Watchdog gives positive verdict on local government’s move to IFRS
- Published on Thursday, 15 December 2011 11:43
- Posted by Scott Buckler
The Audit Commission has found that, although challenging, local government has coped well with the transition to International Financial Reporting Standards (IFRS)
By law, the bodies in the report must publish their accounts six months after the end of the financial year with or without an audit opinion. Publishing audited accounts is one of the main ways that local bodies can show their stewardship for public money to their local people - and Parliament.
The Commission's report, Auditing the Accounts 2010/11, comments favourably on the quality and timeliness of financial reporting by councils, police authorities, fire and rescue authorities. It also includes other local government bodies.
The requirement, for the first time, to prepare their accounts using IFRS, created significant challenges for local government bodies preparing their accounts.
Auditors were able to give opinions by 30 September 2011 at 328 out of 356 councils; 36 out of 38 police authorities; 30 out of 31 fire and rescue authorities; and 28 out of 32 other local government bodies. This performance compares well with last year, despite the additional challenges of IFRS. Only one council received a qualified opinion - and that was unrelated to the implementation of IFRS.
However, the transition to IFRS had had an impact on timeliness - the number of bodies where the opinion was still outstanding after 31 October has risen, from 7 last year to 18 this year. There has also been an impact on quality, with a significant increase in the number of bodies needing to make material accounts adjustments following the audit.
Chief Executive of the Audit Commission, Eugene Sullivan, says:
'The vast majority of local government bodies have maintained their standard of performance on financial reporting for 2010/11. This is notable given the challenge of preparing accounts in accordance with IFRS. In particular, it is commendable that there have been no IFRS-related qualified opinions. Meeting the new requirements was, as expected, a significant challenge and there is still much to do in 2011/12.'
The report congratulates three councils, one police authority, one fire and rescue authority and five other local bodies for early publication of their audited accounts.
Eugene Sullivan adds:
'These bodies have done particularly well to achieve early publication in the first year of the new IFRS accounting requirements. Their performance shows that local government bodies as a whole can improve the timeliness of publishing their audited accounts.'
The Commission has also published two further Auditing the Accounts reports for 2010/11, covering parish councils and internal drainage boards (IDBs).
Parish councils and IDBs must publish their accounts within six months of the end of the financial year. As they have annual income or expenditure below £6.5 million, they prepare their accounts in the form of an annual return.
Overall, parish councils and IDBs demonstrated good performance in respect of the timeliness and quality of their financial reporting for 2010/11.
The audit opinion and certificate on the 2010/11 annual return was issued by 30 September 2011 at 94 per cent of parish councils and IDBs. However, the reports name 14 parish councils that have failed to publish an annual return for the last three years or more, and two IDBs that failed to publish audited accounts for two or more years prior to 2010/11. The Commission is concerned about the persistent failure of these bodies to fulfil their financial reporting and accountability responsibilities.
Eugene Sullivan adds:
'Our three reports issued today also provide assurance to the Accounting Officers of government departments that the funds distributed to the bodies have been safeguarded and accounted for properly. Our reports will help to inform the annual accountability 'system statements' that Accounting Officers include in their annual governance statement'