Summaries of actual spending 2004/05

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 Analysis of expenditure on revenue repair and maintenance of buildings

6 Trading units - summarised accounts 2004/05

7 Revenue expenditure 2004/05 not included in the cash limit

8 Capital expenditure 2004/05

9 Departmental assurance statement

Appendix 1

Policy and Resources

Revenue expenditure 2004/05

Construction of cash limit

In the revised budget revenue expenditure under the service's direct control was subject to a cash limit set by Cabinet of £43.813m. Variations in the cost of business rates are managed centrally because the level of business rates on the County Council's own properties could not be determined precisely when the revenue budget was set, because of the effect of revaluations and transitional arrangements. Rates rebates meant this budget was £1.1m under the provision in the revised budget.

Further adjustments to the cash limit have been made in respect of costs associated with the disposal of land and buildings which, in a similar manner to business rates cannot be predicted in advance and are adjusted at the end of the year. Other adjustments have been made in respect of capital to revenue transfers, legal costs, fewer de minimis capital receipts than planned and a transfer to the Hilliers Development Fund.

The adjustments referred to above are incorporated in the table below which summarises the position for the service in the year:

Appendix 2

Policy and Resources

Final Accounts 2004/05

Summary of Revenue expenditure

Appendix 4

Policy and Resources

Revenue expenditure 2004/05

Major variations in cash limited expenditure - underspending £129,000

Appendix 6

Policy and Resources

Trading units - summarised Trading Accounts 2004/05

The trading units in this statement operate under the arrangements in Section D5 of Financial Procedures. This statement summarises their trading positions and shows the movement in their reserve accounts.

Appendix 7

Policy and Resources

Revenue expenditure 2004/05 not included in the cash limit

1 Capital charges (£10.754m)

Capital charges are made to services for capital assets used in the provision of services. The actual charges are £2,351m more than the budget due to a change in accounting rules requiring write off of the balance of deferred charges arising from Local Government Reorganisation. However, this will have no direct effect upon the overall budget requirement 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 (£24.534m)

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 exercised on a functional rather than service basis, but actual costs are allocated to the relevant service.

3 Adjustment for pension and early retirement costs (£1.663m)

This adjustment includes:

a) the difference between the cash value of employers' contributions to the Local Government Pension Scheme (LGPS) (included within the service's cash limited expenditure) and the current cost of pension benefits earned by members of the LGPS during 2004/05, as assessed by the County Council's actuary. This adjustment is required by the Code of Practice on Local Authority Accounting in the UK and is calculated in accordance with Financial Reporting Standard 17 (FRS 17) Retirement Benefits. It relates only to "defined benefit" schemes, including the LGPS, where the assets and liabilities of the scheme can be attributed to individual employers on a consistent and reasonable basis

b) the costs arising from early retirement decisions and the granting of compensatory added years. These are within this service's cash limited expenditure, but are excluded from the cost of services in the final accounts, on the basis that the cost relates to past service.

4 Corporate and democratic core (recharge £0.749m)

Corporate and democratic core covers management and support costs that relate to member support and advice, but are under the control of this service and thus are included within the service's cash limit. However the Best Value Accounting Code of Practice requires these costs to be aggregated and separated from the cost of providing front line services.

5 Magistrates' Courts (£11.121m)

Since the revised budget, the Department of Constitutional Affairs agreed extra approvals to the Magistrates Courts revenue cash limit. The last reported revised budget of £11.010m was increased to £11.124m, mainly in respect of warrant enforcement. The actual expenditure of £11.121m represents an overspend against the revised budget, but a small underspend of £3,000 when compared with the approved cash limit.

Appendix 8

Policy and Resources

Capital expenditure 2004/05

Appendix 9

Policy and Resources

Department assurance statement for the year ended 31 March 2005

1 Introduction

1.1 The Accounts and Audit Regulation 2003 require the County Treasurer to maintain an adequate and effective system of internal audit.

1.2 From 2002/03 the Code of Practice on Local Authority Accounting in the United Kingdom has required the County Treasurer to sign a statement on the system of internal financial control as a note to the published accounts. From 2003/04, the Leader and Chief Executive are now required to sign a more general statement of internal control, replacing the previous one. To support this process, the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the control environment, comprising risk management, control and governance for each department and the County Council as a whole.

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. The internal audit plan has been delivered in accordance with the Code of practice for internal audit in local government in the United Kingdom, issued by CIPFA.

3.2 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 These are the opinions for the departments that are grouped together within the Policy and Resources group of services.

Chief Executive

4.2 The Chief Executive's department has an effective framework of control that provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown controls to be working in practice.

Human Resources

4.3 The Human Resources department has a basic framework of control that provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown that controls are generally not operating in practice.

IT Services

4.4 The IT Services department has a basic framework of control that provides partial assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown controls not to be working in practice.

4.5 During the year the department incorporated the management of the Enterprise project and therefore the risk assessment within the audit plan has seen a material increase. The higher priority workload and a particular focus on the implementation phase of SAP roll-out has contributed to a change in the department's overall opinion since last year, when it was considered effective.

4.6 A positive response has been received from the Head of IT Services, who is preparing an action plan specifically to resolve the issues raised, and enable progress to be monitored. In addition, detailed audit testing has not identified any evidence of losses or misuse as a result of the weaknesses reported.

Property, Business and Regulatory Services

4.7 The Property, Business and Regulatory Services department has an effective framework of control that provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown controls to be working in practice.

Treasurer's

4.8 The County Treasurer's department has an effective framework of control that provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown controls to be working in practice

5 Overall opinion

5.1 In order to provide an overall opinion for the Policy and Resources group of services, I have considered the overall impact for the whole group framework in achieving the County Council's objectives.

5.2 My overall opinion is that the Policy and Resources group of services has an effective framework of control that provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council's objectives. Audit testing has shown that the controls are generally working in practice, with the exception of in the Human Resources and IT Services departments.

Ejner Knudsen

Chief Internal Auditor

County Treasurer's Department

Hampshire County Council

July 2005