Directory

Accounting systems include the computer software systems public bodies use to record and process transactions. These systems also include the systems of controls and checks in place to process the transactions.

Analytical procedures or analytical review procedures seek to obtain a broad understanding of the public body's financial position and results. They are also used to identify any items requiring further investigation. The procedures examine the relationships between transactions, ratios, trends, and changes in balances from one period to the next.

The procedures may examine past events using recorded transactions or may be predictive where historical data is used to develop an expected outcome. The expected outcome is then compared to the actual outcome.

An annual report is a comprehensive report on a public body's activities throughout the year. Annual reports give information about the company's activities and financial performance.

The Audit Committee is set up by the public body to oversee the arrangements for preparing the financial statements and systems of financial control. HM Treasury guidance on audit committees can be accessed here:

www.hm-treasury.gov.uk/d/auditcommitteehandbook140307.pdf

The audit opinion is part of the auditor's report on the financial statements. The opinion states whether or not the financial statements are materially correct.

The audit plan reflects the auditor's assessment of the risk for the public body. It sets out the work the auditor proposes to undertake in relation to the financial statements.

Auditors typically do not examine every transaction a public body makes. They test a range of transactions and draw conclusions on them. Auditors will undertake a range of different procedures. This will include examination of transactions, balances and other information.

The chief financial officer (CFO) is the director of finance/accounting officer/ responsible financial officer.

 Whilst members/Board are accountable for the finances of the body, a CFO must be appointed for those affairs. The key duties of the CFO are:

• to offer advice to members/ Board on financial matters; 
• to certify that the statement of accounts present fairly; and 
• to establish a framework which presents members with the assurance they need to meet their own obligations.

As a minimum, the CFO should promote awareness amongst members that the accounts provide them with assurance that:

• the accounting systems have operated adequately and been closed down satisfactorily; and
• the budget for the current year has a secure foundation.

Other major tasks are securing other chief officers co-operation; appointing a supervising officer to manage the accounts production process; and liaising with external audit. 

The Chartered Institute of Public Finance and Accountancy, CIPFA, is an accounting body incorporated by Royal Charter. It represents finance professionals in the public sector. CIPFA provides information, guidance and training on accounting and financial issues to the public sector. Along with the Local Authority (Scotland) Accounts Advisory Committee (LASAAC), CIPFA prepares accounting guidance for the local government sector in the form of a Code of Accounting Practice.

www.cipfa.org.uk

Auditors use their CAKE when planning their audits, identifying areas where work should be focussed. CAKE comes from the auditor's knowledge of:

• the public body's objectives and risk;
• assessments of its control environment;
• an understanding of its information systems and computer environment;
• a history of known errors in specific areas;
• an appreciation for any complex and/or high volume of transactions it enters into; and 
• other past experiences including those with other colleagues and teams.

All public bodies in Wales are required to have an external auditor. The statutory auditor for the Assembly Government and the National Assembly for Wales Commission and its sponsored bodies is the Auditor General. The Auditor General appoints the external auditor for local authorities in Wales.

The primary role of external auditors is to express an opinion on whether a body's financial statements are free of material error and misstatements.

Financial statements record the financial activities of public bodies. They are also referred to as the annual accounts or the statement of accounts.

Financial statements normally include:

• an income and expenditure account which reports on a public body's income, expenses and surpluses during the year;
• a balance sheet which reports the public body's assets, liabilities reserves at a given point in time;
• a statement of total recognised gains and losses which reports all the gains and losses for the year and shows the total increase or decrease in net worth; and
• a cash flow statement which shows how changes in balance sheet and income and expenditure accounts affect cash and cash equivalents.
  

Fraud is an intentional deception made for personal gain or to damage another individual. Good internal controls and governance arrangements are essential to minimise the risk of fraud.

When a public body suffers fraud or theft it is often the case that the perpetrator has prepared false documents to disguise or to cover up the theft or fraud. In many cases the false documents include invoices and minutes.

This is how councils ensure that they are doing the right things, in the right way for the right people in a timely, inclusive, open, honest and accountable manner.

International Financial Reporting Standards (IFRS) are Standards,[1] Interpretations and the Framework[2][3] adopted by the International Accounting Standards Board (IASB). IFRS are a "principles based" set of standards in that they establish broad rules as well as dictating specific treatments.

These controls are the financial checks and balances that the public body uses to manage its money on a day-to-day basis. The financial checks and balances make sure that: 

• the council properly uses and monitors its money and assets; and 
• properly records this use.

There are over 800 public bodies in Wales including the Welsh Assembly Government, the National Assembly for Wales, Assembly Government Sponsored Bodies, health boards, local authorities, police and fire authorities and town and community councils. Together these bodies spend in excess of £20 billion each year.

The arrangements for managing these bodies varies across each sector:

• Welsh Assembly Government comprises the Welsh ministers supported by civil servants;
• Assembly Government Sponsored Bodies are non-departmental public bodies directly funded by the Welsh Assembly Government. Responsibility for the running of these bodies lies with a Board of members appointed by the Welsh Assembly Government;
• Health Boards are made up of Executive Directors, who are employees of the Health Board, and Independent Board Members (IMs), who were appointed to the Board by the Minister for Health and Social Services via an open and competitive public appointments process;
• Local authorities and town and community councils are made up of councillors or members elected by the voters within the council area;
• Police authorities are independent organisations responsible for ensuring the local police service is efficient and effective. The authority's members  are made up of councillors from the local authority areas covered by the police service and independent members appointed by a panel following an open advertisement; and
• Fire authorities are made up of councillors from the local authorities covered by the fire and rescue service.

We have used the term Board to describe the arrangements for all of these bodies. Board members are responsible for the financial affairs of the public body. They should take an active approach to financial management throughout the year. In some cases, members only take an interest when a financial problem has caused or may cause bad publicity.

Senior managers are responsible for the direction and practices of public bodies. They include the following:

• Chief Executive - sets the direction and oversees the operations of the public body. 
• Director of Finance - holds the financial reins of the body and ensures that resources are used wisely to secure positive results.
• Responsible Financial Officer (RFO) - under the Local Government Act 1972, local authorities must appoint an RFO to administer the financial affairs for the council. This is usually but not always the Director of Finance.
• Accounting Officer - each organisation in central government, department, agency, trading fund, NHS body, Assembly sponsored public body or significant arm's length body, must have an Accounting Officer. This person is usually the senior official in the public body. The Accounting Officer is someone who may be called to account in Parliament for the stewardship of the resources within the public body's control.
  

A public body's stakeholders are those persons, groups or organisations that can affect or be affected by the public body's actions. Stakeholders include:

• Tax payers and the general public;
• Service users;
• Staff;
• Contractors and suppliers;
• Patients;
• Financial institutions; and
• Other public bodies.

Standing orders are the set of rules by which the audited and inspected body conducts its business. Typically, it would define how a council is to be conducted which would include how many members/non-executives constitute a quorum. It must also define the arrangements for entering into a contract.

The Generally Accepted Accounting Practice in the UK, or UK GAAP, are the overall body of regulation establishing how accounts must be prepared in the United Kingdom. This includes not only accounting standards, but also UK law.