GITTISHAM PARISH COUNCIL
website: https://gittisham.org.uk/
Internet Banking Policy for Gittisham Parish Council
Background
This policy is based on the advice issued by the National Association of Local Councils (NALC) relating to parish councils’ use of online banking and the implications for the way in which the Parish Council operates with regards to the authorization of payments.
Banking arrangements have changed significantly in recent years, with more transactions being carried out online. As a result of this, the use of cheques is becoming rare. Many businesses prefer to receive payment by electronic means and are now discouraging the payment of invoices by cheques. This became particularly apparent during the COVID-19 pandemic.
Legislation
The Legislative Reform (Payments by Parish Councils, Community Councils and Charter Trustees) Order 2014 (SI2014/580) came into effect on 12th March 2014. This Legislative Reform Order repeals the statutory requirement (Local Government Act 1972 section 150(5) which states that “every cheque or other order for the payment of money shall be signed by two members of the council”.
The removal of this particular legal requirement enables the Parish Council to take an overall approach to how it controls its money as well as taking advantage of modern technology including internet banking.
Internal Controls
The Parish Council must ensure that it maintains robust controls on payments as an integrated part of its overall financial control system and proposes an Internet Banking Policy as part of its governance.
At all times the advice of NALC in relation to dual authorization will be followed:
“Councils must not relinquish the “two member signatories” control over cheques and other orders for payment until they have put in place safe and efficient arrangements in accordance with the guidance noted from the NALC Finance and Audit Advisor: “the overriding requirement resulting from the abolition of S150(5) is that each and every local council seeking to depart from the two signature rule must “implement and maintain robust controls on expenditure as an integrated part of their overall financial control system”.
It is not a requirement that two people authorize electronic payments, however it is a general principle that more than one person should be involved in any payment, whether that is before, at or after the point at which the payment is made. Councils must consider the appropriate systems, procedures and controls available by banking providers.”
Current position: November 2023
The Parish Council has two bank accounts with NatWest Bank (one Current Account and one Business Reserve) with internet banking facilities set up for the day-to-day payment of invoices and receipt of income on the current account. This facility is known as Bankline for Communities.
The Clerk provides periodic reconciliations supported by bank statements to full Council on the Council’s main Current and Reserve Accounts.
Payments by cheque will be made when necessary, following the existing controls and approvals, but the Council has moved to online payments as the default position.
The Council will have a minimum of three Councillors as authorised signatories at any one time.
Policy
1. Wherever possible, payments will be made using online banking and should be initiated as per the procedures set out below within one week of being agreed at a council meeting.
2. Payment for items made by internet banking transfer must have evidence retained showing which members approved release of the payment.
3. Where internet banking arrangements are made with any bank, the Clerk / RFO shall be appointed as the Payment Controller. The Clerk / RFO will operate a ‘create and submit only’ authorisation and will be able to transfer funds between accounts held at the same bank.
4. The Bank Mandate approved by the Council shall identify a minimum of three Councillors as Signatories who will be authorised to ‘approve only’ transactions on those accounts.
5. Access to internet banking accounts will be directly to the bank’s log-in page and not through a search engine or e-mail link. Remembered or saved password facilities must not be used on any computer used for council banking work. Breach of this requirement will be treated as a very serious matter.
6. The Council, and those signatories using computers for the Council’s internet banking, shall ensure that anti-virus, anti-spyware and firewall software with automatic updates, together with a high level of security, is used. Signatories may request reimbursement for the installation and annual update of such software on their personal computers.
7. No employee or Councillor shall disclose any PIN or password, relevant to the working of the Council or its bank accounts, to any person not authorised in writing by the council.
8. New beneficiary details and changes to beneficiary details used for internet banking must be supported by hard copy or email notification for checking and supported by hard copy authority for change signed by the Clerk and a Signatory.
9. A programme of regular checks of standing data with suppliers will be followed.
Procedure
The actual process of operating the online account will be the subject to the rules and security authorisation process of the agreed bank:
1. All orders for payment will be verified for accuracy by the Parish Clerk and included on the payment schedule.
2. The schedule of all payments shall be prepared by the Parish Clerk and presented to each meeting of the Council together with any supporting invoices or other documentation for approval. The approved schedule will be signed by the Clerk as Responsible Financial Officer and Chairman of the meeting.
3. The Parish Clerk will initiate payment.
4. Two of the three authorised Councillors will confirm the payments online (from the list of authorised Councillors held by NatWest Bank). Councillors are expected to authorise payment requests within two days of the payment being initiated by the Parish Clerk.
5. Where a councillor is to be reimbursed for expenditure, they should not be an authoriser (in the case of internet payments), or a signatory (in the case of cheque payments).
Inter Account Transfers
Transfers between the Council’s Accounts held with NatWest Bank will continue to be subject to the Council’s own Financial Regulation 5.5c “fund transfers within the councils banking arrangements up to the sum of £10,000 provided that a list of such payments shall be submitted to the next appropriate meeting of council.”
Use of online banking – Risk Assessment
Benefits: quick and safe payment of invoices and staff salaries, access to cheaper, online products and services, preparation for the future when cheque payments may not be possible. Materiality level of risk relatively low with annual budget of approximately £5000.
| Risks: | Actions to minimise risk (as stated in NALC revised Financial Regs): |
| Premature payment of invoices. | All invoices for payment shall be examined, verified and certified by the RFO to confirm that the work, goods or services to which each invoice relates has been received, carried out, examined and represents expenditure previously approved by the council, or authorized by the Chairman of a Committee. |
| Over payment of salaries. | For each financial year the RFO shall draw up a list of due payments which arise on a regular basis as the result of a continuing contract, statutory duty, or obligation (such as but not exclusively, Salaries, PAYE and NI, Superannuation Fund and regular maintenance contracts and the like for which council [,or a duly authorised committee,] may authorise payment for the year provided that the requirements of regulation budgetary controls are adhered to, provided also that a list of such payments shall be submitted to the next appropriate meeting of the Council. |
| Unauthorised payment. | Instructions for each payment to be signed by two authorised bank signatories, either at a meeting of the Council or by email. Copies to be retained and payments to be reported to council. Bank reconciliation for all payments to be signed off by the RFO and Chair at the next Council meeting. Any discrepancies to be minuted. |
| Failure to make payment | Following authorization, the RFO will check that all payments have been made. |
| Payment to incorrect account | The Councillor making a payment to cross-check accuracy of the account details. Parish Clerk to follow up with new payees that payment has been received. |
| Mis-use of pin or password | No employee or councillor shall disclose any PIN or password to any person. |
| Loss of pin or password. | The person who has lost the pin or password will follow the bank procedures to obtain a replacement. |
| Risk of internet fraud. | The council will ensure that anti-virus, anti-spyware and firewall, software with automatic updates, together with a high level of security, is used. Access to any internet banking accounts will be directly to the access page (which may be saved under “favourites”), and not through a search engine or email link. Remembered or saved passwords facilities must not be used on any computer used for council banking work. |
| Embezzlement. | The Parish Council has insurance. |
| Mis-use of debit card. | No debit card will be issued |
Reviewed: November 2023
Review due: November 2024