Recommendation 20

We were concerned that the problems we see now in the local audit sector could spread and contaminate the health sector. We asked what more it could do to help to address the issues with the audit of local government. The Treasury recognised the importance of both auditor incentives and sanctions. It told us that its work so far had tended to focus on incentives, through providing more funding and the proportionality of the regulatory framework, so it thought that it now needed to turn to look at what the sanctions were. It similarly recognised the importance of fixing the issues within local government audit in order to stem the contagion of audit failures from spread to other sectors such as health. 29 WGA0001 Written evidence from Professor David Heald (Emeritus Professor at Adam Smith Business School, University of Glasgow) 30 Q 17 31 Q 3 32 Q 10; Public Accounts Committee, Report of session: Whole of Government Accounts 2019–20, 14 October 2022 Whole of Government Accounts 2020–21 15 The C&AG noted that this risk was already crystallising, and that he expected that the Department of Health’s accounts for 2022–23 will be delayed by two months because of a failure of a local audit supplier to complete the necessary work.33