Smaller Authorities'Audit Appointments
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Frequently Asked Questions

The most frequently asked questions break down into four main categories, which for speed can be directly accessed here;

a) Process changes due to Coronavirus
1 About SAAA
2 Appointment of External Auditors
3 Exempt Authorities
4 Annual Governance and Accountability Return (AGAR)


a) Process changes due to Coronavirus

What statutory amendments have been made due to the current Coronavirus situation?

The government temporarily removed the legal requirement for local authorities to hold public meetings in person during the coronavirus pandemic.

The changes to Regulations allowing public meetings to be held virtually apply to meetings taking place before 7 May 2021. The government has considered extending the 7th May 2021 deadline but has concluded that it is not possible to bring forward emergency legislation to extend the deadline at this time. Therefore if an authority wishes to approve the Annual Governance and Accountability Return via a remote meeting this must be completed before 7th May 2021.

Further technical and practical assistance and advice can be obtained from the following membership organisations:

National Association of Local Councils and County Associations - www.nalc.gov.uk/about-county-associations
Society of Local Council Clerks - www.slcc.co.uk
Association of Drainage Authorities - www.ada.org.uk

 

1 About SAAA

1.1 What is SAAA?

Smaller Authorities’ Audit Appointments Ltd (SAAA) is an independent, not for profit, limited company established to procure external audit services and appoint external auditors for smaller authorities.

A smaller authority is defined as an authority where the higher of gross annual income or expenditure does not exceed £6.5 million.

The principal legislation governing the statutory functions of SAAA is the Local Audit and Accountability Act 2014.

SAAA is a ‘sector-led’ body with a governing Board comprising 3 Member Directors representing the sector membership organisations and 3 Independent Directors.

Member directors:
Peter Bateson – Association of Drainage Authorities
Jonathan Owen – National Association of Local Councils
Michael King – Society of Local Council Clerks

Independent directors:
Mike Attenborough-Cox – Independent Chairman
Martin McNeill – Independent member
Lizzie Peers – Independent member


1.2 Where can I get advice and assistance?

The Annual Governance and Accountability Return needs to be completed in accordance with “proper practices” as set out in “Governance and Accountability for Smaller Authorities in England - A Practitioners’ Guide to Proper Practices.”

Further technical and practical assistance and advice can be obtained from the following membership organisations:

National Association of Local Councils and County Associations - www.nalc.gov.uk/about-county-associations
Society of Local Council Clerks - www.slcc.co.uk
Association of Drainage Authorities - www.ada.org.uk

SAAA is unable to provide advice on the completion of the Annual Governance and Accountability Return.


1.3 Why was SAAA established ?

The Local Audit and Accountability Act 2014 established new arrangements for the accountability and audit of local public bodies in England. The legislation states that for the financial year starting on 1 April 2017, all smaller authorities must appoint their own external auditor.

It was acknowledged that having approximately 10,000 authorities establishing correct procedures and appointing their own auditors for the first time would generate significant challenges. To assist smaller authorities find and appoint an external auditor, the Secretary of State at the then Department of Communities and Local Government (DCLG) specified SAAA as a sector led body with powers to procure and appoint auditors and set audit fees for smaller authorities in compliance with the Local Audit and Accountability Act 2014, the Accounts and Audit Regulations 2015, and the Local Audit (Smaller Authority) Regulations 2015.

SAAA undertook a comprehensive and robust procurement tender exercise in 2016 which resulted in the appointment of external auditors in a cost effective way that has resulted in significant financial savings for the smaller authority sector.


2 Appointment of External Auditors

2.1 How do I know if my authority is included in the SAAA regime?

Following the extensive communication and invitation exercise undertaken during 2016, all smaller authorities in England are opted-in to the national procurement and appointment of external auditors for a 5 year period from 1 April 2017.


2.2 Who is my appointed auditor?

All auditor appointments are listed by contract (County) area on the audit appointments page of the SAAA website together with their contact details, and a full listing of all smaller authorities in the ‘Directory of small body auditor appointments’ is also published on the SAAA website.

Every authority will have been e-mailed by SAAA a ‘notification of external auditor appointment’ letter confirming their appointed auditor and providing contact details and fee scales.


2.3 What period of time is the auditor appointed for?

The auditors have initially been appointed for a 5 year period commencing 1st April 2017.


2.4 How much will it cost?

Fees have been determined by SAAA following consultation for the Audit Years 2017-18 to 2021-22 and the fee scale document is available on the website. Fee scales have been held at similar levels to those applicable to the previous 5 year period.

Scales of fees for smaller authorities are based on bands of annual income or expenditure, whichever is the higher. This means that the fees are broadly proportionate to the public funds and risks involved and the ability of each authority to pay.

An authority that is able to certify itself as ‘exempt’ (qualifying criteria must be met) and does not require or chose to have a limited assurance review will not have to pay an external audit fee provided it returns a completed Certificate of Exemption to the auditor and unless an objection is received from an interested party which requires investigation.

If an authority that meets the exemption criteria wishes the auditor to carry out a review, then the standard fee of £200 will be payable.

Additional charges will be incurred if statutory deadlines for the submission of the Annual Governance and Accountability Return or Certificate of Exemption are missed.


2.5 Does the new audit regime apply to Parish Meetings?

Yes, Parish Meetings are included in the definition of smaller authorities and the audit legislation and regulations are applicable to them, therefore all Parish Meetings will have an appointed auditor even if they have no financial transactions, and will still need to complete and submit a Certificate of Exemption (provided the qualifying criteria are met).

However, the publication requirements differ for Parish Meetings as the Transparency Code for Smaller Authorities does not cover Parish Meetings.


3 Exempt Authorities

3.1 I think my authority may be ‘exempt’ from external audit, what should I do?

An authority can only declare itself exempt from a limited assurance review by the external auditor by resolution at a meeting of the authority after the conclusion of a financial year, providing the authority is able to certify that it meets the various qualifying criteria set out on the Certificate of Exemption, and the higher of its annual gross income and gross expenditure was £25,000 or less. The Certificate of Exemption can then be completed, signed and returned to the external auditor.

A Certificate of Exemption for completion is included as part of the Annual Governance and Accountability Return in the audit pack, which is sent out by the external auditor to all authorities towards the end of the financial year.

A Certificate of Exemption must be sent to the appointed auditor otherwise they will presume the authority does not meet the qualifying criteria and is not exempt, and therefore will be expecting to receive an annual return for review. If the statutory date is missed and reminders are required this will incur charges of £40 +VAT for each reminder.


3.2 Can the Clerk/RFO and Chairman sign the Certificate of Exemption and send it to the external auditor prior to a meeting of the Council?

No. The Council must pass a resolution, having first confirmed that it meets the qualifying criteria, that it wishes to declare itself exempt from a limited assurance review and only then can the Clerk/RFO and Chairman sign the Certificate of Exemption and send it to the auditor.


3.3 What are the qualifying criteria for an authority to declare itself as exempt from a limited assurance review by the appointed external auditor?

The qualifying criteria for an authority to declare itself as exempt are as set out in Regulation 9 of the Local Audit (Smaller Authorities) Regulations 2015, namely:

If the authority is able to confirm that the above statements apply and that the authority neither received gross income nor incurred gross expenditure exceeding £25,000, then a Certificate of Exemption can be completed, signed and returned to the external auditor.


3.4 If we qualify as an exempt authority, can we still request a limited assurance review?

Yes, an authority can decide to submit its annual return to the external auditor for a limited assurance review rather than declaring itself exempt.

It will need to complete and submit to the appointed auditor Part 3 of the Annual Governance and Accountability Return instead of a Certificate of Exemption.

A fee of £200 will be charged if the authority requests a limited assurance review.


3.5 If my authority is exempt do we still need an appointed auditor?

All authorities must have an external auditor appointed as they cannot declare themselves as exempt until after the conclusion of the financial year, and in case a local elector wishes to raise an objection to an item of account or matters of wider concern.

Whilst the authority can exempt itself from a limited assurance review, the appointed auditor is still obliged to receive and act upon challenges or objections raised by local electors in respect of authorities that have certified themselves exempt from a limited assurance review by the external auditor for the year.


3.6 By what date must the authority submit a Certificate of Exemption to notify the auditor of exempt status?

The authority must notify the external auditor by completing and submitting a Certificate of Exemption by no later than 30 June.

Failure to meet this deadline will result in reminders being issued and a charge of £40 per reminder levied.


3.7  If the authority claimed exemption last year does the authority need to communicate with the appointed auditor again.

Yes. A Certificate of Exemption needs to be submitted to the auditor every financial year after 31 March, considering both the level of financial activity for that year and any statutory reports issued in respect of the prior year.


3.8 As an authority exempt from a limited assurance review do we still need to complete and publish an annual return?

Yes. If an authority has financial transactions and is able to certify itself as exempt it must still complete, approve and publish the Annual Governance and Accountability Return (AGAR). It is only exempt from a review by the external auditor.

The authority must comply with the statutory "Transparency code for smaller authorities" and publish its AGAR on a freely accessible public website.


3.9 If the authority has claimed exemption and submitted a Certificate of Exemption to the external auditor, will the authority receive a completed external auditor report and certificate?

No. Once an authority has claimed exemption from a limited assurance review and notified the appointed auditor, there is no External Auditor Report and Certificate to issue. The receipt of the Certificate of Exemption will be acknowledged by the auditor.


4 Annual Governance and Accountability Return (AGAR)
completion

4.1 Which AGAR should I complete?

The AGAR is divided into 3 separate parts which reflect different levels of financial turnover. An authority will need to complete only one of the three parts. The three parts are:

Part 1 – Certificate of Exemption and Declaration of No Accounts;
Part 2 – Certificate of Exemption and Annual Return; higher of annual gross income or gross expenditure was £25,000 or less and meets the qualifying criteria;
Part 3 – over £25,000 up to £6.5 million – limited assurance review.

Parish Meetings where there is no Parish Council have slightly different AGAR forms for completion – Part 1PM, Part2PM, Part3PM – reflecting the differences in statutory requirements applicable to Parish Meetings.


4.2 When will I receive the audit documents from the external auditor?

The external auditor will distribute the audit instruction letter by e-mail towards the end of the financial year (late March). If you have not received any communication from the external auditor by mid-April then please contact them. You should check spam and junk folders to ensure any e-mail has not been filtered; it is advisable to add the auditor to your ‘safe senders’ list.

It is strongly recommended that the authority has a specific authority e-mail address "belonging to the authority" rather than using a personal e-mail address of the Clerk; this will ensure that important e-mail communications continue to be received even if there is a change in Clerk.


4.3 Is it possible to complete an electronic version of the AGAR?

An electronic PDF version of the AGAR can be downloaded and completed electronically. This can then be printed off, signed, as physical signatures are still required, and returned to the auditor. The AGAR can be scanned and returned by e-mail. Please use post or e-mail, not both.

In line with government strategy, communications including the sending out of the audit pack and AGAR from the appointed auditors will be via e-mail unless paper copies have been specifically requested.


4.4 What are the key dates?

Between 1 April and 30 June – the AGAR is completed and approved, then either a Certificate of Exemption or a completed AGAR form with supporting documents must be sent to the external auditor.

Before 1 July – the required documents are published

Before 1 October – authorities that required a limited assurance review by the external auditor publish the required documents together with the External Auditor Report and Certificate.


4.5 What if the authority fails to submit either a Certificate of Exemption or completed AGAR?

The external auditor will follow-up and charge for reminders and/or additional time involved, and then will consider whether exercise formal powers such as issuing a written (Statutory) recommendation or Report in the Public Interest.

Reports in the Public Interest are copied to the Secretary of State at the Ministry of Housing, Communities and Local Government (MHCLG) and the Monitoring Officer at the local Unitary or District Authority. They are also published on the SAAA website.

If either a written (Statutory) recommendation or Report in the Public Interest are issued, the authority will be unable to certify itself as exempt for the following year and will need to submit a completed AGAR to the external auditor for a limited assurance review and be charged the relevant fee.


4
.6 When is the auditor fee invoice payable?

The auditor will issue the final invoice on completion of the limited assurance review with the completed External Auditor Report and Certificate. The fee will be as set out in the published Scales of Fees for the review, plus any charges for late submission reminders and/or investigation work.

Auditor fees are a statutory fee and must be paid direct to the auditor. Authorities that fail to pay invoices despite reminders will be referred back to SAAA to commence legal proceedings for recovery plus costs.

Copyright © 2016 SAAA Ltd. Smaller Authorities' Audit Appointments Limited is registered in England, No 09915776, at 77 Mansell Street, London E1 8AN