Each year every council in the UK must have its accounts signed off by an auditor who certifies that they represent a fair and accurate picture of the council’s financial position. Local electors have the right to inspect the accounts during this audit period and to ask questions of the external auditor.
Who can ask a question of the auditor?
You must be a local elector (i.e. you must be on the electoral roll in the local authority area) to ask questions of the external auditor. If you prefer not to take action alone, you can ask someone else to represent you, who does not have to be a local elector.
When can I ask questions about the accounts?
There is a limited time when you can ask questions to the external auditor called the period for the exercise of public rights. The council must advertise the dates of this period on its website. The period lasts 30 working days and usually occurs in June, July or August. The 30 day period must include a common period of inspection during which all councils’ accounts are available to inspect. This will be 1st-14th July 2016 for the 2015-16 accounts.
What can I ask the auditor?
You can ask questions about an item in the accounts of the financial year being audited.
How do I ask questions?
You can ask the external auditor a question either via email or letter. In your question you should indicate what item in the accounts you are referring to (e.g. by referring to a particular page or section of the unaudited Annual Statement of Accounts).
The external auditor can only reply to questions about facts, not policies and procedures, in other words only ‘what’ and ‘how’ questions, not ‘why’ questions.
To find out who the external auditor is you can either:
- ask the council directly
- see if the information is available on the council’s website
- find the information on the Public Sector Audit Appointments (PSAA) site 1
What can you ask regarding LOBO loans?
Search the Annual Statement of Accounts for any items that reference LOBO loans or borrowing from private banks or the market. Refer to these items when asking your questions. Here are some suggested questions:
- How many LOBO loans does the council hold?
- What are the principal values, the interest rates and Lender’s Option/Change Event dates, for each LOBO loan the Council holds?
- Which bank or financial institution has each LOBO loan been taken out with?
- Who were the brokers for each LOBO loan?
- Who advised the council on each LOBO loan?
- Were the LOBO loans benchmarked against PWLB loans when they were taken out?
- Has the council considered restructuring the LOBO loans?
- How would restructuring of LOBO loans be accounted for in the council’s accounts?
- Is the council able to monitor variation in the mark-to-market cost or breakage costs of its LOBO loan portfolio?
- If not, how does the council know when it is appropriate/prudent to stay in or exit its LOBO loan portfolio?
- How much cash does the council set aside in case the LOBO loans are ‘called in’?
- With respect to the BRRD bank bail-in resolution changes which place unsecured depositors funds at risk if a bank collapses, what measures has the council taken to safeguard these funds?
But do also choose a question that you find appropriate for your council (e.g. for what purpose were the LOBO loans taken out?) The main aim is to gather as much information as possible on LOBO loans and to bring them to the attention of the external auditor and the councillors.
Source: National Audit Office