New transparency rules will require councils to publicise to the press and public the little-known rights to inspect councils’ detailed financial accounts, ledgers and records. This is designed to increase scrutiny of councils’ spending decisions by armchair auditors and local investigative journalists, Local Government Secretary Eric Pickles said today.
Every year councils are required to open their accounting records for public inspection and challenge over a set time period. Yet the public often do not realise that these citizens’ rights include checking not just the accounts but also “all books, deeds, contracts, bills, vouchers and receipts related to them”. These rights allow the public to check any spending under the £500 online transparency threshold, and avoid the need to submit Freedom of Information Act requests.
Revised rules controlling local authority accounting and audit practice have been introduced reinforcing the importance of local transparency, audit openness and accountability. These inspection rights last for 20 working days, but the period differs for each local authority, resulting in a low take-up to date. So in addition to the existing requirement to notify the public of their rights through the local press, councils must now also highlight the opportunity on their website.
In a deregulatory move, changes will also reduce the financial bureaucracy and burdens imposed on the smallest local authorities, streamlining the audit process to make it easier for authorities to be accountable to their community.
Until now, any public body with a budget over £1m had to provide comprehensive accounting and audit details, which hit smaller authorities such as parish councils disproportionately. These budget thresholds have now risen to £6.5m, meaning that up to 100 smaller local bodies will immediately benefit from less burdensome audit requirements, reducing costs on reporting duties imposed by Whitehall.
Communities and Local Government Secretary Eric Pickles said:
An open Government is vital for good democracy and that’s why councils have to open their ledgers to the public - everyone has a right to know how their taxes are spent.
But it’s not enough to just publish them quietly, armchair auditors and local journalists need to know exactly where to find that information and these new changes will make sure they are not just out in the open but under the spotlight too.
We have also cut the red tape for the smallest councils. For too long they have been hostage to the most complex demands from Whitehall, eating into time and resources they could have used to deliver for their community, whilst maintaining robust safeguards on the spending of public money.
Notes to editors
Case studies on the exercise of these rights can be found at: www.orchardnews.com/casestudies.htm (external link).
1. The revised Accounts and Audit (England) Regulations 2011 now include the following notification requirements:
the period during which the accounts and other documents will be available for inspection
the place at which, and the hours during which, they will be so available
the name and address of the auditor
the right to make objections at audit; and
the date appointed for the exercise of rights of electors.
As soon as reasonably possible after conclusion of an audit, a larger relevant body must give notice by advertisement and on its website stating that the audit has been concluded and that the statement of accounts is available for inspection by local government electors and including:
- a statement of the rights conferred on local government electors
- the address at which and the hours during which those rights may be exercised; and
- details of where the statement of accounts can be found on the body’s website
2. In addition the new rules raise the threshold below which a local body is classed as a smaller body from £1m to £6.5m annual income or expenditure. This is based on the definition of small companies in the Companies Act.
3. Changes to the regulations came into effect on 31 March 2011 meaning affected authorities can apply the changes to their 2010 - 2011 accounts due to be published shortly. The full regulations can be found at: www.legislation.gov.uk/uksi/2011/817/contents/made (external link).
4. Any body which enjoys the freedoms given by the Prudential Capital Finance System is excluded from the smaller body category.
5. Smaller body status means that the body can prepare a simpler set of year end accounts, and is subject to a less demanding system of audit scrutiny. Those without websites are being encouraged to consider how else they can make their community more aware of their rights. Larger parish councils, internal drainage boards and joint committees of principal local authorities will be the main types of body affected by the change.
6. The procedure for councillors to approve the accounting statements of the larger bodies will also change to allow them sight of audit findings before they are asked to give their approval.
7. Enforcement of these regulations in the past has relied on audit review and civil law obligations, and this will continue in the future. Criminal sanctions have been removed, as they have not been invoked in recent years and since Coalition Ministers believe such criminal sanctions are disproportionate.
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