English Devolution and Community Empowerment Act 2026

Schedule 36 Local audit: minor and consequential amendments

Section 99 Part 1 Amendments of the Local Audit and Accountability Act 2014 3 (1) Section 7 (appointment of local auditor) is amended as follows. (2) In subsection (1), for “relevant authority” substitute “health service body”. (3) In subsection (2)— (a) in the words before paragraph (a), for “relevant authority” substitute “health service body”; (b) in paragraph (b), for “authority” substitute “body”. (4) In subsection (3), for “relevant authority” substitute “health service body”. (5) For subsection (5) substitute— (5) A relevant health service body may only appoint as its local auditor— (a) the Local Audit Office, or (b) a registered local audit provider. (5A) The body must not appoint a person whom it has reason to think will be unable to act because of section 32B (independence requirement). (6) In subsection (6), in the words before paragraph (a), for “relevant authority” substitute “health service body”. (7) In subsection (7), for “under subsection (6)(b) or (c)” substitute “in accordance with subsection (6)”. (8) For subsection (8) substitute— (8) The Secretary of State may by regulations make provision about the appointment of a local auditor to audit the accounts of a health service body which is specified, or of a description specified, in the regulations. (9) Regulations under subsection (8) may, in particular— (a) make further provision about the operation of this Act or any provision made under it in relation to a health service body to which the regulations apply; (b) provide for any provision of or made under this Act not to apply, or to apply with modifications, in relation to a health service body to which the regulations apply. 21 After Part 5 insert— Part 5A Local audit: further provision Independence of auditors Independence requirement 32B (1) A person (“P”) may not act as a local auditor if any of subsections (2), (4), (5) or (6) applies in relation to P and the relevant authority whose accounts are to be audited. (2) This subsection applies if— (a) P is a member or officer of the relevant authority, (b) where the relevant authority is a corporation sole, P is the holder of that office, (c) P is a partner or employee of a person within paragraph (a) or (b), or (d) P is a partnership of which a person within paragraph (a) or (b) is a partner. (3) In relation to a relevant authority that is an integrated care board, subsection (2)(a) has effect as if “or officer” were omitted. (4) This subsection applies if— (a) the relevant authority is an NHS trust, and (b) P is a director of that NHS trust. (5) This subsection applies if P is— (a) a person elected or appointed— (i) as an entity connected with the relevant authority, (ii) to such an entity, or (iii) to an office of such an entity, (b) an employee of such an entity, (c) a partner or employee of a person within paragraph (a) or (b), or (d) a partnership of which a person within paragraph (a) or (b) is a partner. (6) This subsection applies if there exists a connection of a prescribed description between P and the relevant authority. (7) In subsection (6), “prescribed” means prescribed by regulations made by the Secretary of State. (8) A description of connection prescribed under subsection (6) may be direct or indirect (and so may involve, for instance, chains of connection leading from the relevant authority to P by way of one or more interposed persons). Lack of independence arising after appointment 32C (1) Subsection (2) applies if, at any time during the term of office of a local auditor, the auditor becomes prohibited from acting by section 32B. (2) The auditor must immediately— (a) resign from office (with immediate effect), and (b) give notice in writing to the relevant authority concerned that the auditor has resigned by reason of lack of independence. Second audits Second audits where first auditor ineligible 32D (1) This section applies where a person appointed as a local auditor of the accounts of a relevant authority (“the first auditor”) was not an eligible person for any part of the period during which the audit was conducted. (2) The Local Audit Office may direct the relevant authority to retain an eligible person— (a) to conduct a second audit of the accounts in question, or (b) to review the first audit and to report (giving reasons) on whether a second audit of those accounts is needed. (3) If a report under subsection (2)(b) states that a second audit is needed, the relevant authority must take such steps as are necessary for the carrying out of that audit. (4) If the first auditor is or was on a local audit register kept by an external registration body— (a) the Local Audit Office must send to that body a copy of any direction under subsection (2), and (b) the relevant authority must send to that body a copy of any report under subsection (2)(b). (5) A direction under subsection (2) may specify when the authority must comply with— (a) the requirements of the direction, or (b) any requirement of subsection (3) or (4)(b). (6) A person appointed under this section to conduct a second audit of the accounts of a parish meeting, or to review and report on the first audit of such accounts, must be appointed by the parish meeting itself (and not by its chairman on behalf of the parish meeting). (7) Where a second audit is carried out under this section, any statutory or other provision applying in relation to the first audit applies also, so far as practicable, in relation to the second audit. (8) If the first auditor accepted appointment, or acted as the local auditor, with knowledge of not being an eligible person, the relevant authority may recover from the first auditor any costs incurred by it in complying with the requirements of this section. (9) For the purposes of this section, a person is “eligible” if the person— (a) is a registered local audit provider or the Local Audit Office, and (b) is not prohibited by section 32B from acting as the local auditor of the relevant authority concerned. Partnerships Effect of appointing a partnership 32E (1) This section applies where a partnership constituted under the law of— (a) England and Wales, (b) Northern Ireland, or (c) any other country or territory in which a partnership is not a legal person, is appointed as a local auditor under section 6G or 7. (2) Unless a contrary intention appears, the appointment is an appointment of the partnership as such and not of the partners. (3) Where the partnership ceases, the appointment is to be treated as extending to— (a) any appropriate partnership which succeeds to the practice of that partnership, or (b) any other appropriate person who succeeds to that practice having previously carried it on in partnership. (4) For the purposes of subsection (3)— (a) a partnership is to be regarded as succeeding to the practice of another partnership only if the members of the successor partnership are substantially the same as those of the former partnership, and (b) a partnership or other person is to be regarded as succeeding to the practice of a partnership only if the partnership or person succeeds to the whole or substantially the whole of the business of the former partnership. (5) Where the partnership ceases and the appointment is not treated under subsection (3) as extending to any partnership or other person, the appointment may with the requisite consent be treated as extending to an appropriate partnership, or other appropriate person, that succeeds to— (a) the business of the former partnership, or (b) such part of it as is agreed by the appointing authority is to be treated as comprising the appointment. (6) The requisite consent is that of— (a) the Local Audit Office, where the relevant authority to which the appointment relates is not a health service body, or (b) where that authority is a health service body, the body. (7) For the purposes of this section, a partnership or other person is “appropriate” if the partnership or person— (a) is a registered local audit provider, and (b) is not prohibited by section 32B from acting as the local auditor of the relevant authority concerned. Miscellaneous powers and duties Power of Local Audit Office to obtain information from relevant authorities 32F (1) A relevant authority must comply with any written request by the Local Audit Office to be provided with information. (2) Such a request may relate to information as it exists in the future (for instance, information about a future occurrence once it has occurred or about a future period once it has elapsed). (3) The Office may make such a request only if the Office reasonably requires the information concerned in connection with the performance of its functions. Inspection of accounts by persons exercising regulatory functions 32G (1) This section applies to a person who, further to arrangements made for the purposes of paragraph 9 or 10 of Schedule 1C, carries out an inspection or investigation concerning the audit under this Act of the accounts of a relevant authority. (2) The person may require the relevant authority to make available for inspection— (a) the accounts concerned, and (b) the other documents relating to the authority that might reasonably be required by a local auditor for the purposes of auditing its accounts. Duty of Local Audit Office to publish summaries of inspections 32H The Local Audit Office must, at least once in every calendar year, publish a report containing a summary of the results of the inspections of registered local audit providers that have been carried out further to arrangements made for the purposes of paragraph 9 of Schedule 1C. Offences of deception etc False or misleading information 32I (1) It is an offence for a person knowingly or recklessly to provide information that is false, misleading or deceptive in a material way— (a) for the purposes of, or in connection with, an application under the local audit provisions, or (b) in purported compliance with any requirement having effect under those provisions. (2) In subsection (1), “the local audit provisions” means— (a) Parts 2A to 5A of this Act (including any regulations under any of those Parts), (b) an agreement under section 6B(5), and (c) registration rules within the meaning of paragraph 3 of Schedule 1C. (3) A person who commits an offence under this section is liable— (a) on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court or a fine (or both); (b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both). Wrongful holding out 32J (1) It is an offence for a person who is not a registered local audit provider to— (a) describe themselves as a registered local audit provider, or (b) hold themselves out so as to indicate, or be reasonably understood to indicate, that they are a registered local audit provider. (2) It is an offence for a person who is not an external registration body to— (a) describe themselves as an external registration body, or (b) hold themselves out so as to indicate, or be reasonably understood to indicate, that they are an external registration body. (3) It is an offence for a person who is not a recognised qualifying body to— (a) describe themselves as a recognised qualifying body, or (b) hold themselves out so as to indicate, or be reasonably understood to indicate, that they are a recognised qualifying body. (4) A person who commits an offence under this section is liable on summary conviction to imprisonment for a term not exceeding the maximum term for summary offences or a fine (or both). (5) In subsection (4), “the maximum term for summary offences” means— (a) if the offence is committed before the time when section 281(5) of the Criminal Justice Act 2003 comes into force, six months; (b) if the offence is committed after that time, 51 weeks. 22 In section 43(4) (orders and regulations subject to affirmative procedure)— (a) in paragraphs (d) and (e), for “smaller” substitute “category 2”; (b) after paragraph (f) insert— (fa) regulations under section 7(8) (power to make provision about appointment arrangements for health service bodies), ; (c) after paragraph (h) insert— (ha) regulations under section 33A(4) (power to apply enactments to certain audit committees), ; (d) after paragraph (i) insert— (ia) regulations under section 43A(3) (power to amend definition of “connected entity”), ; (e) after paragraph (j) insert— (ja) regulations under paragraph 9(1) of Schedule 1D (delegation of powers in respect of recognised qualifying bodies); ; (f) omit paragraph (k); (g) in paragraph (l), for “that Schedule” substitute “Schedule 4”; (h) omit paragraph (m) (but not the “and” at the end). 23 After section 43 insert— Connected entities 43A (1) For the purposes of this Act, an entity (“E”) is connected with a relevant authority at any time if E is an entity other than the relevant authority and the relevant authority considers that, in accordance with proper practices in force at that time— (a) the financial transactions, reserves, assets and liabilities of E are to be consolidated into the relevant authority’s statement of accounts for the financial year in which that time falls, (b) the relevant authority’s share of the financial transactions, reserves, assets and liabilities of E is to be consolidated into the relevant authority’s statement of accounts for that financial year, or (c) the relevant authority’s share of the net assets or net liabilities of E, and of the profit or loss of E, are to be brought into the relevant authority’s statement of accounts for that financial year. (2) In subsection (1), “entity” means any entity, whether or not a legal person. (3) The Secretary of State may by regulations amend subsection (1) or (2). (4) In subsection (1) as it applies in relation to a health service body, the reference to the relevant authority’s statement of accounts is to be read as a reference to the body’s accounts.