Joint Committee on Statutory Instruments Nineteenth Report

2 S.I. 2003/533: defective drafting and unexpected use of enabling power

Accounts and Audit Regulations 2003 (S.I 2003/533)

2.1  The Committee draws the special attention of both Houses to these Regulations on the ground that they are defectively drafted in two respects and make an unexpected use of the enabling power in another.

2.2  Regulation 14(1) requires a relevant body to make accounts and other documents available for public inspection for 20 working days before the date appointed by the auditor under regulation 13. "Working day" is defined in regulation 2(1) as any day other than a Saturday or Sunday or a day which is a bank holiday in England. In a memorandum printed at Appendix 2, the Office of the Deputy Prime Minister acknowledges that it is possible, although unlikely, that the period of 20 working days could include Christmas Day or Good Friday, and that the omission of these two days from the definition of "working day" was an oversight. It undertakes to bear the point in mind if these Regulations are amended in future. The Committee therefore reports regulation 2(1) for defective drafting, acknowledged by the Department.

2.3  Regulation 22 declares that contravention of any of the provisions of specified regulations, including regulations 4 and 10, is an offence. The Committee asked the Department to identify, as respects each of the requirements imposed by the specified regulations, the nature of the offence and the person by whom that offence is committed. The Department's first memorandum provides this information.

2.4  Regulation 4(1) states -

"The relevant body shall be responsible for ensuring that the financial management of the body is adequate and effective and that the body has a sound system of internal control which facilitates the effective exercise of that body's functions and which includes arrangements for the management of risk".

2.5  The Committee asked the Department how a relevant body is able to determine whether or not it commits the offence of failing to comply with regulation 4(1), given the imprecise nature of the requirements which it imposes. In its second memorandum, the Department states that it considers that the obligation imposed by this provision is sufficiently clear in the context of the financial management of relevant bodies, and explains why it considers that is so. In the Committee's view, even allowing for the fact that "shall be responsible for ensuring" may be interpreted as meaning "shall ensure", the wording of regulation 4(1) lacks the necessary precision to declare contravention of it an offence. Although the terms of regulation 4(1) are sufficiently clear for the purposes of imposing a statutory duty which can be enforced by administrative action or sanctions, the declaration in regulation 22 that contravention of regulation 4(1) is an offence constitutes an unexpected use of the enabling power. The Committee notes in this connection the absence of such a declaration in respect of regulation 6, which imposes a requirement to "maintain an adequate and effective system of internal audit". The Committee accordingly reports regulation 22 for making an unexpected use of the enabling power.

2.6  Regulation 10(1) requires a relevant body to ensure that the statement of accounts or, where applicable, another document, is prepared in accordance with the Regulations. Regulation 10(3)(a) requires the statement of accounts to be approved by a resolution of a committee of the relevant body or otherwise by a resolution of the members of the body meeting as a whole, such approval to take place as soon as reasonably practicable and in any event before the 30 June immediately following the end of a year. Regulation 10(4)(a) is in similar terms.

2.7  In its first memorandum, the Department states that each of these provisions requires the relevant body to arrange for the statement of accounts (or other documents) to be approved by resolution by the specified date. In its second memorandum it accepts that these provisions do not expressly impose an obligation on the relevant body to "arrange" for these matters, but states that it is a necessary implication of the obligation that the accounts be approved by the relevant time limit by a committee to whom the relevant body has delegated the function or by the relevant body itself that responsibility rests with the relevant body. The Department adds that the body would not be expected to approve the statement of accounts irrespective of any concern it might have as to whether they reflect the true financial position. Thus the Department acknowledges that, although regulation 10(3)(a) and (4)(a) requires the body to approve the statement of accounts etc. within a specified time, there may be circumstances where it would not be expected to do so. In the Committee's view, given that contravention of regulation 10(3)(a) and (4)(a) gives rise to criminal liability, the regulation should have expressed the Department's intentions more precisely and the failure to do so constitutes defective drafting.

  1. The Committee therefore reports regulation 10(3)(a) and (4)(a) for defective drafting.

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