Archived decisions
Hampshire County Council | |||
Executive Member - Recreation and Heritage |
Item 1 | ||
18 July 2002 |
|||
Final Accounts 2001/02 | |||
Report of the County Treasurer | |||
Contact: Bevis Ingram, ext 7508
1 Introduction
1.1 This report summarises the Recreation and Heritage service's spending in 2001/02.
1.2 It recommends that the final accounts for 2001/02 be approved and that the overspend of £46,000 on the Museums service be carried forward to be met from the 2002/03 budget, that the overspend of £324,000 on Milestones be carried forward to 2002/03 to be met from future income, that the remaining net overspend of £223,000, which relates to costs arising from the foot and mouth outbreak offset by a net underspend on other services, be referred to the Leader and Cabinet for consideration.
1.3 Overall there is a net overspending of £593,000 (2.4%) against the 2001/02 revenue cash limit of £24.6m.
1.4 The variations are:
£'000 | ||
Arts, Countryside and Community |
+253 | |
Library and Information Services |
-37 | |
Museums |
- Museums |
+46 |
- Milestones |
+324 | |
Major acquisitions |
-22 | |
Director and support |
+34 | |
Other variations |
-5 | |
Total |
+593 | |
1.5 The County Council's policy is that 100% of overspendings should be carried forward into the following year's budget.
1.6 The overspend on Milestones of £324,000 has occurred following difficulties in forecasting visitor numbers in the first full financial year of operation. Visitor numbers were initially encouraging, and this lead to over optimistic forecasts over the longer period. The museum achieved 133,000 visitors in the year. This exceeded the projection in the original business plan, but was less than a revised target of 200,000 which was based on what is now recognised as an exceptional surge in attendances in the first 4 months of operation. The position was exacerbated by a general depression in the tourist economy, the effect of September 11 on the use of Milestones for corporate hospitality, and the introduction of free admission at all national museums in London. Milestones is run by a Joint Management Committee (JMC) of Hampshire County Council and Basingstoke and Deane Borough Council. Costs at the museum have been cut and a realistic budget was implemented for 2002/03 (based on 125,000 visitors). The JMC is now looking at further action to repay the deficit incurred in 2001/02. This report recommends that this 2001/02 deficit is therefore carried forward to 2002/03. However, Basingstoke and Deane are being approached to fund their 50% share of the deficit in the meanwhile.
1.7 The overspend of £46,000 on the main Museum Service was forecast late in the financial year, but no provision was made for it, so it is recommended that it is carried forward in full to 2002/03.
1.8 The remaining net overspending of £223,000 relates to the costs incurred from foot and mouth and one-off costs of re-structuring the department, offset by savings made across the department as reported earlier this year. The net overspend is £26,000 lower than forecast in February and this reflects the continuing efforts made by Recreation and Heritage managers to make savings. Assurances have been given that any remaining net overspend as a result of foot and mouth would be met from balances rather than carried forward, and the Cabinet will determine this at their meeting on 22 July 2002 when considering the County Council's final accounts.
1.9 On capital, schemes to the value of £533,000 started in the year and schemes to the value of £429,000 have been approved by the Cabinet to be carried forward to 2001/02. Schemes to the value of £8,000 are being recommended to be approved by Cabinet to be carried forward to start in 2002/03.
1.10 In total, this amounts to £73,000 less than the approved cash limit for the capital programme.
1.11 Further details on the main differences between the actual revenue expenditure and the revised budget for cash limited expenditure are given in Part A below while details of revenue expenditure which is not included in the cash limit are contained in the appendices at the end of the report. The results of the trading units are reported in Part B. Part C deals with capital schemes. Part D explains the basis of the financial control assurance statement included as Appendix 8.
1 Part A - Revenue expenditure under the service's control
1.1 Revenue expenditure under the service's direct control is subject to a cash limit. For 2001/02 the adjusted amount is £24,558,000 as set out in Appendix 1.
1.2 The final outturn was £593,000 more than the cash limit. The overall position is analysed in Appendices 2 and 3. Appendix 4 includes a more detailed statement of variations from the revised budget.
1.3 This is a larger variation, mainly because of the foot and mouth outbreak and the position at Milestones, compared with the outturns achieved in recent years as set out in the following table:
Variations from Revised Budget | ||
£'000 |
% | |
1998/99 |
-29 |
-0.1 |
1999/00 |
-103 |
-0.4 |
2000/01 |
+27 |
+0.1 |
2001/02 |
+593 |
+2.4 |
The most significant elements within the total net overspending are explained in the following paragraphs.
Library and Information Services (-£37,000)
1.4 The underspending was achieved through higher income arising from increased video/music rentals (-£50,000).
Arts, Countryside and Community (+£253,000)
1.5 The overspend was primarily caused by the outbreak of foot and mouth which severely affected the Countryside Service at the start of the financial year.
Countryside (+£240,000)
1.6 Extra spending on site maintenance (+£139,000) and support for Staunton Country Park (+£113,000) and advertising and emergency call centre (+£44,000) arising from foot and mouth and flood damage. Extra income across the sites (-£30,000) was subsequently generated.
Sport and Community (+£19,000)
1.7 The overspend was primarily due to lost income at the outdoor centres at the start of the year (+£27,000), due to foot and mouth.
Arts (-£6,000)
1.8 The underspend was primarily due to staff turnover savings at Arts HQ
(-£10,000)
Museums (+£370,000)
1.9 Less income as a result of fewer than expected visitor numbers at Milestones partially offset by planned reductions in expenditure (+£324,000). On the main service unexpected electricity costs (+£20,000) and additional telephone costs (+£17,000) were the main reasons for the overspend.
2 Part B - Trading Units
2.1 Details of the financial performance of Arts Marketing Hampshire are set out in Appendix 5.
3 Part C - Capital expenditure 2001/02
3.1 The outturn for 2001/02 is set out below with details of the total resources and details of the individual schemes started in the year appearing in Appendix 7.
£'000 | |
Total resources |
1,043 |
Value of schemes started in 2001/02 |
-533 |
Value of schemes carried forward to 2002/03 |
-437 |
Undercommitment against the cash limit |
73 |
3.2 The total starts limit for 2001/02 amounted to £1,043,000 and schemes to the value of £533,000 were started during the year. These included computerisation and security and minor works at various libraries, countryside improvements, Forest Arts Centre improvements and grants to village halls.
3.3 Schemes with a total value of £437,000 are to be carried forward to start in 2002/03. These and the reason for their delay are set out in Appendix 7.
4 Part D - Departmental assurance statement
4.1 The Code of Practice on Local Authority Accounting with which the County Council's statement of accounts complies, introduces a new requirement from 2002/03 for the inclusion in the statement of account of an internal control statement, covering as a minimum the system of internal financial control. The statement sets out the framework within which financial control is managed and reviewed, including the arrangement for internal audit and reports on any identified weaknesses and the actions undertaken to rectify these.
4.2 It is proposed to introduce a statement of internal financial control in 2001/02's statement of account. As part of the process of enabling the County Treasurer to form a view on the effectiveness of internal financial control the Chief Internal Auditor has produced an independent assurance statement on the adequacy and effectiveness of the system of internal control in each department. Appendix 8 contains the statement relating to the Recreation and Heritage service and concludes that the service has an effective framework of controls which provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives.
Recommendations
That:
1 The final accounts for 2001/02 be approved.
2 That the Cabinet be requested to approve:
i) The carry forward of overspendings amounting to a net £370,000 as set out in paragraphs 1.5, 1.6, and 1.7.
ii) The net overspending relating to foot and mouth £223,000 be written off.
iii) The carry forward of the following capital scheme to start in 2002/03:
Fairfields Art Centre grant |
(£8,000) |
3 The departmental assurance statement as set out in Appendix 8 be approved.
Section 100 D - Local Government Act 1972 - background papers
The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.
NB the list excludes:
1. Published works.
2. Documents which disclose exempt or confidential information as defined in the Act.
TITLE FILE
Summaries of Actual Spending 2001/02
Appendix |
Contents |
1 |
Construction of the cash limit |
2 |
Summary of revenue expenditure |
3 |
Analysis of cash limited revenue expenditure over services |
4 |
Major variations in cash limited expenditure |
5 |
Trading Units - summarised accounts 2001/02 |
6 |
Revenue expenditure 2001/02 not included in the cash limit |
7 |
Capital expenditure 2001/02 |
8 |
Departmental assurance statement |
Appendix 1
Recreation and Heritage Service
Revenue Expenditure 2001/02
Construction of cash limit
1 |
Revenue expenditure under the service's direct control was subject to a cash limit set by the Cabinet of £24,613,000. Business rates are an exception because the level of business rates on the County Council's own properties could not be determined precisely when the revenue budget was set. As a result of revaluations actual expenditure on rates is £127,000 lower than was provided for in the revised budget and the cash limit has been adjusted accordingly. | |
2 |
During the year, part of the lump sum provisions in the capital programme were allocated to minor schemes of a revenue nature. Under the Code of Practice on Local Authority Accounting the expenditure on these schemes is required to be accounted for in the revenue account. The revenue budget has been increased by £58,000 to cover this expenditure by a transfer from the County Council's overall budget for revenue contributions to capital. The individual schemes will still, however, continue to be controlled through the capital programme. | |
3 |
Further adjustments to the cash limit have also been made in respect of sustainability projects, £10,000 and inflation on IT charges £4,000. | |
4 |
The adjustments referred to above are incorporated in the table below which summarises the position for the service in the year: | |
£'000 | ||
Revised budget for 2001/02 |
24,613 | |
Reduction for the lower level of business rates payable |
-127 | |
Revenue schemes |
+58 | |
Sustainability projects |
+10 | |
IT charges inflation |
+4 | |
Amended cash limit |
24,558 | |
Net expenditure |
25,151 | |
Net overspending against service's controllable expenditure |
+593 | |
Appendix 2
Recreation and Heritage Service
Revenue Expenditure 2001/02
Summary of Revenue Expenditure
(1) |
(2) |
(3) | |||
Adjusted Revised Estimate |
Actual 2001/02 |
Variation (Col 2-Col 1) | |||
£'000 |
£'000 |
£'000 |
% | ||
Cash limited expenditure |
24,558 |
25,151 |
+593 |
2.4 | |
Trading units transferred (to)/from reserve account |
|||||
- |
Arts Marketing Hampshire |
-2 |
+6 |
+8 |
- |
- |
Historical publications |
- |
+13 |
+13 |
- |
Capital Charges |
6,305 |
6,305 |
- |
- | |
Other expenditure which is controlled centrally by Policy and Resources |
|||||
- |
Repair and maintenance of buildings |
950 |
615 |
-335 |
-35.2 |
- |
Central support services |
952 |
950 |
-2 |
- |
Less: |
|||||
Expenditure controlled by this service recharged to Policy and Resources: |
|||||
- |
Corporate and democratic core |
-84 |
-84 |
- |
- |
- |
Unapportionable overheads |
-134 |
-136 |
-2 |
1.5 |
Total Net Expenditure |
32,545 |
32,820 |
+275 |
0.8 | |
Reconciliation with total net expenditure in the budget book: |
|||||
Net expenditure, per page B67 |
32,432 |
||||
of the budget book |
|||||
Adjustments |
|||||
- |
Decrease for business rates |
-127 |
|||
- |
Increase for revenue schemes |
+58 |
|||
- |
Increase for sustainability projects |
+10 |
|||
- |
Increase for IT charges |
+4 |
|||
- |
Increase for capital charges |
+168 |
|||
Total |
32,545 |
||||
Appendix 3
Recreation and Heritage Service
Revenue Expenditure 2001/02
Analysis of cash limited expenditure over services
(1) |
(2) |
(3) | |
Adjusted Revised Estimate |
Actual 2001/02 |
Variation (Col 2 - Col 1) | |
£'000 |
£'000 |
£'000 | |
Cash limited expenditure |
|||
Library and Information Services |
14,080 |
14,043 |
-37 |
Countryside |
3,350 |
3,590 |
+240 |
Sport and Community |
1,955 |
1,974 |
+19 |
Calshot |
183 |
180 |
-3 |
Arts |
1,932 |
1,926 |
-6 |
Museums main service |
2,165 |
2,211 |
+46 |
Milestones |
- |
324 |
+324 |
Archives |
852 |
850 |
-2 |
Major acquisitions |
41 |
19 |
-22 |
Director and support |
- |
34 |
+34 |
Net cash limited expenditure |
24,558 |
25,151 |
+593 |
Appendix 4
Recreation and Heritage Service
Revenue Expenditure 2001/02
Major variations in cash limited expenditure - overspending £593,000
Budget Heading |
Variation |
Adjusted Revised Budget |
Reason |
£'000 |
£'000 |
||
Library and Information Services |
|||
Fees and charges |
-50 |
1,450 |
Higher income from increased music/video rentals |
Countryside |
|||
Site maintenance |
+139 |
378 |
Additional spending on site maintenance including spending arising from foot and mouth and flood damage |
Advertising costs, emergency call centre, promotion costs |
+44 |
- |
Additional spending across various sites arising from foot and mouth |
Grant aid |
+104 |
476 |
Extra spending arising from deficit due to foot and mouth at Staunton Country Park |
Fees and charges |
-30 |
746 |
Income target was reduced because of the effects of foot and mouth. However, the target was subsequently exceeded |
Sport and Community |
|||
Income |
+27 |
439 |
Reduced income at the outdoor centres arising from foot and mouth |
Calshot |
|||
Equipment |
+31 |
102 |
Purchase of equipment to maintain health and safety standards |
Fees and charges |
-54 |
1,301 |
Income from higher usage |
Arts |
|||
Employees |
-10 |
222 |
Staff turnover savings |
Museums |
|||
Milestones Museum |
+324 |
- |
Less income as a result of fewer than expected visitor numbers partially offset by planned reductions in expenditure |
Electricity |
+20 |
46 |
Higher than anticipated electricity costs for one museum |
Telephone rental and calls |
+17 |
37 |
Additional telephone costs |
Major acquisitions |
-22 |
41 |
Planned underspend towards cost of Director and support |
Director and support |
+34 |
- |
Planned spending on restructuring, recruitment and salary costs met from planned underspend on the Library and Information Services, Arts, Countryside and Community Services, and Major Acquisitions |
Appendix 5
Recreation and Heritage Service
Revenue Expenditure 2001/02
Trading units - Summarised Accounts 2001/02
The trading unit in this statement is allowed to carry forward planned surpluses and deficits. The statements set out below show the actual performance for 2001/02 compared with the revised budget. | ||
Revised Budget 2001/02 |
Actual 2001/02 | |
£'000 |
£'000 | |
Arts Marketing Hampshire |
||
Trading Account |
||
Income |
207 |
236 |
Expenditure |
205 |
242 |
Net operating deficit (-) |
2 |
-6 |
Reserve Account |
||
Balance at 1 April 2001 |
32 |
32 |
Deficit (-) for 2001/02 |
2 |
-6 |
Balance at 31 March 2002 |
34 |
26 |
Appendix 6
Recreation and Heritage Service
Revenue expenditure 2001/02 not included in the cash limit
1 |
Capital charges (£6,305,000) |
Capital charges are made to services for capital assets used in the provision of services. The actual charges are £168,000 more than the budget. This will have no direct effect upon the overall budget requirements of the County Council as the capital charges are replaced by actual financing costs in the central asset management revenue account. | |
2 |
Central support services, repairs and maintenance of buildings (£1,565,000) |
These items are within the control of Policy and Resources. Support services are apportioned to services in accordance with the level of services provided and office accommodation occupied. Control of the budget for repairs and maintenance of buildings is by the nature of work and where it is most required rather than by service. | |
3 |
Corporate and democratic core (recharge £84,000) and unapportionable overheads (recharge £136,000) |
These items cover management and support costs that relate to member support and advice and to pension costs for added years and early retirements. They are within this service's control and so are charged against this committee's cash limit. But they are then recharged to Policy and Resources outside of the cash limit as the Best Value Accounting Code of Practice requires these to be excluded from the cost of services. | |
Appendix 7
Recreation and Heritage Service
Capital programme 2001/02
£'000 |
|||||
1 |
Construction of total resources |
||||
Original programme limit per 2001/02 budget book |
446 | ||||
Cash limit brought forward from 2000/01 |
436 | ||||
2000/01 share of capital receipts |
128 | ||||
Unallocated cash limit |
33 | ||||
1,043 | |||||
2 |
Schemes started during 2001/02 |
||||
Libraries' computerisation and security |
54 | ||||
Libraries minor works |
74 | ||||
Countryside minor works and improvements |
140 | ||||
Salterns cottage |
100 | ||||
Grants to village halls |
25 | ||||
Badminton Centre of Excellence |
15 | ||||
Bedhampton Arts Centre improvements |
23 | ||||
Forest Arts Centre improvements |
30 | ||||
Proteus Theatre grant |
8 | ||||
Theatre improvements |
24 | ||||
Minor Arts grants |
6 | ||||
Museums gallery regeneration |
17 | ||||
Museums care of collections |
17 | ||||
533 | |||||
3 |
Schemes carried forward |
||||
Already approved by the Executive Member to start in 2002/03 |
|||||
£'000 |
Reason for the delay | ||||
Libraries minor works |
6 |
Slippage due to recosting of works. | |||
Countryside minor works and improvements |
51 |
Operational reasons, including legal disputes over access, restrictions arising from foot and mouth, and assembling funding from other services. | |||
Grants to village halls |
50 |
Assembling funding from other sources. | |||
Keymer House |
217 |
Delay whilst further funding is being assembled. | |||
Community recreation and sport |
15 |
Awaiting lottery bid outcome. | |||
West End Arts Centre facilities |
55 |
Investigating a new build in Aldershot. | |||
Cricklade Theatre grant |
5 |
Work now planned for summer. | |||
£'000 |
Reason for the delay | ||||
Fairfields Art Centre grant |
24 |
Improvement proposals not yet finalised. | |||
Minor arts grants |
6 |
Assembling funding from other sources. | |||
429 |
|||||
Other scheme to be recommended to the Cabinet to be carried forward to start in 2002/03 |
|||||
£'000 |
Reason for the delay | ||||
Fairfields Arts Centre grant |
8 |
Improvement proposals not yet finalised. |
|||
437 |
|||||
Appendix 8
Recreation and Heritage Service
Departmental Assurance Statement
1 |
Introduction |
1.1 |
The Accounts and Audit Regulation 1996 require the County Treasurer to maintain an adequate and effective internal audit. |
1.2 |
The County Treasurer employs an in-house internal audit section to provide an independent and objective appraisal function of reviewing the system of internal control. It examines, evaluates and reports to Chief Officers and the County Treasurer on the adequacy of the internal control as a contribution to the proper economic, efficient and effective use of resources. |
1.3 |
From 2002/03 The Code of Practice on Local Authority Accounting in the UK requires that the Chief Internal Auditor provides an independent opinion on the adequacy and effectiveness of the system of internal financial control operating in the County Council. The County Treasurer has sought to develop this for 2001/02 in preparation for the full requirement next year. To enable him to do this, an independent opinion on the adequacy and effectiveness of the system of internal control has been prepared for each department. |
2 |
Responsibilities |
2.1 |
It is a management responsibility to develop and maintain the internal control framework, and to ensure that resources are properly applied in the manner and on the activities intended. It is the responsibility of Internal Audit to form an independent opinion, based on reviews during the year, on the adequacy and effectiveness of the system of internal control. |
3 |
Basis of opinion |
3.1 |
The strategic and annual internal audit plans were prepared by the Chief Internal Auditor to take account of the characteristics and relative risks of the activities involved and were approved by the County Treasurer. |
3.2 |
The internal audit plan has been delivered in accordance with the Auditing Practices Board's Guideline number 308, `Guidance for Internal Auditors'. |
3.3 |
Work has been planned and performed so as to obtain all the information and explanations which were considered necessary in order to provide sufficient evidence to give reasonable assurance that the internal control system is operating effectively. However, this assurance can never be absolute. The most that the internal audit service can do is to provide reasonable assurance that there are no major weaknesses in the system of control. |
4 |
Opinion |
4.1 |
In our opinion the Recreation and Heritage Service has an effective framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. |
Ejner Knudsen Chief Internal Auditor County Treasurer's Department Hampshire County Council |