South Norfolk Council Statement of Accounts 2013/14 · statement of accounts 2013/14 south norfolk...

STATEMENT OF ACCOUNTS 2013/14 SOUTH NORFOLK COUNCIL

CONTENTS

EXPLANATORY FOREWORD .................................................................................................... 4

ANNUAL GOVERNANCE STATEMENT ................................................................................... 13

COUNCIL APPROVAL OF THE ANNUAL GOVERNANCE STATEMENT ................................ 24

STATEMENT OF RESPONSIBILITIES...................................................................................... 25

SIGNIFICANT ACCOUNTING POLICIES .................................................................................. 26

MOVEMENT IN RESERVES STATEMENT ............................................................................... 38

COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT ........................................... 40

BALANCE SHEET ..................................................................................................................... 41

CASHFLOW STATEMENT ........................................................................................................ 42

NOTES TO THE FINANCIAL STATEMENTS ............................................................................ 43

1. ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED .......................... 43

2. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES ...................... 43

3. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY .................................................................................. 44

4. MATERIAL ITEMS OF INCOME AND EXPENSE ..................................................... 44

5. PRIOR PERIOD ADJUSTMENTS, CHANGES IN ACCOUNTING POLICIES AND ESTIMATES AND ERRORS ..................................................................................... 45

6. EVENTS AFTER BALANCE SHEET DATE .............................................................. 45

7. ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATION ........................................................................................................... 46

8. PROPERTY, PLANT & EQUIPMENT ....................................................................... 49

9. INVESTMENT PROPERTIES ................................................................................... 52

10. INTANGIBLE ASSETS .............................................................................................. 52

11. FINANCE LEASES ................................................................................................... 53

12. OPERATING LEASES .............................................................................................. 54

13. FINANCIAL INSTRUMENTS..................................................................................... 55

14. LONG TERM DEBTORS .......................................................................................... 58

15. LONG TERM INVESTMENTS .................................................................................. 58

16. SHORT TERM DEBTORS ........................................................................................ 59

17. CASH AND CASH EQUIVALENTS ........................................................................... 59


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18. SHORT TERM INVESTMENTS ................................................................................ 59

19. SHORT TERM CREDITORS .................................................................................... 59

20. PROVISIONS ............................................................................................................ 60

21. LONG TERM CREDITORS ....................................................................................... 60

22. USABLE RESERVES ............................................................................................... 61

23. UNUSABLE RESERVES .......................................................................................... 61

24. CASHFLOW STATEMENT – RECONCILIATION OF NET SURPLUS OR (DEFICIT) ON THE PROVISION OF SERVICES TO NET CASH FLOWS FROM OPERATING ACTIVITIES............................................................................................................... 64

25. AMOUNTS REPORTED FOR RESOURCE ALLOCATION DECISIONS ................. 65

26. MEMBERS ALLOWANCES ...................................................................................... 69

27. OFFICER REMUNERATION .................................................................................... 70

28. EXTERNAL AUDIT COSTS ...................................................................................... 71

29. GRANT INCOME ...................................................................................................... 72

30. RELATED PARTIES ................................................................................................. 73

31. CNC CONSULTANCY SERVICES LTD ................................................................... 73

32. CAPITAL EXPENDITURE AND CAPITAL FINANCING ............................................ 74

33. REVENUE EXPENDITURE FUNDED FROM CAPITAL UNDER STATUTE ............ 75

34. DEFINED BENEFIT PENSION SCHEME ................................................................. 75

35. CONTINGENT ASSETS & LIABILITIES ................................................................... 80

COLLECTION FUND STATEMENT .......................................................................................... 81

NOTES TO THE COLLECTION FUND ...................................................................................... 82

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SOUTH NORFOLK DISTRICT

COUNCIL ................................................................................................................................... 84

GLOSSARY OF FINANCIAL TERMS ........................................................................................ 87

GLOSSARY OF ABBREVIATIONS ........................................................................................... 89


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EXPLANATORY FOREWORD 1. Introduction

This foreword provides a brief explanation of the financial aspects of the Council’s activities and draws attention to the main characteristics of the Council’s financial position. Information on the Statement of Accounts is presented as simply and clearly as possible. However due to the technical nature of the accounts, the use of accounting terms is required in certain cases. A glossary of the meaning of these terms is provided at the end of this document to help the reader’s understanding. The Code of Practice on Local Authority Accounting is prepared on the basis that the published Statement of Accounts gives interested parties including Electors, Council Members and Employees, clear information about the Council’s finances and allows the accounts to be compared with other local authority accounts. The Statement of Accounts is one of the many statutory documents published throughout the year to inform stakeholders of the activities of the Council. Publication of the Statement of Accounts is an essential feature of the public accountability of a local authority as it reports on the use of funds raised from the public and business ratepayers.

2. Annual Governance Statement The Annual Governance Statement, which is included on pages 13 to 23, provides a review of the effectiveness of the Council’s governance framework, internal control and risk management arrangements. 3. Summary of the Council’s Financial Position

The 2013/14 budget, excluding parish precepts, of £12.17 million was set by the Council in February 2013. At the start of the financial year, £0.13 million slippage requests were transferred from the General Revenue Reserve. These related to areas of expenditure which had not taken place in the previous financial year and increased the base budget to £12.3 million. Amendments for income received during the year reduced the in-year budget to £12.234 million. The Council’s overall revenue position is shown in the tables below:

Summary Performance against budget 2013/14

Budget Outturn Variance %

Variance

£ £ £

Pay 14,424,740 14,270,561 (154,179) 1.07%

Non-Pay 12,350,042 12,214,303 (135,739) 1.10%

Income (14,540,812) (16,060,665) (1,519,853) 10.45%

Total 12,233,970 10,424,199 (1,809,771) 14.79%


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Performance against budget 2013/14

Service Areas:-

Net Cost

Budgeted Cost

Variance to

Budget

£000s £000s £000s

Cultural and Related Services 1,806 2,594 (788)

Environment and Regulatory Services 4,692 4,204 488

Planning Services 3,969 4,614 (645)

Highways and Transport Services 123 253 (130)

Housing Services 1,041 1,414 (373)

Central Services 1,650 1,267 383

Corporate Management 2,053 2,750 (697)

Non Distributed Costs 84 0 84

Net Cost of Services 15,418 17,096 (1,678)

Other Operating Expenditure:-

(Gain)/Loss on Disposal of Non-Current Assets (875) 0 (875)

(Gain)/Loss on Revaluation of Investment Property 625 0 625

Precepts Paid to Parish Councils 2,990 2,990 0

Payments to Housing Capital Receipts 1 0 1

Financing and Investment Income and Expenditure:-

Trading Undertakings and other Investment Property income

(137) 46 (183)

Interest Payable or Similar Charges 8 9 (1)

Interest and Investment Income (361) (325) (36)

Pension interest costs (289) 894 (1,183)

Taxation and Non-Specific Grant Income:

Revenue Support Grant (3,902) (3,902) 0

Non-Domestic Rates Income and Expenditure (3,042) (2,728) (314)

Income from Collection Fund (8,420) (8,277) (143)

General Grant (3,519) (2,798) (721)

Capital Grant (308) 0 (308)

(Surplus)/Deficit on Provision of Services (1,811) 3,005 (4,816)


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Analysis of major variances

The surplus of £1,811,000 on the net cost of services is a combination of positive variances against pay, non-pay and income budgets. Positive variances on pay budgets reflect effective management of the staff budget, including management of staff vacancies, to ensure expenditure was in line with the approved budget. The Council experienced an increase in income mainly from greater use of its Leisure and Garden Waste Services and a higher number of Planning applications than anticipated when the budget was set.

The Council’s usable reserves increased by £1,896,000 during the year. This was due to the surplus on revenue expenditure shown above and after funding the capital programme.

4. Capital Expenditure and Funding

The approved Capital Programme for 2013/14 was £9,874,089; of this £3,571,820 has been spent. The actual spend amounts to 36% of the total Capital Budget, leaving a positive variance of £6,302,269 (64%) at the end of the year. The main positive variances relate to ongoing capital projects such as Ketteringham Depot, Leisure Centre Enhancements, the Poringland Development, Invest to Save Property Investments and Low Cost Housing. These are partially offset by an adverse variance on Street Sweeping Equipment. The funding for some projects will be carried forward into the capital programme for 2014/15. These areas are:

Poringland (Phase 1) - £1,522,600

Ketteringham Depot – Expanding Facilities - £1,416,852

Leisure Centre Upgrades - £1,144,269

Investment Property - £1,019,748

Toilet Refurbishments - £350,000

Low Cost Housing - £257,710

Vehicle Replacement (Cleansing) - £185,837

Capital Grants for Neighbourhood Projects - £150,000

Travellers Site - £131,667

CNC Integration - £49,670

Grounds Maintenance Equipment - £20,675

Disabled Facilities Grant - £11,280

The main areas of capital expenditure during the financial year were:

Invest to Save Property Investment – a total of £549,642 was spent in 2013/14 to:

o Refurbish a property at Wymondham for rental.

o Develop commercial units and residential property at Poringland.

These properties will produce a higher rate of return than the Council is able to achieve on its cash investments, in the current economic climate.


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Expenditure on plant and equipment of £1,129,109, including the purchase of new cleansing vehicles to update the fleet.

A range of grants and loans to support people remaining in their homes. These have been treated as revenue expenditure funded from Capital Under Statute.

A number of new IT systems including a HR/Payroll system, a telephony system, network infrastructure, and an environment and housing system. This investment in systems will increase the efficiency of the Council.

Resources used to finance capital expenditure are given in Note 32 on page 74. The main source of funding was from revenue reserves. Further information regarding the use of capital receipts is shown on the Movement in Reserves Statement on page 38 and Note 23 to the Financial Statements on page 61.

Further information is provided in notes 8, 9, 10, 23, 32 and 33 to the accounts. 5. Pensions

The accounts and notes relating to the pension fund have been prepared in accordance with International Accounting Standard (IAS) 19. The pension liability broadly remained stable in 2013/14 following the triennial revaluation of the pension fund. The Comprehensive Income and Expenditure Statement shows an Actuarial Gain of £0.017 million (2012/13 Actuarial loss of £5.848 million) in respect of recognised income and expense. The total Pension Fund liability shown in the Balance Sheet as at 31 March 2014 stands at £32.470 million compared with £32.411 million the previous year. This represents the liability to the Norfolk Pension Fund. This amount is matched by a Pension Reserve also shown in the Balance Sheet and therefore has no impact on the Council’s overall financial position at 31 March 2014. The IAS 19 balance sheet position for the Council deteriorated slightly in 2013/14. This is principally due to the fact that the financial assumptions determined by Hymans Robertson, an independent firm of actuaries, are overall slightly less favourable at 31 March 2014, than they were at 31 March 2013. In particular the significant changes which have taken placed during the year are that:

a. the deficit has decreased due to changing assumptions of lower pay growth; b. the deficit has further decreased due to good asset returns; c. the deficit has increased due to falling real bond yields as interest rates remain low.

Hymans Robertson uses a set of demographic assumptions that are consistent with those used for the Norfolk Pension Fund. The most recent triennial valuation was 31 March 2013 which set the contribution rates for the next three years from 1 April 2014. Employer’s contributions under the scheme have increased to £2.012 million in 2013/14 from £1.766 million last year, reflecting the agreed payments needed to ensure that the scheme moves from the current funding level of 65% of liabilities to become fully funded over a 20 year period. Further information in relation to pensions is detailed at Note 34 within the Notes to the Financial Statements on page 75.


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6. The Financial Statements The Council’s accounts for the year 2013/14 are set out on pages 38 to 42. The accounts contain a series of statements, summarising financial activity during the year and setting out the Council’s assets and liabilities as at 31 March 2014. These accounts are supported by the significant accounting policies set out in pages 26 to 36 and various notes to the accounts which start on page 43. The accounts consist of four core statements, which are inter-related. Total comprehensive income and expenditure is broken down in the movement in reserves statement between unusable and usable reserves. These constitute the net worth of the Council in the balance sheet. The reasons for movements during the year in cash balances held on the balance sheet are shown in the cashflow statement.

Each of the core statements is detailed below: The accounts consist of the following core statements:-

Movements in Reserves Statement This statement reflects the fact that the Council is partly funded through local taxation. It shows the movement in the year in the different reserves held by the Council, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. It shows the impact of the other three core statements on the Council’s reserves and how much expenditure has been funded by the local taxpayer. The (Surplus) or Deficit on the Provision of Services line shows the true economic cost of providing the Council’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting. The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the Statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Council. After allowing for transfers to and from earmarked reserves, the net effect on General Fund balances is shown as nil, which indicates that the Council’s actual financial performance had no effect on the level of Council Tax for the local taxpayer for 2013/14.

Comprehensive Income and Expenditure Statement This shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. This is prepared on an accruals basis, i.e. income and expenditure are shown in the year to which they relate, rather than when cash is actually received or paid out. Charges against Council Tax are specified in regulations which differ from accounting standards and

Comprehensive Income and Expenditure Statement

Surplus or Deficit on the Provision of Services

Other Comprehensive Income and Expenditure

Total Comprehensive Income and Expenditure Movement in Reserves Statement

Effect on usable reserves

Effect on unusable reserves

Total Net Worth Balance Sheet

Cashflow

Statement


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therefore the actual effect of the surplus on provision of services on the charge against Council Tax is shown in the Movement in Reserves Statement (£nil).

Balance Sheet This summarises the Council’s financial position as at 31 March 2014. It shows the Council’s assets, e.g. building, equipment, cash investments, debtors owing, offset by its liabilities, e.g. money owed to creditors, pension scheme liability, and how the net assets are then reflected in the Council’s reserves. The total reserves will match the Council’s net assets. Reserves are reported in two categories. The first category of reserves refers to usable reserves, i.e. those reserves that the Council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve may only be used to fund capital expenditure or repay debt). The second category covers reserves that the Council is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’.

Cash Flow Statement This summarises the changes in the Council’s overall cash position over the year, showing how the Council’s cash in the bank has increased or decreased over 12 months. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The Cash Flow has been calculated by adjusting the Council’s net surplus for items that do not have a cash impact, e.g. depreciation or revaluations. This gives the net cash flow from Operating Activities. From this figure is subtracted the net cash outflow from Investing Activities, i.e. purchase and disposal of fixed assets, the purchase or disposal of cash investments and payment of capital grants. Cash inflows from Financing Activities are then added, i.e. principally the excess of income over expenditure from the Collection Fund. This results in the overall net increase or decrease in cash over the year which then ties back to the Council’s total cash and cash equivalents as at 31 March 2014 (Note 17). The amount of net cash flow arising from operating activities is a key indicator of the extent to which the operations of the Council are funded by way of taxation and grant income or from the charges made for services provided by the Council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. Borrowing) to the Council.

7. Collection Fund

Billing authorities in England are required by statute to maintain a separate fund for the collection and distribution of amounts due in respect of council tax and national non-domestic rates (NNDR). Until 1 April 2013 cash collected from NNDR payers by billing authorities (net of the cost of collection allowance) was owed to central government and the amount not paid to the government at the balance sheet date was included as a creditor; similarly, if cash paid to the


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government exceeded the cash collected from NNDR payers (net of the billing authority’s cost of collection allowance), the excess was included in the Balance Sheet as a debtor. On 1 April 2013 the Business Rates Retention Scheme (BRRS) was introduced. Under BRRS, cash collected by South Norfolk Council (the billing authority) from NNDR debtors belongs proportionately to central government, South Norfolk Council and Norfolk County Council (the major precepting authority). There will be a debtor or creditor position between the billing authority, the government and the major preceptor to be recognised at the end of each year as the net cash paid to the government and the major preceptor during the year will not exactly match its share of the cash collected from NNDR payers. The NNDR included in the Comprehensive Income and Expenditure Statement (CIES) for the year is the accrued income. The difference between the income included in the CIES and the amount required by regulation to be credited to the General fund is taken to the Collection Fund Adjustment Account and is included as a reconciling item in the Movement in Reserves Statement (MiRS). The cash flow statement only includes in revenue activities those cash flows relating to South Norfolk’s share of NNDR collected. The difference between the government and the preceptors’ share of the net cash collected from NNDR payers and the net cash paid to them is included as “other receipts from financing activities”. There are a number of NNDR reliefs available to NNDR payers. Any changes to policy decisions relating to reliefs post-April 2013 are fully reimbursed by government via s31 grants to each authority. The s31 grant included in the CIES for the current year relates to Small Business Rate Relief and is the accrued amount. To ensure that BRRS is equitable when compared to the previous system of NNDR, the government has calculated the Funding Baseline which each authority needs to fund its activities as well as a Business Rate Baseline which relates to the collectable NNDR, the difference between the two has resulted in South Norfolk Council paying a tariff to central government. The tariff is reflected in the Council’s CIES i.e. it does not go through the Collection Fund. The authority is required to calculate whether it is in a levy or safety net position at year end. As the authority’s income from NNDR and the s31 grant less the tariff paid is greater than the funding baseline then a levy is payable according to the levy formula, the percentage of levy is set at 50%. The levy amount of £319,000 is accrued and included in the CIES and in creditors in the Balance Sheet. The introduction of the BRRS has resulted in a shift of the risk of variation in rates collected and movement in rateable value from the government in full to, in Norfolk: 50% to central government, 40% to South Norfolk Council as the billing authority and 10% to Norfolk County Council as the major precepting authority. As this is a change in legislation there is no requirement for the restatement of prior year figures.


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8. Building Control

Together with Broadland District Council and Norwich City Council, the authority formed a partnership to deliver the building control function in 2004. In September 2010, Kings Lynn and West Norfolk Borough Council joined the partnership. The partnership was managed by a joint committee (Central Norfolk Consultancy – CNC) with representatives from each Council. South Norfolk Council provided the accountancy support to the partnership. The joint committee was brought into the South Norfolk Council accounts based on their equal share, and in accordance with the Code. During 2012/13, the four councils within the partnership approved a decision for South Norfolk Council to become the host authority for CNC. Therefore, from 1 April 2013 South Norfolk Council was granted delegated authority from Broadland District Council, Kings Lynn and West Norfolk Borough Council and Norwich City Council to provide Building Control services in their districts as part of CNC. All staff transferred to South Norfolk Council on 1 April 2013 under the Transfer of Undertakings (Protection of Employment) Regulations 2006. CNC Consultancy Services Limited was incorporated on 18 December 2007 and commenced trading on 14 May 2008. The company was established to provide a bespoke Building Regulation and Energy Consultancy Service from the inception of a project through to completion. The structure of the company, governed by Norwich City Council, Broadland District Council and South Norfolk District Council, is that of an associate, in accordance with the powers provided by the Local Government Act 2003. During 2011/12 Kings Lynn and West Norfolk Borough Council joined the company and the Board of Directors consists of representatives appointed by the four Councils. The Council is currently in discussions to bring the building control service for Fenland District Council into CNC. It is in discussions with a number of other local authorities with a view to establishing a regional building control service across the East of England. The Council has also applied for permission to set up an Approved Inspector Company that would be able to trade anywhere outside the South Norfolk area. Further information is provided in Note 31 to the accounts.

9. Material and unusual items charged/credited to the Comprehensive Income and

Expenditure Statement and the Movement in Reserves Statement The annual revaluation of Investment Properties showed a decrease in the valuation of £0.117 million as shown on the face of the Comprehensive Income and Expenditure Statement. However the effect of this loss is reversed through the Movement in Reserves Statement, to negate the effect on the General Fund. Housing Benefit grants received in 2013/14 amounted to £26.674 million. This income is received from the Department of Work and Pensions and is reimbursed to this authority for providing payments of Housing Benefit to those in the local community on low incomes who need additional support in respect of their rent.


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10. Changes in accounting policies The accounting policies adopted by the District Council comply with the relevant recommended accounting practices, except where stated. 11. Changes to statutory functions and delivery of services The Council is faced with having to achieve savings of £1.5 million in order to reduce its cost base over the next three years. This is as a result of projected reductions in government grants and cost pressures such as inflation, pay awards and contract increases. The Council’s strategy to achieve this is three-fold, firstly undertaking lean reviews of services to drive out waste, secondly by the achievement of efficiencies and exploring the potential sharing of services on a service-by-service basis and thirdly by generating additional income through capital investment in services and developing commercial opportunities. Subject to the Localism Act 2011, there have been no changes to statutory functions during 2013/14. 12. Borrowings and financing activities The Council does not have any borrowings and remains debt free. The Council has managed its investments and borrowings in accordance with the limits approved by the Council. The Council holds receipts of £12.517 million, which, along with reserves and balances of £13.956 million are invested to earn interest, which is credited to the General Fund. As at 31 March 2014, the Council had investments in a number of banks and with one building society. 13. Significant provisions, contingencies and write-offs The Council brought forward a provision of £0.215 million at the start of financial year 2013/14. This provision was for bringing sewage treatment works up to adoptable standards. The provision has reduced during this financial year to £0.083 million, as further work on the sewage treatment plants has been carried out. New provisions totalling £0.279 million have been made in relation to ongoing planning cases to cover the Council’s own legal costs and £0.382 million relating to NDR appeals. Note 20 of the Notes to the Financial Statements provides further details. Contingencies have been disclosed in Note 35 to the Financial Statements. Further guidance on the definition of a contingent asset or liability and its disclosure is given in the section Significant Accounting Policies. 14. Material Events after the Balance Sheet Date The Code of Practice requires the Council to consider events occurring after the Balance Sheet date and until the date when the accounts are authorised for issue. Note 6 of the Notes to the Financial Statements discloses any events of this nature if appropriate.


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ANNUAL GOVERNANCE STATEMENT Scope of Responsibility South Norfolk Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. South Norfolk Council also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness. In discharging this overall responsibility, South Norfolk Council is responsible for putting in place proper arrangements for the governance of its affairs, facilitating the effective exercise of its functions, and which includes arrangements for the management of risk. South Norfolk Council has approved and adopted a code of corporate governance, which is consistent with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government. A copy of the code is on our website or can be obtained from Emma Goddard, the Scrutiny and Information Rights Officer. This statement explains how South Norfolk Council has complied with the code and also meets the requirements of regulation 4 (3) of the Accounts and Audit (England) Regulations 2011 in relation to the publication of a statement on internal control, and accompanies the 2013-14 Statement of Accounts of the Council. The Annual Governance Statement is subject to detailed review by the Finance, Resources, Audit and Governance Committee. The Purpose of the Governance Framework The governance framework comprises the systems and processes for the direction and control of the authority and its activities through which it accounts to, engages with and leads the community. It enables the authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of South Norfolk Council’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.

The governance framework has been in place at South Norfolk Council for the year ended 31 March 2014 and up to the date of approval of the statement of accounts. The Governance Framework An annual review of the Governance Framework at South Norfolk Council was completed prior to the preparation of the Annual Governance Statement.


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The Council’s Vision and Intended Outcomes: South Norfolk Council’s vision is “to retain and improve the quality of life in South Norfolk, for now and future generations, to make it one of the best places to live and work in the country.” The Corporate Business Plan drives the Council’s vision and intended outcomes for citizens and service users. The Council’s corporate priorities, agreed in November 2010, are as follows:

Enhancing our quality of life and the environment we live in.

Promoting a thriving economy.

Supporting communities to realise their potential.

Driving services through being businesslike, efficient and customer aware. The vision and intended outcomes are communicated through the Corporate Business Plan, plus regular briefings, press releases, website and the Link magazine, which is delivered to every household and business in the district. The Corporate Business Plan integrates with the Council’s financial plan to form the Directorate Plans which set out the outcomes to be delivered by the organisation. In the financial year 2013/14 the Scrutiny and Overview Committee had the opportunity to scrutinise the Directorate plans twice during their preparation; once at an all-member workshop in December and then again in February alongside the budgets for the financial year 2014/15. Review of the Council’s Vision and Implications for Governance Arrangements: The vision was reviewed in November 2010, and the Council continues to regularly review its organisational structure as part of aligning resources with demand to deliver the priorities above. The Council comprises 4 Directorates: Chief Executive’s, Corporate Resources, Environment and Housing, and Growth and Localism. The Council has made ongoing savings through lean reviews of services and taking opportunities to make efficiencies, alongside growing income levels. The Moving Forward Together programme continues to develop the organisation and employees so that they are readily able to adapt to change. The programme which began in April 2010, aims to sharpen the customer focus, become more business-like and our staff to be consistently “can do” across the Council. The change management programme has now been successfully integrated into business as usual, being part of the organisational culture. Also under the programme of Moving Forward Together the Council continues to undertake lean systems reviews of services, to ensure it achieves the best use of its resources whilst reducing costs. Lean can be defined as ‘people at all levels in an organisation systematically and continuously identifying and eliminating things that waste time, cause blockages to flow and generally add no value to the customer.’ As part of the change programme the values of the Council were reviewed in 2009/10 and the following values were adopted which remain valid:

Pride in South Norfolk – in the place and the Council. We are committed to improving the quality of life in our district.

Community Focus – working with partners to help meet the aspirations of our community by empowering and leading them.

Valuing People – respecting people, being honest with them and putting them at the heart of what we do.

Responsive and Accountable – communicating clearly and openly our decisions and actions and delivering on promises.


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Ambitious and Resourceful – being innovative, creative and flexible in the way we change to anticipate the needs of our community.

As a result of the adoption of the above values projects such as the South Norfolk On Show Day, awards recognising staff achievement and Leadership courses for both senior and middle management have been delivered in the financial year. During the year, the Council was awarded the Gold Standard for Investors in People, the first public body to receive this award in Norfolk. The Council continues to consider shared service opportunities where they arise to deliver future efficiency savings and provide greater resilience. Service by service opportunities are being investigated when they present themselves and the Council took on the delegated responsibility for building control for 3 other local authorities (Broadland, Kings Lynn and West Norfolk and Norwich City) from 1 April 2013 as part of CNC. During the year the Council has:

Reviewed and updated its Constitution

Reviewed Risk Management and updated its Risk Management Strategy

Reviewed and updated its Whistle-blowing Policy

Reviewed and updated its Counter Fraud, Corruption and Bribery Strategy

Reviewed and published its annual Pay Policy Statement

Reviewed the results of a Staff Survey and is implementing changes based on these results

Reviewed and updated the following HR policies and procedures: o Social Media Policy o Safeguarding Children, Young People & Vulnerable Adults Policy

Measuring the Quality of Services for Users and ensuring they are delivered in accordance with the Council’s objectives and best use of resources: The Council uses a performance management framework which cascades from corporate priorities through directorate plans to individual staff targets. Performance is managed during the year. Key projects are subject to a business case to secure resources, to highlight risks and desired outcomes. Projects are categorised as either Corporate or Directorate projects. Monitoring of these projects is either at commercialisation board and/or cabinet level dependent upon the type of project. Service performance is monitored quarterly by cabinet and annually by the Scrutiny Committee, ensuring member input into the process. The Treasury Management Strategy set for 2013/14 prioritised the protection of capital value when placing cash investments. During the year there have been periods of uncertainty in the financial markets and Officers have had to closely monitor the situation and react accordingly in line with the strategy. The Localism Act provides greater powers for the Community to ensure services are delivered in accordance with their requirements and opportunities to bid to run Council Services. To ensure the Community is engaged with the delivery of services in 2013/14 the Council used the five Neighbourhood Boards as a conduit to enhance services in each individual area. Each Neighbourhood Board is chaired by a South Norfolk Councillor and supported by four other ward Members, with local people and community groups represented as well. Funding has


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been provided to each of the five areas in 2013/14 and the Neighbourhood Boards have decided on how best to utilise this funding to deliver the local priorities that have been identified. The main priority has been to support the local economy through the Market Towns Initiative to stimulate growth. The future direction of Neighbourhood working is being reviewed for 2014/15 and changes will begin to take effect from May 2015. Defining and Documenting Roles and Responsibilities of Councillors and Officers and how decisions are taken: The Council’s constitution, scheme of delegation, codes of conduct, Local Member Protocol and rules of financial governance set the framework in which the organisation makes decisions. The Constitution was reviewed during 2013/14 to ensure that it met current legal requirements and a revised Constitution was agreed by the Council on 24 February 2014. Codes of Conduct Defining Standards of Behaviour for Councillors and Officers: The Localism Act abolished the standards regime established under the Local Government Act 2000 and replaced it with a simpler, less prescriptive method of addressing standards and ethics issues within Local Authorities. In May 2012, the Council approved a new standards regime and a new Code of Conduct; these came into effect from 1 July 2012. The Council’s new regime went above the statutory minimum, ensuring that Councillors should be encouraged to focus on what is open and transparent rather than simply a pecuniary or non-pecuniary interest. Councillors were provided training on the new rules, as well as separate training on predetermination. An Independent Person has been appointed who must be consulted on any allegation of a breach of the Code of Conduct. The Council’s Standards Committee exists to hold hearings on any allegation if necessary. The new arrangements have generally been found to be working well within the authority, with Internal Audit providing a “good” level of assurance in a review undertaken in December 2012. The Council conforms to the governance requirements of the CIPFA Statement on the Role of the Chief Financial Officer in Local Government (2010) The Rules of Financial Governance explain the statutory duties of the Head of Finance including the responsibility under direction of the Cabinet for the proper administration of the Council’s financial affairs. The Council’s governance arrangements allow the Head of Finance to bring influence to bear on all material business decisions. The Finance, Resources, Audit and Governance Committee The Committee met regularly during the year. Its key tasks were to monitor the work of Internal Audit, to approve the statutory accounts, to review the Asset Management Plan, to review and update the Whistle-blowing Policy, the Counter Fraud, Corruption and Bribery Strategy, to oversee risk management and to manage the work in supporting the production of this Annual Governance Statement. The Committee also responded to the CIPFA consultation on streamlining the Annual Accounts in Local Government. Ensuring Compliance with Laws and Regulations, Internal Policies and Procedures: Responsibilities for statutory obligations are formally established. The Chief Executive disseminates statutory instruments to Managers responsible for acting on them. The relevant


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professional Officers are tasked with ensuring compliance with appropriate policies and procedures to ensure all Officers work within them. Decisions to be taken by Members are subject to a rigorous scrutiny process by the Monitoring Officer, Section 151 Officer and in most cases Senior Leadership Team before they are considered by Cabinet or Full Council. Service Managers produced an Assurance Statement for those areas which are cross cutting in the organisation, as evidence to identify the governance arrangements in existence in each service. The outcomes of these Assurance Statements are described under Managers Assurance within Governance Issues Whistle-blowing Policies and Investigating Complaints: The Council has a Whistle-blowing Policy which was approved by Council in 2010. This was reviewed and updated by the Finance, Resources, Audit and Governance Committee and approved by the Council in October 2013, after full consultation with Senior Management, the Trade Union and Members. There is a formal complaints procedure operated as part of the Council’s performance management framework. Tackling Fraud and Corruption: The Council has a Housing Benefit and Council Tax Support Anti-fraud and Corruption Policy, and a Council wide Counter-fraud, Corruption and Bribery Strategy. These both exist to tackle fraud and corruption. The Council has reviewed and updated the Counter Fraud, Corruption and Bribery Strategy during 2013/14, with full consultation held with Senior Management, the trade union and Members. This has been disseminated to staff and an update on Counter Fraud Activity is provided annually detailing action taken within the year. Furthermore, each Internal Audit undertaken recognises fraud risks and assesses the adequacy and effectiveness of the controls in place to mitigate such risks. Finally an Annual Fraud Return is provided to the External Auditor which summarises the Internal Audit Consortium Manager’s views on risk at the Authority. An action plan has been developed to deliver the strategy which will be subject to on-going review by Senior Leadership Team. Development Needs of Councillors and Officers: There is a training programme in place for Officers and Members. This is drawn up from new risks or legislation, in response to known and emerging key areas of focus and from Directorate Plans and staff Performance Reviews. The Council has made extensive investment in training in line with its Learning and Development Strategy for staff. The Council achieved Gold Standard for Investors in People during 2013/14. This is the highest level that can be awarded and the Council was one of only 3% of organisations nationally to achieve this. Establishing Communication with all Sections of the Community and Other Stakeholders: The Council works with the County Council, other Norfolk District Councils, the Police, NHS, businesses, and voluntary and community groups.


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The Council consults with members of the public through a number of avenues from workshops, telephone calls, social media channels and the website, to gauge public opinion on a number of issues such as shaping the budget and the Council Tax Support Scheme. Good Governance Arrangements with Partnerships: Partnership arrangements are now in the form of service level agreements. These are reviewed as part of the budget setting process and in advance of the date of cessation. In February 2014, the Council adopted a new protocol on how it enters into funding arrangements with voluntary and third sector organisations. Review of Effectiveness The Role of the Council South Norfolk Council has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review of effectiveness is informed by the work of the Managers and Members within the authority who have responsibility for the development and maintenance of the governance environment, Internal Audit’s annual report, and also by comments made by the External Auditors and other review agencies and inspectorates. The Role of the Cabinet The Cabinet reviewed the Directorate Plans and a range of strategies and policies during the year, including the Treasury Management Strategy, Capital Strategy and Asset Management Plan. It received regular reports on performance monitoring, projects and financial implications. Cabinet received quarterly performance reports through the CorVu performance management software and delegates policy development to the four policy committees. The Role of the Finance, Resources, Audit and Governance Committee The activity of the Committee in the financial year is described above. It has also ensured that it is happy that the control and governance arrangements have operated effectively. The work of the Finance, Resources, Audit and Governance Committee is summarised in an Annual Report to Council. The Role of the Scrutiny Committee The Scrutiny Committee can undertake any work relating to the four key principles of scrutiny as follows:

Hold the Executive to account (Call-In)

Performance management

Assist policy reviews

Internal/external scrutiny The work of the Scrutiny Committee is summarised to Council in an Annual Report. The Council’s legal service is provided by nplaw. The arrangements have continued to operate well, with positive feedback received from users of the service. A scrutiny review was undertaken in 2012 and a further review was considered in November 2013, noting that in general, service users remained satisfied with the service provided by nplaw, although it was


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recognised that there were some clear areas for development, which have been raised with nplaw and addressed. During 2013/14, the Council has been involved in four legal cases relating to planning and a case concerning local land charges. These are ongoing cases, for which the Council has made financial provision. Further details can be found in the Annual Accounts under Provisions. The Role of the Chief Financial Officer The Head of Finance for the purposes of S151 of the Local Government Act 1972 is responsible under the general direction of the Cabinet for the proper administration of the Council’s affairs. This statutory responsibility cannot be overridden. Responsibilities include:

Setting and monitoring compliance with financial management standards

Advising on the corporate financial position and on the key financial controls necessary to secure sound financial management

Section 114 of the Local Government Finance Act 1988 requires the Head of Finance to report to the full Council, Cabinet and External Auditor if the authority or one of its Officers:-

Has made, or is about to make, a decision which involves incurring unlawful expenditure

Has taken, or is about to take, an unlawful action which has resulted or would result in a loss or deficiency to the authority

Is about to make an unlawful entry in the authority’s accounts. The Head of Finance has not been required to make such a report. The Role of Internal Audit All audits are performed in accordance with the good practice contained within the CIPFA Code of Practice for Internal Audit in Local Government in the UK 2006. Internal Audit report to the Finance, Resources, Audit and Governance Committee and provides an opinion on the system of internal control, which is incorporated in the Annual Report for 2013/14. Internal Audit is arranged through a consortium with Great Yarmouth Borough Council, North Norfolk District Council, Broadland District Council, Breckland District Council and the Broads Authority. The Head of Internal Audit and their Deputy are employed by South Norfolk Council. The operational and field management staff in Internal Audit are employed by an external provider, which was Deloitte Internal Audit. During the year, these staff transferred to Mazars Internal Audit Limited. In February 2014, the Head of Internal Audit left the post and their deputy is currently Acting Head of Internal Audit. The Finance, Resources, Audit and Governance Committee is required to do an annual review of the Internal Audit Service, to ensure it is operating effectively. For 2013/14, Internal Audit was deemed to be “effective”. The Role of External Review Bodies Ernst and Young LLP review the Council’s arrangements for:

preparing accounts in accordance with statutory and other relevant requirements

ensure the proper conduct of financial affairs and monitoring their adequacy and effectiveness in practice

Managing performance to secure economy, efficiency and effectiveness in the use of resources


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Ernst and Young LLP were appointed by the Audit Commission as the Council’s external auditors for 2013/14. The auditors give an opinion on the Council’s accounts, corporate governance and performance management arrangements. The Council takes appropriate action where improvements need to be made. Governance Issues Managers Assurance Managers in services that work across the Council undertook the completion of an Assurance Statement relating to their service area. Any areas of risk highlighted through this process are addressed through the Council’s risk management framework. This self-assessment has highlighted the following areas of development or risk:

A number of teams within the Council are undergoing staffing realignments in order to deliver a more effective and efficient service to customers. This is being managed corporately to ensure staff have the maximum opportunities for redeployment (in accordance with revised policies for organisational change and redeployment). There is a risk that there will be a detrimental effect on performance during the reviews and beyond as teams are reformed and staff develop within new roles.

There are risks around the balancing of resources for delivering changes as a result of new systems and processes while delivering “business as usual”.

There are risks around engaging services, members, customers and other stakeholders in new ways of working.

More specific areas of development are:

The raising of awareness of information governance amongst the organisation to include the use of the Information Commissioner’s Privacy Awareness Toolkit and through information on the Council’s intranet. Training sessions have taken place on Data Protection and an internal audit of Data Protection and Freedom of Information provided an opinion of “Good” assurance.

The Localism Act requires the Council to manage the Community Right to Bid and Right to Challenge processes. This includes receiving nominations, assessing their suitability, holding/maintaining a list, informing parties when assets become available for sale. This could include assets belonging to the Council.

The Local Audit and Accountability Act places a potential requirement on Local Authorities to have Independent Audit Panels depending on how they choose to procure external audit.

The Council is implementing greater electronic communications, placing more emphasis on members and the public to use the Council’s website to deliver services and information and greater use of social media to raise the Council’s profile and engage with our communities.

The further development of CorVu and Corbusiness as tools to provide greater business intelligence.

Engaging Members in new ways of working especially paperless digital based formal meetings

Continuing the work of reviewing the Human Resources policies to ensure legislative compliance and best practice.

An Asset Management Plan 2013–16 is in place as a strategic document to ensure best value for money from assets in serving the strategic needs of the Council. This document also includes an investment and disposal strategy and links into the Economic Strategy. The Asset Management Plan will need to be refreshed and updated annually to


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reflect changes in areas such as legislation and the council’s priorities and Capital Programme.

Responding to the DCLG’s Transparency Code which has a requirement for Councils to publish Local Authority property assets.

Managing how the Council responds to the Green Deal and energy saving requirements in connection with the Council’s investment assets. Research was undertaken in 2013/14 and actions arising from this will require implementation.

The corporate management of the Sundry Debtors process.

The corporate management of purchasing and procurement. This continues the improvement work which has been carried out in this area during the financial year. Procurement was awarded a “Good” level of assurance by Internal Audit during the year.

Testing of the revised Business Continuity Policy and Disaster Recovery Plan for IT.

Ensuring that its Information Assurance work remains compliant with a number of standards, primarily the current Public Services Network Code of Connection (PSN CoCo) set of standards, which the Council achieved for the first time in 2013/14.

Continuing work around improving the IT infrastructure to provide more resilience to reflect the increased use of the customer of the Council’s on-line services and to reduce the number of separate IT systems within the Council to improve efficiency.

Completion of restructuring of operations at Ketteringham Depot to ensure regulatory compliance.

Rolling out an integrated Building Control system across the Eastern Region Building Control for new partners and an Approved Inspector company.

Internal Audit The Annual Audit Plan for 2013/14 is now complete, and based on the work performed, Internal Audit is able to provide an “adequate” opinion on the adequacy and effectiveness of the system of internal control (the organisation’s governance, risk management and control framework). There were two high priority recommendations due for implementation during the year 2013/14, one of these has been implemented and the other recommendation is not yet due and is currently work in progress. In addition during 2013/14 a further 5 high priority recommendations from previous financial years have now also been closed, resulting in a year end position of all high priority recommendations having been successfully implemented. A summary of findings from individual audits carried out in 2013/14 is below:

Category of audit Assurance Level Awarded

No. of opinions awarded

Annual Opinion Audits Good 1

Adequate 5

Fundamental Financial Systems Good 1

Adequate 4

Other Systems Good 3

Adequate 8

Limited 1

Computer Systems Adequate 1

Limited 1


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Note: 20 audits were completed where an assurance opinion is provided on conclusion of the review. For 2 of these audits multiple assurance opinions were awarded. No audits were awarded an “unsatisfactory” audit opinion during the year. The two areas awarded “limited” assurance are as follows:

Food Safety as part of the Environmental Health Services audit, the high priority rating recommendation has subsequently been implemented.

Virtualisation audit (virtualisation is the creation of a virtual, rather than actual, version of something, such as an operating system, a server, a storage device or network resources), the high priority recommendation raised on issue of the draft report, is currently being addressed as a matter of urgency by management to address the risks and ensure that the recommendation is implemented as agreed.

The five areas awarded “good” assurance are as follows:

Procurement

Treasury Management

Corporate Governance

Data Protection and Freedom of Information

Private Water Supplies In response to all audit recommendations, the Council has developed an action plan to ensure that recommendations are implemented. On conclusion of the Internal Audit work for 2013/14, the Head of Internal Audit has confirmed that there are no weaknesses that are significant enough for disclosure within this Annual Governance Statement. Risk Management Quarterly reports on Risk Management were taken to the Cabinet. There are currently five strategic risks/opportunities. These are:

Risk Action

Shortage of 5 year land supply results in uncoordinated development

Quarterly monitoring of housing development in the district. Annual reporting of figures for South Norfolk as part of the Norwich Policy Area.

Ratification of the Local Plans leads to co-ordinated housing and infrastructure development across the District

Adoption of the Local Plan documents: Site Allocations, Wymondham Area Action Plan, Long Stratton Area Action Plan.


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The Council is unable to deliver priority services as revenue funding falls short of required income

Resolution of a balanced budget for 2015/16. Delivery of Wymondham Leisure Centre Enhancement Programme Delivery of Diss and Long Stratton Leisure Centre Enhancements. Completion of Phase 1 Poringland Development Completion of reserved matters on Cygnet House development Signing up of regional Building Control Hub Partners.

Council assets are not managed effectively and as a result do not support service delivery

Acquisition of land for depot enhancement. Delivery of Wymondham Leisure Centre Enhancement Programme Delivery of Diss and Long Stratton Leisure Centre Enhancements. Restructure of Property Team so that adequate resource is available to mitigate this risk following the retirement of the Building Maintenance Surveyor

Property Development activities are not successful and income generation is not realised

Maximise opportunities by seeking to gain planning consent for development Establish a procurement compliant method for delivering the construction phase of the developments Restructure of Property Team to provide resource to deliver this activity Respond to market conditions, supply and demand

Each risk has an agreed action plan managed by Officers and monitored on a quarterly basis by Members. Throughout 2013/14, risk management has been presented to Cabinet alongside the financial and performance information, providing a more holistic view of performance across the organisation. Risks are added to the register as and when they are identified and all risks are reviewed regularly with further consideration by the Strategic Leadership Team. In 2013, the Council’s Risk Management Strategy was updated. There is a greater emphasis on our cultural appetite and capacity to take and respond to risk, and a much simpler framework for managing risks which exist in the organisation. The strategy clearly outlines the need to focus on the future direction of the Council, and balancing the risks present in decision making against the potential opportunities and benefits to help deliver the outcomes we wish to achieve. Risks are now categorised as Strategic, Directorate and Operational. In 2014, an internal audit was carried out regarding risk management and resulted in an “Adequate” assurance.


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COUNCIL APPROVAL OF THE ANNUAL GOVERNANCE STATEMENT

We confirm that the Annual Governance Statement has been prepared and reviewed by the Council and was approved for signature by the Finance, Resources, Audit and Governance Committee of the Council at a meeting held on 25th July 2014. Signed:

John Fuller (Leader of the Council) Signed:

Sandra Dinneen (Chief Executive)


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STATEMENT OF RESPONSIBILITIES The Council’s Responsibilities The Council is required to:

Make arrangements for the proper administration of its financial affairs and to secure that one of its Officers has the responsibility for the administration of those affairs. In this authority that Officer is the Head of Finance.

Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets.

Approve the Statement of Accounts. The Head of Finance’s Responsibilities The Head of Finance is responsible for the preparation of the authority’s Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this Statement of Accounts, the Head of Finance has:

Selected 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 Finance has also:

Kept proper accounting records which were up to date

Taken reasonable steps for the prevention and detection of fraud and other irregularities. I certify that the Statement of Accounts presents a true and fair view of the financial position of the Council at the accounting date and its income and expenditure for the year ended 31st March 2014.

Deborah Lorimer FCCA (Head of Finance) Date: 25th July 2014


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SIGNIFICANT ACCOUNTING POLICIES

1. General Principles The Statement of Accounts summarises the Council’s transactions for the financial year 2013/14 and its position at the year end of 31 March 2014. The Council is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2011. The regulations require these to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2013/14 and the Service Reporting Code of Practice 2013/14, supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under section 7 of the 2011 Accounts and Audit Regulations. The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

2. 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 sale of goods is recognised when the Council transfers the significant risks and rewards of ownership to the purchaser and it is probable that economic benefits or service potential associated with the transaction will flow to the Council.

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

Supplies are recorded as expenditure when they are consumed.

Expenses in relation to services received are recorded as expenditure when the services are received rather than when payments are made.

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

Where revenue and expenditure have 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 debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.

3. Cash and Cash Equivalents Cash is represented by cash in hand and on demand deposits. Cash Equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. An investment will normally qualify as a Cash and Cash Equivalent only when it has a short maturity of 3 months or less from the date of acquisition. 4. Prior Period Adjustments 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, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment.


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Changes in accounting policies are only made when required by proper accounting practices, or where the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Council’s financial position or performance. Where a change is made, it is applied retrospectively by adjusting opening balances and comparative amounts for the prior 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. 5. Charges to Revenue for Non-Current Assets Services, support services and trading accounts are debited with the following amounts to record the cost of holding non-current 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 the losses can be written off.

amortisation of intangible assets attributable to the service.

The Council is not required to raise Council Tax to cover depreciation, impairment losses, amortisation or revaluations. However, it is required to make an annual provision from revenue to contribute towards the reduction in its overall borrowing requirement equal to an amount calculated on a prudent basis, determined by the Council in accordance with statutory guidance known as the Minimum Revenue Provision.

Depreciation, impairment losses, amortisation and revaluations (not charged through the Revaluation Reserve) are adjusted through the Capital Adjustment Account and reversed out of the Comprehensive Income and Expenditure Statement through the Movement in Reserves Statement. 6. Employee Benefits Short term employee benefits are those due to be settled within 12 months of the year end. They include such benefits as salaries, paid annual leave and flex leave for current employees and are recognised as an expense for services in the year in which employees render service to the Council. An accrual is made for the cost of holiday entitlements 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 salary rate applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement 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 are amounts payable as a result of a decision by the Council to terminate an Officer’s employment before the normal retirement date, or an Officer’s decision to accept voluntary redundancy. These are charged on an accruals basis to the Non Distributed Costs line in the Comprehensive Income and Expenditure Statement when the Council is demonstrably committed to 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 Council to the pension fund or pensioner in the year, not the amount calculated according to the


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relevant accounting standards. In the Movements 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 the 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 Employees of the Council are eligible to become members of the Local Government Pension Scheme (subject to qualifying criteria), administered by Norfolk County Council. The Local Government Scheme is accounted for as a defined benefits scheme:

The liabilities of the pension fund attributable to the Council 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 4.3% based on the yield available on a basket of AA- rated bonds with long terms to maturity (the iBoxx Sterling Corporates AA over 15 years Index).

The assets of the Norfolk pension fund attributable to the Council are included in the Balance Sheet at their fair value: o quoted securities – current bid price o unquoted securities – professional estimate o unitised securities – current bid price o property – market value

The change in the net pensions liability is analysed into the following components: o Service cost comprising:

current service cost, being the increase in liabilities as a result of years of service earned this year. This is allocated in the Comprehensive Income and Expenditure Statement to the revenue accounts of services for which the employees worked.

past service cost, being the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years. This is debited to the Net Cost of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs.

net interest cost, being the change during the period in the net defined benefit liability (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement.

o Remeasurements comprising: return on plan assets, excluding amounts included in net interest on the net

defined benefit liability (asset) and charged to the Pensions Reserve as Other Comprehensive Income and Expenditure.

actuarial gains and losses, being changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions. This is charged to the Pensions Reserve as Other Comprehensive Income and Expenditure.

o Contributions paid to the Norfolk pension fund, being cash paid as employer’s contributions to the pension fund; not accounted for as an expense.


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Discretionary Benefits The Council also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme.

7. Events after the Balance Sheet Date Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified:

Those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events.

Those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect.

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

8. Financial Instruments Financial liabilities are recognised on the Balance Sheet when the Council becomes 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. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount which it was originally recognised.

Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain/loss over the term that was remaining on the loan against which the premium was payable or discount receivable when it was repaid. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement. Financial assets The Council’s financial assets will fall into the category of loans and receivables. These are assets that have fixed or determinable payments but are not quoted in an active market.

Loans and receivables are recognised on the Balance Sheet when the Council 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 credits to the Financing and Investment Income and Expenditure line in 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.


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9. Government Grants and Other Contributions Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Council when there is reasonable assurance that:

The Council will comply with the conditions attached to the payments, and

The grants or contributions will be received. Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset in the form of the grant or contribution are required to be consumed by the recipient as specified, or future economic benefits or service potential must be returned to the transferor. Monies advanced as grants and 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 Taxation and Non Specific Grant Income (non-ring fenced 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 Balance 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 to fund Capital Expenditure, it is posted to the Capital Adjustment Account.

10. Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events eg. purchased software together with the direct costs incurred in the commissioning or enhancement of the software are capitalised when it will bring benefits to the Council for more than one financial year. The balance is amortised to the relevant service revenue account over the economic life of the investment (5 years). Intangible Assets are initially measured at cost. Amounts are only revalued where the fair value of the asset held by the Council can be determined by reference to an active market. In practice, no intangible asset held by the Council meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service lines in the Comprehensive Income and Expenditure Statement. An asset is tested for impairment whenever there is an indication that the asset might be impaired - any losses recognised are posted to the relevant service lines in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal 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, revaluations 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.


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

12. 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 revalued annually according to market conditions at the year-end. 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 treatment applies to gains and losses on disposal.

Rentals received in relation to investment properties are credited to the Financing and Investment Income and Expenditure line and result in a gain for the General Fund Balance. However, 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 Movements in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve.

13. 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 building 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 return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets. The Council as Lessee: Finance Leases The Council as a lessee recognises finance leases as assets and liabilities on the Balance Sheet at amounts equal to the lower of fair value or the present value of the minimum lease payments. The discount rate used is the rate implicit in the lease or the Council’s incremental borrowing rate - whichever is more practicable.

Rentals payable are apportioned between:

finance charge (interest). The finance charge is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement; and

the reduction of the outstanding liability - the liability is written down as the rent becomes payable.

Assets recognised under finance leases are accounted for using the policies applied generally to items of Property Plant & Equipment. The depreciation and revaluation of assets recognised under finance leases is consistent with the policy for owned assets, subject to depreciation being charged over the shorter of the lease term and the asset’s


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estimated useful life. After initial recognition, such assets are subject to revaluation in the same way as any other asset. Operating Leases Leases that do not meet the definition of finance leases are accounted for as operating leases. Operating lease payments are charged to the relevant service line in the Comprehensive Income and Expenditure Statement benefitting from the use of the leased property, plant or equipment.

The Council as Lessor: Operating Leases Leases that do not meet the definition of finance leases are accounted for as operating leases. All assets subject to operating leases will be presented on the Balance Sheet according to the nature of the asset. Costs, including depreciation are recognised as an expense. Rental Income is credited to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement.

14. Overhead and Support Services The costs of overhead and support services are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 2013/14 (SeRCOP). The total absorption costing principle is used, i.e. the full cost of overheads and support services are shared between users in proportion to the benefits received, with the exception of:

Corporate and Democratic Core – costs relating to the Council’s status as a multifunctional, democratic organisation.

Non Distributed Costs – the costs of discretionary benefits awarded to employees retiring early and impairment losses chargeable on Assets Held for Sale.

These two cost categories are defined in SeRCOP and accounted for as separate headings in the Comprehensive Income and Expenditure Statement, as part of Net Expenditure on Continuing Services. 15. Property, Plant & Equipment Property, Plant & Equipment are non-current assets that have physical substance and are held for use in the provision of services, for rental to others, for administrative purposes or to yield benefits to the Council for a period of more than one financial year.

Recognition – Expenditure on the acquisition, creation or enhancement of Property, Plant & Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (ie. repairs and maintenance) is charged as an expense when it is incurred.

Schemes that cost less than £10,000 are classified as de minimis and these schemes are classed as revenue rather than capital expenditure


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Componentisation Policy - Where an item of property or plant has more than one major component, the Code states that the Council needs to apply the principles of component accounting and depreciate it separately over that major component's remaining useful economic life. Any asset deemed to be of sufficient value, in line with this Council's componentisation policy, shall be depreciated separately in accordance with the Code, unless the componentisation makes no material difference to the overall depreciation charge. It is the Council’s componentisation policy to account separately for any major class of component, in respect of enhancement expenditure, disposal or valuation, where the following criteria are met:-

Firstly, the major component value must be more than 20% of the property value as a whole.

Secondly, the value of the major component must be above a £200,000 de minimis level.

Thirdly, the separate depreciation of the major component will make a material difference to the overall depreciation charge against the Council's assets.

Where a component is an integral part of a property, it is only accounted for separately from the main structure where it satisfies all of the above criteria.

Measurement – Assets are initially measured at cost, comprising purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended. Assets are then carried in the Balance Sheet using the following measurement bases:

Infrastructure, community assets and assets under construction (excluding investment property) shall be measured at depreciated historical cost (DHC).

All other assets shall be valued at fair value, determined as the amount that would be paid for the asset in its existing use (existing use value – EUV). If there is no market-based evidence of fair value because of the specialist nature of the asset and the asset is rarely sold, the estimate for fair value may be depreciated replacement cost (DRC). Specialist assets will only be categorised as such, and DRC applied, when so determined by a professionally qualified valuer.

Non-property assets such as vehicles, plant & equipment shall be measured at fair value. For assets that have short useful lives, i.e. less than 7 years, or low values, i.e. less than £50,000 or both, DHC will be used as a proxy for fair value.

Assets included on the Balance Sheet at fair value are valued on a rolling 5-year programme or when there has been a material change in the value. Where there has been a market condition affecting property values, indexation will be applied only if the change in values is found to be material. Where decreases in value are identified, they are accounted for, as below:

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 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 lines in the Comprehensive Income and Expenditure Statement.


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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.

Depreciation – Land and buildings are separate assets even if acquired together. Depreciation applies to all property, plant and equipment except:

freehold land, as this is considered to have an infinite useful life;

investment properties carried at fair value;

assets held for sale;

assets where it can be demonstrated that the asset has an unlimited useful life. An asset shall not be depreciated:

until it is available for use;

when the residual value of an asset is equal or greater than the asset’s carrying amount.

For all assets that are depreciated, depreciation is calculated on a straight line basis. Where an item of Property, Plant and Equipment has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately.

Depreciation charged to the Comprehensive Income and Expenditure Statement is not a charge to the General Fund; such amounts are transferred to the Capital Adjustment Account and reported in the Movement in Reserves Statement. On a revalued asset, a transfer between the Revaluation Reserve and Capital Adjustment Account is carried out which represents the difference between depreciation based on the revalued carrying amount of the asset and the depreciation based on the asset’s historical cost. 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/revaluation losses are identified, they are accounted for as below:

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 the 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 impairment losses/revaluation losses are reversed subsequently, the reversal is credited to the relevant service line in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised.

Disposals and Non Current Assets Held for Sale – A non-current asset is classified as held for sale if it is probable that the carrying amount will be recovered principally through a sale transaction rather than through continued use.


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The following criteria will have been met before an asset can be classified as held for sale:

The asset must be available for immediate sale in its present condition subject to terms that are usual and customary for sales of such assets.

The sale must be highly probable; the appropriate level of management must be committed to a plan to sell the asset and an active programme to locate a buyer and complete the plan must have been initiated.

The asset must be actively marketed for a sale at a price that is reasonable in relation to its current fair value.

The sale should be expected to qualify for recognition as a completed sale within one year of the date of classification and action required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

The asset is revalued immediately before reclassification and then carried at the lower of this amount and 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 previous losses recognised in the Surplus or Deficit on Provision of Services. Depreciation is not charged on Assets Held for Sale. When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet is written off to the Other Operating Expenditure line in 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 Expenditure Statement also as part of the gain or loss on disposal. Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account. Amounts received for a disposal in excess of £10,000 are categorised as capital receipts and are credited to the Capital Receipts Reserve, and can then only be used for new capital investment. Receipts are appropriated to the Capital Receipts Reserve from the General Fund Balance in the Movement in Reserves Statement. The written off value of disposals is not a charge against Council Tax, as the cost of Property, Plant and Equipment and intangible non-current assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement. 16. Provisions, Contingent Liabilities and Contingent Assets Provisions – Provisions are made where an event has taken place that gives the Council a legal or constructive obligation 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 Council 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 Council becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.


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Contingent Liabilities – A contingent liability arises where an event has taken place that gives the Council a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent liabilities also arise 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.

17. Reserves The Council sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating amounts of the General Fund Balance 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 Balance in the Movement in Reserves Statement so there is no net charge against Council Tax for the expenditure. Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments, retirement and employee benefits and do not represent usable resources for the Council – these reserves are explained in the relevant notes. 18. Revenue Expenditure funded from Capital under Statute Expenditure incurred during the year that may be capitalised under statutory provisions but that does not result in the 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 Council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the Movements in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so that there is no impact on the level of Council Tax.

19. Value Added Tax VAT payable is included as an expense only to the extent that it is not recoverable from HMRC. VAT receivable is excluded from Income.

20. Council Tax and Non-Domestic Rate Income Billing authorities in England are required by statute to maintain a separate fund for the collection and distribution of amounts due in respect of Council Tax and Non-Domestic Rates (NDR). In its capacity as a billing authority, the Council acts as an agent collecting and distributing Council Tax and NDR income on behalf of the major preceptors and itself. From 1 April 2009, the Council has been required to show Council Tax income in the Comprehensive Income and Expenditure Account as accrued income. From 1 April 2013, the Council has been required to show Non-Domestic Rate income in the Comprehensive Income and Expenditure Account as accrued income. The Council’s share of Collection Fund income and expenditure is recognised in the Comprehensive Income and Expenditure Statement in the Taxation and Non-Specific Grant Income and Expenditure section.


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21. Changes to accounting policies The Council has adopted the amended accounting requirements of the IAS 19 Employee benefits standard in its 2013/14 accounts. The changes that have been applied in the Council’s accounts are as follows:

The removal of the value of the expected return on assets. This value has been replaced with a net interest cost comprising of the interest income on the assets and the interest expense on the liabilities, which are calculated using the discount rate set by the actuary.

The definition of the current service cost has been amended to include the current service cost, past service cost, curtailments and settlements.

Pension fund administration expenses are now included within the Comprehensive Income and Expenditure Statement.

The changes made to this accounting standard are considered to be a change of accounting policy and as such the comparative values reported for the prior 2012/13 financial year have been restated to follow the updated accounting requirements of the standard. The prior period adjustments are detailed in Note 5.

The amended accounting policy for the Defined Benefit Pension Scheme is disclosed in accounting policy 6.


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MOVEMENT IN RESERVES STATEMENT

General Fund

Balance

Earmarked General

Fund Reserves

Capital Receipts Reserve

CNC Reserve

Capital Grants

Unapplied Account

Total Usable

Reserves Unusable Reserves

Total Council

Reserves

£000s £000s £000s £000s £000s £000s £000s £000s

Balance brought forward as at 1 April 2012

1,400 10,396 11,483 41 0 23,320 2,791 26,111

Movement in Reserves during 2012/13

Surplus/(Deficit) on provision of services 3,114 0 0 0 0 3,114 0 3,114

Other Comprehensive Expenditure and Income 0 0 0 0 0 0 (5,553) (5,553)

Total Comprehensive Expenditure and Income 3,114 0 0 0 0 3,114 (5,553) (2,439)

Adjustments between accounting basis & funding basis under regulations (Note 7) (2,850) 0 498 (41) 200 (2,193) 2,193 0

Net Increase/Decrease before Transfers to Earmarked Reserves 264 0 498 (41) 200 921 (3,360) (2,439)

Transfers to/from Earmarked Reserves (264) 264 0 0 0 0 0 0

Increase/Decrease in Year 0 264 498 (41) 200 921 (3,360) (2,439)

Balance carried forward at 31 March 2013 1,400 10,660 11,981 0 200 24,241 (569) 23,672


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General Fund

Balance

Earmarked General

Fund Reserves


CNC Reserve

Capital Grants

Unapplied Account

Total Usable

Reserves Unusable Reserves

Total Council

Reserves

£000s £000s £000s £000s £000s £000s £000s £000s

Balance brought forward as at 1 April 2013

1,400 10,660 11,981 0 200 24,241 (569) 23,672

Movement in Reserves during 2013/14

Surplus/(Deficit) on provision of services 1,811 0 0 0 0 1,811 0 1,811

Other Comprehensive Expenditure and Income 0 0 0 0 0 0 (232) (232)

Total Comprehensive Expenditure and Income 1,811 0 0 0 0 1,811 (232) 1,579

Adjustments between accounting basis & funding basis under regulations (Note 7) 85 0 536 0 (200) 421 (421) 0

Net Increase/Decrease before Transfers to Earmarked Reserves 1,896 0 536 0 (200) 2,232 (653) 1,579

Transfers to/from Earmarked Reserves (Note 22) (1,896) 1,896 0 0 0 0 0 0

Increase/Decrease in Year 0 1,896 536 0 (200) 2,232 (653) 1,579

Balance carried forward at 31 March 2014 1,400 12,556 12,517 0 0 26,473 (1,222) 25,251


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COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT

Gross Expenditure

Gross Income Net

Gross Expenditure

Gross Income Net

£000s £000s £000s £000s £000s £000s

Gross expenditure, gross income and net expenditure of continuing operations:-

Cultural and Related Services 4,413 (2,607) 1,806 4,154 (2,232) 1,922

Environment and Regulatory Services 9,091 (4,399) 4,692 7,366 (3,507) 3,859

Planning Services 7,985 (4,016) 3,969 5,510 (1,919) 3,591

Highways and Transport Services 425 (302) 123 462 (336) 126

Housing 29,075 (28,034) 1,041 28,829 (27,816) 1,013

Central Services 2,509 (859) 1,650 9,314 (8,394) 920

Corporate Management 2,193 (140) 2,053 2,058 (76) 1,982

Non distributed costs 84 0 84 0 0 0

Cost of Services 55,775 (40,357) 15,418 57,693 (44,280) 13,413

Other Operating Expenditure:

Precepts paid to Parish Councils 2,990 2,816

(Gain)/Loss on disposal of non-current assets (875) (879)

Payments to Housing capital receipts pool 1 1

Financing and Investment Income and Expenditure:-

Interest payable or similar charges 8 9

(Gain)/Loss on trading accounts (112) 61

Other investment property income (25) (25)

Pensions interest costs (289) 894

Investment interest income (361) (500)

(Gain)/Loss on revaluation of Investment Property 625 (1,338)

Taxation and Non-Specific Grant Income and Expenditure:-

Council Tax Income (8,420) (9,033)

Non-Domestic Rates Income and Expenditure:

- Grant income from Central Government (130) (6,092)

- Business Rates Retention Scheme income and Expenditure

(2,912) 0

Capital Grants (Note 29) (308) (404)

General Grants (Note 29) (7,421) (2,037)

(Surplus)/Deficit on provision of service for the Year (1,811) (3,114)

(Surplus)/deficit on revaluation of non-current assets (Note 23)

(167) (477)

Impairment losses on non-current assets charged to revaluation reserve (Note 23)

416 182

Actuarial (Gains)/Losses on pension assets/liabilities (17) 5,848

Other Comprehensive Income and Expenditure 232 5,553

Total Comprehensive Income and Expenditure (1,579) 2,439

Year ended 31 March 2014 Year ended 31 March 2013


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BALANCE SHEET

As at 31

March 2014 As at 31

March 2013 £000s £000s

Non Current Assets

Property, Plant & Equipment (Note 8) 17,939 18,351

Intangible Fixed Assets (Note 10) 606 489

Investment Properties (Note 9) 12,352 12,467

Long Term Investments (Note 15) 61 4,120

Long Term Debtors (Note 14) 1,503 810

Total Non-Current Assets 32,461 36,237

Current Assets

Cash and cash equivalents (Note 17) 16,063 10,660

Debtors (Note 16) 3,036 3,444

Short Term Investments (Note 18) 15,163 13,918

Inventories 19 35

Total Current Assets 34,281 28,057

Current Liabilities

Creditors (Note 19) (5,049) (5,873)

Revenue Grants Receipts in Advance (Note 29) (5) (26)

Capital Grants Receipts in Advance (Note 29) (11) 0

Short Term Provisions (Note 20) (639) (150)

Total Current Liabilities (5,704) (6,049)

Long Term Liabilities

Long Term Creditors (Note 21) (1,106) (904)

Grants Receipts in Advance (Note 29) (2,106) (1,193)

Provisions (Note 20) (105) (65)

Pension Scheme Liability (Note 34) (32,470) (32,411)

Total Long Term Liabilities (35,787) (34,573)

Net Assets 25,251 23,672

Usable Reserves

General Fund Balance 1,400 1,400

General Reserves (Note 22) 12,556 10,660

Usable Capital Receipts Reserve 12,517 11,981

Capital Grants Unapplied 0 200

Unusable Reserves (Note 23)

Capital Adjustment Account 27,245 27,188

Collection Fund Adjustment Account (110) 25

Deferred Capital Receipts Reserve 12 13

Pension Reserve (32,470) (32,411)

Revaluation Reserve 4,476 4,869

Short Term Accumulated Absences Account (375) (253)

Total Net Worth 25,251 23,672


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CASHFLOW STATEMENT

31 March 2014 31 March 2013

£000s £000s £000s £000s

Net surplus or (deficit) on the provision of services

1,811

3,114

- Adjustments to net surplus or deficit on the provision of services for interest

(353)

(491)

- Adjustments to net surplus or deficit on the provision of services for non-cash movements

9,234

(943)

- Proceeds from Sale of Property, Plant or Equipment reported in net surplus/deficit of provision of service in Comprehensive Income and Expenditure Statement

(878)

(880)

- Other cash flows arising from Operating Activities

506

500

Net cash flows from Operating Activities (Note 24)

10,320

1,300

Investing Activities - (Purchase) of property, plant and equipment, investment

property and intangible assets (3,692)

(3,219)

- Proceeds from/(Purchase of) short-term and long-term investments

2,500

(800)

- Other payments for investing activities 0

(50)

- Proceeds from the sale of property, plant and equipment, investment property and intangible assets 782

628

- Capital grants

319

404

Net Cash Inflows/(Outflows) from Investing Activities

(91)

(3,037)

Financing Activities - Other receipts from financing activities (4,793)

(915)

- Cash payments for the reduction of the outstanding liabilities relating to finance leases (33)

(58)

Net Cash Inflows/(Outflows) from Financing Activities

(4,826)

(973)

Net increase or decrease in cash and cash equivalents

5,403

(2,710)

Cash and cash equivalents at the beginning of the reporting period 10,660

13,370

Cash and cash equivalents at the end of the reporting period (Note 17)

16,063

10,660


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NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

The Council is required to disclose information relating to the impact of an accounting change on the financial statements as a result of the adoption by the Code of a new standard that has been issued but is not yet required to be adopted by the Council. The Code of Practice on Local Authority Accounting in the UK 2014/15 has introduced changes to the following standards: IFRS 10 Consolidated Financial Statements: the new standard identifies a single definition of control for the basis of consolidation. This does not currently have a material effect on these financial statements although it may have an effect in future years.

IFRS 11 Joint Arrangements: the new standards introduces a pre-requisite that there must be joint control based on the share of rights and obligations rather than legal structure and specifies the resulting accounting treatment. This does not currently have a material effect on these financial statements although it may have an effect in future years.

IFRS 12 Disclosure of Interests in Other Entities: the new standard introduces the need to disclose greater detail of material interests in other entities to aid users in their evaluation of the financial statements. The Council does not expect this to have a material effect on the financial statements.

Other changes to the following standards are not expected to materially impact on the Council:

IAS 27 Separate Financial Statements (as amended in 2011);

IAS 28 Investments in Associates and Joint Ventures (as amended in 2011);

IAS 32 Financial Instruments: Presentation;

Annual Improvements to IFRSs 2009 – 2011 Cycle.

2. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

In applying the accounting policies set out in Significant Accounting Policies, the Council has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are: There is a high degree of uncertainty about future levels of funding for local government. However, the Council has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Council might be impaired as a result of a need to close facilities and reduce levels of service provision.


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3. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the Statement of Accounts requires the Council to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for the revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The key adjustments and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows :- Pension Liability Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. Currently these assumptions are calculated for South Norfolk Council by expert actuaries, Hymans Robertson LLP. They provide South Norfolk Council with expert advice about the assumptions that need to be applied. The pension liability as at 31 March 2014 is £32.47 million. The effects on the net pension liability of changes in individual assumptions is measurable and the sensitivities regarding the principal assumptions used to measure the scheme liabilities have been calculated by our actuaries and are set out in the following table.

The above disclosure does not include assets and liabilities that are carried at fair value based on a recently observed market price.

4. MATERIAL ITEMS OF INCOME AND EXPENSE

Material items of income and expense which are not disclosed separately on the face of the Comprehensive Income and Expenditure Statement are as follows: Housing Benefit subsidy of £26.674 million is included in the Cost of Services section in the top half of the Comprehensive Income and Expenditure Statement. This income is the result of a claim made to the Department of Work and Pensions and reimburses the expenditure incurred by the authority for those amounts paid to recipients of housing benefit in the local community. (See note 29). Pension costs charged to the Comprehensive Income and Expenditure Statement on page 40 are shown in note 34.

Change in Assumptions at year ended 31 March 2014

Approximate % increase to Employer Liability

Approximate Monetary Amount

(£'000s)

1 year increase in member life expectancy 3% 2,751

0.5% increase in the Salary Increase Rate 3% 2,818

0.5% increase in the Pension Increase Rate 7% 6,143

0.5% decrease in Real Discount Rate 10% 9,049


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5. PRIOR PERIOD ADJUSTMENTS, CHANGES IN ACCOUNTING POLICIES AND ESTIMATES AND ERRORS

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 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. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period. Changes to IAS 19 Employee Benefits Accounting Standard There have been several significant changes made in relation to the International Accounting Standard IAS 19 Employee Benefits. The Council has adopted the amended accounting requirements in its 2013/14 accounts (refer to Note 34 for further details). The changes made are considered to be a change of accounting policy and as such the comparative values reported for 2012/13 have been restated to follow the new accounting requirements. The changes that have been made to the comparatives are: Comprehensive Income and Expenditure Statement 2012/13 original

£000 2012/13 restated

£000

Financing and Investment Income and Expenditure:

Pensions interest costs and expected return on assets (894)

Net interest on the defined pension liability (1,237)

Other Comprehensive Income and Expenditure:

Actuarial gains and losses 5,848

Remeasurement of the new defined benefit liability (5,505)

There is no impact on the Balance Sheet pension scheme liability as 31 March 2013.

6. EVENTS AFTER BALANCE SHEET DATE

The Statement of Accounts were authorised for issue by the Head of Finance on 13th June 2014. Events taking place after this date are not reflected in the financial statements or notes. Where events taking place before this date provided information about conditions existing at 31 March 2014, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information.


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7. ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATION

This note details the adjustments to the total Comprehensive Income and Expenditure Statement recognised by the Council in the year in accordance with generally accepted accounting practice to the resources that are specified by statutory provisions as being available to the Council to meet future capital and revenue expenditure. The following sets out a description of the reserves that the adjustments are made against: General Fund Balance The General Fund is the statutory fund into which all the receipts of an authority are required to be paid and out of which all liabilities of the authority are to be met, except to the extent that statutory rules might provide otherwise. These rules can also specify the financial year in which liabilities and payments should impact on the General Fund Balance, which is not necessarily in accordance with generally accepted accounting practice. The General Fund Balance therefore summarises the resources that the Council is statutorily empowered to spend on its services or on capital investment (or the deficit of resources that the Council is required to recover) at the end of the financial year.

Capital Receipts Reserve The Capital Receipts Reserve holds the proceeds from the disposal of land or other assets, which are restricted by statute from being used other than to fund new capital expenditure or to be set aside to finance historical capital expenditure. The balance on the reserve shows the resources that have yet to be applied for these purposes at the year-end. Capital Grants Unapplied Account This account holds grants and contributions received towards capital projects where the associated conditions have been met but have yet to be applied to meet expenditure. CNC Reserve The CNC Reserve held the Council’s share of the CNC Building Control Partnership reserves until the Partnership was disbanded as at 31 March 2013.


47

Year ended 31 March 2013: General

Fund Balance

CNC Reserve


Capital Grants

Unapplied Account

Movement in

Unusable Reserves

£000s £000s £000s £000s £000s

Adjustments Primarily involving the Capital Adjustment Account

Reversal of Items debited or credited to the


Amortisation of Intangible Assets 95 0 0 0 (95)

Depreciation of Property, Plant & Equipment 840 0 0 0 (840)

Impairment of Property, Plant & Equipment (26) 0 0 0 26

Government Grants & Contributions (657) 0 0 0 657

Revenue Expenditure funded from Capital Under Statute 1,223 0 0 0 (1,223) Amounts of Non Current Assets written off on disposal or sale as part of the gain/(loss) on disposal to the Comprehensive Income and Expenditure Statement 1 0 0 0 (1)

Gain/(Loss) on revaluation of Investment Properties (1,338) 0 0 0 1,338

138 0 0 0 (138)

Insertion of items not debited or credited to the


Capital Expenditure financed from Revenue (2,716) 0 0 0 2,716

(2,716) 0 0 0 2,716

Adjustments primarily involving the Capital Grants Unapplied Account

Capital grants and contributions applied credited to the Comprehensive Income and Expenditure Account (200) 0 0 200 0

(200) 0 0 200 0

Adjustments Primarily involving the Capital Receipts Reserve

Transfer from Usable Capital Receipts 1 0 (1) 0 0

Transfer of Cash Sale Proceeds credited as part of the gain/(loss) on disposal to the Comprehensive Income and Expenditure Statement (882) 0 882 0 0

Use of the Capital Receipts Reserve to finance new Capital Expenditure 0 0 (383) 0 383

(881) 0 498 0 383

Adjustments primarily involving the Pensions Reserve

Employers pension contribution (1,766) 0 0 0 1,766

Net charges made for retirement benefits 2,476 0 0 0 (2,476)

710 0 0 0 (710)

Other adjustments

Adjustments involving the Collection Fund Adjustment Account 22 0 0 0 (22)

Short Term Accumulated Absences 94 0 0 0 (94)

Finance Leases (58) 0 0 0 58

Movement on CNC Reserve 41 (41) 0 0 0

99 (41) 0 0 (58)

Net Additional amount to be charged/(credited) to the General Fund (2,850) (41) 498 200 (2,193)


48

Year ended 31 March 2014: General

Fund Balance

CNC Reserve


Capital Grants

Unapplied Account

Movement in

Unusable Reserves

£000s £000s £000s £000s £000s

Adjustments Primarily involving the Capital Adjustment Account

Reversal of Items debited or credited to the


Amortisation of Intangible Assets 147 0 0 0 (147)

Depreciation of Property, Plant & Equipment 1,131 0 0 0 (1,131)

Impairment of Property, Plant & Equipment 733 0 0 0 (733)

Government Grants & Contributions (792) 0 0 0 792

Revenue Expenditure funded from Capital Under Statute 1,541 0 0 0

(1,541)

Amounts of Non Current Assets written off on disposal or sale as part of the gain/(loss) on disposal to the Comprehensive Income and Expenditure Statement 2 0 0 0 (2)

Gain/(Loss) on revaluation of Investment Properties 625 0 0 0 (625)

3,387 0 0 0 (3,387)

Insertion of items not debited or credited to the


Capital Expenditure financed from Revenue (2,726) 0 0 0 2,726

(2,726) 0 0 0 2,726

Adjustments primarily involving the Capital Grants Unapplied Account

Capital grants and contributions applied credited to the Comprehensive Income and Expenditure Account 0 0 0 (200) 200

0 0 0 (200) 200

Adjustments Primarily involving the Capital Receipts Reserve

Transfer from Usable Capital Receipts 0 0 6 0 (6)

Transfer of Cash Sale Proceeds credited as part of the gain/(loss) on disposal to the Comprehensive Income and Expenditure Statement (877) 0 877 0 0

Use of the Capital Receipts Reserve to finance new Capital Expenditure 0 0 (347) 0 347

(877) 0 536 0 341

Adjustments primarily involving the Pensions Reserve

Employers pension contribution (2,012) 0 0 0 2,012

Net charges made for retirement benefits 2,088 0 0 0 (2,088)

76 0 0 0 (76)

Other adjustments

Adjustments involving the Collection Fund Adjustment Account 136 0 0 0 (136)

Short Term Accumulated Absences 122 0 0 0 (122)

Finance Leases (33) 0 0 0 33

Movement on CNC Reserve 0 0 0 0 0

225 0 0 0 (225)

Net Additional amount to be charged/(credited) to the General Fund 85 0 536 (200) 421


49

8. PROPERTY, PLANT & EQUIPMENT

Valuation of Property, Plant & Equipment The Council’s land and property are valued by Wilks Head & Eve LLP (RICS). Operational and non-operational assets are valued at the lower of net current replacement cost and net realisable value. Plant, equipment, infrastructure assets and community assets are valued at historical cost. In previous years all land and property were valued every year with the last full valuation being carried out as at 1st April 2004. From 2005/06 a rolling five year programme was commenced revaluing a proportion of the assets each year. All assets are therefore revalued at intervals not exceeding five years as required by the Code. In 2008/09 all tangible non-current assets were revalued to reflect changes in value following the financial crisis. Any major changes will be reflected in the accounts in the year they occur. The gross book value of assets revalued by Wilks Head & Eve LLP as at 1st April 2014 totalled £9,004,353 which equates to approximately 49% of the Net Book Value of all Property, Plant & Equipment held at current value as at 31st March 2014 (as at 1 April 2013, revalued assets totalled £10,440,703 equating to approximately 56% of the Net Book Value of all Property, Plant & Equipment held at current value as at 31st March 2013). The basis of valuation and classification of Property, Plant and Equipment are explained in the Statement of Accounting Policies section of these accounts. Movements in Property, Plant & Equipment during 2012/13 were as follows:

Other Land &

Buildings

Vehicles, Plant &

Equipment

Infrastructure Surplus Assets

Community Assets

Total Property, Plant &

Equipment £000s £000s £000s £000s £000s £000s

Valuation as at 1 April 2012 16,346 5,788 50 0 0 22,184 Reclassifications 49 0 0 21 59 129 Additions 3 1,197 0 0 0 1,200 Revaluation increase/(decrease) recognised in the Revaluations Reserve (140) 0 0 0 (59) (199) Revaluation increase/(decrease) recognised in the (Surplus) / Deficit on Provision of Services (202) 0 0 0 0 (202) De-recognition - disposals 0 (93) 0 0 0 (93)

Value as at 31 March 2013 16,056 6,892 50 21 0 23,019

Accumulated Depreciation At 1 April 2012 (734) (3,809) (50) 0 0 (4,593) Reclassifications (50) 0 0 0 0 (50) Depreciation charge (321) (519) 0 0 0 (840) Depreciation written out to the Revaluation Reserve 494 0 0 0 0 494 Depreciation written out to the Comprehensive Income & Expenditure Statement 228 0 0 0 0 228 De-recognition - disposals 0 93 0 0 0 93

At 31 March 2013 (383) (4,235) (50) 0 0 (4,668)

Net Book Value at 31 March 2013 15,673 2,657 0 21 0 18,351


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Movements in Property, Plant & Equipment during 2013/14 were as follows:

Other Land &

Buildings

Vehicles, Plant &

Equipment Infrastructure

Surplus Assets

Assets Under

Construction


Equipment

£000s £000s £000s £000s £000s £000s

Valuation as at 1 April 2013 16,056 6,892 50 21 0 23,019

Additions 188 1,238 0 0 278 1,704

Revaluation increase/(decrease) recognised in the Revaluations Reserve

(434) 0 0 0 0 (434)

Revaluation increase/(decrease) recognised in the (Surplus) / Deficit on Provision of Services

(641) 0 0 0 (265) (906)

De-recognition - disposals 0 (758) 0 0 0 (758)

Value as at 31 March 2014 15,169 7,372 50 21 13 22,625

Accumulated Depreciation

At 1 April 2013 (383) (4,235) (50) 0 0 (4,668)

Depreciation charge (336) (795) 0 0 0 (1,131)

Depreciation written out to the Revaluation Reserve

223 0 0 0 0 223

Depreciation written out to the Comprehensive Income & Expenditure Statement

134 0 0 0 0 134

De-recognition - disposals 0 755 0 0 0 755

At 31 March 2014 (362) (4,275) (50) 0 0 (4,687)

Net Book Value at 31 March 2014

14,807 3,097 0 21 13 17,938

Analysis of Property, Plant & Equipment

No. of Assets

NBV as at 31 March

2014

NBV as at 31 March

2013

£000s £000s

Operational

Land & Buildings

Car Parks 17 1,503 2,386

Depots 1 398 321

Hostel 5 1,268 1,241

Leisure Centre & Pool 1 6,491 6,514

Offices 1 2,833 2,831

Public Conveniences 6 466 479

Swimming Pool 1 1,849 1,901

Land & Buildings Total

14,808 15,673

Vehicles, Plant & Equipment

Vehicles 67 2,004 1,511

Wheeled Bins

530 532


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Other

563 614

Vehicles, Plant & Equipment Total

3,097 2,657

Infrastructure Assets

Access road

0 0

Operational Total

17,905 18,330

Non Operational

Surplus Assets

Land Awaiting Development

21 21

Surplus Assets Total

21 21

Assets Under Construction

Assets Under Construction

13 0

Assets Under Construction Total 13 0

Non Operational Total

34 21

Total Property, Plant & Equipment

17,939 18,351

Depreciation of Vehicles, Plant & Equipment Assets are depreciated on a straight-line basis over the useful life of the asset as determined by the valuer (for buildings) and internally (for vehicles, plant and equipment). A review of remaining useful life was undertaken and revisions made where necessary.

Class of Asset Remaining Useful Life (years)

Buildings 20 - 57

Plant and Equipment 1 - 13

Vehicles 1 - 7

Capital Commitments and Revaluations As at 31 March 2014, the Council does not have any significant capital commitments outstanding. The Council carries out a rolling programme that ensures that all Land and Buildings required to be measured at fair value are revalued at least every 5 years by an external valuer in accordance with the Council’s Accounting Policy.

Other Land &

Buildings

Vehicles, Plant &

Equipment Infrastructure

Surplus Assets

Assets Under

Construction


Equipment

£000s £000s £000s £000s £000s £000s

Carried at historical cost 13,834 7,372 50 21 278 21,555 Valued at fair value as at:

31-Mar-08 1,100 0 0 0 0 1,100

31-Mar-09 (449) 0 0 0 0 (449)

31-Mar-10 1,196 0 0 0 0 1,196

31-Mar-11 1,371 0 0 0 0 1,371

31-Mar-12 (706) 0 0 0 0 (706)

31-Mar-13 (289) 0 0 0 0 (289)

31-Mar-14 (888) 0 0 0 (265) (1,153)

15,169 7,372 50 21 13 22,625


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9. INVESTMENT PROPERTIES

The Council has let out some of its properties and surplus land under operating leases. The following items of income and expense have been accounted for in the Financing and Investment Income and Expenditure section of the Comprehensive Income and Expenditure Statement within the lines (Gain)/Loss on trading accounts and other investment property income.

2013/14 2012/13

£000s £000s

Rental income from investment property (366) (322)

Direct operating expenses arising from investment property 158 143

Net (gain)/loss (208) (179)

There are no restrictions on the Council’s ability to realise the value inherent in its investment property or on the Council’s right to the remittance of income and the proceeds of disposal. The Council has no contractual obligations to purchase, construct or develop investment property or repairs, maintenance or enhancement except for those properties which it leases out and is obliged to repair when necessary.

The following table summarises the movement in fair value of the investment properties over the

year:

2013/14 2012/13

£000s £000s

Balance as at 1 April 12,467 10,304

Additions:

Purchases 0 851

Subsequent expenditure 510 54

Disposals 0 (1)

Net Gain/(Loss) from Fair Value adjustments (626) 1,338

Transfers:

From/(to) Property, Plant & Equipment 0 (79)

Balance as at 31 March 12,351 12,467

With regard to the Council’s activity as a lessor, the gross value of assets held for use and leased out under operating leases was £5,292,638 (2012/13 - £4,961,225). As these assets are held as investment properties, in accordance with the Code, no depreciation is charged upon them.

10. INTANGIBLE ASSETS

The cost of software together with the direct costs incurred in the commissioning or enhancement of the software is charged to capital and held on the Balance Sheet as Intangible Assets. These costs are amortised to revenue (to individual services, primarily I.T. services) over five years on a straight-line basis.


53

2013/14 2012/13

£000s £000s

Balance at 1 April

Original Cost 2,428 2,049

Accumulated Amortisation (1,939) (1,844)

Net Carrying amount at 1 April 489 205

Additions:

Purchases 264 379

Amortisation for the period (147) (95)

Net Carrying Amount 31 March 606 489

11. FINANCE LEASES

The Council holds a leisure centre under a finance lease which is accounted for as an operational asset under property, plant and equipment as part of its non-current assets. Only a peppercorn rent is payable for this lease which began in 1993 for a lease term of 125 years. As at the 31st March 2014 the value of this asset was £6,491,000.

Fair Value of Assets as at 31 March 2013

Accumulated Depreciation

as at 31 March 2013

Revaluations as at 31

March 2013

Net Book Value as at 31 March

2013

£000s £000s £000s £000s

Vehicles 962 (962) 0 0

Wheeled Bins 479 (433) 0 46

Other Plant & Equipment 358 (342) (16) 0

Total Vehicles, Plant & Equipment 1,799 (1,737) (16) 46

Leisure Centre 3,790 (415) 3,138 6,513

Total Property, Plant & Equipment 5,589 (2,152) 3,122 6,559

Additions 2013/14

Depreciation 2013/14

Revaluations 2013/14

Net Book Value as at 31 March

2014

£000s £000s £000s £000s

Vehicles 0 0 0 0

Wheeled Bins 0 (46) 0 0

Other Plant & Equipment 0 0 0 0

Vehicles, Plant & Equipment 0 (46) 0 0

Leisure Centre 0 (1) (21) 6,491

Total Property, Plant & Equipment 0 (47) (21) 6,491


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12. OPERATING LEASES

Lessor With regard to the Council's activity as a lessor, some of its properties and surplus land are held by tenants under operating leases. Rentals received are shown below:

2013/14 2012/13

£000s £000s

Industrial Units 433 361

Land 10 9

Car Parks 24 29

Other Buildings 25 25

Total Rentals Received 492 424

The gross value of assets held and leased out under operating leases was £5,661,826. As these assets are held for investment purposes, in accordance with the Code no depreciation is charged to them. The Council leases out property under operating leases for the following purposes: - for economic development purposes to provide local business with affordable premises and agricultural land to local farmers. - for the provision of community services such as town council premises, garage/garden plots and travellers site. The future minimum lease payments receivable under non-cancellable leases in future years are:

31 March

2014 31 March

2013

£000s £000s

Not later than 1 year 348 304

Later than 1 year but not later than 5 years 967 571

Later than 5 years 5,238 4,417

Total Payments Receivable 6,553 5,292


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13. FINANCIAL INSTRUMENTS

The following categories of Financial Instruments are carried in the Balance Sheet.

31 March

2014 31 March

2013

31 March 2014

31 March 2013

£000s £000s

£000s £000s

Investments

Loans & receivables 30 4,089

15,163 13,918

Loans & receivables (Cash & Cash Equivalents) 0 0

16,063 10,660

Unquoted equity investment at cost 31 31

0 0

Total Investments 61 4,120

31,226 24,578

Debtors

Loans & receivables 1,503 810

1,974 1,544

Total Debtors 1,503 810

1,974 1,544

Other Long Term Liabilities

Finance lease liabilities 0 0

0 33

Total Other Long Term Liabilities 0 0

0 33

Creditors

Financial liabilities at amortised cost 2,101 1,155

2,411 2,787

Financial liabilities carried at contract amount 0 160

83 160

Total Creditors 2,101 1,315

2,494 2,947

The above figures do not include Pension Liability which is already disclosed in Note 34. Unquoted equity investments relates to the investment in CNC Consultancy Ltd which was converted to equity in 2010/11. Since these equities are not traded on the open market their fair value cannot be reliably calculated, therefore they are carried at cost of £31,000. Creditors carried at contract amount refers to the liability of bringing sewage treatment plants up to adoptable standards. This liability was retained by the Council on transfer of housing stock to Saffron Housing Association on 17 May 2004. Expenditure to date on the scheme is £6.273 million with a further £0.083 million remaining to be spent. Short term Financial Liabilities and all Financial Assets represented by loans and receivables are carried in the Balance Sheet at amortised cost. Their fair value can be calculated using the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions: • Estimated interest rates at 31 March 2014 are 0.5% for investments and soft loans; • No early repayment or impairment is recognised; • Where an instrument will mature over the next 12 months, carrying amount is assumed to be

approximate to fair value; • The fair value of trade and other receivables is taken to be the invoiced or billed amount. The Council has no material soft loans as at the 31st March 2014.

Long Term Current


56

Long term loan & receivables shown as debtors, include financial assets relating to housing renewal loans, housing maintenance loans, decent homes loans and business growth loans which do not have a market value providing a reliable figure for fair value. The present value of the future cash flows cannot easily be calculated as there is no specified termination dates for these loans and they are not included at fair value in the following table for that reason. The loans are currently shown in the balance sheet at their carrying value of £615,000 (£613,000 2012/13). The fair values of assets and liabilities, where measurable, are calculated as follows:

Carrying Amount

Fair Value

Carrying Amount

Fair Value

£000s £000s

£000s £000s

Financial Liabilities - Creditors (Short Term) 2,494 2,494

2,787 2,787

Financial Liabilities - Creditors (Long Term) 2,101 2,101

160 160

Total Financial Liabilities 4,595 4,595

2,947 2,947

Long Term Investments in Financial Institutions 0 0

4,059 4,099

Other Long Term Investments 30 30

30 30

Short Term Investments in Financial Institutions 15,163 15,163

13,918 13,918

Other Short Term Investments (Cash & Cash Equivalents)

16,063 16,063

10,660 10,660

Short Term Debtors 1,974 1,974

1,544 1,544

Long Term Debtors 1,503 1,500

810 807

Total Loans & Receivables 34,733 34,730

31,021 31,058

Note 15 shows an analysis of long term investments classified as loans & receivables. Short Term Debtors & Creditors are carried at cost as this is a fair approximation of their value. Cash and Cash Equivalents are analysed in note 17. Income, Expense, Gains and Losses in relation to financial instruments are shown below: 31 March 2014 31 March 2013

Financial assets:

Loans and receivables

Financial liabilities: measured

at amortised

cost

Financial assets:

Loans and receivables

Financial liabilities: measured

at amortised

cost

£000s £000s

£000s £000s

Interest expense (in surplus or deficit on provision of services)

0 (8)

0 (9)

Interest income (in surplus or deficit on provision of services)

361 0

500 0

Net gain/(loss) for the year 361 (8)

500 (9)

Risk The Council’s activities expose it to a variety of financial risks: Credit risk – the possibility that other parties might fail to pay amounts due to the Council.

31 March 2014 31 March 2013


57

Liquidity risk – the possibility that the Council might not have funds available to meet its commitments to make payments. Market risk – the possibility that financial loss might arise for the Council as a result in changes in such measures as interest rates and stock market movements. Risk management is carried out by the treasury team, under policies approved by the Council in the annual treasury management strategy. The Council provides written principles for overall risk management, as well as written policies covering specific areas such as interest rate risk, credit risk and the investment of surplus cash. Credit risk Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Council’s customers. The rating criteria used by the Council, and supplied by the three Credit Rating Agencies, is that of the lowest common denominator method of selecting counterparties and applying limits. During 2013/14, deposits were made with banks and financial institutions that were either rated independently with a minimum score of A- or equivalent and had a sovereign rating minimum of AA+ or equivalent for non UK sovereigns. In accordance with the counterparty list a maximum of £10 million of the Council’s Investments were deposited in excess of 1 year and up to 3 years. The Council has a policy of not lending more than £10 million to one institution at any one time. This limit with the approval of the Section 151 Officer and Members can be exceeded if necessary. The Council has no past experience of default on any classes of its surplus funds deposited with financial institutions. The Council does not generally extend credit to its customers beyond 30 days. At 31 March 2014, of the total debtor balances of £1.974 million (2012/13: £1.544 million), the past due amount was £499,000 (2012/13: £315,000) and can be analysed by age as follows:

31 March 2014

31 March 2013

£000s £000s

Customer debts

Less than three months 227 37

Three months to one year 69 70

More than one year 203 208

Total 499 315

Liquidity Risk As the Council has ready access to borrowings from the Public Works Loan Board, there is no significant risk that it will be unable to raise finance to meet its commitments.

Market Risk

Interest rate risk The Council is exposed to significant risk in terms of its exposure to interest rate movements on its investments. Movements in interest rates have a complex impact on the Council. For example, an increase in interest rates would have the following effect:


58

Investments at variable rates – the interest income credited to the Comprehensive Income and Expenditure Statement will rise; Investments at fixed rates – the fair value of the assets will fall. If interest rates had been 1% higher during 2013/14 and all other variables held constant, the financial effect would have been that investment interest income on variable rate investments would have increased by £166,000 in the Comprehensive Income and Expenditure Statement. The impact of a decrease to 0.25% below the Bank of England base rate would have reduced income by £79,000. The treasury management team have an active strategy for assessing interest rate exposure that feeds into setting the annual and revised budgets, which allows for positive or adverse changes to be accommodated. Price Risk The Council does not invest in equity shares traded on the open market, so is not exposed to price risk.

Foreign exchange risk The Council has no financial assets or liabilities denominated in foreign currencies so has no exposure to losses arising from movements in exchange rates.

14. LONG TERM DEBTORS

31 March 2014

31 March 2013

£000s £000s

Sawmills Business Park 113 138

Housing Renewal Loans 166 173

Decent Home Loans 429 410

Other loans 795 89

Total Long Term Debtors 1,503 810

15. LONG TERM INVESTMENTS

The investment figure is made up as follows:

31 March 2014

31 March 2013

£000s £000s

Financial Institutions 0 4,000

Government Securities 1 1

Other Local Authorities and Public Bodies 60 60

Accrued Interest 0 59

Total Long Term Investments 61 4,120

At 31 March 2014, there were no investments made with over 1 year to maturity. £15,163,000 was invested on a short term basis of less than 1 year. See note 18.


59

16. SHORT TERM DEBTORS

31 March 2014

31 March 2013

£000s £000s

Central Government Bodies 188 387

Other Local Authorities 695 717

Other entities and individuals 2,153 2,340

Total Short Term Debtors 3,036 3,444

17. CASH AND CASH EQUIVALENTS

The balance of Cash and Cash Equivalents is made up of the following elements:

31 March

2014 31 March

2013

£000s £000s

Cash held by the authority 2 2

Cash in Transit 203 253

Bank Current Accounts 15,858 10,405

Short-term deposits with building societies 0 0

Highly liquid Money Market Deposits 0 0

Total Cash and Cash Equivalents 16,063 10,660

18. SHORT TERM INVESTMENTS

The capital receipts resulting from the transfer of the Council’s housing stock to the Saffron Housing Association and other receipts generated from asset sales together with working capital, has enabled short term investments to be made in various financial institutions of £15,163,000 as at 31 March 2014 (£13,918,000 2012/13).

19. SHORT TERM CREDITORS

31 March

2014 31 March

2013

£000s £000s

Central Government Bodies 486 200

Other Local Authorities 1,240 637

Council Tax Payers/Non-Domestic Rate Payers 375 992

Trade Creditors 557 1,420

Other entities and individuals 1,466 1,490

Receipts in Advance 925 1,134

Total Creditors 5,049 5,873


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20. PROVISIONS

Sewerage Treatment Provision

Planning Provisions

NDR Appeals

Provision

Total Provisions

£000s £000s £000s

Balance as at 1 April 2013 215 0 0 215

Additional provisions made 0 279 382 661

Amounts used in year (132) 0 0 (132)

Balance as at 31 March 2014 83 279 382 744

Short term 83 270 286 639

Long term 0 9 96 105

On transfer of the housing stock to Saffron on 17 May 2004 the Council retained the liability of bringing sewage treatment plants up to adoptable standards. Expenditure to date on the scheme is £6.273 million with a further £0.083 million remaining to be spent. The balance of £83,000 is a short term provision. Provisions have been made in relation to ongoing planning cases to cover the Council’s own legal costs, totalling £279,000. These have been allocated between short term provisions of £270,000 and a long term provision of £9,000. Further details can be found in note 35. The Council’s share of the NDR appeals provision totals £382,000. The total increase in provision for appeals can be found in the Collection Fund Statement on page 81.

21. LONG TERM CREDITORS

Included here are payments received from developers of housing estates transferring the responsibility for the upkeep of grassed areas to the Council. These sums are transferred to the General Fund over ten years to offset the costs incurred.

31 March 2014

31 March 2013

£000s £000s

Maintenance of Grassed Areas 1,106 847

Other entities and individuals 0 57

Total Long Term Creditors 1,106 904


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22. USABLE RESERVES

Movements in the Council’s Usable Reserves are detailed on the Movement in Reserves Statement on page 38. A further breakdown of the movement in Earmarked General Reserves is detailed below: Name of Reserve Balance as

at 31 March 2013

Movement in Year

Balance as at 31 March

2014

£000s £000s £000s

Revenue 4,725 1,236 5,961

Invest for the Future 1,000 0 1,000

Localisation of Business Rates Reserve 1,500 0 1,500

Localisation of Council Tax Benefit 500 0 500

Neighbourhood Grants Reserve 97 0 97

Invest to Save Bids 100 0 100

Renewals Reserve 1,326 (560) 766

Elections Reserve 85 47 132

Land Charges 152 0 152

Local Development Reserve 999 0 999

Contingent Liabilities 106 0 106

Emergencies 43 0 43

Community Development 27 0 27

New Homes Bonus Reserve 0 257 257

Transformation Reserve 0 495 495

Communities Reserve 0 421 421

Total 10,660 1,896 12,556

23. UNUSABLE RESERVES

Capital Adjustment Account The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisation are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert fair value figures to a historical cost basis). The account is credited with the amounts set aside by the Council as finance for the costs of acquisition, construction and enhancement. The account contains accumulated gains and losses on Investment Properties as well as revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date the Revaluation Reserve was created to hold such gains.


62

2013/14 2012/13

£000s £000s

Balance at 1 April 27,188 24,071

Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement:

Charges for Depreciation and Impairment of non-current assets (1,865) (840)

Amortisation of Intangible Assets (147) (95)

Revenue Expenditure Funded From Capital Under Statute (1,541) (1,223)

Adjustment to Finance Leases 33 58

Revaluation gains/(losses) on investment properties (625) 1,338

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the Comprehensive Income and Expenditure Statement (3) (1)

(4,148) (763)

Adjusting amounts written out of the Revaluation Reserve 136 119

Net written out amount of the cost of non-current assets consumed in the year (4,012) (644)

Capital financing applied in the year:

Use of the Capital Receipts Reserve to finance new capital expenditure 348 384

Capital Grants and contributions credited to the Comprehensive Income and Expenditure Statement that have been applied to capital financing 992 657

Capital Expenditure charged against the General Fund Balance 2,726 2,716

Other 3 4

4,069 3,761

Balance at 31 March 27,245 27,188

Revaluation Reserve The Revaluation Reserve contains the gains made by the Council arising from increases in the value of its Property, Plant & Equipment. The balance is reduced when assets with accumulated gains are:

Revalued downwards or impaired and the gains are lost

Used in the provision of services and the gains are consumed through depreciation

Disposed of and the gains are realised The reserve contains only revaluation gains accumulated since 1 April 2007, the date that the reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.

2013/14 2012/13

£000s £000s

Balance at 1 April 4,869 4,662

Upward Revaluation of Assets 158 477

Downward Revaluation of Assets and Impairment losses not charged to the Provision of Services (416) (182)

Adjustments for reclassifications 0 31

Surplus or (Deficit) on revaluation of non-current assets not posted to the Surplus or Deficit on the Provision of Services (258) 326 Difference between fair value depreciation and historical cost depreciation (135) (119)

Amount written off to the Capital Adjustment Account (135) (119)

Balance at 31 March 4,476 4,869


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Pensions Reserve See note 34 on page 75.

Deferred Capital Receipts Reserve The Deferred Capital Receipts Reserve holds the gains recognised on the disposal of non-current assets but for which cash settlement has yet to take place. Under statutory arrangements, the Council does not treat these gains as usable for financing new capital until they are backed by cash receipts. When the deferred cash settlement eventually takes place, amounts are transferred to the Capital Receipts Reserve. Mortgage payments were made during the year and an adjustment relating to historical amounts was transferred to usable capital receipts, reducing the deferred capital receipts reserve balance from £13,753 to £12,319. Collection Fund Adjustment Account

The Collection Fund Adjustment Account manages the differences arising from the recognition of Council Tax and Non-Domestic Rating income in the Comprehensive Income and Expenditure Statement as it falls from Council Tax and Non-Domestic Rate payers compared with the statutory arrangements for paying across amounts to the General Fund from the Collection Fund.

2013/14 2012/13

£000s £000s

Balance at 1 April 25 47

Amount by which Council Tax and Non-Domestic rating income credited to the Comprehensive Income and Expenditure Statement is different from Council Tax and Non-Domestic rating income calculated for the year in accordance with statutory requirements (135) (22)

Balance at 31 March (110) 25

Short Term Accumulated Absences Account The Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year, e.g. annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact to the General Fund Balance is neutralised by transfers to or from the Account.

2013/14 2012/13

£000s £000s

Balance at 1 April (253) (159)

Amounts accrued at the end of the current year (122) (94)

Balance at 31 March (375) (253)


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24. CASHFLOW STATEMENT – RECONCILIATION OF NET SURPLUS OR (DEFICIT) ON THE PROVISION OF SERVICES TO NET CASH FLOWS FROM OPERATING ACTIVITIES

31 March 2014

31 March 2013

£000s £000s £000s £000s

Surplus/(Deficit) on provision of service for the Year

1,811

3,114

Adjust net surplus or deficit on the provision of services for Interest

Interest and Investment Income

(361)

(500) Interest Paid (including Finance Leases)

8

9

(353)

(491)

Non-cash Movements:- Depreciation & Amortisation Charge

1,278

935 Impairment of Fixed Assets and downward valuations

733

(26)

Decrease/(Increase) in Inventories

16

6 Decrease/(Increase) in Debtors

(810)

(604)

Increase/(Decrease) in Creditors

(1,017)

(2,034) Carrying Amount of Disposed Property, Plant,

Equipment and Investment Property

0

1 Gain/(Losses) on revaluation of investment properties

626

(1,338)

Movement in Pension Liability (IAS19)

76

710 Provisions

529

(94)

Provision for Bad Debts

639

84 Movement on Reserves

0

(179)

Collection Fund

6,294

936 Revenue Funded from Capital Under Statute

748

566

Employee Balance of Holiday/Flex Charge

122

94

9,234

(943)

Proceeds for Sale of Property, Plant or Equipment reported in net surplus/deficit of provision of service in Comprehensive Income and Expenditure Statement

(878)

(880)

Other cashflows arising from Operating Activities:- Interest Received

514

509

Interest Paid (including Finance Leases)

(8)

(9)

506

500

Net cash (Inflows)/Outflows from Operating Activities

10,320

1,300


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Investing Activities The net purchase of short-term and long-term investments detailed as £2,500 million for 2013/14 (compared to a net disposal of £(0.8) million for 2012/13) is the result of cash deposited wholly with financial institutions in interest bearing accounts.

Financing Activities – Reconciliation of Net Movement in cash for “other receipts from financing activities”

31 March 2013 31 March 2014 Net Movement Income Expenditure Net Movement

£000s £000s £000s £000s

(1,426) Council Tax (65,467) 57,127 (8,340) 511 NNDR (27,785) 31,332 3,547

(915) (93,252) 88,459 (4,793)

25. AMOUNTS REPORTED FOR RESOURCE ALLOCATION DECISIONS

The following analysis of income and expenditure by service on the face of the Comprehensive Income and Expenditure Statement is that specified by the Service Reporting Code of Practice. However, decisions about resource allocation are taken by the authority’s Cabinet on the basis of budget reports analysed across directorates. These reports are prepared on a different basis from the accounting policies used in the financial statements. In particular:

No charges are made in relation to capital expenditure (whereas depreciation, revaluation and impairment losses in excess of the balance on the Revaluation Reserve and amortisation are charged to services in the Comprehensive Income and Expenditure Account).

The cost of retirement benefits is based on cash flows (payment of employer’s pensions contributions) rather than current service cost of benefits accrued in the year.

Expenditure on some support services is budgeted for centrally and not charged to directorates.


66

The income and expenditure of the Council’s principal directorates recorded in the budget for the year ending 31 March 2014 is as follows:

Chief

Executive

Growth & Localism (including

Neighbourhood Boards)

Corporate Resources

Environment & Housing

SNC Corporate

Total

£000s £000s £000s £000s £000s £000s

Fees, charges & other service income

(21) (2,438) (4,769) (5,376) (374) (12,978)

Interest & Investment income

0 0 0 0 (2,114) (2,114)

Income from Council Tax and Non-Domestic Rates

0 0 0 0 (8,161) (8,161)

Government grants and contributions

(5) (51) (27,465) (712) (18,520) (46,753)

Total Income (26) (2,489) (32,234) (6,088) (29,169) (70,006)

Employee expenses

8 1,340 2,381 2,764 673 7,166

Other service expenses

50 2,188 28,864 3,873 7,930 42,905

Support Service Recharges

185 1,857 3,221 4,331 849 10,443

Interest payments

0 0 0 0 1,472 1,472

Precepts & levies

0 0 0 0 2,991 2,991

Total operating expenses

243 5,385 34,466 10,968 13,915 64,977

Net Cost of Services

217 2,896 2,232 4,880 (15,254) (5,029)

Reconciliation to Net Cost of Services in Comprehensive Income and Expenditure Statement

£000s

Cost of Services in Service Analysis

(5,029)

Add amounts not reported to management

3,482

Add amounts reported to management not included in Comprehensive Income and Expenditure Statement

16,965

Net Cost of Services in Comprehensive Income and Expenditure Statement

15,418


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Reconciliation to Subjective Analysis

Service Analysis

Not reported to

Management

Not included

in I&E


Corporate Amounts

Total

£000s £000s £000s £000s £000s £000s


(12,978) 0 854 (12,124) (879) (13,003)


(2,114) 0 2,114 0 (2,114) (2,114)

Income from Council Tax and Non-Domestic Rates

(8,161) 0 8,161 0 (8,161) (8,161)


(46,753) 0 18,520 (28,233) (18,520) (46,753)

Total Income (70,006) 0 29,649 (40,357) (29,674) (70,031)

Employee expenses

7,166 284 (31) 7,419 31 7,450


42,905 0 (8,092) 34,813 8,091 42,904


10,443 0 (99) 10,344 99 10,443

Depreciation, amortisation and impairment & REFCUS

0 3,198 1 3,199 11 3,210

Interest payments

1,472 0 (1,472) 0 1,472 1,472

Precepts & levies

2,991 0 (2,991) 0 2,990 2,990

Payments to Housing Capital Receipts Pool

0 0 0 0 1 1

Gain or loss on Disposal of Non-current assets and on revaluation of Investment Property

0 0 0 0 (250) (250)


64,977 3,482 (12,684) 55,775 12,445 68,220


(5,029) 3,482 16,965 15,418 (17,229) (1,811)


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The income and expenditure of the Council’s principal directorates recorded in the budget for the year ending 31 March 2013 has been re-stated to align with the presentation for the current year (following minor changes to Committee reporting), as follows:

Chief

Executive

Growth & Localism (including

Neighbourhood Boards)

Corporate Resources

Environment & Housing

SNC Corporate

Total

£000s £000s £000s £000s £000s £000s


(7) (2,051) (2,955) (4,377) (266) (9,656)


0 0 0 0 (3,194) (3,194)

Income from Council Tax

0 0 0 0 (9,032) (9,032)


0 (12) (34,744) (459) (8,342) (43,557)

Total Income (7) (2,063) (37,699) (4,836) (20,834) (65,439)

Employee expenses

0 1,474 1,044 2,706 588 5,812


53 1,603 35,839 3,152 262 40,909


331 1,572 3,126 3,844 639 9,512

Interest payments

0 0 0 0 3,596 3,596

Precepts & levies

0 0 0 0 2,816 2,816


384 4,649 40,009 9,702 7,901 62,645


377 2,586 2,310 4,866 (12,933) (2,794)

Reconciliation to Net Cost of Services in Comprehensive Income and Expenditure Statement

£000s

Cost of Services in Service Analysis

(2,794)

Add amounts not reported to management

1,918

Add amounts reported to management not included in Comprehensive Income and Expenditure Statement

14,289

Net Cost of Services in Comprehensive Income and Expenditure Statement

13,413


69

Reconciliation to Subjective Analysis

Service Analysis

Not reported to

Management

Not included

in I&E


Corporate Amounts

Total

£000s £000s £000s £000s £000s £000s


(9,656) 0 590 (9,066) (626) (9,692)


(3,194) 0 3,194 0 (3,194) (3,194)

Income from Council Tax

(9,032) 0 9,032 0 (9,032) (9,032)


(43,557) 0 8,342 (35,215) (8,342) (43,557)

Total Income (65,439) 0 21,158 (44,281) (21,194) (65,475)

Employee expenses

5,812 (8) (29) 5,775 29 5,804


40,909 0 (212) 40,697 211 40,908


9,512 0 (217) 9,295 217 9,512

Depreciation, amortisation and impairment & REFCUS

0 1,926 1 1,927 14 1,941

Interest payments

3,596 0 (3,596) 0 3,596 3,596

Precepts & levies

2,816 0 (2,816) 0 2,816 2,816

Payments to Housing Capital Receipts Pool

0 0 0 0 1 1

Gain or loss on Disposal of Non-current assets and on revaluation of Investment Property

0 0 0 0 (2,217) (2,217)


62,645 1,918 (6,869) 57,694 4,667 62,361


(2,794) 1,918 14,289 13,413 (16,527) (3,114)

26. MEMBERS ALLOWANCES

Total allowances paid to Members in 2013/14 amounted to £317,119 (2012/13: £321,364).


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27. OFFICER REMUNERATION

In 2013/14 the employees whose remuneration excluding pension contributions was £50,000 or more in bands of £5,000 (including senior employees) were:

Remuneration Band No. of Employees £ £ 2013/14 2012/13

50,000 54,999 1 4 55,000 59,999 3 1 60,000 64,999 1 0 65,000 69,999 0 0 70,000 74,999 1 1 75,000 79,999 0 0 80,000 84,999 0 0 85,000 89,999 0 0 90,000 94,999 0 0 95,000 99,999 1 1

100,000 104,999 0 0 105,000 109,999 0 0 110,000 114,999 0 0 115,000 119,999 0 0 120,000 124,999 0 0 125,000 129,999 1 1

In 2013/14, the remuneration of senior employees who have the power to direct or control the major activities of the body, in particular activities involving the expenditure of money, and whose annual salaries were between £50,000 and £150,000 were as follows:

Salary Expenses Total Remuneration (Excl Pension Contributions)

Pension Contributions

Total Including Pension

Contributions

£ £ £ £ £

Chief Executive 2013/14 127,224 1,592 128,816 18,816 147,632

2012/13 127,126 1,829 128,955 17,443 146,398

Deputy Chief Executive

2013/14 96,270 1,043 97,313 14,440 111,753

2012/13 94,383 1,341 95,724 14,157 109,881

Director of Environment &

Housing

2013/14 71,941 0 71,941 10,791 82,732

2012/13 71,980 0 71,980 10,606 82,586

Director of Growth & Localism

(from 1/2/13)

2013/14 60,822 0 60,822 9,123 69,945

2012/13 53,275 0 53,275 7,738 61,013

Head of Finance 2013/14 58,330 109 58,439 8,420 66,859

2012/13 53,087 867 53,954 7,963 61,917

Head of Business Improvement

2013/14 58,444 50 58,494 8,767 67,261

2012/13 53,289 5 53,294 7,873 61,167

Head of Environmental

Services

2013/14 50,739 63 50,802 7,611 58,413

2012/13 52,391 0 52,391 7,489 59,880

Total 2013/14 523,770 2,857 526,627 77,968 604,595

2012/13 505,531 4,042 509,573 73,269 582,842


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The numbers of exit packages with total cost per band and total cost of the compulsory and other redundancies (including pension strain) are set out in the following table: Exit Package Cost Band (including special payments)

Number of Compulsory

Redundancies

Number of Other Departures

Agreed

Total No. of Exit Packages by Cost

Band

Total Cost of Exit Packages in each

Band

2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 £ £ £

0 – 20,000 2 1 3 1 5 2 50,807 27,776

20,001 – 40,000 3 0 0 0 3 0 82,637 0

40,001 – 60,000 0 0 0 0 0 0 0 0

60,001 – 80,000 1 0 0 0 1 0 78,291 0

Total 6 1 3 1 9 2 211,735 27,776

28. EXTERNAL AUDIT COSTS

The Audit Commission has tendered all local government external audit work for 2012/13 onwards and EY were appointed as the Council’s external auditors for 2012/13 to 2016/17. In 2013/14 the following costs relating to external audit and inspection were paid: 2013/14 2012/13

£000s £000s

Fees payable to EY with regard to external audit services carried out by the appointed auditor

67 67

Fees payable to EY with regard to additional external audit services carried out by the appointed auditor for 2012/13

6 0

Fees payable to the Audit Commission with regard to external audit services carried out by the appointed auditor 0 23

Fees payable to EY for the certification of grant claims and returns 29 29

Fees payable to the Audit Commission for the certification of grant claims and returns 0 47

Fees payable in respect of other services provided by other providers during the year 3 0

Fees payable in respect of other services provided by Audit Commission during the year 0 2

Rebate of 11/12 costs paid to the Audit Commission 0 (7)

Total External Audit Costs 105 161


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29. GRANT INCOME

The following grant income and donations have been credited to the Council’s Comprehensive Income and Expenditure Statement in 2013/14:

31 March 2014

31 March 2013

£000s £000s

Credited to Taxation and Non Specific Grant Income

3,902 Revenue Support Grant* 118

62 Council Tax Freeze Grant 154

142 Council Tax Support Grant 0

115 Second Homes Monies 190

2,653 New Homes Bonus 1,569

495 Transformation Grant 0

52 Other 6

7,421 General Grants 2,037

308 DFG Capital Grant 404

7,729 Total Credited to Taxation & Non Specific Grant Income 2,441

Credited to Services

26,674 DWP Housing Benefit 33,884

661 DWP Admin Grant 709

485 Section 106 Developer Contributions 253

227 Homelessness Grant 206

0 Gypsy & Traveller Capital Grant Unapplied 200

0 NNDR Admin Grant 152

83 Handyman Service NCC Grant 87

282 Other 227

28,412 Total Credited to Services 35,718

36,141 Total Grants Credited to Comprehensive Income & Expenditure Statement 38,159

* The introduction of the Business Rates Retention Scheme has resulted in changes to the allocation of grant funding from Central Government between Revenue Support and Business Rates. In 2013/14 the Revenue Support Grant increased due to the removal of the Business Rates grant.

The Council has also received a number of grants that have yet to be recognised as income as they have conditions attached to them that will require monies to be returned if the conditions are not met. These sums are included in the Balance Sheet at year end as follows:

31 March 2014

31 March 2013

£000s Balance Sheet

£000s

5 Revenue Grants Receipts in Advance (Short Term)

26

11 Capital Grants Receipts in Advance (Short Term)

0

2,106 Grants Receipts in Advance (Long Term)

1,193

2,122

1,219


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30. RELATED PARTIES

The Council is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of these transactions allows readers to assess the extent to which the Council might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Council. Central Government has effective control over the general operations of the Council – it is responsible for providing the statutory framework within which the Council operates, provides substantial funding in the form of grants and prescribes the terms of many of the transactions that the Council has with other parties (e.g. Council Tax bills, Housing Benefits). Grants received from government departments are set out in Grants Note 29. The Council operates a Register of Members’ Interests and a Register of Staff Interests to record and monitor related party transactions. In addition to this, forms were sent to all Members of the Council and those Officers in key management posts to declare any related party transactions existing during the year. The following related party transactions existed during the year to 31 March 2014:

One member of the Council is a trustee of Hethersett Youth Club, which received a grant of £2,300 from South Norfolk Council during 2013/14. One member holds a voluntary position on the South Norfolk Youth Action Committee (SNYA) with which the Council had a service level agreement of £4,000. One member holds a position on the ‘Four Villages Good Neighbour’ scheme committee, which received a grant from South Norfolk Council of £300 during 2013/14. One member is a representative of Diss Town Council, which received a grant from the Council of £11,000 towards works to the Youth Centre. One member is a member of the Spooner Row Village Hall Committee, which received hall hire payments from the Council of £275 during 2013/14. They are also a member of the Wymondham Music Festival Committee with which the Council had a service level agreement of £3,000. One member holds a position at Diss Citizens Advice Bureau, which received a grant from the Council of £30,696 during 2013/14.

In all instances, grants and contributions were made with proper consideration of the declarations of interest. The relevant Members did not take part in any discussion or decision relating to them. Members Allowances paid during the year to 31st March 2014 are disclosed in note 26.

31. CNC CONSULTANCY SERVICES LTD

CNC Consultancy Services Limited was incorporated on 18 December 2007 and commenced trading on 14 May 2008. The company was established to provide a bespoke Building Regulation and Energy Consultancy Service from the inception of a project through to completion. The structure of the company, governed by Norwich City Council, Broadland District Council, South Norfolk District Council and The Borough Council of King’s Lynn and


74

West Norfolk, is that of an associate, in accordance with the powers provided by the Local Government Act 2003. The Board of Directors consist of representatives appointed by the four Councils. The Council holds 31,001 ordinary shares representing a 25% share in the company. To finance the company, each of the three original partnering Councils (Norwich City Council, Broadland District Council and South Norfolk District Council) provided a loan of £31,000. Due to the losses made by the company in its first two years of trading the likelihood of the repayment of the loan was low and was written off in the Council’s accounts. The loan was converted to equity by the three original partnering Councils in 2010/11. The results show a profit for the year of £6,860 (2012/13: Profit of £11,314) with net assets of £73,195 (2012/13: net assets of £66,335). South Norfolk Council is committed to meeting its share of any accumulated deficits or losses of the company. Group accounts have not been prepared as the amounts involved are not considered material. The accounts of the company are prepared by Larking Gowen but are not audited as the directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006. Accounts may be obtained from CNC Consultancy Services Ltd, South Norfolk House, Swan Lane, Long Stratton, Norwich, Norfolk, NR15 2XE.

32. CAPITAL EXPENDITURE AND CAPITAL FINANCING

The total amount of capital expenditure incurred in the year is shown in the table below, together with the resources that have been used to finance it.

2013/14 2012/13

£000s £000s

Opening capital financing requirement 33 91

Capital Investment:

Tangible Fixed Assets 1,704 1,200

Investment Properties 509 905

Intangible Fixed Assets 265 379

Revenue Expenditure Funded from Capital under Statute 1,541 1,223

Debtors 47 50

4,066 3,757

Sources of Finance:

Capital Receipts (348) (384)

Revenue Contributions (2,726) (2,716)

Grants & Contributions (992) (657)

Finance leases principal repayments (33) (58)

(4,099) (3,815)

Closing Capital Financing Requirement 0 33

Explanation of movements in year:

Assets acquired under finance leases 0 (58)

Increase/(decrease) in Capital Financing Requirement 0 (58)


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33. REVENUE EXPENDITURE FUNDED FROM CAPITAL UNDER STATUTE

Expenditure incurred during the year that may be capitalised under statutory provisions but that does not result in the 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 Council has determined to meet the cost of this expenditure from existing capital resources a transfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so that there is no impact on the level of Council Tax.

2013/14 2012/13

Expenditure Grants

Received Amounts

Written Off Expenditure

Grants Received

Amounts Written Off

£000s £000s £000s

£000s £000s £000s

465 (308) 157 Improvement Grants 412 (385) 27

348 0 348 Aids & Adaptations 403 (19) 384

485 (485) 0 Section 106 253 (253) 0

243 0 243 Affordable Housing 55 0 55

0 0 0 Neighbourhood Projects 100 0 100

1,541 (793) 748

1,223 (657) 566

34. DEFINED BENEFIT PENSION SCHEME

As part of the terms and conditions of employment of its Officers, the Council makes contributions towards the cost of post-employment benefits. Although these benefits will not actually be payable until employees retire, the Council has a commitment to make the payments that need to be disclosed at the time that employees earn their future entitlement. The Council participates in the Local Government Pension Scheme, a defined benefit final salary scheme, administered by Norfolk County Council. This is a funded scheme, meaning that the Council and employees pay contributions into a fund, calculated at a level intended to balance the pension liabilities with investment assets. From 1 April 2014, the scheme has changed to an average salary scheme, details of which can be found on page 80. We recognise the cost of retirement benefits in the reported Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge the Council is required to make against Council Tax is based on the cash payable in the year, so the real cost of retirements is reversed out of the General Fund via the Movement in Reserves Statement. The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance via the Movement in Reserves Statement during the year.


76

Local Government Pension Scheme

2013/14

Restated 2012/13

£000s £000s

Comprehensive Income and Expenditure Statement Cost of Services:

Service cost comprising: - Current service cost (2,228) (1,582)

- Past service cost (84) 0

Financing and Investment Income and Expenditure - Net interest expense (1,464) (1,237)

Total Post-employment Benefits charged to the Surplus or (Deficit) on the Provision of Services (3,776) (2,819)

2013/14

Restated 2012/13

Other Post-employment Benefits charged to the Comprehensive Income and Expenditure Statement

£000s £000s

Remeasurement of the new defined benefit liability comprising:

- Return on plan assets (excluding amount included in the net interest expense) 1,753 4,183

- Actuarial gains and losses arising on changes in demographic assumptions (1,987) 0

- Actuarial gains and losses arising on changes in financial assumptions 4,343 (9,775)

- Other (2,403) 87

Total Post-employment Benefits charged to the Comprehensive Income and Expenditure Statement 1,706 (5,505)

Movement in Reserves Statement

- Reversal of net changes made to the Surplus or Deficit on the Provision of Services for post-employment benefits in accordance with the Code (2,088) (2,476)

- Actual amount charged against the General Fund Balance for pensions in year 76 710

Employers' contributions payable to the scheme (2,012) (1,766)


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Pensions Assets and Liabilities Recognised in the Balance Sheet The amount included in the Balance Sheet arising from the Council’s obligation in respect of its defined benefit plans are as follows: Local Government Pension Scheme

2013/14

Restated 2012/13

£000s £000s

Present value of the defined benefit obligation 91,703 87,713

Fair value of plan assets (59,233) (55,302)

Net liability arising from defined benefit obligation 32,470 32,411

Reconciliation of the Movements in the Fair Value of Scheme (Plan) assets Local Government Pension Scheme

2013/14

Restated 2012/13

£000s £000s

Opening fair value of scheme assets 55,302 49,141

Interest income 2,480 2,350

Remeasurement gain/(loss): - The return on plan assets, excluding the amount

included in the net interest expense 1,753 4,183

Contributions from employer 1,947 1,702

Contributions from employees into the scheme 613 548

Benefits paid (2,862) (2,622)

Closing fair value of scheme assets 59,233 55,302

Reconciliation of Present Value of the Scheme Liabilities (Defined Benefit Obligation)

Local Government

Pension Scheme

2013/14

Restated 2012/13

£000s £000s

Opening balance at 1 April 87,713 74,994

Current service cost 2,228 1,582

Interest cost 3,944 3,587

Contributions from scheme participants 613 548

Remeasurement (gains) and losses: - Actuarial gains/losses arising from changes in demographic

assumptions 1,987 0

- Actuarial gains/losses arising from changes in financial assumptions (4,343) 9,775

- Other 2,403 (87)

Past service cost 84 0

Benefits paid (2,926) (2,686)

Closing balance at 31 March 91,703 87,713


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Local Government Pension Scheme assets comprised:

Fair value of scheme assets

2013/14

% of total 2012/13

% of total

£000s assets £000s assets

Cash and cash equivalent

Equity instruments: By industry type Consumer 3,599 6.1% 3,359 6.1%

Manufacturing 3,300 5.6% 2,654 4.8%

Energy and utilities 1,841 3.1% 1,956 3.5%

Financial institutions 3,689 6.2% 3,424 6.2%

Health and care 1,683 2.8% 1,457 2.6%

Information Technology 1,059 1.8% 1,053 1.9%

Other 2,630 4.4% 2,677 4.8%

Sub-total equity 17,801

16,580

Bonds: By sector Corporate (investment grade) 2,391 4.0% 2,439 4.4%

Corporate (non-investment grade) 85 0.1% 45 0.1%

Other 209 0.4% 167 0.3%

Sub-total bonds 2,685

2,651

Property: By type UK property 5,903 10.0% 5,259 9.5%

Overseas property 878 1.5% 901 1.6%

Sub-total property * 6,781

6,160

Private equity: All 4,075 6.9% 4,045 7.3%

Sub-total private equity * 4,075

4,045

Investment Funds and Unit Trusts: Equities 17,132 28.9% 16,630 30.1%

Bonds 9,214 15.6% 8,079 14.6%

Sub-total other investment funds 26,346

24,709

Derivatives: Other 26 0.0% -37 -0.1%

26

-37

Cash and Cash Equivalents: All 1,519 2.6% 1,194 2.2%

1,519

1,194

Total assets 59,233

55,302

*18% of the assets above do not have a quoted market price in an active market.


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Basis for Estimating Assets and Liabilities Liabilities have been assessed on an actuarial basis using the projected unit credit method, to give an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels etc. Norfolk Pension Fund liabilities have been assessed by Hymans Robertson LLP, an independent firm of actuaries and are based upon the latest full valuation of the scheme as at 31 March 2013. The Principal assumptions used by the actuary have been:

Local Government

Pension Scheme

2013/14 2012/13

Mortality assumptions:

Longevity at 65 for current pensioners: Men (years) 22.1 21.2

Women (years) 24.3 23.4

Longevity at 65 for future pensioners:

Men (years) 24.5 23.6

Women (years) 26.9 25.8

Rate of increase in salaries 3.6% 5.1%

Rate of increase in pensions 2.8% 2.8%

Rate for discounting scheme liabilities 4.3% 4.5%

The estimate of the defined benefit obligations is sensitive to the actuarial assumptions set out in the table above. The sensitivity analyses below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period and assumes for each change that the assumption analysed changes while all the other assumptions remain constant. The assumptions in longevity, for example, assume that life expectancy increases or decreases for men and women. In practice, this is unlikely to occur, and changes in some of the assumptions may be interrelated. The estimations in the sensitivity analysis have followed the accounting policies for the scheme, ie on an actuarial basis using the projected unit credit method. The methods and types of assumptions used in preparing the sensitivity analysis below did not change from those used in the previous period.

Impact on the Defined Benefit Obligation in the Scheme

Change in Assumptions at year ended 31 March 2014

Approximate % increase to Employer Liability

Approximate Monetary Amount

(£'000s)

1 year increase in member life expectancy 3% 2,751

0.5% increase in the Salary Increase Rate 3% 2,818

0.5% increase in the Pension Increase Rate 7% 6,143

0.5% decrease in Real Discount Rate 10% 9,049


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Impact on the Council’s Cash Flows

The objectives of the scheme are to keep employers' contributions at as constant a rate as possible. The Council has agreed a strategy with the scheme's actuary to achieve a funding level of 100% over the next 20 years. Funding levels are monitored on an annual basis. The next triennial valuation is due to be completed on 31 March 2016. The scheme will need to take account of the national changes to the scheme under the Public Pensions Services Act 2013. Under the Act, the Local Government Pension Scheme in England and Wales and the other main existing public service schemes may not provide benefits in relation to service after 31 March 2014 (or service after 31 March 2015 for other main existing public service pensions schemes in England and Wales). The Act provides for scheme regulations to be made within a common framework, to establish new career average revalued earnings schemes to pay pensions and other benefits to certain public servants. The Council is anticipated to pay £1,995,000 expected contributions to the scheme in 2014/15. The weighted average duration of the defined benefit obligation for scheme members is 18.9 years, 2013/14 (18.9 years 2012/13).

Further information can be found in the Norfolk Pension Fund Annual Report, which is available on request from: Department of Finance & Information, Norfolk County Council, County Hall, Martineau Lane, Norwich, NR1 2DW.

35. CONTINGENT ASSETS & LIABILITIES

South Norfolk Council is involved in a High Court Claim regarding Local Land Charges. The High Court has been asked to consider a Group Litigation Order which is ongoing. The Council has included a provision in the financial statements in relation to the current case. There are potential further claims pending but the financial implications cannot currently be reliably measured. The Council has retained some liabilities in respect of housing stock that transferred to Saffron on 17 May 2004. Any of these liabilities that are identified after the transfer date but existed before then remain the responsibility of the Council. The Council’s insurers were unable to provide cover for these unquantified risks. Since the housing stock transfer date £100,000 of the LSVT receipts have been earmarked to cover any potential liabilities. There are ongoing planning cases for which the Council has made a provision to cover its own legal costs. However, there is uncertainty over the outcome of these cases which could lead to further expenditure in the coming financial year. No contingent assets have been identified.


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COLLECTION FUND STATEMENT The Collection Fund is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Collection Fund. The statement shows the transactions of the billing authority in relation to the collection from taxpayers and distribution to local authorities and the Government of Council Tax and Non-Domestic Rates.

Total 2013/14

Business Rates

Council Tax

2012/13

£000s £000s £000s £000s

Income

Business Rates Receivable (Note 2) 28,177 28,177 - 26,814

Council Tax Receivable 66,461 - 66,461 64,512

Council Tax Benefits 0 - 0 7,602

94,638 28,177 66,461 98,928

Expenditure

Precepts, Demands and Shares (Note 4) 71,507

Central Government 13,781 13,781 -

Norfolk County Council 51,297 2,756 48,541

South Norfolk Council (including Parish Councils

re.Council Tax) 19,291 11,025 8,266

Norfolk Police and Crime Commissioner 8,512 - 8,512

Charges to Collection Fund

Payment to NNDR Pool (12/13 only) 0 0 0 26,665

Cost of Collection 149 149 - 149

Increase/decrease in allowance for impairment of debts/appeals

92 122 (30) 52

Increase/decrease in provision for appeals 954 954 -

Write Offs of uncollectable amounts 88 37 51 56

Apportionment of Previous Year Surplus /(Deficit)

Contribution to Central Government 0 -

Contribution to Norfolk County Council 64 0 64 459

Contribution to South Norfolk Council 11 0 11 71

Contribution to Norfolk Police and Crime Commissioner

11 - 11 77

94,250 28,824 65,426 99,036

Surplus/(Deficit) for Year (Note 5) 388 (647) 1,035 (108)

Collection Fund Balance

Balance at beginning of the Year 260 0 260 368

Surplus/Deficit (+/-)for Year 388 (647) 1,035 (108)

Balance at End of the Year 648 (647) 1,295 260


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NOTES TO THE COLLECTION FUND 1 GENERAL

This account reflects the statutory requirement for billing authorities to maintain a separate Collection Fund, which shows transactions in relation to Non-Domestic Rates and Council Tax. The Collection Fund is consolidated with the Council’s accounts.

2 INCOME FROM BUSINESS RATES

The scheme for business rate collection has changed from a centralised government pooling system in 2012/13 to a localised system in 2013/14 where the Council acts as the billing authority for itself, Norfolk County Council and Central Government and each authority retains a share of the business rate income. The Council collects non-domestic rates for the area based on local rateable values multiplied by a uniform rate. The total non-domestic rateable value at 31 March 2014 was £75.84 million (£74.02 million 31 March 2013). The standard non-domestic multiplier for the year was 47.1p (45.8p 2012/13) and the small business multiplier 46.2p (45.0p 2012/13).

3 COUNCIL TAX

The Council’s tax base was calculated as follows:

Band Estimated No. of Taxable Properties

after Discounts

Ratio Band D Equivalents

A 3,012 6/9 2,008

B 11,596 7/9 9,019

C 11,586 8/9 10,299

D 8,721 9/9 8,721

E 5,471 11/9 6,687

F 2,394 13/9 3,458

G 1,270 15/9 2,117

H 90 18/9 180

44,140 42,489

Adjustment for changes during the year and losses on collection

(98)

Council Tax Base 42,391

The average total Band D Council Tax for the year was £1,540.85 (2012/13 £1,534.77).

4 COUNCIL TAX PRECEPTS AND DEMANDS

2013/14 2012/13

£000s £000s

Norfolk County Council 48,541 53,350 Norfolk Police and Crime Commissioner 8,512 9,175

South Norfolk District Council 5,540 6,089 Parish Councils 2,726 2,893

65,319 71,507


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5 SURPLUS/(DEFICIT)

The introduction of the Council Tax Support Scheme has led to an increase in the Council Tax Collection Fund balance for 2013/14. An in year surplus of £1,035,000 together with a brought forward balance of £260,000 has led to an overall surplus of £1,295,000 on the Council Tax Collection Fund as at 31 March 2014.

The localised Non-Domestic (Business) Rate Scheme has resulted in a NDR Collection Fund Deficit Balance of £647,000 as at 31 March 2014, which reflects an increase in the appeals and impairments provisions against initial estimates. This is due to further appeals lodged in the final four months of the 2013/14 financial year and revised information from the Valuation Office around settlement rates of past successful appeals.

6 COLLECTION FUND BALANCE

On the basis that Council Tax surpluses and deficits are shared between South Norfolk Council, Norfolk County Council and Norfolk Police and Crime Commissioner on an agency arrangement basis and Non-Domestic Rate surpluses and deficits are shared between South Norfolk Council, Norfolk County Council and Central Government, as required by the Code, the Collection Fund balance has been accounted for as follows: 31 March

2014 31 March

2013

£000s £000s

Central Government (324) 0

Norfolk Police and Crime Commissioner 168 33

Norfolk County Council 895 194

South Norfolk District Council (91) 33

648 260

In the Balance Sheet as at 31 March 2014 the £648,000 surplus has been split as creditors to Norfolk County Council and Norfolk Police and Crime Commissioner of £1,063,000, a reduction in the Central Government creditor by £324,000 and a £91,000 deficit to the Collection Fund Adjustment Account.


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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SOUTH NORFOLK DISTRICT COUNCIL

Opinion on the Authority’s financial statements

We have audited the financial statements of South Norfolk District Council for the year ended 31 March 2014 under the Audit Commission Act 1998. The financial statements comprise the Significant Accounting Policies, the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement, the Balance Sheet, the Cashflow Statement and the related notes 1 to 34 and the Collection Fund Statement and the related notes 1 to 6. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2013/14.

This report is made solely to the members of South Norfolk District Council, as a body, in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 48 of the Statement of Responsibilities of Auditors and Audited Bodies published by the Audit Commission in March 2010. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the authority and the authority’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Head of Finance and auditor

As explained more fully in the Statement of Responsibilities set out on page 24, the Head of Finance is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2013/14, and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Authority’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Head of Finance and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Statement of Accounts to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.


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Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the financial position of South Norfolk District Council as at 31 March 2014 and of its expenditure and income for the year then ended; and

have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2013/14.

Opinion on other matters

In our opinion, the information given for the financial year in the Statement of Accounts for which the financial statements are prepared is consistent with the financial statements.

Matters on which we report by exception

We report to you if:

in our opinion the annual governance statement does not reflect compliance with ‘Delivering Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June 2007 (updated as at December 2012);

we issue a report in the public interest under section 8 of the Audit Commission Act 1998;

we designate under section 11 of the Audit Commission Act 1998 any recommendation as one that requires the Authority to consider it at a public meeting and to decide what action to take in response; or

we exercise any other special powers of the auditor under the Audit Commission Act 1998.

We have nothing to report in these respects.

Conclusion on the Authority’s arrangements for securing economy, efficiency and effectiveness in the use of resources

Respective responsibilities of the Authority and the auditor

The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.

We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires us to report to you our conclusion relating to proper arrangements, having regard to relevant criteria specified by the Audit Commission.

We report if significant matters have come to our attention which prevent us from concluding that the Authority has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we


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considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources

We have undertaken our audit in accordance with the Code of Audit Practice, having regard to the guidance on the specified criteria, published by the Audit Commission in October 2013, as to whether the Authority has proper arrangements for:

securing financial resilience; and

challenging how it secures economy, efficiency and effectiveness.

The Audit Commission has determined these two criteria as those necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Authority put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2014.

We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Authority had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

Conclusion

On the basis of our work, having regard to the guidance on the specified criteria published by the Audit Commission in October 2013, we are satisfied that, in all significant respects, South Norfolk District Council put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2014.

Certificate

We certify that we have completed the audit of the accounts of South Norfolk District Council in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission.

...................................... Date: 25 July 2014

Rob Murray for and on behalf of Ernst & Young LLP, Appointed Auditor Cambridge


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GLOSSARY OF FINANCIAL TERMS Accounting Period The period of time covered by the accounts, normally 12 months commencing on 1 April for local authorities. Accruals Income and Expenditure are recognised as they are earned or incurred, not as money is received or paid. Amortisation The writing off of intangible assets to provision of services over an appropriate period of time. Capital Charges Charges made to provision of services based on the value of the assets they use. Capital Expenditure Expenditure on new assets such as land and buildings, or on enhancements to existing assets which significantly prolong their useful life or increase their value. Capital Receipts The money received from the sale of assets. Creditors Amounts incurred by the Council but not yet paid. Contingency A condition exists at the balance sheet date where the outcome will be confirmed only on the occurrence or non-occurrence of one or more uncertain future events. Current Assets Assets which can be expected to be consumed or realised during the next accounting period. Current Liabilities Amounts which will become due or could be called upon during the next accounting period. Debtors Amounts due to the Council but not yet received. Deferred Capital Receipts Amounts due to the Council from the sale of non-current assets which are not receivable immediately on sale e.g. repayments on mortgages granted on the sale of Council Houses. Depreciation The estimated losses in value of an asset, owing to age, wear and tear, deterioration, or obsolescence. Direct Revenue Financing A method of financing capital expenditure from revenue resources in the year of account instead of spreading the cost over a period of years. Finance Lease


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A lease that transfers substantially all of the risks and rewards of ownership of an asset to the lessee. General Fund The main account of the Council which records the cost of services. Government Grants Payments by central government towards local authority expenditure. They may be specific, for example Housing Benefit Subsidy or Council Tax freeze grant, or general such as the Revenue Support Grant. Intangible Asset Non-current assets that do not have physical substance but are identifiable and are controlled by the entity through custody or legal rights, e.g. software licences. Non-Current Assets (formerly Fixed Assets) Assets which can be expected to be of use or benefit the Council in providing its service for more than one accounting period. Operating Lease A lease under which the ownership of the asset remains with the lessor. Operational Assets Non-current assets held and occupied, used or consumed by the local authority in the direct delivery of those services for which it has either a statutory or discretionary responsibility. Precepts The amount which a local authority, which cannot levy a Council Tax directly on the public (for example County Council), requires to be collected on its behalf. Provisions Monies set aside for liabilities which are likely to be incurred but where exact amounts or dates are uncertain. Revenue Expenditure Funded from Capital under Statute Capital expenditure for which the Council either never had, or no longer holds a capital asset. Reserves Amounts set aside in the accounts for the purpose of meeting particular future expenditure. A distinction is drawn between reserves and provisions which are set up to meet known liabilities. Revenue Expenditure Recurring expenditure on day-to-day expenses such as salaries, electricity, and telephones. Revenue Support Grant Paid by central government to assist in the provision of local government services. Support Service Costs The cost of certain departments that provide professional and administrative services to the Council e.g. human resources and accountancy.


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GLOSSARY OF ABBREVIATIONS CFR Capital Financing Requirement CIPFA Chartered Institute of Public Finance and Accountancy DFG Disabled Facilities Grant DHC Depreciated Historical Cost DRC Depreciated Replacement Cost EUV Existing Use Value FRS Financial Reporting Standard GAAP Generally Accepted Accounting Practice IAS International Accounting Standard IFRS International Financial Reporting Standards IPSAS International Public Sector Accounting Standards LGPS Local Government Pension Scheme MRP Minimum Revenue Provision NNDR National Non-Domestic Rates RSG Revenue Support Grant SOLACE Society of Local Authority Chief Executives SORP Statement of Recommended Practice SSAP Statement of Standard Accounting Practice WGA Whole of Government Accounts

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