Audit Quality Monitoring Report 2023

Executive Summary

We present our Annual Quality Monitoring Report for 2023. This covers the work of local auditors appointed by PSAA for the 2021/22 and 2022/23 financial years and provides relevant related information.

The growing backlog of delayed audits has continued to overshadow local government audit throughout 2023. The background to the delays and potential solutions has been widely covered by the initial report of Sir Tony Redmond, reports by the National Audit Office, and the work and reports of the Public Accounts Committee and the Levelling Up, Housing and Communities Committee, together with Departmental and Ministerial Statements.

At the publishing date of 30 September 2023, five (1%) of local government bodies’ 2022/23 audit opinions had been given. By 31 December 2023 this figure had risen to 45 (10%). In total the number of outstanding opinions at 31 December 2023 was 771.

The limited number of completed audits has reduced the information available to us and we have tailored this report accordingly. Notwithstanding this, the fact that there are still more than 750 delayed opinions is a serious concern for users of accounts and anyone with an interest in local government and local accountability.

Our report is grounded in the International Auditing and Assurance Standards Board (IAASB)’s Framework for Audit Quality. We have taken the attributes the IAASB expects to be present in a quality audit and distilled them into three tests, which we use to consider the quality of audits and auditors under our contracts:

  • adherence to professional standards and guidance;
  • compliance with contractual requirements; and
  • effective relationship management.

Adherence to professional standards and guidance

The results from a limited number of inspections of local audits are available. The Financial Reporting Council (FRC) report on the quality of Major Local Audits set out that the ten financial statement audits and the nine value for money arrangements reviews they inspected all met the required standard, being judged as either good or with only limited improvements required. Of these ten audits only four were local government. No information has been reported at a firm level, and no audit quality information had been published by the ICAEW.

The FRC report also provided details of good practice alongside the limited improvements identified, and highlighted the limited number of inspections that they were able to complete.

Compliance with contractual requirements

Our biggest concern remains the timeliness of audit completion. For 2021/22, 56 (12%) opinions were given by the later publishing date of 30 November 2022, and for 2022/23 only 5 (1%) were given by the publishing date of 30 September 2023.

We also remain concerned at the time being taken to resolve objections raised by local electors. As of 31 December 2023, there were 30 objections unresolved within a nine-month time frame, including some unresolved for significantly longer periods.

There are no other significant contractual compliance matters to report.

Effective relationship management

We surveyed all of our 2022/23 Finance Directors and Audit Committee Chairs to judge the effectiveness of relationships between bodies and their auditors. We received responses from 220 (47%) Finance Directors and 142 (30%) Audit Committee Chairs. It is clear from correspondence, and the information received from our client survey, that timeliness is considered by our clients as a key element of receiving a good quality audit service. As well as expressing their concerns about the very high levels of outstanding opinions, respondents also highlighted the additional workload that delayed audits placed on already stretched finance teams.


Our report is published at the same time that DLUHC, FRC, NAO and CIPFA have started consultations on a number of interlinked proposals to address the backlog and prevent its recurrence. Tackling the issues and dealing with the current situation must be a priority for the whole local audit system and its participants.

Along with the backlog, the local audit market needs to be improved. The results of our 2022 procurement provided clear evidence that it remains highly fragile, with three of the UK’s largest audit firms not submitting bids. There are a limited number of firms and individuals licensed to undertake local audit and not all of these are active in local government. We are encouraged to see new Key Audit Partners (KAPs) being added to the register but are conscious that the list is vulnerable to potential loss of experienced ones moving towards retirement.

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