Reporting the results of audit work
77. Auditors should report the results of their work using a range of outputs at the appropriate point in the audit process as set out in the Code and ISA(UK)260 ‘Communication with those charge with governance’.
78. The auditor should also have regard to the NAO’s Auditor Guidance Note 07 ‘Auditor Reporting’ and any other relevant guidance issued by the NAO.
79. The auditor should provide those charged with governance an overview of the planned scope and timing of the audit, including the significant risks identified by the auditor.
80. Auditors should provide those charged with governance:
- their view about significant qualitative aspects of the audited body’s accounting practices, including accounting policies, accounting estimates and financial statement disclosures;
- significant difficulties, if any, encountered during the audit;
- significant matters arising during the audit that were discussed with management;
- the written representations they are requesting;
- other matters that they consider relevant to the oversight of the financial reporting process; and
- circumstances that affect the form and content of the auditor’s report.
Audit planning report
81. The audit planning report sets out how auditors intend to carry out their duties in respect of the accounts in accordance with auditing standards. In addition to planned work on the audit of the financial statements, the audit planning report should encompass planned work to meet their duties in respect of the audited body’s arrangements to secure value for money through the economic, efficient and effective use of resources. The responsibility for establishing the overall audit strategy and the audit plan rests solely with the auditor. Auditors should discuss their risk assessment and planned approach as set out in the audit planning report with management and with those charged with governance.
82. The audit planning report should include a timetable for completing the audit. The expectation is that the auditor’s opinion on the financial statements will be issued by the publishing date set out in the Accounts and Audit Regulations 2015 (or equivalent) insofar as the auditor can do so in compliance the auditing standards and the guidance issued by the NAO. Where, in the auditor’s view, it would not be possible to issue an audit report in compliance with the auditing standards and the guidance issued by the NAO by the publishing date, the audited body must be consulted on an alternative timetable. Where an alternative target date is set for the issuing of the auditor’s opinion on the financial statements, the auditor should include a timetable for completing the audit in the audit planning report in accordance with that target date insofar as the auditor can do so under the auditing standards and the guidance issued by the NAO. The auditor must notify the audited body promptly of any delays to the agreed timetable, and reissue the timetable having regard to those delays after further consultation.
Conclusion of the audit
83. In order to promote timely and impactful reporting that supports local bodies to improve and provides appropriate assurance to wider stakeholders, auditors issue the following reports when they have concluded their audit:
- Audit opinion on the financial statements – The partner or director who is the relevant Key Audit Partner should sign the audit report with his or her name as well as the name of the firm of auditors. Electronic signatures are allowed. If the auditor is not satisfied in respect of any aspects of the body’s arrangements to secure value for money, they should refer to this by exception.
- Audit completion certificate – the auditor should certify the completion of the audit. The effect of the certificate is to close the audit. This marks the point when the auditor’s responsibilities in respect of the audit of the period covered by the certificate have been discharged. There may be occasions when auditors are able to issue the audit opinion on the financial statements but cannot certify completion of the audit e.g. because they are considering an objection made under Section 27 of the Local Audit and Accountability Act 2014.
- Auditor’s annual report – the auditor’s annual report should bring together all of the auditor’s work over the year. A core element of the auditor’s annual report will be the commentary in accordance with the specified reporting criteria set out in Chapter Three of the Code (and as supplemented in statutory guidance issued by the NAO). The commentary should be clear, readily understandable and highlight any issues that the auditor wishes to draw to the attention of the body or the wider public. This should include details of any recommendations arising from the audit and follow-up of recommendations issued previously, along with the auditor’s view as to whether they have been implemented satisfactorily.
84. The auditor’s annual report should be issued by the auditor in accordance with the timetable specified by the NAO. Where the auditor is unable to publish the auditor’s annual report by 30 September then they should issue an audit letter including a statement explaining the reason for the delay.
85. Reports from the auditor should be addressed to officers or members of the audited body, as appropriate. Auditors do not have responsibilities to officers or directors in their individual capacities or to third parties that choose to place reliance upon the reports from auditors.
86. Outputs arising from the exercise of specific powers and duties of an auditor, the need for which may arise at any point during the audit process, should be issued when appropriate. Where auditors have identified a matter such as significant weakness in the arrangements to secure value for money they do not need to wait until the conclusion of the audit to report the matter.
87. Where auditors are unable to decide an objection within six months, they should inform the objector and the authority. They should provide further updates on progress every three months until the objection is decided.