5. Specific powers and duties of local government auditors
5.1 This section sets out the requirements relating to how auditors fulfil their functions relating to electors’ questions and objections, and their other specific powers and duties such as public interest reports, statutory recommendations, advisory notices, and judicial review.
5.2 Auditors must also have regard under s20(6) of the Act to guidance in AGN04 (Auditors’ Additional Powers and Duties) and AGN07 (Auditor Reporting), and such AGNs or similar that may be subsequently issued.
5.3 Any statutory reports such as Statements of Reasons (SoRs), Public Interest Reports (PIRs) and Statutory Recommendations (SRs) and other correspondence in relation to the exercise of an auditor’s statutory duties must be signed by the KAP.
5.4 Regulation 17(3) of the Regulations provides that the costs of the local auditors are recoverable from an authority as part of the fee for the audit where statutory powers are being exercised.
PSAA process when Firms consider the use of statutory powers
5.5 PSAA does not provide advice to Firms on the exercise of the statutory powers and duties of local auditors so each Firm must take its own legal advice as necessary.
5.6 This process applies to Statements of Reasons, Reports in the Public Interest, statutory written recommendations (recommendations that have specific publicity requirements, rather than recommendations under s27(6)), advisory notices and judicial review – collectively known as “statutory reports” within these Terms.
5.7 PSAA will comment on pre-issue draft statutory reports and related documents in so far as they might impact on the application of the contractual indemnity against court costs and liabilities resulting from challenge work provided to Firms (Appendix 1).
5.8 The process for obtaining comments is set out below.
- Firm to submit the “draft” statutory reports as soon as possible. Where they contain personal details such as the name and address of the elector, these details must be redacted. This “draft” version should be the final version that the auditor is expecting to issue and will have been through the Maxwellisation process of sharing with individuals named in it or shared with the elector as provisional views if that is the case. PSAA does not comment on provisional views or consultation drafts which may be subject to amendment.
- PSAA will consult with its legal advisers and seek to respond with comments on the draft within 10 working days. Where the matter is complex so may take longer, PSAA will inform the Firm.
- Where time is an important factor in the response the Firm must make this clear to PSAA and give advance notice so we can inform our legal advisers of the urgency.
- PSAA’s response to a “draft” statutory report will cover:
- Indemnity concerns.
- Other observations.
- Drafting notes.
- In some cases, PSAA may request confirmation of a matter (e.g. that material documents have been shared with the elector, or that the consultation process has been followed), and/or to review the updated “draft” statutory reports.
- Where PSAA have requested confirmation or to review the updated “draft”, the Firm must not publish the final version until we have provided a response.
- Where PSAA provides comments and does not request any confirmations or to review an updated “draft”, the Firm may make any amendments that it decides to, except in relation to PSAA’s indemnity concern points.
5.9 Firms must provide PSAA with a redacted copy of the final version of the statutory report when issued.
Elector questions and objections
5.10 Firms must also follow the process set out at paragraphs 5.4 to 5.8 to enable PSAA to comment on draft SoRs as they may impact on the application of the indemnity that it provides to Firms.
5.11 Firms must also provide information about their progress with dealing with eligible objections on a quarterly basis to PSAA through the “Objection Tracker”. This covers information such as:
- The audit to which it relates.
- Description of subject of the objection.
- Status of the objection (from PSAA list of options).
- Date the objection was Accepted, and Finalised/Issued.
- Dated summary of progress each quarter.
5.12 PSAA may from time to time have additional or amended information requirements and may share summarised information on auditors’ use of statutory powers and duties with the local audit stakeholders. PSAA may also request evidence of communication from the Firm to the elector where an objection is not concluded within six months.
5.13 Under the Code auditors should use best endeavours to:
- Determine eligibility of an objection within one week of receipt.
- Decide whether to consider the objection within a further month.
- Aim to conclude on the objection within six months of deciding to consider it.
5.14 Where an objection is not concluded within six months, the auditor should inform the objector and the body and provide updates every three months to the objector and body until the objection is decided.
5.15 For clarity there is a distinction between objections received but not accepted (e.g. because they were made outside of inspection period) where auditors are not required to inform PSAA, and objections accepted but not considered under s27(4) where auditors are required to inform PSAA. This is because electors may have a right of appeal against a decision not to consider an objection under s27(4). Step 2 of AGN04 provides guidance to auditors on the process of determining whether to consider an eligible objection and the risks that derive from significant delays occurring between the receipt of an eligible objection and the auditor’s decision as to whether it is accepted for consideration.
5.16 Firms must have systems and processes in place to provide support to their staff in dealing with objections.
Cost of objections at audit work
5.17 Firms may propose a fee variation (paragraphs 5.4 and 5.8) for the costs incurred in dealing with questions and objections prior to legal action. The proposed fees must be discussed with audited bodies at the earliest opportunity.
Communications with objectors
5.18 Auditors must provide written reasons for their decision to an objector (commonly referred to as Statements of Reasons) in the following cases:
- declining to consider an eligible objection under s27(4) (AGN04 para 37), including where requested to do so by the objector in accordance with s28(3) of the Act.
- deciding not to apply for a declaration under s28 after considering an objection (AGN04 para 52), including where requested to do so by the objector in accordance with s28(3) of the Act.
- deciding not to issue a PIR after considering an objection (AGN04 para 52).
Public Interest Reports and statutory written recommendations
5.19 Firms must also follow the process set out at paragraphs 5.4 to 5.8 to enable PSAA to comment on draft PIRs and SRs as they may impact on the application of the indemnity that it provides to Firms.
5.20 Auditors must send final versions of PIRs and SRs to the Secretary of State as set out in AGN07 at the same time as they are issued using the information below:
| Type of body | Government department | Email address |
|---|---|---|
| Local government or County fire and rescue services | Ministry of Housing, Communities & Local Government | localaudit@communities.gov.uk |
| Police and Fire | Home Office | Policeresourcespolicy@homeoffice.gov.uk Emma.Lawrence8@homeoffice.gov.uk |
5.21 Non-statutory recommendations under s27(6) do not require a public response and do not need to be sent to PSAA unless included in a Statement of Reasons.
Advisory notices
5.22 If the Auditor thinks that a body (or an officer of a body) has made or is about to make a decision which would involve the body incurring unlawful expenditure, taking action which is unlawful and likely to cause a loss or deficiency, or entering an unlawful item of account, they can issue an advisory notice under s29 of the 2014 Act.
5.23 Firms must also follow the process set out at paragraphs 5.4 to 5.8 to enable PSAA to comment on draft advisory notice as they may impact on the application of the indemnity that it provides to Firms.
Judicial review
5.24 Under s31 of the Act Auditors may make an application for judicial review of a decision of an authority, or of a failure by that authority to act, which it is reasonable to believe would have an effect on the accounts of that body.
5.25 Firms must also follow the process set out at paragraphs 5.4 to 5.8 to enable PSAA to comment on an application for judicial review as they may impact on the application of the indemnity that it provides to Firms.