Local audit is in crisis and the Government must take urgent
action to fix it, says the cross-partyLevelling Up,
Housing and Communities (LUHC) Committee in a report
published today (Friday).
The Financial Reporting and Audit in Local
Authorities report says that the local audit crisis is
undermining public trust and that the most urgent problem is “a
large and growing” backlog of accounts whose audits have not been
completed, some of them up to seven years old. The report finds
the crisis in audit is hampering efforts to ensure that the
billions of pounds per year spent by councils is properly
accounted for and local authorities held accountable for their
decisions and spending.
The Committee’s report makes a series of recommendations to help
tackle the current audit crisis. The report also proposes a range
of measures to help improve local accounts, which are currently
“overly complicated to the point of being impenetrable”, to
ensure they contain the information needed by the public to hold
local authorities to account.
, Chair of the Levelling Up,
Housing and Communities Committee, said: “Local audit is
in crisis and the Government must act to fix it. Serious delays
in local audits mean that many councils are not fully sighted to
problems while they make major financial and service decisions,
with audit delays also leaving local taxpayers in the dark.
“The growing backlog of audit opinions seriously undermines
efforts to hold councils to account for their financial
management. The Government now needs to set out urgently what it
will do to clear the backlog, re-establish trust in local audit,
and accelerate its efforts to establish a local audit system
leader.
“Local public bodies are responsible for billions of pounds of
expenditure each year, delivering public services that taxpayers
rely on every day. However, the current format and content of
accounts are so complicated that they are impenetrable to
councillors and council officials, let alone the wider public.
The Government should now lead on work with the audit sector to
ensure audits and accounts support the oversight of public
spending and strengthen local democracy and accountability.”
The report calls for the Department of Levelling Up, Housing and
Communities (DLUHC) to move quickly to clear the audit backlog
and implement its proposed actions by the end of the calendar
year 2023. The report also recommends that DLUHC introduce
backstop dates for publishing audit local authority accounts on
an annual basis going forwards.
The Committee’s report notes the lack of momentum in bringing
forward the legislation to establish the Audit Reporting and
Governance Authority (ARGA). The report recommends the Government
make it a priority to establish the local audit system leader and
ensure this body is the primary contact for local auditors to
raise the alarm should they find matters of concern during an
audit of a local authority.
ENDS
Further information
- The report summary is on p3. A list
of the report’s conclusions and recommendations can be found on
p.34. A list of the public evidence sessions for this inquiry
(and links to the transcripts in each case) can be found on p.42
of the report.
- When published at 00.01 Friday 24
November, the report can be viewed on the Committee’s website
(report in html ,
report in
pdf) and also see news item.
- The current backlog (from paragraph
64 of the report). The National Audit Office (NAO) reported in
January 2023 that only 9% of 2020/21 local authority accounts had
audits published by the September 2021 deadline, and only 12% of
2021/22 local authority accounts had audits published by the
extended November 2022 deadline (National Audit Office,
Progress update:
Timeliness of local auditor reporting on local government in
England (25 January 2023), 'Key facts', p 4).
Since then, the situation has become worse. Public Sector Audit
Appointments (PSAA), the body responsible for procuring audit
services for most local authorities, announced that only 1% of
2022/23 local authority accounts had audits published by the 30
September 2023 publication date. This brought the total number
of delayed audits since 2015/16 (the first year in which PSAA
was operational, and thus the earliest year for which it holds
data) to 918 (Aysha Gilmore, Only 1% of local
government bodies have received audit opinions on 22/23
accounts, Room 151, 10 October 2023).
