Session: 2013/2014

Date: 25 March 2014

Reference: Report on the Estimate of the Northern Ireland Audit Office 2014-15

ISBN: Only available online

Mandate Number: 2011/15

10429.pdf (1021.45 kb)

Introduction

1. Article 6(2) of the Audit (Northern Ireland) Order 1987 provides for the Comptroller and Auditor General (C&AG) to prepare for each financial year an estimate of the use of resources by the Northern Ireland Audit Office (NIAO).

2. Section 66 of the Northern Ireland Act 1998, and Standing Order 58 (1), provide for the Assembly’s Audit Committee (in place of the Department of Finance and Personnel (DFP)) to lay that estimate before the Assembly. The Committee may agree modifications to the estimate with the C&AG before it is laid before the Assembly. In carrying out this function the Committee has regard to the advice of the Assembly’s Public Accounts Committee (PAC) and DFP.

3. This report sets out the agreed estimate for 2014-15.

Background to the current estimate

4. In December 2010 the previous Audit Committee looked ahead to the financial savings that would need to be made right across the public sector during the budget period 2011-12 to 2014-15. The Committee recognised the reduction in the levels of funding available from within the Northern Ireland Executive’s Departmental Expenditure Limit over the budget period and concluded that it was important that the NIAO should make a significant contribution to reducing its own expenditure during this time. It was the Committee’s view that this was significant not only in terms of reducing costs to the public purse, but also in terms of demonstrating that the NIAO was willing and ready to bear its fair share of the savings that needed to be made.

5. The Committee discussed with the C&AG the potential for efficiency savings to be made by the NIAO and agreed that during this budget period it should reduce its net resource requirement by 10% in cash terms from its 2010-11 baseline. The Committee also agreed, however, that while it was important that the maximum level of practicable savings should be made it was just as important to ensure that the NIAO had the resources necessary in order to carry out its role effectively. The Committee therefore confirmed that it would not agree a reduction in the funding for the NIAO that would prevent it from fully carrying out its crucial role.

6. In each financial year since then the NIAO has reduced its net resource requirement. Three years into the four year budget period (2013-14) and the NIAO’s net resource requirement had reduced by 11.4% from the 2010-11 position (from £9.397 million to £8.327 million).

7. The financial year which the estimate in this report addresses, 2014-15, is the final year of this four budget period.

The estimate for 2014-15

8. In advance of considering the annual estimate, the Audit Committee meets to consider a draft corporate plan for the NIAO. The draft plan is prepared by the C&AG and it sets out the NIAO’s key strategic aims for the next three year period; how the NIAO propose to deliver these aims; the resources that are required by the NIAO to do so; and their key performance measures.

9. The draft corporate plan is an important document for the Audit Committee as it provides the necessary background and context to enable the estimate to be agreed. Given the significance of the corporate plan, the Audit Committee also seeks the views of both the PAC and DFP in relation to it.

10. The C&AG prepared a draft corporate plan for the period 2014-15 to 2016-17 and presented this plan to the Audit Committee at its meeting on 10 December 2013. The plan set out the NIAO’s key strategic aims along with the activities and associated targets that will be used to measure performance.

11. The plan also set out the resources that would be required by the NIAO over this period and how those resources would be used. These details are set out in the tables below.

Proposed Resource Requirement

 

Plan Period

 

2011-12
Main
Estimate
£’000

2012-13
Main
Estimate
£’000

2013-14 Main
Estimate
£’000

2014-15
Forecast
£’000

2015-16
Forecast
£’000

2016-17
Forecast
£’000

Net Resource Requirement

8,542

8,414

8,327

8,200

8,060

7,880

Increase/(Decrease) in cash terms

 

-1.5%

-1.0%

-1.5%

-1.7%

-2.2%

GDP deflator

 

1.77

2.3

1.9

1.8

1.7

Increase/(Decrease) in real terms

 

-3.2%

-3.3%

-3.4%

-3.4%

-3.9%

 

Proposed Use of Resources:

 

Plan Period

 

2013-14
Main Estimate
£’000

2014-15
Forecast
£’000

2015-16
Forecast
£’000

2016-17
Forecast
£’000

Staff

7,511

7,441

7,404

7,485

Staff (Temporary)

90

220

220

220

Consultancy

45

45

45

45

Contracted out audit

1,317

1,332

1,281

1,281

General Expenditure*

1,484

1,785

1,496

1,797

Gross resource requirement

10,447

10,823

10,446

10,828

Income

(2,120)

(2,623)

(2,386)

(2,948)

Net resource requirement

8,327

8,200

8,060

7,880

 

12. The Audit Committee considered the draft corporate plan and questioned the C&AG and NIAO staff on it. The Committee was satisfied that the draft plan provided for the NIAO to continue to hold the public sector to account for its spending through its core activities of the financial audit of central and local government bodies and the provision of value for money reports for the consideration of the Assembly.

13. The Committee also considered the proposed resource requirement in the draft plan. The Committee noted that the NIAO’s net resource requirement for 2014-15 in the draft plan represented a cash terms reduction of 12.7% from its 2010-11 net resource requirement of £9.397 million This exceeds the 10% reduction target agreed for the NIAO over the budget period 2011-12 to 2014-15.

14. The Committee also noted the anticipated further reductions in the NIAO’s net resource requirement: 1.7% in 2015-16 and then a further 2.2% in 2016-17. If realised these reductions would represent a cash terms reduction of 16.1% from the 2010-11 baseline.

15. The Committee sought reassurance from the C&AG that the proposed savings represented the maximum reduction that could be made by the NIAO whilst still maintaining the same quality and breadth of service to the Assembly that has been offered in recent years.

16. Having received this reassurance, the Committee agreed that it was content with the draft corporate plan. The agreed plan is being published separately by the NIAO, with a foreword from the Chairperson of the Audit Committee endorsing the plan on behalf of the Committee.

17. Further to the corporate plan being agreed, the C&AG has prepared his estimate of the use of resources by the NIAO for 2014-15. The estimate is attached at Annex A and is consistent with the figures set out in the agreed corporate plan. The 2014-15 estimate therefore provides for a decrease in the net resource requirement of 1.5% in cash terms from the estimate for 2013-14 (£8.2 million compared to £8.327 million).

18. The estimate provides for expenditure by the NIAO “on providing objective information, advice and assurance on the use of public funds; encouraging beneficial change in the provision of public services, the highest standards in financial management and reporting and propriety in the conduct of public business; and conducting data matching exercises for the purpose of assisting in the prevention and detection of fraud.” This covers the full scope of the work set out in the NIAO’s Corporate Plan.

19. As usual, advice was sought from both the PAC and DFP on the estimate. Their responses are included at Appendix 1. Both PAC and DFP informed the Committee that they were content with the estimate.

20. The Audit Committee met on 25 March 2014 when it considered the estimate prepared by the C&AG, the advice of the PAC and the advice of DFP. The Committee noted that the estimate produced by the C&AG was consistent with the figures set out in the NIAO’s corporate plan. After having questioned the C&AG and NIAO staff about the estimate, and after having had regard to the advice of both the PAC and DFP, the Committee agreed the estimate at Annex A without modification.

21. The publication of this report gives effect to the Committee’s function of laying the estimate before the Assembly. The Audit Committee will forward the estimate to DFP so that it can be included with the main estimates, together with the budget no 2 bill, which is generally introduced to the Assembly before the summer recess.

View the full report here

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