Financial reports

The Parish Council aims to give excellent value for money as it raises and spends money for the benefit of the local community.

Public Money:

The Parish Council makes it clear where the money goes and is accountable for sound financial management. Council tax payers have no choice but to pay up so they have a right to scrutinise the way in which the council uses their money. They also expect the council to minimise the risk to public money. Risk Management must inform the councils financial decisions. The council that spends public money has a duty to do so lawfully and using legal procedures. If a council spends money unlawfully it could be in trouble with the auditor and even the courts!

 

The council must be confident that when it spends public money:

  • it has legal power (it is not acting beyond its powers)
  • it follows lawful procedures
  • it does not take unnecessary risks
  • transactions are transparent
  • councillors conform to standards in public decision making

Whilst the government pushes for a professional approach to financial management they have also reduced the audit process by which the Audit commission checks the financial procedures of Parish Councils – on condition that councils demonstrate their ability to audit themselves i.e. the appointment of their own internal auditor

Budgets:

The budget shows how council policies are financed; it therefore represents the councils powers to:

  • provide services
  • work for the benefit of the community
  • respond to local needs
  • encourage and support groups in the local community

The budget is an agreed plan of income and expenditure for a specific financial year which runs from 1st April to 31st March.

The precept is calculated as an element of the budget. The precept is the council tax which the district council collects on behalf of the parish council. It is the balance by estimating planned expenditure and subtracting planned income.

The council normally reviews policies and agrees the budget and the precept in the autumn. The Responsible financial Officer (the CPC clerk) completes the precept request in December or January as required by the district council. The request is in effect a demand. The DC must provide the sum required. The budget/precept must be agreed by the full council.

What happens if you overspend during the year?

- there should be a contingency fund built into the budget
- it is perfectly legal to move budgeted funds from one heading to another
- the council can agree a supplementary budget during the year. This might involve transferring funds from reserves. The council cannot issue a supplementary precept to raise more money from the current precept
It is good practice to publicise council policies and spending plans in a way that makes the public sit up and take notice.

There are numerous statutes under which the council can spend money

Parish Councils have limited powers to do whatever they choose for the local community using Section 137 of the Local Government Act 1972. If they can’t find a specific power/statute to authorise expenditure, the council can use the power of Section 137 which permits expenditure on anything of benefit to the parish or community – this figure for 2007/08 stands at £5.64 x number of electors (3705 as at 1.1.07) “ a local authority may……incur expenditure which, in their opinion is in the interest of, and will bring direct benefit to, their area or any part of it or all or some of its inhabitants”

This means that the council cannot uses S.137 if a specific power exists – some councils do not use it at all.

It is illegal for a council to spend money if it has no statutory power to act. (if in doubt further advice is sought from HALC or the internal auditor) - further details of rules and regulations are within the councils Financial Regulations – which all members have a copy of.

Individual councillors must never commit the council to expenditure nor can they spend money on the councils behalf. The council must not agree to spend money on the spur of the moment.

The financial regulations document can be downloaded for review.

 
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