Below is shown a summary of the Council’s Financial Regulations showing the main areas and the significant elements of each. Under the heading column are shown the headings in the Regulations, which are hyperlinked to the relevant sections and supporting procedure notes.
| Heading | Summary | |||||||||||||||||||||
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| Introduction | The financial regulations provide clarity about the financial accountabilities of individuals – Executive members, the Head of Paid Service, the Monitoring Officer, the Chief Finance Officer and a member of the Corporate Management Team. Each of the financial regulations sets out the overarching financial responsibilities: The Objectives of Financial Regulations are:
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| Background | The authority’s governance structure is laid down in its constitution, which sets out how the Council operates, how decisions are made and the procedures that are followed. The Financial Regulations comprise of 5 sections as shown below. Each section of the Regulations is supported by Financial Procedures. These Procedures have equal authority to the Financial Regulations. Links to the supporting Financial Procedures are shown below. | |||||||||||||||||||||
| Status of Financial Regulations | Financial regulations provide the framework for managing the Council’s financial affairs. They apply to every member and officer of the Council and anyone acting on its behalf. All members and staff have a responsibility for taking reasonable action to provide for the security of the assets under their control, and for ensuring that the use of these resources is legal, is properly authorised, provides value for money and achieves best value. | |||||||||||||||||||||
| Financial Regulations | ||||||||||||||||||||||
| Section 1 Financial Management Procedure A |
Financial management covers all financial accountabilities in relation to the running of the authority, including the policy framework and budget. The Chief Finance Officer has statutory duties in relation to the financial administration and stewardship of the authority. This statutory responsibility cannot be overridden. | |||||||||||||||||||||
| Section 2 Financial Planning Procedure B |
The full Council is responsible for agreeing the authority’s policy framework and budget, which will be proposed by the Executive. The general format of the budget will be approved by the full Council and proposed by the Executive on the advice of the Chief Finance Officer. The draft budget should include allocation to different services and projects, proposed taxation levels and contingency funds. The Council will prepare a medium term financial strategy covering a minimum three year period. | |||||||||||||||||||||
| Section 3 Risk Management and Control of Resources Procedure C |
Risk ManagementIt is essential that robust, integrated systems are developed and maintained for identifying and evaluating all significant operational risks to the authority. This should include the proactive participation of all those associated with planning and delivering services. The Executive is responsible for approving the authority’s risk management policy statement and strategy and for reviewing the effectiveness of risk management. The Executive is responsible for ensuring that proper insurance exists where appropriate. The Chief Finance Officer is responsible for preparing the authority’s risk management policy statement, for promoting it throughout the Council and for advising the Executive on proper insurance cover where appropriate. Internal ControlInternal control refers to the systems of control devised by management to help ensure the authority’s objectives are achieved in a manner that promotes economical, efficient and effective use of resources and that the authority’s assets and interests are safeguarded. The Chief Finance Officer is responsible for advising on effective systems of internal control. It is the responsibility of Members of the Corporate Management Team to establish sound arrangements for planning, appraising, authorising and controlling their operations in order to achieve continuous improvement, economy, efficiency and effectiveness and for achieving their financial performance targets. The Chief Finance Officer is responsible for the development and maintenance of an anti-fraud and anti-corruption policy. Members of the Corporate Management Team should ensure that records and assets are properly maintained and securely held. | |||||||||||||||||||||
| Section 4 Systems and Procedures Procedure D |
Sound systems and procedures are essential to an effective framework of accountability and control. The Chief Finance Officer is responsible for the operation of the Council’s accounting systems, the form of accounts and the supporting financial records. Any changes made to financial systems or the Chief Finance Officer must approve the establishment of new systems. However, Members of the Corporate Management Team are responsible for the proper operation of financial processes in their own services. | |||||||||||||||||||||
| Carry forward of year end balances | PartnershipsThe Executive is responsible for approving delegations, including frameworks for partnerships. The Head of Paid Service, or delegated individual, represents the Council on partnership and external bodies. The Monitoring Officer is responsible for promoting and maintaining the same high standards of conduct with regard to financial administration in partnerships that apply throughout the Council. | |||||||||||||||||||||
| Reserves | Shown below is the rule covering arrangements for authorising expenditure from reserves. Reserves include:
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| Virement | VirementMembers of the Corporate Management Team and Business Managers shall be authorised to vire sums of money only within their budgets as per the table shown below. When calculating virement, the net controllable expenditure budget shall be used for determining the level of virement. Ring-fenced or similar budgets shall be excluded from the calculation. Scheme of Virement:
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| Year end balances | Carry Forward of year end balancesShown below is the rule covering arrangements for the transfer of resources between accounting years, ie a carry-forward. These maximum limits apply to carry forward within individual business units.
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| Reserves | Shown below is the rule covering arrangements for authorising expenditure from reserves. Reserves include:
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1.1. To conduct its business efficiently, a local authority needs to ensure that it has sound financial management policies in place and that they are strictly adhered to. Part of this process is the establishment of financial regulations that set out the financial policies of the authority. A modern Council should also be committed to innovation, within the regulatory framework, providing that the necessary risk assessment and approval safeguards are in place.
1.2. The financial regulations provide clarity about the financial accountabilities of individuals – Executive members, the Head of Paid Service, the Monitoring Officer, the Chief Finance Officer and a member of the Corporate Management Team. Each of the financial regulations sets out the overarching financial responsibilities.
1.3. The Objectives of Financial Regulations are :
These Financial Regulations should be applied within the requirements of Internal Codes of Conducts, Personnel Practice Notes and Financial Procedure Notes.
1.4. The Monitoring Officer in consultation with the Chief Finance Officer shall have authority to make minor and consequential changes to these Rules.
2.1. High Peak Borough Council is situated in the Peak District in the north-west of Derbyshire at the western tip of the East Midlands region. The local authority adjoins Derbyshire Dales, Staffordshire in the West Midlands, Cheshire and Greater Manchester in the North West, together with West and South Yorkshire. High Peak Borough Council has a population of 90,600 which is expected to rise to 96,000 by 2010. The services provided by the authority include the following:
2.2. The authority’s governance structure is laid down in its constitution, which sets out how the Council operates, how decisions are made and the procedures that are followed.
2.3. The authority has adopted a leader and Cabinet form of Executive.
2.4. The supporting Financial Procedures shall have equal authority to these Financial Regulations.
3.1. Financial rules provide the framework for managing the authority’s financial affairs. They apply to every member and officer of the authority and anyone acting on its behalf.
3.2. The regulations identify the financial responsibilities of the full Council, Executive and overview and scrutiny members, the Head of Paid Service, the Monitoring Officer, the Chief Finance Officer and a member of the Corporate Management Team. Executive members and Members of the Corporate Management Team should maintain a written record where decision making has been delegated to members of their staff, including seconded staff. Where decisions have been delegated or devolved to other responsible officers references to the chief officer in the regulations should be read as referring to them.1
3.3. All members and staff have a general responsibility for taking reasonable action to provide for the security of the assets under their control, and for ensuring that the use of these resources is legal, is properly authorised, provides value for money and achieves best value.
3.4. The Chief Finance Officer is responsible for maintaining a continuous review of the financial regulations and submitting any additions or changes necessary to the full Council for approval. The Chief Finance Officer is also responsible for reporting, where appropriate, breaches of the financial regulations to the Council and/or to the Executive members.
3.5. The authority’s detailed financial procedures, setting out how the regulations will be implemented, are contained in the appendices to the financial regulations.
3.6. Members of the Corporate Management Team are responsible for ensuring that all staff in their services are aware of the existence and content of the authority’s financial regulations and other internal regulatory documents and that they comply with them. They must also ensure that an adequate number of copies are available for reference within their services.
3.7. The Chief Finance Officer is responsible for issuing advice and guidance to underpin the financial regulations that members, officers and others acting on behalf of the authority are required to follow.
4.1. Financial management covers all financial accountabilities in relation to the running of the authority, including the policy framework and budget.
See also Procedure A – Financial Management.
4.2. The full Council is responsible for adopting the authority’s constitution and members’ code of conduct and for approving the policy framework and budget within which the Executive operates. It is also responsible for approving and monitoring compliance with the authority’s overall framework of accountability and control. The framework is set out in its constitution. The full Council is also responsible for monitoring compliance with the agreed policy and related Executive decisions.
4.3. The full Council is responsible for approving procedures for recording and reporting decisions taken. This includes those key decisions delegated by and decisions taken by the Council and its committees. These delegations and details of who has responsibility for which decisions are set out in the constitution.
4.4. The Executive is responsible for proposing the policy framework and budget to the full Council, and for discharging Executive functions in accordance with the policy framework and budget.
4.5. Executive decisions can be delegated to a committee of the Executive, an individual Executive member, an officer or a joint committee.
4.6. The Executive is responsible for establishing protocols to ensure that individual Executive members consult with relevant officers before taking a decision within his or her delegated authority. In doing so, the individual member must take account of legal and financial liabilities and risk management issues that may arise from the decision.
4.7. The Scrutiny committees are responsible for scrutinising Executive decisions before or after they have been implemented and for holding the Executive to account. The scrutiny committees are also responsible for making recommendations on future policy options and for reviewing the general policy and service delivery of the Council.
4.8. The audit committee is an advisory body and reports to the full Council. It has right of access to all the information it considers necessary and can consult directly with internal and external auditors. The audit committee has responsibility for ensuring that there is adequate internal control, financial probity and that procedures are in place for preparation of the annual accounts. The committee is responsible for reviewing the external auditor’s reports and the annual audit letter and internal audit’s reports.
4.9. The standards committee is established by the full Council and is responsible for promoting and maintaining high standards of conduct amongst Councillors. In particular, it is responsible for advising the Council on the adoption and revision of the members’ code of conduct, and for monitoring the operation of the code.
4.10. Planning, conservation and licensing are not Executive functions but are exercised through the multi-party planning and licensing committee under powers delegated by the full Council. The planning and licensing committee reports to the full Council.
4.11. The Head of Paid Service is responsible for the corporate and overall strategic management of the authority as a whole. He or she must report to and provide information for the Executive, the full Council, the scrutiny committees and other committees. He or she is responsible for establishing a framework for management direction, style and standards and for monitoring the performance of the organisation. The Head of Paid Service is also responsible, together with the Monitoring Officer, for the system of record keeping in relation to all the full Council’s decisions (see below).
4.12. The Monitoring Officer is responsible for promoting and maintaining high standards of financial conduct and therefore provides support to the standards committee. The Monitoring Officer is also responsible for reporting any actual or potential breaches of the law or maladministration to the full Council and/or to the Executive, and for ensuring that procedures for recording and reporting key decisions are operating effectively.
4.13. The Monitoring Officer must ensure that Executive decisions and the reasons for them are made public. He or she must also ensure that Council members are aware of decisions made by the Executive and of those made by officers who have delegated Executive responsibility.
4.14. The Monitoring Officer is responsible for advising all Councillors and officers about who has authority to take a particular decision.
4.15. The Monitoring Officer is responsible for advising the Executive or full Council about whether a decision is likely to be considered contrary or not wholly in accordance with the policy framework.
4.16. The Monitoring Officer (together with the Chief Finance Officer) is responsible for advising the Executive or full Council about whether a decision is likely to be considered contrary or not wholly in accordance with the budget. Actions that may be ‘contrary to the budget’ include:
4.17. The Monitoring Officer is responsible for maintaining an up-to-date constitution.
4.18. The Chief Finance Officer2 has statutory duties in relation to the financial administration and stewardship of the authority. This statutory responsibility cannot be overridden. The statutory duties arise from:
4.19. The Chief Finance Officer is responsible for:
4.20. No item shall be placed before Members without obtaining the Chief Finance Officer’s assessment of its financial implications. Any report containing new proposals shall include independent financial implications as assessed by the Chief Finance Officer.
4.21. Section 114 of the Local Government Finance Act 1988 requires the director of finance to report to the full Council, Executive and external auditor if the authority or one of its officers:
4.22. Section 114 of the 1988 Act also requires:
4.23. Members of the Corporate Management Team are responsible for:
4.24. It is the responsibility of Members of the Corporate Management Team to consult with the Chief Finance Officer and seek approval on any matter liable to affect the authority’s finances materially, before any commitments are incurred.
4.25. The full Council is responsible for agreeing procedures for virement of expenditure between budget headings. All virement must be in accordance with the requirements of the Financial Management procedure.
4.26. The full Council is responsible for agreeing procedures for carrying forward under- and overspendings on budget headings.
4.27. The Chief Finance Officer is responsible for determining accounting policies and ensuring that they are applied consistently.
4.28. The Chief Finance Officer is responsible for determining the accounting procedures and records for the authority.
4.29. The Chief Finance Officer is responsible for ensuring that the annual statement of accounts is prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom: A Statement of Recommended Practice (CIPFA/LASAAC). The full Council is responsible for approving the annual statement of accounts.
5.1 The full Council is responsible for agreeing the authority’s policy framework and budget, which will be proposed by the Executive. In terms of financial planning, the key elements are:
See also Procedure B Financial Planning.
5.2 The full Council is responsible for approving the policy framework and budget. The policy framework comprises the following statutory plans and strategies:
5.3 The full Council is also responsible for approving procedures for agreeing variations to approved budgets, plans and strategies forming the policy framework and for determining the circumstances in which a decision will be deemed to be contrary to the budget or policy framework. Decisions should be referred to the full Council by the Monitoring Officer.
5.4 The full Council is responsible for setting the level at which the Executive may reallocate budget funds from one service to another. The Executive is responsible for taking in-year decisions on resources and priorities in order to deliver the budget policy framework within the financial limits set by the Council.
5.5 The Head of Paid Service is responsible for proposing the corporate plan to the Executive for consideration before its submission to the full Council for approval.
5.6 The Chief Finance Officer is responsible for proposing the Annual Report to the Executive for consideration before its submission to the full Council for approval.
5.7 The general format of the budget will be approved by the full Council and proposed by the Executive on the advice of the Chief Finance Officer. The draft budget should include allocation to different services and projects, proposed taxation levels and contingency funds.
5.8 The Council will prepare a medium term financial strategy covering at a minimum a three year period.
5.9 The Chief Finance Officer is responsible for ensuring that a revenue budget is prepared on an annual basis and a general revenue plan on a three-yearly basis for consideration by the Executive, before submission to the full Council. The full Council may amend the budget or ask the Executive to reconsider it before approving it.
5.10 The Executive is responsible for issuing guidance on the general content of the budget in consultation with the Chief Finance Officer as soon as possible following approval by the full Council.
5.11 It is the responsibility of Members of the Corporate Management Team to ensure that budget estimates reflecting agreed service plans are submitted to the Executive and that these estimates are prepared in line with guidance issued by the Executive.
5.12 The Chief Finance Officer is responsible for providing appropriate financial information to enable budgets to be monitored effectively. He or she must monitor and control expenditure against budget allocations and report to the Executive on the overall position on a regular basis.
5.13 It is the responsibility of Members of the Corporate Management Team to control income and expenditure within their area and to monitor performance, taking account of financial information provided by the Chief Finance Officer. They should also take any action necessary to avoid exceeding their budget allocation and alert the Chief Finance Officer to any problems.
5.14 The Chief Finance Officer is responsible for developing and maintaining a resource allocation process that ensures due consideration of the full Council’s policy framework.
5.15 The Executive Director in consultation with the Chief Finance Officer is responsible for ensuring that a capital programme is prepared on an annual basis for consideration by the Executive before submission to the full Council.
5.16 Budget guidelines/project plan are issued to members and Members of the Corporate Management Team by the Executive following agreement with the Chief Finance Officer. The guidelines will take account of:
5.17 It is the responsibility of the Chief Finance Officer to advise the Executive and/or the full Council on prudent levels of reserves for the authority.
6.1 It is essential that robust, integrated systems are developed and maintained for identifying and evaluating all significant operational risks to the authority. This should include the proactive participation of all those associated with planning and delivering services.
See also Procedure C Risk Management and Control of Resources.
6.2 The Executive is responsible for approving the authority’s risk management policy statement and strategy and for reviewing the effectiveness of risk management. The Executive is responsible for ensuring that proper insurance exists where appropriate.
6.3 The Chief Finance Officer is responsible for preparing the authority’s risk management policy statement, for promoting it throughout the authority and for advising the Executive on proper insurance cover where appropriate.
6.4 Internal control refers to the systems of control devised by management to help ensure the authority’s objectives are achieved in a manner that promotes economical, efficient and effective use of resources and that the authority’s assets and interests are safeguarded.
6.5 The Chief Finance Officer is responsible for advising on effective systems of internal control. These arrangements need to ensure compliance with all applicable statutes and regulations, and other relevant statements of best practice. They should ensure that public funds are properly safeguarded and used economically, efficiently, and in accordance with the statutory and other authorities that govern their use.
6.6 It is the responsibility of Members of the Corporate Management Team to establish sound arrangements for planning, appraising, authorising and controlling their operations in order to achieve continuous improvement, economy, efficiency and effectiveness and for achieving their financial performance targets.
6.7 The Accounts and Audit Regulations 2003 and any subsequent amendments and 2003 issued by the Secretary of State for the Environment require every local authority to maintain an adequate and effective internal audit.
6.8 The Audit Commission is responsible for appointing external auditors to each local authority. The basic duties of the external auditor are governed by section 15 of the Local Government Finance Act 1982, as amended by section 5 of the Audit Commission Act 1998.
6.9 The authority may, from time to time, be subject to audit, inspection or investigation by external bodies such as HM Revenue and Customs, who have statutory rights of access.
6.10 The Chief Finance Officer is responsible for the development and maintenance of an anti-fraud and anti-corruption policy.
6.11 Members of the Corporate Management Team should ensure that records and assets are properly maintained and securely held. They should also ensure that contingency plans for the security of assets and continuity of service in the event of disaster or system failure are in place.
6.12 The authority has adopted CIPFA’s Code of Practice for Treasury Management in Local Authorities.
6.13 The full Council is responsible for approving the treasury management policy statement setting out the matters detailed in paragraph 15 of CIPFA’s Code of Practice for Treasury Management in Local Authorities. The policy statement is proposed to the full Council by the Executive. The Chief Finance Officer has delegated responsibility for implementing and monitoring the statement.
6.14 All money in the hands of the authority is controlled by the officer designated for the purposes of section 151 of the Local Government Act 1972, referred to in the code as the Chief Finance Officer.
6.15 The Chief Finance Officer is responsible for reporting to the Executive a proposed treasury management strategy for the coming financial year at or before the start of each financial year.
6.16 All Executive decisions on borrowing, investment or financing shall be delegated to the Chief Finance Officer+, who is required to act in accordance with CIPFA’s Code of Practice for Treasury Management in Local Authorities.
6.17 The Chief Finance Officer is responsible for reporting to the Executive not less than two times in each financial year on the activities of the treasury management operation and on the exercise of his or her delegated treasury management powers. One such report will comprise an annual report on treasury management for presentation by 30 September of the succeeding financial year.
6.18 The full Council is responsible for determining how officer support for Executive and non-Executive roles within the authority will be organised.
6.19 The Head of Paid Service is responsible for providing overall management to staff. He or she is also responsible for ensuring that there is proper use of the evaluation or other agreed systems for determining the remuneration of a job.
6.20 Members of the Corporate Management Team are responsible for controlling total staff numbers by:
7.1 Sound systems and procedures are essential to an effective framework of accountability and control.
See also Procurement D Financial Systems and Procedues.
7.2 The Chief Finance Officer is responsible for the operation of the authority’s accounting systems, the form of accounts and the supporting financial records. Any changes made by Members of the Corporate Management Team to the existing financial systems or the establishment of new systems must be approved by the Chief Finance Officer. However, Members of the Corporate Management Team are responsible for the proper operation of financial processes in their own services.
7.3 Any changes to agreed procedures by Members of the Corporate Management Team to meet their own specific service needs must be agreed with the Chief Finance Officer.
7.4 Members of the Corporate Management Team must that their staff receive relevant financial training that has been approved by the Chief Finance Officer.
7.5 Members of the Corporate Management Team must ensure that, where appropriate, computer and other systems are registered in accordance with data protection legislation. Members of the Corporate Management Team must ensure that staff are aware of their responsibilities under freedom of information legislation.
7.6 It is the responsibility of Members of the Corporate Management Team to ensure that a proper scheme of delegation has been established within their area and is operating effectively. The scheme of delegation should identify staff authorised to act on the chief officer’s behalf, or on behalf of the Executive, in respect of payments, income collection and placing orders, together with the limits of their authority. The Executive is responsible for approving procedures for writing off debts as part of the overall control framework of accountability and control.
7.7 The Chief Finance Officer is responsible for all payments of salaries and wages to all staff, including payments for overtime, and for payment of allowances to members.
7.8 The Chief Finance Officer is responsible for advising Members of the Corporate Management Team, in the light of guidance issued by appropriate bodies and relevant legislation as it applies, on all taxation issues that affect the authority.
7.9 The Chief Finance Officer is responsible for maintaining the authority’s tax records, making all tax payments, receiving tax credits and submitting tax returns by their due date as appropriate.
7.10 It is the responsibility of the Chief Finance Officer to advise on the establishment and operation of trading accounts and business units.
8.1 The local authority provides a distinctive leadership role for the community and brings together the contributions of the various stakeholders. It must also act to achieve the promotion or improvement of the economic, social or environmental well-being of its area.
See also Procedure E External Arrangements.
8.2 The Executive is responsible for approving delegations, including frameworks for partnerships. The Executive is the focus for forming partnerships with other local public, private, voluntary and community sector organisations to address local needs.
8.3 The Executive can delegate functions – including those relating to partnerships – to officers. These are set out in the scheme of delegation that forms part of the authority’s constitution. Where functions are delegated, the Executive remains accountable for them to the full Council.
8.4 The Head of Paid Service, or delegated individual, represents the Council on partnership and external bodies.
8.5 The Monitoring Officer is responsible for promoting and maintaining the same high standards of conduct with regard to financial administration in partnerships that apply throughout the authority.
8.6 The Chief Finance Officer must ensure that the accounting arrangements to be adopted relating to partnerships and joint ventures are satisfactory. He or she must also consider the overall corporate governance arrangements and legal issues when arranging contracts with external bodies. He or she must ensure that the risks have been fully appraised before agreements are entered into with external bodies.
8.7 Members of the Corporate Management Team are responsible for ensuring that appropriate approvals are obtained before any negotiations are concluded in relation to work with external bodies.
8.8 The Chief Finance Officer is responsible for ensuring that all funding notified by external bodies is received and properly recorded in the authority’s accounts.
8.9 The Executive is responsible for approving the contractual arrangements for any work for third parties or external bodies.
1.01 All staff and members have a duty to abide by the highest standards of probity in dealing with financial issues. This is facilitated by ensuring everyone is clear about the standards to which they are working and the controls that are in place to ensure that these standards are met.
1.02 The key controls and control objectives for financial management standards are:
1.03 To ensure the proper administration of the financial affairs of the Council.
1.04 To set the financial management standards and to monitor compliance with them.
1.05 To ensure proper professional practices are adhered to and to act as head of profession in relation to the standards, performance and development of finance staff throughout the Council.
1.06 To advise on the key strategic controls necessary to secure sound financial management.
1.07 To ensure that financial information is available to enable accurate and timely monitoring and reporting of comparisons of national and local financial performance indicators.
1.08 To promote the financial management standards set by the Chief Finance Officer in their services and to monitor adherence to the standards and practices, liaising as necessary with the Chief Finance Officer.
1.09 To promote sound financial practices in relation to the standards, performance and development of staff in their services.
1.10 The scheme of virement is intended to enable the Executive, Members of the Corporate Management Team and their staff to manage budgets with a degree of flexibility within the overall policy framework determined by the full Council, and therefore to optimise the use of resources.
1.11 Key controls for the scheme of virement are:
1.12 Members of the Corporate Management Team and Business Managers shall be authorised to vire sums of money only within budgets for which they are responsible in accordance with the table shown below. When calculating virement, the net controllable expenditure budget shall be used for determining the level of virement. Ring-fenced or similar budgets shall be excluded from the calculation.
| Position | Virement within budget areas per financial year | Subject to a maximum of |
|---|---|---|
| Full Council | Any sum over £250,000 | |
| Executive | Over £100,000 | £250,000 |
| Individual Member of the Executive | Any sum in excess of £50,000 | £100,000 |
| Corporate Management Team | £20,001 | £50,000 |
| A member of the Corporate Management Team | £5,001 | £20,000 |
| Business Manager | £5,000 |
1.13 Virements not covered by the above limits (e.g. between different Directorates) shall be subject to a written report in accordance with the following:
1.14 No virement relating to a specific financial year should be made after 31 March in that year.
1.15 The Council’s scheme of virement sets out the Council’s treatment of year-end balances. It is administered by the Chief Finance Officer within guidelines set by the full Council. Any variation from the scheme of virement (as set out above) requires the approval of the full Council.
1.16 The rules below cover arrangements for the transfer of resources between accounting years, ie a carry-forward. For the purposes of this scheme, a budget heading is a line in the estimates report, or, as a minimum, at an equivalent level to the standard service subdivision as defined by CIPFA in its Service Expenditure Analysis. These maximum limits apply to carry forward within individual business units.
| Position | Maximum carry forward within budget areas per financial year |
|---|---|
| Executive | Any sum in excess of £25,001 |
| Chief Officer | £25,000 / or 1% whichever is the lower |
| Business Manager | £5,000 / or 0.5% of the net controllable expenditure whichever is the lower |
1.17 Appropriate accounting procedures are in operation to ensure that carried-forward totals are correct.
1.18 To administer the scheme of carry-forward within the guidelines approved by the full Council.
1.19 To report all overspendings and underspendings on service estimates carried forward to the Executive and to the full Council.
1.20 The Council holds reserves and balances; the use of which shall be in accordance with the following table:
| Position | Maximum use of reserves per financial year |
|---|---|
| Full Council | Any sum in excess of £250,001 |
| Executive | Any sum in excess of £100,001 and £250,000 |
| Corporate Management Team | Above £25,001 but below £100,000 |
| A member of the Corporate Management Team (in consultation with the Head of Finance) | Up to £25,000 |
1.21 Any overspending on service estimates in total on budgets under the control of the chief officer must be carried forward to the following year, and will constitute the first call on service estimates in the following year. The Chief Finance Officer will report the extent of overspendings carried forward to the Executive and to the full Council.
1.22 All internal business unit surpluses shall be retained for the benefit of the Council and their application shall require the approval of the Executive.
1.23 The Chief Finance Officer is responsible for the preparation of the Council’s statement of accounts, in accordance with proper practices as set out in the format required by the Code of Practice on Local Authority Accounting in the United Kingdom: A Statement of Recommended Practice (CIPFA/LASAAC), for each financial year ending 31 March.
1.24 The key controls for accounting policies are:
1.25 To select suitable accounting policies and to ensure that they are applied consistently. The accounting policies are set out in the statement of accounts, which is prepared at 31 March each year, and covers such items as:
1.26 To adhere to the accounting policies and guidelines approved by the Chief Finance Officer.
1.27 Maintaining proper accounting records is one of the ways in which the Council discharges its responsibility for stewardship of public resources. The Council has a statutory responsibility to prepare its annual accounts to present fairly its operations during the year. These are subject to external audit. This audit provides assurance that the accounts are prepared properly, that proper accounting practices have been followed and that quality arrangements have been made for securing economy, efficiency and effectiveness in the use of the Council’s resources.
1.28 The key controls for accounting records and returns are:
1.29 To determine the accounting procedures and records for the Council.
1.30 To arrange for the compilation of all accounts and accounting records under his or her direction.
1.31 To comply with the following principles when allocating accounting duties:
1.32 To make proper arrangements for the audit of the Council’s accounts in accordance with the Accounts and Audit Regulations 2003 and any subsequent amendments.
1.33 To ensure that all claims for funds including grants are made by the due date.
1.34 To prepare and publish the audited accounts of the Council for each financial year, in accordance with the statutory timetable and with the requirement for the Audit and Regulatory Committee to approve the statement of accounts before 30 June.
1.35 To administer the Council’s arrangements for under and overspendings to be carried forward to the following financial year.
1.36 To ensure the proper retention of financial documents in accordance with the requirements set out in the Council’s document retention policy.
1.37 To consult and obtain the approval of the Chief Finance Officer before making any changes to accounting records and procedures.
1.38 To comply with the principles outlined in paragraph 1.31 when allocating accounting duties.
1.39 To maintain adequate records to provide a management trail leading from the source of income/expenditure through to the accounting statements.
1.40 To supply information required to enable the statement of accounts to be completed in accordance with guidelines issued by the Chief Finance Officer.
1.41 The Council has a statutory responsibility to prepare its own accounts to present fairly its operations during the year. The Audit and Regulatory Committee is responsible for approving the statutory annual statement of accounts.
1.42 The key controls for the annual statement of accounts are:
1.43 To select suitable accounting policies and to apply them consistently.
1.44 To make judgements and estimates that are reasonable and prudent.
1.45 To comply with the SORP.
1.46 To sign and date the statement of accounts, stating that it presents fairly the financial position of the Council at the accounting date and its income and expenditure for the year ended 31 March 20xx.
1.47 To draw up the timetable for final accounts preparation and to advise staff and external auditors accordingly.
1.48 To comply with accounting guidance provided by the Chief Finance Officer and to supply the Chief Finance Officer with information when required.
2.01 Each local Council has a statutory responsibility to publish various performance plans, including the community strategy, corporate plan and asset management strategy. The purpose of performance plans is to explain overall priorities and objectives, current performance, and proposals for further improvement. The Council is required to publish annually the Annual Report(THE ANNUAL REPORT), which summarises its performance and position in relation to best value. THE ANNUAL REPORT is a key element in the Council’s programme of engaging with the public. External audit is required to report on whether the Council has complied with statutory requirements in respect of the preparation and publication of THE ANNUAL REPORT.
2.02 The key controls for performance plans are:
2.03 To advise and supply the financial information that needs to be included in performance plans in accordance with statutory requirements and agreed timetables.
2.04 To contribute to the development of corporate and service targets and objectives and performance information.
2.05 To ensure that systems are in place to measure activity and collect accurate information for use as performance indicators.
2.06 To ensure that performance information is monitored sufficiently frequently to allow corrective action to be taken if targets are not likely to be met.
2.07 To contribute to the development of performance plans in line with statutory requirements.
2.08 To contribute to the development of corporate and service targets and objectives and performance information.
2.09 The format of the budget determines the level of detail to which financial control and management will be exercised. The format shapes how the rules around virement operate, the operation of cash limits and sets the level at which funds may be reallocated within budgets.
2.10 The key controls for the budget format are:
2.11 To advise the executive on the format of the budget that is approved by the full council.
2.12 To comply with accounting guidance provided by the Chief Finance Officer.
2.13 Budget management ensures that once the budget has been approved by the full council, resources allocated are used for their intended purposes and are properly accounted for. Budgetary control is a continuous process, enabling the Council to review and adjust its budget targets during the financial year. It also provides the mechanism that calls to account managers responsible for defined elements of the budget.
2.14 By continuously identifying and explaining variances against budgetary targets, the Council can identify changes in trends and resource requirements at the earliest opportunity. The Council itself operates within an annual cash limit, approved when setting the overall budget. To ensure that the Council in total does not overspend, each service is required to manage its own expenditure within the cash-limited budget allocated to it.
2.15 For the purposes of budgetary control by managers, a budget will normally be the planned income and expenditure for a service area or cost centre. However, budgetary control may take place at a more detailed level if this is required by the chief officer’s scheme of delegation.
2.16 The key controls for managing and controlling the revenue budget are:
2.17 To establish an appropriate framework of budgetary management and control that ensures that:
2.18 To administer the Council’s scheme of virement.
2.19 To submit reports to the executive and to the full council, in consultation with the relevant chief officer, where a chief officer is unable to balance expenditure and resources within existing approved budgets under his or her control.
2.20 To prepare and submit reports on the Council’s projected income and expenditure compared with the budget on a regular basis.
2.21 To maintain budgetary control within their services, in adherence to the principles in 2.17, and to ensure that all income and expenditure are properly recorded and accounted for.
2.22 To ensure that an accountable budget manager is identified for each item of income and expenditure under the control of the chief officer (grouped together in a series of cost centres). As a general principle, budget responsibility should be aligned as closely as possible to the decision-making that commits expenditure.
2.23 To ensure that spending remains within the service’s overall cash limit, and that individual budget heads are not overspent, by monitoring the budget and taking appropriate corrective action where significant variations from the approved budget are forecast.
2.24 To ensure that a monitoring process is in place to review performance levels/levels of service in conjunction with the budget and is operating effectively.
2.25 To prepare and submit to the executive reports on the service’s projected expenditure compared with its budget, in consultation with the Chief Finance Officer.
2.26 To ensure prior approval by the full council or executive (as appropriate) for new proposals, of whatever amount, that:
2.27 To ensure compliance with the scheme of virement.
2.28 To agree with the relevant chief officer where it appears that a budget proposal, including a virement proposal, may impact materially on another service area or chief officer’s level of service activity.
2.29 The Council is a complex organisation responsible for delivering a wide variety of services. It needs to plan effectively and to develop systems to enable scarce resources to be allocated in accordance with carefully weighed priorities. The budget is the financial expression
A report on new proposals should explain the full financial implications, following consultation with the Chief Finance Officer. Unless the full council or executive has agreed otherwise, Members of the Corporate Management Team must plan to contain the financial implications of such proposals within their cash limit of the Council’s plans and policies.
2.30 The revenue budget must be constructed so as to ensure that resource allocation properly reflects the service plans and priorities of the full council. Budgets (spending plans) are needed so that the Council can plan, authorise, monitor and control the way money is allocated and spent. It is illegal for an Council to budget for a deficit.
2.31 Medium-term planning (three-years) involves a planning cycle in which managers develop their own plans. As each year passes, another future year will be added to the medium-term plan. This ensures that the Council is always preparing for events in advance.
2.32 The key controls for budgets and medium-term planning are:
2.33 To prepare and submit reports on budget prospects for the executive, including resource constraints set by the Government. Reports should take account of medium-term prospects, where appropriate.
2.34 To determine the detailed form of revenue estimates and the methods for their preparation, consistent with the budget approved by the full council, and after consultation with the executive and Members of the Corporate Management Team.
2.35 To prepare and submit reports to the executive on the aggregate spending plans of services and on the resources available to fund them, identifying, where appropriate, the implications for the level of council tax to be levied.
2.36 To advise on the medium-term implications of spending decisions, including the financial effects of partnership arrangements.
2.37 To encourage the best use of resources and value for money by working with Members of the Corporate Management Team to identify opportunities to improve economy, efficiency and effectiveness, and by encouraging good practice in conducting financial appraisals of development or savings options, and in developing financial aspects of service planning.
2.38 To advise the full council on executive proposals in accordance with his or her responsibilities under section 151 of the Local Government Act 1972.
2.39 To prepare estimates of income and expenditure, in consultation with the Chief Finance Officer, to be submitted to the executive.
2.40 To prepare budgets that are consistent with any relevant cash limits, with the Council’s annual budget cycle and with guidelines issued by the executive. The format should be prescribed by the Chief Finance Officer in accordance with the full council’s general directions.
2.41 To integrate financial and budget plans into service planning, so that budget plans can be supported by financial and non-financial performance measures.
2.42 In consultation with the Chief Finance Officer and in accordance with the laid-down guidance and timetable, to prepare detailed draft revenue and capital budgets for consideration by the appropriate committee.
2.43 When drawing up draft budget requirements, to have regard to:
2.44 A mismatch often exists between available resources and required resources. A common scenario is that available resources are not adequate to fulfil need/desire. It is therefore imperative that needs/desires are carefully prioritised and that resources are fairly allocated, in order to fulfil all legal responsibilities. Resources may include staff, money, equipment, goods and materials.
2.45 The key controls for resource allocation are:
2.46 To advise on methods available for the funding of resources, such as grants from central government and borrowing requirements.
2.47 To assist in the allocation of resources to budget managers.
2.48 To work within budget limits and to utilise resources allocated, and further allocate resources, in the most efficient, effective and economic way.
2.49 To identify opportunities to minimise or eliminate resource requirements or consumption without having a detrimental effect on service delivery.
2.50 Capital expenditure involves acquiring or enhancing fixed assets with a long-term value to the Council, such as land, buildings, and major items of plant, equipment or vehicles. Capital assets shape the way services are delivered in the long term and create financial commitments for the future in the form of financing costs and revenue running costs.
2.51 Borrowing for capital investment is undertaken in accordance with CIPFA’s Prudential Code. Capital expenditure should form part of an investment strategy and should be carefully prioritised in order to maximise the benefit of scarce resources.
2.52 The key controls for capital programmes are:
2.53 To prepare capital estimates jointly with Members of the Corporate Management Team and the head of paid service and to report them to the executive for approval. The executive will make recommendations on the capital estimates and on any associated financing requirements to the full council. Executive member approval is required where a chief officer proposes to bid for or exercise additional borrowing approval not anticipated in the capital programme. This is because the extra borrowing may create future commitments to financing costs.
2.54 To prepare and submit reports to the executive on the projected income, expenditure and resources compared with the approved estimates.
2.55 To issue guidance concerning capital schemes and controls, for example, on project appraisal techniques. The definition of ‘capital’ will be determined by the Chief Finance Officer, having regard to government regulations and accounting requirements.
2.56 To obtain authorisation from the executive for individual schemes where the estimated expenditure exceeds the capital programme provision by more than a specified amount.
2.57 To comply with guidance concerning capital schemes and controls issued by the Chief Finance Officer.
2.58 To ensure that all capital proposals have undergone a project appraisal in accordance with guidance issued by the Chief Finance Officer.
2.59 To prepare regular reports reviewing the capital programme provisions for their services. They should also prepare a quarterly return of estimated final costs of schemes in the approved capital programme for submission to the Chief Finance Officer.
2.60 To ensure that adequate records are maintained for all capital contracts.
2.61 To proceed with projects only when there is adequate provision in the capital programme and future revenue consequences and with the agreement of the Chief Finance Officer, where required.
2.62 To prepare and submit reports, jointly with the Chief Finance Officer, to the executive, of any variation in contract costs greater than the approved limits or where the original contract specification will not be delivered. The executive shall determine how to meet any cost increases or approve a significant revision to the contract specification.
2.63 To prepare and submit reports, jointly with the Chief Finance Officer, to the executive, on completion of all contracts where the final expenditure exceeds the approved contract sum by more than 5% or £10,000, whichever is the greater.
2.64 To ensure that credit arrangements, such as leasing agreements, are not entered into without the prior approval of the Chief Finance Officer and, if applicable, approval of the scheme through the capital programme.
2.65 The local Council must decide the level of general reserves it wishes to maintain before it can decide the level of council tax. Reserves are maintained as a matter of prudence. They enable the Council to provide for unexpected events and thereby protect it from overspending, should such events occur. Reserves for specific purposes may also be maintained, such as the purchase or renewal of capital items.
2.66 To maintain reserves in accordance with the Code of Practice on Local Council Accounting in the United Kingdom: A Statement of Recommended Practice (CIPFA/LASAAC) and agreed accounting policies.
2.67 For each reserve established, the purpose, usage and basis of transactions should be clearly identified.
2.68 Authorisation and expenditure from reserves by the appropriate chief officer in consultation with the Chief Finance Officer.
2.69 To advise the executive and/or the full council on prudent levels of reserves for the Council, and to take account of the advice of the external auditor in this matter.
2.70 To ensure that resources are used only for the purposes for which they were intended.
3.01 All organisations, whether private or public sector, face risks to people, property and continued operations. Risk is “ the chance of something happening that will have an impact on objectives” this impact could be positive as well as negative. Risk management is the planned and systematic approach to the identification, evaluation and control of risk. Its objectives are to secure the assets of the organisation and to ensure the continued financial and organisational well-being of the organisation. In essence it is, therefore, an integral part of good business practice. Risk management is the “systematic application of policies, procedures, methods and practices to the tasks of identifying, analysing, evaluating, treating, reviewing and monitoring risk.”
3.02 It is the overall responsibility of the executive to approve the Council’s risk management policy and strategy, and to promote a culture of risk management awareness throughout the Council.
3.03 The key controls for risk management are:
3.04 To prepare and promote the Council’s risk management policy and and strategy.
3.05 To develop risk management controls in conjunction with a member of the Corporate Management Team.
3.06 To include all appropriate employees of the Council in a suitable fidelity guarantee insurance.
3.07 To effect corporate insurance cover, through external insurance and internal funding, and to negotiate all claims in consultation with other officers, where necessary.
3.08 To notify the Chief Finance Officer immediately of any loss, liability or damage that may lead to a claim against the Council, together with any information or explanation required by the Chief Finance Officer or the Council’s insurers.
3.09 To take responsibility for risk management, having regard to advice from the Chief Finance Officer and other specialist officers (eg crime prevention, fire prevention, health and safety).
3.10 To ensure that there are regular reviews of risk within their services.
3.11 To notify the Chief Finance Officer promptly of all new risks, properties or vehicles that require insurance and of any alterations affecting existing insurances.
3.12 To consult the Chief Finance Officer and the head of legal services on the terms of any indemnity that the Council is requested to give.
3.13 To ensure that employees, or anyone covered by the Council’s insurances, do not admit liability or make any offer to pay compensation that may prejudice the assessment of liability in respect of any insurance claim.
3.14 The Council is complex and beyond the direct control of individuals. It therefore requires internal controls to manage and monitor progress towards strategic objectives.
3.15 The Council has statutory obligations, and, therefore, requires internal controls to identify, meet and monitor compliance with these obligations.
3.16 The Council faces a wide range of financial, administrative and commercial risks, both from internal and external factors, which threaten the achievement of its objectives. Internal controls are necessary to manage these risks.
3.17 The system of internal controls is established in order to provide measurable achievement of:
3.18 The key controls and control objectives for internal control systems are:
3.19 To assist the Council to put in place an appropriate control environment and effective internal controls which provide reasonable assurance of effective and efficient operations, financial stewardship, probity and compliance with laws and regulations.
3.20 To manage processes to check that established controls are being adhered to and to evaluate their effectiveness, in order to be confident in the proper use of resources, achievement of objectives and management of risks.
3.21 To review existing controls in the light of changes affecting the Council and to establish and implement new ones in line with guidance from the Chief Finance Officer. Members of the Corporate Management Team should also be responsible for removing controls that are unnecessary or not cost or risk effective – for example, because of duplication.
3.22 To ensure staff have a clear understanding of the consequences of lack of control.
3.23 The requirement for an internal audit function for local authorities is implied by section 151 of the Local Government Act 1972, which requires that authorities “make arrangements for the proper administration of their financial affairs”. The Accounts and Audit Regulations 2003, regulation 6, more specifically require that a relevant body shall maintain an adequate and effective system of internal audit of their accounting records and control systems.
3.24 Accordingly, internal audit is an independent and objective appraisal function established by the Council for reviewing the system of internal control. It examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic, efficient and effective use of resources.
3.25 The role of Internal Audit is that it will review, appraise and report upon:
3.26 The key controls for internal audit are:
3.27 To ensure that internal auditors have the authority to:
3.28 To approve the strategic and annual audit plans prepared by the head of internal audit, which take account of the characteristics and relative risks of the activities involved.
3.29 To ensure that effective procedures are in place to investigate promptly any fraud or irregularity.
3.30 To ensure that internal auditors are given access at all reasonable times to premises, personnel, documents and assets that the auditors consider necessary for the purposes of their work.
3.31 Whenever any matter arises which involves, or is thought to involve, irregularities concerning cash, stores, or other property or any suspected irregularity in the exercise of any function of a pecuniary nature it must be reported to the Chief Finance Officer. The Internal Audit Manager will normally investigate these on his behalf.
3.32 To ensure that auditors are provided with any information and explanations that they seek in the course of their work.
3.33 To consider and respond promptly to recommendations / observations in audit reports.
3.34 To ensure that any agreed actions arising from audit recommendations are carried out in a timely and efficient fashion.
3.35 To notify the Chief Finance Officer immediately of any suspected fraud, theft, irregularity, improper use or misappropriation of the Council’s property or resources. Pending investigation and reporting, the chief officer should take all necessary steps to prevent further loss and to secure records and documentation against removal or alteration.
3.36 To ensure that new systems for maintaining financial records, or records of assets, or changes to such systems, are discussed with and agreed by the head of internal audit prior to implementation.
3.37 Operational Managers are responsible for ensuring that internal auditors are given access at all reasonable times to premises, personnel, documents and assets that the auditors consider necessary for the purposes of their work and:
3.38 The Local Government Finance Act 1982 set up the Audit Commission, which is responsible for appointing external auditors to each local Council in England and Wales. The external auditor has rights of access to all documents and information necessary for audit purposes.
3.39 The basic duties of the external auditor are defined in the Audit Commission Act 1998 and the Local Government Act 1999. In particular, section 4 of the 1998 Act requires the Audit Commission to prepare a code of audit practice, which external auditors follow when carrying out their duties. The code of audit practice issued in March 2000 sets out the auditor’s objectives to review and report upon:
3.40 The Council’s accounts are scrutinised by external auditors, who must be satisfied that the statement of accounts ‘presents fairly’ the financial position of the Council and its income and expenditure for the year in question and complies with the legal requirements.
3.41 External auditors are appointed by the Audit Commission normally for a minimum period of five years. The Audit Commission prepares a code of audit practice, which external auditors follow when carrying out their audits.
3.42 To ensure that external auditors are given access at all reasonable times to premises, personnel, documents and assets that the external auditors consider necessary for the purposes of their work.
3.43 To ensure there is effective liaison between external and internal audit.
3.44 To work with the external auditor and advise the full council, executive and Members of the Corporate Management Team on their responsibilities in relation to external audit.
3.45 To ensure that external auditors are given access at all reasonable times to premises, personnel, documents and assets which the external auditors consider necessary for the purposes of their work.
3.46 To ensure that all records and systems are up to date and available for inspection.
3.47 The Council will not tolerate fraud and corruption in the administration of its responsibilities, whether from inside or outside the Council.
3.48 The Council’s expectation of propriety and accountability is that members and staff at all levels will lead by example in ensuring adherence to legal requirements, rules, procedures and practices.
3.49 The Council also expects that individuals and organisations (eg suppliers, contractors, service providers) with whom it comes into contact will act towards the Council with integrity and without thought or actions involving fraud and corruption.
3.50 The key controls regarding the prevention of financial irregularities are that:
3.51 To develop and maintain an anti-fraud and anti-corruption policy.
3.52 To maintain adequate and effective internal control arrangements.
3.53 To ensure that all suspected irregularities are reported to the chief internal auditor, the head of paid service, the executive and the audit committee.
3.54 To ensure that all suspected irregularities are reported to the chief internal auditor.
3.55 To instigate the Council’s disciplinary procedures where the outcome of an audit investigation indicates improper behaviour.
3.56 To ensure that where financial impropriety is discovered, the Chief Finance Officer is informed, and where sufficient evidence exists to believe that a criminal offence may have been committed, the police are called in to determine with the Crown Prosecution Service whether any prosecution will take place.
3.57 To maintain a serviceal register of interests.
3.58 The Council holds assets in the form of property, vehicles, equipment, furniture and other items worth many millions of pounds. It is important that assets are safeguarded and used efficiently in service delivery, and that there are arrangements for the security of both assets and information required for service operations. An up-to-date asset register is a prerequisite for proper fixed asset accounting and sound asset management.
3.59 The key controls for the security of resources such as land, buildings, fixed plant machinery, equipment, software and information are:
3.60 To ensure that an asset register is maintained in accordance with good practice for all fixed assets with a value in excess of £10,000. The function of the asset register is to provide the Council with information about fixed assets so that they are:
3.61 To receive the information required for accounting, costing and financial records from each chief officer.
3.62 To ensure that assets are valued in accordance with the Code of Practice on Local Council Accounting in the United Kingdom: A Statement of Recommended Practice (CIPFA/LASAAC).
3.63 The appropriate chief officer shall maintain a property database in a form approved by the Chief Finance Officer for all properties, plant and machinery and moveable assets currently owned or used by the Council. Any use of property by a service or establishment other than for direct service delivery should be supported by documentation identifying terms, responsibilities and duration of use.
3.64 To ensure that lessees and other prospective occupiers of council land are not allowed to take possession or enter the land until a lease or agreement, in a form approved by the chief officer in consultation with the Chief Finance Officer, has been established as appropriate.
3.65 To ensure the proper security of all buildings and other assets under their control.
3.66 Where land or buildings are surplus to requirements, a recommendation for sale should be the subject of a joint report by the chief officer and the Chief Finance Officer.
3.67 To pass title deeds to the appropriate chief officer who is responsible for custody of all title deeds.
3.68 To ensure that no Council asset is subject to personal use by an employee without proper Council.
3.69 To ensure the safe custody of vehicles, equipment, furniture, stock, stores and other property belonging to the Council.
3.70 To ensure that the service maintains a register of moveable assets in accordance with arrangements defined by the Chief Finance Officer.
3.71 To ensure that assets are identified, their location recorded and that they are appropriately marked and insured.
3.72 To consult the Chief Finance Officer in any case where security is thought to be defective or where it is considered that special security arrangements may be needed.
3.73 To ensure cash holdings on premises are kept to a minimum.
3.74 To ensure that keys to safes and similar receptacles are carried on the person of those responsible at all times; loss of any such keys must be reported to the Chief Finance Officer as soon as possible.
3.75 To record all disposal or part exchange of assets that should normally be by competitive tender or public auction, unless, following consultation with the Chief Finance Officer, the executive agrees otherwise.
3.76 To arrange for the valuation of assets for accounting purposes to meet requirements specified by the Chief Finance Officer.
3.77 To ensure that all employees are aware that they have a personal responsibility with regard to the protection and confidentiality of information, whether held in manual or computerised records. Information may be sensitive or privileged, or may possess some intrinsic value, and its disclosure or loss could result in a cost to the Council in some way.
3.78 To maintain inventories and record an adequate description of furniture, fittings, equipment, plant and machinery above £10,000 in value.
3.79 To carry out an annual check of all items on the inventory in order to verify location, review, condition and to take action in relation to surpluses or deficiencies, annotating the inventory accordingly. Attractive and portable items such as computers, cameras and video recorders should be identified with security markings as belonging to the Council.
3.80 To make sure that property is only used in the course of the Council’s business, unless the chief officer concerned has given permission otherwise.
3.81 To make arrangements for the care and custody of stocks and stores.
3.82 To ensure stocks are maintained at reasonable levels and are subject to a regular independent physical check. All discrepancies should be investigated and pursued to a satisfactory conclusion.
3.83 To investigate and remove from the Council’s records (ie write off) discrepancies as necessary, or to obtain executive approval if they are in excess of a predetermined limit.
3.84 To authorise or write off disposal of redundant stocks and equipment. Procedures for disposal of such stocks and equipment should be by competitive quotations or auction, unless, following consultation with the Chief Finance Officer, the executive decides otherwise in a particular case.
3.85 To seek executive approval to the write-off of redundant stocks and equipment in excess of a predetermined sum.
3.86 Intellectual property is a generic term that includes inventions and writing. If these are created by the employee during the course of employment, then, as a general rule, they belong to the employer, not the employee. Various acts of Parliament cover different types of intellectual property.
3.87 Certain activities undertaken within the Council may give rise to items that may be patentable, for example, software development. These items are collectively known as intellectual property.
3.88 In the event that the Council decides to become involved in the commercial exploitation of inventions, the matter should proceed in accordance with the Council’s approved intellectual property procedures.
3.89 To develop and disseminate good practice through the Council’s intellectual property procedures.
3.90 To ensure that controls are in place to ensure that staff do not carry out private work in council time and that staff are aware of an employer’s rights with regard to intellectual property.
3.91 It would be uneconomic and inefficient for the cost of assets to outweigh their benefits. Obsolete, non-repairable or unnecessary resources should be disposed of in accordance with the law and the regulations of the Council.
3.92 Assets for disposal are identified and are disposed of at the most appropriate time, and only when it is in the best interests of the Council, and best price is obtained, bearing in mind other factors, such as environmental issues. For items of significant value, disposal should be by competitive tender or public auction.
3.93 Procedures protect staff involved in the disposal from accusations of personal gain.
3.94 To issue guidelines representing best practice for disposal of assets.
3.95 To ensure appropriate accounting entries are made to remove the value of disposed assets from the Council’s records and to include the sale proceeds if appropriate. See contract procedure rules and the procurement manual.
3.96 To seek advice from purchasing advisors on the disposal of surplus or obsolete materials, stores or equipment.
3.97 To ensure that income received for the disposal of an asset is properly banked and coded.
3.98 Many millions of pounds pass through the Council’s books each year. This led to the establishment of codes of practice. These aim to provide assurances that the Council’s money is properly managed in a way that balances risk with return, but with the overriding consideration being given to the security of the Council’s capital sum.
3.99 That the Council’s borrowings and investments comply with the CIPFA Code of Practice on Treasury Management and with the Council’s treasury policy statement.
3.100 To arrange the borrowing and investments of the Council in such a manner as to comply with the CIPFA Code of Practice on Treasury Management and the Council’s treasury management policy statement and strategy.
3.101 To report at least twice a year on treasury management activities to the executive.
3.102 To operate bank accounts as are considered necessary – opening or closing any bank account shall require the approval of the Chief Finance Officer.
3.103 To follow the instructions on banking issued by the Chief Finance Officer.
3.104 To ensure that all investments of money are made in the name of the Council or in the name of nominees approved by the full council.
3.105 To ensure that all securities that are the property of the Council or its nominees and the title deeds of all property in the Council’s ownership are held in the custody of the appropriate chief officer.
3.106 To effect all borrowings in the name of the Council and to comply with the requirements of the CIPFA’s Prudential Code.
3.107 To act as the Council’s registrar of stocks, bonds and mortgages and to maintain records of all borrowing of money by the Council.
3.108 To ensure that loans are not made to third parties and that interests are not acquired in companies, joint ventures or other enterprises without the approval of the full council, following consultation with the Chief Finance Officer.
3.109 To arrange for all trust funds to be held, wherever possible, in the name of the Council. All officers acting as trustees by virtue of their official position shall deposit securities, etc relating to the trust with the Chief Finance Officer, unless the deed otherwise provides.
3.110 To arrange, where funds are held on behalf of third parties, for their secure administration, approved by the Chief Finance Officer, and to maintain written records of all transactions.
3.111 To ensure that trust funds are operated within any relevant legislation and the specific requirements for each trust.
3.112 To provide employees of the Council with cash or bank imprest accounts to meet minor expenditure on behalf of the Council and to prescribe rules for operating these accounts. Minor items of expenditure should not exceed the prescribed amount.
3.113 To determine the petty cash limit and to maintain a record of all transactions and petty cash advances made, and periodically to review the arrangements for the safe custody and control of these advances.
3.114 To reimburse imprest holders as often as necessary to restore the imprests, but normally not more than monthly.
3.115 To ensure that employees operating an imprest account:
3.116 In order to provide the highest level of service, it is crucial that the Council recruits and retains high calibre, knowledgeable staff, qualified to an appropriate level.
3.117 The key controls for staffing are:
3.118 To ensure that budget provision exists for all existing and new employees.
3.119 To act as an advisor to Members of the Corporate Management Team on areas such as National Insurance and pension contributions, as appropriate.
3.120 To produce an annual staffing budget.
3.121 To ensure that the staffing budget is an accurate forecast of staffing levels and is equated to an appropriate revenue budget provision (including on-costs and overheads).
3.122 To monitor staff activity to ensure adequate control over such costs as sickness, overtime, training and temporary staff.
3.123 To ensure that the staffing budget is not exceeded without due Council and that it is managed to enable the agreed level of service to be provided.
3.124 To ensure that the Head of Human Resources and the Chief Finance Officer are immediately informed if the staffing budget is likely to be materially over- or underspent.
4.1 Business Units have many systems and procedures relating to the control of the Council’s assets, including purchasing, costing and management systems. Business Units are increasingly reliant on computers for their financial management information. The information must therefore be accurate and the systems and procedures sound and well administered. They should contain controls to ensure that transactions are properly processed and errors detected promptly.
4.2 The Chief Finance Officer has a responsibility to ensure that the Council’s financial systems are sound and should therefore be notified of any new developments or changes.
4.3 The key controls for systems and procedures are:
4.4 To make arrangements for the proper administration of the Council’s financial affairs, including to:
4.5 To ensure that accounting records are properly maintained and held securely.
4.6 To ensure that vouchers and documents with financial implications are not destroyed, except in accordance with arrangements approved by the Chief Finance Officer.
4.7 To ensure that a complete management trail, allowing financial transactions to be traced from the accounting records to the original document, and vice versa, is maintained.
4.8 To incorporate appropriate controls to ensure that, where relevant:
4.9 To ensure that the organisational structure provides an appropriate segregation of duties to provide adequate internal controls and to minimise the risk of fraud or other malpractice.
4.10 To ensure there is a documented and tested disaster recovery plan to allow information system processing to resume quickly in the event of an interruption.
4.11 To ensure that systems are documented and staff trained in operations.
4.12 To consult and agree with the Chief Finance Officer before changing any existing system or introducing new systems.
4.13 To establish a scheme of delegation identifying officers authorised to act upon the chief officer’s behalf in respect of payments, income collection and placing orders, including variations, and showing the limits of their Council.
4.14 To supply lists of authorised officers, with specimen signatures and delegated limits, to the Chief Finance Officer, together with any subsequent variations.
4.15 To ensure that effective contingency arrangements, including back-up procedures, exist for computer systems. Wherever possible, back-up information should be securely retained in a fireproof location, preferably off site or at an alternative location within the building.
4.16 To ensure that, where appropriate, computer systems are registered in accordance with data protection legislation and that staff are aware of their responsibilities under the legislation.
4.17 To ensure that relevant standards and guidelines for computer systems issued by the chief officer are observed.
4.18 To ensure that computer equipment and software are protected from loss and damage through theft, vandalism, etc.
4.19 To comply with the copyright, designs and patents legislation and, in particular, to ensure that:
4.20 Income can be a vulnerable asset and effective income collection systems are necessary to ensure that all income due is identified, collected, receipted and banked properly. It is preferable to obtain income in advance of supplying goods or services as this improves the Council’s cashflow and also avoids the time and cost of administering debts.
4.21 The key controls for income are:
4.22 To agree arrangements for the collection of all income due to the Council and to approve the procedures, systems and documentation for its collection.
4.23 To order and supply to Business Units all receipt forms, books or tickets and similar items and to satisfy himself or herself regarding the arrangements for their control.
4.24 To agree the write-off of bad debts up to an approved limit in each case and to refer larger sums to the executive.
4.25 To approve all debts to be written off in consultation with the relevant chief officer and to keep a record of all sums written off up to the approved limit and to adhere to the requirements of the Accounts and Audit Regulations 2003 and any subsequent amendments.
4.26 To obtain the approval of the executive in consultation with the relevant chief officer for writing off debts in excess of the approved limit.
4.27 To ensure that appropriate accounting adjustments are made following write-off action.
4.28 To establish a charging policy for the supply of goods or services, including the appropriate charging of VAT, and to review it regularly, in line with corporate policies.
4.29 To separate the responsibility for identifying amounts due and the responsibility for collection, as far as is practicable.
4.30 To establish and initiate appropriate recovery procedures, including legal action where necessary, for debts that are not paid promptly.
4.31 To issue official receipts or to maintain other documentation for income collection.
4.32 To ensure that at least two employees are present when post is opened so that money received by post is properly identified and recorded and banked promptly.
4.33 To hold securely receipts, tickets and other records of income for the appropriate period.
4.34 To lock away all income to safeguard against loss or theft, and to ensure the security of cash handling.
4.35 To ensure that income is paid fully and promptly into the appropriate Council bank account in the form in which it is received, eg. cash, cheque, electronic payment. Appropriate details should be recorded on to paying-in slips to provide an audit trail. Money collected and deposited must be reconciled to the bank account on a regular basis.
4.36 To ensure income is not used to cash personal cheques or other payments.
4.37 To supply the Chief Finance Officer with details relating to work done, goods supplied, services rendered or other amounts due, to enable the Chief Finance Officer to record correctly the sums due to the Council and to ensure accounts are sent out promptly. To do this, Members of the Corporate Management Team should use established performance management systems to monitor recovery of income and flag up areas of concern to the Chief Finance Officer. Members of the Corporate Management Team have a responsibility to assist the Chief Finance Officer in collecting debts that they have originated, by providing any further information requested by the debtor, and in pursuing the matter on the Council’s behalf. Only up to approved levels of cash can be held on the premises.
4.38 To keep a record of every transfer of money between employees of the Council. The receiving officer must sign for the transfer and the transferor must retain a copy.
4.39 To recommend to the Chief Finance Officer all debts to be written off and to keep a record of all sums written off up to the approved limit. Once raised, no bona fide debt may be cancelled, except by full payment or by its formal writing off. A credit note to replace a debt can only be issued to correct a factual inaccuracy or administrative error in the calculation and/or billing of the original debt.
4.40 To obtain the approval of the Chief Finance Officer when writing off debts in excess of the approved limit, and the approval of the executive where required.
4.41 To notify the Head of Finance of outstanding income relating to the previous financial year as soon as possible after 31 March in line with the timetable determined by the Head of Finance and not later than 30 April.
4.42 Public money should be spent with demonstrable probity and in accordance with the Council’s policies. Authorities have a statutory duty to achieve best value in part through economy and efficiency. The Council’s procedures should help to ensure that services obtain value for money from their purchasing arrangements. These procedures should be read in conjunction with the Council’s code of practice on tenders and contracts.
4.43 Every officer and member of the Council has a responsibility to declare any links or personal interests that they may have with purchasers, suppliers and/or contractors if they are engaged in contractual or purchasing decisions on behalf of the Council, in accordance with appropriate codes of conduct.
4.44 Official orders, normally electronic, must be in a form approved by the Chief Finance Officer. Official orders must be issued for all work, goods or services to be supplied to the Council, except for supplies of utilities, periodic payments such as rent or rates, petty cash purchases or other exceptions specified by the Chief Finance Officer.
4.45 Standard terms and conditions must not be varied without the prior approval of the Monitoring Officer and the Procurement Manager.
4.46 The normal method of payment from the Council shall be BACS, cheque or other instrument or approved method, drawn on the Council’s bank account. Official orders must not be raised for any personal or private purchases, nor must personal or private use be made of Council contracts.
4.47 The key controls for ordering and paying for work, goods and services are:
4.48 To ensure that all the Council’s financial systems and procedures are sound and properly administered.
4.49 To approve any changes to existing financial systems and to approve any new systems before they are introduced.
4.50 To make payments from the Council’s funds on the chief officer’s authorisation that the expenditure has been duly incurred in accordance with financial regulations.
4.51 To make payments, whether or not provision exists within the estimates, where the payment is specifically required by statute or is made under a court order.
4.52 To make payments to contractors on the certificate of the appropriate chief officer, which must include details of the value of work, retention money, amounts previously certified and amounts now certified.
4.53 To provide advice and encouragement on making payments by the most economical means.
4.54 To ensure that a budgetary control system is established that enables commitments incurred by placing orders to be shown against the appropriate budget allocation so that they can be taken into account in budget monitoring reports.
4.55 To ensure that electronic orders are used for all goods and services, other than the exceptions specified in 4.43.
4.56 To ensure that orders are only used for goods and services provided to the Business Unit. Individuals must not use official orders to obtain goods or services for their private use.
4.57 To ensure that only those staff authorised by him or her authorise orders and to maintain an up-to-date list of such authorised staff, including specimen signatures identifying in each case the limits of their Council. The authoriser of the order should be satisfied that the goods and services ordered are appropriate and needed, that there is adequate budgetary provision and that quotations or tenders have been obtained if necessary. Best value principles should underpin the Council’s approach to procurement. Value for money should always be achieved.
4.58 To ensure that goods and services are checked on receipt to verify that they are in accordance with the order. This check should, where possible, be carried out by a different officer from the person who authorised the order. Appropriate entries should then be made in inventories or stores records.
4.59 To ensure that payment is not made unless a proper VAT invoice has been received, checked, coded and certified for payment, confirming:
4.60 To ensure that two authorised members of staff are involved in the ordering, receiving and payment process. If possible, a different officer from the person who signed the order, and in every case, a different officer from the person checking a written invoice, should authorise the invoice.
4.61 To ensure that the Business Unit maintains and reviews periodically a list of staff approved to authorise invoices.
4.62 To ensure that payments are not made on a photocopied or faxed invoice, statement or other document other than the formal invoice. Any instances of these being rendered should be reported to the head of internal audit.
4.63 To encourage suppliers of goods and services to receive payment by the most economical means for the Council. It is essential, however, that payments made by direct debit have the prior approval of the Chief Finance Officer.
4.64 To ensure that the Business Unit obtains best value from purchases by taking appropriate steps to obtain competitive prices for goods and services of the appropriate quality, with regard to the best practice guidelines issued by the Chief Finance Officer, which are in line with best value principles and contained in the Council’s code of practice for tenders and contracts.
4.65 To utilise the central purchasing procedures established by the Chief Finance Officer in putting purchases, where appropriate, out to competitive quotation or tender. These will comply with the code of practice on tenders and contracts and will cover:
4.66 To To ensure that employees are aware of the national code of conduct for local government employees (summarised in the procedures and conditions of employment manual) and comply with the Personnel Practice Notes.
4.67 To ensure that loans, leasing or rental arrangements are not entered into without prior agreement from the Chief Finance Officer. This is because of the potential impact on the Council’s borrowing powers, to protect the Council against entering into unapproved credit arrangements and to ensure that value for money is being obtained.
4.68 To notify the Chief Finance Officer of outstanding expenditure relating to the previous financial year as soon as possible after 31 March in line with the timetable determined by the Chief Finance Officer and, in any case, not later than 7 April.
4.69 With regard to contracts for construction and alterations to buildings and for civil engineering works, to document and agree with the Chief Finance Officer the systems and procedures to be adopted in relation to financial aspects, including certification of interim and final payments, checking, recording and authorising payments, the system for monitoring and controlling capital schemes and the procedures for validation of subcontractors’ tax status.
4.70 To notify the Chief Finance Officer immediately of any expenditure to be incurred as a result of statute/court order where there is no budgetary provision.
4.71 To ensure that all appropriate payment records are retained and stored for the defined period, in accordance with the document retention schedule.
4.72 Staff costs are the largest item of expenditure for most Council services. It is therefore important that payments are accurate, timely, made only where they are due for services to the Council and that payments accord with individuals’ conditions of employment. It is also important that all payments are accurately and completely recorded and accounted for and that members’ allowances are authorised in accordance with the scheme adopted by the full council.
4.73 The key controls for payments to employees and members are:
and that payments are made on the basis of timesheets or claims
4.74 To arrange and control secure and reliable payment of salaries, wages, compensation or other emoluments to existing and former employees, in accordance with procedures prescribed by him or her, on the due date. To ensure that procedures are in place to:
4.75 To ensure appointments are made in accordance with the regulations of the Council and approved establishments, grades and scale of pay and that adequate budget provision is available.
4.76 To notify the payroll service of all appointments, terminations or variations which may affect the pay or pension of an employee or former employee, in the form and to the timescale required by the Chief Finance Officer.
4.77 To ensure that adequate and effective systems and procedures are operated, so that:
4.78 To send an up-to-date list of the names of officers authorised to sign records to the Head of Human Resources, together with specimen signatures. The payroll provider should have signatures of personnel officers and officers authorised to sign timesheets and claims.
4.79 To ensure that payroll transactions are processed only through the payroll system. Members of the Corporate Management Team should give careful consideration to the employment status of individuals employed on a self-employed consultant or subcontract basis. The Inland Revenue applies a tight definition for employee status, and in cases of doubt, advice should be sought from the Chief Finance Officer.
4.80 To monitor through the budgetary control system that travel and subsistence claims and other allowances are properly incurred. Due consideration should be given to tax implications and that the Chief Finance Officer is informed where appropriate.
4.81 To ensure that the Chief Finance Officer is notified of the details of any employee benefits in kind, to enable full and complete reporting within the income tax self-assessment system.
4.82 To ensure that all appropriate payroll documents are retained and stored for the defined period in accordance with the document retention schedule.
4.83 To submit claims for members’ travel and subsistence allowances on a monthly basis and, in any event, within one month of the year end.
4.84 Like all organisations, the Council is responsible for ensuring its tax affairs are in order. Tax issues are often very complex and the penalties for incorrectly accounting for tax are severe. It is therefore very important for all officers to be aware of their role.
4.85 The key controls for taxation are:
4.86 To complete all HM Revenue and Customs returns regarding PAYE.
4.87 To complete a monthly return of VAT inputs and outputs to HM Revenue and Customs.
4.88 To provide details to HM Revenue and Customs regarding the construction industry tax deduction scheme.
4.89 To maintain up-to-date guidance for Council employees on taxation issues in the accounting manual and the tax manual.
4.90 To ensure that the correct VAT liability is attached to all income due and that all VAT recoverable on purchases complies with HM Revenue and Customs regulations.
4.91 To ensure that, where construction and maintenance works are undertaken, the contractor fulfils the necessary construction industry tax deduction requirements.
4.92 To ensure that all persons employed by the Council are added to the Council’s payroll and tax deducted from any payments, except where the individuals are bona fide self-employed or are employed by a recognised staff agency.
4.93 To follow the guidance on taxation issued by the Chief Finance Officer.
4.94 Trading accounts and business units have become more important as local authorities have developed a more commercial culture. Under best value, authorities are required to keep trading accounts for services provided on a basis other than straightforward recharge of cost. They are also required to disclose the results of significant trading operations in the THE ANNUAL REPORT.
4.95 To advise on the establishment and operation of trading accounts and business units.
4.96 To consult with the Chief Finance Officer where a business unit wishes to enter into a contract with a third party where the contract expiry date exceeds the remaining life of their main contract with the Council. In general, such contracts should not be entered into unless they can be terminated within the main contract period without penalty.
4.97 To observe all statutory requirements in relation to business units, including the maintenance of a separate revenue account to which all relevant income is credited and all relevant expenditure, including overhead costs, is charged, and to produce an annual report in support of the final accounts.
4.98 To ensure that the same accounting principles are applied in relation to trading accounts as for other services or business units.
4.99 To ensure that each business unit prepares an annual business plan.
5.01 Partnerships are likely to play a key role in delivering community strategies and in helping to promote and improve the well-being of the area. Local authorities are working in partnership with others – public agencies, private companies, community groups and voluntary organisations. Local authorities still deliver some services, but their distinctive leadership role is to bring together the contributions of the various stakeholders. They therefore need to deliver a shared vision of services based on user wishes.
5.02 Local authorities will mobilise investment, bid for funds, champion the needs of their areas and harness the energies of local people and community organisations. Local authorities will be measured by what they achieve in partnership with others.
5.03 The main reasons for entering into a partnership are:
5.04 A partner is defined as either:
or
5.05 Partners participate in projects by:
5.06 Partners have common responsibilities:
5.07 The key controls for authority partners are:
5.08 To advise on effective controls that will ensure that resources are not wasted.
5.09 To advise on the key elements of funding a project. They include:
5.10 To ensure that the accounting arrangements are satisfactory.
5.11 To maintain a register of all contracts entered into with external bodies in accordance with procedures specified by the Chief Finance Officer
5.12 To ensure that, before entering into agreements with external bodies, a risk management appraisal has been prepared for the Chief Finance Officer.
5.13 To ensure that such agreements and arrangements do not impact adversely upon the services provided by the authority.
5.14 To ensure that all agreements and arrangements are properly documented.
5.15 To provide appropriate information to the Chief Finance Officer to enable a note to be entered into the authority’s statement of accounts concerning material items.
5.16 External funding is potentially a very important source of income, but funding conditions need to be carefully considered to ensure that they are compatible with the aims and objectives of the authority. Local authorities are increasingly encouraged to provide seamless service delivery through working closely with other agencies and private service providers. Funds from external agencies such as the National Lottery and the single regeneration budget provide additional resources to enable the authority to deliver services to the local community. However, in some instances, although the scope for external funding has increased, such funding is linked to tight specifications and may not be flexible enough to link to the authority’s overall plan.
5.17 The key controls for external funding are:
5.18 To ensure that all funding notified by external bodies is received and properly recorded in the authority’s accounts.
5.19 To ensure that the match-funding requirements are considered prior to entering into the agreements and that future revenue budgets reflect these requirements.
5.20 To ensure that audit requirements are met.
5.21 To ensure that all claims for funds are made by the due date
5.22 To ensure that the project progresses in accordance with the agreed project and that all expenditure is properly incurred and recorded.
5.23 Current legislation enables the authority to provide a range of services to other bodies. Such work may enable a unit to maintain economies of scale and existing expertise. Arrangements should be in place to ensure that any risks associated with this work is minimised and that such work is intra vires.
5.24 The key controls for working with third parties are:
5.25 To issue guidance with regard to the financial aspects of third party contracts and the maintenance of the contract register.
5.26 To ensure that the approval of the executive is obtained before any negotiations are concluded to work for third parties.
5.27 To maintain a register of all contracts entered into with third parties in accordance with procedures specified by the Chief Finance Officer.
5.28 To ensure that appropriate insurance arrangements are made.
5.29 To ensure that the authority is not put at risk from any bad debts.
5.30 To ensure that no contract is subsidised by the authority.
5.31 To ensure that, wherever possible, payment is received in advance of the delivery of the service.
5.32 To ensure that the service/unit has the appropriate expertise to undertake the contract.
5.33 To ensure that such contracts do not impact adversely upon the services provided for the authority.
5.34 To ensure that all contracts are properly documented.
5.35 To provide appropriate information to the Chief Finance Officer to enable a note to be entered into the statement of accounts.