APPENDIX 5
Supplementary Note submitted by the National
Audit Office
TREASURY AUTHORITY FOR EXPENDITURE (PAC 97-98/322)
QUESTIONS 112-114
1. At the 30 March 1998 hearing of the Committee
to discuss the Comptroller and Auditor General's Report on the
1996-97 Defence Appropriation Accounts, Mr Clifton-Brown asked
whether there were any other examples of the Treasury refusing
retrospectively to grant authority for expenditure incurred by
a department (Minutes of Evidence, Qs 112-114).
2. In principle, no expenditure may be incurred
by departments without the authority of the Treasury. In practice
however, the Treasury delegate to departments powers to incur
expenditure within defined limits. Such delegations are formal
documents, and represent a standing authorisation by the Treasury
to a department to incur expenditure without the Treasury's prior
approval.
3. In cases where departments exceed their delegated
powers to incur expenditure, they are required by Government Accounting
rules to seek retrospective authority from the Treasury for the
expenditure. It is, of course, rare for departments to exceed
their delegated powers, and even more unusual for the Treasury
to refuse retrospectively to sanction the expenditure incurred.
4. Neither the Treasury nor the National Audit
Office maintain a central record of cases where the Treasury have
refused to grant retrospective authority for expenditure. However,
a review of Reports by the Comptroller and Auditor General published
since 1992 has revealed only two cases with similar charactistics
to those of the Waltham Abbey Royal Gunpowder Mills project. These
concerned:
(a) Welsh Development Agency. The
C&AG's report on the 1991-92 Agency accounts (HC 276 of Session
1992-93) included details of a scheme to provide cars to senior
staff of the Agency and board members. The scheme did not require
contributions to be paid the beneficiaries in respect of the private
use of the cars, and contravened Welsh Office guidelines. The
Welsh Office refused to approve the scheme retrospectively after
consulting the Treasury, and as a result the expenditure on it
was deemed to be irregular.
(b) Office of Water Services (OFWAT).
The C&AG's report on OFWAT's 1995-96 appropriation account
(HC II-VI of Session 1996-97) mentioned that OFWAT were required
to obtain Treasury approval where single tender action was taken
in respect of any management consultancy contract valued at over
£50,000. In May 1995 however, the contract with OFWAT's main
consultancy provider was extended without prior Treasury approval,
and a subsequent request by OFWAT for retrospective approval was
turned down.
5. This would tend to supprot the view expressed
a the hearing, that such cases are indeed very unusual.
National Audit Office
4 June 1998
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