Colchester City Council has announced the publication of its accounts for the three years ending 31 March 2023. Due to challenges in obtaining sufficient audit evidence within the necessary timeframes, the auditors have issued a disclaimed audit opinion, meaning they were unable to confirm whether the accounts provide a true and fair view. The council acknowledges the gravity of this situation and its potential implications, particularly in the context of the public sector's responsibility for transparency and accountability.
The council’s Governance and Audit Committee has carefully reviewed the accounts and approved their release. However, it must be emphasised that this approval was procedural and does not imply verification of the accounts' accuracy. The Committee has expressed its disappointment with the current situation and concerns about the limitations placed on both the auditors and the council in resolving these issues.
In its resolution, the Governance and Audit Committee minutes from 17 December 2024 stated: “The committee approves the accounts for the years ending 31 March 2021, 31 March 2022, and 31 March 2023. The committee notes the auditors have been unable to form an opinion on the accounts for Colchester City Council due to the reasons outlined in their report. The committee acknowledges the significant efforts of both the auditors and the council's finance team in addressing these challenges but remains concerned about the unresolved issues. Consequently, the committee cannot conclude that the financial statements presented are free from material misstatement. As highlighted by the auditors, undetected misstatements could have material and pervasive effects on the accounts.”
This issue is not unique to Colchester City Council. Many local authorities across the country face similar challenges, reflecting a broader backlog in local authority audits and the inability of the National Audit Office (NAO) to sign off the whole of government accounts. These delays highlight systemic issues within public sector accounting, where the complexity of International Financial Reporting Standards (IFRS) has not been adequately supported by Treasury funding rules.
The council welcomes the Government’s acknowledgment that the current audit and assurance arrangements are failing. This is underscored by a backlog of nearly 1,000 unaudited accounts across England and the fact that only one percent of councils and other local bodies published audited accounts on time last year. The council agrees with the Government's assessment that these failures stem from limited auditing capacity, poor coordination, and overly complex financial reporting and audit requirements. In response, the council will contribute to the Government’s consultation on reforms, advocating for meaningful changes to address these systemic issues.
As part of these efforts, the council will collaborate with other local authorities to urge the Chartered Institute of Public Finance and Accountancy (CIPFA) and other national bodies to develop practical solutions. A key priority is to better align International Financial Reporting Standards (IFRS) with the unique needs of public sector accounting. Achieving this alignment is vital to reducing the administrative burden on councils, many of which face significant financial and resource constraints.
While this situation is undoubtedly challenging, Colchester City Council is committed to working with newly appointed auditors and relevant national bodies to doing all we can to ensure future audits are completed on time and with full transparency. The council remains focused on maintaining public trust and delivering financial accountability.
Page last reviewed: 24 December 2024