The Canadian Federal Accountability Act created the new office of Accounting
Officer following recommendations contained in the Gomery Report and other
recent studies. In March 2007 the Public Accounts Committee adopted a Protocol
for Accounting Officers. This report was concurred in by a majority of
members of the House of Commons in May. The idea to create Accounting Officers
was borrowed from the United Kingdom. This article outlines how the office
works in the UK.
I spent nearly six years as a Director in the Treasury of the United Kingdom
with the title Treasury Officer of Accounts, a long-standing title which
goes back to the mid-19th century. It forms a link back to the times of
the British Prime Minister, William Gladstone, who introduced wide-ranging
reforms of our public accounts during the Victorian era. Before I describe
the work of accounting officers in the modern era I think it is worth mentioning
that this reform was introduced as a partnership between Parliament and
the Treasury of the day.
A joint committee of Parliament and the Treasury developed the new accounting
arrangements, which were then given statutory form through the Exchequer
and Audit Act of 1866. The joint committee was called the Committee on
Public Accounts which, to this day, retains a Treasury Minister, the Financial
Secretary, as an ex officio member. I believe the committee is unique among
the United Kingdom Parliamentary Select Committees in having a Government
Minister as a member. Normally, members of Select Committees are drawn
solely from the backbenches. The presence of a Treasury Minister on the
Public Accounts Committee underlines the commonality of interest between
Parliament and the Treasury in seeking to promote good financial management
and in uncovering poor financial management.
These days the convention is that the Financial Secretary only participates
once in the committees proceedings immediately after being appointed,
and then only for a brief 15 minutes or so, leaving the committee to get
on with its business in the same way as other select committees. However,
the Treasury Officer of Accounts sits with the committee at all its hearings,
and occasionally at private sessions, to help the committee with its business,
This little digression about the relationship between the Treasury and
the Public Accounts Committee, makes the point that the process of accountability
is inextricably linked to improvement in financial management. Inevitably,
relations between Parliament and the executive can sometimes become a little
fraught but both we and the committee nevertheless try to ensure that we
make positive use of their work.
The UK System of Accounting Officers
The Accounting Officer concept has recently been introduced in Canada after
some debate and I have been asked to speak about the UK system of Accounting
Officers, their role and their relation to Parliament. I know very little
about the arrangements in Canada so I will restrict myself to describing
the arrangements that we have in the UK. Whether these have any relevance
to Canada is for others to judge. I would only say that it would obviously
be dangerous to assume that, just because the title of the post is the
same, then everything else must be the same too. Clearly much will depend
on the context in which Accounting Officers work and the powers that they
have. There may well be important differences in these respects between
our countries. Also, as I am now retired, any comments I make are in a
personal capacity. I no longer speak as a representative of the UK Government.
Over the centuries, Parliament has secured many rights in relation to the
executive. A few are relevant to the position of Accounting Officers.
First, the Government needs Parliaments approval to raise money through
taxation and it needs Parliaments approval to spend money. In relation
to expenditure, the Treasury has to present estimates to Parliament each
year, identifying how much each Government department needs for the year
and, in broad terms, what it needs it for. Parliament then votes the money
to the Government. If a department needs more during the year, the Treasury
has to present a revised estimate for Parliaments approval.
The United Kingdom Comptroller and Auditor General (C&AG), who is an officer
of Parliament, has to authorise the release of funds to the Government
during the course of the year and ensure that releases are in line with
the voted provision. This is his Comptroller function.
At the end of the year, each department has to draw up accounts comparing
spend with the estimate and in a form agreed with Parliament. These accounts
are audited by the C&AG. This is his Auditor General function and he
presents the accounts to Parliament with his report. The Public Accounts
Committee scrutinises them on behalf of Parliament.
There are, in addition, numerous other requirements. For example, the Government
has also agreed, under what is called the 1932 Concordat, that it will
not spend money on new services, above certain thresholds, without specific
legislation authorising it even if Parliament has voted the department
sufficient funds in its estimate. Departments that fail to comply with
these, and other, requirements are at risk of qualified accounts and a
report to Parliament from the C&AG.
Over the years, the C&AGs powers have gradually been extended and, in
particular, he now has extensive powers to report to Parliament on any
aspect of how a department has used the resources at its disposal. These
reports are called value for money reports and the C&AGs staff in the
National Audit Office produce 60 or 70 of them every year. These reports
now form the mainstay of the Public Accounts Committees annual programme
of work, rather than the reports on accounts.
My reason for mentioning all this is just to make two very obvious and
simple points. First, that Parliament has a keen and legitimate interest
in everything that the Government spends money on and, secondly, that,
as departments are large, complex organisations, they inevitably need internal
systems to ensure they comply with these various requirements. Somebody
needs to have responsibility for ensuring these systems are in place and
work properly. And this is where our Accounting Officers come in.
In the UK the concept of Accounting Officers was in the 1866 Exchequer
and Audit Act. That Act required the Treasury to appoint people we now
call Accounting Officers. However, their statutory roles under the Act
were very limited. The Act merely required the Accounting Officer to prepare
the accounts and submit the accounts to the C&AG for audit. In 2000 were
placed this part of the 1866 Act but we left the limited statutory responsibilities
of Accounting Officers unchanged.
On top of these very limited foundations, however, we have gradually, over
the course of 140 years, erected a quite substantial edifice, giving Accounting
Officers important non-statutory responsibilities to which we in the Treasury
and Parliament, through the Public Accounts Committee, attach considerable
importance. The responsibilities are contained in a Treasury document called
the Accounting Officer Memorandum. It forms part of a much bigger Treasury
document called Government Accounting, which codifies the rules and conventions
applying to the management of resources in Government departments.
What are the main elements of the Accounting Officer Memorandum? Well,
first, from the very earliest days 1872, in fact the Treasury has sought
to appoint as the Accounting Officer the most senior civil servant in a
Government department, who we usually call a Permanent Secretary (Deputy
Minister in Canada). Since 1920 this has been the universal arrangement.
This recognises the fact that the Permanent Secretary, as the permanent
head of the department, is the person who has the authority to ensure that
all the systems are in place and operating to prepare proper accounts.
Secondly, by virtue of the fact that the Accounting Officer is in practice
the head of the department, we have been able to attach to the Accounting
Officer role other responsibilities. In particular, responsibility for
ensuring that the department uses its resources in accordance with the
requirements of regularity and propriety, and with economy, efficiency
and effectiveness three es that we usually refer to collectively as
value for money.
Coming back to the phrase regularity and propriety, regularity is the
term we use for ensuring that money is spent in accordance with the rules,
e.g. only spending money on things on which the department has powers to
spend. Propriety is the term we use for spending in accordance with the
standards that Parliament and the public would expect. These standards
of course change over time and require a degree of judgment. Now, in reality,
it does not need a Treasury memorandum to spell out that the head of department
should ensure compliance with regularity, propriety and value for money.
These are fundamental responsibilities of the head of any organisation.
However, by attaching them to the Accounting Officer role and spelling
them out in the Accounting Officer memorandum we have given them an emphasis.
We have placed an onus on the department to devote attention to them, even
when the departments day-to-day priorities might be elsewhere.
The memorandum devotes quite a bit of space to the Accounting Officers
role in ensuring the proper stewardship of public funds. I will not go
over it all here but, in essence, it requires the Accounting Officer to
have in place a strong finance section and to have good financial management
throughout the department. It requires proper consideration of financial
matters when advising on policy and it requires Ministers to give written
instructions to the Accounting Officer in certain circumstances.
Accounting Officers feel that the existence of this memorandum from the
Treasury, spelling out their responsibilities, strengthens their position
in the department and thus supports the maintenance of good financial management.
Relations with Ministers
Interestingly, there is no debate in the UK about the relationship between
Accounting Officers and Ministers. This is presumably because the system
has been in place for so long that everybody has got used to it but there
is some evidence that it was the subject of debate in the early years of
our system. It is obviously a point that merits discussion.
In the UK, as here, Ministers are responsible for their departments and
accountable to Parliament for the actions of their departments. An MP can
raise concerns about the action of a department on the floor of the House
and expect a departmental Minister to respond and take responsibility.
We have been careful in our Accounting Officer memorandum not to undermine
that responsibility. The memorandum states explicitly that the Accounting
Officer is responsible under the Minister, not in substitution for the
What we have done in the memorandum is simply to state explicitly that
the head of department has a personal responsibility for ensuring the department
has proper financial management. The Minister therefore does not need to
issue explicit instructions to the head of department asking for this to
be put in place. The instructions are there in a standing Treasury memorandum.
I think it is fair to say that people see this as a perfectly natural way
of operating and not in any way a dilution of the Ministers position.
The head of department would equally expect to take responsibility for
other aspects of the departments management, such as recruitment, discipline
and performance management, without waiting to be instructed to do so.
In fact, I think Ministers would be surprised if somebody told them they
needed to instruct their Permanent Secretaries to take responsibility for
managing their departments.
Of course, this does not prevent a Minister who has an interest in or concern
about financial management, from looking at, or even seeking to change,
the departments systems - because the Minister remains ultimately responsible.
But, under the Minister, the Accounting Officer has a personal responsibility
and, if the two disagree on what needs to be done, the memorandum provides
a clear process for resolving the disagreement.
One of the implications of the memorandum is that a Minister knows that
the Accounting Officer should be ensuring that the department complies
with the requirements of regularity, propriety and value for money. Ministers
also know they can expect the Accounting Officer to advise on any such
issues that may come up. They do not need to ask for such advice it should
come forward automatically. So what happens if the Minister disagrees with
the advice he or she receives?
The memorandum spells out what happens in these circumstances. In essence,
the Ministers view prevails but the Minister is required to issue a written
instruction to the Accounting Officer. The Treasury and the C&AG have to
be informed. If the matter were to come before the Public Accounts Committee,
the committee could be expected to recognise that the Accounting Officer
bore no personal responsibility for the decision.
On average, these written instructions, which we tend to refer to as directions,
occur perhaps once or twice a year. Some of them might be regarded as technicalities.
Sometimes, the direction may relate to a topic that is already the subject
of public debate. However, I cannot think of any case where the direction
has become a political issue in its own right though that does not mean
we never will have such a case.
I might mention that the requirement for a direction in relation to value
for money cases was only introduced after what is known as the Pergau
dam case in the 1980s. Prior to that directions were only required in
cases of regularity or propriety. These directions were introduced in 1883,
and the requirement to inform the Treasury and the C&AG in 1920. Value
for money decisions require an element of judgment and it is not surprising
if, from time to time, a Minister takes a different view from the Accounting
Officer on the balance of the arguments.
Relations with Parliament
The Public Accounts Committee in the UK, and I suspect it will be similar
in Canada, has as its main task scrutinising on behalf of Parliament the
way in which departments have spent the money that Parliament has provided.
I assume that, at one time, this was done by scrutinising and holding hearings
on departmental accounts. However, these days, the committee holds relatively
few hearings on accounts. Out of the 60 or more hearings the committee
holds each year, the overwhelming majority perhaps as much as 90% are
hearings on value for money reports prepared by the C&AGs staff in the
National Audit Office.
The committee usually holds just one hearing on each report and it invites
the Accounting Officer to give evidence on the issues raised in the report.
These days the committee permits the Accounting Officer to be accompanied
by other staff who can speak knowledgeably about the issues. The Accounting
Officer is nevertheless expected to be on top of the issues and to do most
of the talking.
The committee will have been briefed by the National Audit Office and the
department will have prepared its Accounting Officer at length on the background
to the report. Accounting Officers know that, if the NAOs report is critical,
they can expect a tough time at the hearing. The committee does not mince
By convention, the committee is always chaired by a senior Opposition backbencher,
often a former Minister. However, it always seeks to act in a non-partisan
manner. It does not question Government policy and does not take evidence
from Ministers. It restricts itself to the way in which departments have
used their resources. However, as you will readily appreciate, there is
a considerable grey area where policy and the use of resources overlap.
Because of the way in which Accounting Officers have to justify their departments
actions to the Public Accounts Committee, we talk loosely of them being
accountable to the committee. These days we accept this without question
but in the 1920s the Treasury felt obliged to spell out how this was reconciled
with their accountability to Ministers. The committee can give an Accounting
Officer a bruising time, it can publish a highly critical report, it can
damage an Accounting Officers reputation. But it cannot, at the end of
the day, dismiss or discipline an Accounting Officer. That is something
that would fall to Ministers and/or the head of the civil service. However,
Accounting Officers are accountable to the committee in the sense of being
required to give an account to the committee of the way in which their
departments have used their resources.
Relations with Treasury
The Treasury appoints the Accounting Officer but that is largely a formality
once a new head is appointed to a department. The Treasury issues guidance
to Accounting Officers. The main documents are the Accounting Officer memorandum,
our manual on using public money, called Government Accounting, and occasional
ad hoc guidance in the form of Dear Accounting Officer letters. There
is also a lot of more specific guidance, e.g. on internal audit and risk
management, that is issued as necessary as well as guidance on appearing
before the Public Accounts Committee.
We do not of course expect Accounting Officers to memorise, or indeed even
to read, all this guidance but we expect them to have a finance section
that will be on top of it. And we expect that finance section to have considerable
authority within the department, and the strong backing of the Accounting
Officer in effect to protect the Accounting Officers position.
In addition, because the Treasury Officer of Accounts attends all Public
Accounts Committee hearings, I would always attend at least one briefing
session with the Accounting Officer before a hearing so that I would be
familiar with the issues.
Finally, after the Public Accounts Committee publishes its report on a
hearing, the Government will respond through a Treasury minute which,
although drafted by the department concerned, would be agreed with and
presented to Parliament by the Treasury.
Some issues Relating to Accounting Officers
One issue that crops up quite regularly is the position of former Accounting
Officers, who have since retired or moved elsewhere. The Government and
the committee are agreed that the current Accounting Officer is required
to answer for the departments actions whether or not he or she was in
post at the time. The committee will not accept an answer of I dont know
because it was before my time.
Nevertheless, the committee also reserves the right to call back former
Accounting Officers if it considers this can help its enquiries. This is
disliked by the Accounting Officer community but, at the end of the day,
the committee has the power to summon any citizen it wishes to appear before
it. A modus vivendi has been established on the basis of assurances from
the committee that this power would be used sparingly in exceptional circumstances.
In fact, several of the occasions when it has happened have been occasions
when everybody agreed it was the sensible thing to do.
A second issue that we spend some time discussing is whether our arrangements
have the effect of reinforcing the natural risk aversion of civil servants.
Governments have ambitious programmes and they want to encourage innovative
solutions. Does our system of Accounting Officers, their personal responsibility
to the Public Accounts Committee, the rough time they can receive if their
departments have performed less than perfectly, the voluminous guidance
from the Treasury do these collectively reinforce a blame culture that
the media are only too happy to promote and thus discourage risk taking
The third issue that may be worth mentioning is the increasing focus at
Ministerial level on what we refer to as delivery. Twenty years ago,
Ministers focused on policy while civil servants advised on policy and
then implemented the Governments policies. Any Minister who showed an
interest in implementation was considered rather eccentric. Today, however,
the message is that delivery of policies to the citizens in the country
is the priority. Ministers are increasingly being required to involve themselves
in implementation of policies.
So far, this has not had any impact on the arrangements I have described
in my presentation but I wonder whether, further down the line, there may
be consequences. For example, will it lead to more use of directions? Will
the Public Accounts Committee feel that they need to question Ministers
about some projects rather than just Accounting Officers? It will be interesting