New powers over local government audit

Further measures have been announced to help ensure taxpayers get value for money by improving the effectiveness and transparency of local government audit.

The Audit, Reporting and Governance Authority (ARGA) – the new regulator being established to replace the Financial Reporting Council (FRC) – will be strengthened with new powers over local government audit, protecting public funds and ensuring councils are best serving taxpayers.

The new regulator, which will contain a standalone local audit unit, will bring all regulatory functions into one place, to better coordinate a new, simplified local audit framework.

ARGA will continue to act as regulator and carry out audit quality reviews as the FRC does now, but will also now provide annual reports on the state of local audit and take over responsibility for the updated Code of Local Audit Practice – the guidelines councils are required to follow.

The government has already announced £15 million to support councils with additional costs in audit fees, and recently consulted on the distribution of this funding. Government is also consulting on improving flexibility on audit fee setting and has extended the deadline for when councils must publish their audited accounts.

Rob Whiteman, CIPFA CEO, said: "CIPFA welcomes the announcement that the Audit, Reporting and Governance Authority will be the new systems leader for local audit. We’re pleased to see ARGA bring together regulatory functions, the Code of Audit Practice, reporting on local audit functions, and performance monitoring and review.

"Our concerns around audit supply and market instability remain. It is vital that any changes to the local audit system focus on these issues and emphasise the need for high quality audits in the short and longer term.

"Local authority accounts are vital to transparency and accountability. As with the rest of the public sector and the private sector ensuring that useful information in accounts is accessible to users is becoming increasingly difficult, the statement of accounts is often described as long and complex. CIPFA supports the Redmond Review recommendation for a summary statement that is able to communicate key messages to its council tax payers, service users and other key stakeholders."