Office of Public Sector Information
(1) There shall continue to be a body known as the Audit Commission for Local Authorities and the National Health Service in England and Wales.
(2) The Commission shall consist of not less than 15 nor more than 20 members appointed by the Secretary of State.
(3) The Secretary of State shall appoint one of the members to be chairman and another to be deputy chairman.
(4) An appointment under subsection (2) or (3) shall be made after consultation with such organisations and other bodies as appear to the Secretary of State to be appropriate.
(5) Schedule 1 has effect with respect to the Commission.
(1) The accounts to which this section applies—
(a) shall be made up each year to 31st March or such other date as the Secretary of State may generally or in any special case direct, and
(b) shall be audited in accordance with this Act by an auditor or auditors appointed by the Commission.
(2) This section applies to the accounts mentioned in Schedule 2.
(1) An auditor appointed by the Commission to audit the accounts of a body whose accounts are required to be audited in accordance with this Act (“a body subject to audit”) may be—
(a) an officer of the Commission,
(b) an individual who is not an officer of the Commission, or
(c) a firm of individuals who are not officers of the Commission.
(2) Where two or more auditors are appointed in relation to the accounts of a body, some but not others may be officers of the Commission and they may be appointed—
(a) to act jointly;
(b) to act separately in relation to different parts of the accounts; or
(c) to discharge different functions in relation to the audit.
(3) Before appointing an auditor or auditors to audit the accounts of a body other than a health service body the Commission shall consult that body.
(4) For the purpose of assisting the Commission in deciding on the appointment of an auditor or auditors in relation to the accounts of a body other than a health service body, the Commission may require the body to make available for inspection by or on behalf of the Commission such documents relating to any accounts of the body as the Commission may reasonably require for that purpose.
(5) A person shall not be appointed by the Commission as an auditor unless—
(a) he is a member of one or more of the bodies mentioned in subsection (7);
(b) he has such other qualifications as may be approved for the purposes of this section by the Secretary of State; or
(c) he was approved before 1st April 1996 by the Secretary of State under section 13(5) of the [1982 c. 32.] Local Government Finance Act 1982, and the approval has not been withdrawn.
(6) A firm shall not be appointed by the Commission as an auditor unless each of its members is a member of one or more of the bodies mentioned in subsection (7).
(7) The bodies referred to in subsections (5) and (6) are—
(a) the Institute of Chartered Accountants in England and Wales;
(b) the Institute of Chartered Accountants of Scotland;
(c) the Association of Certified Accountants;
(d) the Chartered Institute of Public Finance and Accountancy;
(e) the Institute of Chartered Accountants in Ireland; and
(f) any other body of accountants established in the United Kingdom and for the time being approved by the Secretary of State for the purposes of this section.
(8) The appointment by the Commission of an auditor who is not an officer of the Commission shall be on such terms and for such period as the Commission may determine.
(9) Arrangements may be approved by the Commission, either generally or in a particular case, for a person or persons to assist an auditor appointed by the Commission (whether the auditor is an officer of the Commission or not) by carrying out such of the auditor’s functions under this Act as may be specified in the arrangements.
(10) Subsection (9) does not apply to functions under section 19.
(11) References in the following provisions of this Act to an auditor include, in relation to any function of an auditor, a reference to any person carrying out that function under arrangements approved under subsection (9).
(1) The Commission shall prepare, and keep under review, a code of audit practice prescribing the way in which auditors are to carry out their functions under this Act.
(2) A different code may be prepared with respect to the audit of the accounts of health service bodies as compared with the code applicable to the accounts of other bodies.
(3) A code prepared under this section shall embody what appears to the Commission to be the best professional practice with respect to the standards, procedures and techniques to be adopted by auditors.
(4) A code does not come into force until approved by a resolution of each House of Parliament, and its continuation in force is subject to its being so approved at intervals of not more than five years.
(5) Subsection (4) does not preclude alterations to a code being made by the Commission in the intervals between its being approved in accordance with that subsection.
(6) The Commission shall send copies of any code prepared under this section, and of any alterations made to such a code, to the Secretary of State who shall lay them before Parliament; and the Commission shall from time to time publish any such code as for the time being in force.
(7) Before preparing or altering a code applicable to any accounts, the Commission shall consult—
(a) if the accounts are or include those of health service bodies, such organisations connected with the health service as appear to the Commission to be concerned;
(b) if the accounts are or include those of other bodies, such associations of local authorities as appear to the Commission to be concerned; and
(c) in any case, such bodies of accountants as appear to the Commission to be appropriate.
(1) In auditing accounts required to be audited in accordance with this Act, an auditor shall by examination of the accounts and otherwise satisfy himself—
(a) if they are accounts of a health service body, that they are prepared in accordance with directions under subsection (2), (2B) (NHS trusts) or (2B) (fund-holding practices) of section 98 of the [1977 c. 49.] National Health Service Act 1977;
(b) in any other case, that they are prepared in accordance with regulations under section 27;
(c) that they comply with the requirements of all other statutory provisions applicable to the accounts;
(d) that proper practices have been observed in the compilation of the accounts;
(e) that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources; and
(f) that that body, if required to publish information in pursuance of a direction under section 44 (performance information), has made such arrangements for collecting and recording the information and for publishing it as are required for the performance of its duties under that section.
(2) The auditor shall comply with the code of audit practice applicable to the accounts being audited as that code is for the time being in force.
(1) An auditor has a right of access at all reasonable times to every document relating to a body subject to audit which appears to him necessary for the purposes of his functions under this Act.
(2) An auditor may—
(a) require a person holding or accountable for any such document to give him such information and explanation as he thinks necessary for the purposes of his functions under this Act; and
(b) if he thinks it necessary, require the person to attend before him in person to give the information or explanation or to produce the document.
(3) In the case of a recognised fund-holding practice, subsections (1) and (2) apply to documents relating to any of the accounts and records of the members of the practice whether or not relating to the allotted sum.
(4) Without prejudice to subsection (2), the auditor may—
(a) require any officer or member of a body subject to audit to give him such information or explanation as he thinks necessary for the purposes of his functions under this Act; and
(b) if he thinks it necessary, require the officer or member to attend before him in person to give the information or explanation.
(5) Without prejudice to subsections (1) to (4), every body subject to audit shall provide the auditor with every facility and all information which he may reasonably require for the purposes of his functions under this Act.
(6) A person who without reasonable excuse fails to comply with any requirement of an auditor under subsection (1), (2) or (4) is guilty of an offence and liable on summary conviction—
(a) to a fine not exceeding level 3 on the standard scale, and
(b) to an additional fine not exceeding £20 for each day on which the offence continues after conviction for that offence.
(7) Any expenses incurred by an auditor in connection with proceedings for an offence under subsection (6) alleged to have been committed in relation to the audit of the accounts of any body, so far as not recovered from any other source, are recoverable from that body.
(1) The Commission shall prescribe a scale or scales of fees in respect of the audit of accounts which are required to be audited in accordance with this Act.
(2) Before prescribing any scale of fees under subsection (1) the Commission shall consult—
(a) if the scale relates to the audit of accounts of a health service body, such organisations connected with the health service as appear to the Commission to be concerned;
(b) if the scale relates to the audit of accounts of any other body, such associations of local authorities as appear to the Commission to be concerned; and
(c) in any case, such bodies of accountants as appear to the Commission to be appropriate.
(3) A body subject to audit shall, subject to subsection (4), pay to the Commission the fee applicable to the audit in accordance with the appropriate scale.
(4) If it appears to the Commission that the work involved in a particular audit was substantially more or less than that envisaged by the appropriate scale, the Commission may charge a fee which is larger or smaller than that referred to in subsection (3).
(5) For the purpose of determining the fee payable for an audit, a body whose accounts are being audited or (if it is a parish meeting) its chairman shall—
(a) complete a statement containing such information as the Commission may require and submit it to the auditor, and
(b) provide the Commission with such further information as it may at any time require.
(6) The auditor shall send the statement mentioned in subsection (5)(a) to the Commission on the conclusion of the audit with a certificate that the statement is correct to the best of his knowledge and belief.
(7) The fee payable for an audit shall be the same whether the auditor who carries it out is an officer of the Commission or not.
(8) If the Secretary of State considers it necessary or desirable to do so, he may by regulations prescribe a scale or scales of fees to have effect, for such period as is specified in the regulations, in place of any scale or scales prescribed by the Commission; and, if he does so, references in subsections (3) and (4) to the appropriate scale are to be read as respects that period as references to the appropriate scale prescribed by the Secretary of State.
(9) Before making any regulations under subsection (8) the Secretary of State shall consult—
(a) the Commission,
(b) such associations of local authorities as appear to him to be concerned, and
(c) such bodies of accountants as appear to him to be appropriate.
In auditing accounts required to be audited in accordance with this Act, the auditor shall consider—
(a) whether, in the public interest, he should make a report on any matter coming to his notice in the course of the audit, in order for it to be considered by the body concerned or brought to the attention of the public, and
(b) whether the public interest requires any such matter to be made the subject of an immediate report rather than of a report to be made at the conclusion of the audit.
(1) When an auditor has concluded his audit of the accounts of any body under this Act he shall, subject to subsection (2), enter on the relevant statement of accounts prepared pursuant to regulations under section 27 (or, where no such statement is required to be prepared, on the accounts)—
(a) a certificate that he has completed the audit in accordance with this Act, and
(b) his opinion on the statement (or, as the case may be, on the accounts).
(2) Where an auditor makes a report to the body concerned under section 8 at the conclusion of the audit, he may include the certificate and opinion referred to in subsection (1) in that report instead of making an entry on the statement or accounts.
(1) Any report under section 8 shall be sent by the auditor to the body concerned or (if it is a parish meeting) to its chairman—
(a) forthwith if it is an immediate report;
(b) otherwise not later than 14 days after conclusion of the audit.
(2) A copy of the report shall be sent by the auditor to the Commission and (in the case of a health service body) to the Secretary of State—
(a) forthwith if it is an immediate report;
(b) otherwise not later than 14 days after conclusion of the audit.
(3) The body concerned shall take the report into consideration—
(a) in accordance with sections 11 and 12, or
(b) if section 11 does not apply to the body, as soon as practicable after receiving it.
(4) The agenda supplied to the members for the meeting of the body at which the report is considered shall be accompanied by the report.
(5) The report shall not be excluded—
(a) from the matter supplied under section 1(4)(b) of the [1960 c. 67.] Public Bodies (Admission to Meetings) Act 1960 or section 100B(7) of the 1972 Act (supply of agenda etc. to newspapers); or
(b) from the documents open to inspection under section 100B(1) of the 1972 Act (public access to agenda and reports before meetings).
(6) Part VA of the 1972 Act has effect in relation to the report as if section 100C(1)(d) of that Act (public access to copies of reports for six years after meeting) were not limited to so much of the report as relates to an item during which the meeting was open to the public.
(1) A body to which this section applies shall consider in accordance with this section and section 12—
(a) any report under section 8, and
(b) any written recommendation within subsection (3),
sent to the body or (if a parish meeting) its chairman in connection with the audit of its accounts.
(2) This section applies to every body subject to audit except—
(a) charter trustees constituted under section 246 of the 1972 Act;
(b) health service bodies;
(c) port health authorities;
(d) licensing planning committees;
(e) internal drainage boards;
(f) probation committees; and
(g) Passenger Transport Executives.
(3) A written recommendation is within this subsection if it is made to the body concerned by an auditor and is stated in the document containing it to be one which in the auditor’s opinion should be considered under this section.
(4) The body concerned shall consider the report or recommendation at a meeting held before the end of four months beginning with the day on which the report or recommendation was sent to the body or its chairman (as the case may be).
(5) At that meeting the body shall decide—
(a) whether the report requires the body to take any action or whether the recommendation is to be accepted; and
(b) what, if any, action to take in response to the report or recommendation.
(6) If an auditor is satisfied that it is reasonable to allow more time for the body to comply with its duties under subsections (4) and (5) in relation to a report or recommendation, the auditor may, in relation to that report or recommendation, extend the period of four months mentioned in subsection (4).
(7) A period may be extended under subsection (6) whether or not it has already been extended under that subsection once or more than once.
(8) Nothing in section 101 of the 1972 Act (delegation of functions) applies to a duty imposed on a body by this section.
(9) This section is without prejudice to any duties (so far as they relate to the subject-matter of a report or recommendation sent to a body to which this section applies) which are imposed by or under this Act, sections 114 to 116 of the [1988 c. 41.] Local Government Finance Act 1988 (functions and reports of finance officers), section 5 of the [1989 c. 42.] Local Government and Housing Act 1989 (functions of monitoring officers) or any other enactment.
(1) A meeting shall not be held for the purposes of section 11 unless, at least seven clear days before the meeting, there has been published, in a newspaper circulating in the area of the body concerned, a notice which—
(a) states the time and place of the meeting,
(b) indicates that the meeting is to be held to consider an auditor’s report or recommendation (as the case may be), and
(c) describes the subject-matter of the report or recommendation.
(2) The body concerned shall ensure that, as soon as practicable after the meeting—
(a) the auditor of its accounts is notified of the decisions made in pursuance of section 11(5); and
(b) a notice containing a summary of those decisions which has been approved by the auditor is published in a newspaper circulating in that body’s area.
(3) The notice required by subsection (2)(b) in relation to a meeting—
(a) need not summarise any decision made while the public were excluded from the meeting—
(i) under section 100A(2) of the 1972 Act (confidential matters);
(ii) in pursuance of a resolution under section 100A(4) of that Act (exempt information); or
(iii) in pursuance of a resolution under section 1(2) of the [1960 c. 67.] Public Bodies (Admission to Meetings) Act 1960 (protection of public interest);
but
(b) if sections 100C and 100D of the 1972 Act (availability for inspection after meetings of minutes, background papers and other documents) apply in relation to the meeting, shall indicate the documents in relation to the meeting which are open for inspection in accordance with those sections.
(4) This section is without prejudice to, and in addition to, any provision made in relation to meetings of the body in question by section 10(4) to (6) or by or under the 1972 Act, the Public Bodies (Admission to Meetings) Act 1960 or any other enactment.
(1) This section applies where under section 10(1) an auditor has sent an immediate report to a body or its chairman, except where the body is a health service body.
(2) From the time when the report is received by virtue of section 10(1), any member of the public may—
(a) inspect the report at all reasonable times without payment,
(b) make a copy of it, or of any part of it, and
(c) require the body or chairman to supply him with a copy of it, or of any part of it, on payment of a reasonable sum.
(3) On receiving the report by virtue of section 10(1), the body or (if a parish meeting) its chairman shall forthwith publish in one or more local newspapers circulating in the area of the body a notice which—
(a) identifies the subject-matter of the report, and
(b) states that any member of the public may inspect the report and make a copy of it or any part of it between such times and at such place or places as are specified in the notice;
and the body, if not a parish meeting, shall in addition forthwith supply a copy of the report to every member of the body.
(4) The auditor may—
(a) notify any person he thinks fit of the fact that he has made the report, and
(b) supply a copy of it or of any part of it to any person he thinks fit.
(5) A person who has the custody of an immediate report and—
(a) obstructs a person in the exercise of a right conferred by subsection (2)(a) or (b), or
(b) refuses to supply a copy of the report or of part of it (as the case may be) to a person entitled to the copy by virtue of subsection (2)(c),
is guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.
(6) A person who fails to comply with a requirement of subsection (3) is guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.
(7) Nothing in this section affects the operation of section 10(4) to (6).
(1) A local government elector for the area of a body subject to audit, other than a health service body, may—
(a) inspect and make copies of any statement of accounts prepared by the body pursuant to regulations under section 27;
(b) inspect and make copies of any report, other than an immediate report, made to the body by an auditor; and
(c) require copies of any such statement or report to be delivered to him on payment of a reasonable sum for each copy.
(2) A document which a person is entitled to inspect under this section may be inspected by him at all reasonable times and without payment.
(3) A person who has the custody of any such document and—
(a) obstructs a person in the exercise of a right under this section to inspect or make copies of the document, or
(b) refuses to give copies of the document to a person entitled under this section to obtain them,
is guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.
(4) References in this section to copies of a document include references to copies of any part of it.
(1) At each audit under this Act, other than an audit of accounts of a health service body, any persons interested may—
(a) inspect the accounts to be audited and all books, deeds, contracts, bills, vouchers and receipts relating to them, and
(b) make copies of all or any part of the accounts and those other documents.
(2) At the request of a local government elector for any area to which the accounts relate, the auditor shall give the elector, or any representative of his, an opportunity to question the auditor about the accounts.
(3) Nothing in this section entitles a person—
(a) to inspect so much of any accounts or other document as contains personal information about a member of the staff of the body whose accounts are being audited; or
(b) to require any such information to be disclosed in answer to any question.
(4) For the purposes of subsection (3), information is to be regarded as personal information about a member of a body’s staff if it relates specifically to a particular individual and is available to the body for reasons connected with the fact—
(a) that that individual holds or has held an office or employment under that body; or
(b) that 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 body.
(5) For the purposes of subsection (4)(b), payments made or benefits provided to an individual in respect of an office or employment include any payment made or benefit provided to him in respect of his ceasing to hold the office or employment.
(1) At each 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, or any representative of his, may attend before the auditor and (in accordance with subsection (2)) make objections—
(a) as to any matter in respect of which the auditor could take action under section 17 or 18; or
(b) as to any other matter in respect of which the auditor could make a report under section 8.
(2) No objection may be made under subsection (1) unless the auditor has received written notice of the proposed objection and of the grounds on which it is to be made.
(3) An elector sending a notice to an auditor for the purposes of subsection (2) shall at the same time send a copy of the notice to the body whose accounts are being audited.
(1) Where—
(a) it appears to the auditor carrying out an audit under this Act, other than an audit of accounts of a health service body, that an item of account is contrary to law, and
(b) the item is not sanctioned by the Secretary of State,
the auditor may apply to the court for a declaration that the item is contrary to law.
(2) On an application under this section the court may make or refuse to make the declaration asked for, and if it makes the declaration then, subject to subsection (3), it may also—
(a) order that any person responsible for incurring or authorising expenditure declared unlawful shall repay it in whole or in part to the body in question and, where there are two or more such persons, that they shall be jointly and severally liable to do so;
(b) if the expenditure declared unlawful exceeds £2,000 and the person responsible for incurring or authorising it is, or was at the time of his conduct in question, a member of a local authority, order him to be disqualified for being a member of a local authority for a specified period; and
(c) order rectification of the accounts.
(3) The court shall not make an order under subsection (2)(a) or (b) if satisfied that the person responsible for incurring or authorising the expenditure acted reasonably or in the belief that the expenditure was authorised by law, and in any other case shall have regard to all the circumstances, including that person’s means and ability to repay the expenditure or any part of it.
(4) A person who has made an objection under section 16(1)(a) and is aggrieved by a decision of an auditor not to apply for a declaration under this section may—
(a) not later than six weeks after being notified of the decision, require the auditor to state in writing the reasons for his decision, and
(b) appeal against the decision to the court;
and on such an appeal the court has the same powers in relation to the item of account to which the objection relates as if the auditor had applied for the declaration.
(5) On an application or appeal under this section relating to the accounts of a body, the court may make such order as it thinks fit for the payment by the body of expenses incurred, in connection with the application or appeal, by—
(a) the auditor,
(b) the person to whom the application or appeal relates, or
(c) the person by whom the appeal is brought.
(6) The High Court and the county courts have jurisdiction for the purposes of this section.
(7) In this section “local authority” includes—
(a) the Common Council;
(b) the Council of the Isles of Scilly;
(c) the Broads Authority;
(d) the Navigation Committee of the Broads Authority;
(e) a National Park authority;
(f) a police authority established under section 3 of the [1996 c. 16.] Police Act 1996; and
(g) the Service Authority for the National Crime Squad.
Audit Commission Act 1998