Reviews of members’ expenses

Report: 5
Date: 27 February 2004
By: Clerk

Summary

This report gives details of reviews carried out by both External and Internal Audit into the payment of members’ expenses, and action being taken to respond to their recommendations.

A. Recommendation

That the Committee notes the reviews and the action being taken to respond to their recommendations.

B. Supporting information

1. Internal Audit have carried out a review of the systems, procedures and processes in place across the MPA. One element of this was to look at the processes for the payment of members’ expenses and allowances. The audit report has not yet been finalised but draft findings in relation to members’ expenses and allowances are attached as Appendix A.

2. Co-incidentally, the External Auditors, KPMG, have been carrying out a review which also included looking at the payment of members’ expenses. This report too has not yet been finalised, but is attached in draft as Appendix B.

Review findings

3. Neither review has identified any major weaknesses but point to a number of areas where improvements can be made or procedures tightened up. The main findings can be summarised as:

• The need to ensure that all pages of all claims are authorised and that no space is left on the forms for additional claims to be added
• Expenses must be backed up by receipts and a fuller description of the expense claimed
• Where exceptional action has been taken (e.g. to agree an unreceipted claim or to purchase airline tickets direct because of a price advantage), then this action must be documented to provide an audit trail
• That claims were not always submitted on a timely basis and some were significantly late

Action being taken in response to the reviews

4. There are some queries to be sorted out about some of the detailed comments in the KPMG report. However, the principles and the majority of the findings of both reviews have been accepted by the management. The following action has been taken so far in response to the reviews:

• A cover sheet has been introduced summarising each claim and stating how many pages are included in the claim. This is signed by the manager and the administrator
• Every page of each claim will be signed by the manager and the administrator and any unused lines in the claim forms will be crossed off
• Members will be asked to provide better information of the reason for the claim and the journey involved
• Receipts are now required for everything except use of public transport and an unreceipted claim will not be paid unless the Clerk has, in exceptional circumstances, authorised it. At the time of writing, further discussion is needed with Audit about whether receipts should be required for public transport
• In future, documentation will be kept on file to demonstrate any action or decisions taken out of the ordinary, such as the Clerk authorising unreceipted claims, or the direct purchase of an airline ticket referred to by Internal Audit
• In January the full Authority agreed to introduce a three month deadline for the submission of claims during the year and a 30 April deadline at the end of the financial year
• Continued efforts will be made to ensure that payments made are accurate and are in respect of valid expenses claims

C. Equality and diversity implications

No specific implications have been identified arising from the two reviews.

D. Financial implications

No specific implications.

D. Background papers

None

E. Contact details

Report author: Simon Vile, MPA.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix A

Draft findings of Internal Audit Review of Members’ Expenses and Allowances

9. Members expenses and allowances

9.1 Controls in place for monitoring expenditure on member’s allowances and expenses were found to be operating effectively. Expenditure is monitored on a monthly basis and an annual report on expenses and allowances is reported to the Co-ordination and Policing Committee.

9.2 Examination of a sample of 10 members’ expense and allowance claims identified the following control weaknesses:

9.2.1 The claim form provides insufficient detail on the journey made to allow the reasonableness of the claim to be evaluated;

9.2.2 Blank sections of claim forms are not crossed off;

9.2.3 Claims do not always clearly state the description of the meeting attended or the location visited:

9.2.4 Both pages of claims covering two pages are not always signed by the claimant, MPA administration or the Head of Member Services;

9.2.5 Claims are not always made on a timely basis. One member made claims totalling £1,144.02 for April 2002 to March 2003 in July 2003 whilst another member made claims totalling £670.31 for April to December 2002 in March 2003;

9.2.6 No evidence was held of a check of prices for a member’s air ticket. DPCS4 were contacted but CLAMS identified a cheaper alternative. In addition no record was held of the fact that the member was able to travel by premium class rather than economy;

9.2.7 No record is held of decisions made to pay for broadband internet access for one member and a dedicated phone line for another member;

9.2.8 Expenditure incurred on hospitality is not checked for reasonableness.

9.3 In order to ensure that all claims are valid and accurate we recommend that:

9.3.1 The claim form is adjusted to contain details of where journeys have started and finished;

9.3.2 Blank sections of the claim form are crossed off;

9.3.3 All pages of the claim form are signed by all relevant parties;

9.3.4 All claims are made on a monthly basis. Claims more than 3 months overdue are not paid;

9.3.5 A record is held of the decision not use DPCS4 for air travel. Evidence is retained of the checking of ticket prices;

9.3.6 A record is held of authorisation of decisions made to pay a member for specific expenses;

9.3.7 Hospitality expenditure incurred is checked for reasonableness.

9.4 Changes to member’s allowances are not always authorised. The adjustments made for the 2003/04 pay award were sent to CAPITA by fax. There is a risk that unauthorised adjustments are made to member’s allowances. We recommend that all changes to member’s allowances are authorised by the Head of Member Services.

Appendix B

Appendix B is available from the MPA in hard copy only.

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