Shropshire Council

Financial management and control

3.1 Principles

3.1.1 A transparent framework of financial management responsibilities and decision making is essential to the effective management of the Council’s financial affairs.

3.1.2 All members and officers have a common duty to abide by the highest standards of integrity and propriety when making decisions about the use of public monies.

The Full Council

3.2 Is responsible for:

  • Approving the budget and policy framework within which Cabinet operates;
  • Approving and monitoring compliance with the Council’s overall framework of accountability and control as set out in the Constitution;
  • Monitoring compliance with policies and related Cabinet decisions;
  • Agreeing procedures for virement of expenditure between budget headings
  • Agreeing procedures for carrying forward under and overspending on year end budget headings;
  • Approving the annual Statement of Accounts.

Cabinet

3.3 Is responsible for proposing the policy framework and budget to the Full Council and for discharging Cabinet functions in accordance with the policy framework and budget.

3.4 Cabinet decisions can be delegated to a Committee of Cabinet, an individual Cabinet Member, a Joint Committee or an officer within the rules set out in the Delegation to Officers

3.5 Together with the Council, Cabinet is responsible for monitoring compliance with policies, Cabinet decisions and the framework of accountability and control.

Committees of Cabinet

Scrutiny Committees

3.6 Are responsible for scrutinising Cabinet or individual decisions before or after they have been implemented and for holding Cabinet to account. These Committees are responsible for making recommendations on future policy options and reviewing the general policy and service delivery of the Council.

Performance Management Scrutiny Committee

3.7 Is an independent advisory body and reports to the Full Council. It has right of access to all the information it considers necessary and can consult directly with internal and external auditors.

Audit Committee

3.8 Is responsible for providing those charged with governance independent assurance on the adequacy of the risk management framework, the internal control environment and the integrity of the financial reporting and annual governance processes. It will review and monitor the robustness of the treasury management arrangements in accordance with the CIPFA Treasury Management Code of Practice.

Standards Committee

3.9 Is established by the Full Council and is responsible for promoting and maintaining high standards of conduct amongst members. In particular, it is responsible for advising the Full Council on the adoption and revision of the code of conduct and for monitoring the operation of the code.

Pensions Committee

3.10 Is responsible for approving matters relating to the Shropshire County Pension Fund and reports into Full Council via the Chair / Vice Chair of the Pensions Committee.

Other Regulatory Committees

3.11 Planning, conservation and licensing are not Cabinet functions but are exercised through the multi-party Planning Committee which reports to the Full Council.

The Statutory Officers

Head of Paid Service

3.12 The Chief Executive is responsible for the corporate and overall strategic management of the council as a whole. The Head of Paid Service must report to and provide information for Cabinet, the Full Council, the Overview and Scrutiny Panels and other Committees. The Head of Paid Service is responsible for establishing a framework for management direction, style and standards and for monitoring the performance of the organisation.  The Head of Paid Service is also responsible, together with the Monitoring Officer, for the system of record keeping in relation to the Full Council’s decisions.

Monitoring Officer

3.13 Is the Head of Legal and Democratic and is responsible for promoting and maintaining high standards of financial conduct and therefore provides support to the Standards Committee. The Monitoring Officer is responsible for reporting any actual or potential breaches of the law or maladministration to the Council and/or to Cabinet and for ensuring that procedures for recording and reporting key decisions are operating effectively.

3.14 The Monitoring Officer is responsible for

  • Ensuring that reports encompass the statutory obligations with regard to their legal and financial content;
  • Ensuring that Cabinet decisions and the reasons for them are made public. They must also ensure that Council members are aware of decisions made by Cabinet and of those made by officers who have delegated Cabinet responsibility.
  • Advising all members and officers about who has authority to take a particular decision.
  • Advising Cabinet or Full Council about whether a decision is likely to be considered contrary or not wholly in accordance with the policy framework.
  • Maintaining an up to date Constitution.

3.15 The Monitoring Officer together with the Section 151 Officer is responsible for advising Cabinet or Full Council about whether a decision is likely to be considered contrary or not wholly in accordance with the budget. Actions that may be ‘contrary to the budget’ include:

  • Initiating a new policy;
  • Committing expenditure ‘in-year’ above the revenue or capital budget level.
  • Any proposal for expenditure in excess of the current year’s budget requires the agreement of Full Council;
  • Committing expenditure in future years to above the budget level;
  • Incurring interdepartmental transfers above the virement limits.

3.16 It is recommended that approval is sought from the relevant Finance Business Partner in respect of all reports being put before Cabinet or Full Council.

The Chief Finance Officer

3.17 Is the Section 151 Officer. The Section 151 Officer[3] has statutory duties in relation to the financial administration and stewardship of the council. This statutory responsibility cannot be overridden.  The statutory duties arise from:

  • Section 151 of the Local Government Act 1972.
  • Local Government Finance Act 1988.
  • The Local Government and Housing Act 1989.
  • The Local Government Act 2003.
  • The Accounts and Audit Regulations 2015.

3.18 There are five principles that are critical to the achievement of the Section 151 Officer’ statutory responsibilities:

  • Is a key member of the Leadership Team, helping it to develop and implement strategy and to resource and deliver the council’s strategic objectives sustainably and in the public interest;
  • Is actively involved in, and able to bring influence to bear on,  all material business decisions to ensure immediate and longer term implications,  opportunities and risks are fully considered,  and alignment with the council’s overall financial strategy;
  • Leads the promotion and delivery by the whole council of good financial management so that public money is safeguarded at all times and used appropriately, economically,  efficiently  and effectively;
  • Must lead and direct a finance function that is resourced to be fit for purpose;
  • Must be professionally qualified and suitably experienced.

3.19 If different organisational arrangements are adopted, reasons should be explained publicly in the organisation’s annual governance report, together with how these deliver the same impact (‘comply or explain’).

3.20 Section 114 of the Local Government Finance Act 1988 requires the Section 151 Officer to report to the Full Council and Cabinet and the external auditor of the council where the Council:

  • Has made, or is about to make, a decision which involves incurring unlawful expenditure.
  • Has taken, or is about to take, an unlawful action which has resulted or would result in a loss or deficiency to the council.
  • Is about to make an unlawful entry in the Council’s accounts.

3.21 Section 114 of the 1988 Act also requires:

  • The Section 151 Officer to nominate a properly qualified member of staff to deputise should he or she be unable to perform the duties under Section 114 personally.
  • The council to provide the Section 151 Officer with sufficient staff, accommodation and other resources – including legal advice where this is necessary – to carry out the duties under Section 114.

3.22 Section 25 of the Local Government Act 2003 requires the Section 151 Officer to report to members on the robustness of estimates and the adequacy of reserves.

3.23 Accounting Policies: The Section 151 Officer is responsible for selecting accounting policies and ensuring that they are applied consistently.

3.24 Accounting Records and Returns: The Section 151 Officer in consultation with directors and managers is responsible for determining the accounting procedures and records for the council. The Council is committed to maximise the benefits available from the introduction of e-commerce and the use of the Internet. Therefore all reference to documents and procedures for their use should be taken to allow for the use of electronic facilities instead of printed matter where appropriate and where approval has been given by the Section 151 Officer in advance.

3.25 The Annual Statement of Accounts: The Section 151 Officer is responsible for ensuring that the annual Statement of Accounts is prepared in accordance with the ‘Code of Practice on Local Authority Accounting in the United Kingdom issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) which is reviewed and updated annually’.

Directors and Managers

3.26 It is the responsibility of the above to:

  • Ensure that all Cabinet Members are advised of the financial implications of all proposals and that they are agreed by the Section 151 Officer;
  • Authorise which staff can sign contracts on behalf of the Council up to a contract value of £140,000;
  • Consult with the Section 151 Officer and seek approval on any matter liable to affect the Council’s finances materially, before any commitments are incurred;
  • Agreeing in-year virements within delegated limits. Any virement between budget heads should only be made in order to cover any unavoidable overspending elsewhere and must be notified and agreed in advance with the Section 151 Officer.  Full details are set out in Appendix A;
  • Adhere to the accounting policies and guidelines approved by the Section 151 Officer.

[3] See “Statement on the Role of the Director of Finance in Local Government” (CIPFA 2010) and Application Note to Delivering Good Governance in Local Government:  Framework (CIPFA/SOLACE 2010)