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About Us: The Role of the National Audit Office: Financial Audit

• Introduction
• Executive Agencies
• International Accounts
• National Loans Fund
• Non-statutory certification audit
• Resource Accounts
• White Paper Accounts

Accounts - Introduction

The Comptroller and Auditor General's statutory duties are to certify the accounts of all Government Departments and a wide range of other public sector bodies; to examine revenue and store accounts; and to report the results of his examinations to Parliament.  There are a number of different types of account published on the website, the following is a description of each of them.

Executive Agencies

On 18 February 1988 the Government accepted the recommendations of the Efficiency Unit ('Improving Management in Government: the Next Steps') that, as far as possible, the executive functions of Government, as distinct from policy advice, should be carried out by units clearly designated within departments as 'Agencies'. Responsibility for the day-to-day operations of each Agency is delegated to a Chief Executive, within a framework of policy objectives and resources set by the responsible Minister in consultation with the Treasury. The Office of Public Service and Science has the general lead responsibility for implementation of the Next Steps initiative.

A framework document is drawn up for each Agency that provides the basis for the Agency's relations with the Minister and for its accountability, both for its finances and its performance, to him and to Parliament.

International Accounts

The Comptroller and Auditor General also audits certain accounts of international bodies to which the United Kingdom contributes funds: for example the International Labour Organisation. He does not audit these accounts on behalf of Parliament but at the invitation of, and for the purposes laid down by, the governing bodies concerned.

National Loans Fund

The National Loans Fund Act 1968 provides that all money raised by the creation of debt is payable into the National Loans Fund together with receipts representing repayments of loans made from the Fund (or, before the National Loans Act 1968, charged directly on the Consolidated Fund) and interest on these loans. The National Loans Fund, the account for which is maintained at the Bank of England, is thus the channel through which pass all the Government's borrowing transactions and most domestic lending transactions. (Loans made from voted monies are the exception: in these cases repayments of principal and interest are normally paid into the Consolidated Fund as extra receipts).

Non-statutory certification audit

At the request of the Treasury and by agreement between the appropriate Minister and the bodies concerned, the Comptroller and Auditor General audits the accounts of a number of other bodies. These include some non-departmental public bodies, such as the British Council, which receive most of their funds by way of government grants. The Contingencies Fund account is also audited at the request of the Treasury following the recommendation of the Committee of Public Accounts. Departmental Accounts other than Appropriation Accounts may also be subject to audit by agreement between the National Audit Office, the Treasury and the department concerned.

Resource Accounts

Resource accounting is an accruals-based commercial style of financial reporting which has replaced the cash-based system of funding, i.e. the Appropriation Accounts. Resource accounts comprise financial statements similar to those found in commercial accounts but also include a statement designed for Parliamentary reporting purposes and a further statement analysing income and expenditure by objectives.

White Paper Accounts

The term 'White Paper accounts' has no statutory significance but is a convenient expression to apply to the annual accounts, prepared by public sector bodies, which are separate from the departmental Resource Accounts but which are similarly presented to Parliament. The authority for the preparation of the accounts is normally contained in the legislation governing the service to which the accounts relate. The legislation may provide for the Comptroller and Auditor General to examine and certify the accounts and lay copies of them, together with his report, before Parliament. Alternatively, the legislation may provide for the appointment of commercial auditors.