AUDITING YOUR COUNCIL’S ACCOUNTS – A QUICK GUIDE
Q: What can I inspect? A: You can inspect your authority’s accounts, any related documents, and, if a local elector, any report the auditor made in that financial year. The law says you may inspect the accounts to be audited and all books, deeds, contracts, bills, vouchers and receipts relating to them for that financial year. You can copy all, or part, of these accounts and related documents (but you may have to pay for copies
Q: Are there limits to what I can inspect? A: Yes. The law limits what you can inspect or copy. Your inspection must be about the accounts, or relate to an item in the accounts. You cannot, for example, inspect or copy documents unrelated to the accounts, or that include personal information about staff.
An exception to this is that there will be information in the statement of accounts relating to senior employees’ salary and benefits and you can ask to see the relevant entries in the statement. A senior employee is someone earning more than £150,000 a year, or someone earning at least £50,000 a year and holding a senior management position in the authority.
You may also not be able to inspect information which is protected by commercial confidentiality. This is information which would prejudice commercial confidentiality if it was released to the public and there is not, set against this, a very strong reason in the public interest why it should nevertheless be disclosed.
The inspection period must include a common period during which all local authority accounts are available to inspect. This will, for larger authorities, be 3-14 July 2017 for the year of accounts 2016-17 and 1-14 June 2018 for the year of account 2017-18.
Q: What if I am denied my inspection rights?
A: If you disagree with an authority about your inspection rights or cannot access the documents you want to inspect, first try to resolve this with the authority. Nobody should try to stop you from inspecting and copying documents, but you must always act reasonably. Acting reasonably includes agreeing a time to inspect documents that suits the authority as well as you. Acting reasonably also means being responsible and specific about what you want to inspect. An authority may consider a request to see ‘everything’ as unreasonable, and reject it.
Objecting to accounts
You have inspected the accounts and asked your questions. Now you may wish to object to the accounts on the basis that, in your view, there is an item in the accounts that is unlawful; there are issues relevant to the authority’s arrangements for securing value for money or that are referred to in an authority’s annual governance statement; or there are matters of wider concern arising from the authority’s finances.
Remember you can only make an objection within the inspection period; the auditor has no discretion to extend this period. It is really important, therefore, that you do not delay corresponding with the auditor. If you leave this to the last minute and submit an ineligible objection, there may not be time to re-submit an eligible objection before the end of the inspection period, and you may lose your right to object.
Q: Who can object to the accounts? A: You can only object to the accounts if you are an elector for the body in question; that is to say you must be registered on the electoral register for the geographical area covered by the authority.
Q: What is an objection to the accounts? A: A local government elector can ask the external auditor to apply to the High Court for a declaration that an item of account is unlawful, or to issue a report on matters which are in the public interest (‘a public interest report’). You must, so far as is possible, tell the external auditor in writing which item in the accounts you object to and why you think the item is unlawful, or why you think that a public interest report should be made.
Simply disagreeing with the merits of any decision taken regarding income or spending does not make it unlawful. You must provide the external auditor with the evidence you have to support your objection.
An unlawful item of account is one that, for example, records spending or income that the authority: • spent or received without powers to do so; • took from, or added to, the wrong fund or account; or • spent on something that it had the power to spend on, but the decision to spend the money was wholly unreasonable or irrational.
‘Unreasonable’ has a special meaning in law in this context and is a high threshold. An authority acts ‘unreasonably’ when its actions are so wholly unreasonable that no reasonable person could have made that decision. This is sometimes called acting ‘irrationally’. You may want to raise issues relating to matters that the auditor might consider issuing a report in the public interest. This could include issues relevant to the authority’s arrangements for securing value for money, matters that are referred to in an authority’s annual governance statement, or matters of wider concern arising from the authority’s finances.
Again, the auditor will not take action simply because you disagree with any income or spending, nor is the auditor likely to get involved where you argue that particular spending is not value for money. The auditor’s concerns will be with the adequacy of the authority’s general arrangements for securing value for money. Auditors have a range of ways in which to bring matters of concern to the attention of authorities and to then take steps to follow up on any recommendations.
Q: How do I object to the accounts? A: To object to the authority’s accounts you must write to the external auditor stating you want to make an objection, including the information and evidence below and you must send a copy to the authority.
The notice must include: • confirmation that you are an elector in the authority’s area; • why you are objecting to the accounts and the facts on which you rely; • details of any item in the accounts that you think is unlawful; • details of any matter you think the external auditor should make a public interest report about; and • what you would like the external auditor to do (see the next question).
Other than it must be in writing, there is no set format for objecting.
Q: What can I ask the external auditor to do about my objection? A: You should say which power or powers you would like the external auditor to consider using to deal with your objection. You can only ask the external auditor to act within the powers available under the Local Audit and Accountability Act 2014. If you are objecting you should specifically ask the external auditor to do either or both of the following: • issue a report in the public interest; and/or • apply to the courts for a declaration that an item of account is against the law. Each of these options is explained below.
Q: What does it mean if an external auditor issues a public interest report? A: The external auditor can report ‘in the public interest’. When an auditor exercises their discretion to report in the public interest, there are actions that the authority must take. On receipt of a public interest report, the authority must publish the report on its website (or if it does not have one, in another way likely to bring it to the attention of people who live in its area), call a public meeting to consider the external auditor’s report and any recommendations in it. The authority must consider and respond publicly within a short time frame of receiving a public interest report, usually a month. The external auditor can send the public interest report to anyone they see fit, including the media and other local or national public bodies. The external auditor must also send a copy to the relevant Secretary of State.
Local authority accounts – a guide to your rights – National Audit Office