Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Deferred
Department confident in audit timeliness improvement despite auditor market exit concerns.
Conclusion
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 it amended accounting regulations to allow short-term flexibility around the valuation of infrastructure assets (for example, roads, street lighting and flood or coastal defences), and expects to see this used to 10 C&AG’s Report, Para 1.3, Figure 2 11 C&AG’s Report, Paras 2.5 and 2.8 12 C&AG’s Report, Para 2.15 13 C&AG’s Report, Para 2.9 14 Qq 2, 3 15 Q 18 16 Qq 16, 41 17 Q 11 10 Timeliness of local auditor reporting unblock delays in lots of cases.18 The Department later expressed its confidence that the contractual obligations of audit providers remain a key incentive in ensuring outstanding audits would be delivered, although the Society of County Treasurers cautions that its members are already reporting reducing levels of engagement from auditors who are leaving the market.19
Government Response Summary
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 progressed.
Government Response
Deferred
HM Government
Deferred
6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 On 17 July 2023, Minister Rowley, gave evidence to the Levelling Up, Housing and Communities Committee inquiry into local financial reporting and audit. This followed his letter to the Committee of 14 July 2023 which updated on early work to deliver reforms across the system, including reviewing the most complex areas of local authority accounting, with a particular focus on the valuation of non-investment assets and pensions and associated auditing requirements. 6.3 The Permanent Secretary has written to the Committee alongside the publication of this Treasury Minute to summarise this work. The Committee will be provided with a further update after the summer once this work has progressed further.