Only 11% of parish councils - 1,015 in total - had their accounts qualified in 2013/14 - according to a new report from the Audit Commission.
The watchdog said that while financial reporting remains ‘strong’ for local government as a whole, the results for small councils was ‘less satisfactory’.
As a result of the Coalition's reform of local audit, small local bodies with annual turnovers less than £25,000 will become exempt from routine annual audit from 2017.
Marcine Waterman, the Audit Commission’s controller of audit, said: ‘No provision was made in the local Audit and Accountability Act 2014 for the national collection and reporting of the audits of local government bodies.’
She said it was unclear how local taxpayers would get independent outside assurance of their accountability and governance in the future, adding 600 of these bodies had their accounts qualified in 2013/14.
Local government minister Kris Hopkins said reforms which had abolished the Audit Commission - which winds down next March - and replaced it with localised audit arrangements would uphold local democratic oversight and were set to save the public purse £1.35bn over a decade.
‘Even the smallest local bodies, mainly parish councils, will be required to publish their spending online, providing the public with a clear and detailed insight into the body’s use of taxpayers’ money,’ said Mr Hopkins. ‘This a proportionate approach to such small bodies.’
In response, the National Association of Local Councils (NALC) has pledged to improve training and guidance to reduce the number of councils receiving a qualification on their accounts.