Local audit in England covers a wide range of public bodies, including local authorities, police and crime commissioners, transport authorities, NHS trusts and clinical commissioning groups. These bodies are responsible for the delivery of essential services, such as frontline healthcare, schools, policing, social housing and waste collection. Local audit bodies are the backbone of our communities and work as a key partner to central government to achieve national priorities – ranging from levelling up and the provision of health and social care to the transition to net zero carbon.
For those interested in the public sector, the local audit profession offers unique opportunities to gain a detailed understanding of the wide scope of local government and NHS activities. Individuals working on audits have access to senior decision makers and gain valuable insight into the inner workings of local democracy, the delivery of key services and the management of local museums or police forces, for example.
Local audits are wider than just the audit of the financial statements; local auditors also report on the audited body’s arrangements to secure value for money. This provides auditors with a broader skill set and a greater understanding of their client’s systems and operations. Local audit also opens up future career opportunities within local government, the NHS, the public sector more generally and the many private sector businesses that work closely with the public sector.
It’s also worth noting that local audit bodies spend vast amounts of public money: local authorities spend more than £100bn each year, while NHS bodies also spend over £100bn. Unlike company shareholders, taxpayers cannot ‘withdraw’ their investment and transfer it elsewhere. The public and their elected representatives rely on local auditors to provide assurance that NHS and local authorities have spent their money effectively and have put publicly-owned assets to good use. Central government departments also rely on these assurance processes in their scrutiny roles to ensure that the public pound is managed effectively.
Like management teams in the corporate sector, bodies subject to local audit benefit from the external scrutiny that auditors bring. Practically speaking, scrutiny includes validating the starting point (outturn figures) they use as a basis for preparing and, in the case of local authorities, recommending financial plans to elected councillors. These financial plans determine key matters, such as council tax levels for the following year and the authority’s capital strategy.
Weaknesses in financial management or governance in a local government or NHS body can, in the worst-case scenarios, restrict the availability (or quality) of public services, or lead to tax increases. Auditors play a key part in preventing this from happening by identifying weaknesses in controls, making recommendations for improvement and giving management the opportunity to address the issues before they become more serious.
When things do go wrong, it is often local auditors that raise the alarm and enable the issues to get resolved. The Local Audit and Accountability Act 2014 gives local auditors unique powers to issue statutory recommendations and public interest reports. Local authority auditors also have unique powers to investigate objections raised by electors.
Furthermore, local audits are performed under the International Standards on Auditing UK, while financial statements are prepared under International Financial Reporting Standards (IFRS). This means that skilled corporate auditors have an effective starting point for local audits and in addition, local auditors gain valuable skills and experience to develop their careers in the future.
Sarah Sheen, Technical Manager at CIPFA
Oliver Simms, Manager, Public Sector Audit & Assurance at ICAEW
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