Local Audit and Accountability Bill (HL Bill 36)

Accounts and audit regulations

31 Accounts and audit regulations

(1) The Secretary of State may by regulations applying to relevant authorities
other than health service bodies make provision about—

(a) 5the form and contents of accounting records;

(b) the form, contents, preparation and approval of statements of accounts;

(c) the preservation of accounting records or statements of accounts;

(d) the publication of accounting records, statements of accounts or other
information;

(e) 10the exercise of any rights of objection or inspection conferred by section
24, 25 or 26 and the steps to be taken by any authority to enable those
rights to be exercised;

(f) the financial management of relevant authorities;

(g) the maintenance by relevant authorities of systems of internal control
15(including arrangements for the management of risk).

(2) Regulations under subsection (1)(b) may, in particular, make provision about
any information to be provided by way of notes to the accounts.

(3) Before making regulations under this section, the Secretary of State must
consult—

(a) 20the Comptroller and Auditor General,

(b) such representatives of relevant authorities as the Secretary of State
thinks appropriate, and

(c) the recognised supervisory bodies.

(4) Section 14(1)(a) of the Transport Act 1968 (accounts and other records of
25Passenger Transport Executives) is subject to regulations under this section.

Part 6 Data matching

32 Data matching

Schedule 9 (data matching) has effect.

30Part 7 Miscellaneous and supplementary

Miscellaneous

33 Best value inspections

Schedule 10 (best value inspections) has effect.

34 Examinations by the Comptroller and Auditor General

(1) After section 7 of the National Audit Act 1983 insert—

“7ZA Relevant authorities

(1) The Comptroller and Auditor General may carry out examinations into
5the economy, efficiency and effectiveness with which relevant
authorities have used their resources in discharging their functions.

(2) An examination under this section must relate to—

(a) all relevant authorities, or

(b) particular descriptions of relevant authorities.

(3) 10An examination under this section is to be carried out for the purposes
of—

(a) ensuring that the use of resources by a department to which
section 6 applies to fund relevant authorities represents an
economical, efficient and effective use of those resources, or

(b) 15providing evaluation, commentary and advice of a general
nature to all relevant authorities, or all relevant authorities of a
particular description, as to the economy, efficiency and
effectiveness with which they use their resources in discharging
their functions.

(4) 20An examination under this section may be combined with another
examination under this Part.

(5) This section does not entitle the Comptroller and Auditor General to
question—

(a) the merits of the policy objectives of any relevant authority in
25respect of which an examination is carried out, or

(b) the merits of government policy.

(6) Before carrying out an examination under this section, the Comptroller
and Auditor General must consult—

(a) such associations or representatives of relevant authorities as
30the Comptroller and Auditor General thinks appropriate, and

(b) such other persons or bodies as appear to the Comptroller and
Auditor General to be relevant to the examination proposed to
be carried out.

(7) Subsection (8) applies if the Comptroller and Auditor General—

(a) 35proposes to carry out an examination under this section, and

(b) considers that the work of the Auditor General for Wales is
relevant to the examination.

(8) Before carrying out the examination, the Comptroller and Auditor
General must—

(a) 40consult the Auditor General for Wales, and

(b) take into account any relevant work done or being done by the
Auditor General for Wales.

(9) In deciding whether to carry out an examination under this section, and
in carrying out such an examination, the Comptroller and Auditor
45General must have regard to any other relevant examination,
inspection or research (by whatever name) that the Comptroller and

Auditor General knows has been, is or is to be undertaken by other
persons.

(10) The Comptroller and Auditor General may publish the results of an
examination under this section in such manner as the Comptroller and
5Auditor General considers appropriate.

(11) In this Act “relevant authority” has the same meaning as in the Local
Audit and Accountability Act 2013 (see section 2(1)), except that—

(a) the Common Council of the City of London is a relevant
authority for the purposes of this Act only to the extent that it
10exercises functions to which that Act applies,

(b) a health service body within the meaning of that Act (see section
3(9)) is not a relevant authority for the purposes of this Act, and

(c) a chief constable within the meaning of that Act (see section
41(1)) or the Commissioner of Police of the Metropolis is not a
15relevant authority for the purposes of this Act.”

(2) Section 8 (rights to obtain documents and information) of that Act is amended
as follows.

(3) In subsection (1) (right to access documents etc for purposes of examination
under section 6 or 7), for “or 7” substitute “, 7 or 7ZA”.

(4) 20In subsection (2) (application of subsection (1) rights)—

(a) at the beginning insert “In the case of an examination under section 6 or
7,”,

(b) after “control of” insert “—(a)”, and

(c) at the end insert “, or

(b) 25where the examination relates in whole or in part to the
use of resources by the department, authority or body to
fund a relevant authority, that relevant authority.”

(5) After subsection (2) insert—

“(2A) In the case of an examination under section 7ZA, subsection (1) applies
30only to documents in the custody or under the control of—

(a) a relevant authority to which the examination relates, or

(b) where the examination is undertaken for a purpose within
section 7ZA(3)(a), a department to which section 6 applies and
which funds a relevant authority to which the examination
35relates.”

35 Disclosure of information

Schedule 11 (disclosure of information) has effect.

36 Social security references and reports

(1) A local auditor may refer to the Secretary of State any matter arising from an
40audit under this Act if it appears that the matter may be relevant for the
purposes of any of the functions of the Secretary of State relating to social
security.

(2) In section 139D(1) of the Social Security Administration Act 1992 (directions by
Secretary of State following reports on social security matters)—

(a) in paragraph (b), for “to an authority under section 10(1) of the Audit
Commission Act 1998 and to the Secretary of State under section 39 of
that Act” substitute “to the Secretary of State under section 36(1) of or
paragraph 3 of Schedule 7 to the Local Audit and Accountability Act
52013”, and

(b) in paragraph (d) omit “section 38(7) of the Audit Commission Act
1998,”.

(3) This section has effect until the coming into force of the repeal (by the Welfare
Reform Act 2012) of section 139D of the Social Security Administration Act
101992.

37 Duty of smaller authorities to publish information

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

(a) after subsection (1) insert—

“(1A) 15This 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
202013 (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
25a 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
30Ministers) 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.”

38 Code of practice on local authority publicity

(1) 35After section 4 of the Local Government Act 1986 insert—

“4A Power to direct compliance with code

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

(2) A direction may be given to—

(a) 40one or more specified local authorities in England,

(b) all local authorities in England of a specified description, or

(c) all local authorities in England.

(3) 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.

(4) A direction may—

(a) specify the steps that an authority to which it is given must take
5to comply with it;

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

(5) 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
10code to which it relates.

(6) Before giving a direction, the Secretary of State must—

(a) if it is to be given to one or more specified authorities, give the
authority or authorities notice in writing of the proposed
direction, or

(b) 15otherwise, take such steps as the Secretary of State thinks
necessary to bring the proposed direction to the attention of the
authorities to which it is to be given.

(7) The Secretary of State may not give a direction to an authority before
the end of the period of 14 days beginning with—

(a) 20the day on which notice under subsection (6) was given to it, or

(b) the latest day on which steps required by that subsection were
taken in relation to it.

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

(9) 25After giving a direction to all local authorities in England, or to all
authorities of a specified description, the Secretary of State must take
such steps as the Secretary of State thinks necessary to bring it to the
attention of those authorities.

(10) The Secretary of State may modify or withdraw a direction under this
30section—

(a) if was given to one or more specified authorities, by notice in
writing to that authority or those authorities, or

(b) otherwise, by taking such steps as the Secretary of State thinks
necessary to bring the modification or withdrawal to the
35attention of the authorities to which the direction was given.

(11) Subsections (6) to (8) 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) 40subsection (7) 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.

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

(2) 45In section 12(3) of that Act (extent), after “Part II” insert “, other than section
4A,”.

39 Council tax referendums

(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
5tax 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
10financial 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
15excessive 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
20subsection (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
25precept), 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
30precepting 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) 35In 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) 40In 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
5relevant 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) 10Section 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.

(15) The Secretary of State may determine categories of authority for that financial
15year 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.

(16) 20In 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
25for that year.

Supplementary

40 Orders and regulations

(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
30instrument.

(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) 35power 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
40each 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
45about 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) 5regulations 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(2) (power to amend Schedule 5),

(h) 10regulations under section 43 (power to make consequential provision)
which amend or repeal any provision of an Act,

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

(j) regulations under paragraph 5(1)(a) of that Schedule (power to amend
15etc local authority enactments in their application to auditor panels),

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

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

(5) 20Any 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 46 (commencement),

(b) 25an 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
30standing 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.

41 Interpretation of Act

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

• “accounts” is to be construed in accordance with section 4(4) to (6);

• 35“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
  40National 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 1996/263SI 1996/263), or

  (c)

  under Part 1 of the Local Government and Public Involvement
  45in Health Act 2007;

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

Local Audit and Accountability BillPage 28

• “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;

• 5“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;

• 10“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
  15expenses 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
  20Authority 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 27(7);

• “local auditor” has the meaning given by section 7(1) (and see subsection
  (7) of that section);

• 25“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 (5));

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

  (a)

  includes a member of the staff of the authority, but

  (b)

  30does not include a local auditor appointed to audit the
  authority’s accounts;

• “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
  35Schedule 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
  40have 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;

• 45“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 an entity connected with a relevant authority or to a
connected entity are to be construed in accordance with paragraph 8 of
Schedule 4.

(4) References in this Act to persons for whom a clinical commissioning group is
5responsible 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).

(5) 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
10government 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
1525 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.

(6) 20Any 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.

(7) Subsection (6) does not apply in relation to any function expressly conferred
on—

(a) 25the London Assembly, or

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

(8) 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
30statements 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
352013.

42 Related amendments

Schedule 12 (related amendments) has effect.

43 Power to make consequential provision

(1) The Secretary of State may by regulations make such consequential, incidental
40or 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.