Source · Select Committees · Public Accounts Committee
Recommendation 26
26
Deferred
Pursuit of optimal accounting standards obstructs understandable local audit and financial reporting.
Conclusion
We asked whether the desirable pursuit of the best possible accounting standards was preventing accounts being understandable. The FRC recognised the issue, yet despite the consensus it described around the need to reset the purpose of local audit and financial reporting it also noted that any such reform would take a long time to implement.86
Government Response Summary
The government agrees with the committee's observation, stating that early work to deliver reforms and review complex accounting areas, particularly asset valuation and pensions, 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.