The Public Accounts Committee (PAC) has warned that accounting for public spending across government is “increasingly unreliable and incomplete” partly due to ongoing delays in council audits.
In a report published today (14 October), it said that delays in publishing the 2019-20 Whole of Government Accounts (WGA) undermined the value of a “uniquely comprehensive view of how government manages taxpayer’s money and of the position of public finances”.
Only 45% of 2019-20 local government audits in England and Wales were completed by the target date of November 2020, and just 9% of 2020-21 audits were finalised by the target of September 2021.
“The WGA is therefore increasingly unreliable and incomplete – excluding 23 local authorities altogether,” the PAC report said.
According to PAC chair Dame Meg Hiller: “Failures in local government audit have left councils operating in the dark, without the management information needed to make key spending decisions in the round and balance their books. Now we see the same picture emerging in the cross-government national accounts.”
Hillier added that the public deserved a “clear and transparent record of the full costs and liabilities that generations of current and future taxpayers have been committed to”.
The WGA brings together information on the financial performance of over 10,000 organisations across the UK public sector, including Whitehall departments, local authorities, public corporations and devolved administrations.
Publication of the 2019-20 WGA took place on 6 June 2022, 26 months after the reporting year-end and missing the statutory deadline by five months. Delays were caused by existing issues with local audit, the impact of Covid-19 on both Whitehall and council finance teams and problems with the implementation of a new Treasury IT system, Oscar II.
Failures in local government audit have left councils operating in the dark, without the management information needed to make key spending decisions in the round and balance their books.
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Deficient data
The PAC report said that the WGA included “unreliable data” for 29 unaudited local authorities along with the 23 councils that were excluded.
“This has reduced the quality of data used to oversee the local government sector and to prepare the WGA, and reduces the certainty of any consequent insights, conclusions or decisions,” the report suggested.
The Treasury has raised the “component audit threshold” for the 2020-21 WGA, so that just ten local government returns will require auditing for 2020-21. According to the PAC, this will make it easier for the WGA to be produced on time, but could have “negative consequences for the quality and reliability of data” unless additional work is undertaken to mitigate this risk.
Completion of the 2020–21 WGA is scheduled for March 2023 and the Treasury also hopes to publish the 2021–22 WGA in November 2023, giving it less than 18 months to produce two sets of accounts.
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