Source · Select Committees · Public Accounts Committee
Recommendation 11
11
The Institute of Chartered Accountants in England and Wales (ICAEW) noted that while the local...
Conclusion
The Institute of Chartered Accountants in England and Wales (ICAEW) noted that while the local audit market is in crisis, government’s response to date has not recognised 25 Committee of Public Accounts, Local authority investment in commercial property, Eleventh Report of Session 2019–21, HC 312, 13 July 2020, para 15. 26 Committee of Public Accounts, Financial sustainability of local authorities, Twenty-Sixth Report of Session 2016–17, HC 708, 18 November 2016, oral evidence of 10 October 2016, qq 30–31 27 Comptroller and Auditor General, Local authority investment in commercial property, HC 45, Session 2019–20, 13 February 2020, Figure 21. 28 C&AG’s Report, Figure 13 data table 29 Committee of Public Accounts, Oral evidence: Local authority commercial investment, HC 312, Friday 15 May 2020, qq 105–106; Committee of Public Accounts, Local authority investment in commercial property, Eleventh Report of Session 2019–21, HC 312, 13 July 2020, recommendation 3 on page 6 30 Q14 31 Department for Levelling Up, Housing & Communities, Changes to the capital framework: Minimum Revenue Provision, consultation paper, 30 November 2021, available at: Changes to the capital framework: Minimum Revenue Provision - GOV.UK (www.gov.uk) 32 Q 22 33 Q 20 34 Qq 21–24. 35 Q 47; CIPFA for the Department of Levelling Up, Housing & Communities, Local Government Finance Review – Slough Borough Council, October 2021 36 Qq 20, 24 Local Government Finance System: Overview and Challenges 13 the urgency of the situation.37 This Committee has been raising repeated concerns about low audit fees since 2018, well before the pandemic.38 However, now only 9% of all local government body audits for 2020–21 were completed in time for audited accounts to be published by the extended deadline of 30 September 2021. At the same date, 70 authorities still had 2019–20 audits outstanding and 15 authorities had 2018–19 audits outstanding.39 We asked if the absence of up to three years’ audited accounts at the p
Government Response
Not Addressed
HM Government
Not Addressed
3.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 3.2 The department remains committed to strengthening the local audit market. Since July 2021 the department has acted as interim system leader, leading work across the system through the Liaison Committee. This has included securing agreement with key partners to a package of measures designed to help improve the timeliness of local audit, published in December 2021. The package has been broadly welcomed by the sector. Furthermore, Public Sector Audit Appointment Ltd (PSAA) announced in March that 99% of eligible local bodies have joined its national scheme for auditor appointments, which will cover the audits for the financial years 2023-24 to 2027-28. 3.3 The Financial Reporting Council (FRC) has now recruited its first Director of Local Audit. The appointment of Neil Harris to lead the FRC’s dedicated local audit unit was announced on 13 March. The department is also working closely with the FRC and the NAO on requirements for the new unit ahead of the commencement of shadow system leadership arrangements at the FRC in the coming months. This will include a timetable for the transition which takes into account the new Director’s start. While this unit builds capacity, the department will maintain its enhanced leadership role and will act as joint Chair of the Liaison Committee from May, as part of the transition arrangements to the FRC. 3.4 The department will publish the response to its consultation Local audit framework: technical consultation shortly. The department therefore proposes updating the Committee in spring 2022, after the outcome of this consultation and Department for Business, Energy & Industrial Strategy’s (BEIS) response on the White Paper Restoring trust in audit and corporate governance have been published and the early stages of the procurement process completed. This will enable a more detailed response on the transition to the new arrangements and proposed junctures for further updates.