From information recently made available by NALC, it appears that there will be no identifiable benefit for councils in choosing to opt out of the arrangements which are being made by Smaller Authorities’ Audit Appointments Limited (SAAA) for the external audit of parish and town councils from 2017. (see editions of the SPCA “Bulletin” dated 8th January and 28th January for further details),
Councils are reminded that they have until 31st March to confirm to NALC if they wish to opt out. Conversely, for those that choose to ‘opt in’ to the sector led audit arrangements no action is required; they will simply become subject to the new arrangements by default.
The understanding is that ‘opted in’ councils with an annual turnover of less that £25,000 will not have an auditor appointed to them, as they will be exempt from audit, and that they will pay no fee; an auditor will only be appointed if there were electors’ queries about the council’s annual accounts.
Opted in councils which have an annual turnover of £25,000 or more will have an auditor appointed to them by SAAA, and it has been confirmed that the scale of fees for audit will be the same as those which currently apply under the existing contract with Grant Thornton.
If councils do choose to ‘go it alone’, and opt out, they will have to appoint their own external auditor by 31st December 2016, even if their annual turnover is less than £25,000. To do that, they will have to set up an auditor panel, following the guidance issued by the Chartered Institute of Public Finance and Accountancy (see SPCA “Bulletin” dated 28th January). The auditor appointed will have to be eligible for appointment in accordance with the Audit and Accountability Act 2014.
The government is currently looking at licensing eligibility to conduct the audit of smaller bodies. External audit work must be carried out in compliance with the National Audit Office’s Code of Audit Practice, and councils’ auditor panels will be expected to monitor compliance. Thus it will be seen that councils which choose to ‘opt out’ will incur a considerable additional administrative burden.