INDEX TO PART B OF THE CONSTITUTION

 

 

PAGE(S)

B – PARTS 6 TO 8

415 - 752 

Part 6 – Officer Procedure Rules

415 - 583  

6.1

Financial Procedure Rules

415 - 537

6.2

Contracts Procedure Rules

538 - 573

6.3

Officer Employment Procedure Rules

574 - 583

Part 7 – Members’ Allowance Scheme

584 - 590

Part 8 – Management Structure

591

Part 9 – Appendices to the Constitution

592 - 752

Appendix 1

Scheme of Management – Corporate Delegations

592 - 600

Appendix 2

Departmental Delegations

601 - 730

 

Adults Health and Wellbeing

601 - 620

 

Chief Executives

621 - 638

 

Children’s Services

639 – 662

 

Communities Localities and Culture

663 – 700

 

Development and Renewal

701 – 722

 

Resources

723 – 730

Appendix 3

Functions allocated between  London Borough of Tower Hamlets and Tower Hamlets Homes

731 – 738

Appendix 4

Tower Hamlets Homes Scheme of Delegation

739 - 752



Part 6 – Officer Procedure Rules

 

6.1       FINANCIAL REGULATIONS AND PROCEDURE RULES

 

CONTENTS

 

Rule

Subject

1

The Budget Framework

2

Financial Regulations/ Procedures

3

Virements

Appendix

 

A

Financial Regulations/ Procedures 2016/17

 

 

1.         THE BUDGET FRAMEWORK

 

1.1       The Budget Framework comprises the following;

(a)     General Fund Budget

(b)     Housing Revenue Account Budget

(c)      General Fund Capital Strategy

(d)     Housing Revenue Account Capital Programme

 

1.2       Council is responsible for agreeing the Budget Framework. It is the responsibility of the Executive (whether the Mayor, the Cabinet, individual Members or an officer acting on delegated authority) to operate within the Budget Framework.

 

1.3       Any proposal or decision by the Mayor or Executive that would result in expenditure exceeding the limits within the budget framework as defined above will be considered a breach of that framework, and must be dealt with in accordance with the Budget and Policy Framework Procedure Rules at Part 4.3 of the Constitution.

 

 


2.         FINANCIAL REGULATIONS

 

2.1              The Corporate Director, Resources is responsible for the administration of the Council’s financial affairs. As part of her/his duties, s/he will, when s/he considers it appropriate, issue Financial Regulations/ Procedures which are the rules governing the management of the Council’s financial resources. S/he will ensure that the Regulations/ Procedures and any updated or amended versions are made available to all chief officers, the Mayor and Members of the Council.  These Regulations/ Procedures and any updated or amended versions will then be placed in Appendix A of these Rules.

 

2.2       It is the responsibility of all Chief Officers to comply personally with Financial Regulations/ Procedures and to ensure that all officers within their Directorate with financial responsibilities also comply with them. Failure to comply with Financial Regulations/ Procedures is likely to constitute a disciplinary offence and be investigated under the appropriate disciplinary procedure.

 

3.         VIREMENT RULES

 

3.1       These rules aim to allow the Executive to manage the budget once it has been approved by Council, whilst also providing for good governance of financial matters.  For more details on Virements please see FM2, FM5 and FA10 of Appendix A to these Rules.

 

3.2       A virement is the transfer of resources from one budget head to another, during a financial year. It is thus the financial consequence of a change in priority of service delivery or in the means by which services are delivered. It can also be the use of resources provided within the budget framework but which are not allocated for any specific purpose e.g. unallocated contingency. A virement will naturally flow from, and be part of, a decision.

 

3.3       The Executive shall have the power to vire resources within each of the above components of the Budget Framework agreed by Council, subject to the following limitations:

 

(a)                    All individual virement proposals that exceed £1 million require the approval of Council.  Virements for the same budget head, project or substantively similar purpose which are below the £1m threshold should not cumulatively (over a period of three months) exceed the £1m limit without the approval of Council.

(b)       Individual virements between £250,000 and £1 million must be reported to the Cabinet for decision.

(c)        Individual virements below £250,000 can be authorised by the relevant Corporate Director/ Chief Officer provided that any virement so authorised which exceeds £100,000 must be subsequently reported to the Cabinet for noting.

(d)       No virement to or from the following budgets (irrespective of the amount proposed) shall be made without the specific agreement of the Corporate Director, Resources:

(i)            Capital Financing (not normally available for virement)

(ii)          Support service and other forms of internal charges (to avoid unintended impact upon other departments' budget).

(iii)        Rates (to ensure compliance with rating legislation).

(iv)         Insurance (to ensure compliance with insurance policies).

(v)           Pensions (to ensure compliance with Pensions regulations).

 

3.4       Virements between Directorates

 

            The use of resources from one Directorate to finance activities in another must be authorised by Council or the Cabinet (depending on the level of resources involved) but the decision should only be made after advice from the relevant Corporate Directors and the Corporate Director, Resources.  However, where the responsibility for a service(s) is merely transferred from one Directorate to another, the consequent transfer of budget resources is not deemed to be a virement for the purposes of these Rules.

 

3.5       Virements – Non-Financial Consequences

 

The Virement Rules refer only to the financial consequences of proposals and decisions by the Executive. However, such proposals and decisions can also impact upon services and upon the community. This needs to be acknowledged when determining the procedural arrangements for those proposals and decisions, for example they may represent a “key decision”.

 


APPENDIX 1 – Financial Regulations/ Procedures 2016/17

 

 

 

Financial Regulations

2016/17

 

 

 

 

 

 

 

Financial Planning

London Borough of Tower Hamlets


Contents

                       

                                              

Financial Regulations 

Introduction   

General

The Financial Control Framework 

Financial Planning   

Financial Management

Risk Management and Control of Resources 

Financial Administration 

External Arrangements 

Appendix A    Financial Procedures 

Contents   

Financial Planning   

Financial Management

Control of Resources and Risk Management

Financial Administration 

External Arrangements 

Key Contacts   

Appendix B    Detailed Financial Procedures 

 

Appendix C    Other Financial Guidelines 

 

Appendix D    Glossary and Abbreviations 

 


 

Introduction

 

To conduct its activities efficiently, a local authority needs to ensure it has Sound financial management policies in place and that they are strictly adhered to. Part of this process is to establish financial regulations that set out the financial policies of the authority. Such regulations are supplemented by detailed financial procedures.

 

Financial procedures provide clarity about the financial responsibilities of individuals within the organisation. All individuals engaged on Council activities are responsible for ensuring that their actions comply with the objectives specified in the financial and procurement procedures.

 

In compiling these regulations and procedures the objective has been:-

 

Ø  To provide advice on how to undertake the financial aspects of your duties;

Ø  To disseminate best practice throughout the Council;

Ø  To ensure consistency; and

Ø  To ensure legal requirements are adhered to.

 

The procedures have been developed by Directorate Finance Business Partners and have been the subject of extensive consultation. However it is obviously impossible for the procedures to cover every eventuality and an element of interpretation may be necessary. If advice is required, please contact your Directorate Finance Business Partner.

 

Zena Cooke

Corporate Director of Resources


A: General

 

A1

Application

 

1.    Financial regulations provide the framework for managing the Council’s financial affairs.  They apply to the Mayor, every elected Member and officer of the Council and anyone acting on its behalf.

 

2.    The Mayor, all Members, staff, agents and consultants have a general responsibility for taking action to provide for the security of the assets under their control, and for ensuring that the use of these resources is legal, properly authorised, provides value for money and achieves best value.

 

A2

Delegation

 

1.      The Constitution of the Council sets out the main delegations and these Regulations identify the additional financial delegations that the Council has decided to make to its officers. The Constitution of the Council also includes the Financial Procedure Rules.

 

2.      Where decisions have been delegated, references to the Senior Manager refers to these delegations.  No other delegations should be inferred from these Regulations.

 

3.      A ‘Senior Manager’ for the purpose of these Regulations means the Head of Paid Service , Corporate Directors, Service Heads, and Budget Managers unless otherwise specified in these Regulations

 

4.      A written record should be maintained of all corporate and directorate schemes of delegation.

 

5.      The Council operates a system of devolved financial responsibility under which Directorates administer their financial affairs. The Finance Business Partners have a dual reporting line to both the appropriate Corporate Director and the Corporate Director of Resources.

 

5.1          The Finance Business Partner is responsible for informing the Corporate Director of Resources of any issue which may have implications for the exercise of the Director’s responsibilities under Section 151 of the Local Government Act 1972 and Section 114 of the Local Government Finance Act 1988.

 

5.2          The Finance Business Partner is responsible for ensuring Directorate compliance with the Financial Procedures, Procurement Procedures and other instructions and guidance issued by the Corporate Director of Resources.

 

6.      Delegation empowers junior officers but ultimate managerial accountability remains with the Senior Manager taking a decision under delegated authority.

 

A3

All staff to have access to Financial Regulations

 

1.         Senior Managers are responsible for ensuring that all staff in their Directorate or Service Area are aware of the existence and content of the Council’s financial regulations and other internal regulatory documents and that they comply with them.

 

 

B: The Financial Control Framework

 

B1

Full Council

 

1.       Full Council is responsible for approving the Budget and Policy Framework within which the Executive operates.

 

2.       Full Council is also responsible for approving and monitoring compliance with the Council’s overall framework of accountability and control. The framework is set out in the Council’s Constitution and Code of Corporate Governance.

 

B2

The Executive

1.       The Executive is responsible for proposing the policy framework and budget to the full Council, and for discharging executive functions in accordance with the budget policy framework as contained in the Constitution.

 

2.       In making any decision, the Executive must take account of legal and financial liabilities and risk management and other relevant issues that may arise from the decision.

 

3.       The Executive is responsible for specifying the limits within which officers have delegated authority to make decisions. These thresholds are as set out in section B10 of these Regulations.

 

B3

 

 

 

 

 

 

 

B4

Overview and Scrutiny

 

1.       The Overview and Scrutiny Committee is responsible for scrutinising executive decisions and for holding the executive to account. The Committee is also responsible for making recommendations on future policy options and for reviewing general policy and service delivery of the authority.

 

Audit Committee 

 

1.       The Audit Committee is the Committee charged with scrutinising the financial governance and system of internal controls of the authority.

 

2.       The Audit Committee has right of access to all the information it considers necessary and can consult directly with internal and external auditors.

 

3.       The Audit Committee is responsible for reviewing the external auditor’s reports and the annual audit letter and internal audit’s annual report.

 

4.       The Audit Committee is responsible for approving the Statement of Accounts of the authority.

 

5.       The Audit Committee is responsible for scrutinising the Treasury Management report.

 

B5

Chief Executive/Head of Paid Service

 

1.       The Chief Executive/Head of Paid Service is responsible for the corporate and overall strategic management of the Council as a whole.

 

2.       The Chief Executive/Head of Paid Service must report to and provide information for the Executive, the full Council, the Overview and Scrutiny Committee and other Committees.

 

3.       The Chief Executive/Head of Paid Service is responsible for establishing a framework for management direction, style and standards and for monitoring the performance of the organisation. 

 

4.       The Chief Executive/Head of Paid Service is also responsible for ensuring that all decisions made by the Executive and the reasons for them are made public.  They must also ensure that Council Members are aware of decisions made by the Executive and of those made by officers who have delegated executive responsibility.

 

B6

Monitoring Officer

 

The Council’s Monitoring Officer is responsible for:

 

1.       Promoting and maintaining high standards of ethical conduct and provides support to the Standards Committee.

 

2.       Reporting any actual or potential breaches of the law or maladministration to the Full Council and/or the Executive.

 

3.       Advising all Councillors and officers about who has authority to take a particular decision.

 

4.       Advising the Executive or Full Council about whether a decision is likely to be considered contrary or not wholly in accordance with the Budget & Policy Framework.

 

5.       Maintaining an up-to-date constitution.

B7

Corporate Director of Resources

 

The Corporate Director of Resources is the officer responsible for financial administration under s.151 of the Local Government Act 1972 and is responsible for:

 

1.The proper administration of the Council’s financial affairs.

 

2.Setting and monitoring compliance with financial management standards.

 

3.Advising on the corporate financial position and on the key financial controls necessary to secure sound financial management.

 

4.Providing financial information in conjunction with Senior Managers.

 

5.Ensuring that the annual statement of accounts is prepared in accordance with International Financial Reporting Standards, the Code of Practice on Local Authority Accounting and the Service Reporting Code of Practice within the statutory deadlines.

 

6.Preparing the revenue budget and capital programme relating to the General Fund and the Housing Revenue Account

 

7.Ensuring that reports requesting decisions of Members include appropriate statements as to the financial and use of resources implications of the matter under consideration.

 

8.Treasury management.

 

9.Section 114 of the Local Government Finance Act 1988 requires the Corporate Director of Resources 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 Council.

·      is about to make an unlawful entry in the authority’s accounts.

 

10.   Section 114 of the 1988 Act also requires the Corporate Director 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.

 

11.   Selecting accounting policies and ensuring that they are applied consistently.

 

12.   Determining the accounting procedures and records for the authority.

 

13.   Issuing advice and guidance to underpin the Financial Regulations.

 

14.   Maintaining a continuous review of the Financial Regulations and issuing updates as necessary.

 

15.   In conjunction with Senior Managers reporting breaches of the Financial Regulations to the Audit Committee.

 

16.   Preparing reports to Corporate Management Team and the Executive to set the Cabinet Thresholds for reporting specific financial issues to the Executive.

B8

Corporate Directors and Service Heads (Senior Managers)

 

Corporate Directors and Service Heads are responsible for:

 

1.Ensuring that the Executive are advised of the financial implications of all proposals and that the financial implications have been agreed by the Corporate Director of Resources.

 

2.       Signing contracts on behalf of the Council.

 

3.       The exercise of budgetary control.

 

4.       Consulting with the Corporate Director of Resources to seek approval on any matter liable to affect the Council’s finances materially, before any commitments are incurred.

 

5.       Ensuring that matters requiring a decision by Members are drawn to the attention of the Corporate Director of Resources before any such decision is taken.

 

B9

Individual Members of the Council

 

No financial decisions are delegated to individual Members of the Council under these Regulations, and no individual Member may instruct any officer to act in any particular way or to take any decision without the authority of the Full Council or the delegated authority of the Executive.

 

B10

Cabinet Reporting Thresholds

 

The following thresholds have been set by the Executive for reports to be submitted to Cabinet/the Executive for approval.

 

Issues which are projected to involve sums below the “Delegated Authority Threshold” may be authorised by Corporate Directors in line with the scheme of delegations.

 

Issues which are approved by Corporate Directors under delegated authority but involve sums in excess of the “Noting Report Threshold” must be the subject of a noting report to the next available Cabinet.

 

 

Delegated Authority Threshold

 

Noting Report Threshold

 

Transfer of a budget allocated for a particular purpose to be used for another purpose (Virement) 

 

£250,000

£100,000

Approval of a supplementary or additional  of a Capital Budget

 

 

£250,000

 

£100,000

 

Waiving Competition Requirements for Contracts and Orders (Subject to EU  Threshold)

 

£250,000

£100,000

Capital Overspends

 

 

£250,000

 

£100,000

Settlement Of Uninsured Claims

 

 

    £250,000

£100,000

 

 

C: Financial Planning

 

C1

Budgets (Financial Procedures FP3 and FP4)

 

1.      The process for compilation of the budget will be approved by the Executive on the advice of the Corporate Director of Resources.

 

2.      The draft budget should include projected net expenditure on services and projects, proposed taxation and other income levels as well as any contingency funds.

 

3.      The Corporate Director of Resources is responsible for ensuring that a revenue budget and a Medium Term Financial Plan for a three year review period are prepared annually for consideration by the Executive, before submission to the Full Council.

 

4.      Senior Managers will ensure the proper administration of the Revenue Budgets and the Capital Programme allocated to them.  They will also ensure compliance with guidance and instructions issued by the Corporate Director of Resources.

C2

Maintenance of Reserves (Financial Procedures FP5)

 

  1. It is the responsibility of the Corporate Director of Resources to advise the Executive on prudent levels of reserves for the Council.

 

D: Financial Management

 

D1

Budget Monitoring and Control (Financial Procedures FM5 and FM6)

 

1.      Senior Managers are responsible for ensuring that within any financial year they take all reasonable measures to ensure an approved Revenue or Capital Budget within their control is not over spent. 

 

2.      Senior Managers must seek to ensure that there is no shortfall in the budgeted level of income.

 

3.      When a projected overspend (or under recovery of income) is forecast to occur in a section of the Revenue Budget, or on a scheme within the Capital Programme, Senior Managers and other responsible officers must take measures to eliminate or reduce the overspend and maintain records of such actions,

 

4.      The Corporate Director of Resources must be informed of potential budget variances in accordance with budget monitoring guidelines. The overspend will be the subject of a report to the Executive.

 

 

E: Risk Management and Control of Resources

 

E1

Risk Management (Financial Procedure CR1)

 

  1. Audit Committee is responsible for approving the authority’s risk management policy statement and strategy and for reviewing the effectiveness of the risk management.

 

  1. The Executive is responsible for ensuring that proper insurance exists where appropriate.

 

  1. The Corporate Director of Resources is responsible for preparing the authority’s risk management policy statement, for promoting it throughout the authority and for advising the Executive on proper insurance cover where appropriate.

 

E2

Internal Control (Financial Procedure CR3)

 

1.       Internal control refers to the systems of control devised by management to help ensure the authority’s objectives are achieved in a manner that promotes economical, efficient and effective use of resources and that the authority’s assets and interests are safeguarded.

 

2.       The Corporate Director of Resources is responsible for advising on effective systems of internal control.

 

 

  1. Senior Managers are responsible for organising their operations to ensure appropriate controls are in place, ensure the Council’s objectives are achieved, VFM secured and assets are safeguarded.

 

  1. Such arrangements need to ensure compliance with all applicable statutes and regulations, and other relevant statements of best practice.

 

5.       Senior Managers must ensure that public funds are properly safeguarded and used economically, efficiently, and effectively and in accordance with the statutory and other authorities that govern their use.

 

6.       It is the responsibility of Senior Managers to establish sound arrangements for planning, appraising, authorising and controlling their operations in order to achieve economy, efficiency and effectiveness and for achieving their financial performance targets.

 

E3

Audit Arrangements (Financial Procedure CR4 and CR5)

 

1.       The Accounts and Audit Regulations 2015 require every local authority to maintain an adequate and effective internal audit.

 

2.       The Audit Committee, in conjunction with an Independent Auditor Panel is responsible for appointing external auditors to each local authority.  The basic duties of the external auditor are governed by part 5 of the Local Audit and Accountability Act 2014. 

 

3.       The authority may, from time to time, be subject to audit, inspection or investigation by external bodies such as HM Revenue and Customs, who have statutory rights of access.

 

4.       Officers and Members will cooperate fully with auditors and inspectors in the pursuance of their duties.

 

E4

Preventing Fraud & Corruption (Financial Procedure CR6)

 

1.       The Corporate Director of Resources is responsible for the development and maintenance of an anti-fraud and anti-corruption policy.

 

2.       Senior Managers are responsible for designing their systems of controls and putting in place internal controls that adequately manage the risk of fraud and corruption.

 

3.       Senior Managers must report all instances of actual or attempted fraud to the Corporate Director of Resources and/or the Head of Audit and Risk Management.

 


 

E5

Assets (Financial Procedure CR7)

 

1.       Senior Managers shall  ensure that records and assets are properly maintained and securely held

 

2.       Senior Managers should ensure that contingency plans for the security of assets and continuity of service in the event of disaster or system failure are in place.

 

3.       The Corporate Director of Development & Renewal is responsible for ensuring that valuations of the Council’s assets are undertaken for management and reporting purposes.

 

E6

Treasury Management (Financial Procedure CR11)

 

1.       The authority has adopted CIPFA’s Code of Practice for Treasury Management in Local Authorities.

 

2.       The Full Council is responsible for approving the treasury management policy statement setting out the matters detailed in paragraph 15 of CIPFA’s Code of Practice for Treasury Management in Local Authorities.  The policy statement is proposed to the full Council as part of the annual budget setting process.

 

3.       The Corporate Director of Resources has delegated responsibility for implementing and monitoring the statement.

 

4.       All money in the hands of the authority is controlled by the officer designated for the purposes of section 151 of the Local Government Act 1972, referred to in the code as the Director of Finance.

 

5.       All executive decisions on borrowing, investment or financing shall be delegated to the Corporate Director of Resources, who is required to act in accordance with CIPFA’s Code of Practice for Treasury Management in Local Authorities.

 

E7

Staffing (Financial Procedure CR9)

 

1.       Full Council is responsible for confirming the appointment of the Chief Executive/Head of Paid Service, and has delegated to the Appointments Sub-Committee of the Human Resources Committee responsibility for appointing to the other Chief Officer and Deputy Chief Officer posts.  These are the only appointments that elected Members are involved in apart from the 4 group/Mayor’s political assistants.

 

2.       The Chief Executive/Head of Paid Service is responsible for providing overall management to staff.  He or she is also responsible for ensuring that there is proper use of the evaluation or other agreed systems for determining the remuneration of a job.

 

3.       Senior Managers are responsible for controlling total staff numbers by:

 

·         Advising the Executive on the budget necessary in any given year to cover approved staffing levels.

 

·         Adjusting the staffing to a level that can be funded within approved budget provision, varying the provision as necessary within that constraint in order to meet changing operational needs.

 

·         The proper use of appointment procedures.

 

 

F: Financial Administration

 

F1

General (Financial Procedure FA1)

 

1.       The Corporate Director of Resources is responsible for the operation of the authority’s accounting systems, the form of accounts and the supporting key financial records.

 

2.       Any changes made by Senior Managers to the existing financial systems or the establishment of new systems must be approved by the Corporate Director of Resources. 

 

3.       Senior Managers are responsible for the proper operation of financial processes in their own departments.

 

4.       Any changes to agreed procedures by Senior Managers to meet their own specific service needs should be agreed with the Corporate Director of Resources.

 

5.       Senior Managers should ensure that their staff receive relevant financial training.

 

6.       Senior Managers must ensure that, where appropriate, computer and other systems are registered in accordance with data protection legislation.

 

7.       Senior Managers must ensure that staff are aware of their responsibilities under freedom of information legislation.

 

F2

Income and Expenditure (Financial Procedure FA2)

 

  1. It is the responsibility of Senior Managers to ensure that a proper scheme of delegation has been established within their area and is operating effectively. The scheme of delegation must be submitted to the Head of Financial Systems and reviewed annually at minimum.

 

  1. The scheme of delegation must identify staff authorised to act on the Senior Managers’ behalf in respect of payments, income collection and placing orders, together with the limits of their authority. The scheme of delegation is subject to the approval of the Corporate Director of Resources.

 

  1. The Executive is responsible for approving procedures for writing off debts as part of the overall control framework of accountability and control.

 

F3

Payments to employees and Members (Financial Procedure FA4)

 

1.       The Corporate Director of Resources is responsible for all remuneration payments   to all staff, including any payments for severance, and for payment of allowances to Members.

 

2.       Senior Managers are responsible for providing information in a timely manner to enable the Corporate Director of Resources to discharge these responsibilities.

 

F4

Taxation (Financial Procedure FA5)

 

1.       The Corporate Director of Resources is responsible for advising Senior Managers, in the light of guidance issued by appropriate bodies and relevant legislation as it applies, on all taxation issues that affect the authority.

 

2.       The Corporate Director of Resources is responsible for maintaining the authority’s tax records, making all tax payments, receiving tax credits and submitting tax returns by their due date as appropriate.

 

3.       Senior Managers are responsible for ensuring that sufficient information is provided in a timely manner to enable the Corporate Director of Resources to discharge the Council’s obligations under the tax legislation.

 

F5

Trading accounts and /business units (Financial Procedure FA6)

 

1.       It is the responsibility of the Corporate Director of Resources to advise on the establishment and operation of trading accounts and business units.

 

 

G: External Arrangements

 

G1
Partnerships (Financial Procedure EA1)

 

1.       The Executive is responsible for approving delegations, including frameworks for partnerships.

 

2.       The Executive is the focus for forming partnerships with other local public, private, voluntary and community sector organisations to address local needs.

 

  1. The Executive may delegate functions – including those relating to partnerships – to officers. Where functions are delegated, the Executive remains accountable for them to the Full Council.

 

  1. The Authority may nominate individual Members and or officers to represent the Authority on external bodies.

 

  1. The Monitoring Officer is responsible for promoting and maintaining the same high standards of ethics in partnerships that apply throughout the Authority.

 

  1. The Corporate Director of Resources will advise on the accounting arrangements to be adopted relating to partnerships and joint ventures. He or she must ensure that the risks have been fully appraised before agreements are entered into with external bodies.

 

  1. Senior Managers are responsible for ensuring that appropriate Council approvals are obtained before any negotiations are concluded in relation to work with external bodies.

 

 

Appendix A

Financial Procedures

 

Contents

 

FP
Financial Planning
18
FP1
Capital Strategy
18
FP2
Asset Management Plan
19
FP3
Capital Programmes
20
FP4
Revenue Budget Preparation
22
FP5
Maintenance of Reserves
24
FP6
Performance Planning and Management
25
FM
Financial Management
26
FM1
Financial Management Standards
26
FM2
Virement
27
FM3
Treatment of Year-End Balances
28
FM4
Accounting Policies
29
FM5
Budgetary Control
30
FM6
Control of Capital Budgets
32

 



FM7
The Annual Statement of Accounts
33
FM8
Accounting Records and Returns
34
FM9
Finance Comments for Reports
35
CR
Control of Resources & Risk Management
36
CR1
Risk Management
36
CR2
Insurances
38
CR3
Internal Control
40
CR4
Internal Audit
42
CR5
External Audit
44
CR6
Preventing Fraud and Corruption
45
CR7
Security of Assets
46
CR8
Inventories
48
CR9
Staffing
49
CR10
Asset Disposal
50
CR11
Treasury Management
51
CR12
Trust Funds
52
CR13
Banking Arrangements
53
CR14
Imprest Accounts
54
CR15
Intellectual Property
55
FA
Financial Administration
56
FA1
Systems
56
FA2
Income
58
FA3
Ordering and Paying for Work Goods and Services
61
FA4
Payments to Employees and Members
65
FA5
Taxation
68
FA6
Trading Accounts, Business Units and Associated Companies
69
FA7
Internal Recharges
70
FA8
Grants
72
FA9
Journals
74
FA10
Record of Corporate Director Actions
75

 

EA
External Arrangements
76
EA1
Partnerships
76
 
Key Contacts
79
 
 
 

                                                  FP: FINANCIAL PLANNING                                                                        

 

FP1: Capital Strategy

 

Background

The Capital Strategy details how capital resources will contribute to the achievement of the Council’s corporate objectives.

The Capital Strategy is prepared by Corporate Finance under the sponsorship of the Asset Management & Capital Strategy Board (AMCSB) which is chaired by the Corporate Director of Development & Renewal.

FP1.1 Objectives

1.                   To ensure that the strategy is produced in accordance with best practice and is consistent with other key strategies and plans.

2.                   To ensure that the financial information provided in the Capital Strategy is consistent with medium term financial plans.

 

FP1.2 Responsibilities of the Chair of Asset Management & Capital Strategy Board

1.                   To revise annually, in consultation with Chief Officers, the Corporate Capital Strategy within        the timetable established.

2.                   To obtain the approval of the Executive and Full Council.

 

FP1.3 Responsibilities of Senior Managers

1.                  To contribute to the development of the Capital Strategy within the statutory deadline and        to ensure other Directorate plans and strategies are consistent with it.

2.                  To provide information and staff resources to the Asset Management & Capital Strategy Board when requested.

 


 

FP2: Asset Management Plan

 

Background

The Council’s Corporate Asset Management Plan (AMP) sets out the Council’s strategy for the management and maintenance of its asset/property portfolio.

The Asset Management Plan is prepared by the Corporate Property team under the sponsorship of the Asset Management & Capital Strategy Board which is chaired by the Corporate Director of Development & Renewal.

FP2.1 Objectives

1.                   To ensure that the plan is produced in accordance with best practice and is consistent with other key strategies and plans such as the Community Plan, the Capital Strategy, the Housing 30 year business plan and Directorate Asset Management Plans.

2.                   To ensure that the financial data provided in the AMP is consistent with medium term financial plans.

 

FP2.2 Responsibilities of the Chair of Asset Management & Capital Strategy Board

1.                                   To revise the AMP annually, in consultation with Senior Managers and within the timetable established.

2.                                   To obtain the approval of the Executive for the AMP.

 

FP2.3 Responsibilities of Senior Managers

1.                   To contribute to the development of the AMP within the statutory deadline and to ensure other Directorate plans and strategies are consistent with it.

2.                   To provide information and staff resources to the Asset Management & Capital Strategy Board when requested.

 

FP3:  Capital Programmes

 

Background

The Council produces a three-year capital programme to ensure resources are maximised, and potential resource gaps identified. This avoids abortive costs being incurred.

FP3.1 Objectives

1.                  A Capital Programme is to be prepared annually projecting capital expenditure and associated resources for the next 3 years.

2.                  All capital receipts are to accrue to the Corporate pot in the first instance, and are to be allocated on the basis of criteria corresponding to the capital strategy document.

3.                  Central Government resources, which are not specific to a project or programme area, also accrue to the Corporate pot and are allocated on the basis of criteria corresponding to the capital strategy document.

4.                  All Directorates are entitled to bid for resources within the Corporate pot.

5.                  All capital programme expenditure must satisfy the statutory definitions of capital.

6.                  The contents and format of the Capital Programme is to be specified by the Corporate Director of Resources.

 

FP3.2 Responsibilities of the Corporate Director of Resources

1.                   To issue guidelines annually on the format and content of the three-year capital programme and produce the three-year programme for approval by the Executive.

2.                   To produce the criteria for the approval of Directorate bids to be allocated corporate capital resources.

3.                   To produce a corporate capital programme for approval by the Executive, including elements to satisfy local priorities.

4.                   To devise a mechanism that allocates resources to Directorate Capital Programmes.

5.                   To produce a report for the Executive for the approval and the allocation of capital resources to Directorates.

 

FP3.3 Responsibilities of Senior Managers

1.                   To prepare bids for capital resources corresponding to the guidance issued by the           Corporate Director of Resources.

2.                   To prepare monitoring reports of the schemes in the approved capital programme in the format and timetable specified by the Corporate Director of Resources.

3.                   To ensure that records which satisfy internal and external audit requirements are maintained for all contracts.

4.                   To proceed with projects only when there is a budget within the agreed capital programme and adequate capital resources have been identified.

5.                   To obtain a supplementary capital budget where an individual Capital Scheme is projected to spend in excess of the original approval, or an additional scheme needs approval.

·         A supplementary capital budget can be granted by the appropriate Corporate Director if the overspend is less than £250,000 – Financial Regulation B10.

·         Executive approval must be obtained for Supplementary Capital budgets in excess of £250,000. An explanatory report is required.

6.                   To comply with Financial Instructions relating to procurement as issued by the Corporate Director of Resources.

7.                                   To comply with the financial accounting instructions relating to capital items issued by Corporate Director of Resources.

8.                   To ensure that adequate provision is made in the revenue budget for any ongoing          revenue costs arising from capital schemes.


 

FP4:  Revenue Budget Preparation

 

Background

Budgets constitute a mechanism, enabling the Council to plan, authorise, monitor and control revenue resources. They are also the basis on which the Council Tax is set.

The current elements which comprise the budget setting process are as set out below:-

1. The Government publishes its spending plans, indicating the aggregate resources to be allocated to Local Authorities in the medium term.

2. This is followed by final announcement and more information each year of the resources to be allocated by Central Government to Local Authorities.

3. The Council has to calculate its tax base, which is formally approved by the Executive in January.

4. The Greater London Authority will notify the Council of the amount it requires to be collected from the residents and this is incorporated into the Council Tax calculation.

6. The Executive must propose its budget to Council in accordance with the Budget and Policy Framework Procedure Rule.

7. The Council has to agree the level of Council Tax before 11th March each year and at the same time Full Council will also formally agree a legal balanced budget.

FP4.1 Objectives

1.                   Tax base to be formally notified to the GLA and levying bodies by 31st January.

2.                   Agreement by Council of the Council Budget by 28th February.

3.                                   Preparation of the overall budget in accordance with the Local Government Finance Act 1992.

4.                   Formal adoption of the budget by Full Council before 11th March.

 

FP4.2 Responsibilities of the Corporate Director of Resources

1.                   To issue detailed guidance and instructions on the procedures, responsibilities and timetable for preparing Revenue Budgets.

2.                   To provide guideline cash budget options to Members following Government announcements.

3.                   To work within the political budget strategy provided by the Executive.

4.                   To manage, in conjunction with Directorates, a process to deliver a balanced budget.

5.                   To calculate the resource/projected expenditure position for the period of the Medium Term Financial Plan (3-5 years ahead).

6.                   To collate the exemplifications of savings or growth from departments, as required by the budget strategy.

7.                   To advise and agree the levels of inflation that may be applied to specific areas of expenditure.

8.                                   To prepare and submit reports to the Executive, in line with the Scheme of Delegation, on the aggregate spending plans of Directorates and on the resources available to fund them, identifying, where appropriate, the implications for the level of Council Tax to be levied.

9.                                   To obtain Full Council approval for both the Council Tax and the budget setting report each year within the statutory timetable.

 

FP4.3 Responsibilities of Senior Managers

1.                  To take responsibility for delivering the budget strategy.

2.                  To assist in the development and delivery of the budget process.

3.                  When drawing up draft budget requirements, to have regard to:

·    spending patterns and pressures revealed through the budget monitoring process.

·    legal requirements.

·    policy requirements as determined by the Full Council in the approved policy framework.

·    initiatives already under way.

4.                  To work within budget limits.

5.                  To provide the specific Directorate information requested.

6.                  To compile a Directorate budget within the guidelines issued by the Corporate Director of Resources.

7.                  To obtain the approval of the Executive for new proposals, of whatever amount, that:

·    create financial commitments in future years.

·    change existing policies, initiate new policies or cease existing policies.

·    in the opinion of the Senior Manager and appropriate Lead Member materially extend or reduce the Council's services.


 

FP5:  Maintenance of Reserves

 

Background

The Authority must decide the level of general Reserves it wishes to maintain as part of its financial planning before it can set the annual Council Tax.

Reserves are maintained as a matter of prudence. They enable the authority to provide for unexpected events and thereby protect it from overspending, should such events occur.

Reserves for specific purposes may also be maintained, such as the purchase or renewal of capital items. Accounting policies require these to be differentiated from Provisions, the latter being maintained to meet future expenditure arising from a past event the timing of which is uncertain and cannot therefore be contained in the annual budget.

 

FP5.1 Objectives

1.                  To maintain Reserves in accordance with the Code of Practice on Local Authority               Accounting in the United Kingdom: A Statement of Recommended Practice, LAAP Bulletin 55 and other agreed accounting policies.

2.                  For each Reserve established, the purpose, usage, procedures for the management and control of reserves, and basis of transactions should be clearly identified.

3.                  Authorisation of expenditure from Reserves by the appropriate Senior Managers in consultation with the Corporate Director of Resources.

 

FP5.2 Responsibilities of the Corporate Director of Resources

1.                  To advise the Executive on prudent levels of Reserves for the Council.

2.                  To recommend the formation or otherwise of earmarked reserves.<