The Smaller Authorities' Audit Appointments (SAAA), on 19 April 2023, announced its new board and published a report on the results of the auditor's work 2021/22.
David Bowles, a CIPFA-qualified accountant, now chairs SAAA's new board. Mr Bowles has extensive experience in the public and private sectors, including the chief executive of four different councils, notably Lincolnshire County Council.
SAAA has also published its fifth report summarising the results of auditors' work at smaller authorities concerning the year that began on 1 April 2021 and ended on 31 March 2022. In 2021/22, there were a total of 9,809 such smaller authorities (9,663 local councils including 1,253 parish meetings, 12 internal drainage boards, and 34 other local government bodies such as charter trustees, port authorities and conservators).
The report sets out the background of the regime, the responsibilities of auditors and councillors and an analysis of the 2021/22 outcomes and public interest reports and recommendations. Some critical insights identified include:
- Since 17 April, auditors have undertaken 23,000 reviews and received 26,000 certificates of exemption from smaller authorities with either income or expenditure of £25,000 or less.
- Over those five years, the number of smaller authorities has increased slightly (by 0.26%). Still, the number of reviews required has increased by 7.8% as the turnover of authorities close to the £25,000 exemption threshold has grown.
- Over the last five years, one encouraging development has been a reduction of just over 12 per cent in the number of authorities receiving a qualified audit opinion. Auditors are required to issue qualified opinions where they are not satisfied that the Annual Governance and Accountability Return (AGAR) submitted by the authority meets specified requirements. It is becoming less of a problem. SAAA note that the percentage of qualified opinions rose slightly in 2021/22, and it remains to be seen whether or not this is a temporary blip or indicates a reversal in the steady trend of improvement.
- The overall picture shows authorities having succeeded in submitting their AGARs or certificates of exemption earlier than in the two Covid-affected years of 2019/20 and 2020/21. The low rate of timely submission remains, however, a concern. 1,211 smaller authorities (almost one authority in eight) failed to meet the statutory deadline of 30 June 2022, and 188 AGARs (3.9%) were still outstanding as of 31 December 2022. While this was smaller than in 2020/21 (4.6%) or 2019/20 (5.3%), it was much higher than before the pandemic. As of 31 December 2019, only 43 2018/19 AGARs (1.0%) had been outstanding.
- SAAA were pleased to report a fall in the number of Public Interest Reports (PIRs) and statutory recommendations that auditors have found necessary to issue, the latter reaching their lowest level since the limited assurance regime came into existence. While most PIRs and statutory recommendations have resulted from the late submission of returns, some indicate more severe weaknesses, including 12 reporting wrongful claims for exemption from review and four drawing public attention to governance failures. Three of this last category resulted from investigations prompted by objections from members of the public exercising their statutory rights to object to an authority's accounts.
The report also sets out the background of SAAA, a sector-led not-for-profit company that assists smaller authorities in procuring and appointing external auditors. It was formed by the National Association of Local Councils, Society of Local Council Clerks and Association of Drainage Authorities. Three firms of external auditors were appointed as auditors to smaller authorities for the five financial years ending on 31 March 2022: PKF Littlejohn, Mazars, and Moore Stephens (now Moore East Midlands). Following a second competitive tendering process in 2021, four firms have been appointed for the five financial years beginning on 1 April 2022: PKF Littlejohn, Mazars, Moore East Midlands and BDO.