Local Audit and Accountability Act 2014
2014 c. 2
An Act to make provision for and in connection with the abolition of the Audit Commission for Local Authorities and the National Health Service in England; to make provision about the accounts of local and certain other public authorities and the auditing of those accounts; to make provision about the appointment, functions and regulation of local auditors; to make provision about data matching; to make provision about examinations by the Comptroller and Auditor General relating to English local and other public authorities; to make provision about the publication of information by smaller authorities; to make provision about compliance with codes of practice on local authority publicity; to make provision about access to meetings and documents of local government bodies; to make provision about council tax referendums; to make provision about polls consequent on parish meetings; and for connected purposes.
[30th January 2014]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
(1) The Audit Commission ceases to exist.
(2) The Audit Commission Act 1998 is repealed.
(3) Schedule 1 (abolition of Audit Commission: supplementary provision) has effect.
(4) In that Schedule—
(a) Part 1 makes some arrangements in connection with the abolition of the Audit Commission, and
(b) Part 2 contains consequential repeals and revocations of Acts and instruments that amend the Audit Commission Act 1998.
(5) In this section and that Schedule “the Audit Commission” means the Audit Commission for Local Authorities and the National Health Service in England.
(1) A body corporate called the Local Audit Office is established.
(2) Schedule 1A makes provision about the Office, including provision about its constitution and proceedings.
(1) The main objective of the Local Audit Office in performing its functions is to secure the effective operation of the system of audit established by this Act, with a view to meeting the needs of users of the audited accounts.
(2) That includes, in particular, securing—
(a) that audits under this Act are carried out to a high standard, and
(b) that there is a suitable range of persons able and willing to carry out such audits.
(1) The Secretary of State may pay grants to the Local Audit Office.
(2) The Office must, on request by the Secretary of State, provide estimates of its income and expenditure.
(3) The Office may charge a person a fee for the exercise in relation to that person of any of its functions that is not the subject of more specific provision about fees.
(4) That includes functions under—
(a) an agreement under section 6B(5)(a), or
(b) rules or arrangements made for the purposes of Schedule 1C.
(5) A fee charged by the Office (under subsection (3) or otherwise) need not be calculated by reference to the cost of doing the thing to which the fee relates.
(6) But the Office must set its fees with a view to securing that, over time, its income from fees is broadly equivalent to such of its expenditure as is not met by way of grant from the Secretary of State.
(7) In subsection (6)—
(a) the reference to fees includes other sums payable to the Office by agreement (see in particular section 6B(5)(b)), and
(b) the reference to setting fees includes agreeing fees and other sums so payable.
(8) Subsection (9) applies to any sum received by the Office by way of penalty under—
(a) paragraph 3 of Schedule 1B (penalties against external registration body), or
(b) arrangements made for the purposes of paragraph 10 of Schedule 1C (penalties against registered local audit provider),
including any interest.
(9) The Office—
(a) must pay the sum to the Secretary of State, but
(b) may deduct any costs incurred by it in connection with the imposition or enforcement of the penalty, so far as those costs are not otherwise recoverable.
1D Oversight and intervention by Secretary of State
(1) The Local Audit Office must exercise its functions in accordance with any direction, and having regard to any guidance, given to it by the Secretary of State.
(2) The Office must comply with any written request by the Secretary of State to be provided with information about the exercise of the Office’s functions.
(3) Such a request may cover information about the exercise of functions after the request is made.
(4) No direction, guidance or request under this section may relate to the exercise of functions in relation to a particular relevant authority.
(5) The Secretary of State must—
(a) consult the Local Audit Office before giving any direction or guidance under this section, and
(b) publish any direction or guidance given under this section.
(1) In this Act “relevant authority” means a person or body listed in Schedule 2.
(2) The application of this Act to a relevant authority is subject to any note forming part of the entry for that authority in Schedule 2.
(3) The Secretary of State may by regulations amend Schedule 2 by adding, modifying or removing an entry relating to a relevant authority.
(4) Regulations under subsection (3) may add an entry relating to a person or body to Schedule 2 only if that person or body exercises functions of a public nature in relation to an area which is—
(a) wholly in England, or
(b) partly in England and partly in Wales.
(5) The Secretary of State may by regulations or order make provision about the application of this Act or provision made under it to a person or body that comes to fall within Schedule 2 (whether or not as a result of regulations under subsection (3)).
(6) The power in subsection (5) includes power—
(a) to amend this Act or provision made under it in its application to that person or body, or
(b) to make provision for this Act or provision made under it to apply to that person or body with modifications.
(1) A relevant authority, other than a health service body, must keep adequate accounting records.
(2) “Adequate accounting records” means records that are sufficient—
(a) to show and explain the relevant authority's transactions,
(b) to disclose at any time, with reasonable accuracy, the financial position of the authority at that time, and
(c) to enable the authority to ensure that any statements of accounts required to be prepared by the authority comply with the requirements imposed by or under this Act.
(3) A relevant authority, other than a health service body, must prepare a statement of accounts in respect of each financial year.
(4) In this Act “financial year” means a period of 12 months ending with 31 March.
(5) The Secretary of State may by regulations—
(a) make provision for the financial year of a relevant authority, other than a health service body, for the purposes of this Act to be such period as is specified in the regulations;
(b) make provision for any requirement in this section not to apply, or to apply with modifications, in relation to the relevant authorities, other than health service bodies, specified or described in the regulations.
(6) Regulations under subsection (5)(a) may—
(a) amend this Act or provision made under it in its application to a relevant authority to which the regulations apply, or
(b) provide for this Act or provision made under it to apply in relation to such a relevant authority with modifications.
(7) Regulations under subsection (5)(a) may make provision in relation to—
(a) all relevant authorities (other than health service bodies);
(b) the relevant authorities specified or described in the regulations.
(8) Section 32 enables the Secretary of State by regulations to make further provision about accounting records and statements of accounts.
(9) In this Act “health service body” means—
(a) an integrated care board;
(b) an NHS trust all or most of whose hospitals, establishments and facilities are situated in England.
(1) The accounts of a relevant authority for a financial year must be audited—
(a) in accordance with this Act and provision made under it, and
(b) by an auditor (a “local auditor”) appointed in accordance with this Act or provision made under it.
(2) In this Act, references to accounts are to be construed in accordance with the following subsections.
(3) In relation to a relevant authority which is not a health service body, “accounts” means—
(a) the authority's accounting records, and
(b) the authority's statement of accounts.
(4) In relation to an integrated care board, “accounts” means—
(a) the annual accounts of the board prepared under paragraph 22(2) of Schedule 1B to the National Health Service Act 2006 (accounts and audit of integrated care boards);
(b) any accounts of the board prepared under paragraph 22(3) of that Schedule in respect of which a direction has been given under paragraph 22(6) of that Schedule.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) In relation to an NHS trust, “accounts” means the annual accounts prepared under paragraph 11A of Schedule 4 to the National Health Service Act 2006.
5 Modification of Act in relation to category 2 authorities
(1) The Secretary of State may by regulations make provision about the audit of the accounts of category 2 authorities.
(2) Regulations under subsection (1) may, in particular, provide for any provision of or made under this Act not to apply, or to apply with modifications, in relation to category 2 authorities.
(3) Subsection (2) applies to a provision of or made under this Act even if it makes specific provision about a category 2 authority to which the regulations apply.
(4) Regulations under subsection (1) may, in particular—
(a) provide for the appointment, by a person specified by the Secretary of State, of a local auditor in relation to the audit of the accounts of a category 2 authority;
(b) make provision about the persons that may be specified by the Secretary of State;
(c) make provision about the procedure for specifying a person and for a person's specification to come to an end in specified circumstances;
(d) make provision about the consequences of a person's specification coming to an end, including for the exercise of functions by the Secretary of State and the transfer of the person's rights and liabilities arising by virtue of the regulations to the Secretary of State or another specified person;
(e) confer functions on a specified person, including in relation to—
(i) the appointment of local auditors under the regulations,
(ii) the activities of such auditors, and
(iii) the resignation or removal from office of such auditors;
(f) require a specified person to consult such persons as are specified in the regulations before exercising specified functions;
(g) make provision for the appointment of a local auditor in relation to the accounts of a category 2 authority to which arrangements within paragraph (a) apply where the specified person does not make an appointment under the regulations (and in particular for such an appointment to be made by the authority or the Secretary of State).
(5) Regulations under subsection (1) may, in particular—
(a) make provision about the category 2 authorities to which arrangements within subsection (4)(a) apply, including provision for them to apply to an authority that has opted into them or has not opted out of them;
(b) make provision about the procedures to be followed in relation to opting into or out of those arrangements;
(c) impose duties on category 2 authorities to which those arrangements apply, including duties as to—
(i) the payment of fees to a specified person, and
(ii) the provision of information to a specified person;
(d) make provision for the making of payments, in specified circumstances and by the category 2 authorities to which those arrangements apply, to a fund of a specified kind for the purposes of meeting local auditors' costs of a specified kind.
(6) Provision made by regulations under subsection (1) by virtue of subsection (5)(c)(i) may, in particular—
(a) provide for fees to be paid in accordance with a scale or scales of fees determined by a specified person, and
(b) provide for the payment in specified circumstances of a larger or smaller fee than is set out in the appropriate scale.
(7) Regulations under subsection (1) may, in particular—
(a) make provision about the eligibility of a person to be appointed as a local auditor of the accounts of a category 2 authority;
(b) make provision about the functions of a local auditor in relation to the accounts of a category 2 authority.
(8) Regulations under subsection (1) may, in particular—
(a) provide that, in specified circumstances, the accounts of a category 2 authority of a specified description are to be exempt from specified audit requirements;
(b) make provision for an exemption under paragraph (a) not to apply or to cease to apply to an authority in specified circumstances.
(9) In this section “specified” (except in the expressions “person specified by the Secretary of State” and “specified person”) means specified in regulations under subsection (1).
(1) For the purposes of section 5, a relevant authority is a “category 2 authority” for a financial year if—
(a) where that year is the year in which the authority was established, the qualifying condition is met for that year,
(b) where that year is the year following that in which the authority was established, the qualifying condition is met for that year or the previous year, and
(c) where that year is the second or any subsequent year following that in which the authority was established, the qualifying condition is met for that year or either of the two previous years.
(2) The qualifying condition is met for a relevant authority and a financial year—
(a) beginning on or before 1st April 2024, if the higher of the authority’s gross income for the year and its gross expenditure for the year does not exceed £6.5 million;
(b) beginning on or after 1st April 2025, if the higher of the authority’s gross income for the year and its gross expenditure for the year does not exceed £15 million.
(3) For the purpose of determining, at a time when a relevant authority's gross income or expenditure for a financial year cannot be accurately determined, whether subsection (2) applies or will apply to the authority, that subsection is to be read as referring to the authority's estimated gross income or expenditure (as the case may be).
(4) The Secretary of State may by regulations make provision about the application of this Act (including in its application by virtue of section 5) or any provision made under it in a case where—
(a) an authority is treated as a category 2 authority for a financial year, and
(b) the authority was not in fact a category 2 authority for that year.
(5) The Secretary of State may by regulations amend this section.
(1) The Local Audit Office must secure that there is at least one public register of individuals and firms who are (by virtue of their registration) entitled to carry out audits in accordance with this Act.
(2) It may do so by—
(a) keeping a register itself, or
(b) designating another body as an external registration body (see section 6B).
(3) An external registration body must keep a register meeting the description in subsection (1).
(4) In this Act—
“local audit register” means a register kept in accordance with this section;
“registered local audit provider” means an individual or firm that is registered in a local audit register.
(5) Fees may be charged in respect of—
(a) applications for registration in a local audit register;
(b) entry in such a register;
(c) remaining in such a register.
(1) The Local Audit Office may designate a body as an external registration body only if—
(a) the body consents, and
(b) the Office is satisfied that—
(i) the body is able and willing to co-operate with the Office in pursuit of the objective set out in section 1B,
(ii) the body is able and willing to promote and maintain high standards of integrity in the conduct of audits under this Act, and
(iii) the rules and arrangements of the body that will have effect in relation to registered local audit providers and lead partners (see in particular Schedule 1C) will be fair, reasonable, and fit for purpose.
(2) The Office—
(a) may revoke the designation of an external registration body, and
(b) must do so if no longer satisfied of the matters set out in subsection (1)(b), unless it considers that the body is likely to satisfy it of those matters again within a reasonable period.
(3) The making or revocation of a designation is to be done by written notice to the body in question; and the Office must publish such a notice.
(4) The making or revocation is to have effect from the time specified in the notice.
(5) The Local Audit Office and an external registration body, or a body that anticipates becoming an external registration body, may enter into an agreement about—
(a) how the body is to carry out its functions as an external registration body;
(b) fees, costs or other sums that are to be paid by the body to the Office;
(c) circumstances in which the Office will or will not exercise its power under subsection (2)(a);
(d) procedures to be followed in order for the Office to reach a decision whether to exercise that power or whether its duty under subsection (2)(b) is engaged.
(6) Fees charged by an external registration body under section 6A(5) may be calculated by reference to any costs borne by the body as a result of this Act.
(7) Schedule 1B makes further provision about external registration bodies, including provision for the enforcement of their duties.
6C Eligibility and regulation of registered providers
(1) The body that keeps a local audit register must comply with the requirements of Schedule 1C (which sets out requirements in connection with the register, including requirements about eligibility for registration and the regulation of registered providers).
(2) The requirements of Schedule 1C do not limit the ability of the body to have in place rules or arrangements going beyond those requirements (whether relating to the same or different subject matter).
(3) An agreement under section 6B(5)(a) may, accordingly, include terms supplementing those requirements or imposing additional requirements.
In Schedule 1D—
(a) Part 1 sets out certain requirements as to professional qualification referred to in Schedule 1C, and
(b) Part 2 makes provision about bodies offering qualifications referred to in Part 1.
6E Powers of Local Audit Office to facilitate provision by firms
The Local Audit Office may—
(a) form a firm,
(b) acquire interests in a firm, or
(c) give assistance (financial or otherwise) to a firm,
with a view to the firm becoming, or remaining, a registered local audit provider that carries out audits under this Act.
6F Scrutiny of Local Audit Office as audit provider
(1) This section applies if the Local Audit Office decides that it is to carry out audits under this Act.
(2) The Office must put in place arrangements under which its audit practice will be monitored, inspected and reported on by persons acting independently of the Office.
(3) The Office must send to the Secretary of State reports made to it under the arrangements.
(1) A relevant authority must appoint a local auditor to audit its accounts for a financial year not later than 31 December in the preceding financial year.
(2) A relevant authority may appoint a local auditor to audit its accounts for more than one financial year; and in such a case—
(a) subsection (1) does not apply in relation to the second or any subsequent year for which the appointment is made, but
(b) the authority must make a further appointment of a local auditor at least once every 5 years.
(3) Subsection (2)(b) does not prevent the relevant authority from re-appointing a local auditor.
(4) The Secretary of State may by regulations amend subsection (2)(b) so as to alter the period for the time being specified in it.
(5) A local auditor appointed under this section—
(a) must be eligible for appointment as a local auditor (see Part 4), and
(b) must not be prohibited from acting as a local auditor of the accounts of the relevant authority by virtue of section 1214 of the Companies Act 2006 (independence requirement) as it has effect by virtue of Schedule 5.
(6) Two or more local auditors may be appointed to audit the accounts of a relevant authority, and those auditors may be appointed—
(a) to act jointly in relation to some or all parts of the accounts;
(b) to act separately in relation to different parts of the accounts;
(c) to carry out different functions in relation to the audit.
(7) If, as a result of an appointment under subsection (6)(b) or (c), a function under this Act may be exercised by two or more local auditors—
(a) it may be exercised by both or all of them acting jointly or by such one or more of them as they may determine, and
(b) references (however expressed) to the local auditor by whom the function is or has been exercised are to the auditors by whom it is or has been exercised.
(8) Schedule 3 makes further provision about the appointment of local auditors; and this section is subject to that Schedule and provision made under it.
(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.
(1) A relevant authority must consult and take into account the advice of its auditor panel on the selection and appointment of a local auditor under section 7.
(2) The relevant authority must, within the period of 28 days beginning with the day on which the appointment is made, publish a notice that—
(a) states that it has made the appointment,
(b) identifies the local auditor that has been appointed,
(c) specifies the period for which the local auditor has been appointed,
(d) sets out the advice, or a summary of the advice, of its auditor panel about the selection and appointment of a local auditor, and
(e) if it has not followed that advice, sets out the reasons why it has not done so.
(3) The notice must be published—
(a) if the relevant authority has a website, on its website;
(b) otherwise, in accordance with subsection (4).
(4) A relevant authority publishes a notice in accordance with this subsection if—
(a) in the case of a relevant authority other than a health service body, it publishes the notice in such manner as it thinks is likely to bring the notice to the attention of persons who live in its area;
(b) in the case of an integrated care board, it publishes the notice in such manner as it thinks is likely to bring the notice to the attention of—
(i) the group of people for whom it has core responsibility, and
(ii) anyone who lives within its area but does not fall within sub-paragraph (i)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) in the case of an NHS trust, it publishes the notice in such manner as it thinks is likely to bring the notice to the attention of persons to whom the trust provides services for the purposes of the health service in England.
(5) The relevant authority must exclude from the notice information whose disclosure would prejudice commercial confidentiality, unless there is an overriding public interest in favour of its disclosure.
(6) This section is subject to Schedule 3 (further provision about appointment of local auditors) and provision made under it.
(1) Each relevant authority must have an auditor panel to exercise the functions conferred on auditor panels by or under this Act.
(2) This section does not apply to—
(a) a chief constable, or
(b) the Commissioner of Police of the Metropolis.
(3) Schedule 4 makes further provision about auditor panels.
(1) A relevant authority's auditor panel must advise the authority on the maintenance of an independent relationship with the local auditor appointed to audit its accounts.
(2) Advice under subsection (1) to a police and crime commissioner for an area must include advice on the maintenance of an independent relationship between the local auditor and the chief constable for the area.
(3) Advice under subsection (1) to the Mayor's Office for Policing and Crime must include advice on the maintenance of an independent relationship between the local auditor and the Commissioner of Police of the Metropolis.
(4) A relevant authority's auditor panel must advise the authority on the selection and appointment of a local auditor to audit its accounts.
(5) Advice under subsection (1) or (4) must be given—
(a) if the relevant authority asks for it, and
(b) at other times, if the auditor panel thinks it is appropriate to do so.
(6) A relevant authority's auditor panel must advise the authority on any proposal by the authority to enter into a liability limitation agreement (see section 14).
(7) Advice under subsection (6) must be given if the authority asks for it.
(8) The Secretary of State may by regulations—
(a) provide more details about an auditor panel's functions under any of subsections (1) to (7);
(b) confer or impose other functions on a relevant authority's auditor panel in relation to the audit of the authority's accounts;
(c) enable a relevant authority to confer or impose other functions on its auditor panel in relation to the audit of its accounts.
(9) A relevant authority must publish advice from its auditor panel in accordance with subsection (10).
(10) A relevant authority publishes advice in accordance with this subsection if—
(a) in the case of a relevant authority other than a health service body, it publishes the advice in such manner as it thinks is likely to bring the advice to the attention of persons who live in its area;
(b) in the case of an integrated care board, it publishes the advice in such manner as it thinks is likely to bring the advice to the attention of—
(i) the group of people for whom it has core responsibility, and
(ii) anyone who lives within its area but does not fall within sub-paragraph (i);
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) in the case of an NHS trust, it publishes the advice in such manner as it thinks is likely to bring the advice to the attention of persons to whom the trust provides services for the purposes of the health service in England.
(11) The relevant authority must exclude from advice published under subsection (10) information whose disclosure would prejudice commercial confidentiality, unless there is an overriding public interest in favour of its disclosure.
(12) An auditor panel must have regard to any guidance issued by the Secretary of State in exercising, or deciding whether to exercise, its functions.
(13) A relevant authority must have regard to any guidance issued by the Secretary of State in exercising, or deciding whether to exercise, its functions in relation to its auditor panel.
(1) A relevant authority other than a health service body must, if asked to do so by its auditor panel, supply to the panel any documents or information held by the authority and required by the panel for the exercise of its functions.
(2) A relevant authority's auditor panel, other than the auditor panel of a health service body, may require a member or officer of the authority to come to a meeting of the panel to answer its questions.
(3) In the application of subsection (2) to a corporation sole, the reference to a member is a reference to a holder of that office.
(4) A person mentioned in subsection (2) must comply with a requirement imposed by an auditor panel under that subsection.
(5) This does not require the person to answer any questions which the person would be entitled to refuse to answer in or for the purposes of proceedings in a court in England and Wales.
(6) The auditor panel of a police and crime commissioner for an area may also exercise the functions in subsections (1) and (2) in relation to the chief constable for the area.
(7) The auditor panel of the Mayor's Office for Policing and Crime may also exercise the functions in subsections (1) and (2) in relation to the Commissioner of Police of the Metropolis.
(8) The auditor panel of a parish meeting may only exercise the function in subsection (2) in relation to the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.
(1) If a relevant authority, other than a health service body, fails to appoint a local auditor in accordance with this Part, the authority must immediately inform the Secretary of State of that fact.
(2) If it appears to the Secretary of State that a relevant authority, other than a health service body, has failed to appoint a local auditor in accordance with this Part, the Secretary of State may—
(a) direct the authority to appoint the auditor named in the direction, or
(b) appoint a local auditor on behalf of the authority.
(3) An appointment under subsection (2)(b) takes effect—
(a) as if it had been made by the relevant authority, and
(b) on such terms as the Secretary of State may direct.
(4) The Secretary of State must—
(a) inform the relevant authority of the intention to give a direction or appoint a local auditor under subsection (2) not less than 28 days before the direction is given or the appointment made, and
(b) consider any representations made by the relevant authority regarding the proposed direction or appointment.
(5) But the Secretary of State may give a direction or make an appointment under subsection (2) without having complied with subsection (4) if the Secretary of State thinks it is likely that a local auditor would have to exercise a function under this Act in relation to a relevant authority within the period of 60 days beginning with the day on which the direction is given or the appointment is made.
13 Failure of health service bodies to appoint local auditor
(1) If a health service body fails to appoint an auditor in accordance with this Part, it must immediately inform NHS England of that fact.
(2) If it appears to NHS England that a health service body has failed to appoint an auditor in accordance with this Part, NHS England must inform the Secretary of State of that fact by the end of 25 March in the financial year preceding the financial year to which the accounts to be audited relate.
(3) If the Secretary of State has been informed by NHS England under subsection (2), the Secretary of State may—
(a) take either of the steps in subsection (4), or
(b) direct NHS England to take whichever of the steps in subsection (4) NHS England considers appropriate.
(4) Those steps are—
(a) to direct the health service body to appoint an auditor named in the direction given under this paragraph, or
(b) to appoint an auditor on behalf of the health service body.
(5) An appointment under subsection (4)(b) takes effect—
(a) as if it had been made by the health service body, and
(b) on such terms as the Secretary of State or (as the case may be) NHS England may direct.
(6) The Secretary of State or NHS England must—
(a) inform the health service body of the intention to give a direction or appoint an auditor under subsection (4) not less than 28 days before the direction is given or the appointment made, and
(b) consider any representations made by the health service body regarding the proposed direction or appointment.
(7) But the Secretary of State or NHS England may give a direction or make an appointment under subsection (4) without having complied with subsection (6) if the Secretary of State or NHS England thinks it is likely that an auditor would have to exercise a function under this Act in relation to the health service body within the period of 60 days beginning with the day on which the direction is given or the appointment is made.
(1) This section applies in relation to an agreement (a “liability limitation agreement”) that purports to limit the amount of a liability owed to a relevant authority by its local auditor in respect of any negligence, default, breach of duty or breach of trust occurring in the course of the audit of accounts, of which the auditor may be guilty in relation to the authority.
(2) A liability limitation agreement must comply with regulations made by the Secretary of State.
(3) Regulations under subsection (2) may, in particular,—
(a) make provision about the duration of a liability limitation agreement;
(b) make provision as to the amount to which a local auditor's liability may be limited by a liability limitation agreement (which may be an amount that is specified in, determined under or described in general terms in the regulations).
(4) Regulations under subsection (2) may—
(a) require a liability limitation agreement to contain provisions, or provisions of a description, specified in the regulations;
(b) prohibit a liability limitation agreement from containing provisions, or provisions of a description, specified in the regulations.
(5) Regulations under subsection (2) may provide—
(a) that a liability limitation agreement that does not comply with the regulations is void;
(b) that a liability limitation agreement is effective only to the extent that it complies with the regulations;
(c) that, in the circumstances specified in the regulations, a provision of a liability limitation agreement that does not comply with the regulations is to have effect as if it complied with the regulations.
(6) The Secretary of State may by regulations make provision requiring a relevant authority that has entered into a liability limitation agreement to disclose such information about the agreement as may be specified in the regulations in such manner as may be so specified.
(7) A liability limitation agreement that complies with regulations under subsection (2) is not subject to section 2(2) or 3(2)(a) of the Unfair Contract Terms Act 1977.
15 Further provisions about liability limitation agreements
(1) Before entering into a liability limitation agreement, a relevant authority other than a chief constable or the Commissioner of Police of the Metropolis must consult and take into account the advice of its auditor panel.
(2) Before entering into a liability limitation agreement, a chief constable for an area must consult and take into account the advice of the auditor panel of the police and crime commissioner for the area.
(3) Before entering into a liability limitation agreement, the Commissioner of Police of the Metropolis must consult and take into account the advice of the auditor panel of the Mayor's Office for Policing and Crime.
(4) If a relevant authority is a local authority operating executive arrangements, the function of deciding whether to enter into a liability limitation agreement is not the responsibility of an executive of the authority under those arrangements.
(5) If a relevant authority is a local authority within the meaning of section 101 of the Local Government Act 1972 (arrangements for discharge of functions), that section does not apply to the authority's function of deciding whether to enter into a liability limitation agreement.
(6) A decision to enter into a liability limitation agreement between a local auditor and the Greater London Authority must be taken by the Mayor of London and the London Assembly acting jointly on behalf of the Authority.
(7) A decision to enter into a liability limitation agreement between a local auditor and a parish meeting must be taken by the parish meeting itself (and not by its chairman on behalf of the parish meeting).
(1) The Secretary of State may by regulations make provision about—
(a) the resignation of a local auditor of the accounts of a relevant authority from that office;
(b) the removal of a local auditor of the accounts of a relevant authority from that office before the expiry of the term of that office.
(2) Regulations under subsection (1)(a) may, in particular, make provision about—
(a) the steps that must be taken by a person who is a local auditor to resign from that office;
(b) the time at which the resignation takes effect;
(c) the steps that must be taken in connection with the resignation by the relevant authority;
(d) the role of the authority's auditor panel or of a recognised supervisory body in connection with the resignation;
(e) the steps that must be taken by the relevant authority after the resignation.
(3) Regulations under subsection (1)(b) may, in particular, make provision about—
(a) the steps that must be taken to remove a local auditor from that office;
(b) the person or persons by whom those steps must be taken and the way in which they must be taken;
(c) the steps that may be taken by the local auditor in connection with the local auditor's removal from that office;
(d) the role of the relevant authority's auditor panel or of a recognised supervisory body in connection with the removal of the local auditor from that office;
(e) the steps that must be taken by the relevant authority after the removal of the local auditor from that office.
(4) Regulations under subsection (1)(b) which make provision about the matter in subsection (3)(b) may provide, in relation to a local auditor of the accounts of a health service body, that some or all of the steps may be taken by the Secretary of State.
(5) Regulations under subsection (1) may, in particular—
(a) make provision for the Secretary of State to appoint, or direct the relevant authority to appoint, a replacement local auditor;
(b) make provision that permits or requires, or enables the Secretary of State to permit or require, that appointment to have effect for a limited period or limited purposes only.
(6) Regulations under subsection (1) which make provision as mentioned in subsection (5)(a) may apply section 12(3), (4) or (5) with modifications to a direction given or appointment made by the Secretary of State under such regulations.
(7) Regulations under subsection (1) that confer functions on a recognised supervisory body may make provision about the supply to the body by a relevant authority of documents or information relating to the resignation or removal of a local auditor.
(1) The Secretary of State may by regulations make provision for and in connection with the appointment, by a person (an “appointing person”) specified by the Secretary of State, of a local auditor to audit the accounts of a relevant authority to which the regulations apply.
(2) Regulations under subsection (1) may, in particular—
(a) make provision about the persons that may be specified as an appointing person;
(b) make provision about the procedure for specifying a person and for an appointing person's specification to come to an end in prescribed circumstances;
(c) make provision about the consequences of an appointing person's specification coming to an end, including—
(i) for the exercise of functions by the Secretary of State, and
(ii) for the transfer of the person's rights and liabilities arising by virtue of the regulations to the Secretary of State or another appointing person;
(d) confer functions on an appointing person, including in relation to—
(i) the appointment of local auditors under the regulations,
(ii) the activities of such auditors, and
(iii) the resignation or removal from office of such auditors;
(e) require an appointing person to consult prescribed persons before exercising prescribed functions.
(3) Regulations under subsection (1) may, in particular—
(a) make provision about the relevant authorities to which the arrangements under the regulations apply, including provision for them to apply to an authority that has opted into them or has not opted out of them;
(b) make provision about the procedures to be followed in relation to opting into or out of those arrangements;
(c) impose duties on relevant authorities to which those arrangements apply, including duties as to—
(i) the payment of fees to the appointing person in respect of an audit carried out by a local auditor appointed by that person, and
(ii) the provision of information to the appointing person.
(4) Provision made by regulations under subsection (1) by virtue of subsection (3)(c)(i) may, in particular—
(a) provide for fees to be paid in accordance with a scale or scales of fees specified by the appointing person, and
(b) provide for the payment in prescribed circumstances of a larger or smaller fee than is specified by the appropriate scale.
(5) Regulations under subsection (1) may, in particular, make provision about the functions of a local auditor appointed by an appointing person.
(6) Regulations under subsection (1) may, in particular, make provision for the appointment of a local auditor of the accounts of a relevant authority to which arrangements made by the regulations apply where the appointing person does not make an appointment under the regulations.
(7) Provision made by regulations under subsection (1) by virtue of subsection (6) may, in particular, provide for the appointment to be made by the authority or the Secretary of State.
(8) Regulations under subsection (1) may, in particular provide—
(a) for any provision of, or made under, this Part not to apply, or to apply with modifications, in relation to a relevant authority to which regulations under that subsection apply;
(b) for any other provision of, or made under, this Act not to apply, or to apply with modifications, in consequence of provision made by regulations under that subsection.
(9) Subsection (8) applies to a provision of or made under this Act even if it makes specific provision about a relevant authority to which the regulations apply.
(10) In this section “prescribed” means prescribed by regulations under subsection (1).
(1) Schedule 5 (eligibility and regulation of local auditors) has effect.
(2) The Secretary of State may by regulations amend that Schedule if the Secretary of State considers it is appropriate to do so as a result of amendments made to Part 42 of the Companies Act 2006.
(1) In auditing the accounts of a relevant authority other than a health service body, a local auditor must, by examination of the accounts and otherwise, be satisfied—
(a) that the accounts comply with the requirements of the enactments that apply to them,
(b) that proper practices have been observed in the preparation of the statement of accounts, and that the statement presents a true and fair view, and
(c) that the authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.
(2) Subject as follows, when a local auditor has completed an audit of the accounts of a relevant authority other than a health service body, the auditor must enter on the statement of accounts—
(a) a certificate that the auditor has completed the audit in accordance with this Act, and
(b) the auditor's opinion on the statement.
(3) If a statement of accounts prepared by a relevant authority under this Act includes both—
(a) accounts of a pension fund maintained by the authority under regulations under section 1 of the Public Service Pensions Act 2013 as they relate to local government workers (within the meaning of that Act), and
(b) other accounts of the authority,
the authority’s local auditor must give a separate opinion on the part of the statement that relates to the accounts of the pension fund.
(4) A local auditor may enter an opinion on the statement of accounts on that statement before the audit is completed if—
(a) the audit has not been completed because an objection has been made under section 27 and that objection has not been disposed of, and
(b) the auditor thinks that, if the objection were resolved in the objector's favour, this would not affect the accuracy of the statement of accounts.
(5) A local auditor must, in carrying out the auditor's functions in relation to the accounts of a relevant authority, comply with the code of audit practice applicable to the authority that is for the time being in force.
(6) A local auditor must, in carrying out functions under this Act, have regard to guidance issued by the Comptroller and Auditor General under paragraph 9 of Schedule 6.
21 General duties of auditors of accounts of health service bodies
(1) In auditing the accounts of an integrated care board, a local auditor must, by examination of the accounts and otherwise, be satisfied—
(a) that the accounts present a true and fair view, and comply with the requirements of the enactments that apply to them,
(b) that proper practices have been observed in the preparation of the accounts,
(c) that the board has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources,
(d) that money provided by Parliament has been expended for the purposes intended by Parliament,
(e) that resources authorised by Parliament to be used have been used for the purposes in relation to which the use was authorised, and
(f) that the financial transactions of the board are in accordance with any authority which is relevant to the transactions.
(2) In subsection (1)(e) use of resources means their expenditure, consumption or reduction in value.
(2A) In auditing the accounts of an NHS trust a local auditor must, by examination of the accounts and otherwise, be satisfied—
(a) that the accounts present a true and fair view, and comply with the requirements of the enactments that apply to them,
(b) that proper practices have been observed in the preparation of the accounts, and
(c) that the NHS trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) When a local auditor has completed an audit of the accounts of a health service body, the auditor must—
(a) enter on the accounts a certificate that the auditor has completed the audit in accordance with this Act, and
(b) make a report in accordance with subsection (5).
(5) A report under subsection (4)(b)—
(a) must contain the auditor's opinion on the accounts, including on the matters in subsection (1) or, as the case may be, subsection (3), but
(b) must not contain the auditor's opinion on the matter in subsection (1)(c) or (3)(c) if the auditor is satisfied as to that matter.
(1) A local auditor has a right of access at all reasonable times to every document (an “audit document”) that—
(a) relates to a relevant authority or an entity connected with a relevant authority, and
(b) the auditor thinks is necessary for the purposes of the auditor's functions under this Act.
(2) This includes power to inspect, copy or take away an audit document.
(3) A local auditor may—
(a) require a person holding or accountable for, or who has at any time held or been accountable for, an audit document to provide such information or explanation as the auditor thinks is necessary for the purposes of this Act, and
(b) if the auditor thinks it necessary, require the person to meet the auditor to give the information or explanation or (if the person holds or is accountable for the document) to produce the document.
(4) Where an audit document is in an electronic form, the power to require a person to produce the document includes power to require it to be produced in a form in which it is legible and can be taken away.
(5) For the purpose of inspecting an audit document which is in an electronic form, a local auditor—
(a) may have access to, and inspect and check the operation of, any computer and associated apparatus or material which the auditor thinks is or has been used in connection with the document, and
(b) may require a person within subsection (6) to give the auditor the reasonable assistance that the auditor needs for that purpose.
(6) A person is within this subsection who—
(a) is the person by whom or on whose behalf the computer is or has been used, or
(b) is a person in charge of, or otherwise involved in operating, the computer, apparatus or material.
(7) A local auditor may—
(a) require any person to whom this subsection applies to provide such information or explanation as the auditor thinks is necessary for the purposes of this Act, and
(b) if the auditor thinks it necessary, require the person to meet the auditor to give the information or explanation.
(8) Subsection (7) applies to—
(a) a member or officer of a relevant authority,
(b) where a relevant authority is a corporation sole, the holder of that office,
(c) a person elected or appointed—
(i) as an entity connected with a relevant authority,
(ii) to such an entity, or
(iii) to an office of such an entity,
(d) an employee of such an entity,
(e) an auditor of the accounts of such an entity, or
(f) a person who fell within any of paragraphs (a) to (d) at a time to which the information or explanation required by the local auditor relates.
(9) A local auditor of the accounts of a parish meeting may only exercise the function in subsection (7), so far as it applies to a person who is or was a member or officer of a relevant authority, in relation to a person who is or was the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.
(10) A relevant authority or an entity connected with a relevant authority must provide a local auditor with the facilities and information that the auditor reasonably requires for the purposes of the auditor's functions under this Act.
(11) A statement made by a person in response to a requirement under this section may not be used in evidence against that person in criminal proceedings other than proceedings for an offence under section 23.
(12) Nothing in this section compels a person to disclose information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.
(1) A person is guilty of an offence if, without reasonable excuse, the person—
(a) obstructs the exercise of any power conferred by section 22, or
(b) fails to comply with any requirement of a local auditor under that section.
(2) A person guilty of an offence under subsection (1) is liable on summary conviction—
(a) to a fine not exceeding level 3 on the standard scale, and
(b) to an additional fine of not more than £20 for each day on which the offence continues after conviction for that offence.
(3) The reasonable expenses incurred by a local auditor in connection with proceedings for an offence under subsection (1) alleged to have been committed by a person within subsection (4) in relation to the audit of the accounts of a relevant authority are recoverable from that authority so far as they are not recovered from any other source.
(4) The persons within this subsection are—
(a) a member or officer of the relevant authority,
(b) 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, and
(c) an employee of such an entity.
(5) Subsection (3) does not apply in relation to a parish meeting unless the offence is alleged to have been committed by the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.
(6) In subsection (4)(a) the reference to a member of the relevant authority, in relation to a corporation sole, is to the holder of that office.
(1) A relevant authority other than a health service body must ensure that a local government elector for its area may inspect and make copies of—
(a) the statement of accounts prepared by the authority,
(b) the local auditor's certificate that the audit of the authority's accounts including that statement has been completed,
(c) the local auditor's opinion on the statement of accounts,
(d) any public interest report relating to the authority or an entity connected with it, and
(e) any recommendation relating to the authority or an entity connected with it.
(2) A relevant authority other than a health service body must ensure that a local government elector for its area may have copies of any document within subsection (1) supplied to the elector at the elector's request on payment of a reasonable sum for each copy.
(3) The relevant authority must ensure that a local government elector may inspect a document within subsection (1) at all reasonable times and without payment.
(4) This section applies in relation to a document only if the relevant authority has prepared the document or it has been made available to the authority.
(5) References in this section to copies of a document include a reference to copies of any part of it.
(1) At each audit of accounts under this Act, other than an audit of accounts of a health service body, any persons interested or any journalist may—
(a) inspect the accounting records for the financial year to which the audit relates and all books, deeds, contracts, bills, vouchers, receipts and other documents relating to those records, and
(b) make copies of all or any part of those records or documents.
(1A) In subsection (1) “journalist” means any person who produces for publication journalistic material (whether paid to do so or otherwise).
(2) At the request of a local government elector for any area to which the accounts relate, the local auditor must give the elector, or any representative of the elector, an opportunity to question the auditor about the accounting records.
(3) The local auditor's reasonable costs of complying with subsection (2) are recoverable from the relevant authority to which the accounts relate.
(4) This section does not entitle a person—
(a) to inspect or copy any part of any record or document containing information which is protected on the grounds of commercial confidentiality, or
(b) to require any such information to be disclosed in answer to any question.
(5) Information is protected on the grounds of commercial confidentiality if—
(a) its disclosure would prejudice commercial confidentiality, and
(b) there is no overriding public interest in favour of its disclosure.
(6) This section does not entitle a person—
(a) to inspect or copy any part of any record or document containing personal information, or
(b) to require any personal information to be disclosed in answer to any question.
(7) Information is personal information if it identifies a particular individual or enables a particular individual to be identified (but see subsection (8)).
(8) Information is not personal information merely because it relates to a business carried on by an individual as a sole trader.
(9) Information is personal information if it is information about an officer of the relevant authority which relates specifically to a particular individual and is available to the authority because—
(a) the individual holds or has held an office or employment with that authority, or
(b) payments or other benefits in respect of an office or employment under any other person are or have been made or provided to that individual by that authority.
(10) For the purposes of subsection (9)—
(a) “the relevant authority” means the relevant authority whose accounts are being audited, and
(b) payments made or benefits provided to an individual in respect of an office or employment include any payment made or benefit provided in respect of the individual ceasing to hold the office or employment.
(1) This section applies if, at an audit of accounts under this Act other than an audit of accounts of a health service body, a local government elector for an area to which the accounts relate makes an objection to the local auditor which meets the requirements in subsection (2) and which—
(a) concerns a matter in respect of which the auditor could make a public interest report, or
(b) concerns a matter in respect of which the auditor could apply for a declaration under section 28.
(2) The requirements are that—
(a) the objection is made in writing, and
(b) a copy of the objection is sent to the relevant authority whose accounts are being audited.
(3) The local auditor must decide—
(a) whether to consider the objection, and
(b) if the auditor does so, whether to take action within paragraph (a) or (b) of subsection (1) in response.
(4) The local auditor may decide not to consider the objection if, in particular, the auditor thinks that—
(a) the objection is frivolous or vexatious,
(b) the cost of the auditor considering the objection would be disproportionate to the sums to which the objection relates, or
(c) the objection repeats an objection already considered—
(i) under this section by a local auditor of the authority's accounts, or
(ii) under section 16 of the Audit Commission Act 1998 by an auditor appointed under that Act in relation to those accounts.
(5) Subsection (4)(b) does not entitle the local auditor to refuse to consider an objection which the auditor thinks might disclose serious concerns about how the relevant authority is managed or led.
(6) If the local auditor decides not to take action within paragraph (a) or (b) of subsection (1), the auditor may recommend that the relevant authority should instead take action in response to the objection.
(7) The local auditor's reasonable costs of exercising functions under this section are recoverable from the relevant authority.
(1) If a local auditor carrying out an audit of accounts under this Act, other than an audit of accounts of a health service body, thinks that an item of account is contrary to law, the auditor may apply to the court for a declaration to that effect.
(2) On an application under this section, the court—
(a) may make or refuse to make the declaration, and
(b) if it makes the declaration, may also order rectification of the statement of accounts or accounting records.
(3) A person who has objected under section 27(1)(b) and is aggrieved by a decision of the local auditor not to consider the objection or not to apply for a declaration under this section may—
(a) within the period of 6 weeks beginning with the day after that on which the person is notified of the decision, require the auditor to provide written reasons for the decision, and
(b) within the period of 21 days beginning with the day after that on which the person receives those written reasons, appeal against the decision to the court.
(4) On an appeal under subsection (3), the court has the same powers in relation to the item of account to which the objection relates as it would have on an application by the local auditor for the declaration.
(5) On an application or appeal under this section, the court may make an order for the payment by the relevant authority to which the application or appeal relates of expenses incurred in connection with it by the local auditor or the person by whom the appeal is brought.
(6) Subsection (7) applies if a local auditor of the accounts of a relevant authority incurs costs in determining whether to make an application under this section in relation to the authority, but the application is not in fact made.
(7) The local auditor may recover the reasonable costs so incurred from the relevant authority.
(8) The High Court and the county court have jurisdiction for the purposes of this section.
(9) In this Act “item of account”, in relation to a relevant authority, means an item in the authority's accounting records or statement of accounts.