Master Statement of Accounts 2013-14

APPENDIX A

BOROUGH OF POOLE

STATEMENT OF ANNUAL ACCOUNTS

2013/2014

CONTENTS

Page/Reference

Explanatory Foreword by the Head of Financial Services (i) to (vi)

The Statement of Responsibilities

The Accounting Statements and accompanying notes

Movement in Reserves Statement 1Comprehensive Income and Expenditure Statement 2Balance Sheet 3Cash Flow Statement 4Notes to the Accounts 5

The Housing Revenue Account (HRA) 68

The Collection Fund 73

The Auditor's Report (to follow) 78

Unaudited Documents

Poole Housing Partnership Summary of Accounts 81

Appendices

Appendix A - The Annual Governance Statement

Appendix B - Glossary

Appendix C - Index

DETAILED INDEX OF NOTES TO THE ACCOUNTS

NOTE DESCRIPTION PAGE

1 Accounting Policies 5-192a Prior Period Adjustments 202b Accounting Standards that have been issued but not adopted 213 Critical judgements in applying accounting policies 21-224 Assumptions about the future and other major sources of estimation uncertainty 22-235 Adjustments between accounting basis and funding basis under regulations 23-256 Detail of movement on reserves earmarked and unearmarked 267 Amounts reported for resource allocation decisions 27-318 Undischarged obligations arising from long term contracts 329 Trading operations 3210 Pooled budgets 32-3311 Members' allowances paid in year 3312 External audit costs 3313 Related party transactions 3414 Employee remuneration 35-3715 Disclosure of deployment of dedicated schools grant 3716 Grants and other contributions 38-4017 Investment properties - Rental income and expenditure 4018 Leases 4119 Movement of property, plant and equipment 42-4520 Heritage assets 4621 Investment property 4722 Intangible assets 4723 Capital expenditure and financing 4824 Capital financing requirement and provision for repayment of debt 4925 Significant commitments under capital contracts 4926 Long term debtors 5027 Debtors 5028 Cash and cash equivalents 5129 Assets held for sale 5130 Investments 5131 Creditors and Depositors 5232 Short term borrowing and long term borrowing 5233 Financial instruments 53-5534 Capital grants and other contributions receipts in advance 5635 Provisions 5636 Usable and unusable reserves summary 57

36a Revaluation reserve 5836b Capital adjustment account 5836c Deferred capital receipts 5936d Movements in specific revenue reserves held for capital purposes 5936e Usable capital receipts 5937 Termination benefits and exit packages 6038 Retirement benefits 60-6339 Notes related to cashflow 6440 Interest in related company and guarantees 6541 Accounting for schools 6542 Authorisation of accounts for issue and events after balance sheet date 6543 Contingent Liabilities 6544 Heritage assets : five year summary of transactions 6545 Heritage assets : further information on the Museum's collections 66-67

EXPLANATORY FOREWORD BY THE HEAD OF FINANCIAL SERVICES

(i) BOROUGH OF POOLE 2013-14

1 INTRODUCTION

The Statement of Accounts, which has been prepared in accordance with The Code of Practice on Local Authority Accounting in the United Kingdom 2013/14 (the Code), based on International Financial Reporting Standards (IFRS), shows the financial performance for the activities undertaken by the Borough of Poole.

2 THE STATEMENTS

The Statement of Responsibilities for the Statement of Accounts identifies the respective responsibilities of the Authority and the Head of Financial Services for the accounts.

The Financial Statements - these comprise the Movements in Reserves, ComprehensiveIncome and Expenditure, Balance Sheet and Cashflow

a) Movements in Reserves Statement

This Statement shows the movement in the year on the different reserves held by the authority, analysed into 'usable reserves' (ie those that can be applied to fund expenditure or reduce local taxation) and other reserves. The '(Surplus) or deficit on the provision of services' line shows the true economic cost of providing the authority'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 Housing Revenue Account for Council Tax setting and dwellings rent setting purposes. The 'Net increase /Decrease before transfers to earmarked 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.

b) Comprehensive Income and Expenditure Statement

This Statement shows the economic 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.

c) Balance Sheet

The Balance Sheet shows the value as at the Balance Sheet date of the asset and liabilities recognised by the authority. The net assets of the authority (assets less liabilities) are matched by the reserves held by the authority. Reserves are reported in two categories. The first category of reserves are usable reserves i.e. those reserves that the authority 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 are those that the authority 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 Statementline Adjustments between accounting basis and funding basis under regulations".


(ii)BOROUGH OF POOLE 2013-14

d) Cashflow

The Cash Flow statement shows the changes in cash and cash equivalents of the authority during the reporting period. The statement shows how the authority 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 authority are funded by way of taxation and grant income or from the recipients of services provided by the authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the authoritys future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (ie borrowing) to the authority.

Notes to the Financial Statements - these are intended to give the reader more informationabout items contained within the Core Financial Statements.

The Housing Revenue Account summarises all income and expenditure in providing local authority council housing and reflects the statutory obligation to maintain a separate account.

The Collection Fund shows the level of council tax and non-domestic rates which has been collected by the Authority and the distribution of these funds.

3 COLLECTION FUND

Good collection rates were achieved in year for both Council Tax (98.2%) and Non-Domestic Rates (98.6%). The Collection Fund has an accumulated deficit of 1,547k.This comprises two elementsone relates to council tax and is an accummulated surplus of 1,282k, the other to business ratesand is an accummulated deficit of 2,829k.Council tax surplus is shared between the Borough of Poole, the Dorset Police and Crime Commissionerand the Dorset Fire Authority.Business rates deficit is shared between Central Government, Borough of Poole and Dorset Fire Authority.

4 THE HOUSING REVENUE ACCOUNT (HRA)

The HRA cumulative surplus balance as at 31st March 2014 amounts to 590k. The account reflects the statutory obligation to account separately for social housing provision. It shows the main elements of expenditure and how these are funded by rents and other income. The HRA Accounts consist of an Income and Expenditure Account and a Statement of Movement on the HRA Balance.The HRA income and expenditure account shows a surplus of 5,981k, this is then offset by statutory adjustments to give a final surplus in year of 11k which is then added to previous years surpluses of 579k to give the final total surplus of 590k.In addition these accounts are consolidated into the main Income and Expenditure Account of the Authority and hence this reduces the deficit shown by 5,981k.There is however no impact on taxpayers as the deficit and all other HRA related items are appropriated through the reconciling items statement entries before the General Fund Balance is calculated.

5 ARMS LENGTH MANAGEMENT ORGANISATION AND GROUP ACCOUNTS

Poole Housing Partnership Ltd (PHP Ltd) was set up in April 2004 to manage the Council's Housingstock. Transactions with the company are contained within the Housing Revenue Account.

The authority has given full consideration to requirements contained within the Code with regardto the production of group accounts. It has considered both the qualitative and quantitative aspects and concluded that group accounts are not required.


(iii) BOROUGH OF POOLE 2013-14

6 CAPITAL EXPENDITURE GENERAL FUND AND HOUSING REVENUE ACCOUNT

Total expenditure on capital schemes in 2013/14 was 28,296k (2012/13:32,629k). This is 9,202k Housing Revenue Account and 19,094k General Fund.

The total expenditure was funded by capital grants, capital receipts, revenue and reserve contributions and borrowing.

A more detailed analysis of capital expenditure and its financing can be found in the Notes to theAccounts at Note 23. Note 25 details significant commitments under capital contracts.

This expenditure has enabled various enhancements to assets within the borough including;* to schools, children's centres, parks, open spaces and playgrounds * the replacement of vehicles, * enhancements to roads and bridges.* continued delivery of the decent homes standard for council housing and disabled

facilities grants

The council's general fund capital reserves total 14,074k of which 510k is held forschools and 13,564k for all other services except for council housing. These reserves arecurrently committed in support of the capital programme which runs until 2021 for furtherenhancements to assets held for service delivery.

The Housing Revenue Account has a major repairs reserve of 11,614k.

7 BORROWING FACILITIES AND CAPITAL BORROWING

The power to borrow is governed by the Local Government Act 2003. The Act states thata local authority may borrow money:

a) for any purpose relevant to its functions under any enactment, orb) for the purposes of the prudent management of its financial affairs.

A local authority may not borrow money if doing so would result in a breach of:a) the limits set out in the prudential indicators approved by full Council during the budget setting process, orb) any limits set by the Secretary of State for national economic reasons.

The Council may borrow from a number of market institutions, but in the main chooses toborrow from the Public Works Loan Board (PWLB), details are contained within the Balance Sheet.

The Council has not increased its long term borrowing during 2013/14.

8 IAS 19 (EMPLOYEE BENEFITS)

In accordance with a report from the Pension Fund Actuary there is a deficit on the Pension Reserve of 176,808k (2012/13:196,391k). This is offset by a Pension Liability of the same value. Further details can be found in Note 38 to the Core Financial Statements.

When calculating the pensions deficit for IAS 19 purposes the actuary makes various assumptionsincluding for inflation and salary increases. The inflation assumption is required to project futurecashflows to and from the Fund that are subject to future inflation levels rather than currentinflation levels. The inflation assumption is therefore an assumption about average levels of future inflation rather than current levels. The actuary has advised that there are a number of marketindicators that can be used but most actuaries look at the difference between fixed interest gilt yields and index linked gilt yields and adjust by historical knowldege. This results in a price inflation of 3.6% for 2013/14 (3.4% for 2012/13).


(iv) BOROUGH OF POOLE 2013-14

8 IAS 19 (EMPLOYEE BENEFITS) (continued)

The key assumption relating to salary increases is less market related (this is for future levels of pay increases). The actuary has stated that history tells us that in the longer term pay increasestend to exceed price inflation - typically between 1-3% per annum and that Auditors expect a consistent assumption from year to year. For this reason they have assumed 4.3% (which is2.8% for prices(CPI) plus additional 1.5%).

The 2.8% is Consumer Price Index (CPI) rather than Retail Price Index (RPI). This is becausethe Government links pensions increases to CPI rather than RPI (CPI tends to run lower thanRPI so has a beneficial impact on pension funds).

The IAS 19 deficit position does not feature within the calculations that the actuary makes forthe actual calculations of the contribution rates to be paid by the authority.

9 CHANGES TO ACCOUNTING POLICIES

Changes in accounting policies are only made when required by proper accounting practices or thechange provides more reliable or relevant information about the effect of transactions, other eventsand conditions on the Authority's financial position or financial performance. Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied.

The adoption of amendments to IAS19 Employee Benefits by the 2013/14 Code is a change in accounting policy relating to accounting requirements for defined benefit pension liabilities arisingfrom the Local Government Pension Scheme. This change is required from 1st April 2013 and asit is applied retrospectively requires some amendments to the 2012/13 comparative figures asdetailed in Note 2a

Further detail on this change is provided in Accounting Policy G, Notes 2a and 38.

10 FINANCIAL SUMMARY OF YEAR END POSITION

Net revenue spending for the year was a contribution to the General Fund balance of 188k. This total purely relates to schools underspending.The in year underspend relating to other general fund services was a total of 2,057k which hasbeen contributed to an earmarked Financial Planning Reserve. Cabinet have received regular monitoring reports throughout the year which have explained any variations to approved budgets.This public information has been available during the year and is on the Council website www.boroughofpoole.com.(from A-Z of services, select F- Financial Services, then select services, Council budget monitoring)

The statement shown on the next page reconciles the Budget and Council Budget Monitoring with the Statement of Accounts.


(v)BOROUGH OF POOLE 2013-14

9 FINANCIAL SUMMARY OF YEAR END POSITION (continued)

Original Budget and Monitoring to Statement of Income and Income and (Surplus) Reconciling SMGFBAccounts Format Expenditure Expenditure Deficit Items (Increase)

for SMGFB Decrease

Net operating expenditure

Sources of Finance

General Fund Balance

000's 000's 000's 000's 000's

Budget 113,170 (104,823) 8,347 (8,347) 0

Reported Variances 42 (684) (642) 642 0

Previously Reported (Council Budget Monitoring) 113,212 (105,507) 7,705 (7,705) 0

Reconciliation to statement of accounts

Schools (634) (634) 446 (188)Housing Revenue Account (5,981) (5,981) 5,981 0Revenue Expenditure Funded by Capital Under Statute net 262 262 (262) 0Minor amendments (1) (1) 1 0Revaluations, depreciation, capital accounting adjustments 25,769 25,769 (25,769) 0Asset disposals 59,350 59,350 (59,350) 0Compensated absences (385) (385) 385 0Net payment to DCLG government pool 353 353 (353) 0IAS 19 Adjustment 10,341 10,341 (10,341) 0Collection Fund Adjustment Account 422 422 (422) 0Capital grants recognition in CI&E Account (8,061) (8,061) 8,061 0

Statement of Accounts format 202,287 (113,147) 89,140 (89,328) (188)


(vi)BOROUGH OF POOLE 2013-14

9 FINANCIAL SUMMARY OF YEAR END POSITION (CONTINUED)

The overall net revenue spending for 2013/14 was 62,057k against a net budget of 64,302k an overall surplus of 2,245k of which 188k related to schools.It was agreed that the surplus of 2,057k would be contributed to a Financial Planning reserve.The variances are summarised in the table below:

In year variance Schools Generalto budget Fund

Balanceimpact

'000 '000 '000Service areas underspending (2,813)Corporate income and expenditure (139)Increased government funding via grants (145)Increased revenue contribution to capital 613Reduced minimum revenue provision (8)Net contribution to earmarked reserves 435Contingency underspendIn year surplus to earmarked reserves 2,057Schools underspending (188)

Movement on GFB 0 (188) (188)

During 2013/14 a key component of the Council's approved financial strategy was to achieve a balanced overall budget position in 2013/14 and in so far as possible drive out additional savings andefficiencies to maximize its' current financial year-end resources. This approach having been taken to protect the Council's financial standing and ensure it is in the best shape possible for future financialyears and the challenges that lay ahead. In this respect progress has been made by the delivery of a 2,057k surplus for the year.

The deficit on the Income and Expenditure Account was 88,390k ( surplus 5,981k HRA, 94,371k General Fund) - but this needs to then be linked with the adjustments between accounting basis and funding basis under regulations which establishes the final movement in the general fund balance for the year as being a contribution of 188k as illustrated above and on the previous page.

General fund unearmarked reserves are retained at 5,752k, and schools have increased to 6,934k.

One of the material charges within the accounts for 2013/14 is a loss on the disposal of non current assetsof 61.3m. When schools transfer to Academy status the Authority is required to write the net book valueof the land and buildings off of the balance sheet. It is treated as a disposal for nil consideration, on the date that the school converts to either Academy of foundation.

Additionally all schools were revalued as at 1st April 2013 which has resulted in a net overall charge to the Income and expenditure account to reflecting a reduction in value of 18.1M this is shown as an exceptionalitem on the face of the account.

STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS

BOROUGH OF POOLE 2013-14

1 THE AUTHORITY'S RESPONSIBILITIES

The Authority is required:

* to make arrangements for the proper administration of its financial affairs and to ensure thatone of its officers has the responsibility for the administration of those affairs. In thisAuthority, that officer is the Head of Financial Services;

* to manage its affairs to secure economic, efficient and effective use of resources and safeguardits assets;

* to approve The Audited Statement of Accounts by 30 September 2014 as specified by the Secretary of State.

2 THE CHIEF FINANCIAL OFFICER'S RESPONSIBILITIES

The Head of Financial Services is responsible for the preparation of the Authoritys Statement of Accounts which, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accountingin United Kingdom, is required give a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the financial year ended 31 March 2014.

In preparing this Statement of Accounts, the Head of Financial Services has:

* established suitable accounting policies and then applied them consistently;

* made judgements and estimates that were reasonable and prudent;

* complied with the local authority Code.

The Head of Financial Services has also:

* kept proper accounting records which were up to date;

* taken reasonable steps for the prevention and detection of fraud and other irregularities.

3 CERTIFICATIONI certify that the statement of accounts presents a true and fair view of the financial position of the Authority as at 31 March 2014, and its income and expenditure for the year then ended.

ADAM RICHENSCHIEF FINANCIAL OFFICERDATE

Certification is required by 30th June 2014

4 RE-CERTIFICATION PRIOR TO APPROVAL AT AUDIT COMMITTEE MEETING

ADAM RICHENSCHIEF FINANCIAL OFFICERDATE

5 CERTIFICATION BY THE PRESIDING MEMBER OF THE AUDIT COMMITTEEI confirm that these accounts were approved by the Committee on the 25th September 2014

COUNCILLOR ROY GODFREY

DATE

FINANCIAL STATEMENTS

1BOROUGH OF POOLE 2013-14

MOVEMENT IN RESERVES STATEMENT (Restated for 2012/13)

Total TotalGeneral Local General Earmarked Housing Capital Major Capital Capital Capital Capital Total Total Total

Fund Management Fund GF Revenue Receipts Repairs Funds Funds Funds Grants Usable Unusable Authorityof Schools Balance Reserves Account Reserve Reserve Schools Reserve Unapplied Reserves Reserves Reserves

0 0 0 0 0 0 0 0 0 0 0 0 0 0

Balance at 1st April 2012 (5,752) (5,879) (11,631) (17,839) (565) 0 (10,028) (14,087) (838) (14,925) (267) (55,255) (299,628) (354,883)

(Surplus) or deficit on provision of services (accounting basis) 15,847 (1,121) 14,726 0 5,687 0 0 0 0 0 0 20,413 0 20,413Other Comprehensive Expenditure and Income 0 0 0 0 0 0 0 0 0 0 0 0 (4,951) (4,951)Total Comprehensive Expenditure and Income 15,847 (1,121) 14,726 0 5,687 0 0 0 0 0 0 20,413 (4,951) 15,462

Adjustments between accounting basis & funding basis under regulations (Note 5) (17,550) 645 (16,905) 0 (5,701) (1,365) (1,084) 0 0 0 (9) (25,064) 25,064 0

Net (Increase) / Decrease before Transfers to Earmarked Reserves (1,703) (476) (2,179) 0 (14) (1,365) (1,084) 0 0 0 (9) (4,651) 20,113 15,462

Transfers (to) / from Reserves 1,703 (391) 1,312 (2,297) 0 444 0 584 401 985 0 444 (444) 0

(Increase) / Decrease in Year 0 (867) (867) (2,297) (14) (921) (1,084) 584 401 985 (9) (4,207) 19,669 15,462

Balance at 31 March 2013 (5,752) (6,746) (12,498) (20,136) (579) (921) (11,112) (13,503) (437) (13,940) (276) (59,462) (279,959) (339,421)

Balance at 1 April 2013 (5,752) (6,746) (12,498) (20,136) (579) (921) (11,112) (13,503) (437) (13,940) (276) (59,462) (279,959) (339,421)

(Surplus) or deficit on provision of services 95,755 (634) 95,121 0 (5,981) 0 0 0 0 0 0 89,140 0 89,140Other Comprehensive Expenditure and Income 0 0 0 0 0 0 0 0 0 0 0 0 (54,835) (54,835)Total Comprehensive Expenditure and Income 95,755 (634) 95,121 0 (5,981) 0 0 0 0 0 0 89,140 (54,835) 34,305

Adjustments between accounting basis & funding basis under regulations (Note 5) (96,288) 373 (95,915) 0 5,970 (4,813) (502) 0 0 0 (204) (95,464) 95,464 0

Net (Increase) / Decrease before Transfers to Earmarked Reserves (533) (261) (794) 0 (11) (4,813) (502) 0 0 0 (204) (6,324) 40,629 34,305

Transfers (to) / from Reserves 533 73 606 (472) 0 900 0 (61) (73) (134) 0 900 (900) 0

(Increase) / Decrease in Year 0 (188) (188) (472) (11) (3,913) (502) (61) (73) (134) (204) (5,424) 39,729 34,305

Balance at 31 March 2014 (5,752) (6,934) (12,686) (20,608) (590) (4,834) (11,614) (13,564) (510) (14,074) (480) (64,886) (240,230) (305,116)


2 BOROUGH OF POOLE 2013-14

Comprehensive Income and Expenditure Statement Restated2012/13 2013/14

Gross Net Gross NetExpenditure Income Expenditure Expenditure Income Expenditure

000s 000s 000s 000s 000s 000sService Areas

54,832 (14,849) 39,983 Adult Social Care 55,444 (13,232) 42,2123,666 (1,514) 2,152 Central services to the public 3,440 (1,483) 1,957

111,503 (85,348) 26,155 Children's and Education Services 114,309 (83,438) 30,8710 Exceptional - Revaluation down of school assets 18,171 0 18,171

13,245 (2,884) 10,361 Cultural and Related Services 12,068 (3,326) 8,74219,617 (5,195) 14,422 Environmental and Regulatory Services 21,933 (5,518) 16,41517,042 (6,468) 10,574 Highways and Transport Services 17,326 (6,896) 10,43024,079 (21,589) 2,490 Local Authority Housing (Housing Revenue Account) 13,681 (22,821) (9,140)66,064 (62,113) 3,951 Other Housing services 58,933 (54,202) 4,7314,650 (1,433) 3,217 Planning Services 5,215 (1,717) 3,498

0 0 0 Public Health 5,829 (5,930) (101)3,277 (202) 3,075 Corporate and democratic core 3,802 (224) 3,578

824 0 824 Non Distributed Costs (NDC) (122) 0 (122)

318,799 (201,595) 117,204 Net cost of services 330,029 (198,787) 131,242

10,831 (85) 10,746 Loss (Gain) on the disposal of non current assets 63,417 (2,092) 61,325182 0 182 Precept Environment Agency Levy 182 0 182317 0 317 Contribution of housing capital receipts to Government Pool 353 0 353228 0 228 Pensions fund administration expenses 190 0 190

11,558 (85) 11,473 Other Operating Expenditure 64,142 (2,092) 62,050

3,143 0 3,143 Interest payable and similar items 2,886 0 2,8860 (213) (213) Interest receivable 0 (60) (60)

688 (1,450) (762)Income and expenditure in relation to investment properties and changes in their fair value 401 (2,782) (2,381)

19,040 (10,524) 8,516 Pensions interest cost and interest earned on assets 20,396 (11,846) 8,550

22,871 (12,187) 10,684 Financing and Investment Income and Expenditure 23,683 (14,688) 8,995

0 (3,810) (3,810) General government grants non ringfenced 0 (26,177) (26,177)0 (29,384) (29,384) Non-domestic rates redistribution 0 0 00 (71,528) (71,528) Income from Council Tax 0 (65,266) (65,266)0 0 0 Income from Localised Business Rates 0 (13,643) (13,643)0 (14,226) (14,226) Capital Grants and Contributions 0 (8,061) (8,061)

0 (118,948) (118,948) Taxation and Non-Specific Grant Income (Note 16) 0 (113,147) (113,147)

20,413 Net (Surplus) or Deficit on Provision of Services 89,140

(39) Surplus or deficit on revaluation of non current assets (24,911)(4,912) Actuarial remeasurements on pension fund assets and liabilities (29,924)

(4,951) Other Comprehensive Income and Expenditure (54,835)

15,462 Total Comprehensive Income and Expenditure 34,305

Note relating to the (surplus) or deficit on the provision of services

The (Surplus) or Deficit is split across the following fund activities15,847 General Fund 95,755(1,121) General Fund - Schools (634)

5,687 Housing Revenue Account (5,981)20,413 89,140



Balance Sheet

As at As at31st March Notes 31 March

2013 2014

000's 000's 000's

190,064 - Housing Revenue Account (including Council Dwellings) 19 192,653283,745 - Other Land & Buildings 19 221,080

11,126 - Vehicles, Plant & Equipment 19 8,3103,288 - Community Assets 19 3,431

107,256 - Infrastructure Assets 19 108,577274 - Assets under construction 19 676

595,753 Property, Plant and Equipment 534,727766 Heritage Assets 20 811

28,176 Investment Properties 21 26,460954 Intangible Fixed Assets 22 906

3,120 Long Term Debtors 26 2,751

628,769 TOTAL LONG TERM ASSETS 565,655

10,028 Short Term Investments 30 6,2340 Assets Held For Sale 29 0

119 Inventories 11316,829 Short Term Debtors 27 16,89824,223 Cash and Cash Equivalents 28 32,84851,199 CURRENT ASSETS 56,093

(33,374) Creditors and depositors 31 (32,851)(1,417) Short Term Borrowing 32 (1,874)

(108) Interest on Borrowing repayable within 12 months 32 (108)(34,899) CURRENT LIABILITIES (34,833)

(91,826) - Long Term Borrowing 32 (89,952)(4,379) - Provisions 35 (7,365)

(13,052) - Gov't Grants and Other receipts in advance 34 (7,674)(196,391) - Pensions Liability 38 (176,808)(305,648) LONG TERM LIABILITIES (281,799)

339,421 NET ASSETS 305,116

FINANCED BY:

(5,752) General Fund balances 6 (5,752)(6,746) General Fund Balances Schools Delegated 6 (6,934)

(34,076) Earmarked Reserves 6 (34,682)(579) Housing Revenue Account (page 66) (590)(921) Capital Receipts Unapplied 36e (4,834)

(11,112) Major Repairs Reserve (HRA) 36d (11,614)(276) Capital Grants Unapplied (unconditional) 6 (480)

(59,462) Usable Reserves (64,886)

(57,497) Revaluation Reserve 36a (66,076)(420,844) Capital Adjustment Account 36b (353,009)

(366) Deferred Capital Receipts 36c (341)(95) Collection Fund Adjustment Account 327

2,452 Short-term Accumulating Compensated Absences Account 2,061196,391 Pensions Reserve 38 176,808

(279,959) Unusable Reserves (240,230)

(339,421) TOTAL NET WORTH (305,116)



Cash Flow Statement Restated

2012/13 2013/14

000's 000's

20,413 Net Surplus / Deficit on the Provision of Services 89,140

(55,449) Adjust for non cash movements (121,722)

19,834 Adjust for items that are investing and financing activites 22,167

(15,202) Net cash flow from operating activities - (Inflow)/Outflow - see note 39a (10,415)

Investing Activities

28,185 Purchase of property,plant,equipment,investment property & intangibles 20,672(7,500) Purchase/repay of short term and long term investments (3,770)

50 Long term loans granted 147(1,760) Proceeds from sale of property,plant,equipment,investment property & intangibles (5,329)

(19,178) Other receipts used in investing activities (eg capital grants) (12,220)

(203) Net cash flows from investing activities (500)

Financing Activities1,906 Non Domestic Rates and Council tax preceptors increase/(decrease) 873

0 Cash receipts of short and long term borrowing 0417 Repayments of short and long term borrowing 1,417

2,323 Net cash flows from financing activities 2,290

(13,082) Net (increase) / decrease in cash and cash equivalents (8,625)

(11,141) Cash and cash equivalents at the beginning of the reporting period (24,223)

(24,223) Cash and cash equivalents at the end of the reporting period (Note 28) (32,848)

NOTES TO THE ACCOUNTS


1 ACCOUNTING POLICIES

A GENERAL PRINCIPLES

The Statement of Accounts summarises the Authority's transactions for the 2013/14 financial year and it's position at the year end of 31 March 2014. The Authority is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2011.It has been prepared, except where mentioned in the notes below, in accordance with proper accounting practices primarily comprising:a) the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local

Authority Accounting in the United Kingdom 2013/14;b) the CIPFA Service Reporting Code of Practice (SeRCOP) 2013/14.c) and supported by International Financial Reporting Standards (IFRS).

Throughout the presentation of financial accounts figures, expenditure, income reductions anddeficits are shown without brackets; income, expenditure reductions and surpluses withinbrackets. This is with the exception of Note 38 Retirement Benefits which is shown in accordancewith actuarial standard practice.

The purpose of this Statement is to explain the basis for the recognition, measurement and disclosureof transactions and other events in the accounts.

The accounting convention adopted is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

B ACCRUALS OF INCOME AND EXPENDITURE

Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:

Revenue from the provision of services is recognised when the Authority can measure reliably the percentage of completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the Authority.

Supplies are recorded as expenditure when they are consumed - where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet.

Expenses in relation to services received (including services made by employees) are recorded as expenditure when the services are received rather than when payments are made.

Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than cash flows fixed or determined by the contract.

Where income and expenditure has been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where it is doubtful that debts will be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.

Both Non Domestic Rates (NDR) and Council Tax are accounted for on an agency basis. For NDRthis means that the Authority is dealing with the collection of business rates on behalf of the the Government and Dorset Fire Authority as well as for Poole Borough. For Council Tax theAuthority is collecting precepts on behalf of Dorset Police and Fire Authorities as well as the Borough of Poole Precepts.The accounts reflect the amount that is attributable to Poole only. Further information is contained within the Collection Fund Accounts.

Analysis of debtors and creditors can be found in the Notes 27 and 31 to the Financial Statements.

VAT is included in income and expenditure accounts, only to the extent that it is irrecoverable.



1 ACCOUNTING POLICIES (continued)

C CASH AND CASH EQUIVALENTS

Cash is represented by cash in hand and deposits with financial institutions repayable without penaltyon notice of not more than 24 hours eg a bank current account.Cash equivalents are investments that are readily convertible to known amounts of cash with insignificant risk of change in value. This Authority has determined that any fixed term deposits held are not highly liquid and therefore not readily convertible to cash.Cash equivalents are deemed to include Call Accounts, Money Market Funds and Instant Deposits.In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that arerepayable on demand and form an integral part of the Authority's cash management.

D EXCEPTIONAL ITEMS

When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the Authority's financial performance.

E PRIOR PERIOD ADJUSTMENTS, CHANGES IN ACCOUNTING POLICIES AND ESTIMATES ANDERRORS

Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, ie in the current and future years affected by the change and do not give rise to a prior period adjustment.

Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Authority's financial performance. Where a change is made, it is applied retrospectively (unless otherwise stated) by adjusting opening balances and comparative amounts for the period as if the new policy had always been applied.

Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

F CHARGES TO REVENUE FOR NON-CURRENT ASSETS

General Fund Service Revenue Accounts, Central Support Services, Trading Accounts and the Housing Revenue Account are charged with the following items to record the real cost of using assets during the year:

- depreciation attributable to the assets used by the relevant service;- revaluation and impairment losses on assets used by the service where there are no

accumulated gains in the Revaluation Reserve against which they can be written off; - amortisation of intangible fixed assets attributable to service.

The Authority is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisations and therefore these charges are appropriated back out to the Capital Adjustment Account via the adjustments between accounting basis and funding basis under regulations. However, it is required to make an annual provision from revenue to contribute towards the reduction in its overall borrowing requirement on a prudent basis. This sum is calculated in line with statutory guidance (for supported borrowing this council uses an amount equal to at least 4% of the underlying amount measured by the adjusted Capital Financing Requirement, excluding amounts attributable to Housing Revenue Account activity). This amount, known as the Minimum Revenue Provision (MRP),is a charge against the General Fund Balance and is an adjusting transaction with the Capital




F CHARGES TO REVENUE FOR NON-CURRENT ASSETS (continued)

Adjustment Account in the Movement in Reserves Statement. For any prudential borrowing repayments are made, as a minimum, over the life of the asset. This is accounted for as voluntaryrevenue provision for capital financing and is accounted for in the same way as described for MRP.In summary depreciation, revaluation and impairment losses and amortisations are therefore replaced by the contribution in the General Fund Balance, by way of an adjusting transaction withthe Capital Adjustment Account in the Movement in Reserves Statement for the difference betweenthe two.

G EMPLOYEE BENEFITS

Benefits Payable During Employment

Short-term employee benefits are those due to be settled within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave and paid sick leave, for current employees and are recognised as an expense for services in the year in which employees render service to the Authority. An accrual is made for the cost of holiday entitlements (or any form of leave, eg time off in lieu) earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable as at the 31st March, to give a true liability as at 31 March date. An alternative would be to use the 'next year' rate for wage and salary rates as this is when the employee takes the benefits. The accrual ischarged to Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

Termination Benefits

Termination benefits are amounts payable as a result of a decision by the Authority to terminate an officer's employment before the normal retirement date or an officer's decision to accept voluntary redundancy. Redundancy costs are charged on an accruals basis to the services in the Comprehensive Income and Expenditure Statement when the Authority is demonstrably committedto the termination of the employment of an officer or group of officers or making an offer to encourage voluntary redundancy.

Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by the Authority to the pension fundor pensioner in the year, not the amount calculated according to the relevant accounting standards.In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end.

Post Employment Benefits

The majority of the Authority's employees are either in the Local Government Pension Scheme (LGPS) or the Teachers' Pension Scheme (TPS).

* The LGPS is administered by Dorset County Council and employer contribution levels areset by the fund administrator taking into account government regulations.

* The TPS administered by Capita Teachers' Pensions on behalf of the Department for Educationset the contributions nationally.

Both schemes provide defined benefits to members, earned as employees work for the Authority.




G EMPLOYEE BENEFITS (continued)

Post Employment Benefits (continued)

However, the arrangements for the Teachers' scheme mean that liabilities for these benefits cannotbe identified to the Authority. The scheme is therefore accounted for as if it were a defined contribution scheme - no liability for future payments of benefits is recognised in the balance sheet and the Children's and Education Services line in the Comprehensive Income and Expenditure Statement is charged with the employer's contributions payable to the TPS in the year.

The LGPS is accounted for as a defined benefit scheme and in compliance with International Financial Reporting Standard 19 (IAS19) Retirement Benefits.In essence this requires that the accounts should reflect the liability for benefits when the Authorityis committed to making them, even if the actual payment will be many years into the future.

This policy is felt to be more appropriate as it means that the full cost of employing people is recognised during the period of employment and that this is consistent with the concept of total cost as defined within CIPFA's 'Service Reporting Code of Practice'.

The liabilities of the Dorset County Pension Scheme attributable to the Authority are included in the Balance Sheet on an actuarial basis using the projected unit method - i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc, and projections of projected earnings for current employees.

Liabilities are discounted to their value at current prices, using a discount rate of 4.4%.(based on the indicative rate of return on high quality corporate bonds)

The assets of the Dorset County Council Pension attributable to the Authority are included in the Balance Sheet at their fair value as estimated by the actuary.

The change in the net pensions liability is analysed into the following components:Service Cost, comprising:- current service cost - the increase in liabilities as a result of years of service earned this

year allocated in the Comprehensive Income and Expenditure Statement to services forwhich the employees worked;

- past service cost - the increase in liabilities arising from current year decisions whose effectrelates to years of service earned in earlier years - debited to the Surplus or deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part ofNon Distributed Costs.

- net interest on the net defined benefit liability - ie net interest expense for the authority - thechange during the period in the net defined benefit liability that arises from the passage oftime charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement. This is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the periodto the net defined benefit liability at the beginning of the period, taking into account any changes in the net defined benefit liability during the period as a result of contribution andbenefit payments.

Remeasurement comprising:- the return on plan assets - excluding amounts included in net interest on the net defined

benefit liability - charged to the Pensions Reserve as Other Comprehensive Income and Expenditure.

- actuarial gains and losses - changes in the net pensions liability that arise because eventshave not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions - charged to the Pensions Reserve as OtherComprehensive Income and Expenditure.




G EMPLOYEE BENEFITS (continued)

Post Employment Benefits (continued)

- contributions paid to the Dorset County Council Pension Fund - cash paid as employer'scontributions to the pension fund in settlement of liabilities; not accounted for as an expense

Statutory provisions require the General Fund Balance to be charged with the amount payable by the Authority to the pension fund in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any amounts payable to the fund but unpaid at the year end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impactthe the General Fund of being required to account for retirement benefits on the basis of cash flowsrather than as benefits are earned by employees.

Discretionary Benefits - the Authority also has restricted powers to make discretionary awards ofretirement benefits in the event of early retirement. Any liabilities estimated to arise as a result of an award to any member of staff (including teachers) are accrued in the year of the decision to make the award.

H EVENTS AFTER THE BALANCE SHEET DATE

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occurbetween the end of the reporting period and the date when the Statement of Accounts is authorisedfor issue. Two types of event can be identified:

- those that provide evidence of conditions that existed at the end of the reporting period - theStatement of Accounts is adjusted to reflect such events

- those that are indicative of conditions that arose after the reporting period - the Statement ofAccounts is not adjusted to reflect such events, but where a category of events would have amaterial effect, disclosure is made in the notes of the nature of the events and their estimatedfinancial effect.

Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts.

I FINANCIAL INSTRUMENTS

Financial Liabilities

Financial liabilities are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and carried at their amortised cost. Annual charges to the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument.

For most of the borrowings of the Authority, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest); and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in the loan agreement.




I FINANCIAL INSTRUMENTS (continued)

Financial Liabilities (continued)

The Authority has a Loan Agreement entered into during 2010/11 with the Regional Development Agency. This agreement gives access to forward funding of up to 9.96m which is for fundingtowards the cost of building Twin Sails Bridge. The funding is accessed via claims for reimbursement of costs incurred. This funding is then recognised on the Authority Balance Sheet as a loan.(Note that the Regional Development Agency no longer exists but has been subsumed intothe Home and Communities Agency)

The intention is that this loan is forward funding of developer contributions. It is currently expectedthat the loan will be repaid with these future contributions.

The loan repayments are scheduled and commenced from 1st September 2013. There are two repayment schedules, one whereby the Authority does not pay any interest, the second incurringinterest penalties at Bank of England Base Rate.

This loan is therefore at a preferential rate and the Authority may normally be required to treatthe preferential element of the agreement as a 'grant' within the accounts. This adjustment whichwould result in a notional grant in the Comprehensive Income and Expenditure Statement which would be reversed out in the Movement on Reserves is not being processed. The reason for thisis that it is considered by the Authority that this would create unnecessary confusion within theAccounts and that the true liability relating to the loan would be unclear.

Financial Assets

Financial assets are required to be classified into two types:- loans and receivables - assets that have fixed or determinable payments but are not quoted in

an active market;- available-for-sale assets - assets that have a quoted market price and/or do not have fixed or

determinable payments.

This Authority only has financial assets that fall within the classification of 'loans and receivables'.

Loans and receivables are recognised on the Balance Sheet when the Authority becomes party to the contractual provisions of a financial instrument and are initially measured at fair value. They aresubsequently measured at their amortised cost. Annual credits to the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. The amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to theComprehensive Income and Expenditure Statement is the amount receivable for the year.

In connection with the liability to the Regional Development Agency the Authority has forwardedonto a developer the potential access to a sum not exceeding 2.5m for the building of a LinkRoad connected to the Twin Sails Bridge development. Funding is provided as costs are incurred and the loan to the developer is at zero percent. At the point of reimbursement this value is being recognised on the Authority Balance Sheet as a long term asset as an agreement is in place for repayment to the Authority with repayments that commenced 31 August 2013.The Authority has chosen not to account for this as a soft loan due to the desire to maintain clarityaround these particular transactions.




J GOVERNMENT GRANTS AND CONTRIBUTIONS

Whether paid on account, by instalments or in arrears, government grants, third party contributionsand donations are recognised as due to the Authority when there is reasonable assurance that:

* the Authority will comply with the conditions attached to the payments, and * the grants or contributions will be received.

Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied.Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed bythe recipient as specified, or future economic benefits or service potential must be returned to the transferor. The Authority's interpretation is that if there is a right of return of the grant or contributionthen the funding will be held in receipts unapplied until such time as it is applied to relevant spend.If there is no right of return then the grant or contribution is recognised immediately in the Comprehensive Income and Expenditure Account but is backed out through the Movement in Reserves Statement to either Earmarked Revenue Reserves or to the Capital Grants Unapplied Reserve.

Monies advanced as grants or contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxationand Non-Specific Grant Income (non-ringfenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement.

Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied reserve. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.

K HERITAGE ASSETS

Heritage assets are those assets that are intended to be preserved in trust for future generationsbecause of their cultural, environmental or historical associations. They are held to achieve the objective of maintenance of heritage. Historical buildings used in the delivery of services are not heldhere but are classified as operational land and buildings.

The heritage assets held by the Authority are the collections of assets, works of art and artefacts either exhibited or stored by the Authority's Museum Service and Civic Regalia. The collections heldprovide a unique insight into the culture and heritage of Poole. They have been collected over more than 130 years and total approximately 50,000 objects. They include local topographical and maritime art, ceramics (particularly Poole pottery), archaeology, maritime and social history, localtrades and industries, photographs, documents and ephemera, costume and textiles.

Heritage assets are recognised at historic cost or at valuation where these are available and considered reliable. The Code allows that the measurement bases for heritage assets are relaxed.Where assets have been recently purchased information will likely be available on their cost orvalue. Where this information is not available, and cannot be obtained at a cost which is commensurate with the benefits to users of the financial statements, the asset will not be recognised.




K HERITAGE ASSETS (continued)

The collections held by the Authority are split into three broad categories for reporting purposes:- the Museums Collections- Civic Regalia and valuable property and gifts- Public Art around the Borough

The Museums CollectionsThe Authority does not as a rule obtain specific valuations for its museums collections nor does it hold historic costs. The contents of the collections are covered by a blanket insurance policy whichis based upon a percentage of the buildings costs. Whilst the Code allows insurance valuations to be used, the Authority considers that the blanket insurance policy approach is not sufficiently accurate as a valuation method to utilise for inclusion of a balance sheet value.The Authority is of the opinionthat the costs of obtaining relevant valuations for the collections would be disproportionate in terms of benefit derived. In addition certain items within the collections cannot be valued because of thediverse and often unique nature of items eg the log boat.

Civic Regalia and valuable property and giftsItems included within this category include all of the Civic Regalia (maces, chains of office, badgependants and seals), freedom caskets, commemorative gifts received and some significant works of art. These items are valued individually and periodically by external valuers for insurance purposes.They were last valued in March 2008 by Bonhams and this value is indexed annually for insurance purposes. This indexed value will be used as a proxy for inclusion on the balance sheet.

Public Art around the BoroughThe Authority tries to ensure that where possible large developments are encouraged to encompasssome form of arts sculpture into any landscaping design. Ownership of these items does not however generally rest with the Borough and often the cost is relatively small. The Authority has reviewed these items and reclassified the historic cost of the Baden Powell statue from community assetsinto heritage assets. Other items of art owned by the Authority, notably the Caro Sea Music Sculptureare not recognised in the balance sheet as no cost in known and there is no market valuation available.

All heritage assets included with a value on the balance sheet are deemed to have indeterminate lives and high residual value; hence the Authortiy does not consider it appropriate to charge depreciation.

General

The policy governing disposal of museum collection items is covered in the museums acquisition and disposals policy as described in Note 45, there is an inherent presumption against disposal as the nature of the assets is that they are held for future generations. Nevertheless, should a disposal take place and the disposal results in a capital receipt it will be recorded in the notes to the accounts.

L INTANGIBLE FIXED ASSETS

Expenditure on assets that do not have a physical substance but are identifiable and controlled bythe Authority is capitalised when it will bring benefits to the council for more than one year.

Intangible assets are measured initially at cost. Amounts are only revalued where the fair value ofthe assets held by the Authority can be determined by reference to an active market. In practice,no intangible asset held by the Authority meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised over its useful life




L INTANGIBLE FIXED ASSETS (continued)

to the relevant service line in the Comprehensive Income and Expenditure Statement. An asset is tested for impairment where there is an indication that the asset might be impaired. Any lossesrecognised are posted to the relevant line in the Comprehensive Income and Expenditure Statement.Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes,amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than 10,000) the Capital Receipts Reserve.

M INTERESTS IN COMPANIES AND GROUP ACCOUNTS

The Authority has no investment in companies other than its' Arms Length Management Organisation' PHP Ltd. Financial transactions with the company are recorded in the HRA and Note 40 to the Financial Statements. PHP is responsible for the management of the Authority's housing stock.

The Code requires the preparation of group accounts where appropriate. This Authority has fully reviewed the requirements with regard to both the quantitative and qualitative aspects contained within the code and has concluded that there is no requirement to produce group accounts for 2013/14 accounts.

N INVENTORIES AND LONG TERM CONTRACTS

Inventories are included in the Balance Sheet at the lower of cost and net realisable value.

Long term contracts are accounted for on the basis of charging the Surplus or Deficit on the Provision of Services with the value of the works and services received under the contract during the financial year. The Authority also discloses any long term contracts of material value where ithas committed revenue resources for future financial years.

O INVESTMENT PROPERTY

Investment properties are those that are used solely to earn rentals and/or for capital appreciation.The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale.

Investment properties are measured initially at cost and subsequently at fair value, based on the amount at which the asset could be exchanged between knowledgeable parties at arms length.Properties are not depreciated but are currently revalued annually.

Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The same treatmentis applied to gains and losses on disposal.

It is intended that all rentals received in relation to investment properties are credited to the Financingand Investment Income line and result in a gain for the General Fund Balance. However, currentlythere are still a few rentals recorded in service lines. Review of this will continue during 2014/15.




O INVESTMENT PROPERTY (continued)

The note includes all rentals relating to investment properties even if the income is coded on in other services. Revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than 10,000) the Capital Receipts Reserve.

P JOINTLY CONTROLLED OPERATIONS

Jointly controlled operations are activities undertaken by the Authority in conjunction with otherventurers that involve the use of the assets and resources of the venturers rather than the establishment of a separate entity. The Authority recognises on its Balance Sheet the assets that it controls and the liabilities that it incurs and debits and credits the Comprehensive Income and Expenditure Statement with its share of expenditure and income from the activity of the operation.

Q LEASES

Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases.Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification. Arrangements that do not have the legal status of a lease but convey a right to use an asset in returnfor payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets.

Authority as Lessee

The Authority has not entered into any finance leases.

Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefitting from use of the leased property, plant or equipment. Charges are generally made according to the pattern of payments though this may be adjusted if for example there is a substantial rent free period at the commencement of the lease.

Authority as Lessor

The Authority has not granted any finance leases with the exception of leases in relation to Academiesas referenced within Note 18.

Where the Authority grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet. Rental income is credited to the Comprehensive Income and Expenditure Statement. Credits are made according to the pattern of payments though this may be adjusted if for example there is a substantial premium paid at the commencement of the lease.

R OVERHEADS AND SUPPORT SERVICES

The cost of overheads and support services are accumulated in holding accounts and then charged to the authority's services and other accounts. They are charged in accordance with the costingprinciples of the CIPFA Service Reporting Code of Practice 2013/14 and on a full cost basis. Exceptions to this are limited to:- Corporate and Democratic Core - cost relating to the council's status as a multi-functional,

democratic organisation.- Non Distributed Costs - the cost of discretionary benefits awarded to employees retiring early

and impairment losses chargeable on assets held for sale.




S PROPERTY, PLANT AND EQUIPMENT (PPE)

Assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment.

RecognitionExpenditure on the acquisition, creation or enhancement of PPE is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associatedwith the item will flow to the Authority and the cost of the item can be measured reliably. This excludes expenditure on routine repairs and maintenance of non current assets which is charged as an expense when it is incurred. The Authority operates to a working deminimus of 25,000.

MeasurementAssets are initially measured at cost, comprising all expenditure that is directly attributable tobringing the asset in to working condition for its intended use.

The Authority does not capitalise borrowing costs incurred whilst assets are under construction.

Assets are then carried in the Balance Sheet using the following measurement bases:

* Infrastructure, community assets and assets under construction - depreciated historicalcost

* council dwellings - fair value, determined using the basis of existing use value for social housing (EUV-SH)

* all other assets - fair value, determined as the amount that would be paid for the assetin its existing use i.e. existing use value (EUV).

Where there is no market-based evidence of fair value because of the specialist nature of an asset,depreciated replacement cost (DRC) is used as an estimate of fair value.

Where non-property assets that have short useful lives and/or low values, depreciated historical cost basis is used as a proxy for fair value.

Assets included in the Balance Sheet at fair value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from their fair value at the year-end, but as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the ComprehensiveIncome and Expenditure Statement where they arise from the reversal of a loss previously charged to a service.

Where decreases in value are identified, they are accounted for by:

* where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amountof the accumulated gains)

* where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.

The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account.




S PROPERTY, PLANT AND EQUIPMENT (PPE) (CONTINUED)

Impairment

Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired. Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall.

Where impairment losses are identified, they are accounted for by:

* where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains)

* where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.

Where an impairment loss is reversed subsequently, the reversal is credited to the relevant serviceline in the Comprehensive Income and Expenditure Statement, up to the amount of the orginal loss.

Depreciation

Depreciation is provided on all PPE assets by the systematic allocation of their depreciable amounts over their useful lives. An exception is made for assets without a determinable finite useful life (i.e. freehold land and certain Community Assets) and assets that are not yet available for use (i.e. assets under construction). It is charged in full in any year of disposal but not in the year of acquisition.

Depreciation is calculated on the following basis:

* buildings - straight line allocation over the useful life of the property as estimated by the valuer and council dwellings are based life of components.Asset lives range between 5 and 50 years.

* vehicles, plant, furniture and equipment - straight line allocation over useful economic life dependent upon asset type and generally after consulting with relevant officers using assetlives ranging between 5 and 20 years.

* infrastructure - straight line allocation ranging between 10 and 125 years.

Information relating to useful economic lives of individual assets is recorded in the Fixed Asset Register. Newly acquired assets are depreciated from the year after acquisition.

Where a material item of PPE has major components whose cost is significant in relation to the total cost of the item, and the UELs are different and would create a distortion to the charge made in the Comprehensive Income and Expenditure Statement, then these will be depreciated seperately.The application of this IFRS standard is prospective, that it is to be applied to assets at the pointof revaluation, enhancement or acquisition. A deminimus level of 2m is being used for the levelat which an individual asset needs to be considered for componentisation and the component would need to be at least 20% of the value.

Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account.




S PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Disposals and Non-current assets Held for Sale

When it becomes probable that the carrying amount of an asset will be recovered principally througha sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale.The asset is revalued immediately before reclassification and then carried at the lower of this amountand fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previouslosses recognised in the Surplus or Deficit on Provision of Service. Depreciation is not charged onAssets Held for Sale.

If assets no longer meet the criteria to be classified as Assets Held for Sale, they are reclassifiedback to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale; adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as Held for Sale, and their recoverable amount at the date of the decision not to sell.

Council dwellings being sold to tenants under Right to Buy legislation will not be held in this categoryas the certainty of the selling decision does not rest with the Authority.

Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale.

When an asset is disposed of or decommissioned, the carrying amount of the asset in the BalanceSheet (whether PPE or Assets Held for Sale) is written off to the Other Operating Expenditure linein the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal.Receipts from disposals are credited to the same line in the Comprehensive Income and ExpenditureStatement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of theasset at the time of disposal). Any revaluation gains accumulated for the asset in the RevaluationReserve are transferred to the Capital Adjustment Account.

Amounts received for a disposal in excess of 10,000 are categorised as capital receipts. A proportion of receipts relating to housing disposals (75% for dwellings, 50% for land and other assets, net of statutory deductions and allowances) is payable to the Government. The balance ofreceipts is required to be credited to the Capital Receipts Reserve, and can then only be used for newcapital investment (or set aside to reduce the Authority's underlying need to borrow (the capitalfinancing requirement)). Receipts are appropriated to the Reserve from the General Fund Balance inthe Movement in Reserves Statement.

The written off value of disposals is not a charge against council tax, as the cost of fixed assets isfully provided for under separate arrangements for capital financing. Amounts are appropriated to theCapital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.

Recognition of school assets and transfer of schools to academy status and foundation status

The accounting treatment of land and buildings for each school is based on the legal framework underlying each type of school and any legal transfers of assets that have occurred.

School assets are retained on the Balance Sheet until they are transferred to their new status.At the point of transfer the asset is treated as a disposal at zero value and the loss is recognised in the Comprehensive Income and Expenditure Account as part of other operating expenditure. There is no impact on the tax payer as this loss is reversed in the adjustment between accounting basis and funding basis under regulations.




T PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions

Provisions are made where an event has taken place that gives the Authority a legal or constructiveobligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. For instance, the Authority may be involved in a court case that could eventually result in the making of a settlement or the payment of compensation.

Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the authority becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle theobligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year - where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlementthan anticipated is made), the provision is reversed and credited back to the relevant service.

Where some or all of the payment required to settle a provision is expected to be recovered from another party (e.g. from an insurance claim), this is only recognised as income for the relevantservice if it is virtually certain that reimbursement will be received if the authority settles the obligation.

T PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)

Contingent Liabilities A contingent liability arises where an event has taken place that gives the authority a possible obligation whose existence will only be confirmed by the occurance or otherwise of uncertainfuture events not wholly within the control of the authority. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably.Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts.




T PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)

Contingent AssetsA contingent asset arises where an event has taken place that gives the authority a possible asset whose existence will only be confirmed by the occurance or otherwise of uncertain future events not wholly within the control of the authority.

Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential.

U RESERVES

The Authority sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating amounts out of the General Fund in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year to score against the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund in the Movement in Reserves Statement so that there is no net charge against council tax for the expenditure.

The Authority also operates reserves earmarked for capital purposes with the intention of funding future capital expenditure. Termed 'capital fund' this has actually been established from revenue contributions.In addition the Housing Revenue Account has a major repairs reserve. When the council incurs capital expenditure, the funds can be used as a source of finance. At the point of use, entries are made in the reconciling items statement and adjustments made to the capital adjustments account and the reserves.

Certain reserves are kept to manage the accounting processes for non-current assets, retirement andemployee benefits and do not represent usable resources for the Authority. These reserves are explained in the relevant policies.

V REVENUE EXPENDITURE FUNDED FROM CAPITAL UNDER STATUTE (REFCUS)

Expenditure incurred during the year that may be capitalised under statutory provisions but does not result in a creation of a non-current asset has been charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the Authority has determined to meet the cost of this expenditure from existing capital resources, or by borrowing, atransfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so there is no impact on the level of council tax. Included here are private sector housing renewal loans. The authority does not recognise these as long term debtors in the accounts. Any repayments are reinvested into the private sector renewal category.This treatment is also applied to capital expenditure on schools where the assets are vested within the control of the governors rather than the LEA eg foundation and voluntary aided schools.

W VALUE ADDED TAX (VAT)

Income and expenditure excludes any amounts related to VAT, as all VAT collected is payable toHM Revenue and Customs and all VAT paid is recoverable from them.



2 a PRIOR PERIOD ADJUSTMENTS

A revised version of IAS19 Employee Benefits applies to the disclosure in relation to retirement benefits(Note 38) for accounting periods beginning after 1st January 2013. The 2012/13 comparative figuresin the Comprehensive Income and Expenditure Statement have therefore been restated, along with theMIRS, and the Cash Flow. Any relevant notes have also been amended (Notes 5, 7, 38 and 39a) There is no effect on scheme assets or liabilities and so the net liability in the Balance Sheet as at 31 March 2013 is unaltered. The analysis of the movement within the assets and liabilities has however been restated into the new format in Note 38.The changes made to the figures within the statements are summarised as follows:

Comprehensive Income and Expenditure StatementPrevious Revised Standard Standard'000 '000

Service Cost 12,489 12,914Settlements and Curtailments 425Interest Cost 19,040Expected Return on Assets (11,822)Net Interest on the Defined Liability (Asset) 8,516Administration expenses 228Total charged to Provision of Services 20,132 21,658Actuarial (Gains) / Losses (3,386)Remeasurements (4,912)Total Comprehensive Income and Expenditure 16,746 16,746

Actual Return on Scheme Assets 33,225 33,453

Other totals within the statement that are changed but neutral to total comprehensive income and expenditureNet (Surplus) or Deficit on Provision of Services 18,887 20,413Other Comprehensive Income and Expenditure (3,425) (4,951)Total Comprehensive Income and Expenditure 15,462 15,462

As explained within Note 38 the net charge to the surplus/deficit on the provision of services is not the final cost to the general fund for pensions. This is achieved by the reversing the net impact of the changes made in accordance with IAS19, these entries are shown in note 5. The previous and revised standard totals are shown belo

Net Charge/(credit) to surplus/deficit on provision of services as above 20,132 21,658Reversals as detailed within note 5 (9,708) (11,234)Retained charge against the general fund - employer contributions 10,424 10,424

Movement in Reserves Statement (MIRS) - included the following:

Reversal of net charges made to surplus/deficit on provision of services 9,708 11,234Actuarial remeasurements gain/loss in CI&ES (3,386) (4,912)

Unusable Reserves Movement (pensions fund) 6,322 6,322General Fund Balance Movement 10,424 10,424Total within the MIRS Statement 16,746 16,746

Cash Flow Statement

Net Surplus/Deficit on the Provision of Services 18,887 20,413Adjustments for non cash movements (53,923) (55,449)

The pensions reversal is one of the totals included in the adjustment for non cash movements note 39a. This has been amended from 9,708k to 11,234k.

Note 7 - Segmental analysis has been amended to show the change in interest cost and expected return onassets - the net value of 7,218k has been replaced with net interest on defined liability and administrationcosts 8,744k.



2 b ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED BUT NOT ADOPTED

The Code of Practice on Local Authority Accounting in the UK 2014/15 (the Code) has introduced several changes in accounting policies which will be required from 1st April 2014. If these had been adopted for the financial year 2013/14 there would be no material changes.

A number of new and revised standards have been issued addressing the accounting for consolidations,involvements in joint arrangements and disclosure of involvements in other entities. These include:

IFRS 10 Consolidated Financial Statements - This standard introduces a new definition of control, which is used to determine which entities are consolidated for the purposes of group accounts. The Authority does have ownership of Poole Housing Partnership (PHP) but has not produced consolidated accounts for this financial year on the basis of materiality.

IFRS 11 Joint Arrangements - This addresses the accounting for a joint arrangement, which is defined as a contactual arrangement over which two or more parties have joint control. These are classified as either a joint venture or a joint operation. The amendment to the standard concerns proportionate consolidation whichcan no longer be used for jointly controlled entities.

IFRS 12 Disclosures of Involvement with Other Entities - This is a consolidated disclosure standard requiringa range of disclosures about an entity's interests in subsidiaries, joint arrangements, associates and unconsolidated 'structured entities'.

IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures - These statements have been amended to conform with the changes in IFRS 10, IFRS 11 and IFRS 12.

The Authority will be giving due consideration to any changes required but has no expectation that any changeswolud be material.

IAS 32 Financial Instruments Presentation - The Code references amended application guidance when offsetting a financial asset and a financial liability. The gains and losses would be separately identified on the ComprehensiveIncome and Expenditure Account and therefore no further disclosure would be required.

IAS 1 Presentation of the Financial Statements - the changes clarifies the disclosure requirements in respect ofcomparative information for the preceding period. The Statement of Accounts fully discloses comparative informationfor the preceding period therefore these changes will not have a material impact on the Statement of Accounts.

3 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

In applying the accounting policies set out in Note 1, the Authority has had to make certain judgementsabout complex transactions or those involving uncertainty about future events. The critical judgementsmade in the Statement of Accounts are:

a There is a degree of uncertainty about future levels of funding for local government. The authority isestimating and accommodating this as far as is possible within its Medium Term Financial Planningprocess. The Authority has determin

Master Statement of Accounts 2013-14

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