The FRC said that from its point of view ‘ARGA cannot come in quickly enough.’ In March 2023 it agreed a memorandum of understanding with the Department setting out the ‘shadow’ system leadership responsibilities it will take on in the meantime. The FRC told us it saw this as a convening role, ‘co-ordinating what has been and still is to an extent a fragmented system.’71 It described its initial priorities as understanding the granularity of issues causing audit delays, addressing the backlog and taking forward work on a comprehensive workforce strategy.72 When we pressed on the risks it faces in this new role, the FRC highlighted the need to build capacity for the role, and manage the risks of operating as both system leader and regulator, where regulatory actions might have a detrimental effect on the local audit market.73 The FRC also highlighted the risk that it is seen as being solely responsible for fixing problems in the system. It described the need for ‘a dedicated and concerted effort from absolutely everybody.’74 We challenged the FRC on whether it would have the strength to influence Departments and other bodies when needed. The FRC’s director of local audit assured us that he would.75 The Department clarified that these ‘shadow’ responsibilities have not yet been handed over, but a further process is underway to assure readiness, following which the Department will formally hand over responsibilities through a remit letter.76 While the legislation to establish ARGA remains pending, the National Audit Office has offered to reissue the 2020 Code of Audit Practice to provide some certainty to the system over local auditors’ responsibilities through to 2027–28.77 68 Department for Levelling Up, Housing and Communities, Local authority financial reporting and external audit: government response to the independent review, December 2020 para 69 69 C&AG’s Report, paras 3.12 and 3.17 70 Qq 84–85 71 Qq 12–13 72 Q 16 73 Q 39 74 Qq 54–55 75 Q 57 76 Q 55 77 Q 87 16