7 High-Level Assessment of Treasury Operations
Themes identified in relation to Compliance & Control
We discussed with the Accountant General a number of general themes relating to how well the Treasury managed compliance with the financial regulations, the management of risk, and ensuring that an effective internal audit regime is in place.
The qualifications of the Internal Audit staff also need to be enhanced and a comprehensive audit methodology incorporating specialist attention on financial IT systems that are being developed and rolled out should be implemented.
It is our view that whilst these themes are recognised as being important little real progress has been made in ensuring that good practice exists.
Controls – Some control activities are in place but are not adequately documented. There is no comprehensive manual of Financial Instructions or Standing Financial Orders which would document the responsibilities of staff, rules, and processes to be followed.
Unless these aspects are addressed quickly there is a danger that noncompliance will continue which has the potential to result in mismanagement and mis-reporting of public funds, error or fraud. Internal audit - this was raised in the OPM 2010 report as an area of concern and it remains so in this report. We understand that progress has been made in this area and the Internal Audit function is now a separate department that reports directly to Cabinet. However, we held discussions with the Acting Director of Internal Audit and reviewed the latest Audit Plan available as well as sample of recent audit reports. The auditing approach of this department can be improved as in our view Internal Audit should have a clearly defined role integrated with public sector wide risk management, governance and control initiatives.
Controls are therefore dependant upon people and ad-hoc instructions which are agreed in management meetings or issued from the Ministry of Finance from time to time. As indicated in the subsequent page, improved controls over the safeguarding of cash is required. We strongly recommend that a Financial Instructions manual be prepared to codify the internal control regime in accordance with the principles set out in the respective Financial Regulations and accepted good practice.
It should provide assurance to Cabinet, the Ministry of Finance and the citizenry on all aspects of compliance and monitoring of the internal control regime. It should play a fully active part in developing and enhancing internal control procedures, as well as carrying out value for money and other special studies on major projects prior to, during, and after completion.
Government of the BVI Treasury Department PwC
Confidential Information for the sole benefit and use of PwC’s Client. Final
22 March 2013 43