Dive into essential year-end processes, compliance obligations, and strategic insights to enhance your council's financial and operational readiness.

1. Understanding Year End for Councillors
What you need to know
Hannah Driver
Jo Peters

2. What is the AGAR?

3. The AGAR
● The Annual Governance and Accountability Return
● For the 1st April - 31st March
Sections
● Exemption Certificate (if relevant)
● Internal Audit Report
● Section 1: The Annual Governance Statement
● Section 2: The Accounting Statements

4. Which AGAR Form?
Form 1
● No financial transactions
● Certificate of Exemption
Form 2
● Under £25k (gross income and gross expenditure)
● Meet other qualifying criteria
● Certificate of Exemption
Form 3
● Over £25k but under £6.5 million
● Unable or do not wish to certify as exempt

5. Internal or External Auditor?
Internal Auditor
● Engaged by the council to review the council’s procedures
and controls
● Must be independent to the council
● All councils should have an internal audit, at least annually
External Auditor
● Determined by the county the council is located in
● Reviews the AGAR (unless the council is exempt)

6. The AGAR: Internal Audit Report

7. The AGAR: Internal Audit Report
● The summarised conclusions from the Internal Auditor’s
report
● To consider adequacy and effectiveness of the council’s
procedures & internal controls e.g. calculation of the precept,
maintenance of the asset register
● Carried out at least annually
● Scope and extent will depend on the council’s size and
circumstances

8. The AGAR: Section 1 - Annual Governance
Statement

9. The AGAR: Section 1 - Annual
Governance Statement
● To review effectiveness of the system of internal controls
● ‘Yes’ or ‘No’ Response to each Statement
● ‘No’ answers must be accompanied by a separate sheet
identifying weaknesses and how they will be addressed
● The response to assertions 2 and 6 will come from the
Internal Audit Report
● Completed by the council at the meeting to review
the Year End

10. The AGAR: Section 2 - Accounting
Statements

11. The AGAR: Section 2 - Accounting
Statements
Receipts & Payments (Councils less than £200k)
● Records transactions at the point at which they were paid/
received
● Data can be taken directly from the cashbook (gross totals)
● Box 7 and 8 will be equal
Income & Expenditure (Councils over £200k for 3 consecutive years)
● Considers the period to which the transactions relate to
● Requires additional year end adjustments e.g. creditors
● VAT owing is an adjustment and totals are reported net
● Box 7 and 8 will be different
● Smaller councils can opt to use I&E

12. The AGAR: Section 2 - Accounting
Statements
● Box 1: Balances brought forward
○ Equal to Box 7 of the prior year
● Box 2: Precept or Rates and Levies
○ Precept only (rates and levies refers to drainage boards only)
● Box 3: Total other receipts
○ All receipts other than the precept
○ Gross totals (including VAT) in R&P / Net totals in I&E
● Box 4: Staff costs
○ Core staff costs only (salaries, tax, NI and pension costs)
● Box 5: Loan interest/capital repayments
○ Loan repayments

13. The AGAR: Section 2 - Accounting
Statements
● Box 6: Other payments
○ All payments other than the staff costs or loan repayments
○ Gross totals (including VAT) in R&P / Net totals in I&E
● Box 7: Balances carried forward
○ Sum of (Box 1 + 2 + 3) - (Box 4 + 5 + 6)
● Box 8: Total value of cash and short term investments
○ To equal bank reconciliation as at 31st March
● Box 9: Total fixed assets plus long term investments
○ Must be consistent in reporting of total (usually purchase value)
○ Depreciation is ignored
● Box 10: Total borrowings
○ Amount outstanding on loans as at 31st March

14. Other Documents
Bank Reconciliation as at 31st March
● To reconcile to the bank statements
Explanation of Variances
● Between the prior year and current year (% differences to
be explained are determined by the external auditor)
● Full numerical explanations must be provided
Reconciliation between Box 7 & 8 (I&E only)
● List of adjustments (debtors, creditors etc) to explain
the difference between Box 7 & 8

15. Reviewing and
Approving the Year
End Accounts

16. Year End Process
At year end 31st March your Clerk will start preparing the End
of Year Accounts. This will include the following:
● Finalising the cashbook
● Bank Reconciliation as at 31st March
● Arranging for the Internal Audit to be carried out (a copy of
the report should be circulated)
● Preparing a Reserves Report
● Completing the Significant Variances Report
● Completion of the Exemption Certificate (if a smaller
authority with a turnover of under £25K)

20. The AGAR: Certificate of Exemption

21. What Happens at the Meeting
The End of Year Accounts must be Approved no later than 30th
June. At the meeting the council will:
● Approve the End of Year Accounts and Bank Reconciliation
as at 31st March
● Approve Sections 1 & 2 of the AGAR and/or the Exemption
Certificate
● Approve the Internal Audit report
Council members should have been provided with either
a paper or electronic copy of the documents listed above
for review prior to them being Approved at this meeting

22. Once the AGAR has
been approved

23. Exercise of Public Rights Notice
Once the AGAR has been Approved an Exercise of Public
Rights Notice needs to be placed on the council’s website
30 working-day period in which accounting records can be
made available for inspection to any interested parties. Must
include the first 10 working days of July
Dates for this notice are usually set by the External
Auditor but these can be changed to meet each
individual council’s needs

24. Exercise of Public Rights Notice
The information on the notice will include:
● The dates of the period for the Exercise of Public Rights
● How individuals can communicate to the Clerk of the
Council to inspect the accounting records and any
related documents
● The name and contact details of the Clerk and External
Auditor and times when to contact the Clerk to request
documents for inspection

25. Publication of Documents Required
Following Approval
Smaller Authorities (Councils under the £25K threshold) must
send the External Auditor their Certificate of Exemption and
publish various documents on their website including:
● Signed copy of the Certificate of Exemption
● Completed Internal Audit Report
● A signed copy of Section 1 of the Annual Governance
Statement (AGAR)
● A signed copy of Section 2 of the Annual Governance
Statement (AGAR)
● A copy of the Explanation of Significant Variances
● A Bank Reconciliation as at 31st March
● The Notice of the period for the Exercise of Public Rights

26. Publication of Documents Required
Following Approval
Councils with either a gross income or expenditure over
£25,000 must return to the External Auditor by email or post
(not both) the following documents:
● Signed Sections 1 and 2 of the AGAR, together with
● A copy of the Bank Reconciliation as at 31st March
● A Copy of the Explanation of Significant Variances
● A Copy of the Exercise of Public Rights Notice
● Completed section of the AGAR with the Internal
Auditors Report

27. What Happens Once These Documents are
Submitted
● Additional information request
● External Audit Report
● Qualified Audit
● Agenda item to Approve the Completion of the
External Audit