The Treasury is consulting on proposed changes to the financial regulatory framework for the Island’s local government bodies which are intended to adopt a more proportionate approach to managing the related risks across the sector.
 
There are over 50 local government bodies, including local authorities and combination bodies, ranging in size from annual gross expenditure of less than ?5,000 to over ?30,000,000. Under the Audit Act 2006 (and subsequent regulations) each of these bodies, regardless of size, is required to undergo a full statutory audit with a total current cost to the sector of over ?210,000.
 
The Treasury, having noted the high level of financial compliance now being achieved across the sector, now considers that the existing ‘one size fits all’ approach is no longer appropriate and so is proposing a revised and more proportionate framework to audit/inspection, based upon turnover:
 
1. ?1m and above: Full Statutory Audit.
2. ?100k to ?1m: Assurance Review by a regulated auditor.
3. Under ?100k: Qualified Independent Examination
 
A similarly proportionate approach based upon the same turnover thresholds is also being proposed for the approach to, and format of the annual accounts required to be published by each body.
 
Commenting on the proposal, Minister for the Treasury, Hon. Eddie Teare MHK said:
 
‘The Treasury is pleased to now be in a position to make these proposals and anticipate that, if progressed, they should significantly reduce the overall regulatory burden whilst still maintaining a high standard of financial reporting across the sector.’
 
Chair of the Treasury Audit (Consultative) Committee, Mr Alex Downie OBE MLC added:
 
‘We have been working, together with the public auditors and Local Government bodies over the past few years to improve financial compliance across the sector. I am pleased to see that the sector is now close to achieving 100% compliance with the current requirements of the Audit Act. This now provides a firm basis on which to introduce a more proportionate approach to the financial regulation of the sector.’
 
The proposals have today gone out to public consultation and further information can be obtained from the Government website: www.gov.im/consultations.