House of Commons - Explanatory Note
Public Audit (Wales) [HL] Bill - continued          House of Commons

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Transitional provision

Clause 69: Local government bodies in Wales

138.     This clause makes provision for appointments of auditors made by the Audit Commission for local government bodies in Wales to continue for the whole of their term, despite the coming into force of those provisions of the Bill which, in effect, transfer the responsibility for appointing the auditors from the Audit Commission to the Auditor General. From the time that the relevant provisions of the Bill come into force, however, an auditor appointed by the Audit Commission to audit the accounts of a local government body in Wales will be regarded as having been appointed by the Auditor General, and his duties will be his duties under Part 2 of the Bill, not the duties he previously had under the ACA (subsection (2) of clause 69).

139.     Subsections (3) and (4) make similar provision in relation to persons assisting local government auditors under arrangements approved by the Audit Commission before the relevant provisions of the Bill come into force.

140.     Subsections (5) and (6) make transitional provision in relation to economy, efficiency and effectiveness studies or other studies which, at the time the relevant provisions of the Bill come into force, are in the course of being carried out by the Audit Commission, and which touch on a local government body in Wales. The Audit Commission is to be able to complete the study under the provisions of the ACA.

Clause 70: Welsh NHS bodies

141.     This clause makes provision equivalent to clause 69, but in respect of Welsh NHS bodies. The only exception to this is that clause 70 does not deal with persons assisting the auditors of Welsh NHS bodies. It is envisaged that the Auditor General will make new arrangements for any such persons, using his ancillary powers, as soon as the relevant provisions of the Bill come into force.

SCHEDULE 1: BEST VALUE AUDIT AND INSPECTIONS

142.     Generally, the Schedule amends relevant provisions of the Local Government Act 1999 (the 1999 Act) to make the Auditor General, or an auditor appointed by him (as applicable), responsible for best value audits and inspections in Wales.

143.     Paragraph 2 amends the 1999 Act to define best value authorities in Wales.

144.     Paragraph 3 amends the 1999 Act to give the Assembly power to provide for certain other bodies to be best value authorities in Wales or to modify the application of the 1999 Act in relation to specified bodies in Wales.

145.     Paragraph 4 amends the 1999 Act to make the Auditor General the "relevant audit authority" in respect of best value authorities in Wales for the purpose of specifying performance indicators and performance standards in relation to best value. The "relevant audit authority" for best value authorities in England remains the Audit Commission.

146.     Paragraph 5 amends the 1999 Act so as to apply relevant provisions in Part 2 of the Bill to the audit of Welsh best value authorities' performance plans - in particular, the appointed auditors' rights to documents and information etc. under clause 18 of the Bill.

147.     Paragraphs 6 and 7 amend the 1999 Act so as to make provision for the Auditor General to prepare and keep under review a code of practice prescribing the way in which auditors appointed by him are to carry out their best value audit functions in respect of Wales. Paragraph 7 also provides for him to prescribe a scale or scales of fees, subject to consultation, in respect of the audit of Welsh best value authority performance plans. The combined effect of paragraphs 6 and 7 is also to require an auditor to have regard to the requirements of the code when undertaking an audit of an improvement plan of a best value authority in Wales. Until the Auditor General issues a code under the new section 8A to be inserted into the 1999 Act by paragraph 7, auditors of such plans are to have regard to the Audit Commission's code issued under section 8 (see new section 8B(3) and (4) in paragraph 7).

148.     Paragraphs 8 and 9 amend the 1999 Act so as to make provision for the Auditor General to carry out an inspection of the compliance by a best value authority in Wales with the requirements of Part 1 of the 1999 Act. The Assembly has the power to direct such an inspection, under s. 10A (as inserted by this Bill), read with s. 29, of the 1999 Act, by virtue of which the references in section 10A to "the Secretary of State" are to be read as references to the Assembly.

149.     Paragraph 10 amends the 1999 Act so as to provide that references to an "inspector" in respect of a best value compliance inspection relating to a best value authority in Wales means the Auditor General for Wales, a member of his staff or a person providing services to him who is carrying out a best value compliance inspection under s. 10A of the 1999 Act (as inserted by this Bill).

150.     Paragraphs 11 and 12 amends the 1999 Act so as to enable the Auditor General to prescribe, subject to consultation, a scale or scales of fees for best value compliance inspections in relation to best value authorities in Wales. The duty to consult includes a duty to consult the Assembly, since, by virtue of s. 29 of the 1999 Act, the references in new s. 12A to "the Secretary of State" are to be read as references to the Assembly.

151.     Paragraph 13 amends the 1999 Act so as to require the Auditor General to issue a report in respect of a best value compliance inspection and sets out related requirements. By virtue of s. 29 of the 1999 Act, the references in new s. 13A to "the Secretary of State" are to be read as references to the Assembly.

152.     Paragraph 14 amends the 1999 Act so as to require the Assembly to consult the Auditor General before making regulations in respect of the keeping of accounts by best value authorities. (The words "the Secretary of State" in s. 23 of the 1999 Act effectively mean the Assembly in this context, by virtue of s. 29 of the same Act).

153.     Paragraph 15 amends the 1999 Act so as to require the Auditor General to have regard to any guidance issued by the Assembly in respect of securing the co-ordination of different kinds of inspection by the regulatory bodies listed in section 25 of the 1999 Act. (The words "the Secretary of State" in s. 25 of the 1999 Act effectively mean the Assembly in this context, by virtue of s. 29 of the 1999 Act).

154.     Paragraph 16 amends the 1999 Act so as to require the Assembly to consult the Auditor General before issuing any guidance on the carrying out of best value compliance inspections in Wales. (The words "the Secretary of State" effectively mean the Assembly in this context, by virtue of s. 29 of the 1999 Act).

155.     Paragraph 17 amends the 1999 Act so as to empower the Assembly to make grants to the Auditor General in respect of expenditure incurred or to be incurred by the Auditor General under Part 1 of the 1999 Act. Current practice is for the cost of best value audits and inspection to be funded 50 per cent through fees charged to best value authorities and 50 per cent through National Assembly grant to the Audit Commission.

SCHEDULE 2: MINOR AND CONSEQUENTIAL AMENDMENTS

156.     The Schedule makes minor and consequential amendments to existing legislation. The principal consequential amendments are as follows.

157.     Sections 33 and 34 of the ACA are amended so as to restrict the Audit Commission's power to undertake or promote economy, efficiency and effectiveness studies, statutory impact studies, and other studies relating to local government bodies in Wales. The Audit Commission will not be able to undertake or promote such a study unless it is being undertaken throughout England and Wales (see paragraphs 23(7) and 24(4) of Schedule 2). Thus the Audit Commission will be able to continue to undertake cross-border studies in relation to local government bodies. The Audit Commission will have to consult the Auditor General before undertaking such a study, and take into account any relevant work done or being done by him (see paras. 23(6) and 24(3)). The Commission will also have to co-operate with the Auditor General where appropriate for the efficient and effective discharge of its function of carrying out such studies (para. 34). The Auditor General is also under a duty to provide the Commission, on request, with information enabling it to make comparisons between English and Welsh bodies when it is carrying out such studies - see clause 57 and the notes on it. Authority to undertake economy, efficiency and effectiveness studies, statutory impact studies, and other similar studies solely in respect of local government bodies in Wales will pass to the Auditor General as a result of the Bill.

158.     Amendments are also made to the GOWA and the Health and Social Care (Community Health and Standards) Act 2003 imposing duties on the Assembly and the CHAI to consult and co-operate with the Auditor General, and take into account work done or being done by him, when exercising their functions in relation to Welsh NHS bodies (as defined in clause 60). These are complementary duties to those imposed on the Auditor General elsewhere in the Bill. A duty is also imposed on the Auditor General to provide the CHAI, on request, with information enabling it to make comparisons between English and Welsh NHS bodies when it is undertaking reviews or studies under sections 51, 52 or 57 of the Health and Social Care (Community Health and Standards) Act 2003.

SCHEDULE 3: TRANSFER SCHEMES

159.     This Schedule sets out provisions in relation to transfer schemes to be made by the Secretary of State, with the consent of the Assembly, for the transfer to the Auditor General of property, rights and liabilities of the Comptroller and Auditor General and of the Audit Commission. The schemes can cover the transfer of staff. Transfers of staff may be governed by the Transfer of Undertakings (Protection of Employment) Regulations 1981 (SI 1981/1794), as amended. If not, Schedule 3 ensures, in accordance with Government policy, that the transfers will comply with the principles underlying those Regulations, and that staff will be treated no less favourably than they would have been had the Regulations applied. This means, amongst other things, that staff transferring will retain continuity of employment and their terms and conditions of employment after the transfer will be no less favourable to them than those on which they were employed immediately before the transfer. Matters such as pension rights, which would not be covered by the Transfer of Undertakings (Protection of Employment) Regulations 1981 (as amended), even if those Regulations apply, will be dealt with in the transfer schemes.

PUBLIC SECTOR FINANCIAL COST AND MANPOWER EFFECTS

160.     There will be initial set up costs in respect of the Wales Audit Office that will be borne from funding provided by the Assembly. The set up costs will relate to the establishment of central administrative functions such as personnel, management services and finance, currently provided centrally by the National Audit Office and the Audit Commission. There are also initial costs relating to the compatibility of information and communication technology and project management. A detailed analysis conducted since introduction of the Bill has identified costs of £985,000, inclusive of VAT. Over the longer term there will be opportunities for offsetting cost savings through, for instance, rationalisation of accommodation needs and working practices.

161.     It is envisaged that the majority of annual budgetary costs will be met through fees and charges. Where overall estimated costs outweigh income, the balance will be met by the Assembly under existing arrangements provided for in the GOWA.

162.     The Assembly estimates that the manpower effects of the Bill will be marginal and will primarily relate to recruitment in respect of the central administrative functions referred to above. The Bill makes provision for statutory transfer schemes that will incorporate the transfer of existing staff employed by the Audit Commission and the National Audit Office to the Wales Audit Office.

SUMMARY OF THE REGULATORY IMPACT ASSESSMENT

163.     The Bill brings the existing functions of the Auditor General and the Audit Commission in respect of public bodies together under the Auditor General in the "Wales Audit Office". It will not extend the audit remit of the Wales Audit Office into the private sector. The compliance costs of the Bill proposals will be borne by the National Assembly. The Assembly considers that the Bill proposals will not result in any additional budgetary costs for the Assembly or other public bodies. The Bill largely maintains the status quo in respect of public audit charging arrangements. The set up and budgetary costs of the new body are dealt with in the above section.

164.     A full copy of the Regulatory Impact Assessment that accompanies the Public Audit (Wales) Bill and includes a more detailed analysis of the cost and benefits of the Bill is available on http:www.walesoffice.gov.uk

EUROPEAN CONVENTION ON HUMAN RIGHTS

165.     Section 19 of the Human Rights Act 1998 requires the Minister in charge of a Bill in either House of Parliament to make a statement, before second reading, about the compatibility of the provisions of the Bill with the Convention rights, as defined by section 1 of that Act. Mr Secretary of State Hain has made the following statement under section 19(1)(a) of that Act: "In my view the provisions of the Public Audit (Wales) Bill are compatible with the Convention rights".

COMMENCEMENT

166.     The provisions of the Bill when enacted will be brought into effect on one or more dates appointed by the Assembly.

GLOSSARY OF TERMS

167.     In these Explanatory Notes, the terms set out in the left-hand column of the table below have the meanings attributed to them in the right-hand column of the table.

     ACA     =     Audit Commission Act 1998
     appointed auditor     =     depending on the context, either auditors appointed in respect of local government bodies by the Audit Commission under the ACA, or auditors appointed by the Auditor General under this Bill in respect of local government bodies in Wales.
     Assembly     =     National Assembly for Wales
     Audit Commission     =     the Audit Commission for Local Authorities and the National Health Service in England and Wales
     Auditor General     =     Auditor General for Wales
     best value authorities in Wales     =     as defined in paragraph 2 of Schedule 1 to the Bill
     CHAI     =     the Commission for Healthcare Audit and Inspection
     GOWA     =     Government of Wales Act 1998
     local authority in Wales     =     as defined in clause 59(5) of the Bill
     local government body in Wales     =     as defined in clause 12 of the Bill
     performance audit     =     a study into the economy, efficiency and effectiveness, and/or quality, with which a body has performed/is performing its functions or any of them.
     value for money     =     economy, efficiency and effectiveness
     Wales Audit Office ("y Swyddfa Archwilio Cymru" in Welsh)     =     the Auditor General and his staff
     Welsh NHS body     =     as defined in clause 60 of the Bill
 
 
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Prepared: 13 May 2004