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Standards of accountability and probity in central government bodies remain high, according to head of the NAO Sir John Bourn. Departments have continued to make good progress in meeting the challenge of resource accounting and in improving the quality of accounts submitted for audit. Sir John also welcomed the progress made by departments in submitting their accounts more speedily but pointed out that many still have much work to do in order to meet the Treasury’s timetable for faster closing of financial reporting.

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Sir John’s comments were contained in his report today to Parliament on the financial audit work undertaken by the NAO in respect of government accounts for 2003-04. According to the report, as evidence of the improved quality of accounts, Sir John issued qualified opinions on only four sets of departmental resource accounts compared with a total of eight in the previous year.

Good progress has been made by departments in improving the timeliness of the submission of accounts. Over 80 per cent of accounts had been submitted for audit by October 2004. Two departments failed to meet the statutory deadline of 30 November, compared with eleven in 2002-03.

However, in order to meet the challenge of the Treasury’s faster closing initiative – to accelerate the production and audit of resource accounts in order to lay audited accounts no later than four months from the end of the financial year – many departments still have much work to do. The aim of faster closing is to provide Parliament with more timely financial information and Sir John is fully committed to a partnership with departments to help achieve this.

Following the Gershon Review, there is now general recognition of the key role that financial management has to play in the efficient use of resources and in the delivery of efficiency programmes. In this respect, Sir John warmly welcomed the steps being taken by the Treasury and departments to improve the professionalism of the finance function: not least the decision that, from December 2006, all departments will have qualified accountants as board level finance directors. He is also particularly pleased to be assisting the Treasury in the major department by department review of the effectiveness of financial management within central government.

Significant progress has been made by departments to improve their risk management capabilities. However, Sir John considers that it is critical for departments to build on the momentum achieved to date as many have further to go to demonstrate that they have made effective risk management a central part of their day to day management processes, in a way that can fully deliver improved performance and other benefits.

Sir John said in his report that he was conscious of the need to ensure that the audit methodologies employed by the NAO continue to reflect best practice and the current thinking of the wider auditing profession. In this regard, the NAO will conduct its work in accordance with International Standards on Auditing in line with the timetable for the adoption of the Standards in the private sector.

"I warmly welcome the steps being taken by the Treasury and departments to improve the professionalism of the finance function. The timely submission of accounts is still a problem for many departments, however. Fundamental to the success of faster closing is the recognition that producing accounts is not something which is left to the end of the year. Robust, accurate and timely financial information is pivotal to improved resource planning. It should be something that departments produce and utilise throughout the financial year.

"The National Audit Office will continue to work with audited bodies to help achieve better financial management and timelier external financial reporting."

Sir John Bourn

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