A fascinating report from the Institute for Government on the abolition of the Audit Commission. A great insight into the way in which governments take key strategic decisions and also the unintended consequences of acting in haste. The report is well worth reading in full but here is the final conclusion.
This report cannot end without a verdict on the abolition of the Audit Commission – the decision which triggered this study. It is hard to conclude that there was not an element of pique in it. That is demonstrated by the current position, where the remnants of the commission will, on the current timetable, be abolished in 2015 with an interim successor body set up to oversee audit contracts until their expiry in 2017 or 2020. That decision appears to have no logic.A key and ancient principle of public audit (genuinely independent appointment of auditors) has been seriously undermined, and a more modern one (that there should be an independent body to stand behind those auditors) has disappeared.
Likewise, central procurement of council and some other public-sector audit, and oversight of whether claims for extra auditing fees from the private sector are justified, will disappear. That system has worked well over the years. It may be replaced by councils – and other public bodies – choosing to club together to buy in these services. If enough do so, that could be a back-door way of recreating part of the commission’s function, though on a voluntary basis. But it makes little sense to scrap the existing centralised function, not least because, on the grounds of value for money and oversight, the Coalition is itself deliberately centralising the procurement of many essential, routine services – of which audit is one. There remains, however, both time and an opportunity for an incoming government in 2015 to reverse those decisions – one it should take.
The National Audit Office may prove good at doing local government studies. But it lacks the power the Audit Commission had to require standardised information from those it will be studying in local government. However good armchair auditors, think-tanks and academics prove to be at analysing the wealth of data that is now being published – and the Institute is all in favour of that data being easily available – it requires standardisation, and the knowledge to interpret what it shows, in order for it be used to produce really reliable conclusions. That too has gone missing. In one form or another, and doubtless under a different banner, a Commission for Audit to cover at least those three roles – a guarantee of independent audit, standardisation of data and ideally a central procurement and oversight function – needs to be reinvented.”