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Report 16 of the 29 May 02 meeting of the Finance, Planning and Best Value Committee and discusses completion of outstanding work on Financial Instructions, and amendments now required to Financial Regulations.

Warning: This is archived material and may be out of date. The Metropolitan Police Authority has been replaced by the Mayor's Office for Policing and Crime (MOPC).

See the MOPC website for further information.

Financial regulations and financial instructions

Report: 16
Date: 29 May 2002
By: Commissioner

Summary

This report informs Members of the completion of outstanding work on Financial Instructions. It also reports on a review which has also been undertaken of amendments now required to Financial Regulations.

A. Recommendations

That members:

  1. consider the proposed amendments to Financial Regulations as set out in paragraph 4 and Appendix 1 (see Supporting material) and recommends adoption by the Full Authority.
  2. note the completion of the Financial Instructions and their proposed dissemination within the MPS;

B. Supporting information

Introduction

1. At its meeting on 21 February 2002 this Committee approved the financial management strategy for taking forward improvements in the Authority's financial management and for monitoring progress. The Action Plan agreed at that meeting included the target of reviewing and updating the detailed Financial Instructions which need to operate below the level of the Authority's Financial Regulations.

2. Financial Regulations are a key element in the financial control framework within which the financial management of the Authority and MPS takes place. They sit within a hierarchy of documents, which set out the governance arrangements in relation to finance, as follows:

  • Standing Orders Approved by the Authority
  • Contract Regulations Approved by the Authority
  • Financial Regulations Approved by the Authority
  • Schemes of Delegation Approved by the Authority/Commissioner
  • Financial Instructions Approved by the Treasurer/Commissioner

Financial regulations

3. There are three areas where it is appropriate to recommend to the Full Authority that Financial Regulations be amended. These changes reflect the experience of the MPA's operation since July 2000. They are (a) revenue budget virement, (b) the approval and management of the capital programme and (c) role of internal and external audit

4. It is proposed that the following amendments, together with those set out in Appendix 1 (see Supporting material), be recommended to the Authority:

Paragraph Reference Proposed Change Comment
Roles and Responsibilities: Director of Resources Add new bullet point
  • facilitate internal audit's working relationship with the MPS.
 Expresses an agreed responsibility.
Roles and Responsibilities: Internal Audit Replace existing summary with: Internal Audit is an independent, objective assurance and consulting activity designed to add value and help improve the effectiveness of MPS operations and fulfilment of MPA responsibilities. It enables the MPA and MPS to accomplish their objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.  Revision based on role description established by the Institute of Internal Auditors.
1. Budgeting and Financial Planning – Annual Revenue Budget. Delete last sentence in paragraph 9, which reads…Expenditure in excess of £1million on a significant change of policy must be the subject of separate approval by the Authority.
Replace with… FPBV Committee will approve budget virements over £1 million. Virements below £1 million will be reported to members through the budget monitoring mechanism. Budget virements should only be made when permanent shifts of priorities or resources are planned. 		 This amendment incorporates arrangements already agreed by the Authority. There is an additional provision, on a temporary basis for 2002/03, that proposed virements above £0.5 million should be notified to the Treasurer.
13. Audit- External Audit New sub paragraph 15. The Commissioner will have responsibility for identifying and leading implementation of recommendations from External Audit Reviews. The Treasurer will report progress in implementation to the Audit Panel. Clarifies responsibilities

5. Appendix 1 (see Supporting material) sets out a revised section on capital budgeting. The present Financial Regulations were based on a misinterpretation of the role of the Mayor's annual capital spending plan in the approval of the Authority's capital programme. They also make no reference to the five year capital programme. The amendments also incorporate delegated arrangements already agreed by the Authority.

6. Appendix 1 (see Supporting material) also provides a revised section on internal audit. This should be read with the amendments to roles and responsibilities in relationship to internal audit set out in paragraph 4 above. The amendments primarily reflect points made by the District Auditor in his review of internal audit last year.

7. Financial Regulations have to be approved by the Authority and it is proposed, subject to the views of the Committee, to provide a fully revised version to the Authority's meeting in June. This will incorporate the changes set out in this report as well as minor amendments such as changing 'Audit Committee' to 'Audit Panel'.

Financial instructions

8. Financial Regulations specify that Financial Instructions will be prepared and issued by the Treasurer and Director of Resources for the purpose of providing more detailed regulation of accounting procedures, records and operational guidance on financial systems and procedures. This has now been done and the Financial Instructions have now been agreed. They set out officer responsibilities for financial administration in the Service and must be read in conjunction with Financial Regulations, which were approved by the Authority in June 2000, subject to the proposed amendments above. Appendix 2 provides a list of headings to give members an indication of the coverage of the Instructions.

9. Many of the instructions mirror reasonably closely current arrangements. There are areas where new obligations have been identified, requiring new instructions to be prepared. An impact analysis has been prepared which has charted the changes that are required from the existing arrangements. and there are a number of actions still required at a lower subsidiary level which are continuing to be progressed. The impact analysis has identified requirements and apportioned responsibilities.

Implementation

10. The Financial Instructions have been presented to the MPS Management Board and received its approval. They have been approved by the Treasurer on behalf of the Authority. They now need to be communicated to a wider audience. The Director of Resources has advised that the proposed programme will include:

  • Launch event to MPS managers
  • Printing and distribution of Instructions and Devolution framework
  • Load on the intranet
  • Organise and deliver training where required
  • Set effective start dates

C. Financial implications

There are no direct financial implications of this report other than additional costs for printing, training etc which will be contained within existing budgets.

D. Background papers

Financial Instructions and Financial Regulations.

E. Contact details

Report author: Ken Hunt, Deputy Treasurer, MPA.

For information contact:

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

Appendix 2: Metropolitan Police Service - Financial Instructions

Index

  1. Introduction
  2. Definitions
  3. Financial administration
  4. Financial advice
  5. Financial planning
  6. Annual revenue budget preparation
  7. Budgetary control
  8. Accounts and accounting systems
  9. Capital budget and expenditure
  10. Private Finance Initiative
  11. Partnerships
  12. Borrowings, investments and financing
  13. Fixed assets
  14. Inventories
  15. Stocks and stores
  16. Security of assets
  17. Risk management
  18. Insurance and Settlement of compensation claims
  19. Banking arrangements
  20. Imprest accounts
  21. Divisional Accounts
  22. Controlled stationery
  23. Income arrangements
  24. Write off of unrecoverable debts
  25. Internal Audit and internal control
  26. Orders for works, goods and services
  27. Payment of accounts
  28. Taxation
  29. Payment of salaries, wages and pensions
  30. Retention of financial records and documents
  31. Voluntary unofficial funds
  32. Sponsorship
  33. Grants to voluntary organisations
  34. Gifts and hospitality

Supporting material

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