As technology continuously reshapes our society, local councils are not exempt from its reach. The need for modernised financial practices is pressing, given the inherent inefficiencies of outdated manual processes and the emerging risks associated with digital transformation. The National Association of Local Councils (NALC) recognises these challenges and has recently updated its Model Financial Regulations to help councils navigate this new digital landscape.

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These regulations serve as a critical framework, guiding local councils in effectively managing their financial operations. In this blog we give our take on the changes. But it’s important to note that the updated Model Financial Regulations 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.

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This blog post explores the digital aspects of these regulations, outlining how they aim to enhance transparency, efficiency, and security in financial management at the local government level. We'll also introduce how Scribe Accounts, our cloud-based financial management solution, is perfectly aligned with these new standards.

Challenges Addressed by the New Regulations

Local councils manage significant community resources and have a duty to uphold rigorous financial stewardship. Traditionally, councils have relied on manual processes and paper-based systems, which are increasingly seen as inadequate due to inefficiencies and a higher propensity for errors. The shift towards digital solutions offers improved accuracy, efficiency, and security but also brings challenges such as cybersecurity threats and data privacy issues. The updated NALC regulations aim to address these challenges by providing a robust framework that governs the use of digital technologies, ensuring their responsible and effective application.

Key Aspects of the Updated Financial Regulations

Electronic Payments (Section 10)

The new regulations emphasise the importance of adopting electronic payment systems to improve the efficiency and traceability of transactions. Specific rules ensure:

• Dual authorisation for all electronic payments to safeguard against fraud.
• Secure online banking systems with robust authentication processes to prevent unauthorised access.

Digital Record-Keeping (Section 11)

To maintain transparency and comply with auditing standards, digital record-keeping is crucial. The regulations stipulate:

• Mandatory maintenance and regular backup of digital financial records.
• Controlled access through strict user permissions to ensure data integrity and security.

Online Procurement Processes (Section 12)

Increasing transparency and competition in procurement is facilitated by digital platforms. The regulations encourage:

• Use of electronic tendering processes where feasible, enhancing openness and reducing biases.
• Comprehensive documentation of procurement activities in a digital format to ensure a transparent auditable trail.

Regular Review and Audit of Digital Practices (Section 13)

Continuous improvement through regular audits is essential to adapting digital financial practices effectively. Councils are required to:

• Conduct annual reviews of digital financial practices to enhance internal control systems.
• Evaluate the effectiveness of digital tools and platforms regularly against operational and security standards.

Data Protection and Cybersecurity (Section 14)

With increased digital transactions, protecting sensitive information and financial data is paramount. The regulations highlight the need for:

• Advanced cybersecurity measures such as firewalls, encryption, and intrusion detection systems.
• Regular training for staff on data privacy and security best practices to ensure compliance with data protection laws.

Integration with Digital Governance Tools (Section 15)

For streamlined operations, integrating financial management systems with other digital governance tools is advised. This involves:

• Compatibility of financial systems with other software used by the council to facilitate data sharing.
• Implementation of tools that provide real-time financial insights and support strategic planning.

How Scribe Accounts Enhances Council Financial Management

Scribe Accounts is a cloud solution purpose-built for parish and town councils, designed to align seamlessly with the NALC's updated financial regulations. Our platform offers robust security features, comprehensive digital record-keeping capabilities, fine grained access controls, back-ups every 5 minutes, full audit trails, ensuring councils meet the stringent standards set forth.

Conclusion

The NALC's updated Model Financial Regulations are a significant step forward in modernising financial practices among local councils. By focusing on digital transactions and processes, the regulations not only aim to enhance operational efficiency and transparency but also ensure that councils are equipped to handle the challenges and opportunities presented by digital transformation. Scribe Accounts is here to help councils adapt to these regulations, offering a secure, efficient, and user-friendly platform for managing public funds effectively.

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