Description

TPP 14-05 Certifying the effectiveness of internal controls over financial information:

• Formalises the requirement for Chief Financial Officers to provide an annual Letter of Certification and mandates minimum requirements around the process to complete that Letter of Certification
• Provides guidance on the elements comprising an effective system of internal control over financial information.

Part 1 of the document mandates five (5) core requirements:

1. The Agency Head must ensure there is an effective system of internal control over the financial and related operations of the agency
2. The CFO must provide the Agency Head with an annual Letter of Certification as to the effectiveness of the system of internal control over financial information. Once the Letter of Certification is accepted by the Agency Head, the CFO must ensure that a copy is provided to NSW Treasury
3. The CFO Letter of Certification must be supported by an Internal Control Questionnaire designed to assess the overall adequacy of the existing system of internal control over financial information and completed by the CFO
4. The CFO, when preparing the CFO Letter of Certification, must request and consider certifications provided by management and outsourced service providers
5. The CFO must submit a copy of the Letter of Certification and supporting documentation to the Audit and Risk Committee (ARC) for review at the same time as the Letter of Certification is submitted to the Agency Head. The ARC must review the Letter of Certification and provide advice to the Agency Head and, where applicable to the governing board.

It is mandatory for all material entities (other than State Owned Corporations) identified in the NSW Government Budget Papers (Budget Paper 2) as a “material entity controlled by the NSW Government” including departments, statutory bodies, and other entities to comply with the Core Requirements.

It is expected that the CFO Letter of Certification certifying the effectiveness of the system of internal control over financial information for 2014-2015 (submitted to NSW Treasury on or before 31 October 2015) and all subsequent years will reflect compliance with the Core Requirements.

Agencies seeking further information are encouraged to contact the Financial Management and Accounting Policy Branch at NSW Treasury.