The Code of Audit Practice is regularly updated by the Commission, following wide consultation with interested parties, and carries the full weight of approval by Parliament. The Code sets out the general duties of auditors and prescribes:

• how they should conduct the audit; and
• how they should report the results of the audit.

Carrying out the audit

The auditor must look at:

• Financial accounts
  The auditor must give an opinion on whether an audited body's annual accounts 'present fairly' the financial position of the local authority, or give a 'true and fair' view for NHS bodies. This judgement involves reviewing accounting systems such as payroll, payments and income, and a detailed examination of the financial statements and final accounts including cash/bank balances, debtors, stocks and creditors.
• Fraud and corruption
  The primary responsibility for preventing fraud and corruption rests with audited bodies themselves. However, the auditor is required to make sure that each audited body has taken reasonable steps to prevent fraud - such as setting up adequate internal control systems that segregate duties, proper authorisation procedures and an effective internal audit function.
• Value for money
  The traditional task of public audit is to check that funds are being used properly for legal purposes. However, making effective use of resources was the key change added to auditors' responsibilities when the Audit Commission was established in 1983.
• Legality
  Reviewing the arrangements put in place by the audited body to ensure the legality of its spending is another vital responsibility of auditors. They must consider whether the accounts comply with statutory requirements and, in the case of NHS bodies, with National Assembly guidance.

Auditors' powers

Appointed auditors have special powers in certain areas. For example, they must be given access to all documents that they feel are necessary to fulfil their audit duties, and can ask audited bodies and their officers for information.

Auditors also have various powers and duties if they discover issues at any time that raise particular concerns. For local government and NHS bodies, for example, the auditors can report publicly on any matter they consider to be in the public interest. The audited body concerned must publicise locally the fact that such a report has been issued and what it covers, and consider the report at a public meeting.

In the case of local authorities, the auditor can apply to the High Court for a declaration that an item of account is unlawful or, in the case of a future action involving unlawful expenditure, issue a prohibition order.

If auditors find that there is a loss due to wilful misconduct or failure to account for money or goods, they must themselves order those concerned to repay the money. There is, however, a right of appeal against the order to the High Court. While they are important, such special functions are rarely exercised. Auditors seek to resolve their concerns wherever possible without recourse to their special functions.

Reporting the audit

In addition to giving an opinion on the accounts, reporting on improvement plans, and reporting on local VFM audits to the audited body, auditors also write a management letter to all the members of the audited body (councillors in local government; board members of NHS bodies). The management letter summarises the main matters that have arisen from the audit and the action that has been agreed to implement the auditor's recommendations. The letter also reviews progress on earlier recommendations. The audited body can normally decide whether to publicise the letter, except where a local authority has been asked by an auditor to respond publicly to specific recommendations.

In addition, under the Government of Wales Act 1998, the Audit Commission may now be called upon to give evidence to the National Assembly on the findings of their work.