Parliaments across the UK are struggling to explain spending, just as the pandemic has invested billions of pounds in the UK government to continue front-line services such as housing and social welfare ten years after tight finances. ..
In addition to last year’s additional £ 10 billion, Prime Minister Rishi Sunak has promised local governments an additional £ 4.8 billion over three years with an autumn budget. Cash will partially cancel the 37% real-term reduction imposed on Congress since 2010. This has been accused of pushing parts of Congress into dangerous real estate investments.
According to the Public Sector Audit Appointments (PSAA), a subsidiary of the Local Government Association, only 9% of UK local governments have released their audited accounts for the 2020/21 fiscal year by the statutory deadline at the end of September.
PSAA, responsible for appointing auditors for nearly 500 public authorities, including councils and fire departments, also found that 70 councils’ 2019/20 accounting was delayed by more than a year.
Meg Hillier, chairman of the House of Commons’ Public Accounting Committee, said in November that Whitehall and the local government said that there were no auditees among the officials of the Housing and Community Level Up Bureau (DLUHC). An accurate image of the sector, which means “flying blindly”.
Authorities denied her claim, but admitted that 10 local governments had applied for “exceptional financial support.”The other three are effective Bankruptcy Since 2018, this year includes the Throw Autonomous Region Parliament.
Timely audited accounts help provide transparency and accountability and serve as an early warning of financial and governance issues. It also helps local leaders set local tax rates and plan the services they can provide.
Auditors and local government officials have caused delays, including 10 years of tight finances, significant reductions in audit fees, and the dissolution of the 2015 Audit Committee, which has many years of experience overseeing specialties. Situation “is explained.
“Unfortunately, they threw their babies out of the bath water,” said Rob Whiteman, CEO of the Association of Certified Accountants.
“We are now trying to recover from the problematic decade when the rug was pulled out from under local public audit.” Without improvement, “decision-making will be poorer. .. fraud. And the potential for corruption increases, “he added.
A government-consigned review, published in September 2020, highlighted the plunging resources available since the majority of local government audit procurement was transferred from the Audit Committee to PSAA.
According to a review led by former local government ombudsman Sir Tony Redmond, between 2014/15 and 2018/19, local audit fees were reduced by 40% and the cost of central government and FTSE 100 corporate audits was 20. % Increased.
“Even local public audits can reach the break-even point,” said Mark Babington, executive director of regulatory standards at the Financial Reporting Council (FRC), where audit firms focus resources on this sector. He added that it is unlikely.
Some council executives feel that the new system prioritizes price over audit quality and senior staff.
Conrad Hall, resource director of the Newham Council in eastern London and former Chief Financial Officer of the Brent Council in the northwestern capital, said the company “has invited as many experts as possible and has sufficient expertise in this area. I’m not building knowledge. ”
DLUHC officials told the Public Accounting Commission that PSAA will focus on quality over price in next year’s audit bid. The PSAA declined to comment, but previously promised to “play a role in helping tackle the challenge.” We have simplified the system that allows the amount to be increased in case the auditor does extra work.
The government has “taken steps to prioritize market stability,” including extending the deadline for audit completion and providing an additional £ 15 million this year to help raise expected audit fees. ..
Sector pressure is affecting quality, and in this year’s review by the FRC, which oversees 216 accounting for the UK’s largest municipality, 30% of local audits are considered in need of improvement.
Auditors said many delays were caused by the long waits of the council’s finance team, often exhausted by budget cuts, to provide information when requested.
“If you’re struggling to get an answer … EY’s UK Public Services Guarantee Leader Janet Dawson, who shares 80% of the local audit market with Grant Thornton and Mothers, said: increase.
However, council officials say that existing rules allow auditors to spend too much time on less important issues, such as valuing nonprofit assets such as schools that are less likely to be sold, rather than more imminent risk. Claims to be necessary.
Before it went bankrupt, the Slough Autonomous Region Congress’s borrowing went from £ 180 million to £ 760 million in four years after investing in Gosport and Wolverhampton supermarkets and Basingstoke cinemas. Increased.
Carol Culley, Deputy Chief Executive Officer of the Manchester City Council, said: “The authorities are very focused on borrowing and have no financial resilience. They are unseen issues. [in audits].. ”
The government will hand over oversight of local audits to the Audit Reporting Governance Authority (Arga). Alga is expected to replace the FRC in 2023 as a corporate accounting watchdog. Some public financial experts are afraid that Alga will focus on overseeing large corporations. Do not coordinate approaches to the most significant risks that need to be identified in local government accounting.
However, Babington downplayed these concerns and noted recent records in the FRC’s more limited supervisory role. Regarding the reduction of local audits that needed to be improved from 60% last year to 30% this year, he said: .. .. The level of audit work in that sector seems to have risen last year. “
Local authorities in England grapple with audit crisis Source link Local authorities in England grapple with audit crisis