Peterborough City Council is seeking to improve its financial accounts auditing amid a national backlog.

The council has published its annual statement of accounts for 2024/25, which is currently being audited by its external auditors Ernest and Young (EY).

Local authorities and other local bodies publish accounts every financial year and the external auditing of these ensures transparency and accountability for public money spent on these services.

However, in recent years there has been a growing backlog of unaudited accounts, with just one per cent of England’s councils and other local bodies publishing their audited accounts on time in 2022/23.

The government is looking to tackle this by setting statutory backstop dates to enable the audit system to recover and enable auditors to focus on more up-to-date accounts, where assurance is most valuable.

These dates include:

– Financial year 2024/25: February 28, 2026 – Financial year 2025/26: January 31, 2027 – Financial year 2026/27: November 30, 2027 – Financial year 2027/28: November 30, 2028

A consequence of these backstop dates however is that many authorities, including Peterborough City Council, will receive modified or disclaimed audit opinions, meaning the auditor cannot obtain sufficient evidence to support an opinion.

Peterborough City Council’s statement of accounts for 2024/25 show that the authority overspent by £5 million last year, a fact that the auditors have flagged as a ‘significant risk and weakness’.

Other areas the auditors identified as risks and weaknesses included the council’s forecast overspend of £6.3 million on Dedicated Schools Grant, its governance arrangements in relation to the Hilton Hotel loan, and its governance arrangements in relation to the disposal of assets.

The city council’s 2024/25 accounts have been published in line with the statutory deadline and the external audit has already commenced, which the authority described as “a positive step in the right direction”, aiming to have the final audited accounts published ahead of the February 28, 2026 backstop date.

A report to be put before the council’s audit committee on July 21 stated: “The delay in publishing audited financial statements by local authorities has reached an unacceptable level, and it is acknowledged that cooperation among all stakeholders in the sector is necessary to address this issue.”

It added that the external auditors Ernest and Young had already confirmed within its audit plan that it was likely to expect to issue a disclaimed opinion.

A government policy paper on local audit backlogs, published in November last year, reads: “Aspects of the measures are uncomfortable, particularly the prospect of disclaimed or modified opinions.

“Given the scale of the backlog, however, and the absence of viable alternatives, the government made the difficult decision to proceed.

“Without these measures, audits would continue to be delayed, and the local audit system would move further away from timely, effective audit, with significant additional cost to the taxpayer.”

As well as a £5 million overspend in 2024/25, Peterborough City Council was only able to deliver 68 per cent of its savings programme.

The authority’s reserve levels have dropped by £50 million since 2023, from £70 million to around £20 million.

Speaking at a meeting in June, deputy leader and cabinet member for finance Cllr Mohammed Jamil, said: “I recognise this is not the position we would like to be in but it is a much-improved position from July last year.”

The rising number of children in looked after care, higher interest rates than anticipated, and delays in asset disposals are among the reasons blamed for the council’s financial position.

As of March 31, 2025, the council had net borrowings including cash and outstanding interest of £506.8m, up from £488.7m in 2023/24.

The council previously noted that its financial situation remained “difficult and challenging” but assured that actions were planned to “rebuild reserves and handle new pressures”.