Concerns have been raised after a council’s annual audit was held up by more than half a year.

Hampshire County Council’s annual audit from the 2021/22 financial year was delayed by eight months, and the Department for Levelling Up, Housing and Communities (DLUHC) urged to provide a written position statement to the audit committee.

The delay will also affect the 2022/23 auditor’s annual report, which, according to the 2020 Code of Audit Practice, for local government bodies, should be issued by September 30 each year; if not, an audit letter stating the reasons for the delay must be given.

The written position statement that mentions DLUH was sent to the local authority on May 17. The document included outstanding matters relating to the audit actions, a timetable to resolve the situation and a judgement on how realistic and achievable this is.

According to the report presented at the audit committee (May 25), this is due to a ‘technical accounting issue’ relating to how infrastructure assets are valued, which affected local authority accounts across the country.

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Therefore, the Chartered Institute of Public Finance and Accountancy (CIPFA) temporarily changed the code of practice in November 2022 to remove the need to report gross book value and accumulated depreciation for infrastructure assets.

To make it even easier for auditors and councils, DLUHC introduced a statutory instrument in December 2022 to allow local authorities and their auditors to treat brought-forward balances on infrastructure assets from previous years as correct and to assume that the value of any component of an infrastructure asset being replaced had reached £nil value.

The external auditor company Ernst & Young LLP (EY) oversees the county council’s audits and the council’s team.

At the committee meeting, Kevin Suter, on behalf of EY, said, "I certainly did not ever anticipate that I would be back here in May trying to set up how we are still going to finish your accounts.

"This is not the greatest position; I do understand that."

The latest monitoring report from the Public Sector Audit Appointments (PSAA) shows that from 467 audits that they are monitoring across the country from the 2021/22 audits, 347 are still outstanding as of March 31.

“This isn’t an issue of Hampshire; this is a national systemic issue", said Suter.

Although this is a national problem, the answer wasn’t well welcomed by Cllr Michael Thierry, that said, "Your comment [Kevin Suter’s comments] leave me to think that you are manning lifeboats here.

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"We are not coping as well as we should do. My concern is if we are struggling now, what assurances do we have in the future?

"This is hanging on by your fingertips, isn’t it?’ he asked Mr Suter.

"Is not quite that bad, but yes, we are in a position that we do not want to, definitely", Suter replied.

This delay will impact the 22/23 accounts process since the 22/23 accounts need to state prior year comparators from 21/22 and year-on-year movements throughout the accounts.

The audit planning report from EY would usually be prepared in the spring. However, this year, EY has indicated they plan to bring the report to the September audit committee meeting.

Mr Suter said "The fact that we are late on the 21/22 accounts means that we haven’t yet started the 22/23 accounts.

"We would normally be here with an audit plan and would be somewhere into that audit. We are not. There is no way we are going to achieve the September deadline."

EY estimates that the 2021/22 audit accounts will be done and available in July; otherwise, it will be delayed until September.