| ANNEX H |
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| THE ROLE OF THE ACCOUNTS COMMISSION
AND THE NATIONAL AUDIT OFFICE |
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| 1. This annex sets out briefly
the statutory position, role and functions of the Accounts Commission for
Scotland and the National Audit Office. |
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| The Accounts Commission for
Scotland |
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| 2. The Accounts Commission for
Scotland is an executive Non-Departmental Public Body (NDPB), independent
of those bodies under Audit and the Government of the day. The Commission
was established in September 1974, under the provision of section 97(1)
of the Local Government (Scotland) Act 36(1) of and Schedule 7 to the NHS
and Community Care Act 1990 which transferred1973 (as amended). Its remit
was extended by section responsibility for NHS statutory audit to the Commission
from April 1, 1995.
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| 3. The Commission's current remit
is to: |
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| 3.1 secure the audit of all the
accounts of local authorities and National Health Service bodies in Scotland; |
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| 3.2 consider reports made to
them by their senior officer, the Controller of Audit; |
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| 3.3 to make recommendations to
the Secretary of State, local authorities and NHS bodies in accordance with
the audit provisions of the Act; |
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| 3.4 undertake value for money
studies in local government or the NHS; and |
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| 3.5 determine, in the context
of the Citizen's Charter, performance indicators for local authority services. |
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| 4. The Commission is also required
to Advise the Secretary of State on any matters relating to the accounting
of local authorities or NHS bodies which he may refer to them. |
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| 5. The Commission's main areas
of practice are |
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| 5.1 publishing a Code
of Audit Practice; |
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| 5.2 controlling the quality
of work of auditors whom it appoints; |
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| 5.3 conducting value for money
studies and producing audit guides, which help auditors to identify opportunities
for savings by audited bodies, and by encouraging those bodies to achieve
such savings; |
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| 5.4 reviewing arrangements by
local authorities and health service bodies for securing economy, efficiency
and effectiveness in their use of resources; |
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| 5.5 publishing a range of management,
occasional and other papers; |
| 5.6 drawing together issues arising
from local audits and assessing them nationally; and |
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| 5.7 preparing and publishing
performance indicators for local authorities and publishing information
about council's performance. |
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| 6. The independence of the Commission
is emphasised by the fact that it does not receive Government grant; its
activities are funded by contributions made by audited bodies in terms of
Regulations made by the Secretary of State for Scotland. The Commission
is not a Crown body and its employees are not civil servants. It is answerable
to Parliament and works within a statutory framework, for which the Secretary
of State is responsible. |
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| 7. The Commission is required
by statute to appoint a Controller of Audit. The Controller of Audit is
designated by the Commission as their Chief Officer and Accounting Officer.
He is empowered to make reports to the Commission on the accounts of local
authorities and health service bodies. The Controller has a duty to make
a special report where he considers that there has been an illegality or
loss affecting a local authority. He must also make such reports to the
Commission as it requires with respect to the accounts of local authorities
and health service bodies. |
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| 8. Members of the Commission
serve in their personal capacity, and not as nominees or representatives
of any interest group. By statute, the Commission comprises between 11 and
15 members, including the Chairman and Deputy Chairman. |
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| The National Audit Office |
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| 9. The National Audit Office
(NAO) was created by the National Audit Act 1983, to replace the Exchequer
and Audit Department. The head of the NAO is the Comptroller and Auditor
General (C&AG) and he has the power to appoint such staff as he considers
necessary to the NAO to enable him to discharge his functions. |
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| 10. The C&AG carries out
on behalf of the Parliament the audit of the following accounts: |
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| 10.1 accounts of the transactions
of the Consolidated Fund and the National Loans Fund; |
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| 10.2 all Appropriation Accounts
other than that relating to the NAO; |
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| 10.3 all Trading Fund accounts
rendered under section 4(6) of the Government Trading Funds Act 1973; |
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| 10.4 accounts prepared in accordance
with a Treasury Direction under section 5 of the Exchequer and Audit Departments
Act 1921; |
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| 10.5 accounts of certain non-departmental
public bodies and other public sector accounts where this is required by
specific statute or Royal Charter; and |
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| 10.6. revenue accounts prepared
by the Commissioners of Customs and Excise, the Board of the Inland Revenue
and other receivers of money which is payable into the Consolidated Fund. |
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| 11. Furthermore, at the request
of the Treasury and by agreement between the appropriate Minister and the
bodies concerned, the C&AG audits the accounts of a number of other
bodies, such as National Savings Products accounts, reporting to Parliament
in cases where he considers that appropriate. The C&AG also audits the
accounts of certain international bodies to which the UK contributes funds
such as the United Nations World Health Organisation, at their request. |
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| 12. In addition to the annual
audit of accounts, the C&AG undertakes examinations of the economy,
efficiency and effectiveness (vfm examinations) with which departments and
other bodies have used their resources. The C&AG's rights to carry out
these vfm examinations extend to most of the bodies that fall within his
audit and inspection remit. |
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| 13. The C&AG's rights to
carry out these vfm examinations extend to all bodies that fall within his
annual audits and to certain other bodies where he has inspection rights. |
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| 14. The C&AG enjoys a high
degree of independence: |
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| 14.1 he is appointed by the Crown
on the joint recommendation of the Prime Minister and the Chairman of the
Committee of Public Accounts who is, by convention, an Opposition MP; |
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| 14.2 he is an Officer of the
House of Commons; |
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| 14.3 he can be removed from office
only by the Queen on an address from both Houses of Parliament; |
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| 14.4 his salary is paid direct
from the Consolidated Fund without requiring the annual approval of the
Executive or Parliament; |
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| 14.5 he has complete discretion
in appointing the staff of the NAO; |
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| 14.6 funds to meet NAO expenses
are met out of monies provided by Parliament; |
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| 14.7 the NAO Estimate is prepared
by the C&AG and submitted directly to the Public Accounts Commission,
a statutory body of the House of Commons, who lay it before the House of
Commons after examining it and making any necessary modifications; |
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| 14.8 the C&AG alone decides
on the extent and conduct of his audits and vfm examinations, and on the
content of his reports; and |
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| 14.9 he reports directly to Parliament
and his reports are considered by the Committee of Public Accounts who use
them as a basis for examining senior civil servants (Accounting Officers)
and for preparing their own reports and recommendations to which the Government
must formally respond. |
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