CLERK’S BRIEFING NOTICE

REVIEW OF EFFECTIVENESS OF THE SYSTEM OF INTERNAL AUDIT OF SEDLESCOMBE PARISH COUNCIL’S
ACCOUNTING RECORDS AND CONTROL SYSTEMS

1.      INTERNAL AUDIT OF 2006/7 ACCOUNTS.  The internal audit of the Parish Council’s 2006/7 accounts was carried out by Mrs Paula Fisher of Battle.  A letter of engagement was sent to Mrs Fisher dated 24/06/07.  This specified the Parish Council’s internal audit requirements which had been approved by the Council at its Annual Meeting on 15/05/07.  The letter mentioned new requirements for “reviewing the effectiveness of internal audit” and “councils acting as sole trustees of charities” and highlighted last year’s incorrect treatment of an unpresented cheque.

 

Mrs Fisher was completely independent of Sedlescombe Parish Council and was competent to do the audit having been Clerk to Battle Town Council for 25 years and being an existing member of Battle Town Council. 

 

Mrs Fisher was provided with appropriate Minute Numbers and appendices and carried out the following checks on the accounts:

a.      Reviewed and assessed the accounting procedures and financial records.

b.       Ensured the book-keeping was correct (random checks carried out and all found to be correct).  NALC SUGGESTS THAT THE NUMBER OF CHECKS IS SPECIFIED; CLERK SUGGESTS TEN INCOME CHECKS AND TWENTY EXPENDITURE CHECKS INCLUDING THE BIGGEST.

c.       Checked supporting documents for all payments and receipts and that they had been authorised by the Chairman of the Finance Committee or another councillor.

d.      Ensured that proper year-end procedures for income and expenditure have been adopted, that there was an adequate audit trail from underlying records and, where appropriate, debtors and creditors had been properly recorded.

e.      Ensured that Section 137 expenditure was shown separately.

f.        Ensured that there was a monthly and year-end bank reconciliation approved by Sedlescombe Parish Council and included with the Minutes.  NALC SUGGESTS THAT THESE ARE SIGNED BY THE FINANCIAL OFFICER AND A COUNCILLOR.

g.       Ensured that adequate internal financial controls are in place.

h.      Reviewed standing orders and financial regulations (Mrs Fisher could see no reason to update).  SINCE THEN, THE STANDING ORDERS HAVE BEEN UPDATED TO INCLUDE RECOMMENDATIONS REGARDING THE CODE OF CONDUCT 2007.

i.         Considered whether the annual risk assessment had been carried out correctly and recommended action taken.

j.        Considered whether the Council’s insurance cover is adequate.

k.       Checked that the Council’s annual precept requirement resulted from an adequate budgetary process.

l.         Checked progress against the budget was regularly monitored and reserves were appropriate.

m.    Checked that VAT had been properly accounted for.

n.      Checked that the Clerk’s salary had been paid in accordance with Council approvals and PAYE and NI requirements had been properly applied.

o.      Checked that petty cash payments were properly supported by receipts.

p.      Checked that the Fixed Assets Register was complete, accurate and properly maintained.

Mrs Fisher sent a letter to Cllr Wright, Chairman of the Parish Council, confirming that she had carried out the Internal Audit in accordance with the requirements listed above.  She also completed a form provided by the Parish Council head “Governance Policy Statement”.  Following the audit trail, Mrs Fisher had found everything to be in order and the accounts well kept, clear and, as far as her check was made, accurate.  She was satisfied that the insurances were in order.  She made the following additional comments:

·         Impressed that precept held at £28,270 for three years.

·         Impressed with the upkeep of the assets, risk assessment and jobs to be done records.

·         Not sure what the “Village Security Fund” is intended to be used for.

·         Impressed with the Annual Report which is a quality document.

·         Believed that the Council had made the right choice to follow the advice of the Charity Commission regarding the trusteeship of the Sedlescombe Public Playing Field and Recreation Group.

·         Disappointed with correspondence with SALC.

Mrs Fisher’s final comment was “All-in-all an extremely well-run Quality Parish Council”.

 

2.       REVIEW OF EFFECTIVENESS.  The Finance Committee of Sedlescombe Parish Council will, at its October Finance Committee Meeting, consider whether the Internal Auditor provided an independent and objective opinion on risk management, control and governance by evaluating their effectiveness.  Also whether the adequacy of the control environment was properly examined, evaluated and reported on.

 

3.       INTERNAL AUDIT OF 2007/8 ACCOUNTS.  After carrying out the Internal Audit of Sedlescombe Parish Council accounts since the inception of this method, Mrs Fisher no longer wishes to undertake this work.  It will be necessary, therefore, for the Parish Council to identify an alternative Internal Auditor for the 2007/8 Accounts.  NALC recommends “another Parish Clerk” but not on a tit-for-tat basis.  This person does not need to be a qualified accountant.

 

P J Raymond
Clerk/Responsible Financial Officer
5 October 2007