Parish councils are subject to various Accounts and Audit Regulations made pursuant to the Local Audit and Accountability Act 2014.

Financial control arrangements for local authorities are normally given the title ‘financial regulations’. Whatever the size of a parish council’s budget and annual expenditure, it is essential that robust financial controls and checks are built in to its governing arrangements. 

A parish council’s financial control arrangements should include:

• The formulation of spending plans, budget and precept, and provide for the approval of them;
• Monitoring expenditure;
• Transferring money between budget heads;
• Authorising expenditure and payment, and making payment;
• Internal and external audit of accounts;
• Approving borrowing and capital expenditure;
• Banking;
• Payroll and pensions;
• Receipt of Income;
• Credit facilities;
• Reviewing fees and charges;
• VAT;
• Register or inventory of assets (with review and update);
• Insurance;
• Use of IT facilities and records for accounting;
• Reviewing and reporting on the integrity of these arrangements.

The nature and extent of the checks necessary will largely depend on the scale of a parish council’s activity and financial turnover. All financial control arrangements should identify which person or body is responsible for each aspect, what arrangements apply and when they apply.

For any receipt of income or expenditure incurred, a clear audit trail of responsibility and decision making will demonstrate a robust and transparent financial system of control.

Annual review is again essential in order to keep abreast of changing needs and developments.

The financial regulation arrangements and Standing Orders to be implemented by a parish council are complex and outside the scope of this Toolkit.

For detailed and practical information, parish councils should refer to “Governance and Accountability for Smaller Authorities in England” , (the “Practitioners’ Guide”) published jointly by the Joint Panel on Accountability & Governance (JPAG) which includes NALC and the SLCC. The Guide represents “proper practices” for local council accounting.

NALC has produced Model Standing Orders relating to matters of financial regulation and administration.