191206AuCtteePaper2Annex1ExpensesReportIncMgmtResponses
Cairngorms National Park Authority Internal Audit Report — Final: Expense Claims Process
October 2019
CAIRNGORMS NATIONAL PARK AUTHORITY Audit & Risk Committee Paper 2 Annex I 06/12/19
BDO
Contents
- Executive Summary (page 3)
- Detailed Findings and Recommendations (page 13)
- Appendices:
- Staff Interviewed (page 22)
- Definitions (page 23)
- Terms of Reference (page 24)
Report Status
- Auditors: Gemma Rickman
- Dates work performed: 5 – 19 August 2019
- Draft report issued: 30 August 2019
- Final report issued: 10 October 2019
Distribution List
- David Cameron, Director of Corporate Services
- Members of the Audit Committee
Executive Summary
Level of Assurance
| Design | Operational Effectiveness | |
|---|---|---|
| Level of Assurance | Moderate | Moderate |
Summary of Recommendations
| Level | Count |
|---|---|
| High | 1 |
| Medium | 2 |
| Low | 5 |
| Total | 7 |
Overview
Background: This Internal Audit reviewed the arrangements in place surrounding travel and staff expenses claimed and paid within the Cairngorm National Park Authority (CNPA). The review aimed to provide assurance on the design and effectiveness of the controls governing these expenses.
Expense Claims Process: CNPA uses a Travel & Subsistence Policy (approved September 2013) that details allowable subsistence costs and travel methods. Expenses are processed through three methods: expense claims, credit cards, and travel providers.
- Expense Claims: Staff and Board members complete a standard claim form, including itemized receipts, and submit it to their line manager for approval before submission to Finance.
- Credit Cards: The Chief Executive Officer, Directors, and Head of Organisational Development have individual credit cards. Support staff use a corporate credit card for specific purposes. Finance receives monthly statements and requests supporting evidence.
- Travel Providers: CNPA does not have formal contracts with travel providers, but frequently uses Clyde Travel Management (CTM).
Scope and Approach: The review assessed whether:
- An appropriate policy and procedures are in place defining acceptable expenses and restrictions.
- Appropriate procedures review expenses and query any non-compliance before approval.
- An appropriate approval process clearly defines responsible individuals and thresholds.
- Contractual arrangements with travel providers are appropriate and offer value for money.
- Approved travel providers are used.
The review included documentation review, staff inquiries, and sample testing.
Good Practice: The existence of a Travel & Subsistence Policy, clearly outlining required supporting evidence (e.g., itemized receipts), was noted as good practice.
Key Findings: Several areas for improvement were identified:
- Travel & Subsistence Policy: The policy lacks clarity and guidance on various expense categories (entertainment, gifts, etc.), doesn’t fully reflect HMRC benchmarks, and lacks up-to-date guidance on credit card use. Approval authority for the CEO’s expenses is also unclear.
- Adherence to Policy and Processes: Sample testing revealed inconsistencies in requisition form completion, approval procedures (unauthorized approvals), receipt provision, and adherence to economy airfare policies.
- Approvals: There is no requirement for line managers to review and approve staff credit card purchases.
- Travel Contractual Arrangements: No contractual arrangements exist with travel providers. Expenditure through CTM (approximately £27,481.88 including fees) exceeded Procurement Policy thresholds without tendering.
- Expense System: The paper-based expense system is inefficient.
- Board Policy: The Travel & Subsistence Policy doesn’t formally apply to Board members.
- Policy Review: The Travel & Subsistence Policy hasn’t been reviewed since September 2013.
Conclusion: Moderate assurance was given over the design and operational effectiveness of the controls. Recommendations aim to improve the current arrangements and ensure consistent application across CNPA.
Detailed Findings and Recommendations
(Note: The following section details the findings and recommendations by risk area with references to specific page numbers within the original document.)
Risk: An approved expenses policy and appropriate procedures are not in place to clearly define acceptable expenses and any restrictions.
Finding 1 (Page 11): The Travel & Subsistence Policy requires expansion to provide clarity and guidance on various expense categories and to reflect HMRC benchmarks and current best practices regarding credit card use and CEO expense approvals.
Recommendation 1 (Page 8 & 11): Further develop the Travel & Subsistence Policy to address the identified shortcomings.
Management Response: Recommendation agreed. Policy will be reviewed and updated. (Page 12) Responsibility and Implementation Date: Director of Corporate Services, January 2020 (Page 12)
Risk: Agreed expenses procedures are not consistently followed, with no controls in place to identify non-compliance.
Finding 2 (Page 13): Sample testing identified numerous inconsistencies in adhering to the Travel & Subsistence Policy (requisition forms, approvals, receipts, airfare class).
Recommendation 2 (Page 9 & 13): Review and revise the policy to clearly define approval procedures and required authorization evidence.
Management Response: Recommendation agreed. Policy will be reviewed and updated. (Page 14) Responsibility and Implementation Date: Director of Corporate Services, January 2020 (Page 14)
Risk: There are insufficient approval procedures in place to provide adequate review and oversight of all expenses paid.
Finding 3 (Page 15): Line manager review and approval of staff credit card purchases are not required. Finance team review lacks an audit trail.
Recommendation 3 (Page 15): Enhance Finance team’s review of expense claims and credit card documentation through a two-step approval process including signatures.
Management Response: Recommendation agreed. (Page 15) Responsibility and Implementation Date: Finance Manager, April 2020 (Page 15)
Risk: Contractual arrangements with travel providers are not appropriate.
Risk: Approved travel providers are used, and arrangements offer value for money.
Finding 4 (Page 16): CNPA lacks contracts with travel providers. Expenditure through CTM exceeded procurement thresholds without tendering.
Recommendation 4 (Page 16): CNPA should sign up to the Scottish Government National Travel Framework and ensure procurement policy is adhered to.
Management Response: Procurement thresholds have not been met, given that the procured costs are fees and not gross total expenditure. Will look into signing up to the Scottish Government National Travel Framework. (Page 16) Responsibility and Implementation Date: Finance Manager, June 2020 (Page 16)
Risk: An approved expenses policy and appropriate procedures are not in place to clearly define acceptable expenses and any restrictions.
Finding 5 (Page 17): The current paper-based expense claim system is inefficient.
Recommendation 5 (Page 17): Assess the costs and benefits of implementing an electronic expense system for improved efficiency and risk mitigation.
Management Response: Recommendation accepted and noted. Aligns with existing strategy to simplify and digitize systems. May also be investigated alongside a finance system review. (Page 17) Responsibility and Implementation Date: Finance Manager, August 2020 (Page 17)
Risk: An approved expenses policy and appropriate procedures are not in place to clearly define acceptable expenses and any restrictions.
Risk: An appropriate approval process is in place which clearly defines responsible individuals and approval thresholds.
Finding 6 (Page 18): The Travel & Subsistence Policy does not formally apply to Board members.
Recommendation 6 (Page 18): Develop and implement a travel and expenses policy that formally applies to Board members, including documented approval authorities.
Management Response: Recommendation agreed. (Page 18) Responsibility and Implementation Date: Director of Corporate Services, January 2020 (Page 18)
Risk: An approved expenses policy and appropriate procedures are not in place to clearly define acceptable expenses and any restrictions.
Finding 7 (Page 19): The Travel & Subsistence Policy hasn’t been reviewed since September 2013.
Recommendation 7 (Page 19): Review the Travel & Subsistence Policy every three years or as needed to reflect legislative changes. Implement version control.
Management Response: Recommendation agreed. (Page 19) Responsibility and Implementation Date: Director of Corporate Services, January 2020 (Page 19)
Appendix I — Staff Interviewed
| Name | Job Title |
|---|---|
| David Cameron | Director of Corporate Services |
| Daniel Ralph | Finance Manager |
| Diane Buchan | Finance Officer |
Appendix II — Definitions
(This section provides definitions for the levels of assurance and recommendation significance as detailed in the original document.)
Appendix III — Terms of Reference
(This section details the background, purpose, and key risks that formed the basis for the internal audit.)
Note: Page numbers in parentheses refer to the location of the information within the original PDF. The formatting may not perfectly reflect the visual presentation of the original, but the content is accurately transcribed.