Statement of Accounts 0607 audit amendments

Statement of Accounts 0607 audit amendments


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SOUTH STAFFORDSHIRECOUNCILSTATEMENT OF ACCOUNTS2006/07South Staffordshire CouncilStatement of Accounts 2006/2007Table of ContentsPagesDescription From ToExplanatory Foreword 1 5Statement of Accounting Policies 6 8The Statement of Responsibilities for the Statement of 9 9AccountsThe Accounting StatementsThe Income and Expenditure Account 10 10The Statement of Movement on the General Fund 11 11BalancesThe Statement of Total Recognised Gains and Losses 12 12The Balance Sheet 13 13The Cash Flow Statement 14 15Notes to the Core Financial Statements 16 29The Collection Fund 30 32The Statement on Internal Control 33 37The Audit Certificate from the Audit Commission 38 39Glossary of terms 40 45EXPLANATORY FOREWORDExplanatory ForewordThe foreword is intended to give a brief explanation of the overall financial aspects of theCouncil's activities and to draw attention to the main characteristics of the Council'sfinancial position.1. Introduction to the AccountsThe Accounts set out in this document have been produced in accordance with thestatutory provisions and codes of practice which apply to local authorities. TheStatements required for 2006/07 are substantially different to those Statements requiredto be produced in 2005/06 and earlier years. The new statements disaggregate the oldConsolidated Revenue account and the old Statement of Total Movement on Reserves toproduce a set of statements each with a single objective.The Core Accounting ...



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2006/07South Staffordshire Council
Statement of Accounts 2006/2007
Table of Contents
Description From To
Explanatory Foreword 1 5
Statement of Accounting Policies 6 8
The Statement of Responsibilities for the Statement of 9 9Accounts
The Accounting Statements
The Income and Expenditure Account 10 10
The Statement of Movement on the General Fund 11 11Balances
The Statement of Total Recognised Gains and Losses 12 12
The Balance Sheet 13 13
The Cash Flow Statement 14 15
Notes to the Core Financial Statements 16 29
The Collection Fund 30 32
The Statement on Internal Control 33 37
The Audit Certificate from the Audit Commission 38 39
Glossary of terms 40 45EXPLANATORY FOREWORD
Explanatory Foreword
The foreword is intended to give a brief explanation of the overall financial aspects of the
Council's activities and to draw attention to the main characteristics of the Council's
financial position.
1. Introduction to the Accounts
The Accounts set out in this document have been produced in accordance with the
statutory provisions and codes of practice which apply to local authorities. The
Statements required for 2006/07 are substantially different to those Statements required
to be produced in 2005/06 and earlier years. The new statements disaggregate the old
Consolidated Revenue account and the old Statement of Total Movement on Reserves to
produce a set of statements each with a single objective.
The Core Accounting Statements comprise:
  The Income and Expenditure Account (I&E), which summarises the costs and
income relating to the Council's day to day activities. It shows the net cost of all
the services delivered by the Council.
  The Statement of the Movement on the General Fund Balance, shows how
the activities of the Council have been financed from government grants and
income from local taxpayers.
  The Statement of Total Recognised Gains and Losses, which brings together
all the recognised gains and losses of the authority during the period and
identifies those which have and have not been recognised in the Income and
Expenditure Account.
  The Balance Sheet, which sets out the financial position of the Council as at 31st
March 2007. It records the value of the assets owned by the Council and how
these have been funded
  The Cash Flow Statement summarises the total movement of cash to and from
the authority or, simply, where the money came from and where it was spent.
This information is not easily obtained elsewhere in the accounts and although
complex this is a useful summary.
The Core Accounting Statements are supported by notes to the accounts
A supplementary statement on the Collection Fund is presented after the notes on the
core statements. The Collection Fund accounts for the council taxes and business rates
collected from local residents and businesses in South Staffordshire. It shows how this
money is then allocated between authorities delivering services to the people and
businesses within the district.
These are supported by a Statement of Accounting Policies, which follows this foreword.
2. Council Spending
The Council incurs revenue and capital expenditure during the year. The Local
Government and Housing Act 1989 (“the 1989 Act”), provides that all expenditure must
be charged to a revenue account of the authority unless it can be classified as capital or
is one of a limited number of specific exclusions.
Generally speaking revenue expenditure covers most day-to-day items that are
consumed within the year. Capital expenditure relates to spending on something of a
more lasting nature such as the purchase of an asset, which has a life beyond one year.
Revenue spending is financed from Council Tax, fees and charges, government grants
and other income. Capital spending is financed mainly from usable capital receipts from
the sale of Council assets, government grants, contributions and revenue.
The schedules below showing total income and expenditure are adjusted to reflect only
the District Council's demand on the Collection Fund for its own services, and the net
movement in borrowing and investments rather than the full turnover for treasury
2006/2007 2006/2007 2005/2006
Budget Actual Actual
£000s £000s £000s
14,078 13,620 12,436Net Cost of Service
(1,317) (1,260) (920)Depreciation
(1,241) (1,501) (1,376)Investment Income
0 (10) 213Pensions Interest & Expected Return on Pension Assets
11,520 10,849 10,353Net Expenditure
(6,610) (6,682) (5,690)Income from Grants
(3,250) (3,250) (3,153)Demand on Collection Fund
(35) 43 (100)Transfer to/(from) Revenue Reserves
(670)0 (613)Contribution from the Pensions Reserve
(68) (67) (73)Transfer from Collection fund
(1,108) (1,005) (1,428)Transfer from Capital Financing Reserve
449 (782) (704)Deficit/(Surplus for the Year)
At the end of the year it was possible to pay a surplus of £782,000 into the general fund
reserve in order to balance the Consolidated Revenue Account, rather than withdraw
£449,000 as originally budgeted. This represents an overall underspend of £1,231,000.
The main items making this up were:-
Savings or increased income
£ £
Receipt of Local Authority Business Growth Incentive Grant 421,000
Increased income, mainly on leisure services, licensing, 249,000
Hinksford & Industrial Units
Lower than expected uptake of concessionary fares 178,000
Lower spending on salaries and supplies and services in Local 278,000
Taxation, Housing, Corporate Policy, Architecture and
Landscapes and Environmental Health
Extra investment income 259,000
Additional Revenue Support Grant in respect of previous years 72,000
Increased expenditure or reduced income
Provisions in respect of Housing Benefit Subsidy Claim 163,000
Reduced income from building control 79,000
Expenditure on Customer Relationship Management project 41,000
Net savings due to larger items 1,174,000
The difference between these figures and the overall underspend of £1,231,000 is made
up of many smaller variances, both under and over spends, across the whole range of
the Council’s services.
3. Pensions Disclosure
The information contained within this disclosure has been supplied by Staffordshire
County Council as the administering authority of the defined benefit multi-employer
pension scheme to which South Staffordshire Council contributes.
The notes to the accounting statements show that this Council’s portion of the pension
fund shows a net liability (deficit) of just under £9.7m at 31 March 2007. The effect of
this is to reduce the Council’s overall reserves as shown in the balance sheet. This is
being addressed by increasing the employer’s contribution rate to the fund from 9.7% in
2006/07 to 11.7% in 2007/08. These contributions are planned to rise by 2% per year
to a peak of 17.7% in 2011/12.
The latest formal valuation of the Staffordshire County Council Pension Fund for funding
purposes was as at 31 March 2004.
4. Investments
In accordance with best practice the Council carries out its treasury management
activities in accordance with CIPFA’s Code of Practice on Treasury Management in the
Public Services 2001, which it has adopted as Council policy.
The bulk of the Council’s investments are invested with the council’s fund managers,
Alliance Capital.
The Council's assets and investments are currently valued at £43.8 million.
5. Capital Account
The original budget for capital expenditure totalled £2,744,500. To this was added
slippage from the previous year of £2,601,900. The schemes that this slippage related
to are listed below:-
Scheme £
Social Housing Grants 86,400
Waste Collection Vehicles 855,000
Housing Renovation Grants 175,700
Geographical Information System 38,800
E Government Schemes 29,000
Leisure Centre Disabled Access Works 2,800
Hinksford Car Park 2,500
Municipal Cemeteries 500,000
Environmental Improvements 251,600
Anite Pericles project 200,000
Electronic Document Management 217,800
Tree Management System 15,900
Replacement of Old PCs 3,700
Virtual Private Network 13,400
Network Infrastructure Upgrade 17,000
Laches Close/Cocksparrow Lane 62,700
Recycling Boxes 105,000
Public Lighting 4,700
Brewood Public Conveniences 4,200
Capital Grants and Loans 15,700
Total 2,601,900
Further schemes totalling £534,910 were approved during the year. They were:-
Scheme £
New Financial Software 140,000
E Forms For Internet 3,000
Area Network Storage Device 20,000
Estate Improvements 264,500
Customer Relationship Management System 55,410
Dual Monitor/Upgraded PCs 13,000
Penkridge LC CCTV 10,000
Grants and Loans 10,000
Fly Tipping Surveillance 5,000
Postal Vote Verification 14,000
Total 534,910
stThe final programme therefore stood at £5,881,310. At 31 March 2006 outturn
expenditure stood at £3,167,438. The majority of the underspend relates to
schemes that will now go ahead or continue in 2007/08.
The items and amounts that will be slipped into 2007/08 were:-
Scheme £
Geographical Information System 15,710
PC Replacement 12,430
Electronic Document Management 44,030
New Financial Software 76,150
Area Network Storage Device 3,950
Anite Pericles Software 46,190
Estate Improvements 857,860
Customer Relationship Management System 24,410
Dual Monitor/Upgraded PCs 1,810
Codsall Fitness Suite 80,000
Cheslyn Hay Multi Function Room 189,470
Penkridge Swimming Pool Changing 29,000
Replacement Wheelie Bins & Recycling Containers 35,040
Waste Collection Vehicles 111,450
Barnfield Sandbeds 11,000
Church Road/Dean Street Brewood 15,000
Windmill Bank Phase IV 81,910
Road Junction, Cheslyn Hay 27,830
Public Lighting 2,270
Tree Management System 35,900
Municipal Cemeteries 497,250
Improvements to Council Offices – Signage 18,330
Council Chamber Conference System -43,620
Laches Close/ Cocksparrow Lane 13,830
Social Housing Grant 392,500
Total 2,579,700
A major source of finance for capital expenditure in 2006/2007 was Usable Capital
Receipts. This fund is augmented annually by the receipt from South
Staffordshire Housing Association under the terms of the Right-to-Buy Clawback
2005/20062006/2007 ActualActual £000s £000s
Useable Capital Receipts
stBalance as at 1 April 15,991 17,683
Usage in the Year (2,538) (2,959)
Income in the Year 1,450 1,267
stBalance as at 31 March 14,903 15,991
6. Future Challenges
Some of the key pressures that the Council faces over the next year are summarised
  Best Value. The Council continues its review of services in accordance with its
Best Value Performance Plan. This sets out how the Council intends to review in
detail all of the services that it provides over a five-year cycle.
  Capital Programme. The Council has approved a capital programme for next
year of £3,017,600 and this will rise to £5,597,300 provided that the proposed
capital slippage is approved. This spending is more than covered by the
anticipated resources available for the year. The programme is designed to
safeguard existing assets and provide new facilities where resources allow,
particularly social housing by payments to housing associations for that purpose.
  Revenue Commitments. In accordance with the Code of Practice on Prudential
Accounting the Council has approved a 5-year medium term financial strategy
containing projections of its revenue commitments based on current and future
service requirements.
  The Euro. The Council continues to monitor the situation. To date it has not
been necessary to incur any costs.
7. Further Information
Further information on the accounts is available from the Chief Finance Officer, PO Box 1,
Council Offices, Codsall, South Staffordshire, WV8 1PX, (telephone 01902 696607, e-mail In addition, interested members of the public have a statutory
right to inspect the accounts before the audit is complete. The availability of the accounts
for inspection has been advertised in the local press.
Chief Finance Officer
Date 15th June, 2007
Statement of Accounting Policies
The Accounts have been prepared in accordance with the Code of Practice on Local
Authority Accounting issued in 2006, recognised by statute as representing proper
accounting practices.
The accounts for 2006/2007 have been prepared on a historic cost basis with certain
assets having been re-valued for balance sheet purposes.
Material Reserves and Provisions
The Council sets aside provisions for specific future expenses that are likely or certain to
be incurred and for which a reliable estimate of the amount can be determined provisions
are charged to the income and expenditure account in the year they are established.
Provisions for doubtful debts are shown in the Balance Sheet as a reduction to debtors
rather than under this heading.
The Council maintains certain reserves to meet general, rather than specific, future
expenditure. The main example of this is the General Fund working balance.
In addition to these reserves, there are amounts held for a special purpose that do not
fall into the definition of provisions. These are referred to as "Earmarked Reserves." The
expenditure charged to reserves is included in the Net Cost of Services part of the
Income and Expenditure Account. The financing from reserves is shown in the Statement
of Movement on General Fund Balances.
Fixed Assets
Fixed Assets are defined as expenditure on the acquisition of, or enhancement to, the
value of tangible assets, which yield benefits to the Council and the services it provides
for more than one year.
The value of assets in the balance sheet as at 31st March 2007 is included on the
following bases:
  Major operational land and property (over £25,000) at the lower of net current
replacement cost or net realisable value in existing use.
  Short lived assets like vehicles and equipment (acquired before 31/3/94) are not
included. (All such equipment was charged to revenue in the year acquired and
not capitalised). Vehicles and equipment acquired after 1/4/94 are included at
cost, subject to a minimum value of £10,000. This item is a departure from the
accounting code but the impact is not material.
  Non-operational assets are included in the balance sheet at market value.
Intangible assets
Intangible assets arise when payments of a capital nature are made where no fixed asset
is created in the Council’s Balance Sheet but which may properly be financed over a
number of years; according to the period over which the Council can be said to benefit
from the expenditure.
No intangible assets are recorded on the balance sheet, as all such amounts (for
improvement grants, landscaping etc.) have been written down to revenue in the year in