The Annual Governance and Accountability Return is the one form the whole year leads to, and the one most likely to cause a qualified audit opinion for a reason that has nothing to do with the money: a date missed, a notice published a day late, a box ticked the wrong way. The content is not hard. The timetable is what catches people out.
What’s in it
- Annual internal audit report. Completed by the council’s internal auditor after their review, usually in April or May. It’s a list of control objectives with yes, no or not covered against each.
- Section 1: the annual governance statement. Nine assertions the council makes about how it ran itself: that it kept proper records, that it had an adequate system of internal control, that it gave the public their rights, and so on. The council has to consider each one and answer yes or no, and a no needs an explanation.
- Section 2: the accounting statements. Ten boxes: balances brought forward, precept, other receipts, staff costs, loan repayments, other payments, balances carried forward, cash and investments, fixed assets, and borrowing. Prepared by the clerk as RFO, on either a receipts and payments or an income and expenditure basis.
- Section 3: the external auditor’s report. Completed by the auditor, not the council. Only for councils that have a limited assurance review.
- The certificate of exemption. For councils that qualify (below) and choose to be exempt from the external review that year.
Exempt or not
A council whose gross income and gross expenditure were both £25,000 or less can certify itself exempt from the limited assurance review, provided it has existed for the three previous financial years (the certificate asks you to confirm the council existed on 1 April three years before the start of the year) and the external auditor didn’t issue a public interest report or a statutory recommendation about it in the year before. The council resolves to certify at a meeting after 31 March, the chair and clerk sign the certificate, and it goes to the external auditor by 30 June. An exempt council pays no audit fee. It still has to do everything else on this page except send the form for review.
Above £25,000 the external auditor, appointed for your area by Smaller Authorities’ Audit Appointments, carries out a limited assurance review. The fee is on a published scale by turnover, starting at £210 plus VAT for a council between £25,000 and £50,000, and is a few hundred pounds for most parish councils.
The timetable
| When | What |
|---|---|
| 1 April | Year end was 31 March. Close the books, do the final bank reconciliation, update the asset register. |
| April to May | Prepare section 2 and the supporting papers. The internal auditor reviews the records and completes their report. Fix anything they raise before the council meets. |
| By 30 June | At a council meeting: receive the internal audit report, approve section 1 (the governance statement) first, then section 2 (the accounts), in that order, and minute both; the chair signs and dates them at that meeting. If exempt, resolve to certify exemption. Send the form to the external auditor, or the exemption certificate. The regulations don’t name 30 June, but the public rights period must include the first ten working days of July and can only start after approval, which is why the AGAR instructions give 30 June as the deadline. |
| Before the public rights period | Publish section 1, section 2, the internal audit report and the notice of the period for the exercise of public rights on the website. The notice names the clerk as the person to contact and says where and when the accounts can be inspected. |
| 30 working days including the first 10 working days of July | Any elector can inspect the accounts and supporting documents, ask the external auditor questions and make objections. In practice most councils start the period on or just before 1 July. A period that doesn’t include those ten July days is one of the commonest reasons for a qualified opinion. |
| By 30 September | The external auditor returns section 3. Publish it, with the notice of conclusion of audit, and the full AGAR including section 3. Exempt councils publish the certificate of exemption instead. |
Why the order matters
The governance statement comes before the accounts because the council is asserting that its system of control worked, and only then adopting the figures that system produced. Approving them the other way round, or in one motion, is a qualification waiting to happen. Two agenda items, two minutes.
What the auditor is really checking
Not whether every receipt is in the right box. The review is a limited assurance one: the auditor looks at the form, the dates, whether the public rights notice was correct, whether the figures agree with last year’s closing balances, and whether anything in the governance statement contradicts what they can see on the website. That last point is worth noticing. The website is part of the audit evidence, which is one reason the Transparency Code items need to be there and dated.
Keeping it painless
Book the internal auditor in January. Put the June meeting date in the diary with the AGAR as the first substantive item. Draft the public rights notice in May with the dates filled in. Upload everything on the day the council approves it. Councils that do these four things rarely hear from the external auditor at all, which is the aim.