Background to the report

In 2019‑20, 487 local bodies were responsible for approximately £100 billion of net revenue spending. These local bodies are also responsible for delivering many of the public services which local taxpayers rely on every day. Each year, external auditors audit their financial statements and provide their opinion on whether they present a true and fair view of their financial position; proper arrangements are in place to secure value for money; and if there are any matters to which they wish to draw attention to users of the financial statements. Proper accounting for public funds is central to democratic accountability at a national and local level.

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Service demands on local bodies have increased considerably due to the COVID-19 pandemic. Whilst this has had an impact on the audit of local bodies, the pandemic has also exacerbated long-standing problems in the audit landscape as fees have decreased, audit demands increased and the commercial attractiveness of the work for audit firms has declined.

Scope of the report

Since 2015, the Comptroller and Auditor General (C&AG) has been responsible for setting the standards for local public audit in England, through maintaining a Code of Audit Practice and issuing associated guidance to local auditors. Our report sets out the:

  • roles and responsibilities of local auditors and national bodies to the local audit framework in England; and
  • facts relating to the decline in the timeliness of delivering audit opinions on local government in England and the main factors contributing to that decline in timeliness.

We have based our report on published data, the views of local authority finance directors, key stakeholders in the audit landscape, and audit firms. We have also considered the impact on central government.

Report conclusions

Given the increasing financial challenge and service pressures on local authorities since 2010, local councils need strong arrangements to manage finances and secure value for money. External auditors have a key role in providing independent assurance on whether these arrangements are strong enough and recommending any action. The late delivery of 2019-20 audit opinions is concerning, given the important part that external audit plays in assurance over taxpayers’ money both centrally and locally.

Since we reported on local authority governance and audit in 2019, despite efforts by the various organisations involved in the local audit system and by the Ministry of Housing, Communities and Local Government, we can only conclude that the local audit system has worsened. The increase in late audit opinions, concerns about audit quality and doubts over audit firms’ willingness to continue to audit local authorities all highlight that the situation needs urgent attention. This will require cooperation and collaboration by all bodies involved in the local audit system, together with clear leadership from government.


Publication details

Press release

View press release (16 Mar 2021)

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