February 2024 update

This edition of our quarterly e-bulletin includes news of the recently launched local audit Joint Statement alongside backlog consultations by DLUHC and the NAO, details of the independent review of our second appointing period and a summary of local audit news from elsewhere.

We hope that you continue to find our e-bulletin to be useful. We welcome your thoughts on future topics that you would like us to cover (contact the team).


Joint Statement and launch of two local audit backlog consultations

All local audit system partners including PSAA have a shared resolve to address the significant numbers of delayed audit opinions. Yesterday, alongside the publication of a new Joint Statement, DLUHC and the NAO launched consultations on proposals with the aim of restoring timely, high-quality financial reporting and audit. The consultations will close on 7 March 2024.

As stated in the Joint Statement, the issues facing local audit are widely recognised as multi-faceted and complex with no single cause or solution, and PSAA welcomes these proposals to reset and recover from the untenable position of very large numbers of delayed audits, and then to reform the local audit system. Our Chair, Steve Freer, said;

‘Delayed audit opinions pose a real threat to good stewardship and financial management. Ultimately, they weaken accountability and undermine public confidence and trust. We agree that the exceptional measures outlined are the best available options to tackle the problem. All three phases – reset, recovery and reform – will pose different challenges and will need our collective commitment and support to secure the consistently high levels of assurance which we all want to see.’

We intend to respond to both consultations and will publish our responses. In addition, as referenced in the Joint Statement, CIPFA LASAAC is planning to consult on temporary changes to the Code of Practice on Local Authority Accounting to reduce burdens on those who prepare and audit local body accounts.

Independent review of our preparations for the second appointing period

In May 2023 we appointed independent consultants Touchstone Renard (TR) to review our work to develop the national auditor appointment scheme for the audits from 2023/24, with a specific focus to:

We have published TR’s final report and a standalone Executive Summary. The report makes recommendations for PSAA including some relating to the next procurement, and contains our initial responses. We will update those responses periodically going forwards.

The report also highlights concerns for the wider local audit system to consider, reflecting the wide range of issues that respondents raised with TR that go beyond PSAA’s role. We will ensure that those concerns continue to be heard by the local audit system partners as work progresses to address the challenges.

If you have any comments or questions on the TR report, please send them to generalenquiries@psaa.co.uk.

Contract Monitoring Data Pack: Quarter 3 for 2023/24

We have published our Contract Monitoring Data Pack: Quarter 3 for 2023/24. We produce quarterly reports on our contracted firms, building up information as the year progresses. The data pack covers audit opinions, approved fee variations and electors’ objections as of 31 December 2023.

Contract monitoring data packs for previous quarters are available to view on our website.

The fee scale for 2023/24 audits

We published the final 2023/24 audit fee scale on 28 November 2023, following consultation in September and October. We emailed all opted-in bodies and other stakeholders to confirm the final fee scale and to share the outcome of the consultation.

Local audit news from elsewhere

The cross-party Levelling Up, Housing and Communities Committee published a report on 24 November 2023 – Financial Reporting and Audit in Local Authorities. The Committee’s report makes a series of recommendations to help tackle the current audit crisis. A range of measures are proposed to help improve local accounts to ensure they contain the information needed by the public to hold local authorities to account. The Government published a response to this report on 29 January 2024.

On 7 December 2023 Grant Thornton issued a report – Preventing failure in local government. The report explores the reasons local government fails and what lessons can be learned to reduce the risk of failures in the future.

The FRC issued its Local Audit Inspection Report on 8 December 2023. This includes its inspection findings on the quality of major local body audits in England, covering large NHS and local government bodies.

The LGA launched its second consultation on an improvement and assurance framework that seeks to improve clarity around how councils deliver and evaluate services. Their aim is to create a single document to increase clarity and improved understanding of how assurance and oversight works. The consultation will be open until the end of February 2024.

The FRC published an update to its Ethical Standard for auditors on the 15 January 2024. This will be effective from 15 December 2024.

On 22 January 2024 the FRC announced important revisions to the UK Corporate Governance Code to help enhance transparency and accountability. Following the announcement the FRC issued supporting guidance notes.