Code of Audit Practice 2010 for Local Government Bodies

My Lords, I thank the Minister for his comprehensive explanation of the two codes. I declare at the outset an interest as chairman of my parish. As my honourable friend Bob Neill said in another place yesterday, we on these Benches take no great issue with either of the codes, which have received only minor adjustments since Parliament last approved them in 2005. I have three questions that I would like the Minister to address. As he explained, the changes to the code include the abolition of the audit of best-value performance plans for specified local government bodies. What is the rationale for this? Will the Minister set out why best-value performance plans need no longer be audited? Is this simply a red-tape cutting measure? Secondly, I turn to the question of fees for having audits done. Local authorities are statutorily obliged to be audited, and the cost of compliance must be met from their funds; yet even the smallest authorities must stump up for an audit. If the turnover of a small body is anything up to £200,000 per annum, it will require a basic audit. There is concern that the cost of the audit may be out of all proportion to the sums that are being audited. I would appreciate it if the noble Lord would comment on the cost of these small audits, and say whether he believes that the auditing of those financial statements really adds value. With this in mind, in recent years Governments in several parts of the world, notably Europe, have repeatedly raised the turnover threshold below which businesses and organisations can exempt themselves from statutory audits. In several member states the threshold is set at £6.5 million in turnover, or £3.9 million in gross balance-sheet total assets, which allows a significant swathe of businesses and organisations to exempt themselves from statutory audits. My third point picks up on the theme of section 5 of the local government code, which gives electors the opportunity to scrutinise for themselves their local government grants. We welcome the measure as a step towards greater openness and transparency. However, perhaps the noble Lord will explain why that openness is not extended to the accounts of NHS bodies. I welcome the Minister's response.