A review into the quality of local authority audits and whether they are spotting warning signs early enough, has been launched by Communities Secretary Rt Hon James Brokenshire MP. It will examine the effectiveness of local authority financial reporting and audit regime.

In a speech at the Chartered Institute of Public Finance and Accountancy’s (CIPFA) annual conference Public Finance Live, the Communities Secretary Rt Hon James Brokenshire MP said: “A robust local audit system is absolutely pivotal to work on oversight, not just because it reinforces confidence in financial reporting but also service delivery and, ultimately, our faith in local democracy. There are potentially far-reaching consequences when audits aren’t carried out properly and they fail to detect significant problems.”

Local authorities in England are responsible for 22% of total UK public sector expenditure. The review will also look at how councils publish their annual accounts and if their financial reporting system is sufficiently transparent to be held to account.

The review will be led by the former President of the Chartered Institute of Public Finance Sir Tony Redmond, a former local authority treasurer and chief executive. Initial recommendations are due in December 2019, with a final report published in March 2020.

In his speech to CIPFA’s conference, Brokenshire said: “Concerns have recently been raised about audit quality and whether the audit framework is too fragmented,” and noted that he had asked Redmond to look at how the local government audit arrangements introduced since 2014 have been implemented as well as the effectiveness of the current audit arrangements: “To look at whether auditors are making full use of their reporting powers and doing so in a timely way.

“To look at whether there’s a gap between what taxpayers expect and what audit can deliver.

“And to make recommendations that will help us improve and restore confidence in the quality of the audit of local authorities.”