Recommendation 14

The audit firms EY and Grant Thornton told us that some local authorities had increasingly complex financial arrangements, for example in their borrowings, investments and financial instruments.34 EY explained that the more investment properties a local authority held, the more difficult it had become to arrive at valuations for the properties. EY added that the valuation of assets supporting pension funds and of investment properties required significant input from its specialist real-estate valuation teams to ensure that valuations were appropriately reported.35 The audit firms pointed out that, at the same 27 Q 9 evidence session of 17 May 2021 28 Local Government Association submission, page 1 29 Q 59 evidence session of 17 May 2021 30 Q 60 evidence session of 17 May 2021 31 Q 62 evidence session of 17 May 2021 32 Centre of Public Accountability, Durham University submission, page 3 33 Institute for Chartered Accountants in England and Wales submission, pages 1, 3, 4 34 Qq 3, 19 evidence session of 17 May 2021 35 Q 38 evidence session of 17 May 2021 Local auditor reporting on local government in England 13 time, the FRC had challenged auditors to improve the work they do in auditing these complex arrangements, and held the audit firms to account for the quality of their audit work.36