Accounting Standards

ICAEW warns of ‘failures’ of local govs financial reporting

The trade association emphasised recent research by Grant Thoronton on reports by local auditors into public interest reports

The Institute of Chartered Accountants in England and Wales (ICAEW) has issued a warning regarding the “failures” of local government to provide insights for councils and their audit committees.

The trade association emphasised recent research by Grant Thoronton on reports by local auditors into public interest reports, which highlighted “significant weaknesses” in governance and scrutiny.

Recent public issue reports issued by local auditors include both Grant Thornton’s separate investigations into governance failures by Nottingham city council and the London borough of Croydon, as well as KPMG’s report into Northampton borough council.

The government’s recent Redmond review into audit committees found concerns about the partisan nature of their make-up, which is detrimental towards proper scrutiny.

Oliver Simms, manager of Public Sector Audit and Assurance for ICAEW, said: “The failures that led to local auditors issuing public interest reports provide lessons for all local authorities on the importance of good governance and strong financial management to ensure councils remain financially viable and secure value for money for taxpayers.

“It is particularly worrying when significant concerns raised by auditors are not addressed. Local authorities face significant financial challenges as they emerge from the COVID-19 pandemic.”

He added: “A better understanding of financial risk, financial sustainability and the need for proper due diligence, combined with an open culture that looks for opportunities to learn, is essential if council leaders, officers, audit committees and councils are to ensure they use their resources effectively.”

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