The relationship between an arm's length body and the department should be set out in a framework document.
Managing Public Money explains that:
“3.8.2 The framework document (or equivalent) agreed between an ALB and its sponsor always provides for the sponsor department to exercise meaningful oversight of the ALB’s strategy and performance, pay arrangements and/or major financial transactions, eg by monthly returns, standard delegations and exception reporting. The sponsor department’s accounts consolidate those of its ALBs so its accounting officer must be satisfied that the consolidated accounts are accurate and not misleading”.
A non-departmental public body is required to submit to their sponsoring department, on an annual basis, an annual report and audited accounts prepared in accordance with the relevant statutes and guidelines. The annual report and accounts provide the sponsoring department with the financial and non-financial performance of the non-departmental public body. In addition, they will state if the non-departmental public body has met key performance indicators as set out in their business and corporate plans. The report and accounts are laid in Parliament and, where commercially possible, made available on the non-departmental public body’s website.
The accounts of a non-departmental public body are usually consolidated with those of their sponsoring department. In the case of regulatory bodies, the annual report and accounts serve the same purpose and are laid before Parliament, but may not be consolidated depending on the classification of the body.