Function
The NAO is the auditor of bodies funded directly by the Parliament of the United Kingdom.
The NAO reports to the Comptroller and Auditor General who is an officer of the House of Commons of the Parliament of the United Kingdom and in turn reports to the Public Accounts Committee, a select committee of the House of Commons. The reports produced by the NAO are reviewed by PAC and in some cases investigated further.
The NAO has three main streams of work:
- Financial Audits
- Value For Money (VFM) audits
- Good Governance
Financial audit The NAO’s financial audits give assurance over three aspects of government expenditure: the truth and fairness of financial statements; the regularity (or statutory validity) of the expenditure, and; the propriety of the audited body’s conduct in accordance with parliamentary, statutory and public expectations. Financial audits are carried out in much the same way as private auditing bodies and the NAO voluntarily applies the International Standards of Auditing (ISAs).
Value for Money (VFM) audits are non-financial audits to measure the effectiveness, economy and efficiency of government spending. Roughly sixty of these reports are produced each year, the most notable from recent years being the reports on MRSA, which led to an increase in public interest in the topic, the report on the rescue of British Energy and the report in the Public Private Partnership to maintain the London Underground. The remits of the NAO and the Public Accounts Committee do not allow them to question the policy itself and so VFM reports only examine the implementation of policy. The responsibility for questioning policy is left for other select committees and debating chambers of Parliament, but this has not prevented the PAC being named committee of the year in 2006.
Good Governance is a smaller but increasing area of work for the office and is somewhere in between VFM and financial audit work. The work tends to produce shorter, quicker reports than VFM and includes briefing documents and papers for select committees. The work also includes Section 2 Reports which examine the collection of taxes by HM Revenue and Customs and the DVLA.
Read more about this topic: National Audit Office (United Kingdom)
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—George Bernard Shaw (1856–1950)
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