Local Audit and Accountability Bill (HC Bill 101)

Local Audit and Accountability BillPage 90

17C A body designated by the Secretary of State under section 1252
(delegation of the Secretary of State’s functions) as it has effect by
virtue of that Schedule.

17D A body with which a recognised supervisory body within the
5meaning of that Act is participating in arrangements for the
purposes of paragraph 23 (independent monitoring of certain
audits) or 24 (independent investigation of public interest cases) of
Schedule 10 as it has effect by virtue of that Schedule.

Serious Crime Act 2007 (c. 27)Serious Crime Act 2007 (c. 27)

75 10In paragraph 9 of Schedule 13 to the Serious Crime Act 2007 (modification of
section 32D(8)(b) of the Audit Commission Act 1998 pending increase in
magistrates’ court sentencing powers) omit paragraph (a).

Local Government and Public Involvement in Health Act 2007 (c. 28)Local Government and Public Involvement in Health Act 2007 (c. 28)

76 The Local Government and Public Involvement in Health Act 2007 is
15amended as follows.

77 Omit section 148 (Benefit Fraud Inspectorate: transfers to the Audit
Commission).

78 In section 212(7) (entities controlled by local authorities: definitions)—

(a) in the definition of “English local authority” after “England” insert “,
20and includes a local authority which exercises functions in relation to
an area which is partly in England and partly in Wales”,

(b) for the definition of “financial year” substitute—

  • “financial year” means a period for which—

    (a)

    a statement of accounts of the local authority
    25must be prepared by reason of section 3 of the
    Local Audit and Accountability Act 2013, or

    (b)

    accounts of the local authority must be
    prepared by reason of section 13 of the Public
    Audit (Wales) Act 2004;, and

(c) 30in the definition of “local authority” for paragraph (b) substitute—

(b) in the case of a body in Wales, is required to prepare
statements of accounts by regulations made under
section 39 of the Public Audit (Wales) Act 2004;.

79 (1) Section 214 (further provision about orders under section 212) is amended as
35follows.

(2) In subsection (1)—

(a) after “section 212” insert “made by the Welsh Ministers”,

(b) before “local authority” insert “Welsh”, and

(c) for “the appropriate person” substitute “the Auditor General for
40Wales”.

(3) Omit subsection (2).

(4) In subsection (9) after “qualifying person” insert—

  • Welsh local authority;.

(5) Omit subsection (10).

Local Audit and Accountability BillPage 91

80 Omit Schedule 10 (Benefit Fraud Inspectorate: transfer schemes).

81 (1) The repeals of section 148 of and Schedule 10 to the Local Government and
Public Involvement in Health Act 2007 by paragraphs 77 and 80 do not
affect—

(a) 5the transfers of property, rights and liabilities of the Secretary of State
or a person authorised under section 139A of the Social Security
Administration Act 1992 to the Audit Commission by a scheme
under that section and that Schedule, or

(b) the operation of that section and that Schedule or of such a scheme in
10relation to those transfers.

(2) Sub-paragraph (1) is subject to the provisions of a transfer scheme under
paragraph 1 of Schedule 1 (transfer of property, rights and liabilities to
Audit Commission).

(3) In this paragraph “the Audit Commission” means the Audit Commission for
15Local Authorities and the National Health Service in England.

Health and Social Care Act 2008 (c. 14)Health and Social Care Act 2008 (c. 14)

82 The Health and Social Care Act 2008 is amended as follows.

83 Omit section 56 (role of Audit Commission in undertaking or promoting
health care studies).

84 (1) 20Schedule 4 (interaction between Care Quality Commission and other
authorities) is amended as follows.

(2) In paragraph 1 (meaning of inspection authorities)—

(a) in sub-paragraph (2)—

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

(ii) 25omit paragraph (g) and the “and” preceding it, and

(b) in sub-paragraph (3)—

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

(ii) omit paragraph (g) and the “and” preceding it.

(3) In paragraph 9 (advice or assistance for other public authorities)—

(a) 30after sub-paragraph (1) insert—

(1A) The Commission may do anything it thinks appropriate to
facilitate the carrying out of an inspection under section 10
of the Local Government Act 1999 (inspection of best value
authorities)., and

(b) 35for sub-paragraph (2) substitute—

(2) Anything done under this paragraph may be done on such
terms, including terms as to payment, as the Commission
thinks fit.

Housing and Regeneration Act 2008 (c. 17)2008 (c. 17)

85 40The Housing and Regeneration Act 2008 is amended as follows.

86 Omit section 106A (co-operation between the Regulator of Social Housing
and the Audit Commission).

Local Audit and Accountability BillPage 92

87 In section 128(4)(a) (duty of local authority which is registered provider of
social housing to send reports under section 8 of the Audit Commission Act
1998 to the Regulator), for “any immediate report under section 8 of the
Audit Commission Act 1998 (immediate and other reports in the public
5interest)” substitute “any report under paragraph 1 of Schedule 7 to the
Local Audit and Accountability Act 2013 (public interest reports)”.

88 In section 196(1) (duty of Regulator to consult listed bodies before setting
standards etc) omit paragraph (d) (the Audit Commission).

89 In section 197(4) (duty of Secretary of State to consult listed bodies before
10giving direction to Regulator) omit paragraph (c).

90 In section 201 (arrangements by Regulator for inspections by third party)
omit subsection (7A) (inspections treated as carried out by regulator for
purposes of Schedule 2A to the Audit Commission Act 1998).

91 (1) Section 210A (extraordinary report: local authorities) is amended as follows.

(2) 15In subsection (1), for the words from “the Audit Commission” to the end
substitute “the regulator may require the local authority to allow its
accounts, so far as they relate to the provision of social housing, to be audited
by a local auditor appointed by the regulator.”

(3) After subsection (1) insert—

(1A) 20The regulator may not appoint a local auditor to audit the accounts
of a local authority if that person—

(a) is the person (or one of the persons) appointed under or by
virtue of the Local Audit and Accountability Act 2013 to
audit the authority’s accounts, or

(b) 25was the person (or one of the persons) who carried out the
most recent completed audit of the authority’s accounts
under or by virtue of that Act.

(1B) Sections 19(1), (2), (5) and (6), 21 and 22 of the Local Audit and
Accountability Act 2013 (local auditors’ general duties and right to
30documents etc) apply in relation to an audit under this section as
they apply in relation to an audit of the local authority under or by
virtue of that Act.

(1C) On completion of the audit under this section, the local auditor must
report to the regulator about such matters and in such form as the
35regulator determines.

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

(5) In subsection (4) for “Audit Commission’s costs of preparing the report”
substitute “costs of the audit (including the local auditor’s remuneration)”.

(6) For subsection (5) substitute—

(5) 40In this section—

  • “accounts” has the meaning given by section 4 of the Local
    Audit and Accountability Act 2013;

  • “local auditor” means a person who is eligible for appointment
    under or by virtue of the Local Audit and Accountability Act
    452013 as an auditor of the local authority’s accounts.

Local Audit and Accountability BillPage 93

(7) In the heading, for “report” substitute “audit”.

92 In section 249(1) (management transfer) after “section 210” insert “or 210A”.

Local Democracy, Economic Development and Construction Act 2009 (c. 20)Local Democracy, Economic Development and Construction Act 2009 (c. 20)

93 Chapter 3 of Part 2 of the Local Democracy, Economic Development and
5Construction Act 2009 (audit of entities connected with local authorities) is
amended as follows.

94 (1) Section 36 (overview of Chapter) is amended as follows.

(2) In subsection (1)—

(a) for “an audit authority” substitute “the Auditor General for Wales”,
10and

(b) omit “English or”.

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

(4) In subsection (6)(b) omit “section 27 of the Audit Commission Act 1998
(c. 18) or”.

95 15In section 37 (notification duties of local authorities) omit subsection (1).

96 (1) Section 38 (power to appoint auditor) is amended as follows.

(2) In subsection (1), for “an audit authority” substitute “the Auditor General for
Wales”.

(3) In subsection (3)(b)(ii)—

(a) 20for “audit authority” substitute “Auditor General for Wales”, and

(b) for “37(1)(a) or (2)(a)” substitute “37(2)(a)”.

(4) Omit subsection (4).

(5) In subsection (6), for “appointing audit authority” substitute “Auditor
General for Wales”.

(6) 25Omit subsection (7).

(7) In subsection (8), for “appointing audit authority” substitute “Auditor
General for Wales”.

97 (1) Section 39 (power to appoint replacement auditor) is amended as follows.

(2) In subsection (1) for “an audit authority” substitute “the Auditor General for
30Wales”.

(3) For the remaining references to “audit authority” substitute “Auditor
General for Wales”.

98 (1) Section 40 (exclusions from power to appoint auditor) is amended as
follows.

(2) 35In subsection (1), for “An audit authority” substitute “The Auditor General
for Wales”.

(3) In each of subsections (2) to (4), for “appointing audit authority” substitute
“Auditor General for Wales”.

Local Audit and Accountability BillPage 94

(4) In subsection (5) for “audit authority” substitute “Auditor General for
Wales”.

99 In section 41(1) (persons who may be appointed as auditor)—

(a) in paragraph (a), for “appointing audit authority” substitute
5“Auditor General for Wales”, and

(b) in paragraph (b), for “that authority” substitute “the Auditor General
for Wales”.

100 (1) Section 42 (terms of appointment of auditor) is amended as follows.

(2) In subsection (5), for “appointing audit authority” substitute “Auditor
10General for Wales”.

(3) Omit subsection (6).

101 (1) Section 43 (right of entity to appoint auditor to conduct statutory audit) is
amended as follows.

(2) In each of subsections (3), (5) and (7), for “audit authority” substitute
15“Auditor General for Wales”.

(3) In subsection (8)—

(a) for “an audit authority” substitute “the Auditor General for Wales”,

(b) in paragraph (a), for “audit authority” substitute “Auditor General
for Wales”, and

(c) 20for paragraph (b) substitute—

(b) the Welsh Ministers.

102 In section 44(5)(b) (functions of auditor not appointed to conduct statutory
audit: duty to send report to appointing audit authority), for “appointing
audit authority” substitute “Auditor General for Wales”.

103 25In section 45(4)(b) (duty of auditor to send public interest report to audit
authority), for “audit authority” substitute “Auditor General for Wales”.

104 In section 46 (codes of practice) omit subsections (1) to (3).

105 (1) Section 50 (fees for appointment of auditor) is amended as follows.

(2) Omit subsection (1).

(3) 30In subsection (3), for “Audit Commission or the Wales Audit Office (as the
case may be)” substitute “Wales Audit Office”.

(4) Omit subsection (4).

(5) In subsection (5)—

(a) omit “(4) or”, and

(b) 35for “Audit Commission or the Wales Audit Office (as the case may
be)” substitute “Wales Audit Office”.

(6) In subsection (6), for “Audit Commission or the Wales Audit Office (as the
case may be)” substitute “Wales Audit Office”.

(7) Omit subsections (8) and (9).

(8) 40In subsection (12)—

(a) for “Audit Commission or the Wales Audit Office (as the case may
be)” in each place it occurs substitute “Wales Audit Office”, and

Local Audit and Accountability BillPage 95

(b) for “(4) or (4A) (as the case may be)” substitute “(4A)”.

106 (1) Section 51 (power of audit authority to require information) is amended as
follows.

(2) In the heading, for “audit authority” substitute “Auditor General for Wales”.

(3) 5In subsection (1)—

(a) for “appointing audit authority” substitute “Auditor General for
Wales”, and

(b) for “it” substitute “the Auditor General for Wales”.

(4) In subsection (2)—

(a) 10for “an audit authority” substitute “the Auditor General for Wales”,
and

(b) for “authority” substitute “Auditor General for Wales”.

107 Omit section 52 (subsidiaries of Passenger Transport Executives).

108 (1) Section 53 (regulations) is amended as follows.

(2) 15In subsection (1), for “36(4)(b) or (5)(b)” substitute “36(5)(b)”.

(3) Omit subsection (4).

(4) In subsection (5) omit “made by the Welsh Ministers”.

109 In section 54(1) (interpretation) omit the definitions of “audit authority”,
“Audit Commission” and “qualifying English local authority entity”.

20Equality Act 2010 (c. 15)2010 (c. 15)

110 In Part 1 of Schedule 19 to the Equality Act 2010 (general list of public
authorities to whom public sector equality duty applies) omit the entry for
the Audit Commission for Local Authorities and the National Health Service
in England.

25Police Reform and Social Responsibility Act 2011 (c. 13)2011 (c. 13)

111 The Police Reform and Social Responsibility Act 2011 is amended as follows.

112 In section 18(7) (delegation of functions by police and crime commissioners:
exceptions), after paragraph (f) insert—

(g) appointing a local auditor under section 7 of the Local Audit
30and Accountability Act 2013;

(h) deciding whether to enter into a liability limitation
agreement under section 14 of that Act.

113 In section 19(7) (delegation of functions by Mayor’s Office for Policing and
Crime: exceptions), after paragraph (h) insert—

(i) 35appointing a local auditor under section 7 of the Local Audit
and Accountability Act 2013;

(j) deciding whether to enter into a liability limitation
agreement under section 14 of that Act.

Charities Act 2011 (c. 25)2011 (c. 25)

114 40The Charities Act 2011 is amended as follows.

Local Audit and Accountability BillPage 96

115 (1) Section 149 (audit or examination of English NHS charity accounts) is
amended as follows.

(2) In subsection (2) for “a person appointed by the Audit Commission”
substitute a person who—

(a) 5is eligible for appointment as a statutory auditor under Part
42 of the Companies Act 2006,

(b) is eligible for appointment as a local auditor (see Part 4 of the
Local Audit and Accountability Act 2013), or

(c) is a member of a body for the time being specified in
10regulations under section 154 and is under the rules of that
body eligible for appointment as auditor of the charity.

(3) In subsection (3)—

(a) for “the Audit Commission” (where it first occurs) substitute “the
charity trustees”,

(b) 15in paragraph (a) for “a person appointed by the Audit Commission”
substitute “a person who is within subsection (2)(a), (b) or (c)”, and

(c) in paragraph (b) for “a person so appointed” substitute “a person
who is qualified to be an independent examiner”.

(4) After subsection (3) insert—

(3A) 20For the purposes of subsection (3)(b), a person is qualified to be an
independent examiner if (and only if)—

(a) the person is independent,

(b) the charity trustees reasonably believe that the person has the
requisite ability and practical experience to carry out a
25competent examination of the accounts, and

(c) the person—

(i) falls within a description of person for the time being
included in the list in section 145(3), or

(ii) is eligible for appointment as a local auditor (see Part
304 of the Local Audit and Accountability Act 2013).

(5) Omit subsection (4).

(6) For subsection (5) substitute—

(5) The Commission may—

(a) give guidance to charity trustees of an English NHS charity
35in connection with the selection of a person for appointment
as an independent examiner;

(b) give such directions as it thinks appropriate with respect to
the carrying out of an examination in pursuance of
subsection (3)(b);

40and any such guidance or directions may either be of general
application or apply to a particular charity only.

(7) Omit subsection (8).

116 (1) Section 151 (audit of accounts of larger groups) is amended as follows.

(2) In subsection (4)(b), for “a person appointed by the Audit Commission”
45substitute “a person, appointed by the charity trustees of the parent charity,
who is within section 149(2)(a), (b) or (c)”.

Local Audit and Accountability BillPage 97

(3) In subsection (6)—

(a) for “Subsections (4) and (6) of section 149 apply” substitute “Section
149(6) applies”, and

(b) for “they apply” substitute “it applies”.

117 (1) 5Section 152 (examination of accounts an option for smaller groups) is
amended as follows.

(2) In subsection (6)—

(a) for the words from “the Audit Commission” (where it first occurs) to
“so appointed” substitute “the charity trustees of the parent charity
10be audited by a person, appointed by those trustees, who is within
section 149(2)(a), (b) or (c); or examined by a person, appointed by
those trustees, who is qualified to be an independent examiner”,

(b) for “(4) to (6)” substitute “(3A), (5) and (6)”, and

(c) after “section 149(3)” insert “; except that in subsection (3A)(b) of that
15section the reference to “the charity trustees” is to be read as a
reference to “the charity trustees of the parent charity”.”

118 In section 154(1) (regulations relating to audits and examinations) after
paragraph (a) insert—

(aa) specifying one or more bodies for the purposes of section
20149(2)(c);.

Repeals and revocations in consequence of this Schedule

119 In consequence of the amendments made by this Schedule, the following
provisions are repealed or revoked—

(a) paragraph 102 of Schedule 1 to the Fire and Rescue Services Act 2004;

(b) 25paragraphs 9(2) and 20(b) of Schedule 2 to the Public Audit (Wales)
Act 2004;

(c) section 158 of the Local Government and Public Involvement in
Health Act 2007;

(d) paragraphs 52 and 55 of Schedule 1 to the Housing and Regeneration
30Act 2008 (Registration of Local Authorities) Order 2010 (SI 2010/
844);

(e) paragraph 10(6) of Schedule 17 to the Localism Act 2011;

(f) section 155(2) of the Health and Social Care Act 2012;

(g) paragraph 91(2) and (5) of Schedule 4 to the Public Audit (Wales) Act
352013.

Section 44

SCHEDULE 13 NHS trusts and trustees for NHS trusts: transitory and saving provision

Operation of this Schedule

1 (1) This Act has effect in accordance with this Schedule until the coming into
40force of section 179(1) of the Health and Social Care Act 2012, subject to sub-
paragraph (2) and any provision made under paragraph 2.

(2) This Act has effect in accordance with this Schedule in relation to—

Local Audit and Accountability BillPage 98

(a) any body which continues to be constituted as an NHS trust by
virtue of section 179(3) of that Act after the coming into force of
subsection (1) of that section, and

(b) any trustees for such a body, appointed under paragraph 10 of
5Schedule 4 to the National Health Service Act 2006,

until that body has ceased to be constituted as an NHS trust (by virtue of
paragraph (a), (b) or (c) of section 179(3) of the Health and Social Care Act
2012).

2 (1) The Secretary of State may by order make further transitory or saving
10provision for the purposes of this Schedule.

(2) An order under this paragraph may, in particular, make provision about the
audit of—

(a) the accounts of an NHS trust prepared in respect of the period which
includes the day on which the trust ceased to be constituted as an
15NHS trust;

(b) the accounts of the trustees for an NHS trust prepared in respect of
the period which includes the day on which the trust ceased to be
constituted as an NHS trust.

(3) An order under this paragraph may—

(a) 20amend the modifications of this Act made by this Schedule;

(b) further modify this Act.

“Relevant authorities”, “health service bodies” and “accounts”

3 (1) The following are relevant authorities for the purposes of this Act—

(a) an NHS trust all or most of whose hospitals, establishments and
25facilities are situated in England, and

(b) any trustees for such a trust, appointed under paragraph 10 of
Schedule 4 to the National Health Service Act 2006.

(2) Accordingly, Schedule 2 is to be read as if it contained the following
paragraphs—

24A 30An NHS trust all or most of whose hospitals, establishments and
facilities are situated in England.

24B Any trustees for an NHS trust within paragraph 24A, appointed
under paragraph 10 of Schedule 4 to the National Health Service
Act 2006 (trustees for NHS trusts established under section 25 of
35that Act).

4 In section 3(9), the definition of “health service body” is to be read as if it
contained the following paragraphs—

(c) an NHS trust all or most of whose hospitals, establishments
and facilities are situated in England;

(d) 40any trustees for such a trust, appointed under paragraph 10
of Schedule 4 to the National Health Service Act 2006.

5 (1) Section 4 is to be read as if after subsection (6) there were inserted—

(7) In relation to an NHS trust, or the trustees for an NHS trust,
“accounts” means the annual accounts prepared under paragraph 3
45of Schedule 15 to the National Health Service Act 2006.

Local Audit and Accountability BillPage 99

(2) Accordingly, in section 41(1) the definition of “accounts” is to be read as if
for “(6)” there were substituted “(7)”.

Notice of appointment of local auditor

6 Section 8(4) (publication of notice of appointment of local auditor) is to be
5read as if it contained the following paragraphs—

(d) in the case of an NHS trust, it publishes the notice in such
manner as it thinks is likely to bring the notice to the attention
of persons to whom the trust provides services for the
purposes of the health service in England;

(e) 10in the case of trustees for an NHS trust, they publish the
notice in such manner as they think is likely to bring the
notice to the attention of persons to whom that NHS trust
provides services for the purposes of the health service in
England.

15Functions of auditor panel

7 Section 10(10) (publication of advice of auditor panel) is to be read as if it
contained the following paragraphs—

(d) in the case of an NHS trust, it publishes the advice in such
manner as it thinks is likely to bring the advice to the
20attention of persons to whom the trust provides services for
the purposes of the health service in England;

(e) in the case of trustees for an NHS trust, they publish the
advice in such manner as they think is likely to bring the
advice to the attention of persons to whom that NHS trust
25provides services for the purposes of the health service in
England.

Failure to appoint local auditor

8 (1) Section 12 does not apply in relation to an NHS trust mentioned in
paragraph 3(1)(a), or the trustees of such a trust as mentioned in paragraph
303(1)(b).

(2) Paragraph 9 applies in relation to such a body.

9 (1) If an NHS trust fails, or the trustees for an NHS trust fail, to appoint an
auditor in accordance with Part 2, the trust or (as the case may be) the
trustees must immediately inform the National Health Service Trust
35Development Authority (“the Authority”) of that fact.

(2) If it appears to the Authority that an NHS trust has, or the trustees for an
NHS trust have, failed to appoint an auditor in accordance with Part 2, the
Authority must inform the Secretary of State of that fact by the end of 25
March in the financial year preceding the financial year to which the
40accounts to be audited relate.

(3) If the Secretary of State has been informed by the Authority under sub-
paragraph (2), the Secretary of State may—

(a) take either of the steps in sub-paragraph (4), or

(b) direct the Authority to take whichever of the steps in sub-paragraph
45(4) the Authority considers appropriate.