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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‍‍‍Why do I need to consider my cashbook structure?

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

Having a well-structured cashbook for your Councils accounts can facilitate in streamlining your reports and also help the Council to gain a better understanding of budget variances. This not only aids decision making within your Council, but also helps you when it comes to drafting budget figures for the next financial year, as well as providing an explanation of variances for the AGAR. 

By investing in an organised cashbook structure now, you can expect time savings and increased efficiency in the future.

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Got it, so how should I structure my cashbook?

As we know, 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.

The structure of the cashbook will of course vary from Council to Council, where different projects are being undertaken or where additional services are available (e.g. venue hires, allotments, cemeteries etc). There is no one set, perfect structure that can be used for the cashbook, and it’s important to take into consideration your Council’s specific projects, services, departments etc.

Here are some things to consider:

- 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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