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The NAO’s Code of Audit Practice for Local Auditors is changing for 2020-21 audit work. As before, auditors are still required to be satisfied about arrangements to secure VFM but the way they report this will change. Auditors will no longer issue a single conclusion on arrangements as part of their opinion on the financial […]

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June 9, 2021

The NAO’s Code of Audit Practice for Local Auditors is changing for 2020-21 audit work.

As before, auditors are still required to be satisfied about arrangements to secure VFM but the way they report this will change.

Auditors will no longer issue a single conclusion on arrangements as part of their opinion on the financial statements.  Instead, auditors will report significant weaknesses in arrangements when they identify them, and make recommendations for improvement.  They will only report on VFM arrangements as part of their opinion by exception, where they have found significant weaknesses. Their main output on VFM will be a commentary contained in a new document, the Auditor’s Annual Report, covering arrangements for:

  • Financial sustainability
  • Governance
  • 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.

In 2020-21, the coronavirus pandemic (COVID-19) will 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, for 2020-21 deadlines have been extended for auditors to issue the new Auditor’s Annual Report to the following:

  • NHS – the publication date for the annual report and accounts (per NHSE&I timetable guidance).
  • Local government  – no more than 3 months after the auditor has issued their opinion on the financial statements.