Local authority financial reporting and external audit in England: the Redmond Review and the future of local audit

Tools

Murphy, P. ORCID: 0000-0001-8459-4448, Eckersley, P. ORCID: 0000-0001-9048-8529, Lakoma, K. ORCID: 0000-0002-2583-3813, Dom, B.K. ORCID: 0000-0002-0889-2571 and Jones, M. ORCID: 0000-0002-0802-6470, 2021. Local authority financial reporting and external audit in England: the Redmond Review and the future of local audit. In: The 24th Annual IRSPM Conference, Virtual, 20-23 April 2021.

Preview

Text
1433860_Murphy.pdf - Published version
Download (541kB) | Preview

Abstract

Academics and auditors have expressed growing concerns about the financial resilience and vulnerability of English local authorities after a decade of funding cuts and growing demand for public services (Barbera et al 2017; CIPFA 2017; Sandford 2020). The COVID-19 pandemic has exacerbated these problems, as local authority income has fallen, demand for services has risen and investments in assets and companies have proven less rewarding in uncertain times. (Murphy et al. 2021).

There is a widespread consensus that arrangements for public audit and formal assurance to the public and key stakeholders are no longer fit for purpose thereby increasing uncertainty amongst all key stakeholders and increasing the risk of severe financial problems within local authorities (Murphy and Lakoma 2020). In response to these growing concerns, the UK Government established an independent review of local authority audit (Redmond 2020). This has been complemented by the release of an updated Code of Audit Practice from the National Audit Office (2020), which sought to guide auditors in how to address financial sustainability. The subsequent Redmond report articulated the widespread concerns about the adequacy and transparency of local authority audit and accounts arrangements. It found new local authority activities such as new commercial and hybrid organisations fell outside of the scope of the statutory audit and it acknowledged the widening ‘expectations gap’ in what the public expect from the audit and what it is actually obliged to deliver (ICAEW 2018). In terms of the overall audit regime Redmond (2020) also found an inadequate regulatory framework, delivered by an overly complex and disparate organisational landscape having no single regulatory authority responsible for systemic leadership, oversight and co-ordination.

In December the UK Government published its response to the report’s recommendations. This paper reviews the Redmond report, the government’s formal response to its recommendations and subsequent progress with implementation in the period prior to the conference. In so doing it will be cognisant of and review its potential compliance with the INTOSAI Financial Audit Guidelines based on the International Standards on Auditing (ISA) issued by the IAASB.

Item Type:

Conference contribution

Creators:

Murphy, P., Eckersley, P., Lakoma, K., Dom, B.K. and Jones, M.

Date:

April 2021

Identifiers: