Exempt authorities have to meet a number of specified criteria and then prepare and submit an exemption certificate. The exemption criteria are met if the smaller authority can declare that it has:
- gross income and gross expenditure below £25k; and
- no public interest report/statutory recommendation/advisory notice/judicial review/application to court re unlawful item of account issued by its external auditor in the prior year; and
- been in existence since before 1/4/14.
Exempt authorities with no accounts must complete and publish Part 1 of the Annual Governance and Accountability Return (AGAR). Exempt authorities with financial transactions during the year must complete, approve and publish Part 2 of the Annual Governance and Accountability Return (AGAR).
All smaller authorities subject to a limited assurance review must complete Part 3 of the Annual Governance and Accountability Return (AGAR). The requirements for basic review procedures are to provide:
- Sections 1 and 2 and the Annual Internal Audit Report of the completed and signed AGAR Part 3;
- a bank reconciliation;
- the notification of the dates of the period for the exercise of public rights;
- an explanation of any significant variances in Section 2;
- a reconciliation between Boxes 7 and 8 of Section 2 (where the smaller authority has chosen to prepare Section 2 on an income and expenditure basis rather than a cash basis);
- (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 not the same;
- (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.
Electronic versions of all the above pro forma documents are available from this website.
We ask that smaller authorities submit only the documents that we have requested.
Smaller authorities with gross income or expenditure over £200,000 (but less than £6.5m per annum) are subject to intermediate review procedures. In addition to the basic information above, specific additional documentation is also required. The additional documentation will change each year depending on which Section 1 assertions are being tested. Please refer to our instructions or to the decision tree on this website 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 3 years must prepare accounts on an income and expenditure basis from the 3rd year onwards and therefore must provide a reconciliation between Boxes 7 and 8.
In addition to the above, we are required to select up to a 5% sample of bodies for intermediate testing that would otherwise be subject to basic review procedures. This selection is made on a random basis and an email confirming that your smaller authority has been chosen is issued to the relevant smaller authorities at the start of each review season. There is no additional fee charged for those smaller authorities selected as part of the sample. Auditors are also able to select an additional sample on a risk basis if they wish, again an email confirming that your smaller authority has been selected is issued to the relevant smaller authorities at the start of each review season.
Exempt authorities who receive an email stating that they have been chosen as part of the 5% sample are not required to receive a limited assurance review and should simply submit a copy of their exemption certificate in line with the requirements for exempt authorities.