Hertsmere Borough Council Presentation of the 2017/18 Statement of Accounts 1
Agenda • The Accounts and Audit Regulations (England) 2015 • The Process and Timetable for Sign Off • Statement of Accounts • Financial Results: 2017/18 • Balance Sheet and Reserves 2
The Accounts & Audit Regulations 2015 The Accounts and Audit (England) Regulations 2015 state that: • The Chief Finance Officer (CFO) is required to sign and certify that the accounts are ‘true and fair’ by 31 May each year. • Following the period of public inspection (1 June – 12 July), Committee/members must consider the accounts, approve the accounts by resolution at that meeting and ensure that the accounts are signed by the person presiding at that committee. Audit Committee is set for 30 July. • The CFO must re-confirm that they are satisfied that the accounts present a true and fair view of both the financial position and the income and expenditure for that financial year, before the authority approves it. The regulations do not require approval by Council of the Statement of Accounts prior to 31 May. In line with good practice, the Council (through this committee) continues to review the Accounts as submitted to external audit. Officers have worked and will continue to work with the external auditors (Ernst & Young) to achieve this timetable. 3
The Process and Timetable Financial Monitoring Report Scrutinised by monitoring 30 April 2018 (FMR) reported by service panel monthly and overview area committee quarterly April – May 2018 Preparation of year end accounts 31 May 2018 Signed and certified as “true and fair” by Chief Finance Officer Presented to Audit Committee 31 May 2018 (made available for public scrutiny on website) 18 June 2018 External audit of year end accounts Re-certification by CFO and approval by Audit Committee 30 July 2018 External auditor provides opinion (made available for public scrutiny on website) Publication of finalised Presentation of accounts to September 2018 accounts Full Council 4
Statement of Accounts Overview: • The accounts have been prepared in accordance with “The Code of Practice on Local Authority Accounting in the UK ( The Code )” as issued by the Chartered Institute of Public Finance & Accountancy (CIPFA) which is based on IFRS, where adopted by The Code. The accounts comprise the following Core Statements : • • Movement in Reserves Statement (Section 4) • Comprehensive Income & Expenditure Statement (Section 5) • Balance Sheet (Section 5) • Cash Flow Statement (Section 5) • Notes to the Accounts (Section 5) • Collection Fund Account (Section 6) • Group Accounts (Section 7) 5
Reconciliation of the Surplus Reported in the FMR to the Statement of Accounts The increase in the General Fund represents the actual movement reported for the year. The surplus reported in the Financial Monitoring Report (FMR) of £530k moves to a surplus of £35k in the Statement of Accounts (Appendix 1, pages 14), and further adjusted for Earmarked Reserves which now form part of the general fund balance as follows: 2017/18: £’000 £’000 Surplus as reported in the FMR 530 Year End Adjustments: Provision for losses at Hertfordshire Building Control Ltd (134) Provision for other losses (450) Other minor adjustments 18 Operational adjustments (566) Operational deficit (36) Collection Fund Deficit for the year (783) Collection Fund Adjustments Account 648 Collection Fund Adjustments (135) Section 31 Grants 206 Increase in Council Fund 35 Add back: Transfers to Earmarked Reserve (Note 5.32.2 page 87) 378 Increase in General Fund 413 6
Reconciliation of the Movement on the General Fund for the Year : how it is shown in the accounts Extracted from the Movement in Reserves Statement 2016/17 2017/18 £’000 £’000 2,133 Net increase / (decrease) for the year 413 Made up as follows: Reported surplus / (deficit) on provision of services per 3,265 I&E (based on IFRS Code) (3,575) Adjustments between accounting basis and funding basis under regulations (Note 5.14 page 52): (882) Collection Fund (Note 5.32.4 page 93) 648 (250) Capital, pension and accumulated absence adjustments 3,340 2,133 Increase/(decrease) in the General Fund 413 7
Financial Monitoring Report Summary of the significant variances reported on the FMR: Surplus / Financial Monitor: March 2018 (Deficit) Budget Actual Services: £’000 £’000 £’000 PLANNING & ECONOMIC DEVELOPMENT 1,189 1,085 104 HOUSING SERVICES 900 1,065 (164) ENVIRONMENTAL HEALTH 1,016 976 40 STREET SCENE SERVICES 4,253 4,203 50 ENGINEERING SERVICES 27 33 (6) ASSET MANAGEMENT (2,943) (3,062) 120 PARTNERSHIP & COMMUNITY ENGAGEMENT 1,173 1,158 15 FINANCE & BUSINESS SERVICES 2,363 2,351 12 LEGAL & DEMOCRATIC SERVICES 1,340 1,246 94 HUMAN RESOURCES & CUSTOMER SERVICES 1,107 1,058 48 EXECUTIVE DIRECTORS 491 506 (15) AUDIT & ASSURANCE 111 121 (10) NET SERVICE EXPENDITURE 11,027 10,740 287 Other Costs - including Audit, Levy, Interest, MRP 451 208 243 TOTAL COSTS 11,478 10,948 530 8
Financial Monitoring Report The main variances explained: £’000 The Planning underspend comes from additional planning income £124k. 104 This is a result of more planning applications, and the 20% fee increase from January 2018. The Housing overspend is from the increased cost of temporary (164) accommodation (£424k), offset in part by additional income (£223k). There were also additional legal costs. £100k of reserve funding with allocated to keep the overspend at this level. 120 Asset Management generated £268k additional income mainly from rent reviews and additional lettings of commercial properties. This was partially offset by an overspend on employee costs £83k (agency staff, required to undertake the rent reviews) and additional premises costs of £75k (mainly due to increases in rates). 9
Summary Balance Sheet Net Assets : 2016/17 Increase / 2017/18 (Decrease) 31 March: £’000 £’000 £’000 Assets: Non-Current Assets (fixed assets, long term debtors & investments) 137,424 974 138,398 Current Assets (cash at bank, short term debtors & investments) 55,435 4,560 59,995 Total Assets (page 26) 192,859 5,534 198,393 Liabilities: Current Liabilities (short term liabilities & bank overdrafts) 13,748 (320) 13,428 Non-current Liabilities (pension liabilities, S106 monies held) 46,896 1,214 48,110 Total Liabilities (Page 26) 60,644 894 61,538 Net Assets 132,215 4,640 136,855 10
Increase in Net Assets Net Assets increase / (decrease) – page 26 Draft Accounts £4,640k Non-current asset movements £974k No significant movements in year – large movements within PPE , for instance valuation of BGCC and Elstree Film Studios. The increases in value from revaluation gains and additions broadly offset the depreciation and valuation and impairment losses . No other major movements. Current assets £4,560k An increase in cash (£1.4m) and short term investments (£5.0m). This comes in part from improved debt collection, reflected in lower debtor balance (£1.8m), increased s106 and CIL income (£2.6m), LAMS repaid (net £1m), movements in non cash transactions (e.g. provisions £2.0m). Current liabilities £320k Reduced creditors, and increase in short term provision. Long term liabilities Favourable £1.3m pension liability movement (reflected in the reserve 5.32.5); £1.3m adverse provision requirement for NNDR appeals; a £0.4m long term liability in respect of a Compulsory Purchase Order of property, for which family have not claimed; and £0.8m additional capital receipts in advance (£1,214k) 11
Summary Balance Sheet (contd.) Financing: 2016/17 Increase/ 2017/18 (Decrease) 31 March: £’000 £’000 £’000 Usable Reserves: (Note 5.31, p86) Increase Council (General) Fund 7,902 35 7,937 Earmarked Reserves 18,788 378 19,166 Usable Capital Receipts 6,585 1,661 8,246 Capital Grants Unapplied 4,832 1,775 6,607 Usable Total Usable Reserves 38,107 3,849 41,956 (Slides 28-29) Unusable Unusable Reserves: (Note 32, p91) Revaluation Reserve 62,808 3,325 66,133 Capital Adjustment Account 65,948 (3,301) 62,647 Pension Reserve (38,215) 1,298 (36,917) Collection Fund Adj. Account & 3,567 (531) 3,036 Other Reserves Total Unusable Reserves 94,108 791 94,899 (Slides 28-29) 12 Total Net Worth 132,215 4,640 136,855
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