PART 2
(CLOSED TO THE
PUBLIC)
ITEM NO.
REPORT OF THE CITY TREASURER
TO THE LEAD AND EXECUTIVE SUPPORT MEMBERS
FOR CUSTOMER AND SUPPORT SERVICES
ON 6TH AUGUST, 2007
Subject : FINANCE DIVISION – PERFORMANCE REPORT FOR Q/E 3OTH JUNE 2007
RECOMMENDATION :
That the report be noted.
EXECUTIVE SUMMARY :
The report identifies performance against service plan targets and other performance issues for the
June 2007 quarter.
BACKGROUND DOCUMENTS : Not for publication by virtue of paragraph 1 (staffing matters)
______________________________________________________________________________
ASSESSMENT OF RISK : None
______________________________________________________________________________
LEGAL ADVICE OBTAINED :
Not applicable
______________________________________________________________________________
FINANCIAL ADVICE OBTAINED :
Not applicable
______________________________________________________________________________
CONTACT OFFICER :
John Spink
Tel No : 793 3230
E-mail : john.spink@salford.gov.uk
WARD(S) TO WHICH REPORT RELATES :
KEY COUNCIL POLICIES :
None
None
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KEY ACHIEVEMENTS FOR THE QUARTER
Awards and Recognition

IIP accreditation – May
Annual CIPFA Benchmarking 2007

Creditors :
o Cost per invoice at £1.69 is 21% below average
o 99% paid on time against average of 91%
o Top score for best practice 94% against average of 85%

Debtors :
o Cost per bill £5.69 is 38% below average
o % debts cleared is 99.7% against average of 91%
o Best practice 88% compared to average of 72%
Accountancy

Completion of the Statement of Accounts for 2006/07 and approval by Accounts Committee

Negotiation with Inland Revenue on the composite tax rate for equal pay settlements –
agreed at 12%, which is significantly less than some other council’s (lowest in GM) and
saving £487,000 against the anticipated rate of 22%

Working with the Greater Manchester Community Foundation on the transfer of dormant
trust funds with the Salford Community Fund being launched in July 2007

Agreeing SLAs with housing organisations – Salix, HCP, NPHL
SAP Team

Development of new financial systems in SAP for Salix Homes, Housing Connections
Partnership, Urban Regeneration Company undertaken with existing SAP team resources
(when NPHL was created consultancy services were engaged at a cost of around £80,000)
which demonstrates the development of in-house skills and capacity
Payroll

Supporting equal pay events in cooperation with HR
Audit and Risk Management Unit

Annual savings of over £350k made on property insurance premium
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Performance

Improved sickness absence rates in Finance – reduced to 2.3% in the six months to June
2007
KEY OBJECTIVES FOR 2007/08
Divisional
BSc - Learning and Growth
 To achieve IIP accreditation – achieved May
 To continue to provide high quality/low cost services
 To reduce sickness absence to 3% or less – currently 2.4%
BSc - Customer
 To maintain 3* rating for the CPA use of resources assessment
BSc – Finance
 To review, develop and deliver the medium-term financial strategy
BSc – Internal
 To maintain and develop services that customers want – Salix/NPHL/HCP SLAs agreed
Debtors

To reduce debt over 60 days old by a further 10% by 31/3/08 (KPI)
Creditors

To pay at least 98% of undisputed invoices within 30 days (BVPI 8)
Payroll

To continue to process payroll promptly and accurately, introducing further automation of input
processes
Accountancy


To continue to maintain efficient and effective financial advice and stewardship
To close the 2006/07 final accounts by 30th June – achieved
E-Trading

To continue to introduce and develop electronic solutions to financial processing transactions
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SAP Team

To implement the development plan
Internal Audit

To deliver the audit plan, develop further the risk management process and identify further
energy savings
QUARTERLY REVIEW OF SERVICE PLAN TARGETS AND ACHIEVEMENTS
A graphical summary of the key operational and balanced scorecard targets is shown in Appendix
2 attached. Progress is as follows :Key Operational Targets
Service Area
Accountancy
Accountancy
Accountancy
Accountancy
Debtors
Creditors
Payroll
E-Trading
Finance Division
Position at 30th June
Achieved
Achieved
Target
Closure of accounts by 30/6/07
Complete
monthly
bank
and
cash
reconciliations within 3 weeks of month-end
Submit monthly VAT returns within 2 weeks
Submit grant claims by the due date
Reduce debt over 60 days by 10%
Pay 98% of invoices within 30 days
Submit statutory returns/documents on time
Reduce no of paper invoices by 24,000
Savings of £616k
Achieved
Not yet applicable
Behind target – see report
On target
Achieved
On target
3 proposals £82k behind target
Balanced Scorecard
Objective Category
Internal
Finance
Customer
Learning & Growth
Cabinet Workplan Priority
Total
Targets
24
21
11
15
1
72
Completed
1
4
5
On
Schedule
23
21
11
11
1
67
Behind
Schedule
Cabinet Workplan Priorities
The City Treasurer, Assistant Directors and/or outstationed Principal Group Accountants are
closely involved with supporting members and directors in progressing the following Cabinet
priorities :-
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Workplan
Ref
1
2
4
6
9
16
17
18
26
35
40
43
45
Priority
Maximising investment through regeneration schemes
Working with partners - Local area agreement
Delivery of CCTV strategy
Continued development of Media City and support to BBC
Establish new housing organisations
Building Schools for the Future programme
Secondary schools PFI
Implement Primary Schools capital programme
Waste recycling
I I P accreditation
Think Efficiency programme
Medium-term financial strategy
Asset management plan
OTHER DEVELOPMENT AND PERFORMANCE ISSUES DURING THE QUARTER
SENIOR MANAGEMENT
2008/09 Revenue Budget
Production of initial medium-term financial forecast for 2008/09 to 2010/11 and commencement of
planning budget strategy for 2008/09.
Building Schools for the Future (BSF)
Work has progressed towards finalising the Outline Business Case and section 151 officer letter for
submission to PfS and approval by the Treasury PRG in June.
Waste Disposal PFI
Participation in discussions with other GM authorities and GMWDA officers and providing advice in
progressing the £3bn 25-year waste disposal PFI contract towards preferred bidder selection and
financial close.
Salford Science and Innovation Park
Participation in working group and providing advice on the proposed transfer of assets to
Manchester Science Park Ltd in exchange for a shareholding in the company.
Investors in People
The formal IIP assessment took place on 8 th May and the IIP panel awarded IIP status to the
Finance Division.
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Housing Stock Options
Arrangements to set up the financial infrastructure for the new housing companies – Salix, HCP –
was co-ordinated and successfully completed, with new companies created in SAP for Salix and
HCP and FSG services co-ordinated to accommodate the new companies.
Equal Pay and Pay and Grading Review
Payroll resource was provided for the final equal pay sessions. Negotiations continued with HMRC
to agree a combined tax/NI rate on equal pay settlements. JE models have been assessed for the
impact on the Finance Division.
SAP
Apart from the new Housing companies, a new company has been set up for the URC to enable
them to use SAP. Project plans for 2007/08 have been developed and preparations were made for
go-live with the Employee Self Service facility in April.
Salford Community Fund
Work continued with Community Foundation on the transfer of dormant trust funds culminating in a
successful launch at the Lowry on 11th July.
SLAs
Agreement has been reached with NPHL, Salix and HCP for SLAs for 2007/08. Some SLA issues
with UV have now been addressed, but outstanding issues with insurance and call centre charges
remain.
Pre-paid cards
Discussions have been held with Alliance & Leicester to discuss the potential use of pre-paid cards
to replace cheque payments to individuals (e.g. employees, benefits) to achieve cost savings.
Similar proposals are to be invited from the Co-op Bank and RBS.
Greater Manchester Police Authority
The main focus during the quarter was supporting meetings of the Authority, its committees,
working groups and panels, together with officer meetings, the main aspects of which covered
budget preparation and associated matters.
ACCOUNTANCY
The main focus of the service during the quarter was the preparation of the final accounts for
2006/07, culminating in achievement of one of their major performance targets with their approval
at Accounts Committee on 29th June.
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Budget monitoring also commenced during the quarter with regular monthly reports to directorate
senior management, lead members and Budget Scrutiny Committee.
Bank and cash reconciliations continue to be completed accurately and promptly, with the June
quarter being completed by 17th July.
All outstationed groups continued to provide the necessary routine support required by directorates
in dealing with a myriad of issues around budget preparation, budget monitoring and financial
advice.
PAYROLL
P11D notices of taxable expenses for 2006/07 (normally issued in June/July) were issued before
the year-end on 30th March.
The Multiple Employments process went live successfully in May, with some minor cosmetic
problems, eg payslip display, that did not affect employees’ pay were identified and corrected.
June was a hectic period for Payroll with many new challenges: Salix Homes / HCP / URC
formations, industrial action recoveries from pay and various internal and external audits, all of
which have been responded to well. A significant amount of time was devoted to the TUPE
transfers of staff from NPHL with Payroll staff putting in additional hours to set up the initial pay
runs for the new housing organisations.
Equal Pay settlements have all but disappeared although a few cheques continue to be issued
each week as employees decide to accept the offers made.
Payroll continues to investigate the implementation of electronic timesheets with SCL.
Electronic Absence Recording – A revised live date of 1.10.07 has been agreed. Schools remain
the only opt-out to this process.
DEBTORS
This Quarter Last Quarter
Total Net Debt
Net of land charges
£17.453m
£16.862m
12 months
ago
£13.246m £16.722m
£12.712m £16.166m
Target by
31/3/08
of which :Over 30 days old
Over 60 days old
Over 120 days old
Subject to :-instalments/payment agreements
- land charges
- legal action
£3.062m
£1.955m
£1.049m
£1.617m £2.894m
£1.300m £1.799m
£1.109m £1.295m
£0.567m
£0.508m
£0.475m
£0.504m £0.581m
£0.452m £0.426m
£0.517m £0.518m
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£1.455m
£1.170m
£0.998m
Total debt outstanding has increased substantially in the quarter across the 30 and 60 days debt
categories, although the 120 day debt has reduced.
April saw the raising of annual invoices for Community Health & Social Care accommodation
charges and Environment trade waste, which resulted in over £16m of debt raised. The majority of
these invoices are payable by instalments over the next 12 months so the total debt will appear
artificially high at this stage of the year, but will reduce on a monthly basis as the year progresses.
Collection of over £12m of debt during May helped to offset the position, but a further £9.9m of
invoices were raised during June.
Outstanding mortgage debt has reduced from £111k (31 cases) to £104k (27 cases), of which 15
cases are in arrears by £35k.
Discussions have been held with Urban Vision and legal to implement a fast track process for
companies withholding payment.
CREDITORS
Performance in processing invoices for payment within 30 days of receipt is as follows :This Quarter
Statutory Target
Local Target
Performance 2007/08
Performance 2006/07
April
May
June
99.2%
99.9%
99.6%
99.3%
98.2%
99.7%
Cum YTD
100%
98%
99%
99.7%
Last
Quarter
Cum YTD
99.4%
The quarter saw excellent performance above 99% in April and May, but a dip in June to 98.2% to
give a cumulative performance for the year to date of 99%. Whilst this is still above the local BVPI
target and remains above all GM authorities by a margin of 4% from the nearest, it is a slight drop
on performance this time last year. The reason for the dip in performance during June was due to a
batch of 26 Housing invoices that missed the 30 day deadline due to a problem within the Creditors
Team.
Cumulative performance for NPHL is 89.3% and for SCL 100%, the latter now having achieved
100% for each of the last 6 months.
76.3% of all payments were made by BACS, comprising 85.2% for trade vendors and 71.5% for
non-trade.
The number of invoices processed in the June quarter was 160% less than 12 months ago, which
was 15% less than 2 years ago following improvements in electronic processes and the use of
purchasing cards. Staffing has been reduced by 37% over the 2 year period.
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E-TRADING
Purchasing Cards
Purchasing cards for building repairs and maintenance expenditure are being explored for UV. A
purchasing card account for Salix has been set up. A routine for sample checking of card
transactions has been developed to enable managers to be provided with details of purchases. A
further 10 cards were issued in the month.
The scanning of purchasing card receipts/invoices commenced in April to enable the images to be
indexed to the GL posting in SAP and viewed on PCs.
Electronic Ordering and Invoicing
Reviews are currently taking place in these areas to identify options to improve efficiency in these
areas.
INTERNAL AUDIT
Salford Team
12 final audit reports and 13 drafts were issued during the quarter. 21% of the 20070/8 Salford
mainstream plan was achieved by 3oth June.
External Contracts Team
A number of audits commenced at North Shropshire, a new client, although we have lost a client at
Conwy due to them engaging their own computer auditor. However, they have informed us that the
Wales Audit Office were very impressed with the ICT Governance in Schools audit done for them.
The Contracts Audit Manual was highly commended in the Cliff Nicholson awards and it has been
posted on CIPFA website for national use.
Salix and NPHL SLAs for 2007/08 have been agreed.
Energy Audit Team
The potential for joint working with the intention to identify areas of potential savings is being
explored at the RCE at Tameside.
The team is offering sustainable learning to schools to promote energy efficiency.
Insurance Claims
A successful tender for property insurance cover was completed in May with a change of insurer
from Zurich to AIG and annual savings of over £350k made on the premium.
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Appendix 1 sets out comparative details of liability, motor and property claims over recent years.
Liability claims for the first quarter of the year show a mixed position at present : a continued
reduction in numbers and value for the current year compared with the same quarter in previous
years, although claims for 2006/07 showed an upturn in numbers and value when compared to the
position at the same time last year.
JOHN SPINK
City Treasurer
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