Local government bodies are failing to respond urgently enough to the increasing number of concerns being raised by auditors, the head of the National Audit Office has warned.
In a report published today, the NAO said auditors raised concerns about the financial arrangements at nearly one in five single tier and county councils last year.
In total, auditors offered a ‘qualified conclusion’ on arrangements to secure value for money at 8% of local government bodies during 2017-18, including local authorities and police and fire organisations, and at 18% of unitary or county councils.
The report said the number of local government bodies receiving qualified conclusions was 40 in 2015-16. In 2017-18, 40 qualified conclusions have been issued so-far with 20 conclusions still to be issued.
In the NHS, the number rose from 130 (29%) to 168 (38%) across the same period.
“Let us hear no cries of ‘where were the auditors?’ when things go wrong.”
Public bodies are audited every year, with auditors offering an opinion on whether an organisation’s financial statements comply with reporting requirements, are free from material errors, and whether arrangements are in place to properly manage finances.
Auditors can ‘qualify’ their opinion in cases where they have concerns about an organisation’s accounts or financial arrangements to secure value for money.
The NAO said it contacted 102 local public bodies where auditors had raised concerns about their financial arrangements. While 95% of those who responded said they had plans in place to address weaknesses, only three bodies had fully implemented these plans.
Amyas Morse, head of the NAO, said: “I am shocked by the persistent high level of qualified audit reports at local public bodies.
“A qualification is a judgement that something is seriously wrong, but despite these continued warnings, the number of bodies receiving qualifications is trending upwards.
“Let us hear no cries of ‘where were the auditors?’ when things go wrong. The answer will be ‘they did the job, but you weren’t listening’.
“This is not good enough; local bodies need to address their weaknesses, and departments across government should ensure they are challenging local bodies to demonstrate how they are responding.”
Auditors also have powers to issue Public Interest Reports or Statutory Recommendations that require local bodies to publicly consider the matters reported and publish their response.
Since April 2015, auditors have issued three reports and made seven statutory recommendations.
Public Interest Reports have drawn attention to issues including unlawful use of parking income, governance failings in the oversight of a council-owned company, and management of major projects or members’ conduct.