Constitutional Reform and Governance Bill

House of Commons

Session 2008 - 09
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Constitutional Reform and Governance Bill

Constitutional Reform and Governance Bill
Schedule 7 — Interaction between NAO and the Comptroller and Auditor General
59

      (3)
The Commission must lay the report before the House of Commons.
27    (1)
The auditor may require access at any reasonable time to any document, as
the auditor thinks 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
5
document to provide any information or explanation that the auditor thinks
necessary for those purposes.
Documentary evidence
28    (1)
The application of NAO’s seal is to be authenticated by the signature of any
of the following—
10
(a)
a member of NAO;
(b)
any person authorised (whether generally or specifically) for the
purpose by a member of NAO.
      (2)
A document purporting to be duly executed under NAO’s seal or signed on
its behalf—
15
(a)
is to be received in evidence, and
(b)
is to be taken to be executed or signed in that way, unless the
contrary is proved.
      (3)
This paragraph does not extend to Scotland.
Schedule 7
20
Section 44

Interaction between NAO and the Comptroller and Auditor General
Strategy
1     (1)
NAO and the Comptroller and Auditor General must jointly—
(a)
prepare a strategy for the national audit functions;
(b)
review the strategy (and revise it as appropriate) at least once every
25
12 months.

“The national audit functions” means NAO’s functions and the Comptroller
and Auditor General’s functions.
      (2)
The strategy must—
(a)
for the period for the time being covered by it, include a plan for the
30
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
purposes of paragraph 2(1).
      (3)
The strategy (including any revision) must be approved by the Commission.
35
      (4)
For this purpose, the chair of NAO and the Comptroller and Auditor
General must jointly submit the strategy (or revision) to the Commission.
      (5)
Before approving the strategy (or revision), the Commission must review it
and may modify it.

Constitutional Reform and Governance Bill
Schedule 7 — Interaction between NAO and the Comptroller and Auditor General
60

      (6)
In doing this the Commission must have regard to any advice given by the
Treasury.
      (7)
NAO 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
5
2     (1)
NAO must provide resources for the Comptroller and Auditor General’s
functions as required by the Comptroller and Auditor General.
      (2)
In 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,
10
(c)
holding documents or information acquired or generated in the
course of, or otherwise for the purposes of, those functions (see,
further, paragraph 13 below), and
(d)
keeping records in relation to those functions,

as required by the Comptroller and Auditor General.
15
      (3)
For any financial year, the maximum amount of resources that the
Comptroller and Auditor General may require for the purposes of sub-
paragraph (1) is the maximum amount specified for that year in the strategy
under paragraph 1(2)(b).
      (4)
Sub-paragraph (1) is also subject to paragraph 3.
20
Provision of certain services by the 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
25
Comptroller and Auditor General—
(a)
to NAO by virtue of Schedule 6 to this Act,
(b)
that are part of, or are incidental to, the Comptroller and Auditor
General’s functions given by or under the Exchequer and Audit
Departments Act 1866 (c. 39), the Exchequer and Audit Departments
30
Act 1921 (c. 52), the National Loans Act 1968 (c. 13), the National
Audit Act 1983 (c. 44) or the Government Resources and Accounts
Act 2000 (c. 20), or
(c)
that consist of, or are incidental to, an audit, examination or
inspection that the Comptroller and Auditor General is required or
35
authorised to carry out by a statutory provision, excluding section
1226 of the Companies Act 2006 (c. 46) and any provision of this Part
of this Act.
      (3)
If NAO approves the provision of any services under sub-paragraph (1), it is
for NAO to determine the maximum amount of resources that the
40
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).

Constitutional Reform and Governance Bill
Schedule 7 — Interaction between NAO and the Comptroller and Auditor General
61

NAO to monitor and provide advice
4
NAO must, as it thinks appropriate, monitor the carrying out of the
Comptroller and Auditor General’s functions.
5     (1)
NAO must, as it thinks appropriate, provide advice to the Comptroller and
Auditor General about that office’s functions.
5
      (2)
The Comptroller and Auditor General must have regard to any advice
given.
Delegation of the 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.
10
      (2)
The scheme (including any revision) must be approved by the 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 stop the Comptroller and Auditor General from doing
anything personally.
15
Vacancy in office of Comptroller and Auditor General or incapacity of Comptroller and Auditor
General
7     (1)
This paragraph applies if the office of the Comptroller and Auditor General
is vacant.
      (2)
This paragraph also applies if—
20
(a)
a person (“P”) holds the office of the Comptroller and Auditor
General,
(b)
the Speaker of the House of Commons certifies to that House that, in
the view of the Speaker, P’s ability to carry out the office’s functions
is seriously impaired because of ill health (mental or physical), and
25
(c)
this paragraph has not previously applied in relation to P.
      (3)
NAO may, with the Commission’s agreement, authorise an employee of
NAO to carry out the Comptroller and Auditor General’s functions during
(as the case may be)—
(a)
the vacancy, or
30
(b)
the period of ill health.
      (4)
“The period of ill health” means the period—
(a)
starting when the Speaker of the House of Commons certifies to that
House as mentioned in sub-paragraph (2)(b), and
(b)
ending when the Speaker certifies to that House that, in the view of
35
the Speaker, P’s ability to carry out the office’s functions is no longer
seriously impaired because of ill health (mental or physical).
      (5)
The functions covered by sub-paragraph (3) include the function of
delegating under paragraph 6.
      (6)
In relation to a vacancy or period of ill health of more than six months,
40
functions may not be carried out by virtue of sub-paragraph (3) after the end
of the first six months.

Constitutional Reform and Governance Bill
Schedule 7 — Interaction between NAO and the Comptroller and Auditor General
62

Audit fees etc
8     (1)
NAO may charge fees for audits carried out by the Comptroller and Auditor
General.
      (2)
Any charging of fees must be done in accordance with a scheme prepared by
NAO.
5
      (3)
The scheme (including any revision) must be approved by the 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)
Sub-paragraphs (1) to (4) do not apply in relation to an audit carried out as
10
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)
Fees and other amounts received by the Comptroller and Auditor General
15
must be paid to NAO.
      (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
20
after 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 chair of NAO and the Comptroller and Auditor General must jointly
submit the report to the Commission.
      (3)
The Commission must lay the report before Parliament.
25
Code 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
30
section 38(6) and (7) of this Act, subject to any limitations on that principle
that are agreed between the 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.
35
      (4)
In 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.

Constitutional Reform and Governance Bill
Schedule 7 — Interaction between NAO and the Comptroller and Auditor General
63

      (7)
For this purpose, the chair of NAO and the Comptroller and Auditor
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
5
code.
11    (1)
This paragraph applies for the purposes of NAO’s approval of the code (or
any revision).
      (2)
The approval must be given at a meeting of NAO.
      (3)
The approval can be given only if at least one half of the non-executive
10
members present and voting on the matter vote in favour of giving the
approval.
      (4)
The requirements of this paragraph are in addition to any other
requirements relating to NAO’s procedure.
12    (1)
The code must—
15
(a)
in relation to the strategy required by paragraph 1, deal with—
(i)
the way in which it is to be prepared, reviewed and revised;
(ii)
the matters to be covered by it;
(iii)
the periods to be covered by it from time to time;
(b)
deal with the way in which resources are to be provided for the
20
purposes of paragraph 2(1);
(c)
deal with the way in which estimates are to be prepared for the
purposes of section 45 of this Act;
(d)
deal with the way in which NAO is to make decisions for the
purposes of paragraph 3;
25
(e)
deal with the way in which NAO is to monitor the Comptroller and
Auditor General’s functions for the purposes of paragraph 4;
(f)
deal with the way in which advice is to be given by NAO for the
purposes of paragraph 5, including the nature of the advice to be
given;
30
(g)
deal with the way in which the Comptroller and Auditor General is
to charge fees and other amounts under paragraph 8;
(h)
deal with the extent to which NAO’s functions are to be delegated to
the Comptroller and Auditor General (see paragraph 23 of Schedule
6);
35
(i)
place restrictions upon the public comments that a non-executive
member of NAO may make in relation to the carrying out of the
Comptroller and Auditor General’s functions.
      (2)
The code may also deal with the following—
(a)
the way in which reports required by paragraph 9 are to be prepared
40
and the matters to be covered by those reports;
(b)
matters about which NAO or the Comptroller and Auditor General
(or both) are to consult the Commission from time to time;
(c)
standards for corporate governance.
      (3)
This paragraph is not exhaustive as regards the matters that may be covered
45
by the code.

Constitutional Reform and Governance Bill
Schedule 8 — Transitional provision relating to Part 7
64

Documents 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
5
(c. 36) any document 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 under section 3(2) of the National
10
Audit Act 1983 (c. 44).
Schedule 8
Section 49

Transitional provision relating to Part 7
Transfer of property etc
1     (1)
Before the appointed time, the Comptroller and Auditor General must—
15
(a)
determine the property, rights and liabilities of the Comptroller and
Auditor General that are to be transferred to NAO in consequence of
the provision made by this Part of this Act, and
(b)
prepare a scheme describing, in the way the Comptroller and
Auditor General thinks appropriate, that property and those rights
20
and liabilities.
      (2)
The scheme must be approved by the Commission.
      (3)
At the appointed time, the property, rights and liabilities described in the
scheme are transferred to NAO.
      (4)
Sub-paragraph (3) operates in relation to property, rights and liabilities—
25
(a)
whether or not they would otherwise be capable of being
transferred,
(b)
without any instrument or other formality being required, and
(c)
irrespective of any kind of requirement for consent that would
otherwise apply.
30
      (5)
In sub-paragraph (1) the references to rights and liabilities include
references to rights and liabilities under or in connection with contracts of
employment with staff that were appointed under section 3(2) of the
National Audit Act 1983.
      (6)
For any purpose relating to a person who becomes an employee of NAO by
35
virtue of sub-paragraph (3)—
(a)
a period of employment under section 3(2) of the National Audit Act
1983 (including a period that was counted as such a period by virtue
of paragraph 2(3) of Schedule 2 to that Act) is to be treated as a period
of employment with NAO, and
40
(b)
the transfer to NAO is not to be treated as a break in service.

Constitutional Reform and Governance Bill
Schedule 8 — Transitional provision relating to Part 7
65

      (7)
Anything done by, on behalf of or in relation to the Comptroller and Auditor
General in relation to anything transferred by sub-paragraph (3) has effect
as if done by, on behalf of or in relation to NAO, so far as necessary or
appropriate for continuing its effect after the appointed time.
      (8)
Anything (including legal proceedings) which, immediately before the
5
appointed time, is in the process of being done by, on behalf of or in relation
to the Comptroller and Auditor General in relation to anything transferred
by sub-paragraph (3) may be continued by, on behalf of or in relation to
NAO.
      (9)
So far as necessary or appropriate in consequence of sub-paragraphs (3) to
10
(8), in any agreement (whether written or not) or instrument or other
document a reference to the Comptroller and Auditor General is to be
treated as a reference to, or as including a reference to, NAO.
     (10)
Sub-paragraph (11) applies for the purposes of paragraph 1(2)(c) and Part 4
of Schedule 6 to this Act.
15
     (11)
Before the appointed time, a person’s employment under section 3(2) of the
National Audit Act 1983 (c. 44) is to be treated as if it were employment with
NAO.
     (12)
In this paragraph “the appointed time” means the time appointed for the
purposes of this paragraph by an order made by the Treasury by statutory
20
instrument.
Tax consequences of transfers by virtue of paragraph 1(3)
2     (1)
For the purposes of the application of Part 5 of the Corporation Tax Act 2009 (loan
relationships) in relation to a transfer by virtue of paragraph 1(3), the Comptroller
and Auditor General and NAO are to be treated as if, at the time of the transfer, they
25
were members of the same group.
      (2)
In sub-paragraph (1) the reference to being members of the same group is to be read
in accordance with section 335(6) of that Act.
3     (1)
For the purposes of Part 8 of the Corporation Tax Act 2009 (intangible fixed
assets)—
30
(a)
a transfer by virtue of paragraph 1(3) of a chargeable intangible asset of the
Comptroller and Auditor General is to be treated as a tax-neutral transfer,
and
(b)
an intangible fixed asset which is a pre-FA 2002 asset of the Comptroller
and Auditor General at the time it is transferred by virtue of paragraph 1(3)
35
is to be treated, on and after the transfer, as a pre-FA 2002 asset in the hands
of NAO.
      (2)
Expressions used in sub-paragraph (1) and in Part 8 have the same meanings in sub-
paragraph (1) as they have in Part 8.
4
For the purposes of the Taxation of Chargeable Gains Act 1992 (c. 12) a disposal
40
constituted by virtue of a transfer by paragraph 1(3) is to be taken (in relation to both
the Comptroller and Auditor General and NAO) to be for a consideration such that
no gain or loss accrues to the Comptroller and Auditor General.