OUR
REPORT
1. On 20 October 2008 the Members Estimate Committee
(MEC) asked the Members Estimate Audit Committee (MEAC) to make
proposals on the future role of the National Audit Office (NAO)
as the external auditor of the House of Commons and the House
of Commons' own Internal Audit service in providing audit and
assurance of spending on the Members' allowances.
2. The MEAC was established in June 2004 as a
sub-committee of the MEC to carry out a number of audit and assurance-related
functions in connection with the Members Estimate, on behalf of
the MEC. These functions included: general oversight of the work
of internal audit and review; monitoring of the external auditor's
independence, objectivity and effectiveness; advising the Accounting
Officer in the exercise of his responsibilities; encouraging best
financial practice, use of resources and governance in relation
to the Members Estimate. The Committee consists of the Rt Hon
Theresa May MP (Chairman) and Nick Harvey MP (both members of
the MEC), Mr Clive Betts MP (member of the Finance and Services
Committee) and three external members, currently Sir Thomas Legg
KCB QC, Mr David Taylor FCA and Mr Alex Jablonowski.[6]
3. We considered the MEC's request at our meeting
on 22 October 2008. We were advised that it would be helpful if
the MEC were able to consider our proposals at the same time as
the advice of the Advisory Panel on Members' Allowances (APMA)
on revisions to the Green Book and any outcome from the Leader
of the House's Paper on Audit and Assurance of MPs' Allowances
(the Leader's Paper).[7]
We decided that in order to make full proposals we should consider
the role of the House of Commons Department of Resources in administering
and providing assurance on allowances, in addition to the roles
of the Internal Audit service and the National Audit Office.
4. We held informal discussions with the National
Audit Office, the House of Commons Internal Audit unit, the Department
of Resources and the Clerk of the House, Malcolm Jack, as Accounting
Officer for the Members Estimate.
5. We set out our findings and recommendations
in four sections; External Audit; Internal Audit; Operational
Assurance Unit; and, reporting and compliance, before offering
some concluding remarks.
BACKGROUND
6. Following the publication by the MEC of its
Review of Allowances[8]
in June 2008, the House debated the subject of Members' allowances
on 3 and 16 July 2008. The debate on these occasions, so far as
it related to audit and assurance of allowances, indicated some
misunderstanding of the proposals in the MEC report. THE
RESOLUTIONS MADE
BY THE
HOUSE IN
RELATION TO
AUDIT AND
ASSURANCE REFLECT
SOME LACK
OF CLARITY,
AND IN
OUR OPINION
DO NOT
ALONE CONSTITUTE
AN EFFECTIVE
WAY FORWARD.[9]
The Leader's Paper acknowledged the need for further steps to
be taken:
In order to put into effect the changes agreed on
3 and 16 July and to build on the determination of the House to
protect public money from abuse and to justify public confidence
in expenditure on MPs allowances, this paper sets out what has
been agreed and poses questions on further steps the House can
take to improve financial control and audit.[10]
7. For clarity we believe it will be helpful
to offer some definitions of the terms used in this report:
