NAO indicates it will retain principles-based audit code
0The National Audit Office says that it intends to retain a principles-based approach to the code governing local government audit.
The NAO has published its response to a consultation on the next Code of Audit Practice, which gives guidance to auditors working on local authority accounts.
According to a report published this week, the majority of respondents said a more prescriptive code could limit auditors’ ability to make judgements in the light of local circumstances.
The report said: “Respondents also stressed, however, the need for a principles-based code to be supplemented with more detailed sector-specific guidance to set out further expectations of how the principles should be applied.”
The NAO also said it would continue to work with the sector on concerns raised by a significant minority of respondents that auditors devote too much resource to less important areas of accounts.
These areas include the valuations of certain types of asset or the valuation and disclosures of pension liabilities.
“Some argued that auditors should focus on the figures in the financial statements that have a direct impact on the council tax requirement, as these are the figures that are of most interest to local authorities and local taxpayers,” the report said.
