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
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Oral Evidence
Lee Rowley · Department for Levelling Up, Housing and Communities Siobhan Jones · Department for Levelling Up, Housing and Communities
26 Jun 2023
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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
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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
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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
5 results
Clear
10 Conclusion Acknowledged
First Report - Financial Reporting…
Accounting Code too expensive, restricting access for local authority account users.
The Code of Practice on Local Authority Accounting (the Accounting Code) is a statutorily recommended guidance document for preparing and understanding local authority accounts, but it is too expensive to be accessed by all possible users of the accounts. If … Read more
Government Response
The government acknowledges it may be beneficial to consider how to encourage the use of the Accounting Code and will consider this alongside CIPFA as they reform financial reporting, but does not commit to making the Code freely available.
Ministry of Housing, Communities and Local Government
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13 Conclusion Acknowledged
First Report - Financial Reporting…
Local audit system faces unacceptable crisis with extensive backlog of incomplete audits.
The local audit system is currently in an unacceptable crisis which requires significant and urgent attention. The most significant symptom of the crisis is an extensive backlog of incomplete audits and unaudited accounts, some of them many years out of … Read more
Government Response
The government acknowledges the unprecedented audit backlog, stating that a consultation on proposals to clear it will begin in early February. They are working with system partners on a solution and will provide updates on progress.
Ministry of Housing, Communities and Local Government
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14 Conclusion Acknowledged
First Report - Financial Reporting…
Proposed actions to clear audit backlog are necessary but require further implementation.
The Department has proposed a series of actions to clear the audit backlog, which include resetting the system through a limited series of statutory deadlines for the delivery of outstanding audits from previous financial years. These proposals represent a necessary … Read more
Government Response
The government acknowledges the need for action to clear the audit backlog and states that a consultation on their proposals will begin in early February, emphasizing that this has involved detailed and complex work with system partners.
Ministry of Housing, Communities and Local Government
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18 Conclusion Acknowledged
First Report - Financial Reporting…
The Redmond and Kingman Reviews stated that a local audit system leader should be a...
The Redmond and Kingman Reviews stated that a local audit system leader should be a new standalone organisation, but the Government has decided to combine it with the separate audit regulator which is currently the Financial Reporting Council (FRC) but … Read more
Government Response
The government acknowledges the conclusion, confirming their decision to appoint a system leader from within the current system (FRC, transitioning to ARGA) rather than creating a new standalone body, explaining that this policy was subject to public consultation.
Ministry of Housing, Communities and Local Government
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31 Recommendation Acknowledged
First Report - Financial Reporting…
Introduce new guidance for local authority auditors to proactively flag potential issues earlier
The Department should work with the organisation that prepares the Audit Code (which is currently the National Audit Office but will be the system leader) to introduce new guidance for the auditors of local authorities in order to encourage them … Read more
Government Response
The government agrees with the importance of auditors using their powers and will work with the NAO and FRC to consider the merits of introducing new guidance. However, it does not commit to introducing the guidance or assessing its effect.
Ministry of Housing, Communities and Local Government
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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