Written evidence submitted Local Government Association (LGA)






Meg Hillier MP  


Public Accounts Committee 

House of Commons 




6 March 2023



Dear Meg,


Timeliness of local auditor reporting


The Local Government Association (LGA), as the national voice of local government, welcomes the opportunity to submit evidence on introducing timeliness of local auditor reporting.

As set out in the conclusions of the report from the National Audit Office (NAO) on the timeliness of local auditor reporting, it is clear local audit is in crisis. The late delivery of audit opinions is concerning to councils, given the important role that external audit plays in assurance over taxpayers’ money both centrally and locally. This crisis is following increasing financial challenge and service pressures on local authorities since 2010, with the recent COVID-19 pandemic and increased audit demands exacerbating long-standing problems in the audit landscape. 

The LGA recognises there are a number of causes to this crisis including the limited number of firms within the market and a shortage of suitably qualified auditors working for those firms. A survey of councils’ experience of local audit undertaken by Public Sector Audit Appointments (PSAA) last year found that the main reason given for delayed audits was resourcing issues on the part of the auditor. While we do not disagree that a shortage of resources and capacity in councils, particularly of suitably qualified staff, will also have had an impact on the timeliness of audit, feedback from our members suggests that long-term causes of delays are more related to the pressures on auditors. It remains the case that a big majority of councils have approved their draft (unaudited) accounts on time each year. 

This situation has been made worse by additional work for auditors caused by tighter and stricter regulation of auditors following audit failures in the private sector. In particular, some of the current problems with local audit are perceived to stem from auditors having to spend time on valuations of assets where the value of the asset plays little or no role in the decision making or accountability of the local authority, for example, infrastructure assets such as roads. We do not believe this to be a good use of scarce audit resources. Furthermore, service demands on local bodies have increased considerably due to the COVID-19 pandemic.

Following the recommendations to improve audit delays made in the Redmond Review, the Government responded in December 2020. We support the Government’s response and the measures proposed. We also welcome the announcement of £45 million of funding to support councils to implement changes needed to respond to new audit requirements and Redmond’s recommendations. With the important role that external audit plays in assurance, local audit delays must be a high priority with further measures implemented urgently. Whilst it has been acknowledged in the NAO’s report that some actions have been taken to address delays, we support the NAO’s call for the Government to set out a detailed timetable outlining the steps to be taken and when and the time by which it expects to restore timely audited accounts. 

We also welcome the creation of the Audit Reporting and Governance Authority (ARGA) as system leader as well as the appointment of a new Director of Local Audit to lead it. However, it is unlikely that the ARGA will be fully functioning until 2024 at the earliest. In the meantime, the new Director of Local Audit, temporarily based in the Financial Reporting Council (FRC) on behalf of DLUHC, is acting as system leader. At the time of writing, the memorandum of understanding between DLUHC and FRC outlining how this will work has not been published. We would therefore welcome clarity on this and on plans to improve the local audit system.

We welcome the move of the deadline for published audited local authority accounts to 30 September for six years, until the end of the next appointing period. This was a necessary move to enable the new audit contracts to be procured. In March 2021, the deadline for preparing draft (unaudited) accounts had been extended 31 July for 2021 and 2022. Unless DLUHC takes action, the deadline for preparing draft (unaudited) accounts will revert to 31 May from 2023. In a paper entitled “Measures to improve local audit delays” published in December 2021, DLUHC said this reversion would be “subject to consultation”. This consultation was eventually published on 16 February 2023 and was open for just two weeks. 

We are calling on DLUHC to extend the 31 May deadline to 30 June for preparing draft (unaudited) accounts for the 2022/23 year and onwards. For the past two years, most councils have been able to finalise their draft accounts by the published deadlines of 31 July but will be under greater pressure to do this for their 2022/23 accounts if the deadline reverts to 31 May 2023. We therefore believe a deadline of 30 June is more realistic. Given the extension of the audit deadline to 30 September, it is unlikely that audit work will be planned to commence soon after 31 May and so reverting to this earlier deadline will cause an unnecessarily tight turnaround for councils. This could also impact on the quality of draft accounts delivered for audit which could, perversely, create more work and lead to further delays.  

As announced by PSAA, new contracts will apply from the 2023/24 audit following a procurement during 2022. There is a likelihood of a major re-set of audit fees for 2023/24, involving an increase in the order of 150 per cent on the total fees for 2022/23. With councils already facing a range of financial pressures, we are calling for this significant increase in fees to be reflected in future allocations of funding and resources to local authorities. 

I hope the information outlined above is useful. If we can assist the Committee’s work with anything else on these issues, please do not hesitate to get in touch with my colleague laura.johnson@local.gov.uk.


Yours sincerely, 

Cllr Peter Marland

Chair, LGA Resources Board

March 2023