Issue - meetings
Update on Government overhaul of local audit in England
Meeting: 27/05/2025 - Audit and Governance Committee (Item 11)
11 Update on Government overhaul of local audit in England 
PDF 683 KB
Summary/Purpose
To provide a briefing on Local Audit Reform following the Government consultation response.
Recommendation
To note the briefing note on Local Audit Reform.
Additional documents:
Minutes:
The purpose of the briefing note was to provide an overview on the Government feedback on local audit reform.
The Independent Auditors, Bishop Fleming, reported that the government’s consultation on local audit reform had been prompted by widespread recognition that the system had been failing for several years. Many audits had been disclaimed, with firms facing significant backlogs due to complex council issues and limited audit capacity. While the proposed reforms were seen as necessary and broadly positive, it was acknowledged that implementation would be challenging, particularly in the context of wider local government reorganisation. The Committee welcomed the fact that action was being taken.
The Deputy Chief Executive Officer informed the Committee that around 1,000 public sector audits were currently without opinions, with a backstop date of 28 February 2025. Some councils had received significant audit bills despite not receiving formal opinions. In response, the government had announced reforms, including the creation of a new Local Audit Office to take on responsibilities for local audit, marking a shift from the previous model of oversight by a single regulator for both public and private sectors.
It was noted that audit fees had risen sharply in recent years to address under investment following the abolition of the Audit Commission, which had previously driven lower costs. Officers expressed support for higher audit fees if they resulted in timely, complete audits and welcomed the government’s efforts to stabilise the system, including consideration of in-house audit provision.
RESOLVED: That the Audit and Governance Committee NOTED the Government overhaul of local audit in England update.