Statement of internal control

Report: 9
Date: 19 June 2006
By: Treasurer and Commissioner

Summary

The MPA has been required to include a Statement of Internal Control in its financial statements since 2003/04, including details of the system of internal control and risk management, the key controls, and how effectively they are being deployed, highlighting any significant internal control issues and the relevant actions being taken to address them. This report provides details of the statement of internal control to be included in the statement of accounts for 2005/06, and details of the MPS’s statement of internal control.

A. Recommendation

That

1. members note the latest draft of the MPS Statement of Internal Control for 2005/06; and
2. agree the MPA Statement of Internal Control to be included in the statement of accounts for 2005/06.

B. Supporting information

Statement of internal control

1. In accordance with the Accounts and Audit Regulations, 2003 there is a statutory obligation on the MPA to publish a Statement of Internal Control (SIC) in the annual accounts setting out details of the MPA/MPS system of internal control and risk management, the key controls and how effectively they are being deployed.

2. The Authority is also responsible for ensuring that there is a sound system of internal control which facilitates the effective exercise of the Authority’s functions and which includes arrangements for the management of risk. In exercising this responsibility, the Authority places reliance on the Commissioner to support the internal control and risk management process as the majority of the MPA’s controls are deployed within the MPS. Hence in exercising its statutory responsibilities under the regulations, the Authority places reliance on the commissioner to deploy, maintain and monitor internal control and risk management processes.

3. The MPS have evidenced these controls through the production of it’s own SIC, which is signed by the Commissioner. This has then been consolidated with the MPA’s own SIC to produce an overarching statement for inclusion in the statement of accounts. Copies of both the MPA and the MPS statement of internal control (MPS still in final draft version – awaiting Commissioner sign-off) are attached at Appendix 1 and 2 respectively, a summary is provided below.

Internal Control Environment

4. The MPA Statement of Internal Control has identified 11 elements as being key to the internal control environment, are indicated below, details of how each element support the internal control environment are provided in the appended statements.

• Facilitating effective strategy policy and decision making
• Establishing and monitoring the achievement of objectives to ensure that high quality services are delivered efficiently and effectively
• Ensuring compliance with statutory obligations, laws, regulations, guidance and established policies and procedures
• Management of change processes
• Identifying, assessing and managing the key risks to the Authority’s services
• Minimising disruption to the Authority’s business as usual
• Ensuring effective corporate financial management and reporting thereof
• Ensuring economical, effective, efficient and safe use of resources
• Ensuring the Authority’s information is trusted, accessible and useable
• Working for and with the community to promote its well being, exercising leadership as necessary
• Defining, communicating and monitoring professional standards
• Defining, communicating and monitoring standards of individual performance expected of all personnel

Review of effectiveness

5. The MPA has responsibility for carrying out a review (at least annually) of the effectiveness of the system of internal control. This is undertaken by the Director of Internal Audit, who taking into account the work of internal audit, other MPA officers, external auditors and other review agencies. For 2005/06 an assurance score of 3.3 has been given, this is a slight reduction on the 2004/05 score of 3.4.

Significant issues

6. The MPS have identified 11 issues for 2005/06. These relate to the following issues:

• The intelligence strategy, MMP and change programmes
• Policies and procedures
• Business planning
• Performance
• Corporate Governance
• Risk management
• Business continuity
• Community
• Information management
• Financial management
• People management

7. Taking into account the significant issues identified by the MPS, and work being undertaken by the MPA, five significant issues have been included in the MPA’s statement of internal control. These relate to the following issues:

• Corporate Governance
• Contract regulations
• Internal Control
• Resource and financial planning
• Risk management

Further details of these and the actions being taken to address them are included in the Statement of Internal Control.

8. Progress in addressing the significant issues identified in 2004/05 is also included in the appended statements. Progress in addressing issues identified in 2005/06 will be reported to Corporate Governance Committee on a quarterly basis.

C. Race and equality impact

The MPA will ensure that equality and diversity issues are fully considered in completing the SIC.

D. Financial implications

A sound system of internal control is vital in ensuring that financial management is effective

E. Background papers

• Statement of internal control – interim report

F. Contact details

Report author: Annabel Adams, Deputy Treasurer, MPA

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Send an e-mail linking to this page

Feedback