Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Deferred
Insufficient oversight and sanctions for local authorities missing draft account deadlines.
Conclusion
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 11, 18 35 C&AG’s Report, para 1.7 36 TAR0001 37 TAR0013 38 Qq 72, 74 12 Timeliness of local auditor reporting draft account production by local authorities.39 As the local authority is at the beginning of the audit chain, this has knock-on effects on auditors. When we challenged the Department on this, it accepted there was ‘no specific sanction’ for missing the statutory deadline but emphasised that local authorities remain accountable for delivery and that it had written to authorities in March 2023 to underline their responsibilities.40 The Department described the situation to us as ‘a system properly under strain from both sides’.41
Government Response Summary
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 consider a wider system of consequences for the longer term, once the backlog of delayed audits is resolved.
Government Response
Deferred
HM Government
Deferred
5.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2023 5.2 The department will write to the Committee in October 2023 with its approach. 5.3 The government recognises the potential role incentives and sanctions can play in a well-balanced system. Incentives and sanctions, however, can also result in unforeseen behavioural impacts. Given the range of issues the government is trying to address across the local audit market, any work in this area would require very careful consideration. 5.4 As stated by Minister Rowley on 17 July 2023 in his evidence given to the Levelling Up, Housing and Communities Committee inquiry into local financial reporting, the government is currently prioritising clearing the backlog of delayed local audits. The government, however, has committed to explore how greater transparency around audit delays could influence behaviour and believes the wider system of consequences is a vital area to consider for the longer term once the urgent issue concerning the backlog has been resolved.