Local authority annual accounts to include commentary

By ICAS Editorial Team

19 May 2015

Management commentaries are being introduced into local authority annual accounts.

Local authorities are to include a management commentary within their published annual accounts for the first time. 

In Scotland this will be from the financial year 2014-15, while in England and Wales, a narrative statement is required from 2015-16.

ICAS welcomes this development as an important step forward to improve accountability and promote wider understanding of performance. 

The Scottish Government has just issued statutory guidance which aligns the content of the management commentary with existing good practice, as applied in central government and the private sector. 

ICAS supports consistency between the public and private sectors, where appropriate to do so, as specialisms can drive complexity and reduce transparency.

The management commentary is a strategic report (applicable at group level, where appropriate) which provides context and helps users interpret the financial statements. It assesses performance and aims to provide insight into the key objectives, strategy and risks facing the authority and how these may affect future performance.

The guidance is principles-based and there is no prescriptive format so local authorities can tell their story in a way which suits them.

External auditors are required to read the management commentary and express an opinion as to whether it is consistent with the financial statements.

More information is available in The Local Authority Accounts (Scotland) Regulations 2014, Finance Circular 5/2015 and The Accounts and Audit Regulations 2015 (England and Wales).

ICAS actively contributes to consultations on public sector issues and our responses are published on icas.com.  If you are a member interested in contributing to ICAS responses, please check our updates for new consultations or email the accounting and auditing team.


  • Public sector

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