Magazine article Public Finance

Auditors Will Still Tell It like It Is

Magazine article Public Finance

Auditors Will Still Tell It like It Is

Article excerpt

The shock waves of the local government finance settlement for 2011/12 and 2012/13 are still resounding and finance directors in councils are digesting the financial implications.

It will be some time before the impact on local budgets and services becomes clear. In the NHS, primary care naists and hospitals are getting to grips with the need to find £20bn of productivity savings by 2015. What is clear is that, in all public bodies, financial systems and processes will come under severe strain. Managers across the public services will have to rise to the challenge of squeezing the most from fewer resources.

This will throw the role of the auditor into sharp relief. Auditors will have a major responsibility in providing assurance to taxpayers and others that public bodies' financial management arrangements are fit for purpose.

They will also have a duty to report publicly where they have concerns about a body's ability to manage with reduced resources.

To support auditors in this role, the Audit Commission has developed a new approach to local 'value for money' work. The details of this approach, which will apply from 2011/12 at principal local government bodies and primary care trusts, have been published alongside our recent consultation on audit fees.

The approach will focus on the arrangements bodies have put in place to secure financial resilience and to challenge how they secure value for money.

It will be sharper and less costly than the previous 'Use of resources' assessments and will help deliver significant cuts in fees of £11.8m (9%) in 2011/12.

In looking at 'financial resilience', auditors will consider whether the body's financial systems and processes are robust enough to:

* manage effectively financial risks and opportunities and

* secure a stable financial position over the medium term.

Ln reviewing the body's approach to securing value for money, auditors will look at how it is setting its priorities within tighter budgets. …

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