The Financial Reporting Council has welcomed the Government tabling legislation to address the significant delays in local authority audits.
The Statutory Instrument, laid alongside revised Code of Audit Practice from the National Audit Office, will introduce backstop dates for local bodies and their auditors to publish audited accounts, starting the process of repairing the foundations of local audit. The first of these will be on 13 December 2024.
As system leader for local audit, the FRC is taking steps to support auditors in implementing these measures.
The NAO has developed Local Audit Reset and Recovery Implementation Guidance (LARRIGs) in close collaboration with the FRC and audit firms. The LARRIGs, endorsed by the FRC, will be published shortly to help auditors meet the requirements of the revised Code of Audit Practice. The FRC and NAO will continue to work with audit firms throughout this process to rebuild assurance and recover the local audit system.
Sarah Rapson, FRC Executive Director of Supervision, said: “The local audit system plays a crucial role in ensuring transparency and accountability for public money spent on vital local services, which the current backlog has undermined. This legislation represents a necessary step towards rebuilding the system so it can provide the assurance the public deserves.
The FRC is committed to supporting auditors and local bodies through this transition, balancing the need for timely reporting with maintaining audit quality, restoring public confidence in local government finance.”
As previously confirmed, the FRC will pause routine inspections of major local audits for financial years up to and including 2022/23, unless there is a clear public interest case to do so. This will allow auditors to focus on clearing the backlog and returning to timely reporting.
Owen Mapley, CIPFA CEO, said; “This is a vital first step towards restoring timely and effective public sector audit, setting key backstop dates for audit. This will provide the framework for tackling the backlog of accounts and ending the unacceptable delay in reporting. It is now urgent that public sector CFOs and their audit partners work together to clear the backlog. Local authorities can start by ensuring that all available accounts are published as quickly as possible.
“The Chartered Institute of Public Finance is providing assistance to our members and looks forward to working with government and other system partners to create a better long-term solution for the future.”
