Is your council under £25,000 for gross income and gross expenditure and able to claim exemption?

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) Form2. Click on this link to download Form2. 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 Form2PM 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 council signs 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.  

What must the authority send to PKF Littlejohn when declaring exemption

The only information PKF Littlejohn needs for authorities claiming exemption is the approved Certificate of Exemption, page 3 of the AGAR Form2, (AGAR Form2PM if a parish meeting where there is no parish council) and updates to contact details (where relevant) no later than 30^th June 2025.

There are no changes in the requirement for wet signatures on the AGAR.

Authorities certifying themselves as exempt SHOULD NOT send the full completed AGAR to PKF Littlejohn, the external auditor.

If an authority is eligible to and wishes to claim exemption but it received notification from PKF Littlejohn that it was chosen for intermediate testing as part of the random 5% sample, this does not affect the authority’s ability to claim exemption.  If this is the case the authority should simply submit a copy of their exemption certificate as normal, there is no impact of the 5% selection in these circumstances. 

Submission deadlines

The default submission deadline for the 2024/25 reporting season is Tuesday 1^st 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 exemption certificate to PKF Littlejohn 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

Smaller authorities must publish various documents on a publicly available website as required by the Accounts and Audit Regulations 2015, the Local Audit (Smaller Authorities) Regulations 2015 and the Transparency Code for Smaller Authorities. The following information needs to be published on the authority’s website before the 1^st July 2025:

•        A copy of the Certificate of Exemption-page 3 of the AGAR approved, completed and signed by the authority

•     The Annual Internal Audit Report-page 4 of the AGAR completed and signed by an independent internal auditor

•        Section 1 - Annual Governance Statement-page 5 of the AGAR approved, completed and signed by the authority

•       Section 2 - Accounting Statements-page 6 of the AGAR approved, completed and signed by the authority

•             An analysis of variances

•             Bank reconciliation

•        Notice of the period for the exercise of public rights and other information required by Regulation 15 (2), Accounts and Audit Regulations 2015. 
  
  
  Public rights notice for authorities claiming exemption

WHAT EXEMPT 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 Annual Governance & Accountability Return (AGAR) Form2 prepared by the authority, 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 an exempt 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 the AGAR Form 2), accompanied by: 

i)        a declaration, signed by that officer to the effect that the statement of accounts will not be audited on account of that authority’s self-certified status as exempt, unless either a request for an opportunity to question the auditor about the authority’s accounting records under section 26(2) or an objection under section 27(1) of the Act, results in the involvement of the local auditor;

ii)       the Annual Governance Statement (i.e. Section 1 of the AGAR Form2); and

iii)     the Certificate of Exemption (i.e. Page 3 of the AGAR Form2); 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 25 (inspection of statements of accounts etc), 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 (page 5 & 6) of the AGAR Form2; and

b) the completed Notice of Public Rights and Publication of Annual Governance & Accountability Return (Exempt Authority). Please note that PKF Littlejohn 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 the notice of public rights and publication of annual governance & accountability return (exempt authority) accounts for the year ending 31 March 2025

Click on this link to download this blog as PDF

To contact PKF Littlejohn email sba@pkf-l.com or call 020 7516 2200. Visit the PKF Littlejohn webpage.