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. INCOME
9. ORDERS FOR WORK, GOODS AND SERVICES
10. CONTRACTS
11. STORES AND EQUIPMENT
12. ASSETS, PROPERTIES AND ESTATES
13. INSURANCE
14. RISK MANAGEMENT
15. SUSPENSION AND REVISION OF FINANCIAL REGULATIONS
GENERAL
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 and any individual financial regulations relating to contracts.
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.
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.
These financial regulations demonstrate how the council meets these responsibilities and requirements.
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.
Deliberate or wilful breach of these Regulations by an employee may give rise to disciplinary proceedings.
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.
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.
The RFO;
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.
The accounting records determined by the RFO shall be sufficient to show and explain the council’s transactions and to enable the RFO 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.
The accounting records determined by the RFO 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.
The accounting control systems determined by the RFO 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;
identification of the duties of officers dealing with financial transactions
measures to ensure that risk is properly managed.
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;
writing off bad debts;
addressing recommendations in any report from the internal or external auditors,
shall be a matter for the full council only.
In addition the council must:
determine and keep under regular review the bank mandate for all council bank accounts;
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.
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.
ACCOUNTING AND AUDIT (INTERNAL AND EXTERNAL)
All accounting procedures and financial records of the council shall be determined by the RFO in accordance with the Accounts and Audit Regulations, appropriate guidance and proper practices.
The RFO 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.
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 RFO, internal auditor, or external auditor with such information and explanation as the council considers necessary for that purpose.
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.
The internal auditor shall:
Be appointed annually and conduct the audit according to the letter of Appointment of Internal Auditor
be competent and independent of the financial operations of the council;
report to council in writing, or in person, on a regular basis with a minimum of one annual written report during each financial year;
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.
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.
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.
The RFO 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.
The RFO shall, without undue delay, bring to the attention of all councillors any correspondence or report from internal or external auditors.
ANNUAL ESTIMATES (BUDGET) AND FORWARD PLANNING
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 RFO shall issue the precept to the billing authority and shall supply each member with a copy of the approved annual budget.
The approved annual budget shall form the basis of financial control for the ensuing year.
BUDGETARY CONTROL AND AUTHORITY TO SPEND
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;
the Clerk, in conjunction with the Council for any other items.
Unspent provisions in the revenue or capital budgets for completed projects shall not be carried forward to a subsequent year.
All works shall be administered in accordance with the council's standing orders and financial regulations relating to contracts.
Changes in earmarked reserves shall be approved by council as part of the budgetary control process.
BANKING ARRANGEMENTS AND AUTHORISATION OF PAYMENTS
The council's banking arrangements, including the bank mandate, shall be made by the RFO and approved by the council; banking arrangements may not be delegated to a committee. They shall be regularly reviewed for safety and efficiency.
The RFO 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 shall review the schedule for compliance and, having satisfied itself shall authorise payment by a resolution of the council [or finance committee]. The approved schedule shall be ruled off and initialled by the Chairman of the Meeting. 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.
All invoices for payment shall be examined, verified and certified by the RFO 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.
The RFO shall examine invoices for arithmetical accuracy and analyse them to the appropriate expenditure heading. The RFO shall take all steps to pay all invoices submitted, and which are in order, at the next available council meeting.
For each financial year the Clerk and RFO 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 and regular maintenance contracts and the like for which council [,or a duly authorised committee,] may authorise payment for the year provided that the requirements of regulation 4.1 (Budgetary Controls) are adhered to, provided also that a list of such payments shall be submitted to the next appropriate meeting of council [or Finance Committee].
A record of regular payments made under 5.5 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.
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.
Any changes in the recorded details of suppliers, such as bank account records, shall be approved in writing by a Member.
INSTRUCTIONS FOR THE MAKING OF PAYMENTS
The council will make safe and efficient arrangements for the making of its payments.
Following authorisation under Financial Regulation 5 above, the council, a duly delegated committee shall give instruction that a payment shall be made.
All payments shall be effected by cheque or other instructions to the council's bankers, or otherwise, in accordance with a resolution of council [or duly delegated committee].
Cheques or orders for payment drawn on the bank account in accordance with the schedule as presented to council 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.
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.
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 [or Finance Committee] at the next convenient meeting.
If thought appropriate by the council, payment for utility supplies (energy, telephone and water) and any National Non-Domestic Rates may be made by variable direct debit provided that the instructions are signed by two members and any payments are reported to council as made. The approval of the use of a variable direct debit shall be renewed by resolution of the council at least every two years.
If thought appropriate by the council, payment for certain items may be made by banker’s standing order provided that the instructions are signed, or otherwise evidenced by two members are retained and any payments are reported to council as made. The approval of the use of a banker’s standing order shall be renewed by resolution of the council at least every two years.
If thought appropriate by the council, payment for certain items may be made provided evidence is retained showing which members approved the payment.
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.
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.
The RFO may maintain a petty cash float of £100 for the purpose of defraying operational and other expenses. Vouchers for payments made from petty cash shall be kept to substantiate the payment.
PAYMENT OF SALARIES
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, or duly delegated committee. All payments shall be made on the first day of the month.
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 if appropriate. No changes shall be made to any employee’s pay, emoluments, or terms and conditions of employment without the prior consent of the council. The total of such payments in each calendar month 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.
Any termination payments shall be supported by a clear business case and reported to the council. Termination payments shall only be authorised by council.
Before employing interim staff the council must consider a full business case.
INCOME
The collection of all sums due to the council shall be the responsibility of and under the supervision of the RFO.
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 RFO and the RFO shall be responsible for the collection of all accounts due to the council.
The council will review all fees and charges at least annually, following a report of the Clerk.
Any sums found to be irrecoverable and any bad debts shall be reported to the council and shall be written off in the year.
All sums received on behalf of the council shall be banked intact as directed by the RFO. The origin of each receipt shall be entered on the paying-in slip.
Personal cheques shall not be cashed out of money held on behalf of the council.
The RFO 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.
Where any significant sums of cash are regularly received by the council, the RFO 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.
[Any income arising which is the property of a charitable trust shall be paid into a charitable bank account. Instructions for the payment of funds due from the charitable trust to the council (to meet expenditure already incurred by the authority) will be given by the Managing Trustees of the charity meeting separately from any council meeting (see also Regulation 16 below)].
ORDERS FOR WORK, GOODS AND SERVICES
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.
A member may not issue an official order or make any contract on behalf of the council.
CONTRACTS
Contracts are not normally raised by GHPC, however in the rare case that such a contract is required then the council shall review such requirements necessary and an appropriate procedure will be written prior to any contract being discussed or awarded.
STORES AND EQUIPMENT
The council shall be responsible for the care and custody of all stores and equipment.
ASSETS, PROPERTIES AND ESTATES
The Clerk shall make appropriate arrangements for the custody of all title deeds and Land Registry Certificates of properties held by the council. The RFO 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.
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.
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.
The RFO 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.
INSURANCE
Following the annual risk assessment (per Regulation 14), the RFO shall effect all insurances and negotiate all claims on the council's insurers [in consultation with the Clerk].
[The Clerk shall give prompt notification of all new risks, properties or vehicles which require to be insured and of any alterations affecting existing insurances.]
The RFO shall keep a record of all insurances effected by the council and the property and risks covered thereby and annually review it.
The RFO 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.
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.
RISK MANAGEMENT
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.
When considering any new activity, the Clerk shall prepare a draft risk assessment including risk management proposals for consideration and adoption by the council.
SUSPENSION AND REVISION OF FINANCIAL REGULATIONS
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.
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.
Reviewing the Financial Regulations
In line with the Gedney Hill Parish Council Standing Orders, all documents will be reviewed on a 12 monthly basis for applicability in line with changes in current legislation and requirements of the council.
All documents therefore, will be reviewed and adopted at the AM irrespective of the date on which they were initially written.
This Procedure was reviewed and adopted at a meeting held on……………………………