Eleventh Report - Local auditor reporting on local government in England

The government agrees with the recommendation and commits to writing to the Committee by September 2021, explaining the contingencies in place to support the procurement of the next round of audit contracts.

The government accepted the recommendation, agreeing to amend regulations to give PSAA greater flexibility in fee setting and committed to working with PSAA on the next procurement strategy to ensure a new, appropriately funded fee regime.

The government accepted the recommendation, outlining ongoing work with stakeholders, including a public consultation on amending Key Audit Partner guidance and developing new training to increase the supply of qualified auditors.

The government accepted the recommendation, outlining MHCLG's interim leadership role through a Liaison Committee and detailing plans for ARGA's setup including a discrete Remit letter and a distinct local audit section in ARGA's annual report.

The government accepted the recommendation, detailing plans to develop a standardised statement, reduce accounting/audit requirements for less risky areas, and work with CIPFA to improve the presentation of local authority accounts.

The government has already extended the audit publication deadline to 30 September for two years and provided additional funding to local bodies for audit costs. It is also consulting on broader system strengthening and will review the audit deadline after the 2021-22 audits, providing an update by September 2021.

The government agrees with its interpretation of the underlying recommendation to increase qualified auditors, detailing ongoing work with stakeholders, a public consultation on new training routes, and a commitment to update by the end of 2021.

The government agrees with the recommendation to increase transparency in local authority financial reporting. It is developing a plan to deliver Sir Tony Redmond’s recommendation for standardised statements and will work with CIPFA to improve account presentation, with an update to the Committee by September 2021.

The government agrees with the committee's recommendation to provide detailed plans by September 2021 on how to focus local authority accounts and audits, and is developing a plan to deliver on transparency and reduce accounting requirements.

The government agreed with the committee's observation, outlining plans to reduce accounting and audit requirements for areas of less risk and to develop a standardised statement to improve the transparency and focus of local authority financial reporting.

The government agrees and is developing a plan for authorities to prepare a standardised financial statement. It is also working with CIPFA and stakeholders to simplify accounting requirements and will write to the Committee by September 2021 with a work plan.

The government agrees with its interpretation of the underlying recommendation to address system leadership, outlining plans for ARGA as the system leader, and committing to provide updates in September and later in 2021.

The government agrees with the need for effective interim system leadership and has already established the Local Audit Liaison Committee, chaired by MHCLG, to address systemic issues during the transition period before ARGA is fully established.

The government agrees with the Committee's position that PSAA should remain the appointing body, and is working with PSAA to design procurement strategy, consider market sustainability contingencies, and amend regulations for fee flexibility. The government will write to the Committee by September 2021 with details on contingencies.

The government has agreed that MHCLG's Secretary of State will send a specific Remit letter to ARGA and ARGA's annual report will include a distinct local audit section, alongside FRC interim arrangements, to ensure local government interests are reflected.

The government acknowledges the market fragility and details specific actions to address it, including working with PSAA and stakeholders on contingencies for market sustainability and regulatory amendments for fee flexibility. The government will provide a written update by September 2021.

The government implicitly accepts the conclusion about the uncompetitive market and is working with PSAA to design procurement strategies to support market sustainability and encourage new firms, including amending regulations to provide flexibility in fee setting. It commits to providing an update on contingencies by September 2021.

The government confirms its commitment to working with stakeholders on improving auditor training and reviewing Key Audit Partner entry requirements. It has published a consultation with proposals to amend guidance and develop a new training offer, seeking views on further actions.

The department is already working with stakeholders on improving auditor training and reviewing Key Audit Partner entry requirements, having committed to this in December 2020 and published proposals for consultation in July 2021.

The government has committed to amending regulations to provide the appointing person (PSAA) with greater flexibility in setting audit fees and to adjust the fee-setting deadline to better reflect additional cost pressures.

The government confirms its commitment to amending regulations to provide the appointing person (PSAA) with greater flexibility in setting and varying audit fees, and to adjust the fee-setting deadline to reflect additional cost pressures.