| Summary
This report presents the proposals of the Members Estimate Audit Committee on the audit and assurance of spending on Members' allowances, in response to the request of the Members Estimate Committee.
The Committee believes that earlier debate on Members' allowances indicated some lack of clarity about the role of audit and assurance. This report sets out the Committee's view on the system which should be adopted in order to give effective assurance to the Accounting Officer and the public that Members' allowances have been properly spent.
The system should include:
- external audit (to be carried out by the National Audit Office);
- internal audit (to be carried out by the House's Internal Audit unit advised by its strategic external partner);
- operational assurance (to be provided by a separate unit within the House's Department of Resources); and
- oversight by the Members Estimate Audit Committee.
The Committee considers that the Green Book—revisions to which were still to be agreed at the time it agreed its report—is crucial to the effective administration of Members' allowances and to the level of assurance that can be given that spending on allowances is for a proper parliamentary purpose.
The Committee suggests that the audit and assurance of Members' allowances should be proportionate and risk-based, bearing in mind that misuse, or allegations of misuse, present a high impact risk to the reputation of individual Members and of the House of Commons as an institution.
The report argues that the National Audit Office should be asked to undertake "full scope" audit of Members' allowances as they would for any other public body. It notes that a trial run full scope audit was carried out successfully and gave no serious grounds for concern about Members' use of their allowances.
The Committee recommend that the Department of Resources should create a small Operational Assurance Unit, to give advice and support to Members on the use of their allowances, to set and maintain standards and to ensure compliance with the rules. Internal Audit should give annual assurance on each of the allowances as well as examining the effectiveness of the overall governance and controls on the regularity and propriety of spending exercised by the Department of Resources.
The Committee sees the recommendations in this report as a package. Together they provide a proportionate system which would enable Members' allowances to be audited and provide a suitable level of assurance regarding their use. Each element of the system plays a necessary part in providing this assurance and it would therefore be a mistake to approach our recommendations as "pick and mix" proposals.
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