By Rob Whiteman, CIPFA CEO
It’s been three months since the publication of the Redmond Review and its accompanying recommendations. Given everything going on in the world at present, it is no great surprise that we have yet to see a response from government outlining which of Sir Tony’s recommendations they will be taking forward to implementation. However, as MHCLG Permanent Secretary Jeremy Pocklington rightly pointed out at a recent Public Accounts Committee hearing, it is essential that local taxpayers can rely on their council undergoing high quality audit. The function is a fundamental pillar of transparency and accountability in local communities. With a COVID vaccine being rolled out and the possibility of a return to some kind of normality in the first half of next year, the use of COVID as a delaying tactic will soon wear thin.
Fragility in the local audit market has reached a tipping point. This was further evidenced by a press release from the PSAA last week outlining that over half of councils have been unable to meet the publication deadline for audited financial statements. CIPFA is clear that the recommendations outlined in September’s Redmond Review must be treated as the best foundation to create a strong and sustainable local audit function and support it into the future.
Particularly important will be the creation of a separate body that brings together responsibility for the appointment of auditors, maintaining the Code of Audit Practice and regulation. It has been a matter of public record for some time that CIPFA has had significant concerns over the way in which the Audit Commission and associated frameworks for local public audit were replaced.
CIPFA’s view is that the optimal way to rectify this would be through the creation of the Redmond Review’s recommended Office of Local Audit and Regulation (OLAR). Crucially, this must cover audit of local health bodies as well as local authorities in order to improve system leadership and mitigate the risk of further fragmentation. And while we’re keen to see that OLAR does not replicate the cost and bureaucracy of the Audit Commission, a mechanism through which OLAR could show the audit picture for the sector would be a useful aid to government and other stakeholders in understanding the resilience of local organisations at large.
A separate question is the one of capacity and skill in the market. Redmond’s report outlined what we at CIPFA have known for some time. Changes in the local government regulatory environment have meant that, over time, local audit has become considerably more complex. It would not be without cause to suggest that specialist auditors who know this area inside and out are few and far between.
The absence of a pool of professionals available to complete timely, high-quality local audit is a pressing concern. Requiring all public sector auditors to be adequately trained for the specialised task of auditing local authorities will help to improve the stewardship of public money in the face of increased risks. CIPFA is currently exploring options for training and skills development that will increase the resilience of the local audit market in a manner that is not prohibitive, and accords with the highest ethical and professional standards.
Key amongst Redmond’s recommendations was the matter of a standardised summary statement to improve accountability and accessibility of financial reporting. It will be important that any standardised statement be accessible, add value beyond current financial reporting requirements and is not onerous to produce. However, what we will absolutely need to see from the government’s upcoming response is clarity on the intended users. This will be critical to outlining the scope and resourcing requirements of any associated consultation.
Jeremy Pocklington’s PAC hearing appearance this week included a statement of the government’s intention to respond to the Redmond Review by the end of the year. We would urge no further delay. While recognising that full implementation could be some time away yet, starting the journey now and allocating appropriate financial resources will be critical for local audit to remain viable and fit for purpose.
This article first appeared in Public Finance.