About the Code
The Code of Audit Practice sets out what local auditors of relevant local public bodies are required to do to fulfil their statutory responsibilities under the Local Audit and Accountability Act 2014. ‘Relevant authorities’ are set out in Schedule 2 of the Act and include local councils, fire authorities, police and NHS bodies. Schedule 6 of the Act extends this requirement to include NHS Foundation Trusts.
Local auditors must comply with the Code of Audit Practice. The Code must be reviewed at least every five years, so the Code that applies will depend on the financial year being audited.
The Local Audit and Accountability Act 2014 made the Comptroller and Auditor General responsible for the preparation, publication and maintenance of the Code of Audit Practice. The Code sets out what local auditors are required to do to fulfill their statutory responsibilities under the Act.
Download the Code of Audit Practice
For audits of financial years from 2020-21 onwards, the Comptroller and Auditor General’s 2020 Code of Audit Practice applies:
For audits of financial years from 2015-16 to 2019-20, the 2015 Code of Audit Practice applies:
The NAO’s Local Audit Code and Guidance team have day to day responsibility for this area of our work.
2024 Code Consultation
We are seeking views on changes to the Code of Audit Practice to support auditors to meet backstop dates and promote more timely reporting of their work on value for money arrangements.
2020–21 audit work onwards
Changes to auditors’ work on value-for-money arrangements and reporting
The NAO’s Code of Audit Practice for Local Auditors changed for 2020-21 audit work onwards. The new Code came into force on 1 April 2020, after being approved by Parliament. It was developed following a consultation process in 2019.
As before, auditors are still required to be satisfied about arrangements to secure value for money but the way they report has changed.
Auditors no longer issue a single conclusion on arrangements as part of their opinion on the financial statements. Instead, auditors report significant weaknesses in arrangements when they identify them, and make recommendations for improvement. They only report on VFM arrangements as part of their opinion by exception, where they have found significant weaknesses. Their main output on VFM is a commentary contained in a new document, the Auditor’s Annual Report, covering arrangements for:
- Financial sustainability
- Improving value for money
Where auditors find significant weaknesses in arrangements, they will also make recommendations for improvement.
Audited bodies are required to publish the Auditor’s Annual Report on their website.
The coronavirus pandemic (Covid-19) continues to significantly impact audited bodies and the financial reporting and auditing process, and may therefore affect the timing of when the work on VFM arrangements can be performed and reported. Therefore, deadlines have continued to be extended in 2021-22 for auditors to issue the Auditor’s Annual Report to the following:
- NHS trusts and commissioners – the publication date for the annual report and accounts (per NHSE&I timetable guidance)
- NHS foundation trusts (FTs) – through discussion and agreement with the body to recognise the need to consider parliamentary laying requirements
- Local government – no more than 3 months after the auditor has issued their opinion on the financial statements
Guidance and information for auditors
The Local Audit and Accountability Act 2014 provides the Comptroller and Auditor General with the power to issue guidance to auditors which may explain or supplement the provisions of the Code of Audit Practice. The Act requires auditors to have regard to such guidance.
To support auditors in their work and facilitate consistency of approach between auditors of the same types of entity, we maintain a series of Auditor Guidance Notes (AGNs). See the current auditor guidance notes.
The audit framework for local public bodies
The Local Audit and Accountability Act 2014 abolished the Audit Commission. The new framework for local public audit now involves several different entities each of which has a particular role – for example, the C&AG has a responsibility to prepare the Code of Audit Practice and a power to issue guidance to auditors.
Previously, the Audit Commission appointed local auditors and maintained the Code of Audit Practice and associated guidance.
Further information about roles and responsibilities for the audit of local bodies please refer to the documents below:
The Comptroller and Auditor General’s remit
Statutory duties and powers in respect of local public audit
Schedule 6 of the Local Audit and Accountability Act 2014 makes the Comptroller and Auditor General (C&AG) responsible for the preparation, publication and maintenance of the Code of Audit Practice. The Code sets out what local auditors are required to do to fulfil their statutory responsibilities under the Act 2014. Local auditors must comply with the Code of Audit Practice.
Schedule 6 of the Act puts a range of requirements in place in respect of the C&AG’s responsibility for the Code. These include duties to consult publicly and obtain Parliament’s approval for the Code prior to publication, to keep the Code under review and to use reasonable endeavours to prepare and publish a new code approximately every five years.
Schedule 6 of the Act provides the C&AG with the power to issue guidance to auditors on the exercise of their duties under the Act. In particular, such guidance may explain or supplement the provisions of the Code of Audit Practice. Local auditors are required to have regard to such guidance.
The C&AG has published Local authority accounts – a guide to your rights.
The C&AG is a prescribed person to whom whistleblowers can make protected disclosures under the Public Interest Disclosure Act 2008. With the closure of the Audit Commission, the Government widened the C&AG’s remit as a prescribed person. However, although the C&AG can now receive disclosures relating to the proper conduct of public business, value for money, fraud and corruption in relation to the provision of all public services, this does not give them any additional investigatory powers.
Matters relating to issues at local authorities or local NHS bodies are therefore best directed to the local auditor who is also a prescribed person under the Act.
To find out more information or to make a disclosure please visit our whistleblowing webpage.