Soa Read Through V7 21 09 09

Devon County Council Statement of Accounts 2008/09 Devon County Council Statement of Accounts Pension Fund Statement of Accounts Explanatory Foreword .................................................... 3 Devon County Council Pension Fund.......................... 95 Statement of Accounting Policies................................... 9 Statement of Accounts................................................. 96 Statement of Responsibilities for the Statement of Notes and Accounting Policies .................................... 99 Accounts ...................................................................... 18 Statistical Summary................................................... 107 Approval of the Statement of Accounts ........................ 19 The Fund’s Largest Equity Shareholdings ................. 108 Independent Auditors' Report to the Members of Devon Employing Bodies...................................................... 109 County Council............................................................. 25 Statement of the Actuary for the year ended 31 March Income and Expenditure Account ................................ 29 2009........................................................................... 110 Statement of Movement on the General Fund Balance30 Balance Sheet.............................................................. 31 Authorisation ................................................................ 32 Statement of Total Recognised Gains and Losses ...... 33 Cash Flow Statement................................................... 34 1. Adjustments to the Prior Period......................... 35 2. Authorised for Issue........................................... 36 3. Audit Fees ......................................................... 36 4. Capital and Fixed Assets................................... 37 5. Contingent Liabilities ......................................... 48 6. Creditors and Debtors ....................................... 50 7. Long Term Debt................................................. 51 8. Exceptional item ................................................ 51 9. Financial Instruments ........................................ 51 10. Government Grants........................................... 58 11. Government Grants and Contributions – Deferred and Unapplied .................................... 61 12. Income from services provided to other Local Authorities and Public Bodies............................ 62 13. Interest Payable and Similar Charges ............... 62 14. Interest and Investment Income ........................ 62 15. Landfill Allowances Trading Scheme................. 63 16. Operating Lease and Contract Hire................... 63 17. Long Term Debtors............................................ 64 18. Members’ Allowances........................................ 64 19. Movement in Cash and Other Financial Resources ......................................................... 65 20. Officer Remuneration ........................................ 67 21. Partnerships and Related Party Transactions ... 67 22. Pensions............................................................ 73 23. Post Balance Sheet Events ............................... 77 24. Provisions.......................................................... 77 25. Publicity Expenditure......................................... 79 26. Reserves ........................................................... 80 27. Schemes under the Transport Act 2000............ 84 28. Stock and Work In Progress.............................. 84 29. The General Fund ............................................. 85 30. Trading Accounts............................................... 86 31. Trust Funds ....................................................... 87 Glossary of Terms........................................................ 88 1 Devon County Council Statement of Accounts 2008/09 2 Devon County Council Statement of Accounts 2008/09 Explanatory Foreword Introduction Welcome to the 2008/09 financial statements for Devon County Council. This year the format of our Accounts has changed marginally to comply with the Statement of Recommended Practice (SORP) for 2008. Information regarding our financial performance for the year is contained within the following statements: • Income and Expenditure Account, analysing the Council’s day to day operations (page 26). It summarises the resources that have been generated and consumed in providing services and managing the Council. It includes all day-to-day expenses and related income on an accruals basis, as well as transactions measuring the value of fixed assets actually consumed and the projected value of retirement benefits earned by employees in the year; • Statement of the Movement on the General Fund Balance, (page 27). Appropriations to reserves and adjustments for statutory and regulatory requirements are made in the statement of movement of the general fund balance. These adjustments allow for generally accepted accounting practice to be reconciled to council tax levels; • Balance Sheet, specifying the assets and liabilities of the Council as at 31 March 2009, excluding Pension and Trust Fund transactions (page 28). This summarises assets and liabilities outstanding at the end of the financial year measured in accordance with financial reporting standards. Accruals made to reflect the resources consumed in the income and expenditure account are included together with tangible assets and the financing used to obtain them. Net assets are matched by reserves generated by capital investment and revenue activities; • Statement of Total Recognised Gains and Losses (page 29). This brings together all the gains and losses for the year and shows the aggregate increase in net worth. Gains and losses not taken to the income and expenditure account are disclosed in this statement. In addition to the surplus generated on the income and expenditure account, it includes gains and losses relating to the revaluation of fixed assets, re-measurement of the net liability to cover the cost of retirement benefits and gains and losses generated by the valuation of financial instruments; • The Cash Flow Statement, summarising the inflows and outflows of cash arising from revenue and capital transactions (page 30). It summarises the change in liquid assets that have occurred during the year. Cash movements for revenue and capital activities are aggregated with the cash effect of financing decisions. The aggregate changes are reconciled to the movement of liquid assets shown in the balance sheet; • The Core Accounting Statements are followed by specific notes to aid understanding and provide more detail (from page 31). The notes provide comparative figures for the previous financial year so they can be compared to performance for the reporting period; and • Devon Pension Fund Accounts, recording the Fund Account and Net Asset Statement for the Fund (from page 90). The Devon Pension Fund accounts are separate from the accounts of the County Council. The pension fund statement of accounts is included with those of the County Council for probably the last time. The accounting is influenced by the Pension SORP (2007) and has required some changes to the way in which some of the figures are presented. In particular investments are shown at fair value based on ‘bid price’, there is more information about the last actuarial valuation and more detail is provided regarding employers’ contributions. Some transitional provisions apply to the presentation as a result of these changes. It should be understood that the Pension Fund financial statements do not recognise the liability for future pension payments. Economic context This financial year has seen unprecedented turmoil in financial and commodity markets. There has been a marked deterioration in the outlook for domestic and global economies. The banking system has experienced severe instability which has been fed by the economic outlook and characterised by increased risk aversion and exceptional volatility in financial markets. Domestic demand has weakened 3 Devon County Council Statement of Accounts 2008/09 as credit has contracted and the national economy has entered a recession. There are some signs of recovery. Growth in the domestic economy of 1.25% is forecast by the Chancellor of the Exchequer for 2010. The Bank of England has responded to recent difficulties by reducing interest rates sharply. This has been accompanied by fiscal measures designed to limit the depth and duration of the recession. The Bank of England base rate now stands at 0.5% which is 4.5% lower than that for September 2008. Analysts suggest that the outlook for interest rates is more stable and that rates may begin to strengthen towards the end of 2009. As a provider of services and consumer of products the County Council has not been immune from the impact of these uncertainties. A lower level of investment income has been received than that originally anticipated this year although performance is still above budget. Although cushioned by lending at advantageous rates early in the period, the income shown in the accounts is substantially lower than would otherwise have been expected. Property values have been affected resulting in a fall in value of £55.0 million. This impairment is partly reflected in the income and expenditure account due to the lack of cover above depreciated historic cost in the revaluation reserve. The most marked impact is shown in the pension liability. The falling value of investments

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