YO018 Annual Audit Letter
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YO018 Annual Audit Letter

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audit 2003/2004 Annual Audit Letter West Yorkshire Police Authority INSIDE THIS LETTER PAGES 2 – 9 • The purpose of this letter • Background to our audit • Key messages • Audit objectives • Financial aspects of corporate governance • Performance management • Accounts • Grants • Conclusion • Closing remarks PAGES 10 – 11 Appendices • Appendix 1 – Reports issued during 2003/04 Audit • Appendix 2 – Audit fee Reference: YO018 Annual Audit Letter Date: November 2004 audit 2003/2004 ANNUAL AUDIT LETTER In addition, the first ‘baseline assessment’ of the force by HMIC, published in April 2004, found The purpose of this letter that the Authority has a number of challenges to meet to ensure performance meets and This annual audit letter to Members summarises continues to maintain standards expected by the significant issues and conclusions from our government and the communities of West 2003/04 audit, together with our comments on Yorkshire. other current issues. The letter includes the work undertaken by both the Audit Commission, your external auditors for 2003/04, and PricewaterhouseCoopers (PWC) your new Key messages external auditors for 2004/05. More detail can be found in the separate reports Financial aspects of corporate we have issued this year, listed in Appendix 1 for information. These reports are discussed and governance agreed with officers and presented to the ...

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audit 2003/2004


Annual Audit Letter
West Yorkshire Police
Authority
INSIDE THIS LETTER
PAGES 2 – 9
• The purpose of this letter
• Background to our audit
• Key messages
• Audit objectives
• Financial aspects of corporate governance
• Performance management
• Accounts
• Grants
• Conclusion
• Closing remarks
PAGES 10 – 11
Appendices
• Appendix 1 – Reports issued during 2003/04
Audit
• Appendix 2 – Audit fee



















Reference: YO018 Annual Audit Letter
Date: November 2004
audit 2003/2004 ANNUAL AUDIT LETTER
In addition, the first ‘baseline assessment’ of the
force by HMIC, published in April 2004, found
The purpose of this letter that the Authority has a number of challenges to
meet to ensure performance meets and
This annual audit letter to Members summarises continues to maintain standards expected by
the significant issues and conclusions from our government and the communities of West
2003/04 audit, together with our comments on Yorkshire.
other current issues. The letter includes the
work undertaken by both the Audit Commission,
your external auditors for 2003/04, and
PricewaterhouseCoopers (PWC) your new Key messages
external auditors for 2004/05.
More detail can be found in the separate reports
Financial aspects of corporate we have issued this year, listed in Appendix 1
for information. These reports are discussed and governance
agreed with officers and presented to the
Finance and Audit Committee, usually in Financial standing
summary format.
General reserves have increased significantly in
The Audit Commission has circulated to all the last two years to £15.4 million at the end of
audited bodies a statement that summarises the 2003/04, part of which had been planned. This
key responsibilities of auditors. Our audit has position needs to be monitored carefully to
been conducted in accordance with the principles ensure that the resources available are directed
set out in that statement. What we say about to priority service areas. Action is currently
the results of our audit should be viewed in the being taken to ensure revenue underspends and
context of that more formal background. capital slippage are identified quickly and
re-directed to other priority needs. Appendix 2 provides information about the fee
charged for our audit.
Overall arrangements
Your overall corporate governance arrangements
are satisfactory and there are no significant
Background to our audit issues to bring to your attention. The Authority
has recently adopted a Code of Corporate
The significant issues that West Yorkshire Police
Governance to strengthen arrangements further.
Authority has faced during the year and
The recommendations made last year have been
continues to face include:
satisfactorily addressed with the exception of
• managing revenue and capital underspends developing an ‘anti fraud and corruption policy’.
to ensure available resources are used
effectively in delivering priority services; Performance management
• working to the new Operational Framework,
introduced in June 2003, and the NCRS Audit (PWC)
subsequent changes in the Command Team;
The Force demonstrates a clear commitment to
• the roll out of Airwave; NCRS, evident from the significantly improved
• continuing efforts to reduce and investigate results from last year’s audit. There is an
crime and promote public safety; excellent awareness of the importance of NCRS
across the whole Force. Overall the Force • the increase in new recruits, both police
achieved an ‘Amber’ and is keen to improve officers and police support officers; and
further by addressing the recommendations
• increased partnership working. made.


Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 2
audit 2003/2004 ANNUAL AUDIT LETTER
Financial aspects of corporate
Activity Based costing (ABC) audit (PWC)
governance
There are some weaknesses in the systems and
• How well the Authority manages its processes in place that require management
finances. action although these have not materially
affected the accuracy or reliability of the ABC • Whether the Authority has effective
submission for 2003/04. financial systems and internal controls.
• How the Authority ensures that its financial
Risk management
decisions remain within its legal powers.
The Authority and Force have made significant
• How well the Authority works to stop or find
progress in developing risk management
fraud and corruption.
arrangements, including the appointment of a
risk and insurance manager and producing a risk
Performance management management strategy. It is important that risk
management continues to be embedded • Does the Authority have adequate
throughout the Authority and Force. arrangements to ensure the best use of
the resources at its disposal?
Partnerships
Accounts Considerable progress has been made in
monitoring this complex area since last year. • Opinion.
Further work is required to ensure that sound
governance arrangements are in place for all
partnerships the Force and Authority are
involved in. Financial aspects of
corporate governance Accounts
We plan to give an unqualified opinion on the
Financial standing Authority’s accounts before the statutory
deadline of 30 November 2004. The authority General reserves have increased significantly in
has complied with the new requirements for this the last two years to £15.4 million at the end of
year. 2003/04, part of which had been planned. This
position needs to be monitored carefully to
ensure that the resources available are directed
to priority service areas. Action is currently
Audit objectives being taken to ensure revenue underspends and
capital slippage are identified quickly and
Our main objective as your appointed auditor is
re-directed to other priority needs.
to plan and carry out an audit that meets the
requirements of the Code of Audit Practice. We Revenue
adopt a risk-based approach to planning our
In previous annual audit letters I have raised audit, and our audit work has focused on your
concerns over your low level of general significant risks that are relevant to our audit
reserves, notably following the financial impact responsibilities.
of the Bradford Riots. In contrast, your general
Central to our audit are your corporate
reserves have increased from £8.6 million at the
governance arrangements. Our audit is then
end of 2002/03 to £15.4 million at the end of
structured around the three elements of our
2003/04 (gross expenditure in 2003/04 was
responsibilities as shown below.
£384 million), an increase of £6.8 million. This is
£2.9 million more than estimated in the revised
budget and £6.4 million more than the original
budget (which planned for a £0.4 million
increase in general reserves).

Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 3
audit 2003/2004 ANNUAL AUDIT LETTER
Grants The original budget was revised to take account
of the reduction in the planned number of new The 2003/04 accounts include unapplied grants
recruits, both police officers and police of £16.5 million, comprising:
community support officers, due to being unable
• unused Airwave grant (£5.6 million, see
to access sufficient training places.
above);
The main reasons for the underspend against
• financing of capital slippage to 2004/05
the revised budget (£2.9 million) include:
(£9.3 million); and
• additional (unexpected) special grant from
• unfinanced capital accruals (£0.6 million).
the Home Office in respect of the Bradford
This provides much of the funding for the capital riots (£1 million);
slippage referred to above.
• reduction in police ill-health retirements
(£400K); Systems of internal financial
• reduction in police staff voluntary control
retirements (£500K); and
The overall control framework is satisfactory. • rents and rating revaluations (£700K).
Internal Audit continues to provide a
The 2004/05 budget has been set with a professional and effective function. The
14.9 per cent precept increase and plans for a Authority has recently adopted a Code of
£1.7 million use of general reserves. Close Corporate Governance to strengthen
budget monitoring has already identified a arrangements further.
number of underspends. Prompt action is being
taken to redirect (vire) these underspends to Internal Audit (IA)
other priority areas via a ‘spending pressures
As in previous years, we have been able to place review’ to match underspends to other priority
reliance on the work of IA. IA is very needs.
professionally managed and produces and
undertakes a sound risk based audit approach to Capital
undertaking its role. IA complies with the
Capital expenditure in 2003/04 was professional standards outlined in the CIPFA
£15.4 million against a planned capital budget of Code of Practice and the standard of their work
£24.7 million ie £9.3 million slippage. This provides a sound basis for securing effective
slippage comprises of a large number of small internal control.
schemes and the following major schemes.
It is encouraging to note that the
• Nelson Street (£3 million) – this scheme was recommendation made last year regarding
delayed due to conditions attached to the staffing levels has been addressed through the
planning permission. Police Authority Best Value Review, with the
• Premises improvement fund (£0.75 million) staffing complement increasing from five to six.
– due to delays in being notified of the grant
Joint protocol which was less than expected and therefore
needed re-prioritising, causing additional We have prepared an updated joint protocol
delays and slippage. document setting out how we work with IA to
• Airwave (£1.5 million) – due to national maximise the benefits arising from the audit in
slippage on ‘ready for service’ dates. accordance with the Audit Commission’s
Airwave is now ‘live’ in one division and will ‘Managed Audit’ approach.
be rolled out across the force this year.
Code of Corporate Governance In an effort to minimise future slippage on the
capital programme, a ‘reserve’ programme is Since last year’s annual audit letter, you have
being set to enable other schemes to be ready adopted a ‘Code of Corporate Governance’ in
to use the funding available should slippage line with good practice.
occur on the capital programme.

Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 4
audit 2003/2004 ANNUAL AUDIT LETTER


Standards of financial conduct
Performance management and the prevention and detection
of fraud and corruption The Force demonstrates a clear commitment to
NCRS, evident from the significantly improved The arrangements in place to prevent and detect
results from last year’s audit. There is an fraud and corruption are generally satisfactory.
excellent awareness of the importance of NCRS However, these could be further enhanced
across the whole Force. Overall the Force through the completion and adoption of an ‘anti
achieved an ‘Amber’ and is keen to improve fraud and corruption policy’.
further by addressing the recommendations
made. Overall arrangement
There are some weaknesses in the systems and Overall arrangements for the prevention and
processes in place that require management detection of fraud and corruption are generally
action although these have not materially sound. However, as reported in last year’s
affected the accuracy or reliability of the ABC Annual Audit letter, these could be further
submission for 2003/04. strengthened through producing an ‘anti fraud
and corruption policy’. The Authority and Force have made significant
progress in developing risk management
National fraud initiative arrangements, including the appointment of a
risk and insurance manager and producing a risk In 2002/03 you took part in the Audit
management strategy. It is important that risk Commission’s national fraud initiative (NFI)
management continues to be embedded 2002 whereby data matching was used widely
throughout the Authority and Force. across the public sector to identify
overpayments or transactions that may be Considerable progress has been made in
fraudulent. No matches were identified at WYPA. monitoring this complex area since last year.
Further work is required to ensure that sound This year the Commission are repeating the
governance arrangements are in place for all exercise and the Authority will be asked once
partnerships the Force and Authority are again to submit data from the payroll system for
involved in. comparison against other public sector payrolls,
housing benefit data, pension’s records and
NCRS Audit (PWC) other government databases.
Overall findings Legality of transactions
Overall results for the crime data audit indicate We are satisfied with the Authority’s
a significant improvement on year one, arrangements for ensuring the legality of
particularly in the categories of criminal transactions with financial consequences.
damage, domestic violence, racist incidents and
You have taken steps to address the
disturbances.
recommendations made in last year’s AAL,
The Force has demonstrated a clear commitment notably through producing a ‘Monitoring Officer
to the application of NCRS which appears to protocol’ and a ‘Member/Officer relationship
have cascaded down through the force. There is ’.
an excellent awareness of NCRS within the
divisions as a result of the force’s
on-going programme to communicate the
importance of consistent crime recording and
the implementation of NCRS.

Officers are clearly moving away from the

‘evidential approach’ to crime recording enabling
the application of the ‘balance of probabilities’
that is central to NCRS.

Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 5
audit 2003/2004 ANNUAL AUDIT LETTER
Crime data results
Data quality additional work, Force-wide results for crime data have improved
significantly since the baseline audit with notable violence against the person
improvements in all categories across all BCUs.
Earlier this year the Force asked the Audit There is little disparity in the results between
Commission, via the Police Standards Unit, to the BCUs, with each BCU scoring an ‘amber’.
undertake some additional audit work to This indicates a good level of consistency and an
follow-up the results of the Data Quality work improved awareness of NCRS across the Force.
reported in last year’s Annual Audit Letter. This
Levels of compliance are high with a additional work was targeted, at the Force’s
considerable number of the test one fails (34 per request, on Violence against the person crimes.
cent) being the result of the failure to close The Force was concerned that following the
incidents within a 72 hour period. findings of last year’s data quality audit, which
The results for test five are moderate with the found these crimes to be significantly under
Force scoring six red BCUs and five amber BCUs. recorded, that the force had began to over
There is clearly room for improvement in this record these crimes (the numbers recorded had
area particularly regarding the insufficient increased dramatically). The work was
additional verifiable information used to support undertaken using the same methodology as last
the no-criming of crimes under category B. year. The results, which have been discussed
No-crimes represent a small proportion of with the Deputy Chief Constable and relevant
overall crimes. staff, still indicated an element of under
recording. As this audit only involved a subset of Overall, the data testing results indicate that
all crimes, the full NCRS review (above) there is still room for improvement, notably the
presents a more accurate picture overall. timeliness of closing incident logs and the
evidencing of additional verifiable information to
no-crime crimes under category B. Activity based costing (ABC)
audit (PWC)
Management Arrangements Results
Based on our work performed, we found there
Overall management arrangements were
were no material misstatements within the
assessed as ‘amber’. The Force Crime Registrar
costing data. However, there are concerns over
is fully locked into the workings of the force and
the data quality obtained from the Activity
has established excellent channels for discussing
Sampling exercise. It is clear that there has
issues, resolving problems, and disseminating
been limited training on completing the activity
good practice. The Force Crime Registrar is the
cards, and front line officers are not aware of
Chair of the regional NCRS Group and plays an
the importance of Activity Based Costing and the
active role at a national group level.
requirement for accurate reliable data.
All improvements highlighted for action following
The activity sampling exercise for the 2003/04
the first year audit have been addressed and
return took place in November 2003. Although
fully implemented resulting in a strong
the Force achieved an excellent return rate of
accountability framework for NCRS compliance
99.7 per cent, it has only established limited
where staff know their own responsibilities and
central internal monitoring controls and
to whom they account to for crime recording.
validation checks of the activity cards.
The implementation of the action points has
The Activity Based Costing return was submitted been closely monitored by the Police Authority.
late on 16 August 2004 as a result of problems
encountered with the B Plan software.
Interviews with Finance staff identified that
training on the software did not match their
needs. This is an area that requires further
attention.

Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 6
audit 2003/2004 ANNUAL AUDIT LETTER
Feedback from focus group sessions confirmed The loss of key staff represented a major risk to
that there is little awareness of Activity Based the continuity of service provided by each of the
Costing at local level or the purpose of the corporate functions. Their knowledge and
activity sampling exercise. This is despite the experience is seen as vital to the effective
central distribution of Activity Based Costing running of the operation and is often a unique
information through bulletins and briefing component within a team. While loss of an
sessions. individual may not have a long term impact in
most cases the short term effect could The Force has only established limited central
potentially derail controls for a vital period of internal monitoring controls and validation
time. The development of a wider understanding checks for managing and ensuring the reliability
of the key ingredients in their role, knowledge of the activity sampling are adequate.
and experience would therefore be beneficial.
The Authority saw this mapping exercise as the Risk management
first stage in a wider risk management project,
Our approach to this aspect of the audit, as involving the newly appointed Risk and
agreed with chief officers, focused on producing Insurance Officer. The original action plan
a position statement on the current risk published with the report has subsequently been
management position across a wide range of modified by the Risk and Insurance Officer with
your core activities. This work was undertaken the agreement of the Command Team and it is
jointly with IA. encouraging to see that a number of actions
have already progressed. While the plan Our review found that the fundamental risks
contains specific activities to ‘kick-start’ the within your core activities are managed
project the long term objective should remain to effectively by the corporate teams. There were a
embed risk management within existing number of examples of foreseeable future
business processes – in both business planning change that could have a significant impact on
and performance management arrangements. risk. Encouragingly they had already been
identified by management as important issues This will ensure risk management is not
and should be managed as such over the coming perceived as an additional task but instead a
months. Examples included: beneficial dimension to the management of the
organisation. • new financial systems – window based with
e-business capability (Finance); A draft risk management strategy was presented
to the Police Authority in October 2004. It is • introduction of the new national
recommended that members keep a watching Independent Police Complaints Commission
brief on the progress on embedding risk (Professional Standards);
management throughout the Police Authority • the shift from physical safety risks to the
and Force. psychological risks associated with work,
eg stress (Health & Safety);
Partnerships
• the development of partnerships may entail
a more complex management of risk (All); In last year’s Annual Audit Letter, we
commented on your progress in developing a • expiry of current insurance arrangements in
partnership protocol which focused on 2004 (Insurance); and
governance aspects. Further refinements have
• impending change in leadership of the
now been made and the protocol is being used
Human Resources function (HR).
in practice. Progress has also been made in
developing a partnership’s database.

Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 7
audit 2003/2004 ANNUAL AUDIT LETTER

The second stage of the audit was to take this
forward and to review the governance
Accounts arrangements in two specific partnerships. To
facilitate this we developed a ‘self-assessment’
We plan to give an unqualified opinion on the tool to assess governance arrangements,
Authority’s accounts before the statutory structured so that common themes could be
deadline of 30 November 2004. The authority identified. This approach has been presented to
has complied with the new requirements for this the Business Partnership Manager to be used on
year. a number of partnerships and we offered our
services in analysing the results. This has now
been given to the Community Safety Final accounts audit
co-ordinator in each district for them to cascade
We are required to give an opinion on the
down to their staff working in partnerships.
financial statements of the Authority. Each year
The Force has also made progress in producing a we assess the risks around the core financial
‘Partnership Strategy’, thought to be one of the systems that form the basis of the annual
first for police forces in the country. accounts and carry out compliance and
substantive testing, as necessary, in order to Although there is no cause for concern, due to
address any risks identified. the complex nature of partnerships, it is
recommended that the self-assessment tool is This year we concluded that we could rely on the
used into the future and the results shared core systems that form the basis for the
widely across all partnerships. preparation of the financial statements, namely:
• budgetary control; Police Authority Best Value
• main accounting system; and Review
• year end closedown procedures.
During 2003/04 you undertook a Best Value
This approach reduces the amount of detailed Review of the Police Authority. This
work that we need to undertake on the financial recommended and resulted in a number of
statements. changes to both the committee and staffing
structures within the authority. The former has We plan to give an unqualified opinion on your
resulted in members generally feeling more accounts by the statutory deadline of
engaged in the decision making process. A 30 November 2004. You have approached the
protocol has also been adopted setting out the new requirements for this year with enthusiasm
respective roles of the Treasurer and Assistant and professionalism:
Chief Officer.
• FRS 17 (disclosure of pension costs);
• the implication of ‘Whole of Government Best value performance
Accounts (WGA)’ in bringing deadlines
indicators forward; and
As this aspect of the audit involved auditing your • the inclusion of a ‘Statement of Internal
2004/05 Policing Plan, it has been undertaken Control (SIC)’ in the accounts.
by PricewaterhouseCoopers who have been The new requirement to disclose the full costs of
appointed as your auditors from 1 April 2004 future pension liabilities (as required by FRS 17)
(ie 2004/05). The outcome from this audit will has resulted in a new £1.7 billion liability being
be reported on separately. shown on the balance sheet. This is offset by a
£1.7 billion pension reserve so that there is no
impact on council tax payers.
You are on track to meet the ultimate WGA
deadlines in 2006 (Accounts to be approved by
30 June and the opinion given by
30 September).

Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 8
audit 2003/2004 ANNUAL AUDIT LETTER

One area to note for the future is the
requirement to produce a full SIC. The Authority
adopted the ‘transitional’ approach in 2003/04 Closing remarks
and although this complies with the guidance
This letter has been discussed and agreed with more work is required to produce the SIC in the
the Executive Director and relevant key staff at future. We recommended that the SIC was
the Police Authority and the Chief Constable and expanded this year to include a reference to the
relevant key staff at the Force. A copy of the future approach, which has been agreed and
letter will be presented at the Finance and Audit acted on.
committee meeting on 26 November 2004. The audit of the accounts progressed well this
The audit has covered a wide range of the year, assisted by very good working papers and
Authority’s arrangements and activities, the assistance of helpful and knowledgeable
providing assurance in key areas and also finance staff.
supporting the Authority’s continuing
improvement and development. Report to those with
As always, the Authority and Force has taken a responsibility for governance in
positive and constructive approach to the audit. the Authority (SAS 610 report)
I would like to take this opportunity to express
We are required by professional standards to my appreciation for the assistance and
report to those charged with governance, in this co-operation provided during the course of the
case your Finance and Audit Committee, certain audit. As this is my last year as District Auditor I
matters before we give an opinion on the would like to wish you well for the future.
financial statements. No issues arose during the
audit which necessitated a SAS 610 and a letter Availability of this letter
has been sent to those charged with governance
This letter will be published on the Audit to this effect.
Commission’s website at
www.audit-commission.gov.uk, and also on the
Authority’s website.
Grants
The audit of the 2003/04 grant claims is

ongoing. The Force has taken steps to improve
Gill Eastwood
the co-ordination of grants and associated
District Auditor
working papers in line with our
November 2004
recommendations in previous years.




Status of our reports to the
Conclusion
Authority
Our annual audit letter is prepared in the Future audit work
context of the Statement of Responsibilities of
As this is the final year of our audit of West Auditors and Audited Bodies issued by the Audit
Yorkshire Police Authority, I have not included Commission. Annual audit letters are prepared
any details of the future work or fees. These are by appointed auditors and addressed to directors
detailed in the 2004/05 audit plan already and officers. They are prepared for the sole use
produced and agreed by your new auditors, of the audited body, and no responsibility is
PricewaterhouseCoopers. taken by auditors to any director or officer in
their individual capacity, or to any third party.


Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 9
audit 2003/2004 APPENDICES

APPENDIX 1
Reports issued during the 2003/04 audit
Report title Date issued
Risk management May 2004
Data Quality, additional work
Interim audit, including financial aspects of corporate June 2004
governance
Internal Audit June 2004
NCRS October 2004 (PWC)
ABC OctobePWC)
Final accounts November 2004 (planned)

Our progress throughout the year is reported to your Finance and Audit Committee.


Annual Audit Letter – Audit 2003/2004 West Yorkshire Police Authority – Page 10

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