The Chartered Institute of Public Finance and Accountancy (CIPFA) has expressed support for the UK government’s consultation outcome on reforming the local audit system for local authorities.  

The focus is on the establishment of the Local Audit Office (LAO), which aims to streamline and simplify the current fragmented system, ensuring efficiency and transparency. 

In December 2024, the government published its strategy to overhaul the “broken local system”. 

This strategy outlines a purpose for local audit and its users, proposes simplified financial reporting, and aims to improve the market’s capacity.  

It also seeks to build relationships between local bodies and auditors, with the LAO playing a central role as it will focus on local audit matters.  

CIPFA director of public financial management Iain Murray said: “CIFPA welcomes the publication of this response. Local audit should play a vital part in providing assurance over local government spending, funding, and governance. increasing delays and backlogs in England have steadily undermined that purpose.  

“We support the establishment of a new Local Audit Office to oversee the system and lead a return to timely, meaningful oversight and assurance. We look forward to working with government and with the LAO as a key system partner, as we move from managing the immediate impact of backstop dates towards rebuilding assurance.”  

Murray added that CIPFA welcomed the decision to retain responsibility for setting the Code of Practice on Local Authority Accounting, describing it as the “right decision”.  

He argued that a UK-wide code should not be overseen by a body focused solely on England.  

However, Murray also acknowledged that substantial reform is needed – both to the Code itself and to the process through which it is developed – to support the recovery of the local audit system and enable clearer, more proportionate reporting by local authorities. 

CIPFA added that it looks forward to working with the Ministry of Housing Communities and Local Government (MHCLG), the devolved administrations, and the soon-to-be-established LAO to advance reforms to the Code of Practice on Local Authority Accounting.  

Murray confirmed that work is already underway through its Better Reporting Group (BRG), now chaired by Rachael Sanders, Section 151 Officer at Herefordshire Council.  

He also expressed support for future discussions with MHCLG on moving the Code to a free-to-access funding model, arguing that such a shift would boost engagement with local authority reporting and enhance transparency across the sector.