The Local Audit (Modification of Financial Reporting Requirements) Regulations 2025
These regulations, effective June 26, 2025, amend the Local Audit and Accountability Act 2014.
They modify the financial reporting requirements for four specific combined county authorities in England and Wales: Devon and Torbay, Greater Lincolnshire, Hull and East Yorkshire, and Lancashire. The changes disapply the requirement to prepare accounts for the financial year beginning April 1, 2024, and adjust the reporting period for the financial year beginning April 1, 2025, to start on February 5, 2025, aligning with the authorities' establishment date.
The changes are made under the authority of section 3(5)(b) of the 2014 Act.
Arguments For
Streamlined Reporting for Newly Formed Authorities: The regulations provide a practical solution for newly established combined county authorities by adjusting the financial reporting period to align with their actual operational start date.
Reduced Administrative Burden: By modifying the reporting requirements, the regulations potentially lessen the administrative burden on the affected authorities, allowing them to focus on other essential tasks.
Legal Compliance: The modifications are made under the powers conferred by section 3(5)(b) of the Local Audit and Accountability Act 2014, ensuring legal compliance.
Fairness and Equity: Adjusting the reporting period ensures fairness to the newly-established authorities, acknowledging the practical challenges of starting operations mid-financial year.
Arguments Against
Potential for Inconsistency: Modifying the reporting requirements for specific authorities might lead to inconsistencies in financial reporting across different local authorities within England and Wales.
Limited Scope: The regulations only address specific authorities, potentially creating inequities if other similar authorities face comparable challenges.
Complexity: The modifications may introduce complexity into the local audit process, requiring additional clarification and guidance for auditors and relevant authorities.
Lack of broader impact assessment: The explanatory note states that a full impact assessment was not produced. This may raise questions about potential unanticipated consequences.
- Citation, commencement and extent (1) These Regulations may be cited as the Local Audit (Modification of Financial Reporting Requirements) Regulations 2025 and come into force on 26th June 2025. (2) These Regulations extend to England and Wales.
Section 1 provides the title and effective date (June 26, 2025) for the regulations.
It also specifies that the regulations apply to England and Wales.
- Modification of the Local Audit and Accountability Act 2014 (1) The requirement in section 3(3) of the Local Audit and Accountability Act 2014 for a relevant authority[2], other than a health service body[3], to prepare a statement of accounts for each financial year[4] is, in respect of a relevant authority specified in paragraph (2)— (a) disapplied in respect of the financial year beginning with 1st April 2024, and (b) modified in respect of the financial year beginning with 1st April 2025 to require the authority to prepare a statement of accounts for that year as though that year were to begin with 5th February 2025. (2) The relevant authorities are— (a) Devon and Torbay Combined County Authority, (b) Greater Lincolnshire Combined County Authority, (c) Hull and East Yorkshire Combined Authority, (d) Lancashire Combined County Authority.
Section 2 modifies the Local Audit and Accountability Act 2014.
It removes the requirement for four specified combined county authorities to prepare a statement of accounts for the financial year beginning April 1, 2024.
For the financial year starting April 1, 2025, it changes the accounting period to begin February 5, 2025 for these authorities.
These four authorities are named in subsection (2).
Signed by authority of the Secretary of State for Housing, Communities and Local Government Jim McMahon Minister of State Ministry of Housing, Communities and Local Government 4th June 2025
This section shows the signature and ministerial approval of the regulations.
Explanatory Note (This note is not part of the Regulations) These Regulations modify the requirement in section 3(3) of the Local Audit and Accountability Act 2014 (c. 2) for a relevant authority (other than a health service body) to prepare a statement of accounts in respect of each financial year, for the following authorities which were established on 5th February 2025— • Devon and Torbay Combined County Authority • Greater Lincolnshire Combined County Authority, • Hull and East Yorkshire Combined Authority, • Lancashire Combined County Authority. Regulation 2 disapplies the requirement for these authorities to prepare a statement of accounts in respect of the financial year beginning with 1st April 2024. It also modifies section 3(3) by extending the period for which the statement of accounts in respect of the financial year beginning with 1st April 2025 is to be prepared, so that it covers the period beginning with 5th February 2025. A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
The Explanatory Note summarizes the regulations' purpose and impact.
It clarifies that the changes address the practical challenges for newly established authorities by altering the accounting periods for the specified authorities.
The note also indicates that a full impact assessment was deemed unnecessary.