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Can your council certify itself exempt?

Under £25,000 of both gross income and gross expenditure, and a council can sign a Certificate of Exemption instead of sending the AGAR to the external auditor. The catch is what counts as gross — loans, grants, CIL and VAT refunds all do, and they are routinely left out.

Question 1

Gross annual income for the year

Everything received: precept, grants, CIL receipts, VAT refunds, loan proceeds, interest, proceeds of asset sales, and any other receipts. Not net of anything.

Question 2

Gross annual expenditure for the year

Everything paid: staff costs, all other payments, VAT paid, loan repayments including capital, and grants given.

Question 3

Was the council in existence three years before the start of this financial year?

Newly created councils cannot certify exemption in their first years.

Yes No — it is newer than that

Question 4

In the previous three years, has the external auditor issued a public interest report, statutory recommendation, advisory notice, or declared an item unlawful?

Any of these removes the right to certify exemption.

No Yes

What the regulations say

Exempt does not mean nothing to do. An exempt council must still have an internal audit, complete and approve the AGAR (Sections 1 and 2, in that order), hold the public rights period, and publish everything — it simply does not send the form to the external auditor.
The £25,000 test is applied to the higher of gross income and gross expenditure, each measured gross. If either exceeds £25,000 the council is not exempt for that year.
A council that could be exempt may still choose a limited assurance review if it wishes.

Exempt or not, the internal audit is still required

Every council needs an effective internal audit each year and the Annual Internal Audit Report completed. Fixed fee by council size, done remotely, back before your meeting.

Ask for a fixed fee