Councils should improve communication with taxpayers

The government has published the results of an independent review into the effectiveness of local authority financial reporting and audit regimes in England.

The review, launched in July 2019, examined whether the reporting regimes are robust enough to spot early warning signs, such as risks from commercial investments, to protect public funds and better serve taxpayers.

It has been led by Sir Tony Redmond, who recommends improvements in the way that councils communicate with taxpayers, to empower local people and improve transparency and accountability. This includes a simplified statement of costs, to allow taxpayers to measure performance against the council’s achievements.

He said: “I am grateful for the opportunity to undertake an independent review of local audit and the transparency of local authority financial reporting. I have been guided by the need to see more accountability and transparency in the local audit system and my proposed recommendations reflect these principles.”

Local Government Secretary Robert Jenrick added: “A robust local audit system is key to delivering transparency and value for money for taxpayers, and for sustaining public confidence in our systems of local democracy. I would like to thank Sir Tony for undertaking this comprehensive and important review over the last year.

“I will consider the findings and recommendations carefully and remain committed to strengthening the local audit system so that it works more effectively for taxpayers and councils. This government remains committed to a locally-led audit regime, alongside robust local scrutiny and local accountability by the press and public.”

The Chartered Institute of Public Finance and Accountancy (CIPFA) is set to launch a consultation on enhanced financial reporting requirements for local government, recommended by the Redmond Review.  The review, announced last year at CIPFA’s annual conference, examined the effectiveness of local authority financial reporting and the audit regime.

The CIPFA consultation will seek views on how best to implement Sir Tony Redmond’s proposal for an additional financial performance report. The wide-ranging report also recommended the creation of a new audit appointments body and stressed the importance of appropriate skills for both preparers of accounts and auditors.

Rob Whiteman, CIPFA CEO, said: “We welcome the recommendations set out today in Sir Tony’s report for a new public body to ensure high quality external audit for local authorities. Auditors play a vital role in shining a light on local decision making and there is concern that the present market arrangements are not delivering this as needed.

“The creation of a new audit body would join up an overly fragmented structure for local audit in England and ensure a sustainable future for local public audit that is presently at risk. The proposed new financial reporting requirements would support more effective communication of the often complex financial affairs of local authorities. We recognise the important role that CIPFA is expected to take in delivering this.

“While the report’s main focus is on system architecture and frameworks it also identifies the importance of enhancing high calibre skills for auditors and council finance departments. To support this, I can also announce that CIPFA is developing a new top-up qualification for professionals in public sector audit, as well as new continuous professional development training for new and existing council finance directors.”