29 January 2020

National Audit Office Code of Conduct

Our vision is to help the nation spend wisely.

Our public audit perspective helps Parliament hold

government to account and improve public

services.

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Office please contact:

National Audit Office

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Tel: 020 7798 7400

Email: enquiries@nao.org.uk

Contents

Preface

1. Introduction

2. Observing our Values

3. Handling Data and Information

4. Political Activities

5. Conflicts of Interest

6. Gifts, Hospitality, Travel and Accommodation

7. Personal Conduct

4 National Audit Office Code of Conduct

Preface

The NAO must be able to demonstrate that it observes the highest standards of

corporate, professional, and personal conduct. At a time when the credibility and

independence of the wider audit sector has come under public scrutiny and criticism it

is crucial that the conduct of all who work for the NAO is above reproach.

The NAO has significant rights and responsibilities, including the following: our work is

concerned with pursuing high standards of probity and propriety in the bodies we

audit; we have rights of access to information and to the employees of public bodies;

we have a unique role to uphold and promote accountability in public service; and we

have a high public profile. These rights and responsibilities place us under a particular

obligation to maintain high standards. It is equally important that we work with each

other in a way that demonstrates mutual respect and values diversity. This ensures a

professional and supportive working environment for us all.

We also subscribe to the professional and ethical standards set by the UK Financial

Reporting Council which reflect ethical standards set by the International Federation of

Accountants and INTOSAI. Our people are subject to the codes of ethics of their

respective professional institutes.

This Code of Conduct reinforces the core values and standards that underpin the

NAO's work, and provides a reference point for decisions and courses of action in

carrying out our statutory and professional responsibilities. All of us who serve

Parliament as non-executives or employees of the NAO have a duty to conduct

ourselves in line with this Code at whatever level we operate, and agree to be bound

by its terms. In issuing the Code, therefore, I confirm that I am personally committed to

adhere to each of the principles, standards, and values contained within it, and to

comply in full with its provisions.

GARETH DAVIES

Comptroller and Auditor General

29 January 2020

National Audit Office Code of Conduct 5

1. Introduction

Annual and within-year returns

1.1 Whilst a Code of Conduct return is required annually, a new Code of Conduct

return should be made at any time within-year if personal circumstances change or

when the NAO should be made aware of any conduct-related issues.

Values and standards 1.2. Given the NAO’s role in providing assurance and advice to Parliament on the way

government departments and public bodies use and account for taxpayers’ money,

the highest standards of corporate and personal conduct are essential. Public service

values and professional standards must, therefore, be at the heart of the way we

conduct our business.

1.3 Our Corporate Values - Independent, Authoritative, Collaborative, and Fair -

underpin the work of the NAO and must be applied consistently if we are to retain the

confidence of Parliament, audited bodies, and the wider public. Everything done by

those who serve Parliament as non-executives or employees of the NAO must be able

to stand the test of Parliamentary scrutiny, public judgements on propriety, and

professional codes of conduct.

Scope and application

1.4 The Code of Conduct sets out the NAO's framework of professional and ethical

behaviour, and is supported by detailed policy statements available on the NAO

intranet. Detailed links to the relevant extracts of these documents are provided where

appropriate. Non-executives and those working for or on behalf of the NAO are

required to read the Code and supporting policy statements, and confirm annually that

they have complied with all its provisions.

1.5 The Code applies to all non-executives and employees, including those on fixed-

term contracts, and inward secondees. Those working for us temporarily through an

employment agency or Framework Partner, and those contracted to work for or

provide services to the NAO, must abide by the terms of the Code but they are not

required to submit a Code of Conduct return as there are other contractual and

binding processes in place to provide assurance. Compliance with the Code is a

prerequisite for undertaking any audit work. Code of Conduct returns will be used in

the process for reviewing and approving security clearances, and adverse entries (e.g.

arrests or convictions) may result in an individual’s security clearance being refused or

withdrawn.

1.6 All those who are members or students of professional bodies must uphold the

codes of ethics of those bodies in addition to their obligations under this Code.

Individuals who are professionally qualified should ensure that they remain competent

6 National Audit Office Code of Conduct

to undertake assignments, that their knowledge remains up-to-date in accordance with

the requirements of their professional body, and that they are fit and proper persons to

undertake their work.

1.7 The Code defines responsibilities but cannot address all the possible issues which

people may face. This places a responsibility on individuals to apply common sense

and careful judgement. There may be occasions when further guidance or clarification

on the Code is required if, for example:

• there are doubts about the application or scope of its provisions;

• there are apparent conflicts with the requirements of professional bodies;

• individuals believe that they are being required to act in a way which is illegal,

improper, unethical or in breach of constitutional convention (which may involve

possible maladministration), or which involves any other activity covered by the

Public Interest Disclosure Act 1998; or

• if individuals face a fundamental issue of conscience.

1.8 In such circumstances, they should discuss the matter with any of their line

manager, Cluster People Director, Director of Human Resources, Director of Financial

Audit Practice and Quality, or Director of Value for Money Practice and Quality. Non-

executives should raise any concerns with the Chairman of the NAO Board, Lord

Bichard, and should refer any potential conflicts with the provisions of the Code to the

Chairman to discuss with the C&AG.

1.9 The Public Interest Disclosure Act 1998 provides protection from detriment to

current and former NAO employees who, in accordance with the requirements of the

Act, raise concerns about wrongdoing at the NAO. Such disclosures need to be made

in line with the NAO's Internal Whistleblowing Policy set out here.

1.10 This Code may be altered, from time to time, to take account of changed

circumstances or new situations. Any amendments will be approved by the Leadership

Team and the NAO Board. If there are any significant changes outside the normal

annual completion process then staff may be asked to make a further return.

1.11 Failure to operate within the terms of the Code may be treated as a disciplinary

matter under the managing misconduct procedures set out in Chapter 19 of the HR

Manual.

1.12 The data from Code of Conduct return(s) will only be reviewed, as necessary, by

relevant NAO colleagues, including Human Resources and the Practice and Quality

teams. All data will be handled in a way which is consistent with our fair processing

notice. The NAO will retain the data from the returns for six years, consistent with our

retention schedule.

National Audit Office Code of Conduct 7

2. Observing our Values

2.1 In undertaking their work, individuals must adhere to our Corporate Values.

Anyone undertaking audit work must also be aware that work should be carried out in

accordance with the UK Financial Reporting Council’s International Standard on

Quality Control 1, FRC Ethical Standard 2016, FRC Ethical Standard 2019, FRC

Auditing Standards and VFM and Non-Financial Audit standards as appropriate to the

nature of the work.

It is each individual's responsibility to ensure that they are sufficiently familiar with the

relevant standards and have complied with them. Anyone concerned about

compliance issues, whether or not they are on the project or engagement team,

should consult the Director of Human Resources, the Director of Financial Audit

Practice and Quality, or the Director of Value for Money Practice and Quality, if they

require additional guidance.

2.2 Examples of behaviours consistent with our values are set out in the Framework of

Behaviours.

Independent

2.3 The C&AG's independence, and that of anyone working for or on behalf of the

NAO, is fundamental to the credibility of all the Office’s work. We must be objective

and impartial in all that we do. Opinions and reports should be influenced only by the

evidence obtained and assembled in accordance with the NAO's professional

standards. Individuals should not prejudge an issue and should not place themselves

under any financial or other obligation to outside individuals or organisations that

might influence them in the performance of their duties.

2.4 Individuals must be independent of audited bodies or other interested groups, and

be independently minded and objective in dealing with the issues and topics under

review. Individuals must not only be independent, but must be seen to be so. Where

people are seconded to or from organisations which are audited by the NAO, care

should be taken over the allocation or routing of work so as to avoid potential conflicts

and, where necessary, safeguards (identified by our Practice and Quality team) should

be put in place. Conflicts of interest are dealt with in detail under section 5 of the

Code.

Authoritative

2.5 The NAO's reputation rests on delivering work of the highest quality, drawing

comprehensively on robust evidence and practice. Individuals are, therefore, expected

to demonstrate professional competence and expertise in all that they do and so have

8 National Audit Office Code of Conduct

a responsibility to maintain and develop themselves, through programmes of

continuing professional and personal development. Those working on Audit must keep

up-to-date with relevant professional guidance, including that issued by the Directors

of Financial Audit and Value for Money Practice and Quality to whom the C&AG, as

Ethics Partner, has delegated responsibility to act as the NAO's Ethics Function - to be

a source of confidential advice for all NAO colleagues.

2.6 Individuals should also maintain the highest standards of personal conduct in

performing their work and in their relationships with employees of audited bodies. In

addition to complying with the law, they should make decisions solely in terms of the

public interest, guided by the highest professional and ethical standards, and not to

gain financial or other material benefits for themselves, their family, or their friends.

Collaborative

2.7 Everyone should work collaboratively with colleagues and stakeholders and be

pro-active in developing, applying and sharing knowledge to achieve our corporate

goals.

2.8 Individuals should adopt a constructive and positive approach to their work and

working relationships. Everyone should act for the benefit of the NAO as a whole -

looking beyond our own immediate deadlines and priorities to ensure our Office

priorities are delivered. This includes working collaboratively to ensure that we make

optimum use of the people and other resources available to the NAO.

Fair

2.9 Everyone is responsible for ensuring that their work is fair and just at all times.

Work should be planned and carried out, and our findings reported, in an accurate, fair

and balanced way. Individuals should also be balanced and fair in exercising their

powers of access to external bodies and private sector firms arising, for example, from

inspection audits or the examination of contracted out work.

2.10 We should all treat other people in a fair and just way at all times. This applies to

our treatment of NAO colleagues, employees of the bodies we audit, and anyone else

with whom we come into contact during the course of our work or while representing

the NAO.

2.11 All individuals should apply NAO policies and processes consistently and in a

timely way. They should be ready to provide timely, honest and objective feedback

and appraisal ratings to support the accountability and development of their

colleagues and the performance of our business.

2.12 All individuals have a responsibility for creating and maintaining an inclusive

working environment in which individuals' differences are respected, and where their

diverse qualities, experiences and contributions are valued.

National Audit Office Code of Conduct 9

3. Handling Data and Information

3.1 The NAO has access to substantial amounts of data and information to enable us

to perform our statutory audit tasks and to support the effective internal administration

of our business. We have a duty to respect this privileged access and to ensure that

the data and information entrusted to us is safeguarded properly. Specific statutory

responsibilities and security considerations apply, and everyone must be familiar with

these and apply them.

3.2 Everyone should make themselves aware, through available guidance, of their

obligations under legislation governing official secrets, data protection, computer

misuse, anti-money laundering, copyright protection, the retention of public records,

and the common law. They are responsible for the security of the information that they

use or manage, and must ensure that appropriate measures are taken to preserve its

safe keeping, integrity and availability for use.

Personal and other sensitive data

3.3 The General Data Protection Regulation and the Data Protection Act 2018 impose

a number of statutory obligations on organisations in respect of how they obtain,

process, protect and destroy personal data. The implications for the NAO are set out

in the NAO's Guidance and the more detailed documents related to it.

3.4 These documents include our Privacy Notice and our Fair Processing Notice and

provide guidance on managing records for audit purposes, data protection impact

assessments, subject access requests, and reporting data breaches. The Guidance

applies equally to data held by us and to data processed by contractors on our behalf.

3.5 Everyone must make themselves familiar and comply with NAO policies related to

the security of personal and other sensitive data and take all reasonable steps to

ensure the Office operates the highest standards of compliance with the Data

Protection Act in relation to requesting, accessing, storing, transferring and destroying

personal and other sensitive data, including that held in both electronic and physical

formats.

Official Secrets Act

3.6 The Official Secrets Acts 1911 and 1989 prohibit non-executives, employees, NAO

contractors, and those employed through an agency, from disclosing to any

unauthorised person, either orally or in writing, certain categories of information

(security and intelligence, defence, international relations, foreign confidences, crime

and special investigation powers) acquired through their official duties, unless they

have received official permission. The Acts apply during and after a person is

employed at the NAO or carries out work on behalf of the NAO.

10 National Audit Office Code of Conduct

Information Security and Breaches

3.7 Everyone must make themselves familiar with NAO security policies as set out on

Merlin and abide by them. All losses of NAO IT assets (e.g. laptops, smartphones)

must be reported immediately to Digital Services (telephone 020 7798 7272 or

NAO.servicedesk@Littlefish.co.uk).

3.8 Where a member of staff has any concerns that there has been an incident where

data has been or may have been lost or compromised, or any concerns that the

NAO’s Information Security policies have not been followed, they should immediately

report their concerns to their line manager and inform Digital Services (telephone 020

7798 7272 or NAO.servicedesk@Littlefish.co.uk) who will follow the NAO's data

breach policy, including contacting the NAO's Interim Data Protection Officer John

McCann

Unauthorised disclosures

3.9 The C&AG shall be the final arbiter about what shall, or shall not, be disclosed

about the work of the NAO. If individuals become aware of the unauthorised

disclosure of information damaging to the interests of the NAO, including the leaking

of draft reports, they should report these matters to the Executive Leader responsible

for Corporate Governance - Daniel Lambauer. These matters may be treated as

misconduct.

Freedom of Information

3.10 The NAO must comply with the requirements of the Freedom of Information Act

2000. While the Act's starting point is that information held should be released, there

are a number of exemptions available to safeguard against inappropriate or damaging

disclosures of information - for example the section 33 "public audit" exemption. The

NAO's FOI team oversees all FOI requests and staff should notify the team in the

event of receiving a request, consulting with others as required e.g. Private Office

and/or Daniel Lambauer as the Executive Leader responsible for corporate

governance. Everyone should familiarise themselves with the Freedom of Information

Handling Requests, on Merlin.

Anti-money laundering reporting

3.11 Anti-money laundering legislation places statutory obligations on the NAO and all

members of staff. Everyone needs to be familiar with the NAO's anti-money

laundering procedures and their personal responsibility to report to the NAO's Money

Laundering Reporting Officer if they acquire knowledge or reasonable suspicion of

money laundering during the course of their work. Staff should read the NAO's anti-

money laundering guidance which includes a link to a mandatory e-learning package

that staff should complete at least annually as appropriate.

National Audit Office Code of Conduct 11

4. Political Activities

4.1 The C&AG is an officer of the House of Commons and is independent of the

Executive. Given the status of the C&AG and the role of the NAO, it is essential that

the NAO is, and is seen to be, free from political bias. The work of the NAO impacts

on a wide range of national and local issues, which frequently attract attention in the

public and political arenas. Ill-considered or irresponsible comments or actions of a

political nature could cause irreparable damage to the credibility of the C&AG and the

NAO.

4.2 It is crucial, therefore, that individuals avoid any activity which might bring into

question the impartiality of the C&AG, the NAO, or its employees. The aim of these

rules is to allow NAO people the freedom to participate in public affairs, without

prejudicing the impartiality of the NAO; they are not intended to place restrictions on

privately held beliefs and opinions.

4.3 In order to protect the impartiality and independence of the NAO, both perceived

and real, it is necessary to restrict the extent to which people can participate in

national and local political activities. Full details of these restrictions are set out below.

Political activities, which may be subject to restriction, include the following:-

• Candidature for, or co-option to, local authorities or candidature for Parliament or

the European Parliament. Under the House of Commons Disqualification Act,

1975, as amended by Schedule 5, Part 2, paragraph 8 of the Budget

Responsibility and National Audit Act 2011, NAO employees cannot become

MPs;

• Holding roles in party political organisations which impinge wholly or mainly on

party politics in the field of local government, Parliament or the European

Parliament;

• Speaking in public on matters of local or national political controversy where the

impartiality of the comments made by the individual may be called into question;

• Expressing views on such matters in letters to the press, or in books, articles or

leaflets, or in any other media, including social media (see Guidance of use of

social media ), that is in the public domain; and

• Canvassing on behalf of candidates for local authorities, Parliament, or the

European Parliament, or on behalf of a political party.

Employees are permitted to undertake political activities as follows:-

• Those in the grade of Audit Manager/Band 1 and above may not engage in

12 National Audit Office Code of Conduct

national political activities of any nature. They may engage in local political

activities, but only with the express written permission of the Director of Human

Resources;

• Those below the grade of Audit Manager/Band 1 may be permitted to engage in

national and local political activities, but only with the express written permission

of the Director of Human Resources; and

• Those who are permitted to take part in politics must observe the Official Secrets

Acts 1911 and 1989, and are barred from political activity whilst on duty or on

official premises.

4.4 In seeking written permission from the Director of Human Resources, individuals

should give precise details of the intended activities and the period over which the

activity is likely to take place. This information will assist the Director of Human

Resources in determining whether the impartiality of the NAO might be compromised.

4.5 If any conflict of interest or potential damage to the interest of the NAO arises from

involvement in approved political activities, they will be required to withdraw their

participation. Failure to do so may result in the Director of Human Resources applying

formal disciplinary procedures or other appropriate action.

4.6 When political activity has been sanctioned, this should not take place in official

work-time. Nor should individuals make any reference to their employment by the

National Audit Office when speaking in public, except in situations where they are

required by legislation to declare an interest.

4.7 The C&AG and the Chair of the NAO Board will discuss and agree any final

decision regarding what does or does not constitute a political activity and what is,

therefore, subject to restriction under this Code of Conduct. If staff have concerns

regarding any activity or other political involvement they should report these matters in

the first instance to the Executive Leader responsible for Corporate Governance -

Daniel Lambauer. If any non-executive member of the Board has such concerns these

should be discussed with the Chair of the Board, Lord Bichard, who will then discuss

the matter with the C&AG.

4.8 These measures are not intended to discourage people from participating in such

public service activities as school governors, approved Non-Executive Directors,

Trade Union work, or in volunteering more generally. The key consideration in these

areas, as in all other activities, is that people should avoid any possibility that their

activities might embarrass the C&AG or call into question the impartiality of the NAO.

If individuals have any doubts, they should consult the Director of Human Resources.

National Audit Office Code of Conduct 13

5. Conflicts of Interest

General

5.1 Those working in the public sector will from time to time find that private matters

will impinge on their public duties. It is not appropriate for an individual to use his/her

public position or resources to deal with private matters or to pursue private interests.

The Office, corporately, and all those in a position to influence the conduct or outcome

of our work and business activities must be, and must be seen to be, independent,

objective, and free from conflicts of interest. The definition of all those in a position to

influence the conduct or outcome of our work is wider than just the members of the

engagement team, and individuals should ensure they understand where this

definition applies to them (see footnote 1 below). Individuals should declare any

private interests relating to their public duties and the wider work and activities of the

Office, taking steps to resolve any conflicts arising, in a way which protects the public

interest.

5.2 The FRC's Revised Ethical Standard 2016 ("the Ethical Standard") applies to our

financial audit work, and NAO policy is to apply this standard, where it is meaningful

1 For an audit engagement and for any other public interest assurance engagement other than an

investment circular reporting engagement:

(a)(i) Each member of the engagement team with responsibilities for managing the performance of the

engagement (including the person(s) responsible for ‘day to day’ direction and supervision on site at the

entity, and all more senior members of the engagement team above them) and persons who provide

engagement quality control review for the engagement;

(a)(ii) All other members of the engagement team;

(b) Any other natural person whose services are placed at the disposal or under the control of the firm and

who is involved in the audit or other public interest assurance engagement, including for example any

individual who is, or whose services are provided by, any external expert of the firm;

(c) Any person in the firm with supervisory, management or other oversight responsibility over:

(i) The engagement or the engagement partner or other key partners involved in the engagement; or

(ii) The conduct of audit or other public interest assurance engagements performed by the firm.

This includes each partner, principal, shareholder and other person in the firm:

a. At each level of firm management, supervision or oversight relating to the audit or other public interest

assurance engagement, up to and including individuals who have ultimate responsibility for the

management or governance of the firm5; or

b. Who is in a position to prepare or approve the performance appraisal and/or remuneration of any

individual defined in (a)(i), (b), (c)(i) and (c)(ii); and

c. Any other person within the firm or a network firm who, due to any other circumstances, is in a position to

influence the conduct or outcome of the audit or other public interest assurance engagement.

14 National Audit Office Code of Conduct

and appropriate to do so, to all our assurance work. Anyone concerned about

compliance issues should consult any of their line manager, Director of Human

Resources, the Cluster People Director, the Director of Financial Audit Practice and

Quality, or the Director of Value for Money Practice and Quality, if they require

additional guidance.

5.3 In the course of their work it is essential that people avoid any suggestion of

nepotism or favouritism in their dealings with colleagues, clients or other contacts.

This applies to the whole range of work activities, but the key areas include

recruitment, promotion, tendering, contracting, outsourcing, and performance

management. In carrying out public business, including making public appointments,

awarding contracts, or recommending individuals for promotion, rewards and benefits,

choices should be based purely on merit and within our policy framework.

5.4 Conflicts or potential conflicts of interest, whether perceived or actual can, and do,

arise in our work. The main areas where conflicts of interest may more commonly

arise in relation to our work include those set out below. The wide range of specific

circumstances which may give rise to a conflict of interest mean that this Code cannot

address all possible situations in which individuals may face an actual or potential

conflict of interest. This places a responsibility on individuals to apply common sense

and careful judgement and to consult the Director of Human Resources, the Cluster

People Director, the Director of Financial Audit Practice and Quality, or the Director of

Value for Money Practice and Quality if they require additional guidance or

clarification.

5.5 Colleagues must comply with the specific and detailed ethics, risk assessment,

and disclosure procedures required under the NAO's HR policies and the Office's

audit methodology. Full and timely disclosure to the appropriate individual, of any

actual or potential conflict, enables the HR and the Ethics Function to assess the

matter and take appropriate and timely action to avoid or manage the risk.

Personal connections to audited entities and their employees

5.6 Individuals must consider whether they have any personal relationships or

interests (e.g. business or financial interests) with an entity, or its affiliates2, audited by

2 The definition of an affiliate of an audited entity can be summarised as "any entity which has direct control

over or can significantly influence the audited entity; or, any entity over which the audited entity has direct

control or significant influence. Entities under common control are also affiliated to the audited entity."

For investment circular reporting engagement, an affiliate is any undertaking which is connected to another

by means of common ownership, control or management.

For a public interest assurance engagement other than an investment circular reporting engagement, an

affiliate is an entity that has any of the following relationships with an entity relevant to the engagement:

(a)An entity that has direct or indirect control over the entity relevant to the engagement if the entity relevant

to the engagement is material, quantitatively or qualitatively, to such entity;

(b)An entity with a direct financial interest in the entity relevant to the engagement if that entity has

significant influence over the entity relevant to the engagement and the interest in the entity relevant to the

National Audit Office Code of Conduct 15

the NAO, or with persons relevant to our work and business activities, that may pose a

threat, perceived or actual, to the independence of the Office. For example, individuals

may become aware that a person closely associated3 with them or a close family

member4 is employed by, or has a business or financial interest in an entity relevant to

our work. Colleagues must disclose any such relationships in their annual and in-year

Code of Conduct returns, or as soon as they become aware of them.

5.7 Individuals have an on-going responsibility to complete an in-year Code of

Conduct return and to inform their line manager, Cluster People Director, the Director

of HR, the Director of Financial Audit Practice and Quality, or the Director of Value for

Money Practice and Quality where their personal connections or interests could give

rise to the risk (perceived or actual) of a conflict of interest. This could, for example, be

where the individual:-

• is asked to work on a particular assignment which could give rise to the risk;

• is performing a role, or been asked to perform a role, such as being a line

manager or mentor to a person leading, managing or directing the audit of an

audited entity or its affiliates; or

• has provided or been asked to provide advice to a team auditing the entity or its

affiliates; or

• has persons closely associated to them or close family members, or others with

whom they have a close personal relationship, that have any relationships with

engagement is material, quantitatively or qualitatively, to such entity;

(c)An entity over which the entity relevant to the engagement has direct or indirect control;

(d)An entity in which the entity relevant to the engagement, or an affiliate of the entity relevant to the

engagement under (c) above, has a direct financial interest that gives it significant influence over such entity

and the interest is material, quantitatively or qualitatively, to the entity relevant to the engagement and its

affiliate in (c); and

(e)An entity which is under common control with the entity relevant to the engagement (a “sister entity”) if

the sister entity and the entity relevant to the engagement are both material, quantitatively or qualitatively, to

the entity that controls both the entity relevant to the engagement and sister entity.

3 "person closely associated" is: (a) A spouse, or a partner considered to be equivalent to a spouse in

accordance with national law; (b) A dependent child, in accordance with national law; (c) A relative who (at

any time in the period from the start of the financial period in respect of which the engagement is being

conducted to the date on which the engagement report is signed) has lived in the same household as the

person with whom they are associated for at least one year; (d) A firm whose managerial responsibilities are

discharged by, or which is directly or indirectly controlled by, the firm / person with whom they are

associated, or by any person mentioned in (a), (b) or (c) or in which the firm or any such person has a

beneficial or other substantially equivalent economic interest; (e) A trust whose managerial responsibilities

are discharged by, or which is directly or indirectly controlled by, or which is set up for the benefit of, or

whose economic interests are substantially equivalent to, the firm / person with whom they are associated

or any person mentioned in (a), (b) or (c).

4 "a close family member" - a non-dependent parent, child or sibling.

16 National Audit Office Code of Conduct

bodies they audit or those bodies' affiliates, or with employees of bodies they

audit or those bodies' affiliates; or

• considers that there is any other circumstance that is relevant.

5.8 Depending on the nature of the actual or perceived conflicts, HR and the Ethics

Function (PQ team) will take appropriate action to ensure the independence of the

Office is not compromised, or perceived to be compromised.

Private occupations

5.9 Individuals must not carry out any work which might conflict with the interests of

the NAO or be inconsistent with their position.

5.10 Specifically, people may not, subject to certain exceptions (to be agreed by the

Director of Human Resources) take part in any outside activity which would require

their attendance during their normal office hours. The exceptions might include, for

example, service as a Justice of the Peace, school governors, or approved Non-

Executive Directors. Further guidance is set out below, but if anyone is in any doubt

they should seek approval from the Director, Human Resources, in advance of

beginning the work.

5.11 Individuals should consult the Director of Human Resources if they are offered

payment for work which relates to their official duties, or is carried out in official time.

Any fee or payment for private work must be surrendered to the NAO if the

preparation or execution of the work is undertaken in official time, as should any fees

for speeches or lectures given in an official capacity. Any travel, accommodation or

meals provided in connection with such events must be reasonable in the

circumstances.

5.12 Employees are permitted to write or contribute to books or articles that are not

related to the work of the NAO. Their content must not call into question the integrity,

objectivity or impartiality of the NAO or the C&AG. Such activities should be conducted

entirely in the individual’s own time and should make no reference to their employment

by the NAO. Any fee or payment for such work can be retained by the individual, but

must be notified in writing to the Director of Human Resources.

5.13 Individuals who are considering writing about the work of the NAO, or about

working for the NAO, should contact the Director of External Communications &

Marketing or the Head of External Communications, to discuss what practical advice

and support can be provided, if needed. Individuals are permitted to write about the

work of the NAO, or working for the NAO, in print or on-line provided that this is

discussed and agreed as follows:

• For Director grades and below, they should first agree with their Line Manager

and then with the Head of External Communications.

• For Executive Leaders, they should first discuss and agree with the C&AG.

If approved, this discussion should include whether any fee payable for the work may

be retained by the individual. The payment can normally be retained as long as it can

be proved that the work has not been undertaken during official hours.

National Audit Office Code of Conduct 17

Business relationships

5.14 Where individuals, persons closely associated with them, or others with whom

they have a close personal relationship, have business relations - including making a

loan or guaranteeing borrowing - with an audited entity or one of its affiliates these

must be declared, except where they:

a) Involve the purchase of goods and services in the ordinary course of business and

on an arm’s length basis and which are not material to either party; or

b) Are clearly inconsequential to either party.

5.15 The Director of HR will consult with the Directors of PQ and the relevant audit/line

Director(s) to determine whether the business relations will impact on the individual's

independence. Courses of action may include terminating the business relationship or

implementing suitable safeguarding arrangements, as appropriate.

5.16 No restriction is placed on paid part-time employment or other paid activities

outside official hours provided that official work does not suffer and if there is no risk of

giving rise to a perceived or actual conflict of interest with the Office's work or

business activities, or of it bringing discredit upon the Office. However, anyone

proposing to undertake outside employment should obtain the consent of the Director

of Human Resources if:

a) It is employment or activity as an auditor, accountant or book-keeper;

b) It involves the use of official information acquired in the course of official duties;

c) It is employment, or activity, for anybody to which the NAO may award business or

contracts; or

d) The working hours of the proposed employment, when aggregated with the working

hours of NAO employment, are likely to exceed 48 hours per week.

5.17 Individuals are personally responsible for any payments due to HMRC as a result

of private occupations.

Shareholdings and other financial interests

5.18 Individuals may hold private investments. However, neither they, nor persons

closely associated with them, should hold or deal in shares or other financial interests,

in any audited entity or its affiliates or where they are otherwise in a position with the

NAO, or perceived to be in a position, to gain privileged information or be in a position

to influence the outcome of an engagement which might affect the value of such

shares or other financial interests. If individuals (or persons closely associated to

them) hold shares, or other financial interests in an audited entity or its affiliates before

joining the NAO, or unintentionally gain a financial interest in an audited entity or its

affiliates whilst they are at the NAO, which might raise a question of possible conflict

with the interests or independence of the C&AG or NAO, they should declare the

holding immediately to the relevant audit/line Director. The relevant audit/line Director

will discuss the matter in confidence with the Director of HR and Directors of Financial

Audit Practice and Quality and Value for Money Practice and Quality.

Some examples of where conflicts exist are when an individual:

18 National Audit Office Code of Conduct

• Knows of a large government contract to be placed with a public company;

• Has privileged information about a future privatisation or any form of public-

private partnership;

• Knows of planned actions which might affect a company's prospects; or

• Has shares or other financial interests (or persons closely associated with them

has shares or financial interests) in a privatised company and the individual

audits that company or the relevant Regulator.

5.19 The audit/line Director, in consultation with the Director of HR and Directors of

PQ will decide whether the individual's (or a closely associated person's) financial

interest in an audited entity or its affiliates might exert undue influence on his/her

judgement, or be a risk to the perceived independence of the NAO and, in conjunction

with the Director of Human Resources and Directors of PQ, will determine the

appropriate course of action to manage the risk, which may include the individual

divesting himself or herself of the interest. A record of this decision must be kept by

Human Resources.

5.20 Declarations should be made for a financial interest in an audited entity or its

affiliates which are held in Trust. If you are unsure whether this is applicable, you

should consult the PQ team as the NAO's Ethics Function. This may be done in

confidence with the Director of Financial Audit Practice and Quality and the Director of

Value for Money Practice and Quality.

5.21 You are not required to declare, for example, a financial interest such as a loan

or home mortgage from an audited entity or its affiliates where those entities are

banks or similar institutions and the loan is made in the normal course of business at

arms length5. If, however, the loan becomes significantly in arrears, this poses an

intimidation threat that compromises independence. If this circumstance applies to an

individual in a position to influence the conduct or outcome of the relevant audit, the

individual should report the matter to the relevant audit/line Director and to the Director

of HR and the Ethics Function in PQ, as appropriate, and cease to have any

involvement in the engagement.

5.22 Individuals are reminded of their legal responsibilities under the Criminal Justice

Act 1993, which states that "An individual who has information as an insider is guilty of

insider dealing if he/she deals in securities that are price-affected securities in relation

to the information”. Further, the Financial Services Act 2012 provides that the misuse

of inside information and market manipulation are criminal offences. The misuse of

any information that may affect the value of shares or dealings in shares at certain

times may, therefore, be a criminal act.

5 ES 2.26

National Audit Office Code of Conduct 19

Relationships with contractors

5.23 Contracts must be awarded on merit in fair competition against other potential

suppliers (see Finance Manual). Individuals who have any personal or domestic

relationship with potential suppliers must report the fact to the Director of Human

Resources, and must not have any involvement in the letting of contracts for which

such suppliers might bid.

5.24 Individuals must declare any investment interests they hold with suppliers or

consultants with whom they might deal. Where conflict might arise the individual

should dispose of his/her investment or ensure that he/she plays no part in awarding

the contract or selecting consultants or suppliers.

5.25 When dealing with suppliers and consultants people should be aware of the

implications of the Bribery Act 2010 as set out in PC 01/11.

Previous employments

5.26 Where an individual who was a director or in a position to exert significant

influence over an audited entity joins the NAO, they must not act or be in a position

(perceived or otherwise) to be able to influence the conduct or outcome of the audit of

the relevant entity for a period of at least two years. The Director of Human Resources

will notify the Directors of Financial Audit Practice and Quality or Value for Money

Practice and Quality if this situation arises.

Future Employment and Secondments

5.27 Colleagues in grades at and above Audit Manager/Band 1, and colleagues

responsible for managing projects and engagements, are required to notify

immediately their line manager, their Cluster People Director, Director of Human

Resources, and the Director of Financial Audit Practice and Quality or Director of

Value for Money Practice and Quality - of any potential employment with an entity

audited by the NAO. All other grades/roles are required to notify the persons stated

above where future employment with an audit client is probable.

5.28 If any colleague is considering applying for a post at an audited body they are

currently performing work on, the line manager, Cluster People Director, Director of

Human Resources, Director of Financial Audit Practice and Quality, and Director of

Value for Money Practice and Quality must be notified at the earliest point, and this

should be prior to applying for the position. This will be treated in confidence. The

individual should keep these persons updated on the progress of their application,

including whether it results in acceptance of a job offer.

5.29 Where individuals have given such notice our Practice and Quality team, acting

as Ethics Function, will be involved in identifying action to negate or mitigate any

potential conflict of interest. This may involve removing colleagues from the audit team

and reviewing any work performed by the individual in the current and, where

appropriate, most recent audit.

20 National Audit Office Code of Conduct

5.30 All outward secondment opportunities which may lead to a potential conflict of

interest or impact on an individual's ability to carry out their audit duties on their return

to the NAO will be approved by the Director of Financial Audit Practice and Quality

and Director of Value for Money Practice and Quality. Any restrictions on work

undertaken either while on secondment or on return to the NAO will be agreed and

clearly documented between PQ and HR before a placement is agreed.

National Audit Office Code of Conduct 21

6. Gifts, Hospitality, Travel and Accommodation

General

6.1 The NAO engages with a wide variety of clients, suppliers and partner bodies in

the normal course of its business, and individuals may be faced with occasions where

gifts or hospitality are offered or provided. Offers of gifts, hospitality, entertainment or

services should not be accepted where they might place, or could be seen to place,

the recipient under an obligation to the donor, or compromise their personal or

professional judgement or impartiality.

6.2 The Bribery Act 2010 aims to promote anti-bribery practices among businesses.

The Act defines bribery as: offering (promising) or receiving (requesting) a bribe in

return for breach of expectation or improper performance, and sets out four criminal

offences, namely: bribing another person; being bribed; bribery of a foreign public

official; and failure of a commercial organisation to prevent (a bribe). The legislation

sets the maximum penalty for bribery by individuals at ten years’ imprisonment, and

further guidance is provided in PC 01/11.

Gifts

6.3 People may accept gifts in the form of: business items of token value (for example,

placemats or calendars); items provided at conferences or related events (for

example, pens and wallets), and occasional tokens of thanks/appreciation (for

example, inexpensive chocolates or a single bottle of wine). These items need not be

recorded.

6.4 All other gifts received by individuals, or by their immediate family members, may

not be accepted, but their receipt must be recorded in the NAO’s Gifts & Hospitality

Register (using the form available from the Finance Manual on Merlin) and either

returned to the donor organisation or, if return is not practical or might cause offence,

surrendered to the Director of Human Resources who will arrange for the item to be

donated for charitable purposes. Where such gifts have been offered but declined this

should also be recorded in the NAO’s gifts and hospitality register on the standard

form located in section L1 of the Finance Manual gifts and hospitality register

Hospitality

6.5 Individuals are permitted to accept hospitality which is provided in the normal

course of business and could reasonably be reciprocated by the NAO. This includes

working lunches or dinners, providing these cover a business agenda. The standard of

hospitality should be no more than that which might reasonably be offered by the NAO

22 National Audit Office Code of Conduct

in return. All working lunches or dinners provided off client premises (e.g. in a

restaurant) must be recorded on the gifts and hospitality register.

6.6 A key principle of accepting such hospitality is that there should be a balance of

hospitality received and hospitality given. Individuals should, therefore, be careful not

to accept hospitality where an appropriate balance is not maintained. Staff must avoid

any risk of there being a perception of hospitality received in exchange for NAO

business or favour.

6.7 People may also accept invitations to events where they are representing the NAO

in an official or professional capacity. This includes invitations to business dinners and

events such as awards ceremonies where the NAO has been nominated for an award,

is judging an award, or is acting as a sponsor. In considering whether an invitation

should be accepted, account should be taken of the level of attendance of NAO

colleagues to ensure that their attendance is reasonable in the circumstances. Events

which include some form of entertainment can be accepted providing the

entertainment forms an intrinsic part of the event. Attendance at all such dinners,

ceremonies or events must be recorded on the gifts and hospitality register.

6.8 In the course of their employment with the NAO, individuals must not accept any

invitation to any event or offer of corporate hospitality where attendance would

normally be subject to payment of a fee. This includes, for example, invitations to art

exhibitions, sporting or cultural events, charity dinners, and hotel accommodation for

leisure purposes. This restriction does not extend to their employment with other

organisations unless acceptance of such hospitality could, by association, call into

question their ability to act objectively in their NAO role. One example could be

accepting hospitality from a supplier in connection with their other employment where

the same supplier is tendering for a contract with the NAO.

6.9 Where hospitality has been offered but declined this should also be recorded in

the NAO’s gifts and hospitality register on the standard form: gifts and hospitality

register

Travel and Accommodation

6.10 Individuals have a responsibility to ensure that any travel or accommodation for

business purposes is reasonable in the circumstances and would not expose the

individual or the NAO to public criticism. Full details of the rules relating to travel and

subsistence are contained in the Office’s Travel Guide which is available on Merlin.

Other than in specific defined circumstances, all travel and accommodation bookings

must be made through the Office’s travel management company.

6.11 Individuals and their line managers will be responsible for judging the travel and

accommodation appropriate to the particular business need, but should be mindful at

all times of the need to balance issues such as safety and security with economy. All

employees are expected to travel standard class. Any variation to this requires the

prior approval of the Director responsible for the project/ budget and must meet the

strict criteria set out in the NAO's Travel Guide. Standards of accommodation should

also be adequate for the purpose and appear reasonable to an informed external

commentator.

National Audit Office Code of Conduct 23

6.12 Any benefits earned through NAO business travel, such as air miles, must only

be used to reduce the costs of future business travel and must not be used for private

purposes.

6.13. Where individuals accept travel and accommodation arranged by their hosts (for

example international bodies) they should review the itinerary in advance to ensure

that the standards offered are compatible with NAO standards. Where the itinerary

indicates that the standard offered is significantly different to that appropriate under

NAO rules and there is a suitable alternative, individuals should consider declining the

offer and making their own arrangements.

6.14 Subject to considerations of practicability and security, the NAO places no

restrictions on the freedom of individuals to be accompanied by partners at their own

expense providing no extra cost falls to the NAO. The Office does not, however,

recognise any representational or other reason for partner-accompanied travel at

public expense, and it accepts no liability for loss or damage suffered by any

accompanying persons not required for NAO business, unless such liabilities have

been explicitly accepted (for example, where there is a long term residential

commitment). Partners travel entirely at their own risk.

6.15 Individuals must obtain prior approval from their Director (or Executive Leader for

Directors, and C&AG for Executive Leaders) for all international travel and associated

work programmes. Managers should be informed of all the relevant details of a trip

before it is approved, including if the individual will be accompanied by their partner or

if there are plans to extend the trip beyond the time necessary for the visit’s business

purpose. Managers should have regard to this information, and to the destination,

duration and intensity of the proposed programme, in assessing the business case

and motivation for the proposed travel. The overriding need is to protect the good

name and reputation of the NAO, and a key test of decisions by authorising managers

will be that criticism of the NAO is avoided or, if it occurs, can, in the judgement of the

Audit Committee, be effectively rebutted. Individuals, and the managers of individuals

undertaking work overseas need to comply with the policy on safeguarding overseas

as set out in MC05/12.

24 National Audit Office Code of Conduct

7. Personal Conduct

General

7.1 Individuals must always maintain the highest standards of personal conduct. The

NAO is concerned only with the private and personal activities of individuals which

impinge on the performance of their duties or risk bringing discredit to the NAO.

Particular difficulties may arise in the following areas, either in the course of

undertaking official duties or outside the NAO:-

a) Individuals must not participate in activities which might severely damage their

financial standing. Individuals who become bankrupt or insolvent, or who experience

significant financial difficulties, must immediately report the fact to the Director of

Human Resources. They will be required to give a full statement of their case to

establish whether their position is likely to prejudice the proper and effective

performance of their duties.

b) Individuals must adopt high standards of personal discipline and avoid any forms of

over-indulgence which may adversely affect their conduct or impair the performance of

their official duties. Where individuals form a dependency to alcohol, drugs, or other

substances, the NAO will provide appropriate support as set out in Chapter 11 of the

HR Manual and the individual will be expected to take advantage of the support

offered.

c) Individuals must discuss with their line manager or senior manager any personal or

domestic relationships with NAO colleagues where that relationship may impinge on

their duties and responsibilities, to ensure that the allocation or routing of work avoids

potential conflicts. A record of the discussion and resulting decision must be sent to

the Director of Human Resources.

d) Individuals must not make use of their official position to further their private

interests.

e) Individuals must inform the Director of Human Resources in the event that they are,

or ever have been, refused or restricted in the right to carry on any trade, business or

profession for which a specific licence, registration or other authority is required.

Individuals subject to a court order instigated by a regulatory body, or subject to official

enquiry by a financial, professional or other business authority, should also disclose it.

f) Individuals must report the results of any disciplinary procedures or reprimands

issued by professional bodies. Individuals investigated by their institute for allegations

of misconduct or malpractice should also make the existence of these investigations

known to the Director of Human Resources.

g) Individuals considering making public comments about the National Audit Office or

its work should contact the Director of External Communications & Marketing or the

Head of External Communications, to discuss what practical advice and support are

available, if needed. Individuals must use their professional judgement when making

public comments about the National Audit Office or its work, ensuring at all times that

National Audit Office Code of Conduct 25

the reputation of the NAO is upheld and confidential or unpublished information is not

shared. Individuals should have a consistent approach whether presenting at a

conference, being interviewed, or interacting online through social channels.

h) Individuals are permitted to use social media, in a work capacity, subject to

following the below guidance:-

• that they read and adhere to the principles and guidance contained within the

social media guidance;

• that they ensure that their use of social media does not either directly or

indirectly damage the NAO's reputation or put our independence into question;

and

• that they seek advice from the Head of External Communications or the Digital

Communications Manager if they have any doubts about what they should and

shouldn't do online.

i) Individuals have a personal responsibility to ensure that they comply with HMRC

rules and that their tax affairs are up to date.

Reporting of arrests or convictions or court judgements

7.2 Individuals must inform the Director of Human Resources if they are arrested and

refused bail, or if they are convicted by a court of any criminal offence (except a traffic

offence with a non-official vehicle, for which the penalty does not include imprisonment

or disqualification from driving). Individuals are also obliged to report any civil actions

they are subject to as a result of professional or business activities where a court has

found against them.

7.3 Individuals should also inform the Director of Human Resources if they are subject

to:

• a judgement by a UK court about a debt (including Child Support Agency orders

and non-payment of Council Tax);

• an attachment of earnings order;

• if they are declared bankrupt or served with a bankruptcy petition; or

• if they enter into compromise arrangements or trust deeds with creditors.

Use and control of public funds and assets

7.4 Individuals should use public assets efficiently and effectively for legitimate

business purposes. This applies to the use of all Office equipment including, for

example, telephones, computers and photocopiers, although occasional use of such

facilities for private purposes is permissible where the costs are trivial. In addition,

individuals must comply with NAO rules regarding expense claims, advances or

imprests, and the recording of absence.

26 National Audit Office Code of Conduct

Prevention of fraud

7.5 Everyone has a personal responsibility for handling public assets with probity.

They also have a responsibility for reporting immediately to their line manager, or

other appropriate person, any suspected fraud by their colleagues, contractors or

suppliers.

Employee relations

7.6 The NAO is subject to UK and (currently) European employment legislation and it

aims to comply with the spirit as well as the letter of relevant Acts and Directives.

People should, therefore, be aware of their responsibilities and the NAO's

expectations in the following areas:-

a) Discrimination: people must not discriminate unfairly on the grounds of ethnic or

racial origin, disability, religion and belief, age, sexual orientation, sex, gender identity,

gender reassignment, pregnancy or maternity, part time/ full time status, marital status

or trade union activities

b) Harassment: this may take many forms, including victimisation, bullying, and

physical or verbal abuse, as well as less obvious actions such as ignoring or excluding

a colleague, showing unwanted attention, or making inappropriate personal remarks. It

can occur in the NAO, or, when work takes people away from home, and outside

normal working hours. It can also occur at work-related social events or trips with NAO

colleagues when outside the Office, such as at team Christmas lunches and drinks or

other celebrations and events. All forms of harassment, in whatever circumstances,

are unacceptable, will not be tolerated at the NAO, and will be subject to disciplinary

action.

c) Health & Safety: the Office’s Health and Safety Policy makes clear that everyone

has a personal responsibility, so far as is reasonably practical, both for their own

health and safety at work and for ensuring that they and their colleagues do not put

the health and safety of others at risk. In completing the Code of Conduct, individuals

are confirming that they have read and understood the Health and Safety Policy,

including the advice on display screen equipment and manual handling, and the ITRC

Remote Working Reference Guide and agree to abide by these its provisions.

Last updated: 29 January 2020