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Local Audit and Accountability BillPage 10

(2) If it appears to the Board that a clinical commissioning group has failed to
appoint an auditor in accordance with this Part, the Board 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 accounts to be audited relate.

(3) 5If the Secretary of State has been informed by the Board under subsection (2),
the Secretary of State may—

(a) take either of the steps in subsection (4), or

(b) direct the Board to take whichever of the steps in subsection (4) the
Board considers appropriate.

(4) 10Those steps are—

(a) to direct the clinical commissioning group to appoint an auditor named
in the direction given under this paragraph, or

(b) to appoint an auditor on behalf of the group.

(5) An appointment under subsection (4)(b) takes effect—

(a) 15as if it had been made by the clinical commissioning group, and

(b) on such terms as the Secretary of State or (as the case may be) the Board
may direct.

(6) The Secretary of State or the Board must—

(a) inform the clinical commissioning group of the intention to give a
20direction or appoint an auditor under subsection (4) not less than 28
days before the direction is given or the appointment made, and

(b) consider any representations made by the group regarding the
proposed direction or appointment.

(7) But the Secretary of State or the Board may give a direction or make an
25appointment under subsection (4) without having complied with subsection
(6) if the Secretary of State or the Board thinks it is likely that an auditor would
have to exercise a function under this Act in relation to the clinical
commissioning group within the period of 60 days beginning with the day on
which the direction is given or the appointment is made.

14 30Limitation of local auditor’s liability

(1) This section applies in relation to an agreement (a “liability limitation
agreement”) that purports to limit the amount of a liability owed to a relevant
authority by its local auditor in respect of any negligence, default, breach of
duty or breach of trust occurring in the course of the audit of accounts, of which
35the auditor may be guilty in relation to the authority.

(2) A liability limitation agreement must comply with regulations made by the
Secretary of State.

(3) Regulations under subsection (2) may, in particular,—

(a) make provision about the duration of a liability limitation agreement;

(b) 40make provision as to the amount to which a local auditor’s liability may
be limited by a liability limitation agreement (which may be an amount
that is specified in, determined under or described in general terms in
the regulations).

(4) Regulations under subsection (2) may—

(a) 45require a liability limitation agreement to contain provisions, or
provisions of a description, specified in the regulations;

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(b) prohibit a liability limitation agreement from containing provisions, or
provisions of a description, specified in the regulations.

(5) Regulations under subsection (2) may provide—

(a) that a liability limitation agreement that does not comply with the
5regulations is void;

(b) that a liability limitation agreement is effective only to the extent that it
complies with the regulations;

(c) that, in the circumstances specified in the regulations, a provision of a
liability limitation agreement that does not comply with the regulations
10is to have effect as if it complied with the regulations.

(6) The Secretary of State may by regulations make provision requiring a relevant
authority that has entered into a liability limitation agreement to disclose such
information about the agreement as may be specified in the regulations in such
manner as may be so specified.

(7) 15A liability limitation agreement that complies with regulations under
subsection (2) is not subject to section 2(2) or 3(2)(a) of the Unfair Contract
Terms Act 1977.

15 Further provisions about liability limitation agreements

(1) Before entering into a liability limitation agreement, a relevant authority other
20than a chief constable or the Commissioner of Police of the Metropolis must
consult and take into account the advice of its auditor panel.

(2) Before entering into a liability limitation agreement, a chief constable for an
area must consult and take into account the advice of the auditor panel of the
police and crime commissioner for the area.

(3) 25Before entering into a liability limitation agreement, the Commissioner of
Police of the Metropolis must consult and take into account the advice of the
auditor panel of the Mayor’s Office for Policing and Crime.

(4) If a relevant authority is a local authority operating executive arrangements,
the function of deciding whether to enter into a liability limitation agreement
30is not the responsibility of an executive of the authority under those
arrangements.

(5) If a relevant authority is a local authority within the meaning of section 101 of
the Local Government Act 1972 (arrangements for discharge of functions), that
section does not apply to the authority’s function of deciding whether to enter
35into a liability limitation agreement.

(6) A decision to enter into a liability limitation agreement between a local auditor
and the Greater London Authority must be taken by the Mayor of London and
the London Assembly acting jointly on behalf of the Authority.

(7) A decision to enter into a liability limitation agreement between a local auditor
40and a parish meeting must be taken by the parish meeting itself (and not by its
chairman on behalf of the parish meeting).

16 Resignation and removal of local auditor

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

Local Audit and Accountability BillPage 12

(a) the resignation of a local auditor of the accounts of a relevant authority
from that office;

(b) the removal of a local auditor of the accounts of a relevant authority
from that office before the expiry of the term of that office.

(2) 5Regulations under subsection (1)(a) may, in particular, make provision
about—

(a) the steps that must be taken by a person who is a local auditor to resign
from that office;

(b) the time at which the resignation takes effect;

(c) 10the steps that must be taken in connection with the resignation by the
relevant authority;

(d) the role of the authority’s auditor panel or of a recognised supervisory
body in connection with the resignation;

(e) the steps that must be taken by the relevant authority after the
15resignation.

(3) Regulations under subsection (1)(b) may, in particular, make provision
about—

(a) the steps that must be taken to remove a local auditor from that office;

(b) the person or persons by whom those steps must be taken and the way
20in which they must be taken;

(c) the steps that may be taken by the local auditor in connection with the
local auditor’s removal from that office;

(d) the role of the relevant authority’s auditor panel or of a recognised
supervisory body in connection with the removal of the local auditor
25from that office;

(e) the steps that must be taken by the relevant authority after the removal
of the local auditor from that office.

(4) Regulations under subsection (1)(b) which make provision about the matter in
subsection (3)(b) may provide, in relation to a local auditor of the accounts of a
30health service body, that some or all of the steps may be taken by the Secretary
of State.

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

(a) make provision for the Secretary of State to appoint, or direct the
relevant authority to appoint, a replacement local auditor;

(b) 35make provision that permits or requires, or enables the Secretary of
State to permit or require, that appointment to have effect for a limited
period or limited purposes only.

(6) Regulations under subsection (1) which make provision as mentioned in
subsection (5)(a) may apply section 12(3), (4) or (5) with modifications to a
40direction given or appointment made by the Secretary of State under such
regulations.

(7) Regulations under subsection (1) that confer functions on a recognised
supervisory body may make provision about the supply to the body by a
relevant authority of documents or information relating to the resignation or
45removal of a local auditor.

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17 Appointment of auditor by specified person

(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
5relevant 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
10appointing 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) 15for 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) 20the 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) 25make 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
30opting 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,
35and

(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
40specified 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) 45Regulations 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.

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(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) 5for 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
10regulations 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).

15Part 4 Eligibility and regulation of local auditors

18 Eligibility and regulation of local auditors

(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
20of State considers it is appropriate to do so as a result of amendments made to
Part 42 of the Companies Act 2006.

Part 5 Conduct of local audit

Codes of practice and guidance

19 25Codes of audit practice and guidance

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

General powers and duties of auditors

20 General duties of auditors

(1) In auditing the accounts of a relevant authority other than a health service
30body, a local auditor must, by examination of the accounts and otherwise, be
satisfied—

(a) that the accounts comply with the requirements of the enactments that
apply to them,

(b) that proper practices have been observed in the preparation of the
35statement of accounts, and that the statement presents a true and fair
view, and

(c) that the authority has made proper arrangements for securing
economy, efficiency and effectiveness in its use of resources.

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(2) Subject as follows, when a local auditor has completed an audit of the accounts
of a relevant authority other than a health service body, the auditor must enter
on the statement of accounts—

(a) a certificate that the auditor has completed the audit in accordance with
5this Act, and

(b) the auditor’s opinion on the statement.

(3) If, for any part of the period for which a relevant authority is required to
prepare a statement of accounts, the authority is required to maintain a pension
fund under regulations under section 1 of the Public Service Pensions Act 2013
10as they relate to local government workers (within the meaning of that Act), the
authority’s local auditor must give a separate opinion on the part of the
statement that relates to the accounts of that pension fund.

(4) A local auditor may enter an opinion on the statement of accounts on that
statement before the audit is completed if—

(a) 15the audit has not been completed because an objection has been made
under section 27 and that objection has not been disposed of, and

(b) the auditor thinks that, if the objection were resolved in the objector’s
favour, this would not affect the accuracy of the statement of accounts.

(5) A local auditor must, in carrying out the auditor’s functions in relation to the
20accounts of a relevant authority, comply with the code of audit practice
applicable to the authority that is for the time being in force.

(6) A local auditor must, in carrying out functions under this Act, have regard to
guidance issued by the Comptroller and Auditor General under paragraph 9
of Schedule 6.

21 25General duties of auditors of accounts of health service bodies

(1) In auditing the accounts of a clinical commissioning group, a local auditor
must, by examination of the accounts and otherwise, be satisfied—

(a) that the accounts present a true and fair view, and comply with the
requirements of the enactments that apply to them,

(b) 30that proper practices have been observed in the preparation of the
accounts,

(c) that the group has made proper arrangements for securing economy,
efficiency and effectiveness in its use of resources,

(d) that money provided by Parliament has been expended for the
35purposes intended by Parliament,

(e) that resources authorised by Parliament to be used have been used for
the purposes in relation to which the use was authorised, and

(f) that the financial transactions of the group are in accordance with any
authority which is relevant to the transactions.

(2) 40In subsection (1)(e) use of resources means their expenditure, consumption or
reduction in value.

(3) In auditing the accounts of special trustees for a hospital, a local auditor must,
by examination of the accounts and otherwise, be satisfied—

(a) that the accounts present a true and fair view, and comply with the
45requirements of the enactments that apply to them,

(b) that proper practices have been observed in the preparation of the
accounts, and

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(c) that the special trustees have made proper arrangements for securing
economy, efficiency and effectiveness in their use of resources.

(4) When a local auditor has completed an audit of the accounts of a health service
body, the auditor must—

(a) 5enter on the accounts a certificate that the auditor has completed the
audit in accordance with this Act, and

(b) make a report in accordance with subsection (5).

(5) A report under subsection (4)(b)—

(a) must contain the auditor’s opinion on the accounts, including on the
10matters in subsection (1) or, as the case may be, subsection (3), but

(b) must not contain the auditor’s opinion on the matter in subsection (1)(c)
or (3)(c) if the auditor is satisfied as to that matter.

22 Auditors’ right to documents and information

(1) A local auditor has a right of access at all reasonable times to every document
15(an “audit document”) that—

(a) relates to a relevant authority or an entity connected with a relevant
authority, and

(b) the auditor thinks is necessary for the purposes of the auditor’s
functions under this Act.

(2) 20This includes power to inspect, copy or take away an audit document.

(3) A local auditor may—

(a) require a person holding or accountable for, or who has at any time
held or been accountable for, an audit document to provide such
information or explanation as the auditor thinks is necessary for the
25purposes of this Act, and

(b) if the auditor thinks it necessary, require the person to meet the auditor
to give the information or explanation or (if the person holds or is
accountable for the document) to produce the document.

(4) Where an audit document is in an electronic form, the power to require a
30person to produce the document includes power to require it to be produced
in a form in which it is legible and can be taken away.

(5) For the purpose of inspecting an audit document which is in an electronic form,
a local auditor—

(a) may have access to, and inspect and check the operation of, any
35computer and associated apparatus or material which the auditor
thinks is or has been used in connection with the document, and

(b) may require a person within subsection (6) to give the auditor the
reasonable assistance that the auditor needs for that purpose.

(6) A person is within this subsection who—

(a) 40is the person by whom or on whose behalf the computer is or has been
used, or

(b) is a person in charge of, or otherwise involved in operating, the
computer, apparatus or material.

(7) A local auditor may—

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(a) require any person to whom this subsection applies to provide such
information or explanation as the auditor thinks is necessary for the
purposes of this Act, and

(b) if the auditor thinks it necessary, require the person to meet the auditor
5to give the information or explanation.

(8) Subsection (7) applies to—

(a) a member or officer of a relevant authority,

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

(c) 10a person elected or appointed—

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

(ii) to such an entity, or

(iii) to an office of such an entity,

(d) an employee of such an entity,

(e) 15an auditor of the accounts of such an entity, or

(f) a person who fell within any of paragraphs (a) to (d) at a time to which
the information or explanation required by the local auditor relates.

(9) A local auditor of the accounts of a parish meeting may only exercise the
function in subsection (7), so far as it applies to a person who is or was a
20member or officer of a relevant authority, in relation to a person who is or was
the chairman of the parish meeting or the proper officer of the district council
within whose area the parish lies.

(10) A relevant authority or an entity connected with a relevant authority must
provide a local auditor with the facilities and information that the auditor
25reasonably requires for the purposes of the auditor’s functions under this Act.

(11) A statement made by a person in response to a requirement under this section
may not be used in evidence against that person in criminal proceedings other
than proceedings for an offence under section 23.

(12) Nothing in this section compels a person to disclose information in respect of
30which a claim to legal professional privilege could be maintained in legal
proceedings.

23 Offences relating to section 22

(1) A person is guilty of an offence if, without reasonable excuse, the person—

(a) obstructs the exercise of any power conferred by section 22, or

(b) 35fails to comply with any requirement of a local auditor under that
section.

(2)
A person guilty of an offence under subsection (1) is liable on summary
conviction—

(a) to a fine not exceeding level 3 on the standard scale, and

(b) 40to an additional fine of not more than £20 for each day on which the
offence continues after conviction for that offence.

(3) The reasonable expenses incurred by a local auditor in connection with
proceedings for an offence under subsection (1) alleged to have been
committed by a person within subsection (4) in relation to the audit of the
45accounts of a relevant authority are recoverable from that authority so far as
they are not recovered from any other source.

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(4) The persons within this subsection are—

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

(b) a person elected or appointed—

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

(ii) 5to such an entity, or

(iii) to an office of such an entity, and

(c) an employee of such an entity.

(5) Subsection (3) does not apply in relation to a parish meeting unless the offence
is alleged to have been committed by the chairman of the parish meeting or the
10proper officer of the district council within whose area the parish lies.

(6) In subsection (4)(a) the reference to a member of the relevant authority, in
relation to a corporation sole, is to the holder of that office.

Reports and recommendations

24 Reports and recommendations

15Schedule 7 (reports and recommendations) has effect.

Public inspection etc and action by auditor

25 Inspection of statements of accounts etc

(1) A relevant authority other than a health service body must ensure that a local
government elector for its area may inspect and make copies of—

(a) 20the statement of accounts prepared by the authority,

(b) the local auditor’s certificate that the audit of the authority’s accounts
including that statement has been completed,

(c) the local auditor’s opinion on the statement of accounts,

(d) any public interest report relating to the authority or an entity
25connected with it, and

(e) any recommendation relating to the authority or an entity connected
with it.

(2) A relevant authority other than a health service body must ensure that a local
government elector for its area may have copies of any document within
30subsection (1) supplied to the elector at the elector’s request on payment of a
reasonable sum for each copy.

(3) The relevant authority must ensure that a local government elector may
inspect a document within subsection (1) at all reasonable times and without
payment.

(4) 35This section applies in relation to a document only if the relevant authority has
prepared the document or it has been made available to the authority.

(5) References in this section to copies of a document include a reference to copies
of any part of it.

Local Audit and Accountability BillPage 19

26 Inspection of documents etc

(1) At each audit of accounts under this Act, other than an audit of accounts of a
health service body, any persons interested may—

(a) inspect the accounting records for the financial year to which the audit
5relates and all books, deeds, contracts, bills, vouchers, receipts and
other documents relating to those records, and

(b) make copies of all or any part of those records or documents.

(2) At the request of a local government elector for any area to which the accounts
relate, the local auditor must give the elector, or any representative of the
10elector, an opportunity to question the auditor about the accounting records.

(3) The local auditor’s reasonable costs of complying with subsection (2) are
recoverable from the relevant authority to which the accounts relate.

(4) This section does not entitle a person—

(a) to inspect or copy any part of any record or document containing
15information which is protected on the grounds of commercial
confidentiality, or

(b) to require any such information to be disclosed in answer to any
question.

(5) Information is protected on the grounds of commercial confidentiality if—

(a) 20its disclosure would prejudice commercial confidentiality, and

(b) there is no overriding public interest in favour of its disclosure.

(6) This section does not entitle a person—

(a) to inspect or copy any part of any record or document containing
personal information, or

(b) 25to require any personal information to be disclosed in answer to any
question.

(7) Information is personal information if it identifies a particular individual or
enables a particular individual to be identified (but see subsection (8)).

(8) Information is not personal information merely because it relates to a business
30carried on by an individual as a sole trader.

(9) Information is personal information if it is information about an officer of the
relevant authority which relates specifically to a particular individual and is
available to the authority because—

(a) the individual holds or has held an office or employment with that
35authority, or

(b) payments or other benefits in respect of an office or employment under
any other person are or have been made or provided to that individual
by that authority.

(10) For the purposes of subsection (9)

(a) 40“the relevant authority” means the relevant authority whose accounts
are being audited, and

(b) payments made or benefits provided to an individual in respect of an
office or employment include any payment made or benefit provided
in respect of the individual ceasing to hold the office or employment.

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