Appendix 1
HULL AND GOOLE PORT HEALTH AUTHORITY
Statement of Accounts 2017-18 Hull & Goole Port Health Authority Statement of Accounts 2017-18
CONTENTS
Page
Explanatory Foreword 2 - 5
Statement of Accounting Policies 6 – 8
Core Financial Statements:
• Income and Expenditure Account 10 – 11
• Statement of Movement on the General Fund Balance 12
• Statement of Total Movement in Reserves and 12 – 13 Recognised Gains and Losses
• Balance Sheet 14
• Cash Flow Statement 15
• Notes to the Core Financial Statements 16 – 22
Annual Governance Statement 23 – 27
Definition of Financial Terms 28 – 30
The following is a statement of the Hull and Goole Port Health Authority accounts for 2017-18 in accordance with the Accounts and Audit Regulations 2015.
The Statement of Accounts is used as a basis for completing the Smaller Authorities in England Annual Return for the financial year ended 31 March 2018 which is externally audited by PKF Littlejohn LLP.
C.D.Bell Director of Finance and Transformation – Section 151 Officer 12 June 2018
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EXPLANATORY FOREWORD
1. Introduction
The Hull & Goole Port Health Authority is responsible for the provision of a broad range of environmental health services to the ports of Hull, Goole, River Trent & River Ouse and south Humber ports (excluding Grimsby and Immingham docks). These services include, amongst others, the inspection of cargoes landed at the ports, the control of infectious disease and overseeing the inspection of persons from abroad who may require medical treatment, undertaking the sanitation and hygiene inspection of vessels berthing at the ports and certain land-based food premises, the legal registration and approval of certain food businesses, the enforcement of animal health controls including waste disposal, the regulation of potentially polluting installations and the investigation of any pollution incidents or complaints occurring at the ports. The Authority is designated as a “Category 1 Responder” under the Civil Contingencies Act. The three Councils represented on the Port Health Authority are Kingston upon Hull City Council, the East Riding of Yorkshire Council and North Lincolnshire Council. The Authority's accounts for the year to 31 March 2018 are detailed in the enclosed statements. This foreword provides a guide to the content of the Statement of Accounts together with an overview of the Authority's financial position.
2. Contents and Purpose of the Statements
(i) Statement of Accounting Policies
The statement of accounting policies explains the basis of the figures contained in the accounts. The accounts themselves can be properly assessed only if the policies followed in the treatment of material items are explained.
(ii) The Statement of Responsibilities for the Statement of Accounts
This statement sets out the respective responsibilities of the Authority and the Treasurer for the accounts.
(iii) Core Financial Statements
Under the revised Code of Practice on Local Authority Accounting in the United Kingdom 2009, all the financial statements relating to the Hull and Goole Port Health Authority are now grouped together under the heading of “Core Financial Statements”. The simplified statements are intended to make the accounts easier for users to understand as they now look similar to the accounts of other types of public and private sector organisations.
The Core Accounting Statements are made up of the following:
• Income and Expenditure Account – This statement shows the net cost for the year of the Authority's activities, and compares that cost with the financing provided through the levy payments made by member authorities.
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• Statement of Movement on the General Fund Balance – This statement shows the in year movement within the Authority’s General Fund Balance which is known as the Levy Rebate Reserve.
• Statement of Total Movement in Reserves and Recognised Gains and Losses – The statement of total movement in reserves draws together all the recognised gains and losses of the Authority during the period and identifies those which have and have not been reflected in the Income and Expenditure account.
• Balance Sheet – This sets out the financial position of the Authority as at 31 March 2018. It contains a summary of the investments held, the current assets employed, the current liabilities, and the reserves of the Authority at this point in time.
• Cash Flow Statement – This summarises the inflows and outflows of cash arising from transactions with third parties for revenue and capital purposes over the course of the year.
• Notes to the Core Financial Statements – These explain the basis and provide further information behind the figures shown on the financial statements.
(iv) The Annual Governance Statement
This statement reviews the system of Internal Control operating within the Authority, in line with the requirements of the Accounts and Audit Regulations 2015.
(v) Definition of Financial Terms
This provides an explanation of the financial terminology used in the Statement of Accounts.
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3. Revenue Spending in 2017-18
The actual expenditure and income of the Authority for 2017-18 compared with the levels forecast in the original and revised estimates is summarised below. The figures reflect the disclosure requirements with regard to pension costs (see note 6 to the Core Financial Statements).
2017-18 2016-17 Original Revised Actual Estimate Estimate Actual £ £ £ £
361,605 Total Expenditure 387,332 378,982 366,428 84,365 Total Income 79,480 79,194 86,655
277,240 Net Expenditure 307,852 299,788 279,773
(111,000) Expected Return on Pension Assets (102,000) (102,000) (102,000) 152,000 Pensions Interest Costs 131,000 131,000 131,000 318,240 Net Operating Expenditure 336,852 328,788 308,773
(49,000) Net Transfer to Pension Reserve (46,000) (46,000) (46,000) 269,240 290,852 282,788 262,773 270,000 Levy 270,000 270,000 270,000
760 Net Surplus/(Deficit) (20,852) (12,788) 7,227
The net profit for the year was £7,227. This compares with a forecast deficit of £20,852 in the original estimate and of £12,788 in the revised position reported to the Board of the Port Health Authority on 12 December 2017.
The improved favourable position is primarily due to an increase in fees and charges income, ongoing vacant post and a reduction of associated costs.
4. Capital Spending in 2017-18
The Port Health Authority did not hold any capital assets at the start of the year and did not incur any capital expenditure during 2017-18.
5. Changes in Accounting Policies
The accounts have been prepared in line with the revised Statement of Recommended Practice (SORP) outlined in the Code of Practice on Local Authority Accounting in the United Kingdom 2009. There have been no other specific changes in the accounting policies adopted by the Port Health Authority during the year.
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6. Changes in Statutory Functions
The principal pieces of legislation which underpin the work of the Port Health Authority are as follows: -
The Food Safety Act (1990) The Public Health Act (1936) The Environmental Protection Act (1990) The Environment Act (1995) The Pollution Prevention and Control Act (1999) The Clean Air Act (1993) The Public Health (Control of Disease) Act (1984) The Public Health Act (1961) The European Communities Act (1972) The Prevention of Damage by Pests Act (1949) The Local Government Act (1972) The Civil Contingencies Act (2004) The Health Act (2006) The Water Industry Act (1991)
The functions of the Authority are largely enshrined in these Acts and the many regulations and orders made thereunder, together with relevant EU legislation. The Health Act 2006 gives the Authority responsibility for the enforcement of the Smokefree provisions within the Port Health District. The Food Safety Act (1990) defines the Authority as a ‘Food Authority’ for enforcement purposes. The Civil Contingencies Act 2004 designates the Authority as a Category 1 Responder.
7. Borrowing Facilities
Effective cash flow management during 2017-18 ensured that no short-term borrowings were required by the Authority.
As no capital expenditure was incurred by the Port Health Authority (see note 4, above), it was not necessary to undertake any long-term borrowing during the year.
8. Source of Funds
The net revenue requirements of the Authority are met through the raising of a levy on the three Councils in the geographical area covered by the Authority (see note 1), payable on a twice yearly basis. Any surplus of levy income over net expenditure in a given period is generally transferred to the Levy Rebate Reserve for use in future years; similarly, any excess of net expenditure against levy income in a given year is chargeable against the accumulated reserves held by the Authority.
9. Further Information
Further information on financial issues is available from the Treasurer of the Port Health Authority, c/o Kingston upon Hull City Council, the Guildhall, Kingston upon Hull. Information on service issues may be obtained from the Chief Port Health Inspector, 257 Hessle Road, Hull. In addition, interested members of the public have a statutory right to inspect the accounts before the completion of the audit. Availability of the accounts for inspection is advertised on the Hull & Goole PHA website.
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STATEMENT OF ACCOUNTING POLICIES
1. General Principles
The accounts of the Authority have been prepared in accordance with the provisions of the Code of Practice on Local Authority Accounting in Great Britain issued by CIPFA. The code specifies and defines the principles and proper accounting practices required for the preparation of a Statement of Accounts which present fairly the financial position and transactions of an authority.
The Code is supported by a number of detailed accounting recommendations including the application of Statements of Standard Accounting Practice (SSAPs) approved by the Accounting Standards Board and relevant to local authorities.
The following sections outline the accounting policies applied in compiling the Statement of Accounts of the Authority and aim to explain the basis of the figures in the accounting statements.
2. Accruals for Income and Expenditure
(i) Supplies and Services
The cost of supplies and services are accrued and accounted for in the period during which they were consumed or received. Accruals are made for all material sums unpaid at the year-end for goods or services received or work done. This means that sums payable by the Authority at the year end are included in the accounts whether or not the cash has actually been paid in the year.
(ii) Customer and Client Receipts
Customer and Client receipts in the form of sales, fees, charges and rents are accrued and accounted for in the period to which they relate.
(iii) Employee Costs
The full cost of employees is charged to the accounts of the period in which the employees worked.
3. Reserves and Provisions
(i) Levy Rebate Reserve
The Levy Rebate Reserve consists of the accumulated net underspends against levy income realised by the Authority over a number of years. It is available to the Authority to apply against any excess of net expenditure (whether planned or unplanned) over the amounts raised through levies on member authorities in any given year.
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(ii) Legal Reserve
The Legal Reserve was created at the close of 1997-98 and acts as a contingency to contribute to the costs of any legal actions which may be taken against the Authority.
(ii) Pension Reserve
A Pension Reserve was created in the 2004-05 Accounts as a consequence of the implementation in full of the Financial Reporting Standard (FRS) 17. This has now been replaced by FRS102. The Pension Reserve reflects the net pensions liability of the Authority adjusted for the net actuarial gain (or loss) on pension scheme assets attributable to the Authority in the year. At the close of 2017-18 there was a negative balance on the Pension Reserve of £1,096,000, reflecting the net liability of the Port Health Authority relating to the Local Government Pension Scheme; however, this will be addressed by increased contributions over the remaining working life of employees (as assessed by the scheme actuary).
4. Capital
In line with the provisions of the Local Government and Housing Act 1989 all expenditure is charged to revenue other than that which the Authority has specifically provided to be capitalised.
The Authority held no capital assets at the start of the year and no capital expenditure was incurred during 2017-18.
5. Deferred Charges
Deferred charges result primarily from expenditure of a capital nature for which no tangible asset is created. Any such charges would be written off to the Revenue Account of the Authority over an appropriate period.
No deferred charges were created as a result of expenditure incurred by the Authority in 2017-18, nor does the Authority hold any deferred charges from an earlier period.
6. Receipts from the Sale of Fixed Assets
Capital receipts arising from the disposal of fixed assets are accounted for on an accruals basis.
The Authority was not holding any receipts from the sale of Fixed Assets at the start of the year and did not receive any such receipts during the course of 2017-18.
7. Grants
Revenue grants are accrued by the Authority and credited to income in the same period in which the related expenditure is charged.
No revenue grants were received by the Authority in 2017-18.
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8. Interest Charges
Interest payable on external borrowings, and interest earned on the temporary investment of surplus funds, is accrued and accounted for in the accounts of the period to which it relates.
9. The Redemption of Debt
The Authority did not hold any external loans at any point during the year and it has consequently not been necessary to set aside any amounts in the revenue account for the repayment of external debt.
10. Leases
(i) Finance Leases
No finance leases were held by the Authority at any point during the year.
(ii) Operating Leases
Rentals payable under operating leases are charged to revenue on an accruals basis.
11. Debtors and Creditors
The revenue transactions of the authority are recorded in the accounts on an accruals basis (see note 2 above) and the appropriate debtor and creditor entries have accordingly been made on the balance sheet.
12. Stocks
The Authority does not hold any stocks.
13. Pensions
The Authority’s staff are members of the Local Government Pension Scheme. The Authority makes contributions, to the East Riding of Yorkshire Council, which now administers the Local Government Superannuation Fund in the Humberside area.
Note 6 to the Core Financial Statements provides a full analysis of the Authority’s pension costs and the impact of the accounting arrangements required under Financial Reporting Standard (FRS) 102.
14. Investments
The Authority has a facility for short term investments in Hull City Council Temporary Loans. However, due to the low interest rates, this was not utilised. Surplus cash was held in interest bearing accounts with the Authorities bankers.
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STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS
1. The Authority’s Responsibilities
The Authority is required:
• to make arrangements for the proper administration of its financial affairs and to ensure that one of its officers has the responsibility for the administration of those affairs. In this authority, that officer is the Treasurer. • to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets. • to approve the Statement of Accounts.
2. The Treasurer’s Responsibilities
• The Treasurer 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 of Practice”).
• In preparing the Statement of Accounts, the Treasurer has:
o selected suitable accounting policies and applied them consistently; o made judgements and estimates that were reasonable and prudent; o complied with the Code of Practice.
• The Treasurer has also:
o maintained proper and up to date accounting records; o taken reasonable steps for the prevention and detection of fraud and other irregularities.
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CORE FINANCIAL STATEMENTS
Income and Expenditure Account for the Year Ended 31 March 2018 2017-18 Note 2016-17 Original Revised Actual Estimate Estimate Actual £ £ £ £ EXPENDITURE Port Health Employees 292,083 Direct Pay 288,007 286,964 284,949 3,284 Indirect Pay 5,060 1,785 1,413
Premises 6,704 Repairs & Maintenance 3,000 2,783 2,953 2,055 Energy Costs 2,400 2,400 2,465 7,895 Rents 8,150 8,150 7,900 (15,284) Rates 234 Water Services 300 270 257 1,540 Cleaning & Domestic 716 716 688 945 Premises Insurance 975 755 580
Transport 1,773 Direct Transport Costs 1,945 1,463 1,316 2,470 Con Hire & Operating Lease 2,515 2,512 2,289 585 Transport Costs 1,150 550 415 9,539 Car Allowances 12,000 10,000 8,485 880 Transport Insurance 910 117 117
Supplies & Services 3,296 Equipment, Furniture & Materials 3,900 3,410 3,040 11 Catering 30 80 56 1,540 Clothing, Uniforms & Laundry 2,000 2,000 1,373 2,162 Printing, Stationery & Gen Office Exps. 2,400 2,400 1,873 1,970 Services 2,500 2,500 1,925 10,618 Communications/Computer 16,958 16,251 16,115 329 Expenses 650 700 437 (15) Grant & Subscriptions 35 35 35 2,686 Miscellaneous 3,606 5,920 5,266
3,867 Third Party Payments 5,500 4,597 4,007 20,438 Support Services 22,624 22,624 18,472
361,605 387,332 378,982 366,428
361,605 Total Expenditure 387,332 378,982 366,428
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Income and Expenditure Account for the Year Ended 31 March 2018 (Continued)
2017-18 Note 2016-17 Original Revised Actual Estimate Estimate Actual £ £ £ £
361,605 Total Expenditure Brought Forward 387,332 378,982 366,428
INCOME Port Health 83,911 Fees and Charges 79,455 79,169 86,521
83,911 79,455 79,169 86,521
83,911 Total Income 79,455 79,169 86,521
277,694 Net Cost of Service 307,877 299,813 279,907
(454) Interest & Investment Income (25) (25) (134)
(111,000) Expected Return on Pension Assets (102,000) (102,000) (102,000) 6
152,000 Pensions Interest Costs 131,000 131,000 131,000 6
318,240 Net Operating Expenditure 336,852 328,788 308,773
Appropriations
- Transfer (to)/from Legal Reserve - - - 48,000 Transfer to Pension Reserve - Payments 59,000 59,000 59,000 6 (97,000) Transfer to Pension Reserve - Taxation Adj. (105,000) (105,000) (105,000) 6
269,240 290,852 282,788 262,773
Sources of Finance
270,000 Levies 270,000 270,000 270,000 9
760 Surplus/(Deficit) For The Year (20,852) (12,788) 7,227
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Statement of Movement on the General Fund Balance The following shows the in year movement on the Authority’s General Fund Balance which is more commonly referred to as the Levy Rebate Reserve. As noted in the Statement of Accounting Policies on page 6, accumulated funds are available to apply against net expenditure to reduce the amounts raised through levies from member authorities.
2017-18 2016-17 £ £
Balance Brought Forward 1 April 171,315 170,555
Surplus (Deficit) For The Year 7,227 760
Balance Carried Forward 31 March 178,542 171,315
Statement of Total Movement in Reserves and Recognised Gains and Losses
The movement in reserves during the year are summarised below.
Surplus/ Balance at Balance at Pension (Deficit) for 31 March 1 April 2017 Adjustments Year 2018 £ £ £ £
Levy Rebate Reserve 171,315 7,227 - 178,542
Legal Reserve 10,105 - - 10,105
Pension Reserve (1,150,000) - 54,000 (1,096,000)
(968,580) 7,227 54,000 (907,353)
The summary below provides an analysis of the overall recognised gain/loss reflected in the Authority’s balance sheet.
2017-18 2016-17 £ £
In Year Surplus / (Deficit) 7,227 760
Appropriations From / (To) Pensions Reserve (46,000) (49,000)
Actuarial Gains/(Losses) Relating to Pensions 100,000 95,000
61,227 46,760
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Statement of Total Movement in Reserves and Recognised Gains and Losses (Continued)
A further analysis of the movement on each of the reserves is shown below:
Levy Rebate Reserve – See Statement of Movement on the General Fund Balance (above).
Legal Reserve
2017-18 2016-17 £ £
Balance as at 1 April 10,105 10,105
Transfer (To) / From Revenue - -
Balance as at 31 March 10,105 10,105
Pension Reserve
2017-18 2016-17 £ £
Balance as at 1 April (1,150,000) (1,196,000)
Current Service Cost (76,000) (56,000)
Past Service Costs - -
Past Service Credit - -
Employer Contribution 59,000 48,000
Settlements & Curtailments - -
Net Return on Assets (29,000) (41,000)
Actuarial Gain/(Loss) 100,000 95,000
Balance as at 31 March (1,096,000) (1,150,000)
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Balance Sheet as at 31 March 2018
2017-18 2016-17 Note £ £ £ £
Fixed Assets
Operational Assets - -
Non Operational Assets - -
Total Long Term Assets - - 2
Investments - -
Current Assets
Debtors 36,024 22,144 16 Provision for Bad Debts - - Payments in Advance 5,416 5,426 Cash in Hand Bank 200,757 235,326 Petty Cash 100 100 242,298 262,996
Current Liabilities
Creditors 36,438 34,326 17 Income in Advance 17,213 47,250 53,651 81,576
Current Assets less Current Liabilities 188,647 181,420
Liabilities Related to Pension Scheme 1,096,000 1,150,000
(907,353) (968,580)
Financed By
Levy Rebate Reserve 178,542 171,315 Legal Reserve 10,105 10,105 Pension Reserve (1,096,000) (1,150,000)
(907,353) (968,580)
-14- Hull & Goole Port Health Authority Statement of Accounts 2017-18
Cash Flow Statement
2017-18 2016-17 £ £ £ £ Revenue Activities
Cash Outflows Cash Paid to and on Behalf of Employees 267,481 287,344 Cash Payments to Suppliers 79,824 68,614 347,306 355,958 Cash Inflows Levy Income (252,788) (300,038) Cash Received for Goods and Services (72,640) (94,293) (325,428) (394,331)
21,878 (38,373)
Returns on Investments and Servicing of Finance
Cash Outflows - -
Cash Inflows Interest Received (134) (454)
(134) (454)
Capital Activites
Cash Outflows - -
Cash Inflows - -
- -
Net Cash Outflow / (Inflow) Before Financing 21,744 - 38,827
Increase / (Decrease) in Short Term Deposits - -
Financing
Cash Outflows Employee Car Loan - -
Cash Inflows
Decrease / (Increase) in Cash and 21,744 (38,827) Cash Equivalents
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Notes to the Core Financial Statements
1. Exceptional and Extraordinary Items and Prior Year Adjustments
There were no extraordinary items or prior year adjustments to report in the year.
2. Fixed Assets
No capital assets were held by the Hull & Goole Port Health Authority at any point during 2017-18.
3. Finance and Operating Leases
One asset, a Volkswagen Caddy Van acquired through an operating lease, was utilised by the Authority during the year. The rental paid during 2017-18 was £2,289. There were no finance leases in place during the year.
4. Publicity
Under Section 5 of the Local Government Act 1986 the Authority is required to keep a separate account of its expenditure on publicity. During 2017-18 expenditure was incurred as follows:-
2017-18 2016-17 £ £
Staff Advertising 99 - Other Advertising 46 -
145 -
5. Local Authority Goods and Services Act 1970
The Authority did not provide any goods and services to any other local authorities under the Local Authorities (Goods and Services) Act 1970 during 2017-18.
6. Pensions
As part of the terms and conditions of employment of its officers and other employees, the Port Health Authority offers retirement benefits. Although these benefits will not actually be payable until employees retire, the Authority has a commitment to make the payments that needs to be disclosed at the time that employees earn their future entitlement.
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The Authority participates in the Local Government Pension Scheme for civilian employees, administered by the East Riding of Yorkshire Council – this is a funded scheme, meaning that the Authority and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets. The contribution rate is determined by the County Fund’s Actuary based on triennial valuations, and under Pension Fund Regulations, the contribution rates are set to meet 100% of the overall liabilities of the fund.
The latest triennial actuarial valuation took place during 2016-17 and the Actuary indicated a minimum contribution rate of 25.3% from 1 April 2017. This rate will apply until 2019/20.
The cost of retirement benefits are recognised in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge the Port Health Authority is required to make against the levies raised is based on the cash payable in the year, so the real cost of retirement benefits is reversed out of the revenue account after Net Operating Expenditure. The following transactions have been made in the Income and Expenditure account during the year:
Local Government Pension Scheme 2017-18 2016-17 £ £
Net Cost of Services: Current Service Cost (76,000) (56,000) Past Service Cost * - - Net Operating Expenditure Interest Cost (131,000) (152,000) Expected Return on Assets in the Scheme 102,000 111,000 Amount to be met from Levies Raised: Movement on Pensions Reserve 46,000 49,000
Employers' Contributions Payable to Scheme (59,000) (48,000)
The objective of FRS 102 (Retirement Benefits) is to ensure the Port Health Authority’s financial statements reflect at fair value the future pension fund liabilities which have been incurred, and the extent to which assets have already been set aside to fund them.
The underlying assets and liabilities for retirement benefits attributable to the authority at 31 March 2018 are as follows:-
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Local Government Pension 31 March 31 March Scheme 2018 2017 £'000 £'000
Estimated Liabilities in Scheme (5,224) (5,277)
Estimate Assets in Scheme 4,128 4,127
Net Assets / (Liabilities) (1,096) (1,150)
The liabilities show the underlying commitments that the authority has in the long-run to pay retirement benefits. The total net liability of £1,062,000 has a substantial impact on the net worth of the authority as recorded in the balance sheet, resulting in a negative overall balance of £907,353. However, statutory arrangements for funding the deficit mean that the financial position of the authority remains healthy – 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.
Liabilities have been assessed on an actuarial basis using the projected unit method (an estimate of the pensions that will be payable in future years dependant on assumptions about mortality rates, salary levels, etc) by Hymans Robertson, an independent firm of actuaries. Estimates for the Local Government Pension Scheme administered by the East Riding of Yorkshire Council has been based on the latest full valuation of the scheme as at 31 March 2018.
The main assumptions in their calculations have been:-
2017-1 2016-17 %% Inflation / Pension Increase Rate 2.4 2.4 Salary Increase Rate 2.6 2.6
Discount Rate 2.6 2.5
Assets in the Local Government Pension Scheme administered by the East Riding of Yorkshire Council are valued at fair value, principally market value for investments, and consist of the following categories, by proportion of the total assets held by the fund:-
31 March 31 March 2018 2017 %% Equity Investments 71 76 Bonds 14 10 Property 12 11 Cash 3 3
100-18- 100 Hull & Goole Port Health Authority Statement of Accounts 2017-18
7. Officers’ Emoluments
The number of officers in receipt of emoluments of £50,000 and over is as follows:
2017-18 2016-17 No. No.
£50,000 - £59,999 0 0
The term “emolument “ means all sums paid to an employee including all taxable benefits, but excludes pension contributions.
8. Members’ Allowance
The Port Health Authority does not pay allowances direct to members. All allowances claimed for Port Health Authority meetings are paid by the Local Authority to which the individual member is elected.
9. Related Party Transactions
Information in respect of material transactions with related parties are as follows:-
(i) Levies
Levies received during 2017-18 from the three representative councils were as follows:-
£ Kingston upon Hull City Council 175,500 East Riding of Yorkshire Council 34,425 North Lincolnshire Council 60,075
270,000
(ii) Pensions
See note 6
(iii) Support Services
The Authority received support services from Kingston upon Hull City Council during 2017-18 to the value of £18,472.
(iv) Other Related Party Transactions
During the course of 2017-18 no members or senior officers of the Port Health Authority, their close relations, or members of the same household, -19- Hull & Goole Port Health Authority Statement of Accounts 2017-18
undertook any declarable related party transactions with the Authority. The Authority requires members and senior officers to complete a declaration of related party transactions, and these declarations are used as the basis of this note.
10. Section 137 Expenditure
Under s.137 of the Local Government Act 1972, a Local Authority may incur expenditure for certain purposes not otherwise authorised. The Port Health Authority did not incur any such expenditure during 2017-18.
11. Audit Fees
PKF Littlejohn LLP were appointed through the SAAA (Smaller Authorities’ Audit Appointments) as the external auditor for the Authority for five years from 2017-18. Fees payable with regard to external audit services carried out by the appointed auditor of £800 have been provided for.
12. Commitments Under Capital Contracts
The Authority has not entered into any significant contracts for future capital expenditure.
13. Long Term Borrowing
The Authority had no long-term borrowing at the close of 2017-18 or at any point during the year.
14. Deferred Liabilities
The Authority has no deferred liabilities.
15. Provision for Credit Liabilities (PCL)
The Authority has no long-term debt and consequently no Provision for Credit Liabilities.
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16. Debtors
Analysis of debtors is as follows:-
2017-18 2016-17 £ £
Amounts Falling Due in One Year Government Departments 21,387 10,826 Other Local Authorities - Sundry Debtors 14,637 11,318 Car Loans to Employees -
36,024 22,144
Less :- Provision for Bad & Doubtful Debts - -
36,024 22,144
Amounts Falling Due After One Year Car Loans to Employees - -
36,024 22,144
17. Creditors
Analysis of creditors is as follows:-
2017-18 2016-17 £ £
Sundry Creditors 25,739 25,059 Payroll Control Account 10,699 9,267
36,438 34,326
18. Contingent Liabilities
There are no known contingent liabilities as at 31 March 2018.
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ANNUAL GOVERNANCE STATEMENT
1. Scope of Responsibility
1.1. Hull and Goole Port Health Authority (the Authority) is responsible for ensuring that its business is conducted in accordance with relevant legislation and proper standards, and that public finance is safeguarded and properly accounted for and used economically, efficiently and effectively.
1.2. In discharging this overall responsibility, the Authority has a duty to put in place proper arrangements for the governance of its affairs, facilitating the effective exercise of its function including arrangements for the identification and management of risk.
2. The Purpose of the Governance Framework
2.1. The governance framework comprises the systems, processes, culture and values by which the Authority is directed and controlled. 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 in accordance with best value principles.
2.2. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control should ensure that, on an ongoing basis, identified risks to the Authority’s operations are evaluated and managed efficiently, effectively and economically. The Authority has continued to develop its formal risk management framework in respect of its Business Continuity Plan, Health and Safety Risk Assessments and the full embedding and monitoring of the Strategic Risk Register.
2.3. The governance framework has been in place at the Authority for the year ended 31 st March 2018 and up to the date of approval of this statement.
3. The Governance Framework
3.1. The governance framework is based on a system of regular management information, Standing Orders, administrative procedures (including segregation of duties), management supervision and a system of delegation and accountability.
3.2. Development and maintenance of the system is undertaken by senior officers of the Authority who, under the chairmanship of the Chief Port Health Inspector, have set up the Officer Management Group (OMG) with assistance from officers of Kingston upon Hull City Council who provide financial (Including Internal Audit), Legal and Human Resources support to the Authority. The OMG meet formally every four months. In addition, an Operational Officer Group meets a
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minimum of four times a year under the guidance of the Principal Port Health Inspector. This group reports to the OMG.
3.3. Key elements of the governance framework are described below.
Establishing and monitoring the achievement of the Authority’s objectives
• The Chief Port Health Inspector is responsible for reporting progress to the Board against the objectives of the Authority. The ongoing basis of this reporting continues to be reviewed by the OMG in light of areas identified for improvement following previous Governance and Best Value Reviews.
Facilitation of policy and decision making
• Standing Orders set out how the Authority operates, how decisions are made and the procedures which are followed to ensure that these are timely, efficient, relevant, transparent and accountable to local people. Some of these processes are required by law whilst others are a matter for the Authority to choose.
Ensuring compliance with established policies, procedures and legislation
• The Chief Port Health Inspector, with assistance from the OMG, is responsible for ensuring compliance with policies, procedures and legislation and for establishing and maintaining appropriate controls, as set out in the Authority’s Standing Orders and Financial Regulations. Arrangements are in place to ensure that services are delivered by trained and experienced officers. Authorised officers of the Authority are subject to the professional standards and controls exercised by the professional body (Chartered Institute of Environmental Health) which includes a Port Health Competency Framework.
• All officers are required to have an annual appraisal in addition to regular one-to-one meetings with the Chief Port Health Inspector. This process seeks to identify individual and collective development and training requirements in furtherance of continuous improvement.
• During 2017-18 a comprehensive review of the Officer Authorisation Procedure was completed in line with the Food Law Code of Practice.
• The Internal Audit Service provided by Kingston upon Hull City Council operates to the standards set out in the ‘CIPFA Code of Practice for Internal Audit in Local Government in the United Kingdom’ and agreed terms of reference. Compliance is tested by Internal Audit in accordance
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with the Internal Audit Strategy and Plan which is risk-based and for which the overall conclusions are presented in an annual report.
• The Authority has an objective and professional relationship with external auditors and inspectors.
• As an enforcement and regulatory organisation, the Authority is obliged to comply with the clearly defined principles and legal demands placed upon it as detailed in the Government’s Regulators’ Compliance Code and Enforcement Concordat.
• The Authority, as a UK Food Authority, is required to submit regular performance data to the Food Standards Agency (FSA). It is also signed up to the FSA Framework Agreement on Local Authority Food Law Enforcement which sets the standards for service planning and guidance and inspection methodology. The Food Law Code of Practice also provides clear statutory guidance. A Food Service Plan is presented to the Board annually.
• Pollution control duties are the subject of scrutiny by DEFRA and annual performance returns are required and published. The Authority’s responsibilities for Smokefree enforcement are monitored by the Department of Health.
• The Authority is a Category 1 Responder under the Civil Contingencies Act and as such is monitored for compliance by the Cabinet Office. Our Port Health Inspectors attend the Local Resilience Forum and take part in planning exercises in compliance with the Act and are supported by the Humber Emergency Planning Service.
• The Chief Port Health Inspector continues to liaise with the appointed Port Medical Officer, Public Health England and other stakeholders to test, review and amend the Port Health Plan.
Ensuring the economical, effective and efficient use of resources and for securing Best Value and continuous improvement
• The Authority has undertaken to pursue Best Value principles to ensure that resources are used economically, efficiently and effectively through service planning, financial planning and developing performance management processes.
Financial Management of the Authority
• The financial management of the Authority is conducted in accordance with the Standing Orders [incorporating Financial Regulations]. The
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Treasurer is the Authority’s officer for the purposes of S. 151 of the Local Government Act 1972.
• The budget for 2018-19 was agreed and set at the December 2017 Joint Board meeting. Once again, a balanced budget was presented, with no increase in the overall levy requirements.
• Budgets are managed by the Chief Port Health Inspector. Financial advice and support is provided by Kingston-upon-Hull City Council’s finance team under a formal agency agreement and Service Level Agreement.
Performance Management of the Authority
• The Chief Port Health Inspector presents regular performance data to the Board.
• The Officer Management Group (OMG) works towards the continuous improvement of performance.
• The Chief Port Health Inspector and OMG will continue to enhance, monitor and review the specific documented procedures in place at the Authority which provide clarity of purpose and are a valuable aid to officer training, competence and consistency of enforcement.
4. Review of Effectiveness
4.1. The Authority has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review is informed by the work of the Chief Port Health Inspector, the OMG, the Internal Audit Service, Financial, Legal and Human Resources, external auditors and other professional inspectors. Managers within the Authority have responsibility for the development and maintenance of the governance environment within the Terms of Reference of the OMG.
4.2. Internal Audit provides annual assurance on the adequacy of internal control at the Authority based upon the work undertaken in the year. The internal control Annual Audit 2017/18 report stated that the systems in operation at the Authority are “good”, with acknowledgement of three areas of identified good practice:
• The process for financial monitoring is robust.
• Governance is managed effectively.
• There are sound controls in place within the expenditure process.
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4.3. The Council’s external auditors carry out work to assess the adequacy of the control environment in place to support their statutory opinions.
4.4. Other professional inspections include periodic FSA food service audits (an FSA audit of imported food controls is planned for November 2018) and annual Local Authority Enforcement Monitoring System (LAEMS) returns to check for consistency and compliance with the agreed standards. The FSA Framework Agreement also requires the Authority to carry out a programme of self-audits coupled with a local programme of Inter-Authority Audits of the food service. The local Inter-Authority Audit annual programme has been very effective and recognised by the FSA as excellent. The Chief Port Health Inspector was closely involved in developing this very worthwhile local initiative. The Humber Authorities Chief Environmental Health Officer Group meets four times annually and oversees the work of the local Food Liaison Group.
5. Transparency and Public Accountability
Minutes to the meetings of the Joint Board Authority, which are open to the public, are placed on the Authority’s website.
An Enforcement Policy and Service Complaints Procedure is also provided for public access and enforcement feedback questionnaires are distributed to our customers and stakeholders.
6. Significant Governance Issues
The Authority seeks to further enhance its governance arrangements through the work of the OMG. Ongoing and concluded key areas of development include:
• The further development of a formal structure to co-ordinate the review of key elements of existing governance processes. This includes an increasingly embedded risk management strategy and draws upon developing performance management and reporting arrangements including an annual Risk Management Report to the Board. The Annual Governance Statement is prepared by the Chief Port Health Inspector with the guidance and support of the OMG and reported to the Board at the June Authority meeting.
• The risk of cyber threats is increasing and the Authority’s independent IT system is protected and regularly updated.
• To seek continuous improvement in developing and utilising management information including budget monitoring.
• To review and develop the scope of support service providers, including the review of the formal Service Level Agreement with Hull City Council and service level expectations. -26- Hull & Goole Port Health Authority Statement of Accounts 2017-18
• During the year 2017 – 18, the Chief Port Health Inspector endeavoured to keep the Board updated with developments following the UK’s decision to withdraw from the EU. The ongoing political uncertainty prevails and the outcome of negotiations could have a significant impact on the volume of portal imported food controls we are tasked with. There is a risk that the current Port Health Inspector staffing level will not be sufficient to cover the potential workload. Only when there is greater clarity from Government will we be able to assess any additional resource requirements. The Chief Port Health Inspector now represents the Authority on an HM Government Local Authorities and Port Health Authorities Border Planning Group.
• The triennial actuarial valuation review of the Authority’s pension arrangements and contributions in 2016 revealed an unexpected reduced membership of the East Riding Pension Fund (ERPF) Small Admissions Bodies Pool. Together with an ongoing long-term pensions deficit.
Following a series of meetings with ERPF, and in consultation with the Treasurer, the Chief Port Health Inspector proposed that the Authority form a new pooling arrangement with KuHCC. This solution would be of mutual benefit as the Council would be protected from its large liabilities as Guarantor and the Authority’s future pension contributions would be stabilized and sustainable at the lower rate. This would provide for ongoing sound budgetary control and avoid the need for a very large increase in annual levies.
The main benefit from pooling with larger employers is that it reduces the volatility of contribution rates. For example:
i) Mortality risks – pooling gives small employers some protection against the higher cost of paying benefits to one or two individuals who enjoy a much longer than expected retirement. ii) Ill-health risks - pooling ill-health costs (which are unpredictable in terms of cost and timing) is also a major benefit to small employers, since one ill-health retirement could cause major increases in the employer’s required contribution rate. At the December 2017 meeting the Board made the decision to pool with KuHCC from 1 April 2018, as this would result in the Authority’s contribution rate falling from 30.2% to 26.1% as soon as possible.
There are no identified risks to the long-term viability of the pension fund and its ability to meet its obligations for pension payments to existing and future pensioners.
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• The introduction in May 2018 of the New General Data Protection Regulation required a comprehensive review of the Authority’s data control systems by the Chief Port Health Inspector to achieve compliance.
As Chairman of the Hull and Goole Port Health Authority I place reliance on the system and procedures identified above, subject to the foregoing measures being taken in the coming year.
... Councillor S Brady Chairman 12 June 2018
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DEFINITION OF FINANCIAL TERMS
Accruals The concept that revenue and capital income and expenditure transactions are included in the accounts as they are earned or incurred, not as monies are received or paid.
Asset An item having value measurable in monetary terms. Assets are classified as Fixed or Current Assets. A Fixed Asset yields benefits beyond one year whereas Current Assets are items (e.g. stock, debtors) which can readily be converted to cash. The Port Health Authority did not hold any Fixed Assets at any point during 2017-18.
Capital Expenditure Expenditure for the acquisition or improvement of assets which has a long term value to the Authority (in excess of one year). No capital expenditure was incurred by the Authority in 2017-18.
Capital Financing The raising of money to pay for capital expenditure. Usually the cost of fixed assets is met by borrowing but capital expenditure may also be financed from other sources - e.g. usable capital receipts, direct revenue financing, leasing, etc. No capital financing was undertaken in the year, as the Authority does not hold any capital assets.
Capital Receipts The proceeds from the sale of fixed assets (e.g. land and buildings). The receipt must be divided into a reserved part, used to meet credit liabilities, and a usable part available for the financing of capital expenditure or the voluntary discharge of credit liabilities. The Authority did not hold any such receipts at the onset of 2017-18 and did not hold or dispose of any capital assets at all during the year.
Consistency The concept that the accounting treatment of like items within an accounting period and from one period to the next is the same.
Creditor An amount owed by the Authority for work done, goods received or services rendered, receivable by the end of an accounting period, but for which payments have not been made by the end of that period. -29- Hull & Goole Port Health Authority Statement of Accounts 2017-18
Debtor An amount due to the Authority for work done, goods provided or services rendered, by the end of the accounting period, but for which payments have not been made by the end of that period.
Financial Reporting Standard Standards adhered to in the presentation of the accounts. Examples include FRS 102 on the disclosure of pension fund assets and liabilities, and FRS 8 on related party transactions.
Going Concern The concept that an authority will remain in operational existence for the foreseeable future; in particular, that the revenue account and balance sheet assume no intention to curtail significantly the scale of operations.
Investments A long term investment is one intended to be held for use on a continuing basis in the activities of an Authority. Investments should be so classified only where an intention to hold the investment for the long term can clearly be demonstrated or where there are restrictions as to the investors’ ability to dispose of the investment.
Investments which do not meet the above criteria should be classified as current assets.
Liability An amount due to an individual or organisation which will be paid at some point in the future.
Operational Assets Fixed assets held and occupied, used or consumed by an authority in the direct delivery of those services for which it has either a statutory or discretionary responsibility. The Authority did not hold any Fixed Assets of any description at any point during 2017-18.
Operating Leases A lease other than a finance lease.
Post Balance Sheet Events Any events, favourable or unfavourable, which occur between the balance sheet date and the date on which the Statement of Accounts is signed by the responsible financial officer.
Provision An amount set aside in the accounts for liabilities which are anticipated in the future but cannot be accurately quantified.
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Prudence The concept that revenue is not anticipated but is recognised only when realised in the form either of cash or other assets, the ultimate cash realisation of which can be assessed with reasonable certainty.
Revenue Expenditure The day-to-day costs an authority incurs in the provision of services. Revenue expenditure covers employee expenses, running expenses and capital financing costs.
Statement of Standard Statement approved by the Accounting Accounting Practice (SSAP) Standards Board and adhered in the compi lation of the accounts.
Temporary Loan Monies borrowed for an initial period of less than one year.
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