Statement of Accounts 2015-16 Note Contents: Page

Lincolnshire County Council Statement of Accounts 2015-16 Note Contents: Page Narrative Report Introduction to the Accounts 3 Executive Director - Finance & Public Protection Review of 2015-16 5 Statement of Responsibilities for the Statement of Accounts 12 Financial Statements Movement in Reserves Statement 13 Comprehensive Income and Expenditure Statement 15 Balance Sheet 16 Cash Flow Statement 17 Notes to the Financial Statements Note 1 Statement of Accounting Policies 18 Note 2 Accounting Standards that have been issued but have not yet been adopted 38 Note 3 Critical Judgements in Applying Accounting Policies 39 Note 4 Assumptions Made about the Future and Other Major Sources of Estimation and Uncertainty 40 Note 5 Exceptional Items 41 Note 6 Material Items of Income and Expenditure 41 Note 7 Events After the Balance Sheet Date 41 Note 8 Adjustments between Accounting Basis and Funding Basis under Regulations 42 Note 9 Transfers to/from Earmarked Reserves 44 Note 10 Other Operating Expenditure 46 Note 11 Financing and Investment Income and Expenditure 46 Note 12 Taxation and Non-Specific Grant Income 46 Note 13 Property, Plant and Equipment 47 Note 14 Heritage Assets 51 Note 15 Investment Properties 53 Note 16 Intangible Assets 55 Note 17 Financial Instruments and Nature and Extent of Risks Arising from Financial Instruments 57 Note 18 Inventories 64 Note 19 Debtors 64 Note 20 Assets Held for Sale 65 Note 21 Creditors 65 Note 22 Provisions 66 Note 23 Other Long Term Liabilities 68 Note 24 Usable Reserves 68 Note 25 Unusable Reserves 68 Note 26 Operating Activities 73 Note 27 Investing Activities 74 Note 28 Financing Activities 74 Note 29 Amounts Reported for Resource Allocation Decisions (Segmental Reporting) 75 Note 30 Acquired and Discontinued Operations 81 Note 31 Agency Services 81 Note 32 Pooled Budgets 81 Note 33 Members’ Allowances 84 Note 34 Officers’ Remuneration 84 Note 35 Exit Packages 86 Note 36 Termination Benefits 86 Note 37 External Audit Costs 86 Note 38 Dedicated Schools Grant 87 Note 39 Grant Income 88 Note 40 Related Parties 90 Note 41 Capital Expenditure and Capital Financing 91 Note 42 Leases 92 Note 43 Private Finance Initiatives (PFI) and Similar Contracts 94 Note 44 Pension Schemes Accounted for as Defined Contribution Schemes 96 Note 45 Defined Benefit Pension Schemes 97 Note 46 Contingent Liabilities 106 Note 47 Contingent Assets 106 1 Lincolnshire County Council Pension Fund 107 (including the Pension fund account, net assets statement (balance sheet) and notes). Lincolnshire Fire and Rescue Pension Fund 137 (including the Pension fund account, net assets statement (balance sheet) and notes). Audit Opinion 140 Annual Governance Statement 141 Appendix A - Officer Remuneration split between staff employed in schools and all other parts of the 155 Council. Glossary of Terms 157 2 Statement of Accounts 2015-16 Introduction to the Accounts The Statement of Accounts for the year 2015-16 is set out on pages 13 to 17. 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? Content The Statement of Responsibilities for the Statement of Accounts This details the financial responsibilities of the Council and the Executive Director - Finance & Public Protection. Review of 2015/16 (Narrative Statement) This provides a general introduction to the Accounts, initially focusing on explaining the more significant features of the Council’s financial activities during the period 1 April 2015 to 31 March 2016, followed by a review of non-financial performance indicators and an assessment of future financial and economic developments that could affect the Council . Together these statements provide evidence of the economy, efficiency and effectiveness of the Council's use of resources over the financial year. Movement in Reserves Statement for the period 1 April 2015 to 31 March 2016 This statement shows the movement in the year on the different reserves held by the Authority, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The (Surplus) or Deficit on the Provision of Services line shows the true economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting purposes. The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Council. Comprehensive Income and Expenditure Statement for the period 1 April 2015 to 31 March 2016 This 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 taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. Balance Sheet as at 31 March 2016 The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Authority 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 that may only be used to fund capital expenditure or repay debt). The second category of reserves are those that the Authority is not able to use to provide services. This category of reserves 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’. Cash Flow Statement for the period 1 April 2015 to 31 March 2016 The Cash Flow Statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The Statement shows how the Authority 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 Authority are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’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 Authority. 3 Notes to the Accounts These comprise of a summary of significant accounting policies, further information and detail of entries in the prime Statements above and other explanatory information. Audit Opinion This contains the External Auditor’s report and opinion on the Accounts. Annual Governance Statement This 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 Account This shows the operation of the Lincolnshire Pension 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 This shows the operation of the Lincolnshire Fire and Rescue Pension Fund run by the Council for its own Fire-fighter employees. 4 Executive Director - Finance and Public Protection Review of 2015-16 Review of the Year The County Council set its spending plans for 2015-16 against a backdrop continued uncertainty in local government funding brought about by a general election in May 2015 and the promise of a new Comprehensive Spending Review which would affect local government funding to the end of the decade. In developing the financial plan for 2015-16, the Council has undertook a fundamental review of priorities and related budgets to identify how to close the gap between current spending levels and the amount of funding available to local government going forward. The Council plan was a mixed approach to match spending to current levels of government funding. This included delivering savings identified through the fundamental budget review plus the one off use of reserves and a 1.90% increase in Council Tax. In particular the Council continues to seek improved value for money by achieving savings through improved efficiency wherever possible. This approach is underpinned by a planned programme of major improvement, efficiency and transformation projects derived directly from key strategies such as the commissioning council model. As part of this process the Council seeks to identify and assess appropriate opportunities to engage in partnership/shared services initiatives with other partners in the public, private and voluntary sectors, where this will result in tangible efficiency savings. This approach has produced savings in areas such as the introduction of a new financial system. Annual Revenue Spending The Council's annual spending on providing public services are set out in the charts below and show how this was used both by type of service provided and by type of expenditure.

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