The deal was announced today in Commons by Treasury chief secretary Andrew Smith following publication of a formal government response to Lord Sharman’s proposals: Audit and Accountability in Central Government.
It will see a widening of the power and scope of comptroller and auditor general Sir John Bourn, including the statutory right to audit all non-departmental public bodies, but not the recommendations for the National Audit Office to cover the BBC and other broadcasters.
Reacting to the response Lord Sharman told AccountancyAge.com: ‘From my point of view they have acted very sensibly.’
However he expressed disappointment about the length of time taken by the government to respond.
‘Given that we were put under pressure to report within nine months, to then take a year to decide whether they agreed with it strikes me as showing a lack of urgency.
‘But the important thing is that they have made some fundamental shifts, particularly on access for the C&AG,’ he added.
On the BBC decision Sharman said: ‘All we recommended was what the current chairman of the BBC recommended in his financing review – maybe [Gavyn Davies] takes a different view now that he’s chairman.’
The new deal
Under the deal Bourn has agreed protocols minimising the impact on bodies whose papers he will be given statutory access to, including Private Finance Initiative contractors, all bodies in receipt of grants, registered social landlords and train-operating companies.
In addition he will increase the work contracted out to private sector auditors, while the NAO’s financial work will be subject to the scrutiny of the Joint Monitoring Unit of the ICAEW.
Announcing the formal response Smith said: ‘This report provides an excellent basis for Parliamentary scrutiny of the way taxpayers’ money is used.
‘It retains the fundamental features of the current arrangements, while giving the C&AG new statutory powers to ensure [Bourn] can do his job independently.’
The NAO will assume responsibility for NDPB audits as contracts with private sector auditors expire.
Its role in government-owned companies or companies in which the government has a large interest will be dependent on a new Companies Act removing a current legal bar requiring the work to be done by private accountants. This is dependent on a way being found to do this without breaching the EU Eighth Company Law Directive.
The NAO has also been told to keep down the cost of audits and to do additional work to provide departments with any extra assurances they need about the conduct of NDPBs.
The settlement is expected to end a battle over several years between the Treasury and the Commons Public Accounts Committee over the C&AG’s powers.
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