Erewash Borough Council Annual Statement of Accounts 2019/20
Total Page:16
File Type:pdf, Size:1020Kb
Erewash Borough Council Annual Statement of Accounts 2019/20 ANNUAL STATEMENT OF ACCOUNTS 2019 - 20 CONTENTS PAGE Page Number Narrative Report 1 Statement of Responsibility for the Statement of Accounts 9 Independent Auditor’s Report 10 Statement of Accounting Policies 13 Accounting Standards that have been issued but not yet 31 adopted Critical Judgements in applying Accounting Policies 32 Assumptions made about the future and other major 33 sources of estimation uncertainty Expenditure and Funding Analysis 35 Core Statements Comprehensive Income and Expenditure Statement 38 Movement in Reserves Statement 39 Balance Sheet 41 Cash Flow Statement 43 Notes to the Accounts 44 Supplementary Statements Collection Fund 111 Notes to the Collection Fund 114 Index of Accounting Policies 116 Index of Notes to the Accounts 117 Glossary of Terms 121 NARRATIVE REPORT Background Erewash Borough Council is an English local authority providing statutory services such as refuse collection, environmental health, street cleaning, planning, housing strategy, building control and housing benefits alongside other services such as green spaces and markets. The Borough of Erewash covers an area of 42.3 square miles and lies between Derby and Nottingham in the south east of Derbyshire. Erewash is a borough of contrast; to the eastern side are the market towns of Ilkeston and Long Eaton, while the west is more rural with some isolated villages. The two large cities of Derby and Nottingham both border the borough, and have an influence on the area. These accounts set out the financial position for Erewash Borough Council for the year ended 31st March 2020. They have been prepared in accordance with The Code of Practice on Local Authority Accounting in the United Kingdom 2019/20 (The Code). The accounting policies follow International Financial Reporting Standards (IFRS) to the extent that they are meaningful and appropriate to local government. The Statement of Accounts The Statement of Accounts comprises the following core statements: Comprehensive Income and Expenditure Statement 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. The council raises taxation to cover expenditure in accordance with statutory requirements but 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. The Cost of Services within the Comprehensive Income and Expenditure Statement are reported by directorate, in the way in which services are operated and performance managed. The main services provided within each directorate are: Resources – planning, building control, personnel, ICT, finance, rent allowances, elections, legal services, democratic and civic support, facilities management, properties and estates, neighbourhood wardens, markets and green space and street scene Community Services – environmental health, waste management, housing, licensing communications and culture, community safety, and performance and community. Non-directorate – parish concurrent functions, contingency, external audit fees, Chief Executive’s Office and Bramcote Crematorium. 1 NARRATIVE REPORT Movement in Reserves Statement The Movement in Reserves Statement shows the movement from the start of the year to the end of the year on the different reserves held by the council, analysed into ‘usable reserves’ i.e. those that can be applied to fund expenditure or reduce local taxation and ‘other’ reserves. The Statement shows how the movements in year of the council’s reserves are analysed between gains and losses incurred in accordance with generally accepted accounting practices and the 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 movements in the year following those adjustments. Balance Sheet The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the council. The net assets of the council (assets less liabilities) are matched by the reserves held by the council. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the council may use to provide services, subject to the need to maintain a prudent level, and any statutory limitations on their use (for example, capital receipts that may only be used to fund capital expenditure or repay debt). The second category of reserves include those that hold unrealised gains and losses (for example, the Revaluation Reserve), where amounts would only become available to provide services if the assets were sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding under regulations’. Cash Flow Statement The Cash Flow Statement shows the changes in cash and cash equivalents of the council during the reporting period. The statement shows how the council 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 council are funded by way of taxation and grant income or from the recipients of services provided by the council. Investing activities represent the extent to which cash outflows have been made for 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 (i.e. borrowing) to the council. The Statement also contains the following supplementary statements: Expenditure and Funding Analysis The Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants, rents, council tax and business rates) by the council 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. Income and expenditure 2 NARRATIVE REPORT accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement. Collection Fund The Collection Fund is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Collection Fund. The statement shows the transactions of the billing authority in relation to the collection of amounts due from taxpayers and the subsequent distribution to local authorities and government of council tax and non- domestic rates. The following authorities are the major preceptors on the council: . Derbyshire County Council; . Police and Crime Commissioner for Derbyshire; . Derbyshire Fire and Rescue Service. The council is required to account for non domestic rates under the Non Domestic Ratings Regulations 2013. Derbyshire National Non Domestic Rates Pool For 2019/20 Erewash was part of the Derbyshire National Non Domestic Rate Pool with seven other Derbyshire district authorities, Derby City Council, Derbyshire County Council and Derbyshire Fire and Rescue Service. The calculation of any levy payment due or top up receivable from or to the Collection Fund is calculated on a collective basis for the pool as opposed to an individual authority basis A Summary of the Council’s Financial Performance for the Financial Year 2019/20 The council’s revenue and capital budgets are allocated between the portfolio holders who make up the Council Executive and Committees of the council. Spending against these budgets is monitored carefully throughout the year and reported quarterly to the Council Executive. The table below compares the actual expenditure in the year in accordance with regulations with the budget for 2019/20. 3 NARRATIVE REPORT Revised Actual Net Revenue Outturn 2019/20 Budget Expenditure Variance £'000 £'000 £'000 Expenditure Resources 8,537 8,394 (143) Community Services 4,830 4,598 (232) Non Directorate 186 123 (63) Net Cost of Services 13,553 13,115 (438) Revised Actual Variance Budget Financed By Financing £'000 £'000 £'000 New Homes Bonus Scheme Grant (491) (491) 0 Revenue Support Grant (104) (104) 0 Other Government Grants (84) (144) (60) Council Tax - EBC Precept (6,155) (6,155) 0 Business Rates Retention (4,690) (4,948) (258) Collection Fund NNDR (31) (31) 0 Collection Fund Council Tax (2) (2) 0 Transfer (from)/to Earmarked Reserves (1,199) (779) 420 Transfer (from)/to General Fund Balances (797) (461) 336 Total Income (13,553) (13,115) 438 The favourable variance of £0.438m on Net Cost of Services was achieved across services and is attributable to vacant posts, underspends on supplies and services and delayed projects. The overall position on the General Fund when adjusted for the removal of the consolidation of the Crematorium (£0.101m), variances on financing (government grants (£0.060m); business rates income (£0.258m)) and transfers to reserves of £0.027m is an underspend of £0.830m. Of this, £0.393m has been transferred to the Funding Risk Reserve and £0.194m will be carried forward to 2020/21 to finance projects not completed in 2019/20. The remaining £0.243m will remain within the General Fund Balance.