North Norfolk District Council
STATEMENT OF ACCOUNTS
2010/11
Statement of Accounts 2010/11
North Norfolk District Council
Statement of Accounts 2010/11
North Norfolk District Council
CONTENTS
Explanatory Foreword
Statement of Responsibilities
Page
no.
1–8
9
Financial Statements:
Movement in Reserves Statement
10
Comprehensive Income and Expenditure
Statement
Balance Sheet
11
Cash Flow Statement
Notes to the Accounts:
1: Accounting Policies
2: Accounting standards issued; Not
adopted
3: Critical judgements in applying
accounting Policies
4: Assumptions made about the future
and other major sources of estimated
uncertainty
5: Movement in Reserves Statement Adjustments between accounting basis
and funding basis under regulations
6: Movement in Reserves Statement Transfers to/from earmarked reserves
7: Other operating expenditure
8: Financing and investment income and
expenditure
9: Taxation and non-specific grant
income
10: Material items of income and
expense
11. Usable reserves
Statement of Accounts 2010/11
12-13
14
15-31
32
32
12: Unusable reserves
13: Cash Flow Statement - Operating
activities
14: Cash Flow Statement - Investing
activities
15: Cash Flow Statement - Financing
activities
16: Cash Flow Statement - Cash and cash
equivalents
17: Amounts reported for resource
allocation decisions
18: Trading operations
19: Members allowances
20: Officers’ Remuneration
21: External audit costs
22: Termination benefits
Page
no.
46-52
Page
no.
84
53
31: Capital expenditure and capital
financing
32: Assets held for sale
53
33: Inventories
85
54
34: Debtors
86
54
35: Creditors
87
55-59
36: Provisions
87
60
61
62-63
63
37: Contingent liabilities
38: Contingent assets
39: Grant income
40: Financial Instruments
88-89
89
90-91
92-93
41: Nature and extent of risks arising from
financial instruments
42: Transition to IFRS
94-96
63
64-70
85
32-33
23: Defined Benefit Pension schemes
97-102
34-39
24: Events after the balance sheet date
71
Collection Fund
40-43
25: Related parties
71
Notes to the Collection Fund
104-107
108-111
112-116
103
44
44
26: Leases
27: Investment properties
72-75
76
Independent Auditor’s Report
Glossary of Terms
45
28: Intangible assets
77-78
Glossary of Acronyms
45
29: Impairment losses
78
Annual Governance Statement
45
30: Property, plant and equipment
79-83
117
AGS 1AGS 19
North Norfolk District Council
CONTENTS
Statement of Accounts 2010/11
North Norfolk District Council
EXPLANATORY FOREWORD
1.
Introduction
The explanatory foreword has been written to provide a brief guide to the content of the Statement of the Accounts. North Norfolk District Council’s
(“the Council”) financial statements for the year ended 31 March 2011 are set out on pages 10 to 14 followed by supporting notes on pages 15 to
102. These accounts have been prepared to provide information about the financial position of the Council and its performance and cash flows to
meet the common needs of most users. The accounts also demonstrate the results of the Members and management’s stewardship and
accountability for the resources entrusted to them. A glossary of terms and acronyms used within the accounts is provided at the end of the
document. While the financial position of the Council is regularly monitored and reviewed throughout the year, this Statement of Accounts brings
together the financial results of all the Council’s operations and the financial position as at 31 March 2011. The 2010/11 accounts have been
prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2010/11 (“the IFRS Code”). The following
outlines the main statements with a brief outline of their purpose:
• Statement of Responsibilities – this sets out the responsibilities of the Council and the Chief Financial Officer for the accounts.
• Movement in Reserves Statement – this statement shows the movement in the year on the different reserves held by the Council analysed
between ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves which are maintained
for accounting purposes.
• Comprehensive Income and Expenditure Statement – this statement shows the accounting cost of providing services in the year in
accordance with generally accepted accounting practices, rather than the amount to be funded from local taxation.
• Balance Sheet – this statement shows the value as at the balance sheet date of the assets and liabilities recognised by the Council. It sets out
the financial position of the Council at the year-end, showing its balances, resources and long-term indebtedness, the net current assets
employed in its operations, together with summarised information on the fixed assets held. The Balance Sheet is fundamental to the
understanding of the Council’s year end financial position.
• Cash Flow Statement - summarises all inflows and outflows of cash arising from transactions with third parties for revenue and capital
purposes.
• Collection Fund - this statement shows the collection and disbursement of the Council Tax and non domestic rates.
• Annual Governance Statement (AGS) – this is the formal statement which recognises records and publishes an authority’s governance
arrangements.
The Financial Statements are supported by various notes to the accounts which provide additional information to that contained in the core
statements themselves.
The remainder of the explanatory foreword gives a brief explanation of the financial aspects of the Council’s activities and draws attention to the
main characteristics of the Council’s financial position. In particular, it compares the outturn results with the revised budget and explains substantive
changes to the accounts in 2010/11.
Statement of Accounts 2010/11
1
North Norfolk District Council
EXPLANATORY FOREWORD
The Council incurs both revenue and capital expenditure during the year. Revenue spending is generally considered to be on items which are
consumed within a year (salaries, energy costs) and is financed by Government Grants, Council Tax and other income streams. Capital expenditure
is incurred on items that have a life beyond one year and is financed from grants, capital receipts or revenue contributions.
2.
Activity in the Year
The following compares the outturn to the budget for the year. This is the main revenue account that represents the day to day expenditure incurred
and income received from government grants, Council Tax, fees and charges in provision of local services.
(a)
Revenue Activity
The following table shows how the Council’s General Fund expenditure compares with the approved revised budget for 2010/11. This position
excludes notional charges but includes precepts by parish councils and levies by other bodies.
Original
Budget
£000
17,159
Revised
Budget
£000
16,470
17,159
16,470
14,374
(2,096)
Parish Precepts
1,427
1,427
1,427
0
Net Interest Receivable/Payable
(550)
(560)
(547)
13
Revenue Contributions to Capital
0
0
62
62
Capital Financing from Reserves
113
123
50
(73)
Net Contributions to/(from) Earmarked Reserves
(1,832)
(1,203)
544
1,747
Council Tax (including Parish Precepts)
(7,174)
(7,174)
(7,174)
0
External Support (Government Grant)
(9,007)
(9,007)
(9,007)
0
136
76
(271)
(347)
(1,057)
(1,057)
(1,057)
0
(921)
(981)
(1,328)
(347)
Net Expenditure on Services
Net Cost of Services
Net (Surplus)/Deficit for year
Balance Brought Forward
Balance Carried Forward
Statement of Accounts 2010/11
2
Variance to
Revised Budget
£000
14,374
(2,096)
Actual
£000
North Norfolk District Council
EXPLANATORY FOREWORD
The actual net spend on services was £2,374,294 less than the revised budget for 2010/11. The main reasons for this variance are shown below:• Planning Policy (£102,697) – The underspend is due to the timing of expenditure in relation to Local Development Framework adoption and
publicity costs and lower than expected examination expenditure. These costs are funded from Housing and Planning Delivery Grant (HPDG)
that is being held in an earmarked reserve and has been rolled forward to match commitments in 2011/12.
• General Economic development (£63,688) – Of the under spend (£36,882) related to planned recession works funded from earmarked reserves
which have not yet been carried out. (£20,918) Represents a grant that has been drawn down from the Marine Management Organisation to
support North Norfolk fisheries local action group which will be spent in 2011/12.
• Coast Protection (£53,417) – The majority of the underspend in the year related to planned repairs not being carried out due to the inclement
weather in the last quarter of the year. This has been carried forward in the coast protection reserve to be spent in 2011/12.
• Coastal Pathfinder (£406,066) – The year end variance reflects the current under spend of the Pathfinder grant. The grant has been fully
allocated to a number of projects and has been carried forward to meet these commitments.
• Strategic Housing (£172,565) – This variance reflects a (£70,000) underspend on the Homeless prevention grant funded expenditure and an
£85,000 grant received to support a county wide youth homelessness project. Both have been carried forward within an earmarked reserve.
• Transport (£68,508) – The main reason for this variance is a (£50,851) underspend in relation to reimbursements to bus operators for the
concessionary fares scheme.
• Waste Collection and Disposal (£77,421) - The overall under spend is made up of a number of different variances the most significant of these
relate to an increase in the profit share income which was offset by additional contractor charges.
• Environmental Strategy (£55,664) - Of the outturn variance (£35,880) relates to an underspend of expenditure identified as part of the carbon
reduction plan. In addition £20,090 funded from Area Based Grant has been committed but not yet incurred. As both of these are one off costs
they have been carried forward to the new financial year.
• Car parking £73,374 – The main reason for this variance is the shortfall of income generated from car park charges.
• Benefits (£212,174) – This service includes the total benefit payments made in the year that are recovered from subsidy. This year-end variance
represents an estimated position in respect of the final benefits subsidy claim for 2010/11.
• Local Strategic Partnership Grant (£227,818) - The under spend in the 2010/11was allocated to revenue at the year-end to allow for the balance
to be rolled forward in an earmarked reserve.
Statement of Accounts 2010/11
3
North Norfolk District Council
EXPLANATORY FOREWORD
The original budget assumed that a net contribution from funds (including earmarked reserves) of £ 1,831,901 would be made in the year. At the
year end £543,632 was actually transferred to funds. Further analysis on the movements on the reserves in the year is provided within note 6 to the
accounts on pages 40 to 43.
(b)
Capital Activity
Capital expenditure in 2010/11 amounted to £2,765,005 (£3,613,254 2009/10) and was incurred against the following areas:
Original
Budget
Revised
Budget
Actual
Variance to
Revised
Budget
£000
£000
£000
£000
Coast Protection
1,763
1,826
406
(1,420)
General Fund Services
1,472
2,903
1,010
(1,893)
General Fund Housing Services
2,155
3,933
1,349
(2,584)
5,390
8,662
2,765
(5,897)
These figures include £929,093 (£578,239 2009/10) Revenue Expenditure Funded from Capital Under Statute (REFFCUS) funded by grant.
Expenditure on the Coast Protection programme of £406,100 (£193,853 2009/10) was in respect of Cromer Coast Protection Strategic Review,
the finalisation of the Shoreline Management Plan and the new Coastal Pathfinder Project. All expenditure has been funded by grant, either
from the Environment Agency or for the pathfinder project from the Department for Environment Food and Rural Affairs (DEFRA).
The major areas of capital expenditure on general fund services in the year included the following:
•
Works related to the adoption of the road within the Fakenham Industrial Estate - £99,426;
•
Contribution towards the resurfacing of the Cromer Sports Centre Artificial Pitch - £58,440;
•
Purchase of new Trade Waste Bins as part of the waste and cleansing contract - £72,700;
•
Works relating to Public Convenience Improvements - £122,232;
•
Virtualisation of the Council’s Servers - £100,844;
Statement of Accounts 2010/11
4
North Norfolk District Council
EXPLANATORY FOREWORD
•
Information and Communications Technology (ICT) related capital schemes totalling £119,713 which included the purchase of new personal
computers and other software in addition to improvements to individual Service’s computer systems;
•
Works relating to environmental improvements within a number of Council Car Parks - £48,083;
•
Voltage Optimisation works undertaken on the Cromer Office building and Council owned Leisure Centres - £58,917.
Within the general fund housing capital programme, private sector renewal grants totalling £45,754 (£162,645 2009/10) were paid during the
year to improve private properties, with £41,073 (£157,539 2009/10) being received in government grants to be used towards the funding of
these schemes. Disabled facility grants of £909,996 (£821,938 2009/10) were also paid out during the year, partly funded by government grant
totalling of £411,927 (£345,000 2009/10).
In the year £1,368,812 (£1,597,661 2009/10) of the Council’s own resources, including capital receipts, reserves and revenue contributions
have been used to finance the capital programme. The balance relates to external sources of finance for example other contributions and
grants.
The variances in the year related mainly to slippage of schemes to 2011/12 due to schemes not progressing as originally anticipated.
3.
Significant Changes introduced in the 2010/11 Accounts
The accounts are now produced in accordance with International Financial Reporting Standards (IFRS) as opposed to UK Generally Accepted
Accounting Principles (GAAP). Adoption of the IFRS Code has required a number of the statements and supporting notes to be re-stated and
presented in a different format. The most significant changes are in relation to the following:
I.
II.
III.
IV.
V.
Accruing employee benefits i.e. annual leave;
Treatment of grants and contributions;
Classification of leases;
Non-Current Assets;
Segmental reporting.
A reconciliation statement to the 2010/11 accounts has been produced and can be found at note 42.
4.
Reserves
The Council has a policy to maintain General Fund balances above a minimum of £950,000. As at 31 March 2011 the General Fund balance
exceeded this at £1,328,638. Earmarked reserves are also held to fund future one-off projects and where there is a need to hold a contingency to
meet future liabilities. The Council’s reserves are detailed on pages 40 to 43.
Statement of Accounts 2010/11
5
North Norfolk District Council
EXPLANATORY FOREWORD
5.
Retirement Benefits Disclosure
International Accounting Standard “Employee Benefits” (IAS 19) has been fully incorporated into the Chartered Institute Public Finance and
Accountancy (CIPFA) Local Authority Accounting Statement of Recommended Practice. The disclosures required for the financial year ending 31
March 2011 are on pages 64 to 70 and show a Net Pension Liability of £19,521,000 as at 31 March 2011 (£38,065,000 at 31 March 2010).
The liabilities show the underlying commitments that NNDC has in the long run to pay retirement benefits. However, statutory arrangements for
funding the deficit mean that the financial position of NNDC remains healthy. At present the deficit on the scheme would be made good by increased
contributions over the remaining working life of employees, as assessed by the scheme actuary.
6.
Capital Programme
The Council's programme of capital works is continually being reviewed and updated. The Capital Strategy sets out the Council’s approach and
process to the deployment of capital resources in meeting the Council’s overall aims and objectives. It also provides the strategic framework within
which the Council’s Asset Management Plan is prepared.
Coast Protection scheme progress depends on the Government approving the schemes and providing grant aid. For other services such as
regeneration projects and information technology, the programme is reviewed having regard to continuing and committed projects for which
resources have been identified. The current Capital Strategy was approved in January 2010 and is due to be updated in 2012.
7.
Borrowing Facilities
The Council remained debt free at 31 March 2011. There are no plans to undertake any new long-term borrowing, requirements for cash flow
purposes will be met by borrowing on the London Money Market. At the 31 March 2011 the Council’s Balance Sheet records an overdrawn bank
current account balance of £1,959,616.78, mainly representing un-presented cheque and BACS payments. The outgoing payments, when paid by
the bank, will not be funded by external borrowing, but from repaid investments.
8.
Prudential Code
The Prudential Code allows local authorities to finance capital expenditure from borrowing which does not receive financial support from central
government. The objectives of the code are to ensure that local authority investment plans are affordable, prudent and sustainable. In 2010/11 the
Council did not undertake any prudential borrowing to finance capital expenditure.
Statement of Accounts 2010/11
6
North Norfolk District Council
EXPLANATORY FOREWORD
9.
Impact of the Current Economic Climate
The 2010/11 original budget included savings and additional income of approximately £460,000 across a number of workstreams including officer
restructurings and service savings. The progress of achieving these has been regularly monitored during the year and where necessary
amendments were made to the budget to reflect where they were not achievable, at the end of the year approximately £410,000 of the original target
had been achieved. The year end position did allow for a contribution of £328,111 to be made to the general reserve. The use of which will be
considered as part of the budget process for the 2012/13 financial year.
The Comprehensive Spending Review (CSR) in 2010 announced planned reductions in government grant for the next four years commencing
2011/12. Whilst figures were only confirmed for 2011/12, provisional allocations were made for 2012/13 and based on the content of the CSR
announcement assumptions on future reductions have been made for the final two years. The table below outlines the current forecasts for
government grant.
2010/11
(Rebased)*
Total Formula Grant £000
2011/12
(Actual)
8,227
Reduction £000
Reduction %
2012/13
(Provisional)
2013/14
Forecast
2014/15
Forecast
7,059
6,225
5,903
5,451
1,168
834
322
452
14%
12%
5%
8%
*– The rebased figure for 2010/11 is actual grant allocated for the year after taking account of a number of adjustments to compare between years
on a like for like basis, that is taking account of changes in responsibilities, for example the transfer of concessionary fares from districts to counties.
A balanced budget has been set for the 2011/12 financial year and takes account of savings and additional income of £1.14 million plus the one off
use of reserves totalling £200,000. It is recognised that the use of reserves to balance the budget is not sustainable in the long term. Future funding
gaps have been forecast for the following three years of £850,000 in 2012/13 increasing to £1.6 million by 2014/15. The Council has already started
planning for this which includes continuation of a number of workstream projects including shared services and restructurings.
A number of property related income budgets including planning and building control fees have been affected by the economic climate in terms of a
reduction of income compared to previous years. Similarly income from investments have reduced due to a lower average rate of investment being
achieved.
Statement of Accounts 2010/11
7
North Norfolk District Council
EXPLANATORY FOREWORD
10.
Further Information
For further information about these accounts please contact the Financial Services Manager, North Norfolk District Council, Council Offices, Holt
Road, Cromer, NR27 9EN or email accountancy@north-norfolk.gov.uk.
Statement of Accounts 2010/11
8
North Norfolk District Council
STATEMENT OF RESPONSIBILITIES
The Council's Responsibilities
The Council is required to:
•
Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the
administration of those affairs. In this authority, that officer is the Deputy Chief Executive.
•
Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.
•
Approve the Statement of Accounts.
The Deputy Chief Executive Responsibilities
The Deputy Chief Executive is responsible for the preparation of the Council's Statement of Accounts in accordance with proper practices as set out
in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code of Practice).
In preparing this Statement of Accounts, the Deputy Chief Executive has:
•
Selected suitable accounting policies and then applied them consistently.
•
Made judgements and estimates that were reasonable and prudent.
•
Complied with the local authority code.
The Deputy Chief Executive has also:
•
Kept proper accounting records which were up to date.
•
Taken reasonable steps for the prevention and detection of fraud and other irregularities.
Certificate by the Deputy Chief Executive
I certify that this Statement of Accounts has been prepared in accordance with proper accounting practices and presents a true and fair view of the
financial position of the Council at the reporting date and of its expenditure and income for the year ended 31 March 2011.
Dated:
21 September 2011
Statement of Accounts 2010/11
S J Oxtoby BSc CPFA
9
North Norfolk District Council
FINANCIAL STATEMENTS 2010/11
Movement in Reserves Statement
This statement shows the movement in the year on the different reserves held by the Council, 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 Council’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 charges 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.
Earmarked
Capital
Total
Total
General
Capital
General
Grants
Unusable
Usable
Authority
Fund
Receipts
Reserves
Fund
unapplied
Reserves
Reserves
Reserve
Balance
Reserves
Account
£000
£000
£000
£000
£000
£000
£000
Balance at 1 April 2009
1,149
4,580
11,329
41
17,099
21,689
38,788
Movement in reserves during 2009/10
(107)
(107)
Surplus or (deficit) on provision of services
(107)
0
0
0
0
(19,602)
(19,602)
Other Comprehensive Income and Expenditure
Total Comprehensive Income and Expenditure
(107)
0
0
0
(107)
(19,602)
(19,709)
Adjustments between accounting basis & funding basis under
130
0
1,358
0
(1,295)
67
(130)
regulations (5)
Net Increase/Decrease before Transfers to Earmarked Reserves
1,251
0
(1,295)
67
23
(19,732)
(19,709)
0
0
Transfers to/from Earmarked Reserves (6)
(1,343)
1,343
0
0
0
Increase/(Decrease) in 2009/10
(92)
1,343
(1,295)
67
23
(19,732)
(19,709)
Balance at 31 March 2010 carried forward
Movement in reserves during 2010/11
Surplus or (deficit) on provision of services
Other Comprehensive Income and Expenditure
Total Other Comprehensive Income and Expenditure
Adjustments between accounting basis & funding basis under
regulations (5)
Net Increase/Decrease before Transfers to Earmarked Reserves
Transfers (to)/from Earmarked Reserves (6)
Increase/(Decrease) in Year
Balance at 31 March 2011 carried forward
Statement of Accounts 2010/11
10
1,057
5,923
10,034
108
17,122
1,957
19,079
4,593
0
4,593
0
0
0
0
0
0
0
0
0
4,593
0
4,593
0
12,958
12,958
4,593
12,958
17,551
(3,764)
0
(1,089)
0
(4,853)
4,853
0
829
(558)
271
0
558
558
(1,089)
0
(1,089)
0
0
0
(260)
0
(260)
17,811
0
17,811
17,551
0
17,551
1,328
6,481
8,945
108
16,862
19,768
36,630
North Norfolk District Council
FINANCIAL STATEMENTS 2010/11
Comprehensive Income and Expenditure Statement
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.
Gross
Expenditure
£000
10,629
16,392
1,648
25,763
2,163
239
56,834
1503
2009/10
Gross
Net
Income
Expenditure
£000
£000
(8,692)
1,937 Central services to the public
(4,904)
11,488 Cultural, environmental, regulatory and planning
services
(2,492)
(844) Highways and transport services
(25,357)
406 Other housing services
(16)
2,147 Corporate and democratic core
0
239 Non distributed costs
(41,461)
15,373 Cost Of Services
(720)
1,699
783
0
(17,748)
107
(216)
126
19,692
19,602
19,709
Statement of Accounts 2010/11
Other Operating Expenditure
Financing and Investment Income and Expenditure
(Surplus) or Deficit of Discontinued Operations
Taxation and Non-Specific Grant Income
(Surplus) or Deficit on Provision of Services
Surplus or deficit on revaluation of Property, Plant and
Equipment assets
Surplus or deficit on revaluation of available for sale
financial assets
Actuarial gains / losses on pension assets / liabilities
Other Comprehensive Income and Expenditure
Total Comprehensive Income and Expenditure
11
Note
10
7
8
Gross
Expenditure
£000
11,087
18,321
2010/11
Gross
Net
Income
Expenditure
£000
£000
(9,814)
1,273
(5,520)
12,801
1,838
28,214
1,841
(6,712)
54,589
(2,099)
(26,998)
0
0
(44,431)
1172
(547)
9
17
(261)
1,216
1,841
(6,712)
10,158
1,305
625
0
(16,681)
(4,593)
(443)
185
(12,700)
(12,958)
(17,551)
North Norfolk District Council
FINANCIAL STATEMENTS 2010/11
Balance Sheet – This statement shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Council. The net
assets of the Council (assets less liabilities) are matched by the reserves held by the Council. Reserves are reported in two categories. The first
category are usable reserves, i.e. those reserves that the Council 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 is those that the Council 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'.
1 April 2009
£000
31 March 2010
£000
Note
31 March 2011
£000
39,170
288
213
8,971
74
39,419
288
534
6,863
61
Property, Plant & Equipment
Investment Property
Intangible Assets
Long Term Investments
Long Term Debtors
30
27
28
40
40
37,900
288
485
5,188
34
48,716
11,164
131
4,013
893
333
47,165
9,146
118
4,953
1,928
63
Long Term Assets
Short Term Investments
Inventories
Short Term Debtors
Cash and Cash Equivalents
Assets held for sale (<1yr)
40
33
34
16
32
43,895
10,628
91
2,392
6,112
714
16,534
0
(1,300)
(5,059)
(1,524)
16,208
0
0
(4,788)
(1,047)
Current Assets
Cash and Cash Equivalents
Short Term Borrowing
Short Term Creditors
Capital Grants Receipts in Advance
(7,883)
(1)
(5,835)
0
Current Liabilities
Long Term Creditors
Statement of Accounts 2010/11
16
35
35
19,937
(1,960)
0
(3,397)
(2,324)
(7,681)
0
12
North Norfolk District Council
FINANCIAL STATEMENTS 2010/11
1 April 2009
£000
(18,578)
31 March 2010
£000
(38,459)
(18,579)
(38,459)
38,788
19,079
Net Assets
1,149
4,580
11,329
41
1,057
5,923
10,034
108
Usable Reserves:
General Fund Balance
Earmarked Reserves
Capital Receipts Reserve
Capital Grants Unapplied Account
17,099
17,122
10,237
469
29,051
(17,864)
42
(246)
10,375
343
29,534
(38,065)
22
(252)
21,689
1,957
38,788
19,079
Note
Other Long Term Liabilities
23
Long Term Liabilities
31 March 2011
£000
(19,521)
(19,521)
36,630
5
6
Total Usable Reserves
Unusable Reserves:
Revaluation Reserve
Available for Sale Financial Instruments Reserve
Capital Adjustment Account
Pensions Reserve
Collection Fund Adjustment Account
Accumulated Compensated Absences Adjustment Account
1,328
6,481
8,945
108
16,862
12
10,748
158
28,588
(19,521)
21
(226)
Total Unusable Reserves
19,768
Total Reserves
36,630
The Statement of Accounts presents a true and fair view of the financial position of the Council at the accounting date and its income and
expenditure for the year ended 31 March 2011.
Dated: 21 September 2011
Statement of Accounts 2010/11
S J Oxtoby BSC CPFA
13
North Norfolk District Council
FINANCIAL STATEMENTS 2010/11
Cash Flow Statement
The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the reporting period. The statement shows how
the Council 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 Council are funded by way of taxation
and grant income or from the recipients of services provided by the Council.
Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Council'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 Council.
31 March
2010
£000
31 March
2011
£000
(107) Net surplus or (deficit) on the provision of services
4,593
40,680 Adjust net surplus or deficit on the provision of services for non cash movements
Adjust for items included in the net surplus or deficit on the provision of services that are investing and
(39,115) financing activities
1,458 Net cash flows from Operating Activities
38,736
(43,177)
152
2,107 Investing Activities (14)
2,106
(2,530) Financing Activities (15)
(34)
1,035 Net increase or decrease in cash and cash equivalents
893 Cash and cash equivalents at the beginning of the reporting period
1,928 Cash and cash equivalents at the end of the reporting period (16)
2,224
1,928
4,152
.
Statement of Accounts 2010/11
14
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
1.
Accounting Policies
A
General Principles
The Statement of Accounts summarises the Council's transactions for the 2010/11 financial year and its position at the year-end of 31 March 2011.
The Council is required to prepare an annual Statement of Accounts by the Accounts and Audit (England) Regulations 2011. These practices
primarily comprise the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local Authority Accounting in the United
Kingdom 2010/11 and the Best Value Accounting Code of Practice 2010/11 supported by International Financial Reporting Standards (IFRS).
The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of
non-current assets and financial instruments.
B
Accruals of Income and Expenditure
Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:
•
•
•
•
•
•
Revenue from the sale of goods is recognised when the Council transfers the significant risks and rewards of ownership to the purchaser and
it is probable that economic benefits or service potential associated with the transaction will flow to the Council.
Revenue from the provision of services is recognised when the Council can measure reliably the percentage of completion of the transaction
and it is probable that economic benefits or service potential associated with the transaction will flow to the Council.
Supplies are recorded as expenditure when they are consumed -where there is a gap between the date supplies are received and their
consumption; they are carried as inventories on the Balance Sheet.
Expenses in relation to services received (including those services provided by employees) are recorded as expenditure when the services
are received, rather than when payments are made.
Interest payable on borrowings and receivable on investments is accounted for on the basis of the effective interest rate for the relevant
financial instrument rather than the cash flows fixed or determined by the contract.
Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount
is recorded in the Balance Sheet. Where there is evidence that debts are unlikely to be settled, the balance of debtors is written down and a
charge made to revenue for the income that might not be collected.
Where the Council is acting as an agent for another party (e.g., in the collection of NNDR and council tax), income and expenditure are recognised
only to the extent that commission is receivable by the Council for the agency services rendered or the Council incurs expenses directly on its own
behalf in rendering the services.
Statement of Accounts 2010/11
15
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
C
Cash and Cash Equivalents
Cash is represented by cash in hand and deposits with financial institutions which are repayable on demand. Cash equivalents are highly liquid
investments that are readily convertible to known amounts of cash on the Balance Sheet date, and which are subject to an insignificant risk of
change in value.
Cash and cash equivalents are shown net of bank overdrafts as they are repayable on demand and form an integral part of the Council’s day to day
cash management activity.
D
Changes in Accounting Policies and Estimates and Errors
Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant
information about the effect of transactions, other events and conditions on the Council's financial position or financial performance. Where a change
is made, it is applied retrospectively by adjusting opening balances and comparative amounts for the prior period as if the new policy had always
been applied.
Changes in accounting estimates are accounted for prospectively, i.e., in the current and future years affected by the change.
Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior
period.
E
Charges to Revenue for Non-Current Assets
Services, support services and trading accounts are debited with the following amounts to record the cost of holding fixed assets during the year:
•
•
•
Depreciation attributable to the assets used by the relevant service;
Revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against
which the losses can be written off;
Amortisation of intangible assets attributable to the service.
The Council is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisations.
Statement of Accounts 2010/11
16
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
F
Employee Benefits
Benefits Payable during Employment
Short-term employee benefits (those that fall due wholly within 12 months of the year-end), such as wages and salaries, paid annual leave and paid
sick leave, bonuses and non-monetary benefits (e.g. cars) for current employees, are recognised as an expense in the year in which employees
render services to the Council. An accrual is made against services in the Surplus or Deficit on the Provision of Services for the cost of holiday
entitlements and other forms of leave earned by employees but not taken before the year-end and which employees can carry forward into the next
financial year. The accrual is made at the remuneration rates applicable in the following financial year. Any accrual made is required under statute to
be reversed out of the General Fund Balance by a credit to the Accumulating Compensated Absences Adjustment Account in the Movement in
Reserves Statement.
Termination Benefits
Termination benefits are amounts payable as a result of a decision by the Council to terminate an officer's employment before the normal retirement
date or an officer's decision to accept voluntary redundancy and are charged on an accruals basis to the Non Distributed Costs line in the
Comprehensive Income and Expenditure Account when the Council is demonstrably committed to either terminating the employment of an officer or
group of officers or making an offer to encourage voluntary redundancy.
Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the
amount payable by the Council to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting
standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits
and credits for termination benefits related to pensions enhancements and replace them with debits for the cash paid to the pension fund and
pensioners and any such amounts payable but unpaid at the year-end.
Post Employment Benefits
Employees of the Council are members of the Local Government Pensions Scheme (LGPS), administered by Norfolk County Council. The scheme
provides defined benefits to members (retirement lump sums and pensions), earned as employees worked for the Council.
The Local Government Scheme is accounted for as a defined benefits scheme in accordance with the Local Government Pension Scheme
(Benefits, Membership and Contributions) Regulations 2007, the Local Government Pension Scheme (Administration) Regulations 2008 and the
Local Government Pension Scheme (Transitional Provisions) Regulations 2008. It is contracted out of the State Second Pension :
Statement of Accounts 2010/11
17
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
•
•
•
•
The liabilities of the Norfolk pension fund attributable to the Council are included in the Balance Sheet on an actuarial basis using the
projected unit method - i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by
employees, based on assumptions about mortality rates, employee turnover rates, etc, and projections of projected earnings for current
employees.
Liabilities are discounted to their value at current prices, using a discount rate of 5.5% (5.5% in 2009/10) based on the indicative rate of
return on high quality corporate bond (equivalent to the gross redemption yield on iBoxx Sterling Corporates AA Over 15 Years Index with
the removal of recently re-rated bonds from the index);
The assets at the Norfolk pension fund attributable to the Council are included in the Balance Sheet at their fair value:
o quoted securities -current bid price;
o unquoted securities -professional estimate;
o unitised securities -current bid price;
o property - market value.
The change in the net pensions liability is analysed into seven components:
o Current service cost - the increase in liabilities as result of years of service earned this year - allocated in the Comprehensive Income
and Expenditure Statement to the services for which the employees worked;
o Past service cost - the increase in liabilities arising from current year decisions whose effect relates to years of service earned in
earlier years - debited to the Surplus/Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as
part of Non Distributed Costs;
o Interest cost -the expected increase in the present value of liabilities during the year as they move one year closer to being paid debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement;
o Expected return on assets - the annual investment return on the fund assets attributable to the Council, based on an average of the
expected long-term return - credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and
Expenditure Statement;
o Gains/losses on settlements and curtailments -the result of actions to relieve the Council of liabilities or events that reduce the
expected future service or accrual of benefits of employees - debited/credited to the Surplus/Deficit on the Provision of Services in the
Comprehensive Income and Expenditure Statement as part of Non Distributed Costs;
o Actuarial gains and losses -changes in the net pensions liability that arise because events have not coincided with assumptions made
at the last actuarial valuation or because the actuaries have updated their assumptions - debited to the Pensions Reserve;
o Contributions paid to the Norfolk pension fund - cash paid as employer’s contributions to the pension fund in settlement of liabilities;
not accounted for as an expense.
In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by the Council to the
pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in
Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for
Statement of Accounts 2010/11
18
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at
the year-end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact on the General Fund of being
required to account for retirement benefits on the basis of cash flows rather than as benefits are earned by employees.
Discretionary Benefits
The Council also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated
to arise as a result of an award to any member of staff are accrued in the year of the decision to make the award and accounted for using the same
policies as are applied to the Local Government Pension Scheme.
G
Events after the Balance Sheet Date
Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the
date when the Statement of Accounts is authorised for issue. Two types-of events can be identified:
•
•
Those that provide evidence of conditions that existed at the end of the reporting period - the Statement of Accounts is adjusted to reflect
such events;
Those that are indicative of conditions that arose after the reporting period - the Statement of Accounts is not adjusted to reflect such events,
but where a category of events would have a material effect, disclosure is made in the notes to the accounts of the nature of the events and
their estimated financial effect.
Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts.
H
Exceptional Items
When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income
and Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the Council's financial
performance.
Statement of Accounts 2010/11
19
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
Financial Instruments
I
Financial Liabilities
Financial liabilities are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument.
The Council has no borrowings; financial liabilities are therefore limited to trade payables. These are carried on the Balance Sheet at their fair value
which is taken to be the invoiced amount.
J
Financial Assets
Financial assets are classified into two types:
•
•
loans and receivables -assets that have fixed or determinable payments but are not quoted in an active market.
available-for-sale assets -assets that have a quoted market price and/or do not have fixed or determinable payments.
Loans and Receivables
Loans and receivables are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial
instrument and are initially measured at fair value. If it is appropriate, they are then measured at their amortised cost (if, for example, the Council
incurred significant transaction costs which need to be written-off or an investment was bought for other than its par value). Annual credits to the
Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based
on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. This means that the amount presented in the
Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income, and Expenditure
Statement is the amount receivable for the year under the terms of the loan.
Where loans are advanced at below market rates, they are classed as ‘Soft Loans’ and specific accounting requirements apply to them. The
Council has a very small number of car loans to employees and other loans to voluntary organisations to encourage leisure activities and economic
development. The impact of accounting fully for the losses on these loans is considered to be immaterial and the special accounting requirements
have not been applied.
Where assets are identified as impaired because of a likelihood arising from a past event that payments due under the contract will not be made, the
asset is written down and a charge made to the Financing and Investment Income and Expenditure line in the Comprehensive Income and
Expenditure Statement. The impairment loss is measured as the difference between the carrying amount and the present value of the revised future
cash flows discounted at the asset's original effective interest rate.
Statement of Accounts 2010/11
20
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
Available for Sale Assets
Available-far-sale assets are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial
instrument and are initially measured and carried at fair value. Where the asset has fixed or determinable payments, annual credits to the Financing
and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based on the
amortised cost of the asset multiplied by the effective rate of interest for the instrument.
Assets are maintained in the Balance Sheet at fair value based on the quoted market price.
Changes in fair value are balanced by an entry in the Available-far-Sale Reserve and the gain/loss is recognised in the Surplus/Deficit on
Revaluation of Available-for-Sale Financial Assets line in the Comprehensive Income and Expenditure Statement.
It is the Council’s policy to hold these assets until maturity at which time the fair value of the asset will be equal to the nominal value. If the asset
were to be sold prior to maturity, any gain or loss would be recognised in the Financing and Investment Income and Expenditure line in the
Comprehensive Income and Expenditure Statement.
K
Foreign Currency Translation
Where the Council has entered into a transaction denominated in a foreign currency, the transaction is converted into sterling at the exchange rate
applicable on the date the transaction was effective.
L
Government Grants and Contributions
Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the
Council when there is reasonable assurance that:
•
•
the Council will comply with the conditions attached to the payments; and
the grants or contributions will be received.
Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Account until conditions attaching to the
grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in
the asset received in the form of the grant or contribution are required to be consumed by the recipient as specified or future economic benefits or
service potential must be returned to the transferor.
Statement of Accounts 2010/11
21
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When
conditions are satisfied, the grant or contribution is credited to the relevant service line (for attributable revenue grants and contributions) or Taxation
and Non-Specific Grant Income (non-ring-fenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement.
Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in
the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants
Unapplied Account. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Account
are transferred to the Capital Adjustment Account once they have been applied.
Where general (non-ringfenced) revenue grants are allocated to the Council by Central Government these are credited to Taxation and Non-Specific
Grant Income in the Comprehensive Income and Expenditure Statement.
M
Intangible Assets
Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events (e.g. software
licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Council for
more than one financial year.
Intangible assets are initially measured at cost. Amounts are only revalued where the fair value of the assets held by the Council can be determined
by reference to an active market. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service lines in the
Comprehensive Income and Expenditure Statement. An asset is tested for impairment whenever there is an indication that the asset might be
impaired - any losses recognised are posted to the relevant service lines in the Comprehensive Income and Expenditure Statement.. Any gain or
loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income
and Expenditure Statement.
Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains
and losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund
Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and for any sale, proceeds greater than £10,000 the
Capital Receipts Reserve.
N
Inventories and Work in Progress
Inventories including coast protection materials and stationery are included in the Balance Sheet at the lower of cost and net realisable value.
Statement of Accounts 2010/11
22
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
O
Investment Properties
Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in
any way to facilitate the delivery of services or production of goods or is held for sale.
Investment properties are measured initially at cost and subsequently at fair value, based on the amount at which the asset could be exchanged
between knowledgeable parties at arm's length. Properties are not depreciated but are revalued annually according to market conditions at the yearend. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and
Expenditure Statement. The same treatment is applied to gains and losses on disposal.
Rentals received in relation to investment properties are credited to the Financing and Investment Income and result in a gain for the General Fund
Balance.
However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the Balance. The gains and
losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment
Account and for any sale proceeds greater than £10,000 the Capital Receipts Reserve.
P
Leases
Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the
property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases. Where a lease covers both land and
buildings, the land and buildings elements are considered separately for classification.
Arrangements that do not have the legal status of a lease but convey a right to use an asset return for payment are accounted for under this policy
where fulfilment of the arrangement is dependent on the use of specific assets.
The Council as Lessee
Finance Leases
Property, plant and equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value
measured at the lease's inception (or the present value of the minimum lease payments, if lower). The asset recognised is matched by a liability for
the obligation to pay the lessor. Initial direct costs of the Council are added to the carrying amount of the asset. Premiums paid on entry into a lease
are applied to writing down the lease liability. Contingent rents are charged as expenses in the years in which they are incurred.
Statement of Accounts 2010/11
23
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
Lease payments are apportioned between:
•
•
a charge for the acquisition of the interest in the property, plant or equipment - applied to write down the lease liability, and
a finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure
Statement)
Property Plant and Equipment recognised under finance leases is accounted for using the policies applied generally to such assets, subject to
depreciation being charged over the lease term if this is shorter than the asset's estimated useful life.
The Council is not required to raise council tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead, a
prudent annual provision is made from revenue towards the deemed capital investment in accordance with statutory requirements. Depreciation and
revaluation and impairment losses are therefore replaced by revenue provision in the General Fund Balance, by way of an adjusting transaction with
the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.
Operating Leases
Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services
benefitting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease; even if this does
not match the pattern of payments, e.g. there is a rent-free period at the commencement of the lease.
The Council as Lessor
Finance Leases
Where the Council grants a finance lease over a property or an item of plant or equipment, the relevant asset is written out of the Balance Sheet as
a disposal. At the commencement of the lease, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or
Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the
gain or loss on disposal. A gain, representing the Council's net investment in the lease, is credited to the same line in the Comprehensive Income
and Expenditure Statement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal),
matched by a lease asset in the Balance Sheet.
Lease rentals receivable are apportioned between:
Statement of Accounts 2010/11
24
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
•
•
A charge for the acquisition of the interest in the property -applied to write down the lease liability (together with any premiums received);
and
Finance income (credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure
Statement)
The gain credited to the Comprehensive Income and Expenditure Statement on disposal is not permitted by statute to increase the General Fund
Balance and will be required to be treated as a capital receipt. Where a premium has been received, this is posted out of the General Fund Balance
to the Capital Receipts Reserve in the Movement in Reserves Statement. Where the amount due in relation to the lease asset is to be settled by the
payment of rentals in future financial years, this is posted out of the General Fund Balance to the Deferred Capital Receipts Reserve in the
Movement in Reserves Statement. When the future rentals are paid, the element for the charge for the acquisition of the interest in the property is
used to write down the lease asset. At this point, the deferred capital receipts are transferred to the Capital Receipts Reserve.
The written-off value of disposals is not a charge against council tax, as the cost of fixed assets is fully provided for under separate arrangements for
capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves
Statement.
Operating Leases
Where the Council grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet. Rental
income is credited to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Credits are made on a
straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a premium paid at the commencement
of the lease). Initial direct costs incurred in negotiating and arranging the lease are added to the carrying amount of the relevant asset and charged
as an expense over the lease term on the same basis as rental income.
Q
Overheads and Support Services
The costs of overheads and support services are charged to those that benefit from the supply or service in accordance with the costing principles of
the CIPFA Best Value Accounting Code of Practice 2010/11 (BVACOP). The total absorption costing principle is used - the full cost of overheads
and support services are shared between users in proportion to the benefits received, with the exception of:
•
•
Corporate and Democratic Core - costs relating to the Council's status as a multifunctional, democratic organisation;
Non Distributed Costs - the cost of discretionary benefits awarded to employees retiring early and any depreciation and impairment losses
chargeable on surplus assets in Property, Plant and Equipment.
Statement of Accounts 2010/11
25
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
These two cost categories are defined in BVACOP and accounted for as separate headings in the Comprehensive Income and Expenditure
Statement, as part of Net Expenditure on Continuing Services.
R
Property, Plant and Equipment
Assets that have physical substance and are held for use in the production or supply of goods or services for rental to others or for administrative
purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment.
Recognition
Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is
probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be
measured reliably. Expenditure that maintains but does not add to an asset's potential to deliver future economic benefits or service potential (i.e.
repairs and maintenance) is charged as an expense when it is incurred.
A de-minimus level of £10,000 is generally applied to expenditure on assets.
Measurement
Assets are initially measured at cost, comprising:
•
•
•
the purchase price;
any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by
management;
the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
The cost of assets acquired other than by purchase is deemed to be its fair value, unless the acquisition will not increase the cash flows of the
Council. In the latter case, the cost of the acquisition is the carrying amount of the asset given up by the Council.
Assets are then carried in the Balance Sheet using the following measurement bases:
•
•
Infrastructure, community assets and assets under construction -depreciated historical cost
All other assets -fair value, determined the amount that would be paid for the asset In its existing use (existing use value - EUV).
Statement of Accounts 2010/11
26
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
Where there is no market-based evidence of fair value because of the specialist nature of an asset, depreciated replacement cost is used as an
estimate of fair value.
Assets included in the Balance Sheet at fair value are revalued sufficiently regularly to ensure that their carrying amount is not materially different
from their fair value at the year-end, but as a minimum every five years. Valuations are carried out either by an internal or external qualified valuer.
Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to
the Comprehensive Income and Expenditure Statement where they arise from the reversal of a revaluation or impairment loss previously charged to
a service.
Where decreases in value are identified, the revaluation loss is accounted for by:
•
•
where there is a balance of revaluation gains for the asset in the revaluation Reserve, the carrying amount of the asset is written down
against that balance (up to the amount of the accumulated gains);
where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the
relevant service line(s) in the Comprehensive Income and Expenditure Statement.
The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before
that date have been consolidated into the Capital Adjustment Account.
Impairment
Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired. Where indications exist and any
possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount
of the asset, an impairment loss is recognised for the shortfall.
Where impairment losses are identified, they are accounted for by:
•
•
where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down
against that balance (up to the amount of the accumulated gains)
where there is no balance in the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the
relevant service line(s) in the Comprehensive Income and Expenditure Statement
Statement of Accounts 2010/11
27
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service line(s) in the Comprehensive Income and
Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been
recognised.
Disposals
When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its
continuing use, it is reclassified as an Asset Held for Sale. The asset is revalued immediately before reclassification and then carried at the lower of
this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other
Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of
any previously recognised losses. Depreciation is not charged on Assets Held for Sale.
Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale.
When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Properly, Plant and Equipment or
Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the
gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement
also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal). Any revaluation gains
accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.
Amounts received for a disposal in excess of £10,000 are categorised as capital receipts. The balance of receipts is required to be credited to the
Capital Receipts Reserve, and can then only be used for new capital investment. Receipts are appropriated to the Reserve from the General Fund
Balance in the Movement in Reserves Statement.
The written-off value of disposals is not a charge against council tax, as the cost of fixed assets is fully provided for under separate arrangements for
capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves
Statement.
Depreciation
Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their useful
lives. An exception is made for assets without a determinable finite useful life (i.e. freehold land and certain Community Assets) and assets that are
not yet available for use (i.e. assets under construction).
Deprecation is calculated on the following bases:
Statement of Accounts 2010/11
28
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
•
•
•
Buildings - straight-line allocation over the useful life of the property as estimated by the valuer;
Vehicles, plant and equipment - a percentage of the value of each class of assets in the Balance Sheet, as advised by a suitably qualified
officer;
Infrastructure – straight line allocation over 20 years.
Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the
depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital
Adjustment Account.
Componentisation
Where an item of Property, Plant and Equipment asset has major components whose cost is significant (i.e. more than 30%) in relation to the total
cost of the item, the components are depreciated separately.
Componentisation is considered for all new valuations, enhancement expenditure and acquisition expenditure carried out on or after 1 April 2010.
Where a component is replaced or restored (i.e. enhancement expenditure) the carrying amount of the old component shall be de-recognised before
reflecting the enhancement.
Work still needs to be undertaken in this area of asset valuation. The Council recognises the following levels of components:
•
•
•
•
Substructure
Superstructure
Internal services
External works
Componentisation is not applicable to land as land is non-depreciable and is considered to have an infinite life.
S
Provisions, Contingent Liabilities and Contingent Assets
Provisions
Provisions are made where an event has taken place that gives the Council a legal or constructive obligation that probably requires settlement by a
transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation but where there is uncertainty
around the timing.
Statement of Accounts 2010/11
29
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the
Council becomes aware of the obligation, and measured at the best estimate at the balance sheet date of the expenditure required to settle the
obligation, taking into account relevant risks and uncertainties. Where the obligation is expected to be settled within 12 months of the Balance Sheet
date the provision is recognised as a Current Liability in the Balance Sheet. Other provisions are recognised as Long Term Liabilities.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end
of each financial year and where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlement than
anticipated is made), the provision is reversed and credited back to the relevant service. Where some or all of the payment required to settle a
provision is expected to be recovered from another party (e.g. from an insurance claim), this is only recognised as income for the relevant service if
it is virtually certain that reimbursement will be received if the Council settles the obligation.
Where some or all of the payment required to settle a provision is expected to be recovered from another party (e.g. from an insurance claim), this is
only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the Council settles the obligation.
Provisions for bad and doubtful debts are maintained in respect of possible losses from non collection of amounts owing to the Council. This
includes Council Tax, Business Rates and other income. The provisions are recalculated each year based on age and category of outstanding debt.
at the end of the financial year, reflecting historical collection patterns, and are included in the Balance Sheet as an adjustment to Debtors.
Contingent Liabilities
A contingent liability arises where an event has taken place that gives the Council a possible obligation whose existence will only be confirmed by
the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent liabilities also arise in circumstances
where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation
cannot be measured reliably.
Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts.
Contingent Assets
A contingent asset arises where an event has taken place that gives the Council a possible asset whose existence will only be confirmed by the
occurrence or otherwise of uncertain future events not wholly within the control of the Council.
Contingent assets are not recognised in the Balance Sheet but disclosed in a to the accounts where it is probable that there will be an inflow of
economic benefits or service potential.
Statement of Accounts 2010/11
30
North Norfolk District Council
NOTES TO THE ACCOUNTS - ACCOUNTING POLICIES
T
Reserves
The Council sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating
amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it
is charged to the appropriate service and included against the Surplus/Deficit on the Provision of Services in the Comprehensive Income and
Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there
is no net charge against council tax for the expenditure.
Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments and retirement benefits and that do not
represent usable resources for the Council - these Unusable Reserves are explained elsewhere within the Accounting Statements.
U
Revenue Expenditure Funded from Capital under Statute
Expenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of a non-current asset has
been charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the Council has
determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the Movement in Reserves Statement
from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so that there is no impact on the level of
council tax.
V
VAT
VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty's Revenue and Customs. VAT receivable is
excluded from income.
W
Area Based Grants
Area Based Grant (ABG) is a general grant allocated by central Government directly to local authorities as additional revenue funding. ABG is nonring fenced and is credited to Taxation and Non Specific Grant Income in the Comprehensive Income and Expenditure Statement.
Statement of Accounts 2010/11
31
North Norfolk District Council
NOTES TO THE ACCOUNTS
2.
Accounting Standards That Have Been Issued but Have Not Yet Been Adopted
The Code of Practice on Local Authority Accounting in the UK 2011/12 has introduced a change in accounting policy in relation to the treatment of
heritage assets held by the Council, which will need to be adopted fully by the Council in the 2011/12 financial statements.
The Council is required to disclose information relating to the impact of the accounting change on the financial statements as a result of the adoption
by the Code of a new standard that been issued, but is not yet required to be adopted by the Council, in this case, heritage assets. Full adoption of
the standard will be required for the 2011/12 financial statements. However, the Council is required to make disclosure of the estimated effect of the
new standard in these (2010/11) financial statements. The new standard will require that a new class of asset, heritage assets, is disclosed
separately on the face of the Council’s Balance Sheet in the 2011/12 financial statements.
“Heritage Assets” (FRS30) are assets that are held by the council principally for their contribution to knowledge or culture. It is not anticipated that
this change will have any material financial effect in relation to revaluations gains or losses or depreciation or impairment.
3.
Critical Judgements in Applying Accounting Policies
In applying the accounting policies set out in 1, the Council has had to make certain judgements about complex transactions or those involving
uncertainty about future events. The critical judgements made in the Statement of Accounts are:
•
•
4.
There is a high degree of uncertainty about future levels of funding for local government. However, the Council has determined that this
uncertainty is not yet sufficient to provide an indication that the assets of the Council might be impaired as a result of a need to close facilities
and reduce levels of service provision.
Asset Categorisation - The Code classifies assets according to certain criteria. For example investment properties are classified as those
assets that are held primarily to generate rental income or for capital appreciation, surplus assets are those assets that are surplus to service
needs and do not meet the criteria for investment property or assets held for sale. Assets held for sale is usually restricted to property that is
expected to be sold in 12 months. For the Council, industrial rental units have been treated as other land and buildings based on the
judgement that they are held for a service objective of Economic Development and regeneration.
Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty
The Statement of Accounts contains estimated figures that are based on assumptions made by the Council about the future or that are otherwise
uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances
cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.
Statement of Accounts 2010/11
32
North Norfolk District Council
NOTES TO THE ACCOUNTS
The items in the Council's Balance Sheet at 31 March 2011 for which there is a significant risk of material adjustment in the forthcoming financial
year are as follows:
Item
Property Plant and Equipment
Uncertainties
Asset valuation in the current economic climate is
subject to significant stress. Impairment by the
Council of its asset base has been undertaken in
a robust way to reflect the changes in its asset
values. Depreciation charges are related to the
useful life of the assets and dependant on the
level of repairs and maintenance that will be
incurred in relation to individual assets.
Effect if actual results differ from assumptions
It is important that the asset values in the Balance
Sheet are kept under review. If the useful lives of the
assets are reduced depreciation increases and the
carrying value of the assets falls. Whilst there is a risk
in any valuation exercise changes to useful lives and
depreciation do not impact the Council’s useable
reserves as depreciation charges do not fall on the
Council Tax payer.
Pensions Liability
Estimation of the net liability to pay pensions
depends on a number of complex judgements
relating to the discount rate used, the rate at
which salaries are projected to increase, changes
in retirement ages, mortality rates and expected
returns on pension fund assets. Actuaries are
employed by the pension schemes
administrators to provide expert advice about the
assumptions to be applied.
The effects on the net pensions liability of changes in
individual assumptions can be measured, for example
a 0.5% decrease in the real discount rate assumption
would result in an increase of 9% in the pension
liability which is approximately £6.015m.
Statement of Accounts 2010/11
33
A one year increase in member life expectancy would
result in an increase of 3% in the pension liability
which is approximately £2.027m. If salaries were to
increase by 0.5% more than anticipated, the pension
liability would increase by 2%, approximating to
£1.412m. If pensions payable were to increase by
0.5% more than anticipated, the pension liability
would increase by 6%, approximating to £4.237m.
North Norfolk District Council
NOTES TO THE ACCOUNTS
5.
Movement in Reserves Statement - Adjustments between Accounting Basis and Funding Basis Under Regulations
This details the adjustments that are made to the total comprehensive income and expenditure recognised by the Council in the year in accordance
with proper accounting practice to the resources that are specified by statutory provisions as being available to the Council to meet future capital and
revenue expenditure.
2009/10
Adjustments involving the Capital Adjustment Account
Reversal of items debited or credited to the Comprehensive Income and
Expenditure Statement:
Charges for depreciation and impairment of non current assets
Amortisation of intangible assets
Capital grants and contributions that have been applied to capital financing
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
Capital
Grants
Unapplied
Account
£000
Movement in
Unusable
Reserves
£000
1,853
0
0
(1,853)
80
0
0
(80)
(1,258)
0
0
1,258
482
0
0
(482)
Revenue expenditure funded from capital under statute
Amounts of non current assets written off on disposal or sale as part of the
gain/loss on disposal to the Comprehensive Income and Expenditure
Statement
Insertion of items not debited or credited to the Comprehensive Income and
Expenditure Statement:
Statutory provision for the financing of capital investment
314
0
0
(314)
(320)
0
0
320
Capital expenditure charged against the General Fund
(251)
0
0
251
(78)
0
78
0
0
0
(11)
11
Adjustments involving the Capital Grants Unapplied Account
Reversal of unapplied capital grants and contributions credited to the
Comprehensive Income and Expenditure Statement
Application of grants to capital financing
Statement of Accounts 2010/11
34
North Norfolk District Council
NOTES TO THE ACCOUNTS
2009/10
Adjustments involving the Capital Receipts Reserve
Transfers of sale proceeds credited as part of the gain/loss on disposal to the
Comprehensive Income and Expenditure Statement
Use of the Capital Receipts Reserve to finance new capital expenditure
Contribution from the Capital Receipts Reserve to finance the payments to
the Government capital receipts pool
Adjustments involving the Deferred Capital Receipts Reserve
Transfer of deferred sale proceeds credited as part of the gain/loss on
disposal to the Comprehensive Income and Expenditure Statement
Adjustments involving the Financial Instruments Adjustment Account
Amount by which finance costs charged to the Comprehensive Income and
Expenditure Statement are different from finance costs chargeable in the
year in accordance with statutory requirements
Adjustments involving the Pensions Reserve
Reversal of items relating to post employment benefits debited or credited to
the surplus or deficit on the provision of services in the Comprehensive
Income and Expenditure Statement
Employer's pensions contributions and direct payments to pensioners
payable in the year
Adjustments involving the Collection Fund Adjustment Account
Amount by which council tax income credited to the Comprehensive Income
and Expenditure Statement is different from the council tax income calculated
for the year in accordance with statutory requirements
Statement of Accounts 2010/11
35
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
Capital
Grants
Unapplied
Account
£000
Movement in
Unusable
Reserves
£000
0
219
0
(219)
0
(1,513)
0
1,513
1
(1)
0
0
0
0
0
0
0
0
0
0
2,466
0
0
(2,466)
(1,957)
0
0
1,957
20
0
0
(20)
North Norfolk District Council
NOTES TO THE ACCOUNTS
2009/10
Adjustments involving the Accumulating Compensated Absences
Adjustment Account
Amount by which officer remuneration charged to the Comprehensive
Income and Expenditure Statement on an accruals basis is different from
remuneration chargeable in the year in accordance with statutory
requirements.
Total Adjustments
Statement of Accounts 2010/11
36
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
Capital
Grants
Unapplied
Account
£000
Movement in
Unusable
Reserves
£000
6
0
0
(6)
1,358
(1,295)
67
(130)
North Norfolk District Council
NOTES TO THE ACCOUNTS
2010/11
Adjustments involving the Capital Adjustment Account
Reversal of items debited or credited to the Comprehensive Income and
Expenditure Statement:
Charges for depreciation and impairment of non current assets
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
Capital
Grants
unapplied
Account
£000
Movement in
Unusable
Reserves
£000
1,787
0
0
(1,787)
577
0
0
(577)
0
0
0
0
Amortisation of intangible assets
135
0
0
(135)
Finance Lease capital payments
0
0
0
0
(444)
0
0
444
661
0
0
(661)
(158)
0
0
158
Revaluation losses on Property, Plant and Equipment
Movements in the market value of Investment Properties
Capital grants and contributions that have been applied to capital financing
Revenue expenditure funded from capital under statute
Amounts of non current assets written off on disposal or sale as part of the
gain/loss on disposal to the Comprehensive Income and Expenditure
Statement
Insertion of items not debited or credited to the Comprehensive Income and
Expenditure Statement:
Statutory provision for the financing of capital investment
(343)
0
0
343
Capital expenditure charged against the General Fund
(112)
0
0
112
0
0
0
0
0
0
0
0
Adjustments involving the Capital Grants Unapplied Account
Reversal of unapplied capital grants and contributions credited to the
Comprehensive Income and Expenditure Statement
Application of grants to capital financing
0
Adjustments involving the Capital Receipts Reserve
Statement of Accounts 2010/11
37
North Norfolk District Council
NOTES TO THE ACCOUNTS
2010/11
Transfers of sale proceeds credited as part of the gain/loss on disposal to the
Comprehensive Income and Expenditure Statement
Use of the Capital Receipts Reserve to finance new capital expenditure
Contribution from the Capital Receipts Reserve towards administrative costs
of non current asset disposals
Contribution from the Capital Receipts Reserve to finance the payments to
the Government capital receipts pool
Transfer from Deferred Capital Receipts Reserve on receipt of cash
Adjustments involving the Deferred Capital Receipts Reserve
Transfer of deferred sale proceeds credited as part of the gain/loss on
disposal to the Comprehensive Income and Expenditure Statement
Adjustments involving the Financial Instruments Adjustment Account
Amount by which finance costs charged to the Comprehensive Income and
Expenditure Statement are different from finance costs chargeable in the
year in accordance with statutory requirements
Adjustments involving the Pensions Reserve
Reversal of items relating to post employment benefits debited or credited to
the surplus or deficit on the provision of services in the Comprehensive
Income and Expenditure Statement
Employer's pensions contributions and direct payments to pensioners
payable in the year
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
Capital
Grants
unapplied
Account
£000
Movement in
Unusable
Reserves
£000
0
193
0
(193)
0
(1,280)
0
1,280
0
0
0
0
2
(2)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(4,053)
0
0
4,053
(1,791)
0
0
1,791
Adjustments involving the Collection Fund Adjustment Account
Statement of Accounts 2010/11
38
North Norfolk District Council
NOTES TO THE ACCOUNTS
2010/11
Amount by which council tax income credited to the Comprehensive Income
and Expenditure Statement is different from the council tax income calculated
for the year in accordance with statutory requirements
Adjustments involving the Accumulating Compensated Absences
Adjustment Account
Amount by which officer remuneration charged to the Comprehensive
Income and Expenditure Statement on an accruals basis is different from
remuneration chargeable in the year in accordance with statutory
requirements.
Total Adjustments
Statement of Accounts 2010/11
39
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
Capital
Grants
unapplied
Account
£000
Movement in
Unusable
Reserves
£000
1
0
0
(1)
(26)
0
0
26
(3,764)
(1,089)
0
4,853
North Norfolk District Council
NOTES TO THE ACCOUNTS
6.
Movement in Reserves Statement – Transfers to/from Earmarked Reserves
This sets out the amounts set aside from the General Fund balances in earmarked reserves to provide financing for future expenditure plans and the
amounts posted back from earmarked reserves to meet General Fund expenditure in 2010/11.
Balance at
1 April
2009
£000
Organisational Development
Transfers
Out
2009/10
£000
Transfers
in 2009/10
£000
Balance at
31 March
2010
£000
Transfers
Out
2010/11
£000
Transfers
In 2010/11
£000
Balance at
31 March
2011
£000
92
(92)
90
90
0
90
180
240
(210)
77
107
(65)
0
42
0
0
474
474
(372)
520
622
Asset Management
148
(51)
0
97
(38)
12
71
Sheringham Splash
65
0
11
76
0
0
76
Sports Hall Equipment
15
0
4
19
(7)
10
22
Common Training
21
(21)
31
31
(26)
22
27
Local Strategic Partnership
499
(71)
0
428
(12)
228
644
Environmental Health
163
(1)
0
162
(80)
0
82
Environmental Policy
65
(55)
29
39
(9)
0
30
0
0
40
40
0
40
80
Land Charges
57
(57)
0
0
0
50
50
Local Development Framework
90
(46)
0
44
(44)
0
0
LSVT Reserve
435
0
0
435
0
0
435
Regeneration Projects
132
(109)
82
105
(27)
18
96
41
(41)
28
28
(28)
14
14
Housing and Planning Delivery Grant - Revenue
158
(50)
480
588
(192)
8
404
Housing and Planning Delivery Grant - Capital
198
(162)
0
36
(23)
0
13
Coast Protection
Pathfinder
Election Reserve
Arts and Community Projects
Statement of Accounts 2010/11
40
North Norfolk District Council
NOTES TO THE ACCOUNTS
Balance at
1 April
2009
£000
Transfers
Out
2009/10
£000
Transfers
in 2009/10
£000
Balance at
31 March
2010
£000
Transfers
Out
2010/11
£000
Transfers
In 2010/11
£000
Balance at
31 March
2011
£000
Housing
127
(35)
62
154
0
155
309
Concessionary Fares
150
0
0
150
0
0
150
Benefits
743
(117)
219
845
(296)
362
911
Restructuring and Invest to Save
685
(206)
0
479
(221)
82
340
Carbon Management
0
0
40
40
(4)
0
36
Whistle Blowing
0
0
10
10
0
0
10
Legal and Democratic Services
0
0
49
49
(12)
10
47
Cromer Pier
0
0
0
0
0
15
15
72
(72)
0
0
0
0
0
Capital Projects Reserve
111
(16)
1,029
1,124
(227)
605
1,502
Grassed Area Deposits
273
0
0
273
0
0
273
4,580
(1,412)
2,755
5,923
(1,683)
2,241
6,481
Local Government Reorganisation
Total
Total transfers out in 2010/11
(1,683)
Total transfers in during 2010/11
2,241
Net Movement in Earmarked Reserves in 2010/11
558
The purpose of each earmarked reserves is explained below:
Organisational Development - To provide funding for organisation development to create capacity within the organisation and address anomalies
within the pay structure.
Coast Protection - To support the ongoing coast protection maintenance programme.
Statement of Accounts 2010/11
41
North Norfolk District Council
NOTES TO THE ACCOUNTS
Pathfinder - To help Coastal Communities adapt to coastal changes. The balance represents grant funding that has been received but has not yet
been spent.
Asset Management - To support improvements to our existing assets as identified through the Asset Management Plan.
Sheringham Splash - Earmarked for repairs and renewals for the Splash facility, the transfers in the year represent repair budget under spends.
Sports Hall Equipment - To support renewals for sports hall equipment. Transfers in the year represents over or under achievement of income
target.
Common Training - To deliver the corporate training and development programme.
Local Strategic Partnership - To ring fence under spends of the Local Strategic Partnership for future liabilities and service delivery.
Environmental Health - Earmarking of underspends for ongoing service commitments.
Environmental Policy - To fund a range of environmental policy initiatives.
Election Reserve - Established to meet costs associated with district council elections, to smooth the impact between financial years.
Land Charges – The balance includes the new burdens personal search fee grant not utilised in 2011/12.
Local Development Framework - To fund the examination and associated costs for the local development framework process.
LSVT Reserve - To meet the cost of successful warranty claims not covered by bonds and insurance following the housing stock transfer.
Regeneration Projects - Earmarked for various regeneration projects.
Arts and Community Projects – To fund arts and community projects.
Housing and Planning Delivery Grant (Revenue and Capital) - Balance of grant received in previous years earmarked for funding related revenue
and capital projects.
Housing – Includes homelessness grant funding received in previous years that has been earmarked for related projects.
Statement of Accounts 2010/11
42
North Norfolk District Council
NOTES TO THE ACCOUNTS
Concessionary Fares - To underwrite the potential increased costs resulting from ongoing claims by the bus operators.
Benefits - To mitigate any claw back by the Department of Works and Pensions following final audited subsidy determination.
Restructuring and Invest to Save - To be used for restructuring costs including one-off redundancy and pension strain costs and invest to save
projects.
Carbon Management - To fund revenue invest to save initiatives as part of the Council's Carbon Management Plan.
Whistle Blowing - Commissioning investigation activity as required.
Legal and Democratic Services – Includes funding for Compulsory Purchase Order (CPO) work and other one-off work.
Cromer Pier - To fund future repair costs for the pier.
Local Government Reorganisation – previously established to provide funding for the Council's input to the Local Government Review for Norfolk
and Suffolk.
Capital Projects Reserve - To provide funding for capital projects. This includes the VAT shelter income that is received in the year and not yet
spent on projects.
Grassed Area Deposits - To finance ongoing commitments in relation to grounds maintenance contracts.
Statement of Accounts 2010/11
43
North Norfolk District Council
NOTES TO THE ACCOUNTS
7.
Comprehensive Income and Expenditure Statement – Other Operating Expenditure
2009/10
£000
2010/11
£000
1,319 Parish council precepts
1,427
0 Levies
0
65 Gains/losses on trading operations (18)
34
1 Payments to the Government Housing Capital Receipts Pool
314 Gains/losses on the disposal of non current assets
(158)
1,699 Total
8.
2
1,305
Comprehensive Income and Expenditure Statement – Financing and Investment Income and Expenditure
2009/10
2010/11
£000
£000
50 Interest payable and similar charges
27
1,453 Pensions interest cost and expected return on pensions assets
1,145
(720) Interest receivable and similar income
(547)
0 Changes in the fair value of investment properties
0
0 Other investment income
0
783
Statement of Accounts 2010/11
Total
625
44
North Norfolk District Council
NOTES TO THE ACCOUNTS
9.
Comprehensive Income and Expenditure Statement – Taxation and Non Specific Grant Income
2009/10
2010/11
£000
£000
(6,871) Council tax income
(7,194)
(7,208) Non domestic rates
(7,865)
(1,664) Revenue Support Grant
(1,142)
(669) Other Non-ring fenced government grants
(36)
(1,336) Capital grants and contributions
(444)
(17,748) Total
10.
(16,681)
Comprehensive Income and Expenditure Statement – Material Items of Income and Expense
Following the Chancellor of the Exchequer’s budget statement on 22 June 2010 the calculations of future pension increases are being linked to
Consumer Price Index (CPI) rather than the Retail Price Index (RPI). The impact on the accounts is to produce a negative past service cost item of
£6,733k.
11.
Balance Sheet – Usable Reserves
Movements in the Council’s usable reserves are detailed in the Movement in Reserves Statement and notes 5 and 6.
Statement of Accounts 2010/11
45
North Norfolk District Council
NOTES TO THE ACCOUNTS
12.
Balance Sheet – Unusable Reserves
The following provides a summary of the details of the Council’s unusable reserves. Further details on each of the reserves are provided below.
2009/10
£000
2010/11
£000
10,375 Revaluation Reserve
10,748
343 Available for Sale Financial Instruments Reserve
158
29,534 Capital Adjustment Account
28,588
0 Financial Instruments Adjustment Account
0
(38,065) Pensions Reserve
(19,521)
22 Collection Fund Adjustment Account
21
(252) Accumulated Compensated Absences Adjustment Account
1,957 Total Unusable Reserves
Statement of Accounts 2010/11
(226)
19,768
46
North Norfolk District Council
NOTES TO THE ACCOUNTS
Revaluation Reserve
The Revaluation Reserve contains the gains made by the Council arising from increases in the value of its Property, Plant and Equipment (and
Intangible Assets). The balance is reduced when assets with accumulated gains are:
•
•
•
revalued downwards or impaired and the gains are lost
used in the provision of services and the gains are consumed through depreciation, or
disposed of and the gains are realised
The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising
before that date are consolidated into the balance on the Capital Adjustment Account.
2009/10
2010/11
£000
£000
10,237 Balance at 1 April
10,375
216 Upward revaluation of assets
Downward revaluation of assets and impairment losses not charged to
0
the surplus/deficit on the provision of services
Surplus or deficit on revaluation of on-current asserts posted to the
0
comprehensive income and expenditure statement (7)
Difference between fair value depreciation and historical cost
(78)
depreciation
0 Accumulated gains on assets sold or scrapped
0 Amount written off to the capital adjustment account
(16)
0
(70)
0
0
10,375 Balance at 31 March
Statement of Accounts 2010/11
459
10,748
47
North Norfolk District Council
NOTES TO THE ACCOUNTS
Available for Sale Financial Instruments Reserve
The Available for Sale Financial Instruments Reserve contains the gains made by the Council arising from increases in the value of its investments
that have quoted market prices or otherwise do not have fixed or determinable payments. The balance is reduced when investments with
accumulated gains are:
•
•
revalued downwards or impaired and the gains are lost
disposed of and the gains are realised
2009/10
2010/11
£000
£000
469 Balance at 1 April
343
0 Upward revaluation of investments
Downward revaluation of investments not charged to the surplus/deficit
(126)
on the provision of services
Accumulated gains on assets sold and maturing assets written out to the
0 comprehensive income and expenditure statement as part of other
investment income
343 Balance at 31 March
Statement of Accounts 2010/11
0
(185)
0
158
48
North Norfolk District Council
NOTES TO THE ACCOUNTS
Capital Adjustment Account
The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of noncurrent assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited
with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive
Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert fair value figures to a historical cost basis).
The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition, construction and enhancement.
The Account contains accumulated gains and losses on Investment Properties and gains recognised on donated assets that have yet to be
consumed by the Council.
The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date that the Revaluation
Reserve was created to hold such gains.
Note 5 provides details of the source of all the transactions posted to the Account, apart from those involving the Revaluation Reserve.
Statement of Accounts 2010/11
49
North Norfolk District Council
NOTES TO THE ACCOUNTS
2009/10
£000
29,051
(1,853)
0
(80)
(482)
(533)
Balance at 1 April
Reversal of items relating to capital expenditure debited or credited to the comprehensive income
and expenditure statement:
~ charges for depreciation and impairment of non current assets
~ revaluation losses on property, plant and equipment
~ amortisation of intangible assets
~ revenue expenditure funded from capital under statute
~ amounts of non current assets written off on disposal or sale as part of the gain/loss on disposal to
the comprehensive income and expenditure statement
26,103
2010/11
£000
29,534
(1,787)
(577)
(135)
(661)
(35)
26,339
78 Adjusting amounts written out of the revaluation reserve
26,181 Net written out amount of the cost of non current assets consumed in the year
Capital financing applied in the year:
1,513 ~ use of capital receipts reserve to finance new capital expenditure
~ capital grants and contributions credited to the comprehensive income and expenditure statements
1,258
that have been applied to capital financing
11 ~ application of grants to capital financing from the capital grants unapplied account
320 ~ statutory provision for the financing of capital investment charged against the general fund balance
251 ~ capital expenditure charged against the general fund balance
29,534
70
26,409
1,280
444
0
343
112
28,588
0
Movements in the market value of investment properties debited or credited to the comprehensive
income and expenditure statement
0
0
Movements in the donated assets account credited to the comprehensive income and expenditure
statement
0
29,534
Statement of Accounts 2010/11
Balance at 31 March
50
28,588
North Norfolk District Council
NOTES TO THE ACCOUNTS
Pensions Reserve
The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for
funding benefits in accordance with statutory provisions. The Council accounts for post employment benefits in the Comprehensive Income and
Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation,
changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits
earned to be financed as the Council makes employer's contributions to pension’s funds or eventually pays any pensions for which it is directly
responsible. The deficit on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and
the resources the Council has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the
benefits come to be paid.
2009/10
2010/11
£000
£000
(17,864)
Balance at 1 April
(38,065)
(19,692) Actuarial gains or (losses) on pensions assets and liabilities
Reversal of items relating to retirement benefits debited or credited to the
(2,466) surplus or deficit on the provision of services in the comprehensive income
and expenditure statement
Employer's pensions contributions and direct payments to pensioners
1,957
payable in the year
(38,065)
Statement of Accounts 2010/11
Balance at 31 March
12,700
4,053
1,791
(19,521)
51
North Norfolk District Council
NOTES TO THE ACCOUNTS
Collection Fund Adjustment Account
The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax income in the Comprehensive Income
and Expenditure Statement as it falls due from council tax payers compared with the statutory arrangements for paying across amounts to the
General Fund from the Collection Fund.
2009/10
£000
2010/11
£000
42
22
Balance at 1 April
Amount by which council tax income credited to the comprehensive income
(20) and expenditure statement is different from council tax income calculated for
the year in accordance with statutory requirements
22
Balance at 31 March
(1)
21
Accumulating Compensated Absences Adjustment Account
The Accumulating Compensated Absences Adjustment Account absorbs the differences that would otherwise arise on the General Fund Balance
from accruing for compensated absences earned but not taken in the year. Statutory arrangements require that the impact on the General Fund
Balance is neutralised by transfers to or from the Account.
2009/10
2010/11
£000
£000
(246)
Balance at 1 April
(252)
246 Settlement or cancellation of accrual made at the end of the preceding year
(288) Amounts accrued at the end of the current year
(258)
Amount by which officer remuneration charged to the comprehensive income
36 and expenditure statement on an accruals basis is different from remuneration
chargeable in the year in accordance with statutory requirements
(252)
Statement of Accounts 2010/11
252
Balance at 31 March
32
(226)
52
North Norfolk District Council
NOTES TO THE ACCOUNTS
13.
Cash Flow Statement – Operating Activities
The cash flows for operating activities include the following items:
2009/10
£000
2010/11
£000
1,122 Interest received
(50) Interest paid
555
(27)
0 Dividends received
14.
0
Cash Flow Statement – Investing Activities
2009/10
£000
2010/11
£000
Purchase of property, plant and equipment, investment property and
intangible assets
(38,560) Purchase of short-term and long-term investments
(3,028)
0 Other payments for investing activities
Proceeds from the sale of property, plant and equipment, investment
219
property and intangible assets
42,160 Proceeds from short-term and long-term investments
105
(42,540)
0
193
42,540
1,316 Other receipts from investing activities
1,808
2,107
2,106
Statement of Accounts 2010/11
Net cash flows from investing activities
53
North Norfolk District Council
NOTES TO THE ACCOUNTS
15.
Cash Flow Statement – Financing Activities
2009/10
£000
2010/11
£000
0 Cash receipts of short-term and long-term borrowings
(909) Other receipts from financing activities
Cash payments for the reduction of the outstanding liabilities relating to
(320)
finance leases and on-balance sheet PFI contracts
(1,301) Repayments of short-term and long-term borrowing
0 Other payments for financing activities
(2,530)
16.
0
309
(343)
0
0
Net cash flows from financing activities
(34)
Cash Flow Statement – Cash and Cash Equivalents
The balance of cash and cash equivalents is made up of the following elements:
2008/09
£000
2009/10
£000
9
2010/11
£000
4
131
100
753
1,824
893
1,928
Statement of Accounts 2010/11
Cash held by officers
4
Bank current accounts
(1,960)
Call Accounts with Banks and investments in Money Market Funds
Total cash and cash equivalents
54
6,108
4,152
North Norfolk District Council
NOTES TO THE ACCOUNTS
17.
Amounts Reported for Resource Allocation Decisions
The analysis of income and expenditure by service on the face of the Comprehensive Income and Expenditure Account is that specified by the Best
Value Accounting Code of Practice. However, decisions about resource allocation are taken by the Council's Cabinet on the basis of budget reports
analysed across Service Areas.
•
These reports are prepared on a different basis from the accounting policies used in the financial statements
The income and expenditure of the Council's principal Service Areas recorded in the budget reports for the year is as follows:
Service Area Income and
Expenditure - 2010/11
Community Environment Information
£000
£000
£000
Resources
Supporting
Communities
Total
£000
£000
£000
Fees, charges and other
services income
Government grants
(4,827)
(844)
(4,543)
0
(3,020)
0
(7,595)
(33,469)
(435)
0
(20,420)
(34,313)
Total Income
(5,671)
(4,543)
(3,020)
(41,064)
(435)
(54,733)
2,624
1,908
1,776
4,191
479
10,978
34
3,343
25
7,644
21
1,241
(7,074)
35,329
6
204
(6,988)
47,761
1,212
3,322
1,085
2,015
177
983
755
3,346
43
209
3,272
9,875
10,535
12,677
4,198
36,547
941
64,898
4,864
8,134
1,178
(4,517)
506
10,165
Employee expenses
Pension Fund Accounting
Entries
Other support expenses
Depreciation, amortisation &
impairment
Support service expenses
Total Expenditure
Net Expenditure
Statement of Accounts 2010/11
55
North Norfolk District Council
NOTES TO THE ACCOUNTS
Service Area Income and
Expenditure - 2009/10
Comparative Figures
Community Environment Information Resources
£000
£000
£000
£000
Supporting
Communities
Total
£000
£000
Fees, charges and other
services income
Government grants
(5,472)
(1,087)
(4,415)
0
(2,953)
0
(7,341)
(31,626)
(239)
0
(20,420)
(32,713)
Total Income
(6,559)
(4,415)
(2,953)
(38,967)
(239)
(53,133)
Employee expenses
Pension Fund Accounting
Entries
Other support expenses
Depreciation, amortisation &
impairment
Support service expenses
2,770
1,954
1,828
4,306
512
11,370
(180)
3,247
(122)
7,648
(106)
1,298
(506)
33,702
(30)
363
(944)
46,258
788
2,768
470
2,476
185
882
131
3,482
(38)
87
1,536
9,695
Total Expenditure
9,393
12,426
4,087
41,115
894
67,915
Net Expenditure
2,834
8,011
1,134
2,148
655
14,782
Statement of Accounts 2010/11
56
North Norfolk District Council
NOTES TO THE ACCOUNTS
Reconciliation of Service Area Income and Expenditure to Cost of Services in the Comprehensive Income and Expenditure Statement
This reconciliation shows how the figures in the analysis of Service Area income and expenditure relate to the amounts included in the
comprehensive income and expenditure statement.
2009/10
£000
2010/11
£000
14,782 Net expenditure in the Service Area analysis
(10) Net expenditure of services and support services not included in the analysis
10,165
10
0 Amounts in the comprehensive income and expenditure statement not reported to management in the analysis
601 Amounts included in the analysis not included in the comprehensive income and expenditure statement
15,373
Cost of services in comprehensive income and expenditure statement
Statement of Accounts 2010/11
57
0
(17)
10,158
North Norfolk District Council
NOTES TO THE ACCOUNTS
Reconciliation to Subjective Analysis
This reconciliation shows how the figures in the analysis of Service Area income and expenditure relate to a subjective analysis of the surplus or
deficit on the provision of services included in the comprehensive income and expenditure statement.
2010/11
Service
Area
Analysis
£000
Services
and
Support
Services
not in
Analysis
£000
Amounts not
reported to
management
£000
Amounts
Cost of
Allocation
not
Services Corporate
of
included
(sub
Amounts
Recharges
in I&E
total)
£000
£000
£000
£000
Total
£000
Fees, charges and other services income
Surplus or deficit on associates and joint
ventures
Interest and investment income
Income from council tax
Government grants and contributions
Total Income
(20,420)
10
0
0
(144)
(20,554)
0
0
0
0
0
0
0
0
(34,313)
(54,733)
0
0
0
10
0
0
0
0
0
0
36
36
0
0
0
(144)
0
0
(34,277)
(54,831)
Employee expenses
Pension Fund Accounting Entries
Other services expenses
Support service recharges
Depreciation, amortisation and impairment
Interest payments
Precepts and levies
Payments to housing capital receipts pool
Gain or loss on disposal of fixed assets
Total Expenditure
10,978
(6,988)
47,761
9,875
3,272
0
0
0
0
64,898
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(53)
0
0
0
0
0
0
(53)
5,412
0
4,607
(9,875)
0
0
0
0
0
144
16,390
(6,988)
52,315
0
3,272
0
0
0
0
64,989
0
1,145
212
0
0
27
1,427
2
(158)
2,655
16,390
(5,843)
52,527
0
3,272
27
1,427
2
(158)
67,644
Surplus or deficit on the provision of
services
10,165
10
0
(17)
0
10,158
(14,751)
(4,593)
Statement of Accounts 2010/11
58
(178) (20,732)
0
0
(547)
(547)
(7,194)
(7,194)
(9,487) (43,764)
(17,406) (72,237)
North Norfolk District Council
NOTES TO THE ACCOUNTS
2009/10 Comparative Figures
Service
Area
Analysis
£000
Services
and
Support
Services
not in
Analysis
£000
Amounts not
reported to
management
£000
Amounts
Cost of
Allocation
not
Services Corporate
of
included
(sub
Amounts
Recharges
in I&E
total)
£000
£000
£000
£000
Total
£000
Fees, charges and other services income
Surplus or deficit on associates and joint
ventures
Interest and investment income
Income from council tax
Government grants and contributions
(20,420)
(10)
0
0
(185)
(20,615)
0
0
0
0
0
0
0
0
(32,713)
0
0
0
0
0
0
0
0
669
0
0
0
0
0
(32,044)
(720)
(720)
(6,871)
(6,871)
(10,877) (42,921)
Total Income
(53,133)
(10)
0
669
(185)
(52,659)
(18,633) (71,292)
Employee expenses
Pension Fund Accounting Entries
Other services expenses
Support service recharges
Depreciation, amortisation and
impairment
Interest payments
Precepts and levies
Payments to housing capital receipts pool
Gain or loss on disposal of fixed assets
11,370
(944)
46,258
9,695
0
0
0
0
0
0
0
0
0
0
(68)
0
5,117
0
4,763
(9,695)
16,487
(944)
50,953
0
0
1,453
230
0
16,487
509
51,183
0
1,536
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,536
0
0
0
0
0
50
1,319
1
314
1,536
50
1,319
1
314
Total Expenditure
67,915
0
0
(68)
185
68,032
3,367
71,399
(10)
0
601
0
15,373
(15,266)
107
Surplus or deficit on the provision of
services
Statement of Accounts 2010/11
14,782
59
(165) (20,780)
0
0
North Norfolk District Council
NOTES TO THE ACCOUNTS
18.
Trading Operations
The Council runs two service areas as trading services. Details of those services are as follows:
2009/10
£000
The Council currently operates four general produce markets on 3 car park sites in
Sheringham, Cromer and Stalham. They are provided to meet local demands and to
promote tourism. Until the 31st March 2011 the markets were managed by Norse
Commercial Services as a partnering arrangement. The trading objective is to
minimise the deficit relating to the service.
Turnover
Expenditure
Deficit
(76)
110
The Council lets a total of seventeen industrial units over three sites in Fakenham,
North Walsham and Catfield. The Catfield and Fakenham sites include starter units
which were developed jointly with the East of England Development Agency, to
provide opportunities for local business start ups and developments. The trading
objective is to minimise the deficit relating to the service.
Turnover
Expenditure
Deficit
(89)
139
Net deficit on trading operations:
2010/11
£000
£000
£000
(72)
103
34
31
(106)
129
50
23
84
54
Trading operations are incorporated into the Comprehensive Income and Expenditure Statement. Some are an integral part of one of the Council's
services to the public (e.g. refuse collection), whilst others are support services to the Council's services to the public. The expenditure of these
operations is allocated or recharged to headings in the net operating expenditure of continuing operations. Only a residual amount of the net surplus
on trading operations is charged as other operating expenditure (see 7):
2009/10 2010/11
£000
£000
Net deficit on trading operations
Services to the public included in expenditure of continuing operations
Support services recharged to expenditure of continuing operations
Net deficit debited to other operating expenditure
Statement of Accounts 2010/11
60
84
(19)
0
65
54
(20)
0
34
North Norfolk District Council
NOTES TO THE ACCOUNTS
19.
Members Allowances
The Council paid the following amounts to members of Council during the year. The figure from the original 2009/10 accounts (£300,378) included
£8,460 in respect of expenditure by the Chairman in undertaking Civic Duties while in office. Full details can be obtained by writing to North Norfolk
District Council, Information Services, Holt Road, Cromer, Norfolk, NR27 9EN.
2009/10
(restated)
2010/11
£
£
260,242
31,676
291,918
Allowances
Expenses
Total
Statement of Accounts 2010/11
259,424
29,218
288,642
61
North Norfolk District Council
NOTES TO THE ACCOUNTS
20.
Officers’ Remuneration
The following table sets out the remuneration paid to the Council’s senior officers. A senior officer is defined as being a statutory chief officer as
defined in the LGHA 1989 section 2(6); a non-statutory Chief officer as defined in the LGHA 1989 section 2(7); or someone with responsibility for the
management of the Council, being able to direct or control its major activities, whether solely or collectively.
Job Title
Salary, Fees
and
Allowance
Bonuses
Expenses
Allowances
£
£
£
Compensation
Pension
for Loss of
Contribution
Office
£
£
Total
£
2010/11
107,883
0
8,224
0
20,493
136,600
2009/10
107,883
0
8,221
0
20,282
136,386
2010/11
84,407
0
8,073
0
16,037
108,517
2009/10
84,407
0
8,073
0
15,869
108,349
2010/11
79,407
0
8,073
0
15,087
102,567
2009/10
79,407
0
8,073
0
14,928
102,408
2010/11
79,407
0
6,857
0
15,087
101,351
2009/10
79,407
0
7,444
0
14,928
101,779
2010/11
79,407
0
8,073
0
15,087
102,567
2009/10
79,407
0
8,073
0
14,928
102,408
Chief Executive
Deputy Chief Executive &
Section 151 Officer
Strategic Director Communities
Strategic Director Environment
Strategic Director Information
Statement of Accounts 2010/11
62
North Norfolk District Council
NOTES TO THE ACCOUNTS
The number of employees not falling into the category of senior officers shown above whose remuneration, excluding pension contributions was
£50,000 or more in bands of £5,000 were:
2009/10
2010/11
Number of Employees
Remuneration Band
Number of Employees
2
£50,000 - £54,999
3
1
£55,000 - £59,999
2
2
£60,000 - £64,999
1
21.
External Audit Costs
The Council has incurred the following costs in relation to the audit of the Statement of Accounts, certification of grant claims and statutory
inspections and to non-audit services provided by the Council's external auditors:
2009/10
£000
PWC
Fees payable with regard to external audit services carried
out by the appointed auditor for the year
Fees payable for the certification of grant claims and returns
for the year
Fees payable in respect of other services provided by
external audit
Total
22.
2009/10
2009/10
2010/11
2010/11
£000
Audit
Commission
£000
Total
£000
PWC
£000
Audit
Commission
2010/11
£000
Total
118
9
127
118
(5)
113
70
2
72
49
0
49
0
0
0
0
0
0
188
11
199
167
(5)
162
Termination Benefits
The Council terminated the contracts of a number of employees in 2010/11 incurring liabilities of £107,990 (£18,083 in 2009/10).
Statement of Accounts 2010/11
63
North Norfolk District Council
NOTES TO THE ACCOUNTS
23.
Defined Benefit Pension Schemes
Participation in pension schemes
As part of the terms and conditions of employment of its officers, the Council makes contributions towards the cost of post employment benefits.
Although these benefits will not actually be payable until employees retire, the Council has a commitment to make the payments and this needs to
be disclosed at the time that employees earn their future entitlement.
The Council participates in two post employment schemes:
•
The Local Government Pension Scheme, administered locally by Norfolk County Council - this is a funded defined benefit final salary
scheme, meaning that the Council and employees pay contributions into a fund, calculated at a level intended to balance the pensions
liabilities with investment assets.
•
Arrangements for the award of discretionary post retirement benefits upon early retirement - this is an unfunded defined benefit final
arrangement; under which liabilities are recognised when awards are made. However, there are no investment assets built up to meet the
pension’s liabilities, and cash has to be generated to meet actual pension’s payments as they eventually fall due.
Transactions relating to post employment benefits
We recognise the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are
eventually paid as pensions. However, the charge we are required to make against council tax is based on the cash payable in the year, so the real
cost of post employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. The following
transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance via the Movement in
Reserves Statement during the year:
Statement of Accounts 2010/11
64
North Norfolk District Council
NOTES TO THE ACCOUNTS
Local Government
Pension Scheme
2009/10
£000
Local Government
Pension Scheme
2010/11
£000
Comprehensive Income and Expenditure Statement
Cost of Services:
774 ~ current service cost
207 ~ past service costs loss/(gain)
32 ~ curtailments loss/(gain)
1,514
(6,733)
21
Financing and investment income expenditure
3,668 ~ interest cost
(2,215) ~ expected return on scheme assets
2,466 Total post employment benefit charged to the surplus or deficit on
the provision of services
4,348
(3,203)
(4,053)
Other post employment benefit charged to the comprehensive
income and expenditure statement
(19,692) ~ actuarial gains and (losses)
12,700
17,226 Total post employment benefit charged to the comprehensive
income and expenditure statement
(8,647)
Movement in reserves statement
~ reversal of net charges made to the surplus or deficit for the
(2,466) provision of services for post employment benefits in accordance
with the code
Statement of Accounts 2010/11
65
4,053
North Norfolk District Council
NOTES TO THE ACCOUNTS
Local Government
Pension Scheme
2009/10
£000
Local Government
Pension Scheme
2010/11
£000
Actual amount charged against the general fund balance for
pensions in the year
1,957 ~ employers' contributions payable to scheme
1,791
The cumulative amount of actuarial gains and losses recognised in the comprehensive income and expenditure statement to the 31 March 2011 is a
loss of £14.279m (£26.883m at 31 March 2010).
Assets and liabilities in relation to post employment benefits
Reconciliation of present value of the scheme liabilities (defined benefit obligation):
Funded Liabilities:
Local Government
Pension Scheme
£000
2009/10
2010/11
Opening balance at 1 April
Current service cost
Interest cost
Contributions by scheme participants
Curtailments
Actuarial gains and losses
Benefits paid
Un funded Benefits paid
Past service costs (gains)
53,664
774
3,668
549
32
28,466
(2,346)
(255)
207
84,759
1,514
4,348
518
21
(13,968)
(2,645)
(258)
(6,733)
Closing balance at 31 March
84,759
67,556
Statement of Accounts 2010/11
66
North Norfolk District Council
NOTES TO THE ACCOUNTS
Reconciliation of fair value of the scheme (plan) assets:
Local Government
Pension Scheme
2009/10
£000
35,800
2,215
8,840
0
1,636
549
255
(2,346)
(255)
Local Government
Pension Scheme
2010/11
£000
46,694
3,203
(1,364)
0
1,629
518
258
(2,645)
(258)
Opening balance at 1 April
Expected rate of return
Actuarial gains and losses
Settlement
Employers contributions
Contributions by scheme participants
Contributions in respect of Unfunded Benefits
Benefits paid
Unfunded Benefits paid
46,694 Closing balance at 31 March
48,035
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment
policy. Expected yields on fixed interest investments are based on gross redemption yields as at the Balance Sheet date. Expected returns on
equity investments reflect long-term real rates of return experienced in the respective markets.
The actual return on scheme assets in the year was a gain of £3.538m (2009/10: a gain of £11.058m).
Present value of liabilities:
Local government pension scheme
Unfunded Obligations
Fair value of assets in the local government pension scheme
Surplus/(deficit) in the scheme:
Local government pension scheme
Discretionary benefits
Total
Statement of Accounts 2010/11
67
2011
£000
2010
£000
2009
£000
2008
£000
2007
£000
(63,553)
(4,003)
48,035
(80,015)
(4,744)
46,694
(53,664)
0
35,800
(55,138)
0
45,305
(58,200)
0
45,558
(19,521)
0
(38,065)
0
(17,864)
0
(9,833)
0
(12,642)
0
(19,521)
(38,065)
(17,864)
(9,833)
(12,642)
North Norfolk District Council
NOTES TO THE ACCOUNTS
The liabilities show the underlying commitments that the Council has in the long run to pay post employment (retirement) benefits. The total liability
of £19.52m has a substantial impact on the net worth of the Council as recorded in the Balance Sheet. However, statutory arrangements for funding
the deficit mean that the financial position of the Council remains healthy:
•
the deficit on the local government scheme will be made good by increased contributions over the remaining working life of employees (i.e.
before payments fall due), as assessed by the scheme actuary.
•
finance is only required to be raised to cover discretionary benefits when the pensions are actually paid.
The total contributions expected to be made to the Local Government Pension Scheme by the Council in the year to 31 March 2012 is £1.4m.
Basis for estimating assets and liabilities
Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future
years dependent on assumptions about mortality rates, salary levels, etc. Both the Local Government Pension Scheme and Discretionary Benefits
liabilities have been assessed by Hymans Robertson LLP, an independent firm of actuaries, estimates for the County Council Fund being based on
the latest full valuation of the scheme as at 1 April 2010.
In relation to the Commutation Adjustment, an allowance is included for future retirements to elect to take 50% of the maximum additional tax-free
cash up to HMRC limits for pre-April 2008 service and 75% of the maximum tax-free cash for post-April 2008 service.
The principal assumptions used by the actuary have been:
Local Government
Pension Scheme
2009/10
7.8%
5.0%
5.8%
4.8%
Local Government
Pension Scheme
2010/11
Long-term expected rate of return on assets in the scheme:
~ equity investments
~ bonds
~ property
~ cash
Statement of Accounts 2010/11
68
7.5%
4.9%
5.5%
4.6%
North Norfolk District Council
NOTES TO THE ACCOUNTS
Local Government
Pension Scheme
2009/10
Local Government
Pension Scheme
2010/11
22.3
25.7
Mortality assumptions:
Longevity at 65 for current pensioners:
~ men
~ women
Longevity at 65 for future pensioners:
~ men
~ women
3.8%
5.3%
6.9%
5.5%
Pension Increase Rate (CPI)
Rate of increase in salaries
Expected Return on Assets
Rate of discounting scheme liabilities
20.8
24.1
21.2
23.4
23.6
25.8
2.8%
5.1%
6.7%
5.5%
The Discretionary Benefits arrangements have no assets to cover its liabilities. The Local Government Pension Scheme's assets consist of the
following categories, by proportion of the total assets held:
31 March
2010
%
67
17
10
6
100
31 March
2011
%
Equities
Bonds
Property
Cash
Statement of Accounts 2010/11
69
17
11
3
100
69
North Norfolk District Council
NOTES TO THE ACCOUNTS
History of experience gains and losses
The actuarial losses identified as movements on the Pensions Reserve in 2010/11 can be analysed into the following categories, measured as a
percentage of assets or liabilities at 31 March 2011;
2011
%
2010
%
2009
%
2008
%
2007
%
Difference between the expected and actual return on assets
(2.8)
18.9
(35.4)
(7.6)
(0.5)
Experience gains and losses on liabilities
(12.4)
0.4
(0.2)
Statement of Accounts 2010/11
70
5.8
(2.6)
North Norfolk District Council
NOTES TO THE ACCOUNTS
24.
Events after the Balance Sheet Date
The draft Statement of Accounts were authorised for issue by the Deputy Chief Executive on 30 June 2011. Events taking place after this date are
not reflected in the financial statements or notes. Where events taking place before this date provided information about conditions existing at 31
March 2011, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information.
25.
Related Parties
The Council is required to disclose material transactions with related parties - bodies or individuals that have the potential to control or influence the
council or to be controlled or influenced by the council. Disclosure of these transactions allows readers to assess the extent to which the council
might have been constrained in its ability to operate independently or might have secured the ability to limit another party's ability to bargain freely
with the Council.
Central Government
Central government has effective control over the general operations of the Council - it is responsible for providing the statutory framework within
which the Council operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the
Council has with other parties (e.g. council tax bills, housing benefits). Grants received from government departments are set out in the subjective
analysis in note 17 on amounts reported to decision makers. Grant receipts outstanding at 31 March 2011 are shown in note 39.
Members
Members of the council have direct control over the council's financial and operating policies. The total of members' allowances paid in 2010/11 is
shown in note 19. During 2010/11, works and services to the value of £36,045 were commissioned from companies in which four members had an
interest. Contracts were entered into in full compliance with the council's standing orders. In addition, the Council paid grants totalling £70,855 to
voluntary organisations in which three members had declared an interest. In all instances, the grants were made with proper consideration of
declarations of interest. The relevant members did not take part in any discussion or decision relating to the grants. Details of all these transactions
are recorded in the Register of Members' Interest, open to public inspection at the Council Offices during office hours.
Statement of Accounts 2010/11
71
North Norfolk District Council
NOTES TO THE ACCOUNTS
26.
Leases
Authority as Lessee
Finance Leases
The Council has determined that the contract with Norse Commercial Services Limited for waste collection services contains an embedded finance
lease in respect of the vehicles used for domestic refuse collection. A deferred liability has been set up for the estimated lease rental charges
included in the contract payments made to the contractor, and the assets are recognised on the balance sheet at net book value.
The accounting treatment for embedded leases in the new waste contract with Kier Street Services which commenced 1 April 2011 will ensure that
the asset and matching lease liability will be written off co-terminus with the contract period.
The vehicles subject to the lease are carried as property, plant and equipment in the balance sheet at the following net amounts:
Property, Plant and Equipment
31 March
2010
£000
31 March
2011
£000
594
594
317
317
The Council is committed to making minimum payments under these leases comprising settlement of the long-term liability for the acquisition of the
vehicles and finance costs which will be payable in future years while the liability remains outstanding. The minimum lease payments are made up of
the following amounts:
31 March
31 March
2010
2011
£000
£000
Finance lease liabilities (net present value of minimum lease payments):
~ current
~ non current
Finance costs payable in future years
Minimum lease payments
Statement of Accounts 2010/11
72
343
52
30
425
52
0
3
55
North Norfolk District Council
NOTES TO THE ACCOUNTS
The minimum lease payments will be payable over the following periods:
Minimum Lease
Payments
31 March
31 March
2010
2011
£000
£000
Not later than one year
Later than one year and not later
than five years
Later than five years
Finance Lease
Liabilities
31 March
31 March
2010
2011
£000
£000
370
55
343
52
55
0
0
0
52
0
0
0
425
55
395
52
Operating Leases
The Council leases property, land, vehicles and items of equipment, including printing and telephony equipment, as part of a number of operating
leases.
The future minimum lease payments due under non-cancellable leases in future years are:
Not later than one year
Later than one year and not later
than five years
Later than five years
Statement of Accounts 2010/11
31 March
2010
£000
31 March
2011
£000
98
124
217
186
270
143
501
537
73
North Norfolk District Council
NOTES TO THE ACCOUNTS
The expenditure charged to the Comprehensive Income and Expenditure Statement during the year in relation to these leases was:
Minimum lease payments
Contingent rents
2009/10
£000
2010/11
£000
174
43
153
33
217
186
Authority as Lessor
Operating Leases
The Council leases out properties under operating leases for the following purposes:
• for the provision of community services, such as sports facilities, tourism services and community centres
• for economic development purposes to provide suitable affordable accommodation for local businesses
The future minimum lease payments receivable under non-cancellable leases in future years are:
Not later than one year
Later than one year and not later than five years
Later than five years
31 March
2010
£000
31 March
2011
£000
(100)
(207)
(134)
(109)
(219)
(133)
(441)
(461)
The minimum lease payments receivable do not include rents that are contingent on events taking place after the lease was entered into, such as
adjustments following rent reviews.
Statement of Accounts 2010/11
74
North Norfolk District Council
NOTES TO THE ACCOUNTS
As at the 13th June 2011 three of the leases, included within the minimum lease payments receivable under non-cancellable leases in future years,
were surrendered. The properties concerned were the Maltings and Granary Buildings, and Units, 1, 2, 3 and 4 at the Sackhouse, Jicklings Yard.
As a result of these post balance sheet events, the minimum lease payments receivable would be reduced by £7,000 for the category of ‘Not later
than one year’, by £28,000 in the ‘Later than one year and not later than five years’ category, and by £97,000 for the period of ‘Later than five years’.
Statement of Accounts 2010/11
75
North Norfolk District Council
NOTES TO THE ACCOUNTS
27.
Investment Properties
The following items of income and expense have been accounted for in the Comprehensive Income and Expenditure Statement:
2009/10
£000
2010/11
£000
29
(0)
29
29
(2)
27
Rental income from investment property
Direct operating expenses arising from investment property
Net gain/(loss)
There are no restrictions on the Council's ability to realise the value inherent in its investment property or on the Council's right to the remittance of
income and the proceeds of disposal. The Council has no contractual obligations to purchase, construct or develop investment property or repairs,
maintenance or enhancement.
The following table summarises the movement in the fair value of investment properties over the year:
2008/09
£000
2009/10
£000
2010/11
£000
288
288
288
0
0
0
0
0
0
0
0
0
0
0
0
Net gains/losses from fair value adjustments
0
0
0
Transfers:
~ to/from inventories
~ to/from property, plant and equipment
Other changes
0
0
0
0
0
0
0
0
0
288
288
288
Balance at start of year
Additions:
~ purchases
~ construction
~ subsequent expenditure
Disposals
Balance at end of year
Statement of Accounts 2010/11
76
North Norfolk District Council
NOTES TO THE ACCOUNTS
28.
Intangible Assets
The Council accounts for its software as intangible assets, to the extent that the software is not an integral part of a particular IT system and
accounted for as part of the hardware item of Property, Plant and Equipment. Intangible assets would include both purchased licenses and internally
generated software.
All software is given a finite useful life, based on assessments of the period that the software is expected to be of use to the Council. The useful lives
assigned to software currently used by the Council are identified below, with the two most significant being shown separately:
Internally Generated
Assets
5 years
Other Assets
Probass, Choice Based Letting, Other
Software
None
The carrying amount of intangible assets is amortised on a straight-line basis. The amortisation of £135,073 charged to revenue in 2010/11
(£80,000 in 2009/10) was charged to the following lines within the income statement; Central Services to the Public (£60,181), Cultural,
Environmental and Planning (£55,302), and Housing Services (£19,590).
The movement on intangible asset balances during the year is as follows:
2008/09
Internally
Generated Other
Assets
Assets
£000
£000
Balance at start of year:
~ gross carrying amounts
~ accumulated
amortisation
Net carrying amount at
start of year
Additions:
~ purchases
Statement of Accounts 2010/11
2009/10
£000
Internally
Generated
Assets
£000
Total
2010/11
Other
Assets
Total
£000
£000
Internally
Generated
Assets
£000
Other
Assets
Total
£000
£000
0
479
479
0
538
538
0
939
939
0
(224)
(224)
0
(325)
(325)
0
(405)
(405)
0
255
255
0
213
213
0
534
534
0
59
59
0
401
401
0
86
86
77
North Norfolk District Council
NOTES TO THE ACCOUNTS
2008/09
2009/10
Internally
Generated
Assets
£000
Other
Assets
£000
Total
£000
Internally
Generated
Assets
£000
Amortisation for the period
0
(101)
(101)
Net carrying amount at
end of year
0
213
213
2010/11
Other
Assets
Total
£000
£000
Internally
Generated
Assets
£000
0
(80)
(80)
0
534
534
Other
Assets
Total
£000
£000
0
(135)
(135)
0
485
485
There are two items of capitalised software that are individually material to the financial statements.
Carrying Amount
21 March 2009
£000
31 March 2010
£000
31 March 2011
£000
Remaining
Amortisation
Period
Probass – Planning Back-office System
26
183
146
4 years
Housing Choice Based Lettings System
0
98
81
4 years
During 2010/11 the Council entered into two contracts for the purchase of software in relation to a new Asset Management Computer System, and
the extension of the Probass Planning system. Both systems are anticipated to be operational in 2011/12. The budgeted cost of the Asset
Management Computer system is £75,000, and the equivalent figure for the Probass project is £34,010.
29.
Impairment Losses
During 2010/11, the Council has recognised total impairment losses of £593,183 in relation to a number of its properties.
Statement of Accounts 2010/11
78
North Norfolk District Council
NOTES TO THE ACCOUNTS
An impairment loss of £109,840 has been recognised in relation to two properties which were purchases in year under the Pathfinder capital
scheme. The properties have been purchased for demolition, with the impairment value being identified as the difference between the purchase
price and the EN12 property valuation. This impairment loss has been charged to the Cultural, Environment and Planning line within the
Comprehensive Income and Expenditure Statement.
A further loss of £63,596 has been recognised in relation to Public Conveniences, which have been subjected to major refurbishments during the
2010/11 financial year. The impairment loss has been calculated by reference to the valuations for the conveniences following the capital
expenditure incurred, and this value has also been charged to the Cultural, Environment and Planning line in the Comprehensive Income and
Expenditure Statement.
The final impairment loss of £419,747 relates to the revaluation of the Parklands Caravan site, which has been revalued under the rolling five year
revaluation programme. The impairment loss has been charged to the Housing Services line within the Comprehensive Income and Expenditure
Statement.
30.
Property, Plant and Equipment
Movement on Balances
Movement in 2010/11:
Other
Land and
Buildings
£000
Cost or Valuation:
At 1 April 2010
Additions
Donations
Revaluation increases/(decreases)
recognised in the revaluation reserve
Revaluation increases/(decreases)
recognised in the surplus/(deficit) on the
provision of services
Statement of Accounts 2010/11
Vehicles,
Infrastructure Community
Plant and
Assets
Assets
Equipment
£000
£000
£000
Surplus
Assets
Assets
Under
Construction
£000
£000
Total
Property,
Plant and
Equipment
£000
38,775
189
0
7,917
383
0
9,912
65
0
468
0
0
2,667
201
0
331
251
0
60,070
1,089
0
459
0
0
0
0
0
459
(577)
0
0
0
0
0
(577)
79
North Norfolk District Council
NOTES TO THE ACCOUNTS
(11)
0
(709)
0
38,126
0
0
0
19
8,319
0
0
0
0
9,977
0
0
0
0
468
0
0
0
0
2,868
0
0
0
(19)
563
Total
Property,
Plant and
Equipment
(11)
0
(709)
0
60,321
7,790
515
4,025
801
6,612
466
9
3
2,215
2
0
0
20,651
1,787
0
0
0
0
0
0
0
0
0
0
0
0
0
0
16
0
0
0
0
0
16
0
0
0
0
0
0
0
(4)
0
0
0
0
0
0
0
0
0
0
0
(4)
0
0
0
0
0
0
0
0
(29)
0
0
0
0
0
(29)
8,288
4,826
7,078
12
2,217
0
22,421
29,838
30,985
3,493
3,892
2,899
3,300
456
459
651
452
563
331
37,900
39,419
Other
Land and
Buildings
Derecognition - disposals
Derecognition - other
Assets reclassified (to)/from held for sale
Other movements in cost or valuation
At 31 March 2011
Accumulated Deprecation and
Impairment:
At 1 April 2010
Depreciation charge
Depreciation written out to the revaluation
reserve
Depreciation written out to the
surplus/deficit on the provision of services
Impairment losses/(reversals) recognised
in the revaluation reserve
Impairment losses/(reversals) recognised
in the surplus/deficit on the provision of
services
Derecognition - disposal
Derecognition - other
Eliminated on reclassification to assets
held for sale
Other movements in depreciation and
impairment
At 31 March 2011
Net Book Value
At 31 March 2011
At 31 March 2010
Statement of Accounts 2010/11
Vehicles,
Infrastructure Community
Plant and
Assets
Assets
Equipment
80
Assets
Under
Construction
Surplus
Assets
North Norfolk District Council
NOTES TO THE ACCOUNTS
Comparative Movements in 2009/10:
Other
Land and
Building
£000
Cost or Valuation:
At 1 April 2009
Additions
Donations
Revaluation increases/(decreases)
recognised in the revaluation reserve
Revaluation increases/(decreases)
recognised in the surplus/(deficit) on the
provision of services
Derecognition - disposals
Derecognition - other
Assets reclassified (to)/from held for sale
Other movements in cost or valuation
At 31 March 2010
Accumulated Deprecation and
Impairment:
At 1 April 2009
Depreciation charge
Depreciation written out to the revaluation
reserve
Depreciation written out to the
surplus/deficit on the provision of services
Impairment losses/(reversals) recognised
in the revaluation reserve
Impairment losses/(reversals) recognised
in the surplus/deficit on the provision of
services
Statement of Accounts 2010/11
Vehicles,
Infrastructure Community
Plant and
Assets
Assets
Equipment
£000
£000
£000
Surplus
Assets
Assets
Under
Construction
£000
£000
Total
Property,
Plant and
Equipment
£000
37,018
1,459
0
7,516
401
0
9,718
194
0
468
0
0
2,936
0
0
328
97
0
57,984
2,151
0
216
0
0
0
0
0
216
0
0
0
0
0
0
0
(31)
0
0
113
38,775
0
0
0
0
7,917
0
0
0
0
9,912
0
0
0
0
468
(250)
0
0
(19)
2,667
0
0
0
(94)
331
(281)
0
0
0
60,070
7,263
375
3,187
838
6,145
467
6
3
2,213
2
0
0
18,814
1,685
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
167
0
0
0
0
0
167
81
North Norfolk District Council
NOTES TO THE ACCOUNTS
(15)
0
0
0
0
0
0
0
0
0
Total
Property,
Plant and
Equipment
0
(15)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
7,790
4,025
6,612
9
2,215
0
20,651
30,985
29,755
3,892
4,329
3,300
3,573
459
462
452
723
331
328
39,419
39,170
Other
Land and
Building
Derecognition - disposal
Derecognition - other
Eliminated on reclassification to assets
held for sale
Other movements in depreciation and
impairment
At 31 March 2010
Net Book Value
At 31 March 2010
At 1 April 2009
Statement of Accounts 2010/11
Vehicles,
Infrastructure Community
Plant and
Assets
Assets
Equipment
82
Surplus
Assets
Assets
Under
Construction
North Norfolk District Council
NOTES TO THE ACCOUNTS
Capital Commitments
As at 31 March 2011, the Council had no significant capital commitments, this was also the case at 31 March 2010.
Revaluations
The Council carries out a rolling programme that ensures that all Property, Plant and Equipment required to be measured at fair value is revalued at
least every five years. All valuations were carried out internally. Valuations of land and buildings were carried out in accordance with the
methodologies and bases for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. Valuations of vehicles,
plant and equipment are based on current prices where there is an active second hand market or latest list prices adjusted for the condition of the
asset.
Other Land
and
Building
Vehicles, Plant
and
Equipment
Infrastructure
Assets
Community
Assets
Surplus Assets
Assets
Under
Construction
Total
£000
£000
£000
£000
£000
£000
£000
Carried at historical cost
Valued at fair value as
at:
0
8,319
9,977
468
0
563
19,327
0
0
0
0
0
0
2,427
(517)
0
~ 31 March 2010
1,570
1,719
0
3,997
1,202
~ 31 March 2009
30,958
0
0
0
957
0
31,915
~ 31 March 2008
230
0
0
0
0
0
230
~ 31 March 2007
Total Cost or
Valuation
3,649
0
0
0
0
0
3,649
38,126
8,319
9,977
468
2,867
563
60,320
~ 31 March 2011
Statement of Accounts 2010/11
83
North Norfolk District Council
NOTES TO THE ACCOUNTS
31.
Capital Expenditure and Capital Financing
The total amount of capital expenditure incurred in the year is shown in the table below (including the value of assets acquired under finance leases
and PFI/PP contracts), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by
charges to revenue as assets are used by the Council, the expenditure results in an increase in the Capital Financing Requirement (CFR), a
measure of the capital expenditure incurred historically by the Council that has yet to be financed. The CFR is analysed in the second part of this
note.
2009/10
£000
Opening capital financing requirement
Capital investment:
Property, plant and equipment
Investment properties
Intangible assets
Revenue expenditure funded from capital under statute
Sources of finance
Capital receipts
Government grants and other contributions
Sums set aside from revenue:
~ direct revenue contributions
~[MRP
Closing Capital Financing Requirement
Explanation of movements in year
Increase in underlying need to borrowing (supported by government
financial assistance)
Increase in underlying need to borrowing (unsupported by government
financial assistance)
Assets acquired under finance leases
Increase/(decrease) in Capital Financing Requirement
Statement of Accounts 2010/11
84
2010/11
£000
714
395
2,151
0
402
482
1,089
0
86
661
(1,509)
(1,275)
(1,280)
(444)
(251)
(319)
395
(112)
(343)
52
0
0
0
0
(319)
(319)
(343)
(343)
North Norfolk District Council
NOTES TO THE ACCOUNTS
32.
Assets Held for Sale
2009/10
£000
Balance outstanding at start of year
Assets newly classified as held for sale:
~ property, plant and equipment
Assets Sold
Other movements
Balance outstanding at year-end
Current
2010/11
£000
333
63
0
(249)
(21)
63
680
(29)
0
714
The assets held for disposal as at 31 March 2011 relate to a public convenience that has now been disposed of and a former block of flats.
33.
Inventories
Consumable Stores
2008/09
2009/10
2010/11
£000
£000
£000
Balance outstanding at
start of year
Purchases
Recognised as expenses in
the year
Written off balances
Balance outstanding at
year-end
Statement of Accounts 2010/11
Maintenance Materials
2008/09
2009/10
2010/11
£000
£000
£000
2008/09
£000
Total
2009/10
£000
2010/11
£000
132
114
96
19
17
22
151
131
118
111
108
128
7
5
0
118
113
128
(123)
(126)
(150)
(13)
0
(5)
(136)
(126)
(155)
(2)
0
0
0
0
0
(2)
0
0
118
96
74
13
22
17
131
118
91
85
North Norfolk District Council
NOTES TO THE ACCOUNTS
34.
Debtors
Debtors represents the amounts owed to the Council at 31 March 2011 and are analysed below. The Council makes an allowance for outstanding
amounts for which recovery of debtors is not anticipated (bad debt provision). Debtors are shown net of the bad debt provision within the Balance
Sheet. The movement on Central Government bodies relates to the balance of Department of Works and Pensions (DWP) Benefits Subsidy due
to/(from) the authority as a result of the final subsidy claim, this was a debtor in 2009/10 and is a creditor in 2010/11.
31 March 2009
£000
Central government bodies
Other local authorities
Public corporations and trading funds
Other entities and individuals
31 March
2010
£000
31 March
2011
£000
1,115
950
260
2,378
4,703
3,138
501
0
1,900
5,539
246
854
5
1,965
3,070
(635)
(55)
(690)
(519)
(67)
(586)
(612)
(66)
(678)
4,013
4,953
2,392
Less: Bad Debt Provision
General Fund
Collection Fund
Statement of Accounts 2010/11
86
North Norfolk District Council
NOTES TO THE ACCOUNTS
35.
Creditors
Creditors represent the amounts owed by the Council at 31 March 2011. The Central Government Bodies figure includes a number of large capital
grants treated as creditors under International Financial Reporting Standards (IFRS). The movement between financial years predominantly relates
to the pathfinder grant. The decrease in other entities and individuals relates to housing benefits payments, a creditor was included as part of the
2009/10 final accounts but no adjustment was necessary in 2010/11.
31 March
2009
£000
Central Government bodies
Other local authorities
NHS bodies
Public corporations and trading funds
Other entities and individuals
Sub Total
Less: Receipts in Advance
Central Government Bodies
Other entities and individuals
Sub Total
Total
36.
31 March
2010
£000
31 March
2011
£000
(1,892)
(742)
0
(208)
(3,741)
(6,583)
(1,145)
(620)
0
(201)
(3,869)
(5,835 )
(2,275)
(679)
(2)
(161)
(2,604)
(5,721)
1,524
0
1,524
5,059
873
174
1,047
4,788
2,008
316
2,324
3,397
Provisions
The Council has no outstanding legal cases in progress or other potential liabilities that require provisions to be made. Details of a contingent
liability in relation to termination benefits is included within note 37.
Statement of Accounts 2010/11
87
North Norfolk District Council
NOTES TO THE ACCOUNTS
37.
Contingent Liabilities
At 31 March 2011, the Council had the following material contingent liabilities:
(a)
Housing Stock Transfer - As part of the legal agreements associated with the transfer of the housing stock to the Victory Housing Trust in
2006/07, the Council provided a number of environmental and non-environmental warranties, guarantees and indemnities to the Trust, its
Lenders and the Norfolk Pension Fund.
The risks associated with these warranties and indemnities have been assessed following professional advice and where felt appropriate the
Council has, or is making, arrangements to transfer some of the potential risks. Specifically, insurance has been arranged in respect of the
environmental warranties and the Trust have provided a bond with an initial sum of £1.2 million in favour of the Council with regard to any
liabilities to the Norfolk Pension Fund in the event of the insolvency, winding up and liquidation of the Trust. In June 2011 the actuary’s total
value of the indemnity required to meet all risks was estimated at £150,000 (£0.945 million 2009/10).
To the extent that claims have to be met some time in the future beyond those covered by the environmental warranty insurance and the
pension bond, the Council recognises a contingent liability. An earmarked reserve of £435,000 is held to mitigate such claims.
(b)
North Walsham Pool - The Council has entered into an agreement with the service provider for the North Walsham Sports facility to enable
them to build an extension to the pool. Any amount remaining undepreciated at the end of the management contract period (on 31 March
2014) will be a liability to the Council. Currently the potential liability is estimated at £148,000.
(c)
Benefits - There have been problems with reconciling the Council’s Civica council tax and benefits system and the accounts have been
closed based on an estimate of the subsidy outturn position for 2010/11. In addition the final claim for 2009/10 is still awaiting sign off by the
Department for Work and Pensions (DWP). There is a risk of potential clawback from the DWP following the final audits and sign off of these
claims, to mitigate the impact of any clawback there is an earmarked reserve for which the balance stood at £910,626 at 31 March 2011.
(d)
Pavilion Theatre, Cromer - Under the terms of the contract for the management of the Pier Pavilion Theatre at Cromer, the Contractor has
invested £93,065 in improvements to the Theatre and is entitled to recover this cost from the Council over the duration of the agreement.
This is being achieved by the Contractor offsetting the Council’s annual profit share against the balance outstanding. Any balance owing to
the Contractor at the end of the agreement will need to be paid in the 2012/13 Financial Year. Final accounts for the 2010 season are still
awaited but, based upon estimates provided by the contractor, the amount still outstanding at 31 March 2011 is approx £30,407.
Statement of Accounts 2010/11
88
North Norfolk District Council
NOTES TO THE ACCOUNTS
(e)
Termination Benefits - As part of setting the budget for the 2011/12 financial year a number of officer restructurings are due to be
undertaken. At the balance sheet date a number of these were in progress and whilst there are anticipated to be costs in relation to
termination benefits an earmarked reserve (Restructuring Reserve) with a closing balance of £340,032 was held at 31 March 2011 to fund
these costs.
38.
Contingent Assets
In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets the Council recognises the following contingent assets:
(a)
VAT Sharing Agreement - As part of the transfer of the housing stock in 2006, the Council entered a VAT sharing agreement with Victory
Housing Trust. Under this agreement the Council receives a 50% share of £8,748,520. During the year £612,653 was received (£1,032,464
in 2009/2010). The balance remaining at the 31 March 2011 to be received is £1,456,583 (£2,069,236 at 31 March 2010).
(b)
VAT - The Council may have a contingent asset at the Balance Sheet date of approximately £2.4 million. This is in respect of VAT that has
been collected from off street car parking charges over the past 11 years that may be refunded to the Council pending the outcome of the
legal case against HM Revenues and Customs by the Isle of Wight Council and others.
Statement of Accounts 2010/11
89
North Norfolk District Council
NOTES TO THE ACCOUNTS
39. Grant Income
The Council credited the following grants, contributions and donations to the comprehensive income and expenditure accounts in 2010/11.
2009/10
£000
Credited to Taxation and Non Specific Grant Income
Revenue Support Grant
Business Rates from National Pool
Housing and Planning Delivery Grant
Area Based Grant
Local Authority Business Growth Incentive
Capital Grants and Contributions
Total
Credited to Services
Coast Protection Pathfinder
Free Swimming
Homelessness Directorate
Concessionary Fares
Community Safety
Other Grants & Contributions
Countryside (Planning)
Drop In, Hang Out & Have Fun
Mobile Gym
Access to Nature
Economic Development
Local Strategic Partnership
Local Land Charges
Other
DWP
Rent Allowances
Council Tax Benefits
Admin Subsidy
Total
Total Revenue Grants Received
Statement of Accounts 2010/11
90
2010/11
£000
1,664
7,208
573
53
43
1,338
10,879
1,142
7,865
0
36
0
444
9,487
513
42
71
497
25
320
31
158
249
38
17
49
45
26
21
686
0
55
0
25
44
62
19
756
34
79
22,877
7,809
946
33,679
44,558
24,490
8,174
805
35,284
44,771
North Norfolk District Council
NOTES TO THE ACCOUNTS
The Council has received a number of grants, contributions and donations that have yet to be recognised as income as they have conditions
attached to them that will require the monies or property to be returned to the giver. The balances at the year-end are as follows:
31 March
2010
£000
Capital Grant Receipts in Advance
Pathfinder
Travellers Site
Developer Contributions
Total
Statement of Accounts 2010/11
91
31 March
2011
£000
415
468
164
1,626
393
305
1,047
2,324
North Norfolk District Council
NOTES TO THE ACCOUNTS
40.
Financial Instruments
Categories of Financial Instruments
The following categories of financial instruments are carried in the Balance Sheet:
Long-Term
31 March
2009
£000
Current
31 March
2009
£000
Long-Term
31 March
2010
£000
Current
31 March
2010
£000
0
8,971
8,971
11,812
104
11,916
0
6,863
6,863
7,866
3,104
10,970
74
0
74
0
2,025
2,025
61
0
61
5
1,433
1,438
395
395
320
320
52
52
343
343
0
0
2,130
2,130
0
0
2,414
2,414
9,440
16,391
6,976
15,165
Statement of Accounts 2010/11
Long-Term
31 March
2011
£000
Investments:
Loans and receivables
Available-for-sale financial assets
Total Investments
Current
31 March
2011
£000
0
5,188
5,188
15,170
1,564
16,734
34
0
34
6
1,676
1,682
Other Long-term Liabilities
Finance lease liabilities
Total other Long-term Liabilities
0
0
52
52
Creditors
Financial liabilities carried at contract amount
Total Creditors
0
0
2,651
2,651
5,222
21,119
Debtors
Loans and receivables
Financial assets carried at contract amounts
Total Debtors
92
North Norfolk District Council
NOTES TO THE ACCOUNTS
Reclassifications
There has been no reclassification of financial assets during 2010/11.
Income, Expense, Gains and Losses
2009/10
Financial
Liabilities
2010/11
Financial
Liabilities
Financial Assets
Finance
Leases
Loans and
receivables
£000
£000
Availablefor-sale
assets
£000
Total
£000
50
313
407
720
50
0
313
(125)
282
(125)
595
Interest Income/expense included in
surplus or deficit on the provision of
services
Losses on revaluation
Net gain/(loss) for the year
Financial Assets
Finance
Leases
Loans and
receivables
£000
£000
Availablefor-sale
assets
£000
Total
£000
27
179
368
547
27
0
179
(185)
183
(185)
362
Fair values of Assets and Liabilities
Financial liabilities, financial assets represented by loans and receivables and long-term debtors and creditors are carried in the balance sheet at
amortised cost. Their carrying values are all equal to their fair value. The fair value is defined as the amount for which an asset could be exchanged
or a liability settled between knowledgeable willing parties in an arm’s length transaction.
The Council’s loans and receivables consist of term deposits with banks and building societies, and investments in money market funds. Where the
maturity dates of these investments are within 12 months of the balance sheet date, the carrying amount is assumed to approximate to fair value.
The contract terms under which a term deposit is made do not permit premature repayment.
The Available-for-sale financial assets are Euro-sterling bonds, and their fair value has been determined by reference to quoted market prices at 31
March 2011.
None of the investments were impaired (i.e. at risk of default).
The fair value of trade receivables and payables is taken to be the invoiced amount.
Statement of Accounts 2010/11
93
North Norfolk District Council
NOTES TO THE ACCOUNTS
41.
Nature and Extent of Risks arising from Financial Instruments
The Council’s activities expose it to a variety of financial risks:
•
credit risk - the possibility that other parties might fail to pay amounts due to the Council
•
liquidity risk - the possibility that the Council might not have funds available to meet its commitments to make payments
•
market risk - the possibility that financial loss might arise for the Council as a result of changes in such measures as interest rates, market
process etc..
The Council has adopted CIPFA’s Code of Practice on Treasury Management and complies with The Prudential Code for Capital Finance in Local
Authorities.
To comply with the Treasury Management Code, the Council approves a Treasury Management Strategy before the commencement of each
financial year which sets out the parameters for the management of risks associated with Financial Instruments. The Council also produces
Treasury Management Practices specifying the practical arrangements to be followed to manage those risks.
The Treasury Management Strategy includes an Annual Investment Strategy in compliance with Central Government’s Investment Guidance to
Local Authorities. The guidance defines a prudent investment policy as having the two objectives of security (protecting the capital sum from loss)
and then liquidity (keeping adequate funds readily available for expenditure when needed). Once proper levels of security and liquidity have been
achieved, consideration is given to seeking the highest rate of return consistent with those priorities.
Credit Risk
The Council manages this risk by ensuring that investments are placed with counterparties which have a high credit rating and for the maximum
periods and amounts set out in the Treasury Management Strategy, Practices and Schedules.
The security and liquidity of the funds invested are the primary objective of the Council’s treasury management activities. The Council selects
countries and the institutions within them as suitable counterparties for investment after analysis and careful monitoring of the credit ratings of all
three rating agencies and a range of economic indicators and financial information are taken into account.
Statement of Accounts 2010/11
94
North Norfolk District Council
NOTES TO THE ACCOUNTS
The table below shows the credit criteria and counterparty limits for investments in place at the end of the financial year.
Maximum Sum to
be Invested
Category
Criteria
Deposits with banks and
building societies
Minimum long-term rating of A+ as issued by Fitch,
Moody’s or Standard & Poors rating agencies.
Local Authorities
All UK local authorities
Debt Management Office
Money Market Funds
AAA and Constant Net Asset Value
Bonds
AAA
£3m (per
counterparty)
£3m (per
counterparty)
No Limit
£3m (per
counterparty)
£15m
(in total)
Amount
Invested
31 Mar 2011
£m`
£14.78
Nil
Nil
£0.39
£6.75
The Council has no historical experience of counterparty default and the Council does not anticipate any losses from default in relation to any of its
current deposits and bonds. No credit limits were exceeded in the financial year.
In addition to treasury investments, the Council is exposed to credit risk from its customers. However the Council has put in place appropriate debt
The age analysis of trade debtors which are past due date but are not impaired is shown below.
31 March
2010
£000
44 Less than three months
26 Three months to one year
7 More than one year
31 March
2011
£000
31
34
6
77
Statement of Accounts 2010/11
71
95
North Norfolk District Council
NOTES TO THE ACCOUNTS
A bad debt provision of £31k has been made against debt which is more than one year old. The factors the Council consider in determining if a
trade debt is impaired include the age of the debt; the default history of the debtor; the proportion of the original debt which is still outstanding and
the recovery stage of the debt
Liquidity risk
The Council has a comprehensive cash flow management system that seeks to ensure that cash is available as needed. If unexpected movements
happen, the Council has ready access to short-term borrowing should this be required, and there is no significant risk that it will be unable to raise
funds to meet its commitments. The Council does not have any long-term debt and therefore does not have any maturing liabilities for which funds
would be required.
Market risk
Interest rate risk
The Council is exposed to risks arising from the movements in interest rates. If interest rates had been lower, there would be a reduction in the
amount of interest credited to other Comprehensive Income and Expenditure. The impact of a reduction in interest rates would be delayed as term
deposits and bonds are fixed for a period of time, and it is not until the investment matures that the lower rate would impact on the Council’s
investment return. If the overall rate of return on investments had been 0.25% lower than the rate actually achieved in 2010/11, there would have
been a reduction of £66,200 in investment income.
The sensitivity to interest rate movements is assessed as part of the budget setting process, and interest rates movements and the resulting impact
is monitored throughout the year as part of routine budget monitoring.
Price risk
The investment in Euro-sterling Bonds exposes the Council to the risk that any change in interest rates will impact on the price of the bonds and, as
they are classified as available-for-sale, all gains and losses will be recognised in other Comprehensive Income and Expenditure. For example, if
the price of the bonds held by the Council reduced by 1%, there would be a loss in fair value of £67,500.
Foreign Exchange Risk
The Council has no financial assets or liabilities denominated in foreign currencies and therefore there is no exposure to loss arising from
movements in exchange rates.
Statement of Accounts 2010/11
96
North Norfolk District Council
NOTES TO THE ACCOUNTS
42.
Transition to IFRS
The Statement of Accounts for 2010/11 is the first one to be prepared on an International Financial Reporting Standards (IFRS) basis. The adoption
of the IFRS Code has resulted in a number of restatements of various balances and transactions within the accounts with the result that some
amounts presented in the financial statements are different from the equivalent figures presented in the 2009/10 Statement of Accounts.
As a consequence of this change, a number of restatements have been made to balances and transactions, which has resulted in alterations to
some of the amounts presented within the 2010/11 financial statements when compared to the equivalent figures in the Statement of Accounts for
2009/10. Explanations of the adjustments made to the 2009/10 Accounts are provided below, together with an analysis of restatements to the
Balance Sheet and the Comprehensive Income and Expenditure Statement (CIES).
Grants and Contributions
The changed treatment of grants and contributions has had an impact on the Balance Sheet and the Comprehensive Income and Expenditure
Statement. Previously the matching principle required that capital grants were released to the appropriate revenue service over the same period that
the asset financed by the grant was depreciated. The treatment under IFRS is different and requires grants to be allocated in full to the CIES, in the
year(s) that the conditions of the grant are met.
As a consequence of adopting the accounting policy required by the Code, the financial statements have been amended as follows:
• The balance on the Government Grants Deferred Account at 31 March 2009 has been transferred to the Capital Adjustment Account in the
opening 1 April 2009 Balance Sheet
• Portions of government grants deferred were previously recognised as income in 2009/10; these have been removed from the CIES in the
comparative figures.
• Capital grants and contributions (including section 106 contributions) that have unsatisfied conditions at the Balance Sheet date have been
reflected as Receipts in Advance in the Liabilities section of the Balance Sheet
• Capital grants and contributions received with no conditions have been included in the CIES as income from Non-specific grants. However,
that there is no consequential change to the General Fund Balance, as capital grant income is transferred out of the General Fund under
both the previous and the current accounting policies.
• Revenue grants previously recognised as receipts in advance in the Balance Sheet have been transferred to the CIES where no conditions
were outstanding at the Balance Sheet date. There has been no impact on the General Fund balance in relation to this treatment as the
grants have been transferred to an earmarked reserve to be released as required.
IFRS also requires that the conditions attached to Government grants should be reviewed and the treatment in the accounts varies as to whether the
conditions have been met so that:
Statement of Accounts 2010/11
97
North Norfolk District Council
NOTES TO THE ACCOUNTS
•
•
•
•
If the conditions of grants received in advance have been met then the grant has been recognised in the CIES
If the conditions are met and the grant is unspent the grant has been included in a new reserve called the Capital
Grants Unapplied Reserve
If the grant has been received and the conditions not met the grant has been included in a new reserve called
Capital Grants Receipts in Advance
Grants and contributions have not been recognised until there is reasonable assurance that the Council will
comply with the conditions attached to them and when grants have been awarded and the conditions of grant
relate to performance criteria, it is the conditions giving rise to costs and expenses which have determined the
periods over which the grant is released.
Fixed Assets
With regard to fixed assets the main changes in the Code relate to a tightening of the definition of Investment Properties, the introduction of a new
asset category "Assets Held for Sale", an increased focus on the recognition of component assets, and some changes in the terminology, most
notably that the majority of assets now fall under the category of "Plant, Property and Equipment" (PPE).
Following a review of all assets previously recognised as Investment Properties, there was only one which satisfied the revised definition, and
therefore all the remaining assets in that category have been transferred to PPE. As these PPE assets must be depreciated, additional depreciation
charges of £25k have been reflected as additional charges to the Cost of Services in 2009/10. However, as with the previous policies, depreciation
charges do not fall on the taxpayer and are removed before they impact on the General Fund balance.
A number of assets have been transferred to Current Assets Held for Sale, where the strict definition under the Code has been met, while the former
category of Surplus Assets now forms part of PPE. Where assets have changed category as a result of adopting the IFRS Code, valuations have
been required to reflect the change in category. Adjustments have been made to valuations and impairment with valuation changes adjusted against
the Revaluation Reserve and / or the CIES as required. Again as with depreciation, impairment charges are reversed from the General Fund
balance to ensure there is no impact on taxpayers.
The Code's requirement to recognise component assets (where any component would have a materially different depreciation pattern to the main
asset) did not require retrospect adjustment. Officers have reviewed all assets for likely components at 31 March 2010 and no material components
have been identified. No adjustments have therefore been made to the 2009/10 accounts in this regard.
Other Items
There are a number of additional adjustments that have had to be made as part of the IFRS restatement process and these include the following;
Statement of Accounts 2010/11
98
North Norfolk District Council
NOTES TO THE ACCOUNTS
•
Leases
Under the Code, leases of property are accounted for as separate leases of land and buildings. Previously each property lease would have been
accounted for as a single lease. Leases for land had previously under UK Generally Accepted Accounting Principles (UK GAAP) been assumed to
be operating leases; this assumption has been rebutted under the Code. The change in accounting treatment can result in the land or buildings
element of the lease being accounted for as an operating lease where it was previously treated as a finance lease; or as a finance lease where it
was previously treated as an operating lease.
The Government has issued regulations and statutory guidance in relation to accounting for leases. Under these arrangements, the annual charge
to the General Fund (where the Council is the lessee) will be unchanged. Where the Council is the lessor, the regulations allow the Council to
continue to treat the income from existing leases in the same way as it accounted for the income prior to the introduction of the Code. The Council
has not had to make any changes following the introduction of the Code in relation to property where the Council is the lessor.
The Council has determined that the contract with Norse Commercial Services Limited (which ended on 31 March 2011) for waste collection
services contains an embedded finance lease in respect of the vehicles used for domestic refuse collection. A deferred liability has been set up for
the estimated lease rental charges included in the contract payments made to the contractor, and the assets are recognised on the balance sheet at
net book value. More information on this can be found within Note 26 – Leases.
•
Cash and cash equivalents
A new policy on cash has been agreed to ensure IFRS compliance so that any short term investments that are readily convertible to known amounts
of cash on the Balance Sheet date with insignificant risk of change in value are classified as cash and cash equivalents. This has resulted in £753k
at 1 April 2009 and £1,071k at the end of 2009/10 being transferred from short term investments to cash and cash equivalents.
•
Accumulated Absences
Short term accumulating absences refers to benefits that employees receive as part of their contract of employment, entitlement to which is built up
as they provide services to the Council. The most significant benefit covered by this heading is holiday pay.
Employees build up an entitlement to paid holiday as they work. Under the code, the cost of providing holiday and similar benefits is required to be
recognised when employees render services that increase their entitlement to future compensated absences. As a result, where these sums are
material in total value the Council’s policy is to accrue for any annual leave earned but not taken as at 31 March each year. This accrual is
calculated taking the budgeted average salary rates applicable in the following accounting year, being the period in which the employee takes the
benefit.
Statement of Accounts 2010/11
99
North Norfolk District Council
NOTES TO THE ACCOUNTS
The Government has issued regulations that mean local authorities are only required to fund holiday pay and similar benefits when they are used,
rather than when employees earn the benefits. Amounts are transferred to an Accumulated Absences Account until the benefits are used. The
opening balance for this provision as at 1 April 2009 was (£246k), the closing balance in the 2009/10 accounts was (£252k) while the closing
balance in the 2010/11 Statement of Accounts was (£226k). Statutory arrangements require that the impact on the General Fund Balance is
neutralised by transfers to or from the Account and there is therefore no impact on taxpayers.
Summary of IFRS Restatements – Balance Sheet
Balance Sheet as at 1st April 2009
1 April
Fixed
Other
1st April
Grants
Items
2009
2009
& Conts Assets
SORP
IFRS
£000
£000
£000
£000
£000
st
Property, Plant &
Equipment
Investment Property
Intangible Assets
Surplus Assets (SORP)
Long Term Investments
Long Term Debtors
Long Term Assets
Short Term Investments
Inventories
Short Term Debtors
Cash and Cash
Equivalents
Assets held for sale
(<1yr)
Current Assets
Short Term Borrowing
Short Term Creditors
Statement of Accounts 2010/11
36,309
1,991
1,556
213
2,870
8,971
74
49,993
11,917
131
4,013
(1,268)
(2,870)
0
(2,147)
140
870
(753)
753
0
16,201
(1,300)
(7,111)
870
333
0
2,298
333
0
(246)
100
Balance Sheet as at 31st March 2010
Grants
Fixed
Other
April 09
& Conts Assets
Items
IFRS
Adj
£000
£000
£000
£000
2009/10
SORP
£000
39,170
37,115
(31)
288
213
0
8,971
74
48,716
11,164
131
4,013
1,571
534
2,349
6,863
61
48,493
10,970
118
4,953
893
104
333
0
16,534
(1,300)
(5,059)
16,145
0
(6,340)
0
39,419
(15)
(1,268)
521
(2,870)
288
534
0
6,863
61
47,165
9,146
118
4,953
(276)
(1,071)
(1,527)
(753)
1,071
753
1,928
583
63
0
583
(6)
2,052
16,208
0
(4,789)
(520)
0
(495)
£000
2,611
475
(276)
IFRS
2009/10
(520)
North Norfolk District Council
NOTES TO THE ACCOUNTS
Current Liabilities
Long Term Creditors
Other Long Term
Liabilities
Capital Grants Receipts
in Advance
Long Term Liabilities
Net Assets
Usable Reserves:
General Fund Balance
Earmarked Reserves
Capital Receipts Reserve
Capital Grants Unapplied
Account
Total Usable Reserves
Unusable Reserves:
Revaluation Reserve
Other Unusable
Reserves
Capital Adjustment
Account
Accumulated
Compensated Absences
Adjustment Account
Statement of Accounts 2010/11
Balance Sheet as at 1st April 2009
1st April
Other
1st April
Grants
Fixed
2009
& Conts Assets
Items
2009
SORP
IFRS
£000
£000
£000
£000
£000
(8,411)
2,298
0
(246)
(6,359)
0
(14,189)
14,189
(17,865)
(714)
Balance Sheet as at 31st March 2010
2009/10
Other
April 09
Fixed
Grants
SORP
IFRS
Items
& Conts Assets
Adj
£000
£000
£000
£000
£000
(6,340)
(495)
0
(6)
2,052
(14,623)
434
14,189
(18,579)
(38,065)
(1,524)
0
479
320
IFRS
2009/10
£000
(4,789)
0
(714)
(38,459)
(1,524)
(1,045)
0
(1,524)
(32,054)
12,665
0
(714)
(20,103)
(52,688)
913
0
320
11,951
(39,504)
25,729
14,963
(1,814)
(90)
38,788
5,610
418
(45)
38
13,059
19,080
1,149
3,847
11,329
733
1,149
4,580
11,329
1,057
5,274
10,034
(84)
733
1,057
5,923
10,034
0
41
41
0
68
41
109
16,325
774
17,099
16,365
(16)
774
17,123
10,237
10,373
(28)
10,375
(17,353)
(37,700)
156
29,051
16,572
(246)
(246)
0
10,265
0
0
(28)
(17,353)
16,492
0
14,189
(1,786)
101
0
0
30
(37,700)
434
(75)
44
12,559
29,534
(6)
(246)
(252)
North Norfolk District Council
NOTES TO THE ACCOUNTS
Balance Sheet as at 1st April 2009
1st April
Other
1st April
Grants
Fixed
2009
& Conts Assets
Items
2009
SORP
IFRS
£000
£000
£000
£000
£000
Total Unusable
Reserves
Total Reserves
2009/10
SORP
£000
Balance Sheet as at 31st March 2010
Other
April 09
Fixed
Grants
IFRS
Items
& Conts Assets
Adj
£000
£000
£000
£000
IFRS
2009/10
£000
9,404
14,189
(1,814)
(90)
21,689
(10,755)
434
(45)
38
12,285
1,957
25,729
14,963
(1,814)
(90)
38,788
5,610
418
(45)
38
13,059
19,080
Summary of IFRS Restatements – Comprehensive Income and Expenditure Account 2009/10
Net Cost of Services
Other Operating Expenditure
Financing and Investment Income and Expenditure
Taxation and Non-Specific Grant Income
(Surplus) or Deficit on Provision of Services
2009/10
Statements
£000
14,537
1,659
733
(16,412)
517
Grants &
Conts
£000
(418)
Fixed
Assets
£000
Other
Items
£000
25
20
(37)
IFRS
Accounts
£000
14,057
1,679
783
(16,412)
107
(87)
50
(418)
45
Surplus or deficit on reval of property, plant & equipment
Surplus or deficit on reval of available for sale fin assets
Actuarial gains/losses on pension assets/liabilities
Other Comprehensive Income and Expenditure
216
(126)
(19,692)
(19,602)
0
0
0
216
(126)
(19,692)
(19,602)
Total Comprehensive Income and Expenditure
(20,119)
418
(45)
37
(19,709)
Statement of Accounts 2010/11
102
North Norfolk District Council
THE COLLECTION FUND
2009/10
Collection Fund Account
2010/11
£000
Notes
£000
£000
INCOME
(53,072)
(7,742)
2
(20,448)
Council Tax Net of Benefits & Transitional Relief
Transfers from General Fund
- Council Tax Benefits
- Transitional Relief
Business Ratepayers Contributions
(54,409)
(2)
(8,134)
1
(3)
(81,260)
(8,133)
(20,371)
(82,913)
EXPENDITURE
60,539
20,225
223
58
97
296
(178)
Precepts & Demands
Business Rates
- Payment to National Pool
- Costs of Collection
Bad & Doubtful Debts/Appeals
- Write Offs
- Provisions
Contributions towards Previous Year’s Estimated Surplus
Surplus / (Deficit) for the Year
(4)
(3)
62,157
20,146
225
141
(9)
(4)
81,260
20,371
132
259
(6)
82,913
370
(178)
BALANCE
At start of year
Surplus / (Deficit) for year
192
At end of year
Statement of Accounts 2010/11
(7)
192
(6)
186
103
North Norfolk District Council
NOTES TO THE COLLECTION FUND
1. General
The Collection Fund is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Collection Fund.
The statement shows the transactions of the billing authority in relation to the collection from taxpayers and distribution to local authorities and
the Government of council tax and non-domestic rates. The Collection Fund is consolidated with the other accounts of the billing authority for
Balance Sheet purposes.
2. Transfers from General Fund
Of the amount shown as transfers from General Fund, an amount of £8,134,534 (£7,741,727 in 2009/10) is in respect of Council Tax benefit
expenditure for which a subsidy is received from the Department for Works and Pensions for credit to the General Fund. The standard rate of
subsidy is 100% but some benefit payments attract lower subsidy rates.
The transitional relief credit of £690 (£1,718 in 2009/10) is retained by the General Fund.
3. Business Ratepayers Contributions
Business rates are collected from the occupiers of such premises based upon a rateable value and a national rate in the £ of that rateable
value. The total rateable value for the District was £63,752,927 on 31 March 2011 (£49,804,006 on 31 March 2010). The substantial increase in
rateable value followed a revaluation effective from 1 April 2010, and a compensating reduction was made to the rate in the £. The Government
fixed the rate at 41.4p in the £ for 2010/11 (48.5p in 2009/10). Transitional arrangements are in force which phase-in increases and decreases
in liability from the former rates base following each 5 yearly revaluation.
The net amount collectable from business rate payers, after interest paid on refunds and a provision for bad debts, was £20,370,519
(£20,448,404 in 2009/10).
The Business Rates collected are paid to the Government who also collect, on a basis of a centrally maintained valuation list, from such
occupiers as electricity, gas and water undertakings. The total received in the National Pool is redistributed by the Government on the basis of
resident population. North Norfolk received £7,864,814 in the year (£7,207,881 in 2009/10). The payment to the National Pool is net of the cost
of collection which is reimbursed by the Government.
Statement of Accounts 2010/11
104
North Norfolk District Council
NOTES TO THE COLLECTION FUND
4. Precepts and Demands
The authorities that made a precept or demand on the Collection Fund are:
Net
Payment
2009/10
Precept/
Demand
Plus
Collection
Fund
Surplus
Net
Payment
2010/11
£000
£000
£000
£000
6,891
North Norfolk District Council (including Parish Precepts)
7,145
29
7,174
46,298
Norfolk County Council
47,142
197
47,339
7,645
Norfolk Police Authority
7,870
33
7,903
62,157
259
62,416
60,834
Total
Statement of Accounts 2010/11
105
North Norfolk District Council
NOTES TO THE COLLECTION FUND
5. The Council Tax Base for 2010/11 is as follows:
Valuation
Band
Number of Chargeable
Dwellings adjusted for
Discounts
Equivalent
Number of Band D
Dwellings
Adjusted Equivalent
Number of Band D
Dwellings
2009/10
2010/11
2009/10
2010/11
2009/10
2010/11
A
B
C
D
E
F
G
H
Contribution from
Ministry of Defence
8,801
12,499
10,026
7,741
4,128
1,926
889
71
8,919
12,526
10,021
7,760
4,149
1,939
887
68
5,864
9,721
8,912
7,741
5,045
2,782
1,482
142
5,943
9,742
8,908
7,760
5,071
2,801
1,478
136
5,764
9,556
8,761
7,609
4,959
2,735
1,457
140
5,848
9,587
8,765
7,636
4,990
2,756
1,454
134
0
0
0
0
18
0
Total Tax Base
46,081
46,269
41,689
41,839
40,999
41,170
Therefore each £1 of Council Tax set was calculated to produce income of £41,170 (£40,999 in 2009/10).
6. Band D Tax Rate
This Council set a Council Tax of £1,475.10 for a band D dwelling, (£1,444.41 in 2009/10), which consisted of £1,145.07 (£1,123.74 in 2009/10)
for Norfolk County Council, £191.16 (£185.58 in 2009/10) for the Norfolk Police Authority and £138.87 (£135.09 in 2009/10) for the District's
requirements. Sums ranging from nil to £76.79 (nil to £79.79 in 2009/10) were the subject of additional charges for parish and town council
requirements.
The calculation of the Council Tax is based upon the adjusted equivalent number of band D dwellings in an area. The adjustment to arrive at the
Council Tax base is in respect of anticipated non-collection of a small percentage of the amounts due.
Statement of Accounts 2010/11
106
North Norfolk District Council
NOTES TO THE COLLECTION FUND
Discounts are given for empty and other properties, in respect of students, disabled people and single occupiers. Since 2004/05 the Council
has implemented the provisions of the Local Government Act 2003 and exercised its discretionary powers to reduce or eliminate discounts on
certain empty properties and second homes.
7. Balances
The balance on the fund represents a surplus from the Council Tax transactions and the few remaining community charge transactions. The
surplus is shared with the Norfolk County Council and Norfolk Police Authority broadly in the proportion to their and our Council Taxes. The
balance is attributed as follows:
Share of Balance
31 March
2010
£
21,752
145,804
23,987
191,543
31 March
2011
£
21,402
141,021
23,542
North Norfolk District Council
Norfolk County Council
Norfolk Police Authority
Total
Statement of Accounts 2010/11
185,965
107
North Norfolk District Council
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report to the Members of North Norfolk District Council
We have audited the financial statements of North Norfolk District Council for the year ended 31 March 2011 which comprise the Comprehensive
Income and Expenditure Statement, the Movement in Reserves Statement, the Balance Sheet as at the end of the period, the Cash Flow Statement,
the Collection Fund, the accounting policies and the related notes. The financial reporting framework that has been applied in their preparation is the
CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom supported by the Best Value Accounting Code of Practice
2010/11.
Respective responsibilities of the Deputy Chief Executive and auditors
As explained more fully in the Statement of Responsibilities for the Statement of Accounts set out on page 9 the Deputy Chief Executive is
responsible for the preparation of the financial statements in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in
the United Kingdom and the Best Value Accounting Code of Practice 2010/11 and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for North Norfolk District Council’s members as a body in accordance with the
Audit Commission Act 1998 and for no other purpose, as set out in paragraph 48 of the Statement of Responsibilities of Auditors and of Audited
Bodies, published by the Audit Commission in March 2010. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in
writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Authority; and the overall presentation of the financial statements. In addition, we read all the financial and nonfinancial information in the explanatory foreword to identify material inconsistencies with the audited financial statements. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the group financial statements:
Statement of Accounts 2010/11
108
North Norfolk District Council
INDEPENDENT AUDITOR’S REPORT
•
give a true and fair view of the state of the affairs as at 31 March 2011 and of the Authority income and expenditure and cash flows for the year
then ended; and
•
have been prepared in accordance with the requirements of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United
Kingdom and the Best Value Accounting Code of Practice 2010/11.
Opinion on other matters
In our opinion, the information given in the explanatory foreword for the financial year for which the accounting statements are prepared is consistent
with the accounting statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the governance statement on which we report to you if, in our opinion the governance statement does not
reflect compliance with ‘Delivering Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June 2007.
Julian Rickett (Engagement Leader)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Norwich
29 September 2011
Statement of Accounts 2010/11
109
North Norfolk District Council
INDEPENDENT AUDITOR’S REPORT
Conclusion on Authority’s arrangements for securing economy, efficiency and effectiveness in the use of resources
Authority’s responsibilities
The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to
ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.
Auditor’s responsibilities
We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Authority has made proper arrangements for
securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires us to
report to you our conclusion relating to proper arrangements, having regard to relevant criteria specified by the Audit Commission.
We report if significant matters have come to our attention which prevent us from concluding that the Authority has put in place proper arrangements
for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all
aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.
Basis of conclusion
We have undertaken our audit in accordance with the Code of Audit Practice, having regard to the guidance on the specified criteria, published by
the Audit Commission in October 2010, as to whether the Authority has proper arrangements for:
• securing financial resilience; and
• challenging how it secures economy, efficiency and effectiveness.
The Audit Commission has determined these two criteria as those necessary for us to consider under the Code of Audit Practice in satisfying
ourselves whether the Authority has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for
the year ended 31 March 2011.
We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered
necessary to form a view on whether, in all significant respects, the Authority had put in place proper arrangements to secure economy, efficiency
and effectiveness in its use of resources.
Statement of Accounts 2010/11
110
North Norfolk District Council
INDEPENDENT AUDITOR’S REPORT
Conclusion
On the basis of our work, having regard to the guidance on the specified criteria published by the Audit Commission in October 2010, we are
satisfied that, in all significant respects, North Norfolk District Council put in place proper arrangements to secure economy, efficiency and
effectiveness in its use of resources for the year ending 31 March 2011.
Certificate
We certify that we have completed the audit of North Norfolk District Council in accordance with the requirements of the Audit Commission Act 1998
and the Code of Audit Practice issued by the Audit Commission.
Julian Rickett (Engagement Leader)
For and on behalf of PricewaterhouseCoopers LLP
Appointed auditors
Norwich
29 September 2011
Statement of Accounts 2010/11
111
North Norfolk District Council
GLOSSARY OF TERMS
Accruals - The accounting treatment that requires expenditure and income to be recognised in the period it is incurred or earned, not when the
money is actually paid or received.
Amortisation - The process of spreading a cost to revenue over a number of years. For example Intangible Assets are amortised to revenue over
their useful life.
Annual Governance Statement (AGS) - The formal statement that recognises, records and publishes an authority’s governance arrangements as
defined by the CIPFA/SOLACE framework.
Area Based Grant (ABG) - The ABG is paid directly to the Council that benefits from the grant without any constraint on how the monies are to be
used.
Bad Debts - Amounts owed to the Council which are considered unlikely to be recovered. An allowance is made in the accounts for this possibility.
Balance Sheet - The Council's financial position at the year end. It summarises what the respective assets and liabilities are.
Business Rates - Business or National Non-Domestic Rates, are collected from occupiers of business properties based upon a rateable value and
a nationally set rate. The money collected is paid to the Government who redistributes it to Councils based on population.
Capital Adjustment Account - An account which reflects the difference between the cost of fixed assets consumed and the capital financing set
aside to pay for them. The balance represents the balance of capital resources set aside to finance capital expenditure (e.g. capital receipts,
revenue contributions) awaiting consumption of resources e.g. from depreciation and impairment.
Capital Charge - A charge to service revenue accounts to reflect the cost of fixed assets used in the provision of services.
Capital Expenditure - Spending on the purchase or enhancement of significant assets which have an expected life of over a year - for example
major improvements to council housing or construction of a car park.
Capital Financing Requirement - The Capital Financing Requirement represents the Council’s underlying need to borrow for capital purposes.
Capital Receipts - Money received from the sale of assets. This can be used to finance capital expenditure or repay debt.
Collection Fund - The account which contains all the transactions relating to Community Charge, Council Tax and Business Rates together with the
payments to this Council, Norfolk County Council and Norfolk Police Authority to meet their requirements.
Statement of Accounts 2010/11
112
North Norfolk District Council
GLOSSARY OF TERMS
Contingent Assets - A Contingent Assets is a possible asset that arises from past events and whose existence will only be confirmed by the
occurrence of one or more uncertain future events not wholly within the Council’s control.
Corporate and Democratic Core - Costs relating to the council’s status as a multi-functional, democratic organisation.
Contingent Liabilities - A Contingent Liability is a possible obligation that arises from past events and whose existence will be confirmed only by
the occurrence of one or more uncertain future events not wholly within the Council’s control.
Creditors - Amounts which the Council owes to others for goods and services received before the year end of 31 March but which were not paid
until after 1 April.
Debtors - Sums which at 31 March are owing to the Council.
Deferred Capital Receipts - Representing the amounts that are not available as cash. They arise from Council house sales on mortgage to the
Council, and where repayments of principal sums due are received over a number of years.
Deferred Charges - Capital expenditure that does not result in the creation of a Council owned tangible fixed asset (for example, grants in respect
of improvements to private houses) is treated as a deferred charge.
Depreciation - A measure of the financial effect of wearing out, consumption or other reduction in the useful life of a fixed asset.
Earmarked Reserve - Amounts set aside for a specific purpose to meet future commitments or potential liabilities, for which it is not appropriate to
establish provisions.
Financial Instruments - Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another. The
term covers both financial assets and financial liabilities. Examples of financial assets include bank deposits, equity instrument of another entity, e.g.
shares, contractual right to receive cash or another financial asset from another entity, such as a trade debtor. Financial liabilities include for
example, contractual obligations to deliver cash or another financial asset.
Fixed Assets - Representing, as fixed assets, the value of what the Council owns in terms of property, land etc. and what is owed to the Council in
respect of debt.
General Fund - The account which summarises the revenue costs of providing services, which are met by the Council’s demand on the Collection
Fund.
Statement of Accounts 2010/11
113
North Norfolk District Council
GLOSSARY OF TERMS
Housing and Planning Delivery Grant (HPDG) – Government grant allocated up until 2009/10 for housing and planning needs.
Impairment - Reduction in the value of a fixed asset below its amount included in the Balance Sheet.
Infrastructure - A classification of fixed assets which have no market value and which exist primarily to facilitate transportation and communication
requirements (e.g. roads, street lighting).
Intangible Assets - Intangible Assets are non financial fixed assets that do not have a physical substance and include for example software
licences.
International Accounting Standard 19 (IAS 19) – The requirement for Local Authority’s to include the forecast cost of future pensions in the
accounts on a notional basis.
International Financial Reporting Standards (IFRS) Large Scale Voluntary Transfer (LSVT) - The process of transferring Council House stock from a local Authority to a Registered Social Landlord.
North Norfolk District Council transferred its housing stock to North Norfolk Housing Trust in February 2006.
Leasing - A method of acquiring items such as vehicles and computer equipment by payment of a lease charge over a period of years. There are
two types of lease.
• A finance lease is where the Council effectively pays for the cost of an asset (it counts as capital expenditure for control purposes and is
included on our Balance Sheet). A primary lease period is that period for which the lease is originally taken out and a secondary period
relates to any extension.
• An operating lease (a long-term hire) is subject to strict criteria and the cost can be charged as a running expense. The item leased must be
worth at least 10% of its original value at the end of the lease and does not appear on the Balance Sheet.
Liabilities - This shows what the Council owes for borrowing, creditors etc. at the Balance Sheet date.
Minimum Revenue Provision - The minimum amount which must be charged to the revenue account each year and set aside as a provision to
meet the rest of credit liabilities for example borrowing
National Non-Domestic Rate (NNDR) - National Non-Domestic Rate (NNDR) is set by the Government and collected by each authority and paid
into a central pool. The government in turn pays back to the authorities their share of the pool as a standard amount per head of population.
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GLOSSARY OF TERMS
Non Distributed Costs - The cost of discretionary benefits awarded to employees retiring early and any depreciation and impairment losses
chargeable on non-operational properties.
Precepts - The amount which the Norfolk County Council and Norfolk Police Authority require us to collect, as part of the Council Tax, to pay for
their services is called a precept. Town and Parish Councils also precept on the District Council to pay for their expenses.
Preserved Right to Buy Receipts (PRTB) - Preserved Right to Buy Receipts arise following a housing stock transfer where the local Authority and
the Registered Social Landlord (RSL) entered into a sharing agreement whereby the proceeds from Preserved Right to Buy sales are split between
the Council and the RSL.
Provisions - An amount set aside for potential liabilities which may arise or will be incurred, where there is uncertainty as to the amounts concerned
or the dates on which these liabilities may arise.
Prudential Code - Professional code of practice developed by CIPFA which came into effect from the 1 April 2004 to ensure Local Authorities
Capital investment plans are affordable, prudent and sustainable. ‘The code allows authorities to undertake borrowing to finance capital expenditure
as long as they can demonstrate affordability. ‘
Public Works Loans Board (PWLB) - An independent statutory body which lends to Local Authorities requiring loans for capital purposes.
Reserves - Accumulated balances built up from excess of income over expenditure or sums that have been specifically identified for a particular
purpose which are known as earmarked reserves.
Revaluation Reserve - Net unrealised gains from the revaluation of fixed assets recognised in the balance sheet. Introduced in the 2007 SORP
from 1 April 2007.
Revenue Contribution to Capital (or Direct Revenue Financing) - Use of revenue resources to finance capital expenditure.
Revenue Expenditure - The day to day running expenses on the services provided.
Revenue Expenditure Funded from Capital Under Statute - Expenditure incurred during the year that may be capitalised under statutory
provisions but does not result in the creation of a fixed asset has been charged as expenditure to the relevant service revenue account in the year.
Revenue Income - Amounts receivable for such items as rents and charges for services and facilities.
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GLOSSARY OF TERMS
Revenue Support Grant (RSG) - Grant paid by central government to aid local authority services in general as opposed to specific grants which
may only be used for a specific purpose.
Soft Loans - Loans which are made at less than market rates or interest free. An authority will sometimes make soft loans to achieve a policy or
service objective. For example an interest free loan to a voluntary organisation to provide upfront funding or car loans to employees.
Support Services - Activities of a professional, technical and administrative nature which are not local authority services in their own right, but
support main front-line services.
Temporary Loans - Money borrowed on a short-term basis as part of the overall borrowing strategy.
VAT Shelter - A procedure agreed by the DCLG and HM Revenues and Customs to ensure that following a housing stock transfer there is no
impact on taxation. Had the Council retained the housing stock and carried out the necessary works on the properties the VAT would have been
reclaimed by the Council, however the Housing Trust are unable to recover the VAT and the VAT shelter arrangement allows the VAT to be
recovered and shared between the Council and Victory Housing Trust.
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GLOSSARY OF ACRONYMS
AGS
Annual Governance Statement
LSVT
Large Scale Voluntary Transfer
BVACOP
Best Value Accounting Code of Practice
MRP
Minimum Revenue Provision
CFR
Capital Financing Requirement
NNCP
North Norfolk Community Partnership
CIPFA
Chartered Institute of Public Finance and Accountancy
NNDC
North Norfolk District Council
CMT
Corporate Management Team
NNSCS
North Norfolk Sustainable Community Strategy
DCLG
Department for Communities and Local Government
OMV
Open Market Value
DEFRA
Department for Environment, Food and Rural Affairs
PRTB
Preserved Right to Buy
EUV
Existing Use Value
PWLB
Public Works Loans Board
FRS
Financial Reporting Standard
REFFCUS
Revenue Expenditure Funded from Capital Under Statute
ICT
Information Communication Technology
RSG
Revenue Support Grant
IDB
Internal Drainage Boards
RSL
Registered Social Landlord
IFRS
International Financial Reporting Standard
SMT
Senior Management Team
LABGI
Local Authority Business Growth Initiative Grant
SORP
Statement of Recommended Practice
LSP
Local Strategic Partnership
UK GAAP
United Kingdom - Generally Accepted Accounting Principles
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ANNUAL GOVERNANCE STATEMENT
1. Scope of responsibility
1.1 North Norfolk District Council (NNDC) is responsible for ensuring that its business is conducted in accordance with the law and proper
standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. NNDC also
has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its
functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
1.2 In discharging this overall responsibility, NNDC is responsible for putting in place proper arrangements for the governance of its affairs,
facilitating the effective exercise of its functions, which includes arrangements for the management of risk.
1.3 NNDC has approved and adopted a code of corporate governance, which is consistent with the principles of the CIPFA/SOLACE
Framework Delivering Good Governance in Local Government. A copy of the code is on our website at www.north-norfolk.gov.uk or can be
obtained from the Financial Services Manager at Council Offices, Holt Road, Cromer. This statement explains how NNDC has complied
with the code and also meets the requirement of regulation 4[3] of the Accounts and Audit (England) Regulations 2011 in relation to the
publication of an annual governance statement, prepared in accordance with proper practises in relation to internal control and is reviewed
annually or more frequently as required.
2. The purpose of the governance framework
2.1 The governance framework comprises the systems and processes, and culture and values, by which the authority is directed and controlled
and its activities through which it accounts to, engages with and leads the community. It enables the Council to monitor the achievement of
its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.
2.2 The governance framework has been in place at NNDC for the year ended 31 March 2011 and up to the date of approval of the statement
of accounts.
3. The governance framework
3.1 Our governance framework derives from six principles identified in a 2004 publication entitled The Good Governance Standard for Public
Services. This was produced by the Independent Commission on Good Governance in Public Services – a commission set up by the
Chartered Institute Of Public Finance and Accountancy (CIPFA), and the Office for Public Management. The commission utilised work done
by, amongst others, Cadbury (1992), Nolan (1995) and CIPFA/ Society of Local Authority Chief Executives (SOLACE) (2001). These
principles were adapted for application to local authorities and published by CIPFA/SOLACE in 2007. The six core principles are:
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3.1.1
focusing on the purpose of the authority and on outcomes for the community and creating and implementing a vision for the local
area;
3.1.2
members and officers working together to achieve a common purpose with clearly defined functions and roles;
3.1.3
promoting values for the authority and demonstrating the values of good governance through upholding high standards of conduct
and behaviour;
3.1.4
taking informed and transparent decisions which are subject to effective scrutiny and managing risk;
3.1.5
developing the capacity and capability of members and officers to be effective; and
3.1.6
engaging with local people and other stakeholders to ensure robust public accountability.
3.2 The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot
eliminate all risk of not fully achieving policies, aims and objectives and therefore provides a reasonable rather than absolute assurance of
effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement
of NNDC policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and
to manage them efficiently, effectively and economically.
4. The Six Key Principles
4.1 Focusing on the purpose of the authority and on outcomes for the community and creating and implementing a vision for the local area.
4.1.1
The North Norfolk Sustainable Community Strategy 2008-2011 (NNSCS) outlines the vision and aims for the area. It was produced by
the North Norfolk Community Partnership (NNCP), which brings together all relevant stakeholders, including those that deliver
services in the area. Priorities have been identified through consultation with local people and a wide range of stakeholders.
4.1.2
The Council’s aims and objectives are set out in the Corporate Plan 2008 – 2011 called “Changing Gear”. This contains a statement
of our vision for the area, priorities and our business strategy over a three year period. These priorities reflect the Community
Strategy. Both the Community Strategy and the Corporate Plan are due to be reviewed and updated for the three year period 2011 –
2014. The legislative requirement to produce a Sustainable Community Strategy is being revoked providing options as to how the
priorities for the area will be communicated in the future. To inform the new priorities, consultation exercises were carried out during
2010 with various stakeholders and the public.
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4.1.3
The Corporate Plan also reports on progress against the previous year’s priorities.
4.1.4
The Corporate Plan includes information about the Council’s services and finances, and lists targets for the next three years together
with planned improvements. It includes performance indicators, both national and local, to show how well we performed in previous
years, plus our plans against these indicators for future years. The Cabinet receives an annual medium term financial strategy which
draws on other strategies for ICT, asset management, human resources etc and covering a four-year period, which is used to set
initial parameters for the coming budget process.
4.1.5
The Council has an effective performance management framework – utilising a dedicated IT system to record and report upon
performance management information. The system is driven by the Corporate Plan which focuses attention on Council priorities. This
is cascaded through departmental service plans, individual employee appraisals and action plans. It is clearly laid out in the annual
service and financial planning and performance management cycle.
4.1.6
The Annual Report and Performance Plan represents the culmination of the annual planning and reporting process. The report
evidences the compliance of the Council with its Performance Management Framework.
4.1.7
The Council’s Cabinet and the Performance and Risk Management Board monitor and scrutinise progress against targets and
performance in priority areas affecting relevant service areas, and consider and approve corrective action where necessary, on a
quarterly basis. These reports also include quarterly budget monitoring reports covering the General Fund, capital projects, key
prudential code indicators and certain specific budget areas regarded as particularly sensitive. The reporting process is under
constant review in order to develop its maximum potential, and we are conscious that the financial information needs to be closely
linked to the service performance information.
4.1.8
The Council maintains an objective and professional relationship with external auditors and statutory inspectors, as evidenced by the
Annual Audit Letter.
4.1.9
Through reviews by external agencies, and Internal Audit, the Council constantly seeks ways of ensuring the economic, effective and
efficient use of resources, and for securing continuous improvement in the way in which its functions are exercised, having regard to a
combination of economy, efficiency and effectiveness. A corporate procurement group has been established and continues to
oversee the policy framework which governs the way in which the Council obtains goods and services.
4.1.10 The Council has reviewed its financial and contract rules as part of a comprehensive review of the Constitution which was completed
during 2010/11.
4.1.11 All budget heads are allocated to a named budget officer, who is responsible for controlling spend against a budget.
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4.1.12 The Council continues to develop and refine systems for identifying and evaluating all significant risks, via the corporate Performance
and Risk Management Board. The Risk Management Framework was updated and approved by the Audit Committee in December
2010. The Performance and Risk Management Board has defined terms of reference to develop a comprehensive performance
framework for risk management and to embed risk management across the Council. The Performance and Risk Management Board
maintains the risk register, and submits it to the Audit Committee on a regular basis. In addition updates on business continuity have
been provided to the Audit Committee throughout the year.
4.2 Members and Officers working together to achieve a common purpose with clearly defined functions and roles
4.2.1
The Council aims to ensure that the roles and responsibilities for governance are defined and allocated so that accountability for
decisions made and actions taken are clear.
4.2.2
The Council has adopted a constitution which sets out how the Council operates, how decisions are made and the procedures which
are followed to ensure these are efficient, transparent and accountable to local people. It does this by electing a Leader and
appointing a Cabinet. The Leader then allocates executive responsibilities.
4.2.3
The Council publishes a forward plan which contains details of key decisions to be made by the Cabinet. Each Cabinet member has a
specific portfolio of responsibilities requiring them to work closely with Member Champions as well as senior and other employees so
as to achieve the Council’s ambitions. The Cabinet operates on the basis of collective responsibility.
4.2.4
Additionally, the Council appoints a number of committees to discharge the Council's regulatory and scrutiny responsibilities. These
leadership roles, and the delegated responsibilities of officers, are set out in the Constitution. A comprehensive review of the
Constitution was undertaken in 2010/11, and approved by Council on 6 April 2011.
4.2.5
All Committees have clear terms of reference and work programmes to set out their roles and responsibilities. An Audit Committee
provides assurance to the Council on the effectiveness of the governance arrangements, risk management framework and internal
control environment.
4.2.6
Meetings are open to the public except where personal or confidential matters are being discussed. During 2009/10, to improve
openness and accountability, public speaking was introduced at all Committees and Full Council, this continued in 2010/11. In
addition, senior officers of the Council can make decisions under delegated authority – again the extent of these delegations is set out
in the Constitution.
4.2.7
The Constitution also includes a Member/Officer protocol which describes and regulates the way in which Members and Officers
should interact to work effectively together.
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4.2.8
The Council's Chief Executive (and Head of Paid Service) leads the Council's officers and chairs the Corporate Management Team.
All staff, including senior management, have clear conditions of employment and job descriptions which set out their roles and
responsibilities.
4.2.9
The Deputy Chief Executive, as the s151 Officer appointed under the 1972 Local Government Act, carries overall responsibility for the
financial administration of the District Council. The Council complies with the requirements of the CIPFA statement on the Role of the
Chief Financial Officer in Local Government, the s151 Officer is a member of the Corporate Management Team and reports directly to
the Chief Executive. A corporate finance function headed by the Financial Services Manager and Deputy s151 Officer, provides
support to each service area in respect of budget preparation and financial monitoring process.
4.2.10 The Monitoring Officer carries overall responsibility for legal compliance and is supported by a legal team. The Council employs three
practising solicitors.
4.2.11 The Council’s Corporate Management Team (CMT) of Chief Officers meets on a weekly basis to develop policy issues commensurate
with the Council’s aims, objectives and priorities. CMT also considers other internal control issues, including risk management,
performance management, compliances, efficiency and value for money, and financial management. CMT will meet with portfolio
holders on a regular basis to review progress in achieving the Council’s ambitions, priorities for action, performance management and
forward planning for major issues.
4.2.12 Below CMT the management structure is well defined in a hierarchical manner, comprising the following teams:
Title
Principal Objectives
Corporate Management Team (CMT)
Weekly meetings
Provides collective responsibility for:
• Providing corporate leadership;
• Employee development ;
• Internal and external communications;
• Performance management; and
• Co-ordinating and delivering corporate objectives and priorities for action;
• Reviews corporate policy implementation;
• Agrees corporate standards; and
• Considers key operational matters
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Title
Principal Objectives
Senior Management Team (SMT)
4 weekly meetings
Directorate Management Teams
Bi weekly meetings
In addition there are specific groups established to progress issues on a corporate basis, examples being:
Group
Asset Management Board
Performance and Risk
Management Board
Principal objectives
To confirm the capital strategy and asset management plan
To oversee:
• The full implementation of the capital strategy and asset management plan;
• The arrangements for maintenance of the corporate asset register;
• The production of a surplus land and property register ;
• To consider future land and property requirements and review under-used or empty
property; and
• To consider and approve terms for the disposal or surplus land and property assets
•
•
•
•
•
•
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To establish a performance management framework that is understood and implemented
by all;
To identify and manage the Council’s strategic and operational risks and strengthen
business continuity;
To ensure that all staff and Members have a shared understanding of the council’s priorities
and of what is needed to be done to realise those priorities;
To ensure that the commitment given to performance and risk management is
commensurate with the importance placed on embedding a successful performance and
risk management culture;
To ensure that services deliver the corporate objectives by challenging the measures and
targets put forward by service heads / managers; and
To ensure that management and Council decisions are based on valid, accurate and timely
information.
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Group
Principal objectives
Procurement Board
•
•
•
•
•
•
•
•
•
•
•
Equality and Diversity Board
•
To monitor the Improvement Plan for the Council’s Procurement processes;
To establish project groups as required and agree and monitor detailed project plans for the
work of those groups;
To research and prepare a business case for change to incorporate e-procurement options
and use a standardised approach to project management;
To work within the Council’s existing Procurement Strategy and develop a new
Procurement Policy;
To ensure delivery of cross-cutting issues and identify key performance indicators;
To make recommendations on robust procurement procedures and processes that link to
standing orders;
To undertake a review of the council’s current procurement arrangements to establish
whether Value for Money is being achieved through the council’s approach to procurement;
To evaluate whether partnership and collaboration models are being addressed through the
current procurement strategy;
To give consideration to our future approach to sustainability, equality and medium and
small enterprises;
To ensure that risk management is being effectively applied to procurement activities; and
To monitor the Council’s position against key milestones identified within the government’s
National Procurement Strategy
To promote diversity within the authority and through the services it provides
4.3 Promoting values for the community and demonstrating the values of good governance through upholding high standards of conduct and
behaviour.
4.3.1
The Council has adopted a number of codes and protocols that govern both Member and officer activities. These are:
Members Code of Conduct;
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4.3.2
Officers Code of Conduct;
Planning Protocol;
Members’ declarations of interest;
Member/officer relations; and
Gifts and hospitality
The Council takes fraud, corruption and maladministration very seriously and has the following policies which aim to prevent or deal
with such occurrences:
Anti-Fraud and Corruption Policy;
Whistle blowing Policy; and
HR policies regarding the implications for staff involved in such incidents.
4.3.3
It is part of the function of the Monitoring Officer to ensure compliance with established policies, procedures, laws and regulations.
After consulting the Chief Executive and Chief Finance Officer, the Monitoring Officer can report to the full Council if any proposal,
decision or omission would give rise to unlawfulness or maladministration. Such a report will have the effect of stopping the proposal
or decision being implemented until the report has been considered.
4.3.4
The financial management of the Council is conducted in accordance with the financial rules set out in the Constitution and with
Financial Regulations. The Council has designated the Deputy Chief Executive as Chief Finance Officer in accordance with Section
151 of the Local Government Act 1972. The Council has in place a four-year Financial Strategy, updated annually, to support the
medium-term aims of the Corporate Plan.
4.3.5
The Council maintains an externalised Internal Audit, which operates to the standards set out in the ‘Code of Practice for Internal
Audit in Local Government in the UK’. This is the third year of an arrangement with Deloitte to provide its internal audit service under
a contract common to other Norfolk district councils.
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4.3.6
Individual services have produced Service Plans, which currently cover the time period 2010-13. These Service Plans are updated
each year so as to incorporate the Corporate Plan requirements into service activities and to take into account available funding. In
this way services identify and plan to achieve the Council’s priorities and ambitions. These plans also identify any governance impact.
4.3.7
At employee level we have established an Employee Development Scheme so as to jointly agree employee objectives and identify
training and development needs. The Scheme provides for an annual appraisal at which past performance is reviewed, and also
provides for regular monitoring of performance during the year.
4.4 Taking informed and transparent decisions which are subject to effective scrutiny and managing risk.
4.4.1
The Council’s Constitution sets out how the Council operates and the process for policy and decision making.
4.4.2
Full Council sets the policy and budget framework. Within this framework, all key decisions are made by the Cabinet. Cabinet
meetings are open to the public (except where items are exempt under the Access to Information Act).
4.4.3
The Leader’s Forward Plan of key decisions to be taken over the next three months is published on the Council’s website.
4.4.4
All decisions made by Cabinet are made on the basis of reports, including assessments of the legal and financial implications, policy
and equalities assessments, and consideration of the risks involved and how these will be managed. The financial and legal
assessments are provided by named finance and legal officers.
4.4.5
The decision-making process is scrutinised by a scrutiny function which has the power to call in decisions made, but which also
undertakes some pre-decision scrutiny and some policy development work.
4.4.6
Other decisions are made by officers under delegated powers. Authority to make day to day operational decisions is detailed in a
departmental Scheme of Delegation.
4.4.7
Policies and procedures governing the Council's operations include Financial Regulations, Contract Procedure Rules and a Risk
Management Policy. Ensuring the policies are up to date and complied with is the responsibility of managers across the Council. The
Internal Audit, Finance and Legal Services check that policies are complied with. Where incidents of non-compliance are identified,
appropriate action is taken.
4.4.8
The Council’s Risk Management Policy requires that consideration of risk is embedded in all key management processes undertaken.
These include policy and decision making, service delivery planning, project and change management, revenue and capital budget
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management and partnership working. In addition, a Corporate Risk Register is maintained and the Performance and Risk
Management Board meets monthly to review the extent to which the risks included are being effectively managed. The Audit
Committee oversees the effectiveness of risk management arrangements and provides assurance to the Council in this respect.
Financial Management processes and procedures are set out in the Council’s Financial Regulations and include:
4.4.9
Comprehensive budgeting systems on a medium term basis;
Clearly defined capital and revenue expenditure guidelines;
Regular reviews and reporting of financial performance against the plans for revenue and capital expenditure;
Overall budgets and a clear Scheme of Delegation defining financial management responsibilities;
Regular capital monitoring reports which compare actual expenditure plus commitments to budgets;
Key financial risks are highlighted in the budgeting process and are monitored through the year by service and corporately;
Robust core financial systems; and
Documented procedures are in place for business critical financial systems, and these are also checked on a regular basis
by the Internal Audit Section.
Containing spending within budget is given a high priority in performance management for individual managers. Monitoring reports
are submitted to the Cabinet on a quarterly basis linking finance and service delivery performance.
4.4.10 The Council has several committees which carry out regulatory or scrutiny functions. A structure chart of the Council’s committee
structure is attached. These are:
Development Control Committee to determine planning applications and related matters;
Standards Committee which promotes, monitors and enforces probity and high ethical standards amongst the Council’s
Members, and this extends to having the same responsibility for all town and parish councils within the District;
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Audit Committee to obtain assurance about the adequacy of internal controls, financial accounting and reporting
arrangements, and that effective risk management is in place. Its work is intended to enhance public trust in the corporate
and financial governance of the council;
A Licensing Committee, which monitors and reviews the effectiveness of the Council’s licensing policy and procedures;
Scrutiny Committees, which review and/or scrutinise decisions made or actions taken in connection with the discharge of any
of the Council’s functions.
4.5 Developing the capacity and capability of Members and Officers to be effective
4.5.1
The Council aims to ensure that Members and managers of the Council have the skills, knowledge and capacity they need to
discharge their responsibilities and recognises the value of well trained and competent people in effective service delivery. All new
Members and Officers undertake an induction to familiarise them with protocols, procedures, values and aims of the Council.
4.5.2
All Council services are delivered by trained and experienced people. All posts have a detailed post profile and person specification.
Training needs are identified through the Employee Development Scheme and addressed via the Human Resources service and/or
individual services as appropriate.
4.5.3
The Council achieved accreditation in January 2008 under the Investors in People Standard, which is a quality framework to ensure
that the Council’s employees have the right knowledge, skills and motivation to work effectively. Reaccreditation took place during
2009/10 and the Council achieved a bronze level assessment.
4.5.4
Environmental Health has achieved accreditation under the ISO 9001:2000.
4.5.5
In respect of Members, the Council has established a Member Development Group which guided a full induction process for
members following the full council elections in May 2007. The group has continued to meet to support the Member induction
programme in 2011. As a commitment to developing and supporting elected Members the Council has committed itself to achieving
the Members Charter which will provide a structured approach to building elected Member capacity.
4.5.6
Members who have not undertaken training are not permitted to sit on the regulatory committees. In addition the Council has
appointed Member Champions who will be able to focus on important issues for the Council. This, along with the Scrutiny role
provides important developmental opportunities for Members.
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4.5.7
The Council is concentrating on delivering improved service for its customers through an information management strategy designed
to enhance the value and usefulness of the corporate resource that information, data and knowledge represents.
4.6 Engaging with local people and other stakeholders to ensure robust public accountability
4.6.1
The Council approved a Communication Strategy in May 2008 which has been updated during 2010 along with a new web
development strategy, both of which were approved in September 2010. The Strategy aims to ensure that the work of the Council is
open, honest and transparent and to enhance inclusion by building on our understanding of all residents’ needs and perceptions,
through improved customer service and community engagement.
4.6.2
The Strategy sets the framework for both conveying messages and seeking residents’ views, and supports the need for further
improvement with clear aims and a set of specific actions.
4.6.3
The Council has continued to engage with local people and stakeholders in the following ways on a range of issues;
Surveys;
Community workshops;
Interviews;
Public meetings;
Road shows; and
Area Forums
4.6.4
The results of this consultation continue to be used to shape and inform the Council’s policies and strategies.
4.6.5
The Council has tried to engage “harder to reach” groups through varying the way in which it conducts consultation so that the views
of a broad spectrum of the community can be well represented.
4.6.6
The Council has also undertaken work with key stakeholders such as parish councillors through the Town and Parish Council Forums
to try to ensure enhanced participation through these types of established forums.
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4.6.7
5.
This is an area which will be scrutinised and reviewed by the Council in parallel to understanding the implications, and opportunities
arising from, the Localism Bill.
Review of effectiveness
5.1 NNDC annually reviews the effectiveness of its governance framework including the system of internal control. The review of effectiveness is
informed by managers within the Council who have responsibility for the development and maintenance of the governance environment, the
work of the internal auditors and from comments made by the external auditors and other inspection agencies.
5.2 Both during the year and at year end, reviews have taken place. In year review mechanisms include:
5.2.1
The Cabinet is responsible for considering overall financial and performance management and receives comprehensive reports on a
quarterly basis. It is also responsible for key decisions and for initiating corrective action in relation to risk and internal control issues.
5.2.2
The Monitoring Officer has a duty to monitor and review the operation of the Constitution to ensure its aims and principles are given
full effect.
5.2.3
A full review of the Constitution was undertaken during 2010/11 to ensure it is accurate and reflects current best practice and legal
requirements.
5.2.4
The current Members’ Allowance scheme was adopted by the Council following an independent review panel being established to
make recommendations.
5.2.5
The Council has a Scrutiny Committee which can establish ‘task and finish’ groups, which can look at particular issues in depth,
taking evidence from internal and external sources, before making recommendations to the Cabinet. Scrutiny can “call-in” a decision
which has been made by the Cabinet but not yet implemented, to enable it to consider whether the decision is appropriate. In addition
the Scrutiny Committee can exercise its scrutiny role in respect of any Cabinet function, regardless of service area or functional
responsibility, and will conduct regular performance monitoring of all services, with particular attention to areas identified as underperforming.
5.2.6
The introduction of the “Councillor Call for Action” by the government provides another mechanism by which members of the public
can raise their concerns. The Council has updated its Constitution and procedures to incorporate this option, although it has not been
used during 2010/11.
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5.2.7 The development of the procurement function across the public sector has led to the establishment of a number of framework
agreements for purchasing where the detailed work on price and quantity with suppliers has already been carried out. Contracts for
supply are only established when goods works or services are called off under the agreement. During 2010/11 the Council procured a
new waste and recycling, grounds maintenance, cleansing and office cleaning contract through a competitive dialogue route.
5.2.8
The Equality Framework builds on the work already undertaken in this area. It is based on three levels of “developing, achieving and
excellent”.
5.2.9
The Standards Committee has met regularly throughout the year to consider and review issues relating to the conduct of Members.
The Local Assessment Framework transferred in May 2008 and the Council had arrangements in place to deal with the investigation
arising from this. Members of the Committee have been meeting regularly to assess complaints received, although the District, due to
the large number of Parishes, has received more complaints regarding parish and town Council members than many other Councils.
The Committee has received reports during the year on trend analysis of complaints and the wider control environment including
Whistle blowing, Anti Fraud and Corruption and Officer Conduct. Changes to the arrangements are anticipated following the
implementation of the Localism Bill.
5.2.10 The Audit Committee met five times during the year to provide independent assurance to the Council in relation to the effectiveness of
the risk management framework and internal control environment. The Committee received regular reports on risk management,
internal control and governance matters in accordance with its agreed work programme. Of the 18 internal audit assignments
completed during 2010/11 the level of assurance achieved was adequate overall. Only one assignment (Network Infrastructure)
received a limited assurance, although this did not include any high recommendations and of the 18 recommendations made seven
have already been implemented. Two audits received a good assurance level (the highest assurance awarded) and no area reviewed
had deteriorated in their direction of travel since the previous review.
5.2.11 Internal Audit is an independent and objective assurance service to the management of the District Council who complete a
programme of reviews throughout the year (18 assignments completed during 2010/11) to provide an opinion on the internal control,
risk management and governance arrangements. In addition, the Section undertakes fraud investigation and proactive fraud detection
work which includes reviewing the control environment in areas where fraud or irregularity has occurred. Significant weaknesses in
the control environment identified by Internal Audit are reported to senior management and the Audit Committee although it should be
noted that there were no high risk recommendations received in relation to any of the audits undertaken during the 2010/11 financial
year.
5.2.12 The External Auditor’s Annual Audit Letter is considered by the Audit Committee and the Performance and Risk Management Board.
The December 2010 letter identified a number of areas for continued focus including implementation of the International Financial
Reporting Standards (IFRS) and ensuring that all lease arrangements have lease agreements in place.
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ANNUAL GOVERNANCE STATEMENT
5.2.13 The Performance and Risk Management Board monitor Best Value and Key Performance Indicators on a quarterly basis and
recommend improvements to the Cabinet. They also continually review corporate risks and ensure that actions are being taken to
effectively manage the Council's highest risks.
5.2.14 There have been significant changes in the economic environment both in the financial sector and in the economy at large. The
Council has continued to monitor the impact of the changing economic position on the provision of services by the Council and the
wider community through its recession summit action plan, as well as responding to the reduction in public sector expenditure levels.
5.2.15 Although the Council did not have any funds invested in any of the Icelandic banks, it continues to review its treasury management
arrangements in line with best practice following the Icelandic banking crisis.
5.2.16 Developments in the way public sector accounts are presented will lead to the adoption of the International Financial Reporting
Standards (IFRS) in 2010/11 in Local Government. Work has been ongoing during 2010/11 in preparing for this significant change to
financial reporting.
5.3 The year end review of the governance and the control environment arrangements by the Performance and Risk Management Board
included:
5.3.1
Obtaining assurances from Directors and Service Managers that key elements of the control framework were in place during the year
in their departments.
5.3.2
The statement itself was considered by CMT and is supported by them as an accurate reflection of the governance arrangements in
place for the year.
5.3.3
Obtaining assurances from other senior management, including the s151 Officer and the Monitoring Officer that internal control and
corporate governance arrangements in these essential areas were in place throughout the year.
5.3.4
Reviewing any high level audit recommendations that remained outstanding at the year end and taking appropriate action if
necessary.
5.3.5
Reviewing external inspection reports received by the Council during the year, the opinion of the Head of Internal Audit in her annual
report to management and an evaluation of management information in key areas to identify any indications that the control
environment may not be sound.
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ANNUAL GOVERNANCE STATEMENT
5.4 The Audit Committee received assurances from the Head of Internal Audit that standards of internal control, corporate governance
arrangements and systems of risk management were all operating to an adequate standard.
5.5 The Audit Committee review the effectiveness of the governance framework as part of an annual review of the Local Code of Corporate
Governance, and an improvement plan to address weaknesses and ensure continuous improvement of the system is in place.
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ANNUAL GOVERNANCE STATEMENT
6.
Significant governance issues
6.1 The outcomes from the action points for the previous year are detailed below. All have been satisfactorily addressed since 2009/10.
Action Points arising from 2009/10
Ref
Action
Officer / Target
Date
Outcome
09/10 a
Undertake a fundamental review of the
Constitution to include contract
management arrangements and letting of
contracts.
Strategic Director
Information
A new constitution was adopted by Council on 6 April
2011.
October 2010
09/10 b
To update the Risk Management
Framework and review on an annual basis.
Corporate Risk
Officer
The Audit Committee received an updated Risk
Management Framework in December 2010.
September 2010
09/10 c
All service risks should be captured within
the service plan and included on the
Council’s performance management
system along with actions to mitigate risks.
Statement of Accounts 2010/11
Corporate Risk
Officer
AGS 17
The 2010/2011 service risks have been captured in the
service plans. The service risks should have then been
added to the risk section of the Council’s performance
system (TEN). However an internal audit review on
Corporate Governance and Risk Management, dated
April 2011, identified that service level risk assessments
had not been updated on the TEN system for all services.
This is therefore identified as an action point for 2010/11.
North Norfolk District Council
ANNUAL GOVERNANCE STATEMENT
Action Points arising from 2010/11
6.2
The review process has highlighted two significant issues regarding the governance and internal control environment and these together
with an issue raised at the audit committee are described briefly in the table below along with the improvement/action proposed.
Ref
Action
Officer
Target Date
10/11 a
Service level risk assessments should be completed by all service
managers with all service level risk registers added to the TEN
system.
Review of the governance arrangements for significant
partnerships and the policies and procedures for evaluating the
effectiveness of partnerships.
To ensure adequate arrangements are in place for the Council to
respond to civil contingencies and provide business continuity.
Organisational
Development Manager
Sept 2011
Deputy Chief Executive
Sept 2011
Environmental Health
Manager
Sept 2011
10/11 b
10/11 c
6.3
7.
We propose over the coming year to take steps identified above to address the above matters to further enhance our governance
arrangements. We are satisfied that these steps will address the need for improvements that were identified in our review of effectiveness
and will monitor their implementation and operation as part of our next annual review.
Certification
7.1
To the best of our knowledge, the governance arrangements, as defined above, have been effectively operating during the year with
the exception of those areas identified above. We propose over the coming year to take steps to address the above matters to further
enhance our governance arrangement. We are satisfied that these steps will address the need for improvements that were identified
during the review of effectiveness and will monitor their implementation and operation as part of our next annual review.
Leader of the Council:
Chief Executive:
Helen Eales________________________________Date:
Philip Burton_______________________________Date:
Statement of Accounts 2010/11
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Statement of Accounts 2010/11
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North Norfolk District Council