Internal Audit. Internal Audit Report. Debtors

Transcription

1 Report Debtors Ann Kirk Assistant Auditor 22 nd March 2012

2 Contents Audit: Auditor: Ann Kirk If viewing on-screen, please click on the links below or use the scrolling arrows 1 Introduction Scope Findings Conclusion Action Plan...9 2

3 1 Introduction 1.1 The Exchequer function is responsible for producing the majority of invoices for the council to the debtors in addition for collecting the debt owed. A small number of other services continue to raise their own invoices. 1.2 The exchequer service produce invoices for a diverse range of goods and services from the rental of careline alarms to the hire of the Westgate sports hall. 1.3 Customers can pay for their debt by Direct Debit if a repeated bill, by telephone to Exchequer, post, via the internet, bank or giro, or BACs if from a business. 3

4 2 Scope 2.1 This audit reviewed the process and procedures in place for debtors and only looked at the exchequer service s responsibilities. The recovery of debt will be reviewed within the Debt Recovery audit later this year. 4

5 3 Findings 3.1 The Exchequer team was formed in combining individuals from both Payables (creditors) and Customer Accounts (debtors). Procedure notes ensure that there is continuation and consistency in the service for debtor responsibilities and these can be found on the services system drive. Two employees came from Customer Accounts while one came from Payables. Training requirements are currently being completed. 3.2 Budget Managers are responsible for managing income and any outstanding debt within their service. The Managers Toolkit informs managers of their responsibilities, which include raising, cancelling and writing-off income and recovering debt from customers. To facilitate these responsibilities managers are provided automatically with an outstanding monthly debt report. 3.3 Invoices raised by Exchequer require documentation to show why the invoice is to be raised; this is in the form of an invoice request form. For a complete audit trail, the invoice request form includes the name of the authorising officer. Testing found that while the authorising officer s name was typed at the top of the form the authorised signature was not always completed due to the forms being sent electronically. advises that in these cases the individuals who sent the requests, their name is recorded on the Invoice Request Form if different from that on the form. 3.4 Invoice request forms are sequentially numbered by the service which is recorded by Exchequer. Testing identified that where a service raised an invoice request for an invoice was subsequently produced. 3.5 In some cases the service may request an invoice to be raised for a new customer. All new customers are checked by Exchequer to ensure that they do not already exist before entering them onto the Council s Financial System. checked a sample of customers and found from the sample taken there were no duplicates. 3.6 All invoices are put onto the system by one member of the Exchequer Team these are checked for accuracy by an independent officer before they are printed. Checks include the name, address, amount and VAT. Once checked a record is maintained on the Invoice Request Form which testing found to have been completed. 3.7 If an invoice is raised in error it can be cancelled. The service responsible for the invoice has to complete a cancellation form which has to be signed by the authorising manager. Testing found in a sample of cases the cancellation form had not always included the authorising managers name. recommends that these are returned to the relevant service before the cancellation is processed. 5

6 3.8 Where an invoice is amended the authorisation process that a written request needs to be made by the officer within the service. All requests are scanned onto the council s document imaging system and from the sample of testing all requests had been in writing and the changes had been made. 3.9 It is the responsibility of the service raising the invoice to ensure that the cost and account code is correct, however, any errors should be picked up during the reconciliation process undertaken by the service and, or the budget reports provided to managers on a monthly basis Reminders for unpaid invoices are sent out 21 days after the invoice is due and a second reminder is sent out 21 days after that. There are times when reminders may not be sent out which is when an account has been put on hold. A circumstance where this arises is when there is a query on the account or it has been agreed that the customer can pay by instalments. Testing found that in these situations the account information is put into a suppressions file held within the Exchequer Team. Procedures state that this file is to be reviewed monthly which in the past has been complied with. Recently due to sickness this has not always been possible however, Internal Audit found that the suppressions had been carried out according to the councils guidance The back of the invoice provides information to the customer on how they can settle their bill. The council s options include, direct debit, telephone, post or via the internet The debtor report is sent to appropriate officers on a monthly basis which include instructions on what they are to do with the information supplied. These include annotating the report with their instructions on the current situation of the debt, for example, debt pursued, held while enquiries are made or cancelled. confirmed that these reports were being sent out monthly, to enable action to be reported and taken by the service. Debt recovery action will be reviewed as part of the Debt Recovery Audit to be undertaken this year 3.13 It is good practice that invoices are raised as soon as possible after the service has been supplied to ensure debt is recovered quickly and efficiently. Testing on a sample of invoice request forms found that invoices were raised on a timely basis, usually before the service has been provided Unallocated payments are put into the council s debtor suspense account which is reviewed by the Cashiers. Testing found that there was only one outstanding item in the account The council s debt recovery procedures require debts over 90 days to be referred to legal this element will be reviewed in more detail within the Debt Recovery audit. However, testing found that before write off each account tested had received two reminders and that when the write off was undertaken it was charged against the correct service. 6

7 4 Conclusion 4.1 is satisfied with the way that this service is run. One recommendation has been made to strengthen the controls already in place which can be found in the Action Plan below 7

8 5 Action Plan Recommendation Officer Priority Agreed? Comments Implementation Date 3.7 That Exchequer return any invoice cancellation forms that are not completed in full including the manager authorisation Exchequer Medium Yes High = Fundamental System Weakness Action is Essential Medium = Potential Control Weakness Action Required Low = Advised for Best Practice 8