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Sir John Bourn, head of the National Audit Office, has reported to Parliament on the outcome of financial audit work undertaken by the NAO in central government over the past year. During the year Sir John qualified his audit opinion on 11 accounts and reported on a further 11.

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Today’s report examines the progress made by government departments in a number of important areas – most notably the development of corporate governance and the introduction of resource accounting.

Corporate governance

Sir John recognises that government departments face a major challenge in responding to the application of the principles of the Turnbull Committee. These cover, in particular, the extension of statements on the systems of internal control to cover operational as well as financial controls. The NAO will continue to work closely with government bodies to advise on the development of corporate governance and risk management processes.

Resource Accounting

The report examines the progress made by departments in producing the first published resource accounts for 1999-2000, following the dry run accounts prepared for 1998-99. A total of 39 accounts for 1999-2000 had been certified by 31 January 2001, of which four received qualified audit opinions. This represents a welcome improvement over the dry run accounts, and has been realised following substantial work by departments and the NAO. But Sir John adds that there is still much progress to be made – and ten departments received ‘dispensations’ from having to produce certified resource accounts by 31 January 2001, the statutory target. These accounts will now be produced on a non-statutory basis, with a target date of 31 March 2001 for certification.

Sir John expresses concern in his report at too much reliance in departments on too few personnel and a lack of staff who are technically competent to prepare accounts. This has contributed to a continuation of the trends, which he has highlighted previously, of the late submission of accounts for audit and some of them being of poor quality.

Sir John also welcomes the publication in February 2001 of Lord Sharman’s report on audit and accountability arrangements in central government, and the recognition that this report gives to the importance of strong and comprehensive accountability regimes for public money. Sir John supports the report recommendations designed to ensure that the most is made of audit findings and to provide enhanced scrutiny of the cost and quality of the NAO’s work: for example, through a commitment to accepting the inspection regime of the Joint Monitoring Unit.

Other matters

Other matters highlighted in the report include:

  • the role of performance measurement and the validation of performance information in achieving better accountability; and the work of the NAO in developing a strategy to assist in improving the public sector’s management and use of performance information and in reviewing the ways by which government departments measure their performance; and
  • the NAO’s continuing work in the wider auditing and accounting profession, including its contribution to the work of the Auditing Practices Board and the Public Audit Forum.

"My General Report sets out the progress made by departments in a number of key areas, including the development of corporate governance and resource accounting. These are significant challenges for them. The National Audit Office and I will continue to support them as they meet these challenges."

Sir John Bourn

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