A total of 188 disclaimed audit opinions has been issued by local government auditors as a result of the latest backstop date for the 2024/25 financial year.

Local government bodies in England were required to publish their audited financial statements by 27 February 2026, the backstop deadline set by government following a local audit crisis in which a backlog of almost 1,000 individual audits had built up.

Data from Public Sector Audit Appointments (PSAA), the body responsible for the appointment of auditors to local government bodies, show that 41% of local government bodies received a disclaimed audit opinion  due to the backstop, with a further two bodies receiving a disclaimed opinion for other reasons.

The data reveals a slight improvement on the proportion of bodies receiving an unmodified opinion, with a total of 183 or 40% of local government bodies, up from 177 bodies for the 2023/24 financial year.

A total of 36 local government bodies are yet to publish audited financial statements for the 2024/25 financial year, while there remain 34 audit opinions that are outstanding for the financial years between 2018/19 to 2023/24.

A small glimpse of progress

The latest figures also show that 43 local government bodies received a qualified audit opinion because of the 2024/25 backstop, compared with eight for the previous financial year.

A qualified audit opinion is issued where the auditor determines that there is not sufficient appropriate audit evidence, or there is evidence that suggests there is material error, but the effects on the financial statements are not considered to be pervasive.

This means that local auditors can provide assurance over most of the financial statements, rather than not being able to provide any substantive assurance at all where a disclaimed audit opinion is issued.

This is an important first step for authorities to return to receiving unmodified audit opinions in future financial years, with the government setting a target for most local government bodies who have received a disclaimer of opinion to return to clean audit opinions in the 2026/27 financial year.

How does this compare with 2023/24?

The number of disclaimed audit opinions issued as a result of the backstop, 188, is an improvement on the 243 that were issued for the 2023/24 financial year.

However, with 36 audit opinions remaining outstanding in 2024/25, it is likely that the final number of disclaimed audit opinions will be relatively comparable with that of 2023/24.

One less unmodified audit opinion has currently been issued in 2024/25, which is not unexpected considering the challenges in rebuilding assurance where a disclaimed audit opinion is issued.

Henning Diederichs, Senior Technical Manager in ICAEW’s public sector team says: "The number of disclaimed audit opinions issued for the 2024/25 financial year is not unexpected as work carries on building back assurance across local government.

“As ICAEW continues to work with system partners to help create a local audit system that is fit for the future, with the impending creation of the Local Audit Office being a significant step, we hope that the next backstop date in January 2027 will see considerably fewer numbers of disclaimed audit opinions issued.”