The National Audit Office has refused to sign off the Whole of Government Accounts for the second year running because of concerns about unaudited data submitted by hundreds of local authorities.
The groundbreaking exercise in documenting the state of the UK public sector's finances is now in its 15th year. However, delays to the WGA’s publication schedule caused by the impact of the Covid-19 pandemic and a shortage of external auditors for local government accounts have prompted fears about the project’s usefulness in recent years.
The 2023-24 WGA, published yesterday, covers more than £1.076tn in total expenditure on public services made by more than 10,000 departments, agencies and other government organisations.
But the quality of the data is impacted by the fact that 167 local authorities in England failed to submit any data at all for the 2023-24 WGA, while a further 224 submitting data based on unaudited accounts.
Just 16 of the 407 English local authorities that should have submitted adequate audited information did so – a rate of 4%. The figure is a drop from the 10% of English local authorities who submitted reliable accounts in 2022-23.
While 2023-24 saw a dip in the number of English authorities failing to submit any accounts, there was a rise in councils and other bodies submitting unaudited accounts.
Greater numbers of councils in Wales and Scotland also failed to submit any accounts for the 2023-24 WGA compared to the previous year. Additionally, Wales, Scotland and Northern Ireland posted higher numbers of unaudited local government returns in 2023-24 than was the case in 2022-23.
Figures in the 318-page WGA document suggested that £73.2bn in 2023-24 public-sector expenditure was estimated to be unaudited.
NAO head Gareth Davies said a total 280 public sector bodies had failed to submit accounts for the 2023-24 WGA, up from 227 the previous year, while 201 organisations had failed to submit any data at all, down from 211 in 2022-23.
He said that the latest WGA needed to be “disclaimed” because he was unable to determine from the draft data whether financial information provided by the organsiations – predominantly councils – “is free from material misstatement”.
The NAO acknowledged the government’s Local Audit Reform Strategy, launched last year, which it said should lead to fewer cases of missing data in the WGA in future years. But said it would still take some time for the “normal level” of audit assurance for English local authorities to be restored.
Davies added: “The Whole of Government Accounts contains valuable information on public spending and the public sector’s assets and liabilities. It’s essential that the government’s reforms to the local government audit system in England are effective in restoring timely and robust assurance in that sector so that the accuracy of the UK’s Whole of Government Accounts can be properly assured.
“Even more importantly, local taxpayers in England deserve timely audited accounts from their local council.”
Sir Geoffrey Clifton-Brown, chair of parliament’s Public Accounts Committee, said it was “wholly unsatisfactory” for the WGA to have been disclaimed by the NAO for a second year running.
“Plans to fix the crisis in local audit are still a long way off from delivering and have so far served to increase the number of disclaimed opinions on local authority accounts,” he said.
“This lack of transparency and ability to hold councils to account will only deepen the current precarious state of local government finances.
“It is imperative that the local audit system is restored and that government acts to bring the WGA fully up to date as a basis for accurate and sound decision-making as soon as possible.”
HM Treasury director-general of public pending Conrad Smewing is the accounting officer for the WGA.
In his introduction to the 2023-24 dataset, he accepted the state of the local authority audit market is “the most significant” of the near-term challenges faced by the WGA.
“Despite these serious issues I believe WGA remains a useful document,” he said. “The government has acted decisively to clear the backlog of unaudited local authority accounts and put the local audit system on a more sustainable footing.
“In autumn 2024, legislation was introduced setting a series of statutory backstop deadlines for the publication of audited accounts.”
Smewing added that the establishment of the Local Audit Office in autumn 2026 would “streamline and simplify” the current system of powers and responsibilities.
“This will create a local audit system that delivers value for money, enhances transparency, and ensures timely and accurate financial reporting,” he said.