Statement of Responsibilities for the Statement of Accounts6

Contents Page

ACCOUNTS

foreword by the DIRECTOR OF FINANCE1

statement of responsibilities for the statement of accounts6

audit opinion(4 PAGES)7

STATEMENT OF MAIN PRINCIPLES, ACCOUNTING POLICIES & ESTIMATION TECHNIQUES 8

core financial statements:

INCOME & EXPENDITURE account13

STATEMENT OF MOVEMENT ON THE GENERAL FUND

BALANCE14

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 16

balance sheet17

cash flow statement19

notes to the ACCOUNTS20

disclosure of financial assets & liabilities67

supplementary statements:

capital expenditure statement78

collection fund80

notes to the collection fund81

GLOSSARY83

ANNUAL GOVERNANCE STATEMENT

ANNUAL GOVERNANCE STATEMENT1

foreword by the director of finance

Accounts 2009

1

Introduction

The Accounts 2009 (“Accounts”) contains a summary of the Council’s financial performance for the year ended 31 March 2009. A summary of service performance is provided in the Council’s Annual Report published separately on the Council’s website.

The accounts have been prepared in accordance with the Accounts and Audit Regulations, and the Statement of Recommended Practice (SORP, published by Chartered Institute of Public Finance and Accountancy), and follow a prescribed format. The SORP, or guidance relating to its interpretation, changes each year, and the impact of some of these changes is explained below.

Brief Guide to Accounts Contents

A glossary of terms can be found on page 83.

A description of the responsibilities of the Council regarding the Accounts 2009 is provided at page 6, and the Audit certificate can be found at page 7.

The Accounts are drawn from systems which in themselves must operate satisfactorily in order for the figures to be true and dependable. More information on the effective operation of the Council’s systems, governance arrangements and control environment can be found in the Annual Governance Statement (AGS) The AGS does not form part of the Accounts, but it has been published alongside so that it can be read in conjunction.

On occasions there can be choices in accounting conventions that would be more practical for a given organisation in order for it to show a truer reflection of economic activity or value. The choices made by the Council are outlined in the accounting policies on pages 8 to 12.

The main financial statements that make up the Accounts are; the Income and Expenditure Account (IE), the Statement of Total Recognised Gains and Losses (STRGL), and the Balance Sheet.

The Income and Expenditure Account (page 13) shows the Council’s actual financial performance for the year, measured in terms of the resources consumed and generated, as defined in the SORP, over the period 1 April 2008 to 31 March 2009. However, the authority is required to set its budget and raise council tax on a different accounting basis than the SORP, the main differences being:

• Capital investment is accounted for as it is financed, rather than when the fixed assets are consumed;

• Retirement benefits are charged as amounts become payable to pension funds and pensioners, rather than as future benefits are earned.

It is the General Fund Balance which is more comparable to the budget set by Council at the start of the year, and upon which the extent of local taxation was raised. A number of adjustments are required to reconcile the net loss stated in the I & E Account of £35.8m with the General Fund Balance and these adjustments of £(36.2)m are stated in the Statement of Movement on the General Fund Balance (SMGFB Page 14). The increase in General Fund Balance is split between schools and non-schools balances, the movement year-on-year in the non-schools balance is detailed in table 2 within the Revenue Budget Outturn report available on the Council’s website.

The STRGL (page 16) shows the movements in gains and losses of the Council for the year and shows the aggregate increase or decrease in the Council’s net worth in terms of all of its recognised assets and liabilities.

The total net worth of the Council, assets less liabilities, in terms of statements of value is detailed on the Balance Sheet on pages 17 to 18.

Explanatory notes to the primary statements are provided on pages 20 to 77. These notes expand on the figures, providing greater detail and information as prescribed or as necessary.

In addition to the STRGL, the Cash Flow statement (page 19) provides summary figures on the total movements in cash for the year.

A statement on 2008/09 capital expenditure and how this was funded can be found on pages 78 to 79.

The final statement is that for the Collection Fund. The Council has the responsibility for collecting all council tax due in the Borough not only for the Council itself but also for the GM Police Authority and the GM Fire & Rescue Authority. The Collection Fund accounts for all movements in Council Tax collected and distributed, as well as allowable costs chargeable by the Council to the fund.

General Fund

The original budget was set by the Council on 19 February 2008 in the sum of £150.528m. This resulted in a Band D Council Tax of £1,035.25 for services which are the responsibility of the Council to deliver, or £1,209.83 when precepts for the Greater Manchester Police and Fire and Rescue Authorities are included. This is £114.19 (8.6%) below the average tax level of Metropolitan Authorities. The budget was financed as follows:

£m
Government RSG / 8.3
Redistributed Business Rates / 59.4
Council Tax / 82.2
Reserves / 0.6
150.5

Area Based Grant (ABG)

For 2008/09 the Government moved a number of specific grants worth £10m to the Council into a new general grant called Area Based Grant (ABG). Specific grants are treated as income in the net cost of services section of the IE Account. However, general grants are treated as funding.

The nature of this change is to make the net cost of services increase by £10m year-on-year, but equally Government general grant has also increased so that there is a £nil effect on the overall gain or loss in the IE Account.

Outturn of Financial Performance

Monthly budget monitoring took place from July 2008. The actual spending in the year was £148.969m, representing anunderspend on overall planned activity of £1.559m:

Budget
£m / Actual
£m
Trafford provided services:
- Children & Young People’s Service / 31.0 / 31.7
- Adult Social Services / 51.1 / 50.2
- Prosperity, Planning & Development / 29.6 / 30.1
- Customer & Corporate Services / 16.1 / 15.6
- Corporate / (0.6) / (0.8)
Levies to other organisations: / 13.1 / 13.1
- Passenger Transport
- Waste Disposal / 10.1 / 8.9
- Flood Defence / 0.1 / 0.1
Total / 150.5 / 148.9

The major variations from the original budget are:

£m
Demand led services:
- Children’s Social Care / 0.9
- Older people Social Care / (0.4)
Waste Management / (0.9)
Income:
- Additional grants or subsidy / (0.5)
- Treasury Management (net) / (0.4)
- Impact of economy / 0.6
Deferred Projects / (0.5)
Other / (0.4)
Total / (1.6)

Included in the above is £1.1m of net service underspends and these will be carried forward into 2009/10, to be spent by the respective services in addition to the approved budget.

Efficiencies

The Council delivered £(4.8)m of efficiencies during the year which was £(0.3)m more than the budgeted £(4.5)m. Including the efficiencies declared by levying bodies and carry forward from previous years, overall a reduction on baseline net expenditure of 2.9% was achieved in 2008/09.

Impact of Economy

The economic downturn of 2008/09 affected the Council’s income by £0.6m, and its ability to raise capital receipts by way of selling non-operational land and buildings in the sum of £7m. Investment income was increased, as although the Bank of England base rate fell the market rates increased for a time due to competition for limited available funds. Funds were invested according to the Council’s policy and there were no investments with the Icelandic Banks which failed in October 2008. Planned borrowing of £18.9m has been deferred until market conditions improve. A review of asset values has found them reduced by £15.9m due to impairment, of which £13.6m has been determined as a consequence of falling market values (note 18 (ii) page 28)

Future Budgets

Information on the planned future expenditure and the financial environment of the Council can be found in the Medium Term Financial Plan (MTFP) and Medium Term Financial Strategy (MTFS) respectively, which are on the Council’s web site. The MTFS is due to be refreshed to take account of the current economic status more fully, and the MTFP will be refreshed by February 2010.

General Reserve

It is a requirement to maintain a General Reserve that will reasonably meet unforeseen expenditure and provide sufficient working capital. The Council set the minimum level for the General Reserve at £5.0m on 19 February 2008. The balance at the start of the year was £7.786m. The balance at the end of the year of £7.292m includes the 2008/09 underspend and a net transfer to earmarked reserves of £0.599m.

The budget for 2009/10 includes for the use of £0.978m of General Reserve.

Trading Organisations

The Council maintains a number of trading operations (see note 5 page 21), which made a surplus in the year on normal activity of £0.853m, of which £0.800m has been transferred to the General Reserve to assist in funding the 2009/10 budget.

Capital Investment

Capital expenditure for the year amounted to £42.3m, details of which can be found on pages 80 to 81:

Expenditure / £m
Schools investment / 15.9
Highways improvements / 10.5
Home Owner Assistance / 2.6
Sport & Recreation / 2.7
Social Services / 1.1
Town Centre Regeneration / 1.3
ICT Investment / 1.0
Waste Recycling / 3.1
Supporting infrastructure / 4.1
42.3

This expenditure was financed by:

£m
Borrowing / 18.9
Grants and Contributions / 22.4
Capital Receipts / 0.4
Earmarked Reserves / 0.6
42.3

The Council has approved a Capital Strategy and an Asset Management Plan which are in place to identify priorities for capital investment. The strategy and plan are supported by the three year capital programme, which is the budget year plus two additional years of proposed spend. The programme is reviewed every year in the light of available resources, and during the year schemes can be moved (deferred or accelerated) in the programme dependent upon the progress to either maximise capital investment spend or avoid overspending.

The capital programme is in part supported by the Land Sales Programme (disposal of fixed assets), and in 2008/09 some £0.6m of capital receipts were generated, with £0.4m used to finance capital expenditure and £0.2m ring-fenced for specific capital projects in later years:

£m
Surplus fixed assets:
- Land / 0.5
Mortgages & Grant Recoupment / 0.1
0.6

The future investment plans of the Council, determined in accordance with the Capital Strategy, are valued at £135.4m to be financed by:

£m
Grants and Contributions / 86.8
Borrowing / 25.8
Capital Receipts / 21.8
Reserves / 1.0
135.4

Treasury Management

The Council proactively manages both long term loans and investments to minimise the interest paid on external borrowing, and to generate as high an income level as possible on cash deposits commensurate with the risk to the principal invested.

For 2008/09 the Council set an authorised borrowing limit of £140.0m, and the maximum amount of long term loans was £102.4m with an average of £101.0m.

During 2008/09 two loans totalling £19.5m were prematurely repaid with the Public Works Loans Board (PWLB). £0.2m was repaid to the PWLB in respect of annuity loans.

The average rate of interest payable during the year was 5.48%, which compares with 5.96% in 2007/08. The following table provides further details, including the average interest rate as at the beginning and end of the year.

as at 1.04.08 / as at 31.03.09
Average weighted maturity of
long term loans (in years) / 25.2 / 24.4
Number of loans / 40 / 38
Value of loans / £102.4m / £82.7m
Average loan rate / 5.83% / 6.18%

Further details can be found in note 37 on page 41.

The Council operates its own trading function for the investment of surplus cash deposits. With average balances of £93.1m the Council made 350 short term deals on the money market or direct to institutions of high credit rating, at an average investment rate of 5.55% which is 2.19% above the market benchmark (London Inter-bank BID rate). Further details can be found in note 8 on page 22.

Collection of Council Tax

and Business Rates

The Council collects Council Tax on behalf of itself, GM Police Authority, GM Fire and Rescue Authority, and Partington Town Council. It collects National Non-Domestic Rates (NNDR) on behalf of the Government on an agency basis.

A total of £83m of Council Tax was collected, a performance of 96.9% (96.7% in 2007/08). Details of the Collection Fund can be found on page 80, which shows an available surplus of £1.3m.

£142m of NNDR was collected, a performance of 97.8% (99.3% in 2007/08). The introduction of rates payable on empty properties has had an effect on collection rates. This is paid to the Government and re-distributed to all local authorities through a national formula, from which the Council received £59.4m in 2008/09.

Net Pensions Asset / Liability

The Council participates in the Local Government Pension Scheme, administered by Tameside Metropolitan Borough Council. At 31 March 2009 the Council had a net liability for pensions of £86.6m, which compares with £29.7m at 31 March 2008.

The Council also has liabilities for the Teachers Pension Scheme, administered nationally by the Teachers Pension Agency. Liabilities at 31 March 2009totalled £18.2m, which compares with £18.9m at 31 March 2008.

The Council’s overall net pensions asset/liability is explained further in note 49 on page 54.

The Council is not required to meet its outstanding pension liabilities immediately, but pays towards those liabilities over a number of years at a rate determined by the pension authority’s actuary. In addition, the assets of the pension fund can change in value considerably year-on-year as investment markets fluctuate.

Significant Business Changes, Exceptional and Extraordinary Activity

Three schools, Wellacre and StretfordHigh Schools and Altrincham College of Arts achieved Foundation status during the year. These schools now operate independently of the Council, and as such have been removed as assets from the Council’s Balance Sheet, though the schools themselves remain an asset to the Borough. The effect of writing out the schools is a charge to the IE Account of £18.9m which inflates the net loss for the year before the charge is reversed in the SMGFB.

The Council approved a new pay structure, terms and conditions for non-Teaching staff on 29 April 2009. The new pay structure is effective from 1 January 2009 and for those staff who will receive an increase in pay back-dated into 2008/09 an accrual has been made of £0.667m. Further information on the effects of Job Evaluation can be found in note 3 page 20, note 39 page 42 and note 44 (g) page 52.

Post Balance Sheet Event

There are no post balance sheet events to report.

Accounting Changes

The new SORP has required a number of accounting changes which have been incorporated into the Accounts 2009. The main accounting changes are:

• Deferred capital charges have been replaced by a new category of Revenue Expenditure Funded from Capital under Statute. Costs and associated grant income is now charged direct to the Income and Expenditure Account, and not via the Balance Sheet as previously. These have also been reclassified from capital to revenue in the cash flow statement and the 2007/08 figures restated accordingly;
• Under the 2008 SORP the council has adopted the amendment to FRS 17, Retirement benefits. As a result, quoted securities held as assets in the defined benefit scheme are now valued at bid price rather than mid-market value. The effect of this change is that the value of scheme assets at 31st March 2009 has been restated from £311.0m to £309.8m, a decrease of £1.2m, resulting in an increase of the pension deficit of £1.2m (31 March 2008: increase of £1.5m). Current and prior year surplus have been unaffected by this change. Prior year figures have not been restated as the change is not considered material, and the difference is reflected in the actuarial loss in 2008/09;
• VAT receipts arising from the Large Scale Voluntary Transfer (LSVT) of housing stock are now included in the Usable Capital Receipts Reserve in the Balance Sheet, whereas they were previously included in Capital Grants and Contributions. The main financial statements and associated notes for 2007/08 have been restated accordingly.

Ian Duncan CPFA

Director of Finance

22September 2009

Accounts 2009

1

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 Director of Finance;
• to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets;
• approve the Statement of Accounts.

Responsibilities of the Director of Finance

The Director of Finance 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.

In preparing this statement of accounts, the Director of Finance 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 prevention and detection of fraud and other irregularities.

Certification

By the Chief Finance Officer

I certify that the Statement of Accounts set out on the following pages presents fairly the financial position of Trafford Metropolitan Borough Council at 31 March 2009, and its income and expenditure for the year ended 31 March 2009.

Ian Duncan CPFA

Director of Finance,

22September 2009

By Chairman of the Accounts & Audit Committee

I confirm that these accounts were approved by the Accounts & Audit Committee at the meeting held on 30September 2009.

Councillor Dylan Butt

Chairman of the Accounts & Audit Committee

30September 2009

audit opinion

Once complete, the District Auditors Certificate and Opinion will be inserted below.

statement of main principles, accounting policies and estimation techniques

Accounts 2009

1

Changes in Accounting Policy/Treatment

The accounts are prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2008 – A Statement of Recommended Practice (the SORP), published by the Chartered Institute of Public Finance and Accountancy (CIPFA). The accounting convention adopted is historical cost, modified by the revaluation of certain categories of fixed assets.