Just 41% of local authorities published their draft accounts for 2023/24 by the audit deadline, with many still struggling from the “knock-on impact” of the backlog.
According to the latest LG improve accounts tracker for 2023/24, which was released today (3 June), 128 authorities out of 315 published their draft accounts by the 31 May deadline.
A breakdown of individual councils shows that 42% of upper-tier authorities (63) and 40% of districts (65) met the deadline, equating to 41% of all local authorities.
The analysis shows that this is a “significant” improvement from last year as only 94 authorities (30%) had published their draft accounts for 2022/23 by the deadline.
Dan Bates, director at LG improve, told Room151: “The numbers from our tracker show that local government finance teams are doing their bit to address the audit backlog with many more authorities having published than at the same point last year.”
Backlog issues
However, Bates stated that despite the positive uptick in meeting the publication deadline, most authorities are yet to publish their draft accounts, with many issuing delay notices.
Bates pointed out that the majority of notices cite the “knock-on” implications from delays in auditing previous years’ statements. “Delay notices give the impression of authorities that have completed their accounts but are waiting on resolution of 2022/23 audit issues,” he added.
Data by LG improve in April revealed that only 21% of local authority audits have been finalised for 2022/23, with 63% awaiting sign-off and 16% unpublished.
The analysis also found that for 2021/22, 54% of audits have been signed off, 38% remain as drafts and 8% are yet to be published. In total, this means that around 390 audits for the last two financial years are yet to be finalised.
In February, the government launched a consultation on the best way to clear the backlog in local authority audit, which outlined measures to “reset” the system through a backstop date of 30 September 2024 to publish accounts for all outstanding years up to and including 2022/23. If accounts are not finalised by this deadline disclaimers of opinion will be issued.
The government are yet to release the outcome of the consultation on addressing the local audit backlog.
Bates stated: “Although there are signs that the audit backlog is reducing, many local authorities will be frustrated that their 2022/23 accounts will receive a modified or disclaimer opinion and the consequent ‘knock-on’ impact this has on publishing the 2023/24 statements.”
According to Tracy Bingham, executive director resources and transformation (s151) at South Derbyshire District Council, stated that meeting the draft accounts deadline last week was as “tough as it has been in previous years”.
“I took the stance that it is better to get the accounts done effectively and efficiently so we can get back to the value adding stuff as well as give the team a well-earned break. I know that comes with the risk that previous year’s audit recommendations could impact this year, 2021/22 and 2022/23 are both still outstanding for us, but we will deal with that as it happens,” she added.
Clearing the backlog
In April, Bates stated that it seems “unlikely” that the backlog will be cleared by the backstop date.
However, some in the sector, such as Stephen Sheen, director of consultant Ichabod’s Industries, said at the time that it is “difficult” to make any predictions on whether the audit backlog will be cleared by the backstop date, “as there doesn’t appear to be any co-ordination of the audit firms”.
“They [audit firms] have been given discretion to make their own decisions about how scarce audit resources are to be deployed in the run-up to the first backlog date. Some authorities have already been told that they will have no further visits from the auditor before 30 September, whereas other authorities are having their Is dotted and Ts crossed to enable a full sign-off,” Sheen said.
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