Internal Audit Report - Bank Reconciliation

Detailed FindingsOBJECTIVE 1 – COUNCIL BANK ACCOUNTS ARE RECONCILED ACCURATELY AND ON A TIMELY BASIS1.1 The Accountant is responsible for reconciling the Council’s bank accounts with theMain Accounting System and relevant feeder systems.The auditor verified that the details on the General Bank Account statements had beenreconciled to the respective systems, which include:- Council Tax and National Non-Domestic Rates- Mortgages- Sundry Debtors- Miscellaneous Income- QELC Income- Giro AccountsTesting was undertaken on the source documentation for the figures used for thereconciliation in November 2001. No errors were found and the accounts were reconciled.OBJECTIVE 2 – BANK RECONCILIATION PROCEDURES ARE CLEARLY DEFINED AND DOCUMENTED2.1 The Accountant has completed the procedure notes on the reconciliation of theGeneral Bank Account. However, in order for the General Bank Account to be accuratelyreconciled, the Drawings Account must also be accurately reconciled and as yet, noprocedure notes have been produced for this reconciliation.It is the auditor’s opinion that if the procedure notes for the Drawings Accounts arecompleted, reference could be made to ensure the continued efficient running of the bankreconciliation function in the event of sickness or long term absence.It is recommended that the procedure notes for the Drawings Account Reconciliation are completedfor the purposes of sickness or long term absence.2.2 It was further found that the Accountant is the only member of the Accountancy Teamthat knows how to reconcile the bank accounts in their entirety.There were staff changes in the Accountancy Section during July 2001, which resulted in adelay in training an additional member of staff.It is the auditor’s opinion that at least two members of staff should have a working knowledgeof the bank reconciliation system.It is recommended that a further member of the Accountancy Team is trained in order thatthey can complete the bank reconciliation without assistance from the Accountant.2.3 In their 2001 Annual Report, District Audit raised concern over the amount of chequesthat were six months old and had been included in the balance sheet.The auditor reviewed cheques that were over six months old on the November 2001 bankreconciliation. Testing highlighted eight cheques totalling £2,410.21.On a regular basis, the Accountant issues the relevant Section e.g. Council Tax, NNDR etc,a list of cheques over six months old. It is then the responsibility of the Section to cancelthese cheques on their relevant system.61