House of Commons Commission - Twenty-fourth Annual Report

Twenty-fourth Annual Report 2001-02

Audit Committee Annual Report for 2001-02

1. This is the second Annual Report of the House of Commons Audit Committee, which was established by the House of Commons Commission on 15 May 2000.

2. The Committee was formed following recommendations in the
Review of Management and Services of the House of Commons by a team led by Mr Michael Braithwaite, which was published by the Commission in July 1999. That Review examined, among other things, the control and direction of the House's audit.

3. The Committee's membership as at 31 March 2002 was:

  • The Rt Hon Eric Forth MP (Chairman) (Mrs Angela Browning MP was Chairman until October 2001);

  • Mr Archy Kirkwood MP;

  • the Clerk of the House;

  • the Director of Finance and Administration; and

  • Sir Thomas Legg KCB QC (external member)

4. Its terms of reference are:
  • to have general oversight of the work of internal audit and review, with particular emphasis on promoting economy, efficiency and effectiveness, on value-for-money studies, and on risk assessment and control assurance;

  • to receive and consider reports from the Internal Review Service (IRS), together with management letters and other external audit material;

  • to advise the Accounting Officer in the exercise of his responsibilities;

  • to consider and recommend to the Accounting Officer the internal review programme;

  • to encourage best financial practice, use of resources and governance in the House administration; and

  • to report annually, the report to be published with the Commission's Annual Report.


5. The Committee met twice in the financial year 2001-02. The IRS Director attended both its meetings and gave updates on the work of the Service. Working links with the House's external auditor (the National Audit Office) have been maintained; each meeting of the Committee included discussions with National Audit Office representatives. The Comptroller and Auditor General attended part of the Committee's March meeting.

6. Discussions with NAO representatives covered the 2000-01 and 2001-02 accounts and the changeover to resource accounting. The Committee was also briefed on the progress of the value for money review of Portcullis House, which was published on
19 April 2002.

7. The Committee maintained its interest in risk management during the year, and discussed action being taken by the Board of Management. Corporate and management risks have now been identified, and Departmental Risk Sponsors have been appointed.[1]

8. It has also continued to monitor developments in audit, and considered in some depth the review of audit and accountability for central government by Lord Sharman of Redlynch
(Holding to Account)[2], and the Government's reply.[3]

9. The recommendations relating to audit committees ­ particularly their composition and the need for training ­ were of particular interest. The Committee is keen to be seen as leading public sector best practice and made a submission on these matters to the House of Commons Commission in spring 2002. The Commission agreed the Committee's recommendation that the Clerk of the House and Director of Finance and Administration should cease to be members (although they will attend meetings), and that a second external member should be nominated. Mr David Taylor FCA, currently one of the Charity Commissioners, was appointed to this position on 20 May 2002.

10. During the course of the year, the Committee has also kept abreast of developing audit arrangements in the devolved parliamentary bodies and the House of Lords.

11. The Committee considered the new "Definition of Internal Audit" and "Government Internal Audit Standards", produced by the Treasury. It commissioned a report from the Internal Review Service Director on whether the House met the new standards, and was satisfied with the House service's performance. The Committee has received a paper by the Internal Review Service Director about the House's compliance with the Turnbull report. This is generally positive and will be considered in more detail in 2002-03. In all these cases the Committee balances the aspiration that the House should adhere to public sector best practice with its unique constitutional position.

12. The Internal Review Service supplied the Committee with an audit of contingency planning, which was critical of some aspects of the House service's arrangements in this area, particularly areas of IT back-up. The management response to the report was constructive, and was welcomed by the Committee.

13. The Committee continues to take a particular interest in value for money work. It is due to receive a report on procurement, which was commissioned in the 2000-01 financial year, in June 2002, alongside a response from the Board of Management.

14. A number of possible subjects for value for money review during 2001-02 were discussed. Members chose two: contract management (which should usefully supplement the work done on procurement) and furniture procurement and disposal. Further areas for study will be identified by the Internal Review Service during 2002-03.

15. The Committee noted that the Internal Review Service is preparing a business plan.
It will consider this in 2002-03.

1   More Information on risk management appears in the Board of Management section of the Commission Annual Report, and the departmental annexes. Back
2   Holding to Account. The review of Audit and Accountability for Central Government, February 2001. Back
3   Audit and Accountability in Central Government: the Government's Response to Lord Sharman's Report "Holding tp Account", HM Treasury. Back

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