My Lords, I shall speak also to Amendment 6. Amendment 5 requires that a transfer scheme must make effective arrangements for the managing of existing audit contracts. These are contracts that are due to expire upon the completion of the 2016-17 audits unless they are extended up to 2020, as we have discussed. It is understood that there could be up to 10 such contracts as well as a few separate contracts relating to smaller bodies. Any successor body would have to manage these contracts after the abolition of the Audit Commission, effectively for a minimum period of about two and a half years.
This is no small matter, as the annual value of these arrangements is understood to be of the order of £85 million. We look to the Minister to share her thoughts on how this is all to be done. Presumably this is not just a case of novating the contracts, because the successor body will have to have some of the commission’s existing statutory functions relating to audit. Is it not the case that, in undertaking the management of these contacts, any body will have to set standards of performance, monitor delivery and effect payment but will to be able to exercise some of the statutory powers that reside with the commission, particularly powers relating to the appointment of auditors, the setting of scale fees, making arrangements for the certification of grant claims and returns? It is understood, for example, that the key functions would encompass
specifying the terms of an auditor’s appointment; considering and approving, where appropriate, requests from auditors to accept additional non-audit work at audited bodies; specifying standards of performance, including setting target dates for the issuing of opinions; scoping, consulting and specifying the delivery of national mandated work programmes—for example, quality audits or IFRS arrangements reviews at NHS bodies; reviewing requests for new certification work; and a whole list of other things as well.
What is planned for the management of these contracts? There is complexity attached to that management. Does the Minister agree that whoever does this will need to have some of the statutory powers of the commission, with the public accountability that goes with such powers? What does the future hold for the additional audit-related functions undertaken by NHS audit—functions that would include collecting information from auditors; preparing and publishing summaries of the results of audits in the annual auditing and accounts report for the Department of Health accounting officer; co-ordinating requests for information from the NAO in connection with its group auditor role; collecting information directly from auditors and monitoring delivery; agreeing auditor submission requirements with the Department of Health and the NHS Commissioning Board in connection with consolidated accounts to monitor delivery; and providing a range of guidance and advice for auditors and dealing with technical queries from auditors on technical issues to promote consistency. That is just a snapshot of some of the activities that would be required.
Have the Government considered a sector-led approach and what are the implications of this? There is obviously a little time, but the clock is ticking, particularly for the staff in the existing compliance group who have a lot of expertise; where that will reside in the future is of significance, I suggest. I look forward to hearing from the Minister and I beg to move.