The system of local auditing in the UK is “close to breaking point”, the House of Commons Committee on Public Accounts (PAC) said.
Local government bodies looking to publish their accounts for 2021-22 received only 12 per cent of local audit opinions – despite having an extended deadline. By the end of November 2022, auditors had failed to sign off more than 630 accounts – some dating back to 2015–16.
Reduced transparency
“The timeliness of local auditor reporting is crucial for making decisions about budgets for local government bodies in England,” the report said. “Delays to local audit reduce transparency over approximately £100 billion of local government spending for local taxpayers and their elected representatives, and impact on other areas of government spending, such as the NHS and central government.”
It said that the delays meant that local government bodies had an increased risk of serious issues going undetected.
While the pandemic has created some lag in the creation of local audit opinions, the problems stem back earlier. The government watchdog the NAO said that while 97% of accounts were published on time for the 2015-2016 accounting year, deadlines started to slip from 2017-2018 and by 2019-2020 only 45% of accounts that included an audit opinion were published on time.
Unattractive
The NAO said that the pandemic had made existing problems worse. That included: “shortages of experienced staff in both local authority finance teams and audit firms, a relative lack of attractiveness of local government audit as a career, and increasing levels of work for finance and audit staff due to increased focus on audit quality findings,” it said.
The PAC said the sector lacked leadership under the current arrangement. A new oversight body to replace the Financial Reporting Council – the Audit Reporting and Governance Authority – which will provide leadership to local audit would not be established until some time in 2024. The PAC had recommended setting up an independent body just to focus on local auditing – but the move was rejected.
