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DIOCESE OF CHICHESTER ACADEMY TRUST GOVERNANCE STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2019
The purpose of the system of internal control
The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an on-going process designed to identify and prioritise the risks to the achievement of academy trust policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place in Diocese Of Chichester Academy Trust for the period 1 September 2018 to 31 August 2019 and up to the date of approval of the annual report and accounts.
Capacity to handle risk
The board of trustees has reviewed the key risks to which the academy trust is exposed together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The board of trustees is of the view that there is a formal ongoing process for identifying, evaluating and managing the academy trust's significant risks that has been in place for the period 1 September 2018 to 31 August 2019 and up to the date of approval of the annual report and accounts. This process is regularly reviewed by the board of trustees.
The risk and control framework
The Trust's system of internal financial control is based on a framework of regular management information and
administrative procedures including the segregation of duties and a system of delegation and accountability. In particular it includes:
• comprehensive budgeting and monitoring systems with an annual budget and periodic financial reports which are reviewed and agreed by the board of trustees;
• regular reviews by the Audit and Resources Committee of reports which indicate financial performance against the forecasts and of major purchase plans, capital works and expenditure programmes;
• setting targets to measure financial and other performance;
• clearly defined purchasing (asset purchase or capital investment) guidelines;
• delegation of authority and segregation of duties;
• identification and management of risks.
The board of trustees has considered the need for a specific internal audit function and has decided to appoint an internal auditor. The schedule of internal audit activities performed have been agreed with the audit and resources committee.
The internal auditor's role includes giving advice on financial matters and performing a range of checks on the Trust's financial systems. In particular the checks carried out in the current period included:
• testing of purchases systems;
• testing of payroll systems;
• monitoring and maintenance of fixed asset registers and VAT returns.
The internal auditor reports to the board of trustees through the audit and resources committee at least three times a year on the operation of the systems of control and on the discharge of the financial responsibilities of the board of trustees.
The internal auditor identified no material or significant control issues but did identify a small number of processes that could be adjusted to ensure that procedures are as robust as possible. Recommendations are made to the board of trustees through the audit and resources committee and these actions are monitored by the trustees.
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