HEELISLODGE

Local Council Services • Internal Audit

Internal Audit Report for Snape Parish Council – 2014/15

Receipts: £27,937.25 Payments: £20,731.43 Reserves: £9,242.40

Annual Return Completion:

Section One: Yes, to be signed by RFO and Chair

Section Two: To be completed and signed by Chair and Clerk

Section Four: Yes, completed by Internal Auditor

The following Internal Audit was carried out on the adequacy of systems of control. The following recommendations/comments have been made:

Proper book-keeping Cash Book, regular reconciliation of books and bank statements. Supporting vouchers, invoices and receipts

Following initial examination by Internal Audit of the Payments List, the Receipts List, the Receipts & Payments (R&P) Account, the Bank Reconciliation and the Annual Return for 2014/15, it became clear that the accounts were not in a suitable form for an audit to be undertaken and that a revised set of Accounts would need to be produced prior to submission to the External Auditors. After consultation with the Clerk it was agreed that Internal Audit would produce a R&P Account and Bank Reconciliation and correct the Annual Return figures.

All receipts and payments in the year and all items passing through the Council’s bank accounts were examined by Internal Audit. A Receipts & Payments Account and Bank Reconciliation were produced by Internal Audit (in Excel Spreadsheet form) and a copy is attached to this audit report.

The Accounts are reflected in Section 1 of the Annual Return as follows (rounded as required for purposes of the Annual Return):

Balances at beginning of year (1 April 2014): Box 1: £2,036

Annual Precept 2014/15: Box 2: £8,600

Total other receipts: Box 3: £19,337

Staff Costs: Box 4: £2,175

Loan interest/capital repayments Box 5: £1,661

All Other payments: Box 6: £16,895

Balances carried forward (31 March 2015): Box 7: £9,242

Total Cash/investments c/f (31 March 2015): Box 8: £9,242

Total Assets Box 9: £59,634

Borrowings (outstanding capital 31 March ’15) Box 10: TBC

There were no PWLB payment advice notices in the documents provided to the Internal Auditor so it was not possible to complete Box 10, which requires the Outstanding Capital Balance of the PWLB loans.

Recommendation 1: The Council should urgently contact the PWLB to obtain the Outstanding Capital Balance as at 31 March 2015 in respect of the PWLB loans. This figure can then be entered into Box 10 of Section 1 of the Annual Return.

Financial regulations Standing Orders and Financial Regulations

Tenders

Appropriate payment controls including acting within the legal framework with reference to council minutes

Identifying VAT payments and reclamation

Cheque books, paying in books and other relevant documents

Standing Orders and Financial Regulations in place: Yes, the Council’s Standing Orders and Financial Regulations were reviewed and approved at a meeting of the Council on 26 November 2014 (Minute 7 refers).

VAT reclaimed: Re-imbursements of from HMRC of VAT paid was received at bank on 14 November 2014 and 18 March 2015.

Use of the General Power of Competence: Not applicable.

Adoption of the Local Code of Conduct: The Council adopted an up-dated Local Code of Conduct at a meeting held on 7 August 2014 (Minute 6 refers).

Data Protection registration: No Registration for the provision of council services has been made (see the Internal Audit Procedures item below).

Risk Assessment Review by Council of the effectiveness of internal controls, including risk assessment, and minuted accordingly

Risk Management and Internal Control arrangements were reviewed by the Council at its meeting on 26 November 2014 (Minute 5 refers). Risk Assessment documents are in place and record areas of risk and the actions in place to mitigate the risks identified.

Insurance was in place for the year of audit. The Fidelity Cover is £250,000 which meets the current recommended guidelines which provide that cover should be at least the sum of the year-end balances plus 50% of the precept/grants.

Recommendation 2: At the time of Insurance Renewal in June 2015 the Council should compare the Assets held with the insurance cover against each to ensure that each appropriate item has the necessary cover (e.g. the current policy provides cover for 2 Grit Bins whereas the Asset Register lists 3 Grit Bins in place).

Budgetary controls Verifying the budgetary process with reference to council minutes and supporting documents

Precept 2014/15: £8,600 (plus Council Tax Support Grant of £481.37)

Good budgetary procedures are in place and the Clerk provides financial information and budget papers to the Council to ensure well informed decision-making takes place. The precept for 2014/15 was agreed in full council and the precept decision and amount has been clearly minuted (Council meeting on 7 November 2013, Minute 8g refers).

The Clerk ensures that the Council is aware of its responsibilities and commitments and the need for forward planning and adequate reserves.

Income controls Precept and other income, including credit control mechanisms

See the Proper Book-keeping item above. Receipts listed in the Receipts and Payments Account agree with the transactions recorded in the bank statements during the year.

Petty Cash Associated books and established system in place

A Petty Cash system is in place with supporting paperwork. The transactions were reviewed and found to be in order.

Payroll controls PAYE and NIC in place where necessary.

Compliance with Inland Revenue procedures

Records relating to contracts of employment

Payroll Services are operated by SALC on behalf of the Council; PAYE is in operation.

Asset control Inspection of asset register and checks on existence of assets

Recording of fixed asset valuations

Cross checking on insurance cover

An Asset Register is in place. The Register complies with the current requirements which provide that each asset should be recorded at its original purchase cost or where the original purchase price is unknown at the time of first recording on the asset register, a current value is recorded, which acts as a proxy for the original cost and will remain unchanged until disposal.

Bank Reconciliation Regularly completed and cash books reconcile with bank statements

See the Proper Book-keeping item above. The bank statements for the HSBC Community Account and the HSBC Business Money Manager Account as at 31 March 2015 reconcile with the End-of-Year accounts and the Bank Reconciliation.

Insufficient funds were available in the HSBC Community Account during October and November 2014. To avoid the possibility of bank charges or interest charges being applied the Council should make every attempt to maintain an appropriate balance in its Community Account to allow cheques to be cleared without the account becoming overdrawn.

Year-end procedures Appropriate accounting procedures are used and can be followed through from working papers to final documents

Verifying sample payments and income

Checking creditors and debtors where appropriate.

See the Proper Book-keeping item above. The End-of-Year Accounts are prepared on a Receipts and Payments basis.

Sole Trustee The Council has met its responsibilities as a trustee

The Council is not a sole Trustee.

Internal Audit

Procedures The Council has satisfactory internal financial controls in place; cheque stubs and invoices are initialled by signatories; the Clerk provides financial reports to Councillors and to Council meetings. Councillors are provided with information to enable them to make informed decisions.

Following its review of the 2013/14 year, Internal Audit made the following recommendations relating to financial control:

a)  The Council should review its Standing Orders and Financial Regulations during 2014/15 in order to ensure they are up-to-date and relevant for the current requirements of the Council. This has been addressed by the Council.

b)  The Council should confirm with the Information Commissioner’s Office whether it is necessary for the Council to be registered with the Commission as a Data Controller. This was reported to Council on 7 August 2014 (Minute 8b refers).

c)  The Council should formally review its Internal Control arrangements, including its Risk Management arrangements and documentation, and Minute the review accordingly. This has been addressed by the Council.

External Audit The External Auditor’s report for the 2013/14 year was not made available to Internal Audit. At its meeting on 6 October 2014 (Minute 8e) the Council considered the following matter raised by the External Auditor in relation to the 2013/14 audit:

a)  A qualification notification was made as no risk assessments had been carried out in the year as part of the review of the effectiveness of internal control. This has now been addressed; Risk Management and Internal Control arrangements were reviewed by the Council at its meeting on 26 November 2014 and the Council nominates a Councillor to undertake regular reviews.

Additional Comments

Ø  The Annual Parish Council Meeting was held on 5 June 2014 and correctly had the Election of Chairman as the first item of business. It should be noted that the Council’s Standing Orders provide that ‘In an election year the annual meeting of the council shall be held on or within 14 days following the day on which the new councillors elected take office. In a year which is not an election year the annual meeting of a council shall held on such day in May as the council may direct’.

Ø  I would like to record my appreciation to the Clerk to the Council for her assistance during the course of the audit work.

Trevor Brown

Heelis & Lodge

15 April 2015

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Contact details: Hall Farm House, Loudham Lane, Pettistree, Suffolk, IP13 0NQ

Tel: 01728 747789 or 07732 681125

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Heather Heelis Dip HE Local Policy PILCM

Lynne Lodge Dip HE Local Policy