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
11
Rejected
Para 57
Make the Accounting Code freely available to all local authority account users.
Recommendation
Through coordination with the Chartered Institute of Public Finance and Accountancy, the Department for Levelling Up, Housing and Communities must make the Accounting Code freely available to all possible users of local authority accounts before the next accounts production cycle …
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Government Response Summary
The government states the Accounting Code is produced by an independent body (CIPFA) and local bodies receive funding for compliance. It does not commit to making the Code freely available by the recommended deadline of March 2024, but will consider what else can be done to encourage its use.
Ministry of Housing, Communities and Local Government
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20
Rejected
Para 92
The Government must reconsider its plan to combine the local audit system leader with the...
Recommendation
The Government must reconsider its plan to combine the local audit system leader with the new audit regulator, ARGA. Specifically, the Government must, in coordination with the FRC, which currently has shadow system leader responsibility, introduce legislation to create a …
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Government Response Summary
The government rejects the recommendation to create a new, separate body for local audit, stating a new arm's length body is not necessary and that ARGA's full establishment is dependent on parliamentary time, while a shadow system leader function is already active within the FRC.
Ministry of Housing, Communities and Local Government
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21
Rejected
The Department must ensure that the local audit system leader is the primary point of...
Recommendation
The Department must ensure that the local audit system leader is the primary point of contact to which local auditors can escalate matters of concern that they find during an audit of a local authority. Additionally, the local audit system …
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Government Response Summary
The government states it is not envisaged that the local audit system leader will be the primary point of contact for auditors' escalations or coordinate responses to systemic issues. It notes existing reporting mechanisms to the Secretary of State and DLUHC, and that the FRC as shadow system leader already reports annually on overall trends and patterns.
Ministry of Housing, Communities and Local Government
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29
Rejected
Para 129
Ensure local auditors' value for money opinions include actual assessment of value achieved
Recommendation
The Department should work with the organisation that prepares the Audit Code (currently the National Audit Office, eventually the system leader) to ensure that local auditors’ opinions over value for money include an actual assessment of value for money achieved, …
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Government Response Summary
The government rejects the recommendation, arguing that ensuring value for money is the responsibility of local leaders, that auditors lack the resources and expertise for such specific assessments, and that it would hinder efforts to clear the audit backlog. They highlight the role of the Office for Local Government (Oflog) in providing performance information.
Ministry of Housing, Communities and Local Government
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Conclusions (2)
12
Conclusion
Rejected
Within the broader rationale for the local authority accounting and audit systems, the purposes of local audit specifically are: • to establish the credibility of the local authority accounts, so that they can fulfil their purposes in supporting local accountability; and • to supplement the local authority accounts with relevant …
Government Response Summary
The government explicitly rejects the Committee's stated purposes for local audit, arguing that auditors are not equipped to comment on value for money and that such an expectation would hinder efforts to clear the audit backlog. It points to Oflog's role in informing citizens about local authority performance.
28
Conclusion
Rejected
Para 128
Local auditors are good at establishing the credibility of the accounts under audit. However, while recent changes to the Audit Code have made improvements to the commentary around value for money, many stakeholders want an opinion from the auditors over whether their local authority has achieved value for money for …
Government Response Summary
The government rejects the idea of auditors providing a value for money opinion on services, stating this responsibility lies with democratically elected leaders, and such a requirement would place significant, unequipped demands on the current audit system.