The National Audit Office (NAO) says it is ready to take on its new local audit responsibilities following the abolition of the Audit Commission in March 2015, but warns government will need to make arrangements to oversee any existing audit contracts which extend beyond the life of the Commission.

Under the Local Audit and Accountability Act which has now taken effect, the NAO now takes on the responsibility for preparing and maintaining the Code of Audit Practice setting out the framework within which auditors of local bodies carry out their work. The NAO also has the power to undertake examinations regarding the economy, efficiency and effectiveness with which local public bodies have used their resources.

The NAO said it had been gearing up for its local audit role for some time, and has already started to augment its programme of work with a small number of additional examinations providing a more 'end to end' view of the use of public funds, designed to provide useful information at the local level as well as fulfilling its remit in reporting to Parliament.

The next such report, scheduled for publication in early 2014, will look at the challenges of delivering value for money in adult social care, one of the most significant services delivered by local authorities.

However, in its statement the NAO said that 'some challenges remain for the government, particularly that of making arrangements for the oversight of the Audit Commission's contracts, which run at least two years beyond March 2015, when the Commission is scheduled to be abolished.'

The audit watchdog has also recruited Sue Higgins as the member of the leadership team with responsibility for its local government work. Higgins, who was previously director general of finance and corporate services for the Department for Communities and Local Government (DCLG), will be leading on the development of the NAO's forward programme of value for money work with local government, working closely with local government representative bodies and other stakeholders.

Sue Higgins, NAO executive leader, local government, said: 'The challenge now for all those with a role to play in the new local audit framework is to manage the transition to the new arrangements, and government will need to ensure they work in practice. We are already experienced in testing value for money across the whole of the public sector, national and local. We will continue to develop that programme as we take on our new local audit role.'