Government departments are continuing to make progress in improving the quality and timeliness of their accounts which they submit for audit. However, according to head of the National Audit Office Sir John Bourn, a large number of departments will need to make significant further effort if they are to meet the Treasury’s timetable for the faster closing of financial reporting.
Today’s report to Parliament on the financial audit work carried out by the NAO in respect of government accounts for 2004-05 points out that standards of accountability and probity in central government bodies remain high. Sir John issued qualified opinions on only two sets of departmental resource accounts compared with a total of four in the previous year.
Nevertheless there was a significant setback in that the accounts of one department, the Home Office, presented such fundamental problems that the Comptroller and Auditor General had to issue a ‘disclaimer of opinion’ because of the lack of audit evidence which he needed to reach an opinion on the truth and fairness of the account.
Good progress has been made by departments in improving the timeliness of the submission of accounts. 87 per cent of accounts had been submitted for audit by October 2005 (compared to the previous year position of 84 per cent). While six departments failed to meet the statutory timetable for submitting accounts to the Comptroller and Auditor General by 30 November, all accounts were laid before the House of Commons by the deadline of 31 January.
However, in order to meet the challenge of the Treasury’s faster closing initiative – to accelerate the production and audit of resource accounts in order to lay them no later than four months from the end of the financial year – many departments still have much work to do. Sir John expressed his full commitment to a partnership with departments to help achieve this, in order to provide Parliament with more up to date financial information.
Sir John was pleased to note an increasing recognition of the key role that financial management has to play in the efficient use of resources and in the delivery of government efficiency programmes. He welcomed the continuing steps being taken by the Treasury and departments to improve the professionalism of the finance function: not least the decision that, from December 2006, all departments will have qualified accountants as board level finance directors. He was also pleased that, during 2005, the NAO was able to assist in a Treasury-led department by department review of the effectiveness of financial management within central government. Senior NAO staff are now discussing with departments’ senior management how the Office might contribute to the achievement of the action plans arising out of the reviews.
Significant progress has been made by departments in improving their risk management capabilities. However, Sir John considered that there was still more that might be done in some departments to demonstrate that they have made effective risk management a central part of their day to day management processes.
Sir John said in his report that he was conscious of the need to ensure that the audit methodologies employed by the NAO continue to reflect best practice and the current thinking of the wider auditing profession and was pleased to report that for the audit of 2005-06 accounts the NAO will conduct its work in accordance with International Standards on Auditing (UK and Ireland) in line with the timetable for the adoption of these Standards in the private sector.