Audit Framework for smaller councils with a turnover below £25,000: Government response to the consultation

The Local Audit and Accountability Act 2014 received Royal Assent on 30 January.  

The Act sets out a new audit framework for local authorities which are currently covered by the Audit Commission regime. Under this new framework, parish councils with an annual turnover not exceeding £25,000 will be exempt from routine external audit. Instead, these parish councils will be subject to new transparency requirements.

On 10 March 2014 the Government launched a consultation on a draft transparency code for parish councils with a turnover not exceeding £25,000. The purpose of this consultation was to gauge the views of organisations affected by the proposed code, and any other parties with an interest in local audit and transparency. The consultation closed on 9 May 2014. 

OALC responded on behalf of our parishes to the consultation. This document from DCLG, August 2014, summarises the comments received and sets out the Government’s response.
The consultation questions were and the Government response is set out in italics after each question:  

• 1. The government proposes that the code will be mandatory for parish councils with an annual turnover not exceeding £25,000. Do you agree?

The Government intends to introduce Regulations to make the Code mandatory. Parish councils can continue to have an external audit if they wish to. The Government intends to base the threshold (£25,000) on a parish council’s annual turnover to ensure consistency with the external audit exemption threshold.

• 2. The government proposes that parish meetings will be exempt from complying with the code. Do you agree?

The Government does not believe that it is proportionate to place parish meetings under a duty to comply with this code. Parish meetings will therefore continue to be required to develop a publication scheme and ensure key financial and governance information is available to local electors upon request.

• 3. Should there be a threshold above which individual items of expenditure must be published? If yes what should this threshold be (e.g. £50, £100)?

The Government agrees that a threshold above which individual items of expenditure should be published should be set at £100 (including VAT where it cannot be recovered)

• 4. What exemptions – if any – would need to be made to information published to explain negative responses to the internal controls objectives (e.g. information relating to a current fraud case)?

The Government agrees that exemptions under the Data Protection Act 1998 and Freedom of Information Act 2000 should apply to data published in accordance with this code.

• 5. The government proposes to require electronic publication. Do you agree?
• 6. How much additional staff time and cost will be involved for authorities in publishing the required data online?

Of those who supported the government’s proposal, more than 40% of respondents recognised that, for many of the smallest parish councils, the additional burden placed on clerks tasked with preparing the required information for publication may be significant. Nevertheless the Government agrees that this requirement should become mandatory. We have listened to the concerns some parish councils and billing authorities have raised regarding their capacity to publish information electronically. In light of these consultation responses, the Government intends to work with the sector to develop a package of support that best meets its needs.

The Governments intention is to lay regulations for making the transparency code for parish councils and other smaller authorities mandatory later on this year.