Parish Council Financial Regulations: What to Adopt, Review, and Get Right

Financial regulations are the rulebook for a parish council's money. They set out how the council budgets, how payments are authorised and made, how the bank accounts are run, how contracts are procured, and what internal controls keep the council's finances safe. Alongside the council's

standing orders, they are one of the two core governance documents every council should adopt and review every year — and the one most likely to be out of date, because the rules around procurement changed in 2025. This guide explains what financial regulations cover, where the obligation to keep them current comes from, and what changed.

What financial regulations are for

Financial regulations translate the principles of good financial management into specific, written rules the council follows. They answer the practical questions that arise around money: who can authorise a payment, what the limit is before a decision needs full council, how many quotes are needed before a contract is awarded, who signs cheques or approves online payments, and how the council guards against fraud and error.

They sit beside, but are separate from, the council's

standing orders (which govern meetings and the conduct of business). Standing orders usually cross-reference the financial regulations for contracts and procurement; the two documents are designed to work together and should be reviewed together.

The Responsible Financial Officer

Financial regulations are built around the role of the Responsible Financial Officer (RFO) — the officer responsible for the council's financial affairs. In most small councils the clerk and the RFO are the same person. The RFO is responsible for the day-to-day financial management: maintaining the accounts, preparing the budget and the year-end accounts, administering payments within the rules the regulations set, and advising the council on financial matters.

The financial regulations define what the RFO may do alone and what must come to the council. A clear split — RFO authority for routine, in-budget spending; council approval for anything above set limits or outside the agreed budget — is the heart of a workable set of regulations.

The obligation to adopt and review

Financial regulations are adopted by resolution of the full council and reviewed regularly. The duty to keep them current flows from proper practices — the standards smaller authorities must follow under the audit framework. "Proper practices" are defined by reference to Governance and Accountability for Local Councils — a Practitioners' Guide, issued by the Joint Practitioners Advisory Group (JPAG). Following proper practices is part of the council's obligations under the Accounts and Audit Regulations 2015.

In practice, the review discipline is:

• Review annually. The financial regulations should be reviewed at least once a year — most councils do this at the annual meeting in May alongside standing orders and the code of conduct.
• Review after a change of clerk or RFO. A new RFO needs to know — and the council needs to confirm — that the rules they are operating under are current.
• Review the system of internal control annually. Separately from re-adopting the regulations, the council must review the effectiveness of its system of internal control once a year, before approving the Annual Governance Statement. This is one of the assertions the council makes in its AGAR.

Record each review in the minutes. The internal auditor will check that the financial regulations have been adopted and reviewed — see the internal audit checklist.

The NALC 2024 model financial regulations

As with standing orders, almost every council starts from the model produced by the National Association of Local Councils (NALC) rather than drafting from scratch. NALC published a substantially rewritten 2024 model financial regulations (further updated in March 2025), replacing the long-standing previous edition. The rewrite was significant for two reasons:

• It is scalable. The 2024 model is designed to suit councils of very different sizes, rather than imposing one set of thresholds on every council. A small council and a large town council should not run the same financial controls, and the model now reflects that.
• It updated the procurement rules to align with the new procurement regime that took effect in 2025 (below).

If the council is still running a pre-2024 set of financial regulations, that is the single most important thing to fix. A document that pre-dates the 2024 model will reference the old procurement legislation and, in many cases, outdated thresholds. Adopt the current model and resolve the council-specific figures it leaves to you.

What changed in procurement: the Procurement Act 2023

The biggest change in the 2024 model is procurement. The Procurement Act 2023 came into force on 24 February 2025, replacing the Public Contracts Regulations 2015 as the framework governing public procurement in England, Wales, and Northern Ireland. Parish councils are within scope.

For most small parish councils, the practical effect is limited, because the Act's full tendering regime only bites on contracts above high financial thresholds that small councils rarely reach. But two points apply broadly:

• Below-threshold notice publication. A contract worth at least £30,000 including VAT is a "notifiable below-threshold contract" for a parish council. Where the council advertises it, it must publish a below-threshold tender notice, and on award a contract details notice, on the government's central digital platform (Find a Tender). Under the old regime these notices went on Contracts Finder; the Procurement Act 2023 moved publication to the central platform. This transparency requirement catches a much wider range of councils than the full tendering rules do.
• Old references are now wrong. Financial regulations that still cite "the Public Contracts Regulations 2015" are referring to a regime that has been replaced. The 2024 NALC model updates these references to the Procurement Act 2023 and the supporting Procurement Regulations 2024 (with wording that picks up any superseding legislation). This is the clearest reason to move to the current model.

Below the advertising threshold, councils have flexibility, but the financial regulations still require value for money and a fair process — which is what the quote and tender thresholds in the model are for.

Quote and tender thresholds

The NALC model uses tiered thresholds: the larger the value of a proposed contract, the more formal the process required — from no formal quotes for small purchases, through a requirement to obtain several written quotations for mid-range spending, up to a full tender process for high-value contracts. The £30,000 below-threshold notice requirement (above) sits on top of this.

The important point is that the specific figures are set by each council in its own adopted regulations. The model presents the thresholds as choices for the council to fill in, scaled to its size and turnover. Do not assume another council's figures apply to yours — read the council's own adopted financial regulations for the thresholds that bind it, and make sure they have been resolved (not left as blanks) and recorded.

Internal controls and fidelity cover

Beyond procurement, the financial regulations set out the council's internal controls — the checks that protect public money:

• Authorisation of payments — who approves spending, the dual-authorisation of payments and online banking, and the segregation of duties so that no single person controls a transaction end to end.
• Banking and reconciliations — how often bank reconciliations are done and who reviews them.
• Budget monitoring — regular reporting of spending against budget to the council.
• Fidelity (employee dishonesty) cover. The model expects the council to hold insurance against loss from dishonesty by employees or officers — this is proper practice rather than a statutory minimum, and the appropriate level of cover is set by reference to the funds the council holds and handles. It connects directly to the council's insurance renewal.

These controls are what the internal and external auditor test. A council with current, adopted financial regulations that it actually follows is straightforward to audit; a council operating on an outdated document, or none, generates findings.

Where financial regulations fit the wider compliance picture

Financial regulations are one corner of the council's governance framework. They work alongside the standing orders for meetings and contracts, feed into the precept-setting process each year, and underpin the financial assertions the council makes in its AGAR. A new councillor or RFO should receive the current document on induction.

Keeping the set current is an annual obligation, not a one-off. Use the compliance checklist tool to confirm the financial regulations have been reviewed and re-adopted, that the procurement references are current to the Procurement Act 2023, and that the dates are recorded in the minutes.

Sources

• Procurement Act 2023 — the procurement framework in force from 24 February 2025
• Accounts and Audit Regulations 2015 — accounts, audit, and the proper-practices framework
• NALC — Model Financial Regulations (2024, updated March 2025; supplied to member councils via county associations)
• GOV.UK — Procurement Act 2023 guidance: below-threshold contracts (£30,000 including VAT notice threshold for non-central authorities; publication on the central digital platform)

This article is for general guidance only and does not constitute legal advice. Financial regulations should be adopted and reviewed using the current NALC model and your county association's guidance; thresholds and controls vary by council, so always check your council's own adopted regulations.