Internal Auditor Requirements

Question

I've read through what's already been asked but well here goes....

My Council has an established internal auditor. I would welcome feedback on whether Council should move to another for the following reasons.
My Council is a very small Council and up until I became a Cllr was paying the Clerk cash in hand at every meeting, there were no Financial SO and no risk assessment. In fact nothing in terms of policies etc. Should the internal audit have picked these up? The response from last years report was to improve your records. How should I approach this to Council?

Answer 1

The Parish Council signed the AGAR - which says that the Parish Council agreed that there is Good Governance . Its very difficult but your Internal audit should have picked up all these issues and legal requirements. The Audit  paperwork has been issued by the external auditors and there is a lot of useful information on their websites .

The Nuclear option is to refuse to approve the accounts and governance statements this year but In would suggest a softer approach but time is against you this year. A recommendation to have all the policies in place to the Council as an agenda item. Using the NALC Foundation as a background list is a very good start so that some simple gap analysis can be done and at each meeting progress reported by the Clerk. It takes time to turn things around.

Comments

Thanks for your advice and noted. No nuclear option. Info on nalc very helpful. Thank you.

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Another thought is that your internal auditor needs o be appointed (re appointed) each year - we do it at the AGM. My own auditor charges £160 per annum - I use his across three Parish Councils - he is a retired auditor from the County Council. I have previously used an accountant - again retired who charged nothing as it was part of his putting back in to the community !! Our EALC has a list of auditors that it shares out every year I am sure your association will have the same.

Answer 2

Whilst your council may be a small one it does not negate their responsibility for fiscal prudence with tax payers money. Habits that may have served councils for many years unfortunately now have no place in modern Parish Councils regardless of how effective they may have worked. We live in a world of ever increasing bureaucracy and compliance with "box ticking". Incidentally this is why I after some 14 years resigned from my PC. as the compliance required reduced the actual amount of work for the community the PC carried out.

You would need to ensure that the requirements of the internal auditors duties are specified to them and your expectation of them are clear and met. More importantly you as a council must act on any recommendations made by the internal auditor which if followed should negate negative reports on the AGAR from the external auditor. The AGAR is only issued on behalf of and with the agreement and responsibility of the councillors as a whole. Each individual councillor is responsibility for ensuring that it is correct and to question anything they do not agree with before it is signed. This is how it should be approached in council.

Comments

Thank you for your comments and wisdom which are noted. Sadly like I  have read in previous posts our internal auditor offers no advice or value so just an expensive signature. I shall raise in the autumn once his report has been received by Council.

Answer 3

The Accounts and Audit Regulations 2015 PART 2 Regulation 5 says that "A relevant authority must undertake an effective internal audit to evaluate the effectiveness of its risk management, control and governance processes, taking into account public sector internal auditing standards or guidance"   Regulation 6 of the same Act says that 6.—(1) A relevant authority must, each financial year—
(a) conduct a review of the effectiveness of the system of internal control required by regulation 3.  I would suggest using the checklist here in conjunction with the above https://www.localaudits.co.uk/Governance_and_Accountability_for_Smaller_Authorities_in_England_2017.pdf

Comments

Thank you Graeme for highlighting the main parts which I have noted. I shall bring to Councils attention later in the year. Thanks again.