The role of the Director of Audit, as head of the National Audit Office (NAO) is to report to Parliament on the spending of public money. The NAO conducts financial audits of all Ministries and Government Departments, other Public bodies and Special Funds. The Office also reports to Parliament on whether value for money has been achieved in respect of public spending.
The NAO is often entrusted with audits of newly set up public bodies and also other bodies not previously audited by us.
Under the law the Office of the Director of Audit is responsible for auditing the accounts of all Ministries/Departments and to report the results to Parliament.
In accordance with the Constitution and auditing practices, the Director of Audit is required to form an opinion on the accounts, as to whether they are free from material misstatements. The Director of Audit must also satisfy himself that transactions in the accounts have appropriate Parliamentary authority. In cases of material misstatements, the Director of Audit issues a qualified opinion. Such reports constitute the basis of the work of the PAC
Though in the past our reports were considered adverse in nature, we have moved over the years towards a more positive and participative approach. We now also suggest measures to improve financial management, human resource management, project and capital asset management and the provision of services.
Since the early 80’s our audit report to Parliament includes a special section on the value for money aspect of spending by Government and other public bodies. This was considered very important owing to growing public awareness of the scarcity of resources and the Economy, Efficiency and Effectiveness of their utilisation. The three E’s have been defined by the UK National Audit Office as:
- Economy: minimizing the cost of resources used or required – spending less;
- Efficiency: the relationship between the output from goods or services and the resources to produce them – spending well; and
- Effectiveness: the relationship between the intended and actual results of public spending – spending wisely.
Disbursements of public funds within the authorised limits, though a legal requirement, are no longer considered sufficient as regards proper stewardship and issues of corporate governance. Those entrusted with the management of public funds are expected to optimise the use of resources made at their disposal.
Our reports on value for money audit have covered a wide range of issues such as the Agricultural Sector Services including diversification and privatisation of agricultural services, Fisheries, Outer Islands Development and Management, Tourism, Health, Education, major contracts for Public Works, Capital Assets, Human Resource Management and Procurement Contracts. Also included are Projects funded by Financial Institutions such as the World Bank, the European Development Fund and the UNDP.
Through our work and recommendations, we have been able to draw the attention of both Parliament and the public on the necessity for urgent redress in various sectors. By creating the awareness of value for money among those entrusted with management of public funds and financial affairs, our work has been beneficial to the nation in various respects. Besides much public savings resulting directly from our work, the long term rewarding effect will be the improvement in the quality of public services rendered by the government to the public at large in the most economical, effective and efficient way.