Subject: STATEMENT OF ACCOUNTS 2011/12 Status: For...

Subject: STATEMENT OF ACCOUNTS 2011/12 Status: For Decision

Report to: Licensing and Regulatory Committee

Date: 6th September 2012

Report of: Service Director, Finance and Procurement Author: Helen Zammit

Author Email: [email protected] Tel: (01706) 925413

Comments from Statutory Officers:

Section 151 Officer

1. PURPOSE OF REPORT 1.1 To seek approval of the audited statement of accounts for 2011/12.

2. RECOMMENDATIONS 2.1 It is recommended that:

The audited statement of accounts for 2011/12 and the management representation letter be approved.

2.2 Reasons for recommendation: There is a statutory requirement on the Licensing and Regulatory Committee to approve the Authority’s annual statement of accounts.

3. MAIN TEXT INCLUDING ALTERNATIVES CONSIDERED/ CONSULTATION CARRIED OUT

3.1 Alternatives and Risks considered: 3.1.1 The submission of the Council’s Statement of Accounts for issue by the 30th September

is a statutory requirement therefore no alternatives are available.

3.2 Consultation Undertaken/Proposed: 3.2.1 Prior to audit, the accounts and supporting documents were available for inspection by

any person interested between Wednesday 20th June and Tuesday 17th July 2012. During the audit which commenced on 18th July, the District Auditor has been available to receive questions and objections relating to the accounts from local electors. Both these opportunities were advertised in the local press.

3.3 Equal Opportunities Implications: 3.3.1 There are no direct equal opportunity implications arising from this report.

3.4 Introduction 3.4.1 The unaudited statement of accounts for 2011/12 was approved by the Service Director

for Finance and Procurement on 19th June 2012. This was in line with the Accounts and Audit Regulations which require their approval by the end of June.

3.4.2 As a consequence of the audit a small number of changes to the statement of accounts and the notes to these statements have been made which have been agreed with the Audit Commission. These are detailed in Appendix 1. The management representation letter and statement of accounts are attached at Appendix 2 and 3.

3.4.3 In accordance with the Accounts and Audit Regulations it is intended that the audited accounts will be published by 30th September. A copy will then be made available to all members.

4. FINANCIAL IMPLICATIONS 4.1 There are no financial implications arising as a result of this report.

5. LEGAL IMPLICATIONS 5.1 There are no legal implications arising as a result of this report.

6. PERSONNEL IMPLICATIONS 6.1 There are no personnel implications arising as a result of this report.

7. RISK ASSESSMENT IMPLICATIONS 7.1 There are no specific risk issues for members to consider arising from this report.

Background Papers For further information about this report or access to any background papers please contact Helen Zammit, Finance Manager - Central Services, Finance Services, PO Box 530, Floor 7 Telegraph House, Baillie Street, Rochdale OL16 9DJ

Tel (01706) 925413. Fax (01706) 924185

Document Place of Inspection

STATEMENT OF ACCOUNTS 2011/12 CHANGES SINCE APPROVAL BY SERVICE DIRECTOR, FINANCE AND PROCUREMENT

MANAGEMENT REPRESENTATION LETTER

STATEMENT OF ACCOUNTS 2011/12

Appendix 1

Appendix 2

Appendix 3

Pauline Kane Service Director, Finance and Procurement

APPENDIX 1 STATEMENT OF ACCOUNTS 2011/12 CHANGES SINCE APPROVAL BY THE SERVICE DIRECTOR FINANCE AND PROCUREMENT ON 19TH JUNE 2012

Issue Change Made Pages

1 AS A CONSEQUENCE OF AUDIT

1.1 The following changes to the accounts have been made but these do not change the financial position of the Council.

2 Changes to Key Statements

2.1 A debtor timing error relating to asset sales where the sales had not been completed by 31st March 2012.

(MIRS)Movement In Reserves Statement Balance Sheet Note 7 - Adjustments between Accounting and Funding Basis Note 19 - Debtors Note 21 - Assets held for sale Note 22 - Creditors Note 25 - Unusable Reserves

18 21 45 61 62 62 64

2.2 Large Scale Voluntary Transfer a) Capital receipt from stock transfer not

shown initially through the HRA account and revaluation classifications

CI&E MIRS statement, Note 7 - Adjustments between Accounting and Funding Basis Note 10 - financing and investment income and expenditure Note 12 - Property Plant and Equipment Note 14 - Investment Properties Note 25 - Unusable Reserves HRA I&E statement HRA note 4 - Depreciation and Impairement HRA Note 7 - Capital Expenditure HRA Note 8 - Movement on the HRA Statement

20 18 45 51 53 56 64 101 103 105 105

b) Classification error on the pension liability for RBH

CI&E, Cashflow Note 26 -Cashflow operating activities Note 29 - amounts reported for resource allocation decisions Note 48 - Defined benefit pension schemes

20 22 67 69 86

c) Presentational changes to the disclosure of the LSVT.

CI&E Note 10 - financing and investment income and expenditure Note 11 - taxation and non specific grant income Note 11a - LSVT

20 51 52 52

2.3 Changes to group statement resulting from changes to RBH accounts after their audit.

Group MIRS Group CI&E

107 109

3 Classification Changes

3.1 Reclassification of Manchester airport and narrative.

Note 16 - Financial Instruments 58

3.2 Reclassification of Mutual Municipal Insurance.

Note 49 – contingent liabilities 89

4 Changes to Notes

4.1 Overstatement of minimum lease payments receivable in the future.

Note 42 - Leases 81

4.2 Separation of funded/unfunded pensions.

Note 48 - Defined benefit pension schemes

86

4.3 Change in category of NNDR debtor Note 19 - Debtors 61 4.4 Change in category of expenditure Note 29 - amounts reported for

resource allocation decisions. 69

4.5 Change misbandings for 2010/11 Note 36a - Officer remuneration 74 4.6 Additional information on restatements Various notes and pages 5 Minor Changes

5.1

Changes to provide more information in notes to aid the users understanding

Note 49 - contingent liabilities Note 16 - financial instruments

89 58

5.2

Various minor typing and formatting changes.

Various notes and pages

APPENDIX 2

Mark Heap

District Auditor

The Audit Commission, 2nd Floor, Aspinall House,

Aspinall Close, Middlebrook, Horwich Bolton BL6 6QQ

FINANCE SERVICES Pauline Kane Service Director Finance and Procurement Finance Services

PO Box 428, Floor 7, Telegraph House, Baillie Street, Rochdale OL16 9DJ.

Tel: (01706) 92 5409 Fax: (01706) 92 4185 Email: [email protected] Web site: www.rochdale.gov.uk

Your ref: Our Ref:

Enquiries: Helen Zammit Date: 6th September 2012

Rochdale MBC - Audit for the year ended 31 March 2012

I confirm to the best of my knowledge and belief, having made appropriate enquiries of other directors of Rochdale MBC, the following representations given to you in connection with your audit of the Authority’s financial statements for the year ended 31 March 2012.

Compliance with the statutory authorities

I have fulfilled my responsibility under the relevant statutory authorities for preparing the financial statements in accordance with the Accounts and Audit (England) Regulations 2011 and the Code of Practice on Local Authority Accounting in the United Kingdom which give a true and fair view of the financial position and financial performance of the Authority, for the completeness of the information provided to you, and for making accurate representations to you.

Supporting records

I have made available all relevant information and access to persons within the Authority for the purpose of your audit. I have properly reflected and recorded in the financial statements all the transactions undertaken by the Authority.

Going Concern

I am satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements.

Irregularities

I acknowledge my responsibility for the design, implementation and maintenance of internal control to

prevent and detect fraud or error.

I also confirm that I have disclosed:

• my knowledge of fraud, or suspected fraud, involving either management, employees who have

significant roles in internal control or others where fraud could have a material effect on the

financial statements;

• my knowledge of any allegations of fraud, or suspected fraud, affecting the entity’s financial

statements communicated by employees, former employees, analysts, regulators or others; and

• the results of our assessment of the risk the financial statements may be materially misstated as a

result of fraud.

Law, regulations, contractual arrangements and codes of practice

I have disclosed to you all known instances of non-compliance, or suspected non-compliance with laws, regulations and codes of practice, whose effects should be considered when preparing financial statements.

Transactions and events have been carried out in accordance with law, regulation or other authority. The Authority has complied with all aspects of contractual arrangements that could have a material effect on the financial statements in the event of non-compliance.

All known actual or possible litigation and claims, whose effects should be considered when preparing the financial statements, have been disclosed to the auditor and accounted for and disclosed in accordance with the applicable financial reporting framework.

Accounting estimates including fair values

I confirm the reasonableness of the significant assumptions used in making the accounting estimates, including those measured at fair value.

For the valuation of the Provision’s accounting estimate, I confirm:

• the appropriateness of the measurement method, including related assumptions and models, and

the consistency in application of the method;

• the assumptions appropriately reflect management’s intent and ability to carry out specific courses

of action on behalf of the Authority, where relevant to the accounting estimates and disclosures;

• the disclosures relating to the accounting estimate are complete and appropriate under the Code;

and

• that no subsequent event requires the Authority to adjust the accounting estimate and related

disclosures included in the financial statements.

Related party transactions

I confirm that I have disclosed the identity of the Authority’s related parties and all the related party

relationships and transactions of which I am aware. I have appropriately accounted for and disclosed

such relationships and transactions in accordance with the requirements of the Code.

Subsequent events

I have adjusted for or disclosed in the financial statements all relevant events subsequent to the date of

the financial statements.

Comparative financial statements

A restatement of the Comprehensive Income and Expenditure Statement (CIES) was made to correct material misstatements in the prior period financial statements for:

• the treatment of capital grants in the CIES, which resulted in the reclassification of income in the

statement

• the inclusion of service recharges shown elsewhere within the accounts.

A restatement of the Cashflow statement was also made to show investment transactions gross, rather than net

This affects the comparative information of the statement. Written representations previously made in respect of the prior period remain appropriate. None of the amendments changed the financial position of the Council.

Specific Representations

Within Long-Term investments we include our investment in Manchester Airport with a valuation of £10.214m. I confirm that it is our intention to retain the investment for the long-term. The investment is included at cost. After considering varying factors in valuing our investment I confirm that this is the most reliable method.

Signed on behalf of Rochdale MBC

I confirm that the this letter has been discussed and agreed by the Licensing and Regulatory Committee on 6th September 2012

Signed

Name Vicky Crossland

Position Head of Corporate Finance, Finance Services

Date 6th September 2012

APPENDIX 3

ANNUAL FINANCIAL REPORT AND ACCOUNTS

2011/12

CONTENTS 1. REGULATION & INTRODUCTION o Independent Auditor’s Report 3 o Commentary by the Cabinet Member for Finance and Corporate Management 5 o Service Director, Finance and Procurement’s Foreword & Financial Summary 6 o Statement of Responsibilities 15

2. STATEMENT OF ACCOUNTS o The Movement in Reserves Statement 18 o The Comprehensive Income and Expenditure Statement 20 o The Balance Sheet 21 o The Cash Flow Statement 22

o Restatement of the Accounts 23 o Index of Notes to the Accounts 26 o The Collection Fund Statement 98

o Notes to the Collection Fund Statement 99 o The Housing Revenue Income and Expenditure Statement and Statement

of Movement on the Housing Revenue Account Balance 101

o Notes to the HRA Comprehensive Income and Expenditure Statement 102 o Group Accounts 106 o The Group Movement in Reserves Statement 107

o The Group Comprehensive Income and Expenditure Statement 109 o The Group Balance Sheet 110

o The Group Cash Flow Statement 111 3. SUPPLEMENTARY INFORMATION o Trust Funds Comprehensive Income and Expenditure Statement and

Balance Sheet 112 o Glossary of Terms 115

REGULATION & INTRODUCTION

INDEPENDENT AUDITOR’S REPORT TO MEMBERS OF ROCHDALE METROPOLITAN BOROUGH COUNCIL The Independent Auditor’s Report to Members will be added to the Statement of Accounts following completion of the External Audit process. Opinion on the financial statements I have audited the financial statements of Rochdale Metropolitan Borough Council for the year ended 31 March 2012 under the Audit Commission Act 1998. The financial statements comprise the Authority and Group Movement in Reserves Statement, the Authority and Group Comprehensive Income and Expenditure Statement, the Authority and Group Balance Sheet, the Authority and Group Cash Flow Statement, the Housing Revenue Account Income and Expenditure Statement, the Movement on the Housing Revenue Account Statement and Collection Fund and the related notes. 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 2011/12. This report is made solely to the members of Rochdale Metropolitan Borough Council 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. Respective responsibilities of the Service Director for Finance & Procurement and auditor As explained more fully in the Statement of the Service Director for Finance & Procurement Responsibilities, the Service Director for Finance & Procurement 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, and for being satisfied that they give a true and fair view. My 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 me 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 and Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Service Director for Finance and Procurement; and the overall presentation of the financial statements. In addition, I read all the financial and non-financial information in the explanatory foreword to identify material inconsistencies with the audited financial statements. If I become aware of any apparent material misstatements or inconsistencies I consider the implications for my report. Opinion on financial statements In my opinion the financial statements:

• give a true and fair view of the financial position of Rochdale Metropolitan Borough Council as at 31 March 2012 and of its expenditure and income for the year then ended;

• give a true and fair view of the financial position of the Group as at 31 March 2012 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 2011/12.

Opinion on other matters In my opinion, the information given in the explanatory foreword for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which I report by exception I report to you if:

• in my 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;

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

• I exercise any other special powers of the auditor under the Audit Commission Act 1998. I have nothing to report in these respects Conclusion on 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. I am required under Section 5 of the Audit Commission Act 1998 to satisfy myself 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 me to report to you my conclusion relating to proper arrangements, having regard to relevant criteria specified by the Audit Commission. I report if significant matters have come to my attention which prevent me from concluding that the Authority has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. I am not required to consider, nor have I considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. Basis of conclusion I have undertaken my 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 2011, 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 me to consider under the Code of Audit Practice in satisfying myself 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 2012. I planned my work in accordance with the Code of Audit Practice. Based on my risk assessment, I undertook such work as I 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 my work, having regard to the guidance on the specified criteria published by the Audit Commission in October 2011, I am satisfied that, in all significant respects, Rochdale Metropolitan Borough Council put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2012. Mark Heap District Auditor Audit Commission, Aspinall House, Aspinall Close, Middlebrook, Horwich, Bolton BL6 6QQ 7th September 2012

COMMENTARY BY THE CABINET MEMBER FOR FINANCE As Cabinet Member for Finance I am responsible for ensuring that the Authority makes the most effective use of its resources in order to deliver value for money services that local people need. I therefore welcome the opportunity to comment on the Authority’s financial performance for the year ended 31 March and future years. The Authority’s Medium Term Financial Strategy was updated in early 2012 to reflect the budget set by Council in February 2012. This reviewed the services provided by the Authority to reflect those areas important to local people. The strategy provides a three year framework for the Authority and its partners to ensure that the value for money offered by the Authority’s Services continues to improve and can be sustained within the reduced resources available. The absence of firm local government spending plans beyond 2012/13 and the change in the methodology in distributing resources to Local Authorities by means of the Business Rates Retention initiative means that there is still considerable uncertainty regarding the level of funding that the Authority will receive for the future. At this stage the Authority’s budget plans assume that government funding will reduce in line with the National Figures announced as part of the Comprehensive Spending Review in October 2010. The position will be kept under close review and updated as further information becomes available. It is expected that an announcement regarding the baseline figures will be announced in the Autumn of 2012 including the amount the Authority will retain in regard to their National Non Domestic Business Rates. There will inevitably be an impact across the Authority where we need to ensure a balanced budget is achieved. In order to realise this, the Authority is working on the vision for 2014/15 and has embarked on a savings programme which requires the achievement of an estimated £45m over a two year period. The Authority as with most local councils faces above inflationary increases in costs as a result of demographic, social and economic factors. An increasingly aging population and Adults with Learning Disabilities are placing pressures on the Adult Care Service and the increased number of children being looked after by the Authority is adding to budget pressures in the Child Care Service. These examples of pressures coupled with the local impact of the national economic downturn, has increased demand for the Authority’s services. The 2012/13 budget also contains a challenging savings programme with resources being targeted towards those services which are statutory and / or provide services which are high priority for the residents of the borough. During 2011/12 the Authority spent £960m on day to day services. This was partially offset by £406m in income obtained from fees and charges, rents and specific grants. The remainder of the spending was funded by government grants and Council Tax. Residents funded £79m, under a tenth of the total Authority’s budget, through Council Tax. The Authority faced significant challenges in keeping spending within the budget in 2011/12 and through robust budget monitoring and a prudent spending policy the Authority has been able to achieve an underspend position of £7.6m. The underspend achieved by services will help the Authority achieve the enormous saving requirement needed to balance the 2013/14 and 2014/15 budget by providing one off funding for the funding strategy in 2013/14. The robust budget monitoring arrangements and the hard work of the Authority’s services helped to ensure that resources were directed to priority areas and non essential spend was not incurred. Further details of our financial performance are outlined in the Service Director Finance and Procurement’s Foreword and Financial Summary on page 6 and will be reported to the Cabinet in July 2012. As well as revenue spending on day to day services, the Authority invests a significant amount on improving our assets. In 2011/12 capital spending amounted to £134.8m, of which £46.3m was invested in schools. As highlighted above the Authority is experiencing a significant increase in the demand for services and these pressures coupled with a reduction in funding from Central Government will mean the Authority will be required to make some challenging decisions regarding the services it provides going forward. The Authority is also aware of the pressures facing local people and businesses, especially given the current economic uncertainty. The Authority will continue to look for ways to reduce financial pressures and minimise the burden of Council Tax on local people and look to provide innovative support to local businesses. Residents can also be assured that the Authority has clear plans to ensure that service delivery and resources are directed towards the priorities of local people.

Councillor Farooq Ahmed Cabinet Member for Finance September 2012

SERVICE DIRECTOR, FINANCE AND PROCUREMENT’S FOREWORD AND FINANCIAL SUMMARY Foreword This document is the statement of accounts for Rochdale Metropolitan Borough Council and its Group. The purpose of the statement of accounts is to give the reader an understanding of the financial position of the Authority and to demonstrate that the financial standing of the Authority is secure. It covers the financial year from 1st April 2011 to 31st March 2012 and shows the financial position of the Authority and the cost of the services it provides. This is the second year the Authority has had to produce Financial Statements in accordance with International Financial Reporting Standards (IFRS) and the first year heritage assets have appeared on the Authority’s balance sheet. There have been significant challenges due to the transfer of the Authority’s Housing Stock to a mutual organisation and the decision to work towards a significant change in the contract with Impact Partnership. The main changes to the accounts are:

• Heritage assets • Transfer of the Authority’s Housing Stock to a Mutual Organisation

Sections within the statement of accounts provide the detail behind these changes and the impact on the accounts. Page 23 to the accounts, details the changes the Authority has made to the accounts and any prior period adjustments to ensure the accounts show a consistent message. The Authority each year produces an Annual Report which details the financial standing of the Authority, how the Authority is working towards its priorities and the performance of the Authority in achieving these priorities. The Annual Report can be found at: Annual Report 2010-11 (PDF) The Authority is experiencing a period of unprecedented change due to implementing significant saving proposals in part as a result of the Comprehensive Spending Review 2010. To up skill managers in financial management, a series of Financial Awareness Training sessions have been provided throughout the Authority, this is to support managers to deliver services within reduced resources due to the austerity times the Authority finds itself in. The Finance Teams have been working hard with services to further develop their financial skills by offering support and guidance and targeting those services assessed as high risk. To aid decision making managers are provided with timely information, the financial system has been developed to provide financial monitoring reports electronically overnight via email. Financial Summary General Fund: In 2011/12, The Authority originally planned to spend £197.3m (net of Dedicated Schools Grant of £171.90m). This was to be funded through government grants (£118.3m) and Council Tax (£79.0m). After taking into account commitments brought forward from 2010/11 (£28.2m), an increase in specific grants £14.2m and those carried forward to 2012/13 (£32.2m), the Authority’s budgeted spend for 2011/12 is revised to £239.7m. The under spend on budget (£7.6m) is currently being reported by services. Cabinet are being asked to carry forward these underspends for the Authority’s Funding Strategy in 2013/14. The Authority’s actual net expenditure during the year on providing its services amounted to £232.1m and was therefore slightly underspent on budget. Details of the reasons for the budget variations will be reported to Cabinet in July 2012. The other operating costs of the Authority for 2011/12 were £62.4m this compares to £0.1m for 2010/11. The increase in expenditure is due to the loss on the disposal of non current assets for schools which have transferred to Academy Status, the housing stock transfer and the revaluation of assets held for sale. The amount of interest payable to service the loans of the Authority for 2011/12 was £24.1m compared to a budget of £25.2m. The reason for the reduced cost of interest payable is due to the Treasury Management Team using their expertise in this area to obtain lower interest rates than budgeted and to accurately time the Cashflows of the Authority therefore maximising the use of internal balances without putting the Authority at financial risk. The Authority receives income from a number of sources Council Tax, Government Grants, and Business Rates. The table below provides details of the income actually received by the Authority for 2010/11 and 2011/12.

http://www.rochdale.gov.uk/pdf/Annual%20Report%20-%20DRAFT.pdf

Table 1 Income Received by the Authority Resources of the Authority 2010/11 2011/12 £'000 £'000 Business Rates 95,778 88,264 Non Specific Government Grants 48,811 44,424 Council Tax 78,713 79,042 Total 223,302 211,730

Local Taxes and Tax Collection: The 2011/12 Council Tax bill for a Band D property was £1,482.36. This represents a freeze in the level of Council Tax compared to 2010/11. Central Government has provided the Council Tax Freeze Grant for 2011/12 and future years to fund the freeze in Council Tax up to 2.5%. In 2012/13 Central Government has again provided the Council Tax freeze Grant again however this is for one year only and will cause a pressure for the Authority in 2013/14. The Movement in Reserves shows that the Authority’s total general reserves at 31st March 2012 amount to £37.2m. However this includes commitments into 2011/12 of £32.2m, leaving uncommitted year end balances of £5.0m The Authority is financially secure and keeps an appropriate level of General Fund Balances to mitigate the risks not provided for within the Authority’s Financial Plans, Reserves or Provisions. The level of balances are assessed annually to ensure they are adequate to safe guard the Authority against the potential “exposure” to risk The risk assessment undertaken as part of the 2012/13 budget setting process estimated that in a worst case scenario the potential maximum unbudgeted costs that the Authority could incur would be £5.0m. It is therefore estimated that this level of general balances will be sufficient to meet this level of potential liability. The potential financial risks facing the Authority will be covered in more detail later. Material Assets and Liabilities: The Authority has increased the level of short term provisions mainly due to the impending changes to the Impact Contract. The Authority has provided for the resources which are required to be paid to Impact in regard to the level of investment made by the company for future service provision. The Long Term Liabilities of the Authority has increased to reflect the Finance element of the new Street lighting PFI scheme which commenced operation in July 2011. The Scheme is to replace and maintain all street lights in the borough through to July 2036. Earmarked Reserves: The Authority earmarks resources for specific issues and these are contained in earmarked reserves. During 2011/12 the level of these reserves increased by £8.4m to £52.7m. The increase in reserves is mainly due to surpluses in individual schools balances being carried forward to 2012/13. Further details regarding Earmarked Reserves can be found in note 8. Housing Revenue Account: The total spending on managing and maintaining council dwellings during 2011/12 was £30.7m and increases to £51.2m when including accounting changes i.e. the revaluation loss on the Council Housing Stock and interest payable / receivable, and capital expenditure funded by revenue. This expenditure was funded from rent income (£42.4m), government grant (£4.0m) and charges for services and facilities (£1.6m) leaving a net in year deficit of £3.2m. As a consequence the HRA balance at 31st March 2012 has reduced from £10.2m at March 2011 to £7.1m. The balance on the HRA will be transferred to the General Fund following the transfer of the Housing Stock to RBH. HRA related Capital spending amounted to £8.8m. The Housing Revenue Account and Notes are provided at pages 101-105. Trading: The Authority provides a number of services on a trading basis. The net deficit on these activities is £0.5m for 2011/12. Further details are provided at Note 31 to the Accounts. Pension Fund: There are two Pension Schemes within the Local Authority namely the Local Authority Defined Contribution Scheme which Teachers who are employed by the Authority are members and the Defined Benefit Pension Scheme which officers of the Authority are members of unless they opt out. The Greater Manchester Pension Fund is administered by Tameside MBC. The figures contained in the Statement of Accounts are based on the previous full valuation which took place 31st March 2012. The Authority’s pension fund liability is £229.4m an increase of £97.8m on the liability reported at 31st March 2011. The increase in the liability is due to in the main to actuarial losses i.e. the financial assumptions made by the Actuary as at 31st March 2012 when compared to March 2011.

Capital and Asset Management: Capital expenditure of £134.8m was incurred in 2011/12 and this was financed by a combination of borrowing, grants, asset disposals and revenue. Details of the financing of capital expenditure in 2011/12 are provided at note 41 to the accounts. The Authority at 31st March 2012 has loans totalling £174.4m which have been used primarily to finance previous year’s capital expenditure. The Capital programme is a three year programme. Government capital allocations are only given on an annual basis and the resources for 2012/13 to 2014/15 have therefore been prudently based on the 2011/12 levels. Forecasts of capital receipts have been re-profiled to take account of the economic climate. Table 2 General Fund Capital Programme

The main changes in the capital programme from 2012/13 to 2013/14 are within the Children, Schools and Families – Support for Learning service and Operational Services. The costs for Building Schools for the future scheme are within Children, Schools and Families and for Number One Riverside are in Operational Services. The Capital Programme in 2012/13 is funded from Prudential Borrowing £35.768m, Capital Receipts £8.505m and External Funding £46.428m. Economic Climate: 2011/12 has been a challenging year with an increase in service demand being experienced due to the economic downturn, Local businesses struggling and shops within the Town Centre closing. Authority has taken decisive steps to mitigate the impact on the Authority’s financial position by services not incurring spend on non essential expenditure, implementing a robust saving programme and realigning budgets to priority areas. This has enabled the Authority to achieve an underspend budget position in 2011/12 which will be used for the Funding Strategy. 2011/12 has bought new challenges as this is the first year of the Finance Settlement which significantly reduced the resources available to the Authority. The Authority has set a robust 2012/13 budget in February 2012, which included savings of £10.476m. This is a major challenge and will require excellent Governance arrangements to be in place, to ensure services achieve the proposals they have signed up to. The Authority is modelling the potential changes in how Local Authorities are resourced following the consultation document issued by Central Government earlier this year. The impact of any changes in the funding methodology should be known in early Autumn. Risks Facing the Authority The Authority faces a number of risks in relation to the financial resources the Authority will receive. When the budget is set at Budget Fixing Council a report is written on these risks and the likely hood of them materialising. The major financial risks to the Authority are as follows: Local Government Resource Review: In March 2011, Central Government announced the Local Government Resource Review which considered the way Local Authorities are funded. Central Government are proposing to abolish the current methodology of how Local Authorities are funded and to replace the current system allowing Authority’s to keep 50% of the Business Rates they collect. There are a number of financial risks to the Authority in Central Governments change to a Business Rates funding regime:

• The Authority currently does not collect enough Business Rates to fund the level of services required by Rochdale Borough

2012/13 2013/14 2014/15Estimate Estimate Estimate

Service £'000 £'000 £'000

General Fund

1 Adult Social Care 669 535 535 2 Children, Schools and Families - Support for Learning 43,918 31,073 6,008 3 Children, Schools and Families - Targeted Support 122 122 122 4 Corporate Services 5,416 4,991 4,813 5 Customers and Communites 9,342 8,380 3,635 6 Highways 2,389 2,499 2,259 7 Operational Services 19,167 2,816 2,219 8 Planning and Regulation 9,678 2,670 1,620

Total General Fund 90,701 53,086 21,211

• The risk of non collection will be moved from Central Government to the Authority • The new methodology is based on business rates generation and not the need of the residents of Rochdale

Council Tax Localisation: Central Government as part of the Comprehensive Spending Review 2010 announced their proposal to introduce the requirement that Billing Authorities introduce a Council Tax Discount Scheme to replace the current Council Tax Benefit scheme. The purpose of the proposal is to reduce the National level of benefits awarded by 10%. The new scheme will protect certain groups from a reduction in their discount for example Pensioners, Single Persons etc. Protecting certain groups has a detrimental impact on the remaining households currently receiving Council Tax Benefit. The number of households the 10% reduction can be recovered from is a smaller number therefore the impact will be greater. The Authority is to develop a scheme by the statutory deadline 31st January 2013 with implementation from the 1st April 2013. The New Universal Credit System for Housing Benefit payments is to be introduced by October 2013 with more details regarding the financial implications for the Authority being released in due course. Technical Reforms of Council Tax: Central Government has given the Authority new powers through the Local Government Finance Bill which gives Authority’s discretion from April 2013 to:

• Allow applications for the exemption to Council Tax where the building for example is uninhabitable • Introduce an empty homes premium • Abolish the second homes discount

Academy Funding Transfer: Central Government is supporting schools that wish to become Academies and independent of Local Authorities. These schools will commission services previously provided by Local Authorities and receive the funding to do this. This means that Local Authorities will receive reduced Dedicated Schools Grant and general funding for these schools; this will have a direct impact on the level of services provided by the Authority. Central Government has reduced the level of funding provided to Local Authorities in 2011/12 for those schools which have converted to Academy status in 2010/11. For 2012/13 and future years it is unclear how much funding will be removed from the Authority’s funding to redirect the resources towards Academies. Public Health Transfer: Central Government has a programme to improve public health through strengthening local action, supporting self esteem and behavioural changes, promoting healthy choices and changing the environment to support healthier lives. The transfer of public health functions from Primary Care Trusts to Local Authorities will provide challenges to Local Authorities as the transfer of responsibilities will be made at a time when there are reductions in total NHS and Local Authorities funding. The basis for allocating funding to Local Authorities is still to be determined. Major Changes Facing the Authority There were several significant local issues that had a bearing on the financial position for 2011/12 and will continue to impact in future years. The following sections set out those issues which are considered to be of most relevance in the context of the 2011/12 accounts. Transfer of Housing Stock: In December 2011, tenants of Rochdale Borough wide Housing (RBH) the Arms Length Management Organisation (ALMO) set up by the Authority, voted in favour of transferring all housing properties to a new registered provider of social housing based on RBH. This transfer took place on the 26th of March 2012 and incorporated 13,712 dwellings, 1606 garages, 65 garage sites, 76 shops, 40 playgrounds, 2 community centres, 9 other buildings and various plots of land within housing estates. This transfer has had a material impact on the Authority’s accounts for 2011/12. This is described more fully in Note 54 to the accounts but the key features were:

• The transfer price for the dwellings was £25.5m, based on the tenanted market value of the housing stock and associated assets.

• The transfer resulted in the repayment by Central Government of £215.3m of Public Works Loan Board debt, which has clearly affected the Balance Sheet of the Authority. This was however in line with expectations and the Authority’s Treasury Management Strategy for 2012/13. This matter is dealt with more fully at Note 16 to the accounts.

• The Authority has entered into an agreement with RBH relating to the future sales under the Preserved Right to Buy (PRTB) regulations. This relates to any future sales of the transferred stock to existing tenants and the Authority will receive capital receipts during each financial year for any properties sold. This matter is noted as a contingent asset in the accounts (note 50).

• The Authority negotiated a claw back arrangement with RBH for any future sales of land that had previously transferred.

• In line with other transfers that have taken place and with the agreement of Her Majesty’s Revenues and Customs Service (HMRC), the Authority and RBH have agreed a Value Added Tax (VAT) shelter arrangement whereby RBH can reclaim VAT on future improvement works to the transferred housing stock for the next 15 years. The Authority will receive £8.3m from the VAT shelter proceeds, which will be used to fund the Authority’s transfer set-up costs and to fund the pension deficit on transfer. The Authority will receive a 40% share of the remaining VAT shelter proceeds, estimated to be £17.5m over the next 15 years. The savings that are received by the Authority will be treated as a capital receipt and will boost the resources available to the Authority to support its capital spending plans from 2016/17. This matter is noted as a contingent asset in the accounts (note 50)

• All current and former tenant rent arrears as at the date of transfer were sold to RBH. • The Authority has agreed to a number of warranties under the Transfer Agreement, the key warranties for

the Authority are the asbestos indemnity, contracts affecting the property and the VAT shelter indemnity. These are noted as Contingent Liabilities in the accounts (note 49).

Group Accounts The Group Accounts, shown in the final section of the Financial Statements, provide consolidated financial information for the Authority plus any material financial interests in organisations over which the Authority has a level of control. The Code requires the relationship that the Authority has with a number of organisations be classified into the categories of subsidiaries, associates and joint ventures. The Rochdale Boroughwide Housing (RBH) has been consolidated within the Group Accounts until the 26th of March 2012, the date of stock transfer. After this date the Authority no longer had control of the company and as such RBH was removed from the Group Accounts. RBH was formed in March 2002 as an “Arms Length Management Organisation”. As an ALMO it was a company “limited by guarantee” meaning it had no share capital. The main objectives of RBH were the delivery of major repairs and improvement to bring Council homes up to the Decent Homes Standard, rent collection, maintenance, and management of lettings. The Vision and Blue Prints of the Authority The Authority is working towards the vision of what the Authority will look like in 2014/15 this will impact on the services provided by the Authority. The four blue prints set out the Authority’s approach under each theme:

• Building Success and independence • Quality of place • Critical Services • Corporate and Support Services

The Principles governing how the Authority will implement the blueprints are:

• Delivering Good Quality Universal Services • Targeting resources to priority areas achieving the best possible outcome within the resources available • Critical Services must achieve best possible outcomes, at a minimal level and cost • All services to achieve value for money • A new radical approach to service delivery, looking at the services we deliver with the principle of stop,

redesign or efficiency • Develop an appropriate balance between Critical services vs building success • Having an appropriate size of the Authority – Reduced, higher skilled workforce; asset rationalisation and

better use of ICT • Commissioning services – Where better outcomes for reduced cost can be achieved, working jointly with

other public service organisations should be implemented • Promotion of community responsibility and volunteering

• Specialist and professional staff will only be brought in where essential, the skills of the workforce will be generic and flexible to be utilised across the Authority

• Services will be integrated to achieve improved Value for Money and Customer Experience • A range of services to be Devolved to Townships

The Blueprints and Principles of the Authority will help to direct the Authority in the achievement of the challenges it faces over the coming years. Vision and Blueprint for Rochdale Borough Council 2014-15.doc Services Provided by the Authority The services the Authority provides are grouped together under the following headings in accordance with the CIPFA Service Reporting Code of Practice for Local Authorities 2011/12; this is to ensure comparison between all Local Authorities can be made on a consistent basis:

• Central Services to the Public • Corporate and Democratic Core • Non distributed costs • Cultural & Related • Environmental & Regulatory • Planning • Children’s and Education • Highways & Transport • Adult Social Care • Housing – General Fund and Housing Revenue Account

The financial activity of the Authority, in relation to these services, is shown through a number of key financial statements and notes. As detailed above there are a number changes this year due to the transfer of the Authority’s Housing Stock and the Impact Contract being reviewed. The accounting policies, key statements and notes to the accounts comply with the requirements of CIPFA’s Code of Practice under IFRS. The key financial statements are: The Comprehensive Income and Expenditure Account: This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the movement in Reserves Statement. The Balance Sheet: The balance sheet shows the value at the balance sheet date of the assets and liabilities recognised by the authority. The net assets of the authority (assets less liabilities) are matched by reserves held by the authority. Reserves are reported in two categories. The first category of reserves are useable reserves, i.e. those reserves that the authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserves may only be used to fund capital expenditure or repay debt ). The second category of reserves include 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 difference shown in the Movement in Reserves Statement line “Adjustments between accounting basis and funding basis under regulations. The Movement in Reserves Statement (MiRS): This Statement shows the movement in year on the different reserves held by the authority, analysed into “Useable reserves” (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The surplus or (Deficit) on the provision of services line shows the true economic cost of providing the authority’s services, more detail are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance and the Housing Revenue Account for Council Tax Setting and dwellings rent setting purposes. The Net Increase / Decrease before Transfers to Earmarked Reserves line shows the Statutory General Fund Balance and the Housing Revenue Account Balance before any discretionary transfers to or from earmarked reserves undertaken by the Authority. The Cash Flow Statement: The Cash Flow Statement shows the changes in cash and cash equivalents of the authority during the reporting period. The statement shows how the authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the authority are funded

http://www.rochdale.gov.uk/Docs/2011-09-22_Vision_and_Blueprint_for_Rochdale_Borough_Council_2014-15.doc

by way of taxation and grant income or from the recipients of services provided by the authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the authority’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 authority. The Housing Revenue Account (HRA): The HRA income and expenditure statement shows the economic cost in the year of providing housing services in accordance with generally accepted accounting practices, rather than the amount to be funded from rents and government grants. Authorities charge rents to cover expenditure in accordance with regulations; this may be different from the accounting cost. The increase or decrease in the year, on the basis of which rents are raised is shown in the Movement on the HRA Statement. This is the final year the Authority will produce a HRA statement due to the Housing Stock Transfer. The Collection Fund: The Collection Fund is an agent’s statement that reflects the statutory obligation for the billing authority 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. The Group Statements The group accounts contain the accounts of the Authority and its subsidiary, Rochdale Boroughwide Housing (RBH) Ltd. Any transactions between the Authority and RBH are removed. This is the final year the Authority will produce Group Statements which include RBH due to the Housing Stock Transfer. Accounting Policies The Authority’s Key Statements are preceded by an explanation of the accounting policies used by the Authority in preparing the financial statements. In addition, each statement is accompanied by a series of notes to help explain the most significant items of income and expenditure. The statement of accounts are prepared in accordance with the recommended practice outlined in The Code of Practice on Local Authority Accounting (The Code), which interprets the relevant International Financial Reporting Standards and prescribes a hierarchy of alternative standards on which the accounting treatment and disclosures should be based for all normal transactions. There have been a number of changes to the accounting policies for the Authority to ensure we comply with the code which include: • Heritage Assets

o Buildings o Arts and Museum Collections o Other Heritage Assets (Statues, monuments)

• Changes in Accounting Policies, Estimates and Returns • Termination Benefits • Intangible Assets • Provisions, Contingent Liabilities, and Contingent Assets • Accounting Concepts • Non-Current Assets Held for Sale • Property, Plant and Equipment • Reserves • Private Finance Initiatives (PFI) and Similar Contracts • Financial Instruments Heritage Assets A new policy has been prepared to explain the treatment of heritage assets within the accounts. Heritage assets are assets held primarily for their contribution towards knowledge and culture. The Authority has three categories of heritage assets which are held in support of the Authority’s artistic, cultural and educational aims. The categories are accounted for as follows: Buildings All buildings of significant heritage interest owned by the Authority are also used for its operational purposes. They are therefore categorised as operational assets and accounted for under IAS 16, Property Plant and Equipment. Art & Museum Collections The Art & Museum collections are reported in the Balance Sheet at valuations obtained for insurance purposes, with any surplus or deficit on revaluation being reported in the Comprehensive Income & Expenditure Statement. Due to the nature of these assets, insurance values are seen as the best proxy for estimating their value. The collections are deemed to have indeterminate lives and maintain their value; hence the Authority does not consider it

appropriate to charge depreciation. Any purchases are initially recorded at cost and donations are recorded at current value ascertained by curators with reference to items of a similar nature. Other Heritage Assets (statues, monuments etc) Reliable cost or valuation information is not available for certain heritage assets such as statues and monuments. This is due to the lack of comparable market values and the cost required to obtain valuations would be disproportionate to the value added to readers of the accounts. The Authority has therefore not recognised these assets on the Balance Sheet but disclosed them separately in the notes to the accounts.

Heritage Assets - General The carrying amounts of heritage assets are reviewed where there is evidence of impairment for heritage assets, e.g. where an item has suffered physical deterioration or breakage or where doubts arise as to its authenticity. Any impairment is recognised and measured in accordance with the Authority’s general policies on impairment. Where heritage assets are disposed of, the proceeds of such items are accounted for in accordance with the Authority’s general provisions relating to the disposal of property, plant and equipment. Disposal proceeds are disclosed separately in the notes to the financial statements and are accounted for in accordance with statutory accounting requirements relating to capital expenditure and capital receipts.

Changes in Accounting Policies and Estimates and Errors The Policy in regard to Prior Period Adjustments has been updated to include changes in Accounting Policies, Estimates and Errors. 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. 1. 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. 2. 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. 3. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances

and comparative amounts for the prior period. 4. Employee benefits Termination benefits Termination Benefits are amounts payable as a result of a decision by the Authority to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to the appropriate service in the Comprehensive Income and Expenditure Statement when the Authority 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 Authority to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. Intangible Assets The policy for Intangible Assets remains the same but more detailed information has been provided on the definition of an intangible asset being expenditure on non-monetary assets that do not have physical substance but are controlled by the Authority as a result of past events (e.g. software licences). Provisions, Contingent Liabilities, and Contingent Assets The policy on provisions remains the same but more detailed information has been provided on when payments are eventually made and where that they are charged to the provision in the balance sheet. For contingent Liabilities and contingent assets the policies remain the same but they have been reworded. Accounting Concepts The policy on accounting concepts remains the same but more detailed information has been provided on two of the concepts that Financial information should be relevant, reliable, comparable and understandable and that the materiality of information must be considered, i.e. information must be of sufficient significance to justify its inclusion.

Non-Current Assets Held for Sale The policy on Non-Current Assets Held for Sale remains the same but more detailed information has been provided on the criteria for determining when an asset as held for sale:-

• asset is immediately available for sale • sale is highly probable • asset is actively marketed • sale is expected to be complete within 12 months

Property, Plant and Equipment The policy on this remains the same but more detailed information has been provided with regards to components. For a component to be separately identified it must meet the following criteria:- • The entire assets current book value must be greater than £500k; • The components value must be at least 20% of the assets current book value; • The components expected useful life must be 25% or less than the expected useful life of the asset Reserves The policy on Reserves remains the same but more detailed information has been provided with regards to the creation and use of a reserve. Private Finance Initiatives (PFI) and Similar Contracts The policy on PFI and similar contracts remains the same but more detailed information has been provided on the elements that the amounts payable to the PFI operators are analysed over. Financial Instruments The policy on Financial Instruments remains the same but has been reworded with regards to premiums and discounts. Policies deleted The following three policies have been deleted as they are no longer required:- • ABG (Area Based Grant) • Revaluation Reserve • Treasury Management Policy The Authority faces huge challenges over the medium term with a significant reduction in resources from Central Government being forecast, a shift of risk in the localisation of funding from Central to Local Government and the impact of the economic downturn on both the local people and businesses of Rochdale. The future shape of the Authority and the services the Authority provides will need to change to enable the Authority to deliver services which meet the borough priorities within the limited resource available. The Statement of Accounts were authorised for issue on 19th June 2012 and is the date where events after this date will not have been included in the Statement of Accounts. If you have any questions or comments regarding the information contained in the Statement of Accounts please contact Vicky Crossland, Head of Corporate Finance, Finance Services, Telegraph House, Baillie Street, Rochdale OL16 1JA (Telephone 01706 925409).

Pauline Kane, Service Director, Finance and Procurement September 2012

STATEMENT OF RESPONSIBILITIES The Metropolitan Borough Council’s Responsibilities:- o 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 Service Director, Finance and Procurement.

o To manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets. o To approve the Statement of Accounts. The Service Director, Finance & Procurement’s Responsibilities:- The Service Director, Finance and Procurement is responsible for the preparation of the Authority’s Statement of Accounts which, in terms of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in Great Britain (“the Code of Practice”), is required to present a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the year. In preparing this Statement of Accounts, the Service Director, Finance and Procurement has: o Selected suitable accounting policies and then applied them consistently. o Made judgements and estimates that were reasonable and prudent. o Complied with the Code of Practice. o Kept proper accounting records which were up to date. o Taken reasonable steps for the prevention and detection of fraud and other irregularities. Certification of Accounts I certify that this Statement of Accounts presents a true and fair view of the financial position of the Authority as at the 31st of March 2012 and its income and expenditure for that year.


STATEMENT OF

ACCOUNTS

2011/12

STATEMENT OF ACCOUNTS CONTENTS 1. STATEMENT OF ACCOUNTS o The Movement in Reserves Statement 18 o The Comprehensive Income and Expenditure Statement 20 o The Balance Sheet 21 o The Cash Flow Statement 22

o Restatement of the Accounts 23 o Index of Notes to the Accounts 26 o The Collection Fund Statement 98

o Notes to the Collection Fund Statement 99 o The Housing Revenue Income and Expenditure Statement and Statement

of Movement on the Housing Revenue Account Balance 101

o Notes to the HRA Comprehensive Income and Expenditure Statement 102 o Group Accounts 106 o The Group Movement in Reserves Statement 107

o The Group Comprehensive Income and Expenditure Statement 109

o The Group Balance Sheet 110

o The Group Cash Flow Statement 111 2. SUPPLEMENTARY INFORMATION o Trust Funds Comprehensive Income and Expenditure Statement and

Balance Sheet 112 o Glossary of Terms 115

THE FINANCIAL STATEMENTS MOVEMENT IN RESERVES STATEMENT This statement shows the movement in the year on the different reserves held by the Authority, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance and the Housing Revenue Account for council tax setting and dwellings rent setting purposes. The Net Increase /Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance and Housing Revenue Account Balance before any discretionary transfers to or from earmarked reserves undertaken by the Authority.

Usable Reserves Unusable Reserves

31st March 2011 General Fund Balance

Earmarked G

F Reserves

Housing Revenue

Account Balance

Earmarked H

RA Reserve

Capital Grants U

napplied Reserve

Capital Receipts Reserve

Total Usable Reserves

Deferred Capital

Receipts

Capital Adjustment

Account

Revaluation Reserve

Financial Instruments

Adjustment Account

Pension Reserve

Collection Fund

Adjustment Account

Accumulated Absences Account

Total Unusable

Reserves

Total Authority

Reserves

£000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's

Balance as at 31st March 2010 15,936 49,821 11,898 - 1,813 3,150 82,618 - 544,703 132,943 (658) (357,300) (1,121) (8,246) 310,321 392,939

Surplus or (deficit) on provision of services (accounting basis) 97,498 2,985 100,483 - 100,483

Other Comprehensive Expenditure and Income - 1,579 151,600 153,179 153,179

Total Comprehensive Expenditure and Income 97,498 - 2,985 - - - 100,483 - - 1,579 - 151,600 - - 153,179 253,662

Adjustments between accounting basis & funding basis under regulations (note 7) (85,710) (4,629) 4,600 1,337 (84,402) 766 12,190 (7,702) (94) 74,100 772 4,370 84,402 -

Net Increase/(Decrease) before Transfer to /(from) Earmarked Reserves 11,788 - (1,644) - 4,600 1,337 16,081 766 12,190 (6,123) (94) 225,700 772 4,370 237,581 253,662

Transfer to /(from) Earmarked Reserves (note 8) 5,549 (5,574) (76) 101 - - -

Increase / (Decrease) in Year 17,337 (5,574) (1,720) 101 4,600 1,337 16,081 766 12,190 (6,123) (94) 225,700 772 4,370 237,581 253,662

Balance as at 31st March 2011 33,273 44,247 10,178 101 6,413 4,487 98,699 766 556,893 126,820 (752) (131,600) (349) (3,876) 547,902 646,601

Usable Reserves Unusable Reserves

31st March 2012 General Fund Balance

Earmarked G

F Reserves

Housing Revenue

Account Balance

Earmarked H

RA Reserve

Capital Grants U

napplied Reserve

Capital Receipts Reserve

Total Usable Reserves

Deferred Capital

Receipts

Capital Adjustment

Account

Revaluation Reserve

Financial Instruments

Adjustment Account

Pension Reserve

Collection Fund

Adjustment Account

Accumulated Absences Account

Total Unusable

Reserves

Total Authority

Reserves

£000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's

Balance as at 31st March 2011 33,273 44,247 10,178 101 6,413 4,487 98,699 766 556,893 126,820 (752) (131,600) (349) (3,876) 547,902 646,601

Surplus or (deficit) on provision of services (accounting basis) (75,635) (101,976) (177,611) - (177,611)

Other Comprehensive Expenditure and Income - (23,933) (89,200) (113,133) (113,133)

Total Comprehensive Expenditure and Income (75,635) - (101,976) - - - (177,611) - - (23,933) - (89,200) - - (113,133) (290,744)

Adjustments between accounting basis & funding basis under regulations (note 7) 87,999 98,774 2,009 19,128 207,910 (766) (193,607) (4,637) (577) (8,600) 307 (30) (207,910) -

Net Increase/(Decrease) before Transfer to /(from) Earmarked Reserves

12,364 - (3,202) - 2,009 19,128 30,299 (766) (193,607) (28,570) (577) (97,800) 307 (30) (321,043) (290,744)

Transfer to / from Earmarked Reserves (note 8) (8,424) 8,424 101 (101) - - -

Increase / (Decrease) in Year 3,940 8,424 (3,101) (101) 2,009 19,128 30,299 (766) (193,607) (28,570) (577) (97,800) 307 (30) (321,043) (290,744)

Balance as at 31st March 2012 37,213 52,671 7,077 - 8,422 23,615 128,998 - 363,286 98,250 (1,329) (229,400) (42) (3,906) 226,859 355,857

I certify that the above Statement of Movement in Reserves presents a true and fair view of the position of Rochdale MBC as at 31st March 2012.


COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT This statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement.

Restated 31st March

2011

Restated 31st March

2011

Restated 31st March

2011

Comprehensive Income and Expenditure Statement

31st March 2012

31st March 2012

31st March 2012

Gross Gross Gross Gross

Expenditure Income Net Expenditure Income Net

£000's £000's £000's £000's £000's £000's

31,970 (24,848) 7,122 Central services to the public 30,664 (25,859) 4,805

6,155 (21) 6,134 Corporate and democratic core 6,271 - 6,271

9,755 (860) 8,895 Non distributed costs 13,673 (86) 13,587

(84,800) - (84,800) NDC - Pension Inflation Charge (Note 55) - - -

25,016 (5,500) 19,516 Cultural and Related 19,959 (2,122) 17,837

24,125 (4,327) 19,798 Environmental and Regulatory 26,113 (4,166) 21,947

15,988 (6,237) 9,751 Planning Services 13,003 (2,690) 10,313

273,748 (216,930) 56,818 Children's and education services 258,075 (209,560) 48,515

28,629 (2,430) 26,199 Highways and transport services 31,918 (4,230) 27,688

105,791 (82,815) 22,976 Housing services - Housing general fund 98,665 (86,006) 12,659

37,687 (50,747) (13,060) Housing revenue account 37,123 (48,010) (10,887)

Housing revenue Account - LSVT (Note 55) 343,236 343,236

86,623 (22,663) 63,960 Adult Social Care 80,600 (23,376) 57,224

560,687 (417,378) 143,309 COST OF SERVICES - CONTINUING OPERATIONS 959,300 (406,105) 553,195

1,612 (1,484) 128 Other operating expenditure (Note 9) 71,855 - 71,855

74,686 (46,430) 28,256 Financing and investment income and expenditure (note 10)

68,755 (47,006) 21,749

(272,176) (272,176) Taxation and non-specific grant income (note 11) (253,912) (253,912)

Exceptional item - overhanging debt settlement LSVT (Note 11a & 55)

66,066 (281,342) (215,276)

636,985 (737,468) (100,483) (SURPLUS) OR DEFICIT ON PROVISION OF SERVICES 1,165,976 (988,365) 177,611

(2,377) (Surplus) or deficit on revaluation of non currentassets

23,463

798 Impairment losses on non current assets charged tothe revaluation reserve

470

(151,600) Actuarial (gains) / losses on pension asset/liabilities 89,200

(153,179) OTHER COMPREHENSIVE INCOME AND EXPENDITURE

113,133

(253,662) TOTAL COMPREHENSIVE INCOME AND EXPENDITURE

290,744

I certify that the above statement presents a true and fair view of the Income and Expenditure of Rochdale MBC for the year ended 31st March 2012.


BALANCE SHEET The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the authority. The net assets of the authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories, usable reserves, i.e. those reserves that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Authority is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’.

Restated 31st March 2010

Restated 31st March 2010 Balance Sheet Notes 31st March 2012

£000's £000's £000's

NON CURRENT ASSETS

1,078,457 1,091,702 Property, Plant and Equipment 12 709,443

13,341 13,376 Heritage Assets 13 13,605

24,164 23,578 Investment Property 14 17,756

5,237 7,050 Intangible Assets 15 7,126

10,315 10,315 Long Term Investments 16 10,315

12,658 14,892 Long Term Debtors 16 17,076

1,144,172 1,160,913 TOTAL LONG TERM ASSETS 775,321

CURRENT ASSETS

65,462 35,600 Short Term Investments 16 32,047

585 825 Inventories 17 516

43,036 42,740 Short Term Debtors 19 38,882

33,670 55,743 Cash and Cash Equivalents 20 46,979

1,226 3,924 Assets Held for Sale 21 5,713

143,979 138,832 TOTAL CURRENT ASSETS 124,137

CURRENT LIABILITIES

(16,526) (30,619) Short Term Borrowing 16 (30,147)

(47,729) (37,567) Short Term Creditors 22 (30,657)

(8,053) (4,472) Provisions (<1 Year) 23 (8,965)

(1,606) (1,555) Other Short Term liabilities 16 (2,604)

(2,604) (3,320) Revenue Grants Receipts in Advance 39 (566)

(4,891) (10,814) Capital Grants Receipts in Advance 39 (17,492)

(81,409) (88,347) TOTAL CURRENT LIABILITIES (90,431)

NON CURRENT LIABILITIES

(391,728) (365,485) Long Term Borrowing 16 (144,267)

- (102) Long Term Creditors -

(12,044) (14,738) Long Term Provisions 23 (11,966)

(48,052) (46,497) Other Long Term Liabilities 16 (65,359)


- (600) Revenue Grants Receipts in Advance 39 (648)

(357,300) (131,600) Pension Liability 48 (229,400)

(813,803) (564,797) TOTAL LONG TERM LIABILITIES (453,170)

392,939 646,601 NET ASSETS 355,857

82,618 98,699 Usable Reserves 7 & 8 128,998

310,321 547,902 Unusable Reserves 25 226,859

392,939 646,601 TOTAL NET WORTH 355,857 I certify that the above Balance Sheet presents a true and fair view of the position of Rochdale MBC as at 31st March 2012.


CASH FLOW STATEMENT The Cash Flow Statement shows the changes in cash and cash equivalents of the authority during the reporting period. The statement shows how the authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the authority are funded by way of taxation and grant income or from the recipients of services provided by the authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the authority’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 authority.

Restated 31st March 2011 Cash Flow Statement 31st March 2012

£000's £000's

(100,483) 177,611

31,662 (469,820)

62,606 301,020

(6,215) 8,811

(30,679) (217,786)

14,821 217,739

(22,073) 8,764

(33,670) (55,743)

(55,743) (46,979)

Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities. (Note 26)

Adjustments to net surplus or deficit on the provision of services for non cash movements (Note 26)

Net (surplus) or deficit on the provision of services

Financing Activities (Note 28)

Net Cash flows from operating activities (Note 26).

Investing Activities (Note 27)

Net (Increase) or decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the reporting period

Cash and cash equivalents at the end of the reporting period I certify that the above Cash Flow Statement presents a true and fair view of the position at Rochdale MBC as at 31st March 2012.


RESTATEMENT OF THE ACCOUNTS Under IAS 8 Authorities are required to disclose changes made to the previous years Statement of accounts in relation to changes in accounting policy and material prior period adjustments. The following tables explain the differences between the amounts presented in the 2010/11 financial statements and the equivalent amounts presented in the 2011/12 financial statements. None of these changes have affected the general fund balances held by the Authority. ACCOUNTING POLICY CHANGES 1. Heritage Assets The code of practice on local authority accounting in the United Kingdom 2011/12 has introduced a change in accounting policy in relation to the treatment of heritage assets held by the Authority. The new standard requires that this new class of asset is disclosed separately on the face of the Authority’s balance sheet and recognised at valuation. Previously, heritage assets were not recognised in the Balance Sheet as they did not meet the definition of the various categories of non current assets. The Authority’s accounting policies for recognition and measurement of heritage assets are set out in the Authority’s summary of accounting policies. In applying the new accounting policy, the Authority has recognised an additional £13.341m of non current assets as at the 1/4/2010 for the recognition of heritage assets that were not previously recognised in the Balance Sheet. This increase is also recognised in the Revaluation Reserve. The 1 April 2010 and 31 March 2011 Balance Sheets and 2010/11 comparative figures have thus been restated in the 2011/12 Statement of Accounts to apply the new policy. The effects of the restatement are as follows: . At 1 April 2010 the carrying amount of the Heritage Assets is presented at its valuation at £13.341m. The revaluation reserve has increased by £13.341m. . At the 31 March 2011 the carrying amount of Heritage Assets has increased to £13.376m due to additions in 2010/11. The revaluation reserve has also increased to £13.376m. . The fully restated Balance Sheet is provided on page 21. The adjustments that have been made to the Balance Sheet over the version published in the 2010/11 Statement of Accounts are as follows

2010/11 Adjustments

Statements Made

£000's £000's

Opening 1st April 2010 Balance sheet 2010/11

Revaluation Reserve (119,602) (13,341)

Heritage Assets - 13,341

31st March 2011 Balance sheet

Revaluation Reserve (113,444) (13,376)

Heritage Assets - 13,376 The change in the value of Heritage Assets of £35k from 1/4/10 to 31/3/11 has been treated as a revaluation and has had the following impact on the Comprehensive Income & Expenditure Account and the Unusable Reserves element of the Movement in Reserves Statement for 2010/11. Comprehensive Income and Expenditure Statement Heritage Assets 2010/11 Adjustments

Statements Made

£'000 £'000

(Surplus) or Deficit on Provision of Services (100,483) -

(Surplus) or Deficit on revaluation of non current assets (1,544) (35)

Actuarial (gains) / losses on pension assets/ liabilities (151,600) -

Total Comprehensive Income & Expenditure (253,627) (35)

Movement in Reserves Statement – Unusable Reserves 2010/11 Heritage Assets 2010/11 Adjustments

Statements Made

£'000 £'000

Balance as at 31 March 2010 379,598 13,341

Surplus or Deficit on the Provision of Services 100,483 -

Other Comprehensive Income and Expenditure 153,144 35

Increase/(decrease) in the year 253,627 35 Balance at the end of the current reporting 633,225 13,376 period 31 March 2011 2. Separation of revenue grants and contributions receipts in advance from creditors – IFRS change The code of practice on local authority accounting in the United Kingdom 2011/12 has introduced a change in accounting policy in relation to revenue grants & contributions receipts in advance. The new standard requires that this is disclosed separately on the face of the Authority’s balance sheet. This has resulted in the following changes being made to the 2010/11 financial statements.

2010/11 Adjustments

Statements Made

£000's £000's

Opening 1st April 2010 Balance sheet 2010/11

Short term creditors (50,333) 2,604

Short term Revenue Grants receipts in Advance - (2,604)

31st March 2011 Balance sheet

Short term creditors (43,364) 3,920

Short term Revenue Grants receipts in Advance - (3,320)

Long Term Revenue Grants receipts in Advance - (600) PRIOR PERIOD ADJUSTMENTS 1. Revenue expenditure Funded by Capital under Statute (REFCUS) – Grants Further clarification in the treatment of capital grants received to fund revenue expenditure has identified that these should be shown as if they are revenue grants. The accounts have therefore been restated to show these in the relevant service line in the comprehensive income and expenditure statement and not in the taxation and non specific grant income. This has resulted in the following changes being made to the 2010/11 financial statements.

2010/11 Adjustments

Statements Made

£000's £000's

Comprehensive Income & Expenditure Account

Cultural and Related 21,565 (671)

Environmental and Regulatory 18,692 (291)

Planning Services 9,928 (177)

Children's and Education Services 65,629 (9,058)

Adult social care 63,894 (19)

Taxation and non-specific grant income (Capital Grants) (282,392) 10,216 2. Cashflow statement A change in the disclosure requirement from gross to net on the amounts received on the sale of short term / long term investments of £101.3m has necessitated for comparative purposes a restatement of the 10/11 cashflow statement. The amendment has been made on the investing activities line (increase of £101.3m) and the adjustment for items included in the net surplus or deficit on the provision of services that re investing and financing activities (reduction of £101.3m). This has also been reflected in notes 26 and 27 to the accounts. This has no impact on the overall cash & cash equivalents at the end of the reporting period.

3. Comprehensive Income and Expenditure Statement In the 2010/11 Comprehensive Income and Expenditure Statement the gross expenditure and income on Cultural & Related and Planning services included £9.978m of recharges to other service areas. As this expenditure is included in other service areas the accounts have been amended to remove this amount from the Cultural & Related and Planning services line within the CI&E. This has no impact on the net position.

Index of Notes to the Accounts Note Note Title Page

1 Accounting Policies 28 2 Accounting Standards Issued, Not Adopted 42 3 Critical Judgements in Applying Accounting Policies 42 4 Assumptions Made About Future and Other Major Sources of Estimation Uncertainty 43 5 Material Items of Income and Expense 43 6 Events After the Balance Sheet Date 44 7 Adjustments Between Accounting Basis And Funding Basis Under Regulations 44 8 Transfers To/From Earmarked Reserves 49 9 Other Operating Expenditure 51 10 Financing Investment Income and Expenditure 51 11 Taxation and Non-Specific Grant Incomes 52 12 Property, Plant and Equipment 53 13 Heritage Assets 55 14 Investment Properties 56 15 Intangible Assets 57 16 Financial Instruments 58 17 Inventories 61 18 Construction Contracts 61 19 Debtors 61 20 Cash and Cash Equivalents 61 21 Assets Held For Sale 62 22 Creditors 62 23 Provisions 62 24 Usable Reserves 63 25 Unusable Reserves 64 26 Cash Flow Statement - Operating Activities 67 27 Cash Flow Statement - Investing Activities 68 28 Cash Flow Statement - Financing Activities 68 29 Amounts Reported For Resource Allocation Decisions 69 30 Acquired and Discontinued Operations 70 31 Trading Operations 71 32 Agency Services 72 33 Road Charging Schemes 73 34 Pooled Budgets 73 35 Members' Allowances 73 36 Officers' Remuneration 74 37 External Audit Costs 76 38 Dedicated Schools Grant 76 39 Grant Income 77 40 Related Parties 78 41 Capital Expenditure and Capital Financing 80 42 Leases 81 43 PFI and Similar Contracts 82 44 Impairment Losses 85 45 Capitalisation of Borrowing Costs 86 46 Termination Benefits 86 47 Pension Schemes Accounted For As Defined Contribution Schemes 86 48 Defined Benefit Pension Schemes 86

Note Note Title Page 49 Contingent Liabilities 89 50 Contingent Assets 90 51 Nature and Extent of Risks Arising Form Financial Instruments 91 52 Heritage Assets: Five Year Summary of Transactions 94 53 Heritage Assets: Further Information on the Museum's Collections 94 54 Large Scale Voluntary Transfer (LSVT) 95 55 Exceptional Items 97

NOTES TO THE ACCOUNTS 1. ACCOUNTING POLICIES The purpose of this statement is to explain the accounting policies used in compiling the figures shown in the Authority’s statement of accounts. A. General Principles The Statement of Accounts summarises transactions for the 2011-12 financial year and its position at the year-end of 31st March 2012. The Authority is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2003. These regulations require the Statement of Accounts to be prepared in accordance with proper accounting practices. These practices primarily comprise the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2011-12, and the Service Reporting Code of Practice (SeRCOP) 2011-12, supported by International Financial Reporting Standards (IFRS). The accounting convention adopted in the Statement of Accounts is primarily historical cost, modified by the revaluation of certain non-Current Assets and financial instruments. B. Changes in Accounting Policies The Authority has reviewed it accounting policies and adopted the additional requirements of International Financial Reporting Standards, as applicable to Local Authorities. The changes in respect of the above impact on the following policies:- • Heritage Assets (new) • Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors (additional definition) • Employee benefits (additional definition and detail) • Intangible Assets (additional detail and rewording) • Provisions, Contingent Liabilities, and Contingent Assets (additional detail and rewording) • Accounting Concepts (additional detail) • Assets Held for Sale (additional detail) • Property, Plant and Equipment (additional detail) • Reserves (additional detail) • Private Finance Initiatives (PFI) and Similar Contracts (additional detail) • Financial Instruments (rewording) • ABG (deleted - not required) • Revaluation Reserve (deleted - not required) • Treasury Management Policy (deleted - not required) The effects of the changes in policy have been applied retrospectively where this is prescribed by the Code of Practice. Details of the policies are provided in the individual policy notes below and in the notes to the accounts. C. Accounting Concepts The Statement of Accounts has been prepared in accordance with the following accounting concepts: o Financial information should be relevant, reliable, comparable and understandable. o Materiality of information must be considered, i.e. information must be of sufficient significance to justify its

inclusion. o Strict compliance to accounting policy has not been applied where the amounts involved are not considered to

affect a true and fair presentation of the financial position and transactions of the Authority. o The accounts have been prepared on the assumption that the Authority will continue to operate and provide

services in the foreseeable future. o Accounting policies have been applied consistently within the year and between this and prior years. o The statements have been prepared to reflect the substance of the Authority’s transactions over their legal

form.

D. Accruals of Income and Expenditure Activity is accounted for in the year in which it takes place, not simply when cash payments are made or received. Particular situations are described below: o Revenue from the sale of goods is recognised when the Authority 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 Authority.

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

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

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

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

o Revenue and expenditure recognised but cash not 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.

o De minimis level. The level above which individual expenditure/income transactions have been accrued is £5,000, except for the debtors and creditors regarding Rochdale Boroughwide Housing where the de minimis level has not been implemented.

E. Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that are instantly repayable to the Authority on demand and that are readily convertible to known amounts of cash with insignificant risk of change in value. These balances are held in call accounts. In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Authority’s cash management. F. 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: o Depreciation attributable to the assets used by the relevant service. o 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. o Amortisation of intangible non current assets attributable to the service.

The Authority is not required to raise Council Tax to fund depreciation, revaluation and impairment losses or amortisations. However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement equal to an amount calculated on a prudent basis determined by the authority in accordance with statutory guidance. Depreciation, revaluation and impairment losses and amortisations are therefore replaced by the contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. G. Collection Fund Billing authorities in England are required by statute to maintain a separate Collection Fund for the collection and distribution of amounts due in respect of Council Tax and national non-domestic rates (NNDR). Council Tax income is raised from charges based on the open market value of dwellings as at 31st March 1991. Note 1 to the Collection Fund Comprehensive Income and Expenditure Statement explains the calculation used to set the Council Tax base.

Council Tax Income The annual Council Tax income included in Rochdale’s Comprehensive Income and Expenditure Statement is the accrued income for the year. The difference between this accrued income and the amount required by regulation to be credited to the Collection Fund is taken to the Collection Fund Adjustment account and included as a reconciling item in the Movement in Reserves Statement. Council acting as collecting agent In its capacity as the billing authority the Council acts as agent in collecting and distributing Council cash income on behalf of itself and the other major preceptors, GMPA (Greater Manchester Police Authority) and GMFRA (Greater Manchester Fire and Rescue Authority) and itself. In view of this agency arrangement, the Council Tax cash collected by Rochdale belongs proportionately to the Council, GMPA and GMFRA. The debtor/creditor positions between the Council and GMPA and GMFRA, arise because the net cash paid to GMPA and GMFRA in the year is not the full share of the cash collected from Council Taxpayers. All cash collected from NNDR Taxpayers by the Council (net of the cost of collection allowance) belongs to the Government and outstanding cash due to the Government at the Balance Sheet date is included in the Balance Sheet as a creditor. If cash paid to the Government exceeds the cash collected from NNDR Taxpayers (net of the cost of collection allowance), the excess is included in the Balance Sheet as a debtor.

Regulations determine when the accrued income should be released from the Collection Fund and be transferred to either the Council’s General Fund or to the major preceptors. H. Employee Benefits Benefits Payable during Employment Short-term employee benefits are those due to be settled within 12 months of the year-end. They include such benefits as wages and salaries and paid annual leave for current employees and are recognised as an expense for services in the year in which employees render service to the Authority. An accrual is made for the cost of holiday entitlements (or any form of leave, e.g. Work Life Balance) earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs. Termination Benefits Termination benefits are amounts payable as a result of a decision by the Authority to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to the appropriate service in the Comprehensive Income and Expenditure Statement when the Authority 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 Authority to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. Post-employment Benefits Employees of the Authority are members of two separate pension schemes: • The Teachers’ Pension Scheme, administered by the Department for Education. • The Local Government Pensions Scheme, administered by Tameside Council. Both schemes provided defined benefits to members (retirement lump sums and pensions), earned as employees worked for the Authority. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot ordinarily be identified specifically to the Authority. The scheme is therefore accounted for as if it was a defined contribution scheme and no liability for future payments of benefits is recognised in the Balance Sheet. The Children’s and Education Services line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to Teachers’ Pensions in the year. The Local Government Pension Scheme is accounted for as a defined benefits scheme:

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

• Liabilities are discounted to their value at current prices, using a discount rate of the yield available on long dated, high quality corporate bonds (as measured by the yield on iBoxx Sterling Corporate Index, AA over 15 years) at the valuation date.

• The assets of The Greater Manchester pension fund attributable to the Authority are included in the Balance Sheet at their fair value:

° quoted securities – current bid price

° unquoted securities – professional estimate

° unitised securities – current bid price

° Property – market value.

• The change in the net pensions liability is analysed into seven components:

° current service cost – the increase in liabilities as a result of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked

° past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs

° interest cost – the expected increase in the present value of liabilities during the year as they move one year closer to being paid – debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement

° expected return on assets – the annual investment return on the fund assets attributable to the Authority, based on an average of the expected long-term return – credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement

° gains or losses on settlements and curtailments – the result of actions to relieve the Authority of liabilities or events that reduce the expected future service or accrual of benefits of employees – debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs

° actuarial gains and losses – 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 – charged to the Pensions Reserve

° Contributions paid to the Greater Manchester pension fund – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense.

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

I. 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: o Conditions existing at the end of the reporting period:

The Statement of Accounts would be adjusted to reflect such events

o Conditions arising after the end of 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 to the accounts 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. J. Exceptional Items When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the Authority’s financial performance. K. Financial Instruments Classification of Financial Instruments The Authority’s financial assets and liabilities have been classified as follows:

Financial Assets Financial Liabilities Loans and Receivables at Amortised Cost Financial liabilities at amortised cost Available for Sale Financial Assets PFI and Finance lease liabilities Unquoted equity investments at cost Fair value through profit and loss

Recognition and Initial Measurement Financial assets have been recognised on the Balance Sheet at the contractual trade date. Financial liabilities have been recognised when the loan has been received. Initial measurement has been at fair value. Associated transaction costs and internal administrative charges have not been attributed to the assets or liabilities as they are not considered material. Such costs have been charged to the Comprehensive Income and Expenditure Statement. We have based our fair value report on the comparable new borrowing/deposit rate for the same financial instrument from a comparable lender. A consistent approach has been applied to assets and liabilities. Accounting for Financial Liabilities Where the interest rate applicable to a financial liability has been contractually agreed to change between two given interest rates, the Effective Interest Rate (EIR) method has been used to calculate the amortised cost. In such instances the Effective Interest Rate has been calculated using the contractual life of the liability. For all other liabilities, where interest rates are fixed over the life of the liability, are subject to options or are variable, the nominal interest rate has been taken to equal the Effective Interest Rate for the purpose of calculating the amortised cost. Accounting for Financial Assets Financial assets with fixed or determinable payments have been classified as loans and receivables. The carrying amounts of such assets have been measured using the Effective Interest Rate (EIR). Generally, equity holdings of the Authority have been classified as available for sale. Where there is no active market for the shares, the fair value of these investments has been adjudged to be best represented by the historical cost of the shareholding less any impairment. For investments which are classified as available for sale at fair value through profit and loss, where the fair value of the asset differs to the actual value of the investment any gain or loss will be recognised via the Comprehensive Income and Expenditure Statement and taken to the Available for Sale Reserve.

Soft Loans Soft loans (when the Authority has leant money below market rates) have been valued at fair value using discounted present value techniques. Where the loan value exceeds the fair value, the excess has been charged to the Comprehensive Income and Expenditure Statement. Premiums and Discounts Gains and losses on the repurchase or early settlement of borrowing are credited and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repurchase/settlement. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write-down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate. 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. Generally the Authority has a policy of spreading the gain or 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. L. Government Grants and Contributions

Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Authority when there is reasonable assurance that: o The Authority will comply with the conditions attached to the payments, and o The grants or contributions will be received. Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied and there is no event anticipated that would result in those conditions being breached. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed 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-ringfenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement. Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund 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, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure. M. Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Authority as a result of past events (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Authority. Internally generated assets are capitalised where it is demonstrable that the project is technically feasible and is intended to be completed (with adequate resources being available) and the Authority will be able to generate future economic benefits or deliver service potential by being able to sell or use the asset. Expenditure is capitalised where it can be measured reliably as attributable to the asset and is restricted to that incurred during the development phase (research expenditure cannot be capitalised). Expenditure on the development of websites is not capitalised if the website is solely or primarily intended to promote or advertise the Authority’s goods or services.

Intangible assets are measured initially at cost. Amounts are only revalued where the fair value of the assets held by the Authority can be determined by reference to an active market. In practice, no intangible asset held by the Authority meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised over its useful life (5 years) to the relevant service line(s) 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 line(s) in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve. N. Interests in Companies and Other Entities (Group Accounts) Where the Authority has material interests in companies and other entities that have the nature of subsidiaries, associates and jointly controlled entities it is required to prepare group accounts. In the Authority’s own single-entity accounts, the interests in companies and other entities are recorded as financial assets at cost, less any provision for losses. Introduction The Group Accounts consolidate the accounting statements of the Authority with those of any subsidiaries, associates and/or joint ventures. Provision of group financial statements enables users of the accounts to obtain a better understanding of the full range of activities in which the Authority has a material interest including those delivered through subsidiary, associates and joint ventures. Basis of consolidation The Group Accounts are prepared by consolidating the accounts of the Council with those of any subsidiary and associated companies. The method of consolidation is determined by reference to the nature of the involvement of the Council with the company. The Group Accounts have been prepared by consolidating on a line by line basis. It should be noted that the accounts of any group companies will be prepared under their own accounting policies, which may differ in some respects from the Council’s accounting policies, particularly in those areas where the legislative requirements for Local Authority accounts differ from those for companies. The notes to the accounts provide separate disclosure of the Group position where this differs from the Council position. Details of subsidiary and associated companies The Council has one subsidiary company, Rochdale Boroughwide Housing Ltd (RBH) (Company registration No. 4394435), details of which are given in the Group Accounts section of the Statement of Accounts. O. Inventories and Long Term Contracts Inventories o Inventory or groups of similar items are included in the Balance Sheet at the lower of cost and net realisable

value of the separate items of stock or groups of similar items.

o Inventory is valued on a FIFO (First in First out basis) or an average costing basis, dependant upon the inventory being valued

o Inventories acquired through non-exchange transactions are measured at their fair value as at the date of acquisition.

o Inventories provided at no charge or for a nominal charge are held at the lower of cost and current replacement cost.

Work In Progress This is generally valued at cost price/average cost.

Long-Term Contracts These are accounted for in accordance with the requirements of the Code of Practice. This involves charging the Surplus or Deficit on the Provision of Services with the value of works and services received under the contract during the financial year. Long-term contracts are defined as: “A contract entered into for the design, manufacture or construction of a single substantial asset or the provision of a service (or of a combination of assets or services which together constitute a single project) where the time taken substantially to complete the contract is such that the contract activity falls into different accounting periods.” P. Investment Properties 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 arm’s-length. Properties are not depreciated but have their values considered annually on a beacon basis 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 is applied to gains and losses on disposal. Rentals received in relation to investment properties are credited to the Financing and Investment Income 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 Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve. Q. Leases Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases. Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification. Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets. The Authority as Lessee Finance Leases Property, plant and equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payments, if lower). The asset recognised is matched by a liability for the obligation to pay the lessor. Initial direct costs of the Authority are added to the carrying amount of the asset. Premiums paid on entry into a lease are applied to writing down the lease liability. Contingent rents are charged as expenses in the periods in which they are incurred. Lease payments are apportioned between:

o A charge for the acquisition of the interest in the property, plant or equipment – applied to write down the lease liability; and

o A finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement).

Property, Plant and Equipment recognised under finance lease is accounted for using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life (where ownership of the asset does not transfer to the authority at the end of the lease period). The Authority is not required to raise council tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead, a prudent annual contribution is made from revenue funds towards the deemed capital

investment in accordance with statutory requirements. Depreciation and revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. Operating Leases Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefiting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease; even if this does not match the pattern of payments (e.g. there is a rent-free period at the commencement of the lease). The Authority as Lessor Finance Leases Where the Authority grants a finance lease over a property or an item of plant or equipment, the relevant asset is written out of the Balance Sheet as a disposal. At the commencement of the lease, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) 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. A gain, representing the Authority’s net investment in the lease, is credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (netted off against the carrying value of the asset at the time of disposal), matched by a lease (long-term debtor) asset in the Balance Sheet. Lease rentals receivable are apportioned between:

o A charge for the acquisition of the interest in the property – applied to write down the lease debtor (together with any premiums received).

o Finance income (credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement).

The gain credited to the Comprehensive Income and Expenditure Statement on disposal is not permitted by statute to increase the General Fund Balance and is required to be treated as a capital receipt. Where a premium has been received, this is posted out of the General Fund Balance to the Capital Receipts Reserve in the Movement in Reserves Statement. Where the amount due in relation to the lease asset is to be settled by the payment of rentals in future financial years, this is posted out of the General Fund Balance to the Deferred Capital Receipts Reserve in the Movement in Reserves Statement. When the future rentals are received, the element for the capital receipt for the disposal of the asset is used to write down the lease debtor. At this point, the deferred capital receipts are transferred to the Capital Receipts Reserve. The written-off value of disposals is not a charge against council tax, as the cost of non current assets is fully provided for under separate arrangements for capital financing. Amounts are therefore appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement. Operating Leases Where the Authority grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet. Rental income is credited to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Credits are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a premium paid at the commencement of the lease). Initial direct costs incurred in negotiating and arranging the lease are added to the carrying amount of the relevant asset and charged as an expense over the lease term on the same basis as rental income. R. Non-Current Assets Held for Sale, Disposals and Demolitions Assets are recognised as Held for Sale when it becomes probable that their future economic benefit will be recovered primarily through a sale transaction. Assets held for Sale are assets where the: o asset is immediately available for sale o sale is highly probable o asset is actively marketed o sale is expected to be complete within 12 months The asset is revalued at this point to the lower of its existing fair value and sale value less costs of sales. Any resultant loss is charged to ‘Other Operating expenditure’ in the Comprehensive Income and Expenditure Statement. Gains would only be recognised to the extent that earlier losses have been included in the Surplus or Deficit on the Provision of Services. No depreciation is charged on Assets Held for Sale.

Assets which fail to meet the criteria of Assets Held for Sale are reclassified to Non Current Assets and revalued at the lower of their carrying amount before they were classified as Assets Held for Sale (adjusted for depreciation) and their recoverable amount at the date of the decision not to sell. Assets held pending development decisions are not classified as Assets Held for Sale. Disposals and Demolitions When any asset is disposed of, demolished or otherwise realised, the carrying amount is written off to ‘Other Operating Expenditure’ in the Comprehensive Income and Expenditure Statement as part of the gain/loss on disposal with receipts and selling costs being credited to the same line. The amount written off is not a charge against Council Tax and the amount is transferred to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserve Statement. Any accumulated revaluation surplus in the Revaluation Reserve attributable to the asset is transferred to the Capital Adjustment Account. Amounts received for a disposal in excess of £10,000 are categorised as capital receipts. A proportion of receipts relating to housing disposals (75% for dwellings, 50% for land and other assets, net of statutory deductions and allowances) is payable to the Government. The balance of receipts, less a reasonable allowance for disposal costs, is required to be credited to the Capital Receipts Reserve, and can then only be used for new capital investment or set aside to reduce the Authority’s underlying need to borrow (the capital financing requirement). Receipts are appropriated to the Reserve from the General Fund Balance in the Movement in Reserves Statement. S. Overheads and Support Services The costs of overheads 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 2011/12 (SeRCOP). The total absorption costing principle is used – 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 Authority’s status as a multifunctional, democratic

organisation. • Non Distributed Costs – the cost 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. T. Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors. Prior period adjustments are the correction of material errors or changes required to reflect changes in accounting policies. 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. 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. U. Private Finance Initiatives (PFI) and Similar Contracts PFI and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the PFI contractor. As the Authority is deemed to control the services that are provided under its PFI schemes, and as ownership of the property, plant and equipment will pass to the Authority at the end of the contracts for no additional charge, the Authority carries the assets used under the contracts on its Balance Sheet as part of Property, Plant and Equipment. The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) is balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. Non-current assets recognised on the Balance Sheet are revalued and depreciated in the same way as property, plant and equipment owned by the Authority.

The amounts payable to the PFI operators each year are analysed into the following elements:

Fair Value of the Services Received during the year – debited to the relevant service in the Comprehensive Income and Expenditure Statement

Contingent Rents – Increases in the amount to be paid for the property arising during the contract, debited to the Comprehensive Income and Expenditure Statement

Finance Costs – an interest charge on the outstanding Balance Sheet liability, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement

Payment towards Liability – applied to write down the Balance Sheet liability towards the PFI operator (the profile of write-downs is calculated using the same principles as for a finance lease)

Lifecycle Replacement Costs – split between capital and revenue costs. For capital costs a proportion of the amounts payable is posted to the Balance Sheet as a prepayment and then recognised as additions to Property, Plant and Equipment when the relevant works are eventually carried out. Revenue costs are debited to the Comprehensive Income and Expenditure Account. V. Property, Plant and Equipment These are assets having physical substance and being held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and that are expected to be used during more than one financial year. Recognition Assets are recognised in Property, Plant and Equipment on an accruals basis, at cost, provided that it is probable an economic benefit will flow to the Authority and they fall into one of the operational or development categories as:

o Council Dwellings. o Other Land and Building. o Vehicles, Plant, Furniture & Equipment. o Infrastructure Assets. o Assets under Construction. o Community Assets. o Surplus assets (which includes assets awaiting development). Expenditure that does not enhance an asset is charged as an expense when it is incurred. Expenditure below £40k is deemed to be non-enhancing. Initial Measurement Items which are capitalised are recognised at the cost of bringing the asset to its current location and condition necessary for it to be capable of operating in the manner intended by management. Assets acquired under finance leases are recognised at the lower of the fair value of the property or the Net Present Value of the minimum lease payments. Donated assets are valued at the fair value of the assets at the date of acquisition. Assets acquired by exchange for a non-monetary asset are recognised at fair value at the date of exchange. Fair values are determined as:

o Land and non-specialised buildings – market value for existing use. o Specialised buildings – depreciated replacement cost. Capitalisation of Interest The Authority has a general policy of not capitalising interest costs in respect of the construction of non-current assets. The Authority will consider capitalisation of interest in circumstances where:

o There is a separately identifiable project with probable future economic benefits. o There is a significant construction period before the asset becomes operational. o The costs of borrowing are significant in relation to overall costs. o A whole life cost assessment (or similar evaluation) of the capital project, including the capitalisation of interest

demonstrates the affordability of the project. o The capital cost of the asset concerned, including capitalised interest, will be charged to the Comprehensive

Income & Expenditure Statement on a prudent basis once the asset becomes operational.

Measurement after Recognition All assets are represented in the Balance Sheet at their net book value. Properties are valued in accordance with the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards (commonly known as the Red Book) and the IFRS Code of Practice. All land and property assets are valued at least every five years as part of a rolling programme of valuations conducted by a qualified member of RICS. The basis of valuation of asset classes is as follows: All Property, Plant and Equipment assets required to be measured other than at cost are valued at fair value. The particular basis used, agreed between the valuer and the Director of Finance and Procurement is:- Historical cost o Infrastructure o Community Assets o Assets under Construction. Fair Value Existing Use o All other Property Plant and Equipment o Social Housing. Where there is no market based evidence of fair value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as a proxy for fair value. For non property assets with a low value or short useful life, depreciated historical cost is used as a proxy for fair value. Increases in value are matched by credits to the Revaluation Reserve unless previous downwards valuations on those assets have been charged to services. In this case, the upwards revaluation will be credited to the relevant service line(s) in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for the depreciation that would have been charged if the loss had not been recognised. Decreases arising from valuations are accounted for as follows: o 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 until it becomes nil or the revaluation loss is exhausted. o Where there is no balance on the Revaluation Reserve or an insufficient balance the carrying amount of the asset

is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve represents only revaluation gains that have arisen since 1 April 2007. Earlier gains were absorbed into the Capital Adjustment Account at that date. Impairment Each year the Authority considers whether there is evidence for impairment of individual assets or classes of asset. Where evidence exists and any possible differences are considered to be material in relation the tangible assets, 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. Where an impairment loss is recognised they are accounted for by: o 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 until it become nil or the revaluation loss is exhausted. o Where there is no balance on the Revaluation Reserve or an insufficient balance the carrying amount of the asset

is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. o Where an impairment loss is subsequently reversed, the reversal will be credited to the relevant service line(s) in

the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for the depreciation that would have been charged if the loss had not been recognised.

Details of impairments are outlined in the note to the accounts regarding Impairment losses. Depreciation Depreciation is charged to Services for all Property, Plant and Equipment they use to deliver services, except for land and community assets with an unlimited useful life and assets that are not yet available (i.e. assets under construction). All depreciation is calculated on a straight-line basis using the asset or component’s useful life.

Depreciation is calculated on the following bases: Tangible Non Current Assets Maximum Depreciation Period Dwellings 80 Standard buildings 40 Listed buildings 50 Recreational equipment e.g. kick pitches 10 Infrastructure assets 40 Vehicle, Plant and Equipment 10

Revaluation gains are also depreciated with an amount equal to the difference between the current value of depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost. This is transferred each year from the Revaluation Reserve to the Capital Adjustment Account. With effect from 1 April 2010, major components of assets acquired, constructed or identified via the revaluation process will be separately identified and depreciated. For a component to be separately identified it must meet the following criteria:-

• The entire assets current book value must be greater than £500k; • The components value must be at least 20% of the assets current book value; • The components expected useful life must be 25% or less than the expected useful life of the asset.

Major component categories have been identified as: Component No. of Years Flat Roof 15 Internal Services (electrical, plumbing, heating) 10-20 Structure 40 Lifts / Boilers 10-20

Asset Components are derecognised on disposal, or when no future economic benefits are expected. The gain or loss arising from derecognition is included in ‘Other operating expenditure’ as a loss on disposal. W. Provisions, Contingent Liabilities, and Contingent Assets Provisions Where there is a legal or constructive obligation to transfer economic benefits as a result of a past event, the Authority has set aside certain provisions to meet the specific future expenditure which is likely to incur. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the authority becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year – where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service. The purpose of these provisions is outlined in the note to the accounts regarding Provisions. Contingent Liabilities A contingent liability arises where an event has taken place that gives the authority a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the authority. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts.

Contingent Assets A contingent asset arises where an event has taken place that gives the authority a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the authority. Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential. X. Reserves Amounts set aside for purposes falling outside the definition of provisions are considered as reserves and transfers to and from them are distinguished separately from service expenditure disclosed in the Statement of Accounts. Reserves are created by appropriating amounts out 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 that there is no net charge against council tax for the expenditure. In addition to statutory reserves such as the General Fund and Housing Revenue Account surplus, the Authority maintains certain other reserves to meet specific, rather than general future expenditure. Further details are provided in the notes to the accounts (Movement in Reserves Statement) 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 Authority – these reserves are explained in the relevant policies Y. Revenue Expenditure Funded from Capital Resources under Statute (REFCUS) 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 Authority has determined to meet the cost of this expenditure from existing capital resources or by borrowing, 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. Z. Value Added Tax (VAT) VAT is included within the accounts only to the extent that it is irrecoverable and therefore charged to revenue or capital expenditure as appropriate. Aa. Heritage assets Heritage assets are assets held primarily for their contribution towards knowledge and culture. The Authority has three categories of heritage assets which are held in support of the Authority’s artistic, cultural and educational aims. The categories are accounted for as follows: Buildings All buildings of significant heritage interest owned by the Authority are also used for its operational purposes. They are therefore categorised as operational assets and accounted for under IAS 16, Property Plant and Equipment. Details of buildings with Heritage interest are disclosed in the notes to the accounts. Art & Museum Collections The Art & Museum collections are reported in the Balance Sheet at valuations obtained for insurance purposes, with any surplus or deficit on revaluation being reported in the Comprehensive Income & Expenditure Statement. Due to the nature of these assets, insurance values are seen as the best proxy for estimating their value. The collections are deemed to have indeterminate lives and maintain their value; hence the Authority does not consider it appropriate to charge depreciation. Any purchases are initially recorded at cost and donations are recorded at current value ascertained by curators with reference to items of a similar nature. Other Heritage Assets (statues, monuments etc) Reliable cost or valuation information is not available for certain heritage assets such as statues and monuments. This is due to the lack of comparable market values and the cost required to obtain valuations would be disproportionate to the value added to readers of the accounts. The Authority has therefore not recognised these assets on the Balance Sheet but disclosed them separately in the notes to the accounts.

Heritage Assets - General The carrying amounts of heritage assets are reviewed where there is evidence of impairment for heritage assets, e.g. where an item has suffered physical deterioration or breakage or where doubts arise as to its authenticity. Any impairment is recognised and measured in accordance with the Authority’s general policies on impairment. Where heritage assets are disposed of, the proceeds of such items are accounted for in accordance with the Authority’s general provisions relating to the disposal of property, plant and equipment. Disposal proceeds are disclosed separately in the notes to the financial statements and are accounted for in accordance with statutory accounting requirements relating to capital expenditure and capital receipts. Further information on the collections is given in the notes to the accounts.

2. ACCOUNTING STANDARDS ISSUED, NOT ADOPTED Financial Instruments: Impact of the adoption of the new standard on 2011/12 The Code of Practice on Local Authority Accounting for 2012/13 (The Code) has introduced a change in accounting policy in relation to the treatment of IFRS7 – Financial Instruments disclosures (Transfer of Financial Assets), Which will need to be adopted fully by Rochdale in the 2012/13 Financial Statements. It replaces the previous requirement with detailed disclosures that are designed to assist users of the financial statement to evaluate the risk of exposures relating to transfers of financial assets. Such transfers are not common transactions for Local Authorities and Rochdale MBC has not entered into any transactions in the 2011/12 financial year covered by the above changes.

3. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES In applying the accounting policies set out in Note 1, the Authority has had to make certain judgements about complex transactions or those involving uncertainty about future events. The following are significant management judgements made in applying the accounting policies of the authority that have the most significant effect on the Statement of Accounts. Material estimation uncertainties are described in note 4. Funding There is a high degree of uncertainty about future levels of funding for local government. However, the Authority has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Authority might be impaired as a result of a need to close facilities and reduce levels of service provision. Private Finance Initiatives (PFI) and similar Arrangements PFI and similar arrangements have been considered to have an implied finance lease within the agreement. In reassessing the leases, the Authority has estimated the implied interest rate within the leases to calculate interest and principal payments. In addition the future Retail Price Index (RPI) increase within the contracts has been estimated throughout the remaining period of the contract. Group Boundaries The group boundaries have been estimated using the criteria associated with the Code of Practice. In line with the code the Authority has not identified any companies within the group boundary as at the 31st March 2012 that would require it to complete Group Accounts on grounds of materiality. In prior years Rochdale Boroughwide Housing (RBH) was included in the group accounts being an arms length management organisation set up by the authority in 2002 and a subsidiary of the Authority. RBH changed its status to a Registered Provider of Social Housing on the 26th March 2012 and the Authority transferred assets to RBH. As a result the Authority no longer has control of RBH and it was removed from the Group accounts as at that date. Provisions The authority has estimated its short term and long term insurance provisions based on a combination of information provided by the authority’s independent actuary and an estimation of likely future claims arising from prior year incidents, calculated using the average number of total claims multiplied by the average cost per claim settled in previous years.

School Assets The following criteria have been used to assess which Schools land and buildings should be included in the authority’s balance sheet or not:

• Who owns the land and buildings? • Who is in control of use of premises? • Who has the power to invoke statutory provision to close schools?

Using this criteria, it has been determined that community schools should be included on the authority’s balance sheet and that voluntary aided, voluntary controlled and foundation schools should not. 4. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF

ESTIMATION UNCERTAINTY The Statement of Accounts contain estimated figures that are based on assumptions made by the Authority about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Authority’s Balance Sheet at 31st March 2012 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows: Depreciation of Property, Plant and Equipment Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the Authority will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives assigned to assets. If the useful life of assets is reduced, depreciation increases and the carrying amount of the assets falls. It is estimated that the annual depreciation charge for buildings would increase by approximately £219k for every year that useful lives had to be reduced. Property Valuations and Impairments Assessments The Authority obtains professional valuations of all its land and property assets in accordance with Accounting Guidance. In practice this is done on a rolling 5 year basis with each asset being valued at least once every 5 years. Before the recession the trend had been upwards but in recent years some assets have reduced in value between valuations, whilst others have increased in value. In the opinion of our valuers, there is no trend that would recommend a general impairment of Council property. If such a trend were to appear this would be reflected by a reduced asset value and a reduction in either the Capital Adjustment Account or the Revaluation Reserve. A 1% reduction in asset values would generate a reduction of around £6.3m. Pensions 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. A firm of consulting actuaries is engaged to provide the Authority with expert advice about the assumptions to be applied. During 2011/12, the actuaries advised that the net pensions liability had increased by £125.1m. This is made up of:-

• £95.1m actuarial loss • £30.1m loss arising from employer contributions of £22.0m being less than pension obligations of £52.1m

5. MATERIAL ITEMS OF INCOME AND EXPENSE The Authority considers material items to be those greater than £6m. Where items are not disclosed on the face of the Comprehensive Income and Expenditure account or in the notes they are detailed below;

Items of Expenditure Amount £m

Loss on disposal of Hollingworth High School 20.5Loss on disposal of St Annes Academy 23.5Total 44.0

Both Hollingworth High School and St Anne’s transferred to Academy status and the loss in both cases arises from the transfer of these assets to the new organisations.

6. EVENTS AFTER THE BALANCE SHEET DATE The Statement of Accounts was authorised for issue by the Head of Corporate Finance on 6th September 2012. 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 31st March 2012, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information. 7. ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER

REGULATIONS This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Authority 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 proper accounting practice. The General Fund Balance therefore summarises the resources that the Authority is statutorily empowered to spend on its services or on capital investment at the end of the financial year. Housing Revenue Account Balance The Housing Revenue Account Balance reflects the statutory obligation to maintain a revenue account for local authority council housing provision in accordance with Part VI of the Local Government and Housing Act 1989. It contains the balance of income and expenditure as defined by the 1989 Act that is available to fund future expenditure in connection with the Council’s landlord function. 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 The Capital Grants Unapplied Account (Reserve) holds the grants and contributions received towards capital projects for which the Authority has met the conditions that would otherwise require repayment of the monies but which have yet to be applied to meet expenditure. The balance is restricted by grant terms as to the capital expenditure against which it can be applied and/or the financial year in which this can take place.

31st March 2012 Usable Reserves

Gen

eral

Fun

d Ba

lanc

e

Hou

sing

Rev

enue

A

ccou

nt

Capi

tal G

rant

s U

napp

lied

Capi

tal R

ecei

pts

Rese

rve

Maj

or R

epai

rs R

eser

ve

Mov

emen

t in

Unu

sabl

e Re

serv

es

£000's £000's £000's £000's £000's £000's

Adjustments primarily involving the Capital Adjustment Account:

Reversal of items debited or credited to the CI&E Statement:

Charges for Depreciation and impairment of non-current assets 20,756 4,653 (25,409)

Revaluation Losses on Property, Plant & Equipment 5,682 343,236 (348,918)

Movements in the market value of Investment Properties (864) 864

Amortisation of intangible assets 1,928 (1,928)

Capital grants and contributions applied (50,822) (215,277) 266,099

Income in relation to donated assets (22) 22

Capital Receipt received for premiums (27,470) (38,595) 66,065 -

Application of capital receipt to premiums 27,470 38,595 (66,065) -

Revenue expenditure funded from capital under statute 23,042 1,250 (24,292)

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CI&E Statement 95,666 1,529 (97,195)

Insertion of items not debited or credited to the CI&E Statement:

Statutory Provision for the Financing of Capital Investment (11,617) 11,617

Voluntary Provision for the Financing of Capital Investment (1,794) 1,794

Capital expenditure charged against the General Fund and HRA balances (165) (18) 183

Adjustments primarily involving the Capital Grants Unapplied Account:

Capital grants and contributions unapplied credited to the CI&E Statement (5,149) 5,149 -

Application of grants to capital financing transferred to the Capital Adjustment Account (3,140) 3,140

Adjustments primarily involving the Capital Receipts Reserve:

Transfer of cash sale proceeds credited as part of the gain/loss on disposal to the CI&E Statement (698) (28,527) 29,225 -

Use of the Capital Receipts Reserve to finance new capital expenditure (7,064) 7,064

Contribution from the Capital Receipts Reserve towards administrative costs of non-current asset disposals 1,296 (1,296) -

Contribution from the Capital Receipts Reserve to finance the payments to the Government capital receipts pool 2,037 (2,037) -

Transfer from Deferred Capital Receipts Reserve on receipt of cash 300 (300)

Reversal of Deferred Capital Receipts 466 (466)

Adjustments primarily involving the Deferred Capital Receipts Reserve (England and Wales):

Transfer of deferred sale proceeds credited as part of the gain/loss on disposal to the CI&E Statement - -

Adjustments primarily involving the Major Repairs Reserve:

Reversal of Major Repairs Allowance credited to the HRA (8,715) 8,715 -

Use of the Major Repairs Reserve to finance new capital expenditure (8,715) 8,715

31st March 2012 Cont' Usable Reserves

Gen

eral

Fun

d Ba

lanc

e

Hou

sing

Rev

enue

A

ccou

nt

Capi

tal G

rant

s U

napp

lied

Capi

tal R

ecei

pts

Rese

rve

Maj

or R

epai

rs R

eser

ve

Mov

emen

t in

Unu

sabl

e Re

serv

es

£000's £000's £000's £000's £000's £000's

Adjustment primarily involving the Financial Instruments Adjustment Account:

Amount by which finance costs charged to the CI&E Statement are different from finance costs chargeable in the year in accordance with statutory requirements (66) 643 (577)

Adjustments primarily involving the Pensions Reserve:

Reversal of items relating to retirement benefits debited or credited to the CI&E Statement (see Note 47) 28,400 (28,400)

Employer's pensions contributions and direct payments to pensioners payable in the year (19,800) 19,800

Adjustments primarily involving the Collection Fund Adjustment Account:

Amount by which Council Tax income credited to the CI&E Statement is different from Council Tax income calculated for the year in accordance with statutory requirements (307) 307

Adjustment primarily involving the Accumulated Absences Account:

Amount by which officer remuneration charged to the CI&E Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements 30 (30)

Total Adjustments 87,999 98,774 2,009 19,128 - (207,910)

31st March 2011 Comparative Figures Usable Reserves

Gen

eral

Fun

d Ba

lanc

e

Hou

sing

Rev

enue

A

ccou

nt

Capi

tal G

rant

s U

napp

lied

Capi

tal R

ecei

pts

Rese

rve

Maj

or R

epai

rs R

eser

ve

Mov

emen

t in

Unu

sabl

e Re

serv

es

£000's £000's £000's £000's £000's £000's

Adjustments primarily involving the Capital Adjustment Account:

Reversal of items debited or credited to the CI&E Statement:

Charges for Depreciation and impairment of non-current assets 43,924 6,740 (50,664)

Movements in the market value of Investment Properties 465 (465)

Amortisation of intangible assets 1,407 (1,407)

Capital grants and contributions applied (53,830) 53,830

Revenue expenditure funded from capital under statute 19,458 (19,458)

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CI&E Statement 1,614 1,120 (2,734)

Insertion of items not debited or credited to the CI&E Statement:

Statutory Provision for the Financing of Capital Investment (11,536) 11,536

Voluntary Provision for the Financing of Capital Investment (1,867) 1,867

Capital expenditure charged against the General Fund and HRA balances (645) (2,988) 3,633

Adjustments primarily involving the Capital Grants Unapplied Account:

Capital grants and contributions unapplied credited to the CI&E Statement (5,259) 5,259 -

Application of grants to capital financing transferred to the Capital Adjustment Account (659) 659

Adjustments primarily involving the Capital Receipts Reserve:

Transfer of cash sale proceeds credited as part of the gain/loss on disposal to the CI&E Statement (1,203) (2,353) 3,556 -

Use of the Capital Receipts Reserve to finance new capital expenditure (502) 502

Contribution from the Capital Receipts Reserve towards administrative costs of non-current asset disposals 105 (105) -

Contribution from the Capital Receipts Reserve to finance the payments to the Government capital receipts pool 1,612 (1,612) -

Adjustments primarily involving the Deferred Capital Receipts Reserve (England and Wales):

Transfer of deferred sale proceeds credited as part of the gain/loss on disposal to the CI&E Statement (766) 766

Adjustments primarily involving the Major Repairs Reserve:

Reversal of Major Repairs Allowance credited to the HRA (7,189) 7,189 -

Use of the Major Repairs Reserve to finance new capital expenditure (7,189) 7,189

31st March 2011 Comparative Figures Cont' Usable Reserves

Gen

eral

Fun

d Ba

lanc

e

Hou

sing

Rev

enue

A

ccou

nt

Capi

tal G

rant

s U

napp

lied

Capi

tal R

ecei

pts

Rese

rve

Maj

or R

epai

rs R

eser

ve

Mov

emen

t in

Unu

sabl

e Re

serv

es

£000's £000's £000's £000's £000's £000's

Adjustment primarily involving the Financial Instruments Adjustment Account:

Amount by which finance costs charged to the CI&E Statement are different from finance costs chargeable in the year in accordance with statutory requirements 53 41 (94)

Adjustments primarily involving the Pensions Reserve:

Reversal of items relating to retirement benefits debited or credited to the CI&E Statement (see Note 47) (52,100) 52,100

Employer's pensions contributions and direct payments to pensioners payable in the year (22,000) 22,000

Adjustments primarily involving the Collection Fund Adjustment Account:

Amount by which Council Tax income credited to the CI&E Statement is different from Council Tax income calculated for the year in accordance with statutory requirements (772) 772

Adjustment primarily involving the Accumulated Absences Account:

Amount by which officer remuneration charged to the CI&E Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements (4,370) 4,370

Total Adjustments (85,710) (4,629) 4,600 1,337 - 84,402

8. TRANSFERS TO / FROM EARMARKED RESERVES This note sets out the amounts set aside from the General Fund and HRA balances in earmarked reserves to provide financing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fund and HRA expenditure in 2011/12. The following table and note explains the amount and purpose of the earmarked reserves held by the Authority.

Balance at 1st April

2010

Transfers Out

2010/11

Transfers In

2010/11

Balance at 31st March

2011

Transfers Out

2011/12

Transfers In

2011/12

Balance at 31st March

2012

£000's £000's £000's £000's £000's £000's £000'sGeneral Fund:

Local Management of Schools 10,095 (1,904) 3,021 11,212 (1,426) 8,011 17,797

Schools PFI 6,895 (28) 737 7,604 - 472 8,076

Insurance Reserve 12,498 (4,595) 37 7,940 (1,569) 1,355 7,726

Early Retirement/Redundancy Reserve 3,874 (5,772) 4,721 2,823 (852) 5,412 7,383

Dedicated Schools grant central 2,146 (386) 656 2,416 - 1,240 3,656

GMWDA Smoothing Levy 994 - 508 1,502 - - 1,502

Street Lighting PFI - - - - - 947 947

Manchester Airport Debt 295 (277) 367 385 - 558 943

Other Reserves 1,369 (632) 422 1,159 (508) 153 804

Reserved rental Income - - 323 323 (8) 215 530

Schools Insurance 453 (54) - 399 - 116 515

Asylum Seekers 816 (602) - 214 - 248 462

Maskew Bequest 526 (44) 3 485 (62) 3 426

Surface Water 225 - 250 475 (75) - 400

Winter Maintenance - - 330 330 - - 330

Managed Transfers 24 - 108 132 - 128 260

Employment Links - - - - - 244 244

S106 grounds maintenance 219 (23) 30 226 (25) 27 228

Kitchen Maintenance 179 - - 179 (29) - 150

Pupil Referral Service 92 (28) - 64 - 56 120

Exit Strategy Reserve 373 (290) - 83 - - 83

Housing Planning Delivery 433 (201) - 232 (186) - 46

Systems Development 885 (765) 9 129 (86) - 43

Schools Devolved Standards Fund 2,166 (2,166) 2,743 2,743 (2,940) 197 -

Standards Fund central 1,485 (1,485) 1,654 1,654 (1,654) - -

Supporting People 1,448 - 90 1,538 (1,538) - -

Future Potential Liabilities Reserve 1,725 (1,725) - - - - -

Modernisation Programme 369 (369) - - - - -

Communities for Health 237 (237) - - - - -

Total 49,821 (21,583) 16,009 44,247 (10,958) 19,382 52,671

HRA

Other Reserves - - 101 101 (101) - -

Total - - 101 101 (101) - - o Local Management of schools and Community Schools - In accordance with the Education Reform Act, 1988

the scheme of Local Management of Schools provides for the carry forward of individual school surpluses/deficits. These balances are available to be spent on the education service in schools and cannot be used by the Authority for general use.

o Schools PFI – This reserve is the cumulative amount of unapplied funding received to date which will be utilised to finance the schools PFI over the whole life of the project. There is also an amount set aside to guard against uncertainties in future Retail Price Index increases, interest rate fluctuations and back-dated contractor claims in relation to the Schools PFI Scheme.

o Insurance Reserve - This reserve represents the need to finance costs (e.g. claims and premium payments) associated with insurable risk. This reserve relates to the self-funding of general corporate risks, insurance risks and fire risks at education establishments.

o Early retirement/Redundancy - This reserve has been created to fund possible future capital costs arising from early retirements/redundancies.

o Dedicated Schools Grant – Central - the Dedicated Schools Grant (DSG) is ring fenced and can only be applied to meet expenditure properly included in the Schools Budget – refer to note 38.

o GMWDA Smoothing – This reserve has been established to allow for a significant increase in the levy in future years. It has been considered more appropriate for individual authorities to provide their own reserves as opposed to a smoothing pot being held by GMWDA.

o Streetlighting PFI – This reserve is the cumulative amount of unapplied funding received to date which will be utilised to finance the streetlighting PFI over the whole life of the project.

o Manchester Airport Debt – This reserve has been set up following the conversion of Manchester Airport debt into an equity instrument. The Airport pays the Authority a contribution towards its debt financing costs. This payment can be deferred if profits fall below a certain threshold and the reserve exists to cover this possibility.

o Other Reserves – This combined reserve consists of a number of miscellaneous reserves all with balances below £125k.

o Reserved Rental Income – This reserve is created from rental income received from properties purchased or built with ring fenced funding and at present has to be spent in line with the original purposes of that funding/receipt.

o Schools Insurance – The Authority operates two shared cost insurance schemes on behalf of schools. These cover property related risks not covered centrally, including damage to buildings, vandalism & theft and cover for the cost of employing additional staff due to illness.

o Asylum Seekers – This reserve represents the accumulated surplus on the NW Consortium for Asylum Seekers contract with the Home Office, which is ring-fenced to provide support to asylum seekers and to deal with any implications (e.g. redundancy costs, withdrawal from buildings) that may arise as a result of funding being withdrawn.

o Maskew Bequest – This reserve represents a bequest left to the Authority to spend on certain activities within the Library service.

o Surface Water – This reserve has been established for the Preliminary Flood Risk Assessment due to be completed by June 2015.

o Winter Maintenance - This reserve has been created to meet possible increases in future years costs in Winter Maintenance due to severe winters.

o Managed Transfers - This is a reserve that schools pay in to when they permanently exclude pupils. Each time a school enrols a pupil that was previously permanently excluded from a different school it can draw from the reserve.

o Employment Links – This reserve has been created to fund the continued delivery of the work programme, complex families support and next step contracts over the next 3 to 5 years.

o S106 Grounds Maintenance – This reserve has been created to hold contributions from developers to pay for future years grounds maintenance costs relating to specific S106 agreements.

o Kitchen Maintenance – Schools have an option to pay into a pooled kitchen maintenance fund. Works are allocated in year via a prioritised programme. This reserve represents the balance within the fund at the year end.

o Pupil Referral Service – The pupil referral service is managed in the same way as a school and as such any unspent balances within the current year are carried forward to be utilised in the future.

o Exit Strategy – This reserve has been established for those areas within the Children, Schools and Families - Support for Learning service that are funded from external resources and may at some point in the future no longer be required or lose that source of funding. The reserve is set aside to deal with any implications (e.g. redundancy costs, withdrawal from buildings) that may arise as a result of funding being withdrawn.

o Housing Planning Delivery – This reserve has been created from monies received from the Housing Planning Delivery Grant which is specifically for improvements to the planning delivery function.

o Systems Development – This reserve has been set up for the purchase of new revenue & benefits service computer system and an electronic data records management system (EDRMS).

o Schools Devolved Standards Fund – Schools have 17 months to spend their Standards Fund allocations – the balance represented the funding that was spent between April to August 2011.

o Standards Fund – Central – This reserve is the carry forward of unspent Standards Fund Revenue Grants which was spent by the 31st August 2011. The reserve includes grants still to be devolved to schools, and grants held centrally.

o Supporting People – This reserve has been created to allow for unspent Supporting People grant to be used to pay for providers in future years.

o Future Potential Liabilities Reserve – This reserve represented the need to meet possible additional costs arising from issues identified in risk assessments undertaken by the Service Director, Finance and Procurement as part of the annual budget setting process.

o Modernisation Programme – This reserve was established in 2008/09 to finance the Adult Care Modernisation Programme which is made up of a number of one off improvement schemes.

o Communities for Health – This reserve had been created for PCT funding which was specifically for joint initiatives relating to reducing health inequalities.

9. OTHER OPERATING EXPENDITURE This note provides an analysis of other operating expenditure within the Comprehensive Income and Expenditure Statement.

31st March 2011 Other Operating Expenditure 31st March 2012

£000's £000's

1,612 Payments to the Government Housing Capital Receipts Pool 2,037

(1,484) (Gains)/Losses on the disposal of non-current assets 69,818

128 Total 71,855 Note 5 details the material transactions on the losses on the disposal of non-current assets.

10. FINANCING AND INVESTMENT INCOME AND EXPENDITURE This note provides an analysis of financing and investment income and expenditure within the Comprehensive income and Expenditure Statement.

31st March 2011 Financing and Investment Income and Expenditure 31st March 2012

£000's £000's

23,965 Interest Payable and similar Charges 25,459

8,000 Pensions interest costs and expected returns on pensions assets 800

(3,393) Interest receivable and similar income (3,431)

(623) Income and expenditure in relation to investment properties and changesin their fair value

(1,571)

307 (Surplus) or deficit on trading undertakings 492

28,256 Total 21,749

11. TAXATION AND NON-SPECIFIC GRANT INCOME This note provides an analysis of taxation and non-specific grant income within the Comprehensive Income and Expenditure Statement.

31st March 2011 Taxation and Non-Specific Grant Incomes 31st March 2012

£000's £000's78,713 Council tax income 79,042

95,778 Non domestic rates 88,264

48,811 Non-ringfenced government grants 44,424

48,874 Capital grants and contributions 42,182

272,176 Total 253,912

11a OVERHANGING DEBT SETTLEMENT This note provides an analysis of overhanging debt settlement within the Comprehensive Income and Expenditure Statement.

31st March 2011 Overhanging debt settlement 31st March 2012

£000's £000's

Premiums payable 66,066

Grant receivable:-

Premiums (66,066)

Principal element (215,276)

- Total (215,276) As part of the large scale voluntary transfer (LSVT) of the Council’s housing stock to Rochdale Borough Wide Housing (see note 54), the Council was eligible for grant from DCLG to repay £215.276m of the Council’s loan debt. In doing so the Council incurred £66m of premiums which were also met by overhanging debt grant. The principal element of the grant has been applied to repay loans via the adjustment to the movements in reserve statement (see note 7). In line with HRA statutory financial framework, the HRA has been debited with the HRA share of premiums (£38.595m) and grant relating thereto plus the principal element of the overhanging debt grant (£253.871m).

12. PROPERTY, PLANT AND EQUIPMENT The table below shows the movement in the Authority’s Property, Plant and Equipment:

Comparative Movements in 2010/11

Council

Dwellings

Other Land and Buildings

Vehicles, Plant &

Equipment Infrastructure Surplus Assets

Community Assets

Assets under Construction Total

£000's £000's £000's £000's £000's £000's £000's £000's

Movements in Cost/valuation:

Amount at 1st April 2010 394,742 575,269 28,656 73,857 17,490 12,178 23,218 1,125,410

Additions 6,984 17,211 10,787 12,291 113 926 19,352 67,664

Donations

Revaluation increases/ (decreases) recognised in the Revaluation Reserve (1,823) (5,183) (262) 1,242 (6,026)

Revaluation increases/ (decreases) recognised in the Surplus Deficit on the Provision of Services (1,780) (27,353) (448) (1,193) (300) (1) (31,075)

De-recognition - disposals (1,120) (211) (788) (3) (2,122)

Reclassifications (1,693) 5,787 6,673 526 (14,481) (3,188)

Other movements in cost or valuations -

Amount at 31st March 2011 395,310 565,520 46,116 85,700 15,886 14,043 28,088 1,150,663

Movements in Depreciation and Impairment

Amount at 1st April 2010 3,811 23,802 9,624 9,519 197 46,953

Charge for 2010-11 3,783 10,374 4,657 1,936 203 20,953

Depreciation written out to the revaluation reserve (8,308) (60) (8,368)

Depreciation written out to Surplus /Deficit on the Provision of Services (1,826) (8) (1,834)

Impairment losses (reversals) recognised in the revaluation reserve 798 798

Impairment losses (reversals) recognised in Surplus Deficit on the Provision of services 452 8 460

De-recognition - disposals (1) (1)

Other movements in depreciation and Impairment -

Amount at 31st March 2011 7,594 25,291 14,281 11,455 340 - - 58,961

Net Book Value

at 31st March 2011 387,716 540,229 31,835 74,245 15,546 14,043 28,088 1,091,702

at 31st March 2010 390,931 551,467 19,032 64,338 17,293 12,178 23,218 1,078,457

Nature of asset holding at 31st March 2011 Owned 387,716 482,826 31,780 74,245 15,546 14,043 28,088 1,034,244

Finance Lease 55 55PFI and similar arrangements 57,403 57,403

Total 387,716 540,229 31,835 74,245 15,546 14,043 28,088 1,091,702

Council

Dwellings

Other Land and Buildings

Vehicles, Plant &

Equipment Infrastructure Surplus Assets

Community Assets

Assets under Construction Total

£000's £000's £000's £000's £000's £000's £000's £000'sMovements in Cost/valuation:

Amount at 1st April 2011 395,310 565,520 46,116 85,700 15,886 14,043 28,088 1,150,663

Additions 6,329 35,209 6,478 11,586 46 819 48,009 108,476

Donations -

Revaluation increases/ (decreases) recognised in the Revaluation Reserve (28,067) 3,588 1,352 (904) (24,031)

Revaluation increases/ (decreases) recognised in the Surplus Deficit on the Provision of Services (356,407) (3,862) (435) (486) (1,141) (168) - (362,499)

De-recognition - disposals (1,529) (45,126) (13) (1,464) - - - (48,132)

Reclassifications (15,636) 4,357 (12,176) (4,388) (1,738) (642) (15,016) (45,239)

Other movements in cost or valuations -

Amount at 31st March 2012 - 559,686 39,970 90,948 14,405 13,148 61,081 779,238

Movements in Depreciation and Impairment

Amount at 1st April 2011 7,594 25,291 14,281 11,455 340 58,961

Charge for 2011-12 3,895 10,152 5,513 2,352 243 22,155

Depreciation written out to the revaluation reserve (382) (9) (391)

Depreciation written out to Surplus /Deficit on the Provision of Services (11,489) (1,100) (435) (486) (71) (13,581)

Impairment losses (reversals) recognised in the revaluation reserve 431 39 470

Impairment losses (reversals) recognised in Surplus Deficit on the Provision of services 2,385 42 814 7 3,248

De-recognition - disposals (1,066) (1) (1,067)

Reclassifications (167) 167 -

Other movements in depreciation and Impairment -

Amount at 31 March 2012 - 35,544 19,400 14,135 716 - - 69,795

Net Book Value

at 31st March 2012 - 524,142 20,570 76,813 13,689 13,148 61,081 709,443

at 31st March 2011 387,716 540,229 31,835 74,245 15,546 14,043 28,088 1,091,702

Nature of asset holding at 31st March 2012 Owned - 467,053 20,536 75,474 13,689 13,148 61,081 650,981

Finance Lease 34 34PFI and similar arrangements 57,089 1,339 58,428

Total - 524,142 20,570 76,813 13,689 13,148 61,081 709,443

Revaluations RMBC carries out a rolling programme that ensures that all Property, Plant and Equipment required to be measured at fair value is revalued at least every five years. All valuations were carried out externally. Valuations of land and buildings were carried out in accordance with the methodologies and bases for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. Valuations of vehicles, plant, furniture and equipment are based on current prices.

Vehicles, Plant &

Equipment £000's

Other Land & Buildings /

Infrastructure / Assets £000's

Surplus Assets £000's

Total £000's

Carried at Historic Cost: 20,570 164,448 185,018

Valued at fair value:

2011/12 31,145 2,314 33,459

2010/11 51,901 3,606 55,507

2009/10 6,975 1,339 8,314

2008/09 338,564 1,423 339,987

2007/08 82,151 5,007 87,157

Total 20,570 675,184 13,689 709,443

Capital Commitments At 31st March 2012, the Authority has entered into a number of contracts for the construction or enhancement of Property, Plant and Equipment and Intangibles in 2012/13 and future years budgeted to cost £57.9m. Similar commitments at 31st March 2011 were £77.4m. The major commitments for Property Plant and Equipment are: No. 1 Riverside £19.1m

BSF ICT £11.7m

Kingsway Park High School £8.6m

Middleton Technology £6.9m

Holy Family £6.9m

Darnhill £1.9m

Other Schemes £2.8m

Total £57.9m

13. HERITAGE ASSETS

Art Collection

Archaeology Collection

Ceramics and

GlassCivic

Regalia

Other Heritage Assets Total

£'000 £'000 £'000 £'000 £'000 £'000

Cost or valuation

01 April 2010 11,475 400 94 1,056 316 13,341

Additions 12 - - - - 12

Donations 23 - - - - 23

Disposals - - - - - -

Revaluations - - - - - -

Reclassifications - - - - - -

31 March 2011 11,510 400 94 1,056 316 13,376

Cost or valuation

01 April 2011 11,510 400 94 1,056 316 13,376

Additions 2 - - - - 2

Donations 22 - - - - 22

Disposals - - - - - -

Revaluations 177 - - - - 177

Reclassifications - - - - 28 28

31 March 2012 11,711 400 94 1,056 344 13,605 Art Collection The Authorities art collection is reported in the balance sheet at insurance valuation updated annually in June. During the year the Authority received 5 paintings, 1 print and 1 book in donations. Archaeology Collection The archaeology collection is reported in the balance sheet at insurance valuation updated annually in June. Ceramics and Glass The Authority’s ceramics and glass is reported in the balance sheet at insurance valuation updated annually in June. Civic Regalia The Authority’s civic regalia is reported in the balance sheet at insurance valuation updated annually in June and is mostly held at the Town Hall. Other Heritage Assets This category includes items in the museum collection such as statues & sculptures, furniture & clocks. These are reported in the balance sheet at insurance valuation updated annually in June.

14. INVESTMENT PROPERTIES The following table identifies items of income and expense that have been accounted for in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

Restated 31st March 2011

£000's31st March 2012

£000's

Rental income from investment property 1,207 874

Direct operating expenses arising from investment property (119) (167)

Net gain 1,088 707 The Income and Expenditure on investment properties is now shown on the CI&E line Financing and Investment Income and Expenditure and not within relevant services lines as was the case in 2010/11. The amounts for 31st March 2011 have been reviewed and updated to enhance comparative analysis. There are no restrictions on the Authority’s ability to realise the value inherent in its investment property or on the Authority’s right to the remittance of income and the proceeds of disposal. The authority has no contractual obligations to purchase, construct or develop investment properties, but there is an obligation for the external maintenance of the buildings and common areas of Industrial Estates which is recovered via a service charge. The value of the Industrial Estates where this applicable is £2.49m. The following table summarises the movement in the fair value of investment properties over the year:

31st March 2011 £000's

31st March 2012 £000's

Balance at start of the year 24,164 23,578

Additions

-Enhancements 1 5

Impairment of spend - (5)

Disposals (122) -

Net gains/(losses) from fair value adjustments (465) 864

Transfers (to)/from Property Plant & Equipment - (9)

Transfers (to)/from Held for Sale - (6,677)

Balance at end of year 23,578 17,756

15. INTANGIBLE ASSETS The authority accounts for its software as intangible assets where such software has been implemented separately and, its cost is separately identifiable from, a particular IT system. All software is given a finite useful life based on the assessments of the period that the software is expected to be of economic benefit to the Authority. This life is estimated initially as five years for most software. The carrying amount of intangible assets is amortised on a straight line basis. Total IT costs are allocated to services by apportionment thus it is not possible to state accurately how much amortisation is attributable to each service heading. The annual review of software values has not resulted in any impairment of software in the current year. The movement on Intangible Asset balances during 2011/12 is as follows:

31st March 2011 31st March 2012Total Total

£000's £000's

Balance at start of year:

� Gross carrying amounts 8,018 11,238

� Accumulated amortisation (2,781) (4,188)

Net carrying amount at start of year 5,237 7,050

Purchases 3,220 2,026

Disposals (Gross) - (106)

Disposals (Amortsation) - 84

Amortisation for the period (1,407) (1,928)

Net carrying amount at end of year 7,050 7,126

Comprising:

� Gross carrying amounts 11,238 13,158

� Accumulated amortisation (4,188) (6,032)

7,050 7,126 No internally generated assets are included in the above totals.

16. FINANCIAL INSTRUMENTS Financial instruments include the financial assets and liabilities of the Authority. These appear in different sections of the balance sheet depending on their characteristics. Note 16a – Categories of Financial Instruments The following categories of financial instruments are held in the Balance Sheet:

Restated 31st March

2010

Restated 31st March

2011

31st March

2012

Restated 31st March

2010

Restated 31st March

2011

31st March

2012

£000's £000's £000's £000's £000's £000's

Investments

Manchester Airport-Available for Sale 10,214 10,214 10,214 - - -

Other Long Term Investments - Available for sale 101 101 101 - - -

Fixed Term Deposits - Loans and Receivables - - - 65,462 35,600 32,047

Cash at Bank and Cash Equivalents - Loans and Receiveables - - - 33,596 55,672 46,929

Total Investments 10,315 10,315 10,315 99,058 91,272 78,976

Debtors - Loans and Receivables

Manchester Airport Debt 8,896 8,618 8,618 - - -

Other Loans & Receivables 2,396 4,424 6,095 411 508 544

PFI Prepayments 1,366 1,850 2,363 - - -

Current Receivables - - - 23,112 22,506 17,461

Total debtors 12,658 14,892 17,076 23,523 23,014 18,005

Borrowings - Financial Liabilities at Amortised Costs

PWLB Loans 255,756 234,402 13,231 14,968 24,021 1,608

Market Loans 135,972 130,963 130,956 1,558 6,558 1,485

Local Authority Loans - - - - - 27,014

Other Loans - 120 80 - 40 40

Total Borrowings 391,728 365,485 144,267 16,526 30,619 30,147

Other Long Term Liabilities

PFI and Finance Lease Liabilities 38,378 37,513 57,085 994 865 1,894

Other Long Term Liabilities - Financial Liabilities at Amortised Cost 9,674 8,984 8,274 612 690 710

Total Other Long Term Liabilities 48,052 46,497 65,359 1,606 1,555 2,604

Creditors

Financial Liabilities at Amortised Cost - - - 38,410 29,325 24,724

Total Creditors - - - 38,410 29,325 24,724

Long Term Current

The above table has been updated to separate the amounts between long term and short term assets and liabilities to enhance comparative analysis. In March 2012 Central Government redeemed £215.3m of the Authority’s PWLB debt as part of our Housing Reform settlement and Stock Transfer. The Authority repaid a further £4.5m of debt to clear its HRA Capital Financing Requirement to zero. The Authority holds shareholdings in the following companies: 10,214,000 fully paid £1 ordinary shares in Manchester Airport Group plc. This represents 5% of the issued share capital. The company owns and develops the International Airport. In year the Authority received dividends of £1,000,000. The company’s most recent accounts for the year ended 31st March 2011 indicated that the company had net assets of £817.0m and made a profit of £84.7m. Further information and details of the Manchester Airport Group plc financial statements may be obtained from the Company Secretary, Manchester Airport Group plc, Manchester M90 1QX. Denehurst Park (Rochdale) Ltd – the Authority holds 99,998 shares (9.1% holding) which were acquired in March 1991. The company is the vehicle through which the activities of Rochdale Football Club and Rochdale Hornets are pursued.

Note 16b – Income, Expense, Gains & Losses The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to Financial Instruments are summarised in the table below:

Financial Financial

Liabilities Liabilities

Liabilities at Long Term Liabilities at Long Term

Amortised Short Term Equity Amortised Short Term Equity

Cost Investments Investment Total Cost Investments Investment Total

£000's £000's £000's £000's £000's £000's £000's £000's

Financial Liabilities

Interest Expense 23,965 - - 23,965 24,079 - - 24,079

Stock Transfer Premiums - - - - 67,446 - - 67,446

Losses on derecognition - - - - - - - -

Reductions in fair value - - - - - - - -

Impairment losses - - - - - - - -

Expense Included in Surplus or Deficit onthe Provision of Services 23,965 - - 23,965 91,525 - - 91,525

Financial Assets

Interest Income (1,147) (836) - (1,983) (1,413) (612) - (2,025)

Income from Long Term Investments - - (1,410) (1,410) - - (1,406) (1,406)

Interest Income accrued on impairedfinancial assets - - - - - - - -

Increases in fair value - - - - - - - -

Gains on derecognition - - - - - - - -

Income Included in Surplus or Deficit onthe Provision of Services (1,147) (836) (1,410) (3,393) (1,413) (612) (1,406) (3,431)

Net Gain/(Loss) for the Year 22,818 (836) (1,410) 20,572 90,112 (612) (1,406) 88,094

31st March 2011 31st March 2012

Financial Assets Financial Assets

Note 16c – Fair Value of Assets & Liabilities Financial liabilities and assets are carried in the Balance Sheet at amortised cost. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Fair value can be assessed by calculating the present value of the cashflows that will take place over the remaining term of the instrument, using the following assumptions:

• For loans the PWLB premature repayment rates from PWLB at 30th March 2012 have been applied to provide fair value using PWLB debt redemption procedures

• No early repayment or impairment is recognised

• The fair value of trade and other receivables is taken to be the invoiced or billed amount. The Authority’s long term investment in Manchester Airport is an unquoted equity holding (all shares are held by the 10 Greater Manchester Authorities) and as such there is no active market or history of trading. Although various valuation techniques are available, these give wide variations in possible values. In conjunction with our Treasury Management Advisers we have concluded that the Airport shares cannot be reliably valued. In accordance with the Code of Practice, this prompts the Authority to include the shares at original cost less impairment (there has been no impairment).

The table below summarises the Financial Instruments of the Authority and compares their current or carrying value with their fair value:

Carrying Value

Fair Value

Carrying Value

Fair Value

£000's £000's £000's £000's

Investments

Manchester Airport-Unqouted Equity Investment at Cost 10,214 10,214 10,214 10,214

Other Long Term Investments 101 101 101 101

Fixed Term Deposits with Banks & Other Financial Institutions 35,600 35,618 32,047 32,061

Cash at Bank and Cash Equivalents 55,672 55,672 46,929 46,929

Total Investments 101,587 101,605 89,291 89,305

Debtors

Manchester Airport Debt 8,618 8,618 8,618 8,618

Other Loans & Receivables 4,932 4,824 6,639 7,053

PFI Prepayments 1,850 1,850 2,363 2,363

Current Receivables 22,506 22,506 17,461 17,461

Total debtors 37,906 37,798 35,081 35,495

Borrowings

Financial Liabilities at Amortised Costs

PWLB Loans 258,423 261,586 14,839 16,574

Market Loans 137,521 154,674 132,441 133,891

Local Authority Loans - - 27,014 26,991

Other Loans 160 196 120 127

Total Borrowings 396,104 416,456 174,414 177,583

Other Long Term Liabilities

PFI and Finance Lease Liabilities 38,378 38,378 58,979 58,979

Other Long Term Liabilities 9,674 9,674 8,984 8,984

Total Other Long Term Liabilities 48,052 48,052 67,963 67,963

Creditors

Financial Liabilities at Amortised Cost 29,325 29,325 24,724 24,724

Total Creditors 29,325 29,325 24,724 24,724


The fair value of the Authority’s borrowings is greater than the carrying amount because our portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the rates available for similar loans in the market at the Balance Sheet date. The higher fair value of ‘Other Loans & Receivables’ is attributable to fixed interest rate instruments being held by the Authority whose interest rate is higher than the prevailing rate estimated to be available at the Balance Sheet date. The Authority’s dealings in Financial Instruments expose it to a variety of financial risks. The nature and extent of these risks, as well as procedures for minimising potential adverse effects, are discussed in Note 51.

17. INVENTORIES This table sets out the materials or supplies that were purchased and used by the Authority in providing services or sold as part of the Authority’s ordinary business during the year.

Total Total

31st March 2011 31st March 2012 31st March 2011 31st March 2012 31st March 2011 31st March 2012

£000's £000's £000's £000's £000's £000's

Opening Balance 500 748 85 77 585 825

New Stock Purchases 3,259 2,948 58 72 3,317 3,020

Stock Issued (3,025) (3,232) (56) (69) (3,081) (3,301)

Stock Written Off 14 (30) (10) 2 4 (28)

Closing Balance 748 434 77 82 825 516

Raw Materials Goods for Resale

18. CONSTRUCTION CONTRACTS The Authority has no specific construction contracts to report.

19. DEBTORS Debtor balances represent amounts which are due at the financial year end but for which the cash has not been received. All debtor amounts are expected to be paid within the following year.

31st March 2010Restated

31st March 2011Debtors

31st March 2012

£000's £000's £000's

16,365 11,065 Central government bodies 7,353

309 8,661 Other local authorities 2,418

- 298 NHS bodies 111

- 12 Public corporations and trading funds 24

26,362 22,704 Other entities and individuals 28,976

43,036 42,740 Total 38,882 The National Non Domestic Rates (NNDR) debtors and creditors amount are consolidated into a single account. These have been reviewed and updated to enhance comparative analysis.

20. CASH AND CASH EQUIVALENTS Cash is represented by cash in hand, petty cash balances and the Authority’s operating bank accounts. In addition, under the Authority’s scheme of delegation, schools hold their own separate individual bank accounts. Cash equivalents are investments that are instantly repayable to the Authority on demand and that are readily convertible to known amounts of cash with insignificant risk of a change in value. These are balances held in interest bearing call accounts and money market funds with institutions meeting our required credit ratings.

31st March 2011 Cash & Cash Equivalents 31st March 2012

£000's £000's

71 Cash Held by the Authority 50

15,206 Bank Accounts 13,088

40,466 Cash Equivalent Short Term Investments 33,841

55,743 Total Cash & Cash Equivalents 46,979

21. ASSETS HELD FOR SALE The table below shows the balance of assets held for sale that are owned by the Authority:

Current


£000's £000's

Balance outstanding at start of year 1,226 3,924

Assets newly classified as held for sale:

-Property, Plant and Equipment 3,188 45,220

-Investment Assets 6,677

-Property, Plant and Equipment not previously recognised 512

Revaluation losses - (19,334)

Revaluation gains - -

Additions 13 -

Impairment Losses (13) -

Assets sold (490) (31,286)

Balance outstanding at year-end 3,924 5,713

22. CREDITORS Since the Balance Sheet represents the financial position at the end of the financial year, there are outstanding monies owed at that date which have yet to be paid. The following analysis shows the amounts owed which had not yet been paid as at 31st March 2012.

31st March 2010Restated

31st March 2011

Creditors

31st March 2012

£000's £000's £000's

7,779 8,383 Central Government Bodies 5,103

1,337 1,294 Other Local Authorities 508

275 199 NHS Bodies 129

135 89 Public Corporations and Trading Funds 306

38,203 27,602 Other Entities and Individuals 24,611

47,729 37,567 Total Creditors 30,657 The National Non Domestic Rates (NNDR) debtors and creditors amount are consolidated into a single account. These have been reviewed and updated to enhance comparative analysis.

23. PROVISIONS Provisions are amounts set aside by the Authority to meet the cost of a future liability, for which the timing of the payment is uncertain. The amounts represent the best estimate of that liability where an exact cost is not able to be determined. In line with the Code of Practice, the provision is charged to service revenue accounts in the year it is established. When the liability falls due, the costs are charged directly to the provision.

Short term

Insurance £000's

Equal Pay £000's

Contract Settlement

£000's

Off street Car Parking

£000's

Early Retirements/ Redundancies

£000's

Other Provisions

£000'sTotal £000's

Balance 1st April 2011 1,067 2,259 - - 432 714 4,472

Additions in Year 2,273 - 4,843 - - 700 7,816

Amounts used in year (1,067) (603) - - (206) (161) (2,037)

Unused amounts reversed in year - (760) - - (226) (300) (1,286)

Balance 31st March 2012 2,273 896 4,843 - - 953 8,965

Long term

Insurance £000's

Equal Pay £000's

Contract Settlement

£000's

Off street Car Parking

£000's

Early Retirements/ Redundancies

£000's

Other Provisions

£000'sTotal £000's

Balance 1st April 2011 13,586 154 - 711 - 287 14,738

Additions in Year - - - - - 136 136

Amounts used in year (1,251) - - (678) - - (1,929)

Unused amounts reversed in year (654) (154) - - - (171) (979)

Balance 31st March 2012 11,681 - - 33 - 252 11,966

o Insurances – This represents amounts set aside by the Authority to meet obligations arising in respect of

Employers and Public Liability claims and motor vehicle insurance. The Authority’s liability is limited to a maximum amount in any one year. Claims in excess of this maximum are met by external insurers. The total provision of £13.954m is comprised of a number of individual provisions (one for each financial year for which employer and public liability claims have yet to be settled) plus one provision relating to motor vehicle insurance claims. Payments will be made from these provisions as claims are settled. Whilst the majority of claims are settled within 2 to 3 years of being submitted a number of more complicated claims can take considerably longer to resolve. The adequacy of the level of individual provisions is reviewed by an independent firm of actuaries based on information and estimates relating to the number and value of claims.

o Equal Pay Provision - Provision for potential claims brought against the Authority for back pay arising from the

Equal Pay Initiative. This is based on the number of claims received and an average settlement amount. o Contract Settlement – This provision is for the settlement costs relating to changes around the impact

Partnership contract and represents amounts due as a consequence of the break with no compensation payments by the Authority.

o Off street car parking – This provision represents VAT on income from off street car parking retained pending

conclusion of legal action by HM Revenue and Customs to determine VAT liability of this service. o Early Retirements/Redundancy – This provision was made to allow for (a) any additional contributions that may

need to be made to pension funds for early retirements, and (b) any future redundancy costs arising from decisions made within that year.

o Other Provisions – These are individually not material.

24. USABLE RESERVES Movements in the Authority’s usable reserves are detailed in the Movement in Reserves Statement and Note 8.

25. UNUSABLE RESERVES Unusable Reserves are those that the Authority is not able to utilise to provide services. The table below summarises the movement of the Authority’s Unusable Reserves:

2010/11 Reserve 2011/12

£000's £000's

126,820 Revaluation reserve 98,250

(752) Financial Instruments Adjustment Account (1,329)

556,893 Capital Adjustment Account 363,286

(131,600) Pension Reserve (229,400)

(349) Collection Fund Adjustment Account (42)

766 Deferred Capital Receipts -

(3,876) Accumulated Absences Account (3,906)

547,902 TOTAL 226,859 a) Revaluation Reserve

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

o Revalued or impaired and the gains are written off. o Used in the provision of services and the gains are consumed through depreciation; or o Disposed of, and the gains are realised.

The reserve contains only 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.

2009/10 2010/11 Revaluation Reserve 2011/12

£000's £000's

118,340 132,943 Balance at 1st April 126,820

29,322 5,380 Upward revaluation of assets 5,681

761 - Asset not previously recognised 346

(10,942) (3,801) Downward revaluation of assets and Impairment not charged to the Surplus/Deficit on the Provision of Services

(29,960)

19,141 1,579 Surplus/(deficit) on the revaluation of non current assets not posted to the Surplus/Deficit on the Provision of Services

(23,933)

(2,428) (2,463) Difference between fair value depreciation and historical cost depreciation

(1,674)

(2,110) (5,239) Accumulated gains on assets sold or scrapped (2,963)

(4,538) (7,702) Amounts written off to the capital adjustment account (4,637)

132,943 126,820 Balance at 31st March 98,250 b) Financial Instruments Adjustment Reserve

The Financial Instruments Adjustment Account holds the timing differences arising from the arrangements for accounting for income and expenses relating to certain financial instruments. The Authority uses the account to manage premiums and discounts received on the early redemption of loans and accounting adjustments in relation to Effective Interest Rates and Soft Loans.

2010/11 Financial Instruments Adjustment Account 2011/12

£000's £000's

(658) Balance Brought Forward (752)

232 Premiums Charged 135

(317) Discounts Received (740)

7 Effective Interest Rate Adjustment 8

(16) Soft Loans 20

(752) Balance Carried Forward (1,329)

c) 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 these 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 Authority as finance for the costs of acquisition, construction and enhancement. The account contains accumulated gains and losses on Investment Properties that have yet to be consumed by the Authority. The account also contains revaluation gains accumulated on Property Plant and Equipment from periods prior to 1 April 2007, the date on which the Revaluation Reserve was created to hold such gains. Note 7 contains details of the sources of all the transactions posted to the Account, apart from those involving the Revaluation Reserve).

2010/11 Capital Adjustment Account 2011/12

£000's £000's

544,703 Balance at 1st April 556,893Reversal of items credited to capital expenditure and debited or credited to the Comprehensive Income and Expenditure Statement:

(21,426) Charges for depreciation and impairment of non current assets (25,409)

(29,238) Revaluation losses on Property Plant and Equipment (348,918)

(1,407) Amortisation of Intangible assets (1,928)

(19,458) Revenue expenditure funded from Capital under Statute (24,292)

(2,734) Amounts of non-current assets written off on disposal as part of gain loss on disposal to the Comprehensive Income and Expenditure Statement

(97,195)

(74,263) (497,742)

7,702 Adjusting amounts written out of Revaluation Reserve 4,637

(66,561) Net amount written out of the cost of non-current assets consumed in the year

(493,105)

Capital financing applied in the year:

502 Use of Capital receipts reserve to finance new capital expenditure 7,064

7,189 Use of the major repairs reserve to finance new capital expenditure 8,715

53,830 Grants and capital contributions credited to the Comprehensive Income and Expenditure Statement that have been applied to capital financing

50,844

- Grants and capital contributions credited to the Comprehensive Income and Expenditure Statement that have been applied to repay HRA debt

215,277

659 Application of grants to capital financing from the Capital Grants Un-Applied Account

3,140

11,536 Statutory Provision for the financing of capital investment charged against the general fund and HRA balances

11,617

1,867 Voluntary Provision for the financing of capital investment charged against the general fund and HRA balances

1,794

3,633 Capital expenditure charged against the general fund and HRA balances

183

79,216 Total capital financing applied in the year 298,634

(465) Movement in the Market value of Investment Properties debited or credited to the Comprehensive Income and Expenditure Statement

864

556,893 Balance at 31st March 363,286

d) Pensions Reserve

The pensions reserve absorbs the timing differences arising from different arrangements for accounting for post employment benefits and funding benefits in accordance with statutory provisions. The Authority accounts for post employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However statutory arrangements require benefits earned to be financed, as the Authority makes employer’s contributions to pension funds or eventually pays any pensions for which it is directly responsible. The debit balance on the pensions reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Authority has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid.

2010/11 Pension Reserve 2011/12

£000's £000's

(357,300) Balance at 1 April (131,600)

151,600 Actuarial gains or losses on pensions assets and liabilities (89,200)

52,100Reversal of items relating to retirement benefits debited or credited to the Surplus or Deficit on the provision of services in the Comprehensive income and expenditure account

(28,400)

22,000 Employer’s pensions contributions and direct payments to pensioners payable in the year.

19,800

(131,600) Balance at 31 March (229,400) e) Collection Fund Adjustment Account

The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax income in the Comprehensive Income and Expenditure Statement as it falls due from the council tax payers compared with the statutory arrangements for paying across amounts to the General fund from the Collection Fund.

2010/11 Collection Fund Adjustment Account 2011/12£000's £000's

(1,121) Balance Brought Forward (349)

772 Amount by which council tax income credited to the Comprehensive Income and Expenditure statement is different from council tax income calculated for the year in accordance with statutory requirements.

307

(349) Balance Carried Forward (42) f) Deferred Capital Receipts Reserve

Deferred Capital Receipts Reserve holds the gains recognised on the disposal of non-current assets but for which the cash settlement has yet to take place. Under statutory arrangements, the Authority does not treat these gains as usable for financing new capital expenditure until they are backed by cash receipts. When the deferred cash settlement eventually takes place, amounts are transferred to the Capital Receipts Reserve.

2010/11 Deferred Capital Receipts Reserve 2011/12

£000's £000's

- Opening Balance 766

766

Transfer of deferred sale proceeds credited as part of the gain/loss on disposal to the Comprehensive Income & Expenditure Statement (466)

- Transfer to the Capital Receipts Reserve upon receipt of cash (300)

766 Closing Balance -

g) 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 31st March. Statutory arrangements require that the impact on the general fund balance is neutralised by transfers to or from the Account.

Accumulated Absences Account£000's £000's

(8,246) Balance Brought Forward (3,876)

8,246 Settlement or cancellation of accrual made at the end of the preceding year 3,876

(3,876) Amounts accrued at the end of the current year (3,906)

4,370Amount by which officer remuneration charged to the comprehensive income and expenditure statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirement

(30)

(3,876) Balance Carried Forward (3,906)

2010/11 2011/12

26. CASH FLOW STATEMENT - OPERATING ACTIVITIES The cash flows for operating activities include the following items:

31st March 2011 £000's

The adjustment to surplus or deficit on the provisin of services for non cash movements: 31st March 2012 £000's

(52,959) Depreciation/Impairment charged to the I and E (374,327)

(1,407) Amortisation of Intangible Assets (1,928)

14,339 Increase/Decrease in Creditors 8,395

(2,315) Increase/Decrease in Debtors 4,638

74,100 Movement in Pension Liability (8,600)

887 Contributions to/(from) Provisions (1,721)

(2,734) Carrying amount of non-current assets and non-current assets held for sale, sold or derecognised (97,195)

1,830 Movement in Investment Property Values 864

(79) Other non-cash adjustments 54

31,662 (469,820)

31st March 2011 £000's

The adjustment for items included in the net surplus or deficit on the provision of services that are investing or financing activities:

31st March 2012 £000's

59,089 Capital Grants credited to surplus or deficit on the provision of services 271,270

3,517 Proceeds from the sale of property plant and equipment, investment property and intangible assets 29,750

62,606 301,020

31st March 2011 The cash flows for operating activities include the following items: 31st March 2012 £000's £000's

(2,151) Interest received (1,664)

24,020 Interest paid 93,991

(1,000) Dividends received (1,000)

27. CASH FLOW STATEMENT - INVESTING ACTIVITIES The cash flows for investing activities include the following items:

31st March 2011 Investing Activities 31st March 2012

£000's £000's

73,470 Purchase of property, plant and equipment, investment property and intangibleassets

92,053

61,500 Purchase of short-term and long-term investments 39,000

2,264 Other payments for investing activities 2,525

(7,682)Proceeds from the sale of property, plant and equipment, investment property andintangible assets

(29,594)

(101,300) Proceeds from short-term and long-term investments (42,500)

(58,931) Other receipts and investing activities (279,270)

(30,679) Net Cash flows from Investing Activities (217,786)

28. CASH FLOW STATEMENT - FINANCING ACTIVITIES The cash flows for financing activities include the following items:

31st March 2011 Financing Activities 31st March 2012

£000's £000's

(160) Cash receipts of short and long-term borrowing (27,000)

- Other receipts from financing activities (3,335)

994 Cash payments for the reduction of the outstanding liabilities relating tofinance leases and on balance sheet PFI contracts

1,222

12,828 Repayments of short and long-term borrowing 246,852

1,159 Other payments for financing activities -

14,821 Net Cash flows from Financing Activities 217,739

29. AMOUNTS REPORTED FOR RESOURCE ALLOCATION DECISIONS The 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 (SeRCOP). However, decisions about resource allocation are taken by Cabinet on the basis of budget reports analysed across services. These reports are prepared on a different basis from the accounting policies used in the financial statements. The income and expenditure of the Authority’s principal services recorded in the budget reports for the year is as follows:-

31st March 2011

Child

ren,

Sch

ools

and

Fa

mili

es -

Sup

port

fo

r Le

arni

ng

Cust

omer

and

Co

mm

unit

ies

Hou

sing

Rev

enue

A

ccou

nt

Adu

lt C

are

Child

ren,

Sch

ools

and

Fa

mili

es -

Tar

gete

d

Plan

ning

&

Regu

lati

on

Tota

l

£000's £000's £000's £000's £000's £000's £000'sFees, charges & other service income (8,557) (8,595) (44,033) (10,710) (271) (2,859) (75,025)Government Grants & Contributions (201,519) (104,291) (8,062) (10,511) (3,152) (338) (327,873)

Total Income (210,076) (112,886) (52,095) (21,221) (3,423) (3,197) (402,898)

Employee Expenses 151,247 17,995 426 23,728 13,123 4,703 211,222Other Operating Expenses 89,988 117,796 52,997 68,053 13,598 17,751 360,183Support Service Recharges 5,191 3,785 392 2,894 2,016 1,404 15,682

Total Operating Expenses 246,426 139,576 53,815 94,675 28,737 23,858 587,087

Net Cost of Services 36,350 26,690 1,720 73,454 25,314 20,661 184,189

31st March 2012

Child

ren,

Sch

ools

and

Fa

mili

es -

Sup

port

fo

r Le

arni

ng

Cust

omer

and

Co

mm

unit

ies

Hou

sing

Rev

enue

A

ccou

nt

Adu

lt C

are

Child

ren,

Sch

ools

and

Fa

mili

es -

Tar

gete

d

Plan

ning

&

Regu

lati

on

Tota

l

£000's £000's £000's £000's £000's £000's £000's

Fees, charges & other service income (10,960) (5,877) (44,136) (10,722) (274) (3,091) (75,060)

Government Grants & Contributions (196,705) (107,786) (257,910) (12,141) (1,670) (253) (576,465)

Total Income (207,665) (113,663) (302,046) (22,863) (1,944) (3,344) (651,525)

Employee Expenses 147,337 12,472 193 20,515 10,356 3,979 194,852

Other Operating Expenses 86,644 116,107 298,579 63,734 13,462 21,971 600,497

Support Service Recharges 4,591 3,556 - 3,818 2,652 2,574 17,191

Total Operating Expenses 238,572 132,135 298,772 88,067 26,470 28,524 812,540

Net Cost of Services 30,907 18,472 (3,274) 65,204 24,526 25,180 161,015 Reconciliation of service Income and Expenditure to Cost of Services in the Comprehensive Income and Expenditure Statement This reconciliation shows how the figures in the analysis of the service income and expenditure relate to the amounts included in the Comprehensive Income and Expenditure Statement.


£000's £000's

Net Expenditure in the Service Analysis 184,189 161,015

Net Expenditure of services and support services not included in the analysis 9,511 49,094

Amounts included in the analysis not included in the comprehensive Income and Expenditure Statement (50,391) 343,086

Cost of Services in Comprehensive Income and Expenditure Statement 143,309 553,195

Reconciliation to Subjective Analysis This reconciliation shows how the figures in the analysis of the service income and expenditure relate to a subjective analysis of the Surplus or Deficit on the Provision of Services included in the Comprehensive Income and Expenditure Statement.

31st March 2011

Dir

ecto

rate

Ana

lysi

s

Serv

ices

and

Su

ppor

t Se

rvic

es

not

in a

naly

sis

Am

ount

s no

t in

clud

ed in

I&E

Cost

of

Serv

ices

Corp

orat

e A

mou

nt

Tota

l

£000's £000's £000's £000's £000's £000's

Fees, Charges, & Other Service Income (73,618) (35,702) 20,795 (88,525) - (88,525)

Interest and Investment Income (174) (46,256) 46,430 - (46,430) (46,430)

Income from Council Tax - (772) 772 - (78,713) (78,713)

Government Grants & Contributions (327,873) (63,066) 62,086 (328,853) (193,463) (522,316)

Gain on Disposal of Fixed Assets (1,233) (251) 1,484 - (1,484) (1,484)

Total Income (402,898) (146,047) 131,567 (417,378) (320,090) (737,468)

Employee Expenses 211,222 (45,073) - 166,149 - 166,149

Other Service Expenses 313,806 104,949 (105,967) 312,788 307 313,095

Support Service Recharges 15,682 13,994 - 29,676 - 29,676

Depreciation, amortisation and impairment 34,932 17,142 - 52,074 - 52,074

Interest Payments 11,445 62,934 (74,379) - 74,379 74,379

Payments to Housing Capital Receipts Pool - 1,612 (1,612) - 1,612 1,612

Total Expenditure 587,087 155,558 (181,958) 560,687 76,298 636,985

(Surplus) or deficit on the provision of services 184,189 9,511 (50,391) 143,309 (243,792) (100,483)

31st March 2012

Dir

ecto

rate

Ana

lysi

s

Serv

ices

and

Su

ppor

t Se

rvic

es

not

in a

naly

sis

Am

ount

s no

t in

clud

ed in

I&E

Cost

of

Serv

ices

Corp

orat

e A

mou

nt

Tota

l

£000's £000's £000's £000's £000's £000's

Fees, Charges, & Other Service Income (74,868) (23,200) 17,326 (80,742) - (80,742)

Interest and Investment Income (192) (46,814) 47,006 - (47,006) (47,006)

Income from Council Tax - - - - (79,042) (79,042)

Government Grants & Contributions (576,465) (72,422) 323,524 (325,363) (456,212) (781,575)

Total Income (651,525) (142,436) 387,856 (406,105) (582,260) (988,365)

Employee Expenses 194,852 41,844 - 236,696 - 236,696

Other Service Expenses 191,231 (35,139) 155,040 311,132 492 311,624

Support Service Recharges 17,191 15,767 - 32,958 - 32,958

Depreciation, amortisation and impairment 360,103 18,411 - 378,514 - 378,514

Interest Payments 50,661 83,668 (134,329) - 134,329 134,329

Payments to Housing Capital Receipts Pool - 2,037 (2,037) - 2,037 2,037

Loss on Disposal of Fixed Assets (1,498) 71,316 (69,818) - 69,818 69,818

Total Expenditure 812,540 197,904 (51,144) 959,300 206,676 1,165,976

(Surplus) or deficit on the provision of services 161,015 55,468 336,712 553,195 (375,584) 177,611

30. ACQUIRED AND DISCONTINUED OPERATIONS The Authority has nothing to report with regard to acquired and discontinued operations.

31. TRADING OPERATIONS The Authority operates trading accounts for services provided on the basis of a fixed price or schedule of rates. The charges for these services are to other parts of the Authority and included within the net cost of services for the Authority or to other organisations. Only the net deficit/-surplus on trading undertakings is shown in the Income and Expenditure Statement.

Catering Service

Turnover (5,810) (4,200)

Expenditure 6,209 4,665

(Surplus)/ Deficit 399 465

Catering Service - Social Care

Turnover (258) (195)

Expenditure 322 273


Cleaning Service

Turnover (6,530) (6,428)


(Surplus)/ Deficit (510) (429)

Fleet Management/ Vehicle Maintenance

Turnover (3,618) (2,620)


(Surplus)/ Deficit (21) 73

Transport Services

Turnover (3,607) (3,141)


(Surplus)/ Deficit (9) (26)

Other Services

Turnover (972) (742)



TOTAL 307 492

2010/11 2011/12

£000's £000's

Facilities Management Catering The Authority provides catering services to 62 primary schools & nurseries, 5 high schools, welfare catering in two social service units, a 'meals on wheels service and it manages 2 commercial units. The two commercial units cater for internal and corporate events and operate a lunch time restaurant for public use. Annual price increases for schools and external contracts are agreed with the individual clients based on inflation and level of service, these clients can elect to use RMBC or not for these services. The annual SLA price % increase for social service units and meals on wheels is agreed in line with estimated % rise in costs in providing the service for the new year. Facilities Management Cleaning The Authority provides cleaning services for 78 schools, 87 internal buildings and 19 external buildings. The annual SLA price % increase for internal cleaning is agreed in line with estimated % rise in costs in providing the service for the new year. Annual price increases for schools and external contracts are agreed with the individual clients based on inflation and level of service; these clients can elect to use RMBC or not for the cleaning service.

Fleet Management / Vehicle Maintenance The authority owns approximately 177 vehicles hired out to internal services. Hire rates are benchmarked against companies offering similar vehicles, with vehicles purchased through an agreed tendering process. Vehicles are also hired in from external hire companies on an ad hoc basis as requested by internal services. The trading objective is to break even, with any surpluses or deficits being returned to the client service at year end. The cost of the vehicle covers leasing or rentals, agreed maintenance, MOT, Licence, Insurance and an administrative overhead. The authority also runs a vehicle maintenance section, with its own stores, to service its fleet of vehicles. It also provides a facility for the licensing of taxis and brings in private work from members of the public and local firms. The section is bench marked against the private sector when ascertaining its hourly rate and the stores purchase contracts are all agreed by a tendering process with Corporate Procurement. The trading objective is to break even with the surplus or deficit being passed onto Fleet Management. Transport Service The authority runs a centralised Transport Services function to provide ambulances from its own in house fleet and orders taxis for clients requested by the following services: Children, Schools and Families Targeted support & Support for learning and Adult Care. Prices are reviewed on an annual basis in conjunction with Corporate Procurement and a tendering process takes place once every two years. The service has to take into account individual user's needs, such as wheel chair facilities and escorting. The trading objective is to break even with the surplus or deficit being returned to the client service. Other trading units These represent a number of internal trading units with the Authority e.g. print unit, grounds maintenance. Trading Operations are incorporated into the Comprehensive Income and Expenditure Statement. The Trading accounts are support services to the Authority’s services to the public (e.g. Schools Catering). The expenditure of these operations is allocated or recharged to the headings in the Net Operating Expenditure of Continuing Operations.

2010/11 2011/12

£000's £000's

Net surplus/Deficit on trading Operations (20,795) (17,326)

Support Services recharged to Expenditure of Continuing Operations 21,102 17,818

Net (surplus)/ Deficit included in Other Operating Expenditure 307 492

32. AGENCY SERVICES The Authority provides services as an agent for other public bodies and private entities. The arrangements that currently exist are as follows;- United Utilities

The Authority carries out work on an agency basis for United Utilities plc for which it is fully reimbursed. The Authority collects water rates from people who live in Council owned houses on behalf of United Utilities plc. This is an agency agreement with United Utilities plc and earned the Authority a commission of £0.715m in 2011/12 (£0.657m in 2010/11). Collection of NNDR

Rochdale MBC, as the billing authority, also acts as agent for the Government in collecting National Non-Domestic Rates (NNDR). The Government paid an allowance for the cost of this collection of £0.29m in 2011/12 (£0.286 in 2010/11). Provision of Library Services

The Authority provides prison library services to Buckley Hall Prison, the Authority received income of £24.8k in 2011/12 (£28k in 2010/11), and incurred expenditure of £24.8k in 2011/12 (£28.1k in 2010/11).

Provision of Coroner Services

The Authority has an agreement with Oldham, and Bury Council’s whereby Rochdale is the lead partner for the Coroner's service and recharges the cost of the service.

2010/11

£ 2011/12

£ Recharge to Bury Council 225,379 252,646 Recharge to Oldham Council 263,083 303,700 Cost of Service to Rochdale MBC 268,737 482,874 Total Cost of the Coroners Service 757,199 1,039,220

33. ROAD CHARGING SCHEMES The Authority does not operate any road charging schemes.

34. POOLED BUDGETS The Authority does not have any pooled budgets.

35. MEMBERS’ ALLOWANCES The Authority makes payments to elected members in the form of allowances. Each member receives a basic allowance in addition to allowances for attendance at quasi-judicial meetings and special allowances for additional work and responsibilities.


£000's £000's

Allowances 462 460

Expenses 212 206

Total 674 666

36. OFFICERS REMUNERATION A - Officers’ Remuneration above £50,000 This note discloses information on the number of Authority employees who have received more than £50,000 in remuneration during the year. This amount excludes any payments made by the Authority in relation to employee pensions.

Remuneration Band

£50,000-£54,999 37 31 68 9 38 21 59 4

£55,000-£59,999 12 13 25 4 11 16 27 3

£60,000-£64,999 19 7 26 4 17 6 23 5

£65,000-£69,999 11 5 16 3 12 5 17 1

£70,000-£74,999 2 6 8 2 1 5 6 1

£75,000-£79,999 1 7 8 3 1 4 5 -

£80,000-£84,999 4 1 5 3 2 1 3 -

£85,000-£89,999 - 1 1 2 1 - 1 -

£90,000-£94,999 1 - 1 - 1 1 2 1

£95,000-£99,999 - 2 2 - - - - -

£100,000-£104,999 - - - - - 2 2 -

£105,000-£109,999 1 1 2 1 - 1 1 1

£110,000-£114,999 - - - - - 1 1 -

£115,000-£119,999 - 1 1 - - - - -

£120,000-£124,999 - 3 3 - 1 3 4 1

£125,000-£129,999 - - - 1 - - - -

£130,000-£134,999 - - - - - - - -

£135,000-£139,999 - - - - - - - -

£140,000-£144,999 - - - - - 1 1 1

£145,000-£149,999 - - - - - - - -

£150,000 + - 1 1 - - - - -

Total 88 79 167 32 85 67 152 18

Total

Number of Employees

TeachersRMBC Other Total

Left in year

Left in year

31st March 201231st March 2011

TeachersRMBC Other

B - Senior Officers’ Remuneration This note discloses the remuneration of defined Senior and Statutory Officers’ whose annualised salary is equal to or more than £50,000. ‘Expenses’ disclosures include car and miscellaneous expenses. The Senior Officers included in the tables below are also included in the previous table (excluding pension contributions).

31st March 2011 Senior Employee's Remuneration - annualised Salaries between £50,000 and £150,000

Post Title Note Salary Expenses Total Pension Total

Remuneration Contributions Remuneration

Excluding Including

Pension Pension

Contributions Contributions

£000's £000's £000's £000's £000's

Chief Executive - Roger Ellis 149 3 152 23 175

Executive Director A 121 1 122 19 141

Executive Director B 121 1 122 19 141

Executive Director C 98 - 98 15 113

Service Director Finance and Procurement D 85 1 86 13 99

Executive Director E 120 - 120 19 139

Executive Director F 77 1 78 12 90

Senior Director Legal Services G 76 - 76 12 88

Totals 847 7 854 132 986

31st March 2012 Senior Employee's Remuneration - annualised Salaries between £50,000 and £150,000

Post Title Note Salary Expenses Total Pension Total

Remuneration Contributions Remuneration

Excluding Including

Pension Pension

Contributions Contributions

£000's £000's £000's £000's £000's

Chief Executive - Roger Ellis 142 2 144 23 167

Executive Director A 121 1 122 19 141

Executive Director B 121 1 122 19 141

Executive Director C 103 - 103 17 120

Service Director Finance and Procurement D 51 - 51 8 59

Service Director Finance and Procurement D* 35 - 35 5 40

Executive Director E 120 - 120 19 139

Executive Director F 108 2 110 17 127

Senior Director Legal Services G 80 - 80 13 93

Totals 881 6 887 140 1,027 Note A. - This Executive Director is responsible for Operational Services, Planning and Regulation, and Partnership Organisations.

Note B. - This Executive Director is responsible for Make or Buy.

Note C. - This Executive Director is responsible for Corporate Services, Finance and Procurement and Customer and Communities Services.

Note D. - The Service Director, Finance and Procurement is responsible for Financial Management, and is the Authority’s designated section 151 Officer was employed in this capacity from 1/4/2011 to 5/11/2011.

Note D*. - The Service Director, Finance and Procurement is responsible for Financial Management, and is the Authority’s designated section 151 Officer was employed in this capacity from 5/11/2011 to 31/3/2012.

Note E. - The Executive Director for Children’s Schools and Families.

Note F. - The Executive Director for Adult Services.

Note G. – The Service Director for Corporate Services is the designated Monitoring Officer for the authority.

C - EXIT PACKAGES The number of exit packages with the total cost per band and the total cost of the compulsory and other redundancies are set out in the table below:

2010/11 2011/12 2010/11 2011/12 2010/11 2011/12£000's £000's £000's £000's £000's £000's

£0 - £20,000 182 122 127 158 309 280 1,792 1,636 375 353 2,168 1,989 £20,001 - £40,000 9 17 70 45 79 62 1,052 919 1,241 691 2,293 1,610 £40,001 - £60,000 4 2 23 20 27 22 514 423 761 657 1,275 1,080 £60,001 - £80,000 1 0 14 4 15 4 329 105 706 184 1,035 289 £80,001 - £100,000 0 0 3 4 3 4 51 131 210 236 261 366 £100,001 - £200,000 0 0 7 3 7 3 228 99 706 260 934 359 Total 196 141 244 234 440 375 3,966 3,313 3,999 2,381 7,966 5,693

Total cost of exit packages in each bandPaid to

employeesPension Strain

Total Cost

Exit package cost band (including special payments)

2011/122010/112011/122010/112011/12

Number of compulsory

redundancies

Number of other departures

agreed

Total number of exit packages by

cost band

2010/11

37. EXTERNAL AUDIT COSTS The Authority has incurred the following costs in relation to the audit of the Statement of Accounts, certification of grant claims and statutory inspections and to non-audit services provided by the Authority’s external auditors:

31st March 2011 Fees payable to the Audit Commission with regard to: 31st March 2012£000's £000's

335 Fees payable with regard to external audit services carried out by the appointed auditor for the year.

301

- Fees payable in respect of statutory inspections -

76 Certification of Grant claims and returns 68

39 Other Service provided by the appointed auditor -

450 Total Cost 369

38. DEDICATED SCHOOLS GRANT The Authority’s expenditure on schools is funded primarily by grant monies provided by the Department for Education, the Dedicated Schools Grant (DSG). DSG is ring fenced and can only be applied to meet expenditure properly included in the Schools Budget, as defined in the School Finance (England) Regulations 2008. The Schools Budget includes elements for a range of educational services provided on an authority-wide basis and for the Individual Schools Budget, which is divided into a budget share for each maintained school. Details of the deployment of DSG receivable for 2011/12 are as follows: Dedicated School Grant 31st March 2012 Central Individual

Expenditure Schools budget

£000's £000's £000's

Final DSG for 2011/12 14,091 157,805 171,896

Plus brought forward from 2010/11 2,416 - 2,416

Less carry forward to 2012/13 agreed in advance - - -

Agreed budgeted distribution in 2011/12 16,507 157,805 174,312

Actual ISB deployed to schools - (157,805) (157,805)

Actual central expenditure (12,851) - (12,851)

Carry forward to 2012/13 3,656 - 3,656

Total

39. GRANT INCOME The Authority credited the following grants, contributions and donations to the Comprehensive Income and Expenditure Statement in 2011/12: Credited to Taxation and Non Specific Grant Income 31st March 2011 31st March 2012

£000's £000's

Revenue:

Formula Grant 109,686 115,546

Area Based Grant 31,907 -

Early Intervention Grant - 13,013

Other Grants 2,996 4,129

subtotal revenue 144,589 132,688

Capital:

Housing Capital Grant (HRA) - 253,872

Housing Capital Grant (non HRA) - 27,470

Partnership for Schools 26,444 33,453

Department for Transport 4,789 4,564

Communities and Local Government - 1,774

Department of Health 1,050 919

Housing Market Renewal Fund 9,424 -

Regional Housing Pot 2,875 -

Surestart 489 -

Other grants 2,908 817

Other contributions 895 655

Subtotal capital 48,874 323,524

Total 193,463 456,212 Credited to Services within cost of services continuing operations 31st March 2011 31st March 2012

£000's £000's

Dedicated Schools Grant (DSG) 143,408 171,896

Housing Benefit Subsidy 74,973 80,661

Council Tax Benefit Subsidy 21,092 21,476

Building Schools for the Future (BSF) 6,156 12,174

Department of Health - Learning Disabilities - 7,953

Private Finance Initiative Credits 4,887 7,924

Housing Subsidy (HRA) 8,062 4,038

Housing Benefit Subsidy Administration Grant 2,260 2,099

Sixth Form (16-19) Grant 2,968 1,915

Schools Primary Capital Programme 2,016 1,626

Standards Fund 29,381 897

General Sure Start Grant 10,803 -

Social Care Reform Grant 1,092 -

Adult Education 178 -

Other Grants 11,227 7,626

Primary Care Trust contribution - Learning Disabilities 7,777 -

Primary Care Trust contribution - Reablement - 2,982

Other Contributions 2,573 2,096

Total 328,853 325,363

The Authority has received a number of grants that have yet to be recognised as income as they have conditions attached to them that will require the monies to be returned to the giver. The balances at the year-end are as follows: Current Liabilities:


£000's £000's

Revenue Grants Receipts in Advance

Housing Benefit Subsidy 1,824 -

Other grants 966 566

Other contributions 530 -

Total 3,320 566


£000's £000's

Capital Grants Receipts in Advance

Standards Fund Capital Grant 9,303 16,540

Homes and Communities Agency Grant 1,000 408


Other contributions - -

Total 10,814 17,492 Long-term Liabilities:


£000's £000's

Revenue Grants Receipts in Advance


Other contributions - -

Total 600 648


£000's £000's

Capital Grants Receipts in Advance

Standards Fund Capital Grant 4,603 407

Other grants 1,117 1,072

Other contributions 55 51

Total 5,775 1,530

40. RELATED PARTIES The Authority is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Authority or to be controlled or influenced by the Authority. Disclosure of these transactions allows readers to assess the extent to which the Authority 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 Authority. In this context related parties include;-

• Central Government • Key Management Personnel including Elected Members and Senior Managers at RMBC • Close Family Member of Family of Key Management Personnel • Other Public Bodies • Entities Controlled or significantly influenced by the Authority.

Central Government Central government has effective control over the general operations of the Authority – it is responsible for providing the statutory framework, within which the Authority operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Authority has with other parties (e.g. council tax bills, housing benefits). Grants received from government departments are set out in Note 29 and 39. Other Public Bodies (subject to common control by Central Government) The Authority pays levies towards the services provided by GMWDA (Greater Manchester Waste Disposal Authority) and the GMCA (Greater Manchester Combined Authority) previously know as GMITA (Greater Manchester Integrated Transport Authority). The amounts paid are as follows:

• GMWDA – £9.9m • GMCA - £4.9m

Members Members of the council have direct control over the Authority’s financial and operating policies. The total of members’ allowances paid in 2011/12 is shown in Note 35. During 2011/12, works and services to the value of £9k were commissioned from companies in which Elected Members had an interest. Contracts were entered into in full compliance with the Authority’s standing orders. In addition, RMBC paid grants totalling £256k to voluntary organisations in which members had positions on the governing body. All Members’ interests, both pecuniary and non-financial, that could conflict with those of the Council are open to public inspection. Officers During 2011/12, Executive Directors/Service Directors are required on an annual basis to make a declaration of any related parties. In addition, there is a code of conduct under which such officers must disclose any pecuniary and non-financial interests. No material related party interests were declared for 2011/12. Entities Controlled or Significantly Influenced by the Authority 1. Rochdale Boroughwide Housing Limited (Group) Responsibility for the management and maintenance of the Authority’s HRA property passed to Rochdale Boroughwide Housing Limited (RBH) in an Arms Length Management Organisation (ALMO) whose principal activity during 2011/12 was the management and maintenance of the Authority’s HRA property, for which a management fee was paid. The RBH Group consist of Rochdale Boroughwide Housing (RBH), Brighter Horizons and Safeguard Security Solutions Limited, total payments including management fee to the RBH Group during 2011/12 amounted to £36.1m and payments for goods and services received from RBH amounted to £3.4m. Amounts owed by RBH to the Authority totalled £91.3k at 31st March 2012; this was offset by amounts totalling £22.1k which the Authority owed at this date. RBH is a company limited by guarantee and does not have any share capital. Rochdale Council is the only member of the Company and its articles of association state that no other person than the Council Member shall be admitted as a member. RBH forms part of Rochdale MBC’s group accounts. At the 26th March 2012 there was a large scale voluntary transfer of housing stock from the Authority to RBH Ltd. As part of this process RBH became a registered provider of Social Housing and ceased to be a related party of the Authority, therefore in future year’s they will not appear in this note. See Note 54 for further information. 2. The Impact Partnership (Rochdale Borough) Ltd This is a company set up and commissioned to deliver Property, Highways Payroll and IT services for Rochdale MBC. The Authority has a 19.9% interest in the Company but no legal obligation to meet the losses of the Company, although its financial position may be taken into account as part of the annual management fee negotiations. Payment is made by way of a contract fee governed by a Management agreement. The contract is in the process of significant change from 2012/13. Payments for goods and services, including the management fee, were made in 2011/12 of £16.3m. Charges were made to Impact of £10.5m during 2011/12 for goods and services provided in 2011/12. Amounts owed by Impact to the Authority totalled £6.7m at 31st March 2012; this was offset by amounts totalling £4.5m which the Authority owed at this date.

3. Link 4 Life Trading and Link 4 Life Charitable Trust Link 4 Life are commissioned on behalf of Rochdale MBC to deliver Leisure and Cultural activities. Payment is made by way of a contract fee governed by a Management agreement. The Authority has no legal obligation to meet the losses of Link 4 Life, although its financial position may be taken into account as part of the annual management fee negotiations. Trusts are deemed to be influenced significantly by the Authority through its representation on the Trust board. Total payment to Link 4 Life for goods and services in 2011/12 £4.6m and payments to RBMC for goods and services was £0.2m. Amounts owed by Link 4 Life to the Authority totalled £803.1k at 31st March 2012; this was offset by amounts totalling £45.1k which the Authority owed at this date.

41. CAPITAL EXPENDITURE AND CAPITAL FINANCING The total amount of capital expenditure incurred in the year is shown in the table below (including the value of assets acquired under finance leases and PFI/PP contracts), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Authority, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Authority that has yet to be financed. The movement in the CFR is analysed in the second part of this note.

Restated 31st March 2011 31st March 2012

£000's £000's

Opening Capital Financing Requirement 444,779 455,917

Capital investment

Property, Plant and Equipment (and 'Held for Sale') 67,677 108,476

Heritage Assets - 2

Investment Properties 1 5

Intangible Assets 3,220 2,026

Revenue Expenditure Funded from Capital under Statute 19,458 24,292

90,356 134,801

Sources of finance

Capital receipts (502) (2,536)

Capital Receipts used to repay HRA debt (4,527)

Government grants and other contributions (54,491) (53,962)

Gain recognised on Cancellation of PWLB debt (215,277)

Major Repairs Reserve (7,189) (8,715)

Sums set aside from revenue: -

Direct revenue contributions (3,633) (183)

[MRP/loans fund principal] (13,403) (13,411)

Closing Capital Financing Requirement 455,917 292,107

Explanation of movements in year

Increase in underlying need to borrowing (supported bygovernment financial assistance) - -

Increase in underlying need to borrowing (unsupported bygovernment financial assistance) 11,138 29,624

Assets acquired under finance leases - -

Gain recognised on cancellation of PWLB debt (215,277)

Assets acquired under PFI/PPP contracts - 21,843

Increase/(decrease) in Capital Financing Requirement 11,138 (163,810) The opening balance for 31st March 2011 has been updated to reflect the opening balance on the CFR for 2010/11.

42. LEASES The Authority as Lessee Finance Leases The assets acquired under Finance Leases are carried as Property, Plant and Equipment in the Balance Sheet at the following net amounts:


£000's £000's

Investment and Commercial Property 984 787

Vehicles, Plant, Furniture and Equipment 55 34

1,039 821 The Authority is committed to making minimum payments under these leases comprising settlement of the long-term liability for the interest in the property, plant and equipment acquired by the Authority and finance costs that will be payable by the Authority in future years while the liability remains outstanding. The minimum lease payments are made up of the following amounts:


£000's £000's

Finance lease liabilities (net present value of minimum lease payments):

� current 40 18

� non-current 22 7

Finance costs payable in future years 2 1

Minimum lease payments 64 26 The minimum lease payments will be payable over the following periods:

31st March 2011 31st March 2012 31st March 2011 31st March 2012

£000's £000's £000's £000's

Not later than 1 year 41 19 40 18

Between 1 and 5 years 23 7 22 7

Later than 5 years - - - -

Total 64 26 62 25

Minimum Lease Payment Finance Lease Liabilities

Operating Leases During 2011/12 the Authority continued to lease land and buildings by means of operating lease. The future minimum lease payments due under non-cancellable leases in future years are:


£000's £000's

Not later than one year 782 764

Later than one year and not later that five years 2,148 1,625

Later than five years 3,668 3,427

6,598 5,816 The amounts for 31st March 2011 have been reviewed and updated to reflect the future minimum lease payments due under non-cancellable leases in future years.

The Authority as Lessor Finance Leases The Authority does not act as Lessor in any Finance Lease arrangements. Operating Leases The Authority leases out land and property under operating leases for the following purposes:

o For economic development purposes to provide suitable affordable accommodation for local businesses. o For community services such as rent of allotments and gardens. The future minimum lease payments receivable under non-cancellable leases in future years are:


£000's £000's

Not later than one year 732 376

Later than one year and not later than five years 1,510 1,369

Later than five years 28,518 28,163

30,760 29,908 The amounts for 31st March 2011 have been reviewed and updated to reflect the future minimum lease payments due under non-cancellable leases in future years.

43. PFI AND SIMILAR CONTRACTS The Authority has entered into several Private Finance Initiative Contracts in which large scale infrastructure projects are developed in conjunction with the private sector, using public sector funding in order to deliver services to a specification defined by the Authority. The Authority retains rights under the contracts to specify minimum standards with deductions from the fees payable if agreed facilities are not available or operate below minimum standards. The contractor usually takes on responsibility to initially fund the construction or improvement of the assets and maintain them to an acceptable standard throughout the contract. The assets usually transfer back to the Authority at the end of the contract for nil consideration. The Authority pays the contractor a Unitary Charge (indexed to RPIX) which covers the following elements:

• Fair Value of the Services Received during the year – debited to the relevant service in the Comprehensive Income and Expenditure Statement

• Contingent Rents – Increases in the amount to be paid for the property arising during the contract, debited to the Comprehensive Income and Expenditure Statement

• Finance costs – an interest charge on the outstanding Balance Sheet liability, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement

• Payment towards Liability – applied to write down the Balance Sheet liability towards the PFI operator (the profile of write-downs is calculated using the same principles as for a finance lease)

• Lifecycle Replacement Costs – proportion of the amounts payable is posted to the Balance Sheet as a prepayment and then recognised as additions to Property, Plant and Equipment when the relevant works are eventually carried out.

Rochdale Schools 2011/12 was the sixth year of operation of the contract with Axiom Ltd to provide and maintain seven schools on four sites within the borough.

Heywood Joint Service Centre The Heywood Joint Service Centre has been built for the Authority and the NHS PCT to deliver administrative services from 2009/10. The building was constructed by and will be maintained by the BRAHM Lift Company.

Street Lighting 2011/12 was the first year of a 25 year contract, commissioned jointly with Oldham MBC, for the replacement of approximately 25,000 street lights in Rochdale over the first five year period and the ongoing maintenance of the lights over the life of the contract.

Hollingworth High School 2011/12 was the first year of a 25 year contract with Carillion plc to refurbish / rebuild and subsequently maintain Hollingworth High School. The school is currently (at Balance Sheet date) a Foundation School, so in line with other schools of this nature the value of the assets is not held on the Authority’s Balance Sheet. However, because the contract is held with the Authority, the Finance Lease Liability is shown on our Balance Sheet.

Note 43a Payments Due Under PFI Contracts The following table shows payments due to be made under PFI Contracts. Contingent Rent has been included under Service Charges.

Payments Due Under PFI Contracts SchoolsHeywood Joint Service Centre

Street Lighting

Hollingworth High School Total

£000's £000's £000's £000's £000's

Within 1 Year - 2012/13

Service Charges 3,842 114 1,160 1,166 6,282

Lifecycle Costs 472 39 - 204 715

Repayment of Liability 849 35 813 179 1,876

Interest Charges 2,461 67 696 2,054 5,278

Total 7,624 255 2,669 3,603 14,151

Within 2 to 5 Years - 2013/14 - 2016/17

Service Charges 16,528 521 5,477 4,902 27,428

Lifecycle Costs 1,888 158 - 817 2,863

Repayment of Liability 4,025 152 2,206 1,019 7,402

Interest Charges 9,218 253 7,313 8,019 24,803

Total 31,659 1,084 14,996 14,757 62,496

Within 6 to 10 Years - 2017/18 - 2021/22

Service Charges 23,350 811 7,376 6,742 38,279

Lifecycle Costs 2,360 197 1,012 1,021 4,590



Total 42,263 1,514 21,631 19,282 84,690

Within 11 to 15 Years - 2022/23 - 2026/27

Service Charges 26,704 1,009 7,426 7,767 42,906

Lifecycle Costs 2,360 197 4,619 1,021 8,197



Total 45,617 1,712 22,734 20,326 90,389

Within 16 to 20 Years - 2027/28 - 2031/32

Service Charges 29,929 1,234 8,408 9,012 48,583

Lifecycle Costs 2,361 197 4,395 1,021 7,974



Total 48,843 1,937 23,894 21,506 96,180

Within 21 to 25 Years - 2032/33 - 2036/37

Service Charges 2,025 674 9,427 9,055 21,181

Lifecycle Costs 472 93 - 902 1,467


Interest Charges 89 64 2,447 2,221 4,821

Total 3,876 1,007 21,306 20,113 46,302

TOTAL

Service Charges 102,378 4,363 39,274 38,644 184,659

Lifecycle Costs 9,913 881 10,026 4,986 25,806

Repayment of Liability 35,705 1,179 24,351 20,739 81,974

Interest Charges 31,886 1,086 33,579 35,218 101,769

Grand Total 179,882 7,509 107,230 99,587 394,208

Note 43b Liabilities under PFI Contracts The table below shows movements in the Finance Lease Liability (to fund the contractors for capital expenditure incurred on the projects) for our PFI Contracts.

Liabilities Under PFI Contracts SchoolsHeywood Joint Service Centre

Street Lighting


£000's £000's £000's £000's £000's

Liability at 31st March 2010 37,243 1,847 - - 39,090Additions in 2010/11 - - - - - Repayments in 2010/12 (743) (32) - - (775)

Liability at 31st March 2011 36,500 1,815 - - 38,315

Additions in 2011/12 - - 1,339 20,505 21,844Repayments 2011/12 (795) (33) (306) (71) (1,205)

Liability at 31st March 2012 35,705 1,782 1,033 20,434 58,954 Note 43c Assets Held under PFI Schemes The table below summarises the assets held under our PFI schemes.

PFI Value of Assets Held SchoolsHeywood Joint Service Centre

Street Lighting


£000's £000's £000's £000's £000's

Carrying Value at 31/3/2010 57,121 1,867 - - 58,988

Additions and Revaluations - - - - -

De-recognition - Disposals - - - - -

Depreciation (1,538) (47) - - (1,585)

Impairments - - - - -



Additions and Revaluations 1,303 - 1,339 20,505 23,147

De-recognition - Disposals - - - (20,505) (20,505)

Depreciation (1,539) (47) - - (1,586)

Impairments (31) - - - (31)

Carrying Value at 31/3/12 55,316 1,773 1,339 - 58,428

New PFI Contracts The Authority is currently negotiating with Carillion plc for the remodelling of Falinge Park and Wardle High Schools with a view to reaching financial close by July 2012.

44. IMPAIRMENT LOSSES During 2011/12, the Authority recognised a material impairment loss of £1.79m in relation to land at John St and Baillie St (former Pentagon car showroom). After the site was acquired the garage was demolished. The recoverable amount of the land has been reduced to its fair value and the impairment loss charged to the Non Distributed Costs line in the Comprehensive Income and Expenditure Statement.

45. CAPITALISATION OF BORROWING COSTS The Authority has not capitalised any borrowing costs in respect of capital projects.

46. TERMINATION BENEFITS The Authority terminated the contracts of a number of employees in 2011/12, incurring liabilities of £5.69m (£7.97m in 2010/11). This consisted of £3.31m to employees (£3.97m in 10/11) and £2.38m in pension strain (£4.00m 10/11) as detailed in note 36C. The amount payable to employees was payable to those across the council who were made redundant as part of the Authority’s requirements to make significant savings. 47. PENSION SCHEMES ACCOUNTED FOR AS DEFINED CONTRIBUTION SCHEMES Teachers employed by the Authority are members of the Teachers Pension Scheme, administered by the Department for Education. This scheme provides teachers with specified benefits on their retirement and the Authority contributes towards the costs by making contributions based on a percentage of members’ pensionable salaries. The scheme is technically a defined benefit scheme. However, the scheme is unfunded and the Department for Education uses a notional fund as a basis for calculating the employers’ contribution rate paid by local authorities. The Authority is not able to identify its share of underlying financial position and performance of the scheme with sufficient reliability for accounting purposes. For the purposes of this statement of Accounts, it is therefore accounted for on the same basis as a defined contribution scheme. In 2011/12, the Authority paid £13.7m to teachers’ pensions in respect of teachers’ retirement benefits, representing 20.50% of pensionable pay. The figures for 2010/11 were £14.0m and 20.50%. In addition, the Authority is responsible for added years awarded to employees and the related annual increases. In 2011/12 these amounted to £0.001m representing 0.002% of pensionable pay. The figures for 2010/11 were £0.029m and 0.04%. The Authority is responsible for any additional benefits awarded upon early retirement outside of the terms of the teachers’ scheme. These costs are accounted for on a defined benefit basis and detailed in note 48.

48. DEFINED BENEFIT PENSION SCHEMES As part of the terms and conditions of employment of its officers the Authority makes contributions towards the cost of post employment benefits. Although these benefits will not actually be payable until employees retire, the Authority has a commitment to make the payments and this needs to be disclosed at the time that employees earn their future entitlement. All employees (except teachers) are unless they have opted out, members of The Greater Manchester Pension Fund which is administered by Tameside MBC and operates in accordance with the rules of the Local Government Pension Scheme. This is a funded defined benefit final salary scheme, meaning that the Authority and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets. The cost of retirement benefits are recognised 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 Authority is required to make against council tax is based on the cash payable in the year, so the real cost of post-employment/retirement benefits 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:

A - Retirement Benefits

Retirement Benefits 31st March 2011 31st March 2012£000's £000's

Comprehensive Income and Expenditure Statement

Cost of services

Current Service Cost 21,300 16,000

Past Service Costs (84,800) 300

Settlements and curtailments 3,400 11,300

Financing and Investment Income and Expenditure

Interest cost 48,000 40,300

Expected return on scheme assets (40,000) (39,500)

Total Post Employment Benefit Charged to the Surplus or Deficit on the Provision of Services

(52,100) 28,400

Other Post Employment Benefit Charged to the Comprehensive Income and Expenditure Statement

Actuarial gains and (losses) 151,600 (89,200)

Total Post Employment Benefit Charged to the Comprehensive Income and Expenditure Statement

99,500 (60,800)

Movement in Reserves Statement

Reversal of net charges made to the Surplus or Deficit for the Provision of Services for post employment benefits in accordance with the code

52,100 (28,400)

Local Government Pension Scheme

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

Employers' contributions payable to scheme 22,000 19,800 The cumulative amount of actuarial gains and losses recognised in the Comprehensive Income and Expenditure Statement to the 31st March 2012 is a loss of £89.2m (gain of £151.6m in 10/11). B - Assets and Liabilities in Relation to Retirement Benefits

The expected return on scheme assets is based on the long-term future expected investment return for each asset class as at the beginning of the period (i.e. as at 31st March 2012). The actual return on scheme assets in the year was £8.8m (£39m in 10/11).

Funded benefits

Unfunded benefits

31st March 2011 Scheme Liabilities

Funded benefits

Unfunded benefits

31st March 2012

£000's £000's £000's £000's £000's £000's(911,400) (25,200) (936,600) Balance at 1st of April (709,800) (22,500) (732,300)

(21,300) - (21,300) Current service cost (16,000) - (16,000)

(46,700) (1,300) (48,000) Interest cost (39,100) (1,200) (40,300)

(6,900) - (6,900) Contributions by scheme participants (6,200) - (6,200)

171,800 1,000 172,800 Actuarial gains/ (losses) (57,500) (900) (58,400)

23,500 - 23,500 Benefits paid 25,500 - 25,500

- 2,800 2,800 Unfunded Benefits Paid - 2,900 2,900

83,400 1,400 84,800 Past service costs (300) - (300)

(3,400) - (3,400) (Losses)/ gains on curtailments (5,400) - (5,400)

(711,000) (21,300) (732,300) Balance as at 31st of March (808,800) (21,700) (830,500)

Funded benefits

Unfunded benefits

31st March 2011 Scheme Assets

Funded benefits

Unfunded benefits

31st March 2012

£000's £000's £000's £000's £000's £000's

579,300 - 579,300 Balance at 1st of April 600,700 - 600,700

40,000 - 40,000 Expected rate of return 39,500 - 39,500

(21,200) - (21,200) Actuarial gains/ (losses) (30,800) - (30,800)

19,200 1,600 20,800 Employer contributions 16,900 1,700 18,600

- Assets Distributed on Settlements (5,900) (5,900)

- 1,200 1,200 Contributions in respect of unfunded - 1,200 1,200

6,900 - 6,900 Contributions by scheme participants 6,200 - 6,200

(23,500) - (23,500) Benefits paid (25,500) - (25,500)

- (2,800) (2,800) Unfunded Benefits Paid - (2,900) (2,900)

600,700 - 600,700 Balance as at 31st of March 601,100 - 601,100

C – Scheme History

2007/08 2008/09 2009/10 2010/11 2011/12

£m £m £m £m £m

Present value of liabilities -571.4 -561.3 -936.6 -732.3 -830.5

Fair value of assets 509.0 423.8 579.3 600.7 601.1

Surplus / (deficit) in Scheme -62.4 -137.5 -357.3 -131.6 -229.4

Actuarial Gains and losses

The liabilities show the underlying commitments that the Authority has in the long run to pay in post employment retirement benefits. The total liability is £39.4m. Statutory arrangements are in place for funding the deficit. The deficit on the local government scheme will be made good by increased contribution over the remaining working life of employees as assessed by the actuary. The total contributions expected to be made to the Greater Manchester Pension Fund by the Authority in the year to 31st March 2013 is £15.5m. D - Basis for Estimating Assets and Liabilities Liabilities in respect of the Greater Manchester Pension Fund have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels etc. The Local Government scheme has been assessed by Hymans Robertson, an independent firm of actuaries, estimates for the Local Government Pension Scheme being based on the latest full valuation of the scheme as at 31st March 2012.

The principal assumptions used in the valuation calculations have been:

31st March 2011 Assumptions used by the actuary 31st March 2012Long-term expected rate of return on assets in the scheme:

7.5% Equity investments 6.3%

4.9% Bonds 3.9%

5.5% Property 4.4%

4.6% Cash 3.5%

Mortality assumptions:Longevity at 65 for current pensioners:

20.1 Men 20.1

22.9 Women 22.9

Longevity at 65 for future pensioners:

22.5 Men 22.5

25.0 Women 25.0

Inflation

2.8% Rate of inflation 2.5%

4.3% Rate of increase in salaries 4.3%

2.8% Rate of increase in pensions 2.5%

5.5% Rate for discounting scheme liabilities 4.8%

50.0%Take-up of option to convert annual pension into retirement lump sum 50.0%

The rate of increase in salaries is assumed to be 1% until 31st March 2015 reverting to 4.3% in the long term. Assets in the Greater Manchester Pension Fund are valued at fair value, principally market value for investments and consist of the following categories by proportion of the total assets held by the fund.

31st March 2011 Asset class 31st March 2012% %

66.00 Equity investments 70.00

17.00 Bonds 18.00

5.00 Property 5.00

12.00 Cash 7.00

100.00 Total 100.00

The Authority is responsible for the costs of any additional benefits awarded upon early retirement outside of the terms of the Teachers scheme. This liability has been estimated by Hymans Robertson as £22.9m at 31st March 2012. This amount has been included in the Pension Liability and Pension Reserve shown in the Balance Sheet. E - Actuarial Gains and Losses The actuarial losses identified as movements on the pensions reserve in 2011/12, can be analysed into the following categories, as a percentage of assets or liabilities at 31st March 2012.

2007/08 2008/09 2009/10 2010/11 2011/12% % % % %

Differences between expected and actual returns on assets (13.8) (28.5) 21.7 (3.5) (6.1)

Experience gains and losses on liabilities (0.4) (0.1) 0.0 11.3 (1.2)

History of experience gains and losses

49. CONTINGENT LIABILITIES The Authority has identified the following contingent liabilities as at 31st March 2012, a contingent liability is a potential liability which depends on an uncertain future event occurring:- Modesole Ltd As a result of the Authority receiving a distribution of proceeds from the sale of its entire shareholding in Modesole Ltd, a liability may arise the extent of which cannot yet be determined. An indemnity was given to the buyer against any future liabilities arising in Modesole which relate to prior to the date of the sale. This indemnity is limited to the value of the sale proceeds received and will last for a period of 10 years from the date of sale (9th August 2006). Pension Liabilities o Rochdale Boroughwide Housing Ltd The Authority has agreed to meet Rochdale Boroughwide Housing Ltd’s (RBH) liabilities to the Greater Manchester Pension Scheme in the unlikely event that RBH could not meet these themselves. The potential liability only relates to staff that transferred from RBH to the new organisation at 26th March 2012. The Authority has also agreed to meet the liabilities of the following organisations to the Greater Manchester Pension Scheme in the unlikely event that they could not meet them themselves: Other Organisations o Capita IT Services (BSF) Limited. o Cloverhall Tenants Association Co-op Ltd. o Council for Voluntary Service Rochdale. o Metro Rochdale Employees Credit Union. o People Print Community Media Workshop. o Rochdale Groundwork Trust. o Rochdale Law Centre. o Rochdale Citizens Advice Bureau. o Rochdale Development Agency. o Sparth Community Centre. o Wardleworth Community Centre. o Greater Manchester Sports Partnership. o Rochdale Boroughwide Cultural Trust. o Alternative Futures Group LTD. o Better Choices LTD (Rochdale). o Balfour Beatty Workplace Ltd. o Carewest Northern Limited o Grosvenor Facilities Management Limited o Macintyre Care. As at 31st March 2012 no guarantees had been exercised.

Grant Claims The Authority submits grant claims for substantial amounts each year. From time to time interpretation of legislation may be a matter of professional and technical judgement. In this context it may lead to possible grant qualifications by the external auditors. It is not possible to produce a reliable forecast for the cost of any grant qualifications. Manchester Airport Plc In 2009/10 various loans used to finance capital expenditure that the Airport had agreed to reimburse the Authority for were restructured. As a consequence the loans to the airport that were previously secured became unsecured but as a consequence a higher coupon rate is receivable. The loan agreement expires in 2055. No provision has been made in the balance sheet for any potential losses arising from this agreement. Metrolink The Association of Greater Manchester Authorities (AGMA), the Greater Manchester Combined Authority (GMCA) and the Department for Transport (DFT) have entered into a partnership fund arrangement for construction of Metrolink Phase 3a. Within the agreement the DFT contribution is capped at £244m in cash and the GMCA and AGMA authorities are jointly responsible for meeting all costs over and above the agreed amount on the understanding that the scheme is fully delivered. The scheme is fully funded at present and the above arrangement will only be operative if the amount is exceeded. Stringent monitoring is in place to minimise the risk of this occurring. Stock Transfer Warranties The Authority has agreed to a number of warranties under the Transfer Agreement, the key warranties for the Authority are: A – Asbestos Indemnity The Authority covenants to indemnify RBH in relation to asbestos liabilities: • Any claims against RBH for exposure to asbestos on the property (except due to RBH’s negligence) • For 30 years costs of treatment, removal, etc of asbestos in dwelling or other property above £6,908,500 + VAT B - Contracts affecting the property For 6 years after the completion date the Authority will indemnify RBH against all claims in connection with breaches of any contract entered into by RBH, or the Authority on behalf of RBH before the completion date, provided that the first £250k in aggregate is met by RBH. C - VAT Shelter Indemnity The Authority covenants to pay RBH the shortfall if the amount of VAT saving retained by RBH is less than £10m with the following provisions:- • It excludes any shortfall arising from breach by RBH of its obligations under the development agreement • It includes any shortfall arising form change in law, change in practice by Customs, or challenge from Customs

of amounts received or retained by RBH. D - Third Party Liabilities The Authority has indemnified RBH for 6 years against 3rd party liabilities relating to matters arising prior to the completion date that cannot be recovered through RBH's insurance policy. The first £250k in aggregate 3rd party liabilities that can not be recovered from RBH's insurance policy will be met by RBH.

50. CONTINGENT ASSETS The Authority has a number of contingent assets as at 31st March 2012. A contingent asset is an asset that may be received but only if a future event occurs that is not under the control of the Authority. Stock Transfer The Authority has potential right to transfer of assets under the Transfer Agreement, the key areas for the Authority are as follows;- A - Right to Buy Sharing Agreement As with other successful stock transfers the Authority has entered into an agreement with RBH relating to the future sales under the Preserved Right to Buy (PRTB) regulations. This relates to any future sales of the transferred stock to existing tenants, new tenants post transfer do not have the same Right to Buy options with differing regulations governing these tenancies.

The Authority will receive capital receipts during each financial year for any properties. The value of receipt is calculated using a formula that takes the net income forgone by RBH from the total proceeds from the sale of dwellings for that year. There were no sales from the date of transfer to the financial year end. B - Disposals Clawback Agreement The Authority negotiated a clawback arrangement with RBH for any future sales of land that had previously transferred. There are some exceptions to this arrangement as set out within the Transfer Agreement which include land that is sold for community benefit, social housing or regeneration purposes, highways schemes and to provide utility supplies. The income received by the Authority will be treated as a capital receipt. C - VAT Shelter Arrangements In normal circumstances, housing associations are not able to reclaim VAT on improvement works to dwellings. The VAT Shelter is an arrangement, used in every transfer since 2002, with HMRC’s agreement, whereby RBH can reclaim VAT on future improvement works to the transferred housing stock. The Authority has agreed a 40/60 share of the VAT with RBH, after the Authority has received the first £8.3m of recoverable VAT.

51. NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS Through its activities Rochdale Metropolitan Borough Council is exposed to a variety of financial risks: credit risk, liquidity risk and market risk. The Authority is risk aware and seeks to minimise potential adverse effects on financial performance. The management of these risks is conducted in accordance with the Authority’s Treasury Management Policy in respect of debt and investments. The Authority’s overall risk management procedures focus on the unpredictability of financial markets, and are structured to implement suitable controls to minimise these risks. The procedures for risk management are set out through a legal framework in the Local Government Act 2003 and associated regulations. These require the Authority to comply with the CIPFA Prudential Code, the CIPFA Code of Practice on Treasury Management in the Public Services and Investment Guidance issued through the Act. Overall, these procedures require the Authority to manage risk in the following ways:

• by formally adopting the requirements of the CIPFA Treasury Management Code of Practice;

• by the adoption of a Treasury Policy Statement and treasury management clauses within its financial regulations/standing orders/constitution;

• by approving annually in advance prudential and treasury indicators for the following three years limiting: o The Authority’s overall borrowing; o Its maximum and minimum exposures to fixed and variable rates; o Its maximum and minimum exposures to the maturity structure of its debt; o Its maximum annual exposures to investments maturing beyond a year.

• by approving an investment strategy for the forthcoming year setting out its criteria for both investing and selecting investment counterparties in compliance with the Government Guidance;

These are required to be reported and approved at or before the Authority’s annual Council Tax setting budget or before the start of the year to which they relate. These items are reported with the annual treasury management strategy which outlines the detailed approach to managing risk in relation to the Authority’s financial instrument exposure. The annual Treasury Management Strategy which incorporates the prudential indicators was approved by Council on 10th February 2011 and is available on the Authority website. These policies are implemented by a central Treasury Team. The Authority maintains written principles for overall risk management, as well as written policies (Treasury Management Practices – TMP’s) covering specific areas, such as interest rate risk, credit risk, and the investment of surplus cash. These TMP’s are a requirement of the Code of Practice and are reviewed periodically.

Credit Risk – Concentration of Investments Credit risk relates to the possibility that one party to a financial instrument will fail to meet their contractual obligations, causing a loss for the other party. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions and credit exposures to trade receivables and other debtors. This risk is minimised through the Annual Investment Strategy, which requires that deposits are not made with financial institutions unless they meet identified minimum credit criteria, in accordance with Fitch and Moody’s Credit Rating Services and the creditworthiness service of our Treasury Management Consultants. The Strategy also considers maximum amounts and time limits in respect of each financial institution. The table below summarises the Authority’s exposure to credit risk on its deposits (excluding accrued interest) with banks and other financial institutions at 31st March 2012.

Institution Long Term Credit RatingFixed Term Deposits at

31st March 2012Cash Equivalents at

31st March 2012 Total

£000's £000's £000's

SHORT TERM:

AAA - 18,820 18,820

AA+ - - -

AA - - -

AA- 10,000 - 10,000

A+ 5,000 - 5,000

A 15,000 15,000 30,000

A- 2,000 - 2,000

Other:

UK Government - - -

Totals 32,000 33,820 65,820 Credit risk arising from Council Tax and NNDR receivables is minimised as a result of the Authority’s statutory collection powers. Credit risk exposure for other financial assets and trade receivables are disclosed in Note 16a - Financial Instruments - Long Term Debtors which includes a provision made against bad debts and in Note 19 – Current Debtors. Where significant contracts are being entered into, customers are assessed, taking into account their financial position, past experience and other factors, with credit limits set in accordance with internal ratings in accordance with parameters set by the Authority. Liquidity Risk Liquidity risk is the risk that the Authority will encounter difficulty raising funds to meet short and long term commitments as they fall due. Liquidity risk is managed by the maintenance of cashflow forecasts that ensures cash is available as needed. Prudent liquidity management implies maintaining sufficient cash (monitoring the maturity profile of its short term investments), the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Authority is able to maintain flexibility in funding by maintaining relationships with banks and brokers and is also able to rely upon lending facilities provided by the Public Works Loans Board (part of HM Treasury). There is no significant risk that the Authority will be unable to raise finance to meet its commitments under financial instruments. Instead the risk is that the Authority will be bound to replenish a significant proportion of its borrowings at a time of unfavourable interest rates – its Refinancing Risk. To counter this risk, the Authority spreads its debt maturity profile to ensure that it is not over-exposed in any one period. This is achieved by careful consideration of the need to borrow, planning of new loans taken (where it is economic to do so) and reviewing the possibility of debt rescheduling.

The maturity profiles of the Authority’s debt portfolio (excluding accrued interest) can be found below:

31st March 2011 Borrowing

31st March 2012

£000's £000's

26,394 Under 1 year 28,405

21,964 Between 1 and 2 years' time 403

30,418 Between 2 and 5 years' time 2,240

26,990 Between 5 and 10 years' time 1,630

286,121 Between 10 years and above 140,003 Interest Rate Risk The Authority is exposed to interest rate movements in both its borrowings and investments. An adverse movement in market interest rates would have the following effects: • Debt funding costs will materially exceed forecast levels of interest costs in approved three year budgets, so as

to impact cost control, capital investment decisions, returns and feasibilities

• Interest income will materially under perform the interest income projections in the Authority’s three year budgets, affecting the Authority’s overall financial performance and position;

Borrowings and investments are not carried at fair value in the balance sheet; therefore, any nominal gains or losses in fair value do not have an impact on the Authority’s budget position. Variable rate borrowings and investments will impact upon the Comprehensive Income and Expenditure Statement. The Authority has a number of strategies for managing interest rate risk. The Treasury Management Strategy draws together prudential and treasury indicators and its expected treasury operations, including an expectation of interest rate movements. An indicator provides maximum limits for fixed and variable interest rate exposure. The Treasury Team will monitor market and forecast interest rates within year to adjust exposures accordingly, working to an active strategy which feeds into the annual budget process and subsequent monitoring exercises. If interest rates had increased by 0.5 per cent (50 basis points) on 31st March 2012, the following table displays the financial effect on the Comprehensive Income and Expenditure Statement:

£000'sIncrease in interest payable on variable rate borrowings -

Increase in interest receivable on variable rate investments 169

Impact on Comprehensive Income and Expenditure Statement 169 Market Price Risk The Authority does not currently hold any investments in quoted equity shares or in other equity shares where there is an active market. The Authority’s only shareholdings are in unquoted companies with no active equity market. Shares are measured on a historical cost basis less any impairment. The Authority is not currently exposed to any market price risk. Foreign Currency Risk The Authority has no foreign currency risk exposure as at the balance sheet date. The Authority is not allowed under statute to enter into financial instruments in currencies other than Sterling.

52. HERITAGE ASSETS – FIVE YEAR SUMMARY OF TRANSACTIONS

2007/8 2008/9 2009/10 2010/11 2011/12

£000's £000's £000's £000's £000's

Cost of Acquisition of Heritage Assets

Art Collection - 1 3 12 2

Total Cost of Purchases - 1 3 12 2

Value of Donated Heritage Assets

Art Collection 3 - 7 23 22

Total Donations 3 - 7 23 22 There have been no disposals or impairment of heritage assets over the past 5 years.

53. HERITAGE ASSETS – FURTHER INFORMATION ON THE COLLECTIONS Art Collection The Art Gallery has a collection of around 1500 works of art, comprising paintings, drawings, prints, photographs, some sculpture and contemporary craft, by local, national and some international artists. The vast majority of the objects held are donated, with the earliest donations dating from 1898. A selection of art works are displayed at Touchstones Rochdale Art Gallery in Rochdale town centre and at the various outreach exhibition points around the borough. Works not on display are kept in store and available to view by appointment. The Link4Life website provides information and images from the collection and all the oil paintings in the collection are also available to view via the Public Catalogue Foundation website (www.thepcf.org.uk) and on the BBC Your Paintings microsite (www.bbc.co.uk/arts/yourpaintings). Archaeology Collection The archaeology collection principally consists of Egyptian artefacts, both in store and Museum. The collection includes scarabs, shabtis, canopic jar, amulets, flint blades, stele fragments, various reliefs and alabaster jars. Ceramics and Glass The Collection of ceramics, porcelain work and figurines includes numerous pieces held by the Authority demonstrating the development and the quality of ceramics produced in the area. Most of the collection has been acquired from local benefactors. The collection includes a selection of ceramics made by Wedgwood and presented to John Bright in 1872. The collection also holds a fine example of a John Rose Coalport English porcelain tea and coffee service circa 1810 with finely painted with flags, canon and other military motifs. In addition there is a fine collection of European Porcelain Meissen figurines dating back to the 18th Century which depict a variety of scenes. Any pieces not currently on display are kept in store and are available to view by appointment. Civic Regalia The Civic Regalia collection is housed at the Town Hall and consists of over 100 items. Significant items within the collection include the ‘Borough of Rochdale Mace’ which was presented to the Borough of Rochdale by Samuel Turner Esq. Mayor 1901-02 and the Rochdale Mayoral Chain which was designed and handmade by Thomas Fattorinis in 2010. Other Heritage Assets The Arts and Heritage Service holds a number of items relating to the celebrated local singer and actress, Gracie Fields. The most notable piece is a tea service by Edward Barnard, 1934 with the inscription ‘A Gift from her Rochdale friends, Presented to Miss Gracie Fields as a token of their affection, Rochdale, December 1934’. The collection also includes the Dame of the British Empire medal awarded to Gracie Fields in 1979 and a rectangular Freedom Casket dated 1937 presented to her. The Authority also owns a number of heritage assets that are not included in the balance sheet as no valuation information is available for these assets. It is felt that the cost of obtaining valuations for these assets would not be commensurate with the benefit to the users of the accounts. This includes assets such as various war memorials in the borough, the Cenotaph and memorial gardens in Rochdale, and the John Bright and A Ashworth statues in Broadfield Park.

Heritage Assets of Particular Importance The Art Gallery collection holds two paintings which the Authority regards as particularly significant donations. One is Charles Burton Barber’s ‘A Special Pleader’ dated 1893 and the other is Laurence Stephen Lowry ‘Our Town’ dated 1943. Operational Assets with heritage qualities The Authority does not hold any buildings solely for educational, artistic or cultural purposes. There are however a number of buildings used for operational purposes that have significance for the towns heritage. These include Rochdale Town Hall, Touchstones, Middleton, Heywood and Milnrow Libraries, Elm Street School, Denehurst Offices, Partnership House, Toad Lane, Fashion Corner and Townhead Offices. Preservation and management of the collections cared for by Link4Life’s Arts & Heritage Service on behalf of Rochdale MBC Since April 2007, the Museum, Art Gallery and Local Studies collections have been cared for and managed by Link4Life’s Arts & Heritage Service on behalf of Rochdale MBC. Link4Life is the trading name of the Rochdale Boroughwide Cultural Trust. The Service has two sites with full MLA (The Museums, Libraries and Archives Council) Museum Accreditation - Touchstones Rochdale and the Arts & Heritage Resource Centre. The former is primarily for the display of items from the collection, the latter is primarily for their storage and care. The Service is operated by professional and suitably experienced staff. The Art Gallery collection is fully documented. Remedial conservation is carried out each year by professional freelance conservators with works of art for display prioritised. The documentation of the Museum collections is ongoing. The storage of the Museum collections implements sector best practice with the state of the art facilities at the Resource Centre. Items from both the Museum and Art Gallery collections are condition checked prior to display and monitored whist on display. Items in the permanent Museum are rotated back into store to ensure their preservation in the long term. The Local Studies collection comprises a wide range of printed material relating to the Rochdale area, and includes Castleton, Littleborough, Milnrow, Norden and Wardle. Information relating to Heywood and Middleton is held at the respective libraries. Documentation of the collections is ongoing. The Service has a contract with Greater Manchester Records Office for the remedial conservation of archival material from the collections. Items from all the collections are accessed by members of the public on a daily basis either through the permanent Museum displays, Local Studies Centre or Art Gallery collection exhibitions at Touchstones Rochdale. In addition any items not on display can be viewed by appointment. The Service utilises a specialist collections management database called KE Emu which holds records for every documented item in the collections.

54. Large Scale Voluntary Transfer (LSVT) The Authority transferred all of its housing stock to Rochdale Boroughwide Housing (RBH) on the 26th of March 2012. This has had a material impact on the Authority’s accounts for 2011/12 and this note explains the main issues and the impact on the accounts in 2011/12 and in future years. Assets Transferred The Authority transferred 13,646 dwellings, 1606 garages, 65 garage sites, 76 shops, 27 playgrounds, and various plots of land within housing estates as part of the Tenanted Market Value (TMV) agreement.

In addition the Authority also transferred 66 dwellings, 13 playgrounds, 2 community centres, 9 other buildings and various plots of land within housing estates as they were intrinsically linked to the assets transferring as part of the TMV. These assets were valued at £6.7m. Transfer Price and Associated Costs The transfer price for the dwellings and associated assets within the TMV was £25.5m. The transfer price is based on a prescribed Government formula which reflects the current value of future income and expenditure streams for the assets over the next 30 years.

Right to Buy Sharing Agreement As with other successful stock transfers the Authority has entered into an agreement with RBH relating to the future sales under the Preserved Right to Buy (PRTB) regulations. This relates to any future sales of the transferred stock to existing tenants, new tenants post transfer do not have the same Right to Buy options with differing regulations governing these tenancies.

The Authority will receive capital receipts during each financial year for any properties sold within the year. The value of receipt is calculated using a formula that takes the net income forgone by RBH from the total proceeds from the sale of dwellings for that year. There were no sales from the date of transfer to the financial year end. Disposals Clawback Agreement The Authority negotiated a clawback arrangement with RBH for any future sales of land that had previously transferred. There are some exceptions to this arrangement as set out within the Transfer Agreement which include land that is sold for community benefit, social housing or regeneration purposes, highways schemes and to provide utility supplies. VAT Shelter Arrangement In normal circumstances, housing associations are not able to reclaim VAT on improvement works to dwellings. The VAT Shelter is an arrangement, used in every transfer since 2002, with HMRC’s agreement, whereby RBH can reclaim VAT on future improvement works to the transferred housing stock.

The Authority has agreed a 40/60 share of the VAT with RBH, after the Authority has received the first £8.3m of recoverable VAT.

Pension Warranty RBH has obtained admission to the Greater Manchester Pension Fund of the Local Government Pension Scheme for the benefit of all Pensionable Employees.

The Authority and RBH have each agreed that the Authority shall act as guarantor under the Admission Agreement only in relation to the Pensionable Employees, the Pensioners and the Deferred Pensioners. Rent and Service Charge Arrears All current and former tenant rent arrears as at the date of transfer were sold to RBH. Miscellaneous and leaseholder arrears were also sold to RBH. Warranties The Authority has agreed to a number of warranties under the Transfer Agreement, these are common place in such negotiations.

The key warranties for the Authority are the asbestos indemnity, contracts affecting the property, third party liabilities and the VAT shelter indemnity. Asbestos Indemnity The Authority covenants to indemnify RBH in relation to asbestos liabilities:

• Any claims against RBH for exposure to asbestos on the property (except due to RBH’s negligence) • For 30 years costs of treatment, removal, etc of asbestos in dwelling or other property above £6.9m + VAT

Contracts affecting the property For 6 years after the completion date the Authority will indemnify RBH against all claims in connection with breaches of any contract entered into by RBH, or the Authority on behalf of RBH before the completion date, provided that the first £250k in aggregate is met by RBH. VAT Shelter Indemnity VAT indemnity – if the amount of VAT saving retained by RBH is less than £10m, the Authority covenants to pay RBH the shortfall.

• excludes any shortfall arising from breach by RBH of its obligations under the development agreement • includes any shortfall arising form change in law, change in practice by Customs, or challenge from Customs

of amounts received or retained by RBH Third Party Liabilities The Authority has indemnified RBH for 6 years against 3rd party liabilities relating to matters arising prior to the completion date that cannot be recovered through RBH's insurance policy. The first £250k in aggregate 3rd party liabilities that can not be recovered from RBH's insurance policy will be met by RBH.

Services provided By RBH and the Authority Agreements were made with RBH for a number of services to be provided for the Authority by RBH and one service provided to RBH by the Authority.

The services that are to be provided by the Authority to RBH include Grounds Maintenance, IT, Contact Centre and Cleaning and Caretaking. During the financial year 2012/13 income from these services will be circa £1.6m. The service level agreements run for mostly one year from the date of transfer.

The service that is to be provided by RBH to the Authority is the Homeownership mortgages administration service.

55. EXCEPTIONAL ITEMS There are a number of items that are shown on separate lines of the Comprehensive Income and Expenditure Account, this is done to help the user’s interpretation of the information, and recognise that they are material one off costs or income. 2010/11 PENSION INFLATION CHARGE The non distributed costs line within the Comprehensive Income and Expenditure Statement normally includes pensions past service and curtailment costs, which are the result of increased benefits being paid in the event of pension scheme members retiring early during the year, together with other strictly defined items. During 2010/11, a large negative past service cost is reported due to future annual pension increases being linked to the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) to reflection Central Government decisions in relation to Pension Valuation in June 2010. Due to the significant variation between years, the amounts in relation to pensions past service costs have been shown as a separate item on the face of the Comprehensive Income and Expenditure Statement. Further information about post employment (pensions) costs is included in Notes 46 and 47. 2011/12 HOUSING STOCK TRANSFER In December 2011, tenants of Rochdale Borough wide Housing (RBH) the Arms Length Management Organisation (ALMO) set up by the Authority, voted in favour of transferring all housing properties to a new registered provider of social housing. This transfer took place on the 26th of March 2012. The transfer of housing stock has had a significant effect on the statement of accounts. The Authority transferred 13,712 of its dwellings, 1606 garages, 76 shops, 40 playgrounds, 1 Community Centre and various plots of land within housing estates. The impairment loss is reported as a separate exceptional item line on the comprehensive Income and Expenditure statement in 2011/12 of £343.2m. It is important to recognise that this is a one-off ‘paper’ loss arising from the accounting entries surrounding the transfer. The other Authority services are not affected by this loss. As part of the transfer the Authority benefited from the redemption by the government of its housing related PWLB debt, known as overhanging debt including associated premia and discount worth £281.3m in 2011/12 and this is reported as a separate exceptional item line on the comprehensive Income and Expenditure statement. The Authority’s balance sheet value has fallen representing the reduction in non current assets, matched by reduction in the revaluation and capital adjustment account in the unusable reserves.

COLLECTION FUND

COLLECTION FUND STATEMENT This account reflects the statutory requirements for the Authority to maintain a separate Collection Fund, which shows the transactions in relation to Non-Domestic Rates and the Council Tax. Council Tax income is raised from charges based on the open market value of dwellings as at 31st March 1991. Note 1 explains the calculation used to set the Council Tax base for 2011/12.

31st March 2011 Collection Fund Income and Expenditure Statement Notes 31st March 2012

£000's £000's

INCOME

70,563 Income from Council Tax 2 70,660

52,862 Income from Business Ratepayers 3 57,805

Transfers from General Fund:-

20,969 Council Tax Benefit 2 21,267

33 Discounts for prompt payments 2 -

144,427 TOTAL INCOME 149,732

EXPENDITURE

Precepts and Demands

78,871 Rochdale Metropolitan Borough Council 78,871

8,755 Greater Manchester Police Authority 8,841

3,192 Greater Manchester Fire and Civil Defence Authority 3,225

90,818 TOTAL PRECEPTS 90,937

52,573 Payments to National Non-Domestic Rate Pool 3 57,519

289 Costs of Collection of National Non Domestic Rates 3 286

786 Increase in provision for bad and doubtful debts 773

- Contributions towards previous year's estimated surplus -

144,466 TOTAL EXPENDITURE 149,515

(39) SURPLUS/(DEFICIT) FOR THE YEAR 217

BALANCES

(1,293) Balances at 1st April (402)

(39) Surplus/(deficit) for the year 217

(1,332) Deficit before distributions (185)

930 Transfer to General Fund of previous year's Collection Fund balance 136

(402) Balances at 31st March 4 (49)

Balances at 31st March

(349) Rochdale MBC (42)

(39) Greater Manchester Police Authority (5)

(14) Greater Manchester Fire and Rescue Authority (2)

(402) (49)

NOTES TO THE COLLECTION FUND STATEMENT Note 1 – Council Tax Council Tax was introduced from 1st April 1993. All domestic properties were placed into one of eight valuation bands according to the open market value of that property at the 31st March 1991. The number of properties in each band is adjusted by a specified fraction to convert the number of dwellings to the equivalent of Band D. Each year the Authority must estimate the equivalent number of Band D properties after allowing for discounts and other adjustments. The estimated number of Band D equivalent properties used for the 2011/12 Council Tax Base was 61,360, (62,231 properties reduced to reflect the estimated collection rate in 2011/12). The Band D Council Tax levied for the year was £1,482.36 (£1,482.36 in 2010/11). An analysis of actual properties as at 31st March 2012 is shown below. The total of 62,014 represents a reduction of 217 (0.3%) compared to the estimated total of 62,231.

Valuation Band

Range of Values Adjusted Total Number of Dwellings

Factor Band D Equivalent

A Up to and including £40,000 42,532 6/9 28,355

B £40,001 - £52,000 12,769 7/9 9,932

C £52,001 - £68,000 10,216 8/9 9,081

D £68,001 - £88,000 6,780 1 6,780

E £88,001 - £120,000 3,666 11/9 4,480

F £120,001 - £160,000 1,385 13/9 2,001

G £160,001 - £320,000 789 15/9 1,315

H More Than £320,000 35 2 70

78,172 62,014 Note 2 – Income from Council Tax This represents the Council Tax for the year that is due in the form of cash from Council Taxpayers. It is based on:

o Income – The Council Tax charge for each property across the Borough in each property band. The total charge for all bands is the gross income due to the Authority.

o Reductions to Income – The main area of reductions to income comprises Council Tax benefits. These provide assistance to those needing help with the cost of Council Tax charges.

31st March 2011 Property Band 31st March 2012

£000's £000's

41,866 Band A 42,032

14,664 Band B 14,722

13,409 Band C 13,462

10,011 Band D 10,050

6,615 Band E 6,642

2,955 Band F 2,966

1,942 Band G 1,950

103 Band H 103

91,565 TOTAL CHARGES RAISED 91,927Less:

- Previous Year's Adjustments

20,969 Council Tax Benefits 21,267

33 Discounts for prompt payments -

70,563 TOTAL INCOME FROM COUNCIL TAX 70,660

Note 3 – Income Collectable from Business Ratepayers Under the current arrangements for uniform business rates, the Authority collects non-domestic rates for its area. These are based on local rateable values multiplied by a uniform rate. The total amount, less certain reliefs and other deductions is paid to a central pool (the NNDR Pool). The pool is managed by Central Government, which in turn pays back to authorities their share of the resources. Each Authority’s share is based on a standard amount per head of the local adult population. Under these arrangements the amounts included in these accounts and the income can be analysed as follows:

31st March 2011 Income Collectable from Business Ratepayers 31st March 2012

£000's £000's

68,241 Non-domestic rateable value x Uniform Business Rate (2011/12 £166.348m x 43.3p)

72,029

1,052 Small Business Rates Supplement 1,100

(15,624) Allowances and other adjustments (14,534)

53,669 Income collectable from Non-Domestic Ratepayers 58,595

221 Discretionary Relief paid by the Council 302

(188) Interest on repayments (25)

(840) Adjustment to provision for bad and doubtful debts (1,067)

52,862 Income collectable from Non-Domestic Ratepayers net of adjustments

57,805

(289) Costs of Collection (286)

52,573 PAYMENTS TO NATIONAL NON-DOMESTIC RATE POOL 57,519 Discretionary rate relief paid by the Authority in 2011/12 have been held in the Collection Fund and will be charged to the General Fund Revenue Account in 2012/13. A significant element of this relief is provided to voluntary aided schools. Note 4 – Year End Deficit The deficit on the Collection Fund of £49k as at 31st March 2012 relates to Council Tax. This deficit will be recovered from the precepting authorities in line with Government regulations concerning the application of surplus and deficit balances, as follows:

31st March 2011 Year End Deficit 31st March 2012

£'000 £'000

(349) Rochdale MBC (42)

(39) Greater Manchester Police Authority (5)

(14) Greater Manchester Fire and Rescue Authority (2)

(402) (49)

HRA THE HOUSING REVENUE ACCOUNT INCOME AND EXPENDITURE STATEMENT Under section 74 of the Local Government and Housing Act, 1989 the Authority is required to maintain a separate account for transactions relating to the provision of council dwellings. This account shows the income to the Authority in respect of rents, housing subsidy (income from the government), interest and charges. It also shows how that money is spent managing and maintaining properties and financing capital expenditure. In accordance with the Code of Practice on Local Authority Accounting the Housing Revenue Account has been split into two parts: HRA Income and Expenditure Statement – which shows in more detail the income and expenditure on HRA services included in the whole authority Comprehensive Income and Expenditure Statement. Movement on the Housing Revenue Account Statement – which shows how the HRA Income and Expenditure Statement surplus or deficit for the year reconciles to the movement on the Housing Revenue Account Statement for the year.

31st March 2011 Notes 31st March 2012

£000's £000's

Expenditure

16,836 Repairs and maintenance 3 17,682

12,955 Supervision and management 3 13,030

812 Rents, rates, taxes and other charges 204

6,740 Depreciation and impairment of non-current assets 4 349,139

101 Debt management costs 154

221 Movement in the allowance for bad debts 5 150

37,665 Total Expenditure 380,359

Income

(39,557) Dwelling rents 1 (41,528)

(805) Non-dwelling rents (853)

(2,301) Charges for services & facilities (1,591)

(8,062) HRA subsidy receivable 2 (4,038)

(50,725) Total Income (48,010)

(13,060) Net Cost of HRA Services as included in the Comprehensive Income and Expenditure Statement

332,349

(13,060) Net Cost of HRA Services 332,349

HRA share of the operating income and expenditure included in the Comprehensive Income and Expenditure Statement:

(1,233) (Gain) or loss on sale of HRA non-current assets (26,998)

11,445 Interest payable and similar charges 50,661

(137) Interest & investment income (164)

- Capital grants and contributions receivable (253,872)

(2,985) (Surplus) or Deficit for the year on HRA Services 101,976

MOVEMENT ON THE HRA STATEMENT

31st March 2011 Notes 31st March 2012

£000's £000's

(11,898) Balance on the HRA at the end of the previous year (10,178)

(2,985) (Surplus) or deficit on the HRA Income and Expenditure Statement 101,976

4,629 Adjustments between accounting basis and funding basis under statute 8 (98,774)

1,644 Net increase or (decrease) before transfers to or from reserves 3,202

76 Transfers to or (from) reserves (101)

1,720 Increase or (decrease) in year on the HRA 3,101

(10,178) Balance on the HRA as at the end of the current year (7,077)

NOTES TO THE HRA INCOME AND EXPENDITURE STATEMENT Note 1 – Housing Stock All dwellings owned by the Authority were transferred to Rochdale Boroughwide Housing on 26th March 2012 in accordance with the agreement for the transfer of the Authority’s housing stock, together with all other assets previous held within the Housing Revenue Account.

31st March 2011 Type of Property 31st March 20121,404 Houses and bungalows with 1 bedroom -

4,164 Flats with 1 bedroom -

2,875 Houses and bungalows with 2 bedrooms -

1,041 Flats with 2 bedrooms -

3,470 Houses and bungalows with 3 bedrooms -

562 Flats with 3 bedrooms -

192 Houses with 4 or more bedrooms -

20 Flats with 4 or more bedrooms -

13,728 Totals - All HRA assets were transferred to Rochdale Boroughwide Housing on 26th March 2012, meaning the value of assets within the HRA at 31st March 2012 was nil.


£000's £000's

387,716 Operational Assets (Council Dwellings) -

10,655 Operational Assets (Other) -

2,765 Non Operational Assets -

3,509 Investment Assets -

404,645 Total HRA Assets -

HRA Asset Categories

Note 2 – HRA Subsidy This note sets out how the Government calculates the HRA subsidy that the Authority receives towards the costs of its housing stock. HRA subsidy is a reimbursement to make up the shortfall between what the Government estimates the Authority needs to spend on its properties and the income that it is estimated that the Authority will receive. The amount of subsidy is calculated by applying ‘notional’ costs and income to the number and type of dwelling properties owned by the Authority. It also takes account of the financing costs the Authority incurs in borrowing for capital expenditure. All the ‘notional’ costs and income that the Authority is expected to incur are added together in a ‘notional’ HRA account. Any deficit on this account is reimbursed to the Authority by way of HRA subsidy.

31st March 2011 HRA Subsidy 31st March 2012

£000's £000's

NOTIONAL EXPENDITURE

25,199 Management & Maintenance 25,537

15,368 Charges for Capital 11,882

8,685 Major Repairs Allowance 8,715

49,252 46,134

NOTIONAL INCOME

39,853 Notional Rents 42,179

16 Interest on Receipts 12

39,869 42,191

9,383 NET NOTIONAL EXPENDITURE 3,943

175 Prior year adjustments 95

(1,496) MRA funding b/f from 2010/11 -

8,062 TOTAL HRA SUBSIDY 4,038 Note 3 – Housing Management Agreement Rochdale MBC entered into a management agreement with Rochdale Boroughwide Housing Limited (RBH) on the 28th March 2002. Under the terms of this agreement RBH has assumed responsibility for the management and maintenance of all HRA property on behalf of the Authority from 1st April 2002. The ownership of the HRA stock remained with Rochdale MBC until the transfer of the stock to RBH on 26th March 2012. Further details of the transactions between the Authority and RBH are provided at Note 40 Related Party Transactions. The management fee in 2011/12 was £30.368m (which is split into £29.343m revenue and £1.025m capital). This compares to a management fee in 2010/11 of £29.097m (£28.191m revenue and £0.906m capital). In order to comply with the standard presentation of the HRA Income and Expenditure Statement as per the Code the revenue element of the management fee has been split between Repairs and Maintenance (£17.682m in 2011/12) and Supervision and Management (£11.661m in 2011/12). Supervision and Management expenditure also includes other costs charged directly to the HRA in addition to the management fee (£1.369m). Note 4 – Depreciation and Impairment on Non Current Assets The Authority has calculated depreciation on dwelling properties on a straight line basis using the useful life of each property based on its beacon valuation. The Code states that the Major Repairs Allowance (MRA) is likely to constitute a reasonable estimate of depreciation for HRA dwellings. The straight line method of depreciation based on the useful life of each property has been used as it provides a more accurate measure of depreciation on Council dwellings than using the MRA as an estimate of depreciation.

31st March 2011 Depreciation and Impairment 31st March 2012£000's £000's

Depreciation - Operational Assets:

4,132 Dwellings 3,895

67 Non Dwellings 758

4,199 4,653

- Downward revaluation for stock transfer purposes 343,236

- REFCUS 1,250

2,541 Impairment -

6,740 Total Depreciation and Impairment 349,139 The charge for depreciation of £4.653m is transferred in full to the Major Repairs Reserve. Any difference between the total depreciation charge and the Authority's Major Repairs Allowance is adjusted via the Movement on HRA Statement. The balance on the reserve is used to finance capital expenditure. Movements on the major repairs reserve for 2011/12 are shown in note 6. The REFCUS charge of £1.250m is transferred to the Capital Adjustment Account. The depreciation and impairment on non current assets includes a downward revaluation of £343.236m in relation to the transfer of the Council’s dwellings and other HRA assets to Rochdale Boroughwide Housing. Note 5 – Provision for Bad Debts / Rent Arrears As part of the agreement for the transfer of the Council’s housing stock, current and former tenant arrears, leaseholder arrears and periodic arrears were assigned to Rochdale Boroughwide Housing. Any remaining arrears, net of the bad debt provision in the balance sheet, were written off to the HRA in 2011/12. Note 6 – The Major Repairs Reserve The Major Repairs Reserve is an earmarked fund to which the Authority appropriates an annual Major Repairs Allowance for capital spending on Council Dwellings. The allowance is part of the Council's annual Housing Subsidy income. This note shows the amount appropriated to the reserve in 2011/12 and the amount transferred from the reserve to finance capital expenditure.

31st March 2011 Major Repairs Reserve 31st March 2012£000's £000's

- Balance 1st April -

Transfers to Reserve

4,132 Depreciation on dwellings 3,895

3,057 Adjustment for MRA in excess of depreciation on dwellings 4,820

67 Depreciation on non-dwellings 758

7,256 9,473

Transfers from Reserve

(67) Depreciation on non-dwellings (758)

(7,189) Financing of capital expenditure (MRR) (8,715)

- Balance at 31st March - In accordance with the Code the difference between the MRA and the depreciation on dwellings is transferred to the Major Repairs Reserve in order to avoid this impacting on the HRA bottom line.

Note 7 – HRA Capital Expenditure The Authority incurred £8.803m of HRA capital expenditure during 2011/12. This note sets out how that expenditure has been financed and analyses capital expenditure between houses, land and other assets.

31st March 2011 Capital Expenditure 31st March 2012£000's £000's

HRA

7,170 - Houses 7,376

2,406 - Land (including infrastructure) 1,368

1,091 - Other 59

10,667 Total Financing Requirement 8,803FINANCED BY:

- Borrowing -

- Capital Receipts 12

490 Capital Grants/Contributions 58

7,189 Major Repairs Reserve 8,715

2,988 Revenue Contribution 18

10,667 Total Capital Financing 8,803 The table below identifies HRA capital receipts received by the Authority from the sale of HRA dwellings and land and shows how those receipts were used. Pooled receipts are the portion of capital receipts that must be paid to the Secretary of State under current legislation. Receipts applied are the capital receipts used to finance capital expenditure.

31st March 2011 HRA Capital Receipts 31st March 2012

£000's £000's

2,353 Dwellings (including stock transfer) 28,527

- Land -

2,353 Total Receipts 28,527HRA Capital Receipts were used as follows:

- Opening Balance -

2,353 Add receipts in year (above) 28,527

(1,612) Less pooled receipts (2,037)

- Less receipts applied (HRA) (12)

(741) Less receipts transferred to Capital Receipts Reserve

(26,478)

- Closing Balance - Note 8 – Movement on the HRA Statement This note sets out the detailed movements within the Movement on the HRA Statement.


£000's £000'sAdjustments between accounting basis and funding basis under statute

(41) Difference between interest payable and similar charges including amortisation of premiums and discounts and the charge for the year determined in accordance with the Code and those determined in accordance with statute

(643)

1,233 Gain or loss on sale of HRA non-current assets 26,998

2,988 Capital expenditure funded by the HRA 18

2,990 Transfer to/from Major Repairs Reserve 4,062

(2,541) Transfer to/from Capital Adjustment Account (129,209)

4,629 Adjustments between accounting basis and funding basis under statute (98,774)

GROUP ACCOUNTS THE GROUP ACCOUNTS Introduction The CIPFA Code of Practice requires that where an authority has material financial interests and a significant level of control over one or more entities, it should prepare Group Accounts. The aim of these statements is to give an overall picture of the Authority’s financial activities and the resources employed in carrying out those activities. The Authority has, under the requirements of the code, one subsidiary, Rochdale Boroughwide Housing Limited that it includes in the group accounts. On 1st April 2002 Rochdale MBC placed its Housing Management into an Arms Length Management Organisation, Rochdale Boroughwide Housing Limited. The company was a local authority controlled company limited by guarantee. The other sections of the Statement of Accounts are prepared on the basis that Rochdale Boroughwide Housing Limited is a separate company with whom the Authority contracts. The following statement provides information on the combined activity of the Authority and Rochdale Boroughwide Housing Limited using the acquisition method and eliminates transactions between them. This is the last year Rochdale Boroughwide Housing Limited accounts are included within the Group Accounts as the organisation became totally independent from the Authority on 26 March 2012 when the Large Scale Voluntary Transfer of housing stock took place. As a result the Authority no longer has control of Rochdale Boroughwide Housing Limited and Rochdale Boroughwide Housing Limited was removed from the group accounts as at the 26th March 2012. Only the primary statements are provided in the group accounts as the end position at the 31st March 2012 is the same as that of the single entity where information is provided in the notes to the single entity accounts.

GROUP MOVEMENT IN RESERVES STATEMENT This statement shows the movement in the year on the different reserves held by Rochdale MBC and Rochdale Boroughwide Housing Ltd. analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the groups services, more details of which are shown in the Comprehensive Income and Expenditure Statement.

Tota

l Aut

hori

ty U

sabl

e Re

serv

es

Tota

l Aut

hori

ty U

nusa

ble

Rese

rves

Tota

l Aut

hori

ty R

eser

ves

Tota

l Aut

hori

ties

sha

re o

f Re

serv

es o

f Su

bsid

iari

es

Tota

l Res

erve

s

£000's £000's £000's £000's £000's

Balance as at 31st March 2010 82,618 310,321 392,939 (22,125) 370,814

Surplus or (deficit) on provision of services (accounting basis) 130,911 - 130,911 (22,294) 108,617Other Comprehensive Expenditure and Income - 153,179 153,179 18,183 171,362

Total Comprehensive Expenditure and Income 130,911 153,179 284,090 (4,111) 279,979

Adjustments between Group Accounts and authority accounts (30,428) - (30,428) 30,428 -

Net Increase/ Decrease before Transfers 100,483 153,179 253,662 26,317 279,979

Adjustments between accounting basis & funding basis under regulations (84,402) 84,402 - - -

Net Increase/ Decrease before Transfer to / from Earmarked Reserves 16,081 237,581 253,662 26,317 279,979

Transfer to / from Earmarked Reserves - - -

Increase / Decrease in Year 16,081 237,581 253,662 26,317 279,979

Balance at 31st March 2011 98,699 547,902 646,601 4,192 650,793

Tota

l Usa

ble

Rese

rves

Tota

l Unu

sabl

e Re

serv

es

Tota

l Aut

hori

ty R

eser

ves

Tota

l Aut

hori

ties

sha

re o

f Re

serv

es o

f Su

bsid

iari

es

Tota

l Res

erve

s

£000's £000's £000's £000's £000's

Balance as at 31st March 2011 98,699 547,902 646,601 4,192 650,793

Surplus or (deficit) on provision of services (accounting basis) (146,400) - (146,400) (35,983) (182,383)Other Comprehensive Expenditure and Income - (113,133) (113,133) 580 (112,553)

Total Comprehensive Expenditure and Income (146,400) (113,133) (259,533) (35,403) (294,936)

Adjustments between Group Accounts and authority accounts (31,211) - (31,211) 31,211 -

Net Increase/ Decrease before Transfers (177,611) (113,133) (290,744) (4,192) (294,936)

Adjustments between accounting basis & funding basis under regulations 207,910 (207,910) - - -

Net Increase/ Decrease before Transfer to / from Earmarked Reserves 30,299 (321,043) (290,744) (4,192) (294,936)

Transfer to / from Earmarked Reserves - - -

Increase / Decrease in Year 30,299 (321,043) (290,744) (4,192) (294,936)

Balance at 31st March 2012 128,998 226,859 355,857 - 355,857

This statement shows the adjustments between group accounts and authority accounts in the group movement in reserves statement.

Tota

l Aut

hori

ty U

sabl

e Re

serv

es

Tota

l Aut

hori

ty U

nusa

ble

Rese

rves

Tota

l Aut

hori

ty R

eser

ves

£000's £000's £000's

To 31st March 2011

Purchase of goods and services from subsidiaries (30,428) - (30,428)

Total Adjustments between Group Accounts and Authority accounts (30,428) - (30,428)

To 31st March 2012

Purchase of goods and services from subsidiaries (31,211) - (31,211)

Total Adjustments between Group Accounts and Authority accounts (31,211) - (31,211)

GROUP COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT This statement shows the accounting cost of services provided by Rochdale MBC and Rochdale Boroughwide Housing Ltd. Any transactions between Rochdale and RBH have been removed. The statement details income and expenditure relating to the Group as a whole and the source of funding for the entire Group’s expenditure.

31st March 2011

31st March 2011

31st March 2011 Comprehensive Income and Expenditure Statement

31st March 2012

31st March 2012

31st March 2012

Gross Gross Net Gross Gross Net

Expenditure Income Expenditure Income

£000's £000's £000's £000's £000's £000's

31,949 (24,848) 7,101 Central services to the public 30,661 (25,859) 4,802

6,155 (21) 6,134 Corporate and democratic core 6,271 0 6,271

9,755 (860) 8,895 Non distributed costs 13,673 (86) 13,587

(84,800) - (84,800) NDC - Pension Inflation Charge - - -

25,016 (4,103) 20,913 Cultural and Related 19,858 (2,122) 17,736

24,125 (5,724) 18,401 Environmental and Regulatory 26,113 (4,166) 21,947

15,988 (6,237) 9,751 Planning Services 13,003 (2,690) 10,313

273,742 (216,930) 56,812 Children's and education Services 258,065 (209,560) 48,505

28,629 (2,430) 26,199 Highways and transport services 31,918 (4,230) 27,688

104,527 (82,815) 21,712 Housing services - Housing general fund 133,956 (89,510) 44,446

35,585 (54,613) (19,028) Housing revenue account 6,712 (48,010) (41,298)

- - - Housing revenue Account - LSVT 343,236 - 343,236

86,583 (22,663) 63,920 Adult social care 80,600 (23,376) 57,224

557,254 (421,244) 136,010 COST OF SERVICES - CONTINUING OPERATIONS 964,066 (409,609) 554,457

1,612 (1,484) 128 Other Operating Expenditure 71,855 - 71,855

75,051 (46,545) 28,506 Financing and Investment Income and Expenditure 68,839 (47,784) 21,055

- (273,294) (273,294) Taxation and Non-Specific Grant Income (255,666) (255,666)

- - - Exceptional item - overhanging debt settlement LSVT (Note 11a & 55)

66,066 (281,342) (215,276)

633,917 (742,567) (108,650) (SURPLUS) OR DEFICIT ON PROVISION OF SERVICES 1,170,826 (994,401) 176,425

33 - 33 Tax expenses of subsidiaries 17 0 17

- - - (Surplus)/ Deficit on the disposal of RBH 5,941 - 5,941

633,950 (742,567) (108,617) GROUP (SURPLUS) OR DEFICIT 1,176,784 (994,401) 182,383

(2,377) (Surplus) or deficit on revaluation of non current assets 23,463

798 Impairment losses on non current assets charged to therevaluation reserve

470

(169,783) Actuarial (gains) / losses on pension asset/liabilities 88,620

(171,362) OTHER COMPREHENSIVE INCOME AND EXPENDITURE 112,553

(279,979) TOTAL COMPREHENSIVE INCOME AND EXPENDITURE 294,936

GROUP BALANCE SHEET The Group Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by Rochdale MBC and Rochdale Boroughwide Housing Ltd. Any transactions between Rochdale and RBH have been removed. This includes the value of property and assets used to deliver services, how much money is owed by and to the group and the amount of balances and reserves.

31st March 2010 31st March 2011 Balance Sheet Notes 31st March 2012

£'000 £'000 £'000

1,079,788 1,095,923 Property, Plant and Equipment 12 709,443

13,341 13,376 Heritage Assets 13 13,605

24,164 23,578 Investment Property 14 17,756

5,237 7,050 Intangible Assets 15 7,126

10,315 10,315 Long-Term Investments 16 10,315

12,658 13,202 Long-Term Debtors 16 17,076

1,145,503 1,163,444 TOTAL LONG TERM ASSETS 775,321

CURRENT ASSETS

68,687 37,600 Short Term Investments 16 32,047

818 1,034 Inventories 17 516

44,177 44,266 Short Term Debtors - External 19 38,882

33,732 58,056 Cash and Cash Equivalents 20 46,979

1,226 3,924 Assets Held for Sale (<1 Year) 21 5,713

148,640 144,880 TOTAL CURRENT ASSETS 124,137

CURRENT LIABILITIES

(16,526) (30,619) Short Term Borrowing 16 (30,147)

(50,128) (40,010) Short Term Creditors - External 22 (30,657)

(8,053) (4,595) Provisions (<1 Year) 23 (8,965)

(1,606) (1,555) Other Short Term Liabilities 16 (2,604)

(2,604) (3,320) Revenue Grants receipts in Advance 39 (566)


(83,808) (92,094) TOTAL CURRENT LIABILITIES (90,431)

(195) (102) Long Term Creditors -

(12,161) (14,738) Long Term Provisions 23 (11,966)

(391,728) (365,485) Long Term Borrowing 16 (144,267)

(48,052) (46,497) Other Long Term liabilities 16 (65,359)

(382,706) (132,240) Pension Liability 48 (229,400)

(600) Revenue Grants receipts in Advance 39 (648)


(839,521) (565,437) TOTAL LONG TERM LIABILITIES (453,170)

370,814 650,793 NET ASSETS 355,857

85,109 101,709 Usable Reserves 7 & 8 128,998

285,705 549,084 Unusable Reserves 25 226,859

370,814 650,793 TOTAL NET WORTH 355,857

GROUP CASH FLOW STATEMENT The Group Cash Flow Statement shows the changes in cash and cash equivalents of the group during the reporting period. The statement shows how the group generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the group are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’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 Authority.


£000's £000's

(108,617) 182,383

(62,463) (466,151)

62,480 295,080

(108,600) 11,312

72,133 (214,576)

12,143 214,341

(24,324) 11,077

(33,732) (58,056)

(58,056) (46,979)

Net (surplus) or deficit on the provision of services

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

Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities

Net Cash flows from operating activities

Investing Activities

Cash and cash equivalents at the end of the reporting period

Financing Activities

Net (Increase) or decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the reporting period

SUPPLEMENTARY INFORMATION TRUST FUNDS COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT The Authority is responsible for the administration of a number of trust funds on behalf of their trustees. This statement sets out the income and expenditure in relation to those funds.

The Authority acts as custodian and administrator for the assets of twelve trust funds, listed in the tables below. These trust funds are unincorporated associations, each has a governing scheme which dictates how the assets of the fund are to be utilised and who should benefit from any income/assets belonging to the trust fund. All decisions in relation to the income/assets are made in accordance with those schemes. The Authority is not a beneficiary of any of these trust funds.

The Authority acts as the sole trustee for three of these trust funds:

Doctor Chadwick Trust Fund Robinsons Common James Handley Bequest

The other nine trust funds have Councillors included as trustees on the Trust Board.

Trust Funds 2011-2012 Note Income Expenditure

Surplus / (Deficit) for the year Assets Liabilities Net Assets

£000's £000's £000's £000's £000's £000'sTrust Funds where the Council acts as Sole Trustee

Trust Funds that provide or maintain recreational areas

Doctor Chadwick Trust Fund 4 1 0 1 34 12 22

Robinson's Common 4 0 0 0 49 0 49

Other Trust Funds

James Handley Bequest 4 3 6 (3) 87 0 87

Total of Trust Funds where the Council acts as Sole Trustee 4 6 (2) 170 12 158Trust Funds where the Council is not the Sole Trustee

Trust Funds that provide grants to promote education

Rochdale Ancient Parish Educational Trusts 4 26 21 5 579 3 576

Norcross Scholarship Fund 4 8 7 1 165 1 164

The Heywood Educational Trust 4 2 1 1 46 1 45

Middleton Educational Trust 4 7 8 (1) 148 1 147

Trust Funds that provide grants to provide relief in need

Rochdale United Charity 4 14 13 1 275 3 272

The Norman Barnes Fund 4 12 11 1 257 0 257

Heywood Relief in Need Trust Fund 4 6 6 0 137 0 137

The Middleton Relief in Need Charity 4 2 2 0 35 0 35

Other Trust Funds

Heywood War Memorial Fund 4 1 1 0 11 0 11

Total of Trust Funds where the Council is not the Sole Trustee 78 70 8 1,653 9 1,644

Total Trust Funds 82 76 6 1,823 21 1,802

Trust Funds 2010-2011 Note Income Expenditure

Surplus / (Deficit) for the year Assets Liabilities Net Assets

£000's £000's £000's £000's £000's £000'sTrust Funds where the Council acts as Sole Trustee

Trust Funds that provide or maintain recreational areas

Doctor Chadwick Trust Fund 4 1 1 0 33 12 21

Robinson's Common 4 3 3 0 49 0 49

Other Trust Funds

James Handley Bequest 4 3 8 (5) 91 1 90

Total of Trust Funds where the Council acts as Sole Trustee 7 12 (5) 173 13 160Trust Funds where the Council is not the Sole Trustee

Trust Funds that provide grants to promote education

Rochdale Ancient Parish Educational Trusts 4 19 10 9 566 3 563

Rochdale Educational Trust (closed December 2010) 6 6 0 0 0 0

Norcross Scholarship Fund 4 8 10 (2) 158 0 158

The Heywood Educational Trust 4 2 2 0 44 0 44

Middleton Educational Trust 4 7 6 1 145 2 143

Trust Funds that provide grants to provide relief in need

Rochdale United Charity 4 15 15 0 265 2 263

The Norman Barnes Fund 4 13 14 (1) 250 0 250

Heywood Relief in Need Trust Fund 4 7 8 (1) 136 2 134

The Middleton Relief in Need Charity 4 2 2 0 34 1 33

Other Trust Funds

Heywood War Memorial Fund 4 1 1 0 12 0 12

Total of Trust Funds where the Council is not the Sole Trustee 80 74 6 1,610 10 1,600

Total Trust Funds 87 86 1 1,783 23 1,760

TRUST FUNDS BALANCE SHEET This statement shows the cumulative financial position of all of the trust funds managed by the Authority. It includes the value of trust assets and how those assets have been accumulated through original bequests and accumulated income. The assets of these trust funds do not represent the assets of the Authority and therefore they have not been included in the balance sheet of the Authority.

Note 31 March Trust Funds Balance Sheet 31 March

2011 2012

£000's £000's

1 136 Land and Property 136

Current Assets

2 1,573 Investments 1,613

3 74 Current/Deposit Accounts 74

1,647 Total Current Assets 1,687

23 Current Liabilities 21

1,624 Net Current Assets 1,666

1,760 TOTAL NET ASSETS 1,802

Represented by

278 Original Bequests 278

1,482 Unrestricted/Endowment Funds 1,524

1,760 TOTAL 1,802 The information contained in the three tables above has been compiled from the annual financial statements of the trust funds. The financial statements of the trust funds have been prepared on a receipts and payments basis (rather than under International Financial Reporting Standards) as allowed under the Charities Act 2011; the liabilities in relation to the trust funds are disclosed above but not included in the annual financial statements of the trust funds. Disclosure under International Financial Reporting Standards would not have a material impact on the financial information presented.

NOTES TO THE TRUST FUNDS FINANCIAL STATEMENTS 1. Land and Property

The land and property held comprises a rental property, land generating income from ground rent and a recreational area at Robinsons Common. The land and property is held in the name of the Authority on behalf of the trust funds. The relevant Trust Boards make all decisions in relation to the land and property held. The Robinsons Common site is maintained and cleaned by the Authority. 2. Investments

Investments comprise of Treasury Gilts, Corporate Bonds and Unit Trusts. Treasury Gilts are held as by the Authority as nominee accounts in the name of the trust funds. Corporate Bonds and Unit Trusts are held in the name of the trust funds. The relevant Trust Boards make all decisions in relation to investments 3. Current/Deposit Accounts

Current accounts in the name of the Authority are operated by the Authority on behalf of the trust funds. Deposit accounts held are in the name of the trust funds and administered by the Authority. 4. Trust Fund Objectives

These notes provide a brief summary of the main objectives of each trust fund. Each trust fund is a registered charity, the registration number stated is the number assigned to it by the Charity Commission, further details about each individual trust fund can be found on the Charity Commission website (www.charity-commission.gov.uk).

Trust Funds That Provide Grants to Promote Education:

o Rochdale Ancient Parish Educational Trusts (Registration No 526318). This trust fund aims to promote the education (including social and physical training) of persons resident in, or who attend any school in the area of the Ancient Parish of Rochdale.

o Norcross Scholarship Fund (Registration No 526666). This trust fund awards scholarships or grants to people

less than 30 years of age who have already qualified but wish to continue with their education. Applicants must be resident in the former County of Lancashire or the former County Borough of Rochdale.

o The Heywood Educational Trust (Registration No 526690). The objective of this trust fund is to promote the

education (including social and physical training) of persons resident in, or who attend any school in the area of the former Borough of Heywood or the Village of Birch.

o Middleton Educational Trust (Registration No 510495). This trust fund aims to promote the education

(including social and physical training) of persons resident in, or who attend any school in the area of the former Borough of Middleton.

Trust Funds That Provide Grants to Provide Relief in Need:

o Rochdale United Charity (Registration No 224461). This trust fund aims to provide relief, either generally or individually, to persons resident in the area of the Ancient Parish of Rochdale, who are in conditions of need, hardship or distress.

o The Norman Barnes Fund (Registration No 511646). This trust fund was created for the welfare of the aged

in the area of the former County Borough of Rochdale.

o Heywood Relief in Need Trust Fund (Registration No 517114). This trust fund aims to provide relief, either generally or individually, to persons resident in the area of the former Municipal Borough of Heywood who are in conditions of need, hardship or distress.

o The Middleton Relief in Need Charity (Registration No 200079). The object of the trust fund is to provide

relief, either generally or individually, to persons resident in the area of the former Borough of Middleton, who are in conditions of need, hardship or distress.

Trust Funds That Provide or Maintain Recreational Areas:

o Doctor Chadwick Trust Fund (Registration No 1081975). This trust fund exists for the acquisition and, or laying out of playing fields or a public park within the former Milnrow Urban District Council and the upkeep thereof, or in or towards the endowment of a Nursing Association within the said District.

o Robinsons Common (Registration No 521302). This trust fund owns a piece of land off Dodgson Street,

Rochdale, adjacent to the former Robinson’s Foundry. The piece of land is covenanted to be held as a public recreation ground.

Other Trust Funds:

o Heywood War Memorial Fund (Registration No 222476). The object of the trust fund is to contribute towards the upkeep of the Heywood War Memorial and the surrounding gardens and to assist in the work of the Royal British Legion and associated events.

o James Handley Bequest – Charities in Connection with The Rochdale Art Gallery (Registration No 526211).

The purpose of the trust fund is the development and care of the permanent collections of the Rochdale Art Gallery.

GLOSSARY

OF

TERMS

A Accounting Period – the period of time covered by the accounts, normally twelve months commencing on 1st April. The end of the accounting period i.e. 31st March is the balance sheet date. Accounting Policies – within the range of possible methods of accounting, a statement of the actual methods chosen locally and used to prepare these accounts. Accruals – the method of including amounts in accounts to cover income or expenditure attributable to an accounting period but for which payment has not been received or made by the end of the accounting period. This is based on the concept that income and expenditure are recognised as they are earned or incurred, not as money is received or paid. Actuarial Gains & Losses – Actuaries assess financial and non financial information provided by the Authority to project levels of future pension fund requirements. Changes in actuarial deficits or surpluses can arise, leading to a loss or gain because:- • events have not coincided with

the actuarial assumptions made for the last valuation

• the actuarial assumptions have changed

Adjustment between accounting basis and funding basis – these are adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Authority to meet

future capital and revenue expenditure. Agency Services – These are services that are performed for or by another Authority or public body, where the principal (the Authority responsible for the service) reimburses the agent (the Authority carrying out the work) for the costs of the work. AGMA (Association of Greater Manchester Authorities) – AGMA represents the ten local authorities in Greater Manchester and works in partnership with Central Government, regional bodies and other Greater Manchester public sector bodies. Area Based Grant (ABG) - a pooled, non-ring-fenced government grant with no separate reporting requirements due to it being awarded for a specific geographical area rather than for a specific purpose. Asset – something of value which is measurable in monetary terms. Assets Held for Sale - Assets which are being actively marketed and expected to sell within the next 12 months. Audit Commission – statutory body that oversees the conduct of local authority statutory audits.

B Bad (and doubtful) debts – debts which may be uneconomic to collect or un-enforceable. Balances – the reserves of the Council, both revenue and capital, which represent the accumulated surplus of income over expenditure on any of the funds Balance sheet – A statement of the recorded assets, liabilities and other balances at the end of an accounting period. Beacon Valuations – This method of valuation uses one archetype as a standard by which all assets of a similar nature can be valued. This avoids the cost of repetitive valuations of identical assets.

Best Value – Government initiative which places a duty on local authorities to achieve, economy, efficiency, effectiveness and quality of services delivered to local people. This is to be achieved by finding out the needs of local people and aiming to meet these needs. To Challenge, Compare, Consult and Compete in service provision and to seek continuous improvement with performance targets benchmarking against the best, is another main objective of Best Value. Billing Authority – Rochdale Metropolitan Borough Council is the billing authority for Rochdale responsible for the collection of the Council Tax and Non-Domestic Rates. Building Schools for the Future (BSF) – This is a major Central Government programme of replacing/ upgrading schools often via the Private Finance Initiative (PFI).

C Capital Adjustment Account (CAA) –The balance on this Account represents timing differences between the amount of the historical cost of non current assets that has been consumed and the amount that has been financed in accordance with statutory requirements. Capital Expenditure – expenditure on the acquisition of a non current asset or expenditure, which adds to and not merely, maintains the value of an existing non current assets. Capital Grants Unapplied - Proceeds received from Government Grants, Other Grants and Contributions, which have not yet been used to finance capital expenditure. Capital Receipts - Monies received from the sale of assets, which may be used to finance new capital expenditure or to repay outstanding loan debt as laid down within rules set by Government. Capitalised – expenditure transferred from revenue to capital.

Carrying Amount – The balance sheet value recorded of an asset or a liability. Cash and Cash Equivalents – this comprises cash in hand, cash overdrawn and short-term investments, which are readily convertible into known amounts of cash. Cash Flow – movement in money received and paid by the Council in the accounting period. CIPFA (The Chartered Institute of Public Finance and Accountancy) – CIPFA is the leading professional accountancy body for public services. Collection Fund (CF) – a statutory account which billing authorities have to maintain for the collection and distribution of amounts due in respect of Council Tax, Non-Domestic Rates. Community Assets – assets that the Council intends to hold forever, have no determinable finite useful life and in addition may have restrictions on their disposal. Example of a community asset is a Park Comprehensive Income and Expenditure Statement - The statement details income and expenditure relating to the Council as a whole and the source of funding for all the Councils expenditure. Consistency – the concept that the accounting treatment of like items within an accounting period and from one period to the next should be the same. Consolidated – added together with adjustments to avoid double counting of income, expenditure or to avoid exaggeration e.g. debtors, creditors as a result of trading between services within the Council which are reported on as a whole in the section on consolidated financial accounts. Contingent Assets – potential assets at the balance sheet date which depend on the occurrence or non-occurrence of one or more uncertain future events. The assets should be included in the balance

sheet where it is probable that a loss will be incurred which can be estimated reasonably accurately at the time the accounts are prepared. Otherwise, where the contingencies are likely to be material, the fact that they exist are disclosed as a note to the accounts. Contingent Liabilities – potential liabilities at the balance sheet date which depend on the occurrence or non-occurrence of one or more uncertain future events. The liabilities should be included in the balance sheet where it is probable that a loss will be incurred which can be estimated reasonably accurately at the time the accounts are prepared. Otherwise, where the contingencies are likely to be material, the fact that they exist are disclosed as a note to the accounts. Council Tax – a banded property tax which is levied on domestic properties throughout the country. The banding is based on estimated property values as at 1st April 1991. The level of tax is set annually by each local authority for the properties in its area. Council Tax Benefit – financial assistance available to residents on a low income that are liable for Council Tax. The majority of the cost to the Council of these benefit payments is reimbursed by Central Government grant. Creditors – amounts owed by the Council for work done, goods received or services rendered to the Council during the accounting period, but for which payment has not been made by the balance sheet date. Current Assets - An asset where the value changes because the volume held varies from day to day, for example, stock. It is reasonable to expect that these assets will either be consumed or realised during the next accounting period. Current Liabilities - An amount which will become payable or could be called in within the next accounting period.

D Debtors – amounts due to the Council that relate to the accounting period and have not been received by the balance sheet date. Deferred Capital Receipts – amounts derived from asset sales, which will be received in instalments over a period of years. (E.g. mortgages on the sale of Council houses). Deferred Creditors -These are amounts owing by the Council where payment is to be made in instalments over a predetermined period of time in excess of one year. Deferred Debtors -These are amounts due to the Council where payment is to is to be made in instalments over a predetermined period of time in excess of one year. Deferred Liabilities – these are liabilities which are payable beyond the next year at some point in the future or paid off by an annual sum over a period of time e.g. Deferred purchase arrangements. Depreciation - The measure of the wearing out, consumption or other reduction in the useful economic life of a non current asset. Defined Benefit Scheme – This is a pension or other retirement benefit scheme other than a defined contribution scheme. Usually, the scheme rules define the benefits independently of the contributions payable and the benefits are not directly related to the investment of the scheme. The scheme may be funded or unfunded (including notionally funded). Defined Contribution Scheme – a pension or other retirement benefit scheme into which an employer pays regular contributions as an amount or as a percentage of pay and will have no legal or constructive obligation to pay further contributions if the scheme does not have sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

E Earmarked Reserves - these reserves represent the monies set aside that can only be used for a specific usage or purpose. Exceptional Items – Material items deriving from events or transactions that fall within the ordinary activities of the Authority, but which need to be separately disclosed by virtue of their size and/ or incidence to give a fair presentation of the accounts. Expenditure – costs incurred by the Council for goods received services rendered or other value consumed during the accounting period, irrespective of whether or not any movement of cash has taken place. External Audit – The independent examination of the activities and accounts of local authorities to ensure the accounts have been prepared in accordance with legislative requirements and proper practices and to ensure the Authority has made proper arrangements to secure value for money in its use of resources.

F Fair Value – The price at which an asset could be exchanged in an arms length transaction, less any grants receivable towards the purchase or use of an asset. Financial Instrument Adjustment Account – provides a balancing mechanism between the different rates at which gains and losses (such as premiums on the early repayment of debt) are recognised under IFRS and are required by statute to be met from the General Fund. Financial Instruments – Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another. Finance Lease – a lease that transfers the risks and rewards of ownership of a non current asset to the lessee. Such a transfer of risks and rewards may be presumed to occur if at the inception of the lease the present value of the

minimum lease payments, including any initial payment, amount to substantially all the fair value of the leased asset. Financial Liabilities at amortised cost – The Balance Sheet value of the liability, usually a loan, after taking account of future changes in the internal rate payable on the liability. Financial Liabilities at Fair Value – The balance sheet value of the liability, usually a loan, after taking account of adjustments to reflect fair value at the balance sheet date. Financial Regulations – These are the written code of procedures approved by the Authority, intended to provide a framework for proper financial management. Non Current Assets – Assets which have value to the Authority for more than one year. These can be tangible (e.g. land, buildings, equipment) or intangible (e.g. Software or licences) assets. Formula Spending Share - An assessment by Central Government of how much a Local Authority should spend in providing a common level of service, having regard to its individual circumstances and responsibilities

G GAAP – ‘Generally Accepted Accounting Principles’. The standard framework of accounting principles. General Fund (GF) – the main revenue account of the Council, which brings together all income and expenditure other than recorded in the Housing Revenue Account, and the Collection Fund. Government support/grants – assistance by Government and inter-government agencies and similar bodies, whether local, national or international, in the form of cash or transfer of assets to an authority in return for past or future compliance with certain conditions relating to the activities of the Council.

GMCA (Greater Manchester Combined Authority) - The GMCA assumed its powers on 1 April 2011 and took over functions previously the responsibility of the Greater Manchester Integrated Transport Authority (GMITA). Greater Manchester Waste Disposal Authority (GMWDA) – This is the levying Authority that provides waste disposal strategy, policy and services to nine of the AGMA Authorities. Group Accounts – These consolidate the financial results of the Authority with any of its subsidiaries and/ or associates.

H Heritage Assets – an asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. Historical Cost - the actual cost of assets, goods or services, at the time of their acquisition. HMRF - Housing Market Renewal Fund. Housing Benefits – financial assistance paid to tenants on a low income to help pay their rent and service charges. Housing Revenue Account (HRA) - Local Authorities are required to keep a separate account for Housing which includes the expenditure and income arising in connection with the provision of housing accommodation by a local authority. Housing Subsidy – a grant from or payment to Central Government in connection with the operation of the Housing Revenue Account.

I Impairment -The amount by which stated capital is reduced by quality and value. Examples include evidence of obsolescence or physical damage to an asset.

Income – amounts due to the Council in respect of services performed, taxes levied or grants receivable during the accounting period, irrespective of whether or not any movement of cash has taken place. Infrastructure Assets – Non current assets belonging to the Council which are not readily sold, do not necessarily have a resale value, and for which a useful life span cannot be readily assessed, for example highways. Intangible Assets - are defined as assets that are not physical in nature. Internation al Accounting Standard 19 (IAS 19) – IAS 19 sets out the treatment of pensions and other forms of retirement benefits in an organisation’s statutory accounts. International Financial Reporting Standards (IFRS) - A set of international financial accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board to make international comparisons as easy as possible. Inventories - Raw materials and consumable items which the Authority has procured to use on a continuing basis and have not been used by the end of the accounting period. Investment Properties – interests in land and/or buildings in respect of which construction work and development have been completed and which are held solely for their income generating or investment potential rather than for operational purposes, any rental income being negotiated at arm’s length. Investments – items such as company shares, other securities and money deposited with financial institutions (other than bank current accounts).

L Leasing – a method of acquiring the use of an asset by paying a rental for a specified period of time, rather than purchasing it outright. Liabilities – amounts due to individuals or organisations, which will have to be paid at some time in the future. Loans and Receivables – Financial Assets that will not be traded and where amounts due to the Council are known. These assets arise when money, goods or services are provided to an external organisation or individual customers. Large Scale Voluntary Transfer (LSVT) – The agreed process through which housing stock is transferred from authorities to an external party.

M Material – the concept that any omission from or inaccuracy in the statements of account should not be large enough to affect the understanding of those statements by a reader. Minimum Revenue Provision (MRP) – The Council is required by statute to set aside minimum revenue provision for the redemption of external debt. The method of calculating the provision is also defined by statute. Movement in Reserves Statement - the movement in the year on the different reserves held by the Authority, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves.

N National Non-Domestic Rates (NNDR) – a tax levied on business properties, and sometime known as Business Rates. A NNDR poundage is set annually by the government. Rates based on properties’ rateable values are collected by billing authorities and paid into a national pool. The proceeds are then redistributed by central government

as a grant to local authorities in proportion to adult population after deducting certain expenses on the basis of relevant population. Net Book Value – the amount at which non current assets are included in the balance sheet, i.e. their historical cost or current value less the cumulative amounts provided for depreciation. Net Current Replacement Cost - The cost of replacing or recreating the particular asset in its existing condition and in its existing use, that is, the cost of its replacement or of the nearest equivalent asset adjusted to reflect the current condition of the existing asset. Net Debt – is the Authority’s borrowing less cash and liquid resources. Net Realisable Value – The open market value of the asset in its existing use (or open market value in the case of non-operational assets), less the expenses to be incurred in realising the asset. Non-Operational Assets – Non current assets held by the Council but not directly occupied, used or consumed in the delivery of services. Examples of non-operational assets are investment properties and assets that are surplus to requirements pending sale or redevelopment.

O Operating lease – a lease where the risks and rewards of ownership of a non current asset remain with the lessor. Such a lease will be for a fixed period, which is significantly less than the useful economic life of the asset. Operational assets – non current assets occupied, used or consumed by the Council in direct delivery of its services.

P Payments in Advance - Amounts actually paid in an accounting period prior to the period in which they are due

Pension Strain – Pension strain arises when an employee retires early without actuarial reduction of pension.

Post Balance Sheet Event - Events both favourable and unfavourable which occur between the balance sheet date and the date on which the financial statements are approved Precept – An amount determined by one authority which is collected on its behalf by another e.g. Rochdale MBC Greater Manchester Police Authority precept. Premium/ Premia – Where the prevailing current interest rate is lower than the fixed rate of a long term loan, which is being repaid early, the lender can charge the borrower a premium, the calculation being based on the difference between the two interest rates over the remaining years of the loan, discounted back to present value. The lender may charge the premium, as their investment will now earn less than when the original loan was taken out. Prior Year Adjustments – material adjustments to the accounts of earlier years arising from changes in accounting policies or from the correction of fundamental errors. They do not include normal recurring corrections or adjustments of accounting estimates made in prior years. Private Finance Initiative (PFI) – A Central Government initiative which aims to increase the level of funding available for public services by attracting private sources of finance. The PFI is supported by a number of incentives to encourage Authorities’ participation. Provisions – amounts set aside in the accounts for liabilities or losses which are certain or very likely to occur but where there is uncertainty as to the amounts involved or the dates on which they will arise. Public Works Loan Board (PWLB) – A central Government agency, which lends money to local

authorities at lower, rates than those generally available from the private sector. Local authorities are able to borrow a proportion of their requirements to finance capital expenditure from this source.

R Receipts in Advance - Amounts actually received in an accounting period prior to the period in which they are due. Revenue Expenditure funded by Capital under statute (REFCUS) - This represents expenditure that may be classified under legislation as capital, but does not result in the creation of a non current asset on the Balance Sheet. Reserves – amounts set aside in the accounts to meet expenditure which the Council may decide to incur in future periods, but not allocated to specific liabilities which are certain or very likely to occur. Earmarked reserves are allocated to a specific purpose or area of spending. Revaluation Reserve – This reserve shows the accumulated gains on the non current assets held by the authority arising from upwards revaluations due to factors such as inflation on asset by asset basis. Any downwards revaluation will initially be charged to the revaluation reserve if one exists for that asset. Revenue Contributions – the method of financing capital expenditure directly from revenue. Revenue Expenditure - Day to day expenses, mainly salaries and wages, and general running costs. Revenue Support Grant (RSG) – a central Government grant paid to each local authority to help to finance its general expenditure. The distribution of the grant between authorities is intended to allow the provision of similar standards of service throughout the country for a similar Council Tax. Ring fenced – this refers to the statutory requirement that certain accounts such as the Housing Revenue Account must be

maintained separately from the General Fund.

S Soft Loans – Loans made with an interest rate below the market rate for a loan of that type.

T Temporary Loans - This represents money borrowed for an initial period of less than one year. Trust Funds – funds administered by the Council on behalf of charity trustees for such purposes as prizes and specific projects. Tenanted Market Value (TMV) – The agreed price for the transfer of housing stock as prescribed by Central Government.

U Unquoted Equity Investment at Cost – Investment in an unquoted company, where a reliable fair value cannot be established.

W Work In Progress – the cost of work done up to a specified date on an uncompleted project

Subject: STATEMENT OF ACCOUNTS 2011/12 Status: For...

Documents

Transcript of Subject: STATEMENT OF ACCOUNTS 2011/12 Status: For...