STANDING ORDERS Appendix G - Financial Regulations

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Council of the Isles of Scilly Financial RegulatoryFramework (updated October 2022)

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FINANCIALREGULATIONS

FINANCIALGOVERNANCE FRAMEWORK

TheRole ofMembers

FG1

Financial Planning &Control

FG2

FinancialManagement

FG3

FinancialOversight

FG4

Financial Governance

FG5

CorePlans, Strategiesand Policesthat supportsound

financial management

Officers

FG6

TheChief ExecutiveOfficer

FG7

TheChief FinancialOfficer (Section151 Officer)

FinancialPlanning & Control

FinancialManagement

FinancialOversight

FinancialGovernance

CorePlans, Strategiesand Policesthat supportsound

financial management

FG8

StrategicDirectors

FinancialPlanning & Control

Financial Management

FinancialOversight

FinancialGovernance

Core Plans,Strategies andPolices thatsupport sound

financial management

FINANCIALAPPROVALS PROCESS

FA1

Introduction

FA2

Responsibilitiesof ChiefFinancial Officer(Section 151Officer)

FA3

Responsibilities of StrategicDirectors

Virements

Use ofReserves

Revenue budgetuplifts

Grants

Award of Tenders/Contracts

Work forThird Parties

Provisionof Non-TreasuryLoans

Write Offof baddebt

Property transactions

FINANCIALPROCEDURE RULES

SectionA –Financial Planning

Policy Framework

Strategic Financial Planning

RevenueBudget Preparation

Capital Programme

Maintenance of Reserves

TreasuryManagement

SectionB –Financial Managementand Control

FinancialProbity

Managing RevenueBudgets

Managing CapitalBudgets

AccountingPolicies

Accounting Records &Returns

Annual Statementof Accounts

SectionC –Risk Management& Audit

Risk Management& Insurance

System ofInternal Control

InternalAudit

External Audit

Anti-Fraud& Corruption

Scrutiny Committee

SectionD –Security andControl ofAssets

Assets

Property

Banking Arrangements

Loans& Investments

Trusts Fundsand Fundsheld forThird Parties

SectionE –Financial Systemsand Procedures

Financial Systems &Procedures

Contracts &Procurement

Income

External GrantFunding Bids

Gifts, Loansof Propertyand Sponsorship

Payroll

Payments toConsultants andSub-Contractors

Taxation

SectionF –External Arrangements

Partnerships

Council OwnedEntities

Grants andSponsorship tothe ThirdSector

Loans made to Third Parties – Non-TreasuryLoans/Investments

FINANCIAL REGULATIONS

Financial Regulationsset outthe keyrules forthe managementof the

Council’s financesthat mustbe observedby allofficers andMembers.

These Financial Regulations form part of the Financial RegulatoryFramework as set out in FR6, and must be read in conjunction with thedocuments setout inFR6

FR1.Allofficers andMembers must,when engagedon Councilactivities, actin theinterests ofthe Councilas awhole.

FR2.All officers and Members must adopt the highest standards offinancial probity, including declaring all relevant financial interests,in accordance with the Employee Code of Conduct or the MembersCode of Conduct to the Monitoring Officer or Strategic Director asappropriate.

FR3.Allofficers mustdeclare anyconflicts of interestin accordancewith the Employee Code of Conduct and Declaration of Interests, Giftsand Hospitality Policy. Members must declare any conflicts ofinterest in accordance with the Members Code of Conduct includingany duties and responsibilities they may have as members ordirectors of any Council Owned Entities, and where appropriate, seekthe advice ofthe Monitoring Officer.

FR4.All officers and Members have a duty to report any unlawful orpotentially unlawful spending or financial irregularity at the earliestopportunity to the Head of Audit and Electoral Services (ChiefInternal Auditor),Monitoring Officerand Section 151Officer.

FR5. The Council appoints a Chief Finance Officer under Section 151 ofthe Local Government Act 1972, who is responsible for the properadministration ofthe Council’s financialaffairs.

FR6.Allofficers andMembers mustcomply withthe FinancialRegulatory Framework established and maintained by the Section 151 Officer,including:

a. Financial Regulations

b. Financial GovernanceFramework

c. Financial ApprovalsProcess

d. Financial ProcedureRules

e. Financial Guidance

FR7.Allofficers andMembers mustact reasonablyand withinthe spiritof the Financial Regulatory Framework.

FR8.TheFinancial Regulations,the FinancialGovernance Frameworkand the Financial Approvals Process will be reviewed annually by theSection 151 Officer and where substantial changes (changes otherthan grammatical,administrative andchanges whichreflect changes in legislation) are required approval will be sought byMembers in accordance with the Council’s Standing Orders.The Financial Procedure Rules and the Financial Guidance will bereviewed annually by the Section 151 Officer who has the authorityto approve anychanges followingreview. FR9.Allactivities must be inaccordance with:

a. legislation.

b. approved Councilplans andstrategies.

c. approved RevenueBudget andCapital Programme.

d. relevant Councilpolicies.

e. all appropriateprofessional codesof practice(e.g. CIPFAcodes).

FR10.Value for money and Best Value (including Social Value) must besought in all activities, including the procurement andcommissioning of goods and services and best consideration mustbe achieved in the acquisition and disposal of assets, in accordancewith the Council’s Contract Procedure Rules, Social Value Policy andCode of Practicefor Land andProperty Transactions.[Where these policies do not currently exist they will need to be developed]

FR11.All officers and Members have a duty to maintain the security ofcouncil assets and computer systems that contain financial,commercial, andpersonal information.

FR12.All managers have a duty to identify, assess and mitigate existingand emerging risks facing the Council, in accordance with the RiskManagement Framework and ensure that there are appropriateinsurance arrangements in place to manage those unmitigatedrisks.

FR13.The Council will maintain oversight of allfinancial activitiesin linewith theFinancial RegulatoryFramework

supported by the Section 151 Officer, who delivers appropriatetransparency andreporting on thedelivery ofthis framework.

FR14.The Council’s Scrutiny Committee will keep under review its riskmanagement and internal control processes and advise the Council, as appropriate, on any changes that need to be made to strengthen financial governance. The Scrutiny Committee’s full Termsof Reference are set out in the Responsibility for Functions sectionof the Council’sStanding Orders.

FR15.The Section 151 Officer will fulfil their statutory responsibility toensure there are appropriate and adequate systems and procedureswithin the Councilto:

a. Ensure thatfinancial plansare realisticand affordable.

b. Report to the Council if they consider that it no longer hassufficient resourcesto deliver itsfinancial plans(S114 report).

c. account forall incomeand expenditure.

d. protect assetsfrom loss, waste,theft, orfraud. FR16.The Section 151 Officer has the right to be present and giveappropriate advice, at all meetings, where the Council’s financialarrangements arediscussed. Regardmust begiven to thatadvice.

FR17.Strategic Directors, under the Financial Regulatory Framework areresponsible for the control and management of all resources of allkinds, includingrevenue andcapital budgetsmade availableto them and must ensure that they and all of their staff comply with allrelevant financial guidance and controls in managing thoseresources.

FR18.Budget Holders must provide an annual assurance statement to theSection 151 Officer, in the format prescribed by the Section 151Officer, to confirm that their Service has complied withthe Financial Regulatory Framework.

FR19.All references within this document to officers include consultantsor anyoneacting on atemporary orinterim basisfor theCouncil.

FR20.The Section 151 Officer must be consulted on the financialarrangements for any Council Owned Entities or any significantchanges to them ensuring Compliance with any Article and Protocols on the Governanceof CouncilOwned Entitiesis required.

FR21.Failure to comply with the Financial Regulatory Framework may beconsidered adisciplinary offence.

FINANCIAL GOVERNANCE FRAMEWORK

TO DELIVERSOUND FINANCIALMANAGEMENT THE ROLEOF MEMBERS

The Council’s Standing Orders sets out in full the roles of Council, the Scrutiny Committee, the Governance Committee and all other Committees. The Financial Governance Framework sets out the key roleof Membersin deliveringsound financialmanagement acrossthe Council FG1.Financial Planning& Control

1. The Council sets the spending plans for The Council of the Isles of Scilly on anannual basisas advisedby the Section 151 Officer, to conform with all necessary legislationand will:

(i) Approve the Annual Revenue Budget and Capital Programmefor each financial year before the preceding 10 March,including:

a. Medium TermFinancial Plan.

b. Reserves Strategyand Policy.

c. Charging Policyand associatedfees &charges.

d. Capital Strategy and associated five-year capitalprogramme.

(ii) Approve the Council Tax base and level of Council Tax inaccordance with theLocal GovernmentFinance Act1992.

(iii) Approve the Treasury Management Strategy and associatedprudential indicators. FG2.Financial Management

1. The Council will approve significant in-year variations to the Revenue Budget or the Capital Programme, inline with the agreed thresholds set out in the Financial ApprovalsProcess. Thisincludes:

(i) Virement of significant sums of money between budgetheadings.

(ii) Substantial new additional spending not included withinRevenue BudgetPlans.

(iii) Significant variations to the Capital Programme between Services and changes to the profiled spend between financial years.

(iv) The creation or unplanned use of reserves not included withinthe approvedRevenue Budgetor Capital Programme.

(v) The carry-forwardof unspentrevenue atthe yearend.

(vi) Agreeing proposals to achieve a balanced budget during theperiod of the Medium-TermFinancial Plan. FG3.Financial Oversight

1. The Council ensuresthat financialplans arebeing deliveredeffectively andwithin availableresources byreceiving:

(i) Quarterly MonitoringReports onthe RevenueBudget andCapital Programme.

(ii) Half-yearly reports on the implementation of the TreasuryManagement Strategy.

(iii) Revenue Budgetand CapitalProgramme out-turnreports.

FG4. FinancialGovernance

1. The Council’s Scrutiny Committee, who has the following key roles inrelation to financial governance by:

(i) Agreeing the InternalAudit Planand InternalAudit Protocol.

(ii) Receiving the Head of Audit and Electoral Service (ChiefInternal Auditor) reports to the Scrutiny Committee on theimplementation of:

a. The Audit Plan and key audit findings on at least aquarterly basis.

b. The Risk Management Strategy on at least a half yearlybasis.

c. The Anti-Fraud and Corruption strategy on at least anannual basis.

FG5. CorePlans, Strategiesand Policiesthat supportsound financialmanagement

1. Where there is a requirement to do so in the Council’s Standing Ordersor in the Plan, Strategy or Policy Members will be engaged in thedevelopment of or in approving core plans, strategies and policiesthat supportsound financialmanagement including:

(i) Anti-Fraud &Corruption Strategy.

(ii) Anti-Money LaunderingPolicy.

(iii) Whistle-blowing Policy.

(iv) Risk ManagementStrategy.

(v) Contract ProcedureRules. OFFICERS

The Council’s Standing Orders set out the role of officers and theScheme of Delegation sets out the extent of their delegations. These aresupported by the Strategic Director delegations which are a supportingdocument to the Standing Orders. The Financial Regulatory Framework setsout the key roles of officers in delivering sound financial managementacross the Council. FG6.The ChiefExecutive Officer

1. The ChiefExecutive Officeris responsiblefor:

(i) The corporate and overall strategic management of the Councilas a whole.

(ii) Reporting andproviding informationto theCouncil, ScrutinyCommittee, Governance Committee and othercommittees.

(iii) Establishing a framework for management direction, style andstandards andfor monitoringperformance ofthe wholeorganisation.

(iv) Proposing the Council’s Corporate Plan toCouncil forapproval. FG7.The ChiefFinancial Officer(Section 151Officer)

1. The Chief Finance Officer has a statutory responsibility for theproper administrationof theCouncil’s financialaffairs. Fiveprinciples that define core activities and behavioursthat belongto the role of the Chief Finance Officer, have been established byCIPFA, the professionallocal authorityaccounting body:

(i) The Chief Finance Officer should be a key member of the Strategic Leadership Team, helping the organisation to develop andimplement strategyand toresource anddeliver theorganisation’s strategic objectives sustainably and in thepublic interest.

(ii) The Chief Finance Officer must be actively involved in, andable to bring influence to bear on, all material businessdecisions toensure immediateand longer-termimplications, opportunities and risks are fully considered,and alignedwith theorganisation’s financialstrategy.

(iii) The ChiefFinance Officermust leadthe promotionand deliveryby thewhole organisationof goodfinancial management so that public money is safeguarded at alltimes and used appropriately, economically, efficiently, andeffectively.

(iv) To deliver these responsibilities the Chief Finance Officermust lead and direct a finance function that is resourced tobe fitfor purpose; and

(v) The Chief Finance Officer must be professionally qualifiedand suitablyexperienced. Financial Planning& Control

2. The ChiefFinance Officerwill:

(i) Advise on the completeness of financial estimates includingRevenue andCapital Budgets.

(ii) Assess the robustness of reserves to support the RevenueBudget.

(iii) Prepare a Reserves Strategy to support the Revenue Budgetand Capital Programme. The Council shouldfollow the advice of the Section 151 Officer concerning theminimum reserve balances in accordance with section 26 ofthe LocalGovernment Act2003.

(iv) Prepare and keep under review a Medium-Term FinancialPlan.

(v) Ensure that the financial implications of the Capital Strategyand CapitalProgramme areaffordable asmeasured byPrudential Indicators.

(vi) Prepare anannual TreasuryManagement Strategy.

(vii) Ensure thatall CouncilTax calculationsaccord withstatutory requirements. Financial Management

3. The ChiefFinance Officerwill:

(i) Ensure the proper administration of the Council’s financialaffairs, including the setting and monitoring of compliancewithin financial managementstandards.

(ii) Oversee the delivery of the Revenue Budget and CapitalProgramme withinthe parametersset bythe Council.

(iii) Establish processes to ensure that any spending or virementthat exceeds the set parameters is brought for decision, asappropriate to Council.

(iv) Establish processesto prioritisecapital and revenue spendingagainst keyCouncil aims andobjectives.

(v) Establish a business case process for capital and revenuefunding bids.

(vi) Establish a gateway process for all new revenue and capitalfunding bids to ensure that they align with core council aimsand objectivesand itsCapital Strategy.

(vii) Advise, develop, and lead on plans to achieve a balancedbudget andmanage projectedmedium-term budgetdeficits. Financial Oversight

4. The ChiefFinance Officerwill:

(i) Prepare at a minimum quarterly monitoring reports on theRevenue Budgetand CapitalProgramme, includingan update on the Medium-Term Financial Plan on a half yearlybasis.

(ii) Comply withthe requirementsunder section114 ofthe LocalGovernment FinanceAct 1988which requiresthe Section 151 Officer to report Council andexternal auditif theauthority orone ofits officers,has:

a. Made orabout tomake adecision whichinvolves incurringunlawful expenditure;

b. Taken orabout totake, anunlawful decisionwhich hasor willresult ina lossor deficiency tothe Council;

c. Make anunlawful entryin the Council’saccounts.

(iii) Nominate a properly qualified member of staff to deputiseshould s/he be unable to perform the duties under Section114 personally.

(iv) Prepare a half-yearly report on the implementation of theTreasury ManagementStrategy.

(v) Prepare Annual Accounts, including the Annual GovernanceStatement (the latter in conjunction with theMonitoring Officer)in accordancewith allnecessary statutoryrequirements, andwithin statutorytimescales.

(vi) Ensure reports requesting decisions of Members will includeappropriate statementsas tothe financialand useof resource implicationsunder consideration. Financial Governance

5. The ChiefFinance Officerwill:

(i) Ensure anappropriate systemof internalcontrol existsthroughout theCouncil includingissuing thedocuments (followingany necessaryapprovals) whichmake upthe Financial Regulatory Framework as set out in FR6 to makeall officers aware of their responsibilities regarding soundfinancial management.Any breachof theFinancial RegulatoryFramework willbe reportedto Council.

(ii) Ensure thatappropriate arrangementsare inplace todeliver an effective internal audit service in line with theLocal GovernmentAct 1972,the LocalAudit andAccountability Act2014 andthe Accountsand AuditRegulations 2015(as amended).

(iii) Make appropriate arrangements for external audit in linewith the Local Auditand Accountability Act2014.

(iv) Ensure open and unfettered access for internal and externalauditors throughoutthe Council.

(v) Ensure effectiveinsurance arrangementsare inplace.

Core Plans, Strategies and Policies that support financialmanagement

6. The ChiefFinance Officerwill:

(i) In consultation with the Chief Internal Auditor, prepare and keep under review anAnti-Fraud andCorruption Strategy.

(ii) Ensure that the Risk Management Strategy highlights thefinancial impactof allrisks facingthe Counciland thisinforms financial plans.

(iii) In consultation with the Chief Executive,assess and advise on the financial aspects of people policiesand theirimpact on theMedium-Term FinancialPlan.

(iv) Ensure that the Contract Procedure Rules and procurementguidelines are followed in the ordering and procurement ofgoods andservices. FG8.Strategic Directors

1. Strategic Directorshave primeresponsibility fortheir budgetsand ultimateresponsibility forthe financialmanagement ofall resources

allocated tothem. Forthe purposesof theFinancial RegulatoryFramework, this means the Chief Executive, The Chief Finance Officer,and allStrategic Directors ofthe Council.

2. Any power conferred upon a Strategic Director may be exercised by anauthorised officer,in accordancewith theScheme ofDelegation subjectto anyexpress limitations attachedto the delegation. Financial Planning& Control

3. Strategic Directorswill:

(i) Ensure thatthe ChiefFinance Officeris awareof newservice and financial pressures that impact on the Medium-Term FinancialPlan.

(ii) Prepare realistic financial estimates for Revenue Budgetsand CapitalProjects in accordancewith financialguidance.

(iii) Sign the annual budget holder statement to confirm theresources allocated to them and that they will keep withinthese allocatedresources.

(iv) Maintain and collect sufficient performance information toassess thefinancial impact of changing demand forthe service.

(v) Prepare Comprehensive Impact Assessments fortheir areasof responsibilityand forany proposalsfor major change.

(vi) Prepare plansand strategiesthat supportthe CapitalStrategy.. Financial Management

4. Strategic Directorswill:

(i) Ensure that net expenditure (revenue and capital) in theirareas of responsibility does not exceed the annual budgetsset for theirservices and projects.

(ii) Ensure thateach budgethas adesignated budgetholder andthat eachcapital projecthas adesignated projectmanager.

(iii) Ensure that monitoring and forecasting of in-year spendingis realisticand accuratelyreflects currentand futuredemand andcommitments for theservice.

(iv) Comply withall financialguidance concerningthe preparationof businesscases andthe gatewayprocess.

(v) Ensure thatthe financialimplications ofdecisions areincluded withinany reportseeking additionalin-year revenue or capital funding and have been agreed with theSection 151 Officer.

(vi) Complying withall financiallimits concerningthe virementof budgetsor thein-year approvalof newcapital andrevenue spending.

(vii) Developing andimplementing plansto contributeto abalanced budget as part of the overall budget managementstrategy led bythe Chief Finance Officer.

(viii) Ensuring theidentification, reconciliation,recording andsecurity ofall income due/received.

(ix) Ensuring thesecurity, custody,and managementof allassets. Financial Oversight

5. Strategic Directorswill:

(i) Ensure that all expenditure is lawful (intra vires), has beenproperly authorised and all necessary processes have beencomplied with.

(ii) Ensure thereare adequatecontrols andprocedures inoperation within theirdirectorate.

(iii) Each StrategicDirector mustreport tothe MonitoringOfficer and the Chief Finance Officer where there is doubtover thelegality ofproposed, oralready incurred,expenditure and oractions.

(iv) Comply with all financial procedures and requirements tomaintain accurateand comprehensivefinancial records.

(v) Observe all year end processes and timetables to preparefinancial information to be consolidated within the Council’sstatement ofaccounts, includingrobust andevidence- basedforecasting ofspend aspart ofthe closedownprocess. Financial Governance

6. Strategic Directorswill:

(i) Co-operate and engage effectively with Finance to ensurethat they are involved in all key financial decisions affectingthe directorate.

(ii) Ensure they have appropriate organisational structures inplace toachieve effectivefinancial administrationin thefulfilment of their service responsibilities and to comply withthe financialregulatory environment.

(iii) Ensure they have effective financial systems, processes andprocedures in place that meet the requirement of the ChiefFinance Officer.

(iv) Ensure that all their officers receive up to date financial andsystems trainingto properlyperform theirduties.

(v) Provide open and unfettered access to internal and externalauditors.

(vi) Implement agreed internal audit recommendations withinagreed timescales. Core Plans, Strategies and Policies that support sound financialmanagement

7. Strategic Directorswill:

(i) Ensure that designated risk owners are appointed for allrisks identifiedand managedwithin theirdirectorate inaccordance with theRisk ManagementFramework.

(ii) Ensure thatappropriate insuranceis inplace.

(iii) Prepare and keep under review the plans, strategies andpolicies setout in FG5.

Financial Approvals Process

FA1.Introduction

1. The Financial Approvals Process sets out the thresholds for financialdecisions across The Council of the Isles of Scilly and will be kept under annualreview bythe Council.

2. The Financial Approvals Process seeks to ensure that the Council isagile in its decision making and that decisions are made at thelowest possiblelevel.

3. At the same time the Financial Approvals Process acknowledges thatthere will be decisions that the Council will wish to makebecause of the scale of financial commitment involved and theoverall impacton Council finances.

FA2. Responsibilitiesof ChiefFinance Officer(Section 151Officer)

4. The Chief Finance Officer has ultimate responsibility for ensuringthat the financial thresholdsare followed.

5. This means that they must make sure that the right financialdecisions reach Council for approval in line with theFinancial ApprovalsProcess.

6. They areresponsible foradvising theCouncil on theapplication ofthese thresholds and reviewing them on an annual basis, inconsultation withthe MonitoringOfficer.

7. They mustalso ensurethat thethresholds areconsistent withthe

Council’s Standing Ordersand Schemeof Delegation.

FA3. Responsibilitiesof StrategicDirectors

8. All Strategic Directors must make sure that they have effectivearrangements in place to comply with the Financial ApprovalsProcess.

9. Strategic Directors must, always, operate within the spirit of theFinancial Approvals Process.

10. Strategic Directors have a duty to ensure that they have takenappropriate advice and guidance, including financial advice and,where appropriate, legal and human resources advice, before theymake decisions inline with theFinancial ApprovalsProcess.

11. Strategic Directors may delegate budget management and decisionmaking within their Directorate, but they remain responsible forensuring thatthese arrangementsare followed effectively.

12. The Strategic Director will remain accountable for any delegateddecision under theirdelegations.

Virements

StrategicDirectors

Section151 Officer

Council

Comments

Authorise transfer offunds between budget heads orbetween services under a Strategic Director for amountsup to £25,000

For amounts between £10,000 and £25,000 theaction be agreed with the Section 151Officer, a report produced by theSection 151 Officer and theStrategic Director, and that theSection 151 Officer notifiesCouncil of the transaction.

Strategic Directorsare able to onward delegatein line

with the Scheme of Delegation.

Please refer to therelevant Strategic Directordelegations.

Virement of Sumsover £25,000

Is over £50,000 or ismaterially outside ofBudget and PolicyFramework andrepresents a considerablechange to one or moreservices following arecommenda tionmade by

Council

Report to be prepared by the Section 151Officer and the relevant StrategicDirector

Useof Reserves

StrategicDirectors

Section151 Officer

Council

Comments

Authorise the creationof anew reserve

Unlimited when it is not materiallyoutside of Budget andPolicy Framework andit does not represents aconsiderable change to oneor more services

When it is materially outside ofBudget and PolicyFramework andrepresents a considerablechange to one or moreservices

Authorise the use ofearmarked reserves for their intendedpurpose.

Unlimited when it is not materiallyoutside of Budget andPolicy Framework andit does not represents aconsiderable change to oneor more services

When it materiallyoutside of Budget andPolicy Frameworkand it represents aconsiderable changeto one or more services orconsidered appropriateby the Section 151Officer or MonitoringOfficer.

The Section 151 Officer is required to report toCouncil on the use of budgetedreserves.

A reportto Councilis required on the use ofunbudgeted earmarkedreserves.

The Section151 Officer is able toonward delegate in linewith theScheme ofDelegation.

Please refer to therelevant Strategic Directordelegations.

Authorise the use ofthe General Fund Reserve

Unlimited

The Section 151 Officer isrequired to report on theuse for the General FundReserve.

Revenue budgetuplifts

StrategicDirectors

Section151 Officer

Council

Comments

Authorise theincrease torevenue incomeand expenditure budgets, due to thereceipt of additional funding, includinggrants, internal recharges or fromearmarked reserves.

Up to

£10,000

when it is not materiallyoutside of Budget andPolicy Frameworkand doesnot represent aconsiderable change toone or more services

Over £10,000

When is materiallyoutside of Budget andPolicy Frameworkand represents a considerablechange to one or moreservices

If funding is fromearmarked reservesappropriate approval for theirdrawdown is also required as set outin the Use of Reserves sectionabove.

The Strategic Director who holds the post of Section151 Officer is able toonward delegate in linewith theScheme ofDelegation.

Please refer to therelevant Strategic Directordelegations

Grants

Strategic Director

Section151 Officer

Council

Comments

Provision ofa grantto athird partyup to £2,000

Where likelyto be adverseimpact on CouncilPolicy or ServiceProvision

Strategic Directorsare ableto onwarddelegate in line withthe Schemeof Delegation.

Please referto therelevant Strategic Directordelegations.

Provisionof agrant to

Wherelikely tobe adverse impacton Council Policy or Service Provision

Theprovision

a thirdparty over

must bewithin

£2,000 upto

available Budget.

£10,000

Requires Strategic

Director

Advice

to betaken from

the Monitoring

Officer andthe

Section 151

officer.

Strategic Directorsare able to onward delegate in linewith theScheme ofDelegation.

Please refer to therelevant Strategic Directordelegations.

Provisionof agrant in

Over£10,000

excess of£10,000

or ismaterially

outside of

Budget and

Policy

Framework and

represents a

Considerable

change to one or

more services

Application for and Receipt ofgrant

Up to

£50,000

and is not materially outside ofBudget and PolicyFramework anddoes notrepresent a considerablechange to one or moreservices

Over £50,000 or is materially outsideof Budget andPolicy Framework andrepresents a considerablechange to one or more services

Award of Tenders/Contracts

StrategicDirector

Section151 Officer

Council

Comments

Authorise Contracts valued upto £100,000

Strategic Directors are ableto onward delegate in linewith the Scheme ofDelegation.

Please refer to therelevant Strategic Directordelegations.

Authorise contracts valued between£100,000 -£250,000

Strategic Directors are ableto onward

delegate in line with the Scheme ofDelegation.

Please refer to therelevant Strategic Directordelegations.

Authorise contracts valuedin excessof £250,000

As recommended by the Section 151Officer

Work for ThirdParties

StrategicDirector

Section151 Officer

Council

Comments

Authorise work valuedup to£10,000

Strategic Directors are ableto onward delegate in linewith the Scheme ofDelegation.

Please refer to therelevant Strategic Directordelegations.

Authorise work valuedover £10,000- £50,000

Strategic Directors are ableto onward

delegate in line with the Scheme ofDelegation.

Please refer to therelevant Strategic Directordelegations.

Authorise work valuedin excessof £50,000

As recommended by the Section 151Officer

Provision of Non-Treasury Loans

StrategicDirector

Section151 Officer

Council

Comments

Upto £25,000

The Section 151 Officer can authorise wherethere is no adverse impact on CouncilPolicy or service deliveryand canbe funded fromapproved budgets. Must also complywith the non- treasury loanguidance in the approved TreasuryStrategy.

The Strategic Director who holds the post of Section151 Officeris able

to onwarddelegate

in line with the Scheme of Delegation.Please refer to therelevant Strategic Directordelegations.

Morethan

£25,000

Over

£25,000

WriteOff ofbad debt

Strategic Director

S151

Officer

Council

Comments

Writeoff debtsup to

£5,000

Strategic Directorsare able to onward delegate in line withthe Scheme of Delegation. Pleaserefer to the relevant Strategic Directordelegations.

Writeoff debts between

£5,001 -£10,000

In consultation with the Chairman and Vice-chairman

Write offdebts over

£10,000

On recommendationof Section 151 Officer

Propertytransactions

StrategicDirector*

Section151 Officer

Council

Comments

Acquisitions(freehold or

And within Budget and PolicyFramework

Incompliance with

premium) upto

the Scheme of

£20,000

Delegation, the Code

of Practice for Land

and Property

Transactions and any

relevant Strategic

Director Delegations.

StrategicDirectors

are ableto onward

delegate inline with

the Scheme of

Delegation, please

refer tothe relevant

Strategic Director

delegations.

Acquisitionsup to

£20,000 per annumleasehold

And withinBudget andPolicy

Framework

Asabove.

Disposals up to £20,000 (freehold orpremium)

üAnd within Budget and

Policy Framework

Asabove.

Disposalsup to

£20,000 per annumleasehold

üAnd within Budget and

Policy Framework

Asabove.

All other Acquisitionsand Disposals above these limits or withinthese limits where it is considered appropriateto refer to Council by the relevant StrategicDirector with responsibility forProperty.

Unlimited

On recommendationof the Strategic Director withresponsibility for Property.

In compliance withthe Code of Practice on Land and PropertyTransactions.

* TheStrategic Directorwith responsibility forProperty.

FINANCIAL PROCEDURE RULES

A FINANCIAL PLANNINGRULES

This sectionsets outhow The Council of the Isles of Scillywill establishviable and legal financial plans that deliver its policy priorities as set outwithin its Policy Framework. The rules cover the development ofsustainable financial plans for The Council for both day-to-day (revenue)spending andmore long-term(capital) spending.In addition, they also consider how this spending will be financedfrom reserves or long-term funding and investments (TreasuryManagement).

FinancialRules

Description

PolicyFramework

Sets out the overall arrangements thatenable theCouncil toset alegal budgetand howthis enablesit toachieve its BusinessPlan outcomesand objectives.

Strategic Financial Planning

How the Council plans to deliver soundfinances over the medium to long term.It sets out the specific requirements fora Medium-TermFinancial Plan and CapitalStrategy.

Revenue Budget Preparation

The arrangementsfor preparingthe AnnualRevenue Budget.

CapitalProgramme

The arrangements for preparing theCapital Programme including profiled cashflows byfinancial year.This includesmanaging a list of aspirational projects/programmes, and that a gateway process ensures strategicOutline Business Cases (proportionate to size of project but large projects will be in accordancewith HM Treasury Green Book on Appraisal and Evaluation) are in placebefore projects/programmes are considered for inclusion into the CapitalProgramme and a prioritisation process to assessthe relative meritsof competingcapital projects.

Maintenanceof Reserves

Thisincludes therequirement fora

Reserves Strategyand setsout thearrangements forestablishing and

managing reserves.

TreasuryManagement

How the Council manages short termcashflow aswell aslonger-term fundingand investments and the associated reporting requirementsfor the

Prudential Code ofPractice Indicators.

Policy FrameworkRules

Rule A1.1The Council must have due regard to the Section 25 report ofthe Section151 Officer,which coversthe robustnessof estimates and the adequacy of reserves, prior to approving theannual revenue budget and capital programme for The Council of the Isles of Scilly.

Rule A1.2The Section 151 Officer must ensure that the Revenue Budgetand CapitalProgramme aresupported bya robustpolicy framework:

(i) Budget Strategy andMedium-Term FinancialPlan (MTFP), which sets out the availability of financial resourcesand how these will be allocated over the medium-term tosupport the delivery of the Business Plan including serviceplans andkey priorities.

(ii) Reserves Strategyshowinghow thereserves willbe managedduring theperiod ofthe BudgetStrategy andMedium-Term FinancialPlan andhow theCouncil willmaintain adequatereserves tomanage therisks thatit faces.

(iii) Capital Strategyshowingthe rationalefor itsCapital Programmepriorities, howthe Councilwill investin themedium tolong termand howthat investmentis bothsustainable andaffordable.

(iv) Treasury Management Strategy showing how the Councilplans to fund its short term cashflow and longer-term capitalinvestment andthe affordabilityof that funding. Strategic FinancialPlanning Rules

Rule A2.1The Council will review its Policy Framework on a regular basisand update its Medium-Term Financial Plan on an annual basissetting outits medium-termservice objectivesand anassessment ofthe consequentialfinancial revenuebudget implications.

Rule A2.2All Budget Holders should act promptly to alert Finance of anynew or emerging budget pressures that could impact on futurefinancial plansand thedelivery ofthe currentyear’s budget.

Rule A2.3The Medium-Term Financial Plan should be prepared by theSection 151 Officer, and be sufficiently detailed to include theimpact of:

(i) Demographic changes.

(ii) Future serviceneeds.

(iii) National pressuresand requirements.

(iv) Current spendingpressures and budgetprojections.

(v) Economic factorse.g. inflation,interest rates.

(vi) Future fundingincluding governmentgrant andprecept.

(vii) The financialimpact of capitalprogramme investment.

(viii) Planned savingsprogrammes.

(ix) The planneduse ofreserves andoverall reserves levels.

(x) Varying keyassumptions (e.g.economic factors).

Rule A2.4 The Council will develop and keep under review an overallCapital Strategysetting outplans forcapital investments,maintenance of assets and financing for the medium and longterm.

Rule A2.5The Council will keep under review key plansand strategiesthat supportthe Capital Strategy.

Rule A2.6All plansand strategiesproduced bythe Councilshould address the financial implications of what is proposed and beclear onhow thesefit withresource prioritiesand availability.

Revenue BudgetPreparation Rules

Rule A3.1The Section 151 Officer, prior to developing revenue budgetproposals, willconsult theCouncil onrevenue budget projections and potential options to close revenue budget gapsincluding:

(i) the deliveryof savings

(ii) the use ofreserves

(iii) council taxlevels

Rule A3.2The Section151 Officerwill advisethe Councilon theframework andtimetable forpreparing detailedbudgets. Capital ProgrammeRules

Rule A4.1The Capital Strategy will include approved criteria and rationalefor investmentdecisions. Allcapital projectsover the

prescribed thresholdwill besubject toa gatewayprocess thatincludes:

(i) A statementof keydeliverables andbenefits

(ii) An assessmentshowing howthe projectwill deliverthe CapitalStrategy priorities

(iii) A fullassessment ofproject coststogether withongoing runningcosts

(iv) A riskassessment including projectdelivery

(v) Clear deliverytimescales.

Rule A4.2The Section151 Officerwill establisha prioritisationand gatewayprocess toassess therelative priorityand deliverabilityof newcapital projects/programmesprior toinclusion within the proposed Capital Programme. The CapitalProgramme will monitor through a number of gateways theprogress ofprojects/programmes toensure theyhave therequisite fullbusiness casein placebefore construction/deliverycan commence.

Rule A4.3The Section 151 Officer will maintain and keep under review aCapital Programme that covers a minimum of five years thatshows the full capital cost of projects over the five-year periodand therevenue implicationsfor eachof thosefinancial years. Maintenance ofReserves Rules

Rule A5.1The Section 151 Officer will prepare and keep under review aReserves Strategy, informed by a risk-based assessment of thefinancial risksfacing theCouncil.

Rule A5.2The Council will agree for each reserve the extent, usage, andoverall level of reserves, on recommendation by the Section151 Officer,as partof theannual budgetsetting process.

Rule A5.3The authorisation requirements for the use of reserves duringthe year isset outin theFinancial ApprovalsProcess.

Rule A5.4No reservesmay becreated withoutthe approvalof the Section 151 Officer or Council in accordance with the Financial ApprovalsProcess. Treasury ManagementRules

Rule A6.1 The Section 151 Officer isresponsible forall TreasuryManagement activity and forensuring the affordabilityand sustainabilityof theCapital Programmeas setout inthe CapitalStrategy.

Rule A6.2 The Section 151 Officer will prepare and keep under annualreview aTreasury Management Strategy.

Rule A6.3 The Section 151 Officer will report on Prudential Indicators as partof thebudget process toCouncil.

Transparency &Reporting

Rule A6.4 The Section 151Officer will report on at least a half yearlybasis on the operation of the Treasury Management functionand all decisions taken in line with the Treasury ManagementStrategy to Council.

Rule A6.5 The Section 151 Officer will provide a half yearly report on Prudential Indicatorsto Council.

B FINANCIAL MANAGEMENTAND CONTROL RULES

This section sets out the rules for managing the budget on a day-to-day basis along with the requirements for financial reporting,including the AnnualStatement of Accounts.

FinancialRules

Description

Financial

Probity

Sets the financial principles whicheveryone responsiblefor financeand involvedin financialmanagement isexpected to operate.

Revenue cover thespending services.

Budgets –day-to-day on Council

Sets out the frameworks against whichDirectorates willmanage day-to-dayspending as set out within the revenue budget. Thisincludes: -

(i) arrangementsfor movingbudgets (virement)between budgetheads

(ii)the extent of flexibility for Directoratesto approvenew itemsof spendingwithout reference to Council,including spendingcovered byadditional income orrecharges.

(iii) arrangements for requesting to carryforward unspent monies at the end of the year.

(iv) Regularquarterly reportingof therevenue budget position.

Capital Budgets – coverspending ofa morelasting naturesuch asinvestment inland andbuildings aswell asinformation technology.

Sets outthe frameworkfor administeringthe capitalprogramme ona day-to-daybasis including:-

(i) Movingcapital moniesallocated fordelivering specificstrategies

(ii)Flexibilityto acceptcapital tenderswithin 10%of thecapital allocation

(iii) Arrangementsfor amendingthe planned profile spend on portfolio’s andprojects.

(iv) Reportingarrangements forthe capitalprogramme and projects.

Accounting Policies

The choiceof prepare the accounts.

accounting policies annual statement

to of

Accounting Returns

Records

Therequirement forkeeping accurate

financial recordsfor financialreporting andfor claimingfunding and grants.

Annual

Statement

The arrangementsfor preparingand

Accounts

approving annualaccounts.

Financial ProbityRules

Rule B1.1No decisions in line with the Financial Approval Process can betaken unlessthere isa clearexplanation ofthe financialimplications of that decision and these implications must beapproved by the Section 151 Officer or as otherwise set out inthe Scheme of Delegation.

Rule B1.2A record should be kept of all financial decisions under ruleB1.1. abovein aformat agreedby theSection 151Officer.

Rule B1.3Clear segregationof dutiesmust bemaintained betweenofficers involved in:

(i) raising of invoicesand collectingcash sums

(ii) overseeing cashtransactions, includingreconciliations, whoshould notbe involvedin theunderlying cashtransactions.

(iii) ordering goodsand servicesand theapproval ofthe paymentof any associatedinvoice. RevenueBudget Rules (forCapital Programmeplease referto rulesB3 below) BudgetHolders

Rule B2.1Each Council budget must have a designated budget holder,who isresponsible andaccountable forthe management of that budget.Responsibility forbudgetary controlwill bedelegated in linewith theScheme of Delegation.

Rule B2.2Spending can only be committed against an approved budgetand forthe purpose setout withinthat approved budget.

Rule B2.3Budget Holders must notifythe Section 151 Officer, promptly, if they consider that current and future in-year commitmentsare likely to exceedthe approvedbudget. VirementRules (Revenue)

Rule B2.4Virements must not result in an overall increase in DirectorateBudgets without the approval as set out within the FinancialApprovals Process.

Rule B2.5 Strategic Directors may move money between budget heads,within their directorate subject to the limits within the FinancialApprovals Processand theirrespective StrategicDirector delegations.

Approval ofAdditional In-YearSpending (Revenuebudget uplifts)

Rule B2.6The Section 151 Officer may approve new in-year spending inline withthe Financial ApprovalsProcess providedthat:

(i) Where the additional spending is covered by additionalincome the incomeprojections arerealistic.

(ii) Where the additional spending is covered by rechargesthere aresufficient resourceswithin therecharged budget to meetthe recharge.

(iii) Where the additional spending is covered by grants thereis sufficientgrant tocover the spend.

(iv) The new spending does not create on-going pressures forfuture years.

Rule B2.7All new in-year spending outside the prescribed criteria inB2.6[and above the threshold set out in the Financial ApprovalsProcess] will require a business case in a format agreed by theSection 151 Officer and will require approval by Council. CarryForward Arrangements(Revenue)

Rule B2.8Strategic Directors must provide the Section 151 Officer with aclear justification for the carry-forward of any un-spent moniesat the endof the financialyear.

Rule B2.9Carry-forwardof un-spentrevenue budgetswill beconsidered byCouncil, asadvised bythe Section 151 Officer.

Transparency &Reporting (Revenue)

Rule B2.10The Section 151 Officer will produce formal budget monitoringreports forCouncil onat leasta quarterlybasis, thatshow:

(i) The overall financial positionfor the current year’s budget

and theprojected yearend surplusor deficit.

(ii) Clear explanationsfor anyforecast variances.

(iii) Management actionsrequired toreduce anyadverse variance(where applicable).

(iv) All virements up to£100,000 between budget headsmade underdelegated authority.

(v) Any proposed budget virements above delegatedauthority levels forapproval.

(vi) A scheduleof allnew in-yearspending approvedover

£10,000made underdelegated authority.

(vii) Any proposed new in-year business cases for approval.(viii)A scheduleof allnew in-yearuse ofreserves approved underdelegated authority.

(ix) Any proposed changes to the use of reserves forapproval.

(x) Any proposalto createnew reservesfor approval.

Rule B2.11The Section 151 Officer will meet with the Lead Member for Finance on a monthly, basis to provide an update on the latestbudget position.

Rule B2.12The Section 151 Officer will inform the Chairman, Lead Member for Finance and the Chief Executive immediately if it is projectedthat overall Council spending is likely to exceed the allocatedbudget. Capital ProgrammeManagement Rules

(for RevenueBudget pleaserefer toRule B2above)

Rule B3.1A designated project, programme manager or Senior Responsible Officer shall be assignedto everyproject/programme within the capitalprogramme.

Rule B3.2Capital spending can only be committed within the approvedbudget and for the purpose set out within the approved capitalbudget.

Rule B3.3Capital reserves may only be used for the purpose agreed bythe Council.

Variations tothe Capital Programme

Rule B3.4Strategic Directorsmay approvevirements betweencapital sschemes,subject tolimits setout withinthe FinancialApprovals Process and consultation with the Section 151 Officerand provided that they do not impact on the total resourcesavailable to deliver individualstrategies.

Rule B3.5All capital virements above the level outlined in B3.4 or thatimpact on the delivery of more than one service must bereferred to Councilfor a decision

Approval ofIn-Year Spending(Capital)

Rule B3.6All new in-year additions to the capital programme require theapproval ofthe Council.

Rule B3.7A strategic outline business case (format dependent on size of project) must be prepared for all newcapital projects/programmes in a format agreed by the Section151 Officer. RuleB3.8Council will considerall strategicoutline businesscases for newcapital projects.

Carry Forward Arrangements/changes to profiled spend(Capital)

Rule B3.9 Strategic Directors must provide a clear justification to theSection 151Officer ofchanges tothe profiledspend byfinancial year of acapital scheme.

Rule B3.10Changesto theprofiled spendof acapital schemewill beconsidered byCouncil asadvised bythe Section151 Officer.

Transparency &Reporting (Capital)

Rule B3.11The Section 151 Officer will provide quarterly capitalmonitoring reports to Councilthat show:

(i) The overall financial position for the current year’s capitalprogramme includingprojected movementbetween profiledspend, and potential slippage.

(ii) All movementsbetween capital schemes.

(iii) A schedule of all new in-year strategic outline businesscases approved.

(iv) The projected level of any under or over-spending withincapital schemes atthe end ofthe financial year.

Accounting Policies Rules

Rule B4.1The Section 151 Officermust advise Council on the appropriate accounting policies to be used to prepare theAccounts.

Rule B4.2The Section151 Officermust followappropriate codesof practice and accounting policies when preparing the statementof accounts for The Council of the Isles of Scilly. Accounting Records &Returns Rules

Rule B5.1All financial transactions must be recorded accurately and indetail.

Rule B5.2All primedocuments that support financial transactions mustbe retainedin accordancewith anylegislative orother requirements.

Rule B5.3 Officers must comply with the requirements of grant conditionsand associateddeadlines for submittinggrant claims. Annual Statementof AccountsRules

Rule B6.1The Section 151 Officer must prepare a statement of accountsthat complieswith theCode ofPractice onLocal Authority Accounting in the UnitedKingdom.

Rule B6.2The accounts will be prepared based on the accounting policiesdetermined by the Section 151 Officer and should be consistentwith anystatutory requirementsand incompliance withaccepted UKaccounting practice.

Rule B6.3The Section151 Officermust establisha timetablefor preparing the accounts to ensure that they meet all statutorydeadlines for the preparationof accounts.

Rule B6.4All officersmust complywith theAccounting Policiesand timetable set by the Section 151 Officer for the preparation ofAccounts.

Rule B6.5The Section 151 Officer must present the Council Accounts andassociated AnnualGovernance Statement,to Councilfor approval.

Rule B6.6The Section 151 Officer shall provide all necessary financialinformation to meet the requirements for Whole of GovernmentAccounts.

C RISK MANAGEMENT& AUDIT

This section sets out the controls that the Council will establish tomanage the organisational and financial risks that they face.This includes the governance and external oversight arrangements andhow theywill protectagainst Fraudand Corruption.

FinancialRules

Description

Risk Management& Insurance

The requirementto identifyand

mitigate major risks along withassociated insurancearrangements.

System of InternalControl

The requirement for an AnnualGovernance Statement explaining the appropriate systems and frameworks that have been put in place to ensuresound financial management of resources on a day to day basis.This includes the requirement to report anypotentially fraudulentor unlawful spendingat theearliest opportunity.

Internal Audit

The rolesand responsibilitiesof internalaudit and how it supports the system ofinternal control.This alsohighlights the requirement for managers toimplement agreedinternal audit managementactions (AMAs).

External Audit

The requirementfor externalaudit andits rightsof access.

Anti-Fraud& Corruption

The arrangements in place to protectagainst fraudand corruptionincluding theresponsibility of allofficers to

report suspectedfraud andfinancial irregularity

Scrutiny Committee

The Council’s establishment of a Scrutiny Committeeand howthis contributesto soundFinancial Governance.

RiskManagement andInsurance Rules

Rule C1.1 All managers and senior officersare requiredto highlightmajor risks that may impact on the Council in accordance withthe RiskManagement Framework.

Rule C1.2 Strategic Directors are responsible for the strategic risks butmust also designate risk owners for all other key risks with theresponsibility tokeep theirallocated risksunder review,identify andimplement arrangementsto mitigatethem.

Rule C1.3 The Section 151 Officer will prepare and keep under reviewannually aRisk ManagementFramework, wheresignificant changes are required approval will be sought from Council.

Transparency &Reporting

Rule C1.4 The Chief Executive must providethe Scrutiny Committee with updates on the Strategic Risks for The Council of the Isles of Scilly Council on aquarterly basisincluding:

(i) Actions beingtaken tomitigate current risks.

(ii) Risks thatcan nowbe closed.

(iii) New andemerging risks. Systemof InternalControl Rules

Rule C2.1 The Section 151 Officer will produce an Annual GovernanceStatement inconsultation withthe ChiefExecutive andMonitoring Officer, Strategic Directors and the Chairman of theCouncil. Thiswill include:

(i) A review of existing governance arrangements and anypreviously agreedactions toimprove governancearrangements.

(ii) A review of the system of internal control based on theannual opinions ofthe internaland externalauditors.

(iii) An actionplan settingout anyfurther actionsthat maybe requiredto improvegovernance arrangements. Internal AuditRules

Rule C3.1 The Council must maintain an adequate and effective internalaudit of their affairs in line with the Local Government Act1972, the Local Audit and Accountability Act 2014 and theAccounts and AuditRegulations 2015as amended.

Rule C3.2 Internal Audit may enter at a reasonable time any Council of the Isles of Scilly premisesor land;and

RuleC3.3Haveaccess to records, documents and correspondencerelating toany transaction ofthe Council; and Rule C3.4Review any activity ofthe Council; and Rule C3.5Require and receive suchexplanations asare necessaryconcerning any matterunder examination; and

Rule C3.6 Require any officer or contractor of the Council, or any officer or contractor to account for any asset under his/her control forwhich the Councilis responsible.

Rule C3.7InternalAudit shall havedirect accessto: -

(i) Chief Executive

(ii) Section 151Officer

(iii) All levelsof management

(iv) Members.

Rule C3.8 The Head of Audit and Electoral Services of Cornwall Council (Chief InternalAuditor) must prepare an annual audit plan in consultation withthe Section 151 Officer and agreed by the Chief Executive,Council Leadership Team, and Monitoring Officer for review by the Scrutiny Committee. AuditAgreed ManagementActions (AMAs)

Rule C3.9 All relevant officers within the Council are required to implement AMAs within agreed timescales and haveresponsibility for reporting on their status via the Internal AuditSoftware where required. Transparencyand ReportingArrangements

Rule C3.10The Head of Audit and Electoral Services of Cornwall Council (Chief Internal Auditor) must report on a regular basis, no less than halfyearly tothe Scrutiny Committeeon

(i) the deliveryof theinternal auditplan

(ii) the outcomeof internalaudit reviews.

Rule C3.11The Head of Audit and Electoral Services of Cornwall Council (Chief InternalAuditor), will report to every Scrutiny Committee.A core function of the Scrutiny Committee is to receive updates on the work of Internal Audit including key findings,issues of concern and actions in hand as a result of InternalAudit work. Specifically, audits with the opinion of LimitedAssurance or NoAssurance, withhigh or a veryhigh-risk assurance outcome will always be reported to the ScrutinyCommittee, together with associated agreed managementactions (AMAs).

Rule C3.12The relevant Strategic Director is required to provide anupdate six months (or earlier if specifically requested) to theScrutiny Committee on progress in regard to the AMAs onlimited/no orhigh/very highassurance reviews.

Rule C3.13The Head of Audit and Electoral Services of Cornwall Council (Chief InternalAuditor) must provide an annual opinion on the overalladequacy and effectiveness of the Council’s controlenvironment, disclosing any qualification to that opinion,together with the reasons for the qualification. The annualopinion should:

(i) Summarise the audit work from which the opinion isderived, including reliance placed on work by otherassurance bodies.

(ii) Draw attention to any issues that the Head of Audit andElectoral Services (Chief Internal Auditor), judgesparticularly relevant to the preparation of the AnnualGovernance Statement.

(iii) Compare the work undertaken against that planned andsummarises the auditperformance.

(iv) Comment on the Head of Audit and Electoral Services(Chief Internal Auditor), compliance with the CIPFACode of Practice for Internal Audit in Local Governmentin the UK2006. External AuditRules Rule C4.1TheCouncilmustappointexternalauditors inline withthe LocalAudit andAccountability Act2014. Rule C4.2Theexternalauditorhasthe rightto accessall documentsand information necessary foraudit purposes.

Rule C4.3 The external auditor shall havedirect accessto Council and report to them the key findings on the Audit ofthe Council’saccounts. Anti-Fraud andCorruption Rules

Rule C5.1 All officers must display the highest standards of probity andintegrity inline with the Anti-fraudand Corruption Policy.

Transparency andReporting

Rule C5.2The Head of Audit and Electoral Services Cornwall Council (Chief InternalAuditor), willreport annuallyon theimplementation ofthe Anti-fraud andCorruption Policy. Scrutiny Committee

Rule C6.1The Council’s ScrutinyCommittee willliaise withthe Section151 Officer and Head of Audit and Electoral Services (ChiefInternal Auditor) and keep under review the Council’sarrangements for financial control.

D SECURITY ANDCONTROL OFASSETS RULES

These rules concern the control of all assets both physical (e.g.land and buildings) and financial assets in the form of loans andinvestments.

FinancialRule

Description

Assets –items suchas stockand storesas well

as IT equipment andvehicles

Requirements for keepingasset recordsalong with specific requirements for

stocks, stores, and intellectualproperty.

Property – land &buildings.

Detailed arrangementsfor managingproperty assets, including the acquisitionand disposalof assets.

Banking Arrangements

The arrangementsfor operatingbank accountsincluding moneylaundering requirements.

Loans& Investments

This sectionsets outthe requirementfor managingloans and investments,

which are all under the control of T The Council of the Isles of Scilly.

TrustFunds andFunds heldfor Third Parties

Arrangements that needto beput inplace for operating voluntary funds.

AssetRules AssetRegister

Rule D1.1 The Section 151 Officer will maintain and keep up to date anAsset Registerthat detailsall councilassets, includingproperty.

RuleD1.2Officersmaynotuse anycouncil asset for personaluse withoutproper authority.

Rule D1.3 Strategic Directors must seek advice from the Section 151Officer andMonitoring Officerwhere assetsare tobe transferredor predominatelyused byan externalparty, includingany ofthe Council’sowned andcontrolled entities.

AssetManagement

Rule D1.4 All officers have a responsibility to ensure and maintain the physicalsecurity ofthe assets that theyhold.

Rule D1.5 The Section 151 Officer mustput inplace appropriatearrangements to value assets and keep asset values up to dateas agreed. Stocksand Stores

Rule D1.6 All stocks and stores will be kept in the name of The Council of the Isles of Scilly.

Rule D1.7 An inventory will be maintainedfor allindividual itemsin excessof £1,000.

Rule D1.8 Strategic Directors willensure anannual stocktakeof allinventory items.

IntellectualProperty Rights

Rule D1.9 The Council will retain the rights for all intellectual propertycreated by officers in the course of their work for The Council of the Isles of Scilly. RuleD1.10Officersmay notcarry outprivate workduring Counciltime. Property Rules

Rule D2.1 All decisions onstrategic management,acquisitions, anddisposals mustbe consistentwith theCouncil’s Codeof Practice forLand andProperty Transactions.

Rule D2.2 Plans for a significant rationalisation or expansion of the estate and provision for its maintenance should be included in theCapital Strategy. The plans shall contain revenue and capitalimplications along with theimpact of theestate changes.

RuleD2.3Thepurchaseand disposalof landand propertyshall havedue regardto:

(i) Any appropriateextant professionaladvice.

(ii) Appropriate professionaland governmentcirculars.

(iii) The powers of The Council of the Isles of Scillyand theduty toachieve bestconsideration.

(iv) The Codeof Practicefor Landand PropertyTransactions.

RuleD2.4Allcontracts forthe acquisitionor disposalof propertiesmust complywith therules governingthe sealing ofdocuments.

Transparency &Reporting

RuleD2.5The Strategic Director with responsibility forProperty willprovide an annual reportto the Scrutiny Committee ina formagreed bythe Section151 Officeron:

(i) All acquisitionsof propertyand newleases

(ii) All Disposalsof property Banking ArrangementsRules

Rule D3.1 All arrangements with the Council’s bankers shall be made byor in accordance with principles approved by the Section 151Officer, whois authorisedto operatebank accountson behalfof the Council.

Rule D3.2 All bank accounts, which contain monies that form part of theCouncil’s generalfund shallbear anofficial titlethat shallinclude the name of The Council of the Isles of Scilly.

Rule D3.3 In no circumstances shall an account be opened in the name ofan individual or with other than the Council’s official banker(s)as determinedby the Section 151 Officer.

Rule D3.4 The consent of the Section 151 Officer is required before anyofficer of the Council opens or maintains any account whichcontains monieswhich donot formpart ofthe Council’sgeneral fund.

RuleD3.5The Section 151 Officerwillundertake regular reconciliationsof allCouncil bankaccounts.

Money Laundering

Rule D3.6 All officers responsible for handling and receivingmoney will be alert to the potential of money laundering and will reportany suspicions to the S151 Officer who is the Council’s Money Laundering Reporting Officer.

Rule D3.7 The Section 151 Officer will produce and keep under reviewan Anti-MoneyLaundering Policy.

(i) to implementcustomer duediligence procedures(procedures toverify thecustomer’s identitybefore enteringinto abusiness relationshipor transaction)

(ii) To establishand maintainappropriate risk-sensitivepolicies andprocedures

(iii) To ensure officers are trained in and implement thoseprocedures and are aware of the law relating to moneylaundering andterrorist financing

Rule D3.8 The National Crime Agency will be notified of the receipt of any cash transactionover £15,000. Loans andInvestments Rules

Rule D4.1 All investments and borrowing will be made in the name of The Council of the Isles of Scilly or in the name of nominees approved by theCouncil inline withthe TreasuryManagement Strategy.

Rule D4.2 The Section 151 Officer willproduce anannual TreasuryManagement Strategy Statement (TMSS) for approval by theCouncil. TheStrategy willset outprinciples, policiesand management arrangements including roles and responsibilitiesfor Treasury Management and other providers. This will includethe requirementsfor theforthcoming yearand theproposals tomeet them.

Rule D4.3 The treasury related implications of any Capital Strategy mustbe consideredand included inany budgetsubmission.

RuleD4.4Anup-to-datecounter-party listwill bemaintained bythe Section151 Officersetting outthe authorisedlending listtogether withthe financiallimits againsteach categoryof lender.

Transparency andReporting

Rule D4.5 The Section 151 Officer will report on treasury management operations to Council on a twice-yearly basis. This will includedetails of all new borrowing and investments of more than 10years. Anannual reporton treasurymanagement will bepresented toCouncil by30 Septemberof thesucceeding financialyear.

Trust Fundsand Fundsheld forThird Parties

Rule D5.1 Trust funds for benevolent and other purposes shall only beestablished with the approval of the Section 151 Officer.All monies held in Trust Fundsmanaged by the Council will be held in the name of the Council unless otherwise agreed by theSection 151 Officer.

RuleD5.2TheSection151Officershall bemade awareof theexistence of all such funds and ensure that arrangements are in place fortheir proper administration, in line with the requirements forthe trustand that their accountsare properly audited.

Rule D5.3 The Section 151 Officer will ensure a right of access to the Head ofAudit andElectoral Services of Cornwall Council(Chief Internal Auditor).

E FINANCIAL SYSTEMSAND PROCEDURESRULES These area setof overarchingrules thatset outhow theCouncil willmanage theircore financial transactions.

FinancialRule

Descriptions

Financial Systems& Procedures

Requirement to consulton keychanges tofinancial systemsand forall officers tofollow appropriateprocedures andfinancial procedurerules.

Contracts & Procurement

Requirement Procedure Rules

follow Contract

Income

All income to be banked promptly andestablishes thefinancial criteriaand processfor deliveringservices to

external bodies.It alsoset outthe arrangementfor writing offdebts.

External Bids

Grant

Funding

The criteriaand approvalprocess formaking bidsfor external funds.

Gifts, Loansof Propertyand Sponsorship

The criteriaand approvalprocess foraccepting gifts,loans ofproperty or sponsorship.

Payroll

The requirementsto ensurethat thepayroll is accurate and appropriate paymentsare made.

Paymentsto Contractorand Consultants

Responsibilities

payments toconsultants.

assess offpayroll contractors and

Taxation

Responsibilities to complywith allappropriate taxationrequirements, inparticular changesin individual

circumstances.

FinancialSystems andProcedures Rules

Rule E1.1 Strategic Directorswill notmake anymaterial changeor amendment to any financial systems, subsidiary systems, orprocedures withoutthe approvalof the Section151 Officer.

Rule E1.2Strategic Directorswill ensurethat effectiveaccess controlsare in place for all financial systems, subsidiary systems withintheir controland thatthese aresubject to regularreview.

Rule E1.3 Appropriate disasterrecovery andbusiness continuityarrangements must be tested on a regular basis to ensure thatthe data held in core systems is safe and secure and can berecreated where necessary.

Rule E1.4 All Officers with a responsibility for finance within the Councilmust be made aware of their responsibilities for operating coresystems, accessingthe datacontained withinit andmaintaining thesecurity ofdata heldwithin byStrategic Directors.it. Contracts & ProcurementRules

Rule E2.1 All staffwill followthe ContractProcedure Rulesin thepurchase ofgoods and services.

Rule E2.2 Every officer of the Council has a responsibility to declare anyinterests they have in contracts (whether financial or non-financial), in accordance with s.117 of the Local GovernmentAct 1972 andthe Employee Code ofConduct.

Rule E2.3 Strategic Directorsshall notenter intoany formof creditarrangement (for example hire purchase or finance leasingagreements), other than the Council’s standard payment termsof 28 days, without the prior agreement of the Section 151Officer. Where prior agreement has been obtained from theSection 151 Officer to enter into a hire purchase or financeleasing arrangement then a copy ofthe signed agreementmust besent to him/herand theoriginal storedsecurely. Income Rules

Rule E3.1 All monies received on behalfof The Council of the Isles of Scilly shall bebanked without delayin The Council of the Isles of Scilly’s name.

Rule E3.2 All documentation relating to income receivable by the Councilshall be in the name of The Council of the Isles of Scilly, including agreementsfor the provisionof services,invoices, andreceipts.

Rule E3.3 Strategic Directors must comply with the Fees and ChargesPolicy covering all fees and charges produced by the Section151 Officer.

Rule E3.4 All fees and charges for services provided shall be reviewed,regularly inline withthe Fees andCharges Policy.

Rule E3.5All proposalsto bid,tender orquote forthe provisionof goodsand servicesto otherorganisations willbe regulatedby theContract Procedure Rules and the Financial Approvals ProcessDebt Write Offand Recovery of SumsDue

Rule E3.6 Adequate records must be kept to support the recovery andsums due and co-operate promptly and fully in the recoveryprocess.

Rule E3.7 The Section 151 Officer will produce and keep under review aDebt Write OffPolicy.

Rule E3.8 Strategic Directors will keep outstanding debts under promptreview andmake appropriatearrangements toensure thewrite off of irrecoverable debts in line with the Debt Write OffPolicy and limitsset outwithin theFinancial Approvals Process. External GrantFunding BidsRules

Rule E4.1 All funding bids shall be discussed with the Section 151 Officerat the beginning of the process and must be approved in linewith the Financial Approvals Process before submission to therelevant body.

Rule E4.2 Any bid for additional grant funding shall be subject to financialadvice from the Finance Service who shall fully participate inthe preparationof thegrant submission.

Rule E4.3The Section151 Officershall:

(i) In conjunction with the Strategic Director assess the full implications for theCouncil before acceptingany grantfunding.

(ii) Approveall grantapplications andreturns priorto submissionand towithhold approvalwhere appropriate.

(iii) Receive and record all funding notified by external bodiesrecorded inthe Council’s accounts.

(iv) Consideration givento anymatch-funding requirementsprior toentering intothe agreementsand thatfuture revenuebudgets reflectthese requirements.

(v) Ensure thatall auditrequirements aremet.

(vi) Submit grantclaims on atimely basis.

(vii) Comply withthe termsand conditionsof the grant.

Rule E4.4Strategic Directorsshall:

(i) Obtain approval from the Section 151 Officer in advance ofany submission.Where theSection 151Officer orMonitoring Officerdetermine thata Councildecision is

required, whether for value, political significance, or otherreasons, Councilapproval mustbe obtainedin advance.

(ii) Ensure claimsfor fundsare madeby thedue date.

(iii) Ensure theproject progressesin accordancewith theagreed project plan and that all expenditure is properlyincurred andrecorded.

(iv) Ensure thatboth revenueand capitalresources areavailable for match-fundingrequirements.

(v) Ensure compliance with the terms and conditions of thegrant offerand thatfull andaccurate recordsare maintained to demonstratecompliance.

(vi) To ensureretention ofrelevant documentationin accordancewith the grantconditions. Gifts, Loansof Property& SponsorshipRules

Rule E5.1 Gifts, loans of property and sponsorship must comply with therequirements set out in the Declaration of Interests, Gifts andHospitality Policy. Payroll Rules

Rule E6.1 All managers with the responsibility for staff will inform payrollof anychanges totheir employmentincluding termination,resignation, newstarters, variations,and enhancements.

Rule E6.2 All officersmay onlyclaim allowancesor expensesin accordancewith the EmployeeHandbook.

Rule E6.3 No payments to officers or Members may be made withoutappropriate authority. Payments toConsultants andContractors Rules

Rule E7.1 Any contractsfor therecruitment ofconsultants andcontractors must take into account the rules governing off-payroll employment. Taxation Rules

Rule E8.1The Section151 Officermust ensureall appropriatereturns arecompleted andsubmitted toHMRC onthe appropriatebasis.

Rule E8.2 The Section 151 Officer will maintain up-to-date guidance forall officerson taxationissues.

Rule E8.3 All officers must ensure compliance with the Taxation Guidanceissued bythe Section151 Officer.

F EXTERNAL ARRANGEMENTS This setof rulescovers thefinancial arrangementsfor workingwith externalbodies includingthe awardof grantsto them.

FinancialRule

Description

Partnerships

Sets out the need to ensure partnersadopt highfinancial standards,including properaccounting arrangements.

Council OwnedEntities

Sets out specific arrangements for any Councilowned companies.

Grants andSponsorship tothe Third Sector

Arrangements for making

grants/providing sponsorship to thethird sector.

Loans made to Third

Parties – Non-TreasuryLoans/Investments

Arrangements for makingNon-Treasury loans/investments

Partnership Rules

Rule F1.1 All Councilpartnerships shallhave agreedbusiness programmesand processesand sufficientand adequategovernance tojustify thecontribution ofpublic fundsor resources.

Rule F1.2 The Section151 Officeris responsiblefor promotingand maintainingthe samehigh standardsof conductregarding financialadministration inpartnerships.

Rule F1.3Partnership agreementsmust includeadequate considerationof the keyissues below.

(i) accounting arrangements to be adopted relating topartnerships aresatisfactory.

(ii) corporate governancearrangements andlegal issueswhen arrangingcontracts oragreements withpartners.

Rule F1.4Partnership leadsmust appraiseall identifiablerisks beforeagreements areentered into.

Rule F1.5 The Headof Auditand ElectoralServices Cornwall Council (ChiefInternal Auditor), must have rights of access to all financial informationheld by the Council of the Isles of Scilly’s partnerships.

Council OwnedEntities Rules

Rule F2.1 The Section 151 Officer and the Monitoring Officer will provideadvice to Council Lead Member or officer prior to agreeingthe financial and governance arrangements for any Council ownedentities.

Rule F2.2Lead Members or officers must follow the ContractProcedure Rules when awarding contracts to any Council OwnedEntities.

Rule F2.3 The CouncilShareholder representativemust consultthe Section151 Officerand MonitoringOfficer onall reservedmatters associated withCouncil OwnedEntities.

Rule F2.4 The Section 151 Officer must promote the embedding of andcompliance withappropriate accountingpractices, includingFinancial Regulations,within CouncilOwned Entities,and monitor compliance through appropriate arrangements, and toprovide guidance to such entities where it is in the Council’sinterest to do so. Grants andSponsorship tothe ThirdSector Rules

Rule F3.1Grants andsponsorship madeto thirdsector organisationsshall complywith thethresholds setout inthe FinancialApprovals Processand shallnot exceedthe annualbudget. RuleF3.2TheSection 151Officer shallensure:

(i) All proposals havebeen subject torobust due diligenceclearly settingour financialand otherimplications;

(ii) Any approval required by Council is in placebefore anyfinancial commitment is agreed;

(iii) Advice from the Council’s legal service has been sought inobtaining the terms of the agreement, including that eachgrant is supported with a written agreement which specifiesas a minimum:

a. The purposefor the grantmay beused

b. The paymentschedules

c. The claimsubmission andpayment process

d. The formand contentof themonitoring returnsincluding supporting evidence and certification sufficientto prove the correctuse ofthe grant

e. The conditions to which the grant is subject includingthose relatingto repaymentwhether ofthe holeor a

proportionate part of the grant if the agreement is notcomplied with

f. Requirements asto anyapprovals thatare requiredsuch as planningpermission

g. Such insurance or indemnity requirements consideredappropriate by the Section 151 Officer and/or Head ofAudit andElectoral Service(Chief InternalAuditor);

(iv) Any grant to be used for the purposes of capital expendituremust complywith theFinancial RegulatoryFramework applyingto theCouncil’s CapitalProgramme includingPrudential spendingcontrols;

(v) A registerof grantsis maintained.

Rule F3.3Strategic Directors shallensure:

(i) Due diligencemeasures havebeen undertaken;

(ii) Any State Aid implications have been addressed followingthe advicefrom theSection 151Officer andMonitoring Officeras appropriate;

(iii) Advice isreceived andconsidered bythe Finance Service;

(iv) A riskappraisal is undertaken;

(v) Correct approvalsare inplace priorto makingany payments;

(vi) The authorisation arrangements have been complied with,including the decision to authorise having been made inaccordance withthe decision-makingprocedures determinedby theMonitoring Officer;

(vii) Budgetary provision or uncommitted reserves have beenidentified to meet the costs in full prior to committing tomaking the grant.

Loans made to Third Parties – Non-Treasury Loans/InvestmentsRule F4.1Loans madeto thirdparties whichfall outsideof theCouncil’s

Treasury ManagementActivity asset outin theapproved TreasuryManagement Strategy,shall complywith thethresholds setout inthe FinancialApprovals Process. RuleF4.2TheSection 151Officer shallensure:

(i) All proposalshave beensubject torobust duediligence clearlysetting outfinancial andother implications.

(ii) Approval requiredby Councilis inplace beforeany financialcommitment is agreed.

(iii) Advice fromthe Council’slegal servicehas beensought in

obtaining theterms ofthe agreement,including;

a. Each loanis supportedby awritten agreementwhich specifiesas aminimum:

· The purposeof theloan approvedby the Council;

· The timingand amountsof repaymentsincluding theperiod of the loan;

· The rateof interestto becharged, ifany;

· The form and content of monitoring returns includesupporting evidenceand certificationsufficient toprove correctuse of the loan;

· The otherconditions towhich theloan ismade includingas tothe requirementto makerepayment in full or in part if the terms of the loan are notcomplied with.

b. Full consideration is given to whether an appropriateguarantee orother formof security,usually alegal chargeon land,property, orother assets,whether ownedby therecipient orsome otherpart, asappropriate.

c. Where there is to be a legal charge or other security,that theland, propertyor otherassets issufficient based on a valuation report and that the value of suchland, property,or otherassets issufficient atthe commencement of the loan repayment period and ispredicted to remain sufficient to protect the Council’sloan debt, interest and costs during the term of the loanor until earlier repayment.

d. If any security that the Council takes to protect themonies due shall be and shall remain as a first rankingsecurity unlessthe Section151 Officerfollowing consultationwith the MonitoringOfficer agrees.

(iv) Ensure that budgetary provision or uncommitted reserveshave beenidentified tomeet thecosts infull priorto committingto the makingof theloan.

(v) A loansregister is maintained.

Rule F4.3Strategic Directorsshall ensure:

(i) Due diligencemeasures havebeen undertaken.

(ii) State Aid implications have been addressed following theadvice from the Section 151 Officerand Monitoring Officeras appropriate.

(iii) Advice given by the Finance Service has been received andconsidered.

(iv) A riskappraisal hasbeen undertaken.

(v) Correct approvalsare inplace priorto makingany payments.

(vi) Any required security is in place prior to any funds beingpaid.

(vii) Budgetary provision or uncommitted reserves have beenidentified to meet the costs in full prior to committing to themaking of theloan.

STANDING ORDERS Appendix G - Financial Regulations

July 2026

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