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

1 HERTSMERE BOROUGH COUNCIL

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13

FULL COUNCIL

Document Reference No

C/10/33 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

• f 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

• f 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

• f 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

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

• f the accounts.

f. No other significant areas of concern were identified. 2.6 The Statement of Accounts was signed off on 21 September 2010 with the 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.

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

• f Total Recognised Gains and Losses, Cash Flow Statement, the

Collection Fund and Group Accounts. In order to understand the purpose

• f 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

• f £18.93m as at 31st March 2010. This is made up of the following: -

*The 2008/09 balance on earmarked reserves has been restated to include the balance

• n the Collection Fund adjustment account (£182k) as required by the change to the

SoRP referred to at 3.2 above.

2008/09 2009/10

Increase/ (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)

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

5 3.11 Prior to 1997, following recommendations from the Audit Commission, this Council formally approved a minimum General Fund Reserve (GFR) level to be maintained at £5m with an approved inflationary increase. Applying an average 3% per annum inflationary increase for the last ten years results means that the minimum level requirement should now be £7,343k. The General Fund (or Council Fund) Reserve as at 31st March 2010 amounts to £6,913k. 3.12 In 2008/09 the Council provided in full for the loss on its investment in Heritable Bank and charged £215k to the GFR. Of this sum, £50k was reversed (added back to the GFR) in 2009/10 when the administrators of the bank were able to improve their forecast of amounts to be paid out to the bank’s creditors. 3.13 The Balance Sheet (Appendix II) also shows that the Council has £11.37m remaining in its Usable Capital Receipts. The Council’s capital strategy aims to ensure that the capital spend is matched to the corporate priorities

• f the Council.

£M Usable Capital Receipts before commitments as at 31/03/2010 11.44 Capital commitments as at 31/03/2010 (3.74) Earmarked for revenue generating projects as per Finance Strategy 80% from 2004/05 onwards. (8.0) Forecast remaining capital resources for future capital projects as at 31/03/20110 (0.3)

The overspend is due to certain capital receipts expected in 2009/10 now forecast to be received in 2010/11. 3.14 The Statement of Movement on the Council Fund shows that the Council has an increase in the council fund for the year of £9K for the financial year ended 31st March 2010; this compares to the deficit of £70K shown in the March monitoring report (see 3.16). 3.15 The disclosures in the Group Accounts and in respect of Related Businesses and Companies were extracted from the audited accounts of the entities concerned namely - Elstree Film Studios Limited, Bushey Golf & Country Club and Hertsmere Leisure Trust.

6 Financial Monitoring Reports 2009/10 3.16 It should be noted that detailed analysis of expenditure has been monitored throughout the year by way of the monthly financial monitoring reports. Budget Actual Variance Surplus / (Deficit) £’000 £’000 £’000 Planning & building control 1,376 1,393 (17) Housing & environmental health 1,876 1,795 81 Waste & street scene 4,513 4,558 (45) Corporate Support 2,626 2,656 (30) Finance, revenues and benefits, & IS 2,704 2,627 77 Legal & democratic services 1,399 1,337 62 Estate maintenance (legal & dem) (2,199) (2,109) (90) Human resources & customer services 1,129 1,139 (10) Executive directors 591 594 (3) Audit & assurance 293 290 3 General expenses 94 114 (20) Pay strategy 70 70

• Audit fees & bank charges not recharged

206 207 (1) Central contingency 286 286

• Total service costs

14,964 14,957 7 Less: Transfer from reserves (261) (261)

• Charges to capital

(74)

• (74)

Mortgage interest (4) (1) (3) Net service costs before year end adjustments 14,625 14,695 (70) Year end adjustments: Reduction in rental income (170) Adjustment to final housing and council tax benefit claim 135 Reduction in concessionary bus fare costs 123 Other adjustments (9) Net surplus for the year added to the general fund 9 Details of the significant variances are as follows:

7 3.17 Planning and Building Control has an unfavourable variance of £17,466 as detailed below. 3.17.1 Planning Policy has an overall favourable variance of £21,807. Fav/(Adv) £ Reason for Variance 21,500 Savings are due to previous vacant posts, all of which have been successfully filled. 21,405 (15,000) As a rolling scheme, expenditure on the Local Development Scheme will vary year on year. As expenditure is lower than anticipated funding from the reserve will not be required. The surplus has reduced in March due to a payment made to the planning inspectorate. (6,536) This over spend is due to a contribution made to Hertfordshire County Council towards the Hertfordshire Economic Partnership. 437 Other minor variances. 21,806 Total for Planning Policy 3.17.2 Development Control has an unfavourable variance of £30,577 Fav/(Adv) £ Reason for Variance (75,699) Planning application fees income deficit appeared much better than previously expected, which might indicate recovery of demand for planning applications. 73,159 Central contingency has been allocated against the shortfall in planning application income. 8,537 Other planning income continues to do well due to the successful introduction of pre application advice charges. 13,967 This saving is primarily due to the previous vacant posts of Head of Service, Development Control Manager and Enforcement Manager, which have now been successfully filled. Savings in March were decreased by career grade increment in arrears and relocation payment for newly appointed Head of Service (20,611) This over spend is primarily due to costs incurred in the office move including new storage cabinets as well as stationery and office supplies, printing and advertising costs. 124,968 (124,968) This relates to court and legal costs that have been identified as unrecoverable from insurance and have now been funded from

• contingency. Report to Executive EX/09/87 refers

(31,805) Contracted services costs are over spent due to the use of expert advice on appeals and enquiries. These costs primarily relate to the Bhaktivedanta Manor enquiry on which a total of £41,718 has been spent to date. 1,875 Other minor variances. (30,577) Total for Development Control

8 3.17.3 Building Control has an overall unfavourable variance of £35,304. Fav/(Adv) £ Reason for Variance (40,958) Income has decreased in March due to drop in demand. (37,000) The amount to be funded from reserve has yet to be finalised. 39,588 Due to the downturn, vacancies have not been filled. Some vacancy savings were built into the budget but additional savings have also been made including training and standby costs. 3,066 Other minor variances. (35,304) Total for Building Control 3.17.4 Planning Administration Team has an overall favourable variance of £22,814. Fav/(Adv) £ Reason for Variance 18,802 There have been savings on employees' expenses due to two vacant posts. 4,012 Other minor variances 22,814 Total for Planning Admin Team 3.17.5 Parking has a favourable variance of £3,795 as detailed below: Fav/(Adv) £ Reason for Variance 9,632 Surplus is due to additional permits purchased by the NHS for employees based at the Civic Offices. (20,590) Machine income is currently below budget. Included in this figure is a deficit of £2,786 for Bushey Heath car parking, which became operational in February 2010. 19,899 Central contingency has been allocated against the shortfall in car parking income. (87,140) Because of the successful enforcement and education of residents on parking regulations, fewer fines are being issued. 52,923 Savings on vacant posts trough the year. One vacancy remains for Bushey car parking. Existing Civil Enforcement Officers will be used to cover this area and the vacancy filled only if required. 18,274 Supplies and services have a favourable variance due to the repairs budget not being fully utilised as well as savings in uniform costs. 6,797 This saving has reduced this month due to the development of schemes to be implemented next year. 4,000 Other variances include savings against transport and contractual costs

• ffset by increased NNDR costs.

3,795 Total for Parking

9 3.18 Housing and Health has an overall favourable variance of £81,454, to which the following services are the main contributors: 3.18.1 Housing Services has an overall favourable variance of £6,428. Fav/(Adv) £ Reason for Variance (12,936) 18,783 Bed and Breakfast rental income is currently below budget, but is offset by reduced costs, leaving a net under spend to date of £5,847. The budget for 2010/11 has been reduced. (2,482) This over spend is primarily due to legal fees of £4,550 incurred defending claims which has been off set by savings against licence costs. A budget provision has been made for future legal costs in 2010/11. 16,495 4,462 (20,000) Choice Based Lettings costs for this year have been funded from partnership support therefore the allocated investment income will be utilised in 2010/11. 2,106 Other minor variances 6,428 Total for Housing Services 3.18.2 Private Sector Housing Grants has no overall deficit.

Fav/(Adv) £ Reason for Variance The total expenditure to date on disabled facilities grants amounts to £250,822. Of this £202,000 is funded from a Government grant and the remaining £48,822 from investment income. The un spent investment income will be rolled forward for grants in 2010/11. 12,446 (12,446) A total of £22,446 to date has been spent on energy efficiency grants. Any budget shortfall is being met from funding secured from British Gas.

0 Total for Private Sector Housing Grants 3.18.3 Miscellaneous Services has an overall surplus of £59,679 made up as follows: Fav/(Adv) £ Reason for Variance 11,798 (5,711) Miscellaneous income has increased this month due to works required under drains testing, which is recharged to those properties concerned. This has in turn led to an over spend on miscellaneous expenditure. Additional income was also received £2,562 for food safety courses and £1,574 on pollution control due to the number of premises requiring inspections. 44,626 The licensing income surplus is primarily due to increased vehicle licensing

• f £27,740. Additional income has also been received on alcohol and

entertainment licences of £11,536 and on gambling and other licensing £5,351. The vehicle licensing income budget has therefore been increased in 2010/11, whilst due to the uncertainties of the economic climate other licenses have not. 3,330 Expenditure on food safety is lower than budgeted due to the number of inspections carried out.

10 3,528 Contaminated Land costs are under spent, as this is dependant on the surveys undertaken and works identified. 2,108 Other minor variances on pest control & pollution contractor costs based on demand. 59,679 Total for Miscellaneous Services 3.18.4 Public conveniences have an overall surplus of £2,232 due to minor variances. 3.18.5 Environmental Health Unit has an overall surplus of £10,726. Fav/(Adv) £ Reason for Variance 4,458 Savings have been made due to staff returning on reduced hours following maternity leave as well as the appointment of staff on salaries lower than

• budgeted. Casual staff are being used to provide extra support for these
• posts. This surplus has decreased due to the need to cover staff on long

term sick leave. 6,268 Other minor variances include lower than budgeted transport allowance claims due to the use of contractors and the recovery of court costs from prior years. 10,726 Total for Environmental Health Unit 3.18.6 Emergency planning has an overall surplus of £2,391 due to minor variances. 3.19 Street Scene Services has an overall unfavourable variance of £44,802. (Street Scene £47,109 unfavourable & Engineering £2,307 favourable) 3.19.1 Waste Services is showing an overall surplus of £55,831 Fav/(Adv) £ Reason for Variance (34,083) Paper recycling income whilst still £62,973 below budget, has improved this month due to higher tonnages. This deficit has been offset by increased glass recycling income as well as kerbside plastic & cans income now receivable under a new consortium agreement. 108,594 This represents a payment due under a County Council scheme to reward local authorities for reduced waste to landfill. Due to actual tonnages diverted being higher than projected, the amount received has increased. (54,621) Although the transfer of green waste disposal to Garston has resulted in the budgeted round saving it has put additional pressure on the remaining collection rounds. This situation was adversely affected by the severe weather conditions for which additional hours and agency costs were incurred to ensure service delivery with minimal disruptions. As a result weekday overtime is now over spent by £66,716. This has been off set by a decreased use of agency staff where possible. An unplanned overtime budget of £60,000 has been built into 2010/11 to recognise the operational need for this expenditure.

11 33,544 Transport related expenses have also decreased due to the round reduction resulting in both a saving in hire costs as well as fuel. (19,961) As well as the additional payment made to Hertfordshire County Council for the Hertsmere Waste Partnership, a year-end stock adjustment has resulted increased costs for this service. 22,358 Contractor costs are under spent due to a reduction in the charge made for plastic/cans recycling. 55,831 Total for Waste Services 3.19.2 Trade Services has an overall deficit of £33,618. Fav/(Adv) £ Reason for Variance (21,575) Although Trade income is below it should be noted that this is only a deficit

• n budgeted income and the service is still expected to bring in a trading

surplus at year-end. (18,197) This is due to increased tipping charges payable to HCC. For budgeting purposes an average tonnage is used however the actual tonnage is dependant on not only the number of customers but the type of outlet e.g. restaurant, office. Charges for the last quarter were £8,812 higher than budgeted. 6,154 There are small savings against employee and transport expenses off setting this deficit. (33,618) Total for Trade Services 3.19.3 Cleansing Services has an overall surplus of £937. Fav/(Adv) £ Reason for Variance (3,219) Employee costs have increased this month due to agency staff required to cover higher than anticipated sickness levels including one operative on long-term sick leave. (11,199) This is primarily due to hire costs of £9,525 incurred for two tipper lorries;

• f which one has been purchased and the other currently under

procurement. (5,025) Supplies and services are over spent primarily due to the increased cost of a hydrant licence required for the sweepers. 22,845 (2,465) Savings have been made against contractor costs due to the low incidences of abandoned vehicles. As a result there has been a corresponding deficit on income. Further savings have been made due to revised timing of weed-killing sprays. 937 Total for Cleansing Services

12 3.19.4 Management & Depot Overheads has an overall deficit of £63,514. Fav/(Adv) £ Reason for Variance (29,541) Overtime is the primary reason for the over spend in this service, with additional overtime costs to date of £22,182. The need for overtime has been reviewed and reduced where possible. However a budget increase of £10,000 was made in 2010/11 to reflect current operational needs. In addition to this cost, as there are no vacancies within this department, it has not been possible to realise the budgeted vacancy saving of £11,720. (6,697) Premises related costs have been over spent due to necessary works under taken to the depot boiler as well as increased NNDR costs. (5,954) Transport related expenditure is over spent on vehicle hire for two

• vehicles. In addition hire costs were incurred covering a vehicle being
• repaired. This vehicle and another, that has now been procured, have

been off hired leaving one vehicle on hire. (21,322) Supplies and services are overspent primarily due to advertising and printing costs for recycling promotions including holiday collections calendars, as well as stationery supplies. There have also been increased insurance costs. (63,514) Total for Management & Depot Overheads 3.19.5 Allotments have an unfavourable variance of £73. 3.19.6 Allum Lane cemetery has an unfavourable variance of £1,061. 3.19.7 Grounds Maintenance has a favourable variance of £37,049. Fav/(Adv) £ Reason for Variance 10,160 Additional contributions received from external income have off set a slight reduction on income received from Hertfordshire County Council, as this was inflation based. 3,523 Supplies and services are under spent due to savings on software costs. 23,366 Contractual services has a favourable variance is due to an under spend against ad hoc maintenance that has not been utilised before year-end. A budget transfer between parks and grounds maintenance has been made in 2010/11 to reflect the change in expenditure between the two services. 37,049 Total for Grounds Maintenance

13 3.19.8 Parks & Amenity Areas has an unfavourable variance of £42,659. Fav/(Adv) £ Reason for Variance (45,238) Premises related costs are over spent primarily as a result of additional works under taken at the King George Playing Fields, which could not be delayed due to health and safety concerns. A budget transfer between parks and grounds maintenance has been made in 2010/11 to reflect the change in expenditure between the two services. 2,579 Other minor variances (42,659) Total for Parks & Amenity Areas 3.19.9 Highways Related - Maintenance Items has an unfavourable variance of £2,307. Fav/(Adv) £ Reason for Variance (22,311) Market income is below budget as the new contract (affected by the economic downturn) is at a lower level than the old one. This was only known after the 2009/10 budget had been set. 22,311 Central contingency has been allocated against the shortfall in market income. 2,307 There have been small savings across the rest of this service area as it predominantly demand led with the main saving on street nameplates. 2,307 Total for Highways Related - Maintenance Items 3.20 Corporate Support has an overall unfavourable variance of £30,392. Several services within this unit have small variances. The significant variances are detailed below. 3.20.1 Corporate support unit shows a small surplus of £571 due to minor variances. 3.20.2 Youth Services shows a surplus of £4,020. Fav/(Adv) £ Reason for Variance 4,867 This surplus is because of additional funding secured for ‘Be There Do It’ activities from the Crime and Disorder Reduction Partnership. (847) Other minor variances 4,020 Total for Youth Services 3.20.3 50 Plus Programme shows an overall surplus of £2,261 due to minor variances. 3.20.4 Outreach Play Provision shows an overall unfavourable variance of £6,304.

14 Fav/(Adv) £ Reason for Variance (10,943) There has been a reduction on both the number of after–school clubs as well as reduced take up on play schemes. A detailed review of the play budget has been undertaken and a revised budget in place for 2010/11. 3,495 Lottery funding for officer time arranging and supervising play ranger activities has reduced the employee expense over spend. 1,144 This has been off set by a reduction in expenditure for hall hire and supplies and services due to the reduced activities. (6,304) Total for Outreach Play Provision 3.20.5 Sports Development is showing an unfavourable variance of £1,687. Fav/(Adv) £ Reason for Variance (36,011) 36,011 As per Executive report EX/09/75 investment income funding was approved for free swimming for residents aged over 60 and 16 years. (5,085) This over spend is due to a contribution made to Hertfordshire County Council for the Olympic Coordinator post to aid sports promotion. 2,217 Increased income due to external funding received for the Livewire project. 1,181 Other minor variances (1,687) Total for Sports Development 3.20.6 Special events show an overall surplus if £1,613 due to minor variances. 3.20.7 Museum and Heritage Services shows an overall deficit of £565 due to minor variances. 3.20.8 Community Development and Performance Management shows a favourable variance of £6,417. Fav/(Adv) £ Reason for Variance (7,355) 7,355 A commitment has been made for all projects approved as part of the ward improvement initiative scheme (WIIS). The remaining under spend, which was to be funded from investment income, has been written back to the reserves. 6,417 This budget is allocated to cover the production of corporate documents such as the corporate plan and performance indicators Expenditure will fluctuate depending on which documents are required in the year and frequency. 6,417 Total for Community Development 3.20.9 Community development and performance management shows an overall surplus of £6,417 due to minor variances.

15 3.20.10 Community Safety shows an overall favourable variance of £6,782. Fav/(Adv) £ Reason for Variance 6,782 Where possible expenditure is funded from the safer stronger Communities

• Fund. This has therefore resulted in an under spend on the revenue

budget. 6,782 Total for Community Safety 3.20.11 CCTV shows an unfavourable variance of £50,154. Fav/(Adv) £ Reason for Variance (6,448) Due to the decision to tender this service to an external provider, no further clients have been sought resulting in an income deficit. (3,525) Due to the purchase of additional videotapes for CCTV operation. (40,181) The budgeted Value for Money gains will not be achieved in 2009/10 due to the delayed implementation. Additional costs of £12,807 were incurred this month due the presentation of a prior years invoice during the closure of accounts with the existing contractor. (50,154) Total for CCTV 3.20.12 Voluntary Sector Grant Aid shows a favourable variance of £4,644. Fav/(Adv) £ Reason for Variance 4,044 The additional grant to Bushey Museum has been off set by savings in unclaimed grants in 2009/10. 600 Other minor variances 4,644 Total for Voluntary Sector Grant Aid 3.20.13 Low dependency day care shows an overall surplus of £1,078 due to minor variances. 3.20.14 Public information shows an overall surplus of £2,905 due to minor variances. 3.20.15 Corporate communications unit shows an overall deficit of £1,972 due to minor variances.

16 3.21 Financial Services and Information Systems have an overall favourable variance of £76,266. 3.21.1 NNDR Collection Costs have a favourable variance of £16,426 Fav/(Adv) £ Reason for Variance 11,999 Summons costs allocated at year end 3,427 Savings due to prior year audit adjustment 1,000 Savings on the use of bailiffs 0 Other minor variances 16,426 Total for NNDR collection costs 3.21.2 Cost of NNDR relief has an unfavourable variance of £23,515 Fav/(Adv) £ Reason for Variance (23,515) Relief granted has increased. This can be affected by just a few large new applications following property creations. Or because of increased awards due to a rateable value (RV) increases - of which there were many in 2009 (eg BUSHEY GROVE LEISURE CENTRE, whose charitable relief award increased by 25% as a result of a higher in-year RV). (23,515) Total for NNDR relief 3.21.3 Council Tax has an unfavourable variance of £30,614 Fav/(Adv) £ Reason for Variance (16,918) Reduced income from court costs. A more lenient policy has been applied this financial year, because of the economic downturn and its effects upon council taxpayers ability to pay. There has been an increase in cases that would otherwise have gone to summons/court (and hence incurred £30+£50 court costs as a result) being prevented from escalating through a more moderate and pragmatic approach to repayment planning. Thus fewer cases progressing to summons and court, thus fewer costs being raised/collected. (13,940) Following an internal audit Her Majesty’s Court Service (HMCS) discovered they should invoice us for each complaint we make to the Magistrates' Court for council tax and business rates liability orders. The HMCS neglected to charge these fees (£3 per summons) in a uniform way from not only us, but also half the Hertfordshire authorities. The £12k is in respect of all liability orders granted to Hertsmere for the financial year 2009-10. Henceforward, a monthly charge per hearing will be due and payable up front by Hertsmere before the Courts Service will accept a complaint and permit applications against debtors from us. 244 Minor Variances (30,614) Total for Council Tax

17 3.21.4 Benefits Administration has a favourable variance of £18,957 Fav/(Adv) £ Reason for Variance 30,711 Increased Government subsidy due to extra workload. (11,754) Payment to Civica (software suppliers) for the year-end subsidy reconciliation for rent allowances that will verify and cleanse data prior to the transfer to the new financial system. This is financed from the above additional subsidy. 18,957 Total for Benefits Administration 3.21.5 Public Transport has a favourable variance of £111,463 Fav/(Adv) £ Reason for Variance (30,600) 30,600 Contracted Bus Services funded from LABGI 106,180 Savings on concessionary bus fares identified following the meeting with

• ther Hertfordshire Councils and MCL consultants. The final outturn is

based on usage. 5,283 Other minor variances 111,463 Total for Public Transport 3.21.6 Procurement shows an overall deficit of £1,589 due to minor variances. 3.21.7 The Finance, Revenues & Benefits Unit has an unfavourable variance of £7,618 Fav/(Adv) £ Reason for Variance

(69,518) 69,520 Due to the increase in benefit claims, coupled with long-term sickness and maternity cover, additional staffing has been recruited. Extra Government grant has been made available to fund the increase in claims as shown below. Because of the recession additional Government grant has been received to fund the increase in benefit claims following the economic downturn. (13,650) There were increased costs for software, hardware and licenses. Also due to the failure of an old ‘Microfiche’ machine, payroll records had to be scanned to a new readable format for which there was no budget provision at a cost of £5K. 4,069 Savings on car mileage reimbursement (2010/11 budget has been reduced accordingly) 1,961 Other minor variances (7,618) Total for Finance, Revenues & Benefits Unit

18 3.21.8 Information Services – Civic Offices Telephones has an unfavourable variance of £6,816 Fav/(Adv) £ Reason for Variance (6,816) Improvements to the telephone internet/email links (6,816) Total for Information Services – Civic Offices Telephones 3.21.9 Information Services Unit has an unfavourable variance of £428 Fav/(Adv) £ Reason for Variance 19,220 Employees’ expenses have a net underspend of £19,220 after the use of £20K investment income re the Land & Property Gazetteer post. (9,721) System hardware and software is overspent following the introduction of ‘Ultra thin Client’ (8,640) The replacement costs for carpet, screens and use of external labour to install new desks for which no budget provision had been made. The capital cost of chairs and desks had been budgeted. (1,287) Minor Variances (428) Total for Information Services Unit 3.22 Legal & Democratic Services have an overall unfavourable variance of £27,086. (Legal & Democratic favourable £62,417 Estate maintenance unfavourable £89,503) The main services affecting this are: 3.22.1 Local Land Charges has a favourable variance of £238 as detailed below. Fav/(Adv) £ Reason for Variance (47,538) This adverse variance is due to the increased use of personal searches as well as the downturn in the housing market. Personal searches, for which there is a statutory charge, is much cheaper than the official search. Month Personal Official April 116 89 May 102 59 June 153 92 July 147 139 August 118 80 September 141 83 October 148 119 November 118 91 December 63 65 January 74 62 February 138 82 March 182 107 45,943 Central contingency has been allocated to the shortfall in land charges income. 1,833 Other minor variances 238 Total for Local Land Charges

19 3.22.2 Electoral registrations show an overall deficit of £3,889 due to minor variances. 3.22.3 Local Elections has an unfavourable variance of £42,346 as detailed below. Fav/(Adv) £ Reason for Variance (42,346)

Overspent due to by-elections in the year and other election costs in prior years and increased printing costs to meet the increased numbers for postal ballot papers in particular.

(42,346) Total for Local Elections 3.22.4 Legal Services Business Unit has a favourable variance of £35,976 as detailed below. Fav/(Adv) £ Reason for Variance (8,497) Income is mostly generated from court cases and section 106 agreements that are demand led. 39,177 The saving on employees’ expenses is due to 1 agency staff covering 1.5 full time equivalent vacancies. There are additional savings of £3,480 on staff training and £1,3330 on evening meetings budgets. 5,296 Savings on court costs due to less proceedings being issued. 35,976 Total for Legal Services Business Unit 3.22.5 Mayoral Budget has an unfavourable variance of £12,750 as detailed below. Fav/(Adv) £ Reason for Variance (6,195) Arrangements for the current Mayor require additional transport support for a significant number of events. (3,325) This expenditure relates to past mayors’ badges (3,230) Additional expenditure incurred on the Civic Dinner (12,750) Total for Mayoral Budget 3.22.6 Surgeries show an overall surplus of £1,277 due to minor variances. 3.22.7 Members Allowances favourable variance of £18,702 as detailed below. Fav/(Adv) £ Reason for Variance 18,702 Some Members are involved in more than one area of responsibility. When this is the case only the higher allowance is paid. This has resulted in the under spent to date. Also minor savings on transport related costs. 18,702 Total for Members Allowances

20 3.22.8 Costs Associated with Members have a favourable variance of £47,491 as detailed below. Fav/(Adv) £ Reason for Variance 19,490 There is a saving on printing minutes and agendas costs due to the increased use of electronic delivery of information. 27,111 Due to fewer new councillors in this municipal year and slower progress than anticipated with the Elected Members Development Charter less training has taken place. Also anticipated expenditure on new computers was not required. Insurance premiums that were profiled for year-end were less expensive. 890 Other minor variances 47,491 Total for Costs Associated with Members 3.22.9 Committee costs and cabinet expenses show overall surpluses of £7,839 and £4,744 respectively due to minor variances. 3.22.10 Democratic Services Unit has a favourable variance of £5,104 as detailed below. Fav/(Adv) £ Reason for Variance 2,010 This under spend is primarily due to savings on retention payments, payable to staff at year end, which have not been required due to post holders leaving during the year. 3,119 The equipment budget was not fully spent. (25) Other minor variances 5,104 Total for Democratic Services Unit 3.22.11 Civic Offices has an unfavourable variance of £23,713 as detailed below Fav/(Adv) £ Reason for Variance 14,938 Additional income from the letting of the ground floor. (33,558) There has been increased expenditure on building heating costs, higher than budgeted NNDR and increased costs of fire alarm maintenance, fire extinguisher replacement, building repairs and maintenance. Next years budget has been increased by £50K. (5,093) This is primarily due to additional costs incurred upgrading the security systems of the building. (23,713) Total for Civic Offices 3.22.12 Depot sites show an overall deficit of £2,208 due to minor variances.

21 3.22.13 Residual Residential Properties have a favourable variance £13,798 as detailed below Fav/(Adv) £ Reason for Variance 27,385 Increased rent from North British Housing Association relating to electricity recharges in 2008/09 (8,754) (4,833) Reduction in quarter 4 rent income due to a vacant property. Premises related expenses are overspent as repairs have been made to properties that have been vacated prior to them being relet. 13,798 Total for Residual Residential Properties 3.22.14 Commercial Properties have an unfavourable variance £75,105 as detailed below Fav/(Adv) £ Reason for Variance 22,128 Income from Cranborne Industrial Estate is above budget by £14,398 due to an additional unit leased after budget setting. (10,801) There is a reduction in income from shops due to vacant properties. (20,923) The deficit on premises related expenses is primarily due to unforeseen building repairs. (4,524) Additional costs have been incurred for planning application fees of £2,680 and £2,500 for Energy Performance Certificates (EPC). (34,380) 21,210 Deficit on Elstree studio due to non-budgeted Insurance cost of £30,407. Additional expenses on building repairs and electrical testing to be recovered from studios. Part of this, £21,210, has been funded from the Studio’s reserve. (47,815) Bad Debts written off following the recovery process; as recommended by Executive report EX/09/118. (75,105) Total for Commercial Properties 3.22.15 Garages show an overall deficit of £4,995 due to minor variances. 3.22.16 Leisure and Community Buildings have an unfavourable variance £7,574 as detailed below Fav/(Adv) £ Reason for Variance (9,144) The reallocated insurance costs for Leisure Centres have increased. This is part of our block policy, which has now been re-tendered. 1,570 Backdated rent increase for Oakmere Community Centre (7,574) Total for Leisure and Community Buildings

22 3.22.17 Estates Maintenance Unit has a favourable variance £10,292 as detailed below Fav/(Adv) £ Reason for Variance 5,618 Employees’ costs are under spent on overtime/evening meetings and training 1,475 Savings on car mileage reimbursement 3,199 There are savings on mobile phone costs and insurance recharges. 10,292 Total for Estates Maintenance Unit 3.23 Human Resources and Customer Services has an unfavourable variance of £9,851. Significant variances are detailed below. 3.23.1 Design & Print Services has a net unfavourable variance of £5,851 as detailed below. Fav/(Adv) £ Reason for Variance (16,180) Income from external customers is below budget. This service is demand led and may be due to the economic downturn. (26,072) Internal recharges income has improved in March but is still below budget for the year due to an overall reduced demand for internal publications. There are savings in other units’ service costs e.g. the cost of printing minutes & agendas are below budget by £19,490. The internal scanning facility has generated £6k income and there is £1K from shredding. 18,313 Savings on employee costs due to CAR will be offset by reallocations at year-end. 7,901 Supplies & Services are under budget due to savings on leasing photocopier costs due to the procurement of cheaper machines. 10,146 Contractual and other services are under spent as fewer projects have been completed externally. 41 Other minor variances. (5,851) Total for Design & Print Services 3.23.2 Customer Services has a net favourable variance of £21,200 as detailed below. Fav/(Adv) £ Reason for Variance 10,423 Employees’ Costs are underspent due to savings on recruitment advertising/training and overtime. The recruitment budget has been reduced in 2010-11 10,242 Due to lack of turnover of staff the clothing & uniform budget was not fully

• spent. The equipment budget was also underspent

535 Other minor variances. 21,200 Total for Customer Services 3.23.3 Civic office refreshments show an overall surplus of £1,593 due to minor variances.

23 3.23.4 Health & Safety has a net unfavourable variance of £6,159 detailed below. Fav/(Adv) £ Reason for Variance (10,000) There is no recharge to Elstree Film Studios as very little work was undertaken on their behalf. 4,188 Equipment replacement, office supplies and advertising were all underspent. (347) Other minor variances. (6,159) Total for Health & Safety 3.23.5 Corporate Admin Resource has an unfavourable variance of £20,634 Fav/(Adv) £ Reason for Variance (50,000) The adverse variance relates to the period from 1 April 2009 to 3 August

• 2009. This was a corporate project, which required agreement between

numbers of Service Heads before it could be implemented. There are savings but due to its late implementation they are less than budgeted. Since the 3 August it has been under the control of the Head of Human Resources and Customer Services. 29,366 Employee expenses are below budget following the admin review. (20,634) Total for Corporate Admin Resource 3.24 Executive Directors has a net unfavourable variance of £3,343 due to a minor overspend on supplies and services. 3.25 Audit & Assurance has a net favourable variance of £3,321 as detailed below. 3.25.1 Internal Audit has an adverse variance of £12,818 that is offset by the Anti Fraud Unit favourable variance (see below) Fav/(Adv) £ Reason for Variance (3,821) Employees’ expenses are over budget due to the vacancy discount. (16,719) 6,375 Agency & contracted services are overspent due to the employment of external expertise to complete computer audit needs assessment; council tax, NNDR and housing benefit audits. The impact of the workload is due to an overspill from the 2007/08 and 2008/09 audit plans carried over into 2009/10. This has been partially funded from investment income. 1,347 Other minor variances. (12,818) Total for Internal Audit

24 3.25.2 Anti Fraud Unit has a favourable variance £20,981 Fav/(Adv) £ Reason for Variance 17,723 Employees’ expenses are under spent, as there were vacancies earlier in the year. 3,008 Supplies & services are under spent as equipment and stationery budgets were not fully spent. 250 Other minor variances. 20,981 Total for Anti Fraud Unit 3.25.3 Risk Management has an unfavourable variance £4,843 that is offset by the Anti Fraud Unit favourable variance Fav/(Adv) £ Reason for Variance (12,743) This post is funded 60% by Hertsmere BC and 40% by Watford BC. The budget is insufficient and has been amended in 2010/11. However, savings in the Anti Fraud Unit and previously agreed investment income funding will minimise the overall impact in 2009/10. 7,900 Funding from investment income (4,843) Total for Risk Management 3.26 General Expenses have an unfavourable variance of £20,117 as detailed below.

Fav/(Adv) £ Reason for Variance (12,760) Alterations were needed to the Civic Offices to provide a drop in centre for swine flu advice and medication. (5,134) Investment brokerage fees were unbudgeted (2,223) Minor variances (20,117) Total for General Expenses

25 3.27 Bank Charges/External Audit Fees have an unfavourable variance of £1,010 as detailed below.

Fav/(Adv) £ Reason for Variance 31,222 The external auditors fees have reduced following increased use of internal resources to assist their auditing. 3,914 Reduction in charges from the Audit Commission following the introduction of the new Comprehensive Area Assessment (36,746) Bank charges are above budget due to the charge for telephone payments by

• card. Software to upgrade the Civica ICON Payments system has now been

installed and went live on 6 October. A refund is due from the bank as there have been some overcharges since the new system went live. 600 Minor variances (1,010) Total for Bank Charges/External Audit Fees

3.28 Central Contingency

The Central Contingency exists to cover areas of exceptional expenditure arising throughout the year that are outside the control of managers and could not have been reasonably budgeted for at the time of setting the revenue budget. As this resource is limited it has only been used in exceptional circumstances. A total of £286,280 has been used to fund one off expenditure relating to: Year End 2009/10 £ Planning legal and consultancy costs 124,968 Planning application fee Income 73,159 Car parking income 19,899 Market income 22,311

Land charges income 45,943 Total 286,280 3.29 Investment Income 3.29.1 The approved budget estimated that £600,000 investment income would be received in 2009/10. The total investment income received was £474,138, which was £125,682 below budget due primarily to the prolonged and unprecedented period of low interest rates. 3.29.2 During the budget setting process the Council committed £584,130 of investment income to be used for one off expenditure. This amount was subsequently increased to £639,630 following one off funding requests approved by the Executive during the year.

26 3.29.3 A reconciliation of how the total committed one off costs have been funded is set out below: £ Commitments: Approved as part of the 2009/10 budget setting 584,130 Approved by Executive during 2009/10 55,500 Total commitments 639,630 Funding: Investment income 474,138 Allocated to funds held for third parties (S106 contributions and Herts & Essex Energy Partnership) (15,763) Written back from prior years (note 1) 130,828 Transferred from Investment Income Equalisation Account (note 2) 50,427 Total funding 639,630 Note 1 – Certain expenditure which had been committed to previous years investment income has been cancelled and the funding written back. Note 2 – In light of current economic climate the council established an investment income equalisation account in 2008/09 in order to help fund shortfalls in investment income resulting from the fall in interest rates. The balance on this fund stands at £245,573 to help the Council to mitigate the effects of continued low interest rates in the future. 3.30 Statement of Accounts Adjustments A summary of the significant year end adjustments made to the March 2010 Financial Monitoring position is set out below: 3.30.1 There was a reduction in rental income from Bushey Golf & Country Club

• f £170,000 due to the company not meeting its budgeted financial results

for the year. 3.30.2 Following the finalisation of the housing and council tax benefit grant claim the final adjustment has resulted in a decrease in surplus of £95,313 and the accounts have been adjusted accordingly. The main adjustment relates to the 2008/09 claim; the grant claim for 2009/10 is still subject to audit. 3.30.3 The Council’s cost in respect of the Concessionary Bus Fare Scheme has reduced by £123,014 based on final usage figures, a further reduction of £23,014 (due to successful contract negotiation) from the Financial Monitoring Report which was based on an estimate. 3.30.4 A reduction in bad debt provisions of £11,769 has resulted in an increase in the surplus of £18,786 as reported in the Financial Monitoring Report.

27 3.30.5 A contingency fund of £50,000 has been set aside for potential planning appeal costs. 3.30.6 Building control costs not chargeable to the General Fund of £12,914 have been funded from earmarked reserves. These costs were included within the Financial Monitoring Report and therefore the final surplus has been increased to reflect the adjustment. 3.30.7 In 2008/09 the Council made a provision for the impairment of its investment with Heritable Bank. Following the receipt of a revised repayment forecasts from the Bank’s administrators the Council now anticipates receiving a higher than expected final settlement and an impairment reversal of £16,769 has been included, which has increased the surplus by the same amount. For further detail on the impaired investment, please refer to notes 13 and 14 in the statement of accounts. 3.30.8 Other minor costs of £640 have also been included leaving a final surplus

• f £9,001 which represents a decrease of £4,470 from that reported in the

March 2010 Financial Monitoring Report issued to the Financial Monitoring Panel on 2 June 2010. 4 LEGAL POWERS RELIED ON AND ANY LEGAL IMPLICATIONS 4.1 This report and the appendix, as originally presented in conjunction with the unaudited accounts to the Statement of Accounts Approval Committee prior to approval of the accounts on 29 June 2010, fulfilled the statutory requirements of the Accounts and Audit Regulations 2003/533 (as amended). 5 EFFICIENCY GAINS AND VALUE FOR MONEY 5.1 None applicable for the purposes of this report. 6 RISK MANAGEMENT 6.1 The risks are assessed as “low” i.e. severity – serious, likelihood- unlikely. 7 PERSONNEL IMPLICATIONS 7.1 None applicable for the purposes of this report.

28 8 CORPORATE PLAN & POLICY FRAMEWORK IMPLICATIONS 8.1 The information disclosed within the Statement of Accounts gives a true and fair view of the financial position of the Council at 31 March 2010. Therefore, the information contained therein can be used to assist in the preparation of the 2011/12 Finance and Capital strategies. The information contained in the reports attached can also be used to inform the policy decisions in relation to setting the 2011/12 budgets. The information can be compared to the aims and priorities contained within the corporate plan and highlight areas for additional funding so that these aims and priorities are achieved. 9 APPENDICES ATTACHED 9.1 Appendix I – Income & Expenditure Account and Statement of Movement

• n Council Fund 2009/10 (note 1)

9.2 Appendix II – Balance Sheet as at 31 March 2010 (note 1) 9.3 Appendix III – General Fund Budget Summary 2009/10 – budget v actual (note 2) Note 1 – Appendix I & II are extracts from the audited statement of accounts, a full copy of which has been despatched to members along with this report pack. Note 2 – In order to reduce paper usage only the front sheet of the General Fund Budget Summary 2009/10 – budget v actual has been included as appendix III. Electronic copies of the full report are available

• n the Council’s website as part of the agenda; however hard copies can

be requested by contacting Democratic Services or one of the authors listed below. 10 BACKGROUND PAPERS USED IN PREPARATION OF THIS REPORT 10.1 None

29 11 AUTHORS 11.1 Principal Authors: Sajida Bijle (Director of Resources) Email: Sajida.bijle@hertsmere.gov.uk Ext: 5000 Dev Gopal (Head of Financial Services) Email: devs.gopal@hertsmere.gov.uk Ext: 5320 11.2 Contributory Authors: Kevin Gibbons (Finance Manager) Email: Kevin.gibbons@hertsmere.gov.uk Ext: 5320 Mike Hatton (Senior Business Accountant) Email: Mike.hatton@hertsmere.gov.uk Ext: 3140 12 CONSULTATION ON DRAFT REPORT On 4 November 2010 a copy of the draft report was sent to the following: Leader, Portfolio Holder, CE, Directors, Heads of Financial Services and Legal & Democratic Services.