Government consults on backstop date for submitting local government audit opinions
The Department for Levelling Up, Housing and Communities has launched a consultation on its plans to tackle local government audit delays, in light of an "unacceptable" backlog in the publication of audited accounts.
According to the Department, the number of outstanding audit opinions peaked on 30 September 2023 at 918. As at 31 December 2023, the backlog of outstanding audit opinions stood at 771.
To clear the backlog of historical accounts and 'reset' the system, the Department proposes putting a date in law (30 September 2024), referred to as a backstop date, by which point local bodies would publish audited accounts for all outstanding years up to and including 2022/23.
In order to ensure delays do not re-emerge once the backlog has been cleared, the Department has proposed further backstop dates into law for the publication of audited accounts by local bodies.
To achieve this, the Department is proposing legislative changes to the Accounts and Audit Regulations 2015 (the 2015 Regulations).
A draft statutory instrument has been published alongside the consultation, which covers the core elements of the proposed amendments to the 2015 Regulations.
The NAO is also consulting, in parallel to the Department's consultation, on related changes to the Code of Audit Practice.
In addition, CIPFA LASAAC will consult on temporary changes to the Code of Practice on Local Authority Accounting for 2023/24 and 2024/25 to reduce burdens on the finance teams and auditors.
In a statement on the consultation, the Department said: "Timely, high-quality financial reporting and audit of local bodies is a vital part of our democratic system. Not only does it support good decision making by local bodies, by enabling them to plan effectively, make informed decisions and manage their services, it ensures transparency and accountability to local taxpayers.
"The backlog in the publication of audited accounts of local bodies in England has grown to an unacceptable level."
In its consultation document, the Department added: "These are not proposals we take lightly, but these are exceptional times. All system partners, including the government, share the conviction that bold steps are necessary to reset the system."
The full consultation document can be read here. The consultation is scheduled to close on 7 March 2024.
Responding to the publication of the consultation, Cllr Pete Marland, Chair of the LGA’s Economy and Resources Board, said: “We have been pressing the Government to set a firm timetable by which timely audits will be restored, so it is good that these proposals have been published.
“The need to come to a pragmatic solution to the backlog is urgent. However, this must not lead to reputational damage for councils as a result of a problem that is not of their making.
“The fact that the proposed reset period will take until 2028 shows the complexity of the problem to be solved. Ultimately, a long-term solution is needed to this crisis which will require a joint effort from a range of stakeholders including the Government, the audit firms, the regulators and CIPFA.”
Steve Freer, chair of Public Sector Audit Appointments, said: “Delayed audit opinions pose a real threat to good stewardship and financial management. Ultimately, they weaken accountability and undermine public confidence and trust. We agree that the exceptional measures outlined are the best available options to tackle the problem. All three phases – reset, recovery and reform – will pose different challenges and will need our collective commitment and support to secure the consistently high levels of assurance which we all want to see.”
Adam Carey
