Recommendations & Conclusions
13 items
2
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
Delays to the publication of audited accounts for local government bodies increases the risk of governance or financial issues being identified too late and hinders accountability for £100 billion of local government spending. There are ways in which auditors can sound the alarm on risks before their audits are completed, …
Government response. The government agrees and states the recommendation is implemented. It explains that Minister Rowley has updated the Levelling-Up Committee on urgent work to clear the audit backlog, and the department has written to local authority Chief Executives emphasizing their role …
HM Treasury
3
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
Long-term market and workforce development are essential if the Department is to resolve the current problems with local auditor reporting and create a more resilient system for the future. Much of the focus to date has been around short- term fixes intended to reduce pressure on the local audit system, …
Government response. The government agrees and states the recommendation is implemented. The Permanent Secretary has written to the Committee setting out the FRC’s plans for the Local Audit Workforce Strategy and will provide a further update before the end of 2023 detailing …
HM Treasury
4
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
Delays to establishing the Audit, Reporting and Governance Authority (ARGA) and handing over responsibilities for leading local audit to the FRC, risk performance deteriorating further. The Department rejected the Redmond Review’s proposal to create an Office of Local Audit and Regulation to oversee local audit, partly due to the time …
Government response. The government agrees and states the recommendation is implemented. Its contingency plan for legislative delays to ARGA's establishment involves establishing "shadow system leader arrangements" at the FRC, which includes appointing a director and publishing an MOU, with full arrangements anticipated …
HM Treasury
6
Recommendation
Sixtieth Report - Timeliness of local a…
Accepted
Government, local bodies and standard setters still lack a shared view of how to ensure that local public accounts, and the audit of them, are fit for purpose. Local government accounts have become increasingly complex. They have to meet financial reporting standards while also reflecting how local government finance works, …
Government response. The government agrees and states the recommendation is implemented. It references Minister Rowley's evidence and letter updating on early work to review complex areas of local authority accounting, and the Permanent Secretary has written to summarise this work, with a …
HM Treasury
1
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
On the basis of a report by the Comptroller and Auditor General (C&AG) we took evidence from the Department for Levelling Up, Housing and Communities (the Department), the Financial Reporting Council (FRC), and Public Sector Audit Appointments Ltd (PSAA) about progress government has made improving the timeliness of audit opinions …
Government response. The government agrees, stating the Minister has outlined work by DLUHC and FRC to clear the audit backlog. The NAO and department are proposing final deadlines for auditors and local bodies to complete outstanding audits, with implementation anticipated by year-end, …
HM Treasury
8
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
We challenged the Department on whether its plans to bring the accounts publication deadline forward for 2022–23 would present a risk to progress. The Department told us it would keep this under review.20 However, local audit providers and local authorities shared with us their concerns that the anticipated return to …
Government response. The government agrees with the committee and has set a target implementation date of December 2023. DLUHC and FRC are leading work to clear the backlog of delayed audits by proposing new final deadlines for auditors and local bodies, with …
HM Treasury
9
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
The audit process provides a key element of assurance for financial planning, budgeting and management in local government bodies and accountability for £100 billion of spend, but this only works effectively when audit work is timely. We pressed the Department on the danger that late audits pose to highlighting risks …
Government response. The government agrees with the committee's observation and is undertaking cross-system work to address the backlog of local audit opinions. It also reminded local authority chief executives of their role in timely financial reporting and emphasized that auditors must continue …
HM Treasury
21
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
The FRC is beginning work on a comprehensive workforce strategy. The FRC told us this will represent a long-term plan including routes into local audit starting with championing public sector audit among people at university and college. When we challenged the FRC on how long it might take for people …
Government response. The government agrees that the recommendation is implemented, stating the Permanent Secretary has written to the Committee outlining the FRC's plans for a Local Audit Workforce Strategy and will provide further details on determined actions before the end of 2023.
HM Treasury
22
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
In 2020 the Department rejected the Redmond Review’s proposal to create an Office of Local Audit and Regulation (OLAR) to oversee local audit, partly due to the time it would take for a new body to establish itself.68 It chose instead to place system leadership with the Audit, Reporting and …
Government response. The government agrees and states the recommendation is implemented, detailing the establishment of shadow system leader arrangements at the FRC, including the appointment of a director and a published MOU, and commits to legislating for ARGA when parliamentary time allows.
HM Treasury
23
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
The FRC said that from its point of view ‘ARGA cannot come in quickly enough.’ In March 2023 it agreed a memorandum of understanding with the Department setting out the ‘shadow’ system leadership responsibilities it will take on in the meantime. The FRC told us it saw this as a …
Government response. The government agrees and states the recommendation is implemented, detailing the establishment of shadow system leader arrangements at the FRC with a memorandum of understanding published in March 2023, anticipated to be fully operational later in 2023 as a contingency …
HM Treasury
24
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
We have previously expressed our concern that local government accounts have become impenetrable to many and that unless local authority accounts are useful, relevant and understandable they will not aid accountability.78 CIPFA, one of the bodies responsible for setting the code of practice on local authority accounting, recognised in its …
Government response. The government agrees with the committee's observation and has initiated a review of the most complex areas of local authority accounting, focusing on non-investment assets, pensions, and associated auditing requirements, with a further update expected after the summer.
HM Treasury
25
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
In 2021 we reported our particular concern that the complexity of valuation arrangements around property in particular generated levels of audit work disproportionate to the risks faced by authorities. Mazars described how these accounting values had limited importance to local authorities themselves, but highlighted the ‘consistent message’ from the FRC …
Government response. The government agrees with the committee's observation and has initiated a review of the most complex areas of local authority accounting, specifically focusing on the valuation of non-investment assets and pensions, with further updates expected after the summer.
HM Treasury
27
Conclusion
Sixtieth Report - Timeliness of local a…
Accepted
CIPFA’s evidence to us highlights its view that no alternative accounting frameworks are without their disadvantages, and that departures from the existing regime may risk reducing consistency with the rest of the public sector and require adjustments to feed in to the Whole of Government Accounts.87 The Department highlighted the …
Government response. The government states it has agreed with the committee's observation. It has begun early work on reforms, including a review of the most complex areas of local authority accounting, particularly non-investment assets and pensions, with further updates expected after the …
HM Treasury