Financial administration
4.1 Overview
4.1.1 This section deals with the administrative issues of the Council’s financial affairs. Financial Systems
4.2.1 The Council needs to have in place sound financial systems. The complexity of the Council will often mean that specialist systems are required for specific service areas. Equally the Council needs to prepare financial accounts based upon its detailed accounting information and records. This requires a corporate financial system to ensure that probity is achieved.
4.2.2 Responsibilities of the Director of Finance, IT and Digital:
- i) To operate and maintain a corporate financial accounting system;
- ii) To monitor and approve all subsidiary financial systems.
4.2.3 Responsibilities of Directors and Chief Officers:
- i) To operate those financial systems within their service areas in accordance with the procedures agreed with and notified by the Director of Finance, IT and Digital;
- ii) To maintain adequate supporting information where applicable within their service area.
4.3 Format of Accounts
4.3.1 The Council is required by law to compile annual accounts complying with the relevant Accounting Code of Practice.
4.3.2 Responsibilities of the Director of Finance, IT and Digital:
- i) To ensure that accounts are prepared on time and in accordance with the necessary legal and professional requirements;
- ii) To ensure that suitable accounting policies are in place and applied consistently;
- iii) To ensure that professional judgements are made in preparation of the accounts which are prudent and reasonable in light of the information available at the time of preparation;
- iv) To ensure that all practicable steps have been taken to identify fraud;
- v) To submit and authorise grant claims subject to external audit;
- vi) To issue detailed instructions on accounting records or procedures necessary to meet the Council’s Statutory requirements.
4.3.3 Responsibilities of Directors and Chief Officers:
- i) To provide the Director of Finance, IT and Digital with information sufficient to enable him to prepare the accounts and submit grant claims within the appropriate timescales;
- ii) Maintain appropriate records and ensure they are up to date.
4.4 Taxation
4.4.1 The Council is subject to Tax and as such needs to ensure that its taxation affairs are efficient. Taxation of Local Authorities is complex and there is significant scope for penalties, which need to be minimised.
4.4.2 Responsibilities of the Director of Finance, IT and Digital:
- i) To ensure that the Council’s taxation affairs are maintained on a timely basis, with due regard to the complex and changing legislation;
- ii) To liaise with the relevant Government Departments and Agencies in relation to Taxation;
- iii) To provide Directors with advice in relation to Taxation issues;
- iv) To ensure that the corporate payroll and accounting systems deal correctly with taxation.
4.4.3 Responsibilities of Directors and Chief Officers:
To ensure the Director of Finance, IT and Digital is informed of any changes, which can materially affect the Council’s Taxation position.
4.5 Budget/Reserves Transfers and Contingencies
4.5.1 The Council sets budgets for both Revenue and Capital expenditure; equally the Council holds reserves for earmarked purposes. Circumstances can and do change that result in those detailed budgets becoming outdated. It is necessary, to ensure good financial management, that flexibility exists to allow transfers of resources.
All transfers must be notified to the Director of Finance, IT and Digital for their agreement prior to those transfers being actioned in the Accounting System. All transfers must leave the originating budget with sufficient funds to meet its commitments for the provision of that service at the level approved by Council within the budget and policy framework within the current financial year and not affect the sustainability of the service in future financial years.
4.5.2 These rules should be interpreted for both budget and reserve transfers and cover:
- i) Detailed transfers between service areas within a Director’s/Chief Officer’s control;
- ii) Transfers from Revenue to Capital;
- iii) Transfers of managed revenue underspends to the following financial year;
- iv) Transfers of resources into and from Specific Reserves;
4.5.3 For Capital these rules cover:
- i) Transfers between projects;
- ii) Transfers from Capital to Revenue, which are subject to specific rules.
4.5.4 Revenue Transfers
In relation to budget transfers the following rules apply:
- i) Changes to staffing structures need to be approved in accordance with the relevant Council policy and be approved by the relevant Director, the Chief Executive, and Director of Finance, IT and Digital and must be wholly sustainable. No permanent staffing changes can be funded from reserves without Finance and Corporate Affairs Committee and Council approval.
- ii) The Chief Executive and Directors may approve revenue budget transfers up to £100,000 (cumulatively up to £200,000 over the financial year) and that formal Council approval be sought for transfers over this limit. There be no other revenue budget transfers outside of the above limits and no transfer between ‘directorates’ without formal Council approval.
4.5.5 Transfers from Revenue to Capital are allowed subject to continued service delivery as determined in 4.5.1.
4.5.6 Transfers of managed revenue underspends from one year to the following are allowed subject to the transfer not exceeding 10% or £500,000, whichever is the lower, of the Departmental budget. Details of contributions to managed revenue underspend must be reported to Committee within either a quarterly monitoring report or the annual outturn report.
4.5.7 Transfer into and from Specific Reserves are also allowed and must be reported to Finance and Corporate Affairs Committee, either within a quarterly monitoring report or the outturn report.
4.5.8
4.5.9 Transfers between capital and revenue are allowed subject to the continued delivery of the capital program and compliance with capital accounting regulations and specific funding arrangements and approved by the Director of Finance, IT and Digital, Internal Audit and reported to the Finance and Corporate Affairs Committee.
4.5.10 Any additional favourable outturn must be allocated to the Council’s General Fund. This will ensure that any further allocation of said monies is subject to Full Council approval.
4.5.11 Responsibilities of the Director of Finance, IT and Digital: To maintain and administer the scheme of budget transfers and contingencies.
4.5.12 Responsibilities of Directors and Chief Officers: To ensure the Director of Finance, IT and Digital is informed of any changes, which require a budget transfer.
4.6 Financial Management of Self Funded Business Cases
The Council delivers a range of projects which do not require funding from the General Fund budget and are funded from either specific grant funding or specific income streams. It is necessary, to ensure good financial management and the making of timely business case decisions, where in the professional opinion of the Chief Executive, Director of Finance, IT and Digital and Director of Legal, Governance and Human Resources, to delegate decision making where there is a robust and self funded business case to do so and which does not add a recurring financial commitment to the General Fund budget. Delegated authority shall be exercised by the Chief Executive, with agreement from the Director of Finance, IT and Digital and the Director of Legal, Governance and Human Resources in consultation with the Chair of Finance and Corporate Affairs Committee. This delegation will also apply where revisions are needed to existing business cases but where such revisions still meet the objectives of the original business case and the tests above are satisfied. Details of business cases approved, or amendments to previously approved business cases, shall be reported to the next scheduled meeting of the Finance and Corporate Affairs Committee for information.
4.7 Use of Managed Revenue Underspend
To ensure the effective management of the Council’s resources detailed proposals for using managed revenue under spends to fund non recurring initiatives and ‘one off’ priorities are included in the Medium Term Financial Strategy proposals referred to Council for approval. Where the final managed revenue under spend is higher than the forecast position the prior approval of the Finance and Corporate Affairs Committee will be required to sanction the use of uncommitted resources to fund non recurring initiatives, or one off priorities, which do not add a recurring financial commitment to the General Fund budget.
4.8 Use of Specific Grant Funding
Technical budget adjustments necessary to allocate specific revenue or capital grant resources and comply with grant conditions are allowed, subject to prior approval of the relevant Policy Committee and being wholly sustainable.