Statement on the System of Internal Financial Control

This statement is given in respect of the statement of accounts for Leicestershire County Council. I acknowledge responsibility for ensuring that an effective system of internal financial control is maintained and operated in connection with the resources concerned.

The system of internal control can provide only reasonable and not absolute assurance that assets are safeguarded, that transactions are authorised and properly recorded, and that material errors or irregularities are either prevented or would be detected within a timely period.

The system of internal financial control is based on a framework of regular management information, financial regulations, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken within the Council. In particular, the system includes:

Comprehensive budgeting systems;
A system of regular reports to managers with budget responsibilities which indicate financial performance against budget;
A system of regular reports to Cabinet monitoring Revenue and Capital expenditure to budget;
The production of targets against which financial and other finance related performance is measured;
The production of regular financial reports to senior management in a form that enables them to take timely decisions on potential financial problems or opportunities;
The use of formal project management disciplines where appropriate.
Leicestershire County Council operates an internal audit service. Its role is to provide the County Council and in particular the Director of Resources with assurance that the internal control systems are operating properly and where appropriate recommend improvements. Particular emphasis is paid to management controls over assets; performance; decision making and information provision; policy and legal compliance.

The Internal Audit is conducted in accordance with professional standards set out in CIPFA’s Code of Practice for Internal Audit in Local Government.

The Head of Internal Audit has concluded that, based on the evidence of audits conducted in 2002/3 and audit work on systems undertaken in previous years, a number of recommendations for improvements have been made however none of these recommendations are of a magnitude to suggest a fundamental weakness. A general assurance can therefore be given that the internal financial controls are of a sufficient standard to provide for the proper administration of its financial affairs.

My review of the effectiveness of the system of internal financial control is informed by:

The work of managers within the Council;
The work of the internal auditors as described above; and
The external auditors in their annual audit letter and other reports.

There were no fundamental weaknesses of significance found in the system of internal financial control during the financial year 2002/3.

A D Youd
Director of Resources
8th September 2003

Statement of Accounts Contents

Statement on the System of Internal Financial Control

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