ANNUAL FINANCIAL REPORT INCLUDING STATEMENT OF …
Transcript of ANNUAL FINANCIAL REPORT INCLUDING STATEMENT OF …
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INDEX PAGE
ANNUAL GOVERNANCE STATEMENT
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EXPLANATORY FOREWORD – SUMMARISED FINANCIAL PERFORMANCE
Revenue Expenditure Council Housing Capital Investment Assets, Liabilities and Reserves Significant Interests, Payments to Auditors, Sickness Absence & Post Balance Sheet Events
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17 17-18 19-30
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AUDITORS CERTIFICATE
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STATEMENT OF ACCOUNTS Statement of Responsibilities for the Statement of Accounts Core Financial Statements – Underlying Principles
Financial Reporting Standards Accounting Concepts Critical Judgements In Applying Accounting Policies & Estimation Risk Statement of Accounting Policies
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Core Financial Statements – Components and Detail Movement in Reserves Statement Comprehensive Income & Expenditure Statement Balance Sheet Cash Flow Statement
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59 60-61
Notes to Movement in Reserves Statement Adjustment between Accounting Basis and Regulatory Funding Basis Usable Reserves Unusable Reserves
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Notes to Comprehensive Income and Expenditure Statement
Taxation, Non-Specific Grant Income, Precepts and Levies
Memorandum Accounts
External Trading Services
Building Control Account
Agency Service
Investment Property
Property Searches Revenue Expenditure Funded From Capital Under Statute
Items of Income & Expenditure Gains And Losses
Pension Costs Exceptional Costs Acquired & Discontinued Operations Remuneration Details Audit Fees Related Party Transactions Amounts Reported for Resource Allocation Decisions
Net Cost of Services Analysed by Income and Expenditure Type
Reconciliation to Comprehensive Income and Expenditure Statement Surplus/Deficit
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INDEX continued PAGE
STATEMENT OF ACCOUNTS continued Notes to the Balance Sheet
Non Current Assets
Fixed Assets
Heritage Assets
Investment Property
Disposals & De-recognition
Intangible assets
Capital Expenditure & Financing Private Finance Initiative Arrangements Leases & Lease Type Arrangements Inventories & Works in Progress (Construction Contracts) Investments Debtors & Creditors
Debtors & Prepayments
Creditors
Grant Receipts in Advance Cash & Cash Equivalents Assets Held for Sale Provisions, Contingent Liabilities & Assets Long Term Borrowing Deferred Liabilities Usable Reserves Unusable Reserves:
Deferred Capital Receipts
Capital Adjustment Account
Revaluation Reserve
Financial Instruments Adjustment Account
Nature & Extent of Risks Arising from Financial Instruments
Accumulated Absences Account
PFI Lifecycle Reserve
Pensions Reserve
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105-106 107-108
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Notes to the Cash Flow Statement
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Housing Revenue Account Movement on Housing Revenue Account Statement HRA Income and Expenditure Statement Housing Stock Rents Value of HRA Assets HRA Capital Expenditure & Receipts HRA Pension Costs
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OTHER ACCOUNTS MANAGED BY THE COUNCIL & MISCELLANEOUS REPORTING REQUIREMENTS
Welsh Church Act Fund Trust Funds & Monies Held in Trust Discretionary Expenditure Publicity Local Authority Goods & Services Act
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ANNUAL GOVERNANCE STATEMENT – 2013-14
1. Scope of Responsibility The Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The Council also has a duty under the Local Government (Wales) Measure 2009 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to strategic effectiveness, service quality, service availability, fairness, sustainability, efficiency and innovation. In discharging this overall responsibility, the Council is also responsible for putting in place proper arrangements for the governance of its affairs which facilitate the effective exercise of the authority’s functions and which includes arrangements for the management of risk and ensuring a sound system of internal control.
The Corporate Governance Committee approved this Council’s Local Code of Corporate Governance at its meeting on 29th June 2011. The adopted Code is consistent with the principles of ‘CIPFA/SOLACE Framework’, ‘Delivering Good Governance in Local Government’. A copy of the adopted Code is on our website: www.pembrokeshire.gov.uk or can be obtained from the Chief Finance Officer. This Statement explains how the Council is complying with the Code and also meets the requirements of the Accounts and Audit (Wales) Regulations 2005 (as amended) and related practice. 2. The Purpose of the Governance Framework The governance framework comprises the systems and processes, and culture and values, by which the Authority is directed and controlled and its activities through which it accounts to, engages with and leads the community. It enables the Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost effective services. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Council’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The governance framework has been in place at the authority during the financial year ended 31st March 2014 and up to the date of approval of the statement of accounts.
3. The Governance Framework
The key elements of the Authority’s governance framework are summarised below.
3.1 Objectives, Policy and Decision Making Single Integrated Plan 2013-18 The Single Integrated Plan is the overarching plan for Pembrokeshire and replaced the Community Plan. It is the document that frames public, private and voluntary sector activity in Pembrokeshire over the period 2013-18.
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The Single Integrated Plan is for everyone who lives in, visits, or has an interest in Pembrokeshire. It has been prepared for a range of audiences; for the people of Pembrokeshire, for the organisations that serve Pembrokeshire and as a means of communicating our priorities to external agencies and the Welsh Government. The Single Integrated Plan was prepared by Pembrokeshire’s Local Service Board (LSB) and its associated partnerships. The LSB is made up of senior representatives from Pembrokeshire County Council, Dyfed Powys Police, Hywel Dda Health Board, Pembrokeshire Association of Voluntary Services and Welsh Government, and was established with the purpose of providing collaborative leadership and to identify opportunities for service providers to work more closely together. A range of other organisations support the work of the LSB. The overall aim and vision for Pembrokeshire is “To ensure that Pembrokeshire is prosperous and that it remains vibrant and special”. Following a Single Needs Assessments, six outcomes were identified that partners have agreed to work towards over the next five years:
Children, young people and families have the opportunity to fulfil their learning potential and to live healthy and happy lives;
Pembrokeshire has a competitive, productive and sustainable economy;
People in Pembrokeshire enjoy an attractive, sustainable and diverse environment;
People in Pembrokeshire are healthier;
Children and adults are safeguarded;
Communities in Pembrokeshire feel safe. The Council adopted a Public Engagement Strategy in November 2012. The Strategy demonstrates the Council’s commitment to putting public engagement at the core of the design and delivery of services, policies and programmes. It provides clear guidance to Heads of Service, managers and those who routinely undertake public engagement activities. The Authority also publishes an annual report on its public engagement work, illustrating the wide variety of consultation and engagement work being undertaken across the Authority and capturing examples of good practice. Improvement Plan The annual Improvement Plan sets out the Council’s vision, objectives and improvements, highlighting progress towards key objectives. It is underpinned by the principles of customer focus, value for money and one team. It also incorporates performance data. Such a Plan was produced for 2013-14 and made widely available. There is also an annual Improvement Review published identifying progress and achievements and including performance analysis and features the national strategic indicators. The annual improvement objectives are selected to reflect learning from previous years, advice received from regulators and future aspirations. The objectives selected for 2013/14 were:
School Improvement
Town Centre Improvement
Waste Management
Reviewing Adult Social Care Services
Safeguarding Decision Making The Council’s Constitution codifies how the Council operates and provides the framework for its decision making processes, including delegation arrangements, and sets out the detailed procedures and codes of conduct by which Members and Officers operate to achieve Council objectives. During 2013-14 the Council received support from the Centre for Public Scrutiny (CfPS) to evaluate its scrutiny and corporate governance arrangements. As a result, the Democratic Services Committee will shortly be receiving a report and action plan setting out a range of proposals to
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strengthen further the Council’s scrutiny arrangements. In addition, a working group has been established to review the Council’s Constitution; CfPS will be providing further support to this process over the course of the forthcoming year. Under the Constitution a Leader and Cabinet form the decision making Executive. Their decisions must be in line with Council objectives, and are subject to examination by a number of Overview and Scrutiny Committees. Meetings of the Council, Cabinet and other Committees are open to the public except where confidential or exempt matters are being disclosed. Members are required to disclose personal interests where appropriate and withdraw from discussion and correspondence where they also have a prejudicial interest. The Constitution includes a right to ‘call-in’ Cabinet decisions to an Overview & Scrutiny Committee. The Corporate Governance Committee exercises functions related to the Council’s Constitution, including annual approval of the Council’s Statement of Accounts. A Standards Committee made up of County Councillors and “non-elected” independent persons is the regulatory body for overseeing the conduct and standards of behaviour of Members. All reports considered by the Council, Cabinet and Committees and the Minutes of decisions taken are, unless confidential or exempt, published and made available on the Council’s website. In addition, Senior Officers of the Council can make decisions under delegated authority. The Council has an Officer specific to the statutory role of, and designated as, Monitoring Officer with responsibility for ensuring the lawfulness of decisions taken by the Council, Cabinet, its Committees and Officers, and providing support and advice on the maintenance of ethical standards and advising the Council’s Standards Committee. Further, a Head of Legal and Committee Services manages and oversees legal matters and the operation of Council, Cabinet and Committee proceedings.
3.2 Compliance with Established Policies, Procedures, Laws and Regulations The role of the Council’s Monitoring Officer includes a responsibility to investigate and report upon allegations of contraventions of established policies, procedures, laws and regulations. The Head of Legal & Committee Services has overall responsibility for legal issues and to provide advice where appropriate. The Council’s Section 151 Officer has overall responsibility for financial administration and as such for providing advice, guidance and instruction in respect of financial matters. The Director of Finance and Leisure was the Council’s Section 151 Officer during 2013-14 and retired at the end of May 2014. These statutory responsibilities then transferred to the Chief Finance Officer with effect from June 2014. The Council has an Internal Audit Service whose role includes reviewing compliance with established policies and procedures to determine the adequacy and effectiveness of the internal control environment, and a Policy and Performance Section providing support and advice.
New employees are subject to appropriate induction training which provides information on a range of policies, procedures and regulations including those relating to financial control, information governance, security, personnel and codes of conduct.
The Council also has in place a Standards Committee and Overview and Scrutiny Committees. The Audit Committee, made up of County Councillors and a “non-elected” independent Chair, considers matters related to the authority’s financial affairs and the appropriateness of its risk management, internal control, corporate governance and internal/external audit arrangements. The Audit Committee provides the forum for formal and transparent scrutiny of these arrangements, whilst improving oversight and accountability of the authority’s governance arrangements. Whilst the Audit Committee will review the authority’s Annual Statement of Accounts, responsibility for their approval will remain with the Corporate Governance Committee.
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The Democratic Services Committee considers matters related to democracy. The Council has designated the Head of Legal and Committee Services as the statutory officer “Head of Democratic Services”. In addition there are external inspections from a range of bodies, including external auditors.
3.3 Financial Management The Director of Finance & Leisure as Chief Finance Officer is responsible for the proper administration of the Council's financial affairs and ensuring the financial arrangements put in place conform with the governance requirements of Cipfa’s Statement on the Role of the Chief Financial Officer in Local Government. Budget and Policy Framework Procedure and Financial Procedure rules are incorporated into the Council’s Constitution. The Council also relies on bids for external grant funding which presents risks as well as opportunities and may have complex relationships. The Cabinet receives regular financial monitoring reports and approves corrective action where necessary. For the 2013-14 financial year, integrated monitoring reports incorporating both financial and performance information were also reported to Overview & Scrutiny Committees on a quarterly basis. The Council’s Treasury Management Governance arrangements follow professional practice in accordance with the latest Code and are subject to regular review by the Treasury Management Panel. Annual Statements of Accounts provide a snapshot of the Council’s financial position as at 31st March and are subject to mandatory external audit, which is undertaken by the Wales Audit Office. This process also allows for annual public inspection. Education through Regional Working (ERW) is a consortium of six authorities in South West and Mid Wales working to improve the standards of education of children and young people within the region. The Council is the lead for accounting purposes.
3.4 Financial Control The system of internal financial control is based on a framework of regular budget and management information, financial regulations, standing orders relating to contracts and other procurement management arrangements, procedure rules and standard financial instructions, together with administration arrangements (including segregation of duties), management supervision and a system of delegation and accountability which are subject to review by Internal Audit.
3.5 Promoting Values, Standards and Conduct of Behaviour There is a framework related to standards and ethics and this includes:
Codes of Conduct for Officers and Members
Equal Opportunities Statement
Registers of personal and business interests and related procedures for other declarations
Protocol governing Member/Officer relations
Whistle-blowing Policy
Corporate Complaints procedure
Code of Practice for considering planning applications and appeals
Counter Fraud Strategy
Standards Committee
Designated Monitoring Officer in accordance with legislation
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Related Member and officer training and induction programmes. It is good practice for individual Members to compile an annual report in respect of their work in the previous year. In respect of safeguarding, the Cabinet Member for Safeguarding and Children’s Services produces a report bi-annually.
3.6 Risk Management and Internal Audit The Audit Committee approved the Council’s Business Risk Management Strategy in June 2013 and has received progress updates throughout the year. An Operational Risk Management Group has been established with representatives from each Directorate to assist in developing and embedding risk management and business continuity into the culture of the Authority. The Corporate Risk Management Group provides strategic direction for the Operational Risk Management Group and reviews the Corporate Risk Register. This Group is responsible for ensuring that all major risks encountered by the Council are identified, assessed and responded to at an appropriate level. This includes major service, directorate and corporate business risks. It is recognised that there are demographic changes being faced by the Council that impact on the delivery of certain services. There is an on-line Risk Management system in place, with content and assessments reviewed regularly by service managers. Risk management is integrated into business/service planning and operations. A copy of the Council’s Corporate Risk Register, is approved annually by the Cabinet, and is available on the Council’s intranet. It is monitored throughout the year by the Audit Committee. The Council maintains an Internal Audit Service whose work plan takes account of their own and Directorate risk assessments and the Council’s key business risks, and operates taking account of professional standards, particularly the Public Sector Internal Audit Standards, reporting to the appropriate level of service management. The Public Sector Internal Audit Standards requires the Audit Manager to deliver an annual internal audit opinion and report that can be used by the organisation to inform its annual governance statement. The Audit Manager is also responsible for ensuring that the internal audit arrangements conform with the governance requirements of Cipfa’s Statement on the Role of the Head of Internal Audit in Public Service Organisations. The Risk Management Service integrates risk management with business continuity, insurance, health and safety and occupational health. However, the business risk management function has recently transferred to the Internal Audit service to allow the Risk Management service to focus on strengthening the Council’s Business Continuity arrangements. The Council’s risk management & internal audit arrangements are overseen by the Audit Committee.
The Head of Information Technology & Central Support Services acts as the Senior Information Risk Owner (SIRO) and reports directly to the Chief Executive. An IT Steering/Information Governance Group, made up of senior officers from across the Council, is in place to ensure the ongoing risk assessment and safeguarding of the Council’s information. Following meetings of the group, the SIRO reports to Corporate Management Team. The Council has numerous safeguards in place to protect its information, which includes encryption of portable IT devices, storage media and email correspondence. These safeguards are under constant review and improvement, with an annual audit of the Council’s information governance arrangements undertaken by the Internal Audit Service and external reviews undertaken by organisations such as the Information Commissioners Office (ICO). Training is provided internally and by external trainers.
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3.7 Performance Management, Quality and Use of Resources The Council prepares an Annual Improvement Plan which sets the main objectives for improving performance and service standards for the forthcoming year. As part of the Council’s performance management framework each service is required to produce an annual service improvement plan, aligned to the Single Integrated Plan and Annual Improvement Plan. For 2013-14, all Heads of Services reported quarterly progress on their service improvement plans to the Corporate Management Team. The performance appraisal process was reviewed during 2013-14 and has been improved so that individual and team performance and targets are more closely aligned corporate and service objectives. The Council currently uses the Welsh Assembly Government’s procured Ffynnon software system to help manage performance data. Progress against the Council's priorities is monitored regularly within services and is reported to Members and published annually in the Improvement Review document. There is a Corporate Land and Building Strategy which is a tool to assist in the pursuit of best practice in County Council property provision and to manage property assets strategically in accord with current priorities. The Performance Management Framework places significant emphasis on the importance of measuring the quality of services for users. In addition, the Council’s approach to Service Improvement Planning also encourages Heads of Service and managers to identify appropriate sources of service user views.
3.8 External Scrutiny The Council has an objective and professional relationship with external auditors and inspectors. Though inspections over recent years have delivered some challenging messages to the Authority, all the recommendations made have been implemented or are in the process of implementation. Through reviews by external auditors, inspectors and other external agencies, the Council continually seeks ways for improvement in the way in which its functions are exercised and in pursuing the economical, effective and efficient use of resources. Where external auditors and inspectors make their reports available to the public they will be published on the inspectorates website. There are also procedures to meet responsibilities under the Environmental Information Regulations and the Freedom of Information Act/Data Protection Act.
4. Review of Effectiveness
4.1 Annual Review
The Council has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review of effectiveness is informed by the Directors, Corporate Heads of Service and senior managers within the authority who have responsibility for the development and maintenance of the governance environment, the work of Internal Audit, Risk Management and the Internal Control Group, and findings and comments made by the external auditors and other review agencies and inspectorates.
The review is also informed by the work of the Head of Paid Service (Chief Executive), Chief Finance Officer (Director of Finance & Leisure), Monitoring Officer (Monitoring Officer) and Head of Democratic Services (Head of Legal & Committee Services) in performing their statutory roles.
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In order to facilitate the annual review of effectiveness for 2013-14, the Internal Control Group
prepared a Gantt chart “Process and Timescale for Compilation and Approval of the Annual Governance Statement” which outlined required actions by officers and Members. The Audit Committee approved the process and have been involved in each stage of the annual review.
The Council’s Internal Control Group, made up of the Chief Finance Officer, Deputy Chief
Executive, Head of Legal & Democratic Services, Head of Revenues & Assurance and the Audit Manager, co-ordinate the Council’s annual review of the effectiveness of the governance framework including the system of internal control. The Audit Manager from the Wales Audit Office is also invited to attend these meetings. The Internal Audit Service undertook an audit review of "Compliance with the Local Code of Corporate Governance" which resulted in the audit opinion “substantial assurance” being given.
Following review of the Annual Governance Statement by the Audit Committee, it is forwarded to
the Corporate Governance Committee for formal approval (Delegated responsibility under the Constitution, Part 3). The approved Annual Governance Statement is signed by the Leader of the Council and Chief Executive.
4.2 Members and Officers The Cabinet monitors the effectiveness of governance and internal control systems via the
consideration of regular performance and financial information reported by senior management together with consideration of various strategies, plans and policies. From 2012-13, reporting arrangements were extended to Overview & Scrutiny Committees.
Overview and Scrutiny Committees within the Authority support the work of the Cabinet and Council as a whole, giving advice on policies, budget and service delivery. Decisions of the Cabinet are also monitored by these Committees and there is the facility to ‘call in’ a decision made by Cabinet that has not yet been implemented in order to assess whether the decision is appropriate. The Audit Committee provides formal and transparent scrutiny of the Council’s risk management, internal control, corporate governance and internal/external audit arrangements via the consideration of regular reports from senior management and the Wales Audit Office. During 2014-15 a new Lay Member has been appointed as Chair of the Audit Committee. The Standards Committee oversees the conduct and standards of behaviour of Members. Annual Directorate and Corporate Service Assurance certificates are required ensuring wider engagement in the review process. Again whilst not able to provide absolute assurance the Directorate self assessment approach regarding opinion on governance, internal control and risk management can reinforce responsibilities, and identify areas that may need improvement, especially any issues considered high priority for inclusion in the concluding Action Plan. It provides a pathway for a more fully informed picture and has been recognised by external audit as good practice. This information is reviewed by the Chief Finance Officer, Audit Manager and the Head of Revenues and Assurance, along with other relevant information such as budget monitoring reports in compiling this statement. In order to improve the interaction and challenge of senior management in the annual review of effectiveness, a joint workshop between Corporate Management Team and Corporate Heads of Service was held during the early stages of the process. There was also improved interaction and challenge with Members, facilitated by a meeting between the Chief Finance Officer and the Audit Manager with the Leader of the Council and the Deputy Leaders.
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4.3 Internal Audit
The effectiveness of the Council's internal controls is examined in detail through the work of the Internal Audit Service on an on-going basis working with managers. The section's work plan is based around a needs and risk assessment process following consultation with Directors and Heads of Service, and approved by the Section 151 Officer and the Audit Committee.
The Audit Manager reports on individual audit reviews and assignments, specifically in respect of
the governance, internal control, risk management and financial management arrangements in place and provides an opinion as to their adequacy and effectiveness, together with recommendations and action plans for improvement.
Internal Audit are unable to give absolute assurance and conclusions reached may have had to place reliance on assurances given by management, however on the basis of the results of reviews completed during the year the Audit Manager’s overall opinion remains that the Council generally has adequate governance, internal control, risk management and financial management arrangements in place, which are operating effectively.
4.4 External Review Agencies The Council’s external auditors (Wales Audit Office) and other inspection agencies, such as Estyn and CSSIW provide further assurance or opinion by reporting throughout the year on the performance of the Authority and these may include comment on the system of internal control. Improvement and action plans have been developed to respond to any recommendations made. External Audit (Wales Audit Office) produce an Annual Improvement Report in addition to their Appointed Auditor’s brief Annual Letter. Following a difference of legal opinion on the Council’s decision to allow senior staff to receive the equivalent of the employer’s pension contribution if they opted out of the Local Government Pension Scheme, the Wales Audit Office issued a Public Interest Report as, in their view, the decision was unlawful. The Council accepted the recommendations made in the Public Interest Report. An unqualified audit opinion of the last audited Statement of Accounts was given (outside of the statutory deadline of 30th September) and that there were appropriate arrangements in place to secure economy, efficiency and effectiveness in use of resources. During 2013-14 work was undertaken investigating data matches received via the National Fraud Initiative 2012-13 which has resulted in the identification of frauds to the value of £6.3k. Care Social Services Inspectorate for Wales (CSSIW) undertook six inspections during 2013-14 with positive feedback that gave assurance that the current approach to service delivery facilitates good outcomes for service users. The Council was in receipt of support from Welsh Government in the form of an Education Recovery Board. Estyn carried out a monitoring visit in June 2014. The outcome of the visit was a recommendation that the Council be removed from special measures. The monitoring visit report was published on Friday 20th June 2014.
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Significant Governance Issues/Priorities for Improvement from the 2012-13 Annual Governance Statement The progress made in addressing the one significant governance issues and seven priorities for improvement highlighted in the 2012-13 Annual Governance Statement is summarised below, having been reported to the Council’s Audit Committee in February 2014. (A full version will be contained within the Corporate Governance Committee agenda papers for 29th September 2014). Significant Governance Issue
5.1 Financial Challenges The financial challenges will continue indefinitely as the UK Government continues to try and address the public sector debt and Wales continues to share the impact of ongoing cuts in public expenditure. Further specific challenges for 2014-15 are detailed in 6.1 below. Priorities for Improvement Three of the priorities for improvement were fully addressed with four requiring further action in 2014-15:
Information Governance (Information Security Breach)
All of the planned actions were completed. Further work is planned for 2014-15 to continue to educate staff and Members on the importance of effective information governance, and to provide assurance that the Council’s information governance arrangements are both adequate and effective, and complied with.
Business Continuity/Disaster Recovery Progress in respect of the planned actions for 2013-14 was limited, so these have been reiterated for 2014-15.
Contracts – Safeguarding Arrangements In line with advice from the Director for Children and Schools, the Council is developing a new approach to ensure that contractors abide by stringent safeguarding arrangements. Good progress has been made in ensuring that contractual arrangements are logged on the Bravo system. The Director will be commissioning the development of a system of proportionate checks during the course of the year.
Partnerships and Third Party Arrangements
A new Partnerships Procedure and joint working register has been developed in 2013-14. Further work is planned for 2014-15 to disseminate the procedure to staff and Members and to populate the register with all partnership arrangements.
6. Significant Governance Issues/Priorities for Improvement from the 2013-14 Annual Governance Statement
There are two significant governance issues that have been identified during 2013-14:
6.1 Financial Challenges Welsh Governments commitment to protect health funding, and resultant cuts to local government funding will necessitate some hard choices to be made. It is anticipated that the -1.5% indicative financial settlement for the Council for 2015-16 could be nearer -4.0%, resulting in an increase to
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the planned £7.1m cost reductions for 2015-16. The Medium Term Financial Plan will need to be revised to take account of future financial settlements and the cost reduction exercise will need to become a rolling programme to critically review the delivery, delivery method and cost of all Council services. Workshops and consultation exercises will commence at the start of the year and continue throughout. A number of European grants are coming to the end of the current round and it is not yet known whether the Council will be successful in obtaining funding in the next round. The Council is continuing to progress its £150m 21st Century Schools programme and will be exiting from the Housing Revenue Account (HRA) negative subsidy system in April 2015 to a system of self financing. The estimated settlement figure to exit from the HRAS is £80.5m.
6.2 Commission on Public Service Governance and Delivery The Williams report issued in January 2014 proposed a radical and comprehensive reform package covering many aspects of governance and delivery across the Welsh public sector. Options tabled were the merger of Pembrokeshire and Ceredigion County Councils and a merger of both with Carmarthenshire County Council. There were also options tabled for support services to be merged into shared service centres. Currently the outcome of this review and timescale for action is uncertain. The following issues and actions have been identified as the highest priorities for improvement following this, the 2013-14 review, and are summarised below. (A full version will be contained within the Corporate Governance Committee agenda papers for 29th September 2014). 6.3 Grant Funding Management Arrangements Developing a corporate approach to the administration of grant funding that ensures the consideration of all financial risks and the provision of effective exit strategies should the grant funding cease. 6.4 Grant Schemes (CPGS/THI) Potential irregularities with two grants were referred to the Police for investigation, resulting in the need to review and strengthen the management and internal controls for the Commercial Property Grant Scheme (CPGS) and Townscape Heritage Initiative (THI) Grant Scheme. 6.5 Transitions Service An Internal Audit review identified a number of opportunities to improve the process for the transition of young people from children to adult services to ensure that there is a coordinated approach applying clear eligibility criteria in accordance with a documented strategy with defined roles and responsibilities. 6.6 Procurement Card A procurement card fraud in an Education service resulted in the dismissal and prosecution of an officer and raised concerns over the controls in place to manage these transactions. A subsequent Internal Audit review identified that non-compliance with procedural requirements in the service provided an opportunity for abuse. A further Internal Audit review of procurement card usage across the Education directorate did not identify any other significant concerns and assisted in strengthening controls and raising awareness of compliance with procedural guidance. 6.7 Impact on Assets of Severe Weather The impact of severe winter weather in 2013-14 on Council assets and infrastructure has been severe. The potential future impact needs to be identified and quantified, including the financial impact of remedial action.
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Leader/Acting Head of Paid Service
We have been advised on the implications of the results of the review of the effectiveness of the governance framework including the system of internal control by the Internal Control Group and a plan to address weaknesses and ensure continuous improvement of the system in place. To the best of our knowledge, the framework identified above has been effectively operated during the year. The process by which the effectiveness of the governance framework including the system of internal control is reviewed will continue to be developed in the future taking account of the Code, experience, best practice, appropriate guidance and any changes in legislation impacting on the Annual Governance Statement. We propose over the coming year to take steps to address the above matters to enhance further our governance arrangements. We are satisfied that these steps will address the need for improvements that were identified in our review of effectiveness and will monitor their implementation and operation as part of our next annual review.
COUNCILLOR J. ADAMS I WESTLEY
Leader Acting Head of Paid Service
Date: 6th July 2015 Date: 6th July 2015
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EXPLANATORY FOREWORD
This explanatory foreword summarises the financial performance of the Council for 2013/14 and highlights pertinent issues appearing in the Balance Sheet at 31st March 2014.
There were no major changes to the statutory functions undertaken by the Council to impact on the accounts. Following the Compact signed between Welsh Local Government and the Welsh Government work continues on exploring methods of delivering services on a collaborative basis with other public sector bodies, eg. Education through Regional Working (ERW). SUMMARISED FINANCIAL PERFORMANCE 2013/14
The summarised financial performance is reported to Cabinet and Overview & Scrutiny Committees on a quarterly basis throughout the year. Set out in the following paragraphs, the final outturn position for 2013/14 is compared to the estimates approving resource allocation and used for council tax setting purposes. Also highlighted are any key issues appearing in the accounts as at 31st March 2014.
1. REVENUE EXPENDITURE
2012/13
Actual
Expend
Original
Estimate
Adjusted
Estimate
Revised
Estimate
Gross
Expend
Income Net
Expend
£000 £000 £000 £000 £000 £000 £000
Children’s Services 97,764 102,426 102,475 102,695 128,898 (27,118) 101,780
Adult Social Care Services 40,680 42,981 43,613 43,504 63,338 (19,826) 43,512
General Fund Housing 1,451 1,679 1,697 1,395 38,041 (36,624) 1,417
Highways & Transport Services 10,546 10,609 10,449 10,545 19,870 (9,344) 10,526
Culture, Environment & Planning 24,479 25,158 24,855 23,968 43,032 (19,336) 23,696
Services to the Public 1,778 8,916 8,953 9,156 10,787 (1,634) 9,153
Corporate & Democratic Core 3,077 3,491 3,396 3,522 3,391 (368) 3,023
Non-Distributed Costs (1,024) (718) (2,524) (1,611) 342 (1,921) (1,579)
Court Services 206 179 179 207 215 (11) 204
Cost Reductions * - (1,628) - - - - -
Contribution to 21C Schools - - - - 1,635 - 1,635
Net Cost of Services 178,957 193,093 193,093 193,381 309,549 (116,182) 193,367
Levies 6,964 7,029 7,029 7,022 7,022 - 7,022
Interest & Investment Income (1,113) (792) (792) (734) - (691) (691)
Capital Financing Costs 13,404 12,515 12,515 12,230 12,196 - 12,196
Total 198,212 211,845 211,845 211,899 328,767 (116,873) 211,894
Financed By:
Revenue Support Grant and
Special Grant(128,316) (134,739) (134,739) (134,739)
NNDR (31,765) (38,078) (38,078) (38,078)
Council Tax (38,290) (39,028) (39,028) (40,248)
(198,371) (211,845) (211,845) (213,065)
* Factored into adjusted, revised and actual figures for 2013/14
Revenue Account
ActualEstimate
2013/14
Copies of the Council’s estimate and monitoring reports can be found on the web-site by searching
the Cabinet documents at www.pembrokeshire.gov.uk.
15
1.1 Commentary on the 2013/14 Revenue Performance
The Council again set the lowest council tax in Wales (£741.17 band D property) and spent £211.9m broadly in line with the revised estimate approved in March 2014. The working balance remained unchanged at £6.5m. The external auditors, in their Annual Improvement Plan highlighted the Council’s strategic planning process and financial management as good or promising practice. Net appropriations to earmarked reserves totalled £5.4m, further details of which are set out on page 29 below.
1.2 Service Specific Issues Education and Children’s Services Resources have been earmarked to the 21st Century Schools programme. Council Tax Reduction Scheme Welsh Government funding, via the settlement and a special grant, was insufficient to cover expenditure for the year. The special grant has not been repeated for 2014/15, so any consequential increase in Council Tax benefit payments, as a result of an increased claimant caseload or higher Council Tax levels, will have to be absorbed by the Council. Pay and Grading The costs related to the impact of the new pay & grading structure upon the revenue budget for 2013/14 were factored into the management accounts. Overall, there was no impact on net expenditure. Cost Reductions The Council achieved its 2013/14 cost reduction target of £1.6m. Other Services Income for some subsidy/grant claims has been accrued in the accounts on a probable/actual basis pending the receipt of final claims data. A number of grants have been rolled over to 2014/15 to ensure resources remain earmarked for their specific purposes. 1.2 Implications and Risks It is not anticipated that there are any unbudgeted commitments or liabilities arising from 2013/14 that the Council cannot meet. During 2013/14 efficiency savings of £1.6m have been achieved with a cumulative figure of £8.0m at 31st March 2014 being achieved over the last 6 years. The main risk is that future cost reductions of £20.0m for the period 2014/15 to 2015/16, as articulated in the 2014/15 budget report, cannot be achieved. This situation could be further exacerbated if the current UK / European economic position continues resulting in further retrenchment in public expenditure and economic activity generally. Equal pay claims totalling £4.5m have been paid at 31st March 2014 from within the resources already set aside. It is anticipated that further claims will be forthcoming in 2014/15. Legal advice obtained by the Welsh Local Government Association and the Council indicated that any back payment made to settle equal pay claims is not superannuable. The Wales Audit Office have issued a contrary opinion. The 2014/15 Medium Term Financial Plan reflects the updated position prior to closure of the 2013/14 accounts and will be revised to take account of the 2013/14 outturn position together with the economic, service, legal, demographic and resource assumptions and risks inherent in the financial projections.
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1.3 Reconciliation of Revenue Expenditure Summary 2013/14 to Comprehensive Income and Expenditure Statement 2013/14 (page 58) Net Actual
Expend
Revenue
Expend
Funded From
Capital
Dep’n &
Impair
ment
Current
Cost
Pension
Adj
Employee
Benefit
Accrual
Reserve
Transactions
Service
MRP &
Interest
Investment
Properties
Prior Year
Adjs
Specific
Grants
Other Misc
Adjs
Comp
Income &
Expend
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Children’s Services 101,780 - 14,914 2,016 (478) (1,127) (966) - - - 73 116,212
Adult Social Services 43,512 - 737 745 - (928) (5) - (100) - - 43,961
General Fund Housing 1,417 - 550 132 - (4) (1) - - - - 2,094
Highways & Transport
Services10,526 - 4,495 469 - (1,714) (206) - - - - 13,570
Culture, Environment &
Planning23,696 - 9,014 1,496 - (1,244) (23) 103 - - - 33,042
Services to the Public 9,153 - 19 170 - (69) - - - - - 9,273
Corporate & Democratic
Core3,023 - 1,805 125 - (265) (16) - (155) - (185) 4,332
Non-Distributed Costs 56 - - (72) - 135 - - - 1,262 121 1,502
Court Services 204 - - 3 - - - - - - - 207
Net Cost of Services 193,367 - 31,534 5,084 (478) (5,216) (1,217) 103 (255) 1,262 9 224,193
Services not in Main
Analysis (HRA)- - 9,576 229 - (2,068) (358) - - - 7,379
Net Cost of Services
(inc HRA) / Deficit on
Continuing Operations
193,367 - 41,110 5,313 (478) (7,284) (1,575) 103 (255) 1,262 9 231,572
19,235
12,617
(239,933)
23,491
(69,243)
(45,752)Total Comprehensive Income & Expenditure
Other Comprehensive Income & Expenditure
Other Operating Expenditure
Financing & Investment Income & Expenditure
Taxation & Non Specific Grant Income
(Surplus) or Deficit on Provision of Services
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2. COUNCIL HOUSING
The summarised financial performance for Council Housing, as set out in the ring-fenced Housing Revenue Account, reports the outturn position as compared to the estimates approving resource allocation and used for rent setting purposes.
2012/13
Actual
Expend
Original
Estimate
Revised
Estimate
Actual
Expend
£000 £000 £000 £000
Income
Rents - Dwellings (18,315) (18,676) (18,617) (18,580)
Other (1,067) (1,099) (1,079) (1,073)
Total Income (19,382) (19,775) (19,696) (19,653)
Expenditure
Management & Maintenance 12,597 12,788 12,681 12,690
Negative Subsidy 6,161 6,371 6,421 6,372
Capital Financing Costs 397 380 367 364
Other 227 236 227 227
Total Cost 19,382 19,775 19,696 19,653
2013/14
Housing Revenue Account
The Housing Revenue Account working balance remains unchanged at £752,000.
Rents were increased by 2% compared with the Rent Increase Guideline issued by the Welsh Government of 5.6%. 2.1 Implications and Risks
The Welsh Housing Quality Standard was achieved in March 2013 (the required date). The HRA Business Plan has been revised for 2014/15 and again submitted to the Welsh Government in support of the bid for Major Repairs Allowance Grant. This is required to maintain the Standard and undertake further improvements. The present Plan is predicated on the continued receipt of the Major Repairs Allowance and various other planning criteria (the number of Council house sales and various economic factors) and assumed the current negative subsidy system would continue in its present form. However, Welsh Government is planning to replace the current negative subsidy system with a new system of self financing from 1st April 2015. They have reached agreement with HM Treasury on a settlement figure to enable Council’s to exit from the current system, although specific details on the consequential borrowing commitment have not been finalised. It is envisaged that the self financing system will provide the Council with additional resources for the management and maintenance of existing housing stock and offer the opportunity to consider capital investment proposals for estate reconfiguration / regeneration / service investment programmes. Welsh Government, through the Housing (Wales) Bill, also intends to harmonise rent levels between local authorities and registered social landlords over time, commencing on 1st April 2015. This is likely to have a significant impact upon Council tenants who have benefitted from below benchmark rents.
3. CAPITAL INVESTMENT The Council’s capital investment policy is centred around the provision of high quality business and other facilities together with the rationalisation and improvement of its infrastructure and building stock. Capital investment totalled £28.5m compared with an estimated programme of £35.9m. Where delays to schemes have occurred, the projects and the associated funding provision have been carried forward.
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3.1 Capital Expenditure & Funding
The 2013/14 expenditure and 2014/15 capital investment plans are summarised as follows:
Latest Approved
Programme
2013/14
Actual
Expenditure
2013/14
Estimate
2014/15
£000 £000 £000
Expenditure
Education (including 21st Century
Schools Programme)4,625 4,465 20,633
Social Care 318 286 -
Highways & Transportation 10,518 8,123 15,967
Housing - H.R.A. 6,567 4,883 6,393
Housing – General Fund 3,787 1,984 4,118
Culture & Related Services 2,181 1,728 4,474
Planning & Development 4,012 3,099 2,398
Environmental 1,705 1,865 4,576
Corporate 2,205 2,092 1,599
Total Expenditure 35,918 28,525 60,158
Financing
Capital Grants & Contributions 17,879 15,967 31,853
Capital Receipts & Capital Fund 3,413 2,185 13,266
Earmarked Reserves 3,411 2,670 2,306
Borrowing 11,215 7,703 12,733
Total Financing 35,918 28,525 60,158
3.2 Implications and Risks
The Welsh Government has now confirmed their method of financial support for the £149.9m 21st Century Schools Programme. Welsh Government will provide 50% support for the programme via two sources of funding. £56m in the form of capital grant which will be claimed over the period of the Programme. Local Government Borrowing Initiative (LGBI), revenue grant for a period of 30 years will finance loan borrowing of £18.9m. LGBI grant is fixed and therefore increases in interest rates will reduce the amount of borrowing supported. This could potentially result in a funding shortfall which will need to be met by the Authority. The implications of these proposals will be modelled in the revised Medium Term Financial Plan.
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4. ASSETS & LIABILITIES
4.1 Fixed Assets
The Council’s fixed asset portfolio was valued at £848m as at 31st March 2014 compared to £843m as at 31st March 2013.
Fixed assets acquisitions in the year were made for consideration of £3.5m.
Asset disposals realised £1.7m in respect of non-council housing and £0.4m in respect of council house sales. At 31st March 2014, surplus assets awaiting disposal have an estimated value of £6.1m, of which £2.9m is estimated as being likely to be sold within the next 12 months.
Impairment of £0.3m was charged in the year to represent dilapidation of buildings and demolition of assets. 4.1.1 Implications and Risks The risks associated with the valuation and usage of the assets are:
the useful life of the asset is under/over estimated
resources are not available to maintain assets and the useful life is shortened
the property market revival stalls resulting in an increasing portfolio of surplus assets
the economic activity worsens resulting in vacant commercial properties
the asset disposals forecast for reinvestment in future capital projects do not occur in the assumed time periods or generate the anticipated capital receipts.
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4.1.2 Fixed Asset Portfolio
31st March
2014Council Housing Property Numbers
Dwellings 4,394
Flats and Bedsits 1,274
Shops 20
Garages 1,055
Treatment Works 21
Pumping Stations 17
Other Land and Buildings
Education & Children Services Buildings
Primary Schools* 61
Secondary Schools* 8
Special Schools 1
Pupil Referral Units 2
Community Centres 4
Professional Education Centre 1
Youth Centres 7
Family Centres 9
Respite Care Homes (LD) 1
Social Services Buildings
Day Centres 7
Homes for the elderly 4
Sheltered Workshop 1
Social Activity Centres 3
Housing Services
Homeless Hostels 1
Gypsy Traveller Sites 5
Highways Roads & Transport Services
Airport 1
Car Park 87
Multi Storey Car Park 2
Other Car Parks (No Parking Order) 14
Cultural Environment & Planning Services
Leisure Centres and Swimming Pools** 12
Bowling Green 1
Water Sports Centres 1
** The gross carrying value of the Tenby Pool area of Tenby Leisure Centre (approx £3.3m) is held in trust and is not
included in the Balance Sheet but is reported separately as part of the Tenby Pool Trust accounts and the asset is
recorded in the figures above.
* The gross carrying value (approx £12m) of Voluntary Controlled (VC) Schools and Voluntary Aided (VA) Schools
not owned by the Council has been excluded from the Balance Sheet. Because these assets form part of the
Education provision of the Authority they are included in the numbers reported above. The value of new VC Schools
funded by the Council has been included on the Balance Sheet together with that of the school funded under P.F.I.
arrangements.
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Other Land and Buildings cont... 31st March
2014Cultural Environment & Planning Services cont... Numbers
Surf Rescue Centres 4
Cinema 1
Libraries 10
Museums 5
Play Area 3
Playing Field 3
Woodland 24
Tourist Attractions 2
Tourist Information Centres 3
Civic Amenity Sites 5
Landfill Site 1
Crematorium 1
Depot 6
Boat Yard 8
County Farms 48
Development Land 22
Electricity Sub-Station 8
Garage Site (Non-HRA) 11
Grazing Land 42
Harbour 2
Harbour Stores, Offices & Cafés 7
Industrial Estates 16
Industrial Plots 61
Industrial Units 146
Land & Buildings Leased to the Community 22
Market 4
Miscellaneous Property 6
Mortuary 1
Offices 10
Public Conveniences 91
Pumping Stations 6
Shops 4
Stores 47
Science and Technology Park 1
Training Centre 1
Yacht Clubs 2
Youth Hostel 1
Other Land 79
Other Buildings 3
Vacant Properties 4
Central & Support Services
Administrative Buildings 9
Archives 1
Registrars 1
Plant Vehicles & Equipment
Large Plant 37
Vehicles 343
Equipment leased in under Finance Lease 143
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31st March
2014Infrastructure Numbers
Toll Bridge 1
Bus Shelter 84
Slipways/Pontoons & Landing Stages 20
Community Assets
Allotment 20
Cemetery 14
Common Land 3
Community Centre 1
Footpath 16
Foreshore 2
Gardens 25
Historic Buildings 1
Nature Reserves 4
Parks & Open Land 9
Picnic Sites / Amenity Areas 17
Play Areas 50
Playing Fields 23
Pond / Lake 2
Heritage Assets
Artefacts 10
Historic Buildings 13
Memorials 28
Assets under Construction
Primary Schools 1
Miscellaneous Property 2
Museum 1
Surplus Assets
Former Education Assets 4
Other Land 10
Other Buildings 15
Investment Property
Café 1
Caravan Park 1
Cinema 1
Golf Club 1
Kiosk 1
Offices 1
Public House / Hotel 3
Shops 4
Assets Held for Sale
Former HRA Assets -
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4.2 Other Long Term Assets, Current Assets and Current Liabilities
An increase in Bad debt provisions of £489k has been made in the year resulting in a total provision of £5.7m made against debtors valued at £29.3m.
No other issues have been identified in relation to the impairment of other long-term or current assets.
4.2.1 Implications and Risks No issues have been identified regarding the settlement of current liabilities.
4.3 Pensions Liability
The Authority participates in two pension schemes - the Dyfed Pension Fund and the Teachers Pension Fund.
4.3.1 Dyfed Superannuation Scheme, which is administered by Carmarthenshire County Council, is a funded defined benefit scheme to which both employees and the Authority as employers pay contributions. The scheme is subject to statutory triennial actuarial valuations to ensure that the fund can meet future obligations, the last valuation having taken place in 2013. The Dyfed Fund has seen a decrease in its net deficit. A pension liability of £68m was recorded at 31st March 2014 (compared to £123m at 31st March 2013). It is not anticipated that there is any cause for concern and that the position will be recovered in the longer term with the Fund able to meet its commitments.
4.3.2 Implications and Risks The Government introduced reforms to local government pensions from April 2014. Future pensions will be based around career average pension as opposed to final salary pensions. There will be no increases in employee contributions for many scheme members with significant increases for the highest paid employees. There are a number of other principles included in the new scheme.
Under the recently signed Compact between Welsh Local Government and the Welsh Government, one of the proposed policy reviews involved considering the number and organisational structure of pension funds in Wales.
The “staging” date for auto-enrolment of staff in the Scheme has been transitionally postponed, as allowed under the regulations, until 2017.
The major risks facing the Council relate to:
the overall number of contributors to the fund relative to the number of pensioners falling significantly resulting in higher employer contribution rates
any consequential increase in employer contribution rates arising from the reforms outlined above or poor economic performance of the Dyfed Fund investments.
4.3.3 Teachers Pension Scheme
The scheme is administered by the Department for Education. This is an unfunded scheme, meaning that there are no investment assets accumulated to meet pension costs before they arise, and therefore no fund assets or liabilities appearing in the Council’s Balance Sheet
4.3.4 Implications and Risks As with other public sector schemes, the U.K. Government is also proposing to introduce legislative changes to teachers pensions to reduce the increasing cost to the public finances
The major risk facing the Council relates to:
the consequential increase in employer contribution rates arising from the falling contributor to pensioner ratios and from the reforms outlined above.
24
4.4 Long Term Borrowing & Financing Costs The Capital Financing Requirement is the measure of the Council’s external debt limit for capital expenditure purposes and the basis for the amount of debt redemption charged to the revenue account every year. The level of external debt must not exceed this in the longer term. The Council did not borrow externally in 2013/14. A key issue for 2014/15 will be if and when and by how much interest rates increase; if judged prudent and in accordance with the Policy on Borrowing in Advance of Need, opportunities will be taken to secure low cost borrowing before rates increase.
4.4.1 Implications and Risks Prudential Indicators The prudential indicators are intended to ensure that the costs of borrowing to finance the capital investment made by the Council is both affordable and sustainable in terms of the impact on future council tax and housing rent levels. The table below shows the ratio of financing costs to net revenue is fairly constant and that debt is aligned with the Capital Financing Requirement.
Prudential Indicators Actual
2012/13
Estimate
2013/14
Revised
Estimate
2013/14
Actual
2013/14
Estimate
2014/15
Ratio Of Financing Costs To Net Revenue
Stream
% % % % %
Gross
- Council Fund 6.3 6.4 6.2 6.0 6.2
- HRA 2.0 1.9 1.9 1.8 1.7
Capital Financing Requirement £m £m £m £m £m
Council Fund 123 143 129 126 137
HRA 5 5 5 4 4
Total 128 148 134 130 141
Net Movement 5 12 6 2 7
External Debt at 1st April £m £m £m £m £m
External Borrowing 121 120 121 120 119
Other Long Term Liabilities 8 8 8 8 8
Repaid in Year
External Borrowing (1) (1) (1) (1) (1)
Other Long Term Liabilities - - - - -
New Borrowing in Year
External Borrowing - 20 - - 5
Other Long Term Liabilities - - - - -
Gross External Debt at 31st March 128 147 128 127 131
The Medium Term Financial Plan and Treasury Management Strategy sets out the affordability and sustainability indicators relating to planned capital investment levels in future years.
25
Treasury Management Strategies, Indicators and Limits
Local authorities are required to produce a Treasury Management Strategy and an Annual Investment Strategy having regard to CIPFA’s Code of Treasury Management in the Public Services and the Prudential Code for Capital Finance in Local Government.
In 2013/14 the Council continued to operate under a low risk investment strategy. The low level of general economic activity and measures taken to counter the recession resulted in a continuation of reduced interest receipts on investments first experienced in 2010/11. As in previous years, the Council has received in full or expects to receive in full on the due dates repayment of all deposits placed with its counterparties together with the interest due.
The limits and indicators, approved under the Treasury Management & Investment Strategies, as set out below were fully complied with in the year.
Interest Rate Indicators
Original
Estimate
2013/14
Revised
Estimate
2013/14
Actual
2013/14
Estimate
2014/15
% % % %
Average Rate of Borrowing (including long term liabilities) 6.14 6.33 6.33 6.26
Average Rate of New Borrowing 4.40 n/a n/a 4.40
Average Investment Return 1.25 0.95 0.87 0.75
Treasury Management Limits 2013/14 2014/15
Interest Rate Exposure Net Outstanding Principal £m £m
Upper Limit On Fixed Interest Rate Exposure 110 110
Upper Limit On Variable Interest Rate Exposure (70) (70)
Borrowing Limits * £m £m
Authorised Limit 180 170
Operational Boundary 174 164
Limits On Debt Maturity**
Upper Lower Upper Lower
% % % %
Under 12 months 35 - 40 -
12 months to 2 years 35 - 35 -
2 to 5 years 35 - 35 -
5 to 10 years 35 - 35 -
10 years and above 90 25 90 25
2013/14 2014/15
*The Authorised Limit is an absolute limit that must not be breached and is set to allow for all possible circumstances. The Operational Boundary Limit takes account of the estimated normal day to day borrowing and long-term funding cash flows. This ensures cash requirements can be managed effectively within the parameters contained in the approved Treasury Management and Investment Strategies. ** an analysis of the debt maturity profile as at 31st March 2014 is shown on page 113.
Debt Repayment
The minimum revenue provision (MRP) is the amount that must be set aside from revenue each year to repay external debt. The Council approved and adhered to the following policy for 2013/14:
26
General Fund Debt :
Generally for debt supported by revenue support grant (RSG) and council tax, MRP of 4%
calculated by reference to the General Fund Capital Finance Requirement (Long Term
Debt) adjusted by regulation as at 1st April each year.
Generally for debt supported by council tax only, an amount calculated by dividing the
outstanding debt by the remaining useful life of the asset and to which additional amounts
may be added if deemed appropriate as at 1st April each year.
Any other basis considered prudent in respect of a particular project or asset having regard
to the guidance issued by the Welsh Government and the Code of Practice on Local
Authority Accounting 2013/14.
No minimum revenue provision shall be made for monies deposited under the
Pembrokeshire Local Authority Mortgage Scheme on the basis that any deposit made are
100% refundable.
Housing Revenue Account (HRA)
2% provision based on the HRA Capital Finance Requirement adjusted by regulation as at
1st April each year.
Any other basis considered prudent in respect of a particular project or asset having regard
to the guidance issued by the Welsh Government and the Code of Practice on Local
Authority Accounting 2013/14.
4.5 Usable Reserves and Balances
4.5.1 General Fund & Housing Revenue Account Working Balances
Working balances (General Fund £6.5m and Housing Revenue Account £0.75m) are maintained to meet day to day operational eventualities. There has been no change during the year.
4.5.2 Earmarked Reserves
As well as the statutory reserves required by the Code of Practice, the Council maintains the reserves as detailed below as part of the Council Fund.
Earmarked reserves are controlled and managed within the protocol guidelines by the Director of Finance and Leisure / Chief Finance Officer.
Earmarked reserves are used in accordance with plans included in the budget approved by Council or in exceptional circumstances to address urgent situations as deemed necessary by the Chief Executive and Director of Finance & Leisure / Chief Finance Officer.
The adequacy and appropriateness of earmarked reserves are assessed during the estimate and final account processes.
Capital Investment Capital Fund - is maintained to provide additional resources for the capital programme, providing flexibility to the financing of capital investment. The fund is fully committed to meet the cost of the planned capital investment.
21st Century Schools To earmark funding to meet the cost of the Council’s share of the 21st Century Schools Programme
27
Risk Management Insurance & Risk - the reserve is maintained to meet the Council's exposure to claims under its insurance arrangements, to provide flexibility to meet the volatility of the insurance market and to provide resources to take any measures required to improve the Council’s risk exposure position.
Annual contributions are made by services to the reserve and contributions are made from the reserve to the claims provision or service revenue accounts to meet the cost of identified and quantified claims or other appropriate expenditure.
Winter Maintenance - the reserve is maintained to meet the costs arising from the measures that may be required to combat the effects of severe weather.
Asset Renewal & Repair Property & Equipment - the reserve is maintained for the renewal and major repair of the Council's property and equipment. Annual contributions are made by services to the reserve.
Carriageway Reconstruction - the reserve is used to provide flexibility between financial years in the maintenance of roads, bridges and other municipal assets when a commitment has been identified but the work has not been undertaken.
Vehicles & Plant - the reserve is maintained for the renewal and major overhaul of the vehicle and plant fleet. Contributions including annual depreciation costs, which are levied on users departments as part of the overall charges for use of the assets, are made to the reserve. The cost of replacing the vehicles and plant are financed from the reserve.
Cleddau Bridge - the reserve is maintained to meet the cost of the major upgrading and overhaul to the bridge and its associated structures.
West Wales Crematorium – the reserve to meet the cost of the major repair upgrading of the Crematorium facilities
Service Delivery & Improvement Initiative Fund - the reserve is maintained to facilitate service rationalisation, improvement and delivery opportunities.
Planning - the reserve is maintained to accumulate funds towards the costs of the local development plan and any other costs arising from public enquiries etc.
Community Regeneration – the reserve has been established to provide funds towards the cost of projects developed by the Community Regeneration Unit.
Other - represent a number of reserves maintained to facilitate the delivery of a range of services obviating fluctuations in annual budgets. Pay & Grading The reserve has been established to facilitate the introduction of a pay and grading system compliant with equal pay legislation. Local Authority Mortgage Scheme The reserve has been established to cover potential future defaults on the indemnified mortgages. Joint Arrangement The reserve is required under financial reporting arrangements for Public Benefit Entities and represents amounts committed to fund joint working arrangements. Further details are set out on pages 80-82.
28
4.5.3 School Reserves and Balances
Working Balances
Under the Council’s Local Management of Schools Scheme (L.M.S.), schools can maintain working balances. Under guidance from the Welsh Government, primary school balances are limited to £50,000 and special and secondary school balances are limited to £100,000.
Other
Other reserves for specific purposes may be held under the L.M.S. scheme.
29
The reserve transactions are summarised below:
Revised
Estimate
2013/14
Actual 2013/14 Estimate
2014/15
£000 £000 £000
Capital Fund
Balance brought forward (7,131) (7,131) (7,549)
Net appropriation (to)/from (418) (2,252) 1,079
Balance Carried Forward (7,549) (9,383) (6,470)
21st Century Schools (Capital)
Balance brought forward (13,214) (13,214) (13,214)
Net appropriation (to)/from - (6,380) 6,969
Balance Carried Forward (13,214) (19,594) (6,245)
Risk Management
Balance brought forward (6,238) (6,238) (6,198)
Net appropriation (to)/from 40 255 40
Balance Carried Forward (6,198) (5,983) (6,158)
Asset Renewal & Repair
Balance brought forward (8,685) (8,685) (7,082)
Net appropriation (to)/from 1,603 (663) 886
Balance Carried Forward (7,082) (9,348) (6,196)
Service Delivery & Improvement
Balance brought forward (7,747) (7,747) (7,052)
Net appropriation (to)/from 695 (1,567) 155
Balance Carried Forward (7,052) (9,314) (6,897)
West Wales Crematorium
Balance brought forward (1,369) (1,369) (1,583)
Net appropriation (to)/from (214) (217) (258)
Balance Carried Forward (1,583) (1,586) (1,841)
Joint Arrangements (PCC Share)
Balance brought forward (453) (453) (316)
Net appropriation (to)/from 137 291 -
Balance Carried Forward (316) (162) (316)
Pay & Grading Reserve
Balance brought forward (5,596) (5,596) (400)
Net appropriation (to)/from 5,196 4,696 400
Balance Carried Forward (400) (900) -
Local Authority Mortgage Scheme
Balance brought forward (33) (33) (75)
Net appropriation (to)/from (42) (42) (42)
Balance Carried Forward (75) (75) (117)
LMS Balances
Balance brought forward (2,778) (2,778) (2,798)
Net appropriation (to)/from (20) 466 (20)
Balance Carried Forward (2,798) (2,312) (2,818)
Other School reserves (Inc. PFI)
Balance brought forward (3,539) (3,539) (3,466)
Net appropriation (to)/from 73 (124) (2)
Balance Carried Forward (3,466) (3,663) (3,468)
Earmarked Reserves
Detailed reserve transactions are set out on page 64.
30
4.5.4 Implications and Risks If the agreed protocol is adhered to there are no inherent risks associated with the level of usable reserves and balances.
The ability of the Council to fund the 21st Century Schools programme and other capital improvements may necessitate a re-evaluation of the position in future years.
4.6 Provisions
The Council undertakes a significant level of self insurance and maintains a provision to meet the cost of identified claims.
The Council has made provision to meet the cost of equal pay claims.
The Council is required to participate in the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme and make provision for the liability incurred in respect of energy consumed. The liability is discharged by surrendering allowances the Council must purchase. The cost to the authority is recognised and reported in the costs of the authority’s services and is apportioned to services on the basis of energy consumption.
Details of provision transactions are set out on page 105.
4.6.1 Implications and Risks Assurance has been received from external consultants that the level of the insurance reserve and provision established to meet liabilities arising and potential liabilities arising from past events is adequate.
It is judged that adequate provision has been made to meet the cost of any equal pay claims arising from the pay and grading review.
The provision of £177k made in respect of 2013/14 for the Carbon Reduction Commitment is judged to be sufficient to meet the liability.
4.7 Contingent Assets and Liabilities
The material contingent assets and liabilities for which no provision has been made in the accounts identified at 31st March are detailed on page 106.
4.8 Potential Future Assets and Liabilities
Under the Landfill Allowances Scheme (Wales) Regulations 2004, the Council is required to meet annual targets in respect of the amount of waste sent to landfill. Failure to meet these targets may result in financial penalties. The Council met its target for 2013/14.
Entities that operate (or have operated) a landfill site have an obligation arising from conditions in planning consents and Natural Resources Wales permits to restore a site and undertake appropriate aftercare and monitoring. This Council has never operated a landfill site. The Council uses facilities provided by the private sector which is responsible for all aftercare costs.
There are various old closed landfill sites throughout the County. No issues requiring remedial works above those already undertaken have been identified at this time. The sites are subject to an on-going risk based inspection and monitoring regime.
Crematorium Abatement of Mercury Emissions – the Council is setting aside monies from cremation income in the Crematorium reserve to meet the environmental improvements that it is anticipated will be required to facility in respect of mercury emissions.
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5. SIGNIFICANT INTERESTS
5.1 Members of the Council The Register of Members Interests, which is open to Public Inspection, lists any financial and other personal interests. The Register is open to inspection by the public.
5.2 Officers Officers are required to declare potential conflicts of interest arising from employment and other arrangements.
6. PAYMENTS TO AUDITORS
£144k was paid to the Wales Audit Office in 2013/14 for non-audit (regulatory) work.
7. SICKNESS ABSENCE
The average sickness absence rate for 2013/14 was 4.2% or 9.4 days per employee.
8. POST BALANCE SHEET EVENTS
There were no events being judged material pertaining to the Council’s position at 31st March 2014, which occurred after the date the Statement was compiled and the initial reporting date for audit of 30th June.
Any events taking place between the 30th June 2014 and the 29th September 2014, the date the audited Statement of Accounts being authorised for issue by the Chief Finance Officer, will be reported on 29th September. As at 30th June it is not anticipated that there will be any such events.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PEMBROKESHIRE COUNTY COUNCIL
I have audited the accounting statements and related notes of Pembrokeshire County Council for the year ended 31 March 2014 under the Public Audit (Wales) Act 2004.
Pembrokeshire County Council’s accounting statements comprise the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement, the Balance Sheet, the Cash Flow Statement, the Movement on the Housing Revenue Account Statement and the Housing Revenue Account Income and Expenditure Statement.
The financial reporting framework that has been applied in their preparation is applicable law and the Code of Practice on Local Authority Accounting in the United Kingdom 2013-14 based on International Financial Reporting Standards (IFRSs).
Respective responsibilities of the responsible financial officer and the independent auditor
As explained more fully in the Statement of Responsibilities for the Statement of Accounts set out on page 34, the responsible financial officer is responsible for the preparation of the statement of accounts, which gives a true and fair view.
My responsibility is to audit the accounting statements and related notes in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require me to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the accounting statements
An audit involves obtaining evidence about the amounts and disclosures in the accounting statements and related notes sufficient to give reasonable assurance that the accounting statements and related notes are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Pembrokeshire County Council’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the responsible financial officer and the overall presentation of the accounting statements and related notes.
In addition, I read all the financial and non-financial information in the Explanatory Foreword to identify material inconsistencies with the audited accounting statements and related notes. If I become aware of any apparent material misstatements or inconsistencies, I consider the implications for my report.
Opinion on the accounting statements of Pembrokeshire County Council
In my opinion the accounting statements and related notes:
give a true and fair view of the financial position of Pembrokeshire County Council as at 31 March 2014 and of its income and expenditure for the year then ended; and
have been properly prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2013-14.
Emphasis of matter – unlawful transactions
I draw attention to the matters disclosed in note 9.1 of the Comprehensive Income and Expenditure Statement on Page 77 in relation to remuneration totalling £23,337 paid to the Chief Executive and one other senior officer in lieu of employer pension contributions. In my view these items of account are unlawful. My opinion is not qualified in respect of this matter.
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Emphasis of matter – Cleddau Bridge
I draw attention to the matter disclosed in note 3 of the Comprehensive Income and Expenditure Statement on Pages 68-69 that sets out the current accounting arrangements for Cleddau Bridge and the work that is to be carried out to clarify the future financial management arrangements of the Bridge. In my view until this work is completed, the information in this disclosure is fundamental to user’s understanding of the financial statement. My opinion is not qualified in respect of this matter.
Opinion on other matters
In my opinion, the information contained in the Explanatory Foreword for the financial year for which the accounting statements and related notes are prepared is consistent with the accounting statements and related notes.
Matters on which I report by exception
I have nothing to report in respect of the Governance Statement on which I report to you if, in my opinion, it does not reflect compliance with ‘Delivering Good Governance in Local Government: Framework’ published by CIPFA/SOLACE in June 2007, or if the statement is misleading or inconsistent with other information I am aware of from my audit.
Certificate of completion of audit
I certify that I have completed the audit of the accounts of Pembrokeshire County Council in accordance with the requirements of the Public Audit (Wales) Act 2004 and the Code of Audit Practice issued by the Auditor General for Wales.
For and on Behalf of the Auditor General for Wales
24 Cathedral Road
Cardiff
CF11 9LJ
17th July 2015
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STATEMENT OF ACCOUNTS STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT The Council’s Responsibilities The Council is required:
To make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority, that officer is the Chief Finance Officer.
To manage its affairs to secure the economic, efficient and effective use of resources and safeguard its assets.
To approve the Statement of Accounts. The Chief Finance Officer’s Responsibilities The Chief Finance Officer is responsible for the preparation of the authority’s statement of accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this Statement of Accounts, the Chief Finance Officer has:
selected suitable accounting policies and then applied them consistently;
made judgments and estimates that were reasonable and prudent;
complied with the local authority Code. The Chief Finance Officer has also:
kept proper accounting records which were up to date;
taken reasonable steps for the prevention and detection of fraud and other irregularities.
CERTIFICATE OF CHIEF FINANCE OFFICER The Statement of Accounts of the Pembrokeshire County Council for the year ended 31st March 2014 is contained on pages 35 to 124, and is produced in accordance with the requirements of the Local Government Accounts and Audit (Wales) Regulations 2005 as amended. The Regulations prescribe the contents of the Statement of Accounts and it is upon the contents only that the Audit opinion is expressed. I certify the accounts present a true and fair view of the financial position of Pembrokeshire County Council as at 31st March 2014 and its income and expenditure for the year ended 31st March 2014 and
append my signature to the Statement in accordance with Regulation 8B. J HASWELL FCCA
Chief Finance Officer Date: REPORTING AND APPROVAL These accounts, initially published on 30th June 2014, have been reported to Corporate Governance Committee for approval following the conclusion of the Annual Audit on 29th September 2014, and re-approval on 6th July 2015. The audit certificate is shown on pages 32-33.
Chairman of Corporate Governance Committee Date:
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CORE FINANCIAL STATEMENTS - UNDERLYING PRINCIPLES
The application of accounting standards, concepts, critical judgements and inherent risks, and accounting policies used in preparing the core financial statements are set out in the following pages.
1. FINANCIAL REPORTING STANDARDS
The International Financial Reporting and Other Standards that have been issued have been applied as required by the Code of Practice on Local Authority Accounting.
The Code of Practice requires that the Authority discloses information relating to the impact of an accounting change that will be required by a new standard that has been issued but not yet adopted. This requirement applies to accounting standards that come into effect for financial years commencing on or before 1 January of the financial year in question (i.e. on or before 1 January 2014 for 2013/14). Disclosure requirements are expected to be included in a subsequent edition of the Code.
- IFRS 13 Fair Value Measurement (May 2011)
- IFRS 10 Consolidated Financial Statements
- IFRS 11 Joint Arrangements
- IFRS 12 Disclosure of Interests in Other Entities
- IAS 27 Separate Financial Statements (as amended in 2011)
- IAS 28 Investments in Associates and Joint Ventures (as amended in 2011)
- IAS 32 Financial Instruments: Presentation
- Annual Improvements to IFRSs 2009 – 2011 Cycle.
It is anticipated that details of the disclosures required for most of these changes will be
included in the Code of Practice issued for 2014/15. Amendments are not deemed material.
The Statement of Accounts set out on pages 35 to 124 have been prepared in compliance with the 2013/14 Code of Practice on Local Authority Accounting.
2. ACCOUNTING CONCEPTS
The following pervasive accounting concepts have been used in the preparation of the Core Accounting Statements:
Accruals
Going concern
Primacy of legislative requirements The qualitative characteristics of financial information continue to be employed:
Relevance
Materiality
Faithfull Representation
Comparability
Understandability
Verifiability
Timeliness
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3. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND
ESTIMATION RISK
In applying the accounting policies set below on pages 37 to 53 the Council has made judgements about the complex transactions and those involving uncertainty in future years.
Although there is a high degree of uncertainty about the future level of funding for local government, there is insufficient evidence to conclude that any assets of the Council may be impaired.
In certain instances it has been necessary to estimate the charges made in the accounts using historical experience, current trends etc. Actual results may be different from the assumptions made and consequently may affect the charges made in future years’ accounts.
The Council’s commitment to the 21st Century School Programme and the requirement to find match funding of £75m in the period 2014/15 to 2018/19 remains a key issue.
The Council’s commitment to borrow to enable it to exit from the current HRA negative subsidy system and move to a system of self financing on 1st April 2015 is a key issue for 2014/15 and beyond.
The main risk areas are set out in the following table:
Item Risk Potential Affect
Non-Current Assets Property, Plant & Equip
Useful life Exclusion of Voluntary Controlled and Voluntary Aided Schools from Balance Sheet value
Incorrect depreciation charge Potential understatement of value by £12m.
Financial Instruments Contractual Obligations
Incorrect assumptions Incorrect quantification and legal challenge
Under/overcharge in the accounts Additional charge to taxpayer at future date
Provisions
Quantification incorrect
Additional charge to taxpayer at future date
Pension Liability
Actuarial assumptions incorrect Increased Employer Contributions at future date/ additional charge to taxpayer at future date
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4. ACCOUNTING POLICIES
The accounting policies used to prepare the Core Accounting Statements and the following Supporting Notes and Supplementary Financial Statements have been reviewed using the 2013/14 Code of Practice on Local Authority Accounting. 4.1 General
The objective of the accounting policies adopted shall be to ensure that the Statement of Accounts provides a “true and fair” view of the financial position of the Council.
The accounts shall be prepared in accordance with the latest Code of Practice on Local Authority Accounting, issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) (the Code) and adhere to the relevant Financial Reporting Standards and Practices, unless otherwise stated.
Figures shall be included in the Financial Statements using the cost convention specified by the appropriate accounting standard.
The accounting policies shall be revised as required from those of the previous year to reflect changes in reporting requirement with any such changes being disclosed.
4.2 Going Concern, Exceptional, Extraordinary Items, Prior Year Adjustments & Events After the Reporting Period
The Financial Statements shall be prepared on a going concern basis unless there is an intention by government that the services will no longer be provided.
Exceptional items – When items of income and expense are material, their nature and amount will be disclosed separately, either on the face of the Comprehenive Income and Expenditure Account or in the notes to the accounts.
Extraordinary items - No items of income or expense will be treated as extraordinary. All items will therefore be accommodated within one of the specified lines of the Surplus or Deficit on the Provision of Services or the Other Comprehensive Income and Expenditure.
Unless otherwise sanctioned by the Code, material prior period adjustments shall result in a restatement of prior year figures and disclosure of the effect.
Material events occurring after the end of the reporting period shall, if applicable at the Balance Sheet date, amend the Statement of Accounts. Other events will be disclosed with an estimate of the likely financial effect. If amended after being issued prior to the conclusion of audit the responsible financial officer shall re-certify the revised Statement of Accounts as replacing that previously issued. Materiality shall be defined as the amount estimated by the Wales Audit Office in any one year.
4.3 Non-Current Fixed Assets
4.3.1 Recognition
All expenditure on the acquisition, creation or enhancements of fixed assets shall be capitalised in the accounts provided that the fixed asset will yield future economic benefits to the authority and the services it provides endures for a period of more than one year and can be reliably measured. These costs shall include subsequent expenditure that enhances, replaces (part or whole) or services the asset.
The cost of day to day non-structural repairs and maintenance works associated with operating the fixed assets shall be charged directly to service revenue accounts.
Generally costs incurred on capital projects prior to RIBA stage E shall be charged to the appropriate service revenue account (feasibility studies, design variations prior to final detailed design etc)
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Non-Current Fixed Assets continued
The land and buildings components of fixed assets shall be accounted for separately. With effect from 1st April 2010 and on a prospective basis, assets shall be recognised on a component basis where:
An individual component is material to the cost and/or operation of that asset and
That component has an estimated useful life that is materially different to that of the other component parts of the asset.
Where components are replaced or restored, the existing carrying amounts in the Balance Sheet shall be derecognised before the new component is recognised.
4.3.2 Classification Property, Plant and Equipment Generally fixed assets shall be classified as Property, Plant and Equipment Investment Property Assets held solely to earn rentals or for capital appreciation purposes or both, shall be classified as Investment Property for which the following disclosures shall be made in the notes to the Comprehensive Income and Expenditure Statement:
Revenue transactions
Any restrictions on asset realisation or use of income
Contractual obligations attaching to the asset including leasehold acquisitions or disposals
An analysis of the amounts reported in the Balance Sheet between the start and the end of the year
Heritage Assets Heritage Assets shall be disclosed separately on the face of the Balance Sheet, or where the cost of obtaining a value is judged to outweigh the likely benefit to users of the Statement, the asset shall be disclosed in the appropriate note to the Balance Sheet together with the Council’s policy in respect of the management of Heritage Assets.
Donated Assets Donated Assets shall be included in the appropriate asset category according to use.
Assets Held for Sale - assets which meet all the following criteria shall be shown as current assets in the Balance Sheet:
The asset (or disposal group) is available for immediate sale in its present condition subject to terms that are usual and customary for sales of such assets (or disposal groups).
The sale is highly probable; the appropriate level of management being committed to a plan to sell the asset (or disposal group) and an active programme to locate a buyer and complete the plan has been initiated.
The asset (or disposal group) is being actively marketed for a sale at a price that is reasonable in relation to its current fair value.
The sale is expected to qualify for recognition as a completed sale within one year of the date of classification and the action required to complete the plan indicates that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
If the above criteria are not met the asset shall continue to be accounted for in the appropriate non-current asset category.
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Non-Current Fixed Assets continued
4.3.3 Initial Valuation
Fixed Asset Values shall be recognised initially at cost recognising all expenditure (normally RIBA stage E onwards) on an accruals basis that is directly attributable to bringing the asset into its intended use.
Donated Assets or Assets Exchanged for Non-monetary Consideration. Where no conditions relating to the asset remain to be fulfilled, the fair value of the asset shall be recognised in the Balance Sheet and in the Comprehensive Income and Expenditure Statement. The latter being transferred to the Capital Adjustment Account via the Movement in Reserves Statement. Where conditions attach to a donated asset the asset shall be recognised in the Balance Sheet and in the Donated Assets Account until such time as the conditions are fulfilled.
Heritage Assets shall be valued at cost or value, obtained by an appropriate method, if available
4.3.4 Subsequent Valuation
Measurement after recognition shall be on the basis recommended by CIPFA and in accordance with the Statements of Asset Valuation Principles and Guidance Notes issued by the Royal Institution of Chartered Surveyors (RICS):
Property, Plant and Equipment shall be included in the Balance Sheet at fair value defined as the lower of net realisable value in existing use or, in the absence of an active market, depreciated replacement cost
Council Housing shall be included in the Balance Sheet at fair value for the existing use of social housing which shall be derived by discounting the market value by a factor reflecting the difference between commercial and social rents.
Investment Properties shall be included in the Balance Sheet at fair value, defined as the amount that would be paid for the asset in its highest and best use less cost of sale. Assets shall be re-valued to fair value prior to being re-categorised to Investment Property or Assets Held for Sale.
Infrastructure and community assets and assets under construction, other than investment property, shall be included in the Balance Sheet at historical cost net of depreciation where appropriate.
Any assets acquired for non-cash consideration shall be included in the Balance Sheet at fair value
Heritage Assets shall be generally be valued using their insurance value as a proxy for fair value.
Revaluation shall not occur at the point of disposal.
With the exception of Heritage Assets, the value of which will be reviewed annually, valuation shall be undertaken within a 5-year period on a rolling basis with changes to values being made in the year they arise, the effective date being 31st March. Material changes in the pattern of economic consumption occurring to any major asset or asset group in any one year shall be recognised in that year.
The assets shall be valued by the Council’s appointed valuer who shall be a suitably qualified officer.
4.3.5 Gains on Revaluation
For the purposes of calculating gains and losses the current value of individual assets at the 31st March 2007 shall equal the historic cost.
In the majority of cases gains on revaluation shall be credited to the Revaluation Reserve except where a previous impairment has been charged to the Comprehensive Income and Expenditure Statement. In these circumstances the gain shall be credited to the Comprehensive Income and Expenditure Statement and applied to the balance of the
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Non-Current Fixed Assets continued
related loss recorded in the Capital Adjustment Account. Any remaining unapplied gain shall be credited to the Revaluation Reserve.
4.3.6 Revaluation Losses and Impairment
At the end of each reporting period, fixed assets other than non-depreciable land shall be reviewed for impairment and the possible reversal of impairment previously charged. Changes in value resulting in impairment shall be charged initially to the Revaluation Reserve up to the balance on that Reserve in respect of the asset concerned and any balance thereafter shall be charged to the Comprehensive Income and Expenditure Statement. The impairment balance not being a proper charge to the Council Fund shall be reversed in the Movement in Reserves Statement to the Capital Adjustment Account.
4.3.7 Depreciation
With the exception of Investment Properties and Heritage Assets which have indefinite lives, depreciation shall be provided for on all non-current fixed assets with a finite useful life and, where material, separate components of the asset shall be identified for depreciation purposes. The net discounted value of Council Housing shall be apportioned between land and buildings before depreciation is calculated.
Generally the straight-line method shall be used to estimate depreciation which shall be charged from the date when the asset becomes available for use to the appropriate service in the Comprehensive Income and Expenditure Statement. Not being a proper charge to the Council Fund this shall be reversed in the Movement in Reserves Statement to the Capital Adjustment Account. 4.3.8 Asset Lives
The remaining useful asset lives, estimated on a component basis if deemed appropriate, shall reflect the amount of economic benefit remaining to be provided by tangible fixed assets and shall be determined taking into account the number, age, obsolescence, type of construction, condition, repair and enhancement. Estimates of remaining useful lives shall be made annually, if deemed appropriate, and each time the asset is revalued.
4.3.9 De Minimis Expenditure
Expenditure greater than £10,000 or expenditure on assets with a useful life exceeding 12 months shall be capitalised. However, exceptions shall be made for certain minor works and vehicles plant and equipment may not be capitalised
5. Non-Current Intangible Assets
Generally expenditure on externally purchased intangibles and internally developed intangible assets shall be charged in the year in which it is incurred to the relevant service heading in the Comprehensive Income and Expenditure Statement. However, if in the case of internally developed assets there is evidence that a ready market exists, and in both instances an estimated finite useful life can be ascertained, the asset shall be reported at fair value and may be written out over a period consistent with the consumption of economic benefits; the appropriateness of the period of amortisation shall be reviewed each year.
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6. Capitalisation of Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction and commissioning of an asset taking over 12 months to be ready for its intended use may be capitalised. Other than borrowing specifically earmarked for a project, the relevant borrowing costs shall be ascertained by calculating a capitalisation rate, being the weighted average of the associated borrowing costs that are outstanding for the period in question. Any borrowing costs that are capitalised in respect of any year shall be separately disclosed.
7. Revenue Expenditure Funded From Capital Under Statute
Payments that under legislation are funded from capital resources but where no fixed assets are created shall be charged to the appropriate service in the Comprehensive Income and Expenditure Statement. Not being funded from revenue resources the amount shall be reversed in the Movement in Reserves Statement with an equal amount charged to the Capital Adjustment Account. 8. Asset Disposals
Disposal proceeds and the carrying value shall be recorded in Comprehensive Income and Expenditure Statement, but not being a proper charge to the Council Fund shall be reversed to the Capital Receipts Reserve and the Capital Adjustment Account respectively. Any balance on the Revaluation Reserve in respect of the asset disposed of shall be written off directly to the Capital Adjustment Account.
In the case of Donated Assets any balance on the Donated Assets Account shall be recognised as a deficit or surplus in the Comprehensive Income and Expenditure Statement as Other Operating Expenditure. Not being funded from revenue resources or revenue income the amount shall be reversed in the Movement in Reserves Statement with an equal amount charged to the Capital Adjustment Account. The receipts from the disposal of Council Housing assets shall be set aside as a provision for debt repayment in the Capital Adjustment Account on a basis which maximises housing subsidy. Monies received after 31st March 2004 from the sale of council houses shall only be applied for Housing Revenue Account functions.
Interest earned on the investment of capital receipts in hand shall be credited to the Council Fund.
Receipts under £10,000 and miscellaneous receipts not related to disposal of assets cannot be treated as capital items and shall be credited to the Comprehensive Income and Expenditure Statement and appropriated to the Capital Receipts Reserve in the Movement in Reserves Statement.
9. Leases and Lease-Type Arrangements
9.1 Recognition and Classification
Leases and similar financial arrangements shall be classified as either finance leases or operating leases. Finance leases are defined as arrangements whereby all risks and rewards incidental to ownership transfer substantially to the lessee but title may or may not eventually transfer. Operating leases shall be defined as all other lease type arrangements. In considering property leases, land and buildings shall be considered separately for classification purposes, with land with an infinite life generally being recognised as an operating lease.
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Leases and Lease -Type Arrangements continued
9.2 Acquisitions (Council as lessee)
9.2.1 Finance Leases - shall be recorded in the Balance Sheet as assets and equal liabilities in the appropriate category at fair value of the property or, if lower, the present value of the minimum lease payments – the discount rate applied being that implicit in the lease. Subsequently assets are subject to revaluation and depreciation in accordance with Accounting Policy 4.3. Other than in the case of “balloon” leases, the outstanding capital obligation shall be reduced by the capital element of the rental charge. An amount equal to the annual capital repayment shall be included in the minimum revenue provision set aside from revenue account each year.
The finance charge shall be charged to the service revenue account on a constant basis over the term of the lease.
In “balloon leases” the charge to the service revenue account shall be equalised over the period of the lease. 9.2.2 Operating Leases - the whole of the rental payable under operating leases shall be charged to the appropriate service revenue account on a straight line basis over the term of the lease.
9.3 Disposals (Council as lessor)
9.3.1 Finance Leases – assets disposed under finance leases shall be written out of the Balance Sheet and an amount recognised in the Balance Sheet as a receivable debtors that reflects the net investment in the lease as defined by the appropriate accounting standard. The capital element of any rental due under a finance lease shall be accounted for as a capital receipt, the debtor and the equivalent liability being written down by that amount. The finance element shall be treated as revenue income.
9.3.2 Operating Leases – assets rented out under operating leases shall be shown in the appropriate Balance Sheet category and depreciated in accordance with normal accounting policy. Income due under operating leases shall be treated as revenue income and recognised on a straight line basis over the term of the lease.
9.4 Disclosure Notes
9.4.1 The following disclosures shall be made where the Council is lessee: Finance Leases: For each class of asset, the net carrying amount at the Balance Sheet date.
i. The finance charge inherent in the lease payments reported as the difference between future minimum lease payments at the Balance Sheet date and their net present value for each of the following periods:
not later than one year
later than one year and not later than five years
later than five years.
ii. Contingent rents recognised as an expense in the period.
iii. The total of future minimum sublease payments expected to be received under non-cancellable subleases at the Balance Sheet date.
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Leases and Lease -Type Arrangements continued
Operating Leases: i. The total of future minimum lease payments under non-cancellable operating
leases for each of the following periods:
not later than one year
later than one year and not later than five years
later than five years.
ii. The total of future minimum sublease payments expected to be received under non-cancellable subleases at the Balance Sheet date.
iii. Lease and sublease payments recognised as an expense in the period, with separate amounts for minimum lease payments, contingent rents, and sublease payments.
9.4.2 The following disclosures shall be made where the Council is lessor:
Finance Leases: i. The finance charge inherent in the lease charges reported as the difference
between future minimum lease receipts at the Balance Sheet date and their net present value for each of the following periods:
not later than one year
later than one year and not later than five years
later than five years.
ii. Unearned finance income.
iii. The unguaranteed residual values accruing to the benefit of the lessor.
iv. The accumulated allowance for uncollectible minimum lease payments receivable.
v. Contingent rents recognised as income in the period.
vi. A general description of the lessor’s material leasing arrangements.
For Operating Leases: i. The future minimum aggregate lease payments for each of the following periods:
not later than one year
later than one year and not later than five years
later than five years.
ii. Total contingent rents recognised as income in the period.
iii. A general description of the lessor’s leasing arrangements.
9.5 Sale And Leaseback Arrangements
If an asset is sold and leased back the following policy shall apply:
i. If the leaseback arrangement is classified as a finance lease, the transaction cannot be regarded as a true disposal, and any excess of sale proceeds over the carrying amount of the asset shall be amortised over the lease term on the basis that the lessor is providing finance to the Council.
ii. If the leaseback arrangement is classified as an operating lease, and both transactions are at fair value any excess of sale proceeds over an asset valued at fair value shall be recognised as income in the year of disposal. If the sale price is above fair value, any excess of sale proceeds over the carrying amount of the asset shall be amortised over the lease term. If the sale price is below fair value, any loss shall be recognised immediately.
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Leases and Lease -Type Arrangements continued
9.6 Arrangements Containing a Lease
Arrangements, other than those specifically made under the Private Finance Initiative or Public Private Partnership arrangements, which convey a right to use an asset shall be assessed as to whether they contain an inherent lease arrangement against the criteria of the asset needing to be used to fulfil the terms of the arrangement and the arrangement conveys the right to use that asset. If an arrangement is judged to contain a lease then the above policies for lease shall apply.
10. Private Finance Initiative Schemes
In respect of the PFI scheme entered into during 2000/2001 where the assets are deemed to be under the control of the Council they shall be recognised on the Balance Sheet under the appropriate asset category and impaired and depreciated in accordance with the policy set out in policy 4.3 above. A related capital liability shall be recognised at the same time which shall be reduced by the capital element of the charge paid to the PFI operator. This sum shall be used as a proxy for depreciating the asset and an equal amount shall be included in the minimum revenue provision set aside from the service revenue account each year. The finance element due to the operator shall be derived from the interest rate implicit in the contract and, together with other charges payable to the operator, shall be charged to the appropriate service section of the Income and Expenditure Statement. Any lifecycle replacement payments that can be reliably identified in the contract shall be recognised as a prepayment in the Balance Sheet until such time as expenditure is incurred by the operator. An adjustment between actual cost and payment shall be made in the Comprehensive Income and Expenditure Statement. Any future contracts shall be assessed in the light of the relevant accounting standards and practices to determine whether or not the Council needs to recognise an asset and capital obligation in its accounts.
11. Borrowing & Other Financial Liabilities
11.1 Recognition & Measurement Borrowing shall be recognised when the cash is received from the lender and shall be measured initially at fair value, being the estimated cost of redeeming the debt. The Council’s debt portfolio shall generally be classified and reported in the Balance Sheet as a financial liability held at amortised cost. In practice this means that the debt the Council has raised from the Public Works Loans Board shall be reported as the principal repayable plus the accrued interest at the Balance Sheet date. For market loans the amortised value shall be estimated by adjusting their maturity value to take account of accrued interest plus an adjustment (effective interest rate adjustment) to smooth out the effect of any stepped interest or premium payments due over the life of the loans. The adjustment shall be made via the Comprehensive Income and Expenditure Statement, not being funded from revenue resources the amount shall be reversed in the Movement in Reserves Statement to the Financial Instrument Adjustment Account. In the case of Lender Option Borrower Option (LOBO) loans it shall be assumed the loan will run for its full contractual period when calculating the adjustment, unless notification has been received from the lender that the loan will be recalled at an earlier date.
The debt portfolio, measured at fair value, shall be reported in a note to the Balance Sheet showing the movements in the year. Any interest free loans or loans taken out at below market rates shall be reported in accordance with the accounting policy 12.
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Borrowing & Other Financial Liabilities continued
11.2 Derecognition, Early Redemption Gains and Losses Where a loan is redeemed and or replaced / substantially modified, the liability shall be treated as extinguished and the loan removed from the Balance Sheet. Any gains and losses on the repayment or early settlement of borrowing shall be credited and debited to the Comprehensive Income and Expenditure Statement in the year of repurchase / settlement. However, regulations allow the impact on the General Fund Balance to be spread over future years. The gain/loss shall be spread over the periods specified in the regulations. The reconciliation of amounts charged to Comprehensive Income and Expenditure Statement to the net charge required by regulation against the General Fund Balance shall be managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.
Where repayment has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments that is not substantial, the premium or discount shall be respectively deducted from or added to the amortised cost of the new or modified loan and the write-down to the Comprehensive Income and Expenditure Statement shall be spread over the life of the modified loan by an adjustment to the effective interest rate.
Substantially modified shall be defined as where the present value of the net cash flow (including premiums and discounts) of the new arrangement is at least 10% different from the discounted present value of the remaining cash flows under the original arrangement.
Appropriate adjustments arising from debt redemption shall be made in the Housing Revenue Account Statements in accordance with the relevant statutory determination.
12. Soft Loans
12.1 Advances Where the Council advances loans that are interest free or at below market rates, the loan shall be recorded initially at fair value in the accounts by discounting the future cash receipts using a prevailing market rate and charging the difference between the cash advanced and its market value (interest loss) to the Comprehensive Income and Expenditure Statement. The market interest due in each year shall be calculated on the discounted balance using the market rate and credited to the Comprehensive Income and Expenditure Statement. Both the interest gain and the market interest, or difference between market and contractual interest, not being proper charges to the Council Fund shall be reversed in the Movement in Reserves Statement to the Financial Instrument Adjustment Account.
12.2 Borrowing Where the Council borrows money at nil interest or at below market rates, the loan shall be recorded initially at fair value in the accounts by discounting the future cash repayments using a prevailing market rate and crediting the difference between the loan and its market value (interest gain) to the Comprehensive Income and Expenditure Statement. The market interest due shall be calculated each year on the outstanding discounted balance using the market rate and charged to the Comprehensive Income and Expenditure Statement. Both the discount and the market interest, or difference between market and contractual interest, not being proper charges to the Council Fund shall be reversed in the Movement in Reserves Statement to the Financial Instrument Adjustment Account.
13. Deferred Liabilities
Liabilities which by arrangement are payable at some future date by an annual sum over a period of time shall be shown separately and classified as long-term liabilities in the Balance Sheet.
46
14. Working Balances and Reserves
14.1 Classification Reserves shall be classified as usable, being available to support future expenditure or unusable being those required for financial accounting purposes.
14.2 Usable Reserves The Council Fund shall comprise of the General Fund balance and reserves, the Housing Revenue Account balance and reserves, usable capital receipts, usable grants and contributions and LMS (School) balances.
Working balances shall be maintained for General Fund and Housing Revenue Account at a level judged to be prudent to meet unforeseen events.
Working balances shall be maintained for schools in accordance with the Council’s approved LMS scheme and regulations.
A protocol shall govern the creation, management and use of all reserves. The expenditure financed from reserves shall be shown, when it is incurred, in the appropriate service section of the Comprehensive Income and Expenditure Statement. The following circumstances shall allow amounts to be reserved from revenue:
i. Material commitments exist for goods and services not received or paid for by 31st March
ii. Facilitation of rolling over of funding to future years to ensure the cost effective use of resources and allow for variation in service demand from year to year
iii. To set aside resources for future developments or contingencies
14.3 Unusable Reserves The following financial reserves shall be maintained:
i. Revaluation Reserve – to record any net gain on fixed asset revaluation after 1st April 2007
ii. Capital Adjustment Account – to reflect the difference between the cost of fixed assets consumed and the capital financing set aside to pay for them
iii. Financial Instruments Adjustment Account - to reflect the discounting and other adjustments applied to financial instruments to arrive at amortised cost reported in the Balance Sheet
iv. PFI Lifecycle Reserve - to reflect the estimated sums paid to the PFI contractor for keeping the asset in a “new” state and shall be matched by a prepayment on the Balance Sheet. Both accounts shall be written down based on information received from the contractor on the lifecycle expenditure incurred in the year.
v. Pension Reserve – to reflect the position of the Scheme’s Fund. vi. Accumulated Absences Account – to reflect the cost of paid absence
entitlement due but not taken at 31st March. vii. Deferred Capital receipts – to reflect sale proceeds in respect of assets
disposed of on a deferred basis. 14.4 Reporting Usable reserve balances shall form part of the Council Fund. Appropriations to and from reserves shall be reported in the Movement in Reserves Statement separately identifying usable reserves the Council has approved for revenue and capital purposes, reserves held by schools and unusable reserves.
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15. Provisions
Provisions shall be established in respect of insurance claims and other contractual commitments where:
i. the Council has a present obligation (legal or constructive), and ii. a reliable estimate can be made, and iii. it is probable resources will be expended in settlement
Contributions to provisions are charged to the appropriate service revenue account. In the case of general provisions, if the uncertainty of the amount is removed the provision shall be reclassified as a creditor and the expenditure when incurred charged against the creditor. In the case of insurance claims the cost of the claim shall be charged to the appropriate service with a corresponding transfer being made from the provision to fund the cost. In the case of the provision made in respect of the Carbon Reduction Commitment Scheme, the liability shall be measured at the best estimate of the expenditure required to meet the obligation, normally at the current market price of the number of allowances required to meet the liability at the reporting date. The cost to the authority shall be recognised and reported in the costs of the authority’s services and shall be apportioned to services on the basis of energy consumption.
16. Investments
16.1 Recognition & Measurement An investment shall be recognised when the counterparty with whom the cash is to be placed is contractually entitled to the asset and shall be measured initially at fair value, being the estimate of the amount receivable if the investment was realised. The investment portfolio, measured at fair value, shall be reported in a note to the Balance Sheet showing the movements in the year.
The Council’s investment portfolio shall generally be classified as loans and receivables valued at amortised cost. In practice this means that the investments the Council has with its approved counterparties shall be reported at amortised value by adjusting the principal sums invested to allow for the equalisation of the return over the life of the investment. The adjustment shall be made via the Movement in Reserves Statement to the Financial Instrument Adjustment Account.
Any available for sale investments shall be reported at fair value.
16.2 Derecognition, Gains and Losses Where an investment is realised the asset shall be removed from the Balance Sheet. The Council’s approved types of investment do not allow for any market gain or loss. In the unlikely event of loss arising from failure of a counterparty, provision shall be made in the Comprehensive Income and Expenditure Statement as allowed for by regulation.
17. Cash & Cash Equivalents
Generally speaking these shall be represented by funds that are held to meet short-term cash commitments, rather than invested for other purposes, and that are readily convertible to known amounts of cash. The amount of cash and cash equivalents so defined shall be determined by reference to the daily cash flow forecasts.
48
18. Income & Expenditure
18.1 Employee Costs & Benefits Salaries and wages shall be charged against the periods to which they relate and if necessary estimated accruals made using previous pay periods as a basis. An adjustment shall be made in the Comprehensive Income & Expenditure Account to take account of accrued leave entitlement. Pension costs – see policy 21 below.
18.2 Supplies and Services Etc The Council operates a system of accruals and converted payments. Creditors will be accrued by cut off payments at the end of a predetermined period of the following year and by the inclusion of estimates for significant items remaining outstanding at this time based on quotations or past costs. An exception to this principle relates to electricity and similar periodic payments which are charged at the date of meter reading rather than being apportioned between financial years. This policy shall be consistently applied each year and therefore does not have a material affect on any year’s accounts.
18.3 Support Services The following bases shall generally be used for charged costs to service revenue
accounts: i. Costs of support services shall be charged to services on the basis of
estimated time spent. ii. Costs associated with office accommodation shall be allocated on the basis of
occupation. iii. Other costs shall be allocated on the basis of gross current expenditure if there
is no more objective basis available.
The cost allocations to services shall only be reviewed when there has been a significant restructuring of service provision.
Precepts and Levies All precepts and levies shall form part of the Council’s Surplus/Deficit on the Provision of Services and Comprehensive Expenditure.
Income Normally all income due to the Council shall be accounted for at the due date and recognised at fair value. Council Tax Income shall be brought into account on the basis of entries in the Valuation List.
The amount of National Non-Domestic Rates collected on behalf of the Welsh Government shall not form part of the Council’s income and associated debtors and creditors shall not therefore appear in the Council’s Balance Sheet.
19. Government Grants And Other Contributions
19.1 General Government grants and other contributions shall be accounted for on an accruals basis and when the conditions for their receipt have been complied with and there is reasonable assurance that the grant or contribution will be received. 19.2 Revenue Grants and Contributions Where a revenue grant or contribution has been received, and conditions remain outstanding at the Balance Sheet date, the grant or contribution shall be recognised as a receipt in advance. When the grant conditions are met it shall be recognised in Comprehensive Income and Expenditure Statement as income and be matched in the service revenue accounts with the expenditure to which it relate. General grants and contributions, e.g. Revenue Support Grant, NNDR redistribution shall be disclosed as one or more items on the face of the Comprehensive Income and Expenditure Statement.
49
Government Grants and Other Contributions continued
19.3 Grants and Contributions for Capital Purposes Where a capital grant or contribution has been received, and conditions remain outstanding at the Balance Sheet date the grant or contribution shall be recognised as part of the Capital Grants Receipts in Advance. When the conditions have been met, the grant or contribution will be transferred from the Capital Grants Receipts in Advance and recognised as income in the Comprehensive Income and Expenditure Statement as non-specific grant income.
Grants and contributions funding capital expenditure and Donated Assets that have been credited to the Comprehensive Income and Expenditure Statement are not proper income to the General Fund or Housing Revenue Account and shall account for these amounts as follows:
i. If the expenditure to be financed from that grant or contribution has been incurred at the Balance Sheet date, the grant or contribution shall be transferred from the General Fund (or Housing Revenue Account) to the Capital Adjustment Account, reflecting the application of capital resources to finance expenditure. This transfer shall be reported in the Movement in Reserves Statement.
ii. Where the expenditure to be financed from that grant or contribution has not been incurred at the Balance Sheet date, the grant or contribution shall be transferred to the Capital Grants Unapplied Account (within the usable reserves section of the Balance Sheet), reflecting its status as a capital resource available to finance expenditure. This transfer shall be reported in the Movement in Reserves Statement. At a future date, when the expenditure is incurred, the grant or contribution (or part thereof) shall be transferred from the Capital Grants Unapplied Account to the Capital Adjustment Account, reflecting the application of capital resources to finance expenditure. This transfer shall be reported in the Movement in Reserves Statement.
19.4 Repayment In the event of repayment this shall first be applied to any receipt or contribution received in advance. To the extent that the repayment exceeds any such receipt in advance, or where no receipt in advance exists, the repayment shall be recognised within the Comprehensive Income and Expenditure Statement as an expense. The repayment of a capital grant shall be transferred from the General Fund (or Housing Revenue Account) to the Capital Adjustment Account. This transfer shall be reported in the Movement in Reserves Statement.
50
20. Interest Payable & Receivable
20.1 Interest Payable
Interest on borrowing shall be accrued and accounted for in the Comprehensive Income and Expenditure Statement in the appropriate year when the economic effect is reflected in the accounts except to the extent that it is capitalised under accounting policy 6.
Any effective interest rate adjustment made in respect of market loans (see accounting policy 11) shall be charged to the Comprehensive Income and Expenditure Statement, but not being a proper charge to the Council Fund shall be reversed in the Movement in Reserves Statement to the Financial Instrument Adjustment Account
20.2 Interest Receivable
The following principles shall apply to interest receivable:
Interest received on surplus funds invested externally shall be credited to the Comprehensive Income and Expenditure Statement from where appropriations shall be made to:
i. Housing Revenue Account in accordance with the rate prescribed in regulations ii. Schools Delegated Fund balances in accordance with the Council’s Scheme for
the Local Management of Schools iii. Earmarked reserves if it is deemed appropriate
21. Employee Benefits
21.1 Benefits During Employment
Normal remuneration costs shall be charged as an expense in the period to which they relate. A year end accrual shall be made in the Comprehensive Income and Expenditure Statement of any material costs arising from holiday entitlement not taken. However, not being a charge for taxation purposes shall be reversed out in the Movement in Reserves Statement.
21.2 Termination Benefits
Termination benefits shall be charged in the Comprehensive Income and Expenditure Statement when the Council is demonstrably committed to the termination of employment.
21.3 Pension Costs
The pension contributions paid by the Council shall be charged on an accruals basis to the appropriate service revenue account and, together with the contributions made by employees, shall be paid over to the respective Fund.
21.3.1 Dyfed Pension Fund – The accounting policies applying to the Fund shall be determined by the Administering Authority, Carmarthenshire County Council, who keep the accounts of the Fund and arrange for actuarial information to be provided to participating authorities.
Pembrokeshire County Council, as an employing authority, shall include the current service costs of pensions as calculated by the Fund’s actuary in the cost of services in accordance with the requirements of Financial Reporting Standard IAS19.
These charges shall be reversed out in the Movement in Reserves Statement and the actual contributions paid to the Fund included to ensure that the correct cost is charged to the council taxpayer. Pension costs shall be included within the Housing Revenue Account as far as can be reliably determined to reflect the requirements of IAS19.
Assets and liabilities pertaining to the Council shall be disclosed on the Balance Sheet.
21.3.2 Teachers’ Pensions Scheme - In the case of teachers, pensions are “unfunded” and are met from annual contributions, therefore no liability for future benefits shall be recognised in the Council’s Balance Sheet.
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22. Stocks and Works in Progress
Stocks held in the Council’s main stores shall be valued at the lower of cost and net realisable value.
Works in progress, where the Council is the contractor, shall be valued at fair value of the contract sum receivable.
23. Debtors, Bad Debt Impairment & Creditors
23.1 General Debtors shall be recognised in the Balance Sheet and measured at fair value of the amount receivable when revenue has been recognised. In the majority of cases fair value will equate to the cash value but in the case of long term debtors the value shall be discounted by the appropriate rate to reflect fair value. The adjustment shall be made in the Comprehensive Income and Expenditure Statement but not being a proper charge to the Council Fund shall be reversed in the Movement in Reserves Statement to the Financial Instrument Adjustment Account. 23.2 Impairment of Debts General allowances for impaired debts shall be made in the Balance Sheet using the following guidelines (or in specific circumstances on a basis agreed with Director of Finance and Leisure / Chief Finance Officer).
Age of Debt %age of debt provided Less than 1 year 50% 1 to 2 years 90% 2 to 3 years 100%
The bad debt allowance shall be reviewed at the end of each financial year against the debts outstanding and adjustments made in the Comprehensive Income and Expenditure Statement as is appropriate. 23.3 General Creditors shall be recognised in the Balance Sheet and measured at fair value of the amount payable when goods have been delivered or services rendered. In the majority of cases fair value will equate to the cash value but in the case of long term creditors the value shall be discounted by the appropriate rate to reflect fair value. The adjustment shall be made in the Comprehensive Income and Expenditure Statement but not being a proper charge to the Council Fund shall be reversed in the Movement in Reserves Statement to the Financial Instrument Adjustment Account.
24. Basis of Charges Made for Repaying Debt
The Comprehensive Income and Expenditure Statements for the Council Fund and HRA shall be charged with the minimum amount (MRP) judged to be prudent in accordance with statutory guidance and as set out in the Annual Minimum Revenue Provision Policy approved by Council. 25. VAT Transactions shall be shown net of VAT to the extent that it is recoverable/payable
52
26. Financial Loan Guarantee Contracts 26.1 Recognition Guarantees relating the ability of another party to repay a debt shall be recognised at fair value by charging the Comprehensive Income and Expenditure Statement and establishing a Financial Liability Reserve.
26.2 Measurement If no premium is charged to the party seeking the guarantee, the amount shall be estimated by considering the probability of the guarantee being called. Any amount guaranteed is reassessed and/or amortised every year to reflect changing circumstances. 27. Contingent Assets and Liabilities
27.1 Recognition Contingent assets and liabilities shall not be recognised other than by way of a note to the accounts disclosing the nature and an estimate of the financial effect and timing. Contingent liabilities shall be noted where a possible obligation arises from a past event that will be confirmed by a future occurrence over which the Council does not have direct control, or a present obligation exists but it is improbable that there will be any transfer of economic benefit or the economic benefit cannot be measured with any certainty. If it becomes more certain the event will take place then a provision shall be recognised by making a charge in the Comprehensive Income and Expenditure Statement and recognising the provision on the Balance Sheet.
27.2 Disclosure The contingency disclosure shall show the nature, an estimate of the possible financial effect and an indication of how the probability has been assessed. 28. Landfill Allowance Scheme Wales and Carbon Reduction Scheme Provision shall be made for any penalties/liabilities payable under the Schemes or where the Council considers it unlikely that the penalty will be enforced it shall disclose a separate class of contingent liability. Any payments made in advance shall be shown as assets.
29. Acquired & Discontinued Operations Income & expenditure in relation to material acquired and discontinued operations shall be shown separately on the face of the Comprehensive Income and Expenditure Statement. Any liabilities shall be identified in notes to the Balance Sheet. 30. Foreign Currency Translation Foreign currency transactions shall be translated to £ sterling at the rate prevailing at the date of the transaction. 31. Research & Development Expenditure on research and development shall be regarded as part of continuing operations and normally written off as incurred.
32. Group Accounts Each year the Council shall review its interests and influence in all types of entity including, but not limited to, other local authorities and similar statutory bodies, common good trust funds, companies, joint committees and other joint arrangements. When appropriate, group accounts shall be prepared in accordance with the pertinent accounting standards.
53
33. Related Parties
The following disclosures shall be made in respect of material transactions with related parties not disclosed elsewhere in the Statement of Accounts:
i. Nature of the relationship and influence exerted either by or on the Council ii. The aggregate of transactions in the year separately showing payable and
receivable amounts iii. Outstanding balances as at 31st March
34. Jointly Controlled Operations and Jointly Controlled Assets Jointly controlled operations are activities undertaken by the Authority in conjunction with other venturers that involve the use of the assets and resources of the venturers rather than the establishment of a separate entity. The Authority recognises on its Balance Sheet the assets that it controls and the liabilities that it incurs and debits and credits the Comprehensive Income and Expenditure Statement with the expenditure it incurs and the share of income it earns from the activity of the operation. Jointly controlled assets are items of property, plant or equipment that are jointly controlled by the Authority and other ventures, with the assets being used to obtain benefits for the ventures. The joint venture does not involve the establishment of a separate entity. The Authority accounts for only its share of the jointly controlled assets, the liabilities and expenses that it incurs on its own behalf or jointly with others in respect of its interest in the joint venture and income that it earns from the venture.
35. Principal And Agent
Where the Council acts as agent, no transactions shall appear in its financial statements unless the Council collects and distributes cash on behalf of the principal, in which case the appropriate cash transactions will be reflected in the balance sheet.
36. Trust Funds & Other Accounts
Separate accounts shall be maintained for trusts and other funds administered by the Council. They shall not form part of the single entity accounts of the Council, however, if material they will be combined with the Council’s service income and expenditure and assets and liabilities, to form the Group Accounts for the Authority.
54
CORE FINANCIAL STATEMENTS – COMPONENTS AND DETAIL
The core financial statements, prepared using International Financial Reporting Standards, (IFRS) comprise of:
The Movement in Reserves Statement – showing the movement on the different reserves held by the authority analysed between usable reserves and unusable reserves held for financial accounting purposes.
The Comprehensive Income and Expenditure Statement - showing the accounting cost in the year of providing services measured on an IFRS basis as opposed to the cost actually funded from taxation. The reconciliation to the taxation position, as represented by the actual funds available to the Council, is shown in the Movement in Reserves Statement on page 55.
The Balance Sheet - which sets out the financial position on 31st March in terms of the value of assets and liabilities recognised by the Council and the reserves held by the Council
The Cash Flow Statement - which summarises the inflows and outflows of cash and cash equivalents with third parties arising from revenue and capital transactions.
Supporting Notes and Supplementary Financial Statements
These comprise of:
Notes to the core financial statements.
Other accounts prepared or controlled by the Council.
The Housing Revenue Account Income and Expenditure Statement, Movement on the Housing Revenue Account Statement and supporting notes that summarise the transactions relating to Council Housing.
Group Accounts
When appropriate, group accounts are to be prepared to reflect the total cost of service provision by including the appropriate expenditure, income and the assets and liabilities of “subsidiary” bodies in which the Council has a material interest and influence.
It has been concluded that there are no interests that would materially affect the figures reported in the Council’s single entity accounts and therefore there is no requirement to prepare group accounts for 2013/14. The position will continue to be reviewed annually.
55
MOVEMENT IN RESERVES STATEMENT
This Statement shows the movement in the year on the different reserves held by the Council, analysed between usable (those that can be applied to fund expenditure or reduce local taxation) and other unusable reserves. The unusable reserves include reserves that hold unrealised gains and losses that are only realised when assets are sold and reserves that hold accounting differences needed to reconcile the differences between reporting on the IFRS accounting basis and the statutory funding basis.
The (Surplus)/Deficit on the provision of services reflects the economic cost of providing the Council’s services, more details of which are provided in the Comprehensive Income and Expenditure Statement on the following page. This is different from the “taxation position” (amounts determined when setting council tax and housing rents) charged to the General Fund Balance and Housing Revenue Account which is shown by the Net Increase/Decrease before Transfers to Earmarked Reserves line.
General
Fund
Working
Balance
Earm’d
General
Fund
Reserves
HRA
Working
Balance
Earm’d
HRA
Reserves
Capital
Receipts &
Grants
Reserves
Total
Usable
Reserves
Unusable
Reserves
Total
Reserves
£000 £000 £000 £000 £000 £000 £000 £000
Balance 1st April
2013(6,539) (52,093) (752) (4,690) (4,587) (68,661) (612,380) (681,041)
(Surplus) / Deficit On
Provision of Services19,633 - 3,858 - - 23,491 - 23,491
Other Comprehensive
Income & Expenditure- - - - - - (69,243) (69,243)
Total Comprehensive
Income &
Expenditure (see
page 58)
19,633 - 3,858 - - 23,491 (69,243) (45,752)
Adjustments Between
Accounting Basis and
Funding Basis Under
Regulation (see page
62)
(24,257) - (4,908) - (704) (29,869) 29,869 -
Net (Increase) &
Decrease Before
Transfers (To) / From
Reserves
(4,624) - (1,050) - (704) (6,378) (39,374) (45,752)
Transfers (To)/ From
Reserves4,624 (4,558) 1,050 (979) - 137 (137) -
(Increase) / Decrease
In Year- (4,558) - (979) (704) (6,241) (39,511) (45,752)
Balance 31st March
2014 (see pages 64 &
65)
(6,539) (56,651) (752) (5,669) (5,291) (74,902) (651,891) (726,793)
Actuals 2013/2014
56
Prior Year
Comparative
2012/2013
General
Fund
Working
Balance
Earm’d
General
Fund
Reserves
HRA
Working
Balance
Earm’d
HRA
Reserves
Capital
Receipts &
Grants
Reserves
Total
Usable
Reserves
Unusable
Reserves
Total
Reserves
* Restated - IAS19
Requirements
£000 £000 £000 £000 £000 £000 £000 £000
Balance 1st April
2012(6,539) (43,228) (752) (4,399) (1,752) (56,670) (629,338) (686,008)
(Surplus) / Deficit On
Provision of Services
*
10,089 - 3,977 - - 14,066 - 14,066
Other
Comprehensive
Income &
Expenditure *
- - - - - - (9,099) (9,099)
Total
Comprehensive
Income &
Expenditure (see
page 58)
10,089 - 3,977 - - 14,066 (9,099) 4,967
Adjustments
Between Accounting
Basis and Funding
Basis Under
Regulation (see page
63) *
(18,934) - (4,339) - (2,835) (26,108) 26,108 -
Net (Increase) &
Decrease Before
Transfers (To) /
From Reserves
(8,845) - (362) - (2,835) (12,042) 17,009 4,967
Transfers (To)/ From
Reserves8,845 (8,865) 362 (291) - 51 (51) -
(Increase) /
Decrease In Year- (8,865) - (291) (2,835) (11,991) 16,958 4,967
Balance 31st March
2013 (see pages 64
& 65)
(6,539) (52,093) (752) (4,690) (4,587) (68,661) (612,380) (681,041)
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COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT
This statement shows the economic cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Authorities raise taxation in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement above.
The Comprehensive Income and Expenditure Statement can be summarised as follows:
Surplus/Deficit on Continuing Operations – analyses by service groupings, the day to day income and expenditure on such items as employee remuneration, running costs of services, capital charges, service specific grants, rents, fees and charges.
In accordance with the Code requirements, the operating income and expenditure of services include the following. These do not form part of the estimates for tax raising purposes, having no direct in year net cost to the taxpayer, but which are required to measure the underlying economic cost of services in any one year:
- the gross cost of insurance claims and an equivalent income amount met from internal or
external insurance provisions.
- receipts under £10,000 arising from the sale of assets. A sum of £15k is included in
Corporate and Democratic Core income that has been appropriated to Capital Receipts
Reserve in accordance with accounting policies
- miscellaneous receipts not related to disposal of assets. A sum of £200k is included in
Corporate and Democratic Core income that has been appropriated to Capital Receipts
Reserve in accordance with accounting policies
- the following “notional” costs are also included that are “reversed out” in the Movement in
Reserves Statement:
revenue expenditure funded from capital under statute and grants
depreciation and impairment costs of fixed assets
current service pension costs
accrued employee benefits
Other Operating Expenditure & Financing & Investment Income – adds the following
to the Surplus/Deficit on Continuing Operations:
- precepts & levies
- agency activities
- interest received on external investments and interest paid on external loans
- the cost of writing down premiums and discounts associated with restructuring the loan
portfolio
In addition the Code requires that the following costs, which are not budgeted for either being
notional or having no direct in year net cost to the taxpayer, are also added:
- pensions net interest cost
- gains or losses on asset disposals and costs of sales.
Taxation and Non-Specific Grants – shows the income received from general taxation in
the form of revenue support and other non-specific grant income, national non-domestic rates
and council tax. General capital grant and contributions for capital purposes are recognised
as revenue income under the Code.
Other Comprehensive Income & Expenditure – shows the surplus or deficit arising from the
revaluation of fixed and financial assets and remeasurement of pension assets and liabilities
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Note
Gross
Total
Cost
Income Net Total
Cost/
Expend
Gross
Total
Cost
Income Net Total
Cost/
Expend
* Restated - IAS19 Requirements £000 £000 £000 £000 £000 £000
Education & Children’s Services 138,929 (29,611) 109,318 143,585 (27,373) 116,212
Adult Social Services 59,358 (17,399) 41,959 64,707 (20,746) 43,961
Local Authority Housing Services 27,065 (19,368) 7,697 27,029 (19,650) 7,379
Other Housing Services 38,517 (37,073) 1,444 40,116 (38,022) 2,094
Highways, Roads & Transport Services 26,424 (9,319) 17,105 23,152 (9,582) 13,570
Cultural Related Services 15,901 (4,027) 11,874 15,525 (4,146) 11,379
Environmental & Regulatory Services 21,471 (7,734) 13,737 23,278 (6,957) 16,321
Planning Services 13,808 (7,959) 5,849 13,010 (7,668) 5,342
Central Services To the Public 11,147 (9,111) 2,036 11,124 (1,644) 9,480
Corporate & Democratic Core 3,723 (233) 3,490 5,190 (858) 4,332
Non Distributed Costs * (3,129) (1,172) (4,301) 3,161 (1,659) 1,502
(Surplus)/Deficit on Continuing
Operations353,214 (143,006) 210,208 369,877 (138,305) 231,572
Other Operating Expenditure
Precepts & Levies 67 18,792 19,302
Gains & Losses on Disposal of Non-
Current Assets47 (67)
Financing & Investment Income and
Expenditure
Interest Payable 71 8,236 8,170
Interest & Investment Income 71 (1,290) (862)
Net Pensions Interest * 73 4,335 4,971
Investment Property 70 (1,743) 338
Taxation & Non-Specific Grant Income
Revenue Support Grant (inc Special
Grant)66 (128,316) (134,739)
NNDR Pool Share 66 (31,765) (38,078)
Local Taxpayers 66 (50,118) (52,528)
Other Non-Specific Grants 67 (1,277) (1,262)
General Capital Grants & Contributions 67 (13,043) (13,326)
(Surplus) or Deficit on Provision of
Services14,066 23,491
Other Comprehensive Income &
Expenditure(Surplus)/Deficit on revaluation of non-
current assets110 (33,095) (3,388)
Remeasurements of Pensions Liabilities &
Assets *114 23,996 (65,855)
Total Other Comprehensive Income &
Expenditure(9,099) (69,243)
TOTAL COMPREHENSIVE INCOME &
EXPENDITURE 4,967 (45,752)
* The new requirements for IAS19 are outlined in note 6 on page 72
Pg
Ref
COMPREHENSIVE INCOME AND
EXPENDITURE STATEMENT
2012/13 * 2013/14
59
BALANCE SHEET This Statement shows the value at the Balance Sheet date of the assets and liabilities recognised by the Council. The net assets (assets less liabilities) are matched by :
Usable reserves comprising of the working balances and earmarked reserves.
Unusable reserves comprising of reserves holding unrealised gains and losses, where amounts would only become available to provide services if assets are sold; and reserves facilitating the adjustments required between accounting basis used to prepare the Statement of Accounts and the statutory funding basis under regulation used to set council tax and housing rents.
BALANCE SHEET AS AT 31ST MARCH£000 £000 £000 £000
NON-CURRENT ASSETS:
Property, Plant & Equipment 88-91
Council Housing Property 289,285 284,382
Other Land & Buildings 433,896 438,054
Infrastructure 100,876 105,512
Vehicles/Plant/Equipment 9,361 9,831
Heritage Assets 92 1,151 1,154
Community Assets 1,628 1,599
Assets Under Construction 654 1,480
Surplus Assets 6,115 6,117
Fixed Assets 842,966 848,129
Investment Property 92 22,046 2,589
Intangible Assets 93 68 89
Long Term Investments 101 1,000 6,000
Long Term Debtors 102 2,128 1,762
TOTAL LONG TERM ASSETS 868,208 858,569
CURRENT ASSETS:
Short Term Investments 101 77,878 75,993
Inventories & Works in Progress 100 1,409 1,228
Short-term Debtors and Prepayments 102 23,115 23,642
Cash & Cash Equivalents 104 6,653 1,667
Assets Held For Sale 104 - -
Total Current Assets 109,055 102,530
TOTAL ASSETS 977,263 961,099
CURRENT LIABILITIES:
Cash Overdrawn 104 - (494)
Other Short-term Borrowing 103 (758) (1,514)
Short-term Creditors 103 (28,389) (23,973)
Revenue Grants Receipts in Advance 103-104 (665) (1,776)
Capital Grants Receipts in Advance 103-104 (5,871) (8,407)
Provisions 105 (3,901) (2,441)
Total Current Liabilities (39,584) (38,605)
TOTAL ASSETS LESS CURRENT LIABILITIES 937,679 922,494
Long Term Borrowing 107 (120,116) (118,661)
Deferred Liabilities 108 (9,778) (9,129)
Net Pension Fund Liability 114 (123,481) (67,911)
Capital Grants Receipts in Advance 103-104 (3,263) -
TOTAL LONG TERM LIABILITIES (256,638) (195,701)
NET ASSETS 681,041 726,793
Usable Reserves
- General Fund Working Balance 64 (6,539) (6,539)
- HRA Working balance 64 (752) (752)
- Earmarked Reserves 108 (61,370) (67,611)
Unusable Reserves 65 (612,380) (651,891)
TOTAL RESERVES (681,041) (726,793)
Page Ref2012/13 2013/14
60
CASH FLOW STATEMENT The Cash Flow Statement shows the changes in cash and cash equivalents during the reporting period, showing how the Council generates and uses cash and cash equivalents by classifying cash flows into operating, investing and financing activities.
The amount of net cash flows arising from net operating activities is a key indicator of the extent to which operations are funded by way of taxation and grant income or from the recipients of services provided by the authority.
Investing activities represent the extent to which cash flows have arisen from resources which are intended to contribute to the Council’s future service delivery.
Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital to the Council. The notes to the Cash Flow can be found on page 115.
61
CASH FLOW STATEMENT
* Restated - IAS19 Requirements £000 £000 £000 £000
Reconciliation of Comprehensive Income and Expenditure
Statement to Net Revenue Cash Flow
Net (Surplus)/Deficit on the provision of services * 14,066 23,491
Adjustments to net surplus or deficit on the provision of
services for non-cash movements
Depreciation (28,277) (30,315)
Impairment & downward valuations (12,340) (10,795)
Movement in market value of investment properties 1,517 (441)
Pension fund adjustments * (6,324) (10,285)
Other non cash financial instrument adjustments (65) (60)
Contributions to provisions 9,162 1,460
Carrying amount of non-current assets sold (3,236) (1,796)
Other non cash movement 117 5
Movements in revenue debtors, creditors, stocks etc. (4,701) (44,147) 4,105 (48,122)
Adjustment for items included in the net surplus or deficit
on the provision of services that are investing and
financing activities
Proceeds from sale of property, plant and equipment,
investment property and intangible assets3,249 1,945
Capital Grants 13,043 13,326
Premium paid on redemption of debt - 16,292 - 15,271
Net Cash Flow from Operating Activities (13,789) (9,360)
INVESTING ACTIVITIES
Purchase of property, plant & equipment, investment property
& intangible assets28,019 24,705
Purchase of short term & long term investments 325,705 443,943
Other payments for investing activities - -
Proceeds from the sale of property, plant & equipment,
investment property & intangible assets(3,249) (1,945)
Proceeds from short term & long term investments (324,135) (440,430)
Capital grants received (12,733) (12,473)
Other capital cash receipts - -
Net Cash Flow From Investing Activities 13,607 13,800
FINANCING ACTIVITES
Cash receipts of short-term & long-term borrowing - -
Other receipts from financing activities - -
Cash payments for the reduction of the outstanding liabilities
relating to finance leases and on-Balance Sheet PFI contracts357 282
Repayments of short-term & long-term borrowing 346 758
Other payments for financing activities - -
Net cash flow from financing activities 703 1,040
NET (INCREASE)/DECREASE IN CASH & CASH
EQUIVALENTS521 5,480
Cash & cash equivalents at the beginning of reporting period 7,174 6,653
Cash & cash equivalents at the end of reporting period 6,653 1,173
INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS (521) (5,480)
2012/13 * 2013/14
62
NOTES TO THE MOVEMENT IN RESERVES STATEMENT
1. ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND REGULATORY FUNDING BASIS
General Fund
Working
Balance
HRA Working
Balance
Capital Receipts
& Grants
Reserves
Total Usable
Reserves
Unusable
Reserves
£000 £000 £000 £000 £000
Amounts included in Total
Comprehensive Income and
Expenditure required by regulation
to be excluded to arrive at the
funding position
Depreciation (25,182) (5,133) - (30,315) 30,315
Impairment / Revaluation (6,351) (4,444) - (10,795) 10,795
Capital Grants Treated As Income 9,326 4,000 - 13,326 (13,326)
Revenue Expenditure Funded From
Capital Under Statute - - - - -
Movement in Market Value of
Investment Properties(441) - - (441) 441
Disposal of Non-Current Assets 332 (15) (2,144) (1,827) 1,827
Use of Capital Receipts, Grants &
Contributions to finance Capital
Expenditure
- - 1,213 1,213 (1,213)
Use of Capital Receipts set aside as
reserved receipts - - 316 316 (316)
Transfer from Deferred Capital
Receipts on receipt of cash - - (89) (89) 89
Capital Grants & Contributions
Unapplied - - - - -
Financing Cost Adjustment (EIR
adjustment)(60) - - (60) 60
Pension Cost Adjustment (19,685) (795) - (20,480) 20,480
Employee Benefits – Leave Accrual 478 - - 478 (478)
Amounts excluded in Total
Comprehensive Income and
Expenditure required by regulation
to be included to arrive at the
funding position
Minimum Revenue Provision 4,504 92 - 4,596 (4,596)
Statutory Repayment of Debt (Finance
Lease Liabilities)114 - - 114 (114)
Statutory Repayment of Debt (PFI) 168 - - 168 (168)
Capital Expenditure Charged To
Council Fund (inc PFI Lifecycle)2,635 1,018 - 3,653 (3,653)
Amortisation of net premium/discounts
in relation to financial instruments79 - - 79 (79)
Employers contributions to pension
schemes9,826 369 - 10,195 (10,195)
Net Adjustment Required (24,257) (4,908) (704) (29,869) 29,869
Actuals 2013/2014
63
Actuals 2012/2013 General Fund
Working
Balance
HRA Working
Balance
Capital Receipts
& Grants
Reserves
Total Usable
Reserves
Unusable
Reserves
* Restated - IAS19 Requirements £000 £000 £000 £000 £000
Amounts included in Total
Comprehensive Income and
Expenditure required by regulation
to be excluded to arrive at the
funding position
Depreciation (23,119) (5,158) - (28,277) 28,277
Impairment / Revaluation (7,237) (5,103) - (12,340) 12,340
Capital Grants Treated As Income 8,946 4,097 - 13,043 (13,043)
Revenue Expenditure Funded From
Capital Under Statute(104) - - (104) 104
Movement in Market Value of
Investment Properties1,517 - - 1,517 (1,517)
Disposal of Non-Current Assets 111 (15) (3,331) (3,235) 3,235
Use of Capital Receipts, Grants &
Contributions to finance Capital
Expenditure
- - 290 290 (290)
Use of Capital Receipts set aside as
reserved receipts - - 211 211 (211)
Transfer from Deferred Capital
Receipts on receipt of cash - - (5) (5) 5
Capital Grants & Contributions
Unapplied - - - - -
Financing Cost Adjustment (EIR
adjustment)(65) - - (65) 65
Pension Cost Adjustment * (15,192) (572) - (15,764) 15,764
Employee Benefits – Leave Accrual 70 - - 70 (70)
Amounts excluded in Total
Comprehensive Income and
Expenditure required by regulation
to be included to arrive at the
funding position
Minimum Revenue Provision 4,306 99 - 4,405 (4,405)
Statutory Repayment of Debt (Finance
Lease Liabilities)204 - - 204 (204)
Statutory Repayment of Debt (PFI) 153 - - 153 (153)
Capital Expenditure Charged To
Council Fund (inc PFI Lifecycle)2,346 1,924 - 4,270 (4,270)
Amortisation of net premium/discounts
in relation to financial instruments79 - - 79 (79)
Employers contributions to pension
schemes9,051 389 - 9,440 (9,440)
Net Adjustment Required (18,934) (4,339) (2,835) (26,108) 26,108
64
2. USABLE RESERVES
2.1 General Fund, HRA, Earmarked and Education Specific Reserve Transactions Balance 1st
April 2013
Contrib’n
from
Revenue
Accounts
Contrib’n to
Revenue
Accounts
Financing Adj
& Transfer to
Provision
Contrib’n
to Capital
Accounts
Balance
31st March
2014
£000 £000 £000 £000 £000 £000
Working Balances
General Fund (6,539) - - - - (6,539)
HRA (752) - - - - (752)
Total Working Balances (7,291) - - - - (7,291)
Earmarked Reserves
Capital Fund
General Capital Fund (2,272) (1,516) 102 - 213 (3,473)
HRA Capital Fund (4,859) (1,822) - - 771 (5,910)
21st Century Schools (13,214) (3,519) - (2,861) - (19,594)
(20,345) (6,857) 102 (2,861) 984 (28,977)
Risk Management
Insurance (6,035) (756) - 1,011 - (5,780)
Winter Maintenance (203) - - - - (203)
(6,238) (756) - 1,011 - (5,983)
Asset Renewal & Repair
Property & Equipment (2,180) (785) 230 - 347 (2,388)
Carriageway Reconstruction (607) (605) - - 408 (804)
Vehicles & Plant (4,215) (1,909) - - 1,385 (4,739)
Cleddau Bridge (1,683) - 34 - 232 (1,417)
(8,685) (3,299) 264 - 2,372 (9,348)
Service Delivery &
Improvement
Initiative Fund (1,771) (228) 74 - 187 (1,738)
Planning (265) (19) 20 - - (264)
Community Regeneration (1,370) - 224 - - (1,146)
Other (4,341) (2,098) 252 - 21 (6,166)
(7,747) (2,345) 570 - 208 (9,314)
West Wales Crematorium (1,369) (217) - - - (1,586)
Joint Arrangements (453) (9) 300 - - (162)
Pay & Grading (5,596) (500) 2,335 2,861 - (900)
Local Authority Mortgage
Scheme(33) (42) - - - (75)
Total Earmarked Reserves (50,466) (14,025) 3,571 1,011 3,564 (56,345)
School LMS Balances
Primary (2,203) - 146 - - (2,057)
Secondary (499) - 341 - - (158)
Special (76) (21) - - - (97)
Delegated Under LMS Scheme (2,778) (21) 487 - - (2,312)
Pupil Referral Unit (21) - - - - (21)
School Meals Service (498) (16) - - - (514)
Schools Maintenance SLA (112) (120) 53 - - (179)
PFI RSG Equalisation (2,908) (41) - - - (2,949)
Total Education Reserves (6,317) (198) 540 - - (5,975)
TOTAL EDUCATION &
EARMARKED RESERVES(56,783) (14,223) 4,111 1,011 3,564 (62,320)
65
2.2 Capital Receipts, Grants & Contributions Reserves Transactions
Part of the receipts from the sale of assets is set aside to repay debt in accordance with accounting policies, the balance is available to finance capital expenditure. Contributions for capital purposes and unapplied capital grants received are also available to finance future capital investment.
Balance at
1st April
2013
Rec’d In
Year
Set Aside
Prov'n
In Year
Transfers
Applied To
Finance
Expend
Balance at
31st March
2014
£000 £000 £000 £000 £000 £000
Capital Receipts Reserve
General Fund (1,685) - - 240 - (1,445)
21st Century Schools (2,875) (1,805) - (240) 1,089 (3,831)
HRA - (428) 316 - 112 -
Capital Grants Unapplied
General Fund (27) - - - 12 (15)
HRA - - - - - -
TOTAL (4,587) (2,233) 316 - 1,213 (5,291)
Capital Receipts & Grants
Reserves
General Fund (1,712) - - 240 12 (1,460)
21st Century Schools (2,875) (1,805) - (240) 1,089 (3,831)
HRA - (428) 316 - 112 -
TOTAL (4,587) (2,233) 316 - 1,213 (5,291)
3 UNUSABLE RESERVES
The transactions in the unusable reserve accounts are summarised below and can be found in more detail on pages 108 to 114.
Balance at 1st
April 2013
Movement in
Year
Balance at 31st
March 2014
£000 £000 £000
Deferred Capital Receipts Reserve (271) 89 (182)
Capital Adjustment Account (485,059) 8,707 (476,352)
Revaluation Reserve (252,567) 7,897 (244,670)
Financial Instruments Adjustment Account 1,118 (19) 1,099
Accumulated Absences Account 1,829 (478) 1,351
Pensions Reserve 123,481 (55,570) 67,911
PFI Lifecycle Reserve (911) (137) (1,048)
Unusable Reserves Total (612,380) (39,511) (651,891)
66
NOTES TO THE COMPREHENSIVE INCOME & EXPENDITURE STATEMENT
1. TAXATION AND NON-SPECIFIC GRANT INCOME
1.1 Revenue Support Grant and Special Grant
The amount reported is that notified by the Welsh Government for the financial year in question.
1.2 National Non-Domestic Rates (NNDR)
The unified business rate for 2013/14 was set by the Welsh Government at 46.4p in £1 compared to 45.2p in 2012/13. The following summarises the transactions for the year:
2012/13 2013/14
£000 £000
Amount due from taxpayers allowing for prior year directions 53,245 57,499
Less: Allowances and other adjustments (9,035) (9,027)
NNDR Pool Contribution 44,210 48,472
Receipts from national pool for Year* (31,765) (38,078)
Net Contribution (from) / to NNDR Pool 12,445 10,394
Average Rateable Value £118,953,337 £127,198,060
* Councils in Wales collect the amount due on behalf of the National Assembly, which in turn
redistributes the pooled proceeds to the Councils on a formula basis.
1.3 Council Tax
The County Council set the following council tax for the County Council and also on behalf of the Dyfed Powys Police Authority and Town and Community Councils.
Band D Council Tax 2012/13 2013/14
Pembrokeshire County Council £719.93 £741.17
Dyfed Powys Police Authority £198.54 £206.28
Average Town and Community Council £26.13 £26.91
Tax Base Number of Band D Equivalent
Chargeable 53,559.22 53,719.93
Collectable 52,653.62 52,657.34
Council tax bills were based on the following property band numbers and multipliers:
Tax Band A B C D E F G H I
Multiplier 6/9 7/9 8/9 9/9 11/9 13/9 15/9 18/9 21/9
Band D Equiv 3,272 6,149 10,425 9,440 13,075 7,550 3,100 521 190
The following amounts were due from council taxpayers for County, Police and Town and Community Councils’ expenditures:
2012/13 2013/14
£000 £000
Council Tax Due In Year (50,628) (52,834)
Less Non- collection allowance 510 306
Amount Due From Taxpayers Before Rebates (50,118) (52,528)
Allocated to:
Dyfed Powys Police Precept (10,454) (10,862)
Pembrokeshire County Council (38,290) (40,248)
Town and Community Councils Precepts (1,374) (1,418)
Total (50,118) (52,528)
Council Tax Income
67
1.4 Revenue – Other Non-Specific Government Grants The grant income reported is that notified by the Welsh Government and other funding bodies.
2012/13 2013/14
£000 £000
Credited to Taxation and Non Specific Grant Income
Outcome Agreement Grant (1,277) (1,262)
Total Revenue Grants Credited to Taxation and Non Specific
Grant Income(1,277) (1,262)
Credited to Services
DWP Subsidy Payments and Administration Grants * (40,338) (33,236)
Post 16 Provision (8,457) (6,087)
Foundation Phase, Flying Start & Families First (6,859) (7,625)
Strategic Waste Management & Other Waste Grants (3,504) (3,185)
European Community grants for Local Services (3,997) (4,434)
Other Grants credited to Services (14,985) (16,494)
Total Revenue Grants Credited to Services (78,140) (71,061)
Total Revenue Grants (79,417) (72,323)
* Council Tax Support Scheme transferred to settlement 2013/14
The above revenue grants and contributions have been accounted as follows during the year:
2012/13 2013/14
£000 £000
Grants & Contributions Received* (80,082) (74,099)
Held In Advance Where Conditions Not Fulfilled 665 1,776
Grants Credited As Income in Year (79,417) (72,323)
*Excludes grants received re Revenue Expenditure Funded from Capital Under Statute (see note 4)
1.5 Capital Grants & Contributions The Authority recognised the following capital grants and contributions in the Comprehensive Income and Expenditure Statement:
2012/13 2013/14
£000 £000
Credited to Taxation and Non Specific Grant Income
General Capital Grant (1,117) (678)
School Building Improvement Grant (2,850) -
Major Repairs Allowance (4,000) (4,000)
Other Grants (4,883) (8,491)
Developers Contributions (193) (157)
(13,043) (13,326)
Applied to Finance Capital Expenditure (13,043) (13,326)
Transferred to Capital Grant Unapplied Reserve - -
(13,043) (13,326) 2. Precepts and Levies
2012/13 2013/14
£000 £000
Precepts
Dyfed Powys Police 10,454 10,862
Town and Community Councils 1,374 1,418
Levies
West Wales Fire and Rescue 5,779 5,842
Pembrokeshire Coast National Parks 1,185 1,180
Totals 18,792 19,302
68
3. MEMORANDUM ACCOUNTS
3.1 External Trading Services
The Council, in accordance with the Service Reporting Code of Practice (Se.R.C.O.P.), has identified the following services as trading activities and they are reported accordingly for final account purposes within the Comprehensive Income and Expenditure Statement.
The following types of trading service have been identified:
Services to the public which are of a commercial nature
Legal requirement to keep a trading account (fee earning building regulation)
Requirement under accounting standards to report separately (investment property),
Services provided to schools under Service Level Agreements in a competitive environment – schools having the freedom to purchase services from other external providers and have “contracted” with respective departments of the Council to deliver the services required.
The trading account transactions are summarised in the following table. The trading (surplus) / deficit, which forms part of the Council’s Comprehensive Income and Expenditure, is adjusted from the accounting basis as reported above, in the Movement in Reserves Statement to arrive at the funding basis for tax setting purposes.
2012/13 *
Net
Expenditure
Turnover Expenditure Net
Expenditure
* Prior Year Restated £000 £000 £000 £000
Highways Roads & Transport
Cleddau Bridge * (1,060) (2,872) 1,792 (1,080)
Car Parks (excl CPE) 2,156 (986) 989 3
Civil Parking Enforcement 38 (374) 403 29
Culture, Environment & Planning
West Wales Crematorium (166) (767) 650 (117)
Markets 99 (153) 221 68
Industrial Estates 214 (978) 574 (404)
Training 221 (1,809) 2,051 242
Building Regulation Chargeable 54 (327) 342 15
School SLAs
Education
Maintenance & Cleaning - (3,171) 3,171 -
Support & Advice - (518) 518 -
Music - (668) 668 -
2013/14
External Trading Services
* The Cleddau Bridge (CB), including Westfield Pill Bridge, is owned by the Council and is regulated by the Dyfed Act 1987 (DA) which sets out a range of statutory requirements for the setting of bridge tolls, the application of revenue (allowable expenditure), the application of interest on deficiencies and the management of a reserve fund.
The statutory accounting entries and disclosures in the Statement of Accounts (SoA) for 2013-14 are the fixed asset (£22m), two external loans (£2.0m), an earmarked reserve (£1.4m) and a trading surplus (£1.1m, after the application of notional costs for depreciation, IAS pensions, soft loans effective interest rate, the application of MRP and an appropriation from reserve). In compliance with the statutory requirements of the DA, the annual trading surpluses are not transferred to the CB earmarked reserve, but accounted for in the Council’s General Fund and used to support its Highways and Transportation budget.
The Council has historically produced an “extract of accounts” showing the financial position of the CB, albeit this is not a statutory requirement, does not form part of the SoA and is not subject to audit by the Council’s external auditors. There are accounting options available under the DA for calculating the financial position of the CB, with the Act providing for interest (compound or simple) to be charged on any accumulated deficit, but not requiring it. As part of the next review of the CB
69
tolls, Council will be required to determine the accounting option to be used, which based on the closing figures for 2013-14, would result in the financial position being either an accumulated deficit of £60.7m (compound interest), an accumulated surplus of £9.3m (simple interest) or an accumulated surplus of £17.6m (no interest applied). As the Council owns the bridge, its financial position is embedded within the Council’s SoA. As a result, whilst the different accounting options being considered would impact on the financial position of the bridge if reported in isolation, they would have no impact on the overall financial position of the Council reported in these 2013-14 financial statements.
Whilst not a statutory requirement under the DA for the CB tolls to be reviewed on a regular basis, it is accepted that as a matter of good practice, they should be reviewed on a regular basis (every three years) and the decision recorded. A full review of the CB tolls will be undertaken during 2015-16 and will incorporate the full lifecycle costs and agreed financial position of the bridge. Over the lifecycle of the CB, the financial position should be neutral to both users of the bridge and Council taxpayers.
3.2 Building Control Account The statement below shows the cost of the Building Regulation divided between chargeable and non-chargeable activities.
Chargeable Non
Chargeable
Total Chargeable Non
Chargeable
Total
£000 £000 £000 £000 £000 £000
Expenditure
Employees 235 119 354 247 128 375
Other Costs 111 51 162 94 46 140
Total Expenditure 346 170 516 341 174 515
Income (292) - (292) (327) (5) (332)
Net Total Cost 54 170 224 14 169 183
Adjustment between
accounting and funding
basis
(13) (3) (16) (22) (13) (35)
Appropriations To/(From)
Reserves(41) - (41) 8 - 8
Net Cost To Taxpayer - 167 167 - 156 156
2012/13 2013/14
3.3 Agency Services The Council performed trunk road works as sub-agent on behalf of Neath Port Talbot County Borough Council and Carmarthenshire County Council. Details of the costs incurred and reimbursements received are:
2012/13 2013/14
£000 £000
South Wales Trunk Road Agency
Highway Maintenance 1,516 1,576
Winter Maintenance 372 272
Street Lighting Maintenance 154 158
Public Conveniences 106 107
Amenity Grass Cutting 17 18
Amount Reimbursed by Carmarthenshire CC / Neath Port
Talbot CBC / SWTRA2,165 2,131
Total Cost & Reimbursement 2,165 2,131
70
3.4 Investment Property
2012/13 2013/14
£000 £000
Rental Income (254) (146)
Direct Operating Expenses 28 43
Movement in market value (1,517) 441
Net (Surplus)/Deficit (1,743) 338
No restrictions exist on realising the capital investment made in investment property. The majority of leases transfer all contractual obligations in respect of repair and maintenance to the lessee. Other construction, development repair and maintenance obligations relating to Investment Property form part of the Capital Programme. There were no outstanding obligations at 31st March 2014. The movement in fair value of investment properties is shown in Balance Sheet note 1.2.
3.5 Property Searches
2012/13 2013/14
£000 £000
Cost of answering property queries 146 144
Income in respect of property queries (170) (183)
Numbers Numbers
Number of Requests 2,297 2,728
4. REVENUE EXPENDITURE FUNDED FROM CAPITAL UNDER STATUTE
Payments of a capital nature where no fixed asset was created are written out of the accounts in the Comprehensive Income and Expenditure Statement.
2012/13 2013/14
£000 £000
Expenditure in Year 3,201 2,629
Grant & Contributions Received in Year (3,097) (2,629)
Net Revenue Expenditure Funded from Capital Under Statute 104 -
71
5. ITEMS OF INCOME EXPENSE GAINS AND LOSSES
Financial
Liabilities
Measured At
Amortised Cost
Financial
Assets,
Loans &
Receivables
Total Financial
Liabilities
Measured At
Amortised Cost
Financial
Assets,
Loans &
Receivables
Total
£000 £000 £000 £000 £000 £000
Interest Expense 8,236 - 8,236 8,170 - 8,170
Premium on debt
redemption - - - - - -
Total Expense in
Surplus/Deficit on
Provision of Services
8,236 - 8,236 8,170 - 8,170
Interest income - (1,290) (1,290) (862) (862)
Total Income in
Surplus/Deficit on
Provision of Services
- (1,290) (1,290) - (862) (862)
Net (gain) / loss for the
year8,236 (1,290) 6,946 8,170 (862) 7,308
The Council does not hold the following categories of financial assets – Available for Sale or Fair Value through Profit
and Loss.
2012/13 2013/14
72
6. PENSION COSTS
The Authority participates in two pension schemes:
6.1 The Dyfed Superannuation Scheme, which is administered by Carmarthenshire County Council, is a funded defined benefit scheme to which both employees and the Authority as employers pay contributions. The scheme operates under the legislation appertaining to Local Government Pensions.
A composite employer’s contribution rate used in 2013/14 was calculated by the Fund’s actuary based on the valuation as at 31st March 2013 for all employees of the County Council who are members of the scheme.
The Fund was valued as at 31st March 2013 & the results of this valuation are reflected in the 2013/2014 Accounts.
The disclosures set out below are required by International Accounting Standard 19 (IAS 19), which employs slightly different assumptions than those used in the actuarial valuation, are also produced by the Fund’s actuary at each financial year end.
IAS 19 requires most assets to be valued at “realisable values” ie: bid values, as opposed to “fair values” (in effect, mid-market values).
Revisions were made to IAS 19 for all fiscal years beginning on or after 1st January 2013 which have been adopted in the 2013/2014 Code, requiring a change in accounting policy from 1st April 2013. Prior year comparatives have been restated.
Interest on Assets
The expected return on assets has been replaced with the “interest on assets”. This is the interest on assets held at the start of the period and cashflows occurring during the period, calculated using the discount rate at the start of the year.
The pension interest cost and expected return on assets has been replaced with the “net interest cost”. This is calculated as interest on pension liabilities less the interest on assets.
Recognition of actuarial gains and losses
All actuarial gains and losses are recognised in the year of occurrence via Other Comprehensive Income and Expenditure and can no longer be deferred (the “corridor approach”).
Actuarial gains and losses on liabilities due to changes in actuarial assumptions are split between the effect of changes in financial assumptions and changes in demographic assumptions.
Expenses
Administration expenses are recognised as a separate item within the pension cost. Investment expenses are treated as a loss on asset and so recognised via Other Comprehensive Income and Expenditure.
73
Revenue Transactions
* Restated - IAS19 Requirement
Interest on Pension Liabilities 20,325 20,508
Interest on Plan assets (15,990) (15,537)
4,335 4,971
Administration Expenses 229 314
Past Service (Gain) / Cost ** 25 83
Curtailment (Gain) / Loss 118 9
Current Service Cost 11,057 15,103
15,764 20,480
Statement of Movement on the Council
Fund Balance Entries
Reversal IAS 19 Entries Above: (15,764) (20,480)
Actual Charges Paid In Year
Actual Amount Charged For Period 8,563 9,321
Cost of Enhancements Charged In Year 877 874
9,440 10,195
(6,324) (10,285)
2012/13 * 2013/14Comprehensive Income And Expenditure
Statement Entries included in Net
Operating Expenditure
** includes (gains) / costs due to change in scheme benefits
£000 £000 £000 £000
The Dyfed Superannuation Scheme Pension Assets & Liabilities
Reconciliation of Present Value of the Scheme Liabilities
Total
Liabilities
2012/13*
Funded
Liabilities
2013/14
Unfunded
Liabilities
2013/14
Total
Liabilities
2013/14
£000 £000 £000 £000
Liability as at 1st April 419,549 480,362 12,268 492,630
Movements in the year:
Current Service Cost 11,057 15,103 - 15,103
Interest on Pension Liabilities 20,325 20,012 496 20,508
Member Contributions 3,537 3,877 - 3,877
Past Service (Gain) / Cost 25 83 - 83
Remeasurements (liabilities) comprising
of : **53,047
Experience (gain) / loss (11,164) 2,322 (8,842)
(Gain) / Loss on financial assumptions (45,385) (399) (45,784)
(Gain) / Loss on demographic
assumptions2,703 44 2,747
Curtailments 118 9 - 9
Benefits / transfers paid (15,028) (13,589) (874) (14,463)
Liability at 31st March 492,630 452,011 13,857 465,868
** Breakdown of actuary information for remeasurements for 2012/2013 is not available
* Restated - IAS19 Requirement
74
Reconciliation of Fair Value of the Scheme Assets
2012/13* 2013/14
£000 £000
Fair Value of Plan Assets as at 1st April 326,388 369,149
Movements in the year:
Interest on Plan assets 15,990 15,537
Remeasurements (assets) 29,051 13,976
Administration Expenses (229) (314)
Employer Contributions 9,440 10,195
Member Contributions 3,537 3,877
Benefits / transfers paid (15,028) (14,463)
Fair Value of Plan Assets as at 31st March 369,149 397,957
* Restated - IAS19 Requirement
Pension Fund Assets split by category
31st March 2013 * 31st March 2014
£000 £000
Equities 265,234 287,006
Government 38,465 37,448
Other Bonds 38,207 37,090
Property 26,320 37,726
Cash/Liquidity 5,500 2,189
Net Current Assets (4,577) (3,502)
Total 369,149 397,957
* Restated - IAS19 Requirement
Notes to the tables:
Deferred taxation has been ignored.
Compensatory Added Years benefits, which are recharged to the Authority, have been included in the liabilities and contributions for the purposes of the calculations.
No specific investigation has been undertaken in relation to increases in the average age of the scheme membership, but no reason has been given to suggest there have been any substantial changes since the 2013 actuarial valuation.
No particular events were notified to the actuary in relation to the production of the above figures.
75
Actuarial Assumptions
Beginning Of
Year
End Of
Year
% %
Financial Assumptions
Rate of CPI inflation 2.4 2.4
Rate of increase in salaries 4.15 3.9
Rate of increase in pensions 2.4 2.4
Discount Rate 4.2 4.5
Expected Rate Of Return On Assets
Equities 7.0 7.0
Government Bonds 2.8 3.4
Other Bonds 3.9 4.3
Property 5.7 6.2
Cash/Liquidity 0.5 0.5
Other 7.0 0.0*
Life Expectancy (Years)
Male future pensioner aged 65 in 20 years’ time 24.2 25.4
Female future pensioner aged 65 in 20 years’ time 27 28
Male current pensioner aged 65 22.4 23.2
Female current pensioner aged 65 25 25.7
* Dependent on type of asset
Notes to the Actuarial Assumptions
The end of year figures for the market value of the assets and split of assets between investment categories have been calculated as at 31 December 2013. The corresponding split of assets at the start of the year has been calculated as at 31 March 2013.
The actuarial assumptions used in the calculation of the year end Balance Sheet liabilities are based on the 2013 actuarial valuation assumptions, other than the financial assumptions, which are shown above
The above expected returns are gross of expenses. A deduction of 0.32% in respect of expenses is made in calculating the expected return for the year.
76
Effect Over Time of Actual To Assumed Performance
Scheme History 2009/10 2010/11 2011/12 2012/13 2013/14
£000 £000 £000 £000 £000
Present Value of Liabilities (405,930) (376,809) (419,549) (492,630) (465,868)
Fair Value of Assets 288,535 320,091 326,388 369,149 397,957
Surplus / (deficit) in the scheme (117,395) (56,718) (93,161) (123,481) (67,911)
The liabilities show the underlying commitments that the authority has in the long run to pay retirement benefits. The total liability of £68m has a substantial impact on the net worth of the authority as recorded in the Balance Sheet. However, the deficit on the local government scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary.
6.2 The Teachers Pension Scheme – administered by the Department for Education in England and Wales. This is an unfunded scheme, meaning that there are no investment assets accumulated to meet pension costs before they arise, and therefore no fund assets or liabilities appearing in the Council’s Balance Sheet.
A change to employees rates was introduced in 2012/13 with a move to banded contributions based on salary levels. 7. EXCEPTIONAL COSTS There were no exceptional costs incurred in the period. 8. ACQUIRED AND DISCONTINUED OPERATIONS There were no acquired operations in the year.
2012/13 2013/14
£000 £000
Included in Net Operating Expenditure
Total contributions charged to the accounts 5,762 5,714
Cost of discretionary awards made in year 110 110
Employees contribution rate 6.4%-8.8% 6.4%-11.2%
Employers contribution rate 14.1% 14.1%
Comprehensive Income & Expenditure Statement Entries
77
9. REMUNERATION DETAILS
9.1 The following tables set out the disclosure of remuneration for Senior Staff as follows:
Chief Executive and Directors including pension contributions or equivalent payments. The total contribution rate for employer pension contributions was 14.7% for 2012/13 and 2013/14.
Gross Salary,
Fees & Other
Emoluments
Employer
Pension
Contributions
to Local
Government
Pension
Scheme
Benefits in
kind
£ £ £
Chief Executive and Returning Officer # 2012/13 194,661 NIL 11,685
DB Parry-Jones 2013/14 193,136 NIL 11,659
2012/13 114,135 16,777 5,998
2013/14 114,135 16,777 8,153
2012/13 114,135 16,777 8,961
2013/14 114,135 16,777 9,373
2012/13 114,135 16,777 7,219
2013/14 114,135 16,777 8,131
2012/13 61,476 9,037 4,687
2013/14 112,191 16,492 9,915
2012/13 88,260 12,974 5,758
2013/14 96,303 14,156 6,283
2012/13 - - -
2013/14 92,994 13,638 5,719
2012/13 - - -
2013/14 56,259 8,270 3,230
2012/13 81,708 12,011 4,762
2013/14 - - -
2012/13 32,718 4,194 2,571
2013/14 - - -
Director of Education & Children’s Services
(retired Dec 2012)
Director of Social Care & Housing (retired Jun
2012)
Director of Adult Care (from May 2013)
Chief Education Officer (from August 2013)
Assistant Chief Executive (from August 2012)
**
Senior Officers
Director of Development
Director of Finance & Leisure
Director of Transportation, Housing &
Environment
Director for Children & Schools *
* Commenced employment Sep 2012. Redesignated from Director of Social Services Jan 2013.
# The Appointed Auditor, in his Public Interest Report issued on 30 January 2014, has determined that the
decision taken by the Senior Staff Committee to allow senior officers to opt out of the Local Government
Pension Scheme and to receive as remuneration the equivalent of the employer’s pension contribution is
unlawful and payments made as a result of that decision result in an item of account that is ‘contrary to
law’.
The remuneration of the Chief Executive in 2013-14, disclosed in the table above, includes a sum of
£18,557 (2012-13 £22,269) as a result of that decision. In addition, a further £4,780 was paid to another
senior staff member.
The Council, at its meeting on 14 February 2014, has subsequently decided to rescind the decision made
by the Senior Staff Committee, acknowledging that withdrawing the option for senior staff and stopping
any future payments created contractual issues.
** Reported in Other Employees in 2012/13
78
Other Employees (including teachers) receiving remuneration of £60,000 or more (not including employer pension contributions) in bands of £5,000.
Other Employees
Remuneration Band
£60,000 - £64,999
£65,000 - £69,999
£70,000 - £74,999
£75,000 - £79,999
£80,000 - £84,999
£85,000 - £89,999
£90,000 - £94,999 *
£95,000 - £99,999
* Restated
3
Number Of Employees
2012/13 *
10
7
2013/14
13
- 1
3
4
4
4
3 2
5
2
6
3
9.2 Members Allowances The total of allowances including taxable benefits paid to Members in the year totalled £1,100,431 compared with £1,097,099 in 2012/13.
9.3 Termination Benefits
The following table identifies payments comprising of statutory and voluntary redundancy costs, pension contributions in respect of added years and pension strain and other ex gratia payments
Redundancy & Other
Termination Costs (Current
Year)
Band
Compulsory Other Total Compulsory Other Total
£0 - £20,000 27 11 38 256 26 13 39 256
£20,001 - £40,000 2 2 4 106 3 3 6 173
£40,001 - £60,000 - - - - 4 5 9 425
Total 29 13 42 362 33 21 54 854
Pension Costs - Capital
Settlement (Current Year)
Band £000 £000
£0 - £20,000 62 25
£20,001 - £40,000 140 21
Total 202 46
Annual Contribution
Total
1,007
1,007
1,002
1,002
2012/13 2013/14
No's
3
1
4
2013/14
£000
Pension Costs - Annual
Contribution (Prior Year)
No's
11
5
16
£000
2012/13
2012/13
No's£000
2013/14
No's£000
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10. AUDIT FEES
The following amounts are estimated as payable to the Wales Audit Office for the year:
2012/13 2013/14
£000 £000
Fees payable to Wales Audit Office with regard to external audit
services carried out by the appointed auditor for the year *168 175
Fees payable to the Auditor General for Wales in respect of
statutory inspections and the LG Measure176 144
Fee payable for the certification of grant claims and returns 90 103
Sub-total 434 422
Wales Audit Office fee refund for 2013/14 ** - (43)
Total 434 379
* 2012/13 re-stated to include £25,000 fee charged for preparing and issuing the Report in the
Public Interest in January 2014
** Auditor General for Wales letter issued May 2014 confirms details of refund due against
2013/14 work
11. RELATED PARTIES
Related parties refers to bodies or individuals that have the potential to control or influence the Council or to be influenced or controlled by the Council thereby possibly constraining the ability of the Council or the other party to operate independently. There are other instances where Members and officers of the Council may attend meetings of the third party bodies but do not have the direct ability to exercise control, however, the opinions they express may influence decisions and policy. 11.1 Members of the Council Under the Code of Conduct incorporated in the Council’s Constitution, Members are required to record in the Register of Members Interests any financial and other personal interests, together with any gift, hospitality, material interest or advantage. The Register is open to inspection by the public.
Members of the Council are nominated to serve on numerous outside bodies some of which either receive funding from the Council or issue levies and precepts to be paid by the Council. When sitting on these bodies Members are expected to act independently and not to represent the views of the County Council. Membership details are available from the Deputy Chief Executive, County Hall, Haverfordwest.
During 2013/2014, there were no Cabinet members identified as having a controlling interest in any company commissioned to supply works or services to the Council.
11.2 Officers Under the Employees’ Code of Conduct, officers are required to declare potential conflicts of interest arising from employment arrangements together with gifts or hospitality and offers thereof and, under Section 117 1972 Local Government Act, contractual arrangements where there is a conflict of interest. Most professional bodies also have codes of professional conduct to which members of those bodies are expected to adhere.
11.3 Contracts Under the Council’s constitution contracts as defined in standing orders are reported to the Cabinet twice yearly.
80
11.4 Material Relationships The following material relationships have been identified where material influence exists. 11.4.1 UK and Welsh Government The UK and Welsh Governments, and to a lesser extent the European Union, have the responsibility for the statutory framework and provide the majority of the Council’s funding. much of which is subject to specific terms and conditions. The latter bodies can, therefore, exert effective control over the operations of the Council. Details of grants received are set out on page 67. Grant receipts outstanding at 31 March 2014 are set out on pages 103-104.
11.4.2 Other Public Bodies Other Public Bodies are subject to common control by Central and Welsh Government. Details of the Council’s arrangements are set out in the tables below.
11.4.3 Pooled Budgets
An arrangement with the Hywel Dda Local Health Board was in place during the year operating under a pooled budget agreement. The transactions of which are set out below:
2012/13 2013/14
£000 £000
Balance B/fwd - -
Contributions:
PCC 274 250
Hywel Dda 378 365
Expenditure in Year 652 615
Balance C/Fwd - -
Joint Equipment Store
11.4.4 Jointly Controlled Operations Together with the other 21 Welsh unitary authorities, the Council is a member of WJEC, a company limited by guarantee whose objectives are to provide and promote other educational and cultural services. The Council’s liability is limited to £1. Copies of the accounts can be obtained from WJEC CBAC Ltd, 245, Western Avenue, Llandaff, Cardiff CF5 2YX.
The Council also participates in a number of other Joint Arrangements which have not involved the establishment of a separate entity, where any unspent contributions to such arrangements are held in a Joint Arrangement Reserve. In accordance with accounting policy 34, where material, the main financial statements of the Council have been consolidated with the relevant entries.
81
Education through Regional Working (ERW)
ERW (formerly South and Mid Wales Consortium (SWAMWAC)) is a consortium of six authorities in South West and Mid Wales working to improve the standards of education of children and young people within the region. The Authority is the lead for accounting purposes. The Authority’s share of the Joint Arrangement Income and Expenditure Account and Balance Sheet are shown in the table below.
Income and Expenditure
Specific
Grants
Central
Costs
PCC Share
Specific Grants
PCC Share
Central Costs
£000 £000 £000 £000
Expenditure 19,452 441 2,582 101
Income (19,452) (198) (2,582) (28)
Net Expenditure - 243 - 73
Movement on Reserves - (243) (73)
Net (Surplus) / Deficit - (243) - (73)
Balance Sheet as at 31 March
Specific
Grants
Central
Costs
PCC Share
Specific Grants
PCC Share
Central Costs
£000 £000 £000 £000
Current Assets 9,489 581 1,256 81
Current Liabilities (9,489) - (1,256) -
Total Assets Less Liabilities - 581 - 81
Reserves - (581) - (81)
Total Financing - (581) - (81)
Education through Regional Working
2013-2014
2013-2014
Waste Joint Arrangements
The Authority is the lead body for a joint arrangement with five other local authorities to develop a strategy around the generation of energy through the use of anaerobic digestion and the diversion of other waste. The joint arrangement ceased operating in March 2014.
Welsh Purchasing Consortium (WPC)
The WPC is a collaborative procurement organisation made up of 16 unitary local Authorities working to deliver competitive procurement arrangements and to share best practice.
South Pembrokeshire Hospital
The Authority has a shared service with Hywel Dda University Health Board for the provision of day care facilities at South Pembrokeshire Hospital.
82
The table below identifies the Income and Expenditure of these Joint Arrangements and the reserves held.
2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14
£000 £000 £000 £000 £000 £000 £000 £000
Income and Expenditure
Expenditure 2,544 2,672 219 183 617 426 57 -
Income (2,544) (2,672) (249) (244) (621) (198) (57) -
Net Expenditure / (Income) - - (30) (61) (4) 228 - -
Movement on Joint
Arrangement Reserve - - 30 65 4 (178) - (50)
Net (Surplus) / Deficit - - - 4 - 50 - (50)
Joint Arrangement
Reserves as at 31 March
Opening Reserve Balance (317) (347) (187) (191) (50) (50)
Net Movement in Year (30) (65) (4) 178 - 50
Closing Reserve Balance (347) (412) (191) (13) (50) -
PCC Share of Closing
Balance(22) (24) (38) (3) (10) -
* PCC Lead Body
Welsh
Purchasing
Consortium
SW Wales
Regional Waste
Mgt - AD Food
Waste*
SW Wales
Regional Waste
Mgt - RCAF
Residual Waste*
South
Pembrokeshire
Hospital
Other joint arrangements include Local Resilience Forum, Integrated Transport (SWWITCH) and ICT Shared Services amongst others. Where material, the main financial statements of the Council have been consolidated with the relevant entries.
11.4.5 Controlled or Influenced Entities – the Council controls the Tenby Pool and other Trust Funds. Detailed transactions are set out on pages 122 to 123.
83
12. AMOUNTS REPORTED FOR RESOURCE ALLOCATION DECISIONS
The Comprehensive Income and Expenditure Statement is prepared using the accounting policies set out on pages 37 to 53 to meet the requirements of the Code of Practice on Local Authority Accounting. Decisions about resource allocation are taken by the Council on the basis of budget reports prepared on a different basis using the service groupings set out in Best Value Accounting Code of Practice. In particular:
No charges are made in relation to capital expenditure (whereas depreciation, revaluation and impairment losses in excess of the balance on the Revaluation Reserve and amortisations are charged to services in the Comprehensive Income and Expenditure Statement).
The cost of retirement benefits is based on cash flows (payment of employer’s pensions contributions) rather than the current service cost of benefits accrued in the year.
Appropriations to earmarked reserves that can be attributed to a particular service are reported at service level.
84
12.1 Net Cost of Services Analysed by Income and Expenditure Type
This reconciliation shows how the figures in the Net Revenue Summary (page 14) relate to the amounts included in the Comprehensive Income and Expenditure Statement (page 58).
Children’s
Services
Adult
Social
Services
General
Fund
Housing
Highways &
Transport’n
Culture,
Environ. &
Planning
Services
to the
Public
Corporate &
Democratic
Core
Non-
Distributed
Costs
Court
Services
Total
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Rents, fees & charges etc (6,289) (15,962) (801) (7,415) (11,849) (816) (57) (659) (11) (43,859)
Government grants (20,829) (3,864) (35,823) (1,929) (7,487) (818) (311) (1,262) - (72,323)
Total Income (27,118) (19,826) (36,624) (9,344) (19,336) (1,634) (368) (1,921) (11) (116,182)
Employee costs 83,568 5,728 846 1,237 15,724 512 2,152 1,949 60 111,776
Other operating costs 36,328 46,549 36,178 15,562 22,007 8,500 1,056 28 142 166,350
Support services 9,002 11,061 1,017 3,071 5,301 1,775 183 - 13 31,423
Total Costs 128,898 63,338 38,041 19,870 43,032 10,787 3,391 1,977 215 309,549
Net Cost of Services 101,780 43,512 1,417 10,526 23,696 9,153 3,023 56 204 193,367
193,367
-
45,336
(7,131)
231,572
Add Services not in main analysis (HRA)
Add Financial Adjustments not included in management reports
Remove amounts not in Comprehensive Income and Expenditure Statement
Net Cost of Services Comprehensive Income and Expenditure Statement
Actual Expenditure 2013/14
Reconciliation to Net Cost of Services in Comprehensive Income and Expenditure Statement
Net Cost of Services
85
12.1 Net Cost of Services Analysed by Income and Expenditure Type continued
Children’s
Services
Adult
Social
Services
General
Fund
Housing
Highways &
Transport’n
Culture,
Environ. &
Planning
Services to
the Public
Corporate &
Democratic
Core
Non-
Distributed
Costs
Court
Services
Total
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Rents, fees & charges etc (6,297) (15,517) (693) (7,489) (11,654) (1,159) (103) (782) (11) (43,705)
Government grants (23,386) (2,253) (34,585) (1,878) (7,800) (7,977) (31) (1,507) - (79,417)
Total Income (29,683) (17,770) (35,278) (9,367) (19,454) (9,136) (134) (2,289) (11) (123,122)
Employee costs 82,163 5,358 747 1,413 15,992 518 2,116 1,208 56 109,571
Other operating costs 36,551 44,152 34,944 15,498 22,798 8,564 921 57 151 163,636
Support services 8,733 8,940 1,038 3,002 5,143 1,832 174 - 10 28,872
Total Costs 127,447 58,450 36,729 19,913 43,933 10,914 3,211 1,265 217 302,079
Net Cost of Services 97,764 40,680 1,451 10,546 24,479 1,778 3,077 (1,024) 206 178,957
178,957
-
43,258
(12,007)
210,208Net Cost of Services Comprehensive Income and Expenditure Statement
Actual Expenditure 2012/13
Reconciliation to Net Cost of Services in Comprehensive Income and Expenditure Statement
Net Cost of Services
Add Services not in main analysis (HRA)
Add Financial Adjustments not included in management reports
Remove amounts not in Comprehensive Income and Expenditure Statement
86
12.2 Reconciliation to (Surplus) / Deficit in Comprehensive Income and Expenditure Statement
This reconciliation shows how the figures in the preceding table relate to a subjective analysis of the Surplus or Deficit on the Provision of Services included in the Comprehensive Income and Expenditure Statement.
Service
Analysis
Services Not In
Analysis (HRA)
Financial
Adjustments
Not In Comp
Inc & Exp
Alloc’n of
Recharges
Net Cost of
Services
Corporate
Amounts
Total
£000 £000 £000 £000 £000 £000 £000 £000
Rents, fees & charges etc (43,859) (19,653) (2,030) 1,384 (451) (64,609) - (64,609)
Interest & investment income - - - 17 - 17 (524) (507)
Income from council tax - - - - - - - -
Government Grants and
Contributions(72,323) - (2,629) 1,262 (23) (73,713) (239,933) (313,646)
Total Income (116,182) (19,653) (4,659) 2,663 (474) (138,305) (240,457) (378,762)
Employee costs 111,776 806 4,906 - 24,460 141,948 - 141,948
Other operating costs 166,350 18,009 3,979 (9,794) 8,275 186,819 - 186,819
Support services 31,423 838 - - (32,261) - - -
Depreciation, amortisation &
impairment- - 41,110 - - 41,110 - 41,110
Interest paid - - - - - - 13,141 13,141
Precepts & Levies - - - - - - 19,302 19,302
Gain or loss on disposal of
fixed assets- - - - - - (67) (67)
Total Costs 309,549 19,653 49,995 (9,794) 474 369,877 32,376 402,253
(Surplus)/Deficit on
Provision of Services193,367 - 45,336 (7,131) - 231,572 (208,081) 23,491
Actual Expenditure 2013/14
Reconciliation to (Surplus) / Deficit in Comprehensive Income and Expenditure Statement
87
12.2 Reconciliation to (Surplus) / Deficit in Comprehensive Income and Expenditure Statement continued
Actual Expenditure 2012/13 Service
Analysis
Services Not In
Analysis (HRA)
Financial
Adjustments *
Not In Comp
Inc & Exp
Alloc’n of
Recharges
Net Cost of
Services
Corporate
Amounts
Total
* Restated £000 £000 £000 £000 £000 £000 £000 £000
Rents, fees & charges etc (43,705) (19,382) (882) 2,214 (503) (62,258) - (62,258)
Interest & investment income - - - (14) - (14) (3,033) (3,047)
Income from council tax - - - - - - - -
Government Grants and
Contributions (79,417) - (3,097) 1,277 (49) (81,286) (224,519) (305,805)
Total Income (123,122) (19,382) (3,979) 3,477 (552) (143,558) (227,552) (371,110)
Employee costs * 109,571 778 1,919 - 24,185 136,453 - 136,453
Other operating costs 163,636 17,674 4,701 (15,484) 6,169 176,696 - 176,696
Support services 28,872 930 - - (29,802) - - -
Depreciation, amortisation &
impairment- - 40,617 - - 40,617 - 40,617
Interest paid * - - - - - - 12,571 12,571
Precepts & Levies - - - - - - 18,792 18,792
Gain or loss on disposal of fixed
assets- - - - - - 47 47
Total Costs 302,079 19,382 47,237 (15,484) 552 353,766 31,410 385,176
(Surplus)/Deficit on Provision of
Services178,957 - 43,258 (12,007) - 210,208 (196,142) 14,066
Reconciliation to (Surplus) / Deficit in Comprehensive Income and Expenditure Statement
88
NOTES TO THE BALANCE SHEET
1. NON-CURRENT ASSETS
1.1 Fixed Assets
1.1.1 Valuation
The assets of the Council have been valued in accordance with the stated accounting policy. Where applicable, assets have been valued by the Council’s valuer, Mr. B. Cooke F.R.I.C.S.
Council
House
Assets
Other
Land &
Buildings
Vehicle,
Plant &
Equip
Commu
nity
Assets
Heritage
Assets
Assets
Under
Const'n
Surplus
Assets
Total
£000 £000 £000 £000 £000 £000 £000 £000Carried at
Historical Cost 38,146 26,521 20,729 509 - 1,496 - 87,401
Valued at Fair
Value as at:
31st March 2014 767 32,071 - - 1,154 - 846 34,838
31st March 2013 2,618 235,063 - 926 - - 2,960 241,567
31st March 2012 84 52,598 - 4 - - - 52,686
31st March 2011 291,937 13,890 - - - - - 305,827
31st March 2010 32 127,788 - 160 - - 2,665 130,645
Total Cost or
Valuation 333,584 487,931 20,729 1,599 1,154 1,496 6,471 852,964
Valuation Basis
Gross Values
The gross carrying value (approx £12m) of Voluntary Controlled (VC) and Voluntary Aided (VA) Schools not owned by the Council has been excluded from the Balance Sheet. The value of new VC schools funded by the Council has been included on the Balance Sheet together with that of the school funded under P.F.I. arrangements.
The gross carrying value of the pool area of Tenby Leisure Centre (approx £3.3m) is held in trust and is not included in the Balance Sheet but is reported separately as part of the Tenby Pool Trust accounts.
89
1.1.2 Depreciation & Impairment
All fixed assets have been depreciated using the straight-line method using the following assumed useful lives shown below.
Type Of Asset Useful Life Over Which Depreciated
Council Dwellings 30 years Other HRA Property Buildings Land Infrastructure
10 – 40 years 5 – 40 years Not depreciated 40 years
Vehicles Plant & General Equipment 5 – 15 years IT Equipment Heritage Assets Community Assets Assets Under Construction Surplus Assets Investment Properties Intangibles
5 years Not depreciated Not depreciated Not depreciated 5 – 40 years Not depreciated 3 years
1.1.3 Asset Usage And Categorisation
General
Fund
HRA Total General
Fund
HRA Total
£000 £000 £000 £000 £000 £000
Property Plant & Equipment
Council Dwellings 93 289,192 289,285 91 284,291 284,382
Land & Buildings 431,998 1,898 433,896 436,551 1,503 438,054
Infrastructure 100,876 - 100,876 105,512 - 105,512
Vehicles Plant & Equipment 9,023 338 9,361 9,600 231 9,831
Heritage Assets 1,151 - 1,151 1,154 - 1,154
Community Assets 1,577 51 1,628 1,548 51 1,599
Assets Under Construction 654 - 654 1,480 - 1,480
Surplus Assets 6,115 - 6,115 6,117 - 6,117
551,487 291,479 842,966 562,053 286,076 848,129
Investment Property 22,046 - 22,046 2,589 - 2,589
Intangibles 68 - 68 89 - 89
Assets Held for Sale - - - - - -
Total 573,601 291,479 865,080 564,731 286,076 850,807
2013/14
Net Book Value
2012/13Type Of Asset
90
1.1.4 Movement in Non-Current Asset Values Property, Plant & Equipment Details 2013/14
Council
House
Assets
Other
Land &
Bldings
Infra-
structure
Vehicle,
Plant &
Equip
Com’ty
Assets
Heritage
assets
Assets
Under
Const’n
Surplus
Assets
Total Property
Plant & Equip
£000 £000 £000 £000 £000 £000 £000 £000 £000
Cost or Valuation At 31st
March 2013328,967 464,504 123,900 18,480 1,628 1,160 670 6,615 945,924
Additions 4,883 8,075 7,930 3,694 - - 1,051 - 25,633
De-recognition / disposals - (456) - (1,445) - - - (870) (2,771)
Revaluation Acc Dep & Imp
w/o to Gross Carrying Amount(27) (4,599) - - - (9) - (343) (4,978)
Revaluations increases /
(decreases) recognised in the
Revaluation Reserve
63 6,637 - - (27) 3 - (697) 5,979
Revaluations increases /
(decreases) recognised in the
Surplus / Deficit on the
Provision of Services
107 (3,246) - - - - - (115) (3,254)
Reclassifications – PPE &
Investment(409) 17,128 - - (2) - (225) 2,524 19,016
Reclassifications – (to) / from
Held for Sale - (112) - - - - - (643) (755)
At 31st March 2014 333,584 487,931 131,830 20,729 1,599 1,154 1,496 6,471 984,794
Depreciation & Impairments
Depreciation (10,429) (22,919) (21,576) (8,339) - (2) - (475) (63,740)
Impairment (29,253) (7,689) (1,448) (780) - (7) (16) (25) (39,218)
At 31st March 2013 (39,682) (30,608) (23,024) (9,119) - (9) (16) (500) (102,958)
Depreciation Charge for
2013/14(4,996) (19,332) (3,056) (2,712) - - - (188) (30,284)
Impairment Losses & Non-
Enhancing Expenditure to
Revaluation Reserve
- (2,591) - - - - - - (2,591)
Impairment Losses & Non-
Enhancing Expenditure to
Surplus/Deficit on the
Provision of Services
(4,551) (2,334) (238) (418) - - - - (7,541)
Derecognition / Disposals:
~ W/O Accumulated
Depreciation - 30 - 1,349 - - - - 1,379
~ W/O Accumulated
Impairment - 348 - 2 - - - - 350
Revaluations:
~ W/O Accumulated
Depreciation27 3,450 - - - 2 - 344 3,823
~ W/O Accumulated
Impairment - 1,150 - - - 7 - - 1,157
Reclassifications: -
~ Transfer Accumulated
Depreciation b/fwd - 10 - - - - - (10) -
~ Transfer Accumulated
Impairment b/fwd - - - - - - - - -
At 31st March 2014 (49,202) (49,877) (26,318) (10,898) - - (16) (354) (136,665)
Balance Sheet Amount at
31st March 2014284,382 438,054 105,512 9,831 1,599 1,154 1,480 6,117 848,129
Balance Sheet Amount at
31st March 2013289,285 433,896 100,876 9,361 1,628 1,151 654 6,115 842,966
Owned Assets
91
1.1.5 Comparative Movement in Non Current Asset Values Property, Plant & Equipment 2012/13
Council
House
Assets
Other
Land &
Bldings
Infra-
structure
Vehicle,
Plant &
Equip
Com’ty
Assets
Heritage
assets
Assets
Under
Const’n
Surplus
Assets
Total Property
Plant & Equip
£000 £000 £000 £000 £000 £000 £000 £000 £000
Cost or Valuation At 31st
March 2012323,441 452,913 116,285 17,227 1,418 1,196 6,558 9,899 928,937
Additions 5,778 9,761 7,950 2,460 - 6 661 - 26,616
De-recognition / disposals - (2,494) - (1,207) - - - (84) (3,785)
Revaluation Acc Dep & Imp
w/o to Gross Carrying Amount(241) (31,712) - - (146) (109) - (2,719) (34,927)
Revaluations increases /
(decreases) recognised in the
Revaluation Reserve
145 37,614 (223) - 191 67 - (1,676) 36,118
Revaluations increases /
(decreases) recognised in the
Surplus / Deficit on the
Provision of Services
55 (3,724) (112) - (157) - - (273) (4,211)
Reclassifications – PPE &
Investment80 4,105 - - 322 - (6,549) 2,066 24
Reclassifications – (to) / from
Held for Sale(291) (1,959) - - - - - (598) (2,848)
At 31st March 2013 328,967 464,504 123,900 18,480 1,628 1,160 670 6,615 945,924
Depreciation & Impairments
Depreciation (5,497) (31,332) (18,709) (6,882) - - (9) (909) (63,338)
Impairment (24,243) (10,700) (1,090) (378) (146) (107) (462) (1,700) (38,826)
At 31st March 2012 (29,740) (42,032) (19,799) (7,260) (146) (107) (471) (2,609) (102,164)
Depreciation Charge for
2012/13(5,007) (17,532) (2,867) (2,539) - (5) - (310) (28,260)
Impairment Losses & Non-
Enhancing Expenditure to
Revaluation Reserve
(22) (2,996) - - - (5) - - (3,023)
Impairment Losses & Non-
Enhancing Expenditure to
Surplus/Deficit on the
Provision of Services
(5,151) (2,164) (358) (402) - (1) (16) (34) (8,126)
De-recognition / Disposals:
~ W/O Accumulated
Depreciation - 31 - 1,082 - - - 50 1,163
~ W/O Accumulated
Impairment - 2,463 - - - - - 34 2,497
Revaluations:
~ W/O Accumulated
Depreciation78 25,594 - - - 3 - 1,019 26,694
~ W/O Accumulated
Impairment163 6,118 - - 146 106 - 1,700 8,233
Reclassifications: -
~ Transfer Accumulated
Depreciation b/fwd(3) 320 - - - - 9 (325) 1
~ Transfer Accumulated
Impairment b/fwd - (410) - - - - 462 (25) 27
At 31st March 2013 (39,682) (30,608) (23,024) (9,119) - (9) (16) (500) (102,958)
Balance Sheet Amount at
31st March 2013289,285 433,896 100,876 9,361 1,628 1,151 654 6,115 842,966
Balance Sheet Amount at
31st March 2012293,701 410,881 96,486 9,967 1,272 1,089 6,087 7,290 826,773
Owned Assets
92
1.1.6 Heritage Asset Transactions In Year
2010/11 2011/12 2012/13 2013/14
£'000 £'000 £'000 £'000
Balance at 1st April 1,089 1,089 1,089 1,151
Cost of Acquisition of heritage assets - - 6 -
Value of heritage assets acquired by
donation - - - -
Disposal of Heritage Assets
· Sale Proceeds - - - -
· Carrying Value - - - -
Revaluations - - 67 3
Impairment losses/(reversals) recognised in
the Revaluation Reserve - - (5) -
Impairment losses/(reversals) recognised in
Surplus or Deficit on the Provision of
Services
- - (1) -
Depreciation - - (5) -
Impairment in period - - - -
Balance at 31st March 1,089 1,089 1,151 1,154
It has not been practicable to provide information in respect of periods prior to 1st April 2010. Further details of the Council’s Heritage Assets can be obtained from the Pembrokeshire Museums and Archives Services.
1.2 Investment Property
During 2013/14 a review was undertaken of property assets allocated as investment and re-categorised where appropriate. The value of property assets re-categorised will be reviewed in 2014/15.
2012/13 2013/14
£000 £000
Movement in Fair Value
Balance at 1st April 20,840 22,046
· Purchase - -
· Construction - -
· Expenditure 1 -
Disposals (287) -
Net gains/(losses) from fair value adjustments 1,517 (441)
Transfers (25) (19,016)
Balance at 31st March 22,046 2,589
93
1.3 Fixed Asset Disposals and De-recognitions in the Year
2012/13 2013/14
£000 £000
Disposals
Council Housing 291 409
Building Plots and Land 2,530 1,224
Investment Property 288 -
Other 587 991
Total Disposals 3,696 2,624
De-recognitions
Council Housing - -
Building Plots and Land 2,578 449
Investment Property - -
Other 641 453
Total De-recognitions 3,219 902
The gross capital value of assets disposed of in the year were
:
1.4 Intangible Assets
Certain externally purchased software packages are recognised as intangible assets in the Balance Sheet. Details of the relevant transactions are included in the following tables.
2012/13 2013/14
£000 £000
Balance at start of year:
Gross Carrying Amounts 21 84
Accumulated Amortisation (17) (16)
Net Carrying Amount at start of year 4 68
Additions 84 52
Disposals / Derecognition (21) -
Revaluations - -
Reclassifications - -
Impairment (3) -
Amortisation for the period (17) (31)
Other Changes 21 -
Net carrying amount at end of year 64 21
Comprising:
Gross Carrying Amounts 84 136
Accumulated Amortisation (16) (47)
68 89
There are no internally generated Intangible Assets
94
1.5 Capital Expenditure and Financing
1.5.1 Capital Expenditure in Year
2012/13 * 2013/14
£000 £000
Capital Expenditure Analysed by Services:
Education 5,806 4,465
Social Services 184 286
Transport 8,914 8,123
Housing – H.R.A. 5,778 4,883
Housing – Council Fund 1,628 1,984
Culture & Related Services * 1,207 1,728
Development 2,385 3,099
Environmental * 752 1,865
Corporate 3,159 2,092
29,813 28,525
Assets Acquired Under Finance Leases in the Year 89 14
Capital Investment 29,902 28,539
Representing:
Fixed Assets 26,701 25,910
Gross Revenue Expenditure Funded from Capital Under
Statute3,201 2,629
29,902 28,539
Financed by:
Loans 9,112 7,703
Unsupported Borrowing 3 -
Capital Grants, Receipts & Contributions 16,430 17,168
General Fund Reserves Applied 4,268 3,654
Finance Leases 89 14
29,902 28,539
* Restated
1.5.2 Capitalisation of Borrowing Costs
No borrowing costs were capitalised during the year.
95
1.5.3 Capital Financing Requirement
The capital financing requirement represents the external financing required, after taking into account grants, capital receipts and internal funds applied in respect the long-term capital investment made by the Council.
2012/13 2013/14
£000 £000
Capital Financing Requirement as at 1st April 123,267 127,499
Movements in Year
Prior Year Adjustment 2 -
Increase/(Decrease) in Supported Borrowing (Local & Central
Taxation)
4,138 2,509
Increase/(Decrease) in Supported Borrowing (Local Taxation) 3 -
Assets Acquired Under Finance Leases 89 14
Capital Finance Requirement as at 31st March 127,499 130,022
In Year Movement
Capital Investment:
Property Plant and Equipment 26,700 25,633
Investment Properties 1 -
Intangible Assets - 52
Loans & Advances - 225
Revenue Expenditure Funded From Capital Under Statute 3,201 2,629
Sub-total 29,902 28,539
Prior Year Adjustment 2 -
Total 29,904 28,539
Sources of Finance:
Capital Receipts (283) (1,201)
Set Aside Capital Receipts (211) (316)
Government Grants and Other Contributions (16,146) (15,967)
Finance Lease Disposals (1) -
Sums Set Aside From Revenue:
- Direct Revenue Contribution (4,269) (3,654)
- Minimum Revenue Provision (4,762) (4,878)
(25,672) (26,016)
Increase/(Decrease) in Capital Financing Requirement 4,232 2,523
96
1.5.4 Capital Contract Commitments
The following represents amounts committed under major works contracts. £1.9m has been accrued in the 2013/14 accounts.
The major commitments under capital contracts at the 31st
March are:
2012/13 * 2013/14
* Restated £000 £000
Education 870 897
Social Services 21 -
Transport 1,464 2,465
Housing – H.R.A. 653 869
Housing – Council Fund 528 1,060
Culture & Related Services * 372 761
Development 720 279
Environmental * 1,043 446
Corporate 1,209 1,582
6,880 8,359
97
2. PRIVATE FINANCE INITIATIVE
2.1 P.F.I. Arrangements
During 2000/2001 the Council entered into a Private Finance Initiative scheme to facilitate the provision of a new Primary School and office facility at Pembroke Dock. The 30-year agreement was signed on 1st June 2000 with an initial capital outlay of £8.9m. The cost in the year for the serviced facility was £1.5m. Future commitments over the life of the contract are estimated to be £21.0m.
Towards the end of the existing agreement period, the Council must exercise an option that will determine whether or not the asset is returned to the Council.
2.2 Valuation Depreciation and Impairment
The asset has been valued, depreciated and impaired in accordance with the Council’s accounting policies.
2.3 PFI Transactions
2.3.1 Movement in PFI Asset Values
2012/13 * 2013/14
£000 £000
Cost or Valuation
At 1st April 13,092 14,159
Additions 169 89
Disposals - -
Reclassifications - -
Revaluations * 898 5,155
At 31st March 14,159 19,403
Depreciation & Impairments
Depreciation (2,189) (2,586)
Impairment (286) (455)
At 1st April (2,475) (3,041)
Depreciation Charge for Year * (397) (633)
Impairment Losses for Year (169) (89)
Revaluation:
W/O Accumulated Depreciation - 2,584
W/O Accumulated Impairment - 456
As at 31st March (3,041) (723)
Balance Sheet Amount at 31st March 11,118 18,680
* Restated
The above value is included within the Other Land and Buildings category on the balance sheet
98
2.3.2 Value of PFI Deferred Liability
2012/13 2013/14
£000 £000
Liability
Balance Sheet Amount at 1st
April (7,848) (7,695)
Capital Element Repaid 153 168
Balance Sheet Amount at 31st
March (7,695) (7,527)
2.3.3 PFI Lifecycle Cost Prepayment
2012/13 2013/14
£000 £000
Prepayment
Balance Sheet Amount at 1st
April 860 911
Lifecycle Payment In Year 220 226
Lifecycle Non-Enhancing Expenditure In Year (169) (89)
Balance Sheet Amount at 31st
March 911 1,048
2.3.4 Obligations Relating to PFI Assets
Liability Interest Service
Charge*
Lifecycle
Replacement*
Total
Oblig’n
£000 £000 £000 £000 £000
Obligations 2014/15 183 694 239 67 1,183
Obligations 2015/16- 2018/19 925 2,585 957 268 4,735
Obligations 2019/20- 2023/24 1,745 2,643 1,196 336 5,920
Obligations 2024/25 – 2028/29 2,746 1,642 1,197 336 5,921
Obligations 2029/30 – 2033/34 1,928 281 838 235 3,282
Obligations 2034/35 - - - - -
Total Obligation At 31st March
2014
7,527 7,845 4,427 1,242 21,041
Total Obligation At 31st March
2013
7,695 8,555 4,666 1,309 22,225
*Estimated at current prices
99
3. LEASE AND LEASE TYPE ARRANGEMENTS
3.1 Council as Lessee
The Council has acquired various assets under finance leases which are reported under Property, Plant and Equipment in the Balance Sheet.
3.1.1 Assets Acquired / Utilised under Lease Arrangements
2012/13 2013/14 2012/13 2013/14 2012/13 2013/14
£000 £000 £000 £000 £000 £000
Finance Leases
Net value of assets leased
included in Balance Sheet:
1,837 1,792 334 178 - -
Operating Leases
Contingent rents/sublease
payments recognised in year
90 81 58 95 672 657
Future sub-lease payments
receivable
- - - - - -
Total Operating Leases 90 81 58 95 672 657
Property Equipment Vehicles & Plant
The minimum lease payments due under Finance Lease arrangements are;
31st
March
2013
31st
March
2014
31st
March
2013
31st
March
2014
31st
March
2013
31st
March
2014
£000 £000 £000 £000 £000 £000
Net present value of future
payments160 160 276 175 - -
Finance charge due in future
years866 852 39 20 - -
Minimum Payments Due 1,026 1,012 315 195 - -
Property Equipment Vehicles & Plant
The minimum lease payments due for both Finance and Operating leases will be payable over the following periods:
Obligations
2014/15
Obligations
2015/16-
2018/19
Obligations
Post 2019
Total
£000 £000 £000 £000
Minimum Lease Payments:
Property 95 284 1,899 2,278
Equipment 185 169 - 354
Vehicles & Plant 453 592 - 1,045
100
3.2 Council as Lessor
The Council has a gross investment in property it leases out comprising of the minimum lease payments expected to be received over the remaining lease terms and the residual value anticipated for the properties when the leases come to end. The gross investment comprises of:
31st March
2013
31st March
2014
£000 £000
Finance lease debtor (net present value of minimum
lease payments)*
- -
Unearned finance income - -
Unguaranteed residual value of property - -
Gross Investment in Leases - -
* Finance lease debtors are not material as consideration payments totalling £890k
were made at the inception of the agreements. No liability is therefore outstanding.
Payments
Receivable
2014/15
Payments
Receivable
2015/16-
2018/19
Payments
Receivable
Post 2019
Total
£000 £000 £000 £000
Finance Leases
Gross investment in leases - - - -
Minimum lease receipts* - - 14 14
Operating Leases
Minimum aggregate lease
payments994 3,060 12,480 16,534
Receipts Due
* Finance lease income is based on peppercorn rentals received over a period of ~999years.
4. INVENTORIES & WORKS IN PROGRESS (Construction Contracts)
Building &
Engineering
Stores
Culture
Environ &
Planning
Catering Other Total
£000 £000 £000 £000 £000
Balance at 31st March 2013 823 319 95 172 1,409
Purchases 3,910 390 1,558 708 6,566
Recognised as an expense in
year(3,949) (463) (1,543) (778) (6,733)
Obsolete Stock Written off (14) - - - (14)
Balance at 31st March 2014 770 246 110 102 1,228
The Council did not undertake any construction contracts for third parties during the year.
101
5. INVESTMENTS
The investments are shown in the Balance Sheet at amortised value which allows for equalisation of the return on the principal sum over the life of the investment.
The market (fair) value reflecting the proceeds if the investments had been realised at 31st March 2014 was £82.7m. The corresponding fair value of investments at 31st March 2013 was £82.2m
Amortised
Value
Amortised
Value Fair Value
31st March
2013
1st April
2013
Move-
ment In
Year
31st
March
2014
31st March
2014
31st March
2014
£000 £000 £000 £000 £000 £000 £000
Long Term
(over 12 months)
· Money Market - - 5,000 5,000 - 5,000 5,014
· Local Authority
Mortgage Scheme 1,000 1,000 - 1,000 - 1,000 n/a
1,000 1,000 5,000 6,000 - 6,000 5,014
Short Term
(under 12 months)
· Money Market 77,845 77,300 (1,487) 75,813 146 75,959 76,012
· Local Authority
Mortgage Scheme 33 - - - 34 34 n/a
77,878 77,300 (1,487) 75,813 180 75,993 76,012
Cash Equivalent
· Money Market 4,110 4,110 (2,443) 1,667 - 1,667 1,667
Total Investments 82,988 82,410 1,070 83,480 180 83,660 82,693
Maturity Value
Investments (Loans &
Receivables)
Interest
Accrued in
Year
102
6. DEBTORS AND CREDITORS
6.1 Debtors and Prepayments
All amounts included as assets are shown at market (fair) value.
Net 1st April
2013
Gross 31st
March 2014
Impairment
Allowance
Net 31st
March 2014
£000 £000 £000 £000
Amounts falling due after one
year:
Mortgages 32 4 - 4
Other Loans 449 492 - 492
Debts Against Estates (see table
below)1,647 1,266 - 1,266
2,128 1,762 - 1,762
Amounts falling due in one year:
Central Government Bodies 12,677 15,103 - 15,103
Other Local Authorities & Public
Bodies2,018 1,608 (27) 1,581
NHS Bodies 2,185 436 - 436
HRA Tenants and Former Tenants 449 1,396 (812) 584
Prepayments 1,976 1,636 - 1,636
Council Taxpayers 649 2,779 (2,075) 704
Sundry Debtors & Accrued Income 3,161 6,351 (2,753) 3,598
23,115 29,309 (5,667) 23,642
Debts Against Estates - are treated as soft loans in the accounts. The adjustment made in the Financial Instrument Adjustment Account from maturity value to fair value is set out below:
31st March
2013
31st March
2014
£000 £000
Debts Against Estates
Maturity Value 1,774 1,425
Financial Adjustment Account Entries
Effective Interest Rate Adjustment
· Prior Year 109 133
· Current Year 24 22
Net Present Value Adjustment
· Prior Year (227) (260)
· Current Year (33) (54)
Amortised (Fair) Value 1,647 1,266
103
6.2 Creditors
Short
Term
Creditors
Revenue
Grants
Receipts
in
Advance
Capital
Grants
Receipts
in
Advance
Total
Creditors
Short
Term
Creditors
Revenue
Grants
Receipts
in
Advance
Capital
Grants
Receipts
in
Advance
Total
Creditors
£000 £000 £000 £000 £000 £000 £000 £000
Amounts falling due in
one year:
Central Government
Bodies(7,060) (665) (3,602) (11,327) (3,657) (1,776) (6,120) (11,553)
Other Local Authorities &
Public Bodies(2,156) - - (2,156) (2,879) - - (2,879)
NHS Bodies (770) - - (770) (341) - - (341)
Loan Interest (1,139) - - (1,139) (1,018) - - (1,018)
Deposits and Bonds (1,470) - - (1,470) (1,482) - - (1,482)
Sundry Creditors (15,794) - (2,269) (18,063) (14,596) - (2,287) (16,883)
(28,389) (665) (5,871) (34,925) (23,973) (1,776) (8,407) (34,156)
Loans Maturing within
One Year(758) (1,514)
Total Creditors (35,683) (35,670)
Balance 1st April 2013 Balance 31st March 2014
6.3 Grants Receipts in Advance
These are grants that have been received in advance and cannot be applied until the terms of the grant have been complied with when the grant will be recognised as income.
Balance
at 1st April
2013
Change in
amount where
conditions
expected to be
satisfied in < 1
year
Applied in
Year
Conditions
Met
Returned in
Year
Conditions
Not Met
Received In
Year
Conditions
Outstanding
Balance
at 31st
March
2014
Current Liability:
Revenue Grants
· General Fund (665) - 665 - (1,776) (1,776)
· HRA - - - - - -
Capital Grants
· General Fund (5,871) (3,263) 1,820 6 (1,099) (8,407)
· HRA - - - - - -
Long-term Liability:
Capital Grants
· General Fund (3,263) 3,263 - - - -
· HRA - - - - - -
Total (9,799) - 2,485 6 (2,875) (10,183)
104
A breakdown of the Grants Receipts in Advance is highlighted in the tables below.
2012/13 2013/14
£000 £000
Current Liabilities
WG - SSR Southern Strategic Route (2,178) (1,466)
WG - Bulford Road Scheme - (3,034)
Contribution to Group Repair Schemes (1,432) (1,539)
S106 Developers Contributions (802) (689)
Other Capital Grants & Contributions (1,459) (1,679)
Total Current Liabilities Capital Grants Receipts in
Advance(5,871) (8,407)
Long Term Liabilities
WG - Bulford Road Scheme (3,263) -
Total Long Term Liabilities Capital Grants Receipts in
Advance(3,263) -
Capital Grants Receipts in Advance
Revenue Grants Receipts in Advance 2012/13 * 2013/14
* Restated £000 £000
Current Liabilities
Education & Childrens' Services (97) (413)
Adult Social Services (42) (42)
Culture, Environment & Planning Services (129) (386)
Highways & Transport Services (148) (19)
Central & Corporate Services * (90) (471)
General Fund Housing & HRA * (159) (445)
Total Current Liabilities Revenue Grants Receipts in
Advance(665) (1,776)
7. CASH AND CASH EQUIVALENTS
Balance 1st
April 2013
Balance 31st
March 2014
£000 £000
Cash in hand 2,543 -
Bank Call Accounts 4,110 1,667
Cash overdrawn - (494)
Total Cash and Cash Equivalents 6,653 1,173
8. ASSETS HELD FOR SALE
2012/13 2013/14
£000 £000
Balance outstanding at start of year - -
Assets classified as Held for Sale during year 2,821 755
Revaluation gains / losses - -
Assets sold (2,821) (755)
Balance outstanding at end of year: - -
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9. PROVISIONS AND CONTINGENT LIABILITIES AND ASSETS
9.1 Provisions
Insurance Other CRC Total Insurance Other CRC Total
£000 £000 £000 £000 £000 £000 £000 £000
Brought Forward at 1st
April(1,328) (11,548) (187) (13,063) (1,698) (2,027) (176) (3,901)
Cost of Claims Charged
To Services435 - - 435 720 - 720
Less : External
Reimbursement(25) - - (25) (30) - - (30)
Other - 4,452 187 4,639 206 135 186 527
Charged To Provision 410 4,452 187 5,049 896 135 186 1,217
Contributions & Transfers
In Year (780) 5,069 (176) 4,113 (1,010) 1,440 (187) 243
Balance Carried
Forward at 31st March (1,698) (2,027) (176) (3,901) (1,812) (452) (177) (2,441)
2012/13 2013/14
The Council undertakes a degree of self insurance and annually contributes an amount to the provision to meet the cost of claims settled.
The Scheme of Arrangement to run off all outstanding insurance claims arising under the policies of the Municipal Mutual Insurance Company (MMI), which the Council inherited from its predecessor constituent authorities, was triggered in 2012/13 and the sum of £206k was settled from the provision in 2013/14. A provision of £80k remains for the Council’s share of the liability arising from the former Dyfed County Council managed by Carmarthenshire County Council.
Following a national pay agreement, the Council is in the process of settling equal pay claims. A new compliant pay and grading structure has been implemented. Provision has been made to meet the cost of these liabilities.
The Council is required to participate in the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme and make provision for the liability incurred in respect of energy consumed. The liability is discharged by surrendering allowances the Council must purchase.
106
9.2 Contingent Liabilities
Following conflicting legislation enacted by the U.K. Government, it is likely that charges made for certain property searches may be refundable. However, the position of reimbursing local authorities is being reviewed by the government. The potential exposure of the Council is estimate at £50,000.
The potential liability exposure of the Council cannot be estimated in respect of the following:
Under the Local Authority Mortgage Scheme, entered into in June 2012, the Authority advanced £1m to Lloyds (mortgage provider) to support first time buyers in the acquisition of a house. The Authority has signed an indemnity deed with the mortgage provider. The indemnity requires the Authority to compensate the bank if the mortgagor defaults and a loss is crystallised. This occurs when the bank has pursued the arrears and has to repossess and sell the property. The Authority will only pay its share of the loss if the sale proceeds are insufficient to pay off the outstanding debt. Losses will be invoiced as they arise but there is an option to elect to deduct losses from the cash advance when it is repaid after 5 years. There are currently no defaults reported on any of the mortgages supported through LAMS. Taking into consideration the current low repossession rates (Council of Mortgage Lenders February 2014 reported “the number and proportion of mortgages ending in repossession was lower in 2013 than in any year since 2007”) it is determined that the value of the indemnity is negligible. The Authority earns interest on the cash advance and interest earned has been set-aside in an earmarked reserve to provide for any potential loss associated with LAMS.
The Dyfed Pension Fund is not fully funded and, following actuarial advice, a twenty-year plan is in place to return to a fully funded position. The position continues to be reviewed in light of subsequent Fund revaluations.
The Council is obligated under several joint development agreements with the Welsh Government (formerly with the Welsh Development Agency), to share any assets or liabilities arising under those agreements.
The Council has signed up to various joint working arrangements with other public and private sector bodies and continues to prepare bids, outline business cases and tenders. Access to funding necessitates this approach to service delivery and potentially exposes the Council to increased levels of liability.
Certain landholdings owned by the Council are known to be environmentally polluted. Steps have been taken to deal with the known issues but others may emerge at a later date.
Following the triggering of MMI’s Scheme of Arrangement, should MMI’s financial position deteriorate further, there is a possibility that additional levies may be imposed on the Council. At present, based on actuarial estimation of the MMI scheme, value is about £250,000.
9.3 Contingent Assets
The Council has claims with H.M.R.C. in respect of the past treatment of other income which may facilitate the recovery of VAT. The maximum amount potentially recoverable is estimated at £600,000.
107
10. LONG TERM BORROWING
10.1 Analysis of Loan Transactions in Year Under the relevant financial reporting standards, in order to ascertain the amortised value of the loan portfolio as reported in the Balance Sheet, the maturity value of loans is adjusted to take account of accrued interest due and a financial adjustment is made to smooth out the effect of any stepped interest or premiums and discounts.
Total 1st
April 2013
Market
Loans
Loans
Managed By
Other LA’s
NAW PWLB Total 31st
March
2014£000 £000 £000 £000 £000 £000
Maturity Value (119,612) (40,000) - (500) (77,598) (118,098)
Financial Adjustment Account
Entries
Effective Interest Rate Adjust
· Prior years (240) (592) - 287 - (305)
· Current year (65) 3 - (63) - (60)
Deferred Liabilities Account
Entries
Discounts Transferred (200) (200) - - - (200)
Less Discount write down
· Prior years 7 9 - - - 9
· Current year 2 1 - - - 1
Council Fund Account Entries
Effective Interest Rate w/off (8) (8) - - - (8)
Amortised Value (120,116) (40,787) - (276) (77,598) (118,661)
Amortised Value
1st April
2013
Market
Loans
Loans
Managed By
Other LA’s
NAW PWLB Total 31st
March
2014£000 £000 £000 £000 £000 £000
Maturity Value
As at 1st April 2013
Long Term Borrowing (120,370) (40,000) - (600) (79,012) (119,612)
Short Term Borrowing (346) - (103) (100) (555) (758)
Total Borrowing (120,716) (40,000) (103) (700) (79,567) (120,370)
Repaid in Year 346 - 103 100 555 758
Raised in Year - - - - - -
Change in amount due in less than
1 year(412) - 103 - (859) (756)
As at 31st March 2014
Long Term Borrowing (119,612) (40,000) - (500) (77,598) (118,098)
Short Term Borrowing (758) - - (100) (1,414) (1,514)
Total Borrowing (120,370) (40,000) - (600) (79,012) (119,612)
Fair Value (156,992) (42,559) - (504) (103,364) (146,427)
Maturity Value and Fair Value
The fair value is an estimate of what the loan portfolio would cost to redeem as at 31st March 2014.
108
10.2 An analysis of the debt portfolio by maturity value by lender and by maturity profile at 31st March is shown on page 113.
11. DEFERRED LIABILITIES
These are liabilities that will not be settled within a twelve month period.
Balance at
1st April
2013
Incurred
In Year
Released
In Year
In Year PV
Adjust-
ment
Balance at
31st March
2014£000 £000 £000 £000 £000
S. Care Debts Against Estates (1,647) (1,066) 1,415 32 (1,266)
Private Finance Initiative (PFI) (7,695) - 168 - (7,527)
Finance Leases (Property) (160) - - - (160)
Finance Leases (Equipment) (276) (14) 114 - (176)
Total (9,778) (1,080) 1,697 32 (9,129)
12. USABLE RESERVES
2012/13 2013/14
£000 £000
Earmarked Reserves (see page 64) (56,783) (62,320)
Capital Receipts and Contributions (see page 65) (4,587) (5,291)
Total (61,370) (67,611)
13. UNUSABLE RESERVES
A summary of the unusable reserves is shown on page 65. Explanations of the various accounts that comprise the unusable reserves and their detailed transactions are set out below.
13.1 Deferred Capital Receipts
The Deferred Capital Receipts Reserve holds sale proceeds in respect of assets disposed of on a deferred basis. When the cash is received the deferred receipt is transferred to the Capital Receipts Reserve.
Balance at
1st April
2013
Advanced Repaid Balance at
31st March
2014
£000 £000 £000 £000
Council House & Commercial
Mortgages(271) - 89 (182)
109
13.2 Capital Adjustment Account
The Capital Adjustment Account absorbs the timing differences arising from the different
arrangements for accounting for the consumption of non-current assets and for financing
the acquisition, construction or enhancement of those assets under statutory provisions
The Account also contains revaluation gains accumulated on Property, Plant and
Equipment before 1 April 2007, the date that the Revaluation Reserve was created
to hold such gains.
2012/13 2013/14
£000 £000
Balance 1st April (493,842) (485,059)
Amounts Set Aside To Repay Debt
- Minimum Revenue Provision (4,762) (4,878)
- Reserved Capital Receipts (211) (316)
Financing of Expenditure on Fixed Assets:
- Capital Fund applied (2,361) (984)
- Other Funds applied (1,909) (2,669)
- Capital Receipts applied (283) (1,201)
- Capital Grants & Contributions credited to CI&E applied to
capital financing
(13,043) (13,326)
- Capital Grants Unapplied Account Applied (7) (12)
Income & Expenditure Statement Charges:
- Write down of Net Revenue Expenditure Funded from
Capital Under Statute
104 -
- Amount Provided for Depreciation 28,277 30,315
- Non-Enhancing Expenditure 6,997 7,493
- Impairment 1,132 48
- Revaluation Loss 6,937 3,831
- Revaluation Gain used to reverse previous Revaluation
Loss
(2,726) (577)
- Movement in Fair Value of Investment Properties (1,517) 441
- Write down of Deferred Liability (1) 31
Fixed Asset Movements:
- Disposals 3,236 1,796
Revaluation Reserve Movements:
- Amounts written off (11,080) (11,285)
Balance Carried Forward 31st March (485,059) (476,352)
110
13.3 Revaluation Reserve
The Revaluation Reserve was established in April 2007 and accounts for increases in the value of Property, Plant and Equipment; gains prior to 1st April 2007 were accounted in the Capital Adjustment Account. The balance is reduced when assets with accumulated gains in the reserve:
suffer a downward revaluation or are impaired
are depreciated as their economic benefit is consumed
are disposed of and the gain is realised
2012/13 2013/14
£000 £000
Balance Brought Forward at 1st April (230,552) (252,567)
Revaluation Gains (63,253) (11,342)
Downward revaluation and impairment* 30,158 7,954
Surplus/Deficit on revaluation of non-current assets not
charged to the surplus/deficit on the provision of services(33,095) (3,388)
Write off excess current value depreciation over historical cost
depreciation 9,554 10,995
Write off excess current value impairment over historical cost
impairment - -
Write off balance re asset disposals 1,526 290
Write off balance re miscellaneous assets (e.g. scrapped and
demolished assets - -
Total Written Off 11,080 11,285
Balance Carried Forward at 31st March (252,567) (244,670)
* where there is no previous valuation gain, losses are charged to the surplus/deficit on the
provision of services in the Comprehensive Income and Expenditure Statement
111
13.4 Financial Instrument Adjustment Account
This account contains the differences between the maturity value of investments and borrowing and the Balance Sheet value measured on an amortised cost basis. It is also used to manage premiums paid and discounts received on the early redemption of loans which are charged / released over time to the General Fund in accordance with statutory arrangements for spreading the burden on council tax.
2012/13 2013/14
£000 £000
Balance 1st April 1,132 1,118
Amounts included in the Comprehensive Income and
Expenditure Statement but required by statute to be
excluded when determining the Movement on the
Council Fund Balance
Effective interest rate adjustment 65 60
PWLB premium paid - -
PWLB discount received - -
Amounts not included in the Comprehensive Income
and Expenditure Statement but required to be
included by statute when determining the Movement
on the Council Fund Balance for the year
Write down of deferred discounts 9 9
Write down of deferred premiums (88) (88)
Balance 31st March 1,118 1,099
13.4.1 Nature and Extent of Risks Arising From Financial Instruments
The Council approves annually in advance of each financial year Treasury Management and Investment Strategies which set out limits and criteria for borrowing and investment for the following financial year with the aim of minimising the Council’s exposure to the unpredictability of financial markets and to protect the financial resources available to fund services. No investment or borrowing limits were exceeded during the financial year. Credit Risk
This is the possibility that one party to a financial instrument will fail to meet their contractual obligations, causing a loss for the other party. Credit risk arises from the investment of surplus funds with banks, building societies and other local authorities as well as credit exposures to the Council’s customers and bankers.
Investment credit risk It is the policy of the Council to place deposits only with a limited number of high quality banks and building societies, whose credit ratings are constantly reviewed by the Council using independent market data provided by the Council’s treasury advisers. The amounts invested are restricted to prudent and affordable amounts as set out in the approved Strategy. No collateral is held for these transactions. The credit quality of the counterparties is regarded as being at the lower end of the risk rankings, however, as the banking crisis has shown, credit ratings can not always be relied upon. Nonetheless, there has been no renegotiation of terms with counterparties and the Council expects full repayment, including all interest earned, on the due date of all deposits placed with its counterparties, accordingly there is no impairment to report.
112
Credit exposures The Council constantly reviews its credit income collection performance and ensures it has made sufficient allowance for any bad debts that might occur. The overdraft facility the Council has in place with its bankers is very rarely utilised and the credit risk exposure is extremely low.
Liquidity Risk
This is the possibility that one party to a financial instrument will fail to meet their contractual obligations, causing a loss for the other party.
The Council has on-line access to monitor its bank transactions and prepares detailed daily, weekly and yearly cash flow forecasts which should ensure that cash shortfalls do not occur.
In any event the Council can borrow from the Public Works Loans Board as well as having in place an agreed overdraft facility with its bankers. As a result there is no significant risk that the Council will be unable to raise finance to meets its commitments under financial loan instruments or any other liability. Market Risks
This is the possibility that the value of an instrument will fluctuate. The key market risks identified are:
Interest rate risk The Council is exposed in the following way to the uncertainty of interest paid/received on variable rate instruments and in respect of any new borrowing required and investments made in any year:
Increases in rates will potentially increase investment income and the cost of borrowing and vice versa. The extent at any one time depends upon the composition and maturity profile of the investment and loans portfolios and the relativity of borrowing and investment rates.
The Council’s policy is to try and ensure that a significant proportion of its borrowing does not mature for repayment at any one time in the future to reduce the financial impact of re-borrowing at a time of unfavourable interest rates. Where, because of an inherited debt position, this is more difficult an optimum time for refinancing will be sought.
Changes in interest rates will not impact on the Balance Sheet for the majority of assets and liabilities held at amortised cost, but will impact on those held at fair value. The fair value of fixed rate financial assets will fall if interest rates rise and the fair value of fixed rate financial liabilities will rise if interest rates fall.
Price risk The Council’s treasury strategy does not allow for transacting in marketable instruments and thus it has no exposure to market price movements. Foreign exchange risk The Council has no financial assets or liabilities denominated in foreign currencies and thus has no exposure to movements in exchange rates.
113
13.4.2 Portfolio Analysis
Analysis of Loans Portfolio at Maturity Value by Lender and by Maturity Profile at 31st March
1 Year 2 Years 3 to 5
Years
6 to 10
Years
Over 10
Years
Total
2013/14
£000 £000 £000 £000 £000 £000
Market Loans - - - - 40,000 40,000
Loans managed by other
authorities- - - - - -
NAW 100 100 300 100 - 600
PWLB 1,414 1,470 4,428 25,020 46,680 79,012
Total 1,514 1,570 4,728 25,120 86,680 119,612
Fixed rate 1,514 1,570 4,728 25,120 46,680 79,612
Variable rate - - - - 40,000 40,000
Total 1,514 1,570 4,728 25,120 86,680 119,612
Due for Redemption
Within:
13.4.3 Analysis of Investment Portfolio at Maturity Value by Credit Exposure and by Maturity Profile at 31st March
1 Year 2 Years 5 Years Total
2013/14
£000 £000 £000 £000
Specified Investments (duration when made
less than 364 days)
UK Government - - - -
Banks & Building Societies 67,480 - 1,000 68,480
Local Authorities 10,000 - - 10,000
Non Specified (duration when made greater
than 364 days)
Banks & Building Societies - - - -
Local Authorities - 5,000 - 5,000
Total 77,480 5,000 1,000 83,480
Fixed rate 40,000 5,000 1,000 46,000
Variable rate (Call Accounts) 37,480 - - 37,480
Total 77,480 5,000 1,000 83,480
Due for Realisation Within :
114
13.5 Accumulated Absences Account
This account represents the cost of paid absence entitlement due but not taken at 31st March which is charged to the cost of services in the Comprehensive Income and Expenditure Statement and is reversed out in the Movement in Reserves Statement and charged to this account to comply with statutory requirements
2012/13 2013/14
£000 £000
Balance 1st April 1,899 1,829
Settlement or cancellation of preceding year’s accrual (1,899) (1,829)
Accrual for current year 1,829 1,351
Balance 31st March 1,829 1,351
13.6 PFI Lifecycle Reserve
This reserve comprises of an amount to reflect the prepayment made to the PFI contractor in respect of life cycle costs which remains unused at 31st March. For details see Balance Sheet note 2.3.3 page 98.
13.7 Pensions Reserve
The Pensions Reserve relates to the Dyfed Pension Scheme (see pages 72 to 76) and absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for funding benefits in accordance with statutory provisions. The debit balance on the Pensions Reserve reflects the shortfall at a point in time between the benefits earned by past and current employees and the resources in terms of pension fund assets required to meet them. The statutory arrangements for managing the Fund should ensure that funding will have been set aside by the time the benefits come to be paid.
2012/13 * 2013/14
£000 £000
Balance 1st April 93,161 123,481
Remeasurements of Pension Liabilities and Assets 23,996 (65,855)
Reversal of items chargeable to the surplus/ deficit on the
provision of services in the Comprehensive Income and
Expenditure Statement
15,764 20,480
Employers pension contributions and other direct payments in
the year(9,440) (10,195)
Balance 31st March 123,481 67,911
* Restated - IAS19 Requirements
115
NOTES TO CASH FLOW STATEMENT
2013 2014
£000 £000 £000
Cash At Bank/(Overdrawn) - (494) 494
Cash Equivalent 4,110 1,667 2,443
Cash In Hand 2,543 - 2,543
(Increase)/Decrease 6,653 1,173 5,480
Movement In Cash Balances As At 31st March Movement In
Year
2012/13 2013/14
£000 £000
Interest Paid 8,055 8,232
Interest Received 1,478 1,262
The cash flows for operating activities include the
following items:
116
HOUSING REVENUE ACCOUNT (HRA)
Transactions relating to Council Housing are shown below in accordance with the Code requirements
MOVEMENT ON THE HOUSING REVENUE ACCOUNT STATEMENT
This Statement shows the adjustment made to the (Surplus)/Deficit on the HRA Income and Expenditure Statement, as measured under IFRS, to ensure that only the costs required by statute are charged to tenants.
HRA
Working
Balance
Earmarked
HRA
Reserves
HRA
Working
Balance
Earmarked
HRA
Reserves
£000 £000 £000 £000
Balance 1st April (752) (4,399) (752) (4,690)
(Surplus) / Deficit On HRA Services 3,977 - 3,858 -
Adjustments between Accounting Basis and
Regulatory Funding Basis.
Amounts included in HRA Income and
Expenditure required by regulation to be
excluded to arrive at the funding position
- Net gain or loss on disposal of non-current
assets
(15) - (15) -
- Depreciation and impairment of Council
dwellings & infrastructure
(10,261) - (9,577) -
- Capital Grants treated as revenue income 4,097 - 4,000 -
- Pension Cost Adjustment (572) - (795) -
Amounts excluded in Total Comprehensive
Income and Expenditure required by
regulation to be included to arrive at the
funding position:
- Employer's contribution to the Dyfed Pension
Fund
389 - 369 -
- Revenue contribution to finance capital 1,924 - 1,018 -
- Provision for repayment of debt 99 - 92 -
Net (Increase) / Decrease Before Transfers (To)
/ From Reserves
(4,339) - (4,908) -
Transfers (To)/ From Reserves 362 (291) 1,050 (979)
(Increase) / Decrease In Year (3,977) (291) (3,858) (979)
Balance 31st March (752) (4,690) (752) (5,669)
2012/13 2013/14
117
HRA INCOME AND EXPENDITURE STATEMENT
This statement shows the adjustments from the account used for resource allocation and rent setting purposes to that showing the economic cost, as defined by International Financial Reporting Standards, of providing the Council Housing Services administered by the Council.
Rent
Setting
Adjusts IFRS
Report
Rent
Setting
Adjusts IFRS
Report
£000 £000 £000 £000 £000 £000
Income
Rents: Dwellings (gross) (18,315) - (18,315) (18,580) - (18,580)
Other (365) - (365) (369) - (369)
Charges for services and facilities (149) - (149) (143) - (143)
Contributions towards expenditure (539) - (539) (558) - (558)
Total Income (19,368) - (19,368) (19,650) - (19,650)
Expenditure
Repairs and maintenance (Pensions
IAS19 adj)7,366 40 7,406 7,697 93 7,790
Supervision and management (Pensions
IAS19 adj)2,920 61 2,981 2,902 136 3,038
Rents, rates, taxes & other charges 54 - 54 49 - 49
HRA subsidy payable 6,161 - 6,161 6,372 - 6,372
Bad debt provision 173 - 173 178 - 178
Depreciation and impairment of non
current assets - 10,261 10,261 - 9,577 9,577
Debt management costs 4 - 4 3 - 3
Total Expenditure 16,678 10,362 27,040 17,201 9,806 27,007
Net Cost of HRA Services per
Comprehensive Income and
Expenditure Statement
7,672 7,357
HRA services share of corporate and
democratic core24 - 24 23 - 23
HRA Services share of non distributed
costs - - - - - -
Net Cost / (Income) of HRA Services (2,666) 10,362 7,696 (2,426) 9,806 7,380
HRA Share of the operating income
and expenditure included in the
Comprehensive Income and
Expenditure StatementInterest receivable (14) - (14) (3) - (3)
Minimum Revenue Provision 99 (99) - 92 (92) -
Interest payable (including debt
redemption premiums and discounts)295 - 295 269 - 269
Appropriations to Reserves 2,286 (2,286) - 2,068 (2,068) -
(Gains)/Loss on HRA assets - 15 15 - 15 15
Major Repairs Allowance & Other Grants - (4,097) (4,097) - (4,000) (4,000)
Pensions interest costs and expected rate
of return - 82 82 - 197 197
(Surplus) / Deficit for Year on HRA
Services - 3,977 3,977 - 3,858 3,858
2012/13 2013/14
118
NOTES TO THE HRA STATEMENTS
1. HOUSING STOCK
The Council was responsible for the maintenance and management of an average stock of 5,669 dwellings and 1,159 shops and garages in 2013/14 comprising of:
* Figure restated Stock at
1st April
2013
Transfers Sales /
Demolitions
Stock at
31st March
2014
Houses / Bungalows 4,397 3 (6) 4,394
Bedsits and Flats 1,273 1 - 1,274
Shops and Garages* 1,100 1 (26) 1,075
Pumping Stations & Treatment Works 38 - - 38
Total Stock 6,808 5 (32) 6,781
2. RENTS - DWELLINGS
This is the total rent income due for the year after an allowance has been made for empty properties etc. Weekly rents were increased by 2.0 % in 2013/14, the average un-rebated rent collectable being £64.12. The comparative figures for 2012/13 are 2.0% and £62.86 respectively.
2012/13 2013/14
£000 £000
Gross Arrears 1,071 1,171
Bad Debt Allowance (711) (822)
Net Arrears at 31st March 360 349
Tenants & Former Tenants
119
3. VALUATION OF HRA ASSETS
Council Housing is included in the Balance Sheet on the basis of existing use for social housing which shall be derived by discounting the market value by a factor reflecting the difference between commercial and social rents.
Property Plant & Equipment
Council
Housing
Other HRA
Land &
Buildings
Infra-
structure
Council
Housing
Assets
£000 £000 £000 £000
Cost or Valuation
At 1st April 2013 321,915 803 6,249 328,967
Recategorisation 4,324 - 559 4,883
Additions - - - -
Derecognition - disposals - - - -
Derecognition - other - - - -
Revaluation Acc Dep & Imp w/o to Gross
Carrying Amount(27) - - (27)
Revaluation Increases/(Decreases) recognised
in the Revaluation Reserve63 - - 63
Revaluation Increases/(Decreases) recognised
in the Surplus/Deficit on the Provision of
Services
107 - - 107
Reclassifications - PPE & Investment (409) - - (409)
Reclassifications - Held for Sale - - - -
At 31st March 2014 325,973 803 6,808 333,584
Depreciation & Impairments
Depreciation (10,214) (25) (190) (10,429)
Impairment (29,031) - (222) (29,253)
At 1st April 2013 (39,245) (25) (412) (39,682)
Depreciation Charge for 2013/14 (4,870) (86) (40) (4,996)
Impairment Losses to Revaluation Reserve - - - -
Impairment Losses to Surplus/Deficit on the
Provision of Services*(4,323) (228) - (4,551)
Disposals: -
~ W/O Accumulated Depreciation - - - -
~ W/O Accumulated Impairment - - - -
Revaluations:
~ W/O Accumulated Depreciation 27 - - 27
~ W/O Accumulated Impairment - - - -
Reclassifications:
~ Transfer Accumulated Depreciation b/fwd - - - -
~ Transfer Accumulated Impairment b/fwd - - - -
At 31st March 2014 (48,411) (339) (452) (49,202)
Balance Sheet Amount at 31st March 2014 277,562 464 6,356 284,382
Balance Sheet Amount at 1st April 2013 282,670 778 5,837 289,285
Owned Assets
*£4,551k impairment relates to the value of work undertaken to improve HRA assets but does not increase the value of the assets.
120
4. HRA CAPITAL EXPENDITURE AND RECEIPTS
2012/13 2013/14
£000 £000
Major Repairs Grant 4,000 4,000
Capital Grants & Contributions 97 -
Capital Receipts 101 112
Capital Fund 1,580 771
Total 5,778 4,883
Receipts From Asset Disposals 303 409
Total Capital Expenditure Funded by:
5. HRA PENSION COSTS HRA pension contributions of £229k from the Pension Reserve were made in accordance with Accounting Policy 21 as set out in the Statement of Accounting Policies.
121
OTHER ACCOUNTS PREPARED OR CONTROLLED BY THE COUNCIL
1. Welsh Church Act Fund Account
The Dyfed Welsh Church Act Fund was established as a result of local government re-organisation in 1974 that brought together the three former counties of Carmarthenshire, Cardiganshire and Pembrokeshire to establish the former Dyfed County Council.
Following the subsequent local government re-organisation on the 1st April 1996 the Fund was dis-aggregated to each new Unitary Authority on the following basis:
Ceredigion County Council 25%
Carmarthenshire County Council 41%
Pembrokeshire County Council 34%
In order to maximise investment income the three Funds are managed as one by Carmarthenshire County Council on behalf of all the authorities.
The administration of the Fund is governed by a model scheme that allows for the consideration of providing financial assistance towards charitable purposes to assist the community in various ways. Details can be obtained from the Chief Finance Officer, County Hall, Haverfordwest.
The Pembrokeshire Fund transactions are shown below and reflect the fact that grant payments in the year are made from the Council’s own accounts with reimbursement received from the Church Act Fund account after the year end.
2012/13 2013/14
£000 £000
Income
Rent of Buildings & Land (5) (5)
Investment Income (21) (22)
Total Income (26) (27)
Less: Administration Costs 3 3
Surplus to Accumulated Fund (23) (24)
Disbursement Re Grant Payments 21 (25)
(Surplus) / Deficit for Year (2) (49)
Capital Account
Net Profit on Realised Investments Reinvested in Year (9) (9)
Change in Unrealised (Gains)/Losses (110) (2)
Net Assets Statement as at 31st March
Investment Assets at Market Value 1,086 1,071
Fixed Assets 742 742
Net Current Assets 228 303
Net Assets 2,056 2,116
Accumulated Funds
Capital (804) (787)
Revaluation Reserve (589) (589)
Revenue (228) (303)
Unrealised Profit Reserve (288) (290)
Capital Adjustment Account (147) (147)
Total Accumulated Funds (2,056) (2,116)
Revenue Account
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2. Trust Funds and Monies Held in Trust
The Council administers the following Trust Funds for which separate accounts are prepared. The new Accounting and Reporting by Charities Statements of
Recommended Practice came into force in April 2005.
2.1 Education and Children’s Services - the following trusts, which are administered by schools, provide scholarships, prizes and grants to pupils and local educational groups:
Margaret Morgan Prize Fund Aveston Prize Brenda Lloyd Scholarship Beatrice Margaret Williams Canon G Davies Ann Warren Thomas Beynon Foundation C Newton Head Girl's Prize A G Breeze Memorial Prize Eric Thomas Hugh Blackman Trust Overdale Amenity Fund Carey George Head Boys Prize Wynford Davies History Prize Amenity Fund Dora Thatcher Prize Narberth Educational Charity Pembs Intermediate & Technical Fund Garfield Williams Fund
2.2 Social Services – monies are held in trust for children and residents by the Council.
In addition the Council administers the following trust fund accounts:
St Brides Aid In Sickness E. E. Forsyth Trust Lily Davies Trust Mem Blewitt Bequest Trust Fund H. E. A. Richards
2.3 Cultural Services
Picton Playing Field Trust – was created to manage the Picton Playing Field in Haverfordwest.
Tenby Swimming Pool – was created to manage the Tenby swimming pool.
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2.4 Summary Revenue Accounts and Balance Sheets
Income Expenditure Contribution
to (from)
Balances
£000 £000 £000
Education & Children's ServicesTrusts - 2012/13 (7) 4 3
- 2013/14 (7) 1 6
Social Services Trusts - 2012/13 (250) 300 (50)
- 2013/14 (224) 238 (14)
Tenby Swimming Pool - 2012/13 (252) 252 -
- 2013/14 (284) 284 -
April To March
The Picton Playing Field Trust transactions for 2012/13 & 2013/14 were under £1,000
2012/13 2013/14 2012/13 2013/14 2012/13 2013/14
£000 £000 £000 £000 £000 £000
Fixed Assets(net) - - - - 2,823 2,658
Debtors 40 43 175 160 - -
Stock - - - - 2 2
Investments 123 123 1 1 27 22
Total Assets 163 166 176 161 2,852 2,682
Creditors - - - - (12) (8)
Net Assets 163 166 176 161 2,840 2,674
Represented By:
Residents Property - - - - - -
Legacies / Criminal Injury
Compensation - - (76) (68) - -
Accumulated Funds: (163) (166) (100) (93) (2,840) (2,674)
(163) (166) (176) (161) (2,840) (2,674)
Social Services Tenby PoolEducation &
Children's Services
The Picton Playing Field Trust has no assets or liabilities
Balance Sheet As At 31st
March
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MISCELLANEOUS REPORTING REQUIREMENTS
The following items are not required to be reported by the Code, but are included in the Comprehensive Income and Expenditure Statement of the Council and are required to be reported by other legislative provisions.
1. Discretionary Expenditure
Under section 137 of 1972 Local Government Act the Council made contributions to charities and the not for profit bodies providing public services of £22,903 in 2013/14 compared with £30,100 in 2012/13.
The Local Government Act 2000 gives local authorities wide ranging powers to assist local communities. These costs, when incurred, are not required to be reported separately but are included with the relevant service expenditure.
2. Publicity Under section 5 of the Local Government Act 1986 requires a local authority to report on certain categories of publicity expenditure which are set out below:
2012/13 2013/14
£000 £000
Recruitment 167 186
Other 623 440
Total 790 626
3. Local Authority Goods and Services Act 1970 The Council undertook works for other organisations under the above legislation the cost of which is shown below.
2012/13* 2013/14
£000 £000
Expenditure 119 106
Income (121) (108)
Net (Surplus) / Deficit (2) (2)
* Restated