Report on the Estimate of the Use of Resources by the Northern Ireland Audit Office 2012-13

nia_32_11-15.pdf (464.32 kb)

4. The membership of the Committee is as follows:

Mr Danny Kinahan (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Ms Anna Lo
Mr Paul Maskey
Ms Margaret Ritchie

Table of Contents

Report

Annex A

Northern Ireland Audit Office Estimate 2012-13

Appendix 1

Other Evidence considered by the Committee

Appendix 2

Minutes of Proceedings

Report

Introduction

1. The Comptroller and Auditor General for Northern Ireland (C&AG) is head of the Northern Ireland Audit Office (NIAO). The C&AG is responsible for:

• authorising the issue of money from the Northern Ireland Consolidated Fund to enable Northern Ireland departments to meet their necessary expenditure, and for ensuring that there are adequate arrangements for the collection of revenue; and
• the external audit of central government bodies in Northern Ireland, including Northern Ireland departments and their executive agencies and a wide range of other public sector bodies, including executive non-departmental public bodies and health and personal social service bodies. The C&AG undertakes financial audit and value for money audit and the results of this work are reported to the Northern Ireland Assembly.

The NIAO supports the C&AG in fulfilling these responsibilities. The C&AG and the NIAO are wholly independent of Government.

2. Further to Section 66 of the Northern Ireland Act 1998, it is for the Assembly's Audit Committee (in place of the Department of Finance and Personnel (DFP)) to agree the annual estimate of the use of resources by the NIAO and to lay that estimate before the Assembly.

3. This is because the core purpose of the work of the C&AG and the NIAO is to ensure that the Assembly is provided with an effective and truly independent audit assurance in relation to the use of public funds. Removing the NIAO from DFP and the Executive's remit underlines and strengthens the NIAO's independence in holding departments, executive agencies and other public bodies to account for their use of public money.

4. Each year the C&AG prepares an estimate of the use of resources by the NIAO for the next financial year. The Audit Committee considers this estimate and, subject to any modifications agreed between it and the C&AG, lays the estimate 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.

5. 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. 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 subsequently. Given the significance of the corporate plan in this regard, the Audit Committee also seeks the advice of both the PAC and DFP in relation to it.

Current Financial Context

6. During 2010/11, prior to the Audit Committee's consideration of either the draft corporate plan or the annual estimate for the following year, it was apparent that the level of expenditure available to fund public services in Northern Ireland over the four year budget period would be reduced. The Audit Committee recognised the significant 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, therefore, that the NIAO should make a significant contribution to reducing its own expenditure over this period. It was the Committee's view that this was important 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 need to be made.

7. 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 has the resources necessary in order to effectively carry out its role. In fact, the role of the NIAO is even more important in the current financial climate. The Audit Committee therefore decided that it would not agree a reduction in the funding for the NIAO that would prevent it from fully carrying out its crucial role.

8. The Audit Committee met on 9 December 2010 and received a presentation from the C&AG on the issue of efficiency savings that could be made by the NIAO over the budget period. This presentation set out how the NIAO intended to build on efficiencies already made by, inter alia, reducing significantly its outsourcing requirements, by reducing recruitment and by implementing a two year pay freeze.

9. The Committee considered carefully the proposed savings that the C&AG outlined. The Committee also gave consideration to the overall reduction to the Northern Ireland Executive's Departmental Expenditure Limit and to the planned reductions to the budgets of other audit bodies in the UK. Having considered all of this, the Audit Committee agreed that it would expect to see the NIAO reduce its budget requirement by at least 10% in cash terms by 2014/15.

10. The Audit Committee subsequently agreed an annual estimate for the use resources by the NIAO during 2011/12 which represented a decrease in cash terms of 9% from the estimate the previous year.

The estimate for 2012/13

11. The C&AG prepared a draft corporate plan for the period 2012-13 to 2014-15 and presented this plan to the Audit Committee at its meeting on 13 December 2011. The plan set out the NIAO's key strategic aims along with the activities and associated targets that will be used to measure performance. The plan also set out the resources that would be required by the NIAO and how those resources would be used. These details are set out in the tables below:

Proposed Resource Requirement

* This amount is based on the NIAO's 2010-11 Main Estimate (that is, before the 2010-11 Spring Supplementary Estimate). In order to aid comparability the figure has been amended to include £388,000 of budget which was transferred from the National Audit Office in respect of the financial audit of policing and justice bodies, effective from 2011-12.

Proposed use of resources

* Other costs include £300,000 in 2012-13 and 2014-15 for the NIAO's costs incurred in the National Fraud Initiative. This is carried out biennially and leads to some fluctuation between years. A similar amount is also included within income in those years in respect of amounts recharged to those bodies participating in the Initiative. As the costs and income are roughly the same, the net cost of the initiative is nil.

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. The Committee also considered the proposed resource requirement in the draft plan and was satisfied that the reduced net resource requirement of 2.5% in cash terms (9.8% in real terms), on top of the net resource requirement reduction of 9.1% (11.7% in real terms) made during 2011/12, was consistent with the overall direction it had given in December 2010. 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 extent of service to the Assembly that has been offered in recent years.

13. 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.

14. Further to the corporate plan being agreed, the C&AG has prepared his estimate of the use of resources by the NIAO for 2012-13. The estimate is attached at Annex A and it represents a decrease in the net resource requirement of 2.5% in cash terms from the estimate for 2011-12 (£8.414 million compared to £8.542 million) and is 0.1% lower than the final net provision for 2011-12 (which was 8.422 million).

15. 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.

16. As usual, advice was sought from both the PAC and DFP on the estimate. Their responses are attached at Appendix 1 respectively. Both PAC and DFP have indicated that they are content with the estimate.

17. The Audit Committee met on 21st February 2012 and considered the estimate prepared by the C&AG, the advice on 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.

18. 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 typically comes before the Assembly before the summer recess.

Annex A

Northern Ireland Audit Office Estimate 2012-13

Northern Ireland Audit Office – Estimate For 2012-13 Memorandum

1. Responsibility for the approval of the Northern Ireland Audit Office's Estimate lies with the Audit Committee of the Northern Ireland Assembly. Under the Northern Ireland Act 1998 before considering the Office's estimate the Audit Committee must have regard to the advice of the Public Accounts Committee and the Department of Finance and Personnel.

2. The proposed Estimate, which has been prepared in accordance with current DFP guidance, is attached.

3. The key figures in the estimate are unchanged from those in the Corporate Plan 2012-13 to 2014-15 that was considered by the Public Accounts Committee on 7 December 2011 and approved by the Audit Committee on 13 December 2011.

4. The key figures in the estimate for 2012-13 are;

• The net resource requirement of £8,414,000;
• A proposed capital expenditure figure of £240,000;
• A net cash requirement of £8,525,000 which is a projection of the cash we need in 2012-13. This figure is based on the two figures above but adjusted to remove any non-cash movements.

Introduction

1. This Estimate provides for expenditure by the Northern Ireland Audit Office 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.

Part I

Amounts required in the year ending 31 March 2013 for use by the Northern Ireland Audit Office on:

RfR A: 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:

• 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; conducting data matching exercises for the purpose of assisting in the prevention and detection of fraud; administration; related services; and associated non-cash items.

The Comptroller and Auditor General for Northern Ireland will account for this Estimate.

Part II Subhead Detail

£'000

Resource to Cash Reconciliation

£'000

Part III Extra Receipts payable to the Consolidated Fund

£'000

In addition to Accruing Resources, the following income and receipts relate to this Office and are payable to the Consolidated Fund (cash receipts being shown in italics):

Forecast Statement of Comprehensive Net Expenditure
For the year ending 31 March 2013

£'000

Reconciliation of resource expenditure between Estimates, Accounts and Budgets
For the year ending 31 March 2013

£'000

Reconciliation of capital expenditure between Estimates, Accounts and Budgets
For the year ending 31 March 2013

£'000

Accruing Resources Analysis

£'000

* Amount that may be applied as accruing resources in addition to the net total, arising from receipts from bodies in respect of audit services tendered and income from the National Audit Office in respect of work carried out on behalf of the Comptroller and Auditor General (GB); fees received in respect of data matching exercises; income in respect of the recovery of salary etc. costs for seconded-out staff.

Notional Charges in Non-Budget

£'000

Notional Charges Analysis

£'000

Consolidated Fund Extra Receipts (CFERs) Analysis

£'000

Detail

In addition to Accruing Resources the following income and receipts relate to the NIAO and are payable to the Consolidated Fund (cash receipts being shown in italics):

Explanation of Accounting Officer Responsibilities

The Department of Finance and Personnel has appointed the Comptroller and Auditor General for Northern Ireland, Mr Kieran Donnelly, as Accounting Officer for the Northern Ireland Audit Office with responsibility for preparing the Office's Estimate.

The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which an Accounting Officer is answerable, for keeping proper records and for safeguarding the NIAO's assets, are set out in Managing Public Money Northern Ireland.

Notes to the Estimate:

1. The provision sought for 2012-13 is 0.1% lower than the final net provision for 2011-12.

2. Historic comparative figures have been amended to reflect the transfer from the National Audit Office of responsibility for the audits of policing and justice bodies.

Appendix 1

Other Evidence Considered by the Committee

Chair's Letter

DFP Comments to Audit Committee -
15 February 2012

Supply 2
Room S10, New building
Rathgael House, Bangor BT19 7NA
Tel No: 028 91858004 (ex. 68004)
Fax No: 028 91858283 (ex. 68283)
email: Barry.Armstrong@dfpni.gov.uk

Paul Gill
Clerk to the Audit Committee,
Parliament Buildings,
Stormont,
Belfast
BT4 3XX

15th February 2012

Dear Paul

NIAO Estimate 2012-13

The NIAO has provided DFP with a copy of the NIAO Main Estimate for 2012-13 and under the Northern Ireland Act 1998 the Audit Committee must, when considering the approval of this Estimate, have regard to the advice of the DFP. I have therefore set out some comments below.

The resource balance to complete being sought is £4,624,000 giving a net resource requirement of £8,414,000 being sought in this Estimate; and the cash balance to complete being sought is £4,661,000 giving a net cash requirement of £8,525,000 being sought in this Estimate. The Departmental Expenditure Limit (DEL) Resource Budget on which this Estimate is based (as shown in the supporting tables) is within the amount agreed by the Assembly when it endorsed the Executive's Budget 2011-15.

DFP has already provided comment to NIAO regarding some minor presentational matters concerning the 2010-11 Outturn information, the note to the Accruing Resource Analysis table and one of the notes to the Estimate. These presentational matters do not have any impact on the provision being sought in the 2012-13 Main Estimate and I can confirm that, subject to the presentational matters which I have mentioned, DFP is content with the 2012-13 Main Estimate as presented by NIAO.

I hope you find this helpful.

Yours sincerely,

BARRY ARMSTRONG cc Richard Pengelly
Fiona Hamill
John McKibbin
Andrew Allen
Brenda Shearer
Hilary Bogle

Clerk to Audit Committee Clerk
re NIAO Estimate 2012-13

Public Accounts Committee
Room 371
Parliament Buildings
Tel: +44 (0) 28 90521208
Fax: +44 (0) 28 90520366
Email : pac.committee@niassembly.gov.uk

From: Aoibhinn Treanor
Clerk to the Public Accounts Committee

To: Paul Gill
Clerk to the Audit Committee

Date: 15 February 2012

Subject: PAC consideration of NIAO Estimate 2012-2013

At its meeting today, the Public Accounts Committee considered the NIAO Estimate for 2012-2013.

I can advise you that the Committee was content with the proposed estimate and agreed to refer the item to Audit Committee for its formal consideration and approval.

With kind regards,

Aoibhinn Treanor
Committee Clerk

Appendix 2

Minutes of Proceedings
relating to the Report

Tuesday, 13th December 2011
Room 29, Parliament Buildings

Present: Mr Danny Kinahan (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Ms Anna Lo

In Attendance: Mr Paul Gill (Assembly Clerk)
Ms Hilary Bogle (Assistant Clerk)
Mr Christopher McNickle (Clerical Officer)

Apologies: None

1.08pm The meeting commenced in open session.

5. Consideration of the draft NIAO Corporate Plan 2012-2013 to 2014-2015

Members noted the Clerk's paper; the draft NIAO Corporate Plan 2012-2013 to 2014-2015; advice from the Public Accounts Committee; and advice from the Department of Finance and Personnel (DFP). The Clerk updated the Committee on the background to the issues.

The Chairperson welcomed Mr Kieran Donnelly, Comptroller and Auditor General; Ms Janet Sides, Assistant Auditor General; Mr Andrew Allen, Audit Manager; and Mr Joe Campbell, Audit Manager. The Chairperson invited Mr Donnelly to brief the Committee on the draft NIAO Corporate Plan.

1.22pm Ms Lo joined the meeting

Following a question and answer session the Chairperson thanked Mr Donnelly and his colleagues and invited them to remain at the table for the next item of business.

Agreed: The Committee agreed that it was content to approve the draft Corporate Plan for 2012-2013 to 2014-2015.

Agreed: The Committee agreed that the Clerk should respond to DFP's advice on the NIAO Corporate Plan, setting out the Committee's concern about the premise underlying aspects of DFP's advice.

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Tuesday, 21st February
Room 29, Parliament Buildings

Present: Mr Danny Kinahan (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Paul Maskey

In Attendance: Mr Paul Gill (Assembly Clerk)
Ms Hilary Bogle (Assistant Clerk)
Mr Christopher McNickle (Clerical Officer)

Apologies: Ms Anna Lo

1.02pm The meeting commenced in open session.

5. NIAO Estimate for 2012-2013

Members noted the draft NIAO Estimate for 2012-2013 and correspondence from the Department of Finance and Personnel and the Public Accounts Committee.

The Chairperson welcomed Mr Kieran Donnelly, Comptroller and Auditor General; Ms Janet Sides, Assistant Auditor General; Mr Andrew Allen, Audit Manager; and Mr Joe Campbell, Audit Manager. The Chairperson invited Mr Donnelly to brief the Committee on the NIAO Estimate for 2012-13.

Following discussion the Chairperson thanked Mr Donnelly and his colleagues for attending the meeting.

Agreed: The Committee agreed the NIAO Estimates for 2012-2013.

1.15pm The Committee moved into closed session.

Agreed: The Committee agreed the draft Committee Report on the NIAO Estimates for 2012-2013.

Agreed: The Committee agreed that the Committee Powers and Membership and Table of Contents should form part of the Report.

Agreed: The Committee agreed that Appendix 1 'Other Evidence considered by the Committee' should form part of the Report.

Agreed: The Committee agreed that Appendix 2 'Minutes of Proceedings relating to the Report' should form part of the Report.

Agreed: The Committee agreed that the tabled extract of today's Minutes of Proceedings as amended should be included in Appendix 1 of the report.

Agreed: The Committee ordered the Report on the Estimates of the Northern Ireland Audit Office 2012-13 to be printed.

Agreed: The Committee agreed that the Report should be accompanied by a covering note from the Chairperson to all MLAs.

Agreed: The Committee agreed that the Clerk should write to the Department of Finance and Personnel advising them of the Committee's decision.

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