Local Audit and Accountability Bill (HL Bill 42)

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

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

(2) In subsection (6)—

(a) 5for the words from “the Audit Commission” (where it first occurs) to
“so appointed” substitute “the charity trustees of the parent charity
be 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) 10for “(4) to (6)” substitute “(3A), (5) and (6)”, and

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

117 In section 154(1) (regulations relating to audits and examinations) after
15paragraph (a) insert—

“(aa) specifying one or more bodies for the purposes of section
149(2)(c);”.

Repeals and revocations in consequence of this Schedule

118 In consequence of the amendments made by this Schedule, the following
20provisions are repealed or revoked—

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

(b) paragraphs 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
25Health Act 2007;

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

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

(f) 30section 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
2013.

Section 44

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

35Operation of this Schedule

1 (1) This Act has effect in accordance with this Schedule until the coming into
force 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—

(a) 40any 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
Schedule 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
52012).

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

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

(a) 10the 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
NHS 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
15constituted as an NHS trust.

(3) An order under this paragraph may—

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

(b) further modify this Act.

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

3 (1) 20The following are relevant authorities for the purposes of this Act—

(a) an NHS trust all or most of whose hospitals, establishments and
facilities 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) 25Accordingly, Schedule 2 is to be read as if it contained the following
paragraphs—

“24A An 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
30under paragraph 10 of Schedule 4 to the National Health Service
Act 2006 (trustees for NHS trusts established under section 25 of
that Act).”

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

“(c) 35an NHS trust all or most of whose hospitals, establishments
and facilities are situated in England;

(d) any 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) 40In relation to an NHS trust, or the trustees for an NHS trust,
“accounts” means the annual accounts prepared under paragraph 3
of Schedule 15 to the National Health Service Act 2006.”

(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
read as if it contained the following paragraphs—

“(d) in the case of an NHS trust, it publishes the notice in such
5manner 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) in the case of trustees for an NHS trust, they publish the
notice in such manner as they think is likely to bring the
10notice to the attention of persons to whom that NHS trust
provides services for the purposes of the health service in
England.”

Functions of auditor panel

7 Section 10(10) (publication of advice of auditor panel) is to be read as if it
15contained 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
attention of persons to whom the trust provides services for
the purposes of the health service in England;

(e) 20in 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
provides services for the purposes of the health service in
England.”

25Failure 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
3(1)(b).

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

9 (1) 30If 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
Development Authority (“the Authority”) of that fact.

(2) If it appears to the Authority that an NHS trust has, or the trustees for an
35NHS 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
accounts to be audited relate.

(3) If the Secretary of State has been informed by the Authority under sub-
40paragraph (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
(4) the Authority considers appropriate.

(4) Those steps are—

(a) 45to direct the trust or trustees to appoint an auditor named in the
direction given under this paragraph, or

(b) to appoint an auditor on behalf of the trust or trustees.

(5) An appointment under sub-paragraph (4)(b) takes effect—

(a) as if it had been made by the trust or trustees, and

(b) on such terms as the Secretary of State or (as the case may be) the
5Authority may direct.

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

(a) inform the trust or trustees of the intention to give a direction or
appoint an auditor under sub-paragraph (4) not less than 28 days
before the direction is given or the appointment made, and

(b) 10consider any representations made by the trust or trustees regarding
the proposed direction or appointment.

(7) But the Secretary of State or the Authority may give a direction or make an
appointment under sub-paragraph (4) without having complied with sub-
paragraph (6) if the Secretary of State or the Authority thinks it is likely that
15an auditor would have to exercise a function under this Act in relation to the
trust or trustees within the period of 60 days beginning with the day on
which the direction is given or the appointment is made.

(8) The National Health Service Trust Development Authority is the Special
Health Authority established under the National Health Service Trust
20Development Authority (Establishment and Constitution) Order 2012 (SI
2012/901)).

General duties of auditors

10 Section 20(3) (general duties of auditors of accounts of special trustees for a
hospital) is to be read as if—

(a) 25for “accounts of special trustees for a hospital” there were substituted
“accounts of a health service body other than a clinical
commissioning group”, and

(b) in paragraph (c)—

(i) for “the special trustees have” there were substituted “the
30body has”, and

(ii) for “their” there were substituted “its”.

Independence requirement: directors of NHS trusts

11 In Schedule 5, paragraph 5 (independence requirement: modification of
section 1214 of the Companies Act 2006) is to be read as if the substitution
35for section 1214 of the Companies Act 2006 provided (in addition to its
existing provision) that a director of an NHS trust may not act as a local
auditor of—

(a) that NHS trust, or

(b) the trustees for that NHS trust.

40Public interest reports and written recommendations

12 (1) Schedule 7 is to be read in accordance with the following sub-paragraphs.

(2) In paragraph 2(3) (persons to whom written recommendations must be sent)

after paragraph (c) insert—

“(ca) where the relevant authority is an NHS trust or the trustees
for an NHS trust, to the National Health Service Trust
Development Authority,”.

(3) 5In paragraph 3(3) (persons to whom public interest reports must be sent)
after paragraph (c) omit “and” and insert—

“(ca) where the relevant authority is an NHS trust or the trustees
for an NHS trust, to the National Health Service Trust
Development Authority, and”

(4) 10In paragraph 4(7) (means of publicising public interest reports and related
notices) after paragraph (c) insert—

“(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
15purposes of the health service in England;

(e) in 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
20England.”

(5) In the modifications made by this paragraph, “National Health Service Trust
Development Authority” is to be construed in accordance with paragraph
9(8).

Unlawful expenditure or activity

13 (1) 25Section 29(2) (referral of health service bodies to certain persons as regards
unlawful expenditure or activity) is to be read as if, at the end of paragraph
(b), there were inserted “, and

“(c) if the health service body is an NHS trust or the trustees for
an NHS trust, notify the National Health Service Trust
30Development Authority of the matter.”

(2) In the modification made by sub-paragraph (1), “National Health Service
Trust Development Authority” is to be construed in accordance with
paragraph 9(8).