What is the Cashbook for Town, Parish & Community Councils?

The cashbook is a Council's key financial document, that helps track and manage the Council's incomings and outgoings. It is a vital tool for maintaining accurate and transparent financial records.

Purpose and key features of a cashbook:

1. Recording Income: The cashbook allows the council to record all sources of income, such as the precept, government grants, donations, and any other revenue streams such as allotments, cemeteries and venue hire.
2. Tracking Expenditure: The cashbook helps in tracking and categorising the council's expenditures. This includes payments for various purposes, such as salaries and wages, maintenance and repairs, community projects, office supplies, utility bills, insurance premiums, and other expenses.
3. Bank Reconciliation: The cashbook facilitates the reconciliation process by comparing the recorded transactions with the bank statements. This helps ensure that the council's financial records align with the actual bank balance, identifying any discrepancies or errors.
4. Budget Monitoring: The cashbook allows the council to monitor its budget effectively. By tracking income and expenditure, it helps council members keep a close eye on their financial position, ensuring that spending remains within the approved budget, or any areas of overspend are understood.
5. Financial Reporting: The cashbook serves as a reliable source of financial information for generating reports, such as monthly or quarterly financial statements, budget reports, and Year End accounts. These reports provide an overview of the council's financial health and enable informed decision-making.
6. Audit and Accountability: The cashbook plays a crucial role during audits and financial inspections. It provides a comprehensive record of all financial transactions, making it easier to demonstrate transparency and accountability to auditors, council members, and the public.
7. Compliance: Town and parish councils in the UK must adhere to specific financial regulations and standards. The cashbook helps ensure compliance by accurately documenting all financial activities and maintaining proper records as required by law.

It's important for local councils to keep their cashbooks up to date to maintain financial transparency, enable effective decision-making, and meet legal requirements.

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How can Town, Parish & Community Councils streamline their financial processes?

Recently the Scribe Academy™️ saw our very own Head Accountant, Hannah Driver, talk through the basics of local council finance and how to streamline processes for a straight forward year-end in the "Local Council Accounting - From Zero to Hero" webinar.

First we ran a poll asking attendees which aspects of council accounting they struggled with the most. With it being the end of May, it was not surprising that Year End and the AGAR came out on top. With lack of time and confidence being the next runner ups and VAT also making an appearance!

Let’s take a look at some of Hannah’s advice on these topics…

🤔 VAT

Knowing when you need to be VAT registered is important. If you provide goods or services and receive additional income on top of your precept income, you will need to consider the amount of VAT that would be incurred on taxable supplies if you were VAT registered. If VAT incurred would reach £1000 or more for the financial year, you will need to become VAT registered.

As Making Tax Digital is now mandatory for all VAT registered councils, you will need to ensure you have sufficient software that allows you to keep VAT records, and submit VAT returns, digitally. Usually VAT returns will be submitted on a quarterly basis and it can be useful to have these quarters fall in line with the regular financial year quarters to keep things easier at Year End – this is also relevant to non-VAT registered councils who claim back VAT using Form 126.

If it is a long or onerous process to produce a VAT return or claim, this should be addressed. Think about how you can make this easier – would recording suppliers VAT registration numbers when adding the transactions help? If claiming VAT back via Form 126, consider adding the invoice date when entering the transaction to save you having to trawl back through paper invoices later on.

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Take a look at our recent blog post on Demystifying VAT, written by Steve Parkinson, Partner at the Parkinson Partnership.

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🕚 Lack of Time

This often comes up when we ask Clerks & RFO's about their accounting challenges. Especially towards Year End, where the regular to-do list doesn’t get any smaller, and you’re needing to complete your Year End of accounts, undergo an internal and external audit, sign off and publicise the accounts, all within a specific time frame.

While it would be great if we could wave a wand and stop the clock, it's simply not possible. That being said, there are tools and techniques that can aid productivity, help you to prioritise tasks and (hopefully) reduce the overwhelm of what can feel like a never-ending to-do list.

Here are some interesting techniques you could try:

The 2-Minute Rule

The Eisenhower Matrix

"Eat That Frog"

The 1-3-5 Rule

Combat Parkinson's Law

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😬 Year End - It Starts With The Cashbook

The cashbook is key for a smooth Year End and therefore a fit for purpose accounting system is vital. Now is the perfect time to consider whether you need to make changes. Ask yourself, am I getting the information that I want? Am I having to do a lot of additional work to provide reports and populate Year End figures?

If the answer is yes, it’s a good idea to look at the structure of your cashbook and implement some improvements:

- Base the structure on your council budget/precept breakdown. This will help when trying to produce an actual vs budget report as you can allocate payments and receipts out to specific budget codes.

- Consider whether you need additional budget codes to further analyse information which could then assist in setting the precept. Alternatively, if you have a large list of budget codes, can these be cut down or simplified in order to make information easier to refer to?

- Also consider grouping budget codes together to report on. For example, you may have a village hall and want to know the income received from this but also the costs incurred. Therefore, you could group the hall hire income together with expenditure such as maintenance, electricity, cleaning etc. Particularly if you have committees or areas that want this information, it will help when providing them reports.

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