WIREDGOV

Parish councils are elected bodies that serve around 15 million people in England and spend about £500 million a year. Now, public spending watchdog the Audit Commission puts the spotlight on the timeliness and quality of their financial reporting.

Audited accounts are the main way public bodies show accountability for managing public money. Parish councils must publish their accounts within six months of the end of the financial year. They do this in the form of an annual return.

The new report 'Auditing the Accounts 2009/10: Parish Councils' summarises the results of auditors' work on the annual return. It covers 9,397 parish councils each with an annual turnover less than £1 million.

Timeliness

Overall, the report found that parish councils' financial reporting is improving. Auditors issued the opinion on the 2009/10 annual return by 30 September at 8,768 parish councils (93 per cent). However, it names eight parish councils that failed to publish an annual return for the last three years or more. Despite auditors issuing public interest reports to these councils, highlighting governance failures and recommending action to address them, no improvements were made for 2009/10. The report emphasises that these parish councils are not providing the basic level of accountability to which local electors are entitled.

Between April 2009 and December 2010, auditors issued public interest reports to 58 parish councils. Most reports related to the failure to produce, or provide sufficient evidence to support, the annual return.

Chief Executive of the Audit Commission, Eugene Sullivan says:

'The financial transparency of public bodies has never been more important than it is now. We acknowledge the good work done by the vast majority of parish councils, often with limited resource, to ensure good governance and financial management. However, I am concerned about the minority of parish councils who persistently fail to show accountability for their use of public money. In the Commission's view, it is unacceptable that parish councils should fail persistently to publish an audited annual return, yet continue to receive and spend local taxpayers' money.'

Quality

Quality is also improving, auditors issued an unqualified opinion on the 2009/10 annual return at 8,165 parish councils (87 per cent) compared to 83 per cent in 2008/09. However, of the 1,232 parish councils that received a qualified opinion for 2009/10, 275 had also received a qualified opinion for the previous two years.

Eugene Sullivan adds:

'We're pleased that more parish councils are doing well. However, weaknesses in governance arrangements which resulted in auditors issuing a qualified opinion are a concern. These weaknesses may leave parish councils open to the possibility of financial mismanagement, or fraud.

The regime and framework for auditing the accounts of parish councils will change. Because of their size and capacity there are particular challenges in developing new scrutiny arrangements for these small bodies. Whatever proposals may emerge, it is important that the current support arrangements for the sector and auditors are maintained. This will help safeguard the improvements made by parish councils over the past decade.'

Notes to editors

1. The report is available at 'Auditing the Accounts 2009/10: Parish councils'
2. In this report the term 'parish councils' covers parish councils, community councils, neighbourhood councils, village councils, town councils and parish meetings in parishes where there is no parish council.
3. Parish council turnover is taken as the greater of gross annual income or gross annual expenditure.
4. Parish councils were required to publish their accounting statements and annual governance statement for 2009/10 by 30 September 2010, with the external auditor's certificate of closure and opinion or with a statement that, at the date of publishing, the auditor had not given an opinion and the reasons why.  
5. What is a qualified opinion?
   Auditors issue an unqualified audit opinion where they consider the information contained in the accounts is in accordance with the specified requirements, and relevant legislation and regulatory requirements have been met. Where this is not the case, the auditor will qualify the opinion setting out the reasons why.
   
   Parish councils with no audit opinion for the last three years or more
   

   Parish council	County area	Years with no audit opinion
   Brasted Parish Council	Kent	2005/06 to 2009/10
   Fillingham Parish Meeting	Lincolnshire	2001/02 to 2009/10
   Little Ponton and Stroxton Parish Council	Lincolnshire	2007/08 to 2009/10
   Markington with Wallerthwaite Parish Council 1	North Yorkshire	2007/08 to 2009/10
   Martindale Parish Meeting	Cumbria	2007/08 to 2009/10
   Newbiggin Parish Meeting	Cumbria	2007/08 to 2009/10
   South Croxton Parish Council	Leicestershire	2006/07 to 2009/10
   Wingrave with Rowsham Parish Council	Buckinghamshire	2007/08 to 2009/10

   
    

6. The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone.
   
   
7. Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers.
   
   
8. On 13 August 2010 the Secretary of State for Communities and Local Government announced that he plans to disband the Audit Commission. His intention is to have new arrangements in place for auditing England's public bodies by 2012/13.