Financial Regulations
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 orders.
1.2. The council is responsible in law for ensuring that its financial management is adequate and effective 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, which 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, prior to approving the Annual Governance Statement, 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 (RFO) holds a statutory office to be appointed by the council. The Clerk has been appointed as RFO for this council and these regulations will apply accordingly.
1.9. The accounting records determined by the clerk shall be sufficient to show and explain the council’s transactions and to enable the clerk to ensure that any income and expenditure account and statement of balances, or record of receipts and payments and 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.
1.10. The accounting records determined by the clerk shall in particular contain entries from day to day of all sums of money received and expended by the council and detailed records kept and evidenced.
1.11. The accounting control systems determined by 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.
1.12. The council is not empowered by these Regulations or otherwise to delegate certain specified decisions. In particular any decision regarding the setting the final budget or the precept (council tax requirement), approving accounting statements, approving an annual governance statement, borrowing, addressing recommendations in any report from the internal or external auditors
1.13. 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 respect of the annual salary for any employee, the council should have regard to recommendations about annual salaries of employees in accordance with any relevant terms of reference.
1.14. 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).
2. ACCOUNTING AND AUDIT (INTERNAL AND EXTERNAL)
2.1. All accounting procedures and financial records of the council shall be determined by the clerk in accordance with the Accounts and Audit Regulations, appropriate guidance and proper practices.
2.2. On a regular basis, at least half yearly, and at each financial year end, a member other than the Chairperson [or a cheque signatory] shall be appointed to verify bank reconciliations (for all accounts) produced by the clerk. The member shall sign the reconciliations and the original bank statements as evidence of verification. This activity shall on conclusion be reported, including any exceptions, to and noted by the council.
2.3. The clerk shall complete the annual statement of accounts, annual report, and any related documents of the council contained in the Annual Return 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.
2.4. 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 clerk , internal auditor, or external auditor (if required) with such information and explanation as the council considers necessary for that purpose.
2.5. 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.
2.6. The internal auditor shall: be competent and independent of the financial operations of the council; report to council in writing during each financial year. The internal auditor should be demonstrate competence, objectivity and independence and 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.
2.7. Internal or external auditors may not under any circumstances: perform 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.
2.8. 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.
2.9. 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.
2.10. The clerk shall, without undue delay, bring to the attention of all councillors any correspondence or report from internal or external auditors.
3. ANNUAL ESTIMATES (BUDGET) AND FORWARD PLANNING
3.1. The Council shall review its three year forecast of revenue and capital receipts and payments. Having regard to the forecast, it shall thereafter formulate and submit proposals for the following financial year with any proposals for revising the forecast.
3.2. The clerk must each year, prepare detailed estimates of all receipts and payments including the use of reserves and all sources of funding for the following financial year in the form of a budget to be considered by the council.
3.3. The council shall consider annual budget proposals in relation to the council’s three year forecast of revenue and capital receipts and payments including recommendations for the use of reserves and sources of funding and update the forecast accordingly.
3.4. The council shall fix the precept 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 annual budget.
3.5. The approved annual budget shall form the basis of financial control for the ensuing year.
4. BUDGETARY CONTROL AND AUTHORITY TO SPEND
4.1. Expenditure must be authorised for all items of expenditure in full council. The Clerk can authorise, in conjunction with Chairperson of Council or Chairperson of the appropriate committee, for any items below £100. Such authority is to be evidenced by an authorisation slip duly signed by the Clerk, and where necessary also by the Chairperson.
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. During the budget year and with the approval of council having considered fully the implications for public services, unspent and available amounts may be moved to other budget headings or to an earmarked reserve as appropriate.
4.3. Unspent provisions in the revenue or capital budgets for completed projects shall be carried forward to a subsequent year.
4.4. The salary budgets are to be reviewed at least annually for the following financial year and such review shall be evidenced in the minutes signed by the Chairperson of Council or relevant committee. The clerk will inform committees of any changes impacting on their budget requirement for the coming year in good time.
4.5. 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 £300. The Clerk shall report such action to the chairperson as soon as possible and to the council as soon as practicable thereafter.
4.6. 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.
4.7. All capital works shall be administered in accordance with the council's standing orders and financial regulations relating to contracts.
4.8. The clerk shall regularly provide the council with a statement of receipts and payments to date under each head of the budgets, comparing actual expenditure to the appropriate date against that planned as shown in the budget. These statements are to be prepared at least at the end of each financial quarter and shall show explanations of variances of more than 10% at the year end.
4.9. 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, including the bank mandate, shall be made by the clerk and approved by the council; banking arrangements may not be delegated. They shall be regularly reviewed for safety and efficiency.
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. The council will review the schedule for compliance and, having satisfied itself shall authorise payment by a resolution of the 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.
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 All payments shall be effected by cheque or petty cash.
6.3 Cheques drawn on the bank account in accordance with the schedule as presented to council or committee shall be signed by two members of council in 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.
6.4 To indicate agreement of the details shown on the cheque or order for payment with the counterfoil and the invoice or similar documentation, the signatories shall each also initial the cheque counterfoil.
6.5. 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.
6.6. No employee or councillor shall disclose any PIN or password, relevant to the working of the council or its bank accounts, to any person not authorised in writing by the council or a duly delegated committee.
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 clerk may provide petty cash to officers for the purpose of operational and other expenses. Vouchers for payments made shall be forwarded to the clerk with a claim for reimbursement.
a) The clerk shall maintain a petty cash float of £300 for the purpose of operational and other expenses. Vouchers for payments made from petty cash shall be kept to substantiate the payment.
b) Income received must not be paid into the petty cash float but must be separately banked, as provided elsewhere in these regulations.
c) Payments to maintain the petty cash float shall be shown separately on the schedule of payments presented to council.
7. PAYMENT OF SALARIES
7.1. As an employer, the council shall make arrangements to meet fully the statutory requirements placed on all employers by PAYE and National Insurance legislation. The payment of all salaries shall be made in accordance with payroll records and the rules of PAYE and National Insurance currently operating, and salary rates shall be as agreed by council.
7.2. Payment of salaries and payment of deductions from salary such as may be required to be made for tax, national insurance and pension contributions, or similar statutory or discretionary deductions must be made in accordance with the payroll records and on the appropriate dates stipulated in employment contracts, provided that each payment is reported to the next available council meeting, as set out in these regulations above.
7.3. No changes shall be made to any employee’s pay or terms and conditions of employment without the prior consent of the council.
7.4. Each and every payment to employees of net salary and to the appropriate creditor of the statutory and discretionary deductions shall be recorded in a separate confidential record. This confidential record is not open to inspection or review (under the Freedom of Information Act 2000 or otherwise) other than:
a) by any councillor who can demonstrate a need to know;
b) by the internal auditor;
c) by the external auditor; or
d) by any person authorised under Audit Commission Act 1998, or any superseding legislation.
7.5. The total of such payments in shall be reported with all other payments as made as may be required under these Financial Regulations, to ensure that only payments due for the period have actually been paid.
7.6. An effective system of personal performance management should be maintained for the senior officers.
7.7. Any termination payments shall be supported by a clear business case and reported to the council. Termination payments shall only be authorised by council.
7.8. Before employing interim staff the council must consider a full business case.
8. LOANS AND INVESTMENTS
8.1. All borrowings shall be effected in the name of the council, after obtaining any necessary borrowing approval. Any application for borrowing approval shall be approved by Council as to terms and purpose. The application for borrowing approval, and subsequent arrangements for the loan shall only be approved by full council.
8.2. Any financial arrangement which does not require formal borrowing approval from the Secretary of State (such as Hire Purchase or Leasing of tangible assets) shall be subject to approval by the full council. In each case a report in writing shall be provided to council in respect of value for money for the proposed transaction.
8.3. All loans and investments shall be negotiated in the name of the council and shall be for a set period in accordance with council policy.
8.4. The council shall consider the need for an Investment Strategy and Policy which, if drawn up, shall be in accordance with relevant regulations, proper practices and guidance. Any Strategy and Policy shall be reviewed by the council at least annually.
8.5. All investments of money under the control of the council shall be in the name of the council.
8.6. All investment certificates and other documents relating thereto shall be retained in the custody of the clerk.
9. INCOME
9.1. The collection of all sums due to the council shall be the responsibility of and under the supervision of the clerk.
9.2. 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.
9.3. The council will review all fees and charges at least annually, following a report of the Clerk.
9.4. Any sums found to be irrecoverable and any bad debts shall be reported to the council and shall be written off in the year.
9.5. 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/possible.
9.6. The origin of each receipt shall be entered on the paying-in slip.
9.7. Personal cheques shall not be cashed out of money held on behalf of the council.
9.8. The clerk shall 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.
9.9. Where any significant sums of cash are regularly received by the council, the clerk shall take such steps as are agreed by the council to ensure that more than one person is present when the cash is counted in the first instance, that there is a reconciliation to some form of control such as ticket issues, and that appropriate care is taken in the security and safety of individuals banking such cash.
10. ORDERS FOR WORK, GOODS AND SERVICES
10.1. 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.
10.2. Order books shall be controlled by the clerk. 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.
10.4. A member may not issue an official order or make any contract on behalf of the council.
10.5. 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.
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 £250.
11.3. No real property (interests in land) shall be sold, leased or otherwise disposed of without the authority of the council, together with any other consents required by law. In each case a report in writing shall be provided to council in respect of valuation and surveyed condition of the property (including matters such as planning permissions and covenants) together with a proper business case (including an adequate level of consultation with the electorate).
11.4. No real property (interests in land) shall be purchased or acquired without the authority of the full council. In each case a report in writing shall be provided to council in respect of valuation and surveyed condition of the property (including matters such as planning permissions and covenants) together with a proper business case including an adequate level of consultation with the electorate.
11.5. Subject only to the limit set in Regulation 12.2 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.
11.6. 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 the clerk shall affect all insurances and negotiate all claims on the council's insurers.
12.2. The Clerk should have prompt notification 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 affected 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.
12.5. All appropriate members and employees of the council shall be included in a suitable form of security or fidelity guarantee insurance which shall cover the maximum risk exposure as determined annually by the council.
13. CHARITIES
13.1. Where the council is sole managing trustee of a charitable body the Clerk and shall ensure that separate accounts are kept of the funds held on charitable trusts and separate financial reports made in such form as shall be appropriate, in accordance with Charity Law and legislation, or as determined by the Charity Commission. The clerk shall arrange for any audit or independent examination as may be required by Charity Law or any Governing Document.
14. RISK MANAGEMENT
14.1. The council is responsible for putting in place arrangements for the management of risk. The Clerk and/or nominated councillors will 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.
14.2. When considering any new activity, it is necessary to prepare a draft risk assessment including risk management proposals for consideration and adoption by the council.
15. SUSPENSION AND REVISION OF FINANCIAL REGULATIONS
15.1. 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.
15.2. 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.
FCBJULY2017