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Wales Audit Office - Local authority accounts generally 'well prepared' despite challenges

But some authorities failed to meet statutory deadlines for 2010-11, says Auditor General.

Most of the 2010-11 local authority accounts in Wales were prepared and audited on time, with two exceptions. That is despite the fact that 2010-11 was a challenging year due to a number of accounting changes, particularly having to adopt International Financial Reporting Standards (IFRS) for the first time, which represented a fundamental change to the way financial statements were prepared. The Auditor General's report, published yesterday, summarises the work of the external auditors he appoints to local government bodies for the 2010-11 financial year.

The report concludes that financial accounts and supporting papers were generally well-prepared and submitted on time by councils, national parks, fire and rescue authorities and police authorities in Wales. Unqualified audit opinions were issued on the majority of accounts. And, the only two authorities who failed to meet the statutory deadlines were the Isle of Anglesey County Council and Neath Port Talbot County Borough Council.

Yesterday's report found that the bodies generally coped well with the big changes required to the preparation and presentation of accounts. But, many of the accounts required some form of amendment following audit. Some authorities are also not fully meeting the requirement to 'publish' their accounts by 30 September. And, there are still inconsistent accounting approaches being taken, because of a lack of definitive guidance in some areas - such as the valuation of council houses and the treatment of voluntary schools. The report recommends that the relevant bodies should provide definitive guidance in these areas.

Auditor General for Wales, Huw Vaughan Thomas, said yesterday:

"The 2010-11 financial year presented local authorities with many difficulties because of big changes to the way their accounts had to be prepared and presented. Although many accounts needed some amendment after external audit, it is encouraging to see that no more than two authorities failed to meet the statutory deadline.

That said, I do expect to see a much better picture next year. There is good practice guidance on timely financial reporting on the Wales Audit Office website. This, along with the analysis in my report today, should go some way to help authorities improve in this area."

Notes to Editors:
  • This report summarises the results of auditors work for 2010-11 at the 22 Unitary Authorities, four Police Authorities, three Fire and Rescue Authorities and three National Park Authorities in Wales.
  • Other, smaller local government bodies, whose accounts are also audited (such as joint committee and community ad town councils) are not included in the scope of this report.
  • The report points to 2010-11 being a challenging year for authorities in terms of preparing accounts. Changes included: An annual governance statement being mandated for the first time; technical changes arising from amendments to the capital accounting and finance regulations; and adjustments required for public service pensions to be increased in line with movements in the Consumer Price Index (CPI) rather than the Retail Price Index (RPI).
    The most significant challenge was the adoption on International Financial Reporting Standards (IFRS) for the first time which required significant changes to accounting practices and the presentation of the financial statements. The accounts from the previous year also had to be restated to show comparative figures in line with IRFS based accounting policies. The scale of change meant that IFRS adoption needed to be managed as a project in itself. This required effective project planning, monitoring and reporting and engagement from many officers outside the finance department.
  • The Auditor General and the auditors he appoints in local government are the independent statutory external auditors of most of the Welsh public sector.
  • They are responsible for the annual audit of most of the public money spent in Wales, including the £14 billion of funds that are voted to Wales annually by the Westminster Parliament. Elements of this funding are passed by the Welsh Government to the NHS in Wales (over £5 billion) and to local government (nearly £4 billion).
  • The Wales Audit Office mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identify and spreading good practice across the Welsh public sector.


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