Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Acknowledged
Local audit delays cause knock-on problems for Whole of Government Accounts and central departments.
Conclusion
Local government audit delays are also creating problems in other parts of government. For example, delays to the completion of 2020–21 local audits are adding to uncertainty around progress with the Whole of Government Accounts, which will be published more than 24 months after the financial year end.25 We note the Department’s and HM Treasury’s action to raise the financial threshold above which authorities are required to provide audited WGA returns.26 We have also seen delays to assurance on Local Government Pension Scheme accounts contribute to delays of four to five months on certifying central government department accounts, including the Ministry of Justice and the Department for Digital, Culture, Media & Sport.27 The Department told us it was keen to explore options available to close the audit of central government accounts sooner where the issue holding up finalisation is the absence of local auditor assurances on the pension valuations feeding into them. The C&AG agreed that a limited audit opinion 18 Qq 8, 11, 16 ; C&AG’s Report, Para 3.20 19 Q 22; TAR0008 p.2 20 Q 69 21 TAR0014 para 7.3, TAR0008, p.2 22 Q 40 23 Q 65 24 Qq 19, 20 25 Committee of Public Accounts, Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, October 2022 26 C&AG’s Report, para 2.15 27 C&AG’s Report, para 2.11 Timeliness of local auditor reporting 11 could help avoid unnecessary delays and we said we would not be concerned with such accounts qualifications if they were agreed in conjunction with the NAO and remained exceptional rather than routine.28
Government Response Summary
The government agrees with the committee's observation on audit delays impacting other accounts. It outlines ongoing urgent cross-system work, including letters to local authority executives and DLUHC's monitoring, to address the overall local audit backlog.
Government Response
Acknowledged
HM Government
Acknowledged
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 As set out above, Minister Rowley has written to the Levelling-Up Committee to update on urgent cross-system work to address the backlog of local audit opinions and mitigate the impact of delays on local bodies going forward. This will help to ensure the system gets back on track which will in turn minimise the negative impact on other government departments and the Whole of Government Accounts. 2.3 The department also wrote to local authority Chief Executives and S151 Officers (Chief Financial Officers) in March 2023 highlighting their critical role in delivering timely, high-quality financial reporting. The letter set out how both the annual auditor’s report to the Audit Committee and Full Council and S151 Officers’ responsibility to report any concerns on the authority’s ability to deliver high-quality draft financial statements by the statutory deadline provide an important accountability mechanism for the taxpayer. 2.4 DLUHC does not rely entirely on audit for the assessment of risk; audit is only one part of the local control framework. The department regularly monitors the financial health of local authorities using a wide range of data including income and expenditure data and reserves levels, as well as through extensive direct engagement with councils. Minister Rowley’s letter to the Levelling-Up Committee also emphasises that auditors must continue to meet their statutory duty to report on value for money (VfM) arrangements in addition to using the existing statutory powers at their disposal to highlight concerns at an early stage.