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Local Audit and Accountability BillPage 50

5 For section 1214 (independence requirement) substitute—

1214 Independence 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)
5apply 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) 10P 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
15pursuant 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) 20to 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) 25This 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) 30In subsection (5) “prescribed” means prescribed by regulations made
by the Secretary of State.

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

6 In section 1215 (effect of lack of independence) omit subsections (2) to (7).

7 35In 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).

8 40In 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

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(b) have been members of the body at any time after the
commencement of Schedule 5 to the Local Audit and
Accountability Act 2013.

9 For section 1219 (appropriate qualifications) substitute—

1219 5Appropriate 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) 10the 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 2013.

(2) The Secretary of State may by regulations provide for a qualification
15to 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) 20it 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
25United 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
30subsection (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
35for 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
40recognition 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) 45make 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;

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(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) 5The 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
10qualification 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
15qualification 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
20recognition 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
25Commission 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
30or 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
35(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
40paragraph 9 of Schedule 5 to the Local Audit and Accountability Act
2013 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
45section.

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

(a) offered by a qualifying body, and

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(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.

10 5After section 1224 insert—

1224ZA Provision 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
10available 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) 15Those 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) 20Section 1225 (enforcement: general) applies with the following
modifications.

(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) 25In 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”.

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

13 30In 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.

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

(3) 35In 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
40register 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—

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(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
5of 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
10accordance 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) 15any 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
20section 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
25Session Act 1988 (c. 36)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
30Audit and Accountability Act 2013.

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

16 For section 1248 (Secretary of State’s power to require second audit of
company) substitute—

1248 35Secretary 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) 40The 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
45needed.

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

Local Audit and Accountability BillPage 55

(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) 5The 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
10recognised 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
15must 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
20audit of such accounts, must be appointed by the parish meeting
itself (and not by its chairman on behalf of the parish meeting).

17 For section 1249 (supplementary provision about second audits)
substitute—

1249 Supplementary provisions about second audits

(1) 25If 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.

30For this purpose “appropriate” is to be construed in accordance with
subsection (3) of that section.

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
35or 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.

(2) Omit subsection (3).

(3) 40In 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) 45in paragraph (a) omit “in England and Wales,”, and

(c) omit paragraph (b).

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

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

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

(3) In subsection (2)—

(a) 5at the end of paragraph (a) insert “and”, and

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

20 In 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
10the following modifications.

(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
15subsection (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
20the 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).

22 In section 1253(5) (delegation of functions to an existing body)—

(a) 25for “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.

(2) 30In 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) 35Section 1256 (time limits for prosecution of offences) applies with the
following modifications.

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

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

(4) For subsection (5) substitute—

(5) 40This section does not authorise the trial of an information laid more
than 3 years after the commission of the offence.

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(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
5the following modifications.

(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.

(2) 10In subsection (1) omit the following definitions—

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

(4) 20After subsection (1) insert—

(1A) Expressions used in this Part that are defined in the Local Audit and
Accountability Act 2013 have the same meaning as in that Act.

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

(2) 25Omit the following entries—

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(3) At the appropriate places insert—

enactment section 44(1) of the Local Audit
and Accountability Act 2013”;
“local audit paragraph 1(2) of Schedule 5 to
5the Local Audit and
Accountability Act 2013”;
“local auditor section 4(1)(b) of the Local
Audit and Accountability Act
2013”;
“local audit work 10paragraph 1(2) of Schedule 5 to
the Local Audit and
Accountability Act 2013”;
“officer, in relation to a relevant
authority
section 44(1) of the Local Audit
and Accountability Act 2013”;
“parish meeting 15section 44(1) of the Local Audit
and Accountability Act 2013”;
“recognised qualifying body section 1219(12)”;
“relevant authority section 2(1) of the Local Audit
and Accountability Act 2013.

(4) 20In 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”
25substitute—

recognised professional
qualification
section 1219(11).

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

(2) 30Omit 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) 35paragraphs 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);

Local Audit and Accountability BillPage 59

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

(3) In paragraph 6 (holding of appropriate qualifications), in each of sub-
paragraphs (2)(a)(i) and (2A), after “recognised professional qualifications”
5insert “(if there are any such qualifications)”.

(4) After paragraph 7 insert—

Auditors to have sufficient skill and experience

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

(a) 10in 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) 15Rules 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.

(5) 20For paragraph 10A substitute—

Technical standards for group audit

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
25conducted 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
30compliance 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
35body, 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
40legal person.

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