Audit Group provides local audit services for parish councils, town councils and other smaller bodies in England. The local audit system changed significantly after the Audit Commission closed in 2015, and many smaller authorities now need to arrange their own independent audit. We handle the whole process.
How local audits work in England
The local audit framework in England is governed by the Local Audit and Accountability Act 2014. When the Audit Commission’s local audit office closed, responsibility for appointing auditors to larger authorities passed to Public Sector Audit Appointments (PSAA). But smaller local bodies – those with income or expenditure of 6.5 million pounds or less – must arrange their own audit.
For these smaller local government bodies, the key requirement is the Annual Governance and Accountability Return (AGAR). The Accounts and Audit Regulations 2015 require every smaller authority to complete an AGAR each year, and the internal auditor’s report is a central part of it.
Audits of local AGAR returns are handled separately by a firm appointed under the local audit in England framework (currently PKF Littlejohn for most smaller bodies). But the internal audit – the review that checks whether your financial management meets the expected standards – is where you choose your own auditor. That’s the service we provide.
Who needs a local government audit?
The AGAR requirement applies to all smaller local authorities in England, including:
- Parish councils
- Town councils
- Parish meetings
- Internal drainage boards
- Charter trustees
- Port health authorities
If your local body’s income or expenditure was 25,000 pounds or less, you can submit a certificate of exemption. But you still need to complete the AGAR and have an internal audit carried out. Bodies above the 25,000-pound threshold need the full AGAR with both an internal and a limited assurance review.
Larger authorities above the 6.5-million-pound threshold have their auditors appointed by PSAA and follow the Code of Audit Practice issued by the National Audit Office. The government introduced a backstop date to clear the audit backlog affecting many of these major local audit engagements, but the delays don’t apply to smaller authorities. The deadlines are still tight though.
What the auditor tests
The internal audit covers the areas set out in the AGAR framework. Our auditor will review:
- Books of account – Have proper accounting records been maintained throughout the year?
- Financial regulations – Has the council operated within its standing orders and financial regulations?
- Risk assessment – Has a proper risk assessment been carried out and reviewed?
- Budgetary control – Has the authority monitored actual spending against budget regularly?
- Income controls – Are expected income sources properly recorded and banked promptly?
- Petty cash – Are petty cash procedures adequate and records properly maintained?
- Payroll – Are salaries, PAYE and NI properly calculated and paid?
- Asset register – Does the council maintain an up-to-date record of its assets?
- Bank reconciliations – Are bank accounts reconciled regularly and discrepancies resolved?
- Year-end procedures – Do the accounting statements in the AGAR agree with the underlying financial reporting records?
The local audit and assurance timetable
Local audits follow a fixed timetable each year:
- By 30 June – The council must approve the AGAR (governance statement and accounting statements)
- 1 July to 14 July – The accounts must be available for public inspection for 30 working days
- By 30 September – The appointed reviewer completes their limited assurance work
Internal audit needs to be completed before the council approves the AGAR. We aim to finish our audit work by mid-June at the latest, giving the council time to consider any issues before the approval deadline.
Common issues in local government audit
We see the same problems come up regularly across the councils and authorities we work with:
- Missing or incomplete minutes – The auditor needs to see that decisions about spending were properly authorised in council meetings
- Inadequate financial regulations – Many smaller local authorities haven’t updated their standing orders and financial regulations for years
- Asset register gaps – Assets acquired decades ago may not appear in the register, or values haven’t been reviewed
- No risk register – The governance statement requires the council to confirm it has assessed its risks, but some bodies don’t maintain a formal register
- Bank reconciliation errors – Especially common where the clerk handles both the bookkeeping and the banking
If our audit identifies issues, we explain them clearly and help you put them right before the external audit of the AGAR. We work with any audit firm appointed to carry out the limited assurance review.
Why choose Audit Group for your local audit?
We’ve worked with parish and town councils across the North West and beyond. Our audit team understands the practical realities of running a small public sector body – limited staff, volunteer clerks and tight budgets.
- Fixed fees – Priced for council budgets, with no hidden costs
- Clear financial reporting – We explain any issues in plain language
- Practical support – If we find problems, we help you fix them before the reviewer arrives
- On time – We plan around the AGAR deadlines so you’re never scrambling at the last minute
If your council needs an internal auditor or you want to review your current local audit arrangements, get in touch.
