Agenda item

To set out the proposal to opt into the Public Sector Audit Appointments arrangements for appointing External Auditors from 2018/19.

There was submitted a report by the Council’s Corporate Director (Corporate Services), which set out the proposal to opt in to the Public Sector Audit Appointments (PSAA) arrangements for appointing External Auditors from 2018/19.

The Committee was reminded that, following the demise of the Audit Commission, new arrangements had been needed for the longer term appointment of external auditors and that the Local Audit and Accountability Act 2014 required the Council to, either opt in to an appointing person regime, or to establish an auditor panel and conduct their own procurement exercise once the existing contract with Ernst and Young expired.

It was reported that, as part of closing the Audit Commission, the Government had novated external audit contracts to PSAA on 1 April 2015. Those 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 had 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 external audit procurement process or opt in to an appointed person regime. An appointed person regime was to a large extent how the external auditors had been appointed under the previous Audit Commission arrangements.

Members were advised that there had been a degree of uncertainty around the new appointed person regime until July 2016 when PSAA had been specified by the Secretary of State as an appointing person body. The appointing person was sometimes referred to as the sector led body and PSAA had wide support across local government. PSAA had originally been established to operate the transitional arrangements following the closure of the Audit Commission and was a company owned by the Local Government Association’s Improvement and Development Agency (IDeA).

The Committee was informed that an invitation to local authorities to opt in had been received from the PSAA on 27 October 2016 and a response was required by 9 March 2017. Subject to the agreement of this Committee, the recommendation to make use of the appointing person arrangements offered by PSAA would be considered by Council on 7 February 2017, as required by the Regulations.

The Committee was made aware that the main advantages of opting in to the PSAA’s appointing person option was set out in its prospectus which were summarised below, namely:

Members were informed that the alternative approach of establishing an auditor panel and conducting a local procurement process would be a far more resource intensive process and without the bulk buying power of the sector led procurement it would be likely to result in a more costly External Audit service.

The Committee was advised that, via discussions with other authorities, it was understood by Officers that most (if not all) other Authorities across Essex would be opting in to the new PSAA appointing person approach.

Having considered the matter it was:

RESOLVED that the Committee recommends to Council that this Council opts in to the appointing person arrangements made by Public Sector Audit Appointments for the appointment of external auditors from 2018/19.