There is a significant shortage of both external and internal auditors. It is now common that when housing associations tender for their audit work they receive no responses. We are also aware of at least four housing associations that reported their financial statements to the Regulator for Social Housing (RSH) after the official deadline of 30 September this year. They also had to send their accounts late to their lenders.
We have spoken to around 15 external auditors that have little, or no, housing association experience. Two of these auditors also audit Public Interest Entities.
In October, we held a training session for these auditors where the NHF, the RSH and Guy Flynn, Chair of the SORP Working Party, explored the relevant accounting framework and the key issues to consider when auditing housing associations.
Auditing firms will be attending our Housing Finance Conference next March (we are expecting more to confirm over the coming weeks) where we will be holding a speed networking session on day one of the event, to enable housing associations to discuss their businesses and their requirements with these firms. The presenting firms will then attend for the remainder of the conference.
To help us resolve this issue, housing associations need to take action. If the following advice is followed, we should start to see an increase in firms making submissions for audit tenders.
1. Run auditor procurement in the finance team
It is usually the case that when a procurement team leads on the recruitment for a new auditor they will run this process through a procurement framework. These are typically very restrictive. For example, it can be three years until a new firm can apply to join an existing framework and then there is no guarantee that they will be given permission to join. To avoid this scenario, we recommend that the finance team runs the process for recruiting new auditors.
2. Engage with firms early
Auditors plan their resources for external audits months, and often years, in advance. We also therefore recommend engaging with auditors at least one year before you decide to tender for your external audit. Contact all the firms on our list of external (and internal) auditors.
3. Use our external audit tender template and send it to all of the auditors on our list
Our external audit tender template removes the common barriers to entry for auditors, such as asking for experience of auditing two or more similar type and sized organisations.