Final Accounts 2008-09 post audit by aqu16527

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									North Down Borough Council




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                                              North Down Borough Council




Contents                                                         Page


Explanatory Foreword                                               1

Statement of the Council’s and Chief Financial Officer’s           5
Responsibilities for the Statement of Accounts

Governance Statement                                               6

Certificate of the Chief Financial Officer                        16

Council Approval of Statement of Accounts                         16

Local Government Auditor’s Report to the Members of North Down    17
Borough Council

District Fund – Income and Expenditure Account                    19

Statement of Movement on the District Fund Balance                20

Statement of Total Recognised Gains and Losses                    20

Balance Sheet                                                     21

Cash Flow Statement                                               22

Notes to the Financial Statements                                 23

Accounts Authorised for Issue Certificate                         54
North Down Borough Council
                                                       North Down Borough Council


Explanatory Foreword

Introduction

North Down Borough Council’s financial performance for the year ended 31 March 2009 is
as set out in the District Fund - Income and Expenditure Account and Balance Sheet.

These financial statements have been prepared in line with the Code of Practice on Local
Authority Accounting in the United Kingdom: A Statement of Recommended Practice
(SORP) and the Department of the Environment Accounts Direction, Circular LG 05/09
dated 20 March 2009. It is the purpose of this foreword to explain the financial facts in
relation to the Council and to summarise the main features of the accounts. Comparative
figures have been re-stated to take account of changes in accounting treatment as a result
of the SORP.

This Statement of Accounts explains the Council's finances during the financial year
2008/09 and its financial position at the end of that year. It follows approved accounting
standards and is necessarily technical in parts.

Group Accounts

The SORP requires local authorities to consider all their interests and to prepare a full set
of group financial statements where they have material interests in subsidiaries, associates
or joint ventures. North Down Borough Council does not have material interests in such
bodies and accordingly is not required to prepare group financial statements.

The District Fund – Income & Expenditure Account

The District Fund – Income & Expenditure Account, which provides information on the
results for the year is set out on page 19. It reports the net cost of the services for which
North Down Borough Council has responsibility, and demonstrates how that cost has been
financed from the General Exchequer Grant and income from local taxpayers.

A detailed Statement of Movement on the District Fund Balance is set out on page 20,
together with a Statement of Total Recognised Gains and Losses, which shows the overall
change in the Council’s net worth.

Further information on the movement on the District Fund is set out in note 3 to the
Financial Statements.

The Balance Sheet

The Balance Sheet, as set out on page 21, shows the balances and reserves at the
Council’s disposal as at 31 March 2009. It also provides details of the fixed and net current
assets employed in the provision of services, together with summarised information on the
Council’s current and long-term liabilities.




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The Cashflow Statement

The Cash Flow Statement, as set out on page 22, summarises the inflows and outflows of
cash arising from transactions with third parties for both revenue and capital purposes.

Financial Report

The results for the year ended 31 March 2009, as detailed on pages 19 and 20, are
summarised as follows:

                                                              2008/09        2007/08
                                                                 £              £
      Net Operating Expenditure                              23,711,850     18,523,848

      Income from General Grant                                 515,771        473,982

      Income from District Rates                             18,626,949     17,259,706

      (Deficit) for the year                                 (4,569,130)      (790,160)
      Further charges/credits made in line with statutory
                                                              5,171,913      1,069,013
      and non-statutory practices
      Surplus on the District Fund Balance for the
                                                                602,783        278,853
      year
      District Fund Balance Brought Forward                   1,388,534      1,109,681
      District Fund Balance at 31 March 2009                  1,991,317      1,388,534

The increase in net operating expenditure is primarily due to the results of a revaluation
exercise undertaken by an independent valuer from Land & Property Services as at 1 April
2008. As set out in Note 1c), the Council is required to undertake a formal revaluation of
fixed assets at intervals of not more than five years. The results of this exercise, which are
summarised in notes 10a and 10b, show an overall net increase in the Council’s fixed
assets of £16,867,686, including revaluation losses of £1,746,283 (2007/08 £nil). These
revaluation losses, together with further asset impairments of £911,966 and increased
depreciation charges of £3,749,684 (2007/08: £2,580,313) are required to be recognised in
the District Fund – Income & Expenditure Account and contribute to the increase in net
operating expenditure for the year. However, in line with the requirements of the SORP,
these charges are added back to arrive at a surplus for the year of £602,783.

Other costs and income for the year were broadly consistent with budget expectations as
set out in the estimates for 2008/2009, with the following key exceptions:

•   Expenditure on Waste Management Services was £390,000 lower than expected.
    This was primarily due to lower than estimated landfill and recycling costs, which have
    been taken into account when setting the budgets for 2009/10.


•   Income from Building Control activities was £130,000 lower than expected.
    This was due to a fall in large property development activities across the borough.

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•   Expenditure on Insurance was £200,000 lower than expected.
    This was primarily due to a reduction in the level of claims outstanding at 31 March
    2009, against which a general provision is made.

•    Expenditure on repayment of borrowings was £265,000 lower than expected and
    income from investments was £165,000 higher than expected.
     These were due to delays in capital expenditure, which resulted in borrowings being
     made later than expected.

•    Income from the district rates was £160,000 lower than expected.
    This loss of income was in relation to the finalisation of rates income for the current year
    and arose primarily as a result of increased vacancies, arrears and increases in the cost
    of collection. The Council continues discussions with Land & Property Services to
    ensure that action is taken to address these losses going forward.

The Council’s total balances and reserves at 31 March 2009, including the District Fund,
amounted to £78,110,714 (2007/08 £64,110,665). The total balances and reserves
incorporate tangible fixed assets with a value of £102,527,818 (2007/08 £84,425,268).

Capital Investment

In 2004 North Down Borough Council approved its Capital Investment Programme -
Investing In Our Future: 2004 to 2011. The Programme originally envisaged some 19
major capital projects during the period and established the interrelations between these
projects both in time and cost. The Capital Investment Programme, which now runs until
completion of the new leisure centre project in 2012, provides a holistic view of the
affordability of the Council’s capital expenditure plans and the individual components within
it, including the effect on the District Rate. The updated Capital Investment Programme is
regularly reported to Council and was most recently approved in February 2009. The final
decision on all major capital projects undertaken by the Council are considered within the
context of the Capital Investment Programme.

Expenditure on capital projects during the year amounted to £6,048,315 and included:

•    £2,255,505 for the completion of the Council’s new Depot & Waste Management
    facilities and associated equipment;

•   £668,589 for the completion of a wind turbine to provide electricity to the Council’s new
    Waste Management transfer facility;

•    £129,445 in respect of upgrades to the North Down Coastal Path and £148,442 for the
    refurbishment of St Malachy’s Wall;

•   £740, 561 towards the completion of the refurbishment of the Walled Garden at Castle
    Park, Bangor; and

•    £1,390,010 in relation to the proposed new leisure centre and £166,175 towards the
    development of a combined heat and power plant to provide green energy to this new
    facility.

Information on capital commitments relating to capital projects is set out in Note 12.

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Financing of Capital Expenditure

Capital expenditure is funded through:

•   Borrowings;
•   Government Grants;
•   The application of capital receipts;
•   Transfers from revenue; or
•   Transfers from the Repairs & Renewals Fund.

The Council has specific authority to make borrowings for capital expenditure approved by
the Department of the Environment from the following sources:

•   High street banks and building societies;
•   Other local authorities; and
•   Department of Finance and Personnel.

The Council makes borrowings on an annual basis at a concessionary rate from the
Consolidated Fund, administered by the Department of Finance and Personnel. The total
of these loans is restricted to 75% of the net reckonable capital payments per annum.

Details of how the Council has funded its capital expenditure are set out in Note 11. The
amount of borrowings outstanding at 31 March 2009 is set out in Notes 16 and 17.


Material and Unusual Items

For the year ended 31 March 2009, an exceptional item not included in the cost of specific
services is recorded in the District Fund – Income and Expenditure Account on page 19.
This is in relation to a value added tax claim submitted to HM Revenue & Customs as
detailed in Note 26.




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Statement of the Council’s and Chief Financial Officer’s Responsibilities
for the Statement of Accounts

The Council’s Responsibilities

Under Section 54 of the Local Government Act (Northern Ireland) 1972 the Council shall
make safe and efficient arrangements for the receipt of money paid to it and the issue of
money payable by it, and those arrangements shall be carried out under the supervision of
such officer of the Council as the Council designates as its Chief Financial Officer.

Under Regulation 5 of the Local Government (Accounts and Audit) Regulations (Northern
Ireland) 2006 the Council, or a Committee, is required by resolution, to approve the
accounts.


These accounts were approved by the Audit Committee (with delegated Council Powers)
on 18 June 2009.



The Chief Financial Officer’s Responsibilities

Under Article 4 of the Local Government (Accounts and Audit) Regulations (Northern
Ireland) 2006, the Chief Financial Officer is responsible for the preparation of the Council’s
Statement of Accounts in the form directed by the Department of the Environment.

The accounts must present fairly the income and expenditure and cash flows for the
financial year and the financial position as at the end of the financial year.

In preparing this Statement of Accounts, the Chief Financial Officer is required to:

•      observe the Accounts Direction issued by the Department of the Environment
       including compliance with the Code of Practice on Local Authority Accounting in the
       United Kingdom: A Statement of Recommended Practice (SORP) as amended and
       augmented from time to time.

•      follow relevant accounting and disclosure requirements and apply suitable
       accounting policies on a consistent basis.

•      make judgements and estimates that are reasonable and prudent.

The Chief Financial Officer is also required to:

•      keep proper accounting records that are up-to-date; and

•      take reasonable steps for the prevention and detection of fraud and other
       irregularities.




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Governance Statement
For the Year Ended 31 March 2009

Scope of responsibility
North Down Borough 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. North Down
Borough Council also has a duty under Local Government (Best Value) Act (Northern
Ireland) 2002 to make arrangements for 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, North Down Borough Council is responsible for
putting in place proper arrangements for the governance of its affairs and facilitating the
effective exercise of its functions, which includes arrangements for the management of
risk.
North Down Borough Council has prepared this Annual Governance Statement, which is
consistent with the principles of the CIPFA/SOLACE Framework: Delivering Good
Governance in Local Government, and is in full compliance with the Framework for the
year commencing 1 April 2009. This statement explains how North Down Borough
Council is progressing towards this and also meets the requirements of Regulation 2A of
the Local Government Accounts and Audit (Amendment) Regulations (Northern Ireland
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 Council is directed and controlled and the activities through which
the Council accounts to, engages with and leads the community. It enables the Council
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 North Down
Borough 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.
In 2007 CIPFA withdrew its guidance relating to Statements on Internal Control with the
publication of the joint CIPFA/SOLACE Framework: Delivering Good Governance in Local
Government. This requires the publication of an Annual Governance Statement rather
than a Statement on Internal Control.
Some aspects of the Statement on Internal Control were carried forward to the Annual
Governance Statement.        North Down Borough Council undertook the necessary
preparatory work during the year ended 31 March 2009. North Down Borough Council is
in full compliance with all aspects of the joint CIPFA / SOLACE Framework: Delivering
Good Governance in Local Government from 1 April 2009.


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The Governance Framework
This section describes the key elements of the systems and processes that comprise
North Down Borough Council’s governance arrangements.

•   Arrangements for identifying and communicating the Council’s vision of its
    purpose and intended outcomes for citizens and service users
    The Council has a Corporate Plan for the period 2008-2012, the purpose of which is
    to give citizens a full understanding of the Council’s aims and priorities over this
    period. The Plan outlines objectives, priorities, projects and performance indicators
    in five key areas, namely:

       •   Environment;
       •   Well Being;
       •   Leadership;
       •   Economic Development; and
       •   Best Value Services.

    For the citizen, this provides clear information on the Council’s work and how
    resources and influence will be used to benefit the Borough as a whole. The Council
    has a Policy Committee that has delegated responsibility from Council for
    overseeing the development and update of the Plan; for ensuring that progress in
    each of the key areas is carefully monitored and that key messages relating to the
    Corporate Plan are effectively communicated.
    The production of the Corporate Plan followed on from a series of consultation
    meetings with key stakeholders including the local business community, statutory
    organisations, community/voluntary groups and local ratepayers and from a number
    of strategic reviews undertaken in recent years.
    The Corporate Plan is available to the public on the Council’s website and hard
    copies are also made available in Council's Town Hall and in buildings across the
    Borough. In addition, an overview of the Plan outlining the key themes and
    objectives was included in the summer 2008 edition of the Council magazine, North
    Down Matters, which is distributed to all households and businesses in the Borough.

•   Arrangements for reviewing the Council’s vision and its implications for the
    Council’s governance arrangements
    The Corporate Plan commits the Council to monitoring and reviewing its aims and
    priorities to take account of changing circumstances. This is particularly important in
    the light of changes arising out of the Review of Public Administration, which will
    require the introduction of new structures and processes to prepare the Council for
    the revised functions that local authorities will be responsible for delivering after
    2011.
    To aid this review process, the Council has committed in its new Corporate Plan to
    publishing an annual update on performance against the indicators set in the Plan.
    It is the intention that this review will be published in the Council Magazine, North
    Down Matters, later in 2009. The Policy Committee has delegated responsibility for
    overseeing this review process and for ensuring that any proposed changes are
    subject to consideration before changes to the Corporate Plan are approved.

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•   Arrangements for measuring the quality of services for users through the
    Citizen Satisfaction Survey, for ensuring they are delivered in accordance with
    the Council’s objectives and for ensuring that they represent the best use of
    resources
    The Council’s performance is benchmarked against other Northern Ireland Councils
    using a statutory performance target framework set by the Department of the
    Environment. This ensures that the performance of all Councils is considered in a
    range of key areas identified. The results of this exercise are reported to Council,
    through its Policy Committee on an annual basis to ensure that any issues identified
    are addressed on a timely basis.
    In addition, local performance targets are set as part of the annual budget setting
    process and progress against targets set is reported to Council through a series of
    quarterly Performance Management Reports.              These performance targets sit
    alongside the statutory performance targets set by the Department of the
    Environment. Where appropriate, these local performance targets are supported by
    detailed operational plans for individual services areas.
    To develop this further, the Council is currently finalising a Balanced Scorecard
    approach that links service business plans to the Council's overall objectives as set
    out in the Corporate Plan. This approach ensures that the overall vision of the Council
    as set out in the Corporate Plan are considered from:
       •   A financial perspective;
       •   A customer perspective;
       •   An internal perspective;
       •   A learning and growth perspective.
    This approach is currently being finalised through the Policy Committee and the
    targets included will be effective from April 2009 with the first performance report
    against the scorecard targets becoming available later in 2009.
    The Council is subject to audit by the Local Government Auditor. The scope of
    auditors’ work is extended to cover not only the audit of the Council’s Financial
    Statements, but also aspects of corporate governance and arrangements to secure
    the economic, efficient and effective use of resources. The Local Government Auditor
    makes an annual report on the results of his audit which is published on the Council’s
    website.
    To support its review of the use of resources, the Council has an Internal Audit
    function, responsible for undertaking audits against an agreed plan of work.

•   Arrangements for 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
    As a statutory body, the Council performs a number of functions that are provided for
    in legislation. The Council takes overall responsibility for discharging these functions,
    with their performance delegated either to a Committee or an Officer.
    To oversee this process, the Council maintains a Committee system, with individual
    committees reporting to the Council as a whole. Each Committee is responsible for
    determining policy within its own area within the remit delegated from the Council.
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    Formal terms of reference are in place for all of the Council’s Standing Committees
    and for its Finance and Audit Committees.
    The responsibilities of the Chief Executive & Town Clerk as Chief Financial Officer
    are set out in the Local Government (Accounts & Audit) Regulations (Northern
    Ireland) 2006. In addition, the responsibilities of Officers up to and including senior
    management grade are enshrined in job descriptions.                 A review of the
    responsibilities of Directors has recently taken place to ensure that these continue to
    be appropriate as the Council moves towards the changes associated with the
    Review of Public Administration. Delegation arrangements are included in each
    Officer’s job description.

•   Arrangements for developing, communicating and embedding codes of
    conduct, defining the standards of behaviour for members and staff
    Council has a wide range of policies and procedures, which are subject to on-going
    review and include the standards of behaviour expected from all employees.
    Council has adopted the Local Government Staff Commission’s Code of Conduct. A
    new ‘Dignity at Work Policy’, which will extend to members as well as employees,
    has been developed and is ready for Union consultation prior to implementation. All
    policies and procedures are communicated to employees through induction and
    other on-going training initiatives.

•   Arrangements for 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 Council operates under a system of Standing Orders and Financial Regulations
    that all Committees and Officers must follow. Any changes to these documents
    require formal approval by the Council.
    The Standing Orders set out the formal mechanisms by which the Council regulates
    the conduct of its meetings and are subject to regular review and update in response
    to the changing environment and the needs of the Council. In addition, there are
    clearly defined guidelines for capital expenditure, procurement, human resources
    management and project management. The Council continuously updates its
    detailed policies and procedures to ensure that these provide sufficient and
    comprehensive coverage. The policies and procedures take account of best
    practice guidance and of issues raised by external and internal audit. Procedures
    are subject to Council approval before implementation and set out the
    responsibilities of management in relation to each area. In recent years, risk
    management has been developed within the Council with the establishment of a
    Corporate Risk Register together with Departmental Risk Registers. Risk Registers
    are subject to formal update and are reported to the Audit Committee at least twice
    yearly, or more regularly if required.
    The Council’s Members Services     Section maintains Standing Orders to ensure that
    these are updated to reflect any   changes agreed by Council. The delegations to
    Committees and Officers have        been explained on page 9. Delegations are
    continuously reviewed to ensure    that they reflect the current environment and the
    needs of the Council.
    The Councillors’ Code of Conduct, which has no statutory basis, provides guidance
    to members relating to breach of Standing Orders. Where there is an override of
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     Council Standing Orders, this requires approval by the Council as a whole. Override
     of more detailed procedures is only allowed in exceptional circumstances and with
     written Director, Chief Executive or Council approval as appropriate.

•    Arrangements for undertaking the core functions of an Audit Committee, as
     identified in CIPFA’s Audit Committees – Practical Guidance for Local
     Authorities
     The Council has in place an Audit Committee whose overall purpose and objective is
     to assist Council in fulfilling its oversight responsibilities. The Audit Committee,
     which meets at least four times each year has responsibility for reviewing:
      •   The system of internal control and management of risks;
      •   The financial reporting process;
      •   The internal and external audit process;
      •   Council’s processes for monitoring compliance with laws and regulations; and
      •   Council’s processes for monitoring compliance with its own Standing Orders,
          policies and procedures.
     In performing its duties, the Audit Committee is responsible for maintaining effective
     working relationships with the Council as a whole, with management and with the
     internal and external auditors.
     In relation to internal control, the Audit Committee is responsible for:
       • Monitoring, implementation and development of effective risk management
           processes for the Council;
       • Monitoring the Council’s risk profile on a periodic basis to ensure that action is
           taken to address issues arising;
       • Monitoring the statement of assurance process to ensure that action has been
           completed in line with the agreed timetable;
       • Monitoring systems for ensuring that satisfactory arrangements are in place to
           promote economy, efficiency and effectiveness;
       • Evaluating whether management is setting the appropriate “control” culture by
           communicating the importance of internal control and the management of risk
           and ensuring that all employees have an understanding of their roles and
           responsibilities;
       • Keeping under review the effectiveness of internal control systems, and in
           particular reviewing the external auditor’s plan of work and management letter,
           the internal auditors’ annual report and management responses;
       • Gaining an understanding of whether internal control recommendations made
           by internal and external audit have been implemented by management;
       • Reviewing and agreeing the wording set out in the Chief Executive & Town
           Clerk’s Annual Governance Statement.
     In addition, the Audit Committee has delegated authority to institute special
     investigations if necessary.
     In May 2009, the Audit Committee undertook a self-assessment of its own
     effectiveness, facilitated by the Council’s internal auditors, based on a checklist
     developed by CIPFA, Measuring the Effectiveness of the Audit Committee. The
     results of this exercise have been considered by the Audit Committee to ensure that
     arrangements for the operation of this Committee continue to be effective.


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•   Arrangements for ensuring compliance with relevant laws and regulations,
    internal policies and procedures, and that expenditure is lawful
    Regulatory compliance is managed at service level to ensure that all relevant laws and
    regulations, internal policies and procedures are adhered to. To support this, the
    Council operates under a system of Standing Orders and Financial Regulations as
    defined on page 9 that all Committees and Officers must follow.
    To ensure that legislative compliance is considered for all activities, reports to Council
    require relevant legislation to be quoted. All major expenditure proposals are subject
    to review by Management Team before being passed to Council and legal advice is
    sought where appropriate and reported to Council. Where appropriate, these
    proposals are supported by an economic appraisal, which considers the legislative
    context of the proposal.

•   Arrangements for whistle-blowing            and   for   receiving   and    investigating
    complaints from the public
    The Council's Standing Operating Procedure: Fraud and Corruption, sets out whistle-
    blowing arrangements. The procedure sets out the arrangements where employees
    wish to make disclosures whilst remaining protected from action by their employer.

    The handling of complaints is set out in the Council's Complaints Procedure, a copy of
    which is published on the Council's website. A recent internal audit review highlighted
    a number of areas for improvement in the Council’s current complaints management
    process. This included widespread non-compliance with existing procedures around
    the recording of complaints. Following the internal audit review, management have re-
    launched the Customer Complaints Policy to ensure that all staff are aware of the
    requirements for logging and dealing with customer complaints. In addition, a
    complete review of the business processes for handling complaints and the
    associated systems has been completed and certain software upgrades have taken
    place as a result. A pilot of the upgraded software is currently being completed for
    waste management services and, following this, the upgraded system will be rolled out
    to other Council services.

•   Arrangements for identifying the development needs of members and senior
    officers in relation to their strategic roles, supported by appropriate training
    After each election, Members receive induction training to ensure that they are fully
    aware of all key issues, including an overview of each Council Department, operation
    of the Committee system and Standing Orders and an overview of local government
    finance. In addition, members attend courses and conferences as required during the
    course of the year. These arrangements are currently considered to be adequate and
    there are currently no formal training plans for members. It is considered that this
    would need to be developed on a Northern Ireland basis as part of the Review of
    Public Administration considerations.
    The development needs of senior officers are addressed through the Employee
    Development Scheme, the next review of which will take place during Summer 2009.
    To support this, the Council operates a ‘Part-time Study Policy’ that gives all staff the
    opportunity to apply for study opportunities that will support them in their personal
    development.


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•   Arrangements for establishing clear channels of communication with all
    sections of the community and other stakeholders, ensuring accountability and
    encouraging open consultation
    Council is committed to establishing and maintaining strong lines of communication
    with all sections of the local community. There is awareness and appreciation across
    all Departments that different communication channels will need to be employed to
    ensure maximum coverage. Council sends two corporate publications per year to all
    households and businesses in the Borough in the form of the Council Magazine North
    Down Matters. This provides an overview of Council business across all Departments
    and each page is themed to enable residents to easily access information of specific
    interest to them. A contact number for further information or links to the Council
    website are provided for readers to access more information if required.


Review of effectiveness

North Down Borough 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 Council’s Senior Management
Team, 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.

The Chief Executive & Town Clerk has responsibility for preparing this Annual
Governance Statement. In preparing this statement, he has considered the governance
framework and system of internal controls in place. This review has been undertaken
taking account of Guidance on the Local Government (Accounts and Audit) Regulations
(Northern Ireland) 2006 and the Local Government (Accounts and Audit) (Amendment)
Regulations (Northern Ireland) 2006 issued by the Department of the Environment in
February 2008. The Chief Executive & Town Clerk leads the Council’s Senior
Management Team to collectively have involvement in and oversight of the processes
involved in maintaining and reviewing the effectiveness of the governance framework. In
producing this statement, full regard has been made to the Council’s Corporate Risk
Register and to Statements of Assurance provided by each Director to the Chief
Executive & Town Clerk for year ended 31 March 2009.

The Council itself maintains overall control of the governance framework and has been
involved, for example, in approving the implementation of the risk management and
statement of assurance processes. Primary responsibility for overseeing the governance
process has been delegated to the Audit Committee as a main committee of Council,
whose responsibilities are set out in formal terms of reference approved by Council. The
role of the Audit Committee extends to receiving reports from the Council’s internal and
external auditors to ensure that any issues raised are subject to due consideration and
are addressed by Senior Management Team on a timely basis.

During the year, various reports were presented to Council regarding operational
difficulties with fourteen ejection trailers at the Council’s new waste transfer facility. An
outline of the circumstances and actions taken by Council to address the issues arising
are set out on page 13.

Internal Audit services are provided to the Council by PricewaterhouseCoopers under
contract. Internal Audit provides an independent opinion on the adequacy and
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effectiveness of the Council’s system of internal control. Internal Audit report any
deficiencies in internal control to Senior Management Team whose responsibility it is to
consider any recommendations made and to take necessary remedial action. The results
of the work of Internal Audit are also reported to the Audit Committee at least four times
each year to ensure that continuous improvement takes place. These reports to the Audit
Committee include a follow-up report to ensure that actions previously agreed by
Management Team are implemented on a timely basis and an annual report from Internal
Audit, providing overall assurance on the systems of internal control in place. Whilst
Internal Audit has identified the need for certain improvements, there were no issues
raised that are considered to represent a significant governance issue. During the year
one Internal Audit report was given a below ‘satisfactory’ level of assurance – Review of
Leisure Membership and Direct Debits. The issues raised in this report are currently
being addressed by management and do not threaten the overall systems of internal
control for the Council.

During the year, the Council undertook a full review of the effectiveness of Internal Audit
in line with the requirements of the CIPFA Code of Practice for Internal Audit in Local
Government in the United Kingdom 2006. This review proved satisfactory.

In considering this Annual Governance Statement, the Audit Committee have considered
the review of the governance framework and system of internal controls prepared by the
Chief Executive & Town Clerk. The Committee has made arrangements to be advised of
and to monitor the further development of the governance framework.

The Council, through its Audit Committee, has been advised on the implications of the
result of the review of the effectiveness of the governance framework by the Chief
Executive & Town Clerk and a plan to address weaknesses and ensure continuous
improvement of the system is in place.


Significant governance issues
Whilst the Council has noted in its Governance Statement a number of areas where
ongoing improvements can be made, these are not considered to be fundamental in
nature. The following area has been identified where the Council’s governance
arrangements can be improved:

1. Trailer Project
   During the year, various reports were presented regarding operational difficulties with
   fourteen ejection trailers. These trailers were procured for the transportation of three
   compacted waste streams from the Council’s new waste transfer facility to end
   disposal locations. Whilst the procurement of these trailers had taken place late in
   2006, with delivery in Spring 2007, their final commissioning could not take place until
   the new waste transfer facility reached a certain stage of completion during Summer
   2008. At this stage, it quickly became evident that there were difficulties associated
   with the size of the trailers specified, which impaired their ability to operate safely for
   the purpose intended. As a result, the Council took a decision to modify the trailers by
   reducing their capacity so that safe ongoing operation could be guaranteed. Nine of
   the fourteen trailers have now been modified and are operating effectively. Further
   consideration is being given to future options for use of the remaining five trailers.


                                                                                             13
North Down Borough Council

     In the period since 2007, the Council has taken significant steps to strengthen
     procurement and project management arrangements. This includes the establishment
     of a central procurement function for the Council in late 2007, with responsibility for
     continuously improving procurement processes across Council in line with best
     practice, and the implementation of more robust project management arrangements
     for cross-departmental projects. These project management arrangements were
     developed during the financial year under review and are now fully in place.
     In addition, the Council appointed an independent consultant to undertake a full review
     of the trailer project. This included:
         •      A review of the procurement processes adopted from development of the
                tender specification through to the award of contract;
         •      A review of the management arrangements for testing and modifying the
                trailers;
         •      Project management arrangements adopted.

     The findings of the review and Management’s proposals to address the issues raised
     were presented to the Council’s Audit Committee at meetings on 16 July 2009 and 27
     July 2009. These are summarised as follows:

     •       Recommendation 1: That Council take legal advice in relation to the
             procurement process
             Management Response – legal advice will be sought with regard to this matter.

     •       Recommendation 2: That Independent specialist technical advice should be
             sought to test the unmodified trailers and re-evaluate their potential uses
             within the Council’s waste management operation before arriving at any
             decision as to their future.
             Management Response – Council is in the process of obtaining independent
             specialist technical advice to test the trailers and re-evaluate their potential uses
             within the Council’s waste management operation before arriving at any decision
             as to their future.

     •       Recommendation 3: That Council should implement a formal project
             management process across all Departments of Council to address the
             efficient, effective and economic implementation of projects
             Management Response – a formal Project Management Process was agreed by
             the Council’s Management Team at the end of January 2009. The Project
             Management Process incorporates:
                a.   Project initiation and definition;
                b.   Project organisation;
                c.   External expertise inputs;
                d.   Identification and management of risk;
                e.   Feasibility studies and economic appraisals;
                f.   Programme management plan;
                g.   Reporting mechanism and procedures;
                h.   Project administrative arrangements.




14
                                                       North Down Borough Council

   •   Recommendation 4: That accountability for the management and delivery of
       capital projects should primarily rest with the Department whose functions
       are being exercised, with management Team taking the role of Chief Co-
       ordinating body.
       A review of organisational structures was completed and implemented in June
       2009. This included the establishment of a Project Board, incorporating a number
       of the Council’s Chief Officers, and the identification of a lead Officer responsible
       for ensuring that the requirements of the Project Management Process are
       implemented across Council. Responsibility for delivery of capital projects now
       rests with the Department whose functions are being exercised.

   •   Recommendation 5 – That Council build up corporate expertise in the whole
       area of procurement.
       Following the establishment of a central procurement function for the Council in
       late 2007, the Council appointed a professionally qualified Procurement Officer
       early in 2008. The Procurement Officer is responsible for continuously improving
       procurement processes across Council in line with best practice. In addition,
       opportunities for developing procurement expertise within operational Departments
       will continue to be sought.
We propose over the coming year to take steps to address the above issues 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 throughout the course of the year and, more
formally, as part of our next annual review.




                                                                                           15
 North Down Borough Council

Certificate of the Chief Financial Officer

I certify that:

(a)     the Statement of Accounts for the year ended 31 March 2009 on pages 1 to 53 has
        been prepared in the form directed by the Department of the Environment and
        under the accounting policies set out on pages 23 to 31.

(b)     in my opinion the Statement of Accounts presents fairly the income and
        expenditure and cash flows for the financial year and the financial position as at
        the end of the financial year.




Council Approval of Statement of Accounts

These accounts were approved by resolution of the Audit Committee (with delegated
Council powers) on 18 June 2009.




16
                                                       North Down Borough Council




NDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NORTH
DOWN BOROUGH COUNCIL
I have audited the statement of accounts of North Down Borough Council for the year ended
31 March 2009 under the Local Government (Northern Ireland) Order 2005. The statement
of accounts comprises the Income and Expenditure Account, Statement of Movement on
District Fund Balance, Statement of Total Recognised Gains and Losses, Balance Sheet,
Cash Flow Statement. The statement of accounts has been prepared under the accounting
policies set out within them.

This report is made solely to the Members of North Down Borough Council in accordance
with Local Government (Northern Ireland) Order 2005 and for no other purpose, as
specified in the Local Government Code of Audit Practice issued by the Chief Local
Government Auditor.

Respective responsibilities of the Chief Financial Officer and the independent
auditor

The Chief Financial Officer’s responsibilities for preparing the statement of accounts in
accordance with relevant legal and regulatory requirements and the Statement of
Recommended Practice on Local Authority Accounting in the United Kingdom 2007 are set
out in the Statement of Responsibilities for the Statement of Accounts.

My responsibility is to audit the statement of accounts 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 statement of accounts present fairly, in
accordance with relevant legal and regulatory requirements and the Statement of
Recommended Practice on Local Authority Accounting in the United Kingdom 2007, the
financial position of the local government body and its income and expenditure for the year.

I review whether the Annual Governance Statement reflects compliance with the Statement
of Recommended Practice on Local Authority Accounting in the United Kingdom 2007. I
report if it does not comply with proper practices specified by the Department of the
Environment or if the statement is misleading or inconsistent with other information I am
aware of from my audit. I am not required to consider, nor have I considered, whether the
Annual Governance Statement covers all risks and controls. Neither am I required to form
an opinion on the effectiveness of the local government body’s corporate governance
procedures or its risk and control procedures.

I read other information published with the statement of accounts and consider whether it is
consistent with the audited statement of accounts. This other information comprises only the
Explanatory Foreword. I consider the implications for my report if I become aware of any
apparent misstatements or material inconsistencies with the statement of accounts. My
responsibilities do not extend to any other information.

                                                                                          17
 North Down Borough Council




Basis of audit opinion

I conducted my audit in accordance with the Local Government (Northern Ireland) Order
2005, the Local Government Code of Audit Practice issued by the Chief Local Government
Auditor 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 statement of accounts. It also includes an assessment of the
significant estimates and judgments made by the local government body in the preparation
of the statement of accounts, and of whether the accounting policies are appropriate to the
local government body’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 statement of accounts is 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 statement of accounts.

Opinion

In my opinion the statement of accounts presents fairly, in accordance with relevant legal
and regulatory requirements and the Statement of Recommended Practice on Local
Authority Accounting in the United Kingdom 2007, the financial position of North Down
Borough Council as at 31 March 2009 and its income and expenditure for the year then
ended.

Certificate

I certify that I have completed the audit of the accounts of North Down Borough Council in
accordance with the requirements of the Local Government (Northern Ireland) Order 2005
and the Local Government Code of Audit Practice issued by the Chief Local Government
Auditor.



Local Government Auditor
106 University Street
Belfast
BT7 1EU

October 2009




18
                                                                    North Down Borough Council

District Fund – Income and Expenditure Account
For the year ended 31 March 2009

                                                                      2008/09                      2007/08
                                              Notes     Gross          Gross        Net Cost       Net Cost
                                                      Expenditure     Income

                                                          £              £              £              £
Services Expenditure
Leisure and Recreational Services                       9,489,666     1,545,117       7,944,549      6,980,743
Environmental Services                                 12,022,740     1,620,776      10,401,964      8,123,386

Democratic Representation and
                                                        1,090,553        5,400        1,085,153      1,031,397
Management and Corporate Management
Other Services                                          4,392,927     1,094,348       3,298,579      1,519,181
Continuing operations                                  26,995,886     4,265,641      22,730,245     17,654,707

Acquired operations                                             -               -              -                -

Discontinued operations                                         -               -              -                -

Exceptional items not included in cost of
                                               26          59,366      296,850        (237,484)        107,000
specific services
Net cost of services                                   27,055,252     4,562,491      22,492,761     17,761,707

(Gain) or loss on disposal of fixed assets                101,799        9,652           92,147        (18,157)

(Surplus)/Deficit of trading or other
                                                                -               -              -                -
operations

Interest payable and similar charges
including gains or losses on the repurchase    6a       1,457,110               -     1,457,110      1,396,012
or early resettlement of borrowings

Interest and Investment Income                 6b               -      330,168        (330,168)      (615,714)

Pensions interest cost and expected return
on pensions assets                                              -               -              -                -

Extraordinary Items                                             -               -              -                -
Net Operating Expenditure                              28,614,161     4,902,311      23,711,850     18,523,848

Income from General Grant and District
Rates
General Grant                                                   -      515,771        (515,771)      (473,982)
District Rates                                  8               -    18,626,949     (18,626,949)   (17,259,706)

Surplus/(Deficit) for the year                         28,614,161    24,045,031      (4,569,130)     (790,160)




                                                                                                           19
North Down Borough Council

Statement of Movement on the District Fund Balance
For the year ended 31 March 2009

                                                                             2008/09       2007/08

                                                                  Notes         £            £

(Deficit) for the year on the District Fund – Income and                    (4,569,130)    (790,160)
Expenditure Account

Net additional amount required by statute and non-statutory
proper practices to be debited or credited to the District Fund     3        5,171,913     1,069,013
Balance for the year

Movement on the District Fund Balance for the year                 3,25        602,783      278,853

District Fund Balance Brought Forward                               25       1,388,534     1,109,681

District Fund Balance Carried Forward                               25       1,991,317     1,388,534




Statement of Total Recognised Gains and Losses
For the year ended 31 March 2009

                                                                             2008/09       2007/08
                                                                  Notes         £            £
Surplus/(Deficit) on the District Fund - Income and Expenditure             (4,569,130)    (790,160)
Account for the year

                                                                  10a&b,
Surplus/(Deficit) arising on revaluation of fixed assets                    18,613,969               -
                                                                   25c

Surplus/(Deficit) arising on revaluation of available-for-sale
                                                                                       -             -
financial assets

Revaluation of pension reserve/provision                          20a, 25     (44,790)      (33,839)

Any other gains and losses required to be included in the
                                                                                       -             -
Statement of Total Recognised Gains and Losses



Total recognised gains and losses for the year (Change in
                                                                            14,000,049     (823,999)
Net Worth)


Prior period adjustments made during the year                                          -             -


Total gains/(losses) recognised since last annual report                    14,000,049     (823,999)
(Change in Net Worth)




20
                                                              North Down Borough Council

Balance Sheet
As at 31 March 2009

                                                                   2008/09         2007/08
                                                      Notes           £               £
FIXED ASSETS
Intangible Assets                                       10a            200,006        150,005
Tangible Fixed Assets
Operational Assets:
     Land & Buildings                                   10b         85,153,375     60,263,348
     Infrastructure Assets                              10b            587,384        451,143
     Community Assets                                   10b             11,972         11,980
     Vehicles, Plant, Furniture and Equipment           10b          6,451,378      2,952,413
Non-Operational Assets:
     Investment Properties                              10b          5,455,603      1,186,234
     Assets under Construction                          10b          4,868,106     19,560,150
     Surplus Assets held for Disposal                   10b                  -              -
TOTAL FIXED ASSETS                                      10b        102,727,824     84,575,273

Long Term Debtors                                       14a            163,821        181,732
TOTAL LONG TERM ASSETS                                             102,891,645     84,757,005

CURRENT ASSETS
Stocks                                                   13             50,456         46,805
Debtors                                                 14b          2,233,082      1,358,138
Short Term Investments                                15,24b         5,600,000      9,248,577
Cash and Bank                                         24a,24b        1,360,157          3,065
                                                                     9,243,695     10,656,585

CURRENT LIABILITIES
Borrowing repayable on demand or within 12 months        16         (1,210,623)    (1,085,641)
Creditors                                                16         (3,139,872)    (3,367,100)
Bank Overdraft                                         16,24a                 -      (173,088)
                                                                    (4,350,495)    (4,625,829)

TOTAL ASSETS LESS CURRENT LIABILITIES                              107,784,845     90,787,761

LONG TERM LIABILITIES
Borrowing repayable within a period in excess of 12
months                                                   17        (25,793,865)   (23,360,009)
Pension Liabilities                                     20a           (424,989)      (412,972)
Deferred Liabilities                                     18           (288,092)              -
Government Grants – deferred                             21         (2,743,185)    (2,377,115)
Provisions                                              20b           (424,000)      (527,000)
                                                                   (29,674,131)   (26,677,096)
NET ASSETS                                                           78,110,714     64,110,665

RESERVES:
Capital Adjustment Account                              25          52,123,491     56,305,210
Revaluation Reserve                                     25          18,125,305              -
Pensions Reserve                                        25           (424,989)      (412,973)
Capital Receipts Reserve                                25           2,668,121      3,178,391
Capital Fund                                            25           3,025,469      2,946,503
Renewal and Repairs Fund                                25             250,000        250,000
Other Balances and Reserves                             25             352,000        455,000
District Fund                                           25           1,991,317      1,388,534
Net Worth                                                           78,110,714     64,110,665


                                                                                                 21
North Down Borough Council

Cash Flow Statement
As at 31 March 2009

                                                       2008/09                      2007/08
                                      Notes        £             £              £               £
REVENUE ACTIVITIES
Net Cash Inflow from Operating         23                     2,112,413                     3,057,044
Activities

Returns on Investments and
Servicing of Finance
Cash Outflows
Interest paid                                  (1,468,976)                  (1,371,005)
Interest element of finance lease
                                                         -                            -
payments
Cash Inflows
Interest received                                 328,500                      622,593
Net Cash Outflow from Returns
on Investments and Servicing of                              (1,140,476)                      (748,412)
Finance


CAPITAL ACTIVITIES
Cash Outflows
Purchase of fixed assets                       (5,881,005)                 (12,759,472)
Purchase of long term investments                        -                            -
Other capital cash payments                              -                            -
Cash Inflows
Sale of fixed assets                                9,653                       21,657
Capital Grants received               24d(i)      222,180                      938,133
Other capital cash receipts                             -                            -
Net Cash Outflow from Capital
                                                             (5,649,172)                  (11,799,682)
Expenditure before Financing


Management of Liquid Resources
Net increase/decrease in short term
                                                         -                            -
deposits
Net increase/decrease in other
                                                3,648,577                    6,251,423
liquid resources
                                                              3,648,577                     6,251,423
FINANCING
Cash Outflows
Repayment of amounts borrowed          24c     (1,085,641)                  (1,047,316)
Capital element of finance lease
                                                         -                            -
rental payments
Cash Inflows
New loans raised                       24c      3,644,479                    3,822,235
New short term loans                                    -                            -
                                                              2,558,838                     2,774,919


Increase/(Decrease) in Cash            24a                    1,530,180                       (464,708)




22
                                                     North Down Borough Council

Notes to the Financial Statements

1.    Accounting Policies

1a)   General Principles

      The Financial Statements have been prepared under the historical cost convention,
      modified by the revaluation of land and buildings, and are in accordance with
      directions and guidance contained in the ‘Code of Practice on Local Authority
      Accounting in the United Kingdom 2008: A Statement of Recommended Practice’
      (SORP) and in a form directed by the Department of the Environment in accordance
      with regulations 4 (1) and (2) in the Local Government (Accounts and Audit)
      Regulations (Northern Ireland) 2006. The general principles adopted in compiling
      and presenting the Financial Statements are those specified within the 2008 SORP.
      The 2008 SORP is based on approved accounting standards for the preparation of
      Financial Statements for the financial year beginning 1 April 2008. These Financial
      Statements comply with accounting standards issued or adopted by the Accounting
      Standards Board insofar as these are applicable to local government.

      Following from this, the Financial Statements are presented on the basis that the
      Council will continue to operate for the foreseeable future, the going concern
      concept. The accounts also reflect the concept of the primacy of legislative
      requirements in that, where an accounting treatment is prescribed by law, it must be
      applied even if it contradicts another accounting concept. In addition the Chartered
      Institute of Public Finance and Accountancy (CIPFA) publish a number of bulletins
      dealing with capital finance and Best Value accounting, which have been followed
      when preparing these Financial Statements.

      The District Fund - Income and Expenditure Account on page 19 has been prepared
      using the requirements of the Best Value Accounting Code of Practice.


1b)   Accounting Concepts

      In general, the Financial Statements are prepared on the basis of historical cost
      modified by the revaluation of land, buildings, vehicles and plant subject to and in
      accordance with the fundamental accounting concepts set out below:

      Relevance
      The Financial Statements are prepared to provide readers with information about the
      Council’s financial performance and position that is useful for assessing the
      stewardship of public funds.




                                                                                       23
North Down Borough Council

      Reliability
      The Financial Statements are prepared on the basis that the financial information
      contained within them is reliable, i.e. free from material error, deliberate or
      systematic bias, complete within the bounds of materiality and represent faithfully
      what they intend to represent. Where there is uncertainty in measuring or
      recognising the existence of assets, liabilities, income and expenditure then
      prudence has been used as a basis to inform the selection and application of
      accounting policies and estimation techniques.

      Comparability
      The Financial Statements are prepared so as to enable comparison between
      financial years. To aid comparability the district council has applied its accounting
      policies consistently both during the year and between years.

      Understandability
      Every effort has been made to make the Financial Statements as easy to understand
      as possible. Nevertheless, an assumption has been made that the reader will have
      a reasonable knowledge of basic accounting and local government finance. Where
      the use of technical terms has been unavoidable, an explanation has been provided
      in the body of the Financial Statements.

      Materiality
      Certain information may be excluded from the Financial Statements on the basis that
      the amounts involved are not material either to the fair presentation of the financial
      position and transactions of the Council or to the understanding of the accounts.

      Accruals
      With the exception of the Cash Flow Statement, the Financial Statements have been
      prepared on an accruals basis. The accruals basis of accounting requires the non-
      cash effect of transactions to be reflected in the Financial Statements for the year in
      which those effects are experienced and not in the year in which the cash is actually
      received or paid.


1c)   Fixed Assets

      i) Intangible Assets

      An intangible item meets the definition of an asset when access to the future
      economic benefits that it represents is controlled by the reporting entity, either
      through custody or legal protection. Purchased intangible assets are capitalised as
      assets at cost. Internally developed intangible assets have only been capitalised
      where there is a readily ascertainable market value.

      FRS 10 permits revaluation only of intangible assets that have a readily
      ascertainable market value. Intangible assets are amortised on a systematic basis
      over their economic lives. If access to the economic benefits associated with an
      intangible asset has been achieved through legal rights that have been granted for a
      finite period, the economic life does not extend beyond that period unless the legal
      rights are renewable and renewal is assured. The useful economic lives of
      intangible assets are reviewed at the end of each reporting period and revised where


24
                                                  North Down Borough Council

necessary. In amortising an intangible asset, a residual value has been assigned to
the asset only where such residual value can be reliably measured.

The Council has the right to hold a market under a Royal Charter dated 1611. This is
included in the Balance Sheet at its revalued amount and as it is held in perpetuity
has not been amortised. In addition the Council owns rights to construct and
maintain public paths on private land under five Public Path Creation Agreements.
These are held at a nominal value of £1 each.

ii) Tangible Assets

All expenditure on the acquisition, creation or enhancement of tangible fixed assets
is capitalised on an accruals basis in accordance with Financial Reporting Standard
15 Tangible Fixed Assets (FRS 15). The Council applies a de-minimis level of
£5,000 to all fixed assets (on an individual asset basis), meaning only assets over
£5,000 are capitalised. Expenditure on the acquisition of a tangible asset, or
expenditure which adds to, and not merely maintains, the value of an existing asset,
is capitalised and classified as a tangible fixed asset, provided that it yields benefits
to the Council and the services it provides are for a period of more than one year.
Assets acquired on terms meeting the definition of a finance lease are capitalised
and included together with a liability to pay future rentals. If a fixed asset is acquired
for other than a cash consideration or if payment is deferred, the asset is recognised
and included in the Balance Sheet at fair value.

All fixed assets are initially capitalised at cost, but only those costs that are directly
attributable to bringing the asset into working condition for its intended use. Fixed
assets are included in the Balance Sheet as follows:

•      Operational land and properties and other operational assets are included at
       the lower of net current replacement cost or net realisable value in existing
       use

•      Infrastructure assets and community assets are included in the Balance Sheet
       at historical cost, net of depreciation, where appropriate and if the information
       on cost is available

•      Investment properties and assets that are surplus to requirements and held
       for disposal are included at the lower of net current replacement cost or net
       realisable value. In the case of investment properties, net realisable value will
       normally be market value.

•      Other non-operational assets, such as assets under construction, are
       included at historical cost.

If an asset is included at current value, it will be formally revalued, by either a
qualified external or internal valuer, at intervals of not more than five years. The
revised amount will then be included in the Balance Sheet.

If a fixed asset is included in the Balance Sheet at current value, the increase over
the previous carrying amount at which that asset was included in the Balance Sheet
immediately prior to the latest valuation or revaluation will be credited to the
Statement of Total Recognised Gains and Losses and taken to the Revaluation
                                                                                       25
North Down Borough Council

     Reserve except to the extent it reverses revaluation losses (after adjusting for
     depreciation) on the same asset that were previously recognised in the District Fund
     – Income and Expenditure Account, in which case it should be recognised in the
     District Fund – Income and Expenditure Account. If, on revaluation, there has been
     a decrease over the previous carrying amount an impairment loss has occurred. If
     the loss has been occasioned by clear consumption of economic benefits, any such
     loss will be recognised in the District Fund – Income and Expenditure Account. The
     amount of the decrease in value not associated with a clear consumption of
     economic benefit will be recognised in the Statement of Total Recognised Gains and
     Losses until the asset’s carrying amount reaches its depreciated historical cost and
     taken to the Revaluation Reserve and thereafter in the District Fund – Income and
     Expenditure Account.

     If a fixed asset is acquired under a finance lease, at the inception of the lease the
     amount to be recorded both as an asset and as a liability will be the present value of
     the minimum lease payments derived by discounting them at the interest rate implicit
     in the lease (minimum lease payments and the interest rate implicit in the lease are
     defined in paragraphs 20 and 24 of SSAP 21).

     A review for impairment of a fixed asset whether carried at historical cost or
     valuation will be carried out if events or changes in circumstances indicate that the
     carrying amount of the fixed asset may not be recoverable. If no such events or
     changes in circumstances are identified, and there are no other indications that a
     tangible fixed asset has become impaired, there is no requirement for an impairment
     review. Impairment will therefore be a relatively infrequent addition to depreciation.
     Tangible fixed assets other than non-depreciable land will be reviewed at the end of
     each reporting period for impairment when either:

     •      no depreciation charge is made on the grounds that it would be immaterial
            (either because of the length of the estimated remaining useful life or because
            the estimated residual value of the fixed asset is not materially different from
            the carrying amount of the asset), or

     •      the estimated remaining useful life of the fixed asset exceeds 50 years.

     If an impairment loss on a tangible fixed asset carried at historical cost caused by a
     clear consumption of economic benefit occurs, it will be written down for the
     impairment and the impairment loss should be recognised in the District Fund –
     Income and Expenditure Account.

     With any gain or loss on disposal of tangible assets, the disposal proceeds are
     credited to the District Fund – Income and Expenditure Account and the net book
     value credited to fixed assets and debited to the District Fund – Income and
     Expenditure Account. In order to comply with statutory/proper practices restrictions
     on the use of capital receipts, if the asset disposed of was carried at historical cost,
     then, it is necessary to reverse out the gain or loss credited or debited to the District
     Fund – Income and Expenditure Account with an amount equal to the gain or loss on
     disposal of the tangible fixed asset, as follows:

     •      credit the Capital Receipts Reserve of an amount equal to the disposal
            proceeds

26
                                                  North Down Borough Council

•      debit the Capital Adjustment Account of an amount equal to the carrying
       amount of the fixed asset disposal.

The gain or loss on disposal of the tangible asset should be a reconciling item in the
Statement of Movement on the General Fund Balance.                    If, in exceptional
circumstances the tangible asset disposed of was carried at current value, in
addition to the entries mentioned above the balance on the Revaluation Reserve in
respect of the asset disposal will be written off to the Capital Adjustment Account.

In accordance with FRS 15, depreciation has been provided for on all tangible fixed
assets with a finite useful life, which can be determined at the time of acquisition or
revaluation. Assets under construction are not depreciated until completed but they
may nevertheless suffer impairment. Surplus assets held for sale are depreciated
under FRS 15. Provision for depreciation has been calculated using the straight-line
method by allocating the cost (or revalued amount) less estimated residual value of
the assets evenly to the periods expected to benefit from their use.

The useful lives of assets are estimated on a realistic basis, reviewed regularly and,
if necessary, revised. If the useful life of a fixed asset is revised, the carrying
amount of the fixed asset will be depreciated over the revised remaining useful life.
Freehold land (both operational and non-operational), community assets and assets
in the course of construction are not depreciated. Depreciation is based on the
amount at which the asset is included in the Balance Sheet, whether at net current
replacement cost or historical cost.

Depreciation is charged on a straight-line basis on each main class of tangible asset
as follows:

•      buildings, installations, and fittings are depreciated on their historic value over
       the estimated remaining life of the asset as advised by the valuer. Depending
       on the type of building, installation or fitting the maximum useful life will be in
       the range of 15 to 50 years

•      plant, vehicles and equipment (excluding IT equipment) are depreciated on
       historic cost using a life of between 3 and 10 years. IT equipment is
       depreciated using a standard life of 3 years

•      a full year’s depreciation is charged in the year of acquisition and none in the
       year of disposal.

District Fund - Income and Expenditure account service revenue accounts, as
defined in CIPFA’s Best Value Accounting Code of Practice, central support services
and trading accounts are charged with depreciation and where required, any related
impairment loss (due to a clear consumption of economic benefits), for all fixed
assets used in the provision of the service. This includes surplus assets held for
disposal.

In respect of all gains and losses resulting from revaluations, the Statement of Total
Recognised Gains and Losses and therefore Revaluation Reserve should be:



                                                                                       27
North Down Borough Council

      •      credited with revaluation gains, except to the extent that they reverse previous
             revaluation losses (after allowing for depreciation) on the same asset that
             were charged to the District Fund – Income and Expenditure Account

      •      debited with revaluation losses not associated with an impairment related to a
             clear consumption of economic benefit up to the balance on the Revaluation
             Reserve in respect of that asset.

      The District Fund – Income and Expenditure Account should be:

      •      credited with any revaluation gains that reverse revaluation losses (after
             allowing for depreciation) on the same asset that were charged to services

      •      debited with revaluation losses associated with an impairment related to a
             clear consumption of economic benefit

      •      debited with revaluation losses not associated with a clear consumption of
             economic benefit in excess of the balance on the Revaluation Reserve in
             respect of that asset (i.e. in excess of the amount allowed to be debited to the
             Statement of Total Recognised Gains and Losses).

      Assets held under finance leases are capitalised at the fair value of the asset with an
      equivalent liability categorised under deferred liabilities in the Balance Sheet. The
      asset is depreciated on its current fair value over the shorter of the lease term and its
      useful economic life. Rentals under operating leases are charged to the District
      Fund - Income and Expenditure Account in the year in which they arise.

      Any grant contribution towards the purchase of a fixed asset is taken to the deferred
      grants account in the Balance Sheet. The balance is then written-off to the District
      Fund – Income and Expenditure Account over the useful life of the asset.


1d)   Debtors and Creditors

      The Financial Statements of the Council are maintained on an accruals basis in
      accordance with the SORP and Financial Reporting Standard 18 Accounting Policies
      (FRS18). This ensures that provision has been made for known outstanding debtors
      and creditors at the year-end, estimated amounts being used where actual figures
      are not available.

      A specific provision for doubtful debts is included in the Financial Statements in
      respect of those debts that are identifiable as potentially not fully collectable.
      Provisions in respect of bad debts have been estimated in accordance with
      recommended practice and past experience. Uncollectable debts are only written-off
      to the District Fund - Income and Expenditure Account after all recovery avenues
      open to the Council have been exhausted. Write-offs are only made in accordance
      with the Council’s approved write-off policy.




28
                                                      North Down Borough Council


1e)   Stocks

      Stocks are valued on the basis of the latest invoiced price. This is not materially
      different from valuation on a First In First Out basis as recommended by Statement
      of Standard Accounting Practice 9 Stocks and Long-Term Contracts (SSAP 9).


1f)   Value Added Tax

      All expenditure and income, irrespective of whether it is revenue or capital in nature,
      is shown net of Value Added Tax, unless it is irrecoverable.


1g)   Provisions

      Provisions for liabilities have been established in accordance with Financial
      Reporting Standard 12 Provisions, Contingent Liabilities and Assets (FRS 12).
      These are sums set aside for liabilities, which will probably occur.


1h)   Overheads

      Charges or apportionments covering all support service costs are made to all their
      users in accordance with the Best Value Accounting Code of Practice. A consistent
      basis is used to apportion these. The costs of the Corporate and Democratic Core
      are not apportioned to other expenditure headings.


1i)   Pensions

      The Council charges the District Fund - Income and Expenditure Account with an
      amount equal to the retirement benefits payments which it made for that financial
      year in accordance with discretionary compensation regulations.

      Councils in Northern Ireland contribute to the Northern Ireland Local Government
      Officers Superannuation Committee (NILGOSC) scheme. It is a multi-employer
      defined benefit scheme, which is treated as a defined contribution scheme under
      Financial Reporting Standard 17 Retirement Benefits (FRS17). This scheme
      provides the relevant information within its own accounts. The council provides
      further information on discretionary benefits awarded to employees. The council’s
      contribution rate is determined by NILGOSC’s actuary every three years and is set to
      maintain the solvency of the fund.




                                                                                          29
 North Down Borough Council

1j)   Post Balance Sheet Events

      The Council complies with the requirements of Financial Reporting Standard 21
      Events After the Balance Sheet Date (FRS21). Changes are made to the Financial
      Statements where a material post balance sheet event occurs that either provides
      additional evidence relating to conditions existing at the balance sheet date or
      indicates that the application of the going concern concept to a material part of the
      Council is not appropriate.

      The Financial Statements may subsequently be adjusted up to the date when they
      are authorised for issue. This date will be recorded on the Financial Statements and
      is usually the date the Local Government Auditor issues his certificate and opinion.
      Where material adjustments are made in this period they will be disclosed.


1k)   Foreign Currency Translation

      Income received and payments made in foreign currency are translated at the rate
      prevailing when lodged to the bank or when payment is made. Whilst this is contrary
      to the Statement of Recommended Practice, due to the sums involved, the effect of
      the different treatment would be immaterial.


1l)   Financial Instruments

      The accounting treatment of a financial instrument (i.e. how its subsequent carrying
      value is measured and gains and losses recognised) depends on its classification on
      initial recognition.

      Most financial instruments held by Local Authorities would fall to be classified into
      just one class of financial liability and two classes of financial assets.

      Financial liabilities
      • Amortised cost

      Financial assets
      • Loans and Receivables
      • Available for Sale

      Financial liabilities are recognised in the Balance Sheet under amortised cost using
      the effective interest rate method. Financing costs and the gain or loss on de-
      recognition are both taken to the District Fund – Income and Expenditure Account.

      The Accounting treatment of Financial Assets is summarised as follows:

      i)     loans and receivables e.g. non-equity and non-derivative financial assets are
             recognised in the Balance Sheet under amortised cost using the effective
             interest rate method. Interest receivable, impairment losses and the gain or
             loss on de-recognition are taken to the District Fund – Income and
             Expenditure Account.



30
                                                       North Down Borough Council

      ii)    available-for-sale assets e.g. equity investments are carried at fair value on
             the Balance Sheet. Interest receivable and dividend income, impairments
             and the gain or loss on de-recognition are taken to the District Fund – Income
             and Expenditure Account. Gains and losses arising from changes in fair
             value (except impairment) are taken to the Statement of Total Recognised
             Gains and Losses. The effective interest rate method is used to determine
             interest income.

      In these disclosure notes, financial instruments are required to be shown at fair
      value. Fair value is defined as the amount for which an asset could be exchanged or
      a liability settled, assuming that the transaction was negotiated between parties
      knowledgeable about the market in which they are dealing and willing to buy/sell at
      an appropriate price, with no other motive in their negotiations other than to secure a
      fair price.

      Where instruments are actively traded rather than held for the long term or are in a
      portfolio of instruments, some of which are actively traded, it is necessary to
      consider whether they should be classified as at fair value through profit or loss.
      Local Authorities often do not hold financial assets or liabilities that FRS 26 would
      require to be classified at fair value through profit or loss. This matter is covered in
      Annex 2 of the 2008 SORP.

      Further information on the recognition, initial measurement and accounting treatment
      in respect of Financial Instruments in contained in Chapter Four of the 2008 SORP.


1m)   Landfill Allowances

      The Landfill Allowances Scheme operates under the Landfill Allowances Scheme
      (Northern Ireland) Regulations 2005. Local Authorities are allocated annual target
      figures for the maximum amount of biodegradable municipal waste that can be sent
      to landfill but there are no tradable allowances. It is not a ‘cap and trade’ scheme
      since landfill allowances are not tradable. For this reason, landfill allowances are not
      recognised as assets on the Balance Sheet.




                                                                                           31
North Down Borough Council

2        Significance of the Statement of Movement on the District Fund –
         Income and Expenditure Account Balance

         The movement on the District Fund – Income and Expenditure Account balance
         adjusts the surplus or deficit generated by the district council in accordance with
         Generally Accepted Accounting Principles (GAAP). The closing balance is available
         to fund district council services.

         The balance on the District Fund is held at a level sufficient to meet the Council’s
         monthly working capital requirements.


3        Analysis of the Movement on the District Fund Balance

                                                                  2008/09                       2007/08
                                                Notes         £               £             £               £
    Surplus/(Deficit) for the year on the
    District Fund - Income and Expenditure                              (4,569,130)                   (790,160)
    Account

    Net additional amount required by statute
    and non-statutory proper practices to be
    debited or credited to the District Fund
    Balance for the year:
    Transfer to Capital Adjustment Account:
    Direct revenue financing of Capital
                                                  11,25                      (27,171)                            -
    Expenditure
    Deferred grants amortised in the year      21,23,25                     (203,310)                 (240,779)
    Revaluation Losses & Impairments in
                                              10b,23,25                     2,658,249                            -
    year
    Loans fund principal/depreciation
    adjustment:
    Depreciation charged in the year            10,23      3,749,684                     2,580,313
    Loans fund principal repayments during
                                                          (1,067,243)                   (1,029,959)
    the year
                                                  25                        2,682,441                 1,550,354
    Transfers to/from earmarked reserves:
    Capital Fund                                  25                         (78,966)                 (114,144)
    Renewal and Repairs Fund                      25                         (21,703)                      (6,902)
    Pension Reserve                               25                         (32,774)                     (31,359)
    Other Reserves                                25                         103,000                      (70,000)

    (Gain)/loss on disposal of fixed assets     23,25                         92,147                      (18,157)
    Difference in Finance costs                                                     -                            -
    Difference in Pension costs                                                     -                            -

    Net adjustments to Income &
                                                                            5,171,913                 1,069,013
    Expenditure Account

    Movement on the District Fund
                                                                             602,783                      278,853
    Balance for the year                          25

    District Fund Balance Brought Forward         25                        1,388,534                 1,109,681


    District Fund Balance Carried Forward         25                        1,991,317                 1,388,534
32
                                                         North Down Borough Council

4.    Operating Expenses
4a)   Section 115 Expenditure

      Section 115 of the Local Government Act (Northern Ireland) 1972 enables district
      councils to spend up to the aggregate of the product of 0.0596p in the pound on the
      rateable value of non-domestic hereditaments, and the product of a rate of 0.00082p
      in the pound on the rateable value of domestic hereditaments for the benefit of all
      the inhabitants in their district, or part of their district, on activities not specifically
      authorised by other powers. This amounted to £62,766 in 2008/09 (2007/08
      £63,351).

      Gross expenditure amounted to £25,463 in 2008/09 (2007/08 £18,276). However
      income of £22,938 (2007/08 £16,726) was received by Council to offset this giving
      net expenditure of £2,525 (2007/08 £1,550).


4b)   Section 115c Expenditure

      Section 115c Expenditure as required by Article 41 of the Local Government
      (Miscellaneous Provisions) Act (Northern Ireland) Order 1992 requires district
      councils to maintain a separate record of its expenditure on publicity. This is
      analysed as follows:

                                                               2008/09            2007/08
                                                                  £                  £
       Promoting Tourism                                           130,337           177,065
       Promoting Arts & Cultural Activities                         34,816            51,986
       Promoting Community Facilities & Activities                   3,158             6,999
       Promoting Sport & Recreational Activities                    33,208            15,513
       Refuse Collection                                            15,199            17,367
       Promoting Economic Development Activities                    22,020            26,509
       Other advertising                                            49,568            97,337
                                                                   288,306           392,776


4c)   External Audit Fees

                                                               2008/09            2007/08
                                                                  £                  £
       External Audit Fees                                          26,448            26,401
       Grant Fees                                                        -               579
       Other Fees                                                    1,693                 -
                                                                    28,141            26,980

      The other fees payable were in respect of Council’s participation in the National
      Fraud Initiative (2007/08 £Nil).




                                                                                               33
North Down Borough Council

4d)   Finance Leases

      The Council has no finance leases.

      Operating Leases

      Expenditure during the year on operating lease rentals was £298,253 (2007/08
      £311,625).

      As at 31 March 2009, the Council had a commitment to meet the following annual
      rental charges:

                                               2008/09                 2007/08
                                             £          £           £            £
                                           Land       Other       Land         Other
      For leases expiring:
      • Within one year                     37,500            -          -        1,314
      • In more than one year, but not
                                                  -    35,492     100,000        29,855
         more than five years
      • After five years                   104,828            -   104,828              -
                                           142,328     35,492     204,828        31,169



5.    Employee Costs and Members’ Allowances

5a)   Employee Costs

                                                          2008/09            2007/08
                                                             £                   £
      Salaries and wages                                   8,550,950          8,222,609
      Employers National Insurance                           575,612            561,502
      Employers pension costs                              1,046,802            866,912
                                                          10,173,364          9,651,023

      In addition, agency costs during the year amounted to £377,417 (2007/08
      £238,195). This included the engagement of seasonal, coaching and summer
      scheme staff who had previously been employed directly on temporary contracts.

      The Council’s current contribution rate to the NILGOSC scheme is 15%. At the last
      actuarial valuation, dated 31 March 2007, the Fund’s assets as a whole were
      sufficient to meet 89% (2004: 85%) of the liabilities accrued up to that date.




34
                                                   North Down Borough Council

5b)   Average Number of Employees

      The average number of full-time equivalent (FTE) employees and the actual number
      of employees employed by the Council are set out below.

                                                         2008/09          2007/08
                                                           FTE              FTE
      Environmental services                               160              153
      Leisure services                                     145              142
      Other                                                 96              98
                                                           401              393

                                                      Actual Numbers   Actual Numbers
      Full-time numbers employed                           350              345
      Part-time numbers employed                           124              112
                                                           474              457


5c)   Senior Employees’ Remuneration

                                                         2008/09          2007/08
                                                         Number           Number
      £50,001   to   £60,000                                3                1
      £60,001   to   £70,000                                2                3
      £70,001   to   £80,000                                -                -
      £80,001   to   £90,000                                -                -
      £90,001   to   £100,000                               1                1
                                                            6                5


5d)   Members’ Allowances

      During the year Members’ allowances (paid under Sections 12 and 36 of the Local
      Government Act (NI) 1972), including Employer’s costs, totalled £371,362 (2007/08
      £375,971). The breakdown is as follows:

                                                         2008/09          2007/08
                                                            £                £
      Basic Allowance                                       237,500          239,623
      Mayor’s & Deputy Mayor’s Allowance                     13,227            13,947
      Special Responsibility Allowances                      30,000            25,962
      Employer’s Costs                                       17,702            22,453
      Mileage                                                 8,204            10,531
      Conferences & Courses                                   5,246             4,925
      Travel Costs                                            1,838             2,917
      Subsistence Costs                                       1,183             3,113
      Miscellaneous                                          56,462            52,500
                                                            371,362          375,971

      Miscellaneous costs include a charge of £31,787 (2007/08 £34,545) for central
      support services provided.
                                                                                35
North Down Borough Council


6a)   Interest Payable and Similar Charges
                                                               2008/09           2007/08
                                                                  £                  £
       Loan Interest                                             1,455,579        1,393,836
       Bank Interest                                                 1,531             2,176
                                                                 1,457,110        1,396,012



6b)   Interest and Investment Income
                                                               2008/09           2007/08
                                                                  £                 £
       Current account interest                                      4,968            6,296
       Short-term deposit interest                                 308,916         592,048
       Other Interest                                               16,284          17,370
                                                                   330,168         615,714



7.    Related Party Transactions
      Financial Reporting Standard 8 Related Party Disclosures (FRS 8) requires the
      Council to disclose all material related party transactions arising during the year.
      Related parties are bodies or individuals that have the potential to control or
      influence the Council or be controlled or influenced by the Council. Disclosing these
      types of transactions in Financial Statements permits readers to assess the extent to
      which the Council might have constrained its ability to operate independently or
      might have secured the ability to limit another party’s ability to bargain freely with the
      Council. Transactions with related parties not disclosed elsewhere in these
      Financial Statements are set out below. All transactions detailed below have been
      entered into in full compliance with its standing orders.

      Councillors have direct control over the Council’s financial and operating policies.
      During the year, the Council commissioned £60,761 (2007/08 £44,729) of works and
      services from companies in which individual Councillors represented the Council’s
      interest. These Councillors had no personal interest in the companies.

      During the year, the Council commissioned £2,340 (2007/08 £2,798) of works and
      services from companies in which individual Chief Officers represent the Council’s
      interest. These Chief Officers had no personal interest in the companies.

      The Council also paid grants and contributions of £369,848 (2007/08 £360,108) to a
      number of organisations in which Councillors and Chief Officers represented the
      Council’s interest.    These grants and contributions were made with proper
      consideration of declaration of interests.

      The Council provided administration support to North Down Local Strategy
      Partnership. During the year, the Council reported income of £9,240 (2007/08
      £16,042) from this organisation. In addition, the Council funded the payment of
36
                                               North Down Borough Council

wages and salaries to the value of £32,988 (2007/08 £64,036). These costs were
recharged in full to the partnership and at 31 March 2009, £Nil (31 March 2008
£12,792) was outstanding.

The Council also paid grants and contributions of £Nil (2007/08 £29,483) to a
number of related organisations, These grants and contributions were made with
proper consideration of declaration of interests.

During the year the Council incurred expenditure of £2,312,029 (2007/08
£2,327,684) to other Councils and Joint Committees and received income of
£93,315 (2007/08 £8,972) from these organisations. Details of amounts outstanding
at 31 March 2009 are set out in notes 14 and 16.

In the course of the year, the Council incurred expenditure of £413,240 (2007/08
£287,760) to other public bodies. These amounts mainly relate to services provided.
The Council received grant income of £1,835,829 (2007/08 £1,610,097) from other
public bodies. Details of amounts outstanding are set out in notes 14 and 16.

The Council received loans of £3,644,479 during the year (2007/08 £3,822,235) from
and made principal and interest loan repayments of £2,540,770 (2007/08
£2,441,154) to the Department of Finance and Personnel. Details of amounts
outstanding at 31 March 2009 are set out in notes 16 and 17.

During the year the Council paid £15,500 (2007/08 £14,500) in car loans to Chief
Officers. Income of £6,706 (2007/08 £6,255) was received in repayment of car loans
from Chief Officers. Each of these loans was for the purposes of purchasing a car in
accordance with the requirements of the ‘Loans to Officers to Purchase Motor
Vehicles Determination (Northern Ireland) 2000’ and the Council’s Assisted Car
Purchase Scheme for Essential Car Users. As at 31 March 2009, there were loans
outstanding from three Council Chief Officers totalling £20,067 (2007/08 £11,273).
As at 31 March 2009, there were loans outstanding from seven Council Officers,
other than Chief Officers, totalling £30,983 (2007/08 £31,085).




                                                                                 37
North Down Borough Council

8.   District Rates
     The amount of District Rates recorded as income is based on the latest available
     information from Land & Property Services and includes adjustments relating to
     previous years, if applicable.
                                                      2008/09         2007/08
                                                         £                £
      Current Year                                     18,626,949      17,012,151
      Prior year finalisation                                   -         247,555
                                                       18,626,949      17,259,706



9.   Significant Trading Operations
     The Council operates a number of trading services, namely Bangor Marina,
     Groomsport Harbour and Bangor Market. The financial results for each are as
     follows:
                                                 2008/09                        2007/08
                               Bangor      Groomsport    Bangor      Total       Total
                               Marina       Harbour      Market
                                 £             £           £           £           £
      Income from trading       292,899        22,639     26,828     342,366     945,476
      Expenditure              (162,088)      (47,882)   (37,402)   (247,372)   (839,492)
      Trading Surplus /
                                130,811       (25,243)   (10,574)     94,994     105,984
      (Deficit) for the year

      Other Expenditure        (574,864)      (27,419)   (25,961)   (628,244)   (585,292)

      Net Surplus/(Deficit)    (444,053)      (52,662)   (36,535)   (533,250)   (479,308)

     On 1 April 2008, Council granted a fifteen year licence to a specialist company in the
     marine industry to operate Bangor Marina. Under this arrangement, the company
     accounts for the direct operating costs and income of the Marina and therefore these
     are no longer reflected in the Council’s accounts. The accounts for 2008/09 show
     income as a result of the new licence agreement together with costs for which the
     Council retains direct responsibility. Other expenditure for all of the above trading
     services includes a charge of £586,023 (2007/08 £476,310) for depreciation.


10a) Intangible Fixed Assets
     The net book value of intangible fixed assets are:
                                                    2008/09         2007/08
                                                        £              £
      As at 31 March                                    200,006       150,005

     The movement in the net book value is primarily due to the upward revaluation of
     Market Trading Rights by £50,000 at 1 April 2008. Due to their indefinite life, these
     assets are not depreciated.

38
                                                                                                                                                                                                                  10b) Tangible Fixed Assets
                                                                                                                                                   The movements in tangible fixed assets during the year were:
                                             Operational Assets                                    Non- Operational Assets

                            Land          Buildings          Infra-    Community     Vehicles &    Investment        Assets Under    TOTAL
                                                           structure     Assets      Equipment      properties       Construction
                                                            Assets
     Cost or Valuation        £               £               £            £             £                                £            £

     At 1 April 2008        17,795,571       49,825,187     506,748        11,980     9,415,184       1,186,234        19,560,150     98,301,054
     Reclassifications      (5,629,015)           (142)            -             -             -      4,916,056           713,101              -
     Revaluations            3,976,190        5,259,887       94,283             -             -       102,310            (28,000)     9,404,670
     Additions (Note 11)              -       2,496,351            -             -    1,233,852           1,002          2,317,110     6,048,315
     Transfers                        -      13,837,782            -             -    3,766,473                  -    (17,604,255)             -
     Disposals (Note 25)              -                -           -           (8)     (418,456)       (99,999)                  -     (518,463)
     Impairments                      -                -           -             -     (171,966)      (650,000)           (90,000)     (911,966)

     At 31 March 2009       16,142,746       71,419,065     601,031        11,972    13,825,087       5,455,603          4,868,106   112,323,610

     Depreciation




                                                                                                                                                                                                                                               North Down Borough Council
     At 1 April 2008                  -       7,357,410       55,605             -    6,462,771                  -               -    13,875,786

     Revaluation                      -      (7,357,410)    (55,605)            -              -                 -               -   (7,413,015)

     Disposals (Note 25)              -                -           -             -     (416,663)                 -               -     (416,663)
     Provided for in year             -       2,408,436       13,647             -    1,327,601                  -               -     3,749,684
     At 31 March 2009                 -       2,408,436       13,647             -    7,373,709                  -               -     9,795,792
     Net Book Value
     At 31 March 2009       16,142,746       69,010,629     587,384        11,972     6,451,378       5,455,603          4,868,106   102,527,818

     At 31 March 2008       17,795,571       42,467,777     451,143        11,980     2,952,413       1,186,234        19,560,150     84,425,268
39
North Down Borough Council

      A valuation of freehold and leasehold properties was carried out as at 1 April 2008
      by an independent valuer from Land & Property Services. Please refer to Note 1c)
      for further information on revaluation and depreciation policies. The results of this
      revaluation exercise are as follows:

                                                      £
               Revaluations upwards                18,563,968
               Revaluations downwards              (1,746,283)
               Total Net Revaluation               16,817,685

      Since this formal valuation exercise, further impairment losses of £911,966 arose.
      The most significant of these related to a reduction in the carrying value of certain
      non-operational land and buildings held for investment purposes. The updated
      valuation for these properties was provided by Land & Property Services (LPS)
      whose review resulted in a reduction in value of investment properties of £650,000,
      which has been reflected as an impairment to the asset carrying value. Other than
      the impairment adjustments reflected in these accounts, the Council is not aware of
      any other material change in the value of freehold and leasehold properties and
      therefore other valuations have not been updated.


11.   Capital Expenditure
      The Council’s net capital position represents the difference between the cumulative
      capital expenditure and capital receipts applied on an accruals basis, as follows:

                                                Note         2008/09         2007/08
       Expenditure                                              £                £
       Capital Expenditure                       10b          6,048,315      11,843,900

       Financed By
       Borrowings:
         Loans                                                 3,644,479      3,822,235
         Finance leases                                                -              -
       Grants receivable                         21              569,380        528,051
       Capital receipts                          25              519,923      8,465,289
       Repairs & Renewals Fund                   25               21,703          6,902
       Revenue contributions to capital         3, 25             27,171              -
       Surplus/(Deficit)                                     (1,265,659)        978,577
       Balance brought forward at 1 April                        (164,160)   (1,142,737)
       At 31 March                                           (1,429,819)      (164,160)

      The deficit of £1,429,819 will be financed during the year ended 31 March 2010 from
      borrowings, capital receipts and government grants.




40
                                                    North Down Borough Council

12.   Future Capital Commitments
      The Council is committed to making the following capital payments in relation to
      work already contracted for at 31 March 2009:
                                                         2008/09        2007/08
                                                               £            £
      Approved and contracted for                            1,105,705    3,385,730

      Approved but not contracted for                          645,472     141,600


13.   Stock
      The stocks of goods available for resale at 31 March is:
                                                            2008/09      2007/08
                                                               £            £
       Wheeled Bins                                             38,992       28,311
       Museum & Tourist Information Centre Shops                11,464       12,988
       Marina Fuel                                                   -        5,506
                                                                50,456       46,805


14.   Debtors
                                                          2008/09        2007/08
                                                             £              £
      a) Long Term Debtors: amounts falling
         due in more than one year
         Government Departments                              127,387       146,889
         Employee car loans                                   29,873        27,081
         Other                                                 6,561         7,762
         Total Long-Term Debtors                             163,821       181,732

      b) Debtors: amounts falling due in less
         than one year
         Government Departments                             1,170,156      509,223
         Employee car loans                                    21,177       15,277
         Other Councils                                       110,987      132,356
         Value Added Tax                                      271,829      277,464
         Payments in advance                                  308,000      170,000
         Other                                                366,320      264,354
          less: provision for doubtful debts                 (15,387)      (10,536)
          Total Short-Term Debtors                          2,233,082     1,358,138

      Total Debtors                                         2,396,903     1,539,870

      The increase in debtors primarily relates to accrued government grant income of
      £380,970 for a proposed new leisure centre and accrued income from HM Revenue
      & Customs of £296,850 in relation to a claim for overpaid output tax. The
      government grant was received in full in April 2009 and the income from HM
      Revenue & Customs was received in full by August 2009.
                                                                                  41
North Down Borough Council

15.   Short-Term Investments
                                                           2008/09        2007/08
                                                              £              £
      Bank deposits - general                                      -       2,418,683
      Bank deposits - capital fund                         3,025,469       2,946,503
      Bank deposits - capital receipts reserve             1,972,531       3,178,391
      Bank deposits - repairs and renewals                   250,000         250,000
      Bank deposits - other                                  352,000         455,000
      Total Short-Term Investments                         5,600,000       9,248,577

                                                           2008/09        2007/08
                                                               £             £
      Money market deposits                                 5,600,000      9,248,577
      Current account deposits                                      -              -
      Total Short-Term Investments                          5,600,000      9,248,577

      At 31 March 2009, the total amount of cash-backed funds held by the Council was
      £6,295,590, of which £5,600,000 was held on fixed term deposits as shown above
      and the remaining £695,590 was held in the Council’s bank account.


16.   Creditors
                                                           2008/09        2007/08
                                                              £              £
      Amounts falling due in less than one year
      Remuneration due to Employees                          234,230           49,701
      Government Departments                                 585,973          896,537
      Other Councils                                          71,775          123,767
      Receipts in advance                                    185,208          191,320
      Trade Creditors                                      1,826,212        1,792,503
      Loan Interest                                          236,474          248,790
      Other                                                        -           64,482
                                                           3,139,872        3,367,100

      Bank overdraft                                                 -        173,088
      Loans re-payable within one year                     1,210,623        1,085,641
      Total creditors                                      4,350,495        4,625,829

      Included in creditors for the year ended 31 March 2009 is an accrual in relation to
      outstanding annual leave entitlement for employees. This accrual is matched by a
      corresponding charge to the District Fund – Income and Expenditure Account for the
      year ended 31 March 2009.




42
                                                       North Down Borough Council

17.   Borrowings Repayable within a Period in Excess of One Year
                                                              2008/09          2007/08
                                                                  £               £
       Between 1 and 2 years                                   1,339,219        1,128,350
       Between 2 and 5 years                                   2,862,643        2,717,776
       Between 5 and 10 years                                  4,112,378        3,707,118
       In more than 10 years                                  17,479,625       15,806,765
       Government Loans Fund                                  25,793,865       23,360,009

      Interest rates on Government Loans range between 1.36% and 11.0%.


18.   Deferred Liabilities

      In the financial statements for the two previous financial years, the Council
      accounted for loss of income in relation to net finalisation of rates income of
      £720,227 (£346,062 for the year ended 31 March 2007 and £374,165 for the year
      ended 31 March 2008). During the year ended 31 March 2009, the Council was
      advised by Land & Property Services that clawback of this income will be staggered
      over a five year period, of which £288,092 is repayable after more than one year as
      follows:

                                                               2008/09         2007/08
                                                                  £               £
       Between 1 and 2 years                                     144,046                   -
       Between 2 and 5 years                                     144,046                   -
                                                                 288,092                   -

      In relation to finance leases, the Council has not acquired any of its assets by asset
      financing and therefore has no deferred liability in respect of assets acquired under
      finance leases.


19.   Financial Instruments
      The Council has no material exposure to any of the risk types identified below in its
      dealings with Financial Instruments.


      Credit Risk

      Credit risk arises from deposits with banks and financial institutions, as well as credit
      exposures to the Council’s customers. Banks and building societies are assessed,
      taking into account their financial position, past experience and other factors.
      Significant sales transactions, such as land sales or long-term arrangements, are
      subject to a credit assessment process prior to contract approval. The provision for
      bad and doubtful debts reflects the Council’s assessment of the risk of non-payment
      by trade debtors and, as such, there is no further additional estimated exposure to
      default and inability to collect.
                                                                                               43
North Down Borough Council


     Trade debtors, inclusive of VAT, can be analysed by age as follows:

                                                                   £
                      Less than three months                     343,628
                      Three to six months                          2,607
                      Six months to one year                       3,038
                      More than one year                          12,911
                      Total                                      362,184

     There is no historical experience of default in relation to deposits with banks and
     other financial institutions. Therefore there is no estimated exposure to risk of
     default.


     Liquidity Risk

     As the Council has ready access to borrowings from the Department of Finance and
     Personnel’s Consolidated Fund, there is no significant risk that it will be unable to
     raise finance to meet its commitments under Financial Instruments. The maturity
     analysis of financial liabilities is included in notes 16 to 18. All trade payables are
     due for payment within one year.


     Market Risk

     Interest rate risk
     The Council is exposed to risk in terms of its exposure to interest rate movements on
     its borrowings and investments.

     Foreign exchange risk
     The Council has no significant financial assets or liabilities denominated in foreign
     currencies and thus has no significant exposure to loss arising from movements in
     exchange rates.


     Fair Value of Soft Loans and Government Loans

     The Council is in receipt of loans from the Department of Finance and Personnel
     that differ from the prevailing market rates. The fair value of these loans is analysed
     as follows:
                                                                 £
                 Government Loans                               32,962,107
                 Market Loans                                            -
                 Total                                          32,962,107

     The Council has not made any material loans to voluntary organisations or other
     external bodies at less than market rates.


44
                                                       North Down Borough Council

20.    Provisions
20a)   Pension Liability

       This is the Council’s pension liability, which is an estimated liability in respect of
       discretionary payments awarded to employees granted early retirement. This
       pension liability is matched in the balance sheet by a reserve of the same amount
       but is not funded. Movements on this liability are as follows:

                                          Note        2008/09         2007/08
                                                         £               £
          Opening balance                                412,973       410,493
          Less: payments to NILGOSC       3,25           (32,774)      (31,359)
          Add: revaluation                 25              44,790        33,839
                                                         424,989        412,973

   20b)    Other Provisions

                                         Increase in Utilised
                                Opening provision      during Interest Closing
                                Balance during year     year   earned Balance
                                   £          £          £        £       £
           Insurance             420,000     43,116 (146,116)         - 317,000
           Environmental         107,000           -         -        - 107,000
                                 527,000      43,116 (146,116)        - 424,000


       Insurance Provision

       The Council operates a self-insurance scheme for public and employee liability
       insurance. The Insurance Provision is a general provision representing an
       estimated liability in respect of self-insurance claims lodged but being strongly
       contested by the Council at 31 March 2009. The general provision is based on the
       Council's experience of settlement rates over the previous three insurance years.
       The insurance provision is matched in the Balance Sheet by a fund of the same
       amount.


       Environmental Provision

       This provision relates to the need for remedial works to be undertaken to address
       environmental damage. While the full extent and cost of carrying out these remedial
       works is subject to further expert analysis, provision has been made for current
       estimated costs.




                                                                                          45
North Down Borough Council

21.    Deferred Grants
       All capital grants towards the purchase of a fixed asset are taken to the Government
       Grants Deferred Account, and this amount is written off to the District Fund - Income
       and Expenditure Account over the useful life of the asset.

       The movements on the Government Grants Deferred account are shown below:

                                                    Note        2008/09          2007/08
                                                                    £               £
        Opening balance                                          2,377,115        2,089,843
        New grants receivable                         11           569,380          528,051
        Amounts released to the District Fund        3,25
                                                                 (203,310)         (240,779)
        - Income and Expenditure Account
        Closing Balance                                          2,743,185         2,377,115


22.    Contingencies
22a)   Bangor Sportsplex at Ballykillare

       During the year ended 31 March 2007, the Council entered in to legal discussions with
       a consultant and contractor appointed during the mid-1990's to develop an athletics
       track and synthetic grass pitch at Ballykillare in Bangor. The discussions concerned
       responsibility for remedial works needed to resolve settlement problems that have
       continued to arise at the site.

       To enable the facility to continue to operate effectively for the longer-term, Council has
       identified that certain remedial works will need to be undertaken. However, these
       works have not yet been completed and Council continues to actively pursue a legal
       resolution on this matter.

       Through its legal advisors, the Council continues to strongly resist liability for any past
       or future costs and on this basis, no provision has been made for the cost of these
       works.

22b) Job Evaluation Exercise

       The Council has carried out a job evaluation exercise as part of the Single Status
       negotiations. The scheme used was the Greater London Provincial (GLPC) Scheme
       for employees up to Director level and the Greater London Employer's Association
       (GLEA) Scheme for Directors. The GLPC Scheme review is complete and the GLEA
       Scheme review has yet to commence. However, before the job evaluation results can
       be implemented, the Single Status Agreement has to be finalised, together with
       details of the grading scheme and effective date. Union negotiations are still ongoing
       in this respect. The cost of the job evaluation exercise attributable to the period up to
       31 March 2009 cannot be fully quantified until the outstanding review work is
       completed, union negotiations are concluded and an effective date is agreed.




46
                                                            North Down Borough Council

22c)   Self-insurance Scheme

       North Down Borough Council operates a self-insurance scheme for public and
       employee liability insurance. As at 31 March 2009, claims with a total value of
       £684,500 (31 March 2008: £724,000) had been lodged but continue to be actively
       challenged.

       Whilst the Council continues to strongly contest liability in respect of each of these
       claims, a general provision has been made based on the Council's experience of
       settlement rates over the previous three insurance years. Details of the Insurance
       Provision are set out in note 20b).


23.    Reconciliation of Surplus/(Deficit) to Net Cash Inflow from
       Operating Activities

                                             Note           2008/09                   2007/08
                                                        £             £           £           £
       Surplus/(Deficit) for year             3                  (4,569,130)               (790,160)

       Non-cash transactions
       Depreciation                          3,10    3,749,684                 2,580,313
       Revaluation losses/Impairments        3,10    2,658,249
                                             3,21,
       Deferred Grants amortised in year             (203,310)                 (240,779)
                                              25
                                                                  6,204,623                2,339,534
       Adjustment for items reported
       separately on Cashflow
       Interest and Investment Income         6b                  (330,168)                (615,714)
       Interest payable and similar
       charges including gains or losses
                                              6a                  1,457,110                1,396,012
       on the repurchase or early
       settlement of borrowings
       Gain or (loss) on disposal of fixed
                                             3,25                     92,147                (18,157)
       assets

       Items on an accruals basis
       (Increase)/decrease in stock                                 (3,651)                   7,343
       (Increase)/decrease in debtors                             (508,164)                 308,002
       Increase/(decrease) in creditors                            (94,580)                 284,543
       Increase/(decrease) in provisions                          (135,774)                 145,641

       Net Cash Inflow/(Outflow) from
                                                                  2,112,413                3,057,044
       Operating Activities




                                                                                                47
North Down Borough Council

24.    Other Cash Flow Disclosures

24a)   Analysis of Changes in Cash and Liquid Resources During the Year

                                      Note          2008/09             2007/08           Change in       Change in
                                                                                           the year        2007/08
                                                      £                   £                    £              £

       Short-term deposits                                -                 -                     -         -
       Cash                                       1,360,157             3,065             1,357,092 (291,620)
       Bank Overdraft                                     -         (173,088)               173,088 (173,088)
       Total                                      1,360,157         (170,023)             1,530,180 (464,708)

       Liquid resources are classed as short-term deposits, which do no have a fixed-term
       investment date. Only current asset investments are included.

24b) Analysis of Net Debt

                                             Cash          Temporary      Loans due         Loans due       Net Debt
                                                          Investments     within one        after more
                                                                             year         than one year
                                              £               £                 £              £                £
           Balance at 1 April 2008       (170,023)          9,248,577     (1,085,641)      (23,360,009)    (15,367,096)

           Change in Year                1,530,180        (3,648,577)         (124,982)     (2,433,856)     (4,677,235)

           Balance at 31 March 2009      1,360,157          5,600,000     (1,210,623)      (25,793,865)    (20,044,331)



24c)   Reconciliation of Changes in Cash to Movements in Net Debt

                                                                  Note              2008/09                  2007/08
                                                                                       £                        £
         Increase/(Decrease) in cash in year                                         1,530,180                (464,708)

         Increase/(Decrease) in temporary
         investments in year                                                        (3,648,577)             (6,251,423)

         Cash inflow from new loans raised                         11               (3,644,479)             (3,822,235)

         Cash outflow from loans repaid                                              1,085,641                1,047,316

         Change in net debt resulting from
                                                                                    (4,677,235)             (9,491,050)
         cash flows

         Net debt b/fwd                                                          (15,367,096)               (5,876,046)

         Net debt carried forward                                                (20,044,331)             (15,367,096)




48
                                                    North Down Borough Council

24d) Analysis of Government Grants shown in the Cash Flow Statement

     Revenue grants are included within the ‘Net Cash Inflow from Operating Activities’
     figure in the Cash Flow Statement.

                                                       2008/09            2007/08
                                                          £                  £
      Capital Grants
      Central Government Grants                             222,180            938,133
      (i) Capital Grants Total                              222,180            938,133

      Revenue Grants
      Arts Development                                      126,065             93,140
      Community Relations                                    62,026             31,320
      Community Safety                                      165,830            281,391
      Community Services                                    153,621             67,425
      District Policing Partnership                         154,892             94,228
      Economic Development                                    8,844             90,614
      Emergency Planning                                     11,615              6,350
      General Register Office                                21,387             50,357
      Special Local Purposes (Section 115)                   22,938              3,000
      Sports Development                                      3,100                  -
      Waste Management                                            -             49,282
      (ii) Revenue Grants Total                             730,318            767,107

      Total Grants                                          952,498          1,705,240


     Revenue grants are included within the ‘Net Cash Inflow from Operating Activities’
     figure in the Cash Flow Statement.




                                                                                          49
50




                                                                                                                                                                             25. Movement on Reserves

                                                                                                                                                                                                        North Down Borough Council
                                            Capital     Revaluation   Pensions        Capital        Capital       Renewal        Other         District        TOTAL
                                          Adjustment     Reserve      Reserve        Receipts         Fund         & Repairs    Balances &       Fund
                                           Account                                   Reserve                         Fund        Reserves
                                              £              £           £              £              £               £            £              £               £

                                   Note      25a            25c        20, 25e         25f            25g             25h          25i&j           3

     At 1 April 2008                       56,305,210             -   (412,973)      3,178,391      2,946,503        250,000       455,000      1,388,534      64,110,665
     Movements on reserves
     during the year:

     Capital Grants released       3,21      203,310              -              -              -              -            -              -    (203,310)                -

     Direct Revenue Financing      3,11       27,171              -              -              -              -      15,003      (103,000)        60,826                -
     Loan principal/depreciation    3
                                          (2,682,441)             -              -              -              -            -              -    2,682,441                -
     adjustment
     I&E Surplus/Deficit                            -             -              -              -              -            -              -   (4,569,130)     (4,569,130)

     Interest Received                              -             -              -              -     78,966           6,700               -     (85,666)                -

     Payments to NILGOSC           3,20             -             -     32,774                  -              -            -              -     (32,774)                -

     Disposal of Fixed Assets /
                                   3,10     (101,800)             -              -      9,653                  -            -              -       92,147                -
     Capital Sales

     Capital receipts used to      3,11
                                             519,923              -              -   (519,923)                 -            -              -               -             -
     finance capital expenditure

                                    10,
     Revaluation                    20
                                          (2,169,585)    18,125,305    (44,790)                 -              -            -              -    2,658,249      18,569,179

     Transfers from Repairs &
     Renewals Fund to finance       11        21,703              -              -              -              -    (21,703)               -               -             -
     capital expenditure

     Total Movements on
     reserves during the year             (4,181,719)    18,125,305    (12,016)      (510,270)        78,966                -     (103,000)       602,783      14,000,049
     (Change in Net Worth):

     At 31 March 2009                      52,123,491    18,125,305   (424,989)      2,668,121      3,025,469        250,000       352,000      1,991,317      78,110,714
                                                       North Down Borough Council

25a)   Capital Adjustment Account

       The purpose of this account is to aggregate the amount of capital expenditure that
       has been financed from revenue and capital receipts excluding sums received in
       respect of loans negotiated to finance capital investment. This account is debited or
       credited with the adjustment made in the District Fund – Income & Expenditure
       Account for principal debt repaid less than or in excess of the provision for
       depreciation already debited to revenue and credited against fixed assets, to adjust
       the provision in line with statutory requirements.

       The account is also debited with an amount equal to the carrying amount of assets
       held at historic cost when they are disposed of. If the asset disposed of was held at
       current value, the balance held on the Revaluation Reserve is written off to the
       Capital Adjustment Account. Other amounts included in this account are the
       revaluation losses and impairments of £2,658,249 (2007/08 £nil) and the difference
       between depreciation calculated on the current value of revalued assets and
       depreciation calculated on the historical cost of £488,664 (2007/08 £nil).


25b) Financial Instruments Adjustment Account

       The Council has no transactions that would require use of this account


25c)   Revaluation Reserve

       The purpose of this account is to build up a balance based on the revaluation
       (upwards or downwards) of individual assets. All such revaluations (excluding
       impairment losses that have been debited to the District Fund – Income and
       Expenditure Account) are mirrored in the Statement of Total Recognised Gains and
       Losses. It is a fundamental principal of this new account that it never becomes
       negative. If the asset disposed of was held at current value when it is disposed of, the
       balance held on the Revaluation Reserve is written off to the Capital Adjustment
       Account.

       The movement on the Revaluation Reserve is made up as follows:

                                                              £
             Balance at 1 April 2008                               -
             Revaluation Gains                            18,613,969
             Depreciation of Revaluation Gains             (488,664)
             Balance at 31 March 2009                     18,125,305


25d) Available-for-Sale Financial Instruments Adjustments Reserve

       The Council has no transactions that would require use of this reserve.




                                                                                           51
 North Down Borough Council


25e)   Pension Reserve

       The Pension Reserve has been established to provide for the Council’s commitment
       to future pension contributions in respect of former employees as set out in note 20(a)


25f)   Capital Receipts Reserve

       These are capital receipts, which have originated primarily from the sale of assets,
       which have not yet been used to finance capital expenditure.

       The opening balance of £3,178,391 on this account arose from the disposal of land at
       Rathgael Road in Bangor in December 2007. Of this balance, an amount of £519,923
       has been applied towards capital expenditure incurred in the current year, which
       together with receipts of £9,653 leaves a closing balance in this account at 31 March
       2009 of £2,668,121. This amount will be applied to capital expenditure in the year
       ended 31 March 2010, as approved by the Department of the Environment.


25g) Capital Fund

       This fund was established under Section 56 of the Local Government Act (Northern
       Ireland) 1972 and has an approved limit of £5,000,000 for the purposes of meeting
       the Council’s obligations to repay maturity loans, as required by Schedule 5 of the
       above Act.

       In line with the requirements of Section 56 (4) of the Local Government Act
       (Northern Ireland) 1972, interest of £78,966 was credited to the Capital Fund by
       applying a notional rate of interest to the balance on the fund at 1 April 2008. The
       rate of interest applied was 2.68%, which equates to the average interest rate
       earned on the Council's bank balances during the year.


25h) Repairs and Renewal Fund

       This fund was established under Section 56 of the Local Government Act (Northern
       Ireland) 1972 and has an approved limit of £250,000. It is to be used for the
       purposes of defraying expenditure to be incurred in repairing, maintaining, replacing
       and renewing any buildings, works, plant, equipment or articles belonging to the
       Council.

       In line with the requirements of Section 56 (4) of the Local Government Act
       (Northern Ireland) 1972, interest of £6,700 was credited to the Repairs & Renewals
       Fund by applying a notional rate of interest to the balance on the fund at 1 April
       2008. The rate of interest applied is 2.68%, which equates to the average interest
       rate earned on the Council's bank balances during the year.




52
                                                        North Down Borough Council


25i)   Insurance Fund

       The Insurance Fund has been established to provide for the potential costs that may
       arise in the future as a result of settlement of claims already notified. Details relating
       to the associated Insurance Provision are set out in Note 20b.


25j)   Election Fund

       This reserve is used to equalise (smooth) the cost of elections by building up a fund to
       cover the costs of future elections by making contributions to the reserve. There were
       no movements in the year ended 31 March 2009 on this Fund, therefore the closing
       balance on this fund remains at £35,000.



26.    Exceptional Items

       During the year ended 31 March 2009, Council submitted a claim to HM Revenue &
       Customs in respect of overpaid output tax on income for admission to leisure
       facilities operated by the Council during the period January 1990 to March 1994.
       The Council’s tax advisors pursued the claim on the Council’s behalf, contending
       with HM Revenue & Customs that relevant EU VAT legislation could be applied to
       this income stream during the claim period. The claim was successful and resulted
       in net income to the Council of £237,484 (including statutory interest of £138,668).




                                                                                            53
 North Down Borough Council

Accounts Authorised for Issue Certificate

In accordance with Financial Reporting Standard 21, Events after the Balance Sheet Date
(FRS 21), this Statement of Accounts contains the following amendments from the
Accounts originally approved on 18 June 2009:

1. An adjustment of £357,236 in relation to the calculation of the revaluation gains (page
   20) and losses (page 19) for operational land and buildings, together with revaluation
   gains depreciation of £10,611 (page 20).

2. A decrease in the net cost of services of £237,484 (page 19) following notification in
   July 2009 of income due to the Council from HM Revenue & Customs in respect of a
   claim for overpaid output tax (note 26).

3. Revision to the Governance Statement to reflect the findings of an independent
   consultant’s report regarding a capital project undertaken by the Council (page 14).


These amended accounts have been approved by the Audit Committee (with Council
powers) on 1 October 2009 and are at today’s date hereby authorised for issue.


FRS 21 sets out

•    The period during which an entity should adjust its Financial Statements for events after
     balance sheet date as being the period between the date the Financial Statements were
     prepared and the date of this authorisation; and

•    In the event of adjustments the disclosures that should be made.




54

								
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