Whitehall’s use of internal audit could be better focused and more effective, the National Audit Office said today.
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Departments spend £70m on internal audit services each year, yet fail to provide government audit committees and other senior stakeholders with the information they require. Many stakeholders consulted by the NAO said they believed internal audit work was not sufficiently tailored to the issues faced by individual departments.
Forty per cent of those surveyed said some or substantial improvement was needed in the expertise and professionalism of internal audit.
Treasury guidance on internal audit was also criticised for being vague. There was little consistency in the application of audit standards as well as variations in quality that meant the NAO could often not rely on internal audit data to inform its own external audits.
NAO head Amyas Morse said: ‘Good internal audit should be the “eyes and ears” of senior management, giving honest and clear information. However, in central government, it is not delivering consistently at this level.
‘There needs to be a clearer statement of the important role of internal audit from the Treasury on one side and a determined move to deliver internal audit’s full potential across government on the other.’
Ian Peters, chief executive of the Chartered Institute of Internal Auditors, warned that unless the government supported its internal audit function, the success of public sector reforms could be compromised. ‘Whilst the report is a comprehensive analysis and pulls no punches, it is very encouraging to see the NAO so explicitly recognise the importance of internal audit to strategy and governance in the public sector,’ he said.
‘If the government wants to improve its internal audit function, then it needs to address three key areas: the need for consistent application of internal audit standards and the development of appropriate guidance; the need to improve the relationship between internal audit and management at executive and non-executive level; and the need to support internal audit through investment in appropriate professional development.’
