Statement of Accounts 2016/17 Nisar Visram, Assistant Director - - PowerPoint PPT Presentation

Statement of Accounts 2016/17

Nisar Visram, Assistant Director Corporate Finance

Purpose of Statement of Accounts

• Provide an overall picture of the financial health of the organisation

rather than a focus on the bottom line

• Provide details on the assets, liabilities and reserves of the
• rganisation
• Contain statutory disclosures
• An externally audited view of the finances for the year

Why are Local Authority Accounts so Complex?

• The Accounts have to comply with International Financial Reporting

Standards (IFRS) but also with UK legislation which dictates what can and cannot impact the bottom line of the Council’s finances

• This means that a number of items have to be accounted for, and then

reversed out of the accounts again. For example:

• Depreciation and asset valuation movements are charged to the accounts

and then reversed out again. Local Authorities fund capital via different requirements related to when expenditure is incurred

• Pension fund are charged and reversed out – Local Authorities pay for

pension costs when they are actually incurred.

General Fund Balances

Reserve 2015/16 2016/17 General Fund £22.4m £22.5m General Fund Earmarked Reserves £49.1m £31.7m Total £71.5m £54.3m

The Council’s General Fund balances have remained largely unchanged for the year – this balance reflects the ability of the organisation to deal with unforeseen circumstances and potential risks funds have not been set aside for. Earmarked reserves are set aside for specific items of future expenditure. These have decreased by £17.4m from the prior year.

Movement in Reserves Statement Page 20 & Note 29c Page 56

GF Net Expenditure by Service (£m)

96 109 6 58 56

Adults & Public Health Childrens Services Corporate Items Corporate Resources Neighbourhoods and Growth

Expenditure on services, net of specific grants that fund service expenditure, was just under £300m

Comprehensive Income and Expenditure Statement Page 1

General Grant Funding £m

103 38 66 69 14 14 Council Tax NNDR NNDR Top UP Revenue Support Grant New Homes Bonus Other Council Tax is approximately 1/3rd of the Council’s general income. The Council keeps 40% of Business Rates it collects and receives a ‘top-up’ from Government as it collects less than it needs. Note 11c Page 38

Other Service Specific Funding

Dedicated Schools Grant £217m Housing and Council Tax Benefit £252m PFI Grants £11m Public Health Grant £33m Pupil Premium £15m YPLA 6th Form Grant £6m Better Care Fund £11m

Note 11a Page 37

Balance Sheet

2015/16 (£m) 2016/17 (£m)

Long Term Assets 3,600 3,715 Current Assets 421 308 Current Liabilities (224) (220) Long Term Liabilities (1,138) (1,183) Net Assets 2,660 2,621 Overall the Net Assets of the Council were broadly consistent over the two years

Balance Sheet Page 22

Property, Plant & Equipment

2015/16 (£m) 2016/17 (£m) Council Dwellings 2,169 2,228 Other Land & Buildings 1,163 1,183 Vehicles, Plant & Equipment 19 36 Infrastructure Assets 149 156 Community Assets 11 5 Surplus Assets 55 35 Assets Under Construction 25 61 Total Assets 3,592 3,703 Council Assets are valued as per the CIPFA code, and this can differ significantly from how assets may be measured in the private sector. Rather than being valued at ‘Market Value’, Council assets are often valued at ‘Existing Use Value’ or the cost of replacing the asset in its current condition (Depreciated Replacement Cost). Note 14a Page 40

Cash and Investments

2015/16 (£m) 2016/17 (£m)

Short Term Investments 216 124 Cash & Cash Equivalents 41 28 Total 257 152

Councils can hold significant cash balances – supporting reserves and also grants received in advance of

• expenditure. These have decreased in year as the Council has borrowed internally from its cash balances

to support capital expenditure rather than borrowing externally. Note 34 Page 60

Debtors and Creditors

2015/16 (£m) 2016/17 (£m)

Debtors 163 156 Creditors (169) (186)

Note 16 & 17 Page 48

Pension Liability

2015/16 (£m) 2016/17 (£m)

Pension Liability 599 631

The Pension liability on the balance sheet is based on an annual actuarial valuation of the scheme with assumptions related to life spans, inflation, the future movements of assets in the scheme and the discount rate used to calculate liabilities at present values. The valuation is coloured by the current state of the economy and is an accounting requirement. For funding purposes the Council has a separate triennial valuation of the scheme and makes employers contributions to fund the pension scheme liability in the long run.

Note 26 Page 51

Capital Financing Requirement (CFR)

2015/16 (£m) 2016/17 (£m)

Capital Financing Requirement (CFR) 631 762 External Borrowing (413) (413) Internal Borrowing from Cash Balances (218) (349)

The CFR is the cumulative borrowing need of the organisation based on historic capital expenditure and this comprises of both General Fund and HRA borrowing taken on as part of the Government’s self financing regime. The Council has to make a statutory revenue payment towards its General Fund CFR each year. Note 14c Page 42

Capital Expenditure

• The Council spent £221.7m on Capital Expenditure Schemes. This

included:

• Investment in Lambeth Housing Standard Borough wide £95.6m
• Investment in Corporate Office Accommodation £39.4m
• Investment in Educational facilities/Schools buildings £23.7m
• This was funded by Grants (£25.1m), Revenue Reserves (£46.3m),

Disposal Receipts (£40.4m) Developers Contributions (£6.2m) and Internal Borrowing from Cash Balances (£103.7m).

• The Council has £69m in Capital Receipts unapplied and £59m in

Capital Grants Unapplied – both to be used to fund future capital expenditure.

Note 14c Page 42

Housing Revenue Account (HRA)

2015/16 (£m) 2016/17 (£m)

HRA Balance 10.7 10.7 HRA Earmarked Reserves 42.0 45.2 Total 52.7 55.9 HRA income was (£185m) for the year. £109m was spent on managing or maintaining properties within the HRA. £26m was spend on interest payments. £42m was spent on supporting the Capital Programme.

HRA Statements Page 61

Employees

• The Council paid 643 employees over £50k (601 employees in 15/16).

This includes staff in schools who are on Council contracts. Schools staff pay is set by the governing bodies and administered by the Council.

• The total cost of exit packages was £4.3m in 16/17 (£7.5m in 15/16).

Note 9b Page 36

Future Accounting Challenges

• Early Closedown – deadline for signing draft accounts moves from 30

June to 31 May this year. Audit deadline (and Corporate Committee sign off) moves from 30 September to 31 July.

• Ongoing drive by CIPFA to make the accounts easier to understand –

this may lead to a few (hopefully positive) changes in the accounts in coming years.

Any Questions?