(Attachment: 26)Appendix 1 to BT9 2003-4

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  • 1. Appendix 1 STATEMENT OF ACCOUNTS 2002/2003
  • 2. SOUTHEND-ON-SEA BOROUGH COUNCIL STATEMENT OF ACCOUNTS 2002/2003 Mayor Councillor A. Crystall Leader of the Council Councillor C.D. Latham (to 20th February 2003) Councillor H.P. Briggs (from 20th February 2003) Chief Executive and Town Clerk J.K.M. Krawiec LL.B., Solicitor Borough Treasurer David Andrews Southend-on-Sea Borough Council Chief Executive & Town Clerk’s Department - Borough Treasurer’s PO Box 2 Civic Centre Victoria Avenue Southend-on-Sea Essex SS2 6EP
  • 3. Contents Page Explanatory Foreword 1 Statement of Responsibilities for the Statement of Accounts 7 Auditors’ Certificate and Opinion 8 Statement of Accounting Policies 9 Statement of Internal Control 13 The Accounting Statements (and associated notes): Consolidated Revenue Account 15 Notes to the Consolidated Revenue Account 16 Housing Revenue Account 23 Notes to the Housing Revenue Account 24 Collection Fund 27 Notes to the Collection Fund Accounts 28 Consolidated Balance Sheet 30 Notes to the Consolidated Balance Sheet 31 Statement of Total Movement in Reserves 45 Consolidated Cash Flow Statement 48 Notes to the Consolidated Cash Flow Statement 49 Terms and Abbreviations 52
  • 4. EXPLANATORY FOREWORD 1. Introduction This publication presents the financial performance for 2002/2003 of the activities undertaken by Southend-on-Sea Borough Council. 2. Financial Statements The financial statements cover all the activities of the Council and include: - i) Statement of Accounting Policies This explains the basis on which the accounts have been prepared. ii) Consolidated Revenue Account This shows the revenue income and expenditure of the authority iii) Housing Revenue Account This covers the activities of the Council as a landlord of approximately 6,500 dwellings. iv) Collection Fund This account reflects the statutory requirement for billing authorities to maintain a separate Collection Fund, which shows the transactions of the Authority in relation to non-domestic rates, community charge and council tax and the way money has been distributed between Leigh-on-Sea Town Council, Essex Police Authority and Southend-on-Sea Borough Council. v) Consolidated Balance Sheet This is the balance sheet of all of the Council's activities including the Collection Fund and Housing Revenue Account. vi) Statement of Total Movement in Reserves This statement summarises the movements in the revenue and capital reserves. vii) Cash Flow Statement This statement summarises the inflows and outflows of cash arising from transactions with third parties. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 1
  • 5. EXPLANATORY FOREWORD 3. Revenue Sources of Funding, Expenditure and Services Provided Sources of Funding The Council’s revenue spending is funded from various sources. Revenue Funding Percentage £m % S ource of funding:- Government Grant 61.1 16.3 HRA Rents 17.1 4.6 HRA Subsidy 12.3 3.3 Sales, Fees and Charges 36.7 9.8 Other Income 82.5 22.1 Revenue Support Grant 66.1 17.6 Non Domestic Rates 54.4 14.6 Council Tax 43.6 11.7 Total 373.8 Revenue Expenditure Revenue Expenditure Percentage £m % Type of expenditure:- Employees 58.6 15.7 Capital Charges 17.4 4.7 Third Party Payments 158.9 42.5 Transfer Payments 49.8 13.3 Other Expenses 89.1 23.8 Total Revenue Expenditure 373.8 Other Expenses include maintenance of buildings, vehicle costs, purchase of supplies. Capital charges are notional charges made to services for the capital assets employed in the delivery of services. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 2
  • 6. EXPLANATORY FOREWORD Services Provided The proportion of expenditure by the Council on the various services. Net Expenditure Percentage £m % S ervice:- Central Services to the Public 33.1 8.9 Cultural, Environmental and Planning 43.9 11.7 Education 139.0 37.2 Highways, Roads and Transport 16.4 4.4 Housing 71.0 19.0 Social Services 65.5 17.5 Corporate and Democratic Core 3.0 0.8 Unapportionable Central Overheads 1.9 0.5 Total 373.8 Central Services to the Public – this includes council tax benefit and administration, all central support services, registration of births, deaths and marriages, elections and emergency planning. Corporate and Democratic Core – this includes mayoral costs, members’ allowances as well as all the cost of members’ activities in the capacity of democratic representation and core costs for the provision of the management infrastructure to support the delivery of services. Unapportionable Central Overheads – this is our contribution, as determined by the actuarial valuation as at 31 st March 2001, of the estimated deficiency on our share of the Pension Fund assets compared to the ongoing liabilities of current and past employees. Housing Revenue Account The main categories of expenditure within the Housing Revenue Account. Net Expenditure Percentage £m % Housing Revenue Expenditure:- Repairs and M aintenance 4.4 11.8 Supervision and M anagement 5.5 14.7 Rent Rebates 12.4 33.2 Debt Charges 10.0 26.7 Other 5.1 13.6 Total 37.4 Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 3
  • 7. EXPLANATORY FOREWORD 4. The General Fund 2002/2003 Budget The Council agreed a budget, including Leigh-on-Sea Town Council precept and after the use of reserves of £164.151m in 2002/2003 (2001/2002 - £160.321). After government grants, the community charge and council tax surpluses have been taken into account, a demand on the Collection Fund of £43.196m was made by this Council. This resulted in the council tax of £733.70 for a Band D property in 2002/2003, (£745.51 for the areas covered by Leigh-on- Sea Town Council). This excludes the amount relating to the Essex Police Authority (see note 8 Financial Facts for 2002/2003). The General Fund Summary Revenue Account (excluding the Housing Revenue Account) is shown below: Original Revised Actual Estimate Estimate £000's £000's £000's Net expenditure: Southend-on-Sea Borough Council 165,400 167,348 165,747 Leigh-on-Sea Town Council 101 101 101 Total before reserves 165,501 167,449 165,848 Use of reserves (1,350) (2,150) (1,697) Items carried forward from 2001/2002 0 (1,148) 0 Total 164,151 164,151 164,151 Financed by:- Revenue Support Grant 66,133 66,133 66,133 Distributions From NDR Pool 54,418 54,418 54,418 Demand on Collection Fund 43,196 43,196 43,196 Collection Fund Surplus 404 404 404 Total 164,151 164,151 164,151 The reserves of the General Fund on 31st March 2003 were £22.755m (31st March 2002 - £26.836m), including earmarked reserves of £18.757m (31st March 2002 - £20.455m). 5. Housing Revenue Account For 2002/2003 the Housing Revenue account had a surplus of £1.857m. and the cumulative balance carried forward was £9.710m. The major repairs reserve had a balance at 31st March 2003 of £4.472m. ( 31st March 2002 -£2.028m ). Average rents in 2002/2003 were £51.22 per property which included the rent increase at April 2002 of 3.3%. The Council has started the implementation of rent restructuring from April 2003 and has introduced separate service charges for relevant tenants in accordance with Government guidelines. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 4
  • 8. EXPLANATORY FOREWORD 6. Capital In 2002/2003 the Council spent £38.022m, £33.217m on General Fund and £4.805m on Housing Services. The areas of capital expenditure within the £33.217m were: • Education £10.072m • Local Transport Plan £7.848m • Sea Defences £4.968m • Southend Pier £2.697m • Regeneration Objective 2 £1.907m • Health and Social Care £1.441m • Schools Devolved Capital £1.213m • Other Leisure £1.104m • Other Highways £1.085m • Other Schemes £0.882m Total £33.217m Expenditure on the acquisition of tangible assets that improves and not merely maintains the value of existing assets must be capitalised. Capital expenditure was financed in the following manner: • Borrowing £16.535m • Grants £11.974m • General Reserves £4.874m • Major Repairs Reserve (Housing) £1.638m • Capital Receipts £1.307m • Third Party Contributions £0.840m • Revenue Contributions £0.854m Total £38.022m 7. Leigh-on-Sea Town Council The precept for 2002/2003 was set at £100,737 (2001/2002 - £91,878). This resulted in a Council Tax of £11.81 (2001/2002 - £10.73) for a Band D property in the area of the Town Council. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 5
  • 9. EXPLANATORY FOREWORD 8. Financial Facts for 2002/2003 Council Tax for a band D property: £ Southend-on-Sea Borough Council 733.70 Leigh-on-Sea Town Council 11.81 Essex Police Authority 77.67 Total for Leigh-on-S ea Town Council Area 823.18 Total for all other parts of the Borough 811.37 • Council tax base - £58,736.70 • Council tax base - Leigh-on-Sea Town Council -£8,527.89 • Essex Police Authority precept of £4.562m. • Southend-on-Sea Borough Council budget requirement was £164.050m. • Southend-on-Sea Borough Council demand on Collection Fund was £43.196m. • Standard Spending Assessment of £163.251m. • Business Rate of 43.7p per £ of Rateable Value. PricewaterhouseCoopers are the auditors appointed by the Audit Commission. Any comments or suggestions for improvements in the format of these accounts in future years would be welcomed submitted to the address at the beginning of this booklet. Councillor H.P. Briggs Leader of the Council Southend-on-Sea Borough Council Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 6
  • 10. STATEMENT OF RESPONSIBILITES FOR THE STATEMENT OF ACCOUNTS STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS The Authority’s Responsibilities The Authority is required: • To make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority, that officer is the Borough Treasurer; • To manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets. • To approve the statement of accounts The Borough Treasurer’s Responsibilities The Borough Treasurer is responsible for the preparation of the Authority’s statement of accounts which, in terms of the CIPFA Code of Practice on Local Authority Accounting in Great Britain (‘the Code of Practice’), is required to present fairly the financial position of the authority at the accounting date and its income and expenditure for the year ended 31st March 2003. In preparing this statement of accounts, the Borough Treasurer has: • selected suitable accounting policies and then applied them consistently; • made judgements and estimates that were reasonable and prudent; • complied with the Code of Practice; • kept proper accounting records which were up to date; • taken reasonable steps for the preparation and detection of fraud and other irregularities BOROUGH TREASURER’S CERTIFICATE I certify that the accounts set out on pages 15 to 51 represent the true financial position of the Council at 31st March 2003. BOROUGH TREASURER Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 7
  • 11. AUDITORS’ CERTIFICATE AND OPINION AUDITORS’ REPORT TO Southend-on-Sea Borough Council We have audited the statement of accounts on pages 15 to 51, which have been prepared in accordance with the accounting policies applicable to local authorities as set out on pages 9 to 12. Respective Responsibilities to Borough Treasurer and Auditors As described on page 7 the Borough Treasurer is responsible for the preparation of the statement of accounts. Our responsibilities as independent auditors are established by statute, the Code of Audit Practice issued by the Audit Commission and our profession’s ethical guidance. We report to you our opinion as to whether the statement of accounts presents fairly the financial position and results of operations of the Council. Basis of Opinion We carried out our audit in accordance with the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission, which requires compliance with the relevant audit standards. Our audit included examination, on a test basis of evidence relevant to the amounts and disclosures in the statement of accounts. It also included an assessment of the significant estimates and judgements made by the authority in the preparation of the statement of accounts and of whether the accounting policies are appropriate to the authority’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we consider necessary in order to provide us with sufficient evidence to give reasonable assurance that the statement of accounts is free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the statement of accounts. Opinion In our opinion the statement of accounts presents fairly the financial position of Southend-on-Sea Borough Council at 31st March 2003 and its income and expenditure for the year then ended. Certificate We certify that we have completed the audit of accounts in accordance with the requirements of the Audit Commission Act 1998 and the Code of Practice issued by the Audit Commission. Signature Date PricewaterhouseCoopers Southwark Towers 32 London Bridge Street London SE1 9SY Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 8
  • 12. STATEMENT OF ACCOUNTING POLICIES 1. General The accounts have been prepared in accordance with the Code of Practice for Local Authority Accounting in Great Britain Statement of Recommended Practice (SORP), issued by the Chartered Institute of Public Finance and Accountancy (CIPFA). 2. Income and Expenditure The accounts are prepared on an accruals basis. Interest payable on external borrowings and interest earned is accrued and accounted for in the accounts of the period to which it relates on a basis which reflects the overall economic effect of the borrowings and investments. Accruals are made for all known material revenue debtors and creditors for goods and services supplied both by and to the Authority during the year. 3. Materials Reserves and Provisions The reserves of the General Fund include: a) The General Fund balance combines all funds held for general purposes and is available to meet future net expenditure as required. The General Fund receives all interest on external investments except the element relating to the Housing Revenue Account balance. The Housing Revenue Account is ring-fenced and is utilised in the provision of housing services. b) A repairs and renewals reserve is maintained by the General Fund specifically for the replacement or repair of scheduled items. c) A capital reserve is maintained for future capital expenditure that will be financed from revenue contributions. d) An insurance provision exists to cover reported claims, whilst an insurance reserve is maintained to provide future cover for potential liabilities arising from insurance claims. e) Other reserves are held to meet unpredictable items of expenditure and have been accumulated by contributions from revenue. f) Provisions for bad and doubtful debts have been made in:- • The Collection Fund for Council Tax, Community Charge and Non-Domestic Rates (NDR) in the light of anticipated collection levels. • The Housing Revenue Account for housing rent arrears in accordance with recommended practice. • The General Fund for residual rates and other miscellaneous income, in accordance with recommended practice. In all cases the provisions were reassessed for appropriateness. g) Specific movements on reserves are disclosed in The Statement of Total Movement in Reserves. Movements in provisions are disclosed in notes to the Consolidated Balance Sheet. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 9
  • 13. STATEMENT OF ACCOUNTING POLICIES 4. Fixed Assets Fixed assets are included in the Balance Sheet at valuation, less depreciation where appropriate. Service revenue accounts are charged with capital charges for all fixed assets used in the delivery of the service, comprising a provision for depreciation (where appropriate) and a notional interest charge. Capital financing costs are disclosed separately in the Consolidated Revenue Account. Operational assets have been included in the Balance Sheet at the lower of open market value for existing use or depreciated replacement cost. Non-operational assets have been included at open market value. Infrastructure and community assets, which by their nature are not capable of being realised, are included at their historical cost. The current asset values used in the accounts are based upon a certificate issued by the Department of Technical and Environmental Services in accordance with the Statement of Asset Valuation Practice and Guidance Notes of the Royal Institute of Chartered Surveyors. Large public buildings and schools have been revalued as at 31st March 2003 thereafter, all assets of the council will be revalued on a rolling 5 year programme. 5. Depreciation Depreciation is a measure of the wearing out, consumption or reduction in the useful economic life of a fixed asset. It has been charged on those assets that have a finite useful life, excluding land, and is calculated by taking the valuation and apportioning it over the economic life of the asset. 6. Charges to Revenue General fund services and central support services are charged with a capital charge for all fixed assets used in the provision of services. The total charge covers the annual provision for depreciation plus a capital financing charge determined by applying a notional rate specified annually by CIPFA to net asset values. For 2002/2003 these rates were 6% for assets carried at current value and 6% for assets such as infrastructure and community assets, carried at historical cost. External interest payable and the provision for depreciation are charged to the Asset Management Revenue Account, which is credited with the capital charges made to services. Capital charges therefore have a neutral impact on the amounts required to be raised from local taxation. Amounts set aside from revenue (by means of a minimum revenue provision) for the repayment of external loans and to finance capital expenditure are disclosed separately as appropriations, on the face of the Consolidated Revenue Account, below net operating expenditure. The Housing Revenue Account is charged with a notional 6% capital charge and a depreciation charge. 7. Capital Reserves • The Fixed Asset Restatement Reserve represents the balance of the surpluses and deficits arising from the revaluation of fixed assets. • The Capital Financing Reserve represents amounts set aside from revenue resources or capital receipts to finance expenditure on fixed assets. This represents sums for debt redemption from the minimum revenue provision and “set-aside” capital receipts. • The Usable Capital Receipts Reserve represents the proportion of capital receipts available to finance new capital investment. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 10
  • 14. STATEMENT OF ACCOUNTING POLICIES 8. Government Grants Government grants are accounted for on an accruals basis and income has been credited, in the case of revenue grants, to the appropriate revenue account. Capital grants have been applied to the appropriate capital expenditure during the year. 9. Basis of Determining Interest Charges Interest is paid to the Housing Revenue Account using the average rate of interest earned by the authority from external investments. Interest on capital is charged by applying the average rate of interest to outstanding borrowings. 10. Treatment of Leases Finance Leases Rental payments under finance leases are apportioned between the finance charge and the reduction of the outstanding obligation, with the finance charge being allocated and charged to revenue over the term of the lease. Operating Leases Rentals payable, net of benefits received or receivable (eg cash incentives for a lessee to sign a lease), under operating leases are charged to revenue on a straight line basis over the term of the lease, even if the payments are not made on such a basis, unless another systematic and rational basis is more appropriate. 11. Stocks and Works in Progress All stocks are valued at replacement cost. Works in progress are valued on the basis of the cost of work done. 12. Allocation of Support Services The Council has adopted the principle of the full allocation of support service costs as recommended by CIPFA. 13. Investments Investments are in accordance with the Council’s Treasury Management Policy and are only placed with:- • Banks (Clearing and Merchant) as authorised by the Banking Act 1987, who are UK incorporated and rated by IBCA (A1+ or A1), Moody’s (P1) or Standard and Poor’s (A1+ or A1). • Building Societies - the top 20 as defined by asset size. • Local Authorities Investments undertaken by Scottish Widows Investment Partnership Ltd and Morley Fund Management on behalf of the Council can also be placed in certificates of sterling cash deposits issued by authorised banks under the Banking Act 1987 and Building Societies all rated A1+, Treasury bills and gilt edged securities and the fund managers own cash portfolio (subject to agreed limits). Investments are shown in the accounts at market value. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 11
  • 15. STATEMENT OF ACCOUNTING POLICIES 14. Borrowing Limits Under Section 45 of the Local Government and Housing Act 1989 the council has determined: • an overall borrowing limit of £100m. • a short term borrowing limit of £20m. • the maximum proportion of total interest payable at variable rates of 50%. During the year, the outstanding balance on a loan from the European Investment Bank of £112,914 was repaid in full together with a prepayment premium of £16,246. 15. Pension Costs Local Government Scheme The pension costs that are charged to the Council's accounts in respect of its employees are equal to the contributions paid to the funded pension scheme for these employees. Further costs arise in respect of certain pensions paid to retired employees on an unfunded basis. These costs have been determined on the basis of contribution rates that are set to meet the liabilities of the Pension Fund. S.S.A.P. 24 “Accounting for pension costs” was never fully incorporated into the SORP, as a result, the Council does not comply with the accounting requirements of S.S.A.P. 24 and the liabilities included in the balance sheet are understated in respect of pension costs. The amounts that would have been necessary in order to provide for pension costs in accordance with S.S.A.P. 24 are disclosed by way of a note to the summary revenue account. Teachers This is an unfunded scheme administered by the Department for Education and Skills. The pension cost charged to the accounts is the contribution rate set by DFES on the basis of a notional fund. FRS 17 Under the transitional arrangements for financial years ending on or after 22nd June 2002 and before 22nd June 2003, implementation of FRS 17 is limited to certain balance sheet disclosures. A memorandum note to the balance sheet discloses information on the fund’s assets as well as the movement in the year on the net asset/liability relating to the defined benefit scheme, analysed across the different gains and losses defined by FRS 17. 16. Deferred Charges Deferred Charges are charged to revenue on the basis of the benefit obtained by the service from the expenditure in that period. 17. Euro During the last financial year the Council has been a member of the CIPFA Euro Forum. This forum provides the opportunity to discuss with colleagues from other Local Authorities the common issues faced in planning for the possible introduction of the Euro in the United Kingdom. Membership of the CIPFA Euro Forum will continue in the next financial year. There have been no specific funds allocated for Euro preparation. Until the decision is made to adopt the Euro, the expenditure on Euro activities should be absorbed, together with expenditure incurred on other strategic planning analyses, within existing budgetary provision. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 12
  • 16. STATEMENT OF INTERNAL CONTROL Statement of Assurance on the Council’s corporate governance arrangements, risk management processes and internal controls 1. Overview Southend-on-Sea Borough Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded, properly accounted for and used economically, efficiently and effectively. In order to ensure this, members and senior officers are responsible for: • Putting in place proper arrangements for the governance of the Council’s affairs and the stewardship of the resources at its disposal • Ensuring that an effective system of risk management and internal controls is maintained 2. Governance The Council has approved and adopted a Local Code of corporate governance, which is consistent with the principles and reflects the requirements of the CIPFA/SOLACE framework “Corporate Governance in Local Government: A Keystone for Community Governance”. A copy of the code is on our website (www.southend.gov.uk) or can be obtained from the Strategy & Performance Unit on 01702 215167. In June 2002, the Council put in place appropriate management and reporting arrangements to enable it to satisfy itself that its approach to corporate governance is both adequate and effective in practice. The Assistant Chief Executive has been given responsibility for • Overseeing the implementation and monitoring the operation of the code • Reviewing the operation of the code in practice on an annual basis • Reporting annually to Cabinet on compliance with the code and any changes that may be necessary to maintain it and ensure its effectiveness in practice • Preparing a summary report to be made available in the Best Value Performance Plan In addition the Chief Internal Auditor, on behalf of the Borough Treasurer, has been given the responsibility to undertake an independent review and report to Cabinet annually to provide assurance on the adequacy and effectiveness of the code and extent of compliance with it. On the basis of the Cabinet reports of both the Assistant Chief Executive and the Chief Internal Auditor arising from the reviews of the Council’s corporate governance arrangements for 2002/2003, we are satisfied that except for the matters listed below, they are adequate and operating effectively. In particular in 2002/2003, significant progress has been made in developing a Local Strategic Partnership “Southend Together”, adopting and implementing a risk management strategy and introducing a performance management framework. This has resulted in the launch of a community plan; formulation of corporate and departmental risk registers through the involvement of Members and Officers; the adoption of a corporate plan; the finalisation of departmental delivery plans; and the introduction of regular performance monitoring reports to Cabinet. There are certain aspects of the code of corporate governance that require further enhancement, in order to ensure that the Council is fully compliant. The main areas that require further enhancement as identified in the 2002/2003 annual review are: • The Council’s approach to consultation to provide a more co-ordinated and effective approach to consultation. • The performance management framework in particular the quality and format of performance monitoring information presented to senior officers and Members and further development of the links between the Council’s corporate objectives, departmental delivery plans and individual development plans. • Formalisation of the Council’s approach to providing and recording Member training. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 13
  • 17. STATEMENT OF INTERNAL CONTROL We propose over the coming year to take steps to address the above 3 matters to further enhance our corporate governance arrangements. We are satisfied that these steps will address the need for improvements that were identified and will monitor their implementation and operation as part of our next annual review. Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 14
  • 18. STATEMENT OF INTERNAL CONTROL 3. Risk management processes and Internal controls The Council has approved and adopted a risk management strategy and “controls assurance” process formalising the Council’s responsibility for maintaining a sound system of internal controls (including financial controls) and risk management processes and for ensuring that these systems are regularly reviewed to ensure effectiveness. The system of internal controls is based on an ongoing process designed to identify the principal risks that threaten the achievement of corporate and departmental objectives, to evaluate the nature and extent of those risks and to manage them. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve the Council’s objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The Council’s review of the effectiveness of the systems of internal controls and risk management processes for 2002/2003 is informed by a) Self certification assurance statements (relating to 2002/2003) provided by Directors and Assistant Directors based on their review of the (i) Adequacy and effectiveness of officer review processes (ii) Outcomes from formal risk assessments and departmental risk registers (iii) Relevant self-assessments of key service areas within the department (iv) Relevant internal audit reports and results of follow ups regarding implementation of recommendations (v) Outcomes from reviews of services by other bodies including, Inspectorates, external auditors etc b) The report of the Assistant Chief Executive relating to the effectiveness of the Council’s risk management and corporate governance processes c) The work of Internal Audit and the Chief Internal Auditor’s independent annual opinion to Cabinet relating to the adequacy and effectiveness of the Council’s system of internal controls and risk management processes. d) The work of the external auditors and comments in their annual management letter and other reports This review has identified certain areas where internal controls have needed or still need to be enhanced. These areas have been detailed in the corporate risk register, departmental risk registers and Directors’/Assistant Directors’ controls assurance statements and actions assigned to enhance controls over the coming year. We are satisfied that these actions will strengthen controls and will monitor their implementation and operation as part of the Council’s next annual review. We are satisfied that except for these matters a sound system of internal control has been in place throughout the financial year and is ongoing. By Order of the Council ………………………………………… ………………………………………. Councillor H.P. Briggs J.K.M. Krawiec Leader of the Council Chief Executive and Town Clerk on behalf of Southend-on-Sea Borough Council Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 15
  • 19. STATEMENT OF INTERNAL CONTROL 2001/2002 2002/2003 2002/2003 2002/2003 Ne t Gross Gross Ne t Expe nditure Expe nditure Income Expe nditure £000's £000s £000s £000s Expe nditure on Se rvice s 3,662 Central Services to the Public 33,143 (29,689) 3,454 24,226 Cultural, Environmental and Planning 43,871 (17,656) 26,215 98,397 Education 139,319 (41,292) 98,027 6,633 Highways, Roads and T ransport 16,367 (9,349) 7,018 10,092 Housing 71,076 (61,197) 9,879 36,029 Social Services 65,459 (26,922) 38,537 2,743 Corporate and Democratic Core 2,999 0 2,999 1,860 Unapportionable Central Overheads 1,931 0 1,931 183,642 NET C O ST O F SERVIC ES 374,165 (186,105) 188,060 6,186 Levies (Note 1) 6,510 6,510 92 Leigh-on-Sea T own Council Precept 101 101 31 Council T ax subsidy limitation scheme 0 0 41 (Surpluses)/deficits on trading undertakings (Note 6) 54 54 2,511 Deferred charges 2,748 2,748 (29,465) Asset Management Revenue Account (Note 8) (28,489) (28,489) (1,208) Interest and Investment Income (1,268) (1,268) 161,830 NET O PERATING EXPENDITURE 383,578 (215,862) 167,716 APPRO PRIATIO NS 1,150 T ransfer to HRA balances 1,857 (8,021) Contribution to capital financing reserve (Note 9) (7,891) 1,013 Deferred liability 973 2,565 Revenue Contribution to Capital Financing 5,449 1,084 Contribution to/(from) Specific Revenue Reserves (2,256) AMO UNTS TO BE MET FRO M GO VERNMENT 159,621 GRANTS AND LO C AL TAXATIO N 165,848 (69,224) Revenue Support Grant (66,133) (49,684) Distribution from NDR Pool (54,418) (41,130) Demand on Collection Fund (43,196) (283) Collection Fund Surplus (Note 14) (404) (160,321) (164,151) (700) NET GENERAL FUND (SURPLUS)/DEFIC IT 1,697 (5,748) Balance on Ge ne ral Fund Brought Forward (6,381) (700) Net General Fund Deficit/(Surplus) 1,697 67 Contribution to/(from) Specific Revenue Reserves 686 (6,381) Balance on Ge ne ral Fund C arrie d Forward (3,998) Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 16
  • 20. NOTES TO THE CONSOLIDATED REVENUE ACCOUNT Note 1. Levies 2001/2002 2002/2003 £000's £000's Essex Fire Authority 4,824 5,106 Essex Local Flood Defence Committee 1,042 1,055 Essex M agistrates' Court Committee 185 185 Coroner's Courts 118 147 Kent and Essex Sea Fisheries Committee 17 17 Total Levies 6,186 6,510 Note 2. Expenditure on Publicity Section 5 of the Local Government Act 1986 requires a local authority to keep a separate account of its expenditure on publicity. 2001/2002 2002/2003 £000's £000's M arketing Expenditure 254 274 Income (21) (15) Net Marketing Expenditure 233 259 Advertising Staff 372 422 General 479 581 Net Advertising Expenditure 851 1,003 Total Publicity Expenditure 1,084 1,262 Note 3. Contributions to Joint Committees and Joint Bodies Southend-on-Sea Borough Council has contributed £0.3m towards the cost of Magistrates and Coroner’s Services. Southend-on-Sea Borough Council is a constituent member of the combined Fire Authority for Essex and as such is responsible for meeting its proportion of the cost of the service (£5.1m).
  • 21. NOTES TO THE CONSOLIDATED REVENUE ACCOUNT Note 4. Officers’ Emoluments The number of employees, including teachers, whose remuneration, excluding pension contributions, was £50,000 or more. 2001/2002 2002/2003 No. No. S taff S taff Remuneration £50,000 to £59,999 27 20 £60,000 to £69,999 9 22 £70,000 to £79,999 4 4 £80,000 to £89,999 1 5 £90,000 to £99,999 1 1 £100,000 to £109,999 1 1 £110,000 to £119,999 1 0 £120,000 to £129,999 1 0 £130,000 to £139,999 0 1 Total 45 54 Overall there has been an increase of 9 staff falling into these remuneration bands, mainly due to increased remuneration through increments and cost of living increases. The 54 staff included 26 at schools and the Adult College (2001/2002 – 20 at schools and the Adult College). This table includes any severance payments that have been made in either of the two years. Note 5. Pensions In 2002/2003 the council paid an employers contribution of £5.546m, based on 13.80% (2001/2002 - £4.829m based on 13.06%) of participating employees pensionable pay, into the Essex County Council Pension Fund, which provides members with defined benefits related to pay and service. The contribution rate is based on triennial actuarial valuations, the last valuation being as at 31st March 2001 (this rate applies for 3 years from 1 st April 2002). The increase in contribution for 2002/2003 is due to an increase in the deficiency contribution of £165,000 and an increase in employers contributions of £552,000 as a result of pay awards, increments and changes in staffing levels, and an increase in the employers contribution rate. The Fund’s Actuary has advised that the pension costs necessary to provide for in the year in accordance with S.S.A.P. 24 “Accounting for Pension Costs” should be 14.22% of pensionable pay (2001/2002 – 13.05%). In 2002/2003 this amounted to £5.714m (2001/2002 - £4.825m). This amount would have had to have been provided for in the year in order to meet future pension liabilities on a systematic and rational basis over the period which the Council derives benefit from its employees’ services. This information was provided after the end of the financial year, the £5.546m actually paid was based on an estimated position when the budget was prepared. In addition, the Council is also responsible for all pension increases and added year’s payments totalling £0.674m (2001/2002 - £0.650m), which represents 1.68% of pensionable pay (2001/2002 – 1.76%). The capital cost of discretionary increases in pension payments and strain on the fund in 2002/2003 totalled £0.035 m. The cost in relation to earlier years, for which payments are still being made, totalled £6.897m (2000/2001 - £6.715m). The transitional period disclosures relating to FRS17 are disclosed in note 13 to the Consolidated Balance Sheet.
  • 22. NOTES TO THE CONSOLIDATED REVENUE ACCOUNT Teachers Pensions In 2002/2003 the Council paid £3.578m at a contribution rate of 8.35% (2001/2002 - £2.912m at a contribution rate of 7.40%) to the Department for Education and Skills in respect of teachers’ pension costs. Added years payments awarded in respect of the teachers’ pension scheme were £23,210. Note 6. Trading Undertakings 2001/2002 2002/2003 £000's £000's The Building Services Division Turnover 3,386 3,580 provides a repairs and maintenance service to the Authority's housing stock and undertakes a Expenditure 3,352 3,532 small amount of work for other public bodies S urplus (34) (48) The Amenity Services Organisation Turnover 1,100 1,285 provides a grounds maintenance service to the Authority and carries out a small Expenditure 1,259 1,427 amount of work for other public bodies Deficit 159 142 The Personnel section provides Turnover 84 78 an advisory service to schools Expenditure 60 90 (S urplus)/Deficit (24) 12 Building control (see note 15) Turnover 323 396 Expenditure 263 344 S urplus (60) (52) Total deficit/(surplus) on trading activities 41 54 Losses incurred on the Amenity Services Organisation contracts should cease in 2003/2004 due to the full year effect of new contracts started on 1st January 2003.
  • 23. NOTES TO THE CONSOLIDATED REVENUE ACCOUNT Note 7 Government Grants Significant Government Grants received towards revenue expenditure during the year were as follows: 2001/2002 2002/2003 £000's £000's Office of Deputy Prime Minister Revenue Support Grant 69,224 66,133 Distribution from N.D.R. Pool 49,684 54,418 Housing Subsidy 12,133 12,326 N.D.R. Cost of Collection 261 261 Department for Work and Pensions Housing and Council Tax Benefit 33,902 35,596 Housing Benefit Administration 655 728 Total Government Grants 165,859 169,462 Note 8. Asset Management Revenue Account This account consolidates interest payable on loans and depreciation with the charges made to services for the use of assets. The balance on this account is transferred to Revenue Account. The impact of the capital charges, which are calculated on a notional basis, is therefore nil. 2001/2002 2002/2003 £000's £000's Expenditure External Interest 3,910 4,645 Depreciation 7,131 7,378 11,041 12,023 Less: Capital charges made to services (40,506) (40,512) Income to Revenue Account (29,465) (28,489)
  • 24. NOTES TO THE CONSOLIDATED REVENUE ACCOUNT Note 9. Contribution to Capital Financing Reserve The net amount charged to the revenue accounts in compliance with the statutory requirement for the repayment of external loans is: 2001/2002 2002/2003 £000's £000's General Fund 1,037 1,696 Housing Revenue Account 584 539 Minimum Revenue Provision 1,621 2,235 Less: Deferred charges (2,511) (2,748) Amount Charged as Depreciation (7,131) (7,378) Provision for Repayment of External Loans (8,021) (7,891) The Council is required to set-aside a minimum revenue provision (MRP) for the redemption of external debt. The method for calculating the provision is defined by statute and for 2002/2003 the amount is £2,235,000, and this amount has been charged to revenue as a depreciation charge for the fixed assets relating to services. Note 10. Leased Assets – Rentals The rentals relating to outstanding leases are:- Finance Operating Leases Leases £000's £000's Total Rentals Paid in 2002/2003 1 564 Outstanding undischarged Leasing Obligations · 2003/2004 1 426 · 2004/2005 1 276 · 2005/2006 1 142
  • 25. NOTES TO THE CONSOLIDATED REVENUE ACCOUNT Note 11. Related Party Transactions The Council is required to disclose material transactions with related parties. These are bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Central Government Details of significant transactions with Government Departments are set out in Note 7 to the consolidated revenue account and in note 1 to the cash flow statement. Members of the Council A Member was the chairman of an organisation which received grant of £23,409 from the Council. A Member was related to the secretary of an organisation which received grant of £138,484 from the Council A Member was president of a group which received grant of £500 from the Council A Member was chairman of a panel which received grant of £526 from the Council A Member was a director of an organisation which received £138,484 from the Council Other Public Bodies The Council paid a precept to the Essex Police Authority of £4,562,000 Other levies are set out in note 1 to the consolidated revenue account Other Organisations Grants made to voluntary organisations which fund at least 20% of their expenses are: Age Concern received a grant of £23,409 Southend Pier Museum Trust received a grant of £10,000. The Citizens Advice Bureau received a grant of £133,434. DIAL received a grant of £10,000. The So Speak Group received a grant of £18,984. HARP received a grant of £104,321 Note 12. Members Allowances A full list of members’ allowances will be published in Civic News. Note 13. Local Authority (Goods and Services) Act 1970 The Council is empowered by this Act to provide goods and services to other public bodies. The Authority provided grounds maintenance to Foundation, Independent and Voluntary Aided Schools and the Essex Magistrates Court Committee, income from these services amounted to £13,272. The Authority also provided building maintenance service to other public bodies, income from this service totalled £22,324. Note 14. Collection Fund Surplus 2001/2002 2002/2003 £000's £000's Council Tax 256 404 Community Charge 27 0 Collection Fund S urplus 283 404
  • 26. NOTES TO THE CONSOLIDATED REVENUE ACCOUNT Note 15. Building Control Fees Under regulation 5(6) of the 1998 Charges Regulations the authority is required to ensure that income received from building control fees fully recovers the costs over a three-year rolling period. Although there was a deficit in the first year (1999/2000) of £7,000, for the three-year period from 2000/2001 to 2002/2003, income received from building control fees exceeds the costs by £172,000. This is the fourth year in which the regulations apply. The surplus generated for 2002/2003 was £52,000 as follows:- Trading Non- Total Account Trading 2002/2003 2002/2003 2002/2003 £000's £000's £000's Income Building regulations 396 0 396 M iscellaneous charges 0 7 7 Total turnover 396 7 403 Expenditure Employees 199 144 343 Transport 11 8 19 Supplies and services 43 9 52 Central and support services 91 66 157 Total expenditure 344 227 571 (S urplus)/deficit for year (52) 220 168 st Balance at 31 March 2002 (113) st Surplus for year ended 31 M arch 2003 (52) st Balance at 31 March 2003 (165)
  • 27. HOUSING REVENUE ACCOUNT 2001/2002 2002/2003 £000’s £000’s INCOME 16,019 Dwelling rents (gross) 16,751 379 Non dwelling rents (gross) 339 1,119 Charges for services and facilities 1,253 12,133 Housing Revenue Account subsidy (Note 3) 12,326 29,650 TOTAL INCOME 30,669 EXPENDITURE 4,311 Repairs and M aintenance 4,410 5,232 Supervision and M anagement 5,505 363 Rents, rates, taxes and other charges 372 12,029 Rent Rebates 12,409 0 Provision for bad or doubtful debts (Note 4) 188 40 Stock transfer 0 Capital charges 10,281 Cost of capital charges (Note 5) 10,093 4,394 Depreciation on dwellings 4,318 53 Depreciation on other assets 54 40 Debt management expenses 40 36,743 TOTAL EXPENDITURE 37,389 7,093 NET COS T OF S ERVICES 6,720 (10,281) Cost of capital charge (10,093) 2,084 Loan interest payable 1,755 (486) Interest receivable (488) (1,590) NET OPERATING EXPENDITURE / (INCOME) (2,106) APPROPRIATIONS 250 Revenue contribution to capital 0 584 HRA set aside 539 (394) Transfer to / (from) major repairs reserve (290) (1,150) NET S URPLUS (1,857) HOUS ING REVENUE ACCOUNT BALANCE (6,703) Balance Brought Forward (7,853) (1,150) Surplus for year (1,857) (7,853) WORKING BALANCE (9,710) (2,028) MAJOR REPAIRS RES ERVE (Note 6) (4,472) (9,881) TOTAL AVAILABLE FUNDS (14,182)
  • 28. NOTES TO THE HOUSING REVENUE ACCOUNT Note 1. Analysis of Housing Stock Number of Number of Properties Properties 2001/2002 2002/2003 Houses (inc. Bungalows) 2,261 2,204 Flats 4,277 4,261 st S tock at 31 March 6,538 6,465 Note 2. Rent Arrears Cumulative rent arrears in respect of H.R.A. properties at 31st March 2003 including service charges and water were £1.395m. (At 31st March 2002 - £1.333m). Note 3. Government Subsidy Housing S ubsidy Calculation 2001/2002 2002/2003 £000’s £000’s Housing Subsidy 8,080 8,244 M ajor Repairs Allowance 4,053 4,082 Government S ubsidy 12,133 12,326 Note 4. Provision for Bad and Doubtful Debts Additional provision for bad debts in 2002/2003 was £187,700. The provision stood at £1.108m at 31 st March 2003 (31st March 2002 - £1.032m). Debts amounting to £113,100 were written off (2001/2002 £172,100).
  • 29. NOTES TO THE HOUSING REVENUE ACCOUNT Note 5. Cost of Capital and Capital Asset Charges Capital charges are included in accordance with the item 8 credit and item 8 debit Government Determination for the Housing Revenue Account. Capital charges consist of depreciation and a notional interest charge. The latter reflects the benefit gained from the capital investment being tied up in a particular asset. Capital charges within the HRA are calculated as follows: (a) Cost of Capital – this requires that a charge be made to the HRA for the use of fixed assets. This is determined by applying a specified rate of interest (6%) to the net value at which the asset is held in the balance sheet at 31st March 2003. (b) Depreciation – a charge for depreciation has also been made covering dwellings. The Major Repairs Allowance (MRA) is used to represent a reasonable estimate of depreciation. Other buildings and non- operational assets are depreciated over 40 years. Land is not depreciated due to having an infinite life. 2001/2002 2002/2003 £000’s £000’s £000’s £000’s Item 8 Debit Cost of Capital 10,281 10,093 Depreciation Council Dwellings 4,394 4,318 Non-Council Dwellings 53 4,447 54 4,372 Debt M anagement 40 40 Capital Accounting Adjustment (10,281) (10,093) Loan Interest Payable 2,084 1,755 Appropriation from M ajor Repairs Reserve (394) (290) Item 8 Credit Interest Receivable (486) (488) Net Effect on HRA 5,691 5,389 Note 6 Major Repairs Reserve 2001/2002 2002/2003 £000's £000's st Balance at 1 April 2002 0 2,028 Transfers in 4,448 4,372 Used to fund capital (Council dwellings) (2,026) (1,638) Capital Accounting Adjustment (394) (290) st Balance at 31 March 2003 2,028 4,472
  • 30. NOTES TO THE HOUSING REVENUE ACCOUNT Note 7 Fixed Assets The Fixed Assets for the Housing Revenue Account are as follows: Council Other Land Infra- Non- TOTAL Dwellings & Buildings S tructure Operational £000's £000's £000's £000's £000's st Gross Book Value as at 31 March 2002 175,369 2,551 2,026 76 180,022 Additions 3,678 0 0 0 3,678 Disposals (2,628) 0 0 0 (2,628) Revaluation (3,678) 0 0 (65) (3,743) st Gross book value as at 31 March 2003 172,741 2,551 2,026 11 177,329 Depreciation b/fwd (4,384) (333) (91) (1) (4,809) Depreciation for current year (4,318) (43) (11) 0 (4,372) Depreciation on assets sold 65 0 0 0 65 Depreciation on revalued assets 0 0 0 0 0 Depreciation c/fwd (8,637) (376) (102) (1) (9,116) st Net Book Value as at 31 March 2003 164,104 2,175 1,924 10 168,213 The assets are shown at existing use value to reflect the fact that they are used for social housing and are less than market value.
  • 31. COLLECTION FUND 2001/2002 2002/2003 2002/2003 £000's £000's £000's INCOME 38,509 Income from Council Tax (Note 1) 41,141 36,929 Income collectable from Business Ratepayers (Note 2) 33,658 Transfers from General Fund 6,663 Council Tax Benefits 6,870 Contributions 14 Residual Community Charge (Note 3) 7 82,115 81,676 EXPENDITURE Precepts and Demands 4,167 Essex Police Authority 4,562 41,130 Southend-on-Sea Borough Council 43,196 47,758 Business Rate 36,668 Payment to National Pool 33,397 261 Cost of Collection Allowance 261 33,658 Provisions (100) Council Tax Appeals & Non-collection (Note 4) (300) 82,126 81,116 (11) S urplus/(Loss) for the year 560 Appropriation of Reserves (256) Council Tax – Southend-on-Sea Borough Council (404) (26) Council Tax – Essex Police Authority (41) (27) Community Charge-Southend-on-Sea Borough Council 0 (445) 698 Balance as at 1st April 378 st 378 Balance as at 31 March (Note 5) 493
  • 32. NOTES TO THE COLLECTION FUND Note 1. Income from Council Tax Council Tax derives from charges raised according to the value of residential properties, which have been classified into 8 valuation bands using estimated 1st April 1991, values for this specific purpose. Individual charges are calculated by estimating the amount of income required to be taken from the Collection Fund by Essex Police Authority and Southend-on-Sea Borough Council for the forthcoming year and dividing this by the council tax base. The basic amount for a Band D property (£823.18 for the Leigh-on-Sea Town Council area and £811.37 for all other parts of the Borough) is multiplied by the proportion specified for the particular band to give an individual amount due. The number of chargeable dwellings for council tax in each valuation band (adjusted for dwellings where discounts apply) for the year was as follows: Band Number Ratio Equivalent of Number of Dwellings Dwellings A* 31 5/9 17 A 12,518 6/9 8,345 B 12,528 7/9 9,744 C 19,484 8/9 17,319 D 10,770 9/9 10,770 E 5,759 11/9 7,039 F 3,213 13/9 4,641 G 1,355 15/9 2,258 H 52 18/9 105 65,710 60,238 Less: Adjustment for collection of rates and anticipated changes during the year for successful appeals against 1,501 valuation banding, new properties, demolitions, disabled persons relief and exempt properties. * Reductions for band A disabled. Council Tax Base 58,737 Note 2. Non-Domestic Rates Non Domestic Rates are organised on a national basis. The Government specified an amount 43.7p in 2002/2003 (2001/2002 - 43.0p) and, subject to the effects of transitionary arrangements, local business’s pay rates that are calculated by multiplying their rateable value by that amount. The Council is responsible for collecting rates due from the ratepayers in its area but pays the proceeds into an NDR pool administered by the Government. The Government redistributes the sums paid into the pool back to local authorities’ General Funds on the basis of a fixed amount per head of population. After relief and provisions, the NDR income collectable was £33,657,670 for 2002/2003 (2001/2002 - £36,929,379). The year end rateable value for the Council’s area was £88,335,359 (31st March 2002 - £90,138,774). Note 3. Residual Community Charge This is net income received during the year relating to Community Charge outstanding accounts.
  • 33. NOTES TO THE COLLECTION FUND Note 4. Council Tax Appeals and Non-Collection There was a reduction of £300,000 (2001/2002 - £100,000 decrease) in the provision for bad and doubtful debts for Council Tax. Note 5. Collection Fund Balance Any surplus or deficit on the Collection Fund as a result of community charge accrues to the Council and reduces or increases the amount of the borough Council Tax in subsequent years. Of the £493,000 surplus on the Collection Fund at 31st March 2003, £19,000 is attributable to Community Charge collection and will be available in subsequent years to reduce the borough Council Tax. The balance of £474,000 on the Collection Fund, remaining after adjusting for the Community Charge surplus will be split between Essex Police Authority and this Council, in proportion to the value of the respective precept demands made by the two authorities on the Collection Fund and will be reflected in future year’s Council Tax. st st 31 March 31 March 2002 2003 £000’s £000’s Council Tax - Southend-on-Sea Borough Council 333 429 Council Tax - Essex Police Authority 34 45 Community Charge - Southend-on-Sea Borough Council 11 19 Total 378 493 Note 6. Uncollectable Debts Uncollectable debts of £479,600 (2001/2002 - £503,000) for council tax and £294,850 (2001/2002 - £394,400) for non- domestic rates were written off in 2002/2003.
  • 34. CONSOLIDATED BALANCE SHEET st st 31 March 2002 31 March 2003 £000's FIXED AS S ETS £000's Operational Assets (Note 1) 171,602 - Council Dwellings 164,669 359,709 - Other Land and Buildings 441,270 1,502 - Vehicles, Plant, Furniture and Equipment 1,733 17,293 - Infrastructure 21,765 289 - Community Assets 4,087 11,559 - Non-operational Assets 11,610 561,954 Total Fixed Assets 645,134 108 Long Term Investments (Note 3) 108 Long Term Debtors 177 - M ortgages 143 146 - Other 102 562,385 Total Long Term Assets 645,487 CURRENT AS S ETS 576 Stocks and Works in Progress 205 18,765 Debtors (net of bad debt provision) (Note 4) 24,298 1,759 Prepayments 1,088 61,631 Investments (Short Term) (Note 3) 63,801 8,249 Cash at bank and in hand 7,695 90,980 Total Current Assets 97,087 CURRENT LIABILITIES (164) Short Term Borrowing (Note 6) (14) (26,276) Creditors (Note 5) (26,168) (2,025) Cash overdrawn (1,528) 62,515 Total Assets less Current Liabilities 69,377 (62,962) Long Term Borrowing (Note 6) (79,774) (24,319) Deferred Liability (Note 7) (23,346) (892) Provisions (Note 8) (920) 536,727 Total Assets less Liabilities 610,824 Reserves 474,224 Fixed Asset Restatement Reserve (Note 9) 533,880 11,115 Capital Financing Reserve (Note 10) 24,147 8,277 Useable Capital Receipts Reserve (Note 11) 8,322 2,028 M ajor Repairs Reserve 4,472 20,455 Specific Reserves (Note 14) 18,757 1,177 Trust Funds (Note 15) 1,381 Balances 6,381 General Fund 3,998 4,623 Schools Balances - Revenue 4,852 216 - Capital 812 7,853 H.R.A. 9,710 378 Collection Fund 493 536,727 Total Equity 610,824
  • 35. Expenditure and disposals during the year were as follows: Note 1 Movement in Fixed Assets Council Other Land Vehicles, Plant, Infra- Community Non- TOTAL Dwellings & Buildings Furniture & S tructure Assets Operational Equipment £000's £000's £000's £000's £000's £000's £000's Gross Book Value as at st 31 March 2002 176,018 376,838 2,080 19,530 289 11,966 586,721 Additions 3,678 15,536 2,350 16,458 0 0 38,022 Disposals (2,628) (46) 0 (137) (2,811) Revaluation (3,717) 62,011 (1,925) (11,217) 3,798 308 49,258 st Gross book value as at 31 173,351 454,339 2,505 24,771 4,087 12,137 671,190 March 2003 Depreciation b/fwd (4,416) (17,129) (578) (2,237) 0 (407) (24,767) Depreciation for current year (4,334) (6,320) (194) (770) 0 (132) (11,750) Depreciation on assets sold 66 3 0 0 0 12 81 Depreciation on revalued assets 2 10,377 0 1 0 0 10,380 Depreciation c/fwd (8,682) (13,069) (772) (3,006) 0 (527) (26,056) st Net Book Value as at 31 March 2003 164,669 441,270 1,733 21,765 4,087 11,610 645,134 The net fixed assets at 31st March analysed by fund is shown below: Council Other Land Vehicles, Plant, Infra- Community Non- TOTAL Dwellings & Buildings Furniture & S tructure Assets Operational Ne t Fixe d Asse ts by Fund Equipment £000's £000's £000's £000's £000's £000's £000's General Fund 565 439,095 1,733 19,841 4,087 11,600 476,921 Housing Revenue Account 164,104 2,175 0 1,924 0 10 168,213 Total Ne t Fixe d Asse ts 164,669 441,270 1,733 21,765 4,087 11,610 645,134
  • 36. Source of Financing Reconciliation of Capital Expenditure st st 31 March 2002 31 March 2003 £000's £000's Cap ital exp enditure capitalised as fixed assets 18,121 35,274 Cap ital exp enditure not giving rise to additions to fixed assets 2,511 2,748 20,632 38,022 Cap ital creditors 261 0 Total Capital Expenditure 20,893 38,022 Total cap ital expenditure comprising:- Housing Services 4,148 4,805 General Fund Services 16,745 33,217 Total Capital Expenditure 20,893 38,022 Financed by:- Usable capital receipts 673 1,307 Revenue contributions:- • Revenue 292 854 • General reserves 2,273 4,874 • M ajor rep airs reserve 2,026 1,638 • Third Party 601 840 • Capital Grant 4,776 9,968 11,974 20,180 Loan: • Basic Credit App roval 3,539 8,532 • Supplementary Credit Approval – GF 6,713 10,252 8,003 16,535 Total Capital Expenditure 20,893 38,022
  • 37. a) Analysis of Fixed Assets: Southend-on-Sea Borough Council owned the following assets: st st 31 March 31 March 2002 2003 No. No. Council Dwellings: - Houses 2261 2204 - Flats 4112 4096 - Shared Dwellings 165 165 Shops 40 40 Schools (excluding foundation schools) 42 42 Pupil Referral Unit 0 1 Libraries 7 7 Training Centres 3 3 Residential Care Homes - Learning Disabilities 3 3 - Older People 3 3 Office - Family Finders 1 1 Family Centre 1 1 Civic Centre 1 1 Depots 1 1 Swimming Pool 1 1 Crematorium 1 1 Cemeteries 3 3 M useums and Galleries 4 4 Day Centres 1 1 Pier 1 1 Car Parks: - Surface 27 27 - M ulti-storey 3 3 Parks and Open Spaces 75 75 Industrial Estates 5 5 Community Centres 9 9 Bus Station 1 1 Theatres and Entertainment centres 2 2 Airport 1 1
  • 38. b) Capital Expenditure Summary of Capital Expenditure: General Fund £000 Education and Lifelong Learning 10,012 Local Transport Plan 7,848 Sea Defences 4,968 Southend Pier 2,697 Regeneration - Objective 2 1,907 Health & Social Care 1,441 Schools devolved capital * 1,213 Highway Schemes 1,085 Cliffs Slippage near Bandstage 347 Airport * 338 Parks and Gardens 317 Peoples Network Programme 244 Public Toilet Refurbishments 236 Sport and Recreation 196 Refurbishment of Registry Office 130 CCTV 75 Electronic Government 60 Royal Village Nursery* 60 Other 43 Total 33,217 Items marked * denotes expenditure not giving rise to additions to fixed assets.
  • 39. Housing S ervices £000 Renovation/Disabled Facility Grants* 1,036 Boiler Replacements 728 Electrical Rewiring 548 Kitchen Renewals 419 Sheltered Bedsit Conversion 412 Bathroom Renewals 227 Window and Door Replacements 194 External Door Replacements 173 Bournemouth Park Road 169 Warden Call System 115 High Rise Flats Repairs 100 Door Entry System 95 Local Authority Social Housing Grant (to Shaftesbury Housing Association)* 91 Fire/Smoke Alarms & Fire Prevention 78 Structural Survey/Asbestos removal 77 Roofing and Balconies 75 Central Heating 64 Estate Improvements 57 Lifts 50 Disabled Adaptations 25 Town Centre Landscaping 14 Other smaller schemes 14 M astic Renewal - Panel Joints 13 M icro Film Conversions 12 Garage Demolition* 10 Drainage Blyth Avenue 9 Total 4,805 Items marked * denotes expenditure not giving rise to fixed assets.
  • 40. Note 2. Deferred Charges The Councils policy is to write off all deferred charges to the revenue account in the year expenditure was incurred. st st 31 March 31 March 2002 2003 £000's £000's General Fund Airport 673 338 Royal Village Nursery 0 60 Schools Devolved Capital 822 1,213 Housing S ervices Local Authority Social Housing Grant 0 91 Renovation/Disabled Facility Grants 1,006 1,036 Assisted Purchase Scheme 9 0 Garage Demolition 1 10 Total Deferred Charges 2,511 2,748 Note 3. Investments a) Long Term Investments st st 31 March 31 March 2002 2003 £000's £000's Association of District Councils Property Ltd. Debenture 100 100 Essex & Herts Provincial Council-Flempton House 8 8 Total Long Term Investments 108 108 b) Short Term Investments st st 31 March 31 March 2002 2003 £000's £000's Investments in the money markets 13,300 13,000 Investments managed by Morley Fund Management 24,334 25,610 Investments managed by Scottish Widows Investment Partnership Ltd 23,997 25,191 Total Short Term Investments 61,631 63,801
  • 41. Note 4. Debtors st st 31 March 31 March 2002 2003 £000's £000's Central Government 2,793 6,694 Local Authorities 1,525 1,587 Housing Rents 1,333 1,395 Taxation 2,067 2,866 General 11,565 12,844 Council Taxpayers 4,349 3,858 N.D.R. Payers 1,279 1,218 Schools 512 1,434 Bad Debt Provision (6,658) (7,598) Total Debtors 18,765 24,298 Note 5. Creditors st st 31 March 31 March 2002 2003 £000's £000's Central Government 1,244 720 Local Authorities 1,367 2,226 Taxation 1,646 1,819 General 12,066 11,717 General Receipts - In Advance 5,868 4,549 N.D.R. In Advance 345 1,012 Council Tax- Paid in Advance 877 978 Schools 2,863 3,147 Total Creditors 26,276 26,168
  • 42. Note 6. Borrowing Analysis of borrowing – other than temporary Short Term Borrowing st st 31 March 31 March Analysis of Loans by Type 2002 2003 £000's £000's Short Te rm De bt Maturing Within O ne Ye ar 164 14 Long Term Borrowing st st 31 March 31 March Analysis of Loans by Type 2002 2003 £000's £000's Public Works Loans Board 62,874 79,774 European Loans 88 0 Total Long Term Borrowing 62,962 79,774 st st 31 March 31 March 2002 2003 £000's £000's Between 1 and 2 Years 54 0 Between 2 and 5 Years 34 0 Between 5 and 10 Years 7,150 7,150 M ore Than 10 Years 55,724 72,624 Total Long Term Borrowing 62,962 79,774 Note 7. Deferred Liability This is owed to Essex County Council in respect of assets transferred to this Council in 1998 at Local Government Reorganisation. As defined by statute this Council is required to pay, each year, to Essex County Council an amount equal to the interest charges that they have incurred on this debt together with the amount of Minimum Revenue Provision (MRP) that they have set aside towards repayment of the principle. The balance outstanding at 31 st March 2003 was £23.346m (31st March 2002 - £24.319m) The amount of MRP repaid in the year was £0.973m and interest charges were £1.302m. Note 8. Provisions st st 31 March Transfers Transfers 31 March 2002 to from 2003 £000's £000's £000's £000's Insurance 850 658 (634) 874 Equipment 42 10 (6) 46 Total Provisions 892 668 (640) 920 The insurance provision is to provide for the level of excess on claims, which is met by the Council, and is expected to be paid in 2003/04.
  • 43. NOTES TO THE CONSOLIDATED BALANCE SHEET Note 9. Fixed Asset Restatement Reserve st st 31 March 31 March 2002 2003 £000's £000's Surplus on revaluation and restatement of fixed assets 477,141 474,224 Revaluations 336 62,385 Disposal of Fixed Assets (3,253) (2,729) Closing Balance 474,224 533,880 Note 10 Capital Financing Reserve st st 31 March 31 March 2002 2003 £000's £000's Opening Balance 9,403 11,115 Deferred Liability 1,013 973 Capital Receipts Set Aside 2,527 2,835 M inimum Revenue Provision less Depreciation (9,958) (9,515) Capital Expenditure Financed by:- Capital receipts 673 1,307 Revenue contributions 292 854 General reserves 2,273 4,874 M ajor repairs reserve 2,026 1,638 8,249 14,081 Capital Grant 4,776 11,974 Third Party 601 840 Less: Deferred Charges (2,511) (2,748) Closing Balance 11,115 24,147 The total capital receipts set aside, at 31 st March 2003, to repay debts are £6.012m for General Fund, £31.720m for the Housing Revenue Account. (At 31st March 2002, £5.921m for General Fund and £28.976m for the Housing Revenue Account).
  • 44. NOTES TO THE CONSOLIDATED BALANCE SHEET Note 11. Capital Receipts Reserve Useable Capital Receipts of £8.322m represent that proportion of capital receipts which may be used for new capital expenditure and is not required to be set aside in the provision for credit liabilities for the repayment of debt. st st Useable Capital Receipts 31 March Received Utilised 31 March 2002 2003 £000's £000's £000's £000's General Fund 4,755 436 (816) 4,375 H.R.A. 3,522 916 (491) 3,947 Total Capital Receipts Reserve 8,277 1,352 (1,307) 8,322 Of the useable capital receipts held by the General Fund at 31st March 2003 £2,224,248 is committed to the London Southend Airport for future development (31st March 2002 - £2,575,661). . Note 12. Provision for Credit Liabilities (Memorandum Account) st st 31 March 31 March 2002 2003 £000's £000's Opening Balance 29,626 33,750 Amount Set Aside for M inimum Revenue Provision (M RP) 1,621 2,235 Reserved Capital Receipts 2,527 2,835 33,774 38,820 Amount Applied to Repay Loans (24) (113) Closing Balance 33,750 38,707
  • 45. NOTES TO THE CONSOLIDATED BALANCE SHEET Note 13. Retirement Benefits Employees are admitted to the Essex County Council Pension Fund (the Fund), which is administered by Essex County Council under the Regulations governing the Local Government Pension Scheme, a defined benefit scheme (non- teaching employees are omitted). The figures disclosed below have been derived by approximate methods from the full actuarial valuation of the Fund carried out by Watson Wyatt as at 31st March 2001 The fair values and expected rate of return of each main class of assets held by the Fund as a whole, as at 1 st April 2002 and 31st March 2003 set out in the following table: st st Assets held by the Fund as a whole 31 March 2002 31 March 2003 Market Expected rate Market Expected rate value of return value of return £m % pa £m % pa Equities (UK) 1,387 7.50 1,080 8.50 Equities (Overseas) 0 7.50 0 8.50 Property 87 6.00 86 7.00 Fixed Interest Gilts 215 5.25 204 4.50 Index Linked Gilts 93 5.25 119 4.50 Other Bonds 0 6.00 0 5.50 Cash 59 4.50 36 4.00 Total 1,841 6.96 1,525 7.46 The main financial assumptions used as at 1st April 2002 and at 31st March 2003 were as follows: st st 31 March 2002 31 March 2003 % pa % pa Inflation Rate 2.50 2.50 Discount Rate (Pre Retirement) 6.10 6.10 Discount Rate (Post Retirement) 6.10 6.10 Expected Rate of Salary Increases 4.30 4.30 Rate of Pension Increases in Payment 2.50 2.50 Rate of Pension Increases in Deferment 2.50 2.50 The actuarial value of Fund liabilities, the market value of Fund assets and the resulting deficit for the part of the Fund relating to Southend-on-Sea Borough Council, as at 1st April 2002 and at 31st March 2003 were as follows: st st For the part of the Fund relating to S outhend-on-S ea Borough Council 31 March 2002 31 March 2003 £000's £000's Actuarial Value of Fund Liabilities 170,957 181,906 M arket Value of Fund Assets 138,059 114,839 Deficit in the Fund 32,898 67,067
  • 46. NOTES TO THE CONSOLIDATED BALANCE SHEET An analysis of the movements in the deficit for the part of the Fund relating to Southend-on-Sea Borough Council, during the financial year is set out in the following table: st 31 March 2003 £000's Deficit in the Fund at 1st April 2002 32,898 Current Service Cost 5,561 Curtailment Cost (Increase in Scheme Benefits above Original Estimate) 6 Interest on Pension Scheme Liabilities 9,037 Actuarial Loss 35,317 Less: Contributions Paid 6,059 Expected Return on Assets in the Pension Scheme 9,693 st Deficit in the Fund at 31 March 2003 67,067 For the part of the Fund relating to Southend-on-Sea Borough Council, the difference between the expected and actual return on assets was £35.3m, this was 30.75% of Fund assets at 31st March 2003. There were no experience gains or losses arising on the scheme liabilities at 31st March 2003, (this is where events occur which are outside the assumptions made in the actuarial valuation). The actuaries will determine the future contribution rate at the next actuarial valuation on 31st March 2004. Note 14. Specific Reserves The specific reserves comprise:- st st 31 March Transfers Transfers 31 March 2002 to from 2003 £000's £000's £000's £000's Repairs and Renewals 10,917 512 (83) 11,346 Capital 4,728 1,240 (3,424) 2,544 Insurance 2,532 659 (660) 2,531 Commuted Sums 248 10 (50) 208 Security 400 15 0 415 Leaseholder Repair 1,093 151 (471) 773 Other 537 528 (125) 940 20,455 3,115 (4,813) 18,757
  • 47. NOTES TO THE CONSOLIDATED BALANCE SHEET Note 15. Trust Funds The Trust Funds comprise: st st 31 March 31 March 2002 2003 £000's £000's The Shrubbery* 146 170 S. Thorpe Smith Bequest 24 25 Jones M emorial Recreation Ground* 87 90 Youth Commemoration Ground* 908 1,047 Emily Briggs Bequest 12 12 R.A. Jones in M emoriam 0 12 A.H. & M .E. Thatcher M emorial Fund 0 8 E.C.Jones Primary School Fund 0 15 E.D.F. Garvie M emorial Fund 0 2 1,177 1,381 * The accounts for these trusts are subject to specific audit or examination in accordance with the requirements of the Charity Commission. The Shrubbery is an area of Southend held in Trust by the Borough Council for the enjoyment of the public as an open space under the Open Spaces Act 1906. The S.Thorpe Smith bequest was a bequest made to the Council for the acquisition of works of art. The Jones Memorial Recreation Ground Trust was registered in 1973 and has as its object “The provision and maintenance of a recreation ground for the benefit of children and young persons who have not reached the age of 25 years and are resident in the district of Southend-on-Sea, without distinction of political, religious or other opinions.” The Youth Commemoration Ground Trust derives from a Deed of Trust dated 1st March 1954 between Edward Cecil Jones and the Corporation of the County Borough of Southend-on-Sea. Mr. Jones donated £6,000 to the Corporations (subsequently the Borough Council) to buy land, which became known as the youth Commemoration Ground. This ground has now been sold and the money used to replace the Youth Commemoration Ground at a different site and to part fund the cost of the Southend Leisure and Tennis Centre. A recoupment fund has been established in accordance with the requirements of the Charity Commission in order to provide funds (including interest) to replace the Trust fund money used towards the building of the Southend Leisure and Tennis Centre. The freehold of the building, some adjoining land, including the netball courts, and a subsidiary car park will be held by the Council as Trustee. Leases exist between Norman Garon Trustees and the Council as Trustee for the car parks and outdoor tennis courts. The Council owns the freehold of the running track. The Emily Briggs bequest, received in 1961, was a bequest made to the Council to be used for the purchase of works of art. During the year, following the resolution of outstanding issues, four trusts were transferred from Essex County Council: The R.A. Jones in Memoriam Fund was registered on 15th January 1980 with the objects of promoting the education of children attending primary schools, providing facilities for recreation or other leisure-time occupation, providing entertainment’s for furthering education of children.
  • 48. NOTES TO THE CONSOLIDATED BALANCE SHEET A.H. and M.E. Thatcher Memorial Fund was set up with a bequest from Mr. A.R. Thatcher for the purposes of providing an annual memorial scholarship or prize in the names of his parents Mr. A.H. and Mrs. M.E. Thatcher for the advancement of education. The E.C. Jones Primary School Fund was set up on the 9th August 1956 for the promotion and encouragement of education with income to be applied for the benefit of children attending primary schools within the meaning of the Education Act 1944 or any statutory amendment thereof. The E.D.F. Garvie Memorial Fund was set up by Mr D. Garvie, Mr J.H. Garvie and Mr. A.G. Garvie in memory of their mother Elizabeth Dorothy Findlay Garvie to promote and encourage education in the Special Schools in the Borough of Southend-on-Sea. 16 Other Trusts Southend-on-Sea Borough Council is responsible, as trustee under the various schemes of arrangements, for the upkeep and maintenance of the following: The Palace Theatre Charity, Beecroft Art Trust, Victory Sports Ground, Priory Park, Prittlewell Priory Museum. In addition to the above, the Council is also represented on the Palace Theatre Trust (Southend-on-Sea) Ltd and the Southend Pier Museum Trust Ltd. 17 Reporting In accordance with the requirements of The Charities Act 1993, individual trust accounts are prepared annually for the following trusts, using information from the Council’s accounts: Jones Memorial Recreation Ground Trust, Youth Commemoration Ground Trust, The Palace Theatre Charity, The Shrubbery, Beecroft Art Trust, Victory Sports Ground, Priory Park, Prittlewell Priory Museum. The accounts of the Youth Commemoration Ground Trust and Priory Park are subject to audit, and the others are subject to an independent examination. Hudson and Co. Chartered Accountants and Registered Auditors of 365 Rayleigh Road, Eastwood, SS9 5PS carry out this work. Copies of the accounts can be obtained from the Borough Treasurer.
  • 49. STATEMENT OF TOTAL MOVEMENT IN RESERVES A reserve is created by appropriating “below the line” from the Consolidated Revenue Account after net expenditure has been calculated. The reserve can by specifically earmarked or kept for general purposes. Unlike a provision no service expenditure is recognised in the revenue account until the year it is incurred. 2001/2002 2002/2003 £000 £000 S urplus/(Deficit) for the year 700 General Fund (1,697) 1,150 Housing Revenue Account 1,857 (645) Add back movements on specific revenue reserves 1,204 1,205 Total Increase in Revenue Resources 1,364 646 Increase in useable capital receipts 45 646 Total Increase in Realised Capital Resources (Note 1) 45 336 Gains on revaluation of fixed assets 62,385 336 Total Increase in Unrealised Value of Fixed Assets (Note 2) 62,385 (3,253) Value of Assets S old, Disposed of or Decommissioned (Note 2) (2,729) 3,200 Capital receipts set aside 4,142 (5,367) Revenue resources set aside (2,149) 5,377 M ovement on contributions and Government Grants Deferred 12,814 (1,498) Write-downs in Capital Financing Reserve (1,775) 1,712 Total Change in Amounts S et Aside to Finance Capital Investment (Note 3) 13,032 646 Total Recognised Gains and Losses 74,097
  • 50. STATEMENT OF TOTAL MOVEMENT IN RESERVES Note 1. Movements in Realised Capital Resources Capital Receipts are categorised between useable or set aside. The level of the useable proportion of an individual capital receipt depends upon the type of asset sold. The useable part of capital receipts is disclosed separately on the Consolidated Balance Sheet, whereas the set aside part is included within the Capital Financing Reserve. The details below show the movement of useable capital receipts for the year. 2001/2002 2002/2003 Useable Useable Capital Capital Receipts Receipts £000 £000 Movements in Realised Capital Resources 1,319 Amounts received 1,352 (673) Amounts applied to new capital investment (1,307) 646 Total Increase in Realised Capital Resources in Year 45 st 7,631 Balance as at 1 April 8,277 st 8,277 Balance as at 31 March 8,322 Note 2. Movements in Value of Fixed Assets The Fixed Asset Restatement Reserve is written down by the net book value of assets as they are disposed of. In addition, any increase or decrease in the valuation of an asset which is currently held is also charged to this account. 2001/2002 2002/2003 £000 £000 Movements in Unrealised Value of Fixed Assets 336 Gains on revaluation of fixed assets 62,385 336 Total Increase in Unrealised Capital Resources in Year 62,385 Value of Assets S old, Disposed of or Decommissioned (3,253) Amounts written off fixed asset balances for disposals (2,729) (2,917) Total Movement in Year 59,656 st 477,141 Balance as at 1 April 474,224 st 474,224 Balance as at 31 March 533,880
  • 51. STATEMENT OF TOTAL MOVEMENT IN RESERVES Note 3 Movements in Amounts Set Aside to Finance Capital Investment This statement combines the Capital Financing Reserve with the Contributions and Government Grants Deferred Account. • Capital Financing Reserve - this reserve contains the amounts which are required by statute to be set aside from capital receipts and revenue. It also contains the difference between amounts provided for depreciation and that required to be charged to revenue as the Minimum Revenue Provision. • Contributions and Government Grants Deferred Account – this account receives contributions and government grant credits relating to fixed assets. The credits are written off to the Asset Management Revenue Account. 2001/2002 2002/2003 Total Capital Contibutions Total Financing and Government Reserve Grants Deferred £000 £000 £000 £000 Capital Receipts S et Aside 2,527 Reserved receipts received 2,835 0 2,835 673 Usable receipts applied 1,307 0 1,307 3,200 Total Capital Receipts S et Aside 4,142 0 4,142 Revenue Resources S et Aside 292 Capital expenditure financed from revenue 854 0 854 2,026 Capital expenditure financed from major repairs reserve 1,638 0 1,638 2,273 Capital expenditure financed from specific reserves 4,874 0 4,874 Reconciling amount for provisions for loan repayment 1,620 Provision for repayment of external loans (M RP) 2,235 0 2,235 (11,578) Depreciation (11,750) 0 (11,750) (9,958) Total reconciling amount for provisions for loan repayment (9,515) 0 (9,515) (5,367) Total Revenue Resources S et Aside (2,149) 0 (2,149) Movement on Contributions and Government Grants Deferred 4,770 Grants applied to capital investment 0 11,533 11,533 6 Lottery Grant 0 441 441 601 Third Party Contributions 0 840 840 Total Movement on Contributions and Government 5,377 Grants Deferred 0 12,814 12,814 Write-downs to the Capital Financing Reserve 0 (2,511) Deferred Charges (2,748) 0 (2,748) 1,013 Deferred Liabilities 973 0 973 (1,498) Total Write-downs to the Capital Financing Reserve (1,775) 0 (1,775) Total increase in Amounts S et Aside to Finance 1,712 Capital Investment 218 12,814 13,032
  • 52. CONSOLIDATED CASH FLOW STATEMENT 2001/2002 2002/2003 £000's REVENUE ACTIVITIES £000's £000's Cash O utflows 88,640 Cash paid to and on behalf of employees 95,813 160,123 Other Operating Costs 181,729 30,058 Housing Benefits paid out 31,543 38,464 National Non-Domestic Rate Payments to National Pool 37,265 4,193 Precepts Paid 6,878 321,478 353,228 Cash Inflows (7,681) Rents (after rebates) (7,802) (39,850) Council T ax Income (42,786) (36,759) Non-domestic Rate Receipts (34,618) (49,684) Receipts from NDR Pool (54,418) (69,224) Revenue Support Grant (66,133) (34,901) Department of Work and Pensions Grants (Note 1) (34,406) (33,326) Other Government Grants (Note 1) (37,874) (63,471) Cash Received For Goods and Services (85,571) (334,896) (363,608) (13,418) Revenue Activities Net Cash Flow (Note 2) (10,380) SERVICING O F FINANCE Cash O utflows 3,896 Interest Paid 4,645 Cash Inflows (428) Interest Received (704) 3,468 Servicing of Finance Net Cash Flow 3,941 CAPITAL ACTIVITIES Cash O utflows 20,891 Purchase of Fixed Assets 38,022 20,891 38,022 Cash Inflows (3,897) Sale of Fixed Assets (4,218) (6,133) Capital Grants received (11,974) (261) Other Capital Cash Receipts (842) (10,291) (17,034) 10,600 Capital Activities Net Cash Flow 20,988 650 NET CASH (INFLO W)/O UTFLO W BEFO RE FINANCING (Note 3) 14,549 MANAGEMENT O F LIQ UID RESO URCES 8,631 Net increase in short term investments (Note 4) 2,170 8,631 Ne t Increase in Management of Liquid Resources 2,170 FINANCING Cash O utflows 1,274 Repayment of amounts borrowed 238 Cash Inflows (11,615) New Short-term Loans (16,900) (10,341) Financing Net Cash Flow (16,662) (1,060) (INCREASE)/DECREASE IN CASH AND CASH EQ UIVALENTS (Note 5) 57
  • 53. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT Note 1. Analysis of Government Grants st st 31 March 2002 31 March 2003 £000's £000's Department of Work and Pensions Grants Housing Benefits 28,190 27,233 Council Tax Benefits 6,711 7,173 Total Department of Work and Pensions Grants 34,901 34,406 Other Government Grants Housing Subsidy 11,524 11,772 Housing Benefit Administration 581 682 N.D.R. Costs of Collection 261 260 Three Year Old grant 1,200 1,493 Standards Funds 4,038 4,869 Recoupment 1,155 0 Schools Standard grant 2,050 2,126 Class Size Initiative 476 579 Threshold Funding 972 1,507 Learning and Skills Council 1,671 590 Other Education grants 67 585 M andatory Awards 312 259 Verification Framework 219 209 Asylum Seekers 2,788 1,778 Promoting Independence Partnership 1,206 618 M ental Health grant 556 560 Children's Services grants 1,098 1,808 Building Care Capacity grant 566 1,190 Preserved Rights grant 0 2,913 Residential Allowance grant 0 370 Other Social Services grants 647 882 Economic Regeneration grants 1,569 1,976 Other 370 848 Total Other Government Grants 33,326 37,874
  • 54. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT Note 2. Reconciliation of Surplus to Net Cash Flow 2001/2002 2002/2003 £000's £000's General Fund Surplus/(Deficit) 700 (1,697) H.R.A. Surplus 1,150 1,857 Collection Fund Surplus/(Deficit) (11) 560 Specific Reserves 857 535 Trust Funds 169 204 Add M inimum Revenue Provision 1,621 2,235 Add Revenue Contributions to Capital Outlay 292 854 Add Reserves Contribution to Capital Outlay 2,272 1,240 Add Provisions in the year 509 940 Decrease/(Increase) in Stocks (13) 76 Decrease/(Increase) in Debtors 2,314 (4,694) Increase/(Decrease) in Creditors (3,729) 917 Servicing of finance 3,468 3,941 HRA depreciation 4,447 4,370 Schools Balances (628) (958) Net Cash Flow from Revenue Activities 13,418 10,380 Note 3. Net Debt Reconciled to Balance Sheet st st 31 March 2002 31 March 2003 Movement £000's £000's £000's Cash with Accounting Officers 8,249 7,695 (554) Cash Overdrawn (2,025) (1,528) 497 Long Term Borrowing (62,962) (79,774) (16,812) Short Term Borrowing (164) (14) 150 Investments (Short Term) 61,631 63,801 2,170 Total 4,729 (9,820) (14,549) Note 4. Liquid Resources st st 31 March 2002 31 March 2003 Movement £000's £000's £000's Investments (Short Term) 61,631 63,801 2,170 Total Liquid Resources 61,631 63,801 2,170
  • 55. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT Note 5. Movement in Cash Reconciled to Net Debt st 31 March 2003 £000's £000's Decrease in cash in the period (57) Cash inflow from debt financing (16,662) Cash inflow from increase in liquid resources (300) Change in net debt from cashflow (17,019) Increase in liquid resources 2,470 Increase in net debt (14,548) st Net debt at 1 April 2002 4,729 st Net debt at 31 March 2003 (9,819) 52Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 52
  • 56. TERMS AND ABBREVIATIONS USED IN THE STATEMENT OF ACCOUNTS Capital This is expenditure on items whose expected useful life is greater than one year. A detailed definition is laid down in the Local Government and Housing Act 1989. Capital Receipts The proceeds from disposals of land, buildings and other capital assets. Collection Fund A separate fund for the collection and distribution of amounts due in respect of Council Tax, Community Charge and Non-Domestic Rates (N.D.R.). Consolidated Balance Sheet This is the combined balance sheet of all the funds of the Council, General fund, H.R.A., and Collection Fund. Council Tax Base This is the revenue that is raised per £1 of Council Tax. Deferred Charges Capital expenditure which does not result in a fixed asset in the balance sheet e.g. Renovation Grant, Schools Devolved Capital. FRS Financial Reporting Standards. e.g. FRS 17 Retirement Benefits General Fund The main fund of the Council. Day to day spending on services provided by the Council is met from this fund. H.R.A. Housing Revenue Account. This is a separate account for the landlord activities that the Council undertakes in respect of housing. MRP. Minimum Revenue Provision, this is an amount defined by statute to be set aside for the repayment of debt. N.D.R. Non Domestic Rates. The rates paid on business properties, which has been determined by the Government since 1st April 1990. Precept A levy made by the Essex Police Authority and this Council on the Collection Fund. Provisions These are set up to meet expenditure, which is likely or certain to be incurred, but the date at which it will be spent is unknown. Reserves These are sums of money set aside to meet programmed expenditure e.g. replacements of assets. Revenue This is expenditure on day to day running costs, and consists mainly of salaries and wages, capital financing costs and general running expenses. Schools Devolved Capital This money is passed to schools to spend on capital and does not result in a fixed asset in the balance sheet. S.S.A. Standard Spending Assessment. This represents the amount, which the government considers appropriate for the authority to calculate as its budget requirement. S.S.A.P. Statements of Standard Accounting Practice. 53Southend-on-Sea Borough Council – Statement of Accounts 2002/2003 53