The Local Audit (Appointing Person) Regulations 2015

PART 1 E+W Preliminary

Citation, commencement and application E+W

1.—(1) These Regulations may be cited as the Local Audit (Appointing Person) Regulations 2015 and come into force on the day after the day on which they are made.

(2) These Regulations apply in relation to principal authorities.

Commencement Information

I1 Reg. 1 in force at 10.2.2015 in accordance with reg. 1(1)

Interpretation E+W

2.  In these Regulations—

“the Act” means the Local Audit and Accountability Act 2014, and, unless otherwise provided references to the Act or to any provision of it are to the Act or that provision as it has effect by virtue of these Regulations;

“appointing person” means a person specified by the Secretary of State under regulation 3 to appoint a local auditor(1);

“audit contract” means a contract between an appointing person and a local auditor for the carrying out of audit work;

“audit work” means, in relation to an authority, the carrying out of the functions of a local auditor under the Act in relation to the accounts of that authority, in compliance with, or with the relevant part or parts of, the code of audit practice applicable to that authority;

“compulsory appointing period” means the financial year or years for which a relevant appointing person is responsible for appointing a local auditor to conduct the audit of the accounts for any authority which becomes an opted in authority by virtue of regulation 9, which—

(a)

is specified in an invitation published under regulation 8, and

(b)

relates to—

(i)

a specific financial year, or

(ii)

a period of consecutive financial years, not exceeding five years;

“full audit authority” has the same meaning as in regulation 2 of the Local Audit (Smaller Authorities) Regulations 2015(2);

“invitation” has the meaning given in regulation 8(5);

“newly established principal authority” means either—

(a)

a principal authority which was not in existence at the time that the relevant appointing person issued an invitation under regulation 8 to a class of principal authorities within which the principal authority now falls; or

(b)

a principal authority which was not a principal authority at the time that the relevant appointing person issued an invitation under regulation 8 to a class of principal authorities, within which the principal authority now falls, but which has subsequently become a principal authority;

“opted in authority” means a principal authority for which the responsibility for the appointment of a local auditor has become that of an appointing person instead of that of the authority by virtue of regulation 9, 10 or 11;

“principal authority” means—

(a)

a relevant authority that is not a smaller authority, or

(b)

a full audit authority; and

“relevant appointing person”, in relation to a principal authority, means the person specified under regulation 3(2) in relation to the class of authorities within which the principal authority falls;

and

“website” means a website which is publicly accessible free of charge.

Commencement Information

I2 Reg. 2 in force at 10.2.2015 in accordance with reg. 1(1)

PART 2 E+W Specification of the appointing person

Specification of a person to appoint local auditors E+W

3.—(1) The Secretary of State may, in accordance with regulation 4, specify a person (an “appointing person”) to appoint a local auditor to audit the accounts of an opted in authority.

(2) The Secretary of State may specify different persons in relation to different classes of principal authorities.

Commencement Information

I3 Reg. 3 in force at 10.2.2015 in accordance with reg. 1(1)

Procedure for specifying an appointing person E+W

4.—(1) The specification of a person must be in writing and may, but need not, specify a date when the specification ends.

(2) The Secretary of State must publish the relevant details of any appointing person—

(a) on a website;

(b) in the London Gazette.

(3) The relevant details are—

(a) the appointing person’s name;

(b) the appointing person’s registered address (if any);

(c) the appointing person’s address for correspondence; and

(d) details of the class of principal authorities in relation to which that person is the appointing person, if the class is not all principal authorities.

Commencement Information

I4 Reg. 4 in force at 10.2.2015 in accordance with reg. 1(1)

Ending specification E+W

5.—(1) The Secretary of State may end the specification of an appointing person in accordance with this regulation.

(2) Before ending the specification, the Secretary of State must—

(a) consult such principal authorities as the Secretary of State considers have an interest;

(b) consult such associations of principal authorities or relevant authorities as appear to the Secretary of State to have an interest.

(3) The Secretary of State must—

(a) give notice to the appointing person concerned of the ending of specification, giving—

(i) the date on which specification is to end,

(ii) the reason for ending the specification;

(b) publish notice of the ending of the specification—

(i) on a website, and

(ii) in the London Gazette; and

(c) make arrangements for notifying opted in authorities of the ending of the specification.

(4) The Secretary of State may make arrangements under paragraph (3)(c) by requiring the appointing person to notify opted in authorities.

Commencement Information

I5 Reg. 5 in force at 10.2.2015 in accordance with reg. 1(1)

Consequences of end of specification E+W

6.—(1) If the Secretary of State gives notice to an appointing person under regulation 5(3)(a), the Secretary of State may, either before or after (or both before and after) the specification ends—

(a) exercise the functions of the appointing person arising by virtue of these Regulations;

(b) transfer rights and liabilities of the appointing person arising by virtue of these Regulations to—

(i) the Secretary of State; or

(ii) another appointing person.

(2) The Secretary of State may transfer some rights and liabilities under paragraph (1)(b) to the Secretary of State and some to another appointing person.

(3) The appointing person to whom notice is given under regulation 5(3)(a) must—

(a) disclose all of the appointing person’s rights and liabilities arising by virtue of these Regulations to the Secretary of State;

(b) co-operate with the Secretary of State and any other appointing person for the purpose of ensuring an audit of an opted in authority is not adversely affected.

Commencement Information

I6 Reg. 6 in force at 10.2.2015 in accordance with reg. 1(1)

Additional functions of appointing person E+W

7.  A specified appointing person must—

(a) keep and maintain a record of which principal authorities are opted in authorities and publish that record on a website;

(b) design and implement appropriate systems to—

(i) oversee issues of independence of any auditor which it has appointed, arising both at the time of appointment and when undertaking audit work;

(ii) monitor compliance by a local auditor against the contractual obligations in an audit contract;

(iii) resolve disputes or complaints from—

(aa) local auditors, opted in authorities and local government electors relating to audit contracts and the carrying out of audit work by auditors it has appointed;

(bb) authorities regarding the refusal of a request to become an opted in authority under regulation 11.

Commencement Information

I7 Reg. 7 in force at 10.2.2015 in accordance with reg. 1(1)

PART 3 E+W Invitation to become an opted in authority

Invitation to principal authorities E+W

8.—(1) Before every compulsory appointing period begins, a relevant appointing person must issue an invitation in accordance with this regulation to all principal authorities which fall within the class of authorities in relation to which the person has been specified under regulation 3(2).

(2) The invitation must be published in such manner as the relevant appointing person thinks is likely to bring it to the attention of the principal authorities concerned.

(3) The invitation must contain the following information—

(a) the length of the compulsory appointing period, specifying the financial year or years to which it relates;

(b) the closing date for the giving of notice to the appointing person by an authority within the class to accept the invitation (and that date must allow at least 8 weeks for acceptance beginning on the date the invitation is published);

(c) an explanation of the procedures by which an authority may accept the invitation and become an opted in authority.

(4) An invitation may not relate to a financial year which commences before 1st April 2017.

(5) In these Regulations “invitation” means an invitation to become an opted in authority for the duration of the compulsory appointing period.

Commencement Information

I8 Reg. 8 in force at 10.2.2015 in accordance with reg. 1(1)

Acceptance of an invitation E+W

9.—(1) A principal authority which is within the class of authorities to whom an invitation has been issued may accept an invitation made by a relevant appointing person under regulation 8 by giving notice of acceptance to the appointing person on or before the closing date mentioned in regulation 8(3)(b).

(2) An authority which gives a notice under paragraph (1) becomes an opted in authority on the date the notice is received by the appointing person.

(3) An authority which has become an opted in authority under this regulation is an opted in authority only for the duration of the compulsory appointing period specified in the invitation.

Commencement Information

I9 Reg. 9 in force at 10.2.2015 in accordance with reg. 1(1)

PART 4 E+W Opted in authorities during compulsory appointing period

Right to become an opted in authority during a compulsory appointing period E+W

10.—(1) During a compulsory appointing period, a newly established principal authority may become an opted in authority in accordance with this regulation.

(2) A newly established principal authority may become an opted in authority by giving notice to the relevant appointing person of its decision to become an opted in authority; and such notice must specify the authority’s postal address.

(3) An authority which gives a notice under paragraph (2) becomes an opted in authority on the date the notice is received by the appointing person.

(4) The authority is an opted in authority for the remainder of the compulsory appointing period which is in existence on the date mentioned in paragraph (3).

Commencement Information

I10 Reg. 10 in force at 10.2.2015 in accordance with reg. 1(1)

Right to request to become an opted in authority during a compulsory appointing period E+W

11.—(1) During a compulsory appointing period, any principal authority which could have accepted a relevant appointing person’s invitation under regulation 8 but did not, may make a request to the relevant appointing person to become an opted in authority, in accordance with this regulation.

(2) The authority must give notice to the relevant appointing person of its request to become an opted in authority; and such notice must specify the authority’s postal address.

(3) The relevant appointing person must—

(a) consider the authority’s request to opt in,

(b) agree to the request unless the appointing person has reasonable grounds for refusing it;

(c) give notice to the authority, within four weeks beginning with the date that the request to become an opted in authority was received, giving the decision in relation to the request, and

(d) provide reasons if the request is refused.

(4) The authority becomes an opted in authority on the date on which the relevant appointing person gives notice to the authority agreeing to its request to become an opted in authority.

(5) The authority is an opted in authority for the remainder of the compulsory appointing period which is in existence on the date mentioned in paragraph (4).

(6) A relevant appointing person may recover its reasonable costs for making arrangements to appoint a local auditor to an authority which becomes an opted in authority under this regulation, from that authority.

Commencement Information

I11 Reg. 11 in force at 10.2.2015 in accordance with reg. 1(1)

Opted in authority ceasing to be principal authority: duty to notify E+W

12.—(1) An opted in authority which ceases to be a principal authority must, as soon as practicable after the day it ceases to be such an authority, give notice of that fact to the relevant appointing person.

(2) An opted in authority which ceases to fall within the class of authority for which the appointing person is the relevant appointing person, must, as soon as practicable after the day it ceases to be such an authority, give notice of that fact to the relevant appointing person.

(3) Paragraph (4) applies where an authority fails to give the notice required by paragraphs (1) or (2).

(4) The relevant appointing person may recover from the authority any reasonable costs incurred in relation to that authority by—

(a) the appointing person, or

(b) a local auditor appointed to the authority by the appointing person,

until the date when the authority in fact gives such notice..

Commencement Information

I12 Reg. 12 in force at 10.2.2015 in accordance with reg. 1(1)

PART 5 E+W Appointment of local auditors to opted in authorities

Appointment of local auditors to opted in authorities E+W

13.—(1) An appointing person must appoint a local auditor to each opted in authority to conduct the audit of that authority for the appropriate period.

(2) The appropriate period is—

(a) for an authority which is an opted in authority by virtue of regulation 8, the compulsory appointing period;

(b) for an authority which is an opted in authority by virtue of either regulation 10 or 11, the remainder of the compulsory appointing period beginning with the day on which the authority became an opted in authority.

(3) Before appointing a local auditor to an opted in authority, an appointing person must consult the authority about the proposed appointment.

Commencement Information

I13 Reg. 13 in force at 10.2.2015 in accordance with reg. 1(1)

Retention of local auditor by non-qualifying authority E+W

14.—(1) This paragraph applies where an appointing person has appointed a local auditor to audit the accounts of an authority which the appointing person reasonably believed to be an opted in authority for which the appointing person was the relevant appointing person, but at the time of the appointment of the auditor the authority—

(a) was not a principal authority; or

(b) did not fall within the class of authorities for which the appointing person is the relevant appointing person.

(2) This paragraph applies where an appointing person has appointed a local auditor to audit the accounts of an opted in authority for which the appointing person was the relevant appointing person, but the authority—

(a) has ceased to be a principal authority; or

(b) no longer falls within the class of authorities for which the appointing person is the relevant appointing person.

(3) Where paragraph (1) or (2) applies, the auditor may remain in office for the relevant financial year subject to agreement between the authority and the auditor.

(4) In paragraph (3) “relevant financial year” means the financial year in which the circumstances first fall within paragraph (1)(a) or (b) or paragraph (2)(a) or (b).

Commencement Information

I14 Reg. 14 in force at 10.2.2015 in accordance with reg. 1(1)

Resignation and removal of auditors E+W

15.—(1) The Local Audit (Auditor Resignation and Removal) Regulations 2014(3) do not apply in relation to a local auditor appointed in accordance with these Regulations.

(2) An appointing person may remove a local auditor which it appointed from office before the expiry of the term of that office.

(3) When a local auditor appointed by a relevant appointing person to an opted in authority leaves office, whether through—

(a) resignation by the auditor from office, or

(b) removal by the appointing person of the auditor from office,

the relevant appointing person must appoint a new local auditor to that opted in authority as soon as practicable after the auditor leaves office.

(4) Before appointing an auditor under paragraph (3), the appointing person must consult the authority about the proposed appointment.

(5) The opted in authority must, within the period of 28 days beginning with the day on which an appointment under paragraph (3) is notified to the authority by the relevant appointing person, publish a notice that—

(a) states that the relevant appointing person has made the appointment,

(b) identifies the local auditor that has been appointed, and

(c) specifies the period for which the local auditor has been appointed.

(6) The notice must be published—

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

(b) otherwise, in accordance with paragraph (7).

(7) An authority publishes a notice in accordance with this paragraph if—

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

(b) in the case of a clinical commissioning group, it publishes the notice in such manner as it thinks is likely to bring the notice to the attention of—

(i) persons who live in the area of the group, and

(ii) persons who do not live in the area of the group but for whom the group has responsibility;

(c) in the case of special trustees for a hospital, they publish the notice in such manner as they think is likely to bring the notice to the attention of persons to whom services are provided at that hospital.

(8) The authority must exclude from the notice information whose disclosure would prejudice commercial confidentiality, unless there is an overriding public interest in favour of its disclosure.

Commencement Information

I15 Reg. 15 in force at 10.2.2015 in accordance with reg. 1(1)

PART 6 E+W Fees for audit

Setting of fee scales for audits E+W

16.—(1) An appointing person must specify, before the start of the financial year to which the scale of fees relates, the scale or scales of fees for the audit of the accounts of opted in authorities in relation to which the person is the relevant appointing person.

(2) A scale of fees must relate to a particular financial year, but may be set for more than one financial year at a time.

(3) An appointing person may vary the scale of fees which it has specified, but must not do so once the financial year to which the scale of fees relates has begun.

(4) Before specifying or varying any scale of fees, an appointing person must consult—

(a) all opted in authorities;

(b) such representative associations of principal authorities as appear to the specified person to be concerned, and

(c) such bodies of accountants as appear to the appointing person to be appropriate.

(5) A scale of fees may take account of the costs or expenses and anticipated costs and expenses of—

(a) the appointing person in respect of any function imposed by or under the Act;

(b) anything which is reasonably incidental or supplementary to the functions of the appointing person imposed by or under the Act;

(c) local auditors which are recoverable from authorities under the Act, specified in regulation 17(3).

(6) The scales of fees applicable to the audit of an authority which became an opted in authority under regulation 10 or 11 must be the scale of fees applicable to other opted in authorities falling within the same class of authorities as the authority.

Commencement Information

I16 Reg. 16 in force at 10.2.2015 in accordance with reg. 1(1)

Setting of fee for audit E+W

17.—(1) Subject to paragraph (2), the fee for the audit of the accounts of an opted in authority must be set in accordance with the appropriate fee scale specified in accordance with regulation 16.

(2) If it appears to an appointing person, on the basis of information supplied by the local auditor which it has appointed—

(a) that the work involved in a particular audit was substantially more or less than that envisaged by the appropriate scale, or

(b) any of the provisions mentioned in paragraph (3) apply,

the appointing person may charge a fee which is larger or smaller than that referred to in paragraph (1), as appropriate.

(3) The costs or expenses of the local auditor recoverable from an authority under any of the following provisions of the Act are recoverable as part of the fee for the audit of the accounts of the opted in authority to which the costs or expenses relate—

(a) section 23(3) (offences relating to auditor’s right to documents and information);

(b) section 26(3) (inspection of documents etc.);

(c) section 27(7) (right to make objections at audit);

(d) section 28(7) (declaration that item of account is unlawful);

(e) section 31(6) (power of auditor to apply for judicial review);

(f) paragraph 1(5) of Schedule 7 (public interest reports);

(g) paragraph 2(4) of Schedule 7 (written recommendations); and

(h) paragraph 3(5) of Schedule 8 (advisory notices).

(4) The appointing person must give notice to the authority concerned of any larger or smaller fee, giving reasons.

Commencement Information

I17 Reg. 17 in force at 10.2.2015 in accordance with reg. 1(1)

Payment of fee E+W

18.  An opted in authority must pay to the relevant appointing person the fee set under regulation 17.

Commencement Information

I18 Reg. 18 in force at 10.2.2015 in accordance with reg. 1(1)

PART 7 E+W Miscellaneous

Requirements in relation to certain functions E+W

19.—(1) A principal authority may only exercise the functions in paragraph (2) by the members of the authority meeting as a whole, except where the authority is a corporation sole, in which case the functions must be exercised by the holder of the office.

(2) The functions are—

(a) deciding to accept an invitation under regulation 9;

(b) deciding to become an opted in authority under regulation 10; or

(c) deciding to request to become an opted in authority under regulation 11.

Commencement Information

I19 Reg. 19 in force at 10.2.2015 in accordance with reg. 1(1)

Duty to provide information E+W

20.  A principal authority or local auditor appointed by an appointing person must, so far as reasonably practicable, provide the appointing person with such information that it may reasonably require for the purposes of exercising its functions under these Regulations.

Commencement Information

I20 Reg. 20 in force at 10.2.2015 in accordance with reg. 1(1)

Notices E+W

21.  A notice that is required under these Regulations to be given to a person or authority must be in writing and may be given by—

(a) delivering it to that person’s or authority’s address;

(b) sending it by post to that person’s or authority’s address; or

(c) electronic service in accordance with regulation 22.

Commencement Information

I21 Reg. 21 in force at 10.2.2015 in accordance with reg. 1(1)

Electronic service E+W

22.—(1) This regulation applies in respect of electronic service of a notice on a person or an authority (“the recipient”).

(2) Transmission of the notice to the recipient by means of an electronic communication has effect for the purposes of service of the notice on the recipient if, and only if, the conditions in paragraph (3) are met.

(3) The conditions are that—

(a) the recipient has stated a willingness to receive notices by means of an electronic communication,

(b) the statement has not been withdrawn, and

(c) the notice was transmitted to an electronic address specified by the recipient.

(4) A statement may be limited to notices of a specified description.

(5) A statement may require a notice to be in a specified electronic form.

(6) A statement may be modified or withdrawn—

(a) in a case where the statement was made by being published, by publishing the modification or withdrawal in the same or in a similar manner;

(b) in any other case, by giving a notice to the person to whom the statement was made.

(7) Where a notice is served on a recipient in accordance with this regulation, the notice is, unless the contrary is proved, to be deemed to have been served on that recipient at the time at which the electronic communication is transmitted.

(8) In this regulation—

“electronic address” includes any number or address used for the purposes of receiving electronic communications;

“electronic communication” means an electronic communication within the meaning of section 15 of the Electronic Communications Act 2000 (general interpretation)(4);

“specified” means specified in a statement made for the purposes of paragraph (3)(a).

Commencement Information

I22 Reg. 22 in force at 10.2.2015 in accordance with reg. 1(1)

Modifications to the Local Audit and Accountability Act 2014 and other Acts E+W

23.  The Schedule to these Regulations has effect.

Commencement Information

I23 Reg. 23 in force at 10.2.2015 in accordance with reg. 1(1)

Signed by authority of the Secretary of State for Communities and Local Government

Kris Hopkins

Parliamentary Under Secretary of State

Department for Communities and Local Government

9th February 2015