MINISRY OF ANYTHING INTERNAL AUDIT REPORT (DRAFT) TREASURY MANAGEMENT (8.

00/01)

Distribution: Manager A - for information Manager B - for comment

DECEMBER 2001

MINISRY OF ANYTHING
INTERNAL AUDIT REPORT TREASURY MANAGEMENT

CONTENTS SECTION 1. Introduction PAGE 1

2.

Executive Summary

2

3.

Findings and Recommendations

3

Appendix A Appendix B

Internal Audit Methodology Action Plan of Agreed Recommendations

5 6

ASSIGNMENT CONTROL:
Draft report issued: November 2001 Final report issued: December 2001 Days planned: Days taken: Cost of audit: 15 15 £2,100 Auditor: Supervisor: Francis Dark Allan Wight

Ministry of Anything

8.00/01 Treasury Management

MINISRY OF ANYTHING
INTERNAL AUDIT REPORT TREASURY MANAGEMENT 1. INTRODUCTION Background 1.1 1.2 We reviewed the system of Treasury Management during November 2000 as part of our 2000/01 internal audit plan. The Ministry has outstanding debts of approximately £3.2 million paying interest rates of between 6.875% and 15.875%. It also has investments of over £0.75 million gaining interest at rates of between 5% and 7.2%. The annual budget indicates that interest payable in 1999/00 will be nearly £250,000 and interest received will be £34,000. Audit Objectives 1.3 The objective of our review was to assess whether existing controls should provide reasonable assurance that the following control objectives are being achieved: • that appropriate cash flow projections are developed and adequate management information is generated in respect of past and future income and expenditure banking arrangements and facilities are appropriate and adequately controlled all suitable loans and investment opportunities are identified and evaluated treasury management is undertaken in such a way that the Ministry's short and long term interests are balanced and safeguarded

• • •

Acknowledgement 1.4 We would like to thank the following staff for their time and co-operation: Name Judy Jones Sally Smith Brian Brown Position Accountancy Services Manager Accountant Accountancy Assistant

Ministry of Anything

8.00/01 Treasury Management

Page 1

MINISRY OF ANYTHING
INTERNAL AUDIT REPORT TREASURY MANAGEMENT 2 2.1 EXECUTIVE SUMMARY Overall conclusion In most areas we consider that the current controls are adequate. However, we consider that changes need to be made to ensure that bank reconciliations act as an effective control over the accuracy of the Ministry's financial records. For this reason we consider that controls within the system should provide substantial assurance that risks material to the achievement of system objectives are adequately managed.
See Appendix A Paragraph 4, for an explanation of this opinion.

2.2

Control objective: to ensure that appropriate cash flow projections are developed and adequate management information is generated in respect of past and future income and expenditure We consider that current controls should provide adequate assurance that this control objective should be achieved.

2.3

Control objective: to ensure that banking arrangements and facilities are appropriate and adequately controlled We consider that, whilst the current controls are not inadequate, a number of improvements could be introduced to ensure that further assurance is provided and especially to ensure that bank reconciliations act as an effective control.

2.4

Control objective: to ensure that all suitable loans and investment opportunities are identified and evaluated We consider that current controls should provide adequate assurance that this control objective should be achieved.

2.5

Control objective: to ensure that treasury management is undertaken in such a way that the Association=s short and long term interests are balanced and safeguarded We consider that current controls should provide adequate assurance that this control objective should be achieved.

Ministry of Anything

8.00/01 Treasury Management

Page 2

3.

FINDINGS AND RECOMMENDATIONS

We have provided an explanation of our reporting methodology at Appendix A. 3.1 Control objective: to ensure that that appropriate cash flow projections are developed and adequate management information is generated in respect of past and future income and expenditure Findings 3.1.1
The Finance Manager posts a range of banking transactions and the Finance Officer undertakes the bank reconciliations each month The Finance Officer takes the cash bankings to the Co-operative Bank in the centre of Nottingham three days a week

Implications
The bank reconciliations do not act as a clear check on the accounting for cash and bank transactions The Finance Officer spends a significant length of time undertaking the bankings for the Association Committee members may not be available to sign cheques as required

Recommendations
The Finance Manager should undertake the monthly bank reconciliations and these should be reviewed, initialled and dated by the Chief Executive Consideration should be given to alternative methods of undertaking the bankings Cheques with a value of less than , 5,000 should not be signed by Members, two members of staff should be sufficient

Priority
Significant

3.1.2 3.1.3

Advisable

Advisable

Ministry of Anything

8.00/01 Treasury Management

Page 3

3.2

Control objective: to ensure that banking arrangements and facilities are appropriate and adequately controlled Findings Implications
The bank reconciliations do not act as a clear check on the accounting for cash and bank transactions The Finance Officer spends a significant length of time undertaking the bankings for the Association Committee members may not be available to sign cheques as required

Recommendations
The Finance Manager should undertake the monthly bank reconciliations and these should be reviewed, initialled and dated by the Chief Executive Consideration should be given to alternative methods of undertaking the bankings Cheques with a value of less than , 5,000 should not be signed by Members, two members of staff should be sufficient

Priority
Significant

3.2.1

The Finance Manager posts a range of banking transactions and the Finance Officer undertakes the bank reconciliations each month The Finance Officer takes the cash bankings to the Co-operative Bank in the centre of Nottingham three days a week The Finance Officer takes the cash bankings to the Co-operative Bank in the centre of Nottingham three days a week

3.2.2

Advisable

3.2.3

Essential

Ministry of Anything

8.00/01 Treasury Management

Page 4

APPENDIX A METHODOLOGY
1. We performed this audit using systems auditing methodology. We identified the objectives of the system and control objectives in advance, and agreed these with the appropriate manager. Following interviews with relevant managers and staff, we identified and evaluated the existing controls against the controls we consider necessary to achieve each control objective. From this work we decided the level of testing required. We then used our control evaluation and the results of our testing to form an opinion on the overall effectiveness of the internal control system. Where we do not consider that a control objective is being efficiently achieved we have made recommendations that, if implemented, should ensure that the control objective is realised in future. To assist management in the pursuit of value for money we have also drawn attention to points, identified during the review, which should help to improve the economic, efficient and effective use of the Ministries resources. As a result of the above work we formed an overall opinion on the extent that existing controls should provide adequate assurance that all significant risks to the achievement of the system’s objectives are being effectively managed. We then graded the control system of the basis of the following scale:

2.

3.

4.

a) controls within the system should provide full assurance that risks material to the achievement
of system objectives are adequately managed

b) controls within the system should provide substantial assurance that risks material to the
achievement of system objectives are adequately managed

c) controls within the system should provide limited assurance that risks material to the
achievement of system objectives are adequately managed

d) controls within the system should provide little assurance that risks material to the achievement
of system objectives are adequately managed. 5. In the third section of this report, on Findings and Recommendations, we have operated a system of exception reporting. We have only referred to a control objective if we do not consider that existing controls should provide reasonable assurance that the objective will be achieved efficiently. We have assigned each of our recommendations to one of the following priorities: Essential Significant Advisable 7. action that we consider is imperative to ensure that the organisation is not exposed to high risks action that we consider is necessary to avoid exposure to significant risks action that we consider is desirable and should result in enhanced control or better value for money.

6.

We view risk as the chance, or probability, of one or more the Ministry's objectives not being achieved. Risk refers both to unwanted outcomes that might arise, and to the potential failure to achieve desired results.

Ministry of Anything

8.00/01 Treasury Management

Page 5

APPENDIX B

ACTION PLAN We consider that the following recommendations are necessary to avoid, or reduce, the risks we have identified. Where managers have agreed to implement these recommendations, they consider that the benefits will outweigh the costs of introducing the controls and that other, more cost effective, controls are not available. Para. Recommendation No. 3.2.3 Priority Management Comment Implementation Manager date Responsible

Cheques with a value of less than , 5,000 should Essential not be signed by Members, two members of staff should be sufficient The Finance Manager should undertake the Significant monthly bank reconciliations and these should be reviewed, initialled and dated by the Chief Executive The Finance Manager should undertake the Significant monthly bank reconciliations and these should be reviewed, initialled and dated by the Chief Executive References should be kept, this needs to be documented in procedures Consideration should be given to alternative methods of undertaking the bankings Consideration should be given to alternative methods of undertaking the bankings Significant Advisable Advisable

3.1.1

3.21

3.3.2 3.1.2 3.2.2

Ministry of Anything

8.00/01 Treasury Management

Page 6

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer: Get 4 months of Scribd and The New York Times for just $1.87 per week!

Master Your Semester with a Special Offer from Scribd & The New York Times