Headlines: July 25th, 2006

The Audit Commission Board has announced savings of 26 million pounds of public money in the next five years through the rolling forward of existing contracts for outsourced audit work. Today’s announcement follows a rigorous tendering exercise.New contracts with a projected value of 29 million pounds a year have been awarded to Deloitte, KPMG, PKF and RSM Robson Rhodes. Together the contracts make up a fifth of the Commission’s projected audit work in 2007-08. The contracts will run for five years from April next year.

The Commission will also look to outsource up to a further 13 million pounds, representing a further 10 per cent, of its projected audit work in the financial year 2008-09 in an effort to make more savings. This would broadly maintain the current pattern of 30 per cent of the Commission’s audit work being outsourced to private firms.

The Commission’s Acting Chairman, Sir Michael Lyons, said the tendering process would enable it to deliver substantial savings for the taxpayer but maintain high-quality services for audited bodies. “It also demonstrates our ongoing commitment to promoting a competitive public sector audit market,” he said. Chief Executive Steve Bundred added, “This has been a major exercise for the Audit Commission conducted in accordance with EU procurement rules. Our aim was to maintain quality, while using price competition to drive down cost.”

The exercise was conducted in the context of a reduction in the size of the Commission’s audit market, because of restructuring in the National Health Service and the move of NHS acute trusts to foundation trust status.

Deloitte will get a total of 6 million pounds for audit work in London and the North of England, KPMG’s contract is worth 8 million pounds for audits in the North, the Midlands, the South East and South West. RSM will get 11 million pounds and will work in all regions except the South East and PKF will be paid 4 million pounds for outsourced work in the East and South East regions.

Meanwhile it has been announced that the new chairman of the Audit Commission is to be Michael O’Higgins, who for ten years has been with PA Consulting, as Managing Partner leading its Government and IT Consulting Groups, and latterly as Member of its International Board. He recently chaired a Department of Health external panel on commissioning a patient-led NHS.