NAO plans stricter MPs' expenses scrutiny

The National Audit Office is already planning to audit MPs' expenses for 2009/2010 on the same basis as other central government departments for the first time, according to an NAO submission to the Committee on Standards in Public Life.

It follows an audit of expenses for 2008/2009 limited by 'the availability of evidence to support the regularity of those claims', with past years' audit certificates limited to whether payments were supported by MPs' claim forms, whether the stated purpose met the requirements of the relevant allowance and whether the Fees Office had properly accounted for claims paid.

Outgoing acting comptroller and auditor general Tim Burr told committee chairman Sir Christopher Kelly that a reduction in the MPs' receipting threshold to £25 from April last year, since reduced to zero, had resulted in improvements to the quality and quantity of audit evidence and he had proposed, and the Commons had accepted, his recommendation that the restriction to the scope of future NAO audits should be removed.

NAO staff were already testing the reliance that can be placed on newly available evidence in support of claims with a view to its use in the 2009/2010 Members Estimate Resource Account.

Burr said 'shortcomings in the past and current systems have hampered effective audit of MPs' expense claims over the years'.

He warned: 'If the future administrative and internal control system for MPs' expenses are to support effective and efficient audit there must be robust, cost effective and proportionate management controls and processes designed to ensure compliance with those rules.'

He said the proposal for an independent Parliamentary Standards Authority – committee since legislated for — would provide an opportunity to address his concerns and strengthen overall governance and policing arrangements.

Burr's submission is among hundreds which have been submitted by MPs and others to the committee, including one from HMRC confirming the MPs' Additional Costs Allowance intended to pay for second homes was covered by 'a complete exemption from tax' with the scope of the allowance determined by resolution of the Commons and Parliamentary authorities.

It said that 'the amounts paid to MPs do not have to be reported on tax returns'.

HMRC also said there were no special Capital Gains Tax rules for MPs whatever internal arrangements applied to payment of the ACA.

Like anyone else a person with more than one residence could choose which should qualify as their exempt home, which they must occupy 'for at least part of the time', it's submission said.

Further reading:

KPMG director admits £500,000 fraud

Corruption: a tailor-made approach?

AATV: MPs' expenses and tax reform