Question re: transferring money from last year's budget into this year.

Question

Hello, a query over financial process.

Our budget for 2023/24 was agreed in December.

Come year end a Committee had underspent on a budget line in 2022/23 because an expected bill wasn't received in time and was expected early in the new financial year.

The Committee agreed to roll forward the underspend into 2023/24 to cover the bill.

How should this be achieved ?

What has happened is that the Clerk has increased the budget to accommodate this (or at least that's what the budget report shows) - which means that the budget agreed by Council has changed (and on the face of it it now looks like we're running a negative budget where income > expenditure). To be fair to our Clerk she said this is what the software company who provide our accounts system told her to do. I'm not an accountant nor a council finances expert but to me this sounds wrong.

How should this have been achieved ? Would it have been better for the Committee to agree to move the underspend into an Earmarked Reserve in 2022/23, and then for 2023/4 move the money back from the EMR ? This would clearly show the movement of funds providing traceability, and it would not alter the headline budget number ? Or should it have been done some other way ?

Many thanks.

Answer 1

Your clerk as RFO has the authority to decide accounting practices and if they have taken advice from their accounts software provider and it has all been minuted and explainable, I cannot see what else is required. Seems fine to me.

Answer 2

I don’t see what the problem is, a Budget is just a best guess and I doubt there are many Councils that agreed one in say December 2020 and it was still 100% correct at 31/3/22

At my PC the Budget is agreed and then basically ignored, there are already large discrepancies in the 2023/24 budget for example the opening bank balance is £30,000 lower than anticipated
This is despite the fact that there are clearly large underspends in some areas
Any attempt to raise concerns with regards to matters like this are considered to be accusations that fraud is taking place
After last Mondays meeting ( my last ) I had one Councillor getting very aggressive with me because he claimed as he counter signs the cheques so there is no fraud
I pointed out a couple of years before the Budget had an arithmetical error of £200,000 and that wasn’t fraud and I was the only Councillor to notice
To me the Budget should be reviewed quarterly to track progress, to learn lessons and to start building the framework for the next three years Budgets but what do I know after 40 years in accounting !

Answer 3

Either way is fine. If they increase the line I would just add an explanation at the review. If it’s earmarked funds that would be annotated on last years review

Either way the money has been agreed anyway