An accounting firm is unlikely to complete an annual external audit of a cash-strapped council’s accounts due to a nationwide backlog.

International company EY is paid to carry out the examination of Southampton City Council’s finances.

The firm is behind schedule and yet to finish the 2022/23 audit for the city council.

Law states every local authority has to have its finances audited by an external accountancy firm.

However, delays which have built up in recent years for a variety of reasons mean there is large backlog leaving hundreds of audits still to be completed.

For audits up to and including the 2022/23 financial year, a national deadline has been set for September 30, at which point a reset will take place.

Kevin Suter, partner at EY, told Southampton City Council’s governance committee the firm was “making the assumption” it will not complete the authority’s 2022/23 audit.

He said clearing the backlog needed “external stimulus”, with approximately 900 audits in the country not signed by the relevant time.

Councillors were told a “disclaimed opinion” will be issued.

Mr Suter said: “It doesn’t say your accounts are wrong. It just says we haven’t done the work.”

He said the decision had not been taken lightly.

Staff at EY would focus their attention on carrying out the 2023/24 financial year audit.

It would be beneficial for the city council given previous concerns raised about the authority’s finances, Mr Suter said.

Moving forward the firm would be carrying out “significantly less” audits, which would assist in ensuring the backlog does not resurface.

Mr Suter said it was also important that authorities supported external auditors by giving accurate material on time.

A report to the committee said the council was set to pay £142,041 to EY for the 2022/23 audit.

Mr Suter confirmed the authority would not be required to pay the full amount.

The final figure will be determined by Public Sector Audit Appointments Ltd, who have the delegated power from government for the statutory function of prescribing fees.

In February, a damning report from the external auditor criticised the council’s ability to manage money.

It said the authority “has not been able” to manage its financial “sustainability” since 2022/23 due to overspending and reserve reduction.

The council has since secured an agreement from government which allows it to use £121.6million from capital resources to cover revenue costs.

Plans are moving forward on selling off assets to raise money and restructuring the council to reduce costs.