Is the end nigh? Nay

Public-Sector Finance Paul Gosling finds the District Audit alive and kicking - and improving

When the Butler review of the Audit Commission was published in August some expected it to mark the beginning of the end for District Audit, the commission's arm's-length agency that conducts 70 per cent of local authority, health authority and NHS trust audits.

Jim Butler, author of the report, said that district auditors should be chosen on merit, and told the Independent that he favoured competitive tendering being used for all contracts. With District Audit winning only one out of eight contracts in the initial tranche of market testing, the writing seemed to be on the wall for District Audit, with some private firms looking forward to picking up more public work.

But it looks as though District Audit will be around for a long time to come, after all. While the commission has welcomed the Butler review and accepted its recommendations, this has not extended market testing beyond the fairly limited scope that had been embarked on, which will alter the 70/30 public/private split only gradually.

"We have standard targets of 1 to 2 per cent market testing of contracts per year," says an Audit Commission spokesman. "We must get the audited bodies to agree to this, we can't just impose this on them, and there are strict eligibility criteria."

The commission is just releasing the specifications for the next batch of market testing, for agreement with the audited bodies, in this case five NHS trusts in Wales. That contract will be awarded in April next year, for commencement a year later. A similar process for the London boroughs and the metropolitan councils will begin in December 1996.

David Prince, chief executive of District Audit, says: "It is a matter for the commission to decide how far it goes with market testing, but it is not without cost. You can get most of the benefits of the programme without increasing overheads." The lessons learnt from a restricted market testing programme can be passed on to all clients.

The view that there is no need to introduce competitive tendering for all audit contracts receives surprisingly little criticism from the private firms. Price Waterhouse's spokesman says: "We are comfortable with the way things are." He adds that historically they won a large amount of the 30 per cent of work not carried out by District Audit.

Mr Prince stresses that District Audit is in a good position to cope with private-sector competition, having learnt a lot from the initial market testing exercise. He believes the greatest weakness displayed was DA's poor presentation skills, which have since been strengthened.

The Butler review, though, focused on other weaknesses, pointing out that the high-quality Audit Commission national value-for-money reports were not being translated effectively into local situations, blaming a weakness in relations between the commission and local district auditors, whether from DA or private firms.

Mr Prince believes that these problems had already been recognised, and were being resolved. "We are putting a greater emphasis on specialists and changing our skills mix, bringing people in on secondment," he says.

"We use a lot of people who are not auditors, we have more than 200 people who have non-financial disciplines from the public and private sectors, such as teachers, health managers and doctors, and we are making increasing use of them. Auditors are then that much closer to the bodies they are auditing. We want to tailor studies to the needs of the organisation we are auditing.

"We have been working on our own change programme for just over a year, since we became an agency. The Butler report reinforces the direction we are already going forward in."

Mr Prince points to DA's local value-for-money reports that have recently led to big savings. The London fraud initiative saved pounds 2m in just one borough, by matching names on computer databases across the city, finding people who were making multiple student grant and housing benefit applications.

Another study found some highways authorities could save pounds 50,000 annually by replacing bulbs in street lights half as often or, in other instances, by using a different type. And a DA investigation into computer security found that hospitals and local authorities were vulnerable to outside hackers as well as unauthorised access within organisations, and gave clients a free computer programme to create an audit trail of illicit data access.

"At the moment market testing affects a relatively small amount of our work," says Mr Prince. "We have been concentrating on developing new products as we want to give all our audited bodies the benefits of our thinking."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent