A: It is a legal right for any local government elector to ask the external auditor to apply to the High Court for a declaration that an item of account is unlawful, or to issue an immediate report in the public interest.
You can only object to a specific item in the accounts.
You must tell the external auditor which item in the accounts you object to and why you think the item is unlawful, or why you think that a public interest report should be made about it.
You must provide the external auditor with the evidence you have to support your objection.
Simply disagreeing with income or spending does not make it unlawful. An unlawful item of account is one, for example, that records spending or income that the council:
had no right to spend or receive;
spent or received without powers to do so;
took from, or added to, the wrong fund or account; or
spent on something that they had the power to spend on, but the decision to spend the money was unreasonable or irrational.
'Unreasonable' has a special meaning in law. A council acts 'unreasonably' or 'irrationally' when its actions are so unreasonable that no reasonable person could have made that decision.
Q: What can I ask the external auditor to do about my objection?
A: You must specify which power or powers you would like the external auditor to consider using in dealing with your objection. You can only ask the external auditor to act within the range of powers available under the Audit Commission Act 1998.
You can ask the external auditor to:
issue a report in the public interest; and/or
apply to the courts for a declaration that an item of account is contrary to law.
Each of these options is explained below.
Q: What does it mean if an external auditor issues a public interest report?
A: For more serious matters, the external auditor can report ‘in the public interest’.
The external auditor can send a public interest report to anyone they see fit, including the media and other public bodies locally and nationally.
On receipt, the council must call a public meeting to consider the external auditor’s report and any recommendations in it.
The council must consider and respond publicly within a short time-frame of receiving a public interest report, usually a month.
(Reporting in the public interest is covered by Section 8 of the Audit Commission Act 1998 and Chapter 4 of the Code of Audit Practice.
Q: What does it mean for an external auditor to apply to the court for an item of account to be declared unlawful?
A: If the external auditor thinks that income or expenditure included in the accounts may be unlawful, they can apply to the court for a declaration by the judge to that effect.
If the court agrees with the external auditor, it can make this declaration and can also order the council to put right the accounts.
When deciding whether to apply for a declaration by a judge, the external auditor has to take into account several matters. These include weighing the possible benefits of going to court against the likely costs and uncertain outcome.
(Making a declaration is covered by Section 17 of the Audit Commission Act 1998 and Chapter 5 of the Code of Audit Practice.)