Local audit reform
The local audit system in England requires local public bodies to publish their accounts and ensure that these are independently audited every year.
Applies to England
Overview
Local public bodies in England must publish annual accounts and have them independently audited. These include all local authorities, police and fire authorities, smaller authorities (such as parish councils) and NHS bodies. This process helps to support transparency and accountability for public spending.
The local audit system has faced significant challenges, including a backlog of unaudited accounts, capacity constraints and fragmented oversight. The government is taking action to rebuild assurance and create a system that is simpler, more resilient and better able to support public accountability.
This page explains the government’s programme of local audit reform and the action being taken to deliver it.
Documents
Policy and strategy
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Local audit reform strategy and consultation (December 2024)
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Government response to the consultation to overhaul local audit in England
Backlog and rebuilding assurance
Implementation
How the government is overhauling the local audit system
The local audit system faces both structural and operational challenges. Oversight and regulation are split across several organisations, while capacity constraints and complex financial reporting and audit requirements have placed pressure on the system. In December 2024, the government launched a strategy and consultation to overhaul local audit and ensure that it can function effectively in the long term.
The government has since acted to legislate for these reforms through the English Devolution and Community Empowerment Act 2026, which came into force in April 2026.
At the centre of these reforms is the creation of the Local Audit Office (LAO). The LAO will:
- oversee and coordinate the local audit system
- appoint auditors to local authorities and certain other local bodies
- oversee the quality of local audit
Alongside establishing the LAO, the government is continuing to reform the local audit system and rebuild assurance. The LAO will play a central role in taking forward many of these reforms as its functions are established and developed. The government will work with the LAO and partners to introduce these changes in stages as the LAO’s functions are established. This includes:
- simplifying financial reporting and audit requirements where possible
- strengthening capacity and capability across audit firms and local bodies
- tailoring regulatory arrangements to the needs of local audit
- supporting a more resilient and sustainable audit market, including enabling public provision of audit
- requiring local authorities to establish an audit committee with at least one independent member
- supporting the rebuilding of assurance
Clearing the audit backlog
Alongside the wider reforms, the government has taken decisive action to tackle the unacceptable audit backlog and introduced a local audit backstop programme. This has cleared the significant backlog of unaudited accounts, enabling auditors and local bodies to refocus on more recent financial years and begin rebuilding assurance.
The backstop arrangements continue to set statutory deadlines for the publication of audited accounts, supporting the return to timely financial reporting and audit
The backstop dates are:
- financial years up to and including 2022 to 2023: 13 December 2024
- financial year 2023 to 2024: 28 February 2025
- financial year 2024 to 2025: 27 February 2026
- financial year 2025 to 2026: 31 January 2027
- financial year 2026 to 2027: 30 November 2027
- financial year 2027 to 2028: 30 November 2028
In the interests of transparency, the government publishes non-compliance lists of local bodies that fail to meet the backstop deadlines.
Rebuilding assurance
Rebuilding assurance means restoring confidence that public money is being properly accounted for and independently audited. The government is delivering a programme of reforms to strengthen the local audit system. This includes:
- working with audit firms and local bodies to improve delivery
- prioritising resources accordingly
- supporting the rebuilding of assurance over successive audit periods
The government continues to work with local bodies and audit firms to accelerate progress and support the recovery of the local audit system.
The government has also published a . This sets out how it is working with key partners to implement the reforms and manage the system during the transition period.