The New Local Government Network has called on the government to avoid a dangerous decline in public trust in councils by including measures in its plans for local government audit that will boost confidence. It wants the Audit Commission to be re-invented as a mutual and citizens given new powers over council audit to avoid loss of public trust.

Based on extensive research across the sector, ‘Show Me the Money’ is the first comprehensive analysis of the future of local government after the abolition of the Audit Commission. The report calls on government to avert the dangers of an uncompetitive audit market and higher costs to councils. NLGN recommends that the Audit Commission Practice is rolled out as a mutual, to create another ‘player’ to compete with existing providers and drive market competition and quality. Without the Audit Commission Practice acting as an additional player in the market, there are real concerns that the market could become a closed shop, barring new business entry and raising the costs faced by councils.

The abolition of the Audit Commission could also have a disastrous effect on public faith in local government if ineffective safeguards allow council finances to fail. To prevent this, the government must actively encourage the public’s involvement and allow a ‘Citizen Right of Appeal’ in circumstances where auditor independence may be compromised.

Report author Olivier Roth said: “We’re pleased to see that the government has recognized the need for a more open and less centralized system for auditing local councils, but if the new model doesn’t work and we see the deterioration or collapse of some councils’ finances, then public confidence in localism will be seriously undermined. With the audit landscape and public finances in turmoil, the best way to reassure citizens is to let them take the front seat in the drive for stable council finances.” “We recommend giving citizens real power in auditing councils’ finances through measures such as independent, citizen-led auditor appointment panels, and a ‘Right of Appeal’ when auditor independence is compromised.”