DfID Financial Management publications parliament uk

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Committee of Public Accounts, The Committee of Public Accounts is appointed by the House of Commons to. examine the accounts showing the appropriation of the sums granted by. Parliament to meet the public expenditure and of such other accounts laid. before Parliament as the committee may think fit Standing Order No 148. Current membership,Rt Hon Margaret Hodge Labour Barking Chair. Mr Richard Bacon Conservative South Norfolk, Mr Stephen Barclay Conservative North East Cambridgeshire. Dr Stella Creasy Labour Cooperative Walthamstow,Jackie Doyle Price Conservative Thurrock. Justine Greening Conservative Putney,Matthew Hancock Conservative West Suffolk.
Chris Heaton Harris Conservative Daventry,Joseph Johnson Conservative Orpington. Rt Hon Mrs Anne McGuire Labour Stirling,Mr Austin Mitchell Labour Great Grimsby. Nick Smith Labour Blaenau Gwent,Ian Swales Liberal Democrats Redcar. James Wharton Conservative Stockton South, The following member was also a member of the committee during the. parliament,Eric Joyce Labour Falkirk, The committee is one of the departmental select committees the powers of.
which are set out in House of Commons Standing Orders principally in SO No. 152 These are available on the internet via www parliament uk. Publication, The Reports and evidence of the Committee are published by The Stationery. Office by Order of the House All publications of the Committee including press. notices are on the internet at www parliament uk pac A list of Reports of the. Committee in the present Parliament is at the back of this volume. Additional written evidence may be published on the internet only. Committee staff, The current staff of the Committee is Philip Aylett Clerk Lori Verwaerde. Senior Committee Assistant Ian Blair and Michelle Garratty Committee. Assistants and Alex Paterson Media Officer, All correspondence should be addressed to the Clerk Committee of Public. Accounts House of Commons 7 Millbank London SW1P 3JA The telephone. number for general enquiries is 020 7219 5708 the Committee s email address is. pubaccom parliament uk,Report Page,Conclusions and recommendations 5. 1 The Department s financial management capacity 7. 2 The Department s strategic direction and focus on value for money 12. Formal Minutes 15,Witnesses 16,List of printed written evidence 16.
List of Reports from the Committee during the current Parliament 17. The Department for International Development the Department is one of only two. government departments protected from overall expenditure reductions The Government. has committed to increasing the UK s aid spending to 0 7 of gross national income by. 2013 The Department faces a substantial challenge to improve its financial management. and secure value for money from its rapidly increasing programme budget over the next. four years while reducing its administration costs by a third. The Department acknowledges the importance of financial management and focussing on. value for money but despite previous recommendations from this Committee has not. made enough progress to date We welcome the planned introduction in 2011 of a finance. improvement plan The Department must now keep up the focus on better financial. management rather than let it slip as happened in April 2010. We were concerned that the Department does not quantify the likely level of leakage. through fraud and corruption And the Department is only considering fraud risk at the. level of delivery method rather than at a country level Management of fraud risk will. require a stronger framework for ensuring money is properly spent on the ground with. effective monitoring and pro active anti fraud work This is particularly important in the. context of the growing budget and the expected efficiency savings in administrative. expenditure, The Department s programme budget is due to increase by a third in the next four years. The Department lacked certainty about the future split between bilateral country to. country funding and funding to multilateral organisations which then determine how to. distribute the aid worldwide On provisional plans however the proportion of the. Department s spending that will go through multilaterals is set to increase We were. unconvinced that an increase in funding to multilaterals would ensure value for money as. the Department does not have the same visibility over the cost and performance of. multilaterals programmes as it does over its own bilateral programmes. The Department s plans to increase spending in fragile states and in sectors where it has. less experience increase the risks to value for money especially given the Department s. patchy evidence on costs and outcomes and its poor understanding of the levels of fraud. and corruption, We are concerned that the Department still has insufficient data to make informed. investment decisions based on value for money The Department was not clear about. whether it needs to generate more data or whether the data exist but need to be better. collated We heard testimony from the Department that it has made progress in collecting. data on primary education in developing countries and we look forward to receiving the. Department s progress report The Department however needs to generate similar data. for all of its aid portfolio, On the basis of a report by the Comptroller and Auditor General 1 we took evidence from. the Department for International Development on its financial management capability its. increasing focus on value for money and the challenges it faces in managing its increasing. programme budget while reducing its overall running costs. 1 C AG s Report Department for International Development Financial Management Report Session 2010 12 HC 820. Conclusions and recommendations, 1 While most departments are under increasing pressure to reduce expenditure the. Department for International Development s the Department s spending on aid is. due to increase by a third in real terms over the next four years At the same time the. Department is expected to reduce its administrative expenditure by 34 million to. 94 million a real terms reduction of a third The Department is planning to do. more work to help those most in need including in sectors in which it has less. experience and in more fragile and conflict affected countries which pose a higher. risk in terms of poor security delivery capacity and leakage of funds through fraud. and corruption Sound financial management and a stronger focus on value for. money are essential to inform the Department s investment decisions We welcome. the Department s recognition that it needs to improve its financial management and. its focus on value for money The following recommendations are intended to help. the Department tackle some of the challenges that lie ahead. 2 The Department increasingly recognises the importance of financial. management but has not consistently prioritised its improvement and does not. have enough financial expertise in the countries in which it works Worryingly. the Department stopped monitoring its finance plan the Money Action Plan in. 2010 when it undertook a more fundamental review of how it allocates resources to. secure impact and value for money from aid In order to keep financial management. as a high corporate priority the Department should set out in its 2011 finance. improvement plan clear and auditable outcome measures for the plan s activities. including how it will increase financial expertise in the countries in which it works. who is responsible for delivering the plan s activities and when targets should be. achieved It should report on progress publicly, 3 The Department does not estimate levels of leakage through fraud and.
corruption which undermines its ability to make informed investment decisions. and gain assurance that it has appropriate and effective controls in place Fraud. investigation is reactive and reported levels of fraud are unbelievably low The. selection of aid projects is not based on a good understanding of the scale and. likelihood of fraud in each country nor how proposed project design mitigates the. risks The Department should assess the level of leakage across each of its. programmes in its 27 priority countries It should also increase the attention given at. all levels of its organisation to tackling fraud with a stronger framework for ensuring. funds are spent properly on the ground with effective monitoring and pro active. anti fraud work Each project and programme business case should set out how the. Department has designed the project to reduce the risk of leakage an assessment of. any residual risk of leakage and how this risk will be managed Subsequent annual. reviews of projects should include updated fraud risk assessments. 4 There is a risk that the Department will increase its funding to multilaterals and. partner organisations simply because it has insufficient capacity to spend its. increased budget through its own bilateral programmes The Department is still. identifying and designing many of the projects and programmes needed to reach the. UK s aid target of 0 7 of gross national income by 2013 The Department plans to. increase the proportion of its funding spent via multilaterals but does not have the. same visibility over the cost and performance of multilaterals programmes as it does. over its bilateral programmes Furthermore the strategy to increase DFID spend. through multilateral programmes appears to have more to do with it being easier for. DFID to do this than for it to assess the viability effectiveness and value for money of. bilateral programme proposals The Department must be able to demonstrate that. any increase in funding to multilaterals is based on a clear assessment that it will. achieve value for money and that it represents better value for money than investing. in alternative bilateral programmes, 5 The Department channels funding through complex delivery chains some of. which have high running costs Total running costs for the delivery chain as a. whole are not known The Department has a corporate target to reduce its running. costs to 2 by 2014 15 but partner organisations and multilaterals also incur further. layers of running costs which can often be much higher In order to maximise the. resources that get to the frontline the Department should develop clear plans to. reduce or control running costs when delivering through multilaterals and partner. organisations and set a target for total running costs for the delivery chain as a. 6 The Department does not have all of the data it needs to manage and prioritise. effectively its aid programme or to measure whether all its projects and. programmes are value for money The Department has introduced a new. information system but it does not provide integrated performance and financial. data to support well founded decisions The Department needs to develop an explicit. information plan setting out how and when it will improve data coverage and quality. for all its programmes including unit costs with clear milestones against which we. can judge progress, 7 The Department says it has increased its focus on value for money and there is a. clearer understanding of top level corporate priorities but it cannot demonstrate. that it has optimised value for money The Department must be able to. demonstrate unequivocally that it allocates resources on the basis of value for money. but staff do not have the information or strong incentives to do so particularly. given the pressure to spend increased resources Country offices protect their own. budgets and have been unwilling to release funds which could be better spent. elsewhere The Department should develop clear and auditable mechanisms which. ensure that staff in both Headquarters and country offices have value for money. criteria at the heart of their decision making and that they reallocate funding to the. best possible alternative when projects are delivering weaker value for money than. 1 The Department s financial management, 1 The Department for International Development the Department is one of only two. government departments protected from overall expenditure reductions The Government. has committed to increasing the UK s aid spending to 0 7 of gross national income by. 2013 0 56 achieved in 2010 and in real terms the Department s spending is due to. increase by a third over the next four years The Department is the UK s main funder of. overseas aid contributing 7 4 billion or 88 of the UK s total in 2010 2 Spending by the. Department of Energy and Climate Change the Foreign and Commonwealth Office the. Ministry of Defence and other government departments accounted for 0 6 billion 7 per. cent of the UK s overseas aid spending with non departmental expenditure accounting for. the remaining 0 4 billion 5 per cent 3, 2 In 2008 the Department recognised the need to strengthen its financial management It. undertook a number of initiatives including implementing ARIES a new financial and. management information IT system recruitment of accountants at both the central and. divisional level and the introduction of the Money Action Plan The Plan included. milestones for introducing a continuous professional development strategy improving the. quality of cash forecasting and for achieving further benefits from ARIES Progress against. the Money Action Plan was formally monitored by the Department s Management Board. DfID Financial Management Fifty second Report of Session 2010 investigation is reactive and reported levels of fraud are unbelievably low The selection of aid projects is not based on a good understanding of the scale and likelihood of fraud in each country nor how proposed pr oject design mitigates the risks The Department should assess the level of leakage across each of its

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