Financial assurance reviews: key insights and trends for local councils

In today’s turbulent world, it can feel almost anomalous to talk about assurance. After all, assurance is “a positive declaration intended to give confidence”,  and positivity and confidence are not words often heard in public sector circles these days.

However, even in challenging circumstances, there is always an opportunity to improve and learn. This desire to share learning sits at the heart of CIPFA’s recent publication on Financial Assurance Reviews.

These insights were drawn from the 12 financial assurance reviews CIPFA carried out on councils receiving Exceptional Financial Support (EFS). The reviews aimed to identify common challenges, assess risks and provide tailored recommendations to help councils strengthen their financial stability. The publication summarises the key findings and trends from these reviews and offers clear insights for local authorities navigating financial pressures.

To characterise many of the recommendations, I would describe them as evolution rather than revolution, perhaps echoing the words of the great tennis player Arthur Ashe:

“Start where you are, use what you have, do what you can.”

This focus on practical, actionable recommendations does not dismiss the broader conversation on funding reform but instead approaches assurance through that pragmatic lens.

Getting more focused

Before delving deeper into the risks and recommendations for specific authorities, the publication groups the 12 councils into three categories based on their financial progress:

• Transition towards financial sustainability – councils that no longer require EFS.
• Moderate financial challenge ahead – councils still receiving EFS, but representing a smaller proportion of total allocations.
• Continued need for high levels of financial assistance – councils requiring significant ongoing EFS.

These categories highlight the diversity of councils currently receiving EFS. Too often, discussions around EFS treat all recipient authorities as a single group, when in reality, their circumstances and underlying causes differ considerably.

From this starting point, the report explores the detailed risks facing these councils and the types of recommendations arising from each assurance review. By analysing these across four key themes, it identifies consistent patterns and trends:

• Organisational and structural: Issues around planning, strategy, culture, workforce capacity, governance and risk management.
• Capital, commercial, assets and revenue: Challenges related to commercial ventures, asset disposals and capital programme delivery.
• Services, savings, debt and reserves: Pressures from service delivery, overspending, debt and critically low reserves.
• Governance and regulations: Weak governance arrangements, limited scrutiny and outdated policies.

Across all councils, organisational and structural risks were the most prevalent, followed by challenges around savings delivery, reserves and governance. Several recurring issues emerged, with most councils facing inadequate transformation programmes and more than half exhibiting weak audit arrangements.

From risks to recommendations

Risks are only one side of the story – the other is the set of recommendations provided by the assurance team. These recommendations draw on experience gathered over the past five years as well as the specific circumstances of each authority.

For transformation strategies, scope was a key factor for success, as was ensuring timely implementation. Recommendations around assets urged councils to expedite disposals, update asset policies, and ensure accurate valuations.

Reflecting the risks identified around audit and governance, the team recommended appointing independent audit members or chairs to strengthen audit committees. For capital programmes, improved monitoring and delivery arrangements were seen as vital.

One notable finding was that 25% of the councils reviewed had undergone reorganisation in the past five years – for example, Somerset. For those familiar with Local Government Reorganisation (LGR), this confirms that while reorganisation can bring long-term benefits, it often creates short-term financial strain and complicates efforts to achieve stability. These are lessons both the sector and Government should reflect on as we move forward with the LGR agenda and the upcoming November budget.

Lessons to learn

For some authorities, the contents of this publication will feel familiar – a well-worn path they are already travelling. For others, the suggested roadmap will be more challenging and require deeper reflection.

Either way, it is vital to remember how much we can continue to learn across the sector – not just from those who succeed, but also from those who struggle. If we want to foster an environment of continual learning, publications like this play a critical role. At CIPFA, sharing experience and promoting improvement will always remain at our core.