In order to claim exemption from a limited assurance review an authority must meet certain specified criteria and submit to us an approved exemption certificate.
The exemption criteria are met if the smaller authority can declare that:
Its gross income and gross expenditure are both below £25k; and
no public interest report/statutory recommendation/advisory notice/judicial review/application to court re unlawful item of account has been issued by its external auditor in the prior year; and
the reporting year is not one of the authority’s first three years of existence.
Please note: The only information we need for authorities claiming exemption is the approved exemption certificate from the relevant AGAR Form 1 or Form 2 and updates to contact details (where relevant).
Please note: If an authority is eligible to and wishes to claim exemption but it received notification from us that is was chosen for intermediate testing as part of the random 5% sample (see ‘Authorities not claiming exemption’ tab), this does not affect the authority’s ability to claim exemption. If this is the case the authority should simply submit a copy of their exemption certificate as normal, there is no impact of the 5% selection in these circumstances.
For authorities that do not claim exemption we undertake two types of review procedures – basic and intermediate. Both types of review are subject to basic procedures, intermediate authorities must provide additional documentation. If you have prepared any documents in Microsoft Excel please submit those documents to us in Excel format.
All smaller authorities subject to a limited assurance review must complete an AGAR Form 3.
Under a basic review, the smaller authority is required to provide:
completed Sections 1 and 2 of the AGAR Form 3;
completed Annual Internal Audit Report (AIAR);
a bank reconciliation in support of Section 2, Box 8 (pro forma including example);
the notification of the dates of the period for the exercise of public rights- (pro forma);
an explanation of any significant variances year on year in Section 2. Explanations are now required for all variances of £100,000 or more regardless of the % variance. All responses should comprise both narrative and numerical explanations (pro forma);
WHERE THE SMALLER AUTHORITY HAS CHOSEN TO PREPARE SECTION 2 ON AN INCOME AND EXPENDITURE BASIS RATHER THAN A CASH BASIS ONLY: a reconciliation between Section 2, Boxes 7 and 8 (pro forma);
FOR INTERNAL DRAINAGE BOARDS ONLY: a copy of the Section 48 notice, together with a reconciliation and explanation of the differences between the notice and the amount stated in Section 2, Box 2 if these two figures are different;
FOR LOCAL COUNCILS ONLY: if your council’s declaration in respect of trust funds has changed from the prior year, an explanation for this change.
The following authorities are subject to an intermediate review:
Smaller authorities with gross income or expenditure over £200,000 (but less than £6.5m per annum) are subject to intermediate review procedures.
A random sample of 5% of authorities who would otherwise be subject to basic procedures are also selected for intermediate procedures. If your authority is selected within this 5% you will have received an email confirming this at the same time as the instructions are issued. There is no additional fee charged for those smaller authorities selected as part of the sample and as stated above it does not affect the authority’s ability to claim exemption.
Authorities subject to an intermediate review must complete the same documentation as those subject to a basic review (see above) – but, in addition, they must also supply specified information in support of selected assertions in Section 1 of the AGAR. The additional documentation for intermediate reviews changes each year depending on which assertions are being tested. Please refer to our instructions or to the decision tree (see our instructions and useful information section) to ensure that the correct information is submitted for the relevant review year.
All smaller authorities that have satisfied the intermediate income/expenditure criteria for at least three years must prepare accounts on an income and expenditure basis from the third year onwards and therefore must provide a reconciliation between Boxes 7 and 8.
All basic procedure information must be submitted (as above) for intermediate authorities, in addition, the following information must also be submitted for 2022/23 intermediate reviews:
Copies of year end bank statements to support the bank reconciliation (only one page per accounts showing the balance as at the close of business on 31 March 2023)
If the 2021/22 external auditor report included any ‘except for’ matters, copies of minutes and any agreed plan showing the corrective action taken to address these matters
If the authority has income or expenditure of more than £2,000,000, the following additional information must be provided:
the detailed internal audit report(s) regardless of whether there were issues or recommendations raised, together with evidence that demonstrates that any recommendations made have been addressed (see Practitioners’ Guide 2022 Paragraph 1.37);
evidence that the authority has considered the independence of the internal auditor in the period 1 April 2022 to 31 March 2023 (see Practitioners’ Guide 2022 Paragraphs 1.36 and 4.11);
evidence that the authority has considered and agreed the internal audit programme of work, having regard to the authority’s identified risks (see Practitioners’ Guide 2022 Paragraphs 1.36 and 4.16); and
evidence that when appointed, the authority satisfied itself with regard to the competence of the internal auditor and agreed a letter of engagement (see Practitioners’ Guide 2022 Paragraphs 1.36, 4.1 and 4.13), including the signed letter of engagement.
Our Small Body Assurance (SBA) team can be reached on firstname.lastname@example.org or +44 (0)20 7516 2200.