Auditors for Tees Valley Combined Authority (TVCA) have warned that it will “most likely” be at or near the end of the decade before they can issue an unqualified opinion on the Authority’s accounts. The warning from auditors Ernst and Young comes in their draft annual report for 2024-25 (pp.113-154), which warns of a disclaimed opinion on accounts for the 2023-24 financial year, a disclaimed or qualified opinion for 2024-25 and qualified opinions thereafter until at least 2028-29.
TVCA’s audit process is two years behind the timescale for rebuilding assurance in its accounts as set out in LARRIG 01, the National Audit Office’s guidance.
TVCA’s Audit and Governance Committee (AGC) will formally receive Ernst and Young’s draft report on 12 December – if it succeeds in holding a quorate meeting.
When the AGC met on 18 September only four members out of eight, including the chair, Councillor Mandy Porter of Darlington, attended and the meeting was inquorate. According to its minutes: “Following a short delay in starting the Chair advised members that the meeting was not quorate and the committee was therefore opened and adjourned. Those present agreed to continue with an informal discussion…It was noted that no decisions could be formally made and any recommendations would need to be ratified at a quorate meeting of the committee. It was further agreed that in the spirit of transparency members of the press and public would have the opportunity to observe.”
The next meeting on 27 November did not go ahead either. According to a note on the TVCA website: “The meeting was opened and closed due to an [unexplained] administrative error having occurred.”
Pressures
When the AGC meets on 12 December it will therefore be the first full, formal meeting since June 30 at a time when TVCA has been under the five-fold pressures of the abrupt departure of its most senior officials, inadequate staffing in the finance team, statutory recommendations from its external auditors, a best value notice (BVN) from the government and pressing audit deadlines.
This is far from meeting the auditor’s expectations: “Management, and the Authority’s AGC, have an essential role in supporting the delivery of an efficient and effective audit. Our ability to complete the audit is dependent on the timely formulation of appropriately supported accounting judgements, provision of accurate and relevant supporting evidence, access to the finance team and management’s responsiveness to the issues identified during the audit.”
These difficulties were compounded by the abrupt departure from TVCA of its corporate director of finance and resources, Gary Macdonald, in July 2025. Macdonald was the TVCA’s Section 73 officer, a statutory role with duties including the signing off of the annual accounts.
He left, according to EY, without signing off the 2023-24 accounts as a full and fair record, leaving his interim successor Jo Moore, new to the Authority, to take on that task while also dealing with the 2024-25 accounts. The two sets of accounts are now being processed in tandem, with a planned publication of both by the end of the first week in December, thus resolving the mystification expressed here on 6 December as to the progress of the earlier year’s accounts. Whether publication has happened is not known at the time of writing but should be by the AGC’s scheduled meeting on 12 December.
Weaknesses
The weaknesses identified by the auditors emanate from two sources. One is the Tees Valley Independent Review set up by then Levelling up Secretary Michael Gove in 2023 following allegations in the House of Commons of corruption associated with the Teesworks regeneration site at Redcar. Although the Review did not find evidence of corruption it did find that standards expected when managing public funds had not been met. The other source of weakness is the capacity and capabilities of the finance team at TVCA.
The draft annual report explains why EY anticipates issuing a disclaimed opinion on the 2023-24 financial statements. It says it has not been able to progress the audit as initially planned due to the draft financial statements produced by the Authority not being of the required quality. The EY report is littered with phrases like significant weaknesses, material errors and material misstatements.
In relation to the 2024-25 accounts, the auditors say they have not been able to start re-building assurance because the TVCA itself does not have financial statements which it is satisfied present a true and fair view of its financial position – which it should now have had by the end of the first week in December (see above).
EY’s reasons for issuing disclaimers or qualified opinions on the accounts include –
- 2023-24: pervasive gaps over opening balances, comparators and in-year movements; lack of assurance over PPE (property, plant and equipment) and over reserves;
- 2024-25: continuing impact from 2023-24, lack of assurance over all the comparator I&E (income and expenditure) transactions, PPE and reserves. Due to gaps in PPE assurance there is a likely lack of assurance over related in-year transactions.
The current audit status of TVCA for the two years is described by EY as:
- 2023-24: the Authority’s progress is behind the expected timescales as set out in the National Audit Office (NAO) guidance. This is because no procedures were completed in 2023-24. This was a result of the Authority’s late publication of draft 2023-24 financial statements and the ongoing nature of the Authority’s 2021-22 and 2022-23 audits with its predecessor auditor;
- 2024-25: The Authority’s progress is behind the expected timescale set out in the NAO guidance. This is because limited procedures were able to be completed for 2024-25 due to the poor quality of the Authority’s draft financial statements.
Given that TVCA is two years behind in rebuilding assurance, the auditors warn that the 2025-26 and 2026-27 financial statements will also need to be disclaimed or qualified and it is most likely to be 2028-29 at the earliest before they are able to consider issuing an unqualified opinion.
Comment
The inquorate meeting of 18 September and the administrative error which prevented a meeting on 27 November came at the worst possible time, particularly as the AGC had maintained a good record of quorate meetings since at least the start of 2022.
No one expects councillors, who are not experts, to carry out audits. But local people are entitled to expect that if they take on the responsibility of sitting on the AGC they will make sure that the Authority has the staff it needs to do the job properly and on time. They cannot do that if they cannot even manage to hold a quorate meeting for more than five months at a time of crisis. Never, probably, has the AGC, working with TVCA’s new team of top officials, been more needed to get a grip on the Authority’s audit and governance responsibilities. It is now clear that that is going to take years.
