Report of The Head of Finance
To
Governance and Standards Committee
On
 23 February 2022	

Appointment of External Auditors

1.	SUMMARY

1.1	To request the approval of Council to accept Public Sector Audit Appointments (PSAA) invitation to become an opted in authority for the appointment of external auditors to Mansfield District Council for the accounts for five year period April 2023.

2.	RECOMMENDATION

That the governance and Standards Committee recommends to Council:

2.1	That the Council accept Public Sector Audit Appointments’ invitation to opt in to the national scheme for the appointment of external auditors for five consecutive financial years commencing April 2023.

2.2	That delegated authority be given to the Section 151 Officer (or deputy in their absence) to accept The PSAA invitation to become an opted-in authority.

3.	BACKGROUND

3.1	In 2016, the Secretary of State specified PSAA as appointing person for principal local government for audits from 2018/19 under the provisions of the Local Audit and Accountability Act 2014 and the Local Audit (Appointing Persons) Regulations 2015. Acting in accordance with this role PSAA were responsible for appointing an auditor and setting fees for local authorities that have chosen to opt into the national scheme. In April 2018, 98% of eligible bodies made the choice to opt in for the five year period.

3.2	This five year period is coming to an end and the external auditor for the audit of the 2023/24 accounts has to be appointed before the end of December 2022. PSAA has been confirmed as continuing in the role of appointing person for the period commencing April 2023 and has once again invited eligible bodies to opt into their national scheme for auditor appointments. 

3.3	The Council opted into the national scheme in 2016. The local audit market remains challenging and the benefits of opting into the national scheme again include: 
 transparent and independent auditor appointment via a third party; 
 the best opportunity to secure the appointment of a qualified, registered auditor; 
 on-going management of any independence issues which may arise;
 access to a specialist PSAA team with significant experience of working within the context of the relevant regulations to appoint auditors, managing contracts with audit firms, and setting and determining audit fees; 
 a value for money offer based on minimising PSAA costs and distribution of any surpluses to scheme members 
 collective efficiency savings for the sector through undertaking one major procurement as opposed to a multiplicity of smaller procurements; 
 avoids the necessity for local bodies to establish an auditor panel and undertake an auditor procurement, enabling time and resources to be deployed on other pressing priorities; 
 updates from PSAA to Section 151 officers and Audit Committee Chairs on a range of local audit related matters to inform and support effective auditor-audited body relationships. 

3.4 	The decision to become an opted in authority must be taken at a meeting of the Council in accordance with the Local Audit (Appointing Persons) Regulations. If the Council decides to become an opted in authority then formal acceptance of PSAA’s invitation is by 11 March 2022.

4.	OPTIONS AVAILABLE

4.1	The Council could undertake its own procurement process for the external audit contract but given the reasons highlighted in the report this would not be in the best of interests of the taxpayer. 

5.	RISK ASSESSMENT OF RECOMMENDATIONS

5.1	The principal risks are that the Council: 

 fails to appoint an auditor in accordance with the requirements and timing specified in local audit legislation; or 
 does not achieve value for money in the appointment process. 

These risks are considered best mitigated by opting into the sector-led approach through PSAA

6.	ALIGNMENT TO COUNCIL PRIORITIES

6.1	A high quality external audit function is critical in terms of good governance which transcends all corporate priorities.

7.	IMPLICATIONS

7.1	Relevant Legislation: 

7.1.1	Section 7 of the Local Audit and Accountability Act 2014 (the Act) requires a relevant authority to appoint a local auditor to audit its accounts for a financial year not later than 31 December in the preceding year. Section 8 governs the procedure for appointment including that the authority must consult and take account of the advice of its auditor panel on the selection and appointment of a local auditor. Section 8 provides that where a relevant authority is a local authority operating executive arrangements, the function of appointing a local auditor to audit its accounts is not the responsibility of an executive of the authority under those arrangements. 
7.1.2	Section 12 makes provision for the failure to appoint a local auditor: the authority must immediately inform the Secretary of State, who may direct the authority to appoint the auditor named in the direction or appoint a local auditor on behalf of the authority. 
7.1.3	Section 17 gives the Secretary of State the power to make regulations in relation to an ‘appointing person’ specified by the Secretary of State. This power has been exercised in the Local Audit (Appointing Person) Regulations 2015 (SI 192) and this gives the Secretary of State the ability to enable a Sector Led Body to become the appointing person.
7.2	Human Rights: No impact.

7.3	Equality and Diversity: No impact.

7.4	Climate change and environmental sustainability: No impact.

7.5	Crime and Disorder: No impact.

7.6	Budget / Resources: There is no direct financial implications arising from this report. There is a risk that current audit fees may rise when the current contract ends. Opting into the national scheme provides maximum opportunity to ensure that fees remain as low as possible whilst ensuring that the quality of audit is maintained by entering into procurement arrangements facilitated by PSAA.

8.	COMMENTS OF STATUTORY OFFICERS

Section 151 Officer – Own report.

Monitoring Officer – No specific comment.

9.	CONSULTATION

9.1	The Governance and Standards Committee was consulted on 23rd February 2022.

10.	BACKGROUND PAPERS

	None

Report Author	-	Dawn Edwards	
Designation	-	Head of Finance & S151 Officer	
Telephone	-	01623 463015	
E-mail	-	dedwards@mansfield.gov.uk