INTERNAL AUDIT REPORT ALDERMINSTER PARISH COUNCIL FOR THE FINANCIAL YEAR

Transcription

1 INTERNAL AUDIT REPORT TO ALDERMINSTER PARISH COUNCIL FOR THE FINANCIAL YEAR Prepared by: Bill Robinson Issued May

2 Contents Page 1. Statement of responsibility 2 2. Audit response Conclusion 6 Statement of Responsibility The audit work I have undertaken was carried out based upon the Internal Audit requirements for Alderminster Parish Council This report has been prepared solely for Alderminster Parish Council s use only, and cannot be used for any other purpose The matters raised in this report are only those which came to my attention during the course of the audit and are not necessarily a comprehensive list of all improvements that might be made. Alderminster Parish Council should formally assess recommendations made in this report for improvements for their full impact on the Parish Council s budget, financial regulations, standing orders, risk assessments, and any other activities before they are implemented. The responsibility for a sound system of internal control rests with Alderminster Parish Council and work undertaken by the Internal Auditor should not be relied upon to identify all circumstances of fraud or irregularity. Internal audit procedures are designed to focus on areas that are considered to be of greatest risk and significance, but implementation of any recommendations by the Internal Auditor are at the discretion of Alderminster Parish Council if the Council believes that they will assist in the internal control of the Parish Council processes. 2

3 Consultant W.J.Robinson. BA(Hons) MA 74 George Street Stockton Southam Warwickshire CV47 8JT Tel: Mobile: Alderminster Parish Council Internal Audit The Internal audit was undertaken on the 18 th May Accurate book keeping All payments and receipts were found to be correct and supported by documentation Bank reconciliation this was checked and found to be correct. In addition an audit trail of the following cheques was carried out. Cheque/Bank Transfer Amount Payee Minute ref. Bank transfer (BT) Breadmark 16/17/14 12b BT Z.Kinchin 21/05/14 12b BT HMRC 21/05/14 12b Ald.Village Hall 21/05/14 12b BT W shire CTP 21/05/14 7a B.Gerrard 16/07/14 12a BT Nisbets 17/09/14 16b BT W shire CTP 17/09/14 24d BT Z.Kinchin 19/11/14 16bi, c B.Gerrard 19/11/14 16a iv Conigree plumbing 19/11/14 16a ii. BACS 7.58 M.Meadows 19/11/14 16a i BT W shire CTP 19/11/14 21a BT Stratford DC 21/01/15 24a i BT HMRC 18/03/15 21bi a. BT HMRC 18/03/15 21biib All cheques were found to be matched to the individual invoices. All cheque audit trails proved satisfactory 3

4 Year End Accounts The year end accounts for the financial year were checked and were found to be correct in agreement with the financial records shown by the Clerk, and the bank statements. Section 4 of the annual return for the external auditor has been signed by the internal auditor Receipts and payments spreadsheet It was noted that income and expenditure are presented on the same worksheet, it would be in the interests of the Parish Council to consider changing to a separate worksheet for income and expenditure within the existing spreadsheet. This will make it easier (and less time consuming) for Cllrs to check the accounts on a regular basis. Income Control It was noted that receipts were banked via bank transfer It was noted that VAT repayments were properly made and accounted for The money manager account was checked and found to be satisfactory. Budget Controls It was noted in item 15 of the minutes for the 21st January 2015 that the precept and budget setting took place, and the precept agreed by the Council. The minutes indicated that budget papers were prepared for consideration but these were not seen by the internal auditor, the Clerk should attempt to find these papers and store them with the appropriate minutes. It was noted that the accounts were approved by the Chairman, and the external auditor on 16 th July item 13. It was noted in item 10a of the minutes for the 16 th July meeting that a bank mandate for cheque signatories has been made and the agenda for the 19 th November meeting indicate completion of the mandate process. The new Clerk may wish to consider dealing with changes to bank mandates in a more formal way (e.g. setting clear agenda items dealing with the change and having the minutes reflect the changes). Petty Cash It was noted that Alderminster Parish Council does not operate a petty cash scheme, and this information will be forwarded by the internal auditor for inclusion in the year end report for the external auditor. Financial Regulations It was noted that the Clerk is the RFO It was also noted that the Clerk can spend up to 500 without reference to the Parish Council in an emergency, this level of spending is appropriate and the Parish Council is to be commended for setting it at this level. Regulation 6.11 indicates that back- up copies of all financial records are stored securely, it is unclear from either the meeting minutes or these regulations where these back ups are held. The new Clerk indicated that she will arrange for back up memory sticks to be made available and stored securely. It may be in the Councils interests to consider whether cloud storage systems would be of benefit. The Council may wish to consider the latest Financial Regulations model from NAC, which has a section on electronic banking. 4

5 The Parish Council should also be aware that these regulations should be reviewed on a regular basis (at least annually). The Parish Council should also consider acquiring a copy of Governance and accountability in Local Councils in England and Wales which details the regulatory requirements for local councils. Standing Orders It was noted that the Standing Orders were formally re- adopted and minuted in item 9 of the 121 st May meeting It was noted that item 1M is not now applicable, anyone can record Council meetings without requesting permission (the Data Protection and Transparency Act 2014 details). The Parish Council may wish to consider the latest Standing Orders model from NALC. The parish Council should also be aware that these orders should be reviewed on a regular basis (at least annually). Asset Register It was noted that Alderminster Parish Council has a formal asset register, this was checked and found to be satisfactory and in line with the recorded value in Box 9 of the annual return for the external auditor. The Council should consider the value of the Dell laptop as this seems out of line with current and recent prices. The Council should value assets at purchase cost and leave that value on the register as Parish Councils are not required to depreciate asset value. Insurance It was noted that the insurance documents for have not been found although a payment for that insurance was found. It was noted in the insurance quotation that the fidelity guarantee is set at 150,000, the parish Council should review this with the insurer to determine whether a more appropriate fidelity insurance level would result in a change of premium. As on the asset register the parish Council should consider the insured value of the Dell laptop as this seems out of line with current and recent prices. Payroll It has been seen that the Parish Clerk has registered Alderminster Parish Council as an employer and that all payroll taxes are paid to HMRC using the Basic PAYE tools from HMRC Sec.137 Payments It was noted that nom payments were made using Sec.137 legislation. Risk assessment It was noted that Box 5 of Sec 2 the Annual Governance Statement from the Parish Council to the external auditor, indicates the Parish Council has undertaken an assessment of the risks facing the Council, and took appropriate steps to manage those risks especially in the area of electronic banking where the Clerk is the Clerk has sole responsibility for this form of bank transfers. There is no evidence in the minutes that such an assessment took place, therefore Box C of section 4 Annual internal audit report will be marked No by this auditor and an explanatory note added. It should be noted that the Parish Council should also undertake a physical risk assessment of those assets that are accessed by the Parishioners e.g. bus shelter, notice boards etc. The Council should 5

6 further note that insurance companies have indicated that an annual risk assessment of these sort of assets may not be adequate, therefore it would be in the Council s interest to have a competent person to look at these assets on a more regular basis, and record the findings (simply detailing date seen, what physical state the asset is in, and if anything is wrong when will it be repaired) Minutes of the Parish Council meetings All minutes were checked, and found to be satisfactory and properly signed, with no evidence of any unusual activity It was noted in minute 21 st May 2014 item 15 that Parish Council assets were amended with old laptops being given to Cllrs. the Parish Council needs to be aware that there is legislation regarding the disposals of assets and this needs to be complied with. It was noted in the minutes of 17 September 2014 item 18 the B.Robinson be appointed as internal auditor at a laid down fee. It was further noted that in the minutes of 19 November this fee had increased ( the Council should note that the Sept. minuted fee is correct) Internal Audit Review It is unclear that this review was formally carried out, and the Parish Council needs to be aware that a formally minuted study of the effectiveness of the internal audit report should be undertaken. General Power of Competence The Parish Council should investigate whether this power would enhance its way of working Data Protection and Transparency Act 2014 It was noted that the Parish Council budget is under 25,000 per year and from 2017 the Council will be able to avoid having an external audit. The Council will however have to put certain information on a free to the public website (this information is detailed in the above act). The Clerk has indicated that she will put this information to the 19 th May 2014 meeting of the Parish Council and that she will be the webmaster for the site. Conclusion Whilst undertaking the Internal Audit, it was noted that the Clerk is showing a good grasp of the requirements of the standard required by Local Government Finance Regulations. Where I have commented on future actions, these are for Alderminster Parish Council to consider whether they will assist in the financial and other management of the Parish Council It will be noted that in Section 4 of the Annual Return the internal auditor marked items F and K as Not Covered, and Not Applicable. This does not imply that there is anything untoward regarding the Parish Council accounts, rather this is a response required by the external auditor and in the case of Alderminster Parish Council it means that there is no petty cash. A separate letter to that effect will be enclosed for the external auditor. This concludes the Internal Audit. Signed Dated 22 nd May 2015 W.J.Robinson 6