Office of Public Sector Information
PART II continued
(1) Where it appears to the auditor carrying out an audit under this Act, other than an audit of accounts of a health service body—
(a) that any person has failed to bring into account a sum which should have been brought into account and that the failure has not been sanctioned by the Secretary of State, or
(b) that a loss has been incurred or deficiency caused by the wilful misconduct of any person,
the auditor shall certify that the sum, or the amount of the loss or deficiency, is due from that person.
(2) Subject to subsections (4) and (8), both the auditor and the body concerned (or, if it is a parish meeting, its chairman) may recover for the benefit of the body a sum or amount certified under this section as due; and if the sum or amount is certified to be due from two or more persons, they shall be jointly and severally liable for it.
(3) A person aggrieved by a decision of an auditor to certify under this section that a sum or amount is due from him 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.
(4) On an appeal under subsection (3) the court may—
(a) confirm, vary or quash the decision, and
(b) give any certificate which the auditor could have given.
(5) A person who has made an objection under section 16(1)(a) and is aggrieved by a decision of an auditor not to certify under this section that a sum or amount is due from another person 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.
(6) On an appeal under subsection (5) the court may—
(a) confirm or quash the decision, and
(b) give any certificate which the auditor could have given.
(7) If a certificate under this section relates to a loss or deficiency caused by the wilful misconduct of a person who is, or was at the time of the misconduct, a member of a local authority and the amount certified to be due from him exceeds £2,000, that person shall be disqualified for being a member of a local authority for five years beginning—
(a) on the ordinary date on which the period for bringing an appeal against a decision to give the certificate expires, or
(b) if such an appeal is brought, on the date on which the appeal is finally disposed of or abandoned or fails for non-prosecution.
(8) A sum or amount certified under this section to be due from any person is payable within 14 days after the date of issue of the certificate or, if an appeal is brought, within 14 days after the appeal is finally disposed of or abandoned or fails for non-prosecution.
(9) In proceedings for the recovery of a sum or amount due under this section—
(a) a certificate signed by an auditor appointed by the Commission stating that the sum or amount is due from a person specified in the certificate to a body specified there is conclusive evidence of that fact; and
(b) a certificate purporting to be so signed shall be taken to have been so signed unless the contrary is proved.
(10) On an 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 that body of expenses incurred in connection with the appeal by—
(a) the auditor,
(b) the person to whom the appeal relates, or
(c) the person by whom the appeal is brought.
(11) Any expenses incurred by an auditor in recovering a sum or amount certified under this section to be due in connection with the accounts of a body, so far as not recovered from any other source, are recoverable from that body unless the court otherwise directs.
(12) Subsections (6) and (7) of section 17 also apply for the purposes of this section.
If the auditor for the time being of the accounts of a health service body has reason to believe that the body or an officer of the body—
(a) is about to make, or has made, a decision which involves or would involve the incurring of expenditure which is unlawful, or
(b) is about to take, or has taken, a course of action which, if pursued to its conclusion, would be unlawful and likely to cause a loss or deficiency,
he shall refer the matter forthwith to the Secretary of State.
(1) The auditor for the time being of the accounts of a body subject to audit other than a health service body may issue an order under this section (a “prohibition order”) if he has reason to believe that the body or an officer of the body—
(a) is about to make or has made a decision which involves or would involve the body incurring expenditure which is unlawful;
(b) is about to take or has taken a course of action which, if pursued to its conclusion, would be unlawful and likely to cause a loss or deficiency; or
(c) is about to enter an item of account, the entry of which is unlawful.
(2) For the purposes of this section and section 22, the actions of—
(a) a committee or sub-committee of a body, or
(b) any other person (other than an officer) authorised to act on behalf of the body,
are to be treated as the actions of the body itself.
(3) A prohibition order is an order which—
(a) is addressed to the body or officer concerned;
(b) specifies the paragraph of subsection (1) which is relevant and the decision, course of action or item of account to which the order relates;
(c) specifies the date on which (subject to subsection (6)) the order is to take effect, which must not be earlier than the date of service of a copy of the order in accordance with paragraph (a) or (as the case may be) paragraphs (a) and (b) of subsection (5); and
(d) requires the body or officer concerned to desist from making or implementing the decision, taking or continuing to take the course of action or entering the item of account in question (as the case may be).
(4) Where two or more auditors are appointed in relation to the accounts of any body—
(a) the power to issue a prohibition order may be exercised by the auditors acting jointly or by such one of them as they may determine; and
(b) in relation to such an order, references in subsections (5) and (6) to the auditor are references to the auditor or auditors by whom the order is issued.
(5) A copy of a prohibition order—
(a) shall be served on the body to which, or to an officer of which, it is addressed;
(b) in the case of an order addressed to an officer, shall also be served on him; and
(c) may be served on such other person or persons as the auditor considers appropriate.
(6) A prohibition order does not have effect unless, not later than the end of the period of seven days beginning on the date of service referred to in subsection (3)(c), the auditor serves on the body concerned and on any officer on whom a copy of the order was served under subsection (5)(b), a statement of the auditor’s reasons for the belief referred to in subsection (1).
(7) Where this section requires a copy of an order or statement to be served on an officer of a body, it shall be served on him by addressing it to him and delivering it to him or leaving it at, or sending it by post to, the office at which he is employed.
(8) A prohibition order may at any time be revoked (but not varied) by the person who is for the time being the auditor in relation to the accounts of the body to which, or to an officer of which, the order was addressed.
(1) Where—
(a) a report is made under section 114(2) of the [1988 c. 41.] Local Government Finance Act 1988 (“the 1988 Act”) (chief finance officer’s report on unlawful expenditure etc.), and
(b) copies of the report are sent in accordance with section 114(4) of the 1988 Act,
no prohibition order may be issued during the relevant period as regards any decision, course of action or item of account which led to the report being made.
(2) For the purposes of subsection (1) the relevant period is the period—
(a) beginning with the day on which copies of the report are sent, and
(b) ending with the day (if any) on which the body’s consideration of the report under section 115(2) of the 1988 Act begins.
(3) If the body fails to hold the meeting to consider the report within the time limit specified in section 115(3) of the 1988 Act that failure is immaterial for the purposes of subsection (2)(b) above.
(1) While a prohibition order has effect, it is not lawful for the body concerned or any officer of that body to make or implement the decision, to take or continue to take the course of action or to enter the item of account to which the order relates (as the case may be).
(2) A prohibition order—
(a) takes effect, subject to subsection (6) of section 20, on the date specified in the order in accordance with subsection (3)(c) of that section; and
(b) continues to have effect, subject to any order or decision of the High Court on an appeal under subsection (3) below, until revoked under section 20(8).
(3) Not later than 28 days after service under section 20(6) of a statement of reasons relating to a prohibition order, the body concerned (but not an officer of that body) may appeal against the order to the High Court in accordance with rules of court.
(4) On an appeal against a prohibition order under subsection (3), the High Court may make such order as it thinks fit for the payment by the body concerned of expenses incurred by the auditor in connection with the appeal.
(5) Any expenses reasonably incurred by the auditor in or in connection with the issue of a prohibition order are recoverable by him from the body concerned.
(6) In this section “the body concerned”, in relation to a prohibition order, means the body to which, or to any officer of which, the order is addressed.
(1) Where—
(a) before a prohibition order is issued, a body enters into a contract to dispose of or acquire an interest in land, and
(b) before the disposal or acquisition is completed, a prohibition order takes effect as a result of which it is unlawful for the body to complete the disposal or acquisition,
the existence of the prohibition order does not prejudice any remedy in damages which may be available to any person by reason of the body’s failure to complete the contract.
(2) No action lies against an auditor in respect of loss or damage alleged to have been caused by reason of the issue of a prohibition order which was issued in good faith; but that does not affect the right of a court to award costs against an auditor on an appeal under section 22(3).
(1) Subject to section 31(3) of the [1981 c. 54.] Supreme Court Act 1981 (no application for judicial review without leave) the auditor appointed in relation to the accounts of a body other than a health service body may make an application for judicial review with respect to—
(a) any decision of that body, or
(b) any failure by that body to act,
which it is reasonable to believe would have an effect on the accounts of that body.
(2) The existence of the powers conferred on an auditor under this Act is not a ground for refusing an application falling within subsection (1) (or an application for leave to make such an application).
(3) On an application for judicial review made as mentioned in subsection (1), the court may make such order as it thinks fit for the payment, by the body to whose decision the application relates, of expenses incurred by the auditor in connection with the application.
(1) The Commission may direct an auditor or auditors appointed by it to hold an extraordinary audit of the accounts of a body subject to audit—
(a) if it appears to the Commission to be desirable to do so in consequence of a report made under this Act by an auditor or for any other reason; or
(b) where the accounts are not those of a health service body, if an application for such an audit is made by a local government elector for the area of the body in question.
(2) If it appears to the Secretary of State that it is desirable in the public interest that there should be an extraordinary audit of the accounts of a body subject to audit he may require the Commission to direct such an audit by an auditor or auditors appointed by it.
(3) The following provisions apply to an extraordinary audit under this section as they apply to an ordinary audit under this Act—
(a) in relation to the accounts of a body other than a health service body, sections 3, 5, 6, 8 to 13 and 16 to 18; and
(b) in relation to the accounts of a health service body, sections 3, 5, 6 and 8 to 10.
(4) An extraordinary audit under this section may be held after three clear days' notice in writing to be given to the body whose accounts are to be audited or (if it is a parish meeting) to be given to its chairman.
(5) The expenditure incurred in holding an extraordinary audit of the accounts of any body—
(a) shall be defrayed in the first instance by the Commission, but
(b) may be recovered by the Commission, if it thinks fit, in whole or part from the body concerned.
(1) Where an officer of a body subject to audit receives money or other property—
(a) on behalf of that body, or
(b) for which he ought to account to that body,
the accounts of the officer shall be audited by the auditor of the accounts of that body, and the provisions mentioned in subsection (2) apply with the necessary modifications to the accounts and audit.
(2) Those provisions are—
(a) in the case of an officer of a health service body, sections 2(1), 5 to 10 and 25;
(b) in any other case, sections 2(1), 5 to 10, 13 to 18, 25 and 27.
(1) The Secretary of State may by regulations applying to bodies subject to audit other than health service bodies make provision with respect to—
(a) the keeping of accounts;
(b) the form, preparation and certification of accounts and of statements of accounts;
(c) the deposit of the accounts of any body at the offices of the body or at any other place;
(d) the publication of information relating to accounts and the publication of statements of accounts;
(e) the exercise of any rights of objection or inspection conferred by section 14, 15 or 16 and the steps to be taken by any body for informing local government electors for the area of that body of those rights.
(2) Regulations under this section may make different provision in relation to bodies of different descriptions.
(3) Before making any regulations under this section 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.
(4) If a person without reasonable excuse contravenes a provision of regulations under this section and the regulations declare that contravention of the provision is an offence, that person is liable on summary conviction to a fine not exceeding level 3 on the standard scale.
(5) Any expenses incurred by an auditor in connection with proceedings in respect of an offence under subsection (4) alleged to have been committed in relation to the accounts of any body, so far as not recovered from any other source, are recoverable from that body.
(1) The Commission shall, if so required by the body concerned, make arrangements—
(a) for certifying claims and returns in respect of grants or subsidies made or paid by any Minister of the Crown or public authority to any body subject to audit;
(b) for certifying any account submitted by any such body to any such Minister with a view to obtaining payment under a contract between that body and the Minister;
(c) for certifying the body’s calculation under paragraph 5(6)(a) of Schedule 8 to the [1988 c. 41.] Local Government Finance Act 1988 of the amount of its non-domestic rating contribution for a financial year, and for certifying the amount calculated; or
(d) for certifying any return by the body which, by or under any enactment, is required or authorised to be certified by the body’s auditor or under arrangements made by the Commission;
and in paragraph (a) “public authority” means a body established by or under the Treaties or by or under any enactment.
(2) The Commission shall charge the body concerned such fees for services provided under this section as will cover the full cost of providing them.
(1) The Commission may, with the consent of the Secretary of State and by agreement with the body concerned, undertake the audit of the accounts of any body which—
(a) appears to the Secretary of State to be connected with local government or the National Health Service; and
(b) is not a body subject to audit.
(2) An audit carried out under this section shall be carried out in such manner as the Commission and the body concerned may agree and references in this Part or Part III to an audit carried out under this Act do not include an audit carried out under this section.
(3) Subsection (2) is without prejudice to any other statutory provisions which apply to an audit under this section.
(4) The Commission shall charge the body such fees for services provided under this section as will cover the full cost of providing them.
(1) In relation to a Passenger Transport Executive this Act applies with the following modifications—
(a) under section 3(3) the Commission shall consult the relevant authority instead of the Executive;
(b) in sections 14(1), 15(2), 16(1), 25(1)(b) and 27(1)(e) references to a local government elector for an area such as is mentioned there are to be read as references to a local government elector for the area of the relevant authority;
(c) in section 10, subsections (1) and (3) apply in relation to the relevant authority as well as the Executive, and subsections (4) to (6) apply only to the relevant authority;
(d) in section 13, subsections (2) and (3) apply in relation to the relevant authority as well as the Executive, but the reference in subsection (3) to one or more local newspapers circulating in the area of the body is to be read as a reference to one or more such newspapers circulating in the area of the relevant authority;
(e) the notice required to be given by section 25(4) shall be given to the relevant authority as well as the Executive.
(2) Section 14(1)(a) of the [1968 c. 73.] Transport Act 1968 (accounts and other records of Passenger Transport Executives) is subject to any regulations under section 27.
(3) In subsection (1) “the relevant authority”, in relation to a Passenger Transport Executive, means the Passenger Transport Authority for the area for which the Executive is established.
(1) Subject to subsection (2), where a Passenger Transport Executive have a subsidiary they shall exercise their control over it so as to ensure that it appoints only auditors who—
(a) are approved by the Commission for appointment as the subsidiary’s auditors, and
(b) are qualified for the appointment in accordance with section 25 of the [1989 c. 40.] Companies Act 1989.
(2) Where a company would, if an Executive and any other body or bodies subject to audit were a single body corporate, be a subsidiary of that body corporate—
(a) subsection (1) does not apply, but
(b) it is the joint duty of the Executive and the other body or bodies concerned to exercise such control over the company as the Executive are required by subsection (1) to exercise over a subsidiary of theirs.
(3) In this section “subsidiary” means a subsidiary within the meaning of section 736 of the [1985 c. 6] Companies Act 1985.
(1) The Commission shall send to the Secretary of State a copy of any report of which a copy is sent to the Commission under section 10(2) and which relates to—
(a) a police authority established under section 3 of the [1996 c. 16.] Police Act 1996, or
(b) the Service Authority for the National Crime Squad.
(2) If it appears to the Commission appropriate to do so, it may send to the Secretary of State a copy of any document which—
(a) relates to one or more police authorities established under section 3 of the Police Act 1996 and has been sent (or a copy of which has been sent) by the Commission to such an authority, or
(b) relates to the Service Authority for the National Crime Squad and has been sent (or a copy of which has been sent) by the Commission to that Authority.
Audit Commission Act 1998