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Statement on the System of Internal Financial
Control
This statement is given in respect of the House
of Commons Refreshment Department Trading Account. As Accounting
Officers for the Trading Account, we have responsibility for ensuring
that an effective system of internal financial control is maintained
and operated in connection with the resources concerned.
The system of internal financial control can
provide only reasonable and not absolute assurance that assets
are safeguarded, transactions authorised and properly recorded
and that material errors or irregularities are either prevented
or would be detected within a timely period.
The system of internal financial control is
based on a framework of regular management information, financial
regulations of the House of Commons, administrative procedures
including segregation of duties and a system of delegation and
accountability. In particular, it includes:
| — | Appropriate budgeting systems: an
annual budget for sales and expenditure, including expenditure
on fixed assets, which is reviewed and agreed by the Senior Management
of the Refreshment Department and the House of Commons Commission; |
| — | Regular reviews by the Senior Management
of the Refreshment Department of periodic and annual financial
reports which indicate financial performance against budgets; |
| — | A target surplus on Trading Account
operations agreed by the House of Commons Commission at 5 per
cent of turnover supported by a range of internally set performance
measures; |
| — | Clear guidelines for capital investment
in assets borne by the Refreshment Department Trading Account,
which are confined to computers and other moveable items of operating
equipment; |
| — | As appropriate, project management
disciplines. |
The control processes in place as described
above are considered appropriate for the trading activities and
projects accounted for on the Refreshment Department account.
The House of Commons Internal audit unit operates
to standards defined in the Government Internal Audit Manual.
The work of the internal audit unit, whose remit covers the Refreshment
Department Trading Account, is informed by an analysis of the
risk to which the Department is exposed and annual internal audit
plans are based on this analysis. The analysis of risk and the
internal audit plans are approved by the Clerk of the House of
Commons, as Accounting Officer and endorsed by the House of Commons
Finance and Services Select Committee. The Committee acts as the
audit committee for the Votes of the House of Commons Commission
and for the Refreshment Department Trading Account. During 1998-99,
there was no audit coverage by internal audit in relation to the
Refreshment Department Trading Account.
Our review of the effectiveness of the system
of internal financial control is informed by the work of the senior
managers within the Department who have responsibility for the
development and maintenance of the financial control framework
and comments made by the external auditors in their management
letter and other reports.
The internal audit programme of work during
1998-99 was based on a judgmental, not a methodical assessment
of risk. Internal Audit are addressing this weakness with a view
to introducing a system of control risk self assessment covering
all financial systems within the House of Commons, including those
processing transactions reported currently in the Refreshment
Department Trading Account, by summer recess 2000. It is expected
that the Financial accounts, and thus the statement of internal
financial control, for the Refreshment Department Trading Account
will be incorporated into the House of Commons Resource Account
for 1999-2000.
William McKay
Clerk of the House of Commons
(Accounting Officer)
2 July 1999
| Susan Harrison
Director of Catering Services
(Additional Accounting Officer)
2 July 1999
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