The NAO said the regulator had “struggled” to fulfil its role due to NHS instability, making only half of the hospital inspections it had planned.
However the CQC was “now taking action to improve its performance”, the report concluded.
The new inspection body replaced the Healthcare Commission, the Commission for Social Care Inspection and the Mental Health Act Commission in October 2010.
The NAO noted that the abrupt shift had caused “disruption for providers and confusion for the public”.
By April 2011 the CQC had carried out only 53% of its planned inspections of hospitals and care homes, and had not met its schedule for registering care providers.
The organisation suffered from lack of staff, the review said: after a year, 14% of its positions – including 100 inspector posts – were unfilled due to Government restrictions on recruitment.
Its failure to identify patient mistreatment and neglect at a residential care home near Bristol was also criticised.
Both the DH and the CQC itself were to blame for the regulator’s failings, the NAO concluded.
Amyas Morse, head of the NAO, commented: “The CQC has had an uphill struggle to carry out its work effectively and has experienced serious difficulties. It is welcome that it is now taking action to improve its performance.
He added: “The commission and the Department of Health should make clear what successful regulation of this critical sector would look like.”
The DH is currently reviewing the CQC; its findings will be published later this year. Margaret Hodge, Chair of the House of Commons Public Accounts Committee, called the NAO’s report “deeply worrying”.