Draft Local Audit Bill

This Draft Local Audit Bill, sets out the government's vision for the future of local audit. It has been designed to implement the government's commitment to disband the Audit Commission and re-focus audit on helping local people hold their councils and other local public bodies to account for local spending decisions. The aim of this new draft bill is to develop a locally focused audit regime, but one still retaining a high quality of audit of local government spending. The government views the current audit arrangements for local public bodies as inefficient and unnecessarily centralised, which has created a system of weak cost incentives and therefore become too focused on reporting to central government and not local people. The new audit framework will also allow bodies to appoint their own auditors from an open and competitive market. The Bill also gives new responsibilities to the Financial Reporting Council, which will act as the overall regulator for auditors; the National Audit Office, which will set the code of audit practice; and the professional audit bodies will also have a role in regulating and monitoring audits.

Draft legislation intended to deliver a more efficient and transparent local audit system may not save money, potentially undermines the integrity of the audit system and may fail to deliver accountability. The principle of independent audit - which has guided public sector audit for the last 150 years - could be undermined if the bill is not amended. Most witnesses criticised the proposed independent auditor panels and felt that they imposed an unnecessary additional bureaucratic burden. They expressed strong support for the retention of a central procurement capacity for appointing auditors to local bodies in order to deliver best value on audit fees. The legislation also has some gaping holes that pose significant risks. Unless stronger safeguards are put into the legislation, whistleblowers might not be able to draw attention to serious failures in local governance. The Comptroller & Auditor General of the National Audit Office should be named in the Bill alongside the appointed auditor, as another prescribed person who may be contacted by any whistleblower. It should also have a duty to publish detailed mandatory guidance to accompany the code and to report annually to Parliament on the Code's effectiveness. Lastly, there is great concern that the draft Bill makes no provision for comprehensive like for like value for money comparisons which would enable informed judgements about the way local bodies spend taxpayer's money. It is essential that the Bill is re-drafted to include a systematic process for benchmarking and like-for-like comparisons between public bodies in the new regime.

Dated April 2013. Government response to HC 696, session 2012-13 (ISBN 9780215052360)

Support is expressed for the draft Bill's main aim which is to create a new Welsh Audit Office under the Auditor General for Wales, covering local government and NHS bodies as well as the National Assembly for Wales and its sponsored bodies. The Committee makes a number of recommendations to improve transparency and accountability including: consideration of a wide statutory duty to be placed on the Auditor General for Wales to ensure sufficient regard to the view of all relevant interests concerning the local government value for money audit; and deletion of the clause which unduly restricts disclosure of information by local government auditors. It also highlights the need for the Auditor General to promote cross-border studies, which should be published as joint reports. Clarification is sought on a range of issues, such as NHS performance audit arrangements.

The proposed Bill seeks to confer new functions on the Auditor General for Wales, including transfer of most of the functions currently exercised by the Audit Commission for local authorities and the NHS into a single public audit body for Wales. The new agency, the Wales Audit Office, will have responsibility for the financial and performance audit of the Welsh Assembly, its sponsored bodies and other publicly funded bodies, health bodies such as NHS trusts and Local Health Boards, and local government bodies. This publication contains the text of the draft Bill and explanatory notes on the Bill. It also includes a regulatory impact assessment which estimates the costs and benefits of the Bill with regards to the strengthening of public audit arrangements in Wales.

The purpose of the report is to distil experience from this parliament and to assist the new committee in the next parliament. It considers how the Committee approached its work, the way it has used research and how this might be strengthened, and its own assessment of performance against the core tasks set by the Liaison Committee. It then suggests some matters the new committee might consider examining in the next Parliament. These include both 'unfinished business', topics the Committee looked at over the Parliament to which the successors might wish to return, and new developments, which the Committee considers will emerge as major issues over the next five years.

Drawing on reports from committees, evidence from outside observers and academic research, this report concludes that two years after the general election and the Wright reforms, the evidence is "broadly encouraging" - although committees face some obstacles and there is room for improvement. The "old doctrine by which ministers alone are accountable to Parliament for the conduct of their department is being stretched to implausibility and there is a need for a changed approach. It recommends that the Government engage with the Liaison Committee in a review of the relationship between Government and select committees with the aim of producing joint guidelines for departments and committees, which recognise ministerial accountability, the proper role of the Civil Service and the legitimate wish of Parliament for more effective accountability. The report also makes numerous recommendations for Committees, including: that they be forward-looking in scrutiny of departmental performance, devoting less effort to raking over the coals of past events unless there are lessons to be learnt; give more attention to the financial implications of departmental policy and how departments assess the effectiveness of their spending; experiment with different approaches to evidence-taking, broaden the range of witnesses, and make more use of commissioned research; follow up recommendations to ensure that reports have impact and report to the House at least once each Session on what has been done The Committee intends to ask the Backbench Business Committee for time for a debate in the House of Commons on a motion endorsing its conclusions and recommendations