What was the issue?

Council Q’s financial administration arrangements were poor. The financial records that were kept were incomplete and inaccurate.

What happened?

During the year, a number of payments were either not approved, recorded or supported by adequate documentation. The Council’s failure to appoint an internal auditor meant that these issues were not identified until the external audit. 

At the same time, the Council did not reclaim VAT for some payments and in other cases, did not have VAT invoices available.

The Council did not prepare any accounts for three years.

What was/could be the impact?

Due to the lack of adequate records, the Council was unable to recover the VAT on payments made.

The failure to ensure that all payments were reported to the Council for authorisation exposed the Council to the risk of fraud.

The failure to prepare and approve the Statement of Accounts within the statutory timeframe is an offence under the Accounts and Audit Regulations.

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;
• 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.