Overview & Scrutiny Committee (Regulatory, Compliance and - - PowerPoint PPT Presentation

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Overview & Scrutiny Committee (Regulatory, Compliance and Corporate Services) Tuesday 31st October 2017 Financial Reports and Terminology

Areas to be covered

• Best Practice in Financial Management
• The annual reporting cycle
• How Members engage
• Aims of Financial Reporting
• Key Aspects

Best Practice Financial Management Three key elements of financial management:

• Enabling Transformation
• Supporting Performance
• Delivering Accountability

Financial Reporting is a key part of each of these and enables informed decisions to be reached

Chief Financial Officer

• Chief Financial Officer (Head of Corporate

Resources) has responsibility for “making arrangements for the administration of the Council’s financial affairs”

• Includes ensuring budgets are robust, the

Council has adequate reserves, effective controls are in place and value for money is achieved

Financial Reporting cycle

MTFP Update continually Budget Reporting (Feb/March) Budget Monitoring (June- March) Scrutiny Reporting Outturn Reporting (June-July)

Key bodies

Member Officer Cabinet Departmental Management Teams Council Strategic Leadership Board Overview and Scrutiny Committee Executive Leadership Team Audit and Governance Committee

Distinctions-Revenue or Capital (1) Revenue – transactions relating to the day to day running of Council services

• Expenditure is funded from Government

Grants, Council Tax, Business Rates and Fees & Charges

• Link to Capital Expenditure as Revenue

includes the cost of borrowing and other revenue consequences of capital expenditure decisions

Distinctions-Revenue or Capital (2) Capital – transactions relating to investing in buildings, infrastructure and expensive pieces of equipment

• Mainly buying, constructing or improving

physical assets (e.g. Buildings, Land and Vehicles, Plant & Equipment)

• Funded by Borrowing, Grants & Contributions,

Capital Receipts and Revenue Resources

• Must have a life of more than one year

Revenue Process (1)

• Update the Medium Term Financial Plan –

normally covering 3 years – to identify forecast budget gaps (April – June)

• Formulate options that could mitigate budget

gaps – links to Council’s Core Purpose, Framework for Change, etc. (Typically July – October)

• Members consider options and a budget

package is developed (November – March)

Revenue Process (2)

• Budget Council agrees the annual budget for

the following year and level of Council Tax (and possibly budget plans for future years) (late February / early March)

• Budget formally monitored throughout year –

monthly starting in June – considered by the Executive Leadership Team, Strategic Leadership Board, Cabinet and Overview & Scrutiny

Aims of Financial reporting

What are we seeking to achieve? What have we done so far? Eg what have we spent/delivered What do we think we are going to do? Eg.What do we think we will spend What conclusions have we reached? What decisions do we need to make?

Capital Process

• Capital Strategy agreed by Budget Council
• Links to Council’s Framework for Change eg

Public Sector Reform, Strategic Investment and Economic Growth

• Schemes and associated funding are approved

by Council and / or Cabinet for inclusion in the Capital Programme

Capital Programme Budget Monitoring

• Capital Programme is multi-year rather than just

annual

• Total scheme forecast variations important as capital

resources limited so remedial action will be required to ensure scheme is funded or funding can be released at an early stage

• Annual forecast variations also important as delays in

expenditure ties up limited capital resources that could be used on other schemes

Council Tax

• Council Tax Requirement set for the year (based on

Council Tax level agreed and the Council Tax Base).

• This will paid from the Collection Fund (the statutory

account for recording Council Tax and Business Rates income) and is fixed regardless of the amounts collected.

• Any surplus or deficit due to the amounts collected

in the year will be accounted for in the following year.

Business Rates

• Business Rates income is set for the year

(based on the NNDR1 form submitted to the DCLG showing forecast income).

• This will paid from the Collection Fund and is

fixed regardless of the amounts collected.

• Any surplus or deficit due to the amounts

collected in the year will be accounted for in the following year.

Council Tax / Business Rates

• These income streams more important than

ever as they make up an increasing percentage of our funding.

• As part of the Liverpool City Region Business

Rates Retention Pilot we now keep 99% of Business Rates income.

• Forecasting Business Rates difficult due to
• utstanding appeals that can take years to

resolve (and will be backdated)

Questions?