Local audit reform
Source: gov.uk (2025-12-02)

The local audit system in England requires local public bodies to publish their accounts and ensure that these are independently audited every year.

These bodies comprise all local authorities, other local bodies such as police and fire authorities, smaller authorities (such as parish councils) and NHS bodies.

Local audit is key to ensuring transparency around public bodies’ finances and their accountability to the public that they serve. The Local Audit and Accountability Act 2014 set the parameters for the current local audit system in England. The Act established a decentralised framework, with different organisations responsible for different aspects of the system.

This website provides information on the action that the government is taking to address the significant challenges that the local audit system in England is currently facing.

The local audit backlog

The system has faced a significant backlog of outstanding unaudited accounts at local authorities (and some other local bodies including police, fire and national parks authorities), covering multiple financial years. Just one per cent of these bodies published audited accounts for 2022/23 by the original deadline. The audit backlog was also the key factor in the Comptroller and Auditor General’s decision to issue disclaimed opinions on the Whole of Government Accounts for financial 2022/23 and 2023/24.

In 2024, the government introduced a local audit backstop programme (https://questions-statements.parliament.uk/written-statements/detail/2024-07-30/hcws46), structured around six publication dates for audited accounts, to clear the backlog and enable a greater focus on recent accounts, setting in motion the reestablishment of discipline required for the timely publication of both unaudited and audited accounts.

While the backstops have also resulted in many disclaimed audit opinions (https://www.gov.uk/government/publications/addressing-the-local-audit-backlog-modified-or-disclaimed-audit-opinions/addressing-the-local-audit-backlog-modified-or-disclaimed-audit-opinions), auditors’ other statutory duties – including to report on value for money arrangements, to make statutory recommendations and issue Public Interest Reports – remain a high priority.

The backstop dates areas follows:
- financial years up to and including 2022/2023: 13 December 2024
- financial year 2023/24: 31 May 2025
- financial year 2024/25: 27 February 2026
- financial year 2025/26: 31 January 2027
- financial year 2026/27: 30 November 2027
- financial year 2027/28: 30 November 2028
In the interests of transparency, the government committed to publishing a non-compliance list of local bodies failing to publish audited accounts by the backstop dates (https://www.gov.uk/government/publications/addressing-the-local-audit-backlog-in-england-non-compliance-lists/addressing-the-local-audit-backlog-in-england-non-compliance-lists).

Rebuilding assurance

Given the large number of disclaimed opinions, the backstops were announced alongside a five-year programme for building back assurance, with an aspiration that local audit recovers as soon as possible within that period. The government continues to work with local bodies and audit firms to achieve this aim, and is considering what further measures may be necessary to support the process.

The government has written to all audit firms and to all local bodies in the process of rebuilding assurance to underline the need for everyone to work together to accelerate progress and prioritise resources accordingly.

Overhauling the local audit system

The backlog underlined the systemic challenges facing local audit. In December 2024, the government launched a strategy and consultation to overhaul local audit (https://www.gov.uk/government/consultations/local-audit-reform-a-strategy-for-overhauling-the-local-audit-system-in-england/local-audit-reform-a-strategy-for-overhauling-the-local-audit-system-in-england) and ensure that it can function effectively in the long term.

The government’s strategy aims to tackle the following key issues:

​responsibility for oversight and regulation being spread across many organisations

​capacity and capability constraints amongst auditors and those who prepare accounts

​overly complex financial reporting and audit requirements

Core elements of the strategy require primary legislation and these measures are included in the English Devolution and Community Empowerment Bill (https://bills.parliament.uk/bills/4002). The Bill would establish a new body – the Local Audit Office (LAO) – to oversee local audit and to simplify and streamline the currently fragmented system. The LAO’s responsibilities will include appointing auditors to local authorities (and some other local bodies, such as police and fire authorities), as well as quality oversight of local audit.

Other measures in the Bill include enabling public provision of audit to support the private market; changes to ensure that auditing standards, eligibility and regulation are more tailored to the specific needs of local audit; and a requirement that all local authorities have an audit committee with at least one independent member.

Outside the Bill, the government is working with the Chartered Institute of Public Finance and Accountancy (CIPFA) and devolved governments on simplifying financial reporting, and has implemented two pieces of secondary legislation to raise smaller (https://www.legislation.gov.uk/uksi/2025/1026/introduction/made) and major (https://www.legislation.gov.uk/uksi/2025/896/made) local audit regime thresholds. These changes aim to free up auditor capacity by allowing firms to work in a more proportionate way.

The government has also published a transition plan. This sets out how it is working with key partners to implement the reforms and manage the system during the transition period. It is iterative and will be updated periodically as implementation of the reform strategy progresses and detailed plans develop.