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Public sector audit

A public sector audit refers to audits covering the government, healthcare, education, charities and other public non-for-profit organisations. There are accounting firms that specialise in such public sector audits, not only providing general auditing services, but other advice, such as how effectively these organisations can make use of taxpayer money or how best to manage their financial assets.

What is a public sector audit?

An audit, generally performed by an accounting firm, is an assessment of an organisation’s financial information. An auditor’s aim is to assure that the financial statements issued by an organisation are free from mistakes and errors. However, unlike audits for private organisations, an auditor, auditing a public organisation may also go further to assess whether the public organisation is meeting its mission or objectives.    

External audit

Generally, there are two types of audits: external and internal. An audit by an outside accounting firm is basically an external audit. It is usually undertaken by a professional accounting firm, on an annual basis, to check the organisation’s financial statements. The results are usually disclosed publicly, usually in annual reports or published financial statements. In the UK, public government agencies are audited by the National Audit Office (www.nao.org.uk).  

Internal audit

An internal audit is an audit undertaken by the organisation itself, usually on a regular basis by an qualified auditor. The main difference with an external audit is that an internal auditor will report to management or board members, instead of making its findings public. In fact, private organisations or those publicly traded may have an auditing department that specifically undertake such internal audits. This is not necessarily the case for public organisations, which in many cases may bring in an audit professional, to undertake an internal audit.

The results of an internal audit are usually used for internal purposes and asses such issues, such as control, governance and risk management processes within an organisation. Regular internal audits are important, because they will help an organisation keep information up-to-date and keep its checks and balances in place.

Resources for appointing an auditor

A useful resource for public organisations in the UK is the Public Audit Forum (www.public-audit-forum.gov.uk). This forum was established together with the National Audit Office, the Audit Commission for Local Authorities, the National Health Service in England, the Northern Ireland Audit Office, the Wales Audit Office and Audit Scotland. The objective of the forum is to provide developmental thinking regarding public audits and provide consultative and advisory services. It is a good place to find up-to-date information on developments in the public audit segment.

For non-governmental public agencies, an external auditor will need to be appointed for an audit. Qualified firms can be found at the Institute of Chartered Accountants in England and Wales (www.icaew.com) and at the Register of Statutory Auditors (www.auditregister.org.uk).

Please contact us if you need any additional advice about appointing an auditor for your organisation.

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Meet the team
Tim Collerton FCCA ACA CTA

Partner, Head of Public Sector

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