Governance Systems Review

These recommendations can be accepted in full.

It is important to note that public expenditure in NI is governed by the UK Budgeting rules set by HM Treasury. These rules mean that there is limited flexibility available to the Executive in some areas.

Some elements are addressed in existing guidance, including the stipulation that resources should be utilised in line with regularity, propriety and value for money considerations. Funding for some specific issues may be provided by HMT on a time-limited basis. In addition the HMT public expenditure rules mean that only very limited funding can be carried forward between financial years. However, this does not override the value for money requirement. Departments have the opportunity to revise annual budget allocations through the in-year process.

Value for Money is already a requirement in the NICS core competency framework.

These recommendations have been addressed in work to date through:
• Departments’ response to the lessons learned following PWC’s Heat Reports;
• the major and fundamental Review of the Expenditure Approval and Business Case Processes, incorporating many of the recommended elements;
• the delivery of an online package of Public Expenditure training for both budget holders and general-service grades;
• the initiation of a review of MPMNI;
• re-establishment of DoF-led Finance Director meetings
• the issue of a formal protocol for engagement with HMT.

Further work is required to:
• give consideration to the role of Casework Committees to ensure that they are rigorous and deliver the necessary scrutiny and independence, in line with the existing role of GatewayTM reviews;
• Implementation of Five Case Model guidance
• Engagement with the Treasury around ‘false economies’
• Consideration by DoF of the introduction of an Approval Panel for the highest cost and most complex proposals
• As part of the Annual Assurance Statement, departments will be asked to confirm:
- that the appropriate approvals process has been followed for all expenditure;
- that Ministers have been made aware of conditions that apply to all expenditure approvals as standard and specifically have been made aware of any non-standard conditions that had been applied to expenditure; and
- that they are content all expenditure activity has adhered to the conditions of its approval.
• Supply shall:
- include a line in non-standard approval letters to say that Ministers should be made aware of the additional conditions; and
- issue a Finance Directors letter to advise this change is coming in and that it would be for departments to determine the most suitable method for advising their Minister of such conditions.
• Progress and finalise the review of MPMNI
• deliver the strategy currently under development for the NICS finance profession;
• Gauge the demand for a further classroom-based training course. As part of that process DoF will engage with Finance Directors on departmental requirements. Should there be demand for such a course DoF will develop in conjunction with CAL.;
• keep the information sharing and knowledge transfer protocols under review, engaging with HMT and departments on their effectiveness and revising where necessary.
• assess position with both HMT and departments and review any breaches for lessons learned as part of its first review.

Departments will review their own corporate governance to address potential weaknesses in the understanding and utilization of existing governance frameworks.

The inquiry recommended that civil servants should understand and know how to use existing governance frameworks. Further work needs to be done on increasing civil servants' understanding of governance frameworks and policies, and we will seek to deliver that.

We acknowledge that further work needs to be done on the governance areas — that was recommendation 32a — and we are endeavouring to deliver that.

The recommendation is not currently likely to be fully implemented.

Whilst we recognise the previous changes in risk management and DoF’s more recent references to the various (higher-level) information and other sources which feed into the discharge of the AO’s responsibilities, as set out within the Governance Statement, we continue to conclude that the nature of the Inquiry’s recommendation remains focussed around departments reviewing the use and active understanding of governance systems by their staff. There is no evidence available to support and confirm that the necessary approaches to achieve this have been put in place.