NAO consults on final stage of local audit code update

The National Audit Office (NAO) is seeking public feedback on proposed updates to its Code of Audit Practice, calling for greater focus on value for money in public bodies

Key changes to the code, which sets out what auditors of local public bodies are required to do under the Local Audit and Accountability Act 2014, include a more detailed focus on value for money and clearer expectations on timely and effective auditor reporting.

The proposed changes will come into effect from April 2020.

Gareth Davies, the head of the NAO, said: ‘The new Code of Audit Practice is an important opportunity to refocus local audit: offering robust assurance, transparency and accountability for local taxpayers on how well their money is being spent. The code will bring a greater emphasis on value for money and aims to ensure auditors report in a more timely and impactful way.’

The draft code will affect audits of relevant bodies such as local councils, police, fire and NHS bodies. Local audit provides the public and stakeholders with assurance about how their money is spent and ensures that local public bodies can be held to account over how they spend taxpayers’ money.

The current principles-based approach will be maintained, but the code will include more detailed sector-specific guidance. A single code was the favoured approach from respondents to the Stage 1 consultation process, who generally said that a more prescriptive code could limit auditors’ ability to make judgments in the light of local circumstances and risked the introduction of a ‘tick box’ approach to audit work.

The 2014 Act requires the code be reviewed, and revisions considered, at least every five years. The consultation on the new code is being carried out in two stages: Stage 1, now complete, involved engagement with key stakeholders and public consultation on the issues that are considered to be relevant to the development of the code. Stage 2 involves public consultation on the draft text for the new code, which was developed after considering the responses to the consultation at Stage 1.

The consultation will remain open until 22 November 2019. The new code will come in to force no later than 1 April 2020 and will be in place for the next five years.

Details of the draft code and consultation process can be found on the NAO website

NAO Draft Code of Audit Practice

By Philip Smith

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