Clause 21 - Auditors’ right to documents and information

Local Audit and AccountabilityBill [Lords] – in a Public Bill Committee at 4:00 pm on 12th November 2013.

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Photo of Andy Sawford Andy Sawford Shadow Minister (Communities and Local Government) 4:00 pm, 12th November 2013

I beg to move amendment 138, in clause 21, page 14, line 25, leave out ‘every document’ and insert—

‘documents relevant to the audit’.

Photo of Michael Weir Michael Weir Shadow SNP Spokesperson (Business), Shadow SNP Spokesperson (Energy and Climate Change)

With this it will be convenient to discuss the following:

Amendment 139, in clause 21, page 15, line 1, leave out ‘and inspect’.

Amendment 140, in clause 21, page 15, line 9, leave out paragraph (b).

Photo of Andy Sawford Andy Sawford Shadow Minister (Communities and Local Government)

Both sides are making a determined effort to make a little more progress this afternoon, so I intend to be brief. In the spirit of the scrutiny my hon. Friends and I bring to the Committee, we could have taken some time on the clause, but I hope that, if I set out our position in brief, the Minister will understand where we are coming from and give us some reassurances.

The amendments are to clause 21, which is on the auditors’ right to documents and information. I have looked into this. The Audit Commission had legal rights to access information, which were emphasised in relation to the production of public interest reports. We all support the principle of the clause that the auditor should have rights to documents and information. Our amendments, though, are intended to be helpful and to test the Bill’s meaning on a few specific points.

Amendment 138 would change the term from “every document”. We are asking about proportionality: whether the Government really mean every document, or whether they mean, in fact, documents that particularly relate to the audit. We want to be clear about the Government’s intention. Will the Minister consider that wording?

On amendment 139, will the Minister say whether he really intends that auditors should be able to access and inspect any computer that may have been used to produce an audit document? An elected member of a local authority might, like myself—or perhaps the Minister—use a wide range of IT devices in different places at different times. For example, they may have access to a computer in the members’ room or an office within the local authority, they may have a personal computer, they may occasionally access documents on the way to or from a meeting on a work laptop and they may have a family iPad or some such device on which they occasionally access information. Given that that is increasingly how many people live their lives, does the Minister think it practical and reasonable for an auditor to seek access to those devices?

Clearly, it would be quite reasonable if a device were based in a local authority—in the members’ room, for example—for the auditor to ask to look at the device. Documents might not have been printed off, they could have been exchanged by e-mail, or they could be in draft form and the auditor might find it helpful to look at the drafting and changes. Documents might not be available as hard copy but might be stored on a computer. It comes to a different matter, however, when there might  be a knock on the door of the family home and an officer of a local authority or their partner or a member of their family answers the door to an auditor who wants access to a family computer or iPad.

There could still be complications in relation to a work laptop. I hope the Minister does not mind me stretching the point, but would it be reasonable for an auditor to demand to see the work laptop of an employee of GCHQ or the Ministry of Defence? Will the Minister tell us whether the use of this power has been given consideration? How does he envisage it will work in practice and in what circumstances may that power be used? It may be only in limited circumstances.

Will the Minister consider this point? If there might be a six o’clock knock on the door of the family home, might it be expected that that would be an investigation of some form of criminality or fraud? In which case, would other provisions in law allow for the inspection of computer equipment by police officers, an employee of the Crown Prosecution Service or some other such person who is suitably qualified and operates within a different legal framework to a private sector auditor?

We could have gone on at great length about this point, but we will be very brief. We are trying to foresee what could happen in a new world where a private sector auditor has been given powers, and someone’s refusal to allow access to the computer was an offence under clause 22.

We are concerned about the wording

“in charge of, or otherwise involved in operating”,

which we would consider too broad a description of what laptops or electronic devices would be potentially subject to some form of investigation. Could the Minister give us some clarification and assurance?

Photo of Brandon Lewis Brandon Lewis The Parliamentary Under-Secretary for Communities and Local Government

I appreciate the comments of the hon. Gentleman. I hope that I can deal with his concerns without spending too much time on the detail.

When I was a councillor, the leading party on the council, which was a different party to my own, had various issues with local authority officers needing to get into councillors’ computers to look at what they were and were not doing and the process that they had to go through. However that is quite different to the auditor’s position, and hopefully I can give the hon. Gentleman some confidence. Amendments 138, 139 and 140 change the rights that auditors would have to access documents and information, as he rightly says. Let me take amendment 138 first. It proposes a redrafted definition, as the hon. Gentleman outlined. I hope that I can convince him that it is not necessary.

The definition of an audit document continues in clause 21(1)(a) and (b). Those subsections specify that the document must relate to a relevant authority, and in the auditor’s view be necessary for the purposes of undertaking the auditor’s function under the Bill. I agree that an auditor should have a legal right to access only documents which are relevant to the audit but subsection (1)(b) already provides this restriction to the definition, and I consider that the current draft is preferable to that in the amendment.

Amendments 139 and 140 would reduce auditors’ rights to access documents and information compared to the current rights under the Audit Commission Act 1998.  The amendments would remove an auditor’s right to inspect a computer which they consider has been used in connection with a document, as well as an auditor’s right to require the person operating the computer to provide further information. I am sure that the hon. Gentleman does not wish to restrict the rights of auditors to get information that they need in order to undertake an audit. I know that is not the point he was making. If the amendments are intended to ensure that the auditor does not have carte blanche to access documents that have no relevance to the audit in an unreasonable way, as he outlined, then I have sympathy with his intent.

I think that the Bill already contains sufficient safeguards. Clause 21 contains some restrictions to the auditor’s rights to access information, documents and explanations from people, so for instance they do not have the right to access documents and information which are not necessary for the audit. With that explanation, I hope that the hon. Gentleman will be able to withdraw the amendments.

Photo of Andy Sawford Andy Sawford Shadow Minister (Communities and Local Government)

I thank the Minister, particularly in relation to amendment 138. He has given sufficient assurance on that point about his intentions and the subsequent qualifying clauses. The record will be clear on that and I welcome his assurances.

I still have serious concerns about the practicality and potential implications of the clause overall. I find myself in a difficult position however, because I am sure there is no difference of view between the Minister and I, and indeed all hon. Members, on the need to facilitate access to all relevant documents concerned with an audit. It is more a practical point about cause and effect, given that we are making an offence under clause 22. I ask the Minister, who will have a leading role in shaping future regulations, to reflect on how, in any regulations or perhaps in the ethical standards framework, we could ensure that the public—for example, the partner or family member of a person set out in subsection (8) to whom the clause applies—are protected. How can we protect those people from what could be quite an imposing request by an auditor for access to their home or IT material? Will he consider that?

Photo of Brandon Lewis Brandon Lewis The Parliamentary Under-Secretary for Communities and Local Government

I am happy to take away the general point. We all recognise that we are in a fast-moving world and that IT and how we use it change quickly. I believe that we are in agreement throughout the Committee on the need to ensure that auditors can get access to the information that they need to do the audit and to follow that through. Obviously, an auditor does not have the power simply to go into someone’s home—quite rightly that is something for the police and the relevant authorities, with warrants and so on, and not for an auditor.

With the proviso that we need to make sure that auditors can get reasonable access to the information that they need for the audit, I am happy to take away the hon. Gentleman’s comments and give some thought to exactly how we couch the provision in the regulations that will have to follow to implement that. In a fast-moving world, we need to ensure that auditors can get their job done efficiently and effectively.

Photo of Andy Sawford Andy Sawford Shadow Minister (Communities and Local Government)

I thank the Minister for his comments. On access, perhaps it is a case of how that is interpreted. If someone wrote a letter seeking access and waited a reasonable time for a response—although such inquiries  need to be conducted expediently—or sent a reasonable e-mail seeking entry, that is quite different from the powers, which he rightly said rest with the police, for forced entry and so on. I think we have explored the point. I suppose it reflects that we are moving away from the era of large desktop computers to different ways of using IT. In the world of the cloud, we can access our documents all over the place, all the time and with all sorts of different items.

I thank the Minister for assuring us that he will give some further thought to this matter. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 31, in clause 21, page 15, line 28, at end insert—

‘(8A) A local auditor of the accounts of a parish meeting may only exercise the function in subsection (7), so far as it applies to a person who is or was a member or officer of a relevant authority, in relation to a person who is or was the chairman of the parish meeting or the proper officer of the district council within whose area the parish lies.’.—(Brandon Lewis.)

Clause 21, as amended, ordered to stand part of the Bill.