NAO consults on code of practice for local auditors

The National Audit Office (NAO) is consulting on an update to the code of audit practice for auditors of local public bodies, to be introduced next year

The current code came into force on 1 April 2015, and its maximum five-year lifespan means it now needs to be reviewed and a new code laid in Parliament in time for it to come in to force no later than 1 April 2020.

The code sets out what local auditors of relevant are required to do to fulfil their statutory responsibilities under the Local Audit and Accountability Act 2014.

The NAO is consulting on potential changes in two stages. First, the audit watchdog is engaging with key stakeholders and holding a public consultation on the issues that are considered to be relevant to the development of the code.

These include consideration of how local auditors’ work on the annual accounts should be carried out and reported to both comply with relevant standards and meet reasonable expectations for providing assurance over the financial statements, and how local auditors’ work on local public bodies’ arrangements to ensure economic, efficient and effective use of their resources should be focused to provide meaningful, independent assurance to stakeholders, including local taxpayers.

The NAO is also seeking views on how the code can best promote local auditor reporting that has the appropriate impact, at the right time and in the right circumstances, to strengthen accountability and support improvement where needed; and whether local auditors will need to develop and make use of different skills or work in new ways to meet changing expectations.

Secondly, in the second half of 2019, there will be a public consultation on the draft text for the new code, which will be developed after considering the responses to the earlier consultation.

The NAO plans to have its second consultation from September to November, and to finalise the code by the end of the year. The new code will apply from audits of local bodies’ 2020-21 financial statements onwards.

The first consultation, which summarises the issues the NAO thinks are relevant to the development of the next code, closes on 31 May.

Local audit in England Code of Audit Practice Issues paper is here.

Report by Pat Sweet

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