Download explanatory foreword to the accounts

Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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CONTENTS
A
EXPLANATORY FOREWORD TO THE ACCOUNTS ................................. 4
I Introduction ............................................................................................................................. 4
II
Statement of Accounting Policies ................................................................................... 5
III Statement of Responsibilities for the Accounts ......................................................... 5
IV
Accounting Statements ...................................................................................................... 5
V Notes to the Core Financial Statements ........................................................................... 5
VI
Supplementary Statements .............................................................................................. 6
VII Annual Governance Statement ......................................................................................... 6
VIII
Comparison with revenue budget ................................................................................. 6
IX
Balances and reserves ........................................................................................................ 7
X Retirement benefits ............................................................................................................... 7
XI
Prudential code .................................................................................................................... 7
XII
Capital programme ........................................................................................................... 8
XIII
Benefit subsidy claims .................................................................................................... 8
XIV
Group accounts ................................................................................................................. 8
XV
Accounting policies .............................................................................................................. 9
B STATEMENT OF ACCOUNTING POLICIES .......................................10
I General ...................................................................................................................................... 10
II
Accruals of income and expenditure .............................................................................. 10
III Acquired/discontinued operations .................................................................................. 11
IV
Contingent assets and liabilities ..................................................................................... 11
V Deferred charges ................................................................................................................... 11
VI
Events after the balance sheet date ............................................................................. 11
VII Exceptional items, extraordinary items and prior period adjustments ................. 12
VIII
Financial instruments ..................................................................................................... 12
IX
Foreign currency translation ........................................................................................... 13
X Government grants and other contributions .................................................................... 13
XI
Group accounts .................................................................................................................... 14
XII
Intangible assets ............................................................................................................ 14
XIII
Leases................................................................................................................................ 14
XIV
Overheads ........................................................................................................................ 14
XV
Pension costs ....................................................................................................................... 15
XVI
Provisions .......................................................................................................................... 15
XVII
Research and development ........................................................................................... 15
XVIII
Reserves ....................................................................................................................... 15
XIX
Stocks ............................................................................................................................... 16
XX
Tangible fixed assets ........................................................................................................ 16
XXI
Value Added Tax ............................................................................................................. 17
C STATEMENT OF RESPONSIBILITIES FOR THE ACCOUNTS ..................18
I The Authority’s Responsibilities ......................................................................................... 18
II
The Borough Treasurer’s Responsibilities .................................................................... 18
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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D
ACCOUNTING STATEMENTS ......................................................19
I Income and Expenditure Account....................................................................................... 19
II
Statement of Movement on the General Fund Balance ............................................. 21
III Statement of Total Recognised Gains and Losses ..................................................... 22
IV
Balance Sheet ..................................................................................................................... 23
V Cash Flow Statement ............................................................................................................ 25
E NOTES TO THE CORE FINANCIAL STATEMENTS ..............................27
1
Prior period adjustments ............................................................................................. 27
2 Exceptional items .......................................................................................................... 28
3 Contingent assets .......................................................................................................... 28
4 Trading operations ........................................................................................................ 29
5 Financial instruments .................................................................................................... 29
6 Contribution to housing pooled capital receipts ..................................................... 35
7 Retirement benefits ..................................................................................................... 35
8 Extraordinary items ..................................................................................................... 38
9 Explanation of the significance of the Statement of Movement on the General
Fund Balance ........................................................................................................................... 39
10
Breakdown of reconciling items in the Statement of Movement on the
General Fund Balance ............................................................................................................ 39
11
Expenditure on publicity ........................................................................................... 41
12
Members allowances .................................................................................................. 41
13
Discretionary expenditure ....................................................................................... 41
14
Officers emoluments ................................................................................................. 41
15
Audit costs .................................................................................................................. 42
16
Value Added Tax ........................................................................................................ 42
17
The building control account ................................................................................... 43
18
Related parties........................................................................................................... 44
19
Other items of Income and Expenditure ............................................................. 44
20
Tangible fixed assets ............................................................................................... 45
21
Tangible fixed asset disposals ............................................................................... 48
22
Capital Financing Requirement ................................................................................ 48
23
Capital commitments ................................................................................................. 49
24
Information on major assets held ......................................................................... 50
25
Valuation information ............................................................................................... 50
26
Long-term debtors ..................................................................................................... 51
27
Stocks ........................................................................................................................... 51
28
Debtors ........................................................................................................................ 52
29
Creditors ..................................................................................................................... 52
30
Provisions ..................................................................................................................... 52
31
Unapplied grants and grants deferred ................................................................. 53
32
Analysis of net assets employed ............................................................................ 54
33
Reserves ...................................................................................................................... 54
34
Deferred charges ...................................................................................................... 59
35
Minimum Revenue Provision ..................................................................................... 59
36
Trust funds ................................................................................................................. 59
37
Interests in companies ............................................................................................. 59
38
Contingent liabilities ................................................................................................. 59
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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F
G
H
39
Authorisation of accounts for issue ..................................................................... 60
40
Events after the Balance Sheet date ................................................................... 60
41
Analysis of other revenue government grants .................................................... 60
42
Reconciliation to the net deficit on the Income and Expenditure Account . 61
43
Movement in cash reconciled to the movement in net debt ............................. 61
44
Analysis of capital grants received ....................................................................... 62
45
Analysis of other capital cash receipts ................................................................ 62
46
Reconciliation of liquid resources to the Balance Sheet .................................. 62
SUPPLEMENTARY STATEMENTS ..................................................63
a HRA Income and Expenditure Account ........................................................................ 63
b Statement of Movement on the HRA Balance ............................................................ 64
c Notes to the HRA ............................................................................................................. 65
1
Housing Repairs Account ............................................................................................. 65
2 HRA subsidy payable..................................................................................................... 65
3 Depreciation and impairment of dwellings ............................................................... 65
The depreciation and impairment of dwellings is an aggregation of the following: 65
4 HRA tangible fixed assets .......................................................................................... 66
5 HRA tangible fixed asset disposals........................................................................... 67
6 HRA Capital Financing Requirement (CFR) ............................................................... 67
7 Explanation of the significance of the Statement of Movement on the HRA
Balance ..................................................................................................................................... 67
8 Breakdown of reconciling items in the Statement of Movement on the HRA
Balance ..................................................................................................................................... 68
9 HRA balance.................................................................................................................... 69
10
Retirement benefits ................................................................................................. 69
11
Dwelling stock ............................................................................................................. 70
12
Major Repairs Reserve .............................................................................................. 71
13
Vacant possession value of dwellings ..................................................................... 71
14
Rent arrears ............................................................................................................... 72
15
Extraordinary and exceptional items .................................................................... 72
d Collection Fund ................................................................................................................... 73
e Notes to the Collection Fund .......................................................................................... 74
1
Council Tax benefits ..................................................................................................... 74
2 Income from business ratepayers ............................................................................. 74
3 Bad and doubtful debts ................................................................................................ 74
4 Collection Fund balance ................................................................................................ 75
5 Council Tax base ............................................................................................................ 75
ANNUAL GOVERNANCE STATEMENT .............................................77
AUDIT CERTIFICATE ...............................................................83
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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A
I
EXPLANATORY FOREWORD TO THE ACCOUNTS
Introduction
The Statement of Accounts summarises the Council’s transactions for the 2007-08
financial year and its position at the year-end 31 March 2008. Figures for the previous
year are included to assist in the interpretation of the accounting statements.
The purpose of the Statement of Accounts is to give readers clear information about
the Council’s finances. It discloses the cost of Council services in the year, where the
money came from to pay for the services and what the assets and liabilities were at the
year-end.
The accounting statements consist of core financial statements followed by a
consolidated set of notes covering all of the core statements.
Supplementary
statements are presented (with their own notes) after the notes on the core
statements.
The Statement of Accounts comprises:

Statement of Accounting Policies

Statement of Responsibilities for the Statement of Accounts

Accounting Statements:
o
The Core Financial Statements:

Income and Expenditure Account

Statement of the Movement on the General Fund Balance

Statement of Total Recognised Gains and Losses

Balance Sheet

Cash Flow Statement

Notes to the Core Financial Statements

Supplementary Statements:
o
Housing Revenue Account (HRA) Income and Expenditure Account and
Statement of Movement on the HRA Balance
o

Collection Fund
Annual Governance Statement.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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II
Statement of Accounting Policies
The purpose of this statement is to explain the basis for the recognition, measurement
and disclosure of transactions and other events in the accounts. The accounting policies
and estimation techniques disclosed are those that are significant to the understanding
of the Statement of Accounts; pages 10 to 17.
III
Statement of Responsibilities for the Accounts
This statement sets out the Council’s responsibilities for the accounts under local
government legislation and other requirements, and the Borough Treasurer’s legal and
professional responsibility for the accounts; page 18.
IV
Accounting Statements
The Income and Expenditure Account (pages 19 to 20) brings together all of the
functions of the Council and summarises all of the resources that have been generated,
consumed or set aside in providing services during the year.
The Statement of Movement on the General Fund Balance (page 21) takes the surplus or
deficit from the Income and Expenditure Account and then applies certain statutory
items that are taken into account in determining the Council’s budget requirement and in
turn its Council Tax demand. This results in the General Fund Balance.
The Statement of Total Recognised Gains and Losses (page 22) brings together all gains
and losses recognised by the Council in the financial year.
The Balance Sheet (pages 23 to 24) sets out the Council’s financial position as at the 31
March 2008. It shows balances and reserves at the Council’s disposal, its long-term
indebtedness, and the long-term and net assets employed in its operations, together
with summarised information on the fixed assets held.
The Cash Flow Statement (pages 25 to 26). This consolidated statement summarises
the inflows and outflows of cash arising from transactions with third parties for
revenue and capital purposes for the financial year.
V
Notes to the Core Financial Statements
The notes to the core financial statements add to and interpret the content of the
individual accounting statements. They provide more explanation and analysis where
matters of financial significance cannot adequately be shown in the statements
themselves.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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VI
Supplementary Statements
The Housing Revenue Account (pages 63 to 72) reflects the statutory obligation to
account separately for Council housing provision. The HRA has two statements. The
HRA Income and Expenditure Account shows the HRA services in more detail than the
whole authority statement. The Statement of Movement on the HRA Balance adjusts
the HRA Income and Expenditure surplus or deficit by applying statutory items. This
results in the year end HRA balance.
The Collection Fund (pages 73 to 76) reflects the statutory requirement to maintain a
separate record of transactions in relation to council tax and non-domestic rates, and
illustrates the way in which these have been distributed to precepting authorities, the
national non-domestic rates pool and the General Fund.
VII
Annual Governance Statement
This statement replaces the Statement on Internal Control from previous years. The
Annual Governance Statement is the mechanism used to demonstrate that, during the
financial year ended 31 March 2008, the Council had an adequate governance regime in
place and that all business was conducted in compliance with the existing arrangements.
Instances of non-compliance or weaknesses identified require an action plan to eliminate
recurrence (pages 77 to 82).
VIII Comparison with revenue budget
The Council’s original spending plans (budget) in overall terms and the actual outturn for
2007-08 are shown below:
2006-07
Budget
2007-08
Actual
Budget
£
12,459,000
Actual
£
11,900,336
558,664
Net General Fund budget
approved by Council on the 27
February 2007
Surplus for the year
To be funded by:
12,729,110
12,305,622
423,488
8,439,543
Central Government
8,672,680
4,019,457
Council Tax
4,056,430
The net actual expenditure for 2007-08 is £423,488 below the Council’s net General
Fund budget (£558,664 for 2006-07). The main reasons are the settlement of previous
years’ benefit subsidy claims with the Department of Works and Pensions releasing
£483,551 of amounts set aside for potential claw back, and the Council made a net gain
on borrowing and investing activities generating £348,540.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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For the Housing Revenue Account the original spending plans (budget) and the actual
outturn for 2007-08 are shown below:
2006-07
Budget
2007-08
Actual
Budget
£
7,340
surplus
Actual
£
645,222
surplus
Housing Revenue Account
budget approved by Council on
the 27 February 2007
17,140
surplus
1,851,136
deficit
The main reason for the deficit of £1,851,136 for 2007-08 is the acceleration of the
housing maintenance programme, spending £1,985,674 during the year.
IX
Balances and reserves
The balances and reserves available to the Council at the 31 March 2008:
General Fund revenue balance
General Fund earmarked reserves
31 March
2007
Movement in
year
31 March
2008
£
£
£
(1,601,698)
(423,488)
(2,025,186)
(1,289,351)
(683,988)
(1,973,339)
(2,576,559)
1,851,136
(725,423)
(7,409)
7,409
0
(348,630)
186,536
(162,094)
Usable capital receipts reserve
(1,269,935)
(458,633)
(1,728,568)
Total usable reserves and balances
(7,093,582)
478,972
(6,614,610)
HRA revenue balance
HRA Major Repairs Reserve
Collection Fund balance (note 4,
page 75)
X
Retirement benefits
The Balance Sheet (pages 23 to 24) shows the Council’s pension liability matched by the
pension reserve at the balance sheet date. This reflects the Council’s future liability
for pensions relating to current and previous staff.
There is no overall effect from pension liabilities on Council Tax or housing rent levels.
XI
Prudential code
From the 1 April 2004 the Prudential Code for Capital Finance in Local Authorities came
into force. This sets out a framework for the self-regulation of capital expenditure
within the restrictions of prudential indicators designed to maintain affordability,
prudence and sustainability.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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XII
Capital programme
The Council’s capital investment for 2007-08 and how it has been financed is shown
below, together with the current debt outstanding and the prudential limit on external
borrowing.
2006-07
2007-08
£
£
17,655,046
Capital investment
(2,071,613)
Financed by borrowing
(1,366,076)
Financed by grant
(6,707,881)
(12,853,491)
(794,237)
(1,935,705)
12,741,814
Financed by capital receipts
Financed by balances and reserves
(17,655,046)
(912,707)
(3,755,150)
(12,741,814)
(40,000,000)
Authorised limit for external debt
(39,000,000)
(29,000,000)
Total of external loans
(29,000,000)
XIII Benefit subsidy claims
The benefit subsidy annual claims involve very large amounts. The total annual subsidy
claimed from the Department of Works and Pensions (DWP) is usually over
£20,000,000. As these claims are for very large amounts and involve complicated
eligibility criteria, a prudent approach is taken when including the amounts in the
Council’s accounts. From the financial year 2004-05 a prudence factor of 2% was used
to anticipate a potential claw back of subsidy, this provided a set aside held in the
Balance Sheet to meet any disallowable subsidy claimed.
The prudence factor of 2% is reviewed annually and with the claims from 2004-05 to
2006-07 settled during 2007-08, the prudence factor has been reassessed in light of
the settlements with the DWP. The prudence factor from 2007-08 has been set at 1%.
XIV Group accounts
Where the Council has a group relationship with a separate entity it is required to
consolidate both sets of accounts and prepare group accounting statements. From the 1
April 2004 the criteria that determine a group relationship changed.
During 2007-08 the Council has not had a group relationship with any organisations,
therefore there are no group accounting statements or disclosures in the Statement of
Accounts.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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XV
Accounting policies
These accounts comply with relevant accounting practices and present fairly the
financial performance and position of the Council. The accounting policies adopted by
the Council are reviewed annually to ensure that the financial information presented is
relevant, reliable, comparable and understandable.
In the 2007-08 Statement of Accounts the Council has adopted two significant new
accounting policies:


Implementation of the Revaluation Reserve
Implementation of the Financial Instruments Adjustment Account
The implementation of the Revaluation Reserve has an impact on the comparative figures
for 2006-07 in the Balance Sheet on pages 23 to 24.
The implementation of the Financial Instruments Adjustment Account applies from the 1
April 2007 and does not have comparative figures for 2006-07.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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B
STATEMENT OF ACCOUNTING POLICIES
I
General
The accounts have been prepared in accordance with the following:
II

Code of Practice on Local Authority Accounting in the United Kingdom 2007
(SORP), published by the Chartered Institute of Public Finance and Accountancy
(CIPFA) and the Local Authority Scottish Accounts Advisory Committee
(LASAAC);

Guidance issued by CIPFA on the application of UK Accounting Standards:
o Statements of Standard Accounting Practice (SSAP);
o Financial Reporting Standards (FRS);

Best Value Accounting Code of Practice (BVACOP); and

Prudential Code on Capital Finance in Local Authorities.
Accruals of income and expenditure
Customer and client receipts that appear in the accounts as sales, fees, charges and
rents are accrued into the period that they relate to. Basic employee costs are charged
to the period within which the employee worked. Expenses and any additional working
are paid in the following month and are accounted for in the accounting period they are
paid in.
Interest payable on external loans and external interest earned is accrued and
accounted for in the period it relates to, reflecting the overall economic effect in the
accounting period. The accumulated interest due but not paid or due but not yet
received at the 31 March is aggregated to the principal outstanding in the Balance
Sheet.
The cost of supplies and services is accrued and accounted for in the period of
consumption or receipt. Accruals are made on an estimated or actual basis for all
material amounts unpaid at the year-end for goods and services received or works
completed.
Bad debt provisions are created to adjust the carrying amount of debtors for doubtful
and uncollectable debts. The Council annually reviews the amount held in each provision
to reflect the current best estimate, primarily based on the age of the debts.
The Council claims and receives significant grant for housing and council tax benefit
each year. To reflect a measure of prudence in the accounting estimate used, a
percentage reduction is applied to the grant receivable. The intention is to avoid a
significant impact on revenue should there be an adverse outcome on settlement.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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III
Acquired/discontinued operations
Any material income and expenditure directly related to acquired or discontinued
operations is shown as a separate item in the Income and Expenditure Account.
Any liability in respect of discontinued operations is disclosed as a separate item in the
Balance Sheet.
IV
Contingent assets and liabilities
Where the Council has contingent assets and liabilities they are disclosed as a note to
the accounts if an economic benefit or obligation is probable.
Contingent assets and liabilities are not included in the accounting statements. Should
contingent assets or liabilities materialise then the resulting transaction will be
accounted for appropriately.
V
Deferred charges
Deferred capital charges are payments of a capital nature where no tangible fixed asset
is created. They are immediately amortised to revenue.
Where the Council creates a deferred revenue charge then it is amortised to revenue in
line with the consumption of economic benefits controlled by the Council.
Where the Council does control the economic benefits and can therefore recognise an
asset, it is included in the appropriate asset category on the Balance Sheet.
VI
Events after the balance sheet date
Where an event after the balance sheet date, favourable or unfavourable, which
provides evidence of conditions that existed at the balance sheet date occurs (adjusting
event) the amounts recognised in the Statement of Accounts are adjusted.
Where an event that occurs after the balance sheet date is indicative of conditions that
arose after the balance sheet date (non-adjusting event) the amounts recognised in the
Statement of Accounts is not adjusted. For each material category of non-adjusting
event after the balance sheet date, the nature of the event and an estimate of the
financial effect (or a statement that such an estimate cannot be made reliably) is
disclosed.
Events after the balance sheet date are reflected up to the date the Statement of
Accounts is authorised for issue. The date when the Statement of Accounts was
authorised for issue by the Borough Treasurer is disclosed in the Notes to the
Accounts, including confirmation of the date up to which events after the balance sheet
date have been considered.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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VII
Exceptional items, extraordinary items and prior period adjustments
Exceptional items are part of the ordinary activities of the Council and are included in
the cost of the service they relate to, unless they would materially distort the service’s
cost and its use as a comparative. Where necessary they are disclosed separately in the
Income and Expenditure Account and explained in Notes to the Accounts.
Extraordinary items are shown separately in the Income and Expenditure Account after
the Council’s ordinary activities, and are disclosed in a note to the accounts.
Prior period adjustments arise from corrections and adjustments from estimations and
accounting treatments used in the accounting process.
Where practicable, the
comparative figures for the previous period are restated in the accounting statements
and an explanatory note included in the accounts.
VIII Financial instruments
The accounting treatment of financial instruments is covered by three Financial
Reporting Standards (FRS’s). FRS 26 deals with recognition and measurement, FRS 25
with presentation and disclosures, and FRS 29 replaces the disclosures part of FRS 25.
A financial instrument is any contract that gives rise to a financial asset of one entity
and a financial liability or equity instrument of another. Financial instruments therefore,
cover both financial assets and financial liabilities. In a local authority context and
particularly for the Council, financial liabilities include; trade payables (creditors) and
borrowings. Financial assets include; trade receivables (debtors), bank deposits and
investments.
Financial liabilities are included in the accounts when, in the case of trade payables, the
goods or services are received. Borrowing is recognised in the accounts when the
amount borrowed is received.
Financial assets are included in the accounts when, in the case of trade receivables, the
goods or services have been delivered or rendered. Investments and deposits are
recognised at the contract date.
Financial assets and liabilities are included in the accounts at fair value less any
transactions costs relating to the acquisition or issue of the financial instrument. Fair
value is defined as the amount for which financial assets could be exchanged or a
financial liability settled under normal market conditions.
The accounting treatment of financial instruments depends on the classification used
and the Council adopts the following classification:


Financial liabilities – amortised cost
Financial assets – loans and receivables
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Barrow-in-Furness Borough Council
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Amortised cost using the effective interest rate is a method of determining the Balance
Sheet carrying amount and the charges to the Income and Expenditure Account for the
financial instrument.
The carrying amount of loans and receivables and the interest income are measured
using the effective interest rate method, except for short duration receivables with no
stated interest that are measured at the original invoice amount.
Where statutory requirements dictate a different treatment for the carrying amounts
relating to premiums and discounts resulting from the early repayment and replacement
of loans, the Income and Expenditure Account will be charged or credited with the
amount calculated using the effective interest rate method, with a matching adjustment
made to the Financial Instruments Adjustment Account (FIAA) to reflect the statutory
requirements.
Other types of financial instruments such as financial guarantees, soft loans, equities
and derivatives are not currently used by the Council.
IX
Foreign currency translation
Income and expenditure arising from foreign currency transactions would be translated
into pounds sterling at the exchange rate on the transaction date.
Any assets or liabilities at the balance sheet date would be shown at the closing rate if
no other exchange rate were fixed.
X
Government grants and other contributions
Grants and other contributions are accounted for on an accruals basis.
Revenue grants are credited against the appropriate service revenue account to match
the expenditure they relate to.
Government grants that finance either all or part of an addition to the Council’s assets
follow the deferred credit method. Capital grants are credited to a government grants
unapplied account. Where the grant is used to finance the creation, acquisition or
enhancement of a fixed asset, amounts equivalent to the grants applied in financing are
transferred to a government grants-deferred account and as depreciation is charged
over the life of the asset, the grant is released to the service revenue account over the
useful life of the asset, to match the depreciation of the asset it relates to.
Similar accounting treatment has been adopted for grants and contributions from other
bodies, using a private grants-deferred account.
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Statement of Accounts 2007-08
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XI
Group accounts
Group accounting requires the consolidation of separate entities accounts where a group
relationship exists with the Council. Where such relationships do exist group accounting
statements are prepared in addition to the Council’s own, separate entity, accounts.
XII
Intangible assets
Intangible assets are held at cost and amortised over their economic lives subject to a
maximum of 20 years.
The Council annually reviews the economic lives of each intangible asset to reflect the
current best estimate.
Service revenue accounts are charged with a provision for amortisation and where
required, impairment, to reflect their use of assets in the course of providing their
services.
XIII Leases
The capital value and future liabilities of items acquired by operational leases are
recorded as a note to the Income and Expenditure Account. Annual lease payments are
charged to the appropriate service revenue account.
Rental payments under finance leases are apportioned between the finance charge and
the reduction of the outstanding obligation. The finance charge is allocated and charged
to revenue over the term of the lease.
XIV Overheads
In accordance with CIPFA guidance the costs of corporate and democratic management
are not recharged to services, they are shown as a separate objective heading in the
Income and Expenditure Account. Similarly non distributed costs are not recharged to
services and are shown separately in the Income and Expenditure Account.
The cost of support services are allocated or charged to individual services using the
most appropriate basis including staff time, number of employees or floor space;
reflecting the nature and type of service provided.
If any overheads are not charged or apportioned, the reason together with the details
are disclosed in a note to the Income and Expenditure Account.
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Statement of Accounts 2007-08
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XV
Pension costs
The Council contributes to the Local Government Pension Scheme managed by Cumbria
County Council. It is a multi-employer, funded defined benefit scheme.
The pension costs charged to service revenue accounts are equal to the current service
costs rather than the contributions paid to the fund.
The contributions paid into the fund on behalf of current employees together with costs
arising in respect of pensions paid to retired employees are set off against the current
service cost with any compensating adjustment coming from a transfer with the Pensions
Reserve.
There is no impact on the bottom line of the Income and Expenditure Account.
The pension costs are determined on the basis of contribution rates that are set to
meet the known liabilities of the fund. Triennial valuations are carried out to determine
the level of contributions required.
The treatment and reporting of retirement benefits complies with the accounting and
disclosure requirements of FRS 17 – Retirement Benefits.
XVI Provisions
Provisions are created to meet potential liabilities or losses that have been incurred but
where timing or amounts are uncertain.
XVII Research and development
Expenditure on research and development is written off as it is incurred as part of the
continuing operations of the Council.
XVIII Reserves
Reserves are used to earmark funds to cover future expenditure. Expenditure should
not be charged directly to any reserve.
Capital reserves are not available for revenue purposes and certain reserves can only be
used for specific statutory purposes.
The Major Repairs Reserve is a statutory account and relates to the Housing Revenue
Account. The account can be used to finance HRA capital expenditure or repay the
principal of any amounts borrowed.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
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XIX Stocks
Stocks are included in the Balance Sheet at the lower of cost and net realisable value in
accordance with SSAP 9 – Stocks and long-term contracts.
XX
Tangible fixed assets
All expenditure on the creation, acquisition or enhancement of tangible fixed assets is
capitalised. This includes any assets acquired under finance leases that have been
capitalised and included in the Balance Sheet on the basis of the outstanding obligation
to make future rental payments.
All asset values shown in the Balance Sheet are net of depreciation. Council dwellings
are included at their Existing Use Value – Social Housing Value. Operational assets are
included at the lower of net current replacement value or net realisable value in existing
use. Non-operational assets are included at the lower of net current replacement value
or net realisable value. Infrastructure assets and community assets are included at
historical cost. Assets under construction are held at cost as non-operational assets
until they are commissioned.
The Council appoints qualified valuers to undertake the revaluation of its assets every
five years. The asset values used in the accounts are based on the last valuation
certificates issued. For the HRA assets this was at 1 April 2007 and was carried out in
accordance with specific government guidance on stock valuation issued in July 2005.
For all other assets the last valuation was at the 1st April 2003 and those valuations
were carried out in accordance with guidelines issued by CIPFA and the Royal Institute
of Chartered Surveyors (‘RICS’). The valuation covered all major assets valued over the
£10,000 de-minimus level.
Additions to the Council’s fixed assets are initially included in the accounts at their cost
of acquisition until they fall into the next valuation.
Where the disposal of a fixed asset results in a gain or loss, the equivalent amount is
transferred to the Income and Expenditure Account. In order to comply with the
statutory restrictions on the use of capital receipts the gain or loss is then reversed in
the Statement of Movement on the General Fund or HRA Balance. Disposal proceeds are
subject to a de-minimus value of £10,000, except the sale of Council dwellings that are
all treated as capital receipts.
In accordance with FRS 11 – Impairment of Fixed Assets and Goodwill – the value at
which each category of asset is included in the Balance Sheet is reviewed annually.
Where there is a material change between the carrying amount and the recoverable
amount, an impairment adjustment is made in the accounts.
In accordance with FRS 15 – Tangible Fixed Assets – all assets are depreciated except
land. Assets are not depreciated in the year of their acquisition or creation; they are
depreciated in the year of their disposal. Assets are depreciated for full years and not
_______________________________________________________________________________
16
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
for interim periods if disposed of part way through a year. Assets are depreciated on a
straight-line basis and are calculated on the opening balance.
Due to the requirements of the current statutory framework the depreciation charges
are replaced with the statutory requirement for the repayment of external loans.
From 1 April 2007 the Fixed Asset Restatement Account and the Capital Financing
Account have been replaced by a Revaluation Reserve and the Capital Adjustment
Account.
The Capital Adjustment Account records all transactions relating to the financing of
capital expenditure.
The Revaluation Reserve reflects the valuation gains on fixed assets owned by the
Council.
The reserve holds information relating to individual assets and their
accumulated balance, created from revaluations, can only be used in the impairment and
disposal of the individual assets. No individual asset can have a negative balance within
the Revaluation Reserve. Impairment and disposal entries can only be charged against
the balance built up from revaluation gains.
XXI Value Added Tax
VAT is only included in the accounts where it is deemed to be irrecoverable.
_______________________________________________________________________________
17
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
C
STATEMENT OF RESPONSIBILITIES FOR THE ACCOUNTS
I
The Authority’s Responsibilities
The authority is required to:



II
make arrangements for the proper administration of its financial affairs and
to secure that one of its officers has the responsibility for the
administration of those affairs. In this authority, that officer is the
Borough Treasurer;
manage its affairs to secure economic, efficient and effective use of
resources and safeguard it’s assets;
approve the Statement of Accounts.
The Borough Treasurer’s Responsibilities
The Borough Treasurer is responsible for the preparation of the authority’s Statement
of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code
of Practice on Local Authority Accounting in the United Kingdom (the SORP).
In preparing this Statement of Accounts, the Borough Treasurer has:



selected suitable accounting policies and then applied them consistently;
made judgements and estimates that were reasonable and prudent; and
complied with the local authority SORP.
The Borough Treasurer has also:


kept proper accounting records which were up to date; and
taken reasonable steps for the prevention and detection of fraud and other
irregularities.
We certify that the accounts set out on pages 19 to 76 of this Statement of Accounts
presents fairly the financial position of the Council for 2007-08 and its income and
expenditure for the year ended 31 March 2008.
M Saleh CFPA, BA, M.Litt
Borough Treasurer
19 June revised 15 September 2008
Councillor J D Heath
Chairman of the Audit Committee
27 June revised 24 September 2008
_______________________________________________________________________________
18
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
D
I
ACCOUNTING STATEMENTS
Income and Expenditure Account
This account summarises the resources that have been generated and consumed in
providing services and managing the Council during the last year. It includes all day-today expenses and related income on an accruals basis, as well as transactions measuring
the value of fixed assets actually consumed and the real projected value of retirement
benefits earned by employees in the period.
Previous
Year Net
Expenditure
Gross
Expenditure
Gross
Income
Net
Expenditure
£
£
£
£
1,229,777
Central services to
the public
8,355,830
(6,520,533)
1,835,297
7,299,135
Cultural,
environmental and
planning services
13,134,774
(5,388,574)
7,746,200
Highways, roads and
transport services
2,054,651
(1,227,000)
827,651
Local authority
housing (HRA)
7,749,843
(8,551,008)
(801,165)
Other housing
services
17,305,985
(17,616,381)
(310,396)
158,693
(33,240)
125,453
1,718,379
(246,345)
1,472,034
475,452
(1,501,492)
704,062
0
1,324,038
Exceptional items
Corporate and
democratic core
22,635
Non distributed costs
358,864
0
358,864
9,553,607
Net Cost of Services
50,837,019
(39,583,081)
11,253,938
0
Gain on the disposal of
fixed assets
(45,485)
(61,473)
Gain on the disposal of
contingent assets
(78,075)
72,000
Parish council
precepts
99,700
51,582
(Surpluses)/deficits
on trading
undertakings
19,997
1,650,630
Interest payable and
similar charges
2,320,177
_______________________________________________________________________________
19
Note 1,
page 27
Note 2,
page 28
Note 3,
page 28
Note 4,
page 29
Note 5b,
page 29
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
1,619,956
Contribution of
housing capital
receipts to
Government Pool
1,407,928
Note 6,
page 35
(501,588)
Interest and
investment income
(624,145)
Note 5b,
page 29
297,000
Note 7a,
page 35
449,000
Pensions interest cost
and expected return
on pensions assets
215,000
Extraordinary items
0
13,048,714
Net Operating
Expenditure
14,651,035
(4,089,381)
Demand on the
Collection Fund
(4,147,973)
(2,076)
Collection fund
(surplus)/deficit
(8,157)
(1,365,536)
Revenue Support
Grant
(1,246,300)
(55,309)
Revenue Support
Grant amendment
(18,895)
Local Authority
Business Growth
Incentive
(7,074,008)
443,509
0
(161,971)
Non-domestic rates
redistribution
(7,426,380)
Deficit for the year
1,660,254
_______________________________________________________________________________
20
Note 8,
page 38
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
II
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 over the last
twelve months. 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.

The payment of a share of housing capital receipts to the Government scores as a
loss in the Income and Expenditure Account, but is met from usable capital receipts
rather than council tax.

Retirement benefits are charged as amounts become payable to pension funds and
pensioners, rather than as future benefits are earned.
The General Fund Balance compares the council’s spending 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:
Previous
Year
Current
Year
£
443,509
(1,002,173)
(558,664)
Note 9,
page 39
£
Deficit for the year on the Income and Expenditure
Account
Net additional amount required by statute and nonstatutory proper practices to be debited or
credited to the General Fund Balance for the year
Increase in General Fund Balance for the Year
1,660,254
(2,083,742)
Note 10,
page 39
(423,488)
(1,043,034)
General Fund Balance brought forward
(1,601,698)
(1,601,698)
General Fund Balance carried forward
(2,025,186)
_______________________________________________________________________________
21
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
III
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.
Previous
Year
£
443,509
(8,383,667)
(3,594,000)
(275,757)
(11,809,915)
Current
Year
£
Deficit for the year on the Income and
Expenditure Account
1,660,254
Surplus arising on the revaluation of fixed assets
Actuarial (gains)/losses on pension fund assets
and liabilities
Surplus for the year on the Collection Fund
Total recognised gains for the year
(17,684,000)
7,633,000
186,536
Note 33c,
page 58
Note 7d,
page 38
Page 73
(8,204,210)
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 XX, page 16). The Fixed Asset Restatement
Account and the Capital Financing Account have been transferred to form the new
Capital Adjustment Account:
31 March 2007
£
(43,710,361)
(37,709,456)
0
1 April 2007
£
Fixed Asset Restatement Account
Capital Financing Account
Capital Adjustment Account
(81,419,817)
0
0
(81,419,817)
(81,419,817)
_______________________________________________________________________________
22
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
IV
Balance Sheet
31 March
2007
31 March
2008
£
£
Note 1,
page 27
Notes 20 to
25, pages
45 to 50
Tangible Fixed Assets
Operational assets:
81,944,104
22,270,979
council dwellings
95,994,027
other land and buildings
24,408,379
1,740,771
equipment
1,550,954
infrastructure assets
1,542,476
community assets
5,596,759
455,524
1,528,377
Non-operational assets:
34,502,025
commercial and other
properties
28,005,335
0
assets under construction
1,088,929
0
surplus assets, held for
disposal
6,761,374
142,464,357
Total fixed assets
164,925,656
13,312
Long-term debtors
9,425
1,231,468
143,709,137
Deferred premiums on
the early repayment of
debt
Note 26,
page 51
0
Total long-term assets
164,935,081
Current assets
22,107
11,086,087
1,500,000
2,362
Stocks
Note 27,
page 51
Note 28,
page 52
Note 5a,
page 29
26,547
Debtors
6,937,989
Investments
4,934,751
Cash and bank
564,118
12,463,405
156,319,693
Total assets
177,398,486
Current liabilities
(8,150,993)
(215,049)
Creditors
Note 29,
page 52
(6,369,556)
Bank overdraft
0
(6,369,556)
_______________________________________________________________________________
23
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
148,383,749
Total assets less current
liabilities
(29,000,000)
Long-term borrowing
(384,364)
Provisions
(861,523)
Unapplied grants
(29,117,175)
(63,878)
(15,175,029)
73,351,682
171,028,930
(29,633,282)
(698,146)
(2,626,899)
Grants deferred
Deferred discounts on
early repayment of debt
Liability related to
defined benefit pension
scheme
Total assets less
liabilities
(33,692,522)
Note 5a,
page 29
Note 30,
page 52
Note 31,
page 53
0
(22,822,190)
Note 7b,
page 36
81,555,891
Note 32,
page 54
Financed by:
(81,419,817)
0
0
(1,269,935)
(13,312)
15,175,029
(7,409)
(1,601,698)
(2,576,559)
(348,630)
(1,289,351)
(73,351,682)
Capital adjustment
account
Financial instruments
adjustment account
Revaluation reserve
Usable capital receipts
reserve
Deferred capital receipts
Pensions reserve
(82,504,574)
905,791
(16,155,263)
Note 33,
page 54
(1,728,568)
(9,425)
22,822,190
Major repairs reserve
0
General Fund balance
(2,025,186)
Housing Revenue Account
balance
(725,423)
Collection Fund balance
(162,094)
Earmarked reserves
(1,973,339)
Total net worth
Note 33,
page 54
Note 33,
page 54
(81,555,891)
_______________________________________________________________________________
24
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
V
Cash Flow Statement
2006-07
2007-08
£
£
£
Revenue activities
7,789,309
15,503,794
Cash outflows
Cash paid to and on behalf of
employees
Other operating cash payments
8,720,453
Housing Benefit paid out
19,315,823
NNDR payments to national pool
25,166,782
1,542,444
(2,341,553)
(24,108,362)
(7,074,008)
(19,028,586)
Precepts paid
Payments to the Capital Receipts
Pool
Cash inflows
8,148,925
23,512,444
8,852,186
19,982,734
26,633,936
1,570,878
Rents
(2,427,735)
Council Tax receipts
(25,452,390)
NNDR receipts from national pool
(7,714,303)
NNDR receipts
(19,788,299)
(1,420,845)
Revenue Support Grant
(1,246,300)
(8,889,734)
DWP grants for benefits
(9,034,918)
(15,020,401)
Other government grants
(18,353,175)
(5,491,278)
(5,336,162)
Cash received for goods and services
Note 41,
page 60
(5,816,630)
Net movement on revenue activities
(1,132,647)
Note 42,
page 61
Returns on Investments and Servicing of Finance
Cash outflows
1,442,738
Interest paid
1,267,187
Cash inflows
(552,220)
890,518
Interest received
(599,359)
Net movement in servicing of finance
667,828
Capital Activities
Cash outflows
5,368,473
Purchase of fixed assets
3,360,517
12,018,771
Other capital cash payments
9,381,297
Cash inflows
(3,279,780)
(12,327,374)
(239,012)
Sale of fixed assets
(2,615,806)
Capital grants received
Other capital cash receipts
(13,695,682)
(146,752)
_______________________________________________________________________________
25
Note 44,
page 62
Note 45,
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
page 62
1,541,078
(2,904,566)
Net movement on capital activities
(3,716,426)
Net cash (inflow)/outflow before financing
(4,181,245)
Management of liquid resources
(800,000)
(1,799)
(801,799)
Net increase/(decrease) in shortterm deposits
Net increase/(decrease) in other
liquid resources
3,400,000
4,065
Net movement on liquid resources
3,404,065
Financing
Cash outflows
21,813,481
Repayments of amounts borrowed
3,595,000
Cash inflows
(15,405,000)
(2,500,000)
3,908,481
202,116
New loans raised
(3,595,000)
New short-term loans
0
Net movement on financing
Net (increase)/decrease in cash
0
(777,180)
_______________________________________________________________________________
26
Note 43,
page 61
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
E
1
NOTES TO THE CORE FINANCIAL STATEMENTS
Prior period adjustments
In the 2007-08 Statement of Accounts, the Council has adopted two significant new
accounting policies:


Implementation of the Revaluation Reserve
Implementation of the Financial Instruments Adjustment Account
The implementation of the Revaluation Reserve has an impact on the comparative figures
for 2006-07 in the Balance Sheet on pages 23 to 24.
The implementation of the Financial Instruments Adjustment Account applies from the
1st April 2007 and does not have comparative figures for 2006-07.
(a) Implementation of the Revaluation Reserve
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 XX, page 16).
The credit balance of £43,710,361 on the Fixed Asset Restatement Account at 31
March 2007 and the credit balance of £37,709,456 on the Capital Financing Account
have been transferred to form the new Capital Adjustment Account with a credit
balance of £81,419,817:
31 March 2007
£
(43,710,361)
(37,709,456)
0
1 April 2007
£
Fixed Asset Restatement Account
Capital Financing Account
Capital Adjustment Account
(81,419,817)
0
0
(81,419,817)
(81,419,817)
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.
(b) Implementation of the Financial Instruments Adjustment Account
The Financial Instrument Adjustment Account (see accounting policy VIII, page 12) in
the Balance Sheet in 2007-08, replaces the deferred premiums and the deferred
discounts on the early repayment of debt. These deferred items both relate to Housing
Revenue Account and they are amortised to revenue in accordance with the Housing
Subsidy Determination.
_______________________________________________________________________________
27
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
From 2007-08 interest receivable from investments and the interest payable on
borrowings accrued at the 31 March is now amalgamated to the principal outstanding.
(c) Other restatements
A prior period adjustment has been made to move the Local Authority Business Growth
Incentive grant (£18,895 credit balance) from the Central Services to the Public
heading (£1,210,882 debit balance) to be shown separately beneath the Net Operating
Expenditure with the other general government grants.
The Income and Expenditure figures for 2006-07 have been adjusted from those
included in the Statement of Accounts for 2006-07 to accommodate the new Local
Authority Business Growth Incentive heading with a credit balance of £18,895 and this
leaves the Central Services to the Public heading with a debit balance of £1,229,777.
The Statement of Total Recognised Gains and Losses (STRGL) figures for the previous
year have been adjusted from those included in the Statement of Accounts for 2006-07
for a prior period adjustment.
The STRGL in the Statement of Accounts for 2006-07 included an entry for capital
receipts (£61,473 credit balance) that should properly have been recognised as a gain on
the disposal of contingent assets (note 3, below) in the Income and Expenditure
Account. The 2006-07 figures in the accounting statements have been changed to
reflect this treatment.
2
Exceptional items
The exceptional items for 2007-08 are shown in the table below, there were no
exceptional items in 2006-07.
2006-07
£
0
0
0
2007-08
£
Exceptional expenditure items:
VAT treatment of Fitness Suite income
Costs of Pay and Grading review
Exceptional income items:
Bank of Credit and Commerce International dividend
0
3
84,317
74,376
(33,240)
125,453
Contingent assets
Contingent assets represent proceeds to the Council where a dwelling sold under the
tenant’s Right To Buy is sold on within five years of the purchase from the Council.
There is a statutory calculation to effectively claw back a proportion of the discount
originally awarded to the tenant purchasing the dwelling from the Council.
_______________________________________________________________________________
28
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
4
Trading operations
Trading operations are services to customers that are deemed to be provided in a
competitive environment.
2006-07
£
2007-08
£
723
(8,033)
58,892
Deficit or (surplus)
Market Hall
Outdoor Market
Trade Refuse
25,769
(5,772)
0
51,582
Total
19,997
(220,549)
(13,206)
(208,473)
Turnover
Market Hall
Outdoor Market
Trade Refuse
(229,344)
(10,959)
0
(442,228)
Total
(240,303)
At the beginning of 2007-08 the Trade Refuse service was sold to the Council’s current
domestic waste collection contractor, SITA (GB) Limited, for £60,000. No trading took
place between the Council and the commercial customers in 2007-08. The sale proceeds
are included in the heading Central Services to the Public.
5
Financial instruments
(a) Financial instruments balances
The borrowings and investments disclosed in the Balance Sheet are made up of the
following categories of financial instruments:
Long-term
31 March
31 March
2007
2008
£
£
Current
31 March
31 March
2007
2008
£
£
Financial liabilities at amortised cost
Trade creditors (note 29,
0
page 52)
Long-term borrowing
(29,000,000)
0
(3,681,488)
(3,284,103)
(29,633,282)
0
0
Total borrowings
(29,000,000)
(29,633,282)
(3,681,488)
(3,284,103)
Loans and receivables
Trade debtors (note 28,
page 52)
Investments
0
0
1,294,768
800,418
0
0
1,500,000
4,934,751
Total investments
0
0
2,794,768
5,735,169
_______________________________________________________________________________
29
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(b) Financial instruments gains and losses
The gains and losses recognised in the Income and Expenditure Account and the
Statement of Total Recognised Gains and Losses in relation to financial instruments are
made up as follows, 2006-07 has no entry from the Statement of Movement on the HRA
Balance as Financial Instrument accounting applies from 1 April 2007:
2006-07
Total
£
(1,369,956)
(96,468)
96,562
(292,777)
12,009
(1,650,030)
501,588
(1,149,042)
0
(1,149,042)
482,263
280,768
(875)
Financial
liabilities:
measured at
amortised cost
£
Financial
assets:
loans and
receivables
£
(1,270,693)
0
(1,270,693)
0
0
0
84,776
0
84,776
(1,231,468)
0
(1,231,468)
97,208
0
97,208
(2,320,177)
0
(2,320,177)
0
624,145
624,145
(2,320,177)
624,145
(1,696,032)
905,791
0
905,791
(1,414,386)
624,145
(790,241)
517,744
0
517,744
228,469
0
228,469
0
(738)
(738)
Interest payable
Losses on derecognition:
General Fund premiums
from rescheduling loans
in the year
General Fund discounts
from rescheduling loans
in the year
Premiums amortised to
HRA
Discounts amortised to
HRA
Interest payable and
similar charges
Interest and investment
income
Net gain/(loss) for the
year
Statement of Movement
on HRA Balance
Net effect of gain/(loss)
on fund balances
Memorandum of HRA items:
Share of interest
payable
Net amortised premiums
and discounts
Share of interest income
2007-08
Total
£
762,156
Impact on the HRA
746,213
(738)
745,475
386,886
Impact on the General
Fund
668,173
(623,407)
44,766
_______________________________________________________________________________
30
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(c) 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:




Estimated interest rates at 31 March 2008 of 4.6% for loans from the PWLB (31
March 2007 4.6%).
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 calculated are as follows:
31 March 2007
Carrying amount
Fair value
£
£
(29,000,000)
(28,629,763)
31 March 2008
Carrying amount
Fair value
£
£
Financial liabilities
(29,633,282)
(30,985,366)
The fair value is higher than the carrying amount because the Council’s portfolio of loans
includes a number of fixed rate loans where the interest rate payable is higher than the
rates available for similar loans at the Balance Sheet date. This commitment to pay
interest above market rates increases the amount that the Council would have to pay if
an early repayment of the loans was made.
(d) 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.
Market risk – the possibility that financial loss might arise for the council as a result
of changes in such measures as interest rates.
The Council achieves the objectives it has set itself within Treasury Risk Management
by the prudent use of its approved financing and investment instruments, methods and
techniques, primarily to create stability and certainty of costs and revenues, but at the
same time retaining a sufficient degree of flexibility to take advantage of unexpected,
potentially advantageous changes in the level or structure of interest rates, exchange
rates or inflation. The above are subject at all times to the consideration and, if
required, approval of any policy or budgetary implications.
_______________________________________________________________________________
31
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Credit risk
Credit risk arises from deposits with banks and financial institutions, as well as credit
exposures to the Council’s customers. Deposits are not made with banks and financial
institutions unless they meet the credit rating criteria that the Council uses to ensure
the security and liquidity of its investments before yield:
Type
Fitch
Moody’s
Standard &
Poor’s
Asset size
Time limit
Value limit
Specified
investments:
Short term only
Banks and
building societies
Non-specified
investments:
Short term
F1
P1
A1
-
Up to 1 year
£5 million
Building societies
-
-
-
Up to 1 year
£5 million
Building societies
-
-
-
Up to 1 year
£4 million
Building societies
-
-
-
Up to 1 year
£3 million
In excess of £1
billion
Between £250
million and £1
billion
Less than £250
million
Long term
Banks and
A (including +/- A (including +/- A (including +/Up to 2 years £3 million
building societies or equivalent)
or equivalent)
or equivalent)
Banks and
AA (including +/- AA (including +/- AA (including +/Up to 4 years £4 million
building societies or equivalent)
or equivalent)
or equivalent)
Banks and
AAA
AAA
AAA
Up to 5 years £5 million
building societies
Local authorities
£3 million
Bank
Subject to the parent bank having necessary credit rating to qualify in its own right.
subsidiaries
Over the last five years the Council has not experienced any defaults or losses from
non-performance by any of its counterparties in relation to investments.
The Council is exposed to credit risk from non-payment by trade debtors and the
maximum risk is calculated and set aside as a bad debt provision, held in the Balance
Sheet. The bad debt provision is based on the age of the debt and is weighted to
reflect the recoverability of the debts owed to the Council. The provision is reviewed
annually to ensure that it reflects the experience as well as the history of default and
uncollectability:
Debt outstanding
Default and uncollectability provision
Less than 3 months
50%
Three months to six months
75%
Six months to one year
100%
More than one year
100%
_______________________________________________________________________________
32
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The Council does not generally allow credit for customers, such that £467,559 of the
£800,418 balance owed by trade debtors is past its due date for payment (£1,171,763
of the £1,294,768 for 2006-07). The past due amount can be analysed by age as
follows:
31 March 2007
£
485,851
52,815
158,268
474,829
1,171,763
31 March 2008
£
Debt outstanding
Less than 3 months
Three months to six months
Six months to one year
More than one year
226,836
38,257
62,072
140,394
Total
467,559
Liquidity risk
As the Council has ready access to borrowings from the Public Works Loans Board there
is no significant risk that it will be unable to raise finance to meet its commitments
under financial instruments. Instead, the risk is that the Council will be bound to
replenish a significant proportion of its borrowings at a time of unfavourable interest
rates.
The Council will ensure that its borrowing is negotiated, structured and documented, and
the maturity profile of the monies so raised are managed, with a view to obtaining offer
terms for renewal or refinancing, if required, which are competitive and as favourable to
the Council as can reasonably be achieved in the light of market conditions prevailing at
the time.
The maturity analysis of financial liabilities is as follows:
31 March 2007
31 March 2008
£
£
Analysis of loans by type
(29,000,000)
0
PWLB loans
(29,000,000)
PWLB interest due but not paid
(633,282)
Analysis of loans by maturity
(629,775)
Within 1 year: PWLB interest
(633,282)
(13,595,000)
Between 20 and 30 years
(10,000,000)
(15,405,000)
More than 30 years
(19,000,000)
(29,000,000)
(29,633,282)
All trade and other payables are due to be paid in less than one year.
_______________________________________________________________________________
33
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Market risk
The Council may be exposed to significant risk in terms of its exposure to interest rate
movements on its borrowings and investments. Movements in interest rates have a
complex impact on the Council. For instance, a rise in interest rates would have the
following effects:




Borrowings at variable rates – the interest payable charged to the Income and
Expenditure Account will rise.
Borrowings at fixed rates – the fair value of the liabilities will fall.
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.
Borrowings are not carried at fair value, so nominal gains and losses on fixed rate
borrowings would not impact on the Income and Expenditure Account or Statement of
Total Realised Gains and Losses. However, changes in interest payable and receivable on
variable rate borrowings and investments will be posted to the Income and Expenditure
Account and affect the General Fund balance £ for £. Movements in the fair value of
fixed rate investments will be reflected in the Statement of Total Realised Gains and
Losses.
The Council manages its exposure to fluctuations in interest rates with a view to
containing its interest costs, or securing its interest revenues, in accordance with the
amounts provided in its budgetary arrangements. As required by the Local Government
Bill 2003, the Council must approve before the beginning of each financial year the
Treasury Management Strategy and prudential indicators. The interest rates used in
the budget setting process are based on the Council’s Treasury Management Strategy.
For 2007-08 (and 2006-07) the Council did not hold any variable rate borrowings or
investments. The Treasury Management Strategy sets out the maximum proportion of
borrowings and investments that may be held in variable rate instruments.
For 2007-08 (and 2006-07) the Council held fixed rate borrowings with the Public
Works Loans Board and short-term fixed rate investments.
Price risk
The Council does not invest in equity shares and thus has no exposure to loss arising
from movements in exchange rates.
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.
_______________________________________________________________________________
34
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
6
Contribution to housing pooled capital receipts
Since the 1 April 2004 authorities are required to pay a proportion of specified housing
related capital receipts into a Government pool for redistribution. This levy does not
have an impact on council tax as it is funded by a transfer from usable capital receipts in
the Statement of Movement on the General Fund Balance.
7
Retirement benefits
As part of the terms and conditions of employment of its officers the Council offers
retirement benefits. Although these benefits will not actually be payable until
employees retire, the Council has a commitment to make the payments that need to be
disclosed at the time that employees earn their future entitlement.
The authority participates in the Local Government Pension Scheme administered by
Cumbria County Council – this is a funded scheme, meaning that the authority and
employees pay contributions into a fund, calculated at a level intended to balance the
pension liabilities with investment assets.
(a) Transactions relating to retirement benefits
The cost of retirement benefits is recognised in the Net Cost of Services when they
are earned by employees, rather than when the benefits are eventually paid as pensions.
However, the charge which is required to be made 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:
Local Government Pension
Scheme
£
2006-07
2007-08
(1,020,000)
(914,000)
(17,000)
(350,000)
(3,591,000)
(3,863,000)
- expected return on assets in the scheme
3,142,000
3,566,000
Net Charge to the Income and Expenditure
Account
(1,486,000)
(1,561,000)
Income and Expenditure Account
Net Cost of Services:
current service cost
past service gain (cost)
Net Operating Expenditure:
- interest cost
_______________________________________________________________________________
35
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Statement of Movement on the General Fund
Balance:
- reversal of net charges made for retirement
benefits in accordance with FRS 17
1,239,135
1,352,081
246,865
208,919
1,486,000
1,561,000
- employers' contributions payable to scheme
(922,561)
(997,197)
- retirement benefits payable to pensioners
(299,218)
(321,858)
(1,221,779)
(1,319,055)
(180,025)
(208,280)
(20,541)
(19,504)
(200,566)
(227,784)
(1,422,345)
(1,546,839)
Statement of Movement on the HRA Balance:
- reversal of net charges made for retirement
benefits in accordance with FRS 17
Actual amount charged against General Fund
Balance for pensions in the year:
Actual amount charged against HRA Balance for
pensions in the year:
- employers' contributions payable to scheme
- retirement benefits payable to pensioners
Total actual pensions paid in the year
(b) Assets and liabilities in relation to retirement benefits
The underlying assets and liabilities for retirement benefits attributable to the Council
at 31 March are as follows:
Local Government Pension Scheme
£
31 March 2007
31 March 2008
(72,669,029)
(79,109,190)
57,494,000
56,287,000
(15,175,029)
(22,822,190)
Estimated liabilities in scheme
Estimated assets in scheme
Net asset/(liability)
The liabilities show the underlying commitments that the Council has in the long term to
pay retirement benefits.
The total liability of £79,109,190 at 31 March 2008 (£72,669,029 at 31 March 2007)
has a substantial impact on the net worth of the Council as recorded in the Balance
Sheet. However, statutory arrangements for funding the deficit mean that the financial
position of the Council remains healthy as it will be made good by increased contributions
over the remaining working life of employees, as assessed by the scheme actuary.
_______________________________________________________________________________
36
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(c) Basis for estimating assets and liabilities
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, salary levels etc.
The liabilities have been assessed by Mercer Human Resources Consulting Limited, an
independent firm of actuaries, estimates for the Cumbria County Council fund being
based on the latest full valuation of the scheme as at 31 March 2007.
The main assumptions used in their calculations have been:
Local Government Pension
Scheme
2006-07
2007-08
3.1%
3.6%
4.85%
5.35%
Rate of increase in pensions
3.1%
3.6%
Rate for discounting scheme liabilities
5.4%
6.1%
Take-up of option to convert annual pension into
retirement grant
50%
50%
Rate of inflation
Rate of increase in salaries
Assets in the Cumbria County Council pension fund are valued at fair value, principally
market value for investments.
Those assets in the pension fund attributable to the Council, total £56,287,000 at 31
March 2008 (£57,494,000 at 31 March 2007).
The assets consist of the following categories, by proportion of the total assets held:
Long-term Return
31 March 2007
31 March 2008
%
%
%
Equities
7.5
59.5
54.9
Government bonds
4.6
19.8
19.9
Other bonds
6.1
9.7
10.3
Property
6.5
8.4
7.3
5.25
2.5
4.6
7.5
0.1
3.0
100
100
Cash/liquidity
Other
_______________________________________________________________________________
37
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(d) Actuarial gains and losses
The actuarial gains 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 at 31 March 2008:
2003-04
Differences
between the
expected
and actual
return on
assets
Differences
between
actuarial
assumptions
about
liabilities
and actual
experience
Changes in
the
demographic
and financial
assumptions
used to
estimate
liabilities
Effect of
change in
discount
rate at 1
April 2004
2005-06
2006-07
2007-08
£000s
%
£000s
%
£000s
%
£000s
%
£000s
%
5,640
31.5
1,742
3.7
7,162
12.9
320
0.6
(3,345)
5.9
0
0
459
0.7
(753)
1.0
0
0
490
0.6
0
0
(3,218)
4.8
(5,281)
7.1
3,274
4.5
(4,778)
6.0
0
0
(6,875)
10.1
0
0
0
0
0
0
5,640
8
2004-05
(7,892)
1,128
3,594
(7,633)
Extraordinary items
There are no extraordinary items for 2007-08.
The extraordinary item in 2006-07 related to the fine and court costs paid by the
Council for breaching Health and Safety Regulations. The fine and court costs were not
covered by insurance and have been met from the Council Opportunities Fund, one of its
Earmarked Reserves.
_______________________________________________________________________________
38
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
9
Explanation of the significance of the Statement of Movement on the
General Fund Balance
The Income and Expenditure Account discloses the income receivable and expenditure
incurred in running the Council for the year. The surplus or deficit achieved on the
Income and Expenditure Account represents the amount by which income is greater than
or less than expenditure.
However, the items of income and expenditure that are required to be credited or
charged to the General Fund and which therefore must be taken into account in
determining the Council’s budget requirement and in turn its Council Tax demand is
determined by statute and non-statutory practices rather than in accordance with
United Kingdom Generally Accepted Accounting Practice (UK GAAP).
The surplus or deficit on the Income and Expenditure Account is the best measure of
the Council’s financial result for the year in accordance with UK GAAP, the movement on
the General Fund Balance is also an important aspect of the Council’s stewardship.
To arrive at the Movement on the General Fund Balance it is necessary to include the
following areas:

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.

Amounts not included in the Income and Expenditure Account but required to be
included by statute when determining the Movement on the General Fund Balance for
the year.

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.
The summation of these items is the net effect of statutory provisions that specify the
net expenditure that authorities need to take into account when setting local taxes.
This net expenditure is applied to the surplus or deficit on the Income and Expenditure
Account to arrive at the Movement on the General Fund Balance in accordance with
statutory and non-statutory proper practices.
10
Breakdown of reconciling items in the Statement of Movement on the
General Fund Balance
The amounts in addition to the Income and Expenditure Account surplus or deficit for
the year that are required by statute and non-statutory proper practices to be charged
or credited to the General Fund in determining the movement on the General Fund
Balance for the year are as follows:
_______________________________________________________________________________
39
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Previous
Year
Current Year
£
£
£
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
(1,006,360)
325,520
(153,687)
0
61,473
(1,239,135)
Depreciation and impairment of
fixed assets
Grants deferred amortisation
Write downs of deferred charges
to be financed from capital
resources
Net gain on sale of fixed assets
Net gain on sale of contingent
assets
Net charges made for retirement
benefits in accordance with FRS
17
(1,349,540)
408,220
Note 34,
page 59
(328,062)
45,485
78,075
Note 7a,
page 36
(1,352,081)
(2,012,189)
(2,497,903)
Amounts not included in the Income and Expenditure Account but required to be
included by statute when determining the Movement on the General Fund Balance for
the year
549,756
(1,619,956)
1,221,779
Minimum revenue provision for the
repayment of debt
Transfer from Usable Capital
Receipts to meet payments to the
Housing Capital Receipts Pool
Employer's contributions payable
to the Superannuation Pension
Fund and retirement benefits
payable direct to pensioners
Note 35,
page 59
720,146
Note 6,
page 35
(1,407,928)
Note 7a,
page 36
1,319,055
151,579
631,273
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
663,335
195,102
Housing Revenue Account balance
Net transfer to or from
earmarked reserves
(901,100)
683,988
858,437
(1,002,173)
Page 63
Note 33e,
page 59
(217,112)
Net additional amount required to be credited
to the General Fund balance for the year
(2,083,742)
_______________________________________________________________________________
40
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
11
Expenditure on publicity
Under the requirements of section 5(1) of the Local Government Act 1986, the Council’s
expenditure on publicity was:
2006-07
2007-08
£
£
22,426
Recruitment advertising
49,350
Publicity
74,148
61,084
Other advertising
58,666
132,860
12
7,279
Total
140,093
Members allowances
The Council has 38 councillors and the total cost of Members allowances for 2007-08
was £119,606 (£116,042 for 2006-07).
13
Discretionary expenditure
Section 137 of the Local Government Act 1972, as amended, empowers local authorities
to make contributions to certain charitable funds, not-for-profit bodies providing a
public service in the United Kingdom and mayoral appeals.
The Council made no expenditure under this power for 2007-08 or for 2006-07.
14
Officers emoluments
Regulation 7(2) of the Accounts and Audit Regulations 2003 specifically requires
disclosure of amounts paid to officers whose remuneration fell in each bracket of a
scale in multiples of £10,000 starting with £50,000.
Remuneration band
2006-07
2007-08
Number of employees
Number of employees
£50,000 - £59,999
0
1
£60,000 - £69,999
2
2
£70,000 - £79,999
0
0
£80,000 - £89,999
0
0
£90,000 - £99,999
1
1
_______________________________________________________________________________
41
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
15
Audit costs
In 2007-08 the Council incurred the following fees relating to external audit:
2006-07
2007-08
£
£
99,004
56,351
155,355
Fees payable to the Audit Commission with regard to
external audit services carried out by the appointed
auditor
Fees payable to the Audit Commission for the
certification of grants and claims
152,034
75,064
Total
227,098
The total audit costs for 2007-08 of £227,098 include amounts paid in relation to
2006-07 that were not accrued into 2006-07 and were therefore included in 2007-08
when they were paid.
The amounts relating to 2006-07 and the cost of the 2007-08 audit works are shown
below:
Fees payable to the Audit Commission with
regard to external audit services carried out
by the appointed auditor
Fees payable to the Audit Commission for
the certification of grants and claims
Total
16
Paid in
2007-08
Relating to
2006-07
Audit works
2007-08
£
£
£
152,034
35,500
116,534
75,064
38,564
36,500
227,098
74,064
153,034
Value Added Tax
There is £2,458 of irrecoverable VAT within the Central Services to the Public, Net
Cost of Services line, relating to the VAT element of officer and Member mileage
claims; £2,593 for 2006-07.
The Council has decided that it is more beneficial to the Council not to recover this VAT
element. The cost of administration would outweigh the amount foregone.
_______________________________________________________________________________
42
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
17
The building control account
The building control service operates under the requirements of the Building Act 1984
and the Local Authority Building Control Regulations (Statutory Instrument 1998/3129).
The statutory requirement for charging schemes is that charges are fixed so that
income will not be less than expenditure over a three-year period.
Certain activities performed by the building control service cannot be charged for, such
as providing general advice and liaising with other statutory authorities. The statement
below shows the financial performance of the building control service divided between
the chargeable and non-chargeable activities.
2006-07
2007-08
£
£
Non-chargeable
155,128
Expenditure
167,606
(32,900)
Income
(31,590)
122,228
Deficit or surplus
136,016
Chargeable
198,736
(210,699)
(11,963)
Expenditure
202,522
Income
(198,919)
Deficit or surplus
3,603
Chargeable three-year period
(54,371)
2004-05
7,951
2005-06
7,951
(11,963)
2006-07
(11,963)
2007-08
3,603
(58,383)
(409)
_______________________________________________________________________________
43
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
18
Related parties
The Council is required to disclose material transactions with related parties. These are
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 restricted another party’s ability to bargain freely
with the Council.
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 of the transactions that the Council has with other parties.
Details of
transactions with government departments are set out in note 41, page 60 and note 44
page 62.
26 senior officers and all 38 members were asked to declare any direct financial
relationships, other than remuneration, with the authority.
For 2007-08 there was 1 officer and 3 members receiving housing benefit as a private
landlord and there was 1 member that transacted business as a supplier of the Council.
In 2006-07 there was 1 officer and 4 members receiving housing benefit as a private
landlord and there were 2 members that transacted business as a supplier of the
Council.
The value of the transactions with the Council is shown below.
2006-07
2007-08
£
£
Officers
3,380
Received housing benefit as a private landlord
3,513
Members
140,257
1,255
Received housing benefit as a private landlord
Traded with the Council as a supplier
144,892
19
132,666
850
137,029
Other items of Income and Expenditure
The Council does not currently have any transactions relating to:




Leases
Acquired or discontinued operations
Foreign currency translation
Research and development.
_______________________________________________________________________________
44
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
20
Tangible fixed assets
During 2007-08 as part of the development of the Council’s Asset Management Plan and
in line with good accounting practice, the individual asset classifications were reviewed
to ensure compliance with the SORP and to ensure that similar assets were accounted
for consistently.
As a consequence of the exercise, several assets have changed in classification and
these changes can be seen on page 46 (a) movement on operational fixed assets and page
47 (b) movement on non-operational fixed asset note. The movements are the values as
at 1 April 2007, historic net book value and are summarised below:
Asset classification
Moved out of this
asset classification
£
Moved into this
asset classification
£
Net
movement
£
Operational assets:
Land and buildings
Community assets
Non-operational assets:
Commercial and other
properties
Assets under
construction
Surplus assets, held for
disposal
(178,870)
0
1,115,491
4,771,369
936,621
4,771,369
(10,137,910)
0
(10,137,910)
0
572,021
572,021
0
3,857,899
3,857,899
Net movement
(10,316,780)
10,316,780
0
The review also identified historic, accumulated capital expenditure for six assets
where it has now been determined that the Council is not the owner. These assets have
now been written down to revenue to remove them from the Council’s asset base and
these changes can be seen on page 46 (a) movement on operational fixed assets and page
47 (b) movement on non-operational fixed asset note. The movements are summarised
below:
Asset classification
Written down to revenue
£
Operational assets:
Land and buildings
Community assets
Non-operational assets:
Commercial and other properties
(144,190)
(85,589)
(83,463)
Net movement
(313,242)
Depreciation of all fixed assets is calculated to write off the value of an asset less its
residual value over the economic life of that asset. Depreciation is calculated on a
straight line basis and charged to the appropriate revenue service.
_______________________________________________________________________________
45
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(a) Movement on operational fixed assets
Council
dwellings
Other land
and
buildings
£
Balance sheet value
At 31 March
83,562,914
2007
Reclassification
0
Written down
0
to revenue
Eliminate
(1,618,810)
depreciation
Revaluations
14,053,780
Equipment
Infrastructure
Community
assets
Total
£
£
£
£
£
23,560,739
2,823,907
2,278,354
473,364
112,699,278
936,621
0
0
4,771,369
5,707,990
(144,190)
0
0
(85,589)
(229,779)
(1,289,760)
(1,083,136)
(727,400)
(17,840)
(4,736,946)
74,450
0
0
0
14,128,230
Impairment
(1,912)
Additions
Capital
expenditure
Disposals
0
0
350,517
0
0
350,517
3,781,625
1,734,699
89,109
49,032
470,865
6,125,330
(1,923,640)
0
0
0
0
(1,923,640)
97,853,957
24,872,559
2,180,397
1,599,986
5,612,169
132,119,068
(1,618,810)
(1,289,760)
(1,083,136)
(727,400)
(17,840)
(4,736,946)
1,618,810
1,289,760
1,083,136
727,400
17,840
4,736,946
Charged in the
year
(1,859,930)
(464,180)
(652,020)
(57,510)
(15,410)
(3,049,050)
At 31 March
2008
(1,859,930)
(464,180)
(652,020)
(57,510)
(15,410)
(3,049,050)
Net Book Value
at 31 March
2007
81,944,104
22,270,979
1,740,771
1,550,954
455,524
107,962,332
Net Book Value
at 31 March
2008
95,994,027
24,408,379
1,528,377
1,542,476
5,596,759
129,070,018
Estimated
useful economic
life
30 years
10-80
years
3-50 years
3-50
years
25 years
At 31 March
2008
(1,912)
Depreciation
At 31 March
2007
Eliminate
depreciation
_______________________________________________________________________________
46
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(b) Movement on non-operational fixed assets
Commercial and
other
properties
Assets under
construction
Surplus
assets, held
for disposal
Total
£
£
£
£
At 31 March 2007
35,032,855
0
0
35,032,855
Reclassification
(10,137,910)
572,021
3,857,899
(5,707,990)
(83,463)
0
0
(83,463)
(530,830)
0
0
(530,830)
3,555,770
0
0
3,555,770
Additions
650,000
0
2,360,000
3,010,000
Capital expenditure
515,424
516,908
543,475
1,575,807
(728,181)
0
0
(728,181)
28,273,665
1,088,929
6,761,374
36,123,968
(530,830)
0
0
(530,830)
530,830
0
0
530,830
Charged in the year
(268,330)
0
0
(268,330)
At 31 March 2008
(268,330)
0
0
(268,330)
Net Book Value at
31 March 2007
34,502,025
0
0
34,502,025
Net Book Value at
31 March 2008
28,005,335
1,088,929
6,761,374
35,855,638
Estimated useful
economic life
10-50 years
Not applicable
30 years
Balance sheet value
Written down to
revenue
Eliminate
depreciation
Revaluations
Disposals
At 31 March 2008
Depreciation
At 31 March 2007
Eliminate
depreciation
_______________________________________________________________________________
47
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
21
Tangible fixed asset disposals
2006-07
2007-08
£
£
£
Sale proceeds:
(2,175,779)
(1,104,001)
(3,279,780)
Dwellings
(1,923,640)
Non-operational land and buildings
(773,666)
(2,697,306)
Total sale proceeds
Carrying value:
2,175,779
1,104,001
3,279,780
0
22
Dwellings
1,923,640
Non-operational land and buildings
728,181
Total carrying value
2,651,821
(Gains)/losses on disposals of fixed assets
(45,485)
Capital Financing Requirement
2006-07
£
2007-08
£
28,998,424
0
Opening Capital Financing Requirement
Write out adjustment A (see note below)
28,998,424
< Capital Financing Requirement abated
Capital Financing Requirement unabated >
4,700,113
11,960,216
994,716
(794,237)
(12,818,490)
(35,000)
(1,935,705)
(549,756)
30,520,281
Capital investment:
Operational assets
Non-operational assets
Deferred charges
30,520,281
1,407,086
31,927,367
6,475,847
4,585,807
1,680,160
Sources of finance:
Capital receipts
Government grants
Private contributions
Balances, reserves and revenue contributions
Minimum revenue provision
(912,707)
(6,494,724)
(194,443)
(3,773,864)
(720,146)
Closing Capital Financing Requirement
32,573,297
2,071,613
(549,756)
Explanation of movements in year:
Increase in underlying need to borrow
Increase in provision to repay borrowing
1,521,857
Increase in Capital Financing Requirement
1,366,076
(720,146)
645,930
_______________________________________________________________________________
48
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The write out of adjustment A in the table above is a one off exercise that comes as a
result of changes to the calculation for the provision to repay debt by the Department
for Communities and Local Government.
Historically, Councils borrowing was controlled through credit approvals from Central
Government that were added annually to form a credit ceiling; the limit on borrowing
activities. The credit ceiling was used to calculate the Minimum Revenue Provision each
year; the amount to set aside into the provision to repay external borrowing.
From the 1 April 2004, the Prudential Code came into force and it set out the
framework for the self-regulation of capital expenditure and borrowing powers. The
calculation of the Minimum Revenue Provision was changed to be based on the Capital
Financing Requirement, an aggregation of items from the Balance Sheet that reflect the
underlying need to borrow. There was a provision within the Prudential Code to remove
any difference between the old credit ceiling value and the new Capital Financing
Requirement; known as adjustment A. For the Council, the Capital Financing Requirement
as calculated at the 1 April 2004 was £1,407,086 higher than the credit ceiling.
The Department for Communities and Local Government issued new regulations during
2007-08, providing optional ways to calculate the Capital Financing Requirement for
previous years and future years. The Council has opted to base the Minimum Revenue
Provision on the actual Capital Financing Requirement from 2007-08 onwards.
23
Capital commitments
As at 31 March 2008 the Council was contractually committed to capital works which
amounted to £2,505,126. Capital commitments at 31 March 2007 were £1,191,193.
31 March 2007
Capital projects
31 March 2008
£
59,754
£
Housing IT system
34,492
663,409
Hindpool Urban Park phase 1 & 2
107,824
203,952
Environmental improvements
430,407
Building refurbishment
988,593
New build
891,238
191,508
0
72,570
Retentions held
52,572
1,191,193
2,505,126
_______________________________________________________________________________
49
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
24
Information on major assets held
2006-07
2007-08
Valuation
base
£
Expected life
£
Operational assets
81,944,104
Council dwellings
4,144,082
Town Hall
4,811,640
Forum 28
3,378,163
Park Leisure Centre
2,411,914
2,158,009
Existing Use
Value of
Social
Housing
Depreciated
Historic
Cost
Net Current
Replacement
Cost
Net Current
Replacement
Cost
Net Current
Replacement
Cost
Net Current
Replacement
Cost
Dock Museum
Market and Mall site
30 years
95,994,027
80 years
4,280,808
50 years
5,155,520
50 years
4,087,307
50 years
2,630,329
50 years
2,173,721
50 years
3,808,026
Not applicable
2,571,194
Non-operational assets
3,758,335
Emlyn Hughes House
2,565,792
Barrow Port land
Open
Market
Value
Open
Market
Value
The Council also has other community assets that are not shown in the Balance Sheet,
these include monuments, statues and civic regalia.
25
Valuation information
In accordance with the Councils’ accounting policy for valuing tangible fixed assets,
valuations are undertaken every five years except for Council dwellings and other HRA
assets that are revalued annually. The Council dwellings and other HRA assets were
valued as at the 1 April 2007 by an external valuer Mr R Bulger BSc (Hons) FRICS of the
Valuation Office Agency. All other Council assets were valued as at 1 April 2003 by an
external valuer Mr A Peill FRICS of Peill and Company. Apart from the asset set out
below, the Council is not aware of any other material change in value and therefore the
valuations have not been updated in the interim.
_______________________________________________________________________________
50
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The Council holds land at Flass Lane as a non-operational asset and this was included in
the valuation exercise carried out by Peill and Company as at 1 April 2003, the land was
then valued at £85,350. The land at Flass Lane has since been revalued by an external
valuer, Mr B Cowley FRICS of the Valuation Office Agency, at £3,627,600 as at the 1
April 2007 and in addition the land has been split into two separate assets:
Valuation
1 April 2003
£
Land at Flass Lane
Land at Flass Lane:
Nursing Home site
Land at Flass Lane:
Smallholdings 1-4
85,350
Split
£
Valuation
1 April 2007
£
Revaluation gain
£
(85,350)
51,070
1,200,750
1,149,680
34,280
2,426,850
2,392,570
0
3,627,600
3,542,250
85,350
Equipment and infrastructure assets were not part of the valuation exercises and are
held in the Balance Sheet at historical cost. The following statement shows the Council’s
latest valuation information:
Council
Dwellings
£
Valued at historical cost
Valued at current value at:
1 April 2007
1 April 2003
26
Other
Operational
Land and
Buildings
£
NonOperational
Land and
Buildings
£
3,387,060
95,728,300
1,283,000
15,348,770
Total of
valuation
certificate
£
3,387,060
508,000
10,797,400
97,519,300
26,146,170
Long-term debtors
Long-term debtors relates to the outstanding mortgage principal for Council dwellings
purchased under the Right To Buy scheme.
27
Stocks
At the Balance Sheet date the Council held the following stocks:
31 March 2007
£
4,608
8,428
9,071
31 March 2008
£
Tourist Information Centre
Dock Museum shop
Other stocks held for internal issue
22,107
8,718
9,730
8,099
26,547
_______________________________________________________________________________
51
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
28
Debtors
At the Balance Sheet date the Council had the following debtors:
31 March 2007
31 March 2008
£
£
5,294,237
459,177
Collection Fund arrears
HRA rent arrears
456,769
8,414,491
Government departments
1,294,768
Trade debtors
800,418
253,894
Sundry debtors
783,377
286,615
Payments in advance
242,079
(4,917,095)
Provision for bad and doubtful debt
11,086,087
29
5,632,217
3,873,289
(4,850,160)
6,937,989
Creditors
At the Balance Sheet date the Council had the following creditors:
31 March 2007
31 March 2008
£
£
(1,143,080)
Government departments
(702,733)
(692,108)
Potential benefit subsidy claw back
(208,557)
(629,775)
Public Works Loan Board
(790,709)
Collection Fund
(904,907)
(3,681,488)
Trade creditors
(3,284,103)
(1,213,833)
Receipts in advance
(1,269,256)
(8,150,993)
30
0
(6,369,556)
Provisions
The Council established an early retirement provision in 2005-06. This provides for the
payment of annual amounts due to be paid following early retirements from 2005-06
onwards.
The Council established an insurance provision in 2006-07. This provides for the
payment of potential insurance claims for which the Council is not insured, also see
Contingent Liabilities (note 38, page 59).
_______________________________________________________________________________
52
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The movements on provisions for the year were:
2006-07
2007-08
£
£
Early retirement provision
(94,572)
22,248
Brought forward
(72,324)
Provision used during the year
(72,324)
6,218
(66,106)
Insurance provision
0
(312,040)
Brought forward
(312,040)
New provision made
(320,000)
(312,040)
(384,364)
31
(632,040)
Total of provisions
(698,146)
Unapplied grants and grants deferred
All capital grants and contributions claimed and received in the year have been credited
to an unapplied grant accounts.
Capital grants used to finance capital expenditure are transferred to grants-deferred
accounts. Amounts are released to the relevant revenue service in line with any
depreciation charged on the assets financed by those grants.
At the Balance Sheet date the Council held the following unapplied grants:
31 March 2007
31 March 2008
£
£
(421,904)
(14,074,474)
13,634,855
(861,523)
Balance brought forward
Grants receivable for the year
Grants applied to finance capital expenditure
Balance carried forward
(861,523)
(9,155,668)
7,390,292
(2,626,899)
At the Balance Sheet date the Council held the following deferred grants:
31 March 2007
31 March 2008
£
£
(17,430,234)
325,520
Balance brought forward
Grants released to revenue
(12,012,461)
Grants applied to finance capital expenditure
(29,117,175)
Balance carried forward
(29,117,175)
521,344
(5,096,691)
(33,692,522)
_______________________________________________________________________________
53
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
32
Analysis of net assets employed
To provide an indication of the level of resources employed in providing the main
services of the Council, the net assets employed are split between General Fund, the
HRA and Collection Fund.
The net assets employed for 2006-07 have been restated for comparison purposes (see
page 22).
2006-07
£
2007-08
£
618,584
72,384,468
348,630
General Fund
HRA
Collection Fund
(4,921,224)
86,315,021
162,094
73,351,682
Total net assets
81,555,891
33
Reserves
The Council keeps a number of reserves in the Balance Sheet.
Some reserves are required to be held for statutory reasons, some are needed to
comply with proper accounting practice, and others have been set up voluntarily to
earmark resources for future spending plans.
The Revaluation Reserve and the Capital Adjustment Account have been established
from the 1 April 2007; accounting policy XX, page 16. The movements on reserves for
the year were:
Reserve
Capital
Adjustment
Account
note (a),
page 56
Financial
Instruments
Adjustment
Account
note (b),
page 57
Balance
1 April
2007
Net Movement
in Year
Balance
31 March
2008
£
£
£
Purpose of Reserve
(82,504,575)
Store of capital
resources set aside
to meet past
expenditure
(81,419,817)
0
(1,084,758)
905,791
905,791
Balancing account to
allow for
differences in
statutory
requirements and
proper accounting
practices for
borrowings and
investments
_______________________________________________________________________________
54
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Revaluation
Reserve
note (c),
page 58
Usable
Capital
Receipts
Reserve
note (d),
page 58
Pensions
Reserve
note 7b,
page 36
Major
Repairs
Reserve
HRA note 11,
page 71
0
(1,269,935)
15,175,029
(7,409)
(16,155,263)
(458,633)
7,647,161
7,409
(16,155,263)
Store of gains on
revaluation of fixed
assets not yet
realised through
sales
(1,728,568)
Proceeds of fixed
asset sales available
to meet future
capital investment
22,822,190
Balancing amount to
allow inclusion of
Pensions Liability in
the Balance Sheet
0
General
Fund
Balance
page 21
(1,601,698)
(423,488)
(2,025,186)
Housing
Revenue
Account
Balance
page 64
(2,576,559)
1,851,136
(725,423)
(1,289,351)
(683,988)
(1,973,339)
(72,989,740)
(8,394,633)
(81,384,373)
Earmarked
Reserves
note (e),
page 59
Total
Resources available
to meet capital
investment in council
housing
A prudent level of
balance maintained
for potential
emergency/
extraordinary
expenditure on nonhousing services
A prudent level of
balance maintained
for potential
emergency/
extraordinary
expenditure on
Council housing
services
Revenue set aside
for specific
purposes
_______________________________________________________________________________
55
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(a) Movement on 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 (note 1a, page 27).
The credit balance of £43,710,361 on the Fixed Asset Restatement Account at 31
March 2007 and the credit balance of £37,709,456 on the Capital Financing Account
have been transferred to form the new Capital Adjustment Account with a credit
balance of £81,419,817.
For comparative purposes the 2006-07 movements are restated on the amalgamated
basis.
2006-07
2007-08
£
£
1,006,360
1,711,640
Depreciation of General Fund assets
1,349,540
Depreciation of HRA assets
1,967,840
0
Impairment of HRA assets
0
Conversion of current value depreciation to
historic cost depreciation
(274,240)
Carrying value of assets on disposal
2,651,821
3,279,780
(8,387,668)
153,687
(794,237)
(5,000)
(1,930,705)
Revaluation gains for assets on disposal
Amortised deferred charges
Capital receipts used in capital financing
1,912
(1,254,497)
328,062
(912,707)
Revenue used in capital financing
(1,985,674)
Reserves used in capital financing
(1,788,189)
(549,756)
Minimum Revenue Provision
(720,146)
(325,520)
Deferred grants released to revenue
(448,480)
(5,841,419)
(1,084,758)
_______________________________________________________________________________
56
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(b) Movement on Financial Instruments Adjustment Account
The movement for 2007-08 includes the derecognition of deferred premiums and
discounts from the early repayment of debt, previously held on the Balance Sheet.
These relate to the Housing Revenue Account (HRA) and are amortised to the HRA in
line with the subsidy determination.
The Financial Instruments Adjustment Account (see accounting policy VIII, page 12)
was implemented from the 1 April 2007.
Further details about the Council’s financial liabilities and financial assets are contained
in note 5, page 29 and the Statement of Total Recognised Gains and Losses, page 22.
2007-08
£
Premiums from the early repayment of debt:
Deferred premiums from previous years amortised to
the HRA
(1,231,468)
Differences between amounts debited/credited to
the Income and Expenditure Account and amounts
payable/receivable to be recognised under statutory
provisions relating to premiums on the early
repayment of debt
980,218
Premiums from the early repayment of debt charged
to the HRA in accordance with statutory provisions
(251,250)
Discounts from the early repayment of debt:
Deferred discounts from previous years amortised to
the HRA
63,878
Differences between amounts debited/credited to
the Income and Expenditure Account and amounts
payable/receivable to be recognised under statutory
provisions relating to discounts on the early
repayment of debt
(74,427)
Discounts from the early repayment of debt charged
to the HRA in accordance with statutory provisions
(10,549)
(261,799)
_______________________________________________________________________________
57
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(c) Movement on Revaluation Reserve
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 (note 1, page 27).
The Revaluation Reserve has 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.
2006-07
2007-08
£
£
0
0
0
Gains on the revaluation of fixed assets
(17,684,000)
Conversion of current value depreciation to
historic cost depreciation
Gains written out on the disposal of fixed
assets
0
274,240
1,254,497
(16,155,263)
(d) Movement on Usable Capital Receipts reserve
2006-07
2007-08
£
£
(2,175,779)
(2,538)
Proceeds from the sale of Council dwellings
Proceeds from the repayment of mortgage principal
(1,923,640)
(3,887)
(61,473)
Proceeds from the repayment of Right To Buy
discount
(78,075)
(1,100,000)
Proceeds from the sale of non-operational land
(773,666)
794,237
1,619,956
Receipts used in capital financing
Share of receipts paid to Capital Receipts Pool
(925,597)
912,707
1,407,928
(458,633)
_______________________________________________________________________________
58
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
(e) Movement on Earmarked reserves
2006-07
2007-08
£
£
(500,000)
New contributions made
(788,800)
304,898
Reserve used in the year
104,812
(195,102)
34
(683,988)
Deferred charges
The deferred charges written down to revenue are financed from the Councils own
capital resources. This capital expenditure relates to renovation grant activities and
other capital grants and is fully amortised to revenue in the year it is incurred.
35
Minimum Revenue Provision
The Minimum Revenue Provision (MRP) is the statutory requirement for the Council to
make provision to repay external debt. The calculation is prescribed by statute and is
set as 4% of the General Fund Capital Financing Requirement each year.
36
Trust funds
The Council acts as an administrator of four trust funds created for charitable
purposes, they do not belong to the Council and are not included in any of the accounting
statements. Their financial information is shown in aggregation below:
2006-07
£
92,143
Assets
(9,430)
14,366
Gross income
Gross expenditure
4,936
37
2007-08
£
91,310
(19,202)
16,038
Net (surplus)/deficit for the year
(3,164)
Interests in companies
The Council holds no interests in companies.
38
Contingent liabilities
The Council is aware that there is the potential to receive claims for uninsured risks,
particularly for events in the past. As far as possible the insurance provision (note 30,
page 52) reflects the quantifiable liability, but there may remain unquantifiable
liabilities.
_______________________________________________________________________________
59
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
39
Authorisation of accounts for issue
These accounts were originally authorised for issue by the Borough Treasurer on 19
June 2008. They are now authorised for issue on the 15 September 2008 after
incorporating revisions from the audit.
40
Events after the Balance Sheet date
There have been no transactions between the Balance Sheet date and the date these
accounts were authorised for issue by the Borough Treasurer that meets the definition
of a post balance sheet event.
41
Analysis of other revenue government grants
The other revenue government grants received on a cash basis by the Council were:
2006-07
2007-08
£
£
(5,798,825)
Council Tax subsidy
(5,495,275)
(5,796,734)
Rent Rebate subsidy
(5,912,502)
(1,838,382)
Neighbourhood Renewal Fund
(1,838,382)
(519,769)
Safer, Stronger Communities Fund
(3,635,813)
(426,384)
Housing Benefit administration subsidy
(383,651)
(393,588)
Council Tax Benefit administration subsidy
(354,131)
(110,674)
(18,895)
0
(1,130)
0
(60,000)
(7,222)
(28,798)
0
Planning Delivery Grant
(200,899)
Local Authority Business Growth Incentive
(161,971)
Local Housing Allowance implementation grant
(101,606)
Contaminated land grant
(73,863)
Concessionary travel grant
(62,136)
Homelessness funding
(60,000)
Smoke free grant
(35,120)
Workstep sheltered placement scheme
(29,351)
Gypsy travellers research grant
(8,475)
(13,000)
Regional directors fund
0
(7,000)
Domestic violence grant
0
(15,020,401)
(18,353,175)
_______________________________________________________________________________
60
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
42
Reconciliation to the net deficit on the Income and Expenditure Account
2006-07
£
443,509
(275,727)
167,782
2007-08
£
(Surplus)/deficit for the year
- Income and Expenditure Account
- Collection Fund
1,660,254
186,536
0
(681,798)
Net movement for the year
Non cash transactions - capital charges, FRS 17
and provisions
Accruals - (decrease)/increase in stocks
Accruals - (decrease)/increase in debtors
Accruals - decrease/(increase) in creditors
Accruals – (decrease)/increase in interest
receivable
Accruals - decrease/(increase) in interest payable
Other items
(5,336,162)
Net cash (inflow)/outflow from revenue activities
(4,131,393)
1,904
(61,509)
(631,148)
0
£
1,846,790
(4,939,553)
4,440
974,459
1,259,997
24,785
(3,506)
(300,059)
(1,132,647)
The non cash and accrual items in the above table have been restated for 2006-07 for
comparative purposes to match those aggregated together in 2007-08.
43
Movement in cash reconciled to the movement in net debt
2006-07
£
(12,933)
2,326,268
(32,908,481)
(30,595,146)
2007-08
£
Balances brought forward
- Bank
- Liquid resources
- Borrowing
(215,049)
1,524,469
(29,000,000)
Total brought forward
Balances carried forward
- Bank
- Liquid resources
- Borrowing
(27,690,580)
Total carried forward
£
(215,049)
1,524,469
(29,000,000)
(27,690,580)
562,131
4,928,534
(29,000,000)
(23,509,335)
2,904,566
Net (increase)/decrease for the year
(202,116)
(801,799)
3,908,481
Net movement on bank
Net movement on liquid resources
Net movement on financing
2,904,566
Net movement for the year
4,181,245
777,180
3,404,065
0
4,181,245
_______________________________________________________________________________
61
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
44
Analysis of capital grants received
The capital grants received by the Council on a cash basis were:
2006-07
£
(3,003,362)
(2,532,000)
(4,237,428)
(889,167)
(1,068,743)
(183,000)
0
0
(120,536)
(100,000)
(92,260)
(63,987)
(36,891)
2007-08
£
West Lakes Renaissance
Housing Capital Grant
Urban Renewal Fund
Safer, Stronger Communities Fund
European Regional Development Fund
Disabled Facilities Grant
Arts Council
Big Lottery
Heritage Lottery Fund
Communities for Health
Cumbria County Council
Building Safer Communities
Planning Delivery Grant
(12,327,374)
45
(6,284,648)
(3,111,000)
(1,957,199)
(1,234,060)
(768,950)
(290,000)
(40,000)
(9,825)
0
0
0
0
0
(13,695,682)
Analysis of other capital cash receipts
The other capital cash received by the Council on a cash basis came from:
2006-07
£
(61,474)
0
(2,538)
(165,000)
(10,000)
2007-08
£
Proceeds from the repayment of Right To Buy discount
Northern Housing Consortium Charitable Trust
Proceeds from the repayment of mortgage principal
Northern Rock Foundation
Furness Maritime Trust
(239,012)
46
(78,075)
(64,790)
(3,887)
0
0
(146,752)
Reconciliation of liquid resources to the Balance Sheet
Liquid resources are stock, cash in hand and sort-term investments. At the Balance
Sheet date the Council held the following liquid resources:
31 March 2007
£
22,107
2,362
1,500,000
31 March 2008
£
Stocks
Cash
Investments – principal only (all short term)
1,524,469
26,547
1,987
4,900,000
4,928,534
_______________________________________________________________________________
62
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
F
a
SUPPLEMENTARY STATEMENTS
HRA Income and Expenditure Account
2006-07
2007-08
£
£
£
Income
(7,580,337)
Dwelling rents
(7,793,980)
(281,868)
Non-dwelling rents
(292,745)
(400,617)
Charges for services and facilities
Contribution from other Local
Authority
(397,155)
(25,835)
(8,288,657)
(26,868)
Total Income
(8,510,748)
Expenditure
2,243,163
2,548,143
168,329
Contribution to the housing repairs
account
Supervision and management
Negative HRA subsidy payable
20,105
Depreciation and impairment of
dwellings
Depreciation and impairment of other
HRA assets
Debt Management Costs
95,785
Increase in bad debt provision
1,618,810
92,830
6,787,165
(1,501,492)
482,263
280,769
(875)
76,000
(663,335)
Total Expenditure
Note 1,
page 65
2,688,647
2,676,258
Note 2,
page 65
Notes
3 to 4,
pages
65 to 66
331,371
1,821,582
107,910
17,160
66,654
7,709,582
Net Cost of HRA Services
Interest payable
Amortisation of premiums and
discounts
Interest income - mortgages
(801,166)
517,744
1,134,260
(738)
Pensions interest cost and expected
return on pensions assets
51,000
(Surplus) or deficit for the year on
HRA services
901,100
_______________________________________________________________________________
63
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
b
Statement of Movement on the HRA Balance
The Income and Expenditure Account shows the HRA’s actual financial performance for
the year, measured in terms of the resources consumed and generated over the last
twelve months. However, the authority is required to raise rent on a different
accounting basis, the main difference being:

Retirement benefits are charged as amounts become payable to pension funds and
pensioners, rather than as future benefits are earned.
The HRA Balance compares the council’s spending against the rent 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 HRA Balance:
2006-07
2007-08
£
£
(663,335)
18,113
(645,222)
(Surplus) or deficit for the year on the HRA
Income and Expenditure Account
Net additional amount required by statute to be
debited or (credited) to the HRA Balance for the
year
(Increase) or decrease in the HRA Balance
Note 7,
page 67
901,100
950,036
Note 8,
page 68
1,851,136
(1,931,337)
HRA Balance brought forward
(2,576,559)
(2,576,559)
HRA Balance carried forward
(725,423)
Note 9,
page 69
_______________________________________________________________________________
64
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
c
1
Notes to the HRA
Housing Repairs Account
The Housing Repairs Account operates within the HRA ring-fence and is a separate
record of income and expenditure on repairs and maintenance of all HRA properties.
The Housing Repairs Account is funded by a contribution from the HRA and any balance
and the end of the financial year is returned to the HRA. Any unused contribution is
earmarked as funds committed for ongoing housing maintenance.
At 31 March 2008 £24,897 (£1,485,225 at 31 March 2007) has been earmarked for
housing repairs. This is part of the overall HRA balance.
2
HRA subsidy payable
The subsidy payable from the HRA to Government is composed of elements of subsidy
payable and receivable for the financial year. The breakdown comes from the general
formula in paragraph 3.1 of the General Determination of HRA Subsidy 2007-08, issued
by the DCLG.
2006-07
£
3
2007-08
£
(1,657,866)
(2,704,523)
(1,771,052)
(1,133,036)
(15,883)
Allowance for management
Allowance for maintenance
Major Repairs Allowance
Charges for capital
Rental constraint allowance
(1,752,002)
(2,779,604)
(1,780,780)
(1,076,677)
(25,663)
(7,282,360)
7,449,693
995
Total allowance for expenditure
Rent receivable
Interest on receipts
(7,414,726)
7,745,261
836
168,328
1
Net subsidy payable for the year
Previous year adjustments
331,371
0
168,329
Total HRA subsidy in the year
331,371
Depreciation and impairment of dwellings
The depreciation and impairment of dwellings is an aggregation of the following:
2006-07
£
1,618,810
0
0
2007-08
£
Depreciation of dwellings
Deferred grants releases to revenue
Impairment of dwelling values
1,618,810
1,859,930
(40,260)
1,912
1,821,582
_______________________________________________________________________________
65
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
4
HRA tangible fixed assets
Council
dwellings
£
Balance sheet value
At 31 March
83,562,914
2007
Eliminate
(1,618,810)
depreciation
Revaluations
14,053,780
Impairment
(1,912)
Additions
Capital
3,781,625
expenditure
Disposals
(1,923,640)
At 31 March
2008
Other
operational
buildings
£
Equipment
£
Nonoperational
buildings
£
Total
£
1,283,000
45,246
675,550
85,566,710
(74,450)
(18,380)
(1,711,640)
74,450
13,520
14,141,750
(1,912)
16,484
54,429
3,845,693
16,484
861
8,778
(1,923,640)
97,853,957
1,283,861
70,508
725,119
99,933,445
(1,618,810)
(74,450)
0
(18,380)
(1,711,640)
1,618,810
74,450
18,380
1,711,640
(1,859,930)
(74,450)
(15,080)
(18,380)
(1,967,840)
At 31 March
2008
(1,859,930)
(74,450)
(15,080)
(18,380)
(1,967,840)
Net Book Value
at 31 March
2007
81,944,104
1,208,550
45,246
657,170
83,855,070
Net Book
Value at 31
March 2008
95,994,027
1,209,411
55,428
706,739
97,965,605
Estimated
useful
economic life
30 years
10-20 years
3 years
30 years
Depreciation
At 31 March
2007
Eliminate
depreciation
Revaluations
Charged in the
year
Depreciation of all fixed assets is calculated to write off the value of an asset less its
residual value over the economic life of that asset. Depreciation is calculated on a
straight line basis and charged to the HRA.
_______________________________________________________________________________
66
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
5
HRA tangible fixed asset disposals
2006-07
£
(2,175,779)
2,175,779
0
2007-08
£
Sale proceeds:
Dwellings
Carrying value:
Dwellings
(1,923,640)
1,923,640
(Gains)/losses on the sale of fixed assets
0
The sale proceeds for 2007-08 include the proceeds from two dwelling sales that were
transacted at the end of 2006-07. The two dwellings were reduced from the stock held
by the HRA (note 11, page 70), but they were not disposed of from the council dwellings
held in the Balance Sheet. The appropriate transactions have been entered in 2007-08.
The dwelling stock of 2,739 at 31 March 2008, matches the council dwellings held in the
Balance Sheet at 31 March 2008.
6
HRA Capital Financing Requirement (CFR)
2006-07
£
9,010,011
2,133,360
0
45,246
0
(247,901)
(1,930,705)
9,010,011
7
2007-08
£
Opening CFR
Capital investment:
Council dwellings
Other operational buildings
Operational equipment
Non-operational buildings
Sources of finance:
Government grants and other contributions
Balances and reserves
Closing CFR
9,010,011
3,781,625
861
25,262
54,429
(88,314)
(3,773,863)
9,010,011
Explanation of the significance of the Statement of Movement on the HRA
Balance
The HRA Income and Expenditure Account shows in more detail the income and
expenditure on HRA services included in the whole authority Income and Expenditure
Account. The surplus or deficit achieved on the HRA Income and Expenditure Account
represents the amount by which income is greater or less than expenditure.
However, the items of income and expenditure that are required to be credited or
charged to the HRA are defined in accordance with Part 6 of the Local Government and
Housing Act 1989 (1989 Act) rather than in accordance with United Kingdom Generally
Accepted Accounting Practice (UK GAAP).
_______________________________________________________________________________
67
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
To arrive at the Movement on the HRA Balance it is necessary to include the following
items:

Amounts included in the HRA Income and Expenditure Account but required by
statute to be excluded when determining the Movement on the HRA Balance for the
year.

Amounts not included in the HRA Income and Expenditure Account but required to
be included by statute when determining the Movement on the HRA Balance for the
year.

Transfers to or from the HRA Balance that are required to be taken into account
when determining the Movement on the HRA Balance for the year.
This net additional amount is applied to the surplus or deficit on the HRA Income and
Expenditure Account to arrive at the Movement on the HRA Balance in accordance with
Part 6 of the 1989 Act.
8
Breakdown of reconciling items in the Statement of Movement on the HRA
Balance
The amounts in addition to the HRA Income and Expenditure Account surplus or deficit
for the year that are required by Part 6 of the 1989 Act to be charged or credited to
the HRA in determining the movement on the HRA Balance for the year are:
2006-07
2007-08
£
£
£
Items included in the HRA Income and Expenditure Account but excluded from the
movement on HRA Balance for the year
0
Impairment of fixed assets
(1,912)
0
Grants deferred amortisation
40,260
0
(246,865)
Differences between amounts
debited/credited to the Income and
Expenditure Account and amounts
payable/receivable to be recognised
under statutory provisions relating to
premiums and discounts on the early
repayment of debt
Net charges made for retirement
benefits in accordance with FRS 17
(905,791)
Note 10,
page 69
(208,919)
(1,076,362)
Items not included in the HRA Income and Expenditure Account but included in the
movement on HRA Balance for the year
59,412
Transfer to/(from) Major Repairs
Reserve
(187,060)
Note 12,
page 71
_______________________________________________________________________________
68
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
200,566
5,000
Employer's contributions payable to
the Superannuation Pension Fund and
retirement benefits payable direct to
pensioners
Capital expenditure funded by the
HRA
1,985,674
264,978
18,113
9
Note 10,
page 69
227,784
2,026,398
Net additional amount required by
statute to be debited or (credited)
to the HRA Balance for the year
950,036
HRA balance
The balance carried forward on the HRA contains an element of funds committed to
ongoing housing maintenance. This occurs when the contribution to the Housing Repairs
Account for the year is not fully spent; any under-spend remains as maintenance funding.
31 March 2007
31 March 2008
£
£
10
(2,576,559)
Total HRA balance carried forward
(1,485,225)
Of which: funds committed to ongoing
housing maintenance
(725,423)
(24,897)
Retirement benefits
As part of the terms and conditions of employment of its officers the Council offers
retirement benefits. Although these benefits will not actually be payable until
employees retire, the Council has a commitment to make the payments that needs to be
disclosed at the time that employees earn their future entitlement.
The authority participates in the Local Government Pension Scheme administered by
Cumbria County Council – this is a funded scheme, meaning that the authority and
employees pay contributions into a fund, calculated at a level intended to balance the
pension liabilities with investment assets.
Transactions relating to retirement benefits
The cost of retirement benefits is recognised in the Net Cost of Services when they
are earned by employees, rather than when the benefits are eventually paid as pensions.
However, the charge which is required to be made to the HRA 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 HRA Balance.
The following transactions have been made in the HRA Income and Expenditure Account
and Statement of Movement on the HRA Balance during the year:
_______________________________________________________________________________
69
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Local Government Pension
Scheme
£
2006-07
2007-08
HRA Income and Expenditure Account
Net Cost of Services:
current service cost
Net Operating Expenditure:
- interest cost
- expected return on assets in the scheme
(170,865)
(157,919)
(602,000)
526,000
(667,000)
616,000
Net Charge to the Income and Expenditure Account
(246,865)
(208,919)
246,865
208,919
246,865
208,919
Actual amount charged against HRA Balance for
pensions in the year:
- employers' contributions payable to scheme
- retirement benefits payable to pensioners
(180,025)
(20,541)
(208,280)
(19,504)
Total actual pensions paid in the year
(200,566)
(227,784)
Statement of Movement on the HRA Balance
- reversal of net charges made for retirement
benefits in accordance with FRS 17
11
Dwelling stock
The Council was responsible for managing 2,739 dwellings in 2007-08. 42 properties
were sold during 2007-08; 54 properties were sold in 2006-07.
31 March 2007
Movement in
year
31 March 2008
1 bedroom
143
0
143
2 bedroom
405
(13)
392
3+ bedroom
952
(25)
927
1 bedroom
965
(3)
962
2 bedroom
308
(1)
307
8
0
8
Houses
1,500
(38)
1,462
Flats
1,281
(4)
1,277
Dwelling stock
2,781
(42)
2,739
Houses
Flats
3+ bedroom
Total
_______________________________________________________________________________
70
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
12
Major Repairs Reserve
An element of the HRA subsidy receivable is the Major Repairs Allowance (MRA). The
MRA is intended to pay for major capital expenditure on Council houses. The subsidy
system allows the creation of the Major Repairs Reserve (MRR) to hold the MRA until it
is used for capital expenditure.
2006-07
2007-08
£
£
£
MRR transfers in the year:
(1,618,810)
(92,830)
(152,242)
92,830
(1,771,052)
From HRA for depreciation of dwellings
From HRA for depreciation of other fixed
assets
Difference between MRA received and
depreciation of dwellings
To HRA for depreciation of other fixed
assets
(1,859,930)
(107,910)
79,150
107,910
MRA subsidy receivable for the year
(1,780,780)
Capital expenditure financed by MRR:
746,021
Heating and insulation
706,336
729,528
Kitchens and bathrooms
594,049
289,705
Rewires
308,942
72,465
Internal works/external rendering
0
49,106
Cavity cleaning
0
34,147
Roofs
178,862
9,733
Shops
0
1,930,705
Total capital expenditure
1,788,189
(167,062)
Balance brought forward
(7,409)
(7,409)
13
Balance carried forward
0
Vacant possession value of dwellings
Council dwellings are held in the Balance Sheet at a value that reflects the nature of
occupancy in public sector housing; this is known as the Existing Use Value of Social
Housing (‘EUV-SH’). The EUV-SH shows the economic cost to the Government of
providing Council housing at less than open market rents.
Lower public sector rent levels and the Right To Buy (‘RTB’) option for tenants are
determining factors in establishing the social housing valuation.
_______________________________________________________________________________
71
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The valuation in the Balance Sheet of the dwellings would be higher, if the Existing Use
Value in Vacant Possession value (‘EUV-VP’) that reflects market conditions was used.
The Existing Use Value of Social Housing at the Balance Sheet date was:
31 March 2007
31 March 2008
£
£
14
81,944,104
Balance Sheet value EUV-SH of dwellings
95,994,027
88,772,779
Difference of dwellings EUV-SH and EUVVP: economic cost
103,993,529
170,716,883
Value of dwelling stock at EUV-VP
199,987,556
Rent arrears
Provision has been made for the potential bad and doubtful debts of rent collection.
The arrears at the year-end together with the aggregate Balance Sheet provision and
overall percentage provisions are:
2006-07
2007-08
£
£
459,177
Arrears
456,769
340,622
Provision for bad and doubtful debts
345,177
74%
15
Percentage of provision
76%
Extraordinary and exceptional items
There were no extraordinary or exceptional items in the HRA for the year.
_______________________________________________________________________________
72
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
d
Collection Fund
2006-07
2007-08
£
(24,133,611)
£
Income
Income from Council Tax
Transfers from General
Fund:
(5,489,054)
- Council Tax benefits
(18,808,617)
Income collectable from
business ratepayers
(48,431,282)
Total Income
£
(25,366,452)
(5,610,701)
Note 1,
page 74
(18,973,337)
Note 2,
page 74
(49,950,490)
Expenditure
Precepts and demands:
21,623,083
- Cumbria County Council
22,877,259
4,089,381
4,147,973
3,459,089
- Barrow Borough Council
- Cumbria Police
Authority
Business rate:
3,656,977
18,703,799
- Payment to national pool
18,869,870
104,818
- Costs of collection
103,467
Note 3,
page 74
Bad and doubtful debts:
(13,255)
- Write offs
(156,344)
173,924
- Provisions
579,636
14,686
48,155,525
(275,757)
(72,873)
(348,630)
Contributions:
- Towards previous year's
estimated Collection Fund
surplus
Total Expenditure
58,188
50,137,026
(Surplus) or deficit for
the year
186,536
Balance brought forward
(348,630)
Balance carried forward
(162,094)
Note 4,
page 75
_______________________________________________________________________________
73
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
e
1
Notes to the Collection Fund
Council Tax benefits
Government regulations provide for specific reductions to be made to the Council Tax
payable by people that satisfy certain criteria, such as low income. These are Council
Tax benefits and they are approximately 95% subsidised by central government.
2
Income from business ratepayers
Under the arrangements for uniform business rates the Council collects business rates
for its area that are based on local rateable values multiplied by a uniform rate. The
total amount, less certain reliefs and other deductions, is paid to a central pool (the
NNDR pool) managed by central government. The pool pays back to the Council their
share of the pool based on a standard amount per head of the local adult population.
The total non-domestic rateable value at the 31 March 2008 was £48,118,720
(£48,417,670 at the 31 March 2007).
The national non-domestic rate multiplier for 2007-08 was 44.4 pence in the pound (43.3
pence in the pound for 2006-07).
A small business rate relief scheme was also introduced on the 1 st April 2005 whereby,
providing certain conditions are met, occupiers of properties with a rateable value of
less than £15,000 pay a reduced rate of 44.1 pence in the pound (42.6 pence in the
pound for 2006-07) and can also qualify for rate relief.
3
Bad and doubtful debts
Provision has been made for the potential bad and doubtful debts of the Collection Fund.
The arrears at the year-end together with the aggregate Balance Sheet provision and
overall percentage provisions are:
31 March 2007
31 March 2008
£
£
Council Tax
4,103,056
Arrears
4,385,677
2,668,860
Provision for bad and doubtful debts
2,938,189
65%
Percentage of provision
67%
Business ratepayer
1,191,181
863,111
72%
Arrears
1,246,540
Provision for bad and doubtful debts
1,012,846
Percentage of provision
81%
_______________________________________________________________________________
74
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
4
Collection Fund balance
The Collection Fund balance for each year belongs to the precepting authorities and is
divided against the precept for the following year. Due to the timing of setting Council
Tax each year there is two year gap between establishing the balance for the year and
returning the surplus or deficit.
The collection fund balance for the financial year 2006-07 will be returned to the
precepting authorities in 2008-09 and the balance for the financial year 2007-08 will be
returned in 2009-10.
Cumbria
County
Council
£
Barrow
Borough
Council
£
Cumbria
Police
Authority
£
Total
£
Balance for:
2005-06 to be returned in 2007-08
2006-07 to be returned in 2008-09
(43,131)
(216,560)
(8,157)
(39,265)
(6,899)
(34,618)
(58,187)
(290,443)
At 31 March 2007
Surplus returned in 2007-08
2007-08 to be returned in 2009-10
(259,691)
43,131
95,809
(47,422)
8,157
17,078
(41,517)
6,899
15,462
(348,630)
58,187
128,349
At 31 March 2008
(120,751)
(22,187)
(19,156)
(162,094)
5
Council Tax base
The Council Tax base is the number of properties against which the Council Tax can be
collected. All properties on the valuation list are split into eight bands, A to H, and each
band is given a standard factor to convert it to a band D equivalent. The total of the
band D equivalent, net of discounts and adjustments, is then multiplied by an assumed
collection rate to give the tax base for the area. The collection rate was assumed to be
98% for 2007-08 as it was in 2006-07. The Council Tax base for the year was set as:
2006-07 Band D
equivalent number of
chargeable dwellings
22
10,613
3,833
3,673
2,042
1,045
306
107
3
Band
A
B
C
D
E
F
G
H
Standard factor
2007-08 Band D
equivalent number of
chargeable dwellings
Disabled reductions
6/9
7/9
8/9
9/9
11/9
13/9
15/9
18/9
29
10,752
3,815
3,677
2,038
1,071
317
109
3
21,644
Equivalent chargeable dwellings
21,811
21,211
98% of which gives the Council Tax base
21,375
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The total of the precepts and demands on the collection fund is divided by the tax base
to arrive at the band D Council Tax, and by applying the standard factor to each band
the tax figures are calculated.
2006-07 Council Tax
Band
Property value
£
2007-08 Council Tax
£
914.61
A
Up to £39,999
953.85
1,067.04
B
£40,000 to £51,999
1,112.84
1,219.48
C
£52,000 to £67,999
1,271.81
1,371.91
D
£68,000 to £87,999
1,430.79
1,676.78
E
£88,000 to £119,999
1,748.73
1,981.65
F
£120,000 to £159,999
2,066.69
2,286.52
G
£160,000 to £319,999
2,384.64
2,743.82
H
£320,000 and over
2,861.57
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76
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
G
ANNUAL GOVERNANCE STATEMENT
Introduction
Barrow Borough Council is responsible for delivering statutory and discretionary services
to the public in the area of the Borough. In discharging this responsibility, the Council
must conduct its affairs in accordance with the law and proper standards. The Council
must also ensure that public money is properly accounted for and used economically,
efficiently and effectively.
To meet this requirement, the Council must have in place proper arrangements for the
governance of its affairs to enable the effective discharge of its functions.
Governance is about how the Council ensures that the right things are done in the right
way, for the right people, in a timely, open, honest and accountable manner. This
comprises the systems and processes, and cultures and values, by which the Council is
directed and controlled and through which they account to, engage with and, where
appropriate, lead the community.
The Annual Governance Statement is the mechanism used to demonstrate that, during
the financial year ended 31st March 2008, the Council has an adequate governance
regime in place and all business was conducted in compliance with the existing
arrangements. Instances of non-compliance or weakness identified require an action plan
to eliminate re-occurrence.
The Governance Arrangements
The Council adopted a Local Code of Corporate Governance (‘the Code’) in December
2005. In 2007-08, the code was reviewed to comply with a guidance note on ‘Delivering
Good Governance in Local Government’ issued in June 2007 by the Chartered Institute
of Public Finance and Accountancy (CIPFA) and the Society of Local Authority Chief
Executives (SOLACE).
There are six core principles that good governance is based on:
(i) Focusing on the purpose of the Council and on outcomes for the community and
creating and implementing a vision for the local area;
(ii) Members and officers working together to achieve a common purpose with
clearly defined functions and roles;
(iii) Promoting Council values and demonstrating the values of good governance
through upholding high standards of conduct and behaviour;
(iv) Taking informed and transparent decisions which are subject to effective
scrutiny and managing risk;
(v) Developing the capacity and capability of Members and officers to be effective;
(vi) Engaging with local people and other stakeholders to ensure robust public
accountability.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The Code establishes the overall governance framework for the Council. Within the
framework, other arrangements have been adopted, the principal of which is the
Constitution of Council. The Constitution is divided into 15 articles which set out the
basic rules governing the Council’s business.
Article 1 of the Constitution commits the Council to exercise all its powers and duties in
accordance with the law and the constitution. Articles 2-15 explain the rights of citizens
and how the key parts of the Council operate. These are:














Article 2 - Members of the Council
Article 3 - Citizens and the Council
Article 4 - The Council meeting
Article 5 - Chairing the Council
Article 6 - Overview and scrutiny of decisions
Article 7 - Policy and other committees
Article 8 - The Standards Committee
Article 9 - Area Committees and Forums
Article 10 - Joint arrangements
Article 11 - Officers
Article 12 - Decision making
Article 13 - Finance, contracts and legal matters
Article 14 - Review and revision of the Constitution
Article 15 - Suspension, interpretation and publication of the Constitution
In addition to the two main governance documents (the Code and the Constitution),
there are further arrangements in place to facilitate the operational running of the
Council (see table on page 79). These include:
Vision and Priorities
 Community plan
 Key priorities
 Performance management framework
 Consultation policy
Financial and Resources Management
 Corporate business plan
 Medium term financial plan
 Asset management plan
 Annual budget
 Value for money strategy
Regulatory Procedures
 Anti-fraud and corruption policy
 Complaints procedure
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Human Resources
 Corporate training plan
 Induction programme
 Annual appraisal scheme
 Union consultation procedure
Risk Management
 Managing corporate risk
 Business continuity plan
 Health and safety register
All the above are publicised throughout the Council and are subject to regular review.
ANNUAL GOVERNANCE STATEMENT (AGS) FRAMEWORK
Governance Framework


Annual Governance Statement
Local Code of Governance
Council Constitution


Published within the Statement of
Accounts or Annual Report
Approved by Audit Committee Chair
and Chief Executive
Key Documents/Functions








Corporate Plan
Medium Term Financial Plan
Revenue and Capital Budgets
Performance Management
Policy and Decision Making
Strategic Planning Framework
Financial Management Reporting
Risk Management and Registers








Anti-Fraud and Corruption Policy
Data Quality Systems
Financial Procedure Rules
Codes of Conducts for Members and Officers
Whistleblowing Policy
Freedom of Information Act
Corporate Procurement Strategy
Health and Safety Policy







E Government Strategy
Asset Management and Plan
Human Resources Policies
Equality and Diversity
Data Protection Policy
Corporate Property Strategy
Community Strategy
Independent review and approval of
the AGS by Audit Committee
Members
Corporate Strategy Performance Group




Monitors residual Risk and management
Monitors risk profile
Receives risk monitoring reports
Performance Indicators and Performance Plan

Monitors compliance with Constitution, standards and legislation.
Draft Annual Governance Statement
Internal Control Environment reviewed by
Finance, Strategy and Performance staff,
Monitoring Officer, Internal Audit
Draft AGS produced.
Monitoring Officer
Performance
Management and
Data Quality

Operates
throughout
the
organisation

Internal and
External
reviews

Action
orientated

National/
Local KPIs

Periodic
Progress
reports
Risk Management



Risk
Management
Strategy
Embedded in
Planning
Processes and
project/
partnership
methodologies
Training
Programme
Legal and
Regulatory
Assurance

Monitoring
officer’s
reports

Sections of
Committee
Reports

Legal
Advice
Members’
Assurance


Standards
Committee
Scrutiny
Function
Assurances by
Directors/Service
Heads

Departmental
Policies

Control and
Risk Self
assessment
questionnaires
Other Sources of
Assurance (inc third
party)

Reports by
inspectors

Service review
reports

Annual Review of
Significant
Partnerships

Fraud reports and
investigations

Ombudsman
reports

Post
implementation
reviews of projects

Investors in People
Accreditation
Financial Management







Internal Audit

Medium Term
Financial Plan
Revenue Budget
and Capital
Programme
Treasury
Management
Policy
Statement of
Accounts
Compliance of
Codes with
Accounting
Practice
Statutory Returns
Grant Claims




Operates under
approved Terms
of Reference
Approved Risk
based plans
Periodic and
annual reports to
Audit
Committee,
including Head
of Internal
Audit’s opinion
CIPFA Code
compliance
assessment
External Audit
Review
_______________________________________________________________________________
79
External Audit






Annual Plan
Annual
Governance
Report
Annual Audit
and Inspection
Letter
Audit opinion
and
VFM
Conclusion
Use
of
Resources
Assessment
Ad
Hoc
Reports
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Another important part of the governance arrangements is the maintenance of an
Internal Audit function, which operates in accordance with the statements, standards
and guidelines published by the Auditing Practices Board, CIPFA (particularly the Code
of Practice for Internal Audit in Local Government in the United Kingdom 2006) and the
Institute of Internal Auditors. The Internal Audit function examines and evaluates the
adequacy of the Council’s system of internal controls as a contribution to ensuring that
resources are used in an economical, efficient and effective manner. Internal Audit is
an independent and objective appraisal function established by the Council for reviewing
the system of internal control. This is in compliance with the Accounts and Audit
Regulations 2003 as amended, which specifically require a local authority to maintain an
adequate and effective system of internal audit. This work is delivered by way of a riskbased approach to the Internal Audit planning process; resulting in the production of an
Annual Audit Plan which is approved by the Audit Committee. In addition, Internal Audit
has undertaken a self assessment against the requirements of the CIPFA Code of
Practice for Internal Audit in Local Government in the United Kingdom 2006, and can
demonstrate substantial compliance.
Internal Audit reports with restricted assurance 2007-08
Internal Audit reports highlighted control weaknesses in the following areas:


Contract Payment Procedures/Contract Register
Corporate Health and Safety Review
The reports include action plans to implement any agreed recommendations. These areas
will be monitored by the Audit Committee during 2008-09.
Adequacy of and Compliance with the Governance Arrangements
In order to demonstrate that the existing arrangements are fit for purpose and are
complied with when carrying out the responsibilities and functions of the Council, a self
assessment process was adopted.
For the current year and because it is the first year of producing the Annual
Governance Statement, it was decided to restrict the number of officers involved in the
process. Members of the Management Team, the Deputy Borough Treasurer and the
Internal Audit Manager were selected to undertake the assessment.
The self assessment schedule contains six sections to reflect the six principles in the
Code of Corporate Governance. Each section has a number of relevant statements which
are designed to assess the degree of compliance with the governance framework. A
scoring system of 1 to 10 was adopted where 10 is best practice. The scoring was
supported by an assurance statement completed by the members of the Management
Team.
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Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
The result of the self assessment was:
1.
2.
3.
4.
5.
6.
Focusing on the purpose of the Council and on outcomes for the
community and creating and implementing a vision for the local area;
(score 7/10).
Members and officers working together to achieve a common purpose
with clearly defined functions and roles; (score 7/10).
Promoting Council values and demonstrating the values of good
governance through upholding high standards of conduct and behaviour;
(score 8/10).
Taking informed and transparent decisions which are subject to
effective scrutiny and managing risk; (score 6/10).
Developing the capacity and capability of Members and officers to be
effective; (score 7/10).
Engaging with local people and other stakeholders to ensure robust public
accountability; (score 7/10).
It is intended to extend the involvement in the self assessment process to include all
members of the Management Group to complete the assurance statements and to
establish a governance working group to score the self assessment document.
Action Plan
Based on the self assessment above and the assurance statement from Management
Team, the following action plan has been agreed for 2008-09 to deal with the issues
identified.
Action required
Responsible officer
Community Plan to be updated and revised
version to be published.
Corporate partnership protocol document
to be developed.
Progress the benchmarking of the
identified pilot services.
Director of Regeneration
and Community Services
Policy & Strategy Officer
Borough Treasurer
Standards & Facilities
Manager
Standards & Facilities
Manager
Procurement Policy to be reviewed.
Agree corporate sustainability strategy.
Ensure that an action plan is in place to
support the relevant Local Area Agreement
targets.
Review and update corporate risk register.
Due Date
July 2008
December
2008
October
2008
March 2009
September
2008
Chief Executive
September
2008
Policy Review Officer
August 2008
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81
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Certification Statement
The review of the governance arrangements for the financial year 2007-08 has not
highlighted any areas of major concern for the Council. We believe that the existing
arrangements are fit for purpose and are adequate to meet the Council’s corporate aims.
The issues highlighted in the action plan will be dealt with by the appropriate officers
and progress will be monitored by the Management Team and the Audit Committee as
appropriate.
Councillor J D Heath
Chairman of the Audit Committee
27 June revised 25 September 2008
T O Campbell
Chief Executive
19 June revised 15 September 2008
_______________________________________________________________________________
82
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
H
AUDIT CERTIFICATE
Independent auditor’s report to the Members of Barrow-in-Furness
Borough Council
Opinion on the financial statements
I have audited the accounting statements and related notes of Barrow-inFurness Borough Council for the year ended 31 March 2008 under the Audit
Commission Act 1998. The accounting statements comprise the Income and
Expenditure Account, the Statement of the Movement on the General Fund
Balance, the Balance Sheet, the Statement of Total Recognised Gains and
Losses, the Cash Flow Statement, the Housing Revenue Account, the
Collection Fund and the related notes. These accounting statements have
been prepared under the accounting policies set out in the Statement of
Accounting Policies.
This report is made solely to the members of Barrow-in-Furness Borough
Council in accordance with Part II of the Audit Commission Act 1998 and for
no other purpose, as set out in paragraph 36 of the Statement of
Responsibilities of Auditors and of Audited Bodies prepared by the Audit
Commission.
Respective responsibilities of the Borough Treasurer and auditor
The Borough Treasurer’s responsibilities for preparing the financial
statements in accordance with relevant legal and regulatory requirements and
the Statement of Recommended Practice on Local Authority Accounting in the
United Kingdom 2007 are set out in the Statement of Responsibilities for the
Statement of Accounts.
My responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
I report to you my opinion as to whether the Council’s accounting statements
present fairly, in accordance with relevant legal and regulatory requirements
and the Statement of Recommended Practice on Local Authority Accounting
in the United Kingdom 2007 the financial position of the Council and its
income and expenditure for the year.
I review whether the governance statement reflects compliance with
‘Delivering Good Governance in Local Government: A Framework’ published
by CIPFA/SOLACE in June 2007. I report if it does not comply with proper
practices specified by CIPFA/SOLACE or if the statement is misleading or
inconsistent with other information I am aware of from my audit of the financial
statements. I am not required to consider, nor have I considered, whether the
governance statement covers all risks and controls. Neither am I required to
form an opinion on the effectiveness of the Council’s corporate governance
procedures or its risk and control procedures.
_______________________________________________________________________________
83
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
I read other information published with the accounting statements, and
consider whether it is consistent with the audited accounting statements. This
other information comprises the Explanatory Foreword and the Finance
section of the Annual Report. I consider the implications for my report if I
become aware of any apparent misstatements or material inconsistencies with
the Council’s accounting 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, 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 and disclosures in the Council’s accounting statements and
related notes. It also includes an assessment of the significant estimates and
judgements made by the Council in the preparation of the Council’s
accounting statements and related notes, and of whether the accounting
policies are appropriate to the Council’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 Council’s accounting
statements and related notes 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
accounting statements and related notes.
Opinion
In my opinion the Council’s financial statements present fairly, in accordance
with relevant legal and regulatory requirements and the Statement of
Recommended Practice on Local Authority Accounting in the United Kingdom
2007, the financial position of the Council as at 31 March 2008 and its income
and expenditure for the year then ended.
Conclusion on arrangements for securing economy, efficiency and
effectiveness in the use of resources
Council’s Responsibilities
The Council is responsible for putting in place proper arrangements to secure
economy, efficiency and effectiveness in its use of resources, to ensure
proper stewardship and governance and regularly to review the adequacy and
effectiveness of these arrangements.
Auditor’s Responsibilities
I am required by the Audit Commission Act 1998 to be satisfied that proper
arrangements have been made by the Council for securing economy,
efficiency and effectiveness in its use of resources. The Code of Audit
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84
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Practice issued by the Audit Commission requires me to report to you my
conclusion in relation to proper arrangements, having regard to relevant
criteria specified by the Audit Commission for principal local authorities. I
report if significant matters have come to my attention which prevent me from
concluding that the Council has made such proper arrangements. I am not
required to consider, nor have I considered, whether all aspects of the
Council’s arrangements for securing economy, efficiency and effectiveness in
its use of resources are operating effectively.
Conclusion
I have undertaken my audit in accordance with the Code of Audit Practice and
having regard to the criteria for principal local authorities specified by the Audit
Commission and published in December 2006, I am satisfied that, in all
significant respects, Barrow-in-Furness Borough Council made proper
arrangements to secure economy, efficiency and effectiveness in its use of
resources for the year ending 31 March 2008.
Best Value Performance Plan
I have issued our statutory report on the audit of the Council’s best value
performance plan for the financial year 2007/08 on 12 December 2007. I did
not identify any matters to be reported to the Council and did not make any
recommendations on procedures in relation to the plan.
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 Audit
Practice issued by the Audit Commission.
Gina Martlew
Senior Audit Manager
Audit Commission
2nd Floor Aspinall House
Aspinall Close
Middlebrook
Bolton
BL6 6QQ
24 September 2008
_______________________________________________________________________________
85
Statement of Accounts 2007-08
Barrow-in-Furness Borough Council
__________________________________________________________________________________
Borough Treasurer’s Department
Town Hall
Duke Street
Barrow-in-Furness
Cumbria
LA14 2LD
[email protected]
www.barrowbc.gov.uk
Published September 2008
_______________________________________________________________________________
86