Report of the Local Government Efficiency Review Group

7.1 Local Government Audit
7. Value for Money and Audit
7.1.1 Internal audit in local government is carried out by specially assigned staff
within local authorities. Each county and city council also has an audit
committee (see sections 7.2 and 7.3 below).
7.1.2 External audit of local authorities is carried out by the Local Government
Audit Service (LGAS). It is an independent service, which for administrative
purposes constitutes a Division of the Department of the Environment,
Heritage and Local Government. It audits the accounts of 184 local bodies
such as city, county, borough and town councils, and miscellaneous bodies
including some harbour authorities. All audit staff are professionally
qualified accountants and have for many years been recruited externally,
having worked in industry, public audit firms, and public sector bodies, and
this mix of skills enhances the external audit function. The LGAS provides
independent scrutiny of the financial stewardship of local authorities and
other bodies. Its role is to carry out audits of local authorities and other
bodies and promote the achievement of value for money in local authorities
by undertaking Value for Money (VFM) audits and publishing such reports.
A VFM Unit has been established within the LGAS.
7.1.3 The Director of Audit, who is fully independent in the discharge of his
responsibilities, is the organisational head of the service. Each local
government auditor is assigned an audit district under warrant of authority
from the Director of Audit. There are at present twenty-one local
government audit districts. Local government auditors operate
independently of the Department when discharging their professional
functions. This independence is protected in legislation through the Local
Government Act 2001.
7.1.4 Audit districts comprise a number of audits grouped, as far as possible, in
convenient geographical areas, and these districts are further grouped into
four regions – Western, Southern and two Eastern. Principal auditors assist
in the regional organisation and supervision of audits. In addition, they have
direct responsibility for the major audits in their region.
7.2 The Local Authority Internal Audit Function
7.2.1 The role of the internal audit function covers the following:
• Appraisal of systems and procedures;
• Assessment of adequacy, reliability and integrity of data;
• Examination of compliance with policies, plans and procedures;
• Assessment of arrangements for acquisition, safeguarding and
disposal of assets;
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