Town Council’s Financial Management

Cllr. Bob Welch, 30th April 2021

In the May edition of Stretton Focus, Andy Munro set out criticisms of the Town Council’s financial management, picking up on issues noted by the Council’s Internal Auditor. Town Councillors had acknowledged those findings.

Reconfiguring Accounting Systems

It was, in fact, the new Responsible Finance Officer, coming in to post in September 2019, who, as a qualified accountant, identified that the accounting systems needed to be reconfigured to ensure that Councillors had a better understanding of the Council’s financial affairs. Her judgement was endorsed by the new Internal Auditor, who was appointed by the Council at the same time, following the retirement of his long term predecessor. 

VAT Entitlements

The Internal Auditor provided comprehensive advice and endorsement to the changes needed to ensure that Councillors exercise proper oversight of all financial transactions. In particular, he recommended that specialist consultancy advice be sought in relation to the complex issues associated with the Council’s VAT reclaim entitlements in respect of the three Charities for which it is responsible. 

This is because the Council has, in the past, sought clarification on these issues from Revenue and Customs (HMRC) but without response. The Council duly instructed two specialist VAT consultancy firms. As a result of their advice, the Council will repay £12,000 which it had previously claimed and has already made changes to ensure there is clarity and transparency in its future transactions, which are entitled to VAT refunds. The Council has not incurred any financial penalty and there has been no net loss of revenue to the Council.

Complying with Audits

The Council has a record of always complying with the requirements of both Internal and External Audits.  Accordingly, at an Extraordinary Council Meeting on March 2nd, Councillors unanimously agreed to implement all of the requirements of both Internal and External Auditors and to set in train the necessary remedial work.

Some immediate actions, such as the increase in the fidelity insurance cover, had already been implemented. A Councillor Task Group had previously identified that the Council needed to undertake more work to be fully compliant with requirements of Data Protection (GDPR), and the Government Digital Service (GDS). Following the Extraordinary Council meeting, a second Councillor Task Group was charged with cataloguing the full range of Councillor responsibilities and making recommendations on how compliance can be more effectively monitored. Going forward, this work will, in future, inform the induction of all Councillors taking office.

No Increase in local council tax

Conscious that the pandemic will have imposed financial pressures on some constituents, Councillors have deliberately not requested any increase in local council tax for the financial year 2021/22.  Budget Look Forward for the year is outlined on the Council’s website Annual Budget

Pandemic Impact

It has been challenging to address these issues because it has coincided not only with the pandemic restrictions requiring all meetings to be held remotely but also by the fact that it has come at a time when Council staffing has been significantly depleted, mostly because of long term ill-health. This unavoidably means that it is taking longer to complete such exercises as the updating of the Asset Register. Both the Internal and External Auditors have accepted that it will take time for such work to be completed by the new incoming Town Clerk and other replacement staff.

Auditors Response

Satisfied that there is no evidence of wrongdoing, the External Auditor has now responded to the resident complainant that the matters have been investigated and that no further action will be taken.

The outgoing Council wishes the newly installed Council well in taking forward the required work and in continuing to serve the needs of the Church Stretton community.

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