PSAA welcomes today’s announcement by the Government (refer to page 103) on further action it intends to take to address the local audit crisis as a part of the promised overhaul, by establishing a new body for local audit. We have previously stated our strong support for the Government’s commitment to ‘overhaul the local audit system, so taxpayers get better value for money’. MHCLG recognises the key assurance role that effective audit delivers, and its importance is heightened given the prospect of enhanced devolution and structural change.
We think that the current fragmentation of the local audit system causes immense practical difficulties in finding solutions to the significant problems with local government audit and ultimately it is local bodies that suffer from the dysfunctionality.
We recognise that whilst establishing a new body is a very significant step forward, it does not in isolation solve many of the underlying issues, and that in practice it will be some time before it is up and running. It is therefore vital that its establishment does not become a distraction from the work by the current system partners to reform both the accounting and auditing frameworks. We remain hugely concerned that the volume of work needed to deliver a Code of Audit Practice compliant audit remains at the level that contributed to the creation of the backlog, and without a reduction we are unclear how preparers and auditors will have the capacity to deliver with the added task of building back assurance for the disclaimed years.
We restate our full commitment to doing all we can to work with partners to help deliver an effective audit regime that is in the public interest.
Our Chair, Bill Butler, said;
‘The Government’s announcement provides much needed light at the end of the dark tunnel that local government audit is stalled in. It is evidence of the priority that the Government has given to sorting out local audit and provides hope of a recovery from the current broken position. It is not a panacea for the problems, and we await further news on the overhaul. We will work with our local audit system partners, audit firms and bodies to do everything possible to hand over a better set of circumstances to the new body but achieving that will be hugely challenging.’