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The Local Audit and Accountability Bill 2013-2014

Print publication

11/09/2013

The Audit Commission (the Commission) has been a key component in the administration of local authorities, the police, fire and NHS bodies since its commencement in April 1983. However, the Local Audit and Accountability Bill (the Bill) enacts the Government’s policy to retire the Commission within the next few years.

What’s new?
The Bill, currently making its way through Parliament, aims to provide greater decentralisation and transparency in the auditing of local authorities, with the intention of providing higher auditing standards and increased competition, seeking to deliver lower fees.

The key changes outlined in the Bill include:

  • the Commission will be closed
  • a local regime for local authorities to appoint auditors will be established
  • the Secretary of State will be given the power to direct local authorities to comply with the local authority publicity “Code of Recommended Practice”
  • a new system will be established for referendums in respect of increases in council tax.

Progress of the Bill
The Bill was published on 9 May 2013 and introduced to the House of Lords the following day. Debates in the Lords have focused on the impact of a number of the Bill’s provisions including:

  • Clause 38 – noting that the Secretary of State now has the power to “direct local authorities to comply with the Code (of Recommended Practice) even if there was no evidence that they had broken it” – see our previous article on this
  • a discussion on the realism of the Bill’s intention to create independent auditor panels suggesting as a solution that local authorities are required to establish local audit committees.

Among the amendments proposed during the Bill’s passage through Parliament is a desire to create a framework for central procurement. The Local Government Association provides support for the central procurement proposal stating that “National procurement has been estimated to save between £205 million and £250 million over a five-year period compared to local appointment”.

The Bill has passed through the House of Lords and had its first reading in the House of Commons on 24 July 2013.

Key dates
A timetable of key milestones was also published with the Bill:

  • 2010/2011: the abolition of the Commission was announced
  • 2012/2013: the Commission’s staff are transferred to the private sector and auditing contracts are outsourced
  • 2014/2015: the Audit Commission is scheduled to close prior to April 2015
  • 2015/2016: the new regulatory regime will take effect
  • 2017/2018: local authorities may appoint auditors at the beginning of the financial year.

Further Information
Full details of the Bill’s progress through Parliament, including a copy of the latest version as it left the House of Lords, can be found here.

If you are interested in the Bill and want advice on the legal implications, please contact Richard Auton in our Public Sector and Projects Team.