“The National Audit Office has sounded the alarm about local authority governance and audit for the second time in a week.
In its latest report, Local Authority Governance, the spending watchdog said the government should improve its oversight of the local governance system in the face of increasing financial pressures on councils.
It said councils’ responses to these pressures had “tested local governance arrangements”, as some had pursued large-scale transformations or potentially risky commercial investments that added complexity to governance arrangements.
But spending to support governance fell by 34% in real terms between 2010-11 and 2017-18.
The NAO said external auditors issued qualified conclusions for around 20% of unitary and county councils, and “several authorities did not take appropriate steps to address these issues”.
A NAO survey of auditors found 27% did not agree that their authority’s audit committees provided sufficient assurance about governance arrangements.
Some councils had questioned the contribution of external audit to providing assurance on their governance arrangements, with 51% of chief finance officers wanting to see changes, including a greater focus on the value for money element of the audit.
The NAO said the Ministry for Housing, Communities & Local Government (MHCLG) did not systematically collect data on governance, and so it could not assess whether issues that arose were isolated incidents or symptomatic of failings in aspects of the system.
Ministry intervention at councils was not always made public “meaning its scale and effectiveness is not open to scrutiny or challenge”, the watchdog said.
The report’s recommendations include that the MHCLG should work with local authorities and stakeholders to assess the implications of, and possible responses to, the various governance issues it had Identified.
This would include examining the status of section 151 officers and the efficacy of their statutory reporting arrangements, the effectiveness of audit committees, the effectiveness of overview and scrutiny functions, and the sustainability and future role of internal audit. …”