How should retrospective approval of payments be handled?

Question

We're being asked to retrospectively approve payments to two suppliers.  There was no minuted decision to order the goods and services.

This sets a very dangerous precedent in which Council is committed to expenditure without its approval.

Do we need to suspend Financial Regulations in order to pay for goods and services retrospectively?  I believe that before we suspend FRs we need to inform all Councillors of this giving reasons for the retrospective payment.

Answer 1

It is not allowed to approve retrospective payments, especially as there are no minutes on the matter.  If this is for a one off service, then the decision to accept the quote from your supplier should be minuted and the payment approved in advance.  If this is a regular payment for a service, then the model Financial Regulations allow for an appendix to be approved by the Full Council for these type of payments eg gas bill, staff wages etc.

Comments

I agree but what should happen if, say due to a misunderstanding someone supplies a service to the Council, expecting to be paid as in previous years (when the financial controls were more lax, let's say).  Can a retrospective payment be agreed?  Would Financial Regulations need to be suspended to allow such a payment to be made?  Councillors have agreed that in future years a budget associated with the services provided must be agreed in advance.

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If a mistake has been made and the supplier has done the work then I am not sure that you could withhold payment for services rendered.  It is certainly not ideal but what other option do you have other than face court over it?  I would suggest that it be tabled as an agenda item, approved and future regulations discussed and minuted.

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I agree that is the pragmatic approach.  And I agree that the minutes should include what steps are to be taken to avoid a similar situation arising again.  I asked for the supplier to be contacted to explain that no work should be done for the Council without an official purchase order; then if this is not heeded then future payments should be withheld.  Sadly my fellow councillors are not prepared to adopt a more rigorous approach to spending the precept money!  But then we've not been using purchase orders for the past 3 years!!

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Absolutely, the council should write to the supplier so it is on record that what has happened in the past will not happen again.  I have had instances where the Chair has appointed work and it led to a very awkward situation where I had to cancel the work with the contractor.  Embarrassing for the Chair and the contractor but not for me - I was just cross it had happened.

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Are you available if our Clerk/RFO doesn't get a grip?  :-)  Having said this, our (new) Clerk did at least insist on adding this retrospective payment to our agenda - previous Clerks would have let it go without any comment.

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The it sounds like your Clerk is on the right track and should be encouraged to stand firm.  It can be very difficult to stand against 'tradition' and 'this is the way we have always done this' attitudes that are sadly quite prevalent in local councils.