This is a brief introduction to Budgets, the Precept, Finance and Audit for and about Town and Parish Councils.Budgets and Precepts

  • This is a very large area and this article only aims to give a very broad general introduction
  • Detailed explanations are beyond the scope of this article
  • The subject is covered in great detail in the members area
  • The law is the same for Town or Parish Councils
  • There are significant differences depending upon the size of the council precept
  • If the council has a small precept it is to a large extent unregulated if it chooses not to follow the law
  • There is beginning to be in our opinion 2 tiers within Town and Parish Councils

 

Article Contents - Click on a link below

The Town or Parish Precept - Taxing the Community

What is the Town or Parish Precept?

Is there a limit on the precept, is it capped?

How and on what do Parish Councils spend money?

Where do Parish or Local Councils get their money from?

How is money allocated to parish councils?

Budgeting and Town and Parish Councils

Town and Parish Council Finance Matters

Do parish councils have to produce accounts?

Whose responsibility is it to produce the parish council accounts?

What rights do I have to see the parish council accounts?

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Can a council just accept the budget done by the parish clerk?

What is parish council participatory budgeting?

Can the Parish Council give money to the village hall?

Do parish councils have a treasurer?

Who is the Parish Council Responsible Financial Officer (RFO)?

Can a parish council borrow money for any purpose?

Can a parish council go overdrawn at the bank?

Our parish council just gives money local groups

Why do parish councils have insurance?

There's been a fraud at our Parish Council, who's responsible?

Town and Parish Council Internal and External Audit

Can a parish council rely on the external audit?

Who is the External Auditor for my Town or Parish Council?

Our parish council has had a qualified audit report

Our Parish Council has had a Report In The Public Interest

Is the parish council external audit really an audit?

 

The Town or Parish Precept - Taxing the Community

 

What is the Town or  Parish Precept?

  • A Town or Parish Council precept is a tax on the residents within the area of the town or parish council
  • Town and parish Councils have powers to raise a "precept" which is a tax on residents in their parish
  • The amount of the precept is decided upon annually by the town or parish councillors
  • It is important to understand that each and every Town or Parish Council calculates how much money it needs to collect as a tax from its community
  • The council does not "share" the main council tax
  • The council must produce a budget for the next financial year
  • This must detail on what they intend to spend the money
  • Having worked out what monies it needs the council's precept request is sent to the District or Unitary Council, who add it to the other precepts from Police, Fire etc
  • These monies are then collected from all Council Tax payers, and the Parish or Town Councils get the money from the District/Unitary authority
  • For many years the town or parish precept was “lost” in the principal authorities council tax charge to residents
  • Nowadays most principal authorities show the the precept for each parish within their area
  • Your Town or Parish Council alone decide how much to collect from residents
  • To suggest otherwise is both wrong and disingenuous

 

Is there a limit on the precept, is it capped?

  • No currently unlike other parts of local government there is no limit on the size of the parish precept or any percentage increase
  • This may mean that where for example there has been a fraud residents may be left with increases in the precept of more than 80%
  • Very large unregulated increases are often due to their council's failure to have proper financial controls
    • e.g. separating the roles of the council proper officer and responsible financial officer (RFO)
    • Having effective and competent internal audit

 

How and on what do Parish Councils spend money?

  • Parish Councils can only spend public money where they have specific legal powers
  • Additionally they can spend a small amount (set by government) per elector on other items (this is called "Section 137" spending)

The short list contains some items that are frequently overlooked but which can provide real benefits to communities, especially the ability to promote tourism.

 

Your parish council can do and provide any of the following...

  • Provide community and conference buildings
  • Support local community groups
  • Work with residents on local issues
  • Provide and support sports and recreation grounds
  • Promote and market the area for tourism
  • Provide and support entertainment and arts festivals
  • Provide and maintain open spaces and biodiversity
  • Provide allotments
  • Provide and support rural transport schemes
  • Provide traffic calming

This is not comprehensive but a short list of practical schemes that any parish council can do and with it's community. 

They will have to have their accounts properly audited each year, and the accounts are open for inspection by the public in the run-up to that audit.

So why's your council not doing anything?

 

Where do Parish or Local Councils get their money from?

  • From you as a resident of the parish. Town and parish Councils raise a "precept" which is a tax on residents
  • The council must produce a budget for the next financial year detailing on what they intend to spend the money
  • For many years the town or parish precept was “lost” in the principal authorities council tax charge to residents
  • Nowadays most principal authorities show the the precept for each parish within their area

 

How is money allocated to parish councils?

  • Town and parish councils are not charities, community groups or residents associations they are part of local government
  • Consequently they do not have to go cap in hand to get money for community projects or their own running costs
  • Town and parish councils have and use the power to tax residents in the local community
  • This tax is known as the parish precept and is collected by the principal authority (a billing authority) on the parish council's behalf as part of a residents overall council tax charge
  • The amount of the parish precept varies widely depending upon
    • the size of the local council,
    • the population of it's community,
    • it's assets
    • and of course how active the council is on behalf of its' community.
  • Town and parish councils can also borrow money to fund the development of community assets

For more information Click on one of the links below...

A CPALC 60 Second Guide (06) to parish council loans and borrowing

BPG 12 A CPALC Best Practice Guide to Participatory Budgeting

  

Budgeting and Town and Parish Councils

  • Budgets determine what the Town or Parish Council wishes to do for and with the community in the coming year
  • The budget is the basis of the Town or Parish Precept

  

Town and Parish Council Finance Matters

 

Do parish councils have to produce accounts?

  • Town and Parish councils are funded by a local tax on residents known as a precept.
  • As they tax and spend residents money they have to produce accounts irrespective of the councils size.
  • These accounts cover the annual period from April to March.
  • These accounts are subject to an internal audit and also an external audit.
  • Nowadays the external audit is usually a simple review consequently the importance of having a competent internal auditor has significantly increased.
  • There are statutory requirements regarding the production and publication of the accounts.
  • There are specific legal rights as to viewing and inspecting tha accounts and records.

Town and Parish Councils must produce and publish accounts because...

a) it's the law and

b) they have the power to raise taxes and spend public money from their residents and electors

 

Whose responsibility is it to produce the parish council accounts?

  • There is a difference between the responsibility for the contents of the accounting statements and the physical production of those statements.
  • It is the responsibility of the parish council RFO (Responsible Financial Officer) to keep the books and prepare the financial statements.
  • The council has overall responsibility for both the production and contents of the accounting records.
  • Your parish council MUST have an RFO, this is a statutory office holder i.e. it is defined in legislation.
  • The RFO is an employee of the council.
  • In small to medium sized parish councils the role of the RFO is often combined with that of the Parish Clerk.
  • The RFO can be a separate role where for example the clerk has insufficient accounting experience.
  • A parish councillor can be the RFO.
  • If this is the case they cannot be paid as it is illegal to be a councillor and a council employee.

 

What rights do I have to see the parish council accounts?

  • After the completion of the annual audit your parish council MUST publish the "Notice of conclusion of audit and right to inspect the annual return"
  • You are allowed to inspect all the books of account, invoices, bank statements etc.

 

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