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Part 4
Financial Regulation A: Financial Management
Introduction
A.1 Financial management covers
all financial accountabilities in relation to the running of the
authority, including the policy framework and budget.
The Full
Council
A.2 The full Council is
responsible for adopting the authority's constitution and members'
code of conduct and for approving the policy framework and budget
within which the Executive operates. It is also responsible for
approving and monitoring compliance with the authority's overall
framework of accountability and control. The framework is set out
in its constitution. The full Council is also responsible for
monitoring compliance with the agreed policy and related Executive
decisions.
A.3 The full Council is
responsible for approving procedures for recording and reporting
decisions taken. This includes those key decisions delegated by and
decisions taken by the Council, the Executive and Committees. These
delegations and details of who has responsibility for which
decisions are set out in the constitution.
The
Executive
A.4 The Executive is responsible
for proposing the policy framework and budget to the full Council,
and for discharging Executive functions in accordance with the
policy framework and budget.
A.5 Executive decisions can be
delegated to a Committee of the Executive, an individual Executive
member, an officer or a joint Committee.
A.6 The Executive is responsible
for establishing protocols to ensure that individual Executive
members consult with relevant officers before taking a decision
within his or her delegated authority. In doing so, the individual
member must take account of legal and financial liabilities and
risk management issues that may arise from the decision.
Committees
Overview and Scrutiny
Committees
A.7 The Overview and Scrutiny
Boards are responsible for scrutinising Executive decisions before
or after they have been implemented and for holding the Executive
to account. The Overview and Scrutiny Boards are also responsible
for making recommendations on future policy options and for
reviewing the general policy and service delivery of the
authority.
Standards
Committee
A.8 The Standards Committee is
established by the full Council and is responsible for promoting
and maintaining high standards of conduct amongst Councillors. In
particular, it is responsible for advising the Council on the
adoption and revision of the members' code of conduct, and for
monitoring the operation of the code.
Other Regulatory
Committees
A.9 Planning and licensing are
not Executive functions but are exercised through the multi-party
planning and licensing Committees under powers delegated by the
full Council. The planning and licensing Committees report to the
full Council.
The Statutory
Officers
Head of Paid Service (and
Managing Director)
A.10 The core roles of the
Managing Director (the statutory Head of the Paid Service)
are:-
- overall corporate management and operational responsibility
(including overall management responsibility for all staff);
- the provision of professional advice to all parties in the
decision-making process (the executive, overview and scrutiny, full
Council and other committees);
- together with the Monitoring Officer, responsibility for a
system of record keeping for all the local authority's decisions
(executive or otherwise); and
- representing the local authority on partnership and external
bodies (as required by statute or the local authority).
The Head of Paid Service will
report to full Council on the manner in which the discharge of the
Council's functions is co-ordinated, the number and grade of
officers required for the discharge of functions and the
organisation of officers.
Monitoring Officer
(Solicitor to the Council)
A.11 Functions of the Monitoring
Officer:-
- Maintaining the Constitution. The Monitoring Officer will
maintain an up-to-date version of the Constitution and will ensure
that it is widely available for consultation by members, staff and
the public.
- Ensuring lawfulness and fairness of decision making. After
consulting with the Head of Paid Service and Chief Finance Officer,
the Monitoring Officer will report to the full Council or to the
Executive in relation to an executive function if he or she
considers that any proposal, decision or omission would give rise
to unlawfulness or if any decision or omission has given rise to
maladministration. Such a report will have the effect of stopping
the proposal or decision being implemented until the report has
been considered.
- Supporting the Standards Committee. The Monitoring Officer will
contribute to the promotion and maintenance of high standards of
conduct through provision of support to the Standards
Committee.
- Receiving reports. The Monitoring Officer will receive and act
on reports made by ethical standards officers and decisions of the
case tribunals.
- Conducting investigations. The Monitoring Officer will conduct
investigations into matters referred by ethical standards officers
and make reports or recommendations in respect of them to the
Standards Committee.
- - Proper officer for access to information. The Monitoring
Officer will ensure that executive decisions, together with the
reasons for those decisions and relevant officer reports and
background papers are made publicly available as soon as
possible.
- Advising whether executive decisions are within the budget and
policy framework. The Monitoring Officer will advise whether
decisions of the Executive are in accordance with the budget and
policy framework. (see A.12)
- Providing advice. The Monitoring Officer will provide advice on
the scope of powers and authority to take decisions,
maladministration, financial impropriety, probity and budget and
policy framework issues to all councillors.
- Restrictions on posts. The Monitoring Officer cannot be the
Chief Finance Officer or the Head of Paid Service.
A.12 The Monitoring Officer
(together with the Head of Resources) is responsible for advising
the Executive or full Council about whether a decision is likely to
be considered contrary or not wholly in accordance with the budget.
Actions that may be 'contrary to the budget' include:
- initiating a new service or significant change to the standard
of a service, particularly one which commits expenditure in future
years to above the budget level.
- incurring budget transfers above virement limits.
- cumulatively causing the total expenditure financed from
Council tax, grants and corporately held reserves in the current
financial year to increase significantly.
Chief Finance Officer
(Head of Resources)
A.13 The Chief Finance Officer
(Head of Resources) has statutory duties in relation to the
financial administration and stewardship of the authority. This
statutory responsibility cannot be overridden. The statutory duties
arise from:
- Section 151 of the Local Government Act 1972
- The Local Government Finance Act 1988
- The Local Government and Housing Act 1989
- The Accounts and Audit Regulations 1996.
A.14 The Head of Resources is
responsible for:
- Ensuring lawfulness and financial prudence of decision making.
After consulting with the Head of the Paid Service and the
Monitoring Officer, the Chief Finance Officer will report to the
full Council or to the Executive in relation to an executive
function and the Council's external auditor if he or she considers
that any proposal, decision or course of action will involve
incurring unlawful expenditure, or is unlawful and is likely to
cause a loss or deficiency or if the Council is about to enter an
item of account unlawfully.
- Administration of financial affairs. The Chief Finance Officer
will have responsibility for the administration of the financial
affairs of the Council.
- Contributing to corporate management. The Chief Finance Officer
will contribute to the corporate management of the Council, in
particular through the provision of professional financial
advice.
- Providing advice. The Chief Finance Officer will provide advice
on the scope of powers and authority to take decisions,
maladministration, financial impropriety, probity and budget and
policy framework issues to all councillors and will support and
advise councillors and officers in their respective roles.
- Give financial information. The Chief Finance Officer will
provide financial information to the media, members of the public
and the community.
A.15 Section 114 of the Local
Government Finance Act 1988 requires the Head of Resources (after
consulting the Managing Director and the Monitoring Officer) to
report to the full Council, Executive and external auditor if the
authority or one of its officers:
- has made, or is about to make, a decision which involves
incurring unlawful expenditure
- has taken, or is about to take, an unlawful action which has
resulted or would result in a loss or deficiency to the
authority
- is about to make an unlawful entry in the authoritys
accounts.
Section 114 of the 1988 Act also
requires:
- the Head of Resources to nominate a properly qualified member
of staff to deputise should he or she be unable to perform the
duties under section 114 personally
- the authority to provide the Head of Resources with sufficient
staff, accommodation and other resources including legal advice
where this is necessary to carry out the duties under section
114.
Directors
A.16 The Managing Director and
Directors are responsible for:
- ensuring that Executive members are advised of the financial
implications of all proposals and that the financial implications
have been agreed by the Head of Resources
- signing contracts on behalf of the authority as applicable
under Contract Standing Orders.
A.17 It is the responsibility of
the Managing Director and Directors to consult with the Head of
Resources and seek approval on any matter liable to affect the
authority's finances materially, before any commitments are
incurred.
A.18 All reports to the Executive,
Committees and the Council shall identify financial implications in
a format agreed with the Head of Resources.
Other Finamcial
Accountabilities
Virement
A.19 The full Council is
responsible for agreeing procedures for transferring revenue budget
provision from one published service budget heading or Group total
direct staffing costs budget total to another (subsequently known
as "virement") . Virement shall not be allowable unless the budget
provision to be transferred can be transferred as a result of a
genuine overall saving to the Council. Where it appears that
expenditure against a revenue budget heading will be exceeded,
income will be less than forecast or additional expenditure is
desirable to meet the objectives of the budget the limits in
relation to virements for each budget head are:-
Up to £25,000
By the Managing Director or
Director, and approved by the Head of Resources
[Finance Manager] (with an
overall limit of £300,000 in one financial year)
£25,000 - £50,000
By the Executive (with an overall
limit of £300,000 in one financial year)
Over £50,000
By the full Council
Virement must be approved by the
Council for any amount if any of the following apply:-
- The virement has overall spending implications for future
years.
- The estimated savings to be utilised have been caused by
abandonment or reduction in the level of a service following a
change in Council or national policy.
Virements up to £25,000 to be
approved by the Head of Resources between budgets managed by
different officers from the Management Team must be agreed by the
relevant Management Team officers.
Treatment of year-end
balances
A.20 The full Council is
responsible for agreeing procedures for carrying forward under-and
overspendings on budget headings other than as set out in this
Regulation. Carry forward to the immediately following financial
year of planned under or over-spending will be allowed with the
agreement of the Head of Resources (up to the amount of
any limit set by the Council), and the Head of Resources will
report such carry-forwards in Budget Monitoring reports to
Committees. Unless otherwise agreed by the Head of Resources
carry-forward applications must be submitted to him/her by 31
January in each year - the amount of a carry-forward may be varied
subsequently with the agreement of the Head of Resources. The Head
of Resources may also allow commitment or exceptionally spending of
approved budgets before 1 April.
Emergencies and essential
expenditure
A.21 The provisions of these
regulations shall not prevent the Managing Director or a Director,
in consultation with the Head of Resources and Managing Director
where appropriate and practicable, from incurring expenditure which
is essential to meet any immediate need created by a sudden
emergency or a situation related to Section 138 of the Local
Government Act 1972. This is subject to the action being reported
as soon as practicable to Management Team and all councillors if
the net expenditure to the Council is in excess of £50,000. The
Head of Resources shall also have authority exceptionally to make
payments for which estimate provision has not been made if the
Council is legally obliged to make such payments.
Accounting
policies
A.22 The Head of Resources is
responsible for selecting accounting policies and ensuring that
they are applied consistently. The Managing Director and Directors
must adhere to the accounting policies and guidelines approved by
the Head of Resources.
Accounting records and
returns
A.23 The Head of Resources is
responsible for determining the accounting procedures and records
for the authority.
The Annual Statement of
Accounts
A.24 The Head of Resources is
responsible for ensuring that the annual statement of accounts is
prepared in accordance with the Code of Practice on Local Authority
Accounting in the United Kingdom: A Statement of Recommended
Practice (CIPFA/LASAAC). The Head of Resources shall present the
Statement of Accounts for approval within six months of the end of
each financial year, or earlier where required by government
regulations.