Hixon Parish Council financial regulations

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:

·
‘Accounts
and Audit Regulations’ means the regulations issued under Sections 32, 43(2)
and 46 of the Local Audit and Accountability Act 2014, or any superseding
legislation, and then in force, unless otherwise specified.

·
“Approve”
refers to an online action, allowing an electronic transaction to take place.

·
“Authorise”
refers to a decision by the council, or a committee or an officer, to allow
something to happen.

·
‘Proper
practices’ means those set out in The
Practitioners’ Guide

·
Practitioners’ Guide refers to the guide issued by the Joint
Panel on Accountability and Governance (JPAG) and published by NALC in England or
Governance and Accountability for Local Councils in Wales – A Practitioners
Guide jointly published by One Voice Wales and the Society of Local Council
Clerks in Wales.

·
‘Must’
and bold text refer to a statutory obligation the council cannot change.

·
‘Shall’
refers to a non-statutory instruction by the council to its members and staff.

1.5.
The
Responsible Financial Officer (RFO) holds a statutory office, appointed by the
council. The Clerk has been appointed as RFO and these regulations 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 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 £1,000
2 – Annual estimates (budget)
Councillors shall formulate and submit proposals to the Council in respect of revenue and capital including the use of reserves and sources of funding for the following financial year not later than the end of November each year.
Detailed estimates of all receipts and payments including the use of reserves and all sources of funding for the year shall be prepared each year by the RFO in the form of a budget to be considered by the Council.
The Council shall review the budget not later than the end of January each year and shall fix the Precept to be levied for the ensuing financial year. The RFO shall issue the precept to the billing authority and shall supply each member with a copy of the approved budget.
The annual budgets shall form the basis of financial control for the ensuing year.
The Council shall consider the need for, and shall have regard to, a three year forecast of Revenue and Capital Receipts and Payments which may be prepared at the same time as the annual Budget.
3 – Budgetary control
Expenditure on revenue items may be incurred up to the amounts included for that class of expenditure in the approved budget.
Any expenditure that will exceed that budget must be approved by the Council. 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.
The RFO 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 half year.
The salary budgets are to be reviewed at least annually in November/December for the following financial year and such review shall be evidenced by a hard copy schedule signed by the Clerk and the Chairman of Council or relevant committee. The RFO will inform committees of any changes impacting on their budget requirement for the coming year in good time.
The Clerk may incur expenditure on behalf of the Council which is necessary to carry out any repair, replacement or other work which is of such extreme urgency that it must be done at once, whether or not there is any budgetary provision for the expenditure, subject to a limit of £500.00. The Clerk shall report the action to the Council as soon as practicable thereafter. If necessary, between full Council meetings, the Clerk may seek authorisation from councillors via electronic communications (e.g. e-mail) for expenditure on items that need to be ordered within a short time-scale.
Unspent provisions in the revenue budget may be carried forward to a subsequent year or placed in an earmarked reserve, by resolution of the Council.
No expenditure shall be incurred 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, or the requisite borrowing approval has been obtained.
All capital works shall be administered in accordance with the Council’s standing orders and financial regulations relating to contracts.
4 – Accounting and audit
All accounting procedures and financial records of the Council shall be determined by the RFO in accordance with the Accounts and Audit Regulations.
The RFO shall complete the annual financial statements of the Council, including the Council’s annual return, as soon as practicable after the end of the financial year and shall submit them and report thereon to the Council.
The RFO shall complete the Accounts of the Council contained in the Annual Return (as supplied by the Auditor appointed) and shall submit the Annual Return for approval and authorisation by the Council within the timescales set by the Accounts and Audit Regulations.
The RFO shall ensure that there is adequate and effective system of internal audit of the Council’s accounting, financial and other operations in accordance with proper practices. Any officer or member of the Council shall, if the RFO or Internal Auditor requires, make available such documents of the Council which appear to the RFO or Internal Auditor to be necessary for the purpose of the internal audit and shall supply the RFO or Internal Auditor with such information and explanation as the RFO or Internal Auditor considers necessary for that purpose.
The Internal Auditor shall be appointed by and shall carry out the work required by the Council in accordance with proper practices. The Internal Auditor, who shall be competent and independent of the operations of the Council, shall report to Council in writing, or in person, on a regular basis with a minimum of one annual written report in respect of each financial year. In order to demonstrate objectivity and independence, the internal auditor shall be free from any conflicts of interest and have no involvement in the financial decision making, management or control of the Council.
The RFO shall make arrangements for the opportunity for inspection of the accounts, books, and vouchers and for the display or publication of any Notices and statements of account required by Audit Commission Act 1998 and the Accounts and Audit Regulations.
The RFO shall, as soon as practicable, bring to the attention of all Councillors any correspondence or report from the Internal or External Auditor, unless the correspondence is of a purely administrative matter.
5 – Banking arrangements and cheques
The Council’s banking arrangements, including the Bank Mandate, shall be made by the RFO and approved by the Council. They shall be regularly reviewed for efficiency.
A schedule of the payments required, forming part of the Agenda for the meeting shall be prepared by the RFO and, together with the relevant invoices, be presented to Council. If the schedule is in order it shall be authorised by a resolution of the Council and shall be initialled by the Chairman of the Meeting. If more appropriate the detail may be shown in the Minutes of the Meeting.
Cheques drawn on the bank account in accordance with the schedule referred to in paragraph 5.2 or in accordance with paragraph 6.4, shall be signed by two members of the Council.
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 – Payment of accounts
All payments shall be effected by cheque or other order drawn on the Council’s bankers.
All invoices for payment shall be examined, verified and certified by the Clerk. The Clerk shall satisfy him/herself that the work, goods or services to which the invoice relates shall have been received, carried out, examined and approved.
The RFO shall examine invoices in relation to arithmetic accuracy and shall analyse them to the appropriate expenditure heading. The Clerk shall take all steps to settle all invoices submitted, and which are in order, at the next available Full Council Meeting.
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 Full Council Meeting, where the RFO certifies that there is no dispute or other reason to delay payment, the RFO may (notwithstanding para 6.3) take all steps necessary to settle such invoices provided that a list of such payments shall be submitted to the next meeting of the Full Council.
If thought appropriate by the Council, payment for utility supplies (energy, telephone and water) may be made by variable Direct Debit provided that the instructions are signed by two members. Direct Debits shall be renewed by resolution of the Council at least every two years.
7 – 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 salaries shall be as agreed by the Council.
Payment of salaries and payment of deductions from salary such as may be made for tax, national insurance and pension contributions, may be made in accordance with the payroll records and on the appropriate dates stipulated in employment contracts, provided that each payment is reported to and ratified by the next Full Council Meeting.
8 – Loans and investments
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.
The Council shall consider the need for an Investment Policy which, if drawn up, shall be in accordance with relevant regulations, proper practices and guidance. Any Policy shall be reviewed at least annually.
All investments of money under the control of the Council shall be in the name of the Council.
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 the Full Council as to terms and purpose. The terms and conditions of borrowings shall be reviewed at least annually.
All investment certificates and other documents relating thereto shall be retained in the custody of the RFO.
9 – 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 annually (if necessary), following a report of the RFO.
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. In all cases, all receipts shall be deposited with the Council’s bankers with such frequency as the RFO considers necessary.
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 quarterly.
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 and that there is a reconciliation to some form of control such as ticket issues. The Council will take appropriate steps to ensure care is taken in the security and safety of individuals banking such cash.
10 – Orders for work, goods and services
An official order or written communication 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.
Any order book shall be controlled by the RFO.
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 (h) below.
The RFO 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 RFO 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 – Contracts
Procedures as to contracts are laid down as follows:
Every contract shall comply with these financial regulations, and no exceptions shall be made otherwise than in an emergency provided that these regulations shall not apply to contracts which relate to items below:
for the supply of gas, electricity, water, sewerage and telephone services;
for specialist services such as are provided by solicitors, accountants, surveyors and planning consultants;
for work to be executed or goods or materials to be supplied which consist of repairs to or parts for existing machinery or equipment or plant;
for work to be executed or goods or materials to be supplied which constitute an extension of an existing contract by the Council;
for additional audit work of the external Auditor up to an estimated value of £250 (in excess of this sum the RFO shall act after consultation with the Chairman and Vice Chairman of the Council);
for goods or materials proposed to be purchased which are proprietary articles and/or are only sold at a fixed price.
Where it is intended to enter into a contract exceeding £5,000 in value for the supply of goods or materials or for the execution of works or specialist services other than such goods, materials, works or specialist services as are excepted as set out in paragraph (a) the Clerk shall invite tenders from at least three firms as approved by Council.
When applications are made to waive financial regulations relating to contracts to enable a price to be negotiated without competition the reason shall be embodied in a recommendation to the Council.
Such invitation to tender shall state the general nature of the intended contract and the Clerk shall obtain the necessary technical assistance to prepare a specification in appropriate cases. The invitation shall in addition state that tenders must be addressed to the Clerk in the ordinary course of post. Each tendering firm shall be supplied with a specifically marked envelope in which the tender is to be sealed and remain sealed until the prescribed date for opening tenders for that contract.
All sealed tenders shall be opened at the same time on the prescribed date by the Clerk in the presence of the Chairman or another Councillor in the absence of the Chairman.
If less than three tenders are received for contracts above £5,000 or if all the tenders are identical the Council may make such arrangements as it thinks fit for procuring the goods or materials or executing the works.
Any invitation to tender issued under this regulation shall contain a statement to the effect of Standing Order 30.c.
When it is to enter into a contract of equal to or less than £5,000 and above £1000 in value for the supply of goods or materials or for the execution of works or specialist services other than such goods, materials, works or specialist services as are excepted as set out in paragraph (a) the RFO shall try to obtain 3 quotations. Otherwise, Regulation 10 (3) above shall apply.
The Council shall not be obliged to accept the lowest, or any, tender, quote or estimate.
12 – Payments under contracts for building or other construction work
Payments on account of the contract sum shall be made within the time specified in the contract by the RFO upon authorised certificates of the architect or other consultants engaged to supervise the contract (subject to any percentage withholding as may be agreed in the particular contract).
Where contracts provide for payment by instalments the RFO shall maintain a record of all such payments. In any case where it is estimated that the total cost of work carried out under a contract, excluding agreed variations, will exceed the contract sum of 5% or more a report shall be submitted to the Council.
Any variation to a contract must be approved by the Council and conveyed by the Clerk to the Contractor in writing.
13 – Stores and equipment
The officer in charge of each section shall be responsible for the care and custody of stores and equipment in that section.
Delivery Notes shall be obtained in respect of all goods received into store or otherwise delivered and goods must be checked as to order and quality at the time delivery is made.
Stocks shall be kept at the minimum levels consistent with operational requirements.
The RFO shall be responsible for periodic checks of stocks and stores at least annually.
14 – Assets, properties and estates
The Clerk shall make appropriate arrangements for the custody of all title deeds of properties owned by the Council. The RFO shall ensure a record is maintained of all properties owned 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 property shall be 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 £50.
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 by Council, possibly in conjunction with a health and safety inspection of assets.
15 – Insurance
Following the annual risk assessment (per Financial Regulation 17), the RFO shall effect all insurances and negotiate all claims on the Council’s insurers.
The Clerk shall give prompt notification to the RFO 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 employees of the Council shall be included in a suitable fidelity guarantee insurance which shall cover the maximum risk exposure as determined by the Council.
16 – Charities

Where the Council is sole trustee of a Charitable body the RFO 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 and RFO shall arrange for any Audit or Independent Examination as may be required by Charity Law or any Governing Document.
17 – 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.
18 – Revision of financial regulations

It shall be the duty of the Council to review the Financial Regulations of the Council from time to time, and at least annually. 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.