2011/2012 audited annual accounts - Falkirk Council

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1. INTRODUCTION FALKIRK COUNCIL FOREWORD BY CHIEF FINANCE OFFICER The purpose of the Annual Accounts is to demonstrate the Council’s stewardship of the significant amount of public funds with which it is entrusted. The financial statements represent the financial position of Falkirk Council as at 31 March 2012. The results for 2011/12 are set out on pages 48 to 120 and have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12. The Statement of Accounting Policies on pages 10 to 29 sets out the accounting policies adopted by the Council in order to ensure that the Accounts provide a true and fair view of our financial performance. This foreword seeks to provide a guide to the most significant matters disclosed in the Accounts. An explanation of the main technical terms used in the Accounts is included at pages 118 to 120. 2. THE FINANCIAL STATEMENTS Core Financial Statements The 2011/12 Code of Practice on Local Authority Accounting (Code) requires local authorities to produce Accounts on an International Financial Reporting Standards (IFRS) basis. An explanation of the financial statements which follow and their purpose are as follows: • The Comprehensive Income and Expenditure Statement (CIES) shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. • The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Council. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. Reserves are reported in two categories. The first category of reserves is usable reserves, i.e. those reserves that the Council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve, that may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Council is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’. • The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the reporting period. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Council are funded by way of taxation and grant income or from the recipients of services provided by the Council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Council. • The Movement in Reserves Statement shows the movement in the year on the different reserves held by the Council, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and unusable reserves (i.e. those that the Council is not able to use to provide services). The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the Council’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance and the Housing Revenue Account for council tax setting and dwellings rent setting purposes. The Net Increase/Decrease before Transfers to Other Statutory Reserves line shows the statutory General Fund Balance and Housing Revenue Account Balance before any discretionary transfers to or from earmarked reserves undertaken by the council. • The Notes to the Accounts provide further information. 2
FALKIRK COUNCIL Supplementary Financial Statements (shown as Notes to the Accounts 36 to 43) An explanation of the supplementary financial statements and their purpose are: • The Housing Revenue Account (HRA) reflects the statutory requirement to account separately for local authority housing provision, as defined in the Housing (Scotland) Act 1987. The HRA account has three parts: i. HRA Income and Expenditure Statement – which shows in more detail the income and expenditure on HRA services included in the whole Council Comprehensive Income and Expenditure Statement. ii. Movement on the HRA Statement – which shows how the HRA Income and Expenditure Statement surplus or deficit for the year reconciles to the movement on the Housing Revenue Account balance for the year. iii. Notes to the Housing Revenue Account – which give additional information on the HRA. • The Council Tax Income Account shows the gross and net income from council tax, together with details of the number of properties on which council tax is levied, and the charge per property. • The Non-Domestic Rates Income Account shows the gross and net income from non-domestic rates and details the amount payable to the national non-domestic pool, as well as the resulting net income for the financial year to the Council that is shown in the Comprehensive Income and Expenditure Statement. • Common Good Funds were inherited from the former burgh authorities of Bo’ness, Denny, Grangemouth and Falkirk in 1975. These funds are used solely for the benefit of the residents of these areas. An Income and Expenditure Statement as well as a Balance Sheet have been prepared for each fund. In addition, a cumulative financial statement has also been prepared. Group Accounts The Council has an interest in the Police, Fire & Rescue and Joint Valuation Joint Boards and Common Good Funds. The Council also has an interest in four limited companies and further information on these can be found on page 112. The Joint Boards have a wide range of functions to discharge, and members of each Board are elected councillors and are appointed by the Council in proportions specified in the legislation. Under accounting standards guidance, the Council can be seen to have significant influence over these statutory bodies, through nominated Council Member involvement in the bodies’ governing Boards. As a result, the Boards are included within the Group Accounts. The following statements make up the “group accounts” for the Council: • The Group Comprehensive Income and Expenditure Statement combines the Income and Expenditure figures for the Council with the Council’s share of the operating results of its external interests. • The Group Balance Sheet brings together all of the assets and liabilities of the group. It also combines the Council’s assets and liabilities with its share of the net assets or liabilities of its external interests. • The Group Cash Flow Statement shows the changes in cash and cash equivalents of the Group • The Group Movement in Reserves Statement shows the movement in the year on the different reserves that are held. It also explains the contribution of the external interests to the overall group surplus or deficit. • The Notes to the Group Accounts provide further information on the Council’s group accounts and includes The Group Segment Note which reconciles the budgetary control figures per the final Committee report to the Service figures in the Group CIES on a subjective basis. Statement of Responsibilities for the Statement of Accounts This statement sets out the respective responsibilities of the Council and the Chief Finance Officer for the financial statements. Annual Governance Statement This statement summarises, openly and transparently, arrangements established by Falkirk Council for ensuring good governance and appropriate arrangements for internal financial control for 2011/12. It highlights areas of improvement that have been identified to enhance existing governance arrangements, and is consistent with the Council’s established improvement agenda. Remuneration Report The Remuneration Report on pages 36 to 47 provides details of the Council’s remuneration policy for senior employees as well as senior councillors in addition to describing the role and membership of the committee that deals with remuneration arrangements. The Report also details the number of employees earning £50,000 or more in bands of £5,000, together with comparative data for the previous year. 3
Page 1 and 2: Annual Report & Accounts 2011/2012
Page 3: FALKIRK COUNCIL INTRODUCTION TO THE
Page 7 and 8: FALKIRK COUNCIL The Council’s Gen
Page 9 and 10: 8. PRINCIPAL SOURCES OF FINANCE FAL
Page 11 and 12: FALKIRK COUNCIL Government grant le
Page 13 and 14: FALKIRK COUNCIL Activity is account
Page 15 and 16: 12. CONTINGENT LIABILITIES FALKIRK
Page 17 and 18: FALKIRK COUNCIL 15. REVENUE EXPENDI
Page 19 and 20: FALKIRK COUNCIL These two cost cate
Page 21 and 22: Post Employment Benefits FALKIRK CO
Page 23 and 24: The Council as Lessee Finance Lease
Page 25 and 26: Loans and Receivables FALKIRK COUNC
Page 27 and 28: FALKIRK COUNCIL Impairment Assets a
Page 29 and 30: FALKIRK COUNCIL Further information
Page 31 and 32: FALKIRK COUNCIL STATEMENT OF RESPON
Page 33 and 34: FALKIRK COUNCIL Principle 2 - Membe
Page 35 and 36: System of Internal Financial Contro
Page 37 and 38: FALKIRK COUNCIL FALKIRK COUNCIL ANN
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2h. Other Adjustments Adjustment be
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NOTES 1. Analysis of Other Comprehe
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2h. Other Adjustments Adjustment be
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FALKIRK COUNCIL 3.(a) Amounts Repor
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3(b). Amounts Reported for Resource
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4. Related Party Transactions FALKI
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FALKIRK COUNCIL NOTES TO THE CORE F
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14.(a) Property, Plant & Equipment
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15.(a) Heritage Assets FALKIRK COUN
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16. Other Capital Notes FALKIRK COU
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18. Capital Expenditure and Capital
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27.(a) Inventories An analysis of s
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28. Construction Contracts FALKIRK
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32. Grant Income FALKIRK COUNCIL NO
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33.(c)(ii) Credit risk FALKIRK COUN
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39. Housing Revenue Account Disclos
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41. Council Tax Account Disclosures
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44. Common Good Funds FALKIRK COUNC
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FALKIRK COUNCIL GROUP BALANCE SHEET
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FALKIRK COUNCIL GROUP MOVEMENT IN R
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1. Group Accounting Policies FALKIR
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FALKIRK COUNCIL NOTES TO THE GROUP
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8(b). Amounts Reported for Resource
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FALKIRK COUNCIL GLOSSARY OF TERMS W
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FALKIRK COUNCIL 29. Transport Costs
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Matters on which I am required to r
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2011/2012 audited annual accounts - Falkirk Council

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