FRC unveils new MoU for local audit system

The Financial Reporting Council (FRC) and the Department of Levelling Up, Housing and Communities (DLUHC) has published a Memorandum of Understanding (MoU) outlining the FRC’s role as shadow system leader for the local audit system.

The MoU represents an important step towards implementing the changes the government promised to make to the local audit framework in response to the Redmond Review.

Neil Harris, director of Local Audit at the FRC, is expected to lead a new local audit department at the organisation.

His responsibilities will include stronger governance across the local audit framework, overseeing the entire quality framework, reporting on the local audit system and a few others.

Since July 2021, DLUHC has acted as interim system leader for the establishment of the local audit Liaison Committee.

However, The FRC will take over the Liaison Committee chair when shadow arrangements start.

FRC said that the shadow period will continue until the new regulator Audit Reporting and Governance Authority (ARGA) is established through primary legislation when full system leader arrangements will be set in statute.

Sir Jon Thompson, CEO of the FRC, said: “We welcome this new role for the FRC and are committed to working with DLUHC and the rest of the local audit system to address the challenges facing the sector.”

Lee Rowley, minister for Local Government, added: “The Government remains strongly committed to building a stronger, more resilient local audit system, properly equipped to deliver the transparency and accountability which local taxpayers deserve.”