Financial Regulations
Financial Regulations are the council’s financial rulebook. They set out how money is spent, recorded, and safeguarded, and who has authority to approve transactions. They must be reviewed and adopted annually by Full Council and followed in every financial decision.
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Internal Controls
Internal controls are the checks and balances that protect public money. They cover authorising payments, verifying bank reconciliations, and ensuring clear separation of duties. Carry out and minute an Internal Controls Check at least quarterly; this forms part of the annual internal audit evidence.
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Procurement
Procurement ensures the council gets value for money while following legal thresholds and transparency rules. All contracts and purchases must comply with Financial Regulations. Obtain three quotes where required and record all decisions.
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Advice Note: Procurement
Budget & Precept
The budget sets out how the council plans to spend and raise money over the year. It must support the council’s priorities and be approved before the precept demand is submitted. Monitor spending quarterly and update councillors on variances. This ensures the council remains within its approved budget and meets audit requirements.
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Bank Reconciliation
Bank reconciliations confirm that the council’s cashbook and bank statements match. They are one of the most important internal checks. Complete reconciliations monthly and have them verified by a councillor who is not an account signatory.
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Reserves, Investments & Expenses
Reserves provide financial stability and cover unexpected costs. General reserves should usually equal three to twelve months’ expenditure, depending on risk, while earmarked reserves are set aside for specific projects. Councils should spread funds across more than one institution to reduce banking risk.
Expenses and reimbursements must follow clear procedures — every claim should be supported by receipts, authorised by the council, and recorded transparently.
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AGAR
The AGAR is the council’s statutory year-end statement of governance and accounts. It must be completed in line with the Practitioners’ Guide 2025, approved by Full Council, and published for the public inspection period. You must publish the Notice of Public Rights for 30 working days, including the first ten working days of July, and ensure the AGAR is sent to the external auditor (if applicable) by the deadline.
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Internal Audit
Internal audit provides independent assurance that your financial and governance systems are sound. It reviews internal controls, financial procedures, risk management, and compliance with legislation and proper practices. Internal audit must be completed annually, and any recommendations should be reported to and acted on by Full Council.
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Assets: Register & Inspection
Councils must keep a complete and up-to-date Asset Register recording all land, buildings, vehicles, equipment, and other property owned or managed. Assets should also be inspected regularly to ensure they remain safe, functional, and accurately valued for audit and insurance. The Asset Register must be reviewed and approved annually, and inspections should be scheduled (play areas, benches, noticeboards, open spaces) to ensure risks are identified and managed.
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Insurance
Councils must review insurance cover annually to ensure it reflects the council’s assets, activities, and financial risks. This includes public liability, employer’s liability, fidelity guarantee, and property cover. Councils must check that sums insured match information held in the Asset Register and that policy documents support the AGAR assertions. Insurance should be considered during budgeting, reserves planning, and when updating the Asset Register. Insurance must be reviewed and approved annually by Full Council as part of good financial governance. The practical checks that inform insurance values (inspections, risk assessments) sit under Risk & Statutory Checks.
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Grants
Grants to community groups or individuals must follow a clear Grant Policy that sets out eligibility, criteria, application requirements, and how decisions are made. Every grant must be agreed by Full Council or an appropriately delegated committee and must demonstrate public benefit. Supporting documentation must be kept for audit.
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HR Compliance
Every employee must have a legally compliant written contract, job description, and clear employment terms. Councils should follow the national contract model recommended by NALC and ensure basic employment duties are followed. Ensure appraisals are carried out and keep accurate records for payroll, leave, sickness, and expenses — these are checked during internal audit.
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PAYE, NI & Pensions
All salary payments must comply with HMRC Real Time Information (RTI) requirements. Payroll information must be submitted electronically using HMRC-approved payroll software (including HMRC Basic PAYE Tools). Councils must provide staff with access to a pension scheme, such as NEST or the LGPS, and maintain full payroll and pension records for audit.
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