Measures to address local audit delays
Published: 6 February 2024
3 minute read
Timely, high-quality financial reporting and audit of local bodies is a vital part of our democratic system. It supports informed decision making by local bodies, accountability to local taxpayers, and transparency to central government over emerging financial issues.
The backlog in the publication of audited accounts by local bodies has grown to an unacceptable level and is undermining these key objectives. The Ministry of Housing, Communities and Local Government (MHCLG) has worked collaboratively with the FRC and other system partners to develop measures to address the delay in local audit.
On 30 July 2024 the Minister for Local Government issued a statement to the UK Parliament announcing that the Government intended to legislate to implement finalised proposals.
Legislative measures
Following the statement issued by the Minister for Local Government and English Devolution in summer 2024, the Government tabled legislation and a revised Code of Audit Practice from the National Audit Office (NAO) in Parliament on 9 September 2024:
Reset measures
There will be a statutory backstop date of 13 December 2024 for the publication of all historic local body audited accounts up to and including 2022/23. This will be supported by changes made to the Code of Audit Practice by the NAO to require auditors to issue an audit opinion to meet this deadline. Auditing standards allow auditors to modify or disclaim their audit opinion where they cannot obtain reasonable assurance before the above backstop date.
Recovery period
Once the backlog of outstanding historic audits has been cleared, there will be a series of further backstop dates for the publication of audited accounts by local bodies:
- 28 February 2025: publication of 2023/24 audited accounts
- 27 February 2026: publication of 2024/25 audited accounts
- 31 January 2027: publication of 2025/26 audited accounts
- 30 November 2027: publication of 2026/27 audited accounts
- 30 November 2028: publication of 2027/28 audited accounts
The date by which local bodies should publish unaudited accounts for these financial years will also change from 31 May to 30 June following the financial year to which they relate.
Support for auditors
The FRC has worked closely with the NAO on the development of Local Audit Reset and Recovery Implementation Guidance (LARRIG) notes to support auditors meet the requirements of the revised Code of Audit Practice. The FRC and NAO consulted with audit firms during this process.
The FRC has endorsed the LARRIGs for use in the audits of local government and police bodies in England.
Auditors can find the LARRIGs on the NAO website.
The FRC has also prepared a high-level briefing setting out how rebuilding of assurance may operate in practice for local bodies which receive modified or disclaimed opinions primarily as a result of the backstop dates.
This explainer is intended to help stakeholders understand how auditors may approach the recovery process. It is not guidance; auditors should refer to the LARRIGs published by the NAO, and CIPFA are responsible for any guidance for accounts preparers.
| Name | Local Audit Backlog Rebuilding Assurance |
|---|---|
| Publication date | 23 September 2024 |
| Format | PDF, 212.0 KB |
| Name | Local Audit Backlog Disclaimed Opinions |
| Publication date | 18 November 2024 |
| Format | PDF, 139.7 KB |
Consultations
The development of these proposals involved widespread engagement since summer 2023 with auditors and finance teams. Consultations took place in Q1 2024 to receive further feedback and inform the decision on how to proceed. All these consultations concluded in spring 2024.
DLUHC Consultation on the Accounts and Audit Regulations 2015
DLUHC sought views on changes to the Accounts and Audit Regulations 2015 to introduce a backstop date of 30 September 2024 for the publication of audited accounts up to and including 2022/23, and a series of future backstop dates covering the remainder of the PSAA appointment period.
NAO Consultation on changes to the Code of Audit Practice
The NAO sought views on changes to the Code of Audit Practice to support auditors to meet backstop dates and promote more timely reporting of their work on value for money arrangements.
CIPFA Consultation on temporary changes to the Code of Practice on Local Authority Accounting for 2023/24 and 2024/25
The CIPFA/LASAAC Local Authority Code Board issued a consultation on short term England-only measures in the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). The proposals are to aid the recovery of local authority reporting and audit as set out in a joint statement from DLUHC and other system partners issued in February 2024. On 3 July 2024, CIPFA LASAAC announced they would not take forward these proposals and instead focus efforts on longer-term enhancements to the Code of Practice on Local Authority Accounting.