Deloitte comment letter on the NAO Draft Code of Audit Practice

Published on: 04 Nov, 2014

We have published our response to the National Audit Office (NAO) consultation on their draft Code of Audit Practice for the audit of local public bodies.

The Code replaces the existing Monitor Audit Code for NHS Foundation Trust (applicable to foundation trusts) and the Audit Commission’s two Codes of Audit Practice (applicable to local authorities, police bodies, and NHS entities other than foundation trusts). Following this consultation, the Code will be finalised by the NAO and must then be approved by Parliament before it comes into force. When it does, it will apply to the audit of local public bodies for years commencing on or after 1 April 2015.

We broadly welcomed the new Code, observing that:

  • the principles based nature of the Code is welcome, given the need for Parliamentary approval. In some areas we suggest that non-statutory supporting guidance will be helpful to promote consistency of application;
  • the general principles, which refer to auditing standards and ethical standards, might usefully also refer to quality control standards, as well as requiring co-operation with other local auditors;
  • the change in legal requirements for the auditors’ work on value-for-money at foundation trusts necessitates a change in the Code requirements. More work may be needed to clarify these duties and avoid an unintended change in work effort (and hence audit cost);
  • it is not clear whether or not an ‘enhanced audit report’ (where the auditor comments on risks and their response, materiality and audit scope) is required for all larger local public bodies; and
  • the limited audit regime for smaller public bodies should use International Standard on Review Engagements 2400 as its starting point.

Further comments and full responses to all questions raised consultation are contained within the full comment letter which can be downloaded below.


Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.