The Committee gave consideration to a report of the Assistant Director of Corporate Governance and Strategic Financial Management which provided Members with an update on matters relating to both the future oversight of external audit within Local Government and matters of interest from Public Sector Audit Appointments (PSAA), who oversee the appointment and high-level quality of external audit provision.
Members were given an update on the latest developments within external audit regulation following the production of the Redmond Report, and the recommendations which were made. It was highlighted that the regulation of external audit overseeing Local Government required reform. One of the most significant recommendations concerned the impact of abolishing the Audit Commission and the impact it had on overseeing external audit in both Local Government and the NHS. The preferred approach of government in response to the Redmond Report was to propose the inclusion of a separate unit to oversee public audit within the Audit Regulation and Governance Authority (ARGA) to provide oversight of both private and public sector audit. This was not fully in line with the Redmond report which recommended the creation of an independent body to oversee Local Government and NHS audit. ARGA was to be the successor body to the Financial Reporting Council. As well as concerns with Local Authority audit, there were also matters on the audit of private companies which required future regulatory reform. Whilst matters on the final design of ARGA were under consultation it was generally accepted this would happen and was broadly supported. One specific challenge it would need to manage was balancing up any conflict on approach between private and public audit.
Members were updated on the proposed procurement exercise which, subject to Local Authorities exercising their right to opt in, was to be undertaken by the PSAA to appoint their external auditors from 1 April 2023. It was recommended by the Director of Finance and the Assistant Director of Finance for Corporate Governance and Strategic Financial Management that the Council should opt into the procurement exercise undertaken by the PSAA. It was consistent with the principle recommended in the Redmond Review that Local Authorities should not appoint their own auditor. In terms of price, there was a likely benefit from a bulk procurement, and it was uncertain if Oldham were to undertake its own procurement it would attract an appropriate external auditor. As Redmond highlighted in the review there were only limited participants in the market prepared to undertake Local Authority audit.
The Committee was provided an update on the overall reported performance of external audit opinions issued for Local Authority accounts before the Statutory Deadline of 30 September 2022. It was highlighted that Oldham Council was one of the 9% of Authorities who had received the certified audit opinion.
Members asked for and received clarification on the following:
· Filling the independent Chairperson on the Committee. Members were advised that the position had been advertised three times and had not gained any interest. It was known that this was where Oldham was lacking.
RESOLVED that the developments outlined in this report be noted.