CLACKMANNANSHIRE COUNCIL

Report to Council of 19th June 2008

Subject: DRAFT STATEMENT OF ACCOUNTS 2007/08

Prepared by: MARTIN DUNSMORE, ACCOUNTING & BUDGETING MANAGER

1.0SUMMARY

1.1.Local authorities are required to prepare a statement of accounts in accordance with ‘proper practices’. This is defined as meaning compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom prepared by the CIPFA/LASAAC Joint Committee. The Code of Practice is recognised by the Accounting Standards Board as a Statement of Recommended Practice (SORP).

1.2.The SORP specifies the principles and practices of accounting required to prepare a Statement of Accounts which ‘present fairly’ the financial position and transactions of a local authority. The SORP is reviewed continuously and updated annually. The main change this year is the introduction of new and more comprehensive accounting disclosure requirements in respect of financial instruments.

1.3.The draft accounts are required to be formally approved by Council before being signed and submitted to Audit Scotland by the 30th June deadline. The attached draft accounts are substantially complete,although it should be noted that Group Statements are omitted as we still await the required information from the Police and Fire Board at the time of writing. There are also some presentational changes still to be completed, particularly in relation to the new financial instruments requirements. Notwithstanding these issues the underlying core statements have been agreed and reviewed.

1.4.The Council finished the year with cumulative surpluses of:

  • £5.164m in the General Fund
  • £7.447m in the Housing Revenue Account, and
  • £0.489m in the Insurance Fund.

1.5Within the General Fund surplus, there are committed sums totalling £4.354m which are earmarked to be spent in 2008/09 and future years. This leaves an un-earmarked reserve of £810k, compared to an equivalent sum of £951k at March 2007. The Council budget decision in 2008/09 to increase reserves by £1m will restore this un-earmarked portion to a more comfortable level to meet any unexpected funding pressures.

1.6The Housing Revenue Account balance has risen to £7.447m from £6.417m the previous year. It has been reported previously that the substantiallevel of reserves held by Housing are necessary to support the requirement to meet the Scottish Housing Quality Standard along with the Clackmannanshire Standard. In the current version of the Business Plan financial model the reserves are drawn down from 2008/09 onwards to assist the capital investment. It is expected that over the next three years c£3m will used in this way.

2.0RECOMMENDATIONS

2.1.It is recommended that the Council note the draft accounts, and authorise the Head of Finance to complete all the outstanding issues prior to submission to Audit Scotland.

3.0BACKGROUND

3.1.The accounts have been prepared in accordance with proper practices as set out in the Code of Practice on Local Authority Accounting in the United Kingdom: A Statement of Recommended Practice (the SORP).

3.2.The new Income and Expenditure Account introduced last year which appears on page 14 again records a deficit, in this case £12.915m for 2007/08. This reflects the results of the Council if it were entirely UK GAAP compliant, and did not operate within a statutory regime. In particular, the deficits arise because of the inclusion of full depreciation charges on fixed assets and also the full impact of retirement benefits in accordance with Financial Reporting Standard (FRS) 17.

3.3.The Statement on the Movement on General Fund on page 15 adjusts the results shown under the Income and Expenditure Account to achieve the statutory requirements referred to above. Therefore, the depreciation charges are reversed out and replaced with the loans fund principal repayment costs. Similarly, the retirement benefits costs are adjusted to bring them in line with actual sums due to the pension fund, and profits or losses on disposals are removed. As a result, this Statement records an adjusted surplus for the year 2007/08 of £1.404m

3.3 The Explanatory Foreword at page 2 provides a concise guide of the most significant aspects of the Councils financial performance and year-end position. Detailed explanations on Revenue and Capital spend during 2007/08are included in papers presented to theScrutiny Committee following this meeting.

4.0CONCLUSION

4.1.The draft results for the year have demonstrated that the Councils finances during 2007/08are broadly in line with in-year forecasts reported previously.The low level of usable general fund reserve has been addressed by a contribution of £1.063m in the current financial year as part of the budget approved for 2008/09 .

4.2.The final adjusted version of the draft accounts will be submitted for audit by the end of June. The audit of the accounts is scheduled for completion by the 30th September 2008. Any changes to this draft as a result of the audit will be reflected and explained when the final audited accounts are presented to the Council for approval.

5.0SUSTAINABILITY IMPLICATIONS

N/A

6.0FINANCIAL IMPLICATIONS

6.1.Increase in Council General reserves of £1.406m, and Housing Revenue Balance by £1.031m.

6.2Declarations

(1)The recommendations contained within this report support or implement Corporate Priorities, Council Policies and/or the Community Plan:

  • Corporate Priorities (Key Themes) (Please tick )

Achieving Potential
Maximising Quality of Life
Securing Prosperity
Enhancing the Environment
Maintaining an Effective Organisation√

  • Council Policies (Please detail)
  • Community Plan (Themes) (Please tick )

Community Safety 
Economic Development
Environment and Sustainability
Health Improvement

(2)In adopting the recommendations contained in this report, 
the Council is acting within its legal powers. (Please tick )

(3)The full financial implications of the recommendations contained
in this report are set out in the report. This includes a reference
to full life cycle costs where appropriate. (Please tick )

Head of Finance

Director of Corporate Development

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