If your answer to this is yes, this blog provides the information of what the authority needs to do.
Complete the Annual Governance and Accountability Return (AGAR) Form3. Click on this link to download Form3. Please ensure you read the guidance notes on the AGAR.
If the authority is a parish meeting, where there is no separate parish council, AGAR Form3PM must be completed. A separate blog will be published for parish meetings.
It is recommended, though not legally required, to complete the internal audit before the councilsigns the annual governance and accounting statements - pages 5 and 6 of the AGAR. These statements must be filled out in draft so that the internal auditor can cross check the information/figures. The internal auditor should not fill in the governance and accounting statements for the council. Can the authority claim exemption?
In order to claim exemption from a limited assurance review an authority must meet certain specified criteria and submit to PKF Littlejohn the Certificate of Exemption, page 3 of the AGAR Form2, which has been completed, approved and signed by the authority.
The exemption criteria are met if the authority can declare that:
· The gross income and gross expenditure are both below £25,000 for the reporting financial year
· The reporting year is not one of the authority’s first three years of existence
· In relation to the preceding financial year (2023/24), the external auditor has not:
Ø issued a public interest report in respect of the authority or any entity connected with it
Ø made a statutory recommendation to the authority, relating to the authority or any entity connected with it
Ø issued an advisory notice under paragraph 1(1) of Schedule 8 to the Local Audit and Accountability Act 2014 (“the Act”), and has not withdrawn the notice
Ø commenced judicial review proceedings under section 31(1) of the Act
Ø made an application under section 28(1) of the Act for a declaration that an item of account is unlawful, and the application has not been withdrawn nor has the court refused to make the declaration
· The court has not declared an item of account unlawful after a person made an appeal under section 28(3) of the Act
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What must the authority send to PKF Littlejohn when NOT claiming exemption
For authorities that do not claim exemption, two types of review procedures are undertaken – basic and intermediate. Both types of review are subject to basic procedures, intermediate authorities must provide additional documentation.
Basic - All smaller authorities subject to a limited assurance review must complete an AGAR Form3.
Under a basic review, the smaller authority is required to provide:
· completed Sections 1 and 2 (pages 4 & 5) of the AGAR Form3 approved, completed and signed by the authority;
· completed Annual Internal Audit Report (AIAR) completed and signed by an independent internal auditor;
· a bank reconciliation in support of Section 2 (page 5), Box 8 (pro forma including example);
· the notification of the dates of the period for the exercise of public rights- (pro forma);
· an explanation of any significant variances year on year in Section 2. Explanations are now required for all variances of £100,000 or more regardless of the % variance. All responses should comprise both narrative and numerical explanations (pro forma);
· where the smaller authority has chosen to prepare section 2 on an income and expenditure basis rather than a cash basis only: a reconciliation between Section 2, Boxes 7 and 8 (pro forma);
· if your council’s declaration in respect of trust funds has changed from the prior year, an explanation for this change
Intermediate - The following authorities are subject to an intermediate review:
· Smaller authorities with gross income or expenditure over £200,000 (but less than £6.5m per annum) are subject to intermediate review procedures.
· A random sample of 5% of authorities who would otherwise be subject to basic procedures are also selected for intermediate procedures. If your authority is selected within this 5% you will have received an email confirming this at the same time as the instructions are issued. There is no additional fee charged for those smaller authorities selected as part of the sample and as stated above it does not affect the authority’s ability to claim exemption.
All smaller authorities that have satisfied the intermediate income/expenditure criteria for at least three years must prepare accounts on an income and expenditure basis from the third year onwards and therefore must provide a reconciliation between Boxes 7 and 8.
Authorities subject to an intermediate review must complete the same documentation as those subject to a basic review (see above) – but, in addition, they must also supply specified information in support of selected assertions in Section 1 of the AGAR. The additional documentation for intermediate reviews changes each year depending on which assertions are being tested.
There are no changes in the requirement for wet signatures on the AGAR. |
For intermediate authorities, in addition, the following information must also be submitted for 2024/25 intermediate reviews:
· A copy of the relevant minutes and agenda papers from the meeting at which the annual review of risk management arrangements during 2024/25 was discussed
· If the 2023/24 external auditor report included any ‘except for’ matters, copies of minutes and any agreed plan showing the corrective action taken to address these matters
If the authority has income or expenditure of more than £2,000,000, the following additional information must be provided:
· copies of year end bank statements to support the bank reconciliation (only one page per account showing the balance as at the close of business on 31 March 2025);
· the detailed internal audit report(s) regardless of whether there were issues or recommendations raised, together with evidence that demonstrates that any recommendations made have been addressed (see Practitioners’ Guide 2024 Paragraph 1.35);
· evidence that the authority has considered the independence of the internal auditor in the period 1 April 2024 to 31 March 2025 (see Practitioners’ Guide 2024 Paragraphs 1.37 and 4.15);
· evidence that the authority has considered and agreed the internal audit programme of work, having regard to the authority’s identified risks (see Practitioners’ Guide 2023 Paragraphs 1.35, 4.12 and 4.13);
· evidence that when appointed, the authority satisfied itself with regard to the competence of the internal auditor and agreed a letter of engagement (see Practitioners’ Guide 2024 Paragraphs 1.35, 4.12 and 4.13), e.g. minutes of the meeting where competence and the appointment was considered and the signed letter of engagement or the minutes of meeting where the engagement letter was agreed. Please note this information is only required if there has been a change in the appointed internal auditor since the information previously submitted in prior years
If you have prepared any documents in Microsoft Excel please submit those documents to PKF Littlejohn in Excel format. The authority must return to the external auditor by email or post (not both) no later than 1 July 2025. Reminder letters will incur a charge of £40 +VAT:
Unless requested, do not send any additional documents to PKF Littlejohn, the external auditor. The external auditor will ask for any additional documents needed. Once the external auditor has completed the limited assurance review and is able to give an opinion, the AGAR Section 1, Section 2 and Section 3. the External Auditor Report and Certificate (pages 4- 6), will be returned to the authority by email or post.
Submission deadlines
The default submission deadline for the 2024/25 reporting season is Tuesday 1st July 2025. Failure to do so will result in reminder letter(s) for which the Authority will be charged £40 +VAT for each letter for all financially active smaller authorities. If you wish to extend your deadline to avoid receiving a chaser fee for late submission, please contact PKF Littlejohn – there is no charge to change the submission deadline.
It is important to note, however, that:
- no submission deadlines will be granted beyond 31 July 2025;
- it will only be possible to extend submission deadlines by a maximum of four weeks to 31 July 2025 providing sufficient justification explaining the exceptional need for the extension is given;
- we are only able to extend the submission deadline
for exceptional reasons, and no extensions past 31 July 2025 will be given
under any circumstances. If you do not submit your completed and signed
AGAR or exemption certificate to us by 31 July 2025 additional charges
will apply for chaser letters issued;
- a statutory recommendation will be issued to all
financially active non-responding authorities that fail to submit their
documents by 14 September 2025. Statutory recommendations for
non-response are charged at the standard fee rate depending on the
authority’s expenditure banding and hence give rise to a minimum
additional fee of £210 plus VAT.
IMPORTANT:
If a financially active smaller authority is issued with a statutory
recommendation (and/or a public interest report) for 2024/25 it will not be
able to claim exemption from a limited assurance review for 2025/26, regardless
of whether it meets all other criteria.
Publication Requirements
Publication Requirements Under the Accounts and Audit Regulations 2015, authorities must publish the following information on the authority website/webpage: Before 1 July 2025 authorities must publish:
Notice of the period for the exercise of public rights and a declaration that the accounting statements are as yet unaudited;
Section 1 - Annual Governance Statement 2024/25, approved, completed and signed by the authority, page 4
Section 2 - Accounting Statements 2024/25, approved, completed and signed by the authority, page 5
Not later than 30 September 2025 authorities must publish:
Notice of conclusion of audit
Section 3 - External Auditor Report and Certificate, page 6
Sections 1 and 2 of AGAR including any amendments as a result of the limited assurance review, pages 4 & 5
It is recommended as best practice, to avoid any potential confusion by local electors and interested parties, that you also publish the Annual Internal Audit Report, page
Publics right notice
WHAT SMALLER AUTHORITIES NEED TO DO TO ADVERTISE THE PERIOD DURING WHICH ELECTORS AND INTERESTED PERSONS MAY EXERCISE RIGHTS RELATING TO THE ANNUAL ACCOUNTS
The Local Audit and Accountability Act 2014 and the Accounts and Audit Regulations 2015 require that:
1) The accounting records for the financial year to which the audit relates and all books, deeds, contracts, bills, vouchers, receipts and other documents relating to those records must be made available for inspection by any person interested, during a period of 30 working days set by the smaller authority and including the first 10 working days of July.
2) The period referred to in paragraph (1) starts with the day on which the period for the exercise of public rights is treated as having been commenced i.e. the day following the day on which all of the obligations in paragraph (3) below have been fulfilled.
3) The responsible financial officer for a relevant authority must, on behalf of that authority, publish (which must include publication on the authority’s website):
a) the Accounting Statements (i.e. Section 2 of either Form 2 or 3, whichever is relevant, of the Annual Governance & Accountability Return (AGAR)), accompanied by:
i) a declaration, signed by that officer to the effect that the status of the Accounting Statements are unaudited and that the Accounting Statements as published may be subject to change;
ii) the Annual Governance Statement (i.e. Section 1 of either Form 2 or Form 3, whichever is relevant, of the AGAR); and
b) a statement that sets out—
i) the period for the exercise of public rights;
ii) details of the manner in which notice should be given of an intention to inspect the accounting records and other documents;
iii) the name and address of the local auditor;
iv) the provisions contained in section 26 (inspection of documents etc.) and section 27 (right to make objections at audit) of the Act, as they have effect in relation to the authority in question;
HOW DO YOU DO IT?
You will meet statutory requirements if you fully and accurately complete the notice of public rights pro forma, and Publish (including publication on the smaller authority’s website) the following documents, the day before the public rights period commences:
a) the approved Sections 1 and 2 of either Form 2 or 3, whichever is relevant to your smaller authority, of the AGAR; and
b) the completed Notice of Public Rights and Publication of Unaudited Annual Governance & Accountability Return. Please note that we have pre-completed it with the following suggested dates: Tuesday 3 June – Monday 14 July 2025. (The latest possible dates that comply with the statutory requirements are Tuesday 1 July –Monday 11 August 2025); and
c) the notes which accompany the Notice (Local authority accounts: a summary of your rights).
Where the authority has answered ‘No’ to any assertions on Section 1, as stated on the face of Section 1 of the AGAR, a sufficiently detailed explanation of the reasons must be published with the AGAR on the authority’s website.
Click on this link to download this blog as a PDF
To contact PKF Littlejohn email sba@pkf-l.com or call 020 7516 2200. Visit the PKF Littlejohn webpage.