Everyone knows we have to pay Council Tax, but who keeps an eye on how it’s spent? Councils have to ensure they are open and transparent so they have to prepare their annual accounts up to 31 March each year and these accounts are independently audited. This provides assurance to local taxpayers that their money has been managed effectively by their local council and it’s not being spent incorrectly.
In September 2013, the Auditor General published his first report summarising issues arising from the external audit of town and community council accounts for 2011-12 (you can read that report on our website via the Publications page).
The main finding was that local councils needed to address “systemic weaknesses in their financial management and governance arrangements”. In non-auditor speak that means, there was a concern that Councils didn’t have strong enough procedures for how they report on finances and the way they managed their day to day activities.
Earlier this month, the Auditor General published a further report on the topic. this new report (again you can find this report online here) reflects on the progress made since 2011-12 and highlights the areas where auditors will focus their attention for 2015-16.
The Crystal Ball of Audit 2015-16
So what does our latest report say? Firstly it provides some encouragement that local councils are making progress. It shows that improvements are being made in the timeliness of preparation of accounts as well as a reduction in the numbers of councils who received a negative or “qualified audit option”.
This is tempered by the fact that a large numbers of councils continue to submit accounts for audit that contain basic errors and need to be amended or they fail to provide auditors with information the auditor had requested. In its most extreme cases, some council had not provided our auditors with sufficient information which delayed a report for up to five years!
We identified that 38 councils received qualified audit opinions for both 2011-12 and 2012-13, that’s 5% of all Local Councils. To further highlight the point 26 of these councils received the qualification for the same reasons, for both years.
Although never a nice part of the job, we have had three occasions where Auditors have had to use their statutory duties and highlight “significant failings”. It is important that we highlight these cases so that all councils in Wales can learn from the mistakes made by others.
As with all our reports, we don’t ever want to just produce something highlighting the doom and gloom of the situation, but to actually prescribe real and practical ways of meeting the requirements set. An example of this would be the recent report on audit arrangements, which looks at budget setting, monitoring and internal audit practices – all things which will be a focus for us in 2015-16.
By setting our stall out early and making things as concise as we can we can provide local councils with the opportunity to make any necessary changes to their arrangements before the start of the financial year.
About the author:
Deryck is the WAO’s Technical Manager for Local Government and Community Councils. He has worked on community council audit since 1994 and has presented on local council’s governance and financial management at various sector led conferences.