Main Accounting System
Source: data.gov.uk (2018-10-29)

CYC Internal Audit Reports 2017. These reports are presented to the Audit and Governance Committee for consideration, and are also included with the agenda papers for the [relevant meetings](http://democracy.york.gov.uk/ieListMeetings.aspx?CommitteeId=437). 

Reports are also grouped together by calendar year and published at this York Open Data platform. Reports for other years are available at the [__CYC Internal Audit Reports__](https://data.yorkopendata.org/dataset?q=internal+audit&sort=score+desc%2C+metadata_modified+desc) datasets.

1 
  
 
     
 
 
 
 
 
 Main Accounting System  
City of York Council 
Internal Audit Report 2017/18 
 
 
 
 
 
 
Business Unit: Customer and Corporate Services Directorate,  
Responsible Officer: Deputy Chief Executive & Director of Customer & 
Corporate Services 
Service Manager: Corporate Finance & Commercial Procurement Manager 
Date Issued: 5 September 2017 
Status: Final 
Reference: 10120/008.bf 
 
P1 
P2 
P3 
Actions 
0 
0 
3 
Overall Audit Opinion 
High Assurance 

 
2 
  
 
Summary and Overall Conclusions 
 
Introduction 
The Financial Management System (FMS) is the fundamental financial accounting system used by the council. The system records all financial 
activity undertaken by the council. This includes gross expenditure on services, in 15/16, of £392m and total expenditure on capital schemes of 
£41.5m.  
 
The FMS also records all financial decisions made by the council in the form of a budget. The FMS is used to prepare the council’s annual 
accounts, financial returns and for budgetary control. The FMS is made up of Civica Financials, which includes integrated modules for general 
ledger, debtors and creditors, and is integrated to the purchasing system Civica Purchasing.  
 
Objectives and Scope of the Audit 
The purpose of this audit was to provide assurance to management that procedures and controls within the system will ensure that: 
 
• 
Control accounts and bank reconciliations are carried out regularly.  
• 
Transactions are transferred accurately from feeder systems into Civica Financials. 
• 
The integrity and security of the main accounting system is maintained. 
• 
Responsibilities and processes for journal entries and year end processing are appropriately defined and allocated. 
• 
Transactions are accurately valued and allocated correctly within the general ledger. 
 
This audit focussed on the arrangements for the overall governance of the system and the controls and risks related to the general ledger. The 
debtors and creditors (including purchasing) systems are audited as separate entities. 
 
Key Findings 
We found that transactions posted to suspense accounts are investigated and cleared-out promptly. Control accounts have been reconciled for 
each month and there has been a lot of progress made at the year end in clearing out and writing off old balances which have been carried 
forward for several years. Some of the transactions held in the Unidentified Receipts account have been carried forward since 2005/06. 
Accountancy are going to look into these during 2017/18. 
 
Feeders are entered promptly onto the FMS and feeder systems are regularly reconciled to the FMS to confirm that the feeders have correctly 
interfaced. Responsibilities for closedown are clearly defined and well documented.  
 

 
3 
  
 
Access to the FMS is well controlled and there is a limited list of officers who are able to approve access. As highlighted in last year's audit there 
is still a high use of the miscellaneous income code. Last year's audit also highlighted the fact that accountants and finance managers still enter 
and approve their own journals. This was still found to be the case during this year’s audit and remains an area where there is still some debate. 
 
A virement log is now maintained, although when this is completed the virement is not being linked to the authorising evidence as was originally 
intended. 
 
Overall, the majority of controls within the main accounting system were found to be operating effectively. Testing identified 3 small issues which 
have been mentioned above. Whilst these are not fundamental to the functioning of the main accounting system, the issues merit the attention of 
management and an action has been raised for each. 
 
 
 
Overall Conclusions 
It was found that the arrangements for managing risk were very good. An effective control environment appears to be in operation. Our overall 
opinion of the controls within the system at the time of the audit was that they provided High Assurance. 

 
4 
  
 
 
1 Unidentified Receipts 
Issue/Control Weakness 
Risk 
Discrepancies are not resolved as promptly as they might be. 
Unidentified receipts are carried forward in the ledger for 
many years. 
 
Findings 
There was an opening balance in 2016 on the Unidentified Receipts account of £32,929.78 plus £4829.69 in year difference during 2016-17 to 
leave a balance of £37,759.47 at the 2016-17 year end. The individual errors which make up the total have all been identified and listed, of 
which £4270.93 of the total relates back to 2005/06. After 6 years the funds are statute-barred (ie they cannot be reclaimed by the originator).  
 
 
Agreed Action 1.1 
The unidentified receipts will be reviewed annually and if necessary transferred to revenue 
(misc income). The amounts on this account at the year end will be less than 12 months 
old or still being investigated. 
Priority 
3 
Responsible Officer 
Systems Accountant 
Timescale 
31 January 2018 
 
 

 
5 
  
 
 
2 Evidence of virement approval is not being retained in accordance with policy 
Issue/Control Weakness 
Risk 
Evidence of virement authorisation is not readily available. 
Virements are completed inappropriately. 
Findings 
The Virement Policy (updated Jan 2016) states: 
"each finance team is asked to keep a log on a simple excel spreadsheet saved to the central directory...listing the virements posted, the 
approval level required and the approver, whether they are part of a bulk upload or an online virement. A link/attachment can then be added to 
provide evidence where applicable. A folder will be created to save the upload files and emails/screen prints etc and a hyperlink added to the 
spreadsheet to link to these documents." 
 
The majority of the virements listed on the virement logs were either for less than £100,000 or where the virement was for more than £100,000, 
were for things that do not require authorisation. e.g. pay award and NI allocation, ward budgets transferred from reserves, reallocation of 
budgets within the same service area. These are accounting adjustment items rather than virements. 
Where virements had been entered which needed authorisation, reference was sometimes made on the virement log to the CMT paper or the 
authorising officer for some of the virements. For the majority of virements however the staff completing the virement logs were not saving 
approval evidence for the virement in the folders that have been set up. 
 
Agreed Action 2.1 
The teams will be reminded to save the virement authorisation with the virement log. 
Priority 
3 
Responsible Officer 
Systems Accountant 
Timescale 
30 September 2017 
 
 

 
6 
  
 
 
3 Value of income posted to miscellaneous income codes 
Issue/Control Weakness 
Risk 
Generic ledger codes are used inappropriately where a more appropriate 
existing code could be used. 
Inaccurate recording of income leading to inaccurate budget 
monitoring. 
 
Findings 
The use of the miscellaneous income code has been highlighted in the previous two audits. Little progress has been made in limiting the usage 
of the code. During 2016-17 £555k of income has been coded here. In 2014-15 this figure was £750k and in 2015-16 it was £579k. It had been 
the intention of the corporate finance team to focus on the usage of these miscellaneous codes and keep the use of them under review. 
 
 
Agreed Action 3.1 
Usage of the miscellaneous income code will be monitored on a quarterly basis and 
alternative codes suggested. New descriptive codes will be created where necessary. 
Priority 
3 
Responsible Officer 
Systems Accountant 
Timescale 
30 September 2017 
 
 

 
7 
  
 
Annex 1 
Audit Opinions and Priorities for Actions 
Audit Opinions 
Audit work is based on sampling transactions to test the operation of systems. It cannot guarantee the elimination of fraud or 
error. Our opinion is based on the risks we identify at the time of the audit. 
 
Our overall audit opinion is based on 5 grades of opinion, as set out below. 
 
Opinion 
Assessment of internal control 
High Assurance 
Overall, very good management of risk. An effective control environment appears to be in operation. 
Substantial 
Assurance 
Overall, good management of risk with few weaknesses identified.  An effective control environment is in 
operation but there is scope for further improvement in the areas identified. 
Reasonable 
Assurance 
Overall, satisfactory management of risk with a number of weaknesses identified.  An acceptable control 
environment is in operation but there are a number of improvements that could be made. 
Limited Assurance 
Overall, poor management of risk with significant control weaknesses in key areas and major 
improvements required before an effective control environment will be in operation. 
No Assurance 
Overall, there is a fundamental failure in control and risks are not being effectively managed.  A number of 
key areas require substantial improvement to protect the system from error and abuse. 
 
Priorities for Actions 
Priority 1 
A fundamental system weakness, which presents unacceptable risk to the system objectives and requires urgent 
attention by management. 
Priority 2 
A significant system weakness, whose impact or frequency presents risks to the system objectives, which needs to 
be addressed by management. 
Priority 3 
The system objectives are not exposed to significant risk, but the issue merits attention by management. 
 

 
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