Local government bodies in Wales ‘face challenges’ to improve and produce their accounts to meet statutory deadlines, auditor says.

A new report from the auditor general for Wales has identified an improvement since 2014-15 in the quality of local government bodies’ annual accounts.

However, Local Government Financial statements 2015-16 warned challenges including the phased introduction of earlier reporting deadlines, austerity and changing models of service delivery will all have an impact on the quality and management of accounting arrangements across the sector.

The auditor general found an increased emphasis on collaboration. He warned there were a number of difficulties associated with accounting for collaboration and said this impacted on producing good quality accounts.

Continued austerity measures may also lead to a reduction in the capacity of finance teams, adding to the pressures of preparing accurate and timely annual accounts, the report noted.

The AG Huw Vaughan-Thomas said local government bodies needed to critically appraise their holding and use of reserves and ensure they are factored into financial and service delivery plans in a manner that allows them to live within their ‘future financial means’.

Mr Vaughan-Thomas also said the changing timetable of account deadlines between now and 2020-21 will present challenges for both local government bodies and their auditors.

But, he added, earlier closure of financial statements would be beneficial.

‘It’s good to see that local authorities are getting better at producing their financial statements – and on time,’ said Mr Vaughan-Thomas.

‘But, there are still issues that need addressing and I hope that this report will encourage further improvement, particularly at a time when services and reporting deadlines are becoming more demanding.’