FRC's annual report highlights challenges in local government audits

Stephanie Jones Date published: Dec 19, 23

The Financial Reporting Council (FRC) recently released its annual report on the quality of major local audits, shedding light on the concerning delays and issues faced by the local government sector in the United Kingdom. With over 900 incomplete local government audits in England by September 2023, the FRC expressed disappointment at the unacceptable delays in financial reporting and auditing.

FRC's assessment and limitations

The report revealed that the FRC's ability to inspect higher-risk audits had been severely restricted due to the overwhelming number of incomplete local government audits. Unlike its usual 20 audits, the FRC was only able to inspect 10 this year, including six in the National Health Service (NHS) and four in local government. The backlog forced the FRC to reduce inspections to allow audit firms to allocate resources to clearing the backlog.

To address this challenge, the FRC announced a temporary measure to perform no routine inspections of local government audits for financial years up to 2022-2023, with the hope of resuming inspections once the system has been reset. The FRC emphasized that timeliness is a crucial aspect of audit quality and expressed its commitment to supporting measures aimed at clearing the backlog and restoring timely completion of audits.

Internal audit and risk management software can be a solution

In the face of these challenges, organizations involved in local government audits can leverage internal audit and risk management software to enhance the quality and efficiency of their processes. Such software offers several advantages that can significantly contribute to overcoming the obstacles highlighted by the FRC:

• Streamlining processes and automation: Internal audit software streamlines processes, automates repetitive tasks, and optimizes resource management, allowing teams to accomplish more with existing resources.
• Real-time risk tracking and scenario modelling: The software enables teams to track and respond to risks in real-time, conduct scenario modelling, and provide audit assurance, ensuring that audits are impactful and responsive to emerging challenges.
• Structured approach and consistent methodology: Internal audit software provides a structured approach and consistent methodology for audit teams. This is particularly beneficial for teams working across multiple agencies or jurisdictions, leading to more reliable and comparable results.
• Enhanced resilience and data integration: Software enhances the resilience of audit teams by integrating data, delivering timely alerts, and providing live dashboards for a clearer view of risks and performance indicators.
• Adaptability to regulatory changes and seamless collaboration: Internal audit software empowers teams to adapt to regulatory changes, collaborate seamlessly with risk management, and evolve policies and reporting to stay aligned with business goals.

Find out more

Discover how internal audit and risk management software can revolutionize your processes, ensuring timely and high-quality local government audits in the face of challenging circumstances. You’ll also learn how to build a business case to introduce such software into your organization.

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