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Contents
Welcome to the 2007/08 Statement of Accounts 3-4
Foreword by the Corporate Director 5 - 11
Statement of Responsibilities for the Financial Statements 12
The Annual Governance Statement 13 - 22
Statement of Accounting Policies 23 - 27
Core Financial Statements:-
Income & Expenditure Account 28
Statement of the Movement on the General Fund Balance 29
Statement of Total Recognised Gains & Losses 29
Balance Sheet 30
Cash Flow Statement 31
Notes to the Core Financial Statements 32 - 65
Supplementary Statement:-
Collection Fund Account 66
Notes to the Supplementary Statement 67 - 68
Glossary of Financial Terms 69 - 72
Auditor’s Opinions 73 - 76
How to Contact Us 77
2
Welcome to the 2007/08 Statement of Accounts
It is our pleasure to introduce the Council’s Statement of Accounts for 2007/08. The
purpose of this document is to provide clear information to readers on how Staffordshire
Moorlands District Council has utilised the financial resources available to it. The
accounts and all relevant documents are subject to review by the Audit Commission,
who provide their opinion on page 76-79.
The Council provides services for 95,300 residents, and the many visitors to the district;
including waste collection, recycling, planning, leisure, recreation and environmental
health. Covering an area of 57,624 hectares, there are 44 parishes, 56 elected
members, and 328 employees currently work for the Council.
2007/08 – a challenging, but rewarding year…..
In July 2007, the Council was awarded ‘excellent’ status from the Audit Commission –
the highest rating that can be achieved by a Local Authority – following a
Comprehensive Performance Assessment. We
Our vision: “Achieving excellence in
are extremely proud of this achievement, and
the delivery of high quality services
intend to continue improving the services we that meet the needs and aspirations
provide for residents and maintain the high of our communities”
standards and value for money expected.
We are also pleased to report that in September 2007, the Audit Commission rated the
Council as a ‘Level 4’ in their Use of Resources assessment. The Council is 1 of only 13
district councils out of 238 to achieve the highest possible level in local government
financial management. The assessment looked at the way financial management is
integrated with strategy and corporate management, supports council priorities and
delivers value for money
Following the May 2007 elections, the Corporate Plan 2007 – 2011 was produced to
reflect the views and commitments of our newly-elected Councillors. A key contribution
to the achievement of excellence status was the focus on well-established priorities.
The new Corporate Plan builds on the previous
Priority Outcomes:
plan’s priorities to reflect the development of the
Improved Community Safety
Improves Health
new Community Strategy, demographic data and
Protection of the Environment the requirements of the Staffordshire Local Area
A Strong Economy Agreement. Identifying the need to protect the
Decent and Affordable Housing environment, strengthen the economy of rural
communities and the importance of a healthy
lifestyle, there are now five priority outcomes. These key outcomes will be the highest
priority and a significant proportion of the Council’s resources will be directed towards
their achievement.
The Council collects Council Tax on behalf of the County Council, the Police Service
and the Fire Authority. The Staffordshire Moorlands element of the average – “Band D” –
Council Tax bill in 2008/09 will be just £136.93, and will be used to fund the services we
provide to you. Indeed 7 of the last 8 years have seen rises of just 2.5% - amongst the
lowest consistent increases in the country. The pages that follow will show how your
Council Tax was spent during 2007/08.
3
There are still many areas of improvement that the Council is striving to make. We
monitor our performance against a range of performance indicators set by the
Government known as ‘best
Year on Year BVPI Quartile Placings
value performance indicators’.
This allows the Government
100% and Councils to compare
38% 37% 42% performance and identify good
80%
practice. Councils who perform
60% 23% 17%
21% best are said to be in the top
40% 27% quartile (top 25% in the
23% 19%
Country) where as those
20% 19% 19%
18% performing weakest are situated
0% in the bottom quartile (bottom
2004/05 2005/06 2006/07
25%) The graph illustrates the
Bottom Quartile Lower Median Upper Median Top Quartile improvements that the Council
has made in recent years.
The Council recognises the benefit of ‘working together’ and a substantial amount of our
work is carried out in conjunction with partner organisations. The Local Strategic
Partnership - encompassing a range of organisations such as the Primary Care Trust,
Police Service and the voluntary sector – ensures that key public services are co-
ordinated and delivered in an efficient manner.
Going forward, the Council recognises that merely ‘standing still’ is not an option as
Central Government tightens its efficiency agenda and reduces the amount of financial
support available to Local Authorities. The recently formed strategic alliance with our
neighbours High Peak Borough Council, aims to not only produce savings through joint
procurement and working, but draw on the expertise of both Authorities to improve
service provision.
It is very important that residents of the District understand the Council’s finances.
Therefore, we are always looking to improve the way in which we present our financial
information for the year. If you have any comments regarding the presentation of the
accounts, please do not hesitate to contact us. Please note, the Statement of Accounts
are available in large print, Braille or in another language on request.
Thank you for showing an interest in the Council’s finances. We trust that you will find
this Statement of Accounts both interesting and informative.
Cllr Gill Heath
Portfolio Holder for Finance and Resources
Andrew Stokes
Corporate Director and Chief Financial Officer
4
Foreword by the Corporate Director
(Chief Financial Officer)
Introduction
The Statement of Accounts for the year ended 31st March 2008 has been prepared in
accordance with the Accounts and Audit Regulations 2003. The format reflects the
requirements of the ‘Code of Practice in Local Authority Accounting in Great Britain – A
Statement of Recommended Practice’ (SORP 2007) and the Best Value Accounting
Code of Practice 2004, published by the Chartered Institute of Public Finance and
Accountancy (CIPFA).
The Council’s core financial statements, beginning at page 28, are listed below along
with a brief explanation of their purpose: -
Income & Expenditure Account – this statement is fundamental to the
understanding of the Council’s activities, in that it reports the net cost for the year of
all the functions for which the Council is responsible and demonstrates how that cost
has been financed from general government grants and income from local taxpayers
Statement of Movement on the General Fund Balance – this provides the
necessary reconciliation between the outturn on the Income & Expenditure Account
and the balance established by the relevant statutory provisions that specify the net
expenditure the Council needs to take into account when setting local taxes
Statement of Total Recognised Gains & Losses - Not all gains and losses
experienced by the Council are reflected in the Income & Expenditure Account. The
Statement of Total Gains & Losses considers all gains and losses recognised in
order to assess the overall financial result for the period
Balance Sheet - this explains the Council’s financial position at the year-end. It
provides details of the Council’s balances and reserves and its long-term
indebtedness. It also includes the fixed and net current assets employed in Council
operations together with summarised information on the fixed assets held; and
Cash Flow Statement - this illustrates the inflows and outflows of cash arising from
transactions with third parties for revenue and capital purposes.
In addition, the Council is also required to produce one supplementary financial
statement: -
Collection Fund - this reflects the statutory requirement for the authority to maintain
a separate account providing details of receipts of Council Tax and Business Rates
and the associated payments to precepting authorities and to the National Non-
Domestic Rate (NNDR) Pool.
5
Financial Summary 2007/08
The financial activities of the Council can be categorised as either Revenue or Capital:
Revenue spending represents the net cost of consuming supplies and providing
services delivered by the Council in its day-to-day business during the year.
Capital spending results in an asset, which will provide benefit to the District over a
number of years.
Revenue Spending
What we planned to spend
The Council set an original net Revenue budget for 2007/2008 of £12,619,180 for
spending on services. Subsequent allocations of additional funding received during the
year and transfers from balances, of £257,320 were assigned to support additional
activities, increasing the budget to £12,876,510. It was anticipated financing available
from external grants and Council Tax income would be £12,636,460 leaving £83,220 to
be funded by a transfer from earmarked reserves and £156,830 from general reserves
held both as a contingency and to support spending.
What we actually spent
Spending was £236,362 lower than planned and £152,800 in additional funding was
received. The combined effect of these factors resulted in a reduced demand on general
reserves of £131,379 to £25,451 and allowed a net contribution of £175,563 to
earmarked reserves.
Lower spending was achieved primarily due to staff vacancies and robust levels of
interest earned on investment which more than outweighed areas of overspending.
Additional funding was received from a number of sources, with the largest sum of
£134,000 coming from Local Authority Business Growth Incentive (LABGI) scheme,
granted in recognition of the Council’s success in improving its Business Rates tax-base.
Budget Actual Variance
£ £ £
Funding (12,636,460) (12,789,260) (152,800)
- activities 12,876,510 12,640,148 (236,362)
- to (from) earmarked reserves (83,220) 174,563 257,783
- to (from) general reserves (156,830) (25,451) 131,379
6
Revenue reserves increased to £5.41 million including the £3.22 million that is set aside
to meet future capital spending with was increased by £139,000 due to contributions in
the year. A full breakdown of the Council’s Revenue reserves appears in the table
below.
Brought 2007/2008 Carried
Revenue Reserves Forward Net Change Forward
£000 £000 £000
Capital Support 3,081 139 3,220
Earmarked 694 175 869
General Revenue 1,346 (25) 1,321
5,121 289 5,410
The allocation to the General Revenue Reserve included £78,700 in budget carried
forward i.e. the money will be spent as originally intended but in the following financial
year (2008/09). This leaves the reserve standing at £1.32 million. Current risk-based
assessments set the Council’s need for a revenue contingency at £950,000. The surplus
£370,000 will therefore be used, over the next three years, to support the Council’s
medium-term financial plans.
How the money was spent
The Income & Expenditure Account (Page 28) summarises the resources that have
been generated and consumed in providing services and managing the Council this
year. It shows Gross Expenditure for the year was £36.13 million across seven defined
service areas,
Gross Expenditure - Total £36.13m common to all councils
£1.09m or 3% £2.61m or 7% £0.37m or 1%
to facilitate
Chief Executive
£0.56m or 2%
Housing comparison. But they
Communities do not however match
Corporate Directors and Support
£6.06m or 17%
£16.01m or 44% Legal & Democratic the service areas
Planning around which this
£2.93m or 8% Regeneration
Organisational Development Council is organised.
Property Services The following chart
Environmental
Customer Services illustrates the profile
Finance & Revenues of total expenditure
Leisure Sport & Culture
£1.31m or 4% £1.11m or 3% based on the
£1.41m or 4%
£1.03m or 3%
£0.01m or <1%
structure of this
£1.58m or 4%
Council.
7
Gross expenditure includes nominal charges made for the use of capital assets and
future pension liability. Their inclusion is a requirement to allow comparison between
Councils as to the true cost of providing services. Statutory provisions however require
that such charges are excluded from the amount charged to Council Taxpayers. These
charges are removed to determine actual Revenue expenditure.
Revenue Expenditure - Total £34.13m Revenue expenditure for the
£0.29m or 1% year was £34.13 million.
Although this figure is not
Balances separately identified in any of the
£9.78m or 28% £10.15m or 30% Employees
statements, it represents actual
Benefits
Running Expenses revenue resources applied
£13.91m or 41%
during the year. Other than
transfers to reserves, the three
main categories of spending are
employee costs, running
expenses and housing benefit payments. Running expenses include maintenance of
buildings, vehicle costs, and supplies and services. The chart below illustrates the
proportion in which expenditure was incurred on these categories of expenditure.
How it was paid for
Central Government provided the majority of funding. It supported general expenditure
through the Revenue Support Grant (RSG) and the contribution from the National Non-
Domestic Rate
(NNDR) Pool. Other Revenue Funding - Total £34.13m
Government grants £1.28m or 4%
£0.87m or 3%
were received to Revenue Support Grant
support specific Business Rates Distribution
£5.88m or 17%
service areas, £6.33m or 18% Benefits Grant
including the largest £4.89m or 14% Other Government grants
grant – Housing £13.87m or 41% Council Tax
Benefits – at £13.87 Interest Receipts
million. Other Income
A total of £4.89 £1.01m or 3%
million was raised
from Council Tax, and fees and charges levied by the Council form a substantial part of
the £5.88 million of other income generated. A further £0.87 million in Interest was
received from investments during the year.
8
Capital Spending
Capital spending either maintains or creates new assets that will contribute to the
Council’s aims and objectives over more than one year. The Council therefore plans and
budgets for capital expenditure by means of a three-year ‘rolling’ capital programme.
This programme was last updated in February 2008 and included capital commitments
of £15.32 million with estimated capital spending in 2007/08 of £3.34 million.
How the money was spent Capital Expenditure Profile - Total £3.01m
£0.06m or 2% £0.28m or 9.3%
The actual spending in
£0.20m or 6.6%
2007/08 was £3.01 million – Housing
Property
slightly lower than estimated. £1.15m or 38.2%
ICT
It was made in the following
Environmental
service areas. £0.86m or 28.6%
Culture
Regeneration
Planning
Major areas of capital
expenditure and significant £0.21m or 7%
individual projects included: £0.25m or 8.3%
Housing - financing of the Council's private sector housing assistance policy
targeted at improving the District's private sector housing stock - Home Repairs,
Renovation and Disabled Facilities Grants (£0.8 million);
ICT – the continued replacement and development of IT systems to enhance service
delivery (£0.3 million);
Environmental – implementation of the Waste Strategy, including the provision of
wheeled bins to maximise recycling levels throughout the District (£0.9 million);
Regeneration – Townscape Heritage Initiatives and Moorlands Partnership grants
(£0.3 million).
How it was paid for
There are a number of sources by which the Council can fund capital expenditure. The
funding of the 2007/08 capital programme is illustrated below:
9
Funding - Total £3.01m
Capital Receipts – the Council still Capital Receipts
has significant cash resources Grants
remaining from the sale of its
£0.98m or 32.6%
housing stock in 2001.
£2.03m or 67.4%
Grants – such as Government
grants supporting Housing and
ICT Initiatives
So what was achieved for the money?
The Revenue and Capital transactions recorded in these statements supported all the
Council’s activities in 2007/08. A wide variety of statutory and non-statutory services
were delivered and numerous Council aims and objectives progressed. In particular,
substantial achievements were made with regard to the Council’s key priorities:
Improved Community Safety - there has been a 13% decrease in overall crime
compared to 2006/07; violent crime is down 17%; cases of personal robbery and
anti-social behaviour have also reduced; and vehicle crime is down by 4%.
Improved Health – usage of the Council’s Leisure Key Card has increased by
14% compared to 2006/07; the Council has implemented smoke free legislation
through a two pronged approach of education and enforcement; and options are
now being evaluated for the development of a junior football centre in Cheadle and
a Sports Village in Leek.
Protection of the Environment – an extra 7,800 tonnes of waste has been
recycled or composted compared to 2006/07 exceeding targets set. The joint
recycling/composting rate at year end was 53%, 11% higher than the 2006/07
upper quartile threshold for district councils; and the percentage of new homes built
on previously developed land increased to 87% of all building against a target of
69%.
A Strong Economy - as part of the Biddulph Area Action Plan, a legal agreement
is now in place with Sainsbury’s and a developer to progress development of the
town centre; and the Cheadle and Leek Townscape Heritage initiative has
progressed accordingly and had a positive impact on the two town centres, grant
offers have been completed and implementation of schemes is on track.
Decent and Affordable Housing - 77 private sector vacant dwellings have been
returned into occupation (or demolished) as a result of Council action, exceeding
the full year target of 40 properties; 22 new affordable dwellings have been
completed and occupied; and 141 private sector homes have been made decent.
10
Overall the 2007/08 Statement of Accounts demonstrates that the finances of
Staffordshire Moorlands District Council remain sound. Both revenue and capital
spending is constrained within affordable budgets, and assets and reserves exist to
support future service provision and the achievement of the Council’s key priorities.
Andrew P Stokes
Corporate Director (CFO)
27th June 2008.
CERTIFICATE OF APPROVAL BY AUDIT & ACCOUNTS COMMITTEE
I confirm that these accounts were approved by the meeting of the Audit and Accounts
Committee held on 27th June 2008.
Councillor Robert Plant
Vice-Chair of the Audit & Accounts Committee
Staffordshire Moorlands District Council
11
Statement of Responsibilities for the Statement
of Accounts
The Council’s Responsibilities
The Council is required:
to make arrangements for the proper administration of its financial affairs and to
ensure that one of its officers has the responsibility for the administration of those
affairs. In this authority, that officer is the Corporate Director (Chief Financial Officer)
(CFO));
to manage its affairs to secure economic, efficient and effective use of resources and
safeguard its assets.
to approve the statement of accounts.
The Corporate Director’s Responsibilities
The Corporate Director (CFO) is responsible for the preparation of the authority’s
Financial Statements. These, in terms of the CIPFA/LASAAC Code of Practice on Local
Authority Accounting in United Kingdom (‘the Code of Practice’), are required to present
fairly the financial position of the Council at the accounting date and its income and
expenditure for the year (ended 31st March 2008).
In preparing this Statement of Accounts, the Corporate Director (CFO) has:
selected suitable accounting policies and applied them consistently;
made judgements and decisions that were reasonable and prudent;
complied with the Code of Practice.
The Corporate Director (CFO) has also:
kept proper accounting records which were up to date;
taken reasonable steps for the prevention and detection of fraud and other
irregularities.
Certificate of the Corporate Director (CFO)
I certify that this Statement of Accounts presents fairly the financial position of the
Council at 31st March 2008 and its income and expenditure for the year.
27th June 2008
Andrew P. Stokes BA (Hons), MBA, CPFA, ACIH, MISPAL
Corporate Director (CFO)
Staffordshire Moorlands District Council
12
Annual Governance Statement 2007/08
SCOPE OF RESPONSIBILITY
Staffordshire Moorlands District Council is responsible for ensuring that its business is
conducted in accordance with the law and proper standards, and that public money is
safeguarded and properly accounted for, and used economically, efficiently and
effectively. Staffordshire Moorlands District Council also has a duty under the Local
Government Act 1999 to make arrangements to secure continuous improvement in the
way in which its functions are exercised, having regard to a combination of economy,
efficiency and effectiveness.
In discharging this overall responsibility, Staffordshire Moorlands District Council is
responsible for putting in place proper arrangements for the governance of its affairs,
facilitating the effective exercise of its functions, and which includes arrangements for
the management of risk.
Staffordshire Moorlands District Council has approved and adopted a code of corporate
governance, which is consistent with the principles of the CIPFA/SOLACE Framework
Delivering Good Governance in Local Government. A copy of the code is on our website
at www.staffsmoorlands.gov.uk or can be obtained from the Corporate Director &
Monitoring Officer. This statement explains how Staffordshire Moorlands District Council
has complied with the code and also meets the requirements of regulation 4 [2] of the
Accounts and Audit Regulations 2003 as amended by the Accounts an Audit
[Amendment] [England] Regulations 2006 in relation to the publication of a statement on
internal control.
THE PURPOSE OF THE GOVERNANCE FRAMEWORK
The governance framework comprises the systems and processes, and culture and
values, by which the authority is directed and controlled and its activities through which it
accounts to, engages with and leads the community. It enables the authority to monitor
the achievement of its strategic objectives and to consider whether those objectives
have led to the delivery of appropriate, cost-effective services.
The system of internal control is a significant part of that framework and is designed to
manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve
policies, aims and objectives and can therefore only provide reasonable and not
absolute assurance of effectiveness. The system of internal control is based on an
ongoing process designed to identify and prioritise the risks to the achievement of
Staffordshire Moorlands District Council’s policies, aims and objectives, to evaluate the
likelihood of those risks being realised and the impact should they be realised, and to
manage them efficiently, effectively and economically.
13
The governance framework has been in place at Staffordshire Moorlands District
Council for the year ended 31 March 2008 and up to the date of approval of the Annual
Report and Statement of Accounts.
THE GOVERNANCE FRAMEWORK
The key elements of the systems and processes that comprise the Council’s governance
arrangements are:
identifying and communicating the authority’s vision of its purpose and
intended outcomes for citizens and service users;
The Council’s vision, aims and objectives and priority outcomes for citizens and
service users are outlined in the Corporate Plan 2007 – 2011.
The Corporate Plan supports the Community Strategy 2007 – 2020 which sets
a long-term vision and plan for bringing about a sustainable improvement in the
social, economic and environmental conditions of Staffordshire Moorlands. It
aims to bring together the needs, interests and aspirations of the community of
Staffordshire Moorlands.
reviewing the authority’s vision and its implications for the authority’s
governance arrangements;
The Council’s Corporate Plan outlining its vision, aims and objectives and priority
outcomes is reviewed annually. The Corporate Plan is communicated externally
to stakeholders and internally via Service Plans and the employee appraisal
process. Service targets and performance indicators are established and
monitored closely on a regular basis by Heads of Service / Service Managers and
corporately via the performance management framework.
The Council’s governance arrangements are reviewed regularly to give effect to
the priorities within the Council’s Corporate Plan.
measuring the quality of services for users, for ensuring they are delivered in
accordance with the authority’s objectives and for ensuring that they
represent the best use of resources;
Management review of services, processes and procedures to ensure the
economical, effective and efficient use of resources, combined with target setting
and monitoring via a comprehensive performance management framework
including regular reporting to senior officers and members, designed to secure
continuous improvement in the way in which its services are delivered, having
regard to a combination of economy, efficiency and effectiveness as required by
the best value duty;
14
The Council continuously assesses the value for money offered to citizens
through its Efficiency Strategy. An integral part of the strategy is the Value for
Money / Prioritisation matrix which is used to ensure that improvements in the
overall effectiveness of services is improved in line with corporate policies
The Council’s Procurement Strategy contains a strategic forward plan of
procurement reviews for key services. These reviews challenge the way in which
services are delivered including market testing where appropriate. This plan
ensures compliance with the duty of best value.
defining and documenting the roles and responsibilities of the executive, non-
executive, scrutiny and officer functions, with clear delegation arrangements
and protocols for effective communication;
The effective facilitation and operation of policies and decision making processes
including Cabinet and Overview and Scrutiny Panels, the Council’s Constitution
and delegated decision making powers. The Constitution sets out how the
Council operates and the procedures which are followed to enable transparent
and accountable decisions to be made by the Cabinet. Overview and Scrutiny
Panels provide the opportunity for independent Member review of Cabinet
decisions and Council services and meetings are open to the public (including
remotely via webcasting) except where confidential matters are being disclosed.
In addition, delegated decision making authority is given to senior officers in
certain circumstances outlined in the Council’s Delegations. The Council
publishes a Forward Plan containing details of key decisions to be made by the
Council.
developing, communicating and embedding codes of conduct, defining the
standards of behaviour for members and staff;
An Ethical Framework including a local code of corporate governance which
describes the set of rules and procedures within which the Council operates in
order to ensure the highest possible standards of ethical behaviour and good
governance. It sets out the standards of behaviour that the Council expects of its
members and staff in all areas of their conduct and also clarifies roles and
responsibilities for the interaction between members and staff. The contents of
these key documents are regularly publicised with staff and members.
The Standards Committee, composed in accordance with the Local Government
Act 2000 requirements, oversees the Ethical Framework, providing guidance and
leadership for ethical governance matters for both members and officers.
15
reviewing and updating standing orders, standing financial instructions, a
scheme of delegation and supporting procedure notes/manuals, which clearly
define how decisions are taken and the processes and controls required to
manage risks;
The Constitution containing the Council’s procedure rules and scheme of
delegation is continually reviewed by Officers and Members via the Constitution
Review Working Party and recommendations made to full Council.
Actively using a formal robust risk management approach via the Council’s
corporate Risk Management Group, to identify, and take appropriate action to
mitigate against or eradicate significant risks to the Council’s objectives in line
with the requirements of the Council’s Risk Management Strategy. This approach
has been developed and maintained and embedded through the pro-active
participation of all services via the corporate Risk Management Group and all
managers have been trained in the assessment, management and monitoring of
risks
undertaking the core functions of an audit committee, as identified in CIPFA’s
Audit Committees – Practical Guidance for Local Authorities;
A formally constituted Audit & Accounts Committee is responsible for providing
independent assurance of the adequacy of the risk management framework and
the associated control environment. The Committee acts in accordance with the
key requirements of the CIPFA guidance on Audit Committees.
ensuring compliance with relevant laws and regulations, internal policies and
procedures, and that expenditure is lawful;
The operation of the statutory officer roles of Head of Paid Service (Chief
Executive), Chief Financial Officer (Corporate Director and Chief Finance Officer)
and Monitoring Officer (Corporate Director and Monitoring Officer), having
specific responsibility for ensuring compliance with established policies,
procedures, laws and regulations. The Monitoring Officer has the authority to
report to Council if he considers that any proposal, decision or omission would
give rise to unlawfulness or maladministration, thereby stopping the proposal or
decision being implemented until the report has been considered. Legal and
financial implications are outlined in all committee reports.
16
Effective financial management of the Council is conducted in accordance with
the Financial Procedure Rules set out in Part 4 of the Constitution and
appropriate professional standards, under the responsibility of the Corporate
Director and Chief Finance Officer in accordance with Section 151 of the Local
Government Act 1972. This includes comprehensive budget setting processes
and budgetary control systems, clearly defined capital expenditure guidelines and
regular reporting mechanisms to Services and Members including quarterly and
annual financial reports which indicate financial performance against forecasts.
The Council has in place an annually updated 3 year financial plan to support the
medium term aims of the Corporate Plan.
The Council maintains an Internal Audit Service, which operates to the standards
set out in the ‘Code of Practice for Internal Audit in Local Government in the
United Kingdom’.
whistle-blowing and for receiving and investigating complaints from the
public;
The Council has a well publicised Whistle-blowing policy for receiving and
investigating alleged illegality or malpractice. This policy allows all staff,
members, contractors, partners, public and other stakeholders the opportunity to
report any concerns regarding malpractice where the interests of others, or of the
Council itself, are at risk, safe in the knowledge that they will be protected from
suffering any form of retribution as a result. As such, it promotes and supports the
requirements of the Public Interest Disclosure Act 1998. The Policy is regularly
updated and publicised.
A customer feedback scheme for the public to make complaints, comments,
compliments and constructive criticism about any aspect of the Council’s
services, which is used to improve these services.
identifying the development needs of members and senior officers in relation
to their strategic roles, supported by appropriate training;
Services are delivered by suitably trained and experienced staff, all posts having
detailed job descriptions and person specifications while training and
development needs are identified through a staff appraisal scheme which ensures
that objectives and targets are clear and agreed.
All elected members are offered a Personal Development Plan, highlighting any
development needs they may have to enable them to carry out their roles
effectively. The Council has been awarded the Member Development Charter by
the LGA in recognition of its work in this area, led by the Council’s Member
Development Champion.
17
establishing clear channels of communication with all sections of the
community and other stakeholders, ensuring accountability and encouraging
open consultation;
The Council effectively communicates and consults with the public on a regular
basis in accordance with the Communication Strategy and Consultation Toolkit.
The Council’s newspaper is delivered to all properties within the District and
contains information as to the Council’s work. The Council’s website contains
detailed information regarding the Council’s services and the community,
enabling public engagement.
The outcomes of consultation were used to inform service provision and spending
priorities, in particular by the annual budget consultation exercise. Further, public
consultation via the ‘Big Debate’ helped to shape the revised Community Strategy
and the emerging LDF Core Strategy.
incorporating good governance arrangements in respect of partnerships and
other group working as identified by the Audit Commission’s report on the
governance of partnerships, and reflecting these in the authority’s overall
governance arrangements;
Appropriate governance arrangements are put in place for each partnership eg
the LAA, LSP. A partnership review has been carried out and the results of this
will be implemented ensuring consistent and thorough governance arrangements.
The effectiveness of each of partnership is assessed via a Partnership Evaluation
Matrix. The review is risk based and an annual report is presented to members
recommending action to ensure effective governance and to evaluate
performance.
REVIEW OF EFFECTIVENESS
Staffordshire Moorlands District Council has responsibility for conducting, at least
annually, a review of the effectiveness of its governance framework including the system
of internal control. The review of effectiveness is informed by the work of the executive
managers within the authority who have responsibility for the development and
maintenance of the governance environment, the Head of Internal Audit’s annual report,
and also by comments made by the external auditors and other review agencies and
inspectorates.
The process that has been applied in maintaining and reviewing the effectiveness of the
governance framework is ongoing throughout the year and includes:
18
the authority;
The ongoing review of the Council’s Constitution by Members and Senior Officers
of the Council via the Constitution Review Working Party.
The ongoing review of existing corporate policies and production and approval of
new or revised policies and procedures in accordance with best practice.
The Corporate Director and Monitoring Officer annually reviews the local Code of
Corporate Governance against CIPFA/SOLACE best practice to ensure that the
Council’s approach to corporate governance is both adequate and effective in
practice.
the executive;
The continued operation of clear policy and decision making through Cabinet and
Regulatory Committees.
the audit committee/overview and scrutiny committees/risk management
committee;
The Audit & Accounts Committee’s composition and terms of reference are based
upon CIPFA guidance and include reviewing the work of the Internal Audit service
and any implications arising from their findings and opinion on the adequacy of
internal controls and the adequacy of policies and practices to ensure compliance
with statutory and other guidance. The Committee are also responsible for
overseeing production of the Council’s Annual Governance Statement, and to
review and recommend/approve it’s adoption as necessary.
Formal reporting mechanisms to members to review and monitor the work of the
Internal Audit Service through quarterly reports to Cabinet and Audit & Accounts
Committee, including an annual report to Audit & Accounts Committee containing
an opinion statement on the overall adequacy and effectiveness of the Council’s
internal control environment.
The continued development and embedding of a risk management culture within
the Council driven by the corporate Risk Management Group including reviewing
the Council’s risk register and associated action plans and ensuring that
appropriate management action is taken to minimise / eliminate risk. Risk
Management updates are reported to Cabinet and Audit & Accounts Committee
and the Risk Management Strategy is reviewed annually.
The Overview and Scrutiny Committees review decisions made by Cabinet and
areas of concern. Members can “call-in” a decision that has been made by the
Cabinet when they consider the decision is not in accordance with the Council’s
Constitution.
19
the Standards Committee;
The Committee is responsible for the ethical framework of the Council, working
closely with the monitoring officer. The terms of reference include advising
members on conduct issues and ensuring the promotion and maintenance of the
highest standards of conduct by elected and co-opted members of the Council.
The Committee has been advised on the changing nature of its responsibilities, in
particular the new obligation for carrying out the Local Assessment of complaints
under the Code.
internal audit;
Internal Audit review services and functions based on a risk assessed audit plan,
in order to provide an independent opinion on the adequacy and effectiveness of
the system of internal control. Audit reports detailing the findings of each review
are issued to Service Managers, Heads of Service, the Corporate Director &
Chief Finance Officer and where appropriate, the Corporate Director & Monitoring
Officer and Chief Executive.
Audit recommendations for improvements require management agreement, and
implementation is monitored and escalated in accordance with formally agreed
escalation procedures. Regular updates on audit recommendation agreement
and implementation are reported to the Audit & Accounts Committee.
Internal Audit operates in accordance with the Code of Practice for Internal Audit
in Local Government in the United Kingdom. The service is subject to regular
review by the Council’s External Auditors who place reliance on their work. An
annual review of the effectiveness of the system of internal audit is also
undertaken and the review for 2007/08 concluded that the system of internal audit
is operating effectively and assurance can be taken from the work of Internal
Audit service.
other explicit review/assurance mechanisms;
Performance is managed by Service Managers and Heads of Service via a
comprehensive performance management framework incorporating regular
reporting to Members.
The Corporate Director & Chief Finance Officer produces quarterly and annual
financial reports which indicate financial performance against forecasts.
Directors and Heads of Service complete and sign annual Managers Assurance
Statements confirming their arrangements for ensuring data quality and the
existence, operation and effectiveness of controls within the service areas for
which they are responsible
20
External review of the Council’s internal control environment by the Audit
Commission, including a thorough review of internal audit’s work.
We have been advised on the implications of the result of the review of the
effectiveness of the governance framework by the Audit & Accounts Committee, and
a plan to address weaknesses and ensure continuous improvement of the system is
in place.
SIGNIFICANT GOVERNANCE ISSUES
During the 2007/08 financial year a number of significant governance issues have been
identified. These are detailed in the table below together with the action that was and is
being taken to address these issues:
Action taken during
Governance Issue Continuing Action
2007/08
Revenues and Benefits ICT Following refinements to Further assurance
System – Assurance the Benefits IT system required that the
required that the Housing the subsidy report has Housing Benefit &
Benefit & Council Tax been run on a quarterly Council Tax subsidy
Subsidy Claim is based basis as this enables claim is based upon
upon sound processes and any issues to be sound processes and
procedures sufficient to identified well in procedures sufficient to
gain an unqualified audit advance of year end gain an unqualified audit
opinion. and corrective measures opinion.
put in place in advance
of year end. Additional
staff training has been
identified and
undertaken to reduce
error. However the
subsidy claim was
qualified due to a
reconciliation issue
concerning one cell.
Trade Waste Collection An investigation into When the investigation
potentially fraudulent has been concluded,
processes operated assurance is required
within the trade waste that the internal control
collection service was weaknesses have been
undertaken, which was satisfactorily addressed
referred for further by management.
Police investigation.
Internal control
weaknesses were
highlighted as a result of
this investigation.
21
We propose over the coming year to take steps to address the above matters to further
enhance our governance arrangements. We are satisfied that these steps will address
the need for improvements that were identified in our review of effectiveness and will
monitor their implementation and operation as part of our next annual review.
Signed:
…………………………………………………… …………………………
Councillor S Ralphs MBE
Leader Date
…………………………………………………… …………………………
Simon W Baker B.Ed, MBA, MISPAL
Chief Executive Date
on behalf of Staffordshire Moorlands District Council
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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.
1. General 3. Provisions
The Statement of Accounts summarises the Council’s Provisions are made where an event has taken place
transactions for the 2007/08 financial year and its position that gives the Council an obligation that probably
at the year-end of 31st March 2008. It has been prepared requires settlement by a transfer of economic benefits,
in accordance with the Code of Practice on Local Authority but where the timing of the transfer is uncertain. For
Accounting in the United Kingdom 2007 – A Statement of example, court cases, which could result in
Recommended Practice (the SORP) compensation payments.
The accounting convention adopted is historical cost, Provisions are charged to the appropriate revenue
modified by the revaluation of certain categories of tangible account in the year that the Council becomes aware of
assets. the obligation, based on the best estimate of the likely
settlement. When payments are eventually made they
2. Accruals of Income & Expenditure are charged to the provision set up in the Balance
Activity is accounted for in the year that it takes place, not Sheet. Where it becomes likely that a transfer of
simply when cash payments are made or received. In economic benefit may not be required, the provision is
particular: reversed and credited back to the relevant revenue
Fees, charges and rents from customers are accounted account.
for as income at the date the Council provides the
relevant goods or services 4. Reserves
The Council sets aside specific amounts as reserves
Supplies are recorded as expenditure when they are for future policy purposes or to cover contingencies.
consumed – where there is a gap between the date Reserves are created by appropriating amounts in the
supplies are received and their consumption, they are Statement of Movement on the General Fund Balance.
carried as stocks on the Balance Sheet When expenditure to be financed from reserve is
incurred, it is charged to the appropriate revenue
Works are charged as expenditure when they are account in that year to score against the Net Cost of
completed, before which they are carried as works in Services in the Income & Expenditure Account. The
progress on the Balance Sheet reserve is then appropriated back into the General
Fund Balance statement so that there is no net charge
Interest, receivable on investments or payable on against Council Tax for the expenditure.
borrowings, is accounted for on the basis of the
effective interest rate for the relevant financial Certain reserves are kept to manage the accounting
instrument rather than the cash flows fixed or processes for tangible fixed assets and retirement
determined by the contract. benefits and they do not represent usable resources for
the Council – these reserves are explained in the
Where income and expenditure has been recognised relevant policies elsewhere.
but cash has not been received or paid, a debtor or
5. Government Grants and Contributions
creditor for the relevant amount is recorded in the
Government grants, third party contributions and
Balance Sheet. Where it is doubtful that the debt will be
donations are recognised as income at the date that
settled, the balance of debtors is written down and a
the Council satisfies the conditions of entitlement to the
charge made to revenue for the income that might not
grant/contribution, there is reasonable assurance that
be collected
the monies will be received and the expenditure for
which the grant is given has been incurred.
Revenue grants are matched in service revenue
Where the exact amount due has not yet been
accounts with the service expenditure to which they
confirmed e.g. grant entitlements from the Government,
relate. Grants to cover general expenditure are
the accounts reflect the best estimate or latest available
credited to the foot of the Income & Expenditure
information.
Account after Net Operating Expenditure.
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6. Pensions 8. VAT
Retirement Benefits Scheme: Council employees are Income and expenditure excludes any amounts related
members of the Local Government Pension Scheme to VAT, as all VAT collected is payable to HM Revenue
administered by Staffordshire County Council. The & Customs and all VAT paid is recoverable from it.
Scheme provides defined benefits to members (retirement
lump sums and pensions), earned as employees work for 9. Provision for Bad and Doubtful Debts
the Council. The provision for Bad and Doubtful debts is provided
for on a sliding scale dependent on an aged debt
Balance Sheet Liability: The net liability of the analysis. Known bad debts, and those deemed
Staffordshire County Council (SCC) Pension Scheme irrecoverable after an agreed period are written off.
attributable to the Council is included in the Balance Sheet.
It represents the difference between the estimated value of 10. Tangible Fixed Assets
the Scheme’s liabilities and its assets as at the year-end. Tangible fixed assets have a physical substance and
These valuations are commissioned annually from the SCC are held for use in the provision of services or for
pension fund actuary, Hymans Robertson, in the FRS17 administrative purposes on a continuing basis.
report specifically for this purpose.
Recognition: Expenditure on the acquisition, creation,
Valuation: Liabilities are measured on an actuarial basis or enhancement of tangible fixed assets is capitalised
using the projected unit method i.e. an assessment of the on an accruals basis. Expenditure that secures but
future payments that will be made in relation to retirement does not extend the previously assessed standards of
benefits earned to date by employees, based on performance of asset (e.g. repairs and maintenance) is
assumptions about mortality rates, employee turnover charged to revenue as it is incurred.
rates, etc. and projected earnings for current employees.
They are discounted to their value at current prices, using Measurement: Assets are initially measured at cost,
an appropriate discount rate determined by the actuary. comprising all expenditure that is directly attributable to
The assets of the Pension Fund attributable to the Council bringing the asset into working condition for its
are included at their fair value. intended use. Assets are then carried in the Balance
Sheet using the following measurement bases:
Pension Reserve: the long-term liability of the scheme,
Investment properties and assets surplus to
recognised on the Balance Sheet, is offset by the existence
requirements - Market Value
of a Pension Reserve. Statutory provisions limit the Council
Dwellings, other land and buildings, vehicles, plant
to raising Council Tax to cover the amounts payable by the
and equipment – lower of net current replacement
Council to the pension fund in the year. In the Statement of
cost or net realisable value in existing use.
Movement on the General Fund Balance, this means that
Infrastructure assets and community assets –
there are appropriations to and from the Pension Reserve
depreciated historical cost.
to remove the notional debits and credits for retirement
benefits and replace them with debits for the cash paid to
Net current replacement cost is assessed as:
the Pension Fund and any amounts payable to the Fund
Non-specialised operational properties – existing
but unpaid at the year end.
use value
Further details of the Pension Fund are available within the Specialised operational properties – depreciated
Notes to the Core Financial Statements. replacement cost
Investment properties and surplus assets – market
7. Overheads and Support Services
value.
The cost of overheads and support services are charged to
those that benefit from the supply or service in accordance Assets included in the Balance Sheet at current value
with the costing principles of the “CIPFA Best Value Code are re-valued where there have been material changes
of Practice 2007”. The total absorption costing principle is in the value, but as a minimum every five years.
used – the full cost of overheads and support services are Increases in valuations are matched by credits to the
shared between users in proportion to the benefits Revaluation Reserve (formerly the Fixed Asset
received, with the exception of: Restatement Account) to recognise unrealised gains.
Corporate and Democratic Core – Costs relating to the Exceptionally, gains might be credited to the Income
Councils status as a democratic organisation and Expenditure Account where they arise from the
Non Distributed Costs – Costs of discretionary benefits reversal of an impairment loss previously charged to a
awarded to employees retiring early service revenue account.
These two costs are accounted for as separate headings in
the Income & Expenditure Account.
24
Capital Expenditure and Income: Expenditure and Where grants and contributions are received that are
income in the capital accounts has been recorded on an identifiable to fixed assets with a finite useful life, the
accruals basis to fully accord with CIPFA / LASAAC’s amounts are credited to the Government Grants
Statement of Recommended Practice. Deferred Account. The Balance Sheet is then written
down to revenue to offset depreciation charges made
Impairment: The values of each category of assets and of for the relevant assets in the relevant service revenue
material individual assets that are not being depreciated account, in line with the depreciation policy applied to
are reviewed at the end of each financial year, for evidence them.
of reductions in value. Where impairment is identified as
part of this review or as a result of a valuation exercise, this 11. Intangible Fixed Assets
is accounted for as follows: Expenditure on assets that do not have physical
Where attributable to the clear consumption of substance but are identifiable and controlled by the
economic benefits – the loss is charged to the relevant Council is capitalised when it will bring benefits to the
service revenue account. Council for more than one financial year. The balance
Otherwise – written off against the Revaluations is amortised to the relevant service revenue account
Reserve (formerly the Fixed Assets Restatement over the economic life of the asset to reflect the pattern
Reserve.) of consumption of benefits.
Disposals: When an asset is disposed of or
There is no requirement to re-value intangible fixed
decommissioned, the value of the asset in the Balance
assets unless there is a readily ascertainable market
Sheet is written of to the Income & Expenditure Account as
value.
part of the gain or loss on disposal. Receipts from
disposals are credited to the income & Expenditure
12. Charges to Revenue for Fixed Assets
account as part of the gain or loss on disposal. Receipts in
Service revenue accounts, central support services
excess of £10,000 are categorised as Capital Receipts. A
and trading accounts are debited with the following
proportion of receipts relating to housing disposals is
amounts to record the real cost of holding fixed assets
payable to the Government. The balance of receipts is
during the year:
credited to the Useable Capital Receipts Reserve, and can
Depreciation attributable to the assets used by the
then only be used for new capital investment or set aside to
relevant service
reduce the Council’s underlying need to borrow.
Impairment losses attributable to the clear
Depreciation: is provided for all assets with a determinable consumption of economic benefits on tangible
finite life (except for investment properties), by allocating fixed assets used by the service and other losses
the value of assets in the Balance Sheet over the periods where there are no accumulated gains in the
expected to benefit from their use. Revaluation Reserve against which they can be
written off.
Depreciation is calculated on the following bases:
Amortisation of intangible fixed assets attributable
Dwellings and other operational buildings – straight-line to the service.
allocation over the life of the property as estimated by
the valuer (20 to 60 years) The Council is not required to raise Council Tax to
Vehicles, plant and equipment - straight-line allocation cover depreciation, impairment losses or amortisation.
over the life of the asset as advised by a suitably However, it is required to make an annual provision
qualified officer (5 to 10 years) from revenue to contribute towards the reduction in its
Infrastructure – straight-line allocation over 25 years overall borrowing requirement (equal to at least 4% of
Community assets - straight-line allocation over 20 to the underlying amount measured by the adjusted
60 years Capital Financing Requirement).
Where an asset has major components with different
Depreciation, impairment losses and amortisations are
estimated useful lives, these are depreciated separately.
therefore replaced by revenue provision in the
There is nil depreciation in the year of acquisition and a full
Statement of Movement on the General Fund Balance,
year’s depreciation in the year of disposal. Revaluation
by way of an adjusting transaction with the Capital
gains are also depreciated, with an amount equal to the
Adjustment Account (formerly the Capital Financing
difference between current value depreciation charged on
Account) for the difference between the two.
assets and the depreciation that would have been
chargeable based on their historical cost being transferred
each year from the Revaluation Reserve to the Capital
Adjustment Account.
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13. Deferred Charges 16. Financial Assets
Deferred charges represent expenditure that may be Financial assets are classified into two types:
capitalised under statutory provisions but does not result in Loans and receivables – assets that have fixed or
the creation of tangible assets, as in the case of determinable payments but are not quoted in an
Renovation Grants. Deferred charges incurred during the active market
year have been written off as expenditure to the relevant Available-for-sale assets – assets that have a
service revenue account in the year. quoted market price and/or do not have fixed or
Where the Council has determined to meet the cost of the determinable payments
deferred charges from existing capital resources or by
borrowing, a transfer to the Capital Adjustment Account Loans and receivables are initially measured at fair
(formerly the Capital Financing Account) then reverses out value and carried at their amortised cost. Annual
the amounts charged in the Statement of Movement on the credits to the Income and Expenditure Account for
General Fund Balance, so there is no impact on the level of interest receivable are based on the carrying amount of
Council Tax. the asset multiplied by the effective rate of interest for
the instrument.
14. Leases
The Council has a small number of soft loans to
Finance Leases: The Council accounts for leases as charitable organisations at interest rates below market
finance leases when substantially all the risks and rewards rate. Further details of these soft loans are contained
relating to the leased property transfer to the Council. within the Notes to the Core financial Statements.
Rentals payable are apportioned between:
Where assets are identified as impaired because of a
A charge for the acquisition of the interest in the
likelihood arising from a past event that payments due
property (recognised as a liability in the Balance
under the contract will not be made, the asset is written
Sheet at the start of the lease, matched with a
down and a charge made to the Income and
tangible fixed asset – the liability is written down as a
Expenditure Account.
rent becomes payable); and
Available-for-sale assets are initially measured and
A finance charge (debited to the Net Operating carried at fair value. Where the asset has fixed or
Expenditure in the Income & Expenditure Account as determinable payments, annual credits to the Income
the rent becomes payable). and Expenditure Account for interest receivable are
based on the amortised cost of the asset multiplied by
Fixed assets recognised under finance leases are the effective rate of interest for the instrument. Where
accounted for using the policies applied generally to there are no fixed or determinable payments, income
Tangible Fixed Assets, subject to depreciation being (eg dividends) is credited to the income and
charged over the lease term if this is shorter than the Expenditure Account when it becomes receivable by
asset’s estimated useful life. the Council.
Assets are maintained in the Balance Sheet at fair
Operating Leases: Leases that do not meet the definition value on the following principles:
of finance leases are accounted for as operating leases. Instruments with quoted market prices - the market
Rentals payable are charged to the relevant service price
revenue account on a straight-line basis over the term of Other instruments with fixed and determinable
the lease, generally meaning that rentals are charged when payments – discounted cash flow analysis
they become payable. Equity shares with no quoted market prices –
independent appraisal of company valuations.
15. Financial Liabilities
Financial liabilities are measured at fair value and carried Changes in fair value are balanced by an entry in the
at their amortised cost. Annual charges to the Income and Available-for-sale Reserve and the gain/loss is
Expenditure Account for interest payable are based on the recognised in the Statement of Total Recognised Gains
carrying amount of the liability, multiplied by the effective and Losses (STRGL).
rate of interest for the instrument. This means that the Where assets are identified as impaired because of a
amount presented in the Balance Sheet is the outstanding likelihood arising from a past event that payments due
principal repayable and interest charged in the Income and under the contract will not be made, the asset is written
Expenditure Account is the amount payable for the year in down and a charge made to the Income and
the loan agreement. Expenditure Account.
The Council is not currently in a borrowing position. Where fair value cannot be measured reliably, the
instrument is carried at cost) less any impairment
losses)
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17. Stocks and Work in Progress 20. Changes in Accounting Policies
Stocks are included in the Balance Sheet on the basis of Policies have been updated to bring them in line with
the lower of cost and net realisable value. the “Code of Practice on Local Authority Accounting in
Work in progress is subject to an interim valuation at the the UK (2007)”. The substantive changes introduced in
year-end and recorded in the Balance Sheet at cost plus the 2007 SORP that affect this Authority relate to;
any profit reasonably attributable to the works. - New accounting, presentation and disclosure
requirements for Financial Instruments, both
18. Interest in Companies and Other Entities liabilities (note 15) and assets (note 16)
The Council has no material interests in companies and - The replacement of the Fixed Asset Restatement
other entities that have the nature of subsidiaries, Account and Capital Financing Account by a
associates and joint ventures and therefore there is no Revaluation Reserve and Capital Adjustment
requirement to prepare group accounts. In the Council’s Account. (note 10)
own single-entity accounts, the minority interest in
companies and other entities are recorded as investments The ‘general’ note contained within the ‘Notes to the
i.e. at cost less any provision for losses. Core Financial Statements’ (page 34) details the
amendments made, under the 2007 SORP, to prior
19. Contingent Liabilities year figures.
Contingent liabilities will not be recognised in the
accounting statements. They will be disclosed by way of
notes if there is a possible obligation, which may require a 21. Post Balance Sheet Events
payment or a transfer of economic benefits. For each class Where material post balance sheet events occur,
of contingent liability the Council will disclose the nature of changes are made to the amount included in the
the contingency, a brief description and estimate of its Statement of Accounts and a full disclosure made
financial effect, and an indication of the uncertainties within the notes to the Core Financial Statements.
relating to the amount or timing of any outflow and the
possibility of any reimbursement.
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Core Financial Statements
The core single entity financial statements applicable to all local authorities comprise:
Income & Expenditure Account
Statement of Movement on the General Fund Balance
Statement of Total Recognised Gains & Losses
Balance Sheet
Cash Flow Statement
Income & Expenditure Account
The Income & Expenditure Account is fundamental to the understanding of the Council’s
activities; it reports the net cost for the year of all functions for which the authority is
responsible, and demonstrates how that cost has been financed from general
government grants and income from local taxpayers.
Notes
2007/08 Gross 2007/08 Gross 2007/08 Net
2006/07 Net
Expenditure Income Expenditure
Expenditure
£’000’s £’000 £’000 £’000
1,170 Central Services to the Public 1 1,755 (779) 976
8,974 Cultural, Environmental and Planning Services 2 14,838 (4,539) 10,299
712 Highways, Roads and Transport Services 3 1,337 (584) 753
1,521 Housing Services 4 15,891 (14,611) 1,280
2,380 Corporate and Democratic Core 5 2,231 (144) 2,087
0 Non Distributed Cost 6 76 (76) 0
14,757 Net Cost of Services 7 36,128 (20,733) 15,395
0 Gain or loss on disposal of fixed assets 39
898 Precepts of Local Precepting Authorities (Parish and Town Councils) 972
7 Interest Payable and Similar Charges 10
(819) Interest and Investment income (875)
Amounts Payable into the Housing Capital Receipts
9 8 10
Pool
Pensions Interest Cost and Expected Return on
(187) 9iii. (146)
Pensions Assets
Gain or loss on financial instruments (35)
0 Other Income (635)
14,665 Net Operating Expenditure 14,735
(5,730) Income from the Collection Fund (5,858)
(1,472) Government Grants (Non-attributable) (1,282)
(5,844) Distribution from Non-Domestic Rate Pool (6,327)
1,619 (Surplus)/Deficit for the Year 1,268
28
Statement of Movement on the General Fund Balance
The Income and Expenditure Account brings together all of the functions of the authority
and summarises all of the resources that the authority has generated, consumed or set
aside in providing services during the year.
However, this accounting basis is currently out of line with the statutory provisions that
specify the net expenditure that authorities need to take into account when setting local
taxes.
The Statement of Movement on the General Fund Balance provides the necessary
reconciliation between the outturn on the Income & Expenditure Account, and the
balance established by the relevant statutory provisions that specify the net expenditure
the Council needs to take into account when setting local taxes.
2006 / 07 2007 / 08
Notes
£’000 £’000
1,619 (Surplus) or Deficit for the year on the Income & Expenditure Account 1,268
Net additional amount required by statute and non-statutory proper practices to
(2,290) 10 (1,557)
be debited or credited to the General Fund Balance for the year
(671) (Increase) or Decrease in the General Fund Balance for the year (289)
(4,450) General Fund Balance brought forward (5,121)
(5,121) General Fund Balance carried forward (5,410)
Statement of Total Recognised Gains & Losses
Not all gains and losses experienced by the Council are reflected in the Income &
Expenditure Account. The Statement of Total Gains & Losses considers all gains and
losses recognised in order to assess the overall financial result for the period.
2006 / 07 2007 / 08
Notes
£’000 £’000
1619 (Surplus) or deficit on the income and Expenditure Account for the year 1,268
(1,030) Surplus or deficit arising on revaluation of Fixed Assets 12ix. (3,686)
0 Derecognition of Fixed Assets 12ix. 36
(1,321) Actuarial gains and losses on pension fund assets and liabilities 9 1,366
Change in liability for Collection Fund balance (Supplementary Statement -
70 Note 3) (30)
(662) Total recognised (gains) and losses for the year (1,046)
29
Balance Sheet
The Balance Sheet provides an overall summary of the financial position of the Council
as at 31st March 2008. It shows the Council’s balances and reserves and its long-term
indebtedness, and the fixed and net current assets employed in its operations, together
with summarised information on the fixed assets held.
31st March 2007 31st March 2008
Notes
£’000 £’000
11 Intangible Assets: 11 43
Tangible Fixed Assets: 12i.
Operational Assets
19,862 Other Land and Buildings 23,294
5,616 Vehicles, Plant, Furniture and Equipment 6,776
0 Infrastructure Assets 0
83 Community Assets 187
25,561 30,257
Non Operational Assets
2,995 Investment Properties 3,368
175 Assets under Construction 18
3,202 Surplus Assets, held for disposal 3,112
6,372 6,498
(2,839) Less Depreciation and Impairment 13 (4,093)
29,105 Total Fixed Assets 32,705
3,115 Long Term Investments 14 5,260
0 Derivative - asset 15 53
135 Long Term Debtors 16 103
3,250 Total Long Term Assets 5,416
Current Assets
72 Stocks and Work in Progress 78
4,909 Debtors (Net of provision for bad and doubtful debts) 17 4,735
8,415 Short Term Investments 4,995
13,396 9,808
45,751 Total Assets
Current Liabilities
(75) Borrowing repayable on demand or within 12 months 18 (82)
(3,989) Creditors 19 (3,859)
(379) Bank Overdraft (77)
(4,443) (4,018)
41,308 Total Assets less Total Liabilities
Long Term Liabilities
0 Derivative - liability 15 (3)
(143) Deferred Liabilities (119)
(164) Unapplied Capital Grants (236)
(398) Developers Contributions (362)
(2,376) Capital Grants Deferred (2,423)
(119) Actuarial Strain (54)
(70) S106 Contractors Commuted Sums (103)
(9,282) Pension Assets/Liabilities 9iv. (10,809)
(12,552) (14,109)
28,756 Total Assets less Total Liabilities 29,802
Reserves
6,225 Unused Capital Receipts 12viii. 4,951
88 Deferred Capital Receipts 12viii. 69
0 Revaluation Reserve (Fixed Asset Restatement Account) 12viii. 3,686
26,615 Capital Adjustment Account (Capital Financing Account) 12viii. 26,476
50 Debenture Purchase 14 0
1,346 General Fund Balance 20 1,371
3,081 General Fund Capital Commitment Reserve 20 3,220
694 Earmarked Reserves 20 869
DLO and DSOs 20
(61) Collection Fund (see Supplementary Statement page 58) (31)
(9,282) Pensions Reserve 9v. (10,809)
28,756 Total Net Worth 22 29,802
30
Cash Flow Statement
This statement summarises the inflows and outflows of cash arising from transactions
with third parties for revenue and capital purposes.
2006/07 2007/08
Notes
£’000 £’000 £’000 £’000
Revenue Activities
Cash Outflows
8,873 Cash paid to and on behalf of employees
8,726 Housing Benefit Paid Out 9,479
15,065 NNDR Payments to National Pool 9,592
39,144 Precepts Paid 15,966
- Payments to the Capital Receipts Pool 40,644
8,190 Other Operating Cash Payments 9
79,998 Sub Total 9,436
Cash Inflows 85,126
(39,118) Council Tax Receipts (41,949)
(5,844) NNDR Receipts from Pool (7,349)
(15,369) NNDR Receipts (14,591)
(1,472) Revenue Support Grant (1,122)
(8,999) DSS Grants for Benefits 24iii (9,790)
(5,564) Other Government Grants 24iii (5,204)
(1,803) Cash Received for Goods and Services (2,231)
(1,922) Other Operating Cash Receipts (2,280)
(80,091) Sub Total (84,516)
(93) Net Cash Flow from Revenue Activities 24i. 610
Returns on Investments and Servicing of Finance
Cash Outflows
- Interest Paid 3
5 Interest element of finance lease rental payments 5
Cash Inflows
(828) Interest Received (837)
(823) Servicing of Finance Net Cash Inflows (829)
Capital Activities
Cash Outflows
2,349 Purchase of Fixed Assets 3,017
- Purchase of long term investments 2,000
1,782 4,131 Other Capital Cash Payments 5,017
Cash Inflows
(1,018) Sale of Fixed Assets (758)
(11) Other Capital Receipts (Housing Advances-principal) (22)
(1,183) (2,212) Capital Grants Received 24iii (1,029) (1,809)
1,919 Capital Activities Net Cash Outflows 3,208
1,003 Net Cash Outflow Before Financing 2,989
Management of Liquid Resources
(1,412) Net Increase / (decrease) in Short-term Deposits 24i (3,298)
Financing
Cash Outflows
- Repayments of Amounts Borrowed -
26 Capital element of finance lease rental payments 24
Cash Inflows
Repayment of amounts lent (10)
(75) New Loans raised (7)
(1,461) Financing Net Cash Flow (3,291)
(458) Net (Increase)/Decrease in Cash 24ii (302)
.
31
Notes to the Core Financial Statements
The notes to the core financial statements are shown below. Some are dictated by
statute while others are included to add clarity. Those prefixed with a number refer to
specific lines in the accounts:
General:
Prior Period and Exceptional/Extraordinary Items
There are no Prior Year Adjustments, exceptional or extraordinary items that have
impacted on the net worth as reported in these Statements. However the 2006/07
comparative figures quoted in the Balance Sheet have been restated to bring them in
line with best practice and in particular the reporting requirements of the 2007 Statement
of Recommended Practice.
2006/07 Changes Restated
Notes
£’000 £’000 £’000
Current Liabilities (4,368) (75) a. (4,443)
Short Term Investments 8,013 402 b. 8,415
Long Term Liabilities (14,181) 75 a. (14,106)
Long Term Investments 3,069 46 b. 3,115
Debtors 5,357 (448) b. 4,909
Other Assets & Liabilities 30,866 30,866
Net Worth 28,756 0 c.d. 28,756
a. The SORP specifies that any borrowing which is repayable within 1 year or on
demand should be classified as a current liability. At the end of 2006/07 the
Authority had a £75k loan outstanding that was repayable to the lender on
demand. This has now been correctly reclassified as a current liability.
b. Guidance released by Cipfa in April 2008 stated that any interest accrued at the
year end should no longer be classified as a current asset/short term debtor.
Instead it must be added to the carrying value of the underlying investment. At the
end of 2006/07 there was £448k of accrued interest included in debtors. This has
been moved to the relevant investment type.
c. The 2007 SORP introduced a new regime for capital accounting requiring the
creation of a Revaluation Reserve and Capital Adjustment Account. The
Revaluation Reserve replaces the Fixed Asset Restatement Account (FARA). The
debit balance of £6.890 million on the FARA at 31st March 2007 has been written
off to the Capital Financing Account (£33.505 million credit balance) to form the
32
new Capital Adjustment Account with a balance of £26.615 million. The
Revaluation Reserve has then been included on the Balance Sheet with a zero
opening balance. The closing position on the Reserve at 31st March 2008
therefore only shows revaluation gains accumulated since 1st April 2007.
d. The 2007 SORP also introduced extensive new requirements for the recognition,
measurement and reporting of Financial Instruments. In acknowledgement that the
retrospective application of these regulations would have been unduly onerous,
transitional arrangements in the SORP gave certain dispensations for the treatment
and restatement of the 2006/07 Balance Sheet. These removed the requirement
to restate opening balances as long as the effect on the net worth of the Authority
was recorded through the 2007/08 Statements as if it had been actioned on 1 st
April 2007.
Review of the 2006/07 balances revealed only one area where applying the SORP
had a significant impact on net worth. There were a number of forward dated
investments where the contracted interest rates would have been lower than that
which could have been obtained as at 31st March 2007. The difference in interest
between the contracted rate and that which theoretically could have been obtained
for the life of the loans represented a Derivative Loss for the Authority. The new
regulations state that such Derivative Losses (or gains) are chargeable to the year
in which the contract arose. Under the transitional arrangements instead of being
charged to 2006/07 these losses should be processed through the General Fund in
2007/08 via the Statement of Movement on the General Fund Balance and
Statement of Total Recognised Gains and Losses. However, as the majority of the
loss arising in 2006/07 would have been reversed out in 2007/08, the transactions
have all been treated as relating to 2007/08 and charged directly to the Income and
Expenditure Account. Recording the transactions in this way, though not strictly in
accord with the SORP, has had no material impact on the 2007/08 Statements, as
can be seen below.
Income & Balance
Transactions Expenditure Sheet
£ £
st
1 April 2007 Recognise Derivative Loss ( re 2006/07 ) 17,775 (17,775)
Crediting back to the General Fund the interest foregone
in 2007/08 as a result of the Derivative Loss (15,096) 15,096
st
31 March 2008 Net loss charged to the 2007/08 Statements re the
2006/07 Derivative 2,679
st
31 March 2008 Derivative Loss ( re 2006/07 ) carried forward (2,679)
33
1. Central Services to the Public
This includes local tax collection, elections, local land charges and community grants.
2. Cultural, Environmental and Planning Services
This includes expenditure on the arts and museums, recreation and sport, open spaces,
tourism, departmental and support services, Leek Cemetery, environmental health,
community safety, flood defence, street cleansing, waste collection, building control,
development control, planning policy, and economic development.
3. Highways, Roads and Transport Services
This includes expenditure on car parking, concessionary fares, engineering services,
bus shelters and street naming.
4. Housing Services
This includes private sector housing, homelessness, housing benefits, welfare services
and residual elements of what was formerly the Housing Revenue Account.
5. Corporate and Democratic Core
The corporate and democratic core comprises all activities which local authorities
engage in specifically because they are elected, multi-purpose authorities. The cost of
these activities are thus over and above those which would have been incurred by a
series of independent, single purpose, nominated bodies managing the same services.
There is therefore no logical basis for apportioning these costs to services.
6. Non Distributed Costs
This includes pension costs for added years and early retirements.
7. Net Cost of Services
The following transactions, included in the Net Cost of Services, are considered in more
detail;
i. Trading Operations
ii. Discretionary Expenditure
iii. Publicity
iv. Building Control
v. Member Allowances
vi. Officer Emoluments
vii. Related Party Transactions
viii. Audit Costs
ix. Local Authority (Goods and Services) 1970 Act
x. Joint Arrangements
34
i. Trading Operations
Net Cost of Services is inclusive of the surpluses and losses generated by the Council’s
six trading accounts. Three of these accounts relate to Service Trading functions, where
the manager of each is required to operate in a commercial environment and balance
their budget target by generating income from other parts of the Council or other
organisations. The other three relate to Contract Service functions, where the trading
surplus or deficit is apportioned in accordance with the requirements of the Best Value
Accounting - Code of Practice. In 2007/08 a net deficit of £36,978 (2006/07 £6,309
surplus) has been apportioned to the clients of each trading activity as set out below.
2006/07 2007/08
£’000 £’000
General Fund – Service Trading Accounts
Markets
(226) To ensure that the service at least breaks-even, although the overriding Turnover (236)
329 objective is to support the local economy and attract tourism. Expenditure 358
103 Net Deficit 122
Trading and Industrial Services
(135) The Council is responsible for two Industrial Sites. As part of the Turnover (126)
96 Council’s economic development strategy these are established to Expenditure 80
(39) support small businesses. Net Surplus (46)
Building Control
(336) Building Control has a trading objective, whereby the fee-earning Turnover (326)
380 element of the service, has to break-even over a three year period Expenditure 346
44 Net Deficit 20
108 Net Deficit on General Fund Service Trading Accounts 96
General Fund – Contract Trading Accounts
Refuse Collection
(2,092) The Council’s refuse collection function is contracted to its Waste Turnover (2,651)
2,041 Collection Trading Unit with the trading objective of breaking even. The Expenditure 2,651
(51) balance is re-apportioned to the client accounts Net Deficit / (Surplus) 0
51 Re-apportioned 0
0 Net Balance 0
Street Cleansing
(643) The Council’s street sweeping function is contracted to its Street Turnover (661)
662 Cleansing Trading Unit, which operates with the aim of breaking even. Expenditure 678
19 Net Deficit 17
(19) The trading balance is re-apportioned to the Re-apportioned (17)
0 Client accounts. Net Balance 0
Convenience Cleaning
(100) The cleaning of public toilets is contracted to the Council’s Convenience Turnover (107)
126 Cleansing Trading Unit, whose objective is to break even. Expenditure 127
26 Net Deficit 20
(26) The trading balance is re-apportioned to the Re-apportioned (20)
0 Client accounts. Net Balance 0
35
ii. 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’s expenditure under this power in 2007/08 was £176,074 mainly on
donations to voluntary bodies working in the local area (£145,004 in 2006/07).
iii. Expenditure on Publicity
Councils are required to keep an account of expenditure on publicity, as defined in
Section 5 (1) of the Local Government Act 1986.
2006/07 2007/08
£’000 £’000
Publicity & Promotion (Tourism, Development, etc.) 422 353
Staff Advertising 76 51
Media Salary Costs 94 99
Total 592 503
iv. The Building Control Account
The Building (Local Authority Charges) Regulations 1998 require the disclosure of
information regarding the setting of charges for the administration of the building control
function. The Council sets charges for work carried out in relation to building regulations
with the aim of covering all costs incurred. However, certain activities performed by the
Building Control Unit cannot be charged for, such as providing general advice and
liasing with other statutory authorities. The statement below shows the total costs of
operating the service divided between the chargeable and non-chargeable activities.
Total Non – Total
Chargeable
Expenditure Chargeable Expenditure
2007/08
2006/07 2007/08 2007/08
£’000
£’000 £’000 £’000
Expenditure
314 Employees 178 76 254
23 Premises 8 3 11
21 Transport 16 7 23
40 Supplies and Services 27 7 34
135 Central and Support Service Charges 117 50 167
533 Total Expenditure 346 143 489
Income
336 Building Control Charges 326 326
87 Miscellaneous Income 97 97
423 Total Income 326 97 423
(110) Surplus/(Deficit) for the year (20) (46) (66)
v. Member’s Allowances
The total allowances paid to the Elected Members in 2007/08 amounted to £241,636
(£240,052 in 2006/07).
36
vi. Officer’s Remuneration
The number of employees receiving total remuneration above £50,000, including
expense allowances chargeable to income tax and an estimated value of other benefits,
but excluding employer’s pension contributions are:
Number of Number of Number of Number of
Remuneration Band Employees Employees Remuneration Band Employees Employees
£ 2006/07 2007/08 £ 2006/07 2007/08
50,000 - 59,999 4 4 120,000 - 129,999 0 0
60,000 - 69,999 0 3 130,000 - 139,999 0 0
70,000 - 79,999 0 0 140,000 - 149,999 0 0
80,000 - 89,999 1 0 150,000 - 159,999 0 0
90,000 - 99,999 1 1 160,000 - 169,999 0 0
100,000 - 109,999 0 1 170,000 - 179,999 0 1
110,000 - 119,999 1 0
During the year the Authority entered into two joint arrangements with regard to sharing
the post of Chief Executive (see note ix). The first, involving East Staffordshire BC was a
short term arrangement, which ended in December 2007. The second is the on-going
arrangement arising out the creation of the Strategic Alliance with High Peak BC (see
note 7x). Consequently the Authority incurred increased costs on the Chief Executive
post, £54k of which was recharged to the other Authorities. When this is taken into
account the cost to the Authority of its top paid employee falls within the £110,000 –
£119,999 remuneration band.
vii. Related Parties
Local authorities are required to disclose in their Financial Statements any related party
transactions that may affect or influence the reported financial position of the Council.
There were no material related party transactions in 2007/08 identified for Council
Officers and elected members. The related party transactions such as grants from
Government, precept payments to other local authorities, levies paid to other bodies and
transactions with the pension fund are disclosed elsewhere within the Financial
Statements.
There are no material transactions with related parties concerning subsidiary, associated
companies or joint ventures.
viii. Audit Costs
The Council has paid the following amounts to the Audit Commission in respect of
external audit and inspection services:
2006/07 2007/08
£’000 £’000
External Audit Services 84 105
Statutory Inspection 14 20
Certification of Grant Claims & Returns 31 2
Total 129 127
37
ix. Local Authority (Goods and Services) Act 1970
The Council is empowered by this Act to provide goods and services to other public
bodies. The authority provided executive / management services to East Staffs Borough
Council, High Peak Borough Council and Lichfield District Council. Income from these
services amounted to £106,519 in 2007/08 (£0 2006/07) and the related expenditure
was £70,260 (£0 2006/07)
x. Joint Arrangements
The Council actively pursues working in partnership with other organisations where this
can improve efficiency and effectiveness in achieving key priorities. Some of the more
significant joint arrangements are detailed below:
Local Area Agreements (LAA)
The Council is a participant in an LAA – a partnership with other public bodies involving
the pooling of government grants to finance work towards jointly agreed objectives for
local public services.
In March 2007, partners across Staffordshire approved the Local Area Agreement for
the period 2007-2010. The LAA is designed to deliver improved outcomes which meet
the needs of local areas through public, private and voluntary sector agencies working in
partnership.
Staffordshire County council is the accountable body for the LAA, and received £8.416m
of grant funding in 2007/08 to be used to achieve the outcomes, targets and indicators
set out in the LAA. Of this sum £218,020 was allocated to Staffordshire Moorlands
District Council.
The list of partners involved in the LAA is set out below:-
LAA Partners
Staffordshire County Council Cannock Chase District Council
Staffordshire Police East Staffordshire Borough Council
Staffordshire Fire and Rescue Service Lichfield District Council
Staffordshire Connexions Newcastle-under-Lyme Borough Council
Learning and Skills Council North Staffordshire PCT
Job Centre Plus South Staffordshire District Council
West Midlands Business Brokerage Service South Staffordshire PCT
Advantage West Midlands Stafford Borough Council
InStaffs Staffordshire Moorlands District Council
Southern Staffordshire Partnership Staffordshire University
Staffordshire Drug Alcohol Action Team Tamworth Borough Council
Community Safety Partnerships Environment Agency
Neighbourhood Management Partnerships Staffordshire Rural Community Council
Staffordshire & Stoke-on-Trent Consortium of Youth Justice Board
Infrastructure Organisations
38
Parking Board
On the 1st October 2007 the Council took over responsibility for on-street parking within
the district, under the control of a county wide Parking Board. Under this arrangement
expenditure relating to the function, including set up costs of the districts and the
County, are to be offset against future revenue streams. Any surplus generated from
activities within the district is transferred to the Board. These funds are then reallocated
by the Board to the districts to finance improvements in parking and traffic management.
Until revenue streams are sufficient to cover set up and running costs these balances
will be borne by the district and county council. At the end of 2007/08 the authority’s
share of this deficit amounted to some £57k. It is anticipated that it will take two or three
years for this debt to be cleared by future income streams.
Strategic Alliance
Towards the end of 2007/08 a strategic alliance was formed with our neighbours High
Peak Borough Council, aiming to not only produce savings through joint procurement
and working, but to draw on the expertise of both Authorities to improve service
provision. Any costs and savings, incurred and accruing in an accounting period, are
accounted for by the relevant partner in the alliance.
8. Housing Capital Receipts
In January 2006 the Office of the Deputy Prime Minister (ODPM) changed their position
on the pooling of housing capital receipts. Previously the ODPM had advised those
authorities that had closed their Housing Revenue Accounts (HRA) that they did not
have to pay a proportion of any capital receipt generated by the disposal of an HRA
asset to the Secretary of State. Their revised position is that ex-HRA authorities, such
as this Council, should be subject to pooling and pay over receipts from HRA sales.
This change, retrospectively effective from the 1st April 2004, was subject to
interpretation and challenge. After taking legal advice on the interpretation of the
legislation it has been determined that payment should be made. The amount due at
31st March 2008 has been agreed at £10,197.
9. Retirement Benefits
The impact of accounting for retirement benefits on the Council’s Statement of Accounts
is considered in the following sections;
i. Pension Scheme
ii. Financial Reporting Standard 17 (FRS17)
iii. Income & Expenditure Account & Statement of Movement on General Fund
Balances
iv. Balance Sheet – Net Liability
v. Balance Sheet – Pension Reserve.
39
i. Pension Scheme
As part of the terms and conditions of employment of its employees, the Council offers
retirement benefits through membership of the Local Government Pension Scheme
(LGPS). The Council is a member of the Staffordshire County Pension Fund, which is
administered by Staffordshire County Council in accordance with the LGPS Regulations
1997. (Further information can be found in Staffordshire County Council’s
Superannuation Fund’s Annual Report which is available upon request from the County
Treasurer’s Department, Eastgate Street, Stafford). Contracted out of the State Second
Pension, the Scheme is known as ‘defined benefit’ and ‘funded’.
Defined Benefit - the levels of benefit retiring members receive is based on their pay
history and length of service
Funded - a Pension Fund of investments is built up from employee and
employer contributions to generate income streams out of which
retirement benefits are paid. The Council pays contributions to the
Pension Fund sufficient to ensure that it can meet future payment
obligations. These contributions are set on rates that are
determined by Hymans Robertson, the Pension Fund’s
professionally qualified actuaries and are based on triennial
valuations of the fund. The most recent triennial valuation was 31st
March 2007. The next formal valuation is 31st March 2010.
ii. Financial Reporting Standard 17 (FRS17).
FRS17 is a national accounting standard that requires an organisation to account for
retirement benefits when it is committed to give them, even if the actual giving will be
many years to come. Whilst FRS17 is a better reflection of the obligations of the
employer to fund pension promises to employees, it does not reflect the actual
accounting arrangements. It impacts on both the General Fund Accounts and the
Balance Sheet.
Income & Expenditure Account: must disclose within the Net Cost of Services the
total value of all pension payments that have accumulated (including deferred
pensions) at the 31st March each year. Net Operating Expenditure should show the
change within the year in the physical assets and liabilities of the fund.
Statement of Movement on General Fund Balances: should record the accounting
entries necessary to ensure that the charge to the tax payer is based only on current
costs of pension provision.
Balance Sheet:
- requires that the Council’s share of the Pension Fund Assets and Liabilities be
reported
- requires a Reserve Account for the accounting entries to restrict the impact of
FRS17 on the council tax payer and to off-set the Council’s net liability.
40
The effect of these requirements is shown below:
iii. Income & Expenditure Account and Statement of Movement on General
Fund Balances
In line with the requirements of FRS 17 pension costs that are charged to the Council’s
accounts in respect of its employees, are equal to the funded pension scheme for these
employees. The total cost of individual services reflects that further costs arise in respect
of certain pensions paid to retired employees on an unfunded basis.
Although 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. We recognise the cost of retirement benefits in the Net
Cost of Service when employees earn them, rather than when the benefits are
eventually paid as pensions. However, the charge we are required to make against
Council Tax is based on the cash payable in the year, so the real cost of retirement
benefits is reversed out of the Income & Expenditure Account after Net Operating
Expenditure. The following transactions have been made in the Income & Expenditure
Account during the year.
General Fund Accounts - Restated under FRS17 Regulations
2006/07 2007/08
Actual Actual
Note
Accounting Accounting
Outturn Final Outturn Final
Entries FRS17 Entries FRS17
£’000 £’000 £’000 £’000 £’000 £’000
Income & Expenditure Account:
13,982 (613) Service Costs 14,948 (778) a
1,388 14,757 1,225 b 15,395
138 (138) Non-distributed cost 140 (140) c
d
14,120 637 14,757 Net cost of Service 15,088 307 15,395
96 96 Corporate Items (514) (514)
2,259 Pensions interest cost 2,508 e
(2,446) (187) Expected return on pension (2,654) f (146)
assets
14,216 450 14,666 Net operating Expenditure 14,574 161 14,735
Statement of Movement on General Fund Balances:
(1,841) (1,841) Movement on Reserves (1,396) (1,396)
(1,201) Movement on Pension (1,079) g
751 (450) Reserve 918 h (161)
12,375 - 12,375 Amount to be met by 13,178 - 13,178
Govt.Grants and Taxation
(13,046) (13,046) Govt. Grants and Taxation (13,467) (13,467)
(Increase) Decrease in
(671) (671) General Fund Balance (289) (289)
41
Notes
a) Employers Superannuation contributions per actuarial report
b) Current service cost as per actuarial report
c) Past service pension contribution in “non distributed costs”
d) Past service cost as per actuarial report
e) Pension interest cost as per actuarial report
f) Expected return on assets in scheme as per actuarial report
g) Reversal of FRS 17 items(b,d,e,f)
h) Reversal of actual Superannuation contributions (a,c)
iv. Balance Sheet – Net Liability
Pension Fund Liability - as at 31st March 2008
Hymans Robertson valued the Pension Fund liabilities and assets as at 31st March
2008 solely for the purposes of FRS 17. This shows the Council’s projected net liability
on its share of the Pensions Fund to be £10.809 million (£9.282 million in 2006/07). This
liability, shown on the Balance Sheet, represents the Council’s underlying commitment
to pay retirement benefits in the long run. It is actually a net figure comprising the
following overall assets and liabilities for the Council’s share of the Scheme.
st st
Staffordshire Moorlands DC share of 31 March 2007 31 March 2008
Pension Fund assets & liabilities £’000 £’000
Estimated liabilities in scheme (46,638) (44,919)
Estimated assets in scheme 37,356 34,110
Net asset / (liability) (9,282) (10,809)
Basis for Valuation:
Liabilities have been assessed on an actuarial basis and the following financial
assumptions have been used in the calculation:
31st March 31st March 31st March 31st March
Financial Real Real Real Real
2005 2006 2007 2008
Assumptions % p.a. % p.a. % p.a. % p.a.
% p.a. % p.a. % p.a. % p.a.
Price increases 2.9% 3.1% 3.2% 3.6%
Salary increases 4.4% 1.5% 4.6% 1.5% 4.7% 1.5% 5.1% 1.5%
Pension increases 2.9% 3.1% 3.2% 3.6%
Discount rate 5.4% 2.4% 4.9% 1.7% 5.4% 2.1% 6.9% 3.2%
Changes to the Local Government Pension Scheme permit employees retiring on or after
6th April 2006 to take an increase in their lump sum payment on retirement in exchange
for a reduction in their future annual pension. On the advice of our actuaries the Council
has taken the view that 50% of future retirements will elect to take the tax free cash, up to
the limits set by Her Majesty’s Revenue and Customs. Consequently, the valuation of the
Council’s retirement benefit liabilities as at 31st March 2008 includes an allowance for this
change.
42
Assets in the County Council Pension Fund are at the market value and consist of the
following categories. The table below shows this Council’s share of the assets of the Fund
and the expected annual return on these assets.
Expected Annual Expected Annual Expected Annual
Scheme Assets Return as at Return as at Return as at
st st st
(Employer Share) 31 March 2006 31 March 2007 31 March 2008
(% per annum) (% per annum) (% per annum)
Equities 7.4% 7.8% 7.7%
Bonds 4.6% 4.9% 4.6%
Property 5.5% 5.8% 5.5%
Cash 4.6% 4.9% 4.6%
The distribution of the Council’s assets within the Fund is as follows:
st st st
31 March 2006 31 March 2007 31 March 2008
Fund Value Asset Fund Value Asset Fund Value Asset
£’000 Distribution £’000 Distribution £’000 Distribution
% % %
Equities 28,393 78.7 28,320 75.8 25,810 75.7
Bonds 3,721 10.3 4,175 11.2 4,705 13.8
Property 2,510 6.9 3,029 8.1 2,740 8.0
Cash 1,470 4.1 1,832 4.9 855 2.5
Total 36,094 100 37,356 100 34,110 100
Pension Fund Liability – changes during 2007/08
The actuary’s analysis of the detailed movements in the net pension liability for the year
to 31st March 2008 is shown below.
2006/07 2007/08
£’000 £’000
Net pensions liability at beginning of year (10,153) (9,282)
Movements in the year:
Current service cost (1,388) (1,225)
Employer’s contribution payable to scheme 613 778
Unfunded benefit contributions 138 140
Impact of Settlements and Curtailments - -
Expected return on Employer Assets 2,446 2,654
Interest on Pension Scheme Liabilities (2,259) (2,508)
Actuarial gains / (losses) 1,321 (1,366)
Net pensions liability at end of year (9,282) (10,809)
Current Service Cost – amount chargeable to the Services based on the Actuaries
assessment of pension liabilities arising and chargeable to 2007/08 (included in the net
cost of services)
43
Employer’s Contributions – the actuary uses an estimated figure whereas the Council
actually paid an employer’s contribution of £778,430 (£612,737 in 2006/07) representing
11.7% (9.9% in 2006/07) of employees’ pensionable pay
Unfunded Contributions - the Council is responsible for all pension payments related to
added years benefits it has awarded, with the related increases. The actuary uses an
estimated figure whereas the actual payments made in 2007/08 amounted to £139,562
representing 2.10% of pensionable pay (£137,743 or 2.23% of pensionable pay in
2006/2007)
Return on Assets/Interest on Liabilities – these represent the change in future liabilities
and assets as measured at 31st March 2008. For example changes in the number of
current members, the mix of existing pensioners and anticipated return on investments
Actuarial Gains/Losses – Changes in the assumptions and measurements as they affect
the year end value as compared to the opening position. The actuarial gain can be
analysed into the following categories, measured as absolute amounts and as a
percentage of assets or liabilities (as applicable) at 31st March 2007:
% age of
£’000 assets / liabilities
Differences between the expected and actual return on assets (4,734) 13.9% assets
Experience gains / (losses) on liabilities (4.628) 10.3% liabilities
Change in Financial Assumptions Underlying the Present Value 7,996 17.8% liabilities
of the Scheme Liabilities
Loss (as a percentage of Scheme Liabilities) 1,366 3.0% liabilities
v. Balance Sheet – Pension Reserve
FRS17 accounting creates two areas of mismatch in the Council’s accounts. Firstly the
cost of retirement benefits is recognised in the Income & Expenditure Account when
employees earn them, rather than when the benefits are eventually paid to pensions.
However the charge required against Council Tax is based upon the cash payable in the
year. Secondly the Council’s Balance Sheet shows its share of the long-term Pension
Fund liability. It is not required however that this liability is funded or matched to assets
held at the Balance Sheet date.
The mismatches are accounted for by creating and maintaining a Pension Reserve. The
Reserve does not represent funds available to the Council but offsets the FRS17
liabilities reported elsewhere in the statements.
The appropriations made to the Reserve in 2007/08 were:
44
£161k appropriation to the reserve to offset the difference between the actual
pension contributions made plus the change in the net pension liability during
2007/08 and the amount the actuary’s report specified should be charged to the
accounts. (Note 9iii - items g and h in the table of FRS17 entries on the General
Fund Accounts)
£1,366k addition to the reserve to reflect the change in the value of the assets and
liabilities resulting from the actuarial gains and losses in 2007/08. (Note 9iv above)
Balance as at Contribution/ Actuarial Gains/ Balance as at
st st
1 April 2007 Return on Assets (Losses) 1 April 2008
£’000 £’000 £’000 £’000
Pension Reserve (9,282) (161) (1,366) (10,809)
The balance on the reserve of £10,809k is the same as the Net Pension Liability
reported on the Balance Sheet (Note 9iv above). This Reserve balance, reported on
the Balance Sheet as a funding account, offsets the Liability. So while the long term
liability to meet future retirement commitments is reported it has not required that current
resources be set aside to meet them.
How can such a significant liability, which is responsible for £11m of the Authority’s
Balance Sheet £29.8m net worth, be virtually disregarded? The LGPS is considered low
risk over the longer term, backed as they are by central Government. Statutory
arrangements for funding the deficit mean that the financial position of the Council
remains healthy.
However, the deficit is not being ignored but being addressed at the local and national
level. Locally, there will be increased contributions over the remaining working life of
employees, as assessed by the Scheme actuary. Nationally, the Scheme’s terms and
conditions are subject to renegotiation by Central Government.
10. Breakdown of Reconciling Items in the Statement of Movement on the
General Fund Balances
The amounts in addition to the Income and Expenditure Account 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:-
45
2006 / 07 2007 / 08
Notes
£’000 £’000
Amounts included in the Income & Expenditure Account but required by Statute
to be excluded when determining the Movement on the General Fund Balance for
the Year
1,049 Depreciation & impairment of Assets 12i 1,458
(78) Government Grants deferred amortisation matching depreciation and impairments (118)
886 Amounts treated as Revenue expenditure in accordance with the SORP but which are 666
classified as Capital expenditure by Statute (i.e. deferred charges)
0 Right To Buy Receipts and Renovation Grants Repaid (635)
0 Net (gain) or loss on sale of fixed assets 39
450 Amount by which pension costs calculated in accordance with the SORP are different 9iii. 161
from the contributions due under the pension scheme regulations
Amounts not included in the Income & Expenditure Account but required to be
included by statue when determining the Movement on the General Fund
Balance for the year
9 Transfer from Capital Receipts Reserve equal to the amount payable into the Housing 8. 10
Capital Receipts Pool
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
(26) Any voluntary provision for repayment of debt 23. (24)
Net additional amount required to be credited to the General Fund Balance for the
2,290 1,557
year
11. Intangible Fixed Assets
The table below illustrates the movement in intangible assets:-
Licences,
Purchased trademarks and Patents Total
Software Licences artistic originals
£’000 £’000 £’000 £’000
Original Cost 11 0 0 11
Amortisations to 1 April 2007 0 0 0 0
Balance at 1 April 2007 11 0 0 11
Expenditure in Year 32 0 0 32
Written off to revenue in year 0 0 0 0
Balance at 31 March 2008 43 0 0 43
Software licences are being held for the Electoral Registration System and Microsoft
Office. The costs will be written off over 3 years.
46
12. Capital
This note is broken down into a number of sections covering:
i. analyses of capital expenditure and disposals during the year between
operational and non-operation assets
ii. basis for valuations
iii. how the capital expenditure has been financed
iv. commitments on capital contracts
v. details of assets held
vi. lease details
vii. details of leases to third parties
viii. analysis of assets employed
ix. balance sheet – capital reserves
i. Capital Expenditure and Disposals
The assets of the Council are shown at their replacement value in line with CIPFA’s
Code of Practice on Capital Accounting.
ii. Valuation Information
Non
Operational Assets Operational
Council Other Vehicle, Infrastruct. Community Assets
Dwellings Land & Plant & Assets Assets
Buildings Equipment TOTAL
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Certified valuation at 31st March 2007 0 19,862 5,616 0 83 6,372 31,933
Accumulated Depreciation & impairment 0 (527) (2,312) 0 0 0 (2,839)
Net book value of Assets at 31st Mar 07 0 19,335 3,304 0 83 6,372 29,094
Certified valuation :
Brought forward at 31st March 2007 0 19,862 5,616 0 83 6,372 31,933
Movements in 2007/08
Additions /Enhancements 0 215 1,160 0 104 45 1,524
Disposals 0 0 0 0 0 (148) (148)
Transfers 0 175 0 0 0 (175) 0
Revaluations 0 3,077 0 0 0 409 3,486
Derecognition of Assets 0 (35) 0 0 0 (5) (40)
Certified valuation at 31st Mar 08 0 23,294 6,776 0 187 6,498 36,755
Accumulated Depreciation and impairment:
Brought forward at 31st March 2007 0 (527) (2,312) 0 0 0 (2,839)
Depreciation In Year 0 (374) (857) 0 0 0 (1,231)
Depreciation Assets Re-valued/Derecognised 0 204 0 0 0 0 204
Depreciation Assets Sold 0 0 0 0 0 0 0
Impairments 0 (200) 0 0 0 (27) (227)
Accumulated depreciation at 31st Mar 08 0 (897) (3,169) 0 0 (27) (4,093)
Net Book Value of Assets at 31st Mar 08 0 22,397 3,607 0 187 6,471 32,662
47
Fixed Assets shown in the Balance sheet have been valued on the basis recommended
by CIPFA and in accordance with the Statements of Assets Valuation Practice and
Guidance Notes published by the Royal Institution of Chartered Surveyors (RICS).
Fixed Assets were classified in accordance with the groups required by the 2004 Code
of Practice on Local Government Accounting. Assets are valued on the following basis:
Operational Assets are valued at either Open Market Value for Existing Use (where
there is adequate evidence of market transactions for that use) or Replacement Cost
where there is no market evidence. Specialised Operational Assets have been
valued at Depreciated Replacement Cost
Non-Operational Assets are valued at Open Market Value
Infrastructure and Community Assets are valued at Historic Cost net of depreciation.
The valuations have been updated as at 31st March 2008. The 2007/08 valuations were
carried out by Clive Rhodes BSc M.R.I.C.S (Internal Officer - Head of Property Services)
and Richard N Day BSc (Hons) M.R.I.C.S (External Valuation Officer).
There is a rolling programme for revaluations whereby each asset will be reassessed
within a five-year period. There is no ‘de-minimis’ level for fixed assets.
Other Vehicle, Non-
Council Infrastruct. Community
Land & Plant & Operational TOTAL
Dwellings Assets Assets
Buildings Equipment Assets
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Valued at
- - 6,808 - 187 - 6,995
historical cost
Valued at
current value in:
2007/2008 - 5,772 - - - 1,894 7,666
2006/2007 - 144 - - - 4,322 4,466
2005/2006 - 12,401 - - - 89 12,490
2004/2005 - 7,060 - - - 1,231 8,291
2003/2004 - 412 - - - - 412
2002/2003 - 10,471 - - - 3,541 14,012
48
iii. Capital Expenditure and Financing
The capital expenditure incurred and financing method can be summarised as follows:
2006/07 2007/08
£’000 £’000
169 Opening Capital Financing Requirement 113
Capital Investment
1,947 Operational 1,511
402 Non-Operational Assets 45
1,782 Deferred Charges 1,453
4,131 3,009
Sources of Finance
0 Borrowing 0
2,730 Capital Receipts 2,027
1,401 Grants, Contributions, etc. 982
- Sums set aside from Revenue 0
4,131 3,009
(30) Write out of Prior Year Funding 30
(26) MRP - Finance Lease (24)
113 Closing Capital Financing Requirement 119
Explanation of movements in Year
(30) Capital Grant written out 30
(26) Principal Repayment Finance Lease set aside from Revenue (24)
(56) Increase/(decrease) In Capital Financing Requirement 6
iv. Commitments under Capital Contracts
The following table identifies significant contracts for capital investment that the authority
has entered into, their purpose, the approximate value and the period over which the
investment will take place:
Contract Value Period Investment
Scheme
£'000s will Take Place
ICT Strategy - Desktop Refresh 50 2008 to 2009
The Council has entered into a Service Level Agreement for £1.65million in 2008/09 with
Beth Johnson Housing Association to deliver elements of its housing strategy.
A number of significant projects are committed in the capital programme but contracts
have yet to be agreed, including:
Public Conveniences - £0.3 million refurbishment of facilities
Leek Sports Village - £0.1 million contribution to a £2 million scheme the Council is
leading on to improve sporting facilities within Leek
Affordable Housing - £7 million development of dwellings throughout the district
Close Circuit Television (CCTV) - £0.5 million improvements to system
Thorley Drive Playing Fields - £0.6 million provision of sports pavilion; and
Hales Hall Pool - £0.5 million safety engineering works to ensure compliance with
Reservoirs Act.
49
v. Information on Assets Held
The main assets held by the Council are:
31st March 31st March
2007 2008
No. No.
Town Halls and Council Offices 4 4
Markets 3 3
Industrial Estates 2 2
Public Conveniences 17 17
Depots 2 2
Leisure Centres 3 3
Cemeteries 2 2
Museums 1 1
vi. Assets Held under Leases
Finance Leases
There were no assets acquired under finance lease arrangements during 2007/08. The
outstanding assets held under finance leases are as follows:
Net Book Value at Accumulated
31st March 2008 Depreciation
£’000 £’000
Other land and buildings 185 1
Vehicles, plant, and equipment 119 71
Total Assets held under Finance Leases 304 72
The outstanding Liabilities under these finance leases (excluding finance charges) at
31st March 2008 are:
Vehicles, Plant
and Equipment
£’000
Obligations payable in 2008/09 24
Obligations payable between 2009/10 and 2013/14 95
st
Obligations payable after 31 March 2014 0
Total Liabilities under Finance Leases 119
The rentals payable under these arrangements in 2007/08 were £29,176 (2006/07
£31,473). Charged to the Income & Expenditure Account was £5,324 (2006/07 £5,522)
in finance costs, with the balance of £23,851 writing down the obligations to the lessor.
There were no finance leases entered into prior to year-end to commence in the future.
Operating Leases
The Council uses property, leased cars, commercial vehicles and equipment financed
under the terms of an operating lease. The amount paid under these arrangements in
2007/08 was £200,301 (2006/07 £201,978). However, the amount charged to revenue
was £209,467 reflecting the matching of these payments with the accounting periods in
which the assets were used by the Council. The Accounting Code of Practice requires
charges to be made evenly throughout the period of lease.
50
The Council is committed to making payments of £227K under these leases in 2008/09,
comprising the following elements:
Land & Vehicles, Plant
Property & Equipment
£’000 £’000
Leases expiring in 2008/09 0 65
Leases expiring between 2009/10 and 2013/14 20 127
Leases expiring after 2013/14 15 0
vii. Authority as the Lessor
The Authority lets a number of its properties, such as industrial units and office
accommodation, to third parties via operating leases. In 2007/08 the total rental income
receivable from this source totalled £284,442 (2006/07 £287,497) analysed below
between rental from finance leases, and rental from operating leases:-
Rental from Rental from Finance Total Rental
Operating Leases Leases Income
£’000 £’000 £’000
284 0 284
The asset value of the properties leased out on operating leases, as recorded in the
Authority’s Balance Sheet, is as follows:-
Net Book Value at Accumulated
st
31 March 2008 Depreciation
£’000 £’000
Other Land and Buildings 5,027 111
viii. Analysis of Net Assets Employed
While the Council does designate some of its activities as trading, these are mainly
internal in nature and aimed at maximising service delivery. All assets are therefore
regarded as employed for the benefit of the General Fund.
st st
Analysis of net assets employed: - 31 March 2007 31 March 2008
£’000 £’000
General Fund 28,756 29,805
51
ix. Balance Sheet – Capital Reserves
A number of capital reserves exist on the Balance Sheet. These represent both
balances available to support capital spend and reserves required to comply with capital
accounting regulations.
Capital Spend Reserves: - proceeds of fixed asset sales available to meet future capital
investment. The Deferred reserve represents the outstanding principal elements of
Mortgages granted by the Authority. As these are repaid in the year they are transferred
to Unused Receipts to signify that they can now be applied.
Unused Deferred Capital
Movement on Reserves: - Capital Receipts
Receipts
£’000 £’000
st
Balance at 1 April 2007 6,225 88
Sale of Assets 109
Right to Buy Receipts & Renovation Grants Repaid 635
Principal repaid on Mortgages 19 (19)
Applied to Capital Schemes (2,027)
Pooled Housing Capital Receipts (10)
st
Balance at 31 March 2008 4,951 69
Capital Accounting Reserves: - because the two reserves in this category are not
available to support future spend they are termed accounts. The Revaluation Reserve is
a store of gains on revaluation of fixed assets not yet realised through sales. Whereas
the Capital Adjustment Account records the capital resources set aside to meet past
expenditure
Capital
Revaluation
Adjustment
Movement on Reserves: - Reserve
Account
£’000 £’000
st
Balance at 1 April 2007 0 (26,615)
Applied to Capital Expenditure (2,027)
Fixed Assets - Valuation Changes
Revaluation Surplus/(Deficit) in Year (3,686)
Assets Derecognised 36
Asset Disposal 148
Debited or credited to the General Fund Balance for the year (Note 10)
- Depreciation & Impairment 1,458
- Capital Grant Written Off 30
- Deferred Charges 666
- Government Grants Deferred (148)
- Minimum Revenue Provision (24)
st
Balance at 31 March 2008 (3,686) (26,476)
52
Assets De-recognised - During 2007/08 a review was undertaken to ensure the
appropriateness of recognition of land and property assets recorded in the Council's
financial statements. As a result of the review 3 leasehold properties have been
removed from the balance sheet. The properties concerned are occupied under terms
that have been re-classified as operating leases.
13. Depreciation
Council buildings and other infrastructure assets, vehicles, plant and machinery are
depreciated using the straight-line method over their useful economic life.
£’000
st
Accumulated depreciation at 1 April 2007 (2,839)
Depreciation during year (1,231)
Depreciation written out on Assets sold/re-valued 204
st
Accumulated depreciation at 31 March 2008 (3,866)
14. Investments
The Council has the authority to invest funds in excess of 364 days and as such these
are treated as long term assets. The profiled periods and principle amounts invested
are as follows:
2006/07 2007/08
Length of Investment (From 31/03/08)
£’000 £’000
1 to 2 Years 1,000 2,000
2 to 3 Years 1,000 2,000
3 to 4 Years - 1,000
4 to 5 years 1,000 -
TOTAL 3,000 5,000
There is an additional £19,000 of miscellaneous long-term investments.
Included in the Council’s short-term investments (maturity less than 1 year) total
principle amount of £4,765 is a £50,000 debenture held since 1996, to help fund the
purchase of the Association of District Councils headquarters. It was not certain that
the amount which would be realised on sale of the property would be sufficient to repay
debenture holders, and as such the Council included a Debenture reserve account on
the balance sheet, to reflect the nominal value of the investment.
However, when the ADC was advised that the achievable sale price was sufficient to
repay the debenture, the property was put on the market. It was sold on 1 st April 2008.
The Authority has received notification that repayment will be made 6 months after the
sale of the property, which will be the 1st October. The trust’s calculation of the premium
payable to debenture holders is approximately 15% but this will be confirmed in due
course when repayment arrangements are finalised.
As it is now known that the Debenture will be repaid it is no longer necessary to maintain
the reserve which has been transferred to the credit of the General Fund Contingency
(note 20).
53
Interest in Companies
The Council is also shareholder, holding a £1 ‘C’ share in Instaffs (UK) Ltd. The
company was established in 1996 to provide a focus for inward investment activities in
Staffordshire, although the Council is no longer an active partner. Copies of Instaffs (UK)
Ltd’s Statement of Accounts can be obtained from Companies House.
15. Derivatives
The 2007 SORP has introduced considerable additional reporting requirements
concerning Financial Instruments. Most of these are dealt with as notes to the
statement (note 21). However they have also resulted in this new ‘derivative’ category of
asset and liability appearing on the Balance Sheet. These Derivatives represent the
asset or liability accruing to the Authority from forward dated investments.
At the balance sheet date note is taken of any investments that have been contracted to
be made in the following year. The interest rate agreed under these contracts is
compared with that which could have been obtained for a similar deal arranged on the
31st March. The interest flows, discounted to net current value, that would accrue under
this hypothetical rate are compared to those that will be earned by the investments. Any
difference is then charged to the accounts of the year in which the contract was agreed.
If the hypothetical rate produces less interest than that contracted then a derivative gain
is recorded in the statements. This is achieved by crediting the difference in interest to
Income and Expenditure and creating a corresponding creditor on the Balance Sheet
equal to the difference in interest. This creditor is then offset against the actual interest
earned in future years. The reverse entries take place where comparison of interest
rates revealed a derivative loss.
The Authority had a number of forward dated deals in place at both 31 st March 2008 and
31st March 2007. In the latter case a derivative loss (liability) has resulted. The initial
recognition and subsequent transactions have been accounted for as if they had taken
place in 2007/08 – see general notes (page 34). By contrast the forward dated
investments at the end of 2007/08 have given rise to a derivative gain (asset). This
debtor, equal to the amount credited to the Income and Expenditure in 2007/08, will
offset future interest earned.
Derivatives – movement in the year Liability Asset
£’000 £’000
As at 01/04/07 ( re 2006/07) (18) 0
Transferred to Income and Expenditure 15 0
31/03/08 (re 2007/08) 53
TOTAL (3) 53
54
16. Long Term Debtors
These consist mainly of mortgage advances, previously granted on the Council’s former
housing stock. Balances at the end of the year were as follows:
2006/07 2007/08
£’000 £’000
Council Tenants 88 69
Private Householders 0 0
Other 47 34
TOTAL 135 103
17. Debtors
An analysis of persons owing the Council money is:-
2006/07 2007/08
£’000 £’000
Local Taxation 1,443 1,460
Business Rates Arrears 615 615
Customs and Excise – VAT 84 38
Government Departments 2,109 2,165
Staffordshire CC 777 386
Staffordshire CC – Parking Board - 57
General 1,099 1,340
6,127 6,061
Less Bad Debts Provision (1,218) (1,326)
Total 4,909 4,735
Bad Debts Provision
The Council has established a number of provisions for Bad Debts:
2006/07 2007/08
£’000 £’000
Non Domestic Rate Payers 545 528
Community Charge Payers 49 49
Council Tax Payers 565 652
General Fund Services 59 97
Total 1,218 1,326
55
18. Short-term Borrowing
In November 2006, £75,000 of surplus funds were invested on behalf of Wetley Moor
Joint Committee (WMJC). The Council jointly administers WMJC with Stoke-on-Trent
City Council. During 2007/08, a further £7,500 was transferred, taking the total surplus
funds invested to £82,500. . The funds have been invested until the Council is informed
by WMJC that they require repayment. Historically this has been shown in the
statements as long-term borrowing. However In the 2007/08 accounts this has been
reclassified as a ‘current liability’ in line with the SORP definition of borrowing that is
payable on demand.
19. Creditors
An analysis of persons to whom the Council owes money is:
2006/07 2007/08
£’000 £’000
Inland Revenue 183 202
Staffordshire CC 831 515
Staffordshire CC – Parking Board - 2
Government Departments 273 312
Local Taxation 580 611
NNDR 407 521
Others 1,715 1,697
Total 3,989 3,860
20. Revenue Reserves
The type, and level, of Reserves are aligned to the Council’s corporate Revenue and
Capital financial strategies. The revenue activities of the Council, as reported in the
Income & Expenditure Account, generated a net surplus of 289k in the year. After
reviewing the appropriateness of the reserves held the Council has assigned this surplus
as set out in the table below:-
Balance as at Contribution Expenditure / Balance as at
st st
General Fund 1 April 2007 Transfer 1 April 2008
£’000 £’000 £’000 £’000
General Fund For Capital Schemes 3,081 139 3,220
General Fund (Earmarked)
GF Ring Fenced: Building Control 63 (12) 51
Insurance Fund 159 16 175
Other Earmarked Reserves 330 221 (50) 501
DSO Reserve 142 142
Earmarked Total 694 869
General Fund Contingency 1,346 (25) 1,321
Total Revenue Reserves 5,121 376 (87) 5,410
56
As recorded at note 14, since 1996 the Authority’s Balance Sheet has included a
reserve of £50,000 to cover an expectation that a Debenture taken out with the
Association of District Councils would not be repaid. As assurances have now been
received that repayment will be made this reserve has been re-designated as General
Fund Contingency increasing Revenue Reserves to a total of £5.46 million.
Debenture General Fund
Re-designation of Debenture Reserve Reserve Contingency
£000’s £000’s
Year end balance: from activities in the year 1,321
Debenture Reserve 50
Transfer to General Fund Contingency (50) 50
Revised General Fund Contingency 0 1,371
Other Reserves 4,089
Total Revenue Reserves 5,460
The Council’s Revenue Reserves are either held as a contingency, are earmarked for
specific purposes or are as a result of ‘ring fencing’. A brief description of the reserves
is given below.
Reserve Nature of Reserve
General Fund for Capital Earmarked to provide funding for the Council’s Capital Strategy
Schemes
Both as a contingency and to temporarily hold balances to be fed back into the short
General Fund (Other)
term budgetary process.
Insurance Fund To meet the cost of any residual MMI liabilities (see Note 22i.); to meet the costs of
claims which fall below an excess level or for a peril that is uninsured; to fund risk
management (RM) activity (per the Council’s RM Strategy).
Other (earmarked) These are revenue reserves established on a short term basis to provide funds for
Council initiatives in the following areas:
- to further develop shared working arrangements
- encouraging business growth in the district
- supporting concessionary travel arrangements
- to improve access to basic amenities throughout the district
- the digitisation of paper records
- promotion of sport and physical activity
- local development framework
Building Control The Council is required by statute to ring fence the profits and losses generated by the
‘fee earning’ service so as to ensure a breakeven position is achieved over any 3 year
rolling period
DSO Reserves The fund has been established from surpluses accumulated on DSO trading accounts
and while the Statutory requirement to maintain the fund has been removed, the
Council continues to retain the nominal balance to subsidise, where necessary, deficits
on the trading accounts included within the General Fund
57
21. Financial Instruments
The Council has carried out an analysis of all its financial assets and liabilities with
regard to the new requirements set out in the SORP 2007 and the results are set out in
the following sections:
i. Categories of financial Instrument
ii. Fair Value
iii. Impairment Review
iv. Re-classification
v. Risk Analysis
i. Categories of Financial Instrument
The table below discloses each category of financial asset and liability and the carrying
value as stated on the balance sheet compared to the fair value:-
31st March 2008
Long Term Current
Carrying Fair Value Carrying Fair Value
Value Value
£’000 £’000 £’000 £’000
Loans and receivables
Trade Debtors (total debtors less statutory) 1,783 1,686
Long-term Debtors 103 103
Callable deposits 3,105 3,095
Cash deposits 771 771
Fixed term deposits 2,136 2,150 4,174 4,172
Debenture 50 58
TOTAL 5,344 5,348 6,778 6,687
Available-for-sale assets
Conversion stocks 18,774 23,478
TOTAL 18,774 23,478 0 0
Financial assets at fair value through profit or loss
Derivatives – Forward Rate Investments 53 53
TOTAL 53 53 0 0
Financial liabilities at amortised cost
Trade Creditors (total creditors less statutory) 2,214 2,214
Borrowing on demand 82 82
Bank Overdraft 77 77
Long-term Liabilities (S106 Commuted sums / Developer Contributions) 468 468
TOTAL 468 468 2,373 2,373
Financial liabilities at fair value through profit or loss
Derivatives – Forward Rate Investments 3 3
TOTAL 0 0 3 3
58
ii. Fair Value
The methods and assumptions used to estimate the fair value of financial instruments
are illustrated below. In some instances, the fair value differs from the carrying value of
an asset or liability. In each case consideration was given to adjusting the accounts in
line with the fair value, where material.
Loans and Receivables
The fair value of trade and other receivables / payables is taken to be the
invoiced or billed amount.
The fair value of the Council’s investments has been assessed by calculating the
present value of future cashflows, which provides an estimate of the value of
payments in the future in today’s terms. The discount rate used in the calculation
is equal to the current rate in relation to the same instrument with the same
duration from a comparable lender on the date of valuation – 31st March 2008.
The rates quoted in this valuation were obtained from Sector Treasury Services
Ltd (the Council’s Advisors) Overall, the fair value of the investments is £2,000
greater than the carrying value because the Council’s portfolio includes a number
of fixed rate loans where the interest rate payable is higher than the rates
available for similar loans in the market at the balance sheet date.
Long-term Debtors include Village hall loans and payments due from mortgaged
properties. One of the outstanding village hall loans was issued on an interest
free basis. It was agreed prior to 1st April 2006 and the amount outstanding at
31st March 2008 was £10,712. Therefore the interest foregone is deemed
immaterial to the accounts. Interest is charged on the principle outstanding on
mortgaged properties. This is set according to the Department of Communities
and Local Government Standard National rate, consequently the fair value and
carrying value are considered equal.
The outstanding Debenture is to be repaid in October 2008 (as per Note 14) The
notification from the Association of District Councils indicates that the premium
payable in addition to the £50,000 principle is approximately 15%. However, this
is yet to be confirmed, therefore the carrying amount has not been adjusted in the
Balance Sheet.
Available-for-Sale
The Council’s purchased conversion stocks have a face value of £23,474, which
is the amount the Bank of England would pay on request. However the Council
has the option to sell them on the stock market. The difference in carrying value
and fair value is minimal, therefore immaterial to the accounts.
59
Financial Assets / liabilities at fair value through profit and loss
the derivatives held in relation to forward dated investments are carried at fair
value in the Balance Sheet – as per Note 15.
Financial Liabilities at amortised cost
As per Note 18, the Council invests surplus funds on behalf of Wetley Moor Joint
Committee. This is at a rate aligned to the Bank of England base rate and is at
no cost to the Authority
Long-term Liabilities represent monies held pending use to support future capital
schemes or revenue commitments. No interest is incurred and the sums are held
at face value.
iii. Impairment Review
An impairment review has been carried out on the Authorities financial assets to assess
the likelihood of repayment. The only asset category where impairment has been
applied is general trade receivables. The result of which is included in the accounts as
the bad debt provision (see Note 17) This is based on historical data and an analysis of
individual debtors. Current and prior year outstanding debtors are impaired by a
determined percentage, except where 100% non-payment is assumed. The provision is
allocated to services based on Debtors outstanding at 31st March 2008 and historical
write offs.
iv. Re-classification
No re-classification of financial instruments was undertaken during 2007/08
v. Risk Analysis
The authority’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
authority
- Liquidity risk – the possibility that the authority might not have funds available to
meet its commitments to make payments
- Market risk– the possibility that financial loss might arise for the authority as a
result of changes in such measures as interest rates
The authority’s overall risk management programme focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the resources
available to fund services. Risk management within the Council is overseen by the
Corporate Risk Management Group under polices approved by the Cabinet in the Risk
Management Strategy. The Council provides written principles for overall risk
management, as well as written polices covering specific areas, such as interest rate
risk, credit risk and the investment of surplus cash through Treasury Management
Practices.
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Credit Risk
Credit risk arises from deposits with banks and financial institutions, as well as credit
exposures to the authority’s customers. Deposits are not made with banks and financial
institutions unless they are rated independently by Fitch with a minimum rating of Short-
term F1, Long-term A, Individual B, Support 3. Non-credit rated institutions were
removed from the Council’s lending list in April 2008.
Customers are assessed, taking into account their financial position, past experience
and other factors, with individual credit limits being set in accordance with internal
ratings in accordance with parameters set by the Council.
The following analysis summarises the authority’s potential maximum exposure to credit
risk, based on experience of default and non-collection over the last five financial years,
adjusted to reflect current market conditions.
Historical experience Estimated maximum
Amount at Historical
st adjusted for markets exposure to default
31 March experience st
conditions at 31 and non -
2008 of default
March 2008 collectability
£’000 % % £’000
Deposits with banks and financial
9,743 0 0 0
institutions
Customers (non-statutory sundry
1,686 2 2 26
debtors)
11,429 26
The Council does not expect any losses in respect of non-performance by counter-
parties in relation to deposits.
The overdue amount from customers can be analysed by age as follows:-
Period Overdue £’000
Less than three months 110
Three to six months 14
Six months to one year 33
More than one year 55
TOTAL 212
Liquidity Risk
The Council is currently debt free, but holds £9.7m in investments as at 31 st March 2008.
The Treasury Management Strategy establishes limits on investments that can be
placed greater than one year, based on the core cashflow forecast. This is to ensure
there are sufficient funds available to meet future capital commitments. The in-house
treasury team also monitor short-term liquidity on a daily basis to ensure there are
adequate funds readily available to cover in-year payments such as precepts, salaries,
payments to suppliers and central government.
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The maturity analysis of funds held at 31st March 2008 was as follows:-
£’000
Less than one year 2,743
Between one and two years 2,000
Between two and five years 5,000
More than five years 0
TOTAL 9,743
Market Risk
The authority is exposed to significant risk in terms of its exposure to interest rate
movements on its investments. Movements in interest rates have a significant impact on
the authority. For example, a rise in interest rates would have the following effect:-
Investments at variable rates – the interest income credited to the Income and
Expenditure account would increase
Investment at fixed rates – the fair value of the assets will fall
The Council carries out its borrowing and investment function within the parameters set
in its Treasury Management Strategy, which establishes interest rate exposure. The
Council uses the services of a treasury advisor, who issue regular interest rate forecasts
to aid decision making when placing investments and setting the annual investment
income budget for the following year. Forecasts are updated within the Quarterly
Financial report to Cabinet, which allows any significant changes in interest rates to be
reflected in current budget projections.
22. General Balance Sheet Notes
This note is broken down into a number of sections covering items that have or could
impact on the net worth of the Authority as reported:
i. Contingent Liabilities and Contingent Assets
ii. Trust funds
iii. Related Party Transactions
iv. Events after the Balance Sheet Date
v. The Possible Implementation of the Euro
vi. Commutation Adjustment
vii. Authorisation of Accounts for Issue
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i. Contingent Liabilities and Assets
Municipal Mutual Insurance
When Municipal Mutual Insurance (MMI) ceased accepting new business in 1992/93 the
Council was entered into a Scheme of Arrangement under Section 425 of the
Companies Act 1985. Under the terms of the Scheme, the Council inherited a potential
liability for future claims against the residual assets of MMI of £62,000. In their 2007
Annual Report the managers of MMI remain confident that assets held continue to
match potential liability without the need to trigger the Scheme.
Concessionary Travel
The Council participate in the Staffordshire and Stoke-on-Trent Concessionary Travel
Scheme. In 2007/08 the scheme reimbursed all concessionary journeys where
passengers boarded on eligible local bus services within the Staffordshire scheme area.
One of the large bus operators are petitioning against the Secretary of State’s
determination regarding their appeal (for participants to meet the additional costs due to
the operator as a consequence of the scheme) Potentially, this could cost the Authority
£57,317 if the bus operator is successful.
ii. Trust Funds
The Council holds no legally defined Trust Funds but it does administer the Chair’s
Charity Fund. This raises funds annually in the Chair’s name on behalf of charities and
voluntary groups within the Staffordshire Moorlands. These funds are then distributed to
the beneficiaries nominated by the chair. Income relates to monies collected due to be
paid out, expenditure consists of related expenses. The movement on the account in
2007/08 was:
st st
31 March 2007 Expenditure Income 31 March 2008
£ £ £ £
Chair’s Charity Fund 17,437 20,167 (9,337) 6,607
The balance held for the Fund is not included in the Balance Sheet.
iii. Amounts Due to or from Related Parties
Other than the debtor and creditor balances listed in the relevant notes there are no
significant transactions outstanding at 31 March 2008 in relation to related parties.
iv. Events after the Balance Sheet Date
There were no material post balance sheet events.
Enquiries with the Council's Principal Solicitor, Risk Manager and Head of Customer
Services have confirmed that there are no outstanding legal issues, insurance claims or
ombudsman complaints, which are likely to have a significant impact on these financial
statements.
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v. The Possible Implementation of the Euro
The introduction of the Euro currency would have an impact on the Council’s business
activities and support systems. The Council needs to assess the commitment of
resources needed to support the possible implementation of the Euro against the
likelihood of the United Kingdom retaining sterling as its currency.
Uncertainties remain nationally surrounding the possible implementation date or even
whether the Euro will be adopted at all.
Nevertheless its future adoption is considered within a number of the Council’s
strategies, principally the Risk Management Strategy, IT Strategy, and Procurement
Strategy. All new systems or upgrades are required to be ‘Euro compliant’. Recently
purchased systems such as the new suite of Financial Systems (operational from 1st
April 2003) and new Revenues and Housing Benefit System are Euro compliant.
The introduction of the Euro would be a major challenge to the Council. No direct,
identifiable costs were incurred in 2007/08. As the size, complexity and time scale for
the task in-hand remains uncertain, it is not possible at this stage to identify the likely
total costs that would be incurred.
vi. Commutation Adjustment
The Council did not make any adjustment for commutation in 2007/08.
vii. Authorisation of Accounts for Issue
The Statement of Accounts 2007/08 were authorised for issue on 27th June 2008 by
Andrew P Stokes, Corporate Director (Chief Financial Officer). Events after this date will
not have been recognised in these Statements.
23. Minimum Revenue Provision
The Council is obliged to make an annual charge to revenue for un-financed capital
expenditure. The charge is known as Minimum Revenue Provision (MRP). With effect
from 31st March 2008 detailed rules on the amount of MRP to be charged to the
accounts has been replaced. The new requirement is based on a simple duty for an
authority to make an amount of MRP, which it considers to be "prudent". In 2007/08 the
Council made MRP of £24,000.
24. Notes Relating to the Cash Flow Statement
This note provides further analysis of certain figures used in the Cash Flow Statement;
i. Reconciliation of Revenue Surplus to Net Cash Flow
ii. Movement in cash
iii. Analysis of Government Grants
iv. Management of Liquid Resources
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i. Reconciliation of Revenue Surplus to Net Cash Flow
2006/07 2007/08
£’000 £’000
1,619 Income and Expenditure (Surplus)/Deficit for the year 1,268
Non Cash Transactions:
(2,290) Reconciling items per Statement of Movement on General Fund (1,557)
Balances (Note 10.)
Financial Instrument valuation gain 35
Included in Other Sections of the Cash Flow Statement:
812 Net External Interest 865
Accruals:
19 Increase/(Decrease) in Stocks / Work in Progress 6
513 Increase/(Decrease) in Debtors / Payments in Advance (66)
(1,065) (Increase)/Decrease in Creditors / Receipts in Advance 130
Other Transactions:
70 (Increase)/Decrease in Collection Fund Balance (30)
262 (Increase)/Decrease in Provisions (76)
(33) (Increase)/Decrease in Other Changes in Balance 35
(93) Net Revenue Cash Flow 610
ii. Movement in Cash
st st
As at 1 April 2007 Cashflow As at 31 Mar 2008
£’000 £’000 £’000
Bank Overdraft 379 (302) 77
iii. Analysis of Government Grants
2006/07 2007/08
£’000 £’000
Benefits 14,149 14,561
Capital Grants 1,183 1,029
Planning Delivery 214 178
Defra (Waste Management) 40 42
Local Service Provision 52 49
Housing 108 111
Concessionary Fares - 53
15,746 16,023
iv. Management of Liquid Resources
£’000 £’000
st
Investments Outstanding 1 April 2007 (8,013)
New Investments 67,390
Disinvestments 70,688
st
Investments Outstanding 31 March 2008 4,715
Liquid Resources represent surplus funds invested on a short-term basis.
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Supplementary Financial Statements
In addition to the five core statements, it is a statutory requirement for billing Authorities
to maintain a separate Collection Fund.
Collection Fund Account
There is a statutory requirement for billing authorities to maintain a separate Collection
Fund. The Fund details the transactions of the billing authority in relation to non-
domestic rates and council tax and illustrates the way in which these have been
distributed to preceptors and the General Fund.
2006/07 2007/08
£’000 £’000 £’000 £’000
Income
15,313 Income collectable from business ratepayers 14,863
39,079 Income from Council Tax (amount receivable, net of benefits, 41,353
discounts for prompt payment and transitional relief)
Transfers from the General Fund:-
4,371 43,450 Council Tax Benefit 4,517 45,870
Contributions:
Towards previous year’s Collection Fund deficit 83
58,763 Total Income 60,816
Expenditure 60,724
30,687 Staffordshire County Council Precept 32,243
5,184 Staffordshire Police Authority Precept 5,450
1,951 Staffordshire Fire Authority Precept 2,051
5,665 Staffordshire Moorlands DC Demand 5,870
Business Ratepayers
15,193 Payment to NNDR Pool 14,743
120 15,313 Costs of Collection 120 14,863
Bad and doubtful debts/appeals
98 Write Offs – Council Tax 29
(87) 11 Increase (Decrease) in Bad Debts Provision 87 116
Contributions
489 Towards previous year’s estimated Collection Fund surplus
59,300 Total Expenditure 60,593
(537) Surplus (Deficit) for year 223
Movement of Fund Balance
69 Balance Brought Forward (468)
(537) Plus surplus/(deficit) for the Year 223
(468) Fund Balance as at 31st March 2008 (245)
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Notes to the Supplementary Financial Statements
1. National Non-Domestic Rates (NNDR)
The Council collects business rates in its area on behalf of the Government based on
non-domestic rateable values multiplied by a uniform multiplier. This multiplier is
specified by the Government and in 2007/08 the standard multiplier was 44.4p (43.3p
2006/07).
2006/07 2007/08
£ £
Non-domestic rateable value at year-end 41,722,827 41,029,121
The total amount collected, less certain reliefs and deductions, is paid into the NNDR
Pool. A share of the Pool is distributed to the Council on the basis of a fixed amount
per head of population.
Note: from 1st April 2005:
the Government introduced a second multiplier for qualifying small business
properties; and
properties subject to Business Rates were subject to revaluation.
2. Council Tax
Council Tax income is derived from charges raised according to the value of the
residential properties, which have been classified into eight valuation bands for this
purpose. Individual charges are calculated by estimating the amount of income
required to be taken from the Collection Fund by Staffordshire County Council,
Staffordshire Police Authority, Staffordshire Fire Authority and the council for the
forthcoming year and dividing this by the council tax base. The average Band D tax in
2007/08 of £1,340.48 compared with £1,279.12 in 2006/07. Multiplication of this
amount by the proportions set out below give the amounts due for a property in each
band:
Proportion of Band D charge:
Band A 0.67
Band B 0.78
Band C 0.89
Band D 1.00
Band E 1.22
Band F 1.44
Band G 1.67
Band H 2.00
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The Council Tax base for 2007/08 of 34,027 was derived as follows:
Number After
Valuation Value Ratio to Band D
Of Discounts &
Band Range Band D Equivalents
Dwellings Exemptions
A Up to £40,000 9,294 7,818 6 5,209
B £40,000 - £52,000 10,000 8,951 7 6,962
C £52,001 - £68,000 10,320 9,423 8 8,376
D £68,001 - £88,000 5,931 5,506 9 5,506
E £88,001 - £120,000 4,030 3,795 11 4,638
F £120,001 - £160,000 1,826 1,717 13 2,480
G £160,001 - £320,000 751 697 15 1,162
H Over £320,000 37 19 18 38
Total 42,189 37,926 34,371
Less Adjustments for collection rates (1%). 344
Total Taxbase 34,027
3. The Fund Balance
The movement in the fund balance is summarised as follows:
Council
Tax
£’000
Opening Balance (468)
Council Tax to fund 2007/2008 precepts 45,870
Adjustment of previous years 83
Precepts and provision for bad debts (45,730)
Closing Balance (245)
Council Tax: The balance on the Fund is allocated between the precepting authorities
on the basis of their historical precepts. The current deficit will be cleared in all cases
by reductions in future precepts on the Fund. The Balance Sheet therefore reports the
Fund deficit on the basis of where the liability falls:
2007/08 2006/07
Council Council Change
Tax Tax
£’000 £’000 £’000
To be met by SMDC – included as a separate balance (31) (61) 30
To be met by the other preceptors – included in debtors (214) (407) 193
Collection Fund Deficit (245) (468) 223
Community Charge: It should be noted that outstanding arrears in respect of
Community Charge are still being collected and these amounts are credited directly to
the Council’s General Fund.
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Glossary of Financial Terms
Accounting Policies Capital Expenditure
Accounting policies and estimation techniques are the Spend on the acquisition of fixed assets or expenditure
principles, bases, conventions, rules and practices applied which adds to and does not merely maintain existing assets.
by the Council that specify how the effects of transactions
and other events are to be reflected in it’s financial Capital Receipts
statement. Income received from the sale of capital assets, a specified
proportion of which may be used to finance new capital
Accounting Period expenditure and the remainder is set-aside and may only be
This is the length of time covered by the accounts. It is used for paying off debt.
normally a period of 12 months commencing 1st April. The
end of the accounting period is the Balance Sheet date. Cash Flow Statement
This statement summarises the inflows and outflows of cash
Accruals arising from transactions with third parties for revenue and
The accruals basis of accounting requires the non-cash capital purposes
effects of transactions to be reflected in the financial
statements for the accounting period in which they were Collection Fund
earned or incurred, and not in the period in which any cash Fund indicating the level of Council Tax and Non-Domestic
is received or paid. Rates received by the Council and the payments which are
made from these funds including precepts to other
Actuarial Gains and Losses authorities, the Council’s own demand and payments to the
NNDR pool.
For a defined benefit scheme, the changes in actuarial
deficits or surpluses that arise because:
Community Assets
Events have not coincided with the actuarial
Assets which the Council intends to hold in perpetuity, that
assumptions made for the last valuation; or
have no determinable useful life, and that may have
The actuarial assumptions have changed.
restrictions on their disposal. Examples of community assets
are parks and historic buildings.
Asset
An asset is something that the Council owns that has a Consistency
monetary value. Assets are either ‘current’ or ‘fixed’. A Accounting concept applied in the preparation of the
current asset will be used by the end of the next financial accounts, ensuring that the accounting treatment of like
year, whereas a fixed asset provides benefits for a period items within a period and from one period to the next is the
of more than one year. same.
Balance Sheet Contingent Assets & Liabilities
A snapshot of the overall financial position of the Council at Possible economic benefit or payment obligation which may
the end of the financial year. arise in the future but which cannot be determined in
advance.
Balances
Reserves held in Council funds at the end of the financial Creditors (Payables)
year. Amounts owed by the Council for goods and services,
where payments have not been made at the end of the
Capital Adjustment Account financial year.
It provides a balancing mechanism between the cost of
fixed assets consumed and the capital financing set aside Current Assets
to pay for them. (Introduced by the 2007 SORP, it Items that can be readily converted into cash.
replaced the Capital Financing Account.)
Current Liabilities
Capital Financing Account Items that are due immediately or in the short-term.
(replaced by the Capital Adjustment Account. – 2007
SORP) Provided a balancing mechanism between the Debtors (Receivables)
different rates at which assets were depreciated under Amounts owed to the Council for goods and services, where
previous SORPs and were financed through the capital the income has not been received at the end of the financial
controls system. year.
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Deferred Charges Finance Lease
Expenditure which may properly be deferred, but which A lease that transfers substantially all of the risks and
does not result in, or remain matched with, tangible assets. rewards of ownership of a fixed asset to the lessee from the
Examples are expenditure on items such as improvement lessor. Such a transfer of risks and rewards may be
grants. presumed to occur if at the inception of the lease the
present value of the minimum lease payments, including any
Defined Benefit Pension Scheme initial payment, amounts to substantially all of the fair value
A pension or other retirement benefit scheme other than a of the leased asset.
defined contribution scheme. Usually the scheme rules
define the benefits independently of the contributions Financial Reporting Standards (FRSs)
payable, and the benefits are not directly related to the Statements prepared by the Accounting Standards
investments of the scheme. The scheme may be funded or Committee. Many of the Financial Reporting Standards
unfunded. (FRSs) and the earlier Statements of Standard Accounting
Practice (SSAPs) apply to local authorities and any
Depreciation departure from these must be disclosed in the published
Measure of the wearing out, consumption, or other accounts.
reduction in the useful economic life of a fixed asset,
whether arising from use over time or obsolescence Financial Instrument
through technological or other changes. These are contracts that give rise to a financial asset of one
entity and a financial liability of another. Examples include
Derivative
trade payables and receivables, borrowings, investments,
A financial instrument whose value is dependant on future
loans and bank deposits. It is only recently that financial
changes. An example relevant to this Authority is where
instruments have been comprehensively covered by UK
an investment is contracted to take place at a future date
financial reporting standards.
at an agreed rate. The derivative is the value of the
interest gained or foregone if the rate that would have been
Financial Year
obtained at the future date differs from that set in the
A period of time to which a Statement of Accounts relates.
contract.
The financial year of the Council runs from 1st April to 31st
March.
Direct Service Organisation (DSOs)
Term used to cover both the Direct Labour Organisations
Fixed Asset Restatement Account
(DLOs) established under the Local Government, Planning
(replaced by the Revaluation Reserve. – 2007 SORP) Under
and Land Act 1980 and the Direct Service Organisations
previous SORPs provided the matching entry by which fixed
(DSOs) established under the Local Government Act 88.
assets were restated, upon revaluation or disposal.
Exceptional Items
Fixed Assets
Material items which derive from events or transactions
Assets that yield benefits to the local authority and the
that fall within the ordinary activities of the authority and
services it provides for a period of more than one year.
which need to be disclosed separately by virtue of their
size or incidence to give fair presentation to the accounts.
Going Concern
Extraordinary Items The accounting concept that assumes the Council will
Material items, possessing a high degree of abnormality, remain in operational existence for the foreseeable future.
which derive from events or transactions that fall outside This means in particular that the income & expenditure
the ordinary activities of the authority and which are not accounts and balance sheet assume no intention to curtail
expected to recur. They do not include exceptional items significantly the scale of operations.
nor do they include any prior period items merely because
they relate to a prior period. Government Grants
Assistance by government and inter-government agencies
Fair Value and similar bodies, in the form of cash or transfer of assets
The fair value of an asset is the price at which it could be to an authority in return for past or future compliance with
exchanged in an arm’s-length transaction less, where certain conditions relating to the activities of the authority.
applicable, any grants receivable towards the purchase or
use of the asset. Government Grants Deferred
Government Grants received in advance awaiting credit to
Fees and Charges the Income & Expenditure Account in future years.
Income arising from the provision of services.
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Income & Expenditure Account Net Current Replacement Cost
The Income & Expenditure Account summarises the Cost of replacing or recreating the particular asset in its
resources that have been generated and consumed in existing the condition and in its existing use, i.e., the cost of
providing services and managing the Council during the its replacement or of the nearest equivalent asset, adjusted
year. to reflect the current condition of the existing asset.
Infrastructure Assets Net Realisable Value
Inalienable fixed assets, expenditure, which is recoverable Open market value of the asset in its existing use (or open
only by continued use of the asset created. Examples of market value in the case of non-operational assets), less the
such assets are highways and footpaths. expenses to be incurred in realising the asset.
Intangible Assets Non-Operational Assets
Are non-financial fixed assets that do not have physical Fixed assets held by a local authority but not directly
substance but are identifiable and are controlled by the occupied, used or consumed in the delivery of services.
authority through custom or legal rights. Examples of such Examples are investment properties and assets that are
assets are software licences. surplus to requirements, pending sale of redevelopment.
Investment Properties Operating Leases
Interest in land and/or buildings in respect of which A lease other than a finance lease
construction work and development have been completed
Operational Assets
and which is held for its investment potential with any
Tangible fixed assets held and occupied, used or consumed
rental income being negotiated at arm’s length.
by the local authority in the direct delivery of those services
for which it has either a statutory or discretionary
Leasing
responsibility.
Method of financing the provision of various capital assets,
usually in the form of operating leases which tend not to
Post Balance Sheet Events
provide for property in the asset to transfer to the authority.
Events, both favourable and unfavourable, which occur
between the balance sheet date and the date on which the
Long-Term Investments
Statement of Accounts is signed by the responsible financial
An investment intended to be held for the medium or long-
officer.
term and will not be capable of realisation within a year of
the balance sheet date. Precept
Demands made upon the collection fund by other authorities
Long-term Debtors (Staffordshire Police, Staffordshire County Council,
Monies due to the Council that are unlikely to be recovered Staffordshire Fire Authority and Parish Councils) for the
within a 12-month period, for example mortgage debts. services they provide.
Minimum Revenue Provision (MRP) Provisions
Minimum amount which must be charged to an authority’s Amounts set aside to meet liabilities or losses which are
revenue account each year for the repayment of principal likely to be incurred but where the amount remains
and set aside as a provision for credit liabilities. uncertain.
National Non-Domestic Rate (NNDR) Prudence
Amounts payable to local authorities from non-domestic Accounting concept that revenue is not anticipated but is
properties. The rate poundage is set nationally and recognised only when realised in the form of either cash or
amounts collected by local authorities are pooled and then of other assets, the ultimate, cash realisation of which can
redistributed by the Government to local authorities based be assessed with reasonable certainty.
on the local resident population.
Prudential Framework
Net Book Value The Prudential Framework replaced the credit approval
Amount at which fixed assets are included in the balance mechanism previously used by central government to
sheet, i.e., their historical cost or current value less the control borrowing for capital expenditure. Local authorities
cumulative amounts provided for depreciation. are now allowed to determine their own capital programmes
according to prudent assessments of affordability.
Authorities must set their spending plans in accordance with
the CIPFA Prudential Code.
71
Reserves Statement of Movement on the General Fund Balance
Sums set aside to meet future expenditure on specific The Statement of Movement on the General Fund Balance
purposes. provides the necessary reconciliation between the outturn
on the Income & Expenditure Account, and the balance
Revaluation Reserve established by the relevant statutory provisions that specify
A capital reserve that records net gains (if any) from the net expenditure the Authority needs to take into account
st
revaluations of assets made after 1 April 2007. when setting local taxes.
(Introduced by the 2007 SORP, it replaced the Fixed Asset
Restatement Account.) Statement of Total Recognised Gains & Losses
Not all gains and losses experienced by the Authority are
Revenue Contributions reflected in the Income & Expenditure Account. The
Method of financing capital expenditure directly from Statement of Total Gains & Losses considers all gains and
revenue. Now usually referred to as Capital Expenditure losses recognised in order to assess the overall financial
Charged to Revenue Account (CERA) result for the period.
Revenue Expenditure Total Cost
Expenditure on the day-to-day running of the Council, The total cost of a service or activity includes all costs which
including employee costs, running expenses and capital relate to the provision of the service (directly or bought in) or
financing costs. the undertaking of the activity. Gross total costs includes
employee costs, expenditure relating to premises and
transport, supplies and services, third party payments,
Revenue Support Grant (RSG)
transfer payments, support services and capital charges.
Grant paid to local authorities by Central Government to
This includes an appropriate share of all support services
help finance its general expenditure. It is determined under
and overheads, which need to be apportioned in accordance
the SSA system.
with CIPFA’s Best Value Accounting Code of Practice.
Short-term Investments
Useable Capital Receipts Reserve
An investment that is capable of realisation within a year of
Distinguishes the amounts in the reserve from any capital
the balance sheet date.
receipts that have been posted to the Capital Finance
Account to reduce the Authority’s underlying requirement to
Soft Loan
borrow.
Loans made for policy reasons rather than as financial
instruments. Commonly, made to local and voluntary
Useful Life
sector bodies that undertake activities considered
Period over which the local authority will derive benefits from
beneficial to the community. They may be interest free or
the use of a fixed asset
below prevailing market rates.
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Auditor’s Reports (to be updated on completion of audit)
Independent auditor’s report to the Members of Staffordshire Moorlands District
Council
Opinion on the financial statements
I have audited the financial statements of Staffordshire Moorlands District Council for the
year ended 31 March 2007 under the Audit Commission Act 1998, which comprise the
Explanatory Foreword, Income and Expenditure Account, 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 Collection Fund and the related notes.
These financial statements have been prepared under the accounting policies set out
within them.
This report is made solely to Staffordshire Moorlands District 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 Chief Finance Officer and auditors
The Chief Finance Officer’s responsibilities for preparing the financial statements in
accordance with applicable laws and regulations and the Statement of Recommended
Practice on Local Authority Accounting in the United Kingdom 2006 are set out in the
Statement of Responsibilities.
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 financial statements present fairly the
financial position of the Council in accordance with applicable laws and regulations and
the Statement of Recommended Practice on Local Authority Accounting in the United
Kingdom 2006.
I review whether the statement on internal control reflects compliance with CIPFA’s
guidance ‘The statement on internal control in local government: meeting the
requirements of the Accounts and Audit Regulations 2003’ issued in April 2004. I report
if it does not comply with proper practices specified by CIPFA 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
statement on internal control covers all risks and controls. I am also not required to form
an opinion on the effectiveness of the Council’s corporate governance procedures or its
risk and control procedures.
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I read other information published with the financial statements, and consider whether it
is consistent with the audited financial statements. This other information comprises only
the content of the Annual Report. I consider the implications for my report if I become
aware of any apparent misstatements or material inconsistencies with the financial
statements. My responsibilities do not extend to any other information.
Basis of audit opinion
I conducted my audit in accordance with the Audit Commission Act 1998, 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 financial
statements. It also includes an assessment of the significant estimates and judgments
made by the Council in the preparation of the financial statements, 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 financial statements are free from material misstatement,
whether caused by fraud or other irregularity or error. In forming my opinion I also
evaluated the overall adequacy of the presentation of information in the financial
statements.
Opinion
In my opinion the financial statements present fairly, in accordance with applicable laws
and regulations and the Statement of Recommended Practice on Local Authority
Accounting in the United Kingdom 2006, the financial position of the Authority as at 31
March 2007 and its income and expenditure for the year then ended.
Grant Patterson
District Auditor
Audit Commission
Opus House
Priestley Court
Stafford Technology Park
Beaconside
Stafford
ST18 0LQ
September 2007
74
Conclusion on arrangements for securing economy, efficiency and effectiveness
in the use of resources
Authority’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 to regularly review the adequacy and effectiveness of these
arrangements.
Under the Local Government Act 1999, the Council is required to prepare and publish a
best value performance plan summarising the Council’s assessment of its performance
and position in relation to its statutory duty to make arrangements to ensure continuous
improvement in the way in which its functions are exercised, having regard to a
combination of economy, efficiency and effectiveness.
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 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.
I am required by section 7 of the Local Government Act 1999 to carry out an audit of the
Council’s best value performance plan and issue a report:
certifying that I have done so;
stating whether I believe that the plan has been prepared and published in
accordance with statutory requirements set out in section 6 of the Local
Government Act 1999 and statutory guidance; and
where relevant, making any recommendations under section 7 of the Local
Government Act 1999.
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, Staffordshire
Moorlands District Council made proper arrangements to secure economy, efficiency
and effectiveness in its use of resources for the year ending 31 March 2007.
75
Best value performance plan
I issued my statutory report on the audit of the Council’s best value performance plan for
the financial year 2006/07 in December 2006. 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.
Grant Patterson
District Auditor
Audit Commission
Opus House
Priestley Court
Stafford Technology Park
Beaconside
Stafford
ST18 0LQ
September 2007
76
How to Contact us
One Stop Shop Opening Hours
Leek Councils Connect
Monday - Thurs 8:45am – 5:15pm
Moorlands House
Stockwell Street
Friday 8:45am – 4:45pm
Leek
Staffs
ST13 6HQ Saturday 9:00am – 1:00pm
Cheadle Councils Connect Monday, Tuesday, Thursday, Friday 9:00am – 5:00pm
15a/17 High Street
Cheadle Wednesday 10:00am – 5:00pm
Stoke-on-Trent
ST10 1AA Saturday 9:00am – 1:00pm
Biddulph Councils Connect Monday, Wednesday & Thursday 9:00am – 4:45pm
Town Hall
High Street Tuesday 10:00 – 4:45pm
Biddulph
Friday 9:00am – 4:30pm
Stoke-on-Trent
ST8 6AR
Saturday 9:00am – 1:00pm
The Council is open to take your telephone calls Monday to Thursday 8.45am to
5.15pm and 8.45am to 4.45pm on a Friday. If you have any general enquiries, please
contact our Customer Service Centre on: 0845 605 3010
Specific Customer Service Areas:-
Local Taxation - 0845 605 3011
Housing Services - 0845 605 3012
Planning & Building Control - 0845 605 3013
Environmental & Waste Services - 0845 605 3014
Automated Payment Line (24 hrs) - 0845 234 0067
Fax: 01538 483474
Email us customer.services@staffsmoorlands.gov.uk
Website: www.staffsmoorlands.gov.uk
The Statement of Accounts are available in large print, Braille
or in another language on request.
77
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