THE FINANCIAL REPORTING COUNCIL (FRC) has published the feedback it received from audit firms, professional bodies and public sector organisations on the new powers and responsibilities delegated to it under the Local Audit and Accountability Act 2014.
Under the act, councils and local health bodies will procure and appoint their own auditors, while the UK reporting watchdog has been handed responsibility for regulating the audit of public bodies.
Its duties will include inspecting the quality of audits of the largest local public bodies and health bodies, excluding foundation trusts; overseeing the regulation of auditors of local public bodies by professional bodies by professional bodies the FRC recognises; and setting specific statutory requirements on auditors.
Alongside the feedback, which garnered views from seven audit firms, six professional bodies including the ICAEW and ACCA, and four public sector organisations, the FRC published its regulations and guidance, in line with its responsibilities under the act.
In its response, while broadly backing the wider sentiments of the legislation, the ICAEW said it was not convinced that one of the original 2010 policy objectives to open up the market to more accountancy firms will be achieved as “the competence requirements for local public audit are more restrictive than they are under the Companies Act”.
In July 2014, Paul George, executive director of conduct at the FRC, said: “This consultation seeks to strike an appropriate balance between recognising the particular challenges of local public audit and consistency with the arrangements for regulating company auditors,” said Paul George, executive director of conduct at the FRC.
Just over a year ago, in April 2014, Big Four duo KPMG and EY, alongside BDO were awarded the remaining local government audit contracts to be handed out to the private sector following the closure of the Audit Commission’s practice. The work was awarded following the retendering of 30% of the commission’s principal audits, having outsourced the work of its in-house audit practice in 2012, covering 70% of the commission’s audit regime.