2019-20 Statement of Accounts Contents
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LINCOLNSHIRE COUNTY COUNCIL 2019-20 STATEMENT OF ACCOUNTS CONTENTS Page Introduction to the Accounts 5 Narrative Report 7 Statement of Responsibilities for the Statement of Accounts 26 Lincolnshire County Council Financial Statements: Comprehensive Income and Expenditure Statement 27 Movement in Reserves Statement 28 Balance Sheet 29 Cash Flow Statement 30 Notes to Lincolnshire County Council Financial Statements: Note 1. Accounting Standards issued, but not yet been adopted 31 Note 2. Critical Judgements in applying Accounting Policies 33 Note 3. Assumptions on future & other major sources of estimation & 34 uncertainty Note 4. Material items of Income & Expenditure 37 Note 5. Events after the Reporting Period 38 Notes supporting the Comprehensive Income & Expenditure Statement: Note 6. Other Operating Expenditure 39 Note 7. Financing & Investment Income & Expenditure 39 Note 8. Taxation & Non-Specific Grant Income 40 Note 9. Note to the Expenditure and Funding Analysis 42 Note 10. Expenditure and Income analysed by nature 47 Notes supporting the Movement in Reserves Statement: Note 11. Adjustments between accounting basis & funding basis under 48 regulation Note 12. Usable Reserves (including Capital Receipts) 51 Note 13. Unusable Reserves 51 Note 14. Transfer to/from Earmarked Reserves 56 2 Lincolnshire County Council / Statement of Accounts / 2019-20 CONTENTS Notes supporting the Balance Sheet: Note 15. Property, Plant & Equipment 60 Note 16. Heritage Assets 63 Note 17. Investment Properties 66 Note 18. Intangible Assets 68 Note 19. Financial Instruments 69 Note 20. Debtors 82 Note 21. Assets Held For Sale 83 Note 22. Cash and Cash Equivalents 83 Note 23. Creditors 84 Note 24. Provisions 84 Note 25. Other Long Term Liabilities 86 Note 26. Private Finance Initiatives (PFI) and Similar Contracts 86 Note 27. Leases 89 Note 28. Pension Schemes Accounted for as Defined Contribution 91 Schemes Note 29. Defined Benefit Pension Schemes (LGPS) 92 Notes supporting the Cash Flow Statement: Note 30. Operating Activities 103 Note 31. Investing Activities 104 Note 32. Financing Activities 104 Other Notes supporting the Financial Statements: Note 33. Pooled Budgets 106 Note 34. Members' Allowances 109 Note 35. Officers' Remuneration 109 Note 36. Exit Packages 113 Note 37. Termination Benefits 113 Note 38. External Audit Costs 114 Note 39. Dedicated Schools Grant 114 Note 40. Related Parties 115 Note 41. Capital Expenditure & Capital Financing 118 Lincolnshire County Council / Statement of Accounts / 2019-20 3 CONTENTS Note 42. Contingent Liabilities 119 Note 43. Contingent Assets 120 Note 44. Statement of Accounting Policies 120 Lincolnshire Fire and Rescue Pension Fund 153 Lincolnshire County Council Pension Fund 157 Audit Opinions 197 Annual Governance Statement 204 Glossary of Terms 229 4 Lincolnshire County Council / Statement of Accounts / 2019-20 INTRODUCTION TO THE ACCOUNTS The Statement of Accounts for the year 2019-20 is set out on pages 27 to 30. 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? The Narrative Report provides a general introduction to the Accounts that focus on explaining the more significant features of the Council’s financial activities during the period 1 April 2019 to 31 March 2020. It includes a review of non-financial performance indicators and an assessment of future financial and economic developments that could affect the Council, as well as a summary of the impacts of the coronavirus pandemic. Together these statements provide evidence of the economy, efficiency and effectiveness of the Council's use of resources over the financial year. The Statement of Responsibilities for the Statement of Accounts details the financial responsibilities of the Council and the Executive Director of Resources. The Comprehensive Income and Expenditure Statement for the period 1 April 2019 to 31 March 2020 shows the accounting cost of providing services throughout the year 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. The Movement in Reserves Statement for the period 1 April 2019 to 31 March 2020 shows the movement from the start of the year to the end on the different reserves held by the Council. Reserves are 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 are broken down between gains and losses incurred in accordance with generally accepted accounting practices and the four 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. The Balance Sheet as at 31 March 2020 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 are usable reserves Lincolnshire County Council / Statement of Accounts / 2019-20 5 INTRODUCTION TO THE ACCOUNTS money that the Council 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 may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Council cannot use to provide services. This category 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’. The Cash Flow Statement for the period 1 April 2019 to 31 March 2020 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 Notes to the Accounts summarise significant accounting policies, further information and detail of entries in the prime Statements named above and other explanatory information. The Audit Opinions contain the External Auditor’s report and opinion and covers the Council's Financial Statements, Lincolnshire County Council Pension Fund and the Lincolnshire Fire and Rescue Pension Fund. There are two aspects to the opinion, one on the Statement of Accounts and one on the Council's arrangements for securing value for money. The Annual Governance Statement 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 shows the operation of the 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 shows the operation of the Pension Fund run by the Council for its own Fire-fighter employees. 6 Lincolnshire County Council / Statement of Accounts / 2019-20 NARRATIVE REPORT 1. Introduction Welcome to Lincolnshire County Council's Statement of Accounts for the financial year 1st April 2019 to 31st March 2020. This Narrative Report to the accounts provides background information about Lincolnshire County Council, highlights key non-financial information, financial information in the accounts, reviews performance in the year and explains any significant areas of risk and opportunity for us. It then looks forward to the future to give a flavour of what to expect in 2020-21 and beyond, including information about how the coronavirus pandemic has affected both our communities and the Council, and how we have responded to this crisis as well as its wider impact going forwards. The accounts themselves, which follow this Narrative Report, provide information about the Council's financial performance during 2019-20 and about our financial position as at 31st March 2020. The Statement of Accounts is prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2019-20 and the main elements of the accounts are shown in the table of contents on pages 2 to 4. This means that almost all of the information reported in these accounts follows generally accepted accounting principles and provides a consistent basis upon which to compare 2019-20 with 2018-19. In addition to this, the Council reports internally to its leadership team on financial performance against the annual budget. Information about performance against the annual budget is included in this Narrative Report within section three and is also shown in the Expenditure and Funding Analysis within the Statement of Accounts on page 42.