Financial Risk Assessment

Financial Risk Assessment

Adopted by Council: 28th September 2021

Review Date: September 2022

Financial Risk Assessment
Risk Area Risk Identified Mitigation Notes
To provide and maintain standards for Town Council services to the residents of Crewe The risk of legislative change which will have an impact on the Town Council’s powers, duties and funding Town Clerk and staff keep appraised of developments GDPR Training carried out 2020/2021
The protection of physical assets owned by the Town Council including buildings and equipment (loss or damage) All physical assets insured

All assets checked regularly

Electronic asset management system in place linked to RBS finance system
The risk of damage to third party property or individuals as a consequence of the Town council providing services (public liability) Public liability Insurance renewed annually Risk assessments are regularly carried out
Insufficient staff or other resources to deliver the service needs Staff have general awareness of other team members’ essential tasks and can provide cover when required.

Town Clerk to formally monitor and review staff and work levels. Any concerns regarding this to then be brought to Personnel Committee / Council

To provide a safe and fulfilling working environment for staff Employees contravene Health and Safety Regulations Health and Safety and First Aid training, insurance, Risk Assessments regularly checked and updated Staff trained in Health and Safety and First Aid

Supported and underwritten by Wirehouse Employer Services

Potential legal proceedings up to corporate manslaughter Employers Liability insurance Employee training and awareness
Staff retention issues Staff training where appropriate
To maintain financial records that are correct and comply with all recommended accounting practice Adverse audit reports, legal action and loss of confidence in Town Council

Loss of income through error or fraud

Clerk keeps up to date with legislative changes, discusses latest requirements with internal and external auditors

Fidelity Guarantee Insurance in place

Town Clerk continually review controls and current procedures

Internal audit review recommendations actioned
To ensure that all actions taken by the Town Council comply with all current Legislation Non-compliance with legislation or practice Council being

‘Ultra Vires’

Town Clerk to keep up to date with changes in legislation, seek advice from SLCC, ChALC, NALC and others as necessary
Employment Contract Compensation claims from employee for contractual employment defects (including statutory failure) Contracts of employment in place for all staff

Matters relating to staff discussed in confidential session and discussed by Personnel Committee

Town Clerk to keep up to date with employment law and seek HR advice where appropriate

Other policies are also in place

Supported and underwritten by Wirehouse Employer Services
Staff Loss of services of employee By distributing knowledge and roles ensure, so far as reasonably practical, that loss of any one employee does not cause unrecoverable damage to business
Loss of key staff trained in financial systems, process or rules Staffing arranged so that knowledge is distributed between RFO and at least one other staff External Accountancy support in place
Financial Control Inappropriate expenditure made Payments reported to Finance and Governance Committee as well as Council for review and corrective action if necessary

Payments are also reported to each Council meeting

Financial Regulations become out of date with change in technology, regulation or business Council to review financial regulations annually

The Clerk reacts to any changes in legislation or other areas in order to ensure the regulations are fully compliant and also provide a strong framework compatible with Council’s practices

Any amendments required are reported to Finance and Governance Committee for recommendation to Council for adoption

Lack of budgetary overview/overspend against budget Quarterly review of nominal ledger

Monthly review of income and expenditure

Budgets are regularly reviewed by each Committee and also at each Council meeting

Lack of finance to meet unbudgeted, urgent commitments (with safety or other critical implications) Contingency included in budget for unforeseen expenditure

Earmarked Reserves are created for set purposes

General reserves equivalent to at least six months spend are kept

Financial Systems and Records Accounts

 

The RBS Omega accounts system is used which is an accepted accounts package

A back up is carried out by RBS Omega each day which are stored on their main server

Hard copies of the Councils reports are held on file together with bank reconciliation reports, invoices/receipts/payments and cheques issued as well as electronic copies on the Councils server

VAT

The RBS Omega system incorporates a VAT schedule which is an accepted package which allows differentiation between tax rates etc. which is itemised in a full report relating back to the original item within the accounts

VAT returns are lodged to HMRC on a quarterly basis in line with accepted procedures and documentation

Procedures will be provided to HMRC every three/four years for comments and approval

Payroll

 

 

The Clerk authorises any overtime, mileage or special duty payments, on a monthly basis

Hard copies linked to pay roll reports are held on file together with payslips, BACS payments and cheques issued to the pension fund and Inland Revenue

Electronic backups copies are kept on the server

Payments can only be issued for the nominated employees, which must be authorised in advance of the payment

Annual pension and year end payroll returns are issued in a timely manner to the appropriate bodies that inspect the information and highlight any discrepancies

John Greenall and Co Ltd provide payroll services and carry out payroll function
Banking Arrangements and Procedures

 

Banking Security/Access to Finances

Bank accounts Co-operative bank account used for day to day payments

CCLA deposit account is used to reduce the risk of loss of funds in line with treasury management procedures

Funds kept in Council bank accounts are regularly reviewed to ensure they are at a satisfactory level to meet legal requirements and mitigate against loss of business continuity
Transfers Monies may be transferred between the Councils accounts by the Clerk
Bank Reconciliation All accounts are reconciled using the RBS Omega system by the contract accountant

Any discrepancies are immediately reported to the bank for investigation

Separation of Duties The Town Clerk is responsible for the cash security in the Town Council offices
Access to the main bank accounts No one person has access to monies held in the main accounts

All Committee Chairs and the Mayor are named signatories on the Councils bank account as well as Officers who process payments and financial transactions

Cheques and payments All invoices are checked by the Clerk in advance of payment and if related to an order, this has passed through the ordering procedure.

Each payment must be authorised by at least two Councillors who are named signatories on the account. At present, all Committee Chairs and the Mayor are named signatories

A payment list is compiled and circulated to the Councillor signatories on a two weekly basis. Once approved by two signatories, payments are processed using online banking by those Officers who are also named signatories

Access to petty cash accounts The Financial Regulations specify maximum balances to ensure that individuals do not have access to large amounts of money No petty cash system in operation
Payments All payments must be authorised before payments are issued

The RFO is to keep a record that the payments have been authorised. These records are kept both in hard copy format and electronically

Petty Cash – Cash Payments All payments made in cash must be substantiated by an invoice etc. which has been authorised by the Clerk

All payments are reported with a full reconciliation report for sign-off

No petty cash system in operation
Hire Charges Council agree the charges

The Officer must abide by these rates and any requests for preferential rates must be made by the hirer to Council for their approval

All bookings must be paid for in advance to avoid bad debts other block bookers are invoiced or given the option of paying the sites on a weekly basis

Cash collected from community events All cash collected at events is collected by appointed staff and a receipt is always issued (e.g. markets income, square bookings, etc.)

When returned to the office, cash is emptied and counted manually within one working day by at least two members of staff and a record be kept of the amounts received

Processing and banking When the money is received it is balanced within the office against any receipts/invoices and any discrepancies are followed up

When the monies have been balanced, it is input onto the RBS Omega system and all entry references are printed out and retained on file

The hire charges are banked when received

The cash element is usually below £500

A unique pay in reference is applied to each batch of banking which is loaded onto the RBS Omega system which is then checked against the bank reconciliation

This is a strict routine that ensures that any booked hire cannot proceed without receiving the payments and guarantees that all monies are accounted for

 

Financial Administration Records non-compliant or inadequate Advice taken from internal auditor, external auditor, accountant, SLCC and NALC on changes in regulation

The Clerk checks records periodically

Internal auditor reviews record keeping annually

 

Expenditure/income coded incorrectly The Clerk checks nominal ledger on a regular basis

Officers advise where income and expenditure is to be coded when invoices are received for payment

Standing Orders

 

 

The Clerk reacts to any changes in legislation, requests from Town Council or other areas in order to ensure the regulations are fully compliant and also provide a strong framework compatible with Council practices

Any amendments are reported to Council for approval

Standing orders are reviewed and approved by Town Council on an annual basis at the AGM
Non-compliance with statutory deadlines for the completion/approval/submission of accounts and other financial returns Programme of meetings are set out in advance so that statutory deadlines are met
Invoice payment without authority All payments reviewed

Payments must be authorised by at least two Councillors before payments are made

All invoices and approvals to pay are stored are hard copies and electronically

Incoming cash and cheque misappropriation Individual receipts to be issued for all cash payments and for cheque payments on request
Theft of funds Bank statements reconciled monthly, Fidelity Insurance in place against theft of funds by staff, Councillors and other persons

Cash and cheques stored securely and banked within 5 working days of receipt

Incorrect entries by bank Bank statements reconciled monthly by the contract accountant and reviewed by the Clerk
Annual Budget and Precept Calculations The annual budget and precept calculations The annual budget and precept calculations are initially calculated in October/November based upon the performance of the prior year and incorporating projected requirements which have been lodged by Officers and Members

The Clerk also completes a mid-year review in October for the current year to calculate possible year end surpluses which may be incorporated within the future budget. The actual precept level is then calculated from the balance sheet assuming that the remainder of the current year’s budget will be utilised in order to estimate the year end bank balance

The new budgeted income, expenditure and reserves are then set against this balance in order to calculate a budget shortfall on which the future precept is based

The new budget is discussed and fine-tuned throughout the October, November and December Council and Committee meetings after the up to date number of band D properties has been confirmed by CEC. This supports discuss and amendments to any highlighted budget levels in order to best achieve an acceptable precept level

Comprehensive minutes are recorded at each stage to substantiate the budget development

The final budget is approved no later than the beginning of January and CEC is immediately advised of the precept request

Monitoring of Budgets Comprehensive budgets Comprehensive budgets are set for each Committee and these are loaded onto RBS Omega accounts system at the start of the new financial year
Monitoring Ongoing daily expenditures have already been incorporated within the budget and the Clerk monitors invoices, etc. against the budget schedule to confirm that they are within the limits

All orders are checked against the accounts system to verify expenditure within the account code to date and the remaining budget

Any over expenditure is highlighted and brought to the attention of the Clerk

Reporting A full report of expenditures against budget is lodged with council at each Finance and Governance Committee meeting

This incorporates a print out of the income and expenditure against each annual budget and the cashbook extract

Any that do not meet the budget levels are highlighted to Members if needed along with committed expenditure

Insurable Risks Public Liability Insurance cover

In addition, weekly, annual checks of play equipment

Limit of cover £12,000,000

Reviewed annually

Employers Liability Insurance cover Limit cover £10,000,000

Reviewed annually

Theft of money by third party Insurance cover Cover varies depending on the situation

Reviewed annually

Theft of money by employee or member Fidelity Guarantee cover Limit of cover £2,000,000
Property Cover for buildings and contents All risks cover for selected items
Officials Indemnity Continue with existing cover (£250k)
Libel and Slander Continued existing cover (£250k) Limit of cover £250,000
Personal Accident Continue with existing cover (scale benefits) Limit of cover £2,000,000
Legal disputes Cover for specified legal disputes Limit of cover £100,000
Long term sickness of employee Liability limited by contract

Sickness is monitored by the Clerk

Business interruption Potential alternative premises, IT back-up off site and ability to restore onto hired equipment, etc.

Cover in place for excess costs

Limit of cover £50,000
Loss/destruction of financial records Key financial data held electronically and backed up off site

All electronic documents backed up daily offsite by the Councils IT provider

Residual risk considered acceptable
Loss of Records Loss of documentation Deeds and other legal documents relating to real estate stored in the office
 

 

 

 

 

Asset List

 

 

 

 

 

Purchased

An asset list is maintained by the Town Council Office on RBS System

This is updated throughout the year from new assets which are in addition, a schedule of road furniture/bins/dog bins/bus shelters play area equipment etc., will be kept on a secondary list

The asset list is circulated to staff on an annual basis to ensure that all items are correct

An annual assessment is carried out by the Clerk relating to the value of items listed on the asset register

Internal Audit Internal Audit The Internal Auditor is approved annually by Council

The Internal Auditor carries out at least on internal audit each financial year

The report is presented to Council for acceptance

The Councils Internal Auditor is JDH Business Services
Annual Audit Annual Audit The annual auditor is appointed and directs the format and structure of the audit in line with current legislation and requirements

Audit costs and levels of requirement are determined by government legislation based upon the annual income or expenditure levels

The Clerk completes the year end accounts to audit trial level and prepares any additional reports required by the external auditor

The Clerk presents the completed Annual Return, Financial Statement and other documentation required to Council in line with the timescales provided by the external auditor

Once these have been formally adopted and signed by Council, they are lodged with external auditors

Any queries raised by the auditors are dealt with by the Clerk in the first instance

Final sign-off by the external auditor is presented to Council

Insurance Fidelity Insurance Fidelity insurance levels have been set after taking into account the possibility of fraudulent activities gaining access to the bank accounts

Procedures in place (as previously detailed) have been established incorporating separation of duties, cross referenced receipts of income

These provisions have ensured that no individual is able to gain access to withdraw funds without due process

£2,000,000
Insurance Annual reviews are carried out to ensure sufficient cover is in place

Annual insurance policies are approved by Council

Zurich are the Councils Insurance provider
ICT IT Security, safety of information/risk of loss of data Microsoft Office 365 is installed on all PCs Allows and daily back ups are carried out by the Councils IT provider offsite

Reviews of this document and the information contained are carried out on a annual basis.

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