Financial Accountability: Agencies and Audit

Abstract

At one level, the Next Steps initiative and the creation of the executive agencies might have been expected to make little difference to the work of the National Audit Office (NAO) or the Committee of Public Accounts (PAC), because the agencies have remained very largely funded by voted money. The NAO was set up under the National Audit Act 1983 and reports to the House of Commons. It is answerable to the House of Commons through the Public Accounts Commission and its reports are considered by the Public Accounts Committee. The Office’s primary functions are to audit the accounts of over five hundred publicly-funded bodies and to ensure the propriety and regularity of those bodies’ expenditure. Under S.6 of the 1983 Act, it is also entitled to investigate the efficiency, effectiveness and economy of public bodies. The agencies’ continued dependence on voted money has meant that their new status has not directly affected their relationship with the NAO, which remains responsible for auditing their accounts and may also carry out value for money studies of their operations. In her February 1988 statement, the then Prime Minister, Mrs Thatcher, assured the House of Commons that the normal rules of accountability and audit should apply to the agencies and that the NAO should have the same role in relation to them as it had in relation to government departments.