Sir John will have access to the financial records of IT service provider CMG which formed the subsidiary, Radio Spectrum International, in a pounds 51m, seven-year deal with the government’s Radiocommunications Agency.
Radio Spectrum International recently recorded a pounds 1.3m profit, approximately 7% of turnover, in its first 18 months of operation.
In the House of Commons, Sir John’s access to CMG’s accounts came under threat when attempts were made to change legislation and switch the government from a cash-based appropriation to resource-based accounting systems.
The Treasury was able to block this move, ensuring the C&AG has access to the books of all organisations in receipt of public funds.
One of the claimed reasons, for the attempt to change government accounting systems, was that the NAO was not qualified to deal with Companies Act accounts.
The partnership was recently defended in a NAO report. While the report highlighted the disagreements and delays in setting up the arrangement, the cost involved and warned that the pounds 10.7m expected savings may be overstated, in the end, it gave the partnership a stamp of approval.
The report stated: ‘The contract provides the C&AG with the right to access the books of the joint venture company.
‘This access extends to CMG so far as is relevant for the purpose of examining and certifying the Agency’s accounts and examinations to determine the economy, efficiency and effectiveness with which the Agency has used its resources.’
It said early indications were that the approach has worked and a trust-based relationship was emerging, with staff reporting greater satisfaction with IT services and developments brought in more rapidly than before.
The purpose of Radio Spectrum International is to supply IT services to the RA and to ‘sell’ the Agency skills and expertise to manage radio spectrum abroad.
In terms of the contract, 30% of Radio Spectrum International is owned by the RA with rest owned CMG.
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