The National Association of Local Councils (NALC) has recently unveiled its updated Model Financial Regulations for the 2024/2025 cycle. These regulations serve as a critical framework, guiding local councils in effectively managing their financial operations. In this blog, we delve into the significant updates and key changes introduced in the new template. It’s important to note that this document is exclusive to NALC members, and we recommend that member councils consult the full, official document for comprehensive details.  If you are not a member of NALC, you can join here.

Here, we summarise the essential alterations and provide insights into how councils can adapt these regulations to better serve their unique needs.

Customisation to Fit Council Needs

The updated regulations emphasise customisation to fit the varying sizes and activities of councils. Text in bold continues to indicate legal requirements, which remain unchanged (Section 1). Curly brackets { } highlight sections that can be adapted or removed depending on the council’s specific circumstances, ensuring that the regulations align perfectly with local needs (General notes).

See One Size Does Not Fit All: 2024 Model Financial Regulations Supports All Council Sizes for more details

Specific Adaptation Areas

Key areas for adaptation include the roles of the Clerk and the Responsible Financial Officer (RFO), the use of committees, and the approval processes for payments and invoices. Councils are encouraged to critically assess these roles and procedures to ensure they align with their operational structure and governance style (Sections 4, 5, and 6).

Procurement and Tendering Processes

Significant revisions have been made in procurement and the tendering process to enhance transparency and competitiveness. New thresholds for formal tender processes have been set to encourage fair competition while considering the council’s scale of spending (Section 11). This includes specific requirements for obtaining multiple quotes or estimates based on the estimated value of contracts.

Electronic Governance

Reflecting modern governance practices, there is a greater emphasis on electronic payments and approvals. The regulations now provide detailed guidelines on managing electronic transactions, including the authorisation levels required and the security measures to be observed (Section 6).

See NALC's Digital Leap Forward With 2024 Model Financial Regulations for more details.

Risk Management and Audit Requirements

There has been a robust enhancement in the sections dealing with risk management and internal controls. Councils must review their risk management policies and internal control systems annually (Section 5). Additionally, the role of the internal auditor is more clearly defined to ensure independence and effectiveness in evaluating the council’s risk management, control, and governance processes (Section 12).

Asset Management and Insurance

Updates include more detailed guidelines on asset management, ensuring that all assets are regularly verified and adequately insured. This section aims to prevent losses and mismanagement of council assets, thereby safeguarding public resources (Sections 14 and 15).

See Understanding Asset Management In The NALC 2024 Financial Regulations for more details.

Financial Planning and Budget Management

The regulations underscore the importance of precise financial planning and budget management. Councils are required to set their budgets and precepts based on thorough financial analysis and forecasts, extending up to three years where possible, to ensure sustainability and accountability (Section 4).

Legal and Statutory Compliance

The updates reiterate the council’s obligation to comply with current laws and statutory requirements, including those relating to the Local Government Finance Act and other relevant legislation. This ensures that councils operate within the legal framework, maintaining high standards of governance and accountability (General and Section 13).

Implementation and Training

Finally, the updated document stresses the importance of proper implementation and regular training for council members and staff. This is crucial to ensure that everyone involved understands the financial regulations and adheres to them strictly (General guidance).

These changes reflect NALC’s commitment to improving financial governance at the local council level. Councils are advised to review and update their financial regulations in line with this new template to enhance financial management and ensure compliance with statutory obligations. For detailed guidance and further information, councils should refer to the full document and consider engaging with NALC directly.

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