The Accounts and Audit (Wales) Regulations 2014

Made: 22 December 2014

Laid before the National Assembly for Wales: 23 December 2014

Coming into force: 31 March 2015

In accordance with section 39(2) of the Public Audit (Wales) Act 2004, the Welsh Ministers have consulted the Auditor General for Wales, such associations of local authorities in Wales as appear to them to be concerned and such bodies of accountants as appear to them to be appropriate.

PART 1 — Introductory

Title, commencement and application

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• (1) The title of these Regulations is the Accounts and Audit (Wales) Regulations 2014 and they come into force on 31 March 2015.

• (2) These Regulations apply in relation to Wales.

• (3) These Regulations apply as follows—

• (a) regulations 2, 5 to 7(2), and 21 to 28 apply to all relevant bodies;

• (b) regulations 3 and 4 apply to internal drainage boards and port health authorities;

• (c) regulations 7(3) to 13 apply to larger relevant bodies;

• (d) regulations 14 to 18 apply to smaller relevant bodies;

• (e) regulations 19 , 20 and 20A apply to the particular relevant bodies mentioned in Part 6;

• (f) regulations 5 to 28 apply, with all necessary modifications, to the accounts of an officer whose accounts are required to be audited by section 38 of the 2004 Act (audit of accounts of officers); and

• (g) regulation 29 applies to county councils and county borough councils.

Interpretation

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• (1) In these Regulations—

• “the 1972 Act” (“Deddf 1972”) means the Local Government Act 1972[^f00004];

• “the 1989 Act” (“Deddf 1989”) means the Local Government and Housing Act 1989[^f00005];

• “the 2003 Act” (“Deddf 2003”) means the Local Government Act 2003;

• “the 2004 Act” (“Deddf 2004”) means the Public Audit (Wales) Act 2004;

• “the 2021 Act” (“Deddf 2021”) means the Local Government and Elections (Wales) Act 2021;

• “auditor” (“archwilydd”) means—a person whose appointment continues to have effect by virtue of the Public Audit (Wales) Act 2013, Schedule 3, paragraph 2(2)[^f00006];otherwise, the Auditor General for Wales;

• “conservation board” (“bwrdd cadwraeth”) means a board established under section 86 of the Countryside and Rights of Way Act 2000[^f00007];

• “corporate joint committee” (“cyd-bwyllgor corfforedig”) means a corporate joint committee established by regulations made under Part 5 of the 2021 Act;

• “fire and rescue authority” (“awdurdod tân ac achub”) means an authority constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004[^f00008] or a scheme to which section 4 of that Act applies;

• “internal drainage board” (“bwrdd draenio mewnol”) means an internal drainage board for an internal drainage district wholly in Wales;

• “joint committee” (“cyd-bwyllgor”) means a joint committee of two or more local authorities but does not include a corporate joint committee;

• “larger relevant body” (“corff perthnasol mwy”) means—a county or county borough council;a fire and rescue authority;a National Park authority;a police and crime commissioner;a chief constable; ora body which is listed in the definition of “smaller relevant body” in this regulation but which does not meet the qualifying condition;

• ...

• “port health authority” (“awdurdod iechyd porthladd”) means a port health authority for a port health district wholly in Wales;

• “qualifying condition” (“amod cymhwyso”) means that the relevant body’s gross income or gross expenditure (whichever is higher) is not more than £2,500,000;

• “relevant body” (“corff perthnasol”) means (as appropriate) a larger relevant body or a smaller relevant body;

• “smaller relevant body” (“corff perthnasol llai”) means a body—which is— a corporate joint committee; a community council;a committee of a county or county borough council (including a joint committee);a port health authority;an internal drainage board; ora conservation board; andbeing—an established body, which meets the qualifying condition for the year concerned or for either of the two preceding years;a newly established body, which meets the qualifying condition for its first or second year;

• “working day” (“diwrnod gwaith”) means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or any other day which is a bank holiday in Wales under the Banking and Financial Dealings Act 1971[^f00009]; and

• “year” (“blwyddyn”) means the 12 months ending with 31 March.

• (2) Any reference in these Regulations to the “responsible financial officer” (“swyddog ariannol cyfrifol”) means—

• (a) the person who is responsible for the administration of the financial affairs of a relevant body by virtue of—

• (i) section 151 of the 1972 Act (financial administration),

• (ii) section 112(1) of the Local Government Finance Act 1988 (financial administration as to certain authorities)[^f00010], or

• (iii) paragraph 13(6) of Schedule 7 to the Environment Act 1995 (national park authorities)[^f00011],

or, if no person is so responsible, the person who is responsible for keeping the accounts of such a body; or

• (b) if the person referred to in sub-paragraph (a) is unable to act owing to absence or illness—

• (i) such member of that person’s staff as is nominated by that person for the purposes of section 114 of the Local Government Finance Act 1988 (functions of responsible officer as regards reports)[^f00012]; or

• (ii) if no nomination is made under that section, such member of staff nominated by the person referred to in sub-paragraph (a) for the purposes of these Regulations.

PART 2 — Specification of Bodies and Proper Practices

Specification of internal drainage boards and port health authorities

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Internal drainage boards and port health authorities are specified for the purposes of section 23(1) of the 2003 Act (local authority) but only in relation to section 21 (accounting practices) of that Act.

Proper practices

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For the purposes of section 21(2) of the 2003 Act (accounting practices)—

• (a) in relation to internal drainage boards, the accounting practices contained in the “Governance and Accountability in Internal Drainage Boards in England: A Practitioners Guide 2006” (as revised in November 2007 and issued jointly by the Association of Drainage Authorities and the Department for Environment, Food and Rural Affairs) are proper practices; and

• (b) in relation to port health authorities which are not county councils or county borough councils, the accounting practices contained in the “Governance and accountability for Local Councils in Wales: A Practitioners’ Guide 2011 (Wales)” as may be amended or reissued from time to time (whether under the same title or not) issued jointly by One Voice Wales and the Society for Local Council Clerks are proper practices.

PART 3 — Financial Management and Internal Control

Responsibility for internal control and financial management

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• (1) The relevant body must ensure that there is a sound system of internal control which facilitates the effective exercise of that body’s functions and which includes—

• (a) arrangements for the management of risk, and

• (b) adequate and effective financial management.

• (2) The relevant body must conduct a review at least once in a year of the effectiveness of its system of internal control.

• (3) The findings of the review referred to in paragraph (2) must be considered—

• (a) in the case of a larger relevant body, by the members of the body meeting as a whole or by a committee, and

• (b) in the case of a smaller relevant body, by the members of the body meeting as a whole.

• (4) Following the review, the body or committee must approve a statement on internal control prepared in accordance with proper practices.

• (5) The relevant body must ensure that the statement referred to in paragraph (4) accompanies—

• (a) any statement of accounts which it is obliged to prepare in accordance with regulation 8; or

• (b) any accounting statement which it is obliged to prepared in accordance with regulation 14.

Accounting records and control systems

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• (1) The responsible financial officer of a relevant body must determine on behalf of the body, after consideration, when relevant, of proper practices, its—

• (a) accounting records, including the form of accounts and supporting accounting records, and

• (b) accounting control systems,

and that officer must ensure that the accounting control systems determined by that officer are observed and that the accounting records of the body are kept up to date and maintained in accordance with the requirements of any enactment and proper practices.

• (2) The accounting records determined in accordance with paragraph (1)(a) must—

• (a) be sufficient to show and explain a relevant body’s transactions and to enable the responsible financial officer to ensure that any statement of accounts or accounting statement which is prepared under these Regulations complies with these Regulations; and

• (b) contain—

• (i) entries from day to day of all sums of money received and expended by the body and the matters to which the income and expenditure or receipts and payments accounts relate;

• (ii) a record of the assets and liabilities of the body; and

• (iii) a record of income and expenditure of the body in relation to claims made, or to be made, by it for contribution, grant or subsidy from the Welsh Ministers, any Minister of the Crown or a body to whom the Welsh Ministers or such a Minister may pay sums of monies.

• (3) The accounting control systems determined in accordance with paragraph (1)(b) must include—

• (a) measures to ensure that the financial transactions of the body are recorded as soon as reasonably practicable and as accurately as reasonably possible, measures to enable the prevention and detection of inaccuracies and fraud, and the ability to reconstitute any lost records;

• (b) identification of the duties of officers dealing with financial transactions and division of responsibilities of those officers in relation to significant transactions;

• (c) procedures to ensure that uncollectable amounts, including bad debts, are not written off except with the approval of the responsible financial officer, or such member of that person’s staff as is nominated for this purpose, and that the approval is shown in the accounting records; and

• (d) measures to ensure that risk is appropriately managed.

Internal audit

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• (1) A relevant body must maintain an adequate and effective system of internal audit of its accounting records and of its system of internal control.

• (2) Any officer or member of that body must, if the body requires—

• (a) make available such documents of the body which relate to its accounting and other records as appear to that body to be necessary for the purpose of the audit; and

• (b) supply the body with such information and explanation as that body considers necessary for that purpose.

• (3) A larger relevant body must, at least once in each year, conduct a review of the effectiveness of its internal audit.

• (4) The findings of the review referred to in paragraph (3) must be considered, as part of the consideration of the system of internal control referred to in regulation 5(3), by the committee or body referred to in that paragraph.

PART 4 — Published Accounts and Audit – Larger Relevant Bodies

Statement of accounts

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• (1) A larger relevant body must prepare for each year a statement of accounts in accordance with these Regulations and proper practices and the statement must include such of the following accounting statements as are relevant to the functions of the body—

• (a) housing revenue account;

• (b) firefighters’ pension fund;

• (c) any other statements relating to each and every other fund in relation to which the body is required by any statutory provision to keep a separate account , except accounts for pension funds administered in accordance with the Local Government Pension Scheme Regulations 2013.

• (2) Where a county council or a county borough council is required by section 74 (duty to keep housing revenue account) of the 1989 Act[^f00013] to maintain a Housing Revenue Account the statement of accounts required by paragraph (1) must include a note prepared in accordance with proper practices in relation to any Major Repairs Allowance grant paid to the county council or county borough council under section 31 of the 2003 Act detailing income and expenditure and any balance on any account used to record the grant.

Declaration of remuneration

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• (1) The statement of accounts required by regulation 8(1) must be accompanied by the notes referred to in paragraphs (2) to (4).

• (2) The first note is a note of the relevant body’s remuneration ratio information (but this requirement does not apply to a relevant body which is a joint committee).

• (3) The second note is a note of (except in relation to persons to whom paragraph (4) applies) the number of employees or police officers in the year to which the accounts relate whose remuneration fell in each bracket of a scale in multiples of £5,000 starting with £60,000.

• (4) The third note is a note of the remuneration (set out according to the categories listed in paragraph (7)) and the contribution to the person’s pension by the relevant body of—

• (i) senior employees, or

• (ii) relevant police officers,

in respect of their employment by the relevant body or in their capacity as a police officer, whether on a permanent or temporary basis.

• (5) The persons whose remuneration is to be noted under paragraph (4) must be listed individually and identified by way of job title only, except that those persons whose salary is £150,000 or more per year must also be identified by name.

• (6) The remuneration and the pension contribution noted under paragraph (4) must be noted in respect of both the year to which the accounts relate and the previous year.

• (7) The categories to which paragraph (4) refers are—

• (a) the total amount of salary, fees or allowances paid to or receivable by the person;

• (b) the total amount of bonuses paid to or receivable by the person;

• (c) the total amount of sums paid by way of expenses allowance that are chargeable to United Kingdom income tax, and were paid to or receivable by the person;

• (d) the total amount of any compensation for loss of employment paid to or receivable by the person, and any other payments made to or receivable by the person in connection with the termination of their employment by the relevant body, or, in the case of a relevant police officer, the total amount of any payment made to a relevant police officer who ceases to hold office before the end of a fixed term appointment;

• (e) the total estimated value of any benefits received by the person otherwise than in cash which do not fall within sub-paragraphs (a) to (d) above, which are emoluments of the person, and which are received by the person in respect of their employment by the relevant body or in their capacity as a police officer; and

• (f) in relation to relevant police officers, any payments, whether made under the Police Regulations 2003[^f00014] or otherwise, which do not fall within (a) to (e) above.

• (8) In this regulation—

• “chief executive” (“prif weithredwr”) means—in the case of a relevant body which is a ... fire and rescue authority or National Park authority, the head of the body’s paid service designated under section 4(1) of the 1989 Act; in the case of a relevant body which is a county council or county borough council, the chief executive appointed under section 54 of the 2021 Act; in the case of a relevant body which is a chief constable, the chief constable;in the case of a relevant body which is a police and crime commissioner, the chief executive appointed by the commissioner under Schedule 1 to the Police Reform and Social Responsibility Act 2011[^f00015];in the case of any other relevant body, the highest ranking employee;

• “contribution to the person’s pension” (“cyfraniad at bensiwn y person”) means an amount to be calculated as follows—in relation to contributions to the relevant pension scheme established under section 7 of the Superannuation Act 1972[^f00016], the common rate of employer’s contribution specified in a rates and adjustments certificate prepared under regulation 62 (actuarial valuations of pension funds) of the Local Government Pension Scheme Regulations 2013[^f00017], being the amount appropriate for that body calculated in accordance with the certificate and regulation 67 (employer’s contributions) of those Regulations, multiplied by the person’s pensionable pay;in relation to contributions to the firefighters’ pension scheme established under the Fire Services Acts 1947 and 1959[^f00018], the percentage of the aggregate of the pensionable pay calculated for the purposes of paragraph G2(3) and (4) of Schedule 2 to the Firemen’s Pension Scheme Order 1992[^f00019], multiplied by the person’s pensionable pay;in relation to contributions to the firefighters’ pension scheme established under the Fire and Rescue Services Act 2004[^f00020], the percentage of the aggregate of the pensionable pay calculated for the purposes of paragraphs (2) and (3) of rule 2 of Part 13 of Schedule 1 to the Firefighters’ Pension Scheme (Wales) Order 2007[^f00021], multiplied by the person’s pensionable pay;in relation to contributions to police pension schemes established under the Police Pensions Regulations 1987[^f00022] or the Police Pensions Regulations 2006[^f00023], the percentage of pensionable pay specified in regulation 5(1) (contributions) of the Police Pension Fund Regulations 2007[^f00024], multiplied by the person’s pensionable pay;

• “employee” (“cyflogai”) includes a member of the relevant body and a holder of an office under the relevant body, but does not include a person who is an elected councillor, and “employment” (“cyflogaeth”) is to be construed accordingly;