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13 Document FULL COUNCIL C/10/33 Reference No DATE OF MEETING: - PDF document

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HERTSMERE BOROUGH COUNCIL Agenda Item No 13 Document FULL COUNCIL C/10/33 Reference No DATE OF MEETING: 17 NOVEMBER 2010 PRESENTATION OF STATEMENT OF ACCOUNTS FOR 2009/10 PORFOLIO HOLDER: COUNCILLOR GRAHAM SUMMARY As part of good

  1. HERTSMERE BOROUGH COUNCIL Agenda Item No 13 Document FULL COUNCIL C/10/33 Reference No DATE OF MEETING: 17 NOVEMBER 2010 PRESENTATION OF STATEMENT OF ACCOUNTS FOR 2009/10 PORFOLIO HOLDER: COUNCILLOR GRAHAM SUMMARY As part of good Corporate Governance practice, this report presents to the Members the Council’s audited Statement of Accounts for 2009/10. A copy of the full audited Statement of Accounts has already been distributed to each Member with an electronic copy also being made available on the Council’s website. 1 ACTION RECOMMENDED 1.1 That the Council notes the audited Statement of Accounts 2009/10, as part of good Corporate Governance practice, which has been approved by the Accounts Approval Committee on 29 June 2010; and issued with an unqualified audit report by its external auditors on 21 September 2010. 2 INTRODUCTION 2.1 The Accounts and Audit Regulations Act 2003 requires that the Statement of Accounts 2009/10 must be approved by resolution before 30 June each year by the full Council or by a body nominated to act on its behalf. For the purpose of this report the two main documents – Income & Expenditure Account and Statement of Movement on Council Fund (Appendix I), and Balance Sheet (Appendix II) are attached. 2.2 Due to the tight timescale for the closure of accounts, authority was delegated to the Accounts Approval Committee to approve the Statement of Accounts 2009/10 and this was carried out at their meeting held on 29 June 2010. 2.3 Due to the complexity of the Statement of Accounts, Members wishing to raise specific questions are asked to direct them to the authors of this report in good time so that a written response can be prepared for the meeting. Officers will only be able to comment on any points of principle 1

  2. contained within the Statement of Accounts on the day of the meeting itself. 2.4 Members are requested to bring with them their copy of the Statement of Accounts 2009/10 to the meeting, which have been distributed under separate cover. In order to reduce printing costs and avoid duplication, there will only be a limited number of spare copies available at the meeting. 2.5 The External Auditors are required, under the International Standard on Auditing (UK and Ireland 260): Communication of Audit Matters to those Charged with Governance (ISA 260), to report to the Audit Committee certain matters before giving an opinion on the Statement of Accounts. The ISA 260 report sets out the current status of the audit of the Statement of Accounts and of the report on the auditor’s Value for Money conclusion (informed by work on Use of Resources until the abolition of the Comprehensive Area Assessment), including any matters outstanding. The ISA report was considered and approved by the Audit Committee on 21 September 2010. The key highlights were as follows: a. The Council continues to prepare good quality accounts that are free from material error or misstatement. b. The overall quality of the Council’s working papers to support the 2009/10 accounts remained of a high standard. c. The audit highlighted a number of issues in respect of accounting for fixed assets including revaluations and the classification of assets in the fixed asset register. The auditors recommended that the exercise to restate the accounts to comply with International Financial Reporting Standards (IFRS) should be used as an opportunity to deal with these issues. d. The auditors considered that appropriate progress was being made in the transition to IFRS. e. After reviewing the Council’s Value for Money arrangements, the auditors recommended improvements to the Council’s data security arrangements and also pointed out that the Council needed to ensure that a flexible approach was taken to future financial planning. The auditor’s review of financial controls did not identify any significant issues which presented any material risk to the accuracy of the accounts. f. No other significant areas of concern were identified. The Statement of Accounts was signed off on 21 September 2010 with the 2.6 External Auditors providing an Unqualified Audit Report. 2.7 The External Auditors issued an Unqualified Value for Money (VFM) Conclusion on the Council’s arrangements for ensuring economy, efficiency and effectiveness in its use of resources. 2

  3. 2.8 Because the Comprehensive Area Assessment has been abolished no further scoring of the Council’s use of resources will be issued. 3 FINANCIAL AND BUDGET FRAMEWORK IMPLICATIONS Statement of Accounts: 3.1 The Statement of Accounts has been prepared in accordance with the Statement of Recommended Practice (SoRP) and the Best Value Accounting Code of Practice (BVACOP), which are both regulated by the Chartered Institute of Public Finance and Accountancy (CIPFA). 3.2 There was one significant change to the way in which the Council is required to prepare its Statement of Accounts following the revised Statement of Recommended Practice (SoRP) issued in 2009. It is now necessary to account for business rates (NNDR) and the share of council tax attributable to Hertfordshire County Council and Hertfordshire Constabulary (‘the major preceptors’) on an agency basis. This affected the preparation of each of the main statements but had no effect on the balance on the Council Fund. 3.3 From 2010/11 onwards the Council will be required to prepare its Statement of Accounts under the International Financial Reporting Standards (IFRS). The Council’s accounts for 2009/10 and the balance sheet which forms the opening position for those accounts (i.e., as at 1 April 2009) are being restated to comply with IFRS. An internal training session covering the implications of IFRS was held for directors and senior managers in May 2010 and the Council’s external auditors held a training session for the Audit Committee in September 2010. 3.4 The accounting statements include an Income and Expenditure Account, a Balance Sheet, Statement of Movement on the Council Fund, Statement of Total Recognised Gains and Losses, Cash Flow Statement, the Collection Fund and Group Accounts. In order to understand the purpose of the main and additional statements, please refer to the explanatory foreword contained in the Statement of Accounts. 3.5 The Balance Sheet demonstrates that the Council had revenue reserves of £18.93m as at 31 st March 2010. This is made up of the following: - Increase/ 2008/09 2009/10 (Decrease) £’000 £’000 £’000 Earmarked Reserves* 12,557 12,017 (540) General Fund Reserve 6,904 6,913 9 al 19,461 18,930 (531) *The 2008/09 balance on earmarked reserves has been restated to include the balance on the Collection Fund adjustment account (£182k) as required by the change to the SoRP referred to at 3.2 above. 3

  4. 3.6 The major movements in earmarked reserves between 2008/09 and 2009/10 were net reductions in the Land Drainage reserve of £445k and the Local Authority Business Growth Incentive (LABGI) reserve of £232k, set against the receipt at the end of March of £217k Performance Reward Grant (PRG), a county-wide grant awarded by central government. 3.7 Currently, revenue from business rates received by local authorities is paid to central government, and then redistributed to local authorities by formula within the local government finance settlement. LABGI provides an incentive for local authorities to promote economic growth in their area by allowing them to be rewarded for an increase in rateable value, above a certain level. 3.8 It is for local authorities to decide how their reward is spent - whether to provide even better public services for their communities, invest in further business growth or to reduce council tax increases. 3.9 The PRG recognised the achievement in Hertfordshire of specific improvements in performance across the full range of local services. Its future is now uncertain but the £217k revenue grant received (together with a equal amount of capital funding) will be allocated by Hertsmere Together, the local strategic partnership. 3.10 Although the total reserves of £18.930m appears to be a significant sum it is clear from the above that £12.017m (63%) of the total is earmarked for specific projects. The major items included within this earmarked reserve provision are the following: £’000 Council Contribution to Pension Fund 387 Land Drainage 3,780 Information Services - Technology Replacement 188 Parking Repairs & Renewals 213 Leisure Buildings Major Repairs 3,017 Local Authority Business Growth Incentive 1,014 Performance Reward Grant 217 Housing & Council Tax Benefit Equalisation Account 243 Waste Services Vehicle Replacement 1,256 Investment Income Equalisation Account 246 Non-recurring items reserve 521 Accumulated surpluses on Collection Fund 154 Other Items less than £150k 781 12,017 4

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