Stourport-on-Severn Town Council Financial Regulations

If approved by Finance Committee on 2nd September 2020 these revised Financial Regulations and Statement of Internal Control will, subject to approval, be adopted by the Council at its meeting on 8th September 2020.

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 governing policy documents providing procedural guidance for members and officers. Financial Regulations must be observed in conjunction with the Council’s Standing Orders[Footnote 1] 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 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;
  • 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 (RFO) holds a statutory office to be appointed by the council. The statutory office of RFO is held in Stourport-on-Severn Town Council by the Treasurer. 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.

1.9.          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.

1.10.       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.

1.11.       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 and division of responsibilities of those officers in relation to significant transactions;
  • procedures to ensure that uncollectable amounts, including any bad debts are not submitted to the Council for approval to be written off except with the approval of the RFO and that the approvals are shown in the accounting records; and
  • measures to ensure that risk is properly managed.

1.12.       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;
  • borrowing;
  • writing off bad debts;
  • 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.

1.13.       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).

ACCOUNTING AND AUDIT (INTERNAL AND EXTERNAL)

2.1.           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.

2.2.           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.

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 RFO, 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;
  • 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.

2.6.           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.

2.7.           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 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.

2.9.           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

3.1.           Each Committee (if any) shall review its three year forecast of receipts and payments. Having regard to the forecast, it shall thereafter formulate and submit proposals for the following financial year to the Council.

3.2.           The RFO 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 Finance Committee and the Council.

3.3.           The Council shall consider annual budget proposals in relation to the Council’s three year forecast of 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 (Council Tax requirement), and relevant basic amount of Council Tax to be levied for the ensuing financial year in accordance with the timetable issued by Wyre Forest District Council. The RFO 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.

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. Contracts may not be disaggregated to avoid controls imposed by these regulations.

4.2.           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. The Clerk shall report such action to the Chairman as soon as possible and to the Council as soon as practicable thereafter.

4.3.           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. All capital works shall be administered in accordance with the Council's standing orders and financial regulations relating to contracts.

4.4.           The RFO shall provide the Council with a statement comparing actual expenditure to budget to the halfway point in the year drawing attention to, and explaining, material variances.

4.5.           Changes in earmarked reserves shall be approved by Council as part of the budgetary control process.

BANKING ARRANGEMENTS AND AUTHORISATION OF PAYMENTS

5.1.           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.

5.2.           The RFO shall prepare a schedule of payments made for each meeting of the Town Council. The schedule shall be signed by the Chairman of the Meeting. The RFO must be satisfied that all invoices for payment have been, prior to payment, examined, verified and certified 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.

5.3.           The RFO shall examine invoices for arithmetical accuracy and analyse them to the appropriate expenditure heading.

5.4.           In respect of grants the Grants Committee shall approve expenditure within any limits set by Council and in accordance with any policy statement approved by Council.

5.5.           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.

INSTRUCTIONS FOR THE MAKING OF PAYMENTS 

6.1.           The Council will make safe and efficient arrangements for the making of its payments.

6.2.           The Clerk or RFO shall give instruction that a payment shall be made.

6.3.           All payments shall be effected in accordance with the Council’s internal financial control procedures (which were reviewed and approved by Finance Committee in March 2023 – see Appendix A).

6.4.           If thought appropriate by the RFO, payment for utility supplies (energy, telephone and water) and any National Non-Domestic Rates may be made by variable direct debit.

6.5.           The Town Council has an arrangement with Wyre Forest District Council under which it uses the District Council’s computer systems. The Town Council relies on the District Council to ensure that records are safely backed up and stored.

6.6.           Any purchase card obtained will be specifically restricted to the Clerk and the RFO and will be restricted to a single transaction maximum value which will be approved by the Finance Committee.

6.7.           The RFO may provide petty cash to officers for the purpose of defraying operational and other expenses. Vouchers for payments made shall be forwarded to the RFO with a claim for reimbursement.

a)        The RFO shall maintain a petty cash float of £500 for the purpose of defraying 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.

c)         Payments to maintain the petty cash float shall be included on the schedule of payments presented to Council.

PAYMENT OF SALARIES

7.1.           As an employer, the Council is required to meet fully the statutory requirements placed on all employers by PAYE and National Insurance legislation. The Council discharges its responsibilities in this area via an arrangement with Wyre Forest District Council who administer the Town Council’s payroll in return for an appropriate fee.

LOANS AND INVESTMENTS

8.1.           The Town Council’s investments are administered in accordance with its Treasury Management and Investment strategy which is reviewed regularly.

8.2.           The Town Council is not, and is not expected to be, in receipt of any loans.

INCOME

9.1.           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.

9.2.           The origin of each receipt shall be entered on the paying-in slip.

9.3.           Personal cheques shall not be cashed out of money held on behalf of the Council.

9.4.           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.

9.5.           Where any significant sums of cash are regularly received by the Council, the RFO shall take steps 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.

9.6.           Any income arising which is the property of a charitable trust shall be paid into a charitable bank account.

ORDERS FOR WORK, GOODS AND SERVICES

10.1.        All members and officers are responsible for obtaining value for money at all times. For significant sums this will usually be achieved by obtaining more than one quotation or estimates from appropriate suppliers.

10.2.        A member may not issue an official order or make any contract on behalf of the Council.

CONTRACTS

11.1.        Procedures as to contracts are laid down as follows:

  1. 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 the supply of gas, electricity, water, sewerage and telephone services;

ii.      for specialist services such as are provided by solicitors, accountants, surveyors and planning consultants;

iii.       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;

iv.       for work to be executed or goods or materials to be supplied which constitute an extension of an existing contract by the Council;

v.       for additional audit work of the external auditor up to an estimated value of £500 (in excess of this sum the Clerk and RFO shall act after consultation with the Chairman and Vice Chairman of Council); and

vi.       for goods or materials proposed to be purchased which are proprietary articles and / or are only sold at a fixed price.

  1. Where the Council intends to procure or award a public supply contract, public service contract or public works contract as defined by The Public Contracts Regulations 2015 (“the Regulations”) which is valued at £25,000 or more, the Council shall comply with the relevant requirements of the Regulations[Footnote 2].
  2. The full requirements of The Regulations, as applicable, shall be followed in respect of the tendering and award of a public supply contract, public service contract or public works contract which exceed thresholds in The Regulations set by the Public Contracts Directive 2014/24/EU (which may change from time to time).
  3. 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.
  4. 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.
  5. All sealed tenders shall be opened at the same time on the prescribed date by the Clerk in the presence of at least one member of the Council.
  6. Any invitation to tender issued under this regulation shall be subject to the Council’s Standing Orders and shall refer to the terms of the Bribery Act 2010.
  7. When it is to enter into a contract of less than £25,000 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 or RFO shall obtain 3 quotations (priced descriptions of the proposed supply); where the value is below £5,000 and above £1,000 the Clerk or RFO shall strive to obtain 3 estimates. Otherwise, Regulation 10.3 above shall apply.
  8. The Council shall not be obliged to accept the lowest or any tender, quote or estimate.
  9. Should it occur that the Council, or duly delegated Committee, does not accept any tender, quote or estimate, the work is not allocated and the Council requires further pricing, provided that the specification does not change, no person shall be permitted to submit a later tender, estimate or quote who was present when the original decision making process was being undertaken.

PAYMENTS UNDER CONTRACTS FOR BUILDING OR OTHER CONSTRUCTION WORKS (PUBLIC WORKS CONTRACTS)

12.1.        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).

12.2.        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 by 5% or more a report shall be submitted to the Council.

12.3.        Any variation to a contract or addition to or omission from a contract must be approved by the Council and Clerk to the contractor in writing, the Council being informed where the final cost is likely to exceed the financial provision.

STORES AND EQUIPMENT

13.1.        The officer in charge of each section shall be responsible for the care and custody of stores and equipment in that section.

13.2.        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.

13.3.        Stocks shall be kept at the minimum levels consistent with operational requirements.

ASSETS, PROPERTIES AND ESTATES

14.1.        The Clerk shall make appropriate arrangements for the custody of all title deeds and Land Registry Certificates of properties held by the council. The 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.

14.2.        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.

14.3.        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 the 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).

14.4.        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 the 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).

14.5.        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.

14.6.        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

15.1.        Following the annual risk assessment, the RFO shall effect all insurances and negotiate all claims on the Council's insurers [in consultation with the Clerk].

15.2.        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.

15.3.        The RFO shall keep a record of all insurances effected by the Council and the property and risks covered thereby and annually review it.

15.4.        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.

15.5.        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 by the Council, or duly delegated Committee.

CHARITIES

16.1.        Where the Council is sole managing trustee of a charitable body the Clerk and 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.

RISK MANAGEMENT

17.1.        The Council is responsible for putting in place arrangements for the management of risk. The Clerk [with the RFO] 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.

17.2.        When considering any new activity, the Clerk shall prepare a draft risk assessment including risk management proposals for consideration and adoption by the Council.

SUSPENSION AND REVISION OF FINANCIAL REGULATIONS

18.1.        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.

 

18.2.        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 the Council.

 

 

APPENDIX A

Statement of Internal Control 

1.         Introduction

1.1       The Accounts and Audit Regulations 2011 require a Statement of Internal Control, prepared in accordance with proper practices in relation to internal control, to be included with the annual accounts.  The statement will if and as necessary be revised and updated on an annual basis.

 

1.2       The Town Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards and that public money is safeguarded, properly accounted for, and used economically, efficiently and effectively.

 

1.3          In discharging this overall responsibility, the Town Council is also responsible for ensuring that there is a sound system of internal control which facilitates the effective exercise of its functions and which includes arrangements for the management of risk.

2.         The Purpose of the System of Internal Control

2.1       The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.  The system of internal control is based on an ongoing process designed to:

 

  • Identify and prioritise the risks to the achievement of the Town Council’s policies, aims and objectives;
  • Evaluate the likelihood of those risks being realised and the impact should they be realised, and;
  • Manage them efficiently, effectively and economically.

 

2.2       The system of internal control has been in place for the year ended 31st March 2016 and up to the date of approval of the accounts.

The System of Internal Control

 

3.1       The system of internal control is based on:-

 

  • Standing orders governing (inter alia) the conduct of meetings of the Town Council;
  • Financial regulations governing financial conduct;
  • A Finance Committee as a Standing Committee of the Council which does not exercise delegated powers but which is not limited in the areas of the Council’s finances which the Committee may examine;
  • Management information and instruction disseminated to the Town Council through the Town Clerk and/or the Treasurer;
  • Administrative procedures (including segregation of duties);
  • Management supervision with a system of delegation and accountability;
  • Accessibility of information and records to Members at all reasonable times.

 

3.2       The maintenance and development of the system is undertaken by Officers of the Town Council.  In particular the system includes:

 

  • Comprehensive budgeting and accounting systems;
  • Preparation of financial reports which indicate forecast and actual expenditure against budgets;
  • A streamlined ‘single signatory’ arrangement for payments by cheque. Cheques are signed by the Council’s Treasurer or, in the absence of the Treasurer, by the Town Clerk. This arrangement is supported by (a) monthly reports by the Town Clerk’s PA to the Town Council listing payments made, (b) cheque book being held by the Town Clerk’s PA; and (c) receipt, and inspection, of monthly bank statements by Town Clerk;
  • Online payment, rather than cheque, of as many invoices as possible.

Internal Audit

 

4.1       The Town Council has appointed Mr. R. Mountford CPFA, as Internal Auditor.  Mr. Mountford is a Chartered Local Government Accountant with an extensive Local Government background who works independently of the Town Council within a clearly defined remit which meets the requirement of External Audit.

 

4.2       The remit is to audit accounting records and the system of internal control in accordance with the Accounts and Audit Regulations 2011 and the CIPFA Code of Practice for Internal Audit in Local Government.

 

4.3       The reporting arrangements are normally through the Treasurer to the Town Council, usually via the Finance Committee.  The Internal Auditor gives a written report and is available to attend meetings if required.

External Audit

 

5.1       On 30th November 2016 the Small Authorities’ Audit Appointments Ltd. appointed PKF Littlejohn LLP as the Town Council’s external auditors from 1st April 2017.

 

5.2       The Town Council is required to submit an Annual Return to include Annual Accounts, Statement on Internal Control and Internal Auditor’s report by a stipulated date.

 

5.3       Following completion of the audit, the Auditor provides the Town Council with an Audit Opinion which is then reported to the Council’s Finance Committee.

 

Review of the Effectiveness of the System of Internal Control

 

6.1       The review is informed by:-

  • Reports of Town Council Officers
  • The Work of the Internal Auditor
  • The External Auditor’s Opinion

Reviewed: March 2023

 

[footnote 1] Model standing orders for councils are available in Local Councils Explained © 2013 National Association of Local Councils. Back to note 1 text

[footnote 2] The Regulations require councils to use the Contracts Finder website to advertise contract opportunities, set out the procedures to be followed in awarding new contracts and to publicise the award of new contracts. Back to note 2 text