Meeting documents
Cabinet
Wednesday, 5th February, 2003
Appendix 8
Balances
Use and Reconciliation of General Fund Balances to Date in 2002/03
|
Type |
£k |
|
|
Opening balance as reported in final accounts from 2001/02: |
Balance |
4,243 |
|
Use from accounts 2001/02 |
Use |
-337 |
|
Sub total |
3,906 |
|
|
Extra Balances transferred from HRA |
Addition |
1,911 |
|
Reported general fund balances 2001/02 as in the final accounts |
5,817 |
|
|
2002/03 uses (earmarking) |
||
|
Risk Mgt & Invest to Save not yet spent |
Use |
-301 |
|
Legal challenge costs not yet charged in 2002/03 (provision from £1.9m HRA transfer) |
Use |
-100 |
|
PARIS project |
Use |
-126 |
|
Other misc. previously earmarked uses |
Use |
-110 |
|
Latest Use in Budget 2002/03 (as in current approved cash limits) |
Use |
-1,373 |
|
Balances returned for financial plan items delayed until 2003/04. This comprises £213k in previous revisions to the plan and £105k in appendix 1. |
+318 |
|
|
Tourism downturn contingency - not yet used. Earmark this item for expenses towards the set up of the new Tourism company. See section 3 of report. |
Use |
-100 |
|
Executive contingency. *This was set aside in the 2002/03 budget as a contingency for potential additional unavoidable costs in 2002/03 |
Use |
-342 |
|
Add use of Lambridge reserve in budget for decriminalised parking (to be repaid in future years) |
Addition |
350 |
|
Sub total of uses |
-1,784 |
|
|
New balances total |
Balance |
4,033 |
|
Legal challenges - approval Council in July 02 |
Use |
-150 |
|
VAT returned on Car Park charges |
Addition |
+100 |
|
Balances to be used in funding carried forward financial plan items in 2003/04 |
-318 |
|
|
Approval by Executive in October (£25k) and Council in November (£50k) to Norton Radstock Regeneration Company (NRR) up to £75,000 to assist with future Company operations |
Use |
-75 |
|
Allocation of remaining Avon balances to be transferred in October 2002 |
Addition |
463 |
|
Proposed new earmarking for further legal challenge costs - see section 3 of report |
Use |
-100 |
|
Net balances (Net minimum for proposed £158.8m budget at 2.5% would need to be £3,970k) |
Balance |
3,953 |
|
Contribution in proposed budget would add a further |
Addition |
450 |
|
36 Net balances if recommended budget approved (equal to 2.75% of recommended net revenue budget). |
Balance |
4,403 |
Appendix 9
Chief Financial Officers' Opinion on Adequacy of Balances and the Robustness of the Budget
It is encouraged in guidance from CIPFA (Local Government Accountants' Professional Body) that has recently been published in January 2003 that the Chief Financial Officer should make a statement on the adequacy of balances and the budget. This echoes the soon to be statutory duty in the 2002 Local Government Bill. Although this is not yet the law, the Executive are keen that we should invite our Chief Financial officer to make such a Statement as a trial run of the new legislation.
The Guidance from CIPFA states the following:
Regarding the Local Government Bill, 2002 (England and Wales)
3.19 The Local Government Bill, 2002 emphasises the importance of sound and effective financial management and signals the introduction of two new statutory duties that will bear heavily on finance directors.
3.20 In relation to capital financing there will be a statutory requirement for each local authority to set and arrange their affairs to remain within prudential limits for borrowing and capital investment. Advice on fulfilling this responsibility is set out in CIPFA's draft Code. The Government also intends to ensure that local government officers (particularly s151 officers) and external auditors have the powers they need to ensure that the legal requirements are complied with in discharging their responsibilities for capital finance.
3.21 There will also be a new statutory duty on the finance director to report to the authority, at the time the budget is considered and the council tax set, on the robustness of the budget estimates and the adequacy of financial reserves. This will be a public report. The Secretary of State in England or the National Assembly for Wales will have powers to specify in regulations a statutory minimum level of reserves that will be used if authorities fail to remedy deficiencies or run down reserves against the advice of the finance director.
Statement of the Resources Director (as Chief Finance Officer for the Authority)
I have examined the budget proposals contained in this report, and believe that whilst the spending and service delivery proposals contained within are tight, they are nevertheless achievable and deliverable given good management practices and sound financial and performance monitoring is maintained. I am satisfied that the requisite management processes exist within the Council to deliver this budget, and to identify and deal with any problems which may unexpectedly arise throughout the year.
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On the matter of general reserves, the recent CPA advice has been to increase the absolute minimum of general reserves to 2.5% of the budget, or, to evidence the requisite level by use of internal risk assessment.
From 2001/2, the Council adopted a risk management approach, which assesses the level of reserves required against a corporate assessment of the risk being carried. The latest assessment of this is around £5M and the Executive are advised to bear this figure in mind when recommending use or replenishment of general reserves. Whilst it is recognised that it would not be possible to achieve this absolute figure in 2003/4 and maintain a balanced budget, a commitment to phase in the increases over the financial planning period would be welcomed. The contribution of £450,000 included within this report, taking the level to over £4m would appear reasonable and prudent in the current circumstance.
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