Auditor General refuses to sign off Commons accounts

The Auditor General has refused to sign off last year's House of Commons accounts in full amid serious concerns about millions of pounds of expenses paid to MPs.

Amyas Morse, the head of the National Audit Office, found the Commons authorities unable to provide evidence justifying £2.6 million of claims.

In addition, the House could not prove that another £11.3 million of expenditure had been incurred for parliamentary purposes.

As a result, Mr Morse has qualified the Commons' accounts for 2009/10 - the first year in which he has been required to examine the claims of MPs in any detail.

In his report on the House of Commons Members Resource Accounts 2009/10, Mr Morse said there were £13.9 million of payments to MPs which were "either unsupported or where entitlement could not be fully demonstrated".

He said that the Commons had failed to maintain proper accounting records concerning the £98.1 million of reimbursements to MPs in expenses.

"In respect of the lack of evidence to support entitlement for payment of £13.9 million of Members' allowances, I have not obtained all the information and explanations that I consider necessary for the purpose of my audit, and proper accounting records have not been maintained," he said.

In particular, there was £800,000 of expenditure which could not be backed up by documentation despite "a major exercise to obtain evidence retrospectively".

Evidence could not be provided for £1.8 million of claims because the MPs concerned were under investigation by the police.

The Commons provided supporting documentation for £11.3 million of claims but it was insufficient proof that the money had been incurred via parliamentary business.

MP John Thurso, spokesman for the Commons Members Estimate Committee, acknowledged there were areas where "the checks and balances were not adequate".

But he said the issues had already been identified by the House and stressed that responsibility for administering MPs' expenses had now been passed to the Independent Parliamentary Standards Authority (Ipsa).

The Auditor General was asked to conduct a "full scope" audit of the Commons' accounts in response to rising public anger about MPs' expenses last year.

Until then, he was only required to check that MPs had signed claims for the cash that was paid out in expenses.

"In my opinion, except for the £13.9 million of expenditure on Members' allowances that was either unsupported or where entitlement could not be fully demonstrated, in all material respects the income and expenditure have been applied for the purposes intended by Parliament and the financial transactions conform to the authorities which govern them," Mr Morse said.

Mr Thurso said the full scope audit had been requested by the Commons to ensure "everything possible was learned from the allowances issue".

"The NAO concluded the accounts were a 'true and fair view' and complied with the relevant accounting standards," he said.

"In 2009/10 the House and the NAO required considerably more documentation than in previous years and by the end of the audit the overwhelming majority of this had been provided. Since then even more evidence from MPs has been forthcoming.

"We recognise there were clearly some areas where the checks and balances were not adequate but these issues had already been identified."

After being asked to look at MPs' expenses claims in detail, Mr Morse said, he had found that one in four payments had not been supported by the evidence required under House rules.

An 11-month "remedial" project was then undertaken by the House to establish how many payments were unsupported and try to retrospectively obtain evidence for them.

But £830,000 remained unsupported at the end of that process in October. Of that, £460,000 related to MPs' staffing budgets and £370,000 to second homes and offices.

The Commons is taking action to recover only £33,794, however. That is the amount of money for which there is either no evidence of any transaction having been made at all, or where it can be positively demonstrated that payments were made incorrectly.

But £17,612 of that was paid to MPs who have since quit Parliament and so the Commons feels it is "unlikely" to be able to recover the money.

Mr Morse explained that he had "limited the scope of (his) regularity opinion" in relation to a further £11.3 million of expenses claims where the supporting evidence did not meet auditing standards.

That included £4.7 million of travel costs, £3.8 million of communications costs and £2.8 million of "other" costs including overnight subsistence and telephone calls.

He said that the rules under the Green Book that previously governed MPs' expenses had been met for this expenditure.

"However, in applying the professional standards that underpin my audit, in my opinion, these requirements are not sufficient to allow me to confirm that expenditure has been incurred for parliamentary purposes," he added.

"This lack of evidence does not necessarily imply that expenditure was paid incorrectly."

The period covered by the audit - April 2009 to March 2010 - falls mainly after the expenses scandal erupted with The Daily Telegraph's revelations in May 2009.

Mr Morse's more in-depth audit had been requested by MPs a few months earlier amid increasing suspicions about MPs' claims even prior to the welter of disclosures that followed the leak.

The MPs from whom the Commons is chasing £33,794 were not immediately named, although a House spokeswoman said they would be at a later stage.

"We intend to release the names at a later date once the MPs themselves have been informed and given an opportunity to comment," she said.