PM faces security audit grilling

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In an unpublicised report, Sir John Bourn, head of the NAO, reveals he had to qualify the accounts because some key spending, part of the £1bn security services budget, remained hidden. Only summary accounts for 2001-2002, in a nine-page NAO report, have been made public though an extra ‘for his eyes only’ paper has been provided to Edward Leigh, chairman of the influential commonspublic accounts committee.

The ‘public’ NAO report points the finger at GCHQ, the top secret information-gathering organisation based in Cheltenham, with listening posts around the world. Sir John said he was ‘unable to obtain all the information and explanations that I considered necessary regarding the valuation of certain fixed assets, prepayments and related figures in the accounts’.

An NAO spokesman said there was nothing they could add to the statement, which revealed the UK’s spooks spent £1,100m, with a net cash requirement of £940,222,000 compared with £859,932,000 in 2000-2001.

There was no balance sheet.

Harry Cohen, Labour MP and ACCA member, said he would put a question to Blair on the floor of the House of Commons. ‘There is an almost complete lack of accountability and transparency in accounting terms. I am not talking about seeking more information about the security services’ operations, but there isa great deal more in terms of accounts which could be made more open,’ said Cohen.

He added that the qualification by the NAO ‘showed there are clearly serious weaknesses which have been identified by the security services’ own internal auditors and I think we must be given a more detailed explanation than these nine pages’.

Current practices for examining the accounts of the security services go back decades and include internal audit teams whose reports go to the head of internal audit for the security and intelligence agencies once a year.

He passes on his ‘independent’ opinion to Cabinet Office accounting officer David Ormand.

A statement from Ormand confirmed the security shroud – but revealed the secret internal audits ‘identified some weaknesses of control during 2001-2002, including areas of asset management, management of consultants, suspense accounts, records management, management information and contract management’.

These ‘are being addressed’ this year ‘but the nature of some of the weaknesses is such that they are not all being resolved’, he said.

Tory MP and chartered accountant Nick Gibb reacted angrily to the suggestionthat the intelligence agencies should reveal more. ‘The security services need to keep operations confidential. I do not think they should be more open for reasons of security.’

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