The AGAR and Accounts and Audit Regulations

The AGAR

The AGAR is the common means of referring to the Annual Governance and Accountability Return. The AGAR is a collection of documents which includes the Annual Internal Audit Report, the Annual Governance Statement, the Statement of Accounts, and the External Auditors Report.

Although the term 'AGAR' is often used as a shorthand to refer to the whole return it should never be used in Minutes or Agendas, especially if the Minutes are intended to record Council consideration or approval of one of the component documents.

Care should be taken to ensure that where the Council is approving the Annual Governance Statement, or the Statement of Accounts, it is that specific document which is referred to.

If you do Minute Council approval of 'the AGAR' or 'the Annual Return' you will have failed to comply with the requirements of the Accounts and Audit Regulations and are very likely to get picked up by both Internal and External Audit which could well result in a Negative response from either or both auditors.

The Regulations

The Accounts and Audit Regulations set out the framework for the audit of local Councils. The latest version of the Accounts and Audit Regulations , which were issued following the Local Audit and Accountability Act 2014, are dated 2015.

As with many formal regulations the Accounts and Audit Regulations are not easy to read. This is made more difficult because the Regulations cover many other public bodies and not just local councils. In the Regulations Town and Parish Councils are referred to as 'Category 2 Authorities'.

The Annual Governance Statement

The Annual Governance Statement (AGS) is a series of Assertions which the Council must respond to. Good practice is that the Council is required to give a response to each of the Assertions during the meeting, rather than simply being asked to approve the Annual Governance Statement as a single document. This can be Minuted as a single item, but it is important that Councillors understand all of the items on the AGS and the details of what they are agreeing to. More detailed guidance on the requirements of each assertion can be found in The Practitioners Guide.

The Annual Governance Statement must be approved "by resolution of members of the authority meeting as a whole" as set out in Regulation 6.3 (b), this means that is must be approved at a meeting of Full Council.

Regulation 6.4 (a) also requires that the Annual Governance Statement is approved prior to approval of the Statement of Accounts.. They can be approved at the same meeting, but the approval of the Annual Governance Statement must happen first. It is very common for Councils to either fail to do this, or fail to record correctly in their Minutes that they first approved the Annual Governance Statement and then the Accounting Statements.

Councils must record a) the approval of the Annual Governance Statement and then b) the approval of the Accounting Statements.

Part 4 - Published Accounts and Audit Category 2 Authorities

This part of the Regulations sets out the reporting, approval, and publication obligations of local councils.

Regulation 11 Statement of Accounts

This requires local councils to prepare a Statement of Accounts as 'specified in any annual return required by, proper practices in relation to accounts'. The 'proper practices' referred to here is The Practitioners Guide.

Regulation 11.3 also sets a limit of £200,000 above which Councils must report on an Income and Expenditure basis, where transactions are recorded based on the accounting date, normally the invoice date. Below this £200,000 threshold Council can report using Receipts and Payments where transactions are recorded by the date payments were made or received. Councils below the £200,000 threshold can use Income and Expenditure if they choose.

Regulation 12 signing, approval, and publication of the Statement of Accounts

This sets out the approval process for the Statement of Accounts. This includes, under 12.1 , setting the responsibility on the Responsible Financial Officer to sign and date the Statement of Accounts and, under 12.3, the requirement to commence the period for the exercise of public rights.

Regulations 12.2 sets out how 'the members meeting as a whole' i.e. a meeting of Full Council, must consider and approve the Statement of Accounts.

Regulation 13 Publication of the Audited Statement and Accounts and Annual Governance Statement

This regulation requires the Council to publish the Statement of Accounts, the Annual Governance Statement and the External Auditors report by 30th September. The Council must ensure that these 'remain available for public access for a period of not less than five years'. In practice it is probably advisable to leave these documents available on the website permanently, unless there is a good reason to remove them.

Regulation 13 imposes a deadline on the External Auditor to complete their work and, if they cannot do so, perhaps because of objections or delay by the Council, then they will commonly issue a letter to the Council by 30th September which should be published instead of the signed report.

Regulation 14 The Exercise of Public Rights

Regulation 14 is, without doubt, the one that causes the most angst for Councils, and most Negative responses by Auditors. It is regulation 14 which states that "any rights of objection, inspection and questioning of the local auditor conferred by sections 26 and 27 of the Act may only be exercised within a single period of 30 working days".

It is this provision which requires that the Period for the Exercise of Public Rights must be set at exactly 30 working days. If the period is not set correctly then it can, potentially, cause problems for both the External Auditor and person who wishes to object to, question, or inspect the accounts.

Regulations 15 Commencement of the Period for the Exercise of Public Rights

It is Regulation 15.1 (b), which requires that the Period for the Exercise of Public Rights must include the first 10 working days of July, that imposes the 30th June deadline for the approval of the Statement of Accounts and the Annual Governance Statement.

Regulation 16 Notice of Conclusion of Audit

This requires a Council to publish a notice stating that the audit has been concluded