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Internal Audit
Report
Bank
Reconciliation
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Internal Audit Report – Bank Reconciliation
1. Executive Summary
Introduction
Internal Audit has recently completed an audit of bank reconciliation procedures.
The objective of the review was to provide assurance that appropriate and effective
systems of control are in place to manage the bank reconciliation process.
The Council changed provider in October 2013 and the bank accounts were
transferred from HSBC Bank to Barclays Bank with the HSBC accounts still in use
for some outstanding transactions until the last account was closed in August
2014.
In the previous year's audit there were two risks identified around a lack of
segregation of duties; the Principal Accountant and Project Accountant have the
Bank Reconciliation Role on SAP and also have SAP access for the authorisation
of orders, and the Accounting Technician for the Pensions Bank Reconciliation
also carries out the preparation of CHAPS payments and inter-account transfers,
both of which are still the case. The management response was that 'The number
of and roles of the staff involved in the process make this inevitable. We
understand the risks and are aware of the need for manual process segregation'.
Based on the risks identified above the overall opinion is Significant Assurance.
Full assurance Full assurance that the system of internal control meets the
organisation’s objectives and controls are consistently applied.
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Internal Audit Report – Bank Reconciliation
2. Summary of Conclusions
2.1. The conclusion for each control objective evaluated as part of this audit was as
follows:
Control Objective Assurance
Full Significant Limited No
2.2. The recommendations arising from the review are ranked according to their level of
priority as detailed at the end of the report within the detailed audit findings.
Recommendations are also colour coded according to their level of priority with the
highest priorities highlighted in red, medium priorities in amber and lower priorities in
green. In addition, the detailed audit findings include columns for the management
response, the responsible officer and the time scale for implementation of all agreed
recommendations.
2.3. Where high recommendations are made within this report it would be expected that
they should be implemented within three months from the date of the report to ensure
that the major areas of risk have either been resolved or that mitigating controls have
been put in place and that medium and low recommendations will be implemented
within six and nine months respectively.
4. Acknowledgements
4.1. Audit would like to thank all involved for their assistance during this review
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Internal Audit Report – Bank Reconciliation
Ref. Priority Findings Risk Arising/ Recommendation Management Response Responsibility Recommendation
Consequence and Timescale Implemented
(Officer & Date)
CO3: Bank reconciliations are carried out regularly by an independent employee.
1 Low The bank reconciliation Errors may not be The bank reconciliations The April 2014 bank
summary sheets had mainly identified in a timely should be carried out on a reconciliation was completed
been signed and dated within manner. monthly basis. The and signed on 10/06/2014 in
one month with the exception completed summary sheet part due to the reconciliation
of April for the pension bank signed and dated by the being the first after the
reconciliation which was person carrying out the change of bank accounts to
signed and dated in June (over reconciliation. The Barclays and also due to the
one month from the end of the reconciliation should be work pressures of final
month being reconciled. reviewed and signed. All accounts close down. The
within the month following process was improved in
the month to which it applies. 2015 with the April 2015
reconciliation complete and
signed on 22/05/2015.
CO4: Bank reconciliations are accurate and complete.
4 Low During the year there has been Errors may not be All differences should be The amounts are identified in
a small difference in the resolved in a timely researched and corrected. the month they arise. No
County Fund Account which manner. action is taken due to the
started at £0.92 and reduced small value as this requires
to £0.90 in August. This is the bank to take action.
detailed as 'Difference
between actual and calculated
issues - Difference between
value of cheque issued and
presented'.
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Internal Audit Report – Bank Reconciliation
Key to Priorities