Agenda item

The Group considered a report which presented the proposed draft Financial Procedure Rules at Appendix 1.  The purpose of the revised Rules was to align financial limits and procedures across the two Councils where possible.  Also, it was good practice to keep the Financial Procedure Rules under review as they formed part of the Constitutions of the Councils.  The opportunity had been taken to undertake a base level review of the Rules and simplify them to facilitate understanding.

Attention was drawn to Appendix 2 of the report which set out the main changes as highlighted below:

Rule 1.4 – Breaches of the Rules

Breaches of the Rules would now be reported to Committee as it was felt that councillors should be aware of breaches and consider the reason(s), such as a requirement for a change to the Rules for clarification.

Rule 1.5 – Code of Officer Conduct

This Rule needed to be clear that officers must follow all Council policies, schemes of delegation, financial procedure rules and contract procedure rules, and that failure to do so would be a disciplinary matter.  As there were some differences between the codes, alignment was sought to provide clarity.

Rule 2.3(d) - Internal Audit Annual Report

As the responsibility to approve the Internal Audit Annual Report and receive reports from the Council’s Internal Auditor was not included in the Terms of Reference of Guildford’s Corporate Governance and Standards Committee, it was felt that it should be added.

Rule 4.3(j) – New Revenue Proposals

This Rule sought the preparation of a justification in respect of all new revenue proposals with a significant financial impact, risk profile or policy change.  This would provide more visibility and clarity for Finance staff.

Rule 5.3 - Virements

Changes had been made to ensure that limits aligned across the Councils with the result that any virement with a value greater than £100,000 must be approved by the Executive to a limit of £500,000 and by Council for any greater amount.  Full details of financial limits for officers were set out in Paragraph 42 of these Rules.  It was noted that there was a typographical error concerning one of the references to the sum of £500,000 in Appendix 2.

Rule 6.2 – Supplementary Estimates

The wording ‘subject to their being no ongoing revenue implications for future years’ had been added to avoid the Councils becoming unintentionally committed financially for future years.

Rule 11.1 Materiality Limit

A Materiality Limit would be added Waverley’s Rules and set at £10,000 in line with Guildford and in accordance with a CIPFA guideline.  It was explained that the Materiality Limit was the amount that was relevant in the accounts, particularly at the year end in the event that overspends over £10,000 occurred and required explanation to assist with monitoring budget lines.

Rule 15.1 – Lease Agreements

Lease agreements for Waverley would be limited to £1,000,000 in line with Guildford’s threshold.  This limit was the whole life value of the lease and should offer a benefit to the Councils and not extend their borrowing limits.  It was agreed that after the reference to the Executive in this paragraph, the words ‘subject to the existing budget limit’ be added.

Rule 16 – Internal Trading Activities

Wording in respect of trading units had been added to the Rules for both Councils and referred to trading within the Councils.

Rule 17.2 – Risk Management

It was noted that Waverley was obliged to implement the findings of an internal risk management audit in addition to policies and strategies.

Rule 22 - Insurance

As there were currently no financial limits set out in the Rules, the Group agreed with the good practice suggestion that the Joint Strategic Director of Finance informed the relevant committees in the event that the total value of claims incurred during a financial year exceeded £200,000 in the classes of claims regarding employer liability, public liability, property, motor or other.

Rule 26 – Asset Disposal / Write-Off

As Waverley had no limit on debt write-off and the Joint Strategic Director of Finance was permitted to write-off debts to an unlimited amount, limits had been introduced and aligned to Guildford’s limits.

Rule 34.1 – Imprest Accounts

For Guildford, the Joint Strategic Director of Finance was permitted to provide bank imprest (petty cash) accounts to meet minor expenditure on behalf of the Council of up to £100 per transaction.  This limit would be applied to both Councils.

Rule 39.4 - Partnerships

This was a new section for Waverley and a strengthened section for Guildford concerning responsibility for approving delegations and frameworks relating to all partnerships and for reviewing the associated governance arrangements.

Rule 39.6 - Delegation of a Budget to a Partnership

As there was currently no delegation limit, the introduction of a limit, subject to approval by the Joint Strategic Director of Finance, up to £25,000 and in excess of this by the Executive, was suggested.

Rule 40.1 – Bidding for Grant Funding

All grant bids of up to £200,000 were subject to the prior approval of the Joint Strategic Director of Finance, who would make the application, in line with the key decision limit.  No grant application should increase revenue spending without an identified budget, and any grant for £200,000 or more would be approved by the Executive.

Rule 41.2 – Loans to Third Parties

Although loans could be provided by the Council to third parties, the delegation to officers would be deleted and the Executive would approve any such loans, in line with Waverley, with the exception of authorising car loans to officers.

The Group RESOLVED to recommend the revised Financial Procedure Rules to the Standards and General Purposes Committee (Waverley) and the Corporate Governance and Standards Committee (Guildford).