Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Accepted
Early accounts deadline risks exacerbating local audit backlogs and pressures.
Conclusion
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 a May deadline for the production of draft accounts, despite auditors being clear they are unlikely to be ready to start work at that point, will create increased pressure on authorities.21 Ominously the FRC highlighted wider system risks of auditors having to clear local audit backlogs at the same time as delivering their NHS audit work, making it ‘far from certain’ that audit timeliness would be back on track within a reasonable period.22 Impacts of local audit delays
Government Response Summary
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 a period of engagement over the summer.
Government Response
Accepted
HM Government
Accepted
1.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 1.2 In addition to writing to local authorities and auditors on 14 July 2023, Minister Rowley (Minister for local government and building safety) also wrote to the Levelling-Up, Housing and Communities Committee outlining work being led by the Department of Levelling up Housing and Communities (DLUHC (the department)) and the Financial Reporting Council (FRC) to clear the backlog of delayed audits, including commitments from organisations across the local audit system, of which more detail can be found in the letter to the Committee accompanying this Treasury Minute. 1.3 In order to prioritise the production of reliable and up-to-date financial information as quickly as possible, the NAO and the department are proposing to set a series of final deadlines for auditors and local bodies to clear the backlog of delayed audits. Auditors will be required to provide as much assurance as possible for these outstanding years and where necessary, limit their opinion to areas in which they have managed to carry out work. Auditors will still be required to report on value for money, while use of their statutory powers will remain paramount, ensuring residents can remain assured about council expenditure. 1.4 These proposals have the support of the Local Audit Liaison Committee, who will continue to advise on implementation, which the department anticipates should be in train by year end, following a period of engagement over the summer. This builds on work the government has committed to in its response to the Redmond Review and its December 2021 package of measures to improve local audit delays. DLUHC and FRC will measure progress through monitoring the number of audits completed by the new deadlines.