TVCA accounts expected to be disclaimed as authority faces criticism

Disclaimed opinion after disclaimed opinion from numerous auditors has meant that those assessing TVCA’s books have been unable to offer a complete, rounded view on financial matters, with the government “backstops” given as a reason, along with blame being levelled at the combined authority more recently.

The latest developments, coming at the end of 2025, don’t make for pretty reading at TVCA, with more disclaimed opinions likely to come, including for the current 2025/26 financial year, as well as criticisms levelled at TVCA’s 2024/25 efforts.

A TVCA spokesperson commented that EY conclusions relate to “past practices”, and do not cover the period of time in which the new TVCA statutory team have been in place.

External auditors exist to provide assurance to taxpayers and the authority that its finances are soundly managed. Ideally auditors should issue a ‘clean’ opinion on accounts, thereby providing full assurance as to their content and accuracy.

But they can also issue a modified opinion or simply disclaim accounts, when there has been insufficient work done to formulate any sort of opinion. Auditors must still issue a “value for money” judgement.

Many of the audit woes at the combined authority have also been suffered by South Tees Development Corporation (STDC) and vice versa. More recently, similar fates have befell the development corporations based in Hartlepool and Middlesbrough, which were both established in early 2023.

Where to start?

While there is no set time or place, the end of 2024 serves as a good starting point. The then outgoing auditors, Forvis Mazars, were unable to provide an opinion on TVCA accounts for 2021/22 and 2022/23.

The decision to disclaim came prior to the “backstop” deadline (December 13, 2024) introduced by the Labour government as part of the attempt to fix the “broken local audit system in England”, Jim McMahon explained in 2024 – he was then the local government minister. Other mayoral combined authorities also saw their accounts disclaimed by auditors because of the backstop.

TVCA confirmed in December 2024 that the expectation was for incoming auditors, Ernst and Young (EY) to disclaim the 23/24 accounts. The backstop date for 23/24 accounts was February 28, 2025.

What happened in 2025?

The year didn’t get off to a great start as far as auditing was concerned. A partner at EY told a public meeting that the backstop deadline of February 28 for completing the STDC audit work would be missed, citing an issue with the development corporation’s publication of necessary statements in the correct location. EY partner Claire Mellons was in attendance at STDC’s audit and governance meeting on February 25, 2025 and confirmed the intention to issue a disclaimed opinion, while identifying “risks of significant weaknesses”.

In May, an extraordinary TVCA Cabinet meeting was arranged, as auditors criticised the combined authority, with EY making three statutory recommendations. They set out that TVCA should review the capacity within the finance team to ensure sufficient capacity. The combined authority was also told to make sure it understands the statutory requirements of the inspection period. The final recommendation was for TVCA to set out “a clear timetable for production of its 2024/25 Statement of Accounts, including the Annual Governance Statement”.

In a letter, sent to members of the TVCA Cabinet, and copied to then Local Government Secretary Angela Rayner, EY confirmed that TVCA did not comply with its statutory reporting obligations, setting out numerous problems. This caused the February 28 backstop to be missed. At the cabinet meeting, held on May 14, 2025, Tom Bryant, chief executive of TVCA said: “We absolutely recognise the significance of this letter, and we fully accept the recommendations.”

When it got to September, the aim for 2024/25 accounts became clear. Rather than getting a clean or modified opinion for the 2024/25 accounts, the aim was simply to try and reach a disclaimed opinion on time, which hadn’t been achieved for 2023/24.

What has the mayor said?

Tees Valley Conservative Mayor Ben Houchen, who heads up the combined authority, went on BBC Radio Tees in early October and hit out at EY, blaming them for the 2024/25 predicament. At the time, EY did not respond to requests for comment, although they had said previously in a letter to TVCA that delayed completion of the 2023/24 audit had a knock on effect for 2024/25, citing “limited engagement” from TVCA.

On his radio appearance, the mayor said: “We were basically told very early on, before EY had even started any work, they basically weren’t going to do our accounts and were going to disclaim them”, describing the move as “disappointing and frustrating”.

Mayor Houchen added that what “infuriates” him is that EY “haven’t done any work” and yet auditors are going to be receiving £400,000 of taxpayers’ money from the combined authority – a situation that Mayor Houchen called “shocking”.

What’s the latest?

Since Mayor Houchen’s appearance on Radio Tees, it was confirmed that TVCA had missed its latest audit deadline. TVCA was named by the government for failing to publish its audited accounts for 2023/24 to the Ministry of Housing, Communities and Local Government (MHCLG) by the deadline of October 31, 2025.

The combined authority, along with South Tees, Middlesbrough and Hartlepool development corporations, were among 16 organisations nationally to miss this date. A TVCA spokesperson said they were confident they will be able to meet the statutory backstop of February 27, 2026 in relation to the 2024/25 accounts.

A mid-November 2025 update, provided by auditors EY, said that in relation to 2024/25, TVCA is undertaking a review of the published draft financial statements – due to them not being of the required quality – and so does not currently have statements which the authority is satisfied presents a “true and fair view” of its financial position and performance.

The EY update added: “We have therefore been unable to execute our planned audit procedures to the timetable previously agreed with management and have not been able to start rebuilding assurance ahead of the planned backstop date of February 27, 2026.”

When it comes to a breakdown of the reporting assessment into individual sections, TVCA is repeatedly branded “ineffective” in five out of the eight different areas. The combined authority is also lagging behind a National Audit Office recovery timeline, with EY placing the blame at TVCA’s door due to the authority’s “poor quality” draft financial statements.

The expectation to issue a disclaimed opinion on 2025/26 accounts is also revealed, due to “the pervasive gaps in assurance over opening balances, comparators and in-year movements”, EY explains. 

It is also likely that the 2026/27 opinion will need to be disclaimed, with the auditors adding: “It is therefore most likely to be 2027/28, at the earliest, before we are able to consider issuing a qualified (except for) opinion, and 2028/29, at the earliest, before we are able to issue an unqualified opinion.”

As for recommendations made in 2023/24, “sufficient progress has not yet been made” by TVCA for these to be closed, according to EY. For 2024/25, a recommendation for the authority to continue implementation of its revised Organisational Improvement Plan is also made by the auditors. 

When it comes to EY’s value for money judgement for 2024/25, “two significant weaknesses” were found in relation to the findings of the Tees Valley Review, along with the capacity and capabilities of TVCA’s finance team.

At the meeting of TVCA’s audit and governance committee in December 2025, TVCA interim group director of finance and resources, Jo Moore highlighted that the 2024/25 report was “backward looking” and “not necessarily a reflection of where we are at this point in time”. Ms Moore added: “There’s no new specific recommendations that have been highlighted, but cross references back to the previous reviews and recommendations.”

In response to a query from Middlesbrough Labour Councillor Nicky Walker about progress being made, Ms Moore said: “That report will be different for 2025/26, I have no doubt in my mind that it will be different and significant progress will have been made.”

In response to the latest update from EY, a TVCA spokesperson said: “Tees Valley Combined Authority acknowledges the report by auditor Ernst and Young and recognises the seriousness of the issues it outlines regarding historic weaknesses in finance and governance arrangements – also highlighted in the Tees Valley Review, and accepted by TVCA.

“The report’s conclusions relate to past practices, and do not cover the period of time in which the new TVCA statutory team have been in place driving improvements at the authority.

“Significant action has already been taken to address these shortcomings. Under new leadership, we have strengthened our finance function, increased capacity and expertise across the organisation, and are embedding robust systems and processes to ensure effective governance and oversight. This tangible improvement was noted publicly by the chair of the independent improvement board, at the last TVCA cabinet meeting.

“We are also working closely with our partners and external advisors to ensure full implementation of all audit recommendations. Good governance, transparency, and value for money are now at the heart of everything we do. We remain fully committed to restoring public confidence and ensuring that the combined authority continues to deliver for the people, businesses, and communities of the Tees Valley in a responsible and accountable way.”

What can we expect in 2026?

In less than two months, on February 27, another statutory backstop deadline will arrive, which TVCA said in December that they were confident that they would be able to meet. This deadline is in relation to the publication of 2024/25 audited accounts.

Work was also still being undertaken on 2023/24 accounts throughout last year – these were not published by either the February 28, 2025 deadline, or the later October 31, 2025 deadline. A final outcome on these accounts should be confirmed later this year.

The majority of work on the 2025/26 accounts will also need to be undertaken during 2026 – while a disclaimed opinion is now the expected outcome, much work will still need to be undertaken to reach a value for money judgement and meet next year’s earlier backstop deadline of January 31, 2027.