Recommendations & Conclusions
11 items
5
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
There are no consequences for local government bodies or local auditors failing to deliver audited accounts on time. Audit contracts cannot specify the delivery of opinions by a certain date. The FRC and the Department say that they want to develop a deeper understanding of the issues affecting timeliness before …
Government response. The government agrees but states that work on incentives and sanctions requires careful consideration and is a longer-term issue. It is prioritising clearing the audit backlog and commits only to exploring transparency and considering wider consequences once the backlog is …
HM Treasury
7
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
We asked the Department why it was confident that performance on audit timeliness would improve and what signs of improvement it would be looking for. The Department described its particular focus on valuation issues which it told us has been of increasing concern to auditors and councils. In December 2022 …
Government response. The government agrees with the committee's observation on audit timeliness, updating that early work to deliver reforms and review complex accounting areas, including asset valuation, is underway. A further update will be provided after the summer once this work has …
HM Treasury
12
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
The Department described the local audit system to us as having no ‘single version of the truth’ for what is holding up individual audits, in some cases issues being with the authority preparing the accounts and in other cases the problem being with auditors.34 Auditors and local authorities both report …
Government response. The government agrees with the committee's observation and will provide its approach in October 2023. It will also explore how greater transparency around audit delays could influence behaviour and consider a wider system of consequences in the longer term after …
HM Treasury
13
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
The Society of London Treasurers told us there also needed to be consequences for late sign-off of accounts, suggesting auditors should report on the causes of delay to audit committees. The Society also queried whether better contract management might help the delivery of audits, suggesting a simpler procurement process might …
Government response. The government agrees and will write to the Committee in October 2023 with its approach, but states that exploring incentives and sanctions for late sign-off is a longer-term consideration requiring very careful thought, to be addressed after the current backlog …
HM Treasury
14
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
Compared to the level of scrutiny over the quality of their audits, local audit providers highlighted a contrasting lack of oversight or sanction over the quality and timeliness of 28 Qq 97–99 29 Q 40 30 TAR0011 31 Q 40, TAR0014 32 Q 16 33 Qq 41, 52 34 Qq …
Government response. The government agrees with the committee's observation and will write to the committee in October 2023 with its approach to addressing the lack of oversight. It commits to exploring how greater transparency around audit delays could influence behavior and will …
HM Treasury
16
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
We recommended in 2021 that the Department ensured PSAA’s procurement exercise for the next round of audit contracts covering 2023–24 to 2027–28 financial years bring fees into line with the costs of work and be appropriately funded. The procurement completed in October 2022, and the Department told us that the …
Government response. The government agrees with the committee's observation on audit fees and market viability, confirming that the FRC plans to progress the Local Audit Workforce Strategy and will provide a further update on determined actions before the end of 2023.
HM Treasury
17
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
When we asked PSAA about its confidence in the future of the market, it cautioned that the procurement had been very tough, having only secured 90% of the capacity PSAA needed in the initial round. PSAA described this outcome as ‘not ideal’ as it was not able to make a …
Government response. The government agrees with the committee's observation on market challenges, stating that the FRC plans to progress the Local Audit Workforce Strategy and will provide a further update before the end of 2023 detailing necessary actions across the local audit …
HM Treasury
18
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
There are less than 100 key audit partners registered to perform local audits.52 We asked PSAA whether it felt there were enough audit partners in the market. PSAA described the number of key audit partners on the register as ‘worryingly low.’53 Audit providers themselves continue to warn of a ‘constrained …
Government response. The government agrees with the committee's observation. The Permanent Secretary has written to the Committee outlining the FRC's plans for a Local Audit Workforce Strategy and will provide a further update by the end of 2023 detailing the determined actions …
HM Treasury
19
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
In 2021 we recommended the Department accelerate training to increase the supply of auditors quickly. The Department told us that it has worked with the Chartered Institute of Public Finance Accountancy (CIPFA) in developing a new qualification it now expects to launch in summer 2023.56 The training aims to support …
Government response. The government agrees with the committee's observation on auditor supply, stating that the FRC plans to progress the Local Audit Workforce Strategy and will provide a further update before the end of 2023 detailing necessary actions to address the supply …
HM Treasury
20
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
We challenged the Department on whether the qualification would equip staff to make judgements that are quite different to those in private audits. The Department accepted that difficult judgements require experience and joint working with council leadership teams. We pressed the Department and the FRC on whether the new qualification …
Government response. The government states it has agreed with the committee's observation. The Permanent Secretary has written to the committee about the FRC's plans to progress the Local Audit Workforce Strategy and will provide a further update by the end of 2023 …
HM Treasury
26
Conclusion
Sixtieth Report - Timeliness of local a…
Deferred
We asked whether the desirable pursuit of the best possible accounting standards was preventing accounts being understandable. The FRC recognised the issue, yet despite the consensus it described around the need to reset the purpose of local audit and financial reporting it also noted that any such reform would take …
Government response. The government agrees with the committee's observation, stating that early work to deliver reforms and review complex accounting areas, particularly asset valuation and pensions, is underway. A further update will be provided after the summer once this work has progressed.
HM Treasury