The report highlights council weakness and risks.
Reading the report I find the accountant suggests that the exact amount of petty cash expenditure only is re-imbursed on production of receipts and vouchers for inspection.
This something that was always done in the past and monthly checks were carried out and expenditure was verified by two members, This was a job I did many years ago when I was a member of Oakham Town Council.
The accountant reminds the council that annually, one members other than the Chairman or a cheque signatory should be appointed to verify bank reconciliations and payments. Two used to be appointed we checked the petty cash spending was being recorded properly each month, this has not been done for years. If I was an employee of Oakham Town Council I would want to provide receipts and vouchers to cover my own back.
What this report shows me is we have a Clerk who is left to do as they please and regulations and procedures are not being followed, that is not their fault. This is the responsibility of all the Councillors and in particular the members of the finance committee. Councillors have a responsibility to protect public money. Financial regulations and procedures are being ignored then they are not protecting public money.
It is almost as if they don't care about what is going on. The Clerk is authorising payments and asking Councillors to approve those payments retrospectively. What happens if the Councillors decided not to pay someone for a good reason? rather like the time Cllr Lowe misled the council about the Cutts Close Footpath, at first they voted not to pay the bill, then at a later meeting he gave them incorrect information (as stated in an external audit report findings), the Councillors then agreed to pay. But what if they had stuck to not paying, because correct procedures were not followed, if the clerk had authorised the payment with out council authority the current clerk has done for some time? This not a new thing I can remember a previous clerk authorising and making large payments to Plantscape without council authority, stating they like to pay all bills on time.
Cllr Dave Romney said this report is a waste of public money. No it's not, because once again it has highlighted Oakham Town Councils continued failings. It also highlights the failings of the internal auditor who is meant to check the council is following its own policies and procedures. I have never really seen the point of the internal auditors who always seem to be offended by any questioning. In this case it appears Oakham Town Council may not have not given clear instructions to the internal auditor, so Cllr Dave Romney that is a waste of public money.
I personally think it suits Oakham Town Council to appoint internal auditor who might lack competence or not look at certain things. Its not a new thing. I remember Alf Dewis and Michael Haley demanding the council wrote to a now former internal auditor apologising for me pointing out the internal auditors failings back then.
Oakham Town Council is known for ignoring most if not all of it audit report recommendations and in some cases even suggest the findings are incorrect.
Below is accountants report in full.
REPORT TO OAKHAM
TOWN COUNCIL
10th JANUARY 2023
All the comments in red are those of the external accountant
Unit 1 Uffcott Farm I Uffcott I Swindon I Wiltshire I SN4 9NB
Tel: 01793 739110 I www.dckaccountingsolutions.co.uk I admin@dckaccountingsolutions.co.uk
DCK Accounting Solutions Ltd I Registered office as above I Registered in England No. 3832919
REPORT TO OAKHAM
TOWN COUNCIL
10th JANUARY 2023
Report to the members of Oakham Town Council
Prepared by: Melodie Beevers.
Following request to attend the Council offices by Cllr Sally-Anne Wadsworth (Chairman) on 4th
January 2023 to review financial systems in use at the Council and prepare a report with particular
attention to any risks and weaknesses in procedures.
INTRODUCTION
DCK Accounting Solutions Limited were engaged by the council to report on financial operations and
whether these were in accordance with proper practices and whether the council’s financial regulations
and standing orders were being adhered to.
The objective of financial regulations and standing orders is to ensure inter alia that the council has in
place “robust and effective systems of control over expenditure”. This requirement stems from a binding
undertaking given to enable section 150 (1) if the local Government Act 1972 (the two signature rule) to
be repealed and thereby cease to be a statutory requirement. Any significant failure to follow financial
regulations is likely to constitute a breach of this undertaking and is therefore extremely serious.
BACKGROUND
The Councils uses the Rialtas ‘Omega’ accounting package. This program is designed for Town and
Parish councils and is one of the better systems in use by councils. It is considered ‘safe’ as alterations
and amendments are not possible within the software and a full audit trail is provided along with a sound
budget program and good reporting facilities for councils with emphasis on a number of different options
available. The package includes the option to use purchase and sales ledgers, but only the cash book is in
use at the moment. The RFO may like to consider using the purchase ledger facility before too long. The
amount of invoices being processed suggests that it is desirable rather than necessary at this time.
The council is not registered for VAT but VAT on expenditure is claimed through a special arrangement
(a Section 33 claim). The VAT Act 1994 allows Councils that received no income that could be subject
to VAT to reclaim refunds under this special provision without having to register for VAT.
The Clerk is also the RFO and carries out all the financial work and makes the data entries on the Omega software.
We would perceive this as a weakness and believe the council should review the risks of only one person being able to use the software.
The council receives very little income of any kind and the only cash used is an occasional withdrawal for petty cash use. We noted that it is possible that there may be unclaimed VAT on part of the £80.00 worth of Petty Cash payments already incurred and we have advised the clerk to check that all VAT is included in the next VAT claim. Reimbursement is made by the council on an ad hoc round sum basis.
We suggest that the exact amount of petty cash expenditure only is re-imbursed on production of receipts and vouchers for inspection.
INTERNAL CONTROL
A proper system of Internal Control is designed to ensure that no one individual is responsible for the
whole chain of authorisation, recording and payment/receipt of any one transaction. An essential element is therefore that at least two (and preferably more) are involved in the transaction from order through recording in the accounting records and (eventually) payment of the debt incurred or banking of amounts due and receivable. In a small council, with limited staff members, this inevitably requires the involvement of councillors in the chain of responsibility, as quite clearly set out in Financial Regulations
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FINANCIAL REGULATIONS
Financial Regulation 6.3 and 6.4 require (between them) that:
All payments …. shall be signed by two members
Financial Regulation 6.14 requires that:
Where internet banking arrangements are made with any bank, the Clerk/RFO shall be appointed as the Service
Administrator. The bank mandate approved by the Council shall identify a number of Councillors who will be
authorised to approve transactions on those accounts.
We note the following as specified within the financial regulations;
1.14 The Council must
Determine and keep under regular review the bank mandate for all Council bank accounts.
It would appear that any review carried out by the Council has not complied with financial regulation 6.3 (see
below)
2.2 Annually, a member other than the Chairman or a cheque signatory shall be appointed to verify bank reconciliations.
We were unable to verify that this is being carried out.
4.8 The RFO shall provide the Council with a statement of receipts and payments under each head of budgets.
On examining the software set up, we would suggest that this isn’t possible as income is not allocated under a budget head. We would suggest that either the Financial Regulations are updated or the budget set up is changed to enable such reporting.
5.1 The council’s banking arrangements, including the bank mandate, shall be made by the RFO and approved by the Council. They shall be reviewed for safety and efficiency.
In as much as we have not seen a copy of the bank mandate, we are unable to confirm whether this in accordance with the above extract. In any event, regulation 6.4 makes it clear that authorisation of payments is by two members. Our examination of the records during our visit indicate that such authorisation has been by the clerk/RFO and thus is in direct contravention to the financial regulations.
5.2 requires that “the RFO shall prepare a schedule of payment requiring authorisation, forming part of
the agenda for the meeting”. To be of any effect, this authorisation must, of necessity, precede actual
payment. We note, however, that such schedules are being approved retrospectively and are thus,
meaningless.
ACCOUNTING RECORDS
We took the opportunity to check the accounting records on the Omega Cash Book software. The records
were up to date and our examination of the purchase invoices indicated that they are checked and signed
off by Councillors. We made a few amendments to the VAT records, but nothing that materially affects
the VAT claims and arranged to send the clerk a comprehensive guide to VAT. We were aware that the
clerk is not fully aware of the potential of the Omega software and the various reports that are available
and suggested he contacts us if there is any additional information that councillors would like to review
as it is possible alternative reports could be provided. Some further training on the Omega system is
recommended in order to gain full benefit from the reports available and to obtain a greater understanding of how to fault find and correct any anomalies.
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INTERNAL AUDIT –
The primary responsibility of the Internal Auditor is to critically review, comment on and (where
appropriate) recommend improvement in the council’s governance, procedures and systems. It will be
apparent from the foregoing observations that in the most recent Internal Audit report, there is no mention
of the various issues we have highlighted. Should these issues have been brought to the attention of the
council in earlier reports we would have hoped that he/she would followed up as a matter of urgency. The
council, in its Annual Governance Statement as part of the AGAR certifies that they “have maintained an
effective system of Internal Audit”. This is patently not the case, and we would urge a stringent review of
the areas of work to be undertaken by the Internal Auditor before the 2022/23 Annual Governance
Statement is completed and signed.
Councillors may like to note that there is guidance within Section 4 of the Practioners Guide concerning
required competences when appointing an Internal Auditor.
Our main area of concern is to bring to the Council’s attention that current banking arrangements are such
that payments are being made from the council’s account on the sole signatory of the current Clerk. This
is in direct contravention of the Council’s own Financial Regulations and constitutes a lack of
“robust and effective system of control over expenditure” and should be changed as a matter of
urgency. We believe this may mean it is necessary for the Council to change bankers as it may not
be possible to set up a duel signature electronic process with HSBC.
As RFO, the clerk, we suggest, should be making arrangements to ensure the council follows the
Financial Regulations and updates arrangements for making safe and legal payments with all haste.
Melodie A Beevers
DCK Accounting Solutions Ltd
10th January 2023
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