Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 56
56
Accepted
Private sector-centric local audit requirements misuse significant public sector resources.
Conclusion
We support the Government’s moves to clear the local audit backlog and get the local audit system functioning, including the creation of the Local Audit Office and amendments to the Code of Accounting Practice, noting that these are in line with recommendations made by the predecessor Committee in its report on Financial Reporting and Audit in Local Authorities. However, without reforms to the audit requirements, significant resources are still spent to comply with requirements that were written for the private sector and that do not apply to public sector bodies like local authorities. (Conclusion, Paragraph 215) 81
Government Response Summary
The government has laid statutory instruments to ensure proportionate audit regimes for smaller and major local audits and committed to review the content and format of local authority accounts in April 2025 to address the committee's concerns about audit requirements.
Government Response
Accepted
HM Government
Accepted
The Government published a strategy in December 2024 which set out the purpose of local audit including a vision statement and key principles. The Local Audit Office (LAO) will be set up next year as an arm’s-length body (ALB) of MHCLG and will focus exclusively on local audit activities, subject to Royal Assent of the English Devolution and Community Empowerment Bill. We have laid statutory instruments to ensure audit regimes for smaller authorities and Major Local Audits are proportionate. We also committed in April 2025 to review the content and format of local authority accounts, which will consider the purposes and users of local authority accounts.