43.1 Overview
Trading accounts have become more important as local authorities have developed a more commercial culture. Under The Best Value Code of Practice, authorities are required to keep trading accounts for services provided on a basis other than straightforward recharge of cost. Accounts that merely recharge cost are referred to as holding accounts and not subject to this part of the Framework.
The Council is required to disclose the results of significant trading operations in the Best Value Performance Plan. (does this still exist?)
43.2 Responsibility/Accountability
43.2.1 Section 151 Officer (click here for all responsibilities for the Section 151 Officer)
Advise on the establishment and operation of trading accounts.
43.2.2 Business Unit Heads (click here for all responsibilities for Business Unit Heads)
Consult with the Section 151 Officer where a Business Unit wishes to enter into a contract with a third party where the contract expiry date exceeds the remaining life of their main contract with the Authority. In general, such contracts should not be entered into unless they can be terminated within the main contract period without penalty.
Observe all statutory requirements in relation to trading accounts.
43.3 Policy
Trading Accounts are only established after seeking advice from the Section 151 Officer.
Trading Accounts are only applicable where the charge out of the account is not on the basis of cost.
A separate revenue account must be maintained for each Trading Account. This will show all relevant income and expenditure, including overhead costs, charged. An annual report supporting the final accounts will be produced.
The same accounting principles will be applied to trading accounts as to other Business Units.
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