Source · Select Committees · Public Accounts Committee
Recommendation 26
26
Accepted
Department faces significant challenges in finance capability and audit timetable delivery.
Conclusion
The Department faces two main challenges to bring the audit timetable forward, issues within the Department’s control and issues within the local audit market. The Department acknowledges that it is always looking to build its finance capability and identified three areas where more expertise is needed: financial, commercial and digital. The Department however confirmed it had enough people within the finance team but that its focus was on the financial expertise of non-finance staff.51 There are expected issues in 2022–23 with the introduction of a new accounting standard, IFRS 16, which fundamentally changes the way entities account for leases.52 The written evidence submitted by the Institute of Chartered Accountants in England and Wales (ICAEW) also raises concern with regards to the staffing levels within the finance function.53
Government Response Summary
The government agrees and commits to a multi-year plan to return to a pre-summer recess timetable for laying accounts by the 2025-26 financial year, aiming to publish the 2022-23 accounts in November 2023, while acknowledging external factors like local audit capacity.
Government Response
Accepted
HM Government
Accepted
5.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2026 5.2 The department is committed to the removal of all qualifications. The department has largely addressed the root causes of ongoing qualifications, mainly through the provision of audit evidence for consumables inventories in the Core Department and Agencies’ and Group’s Statement of Financial Position. 5.3 The department is committed to a return to a pre-summer recess timetable. The department is working to a multi-year plan which aims to bring the timetable forward by approximately two months each year. The department currently aims to lay its 2022-23 accounts in November 2023 and return to a pre-summer recess timetable for the 2025-26 financial year. 5.4 However, the factors underpinning the delays in local audit completion, mainly capacity issues are not wholly within the control of the department. The government is working to address these, and successful resolution of these issues will be critical in enabling the department to lay its accounts ahead of the summer recess. For context, local audits would need to all be completed at least one month sooner than the deadline of 30 June 2023 set for the 2022-23 audit cycle. 5.5 In addition, the increased requirements on auditors (including the National Audit Office (NAO)) lead to particular challenges on a large and complex departmental group. Whilst the department and NAO recognise these challenges, they themselves are not expected to be a barrier to achieving a pre-summer recess audit timetable.