The UK Audit Commission, which is responsible
for checking the efficiency of 11,000 public sector bodies, will be
scrapped and its functions transferred to the voluntary,
not-for-profit or private sector.

The Audit Commission will close by 2012 and
will save £50m a year, according to Communities Secretary Eric

The watchdog, which employs 2,000 people, was
set up in 1983. Its primary objective was to improve economy,
efficiency and effectiveness in local government, housing and the
health service.

Association of Chartered Certified Accountants
public sector head Gillian Fawcett warned the abolition of the
commission would mean the loss of the best practice benchmark for
public sector officers and costly future investigations by
“armchair auditors” that may not benefit the public.

“Going forward, there needs to be some form of
co-ordinating structure which replaces the commission and which
avoids a post code lottery when it comes to public audit,” Fawcett


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The commission’s chairman Michael O’Higgins
said there are a range of options for the future of the audit
practice, including sale, a management buyout, and the setting up
of a mutual organisation.

 “It is critically important that during
the coming period of uncertainty, and the transition period, that
we ensure local accountability, and the accurate audit of public
spending, is carried out effectively,” O’Higgins said.

Criticising the decision to scrap the
commission, shadow secretary of state for local government John
Denham said taxpayers would be without coherent information about
how much value for money their local services provided.