The role of the C&AG
3. Our starting point is the fundamental importance
of preserving the independence of the C&AG in deciding what
audits to carry out and in making audit judgments, and above all
in preserving his or her independence from the executive. The
uniqueness of the C&AG's role is that he or she not only runs
a large organisation but is also responsible for the audit judgments
made by that organisation. The C&AG's independence is an
absolute requirement for effective audit and is the cornerstone
of integrity in public finance in the UK. That independence can
easily be taken for granted, but would very soon be missed if
it were compromised, and therefore great care is needed when altering
in any way the corporate governance of the NAO.
4. The C&AG's independence from the executive
is symbolised by his or her status as an Officer of the House
of Commons,[2] which also
makes clear that the C&AG is a servant of the House. We attach
great importance to that status as an Officer of the House. In
fact the C&AG's independence is preserved even from the House
by the fact that he or she has, by statute, "complete discretion
in the discharge of his functions".
5. The need for the C&AG to be able to make independent
judgments is recognised in John Tiner's review. We endorse the
three objectives set by John Tiner for the governance of the NAO,
which are as follows:
- "The C&AG must have
the authority to form completely independent judgements about
the audits and value for money and other studies conducted by
the NAO and the presentation of these to Parliament."
- "The NAO must maintain systems of governance
and internal controls consistent with best practice, applied in
ways which do not fetter its independence from Government, and
to report publicly on these systems in its Annual Report."
- "The NAO must conduct its work according
to relevant auditing and professional standards and prevailing
best practice."
6. At present the NAO's governance arrangements give
absolute priority to the first objective at the expense of the
second, so that the checks and balances which should ensure good
governance are absent. The central problem in strengthening the
NAO's corporate governance is how to achieve the second objective
without compromising the first. Most of our response to the review
focuses on this issue.
2 National Audit Act 1983, s.1 (2). Back
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