Statement of Accounts and Annual Governance Statement 2019/20
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Statement of Accounts and Annual Governance Statement 2019/20 Statement of Accounts and Annual Governance Statement 2019/2020 Report of the Treasurer and Chief Executive ......................................................................... 4 Statement of Responsibilities for the Statement of Accounts ................................................. 23 Comprehensive Income and Expenditure Statement ............................................................ 24 Movement in Reserves Statement ...................................................................................... 25 Balance Sheet ................................................................................................................. 26 Cash Flow Statement ....................................................................................................... 27 Notes to the Accounts ...................................................................................................... 28 1. Expenditure and Funding Analysis ............................................................................ 28 2. Statement of Accounting Policies .............................................................................. 30 3. Accounting Standards that have been issued but have not yet been adopted ................. 48 4. Critical judgements in applying Accounting Policies ..................................................... 48 5. Assumptions made about the future and other major sources of estimation uncertainty .. 49 6. Material items of Income and Expenditure ................................................................. 51 7. Events after the Reporting Period ............................................................................. 51 8. Adjustments between accounting basis and funding basis under regulations .................. 52 9. General Fund Balance, Schools and Earmarked Reserves............................................. 54 10. Notes to the Expenditure and Funding Analysis .......................................................... 55 11. Other Operating Expenditure ................................................................................... 58 12. Financing and Investment Income and Expenditure .................................................... 58 13. Taxation and Non Specific Grant Income ................................................................... 58 14. Expenditure and Income Analysed by Nature ............................................................. 59 15. Revenue from Contracts with Service Recipients ........................................................ 59 16. Property Plant and Equipment (PPE) ......................................................................... 60 17. Long Term Debtors ................................................................................................. 64 18. Financial Instruments ............................................................................................. 65 19. Creditors and Debtors ............................................................................................. 76 20. Provisions .............................................................................................................. 77 21. Cash and Cash Equivalents ...................................................................................... 79 22. Assets Held for Sale ................................................................................................ 79 23. Unusable Reserves ................................................................................................. 80 24. Other Long Term Liabilities ...................................................................................... 83 25. Cash Flow – Operating Activities .............................................................................. 83 26. Cash Flow - Investing Activities ................................................................................ 84 27. Cash Flow - Financing Activities................................................................................ 84 28. Cash Flow - Reconciliation of liabilities arising from financing activities .......................... 84 29. Members’ Allowances .............................................................................................. 85 30. Audit Fees ............................................................................................................. 85 31. Officers' Remuneration ............................................................................................ 86 32. Grant Income ........................................................................................................ 88 33. Capital Expenditure and Capital Financing ................................................................. 91 34. Partnerships and Related Party Transactions .............................................................. 92 35. Private Finance Initiative and Similar Contracts .......................................................... 98 36. Leases and Contract Hire ........................................................................................ 104 37. Pensions .............................................................................................................. 106 38. Contingent Liabilities ............................................................................................. 114 Glossary of Terms .......................................................................................................... 115 Pension Fund Statement of Accounts 2019/20 .................................................................... 125 Statement of the Actuary for the year ended 31 March 2020................................................ 176 Annual Governance Statement 2019/20 ............................................................................ 182 Report of the Treasurer and Chief Executive Introduction Welcome to the 2019/20 financial statements for Devon County Council. This report includes a brief overview of the County Council, its objectives, performance and service provision for 2019/20. It also provides a summary of the financial performance of the Council as detailed later in the Statement of Accounts. The Covid-19 pandemic is an unprecedented situation which continues to have significant impacts on Devon’s residents, communities and businesses. Outlined later in this report are the major challenges it presents for the County Council, including considerable effects on services, urgent action taken, substantial additional expenditure and changes to priorities, procedures and decision-making arrangements. As a one off because of Covid-19, Parliament has extended the deadline for the publication of the 2019/20 annual accounts from 31st May to no later than 31st August. Audited accounts should be published by 30th November. The financial statements have been prepared in accordance with the requirements of the Code of Practice on Local Authority Accounting (the Code) which is based on International Financial Reporting Standards (IFRS). The Devon Pension Fund accounts, although included in this publication, are separate from the accounts of the Council and are subject to a separate audit opinion. The Annual Governance Statement is included within this publication but does not form part of Devon County Council's accounts or those of the Pension Fund. The Annual Governance Statement explains the Council's Governance Framework and the roles of Cabinet and the Scrutiny function and significant governance issues and the challenges faced by the County Council. This report constitutes the Authority's "Narrative Statement" as required by Section 8 of the Accounts and Audit Regulations 2015 (the Regulations). Accounting Policies The accounting policies (Note 2, page 30) establish the principles on which the figures in the financial statements are based. This year there have not been any significant changes to the Code. Summary of Financial statements The financial statements and their purpose are summarised as follows: Comprehensive Income and Expenditure Statement (page 24) This 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. Councils raise taxation to cover expenditure in accordance with regulations: this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. The Comprehensive Income and Expenditure Account shows a deficit of £56.8 millions in 2019/20 compared with a deficit of £29.9 millions in 2018/19. The increase in the deficit of £26.9 millions is mainly due to the following: • There is an overspend of £19.8 millions in the High Needs Block of the Dedicated Schools Grant which has been carried forward as a negative ringfenced balance in the balance sheet - Note 9, page 54. This additional spend is offset by the recognition of the first tranche of the COVID grant of £22.5 millions received in 2019/20, most of which, £21.7 millions is carried forward to meet expenditure in 2020/21. 4 • In 2018/19 there were one off business rates gains in the 100% pilot year, which were carried forward into reserves. These gains were not repeated in 2019/20 which has contributed to the year on year variance. • Technical adjustments which can be found in Note 8, pages 52 and 53, which have increased from £51.2 millions to £65.7 millions, a net change of £14.5 millions. There are increases in technical costs relating to depreciation