Part 2E+WBasic concepts and requirements

2Relevant authoritiesE+W

(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.

4General requirements for auditE+W

(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 a clinical commissioning group, “accounts” means—

(a)the annual accounts of the group prepared under paragraph 17(2) of Schedule 1A to the National Health Service Act 2006 (accounts and audit of clinical commissioning groups);

(b)any accounts of the group prepared under paragraph 17(3) of that Schedule in respect of which a direction has been given under paragraph 17(5) of that Schedule.

(5)In relation to special trustees for a hospital, “accounts” means the annual accounts of the trustees prepared under paragraph 3 of Schedule 15 to the National Health Service Act 2006.

5Modification of Act in relation to smaller authoritiesE+W

(1)The Secretary of State may by regulations make provision about the audit of the accounts of smaller 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 smaller authorities.

(3)Subsection (2) applies to a provision of or made under this Act even if it makes specific provision about a smaller 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 smaller 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 smaller 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 smaller 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 smaller 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 smaller 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 smaller authority;

(b)make provision about the functions of a local auditor in relation to the accounts of a smaller authority.

(8)Regulations under subsection (1) may, in particular—

(a)provide that, in specified circumstances, the accounts of a smaller 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).

6Meaning of “smaller authority”E+W

(1)For the purposes of section 5, a relevant authority is a “smaller 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 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.

(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 smaller authority for a financial year, and

(b)the authority was not in fact a smaller authority for that year.

(5)The Secretary of State may by regulations amend this section.

Part 3E+WAppointment etc of local auditors

17Appointment of auditor by specified personE+W

(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).

Part 4E+WEligibility and regulation of local auditors

18Eligibility and regulation of local auditorsE+W

(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.

Part 5E+WConduct of local audit

Codes of practice and guidanceE+W

19Codes of audit practice and guidanceE+W

Schedule 6 (codes of audit practice and guidance) has effect.

Part 7U.K.Miscellaneous and supplementary

MiscellaneousE+W

38Duty of smaller authorities to publish informationE+W

In section 2 of the Local Government, Planning and Land Act 1980 (duty of authorities to publish information)—

(a)after subsection (1) insert—

“(1A)This section also applies to an authority which—

(a)is not within subsection (1) above;

(b)is not within section 4(4) below; and

(c)is, or is treated as, a smaller authority for the purposes of section 5 of the Local Audit and Accountability Act 2014 (modification of that Act in relation to smaller authorities).”, and

(b)after subsection (10) insert—

“(11)A code issued under this section applies to an authority within subsection (1A) above only in respect of information relating to a financial year during which the authority was within that subsection.

(12)A function under this section or section 3 below that is expressed to be exercisable by the Secretary of State is exercisable by the Secretary of State (and not the Welsh Ministers) in relation to a person or body that—

(a)is within subsection (1A), and

(b)exercises functions in relation to an area that is partly in England and partly in Wales.”

39Code of practice on local authority publicityE+W

(1)After section 4 of the Local Government Act 1986 insert—

“4APower to direct compliance with code

(1)The Secretary of State may direct one or more specified local authorities in England to comply with a code issued under section 4 that applies to that authority or those authorities.

(2)A direction may require compliance with—

(a)one or more specified provisions of a code, or

(b)all of the provisions of a specified code.

(3)A direction may—

(a)specify the steps that an authority to which it is given must take to comply with it;

(b)specify the time within which such an authority must comply with it.

(4)The Secretary of State may give a direction to an authority whether or not the Secretary of State thinks that the authority is complying with the code to which it relates.

(5)Before giving a direction to an authority, the Secretary of State must give the authority notice in writing of the proposed direction.

(6)The Secretary of State may not give a direction to an authority before the end of the period of 14 days beginning with the day on which notice under subsection (5) was given to it.

(7)The authority may make written representations to the Secretary of State about the proposed direction within that period.

(8)The Secretary of State may modify or withdraw a direction under this section by notice in writing to the authority or authorities to which it was given.

(9)Subsections (5) to (7) apply to the modification or withdrawal of a direction as they apply to the giving of a direction, but as if—

(a)the reference to the proposed direction were to the proposed modification or proposal to withdraw the direction, and

(b)subsection (6) permitted the Secretary of State to withdraw the direction before the end of the 14 day period with the agreement of the authorities to which it applies.

(10)In this section “specified” means specified in a direction under this section.

4BPower to make order requiring compliance with code

(1)The Secretary of State may by order made by statutory instrument impose a duty on all local authorities in England, or all local authorities in England of a specified description, to comply with a code issued under section 4 that applies to those authorities.

(2)An order under this section may impose a duty to comply with—

(a)one or more specified provisions of a code, or

(b)all of the provisions of a specified code.

(3)An order under this section may—

(a)specify the steps that an authority to which the duty applies must take to comply with it;

(b)specify the time within which such an authority must comply with the duty.

(4)The Secretary of State may make an order under this section which applies to an authority whether or not the Secretary of State thinks that the authority is complying with the code to which the order relates.

(5)An order under this section—

(a)may make different provision for different cases or classes of case, including different provision for different descriptions of local authority;

(b)may make incidental, supplementary, consequential, transitional or transitory provision or savings.

(6)A statutory instrument containing an order under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(7)In this section “specified” means specified in an order under this section.”

(2)In section 12(3) of that Act (extent), after “Part II” insert “ , other than sections 4A and 4B, ”.

40Access to local government meetings and documentsE+W

(1)The Secretary of State may by regulations make provision for and in connection with allowing persons—

(a)to film, photograph or make sound recordings of proceedings at a meeting of a body to which this section applies, or of a committee or sub-committee of such a body;

(b)to use other means for enabling persons not present at such a meeting to see or hear proceedings at the meeting, as it takes place or later;

(c)to report or provide commentary on the proceedings at such a meeting, orally or in writing, so that the report or commentary is available, as the meeting takes place or later, to persons not present at the meeting.

(2)Regulations under subsection (1) may, in particular, make provision—

(a)for allowing persons to make available to the public or a section of the public using any medium (including the internet) things produced as a result of activities within that subsection;

(b)about the facilities to be made available by bodies to which the regulations apply to enable persons to carry on such activities;

(c)about the steps to be taken by persons before carrying on such activities;

(d)about the circumstances in which persons may not carry on such activities, including for enabling a person specified in the regulations to prevent them from doing so in the circumstances specified in the regulations.

(3)The Secretary of State may by regulations make provision—

(a)for requiring written records to be kept of decisions that are of a kind specified in the regulations and are taken by an officer of a body to which this section applies,

(b)with respect to the information that is to be included in those written records (including information as to the reasons for any decision);

(c)for requiring any such written records, or any documents connected with the decisions to which they relate, to be supplied or made available to members of the body, to the public or to other persons;

(d)for the creation of offences in respect of any rights or requirements conferred or imposed by the regulations.

(4)The Secretary of State may by regulations provide that any of the following may or must be given or made available by electronic means—

(a)any notice which is required by the Public Bodies (Admission to Meetings) Act 1960, Part 5A of the Local Government Act 1972 (access to meetings and documents of certain authorities etc) or regulations under this section to be given by a body to which this section applies;

(b)any document relating to such a body which is required by that Part or those regulations to be open to inspection.

(5)Regulations under this section may, in particular, amend or repeal any provision of—

(a)the Public Bodies (Admission to Meetings) Act 1960,

(b)Part 5A or section 228 (inspection of documents) of the Local Government Act 1972, or

(c)section 58 of the Greater London Authority Act 1999 (application of Part 5A to the London Assembly).

(6)Subject to subsections (7) and (8), this section applies to—

(a)a district council,

(b)a county council in England,

(c)a London borough council,

(d)the London Assembly,

(e)the Common Council of the City of London in its capacity as a local authority or police authority,

(f)the London Fire and Emergency Planning Authority,

(g)Transport for London,

(h)a joint authority established under Part 4 of the Local Government Act 1985,

(i)an economic prosperity board,

(j)a combined authority,

(k)a fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies,

(l)a National Park authority for a National Park in England,

(m)the Broads Authority,

(n)the Council of the Isles of Scilly,

(o)a parish council, and

(p)a parish meeting.

(7)In its application to subsection (1), subsection (6) is to be read as if it included a reference to an executive of an authority within paragraph (a), (b) or (c) of that subsection.

(8)In its application to subsection (3), subsection (6) is to be read as if the reference in paragraph (d) to the London Assembly were to the Greater London Authority.

(9)References in this section to a committee or sub-committee of a body include any committee or sub-committee of that body to which Part 5A of the Local Government Act 1972 applies or is treated as applying.

(10)References in this section to Part 5A of the Local Government Act 1972 include a reference to that Part as it applies to the London Assembly by virtue of section 58 of the Greater London Authority Act 1999.

(11)In paragraph 4(2) of Schedule 12 to the Local Government Act 1972 (notice of meeting of principal council), for “Three clear days” substitute “ Five clear days ”.

41Council tax referendumsE+W

(1)Chapter 4ZA of Part 1 of the Local Government Finance Act 1992 (referendums relating to council tax increases) is amended as follows.

(2)In section 52ZG (arrangements for referendum on billing authority's council tax increase), after subsection (5) insert—

“(5A)As soon as is reasonably practicable after determining that it is required to hold a referendum in relation to its relevant basic amount of council tax for the financial year, the billing authority must notify that fact in writing to any body that has issued a levy or a special levy to it for the financial year.”

(3)In section 52ZH(1) (duty to inform Secretary of State of result of referendum), after “the Secretary of State” insert “ , and any body the authority was required to notify under section 52ZG(5A), ”.

(4)Section 52ZK (major precepting authority's duty to notify billing authority of excessive council tax increase) is amended as follows.

(5)After subsection (1) insert—

“(1A)As soon as is reasonably practicable after determining that its relevant basic amount of council tax for the financial year is excessive, the major precepting authority must also notify the matters mentioned in subsection (1) in writing to any body that—

(a)has issued a levy to it for the financial year, or

(b)in the case of the Greater London Authority, has issued a levy to any constituent body for the financial year.”

(6)In subsection (2) (requirement for notification under section to include precept), for “this section” substitute “ subsection (1) ”.

(7)In subsection (8) (requirement for Secretary of State to prescribe date by which notification under section must be made), for “this section” substitute “ subsection (1) ”.

(8)In section 52ZO(1) (duty to inform Secretary of State of result of referendum on precepting authority's excessive council tax increase), after “the Secretary of State” insert “ , and any body the authority was required to notify under section 52ZK(1A), ”.

(9)Section 52ZX (meaning of relevant basic amount of council tax) is amended as follows.

(10)In subsection (1) (billing authority's relevant basic amount of council tax), for paragraphs (a) and (b) (disregard of precepts and levies in calculation) substitute “the amount of any precepts—

(a)issued to it for the year by local precepting authorities, or

(b)anticipated by it in pursuance of regulations under section 41 above.”

(11)In subsection (2) (relevant basic amount of council tax of major precepting authority other than county council or Greater London Authority) omit “a county council or”.

(12)Omit subsection (3) (county council's relevant basic amount of council tax).

(13)In subsection (4) (Greater London Authority's relevant basic amount of council tax), for paragraphs (a) and (b) substitute—

“(a)the amount calculated by it in relation to the year under section 88(2) of the Greater London Authority Act 1999 (referred to in this Chapter as the Greater London Authority's unadjusted relevant basic amount of council tax for the year), or

(b)any amount calculated by it in relation to the year under section 89(3) of that Act (referred to in this Chapter as the Greater London Authority's adjusted relevant basic amount of council tax for the year).”

(14)Subsections (15) to (17) apply (and subsections (19) to (21) do not apply) if, in accordance with section 49(3), this section comes into force on the day on which this Act is passed.

(15)Section 52ZC of the Local Government Finance Act 1992 (determination of whether council tax increase is excessive) applies with the following modifications to the determination of a set of principles for the financial year beginning with 1 April 2014.

(16)The Secretary of State may, in particular, determine categories of authority for that financial year on the basis of whether an authority's relevant basic amount of council tax for the financial year beginning with 1 April 2013 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under section 52ZX of the Local Government Finance Act 1992 as amended by this section.

(17)In subsection (3)(b) of section 52ZC the reference to an authority's relevant basic amount of council tax for the financial year immediately preceding the year under consideration is to the amount that would have been calculated by the authority for that year under section 52ZX of the Local Government Finance Act 1992 if the amendments made to it by this section had been in force for that year.

(18)Subsections (19) to (21) apply (and subsections (15) to (17) do not apply) if this section comes into force on a day appointed by the Secretary of State by order under section 49(3).

(19)Section 52ZC of the Local Government Finance Act 1992 applies with the following modifications to the determination of a set of principles for the financial year beginning with 1 April 2015.

(20)The Secretary of State may, in particular, determine categories of authority for that financial year—

(a)on the basis of whether an authority's relevant basic amount of council tax for the financial year beginning with 1 April 2013 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under section 52ZX of the Local Government Finance Act 1992 as amended by this section,

(b)on the basis of whether an authority's relevant basic amount of council tax for the financial year beginning with 1 April 2014 would have been excessive if that amount for that year and for the immediately preceding financial year had been determined under that section as so amended, or

(c)on the basis set out in paragraph (a) and on the basis set out in paragraph (b).

(21)In subsection (3)(b) of section 52ZC the reference to an authority's relevant basic amount of council tax for the financial year immediately preceding the year under consideration is to the amount that would have been calculated by the authority for that year under section 52ZX of the Local Government Finance Act 1992 if the amendments made to it by this section had been in force for that year.

SupplementaryU.K.

43Orders and regulationsU.K.

(1)Any power of the Secretary of State or the Minister for the Cabinet Office to make regulations or an order under this Act is exercisable by statutory instrument.

(2)Any power of the Secretary of State or the Minister for the Cabinet Office to make regulations or an order under this Act includes—

(a)power to make different provision for different cases or classes of case, including different provision for different authorities;

(b)power to make incidental, supplementary, consequential, transitional or transitory provision or savings.

(3)A statutory instrument containing regulations or an order to which subsection (4) applies (whether alone or with other provision) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(4)This subsection applies to—

(a)regulations under section 2(3) (power to amend list of relevant authorities in Schedule 2),

(b)regulations or an order under section 2(5) (power to make provision about application of Act to a person or body coming to fall within Schedule 2) which amends this Act,

(c)regulations under section 3(5)(a) (power to modify financial year of relevant authority) which amend this Act,

(d)regulations under section 5(1) (modification of Act in relation to smaller authorities),

(e)regulations under section 6(5) (power to amend definition of “smaller authority”),

(f)regulations under section 7(4) (power to amend intervals at which local auditor must be appointed),

(g)regulations under section 17 (appointment of auditor by specified person),

(h)regulations under section 18(2) (power to amend Schedule 5),

(i)regulations under section 40 (access to local government meetings and documents) which amend or repeal any provision of an Act,

(j)regulations under section 46 (power to make consequential provision) which amend or repeal any provision of an Act,

(k)regulations under paragraph 2(9) of Schedule 4 (power to amend definition of “independent” member of auditor panel),

(l)regulations under paragraph 5(1)(a) of that Schedule (power to amend etc local authority enactments in their application to auditor panels),

(m)regulations under paragraph 8(3) of that Schedule (power to amend definition of “connected entity”), and

(n)regulations under paragraph 8 of Schedule 9 (power to amend data-matching provisions).

(5)Any other statutory instrument containing regulations or an order under this Act is subject to annulment in pursuance of a resolution of either House of Parliament, subject to subsection (6).

(6)Subsection (5) does not apply to a statutory instrument containing only—

(a)an order under section 49 (commencement),

(b)an order under paragraph 2 of Schedule 13 (transitory and saving provision relating to NHS trusts and trustees of NHS trusts), or

(c)an order under both of those provisions.

(7)If a draft of a statutory instrument containing regulations or an order under section 2 would, apart from this subsection, be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.

44Interpretation of ActE+W

(1)In this Act (unless the context otherwise requires)—

• “accounts” is to be construed in accordance with section 4(3) to (5);

• “area”—

  (a)

  in relation to a chief constable, means the police area of the chief constable's police force;

  (b)

  in relation to a clinical commissioning group, means the area specified in the group's constitution (see Schedule 1A to the National Health Service Act 2006);

• “charter trustees” means charter trustees constituted—

  (a)

  under section 246 of the Local Government Act 1972,

  (b)

  by the Charter Trustees Regulations 1996 (SI 1996/263), or

  (c)

  under Part 1 of the Local Government and Public Involvement in Health Act 2007;

• “chief constable” means a chief constable for a police force for a police area;

• “code of audit practice” means a code of audit practice under Schedule 6;

• “combined authority” means a combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009;

• “the Common Council” means the Common Council of the City of London;

• “costs”, in relation to anything done by a local auditor, means the costs of the auditor's time to do that thing, whether or not the auditor charges on the basis of the time taken to do it;

• “enactment” includes an enactment contained in subordinate legislation as defined in section 21(1) of the Interpretation Act 1978;

• “executive” and “executive arrangements” have the same meaning as in Part 1A of the Local Government Act 2000;

• “expenses”, in relation to anything done by a local auditor, means the expenses incurred by the auditor in doing that thing, including the auditor's costs of doing it;

• “financial year” has the meaning given by section 3(4) (subject to provision made under section 3(5));

• “functional body” has the same meaning as in the Greater London Authority Act 1999 (see section 424(1) of that Act);

• “health service body” has the meaning given by section 3(9);

• “item of account” has the meaning given by section 28(9);

• “local auditor” has the meaning given by section 4(1)(b);

• “local government elector” means a person registered as a local government elector in the register of electors in accordance with the Representation of the People Acts (but see subsection (6));

• “officer”, in relation to a relevant authority—

  (a)

  includes a member of the staff of the authority, but

  (b)

  does not include a local auditor appointed to audit the authority's accounts;

• “parish meeting” means a parish meeting of a parish which does not have a separate parish council;

• “police area” means a police area listed in Schedule 1 to the Police Act 1996 (police areas outside London);

• “public interest report” has the meaning given by paragraph 1(2) of Schedule 7;

• “recognised qualifying body” has the meaning given by 1219(12) of the Companies Act 2006 as it has effect by virtue of Schedule 5 to this Act;

• “recognised supervisory body” is to be construed in accordance with section 1217(4) of and Schedule 10 to the Companies Act 2006 as they have effect by virtue of Schedule 5 to this Act;

• “recommendation” means a recommendation under paragraph 2(1) of Schedule 7;

• “related authority” has the meaning given by paragraph 2(6) of Schedule 7;

• “relevant authority” has the meaning given by section 2(1);

• “special trustees for a hospital” has the meaning given by section 3(9)(b).

(2)References in this Act to a function under this Act or a Part of this Act include a function under regulations under this Act or that Part.

(3)References in this Act to provision made under it include provision made under Part 42 of the Companies Act 2006 as it has effect by virtue of Schedule 5.

(4)References in this Act to an entity connected with a relevant authority or to a connected entity are to be construed in accordance with paragraph 8 of Schedule 4.

(5)References in this Act to persons for whom a clinical commissioning group is responsible are to be construed in accordance with section 3 of the National Health Service Act 2006 (duties of clinical commissioning groups as to commissioning certain health services).

(6)A reference in this Act to a local government elector for any area—

(a)in relation to a Passenger Transport Executive, is a reference to a local government elector for the area of the Integrated Transport Authority or combined authority for the area for which the Executive is established;

(b)in relation to the Broads Authority, is a reference to a local government elector for the area of any participating authority (as defined by section 25 of the Norfolk and Suffolk Broads Act 1988);

(c)in relation to a National Park authority which is the local planning authority for a National Park, is a reference to a local government elector for any area the whole or any part of which is comprised in that Park.

(7)Any function conferred or imposed on the Greater London Authority under or by virtue of this Act is exercisable by the Mayor of London acting on behalf of the Authority.

(8)Subsection (7) does not apply in relation to any function expressly conferred on—

(a)the London Assembly, or

(b)the Mayor of London and the London Assembly acting jointly on behalf of the Greater London Authority.

(9)Any function conferred or imposed on a parish meeting under or by virtue of this Act, other than a function expressly conferred on the parish meeting itself, is exercisable by the chairman of the parish meeting acting on behalf of the authority.

(10)References in this Act to accounts, accounting records or statements of account in relation to the Common Council are to its accounts, accounting records or statements of account so far as relating to—

(a)the collection fund of the Common Council,

(b)the City Fund, or

(c)a pension fund maintained and administered by the Common Council under regulations under section 1 of the Public Service Pensions Act 2013.

46Power to make consequential provisionU.K.

(1)The Secretary of State may by regulations make such consequential, incidental or supplementary provision as the Secretary of State considers appropriate in connection with any provision of, or made under, this Act.

(2)The power in subsection (1) includes power to amend, repeal or revoke any provision of or made under an Act (including this Act) whenever passed or made.

47Application to NHS trusts and trustees for NHS trustsE+W

Schedule 13 (NHS trusts and trustees for NHS trusts: transitory and saving provision) has effect.

48ExtentU.K.

(1)This Act extends to England and Wales only, subject as follows.

(2)An amendment, repeal or revocation made by this Act, other than one mentioned in subsection (3), has the same extent as the relevant part of the Act or instrument amended, repealed or revoked.

(3)Subsection (2) does not apply to the amendment made by section 39(1) (power to require compliance with local authority publicity code), which extends to England and Wales only.

(4)The following provisions of this Act extend to England and Wales, Scotland and Northern Ireland—

(a)section 43 (orders and regulations) so far as it applies to regulations under section 46 or an order under section 49;

(b)section 45 (related amendments) so far as it applies to amendments, repeals and revocations within subsection (2) of this section;

(c)section 46 (power to make consequential provision);

(d)this section;

(e)section 49 (commencement);

(f)section 50 (short title).

49CommencementU.K.

(1)The provisions of this Act come into force on such day as the Secretary of State may by order appoint, subject to subsections (2) to (4).

(2)Sections 39 and 40 come into force at the end of the period of 2 months beginning with the day on which this Act is passed.

(3)If this Act is passed before 5 February 2014, section 41 comes into force on the day on which this Act is passed; otherwise that section comes into force on such day as the Secretary of State may by order appoint.

(4)The following provisions come into force on the day on which this Act is passed—

(a)section 43;

(b)section 44;

(c)section 46;

(d)section 48;

(e)this section;

(f)section 50.

(5)An order under this section may—

(a)appoint different days for different purposes or different areas;

(b)make transitional, transitory or saving provision.

(6)Provision under subsection (5)(b) may, in particular, enable a function of the Audit Commission under—

(a)a provision that is amended or repealed by this Act, or

(b)any of sections 139A to 139C of the Social Security Administration Act 1992,

to be exercised by a person or body, or by the persons or bodies, specified in the order for a period specified in or determined under the order.

(7)Where provision under subsection (5)(b) made by virtue of subsection (6) enables a function to be exercised by a Minister of the Crown, an order under this section may enable the Minister to delegate the exercise of that function to another person or body or other persons or bodies.

(8)An order under this section which makes provision under subsection (5)(b) by virtue of subsection (6) or (7) may in particular provide for references in an enactment to the Audit Commission to be read as references to the person or body or persons or bodies by whom the function may be exercised.

(9)Provision under subsection (5)(b) may, in particular, provide for the first local auditor appointed by a relevant authority under subsection (1) of section 7 to be appointed on a date later than that specified in that subsection.

(10)In this section “the Audit Commission” means the Audit Commission for Local Authorities and the National Health Service in England.

50Short titleU.K.

This Act may be cited as the Local Audit and Accountability Act 2014.

SCHEDULES

Section 2

SCHEDULE 2E+WRelevant authorities

1E+WA county council in England.

2E+WA district council.

3E+WA London borough council.

4E+WA parish council.

5E+WA joint authority established under Part 4 of the Local Government Act 1985.

6E+WA Passenger Transport Executive.

7E+WThe Greater London Authority.

8E+WA functional body.

9E+WThe London Pensions Fund Authority.

10E+WThe London Waste and Recycling Board.

11E+WThe Common Council.

12E+WA parish meeting.

13E+WThe Council of the Isles of Scilly.

14E+WCharter trustees.

15E+WA port health authority for a port health district that is wholly in England.

16E+WThe Broads Authority.

17E+WA National Park authority for a National Park in England.

18E+WA conservation board established by order of the Secretary of State under section 86 of the Countryside and Rights of Way Act 2000.

19E+WA police and crime commissioner for a police area in England.

20E+WA chief constable for an area in England.

21E+WThe Commissioner of Police of the Metropolis.

22E+WA fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies.

23E+WA clinical commissioning group.

24E+WSpecial trustees for a hospital.

25E+WAn authority established for an area in England by an order under section 207 of the Local Government and Public Involvement in Health Act 2007 (joint waste authorities).

26E+WAn internal drainage board for an internal drainage district that is wholly in England.

27E+WAn economic prosperity board established under section 88 of the Local Democracy, Economic Development and Construction Act 2009.

28E+WA combined authority.

29E+WAny person or body exercising functions in relation to an area wholly in England or partly in England and partly in Wales—

(a)which was originally subject to audit provisions contained in an enactment passed before the Audit Commission Act 1998, and

(b)to which the audit provisions of that Act applied by virtue of paragraph 4(1) or 7 of Schedule 4 to that Act immediately before the repeal of section 2(1) of that Act by this Act.

Section 18

SCHEDULE 5E+WEligibility and regulation of local auditors

1(1)Part 42 of the Companies Act 2006 (statutory auditors) applies in relation to local audits as it applies in relation to statutory audits within the meaning of that Part, subject to—E+W

(a)the general modifications to that Part in paragraph 2, and

(b)the specific modifications to that Part in the rest of this Schedule.

(2)For the purposes of this Schedule—

• a “local audit” means an audit under this Act of the accounts of a relevant authority;

• “local audit work” means work in connection with such audits.

(3)The reference in sub-paragraph (1) to Part 42 of the Companies Act 2006 includes sections 1288, 1289, 1290 and 1292 of that Act (regulations and orders) as they apply in relation to that Part.

2(1)The general modifications are that—E+W

(a)references to a statutory auditor are to a local auditor,

(b)references to an audited person are to a relevant authority,

(c)references to a statutory audit are to a local audit,

(d)references to statutory audit work are to local audit work, and

(e)references (however expressed) to Part 42 of the Companies Act 2006 or any provision of that Part are to that Part or provision as it has effect by virtue of this Schedule.

(2)Sub-paragraph (1) does not apply to a provision that—

(a)is treated as forming part of Part 42 of the Companies Act 2006 by virtue of any of the following provisions of this Schedule, and

(b)provides for an expression listed in sub-paragraph (1) to have the meaning it would have under that Part apart from its application by virtue of this Schedule.

3E+WOmit the following provisions—

(a)Chapter 1 (introductory);

(b)sections 1220 (qualifying bodies and recognised professional qualifications), 1221 (approval of third country qualifications) and 1222 (eligibility of individuals retaining only 1967 Act authorisation);

(c)section 1223A (notification of matters relevant to other EEA States);

(d)sections 1224A (restrictions on disclosure) and 1224B (offence of disclosure in contravention of section 1224A);

(e)Chapter 3 (Auditors General);

(f)Chapter 5 (registered third country auditors);

(g)sections 1253A to 1253F (co-operation with foreign competent authorities);

(h)section 1264 (consequential amendments);

(i)Schedule 11 (recognised professional qualifications);

(j)Schedule 11A (specified persons, descriptions, disclosures etc for purposes of section 1224A);

(k)Schedule 12 (arrangements in which registered third country auditors are required to participate);

(l)Schedule 14 (statutory auditors: consequential amendments).

4E+WIn section 1212 (individuals and firms: eligibility for appointment as a statutory auditor) omit subsection (2).

5E+WFor section 1214 (independence requirement) substitute—

“1214Independence requirement

(1)A person (“P”) may not act as local auditor of the accounts of a relevant authority if one or more of subsections (2), (3), (4) and (5) apply to P.

(2)This subsection applies if—

(a)P is a member or officer of the relevant authority,

(b)where the relevant authority is a corporation sole, P is the holder of that office, or

(c)P is a partner or employee of a person within paragraph (a) or (b), or a partnership of which such a person is a partner.

(3)This subsection applies if—

(a)the relevant authority is a clinical commissioning group, and

(b)P is a member of the group's governing body (established pursuant to section 14L of the National Health Service Act 2006).

(4)This subsection applies if—

(a)P is a person elected or appointed—

(i)as an entity connected with the relevant authority,

(ii)to such an entity, or

(iii)to an office of such an entity,

(b)P is an employee of such an entity, or

(c)P is a partner or employee of a person within paragraph (a) or (b), or a partnership of which such a person is a partner.

(5)This subsection applies if there exists a connection of a prescribed description between—

(a)P or an associate of P, and

(b)the relevant authority or an entity connected with the relevant authority.

(6)In subsection (5) “prescribed” means prescribed by regulations made by the Secretary of State.

(7)Regulations under subsection (6) are subject to negative resolution procedure.”

6E+WIn section 1215 (effect of lack of independence) omit subsections (2) to (7).

7E+WIn section 1216 (effect of appointment of a partnership), after subsection (5) insert—

“(5A)The consent or agreement of a parish meeting under subsection (5) must be given by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”

8E+WIn section 1217 (supervisory bodies), for subsection (1A) substitute—

“(1A)The rules referred to in paragraph 9(3)(b) (confidentiality of information) of Schedule 10 must also be binding on persons who—

(a)have sought appointment or acted as a local auditor, and

(b)have been members of the body at any time after the commencement of Schedule 5 to the Local Audit and Accountability Act 2014.”

9E+WFor section 1219 (appropriate qualifications) substitute—

“1219Appropriate qualifications

(1)A person holds an appropriate qualification for the purposes of this Chapter only if—

(a)the person holds a qualification that is an appropriate qualification by virtue of this section, or

(b)the person holds an appropriate qualification for the purposes of this Chapter as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014.

(2)The Secretary of State may by regulations provide for a qualification to be an appropriate qualification for the purposes of this Chapter if—

(a)it is a professional qualification in accountancy,

(b)it is obtained from a body established in the United Kingdom, and

(c)it meets, or the Secretary of State thinks that it meets, specified requirements.

(3)Regulations under this section may, in particular, provide for a qualification to be an appropriate qualification if—

(a)it is offered by a body (a “qualifying body”) established in the United Kingdom (whether a body corporate or an unincorporated association), and

(b)it is recognised by the Secretary of State in accordance with the regulations.

(4)Regulations under this section that contain provision under subsection (3) may in particular—

(a)provide for the Secretary of State to make an order (a “recognition order”) recognising a qualification offered by a qualifying body;

(b)make provision about the application by a qualifying body for a recognition order;

(c)provide for the Secretary of State to give directions or impose requirements in connection with the application;

(d)make provision about the circumstances in which the Secretary of State may or must make or refuse to make a recognition order;

(e)make provision about the steps to be taken by the Secretary of State on making or refusing to make a recognition order;

(f)provide for a recognition order to be revoked by a further order (a “revocation order”);

(g)make provision about the circumstances in which a revocation order may or must be made;

(h)make provision about the date on which a revocation order may or must take effect;

(i)provide for a revocation order to contain transitional provision;

(j)make provision about the steps to be taken by the Secretary of State before or on making a revocation order.

(5)The requirements that may be specified for a qualification to be an appropriate qualification or to be the subject of a recognition order include, in particular, requirements as to—

(a)the persons to whom the qualification is open;

(b)the course of instruction undertaken by persons to whom the qualification is awarded;

(c)the professional experience of such persons;

(d)the examinations passed by such persons;

(e)the practical training undertaken by such persons;

(f)the rules and arrangements of the body offering the qualification for ensuring or monitoring compliance with other specified requirements.

(6)Regulations under this section may in particular—

(a)provide for exceptions to a specified requirement;

(b)confer power on the Secretary of State to give or withhold recognition or approval for the purposes of a specified requirement.

(7)A person holds an appropriate qualification for the purposes of this Chapter if, immediately before the relevant time, the person was qualified for appointment as an auditor under section 3 of the Audit Commission Act 1998 by virtue of the person's membership of a body listed in subsection (7) of that section.

(8)A person holds an appropriate qualification for the purposes of this Chapter if—

(a)before the relevant time, the person began a course of study or practical training leading to a professional qualification in accountancy offered by a body listed in section 3(7) of the Audit Commission Act 1998,

(b)the person would have been qualified for appointment as an auditor under section 3 of that Act by virtue of subsection (5)(b) of that section if that qualification had been obtained before that time, and

(c)the person obtained that qualification within the period of 6 years beginning with that time.

(9)In subsections (7) and (8) “the relevant time” means the time at which paragraph 9 of Schedule 5 to the Local Audit and Accountability Act 2014 comes into force.

(10)Regulations under this section are subject to negative resolution procedure.

(11)In this section “specified” means specified in regulations under this section.

(12)In this Part “recognised professional qualification” means a professional qualification that is—

(a)offered by a qualifying body, and

(b)recognised by the Secretary of State in accordance with regulations under this section.

(13)In this Part “recognised qualifying body” means a qualifying body offering a recognised professional qualification.”

10E+WAfter section 1224 insert—

“1224ZAProvision of documents to the Secretary of State

(1)For the purpose of assisting a person listed in subsection (2) to maintain proper standards in the auditing of the accounts of a relevant authority, the person may require the authority to make available for inspection by that person—

(a)the accounts concerned, and

(b)the other documents relating to the relevant authority that might reasonably be required by a local auditor for the purposes of the audit.

(2)Those persons are—

(a)the Secretary of State,

(b)a body designated by order under section 1252 (delegation of Secretary of State's functions under this Part), and

(c)a recognised supervisory body.”

11(1)Section 1225 (enforcement: general) applies with the following modifications.E+W

(2)In subsection (1)(b), for “any requirement of Part 2 of Schedule 11 is not satisfied” substitute “ any requirement under regulations under section 1219 applying to the qualification is not satisfied ”.

(3)In subsection (3), for “paragraph 3 of Schedule 11 (revocation of recognition orders)” substitute “ any power of the Secretary of State to make a revocation order under regulations under section 1219 ”.

12E+WIn section 1225C(3) (compliance orders) omit “or, in Scotland, the Court of Session”.

13E+WIn section 1225F(10) (appeals against financial penalties) omit “or, in Scotland, the Court of Session”.

14(1)Section 1239 (the register of auditors) applies with the following modifications.E+W

(2)In subsection (1) omit paragraph (b) and the “and” preceding it.

(3)In subsection (2)—

(a)at the end of paragraph (d) insert “ , and ”, and

(b)omit paragraph (f) and the “and” preceding it.

(4)After subsection (4) insert—

“(4A)The regulations may provide for the register to be kept with the register under regulations under this section in its original form.”

(5)For subsection (5) substitute—

“(5)The regulations may impose such obligations as the Secretary of State thinks fit on—

(a)recognised supervisory bodies,

(b)recognised supervisory bodies within the meaning of this Part in its original form,

(c)any body designated by order under section 1252 (delegation of Secretary of State's functions under this Part),

(d)any body designated by order under that section in its original form,

(e)persons eligible for appointment as a local auditor,

(f)persons eligible for appointment as a statutory auditor in accordance with this Part in its original form,

(g)any person with whom arrangements are made by one or more recognised supervisory bodies, or by any body designated by order under section 1252, with respect to the keeping of the register, or

(h)any person with whom arrangements are made by one or more recognised supervisory bodies within the meaning of this Part in its original form, or by any body designated by order under section 1252 in its original form, with respect to the keeping of the register under regulations under this section in its original form.”

(6)Omit subsection (7).

(7)In subsection (8)—

(a)for “(5)(b) or (e)” substitute “ (5)(c), (d), (g) or (h) ”, and

(b)omit “or, in Scotland, by an order under section 45 of the Court of Session Act 1988 (c. 36)”.

(8)After subsection (9) insert—

“(9A)References in subsections (4A) and (5) to this Part or a provision of this Part in its original form are to this Part or that provision as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014.”

15E+WIn section 1240(1)(b) (information to be made available to public), for “audit work” substitute “ local audit work ”.

16E+WFor section 1248 (Secretary of State's power to require second audit of company) substitute—

“1248Secretary of State's power to require second audit

(1)This section applies where a person appointed as a local auditor of the accounts of a relevant authority (“the first auditor”) was not an appropriate person for any part of the period during which the audit was conducted.

(2)The Secretary of State may direct the relevant authority to retain an appropriate person—

(a)to conduct a second audit of the accounts in question, or

(b)to review the first audit and to report (giving the appropriate person's reasons) whether a second audit of those accounts is needed.

(3)For the purposes of subsections (1) and (2) a person is “appropriate” if the person—

(a)is eligible for appointment as a local auditor, and

(b)is not prohibited by section 1214(1) (independence requirement) from acting as a local auditor of the accounts of the relevant authority.

(4)The Secretary of State must send a copy of a direction under subsection (2) to the recognised supervisory body (if any) of which the first auditor is or was a member.

(5)The relevant authority must—

(a)send a copy of a report under subsection (2)(b) to the recognised supervisory body (if any) of which the first auditor is or was a member, and

(b)if the report states that a second audit is needed, take such steps as are necessary for the carrying out of that audit.

(6)A direction under subsection (2) may specify when the authority must comply with—

(a)the requirements of the direction, or

(b)any requirement of subsection (5).

(7)A person appointed under this section to conduct a second audit of the accounts of a parish meeting, or to review and report on the first audit of such accounts, must be appointed by the parish meeting itself (and not by its chairman on behalf of the parish meeting).”

17E+WFor section 1249 (supplementary provision about second audits) substitute—

“1249Supplementary provisions about second audits

(1)If a person accepts an appointment, or continues to act, as a local auditor of the accounts of a relevant authority at a time when the person knows the person is not appropriate, the relevant authority may recover from the person any costs incurred by it in complying with the requirements of section 1248.

For this purpose “appropriate” is to be construed in accordance with subsection (3) of that section.

(2)Where a second audit is carried out under section 1248, any statutory or other provision applying in relation to the first audit applies also, in so far as practicable, in relation to the second audit.”

18(1)Section 1250 (misleading, false and deceptive statements) applies with the following modifications.E+W

(2)Omit subsection (3).

(3)In subsection (5)(b)—

(a)in sub-paragraph (i) omit “in England and Wales,”, and

(b)omit sub-paragraph (ii).

(4)In subsection (6)—

(a)omit “, (3)”,

(b)in paragraph (a) omit “in England and Wales,”, and

(c)omit paragraph (b).

(5)In each of subsections (7) and (8) omit “, (3)”.

19(1)Section 1251 (fees) applies with the following modifications.E+W

(2)In subsection (1), after “a recognition order under this Part” insert “ or under regulations under this Part ”.

(3)In subsection (2)—

(a)at the end of paragraph (a) insert “ and ”, and

(b)omit paragraphs (c) and (d).

20E+WIn section 1251A (duty of Secretary of State to report on inspections) omit paragraph (a).

21(1)Section 1252 (delegation of the Secretary of State's functions) applies with the following modifications.E+W

(2)For subsection (3) substitute—

“(3)A delegation order may provide that it has the effect of making the body designated under section 5 of the Freedom of Information Act 2000 (further power to designate public authorities), subject to subsection (3A).

(3A)A delegation order may only provide that the body is so designated to the extent that it is exercising functions transferred or conferred by the order (so that nothing in Parts 1 to 5 of that Act applies by virtue of the order to information held by the body which does not relate to the exercise of those functions).”

(3)In subsection (4)(b) omit sub-paragraph (ii) and the “and” preceding it.

(4)In subsection (6) omit paragraph (b).

(5)Omit subsection (7).

22E+WIn section 1253(5) (delegation of functions to an existing body)—

(a)for “to 22B” substitute “ , 22 ”,

(b)omit “, 23A(1)”, and

(c)omit “or paragraph 1 or 2 of Schedule 12”.

23(1)Section 1254 (directions to comply with international obligations) applies with the following modifications.E+W

(2)In subsection (1) omit “, the Independent Supervisor”.

(3)For subsection (3) substitute—

“(3)A direction under this section given to a body designated by order under section 1252 is enforceable on the application of the Secretary of State by injunction.”

24(1)Section 1256 (time limits for prosecution of offences) applies with the following modifications.E+W

(2)In subsection (1) omit “in England and Wales”.

(3)Omit subsections (2) to (4).

(4)For subsection (5) substitute—

“(5)This section does not authorise the trial of an information laid more than 3 years after the commission of the offence.”

(5)In subsection (6) omit “, the Lord Advocate, the Director of Public Prosecutions for Northern Ireland”.

(6)In subsection (7) omit the words from “, section 331” to the end.

25(1)Section 1257 (jurisdiction and procedure in respect of offences) applies with the following modifications.E+W

(2)In subsection (1), in each of paragraphs (a) and (b), after “at any place” insert “ in England and Wales ”.

(3)Omit subsections (4) and (5).

26(1)Section 1261 (minor definitions) applies with the following modifications.E+W

(2)In subsection (1) omit the following definitions—

• “audit working papers”;

• “company”;

• “parent undertaking” and “subsidiary undertaking”;

• “third country”;

• “third country auditor”;

• “third country competent authority”;

• “transfer”.

(3)In subsection (1), in the definition of “officer”, after “a body corporate” insert “ other than a relevant authority ”.

(4)After subsection (1) insert—

“(1A)Expressions used in this Part that are defined in the Local Audit and Accountability Act 2014 have the same meaning as in that Act.”

27(1)Section 1262 (index of defined expressions) applies with the following modifications.E+W

(2)Omit the following entries—

• “approved third country competent authority”;

• “audit working papers”;

• “audited person”;

• “Auditor General”;

• “company”;

• “enactment”;

• “main purposes of this Part”;

• “parent undertaking”;

• “recognised, in relation to a qualifying body”;

• “registered third country auditor”;

• “rules of a qualifying body”;

• “statutory auditor, statutory audit and statutory audit work”;

• “subsidiary undertaking”;

• “third country”;

• “third country auditor”;

• “third country competent authority”;

• “transfer (in relation to audit working papers)”;

• “UK-traded non EEA company”.

(3)At the appropriate places insert—

(4)In the entry for “officer”, after “officer” insert “ , in relation to a body corporate other than a relevant authority ”.

(5)In the entry for “qualifying body” for “section 1220(1)” substitute “ section 1219(3)(a) ”.

(6)For the entry for “recognised, in relation to a professional qualification” substitute—

28(1)Schedule 10 (recognised supervisory bodies) applies with the following modifications.E+W

(2)Omit the following paragraphs—

(a)paragraph 4 (recognition orders under old companies legislation to have effect under Schedule);

(b)paragraphs 10B and 10C (public interest entity reporting and independence requirements);

(c)paragraphs 16A to 16AB (transfer of papers to third countries);

(d)paragraph 20A (definition of public interest entity etc);

(e)paragraphs 22A and 22B (arrangements for setting standards relating to public interest entity reporting and independence requirements);

(f)paragraph 23A (arrangements for independent monitoring of third country audits).

(3)For paragraph 6 (holding of appropriate qualification) substitute—

“Holding of appropriate qualificationE+W

6(1)The body must have rules to the effect that an individual is not eligible for appointment as a local auditor unless the individual—

(a)holds an appropriate qualification,

(b)is an EEA auditor who has passed an aptitude test in accordance with sub-paragraph (3), unless an aptitude test is not required (see sub-paragraphs (4) and (5)), or

(c)has been authorised to act as a local auditor by the body pursuant to the European Communities (Recognition of Professional Qualifications) Regulations 2007 (SI 2007/2781), and complies with the requirements of those Regulations that apply to a person acting as a local auditor.

(2)The body must have rules to the effect that a firm is not eligible for appointment as a local auditor unless—

(a)each individual responsible for local audit work on behalf of the firm is eligible for appointment as a local auditor, and

(b)the firm is controlled by qualified persons (see paragraph 7 below).

(3)The aptitude test—

(a)must test the individual's knowledge of subjects—

(i)that are covered by a recognised professional qualification,

(ii)that are not covered by the professional qualification already held by that individual, and

(iii)the knowledge of which is essential for the pursuit of the profession of local auditor;

(b)may test the individual's knowledge of rules of professional conduct;

(c)must not test the individual's knowledge of any other matters.

(4)No aptitude test is required if—

(a)the individual is to provide services consisting of local audit work on a temporary and occasional basis, or

(b)the subjects that are covered by a recognised professional qualification and the knowledge of which is essential for the pursuit of the profession of local auditor are covered by the professional qualification already held by the individual.

(5)Whether the provision of services is on a temporary and occasional basis is to be assessed on a case by case basis and in particular by reference to its duration, its frequency, its regularity and its continuity.

(6)A firm which has ceased to comply with the conditions mentioned in sub-paragraph (2) may be permitted to remain eligible for appointment as a local auditor for a period of not more than three months.”

(4)In paragraph 7 (meaning of control by qualified persons)—

(a)in sub-paragraph (1) (introductory), for “paragraph 6(1)(b)” substitute “ paragraph 6(2)(b) ”, and

(b)in sub-paragraph (2)(b)(i), (requirement for firm to be eligible for appointment as statutory auditor), for “statutory auditor” substitute “ local auditor, or as a statutory auditor in accordance with this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014 ”.

(5)After paragraph 7 insert—

“Auditors to have sufficient skill and experienceE+W

7A(1)The body must have rules to the effect that a person is not eligible for appointment as a local auditor unless—

(a)in the case of a firm, the key audit partner, or each of the key audit partners, has an appropriate level of competence to carry out local audits, and

(b)in the case of an individual, the individual has an appropriate level of competence to carry out local audits.

(2)Rules under sub-paragraph (1) must comply with guidance issued by the Secretary of State.

(3)In sub-paragraph (1) “key audit partner” means an individual identified by the firm as being primarily responsible for local audits.”

(6)For paragraph 10A substitute—

“Technical standards for group auditE+W

10A(1)The body must have rules and practices as to technical standards ensuring that local auditors undertaking a group audit—

(a)review for the purposes of the audit the audit work conducted by other persons, and

(b)record that review.

(2)The body must participate in arrangements within paragraph 22 (arrangements for setting standards), and the rules and practices mentioned in sub-paragraph (1) must include provision requiring compliance with any standards for the time being determined under those arrangements.

(3)In this paragraph “group audit” means an audit that relates to the statement of accounts of a relevant authority, or, where the relevant authority is a health service body, the accounts of the body, in a case where, in accordance with proper practices, the financial transactions of an entity other than the authority must be consolidated into the statement or (as the case may be) the accounts.

(4)In sub-paragraph (3) “entity” means any entity, whether or not a legal person.”

(7)For paragraph 13 substitute—

“Monitoring of auditsE+W

13(1)The body must—

(a)have adequate arrangements for enabling the performance by its members of local audit functions, other than functions in respect of major local audits, to be monitored by means of inspections,

(b)in the case of members of the body who perform any local audit functions in respect of major local audits—

(i)participate in arrangements within paragraph 23(1), and

(ii)have rules and practices designed to ensure that a sanction determined under paragraph 23(1)(b) is to be treated as if it were a sanction which the body had determined under arrangements for enforcement within paragraph 12(1A), and

(c)have rules designed to ensure that members of the body take reasonable steps to enable their performance of any local audit functions to be monitored by means of inspections.

(2)Any monitoring of members of the body under the arrangements within paragraph 23(1) is to be regarded (so far as their performance of local audit functions in respect of major local audits is concerned) as monitoring of compliance with the body's rules for the purposes of paragraph 12(1) and (1A).

(3)The arrangements referred to in sub-paragraph (1)(a) must include an inspection which is conducted in relation to each person eligible for appointment as a local auditor at least once every six years.

(4)The inspection must be conducted by persons who—

(a)have an appropriate professional education,

(b)have experience of—

(i)local audit work,

(ii)statutory audit work within the meaning of this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014,

(iii)other audit work relating to any body whose accounts form part of a group for which the Treasury prepares accounts under section 9(1) of the Government Resources and Accounts Act 2000, or

(iv)work equivalent to that within any of sub-paragraphs (i) to (iii) on the audit of accounts under the law of an EEA State, or part of an EEA State, other than the United Kingdom,

(c)have received adequate training in the conduct of inspections concerning the audits of relevant authorities, and

(d)do not have any interests likely to conflict with the proper conduct of the inspection.

(5)The inspection must review one or more local audits in which the person to whom the inspection relates has participated.

(6)The inspection must include an assessment of—

(a)the person's compliance with the body's rules established for the purposes of paragraphs 9 (professional integrity and independence), 10 (technical standards) and 10A (technical standards for group audits),

(b)the resources allocated by the person to local audit work,

(c)in the case of an inspection in relation to a firm, its internal quality control system, and

(d)the remuneration received by the person in respect of local audit work.

(7)An inspection conducted in relation to a firm may be treated as an inspection of all individuals responsible for local audit work on behalf of that firm, if the firm has a common quality assurance policy with which each of those individuals is required to comply.

(8)The main conclusions of the inspection must be recorded in a report which is made available to—

(a)the person to whom the inspection relates, and

(b)the body.

(9)The body must, at least once every calendar year, give to the Secretary of State a summary of the results of inspections conducted under this paragraph.

(10)For the purposes of this Schedule a local audit of the accounts of a relevant authority is a “major local audit” if the authority is specified in, or of a description specified in—

(a)regulations made for the purposes of this sub-paragraph by the Secretary of State, or

(b)a direction (which has not been revoked) given by the Secretary of State to the body.

(11)Regulations under sub-paragraph (10)(a) may in particular specify a description of relevant authority by reference to its income or expenditure.

(12)Regulations under sub-paragraph (10)(a) are subject to negative resolution procedure.

(13)A direction may be given under sub-paragraph (10)(b) only if the Secretary of State thinks that there is significant public interest in the authority, or in authorities of the description, specified in the direction.

(14)In this Schedule “local audit function” means any function performed as a local auditor.”

(8)In paragraph 23 (arrangements for independent monitoring of audits of listed companies and other major bodies)—

(a)in the heading, for “audits of listed companies and other major bodies” substitute “ major local audits ”,

(b)for “statutory audit functions” in each place substitute “ local audit functions ”,

(c)for “major audits” in each place substitute “ major local audits ”, and

(d)omit sub-paragraph (2).

(9)In paragraph 24 (arrangements for independent investigation for disciplinary purposes of public interest cases)—

(a)in sub-paragraph (1)(a) omit “or third country audit functions”, and

(b)in sub-paragraph (2) omit the definitions of “statutory audit function” and “third country audit function”.

(10)In paragraph 25(1) (supplementary: arrangements to operate independently of body)—

(a)at the end of paragraph (c) insert “ , or ”, and

(b)omit paragraph (ca).

(11)In paragraph 26 (supplementary: funding of arrangements) omit “, 23A”.

(12)In paragraph 27 (supplementary: scope of arrangement) omit “, 23A”.

29E+WIn Schedule 13 (supplementary provision with respect to delegation order)—

(a)in paragraph 9 (legislative functions) omit “(or, in Scotland, sufficient evidence)”, and

(b)in paragraph 10(6) (requirement for auditor of body established by order to be eligible for appointment as statutory auditor), for “a statutory auditor” substitute “ a local auditor, or a statutory auditor in accordance with this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014 ”.

Section 19

SCHEDULE 6E+WCodes of audit practice and guidance

Duty to prepare codeE+W

1(1)The Comptroller and Auditor General must prepare one or more codes of audit practice prescribing the way in which local auditors are to carry out their functions under this Act.E+W

(2)Different codes may be prepared for different relevant authorities (but the Comptroller and Auditor General must ensure that each kind of relevant authority is covered by a code).

(3)A code may contain different provision for different relevant authorities.

(4)A code must embody what the Comptroller and Auditor General considers to be the best professional practice with respect to the standards, procedures and techniques to be adopted by local auditors.

(5)Before preparing a code, the Comptroller and Auditor General must consult—

(a)such associations or representatives of relevant authorities as the Comptroller and Auditor General thinks appropriate,

(b)the recognised supervisory bodies,

(c)the persons appearing on the register of auditors kept under regulations under section 1239 of the Companies Act 2006 as it has effect by virtue of Schedule 5,

(d)the Secretary of State,

(e)the Treasury,

(f)each body to whom the Secretary of State has delegated functions under section 1252 of the Companies Act 2006 as it has effect by virtue of Schedule 5, and

(g)such other bodies or persons as the Comptroller and Auditor General thinks appropriate.

Procedure for codeE+W

2(1)After preparing a code of audit practice, the Comptroller and Auditor General must—E+W

(a)publish it in draft, and

(b)send it to a Minister of the Crown, who must lay it before Parliament.

(2)If, within the 40-day period, either House of Parliament resolves not to approve the code—

(a)it must not be published by the Comptroller and Auditor General, and

(b)the Comptroller and Auditor General must prepare another code.

(3)If no such resolution is made within that period, the Comptroller and Auditor General must publish the code.

(4)This paragraph does not apply to a code of audit practice prepared to replace an existing code of audit practice (but see paragraph 5).

Duty to keep code under reviewE+W

3E+WThe Comptroller and Auditor General must keep each code of audit practice under review.

Alteration of codeE+W

4(1)The Comptroller and Auditor General may prepare alterations to a code of audit practice.E+W

(2)Paragraph 1(5) applies to alterations to a code as it applies to a code.

(3)After preparing alterations to a code, the Comptroller and Auditor General must—

(a)publish the code as altered in draft, and

(b)send the code as altered to a Minister of the Crown, who must lay it before Parliament.

(4)If, within the 40-day period, either House of Parliament resolves not to approve the code as altered, it must not be published by the Comptroller and Auditor General.

(5)If no such resolution is made within that period, the Comptroller and Auditor General must publish the code as altered.

(6)A code published under sub-paragraph (3)(a) or (5) must show the alterations that are proposed to be made to it or (as the case may be) have been made to it in such manner as the Comptroller and Auditor General thinks appropriate.

Replacement of codeE+W

5(1)The Comptroller and Auditor General may prepare a code of audit practice to replace a code published under paragraph 2(3) or sub-paragraph (7).E+W

(2)The Comptroller and Auditor General must—

(a)use reasonable endeavours to ensure that a code is published under sub-paragraph (7) to replace a code published under paragraph 2(3) or that sub-paragraph (“the original code”) before the end of 5 years beginning with the date on which the original code was so published, or

(b)if it does not prove possible to comply with paragraph (a), ensure that a code of the kind referred to in that paragraph is published under sub-paragraph (7) as soon as is reasonably practicable after the end of the period referred in that paragraph.

(3)Sub-paragraphs (1) and (2) apply regardless of whether the original code has been published with alterations under paragraph 4 in the meantime.

(4)A replacement code prepared to comply with sub-paragraph (2) need not make different provision from that made by the original code.

(5)After preparing a replacement code, the Comptroller and Auditor General must—

(a)publish it in draft, and

(b)send it to a Minister of the Crown, who must lay it before Parliament.

(6)If, within the 40-day period, either House of Parliament resolves not to approve the replacement code—

(a)the code must not be published by the Comptroller and Auditor General, and

(b)if the period of 5 years beginning with the date on which the original code was published under paragraph 2(3) or sub-paragraph (7) has expired, the Comptroller and Auditor General must prepare another replacement code.

(7)If no such resolution is made within that period, the Comptroller and Auditor General must publish the replacement code.

Publication of codeE+W

6(1)A code of audit practice may be published in such manner as the Comptroller and Auditor General thinks fit.E+W

(2)A code comes into force on the day on which it is published under paragraph 2(3) or 5(7) unless it specifies a different commencement date.

(3)Alterations to a code come into force on the day on which the code as altered is published under paragraph 4(5) unless it specifies a different commencement date for those alterations.

(4)A code may—

(a)specify different commencement dates for different purposes;

(b)include transitional provisions and savings.

(5)A code may, in particular, provide that all or part of an existing code of audit practice has effect until all or part of the new code comes into force.

Assistance from relevant authorityE+W

7E+WA relevant authority must provide the Comptroller and Auditor General with the information that the Comptroller and Auditor General reasonably requires for the purposes of this Schedule.

Saving for codes of practice under Audit Commission Act 1998E+W

8(1)Despite the repeal of section 4 of the Audit Commission Act 1998 by this Act, a provision of a code of audit practice under that section continues in force until it is replaced by a provision of a code of audit practice under this Schedule.E+W

(2)A provision of a code under that section is to be read subject to the modifications necessary for it to have effect in relation to the functions of a local auditor under this Act.

(3)A code under that section—

(a)is not to be treated as a code of audit practice for the purposes of this Schedule (other than this paragraph), but,

(b)is otherwise to be treated as a code of audit practice for the purposes of this Act.

GuidanceE+W

9(1)The Comptroller and Auditor General may issue guidance as to the exercise by local auditors of their functions under this Act.E+W

(2)Guidance under this paragraph may, in particular, explain or supplement the provisions of a code of practice under this Schedule.

Application to auditors of NHS foundation trustsE+W

10(1)The duty imposed on the Comptroller and Auditor General by paragraph 1 includes a duty to prepare one or more codes of audit practice prescribing the way in which auditors of accounts of NHS foundation trusts are to carry out their functions in relation to such accounts.E+W

(2)This Schedule, apart from paragraph 1(2) and (3), paragraph 8 and this paragraph, applies in relation to a code relating to auditors of accounts of NHS foundation trusts as it applies in relation to a code relating to local auditors, subject to the following sub-paragraphs.

(3)Paragraph 1(4) is to be read as if the reference to “local auditors” were a reference to auditors of accounts of NHS foundation trusts.

(4)Paragraph 1(5) applies as if—

(a)it required the Comptroller and Auditor General to consult Monitor (as well as the other persons mentioned in that sub-paragraph), and

(b)paragraph (a) of that sub-paragraph required the Comptroller and Auditor General to consult such associations or representatives of NHS foundation trusts as the Comptroller and Auditor General thinks appropriate.

(5)Paragraph 7 is to be read as if the reference to “a relevant authority” were a reference to an NHS foundation trust.

(6)Paragraph 9(1) is to be read as if the reference to “the exercise by local auditors of their functions under this Act” were a reference to “the exercise by auditors of accounts of NHS foundation trusts of their functions in relation to such accounts”.

Meaning of “40-day period”E+W

11(1)In this Schedule “the 40-day period”, in relation to a code laid before Parliament, means the period of 40 days beginning with—E+W

(a)the day on which the code is laid, or

(b)if it is not laid before each House of Parliament on the same day, the later of the 2 days on which it is laid.

(2)In calculating that period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.