Fundamental concerns about the financial regulation of councils following the Audit Commission’s abolition have been raised by the chair of an influential committee of MPs.
Margaret Hodge (Lab), left, chair of the Public Accounts Committee (PAC), rejected proposals to allow councils to appoint their own auditors, while expressing doubts that scrapping the watchdog would save money.
Ms Hodge told LGC: “It is up to Eric Pickles to propose [who selects the auditors] but it should not be down to councils themselves. If they can hire and fire their own auditors, I think you lose the integrity of public audit.”
The Department for Communities & Local Government (DCLG) insists there will still be a statutory framework overseen by the National Audit Office (NAO), which would maintain probity. But Ms Hodge said getting the NAO, the Whitehall spending watchdog, involved in selecting council auditors would “distract it from its core purposes”.
The Barking MP also fired a warning to Mr Pickles, stating she was “sceptical” about his claim that scrapping the watchdog would save £50m and that her committee would be scrutinising the details.
She said: “It will be a matter of my committee looking at whether or not the alternative arrangements will save or cost money. We will be monitoring that carefully but I remain sceptical. I would like our committee to have pre-legislative scrutiny of the parts of the bill which impact on what we do to make sure it makes sense.”
Mr Pickles announced the Audit Commission’s demise in August, saying that from 2012-13, councils would be free to appoint their own auditors.
Since then audit professionals have questioned the move. The Association of Chartered Certified Accounts head of public sector Gillian Fawcett last month claimed the move would “turn the clock by 150 years” by taking away independent appointments.
A DCLG spokesman said the abolition of the commission would be included in the Public Bodies (Reform) Bill, which will deal with the winding down of a raft of quangos. He added: “We will be happy to assist the committee’s scrutiny of the government’s planned changes to local government audit arrangements.”