Introduction

The Audit Commission was established by the Local Government Finance Act 1982, subsequently amended by the NHS and Community Care Act 1990 and others.

The Commission aims to be a driving force in the improvement of public services by promoting proper stewardship of public finances and by helping those responsible for public services delivered by local authorities and the NHS to achieve economy, efficiency and effectiveness. The Commission has four main functions:

• to appoint auditors (from its in-house agency or one of eight private accountancy firms) to all local government and NHS bodies in England and Wales;

• to set standards for those auditors through the Code of Audit Practice (which is approved by Parliament);

• to carry out national studies designed to promote economy, efficiency and effectiveness in the provision of local authority and NHS services; and

• to define comparative indicators of local authority performance that are published annually.

The Commission is wholly self-financing, deriving the majority of its income from charging audit fees to local authorities and health service bodies.

The Commission has between 15 and 20 members appointed by the Secretary of State for the Environment, Transport and the Regions, acting jointly with the Secretaries of State for Wales and Health, and in consultation with representatives of audited bodies. The Chairman of the Commission is Roger Brooke.

Achievements in 1996/97

The Commission published a range of important national studies during the year. These covered a range of topics including: the effectiveness of GP fund holders, supplies management in the NHS, the efficiency and effectiveness of the youth justice system, the supply and allocation of school places, maternity services and the management of local authority capital projects.

The Commission began a major programme of joint reviews of social services departments in partnership with Social Service Inspectorate. Other partnership operations included a series of studies on housing associations with the Housing Corporation and a joint study on housing benefit fraud with the NAO.

Other achievements include:

• District Audit is now being managed as an agency

• 36 audits have been market tested since 1985, representing some 4% of the total audit fee income and delivering average savings of around 8% per annum

• re-tendering £1.8m of contracts for supplies and services resulting in an average saving of 10% per annum

• improvements in the Quality Control Review procedures

• development of comparative VFM indicators on the performance of audited bodies

• provision of in-house legal services independent from those provided to auditors

• creation of a conferences and seminar programme to help promote the key findings and recommendations from the national VFM studies

• following the independent external review by Mr P J Butler, Anderson and Co were asked to carry out a review of the economy and efficiency of the central directorates

• the Commission was awarded Investors in People accreditation

Plans for 1997/98

Forthcoming value for money studies will be looking at areas including: environmental stewardship, early retirement in local government, continuing care, libraries and commissioning for community care.

The Commission plans to continue seeking opportunities for working in partnership with other audit and inspection agencies: this will enable the public to benefit from shared expertise and avoid the waste involved in duplication of inspection.

Internally, the Commission plans to improve the technical advice it offers to auditors, make more use of specialists as auditors and central staff, develop indicators to measure the effectiveness of Commission studies, and develop its communications processes.

Key Performance Targets
	1994/95		1995/96		1996/97		1997/98
Key Measure	Set	Achieved	Set	Achieved	Set	Achieved	Set
District Audit
% Auditor Time on Productive Work	­	84.4	­	86	­	90	­
Sickness Days per Staff Member per year	­	4.9	­	6.3	­	6.5	­
Audit Commission
Reports Published	­	31	­	39	­	29	­
Reports Sold	­	33,323	­	34,804	­	36,023	­
Fee Increases Compared to:
RPI (%)	­	-1.61	­	-1.2	­	-0.7	­
Financial Sector Pay (%)	­	-2.8	­	-2.5	­	-1.7	­
Central Costs as % of Fee Income	­	11.6	­	11.6	­	11.5	­
Speed of Response to Letters Against Targets (%)	­	87	­	85.5	­	85.5	­