Appendix 1

Summary of MHCLG’s responses to the 23 Recommendations of the Redmond Review

Recommendations (Grouped by Theme)	MHCLG Summary Responses
Action to support immediate market stability (recommendations 5, 6, 8, 10, 11)
5. All auditors engaged in local audit be provided with the requisite skills and training to audit a local authority irrespective of seniority.	Agree; we will work with key stakeholders to deliver this recommendation
6. The current fee structure for local audit be revised to ensure that adequate resources are deployed to meet the full extent of local audit requirements.	Agree; we will look to revise regulations to enable PSAA to set fees that better reflect the cost to audit firms of undertaking additional work
8. Statute be revised so that audit firms with the requisite capacity, skills and experience are not excluded from bidding for local audit work.	Part agree; we will work with the FRC and ICAEW to deliver this recommendation, including whether changes to statute are required
10. The deadline for publishing audited local authority accounts be revisited with a view to extending it to 30 September from 31 July each year.	Part agree; we will look to extend the deadline to 30 September for publishing audited local authority accounts for two years, and then review
11. The revised deadline for publication of audited local authority accounts be considered in consultation with NHSI(E) and DHSC, given that audit firms use the same auditors on both Local Government and Health final accounts work.	Agree
Consideration of system leadership options (recommendations 1, 2, 3, 7, 13, 17)
1. A new body, the Office of Local Audit and Regulation (OLAR), be created to manage, oversee and regulate local audit with the following key responsibilities: - procurement of local audit contracts; - producing annual reports summarising the state of local audit; - management of local audit contracts; - monitoring and review of local audit performance; - determining the code of local audit practice; - regulating the local audit sector.	We are considering these recommendations further and will make a full response by spring 2021.
2. The current roles and responsibilities relating to local audit discharged by the: - Public Sector Audit Appointments (PSAA); - Institute of Chartered Accountants in England and Wales (ICAEW); - FRC/ARGA; and - The Comptroller and Auditor General (C&AG) should be transferred to the OLAR.          .	We are considering these recommendations further and will make a full response by spring 2021.
3. A Liaison Committee be established comprising key stakeholders and chaired by MHCLG, to receive reports from the new regulator on the development of local audit.	We are considering these recommendations further and will make a full response by spring 2021.
7. That quality be consistent with the highest standards of audit within the revised fee structure. In cases where there are serious or persistent breaches of expected quality standards, OLAR has the scope to apply proportionate sanctions.	We are considering these recommendations further and will make a full response by spring 2021.
13. The changes implemented in the 2020 Audit Code of Practice are endorsed; OLAR to undertake a post implementation review to assess whether these changes have led to more effective external audit consideration of financial resilience and value for money matters.	We are considering these recommendations further and will make a full response by spring 2021.
17. MHCLG reviews its current framework for seeking assurance that financial sustainability in each local authority in England is maintained.	We are considering these recommendations further and will make a full response by spring 2021.
Enhancing the functioning of local audit, and the governance for responding to its findings (recommendations 4, 9, 12, 18)
4. The governance arrangements within local authorities be reviewed by local councils with the purpose of: - an annual report being submitted to Full Council by the external auditor; - consideration being given to the appointment of at least one independent member, suitably qualified, to the Audit Committee; and - formalising the facility for the CEO, Monitoring Officer and Chief Financial Officer (CFO) to meet with the Key Audit Partner at least annually.	Agree; we will work with the LGA, NAO and CIPFA to deliver this recommendation
9. External Audit recognises that Internal Audit work can be a key support in appropriate circumstances where consistent with the Code of Audit Practice.	Agree; we will work with the NAO and CIPFA to deliver this recommendation
12. The external auditor be required to present an Annual Audit Report to the first Full Council meeting after 30 September each year, irrespective of whether the accounts have been certified; OLAR to decide the framework for this report.	Agree; we will work with the LGA, NAO and CIPFA and other key stakeholders to deliver this recommendation, including whether changes to statute are required
18. Key concerns relating to service and financial viability be shared between local auditors and inspectorates including Ofsted, Care Quality Commission and HMICFRS prior to completion of the external auditor’s annual report.	Agree; we will work with other departments and the NAO to deliver this recommendation
Improving transparency of local authorities’ accounts to the public (recommendations 19, 20, 21, 22)
19. A standardised statement of service information and costs be prepared by each authority and be compared with the budget agreed to support the council tax/precept/levy and presented alongside the statutory accounts.	Agree; we will look to CIPFA to develop a product through consultation with local government. We will work with CIPFA to deliver this recommendation
20. The standardised statement should be subject to external audit.	Agree; we will work with CIPFA, the LGA and the NAO to deliver this recommendation
21. The optimum means of communicating such information to council taxpayers/service users be considered by each local authority to ensure access for all sections of the communities.	Agree; we will work with the LGA and CIPFA to deliver this recommendation
22. CIPFA/LASAAC be required to review the statutory accounts, in the light of the new requirement to prepare the standardised statement, to determine whether there is scope to simplify the presentation of local authority accounts by removing disclosures that may no longer be considered to be necessary.	Agree; we will look to CIPFA to deliver this recommendation
Action to further consider the functioning of local audit for smaller bodies (recommendations 14, 15, 16, 23)
14. Smaller Authorities Audit Appointments (SAAA) considers whether the current level of external audit work commissioned for Parish Councils, Parish Meetings and Internal Drainage Boards (IDBs) and Other Smaller Authorities is proportionate to the nature and size of such organisations.	Agree; we will look to SAAA to deliver this recommendation
15. SAAA and OLAR examine the current arrangements for increasing audit activities and fees if a body’s turnover exceeds £6.5m.	We are considering this recommendation further and will make a full response by spring 2020
16. SAAA reviews the current arrangements, with auditors, for managing the resource implications for persistent and vexatious complaints against Parish Councils.	Agree; we will look to SAAA to deliver this recommendation
23. Joint Panel on Accounting & Governance (JPAG) for smaller authorities to be required to review the Annual Governance and Accountability Return (AGAR) prepared by smaller authorities to see if it can be made more transparent to readers. In doing so the following principles should be considered: - whether “Section 2 – the Accounting Statements” should be moved to the first page of the AGAR so that it is more prominent to readers; - whether budgetary information along with the variance between outturn and budget should be included in the Accounting Statements; - whether the explanation of variances provided by the authority to the auditor should be disclosed in the AGAR as part of the Accounting Statements.	Agree; we will work to JPAG to deliver this recommendation

The full response is available here: Local authority financial reporting and external audit: government response to the independent review - GOV.UK (www.gov.uk)