c. External audit

Local councils are subject to a "light touch" system of external audit, referred to as a "limited assurance review" rather than a full audit.  Each financial year legislation requires a council to prepare accounting statements which must also be externally audited for all councils with an annual turnover of £25,000.  Councils under £25,000 still have to complete and publish the AGAR, only a "certificate of exemption" from the external auditor needs to be signed and submitted to the external auditor. 

External auditors review the Annual Governance and Accountability Return (AGAR) and check the accounting summary is consistent and reconciles with the bank account and that year on year variances are explained.

External auditors are appointed nationally every five years and are normally a large accountancy or audit firm.  They will charge a fixed scale fee dependent on the annual turnover of the council and provide an independent opinion on the council's financial statements.

See AGAR article

The annual audit process requires the council to advertise the availability of its accounts and supporting documents for inspection for a 6 week period, which must include the first ten working days of July by "interested persons" which are usually local electors. During this period they can ask questions about the accounts for that year and raise an objection with the external auditor.

There is no exemption if the council offices are not available. The public have a right to inspect the accounts during the period advertised therefore should any person request to inspect them you will have to make arrangements for this to happen at another suitable venue.

If everything is in order the council will receive a signed certificate from the external auditor and an "unqualified opinion" on the AGAR.  This means that nothing has come to the external auditor's attention that gives cause for concern.  Only a significant problem would cause the external auditor to "qualify" the accounts and this is a serious issue that needs to be addressed.

Finally, the council then has to publish a notice stating that the audit has been completed, publish and display its AGAR by no later than 30th September.