Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
Department struggles to ensure sufficient local NHS auditors, despite some improvements for 2023-24.
Conclusion
We observed that the Department appeared to be “slightly skating over the problem” in saying that it did not have the levers needed to address the local audit issues affecting its accounts. Whilst we accepted that the Department did not have responsibility for issues with the audit of local government, we note that it is responsible for the audits of a significant number of local bodies across NHS providers and ICBs.28 We therefore asked what it was doing to ensure that there were sufficient auditors to undertake the work needed. The Department explained that although it could incentivise firms to enter the market, it could not make them, and that the barriers to entry included audit complexity and regulatory risk. NHS England confirmed that going into the 2023–24 year end, every NHS provider and NHS commissioner had an auditor appointed. NHS England advised that this put it in a better position than in 2022–23. In addition, it explained that fewer audits were being undertaken by one particular audit firm which had significant difficulties in delivering timely audits in 2022–23. For 2023–24 there are only 42 NHS commissioners to audit, given Clinical Commissioning Groups were all closed down during 2022–23.29
Government Response Summary
The government has accepted the implicit recommendation to address local audit capacity issues affecting NHS accounts, outlining its multi-year plan to accelerate Annual Report and Accounts publication and its engagement with stakeholders to address these challenges.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2027 2.2 The Department of Health and Social Care (the department) is implementing a multi-year plan which aims to bring forward the publication of its Annual Report and Accounts (ARA) by at least one month per year and targets a return to pre-summer recess laying for the 2026-27 financial year. For 2023-24 audit, the Department has jointly agreed with the NAO that C&AG certification should be planned for the end of November 2024 and laying before Parliament in early December 2024, which would be nearly two months earlier than the 2022-23 accounts were laid. 2.3 The department is actively engaging with key stakeholders across government and externally to address the ongoing capacity issues in the local audit system. Addressing these issues is critical to bringing forward the laying date of the ARA. In addition to audit firm capacity, the regulatory environment in which audit firms operate is creating further pressure on timetables as requirements on audit firms continue to increase. Noting that these challenges are not wholly within the control of the department to resolve, the achievement of pre-summer recess laying of the ARA will be challenging and there is no realistic prospect of this in the short term. In summary, the department will continue doing all it can to work towards a pre-recess laying of the ARA, recognising that this will be challenging and also depends on factors outside of the department’s direct control.