DRY DRAYTON PARISH COUNCIL INTERNAL AUDIT REPORT 2013 – 2014 The comments in this report are based on the objectives of internal control found on page 5 of the Annual Return, referenced A to K. A: Appropriate books of accounts have been properly kept throughout the year i.An examination of transactions has taken place to ensure that the financial records are up-to-date, the arithmetic is correct (apart from one small error) and that the accounts balance. There are no material issues to report for the 2013-14 records. B: The council's financial regulations have been met, payments were supported by invoices, expenditure was approved and VAT was appropriately accounted for i.Financial regulations were last reviewed in May 2013, the review has been recorded in the minutes and no amendments were needed. The Risk Assessment policy incorrectly refers to the regulations as being last reviewed in June 2007 and not being compliant with current guidelines, the policy needs updating. ii.The Financial Regulations state that a quarterly statement will be prepared and presented to the Council. This has been done throughout the year. iii.The cheques book counterfoils have all been initialled by two cheque signatories as required by the Financial Regulations. iv.Four items of Section 137 expenditure appear in the accounts spreadsheet for the year but not all are recorded in the minutes as being Section 137 expenditure. In future Section 137 expenditure needs to be clearly identified and approved in the minutes. v.VAT appears to have been correctly recorded (apart from one small error identified in the audit) and £457.37 will need to be reclaimed in June 2014. C: The council assessed the significant risks to achieving its objectives and reviewed the adequacy of arrangements to manage these i.The Annual Risk Assessment policy was last reviewed in May 2013. The review is noted in the council’s minutes. The policy does require amendment, see note B:i. above. ii.Insurance cover appears to be adequate and was last reviewed in May 2013. The Fidelity Guarantee limit is currently high at £150,000. The recommended level should be the amount of the end of year balances plus the full amount of the Precept which would give a figure of £22,000. The annual premium paid is relatively low however, the level of the Fidelity Guarantee can be left unchanged as the savings made if reviewed will be small.

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iii.Standing Orders were last reviewed in May 2013 and are based on the NALC model document. They appear up to date and relevant. D: The annual precept requirement resulted from an adequate budgetary process; progress against the budget was regularly monitored; and reserves were appropriate i.An adequate budgetary process appears to be in place with updates of expenditure against the Budget reported to Council. There do not appear to be any significant unexplained variances from Budget. ii.Total reserves at the end of the year increased by £3,878 to £12,494. The balance of the general reserve would give fifteen months of budgeted gross expenditure. This is slightly higher than NALC guidelines which state three to twelve months of budgeted gross expenditure. It is not considered a big enough difference to recommend a change in levels of reserves held but should be monitored to ensure it does not go significantly higher. E: Expected income was fully received, based on correct prices, properly recorded and promptly banked; and VAT was appropriately accounted for i.Income and VAT on income appear to be properly recorded. F: Petty cash payments were properly supported by receipts, expenditure was approved and VAT appropriately accounted for i.There is currently not a petty cash system in place and there were therefore no petty cash payments made during the 2013-14 financial year. G: Salaries to employees and allowances to members were paid in accordance with council approvals and PAYE and NI requirements were properly applied i.PAYE and NI has been correctly deducted and payroll records are adequate. ii.Payroll calculations are outsourced to reduce the risks involved. It should be noted that the charity providing the payroll service, Cambridgeshire ACRE, is also the employer of the internal auditor. A degree of independence is maintained however as a different member of staff runs the payroll service and Cambridgeshire ACRE does not authorise any payments through the service, it only advises the amounts to be paid. H: Asset and investments registers were complete and accurate and properly maintained i.The asset register appears complete and up-to-date. I: Periodic and year-end bank account reconciliations were properly carried out i.Monthly reconciliations have been undertaken throughout the year.

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J: Accounting statements prepared during the year were prepared on the correct accounting basis (receipts & payments/income & expenditure), agreed with cash book, were supported by an adequate audit trail from underlying records, and, where appropriate debtors and creditors were properly recorded i.Year-end accounts have been prepared on a Receipts and Payments basis, they appear to

accurately reflect the cash book. K: Trust funds (including charitable) The council has met its responsibilities as a trustee i.The Clerk has indicated that the Council is not sole managing trustee of any local trusts.

Mike Handley Internal Auditor 15th May 2014

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