Timeliness of local auditor reporting
Public Accounts Committee
Closed
Inquiry
In 2021 the Committee reported that the system of local government audit in England was close to breaking point , reinforcing concerns about councils’ ability to budget effectively. Subsequently, in October 2022, the Committee reported that the pandemic had exacerbated existing failures in the local audit market , with a …
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1
Recommendation
27
Conclusions
1
Report
1
Oral session
1
Event
Activity timeline 4 events
24 Sep
2023
2023
23 Jun
2023
2023
Report published
16 Mar
2023
2023
Oral evidence
16 Mar
2023
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
16 Mar 2023
View on parliament.uk
Timeliness of local auditor reporting
Catherine Frances · Department for Levelling Up, Housing and Communities
Jeremy Pocklington CB · Ministry of Defence
Neil Harris · Financial Reporting Council
Sarah Healey · Department for Digital, Culture, Media and Sport
Tony Crawley · Public Sector Audit Appointments Ltd
Reports 1 report · click to expand
| Title | HC No. | Published | Items | Response |
|---|---|---|---|---|
| Sixtieth Report - Timeliness of local auditor reporting | HC 995 | 23 Jun 2023 | 28 | Responded |
Recommendations & Conclusions
11 results
5
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Address the lack of incentives and sanctions for timely local auditor reporting by October 2023.
There are no consequences for local government bodies or local auditors failing to deliver audited accounts on time. Audit contracts cannot specify the delivery of opinions by a certain date. The FRC and the Department say that they want to …
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Government Response
The government agrees but states that work on incentives and sanctions requires careful consideration and is a longer-term issue. It is prioritising clearing the audit backlog and commits only to exploring transparency and considering wider consequences once the backlog is resolved.
HM Treasury
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7
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Department confident in audit timeliness improvement despite auditor market exit concerns.
We asked the Department why it was confident that performance on audit timeliness would improve and what signs of improvement it would be looking for. The Department described its particular focus on valuation issues which it told us has been …
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Government Response
The government agrees with the committee's observation on audit timeliness, updating that early work to deliver reforms and review complex accounting areas, including asset valuation, is underway. A further update will be provided after the summer once this work has progressed.
HM Treasury
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12
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Local audit delays caused by authorities, auditors, and regulatory pressures on complex valuations.
The Department described the local audit system to us as having no ‘single version of the truth’ for what is holding up individual audits, in some cases issues being with the authority preparing the accounts and in other cases the …
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Government Response
The government agrees with the committee's observation and will provide its approach in October 2023. It will also explore how greater transparency around audit delays could influence behaviour and consider a wider system of consequences in the longer term after clearing the backlog.
HM Treasury
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13
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Absence of audit contract deadlines for opinions challenges the independence-timeliness balance.
The Society of London Treasurers told us there also needed to be consequences for late sign-off of accounts, suggesting auditors should report on the causes of delay to audit committees. The Society also queried whether better contract management might help …
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Government Response
The government agrees and will write to the Committee in October 2023 with its approach, but states that exploring incentives and sanctions for late sign-off is a longer-term consideration requiring very careful thought, to be addressed after the current backlog of delayed local audits is cleared.
HM Treasury
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14
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Insufficient oversight and sanctions for local authorities missing draft account deadlines.
Compared to the level of scrutiny over the quality of their audits, local audit providers highlighted a contrasting lack of oversight or sanction over the quality and timeliness of 28 Qq 97–99 29 Q 40 30 TAR0011 31 Q 40, …
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Government Response
The government agrees with the committee's observation and will write to the committee in October 2023 with its approach to addressing the lack of oversight. It commits to exploring how greater transparency around audit delays could influence behavior and will consider a wider system of consequences for the longer term, once the backlog of delayed audits is resolved.
HM Treasury
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16
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
New local audit contracts significantly increase fees, improving financial viability for providers.
We recommended in 2021 that the Department ensured PSAA’s procurement exercise for the next round of audit contracts covering 2023–24 to 2027–28 financial years bring fees into line with the costs of work and be appropriately funded. The procurement completed …
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Government Response
The government agrees with the committee's observation on audit fees and market viability, confirming that the FRC plans to progress the Local Audit Workforce Strategy and will provide a further update on determined actions before the end of 2023.
HM Treasury
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17
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Local audit market faces persistent capacity challenges despite recent procurement efforts.
When we asked PSAA about its confidence in the future of the market, it cautioned that the procurement had been very tough, having only secured 90% of the capacity PSAA needed in the initial round. PSAA described this outcome as …
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Government Response
The government agrees with the committee's observation on market challenges, stating that the FRC plans to progress the Local Audit Workforce Strategy and will provide a further update before the end of 2023 detailing necessary actions across the local audit system.
HM Treasury
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18
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Critically low number of ageing key audit partners threatens local audit resilience.
There are less than 100 key audit partners registered to perform local audits.52 We asked PSAA whether it felt there were enough audit partners in the market. PSAA described the number of key audit partners on the register as ‘worryingly …
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Government Response
The government agrees with the committee's observation. The Permanent Secretary has written to the Committee outlining the FRC's plans for a Local Audit Workforce Strategy and will provide a further update by the end of 2023 detailing the determined actions across the local audit system.
HM Treasury
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19
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
New local audit qualification launch delayed, hindering efforts to boost auditor supply.
In 2021 we recommended the Department accelerate training to increase the supply of auditors quickly. The Department told us that it has worked with the Chartered Institute of Public Finance Accountancy (CIPFA) in developing a new qualification it now expects …
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Government Response
The government agrees with the committee's observation on auditor supply, stating that the FRC plans to progress the Local Audit Workforce Strategy and will provide a further update before the end of 2023 detailing necessary actions to address the supply of auditors.
HM Treasury
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20
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
New local audit qualification's attractiveness and efficacy for private sector auditors questioned.
We challenged the Department on whether the qualification would equip staff to make judgements that are quite different to those in private audits. The Department accepted that difficult judgements require experience and joint working with council leadership teams. We pressed …
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Government Response
The government states it has agreed with the committee's observation. The Permanent Secretary has written to the committee about the FRC's plans to progress the Local Audit Workforce Strategy and will provide a further update by the end of 2023 setting out determined actions.
HM Treasury
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26
Conclusion
Deferred
Sixtieth Report - Timeliness of lo…
Pursuit of optimal accounting standards obstructs understandable local audit and financial reporting.
We asked whether the desirable pursuit of the best possible accounting standards was preventing accounts being understandable. The FRC recognised the issue, yet despite the consensus it described around the need to reset the purpose of local audit and financial …
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Government Response
The government agrees with the committee's observation, stating that early work to deliver reforms and review complex accounting areas, particularly asset valuation and pensions, is underway. A further update will be provided after the summer once this work has progressed.
HM Treasury
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