Internal audit: Understanding the Annual Governance and Accountability Return (AGAR)

For many parish, town, and community councils and other smaller authorities (such as conservation bodies and harbour boards) the Annual Governance and Accountability Return (AGAR) is one of the most important tasks of the year. Yet despite its significance, it can feel like a maze of forms, deadlines, and statutory requirements. Whether you’re a seasoned finance officer or newly elected councillor, understanding the AGAR is essential for ensuring transparency, good governance, and public trust.

This blog breaks down what the AGAR is, why it matters, and how smaller authorities can approach it with confidence.

What is the AGAR?

The AGAR is a statutory document that smaller authorities in England, including parish and town councils, must complete each year. It provides a snapshot of their financial management and governance arrangements for the previous financial year.

Think of it as an annual “health check,” demonstrating that public money has been managed responsibly and in accordance with the law.

The Practitioners’ Guide is issued by the Smaller Authorities Proper Practices Panel (SAPPP) to support the preparation of statutory annual accounting and governance statements by smaller authorities in England, which are found in the AGAR.

Why does the AGAR matter?

Transparency

The AGAR provides a clear, accessible summary of the council/smaller authority’s finances and encourages ethical behaviour.

Accountability

Completing the AGAR ensures the council/relevant smaller authority is meeting its legal obligations under the Local Audit and Accountability Act 2014.

Good governance

The process encourages councils/relevant smaller authorities to reflect on their internal controls, risk management, and decision making processes.

Public confidence

A well completed AGAR reassures the community that the council/relevant smaller authority is operating with integrity and professionalism.

What does the AGAR include?

The AGAR is made up of several key sections. The Responsible Finance Officer (RFO) must certify that the accounting statements present fairly the financial position of the authority and its income and expenditure. The RFO must arrange for the following to be completed and signed off:

A typical AGAR Form 3:

Section 1: Annual Governance Statement

This is where the council/authority confirms that it has followed proper practices throughout the year. It covers areas such as:

Risk management
Internal controls
Budget monitoring
Compliance with laws and regulations

Each statement must be considered and approved by the full council/board.

Section 2: Accounting Statements

These provide a financial summary of the year, including:

Total receipts
Total payments
Assets and liabilities

In addition, as part of the AGAR, the council/authority’s internal auditor must complete the ‘Annual Internal Audit Report’ section. An independent internal auditor reviews the systems and controls. Their report highlights any issues and confirms whether proper practices are in place.

Internal audit services provided by Price Bailey

At Price Bailey, our dedicated Internal Audit team can provide a detailed assessment of compliance and completion of the Annual Internal Audit Report (AIAR). We do not just provide the completed and signed AIAR form. As part of our testing of controls required we provide a comprehensive report on our findings, including recommendations of improvement and sharing of best practice.

Our team offer experience and specialised knowledge, always available to assist you whenever required. We ensure that professional guidance is just a call or email away, providing you with confidence and peace of mind.

Use the form below to get in contact with us.

Key deadlines

Complete and approve the AGAR (sections 1 and 2 & Internal Audit Report) by 30 June

Submit it to the external auditor (if required) shortly after

Publish the approved documents on the council/authority website and noticeboard by 30 June

Publish notice of the period for the exercise of public rights on the council/authority website by 30 June

Missing deadlines can lead to public interest reports or additional audit fees – so planning ahead is essential.

Final thoughts

When the AGAR is completed thoughtfully, it demonstrates that the council/smaller authority is committed to openness, good governance, and responsible stewardship of public funds.

If your council/smaller authority requires an AGAR internal audit conducted by our specialist team, please get in touch today using the form below and we can offer a free quote.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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