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37 2001

LOCAL GOVERNMENT ACT, 2001

Chapter 2

Audit

Interpretation (Chapter 2).

114. —(1) In this Chapter—

“audit committee” has the meaning given in section 122 ;

“audited financial statement” has the meaning given in section 120 (1);

“audit opinion” has the meaning given in section 120 (1);

“auditor's report” has the meaning given in section 120 (1);

“auditor's special report” has the meaning given in section 120 (2);

“local authority or other body” means a local authority, a joint body and any other body standing prescribed by regulations made by the Minister under section 115 ;

“local government auditor” shall be read in accordance with section 116 (1).

(2) Any reference to the Minister in this Chapter shall, in a case where the reference applies to a body prescribed by regulations under section 115 for which another Minister of the Government is responsible, be read as a reference to that Minister.

Application (Chapter 2).

115. —(1) This Chapter applies to every local authority and every joint body and their accounts shall be audited by a local government auditor in accordance with the provisions of this Act.

(2) (a) The Minister may by regulations prescribe a body to be a body to which this Chapter also applies.

(b) The Minister shall not make regulations under this subsection in respect of a body for which another Minister of the Government is directly or indirectly responsible unless that Minister consents to those regulations being made.

Local Government Audit Service.

116. —(1) There is established on the commencement of this section a service to be known as the Local Government Audit Service and the Minister may appoint to such service such and so many suitably qualified persons, to be known as local government auditors, to carry out or assist in the carrying out of audits of the accounts of local authorities and other bodies.

(2) Local government auditors shall be independent in the exercise of their professional functions.

(3) The Minister may appoint a person (in this Act referred to as the “Director of Audit”) to the Local Government Audit Service to carry out the functions set out in subsection (4).

(4) The functions of the Director of Audit are—

(a) to organise, direct and allocate resources within the Local Government Audit Service,

(b) to assign audits of particular local authorities or other bodies to particular local government auditors,

(c) to provide such advice and assistance as the Minister may from time to time require for the purposes of section 117 (1),

(d) to arrange for auditors to certify claims or returns in accordance with section 126 ,

(e) to direct the Local Government (Value for Money) Unit established by section 14 of the Local Government (Financial Provisions) Act, 1997 , and to ensure that the work of the unit is incorporated into local government audit practice,

(f) to report from time to time to the Minister on matters set out in paragraphs (a) to (e) and generally on the performance of the Local Government Audit Service,

(g) to bring proceedings under section 119 (4), and

(h) to carry out such other functions as the Minister may from time to time direct.

(5) By virtue of this subsection the Local Government (Value for Money) Unit referred to in subsection (4)(e) forms part of the Local Government Audit Service.

(6) (a) A person who is a local government auditor immediately prior to the commencement of this section shall by virtue of this subsection on such commencement stand assigned to the Local Government Audit Service.

(b) Nothing in this subsection shall be read as prejudicing the position of a person referred to in paragraph (a) as a civil servant for the purposes of the Civil Service Regulation Act, 1956 .

Code of audit practice.

117. —(1) After consideration of the relevant professional auditing standards and following consultation with the Director of Audit, the Minister may issue and amend from time to time a code of audit practice in relation to the conduct of an audit and to such related matters as the Minister may consider appropriate.

(2) Notwithstanding the generality of subsection (1), the code may include provisions as regards the consideration of—

(a) the general financial standing of the audited body,

(b) the adequacy of the audited body's financial systems,

(c) the adequacy of the audited body's arrangements for preventing and detecting fraud and corruption,

(d) the adequacy of arrangements by a local authority or other body to secure economy and efficiency in the use of resources and of the systems employed by the local authority or other body concerned for the purposes of enabling it to evaluate the effectiveness of its operations.

(3) (a) In carrying out the audit of a local authority or other body, a local government auditor shall comply with the code of audit practice provided for in subsection (1).

(b) Nothing in this Chapter shall prejudice section 15 of the Local Government (Financial Provisions) Act, 1997 .

Audit procedure.

118. —(1) The Minister may make regulations setting out the procedures to be followed by a local authority or other body and by a local government auditor in relation to the audit of accounts of the local authority or other body.

(2) Without prejudice to the generality of subsection (1), the regulations may provide for any or all of the following—

(a) giving notice of the time and place for holding the audit;

(b) adjournment of the audit;

(c) public right of inspection of accounts;

(d) amendment or correction of errors in the annual financial statement;

(e) giving any member of the public a right to make an objection to the local government auditor concerning the accounts and the making of decisions on any such objections by the local government auditor;

(f) completion of the audit by the local government auditor;

(g) public notice of audited accounts;

(h) fees or a scale of fees for audit services.

(3) In the course of the audit of accounts of the local authority or other body, the local government auditor shall carry out such audit tests as he or she considers appropriate in order to be satisfied as to—

(a) whether the annual financial statement is prepared in accordance with section 107 or with the accounting requirements otherwise applicable to the body concerned,

(b) whether the annual financial statement presents fairly the financial position of the authority or other body and of its income and expenditure for the period in question,

(c) whether the transactions of the audited body conform with the statutory or other authorisation under which they purport to have been carried out.

Right of auditor to inspect documents, obtain information, etc.

119. —(1) For the purposes of this Chapter a local government auditor shall in the course of audit—

(a) be given such office accommodation or other facilities as he or she may reasonably require,

(b) be given access to and allowed to inspect all books, deeds, contracts, accounts, vouchers, receipts, maps, plans, documents, or other data, information, materials or things, as he or she may reasonably require,

(c) be entitled at all reasonable times to enter and inspect any land or premises or structure (other than a dwelling) which is owned, used, controlled or managed by a local authority or other body.

(2) It is the duty of a local authority (its members and employees) or other body to afford every facility and co-operation to a local government auditor including the giving of information which he or she may reasonably request.

(3) Any person who obstructs or impedes or refuses to comply with a request of a local government auditor acting in the exercise of any of the functions conferred on him or her by this section is guilty of an offence and is liable on summary conviction to a fine not exceeding £1,500 or, at the discretion of the court, to imprisonment for a term not exceeding 6 months or to both.

(4) Summary proceedings for an offence under this section may be brought by the Director of Audit.

Audit opinion and report.

120. —(1) On completion of the audit of accounts of a local authority or other body, the local government auditor—

(a) shall enter his or her opinion (in this Chapter referred to as an “audit opinion”) in a form consistent with the code of audit practice referred to in section 117 on the relevant annual financial statement (in this Chapter referred to as the “audited financial statement”),

(b) shall send copies of the audited financial statement without delay to the local authority or other body concerned, to the Director of Audit and to the Minister, and

(c) may prepare a report (in this Chapter referred to as an “auditor's report”) on any matter or matters which come to his or her notice during the course of the audit and such report shall accompany the audited financial statement.

(2) (a) Where the local government auditor considers it appropriate in the public interest to do so, he or she may prepare a report (in this Chapter referred to as an “auditor's special report”) on any matter or matters which come to his or her notice during the course of the audit before the completion of such audit.

(b) The auditor's special report shall be sent without delay to the local authority or other body concerned, to the Director of Audit and to the Minister.

(3) An audit opinion, auditor's report or auditor's special report shall be addressed to the local authority or other body concerned.

(4) Before the finalisation of an auditor's report or an auditor's special report, the local government auditor shall consult with the manager or chief officer of the audited body concerned, as the case may be, in respect of the matters the subject of such report and shall consider and record the comments of the manager or chief officer, as the case may be, which are of material significance to such matters.

Consideration of annual financial statement and auditor's report.

121. —(1) Following receipt by the local authority or joint body of the audited financial statement, auditor's report or auditor's special report, the manager for that local authority or joint body shall submit the statement for consideration at the next practicable meeting of the local authority or joint body concerned.

(2) At any time within 3 months of the audited financial statement, auditor's report or auditor's special report having been submitted to the local authority or joint body in accordance with section 120 , the local government auditor who carried out the audit may notify the local authority or joint body that he or she wishes to speak to that authority or body about it.

(3) Following notification under subsection (2), a local government auditor is entitled to speak to the local authority or joint body at its next meeting following the notification about the audited financial statement, auditor's report or auditor's special report or at such other meeting as he or she may specify.

Audit committee.

122. —(1) A local authority or joint body may, within 3 months of the meeting for which an audited financial statement, auditor's report or auditor's special report was submitted in accordance with section 121 (1), establish a committee (in this Chapter referred to as an “audit committee”).

(2) An audit committee consists of such members of the local authority or joint body as the authority or body may decide but in no case may the number exceed half of the total number of members or 7 members, whichever is the lesser number.

(3) An audit committee may consider the audited financial statement of the local authority or joint body, as the case may be, together with any auditor's report or auditor's special report thereon and any other related matters.

(4) All meetings of an audit committee shall be in public.

(5) At the request of an audit committee the local government auditor who conducted the audit shall attend a meeting of the audit committee to clarify such issues as may be necessary in relation to the content of the auditor's report or auditor's special report or otherwise.

(6) The issue to be discussed by an audit committee at a meeting which a local government auditor attends is subject to such guidelines as the Minister may from time to time issue, but in no case while the local government auditor is in attendance may there be discussed an issue relating to—

(a) a surcharge under section 12 of the Local Government (Ireland) Act, 1871, or

(b) a charge under section 20 of the Local Government (Ireland) Act, 1902 (as amended by section 61(3) of the Local Government Act, 1925 ).

(7) At the request of the audit committee the manager for the local authority or joint body concerned shall attend the meeting of the committee and may arrange for the attendance of such other employees, as he or she may consider appropriate.

(8) The audit committee shall report to the local authority or joint body on its consideration of the audited financial statement, auditor's report or auditor's special report.

(9) A local government auditor is entitled to qualified privilege in relation to any statements made by him or her at an audit committee meeting or at a meeting referred to in section 121 (3).

Extraordinary audit.

123. —(1) The Minister may direct that an extraordinary audit of accounts of a local authority or other body, or of an aspect of those accounts, be carried out by a local government auditor if it appears to the Minister appropriate to do so, by reason of information contained in an auditor's report or a special auditor's report or for any other reason.

(2) Sections 117 to 119 apply to the conduct of an extraordinary audit, with any necessary modifications or adaptations.

(3) Sections 120 to 122 apply to a report resulting from an extraordinary audit.

Re-assignment of audit.

124. —(1) Where the local government auditor who conducted or is conducting an audit dies, retires, resigns or is otherwise not available, the Director of Audit may assign another local government auditor to be the local government auditor for the audit.

(2) At any attendance by a local government auditor assigned under subsection (1) at any meeting of a local authority or joint body he or she shall be deemed to have conducted the audit.

Audit fees.

125. —(1) The Minister may from time to time prescribe by regulations a fee or scale of fees in respect of the audits of accounts which are required to be audited in accordance with this Act.

(2) A local authority or other body shall pay to the Minister such amount as determined in accordance with such regulations made under this section.

Certification of claims, returns, etc.

126. —If required by the Minister, the Director of Audit shall make arrangements for local government auditors to certify claims or returns, or any class of claims or returns, in respect of grants, subsidies or other money due to a local authority or other body by a department of State, public authority or other local authority.