Annex B
Financial Management Framework
B.1 RCEP's resources shall be managed in accordance with the requirements of Government Accounting
Departmental expenditure control system
B.2 The resources allocated to RCEP come from DETR's administration Vote (for 2000/01, in subsequent years from DETR's Administration Request for Resources). DETR's resources, including its administration resources, are fixed for periods of three years and reviewed every two years. For example, the 2000 Spending Review has confirmed the resources available for 2001-02 and set limits on the amounts available in 2002-03 and 2003-04; the resources available for 2003-04 will be confirmed in the next review in 2002. DETR allocates administration resources according to Ministerial objectives and priorities in the context of an annual business planning exercise.
Allocation of resources to RCEP
B.3 Resources for RCEP will be included in the total administration resources allocated to DETR's Environmental Protection Group by the Corporate Financial Management Division. The Head of EPSD will allocate resources to RCEP for the next financial year from the Group's budget and also give indicative allocations for the subsequent two financial years. The level of resources allocated will take account of the objectives, outputs and targets set out in the Commission's Corporate Plan (see paragraphs 3.1 and 3.2 of main text above).
B.4 All of RCEP's current spending is subject to Single Running Cost Control i.e. it has freedom to vire between its current expenditure headings. Viring between current and capital budgets requires the agreement of EPSD.
Monitoring expenditure
B.5 By September each year, the Secretary and the Head of EPSD will review RCEP's spending and requirements for the remainder of the financial year and RCEP's allocation may be adjusted accordingly. The Secretary shall provide quarterly reports and notify EPSD as soon as it becomes apparent that overspending or underspending of resources allocated is likely to occur. The Secretary shall not commit RCEP to expenditure beyond the resources at its disposal (see paragraph 9 in Annex C).
End of year report
B.6 The Secretary will provide the following information and commentary in his/her end of year report in June each year:
- any variation between actual expenditure and the resources allocated resulting in overspends of at least 2% or £50,000 (whichever is the lower) or underspends of at least 3% (providing the underspend is at least £10,000);
- the adequacy of the financial management and control systems operated by the Secretariat;
- the outcome of any audits, risk assessments, staff inspections, grading reviews and RCEP's response to any recommendations relevant to financial control;
- details of any contracts awarded by single tender action (see paragraph 12 in Annex C); and
- the arrangements for asset management and IT security; and the financial management training received by, or planned for, Secretariat staff.
Insurance
B.7 RCEP shall adhere to the normal criteria governing insurance by public sector bodies, namely that commercial insurance policies should be taken out only where there is a statutory or contractual requirement to insure. Exceptions to the general presumption in favour of self insurance are only permissible with the prior approval of DETR and Treasury, which will only be given where it can be demonstrated beyond doubt that commercial insurance offers better value for money.
Audit
B.8 The Secretary may seek assurance from either DETR's Internal Audit Service or external auditors that the systems and controls established by RCEP do comply with the principles of regularity, propriety and value for money.
B.9 DETR may arrange for an evaluation of RCEP's systems and controls to be carried out in order to be able to provide assurance to DETR's Principal Accounting Officer about the maintenance of appropriate standards and performance.
B.10 RCEP shall maintain such books and records as are proper to the discharge of its responsibilities. These shall be available for inspection at all reasonable times by DETR, its nominated representatives and the Comptroller and Auditor General or his representatives. The Comptroller and Auditor General may carry out examinations under Section 6 of the National Audit Act 1983 into the economy, efficiency and effectiveness with which RCEP has used its resources in discharging its functions and report to the Parliament the results of any such inspection he has undertaken.
Arrangements for use of DETR services
B.11 RCEP will agree with DETR service providers the provision of services on terms and under arrangements corresponding to those that apply ordinarily to DETR divisions. Any payments under such arrangements will appear in DETR accounts as notional costs.
Liaison between EPSD and DETR Finance Directorate
B.12 In discharging its financial management responsibilities for RCEP's resources, EPSD may seek advice from DETR's Finance Directorate, with the Financial Advice and Resource Management (FARM) Division acting as the focal point. Consulting other finance divisions as necessary, FARM will advise on:
- the financial regularity and propriety of expenditure by RCEP;
- proposals for expenditure which have novel or contentious features and on cases which could give rise to criticism of the Principal Accounting Officer on the grounds of propriety, regularity or value for money, including losses, special payments, fraud or corruption;
- systems and procedures for controlling and monitoring expenditure; and
- responses to NAO management letters and reports.
B.13 FARM will also:
- ensure that the Head of EPSD or RCEP, as appropriate, follow up the recommendations of internal audit reports;
- report this follow-up action to the DETR Audit Committee; and
- write off any losses by RCEP in accordance with the relevant Treasury delegation.
Published 26 February 2001
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