The Accounts and Audit (England) Regulations 2011

PART 2Financial management and internal control

Responsibility for financial management

4.—(1) The relevant body is responsible for ensuring that the financial management of the body is adequate and effective and that the body has a sound system of internal control which facilitates the effective exercise of that body’s functions and which includes arrangements for the management of risk.

(2) The relevant body must conduct a review at least once in a year of the effectiveness of its system of internal control.

(3) The findings of the review referred to in paragraph (2) must be considered—

(a)in the case of a larger relevant body, by the members of the body meeting as a whole or by a committee, and

(b)in the case of a smaller relevant body, by the members of the body meeting as a whole, and

following the review, the body or committee must approve an annual governance statement, prepared in accordance with proper practices in relation to internal control.

(4) The relevant body must ensure that the statement referred to in paragraph (3) accompanies—

(a)any statement of accounts it is obliged to prepare in accordance with regulation 7, or

(b)any accounting statement it is obliged to prepare in accordance with regulation 12.

Accounting records and control systems

5.—(1) Subject to paragraphs (2) and (4), and, in so far as they are not in conflict with this paragraph, to any instructions given by a relevant body to its responsible financial officer, that officer must determine, on behalf of the body, its—

(a)accounting records, including the form of accounts and supporting accounting records; and

(b)accounting control systems,

and such an officer must ensure that the accounting control systems determined by that officer are observed and that the accounting records of the body are kept up to date.

(2) The accounting records determined in accordance with paragraph (1)(a) must be sufficient to show and explain a relevant body’s transactions and to enable the responsible financial officer to ensure that any statement of accounts or accounting statement which are prepared under these Regulations, comply with these Regulations.

(3) The accounting records determined in accordance with paragraph (1)(a) must in particular contain—

(a)entries from day to day of all sums of money received and expended by the body and the matters to which the income and expenditure or receipts and payments account relate;

(b)a record of the assets and liabilities of the body;

(c)a record of income and expenditure of the body in relation to claims made, or to be made, by them for contribution, grant or subsidy from any Minister of the Crown, a body to whom such a Minister may pay sums out of moneys provided by Parliament or an EU institution; and

(d)a record of any approval given for the purposes of paragraph (4)(c).

(4) The accounting control systems determined in accordance with paragraph (1)(b) must include—

(a)measures—

(i)to ensure that the financial transactions of the body are recorded as soon as, and as accurately as, reasonably practicable;

(ii)to enable the prevention and detection of inaccuracies and fraud, and the reconstitution of any lost records; and

(iii)to ensure that risk is appropriately managed;

(b)identification of the duties of officers dealing with financial transactions and division of responsibilities of those officers in relation to significant transactions; and

(c)procedures to ensure that uncollectable amounts, including bad debts, are not written off except with the approval of the responsible financial officer, or such member of that officer’s staff as is nominated by that officer for this purpose.

Internal audit

6.—(1) A relevant body must undertake an adequate and effective internal audit of its accounting records and of its system of internal control in accordance with the proper practices in relation to internal control.

(2) Any officer or member of a relevant body must, if the body requires—

(a)make available such documents and records as appear to that body to be necessary for the purposes of the audit; and

(b)supply the body with such information and explanation as that body considers necessary for that purpose.

(3) A larger relevant body must, at least once in each year, conduct a review of the effectiveness of its internal audit.

(4) The findings of the review referred to in paragraph (3) must be considered, as part of the consideration of the system of internal control referred to in regulation 4(3), by the committee or body referred to in that paragraph.