1. CONCLUSIONS
AND RECOMMENDATIONS
1. 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
(Paragraph 6)
2. As the main source of guidance
to Members on the purpose of each allowance and on the criteria
for judging the appropriateness of any claim, the Green Book is
crucial to the effective administration of spending on Members'
allowances. It is also key to giving the Accounting Officer assurance
that spending has been for a proper Parliamentary purpose.(Paragraph
10) We consider it likely that the APMA proposals for the revision
of the Green Book will have implications for the audit and assurance
system we are recommending. We have not been able to give the
APMA proposals our full consideration because the process of their
development has been concurrent with our own deliberations. (Paragraph
11)
3. the audit and assurance of Members'
allowances ought to be proportionate and "risk-based".
(Paragraph 12)
External audit
4. We consider that it should be a
principle of the audit system that Members' allowances should
be subject to the same degree of external audit as other sectors
of the public service, no less but also no more.(Paragraph 13)
5. We recommend that the House should
continue to ask the NAO to act as its external auditor. (Paragraph
15)
6. We consider that a £25 limit
for expenditure without receipt is a sensible way forward. (Paragraph
19)
7. the NAO's trial run provided a
useful first impression of how a full scope audit would look in
operation. And it did not give grounds for serious concern about
Members' use of their allowances. (Paragraph 21)
8. We recommend that the Accounting
Officer should remove the current limitation on the scope of the
NAO's audit. This would enable the NAO to provide an audit opinion
based on a full scope audit carried out on the same basis that
applies to other public bodies. (Paragraph 22)
Internal audit
9. the Internal Audit service should
treat Members' allowances as a high priority for their work programme.
Internal audit staff should have the same access to the evidence
submitted by Members in support of claims as the NAO would have
when conducting a full scope audit. Each year Internal Audit should,
at a minimum, consider all allowances, as well as examining the
overall governance and control environment operating within the
Department of Resources, and the operation of the main controls
over processing claims by the Department's management and staff.
(Paragraph 26)
10. Instead of auditing a specific
percentage or number of Members, we recommend that Internal Audit
employ an appropriate, risk-based sampling regime developed in
accordance with their professional standards, in order to determine
what percentage of Members to audit for each allowance. (Paragraph
29)
11. The internal audit strategic
partners should be involved in developing the detailed audit strategy
for Internal Audit, suggesting sampling and testing regimes and
determining how to evaluate results. (Paragraph 30)
Operational Assurance Unit
12. We recommend that the Department
of Resources should concentrate a small group of more senior and
experienced staff in an Operational Assurance Unit, composed and
managed separately from the section administering payments themselves.
The unit's role would be to give advice to Members and to ensure
compliance with rules and the maintenance of standards. (Paragraph
35)
Reporting and compliance
13. We recommend that Internal Audit
and the new Operational Assurance Unit should both have an obligation
to report regularly to the Members Estimate Audit Committee their
findings in relation to assurance of spending on Members' allowances.
The external auditor should report to the MEAC at least annually.The
MEAC's role should be to advise the Accounting Officer on the
implications for his Statement on Internal Control of reports
received from the external auditor and Internal Audit as well
as assurance from the Department of Resources and the Operational
Assurance Unit. (Paragraph 36)
14. We recommend that serious instances
of non-compliance identified by Internal Audit, external auditors
or the Operational Assurance Unit should, where appropriate, be
reported to the MEAC. Through the MEAC, the matter would be reported
to the Members Estimate Committee and thereafter onwards to the
Standards and Privileges Committee, if warranted by the circumstances.
(Paragraph 38)
Concluding remarks
15. It is impossible to guarantee
that any proportionate and risk-based system would identify all
instances of the misuse of allowances. Even with a full scope
audit, no external auditor would ever be able to give complete
assurance, although the level of assurance they could give should
be increased by the work of Internal Audit and an Operational
Assurance Unit in creating a robust control environment. If the
House requires a higher level of assurance than our recommendations
provide, then a more intrusive and expensive solution will be
required. (Paragraph 39)
16. We see 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. (Paragraph
40)
- We recommend that our package of recommendations
should be implemented with effect from 1 April 2009. (Paragraph
41)
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