Financial Reporting and Audit in Local Authorities

Housing, Communities and Local Government Committee Closed Inquiry
Opened: 3 Mar 2023 Closed: 18 Mar 2024 Parliament page
This inquiry will examine a range of issues relating to the purpose, understanding and impact of financial reporting and audit in local authorities. It will scrutinise the role of audit in local accountability and democracy and the extent to which accounts provide a clear picture of the financial sustainability and … Read more
15 Recommendations
16 Conclusions
1 Report
4 Oral sessions
5 Letters
4 Events
Activity timeline 15 events
23 Apr
2024
Correspondence
5 Feb
2024
Report published
17 Jan
2024
Correspondence
5 Dec
2023
Correspondence
24 Nov
2023
Report published
18 Jul
2023
Correspondence
17 Jul
2023
Oral evidence
17 Jul
2023
Formal meeting (oral evidence session) · Room 16, Palace of Westminster
26 Jun
2023
Oral evidence
26 Jun
2023
Formal meeting (oral evidence session) · Room 16, Palace of Westminster
5 Jun
2023
Oral evidence
5 Jun
2023
Formal meeting (oral evidence session) · Room 16, Palace of Westminster
Oral evidence sessions 4 sessions
17 Jul 2023
View on parliament.uk
Oral Evidence
Lee Rowley · Department for Levelling Up, Housing and Communities Siobhan Jones · Department for Levelling Up, Housing and Communities
26 Jun 2023
View on parliament.uk
Oral Evidence
Alison Scott · Three Rivers District Council Councillor Abi Brown · Local Government Association Councillor Richard Wenham · Central Bedfordshire Council Councillor Tudor Evans · Plymouth City Council Gerald Almeroth · Westminster City Council Michael Hudson · Cambridgeshire County Council
5 Jun 2023
View on parliament.uk
Oral Evidence
Conrad Hall · Newham Council Gareth Davies · National Audit Office Iain Wright · ICAEW Lynn Pamment · Financial Reporting Advisory Board Mike Newbury · National Audit Office Rob Whiteman · CIPFA
15 May 2023
View on parliament.uk
Oral Evidence
Dr Henry Midgley · Durham University Ed Hammond · Centre for Governance and Scrutiny Neil Harris · Financial Reporting Council Professor David Heald · University of Glasgow Sarah Rapson · Financial Reporting Council Sir Tony Redmond · Chartered Institute of Public Finance and Accountancy (CIPFA)
Title HC No. Published Items Response
First Report - Financial Reporting and Audit in Local Authorities HC 59 24 Nov 2023 31 Responded
Recommendations & Conclusions
4 results
Clear
9 Recommendation Accepted in Part
First Report - Financial Reporting…
Coordinate with stakeholders to align local authority accounts with their agreed purposes.
The Government must also coordinate with key stakeholders in the sector, including the Chartered Institute for Public Finance and Accountancy and the local audit system leader, to ensure that the production, content and format of local authority accounts are aligned … Read more
Government Response
The government commits to working with CIPFA and FRC to align the Accounting Code's requirements with the agreed purposes of local authority accounts. They will report back to the Committee on this progress ahead of the 2025-26 financial year consultation process, though not annually as recommended.
Ministry of Housing, Communities and Local Government
View details
16 Conclusion Accepted in Part
First Report - Financial Reporting…
Lack of consequences for audit delays contributed to current backlog crisis.
We welcome the commitment of the then-Parliamentary Under-Secretary of State for Local Government and Building Safety to address the causes of delays in the local audit system. While the lack of an annual statutory deadline is not itself a cause … Read more
Government Response
The government will consult on proposals including statutory backstop dates for outstanding and future audits and will consider making backstop dates a permanent feature. They also commit to developing an escalated reporting framework, publishing lists of authorities with delayed audits, and keeping options for introducing incentives and sanctions under review.
Ministry of Housing, Communities and Local Government
View details
17 Recommendation Accepted in Part
First Report - Financial Reporting…
Introduce annual backstop dates for audited local authority accounts, requiring explanations for delays.
The Department must introduce backstop dates for publishing audited local authority accounts on an annual basis going forwards. The Department must also ensure that, if an authority and its auditors do not collectively produce audited accounts by the backstop date … Read more
Government Response
The government will introduce statutory backstop dates for outstanding historic years and the next five years, and will consider their permanent inclusion. It agrees Section 151 Officers should update their councils on audit issues but does not accept the requirement for direct notification to the Secretary of State or the Committee.
Ministry of Housing, Communities and Local Government
View details
19 Recommendation Accepted in Part
First Report - Financial Reporting…
The establishment of the local audit system leader will require primary legislation.
The establishment of the local audit system leader will require primary legislation. The legislation required to establish ARGA has been significantly delayed and there appears to be little or no forward momentum or urgency in the Government to introduce it. … Read more
Government Response
The government views a new arm's length body for local audit as unnecessary and has instead appointed the FRC as a shadow system leader, which is now staffed and working. Full establishment of ARGA through primary legislation is subject to parliamentary time.
Ministry of Housing, Communities and Local Government
View details
Government Response AI assessment · 31 of 15 classified
Accepted 2
Accepted in Part 4
Acknowledged 5
Deferred 14
Rejected 6
Total 15 recs + 16 conclusions
Correspondence 5 letters
23 Apr 2024 To committee Letter from the Minister for Local Government to the Chair dated 17 April 2024 concerning the Government’s response to the Committee’s report on Financial Reporting and Audit in Local Authorities
Parliament page
17 Jan 2024 To committee Letter from Minister for Local Government to Chair relating to the financial reporting and audit in local authorities, dated 9 January 2024
Parliament page
5 Dec 2023 To committee Letter from the Chair to the Local Government Association dated 27 November 2023 concerning changes to local government financing
Parliament page
18 Jul 2023 To committee Letter from the Parliamentary Under Secretary of State for Local Government and Building Safety to the Chair dated 14 July 2023 concerning local government audits
Parliament page
25 Apr 2023 To committee Letter from the Mayor of Croydon to the Chair dated 30 March 2023 concerning accountability in local government
Parliament page