Agenda item

(Director of Resources) To consider the attached report (AGC-010-2016/17).

The Director of Resources presented a report regarding the appointment of the External Auditor.

The Director reported that, as part of the closing down of the Audit Commission, the Government had novated external audit contracts to the Public Sector Audit Appointments (PSAA) on 1 April 2015. The contracts were due to expire following conclusion of the audits of the 2016/17 accounts, but could be extended for a period of up to three years by PSAA, subject to approval from the Department for Communities and Local Government. In October 2015, the Secretary of State confirmed that the transitional provisions would be amended to allow an extension of the contracts for a period of one year. This meant that, for the audit of the 2018/19 accounts, it would be necessary for authorities to either undertake their own procurements or to opt in to the Appointed Person regime.

The Director stated that, in July 2016, the PSAA were specified by the Secretary of State as an ‘Appointing Person’ under regulation 3 of the Local Audit (Appointing Person) Regulations 2015. The Appointing Person was sometimes referred to as the sector led body and the PSAA had wide support across most of Local Government. An invitation from the PSAA to opt in was received by the Council on 27 October 2016 and a response was required by 9 March 2017. The main advantages of using the PSAA would be:

                        (a)        assuring timely auditor appointments;

                        (b)        managing the independence of auditors;

                        (c)        securing highly competitive prices;

                        (d)        saving on procurement costs;

                        (e)        saving on the time and effort needed for auditor panels;

                        (f)         focusing on audit quality;

                        (g)        operating on a not-for-profit basis; and

                        (h)        distributing any surplus funds to scheme members.

The Director added that if the Committee were minded to support the use of the Appointing Person arrangements, then this would need to be recommended to the Council for approval at its meeting on 20 December, as Regulation 19 of the Local Audit (Appointing Person) Regulations 2015 required that such a decision had to be made by the Council (authority meeting as a whole). The new contract would need to be awarded by 30 June 2017.

In response to questions from the Committee, the Director confirmed that the PSAA would determine the length of the new contract, but the current intention was for it to be for 5 years, which would be a sensible length of contract and the Director had no real concerns over this. It was also felt that the process would produce a competitive price for the Epping Forest contract.

The Committee acknowledged that a sector wide procurement conducted by the PSAA was likely to produce better outcomes than any procurement undertaken by the Council alone, and would also be less resource intensive. It was felt that this would be the best option for delivering potential cost savings to the Council and also for ensuring the independence of the new appointed External Auditor.

Recommended:

(1)        That the opting in by this Council to the Appointing Person arrangements made by the Public Sector Audit Appointments (PSAA) for the appointment of an External Auditor be recommended to the Council for approval.