Since the announcement to abolish the Audit Commission was made by the Secretary of State in 2010 we have commented at every stage of the development of the new audit framework for local government to help bring about improvements in the new audit regime.
Therefore, we are pleased to comment on the new regulations set out in this consultation.
As stated in our previous responses to the department, in the absence of the Audit Commission, we are pleased to see provisions and regulations for a new sector-led body making audit appointments for small local councils below a £6.5m threshold.
We believe that this is the best possible option for continuing to ensure quality and cost-effective audits for small bodies.
We are also pleased to see that a number of changes have been made since the previous consultation: namely, more detailed provisions relating to opting in and opting out of the appointed person’s auditor regime, and a duty on auditors of small authorities to comply with any new directions issued by the secretary of state.
As set out below, in our responses to specific questions we are in broad agreement with the regulations set out in the consultation for smaller authorities, the establishment of a collective procurement body and accounts and audit regulations.
However, we have some reservations about the introduction of a transparency code for internal drainage boards, charter trustees and port health authorities.
Overall, we support the department’s objectives to achieve greater transparency for the sector at all levels, as well as having proportionate governance and accountability arrangements in place.
However, we do not believe that a transparency code for drainage boards, charter trustees and port health authorities will be an effective substitute for external audit.
Smaller authorities’ regulations
Q1. Do the regulations meet the government’s policy objective at Paragraph 2.1?
Q2. Do you have any other comments on the proposed smaller authorities’ regulations?
Q3. Do you agree with the differing proposals regarding the appointment of auditors to exempt authorities which are opted-in and those which are opted out of the specified person’s auditor appointment regime?
We agree with the direction that the specified person should be required to publish a record of the names of opted in and opted out local authorities and the names of appointed auditors as set out in paragraph 2.8.
In our view this is an important aspect of accountability and good governance for the sector.
In relation to the above questions on smaller authority regulations, we broadly agree that the regulations meet the government’s policy objectives and have no additional comments.
Collective auditor procurement by a specified person
Q4. Should regulations require that the decision to opt in to sector-led arrangements are made by full council?
Q5. Do you agree that the maximum length appointing period should be restricted to five years?
Q6. Do you have any other comments on the proposed collective procurement regulations?
We also agree that the decision to opt in to the sector-led arrangements should be made by full council and that the maximum length appointing period should have a restriction; five years seems a reasonable period.
We have no further comments to make in respect of the above questions on collective procurement procedures.
Accounts and audit regulations
Q7. Is 30 working days a suitable period for the accounts to be available? Do you agree this information should be published electronically?
Q8. Do you agree that a common period for the exercise of public rights should be included in the regulations?
The accounts and audit regulations presented in this consultation appear reasonable.
We have no particular preference for what period the accounts can be inspected by the public, but 30 days appears an adequate time period.
In our experience the take up has been generally low and there are now other mechanisms by which the public can challenge a council’s accounts, such as by initiating freedom of information requests.
It would seem sensible that a common period of public rights should also be outlined in the regulations. Therefore, we have no additional comments to make on questions above.
Transparency Code for internal drainage boards, charter trustees and port health authorities
Q12. Do you agree that the code should be mandatory for internal drainage boards, charter trustees and port health authorities with an annual turnover not exceeding £25,000?
Q13. Should there be a threshold above which individual items of expenditure must be published? If yes, what should this threshold be (eg £50, £100)?
We support the department’s objectives to achieve greater transparency for the sector at all levels, as well as having proportionate governance and accountability arrangements in place.
However, we do not believe that a transparency code for drainage boards, charter trustees and port health authorities will be an effective substitute for external audit. It is even possible that a transparency code, coupled with ad hoc external audit, could prove more costly.
We believe that a risk-based approach to audit, coupled with and the rights of electors to exercise their rights through freedom of information requests, would provide a more cost-effective alternative.
If the government proceeds with the introduction of a transparency code and introduces a threshold, then we this should be identical to the £500 threshold for principal bodies.
We cannot see any rationale basis for this to be different, and believe that accountability should be proportionate to the amount of public money involved without regard to the size of the body doing the spending.