Question to the Department for Levelling Up, Housing & Communities:

To ask Her Majesty's Government what are the consequences when auditors fail to sign off a district council's annual budget.

A council's annual budget is signed off by a meeting of the full council as presented by its chief finance or Section 151 Officer. An auditor does not generally have a role to play in this process. However, the auditor issues an opinion on ie ‘signs off’ a council’s year-end financial statements. This opinion may be unmodified or, where an auditor has identified significant issues, they may give a modified opinion. Auditors also have powers to issue an advisory notice or a public interest report. Local authorities are accountable to their electorate.

It is a legal requirement for a council’s accounts to be signed off by the external auditor, however as the auditor must be satisfied with the accounts before doing so, there is not a specific timescale within which they must give their opinion or other specific consequences of a failure to sign off the accounts. Recently there has been a significant increase in the number of council accounts that remain outstanding. As at 31 May 2020, the 2018/19 accounts of 57 councils had not been signed off.

To help address the audit delay issue, we commissioned the independent Redmond review to review arrangements supporting the transparency and quality of local authority financial reporting and external audit within the Local Audit and Accountability Act 2014. The Review is due to report later this year. We also recognise the pressures councils - and auditors - are under in the context of Covid-19 and have therefore extended the deadlines for them to publish their draft and final accounts in 2019/20 to 1 September and 30 November 2020 respectively.