FRC supports consultation on proposals to tackle local audit backlog

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Published: 8 February 2024

The Financial Reporting Council (FRC) is supporting the Department for Levelling Up, Housing and Communities (DLUHC) to engage stakeholders on a consultation launched today, aimed at tackling the backlog in local audit and reporting.

The four-week consultation will gather views on legislative changes to the Accounts and Audit Regulations 2015, specifically looking at ‘Backstop’ Proposals for financial years 2015/2016 to 2022/2023 and 2023/2024 - 2027/2028.

The National Audit Office have also launched a consultation seeking views on changes to the Code of Audit Practice, which sets out how local auditors in England meet their responsibilities under the Local Audit and Accountability Act 2014

A joint statement from system partners, which explains the package of measures and how the various elements are intended to interact, has also been published today. The package consists of three phases:

  • Phase 1: Reset involving clearing the backlog of historic audit opinions up to and including financial year 2022/23 by 30 September 2024.
  • Phase 2: Recovery from Phase 1 in a way that does not cause a recurrence of the backlog by using backstop dates to allow assurance to be rebuilt over multiple audit cycles.
  • Phase 3: Reform involving addressing systemic challenges in the local audit system and embedding timely financial reporting and audit.

These consultations represent a coordinated effort by the whole system to address the systemic issues facing local authority audits and reporting.

"Timely and transparent financial reporting and audits are vital for accountability and effective decision making in local government. The concerning backlog of unaudited accounts undermines this, so we must act decisively to bring the system back to a standard the public deserves.”

Sarah Rapson, FRC Executive Director of Supervision

DLUHC's consultation will run for 4 weeks and is an open consultation, the views of any individual or entity interested in the proposals are welcomed.