The Department for International Development (DFID) will shortly commence the triennial review of its oversight arrangements for the Independent Commission for Aid Impact (ICAI).

The Government made a commitment regularly to review public bodies, with the aim of increasing accountability for actions carried out on behalf of the state.

The ICAI’s strategic aim is to provide independent scrutiny of UK aid spending, to promote the delivery of value for money for British taxpayers and to maximise the impact of aid. In accordance with the DFID-ICAI memorandum of understanding, a robust and rigorous review of ICAI must take place by the end of 2013 to assess the continuing need for an independent scrutiny function and the associated governance arrangements.

The review will be conducted in line with relevant Cabinet Office guidance, in two stages. The first stage will:

Identify and examine the key functions of the ICAI and assess how these functions contribute to the core business of DFID;

Assess the requirement for these to continue;

If continuing, assess how the key functions might best be delivered; if one of these options is continuing delivery through the ICAI, then make an assessment against the Government’s “three tests”: technical function; political impartiality; and the need for independence from Ministers.

If the outcome of stage one is that delivery should continue through the ICAI, the second stage of the review will ensure that it is operating in line with the recognised principles of good corporate governance, using the Cabinet Office “comply or explain” standard approach.

Full terms of reference for the review will be placed in the Libraries of both Houses and will be available on the DFID website: www.dfid.gov.uk.

The outcome will be announced in Parliament by the end of December.