Merseyside Passenger Transport Executive


Auditors' Report To Members of the Merseyside Passenger Transport Executive (Cont’d)

:)


Download 1.74 Mb.
Page2/11
Date conversion04.09.2017
Size1.74 Mb.
1   2   3   4   5   6   7   8   9   10   11

Auditors' Report To Members of the Merseyside Passenger Transport Executive (Cont’d)


Conclusion on Arrangements for Securing Economy, Efficiency and Effectiveness in the Use of Resources
Executive’s Responsibilities
The Executive is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to regularly review the adequacy and effectiveness of these arrangements.
The Executive is required to input into the Authority’s best value performance plan summarising Merseytravel’s assessment of its performance and position in relation to its statutory duty to make arrangements to ensure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
Auditor’s Responsibilities
I am required by the Audit Commission Act 1998 to be satisfied that proper arrangements have been made by the Executive for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires me to report to you my conclusion in relation to proper arrangements, having regard to relevant criteria specified by the Audit Commission for Passenger Transport Executives. I report if significant matters have come to my attention which prevent me from concluding that the Executive has made such proper arrangements. I am not required to consider, nor have I considered, whether all aspects of the Executive’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.
I am required by section 7 of the Local Government Act 1999 to carry out an audit of the Authority’s best value performance plan, including input by the Executive, and issue a report:-

(i) certifying that I have done so;

(ii) stating whether I believe that the plan has been prepared and published in accordance with statutory requirements set out in section 6 of the Local Government Act 1999 and statutory guidance; and

(iii) where relevant, making any recommendations under section 7 of the Local Government Act 1999.

Conclusion
I have undertaken my audit in accordance with the Code of Audit Practice and I am satisfied that, having regard to the criteria for Executives specified by the Audit Commission and published in 2005, in all significant respects, the Merseyside Passenger Transport Executive made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ending 31 March 2009.
Certificate
I certify that I have completed the audit of the accounts in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission.
Signature: Date:
Audit Commission

The Heath Business Technical Park

Runcorn

WA7 4QF
Merseyside Passenger Transport Executive
Directors' Report (Explanatory Foreword)

1. The Executive's accounts for the year ended 31 March 2009 are set out on pages D18 to D49. They consist of the


(a) Income and Expenditure Account - the Executive's main revenue account covering income and expenditure on all Executive services.
(b) Statement of Total Recognised gains and losses.
(c) Balance Sheet - which sets out the financial position of the Executive on 31 March 2009.
(d) Consolidated Cash Flow statement - which summarises the outflows of cash arising from transactions with third parties for revenue and capital purposes.
These accounts are supported by the Statement of Accounting Policies and the Annual Governance Statement along with various notes to the accounts.

2. During 2008/09, the Executive incurred £86.9m in respect of net revenue expenditure.

The Income and Expenditure Account (page D18) shows that gross expenditure of £228.0m was offset in part by supported bus and ferries fares (£13.0m), sales of prepaid tickets (£20.3m), Special Rail Grant (£78.6m) and other income (£29.2m).
The outturn of £86.9m for the year compares favourably to a revised estimate, approved by both the Executive and Authority in February 2009. This deficit was funded by a revenue grant from the Authority (£87.5m) and resulted in a contribution to reserves (£0.6m).
The Executive’s activities during 2008/09 generated the following estimated journeys:-





Passenger Journeys




2007/08

2008/09

Supported bus

13.8m

13.6m

Rail Passengers

38.4m

42.3m

Special Needs Travel

0.1m

0.1m

Bus Infrastructure supporting both

supported and commercial bus

147.7m

148.7m


Concessionary and Pre-paid travel

72.3m

73.4m

3. Capital invested during the year totalled £30.9m which included ongoing progress with the programme to enhance the facilities at many rail stations, and substantial progress in Merseytravel’s programme to improve integrated public transport along major corridors and centres in Merseyside at an estimated cost of £100m. This Capital outlay was financed by a capital grant from the Authority (£29.1m); and other Executive funding resources (£1.8m).


4. TWA powers were granted by the Government (SI 2005 No 120) for the construction and operation of Merseytram Line One. During 2005/06 the Government withdrew its £170m funding contribution, effectively stalling the good progress made on the development of Merseytram. TWA powers exist until 2010 and alternative means of financing are being explored through LTP2.
5. Where systems hold monetary values, primarily accounting and payroll systems, EPOS tills etc, assurances are being sought that upgrades will be available in the event of the UK joining EMU. There were no direct costs relating to EMU in 2008/09.
Merseyside Passenger Transport Executive

Directors' Report (Explanatory Foreword) (Continued)

6. The financial results of the Executive and the Group (comprising of the Executive, Mersey Ferries Ltd and Merseyside Passenger Transport Services Ltd) are shown on pages D18 to D48.

7. The Directors who served during the year were:-

N Scales Director General

J R Barclay Director of Resources

A G Stilwell Director of Operations
The Executive is a statutory body created by the Transport Act 1968 and does not have share capital in its own right. The Executive does however have a number of subsidiary companies and no director had at any time during the year any interest in their share capital.

8. Details of additions and disposals of fixed assets are shown in the notes to the accounts (note 12a).

9. The Audit Commission have been appointed as auditors to the Executive, under the provisions of Section 2 Schedule 2 and Section 30 of the Audit Commission Act 1998.
10. Corporate Governance
The Executive is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. In discharging this accountability, directors are responsible for putting in place proper arrangements for the governance of the Executive's affairs and the stewardship of the resources at its disposal.
These arrangements include putting in place appropriate management and reporting arrangements to enable it to satisfy itself that its approach to corporate governance is both adequate and effective in practice. Specifically, the Executive is in the process of further developing its risk management strategy.
In addition, the Executive's Chief Internal Auditor reviews Corporate Governance independently to provide assurance on the adequacy and effectiveness of its principles and the extent of compliance.
11. Publishing Statements of Accounts

FRS21 requires a disclosure note giving details of when the accounts will be published; the means of issue; and the Authorising Officer. As from 30/06/09 the Executive’s accounts will be placed on Merseytravel’s website (www.merseytravel.gov.uk). This has been authorised by J R Barclay the Director of Resources.



Merseyside Passenger Transport Executive
Statement Of Accounting Policies
1. Introduction
The accounts have been prepared in accordance with the Accounts and Audit Regulations 2006. These regulations require that the accounts of an Executive shall be prepared so as to be no less informative than if the disclosure requirements of the Companies Act 2006 were, so far as appropriate, applicable to Executives.

2. Statements of Standard Accounting Practice

The accounts have been prepared in accordance with the various Statements of Standard Accounting Practice and Financial Reporting Standards which have been issued.
3. Consolidation of Accounts

The following subsidiary companies are grouped with the Executive’s accounts on the subsidiary undertaking basis (ie line by line consolidation):-


Trading
Merseyside Passenger Transport Services Ltd

Mersey Ferries Ltd. (MFL has wholly owned subsidiaries: The Beatles Story, Gemtex Ltd, Spaceport Ltd and U534 Ltd)

Real Time Information Group Ltd

The Global Smart Media Ltd Group


Non-Trading/Dormant
Merseytravel Ltd

Merseytravel Facilities Management Ltd

Merseytravel Commercial Services Ltd

Merseyside Rapid Transit Ltd

Liverpool South Parkway Ltd

Merseytram 2005 Ltd

Former Spaceport Ltd

Former U534 Ltd

In addition to the above subsidiaries, the Executive has a business relationship with Accrington Technologies Ltd (ATL). The Executive’s accounts include ATL as a partly owned subsidiary. Appropriate disclosures are provided in the notes to the balance sheet.

4. Tangible and Intangible Fixed Assets

All transactions relating to fixed assets are accounted for on an accruals basis in the accounts. Expenditure on fixed assets is capitalised provided that the fixed asset yields benefits to the Executive and the services it provides, for a period of more than one year. This excludes expenditure on routine repairs and maintenance of fixed assets which is charged direct to the revenue account.

Goodwill, as an intangible asset, has arisen from the purchase of The Beatles Story. An independent valuer has valued the company and goodwill is reflected in the accounting statements as being the monies used to purchase the company that exceed the book value of the company from its accounts.


5. Asset Valuation
The majority of fixed assets with a value of £7,500 (ie deminimis threshold for capitalisation purposes) or more were valued, during a quinquennial valuation as at 31 March 2009. All valuations were on the following basis:-
• land, operational properties and other operational assets are included in the balance sheet at the lower of net current replacement cost and net realisable value in respect of current use;

• non-operational assets, including investment properties and assets that are surplus to requirements, are included in the balance sheet at the lower of net current replacement cost and net realisable value. In the case of investment properties, this is normally open market value;

• infrastructure assets and community assets are included in the balance sheet at historical cost, net of depreciation.

Merseyside Passenger Transport Executive
Statement Of Accounting Policies (Continued)

For each of the five years between formal valuations the historical value of all new capital investment, regardless of the £7,500 threshold, will be assumed to be at current values with appropriate adjustments being made in the accounts at the next formal quinquennial valuation.

The surpluses arising on the valuation of fixed assets have been credited to the fixed asset revaluation reserve. Subsequent revaluations of fixed assets are planned at five yearly intervals, although material changes to asset valuations will be adjusted in the interim period, as they occur.
Under FRS11 (Impairment of Fixed Assets and Goodwill), the valuation of fixed assets must be adjusted to reflect impairment along with a disclosure note explaining the nature and extent of the impairment.

6. Depreciation and Amortisation


Depreciation is provided for on all fixed assets with a finite useful life, which is determined at the time of acquisition or revaluation according to the following policy:
• newly acquired assets are depreciated as from the year of purchase
• depreciation is calculated using the straight-line method using the following asset lives which were provided by the District Valuer as part of his asset valuation exercise:-
Assets Asset Lives in Years
Merseytravel Headquarters 50

Freehold and Leasehold Buildings

- Various turning circles 8-15 *

- Various bus stations 31-40 *

- Various ferry buildings etc 16-51 *

- Other buildings 27-41 *

Vessels 10-19 *

Passenger Vehicles 10

Vehicles 5

Equipment/Computer Equipment 4-12 *


(* Different asset lives provided for individual assets)
All other assets have been fully depreciated.

Capital Grants are released to the Profit and Loss Account over a period of years on the same basis as that used for depreciation purposes.

The Executive’s Group accounts includes an amount for Goodwill covering the purchase of The Beatles Story. Goodwill is amortised over 20 years on a straight-line basis.

7. Revenue Expenditure funded from Capital under Statute (formerly known as deferred charges)


These charges represent expenditure which may properly be capitalised, but which do not represent tangible fixed assets. At 31 March 2009 deferred charges, in respect of rail investment and other costs where the ownership of the asset being improved resides with a third party, were 100% funded by capital grants received from the Merseyside Integrated Transport Authority leaving a nil balance in the accounts of the Executive.
Merseyside Passenger Transport Executive
Statement Of Accounting Policies (Continued)

8. Government Grants and Contributions


Where the acquisition of a fixed asset is financed either wholly or in part by a government grant or other contribution, the amount of the grant or contribution is credited initially to the government grants-deferred account. Amounts are released to the Income and Expenditure account over the useful life of the asset to match the depreciation charged on the asset to which it relates.
Government grants and other contributions are accounted for on an accruals basis and recognised in the accounting statements when the conditions for their receipt have been complied with and there is reasonable assurance that the grant or contribution will be received.

9. Revenue Grants


All revenue grants are credited to revenue in the same year as the related expenditure.

10. Reserves


Seven reserves exist:

• a capital reserve to smooth fluctuations in the spending programme for capital projects (the reserve generally holds funding for projects that have slipped into a future year);

• a pensions reserve to neutralise the additional charges expected in 2008/09 arising FRS17;

• a rail reserve to smooth fluctuations in performance bonuses awarded;

• an insurance (excess payments) reserve;

• a fixed asset revaluation reserve;

• a concessionary travel reserve to smooth fluctuations in monies paid to operators arising from changes in patronage and operator mileage; and

• a restructuring reserve to fund the objectives of the Executive’s ‘One Team One Family initiative.

11. Use Made of Usable Capital Receipts

The Executive’s capital receipts are used to offset net book value losses which may arise on disposal of assets.

12. Consumable Stores


Given that Executive stores are generally expected to have a speedy turnover, consumable stores have been valued on the basis of cost.

13. Creditors


Provision has been made for known liabilities, committed expenditure, goods received and work carried out by 31 March 2009.

14. Debtors


Provision has been made for all debts due at 31 March 2009. Where the actual amount has not yet been determined, the amount due has been estimated on the basis of the latest available information. Following the requirements of FRS26, where debtors are to be considered both individually and collectively for impairment, a provision amounting to £161k (consolidated accounts provision £167k) has been made against debts where the recovery is doubtful, the net amount being shown in the Balance Sheet.

Merseyside Passenger Transport Executive
Statement Of Accounting Policies (Continued)

15. Central Administration Costs


Central Administration Costs incurred by the Passenger Transport Executive are apportioned at the end of the year on the basis of both time allocation for salaries and unit usage.

16. Provisions


Provisions are calculated using the most current information available as at 31 March 2009. This covers anticipated liabilities arising from the affects of a job evaluation exercise and unrecoverable recharges in respect of Paradise Street Interchange.

17. Pensions

The employees of the Executive are members of a Local Government Superannuation Scheme: The Merseyside Pension Fund. The pension cost charged to the accounts (£2117k) is equal to the contributions paid to the funded pension scheme for these employees. Further costs arise (£1277k) in respect of a tranche of early retirements prior to bus deregulation on 26 October 1986.

Pension costs have been charged to the income and expenditure account in line with FRS17 and reversed out below the surplus/deficit for the year applying to the statutory override provided by Regulation 7A(2) of the Accounts and Audit Regulations 2003, as amended.

18. Creditors


Generally the Executive aims to pay all of its undisputed creditors within 30 days. Within Merseytravel’s Performance Plan a “payment within 30 days” target of 100% has been set, against which the actual performance was 97.7%. This compares to a performance of 96.3% of undisputed creditors paid within 30 days during the year 2007/08.

19. Estimation Techniques


A consequence of being required to close Merseytravel's accounts (including both the Executive and Authority) earlier is that less opportunity exists to utilise actual values of transactions following in the following year to be accrued in the current year's accounting statements. More reliance is now placed on estimation techniques including:
(a) Details of capital accruals will be provided/agreed with the appropriate project manager/ supervisor;
(b) Bus operator payments will be accrued on an actual basis where details are known during the closure of accounts period. In the event of operator returns not being available in time, estimated accruals will be made on the basis of known contractual liabilities;
(c) On occasions there are delays in the receipt of income analysis returns from departments and this could have an impact upon closure of accounts. Where this arises at year end, actual cash banked will determine the volume of income received and previous periods income analysis returns will provide a basis for estimating the proportion by which the cash will be allowed to various accounts;

(d) Accruals for period 13’s rail performance regime will be on an estimated basis derived from an average of the previous 12 periods;

(e) In the unlikely event that support service recharge timesheets are not available for year end, the previous year’s basis for apportionment will be used for the current year; and

Merseyside Passenger Transport Executive
Statement Of Accounting Policies (Continued)

(f) Where invoices are not available for gas, electricity, water, bus stop maintenance, etc accruals will be made on the basis of usage trends noted from previous periods.



20. Financial Instruments
Under FRS 25 preference shares are required to be shown as liabilities rather than shareholder funds. Although this does not affect the Executive’s accounts, the consolidated group position will be affected in that a wholly owned subsidiary, Merseyside Passenger Transport Services Ltd, has 375 £1 5% non-cumulative preference shares. As a result of this shareholder funds for the subsidiary are reduced by £375.
Whether financial instruments be assets or liabilities, they are classified and measured as follows:-
(a) Financial Assets: Loans and receivables
These are defined as financial assets that have fixed or determinate payments and that are not quoted in an active market (eg, bank deposits, temporary loans, etc.) Loans and receivables are carried at amortised cost whilst the Income & Expenditure account bears interest receivable, impairment costs and any gain or loss on derecognition.
(b) Financial Assets: Available for sale
These include equity shareholdings and quoted investments which are carried at their fair value with movements in fair value taken to the Statement of Total Recognised Gains & Losses. Interest and dividends income are charged to the Income & Expenditure Account alongside gains/losses on derecognition.

(c) Financial Liabilities: Non-Trading

This category includes operational creditors and borrowings, and are carried at amortised cost with the Income & Expenditure Account being charged with interest payable.
(d) Financial Liabilities: Trading or derivations with a negative value
Although the Passenger Transport Executive is not expected to take on liabilities for the purpose of trading, it’s recognised that there might be exceptional instances when the Executive holds liabilities that qualify for this treatment. In such instances, all gains/losses are posted to the Income & Expenditure Account when they arise.
When old debt is repaid and replaced with new debt, a test for “modification” or “extinguishment” is carried out to determine the accounting treatment of loan premiums or discounts on the repaid loans. If repaid loans pass the “modification” test (ie, old debt replaced with new debt via the existing lender; the terms of the loan are not substantially different; the exchange is made on the same day; and the net present values of cashflows between the two loans is plus/minus 10%), premiums/discounts may be amortised over the life of the loan.
Should the repaid loan be deemed to be “extinguished”, the premium/discount will be charged to the Income & Expenditure Account.
There were no premiums/discounts prior to 1 April 2007.
“Soft loans” comprise of loans where the Executive makes loans to third parties at rates below the prevailing market rate or are interest-free. There is a requirement for a calculation of the “fair value” of the loan (net preset value of future cash receipts discounted using prevailing market rates of interest) and for the difference between the fair value and actual amounts charged to be debited to the Income & Expenditure Account. For the purposes of this accounting policy, the Executive’s “soft loans” are deemed to be de-minimis and no adjustment is made.

Merseyside Passenger Transport Executive

Statement Of Accounting Policies (Continued)

Loan transaction costs are required to be applied to adjust the loan’s initial carrying amount and then be amortised over the life of the loan. The Executive, if it were to carry external loans, would arrange such loans through the PWLB and fees arising would be considered de-minimis and consequently charged direct to the Income & Expenditure Account in the year in which they arise.


In the context of financial instruments, “impairment” represents the uncollectability of financial assets. For the Executive, this definition covers just “provisions for bad debtors”.
Collateral held by the Executive is required to be disclosed, being financial assets held as security. No such collateral is currently being held by the Executive.
It is also required that a value for financial guarantees be calculated at fair value. Such a calculation requires the value of a financial guarantee, at inception, to be estimated by considering the “probability” of the guarantee being called in. No such financial guarantees are currently held by the Executive.


Merseyside Passenger Transport Executive
Annual Governance Statement
1. Scope of Responsibility

The Executive is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The Executive also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness. In discharging this overall responsibility, the Executive is also responsible for putting in place proper arrangements for the governance of its affairs, facilitating the effective exercise of the Executive’s functions and which includes arrangements for the management of risk.

The Executive has approved and adopted a code of corporate governance, which is consistent with the principles of the CIPFAs/SoLACe Framework Delivering Good Governance in Local Government.
A copy of the code will be available on our website or can be obtained direct from Merseytravel. This statement explains how the Merseyside Passenger Transport Executive has complied with the code and also meets the requirements of regulation 4(2) of the Accounts and Audit regulations 2003 as amended by the Accounts an Audit (Amendment) (England) regulations 2006 in relation to the publication of a statement on internal control.

2. The Purpose of the Governance Framework


The Governance Framework comprises the systems and processes, and culture and values, by which the Executive is directed and controlled, and its activities through which it accounts to, engages with and leads the community. It enables the Executive to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.
The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives, and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Executive’s 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 governance framework was put in place at the Merseyside Passenger Transport Executive during the year ended 31 March 2009 and operated up to the date of approval of the Annual Report and statement of accounts.

3. Governance Framework

3.1 Corporate Policy and Performance
A 5 year LTP (Local Transport Plan), approved by the PTA and PTE as well as by Merseyside’s Five District Councils and Government, sets out an integrated transport vision for Merseyside along with policies, aims and objectives to fulfil the vision. The LTP is the accepted bidding document upon which the Government provides resources to finance capital investment for public transport and infrastructure. Alongside the LTP we produce and publish a Performance Plan that establishes aims and targets for each of Merseytravel’s services to ensure continuous improvement.
The LTP is reviewed and published annually as the APR (Annual Progress Report). Service reviews are carried out, usually with the help of outside consultants. This document is available on Merseytravel’s web site and is also delivered in summary version to the local community.


Merseyside Passenger Transport Executive
Annual Governance Statement (Cont’d)

3.2 Facilitation of Policy and Decision Making

The LTP is the key statutory strategic transport document. It is augmented by a number of central policy documents covering many areas of the organisation’s activities.
Policy and decision making is facilitated through a hierarchy of management. Generally the Authority approves macro-policies for Management and provides the Executive with the resources to implement those policies. Business areas within the Executive will develop detailed plans/projects and report to Management Team for refinement and approval. These projects will await deliberation and approval by the Executive and/or Authority.
The Executive undertakes widespread and detailed consultation exercises to inform the decision making process.

    1. Risk Management

Merseytravel produces both a Corporate Risk Register and a Divisional Risk Register to identify and manage the risks to the achievement of the organisations objectives.


Business and departmental risks are integrated within business plans produced for the organisation. These are incorporated into a Risk Register which allows a range of risks to be identified, including an evaluation of the impact and mitigating factors. The Risk Register, which is to be approved by the PTE and ITA, is a key management tool for ensuring effective delivery of the corporate objectives.
Large scale projects undertake their own specific risk assessment and produce separate risk registers.

3.4 Compliance


The LTP is the central focus of corporate policy, which is ultimately approved by Central Government. All new development is required to comply with the LTP's policies, aims and objectives.
Divisional Plans identify how corporate policies and objectives will be delivered on a divisional basis. Directors and Senior Management receive regular progress reports and directly communicate appropriate management action.
Risk Management is exercised in respect of both delivery dates and financial management in that a degree of over programming is permitted in Merseytravel's Budget to absorb natural slippage (unforeseen events, etc). From a financial perspective, fairly robust estimates are provided to avoid funding problems. In the event of an inadequate provision of funds, Merseytravel has the added security of being able to purposely delay other schemes in the programme.
A Corporate Governance Working Group has been established to identify and promote good practice throughout the organisation.

3.5 VFM Use of Resources

For major investments the Government's funding regime required sight of business cases, projections of patronage, costings, etc. To meet these requirements a substantial amount of research and evaluation is required to ensure VFM.

A Business Planning Process review programme is in place that reflects Merseytravel’s strategic priorities and helps to ensure that proper arrangements exist to secure year on year improvements to services and to meet the Government’s efficiency agenda.

Merseyside Passenger Transport Executive
Annual Governance Statement (Cont’d)

In addition pressure is exerted on all divisions via corporate set targets for budget reductions to stimulate reassessment of divisional costs and resource use, in delivering corporate aims. Development options are subjected to Management Team review and approval following assessment against corporate goals and resource availability.

3.6 Financial Management
The system of internal financial control is based on a framework of regular management information, financial regulations, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken by managers within Merseytravel. In particular, the system includes:-
 comprehensive budgeting systems;

 regular reviews of periodic and annual financial reports which indicate financial performance against the forecasts;

 setting targets to measure financial and other performance;

 the preparation of regular financial reports which indicate actual expenditure against the forecasts;

 clearly-defined capital expenditure guidelines; and

 as appropriate, formal project management disciplines.


3.7 The Internal Audit Function

Internal Audit is concerned with the adequacy and effectiveness of systems of internal control and whether they are managed, maintained, complied with and function effectively. To this end, Internal Audit will evaluate controls that promote:-

(i) compliance with policies, plans, laws, regulations and procedures;

(ii) accomplishment of objectives and goals;

(iii) reliability and integrity of information, both financially and operationally;

(iv) economy, efficiency and effectiveness of the use of resources;



  1. safe-guarding of the organisation’s assets.

3.8 Standards


To fulfil its function, Internal Audit operates to standards detailed in the Internal Audit Manual. This meets the standards established by the Code of Practice for Internal Audit issued by CIPFA. The Audit Commission review the work and standards of Internal Audit as part of their annual review of Merseytravel’s financial control. Their opinion is reported in their annual audit letter to the Authority.
3.9 Reporting Process
Internal Audit has been positioned in the Chief Executives Division as this is considered to be the best location to position a governance unit that will be an independent, proactive, suitably authorised and resourced operation to influence and guide the organisation’s governance processes. The Chief Internal Auditor as well as reporting to the Chief Executive/Director General will have unrestricted access to report to the Chair of the Executive Audit Committee, (chaired by a Non Executive Director) and the Chair of the ITA, as appropriate, if he/she believes the circumstances so warrant.
3.10 The Authority has established a Standards Committee that is charged with:-
(a) promoting and maintaining high standards of conduct by Elected Members and Co-opted Members of the Authority;
Merseyside Passenger Transport Executive

Annual Governance Statement (Cont’d)

(b) assisting Elected Members and Co-opted Members of the Authority to observe the Authority’s Code of Conduct;

(c) monitoring and keeping under review the Authority’s Code and, where necessary, make recommendations on any required amendments;

(d) advising, training or arranging to train Members and Co-opted Members of the Authority on matters relating to the Authority’s Code of Conduct;

(e) considering guidance issued by the Standards Board on matters relating to the Conduct of Members; and

(f) exercising any other functions conferred upon Standards Committee by law, including the granting of dispensations where appropriate.

(g) carrying out local investigations of allegations of miscount of members following a referral by the Standards Boards.

3.11 Key behaviours for Managers and staff have been produced and widely deployed across the organisation. Key behaviours for Members have also been developed.
3.12 The Year Book displays how Merseytravel is governed and the procedures followed to ensure that decisions are efficient, transparent and accountable to local people. This information is available to staff on the world drive.
3.13 Merseytravel’s Legal and Administration Officer, Secretary to the Executive, has been appointed Monitoring Officer, whose functions include maintaining Merseytravel’s Standing Orders, supporting the Standards Committee and ensuring lawfulness and fairness of decision making;
3.14 The Executive has established an Audit Committee lead by a Non-Executive Director, to review the effectiveness of the body’s internal control system and receive reports from the Corporate Governance Group.
3.15 The Executive has a Local Confidential Reporting Code and a Complaint Handling system to receive and investigate any complaints raised.
3.16 The Executive has commenced an active Organisational Development Programme that identifies the development needs of members and senior officers in relation to their strategic roles, and seeks to provide support by appropriate training.


    1. The Director of Resources has been approved as the officer with Section 151 responsibilities as stated in the Local Government Finance Act 1972. This includes being responsible to the Authority for ensuring that appropriate advice is given on all financial matters, for keeping proper financial records and accounts, and for maintaining an effective system of internal financial control.


    1. Managers are required to complete a statement of assurance regarding the effectiveness of the internal controls on their critical business systems and wider corporate governance issues.

4. Review of Effectiveness


The MPTE has responsibility for conducting at least annually a review of the effectiveness of its Governance Framework including the system of internal control. The review of effectiveness is informed by the work of the Senior Management within the Authority, who have responsibility for the development and maintenance of the governance environment, supported by Internal Audit as described above, the comments made by the external auditors and other review agencies and inspectorates.
The review is an aggregation of ongoing processes and one-off specific exercises.

Merseyside Passenger Transport Executive
Annual Governance Statement (Cont’d)



  • The Executive’s Business Planning and Performance Management processes make a significant contribution to the review process. This aligns divisional and corporate objectives and requires regular reviews of key actions designed to achieve those objectives. The process incorporates high level reporting, which highlights those areas where objectives are at risk and facilitates the direct communication of action for rectification.




  • Internal Audit allocates significant resource to reviewing the Executive’s Critical Financial Systems and in its Annual Internal Audit Report to the Executive provides an opinion on the overall system of internal control. This report provided assurance that no significant control issues had been identified through the work of Internal Audit during the year.



  • The Corporate Governance Working Group receive reports on the work undertaken in reviewing the internal control process and agree action plans to address weaknesses and ensure continuous improvements.





  • Management Team receives and reviews external reports from a variety of sources that informs them on the position of the Executive in achieving its objectives and the internal control framework.




  • A Risk Management Forum is responsible for developing the organisation’s approach to embedding risk management into the structure and processes used by Merseytravel.




  • The Audit Commission undertakes specific annual reviews of the organisation and report at the highest level. Recommendations are agreed and support the organisations continuous improvement.

We have been advised to the implications of the result of the review of the effectiveness of the Governance Framework by the Corporate Governance Working Group, and a plan to address weaknesses and ensure continuous improvement of the system is in place.

5. Significant Governance Issues
No significant governance issues have been identified in the system of internal control and governance framework.

We will continue to work to identify any further enhancements to our governance arrangements.


Signed …………………………………………………………….

(Chief Executive & Director General)

Signed ……………………………………………………………

(Director of Resources)

Dated ……………………………………………………………







1   2   3   4   5   6   7   8   9   10   11
:)


The database is protected by copyright ©hestories.info 2017
send message

    Main page

:)