Policies – Ingoldmells Parish Council

Systems of Internal Control

Document Control
Version Number	1
Adopted on	09-10-23
Last Reviewed	10 - 2023
Review Date	05 - 2024

1. Introduction

The Accounts and Audit Regulations 2015 defines the responsibilities of the Responsible Financial Officer (RFO) as ensuring the Council’s day-to-day finances are run properly but it falls to the Council’s members to exercise a proper and reasonable degree of control over financial matters.

For Ingoldmells Council the Clerk is also the RFO

Internal controls are the activities that the Council undertakes to prevent and detect fraud and ensure that the council’s finances are maintained properly.

GENERAL
Area	Agreed Controls
Cash Book / Bank Reconciliations	The cash book is kept electronically on the Councils Accounting Software This is maintained up to date by the Clerk and RFO. Payments are entered as they are made from original documents Receipts are only entered once any such receipt has cleared the Council’s bank account A record of invoices raised is kept Cash book is reconciled to bank statements monthly The bank reconciliation is submitted at scheduled monthly meetings of the Council for approval The latest financial position on the Council’s accounts is submitted at scheduled monthly meetings of the Council for approval Bank Reconciliations are signed ad-hoc by 2 members of the Council
Financial Regulations and Standing Orders	The Council has adopted Financial Regulations and Standing Orders based on model versions prepared by the National Association of Local Councils and the Society of Local Council Clerks. The documents are reviewed at least annually by the Finance Committee and any amendments considered and approved by the Council
Order / Tender Controls	Financial Regulations list the procedure for obtaining quotes or tenders that must be invited depending on the value and nature of the work A proper legal power must be identified for expenditure
Payment Controls	Depending on the nature of the supply, the Clerk (RFO) to check purchase invoice for accuracy and to ensure that the supply has been received and not previously paid Purchase / work orders are matched to purchase invoices where applicable and attached to the appropriate invoice prior to cheque being signed Purchase / work orders are to specify if appropriate or known the value of the work ordered. If not known, then a maximum amount to be stated. Purchase / Work Orders to be selectively checked to ensure that work has been completed. This to be evidenced on the actual order by the person checking the work Written confirmation (via e-mail or other means) required for certain level of expenditure as detailed in the Financial Regulations Cheques to be signed by three Councillors approved by resolution and as detailed on the Council’s Bank Mandates Signatories are required to check the amount payable against the invoice and that the cheque is made payable to the person or company detailed on the invoice Signatories are also required to sign both the invoice and the cheque stub The original invoice will be made available to those signing cheques along with the appropriate Purchase / Work Order Payments are retrospectively authorised by the Council at its scheduled monthly meetings Signatories are in no circumstances to sign blank cheques Where practicable different signatories are used
Electronic Banking	Documentation relating to payments made by these means will be made available Two signatories are to sign such documentation as well as any order for payment (i.e., BACS) Orders for payment by electronic means are originated by the Clerk (RFO) Any notification of a change in banking details by an organisation paid in this way must be verified as per the Council’s Financial Regulations before any alteration is made Once verified those carrying out this task are required to ensure that amended details are entered correctly Transfers between the Council’s accounts (if any) to ensure sufficient funds are available to meet financial commitments do not require authorisation
VAT	The Clerk (RFO) to verify that all invoices on which VAT is reclaimed are made payable to Ingoldmells Parish Council A separate VAT account is included in the Council’s accounting software to ensure that the correct amount is reclaimed in each financial year. Where historical inaccuracies are identified then these will be manually entered to correct the error
Income Controls	The Clerk (RFO) to ensure that the amount of precept is received in accordance with the precept demand The Clerk (RFO) to ensure that other receipts are received when due and correctly calculated Receipts issued for any cash received Any cash received banked as soon as possible
Financial Reporting	A budget report comparing actual receipts and payments against the agreed budget is prepared monthly and presented to the Council A phased (or flexed) budget is also prepared monthly detailing receipts or payments against that anticipated in the agreed budget Explanations of significant variations in the phased budget are reported to the Council (“significant” meaning + / - 15% of the total individual budget heading)
Payroll Controls	Staff Contracts are approved by the Council Employees are paid under PAYE Necessary systems in place for Real Time Information (RTI) submissions to Her Majesty’s Revenue and Customs (HMRC) Salaries are approved by the Council in line with national guidelines Salary increases agreed at a national level will be reported to the Council by the Clerk as and when notified Additional hours are approved as per employee’s contracts The Clerk (RFO) to ensure that all necessary payroll returns are made to HMRC Salaries are paid either by cheque or BACS and evidenced by three signatories Payments to HMRC are paid by either cheque or BACS and evidenced by three signatories Pension contributions are paid by either cheque or BACS and evidenced by three signatories All records retained for the statutory time period
Budgetary Controls	A draft budget is prepared by the Finance Committee for initial consideration in October Spending Committees to agree their own budgetary requirements by the end of November Budget finally approved in January Precept demand to be sent to East Lindsey Council by the deadline set by them
Asset Control	Asset Register maintained each year by the Clerk (RFO) The adequacy of insurance cover is considered annually by the Council in advance of any insurance renewal Disposal or acquisition of any assets over £500 is recorded
Risk Assessment	A risk assessment is carried out annually by the Clerk and presented to Council for approval. Such approval to be minuted accordingly
Expenses	Any expenses claim by either members or officers is to be submitted on expenses claim form and accompanied by receipts Mileage will be reimbursed at a limit set from time to time by HMRC All expenses are paid by cheque or BACS with appropriate evidence that the expense has been previously authorised as per the Council’s Financial Regulations i.e., signed by the Chair and / or the Clerk as per Financial Regulations

GENERAL
Area	Agreed Controls
Signatories	Signatories to the Council’s accounts are not concentrated amongst a small number of members
Internet transfer of funds to an external account	Bank reconciliations verified and checked against statements by nominated member on a regular basis. Such request may be unannounced Bank reconciliations supplied monthly to members at a Council meeting as part of the monthly Statement of Accounts
BACS payments to suppliers	List of suppliers to be paid by BACS payments authorised by resolution of the Council Instructions for payment evidenced by two authorised Bank Signatories Notification of change to banking details by a supplier to be approved in writing by either two authorised signatories or the RFO and one authorised signatory
Single invoice or other expenditure exceeding £5000	Paid by cheque but needs authorisation of the Council
Direct Debits and Standing Orders	List of suppliers to be paid by Direct Debit or Standing Order to be approved by resolution of the Council Instructions to bank to make such payments to be signed by three authorised bank signatories
Creation of false Work Order	Periodic check by bank signatories or the Chair of Work Orders issued Suppliers contacted if deemed necessary to verify they are genuine Random checks of work carried out to be done and evidenced
Theft of other cash received	Signatories or Chair to be informed that cash has been received with details of person paying the cash. Signatories or Chair to verify that a receipt has been issued and the amount banked
Forging of signatures on cheques	Cheque stubs checked on unannounced visits. Explanation required for missing stubs