Source · Select Committees · Public Accounts Committee
Recommendation 24
24
PSAA is the organisation responsible for appointing audit firms to audit those local authorities which...
Conclusion
PSAA is the organisation responsible for appointing audit firms to audit those local authorities which have opted into its arrangements, for an initial five-year period to 31 53 Sir Tony Redmond, Independent Review into the Oversight of Local Audit and the Transparency of Local Authority Financial reporting, September 2020 54 London Borough of Hackney submission, para 3 55 Qq 4, 12 evidence session of 20 May 2021 56 Qq 28, 51 evidence session of 17 May 2021, Qq 5, 42, 46 evidence session of 20 May 2021 57 Q 11 evidence session of 20 May 2021 58 Q 5 evidence session of 20 May 2021; Q 28 evidence session of 17 May 2021 59 Q 28 evidence session of 17 May 2021; C&AG’s report para 1.16 60 Q 28 evidence session of 17 May 2021 61 Q 61 evidence session of 20 May 2021 62 Q 58 evidence session of 20 May 2021 63 Q 60 evidence session of 20 May 2021 64 Qq 58–59 evidence session of 20 May 2021 16 Local auditor reporting on local government in England March 2023.65 It has a legal obligation to ensure that there is sufficient capacity in the market for auditing local authorities, and that local authorities have access to auditors.66 PSAA recognised that there were many problems in the market for auditing local authorities, and considered that it would take time to sort them out. PSAA wanted to make the market a more attractive one for existing audit firms to stay, and for new firms to enter.67 It also wanted to have long-term viable contracts with the audit firms. We asked if there would be a fundamental problem if one or more of the large audit firms did not bid in the next contract round, and we sought assurance on whether any contingency was in place if any firms dropped out. PSAA explained that if any audit firms were minded to leave the market after the end of the five-year period, it had a safety net in that it could extend the current contracts for two years, forcing the audit firms to keep auditing local authorities beyond 2023.68
Government Response
Not Addressed
HM Government
Not Addressed
4.2 The government agrees that a ready availability of skilled and appropriately trained auditors is crucial to ensuring both the long-term sustainability of the local audit market and good quality, timely audit. As Sir Tony Redmond has noted in his review, the local audit market is currently dependent on a few big suppliers and more needs to be done to encourage other firms into the market to support long-term sustainability.