Wrexham County Borough Council Statement of Accounts for The
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Wrexham County Borough Council Statement of Accounts for the financial year ended 31 March 2019 M S Owen Chief Officer Finance & ICT CONTENTS PAGE Narrative Report 2 Statement of Responsibilities for the Statement of Accounts 7 Expenditure and Funding Analysis and note 8 Financial Statements Comprehensive Income and Expenditure Statement 10 Movement in Reserves Statement 11 Balance Sheet 12 Cash Flow Statement 13 Notes to the Accounts (including Accounting Policies) 14 Housing Revenue Account and Notes 61 Independent Auditor’s Report 65 Annual Governance Statement 67 -1- NARRATIVE REPORT 1. Introduction 1.1 This Narrative report provides a summary of the Council’s financial performance, its financial position and key issues affecting the Council and its Statement of Accounts. The Accounts and Audit (Wales) Regulations 2018 requires the Council to produce a Statement of Accounts for each financial year. The Statements that follow this narrative report are as follows: • Statement of Responsibilities for the Statement of Accounts sets out the respective responsibilities of the Council and the Chief Officer Finance & ICT. • Expenditure and Funding Analysis shows the net expenditure that is chargeable to taxation and rents and reconciles it to the Comprehensive Income and Expenditure Statement. • Comprehensive Income and Expenditure 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 council tax. Councils raise council tax to cover expenditure in accordance with regulations; this may be different from the accounting cost. The council tax position is shown in the Movement in Reserves statement; • Movement in Reserves Statement shows the movement in 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; • Balance Sheet which sets out the financial position of the Council at 31 March 2019; • Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the financial year; • Notes to the Accounts including the Council’s Accounting Policies • Housing Revenue Account (HRA) and notes show, in more detail, the income and expenditure on HRA services included in the Comprehensive Income and Expenditure Account. • Independent Auditor’s Report gives the auditors opinion of the financial statements. 2. The Council’s Corporate Aims and Objectives 2.1 The Council Plan is the overarching plan that helps the Council to focus its resources and drive improvement. Whilst the Council plan sets a vision and framework for a five year period, it is also updated in May each year with targets and actions for the next twelve months. In October each year the Council publishes its annual performance evaluation report – ‘Focused On Our Performance’. This sets out the progress that the Council has made towards its objectives, whether this has had the desired impact and what outstanding issues remain. The 2017/18 report is available at http://www.wrexham.gov.uk/assets/pdfs/councilplan/performance.pdf 2.2 Key performance information for 2018/19 which is currently available includes: • Economy theme: Digital counters in the town centre are giving us a clearer understanding of footfall in the town centre and have shown increases of up to 33% on the same quarter last year during the year; Welsh Government data shows that the number of recorded businesses in the County Borough has increased from 8,910 in 2017/18 to 11,095 in 2018/19. • People theme: Educational attainment is continuing to improve on the previous year at the Foundation Stage, Key Stage 2 and Key Stage 3. Outcomes at GCSE have stabilised, but changes to the patterns and number of pupils sitting exams has had an impact on grades across Wales; more people are visiting local authority sports and leisure facilities and participating in physical activity - improving from 8,154 per 1,000 population in 2017/18 to 10,241 per 1,000 population in 2018/19; • Place theme: The percentage of Council homes meeting the Welsh Housing Quality Standard continues to improve towards the target of 100% completion by December 2020; 35 empty properties have been brought back into use; • Organisation theme: 49 services are now available to customers over the Council’s on-line digital platform which has received 14,345 service requests during the past year. 3 Financial Performance 2018/19 Budget Process 3.1 When preparing the Council’s Medium Term Financial Strategy (MTFS) the Council makes provisional spending plans for future financial years ensuring these are balanced against the expected funding from Welsh Government and Council Tax payers. The MTFS is a three year incremental process that builds on the work and achievements of previous years, taking into account demographic, legislative and other pressures; mitigated by savings proposals to ensure a balanced budget can be achieved in the coming year. -2- NARRATIVE REPORT 3.2 The Council’s MTFS for the period 2017/18 to 2019/20 highlighted the need for savings proposals of approximately £13m to address the budget shortfall over the two year period 2018/19 to 2019/20, of which £6.2m related to the 2018/19 financial year. During October and November 2017 the Council consulted on a package of savings amounting to £9m for the two year period. 3.3 On 21 February 2018, following recommendation by the Executive Board, the Council approved a budget totalling £232m for the 2018/19 financial year. At that meeting the Council also approved an updated MTFS for the period 2018/19 to 2020/21 and the Treasury Management Strategy Statement and Investment Strategy for 2018/19. The Housing Revenue Account budget and both the Non HRA and HRA Capital Programmes were approved by the Executive Board on 13 February 2018. Projected Level of Balances 3.4 One significant issue, both in relation to the MTFS and also the 2018/19 budget, was the assumption about the level of balances that the Council would require to address any unexpected spending pressures. These balances need to reflect spending experience and risks to which the Council might be exposed. At the 21 February 2018 meeting the Council approved the Council’s Reserve Strategy and the recommended General Fund balance of £7.018m and a minimum HRA balance of £5m for 2018/19. Budget Monitoring 3.5 The Council has well established and robust financial management procedures in place to monitor budgets and mitigate any forecast overspending. This has been very successful in acting as an early warning that any approved budget savings are at risk of not being delivered. Revenue budget information, together with progress against planned savings is provided to all members bi monthly and considered by the Customer Performance, Governance and Resources Scrutiny Committee following five, eight and twelve months of the year. The revenue budget information, together with the management of the risks identified as part of the budget setting process, is reported to Council following six months of the year. The Executive Board considers the final revenue outturn and approves the carry forward arrangements in respect of reserves and balances. This process facilitates a good level of challenge, including reviewing any potential impacts on service performance. 3.6 The first monitoring report of the financial year to members highlighted a potential overspend for the Environment and Planning department of £1.1m, primarily due to higher waste collection costs (£966k) and lower car park income than the budget target (£165k) and an overspend of £239k for Children’s Social Care due to higher out of county and leaving care placements. Following eight months of the year the Children’s Social Care potential overspend had increased to £897k. Revenue Outturn for 2018/19 3.7 The Council’s 2018/19 revenue outturn position is shown in a table on page 4. Council Fund services (excluding HRA) spent £232,704k against a budget of £232,872k i.e. an underspend of £168k (line 2, column c). The net yield from council tax was £130k (line 3, column c) greater than expected for the 2018/19 financial year, thus resulting in an overall Council Fund surplus of £298k. Schools overspent by £191k (line 1, column c). The overspend in Environment & Planning of £877k was primarily due to the Waste service operating increased recycling vehicles and staff with a reduced Welsh Government grant. The overspend in Children’s Social Care (£769k) was due to increased out of county placements and leaving care costs. The underspend in Corporate & Central - Services of £1,478k was primarily due to lower Council Tax Reduction scheme (CTRS), Carbon costs and a Vat refund and the underspend in Corporate & Central – Financing & Investment Income & Expenditure of £264k was due to lower capital financing costs. 3.8 The Council monitors expenditure (which includes planned contributions to and from service, earmarked and grant reserves) against its budget for the year, based on its internal management and departmental structure. The expenditure and council tax income monitored during the year includes the cost of the CTRS but excludes payments and council tax raised in respect of the Police and Crime Commissioner for North Wales and Community Councils precepts. Adjusting for the service, earmarked and grant reserves utilised by services during the year of £347k (line 2, column d) and the CTRS and Police and Community Council precepts of £6,337k (see column e) we arrive at the total expenditure and income chargeable to General Fund Balances (including Earmarked Reserves) of £239,388k (line 2, column f) and £239,339k (line 3, column f) respectively i.e. a reported overall deficit of £49k (line 4, column f). -3- NARRATIVE REPORT 3.9 The HRA is reported separately during the financial year and is consolidated as part of the production of the year-end accounts.