Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 16
16
Accepted in Part
Paragraph: 79
Lack of consequences for audit delays contributed to current backlog crisis.
Conclusion
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 and auditors for delayed delivery may have contributed to the current backlog of delayed audits. Annual deadlines with suitable consequences for failure to deliver might have prevented the accumulation of the backlog and the destructive cycle of delay that has led to this current crisis.
Government Response 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 incentives and sanctions under review.
Paragraph Reference:
79
Government Response
Accepted in Part
HM Government
Accepted in Part
The proposals to clear the backlog, on which we will be consulting, will include statutory backstop dates for both outstanding historic years and the duration of the next five years to support the recovery. Our immediate priority must remain clearing the backlog, however, the government agrees with the Committee that important questions concerning systemic challenges must be addressed and as part of this we will consider the desirability of backstop dates becoming a permanent feature of the local audit process. In the immediate term, the FRC, in its role as incoming shadow system leader, is developing an escalated reporting framework for identification of bodies at risk of missing the backstop date. We have also already committed in the July 2023 cross-system statement to publish a list of authorities and their auditors that have not published audited accounts on time. We agree with the Committee that it is important that Section 151 Officers and the auditor’s Key Audit Partner should keep their council updated on the work to produce audited accounts by the backstop dates and would expect Section 151 Officers to notify the council leadership of any issues with the audit, including where audits could not be completed. We are confident that there are already mechanisms in place for the Department to be kept updated on the situation and are mindful not to unnecessarily introduce administrative requirements on S151 Officers. As stated previously, we remain committed to exploring how greater measures of transparency concerning audit delays could influence behaviours across the local audit system, including the mechanisms proposed by the Committee. The government’s priority is to continue to work with all local audit stakeholders to clear the backlog of local audit opinions, but we will work with system partners to keep options for introducing incentives and sanctions under review.