Frodsham Town Council has been found to be in breach of Financial Regulations over the procurement of last year's Christmas tree.

In an internal audit of the Council's accounts, auditor JDH Business Services Ltd noted that: "Council purchased a Christmas tree at a cost of £2,145 (excl VAT) and whilst we have seen evidence that the payment was approved retrospectively by Council, we have not seen evidence that the awarding of the contract in the first place was approved by the Events Committee as required by the Financial Regulations (FRs).

"We were informed that the contract was awarded by the Christmas Festival Working Group (CFWG), the order was placed by a councillor, and there are no terms of reference in place for the CFWG."

In January 2021, the Town Council Events Committee received an invoice for the cost of the tree, with Chair, Cllr Ryan McKeown observing that the order had never before been submitted to members for approval.

The Events Committee had discussed arrangements for Frodsham's Christmas Festival during its September meeting, at which point Cllr Judith Critchley, who was also Chair of the Christmas Festival Working Group, made a report on the preparations made so far.

During this meeting, Cllr Critchley said that she did not yet know the exact cost of the tree, adding that this could be discussed later at an Events or Full Council meeting.

Town Clerk, Jo O'Donoghue, pointed out that: "there is a budget of £6,000 for the Christmas festival, but we still need to adhere to Finance Regulations.

"Unless the figure we're talking about is below £500 – in which case it can be approved by the working group Chairman – any expenditure needs to go through the Committee."

However, when the invoice was presented for approval in January, Cllr McKeown said that this "hadn't, at any point, been the case."

Frodsham Town Councillors did approve the Christmas tree bill retrospectively, and agreed that the Christmas Festival Working Group had done "a great job" in providing festive entertainment for the town despite the challenges of the Covid-19 pandemic.

What do the Financial Regulations say?

The failure to refer back to the Events Committee for approval goes against Section 4 of the Council's Financial Regulations which state that: "Expenditure on revenue items may be authorised [by] the Clerk, in conjunction with Chairman of Council or Chairman of the appropriate committee, for any items below £500" but "a duly delegated committee of the council for items over £500.

"Such authority is to be evidenced by a Minute or by an authorisation slip duly signed by the Clerk."

According to the Local Government Act 1972 (Section 101(1)(a)), "a local authority may arrange for the discharge of their functions by a committee, a sub-committee or an officer of the authority, or by another local authority."

The Christmas Festival Working Group is not a sub-committee and so cannot be categorised as a "duly delegated committee of the council" that can make decisions or commit the council to any liability.

The internal audit recommended, therefore, that: "The Council must ensure it complies with the requirements of the council Financial Regulations and the Local Government Act 1972 when incurring expenditure.

"All council working groups that are not sub-committees should be provided with a formal terms of reference that makes it clear they cannot make any decisions or commit the council to a liability.

"The terms of reference should include a remit to provide a report with recommendations for approval to a council committee or sub-committee."

The audit also noted that last year's move to virtual meetings and the closure of the Council office had led to the absence of two signature authorisations for online payments, which were, however, approved retrospectively by Full Council.

It recommended that alternative controls be introduced when signatures cannot be obtained.

Apart from these issues, the internal audit found the Town Council's financial controls to be effective and adequate for the purpose intended, meaning that its accounts had been properly kept, the precept calculated through a proper budgetary process and employee salaries paid correctly.

As part of the internal audit work for the next financial year, the auditor will follow up on the recommendations made over the Council's Christmas tree procurement.

The findings of the internal audit will be discussed by Councillors at a Full Council meeting on Monday 24 May.

Read more about what Cllrs Critchley, McKeown, Phil Griffiths and Bernie Wade's said on the matter during Frodsham Town Council's January meeting here.