The SAAA (Smaller Authorities’ Audit Appointments) is responsible for appointing external auditors for opted-in smaller authorities and is now appointing for the next five year period.

The Smaller Authorities’ Audit Appointments (SAAA) is responsible for appointing external auditors to opted-in smaller authorities and managing the contracts with the appointed auditors. They are now writing to local councils regarding the appointment for the next 5 year period (2022-23 to 2026-27) and advising councils of the ability to opt-out if they wish.

Emails are being sent in batches, so you may not have received your email yet. If your contact details have changed, or you do not receive an email in the coming weeks, then please contact PKF Littlejohn on sba@pkf-l.com to make sure they have the correct contact details for your council.

All authorities require an appointed external auditor, even those that qualify as exempt since you are still required to send a Certificate of Exemption to the external auditor. During the last five years, all smaller authorities opted-in to the central procurement regime managed by the SAAA; no smaller authority decided to opt-out and follow the various complex procedures required under statute to appoint their own external auditor. If you wish to opt-in and continue as part of the SAAA sector led auditor appointment regime then no action is required; you will remain part of the central scheme.

Although the email will contain guidance on how to opt-out, NALC strongly recommends that councils opt-in (in which case, no action is necessary), and continue as part of the SAAA sector-led appointment regime.

Please bear in mind that this only relates to external auditors; councils will continue to appoint their own internal auditors and we have guidance here to help you choose an internal auditor.

Opting Out

Opting out is a significant decision which requires careful consideration and guidance has been developed to clarify what it would mean in practice. Key implications are:

• an opted-out authority regardless of size (including exempt authorities) MUST appoint an appropriate external auditor;
• the appointed auditor must be a registered auditor as defined by the Companies Act and a member of Institute of Chartered Accountants (England and Wales).
• an opted-out authority must convene an appropriate independent auditor panel which meets the requirements of the Local Audit and Accountability Act 2014 (LAAA). Detailed guidance on auditor panels is available in Schedule 4 of the LAAA Act and from CIPFA;
• an opted-out authority will need to develop its own specification for its external audit contract, will need to negotiate the price for this work on an individual basis and will need to manage the contract, including any disputes, and any independence issues that may arise;
• an opted-out authority must ensure full compliance with the relevant requirements of the Local Audit and Accountability Act and supporting Regulations;
• any opted-out authority that does not successfully appoint an appropriate external auditor in the correct manner and notify SAAA who their external auditor is by 30 November 2022 will have an external auditor appointed for it by the Secretary of State through SAAA. This will result in additional costs of £300 which will have to be met by the authority.

An authority that wishes to opt out must formally reach and record that decision in a way that meets the requirements of its own governance framework, by convening a full council meeting or an extraordinary council meeting.

The SAAA have also shared a case study in NALC’s blog as a cautionary tale of what to avoid during the audit process, and the importance of having a generic email address. There is guidance here on setting up a generic council email with the gov.uk domain.