Financial Regulations
Policy Adopted on 17 March 2025
All Councils must adopt Financial Regulations by law. They must ensure that they are edited to reflect their Council's needs.
This Model Financial Regulations template was produced by the National Association of Local Councils (NALC) in April 2024 for the purpose of its member councils and county associations. Every effort has been made to ensure that the contents of this document are correct at time of publication. NALC cannot accept responsibility for errors, omissions and changes to information subsequent to publication.
This document is a model for councils of all sizes to use to develop their own financial regulations, suitable for the size of the council and the activities it undertakes.
STUBTON PARISH COUNCIL FINANCIAL REGULATIONS
These Financial Regulations were adopted by the council at its meeting held on 17 March 2025.
1. General
1.1. These Financial Regulations govern the financial management of the council and may only be amended or varied by resolution of the council. They are one of the council’s governing documents and shall be observed in conjunction with the council’s Standing Orders.
1.2. Councillors are expected to follow these regulations and not to entice employees to breach them. Failure to follow these regulations brings the office of councillor into disrepute.
1.3. Wilful breach of these regulations by an employee may result in disciplinary proceedings.
1.4. In these Financial Regulations:
· ‘Accounts and Audit Regulations’ means the regulations issued under Sections 32, 43(2) and 46 of the Local Audit and Accountability Act 2014, or any superseding legislation, and then in force, unless otherwise specified.
· “Approve” refers to an online action, allowing an electronic transaction to take place.
· “Authorise” refers to a decision by the council, or a committee or an officer, to allow something to happen.
· ‘Proper practices’ means those set out in The Practitioners’ Guide
· Practitioners’ Guide refers to the guide issued by the Joint Panel on Accountability and Governance (JPAG) and published by NALC in England or Governance and Accountability for Local Councils in Wales – A Practitioners Guide jointly published by One Voice Wales and the Society of Local Council Clerks in Wales.
· ‘Must’ and bold text refer to a statutory obligation the council cannot change.
· ‘Shall’ refers to a non-statutory instruction by the council to its members and staff.
1.5. The Responsible Financial Officer (RFO) holds a statutory office, appointed by the council. The Clerk has been appointed as RFO and these regulations apply accordingly. The RFO;
· acts under the policy direction of the council;
· administers the council's financial affairs in accordance with all Acts, Regulations and proper practices;
· determines on behalf of the council its accounting records and control systems;
· ensures the accounting control systems are observed;
· ensures the accounting records are kept up to date;
· seeks economy, efficiency and effectiveness in the use of council resources; and
· produces financial management information as required by the council.
1.6. The council must not delegate any decision regarding:
· setting the final budget or the precept (council tax requirement);
· the outcome of a review of the effectiveness of its internal controls
· approving accounting statements;
· approving an annual governance statement;
· borrowing;
· declaring eligibility for the General Power of Competence; and
· addressing recommendations from the internal or external auditors
1.7. In addition, the council shall:
· determine and regularly review the bank mandate for all council bank accounts;
· authorise any grant or single commitment in excess of £1,000
2. Risk management and internal control
2.1. The council must ensure that it has a sound system of internal control, which delivers effective financial, operational and risk management.
2.2. The Clerk/RFO shall prepare, for approval by the Council, a risk management policy covering all activities of the council. This policy and consequential risk management arrangements shall be reviewed by the council every 2 years.
2.3. When considering any new activity, the Clerk/RFO shall prepare a draft risk assessment including risk management proposals for consideration by the council.
2.4. At least once a year, the council must review the effectiveness of its system of internal control, before approving the Annual Governance Statement.
2.5. The accounting control systems determined by the RFO must include measures to:
· ensure that risk is appropriately managed;
· ensure the prompt, accurate recording of financial transactions;
· prevent and detect inaccuracy or fraud; and
· allow the reconstitution of any lost records;
· identify the duties of officers dealing with transactions and
· ensure division of responsibilities.
2.6. At each financial year end, a member other than the Chair shall be appointed to verify bank reconciliations produced by the RFO. The member shall sign and date the reconciliations and the original bank statements (or similar document) as evidence of this.
3. Accounts and audit
3.1. All accounting procedures and financial records of the council shall be determined by the RFO in accordance with the Accounts and Audit Regulations.
3.2. The accounting records determined by the RFO must be sufficient to explain the council’s transactions and to disclose its financial position with reasonably accuracy at any time. In particular, they must contain:
· day-to-day entries of all sums of money received and expended by the council and the matters to which they relate;
· a record of the assets and liabilities of the council;
3.3. The RFO shall complete and certify the annual Accounting Statements of the council contained in the Annual Governance and Accountability Return in accordance with proper practices, as soon as practicable after the end of the financial year. Having certified the Accounting Statements, the RFO shall submit them (with any related documents) to the council, within the timescales required by the Accounts and Audit Regulations.
3.5. The council must ensure that there is an adequate and effective system of internal audit of its accounting records and internal control system in accordance with proper practices.
3.6. Any officer or member of the council must make available such documents and records as the internal or external auditor consider necessary for the purpose of the audit and shall, as directed by the council, supply the RFO, internal auditor, or external auditor with such information and explanation as the council considers necessary.
3.7. The internal auditor shall be appointed by [the council] and shall carry out their work to evaluate the effectiveness of the council’s risk management, control and governance processes in accordance with proper practices specified in the Practitioners’ Guide.
3.8. The council shall ensure that the internal auditor is competent and independent of the financial operations of the council;
3.11. 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 documents required by the Local Audit and Accountability Act 2014, or any superseding legislation, and the Accounts and Audit Regulations.
3.12. The RFO shall, without undue delay, bring to the attention of all councillors any correspondence or report from internal or external auditors.
4. Budget and precept
4.1. Before setting a precept, the council must calculate its council tax requirement for each financial year by preparing and approving a budget, in accordance with The Local Government Finance Act 1992 or succeeding legislation.
4.2. Budgets for salaries and wages, including employer contributions shall be reviewed by the Council annually.
4.3. No later than January each year, the RFO shall prepare a draft budget with detailed estimates of all receipts and payments for the following financial year.
4.7. Having considered the proposed budget, the council shall determine its council tax requirement by setting a budget. The council shall set a precept for this amount no later than the end of January for the ensuing financial year.
4.8. Any member with council tax unpaid for more than two months is prohibited from voting on the budget or precept by Section 106 of the Local Government Finance Act 1992 and must and must disclose at the start of the meeting that Section 106 applies to them.
4.9. The RFO shall issue the precept to the billing authority no later than the end of February and supply each member with a copy of the agreed annual budget.
4.11. Any addition to, or withdrawal from, any earmarked reserve shall be agreed by the council {or relevant committee}.
5. Procurement
5.1. Members and officers are responsible for obtaining value for money at all times. Any officer procuring goods, services or works should ensure, as far as practicable, that the best available terms are obtained, usually by obtaining prices from several suppliers.
5.2. The RFO should verify the lawful nature of any proposed purchase before it is made and in the case of new or infrequent purchases, should ensure that the legal power being used is reported to the meeting at which the order is authorised and also recorded in the minutes.
5.3. Every contract shall comply with these the council’s Standing Orders and these Financial Regulations and no exceptions shall be made, except in an emergency.
5.4. For a contract for the supply of goods, services or works where the estimated value will exceed the thresholds set by Parliament, the full requirements of The Public Contracts Regulations 2015 or any superseding legislation (“the Legislation”), must be followed in respect of the tendering, award and notification of that contract.
5.7. For contracts estimated to be over £30,000 including VAT, the council must comply with any requirements of the Legislation regarding the advertising of contract opportunities and the publication of notices about the award of contracts.
5.8. For contracts greater than £1,000 excluding VAT the Clerk/RFO shall seek at least 3 fixed-price quotes;
5.10. For smaller purchases, the Clerk/RFO shall seek to achieve value for money.
5.11. Contracts must not be split into smaller lots to avoid compliance with these rules.
5.12. The requirement to obtain competitive prices in these regulations need not apply to contracts that relate to items (i) to (iv) below:
i. specialist services, such as legal professionals acting in disputes;
ii. repairs to, or parts for, existing machinery or equipment;
iii. works, goods or services that constitute an extension of an existing contract;
iv. goods or services that are only available from one supplier or are sold at a fixed price.
5.15. Individual purchases within an agreed budget for that type of expenditure may be authorised by:
· the Clerk, under delegated authority, for any items below £100 excluding VAT.
5.16. No individual member, or informal group of members may issue an official order or make any contract on behalf of the council.
5.17. No expenditure shall be authorised, no contract entered into or tender accepted in relation to any major project, unless the Council is satisfied that the necessary funds are available and that where a loan is required, Government borrowing approval has been obtained first.
6. Banking and payments
6.1. The council's banking arrangements, including the bank mandate, shall be made by the RFO and authorised by the council; banking arrangements shall not be delegated to a committee. The council has resolved to bank with TSB. The arrangements shall be reviewed every 3 years for security and efficiency.
6.2. The council must have safe and efficient arrangements for making payments, to safeguard against the possibility of fraud or error. Wherever possible, more than one person should be involved in any payment, for example by dual online authorisation or dual cheque signing. Even where a purchase has been authorised, the payment must also be authorised and only authorised payments shall be approved or signed to allow the funds to leave the council’s bank.
6.5. All payments shall be made by online banking/cheque, in accordance with a resolution, unless the Council resolves to use a different payment method.
6.8. The Clerk/RFO shall have delegated authority to authorise payments in the following circumstances:
i. any payments of up to £100 excluding VAT.
ii. any payment necessary to avoid a charge under the Late Payment of Commercial Debts (Interest) Act 1998 or to comply with contractual terms.
6.9. The RFO shall present a schedule of payments requiring authorisation, forming part of the agenda for the meeting, together with the relevant invoices, to the Council. The Council shall review the schedule for compliance and, having satisfied itself, shall authorise payment by resolution.
7. Electronic payments
7.1. Where internet banking arrangements are made with any bank, the Clerk/RFO shall be appointed as the Service Administrator. The bank mandate agreed by the council shall identify councillors who will be authorised to approve transactions on those accounts and a minimum of two people will be involved in any online approval process.
7.2. Authorised signatories shall check the payment details against the invoices before approving each payment using the online banking system.
7.7. Evidence shall be retained showing which members approved the payment online and a printout of the transaction confirming that the payment has been made.
7.8. A full list of all payments made in a month shall be provided to the next Council meeting.
7.9. With the approval of the Council in each case, regular payments may be made by variable direct debit, provided that the instructions are approved by resolution.
7.13. Members and officers shall ensure that any computer used for the council’s financial business has adequate security, with anti-virus, anti-spyware and firewall software installed and regularly updated.
8. Cheque payments
8.1. Cheques or orders for payment in accordance in accordance with a resolution or delegated decision shall be signed by two members or one member and the Clerk/RFO.
9. Payment cards
9.1. A pre-paid debit card may be issued to employees with varying limits. These limits will be set by the Council. Transactions and purchases made will be reported to the Council and authority for topping-up shall be at the discretion of the Council.
10. Petty Cash
10.1. The council does not and will not not maintain any form of cash float.
11. Payment of salaries and allowances
11.1. As an employer, the council must make arrangements to comply with the statutory requirements of PAYE legislation.
11.2. Councillors allowances (where paid) are also liable to deduction of tax under PAYE rules and must be taxed correctly before payment.
11.3. Salary rates shall be agreed by the council, or a duly delegated committee. No changes shall be made to any employee’s gross pay, emoluments, or terms and conditions of employment without the prior consent of the council.
11.4. Payment of salaries shall be made, after deduction of tax, national insurance, pension contributions and any similar statutory or discretionary deductions, on the dates stipulated in employment contracts.
11.5. Deductions from salary shall be paid to the relevant bodies within the required timescales, provided that each payment is reported, as set out in these regulations above.
11.6. Each payment to employees of net salary and to the appropriate creditor of the statutory and discretionary deductions shall be recorded in a payroll control account or other separate confidential record, with the total of such payments each calendar month reported in the cashbook. Payroll reports will be reviewed by [the finance committee] to ensure that the correct payments have been made.
11.7. Any termination payments shall be supported by a report to the council, setting out a clear business case. Termination payments shall only be authorised by the full council.
12. Loans and investments
12.1. Any application for Government approval to borrow money and subsequent arrangements for a loan must be authorised by the full council and recorded in the minutes. All borrowing shall be in the name of the council, after obtaining any necessary approval.
12.2. Any financial arrangement which does not require formal borrowing approval from the [Secretary of State/Welsh Assembly Government] (such as Hire Purchase, Leasing of tangible assets or loans to be repaid within the financial year) must be authorised by the full council, following a written report on the value for money of the proposed transaction.
12.3. The council shall consider the requirement for an Investment Strategy and Policy in accordance with Statutory Guidance on Local Government Investments, which must written be in accordance with relevant regulations, proper practices and guidance. Any Strategy and Policy shall be reviewed by the council at least annually.
12.4. All investment of money under the control of the council shall be in the name of the council.
12.5. All investment certificates and other documents relating thereto shall be retained in the custody of the RFO.
12.6. Payments in respect of short term or long-term investments, including transfers between bank accounts held in the same bank, shall be made in accordance with these regulations.
13. Income
13.1. The collection of all sums due to the council shall be the responsibility of and under the supervision of the RFO.
13.2. The council will review all fees and charges for work done, services provided, or goods sold at least annually as part of the budget-setting process, following a report of the Clerk. The Clerk/RFO shall be responsible for the collection of all amounts due to the council.
13.3. Any sums found to be irrecoverable and any bad debts shall be reported to the Council by the Clerk/RFO and shall be written off in the year. The council’s approval shall be shown in the accounting records.
13.4. All sums received on behalf of the council shall be deposited intact with the council's bankers, with such frequency as the RFO considers necessary. The origin of each receipt shall clearly be recorded on the paying-in slip or other record.
16. Assets, properties and estates
16.1. The Clerk shall make arrangements for the safe custody of all title deeds and Land Registry Certificates of properties held by the council.
17. Insurance
17.1. The RFO shall keep a record of all insurances effected by the council and the property and risks covered, reviewing these annually before the renewal date in conjunction with the council’s review of risk management.
19. Suspension and revision of Financial Regulations
19.1. The council shall review these Financial Regulations annually. The Clerk shall monitor changes in legislation or proper practices and advise the Council of any need to amend these Financial Regulations.
19.2. The council may, by resolution duly notified prior to the relevant meeting of council, suspend any part of these Financial Regulations, provided that reasons for the suspension are recorded and that an assessment of the risks arising has been presented to all members. Suspension does not disapply any legislation or permit the council to act unlawfully.
19.3. The council may temporarily amend these Financial Regulations by a duly notified resolution, to cope with periods of absence, local government reorganisation, national restrictions or other exceptional circumstances.
Appendix 1 - Tender process
1) Any invitation to tender shall state the general nature of the intended contract and the Clerk shall obtain the necessary technical assistance to prepare a specification in appropriate cases.
2) The invitation shall in addition state that tenders must be addressed to the Clerk in the ordinary course of post, unless an electronic tendering process has been agreed by the council.
3) Where a postal process is used, each tendering firm shall be supplied with a specifically marked envelope in which the tender is to be sealed and remain sealed until the prescribed date for opening tenders for that contract. All sealed tenders shall be opened at the same time on the prescribed date by the Clerk in the presence of at least one member of council.
4) Where an electronic tendering process is used, the council shall use a specific email address that will be monitored to ensure that nobody accesses any tender before the expiry of the deadline for submission.
5) Any invitation to tender issued under this regulation shall be subject to Standing Order [insert reference of the council’s relevant standing order] and shall refer to the terms of the Bribery Act 2010.
6) Where the council, or duly delegated committee, does not accept any tender, quote or estimate, the work is not allocated and the council requires further pricing, no person shall be permitted to submit a later tender, estimate or quote who was present when the original decision-making process was being undertaken.