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Budget Responsibility and National Audit BillPage 20

Other terms of appointment

7 (1) The Public Accounts Commission may determine other terms for an

appointment under this Part of this Schedule.

(2) These terms may include restrictions on—

(a) 5the offices or positions (including offices and positions to which

persons may be appointed, or recommended for appointment, by or

on behalf of the Crown) that the non-executive member may hold

while, or after ceasing to be, a member, and

(b) the agreements or other arrangements (including agreements and

10arrangements with the Crown or bodies or other persons acting on

behalf of the Crown) to which the non-executive member may be a

party while, or after ceasing to be, a member.

Consultation

8 Before making any arrangements under paragraph 6 or a determination

15under paragraph 7, the Commission must consult any person with oversight

of public appointments whom the Commission thinks it is appropriate to

consult.

Termination of appointments

9 (1) The person who chairs NAO may resign by giving written notice to the

20Prime Minister.

(2) Any other non-executive member may resign by giving written notice to the

Public Accounts Commission.

10 (1) Her Majesty may terminate the appointment of the person who chairs NAO

on an address of both Houses of Parliament.

(2) 25The Public Accounts Commission may terminate the appointment of any

other non-executive member by giving the member written notice if—

(a) the member has been absent from meetings of NAO without NAO’s

permission for a period of more than 3 months,

(b) the member has become bankrupt or has made an arrangement with

30creditors,

(c) the member’s estate has been sequestrated in Scotland or the

member has entered into a debt arrangement programme under Part

1 of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp

17) as the debtor or has, under Scots law, made a composition or

35arrangement with, or granted a trust deed for, the member’s

creditors,

(d) the member is unfit to continue the appointment because of

misconduct,

(e) the member has failed to comply with the terms of the appointment,

40or

(f) the member is otherwise unable, unfit or unwilling to carry out the

member’s functions.

Budget Responsibility and National Audit BillPage 21

Part 3 Chief executive

11 The Comptroller and Auditor General is to be the chief executive (but not an

employee) of NAO.

5Part 4 Employee members

Appointment

12 (1) The employee members are to be appointed by the non-executive members

as follows.

(2) 10If there is a vacancy, the Comptroller and Auditor General must recommend

a person to the non-executive members for appointment.

(3) The non-executive members may—

(a) appoint that person, or

(b) require the Comptroller and Auditor General to recommend another

15person (in which event this sub-paragraph applies again and so on

until someone is appointed).

Terms of appointment

13 (1) The terms of an employee member’s appointment are to be determined by

the non-executive members.

(2) 20The terms may include remuneration arrangements which—

(a) may make provision for a salary, allowances and other benefits but,

subject to sub-paragraph (4), not a pension, and

(b) may include a formula or other mechanism for adjusting one or more

of those elements from time to time.

(3) 25Amounts payable by virtue of sub-paragraph (2) are to be paid by NAO

(subject to sub-paragraph (4)).

(4) If the employee is a participant in a pension scheme under the terms of the

person’s employment with NAO, the remuneration arrangements may

make provision for the person’s service as an employee member to be

30treated, for the purposes of the scheme, as if it were service as an employee

of NAO.

Termination of appointments

14 The appointment of an employee member terminates—

(a) if the terms of the member’s appointment provide for it to expire at

35the end of a period, at the end of that period, and

(b) in any event, when the member ceases to be an employee of NAO.

15 An employee member may resign by giving written notice to the non-

executive members.

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16 The non-executive members may terminate the appointment of an employee

member by giving the member written notice if—

(a) the member has been absent from meetings of NAO without NAO’s

permission for a period of more than 3 months,

(b) 5the member has become bankrupt or has made an arrangement with

creditors,

(c) the member’s estate has been sequestrated in Scotland or the

member has entered into a debt arrangement programme under Part

1 of the Debt Arrangement and Attachment (Scotland) Act 2002 (asp

1017) as the debtor or has, under Scots law, made a composition or

arrangement with, or granted a trust deed for, the member’s

creditors,

(d) the member is unfit to continue the appointment because of

misconduct,

(e) 15the member has failed to comply with the terms of the appointment,

or

(f) the member is otherwise unable, unfit or unwilling to carry out the

member’s functions.

Part 5 20Employees

17 (1) NAO may employ staff.

(2) In determining the terms of employment of any staff, NAO must have

regard to the desirability of keeping the terms broadly in line with those

applying to civil servants.

(3) 25A person who is an employee of NAO may not hold any office or position to

which a person may be appointed, or recommended for appointment, by or

on behalf of the Crown.

Part 6 Procedural rules

30General

18 NAO must make rules for the purpose of regulating NAO’s procedure.

Quorum for NAO meetings

19 If the rules provide for a quorum for any meetings of NAO, the quorum

cannot be met unless a majority of the members present are non-executive

35members.

Committees

20 (1) The rules may include—

(a) provision for the setting up of committees of NAO and for those

committees to set up sub-committees, and

(b) 40provision regulating the procedures of those committees and sub-

committees.

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(2) An employee of NAO who is not an employee member may be a member of

a committee or sub-committee.

(3) A person who is neither a member of NAO nor an employee of NAO may

be a member of a committee or sub-committee, provided that no functions

5of NAO are delegated to the committee or sub-committee (see paragraph

23).

Part 7 Other matters

Powers

21 10NAO may do anything calculated to facilitate, or incidental or conducive to,

the carrying out of any of its functions.

Validity

22 The validity of anything done by NAO, the non-executive members or any

committee or sub-committee is not affected by—

(a) 15a vacancy, or

(b) a defective appointment.

Delegation of functions

23 (1) NAO may delegate functions to any of its members, employees or

committees.

(2) 20A committee may delegate functions (including functions delegated to it) to

a sub-committee.

(3) The delegation of a function does not prevent NAO or the committee (as the

case may be) from carrying out the function itself.

(4) Functions under the following provisions may not be delegated—

(a) 25section 23(2) of this Act;

(b) paragraph 18 or 25(1) of this Schedule;

(c) paragraph 1(1), 3(1) or (3), 7(3), 9(1) or 10(1) to (5) of Schedule 3.

NAO to prepare resource accounts

24 (1) Resource accounts of the kind mentioned in section 5 of the Government

30Resources and Accounts Act 2000 must be prepared for NAO for each

financial year by the person appointed as accounting officer under this

paragraph.

(2) The Public Accounts Commission must appoint the Comptroller and

Auditor General or some other appropriate person as accounting officer.

(3) 35The person appointed as accounting officer must carry out any other

functions determined by the Commission.

Audit of NAO

25 (1) NAO must appoint an auditor for NAO for each financial year.

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(2) The approval of the Public Accounts Commission is required for the

appointment (including its terms).

(3) The auditor must be eligible for appointment as a statutory auditor by virtue

of Chapter 2 of Part 42 of the Companies Act 2006.

(4) 5Section 1214 (independence requirement) and section 1216 (effect of

appointment of a partnership) of that Act apply as if the audit of NAO were

a statutory audit.

(5) The auditor must examine NAO’s resource accounts for the financial year.

(6) Sections 6(1) and 25(2) of the Government Resources and Accounts Act 2000

10apply (with any necessary modifications) in relation to the examination as

they apply in relation to an examination by the Comptroller and Auditor

General of the resource accounts of a department.

(7) On completion of the examination the auditor must—

(a) certify the accounts, and

(b) 15send them, together with the auditor’s report on them, to the Public

Accounts Commission.

(8) The Commission must lay the accounts and report before the House of

Commons.

26 (1) The terms of the auditor’s appointment may require the auditor to carry out

20economy, efficiency and effectiveness examinations of the use of NAO’s

resources.

(2) On completion of the examinations the auditor must prepare a report and

send it to the Public Accounts Commission.

(3) The Commission must lay the report before the House of Commons.

27 (1) 25The auditor may require access at any reasonable time to any document

where the auditor reasonably thinks it necessary for the purposes of the

auditor’s functions under paragraph 25 or 26.

(2) The auditor may also require any person holding or accountable for any

document to provide any information or explanation that the auditor

30reasonably thinks necessary for those purposes.

Documentary evidence

28 (1) The application of NAO’s seal is to be authenticated by the signature of—

(a) a member of NAO, or

(b) any person authorised (whether generally or specifically) for the

35purpose by a member of NAO.

(2) A document purporting to be duly executed under NAO’s seal or signed on

its behalf—

(a) is to be received in evidence, and

(b) is to be taken to be executed or signed in that way, unless the

40contrary is proved.

(3) This paragraph does not extend to Scotland.

Budget Responsibility and National Audit BillPage 25

Section 22

SCHEDULE 3 Relationship between NAO and Comptroller and Auditor General

Strategy

1 (1) NAO and the Comptroller and Auditor General must jointly—

(a) 5prepare a strategy for the national audit functions, and

(b) review the strategy (and revise it as appropriate) at least once every

12 months.

“The national audit functions” means NAO’s functions and the Comptroller

and Auditor General’s functions.

(2) 10The strategy must—

(a) for the period for the time being covered by it, include a plan for the

use of resources for the national audit functions;

(b) for each financial year for the time being covered by it, specify the

maximum amount of resources to be provided by NAO for the

15purposes of paragraph 2(1).

(3) The strategy (including any revision) must be approved by the Public

Accounts Commission.

(4) For this purpose the person who chairs NAO and the Comptroller and

Auditor General must jointly submit the strategy (or revision) to the

20Commission.

(5) Before approving the strategy (or revision) the Commission must review it

and may modify it.

(6) In doing this the Commission must have regard to any advice given by the

Treasury.

(7) 25NAO and the Comptroller and Auditor General must each give effect to the

strategy.

NAO to provide resources for the Comptroller and Auditor General’s functions

2 (1) NAO must provide resources for the Comptroller and Auditor General’s

functions as required by the Comptroller and Auditor General.

(2) 30In particular, NAO is responsible for—

(a) employing staff to assist in the carrying out of those functions,

(b) procuring services for the purposes of those functions,

(c) holding documents or information acquired or generated in the

course of, or otherwise for the purposes of, those functions (see,

35further, paragraph 13), and

(d) keeping records in relation to those functions,

as required by the Comptroller and Auditor General.

(3) For any financial year the maximum amount of resources that the

Comptroller and Auditor General may require for the purposes of sub-

40paragraph (1) is the maximum amount specified for that year under

paragraph 1(2)(b).

(4) Sub-paragraph (1) is also subject to paragraph 3.

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Provision of certain services by Comptroller and Auditor General to require NAO’s approval

3 (1) The Comptroller and Auditor General may provide services that are not

within sub-paragraph (2) only with NAO’s approval.

(2) The services within this sub-paragraph are services provided by the

5Comptroller and Auditor General—

(a) to NAO by virtue of Schedule 2 to this Act,

(b) that are part of, or are incidental to, the Comptroller and Auditor

General’s functions under the following Acts—

(i) the Exchequer and Audit Departments Act 1866,

(ii) 10the Exchequer and Audit Departments Act 1921,

(iii) the National Loans Act 1968,

(iv) the National Audit Act 1983, and

(v) the Government Resources and Accounts Act 2000, or

(c) that consist of, or are incidental to, an audit, examination or

15inspection that the Comptroller and Auditor General is required or

authorised to carry out by a statutory provision, other than section

1226 of the Companies Act 2006 (eligibility for appointment as a

statutory auditor) and any provision of this Part of this Act.

(3) If NAO approves the provision of any services under sub-paragraph (1), it is

20for NAO to determine the maximum amount of resources that the

Comptroller and Auditor General may require for the services for the

purposes of paragraph 2(1).

(4) In this Schedule “NAO-approved services” means services provided with

NAO’s approval under sub-paragraph (1).

25NAO to monitor and provide advice

4 NAO must, in such manner as it considers appropriate, monitor the carrying

out of the Comptroller and Auditor General’s functions.

5 (1) NAO may provide advice to the Comptroller and Auditor General about the

Comptroller and Auditor General’s functions.

(2) 30The Comptroller and Auditor General must have regard to any advice

given.

Delegation of Comptroller and Auditor General’s functions

6 (1) The Comptroller and Auditor General may prepare a scheme for the

delegation of functions of that office to employees of NAO.

(2) 35The scheme (including any revision) must be approved by the Public

Accounts Commission.

(3) If the Commission approves the scheme (or any revision), the Comptroller

and Auditor General may delegate functions in accordance with it.

(4) A delegation does not prevent the Comptroller and Auditor General from

40doing anything personally.

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Comptroller and Auditor General: vacancy or incapacity

7 (1) This paragraph applies if the office of Comptroller and Auditor General is

vacant.

(2) This paragraph also applies if—

(a) 5the Speaker of the House of Commons certifies to that House that, in

the view of the Speaker, the ability of the person who is Comptroller

and Auditor General to carry out the functions of that office is

seriously impaired because of ill health (whether mental or physical),

and

(b) 10this paragraph has not previously applied in relation to that person.

(3) NAO may, with the agreement of the Public Accounts Commission,

authorise an employee of NAO to carry out the Comptroller and Auditor

General’s functions during the vacancy or period of ill health.

(4) The “period of ill health” means the period—

(a) 15starting when the Speaker of the House of Commons certifies to that

House as mentioned in sub-paragraph (2)(a), and

(b) ending when the Speaker certifies to that House that, in the view of

the Speaker, the person’s ability to carry out the functions of the

Comptroller and Auditor General is no longer seriously impaired

20because of ill health.

(5) The functions to which sub-paragraph (3) applies include the function of

delegating under paragraph 6.

(6) In relation to a vacancy or period of ill health of more than 6 months,

functions may not be carried out by virtue of sub-paragraph (3) after the end

25of the first 6 months.

Audit fees etc

8 (1) NAO may charge fees for audits carried out by the Comptroller and Auditor

General.

(2) Any fees must be charged in accordance with a scheme prepared by NAO.

(3) 30The scheme (including any revision) must be approved by the Public

Accounts Commission.

(4) The agreement of a Minister of the Crown is required for the charging of a

fee if the accounts to be audited are the accounts of a body or other person

who acts on behalf of the Crown.

(5) 35Sub-paragraphs (1) to (4) do not apply in relation to an audit carried out as

part of any NAO-approved services.

(6) The Comptroller and Auditor General may charge fees and other amounts

in relation to NAO-approved services, but only in accordance with the

agreement or other arrangements under which the services are provided.

(7) 40Fees and other amounts received by the Comptroller and Auditor General

must be paid to NAO.

Budget Responsibility and National Audit BillPage 28

(8) Fees and other amounts received by NAO under this paragraph must be

paid into the Consolidated Fund.

Reports

9 (1) NAO and the Comptroller and Auditor General must, as soon as practicable

5after the end of each financial year, jointly prepare a report on the carrying

out during the year of the national audit functions (see paragraph 1(1)).

(2) The person who chairs NAO and the Comptroller and Auditor General must

jointly submit the report to the Public Accounts Commission.

(3) The Commission must lay the report before Parliament.

10Code of practice

10 (1) NAO and the Comptroller and Auditor General must jointly prepare a code

of practice dealing with the relationship between NAO and the Comptroller

and Auditor General.

(2) In doing this, they must (in particular) seek to reflect the principle set out in

15section 17(1) and (2), subject to any limitations on that principle that are

agreed between the Public Accounts Commission, NAO and the

Comptroller and Auditor General.

(3) NAO and the Comptroller and Auditor General must jointly review the code

regularly and revise it as appropriate.

(4) 20In preparing or revising the code, they must consult the Treasury.

(5) They must also consider any proposals for revisions of the code made by the

Commission from time to time.

(6) The code (including any revision) must be approved by the Commission.

(7) For this purpose, the person who chairs NAO and the Comptroller and

25Auditor General must jointly submit the code (or revision) to the

Commission.

(8) If the Commission approves the code (or revision), the Commission must lay

it before Parliament (stating the time from which it takes effect).

(9) NAO and the Comptroller and Auditor General must each comply with the

30code.

11 (1) For the purposes of preparing or revising the code, the NAO must agree to

the code (including any revision) in accordance with this paragraph.

(2) The agreement must be given at a meeting of NAO.

(3) The agreement may be given only if at least one half of the non-executive

35members present and voting on the matter vote in favour of giving the

agreement.

(4) The requirements of this paragraph are in addition to any other

requirements relating to NAO’s procedure.

12 (1) The code must include—

(a) 40provision as to how the strategy required by paragraph 1 is to be

prepared, reviewed and revised;

Budget Responsibility and National Audit BillPage 29

(b) provision about the matters to be covered by the strategy and the

periods to be covered by it from time to time;

(c) provision as to how resources are to be provided for the purposes of

paragraph 2(1);

(d) 5provision about the preparation of estimates for the purposes of

section 23;

(e) provision as to how NAO is to make decisions for the purposes of

paragraph 3;

(f) provision as to how NAO is to monitor the Comptroller and Auditor

10General’s functions for the purposes of paragraph 4;

(g) provision as to how advice is to be given by NAO for the purposes of

paragraph 5, including the nature of the advice to be given;

(h) provision as to how the Comptroller and Auditor General is to

charge fees and other amounts under paragraph 8;

(i) 15provision about the extent to which NAO’s functions are to be

delegated to the Comptroller and Auditor General (see paragraph 23

of Schedule 2);

(j) provision restricting the public comments that a non-executive

member of NAO may make in relation to the carrying out of the

20Comptroller and Auditor General’s functions.

(2) The code may also make provision about—

(a) the way in which reports required by paragraph 9 are to be prepared

and the matters to be covered by those reports;

(b) matters about which NAO or the Comptroller and Auditor General

25(or both) are to consult the Public Accounts Commission from time

to time;

(c) standards for corporate governance.

(3) This paragraph is not exhaustive as regards the matters that may be covered

by the code.

30Documents and information

13 (1) Any document or information which a person is required to provide, or may

provide, to the Comptroller and Auditor General, may be provided to NAO

(either by that person or the Comptroller and Auditor General).

(2) For the purposes of section 3(2) of the Freedom of Information Act 2000 any

35document or information held by NAO as mentioned in paragraph 2(2)(c) is

treated as held by NAO on its own behalf.

(3) The documents and information to be held by NAO as mentioned in

paragraph 2(2)(c) include documents and information previously held by

the National Audit Office established by section 3 of the National Audit Act

401983.

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