Half of council CFOs want changes to external audit

The government needs to improve its oversight of the governance system to help local authorities cope with increasing financial and demand pressures, with a quarter of chief finance officers (CFO) from councils calling for external auditors to focus on value for money, according to a report from the National Audit Office (NAO)

In the NAO’s latest report, Local authority governance, 52% of external auditors did not think that audit committee members in local councils were appropriately trained to deliver their role, with only 33% of committees having at least one independent chair.

Auditors also indicated that authorities’ audit committees were not always effective in reviewing their findings and securing action from management.

Some auditors also raised concerns about the response of audit committees, and the authority more widely, to qualified conclusions in 2016-17. In one in six of these cases the auditor considered that the audit committee had not responded appropriately.

Some external auditors raised concerns about the effectiveness of the internal checks and balances at the local authorities they audit, such as risk management, internal audit and scrutiny and overview. For example, 27% of auditors surveyed by the NAO do not agree that their authority’s audit committees provided enough assurance about the authorities’ governance arrangements.

However, some authorities have begun to question the contribution of external audit to providing assurance on their governance arrangements with 51% of CFOs from single tier and county councils saying that there are aspects of external audit they would like to change. This includes a greater focus on the value for money element of the audit (26%).

Amyas Morse, the head of the NAO, said:  ‘Poor governance can make the difference between local authorities coping and not coping. Given the significant challenges these bodies face, the government needs to take the lead in addressing weaknesses in the local governance system to ensure that local arrangements function as intended and support local decision-making.’

Report by Amy Austin

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