33
Accepted in Part
EY and Grant Thornton highlighted that the amount of work which firms were required to...
Conclusion
EY and Grant Thornton highlighted that the amount of work which firms were required to carry out in auditing local authorities looked nothing like that required in 2017, for example, in the additional work involved in valuing assets supporting pension funds and of investment properties.94 Grant Thornton referred to additional work required to reflect changes in auditing standards, in systems regulation, and in following the revised audit code of practice, and considered that these changes were introduced without recognition of the impacts on the costs to auditors. EY also noted that the contracts signed in early 2017 were different to the audits which auditors had to carry out when they started to deliver work against these contracts in 2019.95 The London Borough of Hackney said that the decline in audit fees had put pressure on audit firms, such as in trying to field a suitable number of experienced auditors, and that this mirrored a deterioration in audit performance over recent years.96 86 Q 42 evidence session of 20 May 2021 87 Qq 43–44 evidence session of 20 May 2021 88 Q 55 evidence session of 20 May 2021 89 Q 28 evidence session of 17 May 2021 90 Committee of Public Accounts, Local Government Governance and Accountability, Ninety-Seventh Report of Session 2017–19, HC 2077, May 2019, paragraph 20 91 Q 8 evidence session of 20 May 2021 92 Q 52 evidence session of 17 May 2021 93 Q 19 evidence session of 17 May 2021 94 Qq 19, 38 evidence session of 17 May 2021 95 Q 19 evidence session of 17 May 2021 96 London Borough of Hackney submission, para 7 Local auditor reporting on local government in England 19
Government Response Summary
The government states it will work with stakeholders to identify opportunities to reduce accounting and audit requirements in less risky areas, which could partially address concerns about increased auditor workload. However, the response largely focuses on transparency and standardized statements, which is a misalignment with this specific conclusion.
Government Response
Accepted in Part
Government Response
Accepted in Part
HM Government
Accepted in Part
The government agrees with the Committee’s recommendation. Target implementation date: September 2021 The government agrees and is clear that local accountability must be at the heart of local government financial reporting. To deliver on this work will require a collaborative effort across the local audit system. The department is currently developing a plan to deliver Sir Tony Redmond’s recommendation for each authority to prepare a standardised statement to be presented alongside the statutory accounts with the aim of providing greater transparency of financial reporting. In its Spring Update 2021, the department also set out its intention to work with stakeholders to identify opportunities to reduce some of the accounting and audit requirements where these relate to areas of less risk to local bodies. This includes working with CIPFA to progress their project to improve the presentation of local authority accounts with the short term aims to review the statutory disclosures and materiality and the longer term review of the more complex disclosures that increase the time to prepare for- and audit in- the statement of accounts. The Local Audit Liaison Committee that is now in place to cover the transition period until the new local audit system leader is established at ARGA and will provide a strategic steer to drive progress of the proposed changes aimed at improving the understanding and accountability of local authority reporting. MHCLG is happy to write to the Committee in September 2021 with a plan for how work will be progressed.
Source
Committee
Public Accounts Committee
Report
Eleventh Report - Local auditor reporting on local government in England
14 Jul 2021
HC 171
Addressee Bodies
HM Treasury
Timeline
Recommendation age
5.0 yrs
Report published
14 Jul 2021