Recommendation 19

The Treasury told us that was putting in place a plan to try to eliminate the backlogs in local audit. It explained that this included: • establishing a final deadline for the production of the audited accounts for local government bodies, accepting that this may necessitate qualifications or even disclaimers on those accounts; • looking at the audit approach, in collaboration with the Financial Reporting Council, with the intention of providing guidance to auditors that underlines the importance of timeliness, and establishing a proportionate approach to historic audits in looking at audit quality reviews; • reviewing the workforce strategies that underly the production of these audits to close the resourcing gaps across the system; and • identifying what can be flexed in the accounting standards and the financial reporting framework to help to streamline the production of the accounts.31 In our report on the 2019–20 WGA, we noted the shortage of auditors with the knowledge and experience to deliver, within the expected timeframes, the high-quality audits required for the increasingly complex structures and transactions within Local Government accounts. The Treasury acknowledged that its primary contribution may be ensuring that funding is available to make engagement with public sector audit commercially viable for audit firms. As part of the 2021 spending review, the Treasury provided £40 million to the local authority sector to carry out audits and encourage more audit firms to enter the sector.32