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Additional Paper - 28 January 2000 Meeting

ASSOCIATION OF HAMPSHIRE AND ISLE OF WIGHT LOCAL AUTHORITIES

28 January 2000

AUDIT COMMISSION CONSULTATION PAPER

BEST VALUE AUDIT AND INSPECTION FEES

Report by the Chief Executive, Rushmoor Borough Council

RECOMMENDATION

The Association is recommended to consider representations to the Local Government Association on the Audit Commission's consultation paper on Best Value Audit and Inspection Fees along the lines set out in Section 3 of this Report.

1. INTRODUCTION

1.1 On 20 January 2000 the Audit Commission published a consultation paper setting out its proposals for Best Value audit and inspection fees which are due to take effect in April.

1.2 In an accompanying letter the Commission has apologised for the "relatively late circulation" of the consultation paper recognising that this may have caused difficulties for authorities in finalising the details of their 2000/01 budgets. The Paper also puts forward the view that, for the most best value authorities, best value audit and inspection will be largely cost neural as the costs are said to have been taken into account in the Revenue Support Grant [RSG].

1.3 Comments have been requested - ideally through the representative organisations - by 16 February 2000.

2. THE PROPOSALS

2.1 Overall cost

For English local government bodies the overall net cost of best value audit and inspection is likely to be about 52M in a full year.

2.3 Principles

The Commission had identified a number of principles to be followed in setting Best Value rates which are summarised below:-

- costs to be proportionate to the level and complexity of activity and risks

- individual best value authorities should have certainty and confidence about equity of charges

- costs of the Best Value Performance Plan audit work to be charged in full to best value authorities. Costs of inspection services to be met by a combination of direct fees to best value authorities and grant from DETR to the Audit Commission.

- DETR to fund the additional costs to best value authorities through increases to the RSG

- fees to be set, following consultation, on an annual basis

2.3 Fee Structure

The fee structure for carrying out the Best Value Performance Plan Audit and Best Value Inspections and are to be based on scales - to be fixed annually by the Audit Commission - which take into account the type and size of different best value authorities (measured by the total annual budget) and, in the case of inspection fees, the type and scope of services provided.

2.4 Following an analysis of the proposals, the estimated impact on a District Council the size of Rushmoor is set out below:

BVPP Audit


Inspection Fee

Grant
Contribution
[to Audit Commission]

Net Cost to
Council

2000/01

23,500

38,000

34,000

27,500

2001/02

23,500

70,000

-

93,500

2002/03

23,500

70,000

-

93,500

Total

214,500

2.5 As can be seen from the above table, the net cost to an average district council in year one is approximately 27,500, but depending upon decisions on grant contribution in the second and third years, this rises to 93,500 per year. This is understood to be only part of the cost of the Best Value audit and inspection process, with the balance being met by payment direct to the Audit Commission.

3. ISSUES

3.1 - the consultation process has commenced extremely late in the current budget round;

- there is an extremely short period available for consideration and comment;

- the additional fees will, unless the grant abatement continues, impose a substantial extra cost on councils;

- the consultation paper suggests a level of inspection which would equate to approximately two full time posts at an average council just for the audit and inspection process;

- undue emphasis is being placed on inspection rather than on the provision of finance for improvement in front-line services to the community.

3.2 The Commission's proposals are likely to have a significant financial impact on all types of best value authorities, particularly as it is difficult to relate the increased costs directly to the Revenue Support Grant settlement.

Andrew Lloyd
Chief Executive, Rushmoor Borough Council

27 January 2000

Last update: 25/09/2000
Author: Nick Goulder, Policy Manager

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