Local Audit and Accountability Act 2014

Schedule 1C Eligibility and regulation of registered providers

Section 6C(1) Introduction 1 (1) The following paragraphs set out the requirements that have effect in relation to a local audit register as provided by section 6C(1). (2) In this Schedule as it applies in relation to a given register— “provider” means an individual or firm entered in that register; “the registration body” means the body keeping that register. Eligibility criteria and procedures 2 (1) The registration body must have in place— (a) criteria for being entered, and remaining, in the register, and (b) procedures for entry in, and removal from, the register. (2) The procedures must allow for appeals to be made to a person who will determine the appeal independently of the maker of the decision appealed against. Registration rules 3 (1) The registration body must secure that each provider is bound by rules determined by the body. (2) Those rules are referred to in this Schedule as “registration rules”. (3) Any changes in the body’s registration rules after its designation must be approved by the Local Audit Office. (4) The body must have arrangements for taking account, in framing its registration rules, of the cost to providers of complying with those rules and any other controls to which they are subject. Professional qualifications 4 (1) The criteria and procedures in place under paragraph 2 must be designed to secure that— (a) an individual— (i) may be entered in the register only if the individual meets the qualification requirement, and (ii) is to be removed from the register as soon as possible after ceasing to meet that requirement; (b) a firm— (i) may be entered in the register only if the firm meets the qualified control requirement, and (ii) is to be removed from the register before the end of the period of 3 months beginning with the day on which the firm ceases to meet that requirement. (2) See Part 1 of Schedule 1D for the requirements referred to in sub-paragraph (1). Professional integrity and independence 5 (1) The registration rules must include rules designed to secure that— (a) audits under this Act are conducted properly and with integrity, and (b) providers are not appointed as local auditors in circumstances in which they have an interest likely to conflict with the proper conduct of the audit. (2) The criteria and procedures in place under paragraph 2 must be designed to secure that a firm— (a) may be entered in the register only if the firm has in place adequate arrangements within sub-paragraph (3), and (b) is to be removed from the register as soon as possible after ceasing to have such arrangements. (3) The arrangements within this sub-paragraph are arrangements to prevent a person to whom sub-paragraph (4) applies from being able to exert any influence over the way in which an audit under this Act is conducted in circumstances in which that influence would be likely to affect the independence or integrity of the audit. (4) This sub-paragraph applies to— (a) any person who is not a member of the firm, and (b) any individual who is a member of the firm but does not meet the qualification requirement for the purposes of paragraph 4(1)(a). Lead partners 6 (1) The registration body must secure that the register includes, for each provider that is a firm, a list of the individuals who may act as the lead partner for an audit carried out by the firm. (2) The registration body must have arrangements designed to secure that an individual appears in the list only if the individual— (a) meets the qualification requirement (see paragraph 1 of Schedule 1D), (b) otherwise has the necessary competence to act as the lead partner for an audit, and (c) is bound by rules determined by the body (which are referred to in this Schedule as “lead partner rules”). (3) Any changes in the body’s lead partner rules after its designation must be approved by the Local Audit Office. (4) The registration body must have lead partner rules designed to secure that individuals acting as lead partners for audits under this Act maintain high standards of professional conduct. Complaints procedures 7 (1) The registration body must have effective arrangements for the investigation of complaints against providers, so far as relating to their work in connection with audits under this Act. (2) The registration body must have effective arrangements for the investigation of complaints against itself, so far as relating to its functions as a registration body. Meeting of claims 8 (1) The registration body must have in place registration rules or other arrangements designed to secure that providers take such steps as may reasonably be expected of them to secure that they are able to meet claims against them arising out of their work in connection with audits under this Act. (2) This may be achieved by professional indemnity insurance or other appropriate arrangements. Monitoring and inspections 9 (1) The registration body must have in place— (a) arrangements for monitoring compliance with its registration rules and lead partner rules, (b) arrangements for the inspection of providers in connection with their work in connection with audits under this Act, (c) registration rules designed to secure that providers co-operate with the monitoring and inspections, and (d) lead partner rules designed to secure that individuals bound by the rules co-operate with the monitoring. (2) The arrangements relating to inspections must be designed to secure that each provider is inspected at least once every 6 years. (3) Those arrangements must include— (a) provision for the results of any inspections not carried out by the registration body to be reported to the registration body, and (b) in the case of an external registration body, provision for the results of any inspections not carried out by the Local Audit Office to be reported to the Office. Enforcement 10 (1) The registration body must have in place— (a) arrangements for the investigation of suspected breaches by providers or lead partners, (b) registration rules and lead partner rules designed to secure that providers and lead partners co-operate with any investigations, (c) arrangements for the imposition of sanctions in respect of breaches that are established, and (d) registration rules and lead partner rules designed to secure that providers and lead partners are bound by any sanctions. (2) In sub-paragraph (1), “breaches” means breaches of requirements imposed by or under this Act (including by registration rules or lead partner rules). (3) The available sanctions must include financial penalties. (4) The arrangements and rules must allow for appeals to be made to a person who will determine the appeal independently of the maker of the decision appealed against. (5) The arrangements and rules must allow for the Local Audit Office to be able— (a) to determine that a particular case raises or appears to raise important issues affecting the public interest, and (b) to assume enforcement responsibility in a case in which it has made such a determination. (6) For the purposes of sub-paragraph (5), the Office assumes enforcement responsibility if it assumes responsibility for the final decision (subject to any appeal) as to— (a) whether the requirement or rule in question has been breached, and (b) if so, the sanction to be imposed. Provision and publication of information 11 (1) The registration rules must require a provider to comply with any written request for the provision of information made by the registration body or (if different) the Local Audit Office for the purposes of its functions. (2) The registration rules must require a provider to comply with any general directions published from time to time by the Local Audit Office regarding the publication of information about providers. (3) That information may, for instance, include information regarding— (a) a provider’s ownership and governance, (b) a provider’s internal controls with respect to the quality and independence of its audit work, (c) a provider’s turnover, and (d) the relevant authorities whose accounts a provider has audited under this Act.