Draft Statement of Accounts 2019/20 Chorley Borough Council 39 1 Contents Introduction to the Statement of Accounts .......................................................................................... 4 Independent auditor’s report to the members of Chorley Borough Council ......................................... 5 Narrative Report of the Chief Financial Officer .................................................................................. 10 Introduction .................................................................................................................................. 10 Key Facts About Chorley.............................................................................................................. 11 Chorley Borough Council Corporate Strategy ............................................................................... 12 Performance of Key Projects ........................................................................................................ 14 Performance of Corporate Strategy Key Measures – 2019/20 ..................................................... 21 Strategic Risk Register ................................................................................................................. 24 The Structure of the Council ......................................................................................................... 27 Context for the 2019/20 Accounts ................................................................................................ 29 Financial Performance in 2019/20 ................................................................................................ 31 Looking Ahead – Future Challenges, Opportunities and Financial Outlook .................................. 43 Statement of Responsibilities ............................................................................................................ 47 Comprehensive Income and Expenditure Statement ........................................................................ 48 Movement in Reserves Statement .................................................................................................... 50 Balance Sheet .................................................................................................................................. 52 Cash Flow Statement ....................................................................................................................... 53 Notes to the Main Financial Statements............................................................................................ 54 1 EXPENDITURE AND FUNDING ANALYSIS – NOTE TO MAIN FINANCIAL STATEMENT .. 54 2 ACCOUNTING POLICIES ..................................................................................................... 55 3 ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED BUT HAVE NOT YET BEEN ADOPTED ............................................................................................................................. 66 4 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES ................................... 66 5 ASSUMPTIONS ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY ..................................................................................................................... 68 6 MATERIAL ITEMS OF INCOME AND EXPENSE ................................................................. 71 7 EVENTS AFTER THE REPORTING PERIOD ....................................................................... 71 8 NOTE TO THE EXPENDITURE AND FUNDING ANALYSIS ................................................ 72 9 EXPENDITURE AND INCOME ANALYSED BY NATURE .................................................... 74 10 ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATIONS .................................................................................................................... 75 11 TRANSFERS TO/FROM EARMARKED RESERVES ............................................................ 77 12 OTHER OPERATING EXPENDITURE .................................................................................. 79 13 FINANCING AND INVESTMENT INCOME AND EXPENDITURE ......................................... 79 14 TAXATION AND NON-SPECIFIC GRANT INCOME & EXPENDITURE ................................ 79 15 PROPERTY PLANT AND EQUIPMENT ................................................................................ 83 16 HERITAGE ASSETS ............................................................................................................. 86 17 INVESTMENT PROPERTIES ............................................................................................... 87 18 INTANGIBLE ASSETS .......................................................................................................... 89 2 19 FINANCIAL INSTRUMENTS ................................................................................................. 90 20 DEBTORS ............................................................................................................................. 95 21 CASH AND CASH EQUIVALENTS ....................................................................................... 95 22 SHORT TERM CREDITORS ................................................................................................. 95 23 PROVISIONS ........................................................................................................................ 96 24 USABLE RESERVES ............................................................................................................ 96 25 UNUSABLE RESERVES....................................................................................................... 97 26 CASH FLOW STATEMENT – OPERATING ACTIVITIES .................................................... 101 27 CASH FLOW STATEMENT – INVESTING ACTIVITIES ..................................................... 102 28 CASH FLOW STATEMENT – FINANCING ACTIVITIES ..................................................... 102 29 MEMBERS ALLOWANCES ................................................................................................ 103 30 OFFICERS REMUNERATION ............................................................................................ 104 31 TERMINATION BENEFITS ................................................................................................. 107 32 EXTERNAL AUDIT COSTS ................................................................................................ 107 33 GRANT INCOME ................................................................................................................ 108 34 RELATED PARTIES ........................................................................................................... 109 35 CAPITAL EXPENDITURE AND FINANCING ...................................................................... 111 36 LEASES .............................................................................................................................. 112 37 DEFINED BENEFIT PENSION SCHEME ........................................................................... 114 38 CONTINGENT LIABILITIES ................................................................................................ 121 39 CONTINGENT ASSETS...................................................................................................... 121 40 COVID 19 PANDEMIC AND EVENTS AFTER THE REPORTING PERIOD........................ 121 41 GROUP ACCOUNTS .......................................................................................................... 122 Collection Fund Statement.............................................................................................................. 124 Annual Governance Statement (AGS) ............................................................................................ 127 Glossary of Terms .......................................................................................................................... 138 3 Introduction to the Statement of Accounts The Accounts and Audit Regulations 2015 require the Council to produce a Statement of Accounts for each financial year. This Statement of Accounts has been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2019/20 (The Code), which is based on International Financial reporting Standards. The Statement of Accounts contains a number of sections and statements and these are explained below: Page 5 The Independent Auditor’s Report – This gives the auditor’s opinion of the financial statements and of the Council’s arrangements for securing economy, efficiency and effectiveness in the use of its resources. Page 10 Narrative Report of the Chief Finance Officer - The purpose of the narrative report is to give the reader an understanding of the most significant matters reported in the accounting statements, as well as a review of the Council’s financial performance and economy, efficiency and effectiveness in its use of resources over the financial year. Page 47 Statement of Responsibilities for the Statement of Accounts – This summarises the responsibilities of the Council and the Chief Finance Officer in relation to the Statement of Accounts. Page 127 The Annual Governance Statement – The Council is required to conduct an annual review of the effectiveness of its system of corporate governance and to publish a statement on the adequacy of the system with its annual accounts. This statement is referred to as the Annual Governance Statement