My Lords, I shall speak also to Amendment 16. Amendment 11 amplifies the reference to the statement of accounts that must ensue from adequate accountancy records and adds the requirement that they show a true and fair view. Amendment 16 inserts an equivalent into the general duties of auditors in Clause 19. It requires them to satisfy themselves that the accounts give a true and fair view. That requirement is already included in the duties of auditors of health service bodies under Clause 20.
I am advised that local authorities were previously required by Regulation 10 of the principal regulations to prepare accounts that present fairly the financial position of the authority at the end of the year and its income and expenditure for the year, or a record of receipts and payments that properly presents receipts and payments for the year. Regulation 5 amends the principal regulation so as to require the responsible financial officer of an authority that must prepare an annual statement of accounts to certify that the statement provides a true and fair view from the 2009-10 financial year and in subsequent financial years.
I am advised that the move to a “true and fair view” opinion was based on the fact that from 2007 the code of practice for local authority accounting, issued at that time as a statement of recommended practice following endorsement by the then Accounting Standards Board, was fully compliant with generally UK-accepted accounting principles. The drive to full GAAP compliance was twofold: pressure from the then Accounting Standards Board for Local Authority Accounting to comply with GAAP, and the need for consistency of accounting practice across the public sector engendered by the preparation of whole of government accounts under the Government Resources and Accounts Act 2000.
Following representations to the Audit Commission, the buyer body that drew up the code of practice for local authority accounting, it was agreed that accounts should be prepared to give a true and fair view. As I understand it, that took effect from 2009-10, and it is that which the amendment is intended to address.