Bring auditors in early, reduce risk of failure

Following the introduction of the Bus Services Act 2025, all Local Transport Authorities (LTAs) have access to bus franchising powers without needing permission of the Secretary of State, in theory simplifying the route to reintroducing bus franchising.

A key step in the process to take back buses under public control remains the preparation of a franchising scheme assessment, a business case that can evaluate whether bringing bus services under public control is the most effective way to meet a region’s transport objectives. 

“Authorities are encouraged to invite the auditor to become involved in the assessment process as soon as the LTA believe it is sensible to do so, and at least to review a small number of drafts of the assessment before a formal report is provided.”

-         Bus franchising guidance

The Act requires an independent review of the assessment of the proposed scheme. The report gives high-level independent assurance that the authority prepared the assessment in good faith and professionally, and that it contains no obvious material or arithmetic errors. 

The question therefore arises, as to when is the most appropriate time to involve an auditor in the assessment process?

Stop treating the franchising audit as an exam

Ask most people, whether in local government or in the private sector, what an audit is for, and you might expect them to describe something to ‘get through’ rather than something that can be beneficial. A box to tick. A hurdle between finishing the work and being allowed to show it to anyone. That instinct is understandable – auditors have a long history in the public imagination of turning up at the end, clipboard in hand, looking for what's wrong.

The audit of a bus franchising scheme assessment doesn't have to work that way, and the government's own guidance is clear that it shouldn't – in our experience, the earlier we are brought in, the greater the opportunity for an audit that can be of real benefit to the LTA. The obtaining of an audit opinion is a statutory precondition to an LTA proceeding to consultation. Get it wrong, or leave it too late, and you risk delay at best and a legal challenge on the assessment at worst.

None of that sounds like an invitation to collaborate. But read the bus franchising guidance and its references to audit timing, and a different picture emerges – authorities are encouraged to bring the auditor in as soon as it's sensible to do so, and to have them review drafts of the assessment well before a formal report is produced. It becomes a relationship that forms an integral part of the assessment itself, rather than a single read rubberstamping a finished document. 

Why audit timing matters for a franchising assessment

The value of an audit is linked to when it happens. Commission it after the assessment is finished, and the best an auditor can do is tell you what's wrong with something you can no longer meaningfully change. People can get attached to their assumptions and become resistant even to well-meaning observations or recommendations from the auditor. Bring the auditor in while the assessment is still being developed and iterated, and they can help you avoid the problem altogether: flagging where data is thin, where assumptions need better evidential support, where significant errors have been identified, or where the value-for-money case doesn't yet hang together, while there's still time to improve it.

An authority that treats the audit as a late-stage compliance step runs the risk of either delaying their timelines to franchising, as they have to scramble to resolve issues the auditor might have discovered (that could have been identified earlier had the auditor been involved), or receive an audit report that highlights significant weaknesses in a franchising assessment that cause consternation to those reading the report at consultation about the viability of the proposed franchising scheme.

Audit as an obligation

• Reduced, late-stage review
• Findings emerge late
• Feels like a pass/fail test
• Minimal room to fix issues

Audit as a collaboration tool

• Integrated draft review process
• Issues resolved as part of scheme development
• Independent, but engaged in a timely fashion
• Gives the benefit of a second opinion

Auditor independence and collaboration aren't mutually exclusive

The obvious objection is that an auditor who gets too close to the work stops being independent. The guidance recognises this, and notes this does not close off the opportunity for auditor involvement.

“The auditor should work collaboratively with the authority to strengthen the quality of the business case, assumptions used and/or approach adopted. While the auditor must remain independent, the aim should be to improve the documentation, so an informed and robust decision can be reached as quickly as possible”

- Bus franchising guidance 

A good auditor reviewing drafts isn't rewriting your assessment or compromising their independence. They're pressure-testing it early enough that any weaknesses can be addressed, on the authority's own terms, rather than being aired for the first time in a report that then sits in the public domain alongside the consultation document.

Done well, this can result in a wholly positive relationship. Instead of an authority defending its work to an external reviewer, you have an expanded team, with defined roles, working together towards the same outcome: a scheme assessment robust enough to survive scrutiny from operators, the public, and potentially the courts. 

What this means in practice for LTAs

For LTAs preparing a franchising assessment, the recommendation is simple: 

Appoint the auditor early and make use of them! Share drafts. Ask them what would concern them if they saw it in a final report. Document their input as you go, and iterate your assessment accordingly, rather than trying to address everything all at once. The auditor should not be the last person to see the assessment before it becomes public – they should be one of the first outside the project team.

The audit report itself is not, and was never meant to be, a pass/fail test. Treated as a genuine second pair of eyes, brought in at the right point, it becomes one of the most useful tools an authority has for making sure its case survives contact with the outside world.

Talk to Neil Peckett about involving the auditor early in your franchising scheme assessment.