Councils should be aware of the extensive guidance available to them to help identify any financial weaknesses.

There are 735 town and community councils in Wales playing vital roles in supporting strong, vibrant communities and local development. Their ability to do this relies on sound financial management and governance. These community councils are subject to a system of wide-ranging accountability and that incorporates both public reporting and annual accounts, in addition to the normal election cycle. This report looks at some of the challenges community councils face, and some of the resources available to help councils navigate those challenges.

Town and community councils are gaining increasing responsibilities due to unitary authorities seeking to transfer assets and services to community councils. This means it is even more important that community councils ensure they have sound systems of internal control and financial management and governance in place. Regrettably, our report shows that many councils still fail to meet the necessary standards.

Increasingly, councils have failed to submit annual returns that are prepared in accordance with proper practices – leading to an increase in the number of qualified audit opinions being issued. Our report found that it is increasingly difficult to verify transactions, due to inadequate accounting records, meaning councils are unable to demonstrate how decisions have been made and value for money secured. Another frequent qualification issue is councils not publishing information they are legally required to do so.

In our report, we outline the guidance available to town and community councils. One Voice Wales and the Society of Local Council Clerks (SLCC) published a free of charge Practitioner’s Guide, describing how councils can implement a system of internal controls, as well as explaining the audit process. In June 2022, One Voice Wales, SLCC, and Welsh Government published a governance toolkit for town and community councils. The toolkit is designed to specifically help all councils identify and address gaps and weaknesses in their financial management and governance arrangements.

Our reporting continues to identify ongoing issues across the sector. Appropriate steps need to be taken to address these issues in order to create a stronger and more accountable future.