An Introduction to the National Audit Office

Slides:



Advertisements
Similar presentations
Helping the nation spend wisely An Introduction to the National Audit Office.
Advertisements

The NAO in National Audit Office Annual Report and Accounts
FINANCIAL AUDIT METHODOLOGY PETER CARLILL UK NATIONAL AUDIT OFFICE.
The Role and Management o of the Scrutiny Unit Jessica Mulley, Head of the Scrutiny Unit June 2013.
Using IFRS Based Financial Statements In Corporate Governance Gareth Davies Local Authority (Scotland) Accounts Advisory Committee secretary CIPFA Policy.
Auditing, Assurance and Governance in Local Government
Helping the nation spend wisely An introduction to the NAO Strategy to
© 2013 Grant Thornton UK LLP | Annual Audit Letter | Date The Annual Audit Letter for North Hertfordshire District Council Year ended 31 March 2013 Philip.
Development of internal control: methodology and responsibility
Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.
The quality framework of European statistics by the ESCB Quality Conference Vienna, 3 June 2014 Aurel Schubert 1) European Central Bank 1) This presentation.
Supporting the PAC: The Role of the NAO David Goldsworthy International Manager
Corporate Governance Life-Cycle GOVERNANCE in GOVERNMENT DOES IT EXIST? SIR JOHN BOURN COMPTROLLER and AUDITOR GENERAL.
Learning Objectives LO1 Explain the importance of auditing. LO2 Distinguish auditing from accounting. LO3 Explain the role of auditing in information risk.
Trinidad & Tobago Corporate Governance Code 2013
ZHRC/HTI Financial Management Training
PAD190 PRINCIPLES OF PUBLIC ADMINISTRATION
Accountability in Finnish administration, introduction Visa Paajanen,
Audit Commission Presentation Salford City Council Consideration of the financial statements.
Local Audit and Accountability Bill 2013 CIPFA Conference 2013 David Watkins, CIPFA P&T Associate.
M. ANGELA JIMENEZ 1 UNIT 5. REGULATION OF EXTERNAL AUDIT IFAC AND E.C.
Information for New Members of Crown Entity Boards Crown copyright: State Services Commission, February
Perspectives on Maximising Accountability Andy Wynne.
Rigsrevisionen The National Audit Office of Denmark.
Workshop on Implementing Audit Quality Practices March 2006 Building Quality into the Financial Audit Process The NAO’s experience Gareth Caller.
Good practices from and for the EU accountability process Irena Petruškevičienė Vilnius, 17 October 2006.
1 1 UNDP’s Financial Management and Assurance March 2007.
The Scrutiny Unit Annual Reports and Accounts Aruni Muthumala, House of Commons Scrutiny Unit 13 March 2012.
National Treasury 11 March Overview of Presentation  The Constitution and oversight  PFMA requirements for tabling of annual reports  Proposed.
International Symposium on the changing role of Parliament in the budget process: Experiences from PUIC Countries and EU Member States Cooperation between.
Relationship: PAC's, SAI's and Accountant General in Improving transparency and accountability process Contributions for discussion from Mozambique National.
Annual Accounts: April 2014 – March 2015 David Maloney Chief Finance Officer Haringey CCG.
Fiscal Policy Audit – National Audit Office of Finland Hannu Rajamäki Director for Performance Audit NAO of Finland.
HELPING THE NATION SPEND WISELY Public Sector Accountability and Auditing in the UK ROLE OF NATIONAL AUDIT OFFICE & RELATIONSHIP WITH PARLIAMENT for Distinguished.
HELPING THE NATION SPEND WISELY Evaluating the quality and use of Impact Assessments The role and approach of the NAO.
SAI & PAC Relationship Perspective from the Maldives “The work of an SAI, and its relations with parliament are key factors in a strong chain of accountability.
HELPING THE NATION SPEND WISELY Rob Prideaux Director of Corporate Affairs, UK National Audit Office Meeting of Representatives of Supreme Audit Institutions,
Tax Administration Diagnostic Assessment Tool MODULE 11 “POA 9: ACCOUNTABILITY AND TRANSPARENCY”
NHS Education & Training Operating Model from April 2013 Liberating the NHS: Developing the Healthcare Workforce From Design to Delivery.
Slide 1 Federation des Experts Comptables Méditerranéens 4 th FCM Conference Capri, 3-4 May 2004 The Globalisation of Small and Medium-sized Enterprises.
Regulation Inside Government: Approach and lessons learned Punita Goodfellow, Better Regulation Executive, Cabinet Office, UK.
Induction toolkit 2. WHAT DOES MY TRUST LOOK LIKE? © GovernWell
Auditing of Performance A conceptual discussion. Auditing of performance To demonstrate and discuss the differences between auditing of performance information.
Internal/External Audit Corporate Governance part 5.
THE ROLE OF THE AUDITOR- GENERAL RP MOSAKA Business Executive: Parliamentary Services OFFICE OF THE AUDITOR-GENERAL.
June 2009 Role of the Treasury - expenditure control.
15 March 2011 Review of the National Compact David Clarke Civil Society & Commissioning VFM Team.
Page 1 Reports that enable accountability and oversight Paul Mosaka, Business Executive 14 April 2010.
Page 1 Portfolio Committee on Water and Environmental Affairs 14 July 2009.
Audit Committee in the Public Sector 30 September 2015 Corporate Executives: Barry Wheeler.
Regional Accreditation Workshop For Asia and Eastern Europe Manila, Philippines th March, 2012.
PETH Revision Questions On Governing Bodies.
Torbay Council Partnerships Review August PricewaterhouseCoopers LLP Date Page 2 Torbay Council Partnerships Background The Audit Commission defines.
Internal Audit Quality Assessment Guide
The Strategic Responsibilities of Governing Bodies Andrew Wilkinson Chair, Board of Governors, University of Wales, Newport and Chair of Chairs of Higher.
Effective Board Governance & role of the Audit Committee Presentation by Cluster Audit Committee – July / August 2012.
AAT Level 3 Diploma Professional Ethics. Aims Outline the relevant legal, regulatory and ethical requirements affecting the accounting and finance sector.
Audit Committee 1 June 2005 Overview of the Audit Function in the Council and Role of Audit Committee.
Governance and Management Trust Board of Directors Trustees for all Academies in Trust Senior Management Staff Appointed by Board to discharge.
Governance and Management
Agency Performance: A New Agenda
PEMPAL IACOP PUBLIC INTERNAL CONTROL: MANAGEMENT AND CONTROL OF THE PUBLIC ENTITIES Presenter: Malapateng Teka; National Treasury| March 2016.
Police and Crime Commissioner for Dyfed Powys - Candidates Briefing
Information for New Members of Crown Entity Boards
TERMS OF REFERENCE - FINANCE COMMITTEE
SAPS Audit Committee 26 October 2016.
INTRODUCTION TO PUBLIC FINANCE MANAGEMENT
National Audit Office Annual Report and Accounts
WHAT TO EXPECT: A CROWN CORPORATION’S GUIDE TO A SPECIAL EXAMINATION
Portfolio Committee on Communications
Presentation transcript:

An Introduction to the National Audit Office

Contents Overview This section covers the role of the NAO and the Comptroller and Auditor General; the impact of the NAO’s work; the accountability process; and who our work is produced for. Our work This section explains the different aspects of the NAO’s work in detail. Our governance This section details the NAO’s governance and leadership structures. Other corporate information Further information about our outputs, our people and accreditations.

Overview

Our role The National Audit Office (NAO) scrutinises public spending for Parliament We help to hold government departments and the bodies we audit to account for how they use public money Our work helps public service managers to improve performance and service delivery, nationally and locally

Our impact Our public audit perspective helps Parliament hold government to account and improve public services. Our work leads to savings and other efficiency gains worth many millions of pounds: £1.1 billion in 2013

The Comptroller and Auditor General (C&AG) Sir Amyas Morse KCB was appointed in June 2009, and leads the NAO. He is an Officer of the House of Commons and was appointed by the Queen. He has statutory access and reporting rights. He and his staff are totally independent of government.

The accountability process * Committee of Public Accounts

Our work is produced for The Committee of Public Accounts (PAC) Other select committees, including the Public Administration Select Committee, Environment, Health, Transport, etc. All MPs and peers Senior officials in government departments Members of the public and groups interested in aspects of our work The Committee of Public Accounts (PAC) Select Committee of the House of Commons Chaired by an Opposition MP Evidence session based on C&AG’s report Questions put to Accounting Officer Reports and makes recommendations Sessions last 1-2 hours Investigative style Designed to be formidable Government must respond to PAC report Treasury Minute

Our work

There are five dimensions to our work Audited bodies include: Departments - e.g. Health, Defence Agencies - e.g. Highways Agency NDPBs - e.g. Environment Agency, Competition Commission Charities – e.g. British Council, V&A Companies – e.g. School Food Trust * International Organisation of Supreme Audit Institutions

Audited bodies The C&AG certified 427 accounts in 2013-14, covering more than £1 trillion of public income and expenditure Departments e.g. Health, Defence Agencies e.g. Highways Agency Arm’s-length bodies e.g. Environment Agency, Competition Commission Charities e.g. British Council, V&A Companies e.g. School Food Trust Source: NAO Annual Report & Accounts 2012-13

Financial audit The NAO provides an independent opinion ensuring accounts are: 'true and fair' properly prepared – in accordance with the relevant Accounting Framework regular – income or expenditure, or both, in line with Parliamentary intention Accounting Framework’ = This is a set of rules and guidelines issued by Treasury which sets out how central government should prepare its annual report and financial statements. This is based on International Financial Reporting Standards, altered to be more specific to the circumstances of government.   ‘Parliamentary intention’ = When a body is established, the legislation will set out what activities it can expend its resources on. This is parliamentary intention.

Financial audit approach The NAO approach: complies with International Standards on Auditing (ISAs) is a risk-based audit approach focuses on material matters, i.e. matters which could alter the user’s understanding of a set of financial statements ‘risk based audit approach’ = Our audit planning seeks to ascertain what risk there is of material fraud or error arising in an account. This drives the level of work we do beyond the minimum required by international auditing standards. We also consider the level of media and public interest in the account.  

Financial audit outputs Audit opinion on financial statements The C&AG gives an opinion on financial statements, including whether they are true and fair. For most of the accounts we audit, the C&AG will also give a regularity opinion. C&AG's report on accounts The C&AG may choose to issue a substantive report on an entity which he audits. These are used to bring Parliament's attention to matters which have a direct or indirect effect on public expenditure. Letter to management The letter recommends process and control improvements. ‘qualified’ = a qualified opinion is given when audit work indicates that an account is not true and fair in all material respects. This will usually be isolated to a specific area of an account, although can be broader.   ‘regularity opinion’ = This is similar to parliamentary intention. Our audit testing seeks reasonable assurance that expenditure has been incurred in line with parliamentary intention. Any expenditure which is not is deemed to be irregular and a qualified opinion on regularity is given.

Value for money audit (VFM) Parliament uses our reports to hold government to account for how it spends public money We cover a wide range of significant topics, such as the NHS and major defence projects, and increasingly focus on local services, including those delivered by local government We select our studies based on a detailed assessment of risks to value for money, with input from PAC and Parliament

Value for money audit (VFM) Our reports highlight important lessons for the bodies we audit and for government more widely We do not comment on the merits of policy but aim to conclude on whether value for money has been secured

What is VFM audit? Evidence based: we must be able to substantiate what we say with documentary and other proof; Analytical: we must be able to derive meaning from our examination of the evidence. VFM work is not just evidence gathering; Resource focused: we are an audit office and people expect to see us reporting on how public money and public assets have been used; Evaluative: we must conclude and make judgments in our work, rather than just be descriptive; Prescriptive: having concluded we must design recommendations to assist our clients to improve aspects of their business; and Purposeful: we do not undertake studies for their own sake but rather to support accountability processes and to stimulate change. What do we mean by VFM audit? VFM audit is a hybrid activity which has evolved over the years to incorporate aspects of a number of other disciplines. It has moved some way from traditional audit, although at heart our approach to evidence and our concern for how public money has been spent demonstrates that we remain auditors. VFM work is not research for its own sake, although we do draw on the work of academic research. Nor is it management consultancy, which is not necessarily so evidence based, although we do make recommendations for change.

Confirming the accuracy of our reports The C&AG has complete discretion over the content of our reports We agree the factual accuracy of our reports with the bodies we audit but not the conclusions and recommendations We also seek comments from other parties mentioned in our reports The aim is to ensure subsequent debate focuses on lessons to be learned, with the facts agreed

Investigations and insight We carry out investigations into areas of concern raised with us by Members of Parliament or members of the public. In 2013-14 this work included: Confidentiality clauses and special severance payments; The Ministry of Justice’s electronic monitoring contracts; and Government whistleblowing policies.

Investigations and insight We also provide in-depth analysis into the systemic issues faced across government, including: the effective use of information and ICT; and good practice in financial management.

Support to Parliament We place our skills at the service of Parliament as a whole, supporting in particular the Committee of Public Accounts (PAC), other select committees from both Houses and individual MPs in their scrutiny of public spending and service delivery.

Our international role We sit on the UN Board of Auditors We carry out external audits of a range of other international organisations We report on EU spending in the UK We are a board member of the International Organisation of Supreme Audit Institutions We provide capacity-building support to Supreme Audit Institutions and parliaments abroad Examples of international bodies we audit: Advisory Centre for World Trade Law, UN High Commissioner for Refugees Source: NAO intranet

New areas of work The NAO has taken on new responsibilities: auditing organisations in the reformed financial regulatory system, such as the Financial Conduct Authority; auditing probation trusts across England; and developing local government work, including preparations to take on new responsibilities for overseeing the Code of Audit Practice Financial Regulatory bodies: From April 2013 we began to audit bodies in the new financial regulatory framework, including the Financial Services Compensation Scheme, the Financial Ombudsman Service, the Money Advice Service, the Prudential Regulation Authority and the Financial Conduct Authority. Local government: The passage of the Local Audit and Accountability Act 2014 has implications for our VFM audits. The Act gives the C&AG’s power to undertake work regarding the economy, efficiency and effectiveness with which local public bodies have used their resources. In 2013-14, we began this work with a small number of separately funded VFM audits considering local services. Examples include our reports on council tax support, funding and structures for local economic growth, financial sustainability of local authorities, and central government’s communication and engagement with local government. Probation trusts: In 2012-13, the C&AG became responsible for auditing 34 English probation trusts. We worked with trusts and sector organisations to develop the framework for our audit. We identified innovative approaches to streamline the audit process, making a ten per cent reduction in audit fees to trusts this year, compared with previous arrangements. The sector welcomed our approach, which has helped to build our credibility as an auditor for local public service bodies.

Our governance

NAO board members Non-executive members Professor Sir Andrew Likierman Chairman Gillian Guy Chair of the Audit Committee Paula Hay-Plumb Senior independent board member and Chair of the Remuneration and nominations committee Naaz Coker Dame Mary Keegan Executive members Amyas Morse Comptroller and Auditor General Michael Whitehouse Chief Operating Officer Gabrielle Cohen Executive Leader (stakeholder relations) John Thorpe Executive Leader (economic affairs)

NAO leadership team * Board member

Governance Effective governance is vital to the success of an organisation. We aim to practise what we preach by upholding high standards of governance in our operations and decision-making

Who audits the NAO? The Public Accounts Commission, a committee of MPs Approves our budget Scrutinises costs and performance Appoints our external auditors Commissions value-for-money studies of our work

Other corporate information

Key corporate data Source: NAO Annual Report and Accounts 2013-14 NAO helps the Ministry of Defence to improve inventory management In our financial audit work for the opinion on the 2013 Ministry of Defence financial accounts, we identified £70 million net book value of Bowman radio raw materials and consumables, and £18 million of capital spares which were not visible on the base inventory systems and had not been accounted for in the financial statements. The Ministry of Defence corrected this financial error. Impact: In response, the Ministry of Defence also amended the manual process that had been suppressing the balances from feeding to the accounts, allowing visibility of this stock to inventory managers and, in turn, improved inventory management.

Our people Accountants Statisticians Economists Social scientists Technical specialists Client specialists

Our role in the accountancy profession We sit on the following boards and councils: HM Treasury’s financial reporting advisory board On CIPFA* and ICAEW** councils ICAEW financial reporting committee * Chartered Institute of Public Finance and Accountancy ** Institute of Chartered Accountants in England and Wales Source: VFMPQ June 2012

Accreditations We are ranked 158th in the Guardian’s list of the top 300 employers that students most want to work for.

Further information NAO website www.nao.org.uk Follow the NAO on Twitter @NAOorguk Sign up for email alerts with NAOdirect NAO videos on YouTube NAO Annual Report & Accounts 2013-14 Public Accounts Commission