An external audit has found that Kingston Council’s financial transaction records are not properly regulated, meaning that there is a high risk that some transactions are mismanaged or even fraudulent.
The Audit, Governance and Standards Committee convened in the Guildhall on 26 February to discuss the audit for the financial year 2023/24 provided by professional services network KPMG.
No wrongdoing was discovered, but KPMG’s audit highlighted areas of concern, the most critical area being the lack of regulation for journals.
KPMG’s report said: “There is no system-enforced segregation of duties in approving the journals posted by users. This creates a risk that fraudulent transactions posted and self-approved are undetected.
“There were also a number of journal entries for which there is only approval via email and no formal approval process.”
The council was recommended under “priority one” to review self-approved journal entries to ensure that they are appropriate and accurate.
The council said it had not done anything wrong, but that their processes needed to be strengthened.
Sue Cuerden, Kingston Council’s Executive Director of Corporate Services said: “Whilst the process could be improved, what they’re actually doing there isn’t an issue.
“The result of the journal is fine, it’s just how that authorisation process works. So have we actually got the evidence of who asked for it, which is more about the completeness of the information rather than if it is represented correctly in the accounts.”
Cuerden said that the council will now add additional steps to the authorisation process of journal entries, something that she claims was being discussed before the audit had made it apparent.
She added that the process changes, which include making it known who authorised the journal and who requested it, will mitigate the risk found in KPMG’s report. The changes will be followed by an internal audit to verify the new system.
