Information Classification: CONTROLLED Cornwall Council 2018/19 Annual Financial Report And Statement of Accounts Information Classification: CONTROLLED This page is intentionally blank Information Classification: CONTROLLED Contents Cornwall Council 2018/19 Annual Financial Report and Statement of Accounts Contents Page Narrative Report 2 Independent Auditor’s Report for Cornwall Council 25 Independent Auditor’s Report for Cornwall Pension Fund 31 Statement of Accounts Statement of Responsibilities and Certification of the Statement of Accounts 35 Main Financial Statements 37 Comprehensive Income and Expenditure Statement 38 Movement in Reserves Statement 38 Balance Sheet 40 Cash Flow Statement 40 Notes to the Main Financial Statements 42 Index of Notes 43 Group Financial Statements 123 Group Movement in Reserves Statement 124 Group Comprehensive Income and Expenditure Statement 124 Group Balance Sheet 126 Group Cash Flow Statement 126 Notes to the Group Financial Statements 128 Supplementary Financial Statements 139 Housing Revenue Account 141 Notes to the Housing Revenue Account 143 Collection Fund 149 Notes to the Collection Fund 151 Fire Fighters’ Pension Fund Account 153 Pension Fund Accounts 157 Cornwall Local Government Pension Scheme Accounts 158 Notes to the Pension Scheme Accounts 159 Glossary 189 Page 1 Information Classification: CONTROLLED Narrative Report Cornwall Council 2018/19 Statement of Accounts Narrative Report from Chief Operating Officer and Section 151 Officer I am pleased to introduce our Annual Financial Report and Statement of Accounts for 2018/19. This document provides a summary of Cornwall Council’s financial affairs for the financial year 1 April 2018 to 31 March 2019 and of our financial position at 31 March 2019. 1. The Financial Report and Statements Our Annual Financial Report and Statement of Accounts includes the following financial statements and disclosure notes: Narrative Report – from the Chief Operating Officer and S151 Officer. This provides interested parties with an effective guide to the most significant matters reported in the Statement of Accounts including information relating to the Council’s spending and financial position and its performance in key areas. Independent Auditor’s Reports – there is an independent report from the external auditors to the Members of the Council and also for Cornwall Pension Fund. Statement of Accounts o Statement of Responsibilities – this explains the different responsibilities relating to the Statement of Accounts and confirms their approval. o The Main Financial Statements - Comprehensive Income and Expenditure Statement – this statement shows the net cost in the year of providing Council services. - Movement in Reserves Statement – this statement shows the movement in the year on the different reserves held by the Council. - Balance Sheet – the Balance Sheet shows the value at 31 March 2019 of the assets and liabilities held by the Council. - Cash Flow Statement – the Cash Flow statement shows the changes in cash and cash equivalents of the Council during the reporting period. o Notes to the Main Financial Statements – these provide additional, more detailed information on specific areas from the main financial statements. o Group Financial Statements – a further set of financial statements, in the same format as those described above, including companies and other organisations in which we have an interest, together with relevant notes. o Supplementary Financial Statements - Housing Revenue Account (HRA) Income and Expenditure Statement - the HRA Income and Expenditure Statement shows the net cost in the year of providing council housing. - Collection Fund Income and Expenditure Statement – this statement shows transactions in relation to council tax and national non-domestic rates. o Fire Fighters’ Pension Fund Account – setting out the financial arrangements for this specific scheme. o Pension Fund Accounts – relating to the main Local Government Pension Scheme we run for our employees (and those of some other organisations). Glossary – an explanation of technical terms that have been used in the document. Except where otherwise indicated, figures are presented in millions of pounds (£m) and are rounded to the nearest thousand pounds (£0.001m). Page 2 Information Classification: CONTROLLED Narrative Report Cornwall Council 2018/19 Statement of Accounts 2. An Overview of Cornwall Council Organisational Overview and External Environment Cornwall Council is a unitary local authority serving a population of over 550,000 residents. As a unitary Council it provides all local authority services including adult social care, children’s social care, education, public health, highways, planning, housing, benefits, fire and rescue, building control and environmental services amongst many more. Cornwall is a large unitary area covering 3,500km2, predominantly rural with 480km of coastline. The Council approved a refresh of its Business Plan and Medium term Financial Plan (MTFP), in February 2019. The refreshed Business Plan set out the Council’s aims as: Ensure everyone can live well and safely together Create more homes and jobs for residents Protect and enhance the environment It also set out the Council’s values as: We listen: we will work with the people of Cornwall We are responsible: we will use resources wisely We act in the best interests of Cornwall: putting people first The original Business Plan 2018/19 to 2021/22 set out how the Council would deliver its Priorities for Cornwall and demonstrates its commitment to protecting the most vulnerable, investing in jobs and homes within Cornwall and continuing to improve Cornwall’s infrastructure so that our people, places and services are connected. The priorities for Cornwall are: Page 3 Information Classification: CONTROLLED Narrative Report Cornwall Council 2018/19 Statement of Accounts The Business Plan 2018/19 - 2021/22 explained how the Council proposed to deliver its Priorities for Cornwall and matching its spending to those priorities. It also included a number of key success measures that would be monitored and reported on a regular and public basis, so residents and businesses could track progress and hold the organisation to account for delivery. In shaping the Business Plan the Council reflected on the results of the extensive residents’ survey conducted in July and August 2017 - reported to Cabinet in November 2017 - to ensure that the priority actions responded to what the people of Cornwall told the Council were the aspects of life that were of greatest importance and in most need of improving. The Business Plan was purposely a succinct and readable document to engage residents, businesses, partners and our employees so that they could have their say on whether the Council’s priorities resonated with them and took on board the messages from the resident survey. It also set out how the Council spends its money both currently and how our budget proposals would change the emphasis in line with the priorities, so this could be consulted upon as well. An Annual Report 2018/19 is due to be published in the summer of 2019 setting out how the Council has delivered against its priorities. The report will be available on the Council’s website. Since its formation in 2009, the Council has delivered over £300m in savings and has seen its central government funding reduce significantly. Consequently, the Council has become more dependent upon locally raised resources; council tax and business rates. In 2009/10 council tax made up around 33% of the Council’s funding whereas in 2021/22 it is expected to be 56%. It is assumed government policy will continue in this direction with further cuts to government funding. We recognise this impact on residents and are proactively driving Page 4 Information Classification: CONTROLLED Narrative Report Cornwall Council 2018/19 Statement of Accounts down costs where possible and changing our service delivery to become more efficient wherever possible. Cornwall Council’s council tax remains the lowest in the South West. Internally the Council is led by the Chief Executive Officer and the Council Directors Team, supported by the Council Leadership Team. Services are grouped into Directorates which are in turn led by Strategic Directors. In 2018/19 the Council was organised around five Directorates: Adult Social Care – including adult social care and support; and adult transformation and commissioning; Children, Schools and Families – including children’s services such as protecting; vulnerable children and supporting disabled children and services around education and supporting families; Economic Growth and Development – including economic development, culture, public transport and planning; Neighbourhoods – including fire and rescue, waste management and environmental services. Customer and Support Services – including commercial services such as procurement and property and assets as well as the Council’s support services such as legal services, finance etc.; and The Council owns a number of companies that form part of its group. Some of these are commercial whereas others facilitate delivery of Council services and objectives by other means than direct service provision by the Council. This is an increasingly common model of operation for local authorities as they seek alternative ways of achieving their aims within reduced funding arrangements. Cornwall Council’s Business Group is as follows: Cornwall Council CORMAC Wave Hub Corserv