Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Accepted
The Local Government audit sector in England and Wales has been under significant strain for...
Recommendation
The Local Government audit sector in England and Wales has been under significant strain for a number of years. There is a shortage of auditors with the knowledge and experience to deliver, within the expected timeframes, the high-quality audits required for the increasingly complex structures and transactions within these accounts. These already widespread delays to statutory audits were only exacerbated with the onset of the COVID-19 pandemic and the additional pressures on Local Government that followed. The target audit completion date for 2018–19 audits was 31 July 2019 however this was met by only 57% of Local Government bodies. This dropped to 45% for 2019–20 audits successfully completed by the target date of 30 November 2020; in October 2021, nearly 12 months after the target date, 70 of the 2019–20 accounts were outstanding.3738 Despite the fact that the 2019–20 WGA did not publish until 26 months after year end, the Treasury included data in the accounts from 29 Local Authorities whose statutory audit had not been certified, and excluded data altogether from a further 23 Local Authorities.3940
Government Response Summary
The Treasury will centrally carry out assurance work over WGA data submissions that are below the audit threshold and is obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness of the assurance procedures for WGA.
Government Response
Accepted
HM Government
Accepted
3. PAC conclusion: Failures in the local audit market in England and Wales are resulting in poorer quality data for Central Government to use in oversight, and in preparing the Whole of Government Accounts. 3. PAC recommendation: The Treasury should set out how it will ensure the data in OSCAR II will remain of sufficient quality, despite significantly reducing the level of auditor assurances, for producing the WGA and informing its understanding of the local government sector. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 WGA data submissions are prepared based on the component entity’s audited accounts where published. As an additional layer of assurance, entities above a certain size are also required to have their WGA data submission audited. The threshold for this additional data submission audit is periodically reassessed to ensure it remains appropriate. A range of different thresholds were considered for WGA 2020-21, taking into consideration the potential impact on data quality. 3.3 To further enhance the level of assurance over OSCAR II data, the Treasury will centrally carry out assurance work over data submissions that are below the audit threshold (across all sectors). The methodology for this work has been discussed with the National Audit Office. In addition, the department is obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness of the assurance procedures for WGA, to support both this year’s account and future cycles.