Public Accounts Committee
Oral evidence: Pre-appointment hearing: preferred candidate for Comptroller and Auditor-General, HC 1883
Wednesday 16 January 2019
Ordered by the House of Commons to be published on 16 January 2019.
Members present: Sir Geoffrey Clifton-Brown (Chair); Chris Davies; Chris Evans; Caroline Flint; Nigel Mills; Layla Moran; Stephen Morgan; Anne Marie Morris; Bridget Phillipson; Lee Rowley; Gareth Snell; Anne-Marie Trevelyan.
Richard Brown, Alternate Treasury Officer of Accounts, HM Treasury, was also in attendance.
Questions 1-66
Witnesses
I: Mr Gareth Davies, preferred candidate, Comptroller and Auditor General.
Witnesses: Mr Gareth Davies.
Q1 Chair: May I extend a warm welcome to you, Mr Gareth Davies? You are the preferred candidate to be appointed the next Comptroller and Auditor General. Today is a relatively rare event for the Committee: a pre-appointment hearing.
The C&AG and his staff provide Parliament, and particularly this Committee, with an invaluable service and advice and support. Our purpose today is to discuss your suitability for the post and to report on our views as soon as possible after the hearing. Every member of the Committee has a copy of your CV, so you can assume they have read that and know it well—they know that much about you. You and I, of course, have met before.
If you are content, may I start with the first question? Can you tell us something about your current role and how it has prepared you, or makes you suitable for the role of head of the National Audit Office?
Mr Davies: Thank you and good afternoon. I am currently head of public services at Mazars, which is the international audit and advisory firm. I have been there approaching seven years now. In that time, I have been responsible for building the public sector practice of the firm. For most of that time in the UK and for the last year and a half, I have also had a global role for the Mazars Group. Mazars operates in about 83 countries and has about 20,000 staff around the world, so it is a substantial organisation globally.
My reason for joining the firm was that I was very keen to ensure that there was an effective public audit presence in the private sector following the abolition of the Audit Commission. I was motivated by the desire to see that public audit ethos taken into the private sector, so I have spent my time building a team that is capable of delivering that kind of work. In that time, we have grown roughly fourfold and are now the third-largest auditor of local government in the UK. We have a substantial portfolio of NHS audits, and a contract with the NAO and with Audit Scotland. It has been a really interesting and enjoyable journey. In that time, I have obviously learned to operate in the commercial world; I have enjoyed that and learned a lot.
Q2 Chair: That answer puts my next question neatly into context; it was going to come later but I will put it to you now. If Mazars has a contract with the NAO, will there be any future conflict of interests?
Mr Davies: No. I think it is a similar position to that of my predecessor, who had been a partner in a firm that had a contract with the NAO. I have already discussed that with NAO staff, who have explained the arrangements they had in place then and would do again. I would have nothing to do with the management of that contract or the award of future work to the firms. When I leave the firm at the end of May, I will have no ongoing interest in the firm, financially or otherwise, so it will be a clean break.
Q3 Chair: You have clearly had a great career previously in the public sector. Of your time at Mazars, how has the time shift gone from as it were domestic, public sector auditing to the worldwide business of the firm? The purpose of that question is to try and gauge whether you are still current in public sector auditing matters.
Mr Davies: I have not been relieved of my responsibilities in the UK, so I still have a portfolio of audit work in the UK, including some big teaching hospitals and some large local authorities. My international work is working with my opposite numbers in those Mazars countries with substantial public sector activity, helping them to develop their work in those countries. A good example is in France—they are overhauling their entire local government audit regime, so it is becoming a lot more like the UK’s. There is an obvious benefit of our comparing notes and helping each other in that case.
Q4 Chair: When your predecessor was appointed, he had had experience within Whitehall. You have been working in the private sector for several years; can you tell us how you have kept well and truly up to date with public sector auditing matters?
Mr Davies: As I say, the firm has a contract with the NAO and I have regular meetings with the NAO, so I am up to date with the development of the NAO as an organisation and its work, particularly in local public services. Obviously, my time at the Audit Commission, followed by national roles, involved me in close liaison with Government Departments, particularly what was then the Department for Communities and Local Government. So I have experience of briefing Ministers, of working with senior officials on the development of new approaches and of managing responses to, in that case, local authorities that were getting into difficulties. I have seen the inside of Whitehall from that perspective.
Chair: We will probably come back to that. At the moment, I will move on to Chris Davies.
Q5 Chris Davies: Thank you, Chair, and thank you, Mr Davies. Welcome to the interview. You said in evidence to Sir Geoffrey that you moved from the public sector to the private sector to improve audit in the private sector. You have evidently learned a lot and been very successful. What experience of the private sector do you plan to bring back to the public sector?
Mr Davies: The NAO is obviously a substantial audit practice in its own right, so a lot of the challenges that the NAO audit practice faces are the same as those of any other large audit practice at the moment. A lot of innovation is going on with audit techniques and methodologies—the use of big data, the use of artificial intelligence. At the moment, I think all of this looks better on firms’ presentations than it is in practice, but there is a reality developing there that is going to have a transformative effect on auditing.
For example, it will soon be possible to audit 100% of the transactions of an organisation, rather than having to pick a sample, which has been the practice for many years. It will also be possible to have an artificially intelligent machine read legal documents and extract key words and highlight risk areas that need more detailed attention. All of that has the potential to transform the efficiency of the audit process—and its effectiveness if it is done well. I have seen the beginnings of that in my firm. There is a long way to go. I am not pretending that any of that is ready to implement next week, but it is going to be very important in the development of the NAO’s auditing over the next few years.
Q6 Chris Davies: During your time in the private sector, you may have been involved in lobbying various political parties, organisations and so on. I was just wondering whether you felt free of any political shackles before coming into the National Audit Office.
Mr Davies: No; I have had no lobbying role at all in the firm. In fact, our firm doesn’t do that kind of lobbying. We obviously submit responses to consultations. Very topical at the moment are the Competition and Markets Authority review of the audit profession and the Kingman review of audit regulation, and partners of mine have been heavily involved in responding to those reviews. But that is all in the public domain; these are public responses. We don’t take part in party political lobbying and we don’t retain any firms to do that on our behalf.
Q7 Layla Moran: Welcome to the hearing, Mr Davies. I would like to turn, if I may, to your non-executive roles. Since 2005 you have been involved in several charities—particularly Oxfam, until 2011. As we know, that was the year that Oxfam realised that there was an issue, especially in Haiti, and raised an internal investigation. Were you there when that was revealed?
Mr Davies: That was revealed in my last few weeks as a board member there. The two things are not connected. I was due to rotate off because I had finished my two three-year terms at that point.
Q8 Layla Moran: So it was a fixed term and you were forced out? Not forced, but the rules said that—
Mr Davies: That is right. I was standing down. My successor had already been appointed and was on the board, ready to take over. I was the honorary treasurer at Oxfam, responsible for the finances and audit there.
Q9 Layla Moran: At the time, when you heard these allegations, how did you treat that crisis?
Mr Davies: It was obviously extremely serious, so much so that the chief executive rang trustees to say that it had been identified and explained the response that was being planned at the time—an immediate investigation, which we obviously supported.
Q10 Layla Moran: Is this the plan to go and tell the Charity Commission?
Mr Davies: No, this was a plan to investigate the allegations that had been received.
Q11 Layla Moran: Okay. So you weren’t there for the plan to not tell the Charity Commission?
Mr Davies: Well, first of all, we are talking about something that was seven or eight years ago. At the time I was there, we did report the incident to the Charity Commission, so—
Q12 Layla Moran: But not fully, because the Charity Commission subsequently said that, when Oxfam had told them about it, Oxfam only said that it was serious misconduct; they had not said that it was sexual in nature. The Charity Commission complained bitterly that actually Oxfam had not been forthright about what was going on. I just want to understand the timeline and whether you were involved in that at any point.
Mr Davies: The board assured itself that the regulator had been notified of this incident. The details of that—exactly what was reported and so on—of course I don’t have to hand and it was a long time ago, so I can’t give you any detail on that. I know that the Charity Commission are looking at all this at the moment as well, so they will obviously report in due course.
Q13 Caroline Flint: But were you aware of the nature of the incidents being reported?
Mr Davies: Yes, we knew that they were serious—
Q14 Caroline Flint: And were you—presumably you were—aware of any other members of staff coming forward to try and raise these concerns?
Mr Davies: Yes. We asked for an investigation report, which set out the findings of the investigation that had been carried out in Haiti. It came up with some very punchy findings. People were disciplined, including being dismissed. And an action plan—
Q15 Layla Moran: And this was all happening while you were still there?
Mr Davies: This was my last board meeting where this report was received, and then an action plan was received by the board, setting out the wider issues that this had raised, because clearly there were issues there about why it took so long for somebody to whistleblow—to report this—and so on. I left the board at that point, feeling, “Well, this is clearly a very serious matter. It has been a wake-up call for the organisation, but it’s being taken appropriately seriously and the right things are being done in response to the problems.”
Q16 Layla Moran: But that’s not true, is it, because it wasn’t dealt with in a way that subsequently, in hindsight, was robust enough.
Mr Davies: I was talking about the information that was available to the board at the time.
Q17 Caroline Flint: Do you think you asked enough questions at the time, even if it was your last board meeting?
Mr Davies: Obviously, now I know a lot more of the detail, because I have read the press reporting over the last year. A lot of that was not available to us at the time. Knowing what I know now, of course, there are lots of things that people would have asked differently. At the time, I think we—it was a very experienced board and a management team. We had had experience of dealing with difficult incidents, including major frauds in the tsunami response in Indonesia a few years before. We had established a precedent for being very open and transparent about that, so the same approach was taken in this case. I was very surprised to read all the detail that I read last year, because that hadn’t been out at the time.
Q18 Layla Moran: But isn’t it up to the trustees to get the questions right at the time? Projecting forward into your role now in helping us to hold Government to account and so forth—
Mr Davies: Yes.
Layla Moran: Isn’t it the whole point of our jobs to ask the right questions at the right time? So why do you think that didn’t happen when it should have done?
Mr Davies: Well, it wasn’t for want of trying. What I can say about what I did at the time is that I took all my trustee roles extremely seriously. I do challenge management where I think that is required and I do insist on getting proper answers to the questions, so at the time, obviously, I thought I was doing that. In retrospect, things emerged that we didn’t know about at the time, and obviously it’s very hard to ask about things that you are not aware of.
Q19 Layla Moran: I just want to ask one last question on that specific incident. Do you feel at all personally responsible for what you—
Mr Davies: Well, I do; as a trustee of the board at the time when it was identified, of course I share—I have proper trustee responsibility, like all the other trustees. It’s hugely disappointing, to say the least, to be let down by your staff in an organisation like that, where so much effort goes into fundraising, into the emergency response—in this case, to the earthquake in Haiti—and it’s clear that we were badly let down by the staff over there. Oxfam has apologised since then for the harm that was done by those staff, and quite rightly.
Caroline Flint: Can I just—
Chair: Can I bring Gareth Snell in here, please?
Q20 Gareth Snell: Sorry—just very briefly, Mr Davies. You said in those responses that you were let down by the staff, that it was at a time when you were leaving the board and that you didn’t have the information to hand. If you were undertaking an audit of a big Government Department or looking at Government accounts, and the permanent secretary said to you, “Oh, it happened before I was the permanent secretary,” or “I was let down by other staff,” or “That information was not to hand at the time,” would you accept that as a suitable answer to the questions that were left unanswered?
Mr Davies: It depends on the evidence—it depends on the evidence. The Charity Commission is looking at all of this at the moment, so it’s very hard to pre-empt something that they are going to—
Q21 Gareth Snell: Not even in the context of Oxfam, that, to me, sounds like—I apologise if this word sounds aggressive—a very cavalier response to say, “It happened. I was on my way out and I didn’t really know what was happening at the time, so it’s not really my responsibility.” If that response was given to you as an auditor, how would you respond to that?
Mr Davies: I’m sorry if that is the impression my answer gave; that wasn’t at all what I intended to convey with that answer. As I said, I took my responsibilities as a trustee extremely seriously. I believe that I asked the questions you would expect somebody to ask, with the information we had available to us at the time, and the fact that other information has become available since then doesn’t change that fact. I am not at all cavalier about what we did at the time, and I think the record shows that as well.
Q22 Caroline Flint: Let’s move on to Save the Children, because I think you are still a trustee there—trustee and honorary treasurer, in fact, at Save the Children, from 2014. Clearly, they have been criticised for the way they have responded to reports of sexual harassment by staff. What did you know about that?
Mr Davies: This is in some ways the opposite situation. I was newly on the board when these things arose. The first I knew of this was being asked by the then chair of the board to be part of a sub-committee.
Q23 Caroline Flint: What year was that?
Mr Davies: It was 2015. That sub-committee was being established because questions had been raised about the handling of allegations at that time against the former chief executive. The sub-committee’s brief was to look at how that had been done and whether anything should have been done differently.
I was asked to be part of that, partly because I was new to the board so I didn’t have involvement in the cases that had led up to that. I carried out that role, along with others, on that sub-committee. We concluded that things hadn’t been done in the way that they needed to be done, and I won’t go into the ins and outs of that. As a result, the board concluded that matters hadn’t been dealt with in the way they should have been, and the chief executive resigned, and you have seen the coverage since then.
So I was part of the governance to address the situation that had arisen and that’s how I dealt with it.
Q24 Caroline Flint: How much as a result of that investigation, while it may have led to the chief executive resigning, was there an attempt to deal with what sounds like systematic bullying, not just from the chief executive but from other members of staff in the organisation?
Mr Davies: We commissioned an external adviser to set out a programme for us on that, and that report was received by the board. We agreed a programme of work to address it, and that got under way in 2016. So that was the approach we took.
Q25 Layla Moran: I have a final question, wrapping the two together. So, is it just sort of bad luck that you were at Oxfam and then at Save the Children, who happened to be the two most high-profile cases, or is it actually speaking to a bigger issue with culture and accountability in charities? And given how long you were involved in these kinds of roles, was that not something that you had picked up as a trustee?
Mr Davies: First of all, yes, it was bad luck, because if the alternative to that is that I was somehow the cause of those two things, then I wasn’t.
Q26 Layla Moran: No, I didn’t suggest that at all. I am trying to get to the bottom of this question: if there was a broader cultural issue, wasn’t part of your job to raise that?
Mr Davies: It was. It is important to say, going back to the Oxfam case, that we did identify this issue of sexual exploitation and abuse. The annual accountability report that we signed off as a board began to report on that earlier than most organisations, and that reporting became more and more detailed over time. So it was being taken seriously.
I think the Haiti case showed us that it was a much deeper problem than we had anticipated and therefore the efforts to address it needed to be ramped up very significantly.
As for your point about a sector-wide issue, I think what has been shown in the last 12 months is that it clearly is a strong sector-wide issue.
Q27 Layla Moran: Oxfam is based just outside my constituency and many of my constituents work there, including my sister. She wasn’t there at the time, but people who were there at the time said they kept raising issues with the board and with senior management, and that in the end all that happened was that those people got shunted off to other charities and there was no due diligence done, which caused some of the issues there.
What was the attitude at that time to the broader culture? It was clear that these people were not leaving the sector completely but going elsewhere, and that was well known within the organisation at the time. Was that not part of what was challenged?
Mr Davies: Very much so. Making sure that the organisational culture was fit for purpose and addressing any areas of weakness or concern that came up were a huge part of the board’s focus.
Q28 Layla Moran: We have a saying on our Committee that sunlight is often the best disinfectant, and yet part of the whole scandal was how charities had kept this under wraps for so long. They had this internal problem and the culture was the opposite of what we try to engender on this Committee. What is your attitude to these kinds of things, Mr Davies? That is what I am trying to understand.
Mr Davies: My attitude is that it does need to be transparently addressed. It needs to be properly reported and then appropriate action must be taken to tackle it.
Q29 Layla Moran: Did you make that clear when you got that report, albeit it was your final board meeting?
Mr Davies: Absolutely. This was a shocking case to the board at that time. There was no complacency at all. We were very clear that strong action needed to be taken and the action plan set out that strong action.
Q30 Caroline Flint: You then went on to Save the Children. As my colleague has said, the situation may have resulted in individuals leaving the organisation but they went on to work for other charities. Didn’t you feel, given that you are, to this day, an honorary treasurer and trustee of Save the Children, that you should have whistleblown and gone back and said, “I don’t think they are doing enough”?
Mr Davies: These are different cases. I was part of the governance process for addressing the issues at Save the Children. If you talk to people who know the situation there, they will tell you that I have been prominent on the board in ensuring that these things are properly tackled and that the culture changes.
Layla Moran: If I may say so, it’s about transparency, isn’t it?
Q31 Caroline Flint: It is about transparency. What I am trying to say is that, even though it was your last board meeting at Oxfam, we know that those issues were not properly dealt with, and that people went on to work for other charities without Oxfam alerting those organisations to the inappropriate behaviour of those individuals. Since you are very involved, for good intentions, in this area, did it never cross your mind, “I don’t think Oxfam is seeing through what they should have seen through”?
Mr Davies: No. I wasn’t aware of that at all. I had no further involvement with Oxfam after that point. I wasn’t privy to the internal workings of the board after October 2011. I wasn’t thinking there were unresolved issues arising from that Oxfam action plan, because clearly it was someone else’s task to implement that and address it. I was then working with other charities.
Q32 Caroline Flint: Personally, I think, as a woman, that if I had been in that situation and that had come to me, even if I had left that board, I would probably have wanted to continue to know what was going on, especially if I was then on the board of another charity that worked in the same area.
Mr Davies: I certainly took the learning about the importance of safeguarding into my subsequent charity roles. One thing I noticed when I started at Save the Children was how strong the child safeguarding arrangements were—for obvious reasons at somewhere like Save the Children—and how far that had evolved just in the two years between those two organisations. I have been heavily involved in ensuring that our safeguarding arrangements are up to scratch, audited properly and that any weaknesses are addressed.
Q33 Layla Moran: I have one final question. Could you summarise your view on what I was saying about transparency? This is public money, albeit in a different form, and not from Government. Ordinary people give money to those charities and they spend it. Neither the Oxfam nor the Save the Children case can be said to have been entirely transparent about what was going on in those organisations at the time of the scandals. Can you explain to the Committee your driving principles in deciding when it is okay to keep something internal as a governance issue? Where is the line where the public need to know what is happening to their money and what it is paying for?
Mr Davies: When it is an issue of public confidence, the public need to know and that has to be reported publicly. As I tried to explain in the Oxfam case, I thought we had broken new ground at Oxfam in being transparent about the allegations of fraud in the big programmes. The stock response was, “Until you know the scale of this, make sure you don’t frighten potential donors and so on.” We said, “We must get this out and then we will update everybody once we have finished our investigation.” That was controversial at the time, but we pushed very hard. In that respect, it is very clear that I have a track record of being extremely open.
I think the sector as a whole underestimated the scale of the sexual abuse and the challenge it faces when working in challenging environments in developing countries and disaster zones. That was completely underestimated. I was part of that, along with everyone else involved in charities at the time. That has changed in a dramatic way now, so there is much more reporting of serious incidents. There is much more public reporting. Every charity has had to come clean about the scale of its activities and the number of complaints it has received.
That is changing practice in a big way. There is now a concerted effort, as you know, to address the issue of humanitarian passports, so that aid workers can be checked and then employed only if they have one of those passports. There is a whole range of other system-wide improvements. Underlying all of that is much more transparency in public reporting about these cases and how they are dealt with.
Q34 Chair: Mr Davies, having been through a difficult experience and learning the lessons, have you had a chance to look at the NAO’s disciplinary procedures, to see—if you are appointed and there are any similar cases of harassment or exploitation—whether there are strong enough processes in place to deal adequately with such matters?
Mr Davies: Absolutely. As you would expect, this is at the forefront of my mind, both where I am working now and with the NAO. One of the things you learn from this is that no organisation can afford to be complacent, however well motivated you think it is and however hard-working and committed the staff are. There will be blind spots. Making sure that you challenge that and understand that will be crucial.
Q35 Anne Marie Morris: I declare a bit of an interest. I am going to look at your previous experience in the Audit Commission. My former husband was the financial controller responsible for, I believe, how many people it takes to change a light bulb in the NHS. The answer is eight—at least, it was then.
Gareth Snell: It’s 12 now.
Anne Marie Morris: It could well be—it’s probably more. My question, Mr Davies, is that the Audit Commission had a much broader role than the NAO, but much of what it did went. Are there things that the Audit Commission did that you would like to see brought back under the umbrella of the NAO?
Mr Davies: I am cautious about this because of the risk of mission creep, which is a serious risk for an organisation. When an organisation like the NAO demonstrates its capability, it is very tempting to give it additional tasks, and if you are not careful you can lose focus on your prime objectives. That is my first note of caution.
Thinking about what is now not happening that used to happen with the Audit Commission, and what is potentially a serious public interest matter, one area is being able to collate the intelligence coming out of local audit work and communicate that intelligence in a useful way to those who are in a position to do something about the serious risks that are emerging.
One of the tasks that I had towards the end of my time at the Audit Commission was to lead our corporate governance inspection work at Doncaster Council. Some urgent action was required to improve things at that council as a result of that inspection. I was able to lead the discussions with the Government and the Local Government Association, as the sector lead body, and that was an effective process in working out what would be the right steps to take, informed by the intelligence coming from the audit and inspection process.
I think that is what is missing at the moment. Something like Northamptonshire County Council is a warning sign. The auditor there was reporting—they were doing their job and reporting that things were not right, and there was some pretty clear evidence that the improvements required were not actually happening—but there did not seem to be a swift enough response to that evidence. We are missing that ability to bring it together.
I do not think that is necessarily a function for the NAO, but it is something for the Government to reflect on. At the moment, it is not clear how that loop is being closed effectively, and it should be.
Q36 Anne Marie Morris: I am impressed by your desire to ensure that we do not overspend—the Government would love that response—but I suppose I have another hat, which is that of the taxpayer. While the taxpayer does not want to pay a lot of money, they also want to get value for the money that the Government spend. What is it that you need to do, despite the cost, that will increase your understanding and ability to drive that value? Sometimes, investing more can actually deliver value—some of which might be monetary and some of which might not be—that is beneficial to UK plc. I suppose I want to, first, agree that that is a gap, but also challenge you to provide some further thoughts about how it might be addressed. It seems to me that, in terms of value, as opposed to just making sure the budget works, it is quite important.
Secondly, I ask you to reflect on the role that the Audit Commission used to have, which was to do a huge amount of data collection that meant that whenever organisations did studies, it had a benchmark that they could use. Now, when the NAO does its reports, it does not have that bank, if you like, of data, so everything is done by sampling. How valuable is that sampling? You now talk about the fact that auditing can be done 100%. Given what you said, is there any way we might look at that? That is point two.
Point three is that the Audit Commission used to do value-for-money studies, which were very valuable. One of the things that we as a Committee need to do more rather than less of is look at the whole value-for-money issue, rather than ask, “Are we coming in on budget?” I apologise for giving you three things to look at, but could you give me your views on how you would deal with those and whether we should?
Mr Davies: Sure. There is an opportunity coming up with the review of the code of audit practice for local audit. A new code will take effect from 2020. That review process has already started and I know that it is already looking at the question whether the value-for-money work of local auditors is appropriately focused, sufficiently detailed and adding the value you say is needed. That is one of the key questions that the review of the code is seeking to address. Without needing legislation to extend the remit of the NAO, there is already a vehicle there to ensure that local audit is being targeted in the way that Parliament thinks it should be, because once drafted that code is signed off by Parliament.
The point about data is really important. It is now getting much more feasible to maintain reliable datasets, to keep them up to date and then, as you said, to interrogate them intelligently, without the need for expensive manual exercises. I know that that is one of the things that the NAO is already working on, but I am sure it is an important area for the new C&AG to drive further progress on, and that is linked to what I was saying at the start about innovation. I think this is where a lot of the value of audit is going to be increased in the next few years, and we should be making better use of local data in that way.
Q37 Anne Marie Morris: What about the underlying studies, which are different?
Mr Davies: Obviously, the NAO carries out a series of those and reports them to this Committee. It has started extending those value-for-money studies into the local services area, which is what you are focusing on. I thought there was a particularly insightful, well-evidenced report produced last year on the sustainability of local government finance. I think those are starting now to highlight issues that really do need addressing. I take your point that they are not reviews of individual councils in the way that the Audit Commission used to do, but I think that really is a matter for Parliament. If it thinks that that is now a gap that needs filling, it is going to have to either insist that the new code of audit practice requires local auditors to do those studies, or give a specific remit to the NAO to carry that out, because that would be a big step. It would reverse the policy direction that led to the current situation, which was all about localism and sector-led improvement. I think that needs a lot of consideration before it is changed.
Q38 Chair: Can I follow up on that? I think that raises a potentially serious lacuna in local authorities. We are told there are one or two other local authorities, potentially, in the Northamptonshire pipeline. What would happen, presumably, is that the local auditor would do its work and the Department would hopefully pick up serious deficiencies in any particular local authority. It is not until the National Audit Office comes to do its auditing of the Department’s accounts that you would necessarily pick it up. Are you saying that there is a gap between the local auditor doing his or her work and the Department picking it up and taking action on it?
Mr Davies: The NAO has actually reported in the last week on that exact point—about departmental understanding of the picture emerging from local audit work. I think the NAO made some really trenchant points in that report in the last few days, pointing out where that oversight needs to be strengthened. There is still a risk that even where things are being flagged up by the local auditor, either the governance of the authority itself or the Department are not acting quickly enough to pick up and address those points.
Q39 Anne Marie Morris: What do you think your role should be in terms of providing advice and thoughts to the Government about how they might change what the NAO does or is responsible for, for example with regard to these sorts of issues? Do you think you should just sit back and take it or do you think you should be proactively saying to Government, “This needs to be looked at”?
Mr Davies: Very much so, but led by the evidence. That is why the reports from the NAO this week are so important. That is the first systematic attempt, since the abolition of the Audit Commission, to take stock of how local government governance and management is developing, and whether appropriate arrangements are in place to respond to audit findings when they are raised. That does set an agenda that, obviously, I would follow up in the post, and I would do so proactively, as you were saying.
Amyas Morse has taken the approach over the last few years of identifying gaps in accountability and then pressing hard for either access by the NAO to those areas or a new role for the NAO—for example, in auditing the BBC or the Bank of England. The early signs of those changes are that they have been successful and have improved the level of accountability, so I would follow the same approach.
Q40 Anne Marie Morris: Are there any other bodies that you think we should now be looking at?
Mr Davies: I do not have my own list coming into the job. I know there is another change coming up with the NAO’s role in the Student Loans Company, for example, which is changing imminently. I am sure the NAO has its views about whether there are any other areas that would benefit from its involvement, and, as part of my induction and briefing, I will pick up on that at the time.
Q41 Gareth Snell: Ms Morris is talking about the NAO working with other institutions, but working with this Committee is a big part of the NAO’s role. I wonder whether you have any thoughts about where you think the Committee is deficient in some of the work that it does, and what recommendations you might have for how we can better explore the reports that the NAO makes. I appreciate that telling us where we are rubbish is not necessarily what you want to do in an interview.
Mr Davies: My observation would be that the relationship is working well. From the discussions I have had, I think the Committee feels well served by the reports from the NAO. I am sure there is an appetite on both sides for working out how the information could be presented to us more usefully and more accessibly, and whether the NAO could be even more responsive in looking at areas of concern and providing sharp reports for the Committee’s benefit. Obviously that is part of the NAO’s new three-year strategy, which has been recently set out.
As a new Comptroller and Auditor General, I would be very keen to understand your appetite for that, what you have found most and least effective in your experience, and what kind of developments of that approach would be most valuable to you in carrying out your role. One raison d’être of the NAO is to equip you to do your job of scrutinising Government spending. Therefore I am very interested in your views on how we could do that more effectively, whether we could provide more accessible summaries of the information, and whether there are other less formal ways of us interacting, and so on.
Chair: It sounds like, once you have your feet under the table, if you are appointed, we will need to have some sort of brainstorming session, probably outside the formal Committee structure. That is food for thought for the future.
Q42 Anne Marie Morris: Value for money, as opposed to, “Is this within budget?” is pretty key, and within different parts of local government gets looked at differently. I know the NAO has its own definition of value for money. Would you look at that again to look at whether it is still valid, given the differing bodies and the differing public appetites? For example, on health, what is value? I do not think it is just a financial calculation. Would you look at that again and, if so, how would you go about it?
Mr Davies: I think we should keep that under review all the time, because understanding of what good value is does change as we become aware of elements of good value that were less important in the past. A good example would be environmental sustainability. Big companies now are judged as much on that as they are on other key aspects of their performance. That was not the case 20 years ago, so it is completely right to keep your understanding of value for money under review, and to make sure that you are challenging it and it is not slipping out of date.
You are right: it is clearly a lot more than financial efficiency and economy, although those are two key elements and always will be. The most challenging bit of value for money is the third E—effectiveness—because clearly it depends whose definition of effectiveness we are talking about. It argues for complete clarity on the objectives of that Department or service in the first place. The only way you can really judge effectiveness is if people have been very clear about what they are seeking to achieve and you can test, first, whether that it is a robust and sufficient definition and, secondly, what the data says about how well performance is doing against that. That is the approach that I would take.
As we understand the impact of technology, for example, on organisations and services, it is about making sure that our understanding of value for money does not ignore some of the consequences of relying more on remote technology. For example, I know that a lot of social care services are concerned about the human impact of reliance on telecare, and remote contact and so on, on measures such as loneliness. As we know, loneliness has become a really key element of effectiveness in those services. Again, that was not the case 10 or 15 years ago. I think it is about keeping that under review and challenge.
Q43 Anne Marie Morris: Would you be prepared to take some of the Government Departments to task on that, because they will push back? Do you think you would be able to create some metrics to measure it?
Mr Davies: Yes. There was an NAO Report just today on environmental metrics—a field that would have been innovative and controversial some time ago, but is now unchallenged as an important area. I think the NAO has a role in ensuring that where definitions of value become critical, it challenges Departments that are being slow to address that and reflect it in their own measurement.
Q44 Chair: It is not just environmental responsibility; it is now social responsibility as well. How will you reflect those aspects in your value-for-money reports?
Mr Davies: Again, this is a big area of development in the whole economy, not just in Government. One of my roles in the firm is to chair the committee that takes account of the firm’s impact on society. We address that through our role as an employer, as a service provider and as a commissioner or procurer, but also as a corporate citizen. Looking at it through those four lenses has given us a way of measuring our social impact. In some cases it is still in early development and in others it is better established, but it has been a very challenging process for a firm that was not used to looking at itself in that way.
I am sure that it will be an equivalent process in Government as well. One of the challenges for the public sector is that it is easy to slip into the view that everything you do is for social benefit, and actually to not be analytical enough about exactly what impact you are having in those categories—as an employer, as a service provider, as a procurer and so on. I think that could be a useful lens for us to start taking the next level of challenge in the way that you have described.
Q45 Caroline Flint: Do you think the NAO’s attentions lead to an overly risk-averse environment in Government Departments?
Mr Davies: I think they can. I think one of the impressive things about how the NAO’s work has developed over the last few years is that they have taken that head on. They have tried to concentrate on how we provide effective challenge that does not just teach everybody the lesson that it is best not to try anything innovative in case they are criticised for managing risks badly in the future.
It is a twin-track approach of rigorous reporting and holding people to account properly, where that is required, but also sharing good practice information. There have been various attempts by the NAO to get good practice information out there, demonstrate that it is interested in people doing innovative things and doing them well, and recognise that in its reporting. Getting that balance right is critical, rather than becoming simply a punitive regime for anybody who has tried to do something different and failed. We know that in any walk of life, including business and Government, not everything you try is going to work perfectly the first time; the key thing is whether you are learning from it and adapting your approach in the light of that learning. That is the approach that I would take.
Q46 Caroline Flint: Do you think that there is potentially more of a role for the NAO, maybe working with the Cabinet Office, to promote good practice across Departments? Some Departments do things quite well, but despite best practice, there still seem to be people both in Government and in the wider country who are not reading it or taking it up. Everyone seems to want to own their own area and not learn from others. What more could the NAO do to foster the taking up of best practice?
Mr Davies: I know that it has been looking at various approaches—there is even an NAO YouTube channel where people summarise the learning points from particular thematic reports that are easily accessible.
I think this is an area where we can probably make the most progress in the next few years. The use of things like webinars, for example, means that it no longer takes a whole day out of the office to go and learn about project management successes in Government, for example; you can do that efficiently in your own time. It is a low-cost but very effective way of communicating learning messages. You can make some of them interactive as well, so that people have the chance to ask questions and clarify points.
I would be very keen to look at the full range of techniques for sharing the learning points coming out of the work and thinking innovatively about different settings. Just reading a paper report that has some useful findings—not many people find that engaging, and it does not actually change their behaviour. Holding workshops for people with key roles around a particular area of activity, for example, so that they could hear from each other, and they could hear the messages directly from those who had been audited—that is the kind of thing that would potentially have more impact.
Q47 Caroline Flint: I am sure there is not a shortage of training in different forms around Whitehall. One of the important things for our Committee is how those at the top of the Departments, the Permanent Secretaries and senior civil servants, don’t necessarily have the skillset themselves—or take it seriously—to follow up on the reports and recommendations that we and other Select Committees make, and also lack, for example, financial qualifications or project management successes on their CV, in order to really prove that they are up for the job. Do you think that the lack of financial skills and project management experience across that senior level is a concern? How would you advise that that should be dealt with?
Mr Davies: I know that the NAO has said a lot of very insightful things about this in the last few years. A great example is the review of transformation projects in Departments, which looked at common problems of levels of optimism bias in business plans, essentially making very optimistic assumptions in the attempt to get your business case approved, without being realistic about deliverability and so on. I think there is a lot of learning there that is relevant to the top people in each of those Departments. I also know that there has been a lot of work in the finance profession in Government, to professionalise financial advice to the management team of the Department. In some cases, I think the non-executive boards of Departments have been effective in bringing business and financial expertise to bear on some of those strategic decisions.
I think a lot of the mechanisms are there. I think it is about making sure they are all implemented to a consistent, high standard, so that every non-executive board has that level of capability and influence over the management team in the Department. The work that has been going on for a while now to strengthen the finance profession in Government continues. I am sure that the NAO has a role in supporting all of that activity. I will be keen to ensure that we play our full part in it.
Q48 Caroline Flint: One aspect of Government work is working with the private sector. The NAO produces guidance for Departments alongside its financial and value-for-money audits. Time and again, we find a lack of skills and experience to engage with the private sector, not only constructively but to hold it to account. I am just looking at your CV. Most of your experience is in the public sector. I am just having a quick look through to see whether you have done any big audits where there was contracting out to the private sector. I cannot see much evidence of that, but it might not be in the summary of the CV. Have you got the right skillset and experience to be able to tell Whitehall how to do procurement and project management better, and does the NAO have that skillset?
Mr Davies: I think the NAO has come up with extremely good advice in its recent reports in these areas, so it clearly has the capability to do that. I will be looking to maintain and build on that. In my own personal experience, as you said, I have audited a lot of public organisations, many of which have relied very heavily on the private sector. For the last five years I have audited a local authority that had a strategic partnership with major private sector companies for most of its professional services. I saw from the inside the challenges of managing those contracts, ensuring that they were sufficiently flexible to respond to changing circumstances, getting good value from them every year and so on. So I have that kind of insight. I have also audited organisations with large PFI schemes, which I know has been a big topic of interest to this Committee over the years. Again, there was a huge range there, from quite effective PFI schemes, which were well-negotiated and met the need for available assets—
Q49 Caroline Flint: Can you tell us one?
Mr Davies: Good quality PFI schemes?
Caroline Flint: You mentioned PFI schemes, could you tell us what they were?
Mr Davies: I have audited lots of them, including hospital wings. I have audited one or two very successful hospital-wing PFI schemes, particularly when they have been renegotiated on better terms as the economy changed. In those cases I think there have been some good examples of the NHS actually gripping that, and behaving much more commercially and less naively than in the past. There are also plenty of documented examples of poor value for money in PFI schemes. Obviously, as a policy, that is now not being continued, but the need to harness private sector capacity and skills, and do so in a way that gives value to the taxpayer, has not gone away. It will live in a different form, so making sure those client-side skills are available in public organisations is going to be critical.
Q50 Chair: In this Committee we have come across some shocking examples of bad procurement, highlighted by the NAO. It seems to me that the problem is often the way that the contract is thought about, written, and then actually procured—the Nuclear Decommissioning Authority being one example, where hundreds of millions of pounds were wasted. As the head of the NAO, what role would you have in trying to prevent that sort of thing happening in future?
Mr Davies: That is a great example of this general point we were talking about—“How do you share learning?”—because there are people who are good at this in both the private and the public sectors. How do you get that learning shared so that it is more widely and more consistently implemented? That is a good example.
My experience is that the key issue is the gap between the people responsible for running the service or the Department and the professional procurement team. There is often far too big a gap between those two sets of people in the organisation, and what starts as a genuinely strategically important project with all sorts of service objectives that need to be delivered gets diluted and becomes a technical procurement process that loses sight of those strategic aims. The successful ones are the ones that keep that tightly tied together. They do not allow the procurement process to become an end in itself; it is always about delivering those service objectives. That takes real skill. This is not a low-level job at all in an organisation, and the best organisations have recognised that and keep those things very tightly tied together.
Q51 Chair: To reinforce Ms Flint’s question, it seems to me that some of the Permanent Secretaries—the accounting officers—do not have those proper commercial skills, otherwise they would be across some of these big contracts. I wonder what you would do to highlight that.
Mr Davies: I would continually bring to their attention the need to make sure that there is somebody on their senior team who has those skills. It does not need to be the Permanent Secretary in every case, because then you would have a very un-diverse set of skills at that level, but they do need to have somebody on their team who is operating at that strategic level and does have those skills. You see those Departments where that is the case, and it makes a real difference.
Q52 Chair: Can I move you on to a different subject? The NAO has a properly constituted board. You would be responsible for setting the relationship with that board, which has to be approved by the Public Accounts Commission. Have you given any thought to how that relationship might work?
Mr Davies: It is obviously a slightly different board arrangement to a normal company, or even a public sector board. The board is there for corporate governance purposes. It is not there to take the audit judgments or to set the risk-based audit plan; that would be my responsibility, along with the leadership team at the NAO. However, what I have learned over many years of operating on both sides of the board table is that a sensible chief executive makes good use of their board members, and is open to challenge.
There are some very high-quality people on the NAO board with huge experience that is valuable to the work of the NAO, and I will always be open to that advice and challenge. I will be robust in the view that I take on it as well, so in the end I will form an independent judgment, but where I have seen board arrangements prove ineffective is where people have got defensive about their role and have not been open to that kind of challenge. Knowing the quality of the people on the NAO board, I am sure that will not be the case for me, and hopefully they will see that as two-way. If I am concerned about an aspect of governance that I think needs addressing, I hope they will be open to me bringing that to their attention and asking for their help in fixing it.
Q53 Anne-Marie Trevelyan: Will you be taking a pay cut to take on this role, and if so, what has made you decide it is worth doing?
Mr Davies: I will, yes: I will be earning less in this job than in my current job. The reason for that is I really want to do this job—that is the obvious reason. I have spent my life trying to help people in your position get value for money for the taxpayer. This, to me, is the job in that space; it is the top of that profession. I cannot think of a more interesting way of spending the next 10 years, which maybe says more about me than anything else, but I genuinely think it is an important job for the country that needs doing well. I know enough about the NAO team to know that they are a talented set of people who it will be a privilege to lead. For those reasons, I have taken the view that that is more important to me than the difference in pay.
Q54 Anne-Marie Trevelyan: As a fellow mathematician and chartered accountant, I have quite a strong view on this, but do you think that parliamentarians understand the value of public audit? We will not tell them what you really think; we will keep it among ourselves.
Mr Davies: I think that at times, they do, and in some cases, all the time they do, but as a general rule, it becomes a matter of importance only when something has gone wrong. That is a real waste of the resource, actually, because, done well, it can be—maybe less excitingly, but more valuably—a driving source for improvement, for getting more out of every pound and for completely rethinking the way some things are done. I am not suggesting that there are not plenty of other sources of good advice on those things, but public auditors see a huge amount of evidence for how things are working in organisations, and that is too important a source not to use for regular improvement, as well as for—the phrase is, bayoneting the wounded when something has gone wrong. That is an inevitable part of it, but that should not be its full value.
Q55 Caroline Flint: Do you think there is a role for the NAO to do some more activities inside the House of Commons to help parliamentarians to understand? We get sent copies of reports on audits of bodies in our constituencies, but sometimes it is hard to get to the bottom of them. Is there a role for the NAO to do more of that sort of workshop work with MPs?
Mr Davies: Yes, there is. It is one of the three priorities in the new strategy already, so it would not be something that I would have to bring in that was different, but clearly I would be bringing in some fresh ideas. I would be very open to discussing with the Committee your experiences and your views on how that could be better done.
Q56 Anne-Marie Trevelyan: One of the challenges that I find, as a chartered accountant and someone who is interested in money, is that there are very few colleagues for whom that is their background. They might have a business background, although even then there are not that many. The challenge of helping them to understand not only the value-for-money question but the management of public money is a huge gap, and we fail to make best use of the power and influence that we have. The challenge will be how you think you might persuade lawyers, who are not that bothered about money in that sense, and whose challenge is to look at the legislative aspect of the role we play here—[Interruption.] I know you’re a lawyer—[Interruption.]
Chair: Let us keep the questions relevant.
Anne-Marie Trevelyan: It is a real challenge. This Committee is the only Committee that looks at money. We are not allowed to talk about money in the Chamber. It is a slightly difficult area to help parliamentarians to push forward on and actually get the best out of. The challenge is how you might empower us to do that.
Mr Davies: I completely agree with that. Of the public bodies that I have been working with, which have been managing big reductions in funding over the last few years, the most successful ones are the ones who have said, “Let’s stop thinking about the next 3% or 5% cut. Let’s say that we have £1.5 billion to spend next year on our objectives. How are we going to use that money to most efficiently drive the outcomes we want to see?” That has been a much more fruitful way to look at it than a year-on-year salami-slicing approach. That does not mean that it suddenly becomes easy—far from it—but it is the way that a successful business would think about its resources as well. Bringing some of that thinking into the equation would be really valuable, I think.
Q57 Anne-Marie Trevelyan: One of the roles of the C&AG is to bring that quality of assurance to the wider audit community. How will you build up your reputation in that role and reach out to that wider audit community?
Mr Davies: Obviously, new to the job, I have a lot of people to meet, which I will be doing very actively. That includes people in Departments and parliamentarians. That is clearly a top priority for my initial phase. Then I want to keep that going as well—that is not just an introductory phase. I want to make sure that I am staying in touch with members of the Committee’s views on whether their needs are being met by the NAO. I will be putting a lot of effort into that.
Q58 Chair: May I ask a question that probably only Anne-Marie will understand the answer to? Can you give us a clue as to some of the technical reviews of accountancy practice that you have been involved in? If it is technical, Anne-Marie will translate for us afterwards.
Mr Davies: I will spare you too much of the detail. The big change this year is that the accounting standard for recognising income in the accounts for every organisation is changing. For a lot of public organisations it is having only a limited effect. Just as an illustration of how accounting standards can influence the real world, for the big teaching hospitals where I am auditing at the moment, a large part of their income comes from research and development, such as clinical trials run in their hospitals, for which they are paid, and so on. Those run over many years.
There is now a very different way of having to recognise the income from those clinical trials, which is having multimillion pound impacts on the balance sheets and the income and expenditure of those trusts. That is a simple example of a technical accounting change that is driving real-world impacts right now.
Q59 Chair: We have just, literally today, approved the Committee’s Whole of Government Accounts report. Do you see that as a useful vehicle to be able to deliver change?
Mr Davies: I think it has. It has been hard work getting to this point and a lot of people have put a lot of effort into having a meaningful set of Whole of Government Accounts. First of all, you need to get every part of the public sector accounting on the same basis, which has not been straightforward. Having put that effort in now, there is a good chance to make more use of the information in there.
Some of the headline points have already been noticed and discussed, such as fleshing out the liabilities of the public sector more clearly. The pension liability, both funded and unfunded, is a huge issue for the country for the future, as we know. Whole of Government Accounts makes that a lot easier to understand and quantify.
There are things such as NHS clinical negligence liabilities. Rather than be buried in Department of Health and Social Care accounts, those are now visible as an issue for the whole country. Intelligent use of the information out of there is going to be important for policy making.
Q60 Caroline Flint: When it comes to the NAO and its recruitment and retention practices, where is it doing well on diversity and where does it need to do better?
Mr Davies: I think the NAO itself would say that it has quite a way to go on all aspects of diversity. It is really encouraging that there are now two women on the leadership team at the NAO. That is just the start on gender diversity. It is very similar to professional organisations of all types on gender diversity: equal at entry level, equal at manager level, and then it quickly tails off, as the proportion of women drops off in director posts and on the leadership team.
That is an issue that we have been working very hard on in my firm for the past few years. There is no substitute, first of all, for top-level commitment to change on that and to living that in the way that you behave—being a role model to encourage talent wherever it is coming from. I have acted as a mentor for female candidates for partnership in my firm. That has been one of the most rewarding things in my time in the firm, seeing the success of some of those mentor arrangements.
Broadening out to other aspects of other diversity, there is much further to go on diversity by ethnic background, disability and sexual orientation. Obviously I would have to be there to understand the fabric and texture of that, but the commitment is obviously there.
There is work under way. It would be a big priority for me to energise that and to get to the point where it stopped being an issue. That is the point. We are so far away from having eliminated the gender pay gap to be able to say, hand on heart, that wherever you come from, as long as you have got the right talent, you are going to be able to progress in the organisation. That is where I want to get to.
Q61 Caroline Flint: Can you give me any practical ideas that you have taken up in your present job or company? I am particularly thinking about the pipeline. Let’s take non-white employees. What have you been involved in to encourage wider applications from that group of people?
Mr Davies: One innovation that we have used, which I will recommend to the NAO, is what we have called upward mentoring, which flips the normal mentoring arrangement around. A junior member of staff from one of our diverse background groups mentors a senior person in the firm. The idea is that the people who are making the decisions in the firm at the top have direct access to the experience of somebody who is making their way in the organisation at a junior level from an ethnic minority background, or of a disabled person joining the firm. That has had a tangible impact on the level of awareness and understanding of the senior leaders in the firm and does affect their responses to challenges and proposals that come up. That is one thing I would strongly recommend.
The other thing we have done is to overhaul our recruitment system so that it is now entirely a strengths-based recruitment system—that is the HR jargon. Rather than have a template of an ideal employee and test everybody against that, we look for the strengths that somebody is bringing to the table and if those are things that we can work with, and we can develop the weaker areas, then they get through the recruitment process. Previously, they were less likely to do that. That is having a big impact on social mobility for us.
Caroline Flint: So, basically, where there is a cultural bias that plays into the process—
Mr Davies: Exactly. By applying those kind of techniques, we are now in the top 20 firms in the country for social mobility. That has been a huge drive across the organisation.
The other big benefit of it is how engaging it is to your existing staff. We have a scheme where we bring in people from schools in disadvantaged communities and they spend a week with our teams and get some skills training as part of that. Our teams love that week. They have a great experience. We get a kind of engagement benefit for our existing staff from that as well as the social mobility benefit.
You can see that this is an area of passion for me, and I would be looking forward to understanding what the NAO already does in these areas and then building on it.
Chair: I am going to hand over to Chris Evans for some fairly quick-fire questions—quick questions and quick answers.
Q62 Chris Evans: I have two questions. You speak to anybody on this Committee who has entered public life, and the level of scrutiny and the intensity of the role is quite shocking, especially in the early days. You said earlier that you have not had a lobbying role before and I would assume you have not had an engagement in the political process. How do you feel about retaining political impartiality? How would you go about doing that? There are bound to be issues that you are going to be passionate about.
The second question is, how are you going to deal with that kind of spotlight, which you have not had to deal with in the past? How do you think you can ready yourself for that?
Mr Davies: I have audited political organisations my whole career, so I am very used to operating in a political environment. I think I can pretty confidently say that no council that I have audited—and I have audited councils of every political administration—has had cause to question political bias. I have issued difficult reports on councils of every colour, and I have issued positive reports on councils of every colour. I completely understand the difference between private views and private life and your professional role and your public role. That is something that I have found easy to maintain and I will continue to do that.
In terms of the spotlight, I guess today is a good test of that; you will form your own views. Because I believe in the importance of the job and my ability to make a contribution to it, I think that it goes with the territory, and I am not put off by the fact that that means appearing in the media when we issue Reports and being expected to be unchallengeable in my own conduct. I have a long track record which I think I can point to on that. So yes, I am aware of it and I am comfortable with it.
Q63 Chris Evans: Two final questions—I will roll them up together. Is there anything in your current or previous appointment that would give rise to a conflict of interest in the new role?
Your appointment will start on 1 June. What do you anticipate will be the last day in your current role?
Mr Davies: I don’t anticipate any conflicts. I think I have already answered the question about my role in the firm and how I will take no part in any contractual management of the firm in the future while I am at the NAO. There are no other conflicts to draw to your attention.
I have already resigned—maybe rashly—from my firm. My last day there will be the end of May, so I will be free to start on 1 June, when the post is required.
Q64 Chair: Will you expect to have a handover before that? Talk us through the dates.
Mr Davies: The NAO has already been very proactive on that. I have had good meetings with the NAO team who are leading the transition project, which they have had established for a while now. They have shared a transition plan, which I have had input into. My current firm is clearly happy for me to take part in the briefings and so on that will be necessary before I start. We have a good framework for that, not just internally in the NAO. We spoke earlier about meeting with members of the Committee, permanent secretaries, and other key people in Departments who I will need to build relationships with. That process will be under way very shortly.
The aim is that I start on day one already up to speed. Apart from anything else, the intense period of signing off the Government accounts for the current financial year still has to be done when I get there, so I need to be fully up to speed, and ready to do that efficiently, from the first day.
Q65 Chair: Do you think that you are going to be robust enough with permanent secretaries whose accounts you might have to qualify? If you feel that the accounts are not complete, will you have any hesitation in qualifying those accounts?
Mr Davies: Absolutely not. My professional responsibilities outweigh any of the other relationships I have in the job. That has always been the case as an auditor, and it will continue to be the case in this role.
Q66 Chair: Is there anything else that you want to tell us in this important hearing that we have not covered?
Mr Davies: No, thank you. Thanks for all your questions.
Chair: I think it has been an extremely useful session. I hope you have found it useful. No doubt we look forward to seeing each other in the future.
Mr Davies: Great. Thank you very much.