Financial Regulations
INDEX
1. GENERAL
2. ACCOUNTING AND AUDIT (INTERNAL AND EXTERNAL)
3. ANNUAL ESTIMATES (BUDGET) AND FORWARD PLANNING
4. BUDGETARY CONTROL AND AUTHORITY TO SPEND
5. BANKING ARRANGEMENTS AND AUTHORISATION OF PAYMENTS
6. INSTRUCTIONS FOR THE MAKING OF PAYMENTS
7. PAYMENT OF SALARIES
8. LOANS AND INVESTMENTS
9. INCOME
10. ORDERS FOR WORK, GOODS AND SERVICES
11. CONTRACTS
12. [PAYMENTS UNDER CONTRACTS FOR BUILDING OR OTHER CONSTRUCTION WORKS
13. [STORES AND EQUIPMENT
14. ASSETS, PROPERTIES AND ESTATES
15. INSURANCE
16. [CHARITIES
17. RISK MANAGEMENT
18. SUSPENSION AND REVISION OF FINANCIAL REGULATIONS
These Financial Regulations were adopted by the Council at its Meeting held on 28/7/22
1. GENERAL
1.1. These financial regulations govern the conduct of financial management by the council and may only be amended or varied by resolution of the council. Financial regulations are one of the council’s three governing policy documents providing procedural guidance for members and officers. Financial regulations must be observed in conjunction with the council’s standing orders1 and any individual financial regulations relating to contracts.
1.2. The council is responsible in law for ensuring that its financial management is adequate and affective and that the council has a sound system of internal control which facilitates the effective exercise of the council’s functions, including arrangements for the management of risk.
1.3. The council’s accounting control systems must include measures:
• for the timely production of accounts;
• that provide for the safe and efficient safeguarding of public money;
• to prevent and detect inaccuracy and fraud; and
• identifying the duties of officers.
1.4. These financial regulations demonstrate how the council meets these responsibilities and requirements.
1.5. At least once a year the council must review the effectiveness of its system of internal control which shall be in accordance with proper practices.
1.6. Deliberate or wilful breach of these Regulations by an employee may give rise to disciplinary proceedings.
1.7. Members of Council are expected to follow the instructions within these Regulations and not to entice employees to breach them. Failure to follow instructions within these Regulations brings the office of councillor into disrepute.
1.8. The Responsible Financial Officer (THE CLERK) holds a statutory office to be appointed by the council. [The Clerk has been appointed as THE CLERK for this council and these regulations will apply accordingly.]
1.9. THE CLERK;
• acts under the policy direction of the council;
• administers the council's financial affairs in accordance with all Acts, Regulations and proper practices,
• determines on behalf of the council its accounting records and accounting control systems,
• ensures the accounting control systems are observed,
• maintains the accounting records of the council up to date in accordance with proper practices,
• assists the council to secure economy, efficiency and effectiveness in the use of its resources; and
• produces financial management information as required by the council.
1.10. The accounting records determined by the The CLERK shall be sufficient to show and explain the council’s transactions and to enable the The Clerk to ensure that any income and expenditure account and statement of balances, or record of receipts and payments and any additional information as the case may be, or management information prepared for the council from time to time comply with the Accounts and Audit Regulations.
1.11. The accounting records determined by the The Clerk shall in particular contain,
• entries from day to day of all sums of money received and expended by the council and the matters to which the income and expenditure or receipts and payments account relate,
• a record of the assets and liabilities of the council; and
• wherever relevant, a record of the council’s income and expenditure in relation to claims made, or to be made, for any contribution, grant or subsidy.
1.12. The accounting control systems determined by the The CLERK shall include:
• procedures to ensure that the financial transactions of the council are recorded as soon as reasonably practicable and as accurately and reasonably as possible,
• procedures to enable the prevention and detection of inaccuracies and fraud and the ability to reconstruct any lost records,
• measures to ensure that risk is properly managed.
1.13. The council is not empowered by these Regulations or otherwise to delegate certain specified decisions. In particular, any decision regarding:
• setting the final budget or the precept (council tax requirement),
• approving accounting statements,
• approving an annual governance statement,
• declaring eligibility for the General Power of Competence; and
• addressing recommendations in any report from the internal or external auditors,
shall be a matter for the full council only.
1.14. In addition the council must:
• determine and keep under regular review the bank mandate for all council bank accounts,
• approve any grant or a single commitment in excess of [£5,000]; and
• in respect of the annual salary for any employee have regard to recommendations about annual salaries of employees made by the relevant committee in accordance with its terms of reference.
1.15. In these financial regulations, references to the Accounts and Audit Regulations or ‘the regulations’ shall mean the regulations issued under the provisions of section 27 of the Audit Commission Act 1998, or any superseding legislation, and then in force unless otherwise specified.
In these financial regulations the term ‘proper practice’ or ‘proper practices’ shall refer to guidance issued in Governance and Accountability for Local Councils - a Practitioners’ Guide (England) issued by the Joint Practitioners Advisory Group (JPAG), available from the websites of NALC and the Society for Local Council Clerks (SLCC).
1 Model standing orders for councils are available in Local Councils Explained © 2013 National Association of Local Councils
2. ACCOUNTING AND AUDIT (INTERNAL AND EXTERNAL)
2.1. All accounting procedures and financial records of the council shall be determined by the The CLERK in accordance with the Accounts and Audit Regulations, appropriate guidance and proper practices.
2.2 The CLERK shall complete the annual statement of accounts, annual report, and any related documents of the council contained in the Annual Return (as specified in proper practices) as soon as practicable after the end of the financial year and having certified the accounts shall submit them and report thereon to the council within the timescales set by the Accounts and Audit Regulations.
2.3. The council shall ensure that there is an adequate and effective system of internal audit of its accounting records, and of its system of internal control in accordance with proper practices. Any officer or member of the council shall make available such documents and records as appear to the council to be necessary for the purpose of the audit and shall, as directed by the council, supply the The CLERK, internal auditor, or external auditor with such information and explanation as the council considers necessary for that purpose.
2.4. The internal auditor shall be appointed by and shall carry out the work in relation to internal controls required by the council in accordance with proper practices.
2.5. The internal auditor shall:
• be competent and independent of the financial operations of the council,
• to demonstrate competence, objectivity and independence, be free from any actual or perceived conflicts of interest, including those arising from family relationships; and
• have no involvement in the financial decision making, management or control of the council.
2.6. Internal or external auditors may not under any circumstances:
• Carry out any operational duties for the council,
• initiate or approve accounting transactions; or
• direct the activities of any council employee, except to the extent that such employees have been appropriately assigned to assist the internal auditor.
2.7. For the avoidance of doubt, in relation to internal audit the terms ‘independent’ and ‘independence’ shall have the same meaning as is described in proper practices.
2.8. The CLERK shall make arrangements for the exercise of electors’ rights in relation to the accounts including the opportunity to inspect the accounts, books, and vouchers and display or publish any notices and statements of account required by Audit Commission Act 1998, or any superseding legislation, and the Accounts and Audit Regulations.
2.9. The CLERK shall, without undue delay, bring to the attention of all councillors any correspondence or report from internal or external auditors.
3. ANNUAL PRECEPT
3.1. The council shall fix the precept (council tax requirement), and relevant basic amount of council tax to be levied for the ensuing financial year not later than by the end of January each year. The CLERK shall issue the precept to the billing authority and shall supply each member with a copy of the approved precept.
4. BUDGETARY CONTROL AND AUTHORITY TO SPEND
4.1. Expenditure on revenue items may be authorised up to the amounts included for that class of expenditure in the approved budget. This authority is to be determined by:
• the council for all items over £500.00
• the Clerk, in conjunction with Chairman of Council for any items below £500.
Such authority is to be evidenced by a minute and where necessary also by the appropriate Chairman.
4.2. No expenditure may be authorised that will exceed the amount provided in the revenue budget for that class of expenditure other than by resolution of the council, or duly delegated committee.
4.3. The CLERKS salary and expenses are to be reviewed according to NALC guidelines and at appropriate times and discussed at the forthcoming Parish Council Meeting and such review shall be evidenced by a hard copy of the minutes signed by the Chairman of Council.
4.4. In cases of extreme risk to the delivery of council services, the clerk may authorise revenue expenditure on behalf of the council which in the clerk’s judgement it is necessary to carry out. Such expenditure includes repair, replacement or other work, whether or not there is any budgetary provision for the expenditure, subject to a limit of £500. The Clerk shall report such action to the chairman as soon as possible and to the council as soon as practicable thereafter.
4.5. No expenditure shall be authorised in relation to any capital project and no contract entered into or tender accepted involving capital expenditure unless the council is satisfied that the necessary funds are available and the requisite borrowing approval has been obtained.
4.6. The CLERK shall provide the council with a statement of receipts and payments to date under each head of the budgets at each Parish Council Annual Meeting. Changes in earmarked reserves shall be approved by council as part of the budgetary control process.
5. BANKING ARRANGEMENTS AND AUTHORISATION OF PAYMENTS
5.1. The council's banking arrangements shall be made by the CLERK and approved by the council.
5.2. The CLERK shall prepare a schedule of payments requiring authorisation, forming part of the Agenda for the Meeting and, together with the relevant invoices, present the schedule to council. A detailed list of all payments shall be disclosed within or as an attachment to the minutes of the meeting at which payment was authorised. Personal payments (including salaries, wages, expenses and any payment made in relation to the termination of a contract of employment) may be summarised to remove public access to any personal information.
5.3. All invoices for payment shall be examined, verified and certified by the CLERK to confirm that the work, goods or services to which each invoice relates has been received, carried out, examined and represents expenditure previously approved by the council.
5.4. The CLERK shall examine invoices for arithmetical accuracy and analyse them to the appropriate expenditure heading. The CLERK shall take all steps to pay all invoices submitted, and which are in order, at the next available council meeting.
5.5. The Clerk shall have delegated authority to authorise the payment of items only in the following circumstances:
a) If a payment is necessary to avoid a charge to interest under the Late Payment of Commercial Debts (Interest) Act 1998, and the due date for payment is before the next scheduled Meeting of council, where the Clerk certifies that there is no dispute or other reason to delay payment, provided that a list of such payments shall be submitted to the next appropriate meeting of council.
b) An expenditure item authorised under 5.6 below (continuing contracts and obligations) provided that a list of such payments shall be submitted to the next appropriate meeting of council or
c) fund transfers within the councils banking arrangements up to the sum of [£10,000] provided that a list of such payments shall be submitted to the next appropriate meeting of council.
5.6. For each financial year the Clerk shall draw up a list of due payments which arise on a regular basis as the result of a continuing contract, statutory duty, or obligation (such as but not exclusively) Salaries, PAYE and NI, Superannuation Fund and regular maintenance contracts and the like for which council may authorise payment for the year provided that the requirements of regulation 4.1 are adhered to, provided also that a list of such payments shall be submitted to the next appropriate meeting of council.
5.7. A record of regular payments made under 5.6 above shall be drawn up and be signed by two members on each and every occasion when payment is authorised - thus controlling the risk of duplicated payments being authorised and / or made.
5.8. In respect of grants a duly authorised committee shall approve expenditure within any limits set by council and in accordance with any policy statement approved by council. Any Revenue or Capital Grant in excess of £5,000 shall before payment, be subject to ratification by resolution of the council.
5.9. Members are subject to the Code of Conduct that has been adopted by the council and shall comply with the Code and Standing Orders when a decision to authorise or instruct payment is made in respect of a matter in which they have a disclosable pecuniary or other interest unless a dispensation has been granted.
5.10. The council will aim to rotate the duties of members in these Regulations so that onerous duties are shared out as evenly as possible over time.
6. INSTRUCTIONS FOR THE MAKING OF PAYMENTS
6.1. The council will make safe and efficient arrangements for the making of its payments.
6.2. Following authorisation under Financial Regulation 5 above, the council shall give instruction that a payment shall be made.
6.3. All payments shall be affected by cheque or other instructions to the council's bankers, or otherwise, in accordance with a resolution of council.
6.4. Cheques or orders for payment drawn on the bank account in accordance with the schedule as presented to council or committee shall be signed by two members of council accordance with a resolution instructing that payment. A member who is a bank signatory, having a connection by virtue of family or business relationships with the beneficiary of a payment, should not, under normal circumstances, be a signatory to the payment in question.
6.5. To indicate agreement of the details shown on the cheque or order for payment, the signatories shall each also initial the cheque counterfoil.
6.6. Cheques or orders for payment shall not normally be presented for signature other than at a council or committee meeting (including immediately before or after such a meeting). Any signatures obtained away from such meetings shall be reported to the council at the next convenient meeting.
6.7. Regular back-up copies of the records on any computer shall be made and shall be stored securely away from the computer in question, and preferably off site.
6.8. The council, and any members using computers for the council’s financial business, shall ensure that anti-virus, anti spyware and firewall software with automatic updates, together with a high level of security, is used.
6.9. The council will not maintain any form of cash float. All cash received must be banked intact. Any payments made in cash by the Clerk (for example for postage or minor stationery items) shall be refunded on a regular basis, at least quarterly.
7. PAYMENT OF SALARIES
7.1. No changes shall be made to any employee’s pay, emoluments, or terms and conditions of employment without the prior consent of the [council] [relevant committee].
8. INCOME
8.1. The collection of all sums due to the council shall be the responsibility of and under the supervision of the CLERK.
8.2. Particulars of all charges to be made for work done, services rendered or goods supplied shall be agreed annually by the council, notified to the CLERK and the CLERK shall be responsible for the collection of all accounts due to the council.
8.3. The council will review all fees and charges at least annually, following a report of the Clerk.
8.4. Any sums found to be irrecoverable and any bad debts shall be reported to the council and shall be written off in the year.
8.5. All sums received on behalf of the council shall be banked intact as directed by The Clerk. In all cases, all receipts shall be deposited with the council's bankers with such frequency as the Clerk considers necessary.
8.6. The origin of each receipt shall be entered on the paying-in slip.
8.7. Personal cheques shall not be cashed out of money held on behalf of the council.
8.8. The Clerk shall promptly complete any VAT Return that is required. Any repayment claim due in accordance with VAT Act 1994 section 33 shall be made at least annually coinciding with the financial year end.
9. ORDERS FOR WORK, GOODS AND SERVICES
9.1. An official order or letter shall be issued for all work, goods and services unless a formal contract is to be prepared or an official order would be inappropriate. Copies of orders shall be retained.
9.2. Order books shall be controlled by the CLERK.
9.3. All members and officers are responsible for obtaining value for money at all times. An officer issuing an official order shall ensure as far as reasonable and practicable that the best available terms are obtained in respect of each transaction, usually by obtaining three or more quotations or estimates from appropriate suppliers, subject to any de minimis provisions in Regulation 11.1 below.
9.4. A member may not issue an official order or make any contract on behalf of the council.
9.5. The Clerk shall verify the lawful nature of any proposed purchase before the issue of any order, and in the case of new or infrequent purchases or payments, the CLERK shall ensure that the statutory authority shall be reported to the meeting at which the order is approved so that the minutes can record the power being used.
10. CONTRACTS
10.1. Procedures as to contracts are laid down as follows:
a. Every contract shall comply with these financial regulations, and no exceptions shall be made otherwise than in an emergency provided that this regulation need not apply to contracts which relate to items (i) to (vi) below:
i. for specialist services such as are provided by solicitors, accountants, surveyors and planning consultants,
ii. for additional audit work of the external auditor up to an estimated value of £500. In excess of this sum the CLERK shall act after consultation with the Chairman and Vice Chairman of council; and
iii. for goods or materials proposed to be purchased which are proprietary articles and / or are only sold at a fixed price.
11. ASSETS, PROPERTIES AND ESTATES
11.1. The Clerk shall make appropriate arrangements for the custody of all title deeds and Land Registry Certificates of properties held by the council. The CLERK shall ensure a record is maintained of all properties held by the council, recording the location, extent, plan, reference, purchase details, nature of the interest, tenancies granted, rents payable and purpose for which held in accordance with Accounts and Audit Regulations.
11.2. No tangible moveable property shall be purchased or otherwise acquired, sold, leased or otherwise disposed of, without the authority of the council, together with any other consents required by law, save where the estimated value of any one item of tangible movable property does not exceed £500.
11.3. Subject only to the limit set in Regulation 14.2 above, no tangible moveable property shall be purchased or acquired without the authority of the full council. In each case a report in writing shall be provided to council with a full business case.
11.4. The CLERK shall ensure that an appropriate and accurate Register of Assets and Investments is kept up to date. The continued existence of tangible assets shown in the Register shall be verified at least annually, possibly in conjunction with a health and safety inspection of assets.
12. INSURANCE
12.1. Following the annual risk assessment (per Regulation 17), the CLERK shall affect all insurances and negotiate all claims on the council's insurers.
12.2. The Clerk shall give prompt notification to the parish councillors of all new risks, properties or vehicles which require to be insured and of any alterations affecting existing insurances.
12.3. The CLERK shall keep a record of all insurances effected by the council and the property and risks covered thereby and annually review it.
12.4. The CLERK shall be notified of any loss liability or damage or of any event likely to lead to a claim and shall report these to council at the next available meeting.
13. RISK MANAGEMENT
13.1. The council is responsible for putting in place arrangements for the management of risk. The Clerk shall prepare, for approval by the council, risk management policy statements in respect of all activities of the council. Risk policy statements and consequential risk management arrangements shall be reviewed by the council at least annually.
13.2. When considering any new activity, the Clerk shall prepare a draft risk assessment including risk management proposals for consideration and adoption by the council.
14. SUSPENSION AND REVISION OF FINANCIAL REGULATIONS
14.1. It shall be the duty of the council to review the Financial Regulations of the council from time to time. The Clerk shall make arrangements to monitor changes in legislation or proper practices and shall advise the council of any requirement for a consequential amendment to these Financial Regulations.
14.2. The council may, by resolution of the council duly notified prior to the relevant meeting of council, suspend any part of these Financial Regulations provided that reasons for the suspension are recorded and that an assessment of the risks arising has been drawn up and presented in advance to all members of council.