Coordinating Audit Functions in the European Union
Edited by Milagros Garciá Crespo
Chapter 2: Public audit in the United Kingdom
2. Public audit in the United Kingdom Sir John Bourn THE CHARACTERISTICS OF THE BRITISH SYSTEM The modern system of public audit in the UK is a creature of the nineteenth century, even though early manifestations of ﬁnancial oversight arrangements can be traced back at least to 1314. Nineteenth-century developments began with the idea that public authorities – government departments, local government authorities and other public authorities – needed to keep accounts showing the sources of their funds and what they had been spent on. And if accounts were to be kept, they needed to be independently audited to see that they gave a true and fair view of the ﬁnancial transactions of the authority and that the money had been spent in accordance with the law and appropriate administrative regulations. These developments paralleled the development of accountancy and audit in the private sector, which was necessary for the functioning of industry, commerce and capital markets. By the start of the twentieth century, as noted below, auditors began to point out cases where money might have been spent lawfully, but still wastefully, such as when goods and services had been purchased of defective quality even though for a legal purpose. Under the impetus of the development of the economics of cost–beneﬁt analysis, by the latter half of the twentieth century auditors began to develop their concern with wasteful expenditure into systems of performance audit, whereby they not only audited accounts but also examined the economy, eﬃciency and eﬀectiveness...
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