THE ROYAL NAVY
SUBMARINE MUSEUM
FINANCIAL MEMORANDUM
1. The Royal Navy Submarine Museum is
established by a Deed of Trust dated 11th December 1963. It was designated
under the National Heritage Act in 1984, and as such became an Executive
Non-Departmental Public Body. Any reference to ‘the Museum’ in this document
shall be read as referring to the Royal Navy Submarine Museum.
2. This financial memorandum (FM) sets
out an agreement between the Ministry of Defence (MOD) and the Trustees of the
Museum setting out the strategic control framework within which the Museum is
required to operate, and the conditions under which grant in aid (GinA) is
provided to the Museum.
3. The conditions set out below are in
addition to, and not in substitution for, any guidelines or directions issued
by the Secretary of State for Defence in respect of any individual functions,
powers and duties of the Museum.
4. For the purpose of day-to-day
dealings, all references in this document to MOD may be taken as referring to
Naval Personnel Secretariat (NP Sec2).
5. This agreement will be reviewed at
5-yearly intervals, or earlier if necessary, and the Museum will assist MOD in
any such review. Amendments may be proposed for mutual consideration whenever
either party considers this necessary. The Treasury will be consulted by MOD
before changes are agreed.
6. Payment ‘of the GinA remains subj ect
to the MOD being satisfied that the conditions set out below are being met,
except where some variation in these has been agreed between the parties in
writing. Detailed financial guidance is given at Annexes A and B.
7. GinA is provided to the Museum to
contribute towards the costs of the management and running of the Museum in
accordance with the following objectives :
a. Provide
an effective and accessible repository, both now and in the future, for the
heritage of the Navy and to raise public awareness of the Royal Navy Submarine
Branch.
b. Encourage
scholarship and research into the history of the Royal Navy Submarine Branch.
8. To this end the GinA is provided to
meet a proportion of the running costs of the Museum as set out in paragraph 9.
COMPOSITION
OF THE GRANT-IN-AID
9. MoD will make an annual GinA
available under the payment arrangements at paragraph 19 towards the costs of
tasks covered by the Museum’s Corporate Plan and detailed under the following
headings:
a. Maintenance
Costs. Building Maintenance and Works Service expenditure.
b. Staff
Costs. Industrial/non-industrial pay, ERNIC, superannuation, travel and
subsistence, pay of temporary casual staff and uniforms.
c. Operating
Costs. Includes security, utilities, cleaning, administration, maintenance
of exhibits, transport of stores/equipment, recruiting, photographic equipment,
marketing and other general operating costs.
d. Acquisition
Costs. Items planned for exhibit.
10. The Museum will prepare a 3 year
Corporate Plan annually in accordance ~with the guidance contained in the
booklet entitled “CORPORATE PLANNING IN NON-DEPARTMENTAL BODIES (NDPBs)” issued in January 1988 by HM Treasury. Draft plans
may be negotiated between MoD and the Museum during the course of the year but
should be finalised by the last week in November.
11. The Corporate Plan should include strategic aims, higher-level objectives, identification of targets and performance indicators and agreed standards of measurement.
12. By the end of March each year, the MoD
shall send the Director of the Museum a statement of the approved Grant in Aid
for the following financial year (the estimates year) and the plan for Grant in
Aid for the Long Term Costing period. This statement will be reviewed annually
in the light of the Government’s forward public expenditure plans and the
Museum’s corporate plan, and is to form the basis of the Museum’s forward
plans.
13. The Grant in Aid approved for the
estimates year is a cash limit and must not be exceeded without MoD and
Treasury approval.
14. By the last week of May each Financial
Year (FY) the Director will provide MoD with a projection of the expenditure to
be met from the GinA in the forthcoming FY (together with any receipts) and an
outline projection of the funding likely to be required for the forthcoming LTC
period.
15. MoD will agree with the Director of the
Museum a format for the projection which contains sufficient detail to enable
MoD to fulfill the requirements of Public Accountability as set out at
paragraphs 40 and 41 below.
16. The GinA will be net of receipts as at
the date of signing this memorandum. During the annual Long Term Costing (LTC)
the Sponsor will review the level of receipts in the Museum’s accounts and
projected plans and these may be taken into account in assessing future GinA.
17. Proceeds from the disposal of assets
previously purchased using the GinA or previously acquired from the MoD will
always be abated unless the amount is insignificant or the sale has been
previously approved as part of a development or plan to acquire an alternative
asset. For any asset valued at over £1M the procedures of DAO 3/89 are to be
applied.
18. Amounts received as a result of appeals
in aid of development projects covered in the agreed Corporate Plan for the
Museum will not be abated from GinA.
19. Payment will be made by cheque, or by
direct payment of staff salaries by MoD to the staff concerned or periodically
on application and will be authorized by MoD on the basis of spend against the
GinA and according to need. The portion of the GinA for purchase of exhibits
will be paid in full with the cheque for the first instalment. The in-year GinA
allocation not issued to the Museum by the end of the FY shall lapse.
20. The Museum has the authority to vire
funds between the cost headings at paragraph 9 without recourse to MoD provided
that this does not result in any increase in the GinA which has not previously
been agreed with the MoD. The acquisition grant is ring fenced for the purchase
of items for exhibit and any amount of unspent funding under this heading may
be retained for future use providing that the overall amount of retained GiA
funds for all purposes does not exceed 2% of the Museum’s total GiA.
21. The Museum will not dispose of any
asset that is wholly or partly provided through MoD/GinA funds, without first
consulting with MoD.
22. Payments and receipts, where appropriate, shall be closely monitored at all times during the FY so that timely action can be taken to ensure that the cash limit of the GinA is not exceeded. The Museum is to provide periodic statements of actual and forecast GinA expenditure, as agreed from time to time by MoD. MoD should be immediately advised if an overspend or underspend of the approved GinA is forecast so that appropriate action can be taken by the parties to the agreement.
23. MoD may carry out periodic inspections or
reviews of the Museum’s financial and management controls as it deems
necessary. The Museum is required to cooperate fully with all such inspections
or reviews including unannounced spot checks in normal office hours.
24. The Director, as Accounting Officer, will
provide to the MoD an annual audited account for expenditure of the GinA and
the accounts relating to any of their additional trading activities and, in
respect of the GinA :
a. Maintain
to M0D’s satisfaction an appropriate system of financial management including
banking arrangements.
b. Maintain
auditable records. Original accounting documents must be retained for 5 years
and main ledgers for 7 years, unless otherwise notified by the Treasury, of
payments and receipts made against the headings at paragraph 9 above.
c. Ensure
that the GinA is accounted for and managed separately from any other funds
managed by the Museum, and in accordance with the instructions of ‘Government
Accounting’ and other instructions issued by the MoD or Treasury.
d. The
authorization of payments and signatories to GinA account for the Museum will
be regularly updated, as agreed by the Chairman of the Museum’s Trustees.
e. Maintain
the minimum level of cash balances consistent with the efficient conduct of
business. GiA and receipts from the disposal of exchequer financial assets are
not to be held in reserves.
f. Ensure
that the GinA is used only for the purpose detailed in this agreement and is
not used for investment or speculation with the intention of generating
additional income.
g. Comply
with such other relevant guidance on administrative and financial practices
governing the expenditure of public funds as are mentioned in ‘Government
Accounting’, or otherwise notified to the Museum by the MoD.
25. The Museum may enter into contracts
observing the rules laid down by MoD ensuring the correct competitive tendering
procedures are followed. MoD is to be consulted on the selection of contractors
for all projects where total value is more than £25,000.
26. Prior approval from MoD who will consult
the Treasury must be sought before establishing a company or subsidiary body
which would have charitable status.
27. The cost of any capital works to be funded
by GinA is subject to separate funding which must be clearly identified in LTC
and in Grant in Aid allocations. GinA will not be provided for increased
running costs as a result of non-grant funded capital work unless the extra
costs have been approved in the LTC. Any reduction of costs must be shown in
LTC as a savings measure.
28. Staff to carry out the functions of the
Museum will be employees of the Museum, and consequent liabilities will fall on
the Museum. Where future liabilities are foreseen and relate to the objectives
set out in paragraph 7 of this memorandum they should be discussed with the
sponsor, and may be included in the costings of the Museum’s future plans for
Grant in Aid.
29.
The Musum will be managed by a Director supported by a secretariat, curatorial
and Museum support staff reporting to the Director. It has been agreed between
MoD and the Museum that the posts that will be funded by GinA will be as at
Annex C. No increase in staff numbers, changes to grading and promotion, above
Senior Executive Officer or equivalent grade, where salary is paid with GinA
funds, will be made without the prior approval of MoD.
30. Recruitment, remuneration, training,
personnel management of staff and industrial relations matters will be
ultimately the responsibility of the Museum Board of Trustees who are encouraged
to delegate authority in these matters to the Director.
31. The Museum will use good employer
practices and meet legal requirements including those of legislation covering
Health and Safety, and Equal Opportunities.
32. The MoD will provide advice on Personnel
Management matters, and the Museums are encouraged to follow the Civil Service
Management Code in its employment policies. MoD retains the right to review and
advise on the personnel practices adopted by the Museum and on grading of
employees paid from GiA both as required and as part of its Internal Audit
programme
33. The Board of Trustees should be involved
in setting priorities, high level objectives and key operational targets, in
the light of Ministerial views. They should set the strategic direction of the
Museum, based on proposals put to it in the Corporate Plan. The Board should
identify and monitor performance against the key operational targets against
which performance of the organization is to be judged.
34. The responsibility for administration and
management of the Museum, including the proper use of Grant in Aid rests with
the Trustees and the Director of the Museum.
35. The Director will be appointed by the MoD
Permanent Secretary as the Museum’s Accounting Officer. As such he will be
responsible to the Museum’s Board of Trustees for the proper conduct of its
responsibilities as described in paragraphs 24 and 33 above.
36. The Director will be responsible to the
Chairman of the Board of Trustees:
a. For
the administration and proper accounting to MOD for GinA. He is responsible for
ensuring that resources are used economically, efficiently and effectively.
b. For
the personnel as set out in paragraph 15 to 19 above, ensuring, where
appropriate, that personnel management policies are developed and observed in
accordance with current legislation and best practice.
c. Ensuring
that adequate internal expenditure controls are maintained in accordance with
the requirements of ‘Government Accounting’, the regulations referred to in
Annex A and any other instructions issued from time to time by MoD.
d. Advising
the Board of Trustees on matters of financial propriety and regularity and of
prudent and economical administration, efficiency and effectiveness.
e. Ensure
financial considerations are fully taken into account at all stages by the
Members of the Board in framing and reaching decisions and in their execution.
f. Signing the accounts and records
related to the accounts.
37. The Director is supported in his
financial responsibility by a secretariat to carry out such routine
administrative duties as he directs.
38. If the Director receives instructions
which he considers conflict with the requirements of financial propriety and
regularity (including the provisions of this memorandum), and of prudent and
economical administration, efficiency and effectiveness, he should act in
accordance with paragraphs 14 to 17 of the NDPB Accounting Officer Memorandum.
39. The Director may be required to give
evidence to the Public Accounts Committee (PAC) or any other Parliamentary
Committee when matters relating to the Museum arise and will be responsible for
complying with any recommendation made by the PAC or other Parliamentary
Committee and accepted by Government.
40. MOD is accountable, through the
Principal Accounting Officer, to Parliament for the following:
a. Determination
and payment of the GinA in accordance with the rules of Government Accounting.
b. The
conditions attaching to the GinA.
c. Monitoring
the Museum’s observance of the conditions.
d. Taking
measures to ensure that the Museum systems of financial management and control
are adequate to safeguard public funds and conform with both the requirements
of propriety and of good financial management.
e. Presentation
of the Museum’s Annual Report and signed Accounts to Parliament.
41. The Trustees are accountable to MoD for
the following:
a. Observance
of the conditions attaching to the GinA.
b. Maintaining
auditable records.
c.
The
regularity and propriety of payments from the GinA.
d.
The
safe keeping of funds which form part of the GinA, or anything purchased with
those funds; including maintenance of inventories or other records required by
MoD regulations.
e.
Ensuring
arrangements for the prevention of theft or fraud are maintained and regularly
reviewed.
f. The
proper presentation of accounts for the GinA and the provision of such management
information as is necessary to allow the MoD Accounting Officer to discharge
his responsibilities as set out in paragraph 35 above.
42.
The
Museum accounts relating to the GinA running from 1 April to the following 31
March will be audited by C&AG or, in the event that C&AG elects not to
audit the Museum’s accounts, by an independent auditor approved by the MOD. The
auditor may also examine the economy, efficiency and effectiveness with which
the Museum has used its resources to
carry out the tasks at paragraph 7 and the procedures it has adopted to comply
with the principles of ‘Government Accounting’.
43. MoD Internal Audit or Manpower Audit
personnel will also examine any or all of these same aspects of the Museum’s
work at the request of MoD, the Museum or its Director. This requirement is in
addition to the Museum’s separate internal audit responsibilities under charity
legislation.
44. The Museum’s books, records and
accounts shall be open to inspection by representatives of C&AG, MoD’S Directorate
of Internal Audit and the sponsor at all times and the Museum will be subject
to periodic audit. The annual account will be signed by the Chairman and
Director after acceptance by the Trustees.
45. In line with the general Government policy
of carrying its own risk, assets provided from MoD sources, purchased from
GinA, or MoD owned should not be insured.
a. MoD
underwrites the Museum’s Employers and Public Liability.
b. Each private function organised
within the Museum’s estate must have dedicated insurance. Advice on satisfactory
insurance cover will be given by MoD.
46. The buildings occupied by the Museum
which are not owned by MoD should have suitable and adequate insurance taken
out to cover any eventualities.
47. Any assets which are owned by the Museum
rather than MoD must also be covered by the Museum’s own insurance.
48. In the event of a major loss, excluding
those aspects where the Museum is required to take out its own insurance, which
cannot be covered from within the Museum’s resources then the Museum may
approach MoD for consideration of additional funding.
49. The Museum is required, in consultation
with MoD, to review its policy on both insurance and non-insurance on a regular
basis.
50. The signed FM will remain in force for
five years from the date of signature unless, after due notice, either party
requests termination before this date. At least twelve months notice will be
given unless both parties agree to terminate or amend the FM in a shorter time
scale.
Signed by Mr Barry Miller (CS/AUS(NP)) on behalf of the Ministry of Defence on 14 May 1997.
Signed by Rear Admiral AJ Whetstone CB Chairman of Trustees on behalf of the Museum on 29 April 1997
Signed by Commander JJ Tall OBE RN as Director of the Museum and Government Accounting Officer on 29 April 1997
FINANCIAL
MEMORANDUM - ANNEX A.
DETAILED FINANCIAL GUIDANCE
1. The
Museum shall ensure that for the Grant-in-Aid :
a. It
follows the requirements of ‘Government Accounting’ (Particularly Chapter 8),
and, where applicable, MoD Joint Service Publication 414 (JSP414), Defence
Council Instructions (DCIs) and HM Treasury Dear Accounting Officer (DAO)
letters.
b. An
effective internal audit is maintained, and that accounting and other
procedures contain all reasonable safeguards against theft and fraud.
c. Any
grants made from Grant-in-Aid to other organizations are accompanied by
appropriate conditions to enable the books and records of such organizations to
be available to the C&AG, MoD Director of Internal Audit and to the
Secretary of State for Defence.
d. There
are arrangements for adequate inventories to be held, giving sufficiently
detailed information in respect of the objects, stores and equipment which it
holds, and adequate stock and stores accounts, kept.
e. The
Museum shall seek the MoD’s prior written approval before authorizing any
information technology project exceeding £25,000.
f. It
has the prior written approval of the MoD to any proposal to acquire or dispose
of land and buildings acquired or improved with Grant-in-Aid funds. Any such
disposal shall be at full open market value, as determined by a valuation made
by the District Valuer after considering representations from the Museum and
such decision by the District Valuer shall be final and binding. The proceeds
from any such disposal shall be surrendered to the Exchequer unless other
arrangements are agreed with MoD and the Treasury. Prior MoD and Treasury
approval is required if there is a proposal at any stage to dispose of
Exchequer financed assets at less than market value.
g. Capital
assets or equipment (other than buildings or land (see e above) or objects from
the collections in their care that are valued at over £5,000.
(i) Shall not be disposed of without the
prior written consent of the MoD
(ii) The
market value (proceeds) of the sale shall be surrendered to the Exchequer
unless other arrangements are agreed by the MoD and Treasury.
h. A record
of all losses (of cash, equipment, stores, abandoned claims etc) and special
payments is kept and all losses sustained and special payments made are
suitably recorded in the statement of accounts for each financial year.
i. The
prior written approval of MoD is sought for all cases falling outside the
Director’s delegated authority set out in Annex B to this FM.
j Except
where agreed with the MoD, fees paid to consultants out of Grant-in- Aid do
not exceed such rates as are provided for in the Civil Service Pay and
Conditions of Service Code or, where scale fees for professional services do
not apply, that the contract tendering procedure is followed.
k.
Any fees or
charges levied by the Museum must be determined in accordance with the
Treasury’s ‘Fees and Charges Guide’.
1. That
it does not borrow or lend money, or charge any asset, acquired or improved
with Grant in Aid funds, for security without the consent of the MoD and the
Treasury, which may be subject to conditions. -
m. Indemnities are neither
offered nor accepted in respect of loans of objects to or from the collection,
except in accordance with conditions laid down by the MoD.
n. No
guarantee or indemnity is issued, except under subparagraph in above, nor any
contingent liability incurred (whether or not in legally binding form) without
the approval of the MoD, given with the consent of the Treasury.
o. The
MoD’S Accounting Officer is responsible for ensuring that the Museum’s banking
arrangements safeguard public funds. The Director is responsible for ensuring
that the Board’s banking arrangements are in accordance with the requirements
of Government Accounting and are carried out efficiently, economically and
effectively. The Board should therefore ensure that these arrangements are
suitably structured, represent value for money and are reviewed at least every
two years, with a comprehensive review leading to competitive tendering every
three to five years. The Director is responsible for providing such information
about banking arrangements as is required to enable the MoD Accounting Officer
to satisfy his responsibilities.
p. As
required by MoD the Museum will keep a Hospitality Register which should be
presented to MoD quarterly.
q. No
gifts are to be made from the GinA without approval from MoD. A record of all
gifts, both given and received, should be kept.
r. Any
proposals for expenditure from Grant in Aid funds which are novel or
contentious are referred to the MoD and Treasury for prior approval.
s. MoD
approval shall be obtained before any extra-statutory payment is made.
t. The
secretariat is responsible for monitoring and charge against the Museum’s vote
headings and correcting any misbookings.
u. The
Secretariat is responsible to the Director on a daily basis and will also be
responsible for providing the Board of Trustees with Annual Accounts and other
information as required.
2. To
facilitate the coordination of the laying of Annual Reports and Accounts in
Parliament the Museum, once the audit timetable has been agreed with C&AG,
is to inform the sponsor of the date by which the audit will be completed. The
sponsor will in turn inform DS Sec(Sec) who will issue the necessary
coordinating instructions.
3. The
Director of the Museum is to issue personal formal letters of financial
delegation to all staff of the Museum who commit and authorize GiA expenditure.
FINANCIAL MEMORANDUM ANNEX B
DELEGATED AUTHORITIES IN RESPECT OF DEFINED LOSSES,
SPECIAL
PAYMENTS, ETC
1. The
Museum shall maintain details of, and record in its accounts, Losses and
Special Payments as prescribed in Government Accounting and J8P414.
2. The
Museum’s Accounting Officer shall have fully delegated authority (which he is
not to sub-delegate) to write off such Defined Losses and make such Special
Payments, but any case involving a sum of £5,000 (£1,000 if fraud is suspected)
shall be immediately reported to the MoD.
3. In
cases of suspected fraud by Museum staff shall be investigated. MOD should be
informed orally at the first indication that fraud may have occurred and a
written report be made to the Trustees and Sponsor as soon as the circumstances
are clear.
The RN Submarine Museum