August 13, 2022

ICAEW: “ARGA needs more powers over local government financial reporting”

The Institute of Chartered Accountants of England and Wales (ICAEW) has called on the government to grant the new local audit regulator more powers over local authority financial reporting.

He said it could help avoid the need for regular ’emergency consultations’ – the most recent being on proposed amendments to the local authority accounting code following problems with the reporting of infrastructure assets.

In May, the government confirmed its intention to establish the Audit, Reporting and Governance Authority (ARGA) as the ‘system leader’ of local audit. ARGA will establish a dedicated local audit unit under the leadership of Neil Harris who will join in September.

Oliver Simms, Head of Public Sector Audit and Assurance at ICAEW, said in response to the infrastructure asset consultation announced by CIPFA/LASAAC: “We believe ARGA is best placed to develop a long-term solution, but that its effectiveness could be hampered by insufficient financial reporting powers.

“We urge the government to grant ARGA powers over the preparation of local authority financial statements to ensure that it can take the lead in addressing issues like this and be an effective leader of the system. for the local audit.”

The auditors have reported that the infrastructure asset reporting issue is causing further delays in completing the 2022/21 accounts.

The ICAEW acknowledged that a temporary solution to the infrastructure problem was needed, but expressed concern over the use of “temporary reductions in accounting standards as a method of trying to address audit backlogs”.

Simms added: “The ICAEW does not support the temporary lowering of reporting standards, but accepts that it is preferable to the alternatives of significant delays or widespread qualifications in these circumstances.

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