Act Now to Ensure Compliance Under the Local Audit and Accountability Act - Action Needed by December 2016!

Under the Local Audit and Accountability Act 2014, NHS Trusts and CCGs have the rest of this year to prepare internally for assuming responsibility for appointing auditors.  During this time, NHS organisations need to set up auditor panels to advise their Governing Board or Governing Body on the selection and appointment of an external auditor.

People talking about figures.

By the end of December 2016, NHS organisations need to have completed internal work and awarded contracts ready for services to be delivered by April 2017.

Prior to its abolition in April 2015, the Audit Commission set up current contracts for external auditors for NHS bodies and these arrangements will continue to provide cover until 31st March 2017. Help and Guidance is available to the NHS and the latest publication entitled Guidance on the Local Procurement of External Auditors for NHS Trusts and CCGs is issued by the Department of Health. (See related files.)

Only auditors and firms specifically approved as an auditor for NHS Trusts and CCGs by a Recognised Supervisory Body (RSB) - for example the Institute of Chartered Accountants England and Wales (ICAEW)  and the Charted Institute of Accountants in Scotland (ICAS) - may deliver external audit services.

The ICAEW has currently authorised eight external auditing firms, with a combined total of 82 individual auditors achieving compliance. Registration with one of the RSB’s to deliver services under the LAAA  is an ongoing process, enabling capacity within the provider market place for both approved and existing authorised providers and for other suitably qualified providers in the market place to achieve compliance against the Act. 

It is important that contractual terms and conditions on appointment of external auditors do not restrict the auditors’ independence, or limit liability.  Generally the standard suite of NHS terms and conditions can be at odds with regulatory and professional codes of conduct, which could mean services taken up may be non-compliant or secured against the provider’s own commercial requirements, which is at odds with the Department of Health’s direction to secure business against NHS terms and conditions. (See related files link on the right side of this page.)

An easy and cost effective solution for NHS Trusts and CCGs is the free to access and fully compliant Statutory Audit and Consultancy Audit Services Framework Agreement, run by the East of England NHS Collaborative Procurement Hub, which is detailed in the above publication. 

Terms and conditions of the framework and the call-off order contracts, have been reviewed by Mills and Reeve (authors of the NHS Standard terms and conditions) our terms and conditions expressly allow for the inclusion of “Letter of Engagements” which are issued by auditors and which will detail professional standards / elements of the external auditors (non-commercial) relationship with the contracting authority, which then forms part of any award of external audit services.

The Hub’s Audit service specification is tried and tested and has been proven to successfully deliver external audit services for NHS Foundation Trusts.  The standards necessary to support the Audit and Accountability Act 2014 were built into the original tender documentation so the Hub’s framework services will fully support NHS Trusts and CCGs.

For more information on the Hub's Audit framework, please contact Sandra Atik, Head of Purchased Healthcare - sandra.atik@eoecph.nhs.uk

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