Our first e-bulletin of 2023 looks forward and reflects on the final months of 2022. It includes an update from our November Advisory Panel, our forthcoming Annual Quality Monitoring Report and client survey, and a roundup of news from elsewhere.
Last year’s procurement of local audit services was a tense and testing experience, further evidencing the significant challenges facing local audit – continued delayed audit opinions, the uncertainty around audit reform, and the need for proportionate audit requirements and a more competitive local audit market.
Steve Freer, PSAA’s Chair, in his article for Room 151 highlighted that there are lots of issues to sort out before something approaching a complete whole-system solution is in place. We are ready to do everything we can as part of a collective systemwide effort to deliver the critical changes required.
We hope that you continue to find our e-bulletins to be of interest. We welcome your thoughts on future topics that you would like us to cover (contact the team).
Tony Crawley, Chief Executive, PSAA
- Quick poll: to assess interest in attending a Local Audit Quality Forum in London
- Neil Harris: key speaker at PSAA’s Advisory Panel meeting
- 2021/22 audit opinion delivery
- Confirmed auditor appointments from 2023/24
- Annual Audit Quality Monitoring Report for 2020/21 audits
- Annual Client Survey for 2021/22 audits
- The fee scale for 2022/23 audits
- Local audit news from elsewhere
Quick poll: to assess interest in attending a Local Audit Quality Forum in London
In person conferences and events are making a return following the pandemic. We would really appreciate a minute of your time to complete a quick poll to gauge your interest in attending a Local Audit Quality Forum (LAQF) day conference in Smith Square, London during Spring 2023. LAQF events are free for opted-in bodies. The poll will close on Friday 3 March.
Thank you in advance for your responses.
Neil Harris: key speaker at PSAA’s Advisory Panel meeting
Our Advisory Panel of Treasurers’ Societies members met on 3 November 2022.
Neil Harris, the FRC’s first Director of Local Audit, attended this meeting as a key speaker. He provided an overview of the Local Audit roles and responsibilities the FRC will be taking on (which covers the NHS as well as local government), including shadow system leadership alongside DLUHC and others, and working with the NAO preparing for the transfer of the Code of Audit Practice.
Neil set out the next steps on agreeing a Memorandum of Understanding (MoU) with DLUHC on the transfer of shadow system leadership and what the likely expectations of the role will be.
Neil said that he expects the FRC to be the convenor of all local audit stakeholders to ensure there is coherent, consistent and coordinated response to issues, risk and challenges facing the local audit system. Additional roles will be oversight of market competition, workforce capacity, capability and leading the overall governance framework for local audit principally by taking on the chairmanship of the Local Audit Liaison Committee. Neil expects the MoU to be published following Ministerial clearance in the early part of 2023.
The meeting also covered an update on the progress of the procurement outcome for audits from 2023/24 to 2027/28, audit delivery information, our 2022/23 scale fee consultation, and a summary of local audit news.
2021/22 audit opinion delivery
Our press release on delayed audit opinions sets out the scale of the huge challenge that local audit is facing. At the publishing date of 30 November 2022, only 12% of local government bodies’ 2021/22 audit opinions had been given. Although a slight increase on the previous year’s 9%, this year’s publishing date was two months later than the 30 September target for delivery of 2020/21 opinions. By the end of December 2022 the figure was 15%.
The release was covered in several media, including:
- The MJ: Worsening audit backlog revealed
- Local Government Chronicle: Auditing backlog ‘seriously undermines’ sector with hundreds of opinions late
- Room 151: PSAA: audit delays reaching ‘increasingly alarming’ level
- Public Finance: Backlogs hinder recovery in local audit performance
- ICAEW: English local audit delays continue
Short term measures have been introduced to address issues on the accounting for and auditing of infrastructure assets, which has been a delay factor at some organisations (see local audit news below).
Confirmed auditor appointments from 2023/24
The PSAA Board approved the proposed appointments from 2023/24, following consultation with audited bodies at its meeting on 16 December 2022.
We wrote to each opted-in body on 19 December 2022 to confirm their auditor appointment. If you did not receive this email please contact us at firstname.lastname@example.org.
Annual Audit Quality Monitoring Report for 2020/21 audits
We produce an Annual Audit Quality Monitoring report covering the work of our supplier firms. The report focuses on the three headline indicators of compliance: professional regulation, client satisfaction, and contractual compliance.
We expect to publish the annual report for the 2020/21 audits on our website in February 2023. Once published we will share details on LinkedIn – please follow us.
Annual Client Survey for 2021/22 audits
Our annual survey is designed to obtain views from opted-in bodies on the delivery of their audit. This feedback is vital as it informs our discussions with the firms, DLUHC, FRC, NAO, CIPFA, ICAEW and other key stakeholders involved in local audit in England.
For independence and transparency we ask the LGA’s Research and Information Team to administer the survey for us, including analysing and reporting on the feedback.
We will issue the survey in March. Please keep an eye out for the survey email; it should take no longer than ten minutes to complete. We strongly encourage you to respond as your views are an important part of how we work with the stakeholders.
We publish the results of past client surveys on our website.
The fee scale for 2022/23 audits
We published the final 2022/23 audit fee scale on 30 November 2022, following consultation in August and September. We emailed all opted-in bodies and other stakeholders to confirm the final fee scale and share the outcome of the consultation.
Local audit news from elsewhere
The NAO published its report – Progress update: Timeliness of local auditor reporting on local government in England on 25 January.
DLUHC introduced a Statutory Instrument to help enable the infrastructure assets issue to move forward. CIPFA/LASAAC issued its Update to the Code and Future Specifications for Infrastructure Assets on 29 November. This was followed by a bulletin providing guidance on its application and the interaction with the Statutory Instrument.
The FRC’s Statement of Recommended Practice – Practice Note 10 Audit of financial statements and regularity of public sector bodies in the United Kingdom (Revised 2022) was published on the Public Audit Forum website in mid-December. Practice Note 10 is relevant to auditors’ Code of Audit Practice work.
On 8 November the FRC issued a consultation on an Audit Committee Standard. The consultation closed on 8 February 2023.
On 28 October the FRC issued its Local Audit Inspection Report. This includes its inspection findings on the quality of major local body audits in England, covering large NHS and local government bodies. It also sets out the results of ICAEW’s inspections of local audits that are not major local audits and summarises the firms’ internal quality review results.