Part 10 - Financial Procedure Rules - Appendix A

1.01

All staff and members have a duty to abide by the highest standards of probity in dealing with financial issues. This is facilitated by ensuring that everyone is clear about the standards to which they are working and the controls which are in place to ensure that these standards are met.

1.02

The key controls and control objectives for financial management standards are:

• their promotion throughout the authority; and
• a monitoring system to review compliance with financial standards, and regular comparisons of performance indicators and benchmark standards that are reported to the executive and full council.

1.03

To ensure the proper administration of the financial affairs of the authority.

1.04

To set the financial management standards and to monitor their compliance.

1.05

To ensure proper professional practices are adhered to and to act as head of profession in relation to the standards, performance and development of finance staff throughout the authority.

1.06

To advise on the key strategic controls necessary to secure sound financial management.

1.07

To ensure that financial information is available to enable accurate and timely monitoring and reporting of comparisons of national and local financial performance indicators.

1.08

To promote the financial management standards set by the chief finance officer in their service units and to monitor adherence to the standards and practices within their own areas, liaising as necessary with the chief finance officer.

1.09

To promote sound financial practices in relation to the standards, performance and development of staff in their service units.

1.10

The scheme of virement is intended to enable the executive and budget managers to manage budgets with a degree of flexibility within the overall policy framework determined by the full council, and therefore optimise the use of resources. Virement is the switching of resources between approved estimates or 'heads' of expenditure. For the purposes of this scheme, a 'budget head' is considered to be a line in the approved estimates report.

1.11

Key controls in relation to the scheme of virement are:

• that it is administered by the chief finance officer within guidelines set by full council. Note: Any variation from this scheme requires the approval of full council;
• the overall budget is agreed by the executive and approved by the full council. Note: Officers and budget managers are therefore authorised to incur expenditure in accordance with the estimates that make up the budget.
• that virement does not create additional overall budget liability. Note: Budget Managers are expected to exercise their discretion in managing their budgets responsibly and prudently. For example, they should aim to avoid supporting recurring expenditure from one-off sources of savings or additional income, or creating future commitments, including full-year effects of decisions made part way through a year, for which they have not identified future resources. Budget Managers must plan to fund such commitments from within their own budgets

1.12

To prepare jointly with the budget manager a report to the executive where virements in excess of £20,000 are proposed.

1.13

A service unit head may exercise virement on budgets under his/her control for amounts up to £5,000 on any one budget head during the year, following notification to the chief finance officer under arrangements agreed by council and subject to the conditions in paragraphs 1.15 to 1.19 below.

1.14

Amounts greater than £5,000 require the approval of the management team, amounts greater than £20,000 require the approval of the executive, following a joint report by the chief finance officer and the service unit head which must specify the proposed expenditure and the source of funding, and must explain the implications in the current and future financial year. Amounts greater than £100,000 require the approval of full council.

1.15

Management team must approve all virements to and from staffing budget heads

1.16

The prior approval of the executive is required for any virement, of whatever amount, where it is proposed to:

• vire between budgets of different accountable executive members
• vire between budgets managed by different service unit heads.

1.17

Virement that is likely to impact on the level of service activity of another service unit head should be implemented only after agreement with the relevant service unit head.

1.18

No virement relating to a specific financial year should be made after 31 March in that year.

1.19

Where an approved budget is a 'lump sum' budget or contingency intended for allocation during the year, its allocation will not be treated as a virement, provided that the amount is used in accordance with the purposes for which it has been established.

1.20

The chief finance officer is responsible for the preparation of the authority's statement of accounts, in accordance with proper practices as set out in the format required by the Code of Practice on Local Authority Accounting in the United Kingdom: A Statement of Recommended Practice (CIPFA/LASAAC), for each financial year ending 31 March.

1.21

The key controls for accounting policies are:

• systems of internal control are in place that ensure that financial transactions are lawful;
• suitable accounting policies are selected and applied consistently;
• proper accounting records are maintained; and
• financial statements are prepared which present fairly the financial position of the authority and its expenditure and income.

1.22

To select suitable accounting policies and to ensure that they are applied consistently. The accounting policies are set out in the statement of accounts which is prepared at 31 March each year.

1.23

To adhere to the accounting policies and guidelines approved by the chief finance

1.24

Maintaining proper accounting records is one of the ways in which the authority discharges its responsibility for stewardship of public resources. The authority has a statutory responsibility to prepare its annual accounts to present fairly its operations during the year. These are subject to external audit. This audit provides assurance that the accounts are prepared properly and that proper accounting practices have been followed and that quality arrangements have been made for securing economy, efficiency and effectiveness in the use of the authority's resources.

1.25

The key controls for accounting records and returns are:

• all executive members, finance staff and budget managers operate within the required accounting standards and timetables;
• all the authority's transactions, material commitments and contracts and other essential accounting information are recorded completely, accurately and on a timely basis; procedures are in place to enable accounting records to be reconstituted in the event of a systems failure;
• reconciliation procedures are carried out to ensure transactions are correctly recorded; and
• prime documents are retained in accordance with legislative and other requirements.

1.26

To determine the accounting procedures and records for the authority.

1.27

To arrange for the compilation of all accounts and accounting records under his/her direction.

1.28

To comply with the following principles when allocating accounting duties:

1. separating the duties of providing information about sums due to or from the authority and calculating, checking and recording these sums, from the duty of collecting or disbursing them; and
2. employees with the duty of examining or checking the accounts of cash transactions shall not themselves be engaged in these transactions.

1.29

To make proper arrangements for the audit of the authority's accounts in accordance with the Accounts and Audit Regulations 1996.

1.30

To ensure that all claims for funds including grants are made by the due date.

1.31

To prepare and publish the audited accounts of the authority for each financial year, in accordance with the statutory timetable and with the requirement for the full council to approve the statement of accounts before 30 September.

1.32

To ensure the proper retention of financial documents in accordance with the requirements set out in the authority's document retention schedule.

1.33

To consult and obtain the approval of the chief finance officer before making any changes to accounting records and procedures.

1.34

To maintain adequate records to provide a management trail leading from the source of income/expenditure through to the accounting statements.

1.35

To carry out regular reconciliations to ensure the integrity of embedded financial systems and to ensure transactions are correctly recorded.

1.36

To supply information required to enable the statement of accounts to be completed in accordance with guidelines issued by the chief finance officer.

1.37

The full council is responsible for approving the statutory annual statement of accounts.

1.38

The key controls for the annual statement of accounts are that:

• the authority is required to make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of these affairs. In this authority, that officer is the chief finance officer; and
• the authority's statement of accounts must be prepared in accordance with proper practices as set out in the Code of Practice on Local Authority Accounting in the United Kingdom: A Statement of Recommended Practice (CIPFA LASAAC) (the 'code of practice').

1.39

To select suitable accounting policies and apply them consistently.

1.40

To make judgements and estimates that are reasonable and prudent.

1.41

To comply with the code of practice.

1.42

To sign and date the statement of accounts, stating that it presents fairly the financial position of the authority at the accounting date and its income and expenditure for the year ended 31 March.

1.43

To draw up the timetable for final accounts preparation and to advise staff and external auditors accordingly.

1.44

To comply with accounting guidance provided by the chief finance officer and to supply the chief finance officer with information when required.