ANNUAL REPORT AND
STATEMENT OF ACCOUNTS
FOR THE YEAR ENDING
31st MARCH 2008
SUBJECT TO EXTERNAL AUDIT
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This document is available on our website at
www.cambridge.gov.uk
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Cambridge City Council
Annual Report & Statement of Accounts
2007/08
Contents
Annual Report ............................................................................................i
Statement of Accounts
Statement of Responsibilities...................................................................................xi
Annual Governance Statement.............................................................................. xiii
Auditors’ Report on the Accounts .........................................................................xxiii
Introduction to the Statement of Accounts.....................................................1
Main Financial Statements:
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Income and Expenditure Account......................................................7
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Statement of Movement on the General Fund Balance ....................8
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Statement of Total Recognised Gains and Losses ...........................9
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Balance Sheet .................................................................................10
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Cash Flow Statement ......................................................................11
Notes to the Main Financial Statements......................................................15
Additional Financial Statements and Information:
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Housing Revenue Account ..............................................................53
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Collection Fund ...............................................................................59
Statement of Accounting Policies and Glossary:
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Statement of Accounting Policies ....................................................65
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Glossary of Financial Terms and Abbreviations ..............................72
Annual Report
Who we are and what we do
Cambridge City Council is one of five district councils which, together with
Cambridgeshire County Council and Peterborough City Council, provide services
to the people of Cambridgeshire.
The City Council serves a population of 120,000 residents in an almost entirely
urban area. As part of the ‘London-Stansted-Cambridge-Peterborough’ Growth
Area, that population is set to increase considerably, however. The City has been
set a target for at least 19,000 new homes between 2001 and 2021, based on the
Government’s announcement in May 2008 of the new Regional Spatial Strategy.
These new homes are planned mainly for sites on the southern, north west and
eastern fringes of Cambridge. The City Council is working closely with
Cambridgeshire Horizons and other local authorities and agencies to ensure a
coherent and comprehensive approach to the creation of sustainable communities.
The Council employs around 1,250 full and part-time staff providing a wide range
of services for residents, local businesses, commuters and visitors to the City. We
work hard to ensure that we provide value for money in all of the services we
provide. The main services we deliver include:
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♦ Keeping the streets and public open spaces clean
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♦ Championing recycling and emptying refuse and recycling bins
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♦ Providing a range of leisure facilities including swimming pools and community
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centres and providing entertainment in parks and in the Corn Exchange
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♦ Offering planning advice, progressing planning applications and making sure
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new buildings and alterations are safe
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♦ Monitoring and enforcing food and drink hygiene standards together with the
control of pests, diseases, noise and air pollution
♦ Licensing food premises, street traders and entertainment venues
♦ Managing council-run car parks
♦ Organising elections and managing the electoral register
♦ Providing housing advice and support and working with partners to meet
peoples housing needs
♦ Providing and maintaining over 7,400 council dwellings
♦ Processing housing benefit and council tax benefit applications
♦ Promoting long-term policies which encourage sustainability
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Council Structure
Cambridge residents elect 42 councillors across 14 wards in the City. The full
Council meets formally at least five times a year. Its main function is to approve
the Council’s most significant policies and its budget framework. In February each
year the Council sets the level of Council Tax for the coming financial year.
During the 2007-08 financial year the Liberal Democrats, led by Councillor Ian
Nimmo-Smith, were the leading group with 28 councillors.
The Exe
cutive
The executive comprises the Leader of the Council and six executive councillors.
Each executive councillor has responsibility for a specific portfolio of services.
The six portfolios are currently:
♦ Arts and recreation
♦ Climate change and growth
♦ Community development and health
♦ Customer services and resources
♦ Environmental and waste services, and
♦ Housing
These councillors can make decisions individually, usually at a meeting of a
scrutiny committee relevant to their executive area. The appropriate scrutiny
committee examines and comments on recommendations relating to key decisions
before the executive councillor makes the final decision. The executive also meet
once a year to determine the overall budget to be recommended to Council.
Annual Report
Regulatory Committees
Regulatory Committees make decisions that are not allowed by law to be made by
executive councillors. These include civic affairs, licensing, planning and
standards.
Area Committees
Area committees cover four geographical areas – north, south, east and
west/central.
Their purpose is to move decision-making out into the community and to make it
easier for people to have a say about decisions that affect them locally.
The Councils Objectives, Performance and
Plans
The Council has set itself four key Medium-Term Objectives which determine how
we prioritise our resources. These include taking steps to reduce the carbon
footprint of the City, increasing our recycling rate, making sure that people have a
positive experience in their dealings with the City Council, doing what we can to
improve the health and safety of people in the City, ensuring that the City and it’s
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neighbourhoods thrive and that the growth of the City does not happen to the
detriment of the quality of life of it’s residents.
So how are we performing against each of these objectives, what have we
achieved and what are our plans for 2008/09?
To promote Cambridge as a sustainable city, in particular
1 by reducing carbon dioxide emissions and the amount of
waste going into landfill in the City and sub-region.
During 2007/08 we:
♦ Increased overall recycling rates in Cambridge once again from 29.5% in
2004/05, 35.2% in 2005/06, and 40% in 2006/07 up to 41.5% in 2007/08.
♦ Achieved our target to improve the energy efficiency of Local Authority owned
dwellings.
♦ Led the development of the Cambridge Climate Change Charter. The charter
was launched in October 2007 at the British Antarctic Survey with the
involvement of over 70 leaders from schools, universities, businesses,
community groups and the public sector.
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♦ Launched the new rechargeable electric "Mega" van, the first truly green
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council vehicle to operate within the city centre.
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♦ Fitted energy saving bulbs to all lighting on stairways and communal passages
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in the Council’s own housing stock.
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♦ Expanded our recycling services to include a further 63 sites, including more
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flats and colleges.
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♦ Established recycling facilities for dry-cell batteries and Tetra-paks
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Our plans for 2008/09 include:
♦ Ensuring that new developments of more than 10 houses or 1,000 square
metres provide at least 10% of their energy requirements from renewable
energy sources where this is possible.
♦ Continuing to investigate different types of renewable energy technologies,
including a trial with a wind turbine, to see if they could be used in the
Council’s housing stock.
♦ Continuing with works to improve the standard of the Council’s housing stock,
including improving insulation and energy efficiency, treating problem cold and
damp rooms and renewing old bathrooms, kitchens and boilers.
♦ Advising elderly and low-income residents about how to make their homes
more energy efficient, and offering grants and loans towards improved
insulation, efficient boilers and central heating.
♦ Exploring options for recycling litter collected in the streets.
♦ Encouraging bus companies to provide better bus services in the city on
Sundays.
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♦ Extending the car club into further locations and introducing low carbon
vehicles
To ensure that residents and other service users
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have an entirely positive experience of dealing with
the Council
During 2007/08 we:
♦ Reduced the average time taken to re-let local authority housing by 7.8 days
compared to 2006/07.
♦ Saw a 24% drop in the number of complaints sent to the Council compared to
2006/07.
♦ Exceeded our targets for collection of Council Tax and Business Rates,
achieving 97.5% and 99.7% respectively.
♦ Reached our 2009/10 target for representation of disabled staff within the top
5% of earners at the Council.
♦ Improved our ranking in the Stonewall Index, rising to 16th place for our work,
as an employer, in the field of lesbian, gay, bi-sexual and trans-sexual (LGBT)
issues. This makes us the highest placed district council in the country.
♦ Set up a forum of Residents Associations to improve residents’ understanding
of the planning process and a new forum for planning and construction
professionals who work with us in the planning process.
Annual Report
♦ Helped the police to implement neighbourhood policing in the City hosted
through the Council’s area committees.
♦ Launched ‘Home-Link’, a lettings Scheme which allows those wanting
subsidised public housing to make choices on the basis of much better
information.
♦ Continued the development of the Customer Service Centre located at
Mandela House ready for the opening in April 2008.
Our plans for 2008/09 include:
♦ Opening the new Customer Service Centre at Mandela House and providing, in
phases, improved access to council services by phone and in person.
♦ Enabling all planning application documents and drawings to be viewed and
commented upon on-line.
♦ Progressing the development of a new Visitor Centre for Cambridge.
♦ Relaunching the Neighbourhood Links programme of volunteers who will work
with council officers to agree priorities for cleaning and maintaining streets and
open spaces.
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♦ Encouraging people with learning disabilities to become involved in politics and
to vote by working with the ‘Promote the Vote’ project.
♦ Consulting local people on how Jesus Green should be used and improved as
a local facility without adversely affecting its unique character.
♦ Developing our services to the homeless by promoting ‘having something
meaningful to do’ as an important way of helping people to have greater
control over their lives.
To maintain a healthy, safe and enjoyable city for all, with
3 thriving and viable neighbourhoods
During 2007/08 we:
♦ Saw a 19.5% drop in the number of domestic burglaries per 1,000 households
in the City.
♦ Saw a 28% increase in the number of school pupils visiting museums and
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galleries in the City.
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♦ Provided a new bus for the DEC youth project.
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♦ Won a £200,000 Big Lottery bid for funding of a 3-year programme of
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children’s play projects.
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♦ Provided Safer City grants to schemes that encourage young people to take
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part in sport and divert them from involvement in anti-social behaviour.
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♦ Refurbished Histon Road recreation ground and the outdoor learner pool at
Sheep’s Green.
♦ Conducted a successful experiment on restricting verge parking in Perne Road
and Mowbray Road.
♦ Introduced a car club in four locations in the City: Queen Anne Terrace and
Park Street car parks, Adam and Eve Street and Great Eastern Street.
♦ Launched a cycle-shopping-trailer scheme in conjunction with Waitrose to
encourage people to cycle to the store and take their shopping home safely.
Our plans for 2008/09 include:
♦ Using the Big Lottery award to provide Urban Adventure play opportunities,
including a Playboat to enable children to experience play activities on or near
the river.
♦ Working with partners to provide safe activities and meeting places for
teenagers.
♦ Replacing the Astroturf at Abbey Pool and improving the swimming pool
changing facilities.
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♦ Refurbishing the children’s play area in Thorpe Way installing a new multiple
use games area and BMX track and installing a multiple use games area at
Nightingale Avenue.
♦ Working with partner organisations and community links to reduce child obesity
in the city.
♦ Supporting projects in the city that educate people about the safe and
appropriate use of alcohol.
To lead the growth of Cambridge to achieve attractive,
sustainable new neighbourhoods, including affordable
4 housing, close to a good range of facilities, and supported
by transport networks so that people can opt not to use the
car
During 2007/08 we:
♦ Adopted an Affordable Housing Supplementary Planning Document, requiring
40% affordable housing and a new approach to placing socially rented homes
alongside market homes in new developments.
♦ Achieved government endorsement of the Cambridge East Area Action Plan,
which will result in the development 12,000 new homes.
♦ Adopted a Sustainable Design and Construction Supplementary Planning
Document that sets out high standards for developers including things such as
sustainable urban drainage, air quality and waste and recycling provision.
Annual Report
♦ Gave outline planning permission to developers, with County and South
Cambridgeshire District Councils, for the development of Trumpington
Meadows.
♦ Successfully steered the massive rebuilding of the shopping areas in the
historic city centre, including the Grand Arcade and Christ’s Lane
developments.
Our plans for 2008/09 include:
♦ Adopting and promoting a Quality Charter for Growth in the Cambridge area
that sets out a joint vision for the quality of the built environment in the area.
♦ Launching a new website that sets out clearly the growth plans for the City.
♦ Preparing a high quality residential development at Council owned land at Clay
Farm.
♦ Working with the County Council to achieve well-designed and sustainable new
schools in the new developments.
♦ Adopting a new Planning Obligation Strategy that builds on our success in
negotiating strong S106 contributions from the new developments.
♦ Preparing the master plan for Cambridge East with the developer.
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♦ Working to influence the development of the County Council’s transport plans
through the Joint Transport Forum.
♦ Reviewing local cycling policies with cycling groups with a view to producing
and promoting a code of conduct for cyclists.
How do we compare?
Information that enables us to compare our performance against that of other
district councils is not yet available for 2007-08.
However, in the three years to 31 March 2007 the City Council improved its
performance against 73% of the performance indicators against which our
performance is measured by Government and the Audit Commission. This ranked
us at 17th out of 288 authorities.
In 2006-07 performance against 32% of our indicators was at the level of the best
25% of district councils in the country.
Waste minimisation and recycling is a priority for the Council and this is a service
area where we are performing well compared with other district councils.
Our
Our
performance Bottom
performance
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Indicator
in 2006-07
25% Median Top 25%
in 2007-08
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Kg of household
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waste collected pre
374.5
445.0
411.3
381.9
385.0
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head
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Recycling and
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composting rate (%)
39.63
24.43
29.86
36.96
41.52
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We are also performing well on the time it takes us to process housing benefit
claims and the collection of business rates.
Our
Our
performance Bottom
performance
Indicator
in 2006-07
25% Median Top 25%
in 2007-08
Average time taken
to process new
24
34
29
25
22
claims (days)
Average time taken
to process change of
8
16
11
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circumstances (days)
Percentage of
Business Rates
99.6
98.44
98.97
99.3
99.7
collected
Areas where we are performing less well include the time we take to process
planning applications and the satisfaction of planning applicants with the planning
service. The considerable demands of the growth of the City on our planning
resources mean that improving our performance will be a significant challenge in
the medium term and achieving stability at current levels of performance may be a
more realistic aim.
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What do residents say about our services?
In the autumn of 2007 the Council surveyed 1,100 citizens to discover their views
about Council services and issues facing the city. A separate sample of 200 Black
and Minority Ethnic (BME) citizens were asked the same questions so that their
views could be compared with those of the wider community and any differences
identified.
Survey respondents told us that they though the most important services the
council provided were:
♦ Recycling (99%)
♦ Refuse (99%)
♦ Street-cleaning (99%)
♦ Hygiene in restaurants and food shops (96%)
♦ Parks and open spaces (95%)
and that the services they were most satisfied with were:
♦ Recycling (83%)
♦ Refuse Collection (80%)
♦ Parks and open spaces (80%)
Lowest levels of satisfaction were with
♦ Council Housing waiting list (22%)
♦ Private sector housing advice (23%)
♦ Letting small commercial and industrial properties to local businesses (26%)
however, these are all services that were used by relatively few respondents and
most did not express a view one way or another.
The most important local issues for respondents were:
Annual Report
♦ Traffic problems (44%)
♦ Litter/cleanliness/Bins (23%)
♦ Crime/Policing (21%)
and this was reflected in the service areas that respondents felt should be
improved and be priorities for spending. The main issues for the BME community
were the same as those for other citizens.
We also asked respondents about their overall satisfaction with the Council.
65% said that they were ‘fairly’ or ‘very’ satisfied with the way the Council runs
things with only 13% saying they are dissatisfied. Satisfaction levels amongst the
BME community were slightly lower at 59% but only 6% said they were
dissatisfied.
When asked about the extent to which they agreed with a number of statements
about the Council respondents agreed that we were;
♦ Easy to contact (89%)
♦ Accessible to the public (85%)
♦ Care about the environment (83%)
♦ Work in partnership with other organisations (80%)
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but only 48% of respondents agreed that we consulted residents before making
decisions and 49% that we took residents views into account when making
decisions. At a time of considerable growth and change in the City we recognise
that consulting people and keeping them informed about the changes that will
affect their lives is important and this will be a key area for improvement in 2008-
09.
How to find out more
Further information about the Council’s performance and the Council’s priorities
for 2008-09 is available from our Best Value Performance Plan 2008 which will be
available on the Council’s website from 30th June at http://www.cambridge.gov.uk
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Statement of Responsibilities for the
Statement of Accounts
The Council’s Responsibilities
The Council is required to:
♦ make arrangements for the proper administration of its financial affairs and to
secure that one of its officers has the responsibility for the administration of
those affairs. In this Council, that officer is the Director of Finance;
♦ manage its affairs to secure economic, efficient and effective use of resources
and safeguard its assets; and
♦ approve the Statement of Accounts.
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The Director of Finance’s Responsibilities
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The Director of Finance is responsible for the preparation of the Council’s
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Statement of Accounts in accordance with proper practices as set out in the
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Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice
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on Local Authority Accounting in the United Kingdom.
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In preparing the Statement of Accounts, the Director of Finance has:
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♦ selected suitable accounting policies and then applied them consistently;
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♦ made judgements and estimates that were reasonable and prudent; and
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complied with the Code of Practice.
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The Director of Finance has also:
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♦ kept proper accounting records which were up to date; and
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♦ taken reasonable steps for the prevention and detection of fraud and other
irregularities.
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Annual Governance Statement
Scope of responsibility
Cambridge City Council is responsible for ensuring that its business is conducted
in accordance with the law and proper standards, and that public money is
safeguarded and properly accounted for, and used economically, efficiently and
effectively. Cambridge City Council also has a duty under the Local Government
Act 1999 to make arrangements to secure continuous improvement in the way in
which its functions are exercised, having regard to a combination of economy,
efficiency and effectiveness.
In discharging this overall responsibility, the Council is responsible for putting in
place proper arrangements for the governance of its affairs, facilitating the effective
exercise of its functions, and which includes arrangements for the management of
risk.
Cambridge City Council has approved and adopted a code of corporate
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governance, which is consistent with the principles of the CIPFA/SOLACE
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Framework Delivering Good Governance in Local Government. A copy of the
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code is on our website at
www.cambridge.gov.uk or can be obtained from the
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Director of Customer & Democratic Services, The Guildhall, Cambridge. This
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statement explains how Cambridge City Council has complied with the code and
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also meets the requirements of regulation 4(2) of the Accounts and Audit
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regulations 2003 as amended by the Accounts and Audit (Amendment) (England)
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Regulations 2006 in relation to the publication of a statement on internal control.
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The Purpose of the Governance Framework
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The governance framework comprises the systems and processes, and culture
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and values, by which Cambridge City Council is directed and controlled and its
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activities through which it accounts to, engages with and leads the community. It
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enables Cambridge city Council to monitor the achievement of its strategic
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objectives and to consider whether those objectives have led to the delivery of
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appropriate, cost-effective services.
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The system of internal control is a significant part of the framework and is designed
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to manage risk to a reasonable level. It cannot eliminate all risk of failure to
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achieve policies, aims and objectives and can therefore only provide reasonable
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and not absolute assurance of effectiveness. The system of internal control is
based on an ongoing process designed to prioritise and risks to the achievement
of Cambridge City Council’s policies, aims and objectives, to evaluate the
likelihood of those risks being realised and the impact should they be realised, and
to manage them efficiently, effectively and economically.
The governance framework has been in place at Cambridge City Council for the
year ended 31 March 2008 and up to the date of approval of the annual report and
accounts.
The Governance Framework
The key elements of the systems and processes that comprise the authority’s
governance arrangements include:
♦ The Council’s Medium Term Objectives (MTOs), which focus the Council’s
efforts in achieving the vision for Cambridge.
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♦ The Local Strategic Partnership’s Sustainable Community Strategy which sets
out the vision for the City and a set of priorities for delivering improvements in
the quality of life for Cambridge’s residents.
♦ The Cambridgeshire Sustainable Community Strategy, which develops the
local community strategies of the five district Sustainable Community Strategies
into a set of countywide priorities.
♦ The Cambridgeshire Local Area Agreement (LAA), which sets out the targets
agreed with government to be achieved in relation to those countywide
priorities.
♦ The annual service planning process which translates the Council’s MTOs into
actions at service level.
♦ The revised Local Code of Corporate Governance which sets out the ways in
which the Council ensures that its business is conducted in accordance with
law and proper standards and that public money is safeguarded and properly
accounted for.
♦ The Performance Management process which reviews and reports on
performance against the Council’s MTOs.
♦ The Best Value Performance Plan (BVPP), which links the Council’s objectives
to the relevant performance indicators and targets and measures progress.
♦ The Corporate Improvement Plan, which sets out targets and actions to
address specific areas of poor performance.
♦ The Council’s Medium Term Financial Strategy, which identifies how the
Council will resource its aspirations and plans for any financial risks.
♦ The arrangements for regular budget monitoring and reporting of significant
variances to senior management.
♦ An independent Internal Audit function with a risk-based audit plan.
♦ An annual opinion of the Head of Internal Audit on the authority’s internal
control environment and risk management framework.
Annual Governance Statement
♦ The Council’s Constitution, which sets out the decision- making process, the
terms of reference for each committee and the roles and responsibilities of
Members and officers.
♦ The Member/Officer protocol, which aids effective communication between
officers and Members and clarifies their respective roles and responsibilities.
♦ Codes of Conduct for Members and officers, which have been formally
approved, are reviewed regularly and available to all Members and staff.
♦ The Council’s Standards Committee, which promotes and maintains high
standards of conduct by Members.
♦ The Council’s Prevention of Fraud and Corruption Policy which is in place and
reviewed annually by the Council’s Standards Committee.
♦ A Register of Interests which is maintained and reviewed regularly.
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♦ Financial Regulations and Financial Procedure Rules which provide a
framework for managing the Council’s financial affairs and set out the financial
accountabilities and responsibilities for individual Members and officers.
♦ A corporate Risk Management Framework which is embedded across the
Council and includes a Risk Management Strategy approved by Members and
a comprehensive risk register identifying the key controls and actions required
to manage the Council’s principal risks.
♦ A regular reporting procedure which informs the Corporate Management Team
and Risk management Group on the position of risks and actions contained in
the Council’s risk register at five key points during the corporate planning and
decision-making cycle.
♦ A corporate Health and Safety Policy, which has been formally approved and is
available to all staff.
♦ The roles of Council’s Civic Affairs and Standards Committees, which fulfil the
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core functions of an Audit Committee as identified in CIPFA’s Audit
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Committees – Practical Guidance for Local Authorities.
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♦ The Procurement Policy and Strategy and the Council’s Contract Procedure
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Rules, which set out how the Council will promote effective procurement across
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the Council.
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♦ The role and functions of the Council’s Monitoring Officer, which are set out in
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the Council’s Articles of the Constitution.
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♦ Responsibilities of Civic Affairs Committee, which include 'overall responsibility
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for the Council's compliance with laws and regulations'.
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♦ The Confidential Reporting (‘Whistleblowing’) Policy, which is in place and
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subject to regular review by the Council’s Standards Committee.
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♦ The Council’s Complaints Procedure, which is available on the Council’s
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website.
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♦ The annual complaints report to Standards Committee, which analyses trends
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in complaints against the Council and what has been done to address them.
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♦ Member Induction training and handbook for new Members and the Member
Development Programme, which provides ongoing training for Members on
various skills and more in-depth explanations of issues concerning the Council.
♦ The Council’s Performance Review process which is undertaken annually
across the Council for all staff.
♦ The Council’s Competency Framework, which is in place for managers, and is
to be rolled out to all staff during 2008/09.
♦ The Council’s People Strategy, which sets out how the Council will recruit,
reward and develop its staff to reach their full potential.
♦ The Citizen’s Survey, which is undertaken to gauge the public’s perception of
Council services.
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♦ Terms of Reference and sound governance and reporting arrangements for the
Council’s key partnerships.
Review of Effectiveness
Cambridge City Council has responsibility for conducting, at least annually, a
review of the effectiveness of its governance framework including the system of
internal control. The review of effectiveness is informed by the work of the
Directors within Cambridge City Council who have responsibility for the
development and maintenance of the governance environment, the Head of
Internal Audit’s annual report, and also by comments made by the external auditors
and other review agencies and inspectorates.
The Council’s Constitution details Directors’ responsibilities for the maintenance of
controls within their departments. The system of internal control is subject to
regular review by Internal Audit. The work of the service is targeted using
assessments of potential risk, with the allocation of audit resources controlled
through an annual risk- based operational plan, which is agreed, annually, by the
Council’s Civic Affairs Committee. Members of this committee are regularly
updated on the work of Internal Audit. Copies of Executive Summaries from
Internal Audit reports and a Members’ Internal Audit newsletter are made available
to all Members.
Individual Internal Audit reports are issued directly to the relevant Director, the
Director of Finance and the Leader of the Council and Executive Summaries of
Internal Audit reports are circulated to the Chief Executive and the Council’s
Monitoring Officer to ensure that they are informed of potential areas of non-
compliance with legislation. Each audit report contains an independent assurance
opinion on the adequacy and effectiveness of the internal controls in place to
mitigate risks. Management actions agreed in Internal Audit reports are entered
into to the Council’s Risk Register. Progress on the implementation of agreed
actions is monitored by the Council’s Risk Management Group and Corporate
Management Team at five key points during the Corporate Planning and Decision
Making cycle through the risk management process, to assist with ensuring that
the Council’s risks are properly managed.
In addition to these arrangements the Council receives and responds to reports
from other review and assurance mechanisms and these have been collated
Annual Governance Statement
centrally and reviewed.
The Council’s Standards Committee is responsible for advising on and monitoring
the Members Code of Conduct and for advising the Council on the ethical aspects
of the corporate governance framework.
We have been advised on the implications of the result of the review of the
effectiveness of the governance framework by Civic Affairs Committee and a plan
to address weaknesses and ensure continuous improvement of the system is in
place.
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Significant Governance Issues
Actions to be taken to deal with significant governance issues:
1 Issue
• The new CIPFA/SOLACE Framework requires the development and
maintenance of a local Code of Corporate Governance that reflects the six
principles of good governance. The existing code does not fully comply with
this new requirement and has therefore been reviewed and updated and is
being brought to Civic Affairs Committee for approval.
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Action
•
[Target date & Officer Responsible]
♦ Scrutiny of the new ‘Code of Corporate Governance’ by Standards
Committee and adoption of the Code by Full Council.
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Director of Customer and Democratic Services
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30/09/2008
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• The current miscellaneous functions of Civic Affairs Committee refer to
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‘Oversight of the Council’s arrangements for corporate governance and its
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internal control environment. This includes reviewing
Statements on Internal
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Control…internal controls.’
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c
•
Actions
e
•
[Target date & Officer Responsible]
S
♦ Update Constitution re: miscellaneous functions of Civic Affairs Committee
t
a
to reflect changes introduced by the new framework for delivering good
t
governance in local government.
e
m
e
Head of Legal Services
n
30/09/2008
t
3 Issue
• Training has been provided to the Members of Civic Affairs Committee on their
role in the governance framework and the requirements of the new AGS. This
needs building on during 2008/09 to ensure the need for a ‘
critical review’ of
the AGS, by a review body, such as an Audit Committee (or equivalent – i.e.
Civic Affairs) is fulfilled. The review body should have the power to make
recommendations and changes to the key processes affecting governance
arrangements.
•
Actions
•
[Target date & Officer Responsible]
♦ Further training to be provided to Members on their role in Governance/
Risk Assurance Framework, starting with a refresher training session on
the AGS and Head of Internal Audit Opinion at the June meeting of Civic
Affairs Committee.
xvii
♦ Members’ Newsletters to be circulated throughout the year to all Members
to keep them up to date with key internal control and governance issues
arising from the work of Internal Audit.
Head of Internal Audit
31/03/09
4 Issue
• In their Annual Inspection Letter of October 2007, the Council’s External
Auditors raised the issue of target setting for performance indicators and
recommended this as an area for improvement.
•
Action
•
[Target date & Officer Responsible]
♦ The process for reviewing and setting targets for PIs to be examined/
audited as part of the 2008/09 Internal Audit Plan.
Head of Internal Audit
31/12/2008
5 Issue
• Managers’ job descriptions have been updated to include a clause relating to
‘Corporate Accountabilities’, including compliance with ‘relevant statutory
responsibilities and applicable legislation’. Risk Management has not been
included.
•
Action
•
[Target date & Officer Responsible]
♦ Review of standard job description for managers to include reference to
Risk Management and strengthen the wording referring to compliance with
legislation.
Head of Human Resources
Annual Governance Statement
31/07/2008
6 Issue
• In their Annual Inspection Letter of October 2007, the Council’s External
Auditors recommended that the Council draws up a Data Quality Strategy.
•
Action
•
[Target date & Officer Responsible]
♦ Development of a Data Quality Strategy once the County-wide Strategy has
been agreed by the LAA Board.
Best Value & Performance Manager
30/09/2008
xviii
7
Issue
• Whilst the current governance and reporting arrangements for the Council’s
existing Partnerships are sound, the increase in partnership working and the
greater emphasis being placed on this, for example in the Audit Commission’s
new Key Lines of Enquiry (KLOEs), means that it is timely for the Council to
review its key partnership arrangements to ensure their governance and risk
management arrangements are robust and clearly defined.
•
Action
•
[Target date & Officer Responsible]
♦ Work with Local Area Agreement (LAA) partners to review partnership
arrangements across the county to ensure they are fit for purpose and to
develop clear governance structures and risk management arrangements.
Director of Customer and Democratic Services
A
31/10/08
n
n
•
Action
u
•
[Target date & Officer Responsible]
a
l
♦ Review the council's own partnership arrangements in the light of the
G
outcomes of this review to ensure membership and delegations are still
o
appropriate and to improve Member scrutiny and performance monitoring
v
of those partnerships.
e
r
n
Director of Customer and Democratic Services
a
n
31/12/08
c
e
S
8 Issue
t
a
• The 2007/08 Internal Audit review of Procurement across the authority
t
identified a number of inconsistencies in procurement practice and a number of
e
key actions to address this situation.
m
e
•
Action
n
•
[Target date & Officer Responsible]
t
♦ Options for prompting Heads of Service to consider forthcoming
procurements as part of the Service Planning Process to be investigated.
Strategic
Procurement
Advisor
01/11/08
9 Issue
• The governance arrangements for delivering growth in Cambridgeshire have
been set up between the local authorities and Cambridge Horizons. The
mechanisms introduced are the first of their kind within the UK and the
organisations will need to ensure that they are effective and remain fit for
purpose.
•
Action
•
[Target date & Officer Responsible]
xix
♦ Co-ordinate a review of the growth governance arrangements, including
risk management and decision-making, with other local authorities.
Director of Environment & Planning
31/03/09
10 Issue
• The 2006 Housing Mock Inspection resulted in a 1 star rating and in response
to this an improvement plan was drawn up. The Council is aspiring to achieve
an excellent or 2 star rating from the Audit Commission Housing Inspection due
to be carried out in 2008.
•
Action
•
[Target date & Officer Responsible]
♦ The improvement plan following the 2006 Inspection has been reviewed
and a refreshed improvement plan is to be agreed in July 2008, taking into
account new requirements and best practice.
Director of Community Services
30/09/08
11 Issue
• The City Council is committed to safeguarding and promoting the welfare of
children, young people and vulnerable adults. A recent Internal Audit on the
Protection of Vulnerable Adults identified that improvements in the Criminal
Records Bureau (CRB) checking procedures need to be made in order to
ensure the Council is fully compliant with its responsibilities in this area.
•
• Cambridgeshire Local Safeguarding Children’s Board (LSCB) is seeking
assurance that Key Safeguarding Employment Standards (KSES) have been
fully implemented at all local authorities.
•
Action
•
[Target date & Officer Responsible]
Annual Governance Statement
♦ Complete the CRB action plan.
Head of Human Resources
30/11/08
•
Action
•
[Target date & Officer Responsible]
♦ Undertake an Internal Audit review of the Council’s safeguarding policies
against the KSES guidance.
Head of Internal Audit
30/12/08
xx
12 Issue
• Whilst member training is provided there is currently no central register held of
Member training undertaken.
•
Action
•
[Target date & Officer Responsible]
♦ Consider how the Council can adapt and develop the Members Training
Programme to provide support to Members in fulfilling their various roles,
including maintaining a register of Member training.
Director of Customer & Democratic Services
30/09/08
We propose over the coming year to take steps to address the above matters to
A
further enhance our governance arrangements. We are satisfied that these steps
will address the need for improvements that were identified in our review of
n
n
effectiveness and will monitor their implementation and operation as part of our
u
next annual review.
a
l
G
o
v
e
r
n
a
n
c
e
Councillor Ian Nimmo-Smith
S
Leader of the Council
t
Date:
2008
a
t
e
m
e
n
t
Rob Hammond
Chief Executive
Date:
2008
xxi
Independent Auditor’s Report to
Cambridge City Council
Opinion on the Financial Statements
I have audited the financial statements of Cambridge City Council for the year
ended 31 March 2008 under the Audit Commission Act 1998, which comprise the
Income and Expenditure Account, Statement of the Movement on the General
Fund Balance, the Statement of Total Recognised Gains and Losses, the
I
n
Collection Fund, the Balance Sheet, the Housing Revenue Account, the Cash Flow
d
Statement and the related notes. These financial statements have been prepared
e
under the accounting policies set out within them.
p
e
n
This report is made solely to Cambridge City Council in accordance with Part II of
d
the Audit Commission Act 1998 and for no other purpose, as set out in Paragraph
e
36 of the Statement of Responsibilities of Auditors and of Audited Bodies,
n
prepared by the Audit Commission.
t
A
u
Respective Responsibilities of the Chief Finance
d
Officer and Auditors
i
t
o
r
The Chief Finance Officer’s responsibilities for preparing the financial statements
’
s
in accordance with applicable laws and regulations and the Statement of
R
Recommended Practice on Local Authority Accounting in the United Kingdom
e
2007 are set out in the Statement of Responsibilities.
p
o
My responsibility is to audit the financial statements in accordance with relevant
r
legal and regulatory requirements and International Standards on Auditing (UK and
t
t
Ireland).
o
C
I report to you my opinion as to whether the financial statements present fairly the
a
financial position of the Authority in accordance with applicable laws and
m
regulations and the Statement of Recommended Practice on Local Authority
Accounting in the United Kingdom 2007.
b
r
i
d
I review whether the Statement on Internal Control reflects compliance with
g
CIPFA’s guidance. I report if it does not comply with proper practices specified by
e
CIPFA or if the statement is misleading or inconsistent with other information I am
C
aware of from my audit of the financial statements. I am not required to consider,
nor have I considered, whether the Statement on Internal Control covers all risks
i
t
y
and controls. I am also not required to form an opinion on the effectiveness of the
Authority’s corporate governance procedures or its risk and control procedures.
C
o
I read other information published with the financial statements, and consider
u
n
whether it is consistent with the audited financial statements. This other
c
information comprises only the Introduction to the Statement of Accounts. I
i
consider the implications for my report if I become aware of any apparent
l
misstatements or material inconsistencies with the financial statements. My
responsibilities do not extend to any other information.
Basis of audit opinion
I conducted my audit in accordance with the Audit Commission Act 1998 and the
Code of Audit Practice issued by the Audit Commission and International
Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts
xxiii
and disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the Authority in the preparation of the
financial statements, and of whether the accounting policies are appropriate to the
Authority’s circumstances, consistently applied and adequately disclosed.
I planned and performed my audit so as to obtain all the information and
explanations which I considered necessary in order to provide me with sufficient
evidence to give reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or other irregularity or error. In
forming my opinion, I also evaluated the overall adequacy of the presentation of
information in the financial statements.
Opinion
In my opinion the financial statements present fairly, in accordance with applicable
laws and regulations and the Statement of Recommended Practice on Local
Authority Accounting in the United Kingdom 2007, the financial position of the
Authority as at 31 March 2008 and its income and expenditure for the year then
ended.
Debbie Hanson
District Auditor
Date:
2008
Audit Commission
Regus House
1010 Cambourne Business Park
Cambourne
Cambridge
CB23 6DP
Independent Auditor’s Report to Cambridge City Council
xxiv
Conclusion on arrangements for securing economy,
efficiency and effectiveness in the use of resources
Authority’s Responsibilities
The Authority is responsible for putting in place proper arrangements to secure
economy, efficiency and effectiveness in its use of resources, to ensure proper
I
n
stewardship and governance, and to regularly review the adequacy and
d
effectiveness of these arrangements.
e
p
Under the Local Government Act 1999, the Authority is required to prepare and
e
publish a best value performance plan summarising the Authority’s assessment of
n
its performance and position in relation to its statutory duty to make arrangements
d
to ensure continuous improvement in the way in which its functions are exercised,
e
n
having regard to a combination of economy, efficiency and effectiveness.
t
A
Auditor’s Responsibilities
u
d
i
I am required by the Audit Commission Act 1998 to be satisfied that proper
t
o
arrangements have been made by the Authority for securing economy, efficiency
r
’
and effectiveness in its use of resources. The Code of Audit Practice issued by
s
the Audit Commission requires me to report to you my conclusion in relation to
R
proper arrangements, having regard to relevant criteria specified by the Audit
e
Commission for principal local authorities. I report if significant matters have come
p
to my attention which prevent me from concluding that the Authority has made
o
such proper arrangements. I am not required to consider, nor have I considered,
r
t
whether all aspects of the Authority’s arrangements for securing economy,
t
efficiency and effectiveness in its use of resources are operating effectively.
o
C
I am required by section 7 of the of Local Government Act 1999 to carry out an
a
audit of the Authority’s best value performance plan and issue a report: certifying
m
that I have done so; stating whether I believe that the plan has been prepared and
b
published in accordance with statutory requirements set out in section 6 of the
r
Local Government Act 1999 and statutory guidance; and where relevant, making
i
d
any recommendations under section 7 of the Local Government Act 1999.
g
e
Conclusion
C
i
t
y
I have undertaken my audit in accordance with the Code of Audit Practice and I am
satisfied that, having regard to the criteria for principal local authorities specified by
C
the Audit Commission and published in July/August 2005, in all significant
o
respects, Cambridge City Council made proper arrangements to secure economy,
u
efficiency and effectiveness in its use of resources for the year ending 31 March
n
c
2008.
i
l
Best Value Performance Plan
I issued my statutory report on the audit of the Authority’s best value performance
plan for the financial year 2007/08 in December 2007. I did not identify any
matters to be reported to the Authority and did not make any recommendations on
procedures in relation to the plan.
xxv
Certificate
I certify that I have completed the audit of the accounts in accordance with the
requirements of the Audit Commission Act 1998 and the Code of Practice issued
by the Audit Commission.
Debbie Hanson
District Auditor
Date:
2008
Audit Commission
Regus House
1010 Cambourne Business Park
Cambourne
Cambridge
CB23 6DP
Independent Auditor’s Report to Cambridge City Council
xxvi
Introduction to the
Statement of Accounts
I am pleased to introduce the Council’s Statement of Accounts for 2007/08.
Cambridge City Council is a large organisation, employing the equivalent of over
1,100 full time staff, and provides a diverse range of services to its residents, local
businesses and visitors. These services include the provision and upkeep of
council housing, collection of refuse, leisure and recreation, car parking,
environmental health, planning and development control and many more.
The accounts, set out on pages 7 to 71 have been prepared in accordance with
the ‘Code of Practice on Local Authority Accounting in the United Kingdom’
commonly referred to as the Statement of Recommended Practice (SORP). The
accounts contain a series of statements, summarising financial activity during the
I
year and setting out the Council’s assets and liabilities at the end of the Council’s
n
financial year on 31 March, as follows:
t
r
o
♦ Income and Expenditure Account
d
u
♦ Statement of Movement on the General Fund Balance
c
♦ Statement of Total Recognised Gains and Losses
t
i
♦ Balance Sheet
o
♦ Cash Flow Statement
n
♦ Housing Revenue Account
t
o
♦ Collection Fund
t
h
These accounts are supported by appropriate notes, a statement of the accounting
e
policies of the Council and a glossary of terms.
S
t
Once again, the accounts have been produced promptly and to the high standard
a
t
expected of the Council. This would not have been possible without the hard work
e
of my own staff and other finance staff across the Council, and I would like to thank
m
them, my fellow Directors, and service managers for their assistance in the
e
preparation of these accounts.
n
t
o
f
Review of 2007/08
A
c
Amongst the financial achievements of the year it is particularly pleasing to note
c
o
that:
u
n
♦ In its annual audit and inspection letter dated March 2008, the Audit
t
s
Commission gave top marks to the City Council for its Financial Reporting,
Financial Management and Financial Standing, putting it in the highest possible
overall category, Level 4, in the ‘Use of Resources’ assessment. We are one
of only thirteen district councils in this category.
♦ In recognition of a significant increase in the level of growth achieved in the
business sector within Cambridge, the Council was awarded a special central
government grant of over £1.5 million in 2007/08.
♦ The Council continued its programme of major investment in the provision and
improvement of face-to-face and telephone services to the public and the new
Customer Service Centre opened to the public in April 2008. The initial
investment, of over £3.8 million, is being funded from the Council’s reserves
and will be repaid from savings in running costs achieved through these
changes.
1
♦ The Council continued working with the Department for Communities and Local
Government, as one of six authorities nationally, to model and explore options
for a self-financing basis for the provision of council housing, as a possible
alternative to the current system of central government subsidies.
♦ Major investment continued to be made in the repair and improvement of
council houses towards achieving the required ‘Decent Homes’ standard by
2010.
Revenue Spending and Income
General Fund Services
For 2007/08, the Council agreed a budget for net spending on services of £18
million. This sum was to be financed in part by Government Grant together with
the Council’s share of Business Rates, with the remainder being raised through
Council Tax. The Council Tax for City Council services was set at £148.81 for
Band D properties, an increase of 4.9% over the previous year. The table below
compares the final outturn figures with those originally budgeted.
(£000s)
Original
Actual Difference
Budget
Net General Fund Spending
17,496
16,239
(1,257)
Contribution to/(from) reserves
457
3,289
2,832
Total 17,953
19,528
1,575
Financed by:
Government Grant
1,742
3,316
1,574
Share of NNDR
10,380
10,380
0
Council Tax
5,831
5,832
1
Total 17,953
19,528
1,575
The Council’s actual net spending was £1,257,000 below the original budget. This,
together with the award of a grant of £1,574,000 from central government
recognising business growth in the City, led to an increased contribution to
reserves from revenue of £2,832,000.
When the Council first approved its capital spending plans for 2007/08, it was
Introduction to the Statement of Accounts
agreed that £6.2 million could be funded by the use of General Fund reserves.
This sum included provision of £3.6 million for the estimated Council share of
investment in the Lion Yard Shopping Centre, the timing of which was uncertain.
In the event, re-phasing of capital expenditure, combined with some delays in
spending originally planned for 2007/08, resulted in the need to use only £2.0
million of reserves to finance capital.
The resulting net contribution to the General Fund Reserve for the year was
£1,298,034. At the end of the year, the Council’s General Fund Reserve stood at
£13.6 million. This reserve provides financial flexibility to the Council for meeting
exceptional and/or unanticipated items and is used to support the Council’s capital
investment programme.
2
Housing Revenue Account
When the Housing Revenue Account (HRA) budget for 2007/08 was agreed at the
start of the financial year, it was set to deliver a sustainable HRA over the longer-
term. Part of the longer-term budget strategy is to release HRA reserves over the
next 7 years, down to the target level of £3 million, to support capital investment in
the stock, including that required to meet the decent homes target by 2010.
Initially, use of reserves of £162,000 was agreed, but this was ultimately increased
to £975,000 at revised budget stage.
At outturn, the HRA reported a use of reserves of £111,572, with requests to carry
forward funding of £595,240 to 2008/09, reflecting re-phasing of a number of
projects. The net use of reserves, therefore, will equate to £706,812 with a net
I
under-spending of £267,978 against the revised budget for the year.
n
t
r
o
The Housing Revenue Account reserve stood at £6.6 million at the year-end.
d
u
Capital Spending and Receipts
c
t
i
o
In 2007/08 the Council spent £19.5 million on capital projects. Of this expenditure
n
£13.5 million was on major repairs and improvements to council dwellings. The
t
other main areas of capital expenditure were:
o
t
h
♦ Customer Service Centre - £1.5 million
e
♦ Investment in ICT systems - £0.9 million
S
♦ Environmental improvements - £0.9 million
t
♦ Leisure and community facilities - £0.7 million
a
♦ Repairs assistance and disabled facilities grants - £0.9 million
t
e
♦ Vehicles and equipment - £0.4 million
m
e
Capital receipts continue to be generated through the sale of land, council houses
n
and shared ownership dwellings. The share of these receipts that the Council is
t
allowed to retain amounted to £4.8 million of the total receipts of £8.9 million in the
o
year.
f
A
c
External Borrowing
c
o
The Council remained debt-free at 31 March 2008.
u
n
t
s
Pension Costs
Information relating to the assets, liabilities, income and expenditure of the
Council’s pension scheme is presented on pages 39 to 42. The Council’s share of
the assets and liabilities of the pension fund show an estimated liability of £26.3
million at 31 March 2008. This liability has no impact on the level of the Council’s
available reserves.
Changes in Accounting Policy
In line with the SORP 2007 and related CIPFA guidance, the Council has changed
a number of Accounting Policies. The impact of these changes is detailed in Note
39 to the Accounts, starting on page 34.
3
Further Information
Further information about the accounts is available from:
Head of Accounting Services
Cambridge City Council Finance Department
Lion House
Lion Yard
Cambridge CB2 3NA
In addition, interested members of the public have a right to inspect the accounts
each year before the audit is completed. The availability of the accounts for public
inspection is advertised in the local press.
Opinion
In my opinion the Statement of Accounts present fairly the financial position of
Cambridge City Council at 31 March 2008 and its income and expenditure for the
year then ended.
David Horspool
Director of Finance
Date:
2008
Signed on behalf of Cambridge City Council:
I confirm that these accounts were approved by the Civic Affairs Committee held
on the 25 June 2008.
Introduction to the Statement of Accounts
Councillor R A Boyce
Chair of Civic Affairs
Date:
2008
4
MAIN FINANCIAL STATEMENTS
5
Income and Expenditure Account
This account summarise
This accoun
s the resources that have been applied and generated in
providing services and managing the C
providing services and
ouncil during the year ending 31 March
ouncil during the
year ending 31 March
2008. It includes all day-to-day expenses on an accruals basis
2008. It includes all day-to-day expenses on an accr
as well as
uals basis
transactions measuring the value of fix
transaction
ed assets
ed asset actually consumed and the real
value of retirement benefits earned by
value of retirement benefits earned b emplo
y
yees in the year.
y
(£000s)
2007/08
2006/07
(Restated)
Gross
Gross
Net
Net
Note Expenditure
Income Expenditure Expenditure
Service expenditure &
1
income
Central services to the public
8,104
(6,351)
1,753
1,655
Cultural, environmental and
35,442
(20,654)
14,788
11,608
planning services
Highways, roads and transport
6,372
(6,459)
(87)
(761)
services
M
Local authority housing (HRA)
33,213
(28,845)
4,368
(305)
Other housing services
32,764
(29,681)
3,083
2,848
a
Corporate and democratic core
2,586
(17)
2,569
2,647
i
n
Non distributed cost
130
0
130
216
F
i
n
Net cost of services
118,611
(92,007)
26,604
17,908
a
n
Loss on disposal of assets
690
2,707
c
Other income
(212)
(125)
i
a
(Surpluses)/deficits on trading
2
(297)
(385)
l
undertakings not included in
S
net cost of services
t
Interest payable and similar
42
616
a
charges
t
e
Amounts payable into the
4,119
4,536
m
Housing Receipts Capital Pool
e
Interest and investment income
(4,140)
(3,338)
n
Pensions cost and expected
(160)
144
t
return on pensions assets
s
Net operating expenditure
26,646
22,063
Income from the Collection
(5,830)
(5,357)
Fund including transfers
to/from the Collection Fund
General government grants
(3,317)
(3,450)
Distribution from non –
(10,380)
(9,924)
domestic rates pool
Deficit for the year
7,119
3,332
7
Statement of Movement on the General Fund
Balance
The Income and Expenditure Account shows the Council’s actual financial
performance for the year, measured in terms of the resources consumed and
generated. However, the authority is required to raise council tax on a different
accounting basis, the main differences being:
♦ Capital investment is accounted for as it is financed, rather than when the fixed
assets are consumed.
♦ Retirement benefits are charged as amounts become payable to the pension
fund and pensioners, rather than as future benefits are earned.
♦ The General Fund balance shows whether the Council has over or under-spent
against the council tax that it raised for the year, taking into account the use of
reserves built up in the past and contributions to reserves earmarked for future
expenditure.
This reconciliation statement summarises the differences between the outturn on
the Income and Expenditure Account and the General Fund balance.
(£000s) Note
2007/08
2006/07
(Restated)
Deficit for the year on the Income and
7,119
3,332
Expenditure Account
Net additional amount required by statute and
15 (8,417) (4,793)
proper practices to be debited or credited to the
General Fund balance for the year
(Increase)/Decrease in General Fund balance
(1,298) (1,461)
Main Financial Statements
for the year
General Fund balance brought forward
(12,319) (10,858)
General Fund balance carried forward
(13,617) (12,319)
8
Statement of Total Recognised Gains and Losses
This Statement brings together all the gains and losses of the Council for the year
and shows the aggregate increase in its net worth. In addition to the deficit
generated on the Income and Expenditure Account, it includes gains and losses
relating to the revaluation of fixed assets and re-measurement of the net liability to
cover the cost of retirement benefits.
(£000s) Note
2007/08
2006/07
(Restated)
Deficit on the Income and Expenditure
7,119
3,332
Account for the year
Movement on the Collection Fund balance 112
(2)
attributable to the Council
(Surplus) or deficit arising on the
53 (32,908)
(68,484)
M
revaluation of fixed assets
a
Actuarial (gains)/losses on Pension Fund
50 (10,075)
(10,745)
i
assets and liabilities
n
F
Total recognised gains and losses
(35,752)
(75,899)
i
n
relating to the year
a
n
Prior period adjustment
39
(454)
c
i
Adjustments to opening balances in
39 2,930
a
respect of Financial Instruments
l
S
Adjustment Account
t
a
t
Total gains and losses recognised
(33,276)
e
since Statement of Accounts 2006-07
m
e
n
t
s
Total equity at 31 March 2007 as reported in the 2006-07 Statement of Accounts
was £779,099,000. The balance sheet at 31 March 2007 has been restated to
£779,553,000 as a result of a prior period adjustment. Further detail can be found
in Note 39 –
Private sector housing improvement loans.
9
Balance Sheet
This summarises the overall financial position of the Council at the 31 March 2008
showing its assets, liabilities and reserves.
(£000s)
31 March
31 March
2007
2008 (Restated)
Note
Intangible assets
17
254 48
Tangible fixed assets
Council dwellings
589,901
577,682
Other land & buildings
88,262
88,306
Vehicles plant & equipment
4,651
4,988
Infrastructure assets
568
419
Community assets
738
764
Operational assets
684,120 672,159
Investment properties
90,175
86,356
Assets under construction
2,780
553
Surplus assets held for disposal
11,772
4,634
Non operational assets
104,727 91,543
Total tangible fixed assets
18-19
788,847 763,702
Long term debtors
26
952
688
Deferred premium on early repayment of debt
26
0
2,829
Total long term assets
790,053 767,267
Current assets
Stocks and work in progress
27
358
306
Debtors 28
14,809
12,118
Investments 29
70,022
73,740
Cash in hand and bank
336
12
Total current assets
85,525 86,176
Current liabilities
Cash at bank overdrawn
0
(580)
Temporary loans
0
(1,430)
Creditors 30
(14,642)
(13,336)
Receipts in advance
31
(5,352)
(4,695)
Total current liabilities
(19,994) (20,041)
Current assets less current liabilities
65,531 66,135
Total assets less current liabilities
855,584 833,402
Creditors due after more than one year
32
(2,646)
(4,771)
Main Financial Statements
Capital contributions unapplied
33
(4,261)
(3,419)
Capital contributions/grants deferred
34
(9,538)
(9,479)
Provisions 35
(477)
(508)
Pension liability
48
(26,287) (35,672)
Total assets less liabilities
812,375 779,553
Financed by:
51
Collection Fund deficit/(surplus)
34
(78)
Capital receipts deferred
52
(179)
(233)
Revaluation reserve
53
(29,303)
0
Financial instruments adjustment account
54
2,406
0
Capital adjustment account
55
(751,825)
(755,708)
Capital Receipts reserve
56
(21,750)
(23,192)
Pensions reserve
57
26,287
35,672
Earmarked reserves
58
(17,837)
(16,992)
General Fund
(13,617)
(12,319)
Housing Revenue Account
(6,591)
(6,703)
Total equity
59
(812,375) (779,553)
David Horspool
Director of Finance
23 June 2008
10
The Cash Flow Statement
This statement summarises the movements of cash into and out of the Council
arising from transactions with third parties.
(£000s) Note
2007/08
2006/07
Revenue activities
Cash outflows
Employment costs
37,707
37,055
Other operating costs
43,756
37,895
Housing Benefit paid
12,774
11,985
Cambridgeshire County Council and police and fire
44,442
40,675
authority precept
Payment to National Non-Domestic Rates pool
72,454
69,398
Payments to the Capital Receipts pool
5,301
3,999
Sub total
216,434
201,007
M
Cash inflows
a
Rents (net of rebates)
(14,273)
(13,922)
i
n
Council Tax
(45,174)
(41,894)
Community Charge
(1)
(2)
F
Non-Domestic Rate Income
(62,305)
(60,087)
i
n
Non-Domestic Rate Income from the National Pool
(10,380)
(9,924)
a
Revenue Support Grant
60
(1,742)
(1,914)
n
c
Housing & Council Tax Benefit grant
60
(32,991)
(31,489)
i
Other government grants 60
(2,291)
(3,388)
a
l
Cash for goods & services
(47,473)
(44,898)
S
Other revenue cash income
(38)
(303)
t
Sub total
(216,668)
(207,821)
a
t
Net cash flow from revenue activities
61
(234)
(6,814)
e
Returns on investments and servicing of finance
m
Cash outflows
e
Interest paid
40
69
n
Interest on finance lease payments
2
2
t
s
Cash inflows
Interest received
(4,832)
(3,220)
Returns on investment & servicing of finance net
(4,790)
(3,149)
cash outflow
Capital activities
Cash outflows
Capital expenditure
19,128
20,077
Other capital cash payments
0
2,830
Cash inflows
Capital receipts
(9,309)
(9,865)
Capital grants
(600)
(1,055)
Other capital contributions
(1,289)
(3,299)
Capital activities net cash outflow
7,930
8,688
Net cash outflow/(inflow) before financing
2,906
(1,275)
Management of liquid resources
Short term investments
62
(5,240)
2,030
Financing
Repayment of borrowing
62
0
2
Net repayment of temporary loans
62
1,430
1
(Increase)/decrease in cash
64
(904)
758
11
NOTES TO THE MAIN FINANCIAL
STATEMENTS
13
Notes to the Main Financial Statements
1 Expenditure & Income on Services
The breakdown of services shown follows the groupings required by the Best
Value Accounting Code of Practice and is intended to assist in making
comparisons between different local authorities.
2 Trading
Operations
The financial results of the Council’s significant trading activities for the year are
set out below.
General Markets – The Council operates the general daily market in the City
Centre together with a number of other smaller specialist markets.
N
o
(£000s) 2007/08
2006/07
t
e
Income (609)
(590)
s
Expenditure 260
281
t
(Surplus) (349)
(309)
o
t
h
e
Commercial and Industrial Property – The Council owns a number of
M
commercial and industrial properties which it rents to local businesses.
a
i
n
(£000s) 2007/08
2006/07
F
i
Income from tenants
(6,844)
(5,925)
n
Reversal of impairment
0
(3,340)
a
n
Expenditure 1,105
1,297
c
(Surplus) (5,739)
(7,968)
i
a
l
S
t
a
Building Control – The Local Authority Building Control Regulations require the
t
disclosure of information regarding the setting of charges for the administration of
e
the building control function. The Council sets charges for work carried out in
m
relation to building regulations with the aim of covering all costs incurred.
e
However, certain activities performed by the Building Control unit cannot be
n
charged for, such as providing general advice and liaising with other statutory
t
s
authorities. The statement below shows the total cost of operating the building
control unit divided between the chargeable and non-chargeable activities.
15
Building Regulations
Charging Account
2007/08
2007/08
2006/07
(£000s)
Chargeable
Non
Total
Total
Chargeable
Building Building
Control Control
Expenditure
Employee Expenses
347
166
513
511
Transport 3
2
5
5
Supplies and Services
48
40
88
72
Central and Support Service
133
85
218 220
Charges
Total Expenditure
531
293
824
808
Income
Building Regulation Charges
(529)
0
(529)
(480)
Miscellaneous Income
0
(1)
(1)
(3)
Total Income
(529)
(1)
(530)
(483)
(Surplus)/Deficit 2
292
294
325
Surplus on trading undertakings not included in net cost of services – The
Council’s City Services department carries out a number of trading activities.
These include building maintenance, printing, grounds maintenance, refuse
collection, building and other cleaning.
(£000s)
2007/08
2006/07
Income
Expenditure (Surplus)/
Income Expenditure (Surplus)
Deficit
Building
(11,055)
10,963
(92)
(11,314)
11,236 (78)
services
Waste
(4,242)
4,161
(81)
(4,509)
4,290 (219)
services
Streetscene
(4,932)
4,779
(153)
(4,880)
4,821
(59)
Notes to the Main Financial Statements
services
Other
(2,006)
2,035
29
(678)
649
(29)
services
Total (22,235)
21,938
(297)
(21,381)
20,996
(385)
Recharges for internal work carried out by the trading operation have been priced
to include a cost of capital recovery, to be comparable with the private sector. As
the SORP does not permit charges for cost of capital to be debited to trading
accounts, the recharges that have been made have resulted in a surplus for these
activities. If cost of capital charges had been made, Building Services would have
made a surplus of £1,795 (£78,576 in 2006/07), Waste Services a surplus of £626
(£219,214 in 2006/07), Streetscene a surplus of £32,449 (£58,122 in 2006/07) and
other services a deficit of £47,998 (a surplus of £28,583 in 2006/07).
16
3 Adjustment for Depreciation and impairment
Each year, a local authority must calculate an amount, to be set-aside from the
revenue account, to be used for the future repayment of external borrowing. This
amount is known as the minimum revenue provision (MRP) and is zero for the
Council as it is debt free. The difference between the calculated MRP and
depreciation charges and impairment adjustments to revenue have been debited
back to the Statement of Movement on the General Fund Balance.
(£000s)
2007/08
2006/07
N
o
Statutory MRP
0
0
t
e
Depreciation and amortisation charge
2,969
2,655
s
Impairment charge/(reversal)
493
(3,475)
t
o
(Credit)/Debit to General Fund
(3,462)
820
Net MRP
0
0
t
h
e
M
4 Section 137 Expenditure
a
i
n
Section 137 of the Local Government Act 1971, as amended, empowers local
authorities to make contributions to certain charitable funds and not-for-profit
F
bodies providing a public service in the United Kingdom and mayoral appeals. The
i
n
Council’s expenditure under this power was £603 (£788.60 in 2006/07) mainly to
a
voluntary bodies working in the local area. The Council also lets out the Guildhall
n
halls at a reduced rate to charities and not-for-profit bodies. The monetary value of
c
the discount granted was £8,355 in 2007/08 (£5,600 in 2006/07).
i
a
l
S
5 Publicity
Expenditure
t
a
t
Section 5 of the Local Government Act, 1986, requires local authorities to disclose
e
expenditure on publicity in the financial year. In 2007/08 the City Council spent
m
£653,690 (£731,109 in 2006/07). The expenditure is incurred by advertising for
e
staff, discretionary and mandatory advertising and publicity in connection with
n
various Council activities.
t
s
6 Agency
Services
The Council operates Local Authority Parking Enforcement (LAPE) on behalf of
Cambridgeshire County Council. The total cost in 2007/08 was £1,322,693
(£1,272,902 in 2006/07) of which the County reimbursed £418,910 (£407,900 in
2006/07). The net surplus, after external parking charges income, was £288,649
(£395,397 in 2006/07). Of this surplus, £144,325 was returned to the County and
the remaining £144,324 is earmarked for future transport-related spending.
The Council also managed, on behalf of the County, the operation of on-street
parking services. Net surplus income for 2007/08 of £1,333,886 (£1,368,543 in
2006/07) from parking charges was reimbursable to the County.
Following the transfer of the City Council Engineering function to Cambridgeshire
County Council, an agency agreement has been in operation for the delivery of
17
highway functions and services from 1 April 2005. Total reimbursable expenditure
due to the County Council for City Council functions performed by it in 2007/08 was
£212,366 (£92,920 in 2006/07). Total reimbursable expenditure due to the City
Council for County Council functions performed by it in 2007/08 was £161,793
(£162,999 in 2006/07).
7 Local Authority (Goods and Services) Act 1970
This act empowers the Council to provide goods and services to other local
authorities and to certain other public bodies. In 2007/08 the City Council received
income of £2,267,199 (£2,247,384 in 2006/07) for services provided to Housing
Associations, Trusts and other local authorities. The expenditure incurred was
£2,137,314 (£2,151,367 in 2006/07).
8 Pension
Costs
Details of pension costs are included in the statement of Pensions Costs, Assets &
Liabilities starting on page 39.
9 Members
Allowances
The total allowances paid to members during the Municipal year 2007/08 were
£236,924 (£223,379 in 2006/07). Details of payments to individual members are
published annually in the local newspaper.
10 Operating Leases
The Council made the following payments under operating leases in 2007/08:
(£000s)
2007/08 2006/07
Buildings 233
249
Equipment 22
17
Total 255
266
The Council is lessor of a number of commercial properties. These are accounted
for as operating leases. Total rentals receivable for these properties amounted to
Notes to the Main Financial Statements
£6.7 million in 2007/08, (£5.8 million in 2006/07).
11 Finance Leases
The Council also holds assets under finance leases. Payments in 2007/08
amounted to £2,247 (£2,247 in 2006/07) and all relate to buildings.
12 Related Party Transactions
The Council is required to disclose material transactions with related parties –
bodies or individuals that have the potential to control or influence the Council or to
be controlled or influenced by the Council. Disclosure of these transactions allows
readers to assess the extent to which the Council might have been constrained in
its ability to operate independently or might have secured the ability to limit another
party’s ability to bargain freely with the Council.
18
Disclosures:
Central government has effective control over the general operations of the
Council – it is responsible for providing the statutory framework within which the
Council operates, provides the majority of its funding in the form of grants and
prescribes the terms of many transactions that the Council has with other parties
(for example, Housing Benefits). Details of transactions with government
departments are set out in a note to the Cash Flow Statement.
Members of the Council have direct control over the Council’s financial and
operating policies. During 2007/08 the Community Services Scrutiny Committee
paid grants totalling £508,454 (£505,541 in 2006/07) to voluntary organisations in
which 19 members had an interest. The relevant members did not take part in any
discussion or decision relating to the grants.
N
No other material transactions have been identified for disclosure which are not
o
already included elsewhere in this Statement of Accounts.
t
e
s
t
13 Employee Remuneration
o
t
Details of the numbers of City Council staff whose remuneration was £50,000 or
h
more are set out below. These are shown in bands of £10,000.
e
M
a
i
2007/08
2006/07
n
£50,000 - £59,999
9
10
F
£60,000 - £69,999
6
1
i
n
£70,000 - £79,999
1
5
a
n
£80,000 - £89,999
3
0
c
£100,000 - £109,999
0
1
i
a
£110,000 - £119,999
1
0
l
S
t
a
t
There are no staff who receive payments above £119,999. Remuneration
e
m
excludes employer’s pension contributions, but includes any other employee
benefits, calculated on the basis of the taxable benefits to which they give rise.
e
n
t
s
14 Audit Costs
In 2007/08 Cambridge City Council incurred the following fees relating to external
audit and inspection.
(£000s)
2007/08
2006/07
Fees payable to the Audit Commission in
respect of:
External audit services carried out by the appointed
103
98
auditor
Fees payable in respect of statutory inspection
7
6
Certification of grant claims and returns
20
20
Fees payable in respect of other services
0
1
Total 130
125
19
15 Note to the Statement of Movement on the General Fund Balance
(£000s) 2007/08
2006/07
(Restated)
Amounts included in the Income and
Expenditure Account but required by statute
to be excluded when determining the
movement on the General Fund balance for
the year
Depreciation and impairment of fixed assets
(8,206)
820
Excess of depreciation charged to HRA services
(2,607)
(1,853)
over the Major Repairs Allowance
Government grants deferred amortisation
432
320
Write downs of deferred charges and de minimis
(1,799)
(3,646)
capital expenditure to be financed from capital
resources
Capital contributions for deferred charges
677
2,502
Differences between amounts debited/credited to
(24)
0
the Income and Expenditure Account and
amounts payable/receivable to be recognised
under statutory provisions relating to soft loans
Net surplus/deficit on sale of fixed assets
(681)
(2,707)
Miscellaneous capital receipts
212
125
Net charges made for retirement benefits in
(4,735)
(5,876)
accordance with FRS17
(16,731)
(10,315)
Amounts not included in the Income and
Expenditure Account but required by statute
to be included when determining the
movement on the General Fund balance for
the year
Difference between the amortisation of premiums
545
determined in accordance with the SORP and
those determined in accordance with statute
Capital expenditure charged in-year to the
3,942
2,681
General Fund balance
Capital expenditure charged in-year to the
3,168
3,118
Housing Revenue Account balance
Transfer from Capital Receipts reserve to meet
(4,119)
(4,536)
payments to the Housing Receipts Pool
Notes to the Main Financial Statements
Employer’s contributions payable to the
4,045
3,507
Cambridgeshire County Council Pension Fund
and retirement benefits payable direct to
pensioners
7,581
4,770
Transfers to or from the General Fund balance
that are required to be taken into account
when determining the movement on the
General Fund balance for the year
Transfer of Housing Revenue Account deficit for
(112)
(627)
the year
Net transfer to or from earmarked reserves
845
1,379
733
752
Net additional amount required to be credited
(8,417)
(4,793)
to the General Fund balance for the year
20
Miscellaneous capital receipts are receipts where no asset has been disposed of
during the year.
16 Local Area Agreement
The Council is a participant in Cambridgeshire Together, a Local Area Agreement
(LAA). This is a partnership with other public bodies involving the pooling of
government grants to finance work towards jointly agreed objectives for local
public services. In 2007/08, the LAA has completed the second year of its three-
year agreement. This agreement will be superseded by a new three year
agreement for 2008-11, currently under negotiation, to reflect a new style of LAA
N
as required by central government.
o
t
Cambridgeshire Together has five key goals:
e
s
♦ Growth – accommodating growth, creating flagship communities and ensuring
t
o
the benefits of growth and infrastructure are enjoyed by all communities
t
h
♦ Economic Prosperity – supporting the special role of the county as a centre of
e
knowledge and innovation, especially in low carbon technologies
M
a
♦ Environmental Sustainability – meeting the challenges of climate change while
i
maintaining a high quality of life
n
F
♦ Equality and Inclusion – supporting vulnerable groups and enabling them to
i
n
participate fully in community life, and encouraging healthier and more
a
sustainable communities
n
c
♦ Strong Communities – engaging citizens in service planning and improvement
i
a
and ensuring our communities enjoy good quality environments and health,
l
free from crime, unemployment, discrimination and inequalities.
S
t
a
t
Cambridgeshire Together partners are:
e
m
♦ Local government bodies – Cambridgeshire County Council, Cambridge City
e
Council, South Cambridgeshire District Council, Fenland District Council, East
n
t
Cambridgeshire District Council, Huntingdonshire District Council
s
♦ Community protection authorities – Cambridgeshire Constabulary
♦ Health bodies – Cambridgeshire Primary Care Trust
♦ Voluntary organisations - Cambridge Council for Voluntary Services,
Cambridgeshire ACRE, Cambridgeshire Association of Town Councils, East
Cambridgeshire Council for Voluntary Services, Fenland Council for Voluntary
Services, Hunts Forum for Voluntary Services, Young Lives
♦ Business organisations – Greater Cambridge Partnership
Cambridgeshire County Council acts as the accountable body for Cambridgeshire
Together. The total amount of LAA Grant received in 2007/08 was £5.6m.
Cambridge City Council received £238,495 of this total to fund its own services.
21
17 Intangible Fixed Assets
The table below explains the movement in the value of intangible fixed assets in
the balance sheet for 2007/08.
(£000s)
Purchased Software
Licences
Opening gross book value as at 1 April 2007
60
Transfer from assets in the course of construction
15
Expenditure in year
239
Gross book value as at 31 March 2008
314
Amortisation as at 1 April 2007
(12)
Amortised during the year
(48)
Amortisation as at 31 March 2008
(60)
Balance at 31 March 2008
254
Balance at 1 April 2007
48
The amortisation in 2007/08 relates to a Novell Strategic Enterprise Agreement
licence (which covers the Council’s network and e-mail system) which cost
£60,000 in 2006/07 and is being amortised over the life of the licence which runs
from 1 January 2007 to 31 March 2008.
Software purchased in 2007/08 includes network related and specialist items
including an enhanced graphical information system, legal case management,
performance management and postal vote checking systems. These are
amortised over the expected life of the software.
18 Tangible Fixed Assets and Capital Expenditure
The tables below explain the movement in the value of tangible fixed assets in the
balance sheet for 2007/08.
Notes to the Main Financial Statements
22
Operational Assets
Operational assets
(£000s) Council
Other
Vehicles
Infra-
Com-
Total
Dwellings
Land &
Plant & structure
munity
Buildings Equipment
Assets
Assets
Opening gross book
577,682 90,349
8,678
535
836
678,080
value as at 1 April 2007
Additions 13,191
299
1,115
162
0
14,767
Completion of assets
0 29
23
0
0 52
under construction
Transfers from/(to) other
(2,620) (372)
(284)
0
25
(3,251)
categories
Disposals (6,667)
0
0
0
0
(6,667)
N
Revaluations 13,039
1,800
0
0
0
14,839
o
594,625 92,105
9,532
697
861
697,820
t
Gross book value as at
e
31 March 2008
s
t
Opening depreciation &
0 (2,043)
(3,690)
(116)
(72) (5,921)
o
impairment 1 April 2007
t
Depreciation (7,475)
(1,563)
(1,435)
(13)
(26) (10,512)
h
Transfers to other
14 7
244
0
0
265
e
categories
M
Depreciation adjustment
7,461 224
0
0
0
7,685
a
on revaluations
i
Impairment (4,724)
(468)
0
0
(25)
(5,217)
n
(4,724) (3,843)
(4,881)
(129)
(123) (13,700)
Accumulated
F
depreciation/impairment
i
as at 31 March 2008
n
a
n
Net book value as at 31
589,901 88,262
4,651
568
738
684,120
c
March 2008
i
a
l
Net book value as at 31
577,682 88,306
4,988
419
764
672,159
S
March 2007
t
a
t
e
m
e
n
t
s
23
Non-Operational Assets
Non- operational assets
(£000s) Investment
Assets Under Surplus Assets
Total
Properties
Construction
for Disposal
Opening gross book
86,404
553
4,634 91,591
value as at 1 April 2007
Additions 17
2,294
216
2,527
Completion of assets
0
(67)
0 (67)
under construction
Transfer from/(to) other
160
0
2,826 2,986
categories
Disposals 0
0
(2,628)
(2,628)
Revaluations 3,642
0
6,742
10,384
Gross book value as at
90,223
2,780
11,790 104,793
31 March 2008
Opening depreciation &
impairment 1 April 2007
(48)
0
0
(48)
Impairment 0
0
(18)
(18)
Accumulated
depreciation/impairment
(48)
0
(18) (66)
as at 31 March 2008
Net book value as at 31
90,175
2,780
11,772 104,727
March 2008
Net book value as at 31
86,356
553
4,634 91,543
March 2007
19 Programme of fixed assets revaluation
Programmed current year valuations were carried out by:
Mr CLN Carter MA MRICS (District Valuer);
Notes to the Main Financial Statements
Ms A Peirson BSc (Hons) MRICS (Bidwells)
The basis for valuation is set out in the statement of accounting policies on page
65.
The following statement should be noted with regard to the valuations carried out
by Bidwells Property Consultants:-
In reaching the final valuation figure, Bidwells has departed from the Appraisal and
Valuation Standards prepared by the Royal Institution of Chartered Surveyors.
This is because the valuation of the portfolio is such that Bidwells have not been
instructed to reinspect any of the properties. They have therefore relied on
information either obtained by them in 1994, 1999, 2003 and 2008, or first and
subsequently provided by Cambridge City Council in order to reach their
conclusions.
24
The gross book value of assets valued by Bidwells Property Consultants during the
Consultants during the
2007/08 valuation process totalled
2007/08 valuation process tota
£24.0 millio
lled
n, this equa
£24.0 millio
tes to 3
n, this equa
.
tes to 3 9% of the tota
9%
l
of the tota
l
gross valuations carried
gross valuat
out during th
ions carried
e year.
out during th
The Council’s internal valuers, Mr J Cowin MRICS and
C
Mr P Doggett BSc(Hons)
BSc(Hons)
MRICS, carry out any ad-hoc revaluations required outside of the rolling
y ad-hoc revaluations required outside of
programme.
The following table shows the p
The following table
r
shows the p ogress of
ogress of the Council’s programme for the
the Council’s programme for the
revaluation of assets
Counci
c l
Other
Vehicles
Infra- Community
Non-
Total
Dw
D el
e li
l ngs
ngs
Land &
La
Plant & structure
Assets Operati
Buildings
Buildi
Equipment
assets
onal
Assets
N
Valued at
-
-
4,651
568
738
2,780
8,737
historic cost
o
t
e
Valued at
s
current value
t
as at:
o
31 March 2008
589,901
8,172
-
-
-
20,159 618,232
t
h
31 March 2007
-
12,057
-
-
-
34,483 46,540
e
31 March 2006
-
40,039
-
-
-
27,403 67,442
31 March 2005
-
19,381
-
-
-
11,191 30,572
M
31 March 2004
-
8,613
-
-
-
8,711 17,324
a
i
n
Total 589,901
88,262
4,651 568
738
104,727
788,847
F
i
n
a
n
c
The last full valuation was carried o
The last full
u
valuation was carried o t during 1998/99, using
t during 19
a valuation date of 31
98/99, using
a valuation date of 31
i
a
March 1999.
l
S
t
20 Depreciation – Useful Lives
a
t
The majority of the Council’s operati
The majority of the Coun
onal asset
cil’s operati
s
onal asset are counci
l
are counci dwellings.
The District
dwellings.
The District
e
m
Valuer last carried out a full valuation of council dwellings during 2007/08. Counci
full valuation of council dwellings du
l
ring 2007/08. Counci
l
dwellings are placed int
dwellings ar
o
e placed int three useful life bandings. Assets built before 1945 were
three useful life bandings. Assets built before
e
assessed a
assesse
s
d a having a r
having a e
r maining useful life of 3
maining useful life of 4
3 years, thos
years, tho e built between 1945
e built bet
n
t
and 1974 have a remaining useful life of 44 years and those built fr
hose built f om 1974
s
onwards having a remaining useful life of 5
onwards having a remaining usef
4
ul life of 5 years. These assets
years. These asset are being
are bein
g
depreciated in accordan
depreciated
ce with the
in accordan
HRA Resou
ce with the
rce Accounting regulations.
ce Accounting regulatio
The remaining operational asset
The remaining operatio
s
nal asset that have useful lives ar
t
e being dep
hat have useful lives ar
reciated in
e being dep
reciated in
accordance with the statement of ac
accordance
counting policies outlined on page 6
counting policies outline
7. At the
end of the fi
end of the f nancial year impairment reviews were carried out, by the Council’s
ews were carried
internal Asset Registrar Mr P Doggett BSc(Hons) MRICS, on those operational
assets not depreciated.
assets not d
No addition
epreciated.
al impairments were ide
No addition
n
al impairments were ide tified.
The useful lives of assets
The useful lives of asset are estimated as:
are estima
Class of
Council
Counc
Other
Plant &
Vehicl
c e
l s
e
s
In
I frastructure
r
e Community
Community
Asset
A
Dw
D el
e li
l ngs
ngs
Buildings
Buildi
Equipmen
Equipme t
Assets
A
ssets
Assets
A
ssets
Useful life
38 - 60
60
3 - 20
3 - 10
40
10 - 60
by y
by e
y ar
a s
25
21 Physical Assets Held
Major assets held at 31 March 2008 were:-
31 March 31 March
2008
2007
No
No
Dwellings
Housing stock
7,438
7,524
Shared ownership
93
95
Operational assets
Operational offices
10
11
Sports/swimming 8
8
Depots 1
2
Car parks
9
9
Community centres
8
8
Concert hall
1
1
Public WCs
10
10
Cemeteries 1
1
Crematorium 1
1
Weekly let garages
1,845
1,861
Surgery 1
1
Non-operational assets
Development sites
3
2
Leased property/land
371
365
Museum/heritage properties
1
1
Infrastructure assets
Private roads/paths
6
6
Community assets
Skateboard ramps/play areas
14
13
Pavilions 3
3
Allotment site & buildings
3
3
Nature reserve
2
2
All weather sports surfaces
4
3
Recreation ground WCs
4
4
Notes to the Main Financial Statements
Area in hectares
Commons 109
109
Allotments 34
34
Public open space
83
83
26
22 Capital expenditure and financing
(£000s) 2007/08
2006/07
(Restated)
Opening capital financing requirement
(1,281)
(1,281)
Capital expenditure
Council housing
13,563
12,028
Private Sector Housing Improvement Loans
213
140
Renovation & disabled facilities grants
646
786
Assistance to housing associations
104
1,520
Leisure & community facilities
749
2,450
N
Environmental improvements
854
891
o
Car parks & parking enforcement
177
215
t
e
Public Conveniences
44
0
s
Waste collection
217
403
t
o
City Services vehicles & equipment
387
558
Commercial properties
151
137
t
h
Customer Service Centre
1,520
180
e
IT Systems
893
234
M
Other (administrative properties & equipment)
27
337
a
Developers’ contributions paid to the County Council
0
2,830
i
n
Financed by:
F
Capital receipts
(6,213)
(4,105)
i
Revenue & Reserves
(12,286)
(11,441)
n
a
Grants & contributions
(1,046)
(7,163)
n
Closing capital financing requirement
(1,281)
(1,281)
c
i
a
l
S
t
a
23 Capital Commitments
t
e
At the 31 March 2008, the Council was contractually committed to capital works
m
valued at approximately £9.1 million, as shown in the following table:
e
n
t
s
27
(£000s) 31
March
31 March
2008
2007
General Fund
Compulsory Purchase Orders
0
391
Public conveniences
52
50
Arbury Park
2,005
1,882
Refuse collection vehicles
0
132
Cycleways 170
0
Controlled drinkers project
0
12
Grafton East Car Park
2,306
0
Customer Access Strategy Accommodation design
81
0
Arbury community centre
0
125
Grand Arcade Partnership
0
250
Environmental improvements programme
0
86
PVCu refurbishment
0
50
Bishops Mill sluice
0
101
Disabled Facilities Grants
61
0
Housing works
97
0
Customer Access IT
89
0
Other works – less than £50,000 per contract
122
320
Affordable Homes
1,354
874
Housing Revenue Account
Decent Homes capital programme
1,776
0
Disabled Adaptations
199
0
Talbot House Refurbishment
172
0
Mansel Court Refurbishment
620
0
Other works – Less than £50,000
0
30
Total 9,104
4,303
The majority of capital expenditure under these contracts will be incurred in
2008/09 except for £81,000 of General Fund works due in 2009/10.
24 Operating leases
Notes to the Main Financial Statements
At 31 March 2008 the future liability under existing operating leases was as follows:
(£000s) Buildings
Other
Total
Future rental liabilities
Leases expiring within two to five years
0
37
37
Leases expiring in more than five years
1,522
10
1,532
Total 1,522
47
1,569
With regard to the Authority’s activity as a lessor, the gross value of assets held for
use in operating leases granted on commercial property was £90.2 million (£86.4
million in 2006/07). These assets are held as investment properties in accordance
with the SORP and accordingly no depreciation is charged upon them.
28
25 Finance leases
25 Finance
The following
The followin assets are held unde
assets ar
r finance
e held unde
le
r finance ases by the
le
Council, a
ases by the
c
Council, a counted for
c
as part of Tangible Fixed Assets:
as part of T
(£000s)
(£00
Valuation as at Valuation as at
31 March 2008 31 March 2007
Property leases
1,439
1,439
As these assets are held as investment properties no depreciation was charged on
them during the period. Lease payments in 2007/08 were £2,247. These
N
payments were accounted for as finance costs.
o
t
e
s
26 Long-Term Debtors and Deferred Premium on Early Repayment of
t
Debt
o
Long-term debtors which fall due after a period of at least one year.
t
h
e
M
(£000s) 31
31 March
2007
a
March
2008
(Restated)
i
n
F
Mortgages 91
133
i
n
Grand Arcade Reverse Lease Premium
244
0
a
Private Sector Housing Improvement Loans
528
454
n
Other 89
101
c
i
a
Long-term debtors
952
688
l
S
t
The deferred premium on early repayment of debt represents the balance of the
a
t
additional charge incurred when the Council prematurely repaid its Public Works
e
Loan Board debt on 31 March 2003. This premium is being written off over ten
m
years. It was derecognised on 1 April 2007 in line with SORP 2007 and the
e
balance at that date was effectively transferred to the Financial Instruments
n
Adjustment Account.
t
s
27 Stocks and Work in Progress
(£000s) 31
March
31 March
2008
2007
Stocks
City Services department
268
233
Other 55
51
Total stocks
323
284
Work-in-progress
City Services department
35
22
Total work-in-progress
35
22
Total 358
306
29
28 Debtors
(£000s) 31
March
31 March
2008
2007
Amounts falling due within one year
Government departments
5,246
972
Housing tenants
1,311
1,289
Community charge payers
1
2
Council tax payers
9,107
8,999
Sundry debtors
4,758
6,143
Total 20,423
17,405
Less provision for bad debts
(5,614)
(5,287)
Total 14,809
12,118
29 Investments
The investments disclosed in the balance sheet are made up of the following
categories:
(£000s)
31 March 2008
Loans and receivables
70,022
The balance at 31 March 2007 which was £73.4 million is not directly comparable
due to the introduction of financial instruments accounting as detailed in note 39.
30 Creditors
(£000s) 31
March
31 March
2008
2007
Government departments
1,233
2,492
Capital creditors
2,878
2,171
Notes to the Main Financial Statements
Developers’ contributions
3,519
1,063
Sundry creditors
7,012
7,610
Total 14,642
13,336
31 Receipts in Advance
(£000s) 31
March
31 March
2008
2007
Council Tax
2,446
2,312
National Non Domestic Rate
1,167
1,326
Developers’ contributions maintenance
695
305
Other 1,044
752
Total 5,352
4,695
30
32 Creditors due in more than one year
Creditors due in more than one y
(£000s
(£00
)
0s 31
March
March
31 March
2008
2007
Developers’ contributio
Develo
ns
pers’ contributio
2,646
4,771
Total 2,646
4,771
33 Capital Contributions Unapplied
N
This accoun
This accou t includes unspent ca
t includes
pital contrib
unspent ca
u
pital contrib tions from developers where the
o
Council has no obligation to repay if projects ar
Council has no obligatio
e not completed within
n to repay if projects ar
a specifie
e not completed within
d
a specifie
d
t
timescale.
e
s
t
o
34 Capital Contributions and Grants Deferred Account
t
This account reflects th
This accoun
e deferred
t reflects th
credit method of accou
e deferred
n
credit method of accou ting for capital grants,
ting for ca
pital grants,
h
e
required under Statement of Standard Account
required under Statement of Standard Acc
ing Practice (SSAP) 4. Grants or
ount
contributions
contribution received to
received t meet capital expenditure are credited to this a
meet capital expenditure are credit
c
ed to this a count and
c
count and
M
a proportion of the
a proportion
sum is relea
of the
s
sum is relea ed to
ed t the Income
the Incom and Expenditure account over a
and Expenditure acco
a
number of years in line
number of years in line with the depreciation of t
hose asset
with the depreciation of t
s
hose asset .
s
i
n
F
35 Provisions
i
n
a
n
(£000s
(£00
)
0s 2007/08
0
2006/07
2006/0
c
In
I s
n u
s r
u a
r n
a c
n e
c
PVCu
Insuranc
I
e
nsuranc
PV
P C
V u
C
i
a
Balance as at 1 April
366
142
176
0
l
S
Movement in the year
(30)
(1)
190
142
t
Balance as at 31 March
336
141
366
142
a
t
e
m
The insurance provision has been set aside to meet the estimated cost to the
e
Council of outstanding insurance claims. However, the actual cost (if any) of
n
individual claims and the timing of payments are uncertain and may be dependent
t
s
on the results of negotiation and/or legal action.
Under current insurance arrangements, the Council takes responsibility for
meeting the first £10,000 of any liability or motor claim up to a total combined loss
in any insurance year of £275,000. For property losses, the Council is responsible
for meeting up to £150,000 of claims in respect of General Fund property from the
provision and up to £250,000 for HRA property from the HRA. Claims or losses in
excess of these amounts are met by the Council’s external insurers.
The Council’s PVCu windows factory closed in October 2006. A 10 year warranty
on all units manufactured since 1997 has been given by the Council and claims
could be received until 2017. A warranty provision has been established based on
a percentage of the contract values.
31
36 Contingent Liabilities and Assets
Compulsory Purchase Orders
Residential dwellings: The Council has compulsory purchased two houses, the first in 2003/04 and the
second in 2006/07. The obligation to compensate the previous owners arises
when the claimant actually claims compensation and such amount is agreed or
awarded by the Lands Tribunal.
The claimants have 12 years from the date of purchase to make a claim for
compensation and are entitled to the value of land and property, plus interest
accrued in accordance with the interest rate set in the Land Compensation Act
1961. The values plus accumulated interest at 31 March 2008 are £568,524.
The claimants have been notified of their rights but no indication has yet been
received on when the amounts may become payable.
Grand Arcade development:
The Council, on 28 July 2003, made a Compulsory Purchase Order (CPO) to
facilitate a new shopping centre in Cambridge. The CPO was confirmed in
September 2004 and the land vested in the Council on 5 January 2005. A total of
five claims have now been received, with one claim outstanding. Three claims
have been settled and two claimants have received estimated 90% advance
payments of compensation. Payments totalling £2,893,215 have been made. The
Council is working to settle the claims where advance payments have been made.
The Council subsequently served Notice to Treat on several tenanted shop units
within Lion Yard shopping centre that had failed to complete Deeds of Variation to
vary restrictive covenants affecting the Grand Arcade development, two of which
are still being negotiated. There is a remote possibility that the Council could end
up with a vacant shop unit but there is an indemnity arrangement in place whereby
the Council would be reimbursed rent payments for up to 18 months.
An indemnity agreement was completed on 17 July 2003 with the Grand Arcade
Partnership (GAP), a special purpose vehicle comprising Grosvenor Developments
Notes to the Main Financial Statements
and the Universities Superannuation Scheme, which ensures that monies are
transferred to the Council from GAP at least three days before the Council has to
make any payments.
Insurance
During 2005/06 the Council settled a mesothelioma claim brought by the widow of
a former employee. The Council’s previous insurers Municipal Mutual Insurance
(MMI) are currently refusing to cover the claim, as they believe that the wording of
the employer’s liability insurance cover is such that the circumstances are not
covered. The solicitor who is dealing with the claim on behalf of the Council has
been appointed Coordinating Solicitor for a collective of 10 other local authorities.
He is maintaining a watching brief and in the event that the claim is settled by the
insurers the costs incurred to date of £159,888 (including legal costs) will be
recoverable. Legal proceedings are scheduled for a 6-8 week trial commencing in
June 2008.
32
In 1992-93 the Council’s then insurers, MMI, ceased taking new business and are
now being managed under a “scheme of arrangement”. City Council claims
payments under this arrangement are £853,084. It is possible that a proportion of
this may need to be repaid or not be receivable by the Council if the scheme of
arrangement triggers insolvency, but the amount cannot be quantified at this stage.
The balance sheet as at 30 June 2007 shows the total assets of MMI stood at
£169 million. MMI are cautiously optimistic that, on the basis of all the information
currently known to them, a solvent run-off can be achieved.
Legal Cases
The Council is currently awaiting the reports of expert witnesses, regarding
possible construction defects at Parkside Pool. The outcome of these reports will
determine whether it will be in the Council’s best financial interest to pursue a legal
N
case against the contractors.
o
t
The Council is involved in litigation with a local company whereby an application to
e
s
the High Court has been made in respect of a declaration of ownership by that
company of steps abutting the River Cam.
t
o
t
There are two ongoing legal cases in respect of planning issues. A legal challenge
h
by way of judicial review, has been made by a developer to a decision not to
e
allocate a site in the west of the City for housing in the Local Plan. Another
M
developer is disputing the conditions in respect of renewable energy included in
a
the original planning permission. In both cases, should legal proceedings find
i
against the Council it would be liable for some or all of the claimants’ costs.
n
F
The Council is currently defending an appeal against a criminal conviction in
i
n
relation to health and safety.
a
n
c
Public Inquiries
i
a
l
S
The Council is involved in three public inquiries in respect of refusal of planning
t
permission.
a
t
e
m
37 Deferred Charges
e
n
t
(£000s) 2007/08
2006/07
s
(Restated)
Balance as at 1 April
0
0
Improvement grants
645
771
Grants for community facilities
210
646
Other expenditure
460
388
Grants for affordable housing
22
1,520
Written off to Income and Expenditure Account
(1,337)
(3,325)
Balance as at 31 March
0
0
33
38 Introduction of the Euro
The Council has considered the impact of the introduction of the Euro. The future
costs of dealing with the Euro are not expected to be significant and will be
accounted for as incurred.
39 Changes in accounting policy
Introduction of Revaluation and Capital Adjustment Account
The Balance Sheet figures for 31 March 2007 have been adjusted from those
included in the Statement of Accounts for 2006/07 to accommodate the
implementation of the Revaluation Reserve (see accounting policy 3). The
Revaluation Reserve replaces the Fixed Asset Restatement Account (FARA). The
credit balance £642,637,000 on the FARA at 31 March 2007 has been written off to
the Capital Financing Account (£112,617,000 credit balance) to form the new
Capital Adjustment Account with a balance of £755,254,000. The Revaluation
Reserve has then been included in the Balance Sheet with a zero opening
balance. The closing position on the Reserve at 31 March 2008 therefore only
shows revaluation gains accumulated since 1 April 2007.
Treatment of certain capital receipts
Previously sums which were defined as capital receipts but were not clearly
attributable to an asset disposal were included in the figures for disposal of assets.
In line with the new guidance in the Statement of Recommended Practice
Practitioner’s Guidance Notes it is now felt more appropriate to disclose these
receipts, which total £212,000 in 2007/08, separately.
The comparative Income and Expenditure Account figures for 2006/07 have been
restated to move receipts totalling £125,000 to other income. Corresponding
adjustments have also been made to Note 15, the Note to the Movement on the
General Fund balance, and note 61, a note to the Cash Flow statement.
These receipts relate entirely to the HRA and adjustments have been made to the
relevant HRA statements as detailed in note 12 to the HRA.
Capital contributions and grants deferred
Notes to the Main Financial Statements
In line with guidance provided in Local Authority Accounting Panel (LAAP) Bulletin
73 issued in April 2008 the Council has also revised the accounting treatment of
grants and contributions applied to finance assets in the course of construction.
Previously these amounts were transferred to the capital contributions deferred
account in advance of the asset becoming operational. Contributions in respect of
assets in the course of construction total £365,000 at 31 March 2008 and are now
retained within capital contributions unapplied until the asset is complete. An
adjustment of £295,000 has been made between capital contributions unapplied
and capital contributions and grants deferred on the balance sheet as at 31 March
2007.
Private sector housing improvement loans The Council has reviewed and revised its accounting treatment of private sector
housing improvement loans. These interest free loans are secured as a legal
charge on the homes of the recipients and must be repaid (with certain exceptions)
on the sale of the property. Loans of £213,000 were advanced in 2007/08. These
34
were previously treated in the same way as improvement grants and written off to
the Income and Expenditure Account as deferred charges – with a corresponding
credit from the Capital Financing account so that there was no impact on Council
Tax. These loans are appropriately held as long term debtors on the balance
sheet and an adjustment has been made, increasing the credit balance on the
Capital Adjustment Account, to reflect the debtor outstanding at 31 March 2007 of
£454,000. Other changes have been made to the comparative figures for 2006/07,
to reflect the £140,000 of loans advanced in 2006/07 which are not now to be
treated as deferred charges, but these have no overall impact on General Fund
balances.
Financial Instruments
SORP 2007 introduced accounting for financial instruments in line with FRS 25,
FRS 26 and FRS 29. The Council has revised the opening balance sheet as at 1
N
April 2007 in line with the requirements in the SORP.
o
The SORP required the remaining deferred premium on early repayment of debt of
t
e
£2,828,817 to be derecognised and written off to the balance on General Fund
s
reserves. However statute allowed the creation of a Financial Instruments
t
Adjustment Account and a corresponding transfer was made from this account so
o
that the derecognition has no impact on reserves.
t
h
e
Statute allows the Council to continue to amortise the remaining premium in the
Statement of Movement on Housing Revenue Account Balances each year with a
M
corresponding credit from the Financial Instruments Adjustment Account. The
a
annual impact on reserves is therefore unchanged from that under the previous
i
n
accounting policy.
F
i
The SORP also now requires financial instruments to be measured at their fair
n
value with a restatement being made to opening balances as at 1 April 2008. An
a
n
adjustment of £99,884 was made at 1 April in respect of soft loans (loans made at
c
less than market rates) because their ‘fair value’ was less than the outstanding
i
a
balance owed to the Council because of the discounted rate of interest offered.
l
Adjustments to fair value must be charged to the Income and Expenditure Account
S
but statutory regulation permits a corresponding transfer from the Financial
t
Instruments Adjustment Account to negate any impact on General Fund balances.
a
t
e
Interest on investments accrued at 31 March 2008 of £1.5 million is disclosed as
m
part of the value of the investment. At 31 March 2007 the interest accrual of £1.6
e
million was included as part of debtors. In line with the SORP no adjustment to
n
comparatives has been made.
t
s
No change to impairments assessed under previous accounting policies was
identified at 1 April 2007.
The adjustments to balances at 1 April 2007 in respect of financial instruments
accounting have no net impact on the Statement of General Fund balances for the
year but they are disclosed in the Statement of Recognised Gains and Losses for
the year.
40 Financial Instruments gains and losses
The gains and losses recognised in the Income and Expenditure Account and
Statement of Total Recognised Gains and Losses in relation to financial
instruments are made up as follows:
35
(£000s)
Liabilities
measured
at
amortised
Loans and
cost
Receivables Total
2007/08:
Charged to net cost of service
Bad debts written off direct to services
0
13
13
Increase in bad debt provisions
0
159
159
Adjustments to fair value of soft loans
0
45
45
Interest payable and similar charges
42
0
42
Interest and investment income
0
(4,140)
(4,140)
Net gain/(loss) for the year
42
(3,923)
(3,881)
41 Fair value of assets and liabilities carried at amortised cost
Financial liabilities and financial assets represented by loans and receivables are
carried in the Balance Sheet at amortised cost. Their fair value can be assessed
by calculating the present value of the cash flows that will take place over the
remaining term of the instruments, using the following assumptions:
♦ An estimated interest rate at 31 March 2008 of 4.24% has been used to
calculate the fair value of private sector housing improvement loans
♦ No early repayment or impairment is recognised
♦ Where an instrument will mature in the next 12 months, the carrying amount is
assumed to approximate to fair value
♦ The fair value of trade and other receivables is taken to be the invoiced or billed
amount.
The fair values are calculated as follows:
(£000s)
31 March 2008
Carrying
amount
Fair
value
Notes to the Main Financial Statements
Financial liabilities at
(10,934)
(10,934)
amortised cost
Loans and receivables
74,779
74,779
42 Nature and extent of risks arising from financial instruments
The Council’s activities expose it to a variety of financial risks:
♦ Credit risk – the possibility that other parties might fail to pay amounts due to
the Council
♦ Liquidity risk – the possibility that the Council might not have funds available to
meet its commitments to make payments
36
♦ Market risk – the possibility that financial loss might arise for the authority as a
result of changes in such measures as interest rates and stock market
movements.
How the Council manages those risks
The Council maintains principles for overall risk management, as well as approved
policies covering specific areas, such as Treasury Management. Each year the
Council produces a Treasury Management & Annual Investment Strategy that
explains how the Council intends to manage credit, liquidity and market risk in its
investments.
Credit risk
N
Credit risk arises from investments with banks and other financial institutions, as
o
well as credit exposures to the Council’s customers.
t
e
s
In relation to investments, deposits of up to one year are only made with banks or
t
o
other financial institutions that are rated independently with a minimum score of F1
(Fitch) or P1 (Moody’s) and a Fitch support rating of at least 3. In the case of
t
h
Building Societies, they must also have assets greater than £2.5bn. A maximum of
e
£5m is allowed to be invested for up to three years but the minimum credit criteria
M
then has to be F1+ with a ‘long-term’ rating of at least AA-, an Individual rating of B
and a Support rating of 2. No more than £ 6 million is to be on deposit with one
a
institution at any time. In light of the above investment strategy, the Council does
i
n
not consider there to be any quantifiable credit risk in relation to its investments as
F
at 31 March 2008.
i
n
In relation to the sums owed by the Council’s customers and contractual debtors,
a
n
the Council makes prudent financial provision for bad debts based on an
c
assessment of the risks for each type of debt and the age of those debts. In
i
a
respect of current and past tenants of council dwellings, the bad debt provision
l
takes account of the total sum owed by each individual debtor.
S
t
The following analysis summarises the Council’s assessment of its potential
a
t
maximum exposure to credit risk in relation to debtors:
e
m
e
(£000s)
n
Impairment
t
s
Allowance
(Estimated
maximum exposure
Gross debt as 31
to default and
March 2008
uncollectability)
Long-term debtors
707
0
Current and former tenants
1,310
918
Other debtors
4,076
418
Total 6,093
1,336
Long-term debtors include private sector housing improvement loans and council
house mortgages. These are secured on properties.
37
The movement in the impairment allowance during the year can be summarised as
follows:
(£000s)
Impairment
allowance
Balance as at 1 April 2007
1,237
Increase in allowance for impairment
160
Balances written off during the year
(61)
Balance as at 31 March 2008
1,336
The Council does not generally extend credit to its customers beyond 21 days. At
31 March 2008, of the total debtor and deferred debtor balances of £6.1 million, the
past due amount was £1.7 million and can be analysed by age as follows:
(£000s)
Customer debts
Less than three months
347
Three to six months
60
Six months to one year
224
More than one year
1,029
Total 1,660
Liquidity risk
As the Council has ready access to borrowings from the Public Works Loan Board,
there is no significant risk that it will be unable to raise finance to meet its
commitments under financial instruments.
All financial liabilities as at 31 March 2008 are due within one year.
Market risk
Notes to the Main Financial Statements
Interest rate risk The Council is exposed to minimal risk in terms of its exposure to movements in
interest rates. This is because the majority of its investments are at fixed rates.
They are also of less than one year in duration and so changes to fair value will be
minimal. The Council does, however, utilise it’s bank’s deposit account for very
short term cash deposits and the interest rate on this account moves in line with
movements in the bank rate.
In general terms, a rise in interest rates would have the following effects:
♦ Investments at variable rates – the interest income credited to the Income and
Expenditure Account will rise
♦ Investments at fixed rates – the fair value of the assets will fall
38
The treasury management team has an active strategy for assessing interest rate
exposure that feeds into the setting of the annual budget and which is used to
update the budget during the year. However, looking back on last year, if interest
rates had been one percentage point higher, with all other variables held constant,
the financial effect would have been an additional income of £23,000.
Price risk The Council does not invest in equity shares and so is not exposed to this risk.
Foreign exchange risk
The Council has no financial assets or liabilities denominated in foreign currencies
and thus has no exposure to loss arising from movements in exchange rates.
N
o
43 Date the Statement of Accounts were authorised for issue
t
e
s
The Statement of Accounts were authorised for issue by the Director of Finance on
23 June 2008. This is the date up to which events after the balance sheet date
t
o
have been considered.
t
h
e
M
a
Pension Costs, Assets & Liabilities
i
n
F
i
44 Pension Scheme
n
a
Employees of Cambridge City Council may participate in the Local Government
n
Pension Scheme (LGPS), administered by Cambridgeshire County Council. This
c
is a funded scheme, meaning that the Council and employees pay contributions
i
a
into a fund, calculated at a level intended to balance the pensions liabilities with
l
investment assets.
S
t
a
t
45 Revenue Cost to Cambridge City Council
e
m
The cost of retirement benefits in the Net Cost of Services is recognised in the
e
accounts when the benefits are earned by employees, rather than when they are
n
eventually paid as pensions. However, the charge that is required to be made
t
s
against council tax is based on the cash payable in the year, so the real cost of
retirement benefits is reversed out in the Statement of Movement on the General
Fund Balance. The following transactions have been made in the Income and
Expenditure Account and Statement of Movement on the General Fund Balance
during the year.
39
(£000s) 2007/08
2006/07
Income and Expenditure Account
Net cost of services
Current service cost
4,765
5,516
Non distributed cost
130
216
Net operating expenditure
Interest cost
8,336
7,554
Expected return on assets
(8,496)
(7,410)
Net charge to the Income & Expenditure
4,735 5,876
Account
Statement of Movement in the General Fund
Balance
Reversal of net charges made for retirement
(690) (2,369)
benefits in accordance with FRS17
Actual amounts charged against the General
Fund balance for pensions in the year:
Employers contributions payable
4,045
3,507
In 2007/08 the Council paid an employer’s contribution of £3,748,831, representing
14.6% of employees’ pensionable pay, into Cambridgeshire County Council’s
Pension Fund (£3,228,302 and 12.8% in 2006/07), which provides members with
defined benefits related to pay and service.
46 Valuation of the Pension Fund
The contribution rate is determined by Hymans Robertson, the independent
actuary to the County Council Fund, based on triennial valuations. Costs in
2007/08 were determined on the basis of contribution rates set in the latest formal
valuation of the Pension Fund as at 31 March 2004 and rolled forward. Liabilities
have been assessed on an actuarial basis using the projected unit method, an
estimate of the pensions that will be payable in future years dependent on
assumptions about mortality rates and salary levels. This valuation concluded that,
to meet future funding requirements, an increase in the contribution rate for
Cambridge City was required to 14.6%, effective from 1 April 2007.
The Actuarial report to 31 March 2007 still requires an increase in future
employer’s contributions levels, although these have been revised downwards as
Notes to the Main Financial Statements
shown below:
1 April 2008
15.9%
1 April 2009
17.2%
1 April 2010
18.6%
It should be noted that if the age profile of the active membership is rising
significantly then, under the projected unit method, the current service costs will
increase as the members of the scheme approach retirement.
40
47 Assumptions Used for Valuation of the Fund
The main assumptions used in the Pension Fund calculations are as shown below:
County Fund – Main Assumptions
Valuations as at
31 March
31 March
31 March
2008
2007
2006
- rate of inflation
3.6%
3.2%
3.1%
- rate of increase in salaries
5.1%
4.7%
4.6%
- rate of increase in pensions
3.6%
3.2%
3.1%
- rate of discounting scheme liabilities
6.9%
5.4%
4.9%
N
o
In accordance with CIPFA guidance, the rate of discounting scheme liabilities for
t
e
the 2007/08 financial year was 6.9% which was the yield available on long-dated,
s
high quality corporate bonds at the FRS17 valuation date.
t
o
t
h
48 Cambridge City Council’s Assets and Liabilities in the Fund
e
M
The position is outlined below and takes into account the commitments from
a
discretionary payments outside the main scheme.
i
n
F
(£000s) 2007/08
2006/07
i
n
a
Share of assets in County Council Fund
110,547
118,094
n
c
Estimated liabilities in County Council Fund
(132,457)
(149,429)
i
a
Net liabilities in County Council Fund
(21,910)
(31,335)
l
Estimated liabilities for discretionary pensions
(4,377)
(4,337)
S
Net pension liability
(26,287)
(35,672)
t
a
t
e
m
The impact on the Council’s assets and liabilities, stated above, has been
incorporated in the Council’s financial accounts.
e
n
The net pension liability shows the underlying commitment that the authority has,
t
s
in the long term, to pay retirement benefits. Statutory arrangements for funding the
deficit mean that the financial position of the authority in relation to pensions
liabilities remains healthy.
The deficit on the Fund will be made good by increased contributions over the
remaining working life of employees, as assessed by the scheme actuary.
49 Total County Pension Fund Assets
Assets are valued at fair value, principally market value for investments and
consist of:
41
Proportion of Total
Expected Rate of Return
Assets held by the
per annum
Fund
(£000s) 31
March
31 March
31 March
31 March
2008
2007
2008
2007
Equity Investments
69.6%
74.2%
7.7% 7.8%
Bonds 12.8%
11.3%
5.7%
4.9%
Property 12.0%
12.4%
5.7%
5.9%
Cash 5.6%
2.1%
4.8%
4.9%
Total Fund Assets
100%
100%
7.0%
7.2%
50 Movement in Net Pension Liabilities
The movement in the net pension liabilities for Cambridge City Council is analysed
below.
(£000s) 2007/08
2006/07
(Deficit) as at 1 April
(35,672)
(44,048)
Current service cost
(4,765)
(5,516)
Employer contributions
3,757
3,241
Contributions in respect of unfunded benefits
288
266
Impact of settlements and curtailments
(75)
(216)
Past service costs
(55)
0
Net return on assets
160
(144)
Actuarial gains/(losses)
10,075
10,745
(Deficit) as at 31 March
(26,287)
(35,672)
The actuarial gains/losses identified as movements on the Pensions Reserve in
2007/08 can be analysed into the following categories, measured as absolute
amounts and as a percentage of assets or liabilities as at 31 March 2008:
2007/08 2006/07 2005/06 2004/05
2003/04
£000s %
£000s
%
£000s
%
£000s %
£000s
%
Differences
(14,298) (12.9)
1,125
1.0
15,484
14.2
4,194
4.8 11,100 14.0
between the
expected and
actual return on
Notes to the Main Financial Statements
assets
Differences
(903) (0.7)
235
0.0
(50)
0.0
(6,474) (5.1) (340) (0.4)
between
actuarial
assumptions
about liabilities
and actual
experience
Changes in the
25,276 18.5
9,385
6.1
(17,981) (11.8) (21,574)
(17.1)
0
0
demographic
and financial
assumptions
used to
estimate
liabilities
Actuarial
10,075 10,745
(2,547)
(23,854)
10,760
gain/(loss) in
pension plan
42
Further information about the Pension Fund can be found in Cambridgeshire
County Council’s Pension Fund Annual Report, which is available on request from
the Director of Finance, Property and Performance, Cambridgeshire County
Council, Shire Hall, Castle Hill, Cambridge, CB3 0AP.
Reserves
51 Summary of Council Reserves
The Council keeps a number of reserves. Some are required to be held for
statutory reasons, some are needed to comply with proper accounting practice,
N
and others have been set up voluntarily to earmark resources for future spending
plans.
o
t
e
s
t
Balance 1
Net
Balance
o
April
Movement 31 March
t
2007
in Year
2008
Further Details
h
Reserve
£000s
£000s
£000s
Purpose of Reserve
of Movements
e
Collection Fund
(78)
112
34 Holds Council’s share
Collection Fund
M
Surplus
of the Collection Fund
Statements,
balance
Pages 59 to 62
a
Capital
(233)
54
(179) Holds balance of capital Note 52
i
n
Receipts
receipts due to the
deferred
Council in instalments
F
Revaluation
0 (29,303)
(29,303) Store of gains on
Note 53
i
n
Reserve
revaluation of fixed
a
assets not yet realised
n
through sales
c
Financial
2,930
(524)
2,406 Balancing account to
Note 54
i
a
Instruments
allow for differences in
l
Adjustment
statutory requirements
S
Account
and proper accounting
requirements for
t
a
borrowings and
t
investments
e
Capital
(755,708)
3,883 (751,825) Capital resources set
Note 55
m
Adjustment
aside to meet past
e
Account
expenditure
n
Capital
(23,192) 1,442
(21,750) Proceeds of fixed asset Note 56
t
Receipts
sales available to meet
s
future capital
investment
Pensions
35,672
(9,385)
26,287 Balancing account to
Note 57
Reserve
allow inclusion of
Pensions Liability in the
Balance Sheet
Earmarked
(16,992)
(845)
(17,837) Resources identified for Note 58
Reserves
specific purposes
General Fund
(12,319)
(1,298)
(13,617) Resources available to Statement of
meet future costs for
Movement on
non-housing services
the General
Fund Balance,
page 8
Housing
(6,703)
112
(6,591) Resources available to HRA
Revenue
meet future costs for
Statements,
Account
council houses
pages 53 to 58
Total (776,623)
(35,752) (812,375)
43
52 Capital Receipts Deferred
Deferred Capital Receipts are amounts due from the sale of assets and from loans
given to meet capital expenditure, which will be received in instalments over
agreed periods of time. They arise principally from mortgages on sales of council
houses.
53 Revaluation Reserve
The movement on the Revaluation Reserve can be summarised as follows:
(£000s)
2007/08
Balance as at 1 April
0
Net gains arising on revaluations during the year
(32,908)
Release of revaluation gains on disposal
3,605
Balance as at 31 March
(29,303)
The Revaluation Reserve has been implemented in line with the SORP 2007.
Further details of the change are detailed in note 39.
54 Financial Instruments Adjustment Account
(£000s)
2007/08
Adjustment on 1 April in respect of Debt Redemption Premium
2,829
Adjustment on 1 April to reflect adjustment to fair value of Private
100
Sector Housing Improvement Loans
Amortisation of debt redemption premium
(545)
2007/08 Movement in fair value of Private Sector Housing
22
Improvements Loans
Balance as at 31 March
2,406
The Financial Instruments Adjustment Account has been implemented in line with
the SORP 2007. Further details of the change can be found in note 39.
Notes to the Main Financial Statements
55 Capital Adjustment Account
The Capital Adjustment Account reflects the difference between the cost of fixed
assets consumed and the capital financing set aside to pay for them.
The comparative figures for 2006/07 represent the transactions on the Capital
Financing Account and the Fixed Asset Restatement Account which were merged
to form the balance on the Capital Financing Account as at 31 March 2007.
Further details on the change can be found in note 39.
44
(£000s) 2007/08
2006/07
(Restated)
Balance as at 1 April
755,708
690,634
Capital Financing
- Capital receipts transferred from usable receipts reserve
6,214
4,105
- Revenue and reserves
12,094
11,441
- Grants
0
15
Depreciation and impairment
(8,205)
820
Write down of deferred capital contributions
432
320
Capital contributions for deferred charges
677
2,502
Write down of deferred charges
(1,337)
(3,325)
N
Write down of de-minimis capital expenditure
(462)
(321)
o
Transfer to Major Repairs Reserve
(7,591)
(6,776)
t
e
Private sector housing loans
(15)
314
s
Surplus on revaluation of fixed assets
0
68,484
t
Disposal of fixed assets
(5,690)
(12,505)
o
Balance as at 31 March
751,825
755,708
t
h
e
M
a
56 Capital Receipts
i
n
This is the balance of capital receipts which remain available to meet capital
F
expenditure after a proportion (in accordance with Government regulations) has
i
n
been reserved to meet future debt repayments.
a
n
c
(£000s) 2007/08
2006/07
i
a
l
S
Balance as at 1 April
23,192
21,878
t
2007/08 Capital Receipts
8,891
9,955
a
t
Housing Pooled Capital Receipts
(4,119)
(4,536)
e
Transferred to Capital Financing Account to finance new
(6,214)
(4,105)
m
expenditure
e
Balance as at 31 March
21,750
23,192
n
t
s
57 Pensions Reserve
The amount chargeable to the General Fund for providing pensions for employees
is the amount payable for the year in accordance with statutory requirements. The
difference between this and the amount charged to the Income and Expenditure
Account for the year is taken to the pensions reserve. Further details of pension
assets and liabilities are included in the statement of Pension Costs, Assets and
Liabilities starting on page 39.
(£000s) 2007/08
2006/07
Balance as at 1 April
35,672
44,048
Deficit for the year
(9,385)
(8,376)
Balance as at 31 March
26,287
35,672
45
58 Earmarked Reserves
These are reserves set aside or earmarked for specific purposes. The total at
31 March 2008 was made up as follows:-
(£000s)
Balance at 1 Movement for Balance at 31
April
the period
March
Asset Repair and Renewal
(12,175)
(1,043) (13,218)
Reserves
Major Repairs Reserve
0
Insurance Fund
(398)
(62)
(460)
Efficiency Fund
(172)
172
0
Technology Investment Fund
(894)
336
(558)
Shared Ownership Reserve
(300)
0
(300)
Commutation Adjustment
(887)
0
(887)
Local Plan Review Reserve
(30)
(16)
(46)
Compulsory Purchase Order
(335)
(234) (569)
Compensation Reserve
Major Planning Appeals Reserve
(233)
195
(38)
Revenue Contributions to
(545)
208 (337)
Capital Reserve
Other Reserves
(1,023)
(401)
(1,424)
Total (16,992)
(845)
(17,837)
Asset Repair & Renewal Reserves are maintained to fund the periodic
replacement of assets such as vehicles, plant and equipment and for major repairs
to Council owned premises. Annual contributions are based on estimated
replacement and repair costs, spread over the anticipated life of assets.
The
Major Repairs Reserve is maintained to contribute towards the funding for
major repairs to Council houses.
The
Insurance Fund is maintained to provide cover for potential damage to
Council assets and other losses, where it is deemed cost effective for the Council
to self-insure rather than take out external insurance with a third party.
The
Efficiency Fund was set up to meet the initial costs of efficiency measures
Notes to the Main Financial Statements
that will, in the longer term, save the Council costs and/or improve the efficiency of
services.
The
Technology Investment Fund was set up to contribute towards the costs of
investment in Information Technology systems and infrastructure.
The
Shared Ownership Reserve provides funding for the purchase back by the
Council of equity in shared ownership houses.
The
Commutation Adjustment Reserve is available to assist the financing of any
amount required to be set aside from revenue for debt repayment.
The
Local Plan Review Reserve was established to provide for the potential costs
of public enquiries into the Local Plan.
46
A
Compulsory Purchase Order Compensation Reserve is held to meet claims
for compensation following the compulsory purchase by the Council of domestic
properties in order to bring them back into use.
The
Major Planning Appeals Reserve is held against the possibility of major
planning appeals in the City.
The
Revenue Contributions to Capital Reserve contains contributions to capital
expenditure which have been agreed but not yet spent.
Other Reserves includes:
• Accumulated surpluses from Building Control activities held for future
investment in this service
• Sums set aside for the award of Historic Buildings Act grants
•
N
Sums set aside to meet the costs of community development projects
o
• Sums set aside for improvements to the Council’s property holding to assist
t
lettings
e
s
t
o
59 Analysis of Net Funds Employed
t
h
e
(£000s) 31
31 March
M
March
2008
2007
a
(Restated)
i
n
General Fund
177,318
158,091
F
i
Housing Revenue Account
635,057
621,462
n
Total 812,375
779,553
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
47
Notes to the Cash Flow Statement
60 Analysis of Government Grants
(£000s) 2007/08
2006/07
Housing & Council Tax Benefit
(32,991)
(31,489)
Revenue Support Grant
(1,742)
(1,914)
Supporting People
(863)
(963)
Smoke Free Grant
(54)
0
Homeless & Rough Sleepers
(392)
(419)
Local Housing Allowance
(108)
0
Planning Delivery
(453)
(458)
Local Authority Business Growth Incentive
(231)
(1,536)
Concessionary Fares
(46)
0
Employment and support allowance
(30)
0
Scan funding
(44)
0
Other Government Grants
(44)
(12)
Elections (26)
0
Total (37,024)
(36,791)
61 Reconciliation of Net Deficit on the Income and Expenditure
Account to the Movement in Cash
(£000s) 2007/08
2006/07
(Restated)
Deficit/(Surplus) for the year
7,119
3,332
Collection Fund deficit
962
15
Non-Cash Transactions
Depreciation and impairment
(15,796)
(5,956)
Adjustment to fair value of Private Sector Housing Loans
(50)
0
Loss on disposal of assets
(690)
(2,707)
Miscellaneous capital receipts
212
125
Notes to the Main Financial Statements
Movement in provisions
31
(332)
Government grants deferred
432
320
FRS17 adjustments
(690)
(2,369)
Write down of deferred charges and de minimis capital
(1,799) (3,646)
expenditure
Capital contributions for deferred charges
677
2,502
Other non-cash transactions
539
1,200
Other adjustments
Investment income
4,140
3,338
Interest payable and similar charges
(42)
(616)
Cash movements
Increase/(Decrease) in stocks and WIP
52
(67)
Increase/(Decrease) in debtors
4,060
(526)
Decrease/(Increase) in creditors and receipts in advance
609
(1,427)
Net cash flow from revenue activities
(234)
(6,814)
48
62 Analysis of Changes in Management of Liquid Resources &
Financing
(£000s) Balance
31
Balance 31
Cash
March 2008 March 2007
Movement In
Year
Management of Liquid Resources
Short Term Investments
68,500
73,740
(5,240)
Financing
N
Repayment of Borrowing
o
Net Repayment of Temporary Loans
0
(1,430)
1,430
t
e
Decrease in Liquid Resources
68,500
72,310
(3,810)
s
t
o
t
h
63 Liquid Resources
e
These comprise of funds invested either overnight or on a short term basis of up to
M
one year. During the year the Council updated its approved lending list.
a
i
n
F
(£000s) 2007/08
2006/07
i
n
a
Value of surplus funds invested during the yea
r
982,410
800,753
n
Investments repaid during the year
(987,650)
(798,723)
c
Net (decrease)/increase in investments
(5,240)
2,030
i
a
l
S
t
a
64 Movement in Cash
t
e
Cash is defined as cash in hand and deposits repayable on demand, less
m
overdrafts.
e
n
t
s
(£’000s) Balance
Balance Movement
31 March 31 March
in Year
2008
2007
Cash in hand/at Bank
336
12
324
Bank overdraft
0
(580)
580
Increase/(decrease) in cash
336
(568)
904
49
65 Reconciliation of net cash flow to movement in net funds
(£000s) Balance
Balance Movement
31 March 31 March
in Year
2008
2007
Cash 336
(568)
904
Borrowing 0
(1,430)
1,430
Short Term Investments
68,500
73,740
(5,240)
Total 68,836
71,742
(2,906)
Notes to the Main Financial Statements
50
ADDITIONAL FINANCIAL
STATEMENTS AND INFORMATION
51
Housing Revenue Account Income and Expenditure
Account
This statement sets out details of the income and expenditure in relation to the
provision of Council dwellings.
£000s Note
2007/08
2006/07
(Restated)
Income
Gross rent - dwellings 2
(25,639)
(24,720)
Gross rent – garages/land
(1,104)
(1,071)
A
Charges for services and facilities
(1,817)
(1,707)
d
Contributions towards expenditure
(285)
(405)
d
i
Total
(28,845)
(27,903)
t
i
o
Expenditure
n
Repairs & maintenance
5,287
5,705
a
Supervision & management
6,047
6,190
l
F
Rents, rates, taxes and other charges
229
198
i
Depreciation and impairment
12,383
6,776
n
a
Negative Housing Revenue Account Subsidy
3
9,137
8,616
n
Increased provision for bad debts
130
113
c
Total
33,213
27,598
i
a
Net cost/(surplus) of HRA services
4,368
(305)
l
S
HRA share of the operating income and
t
expenditure included in the whole authority
a
Income and Expenditure Account
t
e
Loss on sale of HRA fixed assets
508
2,647
m
Other income
(212)
(125)
e
Amortisation of premiums and discounts
0
545
n
Interest and investment income
(575)
(488)
t
s
Deficit for the year on HRA services
4,089
2,274
a
n
d
I
n
f
o
r
m
a
t
i
o
n
53
Statement of Movement on the Housing
Revenue Account Balance
(£000s) Note
2007/08
2006/07
(Restated)
Deficit for the year on the HRA Income
4,089 2,274
and Expenditure Account
Additional items required by statute and
non-statutory proper practices to be
taken into account in determining the
movement in the Housing Revenue
Account Balance:
Items included in the HRA Income and
Expenditure Account but excluded from
the movement on the HRA balance for the
year
Depreciation and impairment adjusted via
(4,792) 0
the Capital Financing Account
Loss on disposal of fixed assets
(508)
(2,647)
Miscellaneous capital receipts
212
125
Net charges for retirement benefits made in (680)
(956)
accordance with FRS17
Items not included in the HRA Income
and Expenditure Account but included in
the movement on the HRA balance for the
year
Sums to be debited to the HRA that are not 53
42
expenditure in accordance with UK GAAP
Difference between the amortisation of
545 0
premiums and discounts determined in
accordance with the SORP and those
determined in accordance with statute
Employer’s contributions payable to the
456
408
Cambridgeshire County Council Pension
Fund
Capital expenditure funded by the Housing
8 3,168
3,118
Revenue Account
Transfers from Major Repairs Reserve
10
(2,607)
(1,853)
Contribution to earmarked reserves
176
116
Total movement on Housing Revenue
112 627
Account for the year
Additional Financial Statements and Information
Housing Revenue Account balance
(6,703) (7,330)
brought forward
Housing Revenue Account balance
(6,591) (6,703)
carried forward
54
Notes to the Housing Revenue Account
1 Introduction
The Local Government and Housing Act 1989 set the framework within which the
Housing Revenue Account (HRA) operates. The account is ‘ringfenced’, meaning
that authorities do not have the discretion to fund any deficits from the General
A
Fund. Transfers from the General Fund can only be made at the direction of the
Secretary of State.
d
d
i
t
i
2 Gross
Rent
o
n
This represents income receivable in respect of all dwellings within the HRA, gross
a
of rent rebates and net of rents not payable when properties are empty. As at
l
F
31 March 2008, 2.14% of properties were vacant (2.19% at 31 March 2007).
i
n
The average rent payable in 2007/08 was £72.37 per week based on 48 rent
a
weeks (£66.80 per week on a 52 week basis). The average rent payable in
n
c
2006/07 was £68.82 per week based on 48 rent weeks (£63.53 per week on a 52
i
week basis).
a
l
S
t
3 Housing Revenue Account Subsidy Payable
a
t
Following removal of rent rebates from the Housing Revenue Account to the
e
m
General Fund with effect from 1 April 2004 the Council is now required to pay
Housing Revenue Account Subsidy to central government to match the surplus on
e
the notional HRA.
n
t
s
The Authority’s HRA subsidy payable for 2007/08 was calculated as follows:
a
n
d
(£000s) 2007/08
2006/07
I
n
Management and maintenance
10,976
10,716
f
Capital charges
1,193
1,056
o
r
Admissible allowance
0
40
m
12,169
11,812
a
Notional rent
(27,487)
(25,844)
t
i
Rental Constraint Allowance
1,130
430
o
n
Interest on receipts
(8)
(12)
(14,196)
(13,614)
Major Repairs Allowance
4,984
4,923
Defects Reinstatement Loan
43
43
Defects Repurchases Loan
0
6
Negative Subsidy Payable
(9,169)
(8,642)
Adjustment to subsidy required in future years
12
26
Estimated adjustment to subsidy for prior year
(26)
0
Actual adjustment to subsidy for prior year
46
0
Negative Subsidy included in HRA Summary
(9,137)
(8,616)
55
4 Asset Values within the HRA and Depreciation and Impairment
(£000s)
Asset Values
Depreciation Impairment
31 March
1 April 2007/08 2006/07 2007/08 2006/07
2008
2007
Operational Assets
Dwellings 589,901 577,682
7,475
6,726
4,724
0
Other Land &
7,020
7,060
116
50
0 0
Buildings
Infrastructure
162
0
0
0
0
0
597,083 584,742
7,591
6,776
4,724 0
Investment
4,387
4,294
0
0
0
0
Properties
Surplus Assets held
3,550
0
0
0
19
0
for disposal
Total Fixed Assets
605,020 589,036
7,591
6,776
4,743
0
The impairments shown above did not result from a clear consumption of economic
benefits but have been charged to the HRA because there is no balance on the
revaluation reserve in respect of these assets.
De minimis capital expenditure of £50,000 (2006/07 £0) has been written off during
2007/08.
The value of council dwellings at 1 April 2007, based on vacant possession, was
£1,259 million (2006/07: £1,149 million). Vacant possession value is the estimate
of the total sum that would be received if all the dwellings were sold on the open
market. The balance sheet value is calculated on the basis of rents receivable on
existing tenancies. These are less than the rent that would be obtainable on the
open market, and the balance sheet value is therefore lower than the vacant
possession valuation. The difference between the two values shows the economic
cost of providing housing at less than market value.
5 Loan Interest Charges
Authorities manage their debt as a whole and no separate record is kept of loans
taken out for HRA purposes. However notional HRA debt is estimated by
reference to a calculation called the HRA credit ceiling. The credit ceiling is a
Additional Financial Statements and Information
measure of net HRA indebtedness which takes account of any new borrowing
taken out each year, assumed to be for HRA purposes, and the assumed
repayment of existing HRA debt. The loan interest charges met by the HRA are
calculated by multiplying the mid-year credit ceiling by the Council’s average rate
of interest for long-term borrowing.
56
6 Housing
Stock
The Council was responsible for an average stock of 7,524 dwellings during the
year. The stock as at 31 March 2008 was as follows:-
31 March
31 March
A
2008
2007
d
d
Houses & bungalows
3,727
3,761
i
t
i
Flats 3,072
3,093
o
n
Sheltered housing units
639
670
a
Shared ownership properties
42
44
l
Total 7,480
7,568
F
i
n
The change in stock during the year can be summarised as follows:
a
n
Stock as at 1 April
7,568
7,645
c
Right to buy sales
(43)
(72)
i
a
Open market disposals
0
(2)
l
Net shared ownership changes
(2)
(1)
S
Other changes
(43)
(2)
t
a
Stock as at 31 March
7,480
7,568
t
e
m
e
Of the 43 ‘other changes’ in 2007/08, 42 relate to dwellings that have been
n
earmarked for disposal and are no longer occupied by tenants. These have been
t
transferred to the category of surplus assets held for disposal and are valued at
s
open market value.
a
n
d
7 Rent
Arrears
I
n
Rent arrears for the year ended 31 March 2008 were £1,223,563 (£1,199,632 in
f
o
2006/07) and as a proportion of gross rent income have increased from 4.40% in
r
2006/07 to 4.47% in 2007/08.
m
a
At 31 March 2008 a provision for bad debts of £917,661 was held in the balance
t
i
sheet (£916,713 at 31 March 2007).
o
n
8 Financing of Capital Expenditure within the HRA
(£000s) 2007/08
2006/07
Capital Receipts
5,556
3,206
Major Repairs Reserve
4,984
5,642
Revenue financing of capital
3,168
3,118
Use of earmarked reserves
99
64
Total 13,807
12,030
57
Capital expenditure in the year is all in relation to HRA stock apart from £162,000
(£0 in 2006/07) which was spent on HRA infrastructure assets and £245,000
(£10,000 in 2006/07) in relation to the HRA share of the new customer service
centre.
9 Capital Income within the HRA (Net of Capital Receipts Pooling)
(£000s) 2007/08
2006/07
Dwellings 2,417
4,463
Land 625
944
Total 3,042
5,407
10 Major Repairs Reserve
(£000s) 2007/08
2006/07
Balance as at 1 April
0
719
Transfer to MRR during the year
7,591
6,776
Amount transferred from MRR to HRA
(2,607)
(1,853)
HRA Capital Expenditure on housing charged to MRR
(4,984)
(5,642)
Balance as at 31 March
0
0
11 Contributions from the Pensions Reserve
The Housing Revenue Account is charged with an attributable share of current
service costs in line with FRS17. The difference between this cost and employers’
contributions payable is then appropriated from the pensions reserve so that the
overall amount to be met from rent and Government subsidy reflects employers’
contributions payable by the Council.
12 Restatement of the HRA
Previously, sums which were defined as capital receipts but were not clearly
attributable to an asset disposal were included in the figures for disposal of assets.
In line with the new guidance in the Statement of Recommended Practice
Additional Financial Statements and Information
Practitioner’s Guidance Notes it is now felt more appropriate to disclose these
receipts, which total £212,000 in 2007/08, separately.
The comparative Income and Expenditure Account figures for 2006/07 have been
restated to move receipts totalling £125,000 to other income. Corresponding
adjustments have also been made to the Movement on the HRA balance.
58
Collection Fund
This shows the transactions in relation to the collection of Council Tax and
National Non-Domestic Rates (NNDR). The account shows how the amounts
collected have been distributed to Cambridgeshire County Council, Police and Fire
Authorities and to the City Council’s General Fund as well as to the NNDR Pool.
A
(£000s) Note
d
2007/08
2006/07
Income and Expenditure Account
1
d
i
Income
t
i
o
Council Tax
2
(49,824)
(46,392)
n
National Non-Domestic Rates
3
(70,101)
(69,865)
a
Reduction in Community Charge bad debt provision
(1)
(1)
l
F
Community Charge deficit transfer from General
0
(3)
Fund
i
n
Total Income
(119,926) (116,261)
a
n
c
Expenditure
i
a
Precepts and demands
4
50,272
46,036
l
Allowable costs of NNDR collection
235
238
S
Payment to NNDR Pool
3
69,866
69,627
t
a
Provision for non-payment of Council Tax
5
514
375
t
e
Community Charge surplus transfer to General
6 1
0
m
Fund
e
Total Expenditure
120,888
116,276
n
t
s
Deficit for the Year
6
962
15
a
(Surplus) as at 1 April
(669)
(684)
n
Deficit/(Surplus) as at 31 March
6
293
(669)
d
I
n
f
o
r
m
a
t
i
o
n
59
Notes to the Collection Fund
1 General
This statement shows the transactions of the Collection Fund, a statutory fund
separate from the General Fund of the Council. The Collection Fund accounts for
income relating to Council Tax and NNDR on behalf of those bodies (including the
Council’s own General Fund) for whom the income has been raised. The costs of
collection are accounted for in the General Fund.
2 Council
Tax
Under the arrangements for Council Tax, each domestic property within the
Council’s area is assigned to one of eight ‘valuation bands’ (A to H) based on the
estimated price it would have achieved if it had been sold at 1 April 1991. The
Council Tax is set for band D properties and the tax for other bands is calculated
as a proportion of the band D tax. The band D Council Tax for the year ended 31
March 2008 was set at £1,283.08, made up as follows:
(£s) 2007/08
2006/07
Cambridge City Council
148.81
142.40
Cambridgeshire County Council
932.49
888.12
Cambridgeshire Police Authority
149.40
142.29
Cambridgeshire Fire Authority
52.38
50.40
Total 1,283.08
1,223.21
The following table shows the calculation of the Council Tax Base for 2007/08
(used to determine the tax needed at band D to finance spending).
Council Tax Base 2007/08
Valuation
Total no.
Total Equivalent
Ratio to
Band D
Band
Dwellings on
Dwellings (after
Band D
Equivalents
Valuation List
discounts, exemptions
Additional Financial Statements and Information
etc.)
A 2,721 1,995 6/9
1,330
B 8,771 6,890 7/9
5,359
C 16,789 14,246 8/9
12,663
D 7,851 6,601 9/9
6,601
E 4,493 3,840 11/9
4,693
F 2,857 2,449 13/9
3,538
G 2,685 2,146 15/9
3,577
H 412 222 18/9
443
Total 46,579
38,389
38,204
60
The income of £49.8 million in 2007/08 was receivable from the following sources:
(£000s) 2007/08
2006/07
Billed to Council Tax payers
44,512
41,379
Transfer from General Fund
- Council Tax benefits
5,312
5,013
Total 49,824
46,392
A
d
3 National Non-Domestic Rates Income
d
i
t
Under the arrangements for business rates, the council collects non-domestic
i
o
rates for its area, based on local rateable values multiplied by a nationally set
n
business rate. This amount, less certain allowances and other deductions, is paid
a
into the central NNDR Pool, which pays back to authorities a share of the pool
l
based on a standard amount per head of population.
F
i
n
The local rateable value as at 31 March 2008 was £208,956,820 (£207,425,015 at
a
31 March 2007) and the Uniform Business Rate in 2007/08 was set by the
n
Government at 44.4p (2006/07, 43.3p).
c
i
a
l
S
4 Precepts and Demands
t
a
t
(£000s) 2007/08
2006/07
e
m
Cambridge City Council
5,831
5,360
Cambridgeshire County Council
36,536
33,424
e
n
Cambridgeshire Police Authority
5,853
5,355
t
Cambridgeshire Fire Authority
2,052
1,897
s
Total 50,272
46,036
a
n
d
I
n
5 Provision for Non-Payment of Council Tax
f
o
A contribution of £514,061 was made to a provision for bad debts. During
r
m
2007/08, £389,861 of irrecoverable debts were written off (2006/07 £5,161).
a
t
i
o
6 Collection Fund Surpluses and Deficits
n
When Council Tax was introduced on 1 April 1993, it was a requirement that the
deficit on the Collection Fund of £2,665,751 in respect of the old Community
Charges, be received in subsequent years through debt collection and if
necessary, by contributions from the Council’s General Fund. In the case of a
surplus, this is transferred to the Council’s General Fund.
There was no balance on the Collection Fund relating to Community Charge at 31
March 2008.
The deficit of £293,463 at 31 March 2008 (£669,133 surplus at 31 March 2007),
which related to Council Tax, will be recovered in subsequent financial years from
Cambridgeshire County Council, Cambridgeshire Police and Fire Authorities and
the Council in proportion to their shares of the total Council Tax raised.
61
The total Collection Fund deficit/(surplus) is therefore shared as follows:
(£000s) 31
March
31 March
2008
2007
Cambridge City Council
34
(78)
Cambridgeshire County Council
213
(486)
Cambridgeshire Police Authority
34
(78)
Cambridgeshire Fire Authority
12
(27)
Total 293
(669)
Additional Financial Statements and Information
62
STATEMENT OF ACCOUNTING
POLICIES
AND
GLOSSARY OF FINANCIAL TERMS
AND ABBREVIATIONS
63
Statement of Accounting Policies
1 General
The general principles adopted in compiling the accounts and the presentation of
the accounts, are those recommended in the Chartered Institute of Public Finance
and Accountancy (CIPFA), Code of Practice on Local Authority Accounting. The
accounts also reflect guidance issued by CIPFA on the application of statements of
standard accounting practice (SSAPs) and financial reporting standards (FRSs).
Any variations from these guidelines are detailed in notes to the accounts.
2 Intangible
Fixed
Assets
G
l
Expenditure on assets that do not have physical substance but are identifiable and
o
controlled by the Council (eg software licences) is capitalised when it will bring
s
s
benefits to the Council for more than one financial year. The balance is amortised
a
to the relevant service revenue account over the economic life of the investment to
r
Statement of Accounting Policies
reflect the pattern of consumption of benefits.
y
o
f
3 Tangible Fixed Assets
F
i
Tangible fixed assets are assets that have physical substance and are held for use
n
a
in the provision of services or for administrative purposes on a continuing basis.
n
c
Recognition: expenditure on the acquisition, creation or enhancement of tangible
i
a
fixed assets is capitalised on an accruals basis, provided that it yields benefits to
l
the Council and the services that it provides for more than one financial year.
T
&
e
A de-minimus level of £2,000 has been adopted for vehicles and £15,000 for all
r
m
other fixed assets. Assets which cost less than these limits are classified as
revenue rather than capital expenditure, but may still be financed from capital
s
resources.
a
n
Expenditure that secures but does not extend the previously assessed standards
d
of performance of assets (eg repairs and maintenance expenditure) is charged to
A
revenue as it is incurred.
b
b
Measurement and valuation: assets are initially measured at cost, comprising all
r
e
expenditure that is directly attributable to bringing the asset into working condition
v
for its intended use. Assets are then carried in the Balance Sheet using the
i
a
following measurement bases:
t
i
o
♦ Investment properties and assets surplus to requirements – lower of net
n
current replacement cost or net realisable value;
s
♦ Dwellings and other land and buildings – lower of net current replacement cost
or net realisable value in existing use;
♦ Short life operational assets, such as vehicles, plant and equipment – historical
cost less depreciation as a proxy for the lower of net current replacement cost
and net realisable value in existing use;and
♦ Infrastructure assets and community assets – depreciated historical cost.
Net current replacement cost is assessed as:
65
♦ Non-specialised operational properties – existing use value;
♦ Specialised operational properties – depreciated replacement cost;and
♦ Investment properties and surplus assets – market value.
Assets in the Balance Sheet at current value are revalued where there have been
material changes in the value, but at a minimum internal of every five years.
Increases in valuations are matched by credits to the Revaluation Reserve to
recognise unrealised gains. Exceptionally, gains might be credited to the Income
and Expenditure Account where they arise from the reversal of an impairment loss
previously charged to a service revenue account.
The Revaluation reserve contains revaluation gains recognised since 1 April 2007
only, the date of formal implementation. Gains arising before that date have been
consolidated into the Capital Adjustment Account.
Impairment: the values of each category of assets and of material individual
assets that are not being depreciated are reviewed at the end of each financial
year for evidence of reductions in value. Where impairment is identified as part of
this review or as a result of a valuation exercise, this is accounted for as follows:
♦ Where attributable to the clear consumption of economic benefits – the loss is
charged to the relevant service revenue account
♦ Otherwise – it is written off against any revaluation gains attributable to the
relevant asset in the Revaluation Reserve, with any excess charged to the
&
relevant service revenue account.
Where an impairment loss is charged to the Income and Expenditure Account but
there were accumulated revaluation gains in the Revaluation Reserve for that
asset, an amount up to the value of the loss is transferred from the Revaluation
reserve to the Capital Adjustment Account.
Disposals: when an asset is disposed of or decommissioned, the value of the
asset in the Balance Sheet is written off to the Income and Expenditure Account as
part of the gain or loss on disposal. Receipts from disposals are credited to the
Income and Expenditure Account as part of the gain or loss on disposal (ie netted
Statement of Accounting Policies
off against the carrying value of the asset at the time of 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 HRA disposals is payable to the Government. The
balance of receipts is required to be credited to the Capital Receipts Reserve, and
Glossary of Financial Terms and Abbreviations
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 from the Statement of Movement on the General
Fund Balance.
The written-off value of disposals is not a charge against the council tax, as the
cost of fixed assets is fully provided for under separate arrangements for capital
financing. Amounts are appropriated to the Capital Adjustment Account from the
Statement of Movement on the General Fund Balance.
66
4 Depreciation
Assets are depreciated over their useful economic life. Depreciation is provided on
all fixed assets other than freehold land and non-operational investment properties
and is calculated on the balance sheet value as at 1 April. Depreciation is not
provided for in the year of purchase, however, a full years depreciation is
accounted for in the year of disposal. Where we provide for depreciation, it is
calculated using the straight-line method.
Revaluation gains are also depreciated, with an amount equal to the difference
between current value depreciation charged on assets and the depreciation that
G
would have been chargeable based on their historical cost (or 1 April 2007 value if
earlier) being transferred each year from the Revaluation reserve to the Capital
l
o
Adjustment Account.
s
s
For assets where the useful life is assessed as being more than 50 years, an
a
r
Statement of Accounting Policies
impairment review is carried out at the end of each financial year and the value of
y
any impairment is charged in place of depreciation.
o
f
F
i
n
5 Deferred
Charges
a
Deferred charges represent expenditure which is capital in nature but where no
n
c
tangible fixed asset is created, for example capital grants made to other bodies or
i
individuals. Deferred charges are written off over the period of benefit to the
a
l
Council.
T
&
e
r
m
6 Government Grants and Contributions
s
Government grants are accounted for on an accruals basis and income is credited,
a
in the case of revenue grants, to the appropriate revenue account.
n
d
Where developers’ contributions remain unspent at the year-end they are held in
A
the balance sheet.
b
b
Contributions in respect of commuted sum maintenance agreements are held as
r
e
Receipts in Advance. They are credited to the Income and Expenditure Account to
v
match expenditure incurred.
i
a
t
i
Where a developers agreement (Section 106) provides for the return of
o
contributions made if capital projects are not carried out within a specified period,
n
any advances are held as creditors until the Council is able to satisfy the
s
conditions for keeping the money, usually on commencement of a project or
payment of the sum to another body, for example the County Council.
All other unspent contributions are held in the balance sheet as Capital
Contributions Unapplied.
Where grants and contributions are spent which are identifiable to completed fixed
assets with a finite useful life, the amounts are credited to the Capital Grants and
Contributions Deferred Account. The balance is then written down to revenue to
offset depreciation charges made for the relevant assets in line with the
depreciation policy applied to them.
67
7 Leases
Rental payments under finance leases are apportioned between the finance
charge (interest) and the principal element. The finance element of rentals is
charged to the asset management revenue account over the term of the lease and
the principal element is treated as capital expenditure.
Rentals payable or receivable under operating leases are charged to revenue on
an accruals basis.
Rentals receivable from operating leases are credited to revenue on a straight line
basis over the term of the lease.
8 Debtors and Creditors
The revenue accounts of the Council are maintained on an accruals basis in
accordance with the Code of Accounting Practice and FRS 18. That is, sums due
to or from the Council during the year are included whether or not the cash has
actually been received or paid in the year. No significant estimates have been
included in debtors and creditors.
Provision is made to cover potential losses in collection of income due to the
Council. The level of provisions made for bad debts take into account the nature,
value and age of debts. Debtors amounts presented in the Balance Sheet are
shown net of provision for bad debts.
&
9 Stocks and Work in Progress
Stocks and Work in Progress held at the year-end are included in the accounts at
the lower of cost or net realisable value.
10 Provisions and Contingent Liabilities
The Council sets aside provisions for specific future expenses, which are likely or
certain to be incurred and which can be reliably estimated, for example to meet the
Council’s share of the cost of insurance claims.
Statement of Accounting Policies
If a liability arises from an event which is too uncertain or the amount of the
obligation cannot be reliably estimated, the liability is disclosed as a contingent
liability.
Glossary of Financial Terms and Abbreviations
11 Cost of Support Services
Most of the costs of management and administration have been allocated to
services. The basis of allocation used for the main management and
administration costs is outlined below:
68
Basis of Allocation
Support Services
Finance
Charges are negotiated in advance
Reception & Office Services
with client departments. They are
Legal
based on a combination of estimated
Human Resources
or actual staff time, directly attributable
costs and volumes of work.
Property
Administrative Buildings
Area Occupied
G
Computing
Fixed cost element based on predicted
consumption of resources plus actual
l
o
cost of additional work undertaken.
s
s
a
12 Reserves
r
Statement of Accounting Policies
y
In addition to General Fund and HRA balances, which are held for cash flow
o
purposes and to support future revenue and capital spending, the Council
f
maintains a number of ‘earmarked’ reserves to meet specific future expenditure.
F
Details of the Council’s reserves can be found in the accompanying notes 51 to 58.
i
n
a
n
13 Financial Instruments
c
i
a
Initial Recognition
l
T
A financial asset or liability is recognised on the balance sheet when the Council
&
e
becomes party to the contractual provisions of the instrument. This will often be
r
m
the date that a contract is entered into but may be later if there are conditions that
need to be satisfied.
s
a
Initial Measurement
n
d
Financial assets and financial liabilities are initially measured at fair value less
A
transaction costs that are directly attributable to the acquisition or issue of the
b
asset or liability.
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Subsequent measurement
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Subsequent measurement of financial instruments is in accordance with their
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classification under the SORP.
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Financial liabilities
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There are two possible classifications:
Amortised cost – liabilities that are not ‘held for trading’, e.g operational creditors
and borrowings
Fair value through profit and loss – liabilities ‘held for trading’.
The Council currently only has liabilities carried at ‘amortised cost.’ Annual
charges to the Income and Expenditure Account for interest payable are based on
the carrying amount of the liability, multiplied by the effective rate of interest for the
instrument.
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Financial Assets
There are three possible classifications:
♦ Loans and receivables – assets that have fixed or determinable payments but
are not quoted in an active market, e.g operational debtors and bank deposits.
♦ Available-for-sale financial assets – assets that have a quoted market price
and/or do not have fixed or determinable payments, e.g equity shareholdings
and quoted investments.
♦ Fair value through profit and loss – assets ‘held for trading.’
The Council currently only has assets classified as ‘loans and receivables.’ This
means that these assets are carried at their amortised cost. Annual credits to the
Income and Expenditure account for interest receivable are based on the carrying
amount of the asset multiplied by the effective rate of interest for the instrument.
The Council has made interest–free loans for private sector housing improvements
(soft loans). When soft loans are made, a loss is recorded in the Income and
Expenditure Account for the present value of the interest that will be foregone over
the life of the instrument, resulting in a lower amortised cost than the outstanding
principal. Over the life of the loan, interest is credited at the effective market rate of
interest serving to increase the amortised cost of the loan in the Balance Sheet.
Statutory provisions require that the impact of soft loans on the General Fund
balance is the actual interest receivable for the financial year. The reconciliation of
amounts debited and credited to the Income and Expenditure Account to the net
gain required against the General Fund balance is managed by a transfer to or
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from the Financial Instruments Adjustment Account in the Statement of Movement
on the General Fund Balance.
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 Income and Expenditure Account.
Any gains or losses that arise on the de-recognition (i.e disposal or maturity) of the
asset are credited/debited to the Income and Expenditure account.
For most of the loans that the Council has made, this means that the amount
Statement of Accounting Policies
presented in the balance sheet is the outstanding principal receivable plus accrued
interest and the interest credited to the Income and Expenditure account is the
amount receivable for the year under the loan agreement.
Glossary of Financial Terms and Abbreviations
14 Pension Costs, Assets & Liabilities
Cambridgeshire County Council administers the Local Government Pension
Scheme in which Cambridge City Council employees may participate. The
accounting policy is to recognise the full liability that the Council has for meeting
the future cost of retirement benefits (arising from years of service earned by
employees up to the balance sheet date) net of the contributions paid into the fund
and the investment income they have generated.
Charges to service revenue accounts are based on an appropriate share of current
service cost (the increase in future benefits arising from service earned in the
current year). Discretionary benefits awarded on early retirement are recognised
as they become payable.
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Interest cost and expected return on assets are included within the Income and
Expenditure Account, increasing Net Operating Expenditure. However, an
appropriation to the pensions reserve replaces these entries with the actual
employer’s contributions paid in the year, meaning that there is no net effect on the
General Fund result for the year.
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Glossary of Financial Terms and Abbreviations
Accounting Period
The period of time covered by the accounts, normally 12 months commencing on 1
April for local authorities.
Accruals
Sums included in the final accounts to cover income or expenditure attributable to
the accounting period but for which payment has not been made/received at the
balance sheet date.
Capital Charges
Charges made to service revenue accounts based on the value of the assets they
use and comprising interest and any depreciation.
Capital Expenditure
Expenditure on new assets such as land and buildings, or on enhancements to
existing assets which significantly prolong their useful life or increase their value.
Capital Receipt
Income from the sale of capital assets such as council houses, land or other
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buildings.
Contingent Liabilities
Potential liabilities which are either dependent on a future event or cannot be
reliably estimated.
Creditors
Amounts owed by the Council at 31 March for goods received or services rendered
but not yet paid for.
Statement of Accounting Policies
Current Assets
Assets which can be expected to be consumed or realised during the next
accounting period.
Glossary of Financial Terms and Abbreviations
Current Liabilities
Amounts which will become due or could be called upon during the next
accounting period.
Debtors
Amounts owed to the Council which are collectable or outstanding at 31 March.
Deferred Charges
Expenditure of a capital nature but for which there is no tangible asset, for example
renovation grants.
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Depreciation
The estimated losses in value of an asset, owing to age, wear and tear,
deterioration, or obsolescence.
Derecognition
The term used for the removal of an asset or liability from the balance sheet.
Effective rate of interest
The rate of interest that will discount the estimated cash flows over the life of a
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financial instrument to the amount in the balance sheet at initial measurement.
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Equity instrument
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A contract that evidences a residual interest in the assets of an entity after
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Statement of Accounting Policies
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deducting all of its liabilities (e.g an equity share in a company.)
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Fair Value
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The amount for which an asset could be exchanged, or a liability settled, between
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knowledgeable, willing parties in an arms length transaction.
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Finance Lease
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A lease that transfers substantially all of the risks and rewards of ownership of a
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fixed asset to the lessee.
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Financial Asset
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A right to future economic benefits controlled by the Council. Examples include
a
bank deposits, investments, trade receivables and loans receivable.
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Financial Liability
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An obligation to transfer economic benefits controlled by the Council. Examples
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include borrowings, financial guarantees and amounts owed to trade creditors.
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Financial Instrument
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Any contract that gives rise to a financial asset of one entity and a financial liability
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or equity instrument of another.
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Fixed Asset
Assets which can be expected to be of use or benefit the Council in providing its
service for more than one accounting period.
Government Grants
Payments by central government towards local authority expenditure. They may
be specific, for example Housing Benefit subsidy, or general such as Revenue
Support Grant.
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Impairment
The term used where the estimated recoverable amount from an asset is less than
the amortised cost at which the asset is being carried on the balance sheet.
Operating Lease
A lease under which the ownership of the asset remains with the lessor; for
practical purposes it is equivalent to contract hiring.
Outturn
Refers to actual income and expenditure or balances as opposed to budgeted
amounts.
Precepts
The amount which a local authority which cannot levy a council tax directly on the
public (for example a County Council) requires to be collected on its behalf.
Provisions
Monies set aside for liabilities which are likely to be incurred but where exact
amounts or dates are uncertain.
Reserves
Amounts set aside in the accounts for the purpose of meeting particular future
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expenditure. A distinction is drawn between reserves and provisions which are set
up to meet known liabilities.
Revenue Expenditure
Spending on day to day items including employees’ pay, premises costs and
supplies and services.
Revenue Support Grant
The main grant paid by central government to a local authority towards the costs of
Statement of Accounting Policies
its services.
Glossary of Financial Terms and Abbreviations
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Abbreviations used in the accounts
CIPFA
Chartered Institute of Public Finance and Accountancy
GAAP
Generally Accepted Accounting Practice
FARA
Fixed Asset Restatement Account
FRS Financial
Reporting
Standard
HRA
Housing Revenue Account
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LAAP
Local Authority Accounting Panel
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LGPS
Local Government Pension Scheme
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MRP Minimum
Revenue
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NNDR
National Non-Domestic Rates
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SSAP Statement
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Standing Accounting Practice
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Document Outline
