Select Committee on Public Accounts Eleventh Report

Chapter 1: Performance in 2001-02


  1.1  In 2001-02 the National Audit Office:

    —  completed the audit of 523 accounts, plus 85 departmental Appropriation Accounts for which 2001-02 was the last year;

    —  delivered 50 major value for money and other major reports to Parliament;

    —  played a key role in assisting departments with the implementation of resource accounting and budgeting, along with providing regular feedback on work underpinning the introduction of whole government accounting;

    —  reported on a range of issues arising from the Government's public service improvement programme;

    —  handled a complex and wide range of enquiries from Members of Parliament and members of the public, some of which came through on the designated whistleblower hotline;

    —  provided a comprehensive service of financial and value for money audit and administrative support to the Auditor General for Wales, who reimburses the costs incurred; and

    —  continued to audit functions in Northern Ireland, Scotland and Wales reserved to Westminster, such as defence, and revenue assessment and collection, which account for over a third of general government spending in those areas.


  1.2  The National Audit Office continues to contribute significantly to the achievement of value for money in the organisations it audits. For example, in the last three years savings resulting from the work of the Office have amounted to some £1.54 billion, an average of £512 million each year. The Office has thus met its target of achieving savings for the taxpayer of at least eight times its net costs. Examples of the types of savings identified are given in chapters 2 and 3.

  1.3  There are other benefits arising from both financial and value for money work which, while not resulting in savings, improve the quality of service provided to the public.


  1.4  The level of public expenditure audited by the National Audit Office over the last 10 years has risen by 15 per cent in real terms. By comparison, over the same period the Office's net costs have increased by less than 4 per cent.

  1.5  The National Audit Office's ability to control costs has arisen principally from an enhanced approach to financial audit, focusing on gaining an understanding of the bodies audited, and in particular their systems and controls. Each audit include checks on individual transactions and this knowledge helps audit staff focus on risks, and concentrate testing on areas where controls are deficient.

  1.6  In addition, the National Audit Office keeps the cost of support services under firm control. In 2001-02, for example, the Office completed a review of its personnel services. This review, together with developments in financial audit and in other areas, has released £1.2 million in 2002-03 for investment in further work to support Parliamentary scrutiny.

  1.7  Benchmarking against external providers and contracting out a proportion of the Office's work on both financial audit and value for money work as well as support services provides further checks on costs and quality.

  In response, Chapter 6 makes a case for increasing the National Audit Office's net resource requirement by an extra 4 per cent. This would enable the Office to:

    —  increase the number of value for money reports by up to 10, including additional work on non-departmental public bodies; and

    —  strengthen the audit of the revenue departments.

  The Office would need an increase in its net resource requirement of £3.1 million to deliver its increased workload in 2003-04. The proposals to strengthen Parliamentary oversight set out in Chapter 6 would require an extra £2.1 million.

Net resource requirement
£ million
Increase over 2002-03

Amount approved by Parliament for 2002-03
Amount needed in 2003-04 to implement Lord Sharman's recommendations and to maintain service to Parliament (Chapter 5)
6 per cent
Amount needed in 2003-04 to strengthen Parliamentary oversight (Chapter 6)
10 per cent

  The Public Accounts Commission is invited to consider and endorse the National Audit Office's corporate plan for 2003-04 to 2005-06. This will allow the Office to develop firm proposals for 2003-04 before inviting the Commission to endorse its Resource Estimate for the coming financial year in early 2003.

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Prepared 7 November 2002