Financial Regulations
These Financial Regulations were adopted at the Parish Council meeting held on the 5th August 2024.
1 General
1.1 These Financial Regulations govern the financial management of the council and may only be amended or varied by resolution of the council. They are one of the council’s governing documents and shall be observed in conjunction with the council’s Standing Orders.
1.2 Councillors are expected to follow these regulations and not to entice employees to breach them. Failure to follow these regulations brings the office of councillor into disrepute.
1.3 Wilful breach of these regulations by an employee may result in disciplinary proceedings.
1.4 In these Financial Regulations ‘Must’ and bold text refer to a statutory obligation the council cannot change.
1.5 The Clerk has been appointed Responsible Financial Officer (RFO) for this council and these regulations will apply accordingly.
• 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 control systems;
• ensures the accounting control systems are observed;
• ensures the accounting records are kept up to date;
• seeks economy, efficiency and effectiveness in the use of council resources; and
• produces financial management information as required by the council.
1.6 The council must not delegate any decision regarding:
• setting the final budget or the precept (council tax requirement);
• the outcome of a review of the effectiveness of its internal controls
• approving accounting statements;
• approving an annual governance statement;
• borrowing;
• declaring eligibility for the General Power of Competence; and
• addressing recommendations from the internal or external auditors
1.7 In addition, the council shall:
• determine and regularly review the bank mandate for all council bank accounts;
• authorise any grant or single commitment in excess of £5,000
2 Risk management and internal control
2.1 The council must ensure that it has a sound system of internal control, which delivers effective financial, operational and risk management.
2.2 The Clerk shall prepare, for approval by the council, a risk management policy covering all activities of the council. This policy and consequential risk management arrangements shall be reviewed by the council at least annually.
2.3 When considering any new activity, the Clerk shall prepare a draft risk assessment including risk management proposals for consideration by the council.
2.4 At least once a year, the council must review the effectiveness of its system of internal control, before approving the Annual Governance Statement.
2.5 The accounting control systems determined by the RFO must include measures to:
• ensure that risk is appropriately managed;
• ensure the prompt, accurate recording of financial transactions;
• prevent and detect inaccuracy or fraud; and
• allow the reconstitution of any lost records;
• identify the duties of officers dealing with transactions and
• ensure division of responsibilities.
2.6 Regular back-up copies shall be made of the records on any council computer and stored either online or in a separate location from the computer. The council shall put measures in place to ensure that the ability to access any council computer is not lost if an employee leaves or is incapacitated for any reason.
3 Accounts and audit
3.1 All accounting procedures and financial records of the council shall be determined by the RFO in accordance with the Accounts and Audit Regulations.
3.2 The accounting records determined by the RFO must be sufficient to explain the council’s transactions and to disclose its financial position with reasonably accuracy at any time. In particular, they must contain:
• day-to-day entries of all sums of money received and expended by the council and the matters to which they relate;
• a record of the assets and liabilities of the council;
3.3 The accounting records shall be designed to facilitate the efficient preparation of the accounting statements in the Annual {Governance and Accountability} Return.
3.4 The RFO shall complete and certify the annual Accounting Statements of the council contained in the Annual {Governance and Accountability} Return in accordance with proper practices, as soon as practicable after the end of the financial year. Having certified the Accounting Statements, the RFO shall submit them (with any related documents) to the council, within the timescales required by the Accounts and Audit Regulations.
3.5 The council must ensure that there is an adequate and effective system of internal audit of its accounting records and internal control system in accordance with proper practices.
3.6 Any officer or member of the council must make available such documents and records as the internal or external auditor consider 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.
3.7 The internal auditor shall be appointed by the council and shall carry out their work to evaluate the effectiveness of the council’s risk management, control and governance processes in accordance with proper practices specified in the Practitioners’ Guide.
3.8 The council shall ensure that the internal auditor:
• is competent and independent of the financial operations of the council;
• reports to council in writing, or in person, on a regular basis with a minimum of one report during each financial year;
3.9 Internal or external auditors may not under any circumstances:
• perform any operational duties for the council;
• initiate or approve accounting transactions;
• provide financial, legal or other advice including in relation to any future 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.
3.10 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 documents required by the Local Audit and Accountability Act 2014, or any superseding legislation, and the Accounts and Audit Regulations.
3.11 The RFO shall, without undue delay, bring to the attention of all councillors any correspondence or report from internal or external auditors.
4 Budget and precept
4.1 Before setting a precept, the council must calculate its council tax requirement for each financial year by preparing and approving a budget, in accordance with The Local Government Finance Act 1992 or succeeding legislation.
4.2 Budgets for salaries and wages, including employer contributions shall be reviewed by at least annually in January for the following financial year.
4.3 Unspent funds for partially completed projects may only be carried forward, by placing them in an earmarked reserve with the formal approval of the full council.}
4.4 The council shall set a precept for this amount no later than the January meeting for the ensuing financial year.
4.5 Any member with council tax unpaid for more than two months is prohibited from voting on the budget or precept by Section 106 of the Local Government Finance Act 1992 and must and must disclose at the start of the meeting that Section 106 applies to them.
4.6 The RFO shall issue the precept to the billing authority no later than the end of January and supply each member with a copy of the agreed annual budget.
4.7 The agreed budget provides a basis for monitoring progress during the year by comparing actual spending and income against what was planned.
4.8 Any addition to, or withdrawal from, any earmarked reserve shall be agreed by the council.
5 Procurement
5.1 Members and officers are responsible for obtaining value for money at all times. Any officer procuring goods, services or works should ensure, as far as practicable, that the best available terms are obtained, usually by obtaining prices from several suppliers.
5.2 The Clerk should verify the lawful nature of any proposed purchase before it is made and in the case of new or infrequent purchases, should ensure that the legal power being used is reported to the meeting at which the order is authorised and also recorded in the minutes.
5.3 Every contract shall comply with these the council’s Standing Orders and these Financial Regulations, and no exceptions shall be made, except in an emergency.
5.4 For a contract for the supply of goods, services or works where the estimated value will exceed the thresholds set by Parliament, the full requirements of The Public Contracts Regulations 2015 or any superseding legislation (“the Legislation”), must be followed in respect of the tendering, award and notification of that contract.
5.5 For contracts estimated to exceed £30,000 including VAT, the Clerk shall {seek formal tenders from at least three suppliers agreed by the council.
5.6 For contracts estimated to be over £30,000 including VAT, the council must comply with any requirements of the Legislation regarding the advertising of contract opportunities and the publication of notices about the award of contracts.
5.7 where the value is between £500 and £5,000 excluding VAT, the Clerk shall try to obtain 3 estimates {which might include evidence of online prices, or recent prices from regular suppliers.}
5.8 For smaller purchases, the clerk shall seek to achieve value for money.
5.9 Contracts must not be split into smaller lots to avoid compliance with these rules.
5.10 The requirement to obtain competitive prices in these regulations need not apply to contracts that relate to items (i) to (iv) below:
i. specialist services, such as legal professionals acting in disputes;
ii. repairs to, or parts for, existing machinery or equipment;
iii. works, goods or services that constitute an extension of an existing contract;
iv. goods or services that are only available from one supplier or are sold at a fixed price.
5.11 When applications are made to waive this financial regulation to enable a price to be negotiated without competition, the reason should be set out in a recommendation of the council {or relevant committee}. Avoidance of competition is not a valid reason.
5.12 The council shall not be obliged to accept the lowest or any tender, quote or estimate.
5.13 Individual purchases within an agreed budget for that type of expenditure may be authorised by:
• the Clerk, under delegated authority, for any items below £500 excluding VAT.
• the Clerk, in consultation with the Chair of the Council for any items below £2,000 excluding VAT.
• the council for all items over £5,000;
• Such authorisation must be supported by a minute or other auditable evidence trail.
5.14 No individual member, or informal group of members may issue an official order {unless instructed to do so in advance by a resolution of the council} or make any contract on behalf of the council.
6 Banking and payments
6.1 The council's banking arrangements, including the bank mandate, shall be made by the Clerk and authorised by the council. The council has resolved to bank with Lloyds Bank. The arrangements shall be reviewed for security and efficiency.
6.2 The council must have safe and efficient arrangements for making payments, to safeguard against the possibility of fraud or error. Wherever possible, more than one person should be involved in any payment, for example by dual online authorisation or dual cheque signing. Even where a purchase has been authorised, the payment must also be authorised, and only authorised payments shall be approved or signed to allow the funds to leave the council’s bank.
6.3 All invoices for payment should be examined for arithmetical accuracy, analysed to the appropriate expenditure heading and verified to confirm that the work, goods or services were received, checked and represent expenditure previously authorised by the council before being certified by the Clerk.
6.4 Personal payments (including salaries, wages, expenses and any payment made in relation to the termination of employment) may be summarised to avoid disclosing any personal information.
6.5 All payments shall be made by online banking, in accordance with a resolution of the council unless the council resolves to use a different payment method.
6.6 The Clerk shall present a schedule of payments requiring authorisation, together with the relevant invoices and present to the council for authorisation. A list of all payments shall be disclosed within the minutes of the meeting at which payment was authorised.
7 Electronic payments
7.1 Where internet banking arrangements are made with any bank, the Clerk shall be appointed as the Service Administrator.
7.2 No employee or councillor shall disclose any PIN or password, relevant to the council or its banking, to anyone not authorised in writing by the council or a duly delegated committee.
7.3 Two councillors shall check the payment details against the invoices before approving each payment using the online banking system.
7.4 Evidence shall be retained showing which members approved the payment online, and a printout of the transaction confirming that the payment has been made shall be appended to the invoice for audit purposes.
7.5 A full list of all payments made in a month shall be shown in the minutes.
7.6 Members and officers shall ensure that any computer used for the council’s financial business has adequate security, with anti-virus, anti-spyware and firewall software installed and regularly updated.
8 Cheque payments
8.1 Cheques for payment drawn on the bank account in accordance with the schedule as presented to council shall be signed by two members of the council, the signatories shall each also initial the cheque counterfoil.
8.2 A signatory having a family or business relationship with the beneficiary of a payment shall not, under normal circumstances, be a signatory to that payment.
9 Petty Cash
9.1 The council will not maintain any form of cash float.
10 Payment of salaries and allowances
10.1 As an employer, the council must make arrangements to comply with the statutory requirements of PAYE legislation.
10.2 Salary rates shall be agreed by the council.
10.3 Payment of salaries shall be made, after deduction of tax, national insurance, pension contributions and any similar statutory or discretionary deductions, on the dates stipulated in employment contracts.
10.4 Deductions from salary shall be paid to the relevant bodies within the required timescales, provided that each payment is reported, as set out in these regulations above.
11 Loans and investments
11.1 Any application for Government approval to borrow money and subsequent arrangements for a loan must be authorised by the full council and recorded in the minutes. All borrowing shall be in the name of the council, after obtaining any necessary approval.
11.2 All investment of money under the control of the council shall be in the name of the council.
11.3 All investment certificates and other documents relating thereto shall be retained in the custody of the RFO.
11.4 Payments in respect of short term or long-term investments, including transfers between bank accounts held in the same bank, shall be made in accordance with these regulations.
12 Income
12.1 The collection of all sums due to the council shall be the responsibility of and under the supervision of the Clerk.
12.2 The council will review all fees and charges for work done, services provided, or goods sold at least annually as part of the budget-setting process. The Clerk shall be responsible for the collection of all amounts due to the council.
12.3 All sums received on behalf of the council shall be deposited intact with the council's bankers.
12.4 The Clerk shall ensure that VAT is correctly recorded in the council’s accounting software and that any VAT repayment claim is made when the claim exceeds £100 and at least annually.
13 Assets, properties and estates
13.1 The Clerk shall make arrangements for the safe custody of all title deeds and Land Registry Certificates of properties held by the council.
13.2 The RFO shall ensure that an appropriate and accurate Register of Assets and Investments is kept up to date and verified annually.
14 Insurance
14.1 The Clerk shall keep a record of all insurances effected by the council and the property and risks covered, reviewing these annually before the renewal date in conjunction with the council’s review of risk management.
15 Suspension and revision of Financial Regulations
15.1 The council shall review these Financial Regulations annually and following any change of Clerk. The Clerk shall monitor changes in legislation or proper practices and advise the council of any need to amend these Financial Regulations.
15.2 The council may, by resolution 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 presented to all members. Suspension does not disapply any legislation or permit the council to act unlawfully.
15.3 The council may temporarily amend these Financial Regulations by a duly notified resolution, to cope with periods of absence, local government reorganisation, national restrictions or other exceptional circumstances.