These financial regulations govern the conduct of the financial transactions of the Council
The policy is overseen by the Finance Committee and was last updated in March 2022.
1.1 These financial regulations govern the conduct of the financial transactions of the Council and may only be amended or varied by resolution of the Council.
1.2 The Responsible Financial Officer (RFO), under the policy direction of the Council, shall be responsible for the proper administration of the Council’s affairs.
1.3 The RFO shall be responsible for the production of financial management information.
2.1 Each Committee shall formulate and submit proposals to the Finance Committee in respect of revenue and capital costs for the following financial year not later than the end of October each year.
2.2 Detailed estimates of all income and expenditure for the year shall be prepared each year by the RFO.
2.3 The Finance Committee shall review the estimates at the meeting to be held in November/December and, using these, shall recommend to Council in January each year the level of Precept to be levied for the following financial year. The Town Council shall decide the level, of Precept. The RFO shall supply each member with a copy of the approved estimates.
2.4 The annual budgets shall form the basis of financial control for the ensuing year.
2.5 The Council may prepare and have regard to a three year forecast of Revenue and Capital Income and Expenditure which shall be prepared at the same time as the annual Budget or Estimates.
2.6 The Finance Committee may, by resolution, increase a committee budget to:
- Add an income budget for a loan and expenditure budget for works covered by the loan
- Increase expenditure budget for planned spending drawn from a previous year budget underspend
- Add budget expenditure for approved spending from reserves
Subject to the following conditions:
- No amendment shall be made for any change below a threshold of £10,000
- No amendment shall be made other than following a report from the Responsible Financial Officer justifying the need for a change
- The budget holding committee shall be informed of the change at its next ordinary meeting
When setting the budget for the next financial year, the relevant committee, finance committee and Council shall be presented with a report showing the agreed and amended budget for ease of comparison.
3.1 Expenditure on revenue items may be incurred up to the amounts included in the approved budget.
3.2 No expenditure may be incurred which will exceed the amount provided in the revenue budget.
3.3 Each Committee shall receive reports at each meeting identifying the ‘year-to-date’ financial information comparing actual expenditure against that planned and a nominal ledger report for the current month.
3.4 The Town Clerk may, having informed the Mayor, 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 £1000. Such action will be reported to the appropriate committee members immediately by e-mail and formally to the committee as soon as practicable.
3.5 The Town Clerk may further incur expenditure for the procurement of equipment, supplies and services required for the operation and delivery and effective management of the council’s services, events and assets subject to adequate budget provision and for expenditure above £1,000 having informed the Mayor.
3.6 The Town Clerk may also incur expenditure in other instances as per delegated authority from the Council or committees
3.7 Unspent provisions in the revenue budget shall not be carried forward to a subsequent year unless such expenditure relates to commitments made or invoices not yet received.
3.8 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.
3.9 All capital works shall be administered in accordance with the Council’s Standing Orders and Financial Regulations relating to contracts.
ACCOUNTING AND AUDIT
4.1 All accounting procedures and financial records of the council shall be determined by the RFO in accordance with the Accounts and Audit Regulations, appropriate guidance and proper practices.
4.2 The RFO shall complete the annual statement of accounts, annual report and any related documents of the council contained in the Annual Return (as specified in proper practices) as soon as practicable after the end of the financial year and having certified the accounts submit them and report thereon to the Finance Committee and following to Council within the timescales set by the Accounts and Audit Regulations.
4.3 The RFO shall be responsible for ensuring that there is adequate and effective system of internal audit of the Council’s accounting, financial and other operations in accordance with the Accounts and Audit Regulations. 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 carry out the work required by the RFO, or by the Council, with a view to satisfactory completion of the Internal Auditor’s Report section of the Annual Return. The Internal Auditor, who shall be competent and independent of the operations of the Council, shall report to Council in writing on a regular basis with a minimum of one annual report in respect of each financial year. The RFO shall make arrangements for the exercise of electors’ rights in relation to the accounts including the opportunity to inspect the accounts, books, and vouchers and display or publish any notices and statements of account required by any legislation and the Accounts and Audit Regulations. The RFO shall, as soon as practicable, bring to the attention of all members of the Finance Committee any correspondence or report from the Internal or External Auditor, unless the correspondence is of a purely administrative matter. Where to the opinion of the RFO there is a matter of a very serious nature all councillors should be informed.
4.5 The Town Council’s internal audit working group shall undertake routine reviews of the council’s internal controls as per the terms of reference in Annex 3.
BANKING ARRANGEMENTS AND CHEQUES
5.1 The Council’s banking arrangements shall be made by the RFO and approved by the Finance Committee. They shall be reviewed following each ordinary elections.
5.2 A payment schedule shall be prepared by the RFO and sent by e-mail to members of the Finance Committee for review. The RFO shall respond to any queries raised in respect of any payments and, subject to the agreement of the Chairman of the Finance Committee, shall approve payments to be made. Approved schedules shall be presented for information to the next meeting of the Town Council.
5.3 Cheques and BACs payments 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/authorised by any two of the signatories to the bank accounts. Council shall appoint four signatories annually.
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. Signatories shall satisfy themselves that payments being made accord with the approved payment schedules.
PAYMENT OF ACCOUNTS
6.1 Following approval, the Town Clerk shall give instruction that payment shall be made. Payments will be made by cheque or BACs transfer.
6.2 All invoices for payment shall be examined, verified and certified by the Town Clerk. The Town Clerk shall satisfy himself that the work, goods or services to which the invoice relates shall have been received, carried out, examined and approved.
6.3 The Town Clerk shall ensure that checks have been undertaken to verify the supplier bank account details presented on the invoice
6.4 Changes to account details for suppliers which are used for internet banking may only be changed on written hard copy notification by the supplier and supported by hard copy authority for change signed by the Town Clerk.
6.5 The RFO shall examine invoices in relation to arithmetic accuracy and shall analyse them to the appropriate expenditure heading. The Town Clerk shall take all steps to settle all invoices submitted, and which are in order, at the next available Council or Finance Committee Meeting.
6.6 Except where otherwise authorised the Town Clerk shall have delegated authority to authorise the payment of items only in the following circumstances:
- If a payment is necessary to avoid a charge to interest under the Late Payment of Commercial Debts (Interest) Act 1998, or required under the Public Contracts Regulations 2015, and the due date for payment is before the next scheduled meeting of the Council or Finance Committee 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.
- fund transfers within the council’s banking arrangements up to the sum of £10,000 provided that a list of such payments shall be submitted to the next appropriate meeting of the Council or Finance Committee.
- Payments to be made using council credit cards
- Payment of salaries in accordance with the payments agreed by the Personnel Committee
- Where it is necessary to make a payment before it can be authorised under 5.2, where it has been certified as to its correctness and urgency in accordance with 3.4
- The reimbursement of out-of-pocket expenses for staff above £50.
6.7 Any arrangements entered into by the council which result in payment of bills by Direct Debit or BACS transfer must be approved by the appropriate spending committee and reported to the next meeting of the Finance Committee.
6.8 All payments made by Direct Debit or BACS transfer must form part of the payment schedules submitted to Council and the Finance Committee.
6.9 The Town Clerk’s Credit card shall have a credit limit of £1,500. Other credit cards may be authorised by the Finance Committee with a credit limit of £500. Payments shall be limited to a maximum single transaction of £1,000 and there shall be a limit of £3,000 for transactions per calendar month.
6.10 BACs payments shall be made in accordance with the procedure set out in Annex 2.
PAYMENT OF SALARIES
7.1 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 and pension contributions, must be made in accordance with the payroll records and on the appropriate dates, provided that each payment is reported to the next available Council Meeting.
LOANS AND INVESTMENTS
8.1 All loans and investments shall be negotiated and held in the name of the Council and shall be for a set period in accordance with Council policy.
8.2 The Council’s Investment Policy shall be in accordance with the Guidance on Local Government Investments issued by the Department for Communities and Local Government and reviewed at least annually.
- Any borrowings shall be subject to the necessary borrowing approval and any application for the same shall be subject to approval by Council.
- 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, notified to the RFO and the RFO shall be responsible for the collection of all accounts due to the Council. (Subject to 9.3 below)
9.3 The council will review the rent applied to 60 King Street every five years following a report from the Managing Agents. The Managing Agents will collect the rent due for 60 King Street quarterly and forward all rent together with an invoice for the agent’s fees onto the RFO, along with a statement. The council will review all fees and charges at least annually, following a report of the Town Clerk.
9.4 Any sums found to be irrecoverable and any bad debts shall be reported to the Council and shall be written off in the year.
9.5 All sums received on behalf of the Council shall be banked intact as directed by the RFO. In all cases, all receipts shall be deposited with the Council’s bankers with such frequency as the RFO considers necessary.
9.6 The origin of each receipt shall be entered on the paying-in slip.
9.7 Personal cheques shall not be cashed out of money held on behalf of the Council.
9.8 The RFO shall promptly complete any VAT Return that is required.
9.9 Where any significant sums of cash are regularly received by the Council, the RFO shall take such steps as are agreed by the Council to ensure that more than one person is present when the cash is counted in the first instance, that there is a reconciliation to some form of control such as ticket issues, and that appropriate care is taken in the security and safety of individuals banking such cash.
ORDERS FOR WORK, GOODS AND SERVICES
10.1 An official order or written correspondence shall be issued for all work, goods and services unless a formal contract is to be prepared or an official order would be inappropriate. Copies of orders shall be retained.
10.2 Order books shall be controlled by the RFO.
10.3 All members and officers are responsible for obtaining value for money at all times. An officer issuing an official order is to ensure as far as reasonable and practicable that the best available terms are obtained in respect of each transaction, usually by obtaining three or more quotations or estimates from appropriate suppliers, subject to any de minimis provisions in Regulation 11 (I) below. A member may not issue an official order or make any contract on behalf of the council.
10.4 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.
10.5 The Council wishes to promote the local economy and where possible maximise the amount of money it spends locally. Such aspirations will not override considerations related to best value being achieved. Where legally possible quotes and tenders will be sought from a range of local suppliers
11.1 Procedures as to contracts are laid down as follows and supplemented by the guidance at Annex 1:
a) Every contract shall comply with these financial regulations, and no exceptions shall be made otherwise than in an emergency provided that these regulations shall not apply to contracts which relate to items (i) to (vi) below:
i. for the supply of water and sewerage services
ii. for work to be executed or goods or materials to be supplied which consist of repairs to or parts for existing machinery or equipment or plant
iii. for work to be executed or goods or materials to be supplied which constitute an extension of an existing contract by the Council
iv. for additional audit work of the External Auditor up to an estimated value of £250 (in excess of this sum the RFO shall act after consultation with the Mayor and Deputy Mayor of the Council)
v. for goods or materials proposed to be purchased which are proprietary articles and/or are only sold at a fixed price
b) Where it is intended to enter into a contract exceeding £30,000 (ex-VAT) in value for the supply of goods or materials or for the execution of works or specialist services other than such goods, materials, works or specialist services as are excepted as set out in paragraph (a) the Town Clerk shall invite tenders from at least three suppliers For avoidance of doubt the Town Clerk should use all reasonable endeavors to ensure the council shall have three tenders for consideration.
c) When applications are made to waive financial regulations relating to contracts to enable a price to be negotiated without competition the reason shall be embodied in a recommendation to the appropriate committee to be provided with the summons.
d) Such invitation to tender shall state the general nature of the intended contract and the Town Clerk shall obtain the necessary technical assistance to prepare a specification in appropriate cases. The invitation shall in addition state that tenders must be addressed to the Town Clerk, clearly labeled for the tender in question and sent either:
- in the ordinary course of post or
- as a password protected folder via email. The password for which shall be sent to a separate designated email address
e) All sealed tenders shall be opened at the same time on the prescribed date by the Town Clerk in the presence of at least one officer or member of Council.
f) If less than three tenders are received for contracts above £30,000 (ex-VAT) 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.
g) Any invitation to tender issued under this regulation shall contain a statement to the effect of Standing Order 79.
h) When it is to enter into a contract less than £30,000 (ex-VAT) in value for the supply of goods or materials or for the execution of works or specialist services other than such goods, materials, works or specialist services as are excepted as set out in paragraph (a) the RFO shall obtain at least 3 quotations (priced descriptions of the proposed supply)
i) Where the value is below £5,000 (ex-VAT) and above £1,000 (ex-VAT) the RFO shall strive to obtain 3 quotations. Otherwise, Regulation 10.3 above shall apply.
j) The Council shall not be obliged to accept the lowest or any tender, quote or estimate.
PAYMENTS UNDER CONTRACTS FOR BUILDING OR OTHER CONSTRUCTION WORKS
12.1 Payments on account of the contract sum shall be made within the time specified in the contract by the RFO upon authorised certificates of the architect or other consultants engaged to supervise the contract (subject to any percentage withholding as may be agreed in the particular contract).
12.2 Where contracts provide for payment by installments 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 relevant committee.
12.3 Any variation to a contract or addition to or omission from a contract must be approved by the council or appropriate committee and Town Clerk to the Contractor in writing, the appropriate committee and the Finance Committee being informed where the final cost is likely to exceed the financial provision.
STORES AND EQUIPMENT
13.1 The Town Clerk shall be responsible for the care and custody of stores and equipment in that section.
13.2 Delivery Notes shall be obtained in respect of all goods received into store or otherwise delivered and goods must be checked as to order and quality at the time delivery is made.
13.3 Stocks shall be kept at the minimum levels consistent with operational requirements.
13.4 The RFO shall be responsible for periodic checks of stocks and stores at least annually.
PROPERTIES AND ESTATES
14.1 The Clerk shall make appropriate arrangements for the custody of all title deeds of properties owned by the Council and 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 the Accounts and Audit Regulations.
14.2 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 £500.
14.3 The Town Clerk shall ensure that all buildings which are the responsibility of the Council are subject to a quinquennial survey of their condition and market value.
14.4 The business case for any substantial building works (e.g. redevelopment and works above that which are required following the condition survey) shall include an assessment of the projected value of the asset.
14.5 The RFO shall ensure that an appropriate and accurate Register of Assets and Investments is kept up to date. Only capital expenditure in excess of £100 will be capitalized. The RFO shall ensure that continued existence of all assets on the register is certified annually by 31st March.
15.1 Any capital receipts shall be held in a separately identified Capital Receipts Reserve
15.2 Expenditure from the Capital Receipts Reserve must be approved by Full Council in advance of any commitment on the funds being made.
COMMUNITY INFRASTRUCTURE LEVY
16.1 Any community infrastructure levy receipts shall be held in a separately identified Community Infrastructure Levy Reserve
16.2 Community Infrastructure Levy expenditure must be approved by Full Council in advance of any commitment on the funds being made.
16.3 The RFO shall publish an annual CIL report in accordance with the Community Infrastructure Levy Regulations. The report shall be submitted to the Finance Committee, published on the council’s website and submitted to Cheshire East Council by 30th September each year.
17.1 Following an annual risk assessment, the RFO shall effect all insurances and negotiate all claims on the Council’s insurers.
17.2 The RFO shall identify promptly all new risks, properties or vehicles which require to be insured and of any alterations affecting existing insurances.
17.3 The RFO shall keep a record of all insurances effected by the Council and the property and risks covered thereby and annually review it.
17.4 The RFO shall be notified of any loss liability or damage or of any event likely to lead to a claim and shall report these to council or the appropriate committee at the next suitable meeting. Matters shall also be reported to the Finance Committee at its next suitable meeting.
17.5 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.
18.1 Where the Council is sole trustee of a charitable body the RFO shall ensure that separate accounts are kept of the funds held on charitable trusts and separate financial reports made in such form as shall be appropriate, in accordance with Charity Law and legislation, or as determined by the Charity Commission. The RFO shall arrange for any Audit or Independent Examination as may be required by Charity Law or any Governing Document.
19.1 The RFO shall prepare and promote risk management policy statements in respect of all activities of the Council.
19.2 When considering any new or significantly altered activity/function (including processes or procedures) the RFO shall prepare a draft Risk Assessment for the activity and shall bring a draft addressing the legal and financial liabilities and Risk Management issues that arise to the appropriate committee/Council for consideration and, if thought appropriate, adoption.
19.3 The Risk Assessment under 18.2 shall be referred to the Finance Committee for consideration. Should the Finance Committee consider any anomalies or omissions in the Risk Assessment it shall be referred back to the submitter to clarify or rectify. In the event the submitter disagrees with the opinion of the Finance Committee it shall be referred to Council.
REVISION OF FINANCIAL REGULATIONS
20.1 It shall be the duty of the Finance Committee to review the Financial Regulations of the Council from time to time.
ANNEX 1 – SUPPLEMENTARY PROCUREMENT GUIDANCE
This procedural document is designed to bring further clarity to the procurement processes set out in Standing Orders and Financial Regulations. This will aid members in their understanding of audit procedures and aid officers through providing the necessary clarification of the internal processes to be adhered to. Section 96 of Standing Orders provides general guidance on contracts and references financial regulations. The table below sets out the general procedures to be adopted by Officers which are overseen by Members.
|Value||Action Required||Evidence retained|
|Over EU Thresholds
|Full EU Tender procedures||All documents and correspondence to be retained.|
|30k to EU Threshold||Compliance with internal tender process. Opportunity to be advertised as widely as possible.||All tender documents to be retained.|
|Over £25k||If opportunity is advertised; it must also be advertised on the Contracts Finder website.||Record of advertisement. Details of award also posted.|
|5k to 30k||At least three written formal quotes to be obtained||Quotes retained alongside reasons for choice of supplier.|
|£500 to 5k||Three written quotes/estimates||Quotes retained alongside reasons for choice of supplier.|
|£100 to £500||Three verbal quotes||Details of the quotes|
|<£100||Verbal quotes to be accepted||Choice of supplier to be recorded along with details of supplies recorded.|
Current thresholds £213,477 for services/supplies contracts, £5,336,937 for works. Next due to be updated 01/01/2023
Exceptions and Exemptions – An exception is a one off deviation from the procedure that may occur due to many reasons such as an emergency or the requirement being so unique as to make locating other supplies impossible. An exemption is a permanent deviation from processes such as costs associated with utilities, rents etc.
Officers should notify Members through formal process i.e. the recording on an exemption/exception in Council or Committee minutes. This may on occasion occur retrospectively, but Officers should be able to justify actions such as those taken in emergency or immediate need.
ANNEX 2 – BACS PAYMENT PROCESSES
Online Banking Users
1) The Town Council in taking advantage of online banking shall establish three classes of user:
CLASS A – user rights only to view balances and create payments.
CLASS B – user rights only to view balances and authorise release of payments.
CLASS C – user rights only to view balances.
2) The Town Clerk and Deputy Town Clerk shall be CLASS A users.
3) The Council’s bank signatories authorised in accordance with regulation 5.3 shall be CLASS B users.
4) Members of the Council’s Internal Audit Working Group shall be CLASS C users. The Finance Committee may appoint other officers or members as CLASS C users.
5) No other users shall be permitted on the council’s online banking system.
6) Class A users are not permitted to authorise the release of payments.
7) All authorisations, including to create new users, shall be subject to double signing rules which shall, as a minimum, require that CLASS A users are unable to create new users without additional authorisation from a CLASS B user. Notwithstanding that any such users must be established only following resolution of the Finance Committee or the appointment of signatories by Council in accordance with regulation 5.3.
Making BACs Payments
1) The RFO shall prepare a schedule of payments to be made by BACs in accordance with regulation 5.2
2) Following approval the RFO shall create payments within the council’s banking system ready for member authorisation. For clarity, payments which have not been approved in accordance with regulation 5.2 or 6.4 shall not be created on the banking system.
3) The RFO shall provide CLASS B users with an approved schedule of payments for reference when authorising payments
4) Two CLASS B users shall authorise payments for release. No payment shall be released without two CLASS B users having authorised the payment.
Payments to be made by BACs
1) The RFO shall, when preparing a schedule of payments in accordance with regulation 5.2 determine whether a payment shall be made by Cheque or BACs. Consideration shall be given to the cost of making a cheque payment vs a BACs payment.
2) The Finance Committee may determine that specific payments or types of payment be made by specific means e.g. utilities by Direct Debit, grants by cheque etc
ANNEX 3 – INTERNAL AUDIT WORKING GROUP TERMS OF REFERENCE
- The ‘Internal Audit Working Group’ membership shall be determined by resolution of the Finance Committee at the first meeting in the new mayoral year with casual vacancies filled during the year as they arise by further resolution.
- The ‘Internal Audit Working Group’ shall comprise three members from the Finance Committee and Personnel Committee, with at least one member from each.
- The quorum for the ‘Internal Audit Working Group’ will be two members (note 4 below).
- The Internal Audit Working Group does not have delegated powers to make decisions on behalf of the Finance Committee or the Town Council.
- The ‘Internal Audit Working Group’ shall produce a quarterly report to the Finance Committee at its next meeting to include its findings from the audit and recommendations for improvements to the financial stewardship. It is acceptable for the Q4 audit to be delayed due to the external audit process.
- In carrying out the quarterly audit the working group should make reference to
- 10% of debit entries
- 10% of credit entries
- Full paper trails for the above
- Evidence of compliance with Financial Regulations in all of the above.
- Outstanding debts owed to the council
- Evidence of debit entries being sanctioned.
- Bank statements agreeing with the closing balance on the financial report (bank reconciliation report).
- An annual review of the certified asset register and a quarterly review of payment schedules to ensure that any assets purchased within the period are included on the register.
- Reporting on actions taken on the points raised by the previous report
- Accounting and financial record keeping where appropriate
- 1 in 20 checks of completed BACS payments to compare the payment details with the account details on invoices.
- Employee leave, absences and flex records
- The members of ‘Internal Audit Working Group’ should report any serious matters e.g. suspected maladministration or misappropriation of funds immediately to the Chairman of the Finance Committee who should, in turn, bring the matter to the attention of the Town Mayor.
- The Terms of Reference for the ‘Internal Audit Group’ shall be reviewed annually at the first meeting of the Finance Committee in the new mayoral year.
- That the Internal Audit Working Group report its findings to the Responsible Financial Officer for remedial action as appropriate.