Town and community councils in Wales failing to meet standards, says audit watchdog

Community and town councils in Wales are increasingly failing to submit annual returns in accordance with proper practices, keeping inadequate accounting records, and failing to publish information they are legally required to, Audit Wales has warned.

The findings were detailed in the watchdog’s latest report, Financial Management and Governance - Lessons from Audit for Community and Town Councils in Wales, which also said increasing responsibilities make it "vital" for community and town councils to have sound financial and governance arrangements.

Wales has 735 community and town councils operating as the first tier of local government.

In recent years, many unitary councils have transferred assets and services to these councils, driving the need for robust internal controls and financial oversight.

The auditor expressed concern that some councils were not acting in accordance with the law in how they raised local taxes, with "many councils continuing to raise excessive sums in local taxes".

The report also revealed that 30% of audits submitted for 2023-24 were inaccurate, contributing to more qualified audit opinions.

"One of the most frequent qualification issues identified by auditors involves councils not publishing information they are legally required to do so," the report noted.

The report also complained of councils submitting inaccurate and incomplete accounting records that fell "far below" the auditor's expectations. 

In some cases, Audit Wales has found that councils had lost significant sums of money, which "could have been prevented if councils addressed the systematic issues".

The auditor recommended that councils adopt Governance and Accountability for Local Councils in Wales: A Practitioners' Guide, which is recognised as proper accounting practice by the Welsh Government. The report also encouraged the use of the Finance and Governance Toolkit for Community and Town Councils, which provides detailed guidance on addressing common weaknesses in council arrangements.

Auditor General Adrian Crompton said: "Our audit work continues to play a vital role in identifying governance and financial management weaknesses.

"Town and community councils need to learn from the challenges raised in our report and use the guidance and support that is readily available to them."

Adam Carey