The disconnect between the substantial efforts dedicated to producing and auditing local government accounts and how little they are used and understood in practice is to be tackled in a forthcoming issue of academic journal Public Money & Management (PMM), in collaboration with ICAEW.

The special edition on local government financial statements will tackle the core question that reporting should address: namely, how effective is this local authority? It will look at whether financial statements adequately explain how public money is being spent, whether they should be more or less ‘corporate’ in style and whether elected representatives are adequately trained to understand the accounts.

PMM is a highly respected international journal affiliated with the Chartered Institute of Public Finance and Accountancy (CIPFA) that publishes international research on improving practice in the financing, policy and management of public services. The special edition, on the theme of broadening the use of local government accounts, will be edited by a panel comprising leading academics and practitioners specialising in local government financial reporting.

Topics will also include how to engage local residents, whether accounts help to understand financial sustainability and whether IFRS is the best accounting framework to use. 

The edition follows ICAEW’s submission last year to a House of Commons select committee inquiry into local government financial reporting and audit in England, in which the Institute expressed its concerns over the lack of use and understanding of local authority financial statements in English local authorities.

Despite growing interest by both individuals and organisations in local government effectiveness and accountability, the financial statements produced by local authorities in the UK may not be meeting their needs effectively. 

Previous research has identified several reasons for this, including the complexity and technical nature of local government accounts, which often use intricate financial terminology and accounting conventions. This complexity can create a barrier to understanding, making it challenging for elected representatives, the general public and other stakeholders to engage.

Alison Ring OBE FCA, Director of Public Sector and Taxation at ICAEW, emphasises the need to seize a unique opportunity to resolve longstanding issues in the use of local government financial statements: “We must address underlying problems that have persisted for generations.”

This is part of a wider ICAEW campaign calling for a holistic approach to local accountability and governance, which led to a recent select committee inquiry into local authority financial reporting and audit. ICAEW is also working closely with CIPFA on its Better Reporting Hub project to make local authority accounts more understandable.

ICAEW and PMM have together issued a call for papers, inviting submissions that delve into the intricacies of this theme and explore complex concepts such as establishing a hierarchy of purposes for local authority accounts. 

ICAEW and PMM are particularly interested in understanding papers on current users of local authority accounts and whether the accounts meet their intended purposes, as well as potential ways to improve the clarity and accessibility of their presentation. The edition will also consider whether the establishment of the Scottish Accounts Commission (for which there is no equivalent in England) has succeeded in fostering increased use of accounts. 

Other potential research topics include the limited nature of discussions about the content of accounts at full council meetings, the level of engagement by councillors in questioning officials in committee meetings about the accounts, and minimal oversight by central government regarding local government.

This ICAEW/PMM theme will include research articles (maximum 8,000 words, excluding references), new development articles (maximum 3,500 words) and debate articles (maximum 1,000 words). Research articles must be suitable for both academic and reflective practitioner readers. The submission deadline is 2 June 2024. 

Further reading:

Find out more about the ICAEW/PMM call for papers.

• ICAEW/PMM theme special issue: Broadening the use of local government accounts
• Levelling Up, Housing and Communities Committee inquiry: Financial Reporting and Audit in Local Authorities
• ICAEW submission to the inquiry
• ICAEW submission to CIPFA LASAAC consultation on the Local Authority Code 2024/25
• ICAEW vision for local audit