| ANNEX L |
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| THE RESPONSIBILITIES OF AN ACCOUNTING
OFFICER |
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| 1. Accounting Officers for Votes
and Trading Funds are appointed by the Treasury in compliance with section
22 of the Exchequer and Audit Departments Act 1866 or section 4(6) of the
Government Trading Funds Act 1973, as amended by the Government Trading
Act 1990. The Chief Executives of Agencies established under the "Next
Steps" initiative which do not have their own Vote or Trading Fund
are designated as Agency Accounting Officers by the appropriate departmental
Accounting Officer (ie either by the principal Accounting Officer or by
an additional Accounting Officer - see paragraph 19 and 20 below). An Accounting
Officer has the personal duty of signing the accounts described in his letter
of appointment and, by virtue of that duty, the further duty of being a
witness before the Committee of Public Accounts (PAC), to deal with questions
arising from those accounts or, more commonly, from reports made to Parliament
by the Comptroller and Auditor General under the National Audit Act 1983.
Associated with these duties are the further responsibilities which are
the subject of this memorandum. More detailed guidance for the Accounting
Officer and his staff is contained in the Treasury Manual "Government
Accounting". |
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| 2. It is incumbent on the officials
who serve as Accounting Officers to combine these duties with their duty
to serve the Minister in charge of their Department, to whom they are responsible
and from whom they derive their authority (subject only to any further specific
powers which may be vested in them by statute as in the case of the Board
of Inland Revenue or the Commissioners of Customs and Excise). The Minister
in turn is responsible to Parliament for all aspects of his Department's
policies, organisation and management. |
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| 3. It is the long-standing practice,
approved by the Public Accounts Committee, that the Permanent Secretary
of a department (or permanent head of a minor department who may be of lower
rank) is appointed as its principal Accounting Officer. However in some
departments it is appropriate in the interests of effective financial management
for other very senior managers responsible for particular activities to
be appointed as additional Accounting Officers; and in the case of Next
Steps Agencies each Chief Executive must have a defined Accounting Officer
responsibility. |
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| 4. Paragraph 5 below describes
the general responsibilities of the principal Accounting Officer of each
department. Paragraphs 6-15 set out the responsibilities which unless otherwise
provided (see paragraphs 16, 19 and 20) are common to all Accounting Officers
in respect of the public funds for which they are responsible. Paragraphs
16 and 17 deal with the relationship between the permanent head of a department
and any additional Accounting Officers in that department. Paragraphs 18-21
explain the position of Chief Executives of Next Steps Agencies. The responsibilities
of the senior full-time officials in certain non-departmental bodies are
covered in paragraphs 31-33. |
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| The General Responsibilities
of the Permanent Head of Department |
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| 5. The appointment of the permanent
head of a department as its principal Accounting Officer reflects the fact
that under his Minister he has responsibility, which only he is in a position
to discharge, for the overall organisation, management and staffing of the
department and for department-wide procedures, where these are appropriate,
in financial and other matters. He must ensure that there is a high standard
of financial management in the department as a whole; that financial systems
and procedures promote the efficient and economical conduct of business
and safeguard financial propriety and regularity throughout the department;
and that financial considerations are fully taken into account in decisions
on policy proposals. Specific responsibility for the organisation, management,
staffing and financial and other procedures in a defined area of the department
may be assigned to an additional Accounting Officer or an Agency Accounting
Officer (see paragraphs 6-21 below). |
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| The Specific Responsibilities
of Accounting Officers |
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| 6. The essence of an Accounting
Officer's role is his responsibility for the propriety and regularity of
the public financed for which he is answerable; for the keeping of proper
accounts; for prudent and economical administration; for the avoidance of
waste and extravagance; and for the efficient and effective use of all the
resources in his charge. |
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| 7. An Accounting Officer must: |
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| a. sign the appropriation, trading
and other accounts assigned to him, and in doing so accept personal responsibility
for their proper presentation as prescribed in legislation or by the Treasury; |
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| b. ensure that proper financial
procedures are followed and that accounting records are maintained in a
form suited to the requirements of management as well as in the form prescribed
for published accounts; |
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| c. ensure that the public funds
for which he is responsible as Accounting Officer are properly and well
managed (see paragraph 8 below) and safeguarded, with independent and effective
checks of cash balances in the hands of any official; |
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| d. ensure that assets for which
he is responsible such as land, building or other propriety, including stores
and equipment are controlled and safeguarded with similar care, and with
checks as appropriate; |
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| e. ensure that, in the consideration
of policy proposals relating to the expenditure or income for which he has
responsibilities as Accounting Officer, all relevant financial considerations,
including any issues of propriety, regularity or value for money, are taken
into account, and where necessary brought to the attention of Ministers. |
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| 8. An Accounting Officer should
ensure that effective management systems appropriate for the achievement
of his organisation's objectives, including financial monitoring and control
systems, have been put in place. He should also ensure that managers at
all levels:- |
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| a. have a clear view of their
objectives, and the means to assess and, wherever possible, measure outputs
or performance in relation to those objectives; |
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| b. are assigned well defined
responsibilities for making the best use of resources (both those consumed
by their own commends and any made available to |
| organisations or individuals
outside the department) including a critical scrutiny of output and value
for money; |
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| c. have the information (particularly
about costs), training and access to the expert advice which they need to
exercise their responsibilities effectively. |
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| 9. An Accounting Officer must
make sure that his arrangements for delegation promote good management and
that he is supported by the necessary staff with an appropriate balance
of skills. The latter requires careful selection and development of staff
and the sufficient provision of special skills and services (scientific,
economic, statistical, accountancy, consultancy, inspection and review,
etc). His arrangement for internal audit should accord with the objectives,
standards and practices set out in the Treasury "Government Internal
Audit Manual". He should ensure that his staff are as conscientious
in their approach to costs not borne directly on his Votes (such as any
"allied services" from other departments and the Exchequer's financial
costs, eg relating to banking and cash flow) as they would be were such
costs directly borne. |
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| Regularity and Propriety of
Expenditure |
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| 10. An Accounting Officer
has a particular responsibility for ensuring compliance with parliamentary
requirements in the control of expenditure. A fundamental requirement is
that the funds for which he is responsible should be applied only to the
extent and for the purposes authorised by Parliament. He must ensure that
parliament's attention is drawn to losses or special payments, by appropriate
notation of the relevant account. In the case of voted expenditure he must
ensure that any payments made are within the ambit and amount of the vote,
and that parliamentary approval has been sought and given. In cases not
covered by the original Estimate, eg in connection with a service not contemplated
when the Estimate was presented, or where a temporary advance from the Contingencies
Fund has been sanctioned by the Treasury, he must ensure that parliamentary
approval is sought and given at the earliest opportunity by way of a Supplementary
Estimate, or if necessary Excess Vote. |
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| 11. An Accounting Officer is
responsible for ensuring that specific Treasury sanction for expenditure
has been obtained in all cases where it is required. It is required for
any expenditure not covered by any standing authorities delegated by the
Treasury to the department. It is required before expenditure is incurred
on any subhead of a vote in excess of the amount specified for that subhead
in the Estimates, even though savings may be available elsewhere and the
expenditure itself falls within the delegated authority of the department.
The Accounting Officer is also responsible for ensuring that adequate machinery
exists for the collection and bringing to account in due form of all receipts
of any kind connected with the votes and accounts for which he is responsible. |
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| Advice to the Minister |
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| 12. An Accounting Officer has
particular responsibility to see that appropriate advice is tendered to
Ministers on all matters of financial propriety and regularity and more
broadly as to all considerations of prudent and economical administration,
efficiency and effectiveness. He will need to determine how and in what
terms such advice should be tendered, and |
| whether in a particular case
to make specific reference to his own duty as Accounting Officer to justify
to the PAC transactions for which he is accountable. |
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| 13. If the Minister in charge
of the department is contemplating a course of action involving a transaction
which an Accounting Officer considers would infringe the requirements of
propriety or regularity (including where applicable the need for Treasury
authority), the Accounting Officer should set out in writing his objection
to the proposal, the reason for his objection and his duty to notify the
Comptroller and Auditor General should his advice be overruled. If the Minister
decides nonetheless to proceed, the Accounting Officer should seek a written
instruction to take the action in question. Having received such an instruction,
the Accounting Officer must comply with it, but should then inform the Treasury
of what has occurred and should also communicate the papers to the Comptroller
and Auditor General without undue delay. Provided that this procedure has
been followed, the PAC can be expected to recognise that the Accounting
Officer bears no personal responsibility for the transaction. |
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| 14. If a course of action is
in contemplation which raises an issue not of formal propriety or regularity
but relating to the Accounting Officer's wider responsibilities for economy,
efficiency and effectiveness set out in paragraph 6, it is his duty to draw
the relevant factors to the attention of his Minister and to advise him
in whatever way he deems appropriate. He may think it right to refer to
the possibility of criticism by the PAC. If his advice is overruled, he
should ensure that both his advice and the overruling of it are apparently
clearly from the papers. The Accounting Officer is not obliged to send the
papers to the Comptroller and Auditor General, but he should ensure that
the National Audit Office is made aware of the Ministerial direction if
it is conducting any relevant enquiry. |
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| 15. If because of the extreme
urgency of the situation there is no time for the Accounting Officer to
submit advice in writing to the Minister in either of the eventualities
referred to in paragraphs 13 and 14 before the Minister takes a decision,
he must ensure that, if the Minister overrules his advice, both his advice
and the Minister's instructions are recorded in writing immediately afterwards. |
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| Relationships between Permanent
Heads of Departments and Additional Accounting Officers |
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| 16. Where one or more senior
officials, other than the permanent head of the department, are appointed
as Accounting Officers for certain votes or accounts there should be a clear
and written understanding of their relationship not only with their Minister
but also with the permanent head. The permanent head, in addition to his
responsibilities for the Votes and accounts assigned to him, remains in
general charge of the department and is responsible for ensuring that there
is a high standard of financial management in the department as a whole
(see paragraph S above). It is within that framework that any additional
Accounting Officers, including those who are Chief Executives of Next Steps
Agencies (see paragraph 18 below), are responsible for the Votes and accounts
assigned to them. The precise nature of the relationship between additional
Accounting Officers and permanent heads of departments will vary according
to the needs of each department. However, additional Accounting Officers
will have immediate responsibility for ensuring that the requirement of
paragraphs 6-15 above are met in respect of expenditure and receipts for
which they are answerable, except |
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| insofar as these matters are
reserved to himself by the permanent head or, in the case of Agency Chief
Executives, assigned to the permanent head in the Agency framework document.
Their judgement as Accounting Officer should only be overridden either by
the Minister - in which case the permanent head should be informed so that
if he wishes he may give his own views to the Minister; or by the permanent
head, after consultation with the Minister, and then only if a major issue
of propriety, regularity or prudent and economical administration is involved
and the permanent head judges that his responsibilities as principal Accounting
Officer require him to intervene. |
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| 17. The position of an additional
Accounting Officer when he appears before the PAC (see paragraphs 22-27
below) is thus different from that of a permanent head who carries full
responsibility under his Minister for the organisation and management of
his department as a whole. An additional Accounting Officer is able to answer
questions from the PAC about the discharge of his own responsibilities.
However if PAC questioning is likely to be directed to issues relating to
the organisation or management of the department as a whole or other matters
determined by the permanent head, the Committee could be expected to accede
to a suggestion that they call the permanent head to give evidence together
with the additional Accounting Officer. |
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| Accounting Officers for
"Next Steps" Agencies |
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| 18. Where an Agency established
under the "Next Steps" initiative is a separate department, or
where it remains part of a department but has its own vote or is a Trading
Fund, the Treasury appoints the Chief Executive as Accounting Officer in
the normal way. Where in these circumstances the Agency is part of a department
the Chief Executive will be an additional Accounting Officer and his relationship
with his Minister and with the permanent head of department as principal
Accounting Officer will be as described in paragraphs 16 and 17 above, and
in particular will stem from the allocation of responsibilities between
the Agency and the department in the Agency framework document.2 |
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| 19. Where an Agency remains part
of a department and is financed from one or more subheads of departmental
Votes, it is for the principal Accounting Officer to designate the Chief
Executive as Agency Accounting Officer. When he does so, he should send
the Chief Executive a letter, in a form approved by the Treasury, defining
the relationship between the Chief Executive's responsibilities as Agency
Accounting Officer and his own as principal Accounting Officer. This relationship,
and in particular the extent to which any of the responsibilities listed
in paragraphs 6-15 above are reserved to the principal Accounting Officer,
will again vary according to the circumstances and will be determined by
the allocation of responsibilities between the Agency and the department
in the Agency framework document. |
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| 20. In certain cases a Next Steps
Agency may be financed from one or more subheads of a Vote for which an
additional Accounting Officer is responsible. In such cases it is for consideration
whether the designation of the Chief Executive as Agency Accounting Officer |
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| 2 In certain cases an Agency
which is a Trading Fund may be financed by loans from a Vote for which the
responsibility is assigned to an additional Accounting Officer. In these
circumstances too there should be a clear and written understanding of the
respective responsibilities of the Agency Chief Executive, the additional
Accounting Officer for the vote and the permanent head of the department. |
| should be effected by the principal
Accounting Officer of the department or by the additional Accounting Officer.
IN any event the respective responsibilities of the principal Accounting
Officer, the additional Accounting Officer and the Agency Accounting Officer
must be clearly defined and will follow the allocation of responsibilities
in the Agency framework document. |
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| 21. The Chief Executive of an
Agency is liable to be summoned to give evidence to the Public Accounts
Committee on the discharge of those responsibilities which have been allocated
to him. Where his appointment is that of an Agency Accounting Officer the
committee will probably wish to take evidence both from him and the principal
Accounting Officer of the department (or additional Accounting Officer if
appropriate). Where an Agency remains part of a department but the Chief
Executive is appointed as an additional Accounting Officer by the Treasury
the PAC will similarly have the opportunity, if they wish, to take evidence
from the principal Accounting Officer as well as the Chief Executive (see
paragraph 17 above). |
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| Appearance before the PAC |
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| 22. Under the National Audit
Act 1983, the Comptroller and Auditor General may carry out examinations
into the economy, efficiency and effectiveness with which any department,
or other authority or body of a kind specified in the Act, has used its
resources in discharging its functions. An Accounting Officer may expect
to be called upon to appear before the Committee from time to time to give
evidence on the reports arising from these examinations, and to answer the
questions of the PAC concerning expenditure and receipts on the Votes and
other accounts for which he is Accounting Officer and related activities.
He may be supported by other officials who may, and commonly do, join in
giving the evidence. |
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| 23. Treasury officials regularly
attend Committee hearings and are frequently asked to comment on the evidence.
They then speak as representatives of the Executive and are subject to collective
Ministerial authority, but are expected to comment from the standpoint of
the department which has the formal responsibility for presenting Estimates
to Parliament, for prescribing the form of accounts and the rules of Government
accounting and for promoting good financial management in departments. This
goes with the Treasury's central responsibility for the operation of public
expenditure control. Parliament has traditionally regarded the Treasury
as an ally in controlling expenditure. |
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| 24. An Accounting Officer will
be expected to furnish the PAC with explanations of any indications of weakness
in the matters covered by paragraphs 6-9 above, to which their attention
has been drawn by the Comptroller and Auditor General or about which they
may wish to question the Accounting Officer. |
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| 25. In practice, an Accounting
Officer will have delegated authority widely, but he cannot on that account
disclaim his responsibility. Nor, by convention, does the incumbent Accounting
Officer decline to answer questions where the events took place before he
assumed his appointment; the Committee may be expected not to press his
personal responsibility in such circumstances. |
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| 26. The Committee have emphasised
the importance they attach to accuracy of evidence, and the responsibility
of witnesses to ensure this. The Accounting Officer should ensure that he
is adequately and accurately briefed on matters on which he gives evidence.
He may ask the Committee for leave to supply information not within his
immediate knowledge by means of a later note. Should it be discovered subsequently
that the evidence provided to the Committee has contained errors, these
should be made known to the Committee at the earliest possible moment. |
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| 27. In general, the rules and
conventions governing appearances of officials before Parliamentary Committees
apply to the PAC, including the general convention that civil servants do
not disclose the advice given to Ministers. Nevertheless, in a case where
the procedure described in paragraph 13 was used concerning a matter of
propriety or regularity, the Accounting Officer's advice, and its overruling
by the Minister, would be disclosed to the PAC. In a case covered by paragraph
14 where advice of an Accounting Officer has been overruled in a matter
not of propriety or regularity but of prudent and economical administration,
efficiency or effectiveness, it will be appropriate for the Accounting Officer,
questioned about the matter at the PAC, to lay stress on the fact that it
was a decision by his Minister. In these circumstances he should generally
seek to avoid disclosing the advice given to his Minister, or disassociating
himself from the Ministerial decision. Subject where appropriate to his
Minister's agreement he should however be ready to explain the reasons for
such a decision and may be called on to satisfy the Committee that all relevant
financial considerations were brought to the Minister's attention before
the decision was taken. It will then for the PAC to pursue the matter further
with the Minister if they so wish. |
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| Absence of Accounting Officer |
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| 28. An Accounting Officer
should ensure that he is generally available for consultation, and that
in any temporary period of unavailability due to illness or other cause,
or during his normal period of annual leave, there will be a senior officer
in the department who can act on his behalf if required. |
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| 29. If it becomes clear to the
department that an Accounting Officer is so incapacitated that he will not
be able to discharge his responsibilities over a period of four weeks or
more, the Treasury should be notified so that an Acting Accounting Officer
can be formally appointed, pending the Accounting Officer's return. The
same applies if exceptionally the Accounting Officer plans an absence of
more than four weeks during which he cannot be contacted. Analogous arrangements
should be made when Agency Accounting Officers are absent; if it is necessary
for an Acting Agency Accounting Officer to be appointed this should be done
by the appropriate departmental Accounting Officer (see paragraphs 19 and
20 above). |
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| 30. The PAC may be expected to
postpone a hearing if the relevant Accounting Officer is temporarily indisposed.
Where the Accounting Officer is unable by reason of incapacity or absence
to sign the appropriation account in time to submit it to the Comptroller
and Auditor General the department may submit unsigned copies pending his
return If the Accounting Officer is unable to sign the account in time for
printing, the Acting Accounting Officer should sign instead. |
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| Accountability in Non-Departmental
Bodies |
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| 31. In all cases where a department
gives a grant or grant-in-aid to a non- departmental public body, there
must be a clear understanding of the respective responsibilities of the
departmental Accounting Officer (ie either the principal Accounting Officer
of the department or, where appropriate, an additional Accounting Officer)
and the senior full-time official (the Chief Executive or equivalent) of
the body concerned. In particular: |
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| a. The responsibility of the
departmental Accounting Officer is to satisfy himself that the financial
and other management controls applied by the department are appropriate
and a sufficient to safeguard public funds and, more generally, that those
being applied by the body conform with the requirements both of propriety
and of good financial management; and to ensure that the conditions attached
to the grant or grant-in-aid conform with the terms of the Vote and to monitor
compliance with those conditions by the body. |
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| b. It should be made clear in
writing to the senior fulltime official of the body that he carries similar
responsibilities to those of a departmental Accounting Officer so far as
his stewardship of public funds is concerned. These include responsibility
for ensuring that the accounts of the body are properly presented, for good
financial management and for all the matters listed in paragraphs 6-9 above
to the extent that they are applicable. He is also responsible for advising
his Board on matters of financial propriety and regularity and of prudent
and economical administration, efficiency and effectiveness (see paragraph
12); and for taking formal action, analogous to the procedures set out in
paragraphs 13-15, if his Board is contemplating a course which would infringe
these requirements. |
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| 32. The senior full-time official
of the body will normally be expected to sign its accounts. The PAC attaches
great importance to the responsibilities of the signatories of public accounts
prepared by non-departmental public bodies and they are liable to be summoned
to appear before the Committee, alongside the departmental Accounting Officer
concerned. They should therefore be notified by the sponsor department of
that liability. The degree of formality attached to such notification is
a matter for the Accounting Officer of the sponsor department. He should,
in the case of a large grant or grant-in-aid, formally designate the senior
full-time official as accounting officer for the body in question. In the
case of a small grant or grant-in-aid this formal designation may be inappropriate.
In any cases of doubt, however, it will be prudent to deal with the matter
formally. Whenever the formal procedure is followed it should include specific
transmission of this memorandum and the letter of appointment should be
copied to the Comptroller and Auditor General, the Clerk to the PAC and
the Treasury Officer of Accounts. |
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| 33. In some cases the need for
public accountability may make it appropriate for departmental Accounting
Officers to apply the arrangements in paragraph 31 above to non-departmental
bodies not receiving grants or grants-in-aid or to other bodies not included
in the definition "non-departmental public body". In such cases,
too, it may be desirable to designate the senior full-time official of the
body as accounting officer. |
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| HM TREASURY NOVEMBER 1991 |
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