Governance and Accountability for Smaller Authorities in England A Practitioners’ Guide to Proper Practices to be applied in the preparation of statutory annual accounts and governance statements March 2017 This Guide is issued by the Joint Panel on Accounting Guidance (JPAG), and jointly published by the Society of Local Council Clerks, the National Association of Local Councils and the Association of Drainage Authorities. JPAG is responsible for issuing proper practices in relation to the accounts of smaller authorities. Its membership consists of sector representatives from the Society of Local Council Clerks, the National Association of Local Councils and the Association of Drainage Authorities, together with stakeholder partners representing the Department of Communities and Local Government, the Department of Environment, Food and Rural Affairs, the Chartered Institute of Public Finance and Accountancy, the National Audit Office, and a representative of the external audit firms appointed to smaller authorities. Contents Foreword Section 1: Annual Governance Statement assertions Introduction Annual Governance Statement assertions Assertion 1: Financial management and preparation of accounting statements Assertion 2: Internal Control Assertion 3: Compliance with laws, regulations and proper practices Assertion 4: Exercise of public rights Assertion 5: Risk Management Assertion 6: Internal Audit Assertion 7: Reports from Auditors Assertion 8: Significant events Assertion 9: Trust Funds (local councils only) Approval process Section 2: The Statement of Accounts Introduction Accounting statements Line 1: Balances brought forward Line 2: Precept or Rates and Levies Line 3: Total other receipts Line 4: Staff costs Line 5: Loan interest/capital repayments Line 6: All other payments Line 7: Balances carried forward Line 8: Total value of cash and short-term investments Line 9: Total fixed assets plus long-term investments and assets Line 10: Total borrowings Line 11: Disclosure note re Trust funds (local councils only) Signature of Responsible Finance Officer Signature of Chairman Accompanying information Bank Reconciliation Section 3: Proper practices in relation to accounts for a smaller authority that has decided to prepare accounts and be audited as a full audit authority Introduction Proper practices – Statement of accounts Proper practices – Annual governance statement Section 4: Non-statutory guidance for internal audit at smaller authorities Introduction Overview of internal audit Appointing an internal audit provider Independence Competence Scope of internal audit Annual internal audit report Reviewing internal audit Section 5: Supporting information and practical examples Introduction Annual governance statement AGS assertion 1: Financial management and preparation of accounting statements Budgeting Accounting records and supporting documents Bank reconciliation Investments AGS assertion 2: Internal Control Standing Orders and Financial Regulations Safe and efficient arrangements to safeguard public money Accounts for payment Receipts Cash Debt collection Employment VAT Fixed assets and equipment Loans and long term liabilities AGS assertion 3: Compliance with laws, regulations and proper practices Acting within its powers Regulations and proper practices Actions during the year AGS assertion 4: Exercise of public rights Limited assurance review by the external auditor AGS assertion 5: Risk management Background Identifying risks Assessing risks Addressing risks Reviewing and reporting AGS assertion 6: Internal audit AGS assertion 7: Reports from auditors AGS assertion 8: Significant events AGS assertion 9: Trust funds (local councils only) Accounting-statements Reporting on an income and expenditure basis Accounting for joint arrangements Total other receipts (Line 3) Loan interest/capital repayments (Line 5) Total value of cash and short-term investments (Line 8) Total fixed assets plus long-term investments and assets (Line 9) Fixed assets Long-term investments Total borrowings (Line 10) Accompanying information Bank Reconciliation Explanation of significant variances Appendix 1: Example documents Bank reconciliation Risk register TOP Published by NALC National Associations of Local Councils Click here to download a full copy of the Governance and Accountability