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.”

Ends

Notes to Editors:

• This report is the Auditor General’s 7th annual report into financial management and governance at Town and Community Councils. It summarises issues identified by external auditors during the statutory audit of local councils in Wales.
• There are over 730 Town and Community Councils in Wales. In some cases, these councils jointly provide services through joint committees established for specific services, usually burial services. There are six joint committees in Wales. Collectively, this report refers to these bodies as local councils.
• The Auditor General is the independent statutory external auditor of the devolved Welsh public sector. He is responsible for the annual audit of the majority of the public money spent in Wales, including the £15 billion of funds that are voted on annually by the National Assembly. Elements of this funding are passed by the Welsh Government to the NHS in Wales (over £7 billion) and to local government (over £4 billion).
• The audit independence of the Auditor General is of paramount importance. He is appointed by the Queen, and his audit work is not subject to direction or control by the National Assembly or government.
• The Wales Audit Office (WAO) is a corporate body consisting of a nine member statutory Board which employs staff and provides other resources to the Auditor General, who is also the Board’s Chief Executive and Accounting Officer. The Board monitors and advises the Auditor General, regarding the exercise of his functions.