Dan Bates from LGImprove details the latest 2021/22 outlook for local authorities’ audited accounts and reveals that one in six local authorities have signed them off.
As we approach another financial year’s end, most local authorities are yet to sign off last year’s accounts as external audit grapples with regulatory reform, capacity issues and the cumulative impact of accounts delays.
The table below shows the status of the most recent accounts for 2021/22 and illustrates that over seven in ten authorities are still waiting for an opinion from their auditors on last year’s accounts. It also reveals that one in six have their 2021/22 accounts signed off.
There are numerous, well-reported issues for the lack of signed-off accounts, including capacity issues, both in finance teams and external audit as well as complexities around code compliance, particularly in respect of infrastructure assets valuations.
This month’s Public Accounts Committee meeting considered the issue of local audit and the transcript indicates that the position is set to deteriorate further in the short term before improving.
Certainly, the closedown process is made more complex with the previous year’s accounts open as brought forward balances are unaudited and might contain errors.
Getting to grips with the accounts process is only a first, albeit crucial step, to a more complete understanding of local government financial resilience.
I am expecting 2022/23 accounts to show signs of financial stress in the sector due to inflation and interest rate rises. Any further delays in accounts being published and then audited will conceal real financial difficulties and hamper efforts to improve the financial health of councils.
Dan Bates is a director at LGImprove.
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