Internal Controls

Internal Controls

Responsibility for Internal Controls

The Parish Council is responsible for ensuring that a satisfactory system of internal control is maintained by the parish, which must include:

1. sound practices for efficient, effective and economical management including the preparation of budgets and the
2. monitoring of variances
3. procedures for the safeguarding of assets and
4. separation of the function and responsibilities for financial record-keeping and the parish clergy.

The Treasurer has a key role in advising the Parish Council in relation to policies and procedures to ensure that these requirements are met. The Parish Auditor or Examiner is also a valuable source of guidance in this respect and should be approached if you have any concerns.

Delegated Authorities

The delegation of authority for Parishes is determined in accordance with Policy 20 - PDT Delegation of Authority and Authority Limits. All officers, employees and Wardens are required to be aware of and work within their authority limits.

Wardens are primarily the authorised persons for entering into contracts and incurring expenditure. The Warden’s authority is subject to any internal procedures and approvals requirements established by the Parish. Presently Wardens are approved under Policy 20 to approve operating commitments not exceeding $20,000 for any single commitment. If the commitment exceeds this, then the contract must be signed by an authorised officer of the Perth Diocesan Trustees.

There are general principles applicable under this policy, as follows:

• An individual may not act as if they had authority where they have no authority or where a transaction exceeds the individual’s level of authority.
• Where an individual’s authority limit is exceeded by a single transaction, escalation to the next level of authority is to occur.
• Delegations are attached to the position occupied not to the occupant of the position.

Practices that undermine the intention of delegations and authority limits outlined in this Policy are expressly prohibited. Such practices could include:

1. splitting large orders into smaller parts to override authorisation limits;
2. entering a purchase order for either goods or services that is knowingly insufficient for completion of the work required or goods ordered; and
3. a delegate’s power cannot be exercised where the individual with the power of delegation has a real and/or perceived conflict of interest.

All transactions entered into on behalf of the Parish must be at arm’s length i.e. parties to a transaction are independent and acting in the ordinary course of events.

Contractual Agreements

Contracts for the supply of goods and services provided by suppliers are typically complex, can contain onerous clauses that may disadvantage the parish and frequently attempt to place personal liability on the people signing the contract on behalf of the Parish. All contracts should be scrutinised carefully to ensure that the agreements appropriately reflect:

• the goods and services to be supplied
• the prices for the goods and services
• whether they are inclusive or exclusive of taxes including GST
• warranty terms and period
• exclusions from liability by the supplier; and
• extensions of liability by the Parish to the supplier.

Many agreements contain wording that would make the Parish liable to the supplier for losses or damages where they are caused by the Parish, even if the Parish is not at fault. These are known as consequential loss or damages clauses. For example, an agreement may state that where an injury occurs to an employee of the Supplier while carrying out the agreement, then the Parish is liable for the employee’s medical costs, loss of income, etc. The Parish should always decline to accept any liability for consequential loss or damage to the supplier except to the extent the Parish has a duty of care.

If the Treasurer is uncertain as to whether the terms of the agreement are acceptable, they should take advice from a professional. The Diocesan Office may be able to assist in some situations and the Treasurer should enquire with the accounts team.