Archived decisions

1. General principles

1.1 The accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting in Great Britain: A Statement of Recommended Practice (SORP) 2006 and the Accounts and Audit Regulations 2003. Any significant non-compliance is explained in the following notes.

2. Debtors and creditors

2.1 Debtors and creditors have been accrued in accordance with the Code of Practice.

2.2 There is, however, one exception. Electricity and other utility companies' payments are accounted for at the date of meter reading rather than being shared between financial years. This applies every year and therefore does not have a material effect on the year's accounts.

3. Reserves and provisions

3.1 Specific amounts are set aside as reserves for future policy purposes or to cover contingencies. Reserves are created by transferring amounts in the Statement of Movement on the General Fund Balance. Expenditure on items for which the reserves were originally created is shown as service expenditure in the Income and Expenditure Account and then transferred back into the General Fund Balance Statement so that there is no net charge against council tax for the expenditure. Variations to earmarked reserves are shown in the notes to the accounts.

3.2 Provisions represent legal liabilities when the amount or date of payment is uncertain. They are charged to the revenue account in the year they are recognised.

3.3 The Authority holds two provisions. The first is a provision for bad debts which is deducted from the total for debtors. The second is for uninsurable and other claims. This covers costs which may arise as a result of the Authority being uninsured for a period, possible tribunals and other claims made against the Authority.

3.4 The Authority has the following reserves:

      · the General Fund balance is the surplus of revenue income over expenditure. It can be used to supplement income in future years

      · the capital reserve is used to help pay for future years' capital payments

      · the modernisation reserve will be used to help finance the range of initiatives required by the modernisation programme

      · the underspendings reserve is used to carry forward specific budget underspends from one year to the next

      · the transitional grant reserve will be used to repay the transitional funding as and when required by the Government.

      · the pensions reserve, which is not cash backed, represents the difference between the Authority's recognised liability in relation to pensions and the amount raised through taxation to pay that liability.

4. Fixed Assets

4.1 All expenditure on the acquisition, creation or enhancement of a fixed asset which yields benefits for a period of more than one year is treated as capital expenditure in the accounts. Spending on IT assets and intangible assets (such as software licences) typically yields benefits for a period of less than five years. Such expenditure is capitalised only if it yields benefits of five years or more.

4.2 Fixed assets are valued on the basis recommended by the Chartered Institute of Public Finance and Accountancy (CIPFA) and in accordance with the Statements of Asset Valuation Principles and Guidance Notes issued by the Royal Institution of Chartered Surveyors. Fixed assets are classified into the groupings in the Code of Practice on Local Authority Accounting:

      · Land, property and other assets used for service provision are called "operational assets". They are included in the balance sheet at the open market value for their present use when there is sufficient evidence to support the value, or at depreciated replacement cost otherwise.

      · Assets not used to provide services are called "non-operational assets" and are assets that are currently not in use. These are included in the balance sheet at open market value.

4.5 Surpluses arising on the valuations of fixed assets have been credited to the fixed asset restatement account. Subsequent revaluations of fixed assets are undertaken on a five year rolling programme.

4.6 Income from the disposal of fixed assets is accounted for in the year in which it occurs. This is used to meet expenditure for capital purposes.

5. Basis of charges for capital

5.1 In accordance with SORP 2006, a notional interest charge, to represent the opportunity cost of the capital employed is no longer required in the accounts.

5.2 Depreciation charges are made on all fixed assets other than land and non-operational assets in line with FRS 15.

5.3 Depreciation is calculated on a straight line basis over the useful economic lives of the assets. In the case of permanent buildings a residual life of between 35 and 60 years is assumed. Furniture and equipment is assumed to have a life of ten years and vehicles between five and 15 years.

6. Deferred charges

6.1 Deferred charges are payments, which are capitalised but do not create tangible fixed assets. In 2006/07, the main category of expenditure

    coming under the heading of deferred charges was the costs associated with the Home Fire Safety Check Initiative.

7. Redemption of debt

7.1 The Authority's borrowing for capital purposes is determined by the Authority each year in accordance with the CIPFA Prudential Code for Capital Finance in Local Authorities. The total borrowing is known as the Capital Financing Requirement which is derived from the opening balance sheet. The Authority makes provision for the redemption of debt in accordance with requirement that a minimum revenue provision is put aside from revenue. This must be at least equal to 4% of the capital financing requirement for capital purposes at the start of each financial year.

8. Stocks and stores

8.1 Stocks worth £615,000 have been included in the consolidated balance sheet.

    Several stocks are held with the largest relating to vehicle spares, uniforms and operational equipment. All stocks are valued at latest buying price which is not in line with the SORP however the difference is immaterial.

9. Support Services

9.1 The costs of the support services are allocated over services according to their usage by direct services with the exception of some corporate services which are allocated on the basis of net expenditure.

10. Pension arrangements

10.1 The Authority participates in three different pension schemes which meet the needs of employees. All schemes provide members with defined benefits relating to pay and service. The costs of providing pensions for employees are charged to the accounts in accordance with the statutory requirements.

11. Leasing

11.1 The Authority has, on occasions, used operating leases to acquire vehicles as an alternative to capital financing. The rentals on the leases are charged to services in the Income and Expenditure Account. The Authority took the decision not to take out any further operating leases for operational vehicles in February 2004.

12. Specific Revenue Government Grants

12.1 Government grants for specific purposes are included in the accounts on the basis of the relevant percentage of expenditure and the total grant awarded for the year, depending on the grant conditions that apply. These grants are shown against the relevant service in the Income and Expenditure Account.

13. Capital Grants and Contributions

13.1 The Code of Practice provides for capital grants and contributions to be credited, initially to a Government grants deferred account. Amounts are released to revenue to offset the charges for depreciation on the revalued assets. The amount of each year's capital grants and contributions is released to revenue over the life of the assets.