Changes to the External Audit Requirements 2017/18 – Exempt authorities

Under a new audit framework effective from 1 April 2017, established by the Local Audit and Accountability Act 2014, Parish Councils (and internal drainage boards, charter trustees and port health authorities) with an annual turnover not exceeding £25,000 will have the option to declare themselves to be exempt from external audit. In place of external audit, these authorities will be subject to the code of recommended practice (‘the Code’), which was issued by the Government (Pursuant to s.2 of the Local Government, Planning and Land Act 1980 (‘the 1980 Act’), on 17 December. This is to enable local electors and ratepayers to access relevant information about the authorities’ accounts and governance.

Although there is no change at all to the requirements for all smaller authorities to complete and approve an Annual Return, now known as the Annual Governance and Accountability Return (AGAR), and provide for public rights, exempt authorities must meet a number of specified criteria and then provided those criteria are satisfied they only need submit a copy of their exemption certificate to the chosen external auditor, after the smaller authority has made that decision.

The exemption criteria are met if the smaller authority can declare that it has:

  • Total gross income and total gross expenditure below £25k; and
  • No public interest report/statutory recommendation/advisory notice/judicial review/application to court re unlawful item of account issued by its external auditor in the prior year; and
  • Was in existence since before 1/4/14.

Tidbury Green Parish Council met all of the exemption criteria for the year 2017-18. Therefore Parish Councillors unanimously agreed to declare themselves exempt. A copy of the Exception Certificate can be found here.