What was the issue?

Council L did not keep any records to support the accounts in the annual return for two years. The annual returns provided for the external audit were incomplete. The clerk resigned without ensuring the records were brought up to date.

What happened?

The clerk did not keep any accounting records in the form of a cash book. The Council had no record of any income or payments made and did not keep any bank statements. Although the annual returns had been completed, the accounts contained in the return could not be substantiated.

During the audit, the auditor required the council to obtain copy bank statements and identified that the Council had no receipts or invoices to support any of its payments for two years.

The Council also committed an offence under the Regulations by not approving the Statements of Accounts for two years within the statutory timeframe.

What was/could be the impact? 

The Council was unable to account for most of the payments it had made and therefore could not demonstrate proper stewardship of public funds.

The auditor issued a qualified audit opinion the council incurred additional audit fees for the work involved.

What improvements should be made?

To ensure the proper administration of public funds, the members should:

• be clear about their legal responsibilities for the stewardship of council funds and the maintenance of council documents;
• be clear about the clerk’s responsibilities;
• ensure that Statements of Accounts are prepared in accordance with legislation;
• ensure there is a sound financial control environment, including authorisation of payments and the receipt of monies;
• insist on the proper reporting of the council’s financial position and performance at each council meeting; and
• ensure that they have an effective system of internal audit to comply with legislation.