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Financial Issues Advisory Group Report
 
 
ANNEX J
 
THE PUBLIC ACCOUNTS COMMISSION
 
Statutory Position
 
1. The Public Accounts Commission (the Commission), is a statutory body, not a committee of the House. The Commission came into being on 1 January 1934, with the coming into force of the National Audit Act 1983.
 
2. The Commission has three main functions under the National Audit Act 1983:
 
2.1 to examine the Estimates for the National Audit Office (NAO) proposed by the Comptroller and Auditor General (C&AG) and to lay them before the House with such modifications as it thinks fit, with regard to any advice received from the PAC and Treasury;
 
2.2 to appoint the accounting officer for the NAO; and
 
2.3 to appoint an auditor for the NAO.
 
3. The Commission is an advisory body and can only comment on the activities of the NAO. The Commission does not have a role to advise the Auditor in his functions, or to comment on the Auditor's reports to Parliament.
 
Membership of the Commission
 
4. The membership of the Commission comprises nine members of the House of Commons, two of whom - the Chairman of the Committee of Public Accounts and the Leader of the House - are ex-officio members; the remaining seven (none of whom may be Ministers of the Crown) are appointed by the House.
 
5. Nominations for membership are made through the Leader of the House's Office. There are no specific criteria for membership, although familiarity with, and an understanding of the work of the NAO is an important factor. The current membership is set out below:
  • Robert Sheldon (Chairman), Labour
  • Roy Beggs, UUP
  • Geoffrey Clifton Brown, Conservative
  • Austin Mitchell, Labour
  • William O'Brien, Labour
  • Andrew Tyrie, Conservative
  • Alan Williams, Labour
  • Ann Taylor (ex officio as Leader of the House of Commons)
  • David Davis (ex officio as Chairman of the Committee of Public Accounts), Conservative
 
Secretariat
 
6. The secretariat consists of a Secretary at Principal Clerk level and his/her personal secretary. The Commission has no other secretariat but is able to call on the NAO for any information or briefings it requires.
 
Procedure
 
7. It is for the Commission to determine its own procedures. Meetings of the Commission normally take place in private. The Commission may choose to interview the Comptroller and Auditor General, his staff and the independent auditors. Other persons could be invited to attend if the Commission considered it necessary. During the period covered by the ninth report (July 1996-July 1998), 5 meetings were held. No records of meetings are kept.
 
Reports
 
8. The Commission presents a report to the House of Commons every two years, in pursuance of section 2(3) of the National Audit Act 1983. (The Commission could publish reports more frequently if it chose). The Commission chooses itself what it should cover in its report. A copy of the most recent report is appended to this Annex.
 
9. The Commission is entitled to discuss whatever NAO matters it chooses. Examples of matters which have been commented on in previous reports are:
  • Pay of the C&AG and staff of the NAO;
  • The NAO's impact on public expenditure;
  • NAO staffing;
  • Trends in NAO expenditure;
  • Information Technology strategy of the NAO;
  • International activities of the NAO; and
  • Contact between the NAO and Members of Parliament.
 
Parliamentary Questions
 
10. The Chairman of the Commission answers Parliamentary Questions relating to the Commission and the National Audit Office. There are 10 minutes devoted to oral questions in the House of Commons once a month. Throughout the period covered by the last report (July 1996-July 1998), 26 questions were tabled, 15 of which were answered orally.
 
Examination of Estimates
 
11. The usual practice of the Commission is to consider the Corporate Plan of the NAO at its meeting in July each year. The Corporate Plan represents the medium term strategy of the Office for the following five years. The Commission's view is that presentation of the Corporate Plan at this stage in the year enables the Commission to consider trends in the scale and range of the NAO's activities and their possible implications in terms of both human and financial resources before the Office's annual Estimate is prepared.
 
12. HM Treasury is given the opportunity to comment in writing on the NAO's Corporate Plan, in accordance with the Commission's statutory duty, to have regard to any advice fromTreasury (and the Committee of Public Accounts) before presenting the NAO's annual estimate to the House. It also provides theTreasury to be discussed with the C&AG before the NAO Estimate is prepared. opportunity for any concerns expressed by the
 
13. The Commission, in its Report, comments on the level of the NAO Estimates, the format of the Estimates, the NAO Appropriation Accounts, and trends in expenditure.
 
Appointment of Accounting Officer
 
14. The Commission appoints the C&AG Accounting Officer for the NAO.
 
Appointment of an Auditor
 
15. The Commission has a statutory duty to appoint an independent auditor for the NAO. The Commission has recorded its view that, because of the unique nature and significance of the audit of the NAO, it is appropriate for the post of auditor to be rotated. The Commission holds a competition to choose the auditors and in its procedures for appointment follows the guidance for the appointment of auditors in the public sector. The period of appointment is at the discretion of the Commission (the current auditors have been appointed for a period of three years, renewable for a further two years at the discretion of the Commission).
 
Value for Money studies
 
16. The National Audit Act 1983 gives the independent auditor power at his discretion to carry out economy, efficiency and effectiveness examinations of the use of resources by the NAO. The independent auditors have prepared VFM studies on various aspects of the NAO's operations, which are considered by the Commission. The independent auditors usually choose the subjects of these VFM studies. However, there is nothing to preclude the Commission from requesting them to undertake specific studies. For example, in 1993 the auditors, at the Commission's request, undertook a review of the NAO's certification methods. (It should be noted that the Scotland Act would preclude anything more since the independence of the auditor would be undermined).
 
The Northern Ireland Audit Office
 
17. The Commission agreed in 1986 to perform on a extra-statutory basis in respect of the Northern Ireland Audit Office, functions similar to those performed on a statutory basis in respect of the NAO.
 

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