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10-08-2005
Home Office Financial Management Code of Practice
The Police Panel of the Chartered Institute of Public Finance and Accountancy would like to put forward some suggestions and queries regarding the content of the Home Office Financial Management Code of Practice, which has not been fundamentally revised since it was laid before Parliament in 1994.
The suggestions and queries have been listed, as they would fall under the headings used in the Code. However, before this we would like to make some general observations.
It is clear that this Code has not been presented in the format usually adopted by the Home Office and the use of italics to distinguish the Code from the guidance is confusing. In addition, it is not clear that a significant proportion of what is first presumed to be guidance (as it is not italicised) is in fact quotes from legislation. To aid clarity, it is suggested that the Code be printed as numbered paragraphs and that the guidance and reference to legislation are written separately. It would also be helpful if the Code were made publicly available on the Home Office Website in both Word and Adobe Acrobat format.
Suggestions and queries:
1 GLOSSARY
The last sentence from the definition of the Force Finance Director on page viii – ‘He or she may either be an employee appointed under section 15 of the Police Act 1996 or an appropriately qualified police officer’ should be deleted. It should be clarified that the holder of the role described as ‘Force Finance Director’ may have a variety of titles, but the Force Finance Director’s responsibilities apply to the member of the chief constable’s top team who leads the finance functions of the force. Reference should be made to the fact that any reference to the Audit Commission refers also to the Wales Audit Office/Auditor General for Wales.
2 POLICE AUTHORITY FINANCIAL REGULATIONS
2.1 The regulations should be based on the model regulations produced by CIPFA.
2.2 Footnote number 1 is no longer necessary or relevant.
2.3 Footnote number 2 is incorrect and needs to be amended. A revised version of the Role of the Finance Director was issued in 2003 and a supplement to adapt the document to fit Police Authorities and Forces is in preparation.
2.4 Paragraph number 4; the reference to the Audit Commission is out of date, accordingly the words ‘following the Audit Commission’s recommendations,’ should be deleted from the first sentence.
2.5 Paragraph number 6, sub point (d); this should be strengthened with an amendment to read ‘identify and agree medium term financial strategy’.
2.6 Paragraph number 7; the last sentence “The meaning of ‘significant’ should be defined in the financial regulations” should be deleted.
2.7 Paragraph number 8; add as the final sentence ‘Financial instructions may also be required to regulate the operation of the Police Authority budget when significant sums are involved’.
3 ROLE OF THE TREASURER
3.1 In this section it is particularly difficult to differentiate between what is the Code, guidance or statute. The reference to the Accounts and Audit Regulations needs to be updated. A separate reference to Accounts and Audit (Wales) Regulations should be included.
3.2 Paragraph number 9; bullet point 6 should be amended to read ‘when delegated by the authority, provide an effective internal audit service and ensure the provision of safe and efficient financial arrangements’.
4 ROLE OF THE FORCE FINANCE DIRECTOR
It would be logical to make the paragraph on the Role of the Force Finance Director part of the Code. For accuracy the reference to ‘force senior policy team’ should be changed to ‘chief officer’s policy team’. Replace the end of the last sentence from “and he or she…” with ‘but should take care to avoid having financial advice compromised by line responsibilities’.
5 AUDIT
5.1 Insert Internal before Audit in the section heading and directly below. Insert ‘and authority’ after ‘force’ in the second paragraph under the Audit heading.
5.2 To ensure that the Code remains up-to-date reference should be made to ‘current’ Accounts and Audit Regulations/ Accounts and Audit (Wales) Regulations as opposed to detailing the specific years.
5.3 Paragraph number 11; replace ‘financial’ in the last sentence with the word ‘internal’. It would also be helpful to include the explanation that Internal Audit is responsible for evaluating all controls – not just financial controls (see CIPFA Internal Audit Guidance and the Statement on Internal Controls to be attached to the annual accounts).
5.4 Paragraph number 13; delete the word ‘financial’ in the first line.
5.5 Footnote number 7 is out of date and should be replaced with a new paragraph that refers to Corporate Governance requirements and the consideration of Internal Audit and External Audit reports. The new paragraph should also refer to HMIC reports as there is a statutory duty for the Authority to consider and respond to HMIC reports (Police Act 1996 Section 22 (5))
5.6 Risk management should be incorporated in the Code and made the responsibility of the Audit Committee or the Police Authority as appropriate. It would be appropriate to place it above paragraph number 17.
6 CONTRACTS
6.1 Paragraph number 25; to reflect the need for best value it is suggested that ‘lowest bidder’ is amended to ‘the bid on most economically advantageous terms’.
6.2 Paragraph 27; as the Force is not a separate legal entity in its own right, all contracts have to be in the name of the Authority, therefore the word ‘should’ ought to be replaced by ‘is’.
6.3 Could the Home Office clarify what is being referred to in paragraphs 28-29? Are they really about procurement? It is also unclear why the title “project manager” has been used; ‘Procurement Manager’ would be a more accurate reference as all Forces now have one. It is suggested that the word ‘goods’ is inserted after ‘service and’ in the second line of paragraph 28.
7 LOANS AND INVESTMENT
Before paragraph number 31, but under the Loans and Investment heading, it is suggested that a section on the Prudential Code is added.
8 EXERCISE OF DELEGATED RESPONSIBILITIES
8.1 The first paragraph after the heading ‘Exercise of delegated responsibilities’ should be part of the Code? If it is not part of the Code, could the rationale behind its inclusion be clarified?
8.2 Footnote 9; with the introduction of the Prudential Code the details in this footnote have become redundant and should be updated to reflect new Capital Controls and Accounting Practices.
8.3 Paragraph number 33; the words ‘team’, ‘officer’ and ‘treasurer’ should all be plural.
8.4 Paragraph number 34; the words ‘procurement and’ should be inserted in the third line between ‘as’ and ‘the’.
8.5 Paragraph number 35 is not very clear, as the government is very supportive of collaborations, which are understood to conflict with EU requirements. Could the Home office clarify the position of the conflict between Best Value and EU rules regarding collaboration and partnerships?
8.6 Paragraph number 36; replace ‘value for money’ with ‘best value’.
9 CAPITAL EXPENDITURE
Paragraph number 40 should be cross-referenced to the Prudential Code. The words ‘credit approvals, usable’ should be deleted from third line.
10 PAYMENT OF ACCOUNTS
Paragraph number 44 should be cross-referenced to the Late Payments of Commercial Debts (1998) legislation.
11 A section on ‘Seized Lost and Found Property’ should be added above the section on ‘Insurance and Risk Management’.
12 INSURANCE AND RISK MANAGEMENT
Paragraph number 51 does not address the issue of volunteers in the Police Service. The word ‘including’ should be replaced with ‘of’’ in the second line.
13 EX-GRATIA PAYMENTS
Could the Home Office, clarify their position on the issue of out of court settlements? Whilst they should involve the Police Authority it is unclear what provision has been made for them?
14 It is suggested that the Code requires new paragraphs to deal with the Best Value application of company law, efficiency plans, e-commerce, estates capital strategy, asset management plans and the Home Office Guidance on Income Generation.