New MoU outlines FRC's role in Local Audit System

News types: Generic Announcement, Publications, Statements

Published: 2 March 2023

The Financial Reporting Council (FRC) and the Department of Levelling Up, Housing and Communities (DLUHC) have today published a Memorandum of Understanding (MoU) outlining the FRC's role as shadow system leader for the local audit system .

The MoU marks a significant milestone in the delivery of reforms the Government committed to the local audit framework following the Redmond Review.

Neil Harris, Director of Local Audit at the FRC, will lead a new local audit department at the organisation with five key responsibilities:
  • leading a coherent and coordinated policy response to challenges arising across the local audit system; 
  • facilitating stronger governance across the local audit framework; 
  • leading work to improve competition, bolster capability and market supply; 
  • overseeing the entire quality framework for local audit; 
  • and reporting on the local audit system. 

DLUHC has acted as interim system leader since July 2021 through the establishment of the local audit Liaison Committee.  The FRC will take over the Liaison Committee chair when shadow arrangements start; the shadow period will continue until the new regulator ARGA is established through primary legislation when full system leader arrangements will be set in statute.

Sir Jon Thompson, CEO of the FRC, said:

"We welcome this new role for the FRC and are committed to working with DLUHC and the rest of the local audit system to address the challenges facing the sector.”


Lee Rowley, Minister for Local Government, said: 

“The Government remains strongly committed to building a stronger more resilient local audit system, properly equipped to deliver the transparency and accountability which local taxpayers deserve”.