In today's blog, I aim to shed light on the pivotal role of internal audits in maintaining transparency, financial integrity, and operational efficiency within local councils. By following the principles outlined in the JPAG Practitioner's Guide, selecting the right internal audit provider, and implementing best practices in public money management, we can elevate the standards of accountability and responsible governance.
Role of Internal Audits
Internal audits are the backbone of responsible governance. They exemplify a council's commitment to best practices and accountability. These audits go beyond mere compliance; they establish a culture of continuous improvement and excellence in financial management and governance.
JPAG Practitioner's Guide
The JPAG Practitioner's Guide is a gold standard document that provides councils with a roadmap for establishing a consistent, compliant, and efficient approach to internal audits. By following this guide, councils can ensure alignment with industry standards and best practices, fostering credibility and trust.
Selecting an Internal Audit Provider
Choosing the right internal audit provider is a decision of paramount importance. The JPAG Practitioner's Guide offers criteria for selecting a provider with independence, competence, financial and governance understanding, and system proficiency. This ensures that audits are conducted impartially and effectively.
To find an internal auditor you can search this The Internal Audit Form Directory of Internal Auditors
Public Money Management
Internal audits serve as critical internal control mechanisms, reinforcing public trust in the responsible management of public funds. They are the guardians of transparency and sound financial management practices.
Role of the Clerk/RFO (Responsible Financial Officer):
Effective financial management hinges on organisation, and the Clerk or RFO plays a pivotal role in this process. Their responsibilities encompass aligning accounts with bank statements, managing fiscal year transitions, and adeptly utilising financial tools.
Financial accounts should be crystal clear and comprehensible, even to those without a finance background. Achieving this involves presenting transparent account statements and employing well-defined cost centres and codes to trace every expense.
To maintain transparency, it is imperative to categorise expenditures accurately rather than lumping them under vague categories like 'Sundries & Miscellaneous.' Clear categorisation promotes accountability and informed decision-making.
Documentation in Minutes
Detailed minutes serve as invaluable historical records. They should encompass essential financial information, including the latest bank reconciliation date, balance, and payment lists. This practice fosters accountability and traceability.
Clear payment protocols act as safeguards against errors or mismanagement. When a single individual oversees payments, such as a clerk, additional oversight or validation steps may be necessary to ensure accuracy and prevent fraud.
Budget & Precept
Clear documentation is paramount when making major decisions like the Budget & Precept. These decisions should be minuted and gain collective council approval to uphold transparency and consensus in financial matters.
Ongoing Risk Management
Continuous risk management is essential for identifying, mitigating, and addressing risks in a timely manner. It involves regular updates to risk strategies, asset statuses, and related documentation, reinforcing the council's commitment to responsible governance.
Incorporating year-round preparations for internal audits into your council's operations is not just a compliance requirement; it's a pledge to uphold the highest standards of transparency, accountability, and financial integrity. By embracing the JPAG Practitioner's Guide and implementing these best practices, you can elevate your council's governance to new heights. Thank you for joining me on this journey towards responsible and accountable local governance.
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