The National Association of Local Councils (NALC) has released its 2024 Model Financial Regulations, aimed at guiding local councils in efficient financial management, compliance with legal requirements, and robust governance practices. One crucial component within these regulations is the detailed approach to asset management. Here, we dive deeper into these provisions to provide clarity on how councils should manage their assets effectively.

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.

1. Comprehensive Asset Register

Section 16 of the regulations mandates that councils maintain an up-to-date and comprehensive Asset Register. This register should include detailed records of all council-held properties, including their location, size, purchase details, and purpose. This rigorous documentation is crucial for ensuring transparency and accountability in asset management.

2. Annual Asset Verification

The regulations require that the existence of tangible assets listed in the Asset Register be verified annually. This verification process may coincide with health and safety inspections to ensure both the physical condition and proper documentation of assets. Such annual checks are vital for maintaining asset integrity and for safeguarding council resources.

3. Asset Acquisition and Disposal

Councils are instructed to follow strict procedures for the acquisition or disposal of assets. As per the regulations, any purchase, sale, lease, or disposal of land or tangible movable property must be approved by the council, supported by a thorough business case. This includes valuations, surveys, and relevant legal considerations (Sections 16.5 and 16.6). These steps ensure that all transactions are justified, beneficial, and transparent.

4. Review of Expenditures on Assets

Regular reviews of expenditures related to assets are required to ensure that funds are spent judiciously and contribute to the council's strategic objectives. The RFO is responsible for ensuring that all asset-related expenditures are approved and documented appropriately, maintaining financial control and operational accountability.

5. Insurance and Risk Management

To protect its assets against loss or damage, the council must secure adequate insurance coverage. The RFO is tasked with maintaining a comprehensive record of all insurances, reviewing and renewing these policies annually (Section 16). This is part of a broader risk management strategy that also includes regular reviews of risk assessments and internal control systems.

6. Challenges Addressed by the New Regulations

The 2024 regulations have been designed to address several challenges and risks previously faced by local councils in managing assets. These include:

• Lack of Standardisation: Prior to the introduction of these detailed regulations, there was a significant variation in how assets were managed across different councils, leading to inefficiencies and a higher risk of mismanagement.
• Inadequate Documentation: The absence of a comprehensive asset register in some councils made it difficult to track the usage and condition of assets, increasing the likelihood of asset misplacement or misuse.
• Insufficient Oversight of Asset Transactions: Without stringent controls, the acquisition and disposal of assets were susceptible to poor decision-making and potential conflicts of interest, compromising financial integrity.
• Risk Exposure: Previously, the lack of regular reviews and inadequate insurance coverage left councils vulnerable to financial losses from asset-related risks that were not adequately mitigated.

By mandating rigorous asset management practices, the NALC 2024 Financial Regulations aim to mitigate these risks, providing a more uniform and effective framework for asset management across all local councils.

Conclusion

The NALC's 2024 Model Financial Regulations provide a structured and clear framework for asset management, emphasising accountability, efficiency, and proactive risk management. By adhering to these guidelines, local councils can ensure that their assets are managed responsibly, safeguarding public resources and enhancing trust within their communities. These regulations not only guide councils in compliance but also support them in achieving their broader operational and community objectives.

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