CIPFA LASAAC has announced that it has scrapped plans to make short-term changes to the Code of Accounting Practice, efforts which were intended to help the achievement of compulsory deadlines for all outstanding local authority audits in England.
Proposals to clear the audit backlog included measures to establish a backstop date of 30 September 2024 to publish audited accounts for all outstanding years up to and including 2022/23. If audits were not finalised by this deadline disclaimers of opinion would then have been issued by auditors.
CIPFA LASAAC’s proposals to make some simplifications to the Code of Accounting Practice for 2023/24 and 2024/25 were aimed at reducing the burden on accounts preparers, and so were aimed at aiding the delivery of audited accounts by the proposed backstop dates for those years (i.e. after the first proposed backstop date).
Instead, the board will now “focus its efforts on longer-term enhancements to the code and other initiatives”.
Despite not going forward with the changes, the board stated that it is “still looking at measures that could be introduced in later codes” and “remains committed to supporting work taking place across the local audit system to address the backlog”.
Conrad Hall, CIPFA/LASAAC’s chair, said: “CIPFA/LASAAC was keen to support other system partners by revising short-term reporting requirements.
“However, the dissolution of parliament meant the board has changed its approach. We will now be focusing our efforts on longer term improvements in local authority financial statements and reporting, utilising the revitalised better reporting group to achieve this.”
While CIPFA clarified that its decision doesn’t mean that backstop dates won’t or can’t happen in the future, its move does highlight the uncertainty over the issue.
Implementing the compulsory backstop dates would require two elements: the government to legislate the statutory deadlines for audited accounts and the National Audit Office (NAO) to amend the Code of Audit Practice.
However, following the dissolution of Parliament on 30 May in advance of the UK general election on 4 July, the introduction of statutory deadlines for audited accounts cannot proceed until a new parliament is formed as the legislation did not come into effect in time. The new government will also have to agree to go ahead with the proposals.
The proposals to clear the audit backlog were co-designed by the audit “system partners”, which include the Department for Levelling Up, Housing and Communities, CIPFA, the NAO, the Financial Reporting Council, and the Public Sector Audit Appointments.
‘Complete audits as soon as possible’
In response to the uncertainty, the NAO referred Room151 to a Supplementary Guidance Note (SGN) issued to local auditors on 19 June.
The SGN advises auditors to “continue to follow the current Code of Audit Practice”, in light of the backstop dates not going ahead due to the dissolution of parliament.
“Where auditors are planning to complete audits, they should continue to make every effort to do so and as soon as possible.
“Until the new government has a policy position on the future of local audit in England it is not possible to provide any further clarity to auditors on next steps above and beyond what is set out in this SGN,” the guidance suggests.
CIPFA LASAAC’s announcement comes as some local authorities have reported that they are struggling to publish their draft audit accounts for 2023/24 due to the “knock on impact” of the backlog.
The most recent account tracker by LG improve has reported that 179 local authorities, equating to 57%, have published their draft accounts. This is a slight improvement from this time last year when 151 councils (48%) had published their accounts.
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