Scottish Office Pensions Agency: Annual Report and Accounts

Statement on the System of Internal Financial Control

As Agency Accounting Officer, I acknowledge my responsibility for ensuring that an effective system of internal financial control is maintained and operated by the Scottish Office Pensions Agency (SOPA).

The system can provide only reasonable and not absolute assurance that assets are safeguarded, transactions authorised and properly recorded, and that material errors or irregularities are either prevented or would be detected within a timely period.

The system of internal financial control is based on a framework of regular management information, administrative procedures including the segregation of duties, and a system of delegation and accountability. In particular, it includes:

• Comprehensive budgeting systems with an annual budget which is reviewed and agreed by the Management Board;
• Regular reviews by the Management Board of periodic and annual financial reports which indicate financial performance against the forecasts;
• Setting targets to measure financial and other performance;
• Clearly defined capital investment control guidelines;
• As appropriate, formal project management disciplines.

SOPA uses the services of an internal audit unit, which operates to standards defined in the Government Internal Audit Manual. The work of the internal audit unit is informed by an analysis of the risk to which the Agency is exposed, and annual internal audit plans are based on this analysis. The analysis of risk and the internal audit plans are endorsed by the Agency's Audit Committee and approved by me. The Head of Internal Audit (HIA) provides me with periodic reports on internal audit activity in the Agency.

My review of the effectiveness of the system of internal financial control is informed by the work of the internal auditors, the Audit Committee which overseas the work of the internal auditors, and the executive managers within the Agency who have responsibility for the development and maintenance of the financial control framework, and comments made by the external auditors in their management letters.

Ralph Garden
Chief Executive
13 July 1999