Annual Governance Accountability Return (AGAR)

In England, the Audit Commission Act 1998 and subsequent regulations govern the accounting and auditing practices and financial management of a council. A local council’s financial year begins on 1 April and ends on 31 March. Legislation requires a council to prepare accounting statements for each financial year, which must be externally audited. Proper practices provide for a council to prepare its accounting statements in the form required by an annual return which summarises the accounts and includes an annual governance statement. The external audit of a council’s annual return provides a professional audit of a council’s annual income and expenditure (or receipts and payments) and a review of the annual governance statement from someone independent of the council. The external auditor provides an independent opinion on the council’s accounting and reviews a council’s arrangements to ensure proper conduct of financial affairs.

A council is responsible for ensuring that its financial management is adequate and effective. It must have a sound system of internal control that facilitates the performance of its statutory functions and powers and includes arrangements for internal audit and management of risk. A council must conduct a review on the effectiveness of its system of internal control a least once a year. The findings of the council’s annual review of its system of internal control must be considered by Full Council. Following such a review and having considered the annual report from internal audit, the council must approve an annual governance statement, prepared in accordance with proper practices in relation to internal control. The system of internal control for all local councils includes the appointment of an internal auditor by the council and responding to matters reported to the council by the internal auditor.

Tharmarajah, M. (2013) Local Councils Explained. London: National Association of Local Councils.