Internal Financial Controls by Business · PDF fileAttachment 1 District Council of the...

Attachment 1

District Council of the Copper Coast

Internal Financial Controls by Business Activity

APPENDIX 4

Coyle Consulting Services March 2010 District Council of the Copper Coast 1

Explanation of the Structure of this Document This document provides the internal controls for each risk against each business activity. It is presented in alphabetic order of business activity and highlights the risks against each activity. The original structure of the Financial Management Group/Deloittes report was in Risk Category order and to match the different structures Page 3 presents the Risk Category structure and identifies which page each Business Activity is located. The following information is provided:

• The Risk to be managed for each activity with an accompanying explanation e.g. for Accounts Payable (Creditors) the first risk is that ‘Accounts payable amounts are either inaccurately recorded or not recorded at all.’

• In the first column of the Table is the number of each internal control

• The second column describes the internal control and if action is required by the Administration it is in bold.

• The third column provides the current position of the Internal Control.

• Column four is the frequency of each internal control.

• Column five identifies the Officer responsible for the internal control.

• Column six identifies firstly, officers who are responsible for a checking role in regard to the internal control and secondly, key internal controls which may be included in a (marked ‘Spot Check’) review process.

At the bottom of each table is a risk analysis table, such as the example below, which assesses the likelihood of a Risk occurring.

Risk Assessment – Outcome Not Achieved

Likelihood Consequence Rating Accept E 2 L Yes

This method of assessment measures the likelihood of each business activity not being achieved and the consequence of the risk event. From this analysis it is possible to determine the level of inherent risk. Liklihood is measured as:

• A = Almost Certain

• B = Likely

• C = Possible

• D = Unlikely

• E = Rare With Internal Controls you would plan on likelihood as being either ‘Unlikely’ or ‘Rare’. If it is in the ‘Possible’ to ‘Almost Certain’ range additional internal controls may be required. Consequence is measured as:

• 1 = Insignificant

• 2 = Minor

• 3 = Moderate

• 4 = Major

• 5 = Catastrophic


The final inherent risk score will be one of the following:

• L = Low risk – Manage by routine procedures.

• M = Moderate Risk – Management responsibility must be specified

• H = High Risk – Senior Management attention needed

• E = Extreme Risk – Immediate action required. If the final score is either H or E additional internal controls would be required and the answer in the ‘Accept’ box would be ‘No’. For L or M the answer in the ‘Accept’ box is ‘Yes’.

Risk Ratings

A H H E E E Extreme risk – immediate action required

B M H H E E C L M H E E High risk – Senior management

attention needed

D L L M H E E L L M H H Moderate risk – Management

responsibility must be specified

1 2 3 4 5 Low risk – Manage by routine

procedures

The top of each risk analysis table is colour coded, as per:

Low Risk

Moderate Risk

High Risk

Extreme Risk

CONSEQUENCE

L I K E L I H O O D


Risk Categories & Associated Business Activities

Risk Category

Business Category

Page No.

Strategic Financial Planning Budgets 19

General Ledger 52

Statutory Reporting 103

Management Reporting 71

Assets Cash Floats & Petty Cash 22

Banking 10

Investments 63

Debtors 29

Inventory 57

Prepayments 87

Fixed Assets 45

Project Costing 89

Loans/Grants to Clubs/Community Groups 68

Liabilities Accounts Payable 4

Accrued Expenses 9

Borrowings 13

Employee Provisions 38

Taxation 106

Revenue Rates/Rate Rebates 95

Grants 54

User Pay Income – Fee for Services 42

Investment/Interest Income 67

Receipting 100

Other Revenue 77

Expenses Purchasing & Procurement 91

Payroll 78

Elected Members Expenses 34

Credit Cards 26

Employee Reimbursements 40

Other Expenses 75

External Services Contracting 24


ACCOUNTS PAYABLE Risk No. 1: Accounts payable amounts are either inaccurately recorded or not recorded at all.

• If invoices or credit notes are not entered accurately (i.e. amounts posted to incorrect creditor), accounts payable will be misstated, as will the relevant expense, inventory, or asset accounts. Also, erroneous payments may be made to vendors.

• If amounts posted to accounts payable do not represent goods or services received (due to invalid delivery address on purchase order), unauthorised payments might be made and the organisation might incur a financial loss.

• If accounts payable amounts are not recorded at all, accounts payable will be understated, as will the related inventory, expense, or asset accounts. Also, supplier payments will not be made, which may damage supplier relationships.

• Disbursements that are not recorded can affect cash flow decisions and cause reconciliation difficulties.

No Internal Controls Current Situation Target Date Resp. Officer

Checking Officer

1 Statements received from suppliers are reconciled to the supplier accounts in the accounts payable sub ledger regularly and differences are investigated.

Statements are reconciled monthly and outstanding accounts followed up.

Monthly Finance Officer

Spot Check

2 Actual expenditures are compared to budget regularly; management reviews and approves significant variances.

These comparisons are made during Quarterly Budget Reviews.

Quarterly Manager Corporate Services

3 Creditors batch listing is checked by independent Officer prior to cheque (or EFT) generation for accuracy.

Not currently. Invoice details should be checked prior to approving cheque or EFT generation.

Continual CEO GMC&CS GM I&ES Manager

Corporate Services

Senior Finance

Officer (C)

Spot Check

4

Invoices for services received are authorised and accompanied by appropriate supporting documentation.

Current practice with copies of purchase orders attached.

Continual Delegated Officers

Finance Officer

5 Variances between Purchase Orders and Invoices are suspended and released by Senior Finance Officer only after verification by the responsible officer.

Variances are checked and authorised by Delegated Officers prior to Finance receiving the invoice.


Finance Officer

6 Goods received are Current practice. Continual Delegated Finance


matched with purchase order details and/or invoices.

Officers Officer

7

Bank statements are reconciled to the general ledger regularly.

Bank Statements are reconciled daily.

Daily Senior Finance

Officer (B)

Spot Check

8 Cheques are endorsed by authorised Officers separate to the preparer who ensure that they are paid to the specified payee.

Current practice with cheques requiring two signatures.

Continual CEO GMC&CS GM I&ES Manager Corporate Services

9 Individuals who process electronic funds transfers are authorised by management.

Current practice. Continual Senior Finance Officers Finance Officer

CEO GMCorp S GM Com S GM I&ES Manager Corporate Services Human

Resources Officer

PA to CEO

10 Invoices, credit notes, and other adjustments related to accounts payable are batched and batch input data is balanced; out of balance batches are corrected promptly.

Current practice. Daily Finance Officer

11

The purchases and accounts payable system prevents users from making adjustments to creditor accounts in excess of approved limits or original order amounts.

Orders are raised manually and Finance do not hold a copy of the original order. Copies of orders should be held in Finance to match to invoices and to identify outstanding orders.


Finance Officer

CEO = Chief Executive Officer; GMC&CS = General Manager Corporate & Community Services; GMI&ES = General Manager Infrastructure & Environmental Services

Risk Assessment – With All Controls

Likelihood Consequence Rating Accept D 2 L Y


Risk No. 2: Payments are not valid.

Unauthorised disbursements could result in Council making payments to suppliers for goods and services not actually received by the organisation or Council may expend its funds on items of a private or personal nature when reimbursing employee expense claims.

No Internal Controls Current Situation Target Date

Resp. Officer

Checking Officer

1 All disbursements must be approved by management in accordance with Delegations of Authority

Current practice. Continual Delegated Officers

Finance Officer

Spot Check

2 Orders must be raised for the purchase of goods and services.

Orders are raised manually. Continual Delegated Officers

Finance Officer

Spot Check

3 Creditors batch listing is checked by independent Officer prior to cheque (or EFT) generation for accuracy.

Not currently. Invoice details should be checked prior to approving cheque or EFT generation. Refer Accounts Payable Control 1.3.

Continual CEO GMC&CS GM I&ES Manager Corporate Services

Senior Finance

Officer (C)

4

Individuals who process electronic funds transfers are authorised by management.

Current practice. Continual Senior Finance Officers Finance Officer

CEO GMC&CS GM I&ES Manager Corporate Services Human

Resources Officer

PA to CEO

5

Cheque usage to be reconciled to stock of cheques on a regular basis.

Cheques are reconciled during the bank reconciliation process. A Register should be maintained identifying cheques in stock and those issued.

Continual Senior Finance

Officer (C)

6 All delegated officers should undertake training for the raising of orders, posting of goods received and the requirements of the creditors process.

Generally officers receive training when appointed. An annual refresher session should be held with staff to update them on developments and common faults.

When Appointed

and Annually

Senior Finance

Officer (C)





Risk No. 3: Accounts payable are not paid on a timely basis.

• If supplier invoices are not paid before their due date, then Council may miss out on any available discounts (i.e. early payment).

• If supplier invoices are paid well before their due date (and prior to any early payment discount) greater demands will be placed on the Council’s cashflow.

No Internal Controls Current Situation Target Date Resp. Officer

Checking Officer

1 Statements received from suppliers are reconciled to the supplier accounts in the accounts payable subledger regularly and differences are investigated.

Statements are reconciled monthly and outstanding accounts followed up.

Monthly Finance Officer

2 Actuals are compared to budget regularly; management reviews and approves significant variances.

These comparisons are made during Quarterly Budget Reviews.


3 System automatically generates a report (based on the due date of the suppliers invoice) detailing all supplier invoices due for payment at any one time.

All payments are processed immediately although there is an option to hold back a payment if required.

Continual Finance Officer

4 Management to review aged payables listing quarterly and investigate where appropriate.

Not currently because invoices generally processed immediately. The system should be reviewed to identify if there is a report of aged payables which may be run quarterly to identify the invoices which have been held.

Quarterly Senior Finance

Officer (C)

Spot Check


Likelihood Consequence Rating Accept E 2 L Y


Risk No. 4: Creditor master file data does not remain pertinent.

To be considered “pertinent,” the master file must reflect current conditions. In this context, pertinence relates both to master file records and to individual data fields within those records. For example, if creditor data is not up-to-date, payments could be made to the wrong bank account.

No Internal Controls Current Situation Target Date

Resp. Officer

Checking Officer

1 Creditor master file data is periodically reviewed by management for accuracy and ongoing pertinence.

Reviewed by the Senior Finance Officer.

Continual Senior Finance Officer (C)

2 Recorded changes to the creditor master file are compared to authorised source documents to ensure that they were input accurately.

This is carried out at the time of entering data.

Continual Senior Finance Officer Finance

Officer (C)

3 Significant changes to the creditor master file are approved by management.

Not currently. The system should produce a report which identifies these changes and it should be checked by an independent officer.

Monthly Manager Corporate Services

4 Creditors that have not been used for a significant period of time are reviewed and marked for deletion by the application, if appropriate.

Not currently. The system should be reviewed to identify the possibility of providing a report identifying creditors who have not been used over a specific length of time and remove them from the system.

Annually Senior Finance Officer (C)

Spot Check




ACCRUED EXPENSES Risk No. 1: Accrued Expenses are either inaccurately recorded or not recorded at all.

If accrued expenses are either inaccurately recorded (i.e. inaccurate estimation of accrual) or unrecorded (i.e. no invoice received and normal review of expenses did not identify need to accrue for expenses), the management reports and financial statements will be misstated.

No Internal Controls Details Target Date

Resp. Officer

Checking Officer

1 Actuals are compared to budget on a regular basis.

Current practice on a quarterly basis.

Quarterly Managers

2 Accrued expenses reconciliations are prepared on a regular basis and are reviewed by an independent person.

Not currently but have now been reconciled and will be reviewed annually.

Annually Senior Finance

Officer (B)




BANKING Risk No. 1: Banking transactions are either inaccurately recorded or not recorded at all.

If Cash is inaccurately recorded/receipted prior to being banked, this will result in banking either being inaccurately recorded or not recorded at all. As a result the cash balance will be misstated in both the management reports and the financial statements.


Resp. Officer

Checking Officer

1 Banking is performed on a regular basis by an appropriately designated and independent person.

Banking is performed daily at Kadina Head Office by the Customer Services Officers and less frequently for Branch offices. The banking processes at all sites should be reviewed for security, especially at Rates times.

Daily Team Leader Customer Services

Spot Check

2 Blank cheques are adequately safeguarded.

Blank cheques are held in the safe.

Continual Team Leader Customer Services

3

Access to EFT Banking system restricted to appropriately designated personnel.

Current practice. Continual Senior Finance Officers

Finance Officer

CEO GMC&CS GM I&ES Manager Corporate Services Human

Resources Officer PA to CEO

4

Bank reconciliations are performed on a regular basis and are reviewed by an independent person.

Current practice. Daily Senior Finance Officer (B)

5 All cash held securely in safe/registers with access restricted to appropriately designated personnel.

Cash is stored in lockable drawers during day and locked in safes overnight. The safes and drawers should be locked when not in use.

Daily Team Leader Customer Services

Senior Finance Officer (B)

Finance Officer IT Officer

Spot Check

6 All incoming mail is received and recorded by Records staff at Head Office.

Current practice. Daily Records Management

Officer





Risk No. 2: Fraud (i.e. misappropriation of funds).

If Cash is misappropriated prior to being banked, this will result in banking either being inaccurately recorded or not recorded at all. As a result the cash balance will be misstated in both the management reports and the financial statements.

No Internal Controls Details Target

Date Resp.

Officer Checking

Officer 1 Banking is performed on a

regular basis by an appropriately designated and independent person.

Banking is performed daily at Kadina Head Office by the Customer Services Officers and less frequently for Branch offices. The banking processes at all sites should be reviewed for security, especially at Rates times. Refer Banking Control 1.1.

Daily Team Leader

Customer Services

2 Blank cheques and/or cheque-signing machines are adequately safeguarded.

Blank cheques are held in the safe.

Continual Team Leader

Customer Services

3

All cash held securely in safe/registers with access restricted to appropriately designated personnel.

Cash is stored in lockable drawers during day and locked in safes overnight. The safes and drawers should be locked when not in use. Refer Banking Control 1.5.

Daily Team Leader

Customer Services

4

Management reviews journal transactions to the bank account.

Journals reviewed during the bank reconciliation.


Officer (B)

5 Bank reconciliations are performed on a regular basis and are reviewed by an independent person. Any identified discrepancies are investigated immediately.

Current practice. Daily Senior Finance

Officer (B)




Risk No. 3: Cash receipts are not banked on a timely basis.

If cash receipts are not banked on a timely basis due to unintentional or intentional delays, the likelihood of cash being misappropriated increases.




Resp. Officer

Checking Officer

1 Banking is performed on a regular basis by an appropriately designated and independent person.

Banking is performed daily at Kadina Head Office by the Customer Services Officers and less frequently for Branch offices. The banking processes at all sites should be reviewed for security, especially at Rates times. Refer Banking Control 1.1.

Daily Team Leader

Customer Services

2 Bank reconciliations are performed on a regular basis and are reviewed by an independent person. Any identified discrepancies are investigated immediately.


Officer (B)

3

Debtor statements are sent on a regular basis.

Debtor statements are forwarded monthly.

Monthly Senior Finance

Officer (C)


BORROWINGS Risk No. 1: Borrowings are either not recorded or are recorded inaccurately as to amounts and terms.

Financing may be obtained but either inaccurately recorded or not recorded at all in the general ledger or loan register, resulting in misstatement of liabilities.


Resp. Officer

Checking Officer

1 A loan register is maintained containing a copy of Council’s resolution approving the loan and a schedule of the loan liability and the loan repayment from the lender. This also includes details of any Cash Advanced Debenture.

A loan register is maintained and a copy of Council’s resolution is held in Records files. There are no Cash Advanced Debentures at this time.

Continual Manager Corporate Services

Spot Check

2 Loan register is subject to management review.

Details of the Loan register are regularly submitted to the Audit Committee.


Officer (B)

3

All loan journals are independently authorised.

Current practice. Continual Manager Corporate Services

4

Actual loans regularly compared to budget; management reviews and as appropriate approves significant variances

Current practice. Quarterly Manager Corporate Services

5

All new loan repayment schedules and conditions are checked prior to accepting each loan.





Risk No. 2: Loans are taken out without appropriate approval.

Should appropriate delegations/approvals not be obtained when taking out loans, the Council may be exposed to undue financial risk and/or not obtain the most appropriate loan terms and conditions.


Date Resp.

Officer Checking Officer

1 All loans are approved by Council resolution.

Current practice. Continual GMC&CS Manager Corporate Services

Spot Check

2 Copy of Council resolution is held securely.

Resolutions are held in Records files.


GMC&CS = General Manager Corporate & Community Services




Risk No. 3: Loans are not repaid in accordance with the agreed terms.

If repayments required by the loan agreement are missed, made late, or made in the wrong amount, the lender may have the right to impose penalties or call the loan.




Resp. Officer

Checking Officer

1 Statements received from lenders are reconciled to the loan register and differences are acted upon.

All statements received are checked.


Officer (B)

2 The loan repayment and covenant schedule, including dates and amounts to be paid is established when loan is setup. Repayment details on Cash Advanced Debentures is recorded and checked as known.


3

Actuals are compared to budget regularly; management reviews and approves significant variances.


4 Loan repayments are made via automated direct debit and approved appropriately.

Current practice. Monthly Senior Finance

Officer (B)

5 Management reviews loan repayment and covenant schedule to ensure that all payments are made and recorded accurately and timely. Repayment details on Cash Advanced Debentures is recorded and checked as becomes known.

Current practice. Monthly Manager Corporate Services

Spot Check


Risk No. 4: Loan repayments are not recorded at all or are recorded inaccurately.

If loan repayments are made but not recorded, liabilities, and cash will be overstated and interest expense may be inaccurately recorded. If loan repayments are recorded inaccurately liabilities, cash, and interest expense may be misstated. Overpayments reduce cash available for other business activities, while underpayments may give the lender cause (and the right) to call the loan (i.e., to demand that the loan be repaid immediately) or to impose penalties.


Resp. Officer

Checking Officer

1 Statements received from lenders are reconciled to the loan register and differences are acted upon.



Officer (B)

2 The loan repayment and covenant schedule, including dates and amounts to be paid is established when loan is setup. Repayment details on Cash Advanced Debentures is recorded and checked as known.


3 All additions, deletions, and other changes to the loan register are compared to the loan agreement to ensure that they were input accurately.


4

Loan repayment data is edited and validated; identified errors are corrected.


5

Payments are manually entered into the system following verification of direct debit from the bank statement.


Officer (B)




Risk No. 5: Council’s cash reserves run out.

Borrowings may take many forms (i.e. loans, cash advance debentures), If these borrowing are not managed effectively, Council may run out of cash, thereby reducing the operational efficiency of the organisation.


Resp. Officer

Checking Officer

1 Management reviews cash position of Council on an on-going basis, involving comparison to budgets; significant variances investigated by management.

Current practice by the Senior Finance Officer. Managers also compare their budgets to actual on a quarterly basis.


Officer (B) Managers

2 Cash flow budgets prepared by suitably qualified personnel on a regular basis.

A cash flow management system should be developed by the Manager Corporate Services when he/she commences.


Spot Check

3 Management approves all changes to cash flow budgets.

This process will be improved once the above control is in place.


4

Borrowings actual are compared to budget regularly; management reviews and approves significant variances.


5 All loans are approved by Council resolution.

Current practice. Continual GMC&CS Manager Corporate Services

6 Details of cash requirements, particularly with capital works, are documented by Managers and discussed with the Senior Finance Officer. Investments and borrowings are scheduled accordingly.

Current practice. Continual Senior Finance

Officer (B)





Risk No. 6: Interest expense is inaccurately calculated or recorded in the wrong period.

If interest is inaccurately calculated or recorded in the incorrect period, the related expense will be misstated.


Date Resp.

Officer Checking

Officer 1 Statements received from

lenders are reconciled to the loan register and differences are acted upon.



Officer (B)

Spot Check

2 Interest on fixed loans is predetermined and journals are checked. Interest on Cash Advanced Debentures is checked.


3 Actuals compared to budget on a regular basis; management reviews and approves significant variances.





BUDGETS Risk No. 1: Budgets do not reflect strategic objectives.

If Budgets are not linked to the objectives contained within the Strategic Plan, there is an increased risk that the initiatives and outcomes of the Strategic Plan will be achieved.


Resp. Officer

Checking Officer

1 Robust and rigorous process to establish Budget and ensure that it is consistent with the initiatives/objectives of the Strategic Plan.

Current practice with the objectives of the Strategic Plan tied to the Budget.

Continual Chief Executive

Officer

2 On-going review of actual performance against budget by management; management perform on-going review of consistency of Budget in relation to initiatives/objectives of Strategic Plan.

Current practice with quarterly budget reviews and six monthly reports on progress with Strategic Plan objectives.

Continual GMC&CS Spot Check

3

Individual Budget Managers to sign off on budgets and budget reviews for their areas.

Progress has been made and will improve over time.

Continual GMC&CS

4

Establishment of clear links and relationship between budgets and Strategic Plan.

Current practice with regular reporting.

Continual GMC&CS





Risk No. 2: Unrealistic Budgets.

Unrealistic budgets will lead to significant variances and the associated inefficiency in analysing and addressing variance analysis. If budgets are too aggressive, this can have a detrimental effect on employees’ morale. On the other hand, if Budgets are set at easily attainable levels, this will result in Council not maximising performance.


Resp. Officer

Checking Officer

1 Budgets based on realistic and achievable assumptions and validated by fact.

Budgets are becoming more realistic.


Spot Check

2 Annual Budgets and their amendments are approved by the appropriate level of management and by Council, and in accordance with Local Government Act.

Current Practice. Annually Manager Corporate Services

3 Managers to accept responsibility for their budgets.

Managers are accepting responsibility for their Budgets.

Continual GMC&CS

4

Budgets are regularly reviewed by management for pertinence and accuracy.

Budgets are reviewed by Managers quarterly.

Quarterly Managers Manager Corporate Services

5 Budgets are amended to take into account significant changes in operations; amendments must be made in accordance with the Local Government Act.

Budgets are updated quarterly.


6 End of year actuals are compared to original budget; significant variances explained

Not currently but planned for the end of the current financial year.

Annually Manager Corporate Services





Risk No. 3: Budgets are inaccurately reported If Budgets are inaccurately reported (i.e. processing errors when inputting the Budget into the financial system), this will result in actual performance not being measured as accurately as possible.





Resp. Officer

Checking Officer

1 Original Budget compared to Budget entered into the financial system for accuracy by appropriate level of management; identified variances are investigated.

Current practice. Annually Manager Corporate Services

2 Access to Budget information is restricted to appropriately authorised personnel.

Current practice. Continual GMC&CSManager Corporate Services Senior

Finance Officer (B)

Spot Check


CASH FLOATS & PETTY CASH Risk No. 1: Cash Floats & Petty Cash are inadequately safeguarded. If access to Cash Floats & Petty Cash is not restricted by storing these assets in secured locations (i.e. safe), then these assets are more likely to be misappropriated.


Resp. Officer

Checking Officer

1 Cash floats and petty cash are stored in secure facilities (e.g. safes, registers)

Current practice. Continual Customer Services Officers

Spot Check

2 Access (i.e. passwords or keys) to the cash floats and petty cash safes/registers is limited to appropriately designated staff.

Staff currently have access to change denominations. Access should be restricted to cash floats and petty cash holders.

Continual Customer Services Officers

Spot Check

3 A register for cash floats and petty cash and custodians is maintained by appropriately designated staff.

Not currently, a Register should be held in Finance.


4 Cash floats and petty cash are reconciled on a regular basis and these reconciliations are reviewed by an independent person.

Cash floats are reconciled daily and petty cash when seeking reimbursement. Cash should not be counted at the front counter in sight of public.

Continual Customer Services

Officers & Petty Cash

Holders

Senior Finance

Officer (C)

5 I.O.U.’s are prohibited. This requirement should be included in a Cash Handling Policy.



Holders

Senior Finance

Officer (B)

6 Surprise Float and Petty Cash counts conducted periodically at Council Office and remote sites.

Not currently. An annual count should be conducted at the end of the financial year as well as surprise counts during the year.


Spot Check

7 All monies received should be paid direct to Council.


8 Petty Cash amounts paid out should be under a capped amount.

Not currently. A cap should be set on payments from petty cash accounts e.g. $50.

Continual GMC&CS





Risk No. 2: Cash Floats and Petty Cash transactions are either invalid, inaccurately recorded or not recorded at all.

• Invalid transactions can result if disbursements or reimbursements sare for fictitious expenses.

• Inaccurately recorded transactions can result from both unintentional and intentional processing errors.

• All disbursements and reimbursements must be recorded in the cash float and petty cash registers to avoid the Cash balances in the management reports and financial statements from being misstated.


Resp. Officer

Checking Officer

1 A register for cash floats and petty cash and custodians is maintained by appropriately designated staff to record all movements.

Not currently, a Register should be held in Finance. Refer Cash Floats & Petty cash Control 1.3.


2 All petty cash disbursements must be independently approved and supported by receipts.

Not currently. All petty cash payments should be entered on a petty cash voucher and approved by a delegated officer.

Continual GMC&CS

3

Cash Handling policy and procedures should be available to all staff who handle cash.

Procedures are available for the Kadina Office. A Cash Handling Policy should be produced and handed to all staff handling cash.


4

Cash floats and petty cash are reconciled on a regular basis and these reconciliations are reviewed by an independent person.

Cash floats are reconciled daily and petty cash when seeking reimbursement. Cash should not be counted at front counter in sight of public. Refer Control 1.4.



Holders

Senior Finance

Officer (C) Finance Officer





CONTRACTING Risk No. 1: Council is not able to demonstrate that all probity issues have been addressed in the Contracting process.

Council does not only need to comply with probity issues throughout the Contract process but also needs to be able to demonstrate compliance. If probity cannot be demonstrated by Council, this will increase the likelihood of negative publicity and public dissatisfaction.


Resp. Officer

Checking Officer

1 Robust selection process for preferred suppliers/contractors/tenders, including compliance with Code of Conduct and Conflict of Interest policies.

Council has selected preferred suppliers and has an approved Code of Conduct.

Continual GMI&ES

2 Suitably qualified and independent personnel to sit on the Selection Panel.

Each area chooses the selection panel and may call in experts if required.

Continual Managers

3

Designated person (i.e. Internal or Probity Auditor) to review Contract process to ensure compliance with Council policy.

Council has undertaken Wallmans compliance review.

Annually GMC&CS

4

Robust evaluation process both during the selection process and throughout the term of the contract.

Current practice assisted by standard forms such as the Defects/Liabilities Form.

Continual GMI&ES

5 Clear and instructive policy on Contracting process readily available to all relevant employees.

Current practice. Continual GMC&CS Spot Check

6 The Contracts and Tenders Policy and Procedures should be reviewed annually.

Current practice. Annually GMC&CS

GMI&ES = General Manager Infrastructure & Environmental Services; GMC&CS = General Manager Corporate & Community Services




Risk No. 2: Council does not obtain value for money in relation to its Contracting.

Poor contract selection and management of ineffective contractors can result in Council not obtaining value for money in relation to its Contractors.


Resp. Officer

Checking Officer

1 Robust and transparent selection process to ensure effective and qualified suppliers / contractors are selected by Council.

Current practice with advantage to local business.

Continual GMI&ES

2 Robust evaluation process both during the selection process and throughout the term of the contract to ensure that supplier / contractor meets their objectives.

Current practice assisted by standard forms such as the Defects/Liabilities Form.

Continual GMI&ES

3

Suitably qualified/independent personnel to sit on Selection Panel to ensure that informed and objective decision is made when selecting suppliers / contractors.

Each area chooses the selection panel and may call in experts if required.

Continual Managers

4

On-going contract management process that identifies and manages deliverables, key contract clauses, responsibilities, milestones and includes dispute resolution procedures.

Current practice through Project Officers.

Continual Project Officers

GMI&ES

Spot Check

5 Council does not release final payments to suppliers / contractors until supplier / contractors meet all of their objectives.

Current practice Continual Managers Manager Corporate Services

Spot Check

GMI&ES = General Manager Infrastructure & Environmental Services




CREDIT CARD Risk No. 1: Credit Cards are issued to unauthorised employees.

If Credit Cards are issued to employees without the prior approval of management, this may result in the Credit Cards being used to purchase goods and services that have not been approved by management.


Resp. Officer

Checking Officer

1 CEO approves all issues of credit cards and limits to employees prior to release.

Current practice. Continual Chief Executive

Officer

2 Credit card holders are provided with a copy of the policy and procedures associated with the issue and use of Credit Cards.

A Credit Card Policy is currently being approved by Council, procedures are to be developed.


3

Employees sign a declaration confirming compliance with Council policy and procedures prior to the credit card being released.

Not currently. Such a requirement should be added to the Credit Card Policy or in Credit Card Procedures.


4

Designated person reviews the Credit Card Register for accuracy and on-going pertinence; unusual entries investigated.

This is a requirement of the policy and will be reviewed annually.

Annually GMC&CS

5 Management reviews exception reports produced by Credit Card providers.


Officer (C)

6 Access to the Credit Card Register and Credit Card documentation is restricted to designated person.

It is likely Cards may have been used by non credit card holders. Usage should be restricted to credit card holders.

Continual GMC&CS





Risk No. 2: Credit Cards are used for purchases of a personal nature.

If Credit Cards are used for purchases of a personal nature, then there is the risk that these items will be paid by Council, resulting in overstating the operating expenses in both the management reports and the financial statements as well as adverse publicity.


Resp. Officer

Checking Officer

1 CEO approves all issues of credit cards and limits to employees prior to release.


Officer

2 Credit card holders are provided with a copy of the policy and procedures associated with the issue and use of Credit Cards.

A Credit Card Policy is currently being approved by Council, procedures are to be developed. Refer Credit Card Control 1.2.

Continual GMC&CS

3 Employees sign a declaration confirming compliance with Council policy and procedures prior to the credit card being released.

Not currently. Such a requirement should be included in the Credit Card procedures - Refer Credit Card Control 1.3.

Continual GMC&CS

4 Usage restrictions placed on Credit Card (i.e. only used for predefined purchases from pre-approved businesses).

Not currently. The Credit Card Policy or Procedures should include usage restrictions.

Continual GMC&CS

5 All credit card statements sent directly to person independent from the credit card holder, who reviews the nature and amounts of items on the statements; any unusual items are investigated.

Statements are forwarded to Finance and Managers review nature and amounts of transactions.


Officer (C)

6 Payments of credit card statements withheld until personal expenses are investigated and rectified.

Credit card payments are directly debited to Council’s bank account and personal expenses are followed up for reimbursement.


Officer (C)

7 Cardholders are advised in the policy and procedures (which they have signed) that improper use of the credit card (purchases of a personal nature) will result in termination of employment.

Not currently. This advice should be included in the declaration signed by each credit card holder – refer Credit Card Control 1.3.

When Accepting

Credit Card

New Credit Card

Holders

8 Receipts are provided for all credit card transactions.


Officer (C)




Risk No. 3: Credit Card limits are set at inappropriate levels.

If credit card limits are too high, then this may result in an increase in expenditure and budget overruns. On the other hand, if credit card limits are insufficient, this could reduce the operational effectiveness of the credit card process and result in purchasing delays.


Resp. Officer

Checking Officer

1 CEO approves all issues of Credit Cards to employees prior to release.


Officer

2 All credit card limits are set in accordance with the Delegations of Authority.

Credit card limits are set in the Credit Card Policy.

Continual GMC&CS

3

Designated person reviews the Credit Card Register for data accuracy and on-going pertinence.


4 Exception report from Credit Card providers detailing all breaches of credit card limits on an individual employee basis are regularly reviewed by management.


Officer (C)

5 Management regularly reviews credit card limits for operational efficiency.

Current practice. Annually Chief Executive

Officer

Spot Check





TRADE DEBTORS Risk No. 1: Debtors are either inaccurately recorded or not recorded at all.

• Errors in rate notices/invoices can lead to a misstatement of debtors and revenue, uncollectible accounts, and customer dissatisfaction. • If invoices are issued but not recorded, revenue and accounts receivable in the financial statements may be understated. Furthermore, the related cash receipts may also not be recorded and may be misappropriated. Alternatively, the Council is unlikely to notice or follow up on delinquent payments if the invoice has not been recorded.


Resp. Officer

Checking Officer

1 Rate notices/invoices are automatically priced standard programmed formulas, including the calculation of discounts, if applicable.

The Synergy System automatically calculates rates.


Officer (C)

2 Statements of non-rate accounts receivable are mailed to customers.

Statements are mailed monthly.


Officer (C)

Spot check

3

Debtors and revenue are compared to budget regularly; management reviews and investigates significant variances.

Debtors when raised are recorded as income and budgets are checked to actuals on a quarterly basis.


4

Debtors reconciliation is performed on a regular basis to the General Ledger and is reviewed by an independent person.

Current practice by the Senior Finance Officer. This reconciliation should be checked by the Manager Corporate Services.


Officer (C)

Manager Corporate Services

Spot Check




Risk No. 2: Rebates and credit notes to debtors are either inaccurately recorded or not recorded at all.

• Inaccurately recorded rate rebates and credit notes can lead to a misstatement of debtors and revenue, and may result in uncollectible accounts and/or customer dissatisfaction. • Rate rebates and credit notes issued but not recorded result in misstated accounts receivable and revenue and may result in customer dissatisfaction. They may have a negative impact on cash flows because customers may refuse to pay notices/invoices for which they are awaiting credits even if the credits are only for a small portion of the notices/invoices.


Resp. Officer

Checking Officer

1 Management approves rate rebates, credit notes, bad-debt write-offs, and other adjustments to accounts receivable.

The CEO authorizes write-off of bad debts up to $5,000 and the Council above that amount as well as rate rebates.


Officer

Spot Check

2 Management monitors the nature, volume, and amounts of recorded rate rebates, credit notes, write-offs, and other adjustments to accounts receivable.

Records are maintained of write-offs and rate rebates. Credit notes are filed.

Continual Senior Finance Officers

3 Invoice and credit note input data is balanced; out-of-balance batches are corrected promptly.


Officer (C)

4 Credit notes are sequentially prenumbered; the sequence of credit notes is accounted for.

The system numbers the credit notes. The sequence is not accounted for. Reports should be produced to identify credit notes raised and they should be checked by an independent officer.


5 Statements of non-rate accounts receivable are mailed to customers.

Statements are mailed monthly.


Officer (C)

Spot Check

6

Debtors’ batch listing is checked prior to invoice generation for accuracy and credit note verification.


Officer (C)




Risk No. 3: An appropriate provision for doubtful debts is not recorded.

If the provision for doubtful debts is not correctly stated, debtors will be misstated in both the management reports and the financial statements.




Resp. Officer

Checking Officer

1 Management reviews provision for doubtful debts on a regular basis.

Current practice. Annually Accountant

2 Management reviews debtors ageing profile on a regular basis and investigates any outstanding items.

The Debtors Ageing profile is reviewed monthly by the Senior Finance Officer. The Manager Corporate Services should review this profile quarterly.


Officer (C)


Spot Check

3

Debtors are compared to budget regularly; management reviews and investigates significant variances.

Current practice during the Quarterly Budget Review.


4

Management approves all bad debt write-offs and movements in the provision for doubtful debts, in accordance with delegations of authority and the Local Government Act (Section 143).

The CEO authorizes write-off of bad debts up to $5,000 and the Council above that amount as well as movements in the provision for doubtful debts.


Officer

5 Bad or Doubtful Debts that are considered abnormal or extraordinary in nature or magnitude are reported to Council.


6 A file should be maintained of bad debt write-offs.

Details are maintained but not in a separate record. This information should be identified separately.


Officer (C)


Risk No. 4: Debtors are either not collected on a timely basis or not collected at all.

If aged debtors are not identified and managed effectively, this may result in debtors not being collected on a timely basis or not collected at all. This will place greater demands on Council’s cashflow.




Resp. Officer

Checking Officer

1 Debtors reconciliation performed on a regular basis and reviewed by an independent person.

Current practice by the Senior Finance Officer. This reconciliation should be checked by the Manager Corporate Services. (Refer Debtors Control 1.4).


Officer (C)


2 Management reviews debtors ageing profile on a regular basis and investigates any outstanding items.

The Debtors Ageing profile is reviewed monthly by the Senior Finance Officer. This should be reported to the Manager Corporate Services. (Refer Debtors Control 3.2).


Officer (C)


3 Debtors are compared to budget regularly; management reviews and investigates significant variances.

Current practice during the Quarterly Budget Review.


4 Management approves all bad debt write-offs and movements in the provision for doubtful debts, in accordance with delegations of authority.

The CEO authorizes write-off of bad debts up to $5,000 and the Council above that amount as well as movements in the provision for doubtful debts.


Officer

5 Debtor Statements are distributed monthly.


Officer (C)

6 The aged trial balance is regularly monitored and a monthly status report prepared.

Current practice, reporting to the General Manager Corporate Services.


Officer (C)

General Manager Corporate Services

Spot Check


Risk No. 5: The Debtors master file data does not remain pertinent.

“Pertinent” means that the Debtors master file reflects current conditions. In this context, the pertinence attribute of quality relates both to master file records and to individual data fields within those records. For example, pertinent Debtors master file records include records for current Debtors and exclude records for former Debtors.




Resp. Officer

Checking Officer

1 Debtors master file data is periodically reviewed by management for accuracy and on-going pertinence.

This file is checked by the Senior Finance Officer when entering data. The system should report any changes to the Debtors master file and this report should be checked by an independent officer.


Officer (C)


2 Recorded changes to Debtors master file data are compared to authorised source documents or confirmed with Debtors to ensure that they were input accurately.


Officer (C)

3

Access to the Debtors master file is restricted to appropriately designated personnel.

Access to this file should be reviewed.


Officer (C)

Spot Check

4

Significant Changes to the Debtors master file are approved by management.

Not all changes are approved by management hence the need for the check in Debtors Control 5.1.


Officer (C)


ELECTED MEMBERS Risk No. 1: Council reimburses expenses to Elected Members of a personal nature.

If Councils reimburse Elected Members for expenses of a personal nature, this will result in negative publicity and public dissatisfaction.


Resp. Officer

Checking Officer

1 Actuals regularly compared to both budget and the original allowances specified by Council in the first ordinary meeting, for significant or repeat expenses; significant variances are investigated.

Actuals are compared to budgets during the quarterly review.


2 Elected Members must complete and sign a standard expenses reimbursement form when claiming expenses. The signing of the form confirms that the Elected Members are claiming valid expenses.

A standard expense form is available for travel. This is the main expense claimed by Councillors. The possibility of adjusting this form into an ‘all expenses’ claim form should be investigated.


Officer (C)

3

Elected Members must provide documentary evidence (i.e. receipts/ mileage analysis) to support their reimbursements claims.


Officer (C)

Spot Check

4

All Elected Members allowances and reimbursements are approved in accordance with delegations of authority and all claims are agreed to supporting documentary evidence (i.e. receipts).

All expenses are approved by the Chief Executive Officer.


Officer

Senior Finance

Officer (C)




Risk No. 2: Elected Members’ allowances are not paid by Council on a timely basis or not at all.

If Council does not pay allowances (due to unintentional oversight) to the Elected Members, Council will be in breach of its statutory obligations and possibly lose the confidence of the Elected Members.


Resp. Officer

Checking Officer

1 Actuals payments regularly compared to both budget and the original allowances specified by Council in the first ordinary meeting.


Quarterly Accountant

2 Register of Allowances and Benefits maintained by designated person.


Officer (C)

3

Management review Register of Allowances and Benefits on a regular basis.

Not currently, the Register should be reviewed annually.

Annually General Manager

Corporate & Community

Services

Spot Check

4 Exception report detailing all unpaid Elected Members’ allowances generated on a regular basis; all unpaid allowances that are due for payment are investigated and acted upon by management.

Not currently. Payment of allowances is diarised by the Senior Finance Officer.


Officer (C)




Risk No. 3: Elected Members’ do not reimburse Council for the private use of assets. If Elected Members do not reimburse Council for the private use of assets, then Council will be effectively funding expenses of a personal nature. which will result in negative publicity and public dissatisfaction. No Internal Controls Details Target

Date Resp.

Officer Checking

Officer 1 Elected Members must complete

and sign a standard expenses reimbursement form when claiming expenses. The signing of the form confirms that the Elected Members are claiming valid expenses and have excluded all items of a personal nature.

A standard expense form is available for travel. This is the main expense claimed by Councillors. The possibility of adjusting this form into an ‘all expenses’ claim form should be investigated. Refer Elected Members Control 1.2.


Officer (C)

2 Register of Allowances and Benefits maintained by designated person. Register details level and nature of expenses reimbursed to Council by Elected Members.


Officer (C)

3

Management review Register of Allowances and Benefits on a regular basis.

Not currently, the Register should be reviewed annually. Refer Elected Members Control 2.3.

Annually General Manager Corporate Services




Risk No. 4: Elected Members’ allowances and reimbursements are either inaccurately recorded or not recorded at all.

• If Elected Members allowances and reimbursements are inaccurately recorded due to processing errors or raising of fictitious claims, both the management reports and the financial statements will be misstated.

• If Elected Members’ allowances and reimbursements are not recorded at all then both the management reports and the financial statements will be misstated.


Date Resp.

Officer Checking

Officer 1 Actuals regularly compared to

both budget and the original allowances specified by Council in the first ordinary meeting; significant variances are investigated.


Quarterly Accountant




EMPLOYEE PROVISIONS Risk No. 1: Employee provisions are either inaccurately recorded or not recorded at all.

• If employees take leave but this leave is recorded against the incorrect employee or not recorded at all, staff entitlements will be inaccurate and the employee provisions will be misstated. • If accruals are not calculated correctly or not at all, staff entitlements will be inaccurate and the employee provisions will be misstated.


Resp. Officer

Checking Officer

1 Management must approve all staff requests for leave and taken leave is recorded by somebody independent from the approval.

Managers approve staff leave on a standard leave form and this leave is recorded on the staff leave calendar.

Continual Managers Senior Finance

Officer (C) Spot Check

2 The methodology used to calculate the employee provisions is reviewed to ensure consistency with statutory reporting requirements.

Current practice. Continual Senior Finance Officer (C)

3

Reconciliation of employee provisions performed on a regular basis and these are independently reviewed.

Provisions are reconciled annually.


Senior Finance Officer (C)

4

Actual balances compared to budget on a regular basis and significant variances are investigated.

Current practice during the quarterly budget review.


5 Access to payroll/provision master file is restricted to designated and qualified staff.

Current practice. Continual Senior Finance Officer (C)

Finance Officer

6 Standard programmed formulas perform employee provision calculations.

The system provides calculations for leave etc.

Continual Senior Finance Officer (C)




Risk No. 2: Payroll master file does not remain pertinent.

To be deemed pertinent, the master files must reflect current conditions. In this context, pertinence relates both to master file records and to individual data fields within those records. For example, if terminated employees are not removed from the payroll master file, the employee provisions will be misstated.


Resp. Officer

Checking Officer

1 Payroll master file data is periodically reviewed for accuracy and pertinence.


Officer (C)

2 Departmental managers periodically review listings of current employees within their departments and notify the personnel department of necessary changes.

Managers are able to request employee listings. Managers should review and sign off their employees each pay. Refer Payroll Control 1.1.

Fortnightly Managers Senior Finance Officer

(C)

3

Recorded changes to the payroll master files are compared to authorised source documents to ensure accurate input.


Officer (C)

4

The ability to view, modify, or transfer information contained in the payroll master files is restricted to authorised personnel.




5 Variations between payroll master files and time recording system are investigated and appropriate action taken.

An audit trail is available and checked by the Senior Finance Officer.


Officer (C)

6 Significant changes to the payroll master files are approved by management.

A report should be produced of changes to the Master File for checking by an independent officer. Refer Payroll Control 4.6.





EMPLOYEE REIMBURSEMENTS Risk No. 1: Employees are reimbursed for expenses of a personal nature.

If employees are reimbursed for private or personal expenses, this will result in unnecessary expenditures and misstatements in the management reports and the financial statements, and may result in negative publicity for the Council.


Resp. Officer

Checking Officer

1 All employees’ reimbursements must be submitted on a signed pro-forma claim form.

Current practice using an expense claim form.


Officer (C)

2 All claims for Employee Reimbursements are approved by management in accordance with Delegations of Authority. Management focus on the nature (i.e. type of expense) as well as the amount of the claim.


Officer (C)

3

All claims for Employee Reimbursements are submitted for approval along with supporting documentary evidence (i.e. receipts).

Receipts are required prior to reimbursement.


Officer (C)

Spot Check

4 Management monitors level of Employee Reimbursements on a regular basis.

Management monitor reimbursements budgets during the quarterly budget reviews and more frequently if required.





Risk No. 2: Employee reimbursements are either inaccurately recorded or not recorded at all. If employee reimbursements are inaccurately recorded due to processing errors or raising of fictitious claims, both the management reports and the financial statements will be misstated. If employee reimbursements are not recorded at all, then both the management reports and the financial statements will be misstated.


Date Resp.

Officer Checking

Officer 1 Management monitors level of

Employee Reimbursements on a regular basis.

Management monitor reimbursements budgets during the quarterly budget reviews and more frequently if required.


2 Management select a sample of employee reimbursements and check them for mathematical accuracy and ensures that they have been recorded correctly in the ledger.

Not currently however the claims are checked by the relevant Manager and the Senior Finance Officer with the final check of accuracy by the employee.


Officer (C)




FEES FOR SERVICE Risk No. 1: Members of the Community do not receive value for money when paying for user services

If members of the community who pay to utilise a service provided by Council and believe that the fee charged do not reasonably reflect the value of the service provided, this could result in negative publicity, public dissatisfaction and loss of revenue.


Resp. Officer

Checking Officer

1 Management to review fees charged for services on a regular basis in order to provide a value for money service in the light of operational costs.

Fees are reviewed annually. Annually GMC&CS Spot Check

2 Comprehensive and robust complaints management policy and opportunities for public to provide regular feedback (i.e. surveys).

Feedback forms are available on the website and Synergy is used to keep track of complaints.

Continual GMC&CS

3

Council to approve all changes in service fees charged by Council.


4 Formal leases, agreements or contracts are required to cover use of Council facilities, sporting grounds, etc.

Current practice with details recorded on system and hard copies locked in safe.


5 All leases, agreements and contracts for use of council services and facilities to be regularly reviewed to ensure conditions are being met and payments made on time.


6

User pay income compared to budget regularly; management reviews and investigates significant variances.

Reviewed during the Quarterly Budget Reviews.


7 Leases, agreements, etc are stored securely.

Current practice. Continual Finance Officer

Spot Check

GMC&CS = General Manager Corporate and Community Services




Risk No. 2: Council does not apply User Pay principles consistently. If Council does not apply User Pay principles consistently (i.e. by charging different rates for the same service), this could result in negative publicity, public dissatisfaction and loss of revenue. No Internal Controls Details Target

Date Resp.

Officer Checking

Officer 1 Management to review fees

charged for services on a regular basis in order to provide both a value for money service in the light of operational costs and ensure consistency in the application of User Pay policies.

Fees are reviewed annually. Annually GMC&CS

2 Comprehensive and robust complaints management policy and opportunities for public to provide regular feedback (i.e. surveys).

Feedback forms are available on the website and Synergy is used to keep track of complaints.

Continual GMC&CS

3

Council to approve all changes in service fees charged by Council.


GMC&CS = General Manager Corporate and Community Services




Risk No. 3: User pay income is either inaccurately recorded or not recorded at all.

If cash receipts from users are inaccurately recorded or not recorded at all by the Council, due to intentional or unintentional errors, this will result in cash and revenue being misstated.


Resp. Officer

Checking Officer

1 User pay income compared to budget regularly; management reviews and investigates significant variances.

Reviewed during the Quarterly Budget Reviews.


2 Users are provided with a sequentially prenumbered form acknowledging receipt of any cash payments and cash receipts forms are balanced to cash deposited to the bank. The numerical sequence of these forms is accounted for.


3

Receipts transactions are batched and batch input data is balanced; out-of-balance batches are corrected promptly.

Current practice. Daily Customer Services Officers




FIXED ASSETS Risk No. 1: Fixed asset acquisitions are fictitious, inaccurately recorded or not recorded at all.

• Recorded fixed asset acquisitions that do not represent fixed assets acquired by Council may result in misstatement in the management report and financial statements. • Inaccuracies in the input and/or processing of asset acquisition details or amounts may lead to the asset being incorrectly reflected in the general ledger. • Asset acquisitions that are not recorded may understate the value of fixed assets and depreciation, and may lead to assets being lost or misappropriated.


Resp. Officer

Checking Officer

1 Fixed asset register (‘FAR”) is periodically reviewed by management for accuracy and ongoing pertinence.

Fixed Asset Registers are held in Excel files. They should be reviewed regularly for accuracy.


2 Activity recorded in fixed asset register is reviewed by management, including comparison to the capital budget.

An asset management tool (Arcview) is used for the reviewing of activity.

Continual GMI&ES Spot Check

3

Periodic counts of fixed assets are performed and reconciled to the FAR.

Mileage and hours of machinery are checked regularly. Infrastructure assets are checked when updated by external consultants.

Continual GMI&ES

4 Recorded changes to the FAR are compared to authorised source documents to ensure accurate input.


5 All fixed asset acquisitions are approved in accordance with Delegation of Authority.

Current practice.` Continual Managers Manager Corporate Services

6 All fixed assets are recognized in the asset register when they are available for use.

Infrastructure assets are recognized at the end of each financial year. Other assets are recognized when purchased.


Spot Check





Risk No. 2: Fixed assets are inadequately safeguarded.

If fixed assets are not securely stored, they may be subject to damage or theft.


Resp. Officer

Checking Officer

1 Fixed assets are located in an appropriately secured area, where access is restricted to authorised personnel.

Buildings are secure and alarmed.


2 Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g. delivery note or goods returned note).

The Kadina Depot which is the main depot for receiving goods is controlled by the front counter Customer Services Officer.

Continual Manager Workshops

& Depot

3

Prenumbered identification tags are attached to fixed assets on acquisition to facilitate accurate identification of assets and recording of details.

Electrical tools are tagged, other assets are not tagged.

Continual Manager Workshops

& Depot

4 Insurance cover of capital items regularly reviewed.

Insurance cover is reviewed annually.


5 Where ovals, etc are leased by community groups the groups should forward a copy of their insurance renewals to Council each year.

This requirement should be regularly reviewed.


Spot Check





Risk No. 3: Fixed Assets are not valued correctly.

If fixed assets are not valued correctly, the management reports and financial statements will be misstated. For example, incorrect carrying values may result from the use of inappropriate depreciation rates.


Resp. Officer

Checking Officer

1 Management regularly reviews valuation of fixed assets (i.e. methodology and useful lives of assets) to ensure that assets’ valuation is appropriate and in accordance with reporting requirements. Where appropriate, Council may consider engaging an expert to perform valuation.

An external consultant revalues fixed assets within the required reporting requirements.

Continual GMI&ES

2 Management reviews depreciation rates and methodology (at least annually) to ensure that methods used to value fixed assets are still appropriate.

Not currently. The depreciation rates should be reviewed annually as required in the Asset Revaluation Policy.


3

Asset revaluations and depreciation reviews are performed in accordance with Australian Accounting Standards.

Asset revaluations are conducted in accordance with Standards, refer to the above control for depreciation.


4

The annual review of Assets includes reviewing the appropriateness of categories of assets and Impairment testing.

Not currently but planned to be carried out as per the Asset Impairment Policy.


Spot Check





Risk No. 4: Depreciation charges are either invalid, not recorded at all or are inaccurately recorded.

Invalid depreciation charges can result if depreciation charges are recorded with respect to fictitious assets or assets that have been disposed of. Invalid depreciation charges may also result if depreciation rates and methods of calculation are not properly applied. Depreciation charges should be calculated in accordance with the accounting policy, including the useful life, depreciation method, and calculation formulas.


Resp. Officer

Checking Officer

1 The balances in fixed assets and accumulated depreciation are rolled forward from one processing cycle to the next using independently obtained asset acquisition, asset disposal, and depreciation expense data.

Current practice. Annually Manager Corporate Services

Spot Check

2 Standard programmed formulas perform depreciation calculations.

Synergy holds formulas for calculating depreciation.


3

Management reviews depreciation rates and methodology (at least annually) to ensure that methods used to value fixed assets are still appropriate.

Not currently. The depreciation rates should be reviewed annually. Refer Fixed Assets Control 3.2.


4 When calculating depreciation reliable figures are available for condition of each asset, unit of measurement, replacement value, residual life and written down replacement value.

Figures are available for Roads, Plant and Buildings but not footpaths. This information needs to be collected for Footpaths.

Continual GMI&ES





Risk No. 5: Fixed Asset disposals are either fictitious, inaccurately recorded or not recorded at all.

• If recorded fixed asset disposals do not represent actual disposals, the management reports and the financial statements will be misstated. • Inaccurate calculation and recording of fixed assets may result in misstatement of fixed assets and profit or loss on asset disposal. • Incomplete recording of fixed asset disposals may result in misstatement of the management reports and the financial statements.


Resp. Officer

Checking Officer

1 FAR is periodically reviewed by management for accuracy and ongoing pertinence

Fixed Asset Registers are held in Excel files. They should be reviewed for accuracy. Refer Fixed Assets Control 1.1


2 Activity recorded in the FAR is reviewed by management, including comparison to the capital expenditure budget.

An asset management tool (Arcview) is used for the reviewing of activity.


3

Periodic counts of fixed assets are performed and reconciled to the FAR.

Mileage and hours of machinery are checked regularly. Infrastructure assets are checked when updated by external consultants.

Continual GMI&ES

4

Standard programmed formulas perform the calculation of the profit or loss upon disposal of an asset.

Synergy holds formulas for calculating depreciation.


5 All recorded disposals of fixed assets are approved in accordance with Delegation of Authority.

Current practice Continual GMC&CS Spot Check

6 Capitalisation and reconciliation of Fixed Assets to General Ledger is to occur at the end of the financial year, with the exception of major plant & equipment, which is updated each quarter and the fixed asset register is reconciled with the General Ledger.

Not currently but planned to be carried out in the future.


GMI&ES = General Manager Infrastructure & Environmental Services; GMC&CS = General Manager Corporate & Community Services




Risk No. 6: Fixed Asset maintenance and/or renewal is inadequately planned.

If Council does not conduct effective financial planning for the long-term use of their Fixed Assets, this will result in Council not having sufficient funds to reinvest in Fixed Assets when required.


Resp. Officer

Checking Officer

1 Asset management plan (including plans to obtain sufficient funding to cover expected capital investment) prepared as part of Strategic Plan. The capital investment plan is reviewed regularly for appropriateness.

Completed for roads and moving towards plans for the remaining assets.

Continual GMI&ES

2 Management undertakes a regular review of useful lives of Fixed Assets and updates asset management plan to reflect any significant changes (i.e. expected time-frame for replacing significant fixed assets).

Current practice using external consultants.

Continual GMI&ES

3

All changes to the asset management plan must be approved by Council

Current practice. Continual GMI&ES





Risk no. 7: Fixed asset register does not remain pertinent.

"Pertinent" means that the fixed asset register reflects current conditions. In this context, the pertinence attribute of quality relates both to fixed asset register records and to individual data fields within the fixed asset register.


Resp. Officer

Checking Officer

1 Asset maintenance schedules are prepared, updated, and monitored by management and activity per the asset maintenance schedule is reconciled to the asset maintenance history register regularly.

Current practice for Roads and Plant.


2 FAR is periodically reviewed by management for accuracy and ongoing pertinence.

Fixed Asset Registers are held in Excel files. They should be reviewed for accuracy. Refer Fixed Assets control 1.1


3 All changes made to the FAR and/or master file are approved by management.


4 Changes to the asset maintenance history register are compared to source documents to ensure that they were input accurately.


Officer (B)





GENERAL LEDGER Risk no. 1: General Ledger does not contain accurate financial information.

If processing errors (i.e. inaccurate journals) occur in the General Ledger, this may result in the General Ledger, as well as the financial statements and management reports being misstated.


Resp. Officer

Checking Officer

1 The chart of accounts is regularly updated to ensure account allocations are correct.

Currently being updated with income and expenditure accounts.

Continual Senior Finance Officer (B)

2

All updates and changes to General Ledger programmes are authorised, tested and documented.

Testing is carried out by Synergy.


3

Access to General Ledger is restricted to approved personnel (i.e. via passwords).

Not currently. Access to make changes should be restricted to the relevant Finance Officers.


Senior Finance Officer (B)

4 General Ledger reconciliations (including control and clearing accounts) are prepared on a regular basis; all reconciliations independently reviewed.

Reconciliations are run weekly.

Weekly Senior Finance Officer (B)

Spot Check

5 All journals are independently reviewed (including check to ensure correct account allocation).

Not currently. Journals should be checked by the Manager Corporate Services.


6 Manual journal entries recorded in the register must be signed off by the officer preparing the journal. All journals (including manual entries) marked as posted accompanied by date and set number.

Current practice. Continual Senior Finance Officers

Spot Check




Risk No. 2: Data contained within the General Ledger is permanently lost.

If adequate back-up procedures are not employed by Council, data within the General Ledger may be permanently lost resulting in significant operational inefficiencies.


Resp. Officer

Checking Officer

1 Formal disaster recovery plan adopted by Council.

A Business Continuity Plan has been prepared and will soon be presented to Council for approval. An Emergency Management Plan is also in place.

Continual ICT Services

Coordinator

2 Off-site backup of data, program and documentation.

Tapes are stored in multiple locations off-site.

Continual ICT Services

Coordinator

Spot Check

3 All updates and changes to programmes are authorised, tested and documented.

Updates are tested by Synergy and IT Vision.


4

Access to General Ledger is restricted to approved personnel (i.e via passwords).

Not currently. Access to make changes should be restricted to the relevant Finance Officers. Refer General Ledger Control 1.3.

Continual Manager Corporate Services Senior

Finance Officer (B)




GRANT FUNDING Risk No. 1: Council loses existing Grant funding.

If Councils are unable to secure recurrent grant funding, community expectations may be established for the related service but not able to be met in future periods.





Resp. Officer

Checking Officer

1 Council has a clear policy on Grant funding detailing assessment process, recognition, treatment and disclosure of any conflicts of interest.

Not currently. A Policy should be developed.

Continual GMC&CS

2 Management performs regular review of all grant income and to monitor compliance with both the terms of grants and Council’s Grant policy.

Currently up to each Manager however a central Register is being created to assist monitoring.


3

Separate cost ledgers are maintained for all grants.


Officer (B)

4 Management approves all grants (prior to funds being received by Council) to ensure that Council will be able to meet the terms of the grant and that the grant does not overcommit Council.


Officer

Spot Check


Risk No. 2: Grant funding is not claimed by Council on a timely basis or not claimed at all.

If Council does not claim and collect grant funding (due to missing the deadline for claims or not submitting the relevant documentation), Council will be placed under greater cash flow demands.


Resp. Officer

Checking Officer

1 Council has a clear policy on Grant funding detailing assessment and claim/collection process.

Not currently. A Policy should be developed. Refer Grants Control 1.1.

Continual GMC&CS

2 Management performs regular review of all grant income and to monitor compliance with both the terms of grants and Council’s Grant policy (including claiming and collecting funds on a timely basis).


Continual GMC&CS

3 Separate cost ledgers are maintained for all grants.


Officer (B)

4

Cash actuals are compared to budget; management reviews and investigates significant variances.

Comparisons are made during the quarterly Budget Reviews.





Risk No. 3: Grants are either inaccurately recorded or not recorded at all. • If Council does not comply with the terms of the grant, repayment may be required. • If Council does not provide receipts to all providers of grants and then reconcile these receipts to bank statements, grants will not be recorded at all, leading to misstatements in both the management reports and the financial statements.


Resp. Officer

Checking Officer

1 Grant income compared to budget regularly; management reviews and investigates significant variances.

Comparisons are made during the quarterly Budget Reviews.


2 Management approves all grants (prior to funds being received by Council).


Officer

3 Separate cost ledgers are maintained for all grants.


Officer (B)

4 Management performs regular review of all grant income (in terms of recognition and treatment) and to monitor compliance with both the terms of grants.


Continual GMC&CS

5 Grant providers are given a sequentially prenumbered form acknowledging receipt of any cash payments and cash receipts forms are balanced to cash deposited to the bank.

Grant providers request a tax invoice and can request a receipt if required.


Officer (B) Customer Services Officers




INVENTORY Risk No. 1: Inventory received is either recorded inaccurately or not recorded at all.

• Failure to record inventories received may also lead to supplier disputes and/or inventory obsolescence.

• Incomplete and/or inaccurate recording of inventory receipts may result in a misstatement of inventory.


Resp. Officer

Checking Officer

1 Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger.

The Depot does not maintain an inventory system. Protective clothing is controlled separately. All other stock is allocated direct to projects.

Continual GM

2 Goods received are logged; the log is reconciled to receipts input to the inventory management system which is used to record movements of inventory in the financial records.

Not applicable.

3 Supplier statements are reconciled to goods receipt records/invoices regularly.

Current practice. Monthly Finance Officer

4

Periodic (quarterly) physical inventory counts matched to ledger and inventory records.

Not applicable.

5

All write-offs and provisions for obsolescence to be approved by management in accordance with delegations of authority.

Current practice to non-inventory items.


GMI&ES = General Manager Inventory & Environmental Services


Likelihood Consequence Rating Accept N/A


Risk No. 2: Inventory is received and accepted without a valid purchase order. Physical inventory is counted periodically by persons independent of day-to-day custody or recording of inventory. Inventory counts are reconciled to inventory records and inventory records are reconciled to the general ledger.

If goods are received for which no valid purchase order exists, goods may be received for which the Council has no need.


Resp. Officer

Checking Officer

1 Goods received are matched with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are cancelled once matched or on payment of the invoice to prevent reuse.

Current practice. Continual Delegated Officers

Finance Officer

2 When goods received are matched to open purchase orders, receipts with no purchase order or that exceed the purchase order quantity by more than an established amount are rejected.

The officer who initially arranges purchase checks the validity of any increase and if necessary queries with the Creditor.


Finance Officer




Risk No. 3: Consumption of inventory is charged to the incorrect project/business activity.

If the consumption of inventory is not tracked correctly, then the inventory balance will be misstated as well as the management reports and the financial statements.


Resp. Officer

Checking Officer

1 All stock transfers are approved by the stock manager.

Not applicable.

2 All stock transfers must be approved by the manager of the receiving project/business activity.

Not applicable.

3

Management regularly reviews inventory consumption by project/business activity.

The General Manager checks all the invoices relating to projects.

Continual GMI&ES

GMI&ES = General Manager Inventory & Environmental Services




Risk No. 4: Inventory is inadequately safeguarded.

If inventory is not securely stored, it may be subject to damage or theft. For example, paper products could be damaged by exposure to water, or other products could be damaged by exposure to temperatures that are too high or too low.


Resp. Officer

Checking Officer

1 Inventory is stored in properly secured locations, where access is restricted to authorised personnel.

All items at the Depots are stored behind fences and locked gates with restricted access to the Kadina Depot.

Continual Manager Workshops &

Depot

2 Security personnel monitor all incoming and outgoing vehicles and ensure all goods leaving the premises are accompanied by duly completed documentation (e.g., delivery note or goods returned note).

Controlled by front counter Customer Services Officer.


Depot

3 Goods are delivered only to designated, physically secure locations within a warehouse or storage building and are accepted only by authorised personnel.

Current practice to Office or Kadina Depot.

Continual Managers

4 All stocks insured with adequate cover which is reviewed regularly.

Current practice. Continual GMC&CS





Risk No. 5: Inventory is not valued correctly. If inventory is not valued correctly (i.e. inclusion of obsolete stock or use of inappropriate methodology), then inventory and the statement of financial performance will be misstated in both the management reports and the financial statements. No Internal Controls Details Target

Date Resp.

Officer Checking

Officer 1 Management reviews valuation

methodology (at least annually) to ensure that methods used to value inventory is appropriate and in accordance with reporting requirements.

Not applicable.

2 Management reviews provision for inventory obsolescence on a regular basis.

Store items are reviewed on an ad hoc basis for obsolescence.

Annually Manager Workshops &

Depot

3 All inventory write-offs and provisions for obsolescence to be approved by management in accordance with delegations of authority.

Current practice to non-inventory stock.

Continual GMI&ES

4 Management to compare actual inventory balance to budget.

Not applicable.





Risk No. 6: Inventory held by Council becomes obsolete.

Council may have inventory that has expired or is technically obsolete, and therefore is not usable. The cost of disposing of obsolete inventory can be high. In addition, certain types of inventory have a limited life span. Adequate inventory management adequate storage facilities and ongoing monitoring are key to maintaining the usability of inventory and maximising its life span.


Resp. Officer

Checking Officer

1 The usability of inventory is assessed regularly including a review during physical inventory counts.

Not applicable.

2 Inventory is stored in properly secured locations, where access is restricted to authorised personnel.

All items at the Depots are stored behind fences and locked gates with restricted access to the Kadina Depot.


Depot

3

Rejected inventory is adequately segregated from inventory and returned to suppliers on a timely basis.

Rejected items are stored separately and returned.

Continual General Manager

Infrastructure & Environment

Services

4

Inventory ageing reports are prepared and analysed regularly.

Not applicable.

5 Management monitors the adequacy and appropriateness of inventory levels by comparing actuals to budget.

Not applicable.




INVESTMENTS Risk No. 1: Council makes poor investment decisions. If Council decides to invest in high-risk or controversial projects, this can result in negative publicity and the potential loss of the original investment.

No Internal Controls Details Target Date Resp. Officer

Checking Officer

1 Council has a clear and comprehensive investment policy to assist when making any decisions to invest funds.

Not currently. An Investment policy should be developed.


2 Delegations are in place for approving and making investment decisions.

Not currently, these delegations should be identified.

Continual GMC&CS

3 All conflicts of interest to be disclosed as part of investment decision process.

Conflict of Interest should be covered in an Investments Policy. Currently all investments are with or being moved to the Local Government Finance Authority.

Continual GMC&CS

4 Council reviews investment performance on a regular basis.

Not currently. A report on investment performance should be included in the quarterly review.


Spot Check

5 Investment advisors are used by Council as appropriate.

There has not been a need however they would be used if necessary.


6

Senior Finance Officer to monitor cash at bank and anticipated future cash flows. Surplus funds are to be invested in accordance with Council’s investment policy.

Cash at bank is monitored daily. The minimum amount held in the bank account should be reviewed and if possible lowered to allow more investments.

Continual Senior Finance Officer

7 All securities are to be held in the name of the Council.


8 Regular comparisons are required on the rate of returns available.

Not currently. Regular comparisons should be made to ensure Council is obtaining the best return.

When Negotiating Investments






Risk No. 2: Investment transactions are either not recorded or are recorded inaccurately.

Unrecorded investment transactions may result in financial loss if funds are disbursed, but title to the investment is never received, or if investments mature or are sold, but the proceeds are neither received nor reinvested. If investment transactions are recorded inaccurately, investments may e misstated in the balance sheet.


Resp. Officer

Checking Officer

1 Investment transactions are reconciled/compared to third-party statements documents and discrepancies are investigated.


Officer (B)

2 Investment transactions at the end of an accounting period are scrutinised and/or reconciled to ensure complete and consistent recording.

Current practice as well as being reconciled monthly


Officer (B)

Spot Check

3 Journals are processed monthly for all investments. All journals are double checked.


Officer (B)

4 Equity investments are recorded on a “mark to market” basis in line with Accounting Standards.

Shares which came over at time of amalgamation are being sold and no shares will be held.


5

Register of investments is kept detailing amounts and maturity dates.

Certain information is available on Statements however a Register should be held by Finance.


6

Actual investment income is compared to budget on a regular basis; variances are investigated.

Comparisons made during quarterly budget reviews.





Risk No. 3: Investment income is inaccurately calculated or not recorded in the appropriate period.

Inaccurately recorded investment income, unrecorded investment income, or investment income recorded in the incorrect period may result in financial misstatement. Such errors often result from inaccurate data entry of interest rates and/or inaccurate calculation of interest or dividend income..


Date Resp.

Officer Checking

Officer 1 Investment transactions are

reconciled/compared to third-party statements documents and discrepancies are investigated.


Officer (B)

2 Interest income is calculated by an automated system.

Interest income is calculated by the Local Government Finance Authority however this should be checked by Council.


3 Actual investment income compared to budget on a regular basis; variances are investigated.

Comparisons are made during budget reviews.


4

Journals are processed monthly for all investments. All journals are double checked.

Current practice with journals processed daily.


Officer (B)




Risk No. 4: Conflicts of interest impacts negatively upon the investment decision.

If a decision to invest funds is made based solely on a personal relationship with a third-party, an inappropriate investment decision may result. Negative publicity and a potential loss of investment income and devaluation in the investment may result from such an investment decision.


Resp. Officer

Checking Officer

1 Council has clear and comprehensive Conflict of Interest policy and Code of Conduct (disseminated to employees).

Current practice and it is emailed to staff regularly.

Continual GMC&CS

2 Clear and comprehensive Investment Policy in place.

Not currently – refer Investments Control 1.1.

Continual GMC&CS

3

All investment decisions are approved in accordance with Investment Policy, Conflict of Interest Policy and Code of Conduct, prior to release of funds.

An Investment Policy is required – refer Investments Control 1.1. Decisions are made in compliance with the Code of Conduct Policy.


Spot Check

4 Process for management to either declare conflicts of interest or indicate that there are no conflicts of interest prior to approving any investment decision.

This process should be covered within an Investment policy – Refer Investments Control 1.1.

Continual GMC&CS

5 Compliance with Conflict of Interest and Code of Conduct regularly monitored either by management or statutory auditors.






INVESTMENT/INTEREST INCOME Risk No. 1: Investment income is either inaccurately recorded or not recorded at all. Inaccurately recorded investment income, investment income recorded in the incorrect period and investments not recorded at all, will result in misstatements in both the management reports and financial statements. Such errors may result from inaccurate data entry of interest rates and/or inaccurate calculation of interest or dividend income.


Resp. Officer

Checking Officer

1 Investment income is reconciled to investment assets. Statements received for which no assets are recorded are investigated.


Officer (B)

2 Interest income is calculated by an automated system.

Interest income is calculated by the Local Government Finance Authority however this should be checked by Council. Refer Investments Control 3.2.


3

Investment income is reconciled to third-party statements regularly and differences are acted upon.


Officer (b)

4 Actual investment income is compared to budget on a regular basis.



5

Investment transactions at, before, or after the end of an accounting period are scrutinized and/or reconciled to ensure complete and consistent recording in the appropriate accounting period.

Current practice. Annually Senior Finance

Officer (B)




LOANS/GRANTS TO CLUBS Risk No. 1: Council issues Loans/Grants inappropriately.

If Councils do not have a robust policy for the issuing of funds to organisations, this may result in funds being distributed to inappropriate Clubs/Community Groups. Such groups may not then be in a position to repay the loans/grants to Council, resulting in both increased demands on cash flow for Council along with negative publicity. This will result in an overstatement in the loan balance and a misstatement in the management reports and financial statements.


Resp. Officer

Checking Officer

1 Council establishes a clear policy for issuing funds to Clubs/Community Groups. Policy details appropriate approval of funds issues in accordance with Delegations of Authority and compliance with Conflict of Interest Policy.

Guidelines are maintained by Council.

Continual Manager Community

Services

2 Management monitors compliance with Council guidelines for issuing funds to Clubs/Community Groups on a regular basis.

Current practice. Continual Manager Community

Services

Spot Check




Risk No. 2: Loans/Grants to Clubs/Community Groups are inaccurately recorded or not recorded at all.

Loans/Grants to clubs/community groups may be inaccurately recorded in terms of either the amount of the loans or the details of the actual recipient of the funds Unintentional or intentional errors can result in the loans not being recorded at all and the management reports and financial statements being misstated.


Resp. Officer

Checking Officer

1 Statements of loans receivable are regularly mailed to recipients of funds.

Currently there are no loans to Clubs or Community Groups but if there were any, regular statements would be mailed.


Officer (C)

Spot Check

2

Loan receivable reconciliations are prepared on a regular basis and reviewed by an independent person.

Current practice when there are loans.


3

All loans must be approved by Council.






Risk No. 3: Clubs/Community Groups not able to repay Loans/Grants to Council.

Councils must monitor the recovery of all Loans/Grants to Clubs/Community Groups on a regular basis to ensure that the amount recorded is the amount that they will receive in full. When a Club/Community Group is not repaying the loan in accordance with the original repayment schedule, the carrying value of the loan must be analysed by Council with a view to assessing whether the full amount is `recoverable. If a decision is made that the full amount is not recoverable, this will result in the carrying value of the loan being misstated and negative publicity for Council.


Resp. Officer

Checking Officer

1 Management approves bad-debt write-offs to loans receivable.

Management approves bad debt write-offs up to $5,000 and Council above that amount.


2 Actual loan balances compared to budgets on a regular basis.

Loan balances are reviewed during budget reviews.


3

Management reviews ageing profile of loans receivable to identify all those outstanding receipts that have not been received in accordance with the original collection schedule. All outstanding items are immediately investigated to ensure timely recovery of outstanding amounts.

Current practice when there are community loans.


Officer (C)

Spot Check

4

Loan receivable reconciliations are prepared on a regular basis and reviewed by an independent person.

Current practice when there are community loans.


Officer (C)




MANAGEMENT REPORTING Risk No. 1: KPIs are not consistent with Corporate Objectives.

If KPIs are not linked to the Corporate Objectives, then the Leadership Team will be striving towards measures that ultimately will not lead to the achievement of the desired corporate objectives.


Resp. Officer

Checking Officer

1 Robust and rigorous process to establish KPIs and ensure that they are consistent with the Corporate Objectives.

Current practice. Annually Chief Executive

Officer

2 On-going review of actual performance against budget by management; management perform on-going review of consistency of KPIs in relation to Corporate Objectives.

Budget Reviews are held quarterly and reviews of KPIs twice per annum.

Quarterly & Six

Monthly

Executive




Risk No. 2: Council’s financial operations are not reviewed and responded to appropriately.

If the Leadership Team does not review financial performance effectively, informed decisions as to the performance of Council and plans effectively for the future, may not be achieved.


Resp. Officer

Checking Officer

1 Management clearly informed of their duties and responsibilities in relation to reporting.


2 Reviewing roles and responsibilities are designated in accordance with Delegations of Authority.


3

Reporting & Review Schedule maintained detailing Reporting timetable. This Schedule in given to all personnel involved in the management reporting process.

A Schedule has been prepared for the period in which the Budget is developed. This schedule should be expanded to cover the whole year and include other financial deadlines.


Spot Check

4 Designated person reviews the Reporting & Review Schedule to ensure that management reviews the appropriate information on a regular and timely basis.






Risk No. 3: Council’s management reports provide inaccurate financial information.

If management reports are inaccurate due to IT processing errors or unreliable data, the Elected Body and the Leadership Team will not be able to monitor the performance of Council effectively.





Resp. Officer

Checking Officer

1 Management reports are produced on a regular basis; senior management reviews these management reports and investigates any significant variances/unusual trends.

Reports have been/are being developed to provide Managers with monthly updates.

Monthly GMC&CS

2 Regular IT Audits to be performed focusing on data accuracy and security. Results of these IT Audits reviewed by management and action plan promptly implemented.

Not currently, more a reactive situation. Regular IT audits should be programmed.

Continual GMC&CS

3

Regular reviews of data accuracy and completeness are performed concurrently with the reporting process through on-going integrity checks of the Trial Balance, and the known budget position. Variances and omissions (if any) are dealt with immediately.

Trial balance checks are performed monthly and budget reviews quarterly.

Continual Managers Senior

Finance Officers



Risk No. 4: Significant budget variances are either not investigated on a timely basis or not investigated at all.

• Significant budget variances may indicate a major operational issue that requires immediate attention. If these variances are either not addressed by management on a timely basis or not at all, then this may have a major impact upon the operational efficiency of Council. • This risk assumes that Councils already perform comparisons of actual performance against budget. It should be noted that if actual performance is not compared against budget, the Elected Body and the Leadership Team will not be notified of any variances/unusual trends that may indicate significant operational issues that require immediate attention. Also without budget comparisons, the Elected Body and the Leadership Team are unable to measure the performance of Council.


Resp. Officer

Checking Officer

1 Management regularly reports on actual performance against budget

Management report quarterly.


2 Automated exception reports generated on a regular basis that automatically identify variances; significant variances may be identified using a standard threshold (either percentage or dollar value).

Current practice through Synergy.


Spot Check

3 Management review the exception reports on a regular basis and investigate all significant variances; evidence of review demonstrated by signing & dating report.

Management reviews these reports quarterly but this will change to monthly.


4 Management ensures that immediate corrective action is taken to rectify significant budget variances.





OTHER EXPENSES Risk No. 1: Other Expenses are either inaccurately recorded or not recorded at all.

If processing errors occur, this will result in Other Expenses either being inaccurately recorded or not recorded at all.


Resp. Officer

Checking Officer

1 Actuals are regularly compared to budgets; significant variances are investigated by management.

Comparisons are made quarterly.

Quarterly Managers

2 Statements received from suppliers are reconciled to the supplier accounts in the accounts payable sub ledger regularly and differences are investigated.



3

Management approves all Other Expenses in accordance with Delegations of Authority.

Current practice. Continual Managers Finance Officer




Risk No. 2: Other Expenses do not represent valid expenses of Council. If management approves expenses of a personal nature, this will result in invalid expenses being recorded by Council, leading to a misstatement in the management report and the financial statements.


Resp. Officer

Checking Officer

1 Actuals are regularly compared to budgets; significant variances are investigated by management.

Comparisons are made quarterly.

Quarterly Managers

2 Management approves all Other Expenses in accordance with Delegations of Authority. When approving Other Expenses, management reviews both the nature and amount of the expense for reasonableness.

Current practice. Continual Managers Finance Officer

3

All employees sign a declaration to certify that they will not make Council liable for expenses of a private or personal nature.

Not currently/ Consideration should be given to including this requirement in the employee induction process.

When Appointed

Human Resources

Officer




OTHER REVENUE Risk No. 1: Other Revenue is either inaccurately recorded or not recorded at all.

• Errors in invoices can lead to a misstatement of debtors and other revenue. • If invoices are issued but not recorded or if cash received is not recorded, other revenue, debtors and cash in the financial statements will be misstated.





Resp. Officer

Checking Officer

1 Other Revenue is compared to budget regularly; management reviews and investigates significant variances.


Quarterly Managers

2 Customers/Donors are provided with a sequentially prenumbered form acknowledging receipt of any cash payments and cash receipts forms are balanced to cash deposited at the bank.

Receipts are provided for cash payments.


3



Spot Check

4 Invoices for other income (i.e. expiation fees) are automatically priced by the application system.

Invoices are priced manually. Continual Senior Finance

Officer (C)

5 Any permits issued in Council’s name to be reviewed regularly.

Current practice. Annually GMC&CS Spot Check

6 Other revenue is reconciled and outstanding accounts are followed up regularly.


Officer (C)


PAYROLL Risk No. 1: Payroll expense is inaccurately calculated.

Inaccurate calculation of payroll may result in both management report and financial statement errors. It will also lead to underpayments or overpayments to employees (and the associated cash flow implications), giving rise to the potential for industrial disputes.




Resp. Officer

Checking Officer

1 Salary and hourly payroll reports are reviewed and approved by management.

These reports are checked by the Senior Finance Officer. General Managers should receive a copy of the payroll report (after the pay) which relates to their staff for checking and signing.

Fortnightly General Managers

Spot Check

2 Standard programmed formulas perform significant payroll calculations.

Current practice for standard pays.


Officer (C)

3

Overtime hours worked and payments for such overtime are authorised by management for all salaried employees who are paid for overtime.

Current practice. Field staff complete a separate sheet which is authorized by Managers.


Officer (C)

4

Non-standard pays checked by a person independent from the calculation process.

Non-standard pays are checked by the appropriate Manager. Calculations should be checked by the Manager Corporate Services.

Continual Managers Manager Corporate Services

Spot Check

5 Amounts paid to employees are regularly reconciled to the General Ledger accounts.


Officer (C)

6 Actual payroll expense is compared to budget by management; significant variances are investigated and approved by management.

Comparisons are made during Quarterly Budget Reviews.



Risk No. 2: Payroll disbursements are made to incorrect or fictitious employees.

When payroll disbursements are posted to either the wrong employee or fictitious employees, this may cause payroll disputes.

No Internal Controls Details Target Date Resp. Officer

Checking Officer

1 Access to the payroll bank transfer tape is restricted to authorised personnel.

The Senior Finance Officer uploads payroll and authorised officers approve the transfer.


Officer GMC&CS Manager Corporate Services

2 Payroll disbursements must involve a minimum of two people in the approval and transfer process.

Current practice. Continual As above

3

Departmental Managers perform a regular review of report detailing all employees listed on payroll master file; all unusual items are investigated.

Not currently. General Managers should receive a copy of the payroll report (after the pay) which relates to their staff for checking and signing. Refer Payroll Control 1.1

Fortnightly Managers Senior Finance

Officer (C)

Spot Check

4 Payroll system generates exception report detailing payroll expense on individual employee basis where the payroll expense is greater than the budgeted amount by a fixed percentage of dollar amount; report regularly reviewed by management who investigate and approve variances.

This report is available but not printed. The report should be printed and regularly checked by management.


5 Employees should not be added to the payroll records or paid without receipt of the appropriate forms duly authorised by responsible Council Officers.

New employees are approved by the Human Resources Officer or the General Manager.


Officer (C)

Spot Check

6 Payees are identified on pay slips by an employee number as well as name. All employees are to be paid by bank transfer. All pays are automatically paid into the bank account authorised by the employee.

Current practice. The system should be reviewed to identify if “Total number of employees paid” can be included in the listing.


Officer (C)


Electronic funds transfer listing must be reconciled to:

• The net pay total of the payroll journal

• Total no. of employees paid

• The listing received from the Council’s bank.

7

Employee records should include employment details and/or contract terms and conditions, authorizations for payroll deductions, annual, long service and sick leave entitlements, specimen signatures.

Payroll files are held by the Human Resources Officer and Senior Finance Officer.

Continual Human Resources

Officer Senior

Finance Officer

8 Officers responsible for originating/preparing EFT transfers are precluded from authorizing transfer of same.


Officer GMC&CS Manager Corporate Services

Spot Check

9 Any non-routine payroll queries or queries of a managerial/strategic nature are referred to Human Resources and/or Finance.

Current practice. Continual Human Resources

Officer

10 Employees are removed from payroll records immediately upon termination. A termination report is to be provided as supporting documentation with a request for an EFT. Comparison of subsequent current employee listings are to be made by an independent person to verify correctness.

The record is identified as terminated until the end of the financial year following which it is classified in the past employee category. A termination report is available. Managers also check future payroll listings.


Officer (C)

Managers

Spot Check

11 Management provides adequate training in relation to requirements of statutory and enterprise agreements.





` Risk No. 3: Time and attendance data is either invalid, inaccurately recorded or not recorded at all.

• Recording of time not actually worked can lead to overpayments to employees. This may affect cash flow and council operations.

• Inaccurate input of time worked may result in payroll errors due to underpayments or overpayments to employees.

• If time worked is not input, there is a risk that employees will not be paid. This can lead to an understatement of the payroll expense and industrial disputes.


Resp. Officer

Checking Officer

1 Salary and hourly payroll reports are reviewed and approved by management.

These reports are checked by the Senior Finance Officer. General Managers should receive a copy of the payroll report (after the pay) which relates to their staff for checking and signing. Refer Payroll Control 1.1.

Fortnightly Managers

2 Time recording and attendance exceptions based on expectations established by management are identified monitored and corrected.

General Managers receive overtime report listings. Exceptions are checked by the Senior Finance Officer.

Continual General Managers

Senior Finance

Officer (C)

3

Overtime hours and time-in-lieu worked and their payments are authorised by management.

Current practice. Continual Managers Senior Finance

Officer (C)

Spot Check

4 Time by employees is reconciled regularly between timesheets and payroll reports to ensure that all time entered manually into the payroll system is accurate.

A report of total hours is checked prior to finalizing each pay.

Fortnightly Senior Finance

Officer (C)

5 An exception report showing all deductions and allowances is to be printed and checked by an independent person.

A deduction and allowances report is available but not checked independently. This report should be checked independently.


6 Total of payment summaries for the year is reconciled to general ledger and payroll.

Current practice Annually Senior Finance

Officer (C)

7 Payment summaries that are returned or unclaimed are received and investigated by the appropriate Manager.

Returned payment summaries are followed up by the Senior Finance Officer


Officer (C)


8

All time sheets are checked, initialed and stamped by the payroll officer as evidence of processing.

Timesheets are checked but not signed. They should be signed as proof of the check.


(C)

Spot Check

9 Data required to update taxation, child support information, etc such as Fringe Benefits Tax is to be updated regularly.


Officer (C)

10 Administration staff are required to fill out time sheets, sign them and have authorized by the supervisor/manager.


Officer (C)




Risk No. 4: Payroll master file does not remain pertinent.

To be deemed pertinent, the master files must reflect current conditions. In this context, pertinence relates both to master file records and to individual data fields within those records. For example, if employee bank account numbers are not up to date, payments may be deposited in the wrong employee account. Also, if pay rate / conditions change due to promotion or reclassification and these are not reflected in the payroll master file, this will result in incorrect payroll disbursements.


Resp. Officer

Checking Officer

1 Payroll master file data is periodically reviewed for accuracy and pertinence.


Officer (C)

2 Departmental Managers periodically review listings of current employees within their departments and notify the personnel department of necessary changes.

Managers are able to request employee listings. Managers should review and sign off their employees each pay.

Fortnightly Managers

3

Payroll master file data is edited and validated; identified errors are corrected.

The master file is regularly reviewed.


Officer (C)

4

The ability to view, modify, or transfer information contained in the payroll master file is restricted to authorised personnel.




5 Variations between payroll master files and time recording system are investigated and appropriate action taken.

An audit trail is available and checked by the Senior Finance Officer.


Officer (C)

6 Significant changes (supported by adequate audit trail) to the payroll master files approved by management.

A report should be produced of changes to the Master File for checking by an independent officer.


Spot Check

7 Any adjustments to employee records are not permitted without written authorization of the employee.

Any adjustment must be requested by letter or email.


Officer (C)




Risk No. 5: Voluntary and statutory payroll deductions are inaccurately processed.

Payroll deductions must reflect current conditions. Inaccurate deductions may arise from improper changes to the payroll deduction tables or errors in processing, resulting in incorrect employee deductions relating for tax, superannuation, etc.


Resp. Officer

Checking Officer

1 The payroll deduction table data is periodically reviewed by management for accuracy and ongoing pertinence.

The payroll deduction report is reviewed each pay.

Fortnightly Senior Finance

Officer (C)

2 Changes to payroll deductions are compared to authorised source documents to ensure that they were input accurately.


Officer (C)

Spot Check

3

Payroll deductions are periodically reviewed for compliance with statutory requirements.

A deduction and allowances report is available but not checked independently. This report should be checked independently. Refer Payroll Control 3.5.


4 Changes to the payroll deduction tables are approved by management.

Changes are approved by management or relevant employee.


Officer (C)

5 All payroll deductions must be approved by the relevant employee.


Officer (C)

6 Payroll deductions are edited and validated; identified errors are corrected.


Officer (C)

Spot Check

7 Access to payroll deductions is restricted to authorised personnel.


Officer (C)




Risk No. 6: Salary sacrifice transactions are inaccurately processed.

If salary sacrifice calculations are processed inaccurately, this will increase the likelihood of both employee disputes and the payment of tax penalties.


Resp. Officer

Checking Officer

1 All original salary sacrifice transactions must be approved by the relevant employee. Payroll Officer must ensure that such approval has been obtained prior to processing transactions into the payroll system.


Officer (C)

2 Management reviews a selection of salary sacrifice calculations for accuracy and compliance with statutory requirements; identified errors are promptly corrected.

Not currently. An independent check should be carried out of new salary sacrifice calculations.





Risk No. 7: Employees are terminated in breach of statutory and enterprise agreements. Termination of employees outside union agreements or statutory requirements can lead to industrial disputes or litigation. No Internal Controls Details Target

Date Resp.


1 Establish employee termination policies and procedures, including statutory regulation and union requirements. Regular update of these policies and procedures.

The Senior Finance Officer prepares a termination spreadsheet. A template should be prepared to guide any employee who is required to calculate a termination pay.


(C)

Spot Check

2 Management provided adequate training in relation to requirements of statutory and enterprise agreements.


3 Regular review by management of compliance with employee termination policies and procedures, including compliance with statutory regulation and union requirements.

Termination payments are checked by the relevant Manager.


Officer (C)




PREPAYMENTS Risk No. 1: Incorrect recognition of payments as prepayments.

If payments are incorrectly recognised as prepayments, this will result in an overstatement of prepayments and misstated financial statements.


Resp. Officer

Checking Officer

1 Policy or procedures document providing clear and comprehensive guidance as to the recognition, treatment and recording of prepayments.

Procedures should be documented.


2 Prepayment reconciliations are prepared on a regular basis and are reviewed by an independent person.

To be reconciled annually. Annually Manager Corporate Services




Risk No. 2: Prepayments are either inaccurately recorded or not recorded at all.

If prepayments are unrecorded or inaccurately recorded, both the management reports and the financial statements will be misstated. Examples of when this may occur include: • deferring all of an expense when only a portion should be deferred; or • not deferring any part of an expense when at least some portion of the expense should be deferred.


Resp. Officer

Checking Officer

1 Prepayment reconciliations are prepared on a regular basis and are reviewed by an independent person.

To be reconciled annually. Annually Manager Corporate Services

Spot Check

2 Policy and procedures document providing clear and comprehensive guidance as to the recognition, treatment and recording of prepayments.

Procedures should be documented. Refer Prepayments Control 1.1.


3

Payments are reviewed on a regular basis in order to identify expenses that should be treated as prepayments.

To be reviewed annually. Annually Manager Corporate Services




PROJECT COSTING Risk No. 1: Projects are either inaccurately recorded or not recorded at all.

• If an inappropriate costing method is used to record Project Costs or if there are IT processing errors, this will result in Projects being inaccurately recorded, leading to misstatements in both the management reports and the financial statements. • If the costs associated with approved Projects are not recorded due to oversights by personnel, this will result in Project Costs being understated and misstatements in both the management reports and the financial statements.


Resp. Officer

Checking Officer

1 Actual project costs are regularly compared to budgets; significant variances are investigated by management.

Comparisons are made regularly and variances investigated.

Monthly GMI&ES

2 Management review costing methodology used for Projects to ensure appropriate method of full cost attribution is in place.

Being developed and introducing standard budget forms.

Continual GMI&ES

3

Regular reviews of costing programmes (in terms of data access, security and validity) by IT staff to ensure accuracy and completeness of financial information.

Data is held in Excel spreadsheets, which is regularly reviewed.

Continual GMI&ES

4

Overhead rates are reviewed and revised on a regular basis.

Not currently. Overhead rates should be reviewed annually.

Annually GMI&ES Spot Check

5 Management compares information detailed in the Project Register with the information reported in the financial system; any omissions are investigated.

Comparisons are made with the Microsoft Projects software, which holds project information.

Quarterly GMI&ES

6 Full cost attribution is reviewed at least every twelve months.

Full cost attribution is processed monthly. The parameters should be reviewed annually.






Risk No. 2: Over-expenditures on Projects may not be detected. If over-expenditures are not detected, this will result in Project objectives not being achieved and may restrict Council’s ability to commit to funding future Projects.


Resp. Officer

Checking Officer

1 Management performs an on-going review of current Projects. This review is formally documented through a robust evaluation process and involves monitoring costs to date and estimated costs of completion.

The outcome of these reviews are reported to Council quarterly.

Quarterly GMI&ES

2 Actual project costs regularly compared to budget; significant variances are investigated by management.

Comparisons are made regularly and variances investigated.

Monthly GMI&ES

3

Robust and rigorous process for establishing budgets for Projects. Project budgets must be approved in accordance with Delegations of Authority.

This process is improving. A standard template identifying all project costs that should be considered when approving a budget e.g. future operating costs would assist this process.


4

Exception report generated detailing all variances for Project Costs over a fixed threshold (i.e. percentage or dollar amount). Exception report reviewed by management and all significant variances are investigated by management.

Budget reports identify exceptions. This reporting is being further developed.


5 Managers to report any instance of over spending budgets with a detailed explanation to the Audit Committee.

This information is included in the quarterly budget reviews reported to Council.

Quarterly GMI&ES Spot Check





PURCHASING & PROCUREMENT Risk No. 1: Council does not obtain value for money in its purchasing & procurement.

If Council does not have a robust and rigorous selection process for preferred suppliers, this may result in Council not obtaining the best possible price from suppliers and therefore not achieving value for money in its purchasing and procurement.


Resp. Officer

Checking Officer

1 Robust selection process of preferred suppliers.

Current practice. Continual OHS&W

2 Periodic re-tender to ensure that Council achieves value for money from suppliers.

Have commenced this process. Continual GMI&ES

3

Staff provided clear guidance and instructions on the process for purchasing goods and services (including appropriate approval and obtaining appropriate number of quotes, where applicable).

Staff are provided guidance through the Purchasing Policy.

Continual GMI&ES

Spot Check

4

Staff provided clear guidance and instructions as to the importance of using preferred suppliers for the purchase of goods and services.

Current practice. Continual OHS&W Spot Check

5 Employees must ensure all purchase orders are approved in accordance with the Delegations of Authority. When approving purchase orders, management check to ensure that a preferred supplier is being used.

Current practice with delegations included in the Purchasing Policy.


Officer (C)

OHS&W = OHS&W, Rehabilitation & Claims Coordinator; GMI&ES = General Manager Infrastructure & Environmental Services




Risk No. 2: Purchases of goods and services are made from non-preferred suppliers. If purchases of goods and services are made from non-preferred suppliers, this may result in Council not obtaining the best possible price for the goods and services. No Internal Controls Details Target

Date Resp.

Officer Checking

Officer 1 Staff provided clear guidance

and instructions on the process for purchasing goods and services (including appropriate approval).


Continual GMI&ES

2 Staff provided clear guidance and instructions as to the importance of using preferred suppliers for the purchase of goods and services.


3

Employees must ensure all purchase orders are approved in accordance with the Delegations of Authority. When approving purchase orders, management check to ensure that a preferred supplier is being used.



Officer (C)

4 Exception report generated detailing all purchases made from non-preferred suppliers; management regularly reviews this report and investigates significant/unusual items.

Not currently. The possibility of having Synergy produce such a report should be reviewed.

Quarterly GMI&ES





Risk No. 3: Purchase orders are either recorded inaccurately or not recorded at all.

• Inaccurate input of purchase orders could lead to financial losses due to incorrect goods or services being purchased. • If purchase order entry or processing is incomplete, receipts of goods and/or processing of invoices might be hampered. Stores employees are normally instructed only to accept goods for which purchase orders have been issued, and only up to the quantity specified in each purchase order. In invoice processing, the invoice is normally matched with the purchase order to verify the price and the payment terms.


Resp. Officer

Checking Officer

1 Controls in place to ensure that orders are fully completed prior to issue.

Orders are processed manually. Annual refresher training would assist correct completion of orders.


Officer (C)

2

Purchase orders and invoice data are compared; inaccuracies are investigated.

Comparisons are made by officers who raised the orders.

Continual Purchasing Officers

Finance Officer

3

Invoices received without a valid order are reported and acted upon.

Confirmation orders are raised. Annual refresher training would reinforce the necessity to raise the order at the beginning of the process. Refer Purchasing & Procurement Control 1.1.

Continual Purchasing Officers

Senior Finance

Officer (C)

Spot Check

4 Unmatched purchase orders are investigated.

Not currently, there is no track of which orders are outstanding because Finance do not hold a copy. A copy of each order should be forwarded to Finance for follow up purposes. Refer Accounts Payable Control 2.4.


Officer (C)

Spot Check

5 Purchase orders are sequentially prenumbered. Sequence of purchase orders processed is accounted for.

Manual order books are pre-numbered and a register is maintained of books which have been issued.


Officer (C)




Risk No. 4: Purchase orders are placed for unapproved goods and services.

A purchasing function procures goods and services to fulfill the Council’s requirements, as approved by management. The purchasing function should not acquire goods or services for which purchase orders have not been approved by management. Purchase orders might be paper-based or entered on-line.


Resp. Officer

Checking Officer

1 A purchase order authorisation list (Delegations of Authority) is maintained, specifying the amounts up to which individuals are authorised to approve purchase requisitions.

The Purchasing Policy includes delegations of authority.


2 Employees must ensure all purchase orders are approved in accordance with the Delegations of Authority (i.e. Manual/on-line approval).



Officer (C)

3

Access to unissued purchase orders is restricted to authorised individuals.

Current practice. Continual Purchase Order Book

Holders

4

Staff provided clear guidance and instructions on the process for purchasing goods and services (including appropriate approval) and the requirement to issue a purchase order.


Continual GMI&ES

5 Staff provided clear guidance and instructions as to the importance of using preferred suppliers for the purchase of goods and services.






RATES Risk No. 1: Council does not raise the correct level of rate income.

If Council does not raise the correct level of rate income (due to inappropriate rating methodology or inaccurate data held in rate software), then this will result in increased cash flow demands and possible negative publicity.




Resp. Officer

Checking Officer

1 Rates are automatically generated by the rate system, including the calculation of rate rebates, if applicable.


Officer (B)

2 Management regularly reviews the calculation methodology within the rate application system and for a sample of ratepayers to ensure correct calculation and methodology has been used.

This methodology is reviewed annually.


Officer (B)

Spot Check

3

All software changes to rate modelling functionality fully tested and reviewed by qualified personnel.

Changes are fully tested by Synergy prior to implementation.


Officer (B)

4 Actual rate revenue is compared to budget; management reviews and investigates significant variances.

Comparisons are made during quarterly budget reviews.


Officer (B)


Risk No. 2: Rates are either inaccurately recorded or not recorded at all.

Errors in rates (i.e. incorrect calculations) can lead to ratepayer dissatisfaction. Revenue and debtors in the financial statements will be understated. Furthermore, the related cash receipts may not be recorded and may be misappropriated.


Resp. Officer

Checking Officer

1 Rates are automatically generated by the rate system.


Officer (B)

2 Management regularly reviews the calculation methodology within the rate application system and for a sample of ratepayers to ensure correct calculation.



Officer (B)

3 Annual valuation update is balanced prior to the generation of rates; all mismatches resolved prior to going live.


Officer (B)

4 Rates are generated using test data prior to the rates billing run.


Officer (B)

5 Rate model outcomes reconciled to billing run outcomes prior to generation of rates.


Officer (B)

6 Rate debtors reconciliation performed on a regular basis; reviewed by management.

The reconciliation is performed on a daily basis and the results reported to the Manager Corporate Services.


Officer (B)

Spot Check

7 Actual rate revenue is compared to budget; management reviews and investigates significant variances.

Comparisons are made during quarterly budget reviews.


Officer (B)

8 Management approves rate rebates to rate payers.

Rate rebates are covered in the Rating Policy.


Officer (B)




Risk No. 3: Rate rebates are either inaccurately recorded or not recorded at all. • Inaccurately recorded rate rebates can lead to a misstatement of debtors and revenue, and may result in uncollectible accounts and/or ratepayer dissatisfaction. • Rate rebates issued but not recorded result in misstated debtors and revenue and may result in ratepayer dissatisfaction. This may have a negative impact upon cashflows because ratepayers may refuse to pay rate notices until the rate rebates have been recorded correctly. No Internal Controls Details Target

Date Resp.


1 Rates are automatically generated by the rate system, including the calculation of rate rebates, if applicable.


Officer (B)

2 Management regularly reviews the calculation methodology within the rate application system and for a sample of ratepayers to ensure correct calculation.



Officer (B)

3 Actual rate revenue and rate rebates are compared to budget regularly; management reviews and investigates significant variances.

Comparisons are made at the time of quarterly budget reviews.


4 Management approves rate rebates to rate payers.

Rate rebates are covered in the Rating Policy.


Officer (B)

Spot Check




Risk No. 4: The Property master file data does not remain pertinent.

“Pertinent” means that the Property master file reflects current conditions. In this context, the pertinence attribute of quality relates both to master file records and to individual data fields within those records. For example, pertinent Property master file records include records for current ratepayers and exclude records for former ratepayers. Inaccurate data may result in rate notices being issued to the incorrect ratepayer and may lead to public dissatisfaction.


Resp. Officer

Checking Officer

1 Property master file data is periodically reviewed by management for accuracy and on-going pertinence.

The master file is checked periodically by the Senior Finance Officer.


Officer (B)

2 Recorded changes to Property master file data are compared to authorised source documents or confirmed with ratepayers to ensure that they were input accurately.

Current practice through the Assessment Book.


Officer (B)

3

Maintain an audit trail for all property master file changes.

A report is available for one record at a time. Recommend check with Synergy on possibility of a report which provides all changes for a set period. This report could be checked monthly by an independent Officer.


Spot Check

4

Access to the Property master file is restricted to appropriately designated personnel.

Access should be reviewed to ensure it is restricted to appropriate officers.


Team Leader Customer Services

5 Significant changes to the Property master file are approved by management.

Master file changes are not viewed by management however all changes will be checked – Refer Rates Control 4.3.


Officer (B)





Risk No. 5: Pensioner concessions and self-funded retirees are either inaccurately recorded or not recorded at all.

If pensioner concessions and self-funded retirees are not recorded in the property master file and the rate modelling software, then this may result in rate revenue and debtors being misstated.


Resp. Officer

Checking Officer

1 Management to approve all pensioner concession entitlement information provided annually by SA Water and self funded retirees provided by Revenue SA.

Entitlements are processed directly by the Senior Finance Officer.


2 Maintain an audit trail of all weekly updates of pensioner concession and self funded retirees information. All updates approved by management and independently matched to the property master file.

An update report is filed with the appropriate journal page. This report should be checked regularly by an independent officer.


3

Reconcile all pensioner concession debtors and balancing accounts on a monthly basis; management to review reconciliation and investigate any unusual items.

Currently reconciled every two months and moving to monthly.

Monthly Senior Finance Officer (B)

Spot Check

4

Pensioner concession debtors to be compared to budget regularly; management investigates significant variances.

Pensioner concession debtors are checked regularly.

Monthly Senior Finance Officer (B)




RECEIPTING Risk No. 1: Receipts are either inaccurately recorded or not recorded at all.

• Inaccurately entered receipts can lead to receipts being allocated to the incorrect customer account. In addition, postings in the wrong amount may result in an out-of-balance condition between the general ledger and the bank statement.

• Unrecorded receipts (through either intentional or unintentional errors) may lead to an overstatement of accounts receivable and misappropriation.


Resp. Officer

Checking Officer

1 Receipts are recorded. Service users / customers are provided with a copy of the receipt and total daily receipts (per register) are balanced to receipts deposited at bank by independent person.

Receipts are issued by the system and customers who make payments by mail have the option to be mailed a receipt.

Continual Customer Services Officer

2 Bank statements are reconciled to the general ledger regularly by an independent person.


Officer (B)

Spot Check

3

Statements of customer accounts receivable are mailed to customers.


Officer (C)

4



5 Receipt forms are sequentially prenumbered and the sequence of such forms is accounted for.

Synergy automatically provides a number with each receipt.


6 Reversals of transactions should be checked by an independent officer.

Not currently. Reversals should be checked by an independent officer.


Officer (B)

Spot Check

7 Cash should be kept secure at all times.

Cash is stored in lockable drawers during day and locked in safes overnight. The safes and drawers should be locked when not in use. Refer Banking Control 1.5.


Officer (B)




Risk No. 2: Cash receipts data is entered for processing more than once.

Invalid or duplicated receipts result in an overstatement of cash and understatement of accounts receivable.




Resp. Officer

Checking Officer

1 Receipts are recorded. Service users / customers are provided with a copy of the receipt and total daily receipts (per register) are balanced to receipts deposited at bank by independent person.

Receipts are issued by the system and customers who make payments by mail have the option to be mailed a receipt.

Continual Customer Services Officer

2 Bank statements are reconciled to the general ledger daily by an independent person.


Officer (B)

3 Receipt forms are sequentially prenumbered and the sequence of such forms is accounted for.

Synergy automatically provides a number with each receipt.



Risk No. 3: Receipts are not deposited at the bank on a timely basis. If cash receipts are not banked on a timely basis, then there is an increased likelihood that the receipts will be open to misappropriation and a potential loss of interest revenue.




Resp. Officer

Checking Officer

1 Cash receipts are deposited regularly at the bank by a person independent from the initial recording of the cash receipts.

Cash receipts are banked by Head Office Customer Services Officers. The banking process should be reviewed, especially during rate periods. Refer Banking Control 1.1.

Daily Customer Services Officers

2 Bank statements are reconciled to the general ledger daily.

Current practice. Daily Senior Finance Officer (B)

3 Cash is stored in a secure area during cash management process.

Cash floats are in lockable drawers when being used and locked in safes when not being used.


Spot Check

4 All cheques received in Records are stamped ‘Not Negotiable’ if not already marked so.

Not currently. Any cheques not marked ‘Not Negotiable’ should be stamped that way.

Continual Records Management

Officer


STATUTORY REPORTING Risk No. 1: Council does not comply with statutory reporting requirements If Council does not comply with statutory reporting requirements, this may result in Council being liable to pay statutory breaching penalties.


Resp. Officer

Checking Officer

1 Financial reports are prepared by suitably qualified staff; reviewed by Audit Committee.


2 A Long Term Financial Plan is approved by Council.

Council has a Long Term Financial Plan which is being updated from the Infrastructure and Asset Management Plans.


Spot Check

3 Relevant personnel responsible for preparing statutory reports are provided regular training to keep abreast of changes to reporting requirements.


4

Regular liaison with external auditors, legal and tax advisors to ensure timely completion and lodgement of statutory documents.

Current practice with access to a 24 hour taxation query line.


5

Designated and qualified staff responsible for planning the statutory reporting process.


6 Council has a Reporting Schedule Register detailing all the statutory reporting deadlines. Designated person responsible for monitoring compliance with reporting deadlines and ensuring Register data is pertinent.

Not currently. This information should be included with an annual budget timetable, which is presented to Council and Senior Management.






Risk No. 2: Council does not meet statutory reporting deadlines. If Council does not meet its statutory reporting deadlines (i.e. annual statements, BAS’s, FBT Return etc), this will result in Council being liable to pay late lodgement penalties.


Date Resp.

Officer Checking

Officer 1 Council has a Reporting

Schedule Register detailing all the statutory reporting deadlines. Designated person responsible for monitoring compliance with reporting deadlines and ensuring Register data is pertinent.

Not currently. This information should be included with an annual budget timetable, which is presented to Council and senior management. Refer statutory Reporting Control 1.5.

Continual GMC&CS

2 Regular liaison with external auditors, legal and tax advisors to ensure timely completion and lodgement of statutory documents.






Risk No. 3: Council’s statutory reports provide inaccurate financial information. If inaccurate financial information is contained within statutory reports (i.e. annual statements), then Council will not be fulfilling its statutory obligations. This may result in legal and financial penalties.




Resp. Officer

Checking Officer

1 Regular liaison with external auditors, legal and tax advisors to ensure that statutory reports include accurate information and are in accordance with statutory reporting requirements.



2 Actual results compared to budget regularly; management reviews and investigates significant variances.

Comparisons are made during the quarterly budget review.


3 Financial reports are prepared by suitably qualified staff; reviewed by Audit Committee.



TAXATION Risk No. 1: Tax liabilities are either inaccurately recorded or not recorded at all.

If taxation staff are not provided with adequate training to keep them up to date with all relevant changes in taxation or if Council does not obtain tax advice from external tax advisors, then there is the risk that either tax liabilities will be inaccurately recorded or not recorded at all. As a result, the taxation liabilities will be misstated in both the management reports and the financial statements and Council may be liable for late lodgement penalty fees and avoidance fees.


Resp. Officer

Checking Officer

1 Taxation staff are provided with regular training in order to keep up to date with all relevant changes in tax legislation and reporting requirements or Council obtains tax advice from external tax advisors.


2 All lodgement statements and returns are reviewed and approved by Senior Finance Officer prior to being released.

Current practice and the Manager Corporate Services checks the FBT Return prior to submission.

Monthly &

Annually

Senior Finance Officer (BAS)

Manager Corporate Services (FBT)

Spot Check

3

Management periodically reviews a selection of transactions to ensure appropriate tax treatment.

This check will be carried out by the Manager Corporate Services when reviewing the returns.

Monthly &

Annually


4

All balance sheet reconciliations for tax liabilities are performed regularly.

Balance sheet reconciliations are checked monthly.

Monthly Senior Finance Officers




Risk No. 2: Council does not meet statutory reporting / lodgement deadlines.

It is important that Council recognises and records statutory reporting/lodgement deadlines in order to avoid any late lodgement penalty fees. One way of doing this is by way of a Tax Compliance Register that is kept up to date.


Resp. Officer

Checking Officer

1 Tax Compliance Register (detailing lodgement timetable) is maintained.

Not currently although the Australian Tax Office forward reminders. This timetable could be included in the annual budget schedule.


Officer (B)

2 Taxation staff are provided with regular training in order to keep up to date with all relevant changes in tax legislation and reporting requirements or Council obtains tax advice from external tax advisors.


3

All lodgement statements and returns are reviewed and approved by Senior Finance Officer prior to being released.

Current practice and the Manager Corporate Services checks the FBT Return prior to submission.

Monthly &

Annually

Senior Finance Officer (BAS)

Manager Corporate Services (FBT)

4 All balance sheet reconciliations for tax liabilities are regularly performed; reconciliations are reviewed by an independent person.

Balance sheet reconciliations are checked monthly.

Monthly Senior Finance Officers



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