Select Committee on Public Accounts Commission Report

3  Background to the review

10. In its Thirteenth Report published on 11 July 2007, the Public Accounts Commission introduced a new system of independent oversight in respect of the expenses of the C&AG. It was emphasised in that report that as far as expenses are concerned the C&AG should follow the rules and practices of Permanent Secretaries. The Chairman of the NAO's Audit Committee, assisted by the Office's Director of Internal Assurance, would oversee the planned expenses of the C&AG and have access to the Public Accounts Commission in the event that he or she has any concerns. In addition, the actual expenses of the C&AG would be reported to the Public Accounts Commission six-monthly and be subject to independent audit. These new procedures were designed so as not to fetter the discretion of the C&AG in the discharge of his functions.

11. The Thirteenth Report also stated that the Commission would be reviewing the corporate governance arrangements of the NAO to ensure they conform to best practice. I was appointed by the Public Accounts Commission to conduct this review on its behalf and this report sets out my findings and proposals for strengthening the governance of the Office. As agreed with the Commission, I have reviewed the governance arrangements in general and have neither specifically reviewed or assessed the expenses of the C&AG or the operation of the new oversight procedures referred to above.

12. The terms of reference for the review were set out in a press notice by the Commission on 11 October 2007, as follows:

"To identify the extent to which the NAO's corporate governance arrangements are consistent with best practice elsewhere (including the arrangements set out in the Combined Code on Corporate Governance and the Treasury's Corporate Governance in Central Government Departments: Code of Practice) and to propose any necessary improvements, taking account of the need to protect the Comptroller & Auditor General's statutory discretion in carrying out his duties.

"The review should focus on the role of the C & AG and his relationship with the NAO, and should cover the role of the NAO's Senior Management Board, whether a separate advisory board would be beneficial, the number of non-executives and the method of their appointment, the method of appointment and reporting arrangements of the Audit Committee, the method of appointment of senior NAO officials, arrangements for determining remuneration, and internal controls, together with any other matters the reviewer or the Commission consider appropriate."

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Prepared 7 February 2008