The National Audit Office has told Lord Sharman’s review of central government audit and accountability that it must be allowed to audit government owned private companies such as the Millennium Dome.
At the moment the NAO has no automatic rights of access to an estimated 150 companies set up by Whitehall departments to deliver public services because of rules in the Companies Act.
Lord Sharman, former senior partner of KPMG in the UK, is due to publish his report sometime in February.
Any advice to extend the powers of the NAO would come as an embarrassment to Treasury chief secretary Andrew Smith who refused recommendations last year from the powerful Public Accounts Committee to do so.
Concern is growing that the powers of the head of the NAO, the comptroller and auditor general, are being curtailed by the government’s choice to deliver services using new methods.
Caroline Mawhood, assistant auditor at the NAO, said the C&AG’s powers had been ‘diminished’, which was not ‘acceptable’.
‘We are not saying that you shouldn’t try and find new ways of delivering services in a modern world. What we are saying is that doesn’t mean you don’t have to have an audit function,’ she said.
Referring to the company running the Dome she said: ‘I don’t need to tell you what the consequences were of setting up an organisation like that.’
In a report last year the PAC noted there was at least #3bn of public money not audited by the NAO, which reports to parliament, but by private sector auditors reporting to government ministers.
The NAO has had to negotiate its way into many bodies to provide assurance for the handling of public money including four years persuading Camelot, the National Lottery operator, and five years finding a way to examine accounts for public money used to maintain Royal Palaces.
– National Audit Office and information about its role can be found at www.nao.gov.uk
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