Recommendation 18

We received written evidence from the University of Glasgow, which suggested two main points of failure in HM Treasury’s approach to the local audit crisis. Firstly, that the emerging problems in local audit were not identified or considered in terms of risk. It explained that this meant that a gap in oversight was allowed to grow when the Department for Levelling Up, Housing & Communities did not step into the oversight role previously occupied by the now defunct Audit Commission. Secondly, it suggested that HM Treasury had failed to appreciate the prime importance of reductions in local 23 WGA0002 Written evidence from ICAEW: The Institute of Chartered Accountants in England and Wales 24 Q 8 25 Q 22 26 Committee of Public Accounts, Report of session: Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, 14 October 2022 27 Committee of Public Accounts, Timeliness of local auditor reporting, Sixtieth Report of Session 2022–23, HC 995, 23 June 2023 28 WGA 2020–21, para 6, p 262 14 Whole of Government Accounts 2020–21 authority capacity and the malfunctioning of the English local audit market. It noted that the local audit crisis had not manifested outside England, where responsibility for local audit is devolved to the Accounts Commission in Scotland and to Northern Ireland Audit Office (NIAO) in Northern Ireland.29 We asked the Treasury about the evidence we had received. The Treasury told us that it thought that these were very fair assessments and that it talked regularly to the Charted Institute of Public Finance and Accountancy (CIPFA) about the financial management of local authorities. It recognised that it needed to focus on this, as well as the quality of local authority audit committee, and financial capacity and leadership in local government.30