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Internal Audit Report 2019-2020

Posted in Internal Audit Report



The internal audit was carried out by undertaking the following tests in the Annual Return for Local Councils in England:

  • Checking that books of account have been properly kept throughout the year
  • Checking a sample of payments to ensure that the Council’s financial regulations have been met, payments are supported byinvoices, expenditure is approved, and VAT is correctly accounted for
  • Reviewing the Council’s risk assessment and ensuring that adequate arrangements are in place to manage all identified risks
  • Verifying that the annual precept request is the result of a proper budgetary process; that budget progress has been regularlymonitored and that the council’s reserves are appropriate
  • Checking income records to ensure that the correct price has been charged, income has been received, recorded and promptlybanked and VAT is correctly accounted for
  • Reviewing petty cash records to ensure payments are supported by receipts, expenditure is approved and VAT is correctly accounted for
  • Checking that salaries to employees have been paid in accordance with Council approvals and that PAYE and NI requirementshave been properly applied
  • Checking the accuracy of the asset and investments registers
  • Testing the accuracy and timeliness of periodic and year-end bank account reconciliation(s)
  • Year end testing on the accuracy and completeness of the financial statements


On the basis of the internal audit work carried out, which was limited to the tests indicated above, in our view the council’s system of internal controls is in place, adequate for the purpose intended and effective, subject to the recommendations reported in the action plan overleaf.

As part of the internal audit work for the next financial year we will follow up all recommendations included in the action plan.

JDH Business Services Limited


1The council did not comply with Regulation 15 of the Account and Audit Regulations 2015 as it failed to make proper provision for the exercise of public rights in Summer 2019 for the 2018/19 accounts as the approval date of the accounts in the AGAR annual return was after the start date of the period for the exercise of public rights.The council must ensure that it makes proper provision for the exercise of public rights for every financial year
2No further issues identified in 2019/20 internal audit. However, see 2018/19 issues below that are still outstanding and 2017/18 issue three regarding lack of clerk employment contractInternal audit recommendations should be implemented on a timely basis.
Action Plan

2018/2019 Internal Audit

1Reserves are in excess of 200% of the precept and no earmarked reserves are disclosed.The council should monitor the level of reserves from year to year and ensure that excessive reserves are not carried forward.No response to this internal audit issue in the council minutes.

Recommendation Outstanding
2Fixed assets are disclosed as unchanged from the prior year. However, testing identified the purchase of a defibrillator cabinet in the financial year.If the council owns the cabinet it should be added to the fixed asset register and the corrected figure included in the AGAR annual returnRecommendation Outstanding
3No VAT was reclaimed or received in the financial year.VAT reclaims should be made on a timely basis.Implemented – a VAT reclaim has been completed for the period 01/04/2018 to 31/03/2020.
2018/19 Internal Audit


There is a new internal control objective (Objective L) in the 2018/19 internal audit certificate that requires internal audit to conclude on whether the Public Rights Notice during the previous Summer was compliant with the Regulations. This is pre-filled for 2018/19 but in order to test this and conclude YES or NO for the 2019/20 internal audit we would need to receive with the 2019/20 books and records:

–  A copy of the completed 2018/19 Notice of Public Rights and Publication of the Unaudited Annual Governance and Accountability Review

–  A dated photograph showing the first day of the Notice of Public Rights on the noticeboard and/or a dated computer screenshot showing the first date of the Notice of Public Rights on the website for 2018/19

Our approach to this new requirement will be to conclude NO if we have not received the above evidence and explain on the AGAR that we received insufficient evidence to be able to conclude YES; we would also conclude NO if the dates advertised were not compliant with the Regulations.

This will be a new ongoing requirement for internal audit, as well as verifying whether certain smaller councils meet the exemption criteria from an external audit. Therefore, for the 2019/20 internal audits there will be additional time charged at a fixed fee of £9 + VAT per local council to complete the new requirements.
2018/2019 Internal Audit Important Guidance Note

2017/2018 Internal Audit

1We were unable to identify the annual audited accounts and Annual Governance Statement on the council websiteThe council should ensure the published information on the website meets the requirements of the Transparency CodeImplemented
2Data Protection Law will change significantly on May 25th 2018 due to the 2016 EU Directive General Data Protection Regulation (GDPR) taking effect.

GDPR replaces the 1998 Data Protection Act and it will impose new obligations on Data Controllers and Data Processors and provides enhanced rights for individuals. Compliance with GDPR could have resource implications for local councils.
The impact of GDPR on the council should be identified through review of ICO and NALC guidance and the Data Protection policy, risk assessment and internal controls should be updated accordinglyOngoing implementation
3There is no formal contract of employment in place for the clerkAll employees should have a signed contract of employment in place. The council should secure the NALC model contract of employment and align it the scope of work at the council.2018/19 follow up – not provided for internal audit therefore we conclude the recommendation is outstanding.
2019/20 follow up – recommendation outstanding
2017/2018 Internal Audit

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