‘Not enough time’ for auditor to provide opinion on RBWM accounts

Auditors are ‘disclaiming’ more than one year of the Royal Borough’s accounts, councillors learned this week.

The council will publish its completed 2021/22 financial statements today (Friday) for the Government’s first backstop deadline – which requires local authorities to publish financial statements up to 2022/23, regardless of whether audit work is completed.

RBWM’s former external auditors Deloitte previously confirmed the 2022/23 accounts would be 'disclaimed' – meaning it is unable to provide an opinion on the accounts.

Now, current auditor Grant Thornton has confirmed this is also the case for 2023/24.

The government introduced the ‘backstop’ measure to tackle the growing backlog of audit work on local councils' accounts by forcing financial statements to be published. 

The first statutory backstop today (December 13) allows councils to submit audited accounts up to 2022/23 and ‘reset the system’,  said the Minister of State for Local Government.

This will clear the backlog but due to time constraints, outstanding accounts will receive no opinion because auditors haven't completed their checks. 

Another backstop deadline is fast approaching for the 2023/24 accounts.

On Monday, the audit and governance committee was told there is ‘not enough time’ for Grant Thornton to undertake a full 2023/24 audit as it has not received the council’s draft accounts.

Meeting chair councillor Julian Tisi said this was ‘news to him’ and asked council officers why the 2023/24 accounts are being disclaimed with the 2022/23 accounts.

RBWM's finance officers confirmed they could produce the draft 2023/24 financial statements before Christmas.

But this is not ‘sufficient time’ for auditors to complete their opinion audit work before the Government’s next backstop deadline in February 2025, said Peter Barber, from Grant Thornton.

“Clearly that has ramifications for future year audits, because there is a number of years of clean opinions (accounts with no issues) that need to pass for that historic disclaimer to work its way out through the accounts,” he added. 

RBWM assistant finance director Julian McGowan said: “The timescale is very tight.

"We're still going [through] the 2023/24 accounts because…we're actually trying to get the balance sheet right for 2023/24 as opposed to the accounts you've seen through today.

“Work is happening furiously in the background to get those produced.”

The next proposed Government backstop dates are February 28, 2025, for financial statements from 2023/24 and February 27, 2026, for the financial year 2024/25.

The government may publish a list of bodies and auditors that do not meet proposed backstop dates.

Mr Barber said a ‘very challenging’ timeline was set nationally, giving local authorities two months to produce financial statements.

Accounts of this ‘size and complexity’ would require several more months of audit.

“If you’d got the accounts to us two or three months ago, that would have probably been too late,” he added.

“It's not just a case of receiving the accounts. Clearly, it is very resource-intensive from our side and your side.

“We need to look forward to 2024/25 and ensure the council [can] produce timely accounts that enable us to have a good run at completing the audit ahead of the 2024/25 deadline.”