Local Audit (overview)

Published: 6 February 2024

1 minute read

A strong local audit system is key to maintaining public confidence in local democracy by ensuring transparency and accountability to taxpayers. Under the previous government the Ministry of Housing, Communities and Local Government (MHCLG) announced its intention to establish the Audit, Reporting and Governance Authority (ARGA) as system leader for local audit with the specific objective to “ensure the local audit system operates effectively.

Ahead of legislation to create ARGA, the FRC is operating as incoming shadow system leader. This aligns with the FRC’s purpose to serve the public interest by promoting high standards of financial reporting, governance and audit.

The FRC chairs the Local Audit Liaison Committee which brings together senior stakeholders from across the local audit system as a forum to identify arising issues and risks across the system and agree actions to resolve them.

Our areas of responsibility

The FRC and MHCLG jointly published a Memorandum of Understanding outlining the five responsibilities for the shadow system leader. They are:

  1. Lead a coherent and coordinated response to challenges arising across the system.
  2. Facilitate stronger governance across the local audit framework.
  3. Lead work to improve competition, bolster capability and market supply.
  4. Oversee the entire quality framework for local audit.
  5. Report on the local audit system.

The local audit framework

  • Local Government
  • NHS bodies
  • Local police bodies
  • Fire and rescue authorities
  • National park authorities
  • Internal drainage boards