The National Audit Office (NAO) is the UK’s independent public spending watchdog. It audits around 400 central government accounts per year, including all government departments as well as executive agencies and arms length bodies. 

What does Getting Back on Track mean?

Rachel Farnsworth: “It’s our ambition that, by summer 2024, most of our audits will return to their pre-pandemic timetables of publishing audited annual reports and accounts before Parliament’s summer recess in July.

“The pandemic had a significant impact on the finance teams at the organisations we audit as efforts were reprioritised to support the operational challenges that arose. Some finance teams were directly involved in the government’s pandemic response, for example, procuring personal protective equipment (PPE) for the front line or setting up COVID-19 financial support schemes. Everyone – including auditors – was disrupted by changes to working patterns and sickness absence.

“Despite this, in 2020, 42% of annual reports and accounts (including 25% of the major departments) were published by the Parliamentary summer recess – no small achievement given the circumstances. 

“In 2022, the figure was 53%, including 59% of major departments. Our aim is to return to the pre-pandemic position of around 80% of the organisations we audit, including all major government departments, publishing their audited annual report and accounts before the summer parliamentary recess.”

What impact is this having on the work of the NAO?

Lewis Knights: “Getting Back on Track is a key priority for the NAO. Our audit teams are project-planning upcoming audits to achieve pre-recess delivery in 2023 and 2024, working closely with key stakeholders, including individual finance teams, the wider Government Finance Function and HM Treasury. 

“In 2022, we were pleased that really effective collaboration between the NAO and the finance teams of certain major departments covering significant government spending – namely, HM Revenue and Customs, the Ministry of Defence, the Department for Transport, and the Foreign, Commonwealth and Development Office – ensured their accounts and audit timetables were brought forward.

“Altogether, nine major departments achieved pre-recess timetables in 2022. We are applying lessons learned from this experience to plan across government to bring other organisations to an earlier accounts timetable.”

What are the challenges that have led to timetables being delayed? Is it all due to COVID-19?

LK: “Clearly, the pandemic had a significant impact from the outset and the after-effects remain significant for some bodies. For example, the Department for Health and Social Care remains affected by the longer-term operational and financial impact of the pandemic, as well as ongoing complexity in accounting judgements – such as the valuation of its PPE inventory. 

“But it’s not just COVID-19. We have seen substantially increased accounting and audit complexity across government more generally: for example, the new and rapidly changing energy guarantee schemes in the Department for Business, Energy and Industrial Strategy.”

RF: “We are also affected by issues in the wider audit profession. Some departments, such as the Ministry of Justice and Department for Digital, Culture, Media and Sport, rely on local government auditors for assurance over material pension balances relating to large groups of their staff. The ongoing delays in local government audit (only 9% of 2020/21 audits were completed by the local audit deadline of 30 September 2021) has a knock-on impact on central government audits.” 

Why is timely publication so important?

RF: “The key word is accountability. Our role is to support Parliament in holding government to account and we do this by providing assurance over departmental annual reports and accounts. This is vital in helping Parliament understand how departments are performing. 

“When we can provide this assurance soon after the financial year end, it means that scrutiny can take place much closer to when the government is making decisions and spending money, which helps protect taxpayers’ money.”

Have there been operational challenges for the NAO in Getting Back on Track?

LK: “There have been challenges and we have worked hard to address these. A fast-moving external environment means working with agility and at pace, and with careful prioritisation. But I feel we have risen to the challenge and the progress we have made in working with finance teams to bring forward timetables so far is something I’m really proud of.

“In addition, we are responding to significant developments across the auditing profession at the same time as focusing on Getting Back on Track. This includes preparing for the adoption of ISA 315 for our 2022-23 audit cycle and making sure our work continues to meet the quality expectations of Parliament, the public and our regulator.”

RF: “We recognise these operational issues have been a challenge to manage for both our own staff and counterparts in finance teams. Extended accounts and audit timetables can feel like a never-ending cycle: in some departments, as one set of accounts is published, the next year’s accounts and audit process begins. There is a risk that, if delayed timetables become embedded, this could tie-up limited resources, making it more difficult to focus efforts on our important value-for-money work.”

What would Getting Back on Track mean for you? 

LK: “The pandemic showed the importance of transparency and the role public audit has to play in this. I saw how powerful the role of audit was during the pandemic through the impact of our real-time audit work, including our tracker monitoring COVID-19 spend, our initial findings from the government’s response to the pandemic and our reporting on issues arising from COVID-19 loans. This showed the importance of high-quality, timely accountability, attracting significant Parliamentary and public interest.”

RF: “With so many other challenges now facing government – from interventions in the energy market, the impact of climate change and the economic uncertainty – we want to make sure all the central government organisations are subject to timely parliamentary scrutiny facilitated by timely and effective audits. This will allow us to fulfil our role as the nation’s independent spending watchdog. This is what is really motivating me and colleagues across the NAO to Get Back on Track.”