The audit will result in an investigation of both the client and contractor side of DLO businesses, which means that the management and finances of other council department in addition to those of DLOs will also be exmained.
One local authority official said: 'This appears to be a second wave of attack. The Scottish Office is now stepping up the pressure and the Accounts Commission will want guarantees about how local authorities manage their finances both in connection with DLOs and their clients.'
Yesterday Scottish Office officials began contacting councils to request information on any big defecits and on issues like bonus payments to workers. It is understood that details of any excessive payments to employees are also being sought after the disclosure earlier this week that a plumber employed by North Lanarkshire's DLO received a salary of£54,000.
An insider said last night: 'We should have all the accounts in by next week. The secretary of state is likely to opt for a full disclosure policy to open these operations up to public scrutiny.'
And writing in The Scotsman (p16) Mr Dewar says he firmly believes local authorities can only exert leadership if they win the trust of the people who elect them and whose lifes they affect, whether it's through health, education or ensuring the bins are emptied.
He writes: 'Local government has a big part to play in the Scotland I want to see in the 21st century. It's a key partner with the Scottish parliament in delivering the kind of services the public deserve.'
He adds that a major problem facing local government today is democratic accountability. He says that a new ethical framework is needed to govern conduct with an Independent Standards Commission for Scotland. 'Only by doing this will we make sure any misconduct can be dealt with impartially, swiftly and with authority.'