Councils to save cash with deal for private auditing

The Audit Commission said it was proposing to sign five-year contracts with four auditing firms. The deals will mean all audits in England are carried out by private companies for the first time.

Confirmation of the contracts is expected today.

Audit Commission chairman Michael O’Higgins said: “This procurement has been the result of a rigorous assessment of each bidder against published cost and quality criteria, and will mean significant audit fee savings for local councils, NHS trusts and other local bodies.

“Its outcome will promote a skilled, well-resourced and diverse public audit market. Only the Audit Commission could have delivered this, given its statutory powers and unique audit procurement arrangements.

“The procurement process has ensured that the specialised skills and experience of over 700 public sector auditors will be retained in an outsourced market.

“I am glad to see the cost benefits of bulk-buying audit services and prices being locked in for at least five years – these £250m savings will be passed on to local public bodies when we announce the detail of fee reductions in April.

“We will continue to spread the cost of audit across all local public bodies, ensuring that smaller and geographically remote public bodies enjoy the benefits of the low prices this procurement has secured.”

Chief executive Eugene Sullivan added: “This has been a complex process delivered to a very challenging timetable, and we are pleased with the outcome.”

Under the proposed deals, Grant Thornton (UK) LLP has a contract with a total notional value of £41.3m a year covering four contract areas in the North West, West Midlands, London (South) Surrey & Kent, and South West.

KPMG LLP has a total notional value of £23.1m a year covering three contract areas in Yorkshire and the Humber, East Midlands, and London (North).

Ernst & Young LLP has a total notional value of £20m a year covering two contract areas in the East and South East.

And DA Partnership Ltd has a total notional value of £5m a year covering one contract area in the North East and North Yorkshire.

Public bodies are expected to save over £30m a year for the length of the contracts.