Auditors call for more investment in finance function skills

Local government finance functions need to invest more in skills training to help improve the issues that have led to significant delays in the publication of audited financial statements in England in recent years.

This was the consensus of a panel discussion at the February Room151 Monthly Online Treasury Briefing, which discussed external and internal audit in local government.

Watch the panel discussion on the Room151 Webcast Channel

Paul Dossett, head of local government at Grant Thornton, said that investment in training in local government had been cut back, just as councils were experimenting with innovative regeneration schemes, regulations had become tighter and workloads heavier.

“You end up in a scenario where the accounts have never been more complicated, the transactions and accounting information have never been more complicated and yet we have seen a decline in investment in finance departments,” he said.

“Some finance departments are still very strong, but others have weakened, as individuals who have left have not been replaced. Some can’t produce accounts of any form of quality. It’s a real risk for your future in such a complicated and challenging environment.”

Dossett, who has written a blog on this subject for Room151, said that more investment needed to be focused on the finance function. This required proper training schemes, employing technical experts and valuing the role of the Section 151 officer.

All in this together

Janet Dawson, EY’s UK government and public services assurance leader, said that audit firms and council finance departments were “in this together”. Reforms were needed to the whole system.

“Local government has not invested in its own financial management and reporting skills. That impacts audit providers and our ability to be able to do a really good and efficient job getting access to the information we need,” she said.

Dawson said that a new workforce strategy was required that provided all the organisation involved in external audit with some certainty about their roles. Such a strategy, which has been discussed with the Department for Levelling Up, Housing and Communities, could demonstrate the long-term sustainability and value of external assurance within the public sector.

“I am worried about short-term uncertainties that are playing out without that overarching vision and messaging that then allows all the system players to understand their role and commit to it over the long term,” Dawson added.

22 March 2022
The Marriott Hotel, Leeds
LATIF North
Lead sponsor: CCLA
Qualifying finance officers can register free of charge here

Internal audit seen as a ‘luxury’

Dossett also suggested that local government had sometimes not valued internal audit, seeing it as a “luxury” or a “back-office service” that could be cut back. He gave the example of one authority that had no internal audit function at all in 2021 because it thought “that was not very important, and they should be focusing on other things”.

Jonathan Idle, head of internal audit at Kent County Council, said that was not his experience in Kent, but there were difficult issues on recruitment and retention. Recruiting at senior levels was becoming increasingly difficult and there were concerns over “flight risk” when it came to more qualified staff.

“That has big implications in terms of retention, talent management and development. Giving staff more opportunities to develop and to work in higher-profile areas has never been more important. We are looking at the whole package related to retention,” Idle said.

He called for ongoing investment and a commitment to efficient and effective internal audit functions.

Attendees at the Monthly Online Treasury Briefing earlier heard a presentation on inflation risk from Cameron Shaw, portfolio manager for interest rate strategies at Ardea Investment Management.

Paul Dossett will be speaking on the audit session at the Room151 Local Authority Treasurers Investment Forum (LATIF) North conference on 22 March in Leeds.

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