Streamline reporting requirements for small public bodies, says NAO 

Streamlining governance and audit requirements for small public bodies would allow the government to release resources and improve accountability, the National Audit Office (NAO) has said. 

Its new report found that some of the government’s requirements on how public bodies should operate effectively are “better suited to large organisations than to small ones”, which have fewer resources at their disposal. 

The NAO warned that many small government bodies find the preparation and audit of their annual reports and accounts “increasingly costly and time consuming”. 

Small central government bodies have to comply with the same financial reporting requirements as their larger counterparts, despite benefiting from exemptions and simplified requirements. 

In light of this the NAO has urged the government to explore streamlining the requirements for small bodies, helping them more effectively comply with updated requirements. 

Statutory requirements in areas such as counter fraud, digital, human resources and security are designed to ensure that public bodies carry out their functions with “efficiency, accountability and transparency”. While these are important to protect the public purse and promote trust, complying with them involves time, effort and cost. 

In recent years, the annual reports and accounts of organisations in all sectors have become longer and more detailed, and external audits have grown in scale and cost, partly due to changes to reporting and auditing standards and to increased regulatory expectations for audit quality.

According to the NAO, small bodies are finding it hard to work out which requirements are appropriate for their operations as they often have fewer people, less in-house expertise and more limited resources than their larger counterparts.

The NAO added that the government should work with departments to “develop a consistent approach” to deciding which bodies may be eligible for ‘light-touch’ reporting requirements where the risk to public money is low. 

Gareth Davies, head of the NAO, said: “The government is implementing ambitious plans to provide greater autonomy to individual public bodies and streamline regulations to increase efficiency and productivity. 

“In doing so, it has an opportunity to review the requirements placed upon smaller public bodies to ensure that they achieve an optimal balance between accountability, transparency, efficiency and continuous improvement.” 

Alison Ring, ICAEW’s director, Public Sector and Taxation, added: “High quality annual reports and accounts are fundamental to effective accountability, but a balance must be struck for smaller public sector entities when considering their financial reporting and audit requirements, just as it is in the private sector. Stakeholders need timely and sufficient information to hold organisations to account.”