Understanding Local Authority Audit Challenges and Solutions
Explore the challenges faced by local authorities in auditing processes, including staff shortages and increased workload. Discover the proposed solutions and backstop dates set to address audit backlogs effectively.
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Presentation Transcript
Local authority update David Lyford-Tilley Head of Technical & Standards The Chartered Institute of Public Finance & Accountancy 1
David Lyford-Tilley Head of Standards & Technical, CIPFA Team covers: Standard-setting for the UK local government sector Support for subscribers through our Networks 2
Local audit backlog The Chartered Institute of Public Finance & Accountancy 3
What is the problem? Authority accounts with outstanding audit opinions 1000 900 800 700 600 500 400 300 200 100 0 3/1/2021 6/1/2021 3/1/2022 6/1/2022 9/1/2022 3/1/2023 6/1/2023 9/1/2023 3/1/2024 6/1/2024 9/1/2024 9/1/2021 12/1/2021 12/1/2022 12/1/2023 pre 2018/19 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Total Taken from: Quarterly quality monitoring reports - PSAA 4
How has this happened? Insufficient staff with the relevant qualifications, skills and experience in both finance and audit teams Increased work due to International Financial Reporting Standards (IFRSs) requirements Increased audit work to address Financial Reporting Council (FRC) concerns after high profile corporate failures Lack of attractiveness of local public bodies audit Competing workload pressures Taken from: Timeliness of local auditor reporting on local government in England, 2020 (nao.org.uk) 5
What is the solution? Backstop dates have been laid in parliament, alongside the necessary amendments to the NAO Code of Practice. Accounts 2015/16 to 2022/23 accounts 2023/24 accounts 2024/25 accounts* 2025/26 accounts* 2026/27 accounts* 2027/28 accounts* Backstop Date 13 December 2024 28 February 2025 27 February 2026 31 January 2027 30 November 2027 30 November 2028 *Publication date for draft (unaudited) accounts is extended to 30 June Taken from: The Accounts and Audit (Amendment) Regulations 2024 (legislation.gov.uk) 6
What might recovery look like? Audit Year Audit Opinion Prior Year Comparatives Opening Balances In Year Movements Closing Balances 2022/23 Disclaimer 2023/24 Disclaimer 2024/25 Disclaimer 2025/26 Qualified 2026/27 Unmodified Taken from: Local Audit Backlog Rebuilding Assurance (frc.org.uk) 7
How were supporting local audit reform CIPFA Bulletin for preparers Better Governance Forum guidance for audit committees Events alongside LGA, FRC, and other systems partners Local authority accounting conference on 16 October Revamped and expanded Better Reporting Group 8
Better Reporting Group The Chartered Institute of Public Finance & Accountancy 9
BRG Vision: Local authority accounts which provide users with the information they need in a timely manner. 10
BRG Mission: Recommend practical measures that improve the value of local authority accounts to users. 11
Membership and Stakeholders Core members: responsible for key decisions/recommendations and direction of the Group Co-opted members: participation in one or more specific projects following guidance from Core Members CIPFA Secretariat: co-ordinate work, information and communications relating to the Group External stakeholders (e.g. FRC, MHCLG): Secretariat will provide a regular update on BRG work Feedback groups: ad-hoc groups arranged to progress project work 12
Project priorities To fulfil the overall mission of BRG there are many different aspects of local authority accounts which need to be investigated and potential improvements recommended. Every project would have a key structure to ensure the following remain in focus: 1. Users of the accounts (to be defined by BRG) 2. BRG s mission & vision 3. BRG s key principles (to be defined by BRG) 4. Conceptual framework 5. Impact of any recommendations on key stakeholders 13
Potential projects being considered by BRG Aligning returns & accounts e.g. RO, WGA Pensions Asset Valuation Statutory Overrides Publication Date(s) inc. draft accounts Narrative & Sustainability Summary Accounts Performance Reporting Group Accounts Move to IPSAS Outturn Reports Financial Instruments Produce a guide to LA accounts for users Model / Example Accounts Infrastructure Assets And more! 14
Questions? The Chartered Institute of Public Finance & Accountancy 15
