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Select Committee · Housing, Communities and Local Government Committee

Financial Reporting and Audit in Local Authorities

Status: Closed Opened: 3 Mar 2023 Closed: 18 Mar 2024 15 recommendations 16 conclusions 1 report

This inquiry will examine a range of issues relating to the purpose, understanding and impact of financial reporting and audit in local authorities. It will scrutinise the role of audit in local accountability and democracy and the extent to which accounts provide a clear picture of the financial sustainability and resilience of a local authority.

Clear

Reports

1 report
Title HC No. Published Items Response
First Report - Financial Reporting and Audit in Local Autho… HC 59 24 Nov 2023 31 Responded

Recommendations & Conclusions

4 items
9 Recommendation First Report - Financial Reporting and … Accepted in Part

Coordinate with stakeholders to align local authority accounts with their agreed purposes.

The Government must also coordinate with key stakeholders in the sector, including the Chartered Institute for Public Finance and Accountancy and the local audit system leader, to ensure that the production, content and format of local authority accounts are aligned with the agreed purposes of local authority accounts; and it … Read more

Government response AI summary
The government commits to working with CIPFA and FRC to align the Accounting Code's requirements with the agreed purposes of local authority accounts. They will report back to the Committee on this progress ahead of the 2025-26 financial year consultation process, though not annually as …
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Ministry of Housing, Communities and Local Government
16 Conclusion First Report - Financial Reporting and … Accepted in Part

Lack of consequences for audit delays contributed to current backlog crisis.

We welcome the commitment of the then-Parliamentary Under-Secretary of State for Local Government and Building Safety to address the causes of delays in the local audit system. While the lack of an annual statutory deadline is not itself a cause of delays, the lack of any consequences for local authorities … Read more

Government response AI summary
The government will consult on proposals including statutory backstop dates for outstanding and future audits and will consider making backstop dates a permanent feature. They also commit to developing an escalated reporting framework, publishing lists of authorities with delayed audits, and keeping options for introducing …
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Ministry of Housing, Communities and Local Government
17 Recommendation First Report - Financial Reporting and … Accepted in Part

Introduce annual backstop dates for audited local authority accounts, requiring explanations for delays.

The Department must introduce backstop dates for publishing audited local authority accounts on an annual basis going forwards. The Department must also ensure that, if an authority and its auditors do not collectively produce audited accounts by the backstop date in a given year, then the Section 151 Officer of … Read more

Government response AI summary
The government will introduce statutory backstop dates for outstanding historic years and the next five years, and will consider their permanent inclusion. It agrees Section 151 Officers should update their councils on audit issues but does not accept the requirement for direct notification to the …
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Ministry of Housing, Communities and Local Government
19 Recommendation First Report - Financial Reporting and … Accepted in Part

The establishment of the local audit system leader will require primary legislation.

The establishment of the local audit system leader will require primary legislation. The legislation required to establish ARGA has been significantly delayed and there appears to be little or no forward momentum or urgency in the Government to introduce it. Moreover, the Department for Levelling Up, Housing and Communities, which … Read more

Government response AI summary
The government views a new arm's length body for local audit as unnecessary and has instead appointed the FRC as a shadow system leader, which is now staffed and working. Full establishment of ARGA through primary legislation is subject to parliamentary time.
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Ministry of Housing, Communities and Local Government

Oral evidence sessions

4 sessions
Date Witnesses
17 Jul 2023 Lee Rowley · Department for Levelling Up, Housing and Communities, Siobhan Jones · Department for Levelling Up, Housing and Communities View ↗
26 Jun 2023 Alison Scott · Three Rivers District Council, Councillor Abi Brown · Local Government Association, Councillor Richard Wenham · Central Bedfordshire Council, Councillor Tudor Evans · Plymouth City Council, Gerald Almeroth · Westminster City Council, Michael Hudson · Cambridgeshire County Council View ↗
5 Jun 2023 Conrad Hall · Newham Council, Gareth Davies · National Audit Office, Iain Wright · ICAEW, Lynn Pamment · Financial Reporting Advisory Board, Mike Newbury · National Audit Office, Rob Whiteman · CIPFA View ↗
15 May 2023 Dr Henry Midgley · Durham University, Ed Hammond · Centre for Governance and Scrutiny, Neil Harris · Financial Reporting Council, Professor David Heald · University of Glasgow, Sarah Rapson · Financial Reporting Council, Sir Tony Redmond · Chartered Institute of Public Finance and Accountancy (CIPFA) View ↗

Who gave evidence

20 witnesses
WitnessOrganisationSessions
Alison Scott · Shared Director of Finance (Section 151 Officer) Three Rivers District Council 1
Conrad Hall · Corporate Director of Resources Newham Council 1
Councillor Abi Brown · Chair of Improvement and Innovation Board Local Government Association 1
Councillor Richard Wenham · Councillor Central Bedfordshire Council 1
Councillor Tudor Evans · Leader of the Council Plymouth City Council 1
Dr Henry Midgley · Assistant Professor in Accounting Durham University 1
Ed Hammond · Deputy Chief Executive Centre for Governance and Scrutiny 1
Gareth Davies · Comptroller and Auditor General National Audit Office 1
Gerald Almeroth · Executive Director Finance & Resources (Section 1… Westminster City Council 1
Iain Wright · Managing Director for Reputation and Influence ICAEW 1
Lee Rowley · Minister for Housing, Planning and Building Safety Department for Levelling Up, Housing and Communities 1
Lynn Pamment · Chair Financial Reporting Advisory Board 1
Michael Hudson · Executive Director Finance & Resources (Section 1… Cambridgeshire County Council 1
Mike Newbury · Director, Code of Audit Practice National Audit Office 1
Neil Harris · Director of Local Audit Financial Reporting Council 1
Professor David Heald · Emeritus Professor University of Glasgow 1
Rob Whiteman · Chief Executive CIPFA 1
Sarah Rapson · Deputy CEO, Executive Director of Supervision, an… Financial Reporting Council 1
Siobhan Jones · Director of Local Government and Communities Department for Levelling Up, Housing and Communities 1
Sir Tony Redmond Chartered Institute of Public Finance and Accountancy (CIPFA) 1

Correspondence

5 letters
DateDirectionTitle
23 Apr 2024 To cttee Letter from the Minister for Local Government to the Chair dated 17 April 2024 …
17 Jan 2024 To cttee Letter from Minister for Local Government to Chair relating to the financial re…
5 Dec 2023 To cttee Letter from the Chair to the Local Government Association dated 27 November 202…
18 Jul 2023 To cttee Letter from the Parliamentary Under Secretary of State for Local Government and…
25 Apr 2023 To cttee Letter from the Mayor of Croydon to the Chair dated 30 March 2023 concerning ac…