Financial Regulations
1 GENERAL
1.1 These financial regulations govern the conduct of financial management by the Council and may only be amended or varied by resolution of the Council. 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 RFO, acting under the policy direction of the Council, shall administer the Council's financial affairs in accordance with proper practices. The RFO shall determine on behalf of the council 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 practice.
1.3 The RFO shall produce financial management information as required by the council, at every other statutory meeting.
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 current Regulations issued.
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.
Approved and signed by Chairman 12.7.2022
2 ANNUAL ESTIMATES (BUDGET)
2.1 [Each Committee (if any) shall formulate and submit proposals to the Council in respect of revenue and capital including the use of reserves and sources of funding for the following financial year not later than the end of November each year.]
2.2 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.
2.3 The Council shall review the budget each year and shall fix the Precept to be levied for the ensuing financial year commensurate with the East Lindsey District Council requested dates for submission.
2.4 The annual budgets shall form the basis of financial control for the ensuing year.
2.5 The Council shall consider the need for and shall have regard to a three year forecast of Revenue and Capital Receipts and Payments which may be prepared at the same time as the annual Budget.
3 BUDGETARY CONTROL
3.1 Expenditure on revenue items may be incurred up to the amounts included for that class of expenditure in the approved budget.
3.2 No expenditure may be incurred that will exceed the amount provided in the revenue budget for that class of expenditure. During the budget year and with the approval of council having considered fully the implications for public services, unspent and available amounts may be moved to other budget headings or to an earmarked reserve as appropriate.
3.3 The Clerk will provide a statement of receipts and payments to date under each head of the budgets, comparing actual expenditure to the appropriate date against that planned as shown in the budget. These statements are to be prepared at least at the end of each financial quarter.
3.4 The Clerk may incur expenditure on behalf of the Council, subject to at least 2 councillors verbal permission 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 £100.00. The Clerk shall report the action to the Council as soon as practicable thereafter.
3.5 Unspent provisions in the revenue budget shall not be carried forward to a subsequent year unless placed in an earmarked reserve by resolution of the council.
3.6 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.
3.7 All capital works shall be administered in accordance with the Council's standing orders and financial regulations relating to contracts
3.8 In normal circumstances, all works or services that results in expenditure should be approved by the Council before any contract tender is accepted. In certain circumstances, works or services may be undertaken without prior approval of the Council.
In these circumstances,
a) the Chairman and the Clerk must agree the expenditure,
b) such matters must be reported to and recorded at the next Council meeting.
3.9 Councillors and the Clerk shall be able to claim expenses on all visits outside of the parish providing the full council approve that the visit is in the interest for the parish and that no decisions can be taken unless authorised by the full council. Each councillor shall give an account of all activity at the next formal meeting.
4 ACCOUNTING AND AUDIT
4.1 All accounting procedures and financial records of the Council shall be determined by the Clerk in accordance with the Accounts and Audit Regulations.
4.2 The Clerk shall complete the annual financial statements of the Council, including the council’s annual return, as soon as practicable after the end of the financial year and shall submit them and report thereon to the Council.
4.3 The Clerk shall complete 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.
4.4 The Clerk 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 Clerk or Internal Auditor requires, make available such documents of the Council which appear to the Clerk or Internal Auditor to be necessary for the purpose of the internal audit and shall supply the Clerk or Internal Auditor with such information and explanation as the Clerk or Internal Auditor considers necessary for that purpose.
4.5 The Internal Auditor shall be appointed by 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, 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.
4.6 The Clerk shall make arrangements for the opportunity for inspection of the accounts and books 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.
4.7 The Clerk 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, shall be made by the Clerk and approved by the Council. They shall 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 Clerk 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. If more appropriate the detail may 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 two 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 Payments into either accounts may be paid into a post office using the approved method and official envelope.
6 PAYMENT OF ACCOUNTS
6.1 All payments shall be effected by cheques or other order drawn on the Council's bankers.
6.2 All invoices for payment shall be examined, verified and certified by the Clerk. The Clerk 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 Clerk shall examine invoices in relation to arithmetic accuracy and shall analyse them to the appropriate expenditure heading. The Clerk 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 Clerk and Chairman certify that there is no dispute or other reason to delay payment, the Clerk 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
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 two members and any payments are reported to council as made. 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 and pension contributions, if applicable 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 loans and investments shall be negotiated in the name of the Council and shall be for a set period in accordance with Council policy.
8.2 The council shall consider the need for an Investment Policy which, if drawn up, shall be in accordance with relevant regulations, proper practices and guidance. Any Policy shall be reviewed at least annually.
8.3 All investments of money under the control of the Council shall be in the name of the Council.
8.4 All borrowings 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.
8.5 All investment certificates and other documents relating thereto shall be retained in the custody of the RFO.
9 INCOME
9.1 The collection of all sums due to the Council shall be the responsibility of and under the supervision of the Clerk.
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 Clerk and the Clerk shall be responsible for the collection of all accounts due to the Council.
9.3 The Council will review all fees and charges annually, following a report of the Clerk.
9.4 Any sums found to be irrecoverable and any bad debts shall be reported to the Council and consideration by the full council for Debt recovery process.
9.5 All sums received on behalf of the Council shall be banked intact as directed by the Clerk. In all cases, all receipts shall be deposited with the Council's bankers with such frequency as the Clerk 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 Clerk shall ensure that any VAT Return that is required is promptly completed. Any repayment claim due in accordance with VAT Act 1994 section 33 shall be made at least annually coinciding with the financial year end.
9.9 Where any significant sums of cash are regularly received by the Council, the Clerk 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 receipts, and that appropriate care is taken in the security and safety of individuals banking such cash.
10 ORDERS FOR WORK, GOODS AND SERVICES
10.1 An 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 orders shall be retained.
10.2 Order books shall be controlled by the Clerk.
10.3 All members and Officers are responsible for obtaining value for money at all times. An officer issuing an official order shall 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 mini mis provisions in Regulation 11 (I) below.
10.4 The Clerk 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 Clerk 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 CONTRACTS
11.1 Procedures as to contracts are laid down as follows:
(a) Every contract shall comply with these financial regulations, and no exceptions shall be made otherwise than an emergency provided that these regulations shall not apply to contracts which relate to items (i) to(vi) below:
(i) for the supply of gas, electricity, water, sewerage and telephone services;
(ii) for specialist services such as are provided by solicitors, accountants, surveyors and planning consultants;
(iii) for work to be executed or goods or materials to be supplied which consist of repairs to or parts for existing machinery or equipment or plant;
(iv) for work to be executed or goods or materials to be supplied which constitute an extension of an existing contract by the Council;
(v) for additional audit work of the external Auditor up to an estimated value of £250 (in excess of this sum the Clerk shall act after consultation with the Chairman and Vice Chairman of Council);
(vi) 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 £1,000 in value for the supply of goods or materials or for the execution of works or specialist services other than such goods, materials, works or specialist services as are excepted as set out in paragraph (a) the Clerk shall invite tenders from at least three firms to be taken from the appropriate approved list.
(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 Council and recorded in the minutes at the next Parish Council meeting.
(d) Such invitation to tender shall state the general nature of the intended contract and the Clerk shall obtain the necessary technical assistance to prepare a specification in appropriate cases. The invitation shall in addition state that tenders must be addressed to the Clerk in the ordinary course of post. Each tendering firm shall be supplied with a specifically marked envelope in which the tender is to be sealed and remain sealed until the prescribed date for opening tenders for that contract.
(e) All sealed tenders shall be opened at the same time on the prescribed date by the Clerk in the presence of at least one member of the Council.
(f) If less than three tenders are received for contracts above £1,000 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.
(g) When it is to enter into a contract less than £1,000 in value for the supply of goods or materials or for the execution of works or specialist services other than such goods, materials, works or specialist services as are excepted as set out in paragraph (a) the Clerk shall obtain 3 quotations (priced descriptions of the proposed supply); where the value is below £100 and above £50 the Clerk shall strive to obtain 3 estimates. Otherwise, Regulation 10 (3) above shall apply.
(i) The Council shall not be obliged to accept the lowest or any tender, quote or estimate.
The reason as to why must be recorded.
12 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 Clerk upon authorised certificates of the architect or other consultants engaged to supervise the contract (subject to any percentage withholding as may be agreed in the particular contract).
12.2 Where contracts provide for payment by instalments the Clerk 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.
12.3 Any variation to a contract or addition to or omission from a contract must be approved by the Council and Clerk to the Contractor in writing, the Council being informed where the final cost is likely to exceed the financial provision.
13 STORES AND EQUIPMENT
13.1 The Councillor and/or 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, and delivery notes forwarded to the clerk in respect of all goods.
13.3 Stocks shall be kept at the minimum levels consistent with operational requirements.
13.4 The Clerk/Councillor shall be responsible for periodic checks of stocks and stores at least annually.
14 ASSETS, PROPERTIES AND ESTATES
14.1 The Clerk shall make appropriate arrangements for the custody of all title deeds of properties owned by the Council. The Clerk 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.
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 £50.
14.3 The Clerk 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.
15 INSURANCE
15.1 Following the annual risk assessment (per Financial Regulation 17), the Clerk shall affect all insurances and negotiate all claims on the Council's insurers [in consultation with the Chairman].
15.2 The Clerk shall give prompt notification to the RFO of all new risks or properties which require to be insured and of any alterations affecting existing insurances.
15.3 The Clerk shall keep a record of all insurances effected by the Council and the property and risks covered thereby and annually review it.
15.4 The Clerk shall be notified of any loss liability or damage or of any event likely to lead to a claim, and shall report these to Council at the next available meeting.
15.5 All appropriate 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.
16 CHARITIES
16.1 Where the Council is sole trustee of a Charitable body the Clerk shall ensure that separate accounts are kept of the funds held on charitable trusts and separate financial reports made in such form as shall be appropriate, in accordance with Charity Law and legislation, or as determined by the Charity Commission.
The Clerk shall arrange for any Audit or Independent Examination as may be required by Charity Law or any Governing Document.
17 GRANTS
17.1 Where the Council is requested to provide a grant (full or partial) to a third party, the Council shall satisfy itself that the third party has obtained value for money (e.g., via a tendering exercise.)
17.2 Where the third-party elects to obtain services/goods from another source other than the cheapest tender, the Council reserves the right to offer a grant to the value of the lowest tender. The Council may also require the third party to provide evidence as to why other than the cheapest quote is accepted.
17.3 The Parish Council will set an annual budget for grants and will adhere to it rather than exceed it. The total amount of grant money available may vary from year to year.
17.4 Requests for grants will only be accepted for consideration provided that the Parish Council’s ’application for grants’ form has been completed and appropriate supplementary information provided.
17.5 Applicants will be required to attend the meeting to answer any questions Councillors may have about the project.
17.6 Grants will be available from £ 25 to £1000 and will not be made retrospectively.
17.7 Applications for grants of less than £ 100 can be made at any time but please allow at least 13 weeks for your grant application to be considered by the Parish Council.
17.8 Grant applications over £ 100 will need to be made prior to 31st October each year for consideration by the council when preparing its budget for the following financial year.
17.9 The Parish Council requires all recipients of grants in excess of £ 100 to provide a written report of how the grant money has been used within 12 months of receipt of the grant. This may take the form of an annual report or set of accounts that clearly identify the manner of spending. The written report must be deposited with the Clerk to the Parish Council, and becomes a document which members of the public have a right to inspect under the provision of Section 228 of the Local Government Act 1972 (as amended).
17.10 The Parish Council will not normally fund more that 50 % of the cost of a project and evidence of other funding will be required (e.g. contribution’s from the District or County Council’s, local business sponsorship, other fundraising events such as jumble sales, etc)
17.11 In the event of there being more applications than the council has budgeted for, the successful applications may be scaled down to fit the budget rather than deleting applications which merit a grant.
17.12 Grant recipient’s may be required to provide evidence of purchase.
17.13 Recipients may be asked to acknowledge Parish Council support on stationery/promotion material.
17.14 The Parish Council will consider only one application for each project in any one financial year. However, an organisation may apply for funding for more than one project within a financial year.
17.15 If the organisation making the grant application owns or leases property which other bodies hire for use, the Parish Council will expect them to demonstrate that they make a distinction between not for profit and for profit hirers in the rates they charge (businesses should not be subsidised with public funds).
17.16 Organisations that do not have a child protection policy (DBS), will, if deemed appropriate, be required as part of the conditions of grant aid to adopt a policy within …. months of receipt of the grant.
17.17 Extended grants – i.e., grants that run over a period of more than one year will not normally be considered. However, in exceptional circumstances the Parish Council may consider such an application which should be supported by a business plan or a service plan in respect of the period for such a grant is being sought. If you wish to make application for an extended grant, please contact the Clerk to the Parish Council in the first instance to discuss the matter.
17.18 Factors the Parish Councill will take into account when considering an application:
a. Has the Parish Council the power to make the grant?
b. Will all or part of the Parish Council or all or some of its inhabitants’ benefit?
c. Has the applicant demonstrated some degree of fund raising on a ‘self help’ basis?
d. Has the applicant applied to other authorities/sources for funding?
e. If the applying group, employs paid staff, is it a registered charity?
Examples of procedure criteria:
General Guidance
1. The Parish Council will not normally make grants to organisations outside of the parish, unless there are direct benefits to the parish.
2. Applications should be made for ‘one of grants’ (i.e., applications for small capital items or ‘one off’ projects should not result in recurring expenditure for the Parish Council)
3. Organisations employing staff must provide a full breakdown of staff numbers and salaries.
4. Applicants will be expected to show a degree of ‘self help’.
5. When the Parish council considers the grant applicants, it will arrange for applicants to attend the evaluation meeting if necessary to answer any questions.
Application Form
Applicants must request a grant form from the Clerk to the Parish Council and return it to the Clerk, together with appropriate supplementary information. Only an original, with original signatures, will be accepted.
Payments of grants
In the case of organisations/projects receiving a single grant from the Parish Council, they have the choice of a single one off payment, or the funding can be retained by the Parish Council and released by the Clerk on receipt of an authorised request.
In the case of organisations/projects of match funding, of which the Parish Council is one of the partners/funding agencies, the Parish Council will only pay its contribution against an invoice.
18 RISK MANAGEMENT
18.1 The council is responsible for putting in place arrangements for the management of risk. The Clerk shall prepare, for approval by the council, risk management policy statements in respect of all activities of the council. Risk policy statements and consequential risk management arrangements shall be reviewed by the council at least annually.
19 REVISION OF FINANCIAL REGULATIONS
19.1 It shall be the duty of the Council to review the Financial Regulations of the Council from time to time. The Clerk shall make arrangements to monitor changes in legislation or proper practices and shall advise the council of any requirement for a consequential amendment to these financial regulations
Approved by the council on 12th July 2022