The current local authority audit market is very fragile, and the current fee structure does not enable auditors to fulfil the role in “a satisfactory manner”, according to the findings of Sir Tony Redmond’s independent review.
What is needed is a new regulatory body “to act as the system leader for the local audit framework”. Sir Tony is calling for the creation of the Office of Local Audit and Regulation (OLAR). This body would liaise with the Financial reporting Council about setting audit standards. Some critics, however have suggested this is merely the Audit Commission Mark 2.
However, Sir Tony’s review revealed that 40% of audits failed to meet the required deadline for report in 2018/19 and this signals a serious weakness in the process that its not being addressed. Attracting new audit firms to the local authority market has also not been realised. He ventured: “Without prompt action to implement my recommendations there is a significant risk that the firms currently holding local audit contracts will withdraw from the market.”
- Read Sir Tony Redmond’s ‘Independent Review into the oversight of local audit and the transparency of local authority financial reporting’ at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/916217/Redmond_Review.pdf