ACCA supports plan to clear local authority audit backlog

ACCA has welcomed new proposals to clear the huge backlog in local authority audits. 

The global professional accountancy body highlights the need for the government to focus on the reasons why the backlog has developed to avoid similar crisis points in the future.  

Responding to a government consultation audit issues in local government, ACCA supports the proposed backstop dates for the publication of audited financial statements up to 2022/23 (Phase 1) and for financial years up to 2028 (Phase 2). The response, however, does express concerns that the plans are ambitious and that they are a short-term fix to more fundamental problems.  

With 1 in 5 councils in England and Wales saying they could become bankrupt in the next parliament, it is clear local authorities are facing an unprecedented financial crisis. The importance of an effective, functioning system of local audit has never been more important.   

Mike Suffield, director of policy and insights, ACCA UK, said: “The backlog of audited accounts presents a complex, multifaceted problem. The fact that the proposed reset period will take until 2028 shows the problem’s intricacy. While we support the reforms proposed, a longer-term plan is required.   

“Clearing the backlog by September 2024, setting deadlines for future audits, and streamlining procedures for timely financial reporting are positive steps. However, permanently addressing the root causes of this long standing issue will require comprehensive and concerted efforts from various stakeholders including the government, audit firms, regulators, and audit and accountancy bodies.” 

ACCA makes it clear that publishing late undermines the usefulness of accounts hindering transparency, accountability and informed decision making. Local authorities need to publish their audited accounts in a timely manner as one important step in restoring public trust in councils’ financial management. 

Longer term plans need to consider resourcing and financial capability at local authority level, the system for delivering local audits, and building a market in which audit firms want both to participate and to invest in skilled public sector audit professionals. Arrangements need to be made for the oversight of how the system is working and audit quality is being achieved.    

Jessica Bingham, policy and insights Lead, ACCA, said: “ACCA is also calling for measures to address underlying problems of shortages of experienced staff in local authority finance teams, attraction and retention hurdles in the profession, increased workload pressure on finance and audit staff, and the impact of reduced local government funding.”