First Report - Financial Reporting and Audit in Local Authorities
Select Committee
Housing, Communities and Local Government Committee
HC 59
24 November 2023
Government response
First Special Report - Financial Reporting and Audit in Local Authorities: Government Response to the Committee’s First Report · published 5 Feb 2024
Recommendations & Conclusions
5 results
10
Conclusion
Acknowledged
Para 56
Accounting Code too expensive, restricting access for local authority account users.
Conclusion
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 …
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Government Response Summary
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
Local audit system faces unacceptable crisis with extensive backlog of incomplete audits.
Conclusion
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 …
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Government Response Summary
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
Para 73
Proposed actions to clear audit backlog are necessary but require further implementation.
Conclusion
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 …
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Government Response Summary
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
Para 90
The Redmond and Kingman Reviews stated that a local audit system leader should be a...
Conclusion
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 …
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Government Response Summary
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
Introduce new guidance for local authority auditors to proactively flag potential issues earlier
Recommendation
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 …
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Government Response Summary
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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