Auditor General calls for urgent action, as the amount of money local councils manage continues to increase
The current standard of financial management and governance remains disappointing at too many Town and Community Councils, according to a report, published today by the Auditor General for Wales. In this financial year, the number of issues identified by auditors – leading to ‘qualified audit opinions’ - has doubled. And, it has been necessary for the Auditor General to issue reports ‘in the public interest’, or make formal recommendations, to 8 councils in 2018.
Town and Community councils continue to manage increasing sums of public money. Collectively, in 2017-18, they raised over £48.5 million in income, primarily from council tax payers. They spent over £47.4 million. Because income continues to outstrip expenditure, by 31 March 2018, their reserves had increased to over £38.7 million.
Today’s report concludes that a significant number of councils fail to comply with their statutory responsibilities for preparing their accounts and ensuring that proper arrangements are made for the statutory audit. The number of ‘qualified audit opinions’ doubled in 2017-18 to 340 councils. And, auditors have, again, highlighted the need to develop and improve the internal audit function – with the Auditor General planning to publish a national report on internal audit in the sector shortly after this report.
The report also highlights the future audit programme up to 2021 and shows the areas which auditors will focus on. These include compliance with standing orders, arrangements for making payments and the employment of staff. Audits will continue to focus on areas where auditors identify scope for improvement.
In October 2018, the Independent Review Panel on Community and Town councils in Wales’ published its final report and made several recommendations. The Auditor General says this now provides Town and Community councils with an opportunity to reflect on the services they deliver to their communities and the financial impact of any proposed developments. They need to consider their future role and how this will impact on their financial management arrangements.
Auditor General, Adrian Crompton said: “Year after year, my auditors are uncovering deficiencies at Town and Community councils across Wales and the situation is worsening. This cannot continue. With rising incomes and increased responsibility, the sector needs to get a grip on financial management, now more than ever. My report needs to be read, digested, and acted upon – so that communities in Wales get the services and the assurance they rightly deserve.”