Local Audit and Accountability Bill (HC Bill 101)

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

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

28 In Schedule 13 (supplementary provision with respect to delegation order),
in paragraph 9 (legislative functions) omit “or, in Scotland, sufficient
40evidence”.

Section 18

SCHEDULE 6 Codes of audit practice and guidance

Duty to prepare code

1 (1) The Comptroller and Auditor General must prepare one or more codes of
5audit practice prescribing the way in which local auditors are to carry out
their functions under this Act.

(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) 10A 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
15consult—

(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
20regulations 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
25under 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 code

2 (1) 30After preparing a code of audit practice, 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.

(2) If, within the 40-day period, either House of Parliament resolves not to
35approve 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(a) it must not be published by the Comptroller and Auditor General,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
40Auditor 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 review

3 The Comptroller and Auditor General must keep each code of audit practice
under review.

Alteration of code

4 (1) 5The Comptroller and Auditor General may prepare alterations to a code of
audit practice.

(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) 10publish 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
15Auditor 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
20been made to it in such manner as the Comptroller and Auditor General
thinks appropriate.

Replacement of code

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).

(2) 25The 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
30published, 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) 35Sub-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
40must—

(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) 5if 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
10Auditor General must publish the replacement code.

Publication of code

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

(2) A code comes into force on the day on which it is published under paragraph
152(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) 20specify 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 authority

7 25A 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 1998

8 (1) Despite the repeal of section 4 of the Audit Commission Act 1998 by this Act,
30a 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.

(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
35local 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
40of this Act.

Guidance

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

(2) Guidance under this paragraph may, in particular, explain or supplement
5the provisions of a code of practice under this Schedule.

Application to auditors of NHS foundation trusts

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
10out their functions in relation to such accounts.

(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) 15Paragraph 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) 20paragraph (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
25reference 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”.

30Meaning of “40-day period”

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—

(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
35later 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.

Section 23

SCHEDULE 7 Reports and recommendations

Public interest reports

1 (1) A local auditor of the accounts of a relevant authority must consider
5whether, in the public interest, the auditor should make a report on any
matter coming to the auditor’s notice during the audit and relating to the
authority or an entity connected with the authority, so it can be considered
in accordance with this Schedule or brought to the public’s attention.

(2) A report under sub-paragraph (1) is referred to in this Act as a public interest
10report.

(3) A public interest report may be made during or after the end of an audit.

(4) A local auditor must notify a relevant authority’s auditor panel (if it has one)
as soon as is reasonably practicable after making a public interest report
relating to the authority or an entity connected with it.

(5) 15A local auditor may recover from a relevant authority—

(a) the reasonable costs of determining whether to make a public
interest report relating to the authority or an entity connected with it,
and

(b) the reasonable costs of making a public interest report relating to the
20authority or an entity connected with it.

(6) Sub-paragraph (5)(a) applies regardless of whether the report is in fact
made.

Written recommendations

2 (1) A local auditor of the accounts of a relevant authority may make a written
25recommendation to the authority relating to the authority or an entity
connected with it, so that the recommendation can be considered under this
Schedule.

(2) A recommendation may be made during or at the end of an audit.

(3) A recommendation must be sent at the time it is made—

(a) 30to the Secretary of State,

(b) where the recommendation relates to an entity connected with the
relevant authority, to that entity and to any other relevant authority
with which the entity is connected,

(c) where the relevant authority is itself a connected entity, to its related
35authority or authorities,

(d) where the relevant authority is a clinical commissioning group, to
the National Health Service Commissioning Board, and

(e) where the relevant authority is the London Pensions Fund
Authority, to the Greater London Authority.

(4) 40A local auditor may recover from a relevant authority—

(a) the reasonable costs of determining whether to make a
recommendation relating to the authority or an entity connected
with it, and

(b) the reasonable costs of making a recommendation relating to the
authority or an entity connected with it.

(5) Sub-paragraph (4)(a) applies regardless of whether the recommendation is
in fact made.

(6) 5In this Act “related authority”, in relation to a connected entity, means the
relevant authority with which the entity is connected.

Supply of public interest reports

3 (1) If a local auditor makes a public interest report arising out of the audit of the
accounts of a relevant authority, the auditor must send the report to—

(a) 10the authority, and

(b) where the report relates to an entity connected with the authority, to
that entity and to any other relevant authority with which the entity
is connected.

(2) If the relevant authority is a parish meeting, the report must instead be sent
15to its chairman.

(3) The local auditor must also send the report—

(a) to the Secretary of State,

(b) where the relevant authority is itself a connected entity, to its related
authority or authorities,

(c) 20where the relevant authority is a clinical commissioning group, to
the National Health Service Commissioning Board, and

(d) where the relevant authority is the London Pensions Fund
Authority, to the Greater London Authority.

(4) A report required to be sent under any of sub-paragraphs (1) to (3) must be
25sent as soon as is reasonably practicable after it is made.

(5) If a relevant authority to which a report is sent under this paragraph is a
health service body, it must take the report into consideration as soon as is
reasonably practicable after receiving it.

(6) If paragraph 5 applies to a relevant authority to which a report is sent under
30this paragraph, it must, if required by that paragraph to do so, take the
report into consideration in accordance with that paragraph.

(7) If a relevant authority to which a report is sent under this paragraph is the
Greater London Authority, it must, if required by that paragraph to do so,
take the report into consideration in accordance with paragraph 6.

35Publicity for public interest reports

4 (1) This paragraph applies to a relevant authority if a local auditor has made a
public interest report relating to the authority or an entity connected with it.

(2) As soon as is practicable after receiving the report, the relevant authority
must publish the report and a notice that—

(a) 40identifies the subject matter of the report, and

(b) unless the authority is a health service body, states that any member
of the public may inspect the report and make a copy of it or any part
of it between the times and at the place or places specified in the
notice.