Grant Thornton Audit Fees Tripled Across 12 Kent Councils

Kent’s 12 district councils are grappling with a dramatic rise in the cost of their annual audits, as new data reveals fees tripled between 2022/23 and 2023/24. The combined external audit bill for the dozen authorities jumped from about £580,000 in 2022/23 to £1.89 million in 2023/24, reflecting a sharp spike in costs borne by local taxpayers This surge comes amid mounting concerns over the breakdown of England’s local audit system, which was meant to ensure transparency in council finances but is now beset by delays, high costs and confusion. Recent reports – and local officials – warn that the system intended to safeguard public money is “not working” and urgently in need of reform.

Soaring Audit Bills In Kent

Kent’s district councils saw mostly steady audit fees from 2018/19 through 2021/22, followed by modest increases in 2022/23 – then a huge jump in 2023/24. In every Kent authority, the audit fee for 2023/24 is roughly three times higher than the previous year. For example, Canterbury City Council paid about £47,600 for 2022/23, which leapt to £166,300 for 2023/24; Dover’s fee jumped from £44,137 to £155,213; and Gravesham’s from £43,836 to £154,260. Even the smallest increase – Thanet’s – was a 207% rise (from ~£58.5k to £179.6k). Several others, including Dover and Gravesham, saw their audit costs soar by over 250% in one year. In total, the dozen Kent districts paid £1.315 million more for audits in 2023/24 than in the prior year.

This spike was widely anticipated as part of a national trend. Public Sector Audit Appointments (PSAA) – the body that procures auditors for local authorities – implemented new contracts and fee scales starting in 2023/24, after auditors demanded higher prices. A recent study notes that “PSAA fee scales increased by 238% between 2022/23 and 2023/24”, mostly due to “basic price hikes” by firms rather than extra audit work. Kent’s figures appear to bear that out, with audit fees roughly tripling across the board. The steep rise has added pressure on council budgets already under strain. It means money that could go to services or closing funding gaps is instead absorbed by the cost of scrutinising the councils’ own finances.

Local finance officers have had little choice in the matter. Audit fees for councils are set through a national process rather than a shopping around for the best price. In fact, paying for an external audit is mandatory for every local authority, and the fees aren’t subject to open market negotiation – they are fixed according to a national scale based on the size and complexity of the authority. For context, these audits are the public-sector equivalent of a company’s annual external audit: an independent accountant (in Kent’s case, Grant Thornton UK) reviews the council’s accounts and gives an opinion on whether the financial statements are true and fair, and whether the council has proper arrangements to secure value for money. This process provides an important check on local spending, intended to assure residents that public funds are accounted for and managed lawfully.

What Is Local Audit – And Why Have One?

A local authority audit is essentially an independent financial checkup for a council. Each year, councils must publish accounts detailing how they spent public money – and by law these accounts have to be audited by an external, qualified auditor. The audit scrutinises the council’s financial statements (and sometimes aspects of governance and value-for-money) to verify that the figures are accurate and that public money isn’t being misused or wasted. This legal requirement is laid down by the Local Audit and Accountability Act 2014, which governs local auditors’ work, alongside regulations on accounts and publi rights. That Act, passed in the wake of the Audit Commission’s abolition, makes annual external audits obligatory for councils in England as part of the framework to ensure transparency and accountability in local government.

In simple terms, the external audit is there to protect the public interest: it provides assurance that a council’s financial reports can be trusted, and it can flag weaknesses in financial management. “Paying for an external audit is something every public body and major corporation does as standard practice to ensure transparency and accountability,” one commentary points out. Unlike the council’s internal auditors (who work within the organisation), the external auditor must be wholly independent. They issue a report each year, including an opinion on the accounts. If something is seriously amiss – say, fraud or unlawful spending – auditors can take action such as issuing a report in the public interest or, in rare cases, involve regulators. This system also ties into national oversight: auditors’ findings feed into assessments of councils’ financial health and into the Whole of Government Accounts (the consolidated national accounts).

The audit requirement exists for good reason: without it, there would be less scrutiny of how councils manage public funds. When audits are done well and on time, local councillors and residents should be able to use the audited accounts to hold their council to account. In theory, this promotes good governance, deters malpractice and reinforces democratic accountability at the local level. UK law mandates these audits precisely to uphold that accountability – a principle long embedded in local government finance. (Indeed, the tradition of independent local audit dates back to the 19th century, though its structure has changed over time.) Today, the 2014 Act ensures every council has an auditor appointed (usually via PSAA’s national arrangements), and gives local electors rights to inspect the accounts and even raise formal objections to items of spending during the audit.

However, an audit system on paper is only as effective as it is in practice. Over the past several years, the local audit regime in England has fallen into disarray, undermining its core purpose. Audits have been plagued by delays, staff shortages, and the aftermath of reforms that transferred audits to the private sector. The result has been a backlog of late audits – and now, much higher fees – which together raise the question: is the system still delivering value for money for taxpayers?

A “Market Chaos” Of Delays & Spiralling Costs

A series of recent analyses paints a stark picture of England’s local audit system in crisis. Far from the promised efficiencies of outsourcing audits to commercial firms, the system has seen worsening performance and escalating costs. In August this year, researchers at the University of Sheffield issued a “highly critical” report on the state of local authority audit (aptly titled administrative–paralysis). They found that the regime set up after the Audit Commission was scrapped in 2015 has largely collapsed. “Ten years on… it now seems clear that these reform ambitions have failed,” the report states bluntly. “Only 1% of audits were delivered on time in 2022/23, with many audits delayed by several years. Audit costs have risen dramatically in response. An unwieldy, but ultimately operational centralised bureaucracy was replaced by market chaos. The £100m per annum savings heralded by the UK Government in 2014 are now a distant memory.”

This scathing assessment refers to the decision a decade ago to abolish the Audit Commission (a public body that oversaw local audits) and instead let accounting firms audit councils under contracts. The Commission’s shutdown was sold as a way to save money – but those savings haven’t materialised. Instead, audit fees have “rocketed amid [the] financial crisis” facing councils. Nationally, the average cost of auditing a council has more than tripled in one year. The Kent figures, as we’ve seen, mirror that trend. In the words of the Sheffield report’s authors, audit firms have effectively “hiked hourly costs whilst presiding over the breakdown of local authority audit in England”, a situation that “in any other industry… would be viewed as a moral hazard or a reward for failure.”

One major consequence has been severe delays in completing audits. By the statutory deadline of 30 September last year, almost no 2021/22 local audits were finished, and the 2022/23 cycle is faring even worse. As of June 2024, only 1% of councils’ 2022/23 audits had been finished on time (Kent’s councils were no exception), and 68% remained outstanding months after the deadline. It’s become common for councils to see their accounts audited a year or more late. Such delays rob the audits of much of their usefulness – by the time an audit report is issued, the information is old news. A parliamentary inquiry earlier this year heard that “old information is practically useless for the purpose of accountability and transparency and undermines trust in the system.” In other words, if audits aren’t timely, they don’t truly serve the public’s need to know what’s going on at their council.

The underlying causes of this breakdown are manifold. Audit firms have struggled to retain enough qualified staff willing to do local authority audits (which can be complex and, until recently, were seen as offering lower fees than corporate audits). Several firms have quit the local government market entirely. Those that remain – primarily Grant Thornton, EY, and Mazars (now Forvis) – have gained near-monopoly power in some regions, enabling them to demand higher fees. The regulator overseeing audit quality found that two-thirds of reviewed local audits in 2022 did not meet required standards – indicating problems with quality on top of lateness and cost inflation. This perfect storm has prompted the government to acknowledge an “urgent policy priority” to fix local audit. Plans are underway to create a new Local Audit Office – effectively reintroducing a central body akin to the old Audit Commission – to oversee and support local audits going forward. There is also talk of bringing in government-employed auditors to tackle the backlog and restore capacity. But such reforms will take time (and legislation); in the meantime, councils and residents are left with a system widely regarded as dysfunctional.

As William Benson, chief executive of Tunbridge Wells Borough Council, observed recently: “I don’t think anyone can pretend that the system is working.” Benson’s council – like all Kent districts – has felt the effects: Tunbridge Wells paid about £150,000 for its 2023/24 audit, up from £46,948 the year before, and its 2022/23 audit was delivered many months late. He and other local officials have expressed frustration at being dependent on an external audit process that they have little control over, yet must pay ever-higher sums for. The sentiment now echoed across local government is that urgent changes are needed to restore a reliable audit function. Without it, not only is public money at risk of going unchecked, but confidence in council finances (already strained by several high-profile failures) is further eroded. Audit is supposed to be the backstop that catches problems early and provides assurance – but right now that backstop is full of holes.

Inaccessible Accounts and Poor Scrutiny

The audit woes are part of a bigger picture: concerns about financial transparency and scrutiny in local councils. Even when audits do get done, there’s evidence that council accounts are often impenetrable to the very people meant to scrutinise them – councillors and the public. A new study on openness in local government (by think-tank Research for Action and the University of Sussex) found that “even experienced researchers, accountants and councillors struggle to find and understand local authority financial information”. There are “no standard formats” for how councils present budget and account data, and much of it isn’t in user-friendly (or even machine-readable) form. This fragmentation and complexity make it hard for elected members – let alone ordinary residents – to follow the money.

Crucially, many councillors lack the training or financial background to interpret the thick, jargon-laden statements that make up a council’s accounts. Finance officers do their best to explain, but after years of austerity cuts, councils’ finance teams themselves are stretched thin. The Research for Action report notes that making financial information accessible has often been a low priority, seen as a technical issue rather than a cornerstone of democracy. The result is that local budgets and audited accounts effectively aren’t serving their purpose: which is to enable informed oversight and public engagement in council spending.

Evidence of this came out in a 2023 Parliamentary inquiry. Experts told MPs that typical council accounts are “too long-winded, technically incomprehensible and not relevant” to most users’ needs. One former councillor admitted he never once used the formal accounts in his eight years in office – finding them useless for understanding what the council was doing. The Commons Levelling Up, Housing and Communities Committee concluded that local government accounts “are currently used rarely and by only a few people.” Even among those few (often activists or journalists who try to analyze council finances), there is a “clear lack of transparency” – key facts are buried or hard to discern. It’s telling that a civil society group known as People’s Audit reported that “almost no citizens” look at councils’ accounts at all.

A recent Public Finance magazine article summed it up: “Scrutiny of local government finances is being hindered by a lack of understanding among officers and elected members and the absence of standardised reporting requirements.” In other words, not only are the auditors hard to come by – but even within the councils, the people charged with oversight struggle to navigate the financial maze. The implications are troubling: decisions about budgets and spending may not face effective challenge, risks may go unnoticed, and democratic accountability is weakened. As one finance specialist told MPs, “local government accounts should support democracy and accountability”, but in reality “falls well short” of that ideal.

For Kent’s councils, these national findings ring true. While the county has not seen a high-profile financial collapse of the kind that befell Croydon or Thurrock, the ingredients for problems are present: tight budgets, complex funding arrangements, and limited scrutiny. In fact, Kent County Council itself (a separate authority from the districts) has come under political fire this year from new leaders questioning spending – only to discover that certain claims lacked context. In one case, a critic blasted the county’s £450k audit fee as “a racket”, failing to note it was a mandated cost calculated via national scale and vital for accountability. The episode, detailed in a local media investigation, ironically underscored the importance of public understanding: even at the leadership level, misconceptions can arise about council finances, feeding discord. Clarity and openness in financial reporting could help prevent such misinformed debates.

Calls For Reform And Local Accountability

The confluence of skyrocketing audit fees, audit delays, and opaque financial reports has sparked calls for change at both national and local levels. The consensus among experts and practitioners is that the status quo is untenable. Kent’s council leaders and finance chiefs haven’t been silent: through the Local Government Association and direct appeals, they’ve pressed for a solution to the audit logjam that is costing them time and money. When a basic oversight function like the annual audit goes awry, it becomes harder for councils to plan budgets or decisively address issues flagged by auditors. There’s also a fear that if auditors keep quitting or charging more, some councils might struggle to secure timely audits at any price. In the worst case, a lack of credible audit could undermine confidence in a council’s financial stability – making it harder to borrow money or do business.

Nationally, the government has recognised the problem. Ministers have agreed to establish the Local Audit Office (LAO), a new central body to coordinate local audits and bolster capacity. The LAO is expected to take on responsibilities like setting audit standards, monitoring audit quality, and perhaps directly auditing some councils (to reduce reliance on the big accountancy firms). Legislation to create the LAO and related reforms is anticipated in late 2025. Alongside this, there’s a push for simpler, more intelligible local authority accounts. The hope is that future statements might be shorter, standardized, and geared towards readability, so that councillors and residents can actually use them. Think tanks have urged adopting open data standards and centralised data portals for council finances, and improving “budget literacy” training for officials and elected members.

For citizens in Kent, these might sound like abstract fixes, but they have real significance. Transparent and timely audits can shine a light on any emerging troubles in local authorities – whether that’s a risky investment, an accounting error, or unsustainable spending practices – before they escalate into crises. Conversely, when audits are late or financial info is indecipherable, problems can fester in the dark. The expensive mess at Woking Borough Council (which went effectively bankrupt after risky loans) was preceded by years of opaque finances and minimal challenge – something a robust audit regime might have caught. While none of Kent’s councils are in such dire straits, the principle holds: accountability mechanisms must be working proactively, not just as a formality.

As it stands, Kent’s district councils have collectively weathered the storm of audit market failure by paying vastly more for the same service, with little alternative. The sudden hike in audit fees between 2022 and 2024 is a symptom of that wider system failure. But shelling out more money is only a stopgap. True accountability will require fixing the audit system and making financial information accessible to those who need to act on it. Until then, local taxpayers might well ask: Are we getting what we pay for? When an audit arrives a year late at triple the price, it’s a hard question to answer. Effective oversight of council finances is a cornerstone of local democracy – and right now in Kent, as in the rest of England, that cornerstone is in urgent need of repair.

The Shepway Vox Team

Discernibly Different Dissent