Thank you for your letter of 24 April about DFID support for the NAO in obtaining overseas audit contracts.

  The NAO can play a valuable role in assisting developing country governments and international organisations in their efforts to improve their accounting and audit capacities. DFID has contracted the NAO for development work on a number of occasions, on the basis of their offering the most cost-effective services available for the benefit of the developing countries or institutions we are assisting.

  In view of the NAO's high reputation, we would also encourage developing country governments and international bodies to consider using the NAO when paying for advice or audit services themselves. But we would equally encourage them to adopt the same value-for-money criteria as we do in deciding on who should win a contract in the end. DFID's remit of course is to promote international development and the eradication of poverty; it is not to support United Kingdom bodies or companies in obtaining contracts in developing countries and international organisations.

  As for Sir John Bourn's specific suggestion about regional activities, I agree that these can in some cases be a more efficient and effective way of providing training than national programmes. DFID finances regional training activities, in the Caribbean and elsewhere, and we are ready to do more of this.

  We are keen to strengthen our collaboration with the NAO to improve standards of financial management, audit and risk management in the countries where we work. I have asked my Finance Director to discuss with senior colleagues in the NAO how we can best take this forward.

15 May 2002