Consolidated UK government accounts undermined by inconsistent accounting policies and patchy data collection, warns ACCA
ACCA remains concerned about the usefulness, timeliness and data quality and collection of Whole of Government Accounts (WGA) in the UK. Especially in the context of local government audit backlogs, ACCA continues to urge for a coordinated approach involving government stakeholders, audit firms, regulators, and professional bodies to address the root causes of the issue.
Mike Suffield, Director of Policy and Insights, ACCA, said: ‘ACCA continues to have concerns that lessons from the past – on data quality and collection and timeliness of local government audits – have not been learned.
‘Ultimately these risks undermine public trust in government financial management practices and impede informed decision-making at the national level.’
ACCA recommends that HM Treasury delivers on its re-commitment in the WGA to consider its plan for considering local authority financial sustainability at spending reviews, and the actions it might take to ensure that the local authority sector has the resources it needs to carry out its functions.
ACCA also has concerns around how prepared local authorities are for the upcoming mandatory implementation of accounting standard IFRS 16 on leases. Commenting on the UK Parliament Public Accounts Committee’s (PAC) consultation on WGA 2021-22, ACCA highlighted the issues of inconsistent accounting policies within the public sector and patchy application of new accounting standards.
Local authorities need to be ready for this major reform to their accounting policies. Jessica Bingham, ACCA’s Regional Lead, Policy and Insights, said: ‘It remains important to understand the preparedness of local authorities for the obligatory integration of IFRS 16 during the 2024/25 fiscal year. ACCA recognises the backlog of pending statutory audits, the challenges faced by local authorities, and concerns regarding the financial stability of certain councils.’
ACCA raised the possibility that meeting additional reporting pressures may simply be undeliverable in the face of staff and spending cuts. It also wants to see careful implementation of the new standard - Lease Liability in a Sale and Leaseback (Amendments to IFRS 16).
Suffield added: ‘We are calling for prudent implementation, especially when considering Private Finance Initiatives. The potential repercussions could result in an upsurge in debt on balance sheets.’
However ACCA did commend the public sector for its ongoing commitment to upskilling in finance and accounting. Bingham commented: ‘ACCA is pleased to see ongoing commitment to the education and upskilling of public sector employees through activities such as webinars providing guidance on IFRS 16.’
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