Audit Commission Act 1998
Audit Commission Act 1998
1998 CHAPTER 18
An Act to consolidate Part III of the Local Government Finance Act 1982 and other enactments relating to the Audit Commission for Local Authorities and the National Health Service in England and Wales.
[11th June 1998]
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part I
The Audit Commission
1 The Audit Commission.
(1) There shall continue to be a body known as the Audit Commission for Local Authorities and the National Health Service in England and Wales.
(2) The Commission shall consist of not less than 15 nor more than 20 members appointed by the Secretary of State.
(3) The Secretary of State shall appoint one of the members to be chairman and another to be deputy chairman.
(4) An appointment under subsection (2) or (3) shall be made after consultation with such organisations and o ther bodies as appear to the Secretary of State to be appropriate.
(5) Schedule 1 has effect with respect to the Commission. We welcome your
Part II
Accounts and Audit of Public Bodies
Audit of accounts
2 Required audit of accounts.
(1) The accounts to which this section applies—
(a) shall be made up each year to 31st March or such other date as the Secretary of State may generally or in any special case direct, and
(b) shall be audited in accordance with this Act by an auditor or auditors appointed by the Commission.
(2) This section applies to the accounts mentioned in Schedule 2.
3 Appointment of auditors.
(1) An auditor appointed by the Commission to audit the accounts of a body whose accounts are required to be audited in accordance with this Act (‘a body subject to audit’) may be—
(a) an officer of the Commission,
(b) an individual who is not an officer of the Commission, or
(c) a firm of individuals who are not officers of the Commission.
(2) Where two or more auditors are appointed in relation to the accounts of a body, some but not others may be officers of the Commission and they may be appointed—
(a) to act jointly
(b) to act separately in relation to different parts of the accounts or
(c) to discharge different functions in relation to the audit.
(3) Before appointing an auditor or auditors to audit the accounts of a body other than a health service body the Commission shall consult that body.
(4) For the purpose of assisting the Commission in deciding on the appointment of an auditor or auditors in relation to the accounts of a body other than a health service body, the Commission may require the body to make available for inspection by or on behalf of the Commission such documents relating to any accounts of the body as the Co mmission may reasonably require for that purpose.
(5) A person shall not be appointed by the Commission as an auditor unless—
(a) he is a member of one or more of the bodies mentioned in subsection (7)
(b) he has such other qualifications as may be approved for the purposes of this section by the Secretary of State or
(c) he was approved before 1st April 1996 by the Secretary of State under section 13(5 ) of the Local Government Finance Act 1982, and the approval has not been withdrawn.
(6) A firm shall not be appointed by the Commission as an auditor unless each of its members is a member of one or more of the bodies mentioned in subsection (7).
(7) The bodies referred to in subsections (5) and (6) are—
(a) the Institute of Chartered Accountants in England and Wales
(b) the Institute of Chartered Accountants of Scotland
(c) the Association of Certified Accountants
(d) the Chartered Institute of Public Finance and Accountancy
(e) the Institute of Chartered Accountants in Ireland and
(f) any other body of accountants established in the United Kingdom and for the time being approved by the Secretary of State for the purposes of this section.
(8) The appointment by the Commission of an auditor who is not an officer of the Commission shall be on such terms and for such period as the Commission may determine.
(9) Arrangements may be approved by the Commission, either generally or in a particular case, for a person or persons to assist an auditor appointed by the Commission (whether the auditor is an officer of the Commission or not) by carrying out such of the auditor's functions under this Act as may be specified in the arran gements.
(10) Subsection (9) does not apply to functions under section 19.
(11) References in the following provisions of this Act to an auditor include, in relation to any function of an auditor, a reference to any person carrying out that function under arrangements approved under subsection (9). Code of audit practice.
4 Code of audit practice.
(1) The Commission shall prepare, and keep under review, a code of audit practice prescribing the way in which auditors are to carry out their functions under this Act.
(2) A different code may be prepared with respect to the audit of the accounts of health service bodies as compared with the code applicable to the accounts of other bodies.
(3) A code prepared under this section shall embody what appears to the Commission to be the best professional practice with respect to the standards, procedures and techniques to be adopted by auditors.
(4) A code does not come into force until approved by a resolution of each House of Parliament, and its continuation in force is subject to its being so approved at intervals of not more than five years.
(5) Subsection (4) does not preclude alterations to a code being made by the Co mmission in the intervals between its being approved in accordance with that subsection.
(6) The Commission shall send copies of any code prepared under this section, and of any alterations made to such a code, to the Secretary of State who shall lay them before Parliament and the Commission shall from time to time publish any such code as for the time being in force.
(7) Before preparing or altering a code applicable to any accounts, the Commission shall consult—
(a) if the accounts are or include those of health service bodies, such organisations connected with the health service as appear to the Commission to be concerned
(b) if the accounts are or include those of other bodies, such associations of local authorities as appear to the Commission to be concerned and
(c) in any case, such bodies of accountants as appear to the Commission to be appropriate.
5 General duties of auditors.
(1) In auditing accounts required to be audited in accordance with this Act, an auditor shall by examination of the accounts and otherwise satisfy himself—
(a) if they are accounts of a health service body, that they are prepared in accordance with directions under subsection (2), (2B) (NHS trusts) or (2B) (fund-holding practices) of section 98 of the National Health Service Act 1977
(b) in any other case, that they are prepared in accordance with regulations under section 27
(c) that they comply with the requirements of all other statutory provisions applicable to the accounts
(d) that proper practices have been observed in the compilation of the accounts
(e) that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources and
(f) that that body, if required to publish information in pursuance of a direction under section 44 (performance information), has made such arrangements for collecting and recording the information and for publishing it as are required for the performance of its duties under that section.
(2) The auditor shall comply with the code of audit practice applicable to the accounts being audited as that code is for the time being in force.
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