Audit and inspection of local authorities in England: research published

The Housing, Communities and Local Committee publishes a report by Professor Laurence Ferry, Parliamentary Academic Fellow, which considers the local audit regime set up by the Local Audit and Accountability Act 2014 and recommends ways forward.

The future scope of audit

Professor Ferry’s main finding was that:

Public audit should, and should be seen to, serve the public interest. Public audit is not just another professional service. The current audit and inspection system is not broken in terms of what it does, but the question is whether it does the right thing. Currently, for local government, it is known what local authorities have spent (financial stewardship), but not what local government got for it (Value for Money (VfM) – economy, efficiency and effectiveness), nor whether it has contributed towards fairness in society (equity). This needs to be addressed.

The report also recommends that the Housing, Communities and Local Government Committee should carry out post-legislative scrutiny of the Local Audit and Accountability Act 2014 to ensure the new audit and inspection regime is fit-for-purpose, together with an evaluation of the original business case for Audit Commission abolition.

Professor Ferry’s report identified six further themes: overcoming fragmentation, upholding auditor independence, reconsidering the role of inspection, challenging the expectation of audit ‘stamp of approval’, failure to increase audit market competition, and public auditors’ role in an accountable and democratic system.

Post-legislative assessment

Clive Betts MP, Chair of the Committee, said:

We warmly welcome [Professor Ferry’s] report and congratulate him on his timely contribution to this important issue.

We are pleased to be able to share this work with the Secretary of State and the department, in particular to help inform the post-legislative scrutiny evaluation of the Act scheduled to take place in 2020. We hope this report will make a useful contribution to the consideration of the issues and we look forward to receiving the department’s post-legislative assessment in due course.

Scope of the research

The report is based on extensive documentation review of practitioner and academic literature and interviews with fifty stakeholders, including the Ministry of Housing, Communities and Local Government, MPs, and audit firms.

Professor Laurence Ferry, Head of Department and Professor in Accounting at Durham University, conducted the research as part of his Parliamentary Academic Fellowship for 2018–2019.  

Image: Samuel Zeller via Unsplash