ICAEW has welcomed the release of a Written Ministerial Statement on the local audit backlog, in a joint statement with the Chartered Institute for Public Finance and Accountancy (CIPFA).

The Written Ministerial Statement gives a clear timeline for reducing the backlog and by setting backstop dates for audits.

Jim McMahon, Minister of State for Local Government and English Devolution, writes in the statement: “Local authorities and other local bodies, alongside their auditors, are our partners in this plan to restore a system of high-quality and timely financial reporting and audit, while managing the impact of this in a sustainable way. I commend the commitment of local finance teams and auditors in their work to date.” 

The statement outlines proposed secondary legislation that will include five further backstop dates up to and including financial year 2027/28. This will allow the government to rebuild full assurance over several audit cycles. The government and its local audit system partners want local audit to recover as early in that period as possible. They expect disclaimed opinions to be limited to the next two years – up to and including the 2024/25 backstop date of 27 February 2026 – in most cases.

The proposed backstop dates are:

• Financial years up-to-and-including 2022/23: 13 December 2024
• Financial year 2023/24: 28 February 2025
• Financial year 2024/25: 27 February 2026
• Financial year 2025/26: 31 January 2027
• Financial year 2026/27: 30 November 2027
• Financial year 2027/28: 30 November 2028

The proposed legislation will include some scenarios in which bodies may be exempt. This includes: 

• where auditors are considering a material objection; 
• where recourse to the court could be required; or 
• from 2023/24, where the auditor is not yet satisfied with the body’s value for money arrangements.

Where such an exemption exists, the legislation would include a requirement to publish the audit opinion as soon as practicable. For transparency, if a body is exempt, they would be required to publish an explanation of their exemption at the time of a backstop date.

The work underpinning the statement, led by system partners the Ministry for Housing, Communities and Local Government, the Financial Reporting Council, the National Audit Office and CIPFA, is vital for both preparers and auditors. 

The timeline provides the framework for tackling the backlog of auditing the accounts and ensuring accountability and good governance for all stakeholders and our communities in the future via our audited public sector accounts.

“Restoring timely reporting is critical to restoring financial accountability to the local government sector in England,” Alan Vallance, ICAEW Chief Executive says. “The current delays in publishing financial statements have led to unacceptably low levels of accountability of some local authorities. By setting backstop dates there is a reset of the audits of financial statements, which is an important step to restoring credibility and preventing backlogs recurring in the future.”

CIPFA Chief Executive Owen Mapley adds that the Ministerial Statement is an important step to address the backlog and re-establish timely financial reporting and audit in England. “CIPFA remains committed to supporting work taking place across the local audit system and calls on all public finance professionals to continue the work they are doing to provide transparency and accountability through their accounts to the communities they serve.”