Source · Select Committees · Housing, Communities and Local Government Committee
First Report - Financial Reporting and Audit in Local Authorities
Housing, Communities and Local Government Committee
HC 59
Published 24 November 2023
Recommendations
9
Accepted in Part
Para 48
Coordinate with stakeholders to align local authority accounts with their agreed purposes.
Recommendation
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 …
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Government Response 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 recommended.
Ministry of Housing, Communities and Local Government
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17
Accepted in Part
Para 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 …
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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.
Ministry of Housing, Communities and Local Government
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19
Accepted in Part
Para 91
The establishment of the local audit system leader will require primary legislation.
Recommendation
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. …
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Government Response 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.
Ministry of Housing, Communities and Local Government
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Conclusions (1)
16
Conclusion
Accepted in Part
Para 79
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 …
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.