Parliamentary

44
Corporate Governance
The Corporate Governance Code issued
by HM Treasury is designed specifically
for central government departments. It is
essential that IPSA is seen to uphold the
highest standards in its own operations,
and I am satisfied that IPSA is compliant
with the requirements of the Code where
they are relevant to its statutory position, in
most cases complying with the letter and
the spirit of the Code’s provisions. Where the
requirements of the Parliamentary Standards
Act 2009 differ from the Code, IPSA will
always seek to comply with the Act, which
reflects the wishes of Parliament.
There is one area where to comply fully with
the Code would result in IPSA’s governance
arrangements being in conflict with the
intention of Parliament: the Code requires
Boards of departments to be chaired by the
lead minister and for membership to be
balanced, with an equal number of ministers,
senior officials and non-executive members
(Provision 3.3). The composition of the
IPSA Board is determined by the Act which
requires that the Board should be chaired by
a non-executive Chairman with a majority of
non-executive members.
Provision 2.5 of the Code provides for some
activities to be exercised by committees
of the Board including, as a minimum,
committees responsible for audit and risk
assurance, and nominations and governance.
During 2011-12, as mentioned above, the
IPSA Board was supported in its role by the
Audit and Risk Committee.
Risk management
Within IPSA, risk matters are handled
primarily through the Risk and Assurance
Working Group. This is chaired by the
Director of Finance and Corporate Services,
who provides regular reports on risk matters
to the Accounting Officer, Senior Leadership
Team and Audit and Risk Committee. IPSA
has a risk appetite policy, which has been
approved by IPSA’s Board, which is used in
determining its risk management strategy.
Risk appetite is ranked on a five point scale
from zero, through low, modest, moderate
to high. At present, IPSA judges that it will
tolerate:
• low risks for financial matters;
• modest risks for reputation and
compliance;
• moderate risks for operational and policy
delivery.
The risk appetite is reviewed biannually and
will be developed gradually to provide a more
detailed breakdown of risk categories.
Fraud prevention
The nature of IPSA’s role means that it has to
ensure the minimum possible risk of fraud,
even compared to the standards normally
applied to the management of public money.
For payment of MPs’ expenses, this is
achieved through a multi-layered assurance
process consisting of:
• the underlying claims process which
requires every payment to be supported
by a receipt or similar documentary
evidence;
• a framework of validation under which
all claims are subject to scrutiny, driven
by the relative risks attached to each
expense category, for compliance with
the Scheme and satisfactory supporting
evidence;
• a separate internal Assurance and Review
Team and process which considers a
sample of payments to check they are
accurate; and
• public transparency through publication
of all payments.
IPSA Annual Report and Accounts 2011-2012