Meeting documents

Cabinet
Wednesday, 21 June 2006

CA210606-07

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Division(s): N/A

ITEM CA7

CABINET– 21 JUNE 2006

STATEMENT ON INTERNAL CONTROL 2005/06

Report by the County Solicitor and Head of Finance & Procurement

Introduction

  1. The Accounts and Audit Regulations 2003 require that the Council conducts a review at least once a year on the effectiveness of its system of internal control and produces a statement on its effectiveness as part of the Council’s Statement of Accounts. The scope of internal control spans the whole range of the Council’s activities and includes controls designed to ensure that:

    • the Council’s policies are put into practice;

    • its values are met and laws and regulations are complied with;

    • required processes are adhered to;

    • financial statements and other published information are accurate and reliable;

    • human, financial and other resources are managed efficiently and effectively; and

    • high quality services are delivered.

  1. This report reviews the process for the production of the Statement on Internal Control (SIC), presents the SIC for 2004/05 and seeks confirmation from the Cabinet that it is satisfied with the process for reviewing the system of internal control.

    2. Compilation of the Statement on Internal Control

  2. On 26 April 2006 the Audit Committee agreed the updated process for gaining assurance on risk management and internal control. Heads of Service have been required to complete a risk register for their service on a quarterly basis since August 2004. Additionally Business Managers are required to complete an Internal Control Checklist bi-annually. The Checklist asks a series of key questions relating to the following areas:

    1. Risk management;

    2. Performance management;

    3. Financial management;

    4. Legislation;

    5. Human resources;

    6. Procurement/contracts;

    7. Information technology;

    8. Project management;

    9. Partnerships;

    10. Other significant control issues.

    Action plans are required for all areas that are not considered by the Business Manager to be fully compliant.

  3. Heads of Service and Business Managers are required to sign Certificates of Assurance to confirm that they have updated the documents. Risk registers and internal control checklists are then reviewed by the relevant Director, who also signs a Certificate of Assurance to confirm that he has discussed and agreed the documents.

  4. Risk registers and internal control checklists are reviewed by the SIC Working Group, a group of senior officers, chaired by the County Solicitor. Progress is reported quarterly to the Audit Working Group.

  5. An internal audit report published during the second half of 2005/06 recommended that the model of the SIC should be updated. The revised version was approved by the Audit Committee 26 April 2006. In giving a judgement of qualified assurance, the report did make further recommendations including: improving guidance on completion of the SIC and revising the internal control checklists.

    6. Statement on Internal Control 2005/06

  6. The Statement on Internal Control 2005/06 is attached at Annex 1 (download as .doc file). It has been compiled by the members of the SIC Working Group drawing on the following information:

        1. Risk Registers compiled by Heads of Service and endorsed by Directors;

        2. Internal Control Checklists compiled by Business Managers and endorsed by Directors;

        3. The view of the Chief Internal Auditor;

        4. The view of the Chairman of the Audit Working Group;

        5. The view of the external auditor as contained within the annual audit and inspection letter;

        6. Reports by other independent inspection bodies.

  7. All members of the County Council Management Team (CCMT) have been consulted on the draft SIC. The Statement was discussed by the Audit Working Group on 15 June 2006. As required by the Regulations, it has been signed by the Chief Executive and Leader of the Council and additionally the Chief Financial Officer and the Monitoring Officer. The Audit Committee will be asked to approve the Statement on Internal Control 2005/06 for inclusion in the Statement of Accounts at its meeting on 28 June 2006.

  8. Progress on actions identified as part of the SIC process will be monitored by the SIC Working Group and reported to the Audit Working Group and Audit Committee on a regular basis.

    9. Production of the Statement for 2006/07 and Beyond

  9. All directorates have made significant progress in embedding the assurance process. During 2006/07 work will need to be undertaken to ensure that risk registers and risk management become further embedded in the workings of the Council and that the risk management strategy is fully implemented. There will also need to be a review of the internal control checklist and revision of the guidance notes for production of the SIC in accordance with the Internal Audit Report recommendations.

    10. RECOMMENDATION

  10. The Cabinet is RECOMMENDED to endorse the process of internal control undertaken during 2005/06 as evidenced by the Statement on Internal Control 2005/06.

P G CLARK
County Solicitor

SUE SCANE
Head of Finance & Procurement

Background Papers: Nil

Contact Officers:
Peter Clark, County Solicitor, Tel 01865 815363
Georgina Paton, Corporate & Professional Standards Manager, Tel 01865 816357

June 2006

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