The Financial Reporting Council (FRC) has published regulations and guidance regarding its responsibilities under the Local Audit and Accountability Act 2014 and a feedback statement to recognised supervisory bodies (RSBs) on the approval of key audit partners for local audit
Under the Act, the secretary of state has delegated most of his responsibilities for the oversight of the regulation of auditors of local bodies to the FRC.
These include:
- inspecting the quality of the audits of the largest local public bodies and health bodies other than foundation trusts;
- recognising professional bodies responsible for overseeing auditor activities; and
- setting specific statutory requirements for local auditors.
The 2014 Act introduces new arrangements for regulating auditors of local bodies in England (principally local authorities and health bodies other than NHS foundation trusts), that will apply following the abolition of the Audit Commission. In most respects these parallel the legal framework for company audits.
The FRC also recognises that changes to audit requirements for public entities from June 2016 under the EU Audit Regulation could impact on the rules for local bodies.
In the 10-page feedback statement, it says: ‘The FRC will need to consult during 2015 on changes needed to ensure that the existing regulations on transparency reporting reflect the amended requirements. We would expect to consult at the same time on the extent to which the regulations for local audit transparency reporting should reflect changes made in respect of private sector audits.’
The accounting regulator first consulted on these changes in July 2014.
The feedback statement on regulation of auditors of local bodies issued 18 May 2015 is available here