Statement of Accounts 2016/17
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Lincolnshire County Council Statement of Accounts 2016-17 LincolnshireC..OONTY C.OUNtlL It.. I J ( Contents Page Narrative Report 3 Statement of Responsibilities for the Statement of Accounts 12 Financial Statements: Expenditure Funding Analysis 13 Comprehensive Income and Expenditure Statement 14 Movement in Reserves Statement 15 Balance Sheet 16 Cash Flow Statement 17 Notes to the Financial Statements 18 Lincolnshire County Council Pension Fund 110 Lincolnshire Fire and Rescue Pension Fund 145 Audit Opinion 148 Annual Governance Statement 151 Appendices 165 Glossary of Terms 166 2 Narrative Report Introduction to the Accounts The Statement of Accounts for the year 2016-17 is set out on pages 13 to 17. The purpose of the published Statement of Accounts is to give electors, local tax payers and service users, elected members, employees and other interested parties clear information about the Council’s finances. It should answer such questions as: What did the Council’s services cost in the year of account? Where did the money come from? What were the Council’s assets and liabilities at the year-end? Content The Statement of Responsibilities for the Statement of Accounts This details the financial responsibilities of the Council and the Executive Director – Finance & Public Protection. Review of 2016-17 (Narrative Statement) This provides a general introduction to the Accounts, initially focusing on explaining the more significant features of the Council’s financial activities during the period 1 April 2016 to 31 March 2017, followed by a review of non-financial performance indicators and an assessment of future financial and economic developments that could affect the Council. Together these statements provide evidence of the economy, efficiency and effectiveness of the Council's use of resources over the financial year. Expenditure and Funding Analysis for the period 1 April 2016 to 31 March 2017 The Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants, rents, council tax and business rates) by local authorities in comparison with those resources consumed or earned by authorities in accordance with generally accepted accounting practices. It also shows how this expenditure is allocated for decision making purposes between the council’s directorates, services and departments. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement. Comprehensive Income and Expenditure Statement for the period 1 April 2016 to 31 March 2017 The Comprehensive Income and Expenditure Statement shows the accounting 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 to cover expenditure in accordance with statutory requirements; this may be different from the accounting cost. The taxation position is shown in both the Expenditure and Funding Analysis and the Movement in Reserves Statement. Movement in Reserves Statement for the period 1 April 2016 to 31 March 2017 The Movement in Reserves Statement shows the movement from the start of the year to the end on the different reserves held by the authority, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other ‘unusable reserves’. The Statement shows how the movements in year of the authority’s reserves are broken down between gains and losses incurred in accordance with generally accepted accounting practices and the 3 statutory adjustments required to return to the amounts chargeable to council tax for the year. The Net Increase/Decrease line shows the statutory General Fund Balance and movement in the year following those adjustments. Balance Sheet as at 31 March 2017 The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Authority is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’. Cash Flow Statement for the period 1 April 2016 to 31 March 2017 The Cash Flow Statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The Statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Authority 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 outflows have been made for resources which are intended to contribute to the Authority’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Authority. Notes to the Accounts These comprise of a summary of significant accounting policies, further information and detail of entries in the prime Statements above and other explanatory information. Audit Opinion This contains the External Auditor’s report and opinion on the Accounts. Annual Governance Statement This identifies the systems that the Council has in place to ensure that its business is conducted in accordance with the law and proper standards and that public money is safeguarded and properly accounted for. The Lincolnshire Pension Fund Account This shows the operation of the Lincolnshire Pension Fund run by the Council for its own employees and employees of the seven District, City and Borough Councils in Lincolnshire along with other scheduled and admitted bodies. The Lincolnshire Fire and Rescue Pension Fund Account This shows the operation of the Lincolnshire Fire and Rescue Pension Fund run by the Council for its own Fire-fighter employees. 4 Executive Director – Finance and Public Protection Review of 2016-17 The County Council set its spending plans for 2016-17 against a backdrop of continued significant reductions in government funding, growing cost pressures from demand led services such as adult and children's social care, waste disposal and the Council's responsibility to pay the National Living Wage. In developing its financial plan the Council considered all areas of current spending to identify cost pressures which must be funded and savings which could be made, through efficiencies and by reducing the level of service provided. The budget proposals also included an increase in Council Tax levels of 3.95% (1.95% general increase, plus 2.00% for Adult Social Care Services) and one off use of reserves. Annual Revenue Spending The Council spent £910.237m in 2016-17 on providing public services – £1,244.34 for every person in Lincolnshire. The Council's annual spending on providing public services are set out in the charts below and show how this was used both by type of service provided and by type of expenditure. Gross Expenditure Service Analysis £'000k (£910,237k) Services, £85,888, 9% Children's Services, Capital Financing £128,298, 14% Charges, £40,702, 5% ___ Contribution to Reserves, £8 ,071 , 1% Adult Care, £227,008, 25% Schools, £284,409, 31% Community Well being ____--.::: Environment and and Public Health , Economy, £85,307, 9% £50,554, 6% Children's Services Includes: Readiness for School, Learn and Achieve, Children are Safe & Healthy and Readiness for Adult Life. Adult Care Includes: Adult Safeguarding, Adult Frailty, Long Term Conditions and Physical Disability, Carers and Adult Specialities. Community Wellbeing and Public Health Includes: Community Resilience & Assets and Wellbeing. Environment and Economy Includes: Sustaining & Developing Prosperity Through Infrastructure, Protecting & Sustaining the Environment and Sustaining & Growing Business & the Economy. 5 Other Services Includes: Protecting the Public, How We Do Our Business and Enablers & Support to Council Outcomes, Contingency Budgets, Transfer to/from Earmarked Reserves and General Reserves. Gross Expenditure Subjective Analysis £'000k (£910,237k) Contribution to Reserves, £8,071, 1% _____ Employee Expenses, Other Runn ing £325,189, 36% Expenses, £183,01 o, 20% Agency & Contracted ____, Services, £353,265, 39% Capital Financing, £40,702, 4% The distribution of expenditure type differs significantly between different services. For example employee expenses compromises 61% of budgeted expenditure in schools, for other (non-schools) budgets it is only 25% of expenditure and contract payments comprises 55% of total expenditure. These differences reflect how Council services are provided. Annual income The Council’s revenue spending was funded by: Business Rates, Grants and £104,710, 11% Contributions, £162,409, 18% _______,1 Revenue Support Grant, £70,351 , 8% Other Income (Fees & Charges), £69,407, 8% Dedicated Schools Grant, £247,695, 27% Council Tax, £253,801 , 28% 6 In 2016-17 the Council increased Council Tax by 3.95% and also saw growth of 2.34% on the number of band D equivalent properties in Lincolnshire. This in total generated an additional income for the Council of £14.886m. The Council Tax collection funds in Lincolnshire also generated a surplus in 2016-17, of a further £5.609m to the County Council.