STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
ITEM 05
FINAL ACCOUNTS 2007/08
Report of the:
Director of Finance
Contact:
Enver Enver
Urgent Decision?(yes/no)
No
If yes, reason urgent decision required:
N/A
Annexes/Appendices (attached):
Annexe 1 - Financial Statements 2007/08
Other available papers (not attached):
Accounts Working Papers 2007/08
Also the following papers were issued to all
councillors on 27 May 2008 (Please bring these
with you to the meeting):

General Fund Summary Position 2007/08

Major Budget Variances 2007/08

Capital Expenditure Position 2007/08
This report summarises the Council’s financial performance for 2007/08, recommends
approval of the draft statement of accounts and the carry forward of capital provision
for schemes where costs will be incurred in 2008/09.
Notes
RECOMMENDATIONS
That the Committee:(1)
receives the report on financial performance for 2007/08,
and
(2)
approves the published form of the accounts as attached
at Annexe 1, including the Annual Governance
Statement, and
(3)
approves the request to carry forward £2,104,000
provision for capital schemes to be added to the 2008/09
capital programme.
1
Implications for Community Strategy and Council’s Key Priorities
1.1
2
None for the purpose of this report.
Implications for Committee’s Key Service Priorities
2.1
The revenue budget and capital programme comprise the resources available for
the delivery of Council services including each of the Committee’s Key Service
Priorities.
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STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
3
4
ITEM 05
Introduction
3.1
Local Authorities are required to prepare a statement of accounts at the end of
each financial year. In doing so authorities must comply with the Accounts and
Audit Regulations and ‘proper accounting practice’ as defined in the ‘Code of
Practice on Local Authority Accounting in the United Kingdom’.
3.2
The Accounts and Audit Regulations 2003 introduced changes in the preparation
and approval of financial statements. The published version of accounts should
be approved by Members by the end of June 2008 and published by the end of
September 2008.
General Fund Summary Position
4.1
A detailed analysis of the General Fund Summary 2007/08 by service group was
distributed to all councillors.
4.2
In summary the final position for 2007/08 is: General Fund Summary 2007/08
Strategy and Resources
Committee
Original
Budget
Current
Approved *
£’000
£’000
Actual
Variance
£’000
£’000
2,575
1,902
1,763
(139)
(2,616)
(2,222)
(2,222)
0
Environment Committee
2,086
3,281
3,290
9
Social Committee
3,039
2,947
2,838
(109)
Leisure Committee
3,882
3,058
3,090
32
Total Net Expenditure
8,966
8,966
8,759
(207)
4,553
4,553
4,553
-
584
584
584
-
Business rate redistribution
3,484
3,484
3,484
-
Transfer to Collection Fund
(25)
(25)
(25)
-
Total Funding (Budget
Requirement)
8,596
8,596
8,596
-
Surplus (deficit) for the year
(370)
(370)
(163)
207
Asset Rents (landlord
account)
Funded by:
Collection fund precept
Revenue Support Grant
* includes changes to employee and support services allocations and asset
rental recharges from the original budget and reflects required changes in
accounting practice.
Note: figures in table have been adjusted for roundings
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STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
4.3
ITEM 05
Information on the main variations within each policy committee was circulated to
all councillors on 27 May 2008. The following minor changes have been made to
the circulated figures:4.3.1
The bottom line use of the working balance has subsequently been
amended from £150,000 to £163,000 following completion of the housing
and council tax benefit subsidy claim
4.3.2 The central overhead allocations have been finalised providing some
changes between committee budgets but not affecting the bottom line.
4.4
In summary the net expenditure for the year is £207,000 less than the original
budget. This still required a withdrawal from the General Fund Working Balance
of £163,000 but this is significantly less than the withdrawal of £370,000 in the
original budget.
4.5
The working balance was £3,597,000 at 31 March 2008, calculated as follows:£000
Working Balance b/f at 31 March 2007
Use of General Fund Working Balance for 2007/08
Working Balance as at 31 March 2008
5
3,760
-163
3,597
4.6
The final net expenditure for 2007/08 compares very closely to the forecast
position (probable outturn) reported to Council in February 2008, which included
a forecasted use of the working balance of £153,000.
4.7
Prior year adjustments at around £72,000 account for a proportion of the
favourable variance. The main prior year adjustments are for backdated head
rent and equity share for previous years on the Ashley Centre.
4.8
Excluding prior year adjustments the final account position for 2007/08 is around
£135,000 better than budget. The most significant favourable variance for
2007/08 is on treasury management income which is higher than budget by
£124,000 and additional income above budget of £80,000 from vehicle licensing.
4.9
Subject to the audit of the accounts, the working balance carried forward will be
£3.6m.
4.10
Many of the variances have already been reflected in the preparation of the
2008/09 budget. Some areas, particularly where income increased in the final
quarter, could offer scope to increase the level of income budgeted for 2008/09.
However, some of the cost centres have already had significant increases
included for budgeted income for 2008/09 and there are also some accounts
where income targets were not met which will need examination before the
benefit is included in future forecasts.
Reserves and Provisions
5.1
The following treatment has been used in preparing the draft accounts: -
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STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
ITEM 05
5.1.1 Planning Delivery Grant – £4,000 has been transferred from the specific
reserve to fund the balance of expenditure in 2007/08. There is still a
balance of £205,000 in the reserve.
5.1.2 Property Maintenance Reserve – £88,000 was drawn down to fund backlog
maintenance work. There is a balance of £119,000 in the reserve which will
be carried forward to fund works in 2008/09.
5.1.3 Insurance Reserve – £55,000 has been transferred to fund the balance of
expenditure in 2007/08. There is a balance of £604,000 in this reserve held
against future claims or uninsured losses.
5.1.4 Repairs and Renewals Reserve – £158,000 was drawn down to fund
maintenance work. There is a balance of £782,000 in the reserve part of
which is committed for approved projects and the rest held for the
replacement of plant and equipment.
5.1.5 Community Safety Fund – £31,000 has been transferred from the reserve
to fund the expenditure in 2007/08. There is a balance of £61,000 in this
reserve.
6
Pension Fund
6.1
7
Pensions have been treated within the statements in accordance with
recommended financial reporting standards for local authorities, additional
information on pension costs and liabilities are included within the Annexe in the
notes to the Core Financial Statements (Note 12). The disclosure notes within
the financial statements have been prepared in accordance with FRS17. The net
liability as at 31 March 2008 for accounting purposes is £9.1m compared to
£13.0m at 31 March 2007. This doesn’t comprise a full valuation of the fund. The
last valuation was in March 2007 and the next valuation will be carried out as at
31 March 2010.
Capital Expenditure 2007/08
7.1
A summary of the actual expenditure for each capital scheme was issued to all
councillors on 27 May 2008. In summary, expenditure 2007/08 was:Committee
Original
Budget
Latest
Budget *
£000
£’000
Actual
Variance
£’000
£’000
Strategy and Resources
Committee
395
679
322
(357)
Environment Committee
151
553
415
(138)
1,085
1,219
638
(581)
820
1,015
492
(523)
0
525
1
(524)
2,451
3,991
1,868
(2,123)
Social Committee
Leisure Committee
Hospital Cluster
Total
* includes schemes rolled forward from 2006/07 and new schemes approved during
the year
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STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
ITEM 05
7.2
The capital programme includes variances on a number of schemes where works
have either been completed below original estimate or where the scheme has not
yet been completed and where project managers have requested that the
provision be carried forward to 2008/09. Details were provided to the Members
on 27 May 2008. Provisions totalling £2,104,000 as requested to be carried
forward for schemes not completed in 2007/08, in line with Council policy, and the
balance of £105,000 will be transferred back to the reserves as savings. The
carry forward sum will be examined by the Capital Management Group as part of
the capital programme review.
7.3
The financing of capital expenditure 2007/08 is summarised below:
£’000
Capital reserves
8
933
External contributions
77
Revenue contributions
198
Total Capital Funding
1,868
Capital Receipts 2007/08
8.1
Capital receipts for 2007/08 are summarised below:Housing Receipts 2007/08
£’000
Council House Sales (right to buy)
Mortgage Principal repaid (net receipt)
Sub total of Housing Receipts
General Fund Property Receipts 2007/08
Total Capital Receipts
166
6
172
5
177
8.2
The target in the financial plan 2004-2008 for receipts from disposals of assets
was £5,108,000 for non-housing receipts (including £1.108 million disposals
approved pre- April 2008) and £1,000,000 for housing receipts. This reports
progress against the balance of receipts taking into account progress made at 31
March 2008.
8.3
Actual delivery from 1April 2004 to the 31st March 2008 is as follows:
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STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
ITEM 05
Housing Receipts
£’m
Four Year Target (2004/5 to 2007/8)
1.000
Total Housing receipts (from 1 April 2004 to 31 Mar 2008)
0.805
Shortfall against target to 31 March 2008
(0.195)
Non-Housing Receipts
£’m
9
Four Year Target (2004/5 to 2007/8)
5.108
Actual General Fund receipts (from 1 April 2004 to 31 Mar 2008)
4.629
Shortfall against target to 31 March 2008
(0.479)
Total Shortfall against four year target
(0.674)
8.4
The Council had approved three further disposals by 31 March 2008 that if
realised in 2008/09 will contribute towards this shortfall.
8.5
The Council reviewed its capital programme and agreed a capital strategy
statement for 2008-12 in February 2008. A preferred level of capital investment
of £10.2million has been identified and funding has only been identified for
approximately 50% of the overall four year programme. The Council’s policy is to
maintain reserves of £7 million, subject to annual review, which are used for
treasury management and investment returns to help fund services. The Council
will need to identify new receipts from asset disposals, planning gains or grants.
In view of the current economy, the Council will also need to carefully review its
investment programme against available finance each year.
Approval of Statement of Accounts
9.1
The Accounts and Audit Regulations 2003 require a local authority to ensure that
a statement of accounts is prepared in accordance with the provisions of the
regulations and proper accounting practice. The regulations were revised in
2003 incorporating some significant changes in reporting requirements and
timescale for approval of financial statements. The timescale for approval and
publication of financial statements has been reduced to three months (end of
June) and six months (end of September) respectively.
9.2
Requirements for Whole of Government Accounts (WGA) have been included in
the financial statements for 2007/08 and show any significant financial
transactions with other public sector organisations. Standard returns need to be
completed for 2007/08 during September 2008. Accounts will be audited by 30
September 2008 along with other financial statements.
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STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
ITEM 05
9.3
As from this year there is a requirement to produce an Annual Governance
Statement, signed by the Chief Executive and Chairman of Strategy and
Resources Committee. This is included in the Financial Statements. The Scrutiny
Committee will consider the draft statement in detail at its meeting of 18 June
2008 and any amendments presented to the Strategy and Resources Committee
on 24 June 2008.
9.4
The Council must prepare, in accordance with proper practices, a statement of
accounts for each year which includes the following:
An explanatory foreword;

A statement of accounting policies adopted, drawing attention to any changes
of policy which have a significant effect on the results shown by the statement
of accounts;

A statement of responsibilities for preparing the statements of accounts

An annual governance statement

An income and expenditure account summarising income and expenditure of
the Council;

A statement of total recognised gains and losses (STRGL);

A balance sheet;

A cash flow statement;

The Collection Fund;

Other statements of the income and expenditure for funds which the Council is
required by any statutory provision to keep a separate account;
9.5
The statement of accounts has then to be adopted by Members in the required
published format.
9.6
Should the auditor’s report require material amendments to be made to the
Accounts, then the responsible financial officer (Director of Finance) is required to
report those amendments to the Council.
9.7
The published form of accounts is presented for approval by Members and is
attached at Annexe 1 to this report. The Annual Governance Statement is
included at pages 19 to 22 of the financial statements.
9.8
It would be helpful if any points of clarification on the accounts could be raised
with the Head of Financial services prior to the meeting.
10 Risk Assessment and Conclusions
10.1
A risk assessment was included in the 2007/08 budget report and monitoring
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STRATEGY & RESOURCES COMMITTEE
24 JUNE 2008
ITEM 05
arrangements during the year have allowed corrective action to be taken on a
number of budget variances, either during the year or as part of the Council’s
longer term service and financial planning. An updated risk assessment was
included in the 2008/09 budget report.
10.2
Key points on the accounts for 2007/08 are as follows:10.2.1 Due mainly to additional income recovery, the planned use of the revenue
working balance to finance the budget gap between income and
expenditure was less than expected at £207,000.
10.2.2 Expenditure on capital schemes totalled £1.9 million compared to £2.2
million in 2006/07
10.2.3 Capital Receipts totalled £0.2 million compared to £0.9 million in 2006/07.
10.2.4 Overall capital and revenue balances remain healthy:31 March
2007
31 March
2008
£’000
£’000
General Fund Working Balance
3,760
3,597
General Fund Provisions
5,446
5,325
Revenue Total
9,206
8,922
Capital Reserves
9,448
8,628
10.3
In the longer term the Council still faces the challenge of maintaining a balanced
budget. A new four year Financial Plan for 2008-12 is included in Item 12 of this
agenda.
10.4
The capital programme delivery included a number of schemes where provision
needs to be carried forward into 2008/09. Funding remains in place to allow
completion of these schemes. There was no significant capital overspend in
2007/08.
10.5
The financial statements are subject to external audit and any material changes
will be reported back to this Committee.
Ward(s) affected: All
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