Statement of Accounts

 

2015-16

September 2016

 

 

 

 

 

 

 

 

 

 

 

 

                                                           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contents

 

Narrative Report 4

Statement of Responsibilities for the Statement of Accounts. 18

Independent Auditors Report to the Members of Thanet District Council 19

Movement in Reserves Statement 22

Movement in Reserves Statement cont’d.. 23

Comprehensive Income and Expenditure Statement 24

Balance Sheet as at 31 March 2016.. 25

Cash Flow Statement 26

Notes to the Core Financial Statements. 27

Housing Revenue Account Income and Expenditure Statement for the year ended 31 March 2016.. 104

Movement on the Housing Revenue Account Statement 105

Notes to the Housing Revenue Account 106

Collection Fund Statement for the year ended 31 March 2016.. 109

Notes to the Collection Fund Statement 110

Glossary of Terms. 113

 

 

 

 

 

 

 

 

 


Narrative Report

The council’s Statement of Accounts

This Statement of Accounts presents the financial results of the council’s activities for the year ended 31 March 2016 and provides a picture of the council’s overall financial position as at that date. The Accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2015-16.

The purpose of this narrative report is to give the reader an understanding of the most significant matters reported in the accounting statements, as well as a review of the council’s financial performance and economy, efficiency and effectiveness in its use of resources over the year.

Introduction to Thanet

Thanet District Council is a local authority providing services within the administrative district of Thanet in Kent. These services include leisure, environmental health, and housing.

Thanet has a resident population of 139,800 (2015). Most of the population live on the coast that links the resorts of Ramsgate, Broadstairs and Margate

The district is a unique coastal area, with 19 miles of nationally and internationally recognised coastline and Blue Flag award winning beaches and bays. Together with its villages, open countryside and proximity to the rest of Kent, London and Europe through its transport links, Thanet has plenty to offer.  With a broad range of events, cultural facilities and a growing creative scene.

 

However, the area also has its challenges and remains Kent’s most deprived local authority district in the Index of Multiple Deprivation IMD2015. Nationally, Thanet is ranked at 21 out of 326 authorities placing it within England’s 10% most deprived of authorities.

 

The council’s corporate plan 2015 to 2019 sets out the corporate priorities that the council are focussing on.  These are:

 

Underpinning the corporate priorities, the council’s values identify the way the council will work in order to deliver its priorities.  These are:

 

Context for the 2015-16 Accounts

Current Economic Climate

The current economic climate and that of recent years has had a considerable impact on the council, particularly due to its strong reliance on revenue from interest on reserves and fees and charges. The Bank of England base rate has remained at an historic low of 0.5% which has resulted in reduced investment receipts for the council.

The council is going through an extremely challenging financial period as central Government continues its drive to reduce the national deficit.  Local government as a whole has continued to face larger reductions than other parts of the public sector.  For Thanet District Council this has resulted in significant cuts in government funding, with further cuts anticipated over the coming years.  As a result, the council has already made savings of £7.1m between 2011-12 and 2015-16.

 

The Medium Term Financial Strategy (MTFS) sets out the council’s strategic approach to managing its finances over a rolling four year period.  A range of savings options have been developed over the medium term to mitigate the impact of funding cuts and enable the Council to deliver a balanced budget. These include sharing services with neighbouring councils, reviewing staff structures and service efficiencies.  In 2015-16, savings targets of £1.218m were identified, including £0.932m of savings already agreed as part of the 2014 budget setting process, and £228k as a result of a corporate review of budgets.

 

The Council has reviewed its level of reserves, taking account of the financial risks that could pose a threat to the Authority over the medium term and also in light of the cuts in future funding. The Council has set its optimal level of general reserves at 12% of the net revenue budget. The general reserves as at 31 March 2016 are £2.011m which represents 12% of the 2015-16 net revenue budget and are therefore in line with the Council’s optimal reserve level. In addition to the general reserve, a number of earmarked reserves exist. These are sums set aside for specific purposes and essentially allow funds to be saved over a number of years for large and often one-off items of expenditure, thereby smoothing the impact on Council Tax. The need for these reserves is reviewed regularly.

 

Also affected by the current economic climate are asset disposals. The Council’s ability to generate funds from releasing capital resources has been limited, affecting the Council’s capital programme. Only the most important capital projects are now selected for inclusion within the programme which means that the programme is now driven predominately in response to health and safety issues and those projects that are key corporate priorities.

Financial Performance in 2015-16

The Council provides a variety of services relating to residents, customers and housing tenants. Its spending is split between revenue and capital in accordance with statute and accounting practice. Revenue expenditure is generally incurred on items that are consumed within the year.  This is financed from Council Tax, National Non-Domestic Rates, Government grants, fees and charges and other miscellaneous income. Capital expenditure is incurred on items that provide value to the Council or community for more than one year and is generally financed by borrowing, grants, revenue balances and proceeds from the sale of capital assets.

Revenue Outturn

In February 2015 the Council approved a net revenue budget for 2015-16 of £16.807m. This enabled the Council to implement a council tax freeze in line with Government’s recommendations and therefore qualify for Section 31 council tax freeze grant funding.  The budget strategy was to keep budget growth to a minimum, whilst achieving the savings target of £1.218m.  Additional investment of £100k was made in street cleansing, as this was identified as a priority area during budget consultation.

 

The Council has monitored its budget position very closely during the course of the year and has encouraged managers to make savings wherever possible in order to counteract budget pressures. Strict controls over recruitment were maintained and managers were encouraged to identify efficiency savings and delay spending where possible where this would not adversely impact on service delivery.  As a result, the Council has managed to make the required transfers to Earmarked Reserves as planned in the budget and during in-year budget monitoring.

 

The outturn against the budget is shown in the following table:

 

 


 

2015-16

2015-16

2015-16

2015-16

2015-16

 

Gross

Gross

Net

Net Original

Variance

 

Expenditure

Income

Expenditure

Budget

 

 

£’000s

£’000s

£’000s

£’000s

£’000s

 

 

 

 

 

 

Cost of Services

135,742

112,061

23,681

19,957

3,724

 

 

 

 

 

 

Precepts paid to Parish Councils

855

860

(5)

Payments to the Housing Capital Receipts Pool

208

208

-

Gains/losses on disposal of fixed assets

845

845

-

 

 

 

 

Other Operating Expenditure

1,908

1,913

(5)

 

 

 

 

 

 

Interest payable and similar charges

1,116

1,343

(227)

Impairment of Financial Instruments

22

18

4

Net Interest on the Net Defined Pension Liability

3,621

-

3,621

Interest receivable & investment income

(207)

(144)

(63)

Gains/losses on trading undertakings

16

16

-

Changes in the fair value of Investment Properties

(1,306)

(1,306)

-

Gains/losses on Investment Properties

(422)

(422)

-

 

 

 

 

Financing & Investment Income & Expenditure

2,840

(495)

3,335

 

 

 

 

Council Tax Income

(9,424)

(9,264)

(160)

Business Rate Income

(13,650)

(5,200)

(8,450)

Business Rate Expenditure (Tariff)

8,555

-

8,555

Non-ring fenced government grants

(6,564)

(4,663)

(1,901)

Capital grants & contributions

(4,454)

(1,362)

(3,092)

 

 

 

 

Taxation & Non-Specific Grant Income

(25,537)

(20,489)

(5,048)

 

 

 

 

 

 

 

 

(Surplus)/Deficit on Provision of Services

2,892

886

2,006

 

The outturn position has enabled the Council’s general fund balances to be maintained at 12% of its net revenue budget requirement for 2015-16.  This in line with its financial risk assessment of reserve levels as approved by Members in February 2016. A number of contributions to and from Earmarked Reserves were made during the year to deliver the General Fund budget.  Overall, Earmarked Reserves have reduced by £4.04m largely due to the animal exports ban settlements and the Health and Safety provision (see Note 22).  Reserves have been reviewed as part of the year end process and are considered adequate to meet the on-going needs and plans of the authority.

 

 

 

 

Material or Unusual Charges or Credits to the Accounts

 

In September 2012, the Council imposed a temporary ban (lasting approximately five weeks) on the movement of live animals through the Port of Ramsgate.  The Council was served with a judicial review application in October 2012 seeking to quash the decision on the grounds that it was unlawful, there was a further claim for resultant damages.

The High Court found in favour of the Claimants, agreeing that the ban was unlawful, and that the Council were liable for damages. A quantum of damages hearing was listed for June 2015. A settlement sum of £2.3m was paid to claimants in 2014-15 and a further £2.4m in 2015-16.

 

Major Changes to Services

There were no major changes to services in 2015-16.

 

Future Service Delivery Plans

In order to deliver a balanced budget moving forward, the Council needs to make savings of £1.036m in 2016-17 and identify further savings of circa £1.264m in 2017-18. The Council has reviewed staff structures to enable the Council to develop plans to deal with the continuing budget cuts; is looking to identify further savings from the shared service arrangements and reviewing which budgets can be reduced as a result of under-spending in prior years. The Council is also undertaking a service review programme to identify the further savings required in order to be able to continue to deliver key priority services to residents and ensure delivery of the Council’s Corporate Plan objectives. This programme will include looking at key themes such as Digitalisation, Partnership working and possible Joint Ventures to see which services can be reduced whilst still meeting customer needs; which can be delivered in a different way to reduce costs; and will look to identify where there are further efficiencies to be made within service areas.

 

Housing Revenue Account

The Housing Revenue Account (HRA) generated a decrease in balances of £96k in 2015-16 in addition to a budgeted deficit of £221k. The New Build programme is due to commence in 2016-17 with the Homes and Communities Agency. Funds allocated within the 2015-16 budget to fund capital works have been transferred to the New HRA Properties Reserve and are detailed in the variance report below. The council is continuing with Margate Intervention as a long-term regeneration programme in the Cliftonville West and Margate Central area with Kent County Council and the Homes and Community Agency to transform the housing market in two of Britain’s most deprived wards. Major variances against the original HRA budget are detailed below:

Major Variances on the Housing Revenue Account

2015-16

 

£’000s

Increased contribution to fund capital expenditure

       266

Increased contribution to reserves

       332

Reduction in dwelling rents income

         63

Reduction in interest costs of borrowing

     (178)

Reduction in cyclical external repairs expenditure

(115)

Increase in recharges to the HRA

146

Increased costs in relation to asbestos and repairs consultancy

         85

Reduction in day to day repairs expenditure

        (63)

Increase in rechargeable repairs

(44)

Reduction in contributions to expenditure

        (43)

Decrease in insurance premiums

        (54)

Increased income from interest earned on balances

        (36)

Reduction in communal costs

        (42)

 

       317

 

The accumulated HRA balance at 31 March 2016 is £5.296m. The balance provides flexibility for delivery of the Housing Business Plan which has recently been reviewed.

 

Capital Expenditure

Given the Council’s resource profile and constraints, a review of the 2015-16 capital programme was undertaken during the year to identify opportunities for the transfer, removal and deferral of capital projects and to re-profile funding from reserves and revenue to capital receipts. This was approved by Council on 3 December 2015.

 

Total expenditure on capital items, including grants and loans, amounted to £17.749m, of which £6.302m was met by capital grants and other contributions, £4.351m from revenue resources/reserves, £1.378m from capital receipts and £5.718m from internal borrowing.

 

As at 31 March 2016, capital receipts of £3.923m, unapplied capital grants of £108k and the Capital Projects Reserve balance of £0.261m were carried forward to fund the 2016-17 programme.

 

The main items of capital expenditure are set out below:

 

 

 

2015-16

 

 

 

£’000s

Fixed Assets

 

 

 

Council Dwellings

 

 

3,492

Other HRA Assets

 

 

1,537

General Fund assets

 

 

10,379

Expenditure not resulting in assets

 

 

2,341

Total Capital Expenditure

 

 

17,749

 

Expenditure in respect of acquiring new assets totalled £0.804m (see following paragraph ‘Material Acquisitions/New Assets’ for further detail), the remaining expenditure related to the improvement of existing assets.

 

As a result of resource constraints, the Council has had to scale back its capital projects to match its funding envelope. The capital programme is now driven by those capital schemes that have a health and safety implication or deliver revenue savings to the Authority. The major new project planned over the coming year is replacement of a berth at Ramsgate Port at a budget of £1m, to be funded from prudential borrowing.

 

Capital Receipts

 

Royal Sands

 

The development agreement dated 2006 (and amended 2009) between the Council and developer SFP Ventures(UK) Ltd became the subject of legal dispute and as such the parties entered into a dispute resolution situation supported by independent legal advisors.  This process led to the parties agreeing a new agreement for sale of the site, with the company SFP Ventures (UK) Ltd being bought out by Cardy Construction, but with the Council retaining performance monitoring and an Option agreement to purchase the site back should the owner trigger an event of default.  The contracts for sale exchanged in March 2015 with completion on 20 July 2016. Although Cardy Construction Ltd has since filed a notice of intent to appoint an administrator the council has received the monies due from the sale.

 

Material Acquisitions/New Assets

The following new assets have been recognised in the Balance Sheet as at 31 March 2016:

 

·         Mowers (£73k)

·         CCTV (£16k)

·         Pegwell playground (£50k)

·         Fuel facility (£103k)

·         Car park (£11k)

·         Amusement rides (£335k)

·         Street Scene vehicles (£216k)

 

 

Heritage Assets

The Council is required to disclose heritage assets separately. Heritage assets can be defined as tangible or intangible, and are intended to be preserved in trust for future generations because of their historical, artistic, scientific, technological, geophysical or environmental qualities and are held and maintained principally for their contribution to knowledge and culture. The value of heritage assets as at 31 March 2016 is £9.207m (2014-15 £0.685m). These relate to public statues, artefacts or collections within museums, art collections, civic regalia, heritage theme park and historic amusement park rides, £3.78m has been reclassified from assets under construction to heritage assets for the Dreamland amusement park that opened during the year. For further details see notes 12, 44 and 45.

Highways Network Assets

Any Council Highways Network Assets (HNAs) are to be recognised as a separate class of property, plant and equipment and measured at depreciated replacement cost for the first time in its 2016-17 financial statements, in accordance with the CIPFA Code of Practice on Transport Infrastructure Assets and the recognition, measurement and disclosure requirements of the CIPFA Code of Practice on Local Authority Accounting.

The Council has reviewed its transport infrastructure assets and assessed that none of these meet the definition of an HNA as published in the 2016-17 CIPFA Code of Practice on Local Authority Accounting. This is in accordance with the CIPFA HNA Briefing Number 1 which notes that it is not anticipated that District Authorities will have any HNAs.

Given the above, the Council has not separately disclosed details of its transport infrastructure assets in these accounts as referred to in Appendix D to the 2015-16 CIPFA Code of Practice on Local Authority Accounting.

Treasury Management

During 2015-16, the Council complied with all its legislative and regulatory requirements with regard to its treasury activities, apart from the money limit with the Lloyds Banking Group (Lloyds) for the 11 day period from 15 May 2015 to 26 May 2015. With effect from 15 May 2015 the Council’s treasury management advisor Capita Asset Services (Capita) changed it’s view on Lloyds, no longer regarding it as part nationalised. Given the credit rating of Lloyds, this meant that the Council’s money limit with Lloyds reduced from £7m to £5m. The Council was able to reduce it’s deposits with Lloyds to under £5m on 26 May 2015, upon maturity of a £2m fixed term deposit with them.

The Council’s debt and investment position is organised by the treasury management service in order to ensure adequate liquidity for revenue and capital activities, security for investments and to manage risks within all treasury management activities. Procedures and controls to achieve these objectives are well established both through regular reporting to Members and through officer activity detailed in the Council’s Treasury Management Practices.

As at 31 March 2016, the Council had £28.612m in investments. As a result of the continuing difficulties in economic conditions, interest rates remained at historic lows. The Council maintained an average balance of £40.203m of internally managed funds which earned an average rate of 0.55%. This compares with a budget assumption of £20m investment balances earning an average rate of 0. 75%. However, the performance indicator for investment returns is to achieve returns above the 7 day LIBID rate. This average rate for 2015-16 was 0.36% so this performance indicator has been met.

Continued uncertainty in the aftermath of the 2008 financial crisis promoted a cautious approach, whereby investments continued to be dominated by low counterparty risk considerations, resulting in relatively low returns compared to borrowing rates.

No rescheduling of debt was done as the average 1% differential between the PWLB new borrowing rates and premature repayment rates made rescheduling unviable. The Council repaid £1.439m of maturing debt during the year (£0.086m at a rate of 3.08%, £0.96m at a rate of 2.75%, £0.1m at a rate of 2.48% and £0.293m at a rate of 1.97%) and did not take out any new loans. This repayment of the debt portfolio resulted in an increase in the Council’s average borrowing rate of 0.01% from 3.77% to 3.78%, representing an interest cost of £3k on the weighted average of the 2015-16 debt principal. The Council’s total principal debt outstanding as at 31 March 2016 was £29.22m.

In order to ensure that borrowing levels are prudent over the medium term and only for a capital purpose, the Council should ensure that its gross external borrowing does not, except in the short term, exceed the total of the Capital Financing Requirement (CFR) in the preceding year plus the estimates of any additional capital financing requirement for the current and next two financial years. The CFR is the Council’s underlying need to borrow for capital expenditure. The CFR results from the capital activity of the Council and resources used to pay for the capital spend. It represents the unfinanced capital expenditure for the year and prior years’ unfinanced capital expenditure which has not yet been paid for by revenue or other resources.

 

 

The Council’s unfinanced capital expenditure for 2015-16 is shown in the following table:

 

2014-15

Actual

 

2015-16 Estimate

2015-16 Actual

£’000s

 

£’000s

£’000s

8,184

Non-HRA capital expenditure

4,229

12,720

7,149

HRA capital expenditure

10,944

5,029

15,333

Total capital expenditure

15,173

17,749

 

Resourced by:

 

 

199

 Capital receipts

1,067

1,378

5,324

 Capital grants

2,930

6,302

5,525

 Capital reserves

5,259

2,959

1,940

 Revenue

1,251

1,392

2,345

Unfinanced capital expenditure

4,666

5,718

 

 

The Council’s CFR for the General Fund as at 31 March 2016 was £27.066m, calculated as follows:

31 March 2015

Actual

CFR

31 March 2016

Original Indicator

31 March 2016

Actual

£’000s

 

£’000s

£’000s

20,898

Opening balance

26,460

22,390

2,120

Add unfinanced capital expenditure (as above)

1,105

5,524

(853)

Less MRP/*

(1,095)

(848)

225

Asset transfer to HRA

-

-

22,390

Closing balance

26,470

27,066

 

* The Council is required to make an annual revenue charge, called the Minimum Revenue Provision (MRP) to reduce the CFR. This is effectively a repayment of the non-HRA borrowing need

 

The Council’s CFR for the Housing Revenue Account as at 31 March 2016 was £20.241m, calculated as follows:

31 March 2015

Actual

CFR

31 March 2016

Original Indicator

31 March 2016

Actual

£’000s

 

£’000s

£’000s

20,874

Opening balance

20,874

20,874

225

Add unfinanced capital expenditure (as above)

3,561

194

-

HRA loan repayments

(828)

(828)

-

Revaluations to C I & E

-

1

(225)

Asset transfer to General Fund

-

-

20,874

Closing balance

23,607

20,241

 

Gross borrowing should not, except in the short term, have exceeded the CFR for 2015-16 plus the expected changes to the CFR over 2016-17 and 2017-18. This indicator allows the Council some flexibility to borrow in advance of its immediate capital needs in 2015-16. Gross borrowing as at 31 March 2016 was £29.22m and therefore, the Council has not exceeded its CFR.

 

Pensions Liability

As part of the Conditions of Employment, the Council offers retirement benefits in accordance with statutory requirements. These payments, investment assets and future liabilities are managed as part of the Kent County Pension Fund on behalf of all contributing member authorities. Local authorities are required to account for their share of the pension deficit, the impact of which can be seen in note 37 to the Core Financial Statements.

 

Thanet’s net liability on the Kent County Council Pension Fund as at 31 March 2016 is £99.5m (£109.6m as at 31 March 2015), a decrease in liability of £10.1m. The liabilities show the underlying commitments that the Authority has in the long run to pay retirement benefits. The total liability of £99.5m has a substantial impact on the net worth of the Council as recorded in the Balance Sheet. However, statutory arrangements for funding the deficit mean that the financial position of the Council remains healthy. The deficit on the pension scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary. Finance is only required to be raised to cover discretionary benefits when the pensions are actually paid.

 

Compliance with International Accounting Standard 19 Employee Benefits does not impact directly on the actual level of employer contributions paid to the Kent County Council Pension Fund. Employers’ levels of contributions are determined by triennial actuarial valuations which are based on the Fund’s actual investment strategy (rather than being based on corporate bond yields).

 

The movement to the Fund is set out in more detail in note 37 to the Core Financial Statements.

 

Provisions 

The Council holds a provision of £432k in respect of asbestos related compensation claims through employer’s liability insurance following a Supreme Court Judgement in favour of the claimants.

 

Following an investigation into Hand Arm Vibration cases by the Health and Safety Executive, the council has been informed of the decision to instigate criminal proceedings against it for alleged offences for contravention of the Health and Safety at Work Act 1974 (‘the Act’) between 6 July 2005 and 15 October 2014.

 

Following a ruling in January 2015 on the valuation method used to set rateable values for purpose built GP surgeries, there have been substantial reductions implemented by the Valuation Office Agency (VOA), and subsequent overpayments are subject to backdating to earlier periods. The provision for business rate appeals in the Collection Fund accounts is £3.597m in respect of GP surgeries and £2,487m in respect of general appeals. Under the Business Rate Retention Scheme the council’s share of the provision (disclosed in the Balance Sheet with the impairment of debtors) equates to 40% of the total (£2.434m).

Thanet Workforce

At 31 March 2016 (2014-15) the Council employed 732 (755) permanent staff, equating to 666.23 (694.82) full-time equivalents.

An analysis of the cost of employees is given in the table below.

 

2014-15 Actual

 

2015-16 Budget

2015-16 Actual

Variance

£’000

 

£’000

£’000

£’000

19,534

Salaries

20,577

19,359

(1,218)

1,446

Employers' National Insurance Contributions

1,589

1,428

(161)

4,294

Employers' Retirement Benefit costs

4,621

4,420

(201)

1,233

Agency

972

1,636

664

472

Employee allowances (insurance, staff parking, other benefits)

502

524

22

34

Recruitment

-

53

53

150

Training

202

173

(29)

1,082

Severance payments

1,013

1,266

253

61

Other miscellaneous staff payment

33

50

17

28,306

Total

29,509

28,909

(600)

 

Transparency

As part of its commitment to openness and accountability the Council publishes a number of datasets under the heading Open Data and Transparency. Information provided includes:

        Supplier Spend over £250

        Senior officer remuneration

        Properties List

        Procurement of Goods and Services

Further details can be found on the Council’s website at:

https://www.thanet.gov.uk/your-services/information-requests/open-data/open-data-and-transparency/

Council’s Performance

Here are some facts and figures:

        We collected 96.49% of the £63.7m of council tax due for the 2015-16 year (2014-15 96.15%)

        We collected 99.53% of the £33.0m of business rates due for the 2015-16 year (2014-15 98.53%)

        We paid 96.15% of the 12,793 invoices processed within 30 days of receipt (2014-15 97.46%)

        On average it took us 6.61 days to process a new housing benefit claim (2014-15 7.03 days)

        78.79% of major planning applications were determined within the recommended timeframe, against a target of 60% (2014-15 74.19%)

 

This year 23 key projects are now tracking the core priorities of the Corporate Plan. As at the end of March 2016, 18 of the key projects are on target and 5 are completed.

 

Notable achievements include a number of projects that have faced severe logistical challenges, but by following sound procedure are working towards the long-term betterment of Thanet:

 

        Yacht Valley Project, Ramsgate -  This project is now complete. It has attracted nearly £470k of external funding that has enabled refurbishment of the Military Road arches and improved harbour facilities.

 

        Dreamland Heritage Park - This is one of the economic game-changers in Thanet. Works are on-going in the cinema and external areas. The park opened to the public for the first time on 19th June 2015. The iconic Scenic Railway opened to the public in October 2015.

https://www.thanet.gov.uk/the-thanet-magazine/press-releases/2015/october/the-scenic-rides-again/

 

        Margate Housing Intervention project - This is another multi-strand and complex series of projects to tackle one of the most challenging housing areas in the South East

        Selective Licencing Scheme - This legal breakthrough project is enabling the Council to work with the private sector to prevent deterioration in the housing stock in Margate and Cliftonville

 

        The National Food Hygiene Rating Scheme -  This programme has introduced an updated method for protecting the standards in Thanet’s food establishments

 

         North Sea Wall - The project was delivered below budget with additional permission to spend the remaining budget on additional elements. Three separate lengths of sea wall have been refurbished protecting the coastline and residents between Grenham Bay and St. Mildred’s Bay. http://thanet.gov.uk/your-services/emergencies/westgate-flood-and-coastal-protection/north-thanet-sea-wall/

 

        Street Cleansing improvements -Improvements have been made to the cleansing of streets in Thanet including:

·       The Bin it for Good anti-litter campaign #BinItForGood celebrates success https://www.thanet.gov.uk/the-thanet-magazine/press-releases/2016/january/bin-it-for-good-anti-litter-campaign-celebrates-success/

·       A new FIDO  (Faeces Intake Disposal Operation) machine to combat dog mess and keep Thanet clean and beautiful http://thanet.gov.uk/the-thanet-magazine/press-releases/2015/august/council-invest-in-new-dog-waste-cleaning-machine-for-thanet/ 

 

        Thanet Wins Visitor Information Provider of the Year - Thanet District Council’s Visitor Information Service has been crowned Visitor Information Provider of the year winning Gold in their category at the Visit England Awards for Excellence 2016. https://www.thanet.gov.uk/the-thanet-magazine/press-releases/2016/march/vic-award-win/

 

Future Financial Challenges

The council’s funding sources have changed fundamentally in recent years.  Revenue Support Grant has continued to decline and is expected to cease altogether by 2020. The replacement of this with Business Rates Retention Scheme funding and uncertainty around the level of New Homes Bonus funding brings greater volatility and risk.  Recent Government initiatives relating to social and affordable housing will also impact on the HRA 30 year Business Plan.  The limited availability of capital receipts and the need to contain the level of borrowing to minimise revenue impact has led to a review of the Capital Programme. This is in the context of continuing external economic pressures and heightened uncertainty arising from the result of the EU Referendum.

Spending challenges will also continue over the period of the MTFS.  However, there will also be significant opportunities.  In particular, our corporate priority of promoting inward investment and job creation will be used to stimulate the local economy.  Whilst the corporate value of delivering value for money will enable us to ensure resources are targeted to maximise effectiveness in service delivery and ensure we achieve a stable and sustainable financial position going forward.

The council will develop its future budget plans to protect its key priority services from budget reductions as far as possible, and remains committed to promoting a culture of continuous improvement to ensure that it delivers good value for money for its residents.

 

Accounting Statements

The accounts have been prepared in accordance with the Accounts and Audit Regulations and the Code of Practice and guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA). The accounting policies adopted by the Council are outlined in this document and have been fairly and consistently applied.

 

The statements are as detailed below:

 

The Core Statements

 

Movement in Reserves Statement - This Statement shows the movement in the year on the different reserves held by the Authority, analysed into “usable” reserves (those that can be applied to fund expenditure or reduce local taxation) and other reserves. The “Surplus or (Deficit) on 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 and Housing Revenue Account (HRA) for Council Tax setting and dwellings rent setting purposes. The “Net increase/decrease before transfers to Earmarked Reserves” line shows the statutory General Fund balance and HRA balance before any discretionary transfers to or from Earmarked Reserves undertaken by the Council.

 

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.

 

Balance Sheet – This statement 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 of reserves 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 that may only be used to fund capital expenditure or repay debt). The second category of reserves are 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”.

 

Cash Flow Statement – This 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.

 

Notes to the Core Financial Statements – These are set out after the above core statements. They provide further information and interpretation of the content of the individual statements.

 

 

The Supplementary Financial Statements

 

Housing Revenue Account – The Council is required by law to account separately for the provision of housing. This account shows the expenditure on managing, maintaining and providing the Council’s housing stock and how this is financed by rents and other income.

 

Collection Fund Statement – The Collection Fund is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Collection Fund. The statement shows the transactions of the billing authority in relation to the collection from taxpayers and distribution to local authorities and the Government of council tax and non-domestic rates.


Approval

In accordance with the Accounts and Audit (England) Regulations 2015, the Governance and Audit Committee approved the 2015-16 Statement of Accounts on 20 September 2016.

 

Signed :                                                                                           Date: 20 September 2016

Chair of the Governance and Audit Committee

 

 

 

 

For further information on the accounts please contact the Head of Financial Services  on 01843 577722 or write to : Head of Financial Services, Thanet District Council, PO Box 9, Cecil Street, Margate, Kent CT9 1XZ

 


Statement of Responsibilities for the Statement of Accounts

Both the Council and the Section 151 Officer have certain responsibilities in respect of the Statement of Accounts.

The Authority’s Responsibilities

The Authority is required:

 

Ø  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; and

Ø  to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.

Ø  to approve the Statement of Accounts.

 

In this Authority, the Responsible Officer is the Director of Corporate Resources & Section 151 Officer.

Director of Corporate Resources & Section 151 Officer’s Responsibilities

The Director of Corporate Resources & Section 151 Officer is responsible for the preparation of the authority’s Statement of Accounts in accordance with proper practices as set out in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in United Kingdom (“the Code”).

 

In preparing this statement of accounts, the Director of Corporate Resources & Section 151 Officer has:

 

Ø  selected suitable accounting policies and then applied them consistently;

Ø  made judgements and estimates that were reasonable and prudent;

Ø  complied with the local authority Code;

Ø  kept proper accounting records which were up to date;

Ø  taken reasonable steps for the prevention and detection of fraud and other irregularities;

Ø  gained appropriate assurance over the accuracy of the statement of accounts prior to approval.

 

The Statement of Accounts gives a true and fair view of the financial position of Thanet District Council as at 31 March 2016 and of its income and expenditure for the year ended on that date.

 

 

 

Tim Willis CPFA

Director of Corporate Resources & Section 151 Officer

Date: 20 September 2016

 


Independent Auditors Report to the Members of Thanet District Council

 

We have audited the financial statements of Thanet District Council (the "Authority") for the year ended 31 March 2016 under the Local Audit and Accountability Act 2014 (the "Act"). The financial statements comprise the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement, the Balance Sheet, the Cash Flow Statement, the Housing Revenue Account Income and Expenditure Statement, the Movement on the Housing Revenue Account Statement, the Collection Fund and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.

 

This report is made solely to the members of the Authority, as a body, in accordance with Part 5 of the Act and as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been undertaken so that we might state to the members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority and the Authority's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Respective responsibilities of the Corporate Resources & Section 151 Officer and auditor

 

As explained more fully in the Statement of the Director of Corporate Resources and Section 151 Officer's Responsibilities, the Director of Corporate Resources & Section 151 Officer is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16, which give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

 

Scope of the audit of the financial statements

 

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Authority’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Corporate Resources & Section 151 Officer; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Narrative Report and the Annual Governance Statement to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

 

 

 

 

Opinion on financial statements

 

In our opinion the financial statements:

·          present a true and fair view of the financial position of the Authority as at 31 March 2016 and of its expenditure and income for the year then ended; and

·          have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16 and applicable law.

 

Opinion on other matters

 

In our opinion, the other information published together with the audited financial statements in the Narrative Report and the Annual Governance Statement is consistent with the audited financial statements.

 

Matters on which we are required to report by exception

 

We are required to report to you if:

·          in our opinion the Annual Governance Statement does not comply with the guidance included in ‘Delivering Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June 2007; or

·          we issue a report in the public interest under section 24 of the Act; or

·          we make a written recommendation to the Authority under section 24 of the Act; or

·          we exercise any other special powers of the auditor under the Act.

 

We have nothing to report in these respects.

 

Conclusion on the Authority’s arrangements to secure value for money through economic, efficient and effective use of its resources

 

Respective responsibilities of the Authority and auditor

 

The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.

 

We are required under Section 20(1)(c) of the Act to be satisfied that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority's arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

 

Scope of the review of the Authority's arrangements to secure value for money through economic, efficient and effective use of its resources

 

We have undertaken our review in accordance with the Code of Audit Practice prepared by the Comptroller and Auditor General as required by the Act (the "Code"), having regard to the guidance on the specified criteria issued by the Comptroller and Auditor General in November 2015, as to whether the Authority had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. The Comptroller and Auditor General determined these criteria as those necessary for us to consider under the Code in satisfying ourselves whether the Authority put in place proper arrangements to secure value for money through the economic, efficient and effective use of its resources for the year ended 31 March 2016.

 

We planned our work in accordance with the Code. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether in all significant respects the Authority has put in place proper arrangements to secure value for money through economic, efficient and effective use of its resources.

 

Conclusion

 

On the basis of our work, having regard to the guidance on the specified criteria issued by the Comptroller and Auditor General in November 2015, we are satisfied that in all significant respects the Authority has put in place proper arrangements to secure value for money through economic, efficient and effective use of its resources for the year ended 31 March 2016.

 

Delay in certification of completion of the audit

 

We cannot formally conclude the audit and issue an audit certificate for the Authority for the year ended 31 March 2016 in accordance until we have completed our consideration of formal objections brought to our attention by local government electors under Section 27 of the Act. We are satisfied that these matters do not have a material effect on the financial statements or on our conclusion on the Authority's arrangements for securing value for money through economic, efficient and effective use of its resources.

 

 

 

 

Darren Wells
for and on behalf of Grant Thornton UK LLP, Appointed Auditor

 

Fleming Way

Manor Royal

Gatwick

RH10 9GT

 

13 September 2016

 

 


Movement in Reserves Statement

 

Restated For the Year Ended

31 March 2015

General Fund Balance

Earmarked GF / HRA Reserves

Housing Revenue Account

Capital Receipts Reserve

Major Repairs Reserve

Capital Grants Unapplied

Total Usable Reserves

Unusable Reserves

Total Authority Reserves

 

 

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

 

 

Note 6

Note 7

Note 6

Note 23A

Note 3 to the HRA

Note 23

Note 23

Note 24

 

 

Balance at 1 April 2014

2,177

16,757

5,664

1,628

5,999

224

32,449

55,704

88,153

 

Surplus or (deficit) on provision of services

(5,690)

-

3,108

-

-

-

 (2,582)

-

(2,582)

 

Other Comprehensive Income and Expenditure

-

-

-

-

-

-

-

(3,142)

(3,142)

 

Total Comprehensive Income and Expenditure

(5,690)

-

3,108

-

-

-

(2,582)

(3,142)

(5,724)

 

Adjustments between accounting basis & funding basis under regulations (Note 6)

6,172

-

(1,898)

905

791

(116)

5,854

(5,854)

-

Net Increase/

Decrease before Transfers to Earmarked Reserves

482

-

1,210

905

791

(116)

3,272

(8,996)

(5,724)

 

Transfers to/from Earmarked & Other Reserves

(648)

(1,070)

(1,482)

(21)

(232)

-

(3,453)

3,453

-

 

Increase/ Decrease (movement) in Year

(166)

(1,070)

(272)

884

559

(116)

(181)

(5,543)

(5,724)

 

Balance at 31 March 2015 carried forward

2,011

15,687

5,392

2,512

6,558

108

32,268

50,161

82,429

 

 

The above table has been restated to reflect the correct disclosure of HRA depreciation.

 

 

 

Movement in Reserves Statement cont’d

 

For the Year Ended

31 March 2016

General Fund Balance

Earmarked GF / HRA Reserves

Housing Revenue Account

Capital Receipts Reserve

Major Repairs Reserve

Capital Grants Unapplied

Total Usable Reserves

Unusable Reserves

Total Authority Reserves

 

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

 

Note 6

Note 7

Note 6

Note 23A

Note 3 to the HRA

Note 23

Note 23

Note 24

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 April 2015

2,011

15,687

5,392

2,512

6,558

108

32,268

50,161

  82,429

Surplus or (deficit) on provision of services

(4,587)

-

1,695

-

-

-

(2,892)

-

   (2,892)

Other Comprehensive Income and Expenditure

-

-

-

-

-

-

-

37,370

37,370

Total Comprehensive Income and Expenditure

(4,587)

-

1,695

-

-

-

(2,892)

37,370

34,478

Adjustments between accounting basis & funding basis under regulations (Note 6)

175

-

(365)

1,434

18

-

1,262

(1,262)

-

 

Net Increase/ Decrease before Transfers to Earmarked Reserves

(4,412)

-

1,330

1,434

18

-

(1,630)

36,108

34,478

Transfers to/from Earmarked & Other Reserves

4,412

(4,040)

(1,426)

(23)

595

-

(482)

482

-

Increase/ Decrease (movement) in Year

-

(4,040)

(96)

1,411

613

-

(2,112)

36,590

34,478

Balance at 31 March 2016 carried forward

2,011

11,647

5,296

3,923

7,171

108

30,156

86,751

  116,907

 


Comprehensive Income and Expenditure Statement

 

 

 

 

 

31 March 2015

 

31 March 2016

Expenditure

Income

Net

 

Expenditure

Income

Net

£’000s

£’000s

£’000s

 

£’000s

£’000s

£’000s

 

 

 

Gross expenditure, gross income and net expenditure on continuing operations

 

 

 

5,484

975

4,509

Cultural and Related Services

7,393

1,078

6,315

14,700

6,004

8,696

Environment and Regulatory Services

14,376

5,909

8,467

4,971

2,126

2,845

Planning Services

5,546

2,376

3,170

8,590

4,864

3,726

Highways and Transport Services

9,657

6,037

3,620

79,884

77,791

2,093

Other Housing Services

77,858

75,847

2,011

9,557

13,554

(3,997)

Local Authority Housing (HRA)

10,468

13,962

(3,494)

7,602

5,642

1,960

Central Services

7,900

5,885

2,015

2,327

417

1,910

Corporate and Democratic Core

2,340

560

1,780

195

394

(199)

Non Distributed Costs

204

407

(203)

133,310

111,767

21,543

Cost of Services

135,742

112,061

23,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     1,929

Other Operating Expenditure

Note 8

 

1,908

 

 

3,586

Financing and Investment Income and Expenditure

Note 9

 

2,840

 

 

(24,476)

Taxation and Non-Specific Grant Income and Expenditure

Note 10

 

(25,537)

 

 

 

 

 

 

 

 

 

     2,582

(Surplus) or Deficit on Provision of Services

 

 

     2,892

 

 

 

 

 

 

 

 

 

  (19,615)

(Surplus) or Deficit on revaluation of non-current assets

 Note 24A

 

 (23,724)

 

 

-

Impairment losses on non-current assets charged to the Revaluation Reserve

 

 

2

 

 

22,757

Re-measurements of the net defined benefit liability

 Note 37

 

(13,648)

 

 

 

 

 

 

 

 

 

3,142

Other Comprehensive Income and Expenditure

 

 

   (37,370)

 

 

 

 

 

 

 

 

 

     5,724

Total Comprehensive Income and Expenditure

 

 

   (34,478)

 


Balance Sheet as at 31 March 2016

 

 

 

 

 

 

31 March 2015

 

 

31 March 2016

 

£’000s

 

 

  £’000s

£’000s

 

 

Property, Plant & Equipment

Note 11

 

 

 

96,838

Council Dwellings

 

114,926

 

 

56,699

Other land and buildings

 

60,504

 

 

4,300

Vehicles, plant, furniture and equipment

 

3,988

 

 

14,081

Infrastructure

 

14,828

 

 

9,100

Assets under construction

 

8,255

 

 

1,781

Surplus assets not held for sale

 

725

 

 

685

Heritage Assets

Note 12

9,207

 

 

24,623

Investment Property

Note 14

24,750

 

 

278

Long Term Debtors

Note 18

464

 

 

 

 

 

 

 

 

208,385

Long Term Assets

 

 

237,647

 

 

 

 

 

 

 

6,800

Short Term Investments

Note 15

12,764

 

 

132

Inventories

 

113

 

 

16,693

Short Term Debtors

Note 18

15,829

 

 

(7,485)

Impairment of Debtors

Note 18

(7,802)

 

 

23,766

Cash and Cash Equivalents

Note 19

17,076

 

 

247

Assets Held for Sale (< 1year)

Note 20

296

 

 

 

 

 

 

 

 

40,153

Current Assets

 

 

38,276

 

 

 

 

 

 

 

1,789

Short Term Borrowing

Note 15

814

 

 

12,556

Short Term Creditors

Note 21

16,121

 

 

1,227

Provisions

Note 22

2,465

 

 

5,659

Grant Receipts in Advance

Note 33

6,709

 

 

 

 

 

 

 

 

21,231

Current Liabilities

 

 

26,109

 

 

 

 

 

 

 

29,220

Long Term Borrowing

Note 15

  28,741

 

 

113,879

Other Long Term Liabilities

Note 37/38

103,113

 

 

1,779

Grant Receipts in Advance

Note 33

    1,053

 

 

 

 

 

 

 

 

144,878

Long Term Liabilities

 

 

132,907

 

 

 

 

 

 

 

82,429

Net Assets

 

 

116,907

 

 

 

 

 

 

 

 

Represented By:

 

 

 

 

 

Usable Reserves

 

 

 

 

2,011

General Fund

Note 23

     2,011

 

 

15,687

Earmarked Reserves

Note 7

   11,647

 

 

5,392

Housing Revenue Account

Note 23

     5,296

 

 

2,512

Capital Receipts Reserve

Note 23A

     3,923

 

 

6,558

Major Repairs Reserve

Note 23

     7,171

 

 

108

Capital Grants Unapplied

Note 23

        108

 

 

 

Unusable Reserves

 

 

 

 

40,231

Revaluation Reserve

Note 24A

   61,480

 

 

(187)

Accumulated Absences Reserve

Note 24E

       (223)

 

(109,620)

Pensions Reserve

Note 24C

  (99,458)

 

121,601

Capital Adjustment Account

Note 24B

 125,996

 

 

15

Deferred Capital Receipts

 

            4

 

 

(1,879)

Collection Fund Adjustment Account

Note 24D

    (1,048)

 

 

82,429

Total Reserves

 

 

116,907

 

 

Signed:                                                        Tim Willis CPFA

Date:      20 September 2016                     Director of Corporate Resources & Section 151 Officer

 

Cash Flow Statement

 

 

 

 

 

 

2014-15

 

 

2015-16

£’000s

 

 

 

£’000s

 

 

 

 

 

2,582

Net (surplus) or deficit on the provision of services

 

 

2,892

 

 

 

 

 

(12,791)

Adjust net surplus or deficit on the provision of services for non-cash movements

Note 25a

 

(18,585)

 

 

 

 

 

4,069

Adjust for items included in the net surplus or deficit on the provision of services that are investing and financing activities

Note 25b

 

7,492

 

 

 

 

 

(6,140)

Net cash flows from Operating Activities

 

 

(8,201)

 

 

 

 

 

10,359

Investing Activities

Note 26

 

16,802

 

 

 

 

 

(2,934)

Financing Activities

Note 27

 

(1,911)

 

 

 

 

 

1,285

Net (increase) or decrease in cash and cash equivalents

Note 19

 

6,690

 

 

 

 

 

(25,051)

Cash and cash equivalents at the beginning of the reporting period

 

 

(23,766)

 

 

 

 

 

(23,766)

Cash and cash equivalents at the end of the reporting period

 

 

(17,076)

 

 

 


Notes to the Core Financial Statements

1.        Accounting Policies

General

The Statement of Accounts summarises the Authority’s transactions for the 2015-16 financial year and its position at the year end of 31 March 2016. The Authority is required to prepare an annual Statement of Accounts in accordance with the statutory framework established in England by the Accounts and Audit Regulations 2015 which require the accounts to be prepared in accordance with proper accounting practice. These primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2015-16 (The Code) and the Service Reporting Code of Practice 2015-16 (SERCOP), supported by the International Financial Reporting Standards (IFRS).

 

The accounting policies that have been adopted are set out in the following paragraphs. Where an accounting policy has not been adopted, or where it has been varied, then a note to that effect has been provided.

 

The qualitative characteristics, fundamental accounting principles, concepts and estimation techniques upon which the accounts have been prepared are set out below. The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

 

Qualitative Characteristics of Financial Information

Relevance

In accordance with IAS 1, Accounting Policies, all information about the Authority's financial performance that is useful for assessing the stewardship of public funds and making economic decisions is disclosed within the accounts.

Reliability

The Accounts represent fairly the substance of transactions that have taken place. The accounts are free from material error, complete within the bounds of materiality and have been prudently prepared.

Comparability

Comparative figures have been included to allow performance to be compared with a prior period or other authorities and entities with similar information.

Faithful Representation

 

In order to provide useful financial information it may be necessary to explain the extent to which information has been estimated, including any judgements made.  A representation of that estimate can be faithful if the amount is described clearly and accurately as being an estimate, nature and limitations of the estimating process are explained and no errors have been made in selecting and applying an appropriate process for developing the estimate.

 

Verifiability

 

Information represented enables different knowledgeable and independent observers to reach consensus, although not necessarily complete agreement that particular depiction is a faithful representation. Verification can be direct for example by observing the counting of cash, or indirect by checking the inputs, formula or other technique and recalculating the results using the same methodology.

 

Timeliness

 

Information is available to decision-makers in time to be capable of influencing their decisions. 

 

Understandability

In accordance with IAS 1, the accounts have been prepared in such a way to aid the understanding of the reader. We do, however, recognise the complexities contained within the Statement of Accounts. The Statements are prepared in accordance with accounting concepts, treatments and terminology that require reasonable knowledge of accounting and local government if they are to be properly understood. Technical terms have been avoided where possible, in favour of plain language. There is also a Glossary of Terms included which can be found on pages 113-118.

The Narrative Report on pages 4-16 sets out the local authority financial reporting framework and the key aspects of the Authority’s financial performance and standing.

Materiality

Materiality is a measure to ensure that information is of such significance as to justify its inclusion in the financial statements. An item of information is considered material to the financial statements if its misstatement or omission might reasonably be expected to influence assessments of the Authority’s stewardship, economic decisions, or comparisons with other entities, based upon those financial statements. If there are two or more similar items the materiality of the items in aggregate, as well as of items individually, are considered.

 

Council policy is to consider the following factors when assessing whether items are material:

 

 

 

 

Strict compliance with the Code, as to both disclosure and accounting principles, is not considered necessary where the amounts involved are not material to the fair presentation of the financial position and transactions of the Authority and to the understanding of the Statement of Accounts by the reader.

 

Accounting Concepts

Accruals

The accounts, other than cash flow information, have been prepared on an accruals basis. This means that sums due to or from the Council in respect of the year of account are included whether or not the cash has actually been received or paid in the year.

 

Going Concern

The Accounts have been prepared on a going concern basis, on the assumption that the Authority will continue in operational existence for the foreseeable future. This means in particular that the Comprehensive Income and Expenditure Statement and Balance Sheet assume no intention to curtail significantly the scale of the operation.

Primacy of Legislation

Local Authorities derive their power from statute and their financial and accounting framework is closely controlled by primary and secondary legislation. Where there is a conflict between a legal requirement and an accounting standard, the legal requirement will take precedence over the accounting standard.

Estimation Techniques

An accounting policy specifies the basis on which an item is to be measured. Where there is uncertainty over the monetary amount corresponding to that basis the amount will be arrived at using an estimation technique.

Accruals of Income and Expenditure

 

Revenue streams are accounted for in the year they are due irrespective of whether the sums have been paid or received as follows:

 

 

Exceptions to this principle are public utility accounts which are charged according to the date of the meter reading and some recurring sundry debtor accounts and annual fees for which the due dates do not coincide with normal quarter or year dates, subject to materiality. This policy is applied consistently each year and does not have a material effect on the year’s accounts. The income to be recovered through on-going benefit deduction is accounted for in the year of account and not when the cash has been received or paid in the year and the income to be recovered through the issue of fines is accounted for in the year of account and not when the cash has been received or paid in the year. Where revenue and expenditure have been recognised but cash has not been received or paid a debtor or creditor for the relevant amount is recorded in the Balance Sheet.

 

Cash and Cash Equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Authority’s cash management.

 

Prior Period Adjustments

Material adjustments applicable to prior years arising from changes in accounting policies or standards will be reflected by restating the comparable figures in the Statement of Accounts, together with a disclosure note detailing the reasons for such restatement.

 

Changes in Accounting Policy

The Code from time to time requires Local Authorities to amend their accounting policies. Where a change is made it is applied retrospectively (unless stated otherwise) by adjusting opening balances and prior period comparative amounts as if the new policy had always been applied. From 1 April 2015 the council prospectively applied IFRS 13 (Fair Value Measurement) in Notes 1 and 4 (Fair Value Measurement) and Note 13 (Fair Value Measurement of Property Assets).

 

Charges to Revenue for Non-Current Assets

Service revenue accounts are debited with the following amounts to record the real cost of holding fixed assets during the year:

 

a)    Depreciation attributable to the assets used by the relevant service

b)    Impairment losses on non-current assets where there are no accumulated gains in the Revaluation Reserve against which they can be written off

c)    Amortisation of intangible assets attributable to the service.

 

The Authority is not required to raise council tax to fund depreciation, revaluation and impairment losses or amortisation. However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement (Minimum Revenue Provision, (MRP)). Depreciation, revaluation and impairment losses and amortisation are therefore replaced by the contribution in the General Fund Balance (MRP) by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement.

 

With regard to the Housing Revenue Account (HRA) post self-financing guidance was issued by the Department of Communities and Local Government that any charges made to the revenue account for HRA Non-Dwelling assets for an impairment or downward revaluation would no longer be able to undertake the same accounting treatment as the general fund to negate the impact on the council dwelling rent payer and this now shows as a true cost to the HRA. However, in undertaking this treatment it causes an imbalance in the councils capital financing requirement and balance sheet and it is understood that a review of the treatment is currently being undertaken by the Department of Communities and Local Government and CIPFA.

 

 

Employee Benefits

Benefits Payable During Employment

 

Overtime payments relating to the previous financial year are accrued to that year. The full costs of employees are charged to the accounts of the period within which the employees worked.

 

The Code requires that Councils identify the costs of any Employee Benefits accrued but untaken at the balance sheet date. These costs primarily consist of any untaken leave, flexitime and lieu time. The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to Surplus or Deficit on the Provision of Services so that the holiday benefits are accounted for in the financial year in which the holiday absence occurs. The adjustment is reversed out of the Comprehensive Income and Expenditure Statement so that there is no charge to the taxpayer.

 

Pensions General

 

The Accounting Standards, IAS 19 and 26 regarding Employee Benefits and Retirement Benefits, require recognition of pension assets and liabilities in the Balance Sheet and the operating costs of providing retirement benefits together with changes in the value of assets and liabilities to be reflected in the Comprehensive Income and Expenditure Statement. In order that IAS 26 requirements do not impact upon council tax levels, the movement on the net assets and liabilities (net of the employer’s contributions and actuarial gains and losses) is reversed out to the Pension Reserve through 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 appropriate service in the Comprehensive Income and Expenditure Statement when the Authority is demonstrably committed to the termination of 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 pension enhancement termination 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.

 

Post Employment Benefits

 

Contributions to the pension scheme are determined by the Fund’s actuary on a triennial basis. The latest formal valuation of the Fund for the purpose of setting employers’ actual contributions was as at 31 March 2014 and this has been used to update the service cost figures.

 

Liabilities of the pension scheme attributable to the Council are included in the Balance Sheet on an actuarial basis using the projected unit method. This requires 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 and projections of earnings for current employees.

 

Liabilities are discounted to their value at current prices, using a discount rate based on the indicative rate of return on high quality corporate bonds.

 

The assets of the pension fund attributable to the Council are included in the Balance Sheet at their fair value:

 

 

Previously, quoted securities were valued at mid-market value rather than bid price.

 

The changes in the net pensions liability is analysed into the following components:

 

Service Costs comprising;

 

Current Service Cost – the increase in liabilities as a result of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the revenue accounts of services for which the employees worked.

 

Past Service Cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the Cost of Services in the Comprehensive Income and Expenditure Statement as part of Non-Distributed Costs.

 

Interest Cost – the expected increase in the present value of liabilities during the year as they move one year closer to being paid – debited to Financing and Investment Income and Expenditure in the Comprehensive Income and Expenditure Statement.

 

Remeasurements;

 

Expected Return on Assets – the annual investment return on the fund assets attributable to the Council, based on an average of the expected long-term return – credited to Other Comprehensive Income and Expenditure in the Comprehensive Income and Expenditure Statement.

 

Actuarial Gains and Losses – changes in the net pension liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – charged to the Pensions Reserve.

 

Contributions Paid to the Funds - cash paid as employer’s contributions to the pension fund.

 

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 transfers 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 to 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.

 

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.

 

Events After the Reporting Period

Where an event occurs after the Balance Sheet date, whether favourable or unfavourable, and also provides evidence of conditions that existed at the Balance Sheet date, the amounts recognised in the Statement of Accounts will be adjusted. Any disclosures affected by the new information about the adjusting event will also be updated in light of the new information.

Events that occur after the Balance Sheet date indicative of conditions arising after the Balance Sheet date will not be adjusted in the Accounting Statements, but will be disclosed in the Notes to the Core Financial Statements, to include:

 

 

Events after the Balance Sheet date will be reflected up to the date when the Statement of Accounts is authorised for issue.

 

Financial Instruments - Financial Liabilities

 

Financial liabilities 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 and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised. For the Council’s borrowings this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in accordance with the loan agreements.

 

Financial Instruments - 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. (The Council does not hold any “Available- for-sale assets”)

 

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. They are subsequently measured at their amortised cost. 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. For most of the loans that the Authority has made, 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 in the loan agreement. A small element of the loans are classified as soft loans (made at less than market rate) so there is a requirement to record any loss in the Comprehensive Income and Expenditure Statement to represent interest forgone over the life of the loan.

 

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 under the heading “Impairment of Financial Instruments”.

 

The impairment loss is measured as the difference between the carrying amount and present value of the revised future cash flows discounted at the assets original effective interest rate. Any gains and losses that arise on the de-recognition of an asset are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

 

 

Fair Value Measurement

 

The authority measures some of its property assets and some of its financial instruments at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:

 

·         in the principal market for the asset or liability, or

·         in the absence of a principal market, in the most advantageous market for the asset or liability

 

The authority measures the fair value of an asset or liability using assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. When measuring the fair value of a non-financial asset, the authority takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The authority uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

 

Inputs to the valuation techniques in respect of assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy as follows:

 

·         Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the authority can access at the measurement date

·         Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

·         Level 3 – unobservable inputs for the asset or liability.

 

 

Government and Non-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 Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset 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 creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-specific Grant Income and Expenditure (non-ringfenced 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 Reserve. Where it has been applied, it is posted to the Capital Adjustment

Account. Amounts in the Capital Grants Unapplied Reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.

 

Revenue grants are matched in service revenue accounts with the service expenditure to which they relate. Grants to cover general expenditure (e.g. Revenue Support Grant) are credited to the foot of the Comprehensive Income and Expenditure Statement under Taxation and Non–Specific Grant Income.

 

Heritage Assets

 

A heritage asset is a tangible or intangible asset that is intended to be preserved in trust for future generations because of its historical, artistic, scientific, technological, geophysical or environmental qualities and is held and maintained principally for its contribution to knowledge and culture.

 

The Authority has identified the following asset groups as classified as Heritage Assets:

 

 

 

Heritage assets (other than operational heritage assets) shall normally be measured at valuation in accordance with FRS 30. Where it is not practicable to obtain a valuation at a cost which is commensurate with the benefits to users of the financial statements, heritage assets shall be measured at historical cost (less any accumulated depreciation, amortisation and impairment losses). Valuations may be made by any method that is appropriate and relevant. There is no requirement for valuations to be carried out or verified by external valuers, nor is there any prescribed minimum period between valuations. However, where heritage assets are measured at valuation, the carrying amount shall be reviewed with sufficient frequency to ensure the valuations remain current. Where no records of valuation are available the assets are not included on the Authority’s Balance Sheet but a disclosure is made as to these assets.

 

Acquisitions are initially recognised at cost or if bequeathed or donated at nil cost, at valuation.

 

Heritage assets are reviewed for evidence of impairment, including doubts as to authenticity. Any impairment is accounted for in accordance with the Council’s policy within the Property Plant and Equipment accounting policy. The proceeds of any disposals likewise follow the Council’s general accounting policy.

 

The Authority accounts for heritage assets in accordance with FRS 30, except where interpretations or adaptations to fit the public sector are detailed in the Code. References in FRS 30 to UK accounting standards shall be taken to refer to the equivalent IFRS or IPSAS.

 

Operational heritage assets (i.e. those that, in addition to being held for their heritage characteristics, are also used by the Authority for other activities or to provide other services) shall be accounted for as operational assets, and shall be valued in the same way as other assets of that general type.

 

Intangible Assets

 

In line with IAS 38 (Intangible Assets), expenditure on intangible fixed assets is capitalised at cost. An intangible fixed asset is one that has no physical substance but is identifiable and the Authority has control, (either through custody or legal protection) over the future economic benefits derivable from it.

 

Purchased intangible assets (e.g. software licences) should be capitalised as assets. Internally developed intangible assets should only be capitalised where criteria set out in section 4.5.2.7 of The Code are met. The Authority must satisfy itself that these criteria can be met and that internal systems are able to distinguish between Research and Development phases of a project.

 

Council policy is to write down intangible assets to the relevant service revenue account in the year that they occur.

 

Interests in Companies and Other Entities

 

The Code’s definition of an interest in another entity includes “the means by which an entity has control or joint control of, or significant influence over, another entity”. In accordance with IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements, assessment of any involvement/interest for the purposes of group accounts will consider the above when determining whether or not a group relationship exists. This is considered to apply where the Authority has all of the following:

 

·         sole control of another entity and power over it;

·         exposure to risks or rights to variable returns;

·         and the ability to use its power over the other entity to influence those returns.

 

Subject to the assessment set out above if the Authority’s interest is deemed to be a group relationship the Council may still only prepare single entity accounts if the group interest is not material.

 

 

 

Inventories, Rechargeable Works and Long Term Contracts

 

Inventories relate to printing, stationery and marketing merchandise held at Visitor Information Centres and Museums and stores held at the Parks and Waste Direct Labour Organisations.

 

The Code and IAS 2 (Stocks and Long-term contracts), require stocks to be shown at the lower of actual cost or net realisable value. The stock at the printing unit is measured at average cost of stock held as it is considered that the financial effect of the different treatment is not material.

 

Any work in progress is subject to an interim valuation at the year end. Rechargeable Works are included at cost.

 

Long Term contracts are defined as “contracts entered into for the design, manufacture or construction of a single substantial asset or the provision of a service (or of a combination of assets or services which together constitute a single project) where the time taken substantially to complete the contract is such that the contract activity falls into different accounting periods.” The Council makes a disclosure in the notes to the Core Financial Statements in respect of any capital contracts meeting this definition.

 

Joint Operations

 

Joint Operations are activities undertaken by the Authority in conjunction with other bodies where there is joint control and the parties have rights to the assets, and obligations for the liabilities of the arrangement. Joint control exists where unanimous consent is required from the parties sharing control for decisions about relevant activities. The Authority recognises on its Balance Sheet its own assets and the liabilities that it incurs, and debits and credits the Comprehensive Income and Expenditure Statement with the expenditure it incurs and the share of the income it may earn from the activity of the operation.

 

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. The accounting treatment for leases depends on whether the Council is a lessee; is paying a third party rental payments for the right to use an asset, or a lessor where it is granting the right to use an asset to an external third party. The accounting treatment for each is given below:

 

 

Where the Council is a Lessee

 

Finance Leases: Where the Council enters into material finance leases, the asset is recognised in the Council’s Balance Sheet, together with any associated liability to fund the asset. The cost of the fixed asset is then charged to the Comprehensive Income and Expenditure Statement over the life of the asset in accordance with the Council’s depreciation policy.

 

Rentals payable under finance leases are apportioned between a finance charge and a reduction in the liability. The apportionment basis used ensures that the finance charge is allocated over the term of the lease.

 

Operating Leases:Leases that do not meet the definition of finance leases are accounted for as operating leases. Rentals payable are charged to the relevant service revenue account on a straight-line basis over the term of the lease, generally meaning that rentals are charged when they become payable.

 

Where the Council is a Lessor

 

Finance Leases: The asset is removed from the Balance Sheet as the risks and rewards are with the lessee with the amounts due from finance leases recorded in the Balance Sheet as a debtor. Rentals received are apportioned between reducing the debtor and finance interest earnings. The apportionment basis used ensures that earnings are normally allocated to the lease term to give a constant periodic rate of return to the Council.

 

Operating Leases: Rentals receivable are charged to the relevant service revenue account over the term of the lease, generally meaning that rentals are charged when they become payable.

 

Embedded Leases: The IFRS reporting arrangements require the Council to determine whether or not it benefits from the exclusive use of tangible assets within any of its contract arrangements with third parties. If the Council decides that this is the case it has to decide whether the arrangement is to be considered a lease in accordance with IFRIC 12. The Council has determined that there are no contracts that fall within these criteria.

 

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 2015-16 (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 multi-functional, democratic organisation.

·         Non Distributed Costs – the cost of discretionary benefits awarded to employees retiring early and impairment losses chargeable on Assets Held for Sale.

 

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 Operations.

 

 

Property, Plant and Equipment and Investment Property

 

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 either Property, Plant and Equipment or Investment Properties.

 

Recognition: Expenditure on the acquisition, creation or enhancement of non-current assets has been capitalised on an accruals basis at cost with subsequent measurement as explained below. Expenditure on non-current assets is capitalised, provided that the asset yields benefit to the Council and the services it provides, for a period of more than one financial year. Subsequent expenditure on non-current assets is capitalised in accordance with IAS 16. This excludes expenditure on routine repairs and maintenance of non-current assets, which is charged directly to service revenue accounts. The Council has set a de minimus level in respect of the recognition of capital expenditure of £10,000.

 

Non-current assets are classified into groupings required by The Code, comprising

a)            Property, Plant and Equipment, which can be further analysed as

·           Land and Operational Buildings

·           Council Dwellings

·           Infrastructure Assets

·           Vehicles Plant and Equipment

·           Community Assets

·           Assets under Construction

b)            Heritage Assets

c)            Investment Properties

d)                       Intangible Assets (see separate Accounting Policy)

 

Measurement: Non-current assets have been valued on the basis recommended by CIPFA and in accordance with the Statements of Asset Valuation Principles and Guidance Notes issued by the Royal Institution of Chartered Surveyors (RICS). They have been classified in accordance with the IFRS Code and have been valued on the following bases:

 

a)               Land and Operational Buildings – the lower of net current replacement cost or net realisable value (as certified by the Estates Surveyor)

b)               Council Dwellings – existing use value for social housing, including regional adjustment factors as amended from time to time

c)               Heritage Assets – (see separate accounting policy)

d)               Infrastructure Assets – historical costs net of depreciation

e)               Vehicles, Plant and Equipment – the lower of net current replacement cost or net realisable value

f)                Community Assets – historic cost

g)               Investment Properties –­ normally open market value

 

Net current replacement cost is assessed as:

 

Depreciated replacement cost is only used where there is no active market for the asset being valued: that is where there is no useful or relevant evidence of recent sales transactions due to the specialised nature of the asset.

 

Revaluation:Revaluations of non-current assets are undertaken on a 5-year rolling programme, revaluing approximately one fifth of the Authority's assets annually. Council Dwellings are re-valued annually using the Beacon principle. Identified material changes to asset valuations will be adjusted in the interim period, as they occur. The Asset Valuations in these accounts have been prepared by the Council’s internal Estates Surveyors, Mandy Robinson, BSc MRICS, Chartered Surveyor and Lesley Trim BSc MRICS Chartered Surveyor RV apart from the valuation of specialist assets such as council dwellings and Ramsgate Port/Harbour, where the services of external valuers are used. The valuations were produced in accordance with guidelines issued by CIPFA, and in accordance with the Royal Institute of Chartered Surveyors current guidance notes for Asset Valuation. The date of valuation for the General Fund is 1 April 2015.

 

The basis for Council Dwellings valuations is Existing Use Value for Social Housing (EUV-SH). Under this method the vacant possession value of the dwellings is reduced to 32% of the market value, to reflect the occupation by a secure tenant. A full valuation of the Beacon properties is undertaken every five years but an annual adjustment is made to reflect market changes during the year. The date of valuation for the Housing Revenue Account is 31 March 2016.

 

Surpluses from any revaluation of assets are credited to the Revaluation Reserve and are used to offset any subsequent revaluation loss with the exception of investment properties that are charged directly to the Comprehensive Income and Expenditure Statement and reversed out to the Capital Adjustment Account to ensure that no cost falls to the taxpayer. 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.

 

The Council has decided to adopt a phased approach to annual valuation of its Investment Properties due to the size of the portfolio. From April 2010 investment properties with a value in excess of £100,000 are valued annually with the remaining properties included in the existing 5 yearly rolling programme of revaluation.

 

Investment Property: 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 arms length. Properties are not depreciated but are revalued annually according to market conditions at the year end. 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 line 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 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.

 

Components: The Code requires local authorities to identify elements of major assets that have either a capital cost that is significant in relation to the total cost of the asset and/or has a different useful life or depreciation method. The Council accounts for components for assets with a gross book value in excess of £1m and where any individual component has a value in excess of £100,000. The component proposals for the HRA dwelling stock differ from that above. The Council componentises its Council Dwelling stock on a dwelling basis and proportions the overall valuation into four key components. Those components that are depreciable are depreciated over the remaining useful life of the council dwelling, resulting in an overall stock depreciation figure.

 

Impairment: Assets are assessed at each year end as to whether there is any indication that an impairment charge may be required. Where indications exist that may give rise to impairment of an asset 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, the accounting entries are:

 

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.

 

The HRA dwelling stock is revalued annually using beacon property values. Any change in valuation is assessed to determine any annual impairment charges.

 

Disposals: Income from the disposal of non-current assets is accounted for on an accruals basis. When an asset is disposed of or decommissioned, the value of the asset in the Balance Sheet, any receipt from disposal and any costs associated with the disposal are accounted for in the Comprehensive Income and Expenditure Statement so comprising any gains or losses on disposal. Any revaluation gains in the Revaluation Reserve are transferred to the Capital Adjustment Account. Amounts in excess of £10,000 are categorised as capital receipts. A proportion of receipts relating to Right to Buy disposals are payable to Government, net of allowable deductions. Since the changes to the pooling of capital receipts (1st April 2012) and the introduction of the Governments 1-4-1 replacement programme, which the authority adopted, a higher proportion of receipts are retained. These housing receipts are retained for the 1-4-1 replacement of Council Dwellings and for investment in certain regeneration projects or affordable housing. The balance of receipts is required to be credited to the Usable Capital Receipts Reserve and can then only be used for new capital investment or set aside to reduce the Council’s underlying need to borrow (the Capital Financing Requirement). Receipts are appropriated to the reserve through 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 through the Movement in Reserves Statement.

 

Depreciation: With the exception of Investment Properties and Land (which are not subject to depreciation), assets are depreciated on a straight line basis over their useful economic life as follows:

 

Council Dwellings

Up to 60 years

Infrastructure

Up to 40 years

Heritage Assets

Varies on asset type, see separate accounting policy

Other Buildings

Specifically determined by Estates Officer

Vehicles

Up to 12 years

Plant

Up to 10 years

Surplus assets

Up to 40 years

 

Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account. On revaluation, accumulated depreciation is written out for both current value and historical cost with subsequent depreciation calculated on a straight line basis over the remaining useful life of the asset.

 

Newly acquired assets are depreciated in the year of acquisition unless the purchase is near to the financial year end and the change in depreciation charge is considered material in which case depreciation will apply to the following year. Assets in the course of construction are depreciated when they are brought into use.

 

Where an item of Property, Plant and Equipment has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately (see Component section above).

 

The Council componentises its housing stock and then depreciates the depreciable components over the useful economic life of each council dwelling.

 

Provisions

 

Provisions represent sums set aside for liabilities or losses which are likely or certain to be incurred but it is uncertain as to the amounts or dates on which they will arise. Provisions are charged direct to the appropriate service revenue account and when the expenditure is incurred to which the provision relates it is charged direct to the provision.

 

HRA Leasehold Service Charge accounts are raised after the accounts have closed as they are based on actual cost in order to comply with Leasehold conditions. A provision is made on the Leasehold Maintenance Holding Account for the estimated cost of services, day to day repairs, recurring maintenance and major works incurred during the financial year.

 

Reserves

 

Amounts set aside for purposes falling outside of the definition of provisions are considered as reserves. The Council sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. The IFRS standards require details of Reserves to be reported in the Movement in Reserves Statement, in the Core Financial Statements. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service revenue account in that year within the Cost of Services in the Comprehensive Income and Expenditure Statement and an equal amount is appropriated back to the General Fund from the relevant reserve so that there is no charge to the taxpayer.

 

Details of the Council’s reserves can be found within the notes to the Core Financial Statements. Certain reserves are kept to manage the accounting processes for tangible fixed assets and retirement benefits and they do not represent usable resources for the Council.

 

The Statement of Accounts also clearly separates the usable and unusable reserves in the Financing section of the Balance Sheet.

 

Contingent Assets/Liabilities

 

Contingent Liabilities are defined as possible obligations that arise from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the Council's control. If such obligations are likely, they are quantified and a disclosure note is added to the Accounts.

 

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.

 

Revenue Expenditure Funded from Capital Under Statute (REFCUS)

Expenditure incurred during the year that may be capitalised under statutory provisions but that 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. Council policy is to write down this expenditure in the year that it occurs. The full cost is charged to the relevant service in the Comprehensive Income and Expenditure Statement but then reversed out through the Movement in Reserves Statement to ensure that there is no effect on the revenue accounts as a whole.

Current Assets Held for Sale

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 andhas the following specific criteria attached to it:

 

If the asset meets these criteria it should be newly classified as a current asset and no longer depreciated. The asset is revalued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell.

Impairment of Debtors

 

Provisions are made for bad and doubtful statutory debts and these are charged to the appropriate revenue service. In accordance with the CIPFA guidelines, for Council Tax and Business Rate debts, the older the debt the greater the provision, although depending on specific circumstances this may not be applied. Debts relating to garage rents are subject to a flat rate percentage based on historical trends. All other HRA related debts over £2,500 are analysed and a provision made depending on individual circumstances, with the exception of leaseholder accounts as the Housing Act states that tenants should not subsidise Leaseholders, therefore no bad debt provision is made within the HRA. Housing benefit overpayment debt provision is subject to a range of specific percentages dependant on whether the debt is to be collected from on-going benefit.

 

Trade debtors are classified as financial instruments and impairments are charged to ‘Impairment of Financial Instruments’ in the Comprehensive Income & Expenditure Statement.

 

Previous guidance set out more detailed criteria for the assessment of the “impairment” of the outstanding debt and stressed a need to look at individual large debts and their specific circumstances as well as estimating a more general provision based on historic payment trends, these criteria are continued into the current policy.

 

Collection Fund

 

Billing authorities are required by statute to maintain a separate fund for the collection and distribution of amounts due in respect of Council Tax and Business Rates. Statute determines the amount required to be transferred from the Collection Fund to the General Fund (an authority’s precept for the year plus/minus its share of the surplus/deficit on the Collection Fund for the previous year estimated on 15 January for Council Tax and 31 January for Business Rates). The Council Tax and Business Rate income included in the Comprehensive Income and Expenditure Statement is the accrued income for the year. The difference between this amount and the amount required by regulation is taken to the Collection Fund Adjustment Account, and is included as a reconciling item in the Movement in Reserves Statement to negate the effect on the taxpayer. Council Tax and Business Rates are collected on an agency basis, so the Balance Sheet reflects the debtor/creditor position between the Council, Central Government and major preceptors, since the cash paid to preceptors in the year is not the share of actual cash collected from council tax and business rate payers.

 

Business Rate Retention

 

New arrangements for the retention of business rates came into effect on 1 April 2013 along with the requirement for an additional provision to be set aside for potential changes to rateable values as a result of appeals. The council’s share of this provision sits alongside the impairment provision for unrecoverable debt (Note 18) and is calculated using Valuation Office data on successful and outstanding appeals. As there is potential for such appeals to be backdated to the last Valuation Office valuation of the rating list, (the closing date for backdating to the 2010 list being 31st March 2015) the amount set aside includes an element for backdating. An estimated provision is also made for appeals that may yet be lodged, based on new assessments due to be added to the rating list if the estimated assessment is material.

 

Business Rate Pool

 

Income or expenditure generated as a result of membership of the Kent Business Rate Pool (from 1 April 2015) is accounted for in the proportions set out in the pool agreement. The authority’s share of any income or expenditure is credited or debited respectively to Taxation and Non-Specific Grant Income and Expenditure in the Comprehensive Income and Expenditure Statement in the relevant financial year. Levy or safety net payments due to or from the lead authority at the end of the accounting year are reflected as creditors or debtors in the Balance Sheet and any increase or decrease in the Growth Fund share (to be utilised to promote growth within the district pool based area) is set aside in the NDR Equalisation Reserve within the council’s Balance Sheet for future use.

 

 

Value Added Tax

 

In accounting for VAT, the Council complies with the SSAP 5, Accounting for Value Added Tax and VAT is excluded from the main accounting statements unless it is not recoverable. The Council’s partial exemption status is reviewed on an annual basis.

 

2.       Accounting Standards issued, Not Adopted

 

 

The 2015-16 Code requires changes in accounting policy to be applied retrospectively unless alternative transitional arrangements are specified in the Code. Paragraph 3.3.4.3 (and IAS 8) requires an authority to disclose information relating to the impact of an accounting change that will be required by a new standard that has been issued but not yet adopted by the Code for the relevant financial year. The standards that paragraph 3.3.4.3 of the Code are likely to apply to are set out below and further details of the disclosures required will be provided in the 2016-17 Code:

 

·         Amendments to IAS 19 Employee Benefits (Defined Benefit Plans: Employee Contributions)

·         Annual Improvements to IFRS’s 2010-2012 Cycle

·         Amendment to IFRS 11 Joint Arrangements (Accounting for Acquisitions of Interests in Joint Operations)

·         Amendment to IAS 16 Property, Plant & Equipment and IAS 38 Intangible Assets (Clarification of Acceptable methods of Depreciation and Amortisation)

·         Annual Improvements to IFRS’s 2012-2014 Cycle

·         Amendment to IAS 1 Presentation of Financial Statements (Disclosure Initiative)

·         The changes to the format of the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement and the introduction of the new Expenditure and Funding Analysis

·         The changes to the format of the Pension Fund Account and the Net Assets Statement

 

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:

 

·        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. The Council is satisfied that its financial management procedures are robust and that it has sufficient reserves to mitigate any adverse economic trends.

 

·         The Council revalues its Investment Properties and its General Fund Operational Land and Buildings on a five yearly rolling cycle (apart from Investment Properties with a value over £100k which are valued annually) in accordance with RICS and CIPFA guidance. It is not considered feasible or financially viable to value all assets annually and the Council has implemented a desk top review process to assess whether or not the valuation held on the balance sheet is materially different from that if an actual year end valuation had taken place. This assessment has identified an estimated increase of £1,150k (1.97%) against the operational asset base of £58.269m, and £1,713k (6.92%) against the investment property asset base of £24.75m. This is considered to be immaterial and no adjustment has been made to the balance sheet. The current revaluation policy (including frequency, methodology and classifications) states that any material changes to asset valuations will be adjusted in the interim period as they occur.  

 

·         The Council’s 50:50 ownership (with Kent County Council) of East Kent Opportunities LLP is accounted for as a joint operation under IFRS 11 Joint Arrangements. If EKO were to cease operations the council would retain ownership of the land it originally contributed to the partnership currently valued at £6.812m and would be required to repay its share of the cost of construction of the Spine Road £2.775m. The Council’s accounts reflect these risks and rewards.

 

·         Dreamland is considered to be the oldest surviving pleasure park in Great Britain (dating back to the British railway boom of the early 1860’s) and has been restored specifically as a vintage site. The amusement park is regarded as a heritage asset in these accounts as it is essential to provide the heritage dreamland activities/services from the site, which is held and maintained principally for its contribution to knowledge and culture. The specific site is an integral part of the heritage experience (being the original location of the park) as are certain features of the site such as the iconic Grade II Listed Scenic Railway and cinema complex. Given that the amusement park is a specialist asset providing a unique heritage experience , it is measured at historical cost as it is not practicable to obtain a valuation at a cost which is commensurate with the benefits to users of these accounts. The Dreamland building is included in these accounts as an asset under construction and, on completion, it is intended that it will be accounted for in the same way as described above for the park.     


4.      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 2016 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:


Item

Uncertainties

Effect if Actual Result Differs from Assumptions

 

Property, Plant and Equipment

 

Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the Authority will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives assigned to assets.

 

If the useful life of operational assets is reduced, depreciation increases and the carrying amount of the assets falls. It is estimated that the annual depreciation charge for buildings would increase by £605k for every year that useful lives had to be reduced.

 

 

 

Fair Value Measurements

When the fair values of financial assets and financial liabilities cannot be measured based on quoted prices in active markets (ie.Level 1 inputs), their fair value is measured using valuation techniques such as quoted prices for similar assets or liabilities in active markets or using the discounted cash flow (DCF) model. Where possible, the inputs to these valuation techniques are based on observable data, but where this is not possible judgement is required in establishing fair values. These judgements typically include considerations such as uncertainty and risk. However, changes in the assumptions used could affect the fair value of the authorities assets and liabilities. Where Level 1 inputs are not available, the authority employs relevant experts to identify the most appropriate valuation techniques to determine fair value (eg. for investment properties the authority’s valuation officer and external valuer). Information about the valuation techniques and inputs used in determining the fair value of the authority’s assets and liabilities are disclosed in Notes 13 and 14.

The authority uses the discounted cash flow (DCF) model and the market, income and cost approaches to measure the fair value of some of its property assets and financial assets. The significant unobservable inputs used in the fair value measurement include the management assumptions regarding rent growth, vacancy levels (for investment properties) and discount rates – adjusted for regional factors (for both investment properties and some financial assets). Significant changes in any of the unobservable inputs would result in a significantly lower or higher fair value measurement for the relevant property assets and financial assets/liabilities.

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. A firm of consulting actuaries is engaged to provide the Authority with expert advice about the assumptions to be applied.

 

The effects on the net pensions liability of changes in individual assumptions can be measured. For instance, a 0.1% increase in the discount rate assumption would result in a decrease in the pension liability of £3.945m and an increase of one year to the mortality rate would result in a decreased pension liability of £6.935m. However, the assumptions interact in complex ways.

 

 

 

 

Impairment

At 31 March 2016, the Authority had a balance of sundry debtors of £1.295m. A review of balances suggested that an impairment of doubtful debts of 100% would be made for those debts over 1 year old, 50% for those debts over 6 months old and full recovery has been assumed for those debts under 6 months old. However, in the current economic climate it is not certain that such an allowance would be sufficient.

 

If collection rates were to deteriorate, an impairment of doubtful debts of 10% for those debts under 6 months old (total £639k) would require an additional £63.9k to be set aside as an allowance.

 

 

 

Investment Property Asset Values

The Council has in excess of 200 investment properties. An annual valuation of all these assets is not practical, therefore only those assets with a value over £100k are valued annually with the remainder valued on a rolling 5 year basis.

Investment assets totaling £4.559m have not been revalued in 2015-16. In general, the asset valuations for investment properties have gone up by 6.92% in 2015-16. If the same increase were to be applied to those investment properties not revalued, then this would require an adjustment of £0.315m to the asset valuation.

 

 

 

 

Business Rate Appeals

The Council has a significant number of outstanding appeals against the 2010 Valuation Office (VO) rating list (Rateable Value £38.464m) which can take a number of years to be heard. An estimate of the expected refunds to business ratepayers as a result of these appeals for prior, current and future years is based on VO data for settled and outstanding appeals, assuming average percentages of claims being successful and average percentages of reductions to rateable values relevant to the year of appeal. The council’s share of the provision set aside for appeals is £2.434m.

If the top ten appeals were successful (RV 14.7m) and rateable values were reduced by 15% and backdated to 2010 (if relevant) then an additional £1.479m would need to be set aside in the provision for appeals.

 

 

 

5.       Events After The Reporting Period

 

The Statement of Accounts were authorised for issue by the Director of Corporate Resources & S151 Officer on 20 September 2016. Events taking place after this date will not be reflected in the financial statements or notes.

Where events taking place before this date provided information about conditions existing at 31 March 2016, the figures and disclosures in the financial statements have been adjusted to reflect this information as follows:

Following an investigation into Hand Arm Vibration cases by the Health and Safety Executive, the council has been informed of the decision to instigate criminal proceedings against it for alleged offences for contravention of the Health and Safety at Work etc. Act (‘the Act’) between 6 July 2005 and 15 October 2014.

 

The operators of the Dreamland historic amusement park (Sands Heritage Limited) went into administration on 27th May 2016. Although the operator is in administration the park continues to trade whilst options for the future of the operator are considered by the appointed administrator.

 

 

 

 

 

 

 

 

 

 

6.      Adjustments Between Accounting Basis and Funding Basis under Regulations

This note 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. The table below has been restated to reflect the correct disclosure of HRA depreciation.

Restated 2014-15

General Fund Balance

Housing Revenue Account

Capital Receipts Reserve

Major Repairs Reserve

Capital Grants Unapplied

Movement in Unusable Reserves

 

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

Adjustments primarily involving the Capital Adjustment Account

 

Depreciation and impairment of non-current assets

4,314

-

-

2,803

-

(7,117)

Revaluation losses of non-current assets

170

-

-

-

-

(170)

Movements in the fair value of investment properties

(622)

-

-

-

-

622

Amortisation of intangible assets

47

-

-

-

-

(47)

Capital grants and contributions applied

(2,931)

(938)

-

-

(116)

3,985

Revenue expenditure funded from capital under statute

431

-

-

-

-

(431)

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CI&E Statement

183

       2,066

               -

               -

                 -

           (2,249)

Statutory provision for repayment of debt

(853)

-

-

-

-

853

Capital expenditure charged to the General Fund

-

(1,940)

-

-

-

1,940

Adjustments primarily involving the Capital Receipts Reserve

 

Transfer of cash sale proceeds credited as part of the gain/loss on disposal to the CI&E Statement

(144)

      (1,142)

       1,286

               -

                 -

                    -

Costs of disposal funded from capital receipts

3

-

(3)

-

-

-

Use of the CRR to finance new capital expenditure

-

-

(199)

-

-

199

Use of the CRR to finance the payments to the Government capital receipts pool

186

-

(186)

-

-

-

Deferred capital receipts

-

-

7

-

-

(7)

Adjustments primarily involving the Major Repairs Reserve

 

Use of the MRR to finance new capital expenditure

-

-

-

(2,012)

-

2,012

Adjustments primarily involving the Pensions Reserve

 

Reversal of retirement benefit related items debited/credited to the CI&E Statement

7,758

115

-

-

-

(7,873)

Employer’s pension contributions and in year payments direct to pensioners

(4,874)

(59)

-

-

-

4,933

Adjustments primarily involving the Collection Fund Adjustment Account

 

Amount by which Council Tax income credited to the CI&E Statement is different from that calculated for the year in accordance with statute

2,498

               -

               -

               -

                 -

          (2,498)

Adjustments primarily involving the Accumulated Absences Account

 

Amount by which officer remuneration charged to the CI&E Statement on an accruals basis differs from that chargeable in the year in accordance with statutory requirements

6

               -

               -

               -

                 -

                 (6)

 

Total Adjustments

6,172

(1,898)

905

791

(116)

(5,854)

 

 

2015-16

General Fund Balance

Housing Revenue Account

Capital Receipts Reserve

Major Repairs Reserve

Capital Grants Unapplied

Movement in Unusable Reserves

 

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

Adjustments primarily involving the Capital Adjustment Account

 

Depreciation and impairment of non-current assets

4,006

-

-

3,323

-

(7,329)

Revaluation losses of non-current assets

(172)

-

-

-

-

172

Movements in the fair value of investment properties

(1,306)

-

-

-

-

1,306

Amortisation of intangible assets

57

-

-

-

-

(57)

Capital grants and contributions applied

(4,539)

(255)

-

-

-

4,794

Revenue expenditure funded from capital under statute

493

-

-

-

-

(493)

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CI&E Statement

1,501

       2,375

               -

               -

                 -

           (3,876)

Statutory provision for repayment of debt

(848)

-

-

-

-

848

Capital expenditure charged to the General Fund

-

(1,392)

-

-

-

1,392

Adjustments primarily involving the Capital Receipts Reserve

 

Transfer of cash sale proceeds credited as part of the gain/loss on disposal to the CI&E Statement

(1,862)

      (1,169)

       3,031

               -

                 -

                    -

Costs of disposal funded from capital receipts

22

-

(22)

-

-

-

Use of the CRR to finance new capital expenditure

-

-

(1,378)

-

-

1,378

Use of the CRR to finance payments to the Government capital receipts pool

208

-

(208)

-

-

-

Transfer from deferred capital receipts

-

-

11

-

-

(11)

Adjustments primarily involving the Major Repairs Reserve

 

Use of MRR to finance HRA

-

-

-

(828)

-

828

Use of the MRR to finance new capital expenditure

-

-

-

(2,477)

-

2,477

Adjustments primarily involving the Pensions Reserve

 

Reversal of retirement benefit related items debited/credited to the CI&E Statement

8,406

137

-

-

-

(8,543)

Employer’s pension contributions and in year payments direct to pensioners

(4,996)

(61)

-

-

-

5,057

Adjustments primarily involving the Collection Fund Adjustment Account

 

Amount by which Council Tax and NDR income credited to the CI&E Statement is different from that calculated for the year in accordance with statute

(831)

-

-

-

-

              831

Adjustments primarily involving the Accumulated Absences Account

 

Amount by which officer remuneration charged to the CI&E Statement (accruals basis) differs from that chargeable in the year in accordance with statutory requirements

36

-

-

-

-

               (36)

Total Adjustments

175

(365)

1,434

18

-

       (1,262)

 

 

 

 

 

 

 

 

 


7.     Earmarked Reserves

This note sets out the amounts set aside from the General Fund and HRA balances in Earmarked Reserves to provide financing for future expenditure plans and the amounts posted back from Earmarked Reserves to meet General Fund and HRA expenditure in 2015-16.

 

 

 

 

Transfers

Revenue

 

For the Year Ended 31 March 2015

1 April

Between

Approp.

31 March

 

2014

Reserves

 

2015

 

£000’s

£000’s

£000’s

£000’s

General Fund

 

 

 

 

Capital Projects

1,922

  (1,194)

      226

954

Council Election

117

           -

          1

118

Cremator and Cemeteries Works

247

           -

      159

406

Customer Services

586

           -

   1,816

2,402

Decriminalisation

182

           -

        28

210

Destination Management

-

       500

     (100)

400

Dreamland Reserve

117

           -

           -

117

East Kent Services

790

       (22)

     (465)

303

Economic Development & Regeneration

202

           -

         (4)

198

Environmental Action Plan

162

           -

           -

162

General Fund Repairs

379

     (130)

        67

316

Homelessness

260

           -

        16

276

Housing Intervention

246

           -

       (74)

172

Information Technology

350

           -

       (39)

311

Insurance Risk Management

257

           -

     (154)

103

Local Plan

425

           -

         (7)

418

Maritime Reserve

518

       (81)

       (81)

356

New Homes Bonus

235

     (500)

      402

137

Office Accommodation

31

           -

           -

31

Pay & Reward

378

           -

       (87)

291

Pension Earmarked Reserve

661

           -

     (249)

412

Priority Improvement

746

       (12)

     (256)

478

Renewal Reserve

9

           -

          1

10

Slippage Fund – GF

1,387

       (10)

     (261)

1,101

Strategic Reserve

-

       (15)

           -

-

Unringfenced Grant

616

       (40)

     (223)

353

VAT Reserve

437

           -

         (4)

433

Vehicle, Plant & Equipment Replacement

227

           -

           -

227

Waste

77

           -

       (64)

13

 

 

 

 

 

HRA

 

 

 

 

Slippage Fund – HRA

6

           -

      271

277

HRA Properties

5,187

     (489)

          4

4,702

 

16,757

  (1,993)

      923

15,687

 

 

 

 

 

 

 

 

 

 

Revenue Appropriations

 

 

 

       923

Funding for Capital Programme

 

 

 

  (1,993)

Contribution from Reserves as per Movement in Reserves Statement

 

  (1,070)

 

 

 

 

 

 

 

 

 

 

 

 

 

Restated

Transfers

Revenue

 

For the Year Ended 31 March 2016

1 April

Between

Approp.

31 March

 

2015

Reserves

 

2016

 

£000’s

£000’s

£000’s

£000’s

General Fund

 

 

 

 

Capital Projects

954

(952)

      259

261

Council Election

118

-

    (118)

-

Cremator and Cemeteries Works

406

-

    (337)

69

Decriminalisation

210

-

        85

295

Destination Management

400

-

    (249)

151

Dreamland Reserve

117

(117)

      299

299

East Kent Services

303

(68)

      (85)

150

Economic Development & Regeneration

198

-

      (98)

100

Environmental Action Plan

162

-

    (162)

-

General Fund Repairs

316

(100)

      (48)

168

Homelessness

276

-

        13

289

Housing Intervention

172

(45)

      (55)

72

Information Technology

311

          (82)

        94

323

Insurance Risk Management

103

      1,774

(1,545)

332

Local Plan

418

-

    (124)

294

Maritime Reserve

356

(103)

      (93)

160

NDR Equalisation

2,402

-

    (808)

1,594

New Homes Bonus

137

-

      (29)

108

Office Accommodation

31

-

      (30)

1

Pay & Reward

291

-

    (228)

63

Pension Earmarked Reserve

412

-

    (270)

142

Priority Improvement

478

(217)

      (74)

187

Renewal Reserve

10

-

        (9)

1

Slippage Fund – GF

1,101

-

    (535)

566

Strategic Reserve

-

-

        75

75

Unringfenced Grant

353

(6)

        (1)

346

VAT Reserve

433

-

    (333)

100

Front Line Vehicle, Plant & Equipment Replacement

240

(227)

        (7)

6

 

 

 

 

 

HRA

 

 

 

 

Slippage Fund – HRA

277

(223)

      (23)

31

HRA Properties

4,702

(116)

      878

5,464

 

15,687

(482)

(3,558)

11,647

 

 

 

 

 

 

 

 

 

 

Revenue Appropriations

 

 

 

(3,558)

Funding for Capital Programme

 

 

 

(482)

Contribution from Reserves as per Movement in Reserves Statement

 

(4,040)

 

 

 

 

 

 

 

The above reserves have been established under the Local Government and Housing Act 1989 to set aside specific amounts for future policy purposes as follows:

 

Capital Projects – Revenue monies and other contributions set aside for capital projects.

 

Council Elections – This is a saving account for the elections which occur every four years.

 

Cremator and Cemeteries Works – The Council has an obligation to be environmentally compliant. The surcharge on both cremations and burials is set aside in this reserve to support cremator burner replacement and works required at the cemeteries.

 

Decriminalisation – The Council administers on street parking but has to account for the income and expenditure separately. This reserve holds any unutilised revenues from parking charges. These are used to fund future parking, transport or environmental improvement related schemes.

 

Destination Management - Monies have been set aside from the New Homes Bonus to support the objectives of the Destination Management Plan by enhancing council assets that help to support and encourage tourism.

Dreamland Reserve – This reserve has been set up to bolster the contingency for the Dreamland project.

 

East Kent Services – This reserve is ring fenced for future investment within the services delivered by East Kent Services to enable further savings to be identified in future years.

 

Economic Development and Regeneration This reserve is to cover one off service improvements and initiatives within Economic Development and Regeneration, including feasibility works and match funding.

 

Environmental Action Plan - The Environmental Action Plan (EAP) is used to help deliver the Council’s Corporate Plan and key corporate priorities, with a drawdown from this reserve being utilised in 2015-16.

 

General Fund Repairs – To make provision for necessary essential repairs and maintenance and minor improvements to the Council’s assets.

 

Homelessness– This represents the roll forward of under spends on the service to be used for future expenditures due to the volatility of this area.

 

Housing Intervention – To fund anticipated costs associated with the Authority's Intervention Schemes.

 

 Information Technology - To control and enhance the development of new Information Technology initiatives with the objective of improving efficiency throughout the Council’s activities.

 

 

Insurance & Risk Management – This reserve is held to meet potential increases in insurance premiums and to cover the cost of large excesses relating to insurance claims as well as unforeseen one-off risk related expenditure.

 

Local Plan – Due to the variable profile of spend on this activity and the variable cost in relation to consultation and inspection, any under spend is set aside in this reserve to be drawn against as and when required.

 

Maritime –This reserve is to be used to fund potential future works at the Port and Harbour and for income protection/maximisation works.

 

NDR Equalisation – This reserve is to be used to offset significant variations in benefit subsidy. Due to the volatility of this activity and the tight financial constraints which preclude the budgets being set at a level that would be sufficient for upper activity levels, it is prudent to set aside under spends that arise in this area as a contingency for future years.  This reserve will also support any potential shortfall in business rates, under the new business rates retention scheme and has therefore been renamed from the Customer Services Reserve.

New Homes Bonus – This reserve holds the balance of monies from the New Homes Bonus.

 

Office Accommodation – This reserve allows for the appropriate level of funding to be drawn down as and when required in relation to the accommodation strategy.

 

Pay and Reward– This reserve is to be used to fund costs associated with the implementation of the new Pay and Reward Scheme using set aside vacant post savings.

 

Pensions (Earmarked) - Due to the uncertainty around Pensions any pension under spends identified are transferred to this reserve in order to mitigate future risk.

 

Priority Improvement – This reserve is for one-off projects and pump priming investment into service improvements.

 

Renewal – This is a saving account for specific purposes based on the average annual amount required e.g. for the cost of Disclosure and Barring Service (DBS) checks.

 

Slippage Fund GF - To set aside sums at year end to meet ad hoc and specified liabilities on the General Fund which, due to timing difficulties, cannot be spent until after the 31 March.

 

Unringfenced Grants – Any under spend against unringfenced grant funding is set aside in this earmarked reserve to be utilised in future years.

 

VAT - This reserve has been set up to hold funds reimbursed in relation to our Fleming claim and will be used to cover any one off cost deemed appropriate.

 

Front Line Vehicle Plant and Equipment Replacement Reserve – This reserve is set aside to replace vehicles, plant and equipment coming to the end of their useful lives. Service underspends in relation to front line operational services are set aside to support the replacement programme. The table above has been restated to combine this reserve with the Waste Reserve and rename it.

 

Strategic – This reserve is used to help facilitate work around the strategic objectives of the council.

 

HRA Properties - The reserve is to set aside and hold HRA balances for the purchase and refurbishment of new HRA properties.

 

Slippage Fund HRA - To set aside sums at year end to meet ad hoc and specified liabilities on the Housing Revenue Account which, due to timing difficulties, cannot be spent until after the 31 March.

 

 


8.      Other Operating Expenditure

2014-15

 

2015-16

£’000s

 

£’000s

780

Parish Council Precepts

855

186

Payments to the Housing Capital Receipts Pool

208

963

(Gains)/Losses on the disposal of non-current assets

845

1,929

Total

1,908

 

9.      Financing and Investment Income and Expenditure

 

2014-15

 

2015-16

£’000s

 

£’000s

1,073

Interest Payable and Similar Charges

1,116

90

Impairment of Financial Instruments

22

3,760

Net Interest on the Net Defined Benefit Liability

3,621

(188)

Interest Receivable and similar income

(207)

(16)

(Gain)/Loss on Trading Operations (see below)

16

(511)

Income and Expenditure on investment properties-Note 14

(422)

 (622)

Changes in fair value of investment properties

(1,306)

3,586

Total

2,840

 

Trading Operations

Under accounting definitions the Council operates trading operations, relating to the Building Control service. The following table shows the details of the income and expenditure of the trading operations:

 

2014-15

 

2015-16

2015-16

2015-16

(Surplus)/Deficit

Trading Service

Expenditure

Income

(Surplus)/

Deficit

£’000s

 

£’000s

£’000s

£’000s

 

 

 

 

 

(16)

Building Control

352

(336)

16

 

 

 

2013-14

2014-15

2015-16

 

Building Control

(Surplus)/

Deficit

(Surplus)/

Deficit

(Surplus)/

Deficit

 

 

£’000s

£’000s

£’000s

 

Turnover

(304)

(340)

(336)

 

Expenditure

336

         324

         352

 

Total

32

        (16)

16

 

10. Taxation and Non-Specific Grant Income

2014-15

 

2015-16

£’000s

 

£’000s

(9,125)

Council Tax Income

(9,424)

(12,637)

Business Rates Income

(13,650)

8,394

Business Rates Expenditure (Tariff)

      8,555

(7,579)

Non Ring Fenced Government Grants

(6,564)

 (3,529)

Capital Grants and Contributions (see note 33)

(4,454)

(24,476)

Total

(25,537)


11.   Property, Plant and Equipment

 

 

Council Dwellings

Other Land and Buildings

Heritage Assets

Vehicles, Plant and Equip

Infra-structure

Assets

Community Assets

Assets Under Construction

Surplus Property

Total

 

 

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

 

 

 

 

 

 

 

 

 

 

 

 

As at 1 April 2014

91,502

48,692

642

11,351

21,149

-

5,050

2,019

180,405

 

Additions

4,294

  3,317

175

1,054

6

9

4,275

-

13,130

 

Disposals

-

(25)

(150)

(1,076)

-

-

-

(11)

(1,262)

 

Reclassifications

(181)

(11)

-

8

-

-

(225)

(266)

(675)

Revaluation & Restatements

2,293

9,913

7

-

-

-

-

212

12,425

 

Recognition

-

-

31

-

-

-

-

-

31

 

Downward Revaluation and Impairment charged to CI&E

-

(224)

(20)

(9)

(7)

(9)

-

-

(269)

 

Downward Revaluation & Impairment charged to the Revaluation Reserve

(1,070)

(1,201)

-

-

-

-

-

(150)

(2,421)

 

Gross Asset Valuation

96,838

60,461

685

11,328

21,148

-

9,100

1,804

201,364

 

Depreciation b/fwd

-

6,371

-

6,989

6,538

-

-

68

19,966

 

Depreciation 2014-15

2,570

2,913

-

1,000

529

-

-

23

7,035

 

Write out Accumulated                    Depreciation on Revaluation

(2,570)

(5,485)

-

-

-

-

-

(68)

(8,123)

 

Write out acc dep charged to Revaluation Reserve

-

-

-

-

-

-

-

-

-

 

Other depreciation adj

-

(37)

-

(961)

-

-

-

-

(998)

 

Gross Depreciation c/fwd

-

3,762

-

7,028

7,067

-

-

23

17,880

 

Net Book Value:

 

 

 

 

 

 

 

 

 

 

as at 31 March 2015

96,838

56,699

685

4,300

14,081

-

9,100

1,781

183,484

 

as at 31 March 2014

91,502

42,321

642

4,362

14,611

-

5,050

1,951

160,439

 

 

 


 

 

Council Dwellings

Other Land and Buildings

Heritage Assets

Vehicles, Plant and Equip

Infra-structure

Assets

Community Assets

Assets Under Construction

Surplus Property

Total

 

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

£’000s

 

 

 

 

 

 

 

 

 

 

As at 1 April 2015

96,838

60,461

685

11,328

21,148

-

9,100

1,804

201,364

 

 

 

 

 

 

 

 

 

 

Additions

3,492

1,519

4,831

686

1,154

18

3,428

-

15,128

Disposals

-

(142)

-

(345)

-

-

-

-

(487)

Reclassifications

1,531

(779)

3,780

17

155

-

(4,273)

(1,277)

(846)

Revaluation & Restatements

14,580

4,186

-

-

-

-

-

350

19,116

Recognition

-

116

-

-

-

-

-

-

116

Downward Revaluation and Impairment charged to CI&E

-

(35)

(89)

-

-

(18)

-

-

(142)

Downward Revaluation & Impairment charged to the Revaluation Reserve

(1,515)

(541)

-

-

-

-

-

(140)

(2,196)

Gross Asset Valuation

114,926

64,785

9,207

11,686

22,457

-

8,255

737

232,053

Depreciation b/fwd

-

3,762

-

7,028

7,067

-

-

23

17,880

Depreciation 2015-16

3,090

2,602

-

974

562

-

-

12

7,240

Write out Accumulated Depreciation on Revaluation

(3,090)

(1,920)

-

-

-

-

-

(23)

(5,033)

Write out acc dep charged to Revaluation Reserve

-

-

-

-

 -

-

-

-

-

Other depreciation adjustments

-

(163)

-

(304)

-

-

-

-

(467)

Gross Depreciation c/fwd

-

4,281

-

7,698

7,629

-

-

12

19,620

Net Book Value:

 

as at 31 March 2016

114,926

60,504

9,207

3,988

14,828

-

8,255

725

212,433

as at 31 March 2015

96,838

56,699

685

4,300

14,081

-

9,100

1,781

183,484

The accounting policies in relation to the measurement used for determining the gross carrying amount of Property, Plant and Equipment, and the depreciation method and rates that are used can be found in Note 1.


Revaluations

For those assets not re-valued as part of the rolling programme or subject to impairment review, the Council is not aware of any material change in value therefore the valuations have not been updated. £14.58m of the total £19.116m revaluation in 2015-16 relates to Council Dwellings, which was derived using the services of an external valuer and in accordance with the Beacon principle.

Valuations of Non-Current Assets Carried at Current/Fair Value

 

 

Council Dwellings

£’000

Land, Buildings

£’000

 

Heritage

£’000

 

Surplus

£’000

Investment Properties

£’000

Total

 

£’000

 

 

 

 

 

 

 

Carried at Current Value

 

 

 

 

 

 

Pre 2011

-

-

431

-

-

431

2011/12

-

977

-

-

602

1,579

2012/13

-

338

-

-

1,722