FRC publishes latest results of major local audit inspections

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01 Nov, 2022

The Financial Reporting Council (FRC) has published its inspection findings into the quality of major local body audits in England for the 2021/22 inspection cycle. This included larger health and local government bodies.

The FRC reviewed 20 audits across six audit firms covering both the financial statement opinion and the Value for Money (VfM) arrangements conclusion work. The report focuses on the key areas requiring action across the firms, in relation to major local audits, to safeguard and enhance audit quality.

The FRC indicated that 70% of audits required no more than limited improvements (the same as last year) - an improvement from the 46% average over the preceding three years - and that 93% of the auditor’s work on VfM arrangements required no more than limited improvements.  However the number of audits assessed as requiring significant improvements has increased from none last year to 15% in 2021/22.  The findings which contributed to this increase were inadequate financial statements review procedures, ineffective evaluation of identified misstatements and insufficient justification for issuing a qualified audit opinion  

Timliness of audits was also identified as a key finding where 91% of 31 March audits of local government bodies were not completed by the target date of 30 September 2021.  Findings also showed that there was a remaining backlog of audits from the prior year where 19% of 31 March 2020 audits were still incomplete as at 30 September 2021.  The FRC indicates that "Audited bodies, local auditors and those with regulatory responsibilities must continue to work together to restore timely financial reporting and audit".

A press release and the full report is available on the FRC website

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