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A parish council's failings — A cautionary tale from the Smaller Authorities' Audit Appointments

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AUTHOR: MIKE ATTENBOROUGH-COX, CHAIR OF THE SMALLER AUTHORTIES' AUDIT APPOINTMENTS


A complaint was received by the external auditor from a parish council in the southwest that had received a Public Interest Report and invoice for associated charges for 2020/21. The parish council levied a precept of £10k for the past two years.

However, the previous clerk had left in January 2021, and the email address which contained the parish council name was a bt.internet account personal to the clerk, which, when the clerk departed, became dormant. The telephone number was also the personal mobile for the previous clerk, which was no longer in use.

The council website had not been updated since 2018/19 and still advertised the email and telephone number of the previous clerk. A new clerk was appointed in March 2022, although whilst the new clerk set up another email in the council's name, it was not published anywhere and was again linked to a personal Gmail account accessed only by the clerk.

Apparently and surprisingly, neither the new clerk nor the council realised they were required to complete, approve, submit and publish an Annual Governance and Accountability Report (AGAR). After no contact from the council at all for the audit year 2020/21, a Public Interest Report was issued in December 2021. No minutes appear to have been taken or published between January 2021 and March 2022, no AGAR has ever been published on the website, and the auditor's invoice for 2019/20 also remained unpaid.

Eventually, contact was made with the chair, who then complained about the Public Interest Report, although admitted no AGAR or accounts had been prepared or approved by the council. It was claimed the clerk had been under pressure, and the chair objected to the issue of a Public Interest Report and associated charges, which are now payable.

What went wrong

  1. The council did not have a generic email address despite numerous reminders by NALC, SLCC and SAAA that all smaller bodies should have a generic email address which can be accessed by council members other than the clerk.
  2. The council, surprisingly, did not complete and publish an AGAR.
  3. The council appears not to be aware of its legal responsibilities and failed to be accountable to the community it represents.
  4. Notice of Public Rights: the internal auditors' Annual Report, Governance Statement and Accounting Statements were not published hence electors' rights were frustrated.
  5. It would appear that the council's internal auditor failed in their duty (assuming the council had appointed an internal auditor) to complete the internal auditors' Annual Report, included within the AGAR, and report to the council. The internal auditors' report includes:
    • Appropriate accounting records have been properly kept throughout the financial year.
    • The authority complied with its financial regulations, invoices supported payments, approved all expenditures, and appropriately accounted for VAT.
    • The authority assessed the significant risks to achieving its objectives and reviewed the adequacy of arrangements to manage these.
    • The precept or rates requirement resulted from an adequate budgetary process; progress against the budget was regularly monitored, and reserves were appropriate.
    • Expected income was fully received based on correct prices, properly recorded and promptly banked, and appropriately accounted for VAT.
    • Petty cash payments were properly supported by receipts, all petty cash expenditure was approved, and VAT was appropriately accounted for.
    • Salaries to employees and allowances to members were paid in accordance with these authorities' approvals, and PAYE and NI requirements were applied correctly.
    • Asset and investment registers were complete and accurate, and properly maintained.
    • Periodic bank account reconciliations were properly carried out during the year.
    • Accounting statements prepared during the year were prepared on the correct accounting basis (receipts and payments or income and expenditure), agreed to the cash book, supported by an adequate audit trail from underlying records and where appropriate debtors and creditors were properly recorded.
    • The authority publishes information on a website/webpage, up to date at the time of the internal audit, in accordance with the Transparency code for smaller authorities.
    • During the previous year (2019/20), the authority correctly provided the period for the exercise of public rights as required by the Accounts and Audit Regulations (evidenced by the notice published on the website and/or authority-approved minutes confirming the dates set).
    • The authority has complied with the publication requirements for 2019/20 AGAR.

Consequences

  1. The council must pay outstanding invoices for reminder letters and the Public Interest Report, £280 plus VAT. As a result, the council will be required to have a Limited Assurance Review in 2021/22, costing £200 plus VAT, all of which could have been avoided.
  2. If the council fails to pay the outstanding invoices and statutory fees, legal action will be taken to collect the debt, and the council will incur additional charges.
  3. The community will now be aware of the council's failure, given the Public Interest Report has to be published. 
  4. A copy of the Public Interest Report will be sent to the Department for Levelling Up, Housing and Communities. 
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