Don’t be afraid of the Internal Audit!!
With a huge number of parish councils in the country, all requiring an Internal Audit, it is important to understand not only their role but how to find someone who is competent and independent from your council.
The Internal Auditor (IA) – who is external to the council – is the only independent person with a legal right to look at all of the systems and controls of the council.
They will check that the Council has followed Proper Practices and thus that the figures they present on their AGAR can be relied on.
When a council approves the Annual Governance Statement and the Annual Statement of Accounts, the report of the internal auditor is proof that a competent independent person has reviewed the systems.
The purpose of the annual governance statement is for the authority to report publicly on its arrangements for ensuring that its business is conducted in accordance with the law, regulations and proper practices and that public money is safeguarded and properly accounted for. It provides assurance to the local electorate that their money is being spent in accordance with the law.
By engaging an IA who properly understands the legal framework and the up to date requirements, the council has demonstrated to ratepayers that it is complying with all the relevant legislation. In addition to the report included in the AGAR a competent IA will also provide a more detailed report to council giving recommendations for improvement where necessary. This should be published by the council and made available on its website along with the rest of the end of year paperwork.
The IA is not there to “punish” councils but to check systems and to guide clerks and councils as they get to grips with new requirements. It is really useful to make sure you have an IA in place well before the end of year. Some will be happy to do a mid year check so that there is time to make sure that anything missing can be put in place before the year end. Annual reviews of Standing Orders, Financial Regulations etc can be undertaken at anytime during the year and don’t have to wait until March! The Practitioner Guide also has a great deal of help for councils to make sure everything required is in place - this year particularly useful in relation to the new Assertion 10.
To help your auditor, councils should have as much as possible available on their website. That way a lot of the IA checks on minutes, policies etc can be undertaken remotely.
What to look for when appointing your Internal Auditor
The Practitioners’ Guide includes detailed guidance for appointing an IA. The key principles are that they are independent and competent. There is no requirement for a person providing the internal audit to be professionally qualified, however advice would be to look for an Internal Audit qualification and an understanding of the work of parish councils. It is also important to regularly change your IA – it is suggested this be every 3 years.
In summary, do not be afraid of your IA, they are there to help and really want to make sure the systems are in place and if they are not, their report will include guidance of what the council needs to do to make sure it’s all there next year!
