Statement on the system of internal financial control ________________________

1. This statement is given in respect of the Statement of Accounts for Hampshire Fire and Rescue Authority (the Authority). I acknowledge my responsibility for ensuring that an effective system of internal financial control is maintained and operated in connection with the resources concerned.

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

3. 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 the Authority. 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.

4. Hampshire Fire and Rescue Authority employs an internal audit service which operates in accordance with the requirements of the code of practice for internal audit in local government in the United Kingdom, issued by CIPFA. The internal audit service provides an independent and objective appraisal function for reviewing the system of internal control. It examines, evaluates and reports to Senior Managers and the Treasurer on the adequacy of the internal financial control as a contribution to the proper economic, efficient and effective use of resources. Action is agreed by relevant managers to address issues raised and progress in implementing agreed action is monitored as appropriate.

5. The strategic and annual internal audit plans are prepared by the Chief Internal Auditor to take account of the characteristics and relative risks of the activities involved and are approved by the Treasurer. At least annually, the Chief Internal Auditor provides a report on internal audit activity to the Chief Fire Officer. The annual report includes the Chief Internal Auditor's independent opinion on the adequacy and effectiveness of the Authority's systems of internal control, including internal financial control.

6. My review of the effectiveness of the system of internal financial control is informed by the work of managers within Hampshire Fire and Rescue Authority; the work of the internal auditors as described above; and the external auditors in their annual audit letter and other reports.

Jon Pittam

Treasurer

6 July 2004