Statement on the approval of the accounts at the Audit and Governance Committee on Wednesday 22 January
Councillor Paul de Kort, Leader of St Albans City and District Council, said:
I am pleased that the Council’s Statements of Accounts for three previous financial years have been approved by the Audit Committee.
This brings to an end what has been a frustrating period for us and dozens of other local authorities across the country.
We have complied with all laws and regulations governing our financial activities and there is nothing untoward in the accounts, which have been open to public inspection.
Unfortunately, the delays in auditing the accounts – which were out of our control – have led to some unfair criticism and speculation that can now be put to rest.
We will move forward, look to the future and concentrate on finalising our accounts for the last financial year, 2023/24, with the way clear for them to be audited in a timely fashion.
Jonathan Flowers, the independent Chair of the Council’s Audit and Governance Committee, said:
As the Council’s external auditor BDO’s report explains, delays to the auditing of local authority accounts have been a national problem due to factors which councils have been powerless to prevent.
These range from significant staff shortages among BDO and other auditors, who have had difficulty in recruiting and retaining staff, to the adverse impact upon their work of the Covid-19 pandemic.
The Government recognised councils were experiencing lengthy delays through no fault of their own and introduced legislation last year which allowed them to clear the backlog and start afresh.
Auditors are now required to issue a disclaimed opinion on accounts which the backlog pressures mean they have been unable to check.
More than 300 disclaimed opinions have been made by auditors for local authority accounts across the country. It offers no opinion rather than an approval or a non-approval and attaches no blame.
It is a mechanism the Government is using to reset the local audit assurance process and allow for a fresh start.
This means that the Audit and Governance Committee have had to look to other sources of assurance in relation to our accounts such as the work of our internal audit service.
We look forward to putting the backlog behind us, though it will be some time before any of the affected councils can get fully approved accounts because of the overhang from this issue.
Cllr de Kort added:
A disclaimed opinion is what BDO have made for our accounts for the financial years, 2021/22 and 2022/23.
For the financial year 2020/21, they have issued a modified opinion. The audit commenced for that financial year but was not completed.
Some issues were identified during the audit but were not resolved within the time constraints.
These are of a technical nature, such as the method used to value land and buildings, and we don't necessarily accept the points BDO have raised. It is a matter of judgement, and we will simply agree to disagree.
The important thing is that we can now put these frustrating delays behind us and with the Committee having approved the accounts, we can move on to complete our accounts for 2023/24 with the help of our new auditors, KPMG.
Notes:
BDO’s Audit Completion Report – Extract from the Executive Summary:
Circumstances that affect the form and content of the auditor's report
There has been a deterioration in the timeliness of local audit in recent years leading to a persistent and significant backlog of audit opinions.
Across England, the backlog of outstanding audit opinions stood at 771 at 31 December 2023 and is estimated to increase to around 1,000 later this year.
In February 2024, the Department for Levelling Up, Housing and Communities published ‘Local audit delays: Joint statement on update to proposals to clear the backlog and embed timely audit’.
This joint statement confirmed that: “The issues facing local audit are widely recognised as multi-faceted and complex with no single cause or solution”.
The factors contributing to the delay in issuing an audit opinion on the financial statements of St Albans City & District Council for the year ended 31 March 2021 include, but are not limited to:
§ increased regulator expectations on auditors
§ difficulties in attracting, developing and retaining staff to perform local audit work
§ the impact of the Covid-19 pandemic
Over the last year, organisations involved in the regulation and oversight of local body financial reporting and audit have been working collectively to agree a proposed solution to clear the outstanding historical audit opinions and ensure that delays do not return.