Local government audit backlog in England blamed as spending watchdog disclaims government accounts for first time

The National Audit Office has disclaimed the Whole of Government Accounts (WGA) for the first time, blaming the severe backlog in audits of England’s local authorities.

As a consequence of the disclaimer of WGA 2022-23, there is inadequate assurance over material amounts throughout those accounts, the spending watchdog said.

It added: “It is essential that the steps being taken by Government to restore timely and robust local authority audited accounts are effective.”

As well as local authority accounts, the WGA combines the accounts of more than 10,000 public bodies, such as central government departments, devolved administrations, the NHS, academy schools and public corporations.

Within his audit report, the NAO’s head, Gareth Davies, said he had been “unable to obtain sufficient, appropriate evidence upon which to form an opinion”.

According to the watchdog, just over 10% (43) of England’s 426 local authorities submitted reliable data to the WGA.

Of the near 90% of local authorities that failed to submit reliable data, 46% (196) submitted information that hadn’t been audited, and 44% (187) did not submit any data at all.

The impact of the backlog was deemed so material and pervasive that the Comptroller and Auditor General (C&AG) was unable to give any opinion on the WGA at all.

The C&AG will continue to provide assurance over all central government departments via their statutory departmental accounts on an annual basis, and the disclaimer of the WGA does not impact upon the opinions he gives on those accounts.

The NAO noted that the Government is taking steps to address the backlog in audited accounts for English local authorities, including the use of fixed dates by which each year’s audits must be completed.

The watchdog suggested that this process was unlikely to allow the disclaimer on WGA to be removed for 2023-24, but it did offer a medium-term solution to the problem.

Gareth Davies said: “It is clearly not acceptable that delays in audited accounts for English local authorities have made it impossible for me to provide assurance on the Whole of Government Accounts for 2022-23. It is essential that the steps being taken by Government to restore timely and robust local authority audited accounts are effective”

Sir Geoffrey Clifton-Brown MP, Chair of the Public Accounts Committee, said: “The Whole of Government Accounts should provide an accurate picture of the nation’s finances.

“It is deeply unsatisfactory that failures in the local authority audit market have meant that the Comptroller and Auditor General is unable to give any formal audit opinion on the accounts for the first time ever.”

He added:“If these issues are not addressed, it will become increasingly difficult to hold local leaders to account and more horror stories of failing councils will follow.

“The government should press forward with its plans to permanently resolve the local audit crisis. The Whole of Government Accounts must be made fit for purpose again.”

An HM Treasury spokesperson said: “The Whole of Government Accounts remains a valuable and reliable source of information for a wide range of stakeholders.

“We are working with local authorities to improve reporting and transparency and ensure the accounts are as detailed as possible, while making significant additional disclosures to the National Audit Office to address any missing data.”