Audit Commission hails improvement in local financial reporting

11 Dec 13
Councils have continued to improve their financial reporting, with only one local authority – Manchester City Council – receiving a qualified audit opinion on its 2012/13 accounts, the Audit Commission has said

By Richard Johnstone | 12 December 2013

Councils have continued to improve their financial reporting, with only one local authority – Manchester City Council – receiving a qualified audit opinion on its 2012/13 accounts, the Audit Commission has said.

Audit Commission, Millbank Tower

In its annual Auditing the accounts report, the commission said 99% of local authorities had received an audit opinion on their accounts by the target date of September 30. This is up from just over 90% one year ago.

Only Manchester City Council’s accounts had been qualified to date. Auditors issued the ‘except for’ opinion due to a limitation in the scope of the accounts.

This was because some assets were included in the council's group accounts at their original cost, whereas they should have been included at their fair value. A Manchester City Council spokesman said the technical error in no way impacted the actual money available to the council.

In addition, 12 councils, two police bodies and two other local government bodies had their arrangement for securing value for money qualified.

Marcine Waterman, the commission’s controller of audit, said the overwhelming majority of local authorities continued to meet their financial reporting responsibilities at a time of pressures on funding.

‘We’ve published Auditing the accounts for five years now, and during this period there has been a real improvement,’ she added. 

‘Councils have made the greatest strides, moving from 85% receiving an audit opinion by September 30 for their 2008/09 audits to 99% this year. The figures reflect the effort that bodies have invested into getting this process right.'

However, Waterman directly criticised Birmingham City Council for failing to publish its 2012/13 accounts by the June 30, meaning auditors were unable to meet the target of signing off accounts by the end of September.

England’s largest local authority was one of five bodies that failed to produce signed and certified accounts for 2012/13 by the end of June. The others were Epping Forest District Council, the South Worcestershire Shared Services Partnership Joint Committee, the West London Waste Authority and Dorset Police.

‘I hope the bodies that delayed publishing their audited accounts this year appreciate the importance of putting this information into the public domain as early as possible and will work to avoid a similar occurrence in the future,’ said Waterman. 

‘With all the resources it has to hand, it is especially disappointing to see the largest council in the country miss this deadline.’

Responding to the comments, Birmingham City Council said that its accounts had been given an unqualified opinion in its annual audit letter, which will be presented to the council’s cabinet on December 16.

A spokeswoman said the council's accounts for 2012/13 were the second to be compiled as part of a three-year financial reporting improvement plan, and they were submitted to the deadline agreed with auditor Grant Thornton.

Deputy leader Ian Ward added: “Our accounts have received an unqualified opinion, which is effectively a clean bill of health and the outcome that all public sector organisations strive for.

‘The auditor acknowledged in his Annual Audit Letter that the council has significantly improved the quality and timeliness of its accounts production, which coming in the second year of a three-year improvement plan is very encouraging.’

Waterman welcomed the fact there were now no parish councils or internal drainage boards that had failed to prepare and publish audited accounts for three consecutive years, for the first time since the commission began the report.

However, she criticised the government’s proposals to allow small bodies with an annual turnover of £25,000 or less to avoid annual audits in the new local audit regime, which begins in 2015, when the commission is abolished

‘In our view, it is not clear how local taxpayers will receive independent external assurance around accountability and governance for these bodies in the future,’ Waterman said.

Responding to the report, CIPFA’s policy & technical director Ian Carruthers said: 'This report demonstrates the excellent job that the finance profession across local government is doing, especially when considering the increasing financial pressures they face.

'While encouraging, as those pressures continue, the challenge for the profession will be to carry on demonstrating that same high levels of financial management and good governance in the years ahead.'


CIPFA logo

PF Jobsite logo

Did you enjoy this article?