NEWINGTON PARISH COUNCIL FINANCIAL REGULATIONS
These Financial Regulations were adopted by the Council at its Meeting
held on 7 December 2010
1.1 These financial regulations govern the conduct of financial management by the Council and may only be amended or varied by resolution of the Council. The council is responsible in law for ensuring that its financial management is adequate and effective and that the council has a sound system of financial control which facilitates the effective exercise of the council’s functions, including arrangements for the management of risk and for the prevention and detection of fraud and corruption. These financial regulations are designed to demonstrate how the council meets these responsibilities.
1.2 The Responsible Financial Officer (RFO) is a statutory office and shall be appointed by the council. The appointed RFO is the Clerk to the Council. The RFO, acting under the policy direction of the Council, shall administer the Council’s financial affairs in accordance with proper practices. The Council shall determine its accounting records, and accounting control systems. The RFO shall ensure that the accounting control systems are observed and that the accounting records of the council are maintained and kept up to date in accordance with proper practices.
1.3 The RFO shall produce financial management information as required by the budgetary controls set out in Section 3 of these Regulations.
1.4 At least once a year, prior to approving the annual return, the council shall conduct a review of the effectiveness of its system of internal control which shall be in accordance with proper practices.
1.5 In these financial regulations, references to the Accounts and Audit Regulations shall mean the Regulations issued from time to time under the provisions of section 27 of the Audit Commission Act 1998 and then in force.
1.6 In these financial regulations the term ‘proper practice’ or ‘proper practices’ shall refer to guidance issued in Governance and Accountability in local Councils in England and Wales- A Practitioners’ Guide, which is published jointly by NALC and SLCC and updated from time to time.
2. ANNUAL ESTIMATES (BUDGET)
2.1 Detailed estimates of all receipts and payments including the use of reserves and all sources of funding for the year shall be prepared each year by the RFO in the form of a budget to be considered by the council.
2.2 The Council shall review the budget not later than the end of January each year and shall fix the Precept to be levied for the ensuing financial year. The RFO shall issue the precept to the billing authority (Swale Borough Council) and shall supply each member with a copy of the approved budget.
2.3 The annual budgets shall form the basis of financial control and budget monitoring for the ensuing year.
3. BUDGETARY CONTROL
3.1 Expenditure on revenue items may be incurred up to the amounts included for that item of expenditure in the approved budget. Expenditure in excess of the approved budget MUST be previously approved by the Council, having considered fully the implications for the revenue budget and/or reserves of the Council.
3.2 During the budget year and with the approval of council having considered fully the budgetary implications, unspent and available amounts may be moved to other budget headings or to reserves as appropriate.
3.3 The RFO shall regularly present to the Council a statement of receipts and payments to date under each head of the budgets, comparing actual expenditure and income to the appropriate date against the planned budget for the year and a forecast of the anticipated outturn for the year. These statements are to be prepared for the September and December meetings and also for the Annual Return.
3.4 The RFO with approval from the Chairman of the Council may incur expenditure on behalf of the Council which is necessary to carry out any repair replacement or other work which is of such extreme urgency that it must be done at once, whether or not there is any budgetary provision for the expenditure, subject to a limit of £200. The RFO shall report the action to the Council as soon as practicable thereafter.
3.5 No expenditure shall be incurred in relation to any capital project and no contract entered into or tender accepted involving capital expenditure unless the Council is satisfied that the necessary funds are available, or the requisite borrowing approval has been obtained.
3.6 All capital works shall be administered in accordance with the Council’s standing orders and financial regulations relating to contracts.
4. ACCOUNTING AND AUDIT
4.1 The RFO shall ensure that the accounting procedures are observed and all financial records of the Council are kept up to date in accordance with proper practices.
4.2 The RFO shall complete the financial statements and the Accounts of the Council contained in the Annual Return ( as supplied by the Auditor appointed from time to time by the Audit Commission) and shall submit the Annual Return for approval and authorisation by the Council within the timescales set by the Accounts and Audit Regulations.
4.3 The Council shall ensure that there is adequate and effective system of internal audit of the Council’s accounting, financial and other operations in accordance with proper practices. Any officer or member of the Council shall, if the RFO or Internal Auditor requires, make available such documents of the Council which appear to the RFO or Internal Auditor to be necessary for the purpose of the internal audit and shall supply the RFO or Internal Auditor with such information and explanation as the RFO or Internal Auditor considers necessary for that purpose.
4.4 The Internal Auditor shall be appointed by the Council and shall carry out the work required by the council in accordance with proper practices. The Internal Auditor, who shall be competent and independent of the operations of the Council, shall report to Council in writing, and if necessary in person, on a regular basis with a minimum of one annual written report in respect of each financial year. In order to demonstrate objectivity and independence, the internal auditor shall be free from any conflicts of interest and have no involvement in the financial decision making, management or control of the council.
4.5 The RFO shall make arrangements for the opportunity for inspection of the accounts, books, and vouchers and for the display or publication of any Notices and statements of account required by Audit Commission Act 1998 and the Accounts and Audit Regulations.
4.6 The RFO shall, as soon as practicable, bring to the attention of all councillors any correspondence or report from the Internal or External Auditor, unless the correspondence is of a purely administrative matter.
5. BANKING ARRANGEMENTS AND CHEQUES
5.1 The Council’s banking arrangements, including the Bank Mandate and bank accounts, shall be made by the RFO and approved by the Council and should be regularly reviewed for efficiency.
5.2 A schedule of the payments required, forming part of the Agenda for the Meeting, shall be prepared by the RFO and, together with the relevant invoices, be presented to Council. If the schedule is in order it shall be authorised by a resolution of the Council and shall be initialled by the Chairman of the Meeting. The approved schedule of payments including the cheque number will be shown in the Minutes of the Meeting.
5.3 Cheques drawn on the bank account in accordance with the schedule referred to in paragraph 5.2 or in accordance with paragraph 6.4 shall be signed by three members of Council.
5.4 To indicate agreement of the details shown on the cheque or order for payment with the counterfoil and the invoice or similar documentation, the signatories shall each also initial the cheque counterfoil.
5.5 The bank statements will be checked by a Councillor against the approved schedule of cheques from the previous Council meeting. The checked statement will be held by the Chair.
6. PAYMENT OF ACCOUNTS
6.1 All payments shall be effected by cheque or other order drawn on the Council’s bankers.
6.2 All invoices for payment shall be examined, verified and certified by the RFO. The RFO shall satisfy him/herself that the work, goods or services to which the invoice relates shall have been received, carried out, examined and approved.
6.3 The RFO shall examine invoices in relation to arithmetic accuracy and shall analyse them to the appropriate expenditure heading. The RFO shall take all steps to settle all invoices submitted, and which are in order, at the next available Council Meeting.
6.4 If a payment is necessary to avoid a charge to interest under the Late Payment of Commercial Debts (Interest) Act 1998, and the due date for payment is before the next scheduled Meeting of Council, where the RFO certifies that there is no dispute or other reason to delay payment, the RFO may (notwithstanding para 6.3) take all steps necessary to settle such invoices provided that a list of such payments shall be submitted to the next appropriate meeting of Council and minuted accordingly
6.5 If thought appropriate by the council, payment for utility supplies (energy, telephone and water) may be made by variable Direct Debit provided that the instructions are signed by three members and any payments are reported to council as made linked with the schedule of payments referred to in paragraph 5.2. The approval of the use of a variable Direct Debit shall be renewed by resolution of the council at least every two years.
7. PAYMENT OF SALARIES
7.1 As an employer, the council shall make arrangements to meet fully the statutory requirements placed on all employers by PAYE and National Insurance legislation. The payment of all salaries shall be made in accordance with payroll records and the rules of PAYE and National Insurance currently operating, and salaries shall be as agreed by Council.
7.2 Payment of salaries and payment of deductions from salary such as may be made for tax, national insurance, may be made in accordance with the payroll records and on the appropriate dates stipulated in employment contracts, provided that each payment is reported to and ratified by the next available Council Meeting.
8. LOANS AND INVESTMENTS
8.1 All investments of money under the control of the Council shall be in the name of the Council.
8.2 All borrowings(loans) shall be effected in the name of the Council, after obtaining any necessary borrowing approval. Any application for borrowing approval shall be approved by Council as to terms and purpose. The terms and conditions of borrowings shall be reviewed at least annually.
8.3 All investment certificates and other documents relating thereto shall be retained in the custody of the RFO.
9.1 The collection of all sums due to the Council shall be the responsibility of and under the supervision of the RFO.
9.2 Particulars of all charges to be made for work done, services rendered or goods supplied shall be agreed annually by the Council following a report of the RFO.
9.3 Any sums found to be irrecoverable and any bad debts shall be reported to the Council by the RFO and shall be written off in the year.
9.4 All sums received on behalf of the Council shall be banked intact by the RFO. In all cases, all receipts shall be deposited with the Council’s bankers with such frequency as the RFO considers necessary.
9.5 The origin of each receipt shall be entered on the paying-in slip.
9.6 Personal cheques shall not be cashed out of money held on behalf of the Council.
10.1 The RFO shall promptly complete any VAT Return that is required. Any repayment claim due in accordance with VAT Act 1994 section 33 shall be made at least annually coinciding with the financial year end.
11. ORDERS/CONTRACTS FOR WORK, GOODS AND SERVICES
11.1 A numbered official order or letter shall be issued for all work, goods and services unless a formal contract is to be prepared or an official order would be inappropriate. Copies of all orders or letters shall be retained by the RFO and available for inspection by members as required.
11.2 Order books shall be controlled by the RFO.
11.3 The RFO shall verify the lawful nature of any proposed purchase before the issue of any order, and in the case of new or infrequent purchases or payments, the RFO shall ensure that the statutory authority shall be reported to the meeting at which the order is approved so that the Minutes can record the power being used.
11.4 Where it is intended to enter into a contract or purchase exceeding £5,000 in value for the supply of goods or materials or for the execution of works or specialist services the RFO shall invite tenders from at least three suitable firms.
11.5 When applications are made to waive financial regulations relating to contracts/purchases exceeding £5,000 to enable a price to be negotiated without competition the reason shall be embodied in a recommendation to the Council.
11.6 Such invitation to tender shall state the general nature of the intended contract/purchase and the RFO shall obtain the necessary technical assistance to prepare a specification in appropriate cases. The invitation shall in addition state that tenders must be addressed to the RFO in the ordinary course of post. Each tendering firm shall be supplied with a specifically marked envelope in which the tender is to be sealed and remain sealed until the prescribed date for opening tenders for that contract/purchase.
11.7 All sealed tenders shall be opened at the same time on the prescribed date by the RFO in the presence of at least two member(s) of Council.
11.8 If less than three tenders are received for contracts/purchases above £5,000 or if all the tenders are identical the Council may make such arrangements as it thinks fit for procuring the goods or materials or executing the works.
11.9 Where it is intended to enter into a contract/purchase for between £1,000 and £5,000 in value for the supply of goods or materials or for the execution of works or specialist services the RFO shall obtain 3 quotations (priced descriptions of the proposed supply); where the value is below £1,000 the RFO shall strive to obtain 3 estimates.
11.10 The Council shall not be obliged to accept the lowest or any tender, quote or estimate.
11.11 Where contracts provide for payment by instalments the RFO shall maintain a record of all such payments. In any case where it is estimated that the total cost of work carried out under a contract, excluding agreed variations, will exceed the contract sum of 5% or more a report shall be submitted to the Council.
11.12 Any variation to a contract or addition to or omission from a contract must be approved by the Council and RFO to the Contractor in writing, the Council being informed where the final cost is likely to exceed the financial provision.
12. ASSETS PROPERTIES AND ESTATES
12.1 The RFO shall make appropriate arrangements for the custody of all title deeds of properties owned by the Council. The RFO shall ensure a record is maintained of all properties owned by the Council, recording the location, extent, plan, reference, purchase details, nature of the interest, tenancies granted, rents payable and purpose for which held in accordance with Accounts and Audit Regulations.
12.2 No property shall be sold, leased or otherwise disposed of without the authority of the Council, together with any other consents required by law, save where the estimated value of any one item of tangible movable property does not exceed £50.
12.3 The RFO shall ensure that an appropriate and accurate Register of Assets and Investments is kept up to date. The continued existence of tangible assets shown in the Register shall be verified at least annually, possibly in conjunction with a health and safety inspection of assets.
13.1 Following the annual risk assessment (per Financial Regulation 13), the RFO shall effect all insurances and negotiate all claims on the Council’s insurers
13.2 The RFO shall keep a record of all insurances effected by the Council and the property and risks covered thereby and annually review it.
13.3 The RFO shall be notified of any loss liability or damage or of any event likely to lead to a claim, and shall report these to Council at the next available meeting.
13.4 All appropriate employees of the Council shall be included in a suitable fidelity guarantee insurance which shall cover the maximum risk exposure as determined by the Council and/or advised by the external auditors.
14. RISK MANAGEMENT
14.1 The council is responsible for putting in place arrangements for the management of risk. The Council shall consider risk management policy statements in respect of all activities of the council. Risk policy statements and consequential risk management arrangements shall be reviewed by the council at least annually.
14.2 When considering any new activity, the Council shall prepare a draft risk assessment including risk management proposals for consideration and adoption .
15. REVISION OF FINANCIAL REGULATIONS
15.1 It shall be the duty of the Council to review the Financial Regulations of the Council from time to time. The RFO shall make arrangements to monitor changes in legislation or proper practices and shall advise the council of any requirement for a consequential amendment to these financial regulations.