Accounting Practice Upgrade or More False Promises?

 

 The National Association of Local Councils (NALC) has been working on improving standards and accounting practices of local councils, particularly parish and small councils.

The 2024/25 review shows that 97% of local authorities submitted their Annual Governance and Accountability Returns (AGARs) by the end of September. Whilst two-thirds of councils (67%) received clean, unqualified audit opinions.  However, this also means, that 33% did not – ie one third of all councils.  And although councils might have submitted their returns on time, this does not mean to say that their record was accurate or completely open and transparent.  Thus the study would appear to focus primarily on completion rates rather than on the depth or effectiveness of audit scrutiny.

The Report also stated that Auditors also maintained high levels of performance, completing 94% of reviews by the statutory deadline, rising to 96% by year-end.  However, this might be to place the emphasis more on quantity than on quality.  Given that many audits are light touch, and that much of the examined documentation is ‘selected’ by council Clerks/Finance Officers, thus some important details and minor errors might not have been identified.

Given that 'the local government sector is responsible for delivering vital local services and managing more than £856 million in annual funding', perhaps it is time to concentrate a little more on the quality, accountability and transparency of governance.

That said, the report does admit to 'longstanding and systemic challenges that remain unresolved'.  It states that ‘despite the positive headline figures, issues such as late submissions, a number of qualified audit opinions, and Public Interest Reports continue to affect a minority of local authorities. These problems are often linked to capacity constraints, complexity in regulatory requirements, and an inconsistent application of guidance, rather than deliberate non-compliance’.   Although there are cases where non-compliance appears both clear and significant.

This leads some observers to note that regulatory bodies have not always acted decisively when concerns have been raised and that intervention has been sufficiently robust.

Many long-standing observers of the sector will recall a time when relatively minor accounting discrepancies attracted far greater scrutiny.  A former Leader of Newcastle-under-Lyme Borough Council claimed that time was when £10 or less not fully/properly accounted for would trigger a major investigation.

Over the past 20 years and a laissez-faire approach, it now takes five figure sums before the regulatory gaze is turned in order to identify embezzlement/ fraud/ over reimbursement by the unscrupulous.  Neither can official recorded evidence be found which systematically publicises that ‘lost’ sums are ever recovered.

It is therefore somewhat reassuring to learn that ‘game-changing steps are planned by SAAA (formerly JPAG), including moving the annual governance and accountability return online.  It's welcome support for the work of the panel overseeing improvement to proper practices, which is helping too’.

It is also almost reassuring to note that whilst NALC is aware that its Report makes ‘very positive reading and reflects the success of the audit framework and SAAA,  it also shows that in many respects, progress has stalled’ and that ‘without targeted intervention and support, we risk seeing the same issues repeated year after year’.  

Hopefully, this is why NALC might also be urging ‘renewed focus by parish and town councils on good governance and a national drive on sector-wide improvement, including stronger support for councils to build capability, improve compliance, and apply guidance more consistently’.

And whilst this might be a plea for more funding, it might be an idea to understand that perhaps performance should come before reward.  Essentially people perform, the funding to do so is just a tool to assist.  This might suggest a need for rigorous and systematic training for staff at the local level - both paid and elected.

This might be especially important when local people then link poor decision-making and management to a wastefulness of often scarce resources which have to be found at the local level via the Community Charge, the Parish Precept- in addition to national taxation. 

However, to even make a start on this, it might be necessary, first, to address the reality of the over representation of too many pale, stale and male individuals who occupy the seats on too many local councils.