Audit reform plans moot local accounts committees

The government is considering the creation of local public accounts committees to scrutinise combined authorities in England.

Earlier today, alongside the provisional local government finance settlement, the government published a consultation on plans to “streamline” the audit system into one central body: the Local Audit Office (LAO).

The LAO will be statutory, independent, and will assume five strategic responsibilities: system coordination, contract management, ownership of the Code of Audit Practice, quality oversight, and reporting.

Currently these powers, formerly held by the Audit Commission until 2015, are split between Public Sector Audit Appointments, National Audit Office, Finance Reporting Council and the Cabinet Office.

The government is also consulting on several specific proposals as part of this strategy, including the creation of new local public accounts committees for “strategic authority” areas in England. Under the English devolution white paper strategic authorities are defined as “a number of councils working together, covering areas that people recognise and work in”, such as a combined authority.

The document highlighted that “greater powers and funding come with more responsibility” and emphasised the need for “robust” accounting practices to be in place.

The consultation suggests that these forums could be created to strengthen external scrutiny of value for money in local public spending. They would draw on audit findings and engage directly with the LAO, in arrangements that mirror the role of the National Audit Office, the Commons’ public accounts committee and Parliament.

Ian Murray, director of public financial management at the Chartered Institute of Public Finance and Accountancy (CIPFA), described the LAO as a “positive first step,” and emphasised the importance of the body in providing system leadership to “restore trust in local audit”.

He said: “Ongoing delays in local authority audits, coupled with the current situation where some authorities are without an external auditor, highlight that the system is failing. Effective local audit ensures transparency and accountability and is essential for establishing and maintaining trust in our local public bodies.

“The planned reforms in the devolution white paper and local government policy statement, which focus on restructuring and funding local government, depend on the integrity of local audits to ensure public money is spent effectively.”

Mr Murray also stressed that the government’s plan to overhaul local audit must be seen as part of broader reforms aimed at creating a more transparent and accountable system.

He added: “Only with strong accountability processes in place can we ensure the success of public service reforms.”

The consultation closes on Sunday 29 January.