Local Audit and Accountability Bill Second Reading Legislative Briefing, 28 October 2013 The Local Audit and Accountability Bill aims to finalise the Government’s plans for local government reform by abolishing the Audit Commission and changing the arrangements for external audit of local authorities. The range of measures outlined in this Bill, combined with recent legislative reforms under the Localism Act 2011, remove key institutional defences against corruption, replacing them with arrangements that are likely to be inadequate to protect the public interest and the public purse. Under the new standards and audit frameworks, corruption is likely to increase while policy makers, the public and police will have much less information about how and where corruption is occurring in local government. This is an unintended consequence of the cumulative changes, but a very real risk. The system of checks and balances that previously existed to limit corruption has been eroded or removed. These changes include:
the removal of independent public audit of local authorities; the withdrawal of a universal national code of conduct; the reduced capacity of the local press; and a reduced potential scope to apply for freedom of information requests.
Transparency International believes that the following four areas will be negatively impacted by the measures outlined in the Local Audit and Accountability Bill.
1. Accountability Previously, the work of the Audit Commission was covered by the Freedom of Information Act and even some information held by external auditors was regarded as being held by the Commission in certain circumstances. This information was also subject to the Freedom of Information Act, meaning that it was possible for the public to scrutinise the work of external auditors where there were suspicions of misconduct. However, no public authority has inherited those responsibilities from the Audit Commission, and hence under the new framework, information held by external auditors about the activities of local authorities will no longer be automatically covered by the Freedom of Information Act, but rather the details of what is covered by the Act will depend on the terms of contracts. Citizens retain a right to gain access to other relevant information through the courts, but this represents an unnecessary cost and ultimately a barrier to public accountability. Our report found no evidence that a system of citizen auditors would work or that a real effort has been made to encourage them to exist. Private companies, when operating services in the public interest, should be required to comply with the Freedom of Information Act with regards to those services. Specifically, audit reports from local authorities should be covered under the Freedom of Information Act or published directly as public documents. Key Recommendation: Amendment should be made to the Bill to ensure that the work conducted by auditors will be subject to the Freedom of Information Act, and that auditors will be allowed to access documents from significant private contractors that a local authority has used.