The finance watchdog has said the number of local government audits requiring significant improvement is ‘unacceptable’.
The Financial Reporting Council (FRC) also raised concerns over timeliness in its inspection findings into major local body audits in England.
Four inspections carried out by BDO, Deloitte and Grant Thornton, were assessed as ‘requiring significant improvements’.
They included material errors, insufficient justification for modification of an audit opinion and in one case changes were made to a file provided to inspectors after the FRC notified the firm of its inspection.
Overall, 70% of financial statements and 93% Value for Money arrangements required no more than limited improvements, the same as in the previous year and This is a significant improvement on the 46% average over the preceding three years.
The FRC’s executive director of supervision, Sarah Rapson said: ‘While it is encouraging that some improvements observed last year have been maintained, the number of audits requiring significant improvement is unacceptable and urgent action is required by the firms to address any shortfalls in audit quality.’
The FRC also urged councils and auditors to ‘work together to restore timely financial reporting and audit’ after 91% of local government audits in 2021 were not completed by the target date of 30 September last year.
Ms Rapson added: ‘The persistent timeliness issues with audited accounts remains a significant concern for the FRC as system leader and concerted action is needed from all parts of the system for local government financial reporting and audit to urgently improve matters.’
Responding to the findings, head of audit at BDO Scott Knight said: ‘We’re disappointed with the findings relating to one major local audit. On determining the underlying issues, immediate action was taken and we’re continuing to action improvements.’
Fiona Baldwin, head of audit at Grant Thornton said: ‘Whilst not all of our files reviewed achieved the highest standards, we will continue to strengthen our procedures and training to limit the risk of this reoccurring.’
This article was originally published by The MJ (£).
