Accounting Changes for Smaller Councils

 The National Association for Local Councils (NALC) in an attempt to change/improve the accounting practices of smaller councils is launching a consultation re the proper practices for smaller councils re transparency and accountability and sound financial management. 

The Smaller Authorities Proper Practices Panel (SAPPP) formerly AGAR which after the Audit Commission was abolished, became the core document for the new audit regime run under the Local Audit and Accountability Act 2014.

The completed AGAR form had to  include accounting statements, Governance statements and an internal audit report.

All these documents must be made available to the public in order to help residents see how local money is being managed and spent.

The Internal and External Auditors review the AGAR to check that governance arrangements are sound, that accounting statements are properly prepared, that public money is being used lawfully.  However such reviews are very light touch and rely heavily on the documents and 'snapshots' of accounts that Clerks submit to them.

In completing the AGAR form re the end of year accounts Local Authorities including Parish Councils, must confirm that they follow financial regulations, manage risk properly, maintain adequate internal controls and have sound budgeting processes,which only a sound and reliable paper trail can deliver. 

SAPPP are currently consulting with a view to improving proper accounting practices in the areas of presentation of accounts, making financial information clearer, more consistent and easier for everyone to understand.  They could go so much further.

Nevertheless, this small step will also mean ensuring that internal auditors are competent, that audit standards are strong, practical and fit for purpose.  This is long overdue, particularly where some Councils behave as a law unto themselves, treating the AGAR process as a tick box exercise.  One Clerk claimed not to know what the AGAR form was.

Too often simple accounts are presented in an incomprehensible and circumlocutionary way and especially if a council has two bank accounts.  Often the accounts are presented in a haphazard fashion so the public and even conscientious councillors have to do their  own audit in order to make sense of them and to be assured that these accounts meet the required standards.  

It is also unfortunate that some Clerks who are also Responsible Finance Officers (RFOs), not only refuse to answer questions re the council’s accounts (even when requested to do so under the Freedom of Information Act) but also to provide invoices and receipts when requested.  It appears, then, that some Councils treat public accounts as if they were their own private bank accounts.  Thus any changes to remove and counter any shoddy practices in local councils, appear to be long overdue.