SOUTH LAKELAND DISTRICT COUNCIL INTERNAL AUDIT FINAL REPORT ACCOUNTING SYSTEM AND GENERAL LEDGER

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1 SOUTH LAKELAND DISTRICT COUNCIL INTERNAL AUDIT FINAL REPORT ACCOUNTING SYSTEM AND GENERAL LEDGER Executive Summary Introduction The Council s Integra financial information and accounting system is administered and controlled by Financial Services, and incorporates receivables, payables, purchasing, general ledger and cash management modules. The purpose of the Council s financial information and accounting system is to provide complete and accurate financial information, including the production of statutory year end financial statements. Audit Objectives This system has been recognised as significance band 2, and forms part of the agreed 2012/13 programme. The audit objectives were to evaluate and test the internal controls over the Council s Accounting System and General Ledger. The scope and objectives of the audit were discussed and agreed in advance with Helen Smith, Financial Services Manager. Audit work included a control evaluation of the system design, and testing the operation of key controls. Details of the audit methodology are provided in Appendix 1. The audit fieldwork was undertaken in January Key Points Significance Band 2 Substantial Assurance One minor issue Audit Conclusion Substantial Assurance As a result of the audit we have concluded that while there is a basically sound system, there are weaknesses, which may put some of the system objectives at risk. We have made one Priority 3 recommendation, which relates to ensuring journal vouchers are completed and retained for all postings. Internal Audit also reviewed the two outstanding recommendations made in Audit Reports and 10-09, dated March 2012 and March Both recommendations have been implemented. Management Response We have received a constructive management response from Pete Notley, Chief Accountant, accepting the recommendation. Page 1

The purpose of the Council s financial information and accounting system is to provide complete and accurate financial information, including the production of statutory year end financial statements.

2 Acknowledgement Internal Audit would like to thank staff for their co-operation and assistance during the review. Page 2

3 Recommendation 1 Responsibility: Chief Accountant Priority: 3 The Council should ensure that journal vouchers are completed and retained for all postings. Rationale Journals are completed and authorised before being processed via the Integra General Ledger. The vouchers together with any supporting documentation are retained on file. Internal Audit selected a random sample of 15 journals from a report detailing all journals posted to the General Ledger since 1 st April Details of 14 journals were agreed to the hard copy journal vouchers. However, Internal Audit were unable to locate the one remaining journal within the sample. Management Response Management acknowledge the importance of keeping documentation to clearly explain all journal entries. A check of the journal file will be included in the month end processes to ensure that there is supporting paperwork for all manual journals. Accepted Implementation Deadline: 30 April 2013 Page 3

Internal Audit selected a random sample of 15 journals from a report detailing all journals posted to the General Ledger since 1 st April 2012.

4 AUDIT FRAMEWORK APPENDIX 1 Coverage The review covered the following areas, which were agreed as part of the preliminary planning stage: - processing controls (including feeder systems); - control and suspense accounts; - journal control; - year-end procedures/timetables; - coding structure; and - access to the system. Methodology A system based audit approach has been used for this audit, involving the following key procedures: - determine specific management objectives for each area under review; - identify the risk applicable to each area; - review controls against each of the key risks; - test key controls to establish whether they are operating as prescribed; and - report findings, with practical recommendations for improvement where appropriate. In addition, Internal Audit reviewed management's progress in implementing the agreed recommendations from our previous audit report. Performance Auditor: Steve Crompton The fieldwork was performed: January Page 4

Methodology A system based audit approach has been used for this audit, involving the following key procedures: - determine specific management objectives for each area under review; - identify the

5 APPENDIX 2 CLASSIFICATIONS Assurance Level Unqualified Substantial Restricted None Evaluation of Controls There is an adequate system of controls designed to achieve the system objectives. While there is a reasonable system of control, there are weaknesses, which may put the system objectives at risk. Significant weaknesses have been identified in the system of control, which put the system objectives at risk. Control is weak, causing the system to be vulnerable to error and abuse. Testing of Controls The controls appear to be consistently applied. Evidence was identified to suggest that the level of non-compliance with controls may put some of the system objectives at risk. The level of non-compliance identified places the system objectives at risk. Significant non-compliance with controls was identified leaving the system vulnerable to error and abuse. Audit Recommendations and Follow-up Priority 1 Priority 2 Priority 3 Recommendation Major issues that we consider need to be brought to the attention of senior management. Important issues which should be addressed by management in their areas of responsibility. Minor issues which provide scope for operational improvement. Follow Up Follow-up will be performed at specific dates agreed with senior management. Follow-up of the recommendations will be performed by the end of the next audit year. Follow-up performed by the end of the next audit year. Page 5

Significant weaknesses have been identified in the system of control, which put the system objectives at risk. Control is weak, causing the system to be vulnerable to error and abuse.

SOUTH LAKELAND DISTRICT COUNCIL INTERNAL AUDIT FINAL REPORT IT 11-02. IT Backup, Recovery and Disaster Recovery Planning

SOUTH LAKELAND DISTRICT COUNCIL INTERNAL AUDIT FINAL REPORT IT 11-02 IT Backup, Recovery and Disaster Recovery Planning Executive Summary Introduction As part of the 2011/12 Audit Plan and following discussions