National Audit Office (United Kingdom) - History and Establishment

History and Establishment

The NAO developed from the former Exchequer and Audit Department (founded in 1866) in 1983 as the auditor for central government (including most of the externalised agencies and public bodies) as part of an "appropriate mechanism" to check and reinforce departmental balance and matching of quantitative allocation with qualitative purpose (as set out by public policy). The existence and work of the NAO are underpinned by three fundamental principles of public audit:

• Independence of auditors from the audited (executives and Parliament)
• Auditing for: regularity, propriety and VFM (Value for Money)
• Public reporting that enables democratic and managerial accountability

The basic need for the NAO arises from these three fundamental principles, in that, as Parliament votes on public expenditure of various activities by public bodies, they need auditors that are independent of the body in question, the government and/or opposing political parties; while auditing for compliance and legal spending by departments on the activities voted for by Parliament, in a transparent and public forum.