Policy paper

River Arun: annual governance and accountability return 2023 to 2024 - form 3

Updated 17 July 2024

Applies to England

To be completed by local councils, internal drainage boards (IDB) and other smaller authorities: 

• where the higher of gross income or gross expenditure exceeded £25,000 but did not exceed £6.5 million; or 

• where the higher of gross income or gross expenditure was £25,000 or less, but that: 

• are unable to certify themselves as exempt (fee payable); or 

• have requested a limited assurance review (fee payable) 

1. Guidance notes on completing Form 3 of the annual governance and accountability return 2023 to 2024 

1. Every smaller authority in England that either received gross income or incurred gross expenditure exceeding £25,000 must complete Form 3 of the annual governance and accountability return (AGAR). This must be done at the end of each financial year in accordance with Proper Practices. 

2. The annual governance and accountability return is made up of 3 parts, pages 3 to 6: 

• the annual internal audit report must be completed by the authority’s internal auditor 

• sections 1 and 2 must be completed and approved by the authority 

• section 3 is completed by the external auditor and will be returned to the authority 

1. The authority must approve section 1, annual governance statement, before approving section 2, accounting statements. Both must be approved and published on the authority website before 1 July 2024. 

2. An authority with either gross income or gross expenditure exceeding £25,000 or with neither income nor expenditure exceeding £25,000, but which is unable to certify itself as exempt, or requesting a limited assurance review, must return to the external auditor by email or post (not both) no later than 30 June 2024. Reminder letters will incur a charge of £40 + VAT: 

• the AGAR sections 1 and 2, together with  

• a bank reconciliation as at 31 March 2024 

• an explanation of any significant year on year variances in the accounting statements 

• notification of the commencement date of the period for the exercise of public rights 

• annual internal audit report 2023 to 2024 

Unless requested, do not send any additional documents to your external auditor. Your external auditor will ask for any additional documents needed. 

Once the external auditor has completed the limited assurance review and is able to give an opinion, the AGAR section 1, 2 and 3 – the external auditor report and certificate will be returned to the authority by email or post. 

2. Publication Requirements 

Under the Accounts and Audit Regulations 2015 act, authorities must publish on the authority website/webpage: 

Before 1 July 2024 authorities must publish: 

• notice of the period for the exercise of public rights and a declaration that the accounting statements are as yet unaudited 

• Section 1 - Annual Governance Statement 2023 to 2024, approved and signed, page 4 

• Section 2 - Accounting Statements 2023 to 2024, approved and signed, page 5 

Not later than 30 September 2024 authorities must publish: 

• notice of conclusion of audit 

• Section 3 - External Auditor Report and Certificate 

• Sections 1 and 2 of AGAR including any amendments as a result of the limited assurance review. It is recommended as best practice, to avoid any potential confusion by local electors and interested parties, that you also publish the Annual Internal Audit Report, page 3. 

The Annual governance and Accountability Return constitutes the annual return to in the Accounts and Audit Regulations 2015. Throughout, the words ‘external auditor’ have the same meaning as the words ‘local auditor’ in the Accounts and Audit Regulations 2015. 

3. Guidance notes on completing Form 3 of the Annual Governance Accountability Return (AGAR) 2023 to 2024 

The authority must comply with proper practices in completing sections 1 and 2 of this AGAR. Proper practices are found in the practitioners’ guide which is updated from time to time and contains everything needed to prepare successfully for the financial year end and the subsequent work by the external auditor. 

Make sure that the AGAR is complete (no highlighted boxes left empty) and is properly signed and dated. Any amendments must be approved by the authority and properly initialled. 

The authority should receive and note the annual internal audit report before approving the annual governance statement and the annual governance statement and the accounts. 

Use the completion checklist table to review the AGAR for completeness before returning it to the external auditor by email or post (not both) no later than 30 June 2024. 

The annual governance statement (section 1) must be approved on the same day or before the accounting statements (section 2) and evidenced by the agenda or minute references. 

The responsible financial officer (RFO) must certify the accounts (section 2) before they are presented to the authority for approval. The authority must in this order; consider, approve and sign the accounts. 

The RFO is required to commence the public rights period as soon as practical after the date of the AGAR approval. 

You must inform your external auditor about any change of Clerk, Responsible Finance Officer (RFO) or Chairman and provide relevant authority owned generic email addresses and telephone numbers. 

Make sure that the copy of the bank reconciliation to be sent to your external auditor with the AGAR covers all the bank accounts. If the authority holds any short-term investments, note their value on the bank reconciliation. The external auditor must be able to agree the bank reconciliation to box 8 on the accounting statements (section 2, page 5). An explanation must be provided of any difference between box 7 and box 8. More help on bank reconciliation is available in the practitioners’ guide. 

Explain fully significant variances in the accounting statements on page 5. Do not just send a copy of the detailed accounting records instead of this explanation. The external auditor wants to know that you understand the reasons for all variances. Include complete numerical and narrative analysis to support the full variance. 

If the bank reconciliation is incomplete or variances not fully explained then additional costs may be incurred. 

Make sure that the accounting statements add up and that the balance carried forward from the previous year (box 7 of 2023) equals the balance brought forward in the current year (box 1 of 2024). 

The RFO on behalf of the authority, must set the commencement date for the exercise of public rights of 30 consecutive working days. This must include the first 10 working days of July. 

The authority must publish on the authority website/webpage the information required by Regulation 15 (2), Accounts and Audit Regulations 2015, including the period for the exercise of public rights and the name and address of the external auditor before 1 July 2024. 

4. Completion checklist - no answers mean you may not have met requirements 

Section	Questions	Answer
All sections	Have all highlighted boxes have been completed?	Yes
All sections	Has all additional information requested, including the dates set for the period for the exercise of public rights, been provided for the external auditor?	Yes
Internal Audit Report	Have all highlighted boxes been completed by the internal auditor and explanations provided?	Yes
Section 1	For any statement to which the response is ‘no’, has an explanation been published?	Yes
Section 2	Has the responsible finance officer signed the accounting statements before presentation to the authority for approval?	Yes
Section 2	Has the authority’s approval of the accounting statements been confirmed by the signature of the Chairman of the approval meeting?	Yes
Section 2	Has an explanation of significant variations from last year to this year been published where required?	Yes
Section 2	Has the bank reconciliation as at 31 March 2024 been reconciled to Box 8?	Yes
Section 2	Has an explanation of any difference between Box 7 and Box 8 been provided?	Yes
Sections 1 and 2	Trust funds – have all disclosures been made if the authority as a body corporate is a sole managing trustee? NB: do not send trust accounting statements unless requested.

5. Annual Internal Audit Report 2023 to 2024 

5.1 River Arun Internal Drainage Board 

5.2 Internal drainage districts (IDDs) in southern England – GOV.UK (www.gov.uk) 

During the financial year ended 31 March 2024, this authority’s internal auditor acting independently and on the basis of an assessment of risk, carried out a selective assessment of compliance with the relevant procedures and controls in operation and obtained appropriate evidence from the authority. 

The internal audit for 2023 to 2024 has been carried out in accordance with this authority’s needs and planned coverage. On the basis of the findings in the areas examined, the internal audit conclusions are summarised in this table. Set out below are the objectives of internal control and alongside internal audit conclusions on whether, in all significant aspects, the control objectives were being achieved throughout the financial year to a standard adequate to meet the needs of this authority. 

If the response is ‘no’ please state the implications and action being taken to address any weakness in control identified (add separate sheets if needed). 

Note: If the response is ‘not covered’ please state when the most recent internal audit work was done in this area and when it is next planned. If coverage is not required, the annual internal audit report must explain why not (add separate sheets if needed). 

For any other risk areas identified by this authority adequate controls existed (list any other risk areas on separate sheets if needed). 

5.3 Internal control objective 

Section	Questions	Answers
A	Appropriate accounting records have been properly kept throughout the financial year?	Yes
B	This authority complied with its financial regulations, payments were supported by invoices, all expenditure was approved and VAT was appropriately accounted for.	Yes
C	This authority assessed the significant risks to achieving its objectives and reviewed the adequacy of arrangements to manage these.	Yes
D	The precept or rates requirement resulted from an adequate budgetary process; progress against the budget was regularly monitored and reserves were appropriate.	Yes
E	Expected income was fully received, based on correct prices, properly recorded and promptly banked and VAT was appropriately accounted for.	Yes
F	Petty cash payments were properly supported by receipts, all petty cash expenditure was approved and VAT appropriately accounted for.	Not covered
G	Salaries to employees and allowances to members were paid in accordance with this authority’s approvals and PAYE and NI requirements were properly applied.	Not covered
H	Asset and investments registers were complete and accurate and properly maintained.	Yes
I	Periodic bank account reconciliations were properly carried out during the year.	Not covered
J	Accounting statements prepared during the year were prepared on the correct accounting basis (receipts and payments or income and expenditure), agreed to the cash book, supported by an adequate audit trail from underlying records and where appropriate debtors and creditors were properly recorded.	Yes
K	If the authority certified itself as exempt from a limited assurance review in 2022 to 2023, it met the exemption criteria and correctly declared itself exempt (If the authority had a limited assurance review of its 2022 to 2023 AGAR put “not covered”).	Not covered
L	The authority publishes information on a website/webpage up to date at the time of the internal audit in accordance with any relevant legislation.	Yes
M	In the year covered by this AGAR, the authority correctly provided for the period for the exercise of public rights as required by the Accounts and Audit Regulations (during the 2023 to 2024 AGAR period, were public rights in relation to the 2022 to 2023 AGAR evidenced by a notice on the website and/or authority approved minutes confirming the dates set).	Yes
N	The authority has complied with the publication requirements for 2022 to 2023 AGAR (see AGAR page 1 guidance notes).	Yes
O	(For local councils only) Trust funds (including charitable) – The council met its responsibilities as a trustee.	Not applicable

Internal audit AGAR report - matters of internal control 2024

Date(s) internal audit undertaken	Name of person who carried out the internal audit
02/04/2024 to 19/04/2024	Richard Charles (01/05/2024)