Stratford-on-Avon District Council
STATEMENT OF ACCOUNTS
2014/15
CONTENTS
Page numbers
A Financial Review from the Leader (2014/15) and the Assistant Chief Executive / 2Foreword / 3-7
Statement of Responsibilities for the Statement of Accounts / 8
Financial Statements:-
Movement in Reserves Statement
Comprehensive Income and Expenditure Statement
Balance Sheet
Cash Flow Statement / 9-10
11
12
13
Notes to the Accounts / 14-71
Supplementary Financial Statements:-
Collection Fund
72-73
Notes to the Collection Fund / 74-78
Glossary of Terms / 79-80
1
Stratford-on-Avon District Council
A Financial Review from the Leader (2014/15)
and the Assistant Chief Executive
For 2014/15 the District Council approved a net Revenue expenditure Budget of £12.5m.
The net revenue expenditure for all of the Council’s services was £12,227kcompared to a revised budget of £12,769k resulting in a service underspend of £542k. This underspend along with the budgeted contribution to the General Fund Reserve, slippage and other movements such as allocations to and from Earmarked Reserves, has resulted in an overall General Fund Reserve movement of £743k.
Major income received was £6.5m from general Government Grant and the National Non-Domestic Rate pool, plus £8.8m (inclusive of Parish Precepts) from Council Tax payers. The Council Tax levy at Band D was £128.05per domestic property per year.
The 2014/15 Capital Expenditure Amended Estimate (inclusive of2013/14 slippage) was £5.7m, comprising mainly of£982k for Stratford Leisure & Visitor Centre, £640k for IT & New Financial Management System, £487k for Planned Maintenance,£560k for Disabled Facilities Grants,£166k for Home Repairs Grants, £203k for Empty Homes Grants, £1,114k for Social Housing and £1,039k for Section 106 Projects. Due to circumstances beyond the control of the Council, including progress by external bodies or organisations, spending on some major projects was deferred until 2015/16. The final 2014/15 capital expenditure was £3.02m.
At 31 March 2015the Council held a total£5.106m in GeneralFund Balance with £9.562min available capital resources and had no outstanding debt.
Foreword
Introduction
1.This foreword provides an explanation of the financial aspects of the Council's activities and endeavours to provide an understandable guide to the significant matters reported in the accounts.
2.All local authority income and expenditure is classified as either revenue or capital.
i)Revenue income and expenditure for the year is summarised within the Comprehensive Income and ExpenditureStatement. This Statement details the net operating expenditure or the running costs of the Council for the year and the extent to which this has been financed from government grant and local taxpayers. Expenditure of a revenue nature must be financed in the year of that expenditure as the goods and services bought are deemed to have also been consumed in the year. A separate revenue account is maintained for the Collection Fund, which includes income and expenditure in respect of Tax, Non-domestic Rates ('Business Rates') and residual Community Charge. Transactions between the Comprehensive Income and Expenditure Statement and this account are shown "below the line" within the Comprehensive Income and ExpenditureStatement.
ii)Capital expenditure is expenditure that results in the creation or enhancement of assets. The benefits resulting from this expenditure are deemed to last for more than one year. Capital income comes from receipts due to the sale of assets, and also grants and contributions towards specific capital projects. Capital income and expenditure are recorded within the Balance Sheet. There are implications for revenue accounts in respect of the amount of capital expenditure financed by revenue resources.
Revenue Income and Expenditure
- The net District Expenditure for 2014/15 was £12,227kcompared to a budgeted £12,769k. This underspend together with the £272k identified slippage that will be financed in 2015/16 leads to an effective underspend of £270k.
- The major variances, comparing actual expenditure against the revised budget and taking the use of earmarked reserves into account, contained within the Comprehensive Income and Expenditure statement include: -
Foreword (cont.…)
5.The Comprehensive Income and Expenditure Statement details the gross costs of service provision amounting to £53,115,097. This expenditure has been analysed as follows:
Direct employee expenses comprisespayments to and on behalf of the Council's employees. It includes salaries, employer's national insurance and superannuation contributions, training, professional subscriptions, recruitment, and health and safety costs.
A breakdown of the total employee costs of the Council are given in the table below:-
Service costs are running expenses and include the cost of maintaining buildings, operating vehicles and the purchase of goods.
Third Party Payments are payments to others in respect of the provision of services and include mainly contract payments to companies providing services on the Council's behalf.
Transfer payments are payments made to others for which no goods or services are received and are principally in respect of housing and council tax benefits.
Support services are provided mainly by the Assistant Chief Executive, Legal and Democratic Services andCustomer Accessto direct services of the Council. These costs include support service employee costs and any equipment and licences in the case of Customer Access.
Capital charges comprise depreciation/impairmentsand represent the real cost of using assets to provide services.
Foreword (cont….)
6.The gross income of £35,581,292shown in the Comprehensive Income and Expenditure Statement has been analysed as follows:
Government grant income is receivedtowards the cost of Council Tax Benefits, Housing Benefits, their administration, National Non-Domestic Rate administration, Disabled Facilities Grants and New Homes Bonus.
Rent income comprises mainly rents in respect of industrial and commercial properties.
Income from sales, fees and charges including building control fees, planning fees, land charges fees and licensing fees.
7.The net cost of services within the Comprehensive Income and ExpenditureStatement is £17,533,805. The services provided for this amount are summarised below:
Precepts to town and parish councils, investment income, income from Council Tax payers, and Government grant to finance overall Council expenditure, along with various appropriations, are shown below the net cost of services within the Comprehensive Income and Expenditure Statement. After these items, there is a contribution to reserves for the year of £743k. This compares to a budgeted contribution to reserves of £483k.
8.Pensions liabilities are the estimated underlying commitments that the Council has in the long term to pay retirement benefits. The total liability of £116,245k has a significant impact on the net worth of the Council as recorded in note 17 on page 38. However, statutory arrangements for funding the deficit mean that the financial position of the Council remains healthy. The deficit on the scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme’s Actuary.
Foreword (cont.…)
Capital Expenditure
9.Capital expenditure amounted to £3.02m in 2014/15. This compares to an original estimate of £6.6m which was subsequently revised to £5.7m (inclusive of slippage).
10.A summary of capital expenditure in 2014/15 is shown below:
11.Capital receipts received in year amounted to £404k in 2014/15. This figure mainly comprises: Right to Buy Receipts (£376k)and minor receipts (£28k).
The level of capital receipts held as at the year end was £9.6m. Capital slippage of £2.4m (Stratford Leisure & Visitor Centre(£199k), Social Housing Contribution (£75k), Disabled Facilities Grants (£122k), Empty Homes Grants (£83k),Minor Works Grants (£75K), Section 106 Projects (£1.6m) and various other schemes (£246k) has been approved, which will be financed from accumulated capital receipts, giving an adjusted level of receipts of £7.2m.
12.Asset revaluation increases are included on the Balance Sheet at £81kfor 2014/15, duemainly to an impairment review of Elizabeth House and Multi-Storey car parks.
The Future
13.The Council has adequate revenue balances to provide financial security and a safety mechanism for unforeseen events.
The General Fund Balance stood at£5.106mas at 31 March 2015. However, thisis reduced to £4.834mafter allowing for revenue slippage of £272k. The Authority also holds £1.726min Earmarked Reserves.
Foreword (cont.…)
14.Accumulated usable capital receipts amounted to over £9.6m at 31 March 2015. The Council’s capital budget for 2015/16 amounts to £6.3mwhich will include therefurbishment of the Stratford Leisure & Visitor Centre, E-Government Action Plan, Planned Maintenance,Disabled Facilities Grants, Home Repair Assistance Grants, Empty Homes Grants and various small schemes.
This is expected to be financed by Disabled Facilities Grant (£373k), Capital Grants (£100k), Section 106 receipts (£560k) and capital receipts (£5.3m).
The Financial Statements
15.The Council's financial statements for the year 2014/15 are as follows:
Page
9Movement in Reserves Statement. This statement shows the movement in the year on the different reserves held by the Authority.
11Comprehensive Income and ExpenditureStatement. This account brings together all the functions of the Authority and summarises all of the resources that the Authority has generated, consumed or set aside in providing services during the year.
12Balance Sheet. This statement sets out the financial position of the Council as at the 31 March 2015. It shows the assets and liabilities of the Council as a whole including those relating to the Collection Fund.
13Cash Flow Statement. This statement summarises the inflows and outflows of cash arising from transactions with third parties for revenue and capital purposes.
14Notes to the Accounts. The policies and concepts used in the preparation of the accounts and explanatory notes.
72Collection Fund. This is concerned with Council Tax, Business Rates and residual Community Charge. Stratford-on-Avon District Council is responsible for collecting local taxes on behalf of Warwickshire County Council, Warwickshire Police Authority and the District Council itself. Town and parish council precepts are included within the District Council's demand on the Collection Fund.
81Independent Auditors Report. This report contains the auditor’s opinion on whether the Authority’s accounts show a true and fair view of its financial affairs.
Where relevant, equivalent figures for the previous year 2013/14 are shown for comparative purposes.
Further Information
16.Further information about the Council's finances is available from:
Assistant Chief Executive
Stratford-on-Avon District Council
Elizabeth House
Church Street
Stratford-upon-Avon
CV37 6HX
e-mail address –
Statement of Responsibilities for the Statement of Accounts
The Authority's Responsibilities
The Authority is required to:
i)make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority, that officer is the Assistant Chief Executive (the Authority’s Chief Financial Officer);
ii)manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets;
iii)approve the Statement of Accounts.
The Assistant Chief Executive’s Responsibilities
The Assistant Chief Executive is responsible for the preparation of the Authority's statement of accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (‘the code’).
In preparing this statement of accounts, the Assistant Chief Executive has:
i)selected suitable accounting policies and then applied them consistently;
ii)made judgements and estimates that were reasonable and prudent;
iii)complied with the local authority Code.
The Assistant Chief Executive has also:
i)kept proper accounting records which were up to date;
ii)taken reasonable steps for the prevention and detection of fraud and other irregularities.
I certify that the Statement of Accounts from page 9 as presented give a true and fair view of the financial position of Stratford-on-Avon District Council as at 31 March 2015 and its income and expenditure for the year ended 31 March 2015.
Date / Signature:Assistant Chief Executive (S151 Officer)
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Stratford-on-Avon District Council
Financial 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’ (ie: those that can be applied to fund expenditure or reduce local taxation) and other reserves. The ‘surplus or (deficit) on the provision of services’ line shows the true economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting. The ‘net increase/(decrease) before transfers to the Earmarked Reserves’ line shows the statutory General Fund Balance before any discretionary transfers to or from Earmarked Reserves undertaken by the Council.
Financial Statements
Movement in Reserves Statement
Financial Statements
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.
1
Stratford-on-Avon District Council
Financial Statements
Balance Sheet
The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category of reserves are usable reserves ie those reserves that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the capital receipts reserve may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Authority is not able to use to provide services. This category of reserves includes those 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'.
The notes on pages 14 to 71 form part of the financial statements.
Date: / `Assistant Chief Executive (S151 Officer)
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Stratford-on-Avon District Council
Financial Statements
Cash Flow Statement
The Cash Flow Statement shows the changes in cash and cashequivalents 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 (ie borrowing) to the Authority.
Notes to the Accounts
1. Accounting Policies
i.General Principles
The Statement of Accounts summarises the Authority’s transactions for the 2014/15 financial year and its position at the year end of 31 March 2015. The Authority is required to prepare an annual Statement of Accounts by the Accounts and Audit (England) Regulations 2011, which those regulations require to be prepared in accordance with proper accounting practices. These practices primarily comprise the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2014/15 and the Service Reporting Code of Practice 2014/15, supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under section 12 of the 2003 Act.
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 instrument. The principal accounting policies have been applied consistently throughout the year.
ii.Accruals of Income and Expenditure
Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:
- Revenue from the sale of goods is recognised when the Authority transfers the significant risks and rewards of ownership to the purchaser and it is probable that economic benefits or service potential associated with the transaction will flow to the Authority.
- Revenue from the provision of services is recognised when the Authority can measure reliably the percentage of completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the Authority.
- Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet.
- Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made.
- Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instruments rather than cash flows fixed or determined by the contract.
- Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to the revenue for the income that might not be collected.
iii.Exceptional Items