The Institute of Chartered Accountants in England and Wales (ICAEW) has called for the government to grant the new local audit regulator more powers over local authority financial reporting.
It said that this could help to avoid the need for regular “emergency consultations” – the most recent being on proposed amendments to the local authority accounting code following issues with the reporting of infrastructure assets.
The government confirmed plans to establish the Audit, Reporting and Governance Authority (ARGA) as the “system leader” in local audit in May. ARGA will establish a dedicated local audit unit under the leadership of Neil Harris who will join in September.
Oliver Simms, manager for public sector audit and assurance at the ICAEW, said in response to the consultation on infrastructure assets announced by CIPFA/LASAAC: “We believe that ARGA is best placed to develop a long-term solution, but that its effectiveness could be hampered by insufficient powers over financial reporting.
“We urge the government to grant ARGA powers over local authority financial statement preparation to ensure it can take the lead in resolving issues like this and be an effective system leader for local audit.”
Auditors have reported that the issue with the reporting of infrastructure assets is causing further delays to the completion of the 2022/21 accounts.
The ICAEW accepted that a temporary solution to the infrastructure issue was required, but raised concerns about using “temporary reductions in accounting standards as a method of seeking to address audit delays”.
Simms added: “ICAEW does not support the temporary lowering of reporting standards but accepts that it is preferable to the alternatives of extensive delays or widespread qualifications in these circumstances.”
—————
FREE weekly newsletters
Subscribe to Room151 Newsletters
Room151 LinkedIn Community
Join here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
