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Local Audit and Accountability Act 2014

Type Public General Act

Publication 2014-01-30

Last updated 2026-03-26

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

“officer”, in relation to a relevant authority—includes a member of the staff of the authority, butdoes not include a local auditor appointed to audit the authority's accounts;

“parish meeting” means a parish meeting of a parish which does not have a separate parish council;

“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 Schedule 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 have 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;

“relevant authority” has the meaning given by section 2(1);

“sub-national transport body” means a sub-national transport body established under section 102E of the Local Transport Act 2008.

(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 provision made under it include provision made under Part 42 of the Companies Act 2006 as it has effect by virtue of Schedule 5.

(4) 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.

(5) References in this Act to the group of people for whom an integrated care board has core responsibility are to be read in accordance with section 14Z31 of the National Health Service Act 2006.

(6) 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 government 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 25 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.

(7) Any 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.

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

(a) the London Assembly, or

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

(9) Any function conferred or imposed on a parish meeting under or by virtue of this Act, other than a function expressly conferred on the parish meeting itself, is exercisable by the chairman of the parish meeting acting on behalf of the authority.

(10) 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 statements 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 2013.

45

Schedule 12 (related amendments) has effect.

Power to make consequential provision

46

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

Application to NHS trusts and trustees for NHS trusts

47

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Extent

48

(1) This Act extends to England and Wales only, subject as follows.

(2) An amendment, repeal or revocation made by this Act, other than one mentioned in subsection (3), has the same extent as the relevant part of the Act or instrument amended, repealed or revoked.

(3) Subsection (2) does not apply to the amendment made by section 39(1) (power to require compliance with local authority publicity code), which extends to England and Wales only.

(4) The following provisions of this Act extend to England and Wales, Scotland and Northern Ireland—

(a) section 43 (orders and regulations) so far as it applies to regulations under section 46 or an order under section 49;

(b) section 45 (related amendments) so far as it applies to amendments, repeals and revocations within subsection (2) of this section;

(d) this section;

(e) section 49 (commencement);

(f) section 50 (short title).

Commencement

49

(1) The provisions of this Act come into force on such day as the Secretary of State may by order appoint, subject to subsections (2) to (4).

(2) Sections 39 and 40 come into force at the end of the period of 2 months beginning with the day on which this Act is passed.

(3) If this Act is passed before 5 February 2014, section 41 comes into force on the day on which this Act is passed; otherwise that section comes into force on such day as the Secretary of State may by order appoint.

(4) The following provisions come into force on the day on which this Act is passed—

(a) section 43;

(b) section 44;

(d) section 48;

(e) this section;

(f) section 50.

(5) An order under this section may—

(a) appoint different days for different purposes or different areas;

(b) make transitional, transitory or saving provision.

(6) Provision under subsection (5)(b) may, in particular, enable a function of the Audit Commission under—

(a) a provision that is amended or repealed by this Act, or

(b) any of sections 139A to 139C of the Social Security Administration Act 1992,

to be exercised by a person or body, or by the persons or bodies, specified in the order for a period specified in or determined under the order.

(7) Where provision under subsection (5)(b) made by virtue of subsection (6) enables a function to be exercised by a Minister of the Crown, an order under this section may enable the Minister to delegate the exercise of that function to another person or body or other persons or bodies.

(8) An order under this section which makes provision under subsection (5)(b) by virtue of subsection (6) or (7) may in particular provide for references in an enactment to the Audit Commission to be read as references to the person or body or persons or bodies by whom the function may be exercised.

(9) Provision under subsection (5)(b) may, in particular, provide for the first local auditor appointed by a relevant authority under subsection (1) of section 7 to be appointed on a date later than that specified in that subsection.

(10) In this section “the Audit Commission” means the Audit Commission for Local Authorities and the National Health Service in England.

Short title

50

This Act may be cited as the Local Audit and Accountability Act 2014.

SCHEDULE 1

Part 1 — Arrangements in connection with abolition of Audit Commission

Transfer of property, rights and liabilities

1

(1) The Secretary of State may make one or more schemes for the transfer of property, rights and liabilities of the Audit Commission to a person or persons specified in the scheme.

(2) The things that may be transferred under a transfer scheme include—

(a) property, rights and liabilities that could not otherwise be transferred;

(b) property acquired, and rights and liabilities arising, after the making of the scheme.

(3) A transfer scheme may make consequential, supplementary, incidental or transitional provision and may in particular—

(a) create rights, or impose liabilities, in relation to property or rights transferred;

(b) make provision about the continuing effect of things done by the transferor in respect of anything transferred;

(c) make provision about the continuation of things (including legal proceedings) in the process of being done by, on behalf of or in relation to the transferor, in respect of anything transferred;

(d) make provision for references to the transferor in an instrument or other document in respect of anything transferred to be treated as references to the transferee;

(e) make provision for the shared ownership or use of property;

(f) if the TUPE regulations do not apply in relation to the transfer, make provision which is the same or similar.

(4) A transfer scheme may, in such cases as may be specified in the scheme, provide for a person's period of employment before the person was employed by the Audit Commission (as well as the person's period of employment by the Audit Commission) to be treated as a period of employment with the transferee for the purposes of the scheme or, if they apply in relation to the transfer, the TUPE regulations.

(5) A transfer scheme may provide—

(a) for modification by agreement;

(b) for modifications to have effect from the date when the original scheme came into effect.

(6) In this paragraph—

(a) “TUPE regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246), and

(b) references to rights and liabilities include rights and liabilities under a contract of employment.

Reduction in membership pending abolition

2

Until the coming into force of section 1, in section 1(2) of the Audit Commission Act 1998 (Audit Commission to consist of not less than 10 nor more than 15 members) there is omitted the words “less than 10 nor”.

Final accounts

3

(1) As soon as is reasonably practicable after the abolition date, the Secretary of State must prepare—

(a) a statement of account for the Audit Commission for the last financial year to end before the abolition date, and

(b) a statement of account for the Audit Commission for the period (if any) beginning immediately after the end of that financial year and ending immediately before the abolition date.

(2) A statement of account under this paragraph must be prepared in accordance with the last direction given by the Secretary of State to the Audit Commission under paragraph 11(1) of Schedule 1 to the Audit Commission Act 1998.

(3) The Secretary of State must, as soon as is reasonably practicable after preparing a statement of account under this paragraph, send a copy of it to the Comptroller and Auditor General.

(4) The Comptroller and Auditor General must—

(a) examine, certify and report on the statement of account, and

(b) make arrangements for a copy of the statement and the report to be laid before Parliament.

(5) Sub-paragraph (1)(a) does not apply if the Audit Commission has already sent a copy of the statement of account for that year to the Comptroller and Auditor General.

(6) In that case, the repeal by this Act of paragraph 11 of Schedule 1 to the Audit Commission Act 1998 does not remove the obligation of the Comptroller and Auditor General to take the steps specified in that paragraph in relation to the statement of account if the Comptroller has not already done so.

(7) In this paragraph “financial year” means the period of 12 months ending with 31st March in any year.

Final annual report

4

(1) As soon as is reasonably practicable after the abolition date, the Secretary of State must publish a report on the discharge of the functions of the Audit Commission.

(2) The report must relate to the period—

(a) beginning immediately after the period covered by the last annual report published by the Audit Commission, and

(b) ending immediately before the abolition date.

(3) The Secretary of State must lay an annual report published under this paragraph before Parliament.

(4) The repeal by this Act of paragraph 14(2) of Schedule 1 to the Audit Commission Act 1998 does not remove the obligation of the Secretary of State to lay copies of an annual report received from the Audit Commission before each House of Parliament if the Secretary of State has not already done so.

Payments in respect of pension liabilities

5

The Secretary of State may make payments to any person to enable that person to meet—

(a) liabilities arising as the result of provision made under paragraph 5(2) of Schedule 1 to the Audit Commission Act 1998 for the payment of sums by way of pension, allowances or gratuities, or

(b) liabilities under the pension scheme established under paragraph 7(4)(c) of that Schedule.

Meaning of “the abolition date”

6

In this Schedule “the abolition date” means the date on which section 1(1) (abolition of Audit Commission) comes into force.

Part 2 — Repeal of Audit Commission Act 1998: consequential repeals and revocations

SCHEDULE 2

1

A county council in England.

2

A district council.

3

A London borough council.

4

A parish council.

5

A joint authority established under Part 4 of the Local Government Act 1985.

6

A Passenger Transport Executive.

7

The Greater London Authority.

8

A functional body.

9

The London Pensions Fund Authority.

10

The London Waste and Recycling Board.

11

The Common Council.

12

A parish meeting.

13

The Council of the Isles of Scilly.

14

Charter trustees.

15

A port health authority for a port health district that is wholly in England.

16

The Broads Authority.

17

A National Park authority for a National Park in England.

18

A conservation board established by order of the Secretary of State under section 86 of the Countryside and Rights of Way Act 2000.

19

A police and crime commissioner for a police area in England.

20

A chief constable for an area in England.

21

The Commissioner of Police of the Metropolis.

22

A fire and rescue authority in England constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 or a scheme to which section 4 of that Act applies.

23

An integrated care board.

24

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26

An internal drainage board for an internal drainage district that is wholly in England.

27

An economic prosperity board established under section 88 of the Local Democracy, Economic Development and Construction Act 2009.

28

A combined authority.

29

Any person or body exercising functions in relation to an area wholly in England or partly in England and partly in Wales—

(a) which was originally subject to audit provisions contained in an enactment passed before the Audit Commission Act 1998, and

(b) to which the audit provisions of that Act applied by virtue of paragraph 4(1) or 7 of Schedule 4 to that Act immediately before the repeal of section 2(1) of that Act by this Act.

SCHEDULE 3

Provisions applying to certain local authorities

1

(1) If a relevant authority is a local authority operating executive arrangements, the function of appointing a local auditor to audit its accounts is not the responsibility of an executive of the authority under those arrangements.

(2) 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 appointing a local auditor to audit its accounts.

(3) A local auditor appointed to audit the accounts of the Greater London Authority must be appointed by the Mayor of London and the London Assembly acting jointly on behalf of the Authority.

(4) A local auditor appointed to audit the accounts of a parish meeting must be appointed by the parish meeting itself (and not by its chairman on behalf of the parish meeting).

Provisions applying to chief constables

2

(1) This paragraph applies to the accounts for a financial year of a chief constable for an area.

(2) The chief constable must not appoint a local auditor to audit the accounts.

(3) The accounts must be audited by the local auditor appointed by the police and crime commissioner for the area to audit the commissioner's accounts for the financial year.

(4) The police and crime commissioner must consult and take into account the advice of the commissioner's auditor panel on the selection and appointment of the local auditor.

Provisions applying to the Commissioner of Police of the Metropolis

3

(1) This paragraph applies to the accounts for a financial year of the Commissioner of Police of the Metropolis.

(2) The Commissioner of Police of the Metropolis must not appoint a local auditor to audit the accounts.

(3) The accounts must be audited by the local auditor appointed by the Mayor's Office for Policing and Crime to audit the Office's accounts for the financial year.

(4) The Mayor's Office for Policing and Crime must consult and take into account the advice of the Office's auditor panel on the selection and appointment of the auditor.

Provisions applying to other authorities

4

(1) The Secretary of State may by regulations make provision about the appointment of a local auditor to audit the accounts of a relevant authority—

(a) which is not an authority to which any of paragraphs 1 to 3 applies, and

(b) which is specified, or of a description specified, in the regulations.

(2) Regulations under sub-paragraph (1) may, in particular—

(a) make further provision about the operation of this Act or any provision made under it in relation to a relevant authority to which the regulations apply;

(b) provide for any provision of or made under this Act not to apply, or to apply with modifications, in relation to a relevant authority to which the regulations apply.

SCHEDULE 4

Options for auditor panels

1

(1) The auditor panel of a relevant authority (“R”) must be—

(a) a panel appointed as an auditor panel by R,

(b) a panel appointed as an auditor panel by R and one or more other relevant authorities,

(d) a panel to which sub-paragraph (3) applies.

(2) This sub-paragraph applies to a committee of R (however described) which has not been appointed as an auditor panel if—

(a) R determines that the committee should be R's auditor panel,

(b) the committee agrees to be R's auditor panel, and

(3) This sub-paragraph applies to a panel if—

(a) the panel is (by virtue of any of paragraphs (a) to (c) of sub-paragraph (1)) the auditor panel of a relevant authority other than R,

(b) R determines that the panel should be R's auditor panel,

(d) the panel complies (as regards R) with the other provisions applying to auditor panels made by or under this Schedule.

(4) References in sub-paragraphs (1) and (2) to a committee of R include a sub-committee of a committee of R.

(5) The function of appointing a panel or making a determination under this paragraph is to be exercised in the case of the Greater London Authority by the Mayor of London and the London Assembly acting jointly on behalf of the Authority.

(6) The function of appointing a panel or making a determination under this paragraph is to be exercised in the case of a parish meeting by the parish meeting itself (and not by its chairman on behalf of the parish meeting).

Constitution of auditor panels

2

(1) A relevant authority's auditor panel, other than a health service body's auditor panel—

(a) must consist of a majority of independent members (or wholly of independent members), and

(b) must be chaired by an independent member.

(2) A member of a relevant authority’s auditor panel, other than a health service body’s auditor panel, is “independent” at any given time if the following conditions are met—

(a) the panel member has not been a member or officer of the authority within the period of 5 years ending with that time (the “last 5 years”),

(b) the panel member has not, within the last 5 years, been a member or officer of another relevant authority that is (at the given time) connected with the authority or with which (at the given time) the authority is connected,

(c) the panel member has not, within the last 5 years, been an officer or employee of an entity, other than a relevant authority, that is (at the given time) connected with the authority,

(d) the panel member is not a relative or close friend of—

(i) a member or officer of the authority,

(ii) a member or officer of another relevant authority that is connected with the authority or with which the authority is connected, or

(iii) an officer or employee of an entity, other than a relevant authority, that is connected with the authority,

(e) the panel member is not the authority’s elected mayor,

(f) neither the panel member, nor any body in which the panel member has a beneficial interest, has entered into a contract with the authority—

(i) under which goods or services are to be provided or works are to be executed, and

(ii) which has not been fully discharged,

(g) the panel member is not a current or prospective auditor of the authority, and

(h) the panel member has not, within the last 5 years, been—

(i) an employee of a person who is (at the given time) a current or prospective auditor of the authority,

(ii) a partner in a firm that is (at the given time) a current or prospective auditor of the authority, or

(iii) a director of a body corporate that is (at the given time) a current or prospective auditor of the authority.

(4) Sub-paragraphs (5) to (6D) modify the application of sub-paragraph (2) in relation to—

(a) cases where the relevant authority referred to in the opening words of sub-paragraph (2) (the “relevant authority concerned”) is a police and crime commissioner, the Mayor’s Office for Policing and Crime, another functional body or the Greater London Authority, and

(b) relevant authorities that are corporations sole (including, but not limited to, corporations sole mentioned in paragraph (a)).

(5) Where the relevant authority concerned is the police and crime commissioner for an area, references to “the authority” include the chief constable for the area.

(6) Where the relevant authority concerned is the Mayor’s Office for Policing and Crime, references to “the authority” include the Commissioner of Police of the Metropolis and the Greater London Authority.

(6A) Where the relevant authority concerned is a functional body other than the Mayor’s Office for Policing and Crime, references to “the authority” include the Greater London Authority.

(6B) Where the relevant authority concerned is the Greater London Authority, references to “the authority” include a functional body and the Commissioner of Police of the Metropolis.

(6C) Where a relevant authority is a corporation sole, references to “a member” of the relevant authority are to a holder of that office of corporation sole.

(6D) Sub-paragraph (6C) applies regardless of whether the relevant authority is—

(a) the relevant authority concerned,

(b) a relevant authority treated under any of sub-paragraphs (5) to (6B) as included in a reference to the relevant authority concerned, or

(c) a relevant authority that is connected with an authority falling within paragraph (a) or (b), or with which such an authority is connected.

(7) In sub-paragraph (2)—

“elected mayor” has the same meaning as in Part 1A of the Local Government Act 2000;

“officer”, in relation to an entity other than a relevant authority, means a person elected or appointed as, or to, that entity.

(8) For the purposes of sub-paragraph (2)(d), a person (“R”) is a relative of another person (“P”) if R is—

(a) P's partner,

(b) P's parent or grandparent,

(d) P's brother or sister,

(e) P's uncle, aunt, nephew or niece,

(f) a parent, son, daughter, brother or sister of P's partner, or

(g) a partner of any person within paragraphs (b) to (f),

and for this purpose “partner” means a spouse, civil partner or someone a person lives with as if they were husband and wife or civil partners.

(8A) For the purposes of sub-paragraph (2)(f) to (h)—

“body in which the panel member has a beneficial interest” means a body in which the panel member is a partner, or of which the panel member is a director, or in the securities of which the panel member has a beneficial interest;

“current or prospective auditor”, in relation to a relevant authority, means—the person appointed to act as the authority’s local auditor, ora person who has made a bid, which has not been declined or withdrawn, for a contract of appointment as the authority’s local auditor;

“director” includes a member of the management committee or other directing body of a registered society, and a member of a limited liability partnership;

“registered society” means a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014;

“securities” means shares, debentures, debenture stock, loan stock, bonds, units of a collective investment scheme within the meaning of the Financial Services and Markets Act 2000 and other securities of any description, other than money deposited with a building society.

(9) The Secretary of State may by regulations amend this paragraph so as to make provision about the members of a relevant authority's auditor panel who are or are not independent for the purposes of sub-paragraph (1).

Constitution of auditor panels: health service bodies

3

The Secretary of State may by regulations make provision about—

(a) whether any of the members of a health service body's auditor panel must be independent and, if so, the proportion which must be independent;

(b) whether the chair of a health service body's auditor panel must be independent;

Power to make further provision about constitution of auditor panels

4

(1) The Secretary of State may by regulations make provision about the constitution of an auditor panel.

(2) This includes further provision about the matters mentioned in paragraph 2(1) and provision about—

(a) the number of members of an auditor panel;

(b) the appointment of members of an auditor panel (including to fill casual vacancies);

(d) the removal or resignation of members of an auditor panel, or of its chair;

(e) the payment of remuneration or allowances to members of an auditor panel;

(f) the proceedings and validity of proceedings of an auditor panel.

(3) The regulations may provide for any of those matters to be determined for a relevant authority's auditor panel by the authority.

Application of local authority enactments to auditor panels

5

(1) The Secretary of State may by regulations—

(a) amend or otherwise modify any local authority enactment in its application to auditor panels or members of auditor panels;

(b) apply any local authority enactment (with or without modifications) to auditor panels or members of auditor panels if, or to the extent that, it does not otherwise apply.

(2) In this paragraph—

“local authority” means a county council, a district council, a London borough council, the Common Council or the Council of the Isles of Scilly;

“local authority enactment” means an enactment which relates to—local authorities or committees or joint committees of local authorities, ormembers of such authorities, committees or joint committees.

Status of auditor panels

6

(1) Where a relevant authority other than a health service body has determined that a committee of that authority should be its auditor panel, the panel when acting as such is not to be treated as a committee of the authority for the purposes of any enactment.

(2) Sub-paragraph (1) is subject to provision made by regulations under paragraph 5.

(3) References in this paragraph to a committee of a relevant authority include a sub-committee of such a committee.

Expenses of auditor panels

7

A relevant authority must meet the reasonable expenses of its auditor panel incurred by the panel when acting as such.

Meaning of “connected entity”

8

(1) For the purposes of this Act, an entity (“E”) is connected with a relevant authority at any time if E is an entity other than the relevant authority and the relevant authority considers that, in accordance with proper practices in force at that time—

(a) the financial transactions, reserves, assets and liabilities of E are to be consolidated into the relevant authority's statement of accounts for the financial year in which that time falls,

(b) the relevant authority's share of the financial transactions, reserves, assets and liabilities of E is to be consolidated into the relevant authority's statement of accounts for that financial year, or

(c) the relevant authority's share of the net assets or net liabilities of E, and of the profit or loss of E, are to be brought into the relevant authority's statement of accounts for that financial year.

(2) In sub-paragraph (1) “entity” means any entity, whether or not a legal person.

(3) The Secretary of State may by regulations amend sub-paragraph (1) or (2).

(4) In sub-paragraph (1) as it applies in relation to a health service body, the reference to the relevant authority's statement of accounts is to be read as a reference to the body's accounts.

SCHEDULE 5

1

(1) Part 42 of the Companies Act 2006 (statutory auditors) applies in relation to local audits as it applies in relation to statutory audits within the meaning of that Part, subject to—

(a) the general modifications to that Part in paragraph 2, and

(b) the specific modifications to that Part in the rest of this Schedule.

(2) For the purposes of this Schedule—

a “local audit” means an audit under this Act of the accounts of a relevant authority;

“local audit work” means work in connection with such audits.

(3) The reference in sub-paragraph (1) to Part 42 of the Companies Act 2006—

(a) includes sections 1288, 1289, 1290 and 1292 of that Act (regulations and orders) as they apply in relation to that Part;

(b) does not include the amendments made to that Part by the Statutory Auditors and Third Country Auditors Regulations 2016 and the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019.

2

(1) The general modifications are that—

(a) references to a statutory auditor are to a local auditor,

(b) references to an audited person are to a relevant authority,

(d) references to statutory audit work are to local audit work, and

(e) references (however expressed) to Part 42 of the Companies Act 2006 or any provision of that Part are to that Part or provision as it has effect by virtue of this Schedule.

(2) Sub-paragraph (1) does not apply to a provision that—

(a) is treated as forming part of Part 42 of the Companies Act 2006 by virtue of any of the following provisions of this Schedule, and

(b) provides for an expression listed in sub-paragraph (1) to have the meaning it would have under that Part apart from its application by virtue of this Schedule.

3

Omit the following provisions—

(a) Chapter 1 (introductory);

(b) sections 1220 (qualifying bodies and recognised professional qualifications), 1221 (approval of third country qualifications) and 1222 (eligibility of individuals retaining only 1967 Act authorisation);

(d) sections 1224A (restrictions on disclosure) and 1224B (offence of disclosure in contravention of section 1224A);

(e) Chapter 3 (Auditors General);

(f) Chapter 5 (registered third country auditors);

(g) sections 1253A to 1253F (co-operation with foreign competent authorities);

(h) section 1264 (consequential amendments);

(i) Schedule 11 (recognised professional qualifications);

(j) Schedule 11A (specified persons, descriptions, disclosures etc for purposes of section 1224A);

(k) Schedule 12 (arrangements in which registered third country auditors are required to participate);

(l) Schedule 14 (statutory auditors: consequential amendments).

4

In section 1212 (individuals and firms: eligibility for appointment as a statutory auditor) omit subsection (2).

5

For section 1214 (independence requirement) substitute—

(1214) (1) A person (“P”) may not act as local auditor of the accounts of a relevant authority if one or more of subsections (2), ... (3A), (4) and (5) apply 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) 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. (3) In relation to a relevant authority that is an integrated care board, subsection (2)(a) has effect as if “or officer” were omitted. (3A) This subsection applies if— (a) the relevant authority is an NHS trust, and (b) P is a director of that NHS trust. (4) This subsection applies if— (a) P is a person elected or appointed— (i) as an entity connected with the relevant authority, (ii) to 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) This 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) In 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

In 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

In 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 (b) have been members of the body at any time after the commencement of Schedule 5 to the Local Audit and Accountability Act 2014.

9

For section 1219 (appropriate qualifications) substitute—

(1219) (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) the 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 2014. (2) The Secretary of State may by regulations provide for a qualification to 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) it 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 United 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 subsection (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 for 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 recognition 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) make 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; (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) The 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 qualification 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 qualification 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 recognition 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 Commission 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 or 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 (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 paragraph 9 of Schedule 5 to the Local Audit and Accountability Act 2014 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 section. (12) In this Part “recognised professional qualification” means a professional qualification that is— (a) offered by a qualifying body, and (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

After section 1224 insert—

(1224ZA) (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 available 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) Those 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) Section 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) In 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

In 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) In 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 register 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— (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 of 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 accordance 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) any 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 section 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 Session Act 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 Audit and Accountability Act 2014.

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) (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) The 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 needed. (3) For the purposes of subsections (1) and (2) a person is “appropriate” if the person— (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) The 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 recognised 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 must 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 audit 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) (1) If 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. 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 or 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) In 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) in paragraph (a) omit “in England and Wales,”, and

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

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) at 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 the 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 subsection (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 the 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) for “to 22B” substitute “ , 22 ”,

(b) omit “, 23A(1)”, and

23

(1) Section 1254 (directions to comply with international obligations) applies with the following modifications.

(2) In subsection (1)(a)—

(a) omit “, the Independent Supervisor” , and

(b) for “EU obligations” substitute assimilated obligations”.

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

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

“audit working papers”;

“company”;

“parent undertaking” and “subsidiary undertaking”;

“third country”;

“third country auditor”;

“third country competent authority”;

“transfer”.

(3) In subsection (1) —

(a) in the definition of “EEA competent authority”, omit “other than the United Kingdom”, ...

(b) in the definition of “officer”, after “a body corporate” insert “ other than a relevant authority ” and

“specified state” means one of the states specified in Schedule 1 to the Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023;

“specified state auditor” means an individual who is eligible to conduct audits of the accounts of bodies corporate that are incorporated or formed under the law of a specified state in accordance with the law of that state;

(4) After subsection (1) insert—

(1A) Expressions used in this Part that are defined in the Local Audit and Accountability Act 2014 have the same meaning as in that Act.

(5) In subsection (2A), after “EEA State” insert “and subject to the Audit Directive.”.

27

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

(2) Omit the following entries—

“approved third country competent authority”;

“audit working papers”;

“audited person”;

“Auditor General”;

“company”;

“enactment”;

“main purposes of this Part”;

“parent undertaking”;

“recognised, in relation to a qualifying body”;

“registered third country auditor”;

“rules of a qualifying body”;

“statutory auditor, statutory audit and statutory audit work”;

“subsidiary undertaking”;

“third country”;

“third country auditor”;

“third country competent authority”;

“transfer (in relation to audit working papers)”;

“UK-traded non EEA company”.

(3) At the appropriate places insert—

enactment	section 44(1) of the Local Audit and Accountability Act 2014”;
“local audit	paragraph 1(2) of Schedule 5 to the Local Audit and Accountability Act 2014”;
“local auditor	section 4(1)(b) of the Local Audit and Accountability Act 2014”;
“local audit work	paragraph 1(2) of Schedule 5 to the Local Audit and Accountability Act 2014”;
“officer, in relation to a relevant authority	section 44(1) of the Local Audit and Accountability Act 2014”;
“parish meeting	section 44(1) of the Local Audit and Accountability Act 2014”;
“recognised qualifying body	section 1219(13)”;
“relevant authority	section 2(1) of the Local Audit and Accountability Act 2014
“specified state”	section 1261(1)
“specified state auditor”	section 1261(1)

(4) In 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” substitute—

recognised professional qualification	section 1219(12)

28

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

(2) Omit 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);

(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);

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

(3) For paragraph 6 (holding of appropriate qualification) substitute—

(6) (1) The body must have rules to the effect that an individual is not eligible for appointment as a local auditor unless the individual— (a) holds an appropriate qualification, (b) is an EEA auditor who has passed an aptitude test in accordance with sub-paragraph (3) on or before 31 December 2020, unless an aptitude test is not required (see sub-paragraph (4)), ... (ba) is a specified state auditor who— (i) holds professional qualifications obtained in a specified state that are comparable to an appropriate qualification; and (ii) has met a requirement to take an aptitude test or to complete an adaptation period, or to undertake both, imposed on the individual by the body in accordance with Part 2 of the Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023, if such a requirement is so imposed, or (c) has been authorised to act as a local auditor by the body pursuant to the European Communities (Recognition of Professional Qualifications) Regulations 2007 (SI 2007/2781), and complies with the requirements of those Regulations that apply to a person acting as a local auditor. (2) The body must have rules to the effect that a firm is not eligible for appointment as a local auditor unless— (a) each individual responsible for local audit work on behalf of the firm is eligible for appointment as a local auditor, and (b) the firm is controlled by qualified persons (see paragraph 7 below). (3) The aptitude test— (a) must test the individual's knowledge of subjects— (i) that are covered by a recognised professional qualification, (ii) that are not covered by the professional qualification already held by that individual, and (iii) the knowledge of which is essential for the pursuit of the profession of local auditor; (b) may test the individual's knowledge of rules of professional conduct; (c) must not test the individual's knowledge of any other matters. (4) No aptitude test is required if— (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) the subjects that are covered by a recognised professional qualification and the knowledge of which is essential for the pursuit of the profession of local auditor are covered by the professional qualification already held by the individual. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) A firm which has ceased to comply with the conditions mentioned in sub-paragraph (2) may be permitted to remain eligible for appointment as a local auditor for a period of not more than three months.

(4) In paragraph 7 (meaning of control by qualified persons)—

(a) in sub-paragraph (1) (introductory), for “paragraph 6(1)(b)” substitute “ paragraph 6(2)(b) ”, ...

(aa) in sub-paragraph (2)(a)(ii), omit “, other than the United Kingdom”,

(b) in sub-paragraph (2)(b)(i), (requirement for firm to be eligible for appointment as statutory auditor), for “statutory auditor” substitute “ local auditor, or as a statutory auditor in accordance with this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014 ” , and

(5) After paragraph 7 insert—

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

(6) For paragraph 10A substitute—

(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 conducted 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 compliance 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 body, 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 legal person.

(7) For paragraph 13 substitute—

(13) (1) The body must— (a) have adequate arrangements for enabling the performance by its members of local audit functions, other than functions in respect of major local audits, to be monitored by means of inspections, (b) in the case of members of the body who perform any local audit functions in respect of major local audits— (i) participate in arrangements within paragraph 23(1), and (ii) have rules and practices designed to ensure that a sanction determined under paragraph 23(1)(b) is to be treated as if it were a sanction which the body had determined under arrangements for enforcement within paragraph 12(1A), and (c) have rules designed to ensure that members of the body take reasonable steps to enable their performance of any local audit functions to be monitored by means of inspections. (2) Any monitoring of members of the body under the arrangements within paragraph 23(1) is to be regarded (so far as their performance of local audit functions in respect of major local audits is concerned) as monitoring of compliance with the body's rules for the purposes of paragraph 12(1) and (1A). (3) The arrangements referred to in sub-paragraph (1)(a) must include an inspection which is conducted in relation to each person eligible for appointment as a local auditor at least once every six years. (4) The inspection must be conducted by persons who— (a) have an appropriate professional education, (b) have experience of— (i) local audit work, (ii) statutory audit work within the meaning of this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014, (iii) other audit work relating to any body whose accounts form part of a group for which the Treasury prepares accounts under section 9(1) of the Government Resources and Accounts Act 2000, or (iv) work equivalent to that within any of sub-paragraphs (i) to (iii) on the audit of accounts under the law of— (aa) an equivalent third country, or part of an equivalent third country, or (bb) a transitional third country, or part of a transitional third country, (c) have received adequate training in the conduct of inspections concerning the audits of relevant authorities, and (d) do not have any interests likely to conflict with the proper conduct of the inspection. (4A) For the purposes of sub-paragraph (4)— - “equivalent third country” means a third country granted approval or provisional approval as an equivalent third country in accordance with section 1240A(1), as that section applies in relation to statutory audits; - “third country” means a country or territory other than the United Kingdom; - “transitional third country” means a third country granted approval or provisional approval as a transitional third country in accordance with section 1240A(1), as that section applies in relation to statutory audits. (5) The inspection must review one or more local audits in which the person to whom the inspection relates has participated. (6) The inspection must include an assessment of— (a) the person's compliance with the body's rules established for the purposes of paragraphs 9 (professional integrity and independence), 10 (technical standards) and 10A (technical standards for group audits), (b) the resources allocated by the person to local audit work, (c) in the case of an inspection in relation to a firm, its internal quality control system, and (d) the remuneration received by the person in respect of local audit work. (7) An inspection conducted in relation to a firm may be treated as an inspection of all individuals responsible for local audit work on behalf of that firm, if the firm has a common quality assurance policy with which each of those individuals is required to comply. (8) The main conclusions of the inspection must be recorded in a report which is made available to— (a) the person to whom the inspection relates, and (b) the body. (9) The body must, at least once every calendar year, give to the Secretary of State a summary of the results of inspections conducted under this paragraph. (10) For the purposes of this Schedule a local audit of the accounts of a relevant authority is a “major local audit” if the authority is specified in, or of a description specified in— (a) regulations made for the purposes of this sub-paragraph by the Secretary of State, or (b) a direction (which has not been revoked) given by the Secretary of State to the body. (11) Regulations under sub-paragraph (10)(a) may in particular specify a description of relevant authority by reference to its income or expenditure. (12) Regulations under sub-paragraph (10)(a) are subject to negative resolution procedure. (13) A direction may be given under sub-paragraph (10)(b) only if the Secretary of State thinks that there is significant public interest in the authority, or in authorities of the description, specified in the direction. (14) In this Schedule “local audit function” means any function performed as a local auditor.

(8) In paragraph 23 (arrangements for independent monitoring of audits of listed companies and other major bodies)—

(a) in the heading, for “audits of listed companies and other major bodies” substitute “ major local audits ”,

(b) for “statutory audit functions” in each place substitute “ local audit functions ”,

(d) omit sub-paragraph (2).

(9) In paragraph 24 (arrangements for independent investigation for disciplinary purposes of public interest cases)—

(a) in sub-paragraph (1)(a) omit “or third country audit functions”, and

(b) in sub-paragraph (2) omit the definitions of “statutory audit function” and “third country audit function”.

(10) In paragraph 25(1) (supplementary: arrangements to operate independently of body)—

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

(b) omit paragraph (ca).

(11) In paragraph 26 (supplementary: funding of arrangements) omit “, 23A”.

(12) In paragraph 27 (supplementary: scope of arrangement) omit “, 23A”.

29

In Schedule 13 (supplementary provision with respect to delegation order)—

(a) in paragraph 9 (legislative functions) omit “(or, in Scotland, sufficient evidence)”, and

(b) in paragraph 10(6) (requirement for auditor of body established by order to be eligible for appointment as statutory auditor), for “a statutory auditor” substitute “ a local auditor, or a statutory auditor in accordance with this Part of this Act as it has effect apart from its application by virtue of Schedule 5 to the Local Audit and Accountability Act 2014 ”.

SCHEDULE 6

Duty to prepare code

1

(1) The Comptroller and Auditor General must prepare one or more codes of audit practice prescribing the way in which local auditors are to carry out their functions under this Act.

(2) Different codes may be prepared for different relevant authorities (but the Comptroller and Auditor General must ensure that each kind of relevant authority is covered by a code).

(3) A code may contain different provision for different relevant authorities.

(4) A code must embody what the Comptroller and Auditor General considers to be the best professional practice with respect to the standards, procedures and techniques to be adopted by local auditors.

(5) Before preparing a code, the Comptroller and Auditor General must consult—

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

(b) the recognised supervisory bodies,

(c) the persons appearing on the register of auditors kept under regulations under section 1239 of the Companies Act 2006 as it has effect by virtue of Schedule 5,

(d) the Secretary of State,

(e) the Treasury,

(f) each body to whom the Secretary of State has delegated functions under section 1252 of the Companies Act 2006 as it has effect by virtue of Schedule 5, and

(g) such other bodies or persons as the Comptroller and Auditor General thinks appropriate.

Procedure for code

2

(1) After preparing a code of audit practice, the Comptroller and Auditor General must—

(a) publish it in draft, and

(b) send it to a Minister of the Crown, who must lay it before Parliament.

(2) If, within the 40-day period, either House of Parliament resolves not to approve the code—

(a) it must not be published by the Comptroller and Auditor General, and

(b) the Comptroller and Auditor General must prepare another code.

(3) If no such resolution is made within that period, the Comptroller and Auditor General must publish the code.

(4) This paragraph does not apply to a code of audit practice prepared to replace an existing code of audit practice (but see paragraph 5).

Duty to keep code under review

3

The Comptroller and Auditor General must keep each code of audit practice under review.

Alteration of code

4

(1) The Comptroller and Auditor General may prepare alterations to a code of audit practice.

(2) Paragraph 1(5) applies to alterations to a code as it applies to a code.

(3) After preparing alterations to a code, the Comptroller and Auditor General must—

(a) publish the code as altered in draft, and

(b) send the code as altered to a Minister of the Crown, who must lay it before Parliament.

(4) If, within the 40-day period, either House of Parliament resolves not to approve the code as altered, it must not be published by the Comptroller and Auditor General.

(5) If no such resolution is made within that period, the Comptroller and Auditor General must publish the code as altered.

(6) A code published under sub-paragraph (3)(a) or (5) must show the alterations that are proposed to be made to it or (as the case may be) have been made to it in such manner as the Comptroller and Auditor General thinks appropriate.

Replacement of code

5

(1) The Comptroller and Auditor General may prepare a code of audit practice to replace a code published under paragraph 2(3) or sub-paragraph (7).

(2) The Comptroller and Auditor General must—

(a) use reasonable endeavours to ensure that a code is published under sub-paragraph (7) to replace a code published under paragraph 2(3) or that sub-paragraph (“the original code”) before the end of 5 years beginning with the date on which the original code was so published, or

(b) if it does not prove possible to comply with paragraph (a), ensure that a code of the kind referred to in that paragraph is published under sub-paragraph (7) as soon as is reasonably practicable after the end of the period referred in that paragraph.

(3) Sub-paragraphs (1) and (2) apply regardless of whether the original code has been published with alterations under paragraph 4 in the meantime.

(4) A replacement code prepared to comply with sub-paragraph (2) need not make different provision from that made by the original code.

(5) After preparing a replacement code, the Comptroller and Auditor General must—

(a) publish it in draft, and

(b) send it to a Minister of the Crown, who must lay it before Parliament.

(6) If, within the 40-day period, either House of Parliament resolves not to approve the replacement code—

(a) the code must not be published by the Comptroller and Auditor General, and

(b) if the period of 5 years beginning with the date on which the original code was published under paragraph 2(3) or sub-paragraph (7) has expired, the Comptroller and Auditor General must prepare another replacement code.

(7) If no such resolution is made within that period, the Comptroller and Auditor General must publish the replacement code.

Publication of code

6

(1) A code of audit practice may be published in such manner as the Comptroller and Auditor General thinks fit.

(2) A code comes into force on the day on which it is published under paragraph 2(3) or 5(7) unless it specifies a different commencement date.

(3) Alterations to a code come into force on the day on which the code as altered is published under paragraph 4(5) unless it specifies a different commencement date for those alterations.

(4) A code may—

(a) specify different commencement dates for different purposes;

(b) include transitional provisions and savings.

(5) A code may, in particular, provide that all or part of an existing code of audit practice has effect until all or part of the new code comes into force.

Assistance from relevant authority

7

A relevant authority must provide the Comptroller and Auditor General with the information that the Comptroller and Auditor General reasonably requires for the purposes of this Schedule.

Saving for codes of practice under Audit Commission Act 1998

8

(1) Despite the repeal of section 4 of the Audit Commission Act 1998 by this Act, a provision of a code of audit practice under that section continues in force until it is replaced by a provision of a code of audit practice under this Schedule.

(2) A provision of a code under that section is to be read subject to the modifications necessary for it to have effect in relation to the functions of a local auditor under this Act.

(3) A code under that section—

(a) is not to be treated as a code of audit practice for the purposes of this Schedule (other than this paragraph), but,

(b) is otherwise to be treated as a code of audit practice for the purposes of this Act.

Guidance

9

(1) The Comptroller and Auditor General may issue guidance as to the exercise by local auditors of their functions under this Act.

(2) Guidance under this paragraph may, in particular, explain or supplement the provisions of a code of practice under this Schedule.

Application to auditors of NHS foundation trusts

10

(1) The duty imposed on the Comptroller and Auditor General by paragraph 1 includes a duty to prepare one or more codes of audit practice prescribing the way in which auditors of accounts of NHS foundation trusts are to carry out their functions in relation to such accounts.

(2) This Schedule, apart from paragraph 1(2) and (3), paragraph 8 and this paragraph, applies in relation to a code relating to auditors of accounts of NHS foundation trusts as it applies in relation to a code relating to local auditors, subject to the following sub-paragraphs.

(3) Paragraph 1(4) is to be read as if the reference to “local auditors” were a reference to auditors of accounts of NHS foundation trusts.

(4) Paragraph 1(5) applies as if—

(a) it required the Comptroller and Auditor General to consult NHS England (as well as the other persons mentioned in that sub-paragraph), and

(b) paragraph (a) of that sub-paragraph required the Comptroller and Auditor General to consult such associations or representatives of NHS foundation trusts as the Comptroller and Auditor General thinks appropriate.

(5) Paragraph 7 is to be read as if the reference to “a relevant authority” were a reference to an NHS foundation trust.

(6) Paragraph 9(1) is to be read as if the reference to “the exercise by local auditors of their functions under this Act” were a reference to “the exercise by auditors of accounts of NHS foundation trusts of their functions in relation to such accounts”.

Meaning of “40-day period”

11

(1) In this Schedule “the 40-day period”, in relation to a code laid before Parliament, means the period of 40 days beginning with—

(a) the day on which the code is laid, or

(b) if it is not laid before each House of Parliament on the same day, the later of the 2 days on which it is laid.

(2) In calculating that period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

SCHEDULE 7

Public interest reports

1

(1) A local auditor of the accounts of a relevant authority must consider whether, in the public interest, the auditor should make a report on any matter coming to the auditor's notice during the audit and relating to the authority or an entity connected with the authority, so it can be considered in accordance with this Schedule or brought to the public's attention.

(2) A report under sub-paragraph (1) is referred to in this Act as a public interest report.

(3) A public interest report may be made during or after the end of an audit.

(4) A local auditor must notify a relevant authority's auditor panel (if it has one) as soon as is reasonably practicable after making a public interest report relating to the authority or an entity connected with it.

(5) A local auditor may recover from a relevant authority—

(a) the reasonable costs of determining whether to make a public interest report relating to the authority or an entity connected with it, and

(b) the reasonable costs of making a public interest report relating to the authority or an entity connected with it.

(6) Sub-paragraph (5)(a) applies regardless of whether the report is in fact made.

Written recommendations

2

(1) A local auditor of the accounts of a relevant authority may make a written recommendation to the authority relating to the authority or an entity connected with it, so that the recommendation can be considered under this Schedule.

(2) A recommendation may be made during or at the end of an audit.

(3) A recommendation must be sent at the time it is made—

(a) to the Secretary of State,

(b) where the recommendation relates to an entity connected with the relevant authority, to that entity and to any other relevant authority with which the entity is connected,

(d) where the relevant authority is a health service body, to NHS England, and

(e) where the relevant authority is—

(i) a functional body,

(ii) an entity connected with a functional body, or

(iii) the London Pensions Fund Authority,

to the Greater London Authority.

(4) A local auditor may recover from a relevant authority—

(a) the reasonable costs of determining whether to make a recommendation relating to the authority or an entity connected with it, and

(b) the reasonable costs of making a recommendation relating to the authority or an entity connected with it.

(5) Sub-paragraph (4)(a) applies regardless of whether the recommendation is in fact made.

(6) In this Act “related authority”, in relation to a connected entity, means the relevant authority with which the entity is connected.

Supply of public interest reports

3

(1) If a local auditor makes a public interest report arising out of the audit of the accounts of a relevant authority, the auditor must send the report to—

(a) the authority, and

(b) where the report relates to an entity connected with the authority, to that entity and to any other relevant authority with which the entity is connected.

(2) The local auditor must also send the report—

(a) to the Secretary of State,

(b) where the relevant authority is itself a connected entity, to its related authority or authorities,

(d) where the relevant authority is—

(i) a functional body,

(ii) an entity connected with a functional body, or

(iii) the London Pensions Fund Authority,

to the Greater London Authority.

(3) A report required to be sent under sub-paragraph (1) or (2) must be sent as soon as is reasonably practicable after it is made.

(4) If a relevant authority to which a report is sent under this paragraph is a health service body, it must take the report into consideration as soon as is reasonably practicable after receiving it.

(5) If paragraph 5 applies to a relevant authority to which a report is sent under this paragraph, it must, if required by that paragraph to do so, take the report into consideration in accordance with that paragraph.

(6) If a relevant authority to which a report is sent under this paragraph is the Greater London Authority, it must, if required by that paragraph to do so, take the report into consideration in accordance with paragraph 6.

Publicity for public interest reports

4

(1) This paragraph applies to a relevant authority if a local auditor has made a public interest report relating to the authority or an entity connected with it.

(2) As soon as is practicable after receiving the report, the relevant authority must publish the report and a notice that—

(a) identifies the subject matter of the report, and

(b) unless the authority is a health service body, states that any member of the public may inspect the report and make a copy of it or any part of it between the times and at the place or places specified in the notice.

(3) As soon as is practicable after receiving the report, the relevant authority must supply a copy of the report to—

(a) each of its members (if it has members), and

(b) its auditor panel (if it has one).

(4) Sub-paragraph (3)(a) does not apply in relation to a parish meeting.

(5) From the time when the report is received, the relevant authority, unless it is a health service body, must ensure that any member of the public may—

(a) inspect the report at all reasonable times without payment,

(b) make a copy of it, or any part of it, and

(6) The local auditor may—

(a) notify any person the auditor thinks fit of the fact that the auditor has made the report, and

(b) supply a copy of it or any part of it to any person the auditor thinks fit.

(7) A notice or report required to be published under this paragraph must be published—

(a) if the authority has a website, on its website;

(b) otherwise, in accordance with sub-paragraph (8).

(8) A relevant authority publishes a notice or report in accordance with this sub-paragraph if—

(a) in the case of an authority other than a health service body, it publishes the notice or report in such manner as it thinks is likely to bring the notice or report to the attention of persons who live in its area;

(b) in the case of an integrated care board, it publishes the notice or report in such manner as it thinks is likely to bring the notice or report to the attention of—

(i) the group of people for whom it has core responsibility, and

(ii) anyone who lives within its area but does not fall within sub-paragraph (i)

(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 purposes of the health service in England.

(9) Nothing in this paragraph affects the operation of paragraph 9.

Consideration of report or recommendation

5

(1) Subject to sub-paragraphs (2) and (4), this paragraph applies to a relevant authority if—

(a) a local auditor has made a public interest report relating to the authority or an entity connected with it, or

(b) a local auditor has made a recommendation relating to the authority or an entity connected with it.

(2) This paragraph does not apply to a relevant authority which is itself a connected entity, subject to sub-paragraph (3).

(3) This paragraph applies to the Mayor's Office for Policing and Crime where a local auditor has made a report or recommendation relating to the Commissioner of Police of the Metropolis regardless of whether the Office is a connected entity or was such an entity at the time to which the report or recommendation relates.

(4) This paragraph does not apply to—

(a) the Greater London Authority (but see paragraph 6), and

(b) health service bodies.

(5) The relevant authority must consider the report or recommendation at a meeting held before the end of the period of one month beginning with the day on which it was sent to the authority.

(6) At that meeting the relevant authority must decide—

(a) whether the report requires the authority to take any action or whether the recommendation is to be accepted, and

(b) what, if any, action to take in response to the report or recommendation.

(7) Where the relevant authority is a police and crime commissioner , the Mayor’s Office for Policing and Crime , a fire and rescue authority created by an order under section 4A of the Fire and Rescue Services Act 2004 or the London Fire Commissioner, the authority must, before the end of the period of one month beginning with the day on which the report or recommendation was sent to the authority, decide—

(a) whether the report requires the authority to take any action or whether the recommendation is to be accepted, and

(b) what, if any, action to take in response to the report or recommendation.

(8) If the local auditor is satisfied that it is reasonable to allow more time for the relevant authority to comply with sub-paragraph (5) or (7), the auditor may extend or further extend the period of one month mentioned in that sub-paragraph.

(9) This paragraph does not affect any duties (so far as they relate to the subject-matter of a report or recommendation sent to a relevant authority) which are imposed by or under—

(a) this Act,

(b) sections 114 to 116 of the Local Government Finance Act 1988 (functions and reports of finance officers),

(d) any other enactment.

(10) The Secretary of State may by regulations provide for this paragraph to apply with modifications in relation to a relevant authority specified, or of a description specified, in the regulations.

(11) The Secretary of State may by regulations provide for any provisions of the following that do not otherwise apply to a meeting of a relevant authority under this paragraph to apply (with or without modifications) to such a meeting—

(a) the Public Bodies (Admission to Meetings) Act 1960;

(b) Part 5A of the Local Government Act 1972 (access to meetings and documents);

Consideration of report or recommendation: Greater London Authority

6

(1) This paragraph applies if—

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Local Audit and Accountability Act 2014

Related amendments

45

Power to make consequential provision

46

Application to NHS trusts and trustees for NHS trusts

47

Extent

48

Commencement

49

Short title

50

SCHEDULE 1

Part 1 — Arrangements in connection with abolition of Audit Commission

Transfer of property, rights and liabilities

1

Reduction in membership pending abolition

2

Final accounts

3

Final annual report

4

Payments in respect of pension liabilities

5

Meaning of “the abolition date”

6

Part 2 — Repeal of Audit Commission Act 1998: consequential repeals and revocations

SCHEDULE 2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

SCHEDULE 3

Provisions applying to certain local authorities

1

Provisions applying to chief constables

2

Provisions applying to the Commissioner of Police of the Metropolis

3

Provisions applying to other authorities

4

SCHEDULE 4

Options for auditor panels

1

Constitution of auditor panels

2

Constitution of auditor panels: health service bodies

3

Power to make further provision about constitution of auditor panels

4

Application of local authority enactments to auditor panels

5

Status of auditor panels

6