The government will propose a compulsory deadline of 30 September for all outstanding local authority audited accounts in England.
In July 2023, the Department for Levelling Up, Housing and Communities (DLUHC) announced a range of proposals to address the backlog of local audits in England. These included enforcing setting statutory deadlines and issuing qualifications and disclaimers of opinion in the short term.
The government has been engaging with the sector on these proposals since Summer.
In a letter published recently, local government minister Simon Hoare proposed a deadline of 30 September 2024 for the publication of all outstanding audited accounts from 2022/23 and earlier, subject to the outcome of a consultation.
Last year, the Public Sector Audit Appointments reported that only 1% of local government bodies received an auditor’s opinion on their 2022/23 accounts by the publishing deadline.
In addition, research by LGimprove in November 2023 revealed that only 108 local authorities had finalised their 2021/22 accounts, which is approximately 35% of councils.
Writing to Clive Betts, chair of the Levelling Up, Housing and Communities (LUHC) Committee, Hoare said: “The government recognises the vital role played by our systems of local authority financial reporting and audit.
“In July my predecessor, Lee Rowley, wrote to you providing a cross system statement on proposals to clear the backlog of local audit.
“I can now confirm that the department, supported by the FRC, alongside the National Audit Office, will launch consultations on these proposals soon.
“Our proposals will include an initial backstop date for local authorities and auditors of 30 September 2024 for all outstanding local audits in England up to and including the financial year 2022/23.
“Subject to the outcome of the consultations on necessary legislative changes as well as changes to the Code of Audit Practice, we intend to bring forward legislation to implement backstop proposals.”
Long-term action
In his letter, Hoare also addressed the LUHC Committee’s report (published in November 2023), which highlighted that the department should take long-term action to prevent the audit crisis from happening again.
A key recommendation made by the committee to implement this was the creation of Audit Reporting and Governance Authority (ARGA) as a “system leader”.
The government confirmed ARGA as the new regulator for local audit in May 2022, but has not released an update on its implementation since.
In response to this, Hoare wrote in his letter: “The committee’s report makes a wide range of recommendations for both the backlog and the future of local financial reporting and audit and I agree that important questions concerning systemic challenges must be addressed.”
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