Source: International Accounting Bulletin
The New Local Government Network (NLGN) in the UK has unveiled a series of proposals to protect against the dangers of the “trend towards centralised regulation of public sector audit¸” following the abolition of the Audit Commission last year.
In its report¸ ‘Show me the Money’¸ the independent think tanks says that while a successor to the Audit Commission is found¸ a series of important standards must be retained.
The research report advocates auditor independence be maintained and suggests a series of proposals to protect against the dangers of centralised regulation to “ensure cost-effective audit and clear systems of accountability and independence”.
- Decentralising the responsibility to approve appointment of auditors to local independent audit committees. These should be statutory bodies with a lay chair and a majority of lay members.
- Simplifying financial reporting to make it more accessible and meaningful to local citizens so that ‘armchair auditors’ can hold elected officials to account.
- Providing citizens with a ‘Right of Appeal’ in cases where the independence of auditors may be compromised.
The NLGN’s research also highlights three key foundations for a new audit regime: independence¸ assurance and accountability to citizens; ensuring a vibrant market for audit services to reduce costs and retain quality; and providing local choice¸ discretion and democratic accountability.
The report says that if these three often-competing dynamics can be balanced then “the future of audit is likely to be stable¸ productive and proactive in meeting the needs and demands of central politicians¸ local government¸ ambitious audit firms¸ the cost-reduction agenda and citizens themselves.”
The UK government announced the abolition of the Audit Commission in August 2010.