Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 17
17
Accepted in Part
Paragraph: 80
Introduce annual backstop dates for audited local authority accounts, requiring explanations for delays.
Recommendation
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 the authority (and other responsible individuals such as the auditor’s Key Audit Partner) must immediately write to the Secretary of State for Levelling Up, Housing and Communities, to us, and to the authority’s council to explain why the audit could not be completed. The relevant recipients of the correspondence from the Section 151 Officer should then pursue any follow-up action as is necessary. The introduction of these backstop dates should be done alongside the Department’s implementation of its statement of proposals to clear the backlog, with a suitable annual backstop date chosen by the end of the calendar year.
Government Response 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 Secretary of State or the Committee.
Paragraph Reference:
80
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.