2011/2012 audited annual accounts - Falkirk Council

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External Debt Levels - £284.8m FALKIRK COUNCIL This indicator reflects the actual External Debt (£152.6m) and Long Term Liabilities (£132.2m) of the Council. This indicator is measured against the predetermined Authorised Limit (£335m) and Operational Limit (£330m) which the Council has set in accordance with its capital expenditure plans. It should never exceed the Authorised Limit (£335m). Ratio of Financing Costs to Net Revenue Stream General Fund 5% Housing Revenue Account 18% This indicator is a measure of how affordable the Council’s capital plans are. It is calculated by taking actual finance costs as a percentage of net revenue of the General Fund or Housing Revenue Account. Thereafter, it is measured against predetermined ratios which the Council has set in accordance with its capital expenditure plans. As the predetermined levels for 2011/12 were 5% for General Fund and 18% for the Housing Revenue Account, the actual 2011/12 ratio is within the limits which have been set. Impact of Capital Investment on Council Tax and Housing Rents Council Tax - £4.73 per Band D Council Tax Housing Rents - £3.51 per week/per house This indicator measures the impact of capital investment decisions on the Council’s “bottom line” in terms of Council Tax and also rent levels in terms of the average weekly rent. Trading Operations The Council operates two Statutory Trading Accounts, one for Building Maintenance and one for Roads Maintenance. Building Maintenance achieved a surplus for the year of £0.813m and Roads Maintenance achieved a surplus for the year of £0.497m. Both Statutory Trading Accounts exceeded the minimum financial requirement to break-even over a three year rolling period. 4. PUBLIC PRIVATE PARTNERSHIP (PPP) In order to provide fit for purpose schools, the Council has entered into a scheme under PPP financing arrangements. This scheme involved the replacement of five schools which were first occupied by the Council in August 2000. During the financial year 2011/12, £13.021m was paid to the contractor under the terms of the agreement for these schools. 5. NOT FOR PROFIT DISTRIBUTING ORGANISATION (NPDO) The Council reached Financial Close in May 2007 on its second PPP scheme to provide four new high schools. The Council is using a Non-Profit Distributing Organisation (NPDO) model. Two schools were delivered in January and February 2009 and a further two were delivered in June and July 2009. During the financial year 2011/12, £11.441m was paid to the contractor under the terms of the agreement for these schools for the basic annual payment and the sum of £12m was also paid from the New Schools Reserve (see note 1). 6. BALANCE SHEET The Balance Sheet on Page 49 summarises the assets and liabilities of the Council as at 31 March 2012, with explanatory notes also being provided. Total net assets have decreased by £35.834m from £205.409m to £169.575m. This decrease is summarised in the Movement in Reserves Statement on Page 51, with the main reason being an increase in pension fund liabilities. 7. LONG-TERM BORROWING The Council’s borrowing strategy is prepared in accordance with the Code of Practice on Treasury Management in Local Authorities. The majority of the Council’s borrowing, which is used to finance capital expenditure, comes from the Public Works Loan Board with the remainder from market bonds or the European Investment Bank. Further details are provided at Note 23. 6
8. PRINCIPAL SOURCES OF FINANCE FALKIRK COUNCIL The principal sources of finance utilised by the Council in 2011/12 were as follows: Revenue Support Grant £225.69m Provided by the Scottish Government Ring-Fenced Government Grants £13.02m Provided by the Scottish Government Non-Domestic Rates Income £55.52m Provided by the Scottish Government* Council Tax £60.04m Raised from local taxpayers Housing Rents £44.03m Raised from tenants Other Income £102.20m Sales, fees, charges and other contributions for services The in-year collection rate for Council Tax was 96.1%. Council Tax income represents 17.59% of the overall level of funding received from Revenue Support Grant, Non-Domestic Rates income and Council Tax. This demonstrates that 82.41% of the Council’s principal source of finance is outwith its control which is a major factor to be taken account of when expenditure plans are being considered. * Although the Council was due £55.52m of non-domestic rate income from the Scottish Government, £62.83m was due to be paid to the Government from non-domestic rates raised in the Falkirk Council area which represents a net contribution by the Council of £7.31m (£0.35m draw in 2010/11). 9. PENSION LIABILITIES In terms of International Accounting Standard 19 “Employee Benefits” (IAS19), the Council is required to show the actuarially assessed net pension deficit/liability within the Balance Sheet. The deficit is assessed as £214.510m as at 31 March 2012 (£171.869m as at 31 March 2011). Pension Fund deficits have increased significantly since last year due to the fact that the discount rate has reduced by 0.7% to 4.8%, and the return on assets has also reduced by 1.2% to 5.7% reflecting the less favourable market conditions. Further information on accounting for retirement benefits can be found in Note 9. Future actuarial valuations will recommend employer contribution rates which, together with employee contributions and revenues generated by the Fund’s assets will be sufficient to meet future pension liabilities. 10. COMMON GOOD The Council administers Common Good funds for the areas of Bo’ness, Denny, Grangemouth and Falkirk. Overall, the total net asset value of the funds reduced from £1.078m in 2010/11 to £1.076m in 2011/12. Further information can be found in note 43. 11. GROUP FINANCIAL STATEMENTS Local authorities are required to prepare Group Accounts in addition to their own Council’s accounts where they have a material interest in other organisations. Group Financial Statements have been prepared (see pages 101 to 117) which consolidate the results of the Council with its share of the following entities – the Police, Fire & Rescue and Valuation Joint Boards, FCSL (Holdings) Ltd, Falkirk Community Stadium Limited, Falkirk Community Trust Limited and Common Good Funds. The effect of the inclusion of the Council’s interests on the Group Balance Sheet is to reduce both Reserves and Net Assets by £288.9m. The main reason for this reduction is the inclusion of pension fund deficits attributable to the Police, Fire & Rescue and Valuation Joint Boards. Pension Fund deficits have increased since last year due to the fact that the discount rate has reduced from 5.5% to 4.8%. Notwithstanding the excess of liabilities over assets, I consider it appropriate to adopt a going concern basis for the preparation of these financial statements as the amounts will fall due to be met by the constituent authorities and Scottish Government grants as appropriate. 12. CHANGE IN ACCOUNTING POLICIES The 2011/12 Code of Practice requires local authorities to account for heritage assets in accordance with FRS30 Heritage Assets. Heritage assets are defined as assets which have historical, artistic, scientific, technological or environmental qualities and are held and maintained principally for their contribution to knowledge and culture. The adoption of the revised requirements for accounting for heritage assets amounts to a change in accounting policy and a restated opening Balance Sheet is required where adoption results in a material restatement. The total value of heritage assets recognised in the 2011/12 financial statements is £0.211m which is deemed not to be material and as such a restated opening Balance Sheet has not been prepared. 7
Page 1 and 2: Annual Report & Accounts 2011/2012
Page 3 and 4: FALKIRK COUNCIL INTRODUCTION TO THE
Page 5 and 6: FALKIRK COUNCIL Supplementary Finan
Page 7: FALKIRK COUNCIL The Council’s Gen
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
Page 39 and 40: FALKIRK COUNCIL 3. Disclosure - Loc
Page 41 and 42: Surname Forename Post FALKIRK COUNC
Page 43 and 44: FALKIRK COUNCIL There were no payme
Page 45 and 46: FALKIRK COUNCIL a) Pension Rights o
Page 47 and 48: FALKIRK COUNCIL c) Pension Rights o
Page 49 and 50: FALKIRK COUNCIL COMPREHENSIVE INCOM
Page 51 and 52: FALKIRK COUNCIL CASH FLOW STATEMENT
Page 53 and 54: NOTES 1. Analysis of Other Comprehe
Page 55 and 56: 2h. Other Adjustments Adjustment be
Page 57 and 58: NOTES 1. Analysis of Other Comprehe
Page 59 and 60:
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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Page 73 and 74:
Page 75 and 76:
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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