(Bloomberg) -- The UK spending watchdog has refused to sign off on the government’s annual accounts for the first time ever, pointing to a huge backlog of councils needing to get their finances audited.
The National Audit Office said it has been unable to gather enough “sufficient, appropriate evidence upon which to form an opinion” about the accounts for the 2022-23 fiscal year, which cover 10,000 public bodies including departments, councils and schools.
The NAO said that only around 10% of English local authorities produced reliable data for the accounts. Some 46% submitted information that hasn’t been audited and 44% did not hand in any data.
It is an embarrassing intervention for the UK government as it struggles to grapple with a financial crisis ripping through town halls. The new Labour administration is taking steps to deal with the huge delays in local government audits by clearing out the old backlog and focusing on more recent accounts.
Gareth Davies, head of the NAO, said the gaps were so “material and pervasive” that he had no choice but to “disclaim” his “true and fair” opinion on the financial statements.
“It is clearly not acceptable that delays in audited accounts for English local authorities have made it impossible for me to provide assurance on the Whole of Government Accounts for 2022-23,” said Gareth Davies, head of the NAO.
“It is essential that the steps being taken by government to restore timely and robust local authority audited accounts are effective,” he added.
The NAO said that the government’s remedy offers a medium-term solution to the problem, though will likely mean the disclaimer on the government’s accounts remains for 2023-24.
The accounts bring together all public sector assets and liabilities. The problems could make forecasting more difficult, with implications for tax and spending, as Chancellor Rachel Reeves has adopted a fiscal target based on public sector net financial liabilities.
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