NALC warns of unintended consequences for smaller authorities of the proposed new national audit body

The English Devolution White Paper set out the government's vision for radically simplifying the local audit system, including their intention to set up a new body for local audit. It indicated the government would engage with key stakeholders on a draft strategy, on which we'll give feedback. That strategy has now been published for consultation until 29 January 2025.

Whilst the proposals mainly cover audits for principal authorities, they may have implications for the hugely different limited assurance regime for smaller authorities, currently overseen by the Smaller Authorities' Audit Appointments (SAAA), which we helped set up in 2025 along with the Association of Drainage Authorities and the Society of Local Council Clerks.

We have been calling for an increase in the £25,000 and £6.5 million threshold, which the government is considering. We are less sure of the extension over time of any new national audit body to cover around 8,000 smaller authorities as it might not be able to focus on their unique needs. There may be a case for the body that oversees limited assurance, SAAA, to have a relationship with the new body. Still, we would support the SAAA's continuation of its ambitious plans to further support transparency and governance in the sector.

Some notable achievements of the SAAA since 2015 include:

• All smaller authorities have opted into central procurement with the SAAA. No one has opted out, and an auditor has continuously been appointed.
• Fees have been kept low, with only a 5% rise for fees between 2022 and 2027.
• For audit year 23/24, 96% of limited assurance reviews that could be completed were completed by 30 September 2024.
• SAAA's 2022/23 quality assurance review concluded that suppliers were rated high or medium for level of assurance, so auditors are providing good quality reviews in accordance with the requirements.
• SAAA delivers its activity with just 1.69 full-time staff, with small central costs.

SAAA has an ambitious, fully funded strategic plan to continue delivering sector improvements working with its member bodies and stakeholders, which must not be put at risk by these proposals. These improvements include developing the market to encourage smaller firms to tender, train, develop, and support councillors, clerks, and councils and adopting digital returns.

We welcome the opportunity to contribute to the government's plans and support the changes to the audit thresholds outlined, something we have been calling on the government to do for some time. However, the limited assurance regime for smaller authorities is very different from the audit for upper-tier councils. It has been a success, with 96% of limited assurance reviews completed by the end of September 2024. Any changes should reflect and build on that success, not threaten planned improvements.

Cllr Keith Stevens
NALC chair