Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 18
18
Acknowledged
Paragraph: 90
The Redmond and Kingman Reviews stated that a local audit system leader should be a...
Conclusion
The Redmond and Kingman Reviews stated that a local audit system leader should be a new standalone organisation, but the Government has decided to combine it with the separate audit regulator which is currently the Financial Reporting Council (FRC) but will eventually be the Audit Reporting and Governance Authority (ARGA).
Government Response Summary
The government acknowledges the conclusion, confirming their decision to appoint a system leader from within the current system (FRC, transitioning to ARGA) rather than creating a new standalone body, explaining that this policy was subject to public consultation.
Paragraph Reference:
90
Government Response
Acknowledged
HM Government
Acknowledged
As the Committee will be aware, Sir Tony Redmond’s ‘Independent review of local authority financial reporting and external audit’ recommended the establishment of a new independent regulator for local audit. The aim of this central proposal was to overcome fragmentation in the local audit framework, enabling a coordinated response to challenges arising. As set out in our May 2021 ‘Local Authority Financial reporting and external audit: Spring Update’, it is the government’s view that a new arm’s length body is not necessary to achieve this objective and that a system leader should instead be appointed from within the current system. This policy has been subject to a public consultation. The Auditing, Reporting and Governance Authority (ARGA) will be established through primary legislation when parliamentary time allows. Ahead of that, it was stipulated in our July 2021 public consultation ‘Local Audit Framework: technical consultation’ and the subsequent government response, that a shadow system leader function would start at the FRC, funded by and accountable to the Department. Accordingly, an MoU between the FRC and DLUHC was published in March 2023 setting out the roles and responsibilities the FRC will undertake as shadow system leader and associated governance arrangements. The local audit unit at the FRC, as incoming shadow system leader, has now been staffed and is working with the Department to lead the cross-system package of measures to clear the backlog.