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Accounts qualified for 1,000 ‘small bodies’, reports Audit Commission

THE AUDIT COMMISSION has expressed its dismay at the decline in the quality of reporting for ‘small bodies’ such as parish councils and Internal Drainage Boards, which spend around £570m of public money each year.

It made public its disappointment in its finalAuditing the Accounts 2013/14: Local Government Bodies’ report.

However, it was more upbeat about the financial reporting was consistently strong for most types of principal local authority in 2013/14 when compared to the previous financial year.

But 1,015 parish councils (11%) and 19 internal drainage boards (IDBs, 16%) received a qualified opinion on their 2013/14 annual return by 30 September 2014. For parish councils and IDBs, the level of qualifications increased from 8% and 9%, respectively.

And while 99% of small bodies received an audit opinion by 30 September this year, the commission said there were still 74 parish councils where auditors had qualified the opinion for three consecutive years (2011/12 to 2013/14). Such persistence at these parish councils suggests “systemic weaknesses in their financial management and governance arrangements which need to be addressed locally”.

Marcine Waterman, the commission’s controller of audit, said: “This is the last time that the Audit Commission will report on the financial stewardship of local public bodies. The first ‘Auditing the Accounts’ report for principal local government bodies was prompted by concerns we had regarding the timeliness and quality of the information reported by public bodies.”

But she expressed deep-seated fears over the future accountability and transparency of bodies that control public funds.

“No provision was made in the Local Audit and Accountability Act 2014 for the national collection and reporting of the audits of local government bodies. Small bodies with an annual turnover of £25,000 or less will be exempt from routine annual audit from 2017 and it is still unclear as to how local taxpayers will receive independent external assurance around accountability and governance for these bodies in the future. 600 of these bodies had their accounts qualified this year.

“Since the Audit Commission published the first Auditing the Accounts report for 2008/09, there has been a significant improvement in the performance of both principal and small bodies in meeting their financial reporting responsibilities. In the Commission’s view, one of the key drivers for the improvement has been its annual public reporting of performance. We very much hope that, without national reporting, these improvements will not be lost.”

Among the parish councils named and shamed by the commission is Keighley Town Council for a “number of significant weaknesses in its governance arrangements resulting in the council making decisions without due consideration of its legal powers”.

Recently PKF Littlejohn issued a damning audit report after it discovered that Keighley Town Council may have taken “unlawful actions” and acted “without consideration of its legal powers” – prompting West Yorkshire’s chief constable to compel investigators from its Economic Crime Unit to begin a probe.

Other authorities singled out for public shaming included Broughton Hackett Parish Council for failing to hold a bank account in the name of the parish meeting, which meant that the annual precept was paid into the clerk’s wife’s bank account.

Among the bigger public authorities singled out because auditors were unable to issue a 2013/14 opinion by 30 September 2014, were the London Boroughs of Lambeth, Tower Hamlets and Newham.

A hat-trick of fire authorities for Buckinghamshire and Milton Keynes, Cambridgeshire and Peterborough and Hampshire were similarly admonished while the Chief Constable for Kent Police as well as the Police and Crime Commissioner for Kent were also pulled up by the Commission.

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