Council audit delays hitting NHS

The National Audit Office said this week that local auditors gave opinions on only 12% of local government bodies’ 2021/22 financial statements by the statutory accounts’ publication deadline of 30 November 2022. This marks a significant downturn in performance compared with 45% of opinions given in 2019/20 and 97% in 2015/16. As of 30 November, Public Sector Audit Appointments (PAA) reported that a total of 632 audit opinions were outstanding for all years.

The watchdog’s report – Timeliness of local auditor reporting on local government in England – follows up its earlier March 2021 publication, highlighting that what was already a downward trend accelerated during the Covid-19 pandemic.

While the delays in completing local government audited accounts have implications for local accountability, they also have impacts elsewhere. For example, local audit delays were partly responsible for the late certification of 2019/20’s whole of government accounts and in 2021/22 also contributed to the late publication of central government accounts that had material pensions valuations.

However, the local government delays are also having an impact on the NHS, which relies on many of the same audit firms and staff. Delays in one sector disrupt the firms’ audit planning and delivery for the others, the NAO said. It highlighted work by the HFMA on this subject and identified a number of issues, including:

• concerns about audit team capacity. This can result in fewer interim audit visits, putting more pressure on the year-end audit
• difficulties attracting interest from enough firms when trying to appoint an auditor
• concerns about the ability to appoint in future.
• concerns about the timetable for accounts preparation in terms of finance team capacity.

The Public Accounts Committee has recommended the DHSC bring forward the preparation and publication of its annual report and accounts. While the Department is working towards returning to a pre-Parliamentary recess timetable from 2023/24, it has warned that this is dependent on capacity issues in the audit market.

Gareth Davies (pictured), head of the NAO, called on the Department for Levelling Up, Housing and Communities to continue working with the Financial Reporting Council and other key stakeholders to secure the timely production of audited accounts for local authorities. ‘It is essential to transparency that the timeliness of local auditor reporting improves and does so quickly,’ he said.