Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Accepted
Systemic local audit issues, not authority failings, cause widespread missing WGA submissions
Conclusion
The Local Government Association (LGA) provided us with written evidence and commented that the high number of missing audit submissions to WGA from English local government is due to widespread systemic issues with local audit and not due to failings of governance in local authorities. It stated that the disclaimed or modified opinions are due to circumstances largely outside of the control of local bodies and do not 14 WGA 2022–23 p284 15 WGA 2022–23 p285 16 Q 1 17 WGA 2022–23 p18 18 WGA 2022–23 p285 19 Q 13 20 Q 13 10 signify issues in their financial accounts. It added that the causes of the crisis (in local audit) are complex, with no easy explanation or easy solution, but that factors include: • Insufficient audit resources. There are a limited number of audit firms within the market and a shortage of suitably qualified auditors working for them. • Auditors have to do additional work due to tighter and stricter regulation of auditors following audit failures in the private sector. • Local authority accounts are complicated and hard to understand. These complexities add to the amount of audit work and the work for accounts preparers.21
Government Response Summary
The government commits to providing an update to the committee within six months (September 2025) on actions taken to address missing and unaudited data, acknowledging the systemic issues highlighted by the LGA.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date: September 2025. HM Treasury will respond to the committee within 6 months of the Committee’s report to provide an update on actions taken to address missing and unaudited data. The department intends to write after the Cycle 1 deadline for draft 2024-25 data so that it can provide an indication of the likely 2024-25 position (local authority deadline 29 August 2025). The Ministry for Housing, Community and Local Government’s (MHCLG) work on the local audit crisis will help revert the focus of local authorities to more recent financial information. The government expects the level of missing data to reduce in 2024-25, although it may take longer to reach a point where no audit opinions are disclaimed due to the local audit crisis.