Inspection of accounting records

May 2nd, 2017 by James Goudie QC in Non Judicial Control, Social Care

On 27 April 2017 the Local Audit (Public Access to Documents) Act 2017, extending to England and Wales, received the Royal Assent. It extends, 2 months after this date, access to certain documents under Section 26 of the Local Audit and Accountability Act 2014.  Section 26 of the 2014 Act is amended so that in subsection (1) persons who can inspect “accounting records and related documents” are extended to “any journalist”.  “Journalist” means “any person who produces for publication journalistic material”. This applies whether or not the person is paid.

 

Pension Ombudsman

March 23rd, 2017 by James Goudie QC in Non Judicial Control

Section 146 of the Pension Schemes Act 1993 sets out the functions of the Pensions Ombudsman (“the PO”). The PO may investigate and determine various specified matters.  These include a complaint made to him by an actual or potential beneficiary of an occupational pension scheme who alleges that he or she has sustained injustice in consequence of “maladministration”.  There is no statutory definition of “maladministration”.  It is well established that it is a “broad concept”, which goes further than a violation of legal rights.  There can be “maladministration” even if a person’s legal rights are not infringed.  In Baugniet v Teachers’ Pensions [2017] EWHC 501 (Ch) the High Court repeated with respect to the powers of the PO that:-

(1)       The PO must decide disputes in accordance with established legal principles rather than by reference to what he himself considers to be fair and reasonable;

(2)       In general, the PO does not have the power to make an order that the Court could not make, although the PO is not tied to the precise form of relief a court would grant;

(3)       Injustice resulting from maladministration not involving infringement of legal rights may be afforded a remedy, such as an apology and/or modest compensation for distress or inconvenience;

(4)       Absent very exceptional circumstances, an award for maladministration not involving infringement of legal rights should not exceed £1,600.

 

 

Local authority boycotts

February 22nd, 2016 by Peter Oldham QC in Best Value, Decision making and Contracts, Non Judicial Control

A House of Commons briefing paper of 19th February 2016, which can be found here, notes that the Government is introducing new rules and guidance to limit the extent to which local authorities in England and Wales can use boycotts in their procurement and pensions investment policies.

On procurement, the Government has published Procurement Policy Note 01/16 on 17th February 2016 here which says:-

“Public procurement should never be used as a tool to boycott tenders from suppliers based in other countries, except where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government.”

On pensions, the briefing paper refers to the DCLG’s consultation on the draft Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 (here), which closed on 19th February 2016, and to proposed guidance from SoS that environmental, social and corporate governance factors in investment decisions should reflect foreign policy.  The power to give guidance is in draft reg 7(1) and an authority’s investment strategy “must be in accordance” with it.

 

 

Accounts and Audit

February 18th, 2015 by James Goudie QC in Non Judicial Control

The Accounts and Audit Regulations 2015, SI 2015/234, which come into force on 1 April 2015, revoke the Accounts and Audit (England) Regulations 2011, SI 2011/817, and set out the detailed requirements on a “relevant authority” (other than a health service body) in relation to keeping adequate accounting records and control systems, preparing, approving and publishing a statement of accounts, and making various documents available for public inspection, and objection and questioning by local electors.  The authority “must ensure” that it has (and reviews) a “sound system of internal control”: Regulation 3.  It “must undertake an effective internal audit”: Regulation 5.  There is a new requirement to prepare and publish a “narrative statement”, commenting on the authority’s financial performance and economy, efficiency and effectiveness in the use of resources over the year.

 

Accounts and Audit (Wales)

January 13th, 2015 by James Goudie QC in Non Judicial Control

The Accounts and Audit (Wales) Regulations 2014, SI 2014/3362 (W.337), made and laid before the National Assembly on 23 December 2014, and coming into force on 31 March 2015, make provision with respect to the accounts and audit of bodies whose accounts are required to be audited in accordance with Section 39 of the Public Audit (Wales) Act 2004 (“the 2004 Act”) other than a local probation board for an area in Wales or a Welsh probation trust. The bodies who are subject to the Regulations are: county and county borough councils (and their committees and joint committees); community councils; fire and rescue authorities; National Park authorities; police and crime commissioners; chief constables; port health authorities; internal drainage boards; and conservation boards.

The Regulations replace the Accounts and Audit (Wales) Regulations 2005 which, together with amending Regulations, are revoked.

The Regulations differ in a number of respects from previous Accounts and Audit Regulations. Of particular note among the changes are the following: the bodies which are subject to the Regulations are specified on the face of the Regulations; the increase in the threshold of gross income or gross expenditure for smaller relevant bodies, from £1 million per year to not more than £2.5 million (regulation 2); changes to the procedures for approving and publishing accounts (regulations 10 and 15); the separation of procedures governing published accounts and audit for larger relevant bodies from that for smaller relevant bodies in the structure of the Regulations (see Parts 4 and 5); and it is no longer an offence to fail to comply with any aspect of the Regulations.

Part 1 is introductory.  Regulation 2 sets out the defined terms used in the Regulations.

Part 2 concerns specifying bodies so that those bodies come within the meaning of local authority for the purposes of Section 23(1) of the Local Government Act 2003. Under that Section the Welsh Ministers may make provision about accounting practices to be followed by local authorities as defined in the 2003 Act. Regulation 3 specifies internal drainage boards and port health authorities and regulation 4 identifies accounting practices for those bodies.

Part 3 concerns financial management and internal control. Regulation 5 requires relevant bodies to be responsible for ensuring that the financial management of the body is adequate and effective and the body has a sound system of internal control which they regularly review. Regulation 6 makes provision in respect of the accounting records which are to be kept, and the control systems that must be maintained, by relevant bodies. Regulation 7 makes provision for relevant bodies to maintain an adequate and effective internal audit of their accounting records and system of internal control.

Part 4 concerns the published accounts and audit for larger relevant bodies. Regulation 8 contains the requirements for the preparation of the statement of accounts for a body; regulation 9 the requirement for the statement of accounts to include notes relating to remuneration; regulation 10 the requirements for signing, approval and publication of the statement of accounts; regulation 11 the procedure for the public to inspect the accounts of a body; regulation 12 the procedure for a body to give notice of the public rights relating to the accounts and audit procedure; and regulation 13 the requirement for a body to give notice as to the conclusion of audit and the availability of its statement of accounts for inspection by local government electors.

Part 5 concerns the published accounts and audit for smaller relevant bodies. Regulation 14 contains the requirements for the preparation of accounting statements for a body; regulation 15 the requirements for signing, approval and publication of accounting statements; regulation 16 the procedure for the public to inspect the accounts of a body; regulation 17 the procedure for a body to give notice of the public rights relating to the accounts and audit procedure; and regulation 18 the requirement for a body to display a notice stating that the audit has concluded and that the relevant accounting statements are available for inspection by local government electors.

 

Local Audit

December 11th, 2014 by James Goudie QC in Non Judicial Control

The Local Audit (Auditor Panel) Regulations 2014, SI 2014/3224 (“the Regulations”) relate to the Auditor Panels who will advise on the appointment, removal, or resignation of the auditors of relevant authorities.  The Regulationsmake provision about Auditor Panels established under Part 3 of the Local Auditand Accountability Act 2014 (“the 2014 Act”) by relevant authorities (as to which, see Schedule 2 to that Act). Section 9 of, and Schedule 4 to, the 2014 Act contain provisions about establishment of Auditor Panels, and Section 10 sets out the Panel’s functions.

Regulations 2 to 6 make provision about the membership of Auditor Panels, removal of Panel Members on disqualification, allowances for Panel Members and proceedings of Panel Meetings.  Regulation 7 contains more detail about a Panel’s functions under Section 10(1) to (3) of the 2014 Act. Regulations 8 to 10 apply certain enactments relating to local authorities and local authority committees to Auditor Panels and appointments to such Panels, subject to modifications, including enactments relating to access to meetings and documents and enactments relating to political balance.

 

Non Judicial Control – Local Auditors

October 27th, 2014 by James Goudie QC in Non Judicial Control, Social Care

The Local Audit and Accountability Act 2014 (“the Act”) provides that local public bodies will need to appoint their own Auditors.  Local public bodies must also appoint Auditor Panels, with a majority of Independent Members, to advise on the selection and appointment of an Auditor.  Local Audit (Auditor Panel Independence) Regulations 2014, SI 2014/2845, amongst other things amend the definition of an Independent Member as set out in the Act.  The substituted definition, in Regulation 2(2), is as follows:-

“(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.”

 

Local Government Ombudsman

July 8th, 2014 by James Goudie QC in Non Judicial Control

Who can complain to the Local Government Ombudsman?  Basically, “a member of the public”: Section 26A of the Local Government Act 1974.  Who for this purpose is “a member of the public”?  An individual or “a body of persons”, whether incorporated or not, that does not come within either of the exclusions in Section 27.  The first exclusion is of a local authority or other authority or body constituted for purposes of the public service or of local government, or for the purposes of carrying on under national ownership any industry or undertaking or part of an industry or undertaking.  The second exclusion is of any other authority or body whose members are appointed by Her Majesty or any Minister of the Crown or government department or by the Welsh Ministers, or “whose revenues consist wholly or mainly of moneys provided by Parliament or the Welsh Ministers”.  The purpose no doubt of both exclusions is to avoid one public body invoking the Ombudsman to pursue a complaint of injustice which it attributes to another public body.

In The Matter of an Application by Armagh City and District Council for Judicial Review, [2014] NICA 44, the Northern Ireland Court of Appeal held that a GP partnership is a “body” for the purpose of similar exclusions in Northern Ireland legislation, but that, although the partnership was mainly publicly funded under the NHS, it did not come within the “… revenues … provided by Parliament …” exclusion of complainants from the Ombudsman’s jurisdiction.

 

Local Auditors

July 7th, 2014 by James Goudie QC in Non Judicial Control

The Local Audit (Auditor Resignation and Removal) Regulations 2014, SI 2014/1710 (“the Regulations”) made pursuant to the Local Audit and Accountability Act 2014 (“the Act”) make provision about the resignation and removal of a local auditor appointed under Part 3 of the Act. Local auditors audit the accounts of relevant authorities (as to which, see Section 2 of, and Schedule 2 to, the Act). Most relevant authorities are required to have an auditor panel to advise on the selection and appointment of its local auditor (see Section 9 of, and Schedule 4 to, the Act in relation to auditor panels).

Regulation 2 makes provision about the application of the Regulations in relation to relevant authorities that are policing bodies (by virtue of Section 9(2) of the Act those authorities are not required to have an auditor panel). Regulation 3 sets out requirements on an auditor when resigning from office as a relevant authority’s local auditor and steps that must be taken by the authority in question. Regulation 4 requires the auditor panel of the authority to investigate following the resignation of a local auditor.  The panel’s statement is required to be published.

Regulations 5 to 7 make provision about the removal of a local auditor from office, including the way in which such a decision must be taken, the process the relevant authority must follow prior to removal of the auditor and the steps it must take after that removal. Regulation 8 requires a relevant authority to notify certain bodies that the local auditor has ceased to hold office. Regulation 9 requires a relevant authority to appoint a new local auditor within three months and contains provision enabling the Secretary of State to appoint, or direct the authority to appoint, a replacement auditor where the authority has failed to do so.

 

Local Auditors

June 30th, 2014 by James Goudie QC in Non Judicial Control

Regulations have been made under the Local Audit and Accountability Act 2014 (“the Act”).  The Local Audit (Professional Qualifications and Major Local Audit) Regulations 2014, SI 2014/1627 make provision about professional audit qualifications under the Act, which requires “relevant authorities” to appoint their own “local auditors”.  Schedule 5 to the Act applies, with modifications, provisions of the Companies Act 2006 in relation to the eligibility and monitoring of local auditors.  The Local Audit (Liability Limitation Agreements) Regulations 2014, SI 2014/1628, make provision about agreements (liability limitation agreements) to limit the liability of a local auditor appointed under the Act Pt 3 in respect of any negligence, default, breach of duty or trust in relation to a “relevant authority”.  Regulation 2 sets out a restriction on the duration of an agreement: it cannot cover more than the financial year or years to which the appointment of the local auditor relates.  Regulation 3 prevents the agreement from limiting the local auditor’s liability to less than such amount as is fair and reasonable in all the circumstances of the case.  The Public Interest Reports and Recommendations (Modification of Consideration Procedure) Regulations 2014, SI 2014/1629, provide for paragraph 5 of Schedule 7 to the Act to apply with modifications in respect of certain relevant authorities listed in Schedule 2 to the Act.  Paragraph 5 of Schedule 7 to the Act sets out the procedure for the consideration by relevant authorities of public interest reports or recommendations.  Relevant authorities must consider the report or recommendation at a meeting within one month of receiving it under paragraph 5(5).  The Regulation modify the application of this sub-paragraph so that certain relevant authorities may consider a report or recommendation as soon as is practicable, rather than within one month of receipt.