Agenda item

Future External Audit Procurement

Report of the Director of Finance and Resources.


The Chief Internal Auditor referred to reports previously shared with the Committee following the decision to close the Audit Commission and to end its role in appointing the external auditor. Original transitional arrangements for the appointment of all external auditors within the public sector and for the setting up of audit fees were  extended, for one more year – 2017/18. , The Council had received confirmation that Ernst and Young LLP would continue as the external auditor for that period. When the transitional arrangements end on the 31 March 2018 each Council has  the ability to move to local appointment of the external auditor. The County Council and Pension Fund should appoint an external auditor for the 2018/19 financial year by December 2017. There were three broad options available, firstly to make a stand alone appointment via an auditor panel, secondly to set up a joint auditor panel or undertake joint procurement arrangements with other public sector bodies within the particular area or thirdly to opt into a sector led body arrangement.  The Local Government Association had lobbied for a sector led body to be established to potentially procure future audit contracts. This body would have the ability to negotiate contracts nationally, potentially maximising opportunities to procure sustainable external audit arrangements on behalf of the whole sector. In July 2016 it was announced by the Department for Communities and Local Government that Public Sector Audit Appointments Limited had been named as the sector led body and that the first appointments made by this body would be for 2018/19. The advantages and disadvantages of each option were outlined in the Committee paper, including a detailed question and answer paper published by Public Sector Audit Appointments Limited. CIPFA had produced guidance on setting up an auditor panel which organisations would need to adhere to when making their own appointments and also if a joint auditor panel was set up. A sector led body could provide the opportunity to potentially obtain greater scales of economy. The County Council had until 2017/18 to make an appointment but in practical terms this meant that one of the options had to be deemed as the favourable route by December 2016. Public Sector Audit Appointments Limited would be looking to issue the invitation to join the sector led body by December 2016 which would give organisations eight weeks to decide whether to go down this route. Contract negotiations would then commence in Spring 2017. Over two hundred and seventy public sector bodies had said that they would prefer the Public Sector Audit Appointments route to do the procurement on their behalf when consulted. The Council is required to take action to appoint the external auditor from April 2018. The appropriate route for the organisation would need to be approved by Full Council following a decision by the Audit and Standards Committee. The recommendation to the Committee was for the Council to opt for the forthcoming cycle of appointments to be undertaken by the Public Sector Audit Appointments route.



That the Committee recommend that Full Council ‘opt-in’ to the Local Government Association Sector Led Body approach via Public Sector Audit Appointments Ltd for the procurement of the External Audit contract for the financial year commencing April 2018. 

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