Meeting 27 February 2017
- Purchase orders
- Bank accounts
- Process and procedures
- Accounting Software
- Management Reporting
- End of year Accounts
1 Purchase orders
1.1 Authorisations for initiating work, services, procurement of services etc are as follows:
|Amount||Authorising person / committee|
|Less than £1,000 and in budget||Clerk|
|Less than £1,000 but not in budget||F&GP or in extremis Chairman of F&GP|
|Over £1,000||Three quotes to be obtained; F&GP to approve|
1.2 Purchase orders to be created for all expenditure and filed in a ring binder. Only exceptions are those items where a direct debit applies ie for loans, utility supplies etc.
2.1 Purchase orders shall be produced for each contract; paper copies to be kept in dedicated file
2.2 Suppliers’ invoices shall be paid within 30 days of receipt of invoice
3.1 Where invoices need to be issued by the Council then they shall be issued within a month of due date
3.2 Invoices not paid within 5 weeks shall be chased and at 2 weekly intervals thereafter
3.3 Invoices not paid after 3 months shall cause a solicitors letter to be sent
4 Bank Accounts
4.1 A suitable current account shall be maintained for day-to-day transactions
4.2 The current account balance shall be maintained at a suitable level to ensure that there are sufficient funds available at all times.
4.3 A second account shall be maintained for accruals and for purchase orders where goods were not received at the close of the financial year.
4.4 A third account will be maintained for reserves. The agreed reserves (ie the 15% of precept plus monies set aside for specific future projects) shall be kept in a separate high interest account.
4.5 A fourth account shall be maintained for projects that involve public donations e.g.: War Memorial refurbishment and for when funds are requested to be administered by the Parish Council on behalf of a local organisation.
4.6 Internet banking shall be used to facilitate financial management and payments in particular.
4.7 Bank account signatories
In principle all F&GP members plus the Council chairman can be signatories to the bank accounts. In practice banking arrangements can make such a large number of signatories somewhat cumbersome. The compromise currently employed is as follows:
a) Main bank account:
• All F&GP committee members may be signatories + the Clerk
Any two authorised signatories may authorise a transaction.
b) Reserve account(s)
- Chairman F&GP
- One other senior member of the F&GP
- The Clerk
Any two F&GP Councillors may authorise a transaction.
c) Internet banking
• Chairman F&GP
• One other senior member of the F&GP
• The Clerk
Any two members of the F&GP must approve an Internet payment in advance and the Clerk will effect the transaction. In the exceptional event that the Clerk is unavailable (ie is sick, on holiday, resigned etc) then one of the two authorised Councillors can effect a transaction on an interim basis. This arrangement is to ensure there is no duplication of activity.
5 Process and Procedures
5.1 Data entry into the accounting software shall be made at least every two weeks
5.2 Bank reconciliation shall take place in the first week of each new month for the preceding month
5.3 A ring binder filing system for ensuring an adequate paper trail shall be maintained as follows:
1) Purchase orders
(nb: PO to be transferred to File no. 2 on receipt of invoice)
2) Expenditure – invoices received
(nb: invoice and PO transferred to File no. 3 when paid)
3) Expenditure – invoices paid
4) Income – invoices issued but not paid
(nb: moved to file 5 once paid)
5) Income – invoices paid
6) Bank statements
(Reconciliation with accounting software to be done every month)
7) VAT returns
5.4.1 Payments wherever possible shall be paid by direct debit
5.4.2 Where direct debit payments are not possible then payments shall be made by internet banking. See authorising signatory arrangements in para 4.6c above.
5.4.3 Only where neither of the above are possible shall a cheque be issued.
5.5.1 Every member of the F&GP may be an ‘authorised signatory’ for the signing of cheques etc, unless they specifically do not wish to perform this role.
5.5.2 A list of direct debits shall be reported to and approved at quarterly intervals by the F&GP meeting
5.5.3 Internet transfers shall be undertaken by the Clerk or, in extremis, the chairman of the F&GP. A list of internet transfers to be carried out shall be created and approved with signatures in advance by two ‘authorised signatories’.
5.5.4 Cheques will be completed by the Clerk and signed by two ‘authorised signatories’.
5.5.5 A summary of signatories is given below:
|Current account||NatWest||All F&GP members + Clerk|
|Reserves account||Barclays||Two F&GP + Clerk|
|Accruals Account||NatWest Reserve||All F&GP members + Clerk|
|Public donations for projects||Unity Trust Bank||Two F&GP + Clerk|
5.6 Asset Register
5.6.1 The asset register needs to be updated routinely at 3 monthly intervals.
5.6.2 At the end of March each year the register needs to be formally updated and the data entered into the accounting software so that it can be incorporated into the Annual Return (see 5.7 below).
5.7 Annual Return
Needs to be:
o Generated by the accounting software
o Paper version completed for signatures (as shown on the form)
o Approved via email by the F&GP Committee before the June Council meeting
o Sent off in June
5.8.1 Internal Auditor
Arrange for internal auditor to audit accounts and approve Annual Return in May each year. They may advise comments and direct actions for improvements etc.
The auditor needs to check the draft Annual Return.
5.8.2 External Auditor
The Annual Return is inspected by the External Auditor who can make comments as they see fit (no visit normally).The external auditor undertakes a sampling exercise (10%) whereby every few years we are asked to supply copies of detailed information combined with an actual visit.
The current auditor, PKF Littlejohn, has an earlier deadline for submission of the Annual Return of 10 June. It is therefore prudent to request an extension to 30 June (the deadline specified in the Local Government Act 1972).
5.9 Interest rates
The interest rates for the high interest account should be checked at least annually to ensure the best return.
5.10 Contract Review
All long term contracts should be reviewed at the end of each financial year at least and a list produced each year.
6 Accounting software
6.1 The accounting software package currently used is that from RBS Software Solutions Ltd.
7.1 The budget setting cycle is as follows:
|August:||Clerk’s Newsletter submission for August and September issues – advise that grants may be available and applications to be with Clerk by 30th September. This will also be posted on the PC website.|
|September||Review of first draft budget|
|October F&GP meeting:||Second review taking account of points raised at previous meeting. Agreement on budget if no further discussion required.|
|November F&GP meeting:||Final review if required and agreement on budget|
|November or December full council meeting:||Resolution to agree budget|
|January 31st (latest):||Submission to WDC of required precept|
8.1 The precept is the main source of income for the Council. It is prescribed during the Council’s budget setting process (see 7.1 above).
The payments are in two 6 month tranches commencing 1st April.
9 Management Reporting
9.1 A monthly Finance Report is produced for:
b) Full Council
In order to minimise preparation time the standard management reports as produced by the financial accounting software are to be used. The Report is structural the same for each meeting except that the F&GP includes a 4th attachment which gives a detailed analysis of income and expenditure.
The structure of the Finance Report is as follows:
i) A written statement stating:
a. the health of the finances
b. any anomalies or unusual occurrences
c. analysis of any remaining funds in the accruals account
ii) Attachment 1: An analysis of the bank balances at the beginning and end of the month for each of the bank accounts held. Also included is a breakdown of the Reserves
iii) Attachment 2: A print out of the expenditure in the month
iv) Attachment 2 page 2: A print out of the income in the month
v) Attachment 3: A print out summary of income and expenditure for the month and year to date
vi) Attachment 4 (for F&GP only): A print out of the detailed income and expenditure for the month and year to date
9.2 The Finance Report is prepared by the Clerk, with the assistance of the chairman of the F&GP as necessary.
9.3 A monthly bank reconciliation for each bak account is prepared by the Clerk and signed by the Chairman of the F&GP at the subsequent meeting.
10 End of year accounts
10.1 The financial year runs from 1st April to 31st March.
10.2 The financial accounting software produces the end of year results automatically, but a reconciliation and adjustments for accruals are needed to be input manually.
10.3 The bank cash position has to be reconciled with the data from the accounts software. It should align but any discrepancies need to be remedied or, if this is not possible, then explained as an attached narrative
10.4 The end of year results should include a comparison with budget for each main cost centre and any variances identified and explained.
10.5 The Annual Return can be produced using the software.