Ruyton XI Towns

Financial Information Concerning

The Parish Council

 

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Ruyton-XI-Towns Parish Council

Internal Audit Report - 2005/2006

Final Report Issued June 2006
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This report has been prepared on the basis of the limitations set out on page 10

Contents
Executive Summary
Historical Summary
High Level Review
Priority Issues resulting from the Internal Audit
Other Issues resulting from the Internal Audit
Audit Framework
Audit Objective
Audit Scope
Audit Approach and Methodology
Findings and Recommendations
Proper Book-keeping
Financial Regulations
Risk Arrangements
Budget controls
Income controls
Petty cash procedures
Payroll Controls
Asset control
Bank Reconciliation
Year-end procedures
Statement of Responsibility



Executive Summary

Historical Summary

This audit has been undertaken as part of the Councils responsibilities for financial year 2005/2006. The objective of the audit was to establish if the council has maintained an adequate and effective system of financial and other controls. The audit is the fourth produced for the council under the new light touch audit regime.
Previous non priority audit recommendations not acted upon have not been repeated in this report.

With the appointment of a new clerk in early 2004 the methods, controls and documents of the Council had been passed over without formal procedural documentation. This situation has not changed since the last audit.

High Level Review

The clerk has now fully adopted the new method of accounting and the year end documents produced in the revised format.

The documentation is kept in a neat and easily accessible format.

The budgetary calculations format has developed further in this year.

The asset register has not received any additional documented attention and further work is required during the year to bring it in line with expected standards. Should the council decide that no further action will be taken this must be formalised through the minutes.

Additional work around risks seems limited.

Some areas still have no financial procedures in written form.

Some areas of expenditure over the summer period do not seem to have been minuted or have been duplicated.

With this in mind the first layer of internal control has not been as strong as it could be and certain aspects will need remedying during the coming year.

In this regard a limited sample was subject to substantive testing.
Priority Issues resulting from the Internal Audit

Council Officer oversight of aspects of the financial framework has improved but is not yet working effectively. A number of small under and over payments have been made during the year and not all picked up by the council oversight.

In conjunction with the above oversight issues bank reconciliations have not been completed regularly and have therefore also failed to identify the small recording and payment errors.

Asset register has been reviewed but further work and approval by officers is required.

After its completion the council should give consideration to a professional valuation of its assets.


Other Issues resulting from the Internal Audit.

Budget monitoring does not seem to have been reported to the council.

In addition to the above key issues a number of recommendations are made within the body of the report.
Audit Framework
Audit Objective
The objective of the audit was to establish if the council has maintained an adequate and effective system of financial and other controls.
Audit Scope
The scope of the audit was to include examination of the following areas which link to the annual report in section 4 of the annual return:
Proper Book-keeping
Financial Regulations
Risk arrangements
Budgetary controls
Income controls
Petty cash procedure
Payroll controls
Asset controls
Bank reconciliation
Year-end procedures
Audit Approach and Methodology
The audit approach involved reviewing the controls surrounding the system of financial and other controls of Ruyton-XI-Towns Parish Council. The following process was adopted:

High level review of documents, systems and procedures
In year consultations with the Parish Clerk.

From this examination areas have been identified which still require strengthening. This has influenced the overall conclusions on the design and operation of the systems and other controls.

Findings and Recommendations
Proper Book-keeping
Summary
The basic receipts and payments spreadsheet records detailed transactions. An officer has been nominated and some reviews has taken place.

Recommendations 2005-2006
Council Officers, now nominated, need to more regularly review the accounts

Financial Regulations
Summary
Standing Orders have been produced and adopted. New policy for Grants has been adopted by the council with schedules submitted and attached to the minutes as part of the Budget forecasts. No expenditure was incurred from Grant balances.

Recommendations 2005-2006
Closer attention to detail and recording of transactions.

Risk Arrangements
Summary
Aspects are considered on an ongoing basis in the light of parish matters. A sample review of minutes highlighted that issues which may have been identified by risk reviews occurred during the year.

Recommendations 2005-2006
Unexpected and unplanned expenditure may result using a methodology based on budget setting and insurance review. The council should make sure that sufficient resources are available to cover uncertainty.

Budget controls
Summary
The council adopted an improved process for its budget and precept level. Past expenditure analysis was undertaken by the clerk in detail. A risk review on future expenditure was undertaken but missed issues subsequently identified. The budget was formally adopted but no review seems to have been presented during the year to monitor compliance or analyse variances.


Recommendations 2005-2006
Councillor oversight of the cash and budget position is important.
The budget should be formally reported and monitored during the year
Reporting of bank statements should confirm that the balances have been communicated to the councillors.

Income controls
Summary
Most income is received by BACS with a few cheques from other individuals and organisations. The bank interest is not allocated between council balances and grants.

Recommendations 2005-2006
Finalise operational procedures for Book-keeping
Consideration be given to allocating interest accrued between the income raised via the precept and that by grant income. A calculation has been presented to the clerk for adoption or rejection.

Petty cash procedures
Summary
No petty cash actually exists. Expenditure is recorded in a hard backed book which is countersigned by the chairman of the council. The expenses are then reported to and approved by the council and appears in the minutes. Some errors have been identified.

Recommendations 2005-2006
Care should be taken to ensure that cheques issued match minuted expenditure.

Payroll Controls
Summary
Annual Salary is approved by the council and appears in the minutes. The monthly payments are approved at each meeting and paid gross. Approval has been given by the revenue to code out any PAYE

Recommendations 2005-2006
No recommendations

Asset control
Summary
Asset register reliance is still made on the value contained within the insurance proposals. No investments were held by the council.

Recommendations 2005-2006
The position on whether further work to improve the new asset register in 2006 2007 will be actioned needs clarifying.
Use of insurance values as a proxy may over/under value the assets.

Bank Reconciliation
Summary
Bank reconciliation's did not take place at the receipt of every statement. However bank statements were noted to most council meetings when received. This does not mention balances. Some small errors would have been identified had a regular bank reconciliation taken place.

Recommendations 2005-2006
Monthly reconciliation need to be completed by the clerk on a regular basis and considered by a nominated council officer.

Year-end procedures
Summary
The year end procedure was examined and other than the previously mentioned discrepancies found to be satisfactory.

Recommendations 2005-2006
No recommendations

Statement of Responsibility

Internal audit is not a substitute for officers responsibilities to oversee the Councils financial systems and controls. It is also not necessarily a comprehensive statement of all weaknesses that exist or all improvements that should be made. It cannot identify all circumstances where fraud or irregularity may take place. Items reported are those which came to attention during course of the audit.
The report is prepared solely for your use and should not be quoted in whole or in part without written consent. It is important to assess any impacts before implementing recommendations for improvement
No responsibility to any third party is accepted as the report has not been prepared , and is not intended , for any other purpose than that specified.




Draft Report Issued 10th June 2006
Final Report Issued 27th June 2006




Mike Lugg - Internal Auditor to the Ruyton-XI-Towns Parish Council