Breaking the Audit Backlog: Can Your Firm Clear the Bottleneck?

The backlog of local body audits in England has reached critical levels, with 918 audit opinions outstanding as of September 2023 and 771 still unresolved by the end of December .

With local authorities given a hard deadline of 13 December 2024 to clear 80% of 2022-23 audits, the pressure on audit firms is immense.

The Labour government, acting on its manifesto pledge to prioritise audit reforms, has left firms with just four months to achieve a monumental task—an undertaking that could overwhelm even the most well-resourced firms.

As audit deadlines loom, the risk of rushed, lower-quality work increases.

Sarah Rapson, head of supervision at the Financial Reporting Council (FRC), voiced her concern: “Timely and transparent financial reporting and audits are vital for accountability and effective decision-making in local government. The concerning backlog of unaudited accounts undermines this, so we must act decisively to bring the system back to a standard the public deserves.”

Given these challenges, audit firms are at a critical crossroads. How can they meet this tight deadline while maintaining the quality and integrity of their audits?

The Capacity Crunch: A Growing Problem

The backlog has already impacted local authorities' ability to operate efficiently, leaving financial reports delayed and public trust in the system waning. While audit firms face intense pressure to resolve this issue, they are simultaneously grappling with a severe talent shortage.

This is further compounded by the coinciding Self Assessment tax season, which adds an additional layer of complexity and resource strain.

The UK accounting industry will face a shortage of 60,000 accountants by 2050. (Source: ATT)

Outsourcing: The Game-Changing Solution

Outsourcing can provide a lifeline for audit firms as they navigate this period of unprecedented workload. By leveraging outsourcing partners, firms can address their capacity shortfall, meet deadlines, and preserve the quality of audits.

Here’s how outsourcing can help:

1. Capacity Relief

Outsourcing can provide immediate relief by bringing additional qualified teams on board to handle overflow audits. This prevents the need for audit firms to stretch their in-house teams thin, avoiding burnout, poor quality, and costly errors.

For firms facing tight deadlines and severe talent shortages, an outsourced team can be the difference between success and failure. It ensures that auditors can focus on the highest-risk areas while administrative and lower-risk tasks are handled by external experts.

2. Maintaining Quality Amid Tight Deadlines

The fear of declining audit quality is real when deadlines are looming, and internal teams are stretched too thin.

Outsourcing providers specialising in audit support services have well-trained, certified professionals familiar with UK accounting standards. By delegating parts of the audit process, firms can uphold high audit standards while meeting aggressive timelines.

This not only safeguards the firm's reputation but also prevents costly audit restatements or regulatory penalties.

3. Scalability Without Overhead

Outsourcing allows firms to scale their operations quickly without the time and expense involved in hiring and training new staff. Audit firms can seamlessly integrate outsourcing partners into their existing workflows, scaling up during peak periods and scaling back when demand subsides. This flexibility is crucial when facing short-term spikes in workload, such as the current audit backlog.

4. Freeing Up Core Staff for High-Value Tasks

By outsourcing routine or lower-level audit tasks, firms can allow their senior auditors and specialists to focus on high-value activities that directly impact audit quality. This not only helps clear the backlog faster but ensures that complex, high-risk audits receive the attention they deserve.

Looking Ahead: Act Now or Risk Falling Behind

The government’s December 2024 deadline leaves little room for error, and audit firms must act now to avoid being overwhelmed. Outsourcing offers a proven, scalable solution to handle the volume of work while preserving audit integrity.

The alternative—forcing internal teams to bear the brunt of an overwhelming workload—risks missed deadlines, higher error rates, and ultimately, damage to the firm’s reputation.

In today’s fast-paced audit environment, where trust and transparency are paramount, outsourcing is not just an option—it’s a necessity.

Conclusion: Clearing the Backlog with Confidence

The backlog of unaudited accounts across local authorities has placed unprecedented pressure on audit firms. To clear this bottleneck by December 2024, outsourcing is a strategic solution that provides both immediate relief and long-term value.

By partnering with a market-leading outsourcing provider like QX Accounting Services , audit firms can meet government deadlines, maintain audit quality, and protect their reputation.

As Sarah Rapson emphasized, timely and transparent financial reporting is crucial for public trust and effective decision-making. By embracing outsourcing, audit firms can play their part in restoring the system to the standard the public deserves—without sacrificing quality or overburdening their teams.

If you’re curious to know how QX can support your firm with audit requirements , call us at +44 208 146 0808 or feel free to book a meeting with our expert here .