Ms Niamh Larkin:

My name is Niamh Larkin and I am the director of audit in the Local Government Audit Service, LGAS. I am accompanied today by Mr. Richard Murphy, who is a principal local government auditor in the LGAS.

The LGAS performs the independent, external audit of local government, as established by the Minister for Housing, Planning and Local Government. The LGAS audits the annual financial statements of local authorities, including regional authorities, motor taxation offices and other bodies. The Minister for Housing, Planning and Local Government appoints auditors, known as local government auditors, to carry out or assist in the carrying out of audits of local authorities and other bodies. All local government auditors are qualified accountants and are recruited following open public competitions.

Each local government auditor is assigned an audit district under warrant of authority from the director of audit. Local government auditors are independent of the Department when discharging their professional functions. This independence is protected in legislation in accordance with section 116(2) of the Local Government Act, 2001. The 2001 Act sets out the primary duties of the local government auditor as follows:

In the course of the audit of accounts of the local authority or other body, the local government auditor shall carry out such audit tests as he or she considers appropriate in order to be satisfied as to: (a) whether the annual financial statement is prepared in accordance with section 108 or with the accounting requirements otherwise applicable to the body concerned,

(b) whether the annual financial statement presents fairly the financial position of the authority or other body and of its income and expenditure for the period in question,

(c) whether the transactions of the audited body conform to the statutory or other authorisation under which they purport to have been carried out.

Following the audit each local government auditor issues an audit opinion, an audit report and a management letter to the chief executive of the local authority. It is the local government auditor’s main statutory duty, following completion of the financial audit, to give his or her independent audit opinion on the annual financial statements of the audited body as to whether it presents fairly the financial position of the audited body and of its income and expenditure for the period under audit. In addition to the audit opinion, it is custom and practice to issue statutory audit reports covering any matter or matters which the auditor considers should be reported. The chief executive of a local authority is required to respond to this report and his or her comments shall be included, if of material significance, as part of the final report. This procedure has enhanced public scrutiny of local government as management responses to address the issues raised at audit now form part of the published audit reports. In accordance with international standards on auditing, an auditor may issue a management letter drawing attention to any weaknesses in financial procedures and-or internal controls identified during audit and make appropriate recommendations.

The role of the elected members in the governance of local authorities is vital. The approval and regular monitoring of revenue and capital expenditure and the consideration of the annual financial statement are important functions for the council members. A copy of the auditor’s report is furnished to each member of the local authority in accordance with section 20 of the Local Government (Financial and Audit Procedures) Regulations 2014. Furthermore, the audit committee is required to report to the relevant authority on its consideration of the audited financial statement, auditor’s report or auditor’s special report at the next practicable meeting of the relevant authority following the audit committee’s consideration. The participation of members or retired members on local authorities’ audit committees is now an integral part of the oversight of corporate governance in the local authorities. In accordance with good governance, each local government auditor attends at least one meeting with the audit committee of the local authority, to present his or her report, discuss the issues arising and to review responses provided by the chief executive.

Members of the public have unique rights as part of the public accountability framework for local government. They can inspect the annual financial statement, records and other documents relating to the accounts to be audited for seven days before the formal audit commences.

I hope that the information provided clarifies the role of the LGAS in the accountability framework applying to the local government sector. The LGAS has no role in determining the methods used to fund local authorities or in deciding on the levels of funding in individual cases. However, in the course of their audits, the local government auditors would be aware of the financial position of each local authority and references are often made in audit reports to matters of concern in this regard.

As director of audit, I thank the committee for inviting me and my colleague here today to discuss the role of the LGAS.