Future of Local Public Audit June 2011 Peter W Lacey FCA National Association of Local Councils

Political Imperative Friday 13 th August 2010 Disband Audit Commission Re-focus Audit Consultation closes 30 th June 2011

Principles Localism Transparency Cut costs High standards of audit Smaller bodies – proportionate

Proposed Design principles Localism –Appoint your own Transparency Lower audit fees Keep high standards

Proposed Commissioning (Bodies over £6.5m) Duty on the body to appoint Full Council Audit Committee Allow for Elector input Joint arrangements allowed

Proposals for Structure & Role of Audit Committee Structure –Independent Chair and Vice Chair –Non-executive and non-cabinet members of council (with financial experience?) –Independent members to make majority Role –Engagement, and quality, of Auditors –Policy on non-audit work by Auditor –Review of financial statements

Transparency Public may raise issues, question and make representations In addition to FOI, LGO and ICO. Amend the right to make objections but leave full discretion to auditor

Proposals for smaller bodies 4 Bands (income or expenditure) 1. Up to £1, £1,001 to £50, £50,001 to £250, £250,001 to £6,500,000 Too many bands?

Proposals for Internal Audit Part repealed Part as existing regulations Too risky – keep status quo Words give wrong impression of work done

Proposed External Scrutiny 1 None High risk 2 Independent examiner (need not be qualified) 3 Independent examiner with professional qualification 4 Independent examiner registered as public auditor Simplify – Continue with limited assurance

Proposals for Appointments a) None b) By County or Unitary Council c) Self appoint, if there is an Audit Committee in place. 50 appointing bodies – Cost? - Regulation ? Plan B - National body ?

Public Interest Reporting With Independent Examination there is no Auditor to address. Examiner may refer to body or county/unitary council County / unitary to have power to appoint ? If retain Limited Assurance Auditor – no change

Poor Governance Qualified Audit Reports Proposal that sanction should include with- holding of all or part of Precept. Object strongly – sanction should be against Councillors, not against employees and contractors. What alternative ?

Electors’ Objections Larger bodies – modernise Smaller bodies – Possibility of referring issues to county / unitary to appoint auditor to report. Costs fall on smaller body What is broken ?

Regulatory Regime County / Unitary effectively becomes the Regulator of the sector. Who regulates the County / Unitary regulator ? National regulatory standards ? Is the result proportionate and cost effective?

What’s missing ? -1 Annual Return continues -Yes What are the costs of involvement with County / Unitary Council ? Is there an alternative ? Default examiner where no interest? Verification of powers without general competence available to all?

What’s missing – 2 Proper practices – who? Proper practices – funding? “It’s not broken – so don’t fix it.” “Throwing baby out with the bath-water” Continue with national appointments and national guidance…

Other Topical Issues (If time permits) Council Tax Veto by Referendum Disclosure of over £500 spend Internet Banking –Model Financial Regulations