Draft accounts: delays continue despite deadline dash
0Dan Bates discusses the latest data on the publication of local authority accounts and examines why so many councils missed the 31 July deadline.
Photo: Shutterstock
Sunday 31 July 2022 was the deadline for local authorities to publish their draft accounts for 2021/22. Despite some last-minute weekend working, almost one-third of councils did not meet the deadline.
The table below shows, for each type of authority, the number of published draft accounts and a percentage comparison with the previous year’s figures.
The annual accounts do matter and delays in publication hamper our ability to assess the financial health and sustainability of local government at a time of unprecedented turmoil.
Delays and difficulties continue
This is the second year in which the deadline was extended due to Covid-19 and the lower number of published accounts reflects continuing difficulties in the sector. A look at the published notices point to three main reasons for delays.
First, many authorities cite resourcing issues. The period leading up to accounts publication is traditionally hectic in finance teams but add to that the massive administrative burden which has come with Covid grants and reliefs, and it is little surprise that some authorities have struggled. I also wonder, judging from the number of job adverts, whether there are more accountants leaving the sector than are entering it.
Second, well reported issues with external audit capacity are clearly having a significant impact. Incredibly, half of all authorities still don’t have 2020/21 accounts signed off. Finalising 21/22 accounts without the assurance that brought-forward balances are finalised and correct can be tricky. Some authorities have pointed to issues from the 2020/21 accounts process preventing progress with this year’s accounts.
Finally, connected to the above, problems with fixed asset valuations are preventing sign off. This is perhaps the most frustrating issue and, as Michael Hudson has pointed out in his recent Room151 article, the work to get this right is disproportional to benefit as valuations have very little impact on financial health or performance of the local authority. The delay in accounts, however, means that more important issues such as the health of reserves and capital cannot be assessed until relatively meaningless detail issues are resolved.
The annual accounts do matter. I would say that as a good proportion of my working week is spent analysing them! But they really do and delays in publication hamper our ability to assess the financial health and sustainability of local government at a time of unprecedented turmoil.
I wonder, judging from the number of job adverts, whether there are more accountants leaving the sector than are entering it.
Flawed assumptions
The government and other regulators press ahead with policies and rules changes based on, sometimes flawed, assumptions about reserves, capital health, borrowing and commercial properties. Information from unaudited, incomplete, inconsistent and sometime inaccurate data sources is used to make important conclusions and policy decisions.
Audited accounts, analysed properly, provide the most reliable information on which to make the best assessment of local government financial health.
We all need to work together to catch up and remove the delay in accounts. By all I mean local authorities, auditors, the government and relevant regulators (CIPFA/LASAAC). It is in our joint interests to return to a situation where good quality local authority accounts are published and audited to the statutory deadlines.
Dan Bates is a finance specialist at LGImprove, which provides a financial resilience benchmarking service based upon annual accounts. He can be contacted at dan@lgimprove.com
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