FRC welcomes legislation to restore timely financial reporting and audit

The Financial Reporting Council has welcomed the government tabling legislation in Parliament on 9 September 2024 to address the significant delays in local authority audits. 

This follows the Written Ministerial Statement issued on 30 July 2024. This Statutory Instrument, laid alongside revised Code of Audit Practice from the National Audit Office (NAO), will introduce backstop dates for local bodies and their auditors to publish audited accounts, starting the process of repairing the foundations of local audit. 

The first of these will be on 13 December 2024. As system leader for local audit, the FRC is taking steps to support auditors in implementing these measures.

The NAO has developed Local Audit Reset and Recovery Implementation Guidance (LARRIGs) in close collaboration with the FRC and audit firms. 

The LARRIGs, endorsed by the FRC, will be published shortly to help auditors meet the requirements of the revised Code of Audit Practice. The FRC and NAO will continue to work with audit firms throughout this process to rebuild assurance and recover the local audit system.

As previously confirmed, the FRC will pause routine inspections of major local audits for financial years up to and including 2022/23, unless there is a clear public interest case to do so. This will allow auditors to focus on clearing the backlog and returning to timely reporting.

Sarah Rapson, FRC executive director of Supervision, said: “The local audit system plays a crucial role in ensuring transparency and accountability for public money spent on vital local services, which the current backlog has undermined. This legislation represents a necessary step towards rebuilding the system so it can provide the assurance the public deserves. 

“The FRC is committed to supporting auditors and local bodies through this transition, balancing the need for timely reporting with maintaining audit quality, restoring public confidence in local government finance.”