Please Contact: Lydia Hall
Please email: lydia.hall@north-norfolk.gov.uk
Please Direct Dial on: 01263 516047
07 September 2015
A meeting of the Audit Committee of North Norfolk District Council will be held in the
Committee Room at the Council Offices, Holt Road, Cromer on Tuesday 15 September
2015 at 2.00 pm
Members of the public who wish to ask a question or speak on an agenda item are
requested to arrive at least 15 minutes before the start of the meeting. It will not always be
possible to accommodate requests after that time. This is to allow time for the Committee
Chair to rearrange the order of items on the agenda for the convenience of members of the
public. Further information on the procedure for public speaking can be obtained from
Democratic Services, Tel: 01263 516047, Email: democraticservices@north-norfolk.gov.uk
Anyone attending this meeting may take photographs, film or audio-record the proceedings
and report on the meeting. Anyone wishing to do so must inform the Chairman. If you are a
member of the public and you wish to speak on an item on the agenda, please be aware that
you may be filmed or photographed.
Sheila Oxtoby
Chief Executive
To: Mr V FitzPatrick, Mr S Hester, Mr B Jarvis, Mr M Knowles, Mrs A Moore
and Mr D Young
All other Members of the Council for information.
Members of the Management Team, appropriate Officers, Press and Public
If you have any special requirements in order to attend this meeting, please let us
know in advance
If you would like any document in large print, audio, Braille, alternative format or in a
different language please contact us
Chief Executive: Sheila Oxtoby
Strategic Directors: Nick Baker and Steve Blatch
Tel 01263 513811 Fax 01263 515042 Minicom 01263 516005
Email districtcouncil@north-norfolk.gov.uk Web site northnorfolk.org
AGENDA
1.
TO RECEIVE APOLOGIES FOR ABSENCE
2.
APPOINTMENT OF VICE-CHAIRMAN OF AUDIT COMMITTEE
Members to appoint a Vice-Chairman of the Committee.
3.
PUBLIC QUESTIONS
To receive public questions, if any.
4.
ITEMS OF URGENT BUSINESS
To determine any items of business which the Chairman decides should be
considered as a matter of urgency pursuant to Section 100B(4)(b) of the Local
Government Act 1972.
5.
DECLARATIONS OF INTEREST
Members are asked at this stage to declare any interests that they may have in any
of the following items on the agenda. The Code of Conduct for Members requires
that declarations include the nature of the interest and whether it is a disclosable
pecuniary interest.
6.
MINUTES
(Page 1)
To approve as a correct record, the minutes of the meeting of the Audit Committee
held on 16 June 2015.
7.
AUDIT UPDATE AND ACTION LIST
(Page 6)
To monitor progress on items requiring action from the meeting of 16 June 2015
including progress on implementation of audit recommendations.
8.
AUDIT COMMITTEE WORK PROGRAMME
(Page 7)
To review the Audit Committee Work Programme.
9.
MONITORING OFFICER’S REPORT
(Page 8)
To receive the Monitoring Officer’s report for 2014/15.
10.
ANNUAL GOVERNANCE STATEMENT
(Page 16)
To receive the Annual Governance Statement.
11.
STATEMENT OF ACCOUNTS
(Page 34)
To receive the Statement of Accounts (draft attached)
12.
ANNUAL GOVERNANCE REPORT
To receive the Annual Governance Report (draft attached)
(Page 146)
13.
INTERNAL AUDIT PROGRESS REPORT
(Page 178)
To receive a follow up report on the recommendations made by Internal Audit.
14.
EXCLUSION OF THE PRESS AND PUBLIC
To pass the following resolution, if necessary:
“That under Section 100A(4) of the Local Government Act 1972 the press and public
be excluded from the meeting for the following items of business on the grounds that
they involve the likely disclosure of exempt information as defined in
of Part I
of Schedule 12A (as amended) to the Act.”
Agenda item _5 _
AUDIT COMMITTEE
Minutes of a meeting of the Audit Committee held on Tuesday 16 June 2015 in the
Committee Room, Council Offices, Holt Road, Cromer at 2.00 pm.
Members Present:
Committee:
Mr V FitzPatrick (Chairman)
Mr S Hester
Mr M Knowles
Mrs A Moore
Mr D Young
Officers in
Attendance:
The Head of Finance, the Internal Audit Consortium Manager, and the
Democratic Services Team Leader
1.
APOLOGIES
Mr R Shepherd
2.
PUBLIC QUESTIONS
None received.
3.
ITEMS OF URGENT BUSINESS
None
4.
DECLARATIONS OF INTEREST
None.
5.
MINUTES
The Minutes of the meeting of the Audit Committee held on 17 March 2015 were
approved as a correct record and signed by the Chairman.
6.
AUDIT UPDATE AND ACTION LIST
The Head of Finance advised Members that the item outlined in the Action List was
included within the Business Continuity Plan Review and Training Update which would
be dealt with at Agenda Item 13.
7.
AUDIT COMMITTEE WORK PROGRAMME
Audit Committee
1
16 June 2015
The work programme for 2015-2016 was discussed. The Internal Audit Consortium
Manager sought clarification on the scheduling of the self-assessment. It was currently
scheduled for September 2015 but that would only have allowed for one full meeting of
the new Committee. She suggested that it could be put back. The Chairman agreed,
saying that the September meeting had a particularly full work programme. Mr M
Knowles proposed that it was dealt with at the meeting of the Committee in March
2016. Members agreed that this was a suitable date for the self-assessment.
The Internal Audit Consortium Manager then commented on the training that was
scheduled on the work programme. She said that there would be training prior to the
Statement of Accounts coming before the Committee, otherwise it would be as and
when required.
AGREED to accept the Work Programme for 2015-2016, subject to the selfassessment being moved to March 2016
8.
PROGRESS REPORT ON INTERNAL AUDIT ACTIVITY: 6 MARCH 2015 TO 9
APRIL 2015
The Internal Audit Consortium Manager introduced this item. She explained that the
report examined the progress made between 6 March and 2 April 2015 in relation to
the delivery of the Annual Internal Audit Plan for 2104/15 and provided the end
position. She drew Members’ attention to the five final reports that had been issued.
The Chairman, referring to the Payroll and Human Resources final report, asked for
more information how the adequate controls would be monitored. The Internal Audit
Consortium Manager replied that they would be reviewed on an annual basis.
Mr D Young, referring to the final report on Creditors, queried whether the Council
used any self-employed contractors. The Head of Finance replied that consultants and
some of the sports coaches came into this category, however, they were short-term
appointments.
The Chairman asked whether Members should be concerned about an amber rating
for the effectiveness of controls. The Internal Audit Consortium Manager replied that
this rating indicated that there were controls in place but that they were not always
working effectively. However, it was considered that there was only a medium risk and
it was not necessary to address them immediately. She informed Members that the full
versions of all of the final reports were available on request.
The Committee AGREED to receive the Progress Report in Internal Audit Activity.
9.
FOLLOW UP ON INTERNAL AUDIT RECOMMENDATIONS
The Internal Audit Consortium Manager advised Members that the report was issued to
assist the Authority in discharging its responsibilities in relation to the internal audit
activity. She drew members’ attention to the table detailing the status of
recommendations as at 31 October 2014 and 31 March 2015 and said that there were
no concerns at present.
Mr D Young asked about outstanding items. He said it was not clear in the tables
which ones had been carried over from October to March. Internal Audit Consortium
Manager replied that further information was provided in Appendix 1 – Status of
Agreed Actions’ and this indicated which items had been carried over.
Audit Committee
2
16 June 2015
The Head of Finance added that some recommendations had not been implemented
due to a vacant post, a recent appointment and in some cases a restructure of the
service area. She acknowledged that it was disappointing not to have achieved a
100% implementation rate but said that there were valid reasons. The Head of Finance
went onto say that for example if there was a budget implication to implementing the
recommendation and it was also a low priority then it could be discussed with Internal
Audit and considered to be removed
The Chairman asked whether it was possible for long-term recommendations to be
highlighted in a different colour to distinguish them. Internal Audit Consortium Manager
said that the reports could be tailored to the Committee’s requirements and she was
happy to accommodate this. Mr M Knowles agreed that this was a good idea. He went
onto ask whether Members should be concerned that some recommendations had
been outstanding for some considerable time. He queried why there was no detail
available on these and whether Members should know more about them. The Head of
Finance replied that there would be some concerns when there was a new audit and
there were some outstanding recommendations but it was possible that any new
recommendations could override the previous ones. The Internal Audit Consortium
Manager added that if a new audit was undertaken there was the potential for
outstanding recommendations to be superceded by new recommendations (then in
theory they would have been replaced), however, the initial issue would still be
outstanding and therefore this was made clear in the report issued at the end of the
audit.
Mr D Young commented that it would be helpful for Members to have some information
on the outstanding recommendations. The Head of Finance agreed that this was
appropriate for any medium priority ones. She added that there were no high priority
recommendations outstanding and no real concerns.
The Committee AGREED to receive the follow up report on the recommendations
made by Internal Audit
10.
ANNUAL REPORT AND OPINION
The Internal Audit Consortium Manager introduced the report. She explained that the
Council was required by the Accounts and Audit Regulations 2011 to maintain an
adequate and effective system of internal audit of its accounting records and internal
control systems in accordance with proper internal audit practices. She drew Members’
attention to the summary statement which outlined that the overall opinion was that the
framework of governance, risk management and control at the Council was deemed to
be adequate, with three good assurances awarded during the year.
In relation to performance against the Public Sector Internal Audit Standards, she
concluded by saying that the service was compliant, with the only item needing
attention being an external assessment of Internal Audit , which was not due until
March 2018. However, the Internal Audit Consortium Manager was hopeful that it could
take place before then (January 2016) to provide assurance on the new contractor,
TIAA Ltd.
Mr D Young asked whether the Internal Audit Consortium Manager completed the
checklist on her own effectiveness. The Internal Audit Consortium Manager confirmed
that this was the case but that the Head of Finance also received the information
checklist to support that.
Audit Committee
3
16 June 2015
Mr D Young asked for an explanation of how the score card approach worked as it was
a new system. The Internal Audit Consortium Manager replied that this approach took
things to a higher level and was designed to cover all aspects of the service, whilst
allowing the contractor to get on with the delivery of the work. There were 11 indicators
and it operated on a ‘rag’ status so if 9 or more indicators were green then the
performance was deemed to be satisfactory. The performance measures were also
now linked to the contractor payments. 10% of the contractor bill for the financial year
would be held back to be paid on conclusion of the year’s work, if performance was
rated as amber or red then a proportion of this would not be paid, thus linking a high
quality service to the payment of the contractor. She added that the first progress
report would update on all 11 indicators.
The Chairman asked for more information on the indicators themselves. The Internal
Audit Consortium Manager explained that they were quite broad and covered the
whole of the service area.
The Committee AGREED to receive the Progress Report on Internal Audit Activity.
11.
CORPORATE RISK REGISTER
The Head of Finance explained that this came before the Committee twice a year. The
Chairman asked about the risks relating to the Business Transformation Programme.
The Head of Finance replied that any risks were related to the slippage of the
programme and projects associated with it. She said that it was a very ambitious
programme of work and it was only over the longer-term that it would deliver savings.
Mr D Young said that there had previously been concerns about recruitment to roles
relating to the Business Transformation Programme and asked whether this was still
ongoing. The Head of Finance replied that these positions had now been filled. She
added that it may be necessary to use consultants on a short-term basis as business
process reviews were undertaken across all service areas.
Mrs A Moore asked about car parking income and whether restrictions regarding profit
made on it only applied to on-street parking. The Head of Finance confirmed that this
was the case.
The Committee ACCEPTED the report.
12.
BUSINESS CONTINUITY PLAN REVIEW AND TRAINING UPDATE
The Head of Finance advised Members that this was just an update. She confirmed
that business continuity plans were in place for all teams now and that they would be
reviewed on a regular basis.
Mr M Knowles queried whether the Business Continuity Working Group would continue
to meet. The Head of Finance replied that it had been set-up to raise the profile of
business continuity across the organisation and that it would continue to meet quarterly
to ensure interest was maintained.
The Committee ACCEPTED the update.
Audit Committee
4
16 June 2015
The meeting closed at 3.01pm
______________________
Chairman
Audit Committee
5
16 June 2015
Agenda Item
6
AUDIT COMMITTEE 16 JUNE 2015 – ACTIONS ARISING FROM THE MINUTES
1. Audit Work
Programme
Agreed for the Self- Assessment to come to the
March 2016 Committee meeting
Emma Hodds
2. Progress on
Internal Audit
Activity
To provide information on all outstanding mediumpriority audit recommendations
Karen Sly
6
Agenda Item 8
AUDIT COMMITTEE WORK PROGRAMME 2015 – 2016
JUNE 2015
PWC
SEPTEMBER
2015
DECEMBER 2015
PWC 2014/15
Annual
Governance
report
(ISA260)
Internal Audit
Annual Report and Progress Report
Opinion and
on Internal Audit
Review of the
Activity
Effectiveness of
Internal Audit
Progress report on
Internal Audit
Activity
Follow up on
Internal Audit
Recommendations
NNDC
Corporate Risk
Register/ risk
management
framework
Business
Continuity Plan
Review
Business
Continuity training
update
MARCH 2016
E&Y Annual Audit
Letter
E&Y Audit Plan
(with overview)
Annual Grant
Certification
Report
Progress Report
on Internal Audit
Activity
Progress Report
on Internal Audit
Activity
Follow Up Report
Strategic and
on Internal Audit
Annual Audit
Recommendations Plans
Undertake selfassessment
Statement of
Accounts
Local Code of
Corporate
Governance and
Action Plan
Business
Continuity
Monitoring
Officer’s Report
Corporate Risk
Register
7
Risk
Management
Framework
Agenda item ___9____
Monitoring Officer
Annual Report 2014/15
Section
Numbers
Contents
1
Introduction
2
The Monitoring Officer’s Work April 2014 – March 2015
3
Key Messages
4
Looking Forward
5
Overall opinion on the adequacy and effectiveness of the
Governance framework
8
1.
Introduction
1.1
The Monitoring Officer’s Annual Report summarises the more important
matters arising from the Monitoring Officer’s work for the District Council from
1 April 2014 to 31 March 2015 and comments on other current issues.
1.2
Corporate Governance is the system by which local authorities direct and
control their functions and relate to their communities. It is founded on the
fundamental principles of openness, integrity and accountability together with
the overarching concept of leadership. In this respect, North Norfolk District
Council recognises the need for sound corporate governance arrangements
and over the years has put in place policies, systems and procedures
designed to achieve this.
1.3
The Monitoring Officer is appointed under Section 5 of the Local Government
and Housing Act 1989 and has a number of statutory functions in addition to
those conferred under the Localism Act 2011 and regulations governing local
Member conduct. These are outlined in the next section of the report.
2.
The Monitoring Officer’s Work April 2014 – March 2015
2.1
The Monitoring Officer has undertaken the following work during the year
from April 2014 to March 2015.
Duties
(a) Report on contraventions or likely
contraventions of any enactment or
rule of law.
Work undertaken
None
(b)
There have been no such reportable
incidents.
(c)
Report any findings of
maladministration causing injustice
where the Ombudsman has carried
out an investigation.
Establish and maintain the Register
of Member’s interests and gifts and
hospitality.
Members have been trained in the
provisions of the Code of Conduct and
have been issued with Guidance.
The Register of Members’ Interests is
publicised on the Council’s website.
The Registers are available for Members
or members of the public to inspect.
9
(
Duties
d) Maintain Register of Employees
gifts and hospitality and declaration
of officer’s interests in contract.
Work undertaken
The Registers have been updated
regularly and are open to inspection.
(e)
During the year between April 2014 and
March 2015 a total of 14 complaints have
been received, compared with 10 in
2013/14
Investigate misconduct in respect of
District, Parish and Town
Councillors under the Code of
Conduct.
5 Cases were referred for investigation (3
in 2013/14) and none were referred for
other action. Of the 5 referred for
investigation, 1 was found to have
breached the Code of Conduct, 3 were
found to have no breach and the other
case was delayed until after March 2015.
Of the 14 complaints received, 2 related
to a District Councillor and 12 related to
Town or Parish Councillors.
Members have regularly sought advice in
order to comply with the Code of
Conduct, particularly in relation to
declaring interests under the Code.
(f)
Investigate breaches of the
Council’s own protocols.
There have been no alleged breaches of
the Council’s own protocols.
(g)
Provide advice to Town and Parish
Councils on the interpretation of the
Code of Conduct.
The Monitoring Officer has provided
advice to Parish Councils on their
Standards and Conduct Arrangements
during 2014/15 face to face, by letter,
telephone and email.
10
Duties
(h) Promote and support high
standards of conduct through
support to the Standards
Committee.
Work undertaken
The Standards Committee have received
reports on a range of matters during
2014/15 including;
 Regular reporting of outstanding
cases.
 Reports requested by the
Committee.
 Receipt of Investigation Reports
 Work on engagement with Parish
Councils.
The Standards Committee has been
programmed to meet on a bi-monthly
basis with reserve dates for alternate
months. During the year to 31 March
2015, the Standards Committee actually
met on 7 occasions.
Training on governance and standards
has been provided to newly elected
members in May 2015.
(i)
Compensation for
maladministration.
None.
(k)
Maintenance and review of the
Constitution.
Standards Committee has been advised
of any constitutional issues overlapping
its work with that of Constitutional
Working Party.
(l)
Responsibility for complaints made
under the Council’s Whistleblowing
and Anti-Fraud policies.
(m) Breaches of the Employee Code of
Conduct.
None
There have been no formal allegations of
breaches under the Employee Code of
Conduct.
11
Duties
(n) Advice on vires issues,
maladministration, financial
impropriety, probity and policy
framework.
Work undertaken
The Monitoring Officer has been
consulted on new policy proposals and
on matters, which have potentially
significant legal implications.
The Monitoring Officer has attended
Council and other Committees as
necessary.
The Monitoring Officer regularly advises
on the legality and/or appropriateness of
administrative procedures, in conjunction
with the Democratic Services Team.
Ombudsman cases summary
Closed
after
initial
enquiries
2
Incomplete/invald Referred
back for
local
resolution
1
5
Upheld
Not
upheld
%
upheld
Total
1
2
33.3%
11
3.
Key Messages
3.1
The key messages to note from the year are:
(i)
The systems of internal control administered by the Monitoring Officer
including compliance with the Council’s Constitution were adequate and
effective during the period. However, it is important that Members and
Officers are regularly reminded of their obligations and updated on any
changes.
(ii)
Any constitutional issues or concerns should be forwarded to the
Monitoring Officer for resolution or for referral onwards to Constitution
Working Party.
4.
Looking Forward
4.1
The key issues for 2015/16 are as follows;
4.2
Code of Conduct
4.2.2
In accordance with the resolution of Standards Committee to continue to
engage with parish councils over their promotion and maintenance of high
standards of ethics and conduct.
12
4.2.3
To consider the appointment of an Independent Person when the current IP’s
term of office expires in June 2016.
4.3
Corporate Governance Framework
4.3.1
The Council will keep the Code of Corporate Governance under review,
taking into account any revisions to associated guidance and any
recommendations arising from audit reports.
4.3.2
The Monitoring Officer will continue to provide an assurance in respect of the
Code and the Annual Governance Statement by way of this Annual Report.
4.4
Constitution and Regulations
4.4.1
The Constitution Working Party has an on-going role and responsibility for the
foreseeable future in monitoring the effectiveness of the Constitution and
identifying further amendments.
4.4.2
It will be appropriate to continue to remind Members and staff of the
importance of compliance with the Council’s regulations, as set out in the
Constitution and other policy framework documents, and the Monitoring
Officer and his staff will give advice accordingly.
5.
Overall opinion on the adequacy and effectiveness of the Governance
framework
5.1
That the systems of internal control administered by the Monitoring Officer
including the Code of Conduct and the Council’s Constitution, were adequate
and effective during the year between April 2014 and March 2015 for the
purposes of the latest regulations (subject to the areas outlined above).
David Johnson
Interim Monitoring Officer
27 August 2015
13
List of procurement exemption requests
Section 9 of the Council’s Contract Procedure Rules deals with exemptions as
it is acknowledged that the market place or extenuating circumstances does
not always allow for the normal procedures to be followed. Where exemptions
have been approved there is a requirement for these to be reported as part of
the Monitoring Officer’s Annual Report in line with the Council’s Constitution
and Contract Standing Orders (9.1, pg 150).
Service
Description
Leisure
Consultancy
services for Dual
Use Centre
business case
Electoral
Supply of Postal
Services
Vote Packs and
Ballot Papers
Environmental 3 year extension
Health
to M3
Environmental
Health system
software contract
Coast
Happisburgh
Protection
steps
Payroll
5 year extension
to payroll system
software contract.
Housing
Locata housing
Services
system software
extension
Customer
Provision of
Services
franking machine
Property
Services
Property
Services
Urgent repairs to
Cromer pier
pavilion roof.
Public
convenience
urgent vandalism
repairs –
Sheringham East
prom
Estimated
Value over
contract life
£6,500
Exemption
Applied
Contact
Officer
9.1 (d)
Framework
Agreement
Karl Read
£8,812
9.1 (a)
Suzanne
Taylor
£55,715
9.1 (a)
James
Wilson
£25,000
9.1 (e)
Brian Farrow
£76,000
9.1 (d)
Framework
Agreement
9.1 (a)
Julie Cooke
Jane Wisson
£8,250
9.1 (d)
Framework
Agreement
9.1 (e)
£9,982
9.1 (a)
Russell
Tanner
£95,000
£23,794
Lisa Grice
Russell
Tanner
Exceptions (9.1)
It is acknowledged that the market place or extenuating circumstances do not
always allow the full procurement procedures to be followed. Subject to
14
compliance at all times with European procurement rules, contracts can also
be entered into in the following circumstances:
(a)For the supply of goods or services where there is only one supplier and no
acceptable alternative, following consultation with the Procurement Officer.
(b) For the extension, addition to or maintenance of existing buildings, works
plant or equipment, where the Cabinet has decided that this can only be done
satisfactorily by the original supplier.
(c) As part of a consortium (where the Council is not the lead authority).
(d) A contract that has been tendered by a central government body (the
Office of Government Commerce) or Framework contracts such as the
Eastern Shires Purchasing Organisation (ESPO).
(e) Where there is an urgent Health and Safety requirement, subject to the
prior approval of the Council’s Health and Safety Officer and the relevant
Director.
(f) Where the Cabinet considers it desirable on commercial grounds to accept
a quotation from a supplier already engaged by the Council on a project
provided that further services have a connection with the original project and
that the price is not more than 50% of the original contract sum.
(g) For loans arrangements.
(h) On behalf of another authority where the agency agreement provides that
the procurement rules of that authority are to be followed.
Further information can be requested from Duncan Ellis, Head of Assets and
Leisure on ext 6330 or via email: Duncan.ellis@north-norfolk.gov.uk
15
Annual Governance Statement 2014/15 – DRAFT
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, 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 local 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 Council’s local code is on our website at www.northnorfolk.org or
can be obtained from the Head of Finance at the 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. In addition NNDC’s framework for delivering good Corporate Governance is embedded within its constitution, policies and
procedures.
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 appropriate, cost-effective service delivery.
2.2.
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 failure to achieve policies, aims and objectives and can therefore only provide reasonable and not 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 the Council’s
policies, aims and objectives, to evaluate the likelihood and impact should those risks be realised and to manage those risks efficiently,
effectively and economically.
2.3.
The governance framework has been in place at NNDC for the year ended 31 March 2015 and up to the date of approval of the statement of
accounts.
16
AGS 2014/15, Page 1 of 18
Annual Governance Statement 2014/15 – DRAFT
3. THE GOVERNANCE FRAMEWORK
3.1.
The Councils governance framework is derived from the following principles:
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.
3.3.
The following section goes through in detail each of the key principles of the governance framework.
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
17
AGS 2014/15, Page 2 of 18
Annual Governance Statement 2014/15 – DRAFT
1
4.1.1.
The Council’s aims and objectives are set out in the Corporate Plan 2012-2015: small government, big society1. This contains a
statement of the Council’s vision for the area, priorities and business strategy over the same period.
4.1.2.
The Corporate Plan identifies five key strategic priorities for the Council up to 2015 including clear statements of intent under each of
the following priority areas:

To boost employment and create more jobs

To enable the provision of new homes and the infrastructure that goes with them

To protect our coastline and the character of our countryside and built heritage

To empower individuals and local communities to have a greater say in their own futures

To reform the organisation to deliver high quality services that achieve our priorities in an efficient manner that represents good
value for local taxpayers.
4.1.3.
The Corporate Plan contains details of what the Council wants to achieve, the methods to be employed in delivering the key priorities
and is accompanied by an annual action plan setting out the details which underpin the Corporate Plan. In addition the Cabinet
receives an annual Medium Term Financial Strategy which draws on other strategies, including ICT, asset management and human
resources covering a rolling four-year period, which is used to set initial parameters for the annual budget process.
4.1.4.
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 established in the annual
service and financial planning and performance management cycle and comprises of regular reports to Members upon progress of
delivering the overall plan.
4.1.5.
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 and is reported in June each year.
4.1.6.
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 on a regular basis where
necessary. These reports also include a minimum of four budget monitoring reports including the outturn report, covering the revenue
account, capital projects, key prudential code indicators, treasury management 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.
The Corporate Plan from 2015 onwards will be updated post the May 2015 Elections
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4.1.7.
All budget headings are allocated to a named budget officer, who is responsible for controlling spend against a budget. This control is
reinforced by regular budget monitoring reports to Cabinet and Overview and Scrutiny Committee culminating in the annual outturn
report.
4.1.8.
The Council maintains an objective and professional relationship with external auditors and other 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.
4.1.10.
During the year the Council took part in a Corporate Peer Challenge, the review focused on a number of opportunities for growth along
with how effective the Council’s arrangements are for transformation to meet financial challenges and how the arrangements will
provide services to residents and businesses in the future. The feedback from the review was very positive, in relation to governance
and decision making the feedback included the following:


The formal democratic decision-making process of Cabinet and committees works with each understanding their
respective role.
The Cabinet and CLT interface is strong and there is good use of Management Boards (with Member involvement)
that can be a powerful way to develop cross-cutting themes and agendas and to work across Council services to
promote integrated working.
4.1.11. During the year the Constitution Working Party met to review and recommend changes as applicable.
4.1.12. 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. The representatives on the Business Continuity Working Group is
currently under review this has not impacted on the delivery of Business Impact Assessments which are now in place for critical areas
and Business Continuity Plans have been strengthened with critical services having complete documentation.
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.
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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 to the members of the Cabinet.
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 senior officers 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, revisions to the constitution were
recommended by the constitution working party during the year.
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. Public speaking was introduced to
all Committees and Full Council some years ago to improve openness and accountability. In addition, senior officers of the Council can
make decisions under delegated authority, 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.
4.2.8.
The Council's Chief Executive (and Head of Paid Service) leads the Council's officers and chairs the Corporate Leadership Team which
consists of the Chief Executive and two Corporate Directors. All staff, including senior management, have clear conditions of
employment and job descriptions which set out their roles and responsibilities.
4.2.9.
The Head of Finance has been appointed as the s151 Officer under the Local Government Act 1972, carrying overall responsibility for
the financial administration of the District Council and is member of the Management Team. The Council complies with the requirements
of the CIPFA statement on the Role of the Chief Financial Officer in Local Government. The corporate finance function headed by s151
Officer, provides support to each service area of the Council in respect of budget preparation, financial monitoring and advice.
4.2.10. The Monitoring Officer position is provided under contract with NP Law and carries overall responsibility for legal compliance supported
by a legal team. The Council employs four practising solicitors.
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4.2.11. The Council’s Corporate Leadership Team (CLT) is made up of the Chief Executive and two Corporate Directors who meet on a weekly
basis to develop policy issues commensurate with the Council’s aims, objectives and priorities. CLT also considers other internal control
issues, including risk management, performance management, compliances, value for money and financial management. CLT also
meets with Cabinet 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 CLT the management structure is well defined in a hierarchical manner, comprising the following teams:
Title
Corporate Leadership Team
(CLT)
(Consists of Chief Executive
and Corporate Directors)
Title
Management Team (MT)
Principal Objectives
Weekly meetings that deal with forward workplan and media issues
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
Principal Objectives
Monthly meetings consisting of all Heads of Service and members of Corporate Leadership Team.
(Consists of CLT and Heads of To work with the Corporate Leadership Team in the leadership of the Council so as to deliver the
Service)
Council’s Corporate Plan and provision of high quality services to the District’s residents,
businesses and visitors.
To work as one team to deliver the Council’s objectives and vision by
•
Leading by example - promoting the values and principles of the Council
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Title
Principal Objectives
• Utilising collective skills, knowledge and experience
• Creating a safe, collaborative and respectful environment where robust challenge and
informed and managed risk taking is acceptable
• Keeping colleagues informed on matters which may impact on other service areas
• Collectively updating CLT on matters of strategic or reputational importance
• Providing consistent and regular communication to staff on key issues and activities
• Listening to, sharing and reacting to feedback from staff, Councillors and service users
• Deputising on generic management issues for other Heads of Service as required
• Providing shared understanding of the changes the Council needs to take in order to gain ‘buy
in’ from staff
• Taking joint responsibility to empower and motivate staff to provide the best possible service
and be proud of their achievements
• Continually challenging current working practices and identifying flexible and innovative ways
to maximise efficiency and effectiveness
• Taking responsibility for implementing changes (within budget) to service delivery, including
across services
• Driving a customer service ethos throughout the organisation
• Measuring and managing performance against key indicators
Title
Extended Managers Group
Principal Objectives
•
(Consists of all Managers that •
Report to a Head of Service)
•
Quarterly meetings of all Managers that report to a Head of Service
Deliver consistent messages through the organisation
Keeping managers informed on matters which may impact on their teams and services
In addition there are specific groups established to progress issues on a corporate basis, examples include the following:
Group
Principal objectives
Coastal Management Board
(Consists of Members and
•
The Board meets on a quarterly basis, with additional meetings if required;
•
To oversee coastal adaptation and policy and coast defence capital works;
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Group
Officers)
Performance and Risk
Management Board (Consists
of the Leader, Deputy Leader
and Portfolio member for
Resources, CLT, Head of
Finance and Head of
Organisational Development)
Principal objectives
•
Providing strategic steer for the overall management of the coastal issues at NNDC;
•
Provides an officer/member corporate group to ensure an integrated approach is taken to all
coastal issues and inform the development of an Integrated Coastal Management Plan;
•
Make recommendations to Cabinet as appropriate;
•
Reports into the Coastal Forum.
To maintain 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;
•
To ensure that management and Council decisions are based on valid, accurate and timely
information;
•
Report to Audit Committee, Scrutiny or Cabinet.
Housing and Planning Policy
Board (Consists of the Leader
and Portfolio Member and
Officers)
•
Provide a steer to the work of the Housing and Planning Policy Teams to ensure a strategic
approach to deliver the Council’s Growth Agenda;
•
Report to Planning Policy and Built heritage Working Party.
Big Society Grant Panel
(Consists of Members and
Officers)
•
•
Receive and determine applications for Big Society and Enabling funding;
Make recommendations to Cabinet on large grant applications.
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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.






4.3.2.



The Council has adopted a number of codes and protocols that govern both Member and Officer activities. These are:
Members Code of Conduct;
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 in place 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 Head of Finance, 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 Head of Finance as its 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.
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4.4.
4.3.5.
The Council maintains an externalised Internal Audit function, which operates to the Public Sector Internal Audit standards. 2014/15
was the final year of the delivery model with South Norfolk District Council to provide internal audit services to a consortium of client
authorities under a contract with Mazars Public Sector Internal Audit Ltd.2
4.3.6.
Service Plans are produced and updated annually so as to translate 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 the Council has 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 for each member of staff at which past
performance is reviewed, work objectives are planned and also provides for regular monitoring of performance during the year.
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 as part of the report production stage.
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.
2
During 2014/15 the procurement of the Internal Audit provider for the consortium from 2015/16 was completed with the outcome finalized in the Autumn of 2014 ahead of the
commencement of the new contract with TIAA from April 2015.
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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 also 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 framework 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 management and partnership working. In addition, a Corporate Risk Register is maintained and the Performance and Risk
Management Board meets regularly 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:

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 and income;

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 Internal Audit.
4.4.9.
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 and also provides a monitoring position
on achieving planned savings.
4.4.10. The Council has several committees which carry out regulatory or scrutiny functions. 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;

Audit Committee to obtain assurance about the adequacy of internal controls, financial accounting and reporting
arrangements, and that effective risk management is in place. The committees work is intended to enhance public trust in
the corporate and financial governance of the council;

A Licensing Committee is responsible for policy issues regarding licensing and will consider licensing applications;

Overview and Scrutiny Committee, which review and/or scrutinise decisions made or actions taken in connection with the
discharge of any of the Council’s functions.
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4.5.
4.6.
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 was re-assessed in July 2013 for the Investors in People Standard and was re-accredited at Bronze level, the Council is
currently planning for re-assessment in late Autumn 2015.
4.5.4.
In respect of Members, the Council has established a Member Training, Development and Support Group which has continued to meet
to support the Member development programme. As part of the arrangements for 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.
4.5.5.
Members who have not undertaken relevant training are not permitted to sit on the regulatory committees for example Development
Committee. This, along with the Scrutiny role provides important developmental opportunities for Members.
4.5.6.
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.
Engaging with local people and other stakeholders to ensure robust public accountability
4.6.1.
The Council has an approved Communication Strategy which covers the period 2011 to 2015, this is due to be reviewed in 2015/16.
The Communication Strategy ensures that the work of the Council is and will continue to be open, honest and transparent and will
enhance inclusion by building on our understanding of all residents’ needs and perceptions, through improved customer service and
community engagement. An annual action plan is agreed and implemented in conjunction with the strategy.
4.6.2.
In line with the implications and opportunities arising from the Localism Act 2011, the Council is currently developing a Customer
Services Strategy and a separate Consultation Strategy is also being developed.
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4.6.3.
The Communication 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.
4.6.4.
The Council has continued to engage with local people and stakeholders on a range of issues, the means of engagement include the
following;

Surveys;

Consultation workshops;

Interviews;

Public meetings;

Road shows;

Attendance at parish and Town Council meetings.
4.6.5.
The results of this engagement continue to be used to shape and inform the Council’s policies and strategies.
4.6.6.
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.
4.6.7.
The Council has recognised the opportunities provided by the Localism Act 2011 to engage with local communities. The Corporate Plan
(Small Government – Big Society), and its associated action plan, sets out how the Council proposes to embrace the Localism agenda.
In addition the Council has continued to provide support and funding (from the Big Society Fund) for community oriented projects,
building on the successful approach operated since it started in 2012/13.
5. 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.
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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. In addition the Constitution Working Party is in place to review the constitution and make recommendations to Full Council as
appropriate.
5.2.3.
The Council has a Scrutiny Committee which can establish ‘task and finish’ groups, to look at particular issues in depth, taking evidence
from internal and external sources, before making recommendations to the Cabinet. Scrutiny can “call-in” a decisions of the Cabinet
which are yet to be 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 under-performing.
5.2.4.
The Local Government and Public Involvement in Health Act 2007 include powers to enable Councillors to formally champion local
issues where problems have arisen in their ward. North Norfolk has embedded the “Councillor Call for Action”. This allows Councillors to
ask for discussion at Overview and Scrutiny Committee on issues where other methods of resolution by the District member have been
exhausted.
5.2.5.
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.
5.2.6.
The Equality Framework builds on the work already undertaken in this area. It is based on three levels of “developing, achieving and
excellent”.
5.2.7.
The Standards and Conduct provisions of the Localism Act 2011 came into force on 1st July 2012. The authority has appointed an
Independent Person pursuant to the Act and has decided to have a Standards Committee (which is now not mandatory). This
committee met seven times during the year to consider complaints and issues around the conduct of Members. The Committee has
received a number of items during the year including, reports detailing complaints received by the Monitoring Officer and the status of
such complaints. It has held two full hearings in relation to Members and parish complaints.
5.2.8.
The Audit Committee met four 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, internal control and
governance matters in accordance with its agreed work programme. During the year 16 (14 in 2013/14) internal audit assignments were
completed delivered over 210 days (186 days in 2013/14), the level of assurance achieved was adequate overall. One review was not
completed during the year as originally planned due to the timing of the review, this was carried forward to the following year.
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5.2.9.
Internal Audit is an independent and objective assurance service to the management of the District Council. It completes a programme
of reviews throughout the year (16 reviews completed during 2014/15) to provide an opinion on the internal control, risk management
and governance arrangements. In addition, Internal Audit undertakes fraud investigation and proactive fraud detection work which
includes reviewing the control environment in areas where fraud or irregularity has occurred. All significant weaknesses in the control
environment identified by Internal Audit are reported to senior management and the Audit Committee. It should be noted that two high
risk recommendations were raised in the year in relation to Network Infrastructure, both recommendations have been implemented in
line with the agreed timescales and therefore no high priority recommendations are outstanding. Internal Audit also carry out bi-annual
reviews of the status of implementation of Internal Audit recommendations. During the year there has been an improvement in the
number of recommendation being completed compared to the previous year. At 31 March 2015 there was 10 recommendations
outstanding (7 medium and 3 low) compared to 19 outstanding at 31 March 2014 (12 medium and 7 low), where applicable revised
implementation dates have been agreed between Audit and Officers and will be followed up during 2015/16.
5.2.10. The External Auditor’s Annual Audit Letter is considered by the Audit Committee and the Performance and Risk Management Board.
5.2.11. The Performance and Risk Management Board monitor 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.
5.2.12. The Council continues to review its treasury management arrangements in line with best practice and in response to regular updates
and advice from the Council’s Treasury advisors, Arlingclose.
5.2.13. Management Team (Heads of Service and CLT) complete an annual Self-Assessment Assurance Statement which identifies noncompliance in a number of areas including procedures, risk and control, financial management and procurement. Any significant areas
of non-compliance will either be taken account of in service plans or if corporate included in the AGS action plan.
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 Heads of Service 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 CLT 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 Monitoring Officer that internal control and corporate governance
arrangements in these essential areas were in place throughout the year.
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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.
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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6. SIGNIFICANT GOVERNANCE ISSUES
6.1.
6.2.
Two significant issues requiring action were made within the 2013/14 Annual Governance process, the status on these are included below:
Action
Officer
Target Date
Status
Timely completion of all
agreed internal audit
recommendations
Management Team (All
Heads of Service and
CLT)
31 October 2014
In progress – there has been an improvement in the
implementation of agreed recommendations, whilst there are
some outstanding recommendations the progress of
implementation is being monitored as part of the ongoing
programme of review.
Recording of all
delegated Executive
decisions
Chief Executive
30 September 2014
Completed (TBC)
Following from the review of the Annual Governance Statement for 2014/15 and the Self-Assessment Assurance Statements the following action
has been identified:
Action
Contract and SLA monitoring including
contracts register maintenance and
publication inline with transparency
requirements
Officer
Target Date
Management Team (All Heads of Service and
CLT)
31 October 2015
7. 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:
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Cllr Tom FitzPatrick
Mrs Sheila Oxtoby
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North Norfolk District Council
DRAFT
STATEMENT OF ACCOUNTS
2014/15
Draft Statement of Accounts 2014/15
34
North Norfolk District Council
Draft Statement of Accounts 2014/15
35
North Norfolk District Council
CONTENTS
Explanatory Foreword
Statement of Responsibilities
Financial Statements:
Movement in Reserves Statement
Comprehensive Income and Expenditure
Statement
Balance Sheet
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 estimation
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
9a: Material items of Income and Expense
10: Usable reserves
Draft Statement of Accounts 2014/15
Page
Page
No.
No.
1 - 8 11: Unusable reserves
45 - 50
12: Cash Flow Statement - Operating
9
51
activities
13: Cash Flow Statement - Investing
52
activities
14: Cash Flow Statement - Financing
10
52
activities
15: Cash Flow Statement - Cash and cash
11
52
equivalents
16: Amounts reported for resource allocation
12 - 13
53 - 57
decisions
14
58
17: Trading operations
18: External Audit Costs
59
15 - 31 19: Members Allowances
59
30 - 31 20: Officers' Remuneration
32
21: Exit Packages
34 - 38 23: Events after the Balance Sheet Date
39 - 42 24: Related parties
43
25: Leases
43
26: Investment properties
43
44
45
27: Intangible assets
28: Impairment losses
28a - Tidal Surge
30: Capital expenditure and capital financing
62 - 69
69
83
32: Inventories
83
33: Receivables
84
34: Payables
85
35: Provisions
36: Contingent Liabilities
37: Contingent Assets
39: Financial Instruments
89 - 90
40: Nature and extent of risks arising from
financial instruments
91 - 94
95
Collection Fund
70 - 72 Independent Auditors' Report
96 - 98
99
101 - 103
Glossary of Terms
73 - 74 Glossary of Acronyms
74
75
36
85
85 - 86
86
87 - 88
69 - 70 Notes to the Collection Fund
73
82
31: Assets held for sale
60 - 61 38: Grant income
61
32 - 33 22: Defined Benefit Pension schemes
29: Property, plant and equipment
Page
No.
76 - 81
104
North Norfolk District Council
CONTENTS
This page is intentionally blank
Draft Statement of Accounts 2014/15
37
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 Authority”) financial statements for the year ended 31 March 2015 are set out on pages 10 to 14 followed by supporting notes on pages 15 to
94. These accounts have been prepared to provide information about the financial position of the Authority 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 Authority is regularly monitored and reviewed throughout the year, this Statement of Accounts brings
together the financial results of all the Authority’s operations and the financial position as at 31 March 2015. The 2014/15 accounts have been
prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2014/15 (“the Code”). The following outlines
the main statements with a brief outline of their purpose:
 Statement of Responsibilities – this sets out the responsibilities of the Authority 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 Authority 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 Authority. It sets out
the financial position of the Authority 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 Authority’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 total income collected by the Authority from Council Tax and National Non-Domestic Rates and how
this has been distributed to all Precepting organisations including the Government, Norfolk County Council and the Police and Crime
Commissioner.
There will be a debtor or creditor position between the billing authority (NNDC), the Government and the major preceptor (NCC) to be recognised
at the end of each year. This is because the net cash paid to the government and the major preceptor during the year will not exactly match its
share of the cash collected from NNDR payers.
The Financial Statements are supported by various notes to the accounts which provide additional information to that contained in the core
statements themselves.
Draft Statement of Accounts 2014/15
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North Norfolk District Council
EXPLANATORY FOREWORD
The remainder of the explanatory foreword gives a brief explanation of the financial aspects of the Authority’s activities and draws attention to the
main characteristics of the Authority’s financial position. In particular, it compares the outturn results with the updated budget.
The Authority 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 table 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 Authority’s General Fund expenditure compares with the updated budget for 2014/15. This position excludes
notional charges but includes precepts by parish councils and levies by other bodies.
Net Expenditure on Services
Net Cost of Services
Parish Precepts
Net Interest Receivable/Payable
Revenue Contributions to Capital
Capital Financing from Reserves
Net Contributions to/(from) Earmarked Reserves
Council Tax (including Parish Precepts)
External Support (Government Grant)
Net (Surplus)/Deficit for year
Balance Brought Forward
Balance Carried Forward
Original
Budget
£000
13,126
13,126
Updated
Budget
£000
13,490
13,490
Actual
Variance to
Updated Budget
£000
£000
10,377
(3,113)
10,377
(3,113)
1,636
(364)
421
40
(427)
(9,714)
(4,678)
39
1,636
(332)
707
(344)
(306)
(10,071)
(4,678)
101
1,636
(418)
368
795
2,521
(10,944)
(4,700)
(366)
0
(86)
(339)
1,139
2,827
(125)
450
(467)
39
101
(366)
(467)
The actual net spend on services was £3,113,341 less than the updated budget for 2014/15; this is before movements on earmarked reserves for
example where expenditure has not been incurred as originally budgeted or if grants or contributions have been received in advance of spend and
can be carried forward in an earmarked reserve. . The reasons for the more significant variances are provided in the following commentary.
Draft Statement of Accounts 2014/15
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North Norfolk District Council
EXPLANATORY FOREWORD
Storm Costs
The budget for the year allowed for ongoing repair works to a number of the Council’s properties that were to be funded from either grants,
insurance claims or NNDC resources, namely the general reserve. Some of the works have not been completed in full during the year and therefore
whilst the budget shows an underspend, these are due to be utilised in 2015/16. In addition the nature of some of the works has meant that the
works have been capitalised and whilst there has been an underspend on the revenue account, the funding has been used to finance the capital
works. The main areas this relates to are as follows:
 Foreshore properties underspend of £46,928 - this includes lighting, management of the promenade and foreshore furniture and fittings.
 Investment Properties underspend of £396,888 this includes properties such as chalets and beach huts. Some of the costs have been treated
as capital and the funding has been re-allocated accordingly.
 Coast Protection the underspend of £470,426 includes storm damage repairs not completed in the year totalling £135,756; of the remaining
underspend £295,038 related to various sea defence projects that were not completed in the year.
External Grants and Contributions
There were two significant variances in the year on external grants and contributions. One was due to monies being received above the level
budgeted for the VAT Shelter of £514,239 which has been allocated to the Capital Projects reserve to be used to fund schemes within The other
related to the allocation of the second homes council tax received from the County, not being fully expended or drawn down by successful grant
applicants in the year by £448,114, this has been allocated to an earmarked reserve to be used in 2015/16.
Service Movements
Income - Within the services there have been a number of more significant variances due to additional income being received or a delay in the
income being matched by expenditure, the following highlights the reasons for the more significant service areas:
 Car Parks – During the year the income budget for car parking fees was exceeded by £84,277.
 Legal Services – During the year Legal Services was successful in securing additional external work which has generated additional income for
the Council. An element of the additional income will be offset by additional staffing costs in order to deliver the work, although some of the posts
were not appointed to until later on in the year and therefore overall within the service there was a £135,524 underspend for 2014/15.
 Building Control and Access – During the year the service generated £55,721 additional income above the level budgeted.
 Licensing – income totalling £25,361was achieved above the budgeted level.
Employee Costs – The budget allows for 2% turnover saving annually across all employee costs. During the year there were a number of vacant
posts due to inability to recruit or not being recruited to pending further review. In total there was an underspend on employee related costs of
£417,545 including a saving from training of approximately £70,000. The areas carrying vacancies during the year included Regeneration
Management, Media and Communications, Customer Services, IT and Revenues and Benefits.
Other Service Movements
Draft Statement of Accounts 2014/15
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North Norfolk District Council
EXPLANATORY FOREWORD
There have been other service movements in the year compared to the budget, the more significant of which are summarised below:
 Administration Buildings £45,204 Overspend – Of the overspend £33,464 relates to repair and maintenance costs in respect of the Cromer
offices including glazing works. Whilst there has been an underspend in relation to electricity, there is an overspend for the budget heading
overall, although this has been mitigated by the favourable outturn position in respect of Property services.
 Pathfinder £51,928 Underspend – The underspend is in relation to the Integrated Coastal Management Fund which has not been used. This will
be rolled forward within the earmarked reserve for use in 2015/16 for the development of adaptation and coastal management team.
 IT Support Services £99,402 Underspend - The outturn position is made up of a number of service variances including an underspend on
employee costs of £21,351; £20,638 underspend in relation to hardware and software purchase and computer maintenance, and £43,297
underspend on Computer software licences as part of the business transformation project which will be required in 2015/16.
 Environmental Protection £30,389 Underspend – The year end position reflects a number of variances within the service, the more significant of
which include the reversing of a bad debt provision of £16,108 for enforcement works which is no longer required as the debt was paid, along
with a number underspends against employee related expenditure due to turnover within the year.
 Waste Collection and Disposal £29,346 underspend – The overall underspend for the service is made up of a number of variances within the
service budget headings, including:

Reduction in commercial disposal costs of (£24,422);

Additional fee income of (£18,310) from garden bins and bulky collections;

Staff savings of (£20,727) due to vacant posts and turnover;

Savings of (£82,978) associated with the Kier contract, primarily the purchase of a new trade waste vehicle which was not required in
the year;

The new recycling contract commenced in October 2014 and this resulted in contract savings of (£31,968); however, there was a loss
of £257,192 on the profit share but this was offset by additional income of (£83,542) by way of a transfer charge being paid by Kier
and additional recycling credit income being paid by County of (£31,162)

Cleansing £44,601 Underspend – Of the underspend £30,347 relates to costs which have been capitalised and will therefore be
funded from a revenue contribution to capital in the year.
 Local Taxation £48,879 Underspend – The budget for 2014/15 included provision for software costs in respect of the Council Tax Support
scheme which was to be funded from grant (£35,000), this has not yet been incurred and will therefore be required in future years. In addition
new burdens funding totalling £15,507 was received at the end of year and will be used in 2015/16.
The Updated budget assumed that a net contribution of £649,227 would be made from earmarked reserves in 2014/15. At the year-end
£3,316,525 was actually transferred to reserves which included additional income from the business rates retention scheme. Further analysis on
the movements on the reserves in the year is provided within note 6 to the accounts on pages xx to xx.
Draft Statement of Accounts 2014/15
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North Norfolk District Council
EXPLANATORY FOREWORD
(b)
Capital Activity
Capital expenditure in 2014/15 amounted to £5,714,692 (£4,801,577 2013/14) and was incurred against the following areas:
Jobs and the Local Economy
Housing and Infrastructure
Coast, Countryside and Built Heritage
Localism
Delivering the Vision
Original
Budget
£000
284,311
1,100,543
6,649,952
478,764
730,198
9,243,768
Updated
Budget
£000
284,311
1,100,543
6,649,952
490,809
764,198
9,289,813
Actual
£000
169,271
539,115
4,227,733
241,428
537,145
5,714,692
Variance to
Updated Budget
£000
(115,040)
(561,428)
(2,422,219)
(249,381)
(227,053)
(3,575,121)
These figures include £1,123,367 (£1,216,266 2013/14) of Revenue Expenditure Funded from Capital under Statute (REFCUS), of which £886,781
has been funded by grant and external contributions.
The main areas of capital expenditure in the year included the following:Jobs and the Local Economy

Council Car Park Improvements - £116,892;
Housing and Infrastructure

Payment of Disabled Facilities Grants - £534,677;
Coast, Countryside and Built Heritage

Works on the Cromer Coastal Protection Scheme - £2,323,002;

Storm Surge Works - £153,723;

Sheringham West Prom - £279,957;

Cromer Pier Restaurant and Shop – Storm Surge Works - £228,780;

Chalet Rebuild – Storm Surge Works - £99,545;

Cromer Pier Decking – Storm Surge Works - £142,153;
Draft Statement of Accounts 2014/15
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North Norfolk District Council
EXPLANATORY FOREWORD

Sheringham West Prom Cafe – Storm Surge Works - £126,508;

Payment of Repairs and Renewals Grants - £368,294;

Cromer Pier Roof Refurbishment - £92,975;
Localism

Capital grants awarded under the Big Society Fund scheme - £132,500;
Delivering the Vision

Purchase of IT Network Switches - £91,286;

Replacement of Server - £100,000.
In the year £1,501,363 (£1,982,438 2013/14) of the Authority’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 in the main to slippage of schemes to 2015/16 due to schemes not progressing as originally anticipated.
3.
Significant Changes introduced in the 2014/15 Accounts
There have been no significant accounting changes introduced by the 2014/15 code that are applicable to the Authority.
4.
Reserves
The Authority has a policy to maintain General Fund balances above a minimum of £1.75 million. As at 31 March 2015 the General Fund balance
exceeded this at £2.3 million. 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 Authority’s reserves are detailed on pages 39 to 42.
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 2015 are on pages 62 to 69 and show a Net Pension Liability of £39,012,000 as at 31 March 2015 (£31,716,000 at 31 March 2014).
Draft Statement of Accounts 2014/15
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North Norfolk District Council
EXPLANATORY FOREWORD
The liabilities show the underlying commitments that the Authority has in the long run to pay retirement benefits. However, statutory arrangements
for funding the deficit mean that the financial position of the Authority 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.
Borrowing Facilities
The Authority remained free of long term debt at 31 March 2015. There are no current plans to undertake any new long-term borrowing,
requirements for cash flow purposes will be met by borrowing on the London Money Market.
7.
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 2014/15 the
Authority did not undertake any prudential borrowing to finance capital expenditure.
8.
Impact of the Current Economic Climate
The current economic climate along with the associated reductions in central government funding continues to have a direct impact on the finances
of the authority.
The 2014/15 budget was approved in February 2014 and included savings and additional income of just under £582,000 across a number of
corporate and service areas including contract, efficiency and reorganisation savings. The progress of achieving these has been regularly monitored
during the year and where necessary amendments have been made to the budget to reflect where they were not achieved as planned or in fact
exceeded.
The repair and recovery programme of works following the damage to NNDC properties caused by the tidal surge in December 2013 has continued
in 2014/15 along with administration of the governments repair and renewal grant scheme. Some of the repairs are still outstanding and therefore
work will continue in 2015/16. The repair costs have been funded from a number of resources including insurance claims, NNDC reserves and
Environment Agency Grant.
A balanced budget has been set for the 2015/16 financial year and takes account of continuing savings from previous years along with new savings
and income plans of approximately £221,000. Future funding gaps have been forecast for the following three years of up to £1.3 million by 2018/19.
The Authority has already started planning for this which includes business transformation projects which are expected to deliver additional on-going
savings from 2016 onwards.
Following the May 2015 Elections an emergency budget has been announced which will take place in July 2015, this will inform the future budgets
Draft Statement of Accounts 2014/15
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North Norfolk District Council
EXPLANATORY FOREWORD
and also should there be any in year changes these will need to be mitigated by the use of reserves.
Income from investments has increased compared to previous years. For 2014/15 income from investments totalled some £418,400. The key
treasury management principles for investment continue to be security of the capital sum.
9.
Further Information
For further information about these accounts please contact the Head of Finance, North Norfolk District Council, Council Offices, Holt Road, Cromer,
NR27 9EN or email accountancy@north-norfolk.gov.uk.
Draft Statement of Accounts 2014/15
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North Norfolk District Council
STATEMENT OF RESPONSIBILITIES
The Authority's Responsibilities
The Authority 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 Chief Finance Officer.

Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.

Approve the Statement of Accounts.
The Chief Finance Officers Responsibilities
The Chief Finance Officer is responsible for the preparation of the Authority’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 Chief Finance Officer 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 Chief Finance Officer 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 Chief Finance Officer
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 Authority at the reporting date and of its expenditure and income for the year ended 31 March 2015.
Dated:
xx September 2015
Draft Statement of Accounts 2014/15
K Sly BA Hons CPFA
9
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North Norfolk District Council
NOTES TO THE ACCOUNTS
Draft Statement of Accounts 2014/15
10
47
North Norfolk District Council
NOTES TO THE ACCOUNTS
Movement in Reserves Statement
This statement shows the movement in the year on the different reserves held by the Authority, analysed into ‘usable reserves’, (i.e. those that can
be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true
economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement.
These are different from the statutory amounts required to be charged to the general fund balance for council tax setting purposes. The Net
Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to or
from earmarked reserves undertaken by the Authority.
Draft Statement of Accounts 2014/15
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North Norfolk District Council
NOTES TO THE ACCOUNTS
General
Fund
Balance
Balance at 1 April 2013
Movement in Reserves during 2013/14
(Deficit) on provision of services
Other Comprehensive Income and Expenditure
Total Comprehensive Income and Expenditure
Adjustments between accounting basis & funding basis
under regulations (5)
Net (Decrease) before Transfers to Earmarked
Reserves
Transfers (to)/from Earmarked Reserves (6)
(Decrease)/Increase in Year
Balance at 31 March 2014 Carried Forward
Movement in Reserves during 2014/15
Surplus on provision of services
Other Comprehensive Income and Expenditure
Total 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 2015 Carried Forward
Draft Statement of Accounts 2014/15
£000
1,745
Earmarked
General
Fund
Reserves
£000
6,774
2,611
0
2,611
Capital
Receipts
Reserve
£000
6,897
Capital
Grants
Unapplied
Account
£000
0
0
0
0
0
0
0
(339)
0
2,272
Total
Usable
Reserves
Unusable
Reserves
Total
Authority
Reserves
£000
15,416
£000
10,371
£000
25,787
0
0
0
2,611
0
2,611
0
3,255
3,255
2,611
3,255
5,866
(627)
0
(966)
966
0
0
(627)
0
1,645
4,221
5,866
(2,095)
177
1,922
2,095
2,095
8,869
0
(627)
6,270
0
0
0
0
1,645
17,061
0
4,221
14,592
0
5,866
31,653
4,485
0
4,485
0
0
0
0
0
0
0
0
0
4,485
0
4,485
0
(4,928)
(4,928)
4,485
(4,928)
(443)
(804)
0
(175)
0
(979)
979
0
3,681
0
(175)
0
3,506
(3,949)
(443)
(3,317)
364
2,286
3,317
3,317
12,186
0
(175)
6,095
0
0
0
0
3,506
20,567
0
(3,949)
10,643
0
(443)
31,210
12
49
North Norfolk District Council
NOTES TO THE ACCOUNTS
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.
Net
Expenditure
£000
1,595
2,763
5,692
1,099
(1,426)
1,200
1,780
23
12,726
831
1,205
(17,373)
(2,611)
(1,400)
(439)
(1,416)
(3,255)
(5,866)
Note
Central Services to the public
Cultural and Related Services
Environmental and Regulatory Services
Planning Services
Highways and Transport Services
Other Housing Services
Corporate and Democratic Core
Non Distributed Costs
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
(Surplus) or Deficit on revaluation of Plant, Property 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
Draft Statement of Accounts 2014/15
13
7
8
9
16
Gross
Expenditure
£000
3,102
3,872
8,961
3,523
883
29,554
1,852
5
51,752
1,473
2014/15
Gross
Net
Income
Expenditure
£000
£000
(1,390)
1,712
(625)
3,247
(3,474)
5,487
(2,656)
867
(2,292)
(1,409)
(29,002)
552
(3)
1,849
0
5
(39,442)
12,310
691
(406)
1,067
(18,553)
(4,485)
(555)
(688)
6,171
4,928
443
50
North Norfolk District Council
NOTES TO THE ACCOUNTS
Balance Sheet
The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the
Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category are
usable reserves, i.e. those reserves that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and
any statutory limitations on their use (for example the Capital Receipts Reserve may only be used to fund capital expenditure or repay debt). The
second category of reserves is those that the Authority is not able to use to provide services. This category of reserves includes reserves that hold
unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets
are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line 'Adjustments between accounting basis and
funding basis under regulations'.
31 March 2014
£000
47,246
260
294
5,412
23
53,235
6,106
26
4,178
10,059
0
20,369
(462)
0
(7,834)
(611)
(8,907)
0
(33,044)
(33,044)
Note
29
26
27
39
39
Property, Plant and Equipment
Investment Property
Intangible Assets
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
Bank Overdraft
Short Term Borrowing
Short Term Creditors
Capital Grants Receipts in Advance
Current Liabilities
Long Term Creditors
Other Long Term Liabilities
Long term Liabilities
39
32
33
15
31
15
39
34
38
22/39
31,653 Net Assets
Draft Statement of Accounts 2014/15
31 March 2015
£000
50,211
255
206
10,904
38
61,614
4,364
37
9,236
5,040
0
18,677
(437)
0
(8,122)
(512)
(9,071)
0
(40,010)
(40,010)
31,210
14
51
North Norfolk District Council
NOTES TO THE ACCOUNTS
31 March 2014
£000
1,922
8,869
6,270
0
17,061
15,742
413
30,227
(31,716)
133
(207)
14,592
31,653
Note
Usable Reserves:
General Fund Balance
Earmarked Reserves
Capital Receipts Reserve
Capital Grants Unapplied Account
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
Total Unusable Reserves
Total Reserves
31 March 2015
£000
6
11
11(a)
11(b)
11(c)
11(d)
11(e)
11(f)
2,289
12,187
6,094
0
20,570
16,176
1,099
32,971
(39,012)
(401)
(193)
10,640
31,210
The Statement of Accounts presents a true and fair view of the financial position of the Authority at the accounting date and its income and
expenditure for the year ended 31 March 2015. The notes on pages 14 to 94 and 96 to 99
form part of the financial statements.
Dated xxxx 2015
Draft Statement of Accounts 2014/15
K Sly BA Hons CPFA
15
52
North Norfolk District Council
NOTES TO THE ACCOUNTS
Cash Flow Statement
The Cash Flow Statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how
the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of
net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Authority are funded by way of taxation
and grant income or from the recipients of services provided by the Authority.
Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority's
future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e.
borrowing) to the Authority.
31 March 2014
£000
2,611 Net Surplus/(Deficit) on the provision of services
6,839 Adjust Net Surplus on the provision of services for non cash movements
Adjust for items included in the Net Surplus on the provision of services that are investing and
(1,965) financing activities
7,485 Net Cash Flows from Operating Activities
6,380 Investing Activities
(4,438) Financing Activities
9,427 Net Increase or (Decrease) in Cash and Cash Equivalents
170 Cash and Cash Equivalents at the beginning of the reporting period
9,597 Cash and Cash Equivalents at the end of the reporting period
Draft Statement of Accounts 2014/15
16
53
Note
16
12
12
13
14
15
15
31 March 2015
£000
4,485
(2,460)
(1,049)
976
(4,723)
(1,247)
(4,994)
9,597
4,603
North Norfolk District Council
NOTES TO THE ACCOUNTS
1.
Accounting Policies
A
General Principles
The Statement of Accounts summarises the Authority's transactions for the 2014/15 financial year and its position at the year-end of 31 March 2015.
The Authority 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 2014/15 and the Service Reporting Code of Practice 2014/15 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 noncurrent assets and financial instruments. The accounting policies detailed below have been consistently applied within the financial statements.
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 Authority 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 Authority
Revenue from the provision of services is recognised when the Authority 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 Authority.
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 receivable or payable for the relevant
amount is recorded in the Balance Sheet. Where there is evidence that debts are unlikely to be settled, the balance of receivables is written
down and a charge made to revenue for the income that might not be collected.
Where the Authority 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 Authority for the agency services rendered or the Authority incurs expenses directly on its
own behalf in rendering the services.
Draft Statement of Accounts 2014/15
17
54
North Norfolk District Council
NOTES TO THE ACCOUNTS
C
Cash and Cash Equivalents
Cash is represented by cash in hand and deposits with financial institutions 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 Authority’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 Authority'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 non-current 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 Authority is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisations.
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 Authority. An accrual is made against services in the Surplus or Deficit on the Provision of Services for the cost of holiday
Draft Statement of Accounts 2014/15
18
55
North Norfolk District Council
NOTES TO THE ACCOUNTS
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 Authority 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 Statement when the Authority 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 Authority 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 Authority 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 Authority.
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:

The liabilities of the Norfolk pension fund attributable to the Authority 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.
Draft Statement of Accounts 2014/15
19
56
North Norfolk District Council
NOTES TO THE ACCOUNTS

Liabilities are discounted to their value at current prices, using a discount rate of 3.2% (4.3% in 2013/14). This rate is based on a corporate
yield curve based on the constituents of the iBoxx Sterling Corporates AA index and using the UBS delta curve fitting methodology. In line
with the adoption of IAS 19 – Employee Benefits, an individual discount rate is calculated for each employer, based on their own weighted
average duration category. The weighted average duration is used to identify the appropriate category for each employer as shown in the
table below:Weighted Average Duration
Less than 17 years
Between 17 and 23 years
More than 23 years

Discount Rate Category
Short
Medium
Long
The change in the net pensions liability is analysed into seven components:
o Current service cost - The increase in the present value of the defined benefit obligation resulting from employee service in the
current period
o Past service cost – The increase in the present value of the defined benefit obligation for employee service in prior periods, resulting
in the current period from the introduction of, or changes to, post-employment benefits or other long-term employee benefits. Past
service cost may either be positive (where benefits are introduced or improved) or negative (where existing benefits are reduced).
o Interest cost – The increase during a period in the present value of a defined benefit obligation which arises because the benefits are
one period closer to payment.
o Expected return on assets -The expected increase during a period in the value of assets, based on values and long term expected
returns as at the start of the period.
o Gains/losses on settlements and curtailments -the result of actions to relieve the Authority 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. These are
recognised under ‘other comprehensive income’;
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 Authority 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
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.
Draft Statement of Accounts 2014/15
20
57
North Norfolk District Council
NOTES TO THE ACCOUNTS
Discretionary Benefits
The Authority 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 are 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.
Any events taking place after the accounts are finally signed off 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 Authority’s
financial performance.
Financial Instruments
I
Financial Liabilities
Financial liabilities are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument.
For the short term borrowing that the Authority has, the amount presented in the Balance Sheet is the outstanding principal payable (plus accrued
interest). Interest charged to the Comprehensive Income and Expenditure statement is the amount payable for the year. Other financial liabilities
are trade payables. These are carried on the Balance Sheet at their fair value which is taken to be the invoiced amount and no instruments are held
at amortised cost
Draft Statement of Accounts 2014/15
21
58
North Norfolk District Council
NOTES TO THE ACCOUNTS
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 Authority 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 Authority
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
Authority 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.
Available for Sale Assets
Available-for-sale assets are recognised on the Balance Sheet when the Authority 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.
Draft Statement of Accounts 2014/15
22
59
North Norfolk District Council
NOTES TO THE ACCOUNTS
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-for-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 Authority’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
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
Authority when there is reasonable assurance that:


the Authority will comply with the conditions attached to the payments; and
the grants or contributions will be received.
Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Account until conditions attached to the
grant or contributions 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.
Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as payables. 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-ring fenced) revenue grants are allocated to the Authority by Central Government these are credited to Taxation and NonSpecific Grant Income in the Comprehensive Income and Expenditure Statement.
Draft Statement of Accounts 2014/15
23
60
North Norfolk District Council
NOTES TO THE ACCOUNTS
L
Intangible Assets
Expenditure on non-monetary assets that do not have physical substance but are controlled by the Authority 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 Authority 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 Authority 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 with proceeds greater than £10,000
the Capital Receipts Reserve.
M
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. Cost
is determined using the first-in, first-out (FIFO) method.
N
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 General Fund
Draft Statement of Accounts 2014/15
24
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North Norfolk District Council
NOTES TO THE ACCOUNTS
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.
O
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 Authority 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 Authority 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.
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 Authority 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.
Draft Statement of Accounts 2014/15
25
62
North Norfolk District Council
NOTES TO THE ACCOUNTS
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 Authority as Lessor
Finance Leases
Where the Authority 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 Authority'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:


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.
Draft Statement of Accounts 2014/15
26
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North Norfolk District Council
NOTES TO THE ACCOUNTS
Operating Leases
Where the Authority 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.
P
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 Service Reporting Code of Practice 2014/15 (SeRCOP). 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 Authority'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.
These two cost categories are defined in SeRCOP and accounted for as separate headings in the Comprehensive Income and Expenditure
Statement, as part of Net Expenditure on Continuing Services.
Q
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 Authority 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 applied to expenditure on assets.
Draft Statement of Accounts 2014/15
27
64
North Norfolk District Council
NOTES TO THE ACCOUNTS
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
Authority. In the latter case, the cost of the acquisition is the carrying amount of the asset given up by the Authority.
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).
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 re-valued 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 as follows:


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.
Draft Statement of Accounts 2014/15
28
65
North Norfolk District Council
NOTES TO THE ACCOUNTS
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 as follows:


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
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 re-valued 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.
Draft Statement of Accounts 2014/15
29
66
North Norfolk District Council
NOTES TO THE ACCOUNTS
Amounts received for a disposal in excess of £10,000 are generally 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:




Buildings - straight-line allocation over the useful life of the property as estimated by the valuer (typically 30 to 100 years);
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. The maximum useful life is 10 years and the minimum 4 years typically most assets have a useful life of 5 years;
Infrastructure – straight line allocation over 20 years.
Community and Surplus assets – The land element of these is not depreciated, any property is depreciated over its useful life.
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 2011.
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.
Draft Statement of Accounts 2014/15
30
67
North Norfolk District Council
NOTES TO THE ACCOUNTS
The Authority 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.
R
Provisions, Contingent Liabilities and Contingent Assets
Provisions
Provisions are made where an event has taken place that gives the Authority 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.
Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the
Authority 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 Authority 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 Authority settles the obligation.
Provisions for bad and doubtful debts are maintained in respect of possible losses from non-collection of amounts owing to the Authority. 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 receivables.
Draft Statement of Accounts 2014/15
31
68
North Norfolk District Council
NOTES TO THE ACCOUNTS
Contingent Liabilities
A contingent liability arises where an event has taken place that gives the Authority 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 Authority. 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 Authority 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 Authority. Contingent assets are not recognised in the
Balance Sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential.
S
Reserves
The Authority 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 Authority - these Unusable Reserves are explained elsewhere within the Accounting Statements.
T
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 Authority 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.
U
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.
Draft Statement of Accounts 2014/15
32
69
North Norfolk District Council
NOTES TO THE ACCOUNTS
V
Council Tax and Non-domestic Rate Income
Billing authorities in England are required by statute to maintain a separate fund for the collection and distribution of amounts due in respect of
Council Tax and Non-Domestic Rates (NDR). In its capacity as a billing authority, the Council acts as an agent collecting and distributing Council
Tax and NDR income on behalf of the major preceptors and itself.
From 1 April 2009, the Council has been required to show Council Tax income in the Comprehensive Income and Expenditure Account as accrued
income.
From 1 April 2013, the Council has been required to show Non-Domestic Rate income in the Comprehensive Income and Expenditure Account as
accrued income.
The Council’s share of Collection Fund income and expenditure is recognised in the Comprehensive Income and Expenditure Statement in the
Taxation and Non-Specific Grant Income and Expenditure section.
2.
Accounting Standards That Have Been Issued but Have Not Yet Been Adopted
The Code of Practice on Local Authority Accounting in the UK 2015/16 has introduced the following changes in accounting policy, which will need to
be adopted fully by the Authority in the 2015/16 financial statements from 1 April 2015 :

IFRS 13 Fair Value Measurement - This standard has introduced a consistent definition of fair value setting out a framework for measuring
fair value and the related disclosures required. It is designed to apply to assets and liabilities covered by those IFRS standards that currently
require or allow fair value measurement. This new accounting standard will require the Council to measure its surplus assets, investment
property and investments held for sale at fair value as opposed to their previous bases for measurement. Operational property, plant and
equipment assets are outside the scope of IFRS 13. Overall this standard is not expected to have a material impact on the Statement of
Accounts, due to the low value of surplus assets held by the Council.

IFRIC 21 Levies - This standard provides guidance on the recognition of liabilities to pay levies (in line with IAS 37 Provisions, contingent
liabilities & contingent assets). This is not expected to have any material impact on the council.

Annual Improvements to IFRSs 2011-2013 Cycle – These improvements are minor and are mainly focused on providing clarification and is
not expected to have any impact on the Council.
The Code requires implementation from 1 April 2015 and there is therefore no impact on the 2014/15 Statement of Accounts.
Draft Statement of Accounts 2014/15
33
70
North Norfolk District Council
NOTES TO THE ACCOUNTS
3.
Critical Judgements in Applying Accounting Policies
In applying the accounting policies set out in Note 1, the Authority 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 Authority has determined that this
uncertainty is not yet sufficient to provide an indication that the assets of the Authority 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 Authority, 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.
NNDR appeals- are estimates made for the expected loss of income as a result of successful appeals based on currently outstanding
appeals
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 Authority 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.
The items in the Authority's Balance Sheet at 31 March 2015 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 reviews by the Authority of its
asset base have 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.
Draft Statement of Accounts 2014/15
34
71
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 Authority’s useable reserves as depreciation charges do not
fall on the Council Tax payer.
North Norfolk District Council
NOTES TO THE ACCOUNTS
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 pension’s 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 £8.791m.
(i)
(ii)
(iii)
Draft Statement of Accounts 2014/15
35
72
A one year increase in member life expectancy would result
in an increase of 3% in the pension liability which is
approximately £2.998m.
If salaries were to increase by 0.5% more than anticipated,
the pension liability would increase by 3%, approximating to
£2.852m.
If pensions payable were to increase by 0.5% more than
anticipated, the pension liability would increase by 6%,
approximating to £5.769m.
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 Authority in the year in accordance
with proper accounting practice to the resources that are specified by statutory provisions as being available to the Authority to meet future capital
and revenue expenditure.
2014/15
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
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
Revaluation losses on Property, Plant and Equipment
Movements in the market value of Investment Properties
Amortisation of intangible assets
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
Capital expenditure charged against the General Fund
Adjustments involving the Capital Grants Unapplied Account
Application of grants to capital financing
Draft Statement of Accounts 2014/15
36
73
Capital
Grants
Unapplied
Account
£000
Movement in
Unusable
Reserves
£000
1,570
549
12
143
0
0
0
0
0
0
0
0
(1,570)
(549)
(12)
(143)
(3,335)
237
0
0
0
0
3,335
(237)
(950)
0
0
950
(306)
(368)
0
0
0
0
306
368
0
0
0
0
North Norfolk District Council
NOTES TO THE ACCOUNTS
2014/15
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
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
Use of the Capital Receipts Reserve to finance new capital
expenditure
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
Movement in
Unusable
Reserves
£000
0
950
0
(950)
0
(1,125)
0
1,125
2,832
0
0
(2,832)
(1,707)
0
0
1,707
0
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
533
0
0
(533)
0
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
Draft Statement of Accounts 2014/15
Capital
Grants
Unapplied
Account
£000
37
74
(14)
0
0
14
(804)
(175)
0
979
North Norfolk District Council
NOTES TO THE ACCOUNTS
2013/14
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
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
Revaluation losses on Property, Plant and Equipment
Movements in the market value of Investment Properties
Amortisation of intangible assets
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
Capital expenditure charged against the General Fund
Adjustments involving the Capital Grants Unapplied Account
Application of grants to capital financing
Draft Statement of Accounts 2014/15
38
75
Capital
Grants
Unapplied
Account
£000
Movement in
Unusable
Reserves
£000
883
441
10
150
0
0
0
0
0
0
0
0
(883)
(441)
(10)
(150)
(2,247)
645
0
0
0
0
2,247
(645)
(555)
0
0
555
(281)
(600)
0
0
0
0
281
600
0
0
0
0
North Norfolk District Council
NOTES TO THE ACCOUNTS
2013/14
General
Fund
Balance
Capital
Receipts
Reserve
£000
£000
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
Use of the Capital Receipts Reserve to finance new capital
expenditure
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
Movement in
Unusable
Reserves
£000
0
755
0
(755)
0
(1,382)
0
1,382
2,976
0
0
(2,976)
(1,684)
0
0
1,684
0
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
(97)
0
0
97
0
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
Draft Statement of Accounts 2014/15
Capital
Grants
Unapplied
Account
£000
39
76
20
0
0
(20)
(339)
(627)
0
966
North Norfolk District Council
NOTES TO THE ACCOUNTS
General Fund Balance - The General Fund is the statutory fund into which all the receipts of an authority are required to be paid and
out of which all liabilities of the authority are to be met, except to the extent that statutory rules might provide otherwise.
Capital Receipts Reserve – The Capital Receipt Reserve holds the proceeds from the disposal of land or other assets, which are
restricted by statute from being used other than to fund new capital expenditure or to be set aside to finance historical capital
expenditure. The balance on the reserve shows the resources that have yet to be applied for these purposes.
Capital Grants Unapplied – The capital Grants Unapplied Account holds grants and contributions received towards capital projects
from which the Council has met the conditions that would otherwise require repayment of the monies but which have yet to be applied to
meet expenditure. The balance is restricted by grant terms as to the capital expenditure against which it can be applied and/or the
financial year in which this can take place.
Draft Statement of Accounts 2014/15
40
77
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 2014/15.
Balance at
1 April
2013
£000
65
Asset Management
672
Benefits
542
Big Society Fund
Broadband
0
Building Control
0
Business Rate Retention
0
2,063
Capital Projects Reserve
21
Carbon Management
60
Coast Protection
36
Common Training
15
Cromer Pier
70
Economic Development & Regeneration
30
Election Reserve
Enforcement Board
0
33
Environmental Health
48
Grants
349
Grassed Area Deposits
242
Housing
50
Land Charges
48
Legal
Local Development Framework
0
83
Local Strategic Partnership
LSVT Reserve
435
New Homes Bonus
612
Draft Statement of Accounts 2014/15
Transfers
Transfers
Out
In
2013/14
2013/14
£000
£000
(53)
36
0
50
(184)
611
0
0
0
46
0
327
(994)
812
(21)
0
(60)
243
(9)
50
(15)
0
(26)
6
0
45
(53)
200
(20)
53
(48)
238
0
0
(142)
0
(30)
20
(43)
44
0
0
(31)
0
0
0
0
675
41
78
Balance at Transfers
31 March
Out
2014
2014/15
£000
£000
48
(14)
722
(50)
969
(651)
0
0
46
0
327
0
1,881
0
(0)
0
243
(243)
77
(50)
0
0
50
0
75
(15)
147
(88)
66
(45)
238
(240)
349
0
100
(15)
40
0
49
(5)
0
0
52
0
435
0
1,287
(469)
Transfers
In
2014/15
£000
27
50
467
1,000
75
1,252
795
0
237
0
0
67
30
88
20
330
0
17
49
30
0
0
0
298
Balance at
31 March
2015
£000
61
722
784
1,000
121
1,579
2,676
(0)
237
27
0
118
90
147
41
328
349
102
89
74
0
52
435
1,116
North Norfolk District Council
NOTES TO THE ACCOUNTS
Organisational Development
Partnership Budgets
Pathfinder
Planning - Revenue
Restructuring and Invest to Save
Sports Hall Equipment/Sports Facilities
Treasury (Property) Reserve
Whistle Blowing
Total
Balance at
1 April
2013
£000
70
35
266
135
694
25
66
10
6,775
Transfers Transfers
Out
In
2013/14
2013/14
£000
£000
(70)
108
(35)
0
(128)
102
(124)
289
(205)
435
(13)
18
0
0
(10)
0
(2,314)
4,408
Total transfers out during 2014/15
Total transfers in during 2014/15
Net Movement in Earmarked Reserves
in 2014/15
Balance at
31 March
2014
£000
108
0
240
301
923
30
66
0
8,868
Transfers
Out
2014/15
£000
(82)
0
(104)
(102)
(314)
(16)
0
0
(2,503)
Transfers
In
2014/15
£000
90
0
71
177
638
12
0
0
5,820
Balance at
31 March
2014/15
£000
116
0
207
375
1,248
26
66
0
12,185
(2,503)
5,820
3,317
The purpose of each earmarked reserves is explained below:
Asset Management - To support improvements to our existing assets as identified through the Asset Management Plan.
Benefits - To mitigate any claw back by the Department of Works and Pensions following final audited subsidy determination.
Big Society Fund (BSF) – To support projects that communities identify where they will make a difference to the economic and social wellbeing of
the area. This is funded from the return of the second homes funding from Norfolk County Council.
Building Control – Ring-fenced to cover any future deficits
Business Rates Retention – To be used to mitigate the impact of final claims and appeals in relation to Business Rates Retention scheme.
Draft Statement of Accounts 2014/15
42
79
North Norfolk District Council
NOTES TO THE ACCOUNTS
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.
Carbon Management - To fund revenue invest to save initiatives as part of the Authority's Carbon Management Plan.
Coast Protection - To support the on-going coast protection maintenance programme.
Common Training - To deliver the corporate training and development programme.
Cromer Pier - To fund future repair costs for the pier.
Economic Development and Regeneration: Service underspends rolled forward that relate to one off projects or expenditure not budgeted for in
future years, including learning for everyone.
Election Reserve - Established to meet costs associated with district council elections, to smooth the impact between financial years.
Environmental Health - Earmarking of underspends and additional Income to meet Environmental Health.
Grants – Earmarking of grants to be used to fund future expenditure.
Grassed Area Deposits - To finance ongoing commitments in relation to grounds maintenance contracts.
Housing – Includes homelessness grant funding received in previous years that had been earmarked for related projects.
Land Charges – To mitigate the impact of potential income reductions for the service.
Legal – Includes funding for Compulsory Purchase Order (CPO) work and other one-off work.
Local Strategic Partnership – Ring fenced from the former Local Strategic Partnership, earmarked for ongoing liabilities.
LSVT Reserve – To meet the cost of successful warranty claims not covered by bonds and insurance following the housing stock transfer.
New Homes Bonus (NHB) – Established for supporting communities with future growth and development and Plan review.
Draft Statement of Accounts 2014/15
43
80
North Norfolk District Council
NOTES TO THE ACCOUNTS
Organisational Development - To provide funding for organisation development to create capacity within the organisation and address anomalies
within the pay structure.
Pathfinder - To help Coastal Communities adapt to coastal changes. The balance represents grant funding that has been received that has been
fully allocated to projects to deliver the Pathfinder objectives but has not yet been spent.
Planning – Additional Planning Income earmarked for Planning Initiatives including Plan Review.
Restructuring and Invest to Save - To be used for restructuring costs including one-off redundancy and pension strain costs and invest to save
projects that will deliver efficiency savings.
Sports Hall Equipment and Sports Facilities - To support renewals for sports hall equipment. Transfers in the year represents over or under
achievement of income target.
Treasury (Property) – To smooth the impact of fluctuations in returns from property investment.
Whistle Blowing - Commissioning investigation activity as required.
Draft Statement of Accounts 2014/15
44
81
North Norfolk District Council
NOTES TO THE ACCOUNTS
7.
Comprehensive Income and Expenditure Statement – Other Operating Expenditure
2013/14
£000
1,457
(71)
(555)
831
8.
2014/15
£000
1,635
6
(950)
691
Parish Council Precepts
(Gains) on Trading Operations (Note 17)
Gains/losses on the disposal of non-current assets
Total
Comprehensive Income and Expenditure Statement – Financing and Investment Income and Expenditure
2013/14
£000
140 Interest payable and similar charges
2014/15
£000
115
1,429
1,358
Pensions interest cost and expected return on pensions assets
(354) Interest receivable and similar income
(10) Changes in the fair value of investment property
1,205 Total
9.
(418)
12
1,067
Comprehensive Income and Expenditure Statement – Taxation and Non Specific Grant Income
2013/14
£000
(6,540)
(3,271)
(4,235)
(1,080)
(2,247)
(17,373)
2014/15
£000
(6,840)
(3,570)
(3,354)
(1,454)
(3,335)
(18,553)
Council Tax Income
Non Domestic Rates
Revenue Support Grant
Other Non ringfenced government grants
Capital grants and contributions
Total
Draft Statement of Accounts 2014/15
45
82
North Norfolk District Council
NOTES TO THE ACCOUNTS
9a. Material Items of Income and Expense
Material items of income and expenditure which are not disclosed separately on the face of the Comprehensive Income and Expenditure Statement
are as follows:
Tidal Surge of 5th and 6th December 2013 - This event had a significant impact upon properties both residential and commercial throughout the
coastal areas of the district. The Comprehensive Income and Expenditure Statement reflects the repair costs that had been incurred as at the 31st
March 2015 and the associated sources of funding. These are set out in the table below.
REVENUE
Expenditure:
2013/14
2014/15
NNDC Property Assets
57,914
56,874
Coastal Assets
71,668
170,730
8,142
22,049
44,373
0
0
51,518
182,097
301,171
Insurance Claims
(33,697)
(50,768)
Bellwin Claim*
(45,758)
0
(102,642)
0
0
(51,518)
(182,097)
(102,285)
0
198,886
Other Infrastructure
Emergency Response
Business Support Grants
Sub Total
External Funding:
Severe Weather Recovery Scheme **
Business Support Grant
Net Impact to NNDC
Details of capital expenditure incurred as a result of the Tidal Surge can be found in note 28a.
* A Government scheme designed to recompense authorities for the costs of emergency measures taken
during exceptional circumstances.
** A fund launched by Government in February 2014 to help local authorities affected by flooding.
Draft Statement of Accounts 2014/15
46
83
North Norfolk District Council
NOTES TO THE ACCOUNTS
Balance Sheet – Usable Reserves
10.
Movements in the Authority’s usable reserves are detailed in the Movement in Reserves Statement and notes 5 and 6.
Balance Sheet – Unusable Reserves
11.
The following provides a summary of the details of the Authority’s unusable reserves. Further details on each of the reserves are provided below.
2013/14
£000
15,742
412
30,227
0
(31,716)
133
(207)
14,591
2014/15
£000
16,176
1,099
32,971
0
(39,012)
(401)
(193)
10,639
Revaluation Reserve
Available for Sale Financial Instruments Reserve
Capital Adjustment Account
Financial Instruments Adjustment Account
Pensions Reserve
Collection Fund Adjustment Account
Accumulated Compensated Absences Adjustment Account
Total Unusable Reserves
11(a) Revaluation Reserve
The Revaluation Reserve contains the gains made by the Authority 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.
Draft Statement of Accounts 2014/15
47
84
North Norfolk District Council
NOTES TO THE ACCOUNTS
2013/14
£000
14,473 Balance at 1 April
2,767 Upward revaluation of assets
Downward revaluation of assets and impairment losses not
(1,366)
charged to the surplus/deficit on the provision of services
Surplus/Deficit on revaluation of non-current assets posted to
0
the Comprehensive Income and Expenditure Statement
Difference between fair value depreciation and historical cost
(132)
depreciation
0 Accumulated gains on assets sold or scrapped
0 Amount to be written off to the capital adjustment account
15,742 Balance at 31 March
2014/15
£000
15,742
1,652
(1,097)
0
(121)
0
0
16,176
11(b) Available for Sale Financial Instruments Reserve
The Available for Sale Financial Instruments Reserve contains the gains made by the Authority 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
2013/14
£000
(28) Balance at 1 April
0 Upward revaluation of investments
(Downward)/upward revaluation of investments not charged to the
441
surplus/deficit on the provision of services
Accumulated gains/losses on assets sold and maturing assets written
0 out to the Comprehensive Income and Expenditure Statement as part
of other investment income
412 Balance at 31 March
Draft Statement of Accounts 2014/15
48
85
2014/15
£000
412
0
687
0
1,099
North Norfolk District Council
NOTES TO THE ACCOUNTS
11(c) 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 Authority 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 Authority.
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.
Draft Statement of Accounts 2014/15
49
86
North Norfolk District Council
NOTES TO THE ACCOUNTS
2013/14
£000
27,917 Balance at 1 April
Reversal of items relating to capital expenditure debited or credited to the
Comprehensive Income and Expenditure Statement:
(883) Charges for depreciation and impairment on non-current assets
(441) Revaluation losses on Property, Plant and Equipment
(150) Amortisation of tangible assets
(645) Revenue expenditure funded from capital under statute
Amounts of non-current assets written off on disposal or sale as part of the
(203) gain/loss on disposal to the Comprehensive Income and Expenditure
Statement
25,595
132 Adjusting amounts written out of the revaluation reserve
25,727
1,382
2,247
0
281
600
30,237
(10)
(1,570)
(549)
(143)
(237)
0
27,728
121
Net written out amount of the cost of non current assets consumed in the
year
Capital financing applied in the year:
Use of capital receipts reserve to finance new capital expenditure
Capital grants and contributions credited to the Comprehensive Income and
Expenditure Statements that have been applied to capital financing
Application of grants to capital financing from the capital grants unapplied
account
Statutory provision for the financing of capital investment charged against
the general fund balance
Capital expenditure charged against the general fund balance
Movements in the market value of investment properties debited or credited
to the Comprehensive Income and Expenditure Statement
30,227 Balance at 31 March
Draft Statement of Accounts 2014/15
2014/15
£000
30,227
27,849
1,125
3,335
0
306
368
32,983
(12)
32,971
50
87
North Norfolk District Council
NOTES TO THE ACCOUNTS
11(d) 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 Authority 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 Authority makes employer's contributions to pension 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 Authority 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.
2013/14
£000
(31,840) Balance at 1 April
1,416 Actuarial gains/(losses) on pensions assets and liabilities
Reversal of items relating to retirement benefits debited or
(2,976) credited to the surplus or deficit on the provision of services in
the Comprehensive Income and Expenditure Statement
Employer's pension contributions and direct payments to
1,684
pensioners payable in the year
(31,716) Balance at 31 March
2014/15
£000
(31,716)
(6,171)
(2,832)
1,707
(39,012)
11(e) Collection Fund Adjustment Account
The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax and business rate income in the
Comprehensive Income and Expenditure Statement as it falls due from council tax and business rate payers, compared with the statutory
arrangements for paying across amounts to the General Fund from the Collection Fund.
2013/14
£000
2014/15
£000
133
36 Balance at 1 April
Amount by which council tax and business rate income credited
97 to the Comprehensive Income and Expenditure Statement is
different from council tax and business rate income calculated
for the year in accordance with statutory requirements
133 Balance at 31 March
Draft Statement of Accounts 2014/15
51
(534)
(401)
88
North Norfolk District Council
NOTES TO THE ACCOUNTS
11(f) 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.
2013/14
£000
(187) Balance at 1 April
Settlement or cancellation of an accrual made at the end of the
187
preceding year
(213) Amounts accrued at the end of the current year
Amount by which officer remuneration charged to the
Comprehensive Income and Expenditure Statement on an
6
accruals basis is different from remuneration chargeable in the
year in accordance with statutory requirements
(207) Balance at 31 March
Draft Statement of Accounts 2014/15
52
2014/15
£000
(207)
207
(229)
36
(193)
89
North Norfolk District Council
NOTES TO THE ACCOUNTS
12.
Cash Flow Statement – Arising from Operating Activities
The cash flows for operating activities include the following items
2013/14
£000
296 Interest Received
(140) Interest Paid
156 Net cash flows from operating activities
2013/14
£000
883
451
150
2
2,931
(58)
944
41
1,292
203
2014/15
£000
413
(115)
298
The surplus or deficit on the provision of services has been adjusted for the following
non-cash movements
Depreciation
Impairment and downward valuations
Amortisation
Adjustment movements in fair value of investments classified as Fair Value through Profit & Loss a/c
Increase in Creditors
Increase/(Decrease) in Interest and Dividend Debtors
Increase in Debtors
(Decrease) in Inventories
Movement in Pension Liability
Carrying amount of non-current assets and non-current assets held for sale, sold or derecognised
6,839
2013/14
£000
2014/15
£000
1,570
561
143
0
(102)
(6)
(5,740)
(11)
1,125
0
(2,460)
Adjust for items included in the net surplus or deficit on the provision of services that are investing or financing
2014/15
activities
£000
(213) Capital Grants credited to surplus or deficit on the provision of services
(997) Net adjustment from the sale of short and long term investments
(755) Proceeds from the sale of property plant and equipment, investment property and intangible assets
(1,965)
Draft Statement of Accounts 2014/15
(99)
0
(950)
(1,049)
53
90
North Norfolk District Council
NOTES TO THE ACCOUNTS
13.
Cash Flow Statement – Investing Activities
2013/14
£000
(2,074)
(41,315)
0
755
50,310
(1,296)
6,380
14.
2014/15
£000
Purchase of property, plant and equipment, investment property
and intangible assets
Purchase of short-term and long-term investments
Other payments for investing activities
Proceeds from the sale of property, plant and equipment,
investment property and intangible assets
Proceeds from short-term and long-term investments
Other receipts from investing activities
Net cash flows from investing activities
(3,362)
(46,131)
0
950
43,075
745
(4,723)
Cash Flow Statement – Financing Activities
2013/14
£000
975 Other receipts from financing activities
Cash payments for the reduction of the outstanding liabilities
(1,913)
relating to finance leases.
(3,500) Repayments of short-term and long-term borrowing
0 Other payments for financing activities
(4,438) Net cash flows from financing activities
15.
2014/15
£000
0
(1,634)
0
387
(1,247)
Cash Flow Statement – Cash and Cash Equivalents
The balance of cash and cash equivalents is made up of the following elements:
2013/14
£000
2014/15
£000
4 Cash held by officers
(462) Bank current accounts
Call Accounts with Banks and investments in Money Market
10,155
Funds
9,697 Total cash and cash equivalents
Draft Statement of Accounts 2014/15
54
3
(437)
5,037
4,603
91
North Norfolk District Council
NOTES TO THE ACCOUNTS
16.
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 Authority'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 Authority's principal Service Areas recorded in the budget reports for the year is as follows:
Community,
Economic
Development
& Coastal
Service Area Income and Expenditure - 2014/15
Fees, charges and other services income
Government Grants
Total Income
Assets &
Leisure
£000
(4,648)
0
(4,648)
Employee Expenses
Pension Fund Accounting Entries (Included in reporting to
management)
Other service expenses
Depreciation, amortisation and impairment (Included in reporting to
management)
Support service expenses
Total Expenditure
Net Expenditure
Draft Statement of Accounts 2014/15
55
CLT /
Corporate
Customer
Services
Organisational
development
(1,052)
0
(1,052)
(2,574)
0
(2,574)
(2,520)
(466)
(2,986)
(862)
0
(862)
974
730
1,293
848
634
5
4
6
4
3
3,515
151
826
1,337
632
1,161
0
170
846
2
1,408
7,063
166
1,051
856
3,151
1,115
4,150
427
1,698
2,415
(1)
577
1,164
836
92
North Norfolk District Council
NOTES TO THE ACCOUNTS
Service Area Income and Expenditure - 2014/15 Cont'd
Fees, charges and other services income
Government Grants
Total Income
Environmental
Health
£000
(3,620)
0
(3,620)
Development
Finance
Management
£000
£000
(2,195)
(2,146)
(28,325)
0
(30,520)
(2,146)
Total
£000
(19,617)
(28,791)
(48,408)
Employee Expenses
Pension Fund Accounting Entries (Included in reporting to
management)
Other service expenses
Depreciation, amortisation and impairment (Included in reporting to
management)
Support service expenses
Total Expenditure
1,223
2,092
1,591
9,385
6
(269)
8
(233)
4,985
28,771
520
40,737
292
43
50
2,564
727
7,233
2,526
33,163
1,070
3,239
8,295
60,748
Net Expenditure
3,613
2,643
1,093
12,340
Service Area Income and Expenditure - 2013/14
Fees, charges and other services income
Government Grants
Total Income
Assets &
Leisure
£000
(4,766)
0
(4,766)
CLT /
Corporate
Customer
Services
Community,
Economic
Development
& Coastal
Organisational
development
(1,116)
0
(1,116)
(2,711)
0
(2,711)
(2,056)
(463)
(2,519)
(859)
0
(859)
Employee Expenses
Pension Fund Accounting Entries (Included in reporting to
management)
Other service expenses
Depreciation, amortisation and impairment (Included in reporting to
management)
Support service expenses
Total Expenditure
1,067
773
1,325
911
624
18
14
20
16
10
3,881
122
815
575
612
27
0
265
1,795
0
1,369
6,362
206
1,115
1,057
3,482
1,030
4,327
491
1,737
Net Expenditure
1,596
(1)
771
1,808
878
Draft Statement of Accounts 2014/15
56
93
North Norfolk District Council
NOTES TO THE ACCOUNTS
Service Area Income and Expenditure - 2013/14 Cont'd
Fees, charges and other services income
Government Grants
Total Income
Environmental
Health
£000
(3,473)
0
(3,473)
Development
Finance
Management
£000
£000
(2,146)
(2,763)
(28,850)
0
(30,996)
(2,763)
Total
£000
(19,890)
(29,313)
(49,203)
Employee Expenses
Pension Fund Accounting Entries (Included in reporting to
management)
Other service expenses
Depreciation, amortisation and impairment (Included in reporting to
management)
Support service expenses
Total Expenditure
1,146
2,201
1,547
9,594
22
(264)
27
(137)
5,163
29,259
412
40,839
252
36
41
2,416
786
7,369
2,448
33,680
1,121
3,148
8,508
61,220
Net Expenditure
3,896
2,684
385
12,017
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.
2013/14
£000
12,017 Net expenditure in the Service Area analysis
Amounts in the Comprehensive Income and Expenditure Statement not reported to
(86)
management in the analysis
Amounts included in the analysis not included in the Comprehensive Income and
795
Expenditure Statement
12,726 Cost of services in Comprehensive Income and Expenditure Statement
Draft Statement of Accounts 2014/15
57
94
2014/15
£000
12,340
(120)
90
12,310
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.
2014/15
Fees, charges and other services
income
Interest and investment income
Income from council tax
Government grants and contributions
Total Income
Employee Expenses
Pension Fund Accounting Entries
Other service expenses
Support service recharges
Depreciation, amortisation and
impairment
Interest Payments
Precepts and levies
Gain or loss on disposal of fixed
assets
Total Expenditure
Surplus or deficit on the provision
of services
Draft Statement of Accounts 2014/15
Service
Area
Analysis
Services
and Support
Services not
in Analysis
£000
Amounts not
reported to
management
Amounts not
included in
I&E
Allocation
of recharges
Cost of
Services
(sub total)
Corporate
Amounts
Total
£000
£000
£000
£000
£000
£000
(19,617)
0
0
0
(384)
(20,001)
(175)
(20,176)
0
0
(28,791)
(48,408)
0
0
0
0
0
0
0
0
0
0
107
107
0
0
0
(384)
0
0
(28,684)
(48,685)
(424)
(6,794)
(11,759)
(19,152)
(424)
(6,794)
(40,443)
(67,837)
9,385
(233)
40,737
8,295
0
0
0
0
(14)
0
(106)
0
0
0
(5)
0
4,563
0
4,116
(8,295)
13,934
(233)
44,742
0
12
1,358
169
0
13,946
1,125
44,911
0
2,564
0
0
(12)
0
2,552
12
2,564
0
0
0
0
0
0
0
0
0
0
0
0
121
1,635
121
1,635
0
0
0
0
0
0
(950)
(950)
60,748
0
(120)
(17)
384
60,995
2,357
63,352
12,340
0
(120)
90
0
12,310
(16,795)
(4,485)
£000
58
95
North Norfolk District Council
NOTES TO THE ACCOUNTS
2013/14 (Comparative Figures)
Fees, charges and other services
income
Interest and investment income
Income from council tax
Government grants and contributions
Total Income
Employee Expenses
Pension Fund Accounting Entries
Other service expenses
Support service recharges
Depreciation, amortisation and
impairment
Interest Payments
Precepts and levies
Gain or loss on disposal of fixed
assets
Total Expenditure
Surplus or deficit on the provision
of services
Draft Statement of Accounts 2014/15
Service
Area
Analysis
Services
and Support
Services not
in Analysis
£000
Amounts not
reported to
management
Amounts not
included in
I&E
Allocation
of recharges
Cost of
Services
(sub total)
Corporate
Amounts
Total
£000
£000
£000
£000
£000
£000
(19,890)
0
0
0
(183)
(20,073)
(190)
(20,263)
0
0
(29,313)
(49,203)
0
0
0
0
0
0
0
0
0
0
729
729
0
0
0
(183)
0
0
(28,584)
(48,657)
(358)
(6,540)
(10,833)
(17,921)
(358)
(6,540)
(39,417)
(66,578)
9,594
(137)
40,839
8,508
0
0
0
0
20
0
(106)
0
0
0
66
0
4,403
0
4,288
(8,508)
14,017
(137)
45,087
0
10
1,429
109
0
14,027
1,292
45,196
0
2,416
0
0
0
0
2,416
(10)
2,406
0
0
0
0
0
0
0
0
0
0
0
0
144
1,457
144
1,457
0
0
0
0
0
0
(555)
(555)
61,220
0
(86)
66
183
61,383
2,584
63,967
12,017
0
(86)
795
0
12,726
(15,337)
(2,611)
£000
59
96
North Norfolk District Council
NOTES TO THE ACCOUNTS
17.
Trading Operations
The Authority runs two service areas as trading services. Details of those services are as follows:
2013/14
£000
£000
The Council currently operates three general produce markets on two car park
sites in Sheringham and Cromer. They are provided to meet local demands and to
promote tourism. The trading objective is to minimise the deficit relating to the
service.
Turnover
Expenditure
Deficit
The Council lets a total of 17 industrial units over three sites in Fakenham, North
Walsham and Catfield. The Catfield and Fakenham sites include starter units
which were developed jointly with EEDA, 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 /
(Surplus)
(78)
2014/15
£000
£000
(60)
144
128
66
(112)
12
Net (surplus) / deficit on trading operations:
68
(114)
81
(101)
(33)
(35)
35
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 Note 7):
In 2013/14 there were significant property revaluations in relation to the industrial units which resulted in impairment and writing back of
depreciation figures being included within the accounts. For 2014/15 there were no equivalent changes which have resulted in a change from a
surplus in year to a deficit across the trading operations.
2013/14
2014/15
£000
£000
(35)
35
(36)
(29)
0
0
(71)
6
Net deficit/(surplus) on trading operations
Services to the public included in expenditure of continuing operations
Support services recharged to expenditure of continuing operations
Net deficit / (surplus) debited / (credited) to other operating expenditure
Draft Statement of Accounts 2014/15
60
97
North Norfolk District Council
NOTES TO THE ACCOUNTS
18.
External Audit Costs
The Authority 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 Authority's external auditors:
2013/14
PWC
2013/14
Audit
Commission
£000
£000
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
Total
19.
2013/14
Total
2014/15
PWC
£000
£000
2014/15
Audit
Commission
£000
2014/15
Total
£000
74
(8)
66
71
(6)
65
39
0
39
46
0
46
113
(8)
105
117
(6)
111
Members Allowances
The Authority paid the following amounts to members of Council during the year. Full details can be obtained by writing to North Norfolk District
Council, Information Services, Holt Road, Cromer, Norfolk, NR27 9EN.
2013/14
£
258,160 Allowances
29,823 Expenses
287,983
Draft Statement of Accounts 2014/15
2014/15
£
257,068
27,882
284,950
61
98
North Norfolk District Council
NOTES TO THE ACCOUNTS
20.
Officers’ Remuneration
The following table sets out the remuneration paid to the Authority’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 Authority, being able to direct or control its major activities, whether solely or collectively.
Salary, Fees
Job Title
Bonuses
and
Expenses
Compensation
Allowances
for Loss of
Allowance
£
Sub-total
Pension
Total
Contribution
Office
£
£
£
£
£
1st April 2014 to 31st March 2015
Chief Executive
2014/15
99,771
0
963
0
100,734
14,460
115,194
Corporate Director
2014/15
77,693
0
963
0
78,656
11,266
89,922
Corporate Director
2014/15
77,693
0
963
0
78,656
11,266
89,922
Section 151 Officer
2014/15
57,556
0
963
0
58,519
8,346
66,865
Chief Executive
2013/14
99,771
0
0
0
99,771
14,467
114,238
Corporate Director
2013/14
77,307
0
0
0
77,307
11,210
88,517
Corporate Director
2013/14
77,307
0
1,747
0
79,054
11,210
90,264
Section 151 Officer
2013/14
57,270
0
0
0
57,270
8,304
65,574
1st April 2013 to 31st March 2014
Draft Statement of Accounts 2014/15
62
99
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:
2013/14
Number of Employees
2
0
0
0
0
0
21.
Remuneration Band
£50,000 - £54,999
£55,000 - £59,999
£60,000 - £64,999
£65,000 - £69,999
£70,000 - £74,999
£75,000 - £79,999
2014/15
Number of Employees
2
1
0
0
0
0
Exit Packages
The number of exit packages agreed with the total cost per band and total cost of the compulsory and other are set out in the table below.
Bandings
Compulsory
Redundancies
Number of
Employees
2013/14
Other
Departures
Number of
Total Number
Total
Employees
of Employees Amount £
Compulsory
Redundancies
Number of
Employees
2014/15
Other
Departures
Number of
Total Number
Total
Employees
of Employees Amount £
£0 to £20,000
3
5
8
88,251
8
1
9
68,961
£20,001 to £40,000
1
1
2
61,402
1
0
1
26,045
£40,001 to £60,000
0
0
0
0
0
0
0
0
£60,001 to £80,000
0
0
0
0
0
0
0
0
£80,001 to £100,000
0
0
0
0
0
0
0
0
4
6
10
149,653
9
1
10
95,007
Draft Statement of Accounts 2014/15
63
100
North Norfolk District Council
NOTES TO THE ACCOUNTS
22.
Defined Benefit Pension Schemes
Participation in pension schemes
As part of the terms and conditions of employment of its officers, the Authority makes contributions towards the cost of post-employment benefits.
Although these benefits will not actually be payable until employees retire, the Authority has a commitment to make the payments and this needs to
be disclosed at the time that employees earn their future entitlement.
The Authority 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 Authority 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 payments as they eventually fall due.
Transactions relating to post-employment benefits
The Authority recognises 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:
Draft Statement of Accounts 2014/15
64
101
North Norfolk District Council
NOTES TO THE ACCOUNTS
Comprehensive Income and Expenditure Statement
Cost of Services:
Current service cost
Past Service Costs loss
Curtailments loss
Local Government
Pension Scheme
2013/14
£000
Local Government
Pension Scheme
2014/15
£000
1,524
23
0
1,469
5
0
3,779
(2,350)
3,681
(2,323)
Total post-employment benefit charged to the
surplus/deficit on the provision of services
2,976
2,832
Other post-employment benefit charged to the Comprehensive
Income and Expenditure Statement:
Actuarial gains and (losses)
1,416
(6,171)
(4,392)
3,339
(2,976)
(2,832)
1,684
1,707
Financing and Investment Income and Expenditure:
Interest cost
Expected return on scheme assets
Total post-employment benefit charged to the
Comprehensive Income and Expenditure Statement
Movement in Reserves Statement:
Reversal of net charges made to the surplus/deficit for the
provision of services for post-employment benefits in
accordance with the code
Actual amount charged against the general fund balance for
pensions in the year:
Employers' contributions payable to scheme
The cumulative amount of actuarial gains and losses recognised in the comprehensive income and expenditure statement to the 31 March 2015 is a
loss of £30.548m (£24.377m at 31 March 2014).
Draft Statement of Accounts 2014/15
65
102
North Norfolk District Council
NOTES TO THE ACCOUNTS
Assets and liabilities in relation to post-employment benefits
Reconciliation of present value of the scheme liabilities (defined benefit obligation):
Funded Liabilities
Local Government
Opening Balance at 1 April
Current service cost
Interest cost
Contributions by scheme participants
Curtailments
Actuarial gains and losses
Benefits paid
Unfunded Benefits paid
Past service costs
Closing Balance at 31 March
Pension Scheme
2013/14
2014/15
£000
£000
84,647
86,297
1,524
1,469
3,779
3,681
432
433
(886)
(2,958)
(264)
23
86,297
11,215
(2,917)
(263)
5
99,920
Reconciliation of fair value of the scheme (plan) assets:
Opening balance at 1 April
Expected rate of return
Actuarial gains
Employers contributions
Contributions by scheme participants
Contributions in respect of Unfunded Benefits
Benefits paid
Unfunded Benefits paid
Closing balance at 31 March
Draft Statement of Accounts 2014/15
Local Government Local Government
Pension Scheme
Pension Scheme
2013/14
2014/15
£000
£000
52,807
54,581
2,350
2,323
546
5,033
1,404
1,455
432
433
264
263
(2,958)
(2,917)
(264)
(263)
54,581
60,908
66
103
North Norfolk District Council
NOTES TO THE ACCOUNTS
Fair Value of Employer Assets
31/03/14
31/03/15
Quoted
Quoted
Total £(000)
Prices in Prices not in
active
active
markets
markets
£(000)
£(000)
Percentage
of Total
Assets
Quoted
Prices in
active
markets
£(000)
Quoted
Total £(000)
Prices not in
active
markets
£(000)
Percentage
of Total
Assets
ASSET CATEGORY
Equity Securities:
Consumer
Manufacturing
Energy & Utilities
Financial Institutions
Health & Care
Information
Technology
Other
Debt Securities:
Corporate Bonds
(Investment Grade)
Corporate Bonds (NonInvestment Grade)
Other
3,316.0
3,041.1
1,696.6
3,399.6
1,551.1
976.2
0.0
0.0
0.0
0.0
0.0
0.0
3,316.0
3,041.1
1,696.6
3,399.6
1,551.1
976.2
6%
6%
3%
6%
3%
2%
2,618.6
3,230.8
1,341.2
3,917.0
2,059.7
2,069.6
0.0
0.0
0.0
0.0
0.0
0.0
2,618.6
3,230.8
1,341.2
3,917.0
2,059.7
2,069.6
4%
5%
2%
6%
3%
3%
2,423.5
0.0
2,423.5
4%
3,086.8
0.0
3,086.8
5%
2,202.7
0.0
2,202.7
4%
2,562.3
0.0
2,562.3
4%
78.3
0.0
78.3
0%
66.2
0.0
66.2
0%
192.6
0.0
192.6
0%
0.0
0.0
0.0
0%
0.0
3,754.9
3,754.9
7%
0.0
4,005.7
4,005.7
7%
Private Equity:
All
Draft Statement of Accounts 2014/15
67
104
North Norfolk District Council
NOTES TO THE ACCOUNTS
Fair Value of Employer Assets (cont'd)
31/03/14
31/03/15
Quoted
Quoted
Total £(000)
Prices in Prices not in
active
active
markets
markets
£(000)
£(000)
Real Estate:
UK Property
Overseas Property
Percentage
of Total
Assets
Quoted
Prices in
active
markets
£(000)
Quoted
Total £(000)
Prices not in
active
markets
£(000)
Percentage
of Total
Assets
0.0
0.0
5,438.9
809.4
5,438.9
809.4
10%
1%
0.0
0.0
6,469.2
742.6
6,469.2
742.6
11%
1%
Investment Funds & Unit Trusts:
Equities
15,786.2
Bonds
8,490.0
0.0
0.0
15,786.2
8,490.0
29%
16%
24,515.0
2,522.4
0.0
0.0
24,515.0
2,522.4
40%
4%
Derivatives:
Foreign Exchange
Other
0.0
23.7
0.0
0.0
0.0
23.7
0%
0%
53.9
21.7
0.0
0.0
53.9
21.7
0%
0%
0.0
1,399.7
1,399.7
3%
0.0
1,625.3
1,625.3
3%
43,178
11,403
54,581
100%
48,065
12,843
60,908
100%
Cash & Cash Equivalents
All
TOTALS
Draft Statement of Accounts 2014/15
68
105
North Norfolk District Council
NOTES TO THE ACCOUNTS
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.
2015
£000
Present Value of Liabilities:
Local Government Pension Scheme
Unfunded obligations
Fair value of assets in the LGPS
Surplus/(Deficit) in the scheme:
Local Government Pension Scheme
Discretionary Benefits
Total
2014
£000
2013
£000
2012
£000
2011
£000
(95,208)
(4,712)
60,908
(81,765)
(4,532)
54,581
(80,213)
(4,434)
52,807
(69,675)
(4,255)
47,536
(63,553)
(4,003)
48,035
(39,012)
0
(39,012)
(31,716)
0
(31,716)
(31,840)
0
(31,840)
(26,394)
0
(26,394)
(19,521)
0
(19,521)
The liabilities show the underlying commitments that the Authority has in the long run to pay post-employment (retirement) benefits. The total liability
of £39.01m has a substantial impact on the net worth of the Authority as recorded in the Balance Sheet. However, statutory arrangements for
funding the deficit mean that the financial position of the Authority 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 Authority in the year to 31 March 2016 is £1.5m.
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 2013.
Draft Statement of Accounts 2014/15
69
106
North Norfolk District Council
NOTES TO THE ACCOUNTS
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
2013/14
Long-term expected rate of return on assets in the scheme:
Equity investments
Bonds
Property
Cash
Mortality assumptions:
Longevity at 65 for current pensioners:
Men
Women
Longevity at 65 for future pensioners:
Men
Women
Pension Increase Rate (CPI)
Rate of increase in salaries
Expected Return on Assets
Rate of discounting scheme liabilities
Local Government
Pension Scheme
2014/15
4.3%
4.3%
4.3%
4.3%
3.2%
3.2%
3.2%
3.2%
22.1
24.3
22.1
24.3
24.5
26.9
24.5
26.9
2.8%
3.6%
4.3%
4.3%
2.4%
3.3%
3.2%
3.2%
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:
Equities
Bonds
Property
Cash
31 March 2014
%
66
20
11
3
100
Draft Statement of Accounts 2014/15
31 March 2015
%
77
8
12
3
100
70
107
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 2013/14 can be analysed into the following categories, measured as a
percentage of assets or liabilities at 31 March 2014;
Difference between the expected and actual return on assets
Experience gains and losses on liabilities
23.
2015
%
8.3
0.4
2014
%
1.0
0.6
2013
%
7.0
(0.0)
2012
%
(5.7)
1.5
2011
%
(2.8)
(12.4)
Events after the Balance Sheet Date
Events taking place after the accounts are finally signed off are not reflected in the financial statements or notes. Where events taking place before
this date provided information about conditions existing at 31 March 2015, the figures in the financial statements and notes have been adjusted in all
material respects to reflect the impact of this information.
24.
Related Parties
The Authority is required to disclose material transactions with related parties - bodies or individuals that have the potential to control or influence the
Authority or to be controlled or influenced by the Authority. Disclosure of these transactions allows readers to assess the extent to which the
Authority 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 Authority.
Central Government
Central government has effective control over the general operations of the Authority - it is responsible for providing the statutory framework, within
which the Authority operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the
Authority 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 16 on amounts reported to decision makers. Grant receipts outstanding at 31 March 2014 are shown in note 38.
Members
Members of the Authority have direct control over the Authority's financial and operating policies. The total of members' allowances paid in 2014/15
is shown in note 19. During 2014/15 works and services to the value of £382,748 were commissioned from companies in which 13 members had an
Draft Statement of Accounts 2014/15
71
108
North Norfolk District Council
NOTES TO THE ACCOUNTS
interest (£792,099 and 17 in 2013/14). The Authority paid grants totalling £21,405 to voluntary organisations (£118,053 in 2013/14) in which two
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.
25.
Leases
Authority as Lessee
Finance Leases
The Authority has determined that the contracts with Kier Services - Environmental for waste collection and related services, and with the Borough
Council of King’s Lynn and West Norfolk for car parks management, contain embedded finance leases in respect of the vehicles and equipment
used on the contracts. A deferred liability has been set up for the estimated lease rental charges included in the contract payments made to the
contractors, and the assets are recognised on the balance sheet at net book value.
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 2014
£000
1,462
1,462
31 March 2015
£000
1,147
1,147
The Authority 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 2014
£000
31 March 2015
£000
305
1,328
338
1,971
330
998
0
1,328
Finance Lease Liabilities (Net present value of minimum lease
payments):
- Current
- Non current
Finance costs payable in future years
Minimum Lease Payments
The minimum lease payments will be payable over the following periods:
Draft Statement of Accounts 2014/15
72
109
North Norfolk District Council
NOTES TO THE ACCOUNTS
Not later than one year
Later than one year and not later than five years
Later than five years
Minimum Lease Payments
31 March 2014 31 March 2015
£000
£000
421
421
1,550
1,130
0
0
1,971
1,551
Finance Lease Liabilities
31 March 2014 31 March 2015
£000
£000
306
330
1,328
998
0
0
1,634
1,328
Operating Leases
The Authority 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
31 March 2014
£000
58
210
101
369
31 March 2015
£000
60
162
9
231
The expenditure charged to the Comprehensive Income and Expenditure Statement during the year in relation to these Leases was:
Minimum Lease Payments
Contingent Rents
31 March 2014
£000
122
28
150
31 March 2015
£000
74
25
99
Authority as Lessor
Operating Leases
The Authority 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
Draft Statement of Accounts 2014/15
73
110
North Norfolk District Council
NOTES TO THE ACCOUNTS
 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 2014 31 March 2015
£000
£000
(71)
(154)
(144)
(459)
(51)
(474)
(266)
(1,087)
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.
26.
Investment Properties
The following items of income and expense have been accounted for in the Comprehensive Income and Expenditure Statement:
2013/14
£000
Rental income from investment property
Direct operating expenses arising from investment property
Net gain/(loss)
2014/15
£000
8
(21)
(13)
0
(26)
(26)
There are no restrictions on the Authority's ability to realise the value inherent in its investment property or on the Authority's right to the remittance
of income and the proceeds of disposal. The Authority 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:
Draft Statement of Accounts 2014/15
74
111
North Norfolk District Council
NOTES TO THE ACCOUNTS
2013/14
£000
Opening Balance
Additions:
270
2014/15
£000
260
Net gains/losses from fair value adjustments
(10)
(5)
Transfers:
Closing Balance
260
255
There have been no additions in the year and the net loss is due to a fair value adjustment.
27.
Intangible Assets
The Authority 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 Authority. The useful
lives assigned to software currently used by the Authority are identified below, with the most significant being shown separately:
5 years
Internally Generated Assets
None
Other Assets
Choice Based Letting, Other Software
The carrying amount of intangible assets is amortised on a straight-line basis. The amortisation of £143,269 charged to revenue in 2014/15
(£150,584 in 2013/14) was charged to the following lines within the income statement; Central Services to the Public (£77,668), Environmental
Services (£6,317), Planning Services (£32,524) and Housing Services (£26,760).
The movement on intangible asset balances during the year is as follows:
Draft Statement of Accounts 2014/15
75
112
North Norfolk District Council
NOTES TO THE ACCOUNTS
Internally
Generated
Assets
£000
Opening Balance:
Gross carrying amounts
Accumulated amortisation
Net carrying amount at start of year
Additions:
- Purchases
Amortisation for the period
Closing Balance
2013/14
Other
Assets
Total
£000
£000
Internally
Generated
Assets
£000
2014/15
Other
Assets
Total
£000
£000
0
0
0
1,170
(772)
398
1,170
(772)
398
0
0
0
1,215
(923)
293
1,215
(923)
293
0
0
0
46
(150)
294
46
(150)
294
0
0
0
57
(143)
206
57
(143)
206
There is only one item of capitalised software that is individually material to the financial statements.
Housing Choice Based Lettings System
Carrying Amount
31 March 2014 31 March 2015
£000
£000
54
27
Remaining
Amortisation
Period
1 year
During 2014/15 the Authority entered into 2 new contracts for the purchase of software. The first of these was the purchase of Website Integration
Software which was completed within the year. The second was in respect of the commencement of the Probass 4 scheme which is due for
completion in 2015/16.
28.
Impairment Losses
During 2014/15 the Authority has recognised total impairment losses of £619,872 (2013/14 - 188,167).
An impairment loss of £6,000 has been recognised in relation to the loss of land at Beach Road Car Park, Happisburgh. This impairment loss has
been taken to the Highways, Roads and Transport line within the Comprehensive Income and Expenditure Statement.
Draft Statement of Accounts 2014/15
76
113
North Norfolk District Council
NOTES TO THE ACCOUNTS
Two properties on Cromer Pier have also been impaired as a result of works undertaken following the tidal surge in December 2013; the Tides
Restaurant has been impaired by £160,877, and the Booking Office and Footprints Café by £206,336. In both instances the impairment loss has
been included within the Cultural and Related Services line of the Income and Expenditure Statement.
In addition to this there have been three further impairments in relation to assets situated along the coastline, which arose as a result of works
required to be undertaken following the tidal surge. The West Prom Café in Sheringham has been impaired by £95,558 with the loss being taken to
the Cultural and Relates Services line of the Income and Expenditure Statement. The two remaining assets are the chalets and beach hut sites in
both Cromer and Sheringham, which have been impaired by £118,866 and £32,235 respectively. In both instances the losses have been reversed
out of the Revaluation Reserves which existed in relation to these assets, and as such they do not impact on the Comprehensive Income and
Expenditure Statement. This reserve reflects the gains in value in relation to the Authority’s assets which will have occurred in previous years.
28a. Tidal Surge
Tidal Surge of 5th and 6th December 2013. This event had a significant impact upon the Council’s property and Coastal Assets. The table below
shows the levels of expenditure on these assets and the associated funding within the year.
Draft Statement of Accounts 2014/15
77
114
North Norfolk District Council
NOTES TO THE ACCOUNTS
Capital
2013/14 £
Expenditure:
NNDC Property Assets
Coastal Assets
Sub Total
External Funding:
Grants (Environment Agency)
Insurance Claims
Net Impact to NNDC
NNDC Funding:
NNDC Reserves
Capital Receipts
Draft Statement of Accounts 2014/15
Capital
2014/15 £
146,876
698,382
845,258
714,584
153,723
868,307
(698,382)
(146,876)
(845,258)
0
(153,723)
(604,681)
(758,404)
109,903
0
0
0
(28,000)
(81,903)
(109,903)
78
115
North Norfolk District Council
NOTES TO THE ACCOUNTS
29.
Property, Plant and Equipment
Movement on Balances
Movement in 2014/15:
Cost or Valuation:
At 1 April 2014
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 2015
Draft Statement of Accounts 2014/15
Other
Land and
Buildings
Vehicles,
Plant and
Equipment
Infrastructure
Assets
Community
Assets
Surplus
Assets
Assets
Under
Construction
£000
£000
£000
£000
£000
£000
Total
Property
Plant and
Equipment
£000
44,230
876
0
11,223
484
0
11,554
2,336
0
350
142
0
2,058
3
0
3,317
693
0
72,732
4,535
0
726
0
0
0
0
0
726
(460)
0
0
0
0
0
(460)
0
0
0
97
45,469
(148)
0
0
145
11,704
0
0
0
0
13,891
0
0
0
1,522
2,014
0
0
0
0
2,061
0
0
0
(1,764)
2,246
(148)
0
0
0
77,384
79
116
North Norfolk District Council
NOTES TO THE ACCOUNTS
Accumulated Depreciation and Impairment:
At 1 April 2014
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 2015
Other
Land and
Buildings
Vehicles,
Plant and
Equipment
Infrastructure
Assets
Community
Assets
Surplus
Assets
Assets
Under
Construction
£000
£000
£000
£000
£000
£000
Total
Property
Plant and
Equipment
£000
8,470
611
7,424
800
8,476
471
20
3
1,095
0
0
0
25,486
1,884
0
0
0
0
0
0
0
(314)
0
0
0
0
0
(314)
151
0
0
0
0
0
151
116
0
0
0
0
0
116
0
0
(148)
0
0
0
0
0
0
0
0
0
(148)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9,034
8,076
8,947
23
1,095
0
27,176
36,435
35,760
3,628
3,799
4,943
3,078
1,991
329
966
963
2,246
3,317
50,209
47,246
Net Book Value
At 31 March 2015
At 31 March 2014
Draft Statement of Accounts 2014/15
80
117
North Norfolk District Council
NOTES TO THE ACCOUNTS
Comparative Movements in 2013/14:
Cost or Valuation:
At 1 April 2013
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 2014
Draft Statement of Accounts 2014/15
Other
Land and
Buildings
Vehicles,
Plant and
Equipment
Infrastructure
Assets
Community
Assets
Surplus
Assets
Assets
Under
Construction
£000
£000
£000
£000
£000
£000
Total
Property
Plant and
Equipment
£000
44,920
377
0
11,086
161
0
10,182
1,372
0
468
0
0
3,402
12
0
1,800
1,811
0
71,858
3,733
0
1,457
0
0
44
5
0
1,506
(2,477)
0
0
(157)
(1,361)
0
(3,995)
(309)
0
0
262
44,230
(56)
0
0
32
11,223
0
0
0
0
11,554
(5)
0
0
0
350
0
0
0
0
2,058
0
0
0
(294)
3,317
(370)
0
0
0
72,732
81
118
North Norfolk District Council
NOTES TO THE ACCOUNTS
Accumulated Depreciation and Impairment:
At 1 April 2013
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 2014
Net Book Value
At 31 March 2014
At 31 March 2013
Draft Statement of Accounts 2014/15
Other
Land and
Buildings
Vehicles,
Plant and
Equipment
Infrastructure
Assets
Community
Assets
Surplus
Assets
Assets
Under
Construction
£000
£000
£000
£000
£000
£000
Total
Property
Plant and
Equipment
£000
11,118
750
6,690
768
7,995
481
18
3
2,398
0
0
0
28,219
2,002
0
0
0
0
0
0
0
(1,119)
0
0
0
(1,303)
0
(2,422)
71
0
0
0
0
0
71
(2,216)
0
0
0
0
0
(2,216)
(134)
0
(34)
0
0
0
0
0
0
0
0
0
(168)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
8,470
7,424
8,476
21
1,095
0
25,486
35,760
33,802
3,799
4,396
3,078
2,187
329
450
963
1,004
3,317
1,800
47,246
43,639
82
119
North Norfolk District Council
NOTES TO THE ACCOUNTS
Capital Commitments
As at 31 March 2015, the Authority has entered into several contracts for the construction or enhancement of Property, Plant and Equipment in
2014/15 and future years, budgeted to cost £5,028,301 in total. The major commitments relate to the following Schemes:
2013/14
Cromer Pier Major Refurbishment Works
Cromer 982 Coastal Protection Scheme
Tidal Surge Emergency Works
Sheringham West Coast Protection Scheme
Sheringham Gangway (FLAG)
41,706
2,730,326
400,623
0
0
3,172,655
2014/15
0
1,034,416
0
309,539
67,827
1,411,782
Revaluations
The Authority 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. During the intervening years reviews are conducted to ensure the carrying value of assets are not materially different from
their fair values. Impairment reviews are also undertaken on the portfolio on an annual basis to ensure that the carrying value of assets is not
overstated. For the 2014/15 accounts the valuations have been carried out by the Authority’s own internal valuer. 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. Further details regarding the valuations are provided within the Statement of Accounting Policies
which starts on page 14.
Draft Statement of Accounts 2014/15
83
120
North Norfolk District Council
NOTES TO THE ACCOUNTS
Other
Land and
Buildings
Vehicles,
Plant and
Equipment
£000
Carried at historical cost
Valued at fair value as at:
31 March 2015
31 March 2014
31 March 2013
31 March 2012
31 March 2011
Total Cost or Valuation
Draft Statement of Accounts 2014/15
Infrastructure
Assets
Community
Assets
0
£000
11,704
£000
13,891
£000
2,014
2,958
31,013
2,435
7,493
1,570
45,469
0
0
0
0
0
11,704
0
0
0
0
0
13,891
0
0
0
0
0
2,014
84
121
Surplus
Assets
Assets
Under
Construction
0
£000
2,246
Total
Property
Plant and
Equipment
£000
29,855
(514)
957
(1,352)
543
2,427
2,061
0
0
0
0
0
2,246
2,445
31,970
1,083
8,036
3,997
77,385
£000
North Norfolk District Council
NOTES TO THE ACCOUNTS
30.
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 Authority, the expenditure results in an increase in the Capital Financing Requirement (CFR), a
measure of the capital expenditure incurred historically by the Authority that has yet to be financed. The CFR is analysed in the second part of this
note.
Opening Capital Financing Requirement
Capital Investment:
Property, plant and equipment
Property, Plant and Equipment - embedded finance leases
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
2013/14
£000
1,959
2014/15
£000
1,679
3,540
0
0
46
645
4,535
0
0
57
237
(1,382)
(2,247)
(1,125)
(3,335)
(600)
(282)
1,679
(368)
(306)
1,373
0
0
0
0
(282)
(282)
(306)
(306)
Explanations of movements in year
Increase in underlying need to borrow (supported by
government financial assistance)
Increase in underlying need to borrow (unsupported by
government financial assistance)
Assets acquired under finance leases
(Decrease) in Capital Financing Requirement
Draft Statement of Accounts 2014/15
85
122
North Norfolk District Council
NOTES TO THE ACCOUNTS
31.
Assets Held for Sale
There are no assets classified as Held for Sale (2013/14 £Nil)
32.
Inventories
Balance outstanding at start of year
Purchases
Recognised as expenses in the year
Written off balances
Balance outstanding at year-end
Draft Statement of Accounts 2014/15
Consumable Stores
2013/14
2014/15
£000
£000
39
11
49
40
(47)
(68)
0
0
11
13
86
Maintenance Materials
2013/14
2014/15
£000
£000
28
15
9
11
(22)
(2)
0
0
15
23
123
Total
2013/14
£000
67
49
(90)
0
26
2014/15
£000
26
60
(49)
0
37
North Norfolk District Council
NOTES TO THE ACCOUNTS
33.
Receivables
Receivables represent the amounts owed to the Authority at 31 March 2015 and are analysed below. The Authority makes an allowance for
outstanding amounts for which recovery of receivables is not anticipated (bad debt provision). Receivables 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 and a number of capital contributions from the Environment
Agency.
Central government bodies
Other local authorities
NHS Bodies
Other entities and individuals
Sub Total
Less: Bad Debt Provision
General Fund
Collection Fund
Sub Total
Total
Draft Statement of Accounts 2014/15
31 March 2014
31 March 2015
£000
£000
1,752
7,642
356
351
0
0
3,035
2,238
5,143
10,231
(792)
(173)
(965)
4,178
(834)
(161)
(995)
9,236
87
124
North Norfolk District Council
NOTES TO THE ACCOUNTS
34.
Payables
Payables represent the amounts owed by the Authority at 31 March 2015.
Central government bodies
Other local authorities
Public corporations and trading funds
Other entities and individuals
Sub Total
Less: Receipts in Advance
Central government bodies
Other Local Authorities
Public Corporations and Trading Funds
Other entities and individuals
Sub Total
Total
35.
31 March 2014 31 March 2015
£000
£000
(3,701)
(1,072)
(1,064)
(1,739)
(3)
(3)
(3,677)
(5,820)
(8,445)
(8,634)
607
0
4
0
611
(7,834)
508
0
4
0
512
(8,122)
Provisions
The Authority has no outstanding legal cases in progress or other potential liabilities that require provisions to be made.
36.
Contingent Liabilities
At 31 March 2015, the Authority 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 Authority provided a number of environmental and non-environmental warranties, guarantees and indemnities to the Trust, its
Lenders and the Norfolk Pension Fund.
Draft Statement of Accounts 2014/15
88
125
North Norfolk District Council
NOTES TO THE ACCOUNTS
The risks associated with these warranties and indemnities have been assessed following professional advice and where felt appropriate the
Authority 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 has provided a bond with an initial sum of £1.2 million in favour of the Authority with regard to any
liabilities to the Norfolk Pension Fund in the event of the insolvency, winding up and liquidation of the Trust. In May 2015 the actuary’s total
value of the indemnity required to meet the deficit with a certainty of 80% to 85% was estimated at £1,983,000 (£620,000 for 2013/14). A
bond of £5,043,000 (£2,533,000 for 2013/14), would be required to be 98% certain of meeting any deficit arising.
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 Authority discloses a contingent liability. An earmarked reserve of £435,000 is held to mitigate such claims.
(b)
NNDR Appeals – Note 8 to the Collection Fund details the provision made for appeals. It is not possible to quantify the number and value of
appeals that have not yet been lodged with the Valuation Office with any certainty, so there is a risk to the Council that national and local
appeals may have a future impact on the accounts. The Council maintains an earmarked reserve to mitigate any adverse impact.
(c)
Tidal Surge – Expenditure on recovering from the December 2013 tidal surge continued during 2014/15 for which some of the costs have
been claimed under insurance. Any shortfall in recovering costs will be met from the general reserve.
(d)
Benefits - There is a risk of potential claw back from the Department of Works and Pensions following the final audit and sign off the year
end subsidy claim. To mitigate the impact of any claw back there is an earmarked reserve for which the balance stood at £721,792 at 31
March 2015.
(e)
Land Charges - Local authorities nationally have been subject to a legal challenge by personal search companies in respect of an element
of land charges fee income paid to authorities going back to 2001. The personal search companies’ claim is based on the position that they
could access for free certain information for which to date they have been charged, by means of the Environmental Information Regulations.
Local authorities are awaiting clarification on this point. The Council has carried out no formal calculations in respect of this potential liability
to date.
37.
Contingent Assets
In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets the Authority recognises the following contingent assets:
(a)
VAT Sharing Agreement - As part of the transfer of the housing stock in 2006, the Authority entered a VAT sharing agreement with Victory
Housing Trust. Under this agreement the Authority receives a 50% share of the recoverable VAT on qualifying works that would have been
recoverable had the Council retained the assets. During the year £670,109 was received (£490,862 in 2013/14).
Draft Statement of Accounts 2014/15
89
126
North Norfolk District Council
NOTES TO THE ACCOUNTS
38. Grant Income
The Authority credited the following grants, contributions and donations to the Comprehensive Income and Expenditure accounts in 2014/15.
Credited to Taxation and Non Specific Grant Income
Revenue Support Grant
Relief for Flooded Properties
Business Rates
Business Rates Efficiency & Transformation
New Homes Bonus
Community Right to Challenge/ Community Right to Bid
Council Tax Freeze Funding
Council Tax Rural Services Delivery Grant
Local Council Tax Support Transitional Funding
Efficiency Support Sparse Area
Capital Grants and Contributions
Council Tax Support New Burdens
Severe Weather Recovery
Other
Total
Credited to Services
DWP - Rent Allowances
DWP - Admin Subsidy
Arts Council England
Cabinet Office
Dept. for Environment, Food & Rural Affairs (DEFRA)
Dept. for Communities and Local Govt (DCLG)
Forestry Commission
Marine Management Organisation
Norfolk County Council
Sport England
S106 Contributions
Other Grants & Contributions
Total
Total Revenue Grants Received
Draft Statement of Accounts 2014/15
90
2013/14
£000
4,235
0
2014/15
£000
3,354
47
3,271
0
729
16
58
0
23
44
2,247
58
144
7
10,832
3,570
15
1,277
16
58
12
0
0
3,335
76
0
0
11,760
28,187
663
28,850
20
22
12
555
0
0
1,208
0
51
135
30,853
41,685
27,741
584
28,325
22
77
437
510
9
33
1,207
56
0
100
30,776
42,536
127
North Norfolk District Council
NOTES TO THE ACCOUNTS
The Authority 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 2014
31 March 2015
£000
£000
Capital Grants Receipts in Advance
Pathfinder
299
284
Travellers Site
260
225
48
0
Developers Contributions
3
3
Other
0
0
Total
611
512
Coastal Erosion Grant
Draft Statement of Accounts 2014/15
91
128
North Norfolk District Council
NOTES TO THE ACCOUNTS
39.
Financial Instruments
Categories of Financial Instruments
The following categories of financial instruments are carried in the Balance Sheet:
Long Term
31 March 2014
£000
Current
31 March 2014
£000
Long Term
31 March 2015
£000
Current
31 March 2015
£000
0
5,412
5,412
6,032
74
6,106
0
10,904
10,904
0
4,364
4,364
0
0
0
3,008
7,046
10,054
0
0
0
0
5,036
5,036
23
0
23
0
2,571
2,571
38
0
38
1
1,360
1,361
0
0
0
0
1,328
1,328
306
306
998
998
330
330
0
0
2,973
2,973
0
0
2,812
2,812
6,763
22,010
11,940
13,903
Investments
Loans and receivables
Available-for-sale investments
Total Investments
Cash and Cash Equivalents:
Loans and receivables
Available-for-sale investments
Total Cash and Cash Equivalents
Debtors
Loans and receivables
Financial assets carried at contract amount
Total Debtors
Borrowing
Other Long-term Liabilities
Finance lease liabilities
Total Other Long-term Liabilities
Creditors
Financial liabilities carried at contract amount
Total Creditors
Total Financial Instruments
Draft Statement of Accounts 2014/15
92
129
North Norfolk District Council
NOTES TO THE ACCOUNTS
Investments which can be repaid on the balance sheet date – i.e. money market funds and call accounts, are classified as cash and cash
equivalents. The current financial liabilities (£2,811,561) together with the finance lease liabilities (£330,184) total £3,141,745. Note 34 shows total
payables of £8,633,808. The difference between these two figures represents liabilities which are non-contractual or statutory in nature and
therefore not financial instruments.
Offsetting Financial Assets and Liabilities
Financial assets and liabilities are set off against each other where the Authority has a legally enforceable right to set off and it intends either to
settle on a net basis, or to realise the asset and settle the liability simultaneously. The table below shows those instruments that have been offset on
the balance sheet. The Authority had no other financial assets or liabilities subject to an enforceable master netting arrangement or similar
agreement.
Assets
Financial Assets
- Bank accounts in hand
Financial Liabilities
- Bank overdrafts
£000
2013/14
Liabilities Net position on
Balance Sheet
£000
£000
2014/15
Liabilities Net position on
Balance Sheet
£000
£000
Assets
£000
2,861
(2,861)
0
2,214
(2,214)
0
2,861
(3,323)
(462)
2,214
(2,651)
(437)
Income, Expense, Gains and Losses
2013/14
Financial
Liabilities
Finance
Leases
£000
Interest income/expense included in
surplus/deficit on the provision of services
Gains on revaluation
Net gain/(loss) for the year
Draft Statement of Accounts 2014/15
2013/14
Financial
Assets
Loans
Available
and
for sale
Receivables Investments
£000
£000
2014/15
Financial
Liabilities
Total
Finance
Leases
£000
£000
2014/15
Financial
Assets
Loans
Available
and
for sale
Receivables Investments
£000
£000
Total
£000
139
92
263
355
115
49
366
415
0
139
0
92
439
702
439
794
0
115
0
49
688
1,054
688
1,103
93
130
North Norfolk District Council
NOTES TO THE ACCOUNTS
Fair values of Assets and Liabilities
Financial liabilities and financial assets represented by loans and receivables and long-term receivables and payables 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 Authority’s loans and receivables consist of term deposits with banks and building societies. 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 investments in money market funds and other collective investment schemes (a pooled property fund),
certificates of deposit and covered bonds. The fair value of the pooled property fund and the covered bonds has been determined by reference to
quoted market prices at 31 March 2015. Money market funds and certificates of deposit are short-term instruments and their fair value is assumed
to approximate to their carrying amount.
No early repayment or impairment is recognised for any financial instrument.
The fair value of trade receivables and payables is taken to be the invoiced amount.
40.
Nature and Extent of Risks arising from Financial Instruments
The Authority’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 Authority

liquidity risk - the possibility that the Authority might not have funds available to meet its commitments to make payments

market risk - the possibility that financial loss might arise for the Authority as a result of changes in such measures as interest rates, market
process etc.
The Authority has adopted CIPFA’s Code of Practice on Treasury Management and complies with The Prudential Code for Capital Finance in Local
Authorities.
Draft Statement of Accounts 2014/15
94
131
North Norfolk District Council
NOTES TO THE ACCOUNTS
To comply with the Treasury Management Code, the Authority 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 Authority 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 Authority 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 Authority’s treasury management activities. The Authority 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.
The credit quality of £4.5m of the Authority’s investments is enhanced by collateral held. These investments are in the form of covered bonds
collateralised by UK residential mortgages. The collateral significantly reduces the likelihood of the Council suffering loss on these investments.
The table below shows the credit criteria exposures of the Authority’s investment portfolio by credit rating.
Credit Rating
AAA
AA+
AA
AAA+
A
AUnrated Pooled Fund
Total Investments
Long Term Short Term
31/03/2014 31/03/2014
£000s
£000s
7,046
Long Term Short Term
31/03/2015 31/03/2015
£000s
£000s
4,871
5,036
1,500
3,015
7,540
1,251
5,486
5,486
Draft Statement of Accounts 2014/15
16,086
6,132
11,003
9,302
95
132
North Norfolk District Council
NOTES TO THE ACCOUNTS
The Authority has no historical experience of counterparty default and the Authority does not anticipate any losses from default in relation to any of
its current investments. No credit limits were exceeded in the financial year.
None of the above were identified as past due or impaired during the year.
In addition to treasury investments, the Authority is exposed to credit risk from its customers. However the Authority has put in place appropriate
debt recovery procedures to manage this risk and minimise any loss.
The age analysis of trade receivables which are past due date but are not impaired is shown below.
Less than three months
Three months to one year
More than one year
31 March 31 March
2013
2014
£000
£000
15
256
47
66
2
41
64
363
A bad debt provision of £18,268 has been made against debts which are more than one year old. The factors the Authority 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. The Authority’s maximum exposure to trade debts is £698,547. Of the debts which are passed their due date
(and not impaired) £255,936 is less than three months old, £66,417 is between three months and one year and £41,239 is more than one year, as
per the table above. The aged debt note relates to trade receivables only and it is not possible to determine the credit quality of the debtor.
Liquidity risk
The Authority has a comprehensive cash flow management system that seeks to ensure that cash is available as needed. If unexpected movements
happen, the Authority 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 Authority does not have any long-term debt and therefore does not have any maturing liabilities for which funds
would be required.
Draft Statement of Accounts 2014/15
96
133
North Norfolk District Council
NOTES TO THE ACCOUNTS
Market risk
Interest rate risk
The Authority 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 the Comprehensive Income and Expenditure Statement. The impact of a reduction in interest rates would be delayed
as term deposits are fixed for a period of time, and it is not until the investment matures that the lower rate would impact on the Authority’s
investment return. If the overall rate of return on investments had been 0.25% lower than the rate actually achieved in 2013/14, there would have
been a reduction of £51,700 in investment income, based on the average balance available for investment during the year.
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, and this assumes that all other terms of the investments remain unchanged.
The figure of 0.25% reduction has been used because interest rates are historically low and anticipated to remain low and unlikely to change by
more than this figure.
Price risk
The investment in the pooled property fund exposes the Authority to the risk of changes in the price of the fund units. As they are classified as
available-for-sale financial assets, all gains and losses will be recognised in the Comprehensive Income and Expenditure Statement. For example,
if the price of the units held by the Authority at the year-end reduced by 1%, there would be a loss in fair value of £60,553.
Foreign Exchange Risk
The Authority has no financial assets or liabilities denominated in foreign currencies and therefore there is no exposure to loss arising from
movements in exchange rates.
Draft Statement of Accounts 2014/15
97
134
North Norfolk District Council
COLLECTION FUND
2013/14
COLLECTION FUND
Notes
£000
(56,791)
(24,185)
INCOME
Council Tax
Business Rates
(4 & 5)
(2)
(80,976)
6,513
41,693
7,311
11,738
9,410
2,348
230
(52)
273
450
26
171
29
(306)
(836)
(1,142)
(57,901)
(57,901)
EXPENDITURE
Precepts:
- North Norfolk District Council (including Parish Councils)
- Norfolk County Council
- Office of the Police & Crime Commissioner for Norfolk
Business Rate Shares:
- Central Government
- North Norfolk District Council (including Renewable Energy Retained)
- Norfolk County Council
Charges to the Collection Fund:
- Cost of Collection
- Increase / (Decrease) in Provision for Bad & Doubtful Debts
- Write Offs of Uncollectable Amounts
- Increase / (Decrease) in Provision for Appeals
Apportionment of Previous Year Deficit / (Surplus)
- Central Government
- North Norfolk District Council
- Norfolk County Council
- Office of the Police & Crime Commissioner for Norfolk
(3)
(6)
(7)
(7)
(3)
(Surplus)/Deficit for the year
(6)
COLLECTION FUND BALANCE
Balance brought forward at 1 April
(Surplus)/Deficit for the year (as above)
Balance carried forward at 31 March
Draft Statement of Accounts 2014/15
98
135
2
134
Total
£000
(23,288)
(57,901)
(23,288)
(23,288)
(81,189)
6,742
42,103
7,528
99
651
114
80,140
(836)
2014/15
Council Tax Business Rates
£000
£000
6,742
42,103
7,528
12,155
9,928
2,431
12,155
9,928
2,431
233
(34)
83
387
233
(32)
217
387
1
1
0
100
651
114
57,373
25,185
82,557
(528)
1,897
1,368
(1,143)
(528)
(1,671)
1
1,897
1,898
(1,142)
1,369
227
North Norfolk District Council
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 of Council Tax and National NonDomestic Rates (NNDR) and its distribution to local government bodies and central government. The Collection Fund is consolidated with the
other accounts of the billing authority for Balance Sheet purposes.
2. Income from Business Ratepayers
The Council collects NNDR from ratepayers based on local rateable values provided by the Valuation Office Agency, multiplied by a uniform
business rate in the £ set nationally by Central Government. The total rateable value for the District was £65,360,645 on 31 March 2015
(£65,488,294 on 31 March 2014). The national multipliers for 2014/15 were 47.1p for qualifying Small Businesses (46.2p in 2013/14), and the
standard multiplier was set at 48.2 for all other businesses (47.1p in 2013/14).
The total income from business rate payers was £23,288,082 (£24,184,512 in 2013/14) and this sum includes £54,202 of transitional protection
payments from Central Government. The transitional relief scheme provides protection to ratepayers from large changes in their bills following
revaluations of their business, by phasing in changes gradually. This could mean that a billing authority may collect more or less rates than
would otherwise be the case, and Government Regulations make provision for adjusting payments to be made to or from billing authorities.
3. Precepts and Demands
The authorities that made a precept or demand on the Collection Fund are:
Net
Payment
2013/14
£000
6,539
41,864
7,340
55,743
Precept /
Demand
£000
North Norfolk District Council (including Parish Precepts)
Norfolk County Council
Office of the Police & Crime Commissioner for Norfolk
Total
Draft Statement of Accounts 2014/15
99
136
6,742
42,103
7,528
56,373
Collection
Fund
Surplus
£000
99
651
114
864
Net
Payment
2014/15
£000
6,841
42,754
7,642
57,237
North Norfolk District Council
COLLECTION FUND
4. The Council Tax Base for 2014/15 is as follows:
Therefore each £1 of Council Tax set was calculated to produce income of £36,769 (£36,411 in 2013/14).
Valuation
Band
A
B
C
D
E
F
G
H
Total Tax Base
Number of Chargeable
Dwellings adjusted for
Discounts
2013/14
2014/15
6,685
6,753
9,999
10,147
9,094
9,264
7,359
7,400
4,106
4,108
1,947
1,955
903
903
72
71
40,165
40,601
Equivalent
Number of Band D
Dwellings
2013/14
2014/15
4,454
4,500
7,777
7,892
8,083
8,235
7,358
7,400
5,019
5,021
2,813
2,824
1,506
1,505
144
142
37,154
37,519
Adjusted Equivalent
Number of Band D
Dwellings
2013/14
2014/15
4,365
4,410
7,621
7,734
7,921
8,070
7,210
7,251
4,919
4,921
2,757
2,768
1,476
1,475
142
140
36,411
36,769
5. Band D Tax Rate
This Authority set a Council Tax of £1,488.69 for a band D dwelling, (£1,484.73 in 2013/14), which consisted of £1,145.07 (£1,145.07 in
2013/14) for Norfolk County Council, £204.75 (£200.79 in 2013/14) for the Office of the Police & Crime Commissioner for Norfolk and £138.87
(£138.87 in 2013/14) for the District's requirements. Sums ranging from nil to £89.45 (nil to £88.97 in 2013/14) were charged in addition for
parish and town council requirements.
The calculation of the District’s Council Tax is made by dividing its demand on the Collection Fund by the equivalent number of Band D
dwellings in the area (the Tax Base). An adjustment is made to the Tax Base to take into account the anticipated non-collection of amounts due.
Discounts are given for empty and other properties, in respect of students, disabled people, single occupiers and those in receipt of support
under the Local Council Tax Support Scheme. Since 2004/05 the Authority 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. Further reforms in the
Local Government Finance Act 2012 gave the Authority new flexibilities to vary council tax on second homes and empty dwellings, and to apply
a premium on empty properties.
Draft Statement of Accounts 2014/15
100
137
North Norfolk District Council
COLLECTION FUND
6. Balances
The balance on the Collection Fund represents a surplus from Council Tax and a deficit from Business Rate transactions. The Council Tax
surplus is shared between Norfolk County Council, the Office of the Police & Crime Commissioner for Norfolk and North Norfolk District Council
in proportion to their respective precepts.
The deficit on Business Rate transactions results from changes in the year against initial estimates. Gross rates payable were lower than
anticipated, mandatory reliefs were greater and the amount required to provide for appeals against rateable values was higher than anticipated.
The deficit is shared in accordance with the proportionate shares of 50% for Central Government, 10% for Norfolk County Council and 40% for
North Norfolk District Council.
The total balance is attributed as follows:
31 March 2014
Total
£
(133,789)
(858,429)
(150,541)
412
(1,142,759)
Share of Balance
North Norfolk District Council
Norfolk County Council
Office of the Police & Crime Commissioner for Norfolk
Central Government
Total
31 March 2015
Council Tax
Business Rates
Total
£
£
£
759,194
559,380
(199,814)
(1,247,819)
189,798 (1,058,021)
(223,123)
(223,123)
948,992
948,992
(1,670,756)
1,897,984
227,228
7. Bad Debt Provision and Appeals Accounting Policy
The Collection Fund account provides for bad debts on arrears based on historical experience of non-payment and the age of debt.
Authorities are expected to finance the cost of appeals made against rateable values and are required to make provision for these amounts.
Successful appeals in 2014/15 have been charged to this provision, and an additional £387,182 has been charged to the Collection Fund to
ensure that there is an adequate provision to meet appeals not settled as at 31 March 2015.
Draft Statement of Accounts 2014/15
101
138
North Norfolk District Council
AUDIT REPORT
Independent auditors’ report to the Members of North Norfolk District Council
Draft Statement of Accounts 2014/15
102
139
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.
Bad Debts - Amounts owed to the Authority which are considered unlikely to be recovered. An allowance is made in the accounts for this possibility.
Balance Sheet - The Authority'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. They are collected by each authority and nationally determined proportionate shares are paid to the Government and Norfolk
County Council with a share retained by the authority.
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 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 (CFR) - The Capital Financing Requirement represents the Authority’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 Authority, Norfolk County Council and Norfolk Police Authority to meet their requirements.
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 Authority’s control.
Corporate and Democratic Core - Costs relating to the Authority’s status as a multi-functional, democratic organisation.
Draft Statement of Accounts 2014/15
103
140
North Norfolk District Council
GLOSSARY OF TERMS
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 Authority’s control.
Deferred Capital Receipts - Representing the amounts that are not available as cash. They arise from Council house sales on mortgage to the
Authority, and where repayments of principal sums due are received over a number of years.
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 receivable. 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 Authority owns in terms of property, land etc. and what is owed to the Authority
in respect of debt.
General Fund - The account which summarises the revenue costs of providing services, which are met by the Authority’s demand on the Collection
Fund.
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) – A set of international accounting standards stating how particular types of transactions and
other events should be reported in Financial Statements. IFRS are issued by the International Accounting Standards Board.
Draft Statement of Accounts 2014/15
104
141
North Norfolk District Council
GLOSSARY OF TERMS
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 Authority 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 Authority owes for borrowing, payables 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
nationally determined proportionate shares are paid to the Government and Norfolk County Council with a share retained by the authority.
Non Distributed Costs - The cost of discretionary benefits awarded to employees retiring early and any depreciation and impairment losses
chargeable on non-operational properties.
Payables - Amounts which the Authority owes to others for goods and services received before the year end of 31 March but which were not paid
until after 1 April.
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.
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. ‘
Draft Statement of Accounts 2014/15
105
142
North Norfolk District Council
GLOSSARY OF TERMS
Receivables - Sums which at 31 March are owing to the Authority.
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.
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 Authority retained the housing stock and carried out the necessary works on the properties the VAT would have been
reclaimed by the Authority, 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 Authority and Victory Housing Trust.
Draft Statement of Accounts 2014/15
106
143
North Norfolk District Council
GLOSSARY OF ACRONYMS
CFR
Capital Financing Requirement
NNDC
North Norfolk District Council
CIPFA
Chartered Institute of Public Finance and Accountancy
REFCUS
Revenue Expenditure Funded from Capital Under Statute
IAS
International Accounting Standards
RSG
Revenue Support Grant
ICT
Information Communication Technology
SERCOP
Service Reporting Code of Practice
IFRS
International Financial Reporting Standard
SORP
Statement of Recommended Practice
LSVT
Large Scale Voluntary Transfer
TIC
Tourist Information Centre
MRP
Minimum Revenue Provision
UK GAAP
United Kingdom - Generally Accepted Accounting Principles
Draft Statement of Accounts 2013/14
107
144
North Norfolk District Council
Statement of Accounts 2014/15
145
North Norfolk District Council
www.pwc.co.uk
North Norfolk District
Council
Report to those charged with governance
Report to the Audit Committee of the authority on the audit for the
year ended 31 March 2015 (ISA (UK&I)) 260)
Government and
Public Sector
August 2015
DRAFT
146
Contents
Code of Audit Practice and
Statement of Responsibilities
of Auditors and of Audited
Bodies
In April 2010 the Audit Commission
issued a revised version of the
‘Statement of responsibilities of
auditors and of audited bodies’. It is
available from the Chief Executive
of each audited body. The purpose
of the statement is to assist auditors
and audited bodies by explaining
where the responsibilities of
auditors begin and end and what is
to be expected of the audited body in
certain areas. Our reports and
management letters are prepared in
the context of this Statement.
Reports and letters prepared by
appointed auditors and addressed
to members or officers are prepared
for the sole use of the audited body
and no responsibility is taken by
auditors to any Member or officer
in their individual capacity or to
any third party.
Executive summary
2
Audit approach
3
Significant audit and accounting matters
7
Internal controls
14
Risk of fraud
16
Fees update
18
Appendices
19
Appendix 1: Summary of uncorrected misstatements
20
Appendix 2: Summary of corrected misstatements
21
Appendix 3: Letter of representation
22
North Norfolk District Council
PwC  Contents
147
An audit of the Statement of
Accounts is not designed to
identify all matters that may be
relevant to those charged with
governance. Accordingly, the
audit does not ordinarily identify
all such matters. We have issued a
number of reports during the
audit year, detailing the findings
from our work and making
recommendations for
improvement, where appropriate.
Executive summary
Background
This report tells you about the significant findings from our audit. Since we presented our plan to you in March 2015 we
issued an updated plan in June to include a change in engagement leader from Harriet Aldridge to Anna Blackman. In
addition we have amended our risk assessment to upgrade the risk related to the valuation of Property, Plant and Equipment
from elevated to significant. Further detail is included in our Audit Approach section below.
Audit Summary
We have completed the majority of our audit work and expect to be able to issue an unqualified audit opinion on the
Statement of Accounts by 30 September 2015.
The key outstanding matters, where our work has commenced but is not yet finalised, are:

property, plant and equipment revaluations;

national non-domestic rates (NNDR) appeals provision;

value for money conclusion;

reserves;

whole of government accounts;

testing of the granting of planning permission;

pensions;

accounts receivable cut off;

review of the detailed disclosures in the Statement of Accounts;

approval of the Statement of Accounts and Letter of Representation;

receipt of outstanding bank and investment confirmations; and

completion procedures including subsequent events review.
There are four key judgments which require the Audit Committee/those charged with governance's attention – further details
are set out below. The Audit Committee need to confirm that they are happy to approve the proposed treatment of unadjusted
misstatements listed in Appendix 1.
Please note that this report will be sent to the Public Sector Audit Appointments Limited in accordance with the requirements
of its standing guidance.
We look forward to discussing our report with you on15th September. Attending the meeting from PwC will be Anna Blackman
and Aphrodite Antoniades.
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Audit approach
Our audit approach was set in our audit plan which we presented to you in March 2015.
We have summarised below the significant risks we identified in our audit plan, the audit approach we took to address each
risk and the outcome of our work.
Risk
Categorisation
Audit approach
Results of work performed
Management override
of controls
Significant
As part of our assessment of your control
environment we considered those areas
where management could use discretion
outside of the financial controls in place to
misstate the financial statements.
A control weakness was raised in relation
the National Non-Domestic Rates (NNDR)
appeals provision. Further details are
included in the Internal Controls section.
Our work is still ongoing on this area and
we will update the Audit Committee
verbally on the results of our work.
ISA (UK&I) 240
requires that we plan
our audit work to
consider the risk of
fraud, which is
presumed to be a
significant risk in any
audit. In every
organisation,
management may be in
a position to override
the routine day to day
financial controls.
Accordingly, for all of
our audits, we consider
this risk and adapt our
audit procedures
accordingly.
We have performed procedures to:
 Review the appropriateness of accounting
policies and estimation bases, focusing on
any changes not driven by amendments
to reporting standards;
 Test the appropriateness of journal
entries and other year-end adjustments,
targeting higher risk items such as those
that affect the reported deficit/surplus;
 Reviewed accounting estimates for bias
and evaluated whether judgment and
estimates used are reasonable (for
example pension scheme assumptions,
valuation and impairment assumptions);
 Evaluated the business rationale
underlying significant transactions
outside the normal course of business;
and
 Performed unpredictable procedures
targeted on fraud risks.
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Risk
Categorisation
Audit approach
Results of work performed
Risk of fraud in revenue
and expenditure
recognition
Under ISA (UK&I) 240
there is a presumption
that there are risks of
fraud in revenue
recognition.
We extend this
presumption to the
recognition of
expenditure in local
government.
Significant
We have obtained an understanding of
revenue and expenditure controls.
Expenditure Testing
We evaluated and tested the accounting
policy for income and expenditure
recognition to ensure that this is consistent
with the requirements of the Code of Practice
on Local Authority Accounting.
We also performed detailed testing to high
assurance of revenue and expenditure
transactions which occurred within the last
three months of the financial year end, and
the first three months of the new financial
year. .
In addition, we have considered the existence
of complex supplier contracts and estimates
in relation to accrued and deferred income
and bad debt provisions.
In our expenditure testing we identified
one transaction relating to 2014/15 that
had been incorrectly included as
expenditure in 2015/16 and had not been
accrued as at 31 March 2015. Management
have agreed to adjust this error in the
financial statements and this has been
included in Appendix 2.No other
exceptions were noted in our testing of
expenditure.
Revenue Testing
Two minor exceptions were noted in our
testing of revenue recognition. In one case
income received in 2014/15 but relating to
2015/16 had been erroneously included in
2014/15. In the second case income
received in 2015/16 relating to 2014/15 had
been erroneously included in 2015/16.
These exceptions were below our SUM
level of £50,000 and therefore do not
require adjustment.
However, as we identified exceptions in
relation to revenue and expenditure
recognition we have raised a control
weakness in the Internal Controls section,
below.
Our work on complex supplier
arrangements remains in progress. We will
verbally update the audit committee on the
outcome of our work.
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Risk
Categorisation
Audit approach
Results of work performed
Property, Plant and
Equipment:
Valuation Property,
Plant and Equipment is
the largest figure on
your balance sheet.
Economic conditions
continue to be
uncertain, which has a
potential impact on the
valuation of property,
plant and equipment.
The Authority is
required to assess the
carrying value of assets
every year.
Significant
Property, plant and equipment (PPE)
represents the largest balance in the
Authority’s balance sheet. The Authority
measures its properties at fair value
involving a range of assumptions and the use
of external valuation expertise. ISAs (UK&I)
500 and 540 require us, respectively, to
undertake certain procedures on the use of
external expert valuers and processes and
assumptions underlying fair value estimates.
Our work on this area is on-going.
We will update the Audit Committee
verbally on the results of our work.
Updated risk
assessment
Following the
completion of our
planning procedures,
this risk was upgraded
from elevated to
significant. This was
following a recent
reassessment of our
risks and reflects that
property, plant and
equipment represents
the largest balance on
the balance sheet, and
that even a slight
fluctuation could result
in a material
misstatement.
Specific areas of risk include:
 The accuracy and completeness of
detailed information on assets.
 Whether the Authority’s assumptions
underlying the classification of
properties are appropriate.
 Whether properties that are not
programmed to be revalued in the year
might have undergone material changes
in their fair value.
 The valuer’s methodology, assumptions
and underlying data, and our access to
these.
Where asset valuations are undertaken inyear we have:
 Agreed the source data used by the
Authority’s valuer to supporting records,
this involved reviewing the gross internal
areas (GIAs) used by the valuers and
physically verified that these are
appropriate;
 Assessed the work of the Authority’s
valuer through use of our own internal
specialists where required; and
 Agreed the outputs to your Fixed Asset
Register and accounts.
Where any changes to valuation bases are
proposed we worked with officers to
understand and evaluate the rationale the
Authority is using.
North Norfolk District Council
Where assets are not formally re-valued in
151 year, we reviewed the Authority’s
impairment assessment, and its evaluation as
to whether assets are held at an appropriate
value in the accounts at the year end. We
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Intelligent scoping
In our audit plan presented to you in March 2015 we reported our planned overall materiality which we used in planning the
overall audit strategy. Our materiality level in the plan was based on the Authority’s audited expenditure in 2013/14. Our
actual materiality level was different to the amount reported in our plan because the Authority’s actual expenditure in 2014/15
was lower than in 2013/14. This had no effect on our testing strategy.
Our revised materiality levels are as follows:
£
Overall materiality
1,035,000
Clearly trivial reporting de minimis
50,000
Overall materiality has been set at 2% of actual expenditure for the year ended 31 March 2015.
ISA (UK&I) 450 (revised) requires that we record all misstatements identified except those which are “clearly trivial” i.e. those
which we do expect not to have a material effect on the financial statements even if accumulated. We agreed the de minimis
threshold with the Audit Committee at its meeting in March 2015.
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Significant audit and accounting matters
Auditing Standards require us to tell you about relevant matters relating to the audit of the Statement of Accounts sufficiently
promptly to enable you to take appropriate action.
Accounts
We have completed our audit, subject to the following outstanding matters:













property, plant and equipment revaluations;
national non-domestic rates (NNDR) appeals provision;
value for money conclusion;
reserves;
whole of government accounts;
unpredictable procedures (planning permission);
pensions;
accounts receivable cut off;
report on findings from the Norfolk County Council pension scheme auditors has not yet been received;
review of the detailed disclosures in the Statement of Accounts;
approval of the Statement of Accounts and letters of representation;
receipt of outstanding bank and investment confirmations; and
completion procedures including subsequent events review.
Subject to the satisfactory resolution of these matters, the finalisation of the Statement of Accounts and their approval of them
we expect to issue an unqualified audit opinion.
As part of our work on the Statement of Accounts we have also examined the Whole of Government Accounts schedules
submitted to the Department for Communities and Local Government and anticipate issuing an opinion stating in our view
they are consistent with the Statement of Accounts.
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Accounting issues
Related parties
In forming an opinion on the financial statements, we are required to evaluate:


whether identified related party relationships and transactions have been appropriately accounted for and disclosed;
and
whether the effects of the related party relationships and transactions cause the financial statements to be misleading.
It was identified during the course of our work that the Authority does not hold a full list of related parties. Per CIPFA code of
practice, paragraph 3.9.2.15, “Related party relationships where control exists should be disclosed irrespective of whether
there have been transactions between the related parties.” The Authority would therefore need to hold a complete list of
related parties in order to meet this requirement.
Declaration forms completed by Councillors only require Councillors to disclose interests that they or their close family
members have in other organisations where they are aware that these organisations have transacted with the Authority. There
is therefore a risk that Councillors omit related parties from their declaration forms and the Authority does not hold a
complete list of related parties.
Finally, the Authority has been unable to obtain declaration forms for two councillors who did not return to Council following
the election.
In our work we identified five additional related parties which the Authority had transacted with or provided grants to in the
year, and which had not been disclosed in the initial draft accounts. For four of these the councillor in question was
representing the Authority on the Board of another organisation. In one case the Authority was unaware of the individual’s
involvement in the organisation. This has been raised as an adjustment, see Appendix 2.
This has also been raised as a control weakness on page 14 below.
Pensions liability
The most significant estimate in the Statement of Accounts is in the valuation of net pension liabilities for employees in the
Norfolk County Council pension fund. The Authority’s net pension surplus/liability at 31 March 2015 was £39 million (2014 £32 million).
We reviewed the reasonableness of the assumptions underlying the pension liability, and we are comfortable that the
assumptions are within an acceptable range. The report from the Pension Fund actuary was reviewed by the PwC specialist
team and the assumptions used were compared to the industry averages with no exceptions or major variances noted.
We validated the data supplied to the actuary on which to base their calculations.
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Misstatements and significant audit adjustments
We have to tell you about all uncorrected misstatements we found during the audit, other than those which are trivial. These
are outlined in Appendix 1.
We also bring to your attention the misstatements set out in Appendix 2 to this report which have been corrected by
management but which we consider you should be aware of in fulfilling your governance responsibilities.
Significant accounting principles and policies
Significant accounting principles and policies are disclosed in the notes to the Statement of Accounts. We will ask
management to represent to us that the selection of, or changes in, significant accounting policies and practices that have, or
could have, a material effect on the Statement of Accounts have been considered. Policies and their application are considered
appropriate.
Judgments and accounting estimates
The Authority is required to prepare its financial statements in accordance with the CIPFA Code. Nevertheless, there are still
many areas where management need to apply judgement to the recognition and measurement of items in the financial
statements. The following significant judgements and accounting estimates were used in the preparation of the financial
statements:
Property, Plant and Equipment – Depreciation and Valuation: the Authority charges depreciation based on an
estimate of the Useful Economic Lives (UELs) of assets for the majority of its Property, Plant and Equipment (PPE). The total
depreciation charge in 2014/15 was £1.9 million (2013/14 £2 million). The Authority also values your PPE in accordance with
your accounting policies to ensure that the carrying value is true and fair. This involves judgement and reliance on your
internal valuers who are charged with revaluing certain classes of assets annually.
Accruals: The Authority raises accruals for expenditure incurred where an invoice has not been raised or received at year
end, but where it knows there is a liability to be met which relates to the current year. This involves a degree of estimation as
in some cases where invoices have not been received the exact amount due may not yet be known. Accruals are not disclosed
separately within the statement of accounts but are shown within the payables balance. We have raised a control weakness in
relation to the recognition of expenditure. Please see Internal Controls section, below.
Pensions: As above, the Authority relies on the work of an actuary in calculating these balances, which involves estimation.
The net pension surplus/liability at 31 March 2015 was £39 million Please see Pension Liability section above.
Bad Debt Provision: The Authority provides for all debts that have been outstanding for more than one year. Further
judgement is used to make additional provisions for riskier debts which are not deemed to be collectable. The bad debt
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provision in 2014/15 for the General Fund was £0.83 million (2013/14 £0.79 million). Based on our work performed we
consider this to be reasonable.
NNDR Provision for Appeals: The Authority provides for appeals to change the business rates paid. The Authority has
calculated the provision amount based on historic data on the percentage success of claims and the percentage reduction of
these successful claims multiplied by the rateable value for the year. The value for the current year is £0.8 million (2013/14
£0.4 million).
Our work on these judgements and accounting estimates remains in progress. We will update the Audit Committee verbally
on the progress of our work.
Management representations
The final draft of the representation letter that we ask management to sign is attached in Appendix 3.
We have asked Management to confirm the accuracy of the list of related parties included as an appendix to the representation
letter.
Audit independence
We are required to follow both the International Standard on Auditing (UK and Ireland) 260 (Revised) “Communication with
those charged with governance”, UK Ethical Standard 1 (Revised) “Integrity, objectivity and independence” and UK Ethical
Standard 5 (Revised) “Non-audit services provided to audited entities” issued by the UK Auditing Practices Board.
Together these require that we tell you at least annually about all relationships between PricewaterhouseCoopers LLP in the
UK and other PricewaterhouseCoopers’ firms and associated entities (“PwC”) and the Authority that, in our professional
judgement, may reasonably be thought to bear on our independence and objectivity.
Relationships between PwC and the Authority
We are not aware of any relationships that, in our professional judgement, may reasonably be thought to bear on our
independence and objectivity and which represent matters that have occurred during the financial year on which we are to
report or up to the date of this document.
Relationships and Investments
We have not identified any potential issues in respect of personal relationships with the Authority or investments in the
Authority held by individuals.
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Employment of PricewaterhouseCoopers staff by the Authority
We are not aware of any former PwC partners or staff being employed, or holding discussions in respect of employment, by
the Authority as a director or in a senior management position covering financial, accounting or control related areas.
Business relationships
We have not identified any business relationships between PwC and the Authority.
Services provided to the Authority
The audit of the Statement of Accounts is undertaken in accordance with the UK Firm’s internal policies. The audit is also
subject to other internal PwC quality control procedures such as peer reviews by other offices.
Fees
The analysis of our audit and non-audit fees for the year ended 31 March 2015 is included below. In relation to the non-audit
services provided, none included contingent fee arrangements.
Services to Directors and Senior Management
PwC does not provide any services e.g. personal tax services, directly to directors, senior management.
Rotation
It is Public Sector Audit Appointments Limited's1 policy that engagement leaders at an audited body at which a full Code audit
is required to be carried out should act for an initial period of five years. Public Sector Audit Appointments Limited’s view is
that generally the range of regulatory safeguards it applies within its audit regime is sufficient to reduce any threats to
independence that may otherwise arise at the end of this period to an acceptable level. Therefore, to safeguard audit quality,
and in accordance with APB Ethical Standard 3, it will subsequently approve engagement leaders for an additional period of
up to no more than two years, provided that there are no considerations that compromise, or could be perceived to
compromise, the auditor’s independence or objectivity.
Gifts and hospitality
We have not identified any significant gifts or hospitality provided to, or received from, a member of Authority’s Executive
Team, senior management or staff.
On the 31 March 2015 the Audit Commission was abolished and contracts were novated from the Audit Commission through
to Public Sector Audit Appointments Limited.
1
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Conclusion
We hereby confirm that in our professional judgement, as at the date of this document:


we comply with UK regulatory and professional requirements, including the Ethical Standards issued by the Auditing
Practices Board; and
our objectivity is not compromised.
We would ask the Audit Committee to consider the matters in this document and to confirm that they agree with our
conclusion on our independence and objectivity.
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Annual Governance Statement
Local Authorities are required to produce an Annual Governance Statement (AGS), which is consistent with guidance issued
by CIPFA / SOLACE: “Delivering Good Governance in Local Government”. The AGS was included in the Statement of
Accounts.
We reviewed the AGS to consider whether it complied with the CIPFA / SOLACE “Delivering Good Governance in Local
Government” framework and whether it is misleading or inconsistent with other information known to us from our audit
work. We found no areas of concern to report in this context.
Economy, efficiency and effectiveness
Our value for money code responsibility requires us to carry out sufficient and relevant work in order to conclude on whether
the Authority has put in place proper arrangements to secure economy, efficiency and effectiveness in the use of resources.
Public Sector Audit Appointments Limited guidance includes two criteria:


The organisation has proper arrangements in place for securing financial resilience; and
The organisation has proper arrangements for challenging how it secures economy, efficiency and effectiveness.
We determine a local programme of audit work based on our audit risk assessment, informed by these criteria and our
statutory responsibilities.
Our work on the Value for Money conclusion remains in progress and we will update the Audit Committee verbally on the
conclusion of our work.
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Internal controls
Accounting systems and systems of internal control
Management are responsible for developing and implementing systems of internal financial control and to put in place proper
arrangements to monitor their adequacy and effectiveness in practice. As auditors, we review these arrangements for the
purposes of our audit of the Statement of Accounts and our review of the annual governance statement.
The significant matters that we wish to bring to your attention are set out below.
Reporting requirements
We have to report to you any deficiencies in internal control that we found during the audit which we believe should be
brought to your attention. No significant internal control deficiencies were identified. However, we are reporting other control
deficiencies below which we consider you should be aware of.
Summary of internal control deficiencies
Deficiency
Recommendation
Management’s response
The Authority does not hold a
full list of related parties, as
required by CIPFA.
- Declaration forms only require
Councillors to disclose interests in
other organisations which they or
their close family have where they
are aware that these have
transacted with the Authority.
However, CIPFA code of practice
states that related parties should
be declared regardless of whether
there have been any transactions.
- The Authority has been unable
to obtain declaration forms for
two Councillors who did not
return following the election.
Provide training to Councillors on what constitutes a
related party and the importance of completing
declaration forms in full.
TBC
The audit trail for the NNDR
appeals provision was
insufficient.
The Authority should maintain full audit trails supporting
all key figures in the accounts.
Revise the declaration form to require the disclosure of all
organisations with which the councillor has involvement,
and not just those where the councillor is aware there
have been transactions with the Authority in the financial
year.
Revise the declaration form to include the interests of
close family members.
Obtain declaration forms from councillors on a regular
basis throughout the year.
TBC
The NNDR provision was
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calculated using data obtained
from the Valuation Office Agency
website. However, the data used
could not be made available to
PwC, and neither could the
methods used to calculate the
provision from the data.
Assets revaluations are
virtually a year out of date.
Assets are revalued as at the start
(rather than the end) of the
financial year (i.e. as at 1 April
20xx-1 rather than as at 31 March
20xx).
It is recommended that assets are revalued as at the end
of the financial year to enable an accurate reflection of the
valuation to be held on the Balance Sheet date. This has
been raised as an uncorrected misstatement in Appendix
1.
TBC
Training on the importance of cut off would help address
some of the errors made by staff.
TBC
Where there is significant
movement in property values in
the financial year, this could have
a significant impact on the
accounts.
Consistent issues have been
noted in relation to cut off.
A misstatement of two invoices
totalling £705k was noted in
relation to accounts payable cut
off, identified through our testing.
An exception of £5k was also
noted in relation to accounts
receivable cut off, and a further
exception of £175 was noted in
relation to revenue cut off. Similar
cut off issues were also identified
in the prior year, with a corrected
misstatement of £194k. Cut off is
a consistent problem area for the
Authority which should be
addressed.
Increase scrutiny from management of transactions input
around year end, for instance by spot-checking.
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Risk of fraud
International Standards on Auditing (UK&I) state that we, as auditors, are responsible for obtaining reasonable assurance that
the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. The
respective responsibilities of auditors, management and those charged with governance are summarised below:
Auditors’ responsibility
Our objectives are:



to identify and assess the risks of material misstatement of the financial statements due to fraud;
to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud,
through designing and implementing appropriate responses; and
to respond appropriately to fraud or suspected fraud identified during the audit.
Management’s responsibility
Management’s responsibilities in relation to fraud are:



to design and implement programmes and controls to prevent, deter and detect fraud;
to ensure that the entity’s culture and environment promote ethical behaviour; and
to perform a risk assessment that specifically includes the risk of fraud addressing incentives and pressures,
opportunities, and attitudes and rationalisation.
Responsibility of the Audit Committee
Your responsibility as part of your governance role is:


to evaluate management’s identification of fraud risk, implementation of anti-fraud measures and creation of
appropriate “tone at the top”; and
to investigate any alleged or suspected instances of fraud brought to your attention.
Your views on fraud
In our audit plan presented to the Audit Committee in March 2015 we enquired:



Whether you have knowledge of fraud, either actual, suspected or alleged, including those involving management?
What fraud detection or prevention measures (e.g. whistle-blower lines) are in place in the entity?
What role you have in relation to fraud?
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
What protocols / procedures have been established between those charged with governance and management to keep
you informed of instances of fraud, either actual, suspected or alleged?
In presenting this report to you we ask for your confirmation that there have been no changes to your view of fraud risk and
that no additional matters have arisen that should be brought to our attention. A specific confirmation from management in
relation to fraud is included in the letter of representation.
Conditions under which fraud may occur
Management or other employees have an incentive
or are under pressure
Incentive / pressure
Why
commit
fraud?
Opportunity
Rationalisation/attitude
Circumstances exist that provide opportunity –
ineffective or absent control, or management
ability to override controls
Culture or environment enables management to
rationalise committing fraud – attitude or values
of those involved, or pressure that enables them
to rationalise committing a dishonest act
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Fees update
Fees update for 2014/15
We reported our fee proposals in our plan.
Our fees charged were therefore:
2014/15
forecast
outturn
2014/15
fee proposal
Statement of Accounts (including
whole of government accounts and
value for money conclusion)
*
72,150
Grants and Certification Fee
*
35,480
TOTAL
*
107,630
* A significant portion of our work remains outstanding at the time of writing this report. We will be able to verbally update
the Audit Committee on the progress of our work and any impact this has on the forecast outturn.
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Appendices
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Appendix 1: Summary of uncorrected
misstatements
We found the following misstatements during the audit that have not been adjusted by management. You are requested to
consider these formally and determine whether you would wish the accounts to be amended. If the misstatements are not
adjusted we will need a written representation from you explaining your reasons for not making the adjustments. The SUM
level is £50,000.
An adjustment below is proposed to increase the value of the public conveniences. This is because the Authority have revalued
their assets as at 1 April 2014, using the BCIS (Building Cost Information Service) average value per square metre for financial
year end 2014. However, the values of properties have moved between this date and the financial year end. The proposed
adjustment increases the values of the public conveniences to bring them in line with the BCIS average per square metre as at
the financial year end, 31 March 2015.
No
Description of misstatement
(factual, judgemental, projected)
Income statement
Dr
1
Dr property, plant and equipment
Cr revaluation reserve
Cr
F
Balance sheet
Dr
Cr
91,769
91,769
Being an adjustment to increase the value of the public conveniences.
Total uncorrected misstatements
0
0
91,769
91,769
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Appendix 2: Summary of corrected
misstatements
We are required to report to you the following misstatements
identified during the audit that have been adjusted by
management. The sum de minimis level is £50,000.
No
Description of misstatement
(factual, judgemental, projected)
Income statement
Dr
1
Dr operating expenses
F
Cr
Balance sheet
Dr
705,837
Cr accounts payable
Being an adjustment to include expenses relating to 2014/15 in the
financial year 2014/15. These expenses related to coastal defences at
Cromer.
Total uncorrected misstatements
Cr
705,837
705,837
0
0
705,837
Disclosure
The following disclosures were updated by management as a result of the audit:
-
Leases Note: the balance for “operating leases later than five years” has been altered from £474k to £301k. The
difference of £172k was due to an error made when copying the value from the working papers to the draft accounts.
-
Related Parties Note: the note initially stated that "during 2014/15, works and services to the value of £382,748 were
commissioned from companies in which three members had an interest. Contracts were entered into in full
compliance with the Authority's standing orders. In addition, the Authority paid grants totalling £21,405 to
voluntary organisations in which two members had declared an interest." Following audit work which identified
additional related parties, this has been updated to say £407,681 and 17 members for works and services, and £52,905
and eight members for grants.
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Appendix 3: Letter of representation
Savannah House
3 Ocean Way
Ocean Village
Southampton
SO14 3TJ
Dear Sirs
Representation letter – audit of North Norfolk District Council’s (the Authority) Statement of Accounts for
the year ended 31 March 2015
Your audit is conducted for the purpose of expressing an opinion as to whether the Statement of Accounts of the Authority
give a true and fair view of the affairs of the Authority as at 31 March 2015 and of its surplus and cash flows for the year then
ended and have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority
Accounting in the United Kingdom 2014/15 supported by the Service Reporting Code of Practice 2014/15.
I acknowledge my responsibilities as Chief Financial Officer for preparing the Statement of Accounts as set out in the
Statement of Responsibilities for the Statement of Accounts. I also acknowledge my responsibility for the administration of
the financial affairs of the authority and that I am responsible for making accurate representations to you.
I confirm that the following representations are made on the basis of enquiries of other chief officers and members of the
Authority with relevant knowledge and experience and, where appropriate, of inspection of supporting documentation
sufficient to satisfy myself that I can properly make each of the following representations to you.
I confirm, to the best of my knowledge and belief, and having made the appropriate enquiries, the following representations:
Statement of Accounts

I have fulfilled my responsibilities for the preparation of the Statement of Accounts in accordance with the
CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2013/14 supported by the
Service Reporting Code of Practice 2014/15; in particular the Statement of Accounts give a true and fair view in
accordance therewith.

All transactions have been recorded in the accounting records and are reflected in the Statement of Accounts.
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
Significant assumptions used by the Authority in making accounting estimates, including those surrounding
measurement at fair value, are reasonable.

All events subsequent to the date of the Statement of Accounts for which the CIPFA/LASAAC Code of Practice on
Local Authority Accounting in the United Kingdom 2014/15 requires adjustment or disclosure have been adjusted or
disclosed.

The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to the Statement of
Accounts as a whole. A list of the uncorrected misstatements, grouped by category, is included in Schedule 1, attached
to this letter.
Information Provided

I have taken all the steps that I ought to have taken in order to make myself aware of any relevant audit information
and to establish that you, the authority's auditors, are aware of that information.

I have provided you with:
 access to all information of which I am aware that is relevant to the preparation of the Statement of Accounts such
as records, documentation and other matters, including minutes of the Authority and its committees, and relevant
management meetings;
 additional information that you have requested from us for the purpose of the audit; and
 unrestricted access to persons within the Authority from whom you determined it necessary to obtain audit
evidence.

So far as I am aware, there is no relevant audit information of which you are unaware.
Accounting policies
I confirm that I have reviewed the Authority’s accounting policies and estimation techniques and, having regard to the
possible alternative policies and techniques, the accounting policies and estimation techniques selected for use in the
preparation of Statement of Accounts are appropriate to give a true and fair view for the authority's particular circumstances.
Fraud and non-compliance with laws and regulations
I acknowledge responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud.
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I have disclosed to you:


the results of our assessment of the risk that the Statement of Accounts may be materially misstated as a result of
fraud.
all information in relation to fraud or suspected fraud that we are aware of and that affects the Authority and involves:
– management;
– employees who have significant roles in internal control; or
– others where the fraud could have a material effect on the Statement of Accounts.

all information in relation to allegations of fraud, or suspected fraud, affecting the Authority’s Statement of Accounts
communicated by employees, former employees, analysts, regulators or others.

all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should
be considered when preparing the Statement of Accounts.
I am not aware of any instances of actual or potential breaches of or non-compliance with laws and regulations which provide
a legal framework within which the Authority conducts its business and which are central to the authority’s ability to conduct
its business or that could have a material effect on the Statement of Accounts.
I am not aware of any irregularities, or allegations of irregularities including fraud, involving members, management or
employees who have a significant role in the accounting and internal control systems, or that could have a material effect on
the Statement of Accounts.
Related party transactions
I confirm that the attached Schedule 2 to this letter is a complete list of the Authority’s related parties. All transfer of
resources, services or obligations between the Authority and these parties have been disclosed to you, regardless of whether a
price is charged. We are unaware of any other related parties, or transactions between disclosed related parties.
Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the
requirements of Section 3.9 of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom
2014/15.
We confirm that we have identified to you all senior officers, as defined by the Accounts and Audit Regulations 2011, and
included their remuneration in the disclosures of senior officer remuneration.
Employee Benefits
I confirm that we have made you aware of all employee benefit schemes in which employees of the authority participate.
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Contractual arrangements/agreements
All contractual arrangements (including side-letters to agreements) entered into by the Authority have been properly reflected
in the accounting records or, where material (or potentially material) to the statement of accounts, have been disclosed to you.
Litigation and claims
I have disclosed to you all known actual or possible litigation and claims whose effects should be considered when preparing
the statement of accounts and such matters have been appropriately accounted for and disclosed in accordance with the
CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2014/15.
Taxation
I have complied with UK taxation requirements and have brought to account all liabilities for taxation due to the relevant tax
authorities whether in respect of any direct tax or any indirect taxes. I am not aware of any non-compliance that would give
rise to additional liabilities by way of penalty or interest and I have made full disclosure regarding any Revenue Authority
queries or investigations that we are aware of or that are ongoing.
In particular:



In connection with any tax accounting requirements, I am satisfied that our systems are capable of identifying all
material tax liabilities and transactions subject to tax and have maintained all documents and records required to be
kept by the relevant tax authorities in accordance with UK law or in accordance with any agreement reached with such
authorities.
I have submitted all returns and made all payments that were required to be made (within the relevant time limits) to
the relevant tax authorities including any return requiring us to disclose any tax planning transactions that have been
undertaken for the authority’s benefit or any other party’s benefit.
I am not aware of any taxation, penalties or interest that are yet to be assessed relating to either the authority or any
associated company for whose taxation liabilities the authority may be responsible.
Pension fund assets and liabilities
All known assets and liabilities including contingent liabilities, as at the 31 March 2015, have been taken into account or
referred to in the Statement of Accounts.
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Details of all financial instruments, including derivatives, entered into during the year have been made available to you.
Any such instruments open at the 31 March 2015 have been properly valued and that valuation incorporated into the
Statement of Accounts.
The pension fund has satisfactory title to all assets and there are no liens or encumbrances on the pension fund's assets.
The value at which assets and liabilities are recorded in the net assets statement is, in the opinion of the authority, the
market value. We are responsible for the reasonableness of any significant assumptions underlying the valuation,
including consideration of whether they appropriately reflect our intent and ability to carry out specific courses of action
on behalf of the pension fund. Any significant changes in those values since the date of the Statement of Accounts have
been disclosed to you.
Pension fund registered status
I confirm that the Local Government Pension Scheme is a Registered Pension Scheme. We are not aware of any reason
why the tax status of the scheme should change.
Bank accounts
I confirm that I have disclosed all bank accounts to you.
Subsequent events
There have been no circumstances or events subsequent to the period end which require adjustment of or disclosure in the
statement of accounts or in the notes thereto.
Using the work of experts
I agree with the findings of our Internal Valuer, expert in evaluating the value of our non-current assets and have
adequately considered the competence and capabilities of the experts in determining the amounts and disclosures used in
the preparation of the Statement of Accounts and underlying accounting records. The Authority did not give or cause any
instructions to be given to experts with respect to the values or amounts derived in an attempt to bias their work, and I am
not otherwise aware of any matters that have had an impact on the objectivity of the experts.
Assets and liabilities

The Authority has no plans or intentions that may materially alter the carrying value and where relevant the fair
value measurements or classification of assets and liabilities reflected in the Statement of Accounts.
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









In my opinion, on realisation in the ordinary course of the business the current assets in the balance sheet are
expected to produce no less than the net book amounts at which they are stated.
The Authority has no plans or intentions that will result in any excess or obsolete inventory, and no inventory is
stated at an amount in excess of net realisable value.
The Authority has satisfactory title to all assets and there are no liens or encumbrances on the Authority's assets,
except for those that are disclosed in the Statement of Accounts.
I confirm that we have carried out impairment reviews appropriately, including an assessment of when such
reviews are required, where they are not mandatory. I confirm that we have used the appropriate assumptions
with those reviews.
Details of all financial instruments, including derivatives, entered into during the year have been made available
to you. Any such instruments open at the year-end have been properly valued and that valuation incorporated
into the statement of accounts. When appropriate, open positions in off-balance sheet financial instruments have
also been properly disclosed in the Statement of Accounts.
Regarding the revaluation of land and buildings, an accounting estimate that was recognised in the Statement of
Accounts:
We used appropriate measurement processes, including related assumptions and models, in determining the
accounting estimate in the context of the CIPFA Code of Practice on Local Authority Accounting 2014/15.
Measurement processes were consistently applied from year to year.
The assumptions appropriately reflect our intent and ability to carry out specific courses of action on behalf of the
District Council, where relevant to the accounting estimates and disclosures.
Disclosures related to accounting estimates are complete and appropriate under the CIPFA Code of Practice on
Local Authority Accounting 2014/15.
No subsequent event requires adjustment to the accounting estimates and disclosures included in the financial
statements.
Financial Instruments



All embedded derivatives have been identified and appropriately accounted for under the CIPFA/LASAAC Code of
Practice on Local Authority Accounting in the United Kingdom 2014/15.
Where hedging relationships have been designated as either firm commitments or highly probable forecast
transactions, I confirm that our plans and intentions are such that these relationships qualify as genuine hedge
arrangements.
Where fair values have been assigned to financial instruments, I confirm that the valuation techniques, the inputs
to those techniques and assumptions that have been made are appropriate and reflect market conditions at the
balance sheet date, and are in line with the business environment in which we operate.
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Retirement benefits



All retirement benefits that the Authority is committed to providing, including any arrangements that are statutory,
contractual or implicit in the Authority’s actions, wherever they arise, whether funded or unfunded, approved or
unapproved, have been identified and properly accounted for and/or disclosed.
All settlements and curtailments in respect of retirement benefit schemes have been identified and properly
accounted for.
The following actuarial assumptions underlying the valuation of retirement benefit scheme liabilities are consistent
with my knowledge of the business and in my view would lead to the best estimate of the future cash flows that will
arise under the scheme liabilities:
Pension Increase Rate
2.4%
Salary Increase Rate
3.3%
Discount Rate
3.2%
Average future life expectancies at age 65
Men
Women
Current pensioners
22.1
24.3
Future pensioners
24.5
26.9
Items specific to Local Government




I confirm that the Authority does not have plans to implement any redundancy/early retirement programmes for
which we should have made provision in the Statement of Accounts.
I confirm that the Authority has determined a prudent amount of revenue provision for the year under the Prudential
Framework.
I confirm that the Authority has determined a proper application of the statutory provisions for the neutralisation of
the impact of Single Status provisions on the General Fund balance.
I confirm that the Authority has determined a proper application of the statutory provisions for the treatment of
leases that have changed status on transition to IFRS.
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
I confirm that the Authority has determined a proper application of the statutory provisions for the neutralisation of
the impact of accumulating compensated absences on the General Fund balance.
........................................
Chief Financial Officer
For and on behalf of North Norfolk District Council
Date ……………………
Schedule 1 – Unadjusted misstatements
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To be updated
Schedule 2 – List of Related Parties
To be updated
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In the event that, pursuant to a request which North Norfolk District Council has received under the Freedom of Information Act 2000, it is required to disclose any information contained in this
report, it will notify PwC promptly and consult with PwC prior to disclosing such report. North Norfolk District Council agrees to pay due regard to any representations which PwC may make in
connection with such disclosure and North Norfolk District Council shall apply any relevant exemptions which may exist under the Act to such report. If, following consultation with PwC, North
Norfolk District Council discloses this report or any part thereof, it shall ensure that any disclaimer which PwC has included or may subsequently wish to include in the information is reproduced
in full in any copies disclosed.
This document has been prepared only for North Norfolk District Council and solely for the purpose and on the terms agreed through our contract with Public Sector Audit Appointments Limited.
We accept no liability (including for negligence) to anyone else in connection with this document, and it may not be provided to anyone else.
© 2015 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate
legal entity. Please see www.pwc.com/structure for further details.
130610-142627-JA-UK
177
Audit Committee
15 September 2015
Agenda Item No_____________
Progress Report on Internal Audit Activity: 1 April to 3 September 2015
Summary:
This report examines the progress made between 1 April and 3
September 2015 in relation to delivery of the Annual Internal
Audit Plan for 2015/16.
Conclusions:
Progress in relation to delivery of the Internal Audit Plan is line
with expectations with the audit plan now being 41% complete;
and positive assurances have been awarded in the three audit
reviews finalised in this period.
Recommendations:
It is recommended that the Committee notes the outcome of the
audits completed between 1 April and 3 September 2015 where
assurance levels have been given.
Cabinet member(s):
Ward(s) affected:
All
All
Emma Hodds, Internal Audit Consortium Manager
01508 533791, ehodds@s-norfolk.gov.uk
Contact Officer, telephone
number, and e-mail:
1.
Background
1.1.
This report reflects progress made with regard to assignments featuring in the
approved Annual Internal Audit Plan for 2015/16 which was endorsed by the
Audit Committee on 17 March 2015.
1.2.
Members who have previously served on the Audit Committee will note from the
attached report that the terminology for the assurance level and recommendation
priority has changed. TIAA Ltd (the new contractor) use different terminology for
assurance ratings and recommendation priority levels, it was decided to move
the Consortium onto these assurance levels to enable greater comparison across
TIAA customers and enable us to benefit from areas of good practice. For the
Committee’s information a comparison between these is as follows, with the new
definitions contained within the attached report:
178
Audit Committee
15 September 2015
Assurance Levels
Previous Contract
Current Contract
Good
Substantial Assurance
Adequate
Reasonable Assurance
Limited
Limited Assurance
Unsatisfactory
No Assurance
Recommendation Priority
Previous Contract
Current Contract
High
Priority One – Urgent
Medium
Priority Two – Important
Low
Priority Three – Needs Attention
2.
Overall Position
2.1.
The overall position in relation to the progress made against the Internal Audit
Plan is within the attached report.
3.
Conclusion
3.1
Progress in relation to delivery of the Internal Audit Plan is line with expectations
and positive assurances have been awarded in the three audit reviews finalised
in this period.
4.
Recommendation
4.1
It is recommended that the Committee notes the outcome of the audits
completed between 1 April and 3 September 2015 where assurance levels have
been given.
Appendices attached to this report:
Progress Report on Internal Audit Activity
179
Eastern Internal Audit Services
North Norfolk District Council
Progress Report on Internal Audit Activity
Period Covered: 1 April 2015 to 3 September 2015
Responsible Officer: Emma Hodds – Internal Audit Consortium Manager (IACM)
CONTENTS
1. INTRODUCTION ............................................................................................................. 2
2. SIGNIFICANT CHANGES TO THE APPROVED INTERNAL AUDIT PLAN ................... 2
3. PROGRESS MADE IN DELIVERING THE AGREED AUDIT WORK ............................. 3
4. THE OUTCOMES ARISING FROM OUR WORK ........................................................... 3
5. PERFORMANCE MEASURES ....................................................................................... 5
APPENDIX 1 – PROGRESS IN COMPLETING THE AGREED AUDIT WORK .................. 6
APPENDIX 2 – AUDIT REPORT EXECUTIVE SUMMARIES ............................................. 8
APPENDIX 3 – PERFORMANCE MEASURES ................................................................. 16
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1.
INTRODUCTION
1.1
This report is issued to assist the Authority in discharging its responsibilities in relation to the
internal audit activity.
1.2
The Public Sector Internal Audit Standards also require the Chief Audit Executive (known in
this context as the Internal Audit Consortium Manager) to report to the Audit Committee on
the performance of internal audit relative to its plan, including any significant risk exposures
and control issues. The frequency of reporting and the specific content are for the Authority
to determine.
1.3
To comply with the above this report includes:



Any significant changes to the approved Audit Plan;
Progress made in delivering the agreed audits for the year;
Any significant outcomes arising from those audits; and
Performance Indicator outcomes to date.
2.
SIGNIFICANT CHANGES TO THE APPROVED INTERNAL AUDIT PLAN
2.1
At the meeting on 15 March 2015, the Annual Internal Audit Plan for the year was approved,
identifying the specific audits to be delivered. Since then, the IT audits have been revisited,
as planned, and agreed with management. The IT Audits are as follows, with a brief
description of coverage confirmed.
Audit description
Coverage
Disaster Recovery
Originally planned as a Business Continuity audit,
but Disaster Recovery is considered to be a
greater priority. To include physical access at the
Fakenham Disaster Recovery site as it is a
shared facility.
Software Licensing
Last audited in 2010/11 with an Adequate
assurance. Given the five year timespan since the
last review, it is considered prudent to review
software licensing processes in 2015/16.
Register of Electors
The eXpress application has not been audited at
North Norfolk District Council. Hence, it has been
included within the 2015/16 plan.
Cash Receipting Application
This application has been highlighted for a review
due to the importance of the system and the
associated risks.
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3.
PROGRESS MADE IN DELIVERING THE AGREED AUDIT WORK
3.1
The current position in completing audits to date within the financial year is shown in
Appendix 1 and progress to date is in line with expectations, with quarter one work
complete and all quarter two work planned, and underway.
3.2
In summary 70.5 days of programmed work has been completed, equating to 41% of the
(revised) Audit Plan for 2015/16.
4.
THE OUTCOMES ARISING FROM OUR WORK
4.1
On completion of each individual audit an assurance level is awarded using the definitions
shown in the table below.
Substantial
Assurance
Based upon the issues identified there is a robust series of suitably
designed internal controls in place upon which the organisation relies to
manage the risks to the continuous and effective achievement of the
objectives of the process, and which at the time of our review were being
consistently applied.
Reasonable
Assurance
Based upon the issues identified there is a series of internal controls in
place, however these could be strengthened to facilitate the organisation’s
management of risks to the continuous and effective achievement of the
objectives of the process. Improvements are required to enhance the
controls to mitigate these risks.
Limited
Assurance
Based upon the issues identified the controls in place are insufficient to
ensure that the organisation can rely upon them to manage the risks to the
continuous and effective achievement of the objectives of the process.
Significant improvements are required to improve the adequacy and
effectiveness of the controls to mitigate these risks.
No Assurance Based upon the issues identified there is a fundamental breakdown or
absence of core internal controls such that the organisation cannot rely
upon them to manage risk to the continuous and effective achievement of
the objectives of the process. Immediate action is required to improve the
controls required to mitigate these risks.
4.2
Recommendations made on completion of audit work are prioritised using the definitions
shown in the table below.
Urgent
Fundamental control issue on which action to implement should be taken within
1 month.
Important Control issue on which action to implement should be taken within 3 months.
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182
Needs
Attention
Control issue on which action to implement should be taken within 6 months.
4.3
In addition, on completion of audit work “Operational Effectiveness Matters” are proposed,
these set out matters identified during the assignment where there may be opportunities for
service enhancements to be made to increase both the operational efficiency and enhance
the delivery of value for money services. These are for management to consider and are not
part of the follow up process.
4.4
During the period covered by the report Internal Audit Services have issued three final
reports and the Executive Summary of these reports are attached at Appendix 2, full copies
of these reports can be requested by Members from the Internal Audit Consortium Manager.
4.5
As a result of these audits 16 recommendations have been raised; no priority one (urgent)
recommendations, 10 priority two (important) recommendations and six priority three (needs
attention) recommendations.
Of these 16, 15 have been agreed by management and one has been disagreed, and is
explored further in the following paragraph (4.6), Leisure, Arts & Pier Pavilion audit. In
addition three Operational Effectiveness Matters have been proposed to management for
consideration.
4.6
In summary the final reports issued conclude the following:
Leisure, Arts and Pier Pavilion
This scope of this was to review the two management contracts that the Council has for its
Leisure provision, in particular: Places for People and Openwide.
On conclusion of the audit a Reasonable assurance was awarded, with five priority two
(important) recommendations and three priority three (needs attention) recommendations
were raised on conclusion of this review.
Four of the important recommendations were agreed with management and relate to
improving the governance for the monthly meetings in relation to performance by the
contractor, improving the data provided for the performance indicators, for the Council to add
a review of poll management & gym safety to their health and safety checks and to carry out
compliance checks on the contractor in relation to DBS checks.
There was one recommendation disagreed by management, the audit found that the current
contract refers to the wrong management fee for the services provided and it was
recommended that an amendment be raised to ensure the correct fee was reflected.
Management response was: Not agreed. The figures for this were double checked with legal
at the time and they were comfortable with the approach taken, this approach was also
agreed by Places for People. The reduced figure is based on the original figure as provided
within the contract. We are not at this point proposing to adjust this.
Waste Management
The audit covered the contract monitoring arrangements operated by the Council for
monitoring the waste management contract with Kier, in particular: Contract and Payments;
Contract and Service Monitoring; and Kier Systems and Controls.
On conclusion of the audit a Reasonable assurance was awarded, with two priority two
(important) recommendations and one priority three (needs attention) recommendation
agreed with management.
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183
The two important recommendations relate to; reviewing the client / contractor liaison
meetings to provide clarity over outcomes, frequency of meetings and responsibilities; and to
ensure that the generic risk register is reviewed and reflects the actual contract in place, and
that this is then reviewed as part of the contract monitoring arrangements.
Software Licensing
This IT audit covered; Software Policies; Software Inventory; Security of Software media and
licences (where appropriate); Software Copyright; and Software Licencing Procurement.
A Reasonable assurance opinion was awarded on conclusion of the audit with three priority
two (urgent) recommendations and two priority three (needs attention) recommendations
agreed with management.
The urgent recommendations relate to; updating the service desk software inventory and
ensuring that a regular and documented software audit is carried out.
4.7
It is also pleasing to note that all audits concluded in a positive opinion being awarded,
indicating a strong and stable control environment to date, with no issues that would need to
be considered at year end and included in the Annual Governance Statement.
5.
PERFORMANCE MEASURES
5.1
The new Internal Audit Services contract includes a suite of key performance measures
against which the new contractor will be reviewed on a quarterly basis. There are a total of
13 indicators, over 4 areas. From the first year of the contract records will be maintained for
all 13, however performance can only be recorded on 11 of these as base line data is
required for the final 2. The performance measures can be seen at Appendix 3.
5.2
There are individual requirements for performance in relation to each measure; however
performance will be assessed on an overall basis as follows (for the first year):



9-11 KPIs have met target = Green Status.
5-8 KPIs have met target = Amber Status.
4 or below have met target = Red Status.
Where performance is amber or red a Performance Improvement Plan will be developed by
the contractor and agreed with the Internal Audit Consortium Manager to ensure that
appropriate action is taken.
5.3
The first quarters work has been completed and a report on the performance measures
provided to the Internal Audit Consortium Manager, performance is currently at green status
with targets having been satisfactorily met for this quarter.
5.4
In addition to these quarterly reports from the Contractors Audit Director, ongoing weekly
updates are provided to ensure that delivery of the audit plan for the current financial year is
on track. A review of the most recent update indicates that the Internal Audit plan of work at
North Norfolk remains on track, and there are no issues that need to be addressed.
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APPENDIX 1 – PROGRESS IN COMPLETING THE AGREED AUDIT WORK
Audit Area
Audit
Ref
No. of
days
Revised
Days Status
Days Delivere
d
Assurance
Level
Recommendations
Urgent Importan Needs
t
Attention
Date to
Committee
OEM
Quarter 1
Leisure, Arts and Pier Pavilion
NN1601
10
10
10
Final Report issued 17 July
2015
Reasonable
0
5
3
1
15 September
2015
Waste Management
NN1602
17
17
17
Final Report issued 9 July
2015
Reasonable
0
2
1
1
15 September
2015
27
27
27
NN1603
8
8
7.5
NN1604
NN1605
10
10
10
10
5
1
NN1606
10
10
1
38
38
14.5
NN1607
NN1608
12
10
22
12
10
22
0
0
0
NN1609
NN1610
NN1611
15
16
10
41
15
16
10
41
0
0
0
0
TOTAL
Quarter 2
Corporate Governance and Risk
Management
Housing Strategy & Affordable Housing
Homelessness and Housing Options
Parks and Open Spaces & Woodland
Management
TOTAL
Quarter 3
Remittances
Car Parking
TOTAL
Quarter 4
Key Controls and Assurance
Accountancy Services
Accounts Receivables
TOTAL
Draft Report imminent to
Management
Audit underway
Audit Planning Memorandum
issued and audit to start 14
September 2015
Audit Planning Memorandum
issued and audit to start 14
September 2015
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185
IT Audits
Disaster Recovery
Software Licensing
NN1612
NN1613
0
0
8
6
0
6
Planned for quarter three
Final Report issued 7 August Reasonable
2015
Register of Electors
NN1614
0
8
7
Cash Receipting Application
IT audits to be confirmed
TOTAL
Follow Up
Follow Up
TOTAL
NN1615
NN TBC
0
30
30
8
0
30
0
0
13
Draft Report imminent to
Management
Planned for quarter three
NN NA
12
12
12
12
3
16
170
170
70.5
TOTAL
Percentage of plan completed
41%
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186
0
3
2
1
0
10
6
3
15 September
2015
APPENDIX 2 – AUDIT REPORT EXECUTIVE SUMMARIES
Assurance Review of the Leisure and Pier Pavilion
Executive Summary
OVERALL ASSURANCE ASSESSMENT
SCOPE
The audit covered the contract monitoring arrangements operated by the Council for
monitoring the two management contracts, in particular:
•
Places for People for managing the Splash Leisure and Fitness Centre, Victory
Swim and Fitness Centre and Fakenham Sport and Fitness Centre; and
•
Openwide, for managing the Cromer Pier Pavilion, which won the Pier of the Year
award for 2015 by the National Piers Society.
ACTION POINTS
Urgent
Important
Needs Attention
Operational
0
5
3
1
187
RATIONALE
 The systems and processes of internal control are, overall, deemed ‘Reasonable’ in managing the risks associated with Leisure and Pier
Pavilion. The assurance opinion has been derived as a result of five ‘important’ and three ‘needs attention’ recommendations being raised
upon the conclusion of our work. In addition, one Operational Efficiency Matter has been proposed.
 The ‘important’ recommendations relate to the need for the current Places for People contract to reflect the correct management fee agreed
and charged per annum, to ensure that monthly monitoring meeting minutes for both contractors detail the results of all applicable
performance indicators, to ensure arrangements are undertaken between the Council and Openwide to resolve the data reporting issues and
enable the Council to verify data provided by Openwide. Furthermore, that inspections by the Council on the leisure centres managed by
Places for People are expanded to include checks on compliance for pool management and gym safety and to ensure that six monthly Data
Barring Service (DBS) compliance checks by the Council are undertaken by Places for People, on their leisure centre staff.
KEY FINDINGS
Positive Findings
 Contract extensions are approved in line with delegated authority levels; and
 Written procedures are contained within both contracts and on target ‘Scorecards’ explaining the key service aspects to be monitored.
Issues to be addressed
 The annual management fee for the Openwide contractor is incorrectly stated in the contract with no documentary evidence of the current fees
having been agreed by all parties;
 The monitoring meetings with both contractors do not assess all aspects of the contractor’s performance contained with the Scorecard;
 Performance information is insufficient in detail to enable data verification;
 Current health and safety inspections at site managed by Places for People do not include checking compliance for pool management and
gym safety; and
 The Council needs to monitor the contractor’s compliance with DBS checks as standard. Checks requested by Audit during the fieldwork did
not reveal any non-compliance; effectively, the Sports and Leisure Services Manager informed us that where records did not show a DBS
check having been undertaken, this was due to the personnel not requiring one.
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In addition, the audit has highlighted three areas where action is required by management to improve the control environment, in particular, that
the Council increases its monitoring of performance information provided by Places for People with more frequent ad hoc visits, to undertake
documented checks on invoices received for contractor management fee payments against formally agreed annual management fee and payment
schedules and to ensure that frequent and documented pre-emptive checks are undertaken by the Council on Openwide’s compliance with health
and safety regulations.
The audit also highlighted an operational efficiency matter for consideration. This relates to increase Quest threshold targets in relation to
measuring inspection outcomes.
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Assurance Review of the Waste Management
Executive Summary
OVERALL ASSURANCE ASSESSMENT
SCOPE
The audit covered the contract monitoring arrangements operated by
the Council for monitoring the waste management contract with Kier, in
particular:
• Contract and Payments;
• Contract and Service Monitoring; and
• Kier Systems and Controls.
ACTION POINTS
Urgent
Important
Needs Attention
Operational
0
2
1
1
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RATIONALE
 The systems and processes of internal control are, overall, deemed ‘Reasonable’ in managing the risks associated with Waste M anagement.
The assurance opinion has been derived as a result of one ‘important’ recommendation, two ‘needs attention’ recommendations and one
operational effectiveness matter being raised upon the conclusion of our work.
KEY FINDINGS
Positive Findings
 Written performance monitoring procedures are contained within an agreed waste management contract between the Council and Kier;
 Key Performance Indicators (KPIs) are recorded and agreed with Kier in line with the Council’s Corporate Plan and Environmental Services
Service Plan;
 The monitoring systems of the Council assess all aspects of the contractors performance;
 The Annual Services Improvement Plan, provisioned for within the waste management contract, has been replaced by the Cost Saving
Proposals for the 2014/15 and 2015/16 financial years.
 All payments and deductions due under the waste management contract are processed correctly; and
 The Council holds an accurate record of trade waste and assisted collection customers and Kier crews are promptly notified of all new and
cancelled customers
Issues to be addressed
 There is a lack of clarity and communication of governance arrangements in relation to the waste management contract, in particular over the
various levels of client / contractor liaison;
 A formal review of the contractor risk register has not taken place, as per the outstanding recommendation raised within the previous audit
undertaken on Waste Management (NN/14/04) in October 2013;
 The Council does not follow up or validate poor performance in relation to missed assisted collections.
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Assurance Review Software Licencing
Executive Summary
OVERALL ASSURANCE ASSESSMENT
SCOPE
The audit looked at the management of Software Licencing, in particular:

Software Policies;

Software Inventory;

Security of Software media and licences (where appropriate);

Software Copyright; and

Software Licencing Procurement.
ACTION POINTS
Urgent
Important
Needs Attention
Operational
0
3
2
1
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RATIONALE
 The systems and processes of internal control are, overall, deemed ‘Reasonable’ in managing the risks associated with Software Licencing.
The assurance opinion has been derived as a result of two ‘important’ recommendations and four ‘needs attention’ recommendations being
raised upon the conclusion of our work. In addition, one Operational Efficiency Matter has been proposed.
 The ‘Important’ recommendations relate to the need to ensure that the available software licence inventory contained within the Service Desk
application is updated to reflect all of the current licences available to the Council; ensure that regular reviews of the inventory are conducted;
and conduct regular software audits.
KEY FINDINGS
Positive Findings
Software Policies
 The Council has a central ICT Security Policy that includes relevant clauses that relate to Software Licencing requirements.
 The document is communicated to all staff primarily via the Intranet.
Security of Software Media and Licences (where appropriate)
 Software is downloaded and stored in appropriately secured network folders to help prevent unauthorised access to the installation files.
 Licences are not held in physical form, with the exception of Adobe licences, although relevant records are available on demand from vendor
website portals.
Software Copyright
 Council staff not in the IT department are prevented from downloading or installing software on Council machines.
Software Licence Procurement
 The ICT Policy mentioned above expressly forbids software procurement except via the IT department.
 The physical download and install restrictions mentioned above also help prevent unauthorised procurement.
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Issues to be addressed
Software Inventory
 The Service Desk includes a software inventory capability, although work to align it with actual licence availability is not yet complete.
 There are no processes to review the inventory periodically or to conduct regular software audits.
In addition, the audit has highlighted two areas whereby action is required by management to improve the control environment. They relate to the
need to review the ICT Security policy and have it formally approved by Senior Management; and communicate the approved document to all staff.
IT Management is aware of these and recommendations have been raised for completeness and to ensure that the control environment is
maintained.
The audit has also highlighted an operational efficiency matter - this needs to be considered as part of management review of procedures, rather
than on a one-by-one basis – and is for management to consider and address as appropriate. This relates to becoming a member of the Federation
Against Software Theft (FAST).
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APPENDIX 3 – PERFORMANCE MEASURES
Area / Indicator
Audit Committee / Senior Management
1. Audit Committee Satisfaction – measured
annually
2. Chief Finance Officer Satisfaction –
measured quarterly
Internal Audit Process
3. Each quarters audits completed to draft
report within 10 working days of the end
of the quarter
4. Quarterly assurance reports to the
Contract Manager within 15 working days
of the end of each quarter
5. An audit file supporting each review and
showing clear evidence of quality control
review shall be completed prior to the
issue of the draft report ( a sample of
these will be subject to quality review by
the Contract Manager)
6. Compliance with Public Sector Internal
Audit Standards
7. Respond to the Contract Manager within
3 working days where unsatisfactory
feedback has been received.
Clients
8. Average feedback score received from
key clients (auditees)
9. Percentage of recommendations
accepted by management
Innovations and Capabilities
10. Percentage of qualified (including
experienced) staff working on the
contract each quarter
11. Number of training hours per member of
staff completed per quarter
12. Number of high and medium priority
recommendations made per quarter
13. Number of audits which are considered
to add value
Target
Adequate
Good
100%
100%
100%
Full
100%
Adequate
90%
60%
1 day
To decrease over the life of the contract (from
year 2)
To increase over the life of the contact (from
year 2)
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