BBC PROTOCOL C4 – VALUE FOR MONEY INVESTIGATIONS January 2007 VALUE FOR MONEY INVESTIGATIONS 1 Scope 1.1 This protocol applies to the process for instigating and conducting Value for Money investigations for the BBC as a whole, including the UK Public Services, the World Service, BBC Monitoring, non-service activities and the commercial services. 2 Duties of the Trust 2.1 Under the Charter, the Trust is the guardian of the licence fee revenue and the public interest in the BBC. The Trust’s general duties include representing the interests of licence fee payers and exercising rigorous stewardship of public money (Charter, Articles 23(a) and (d)). 2.2 The Trust is required under the Charter (Article 24(2)(i)) to commission value for money (VFM) investigations into specific areas of BBC activity. The Trust is also required under the Agreement (Clause 79) to examine the value for money achieved by the BBC in using the sums paid to it under Clause 75(1). 2.3 Under Clause 75(1) of the Agreement, the Secretary of State is required to pay to the BBC out of money provided by Parliament sums equal to the whole of the net Licence Revenue or such lesser sums as the Secretary of State may, with the consent of the Treasury, determine. 3 Role of the Executive Board 3.1 Members of the Executive Board (including the Director-General and Finance Director) may be required to participate in discussions with the Trust and National Audit Office (NAO) to scope out areas for the audit programme. 3.2 The Executive Board may be required by the Trust to respond to any aspect or conclusion of a report following a VFM investigation. 3.3 The Executive Board must co-operate with the NAO or any other organisation that has been instructed to undertake a VFM review and must nominate an executive sponsor for each review. 4 Approach 4.1 For the purposes of examining value for money achieved by the BBC, the Trust will: (i) discuss regularly with the Comptroller and Auditor General (C&AG) the possible scope of its audit programme and which individual reviews may be suited to the NAO; (ii) take reasonable steps to agree with the C&AG the information needed by the NAO to conduct such a discussion and how it is to be accessed; (iii) ensure C&AG has access to such information; (iv) decide upon an audit programme including, in particular, the activities of the BBC which will be subject to individual reviews in accordance with that programme; (v) consider any report submitted to the Trust and decide what action the Trust must take in the light of any such report, including requiring a response (if necessary) from the Executive Board; (vi) transmit any report submitted to it, together with any written response it considers appropriate, to the Secretary of State; and (vii) monitor the effect of any recommendations arising from such reports. 5 Procedure Discussions on the scope of the audit programme 5.1 The Trust Unit will conduct an initial scoping of the VFM audit programme for the next financial year and successive financial years. 5.2 In doing so, the Trust Unit will discuss with the NAO and invite its views on: (i) the possible scope of its audit programme; (ii) the prospective long list in general terms; (iii) the shortlist of possible areas for review in the immediately following financial year; and (iv) which individual reviews within that programme would be particularly suited to the NAO (Agreement, Clause 79(2)(a)). 5.3 The Trust will take all reasonable steps to agree with the C&AG the information needed to conduct such a discussion and how it is to be accessed, and ensure that he has such access to such information (Agreement, Clause 79(2)(b)). 5.4 The process may also include discussions between the NAO, Trust Unit and the BBC Executive and staff. Decisions on the audit programme 5.5 The Trust’s Finance & Strategy Committee will, each year: (i) decide on a VFM audit programme for the calendar year immediately following (areas for review, allocation between NAO and other bodies); (ii) provisionally plan the VFM audit programme for successive years. 5.6 The C&AG or his representative will be invited to attend the relevant Committee meeting. Wider BBC/NAO contact 5.7 Alongside the arrangements referred to above, BBC/NAO contact will be enhanced more generally by discussion between a Trustee and the C&AG and regular discussions between NAO and Trust Unit to review the progress of studies and other issues. Arrangements for review 5.8 Following its decision on an audit programme, the Trust must enter into suitable arrangements, including those with: (i) the NAO, on terms which require the factual content of any report to be submitted to be agreed by the BBC before submission but allow the NAO to retain full discretion over the report’s conclusions and recommendations; and (ii) other suitable organisations, to carry out individual reviews in accordance with the audit programme, for such period or periods as the Trust determines (Agreement, Clause 79(3)(a)). 5.9 Following the Trust’s decision on an audit programme, the author of the study should, in liaison with the Trust Unit, work up detailed terms of reference for studies in these areas. 5.10 Any such arrangements referred to above must require an organisation, on completion of a review, to report exclusively to the Trust on that review (Agreement, Clause 79(3)(b)). 5.11 The Executive Board will nominate an executive sponsor to the review who will be required to present a formal written response to the Trust’s Finance & Strategy committee at the point at which the review is tabled. The Executive Board is required by the Trust to co-operate with the NAO or any other organisation that has been instructed to undertake a VFM review. Modifications to the audit programme 5.12 Where significant concerns arise, it is open to the NAO to suggest modifications to the audit programme for the year in question. Action following receipt of reports 5.13 The Trust will consider any report and the extent to which it contains, in the Trust’s view, anything which ought to be taken into account in examining the value for money achieved by the BBC in using the sums paid to it under Clause 75(1) of the Agreement (Agreement, Clauses 79(3)(c), 79(1)). 5.14 The Trust will decide what action it should take in light of any such report, which may include requiring the Executive Board to set out how it intends to respond to: (i) any aspect of the report, including what steps it intends to take in consequence of it; or (ii) the conclusions of those aspects of the Trust’s examination which took the report into account, so far as they are relevant to the functions of the Executive Board (Agreement, Clause 79(3)(d)). Transmission of reports and responses to the Secretary of State. 5.15 The Trust will, as soon as practicable, transmit any report submitted to it (whether by the NAO or by any other organisation) together with any written response it considers appropriate, to the Secretary of State. It is the responsibility of the Secretary of State to lay that report, together with the Trust’s response (if any) before Parliament. Monitoring of action following reports 5.16 The Trust will monitor the response of the Executive to reports from time to time.