Recommendation 17

In May 2021, the Department announced its updated response to recommendations in Sir Tony Redmond’s review, from September 2020. We challenged the Department on whether the new arrangements would have any real effect on the efficiency of local government auditing. In the response, the Department expressed its view that the Audit, Reporting and Governance Authority (ARGA), the new regulator being established to replace the FRC, would be best placed to take on the local audit system leader role.42 The system leader would be a single body aiming to resolve the fragmented structure of public sector audit, which is dispersed around different bodies, and with no one body looking for systemic problems, co-ordinating different parties, or monitoring and acting on emerging risks.43 The Department believed the proposals it had announced would tackle the weaknesses in the market for auditing local authorities and the fragmented nature of the different responsibilities of the bodies involved.44 We questioned whether ARGA would really have the degree of independence needed to look at the specifics of local 36 Qq 3, 8 evidence session of 17 May 2021 37 Q 46 evidence session of 17 May 2021 38 Q 47 evidence session of 17 May 2021 39 Local Government Association submission, page 1 40 Q 19 evidence session of 20 May 2021 41 Q 47 evidence session of 20 May 2021 42 Ministry of Housing, Communities and Local Government, Local authority financial reporting and external audit: Spring update, 19 May 2021 43 Sir Tony Redmond, Independent Review into the Oversight of Local Audit and the Transparency of Local Authority Financial reporting, September 2020 44 Q 4 evidence session of 20 May 2021 14 Local auditor reporting on local government in England government audit. The Department indicated that ARGA would establish a unit with local government audit expertise, aimed at ensuring that the specific nature and circumstances of local government were not ignored.45