Statement of Accounts

Somerset County Council Published by: Corporate, Accounting & Technical Section, Statement of accounts Finance Department, Somerset County Council Printed by: 2007/08 SCS Design & Print, Somerset County Council, County Hall, Taunton, Somerset TA1 4DY Foreword from the Head of Finance I am pleased to present Somerset County Council’s statement of accounts for 2007/08. This document, together with the authority’s Annual Plan and many of the other plans we must produce by law, provides a commentary on our performance. Making sure we are accountable for our work is extremely important and our financial statements help show how your money has been used. We have written our statement of accounts using plain, jargon-free English as judged by the Plain English Campaign’s Crystal Mark, which shows that the information is as clear as possible. Using plain English in our publications is one of the steps we take to communicate more effectively with our citizens and other readers of the accounts. We hope the use of plain English will encourage more people to read our publication. We value diversity, and celebrate cultural and social differences. Our equal-opportunities promise is to provide all services of equal quality which meet your needs and fulfil your rights. You can expect us to treat you fairly, with respect and dignity, whoever you are and whatever your background. Kevin Nacey CPFA Jill Shortland Head of Finance and Property Chairman 26 September 2008 Special Accounts Committee 24 September 2008 Contents The Head of Finance’s introduction Page 1 Statement of responsibilities Page 10 Auditor’s report Page 11 Annual Governance Statement Page 14 Statement of accounting policies Page 19 Income and Expenditure Account Page 24 Statement of Movement on the General Fund Balance Page 26 Statement of Total Recognised Gains and Losses Page 27 Balance Sheet Page 28 Cash-flow Statement Page 29 Notes to the Core Financial Statements Page 30 Group Accounts Page 65 The Pension Fund Page 70 Glossary of Terms Page 79 Head of Finance’s introduction This section highlights some of the most important matters reported in the accounts and comments on any issues that have had a major effect on our finances. Introduction The annual statement of accounts sets out a summary of our financial affairs for 2007/08 and shows our financial position on 31 March 2008. It includes the following statements and accounts. • Income and Expenditure account • Statement of Movement on the General Fund Balance • Statement of Total Recognised Gains and Losses • Balance Sheet • Cash-flow statement • Group accounts • Pension Fund accounts We use some technical terms in these accounts, which we have explained in the glossary on page 78. Important developments this year Format of the accounts We have made some changes to the content of the accounts this year. These changes have been made to meet the new accounting rules set out in the 2007 Statement of Recommended Practice (SORP), which has been developed by CIPFA and the Accounting Standards Board (ASB). The changes are intended to bring our accounts more in line with UK GAAP (Generally Accepted Accounting Practice). The main changes are as follows. • We have combined the Capital Financing Account and the Fixed Asset Restatement Account to form the Capital Adjustment Account. • We have a new Revaluation Reserve, which records all the upward revaluations (where the value of our assets has increased as a result of a revaluation) we have on our assets. • There is new information we have to reveal relating to financial instruments. Fire service merger Following a review of our Fire Services, which was carried out during 2005/06, it was agreed that our Fire Service would merge with Devon Fire & Rescue Services on 1 April 2007 and create a new authority called Devon and Somerset Fire and Rescue Authority. This merger was fully supported by the Government. As a result of this merger, some important transactions took place in 2007/08. Improving Services in Somerset (ISiS) During 2007/08, the Improving Services in Somerset (ISiS) programme, part of our local modernisation agenda, took shape and resulted in a contract between SCC, TDBC and IBM. The two councils’ support services functions will now be provided by a company called South West One, created by the councils and IBM. The Avon and Somerset Constabulary also joined the partnership in 2007/08. Somerset Waste Partnership During the year, we became the administering authority of the Somerset Waste Partnership. This partnership will take a consistent approach to meeting the responsibilities of both the districts and the county council to collect and manage waste. As the administering authority, the transactions and reserves relating to the partnership will be shown in our accounts. The assets held by the districts for waste collection and so on were transferred to our accounts on 8 October 2007. These are shown in the Balance Sheet under ‘Operational assets’. 4 Star Authority During the course of this year, it was announced that the Audit Commission – under its Comprehensive Performance Assessment (CPA) – had assessed Somerset County Council as improving strongly and 1 demonstrating a 4-star overall performance. We are extremely pleased to hear that our hard work to continuously improve has been acknowledged by this independent source. Revenue spending in 2007/08 In February 2007, we agreed our budget at £267 million. This resulted in a band-D Council Tax of £963, which was an increase of £36.16 or 3.9% over the equivalent figure for 2006/07. The following table shows that our actual spending was £270.5 million. These figures are based on directorate responsibilities, rather than the total cost of providing services (including charges for support services, using assets, and adjustments to show the true cost of providing pensions to employees), which is used in the income and expenditure account on page 23. 2007/08 2007/08 Directorate Budget Actual Variation £millions £millions £millions % Children's Services 72.0 42.4 -29.6 -41.1 Community Services 114.2 113.7 -0.5 -0.5 Environment 65.2 68.1 2.9 4.5 Chief Executive's Office 3.9 4.0 0.1 2.7 Resources 20.3 18.5 -1.8 -9.0 275.6 246.7 -28.9 -10.5 Non-service items 26.0 23.8 -2.2 -8.5 301.6 270.5 -31.1 -10.3 Transfer to or from (-): the carry-forward fund -29.0 0.9 29.9 revenue reserves which we have set aside -1.8 0.2 2.0 the capital fund -1.9 -5.9 -4.0 general reserves -1.5 1.7 3.2 267.4 267.4 0.0 Funded by: Government grant -11.8 -11.8 0.0 Business Rates -70.3 -70.3 0.0 Council Tax -185.3 -185.3 0.0 -267.4 -267.4 0.0 Carry-forward fund Services are allowed to spend up to their approved budgets. In 2007/08, this was £275.6 million. Each year services are allowed to save any amounts they have not spent, and they can spend these in future years. This is called the ‘carry-forward fund’. Services also have other reserves, which they have set aside for certain purposes, and they are allowed to spend these on those purposes. On top of this, some spending (for items outside our services’ control) is funded from general reserves. The table on page 3 shows how the carry-forward fund changed during the year. 2 Carry-forward fund 2007/08 £millions £millions Balance on 1 April 2007 26.344 Add: Legal services (now a trading account) 0.280 Add: 2006/07 overspends funded from general reserves 0.883 Add: overspends managed by services 1.513 29.020 Less: 2007/08 approved use of carry-forward reserves -30.408 -1.388 Service budgets (including use of carry-forward fund) 275.613 Less: total service spending -243.204 Net service underspending 32.409 Corporate costs underspending -0.830 Service underspending transferred to reserves set aside for other purposes 0.400 Service underspending transferred to general reserves -2.069 Underspending transferred to the carry-forward fund 29.910 Add: transfers from earmarked reserves -0.213 Carry-forward fund on 31 March 2008 28.309 Of the £28.3 million total carried forward, £29.1 million is for individual school budgets and cannot be used for anything else. This is an increase of £3.7 million over the previous year. It is partly because all schools receive a special grant, which many are saving up to pay for future building work, and also because schools can now carry forward their underspending from the Standards Fund grant. Financing The diagrams below show where our money came from, which services we spent it on and how we spent it. It is important to note that the contribution from the local community through the Council Tax represents just 22% of our funding needs. Analysis of total revenue spending (£822 million) Where the money came from Council Tax 22% Government grants 47% Fees and charges 21% Revenue Support Grant Business Rates 1% 9% 3 Which services we spent it on Education 51% Highways 10% Other services 9% Waste services 3% Libraries Social services 1% 26% How we spent this Capital financing charges 4% Employees Running expenses 48% 48% 4 Capital spending in 2007/08 Alongside our day to day costs, we spend money on assets such as buildings, roads, major maintenance, vehicles and information and communication technology (ICT). This is capital spending. During 2007/08, our actual capital spending was £64.0 million (£49.8 million in 2006/07). Of this, we spent £13.8 million on schools and £7.1 million on other services for children and young people including nurseries, children’s centres and the Youth Service.

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