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Audit bodies should merge, report says

'Super agency' could save £20m

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A think tank has urged the government to merge the Audit Commission and National Audit Office (NAO).

A new report from the New Local Government Network (NLGN), Expecting more from Inspectors?, calls on the government to create a super audit agency under the banner of Audit UK. It says this would provide cashable savings of about £20m.

The think tank says with councils facing fewer performance targets under comprehensive area assessments and with performance indicators being more closely aligned with public service agreement targets, it makes sense to merge the two organisations and just have one body responsible for local government inspection.

It says imminent departure of Sir John Bourn as auditor general of the NAO creates an ideal opportunity to combine both agencies, whom the report argues "share similar goals and values".

The report argues that the merger would reduce red tape and improve cost-efficiency, and points out that the two bodies have merged in Wales to create the Wales Audit Office and there is no reason why the same cannot take place in England.

Combining the skills of each organisation would also help to raise the profile and importance of accounting for public spending. The report finds that currently "public understanding of the NAO and Audit Commission is low and public scrutiny and understanding of their output is more limited still".

While the NAO currently focuses on accounting for government spending and the Audit Commission stresses a heavy focus on auditing local spending, the report finds that their work overlaps in many areas. An analysis of the 2006 reports from both organisations found significant similarities in what they covered, with both organisations investigating spending on health services and effective governance.

Report author Anthony Brand said: "Merging the two entities completely should lead to further increases in efficiency, best practice, and operational effectiveness as well as a more holistic view of public services. In this way integrating the two bodies may lead to a more responsive and flexible inspection system."

He added that as the government is moving towards a "light touch" method of regulation, coupled with a reduced number of targets for local government, there is the need for a more streamlined public auditing agency.

"There is widespread recognition that regulation has become burdensome, particularly for high performing local public bodies," he said. "The local government white paper implementation has reduced over 1000 performance indicators to just 198.

"This reduced inspection role will require a different assessment process and a new set of skills as well as potentially a reduction in the resources necessary".

This article was originally published at Kablenet.

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