Example Financial Statements and Notes to the Accounts for Local

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Example Financial Statements and Notes to the Accounts for Local Page 2 of 133 CONTENTS Page ACCOUNTS INTRODUCTION 1) Explanatory Foreword 3 A guide to significant matters in the accounts 2) Statement of Responsibilities for the Statement of Accounts 7 Setting out the principal financial responsibilities CORE FINANCIAL STATEMENTS 3) Movement in Reserves Statement 8 Shows the movement in the year between the different reserves held by the Council 4) Comprehensive Income and Expenditure Statement 9 A summary of the accounting cost in the year of providing services in accordance with Internal Financial Reporting Standards (IFRS), rather than the amount to be funded from taxation 5) Balance Sheet 10 A summary of assets, liabilities and reserves of the Council at year end 6) Cash Flow Statement 11 The inflows and outflows of cash for operating, financing and investing purposes 7) Notes to the Core Financial Statements 12 Supplementary information to support the core financial statements, including Accounting Policies SUPPLEMENTARY STATEMENTS 8) Collection Fund 78 A summary of Council Tax and National Non-Domestic Rates collection performance, including supporting notes 9) Pension Fund 82 The accounts of the Pension Fund – administered by the Council, including supporting notes 10) Annual Governance Statement 108 A statement on the governance controls in place within the Council OTHER 11) Glossary of Terms 125 An explanation of accounting terms used within these accounts 12) Independent Auditor Reports 130 There are two reports that give an independent statement on the accounts of the Council and the Pension Fund Page 3 of 133 1) EXPLANATORY FOREWORD a) Introduction 2013/14 has been another challenging year for Bedford Borough Council with increasing demand for services at the same time as budgets being constrained. The Council has continued to be faced with external challenges from the impact of the credit crunch, recession, inflation fluctuations and the global financial market issue. Alongside this, demand led pressures and other one-off expenditure has required careful management of the financial situation facing the Council. b) Outturn Position The Council monitors its budget on a monthly basis against the impact on the General Fund (and therefore Council tax) that reflects the Council’s management structure. The Council is required to report its Statement of Accounts using International Financial Reporting Standards (IFRS) that follow a prescribed layout. This means that there are significant differences when comparing the financial position reported under IFRS from that reported to Executive throughout the year. Note 28 aims to assist in explaining these differences. Due to various statutory instruments the Council is required to charge various amounts to council tax payers (via the General Fund), and exclude others. For example, the Comprehensive Income and Expenditure Statement (CIES) on page 9 follows a prescribed format on where and how spend should be reported. This statement also includes a number of technical accounting entries (such as depreciation, pension fund adjustments, overhead apportionments) that are subsequently reversed out in the Movement in Reserves Statement on page 8. The outturn for 2013/14 shows an underspend of £1.279 million. This reflects all expenditure incurred and income due and relevant year end accounting entries, including transfers to existing reserves or provisions. During 2013/14 the Executive has been presented with regular reports showing Revenue and Capital Budget trends and a number of corrective actions have been taken during the year to ensure stability of those budgets. The table below sets out the revenue outturn position for each Directorate, as reported to Executive on 25 June 2014. Net Net Net Budget Outturn Variance Directorate £million £million £million Adult Social Care 46.637 46.084 -0.553 Chief Executives’ 6.735 6.247 -0.488 Children's Services, Schools & Families 26.705 27.747 1.042 Finance & Corporate Services 14.758 13.727 -1.031 Environment & Sustainable Communities 32.926 32.124 -0.802 Public Health 0 0 0 Operational Net Cost 127.761 125.929 -1.831 Capital Financing 8.380 7.563 -0.817 Contingency 0 -0.013 -0.013 Corporate Budgets 10.634 12.884 2.249 Total 146.775 146.363 -0.411 Financing -146.775 -147.642 -0.868 % of Total Net Budget 0 -1.279 -0.87% It is best practice to ascertain a risk assessed level of all reserves for review by the Council. This was undertaken and the exercise indicated that the General Fund balance should be within the range of £7.5 million to £10.1 million. The assessment takes into account past experience of budget pressures, demographic pressures, legislative impacts and the extent to which services are reliant on external funding among others. It was approved by the Executive on 25 June 2014 that the whole of the General Fund surplus of £1.279 million will be transferred to two reserves. The Transitional Cost Reserve has been increased by £0.783 million and the Transformation Reserve has been increased by £0.496 million to fund future IT investment. Page 4 of 133 The projected General Fund balance of £8.205 million at the year end is well within the range of the risk profile for General Fund, which enables greater flexibility with budget planning going forward. Supplementing this risk assessment are other factors that mitigate financial pressures: Continuation in 2014/15 of the contingency at £2 million; Embedded budget monitoring culminating in monthly management reports and Portfolio Holder budget review and challenge meetings; Revenue and capital budget trend reports to the Executive at regular intervals. The risk assessed level of General Fund Reserve was recommended to the Executive for approval on 25 June 2014. The capital outturn position for 2013/14 is shown in the table below. This identifies a total net underspend for the year amounting to £0.302 million. Directorate Net Net Net Budget Outturn Variance £million £million £million Adult Social Care 0.213 0.124 -0.089 Chief Executive 3.588 3.595 0.007 Children's Services, Schools & Families -0.747 -0.734 0.013 Finance & Corporate Services 0.489 0.305 -0.184 Environment & Sustainable Communities 2.095 2.046 -0.049 Total 5.638 5.336 -0.302 Capital can be funded from a number of sources, including capital grant & contributions, revenue budgets, capital receipts and borrowing. A breakdown of the Council’s financing of the capital programme is shown in Note 38 – which shows expenditure on a gross expenditure basis. Due to the nature of capital schemes it is not unusual to have projects delayed and, therefore, the re-profiling of schemes into future years does occur as the programme is subject to regular review. Scheme budgets are subject to challenge during the year, with Directorates and Portfolio Holders to assess the current need for funding and to ensure that critical schemes are re-profiled accordingly. The outcome of these reviews is reported to the Executive for consideration as an integral part of the capital programme review process. Further information on both the revenue and capital monitoring and outturns are available in the report presented to the Executive on 25 June 2014, which can be accessed on the Council’s website. c) Commentary on Statement of Accounts Movement in Reserves Statement (page 8) This provides a summary in the movements of all the different reserves of the Council. The movement in 2013/14 shows that overall reserves have increased by £20 million, which equates to the net worth of the Council. Within this, usable reserves, which are cash-backed, reduced by £1.9 million, with the General Fund balance remaining unchanged at £8.2 million. Comprehensive Income and Expenditure Statement (page 9) This shows a surplus of £20 million, however, this contains a number of items which are subsequently reversed out (due to statutory requirements) because they would otherwise have a dramatic year-on-year impact on the level of Council Tax. This includes capital asset revaluations, depreciation and Pensions IAS19 adjustments. Balance Sheet (page 10) The Council has long term assets of £485 million and long term liabilities of £341 million. There are also current assets of £95 million and current liabilities of £54 million. The balance is supported by reserves and balances of £185 million and represents the total net worth of the Council, which saw an increase of £20 million over the past twelve months. Page 5 of 133 Long Term Assets There is an increase of £25 million on Long Term Assets between the opening and closing balance sheet figures, which was mainly due to significant upward revaluations for Investment Property and operational land and buildings. Long Term Liabilities Long term liabilities increased by £8 million, mainly due to increases in the Pension Liability of £7 million and Capital Grants received in advance of £5 million. These increases and are offset by reduced provisions and long term borrowing. The majority of the Council’s long-term borrowing is with the Public Works Loans Board and stands at £83 million, a reduction of £3 million. This reflects the Council on-going strategy of not replacing matured borrowing and relying on internal borrowing. Reserves The total net worth of the Council has increased by £20 million with Usable reserves decreasing by £2 million and Unusable Reserve increasing by £22 million. Unusable reserves are not cashable, and a breakdown of these amounts is given in Note 24. The General Fund balance at the year-end is within the range of the risk profile for General Fund, which enables greater flexibility with budget planning going forward into 2013/14 and beyond. Cashflow Statement (page 11) This statement essentially restates the Comprehensive Income & Expenditure Statement for cash items only, stripping out accruals and other items such as depreciation and pension fund charges.
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