Statement of Accounts - Harrogate and Governance Com… · Harrogate is a beautiful district in the...

APPENDIX 1

Statement of Accounts

For the year ended 31 March 2018

INTRODUCTION

This document contains the Statement of Accounts that the Council publishes in accordance with theAccounts and Audit Regulations 2017.

CONTENTS Page No

Narrative Report 1

Statement of Responsibilities; Signature of Approval 13

Movement in Reserves Statement 14

Comprehensive Income and Expenditure Statement 16

Balance Sheet 17

Cash Flow Statement 18

Notes to the Financial Statements 19

Supplementary Financial Statements:

Movement on the Housing Revenue Account Statement 64

Housing Revenue Account Income and Expenditure Statement 65

Notes to the Housing Revenue Account 66

Collection Fund (England) Statement 69

Glossary of Terms 71

Independent Auditor’s Report 75

Additional Information to the Accounts

Appendix 1: Annual Governance Statement

THESE ACCOUNTS ARE SUBJECT TO AUDIT. THE AUDITOR’S REPORTWILL BE ATTACHED WHEN IT IS AVAILABLE.

HARROGATE BOROUGH COUNCIL

NARRATIVE REPORT: FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2018

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The Harrogate District

Harrogate is a beautiful district in the county of North Yorkshire offering a superb quality of life. We have astrong local economy, low unemployment, unrivalled natural and built heritage, low levels of crime andexcellent sporting and cultural opportunities. Key features of the district and the council include:



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Our corporate priorities and values are:



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Local Government service delivery in the district is split between HBC and North Yorkshire County Council(NYCC). NYCC are responsible for services such as social care, education and highways. The servicesprovided by HBC are:

Central Services includes expenditure on housing benefit (£23.3m in 2017/18) as well as theInformation Communication & Technology, Legal, Finance and Organisational Development &Improvement services. These are largely ‘back office’ functions and support the other services thatthe Council provides, although included within here are services such as Revenues & Welfare andElections.

Culture, Tourism and Sport includes recreation and sport, museums and arts and holiday tourism.

Safer Communities includes community safety including CCTV, licensing, food safety, environmentalprotection and car parking.

Planning and Development includes forward planning, development control, building control,economic development and building maintenance.

Housing Services: Council Housing includes expenditure and income in relation to the Council’s ownhousing stock, which is charged to a separate ring-fenced account called the Housing RevenueAccount (HRA).

Housing Services: General Fund includes housing services provided to non-Council tenants, such ashomelessness, housing advice and housing improvement grants.

Parks and Environmental Services includes open spaces, waste collection, recycling, cemeteries andcrematoria, street cleansing and pest control.

Harrogate Convention Centre includes services provided by the Convention Centre.



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Other Operating Expenditure includes interest costs (including for the HRA), precept and grantpayments to Parishes and the contribution to the Government’s Housing Capital Receipts Pool.

Funding comes from the following sources:

The table shows the importance of government grants, despite their continued reduction. That said, themajority of the grant figure (£23.4m in 2017/18) relates to Housing Benefit grant. 2017/18 was the lastyear that the Council will receive Revenue Support Grant (£0.4m received in the year). New Homes Bonustotalled £1.2m and is a key element of funding, but one that is not guaranteed beyond 2019/20. It will beimportant to maximise the opportunities for generating sales income in order to mitigate against futuregrant cuts and to keep council tax as low as possible.



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The General Fund budget for 2017/18 and a comparison with actual performance are set outbelow:

Overall, a significant saving against budget of £1.8m was made, with variations across most serviceareas. This underspend is similar to previous years (£1.3m in 2016/17 and £1.8m in 2015/16). Themain variances were within Parks & Environmental Services, where in particular the Garden Wastesubscription service generated more income than initially expected in the first year, during whichthe service was only rolled out to existing customers. Within Culture, Tourism & Sport, income fellshort of expectations across a number of sites. The Planning & Development service underspentsignificantly, primarily due to a large increase in planning application income. The ConventionCentre fell slightly short of its income targets, as well as increasing spend on security followingrecent terrorist attacks in the UK. The savings within Treasury Management primarily relate to adrawdown from the Budget Transition Reserve to offset overspends within Parks & EnvironmentalServices and Finance, as well as savings on the in-year cost of the business rates levy and grantincome. Of the £1.8m underspend, £0.5m has been transferred to service reserves, with theremainder being transferred to the General Fund working balance ahead of decisions being madeas to its use. More detail can be found in the ‘2017/18 Year end Finance and Performance report’,which will be published in June.

NetControllable

Budget£000

Outturn£000

Variance£000

Community:Housing & Property 1,734 1,734 0Parks & Environmental Services 5,373 4,774 -599Safer Communities -1,539 -1,514 +25

Corporate Affairs:Finance 2,479 2,641 +162Legal & Governance 2,029 1,986 -43ICT 2,508 2,499 -9Organisational Development &

Improvement2,119 2,119 0

Economy & Culture:Culture, Tourism & Sport 676 905 +229Planning & Development 5,286 4,283 -1,003

Harrogate Convention Centre -1,008 -730 +278

Treasury Management & OtherCorporate Items

-1,972 -2,679 -707

Total Net GF Expenditure 17,685 16,018 -1,667Funding -17,685 -17,856 -171

Net Position 0 -1,838 -1,838



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The Housing Revenue Account budget for 2017/18 and a comparison with actual performance are setout below:

Net budget£’000

Outturn£’000

Variance£’000

Expenditure 16,937 13,498 -3,439Income -17,932 -18,013 -81Net Expenditure -995 -4,515 -3,520

Working Balance:Brought forward -12,398 -13,622 -1,224Carried forward -13,393 -18,137 -4,744

Expenditure was significantly lower than budget, primarily because the contribution to capitalexpenditure was reduced by £2.8m due to delays in some redevelopment work.Income was £0.1m higher than budget, due to small variances over a range of areas.The HRA working balance carried forward is £18.1m, and this is forecast to remain at a similar orhigher level over the coming years in preparation for repaying in 2021/22 £15m of loan funding thatwas taken out to fund the self-financing payment to Government in 2012.

Capital

In 2017/18 the Council spent £12.8m on capital projects compared with the original overall budgetof £14.0m. Of this total, Housing capital spending for 2017/18 was £6.4m compared to a budget of£9.2m, the net reduction of £2.8m being a combination of £1.2m of increased spending onpurchasing properties to add to the stock of shared ownership properties and a £4.0m reduction inthe cost of redevelopment work due to work being carried forward to 2018/19. Work completed inthe year included the annual programme of planned maintenance and upgrades, together with anumber of property purchases to add to the shared ownership stock and the continued small-scaleprogramme of new house building.

Capital spending on non-housing schemes was £6.4m, compared to an original budget of £4.8m.The variance was largely due to £4.0m of expenditure on the new Civic Centre being broughtforward to 2017/18 from 2016/17, whilst expenditure of £2.4m is being carried forward to 2018/19,consisting of £2.0m for Ripon Pool and £0.4m for vehicles and plant. The majority of theexpenditure in the year was on the new civic centre (£4.0m), which is now complete and fullyoperational. This major development was completed within budget and will now allow to theCouncil to realise ongoing revenue savings, as well as significant capital receipts from the sale of ourold office accommodation, whilst enabling the Council to work better together to provide anenhanced customer experience.

Capital receipts from asset sales during the year totalled £4.4m. £2.5m of this related to Councildwelling sales within the HRA, including shared ownership property sales. Of these receipts, £0.9mwas paid over to the Government in line with the pooling requirements. The only non-housing assetsale in the year was Scottsdale House (£1.9m), the second office sale as a result of the move to thenew Civic Centre.



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The financial performance in the year was encouraging insofar as both the General Fund and HRAunderspent, but there are undoubtedly financial challenges both in the immediate and mediumterm that will need to be met. The Medium Term Financial Strategy (MTFS) will be updated overthe summer of 2018 and will set out the upcoming financial challenges and risks, together with theactions needed to overcome them. The MTFS is just one element of the strategic planning process,which is set out below:



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In March 2016 the Council adopted an updated transformation programme, named Our Strategy forSuccess, which is due to run until 2020. The programme has made a number of significant achievementsin the past two years, including:

Completion of a new civic centre and successful relocation of 500 staff and customer facing servicesAchieving projected income in excess of £2.5m through the commercialism agendaDevelopment of an award winning websiteOver 26,000 online accounts set up by customersRoll out of a leadership and management programme to increase skills and effectiveness of seniormanagersEmbedding of new standards of behaviour and staff recognition programmes

The Our Strategy for Success programme is currently being reviewed with a view to introducing a new2024 Programme that will address the challenges and opportunities now facing the Council, including:

Challenges:

Funding – there is significant uncertainty over future funding levels, with a Fair Funding Review dueto implement new baseline funding allocations for local authorities from 2020/21Ageing workforce – the Council must address how it will retain knowledge and experience as asignificant proportion of the workforce approaches retirement ageTechnological change – ensuring that the council has the capacity to invest in and implementinfrastructure change, in order to operate efficiently and to meet customer needs

More widely, the district faces key challenges including:

Ageing population – the number of people aged over 65 is forecast to increase by 49% by 2035Economic growth – the district is forecast to grow more slowly than the wider Leeds City Regionover the next five yearsTransport – ongoing issues with road and rail connectivity and traffic congestionHousing - high cost of renting and purchasing housing, with a limited supply of affordable housing

Opportunities:

Income generation – commercial opportunities, including the Turkish Baths and Convention CentreAlternative service delivery models – to maximise commercial opportunitiesDigitisation – improved and quicker communications with customers

Financial and Service Performance

In planning to meet these challenges and to take advantage of these opportunities, the Councilrecognises that an integration of financial and service performance is key. Each year, in order topresent a balanced budget, each service has to critically review its spending and service delivery inorder to make budgetary savings whilst continuing to provide services of the same or improvedstandard, meaning that there is an on-going commitment to increasing the economy, efficiency andeffectiveness across all service areas.

The Council’s service planning arrangements are integrated with its financial managementarrangements. A strategic approach is taken to service and financial planning during the PerformanceClinic process in which the budgets and performance of each service are scrutinised by ManagementBoard. Integrated finance and performance monitoring reports are taken to Management Board on amonthly basis and go forward to Cabinet each quarter. In 2018/19, additional quarterly ManagementBoard performance and finance meetings are being introduced to allow for detailed discussions onany areas of concern in order to identify further support required by services.



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The Council produces an annual delivery plan to deliver its Corporate Plan – the actions andperformance indicators in the annual delivery plan can change on an annual basis in order to ensurewe are focusing on our priority areas. On presentation of the year-end performance report for2017/18, Management Board congratulated staff on their achievements throughout the year, as wellas scrutinising the performance measures that were off target. They were satisfied with theexplanations and actions put forward to mitigate the associated risks but noted that in 2018/19,further interventions will be put in place to improve corporate performance managementarrangements.

The four main areas that were off target have all been previously reported and measures have beenput in place throughout the year to mitigate against the risk of not achieving targets:

Attract convention events to Harrogate to deliver economic benefits of £65m through visitorspend and achieve our Harrogate Convention Centre income targetWork with partners to address traffic, congestion and air quality in the districtDevelop and maintain a proactive approach to housing provision in the districtReduce the number of families living in temporary accommodation by securing permanentaccommodation

Key outcomes achieved in 2017/18 were:

We have approved and started to implement our ambitious Economic Growth Strategy.Some of the early successes include the approval of/implementation of major capital projectssuch as Station Gateway. Digital growth has been high on our agenda and we have madesignificant progress on the ‘Smart Harrogate’ work stream, including ‘smart parking’.

We recognise the importance that tourism plays to our local economy and this year’sprogramme of major events included the Tour de Yorkshire. We are well underway with thepreparations to host the UCI World Cycling Championships in 2019; securing £300,000 of LeedsCity Region funding to support this event.

In 2017/18 we made significant progress on the delivery of our emerging Local Plan. Publicconsultation has taken place and work is now progressing on the submission of the planscheduled for summer 2018.

During 2017/2018 we re-used, recycled and composted 39.7% of household waste;exceeding our 34% target and a 2.1% improvement on the previous year. Households acrossthe district have reduced the amount of waste they produce; with each household creating470.6 kilogrammes of household waste compared to 483 kilogrammes in 2016/17.

In 2017/18 we continued our proactive approach to housing provision in the district. Weagreed a business case to develop a Housing Company. Although we did not meet ourambitious target of delivering 200 new affordable dwellings, we significantly improved on our2016/2017 performance by increasing the number from 51 to 161 dwellings (a 216% variance).

We have worked to reduce the number of families living in temporary accommodation bysecuring them permanent accommodation. We reduced the number of families living intemporary accommodation from 58 to 51 at the end of March 2018. However, the averagelength of stay for families in temporary hostel and B&B accommodation have both increased incomparison with the previous Quarter Four data; from 4.07 to 8.68 weeks and 5 to 10.42weeks respectively. The average length of stay in temporary accommodation is directlyaffected by the availability of suitable properties. We have taken a proactive approach toexpanding the properties available by starting a project to construct our own new buildspecialist housing site; the public consultation for this has now closed and we are proposing tosubmit a planning application in the next few months.

We have continued to develop a model for a cost-effective and commercially focused Sportand Leisure Service. The scope for the review has been agreed by Cabinet; a Strategy has beendrafted and is currently out for consultation with partner organisations. Management Boardagreed to progress the public consultation on the Strategy and an options appraisal will be



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reported to Cabinet in December 2018. Overall project completion is anticipated by the end of2019.

More detail regarding the Council’s performance during the year can be found in the ‘2017/18Corporate Delivery Plan: Year-end performance report’, which will be available on the Council’swebsite in due course.

Planned Future Developments in Service Delivery

The Council is continuing to pursue its comprehensive programme of innovation and businesstransformation, designed to reduce costs, improve services, drive cultural change and place thecustomer at the heart of everything that we do. When the 2024 Programme is fully up and running, itwill focus on four areas of activity:

Sustainable Harrogate – using our assets and powers to support economic growth and theprovision of affordable housingDestination Harrogate – promoting Harrogate as an events destination in order to support thevisitor economyDigital Harrogate – improving our communications through the use of digital and social media;and harnessing digital technology advances to improve access to services, reduce isolationand improve the effectiveness of the CouncilCommercial Harrogate – making the best use of resources by pursuing commercialopportunities and making efficiencies

Our approach to transformation enables the Council to continue to improve its services whilstensuring that the financial footing of the Council remains solid.

Further information

The following documents are all available on our website (www.harrogate.gov.uk):

District Profile – sets out the context for our plans, detailing information about our district andresidents

Corporate Plan and Delivery Plan – the Corporate Plan sets out our ambitions, corporate priorities andvalues. Each year we publish our Delivery Plan alongside the Corporate Plan, which details what wewill do, what our targets are and how we will measure these.

Medium Term Financial Strategy – sets out how we plan to manage our finances and how we canmore closely align resource to the priorities set out in our key strategic planning documents.

Our Strategy for Success – is our integrated transformation and organisational development strategy,setting out our ambition for the Council.



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The Financial Statements

The Council’s Statement of Accounts sets out the Council’s income and expenditure for the year, andits financial position at 31 March 2018. It comprises core and supplementary statements, togetherwith disclosure notes. The format and content of the financial statements are prescribed by the CIPFACode of Practice on Local Authority Accounting in the United Kingdom 2017/18, which in turn isunderpinned by International Financial Reporting Standards.

The Core Statements are:

the Statement of Responsibilities for the Statement of Accounts – which explains both theCouncil’s and Head of Finance’s responsibilities in respect of the Statement of Accounts.

the Movement in Reserves Statement – this Statement shows the movement in the year on thedifferent reserves held by the Council, analysed into ‘usable reserves’ (i.e. those that can beapplied to fund expenditure or reduce local taxation) and other reserves. The Surplus or Deficit onthe Provision of Services line shows the true economic cost of providing the Council’s services,more details of which are shown in the Comprehensive Income and Expenditure Statement. Theseare different from the statutory amounts required to be charged to the General Fund Balance andHousing Revenue Account for council tax setting and dwellings rent setting purposes. The NetIncrease/Decrease before Transfers to Earmarked Reserves line shows the statutory General FundBalance and Housing Revenue Account Balance before any discretionary transfers to or fromearmarked reserves undertaken by the Council.

the Comprehensive Income and Expenditure Statement – this Statement shows the accountingcost 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 coverexpenditure in accordance with regulations; this may be different from the accounting cost. Thetaxation position is shown in the Movement in Reserves Statement.

the Balance Sheet – the Balance Sheet shows the value as at the Balance Sheet date of the assetsand liabilities recognised by the Council. The net assets of the Council (assets less liabilities) arematched by the reserves held by the Council. Reserves are reported in two categories. The firstcategory of reserves is usable reserves, i.e. those reserves that the Council may use to provideservices, subject to the need to maintain a prudent level of reserves and any statutory limitationson their use (for example the Capital Receipts Reserve that may only be used to fund capitalexpenditure or repay debt). The second category of reserves consists of those that the Council isnot able to use to provide services. This includes reserves that hold unrealised gains and losses (forexample the Revaluation Reserve), where amounts would only become available to provideservices if the assets are sold; and reserves that hold timing differences shown in the Movement inReserves Statement line ‘Adjustments between accounting basis and funding basis underregulations’.

the Cash Flow Statement – the Cash Flow statement shows the changes in cash and cashequivalents of the Council during the reporting period. The statement shows how the Councilgenerates and uses cash and cash equivalents by classifying cash flows as operating, investing andfinancing activities. The amount of net cash flows arising from operating activities is a key indicatorof the extent to which the operations of the Council are funded by way of taxation and grantincome or from the recipients of services provided by the Council. Investing activities represent theextent to which cash outflows have been made for resources which are intended to contribute tothe Council’s future service delivery. Cash flows arising from financing activities are useful inpredicting claims on future cash flows by providers of capital (i.e. borrowing) to the Council.



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the Notes to the Financial Statements – the notes to the accounts disclose the informationrequired by the Chartered Institute of Public Finance and Accountancy (CIPFA) Accounting Code ofPractice on Local Authority Accounting that is not presented elsewhere in the financial statementsand which is relevant to the understanding of them.

The Supplementary Financial Statements are:

the Movement on the Housing Revenue Account (HRA) Statement – which shows how the HRAIncome and Expenditure Account surplus or deficit for the year reconciles to the movement on theHRA Balance for the year.

the Housing Revenue Account Income and Expenditure Statement – this Statement shows theeconomic cost in the year of providing housing services in accordance with generally acceptedaccounting 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 bedifferent from the accounting cost. The increase or decrease in the year, on the basis on whichrents are raised, is shown in the Movement on the Housing Revenue Account Statement.

the Collection Fund (England) Statement – this is an agent’s statement that reflects the statutoryobligation for billing authorities to maintain a separate Collection Fund. The statement shows thetransactions of the billing authority in relation to the collection from taxpayers and distribution tolocal authorities and the Government of council tax and non-domestic rates.

Supporting Statements

the Annual Governance Statement (Appendix 1) which explains how the Council maintains aneffective system of internal financial control.

Further Information

Further information about the accounts is available from the Corporate Finance team at Finance,Harrogate Borough Council, PO Box 787, Harrogate HG1 9RW, telephone (01423) 500600 or [email protected].

In addition, interested members of the public have a statutory right to inspect the accounts beforethe audit is completed. The availability of the accounts for inspection is advertised on the Council’swebsite.


STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31 MARCH2018

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The Authority’s Responsibilities

The Authority is required to:

make arrangements for the proper administration of its financial affairs and to secure that one of itsofficers has the responsibility for the administration of those affairs. In this authority, that officer is theHead of Finance;

manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets;

approve the Statement of Accounts.

The Head of Finance’s Responsibilities

The Head of Finance is responsible for the preparation of the authority’s Statement of Accounts inaccordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local AuthorityAccounting in the United Kingdom (‘the Code’).

In preparing this Statement of Accounts, the Head of Finance has:

selected suitable accounting policies and then applied them consistently;

made judgements and estimates that were reasonable and prudent;

complied with the Local Authority Code.

The Head of Finance has also:

kept proper accounting records which were up to date;

taken reasonable steps for the prevention and detection of fraud and other irregularities.

Statement by the Head of Finance

I certify that this Statement of Accounts presents a true and fair view of the financial position of HarrogateBorough Council at 31 March 2018 and its income and expenditure for the year then ended.

24 May 2018Paul Foster CPFA, Financial Services Manager (Interims151 Officer) – in the absence of the Head of Finance

APPROVAL BY CHAIR OF AUDIT & GOVERNANCE COMMITTEE

This Statement of Accounts was approved by a resolution of the Audit & Governance Committee ofHarrogate Borough Council on 23 July 2018.

Councillor V Oldham, Chair of Audit & Governance Committee


MOVEMENT IN RESERVES STATEMENT FOR THE YEAR ENDED 31 MARCH 2018

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Capital HRA Major Earmarked Capital General Housing Total Unusable TotalReceipts Repairs GF Grants Fund Revenue Usable Reserves ReservesReserve Reserve Reserves Unapplied Balance Account Reserves

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000Note 7 Note 16

Balance at 31 March 2017 4,944 1,654 22,427 2,614 3,328 13,622 48,589 229,259 277,848

Movement in Reserves during 2017/18

Total Comprehensive Income and Expenditure 0 0 0 0 -2,461 20,579 18,118 19,216 37,334

Adjustments between accounting basisand funding basis under regulations:Depreciation, impairment and revaluation losses of non–current assets 0 0 0 0 3,103 0 3,103 -3,103 0Excess of depreciation charged to HRA over MRA 0 4,304 0 0 0 -15,583 -11,279 11,279 0Movements in the fair value of investment properties 0 0 0 0 178 0 178 -178 0Capital grants and contributions credited to the CI&E Statement 0 0 0 1,660 -1,660 0 0 0 0Net gain or loss on sale or derecognition of non-current assets 4,303 0 0 0 -505 -540 3,258 -3,258 0Transfer to/from Deferred Capital Receipts 10 0 0 0 28 0 38 -38 0Amount by which pension costs calculated in accordancewith IAS19 are different from the contributions dueunder pension scheme regulations 0 0 0 0 1,563 59 1,622 -1,622 0Amount by which Council Tax/NDR Income taken to CI&Eis different to amount taken to GF in accordancewith regulations 0 0 0 0 1,492 0 1,492 -1,492 0Amount by which short term accumulated absences chargedto CI&E is different to amount taken to GF in accordancewith regulations 0 0 0 0 7 0 7 -7 0Statutory Provision for repayment of Principal 0 0 0 0 -580 0 -580 580 0Capital expenditure charged to the General Fund/HRA Balances 0 0 0 0 -116 0 -116 116 0Transfer from Capital Receipts Reserve equal to amountpayable to Housing Receipts Pool -897 0 0 0 897 0 0 0 0Usable Reserves used to Finance Capital Expenditure -3,456 -4,293 0 -1,566 0 0 -9,315 9,315 0Net Increase/Decrease(-) before transfers to Earmarked Reserve -40 11 0 94 1,946 4,515 6,526 30,808 37,334

Transfers to/from Earmarked Reserves 0 0 1,489 0 -1,489 0 0 0 0Increase /Decrease(-) in year -40 11 1,489 94 457 4,515 6,526 30,808 37,334

Balance at 31 March 2018 carried forward 4,904 1,665 23,916 2,708 3,785 18,137 55,115 260,067 315,182


MOVEMENT IN RESERVES STATEMENT FOR THE YEAR ENDED 31 MARCH 2017

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Capital HRA Major Earmarked Capital General Housing Total Unusable TotalReceipts Repairs GF Grants Fund Revenue Usable Reserves ReservesReserve Reserve Reserves Unapplied Balance Account Reserves

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000Note 7 Note 16

Balance at 31 March 2016 3,283 672 19,935 2,339 3,882 16,571 46,682 156,553 203,235

Movement in Reserves during 2016/17

Total Comprehensive Income and Expenditure 0 0 0 0 1,959 71,591 73,550 1,063 74,613

Adjustments between accounting basisand funding basis under regulations:Depreciation, impairment and revaluation losses of non–current assets 0 0 0 0 2,580 0 2,580 -2,580 0Excess of depreciation charged to HRA over MRA 0 4,026 0 0 0 -66,851 -62,825 62,825 0Movements in the fair value of investment properties 0 0 0 0 -3 0 -3 3 0Capital grants and contributions credited to the CI&E Statement 0 0 0 1,409 -1,409 0 0 0 0Net gain or loss on sale or derecognition of non-current assets 4,413 0 0 0 -1,061 -591 2,761 -2,761 0Transfer to/from Deferred Capital Receipts 20 0 0 0 35 0 55 -55 0Amount by which pension costs calculated in accordancewith IAS19 are different from the contributions dueunder pension scheme regulations 0 0 0 0 360 -98 262 -262 0Amount by which Council Tax/NDR Income taken to CI&Eis different to amount taken to GF in accordance with regulations 0 0 0 0 -820 0 -820 820 0Amount by which short term accumulated absences chargedto CI&E is different to amount taken to GF in accordancewith regulations 0 0 0 0 13 0 13 -13 0Statutory Provision for repayment of Principal 0 0 0 0 -595 -7,000 -7,595 7,595 0Capital expenditure charged to the General Fund/HRA Balances 0 0 0 0 -88 0 -88 88 0Transfer from Capital Receipts Reserve equal to amountpayable to Housing Receipts Pool -967 0 0 0 967 0 0 0 0Usable Reserves used to Finance Capital Expenditure -1,805 -3,044 0 -1,134 0 0 -5,983 5,983 0Net Increase/Decrease(-) before transfers to Earmarked Reserves 1,661 982 0 275 1,938 -2,949 1,907 72,706 74,613

Transfers to/from Earmarked Reserves 0 0 2,492 0 -2,492 0 0 0 0

Increase /Decrease(-) in year 1,661 982 2,492 275 -554 -2,949 1,907 72,706 74,613

Balance at 31 March 2017 carried forward 4,944 1,654 22,427 2,614 3,328 13,622 48,589 229,259 277,848


COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 31 MARCH 2018

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2017/18 2017/18 2017/18 2016/17 2016/17 2016/17Expenditure Income Net Cost Expenditure Income Net Cost

£’000 £’000 £’000 £’000 £’000 £’000Restated* Restated* Restated*

Housing General Fund 2,512 -950 1,562 2,341 -1,532 809Parks & Environmental Services 11,384 -5,403 5,981 10,815 -4,570 6,245Safer Communities 2,406 -4,084 -1,678 2,700 -4,223 -1,523Finance 27,824 -24,960 2,864 31,798 -29,621 2,177Legal & Governance 3,252 -487 2,765 2,766 -500 2,266Information, Communications & Technology 2,486 -1 2,485 2,291 -15 2,276Organisational Development & Improvement 2,413 -38 2,375 2,060 -14 2,046Culture, Tourism & Sport 7,154 -5,153 2,001 7,379 -5,250 2,129Planning & Development 8,924 -4,810 4,114 8,885 -4,065 4,820Harrogate Convention Centre 5,039 -5,042 -3 4,366 -5,107 -741Corporate 1,141 -306 835 157 -280 -123Housing Revenue Account -4,107 -17,476 -21,583 -54,925 -17,683 -72,608Cost of Services 70,428 -68,710 1,718 20,633 -72,860 -52,227Other Operating ExpenditureParish Precepts 888 0 888 794 0 794Council Tax Support Grants to Parishes 27 0 27 31 0 31Contribution to Housing Pooled Capital Receipts 897 0 897 967 0 967Gain(-) or loss on disposal of Non-current assets 0 -1,081 -1,081 0 -1,677 -1,677Other Capital Receipts 0 0 0 0 -1 -1Financing & Investment Income & ExpenditureExternal Interest Payments 1,590 0 1,590 1,676 0 1,676Net Interest on the Net Defined Benefit Liability (Asset) (note 26) 1,037 0 1,037 1,284 0 1,284External Interest Income 0 -225 -225 0 -339 -339Investment Property Income & Expenditure (note 10) 178 -270 -92 -2 -264 -266Taxation and Non Specific Grant IncomeIncome from Council Tax 0 -14,890 -14,890 0 -14,397 -14,397Capital Grant Income (note 21) 0 -1,660 -1,660 0 -1,409 -1,409Other Non-ringfenced Government Grants (note 21) 0 -3,965 -3,965 0 -3,352 -3,352Revenue Support Grant 0 -399 -399 0 -1,543 -1,543Non-Domestic Rates Income and Expenditure 21,120 -23,083 -1,963 21,939 -25,030 -3,091Surplus(-) or Deficit on the Provision of Services 96,165 -114,283 -18,118 47,322 -120,872 -73,550Surplus(-) or Deficit on the Revaluation of Non-current Assets -13,853 -3,940Remeasurements pension assets/liabilities (note 29) -5,363 2,877Other Comprehensive Income & Expenditure -19,216 -1,063Total Comprehensive Income & Expenditure -37,334 -74,613* In 2017/18, the costs and income associated with housing benefit have moved from the Housing General Fund service to Finance. The 2016/17 figures have been restated so as to beconsistent with this, meaning that £27,806k of expenditure and -£28,028k of income has moved from Housing to Finance – a net movement of £222k.


BALANCE SHEET AS AT 31 MARCH 2018

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2018 2017Note £’000 £’000

Property, Plant & Equipment 8Council Dwellings 235,528 222,397Other Land & Buildings 87,825 70,605Vehicles, Plant & Equipment 7,615 6,909Infrastructure Assets 568 689Community Assets 2,088 2,001Surplus Assets 6,010 705Assets Under Construction 1,506 8,117

341,140 311,423

Heritage Assets 9 39,618 38,677Investment Property 10 4,729 4,562Intangible Assets 105 0Long Term Debtors – Housing Loans 11 559 597

Long Term Assets 386,151 355,259

Short Term Investments 11 26,037 19,171Assets Held for Sale 12 12 0Inventories 141 133Short Term Debtors 13 5,142 4,116Cash & Cash Equivalents

Cash In Hand/At Bank 11 15 21Cash Equivalents 11 6,781 14,321

Current Assets 38,128 37,762

Bank Overdraft 11 -620 -62Short Term Borrowing 11 -26 -26Short Term Creditors 14 -12,554 -14,437Provisions 15 -3,388 -1,954Grants Receipts In Advance (Revenue) 21 -1,143 -1,742Current Liabilities -17,731 -18,221

Long Term Borrowing 11 -53,078 -53,082Other Long Term Liabilities – Pensions Liability 26 -38,288 -43,870Long Term Liabilities -91,366 -96,952

Net Assets 315,182 277,848

Usable ReservesUsable Capital Receipts Reserve 4,904 4,944Major Repairs Reserve 1,665 1,654General Fund Earmarked Reserves 7 23,916 22,427Capital Grants Unapplied Account 2,708 2,614Working Balances:

General Fund 3,785 3,328HRA 18,137 13,622

Unusable ReservesRevaluation Reserve 16 71,528 58,406Capital Adjustment Account 16 229,682 214,200Deferred Capital Receipts 16 559 597Pensions Reserve 16 -40,129 -43,870Accumulated Absences Adjustment Account 16 -488 -481Collection Fund Adjustment Account 16 -1,085 407

Total Reserves 315,182 277,848


CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2018

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2017/18 2016/17£’000 £’000

Operating ActivitiesNet surplus(-) or deficit on the provision of servicesexcluding interest transactions: -19,483 -74,887

External Interest paid 1,590 1,676External Interest received -225 -339

Net surplus(-) or deficit on the provision of services -18,118 -73,550

Adjust net surplus(-) or deficit for non-cash movements:Depreciation and amortisation -2,798 -2,524Impairment and revaluations 15,100 66,799Increase(-)/decrease in impairment for bad debts -286 39Increase(-)/decrease in other provisions -1,434 533Increase(-)/decrease in creditors 860 -2,084Increase/decrease(-) in debtors 1,170 -100Increase/decrease(-) in inventories 8 -19Pension Liability – contributions more/less(-) than IAS19 Costs 219 -262Carrying amount of non-current assets sold or derecognised -3,258 -2,761Increase(-)/decrease in Major Repairs Reserve (MRR) -11 -982

Adjust net surplus(-) or deficit for investing activity items:Less purchase of property, plant and equipment from MRR -4,293 -3,044Proceeds from the sale of non-current assets 4,303 4,413Less Capital Grants credited to CI&ES 1,660 1,409Less other Capital Receipts -28 -35

Net Cash Flows from Operating Activities -6,906 -12,168

Investing ActivitiesPurchase of property, plant & equipment and intangible assets 11,959 12,739Proceeds from the sale of property, plant and equipment,investment property and intangible assets -4,313 -4,433

Capital grants received -1,778 -1,498Proceeds from(-)/purchase of short term deposits 6,866 4,034Net Cash Flows from Investing Activities 12,734 10,842

Financing ActivitiesRepayments of long & short term borrowing 4 7,005Change in net debtors for Council Tax and NDR income 2,272 -724

Net Cash Flows from Financing Activities 2,276 6,281

Net Increase(-)/Decrease in Cash & Cash Equivalents 8,104 4,955

Cash & Cash Equivalents at the beginning of the reporting periodBank overdraft 62 370Cash at Bank/in hand -21 -21Cash Equivalents* -14,321 -19,584

-14,280 -19,235

Cash & Cash Equivalents at the end of the reporting periodBank overdraft 620 62Cash at Bank/in hand -15 -21Cash Equivalents* -6,781 -14,321

-6,176 -14,280

* Short Term Investments that mature within one month of date of acquisitionCredit cash balances are depicted as negative amounts


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

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1. Accounting Policies

i. General Principles

The Accounts have been prepared in accordance with the 2017/18 Code of Practice on Local AuthorityAccounting issued in February 2017 by the Chartered Institute of Public Finance and Accountancy(CIPFA), based on International Financial Reporting Standards. The Accounts have been preparedunder the historical cost convention modified to account for the revaluation of non-current assets. Allthe figures presented are rounded to varying levels of precision and this is made clear in each case.

ii. Accruals of Income and Expenditure

Activity is accounted for in the year that it takes place, not simply when cash payments are made orreceived. In particular:

Revenue from the sale of goods is recognised when the Council transfers the significant risks andrewards of ownership to the purchaser and it is probable that economic benefits or servicepotential associated with the transaction will flow to the Council.

Revenue from the provision of services is recognised when the Council can measure reliably thepercentage of completion of the transaction and it is probable that economic benefits or servicepotential associated with the transaction will flow to the Council.

Supplies are recorded as expenditure when they are consumed – where there is a gap betweenthe date supplies are received and their consumption, they are carried as inventories on theBalance Sheet.

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

Where revenue and expenditure have been recognised but cash has not been received or paid, adebtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may notbe settled, the balance of debtors is written down and a charge made to revenue for the incomethat might not be collected.

iii. Cash and Cash Equivalents

Cash and cash equivalents are short term, highly liquid investments that are readily convertible toknown amounts of cash and which are subject to an insignificant risk of changes in value. TheCouncil has adopted a policy of cash equivalents being short term investments which mature withinone month of their acquisition.

iv. Contingent Assets and Liabilities

Contingent assets and liabilities are not recognised within the financial statements. Contingentassets are disclosed by way of a note to the accounts if the inflow of economic benefits or servicepotential is probable.

Contingent liabilities are disclosed by way of a note to the accounts if there are possible obligationsthat may require payment or a transfer of economic benefits.

v. Employee Benefits

Benefits Payable during Employment

Short-term employee benefits are those due to be settled within twelve months of the year-end.They include such benefits as wages and salaries, paid annual leave and paid sick leave, bonusesand non-monetary benefits (e.g. cars) for current employees and are recognised as an expense for



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services in the year in which employees render service to the Council. An accrual is made for thecost of holiday entitlements (or any form of leave, e.g. time off in lieu) earned by employees but nottaken before the year-end, which employees can carry forward into the next financial year. Theaccrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out throughthe Movement in Reserves Statement so that holiday benefits are charged to revenue in thefinancial year in which the holiday absence occurs.

Termination Benefits

Termination benefits are amounts payable as a result of a decision by the Council to terminate anofficer’s employment before the normal retirement date, or an officer’s decision to accept voluntaryredundancy in exchange for those benefits. They are charged on an accruals basis to the relevantservice or, where applicable, to Non Distributed Costs within the Corporate line in the ComprehensiveIncome and Expenditure Statement, at the earlier of when the Council can no longer withdraw theoffer of those benefits or when the Council recognises costs for restructuring.

Where termination benefits involve the enhancement of pensions, statutory provisions require theGeneral Fund balance to be charged with the amount payable by the Council to the pension fund inthe year, not the amount calculated according to the relevant accounting standards. In the Movementin Reserves Statement, transfers are required to and from the Pensions Reserve to remove thenotional debits and credits for pension enhancement termination benefits and replace them withdebits for the cash paid to the pension fund and any such amounts payable but unpaid at the year-end.

Retirement Benefits

In line with the CIPFA Accounting Code, the Council has adopted the full accounting requirements ofIAS19 (Retirement Benefits). The disclosures required under IAS19 are set out in the notes to theFinancial Statements, note 26a-i.

Employees of the Council are members of the Local Government Pensions Scheme, administered byNorth Yorkshire County Council (NYCC). The scheme provides defined benefits to members(retirement lump sums and pensions), earned as employees work for the Council.

The Local Government Pension Scheme

The Local Government Scheme is accounted for as a defined benefits scheme:

The liabilities of the NYCC pension scheme attributable to the Council are included in theBalance Sheet on an actuarial basis using the projected unit method – i.e. an assessment of thefuture payments that will be made in relation to retirement benefits earned to date byemployees, based on assumptions about mortality rates, employee turnover rates, etc., andprojections of earnings for current employees.

Liabilities are discounted to their value at current price, using a discount rate of 2.6% (based onthe indicative rate of return on AA-rated corporate bonds).

The assets of the NYCC pension fund attributable to the Council are included in the BalanceSheet at their fair value:

– Quoted securities – current bid price – Unquoted securities – professional estimate – Unitised securities – current bid price – Property – market value



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

Service cost comprising:

– 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 revenueaccounts of services for which the employees worked

– past service cost – the increase in liabilities as a result of a scheme amendment orcurtailment whose effect relates to years of service earned in earlier years – debited to theNet Cost of Services in the Comprehensive Income and Expenditure Statement as part of NonDistributed Costs within the Corporate line on the statement.

– net interest cost on the net defined liability (asset) i.e. net interest expense for the Council –the change during the period in the net defined benefit liability (asset) that arises from thepassage of time charged to the Financing and Investment Income and Expenditure line of theComprehensive Income and Expenditure Statement – this is calculated by applying thediscount rate used to measure the defined benefit obligation at the beginning of the periodto the net defined benefit liability (asset) at the beginning of the period – taking into accountany changes in the net defined liability (asset) during the period as a result of contributionand benefit payments.

Remeasurements comprising:

– the return on plan assets – excluding amounts included in the net interest on the netdefined liability (asset) charged to the Pensions Reserve as Other Comprehensive Income andExpenditure

– actuarial gains and losses – changes in the net pensions liability that arise because eventshave not coincided with assumptions made at the last actuarial valuation, or because theactuaries have updated their assumptions – debited to the Comprehensive Income andExpenditure Statement – charged to the Pensions Reserve as other Comprehensive Incomeand Expenditure

– contributions paid to the NYCC pension fund – cash paid as employer’s contributions to thepension fund in settlement of liabilities: not accounted for as an expense.

In relation to retirement benefits, statutory provisions require the General Fund Balance to becharged with the amount payable by the Council to the pension fund in the year, not the amountcalculated according to the relevant accounting standards. In the Movement in Reserves Statementthere are transfers to and from the Pensions Reserve to the General Fund Balance to remove thenotional debits and credits for retirement benefits and replace them with debits for the cash paid tothe pension fund and any amounts payable to the fund but unpaid at the year-end.

Discretionary Benefits

The Council also has restricted powers to make discretionary awards of retirement benefits in theevent of early retirements. Any liabilities estimated to arise as a result of an award to any memberof staff are accrued in the year of the decision to make the award and accounted for using the samepolicies as are applied to the Local Government Pension Scheme.

vi. Events after the Reporting Date

Events after the Reporting Date are those events, both favourable and unfavourable, that occurbetween the end of the reporting period and the date when the Statement of Accounts isauthorised for issue. Two types of events can be identified:

those that provide evidence of conditions that existed at the end of the reporting period - theStatement of Accounts is adjusted to reflect such events.



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those that are indicative of conditions that arose after the reporting period – the Statement ofAccounts is not adjusted to reflect such events, but where a category of events would have amaterial effect, disclosure is made in the notes of the nature of the events and theirestimated financial effect.

Events taking place after the date of authorisation for issue are not reflected in the Statement ofAccounts.

vii. Financial Liabilities

Financial Liabilities are initially measured at fair value and carried at their amortised cost. Annualcharges to the Comprehensive Income and Expenditure Statement for interest payable are basedon the carrying amount of the liability, multiplied by the effective rate of interest for theinstrument. This means that for all the Council’s borrowings the amount presented in the BalanceSheet is the outstanding principal plus accrued interest repayable and the interest charged to theComprehensive Income and Expenditure Statement is the amount payable for the year in the loanagreement.

Any gains or losses on the repurchase or early settlement of borrowing are credited and debited toFinancing and Investment Income and Expenditure in the Comprehensive Income and ExpenditureStatement in the year of repurchase/settlement.

viii. Financial Assets

The Council’s Financial Assets are all classed as loans and receivables - assets that have fixed ordeterminable payments but are not quoted in an active market. They are initially measured at fairvalue and carried at their amortised cost. Annual credits to the Comprehensive Income andExpenditure Statement for interest receivable are based on the carrying amount of the asset,multiplied by the effective rate of interest for the instrument. For loans that the Council has madethis means that the amount presented in the Balance Sheet is the outstanding principal plusaccrued interest receivable and interest credited to the Comprehensive Income and ExpenditureStatement is the amount receivable for the year in the loan agreement.

ix. Grants and Contributions

Grants and Contributions relating to capital and revenue expenditure are accounted for on anaccruals basis. They are recognised in the Comprehensive Income and Expenditure Statement asincome in the period in which the conditions of the grant have been complied with and there isreasonable assurance that the grant or contribution will be received. Specific service revenue grantsare shown in the relevant service line, general revenue grants and capital grants are shown in theNon Specific Grant Income lines.

Where a revenue grant is received in advance of the related expenditure the money is transferredto an earmarked reserve to reflect the expenditure commitment in future years.

Where a capital grant or contribution has been recognised as income in the Comprehensive Incomeand Expenditure Statement, the grant or contribution is transferred to the Capital Grants UnappliedAccount to reflect its status as a capital resource available to finance expenditure. This transfer isreported in the Movement in Reserves Statement. Where the expenditure to be financed has beenincurred at the balance sheet date the grant is transferred from the Capital Grants UnappliedAccount to the Capital Adjustment Account. This transfer is also reported in the Movement inReserves Statement.

Where a capital grant or contribution has a condition that the Council has not satisfied at thebalance sheet date, the grant or contribution is credited to Capital Grants Receipts in Advance on



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the Balance Sheet. Once the condition has been met the grant is transferred and recognised asincome in the Comprehensive Income and Expenditure Statement.

x. Heritage Assets

The Council has four main collections of heritage assets that are held primarily for the purpose ofpreserving them in trust for future generations because of their cultural, environmental or historicalassociations. Heritage Assets are recognised and measured (including the treatment of revaluationgains and losses) in accordance with the Council’s accounting policies on property, plant andequipment. However, some of the measurement rules are relaxed in relation to heritage assets, asdetailed below. The Council’s collections of heritage assets are accounted for as follows:

Museums and Art Exhibits

Museum and Art Collections are reported on the Balance Sheet at insurance valuations, whichare based on market values assessed by expert external valuers in 2006 and 2007, reviewedand updated annually by the Curator of Arts to include donations and purchases since this dateat valuation or cost.

Sculptures included in this category are also reported at insurance valuations assessed by theCurator of Art in 1996 with more recent acquisitions being included at cost or valuation.

Acquisitions are normally purchases either at auction or from private collections and arefunded using grants and contributions received for this purpose. These items, irrespective ofvalue, are included in capital expenditure and recognised initially at cost on the Balance Sheet.Donations and bequests are few; where they do occur, they are recognised at valuation on theBalance Sheet, with a corresponding credit to the Donated Assets Account, or ComprehensiveIncome and Expenditure Statement once any conditions of the donation are met.

There is a strong presumption against the disposal of any items in the Museum & ArtCollections but where a disposal does occur then the proceeds of such items are treated ascapital receipts in the same way as Property, Plant & Equipment disposals but are to beapplied for the benefit of the collections. This would normally mean that they would be usedfor the purchase of further acquisitions.

Full details of the Council’s Acquisition and Disposal Policy for Museum and Art Collections canbe found on the Council’s website www.harrogate.gov.uk in the Collection DevelopmentPolicy.

These items are deemed to have indeterminate lives and high residual values, anddepreciation is therefore not charged.

Civic Regalia:

The Council’s Civic Regalia – including the Mayor’s and Mayoress’ chains, badges of office,items of jewellery and mace – are included on the Council’s Balance Sheet at their insurancevaluation (replacement cost), as assessed by external experts in 2011/12 (four main Mayor andMayoress’s chains), 2012/13 (items of jewellery and mace) and 2013/14 (Toastmaster chainand various badges of office pre 1974). These items are used on a frequent basis outside ofsafe storage at public events so the insurance value is updated as regularly as possible. Thenumber of valuations that can be carried out each year is restricted due to the costs involved.

The civic regalia category also includes a large number of trophies, bowls and other trinkets,many of which are made of silver and have been presented to the Council over the years tocommemorate special occasions. Due to the large volume and diverse nature of these items,



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these items are not regularly valued due to the cost not being commensurate with the benefitattained. However, an up to date insurance valuation was commissioned in 2014.

The Council recognises these assets on the Balance Sheet at their insurance valuation, which isthe expert valuation figure obtained in 2014.

The items included on the Balance Sheet are deemed to have indeterminate lives and highresidual values, and depreciation is therefore not charged.

Acquisitions and donations are rare. Where they do occur, acquisitions are initially recognisedat cost. Donations are not normally valued unless there are exceptional items that are likely tobe of high value, in which case they would be valued by external specialists and recognised onthe Balance Sheet, with a corresponding entry in the Donated Assets Account if there areconditions outstanding or in the Comprehensive Income and Expenditure Statement wherethere are no outstanding conditions.

Memorials and Monuments:

The Council holds a small but diverse range of memorials and monuments. These are reportedon the Balance Sheet at their insurance valuations, which are based on the estimatedrebuilding costs that are reviewed and updated annually. These assets are considered to haveindeterminate useful lives and depreciation is therefore not charged.

Acquisitions and disposals are not expected in this category.

Buildings:

The Council holds one building that is classified as a heritage asset, namely the Royal Hall inHarrogate. Although historic cost information is available regarding the refurbishment thattook place between 2006 and 2008, this cost relates only to aspects of the structure andinterior of the building and not to the building as a whole. The asset is therefore held on theBalance Sheet at its insurance valuation which is based on the rebuilding cost as assessed bythe Assets Manager. This valuation is reviewed annually. Depreciation is not charged on theRoyal Hall as it is deemed to have an indeterminate useful life.

Acquisitions and disposals are not expected in this category.

xi. Intangible Assets

Intangible assets (e.g. software licences) are valued at cost and depreciated over their economic lives(generally three years) on a straight line basis.

xii. Inventories

Inventories are included on the Balance Sheet at the lower of actual cost or net realisable value.

xiii. Investment Property

Investment Property is property (land and/or buildings) held solely to earn rental income or for capitalappreciation or both. The Council's property portfolio is reviewed annually to identify any additionalassets which meet these criteria.

Investment Properties are initially recognised at cost, but are subject to valuation at fair value at theend of each accounting period. When an asset is transferred to this category it is re-valued to fairvalue on transfer and any gain is recognised in the Revaluation Reserve. A loss is recognised in theRevaluation Reserve up to the balance on the Reserve and then to the Comprehensive Income and



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Expenditure Statement. Any balance on the Revaluation Reserve is frozen until the asset isderecognised.

Subsequent revaluation gains or losses on Investment Property are included in the Financing andInvestment Income and Expenditure section of the Comprehensive Income and ExpenditureStatement in addition to the rental income and any direct expenditure.

Depreciation is not charged on Investment Property.

xiv. Operating Leases

Assets utilised under operating leases are not shown on the Balance Sheet. The rentals payable arecharged evenly to revenue and disclosed in the notes to the Financial Statements together withoutstanding commitments at 31 March.

Council Assets rented out under operating leases are recorded as non-current assets and the rentalincome credited evenly to revenue over the period of the lease. The rental income is shown in thenotes to the Financial Statements.

xv. Costs of Support Services

The costs of overheads and support services are included in the Comprehensive Income andExpenditure Statement (CIES) against the service within which they are managed and monitored,although the Housing Revenue Account includes its share of support charges and the costs arenetted off the expenditure of the appropriate recharging service.

xvi. Property, Plant and Equipment

All expenditure on the acquisition, creation or enhancement of non-current assets is capitalised onan accruals basis (subject to the application of a deminimis of £10,000 for land and buildings,£5,000 for equipment and £0 for heritage assets for schemes to be included on the Council’s capitalprogramme). Property, Plant and Equipment assets are included in the Balance Sheet at currentvalue. For land and buildings this is market value in existing use (or depreciated replacement cost, ifthere is no market based evidence of current value). Council dwellings are included on the basis ofexisting use value for social housing. For non-property assets that have short useful lives or lowvalue (or both), depreciated historical cost basis is used as a proxy for current value.

Assets under Construction, Infrastructure Assets and Community Assets are included at historiccost. The current asset values used in the accounts are certified by the Council’s internal valuersunder a five year rolling programme of revaluations. Subsequent additions are included in theaccounts at the cost of acquisition.

The increases in valuations arising on the revaluation of Property, Plant and Equipment at currentvalue are matched by credits to the Revaluation Reserve to recognise unrealised gains.Exceptionally gains may be credited to the Comprehensive Income and Expenditure Statementwhere they arise from the reversal of a revaluation or impairment loss previously charged to aservice revenue account.

An impairment or revaluation loss on a previously revalued asset is initially recognised in theRevaluation Reserve up to the balance on the Reserve in relation to that asset, any remaining lossbeing recognised in the Comprehensive Income and Expenditure Statement.

Property, Plant and Equipment are depreciated over their useful economic lives, except where anyprovision for depreciation would not be material. Depreciation is calculated using the straight linemethod for buildings. Depreciation on small items of plant and equipment is calculated on astraight line basis over periods ranging from 4 to 12 years and the reducing balance method is usedfor vehicles at 30% per annum. Assets in the course of construction are depreciated from the point



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at which the asset is brought into use. Council dwellings are depreciated on a straight line basisover 40 years.

The Council is not required to raise Council Tax to cover depreciation, revaluation or impairmentlosses. However it is required to make an annual provision from revenue to contribute towards thereduction in its overall borrowing requirements (equal to an amount calculated on a prudent basisdetermined by the Council in accordance with Statutory guidance). Depreciation, revaluation andimpairment losses are therefore replaced by revenue provision in the General Fund Balance on theMovement in Reserves Statement, by way of an adjusting transaction with the Capital AdjustmentAccount.

Componentisation

When expenditure over £400k is incurred on a component of a building, the component is reviewedby the Council’s valuers to assess whether the asset life of the component is significantly differentto the life of the rest of the building. If it is considered to be materially different, the componentwill be recorded separately in the asset register for the purposes of calculating depreciation chargesfor the building.

When carrying out the rolling programme of building revaluations, the Council’s valuers review allbuildings with an asset value over £1m for significant components representing at least 20% of theoverall original building cost, subject to a deminimis of £400k and with an asset life materiallydifferent to that of the rest of the building. If any are identified they are included in the year endrevaluation report and separated out on the asset register. These components are then taken intoaccount in the calculation of the total depreciation charges to services for the building in the followingyear.

For some buildings (e.g. swimming pools), the valuer may define a component as a group of itemswhich have similar significantly shorter lives than the rest of the building and collectively representover 20% of the original cost of the building, subject to the £400k deminimis.

Assets Held For Sale

These are assets that have been declared surplus to the Council’s operational requirements, arebeing actively marketed and have an estimated sale date within twelve months of the balance sheetdate. Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale.

Assets Held for Sale are included on the Balance Sheet at the lower of the carrying amount or thefair value of the asset less the costs to sell the asset.

Impairment or revaluation losses on initial classification or subsequent write down to fair value arecharged directly to the Comprehensive Income and Expenditure Statement even if the asset hasbeen previously re-valued. Any balance on the Revaluation Reserve remains until the asset is sold.

Assets Held for Sale are not subject to depreciation.

Disposals

When an asset is disposed of, the value of the asset on the Balance Sheet is written off to the OtherOperating Expenditure line in the Comprehensive Income and Expenditure Statement as part of thegain or loss on disposal. The receipt from the disposal is also credited to the same line in theComprehensive Income and Expenditure Statement and netted off against the balance sheet valueto show the net gain or loss on disposal of the fixed asset.

Amounts in excess of £10,000 must be treated as capital receipts. A proportion of receipts relatingto housing disposals are payable to the Government.

Capital receipts are transferred to the Usable Capital Receipts Reserve (to fund future capitalinvestment and the payment to the Government) and the balance sheet value of the assets sold is



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transferred to the Capital Adjustment Account. The net amount is shown as a transfer of the gain orloss on sale of non-current assets on the General Fund Balance in the Movement in ReservesStatement to neutralise the effect of recognising the gain or loss on disposal of fixed assets in theComprehensive Income and Expenditure Statement surplus or deficit.

Any revaluation gains in the Revaluation Reserve relating to the asset sold are transferred to theCapital Adjustment Account.

xvii. Provisions

Provisions are made where an event has taken place which gives the Council a legal or constructiveobligation that probably requires settlement by a transfer of economic benefits or service potential,and a reliable estimate can be made of the amount of the obligation.

Provisions are charged as an expense to the appropriate service line in the Comprehensive Incomeand Expenditure Statement in the year that the Council becomes aware of the obligation and aremeasured at the best estimate at the balance sheet date of the amount required to settle theobligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the BalanceSheet. Provisions are reviewed at the end of each financial year and where it has become lessprobable that a transfer of economic benefits will now be required, or a lower settlement thananticipated is made, the provision is reversed and credited back to the relevant service.

xviii. Reserves

The Council sets aside specific amounts as reserves for future policy purposes or to covercontingencies. Reserves are created by transferring amounts out of the General Fund Balance in theMovement on Reserves Statement.

When expenditure to be financed from a reserve is incurred, it is charged to an appropriate serviceto score against the surplus or deficit on the Provision of Services in the Comprehensive Incomeand Expenditure Statement. The reserve is then transferred back into the General Fund Balance inthe Movement in Reserves Statement so there is no net charge against Council Tax for theexpenditure.

Certain reserves are kept to manage the accounting processes for non-current assets, collectionfund, retirement and employee benefits and do not represent usable resources for the Council.These reserves and the movements on them in the year are explained in more detail in note 16 tothe Financial Statements.

ixx. Revenue Expenditure Funded from Capital under Statute

Expenditure incurred during the year that may be capitalised under statutory provisions but that doesnot result in the creation of non-current assets has been charged as expenditure to the relevantservice in the Comprehensive Income and Expenditure Statement in the year. Where the Council hasdetermined to meet the cost of this expenditure from existing capital resources or by borrowing, atransfer to the Capital Adjustment Account then reverses out the amounts charged to the GeneralFund Balance so there is no impact on the level of Council Tax.

xx. Value Added Tax (VAT)

The Council is VAT registered. The VAT that the Council pays on purchases of goods and services(input tax) and VAT that the Council collects on income from the supply of goods and services(output tax) are collected in a separate VAT Account. VAT collected on income must be paid to HerMajesty’s Revenues and Customs (HMRC) whilst the VAT paid is recoverable from HMRC in themajority of cases.

The Council completes a monthly VAT return to HMRC and depending on the net position eachmonth either the Council makes a payment to HMRC or HMRC makes a repayment to the Council.



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Where VAT is not recoverable it is charged to the appropriate service in the Comprehensive Incomeand Expenditure statement.

When HMRC makes a refund of VAT collected in prior years due to a change in VAT regulations, therefunded VAT is credited to the appropriate service in the Comprehensive Income and ExpenditureStatement in the year it is received. Any interest paid on the refunded VAT balance is credited toExternal Interest Income in the Comprehensive Income and Expenditure Statement.

At the year-end any balance due to or from HMRC is included as a creditor or debtor on theCouncil’s Balance Sheet.

xxi. Internal Interest

External interest receipts and payments are collected centrally and shown in the ComprehensiveIncome and Expenditure Statement as Financing and Investment Income and Expenditure. TheHousing Revenue Account is credited and debited with internal interest, being a share of theseinterest receipts and payments in accordance with the formulae set out in the Item 8 Credit andItem 8 Debit (General) Determination issued by the Government each year in exercise of its powersunder the Local Government and Housing Act 1989.

xxii. Borrowing Costs

Borrowing costs are interest and other costs that are incurred in connection with the borrowing offunds. The Council has adopted a policy of recognising these costs as an expense in the period inwhich they are incurred.

xxiii. Exceptional items and prior year adjustmentsAny material exceptional items are included within the cost of the relevant individual service or, if adegree of prominence is necessary in order to give a fair presentation of the accounts, separatelyidentified on the face of the revenue account. Details of any such exceptional items are given in theexplanatory notes.

Material prior period adjustments arising from changes in accounting policies or from the correctionof material errors have been accounted for by restating the comparative figures in the financialstatements and notes, along with the cumulative effect on reserves. Any effect of material priorperiod adjustments is disclosed separately as a note to the accounts.

xxiv. Collection FundThe Council is required by statute to maintain a separate fund for the collection and distribution ofamounts due in respect of Council Tax and Non-Domestic Rates (NDR). The Statutory CollectionFund (England) Statement is included as a supplementary statement in the accounts.

In its capacity as billing authority the Council acts as an agent. It collects and distributes NDR onbehalf of the Government, North Yorkshire County Council (NYCC) and North Yorkshire Fire andRescue Authority (NYFRA), and Council Tax on behalf of NYCC, North Yorkshire Police and CrimeCommissioner (NYPCC) and NYFRA.

NDR accrued income for the year and Non-Domestic Ratepayers debtors, creditors, provision forbad debts and provision for appeals are shared between the Government, NYCC, NYFRA and theCouncil.

Council Tax accrued income for the year and Council Taxpayers debtors, creditors and provision forbad debts at 31 March are shared between the major preceptors and the Council based on theirpercentage share of the total demands/precepts for the following year.

Collection Fund debtors are reviewed collectively at the balance sheet date by debt type andprovision is made for impairment based on the historical evidence of default in each category. TheCouncil’s share of the Collection Fund debtors shown on the Balance Sheet is net of this bad debtprovision.

In accordance with the current accounting code of practice the Council’s Comprehensive Incomeand Expenditure Statement includes its share of accrued NDR and Council Tax Income. Where this



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amount is more or less than the amount to be credited to the General Fund under statute, there isan adjusting transfer in the Movement in Reserves Statement, between the General Fund Balanceand the Collection Fund Adjustment Account. This account holds the Council’s share of theCollection Fund Surplus or Deficit at 31 March.

The Council’s Balance Sheet includes the net creditor/debtor position with the Government andother local authorities for taxes collected on their behalf and not yet paid to them or taxes paid tothem but not yet collected from taxpayers.

xxv. Fair ValueThe Council measures some of its non-financial assets, such as surplus assets and investmentproperties, at fair value at each reporting date. Fair value is the price that would be received to sellan asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date. The fair value measurement assumes that the transaction to sell the asset ortransfer the liability takes place either:

a) in the principal market for the asset or liability, or

b) in the absence of a principal market, in the most advantageous market for the asset or liability.

The Council measures the fair value of an asset or liability on the same basis that marketparticipants would use when pricing the asset or liability (assuming that market participants act intheir economic best interest).

When measuring the fair value of a non-financial asset, the Council takes into account a marketparticipant’s ability to generate economic benefits by using the asset in its highest and best use orby selling it to another market participant that would use the asset in its highest and best use.

The Council uses appropriate valuation techniques for each circumstance, maximising the use ofrelevant known data and minimising the use of estimates or unknowns.

Inputs to the valuation techniques in respect of assets and liabilities for which fair value is measuredor disclosed in the Council’s financial statements are categorised within the fair value hierarchy, asfollows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that theCouncil can access at the measurement date.

Level 2 – inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly or indirectly.

Level 3 – unobservable inputs for the asset or liability.



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2. Accounting Standards Issued but not yet Adopted

The Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 (the Code)requires the disclosure of information relating to the expected impact of an accounting change thatwill be required by a new standard that has been issued but not yet adopted by the Code. Theaccounting standards that will result in amendments to the 2018/19 Code include:

IFRS 9 Financial Instruments

IFRS15 Revenue from Contracts with Customers

IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses

IAS 7 Statement of Cash Flows: Disclosure Initiative

None of these are expected to have a material impact on the Council’s accounts.

3. Critical Judgements in Applying Accounting Policies

In applying the Accounting Policies set out in note 1, the Council has had to make certainjudgements about complex transactions or those involving uncertainty about future events. Thecritical judgements made in the Statement of Accounts are:

There is a high degree of uncertainty about future levels of funding for local government.However, the Council has determined that this uncertainty is not yet sufficient to provide anindication that the assets of the Council might be impaired as a result of a need to closefacilities and reduce levels of service provision.

4. Assumptions Made about the Future and Other Major Sources of Estimation Uncertainty

The Statement of Accounts contains estimated figures that are based on assumptions made by theCouncil about the future or that are otherwise uncertain. Estimates are made taking into accounthistorical experience, current trends and other relevant factors. However, because balances cannotbe determined with certainty, actual results could be materially different from the assumptions andestimates.

The items on the Council’s Balance Sheet at 31 March 2018 for which there are significant risks ofmaterial adjustment in the forthcoming financial year are shown in the table overleaf:



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Uncertainties Effect if Actual Results Differ fromAssumptions

Valuations ofproperty, plantand equipment

Judgements are made byvaluers when valuingproperty.

Discussed in more detail below.

(a) Councildwellings

In addition to the judgementsmade by valuers, the value ofcouncil dwellings is affectedby adjustment factorsprescribed by theGovernment.

A movement of 1% in the adjustment factorwill change the balance sheet value of councildwellings by approximately £5.7m. Undercurrent accounting rules, any revaluation gainor loss has no impact on the Housing RevenueAccount (HRA) Balance or council dwellingrents.

(b) Otherproperty, plantand equipment


The balance sheet values of the non-currentassets could change. Under currentaccounting rules, any revaluation gain or losshas no impact on the General Fund or HRABalances.

Useful lives andresidual values ofproperty, plantand equipment


The amount of depreciation charged to theaccounts could differ. Depreciation charges(above a statutory minimum) are reversed outof the accounts meaning that any changewould not impact upon the net cost of theGeneral Fund or HRA Balances.

Business Rates Since the introduction of theBusiness Rates RetentionScheme from 1 April 2013,Local Authorities havebecome liable for a proportionof the cost of successfulappeals against business ratescharged to businesses. Aprovision has therefore beenrecognised for an estimate ofthe amount that businesseshave been overcharged up to31 March 2018. The estimatehas been calculated in twoparts. Firstly, in relation tothe 2010 rating list, by usingthe Valuation Office ratingslist of appeals and historicalanalysis of successful appeals.Secondly, in relation to the2017 rating list, by estimatingthe potential impact ofappeals based on the totalrateable value, as there is anew ‘check, challenge, appeal’process in place and appealsdata to date is extremelylimited.

There are a number of variables that canaffect the calculated level of provision. Forexample, a 1% increase in the historicreduction in RV of all successful appealswould result in the provision relating to the2010 list increasing by £127k. In terms of the2017 rating list, a further 0.5% decrease in thetotal rateable value of properties in thedistrict due to appeals would increase in theprovision by £819k. The Council’s share ofthe provision is 40%.

Pensions Liability Estimation of the net liabilityto pay pensions depends on anumber of complex factors.Actuaries make judgements inrelation to factors such as the

The effects on the net pension liability ofchanges in individual assumptions can bemeasured – for example, a 0.1% increase inthe rate of increase in salaries assumptionwould increase the pensions liability by



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Uncertainties Effect if Actual Results Differ fromAssumptions

rate of inflation, therate of increase in salaries,and mortality rates.

£1.0m. However, changes are complexbecause the different assumptions interact.Under current accounting rules, a change inthe pensions liability does not impact uponthe net cost of the General Fund or HRABalances.

5. Events after the Reporting Period

All events between the balance sheet date and the date the accounts were authorised for issue bythe Head of Finance of 24 May 2018 have been considered and there are no Post Reporting PeriodEvents to disclose.

6. Adjustments between Accounting and Funding Basis under Regulations

The adjustments made to the total comprehensive income and expenditure recognised by the Councilin the year in accordance with proper accounting practices to the resources that are specified bystatutory provisions as being available to the Council to meet future capital and revenue expenditureare set out on the face of the Movement in Reserves Statement. A description of the reserves thatthese adjustments are made against is set out below:

General Fund Balance - The General Fund is the statutory fund into which all the receipts of theCouncil are required to be paid and out of which all liabilities of the Council are to be met, except tothe extent that statutory rules might provide otherwise. These rules can also specify the financial yearin which liabilities and payments should impact on the General Fund Balance, which is not necessarilyin accordance with proper accounting practice. The General Fund Balance therefore summarises theresources that the Council is statutorily empowered to spend on its services or on capital investment(or the deficit of resources that the Council is required to recover) at the end of the financial year.However, the balance is not available to be applied to fund HRA services.

Housing Revenue Account Balance - The Housing Revenue Account Balance reflects the statutoryobligation to maintain a revenue account for local authority council housing provision in accordancewith Part VI of the Local Government and Housing Act 1989. It contains the balance of income andexpenditure as defined by the 1989 Act that is available to fund future expenditure in connection withthe Council’s landlord function or (where in deficit) that is required to be recovered from tenants infuture years.

Major Repairs Reserve - The Council is required to maintain the Major Repairs Reserve, whichcontrols an element of the capital resources limited to being used on capital expenditure on HRAassets or the financing of historical capital expenditure by the HRA. The balance shows the capitalresources that have yet to be applied at the year-end.

Usable Capital Receipts Reserve - This reserve holds the capital receipts that have been set asidefrom the disposal of non-current assets. The use of these receipts is restricted by statute to fund newcapital expenditure or to be set aside to finance historical capital expenditure.

Capital Grants Unapplied Account - This reserve holds the balance of capital grants received andcredited to the Comprehensive Income and Expenditure Statement but not yet used to finance capitalschemes. The balance is restricted by grant terms as to capital expenditure against which it can beapplied and/or the financial year in which this can take place.



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7. Movements in General Fund Earmarked Reserves

1 April2017

Transfers In2017/18

Transfers Out2017/18

31 March2018

£’000 £’000 £‘000 £’000

Council Investment Reserve (see i below) 13,942 3,212 -1,722 15,432Service Reserves (ii) 3,289 788 -1,330 2,747Insurance Reserve (iii) 629 211 -254 586Corporate Projects Reserve (iv) 243 0 -91 152Innovate Reserve (iv) 299 100 -127 272Council Tax/Housing Benefit Reserve (v) 538 86 -283 341Budget Transition Fund (vi) 1,411 467 -1,191 687Business Rate Retention Reserve (vii) 0 784 0 784Other Earmarked Reserves (viii) 2,076 1,582 -743 2,915Total 2017/18 22,427 7,230 -5,741 23,916

1 April2016

Transfers In2016/17

Transfers Out2016/17

31 March2017

£’000 £’000 £‘000 £’000

Council Investment Reserve 11,020 3,982 -1,060 13,942Service Reserves 3,437 1,793 -1,941 3,289Insurance Reserve 602 171 -144 629Corporate Projects Reserve 429 0 -186 243Innovate Reserve 378 2 -81 299Council Tax/Housing Benefit Reserve 652 0 -114 538Budget Transition Fund 1,000 589 -178 1,411Other Earmarked Reserves 2,417 480 -821 2,076Total 2016/17 19,935 7,017 -4,525 22,427

i) The ‘Council Investment Reserve’ was created in 2015/16 to pool capital and investment resourcesacross the Council.

ii) Service Reserves are built up from annual savings and are available to fund investment in services.

iii) The Insurance Reserve is held to meet any future self-insurance liabilities.

iv) The Corporate Projects and Innovate Reserves have been set up to fund any future costs that mayarise from corporate restructuring reviews and the introduction of improved working arrangements.

v) The Council Tax/Housing Benefit Reserve is used to fund initiatives within the Revenues,Welfare & Customer Services function, including support for the White Rose Credit Union andchannel shift, as well as smoothing the budgetary effects of annual variations in the BenefitsSubsidy that the Council receives.

vi) The Budget Transition Fund was set up in 2015/16 and will be used to smooth out the sharpreductions that are required to the Council’s budget in the short-term due to reductions in funding.Transformational changes in service delivery will be implemented over the coming years that willgenerate savings that will once again ensure that the Council’s expenditure budget matches theavailable in-year funding.

vii) The Business Rate Retention Reserve is used to smooth the impact of business rate deficits. In-year savings are set aside to fund the associated future deficits.

viii) Other earmarked reserves are established for services across the Council to support specificwork areas.



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8. Property, Plant & Equipment (PP&E)

a) Movement on Balances 2017/18Property, Plant and Equipment

CouncilDwellings

Other Land& Building

Vehicles,Plant &

Equipment

InfrastructureAssets

CommunityAssets

SurplusAssets

AssetsUnder

Construction

TotalPP&E

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Cost or Valuation

1 April 2017 222,397 72,067 16,171 3,238 2,001 705 8,117 324,696Additions 3,832 5,074 1,912 111 87 0 1,199 12,215Revaluation Increases/decreases (-) to RR* -366 10,110 75 0 0 3,123 0 12,942Revaluation Increases/decreases (-) to SDPS** 11,461 -2,418 -177 0 0 1,227 0 10,093Derecognition – Disposals -1,549 -447 -360 0 0 0 0 -2,356Derecognition – Other 0 0 0 0 0 0 0 0Reclassifications -247 5,470 0 0 0 955 -7,810 -1,632

31 March 2018 235,528 89,856 17,621 3,349 2,088 6,010 1,506 355,958

Depreciation and Impairment

1 April 2017 0 -1,462 -9,262 -2,549 0 0 0 -13,273Depreciation Charge to SDPS** -4,151 -1,447 -1,266 -232 0 -6 0 -7,102Depreciation charge written out on revaluation 4,122 871 185 0 0 6 0 5,184Impairment Losses/reversal to RR* 0 0 0 0 0 0 0 0Impairment Losses/reversal to SDPS** 0 0 0 0 0 0 0 0Derecognition – Disposals 29 7 337 0 0 0 0 373Derecognition – Other 0 0 0 0 0 0 0 0Reclassifications 0 0 0 0 0 0 0 0

31 March 2018 0 -2,031 -10,006 -2,781 0 0 0 -14,818

Net Book Value at 31 March 2018 235,528 87,825 7,615 568 2,088 6,010 1,506 341,140

Net Book Value at 31 March 2017 222,397 70,605 6,909 689 2,001 705 8,117 311,423

*RR = Revaluation Reserve**SDPS = Surplus or Deficit on the Provision of Services



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b) Movement on Balances 2016/17

CouncilDwellings

Other Land &Buildings

Vehicles,Plant &

Equipment


CommunityAssets

SurplusAssets

AssetsUnder

Construction

Total PP&E

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Cost or Valuation

1 April 2016 157,208 70,902 15,502 3,039 1,850 345 1,280 250,126Additions 3,843 59 1,377 199 1 0 6,966 12,445Revaluation Increases/decreases (-) to RR* 337 2,700 0 0 0 32 0 3,069Revaluation Increases/decreases (-) to SDPS** 62,928 -884 0 0 0 -80 0 61,964Derecognition – Disposals -2,048 -39 -708 0 0 0 0 -2,795Derecognition – Other 0 -113 0 0 0 0 0 -113Reclassifications 129 -558 0 0 150 408 -129 0

31 March 2017 222,397 72,067 16,171 3,238 2,001 705 8,117 324,696

Depreciation and Impairment

1 April 2016 0 -1,200 -8,851 -2,251 0 0 0 -12,302Depreciation Charge to SDPS** -3,975 -1,180 -1,100 -298 0 0 0 -6,553Depreciation charge written out on revaluation 3,923 899 0 0 0 13 0 4,835Impairment Losses/reversal to RR* 0 0 0 0 0 0 0 0Impairment Losses/reversal to SDPS** 0 0 0 0 0 0 0 0Derecognition – Disposals 52 1 689 0 0 0 0 742Derecognition – Other 0 5 0 0 0 0 0 5Reclassifications 0 13 0 0 0 -13 0 0

31 March 2017 0 -1,462 -9,262 -2,549 0 0 0 -13,273



*RR = Revaluation Reserve**SDPS = Surplus or Deficit on the Provision of Services



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c) Depreciation

For more information on depreciation methods and rates see Accounting Policy note 1(xvi).

d) Capital Commitments

The Council has authorised expenditure in 2018/19 of £20.2m (plus expenditure carried forward from2017/18 of £2.7m) (£23m authorised in 2017/18 as at 31 March 2017). At 31 March 2018 £2.5m iscontractually committed, £1.1m being for the Vehicle Replacement Programme, £0.9m being for carpark refurbishments, £0.4m for Ripon pool and £0.1m for playground refurbishments (£0.6m for thenew Civic Centre and £0.2m for the Vehicle Replacement Programme at 31 March 2017).

e) Effects of changes in Estimates

There were no material charges in the 2017/18 accounts resulting from changes in estimates forProperty Plant and Equipment.

f) Revaluations

During the year all Council dwellings and approximately one fifth of other Council properties wererevalued in accordance with the capital accounting rules, as part of the Council’s five year rollingprogramme of valuations. All assets were reviewed for evidence of impairment at 31 March. Theeffective date for these revaluations was 31 March 2017, and the basis of all valuations is explained inAccounting Policy note 1(xvi).

Some of the properties were valued by internal valuers; Giles Cooper BSc MRICS, Susan Beaumont BSc(Hons) MRICS, Emma Guy BSc (Hons) MRICS, Lisa Corby BSc (Hons) MRICS, Glenn Levison BSc (Hons)MRICS, Susan Jackson BSc (Hons) and James Bean BSc Hons FRGS (the latter two under thesupervision of one of the other internal RICS registered valuers). Council dwellings and other HRAproperties were valued by external valuers Kier; Stonefall Cemetery and Turkish Baths were valued byexternal valuers DVS; and Victoria Gardens Shopping Centre was valued by external valuers CBRE.

The following table shows the progress of the Council’s rolling programme for the revaluation of non-current assets:

CouncilDwellings

Other Land& Buildings

VehiclesPlant &

Equipment


£’000 £’000 £’000 £’000Valued at Historic Cost 0 0 5,319 568Valued at current value in:2013/14 0 2,077 1,366 02014/15 0 5,411 68 02015/16 0 29,403 0 02016/17 0 18,386 0 02017/18 235,528 32,548 862 0Total 235,528 87,825 7,615 568

CommunityAssets

SurplusAssets

AssetsUnder

Construction

Total PropertyPlant &

Equipment£’000 £’000 £’000 £’000

Valued at Historic Cost 2,088 0 1,506 9,481Valued at current value in:2013/14 0 0 0 3,4432014/15 0 0 0 5,4792015/16 0 345 0 29,7482016/17 0 15 0 18,4012017/18 0 5,650 0 274,588Total 2,088 6,010 1,506 341,140

The revaluation of Council Dwellings resulted in a reversal of previous revaluation losses of£15,583k, reflecting the current housing market.



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g) Non-operational Property, Plant & Equipment (Surplus Assets)

The Council does not have material surplus assets.

9. Heritage Assets

Reconciliation of the Carrying Value of Heritage Assets held by the Council. The four categories ofHeritage Assets below are all shown on the Balance Sheet at their insurance valuations.

Museums &Art Exhibits

£’000

CivicRegalia

£’000

Memorials &Monuments

£’000

BuildingsRoyal

Hall£’000

Total

£’0001 April 2017 8,488 411 1,916 27,862 38,677Additions 30 0 0 0 30Donations 0 0 0 0 0Derecognition – other 0 0 0 0 0Revaluation Increases/decreases (-) to RR*

18 0 57 836 911

31 March 2018 8,536 411 1,973 28,698 39,618

*RR – Revaluation Reserve

1 April 2016 8,439 411 1,860 27,051 37,761Additions 45 0 0 0 45Donations 0 0 0 0 0Derecognition – other 0 0 0 0 0Revaluation Increases/decreases (-) to RR*

4 0 56 811 871

31 March 2017 8,488 411 1,916 27,862 38,677

*RR – Revaluation Reserve

Museums and Art Exhibits

For Museums and Art Exhibits, the insurance valuations shown are based on the market values assessedby external expert valuers in 2006 (items of Russian jewellery valued by Wartski of London) and 2007(Fine art, ceramics, jewellery, Egyptology and Greek, Roman & South American collections valued byTennants Fine Art Auctioneers). These insurance valuations have been updated in 2017/18 by theCurator of Art for acquisitions since that date, purchases being at cost, and donations at valuation, andthe movements are shown as additions in the year.

Within Museums and Art exhibits there are a number of sub-categories of heritage assets. The fine artcollection consists of 2,500 works and accounts for the majority of the museums and arts collection’svaluation.

A significant collection of foreign antiquities is held, with the Egyptology collection forming the majorityof it, together with a collection of Greek, Roman and South American pieces.

There is also a collection of decorative and applied arts, consisting of ceramics, glass, silver andjewellery, and a collection of British archaeological material, together with a social history collection thatcovers a range of materials relating to domestic, community and working life in the Harrogate district,mainly dating from the 19th and 20th centuries.

The Council’s Museums and Arts service cares for and promotes the above collections, which span theareas of Human History with 20,000 objects and Fine Art with 2,500 objects. All collections are stored atthe Mercer Gallery in a purpose built secure storage and they are displayed principally at three sites; theMercer Gallery, the Royal Pump Room Museum and Knaresborough Castle. Items are also loaned out toother museums and galleries in the UK and occasionally overseas.



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The Council is committed to making the collections as intellectually and physically accessible as possible,not only to residents in its District but also in the wider north of England region and, where appropriate,nationally and internationally. For example, there are both permanent and temporary themed displaysat the sites above, as well as education programmes for young people and the opportunity forsupervised private individual academic study.

In addition to the above collections, the Council holds nine sculptures that have been included in theMuseum and Art Exhibits category.

The Museums and Arts service maintain inventory books with hand written entries for each item as theyhave come into the collection, giving each item an accession number. They also maintain a computerisedcatalogue of all collections called the MODES system.

Civic Regalia

These items are included on the Council’s Balance Sheet at their insurance valuation, being the costof replacement assessed by external specialists; (Oddy Wilson & Co Ltd) in 1984; (Ogden ofHarrogate) in 2011/12, 2012/13 and 2013/14; and Tennants in 2014/15.

The collection includes items such as the Mayor’s and Mayoress’ chains and their badges of office,together with a number of trophies, bowls and other trinkets, many of which are made of silver andhave been presented to the Council over the years to commemorate special occasions.

The majority of the civic regalia collection is kept in secure storage, although some items are ondisplay in the Council Offices and items are sometimes displayed at the Council’s museums. TheMayor and Mayoress use their chains of office for public engagements.

The Mayor’s secretary maintains an inventory of all the items presented to the Council and thevaluation schedules for the Civic Regalia.

Memorials and Monuments

Memorials and monuments are included on the Balance Sheet at their insurance valuation. Thisinsurance valuation for the estimated cost of replacement is provided by the Council’s AssetsManager and is based on rebuilding costs, which are reviewed annually.

The Council is responsible for twelve memorials and monuments, including the clock tower onNorth Road in Ripon, the Queen Victoria monument in Harrogate town centre and the obelisk inRipon Market Place.

The increase in valuation in 2017/18 reflects an inflationary increase in the assessment of therebuilding cost of all the memorials and monuments.

The monuments and memorials are all located in community open spaces across the district andare accessible to the public. The items are recorded in the property schedules maintained forinsurance purposes.

Buildings

The Royal Hall, Harrogate, is the only building held by the Council in the Heritage Asset category. Itwas originally built in 1903 and was fully restored between 2006 and 2008 with the assistance ofgrants from the Heritage Lottery Fund and the Royal Hall Restoration Trust. It is a unique local assetand is an important Grade II listed building. It is held on the Balance Sheet at its insurancevaluation, being the estimated cost of replacement based on an assessment carried out by theCouncil’s Asset Manager. This valuation is reviewed annually.

The building is recorded in the property schedules maintained for insurance purposes.



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In accordance with the conditions of the Heritage Lottery Grant, the Royal Hall is open to the publicby way of regular entertainment events, as well as public open days, and group tours can also bearranged.

The Council has a number of other heritage buildings e.g. Pump Room Museum, Mercer Gallery andKnaresborough House, but in accordance with the accounting code of practice these are treated asoperational assets. They are included in the Property, Plant and Equipment Category on the BalanceSheet at current value and are not included as Heritage Assets.

The Council does not possess any intangible heritage assets.

10. Investment Property

The Council received rental income of £270k from investment property in 2017/18 (£264k in2016/17) and direct operating expenses amounted to £0k (£1k in 2016/17). As part of the assetrevaluation process in 2017/18 the Council’s internal valuers have reviewed all of the investmentproperties and are not aware of any material restrictions on the realisability of investment propertyor the remittance of income and proceeds on disposal.

A reconciliation of the carrying amounts of investment property at the beginning and end of2016/17 and 2017/18 is set out below:

2017/18 2016/17Fair Value £’000 £’0001 April 4,562 4,559Disposals 0 0Net gains or losses(-) from fair value adjustments -178 3Reclassifications 345 031 March 4,729 4,562

Fair Value Hierarchy

Details of the Council’s investment properties and information about the fair value hierarchy as at 31March 2018 and 2017 are as follows:

Recurring fair valuemeasurements using:

Quoted prices inactive markets for

identical assets(Level 1)

£’000

Other significantobservable inputs

(Level 2)

£’000

Significantunobservable

inputs (Level 3)

£’000

Fair valueas at 31

March2018

£’000

Shopping centre 0 3,950 0 3,950

Secondary IndustrialLand 0 0 701 701

Garage block 0 0 78 78

Total 0 3,950 779 4,729



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2017 Comparative Figures:

Recurring fair valuemeasurements using:

Quoted prices inactive markets for

identical assets(Level 1)

£’000

Other significantobservable inputs

(Level 2)

£’000

Significantunobservable

inputs (Level 3)

£’000

Fair valueas at 31

March2017

£’000

Shopping centre 0 4,100 0 4,100

Secondary IndustrialLand 0 0 356 356

Garage block 0 0 106 106

Total 0 4,100 462 4,562

There were no transfers between Levels 1, 2 and 3 during the year.

Valuation Techniques used to determine Level 2 and 3 Fair Values for Investment Properties

Significant Observable Inputs – Level 2

The shopping centre has been valued using an investment method of valuation using an initial yield.When valuing the asset, regard has been made to comparable investments with characteristicssimilar, but not identical, to the subject property.

Significant Unobservable Inputs – Level 3

The secondary industrial land and garage block have been valued using an investment method ofvaluation, with an initial yield applied to the income stream. However, due to the nature andlocation of these assets there is no evidence of disposals of similar properties and little quantitativeinformation to consider, and therefore the valuer has relied upon other information and appropriateassumptions. For this reason, these assets are categorised as Level 3 in the fair value hierarchy asthe valuation method uses significant unobservable inputs to determine the fair value (and there isno reasonably available information that indicates that market participants would use differentassumptions).

Highest and Best Use of Investment Properties

In estimating the fair value of the Council’s investment properties, the highest and best use of theshopping centre is its current use. The secondary industrial land and garage block are currentlyleased out and generate income, but there is the potential that their value could increase if theywere reviewed and planning permission sought for development.

Valuation Process for Investment Properties

The fair value of the Council’s investment property is measured annually at each reporting date. Thevaluations are carried out by both internal and external valuers, in accordance with the RoyalInstitution of Chartered Surveyors (RICS) Valuation – Professional Standards. The Council’svaluations experts work closely with finance officers regarding all valuation matters.



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11. Financial Instruments

a) Categories for Financial Instruments

The following categories of financial instruments are carried on the Balance Sheet:

31 MarchLong Term

2018Current

2018Long Term

2017Current

2017£’000 £’000 £’000 £’000

InvestmentsLoans and receivables at amortised cost:Short Term Investments 0 26,037 0 19,171Cash & Cash Equivalents 0 6,796 0 14,342Total included in investments 0 32,833 0 33,513

DebtorsLoans and Receivables 559 0 597 0Financial Assets carried at contract amounts 0 3,343 0 2,800Total included in debtors 559 3,343 597 2,800

BorrowingsFinancial Liabilities at amortised cost 53,078 646 53,082 88Total included in borrowings 53,078 646 53,082 88

CreditorsFinancial Liabilities carried at contract amounts 0 8,616 0 11,159Total included in creditors 0 8,616 0 11,159

b) Income, Expense, Gains and Losses

Interest income of -£225k (-£339k 2016/17) on loans and receivables and interest expense of £1,590k(£1,676k 2016/17) on financial liabilities at amortised cost are included in the surplus or deficit on theprovision of services for the year, giving a net expense of £1,365k in the year (£1,337k net expense in2016/17).

c) Fair Value of Financial Assets and Liabilities

31 MarchCarryingAmount

2018Fair Value

2018

CarryingAmount

2017Fair Value

2017£’000 £’000 £’000 £’000

Financial Liabilities at amortised costPWLB loans 53,104 61,991 53,108 63,938Bank overdraft 620 620 62 62Total 53,724 62,611 53,170 64,000

Loans and Receivables at amortised cost 32,833 32,833 33,513 33,513

Financial Liabilities consists of a bank overdraft and Public Works Loans Board (PWLB) loans. Thefair value of PWLB loans is higher than the carrying amount because the Council’s portfolio of loansincludes a number of fixed rate loans where the interest payable is higher than the rates availablefor similar loans at the balance sheet date. This commitment to pay interest above current marketrates increases the amount that the Council would have to pay if the lender agreed to earlyrepayment of the loan. The fair value has been assessed by calculating the present value of theremaining cash flows by reference to the PWLB ‘premature repayment’ set of rates in force at thebalance sheet date.



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However, the Council has a continuing ability to borrow at concessionary rates from the PWLBrather than from the markets, termed the PWLB Certainty interest rates. A supplementary measureof the fair value as a result of its PWLB commitments for fixed rate loans is to compare the terms ofthese loans with the new borrowing rates available from the PWLB. If a value is calculated on thisbasis, the carrying amount of £53,104k would be valued at £57,090k. But, if the Council were toseek to avoid the projected loss by repaying the loans to the PWLB, the PWLB would raise a penaltycharge, based on the redemption interest rates, for early redemption of £8,887k for the additionalinterest that will not now be paid. The exit price for the PWLB loans including the penalty chargewould be £61,991k.

In 2017/18 the fair value of Loans and Receivables is equal to the carrying amount because all of theCouncil’s investments have less than twelve months to maturity and therefore the carrying amount isassumed to approximate to fair value.

See note 28 for further information regarding financial instruments.

12. Assets Held for Sale2017/18 2016/17

£’000 £’000Balance outstanding at start of year 0 600Assets newly qualified as held for sale:

Property, Plant & Equipment 1,287 600Assets sold -1,275 -600Balance outstanding at year-end 12 0

13. Debtors

Debtors have been reviewed collectively for impairment, based on historical loss experience at31 March in the following categories shown in the table. Other Entities and Individual Debtors arereviewed individually by age analysis of the debtor system balance. The estimated provision for baddebts required has been charged to net cost of services in the Comprehensive Income andExpenditure Statement.

31 March2018 2017

£’000 £’000Central Government Bodies 1,385 1,068NHS Bodies 5 8Other Local Authorities 808 519

Other entities and individuals 1,238 1,292Impairment Allowance -93 -87

1,145 1,205Payments in Advance 886 705

Total Customer Debtors 4,229 3,505

NDR/Council Taxpayers 1,779 1,245Impairment Allowance -959 -718

820 527Housing Rents 292 244Impairment Allowance -199 -160

93 84Total Statutory Debtors 913 611Net Debtors 5,142 4,116Total Impairment Allowance -1,251 -965



43

14. Creditors31 March

2018 2017£’000 £’000

Central Government Bodies -2,167 -2,562NHS Bodies 0 -1Other Local Authorities -3,177 -3,877Housing Rents -175 -151NDR/Council Taxpayers -52 -44Other entities and individuals -3,272 -4,719Receipts in Advance (Non-Grant Income) -3,711 -3,083Total -12,554 -14,437

15. Provisions1 April

2017AdditionalProvision

In Year

UsedIn Year

ReleasedIn Year

31 March2018

£’000 £’000 £’000 £’000 £’000 NDR Appeals -1,214 -1,940 853 0 -2,301 Insurance Liabilities -238 -170 80 81 -247

Energy Bill Provision -254 -71 0 4 -321 Redundancy Provision -52 -155 31 0 -176 Litigation -24 0 0 24 0 Other -172 -192 4 17 -343

Total 2017/18 -1,954 -2,528 968 126 -3,388 Total 2016/17 -2,487 -639 993 179 -1,954

Under the Business Rate Retention Scheme introduced on 1 April 2013, the Council has to makeprovision against its estimated liability for possible successful appeals against non-domestic rate(NDR) bills issued in 2017/18 and prior years. Payment from the provision will depend on the finalsettlement of these appeals by the Valuation Office and the time taken to settle appeals can varysignificantly.

The Council is self-insured up to £50,000 per claim for public liability and employer’s liability claims.Any claims beyond these levels are met by insurers. The level of provision made is adequate to meetthe Council’s estimated known liabilities under its self-insurance arrangements for all outstandingclaims. Claims can take a number of years to resolve with, on average, annual settlements of around£100,000 being made. The value of outstanding claims is assessed by the Council’s professionaladvisors and provided in full. The insurance provision also includes the estimated liability under thescheme of arrangement with the Council’s former insurer Municipal Mutual Insurance (MMI) forclaims relating to pre-1993 policies.

The provision for Energy Bills relates to a number of outstanding invoices from utility companies forgas and electricity used at a number of sites. The settlement date will depend on the receipt ofoutstanding invoices from Energy Companies.

The Redundancy Provision was used to meet the liabilities arising from redundancies in 2017/18 thathad been negotiated in 2016/17. New provision has been made for redundancies negotiated in2017/18 that will be paid in 2018/19.

The Litigation provision was established in 2014/15 for the expected settlement costs associated witha legal case, whereby a group of property search companies were seeking to claim refunds for feespaid to the Council to access land charges data. The claim was partly settled in 2015/16 and2016/17, with the final payment made in 2017/18 and the remainder of the provision beingreleased back to revenue.

No reimbursement is currently expected in relation to any of these provisions.



44

16. Total Movement on Unusable Reserves

1 April2017

Gains/Losses(-)

in year

TransfersBetweenReserves

31 March2018

£’000 £’000 £’000 £’000Revaluation Reserve (see i below) 58,406 13,853 -731 71,528Capital Adjustment Account (ii) 214,200 0 15,482 229,682Deferred Capital Receipts (iii) 597 0 -38 559Pension Reserve (iv) -43,870 5,363 -1,622 -40,129Accumulated Absences Adjustment Account(v)

-481 0 -7 -488

Collection Fund Adjustment Account (vi) 407 0 -1,492 -1,085Total 2017/18 229,259 19,216 11,592 260,067

1 April2016

Gains/Losses(-)

in year

TransfersBetweenReserves

31 March2017

£’000 £’000 £’000 £’000Revaluation Reserve (i) 55,253 3,940 -787 58,406Capital Adjustment Account (ii) 142,259 0 71,941 214,200Deferred Capital Receipts (iii) 652 0 -55 597Pension Reserve (iv) -40,731 -2,877 -262 -43,870Accumulated Absences Adjustment Account(v)

-468 0 -13 -481

Collection Fund Adjustment Account (vi) -412 0 819 407Total 2016/17 156,553 1,063 71,643 229,259

i) Revaluation ReserveThe Revaluation Reserve contains revaluation gains made by the Council arising from increases inthe value of its Property, Plant and Equipment recognised since 1 April 2007 only, the date of itsformal implementation. Gains arising before that date have been consolidated into the CapitalAdjustment Account. The balance is reduced when assets with accumulated gains are:• revalued downwards or impaired and the gains are lost• used in the provision of services and the gains are consumed through depreciation, or• disposed of and the gains are realised.

2017/18 2016/17£’000 £’000

Balance at 1 April 58,406 55,253

Upward Revaluation of Assets 14,251 4,162Downward revaluation of assets and impairment losses not charged to theSurplus/Deficit on the Provision of Services -398 -222

Surplus or Deficit on revaluation of non-current assets not charged to theSurplus/Deficit on the Provision of Services 13,853 3,940

Difference between fair value depreciation and historical cost depreciation -693 -598

Accumulated gains on assets sold -38 -189

Amount written off to Capital Adjustment Account -731 -787Balance 31 March 71,528 58,406



45

ii) Capital Adjustment Account

The Capital Adjustment Account is used to absorb the timing differences arising from the differentarrangements for accounting for the consumption of non-current assets and for financing theacquisition, construction or enhancement of those assets under statutory provisions. The Account isdebited with the cost of acquisition, construction or enhancement as depreciation, impairmentlosses and amortisations are charged to the Comprehensive Income and Expenditure Statement(with reconciling postings from the Revaluation Reserve to convert fair value figures to a historicalcost basis). The Account is credited with the amounts set aside by the Council as finance for thecosts of acquisition, construction and enhancement.The Account is used to hold accumulated gains and losses on Investment Properties and gainsrecognised on donated assets that have yet to be consumed by the Council.The Account is also used to hold revaluation gains accumulated on Property, Plant and Equipmentbefore 1 April 2007, the date that the Revaluation Reserve was created to hold such gains. It is notavailable to support spending.

2017/18 2016/17£’000 £’000

Balance 1 April 214,200 142,259

Reversal of items relating to capital expenditure debited or credited to theComprehensive Income & Expenditure Statement (CI&ES):

Charges for the depreciation and impairment of non-current assets -7,102 -6,553Revaluation losses on Property, Plant & Equipment -2,223 -1,605Reversal Revaluation Losses on Property, Plant & Equipment 17,501 68,404Movement in the market value of Investment Property -178 3Amount of non-current assets written off on disposal or sale as part of thegain/loss on disposal -3,258 -2,761Capital Financing Applied in year:

Use of the Capital Receipts Reserve to finance new capital expenditure 3,456 1,805Use of Major Repairs Reserve to finance new capital expenditure 4,293 3,044Capital Grants and Contributions credited to the CI&ES that have beenapplied to capital financing 1,566 1,134Statutory Provision for the repayment of Principal 580 595HRA Voluntary set aside for debt repayment 0 7,000

Capital expenditure charged against General Fund and HRA balances 116 88Adjusting amounts written out of the Revaluation Reserve 731 787Balance at 31 March 229,682 214,200



46

iii) Deferred Capital ReceiptsThe Deferred Capital Receipts Reserve holds the gains recognised on the disposal of non- currentassets or on making improvement loans to home owners repayable when their house is sold, forwhich cash settlements have yet to take place. These items form Long Term Debtors.

Under statutory arrangements, the Council does not treat these gains as usable for financing newcapital expenditure until they are backed by cash receipts. When the deferred cash settlementeventually takes place, amounts are transferred to the Usable Capital Receipts Reserve (or wherethe capital receipt is less than the £10,000 de minimis under legislation, to the Housing CapitalReserve).

2017/18 2016/17£’000 £’000

Balance at 1 April 597 652New Deferred Receipts in year credited to CI&ES 0 1Transfer to Usable Receipts reserve/GF Balance upon receiptof cash -38 -56Balance at 31 March 559 597

iv) Pensions Reserve

The Pensions Reserve is used to absorb the timing differences arising from the differentarrangements for accounting for post-employment benefits and for funding benefits in accordancewith statutory provisions. The Council accounts for post-employment benefits in theComprehensive Income and Expenditure Statement as the benefits are earned by employeesaccruing years of service, updating the liabilities recognised to reflect inflation, changingassumptions and investment returns on any resources set aside to meet the costs. However,statutory arrangements require benefits earned to be financed as the Council makes employer’scontributions to the pension fund. The debit balance on the Pensions Reserve therefore shows asubstantial shortfall in the benefits earned by past and current employees and the resources theCouncil has set aside to meet them. The statutory arrangements will ensure that funding will havebeen set aside by the time the benefits come to be paid.

2017/18 2016/17£’000 £’000

Balance at 1 April -43,870 -40,731

Remeasurement gains or losses (-) on pensions assets and liabilities 5,363 -2,877Reversal of items relating to retirement benefits debited or credited tothe surplus or deficit on the Provision of Services in the CI&ES -7,800 -6,246

Employer's Pension Contributions payable in the year 6,178 5,984

Balance at 31 March -40,129 -43,870



47

v) Accumulated Absences Adjustment Account

The Accumulated Absences Adjustment Account is used to absorb the differences that wouldnormally be charged to the General Fund Balance from accruing for compensated absences earnedbut not taken in the year e.g. annual leave entitlement carried forward at 31 March. Statutoryarrangements require that the impact on the General Fund Balance is reversed by transfers to orfrom the Account.

2017/18 2016/17£’000 £’000

Balance at 1 April -481 -468

Reversal of accrual made at the end of the preceding year 481 468Amounts accrued at the end of the current year -488 -481Amount by which officer remuneration charged to the CI&ES on anaccruals basis is different to remuneration chargeable in the year inaccordance with statutory requirements

-7 -13

Balance at 31 March -488 -481

vi) Collection Fund Adjustment Account

The Collection Fund Adjustment Account is used to account for the differences from the recognitionof council tax and non-domestic rates (NDR) income in the Comprehensive Income and ExpenditureStatement as it falls due from tax payers compared with the statutory arrangements for payingacross amounts to the General Fund from the Collection Fund.

2017/18 2016/17£’000 £’000

Balance at 1 April 407 -412

Amount by which the Council Tax Income credited to the CI&ES on anaccruals basis is different to Council Tax Income calculated for the yearin accordance with statutory requirements

-165 -52

Amount by which the NDR Income credited to the CI&ES on anAccruals basis is different to the NDR income calculated for the year inaccordance with statutory requirements

-1,327 871

Balance at 31 March -1,085 407



48

17. Expenditure and Funding Analysis and Segmental Income

a) Expenditure and Funding AnalysisThe Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants, rents, council tax and business rates) bylocal authorities in comparison with those resources consumed or earned by authorities in accordance with generally accepted accounting practices. It also shows howthis expenditure is allocated from decision making purposes between the Council’s services. Income and expenditure accounted for under generally accepted accountingpractices is presented more fully in the Comprehensive Income and Expenditure Statement.

2017/18 NetExpenditure

chargeable tothe General

Fund andHRA balances

Adjustmentsfor Capital

Purposes(Note i)

Net changefor the

PensionsAdjustments

(Note ii)

OtherDifferences

(Note iii)

Net Expenditurein the

ComprehensiveIncome andExpenditure

Statement£000 £000 £000 £000 £000

Housing General Fund 1,422 118 22 0 1,562Parks & Environmental Services 4,379 1,477 125 0 5,981Safer Communities -1,402 -311 35 0 -1,678Finance 2,225 566 73 0 2,864Legal & Governance 2,516 225 24 0 2,765Information, Communications & Technology 2,178 287 20 0 2,485Organisational Development & Improvement 2,055 288 32 0 2,375Culture, Tourism & Sport 1,173 757 71 0 2,001Planning & Development 4,575 -543 82 0 4,114Harrogate Convention Centre -52 7 42 0 -3Corporate 594 233 1 7 835Housing Revenue Account (HRA) -6,058 -15,583 58 0 -21,583Net Cost of Services 13,605 -12,479 585 7 1,718Other Income & Expenditure -20,066 -2,299 1,037 1,492 -19,836Transfers to/from(-) Earmarked Reserves 1,489 0 0 -1,489 0Surplus(-) or Deficit -4,972 -14,778 1,622 10 -18,118

Opening General Fund & HRA Balances at 31 March 2017 -16,950Surplus(-)/Deficit on General Fund and HRA Balances in year -4,972Closing General Fund & HRA Balances at 31 March 2018* -21,922

* For a split of this balance between General Fund and HRA, see the Movement in Reserves Statement



49

2016/17 NetExpenditure

chargeable tothe General

Fund andHRA balances

Adjustmentsfor Capital

Purposes(Note i)

Net changefor the

PensionsAdjustments

(Note ii)

OtherDifferences

(Note iii)

Net Expenditurein the

ComprehensiveIncome andExpenditure

Statement£000 £000 £000 £000 £000

Restated** Restated** Restated** Restated** Restated**Housing General Fund 834 -7 -18 0 809Parks & Environmental Services 5,186 1,280 -221 0 6,245Safer Communities -1,610 149 -62 0 -1,523Finance 2,231 9 -63 0 2,863Legal & Governance 2,298 3 -35 0 2,266Information, Communications & Technology 2,165 111 0 0 2,276Organisational Development & Improvement 2,021 37 -12 0 2,046Culture, Tourism & Sport 657 1,594 -122 0 2,129Planning & Development 5,182 -257 -105 0 4,820Harrogate Convention Centre -617 -48 -76 0 -741Corporate 366 -292 -210 13 -123Housing Revenue Account (HRA) -5,659 -66,851 -98 0 -72,608Net Cost of Services 13,054 -64,272 -1,022 13 -52,227Other Income & Expenditure -12,043 -9,744 1,284 -820 -21,323Transfers to/from(-) Earmarked Reserves 2,492 0 0 -2,492 0Surplus(-) or Deficit 3,503 -74,016 262 -3,299 -73,550

Opening General Fund & HRA Balances at 31 March 2016 -20,453Surplus(-)/Deficit on General Fund and HRA Balances in year 3,503Closing General Fund & HRA Balances at 31 March 2017* -16,950

* For a split of this balance between General Fund and HRA, see the Movement in Reserves Statement ** In 2017/18, the costs and income associated with housing benefit have moved from the Housing General Fund service to Finance. The 2016/17 figures have been restated so as to be

consistent with this. For Housing, net expenditure chargeable to the General Fund has increased by £200k, the pension adjustment has increased by £22k and the net expenditure in theCIES has therefore increased by £222k. For Finance, the equivalent figures have decreased by these amounts.



50



51

i) Adjustments for Capital Purposes:

This column adds in depreciation and impairment and revaluation gains and losses in the services lines, andfor Other Income and Expenditure:

Adjusts for capital disposals with a transfer of income on disposal of those assets and the amountswritten off for those assets.Removes the charges for capital financing – ie Minimum Revenue Provision and voluntary set aside torepay debt, as well as revenue contributions to – as these are not chargeable under generally acceptedaccounting practices.Adds the contribution to Housing Pooled Capital Receipts.Adds in revaluation gains or losses for Investment Properties.Adds the transfer from deferred capital receipts for repaid housing improvement loans.Adds capital grant income for grants that are receivable in the year without conditions or for whichconditions were satisfied in the year.

ii) Net Change for the Pensions Adjustments:

Net change for the removal of pension contributions and the addition of IAS 19 Employee Benefits pension-related expenditure and income:

For services this represents the removal of the employer pension contributions made by the authorityas allowed by statute and their replacement with current service costs and past service costs.For Other Income and Expenditure, the net interest on the defined benefit liability is charged to theCIES.

ii) Other Differences:

Other differences between amounts debited/credited to the CIES and amounts payable/receivable to berecognised under statute:

For services this represents the adjustment for accumulated absences.For Other Income and Expenditure, the difference between what is chargeable under statutoryregulations for council tax and business rates that was projected to be received at the start of the yearand the income recognised under generally accepted accounting practices. This is a timing differenceas any difference will be brought forward in future surpluses or deficits on the Collection Fund.Transfers between Earmarked Reserves and the General Fund Working Balance are also adjusted for inthis column.

b) Segmental IncomeRevenue received from external customers is analysed on a segmental basis below:

2017/18 2016/17Services £’000 £’000Housing General Fund -215 -234Parks & Environmental Services -4,319 -3,473Safer Communities -4,057 -4,198Finance -560 -661Legal & Governance -54 -76Information, Communications & Technology 0 -9Organisational Development & Improvement -37 -13Culture, Tourism & Sport -4,979 -5,097Planning & Development -3,747 -3,281Harrogate Convention Centre -5,037 -5,105Corporate -51 -32Housing Revenue Account (including rents) -17,181 -17,407Total -40,237 -39,586



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18. Members’ Allowances and Expenses

Allowances paid in the year amounted to £357,000 in aggregate (£359,000 2016/17).

This comprised: 2017/18 2016/17£’000 £’000

Basic Allowances 252 253Special Responsibility Allowances 80 80

Mayoral Allowance 15 14 Members Car & Other Allowances Expenses

91

111

357 359

19. Employees’ earnings

a) The numbers of employees (excluding senior officers - see note c) whose remuneration(excluding pension contributions) was £50,000 or more in the year were as follows:

Remuneration Band 2017/18Number of Employees

2016/17Number of Employees

£50,000 - £54,999 4 2£55,000 - £59,999 6 7£60,000 - £64,999 1 1£65,000 - £69,999 1 0

12 10

b) The number of exit packages with total cost per band and total cost of the compulsory andother redundancies are set out in the table below:

a.Exit Package costband (including

special payments)

b.Number ofcompulsory

redundancies

c.Number of other

departures agreed

d.Total number ofexit packages by

cost band[(b) + (c)]

e.Total cost of exitpackages in each

band £’000

Value 2017/18 2016/17 2017/18 2016/17 2017/18 2016/17 2017/18 2016/17

£0 - £20,000 2 1 13 12 15 13 133* 111

£20,001 - £40,000 0 1 5 4 5 5 153 135

£40,001 - £60,000 0 1 2 0 2 1 91 53

£60,001 - £80,000 0 0 0 0 0 0 0 0

£80,001 - £100,000 0 0 1 0 1 0 95 0

Total 2 3 21 16 23 19 472 299

* Includes £8k pension cost associated with a departure agreed in 16/17 (associatedredundancy cost also included in 16/17).



53

c) Senior Officers whose remuneration was £50,000 or moreSalary,

Including Fees& Allowances

Benefits in Kindeg car allowance

TotalRemuneration

excluding PensionContributions

EmployersPension

Contribution

TotalRemuneration

including PensionContributions

2017/18 £ £ £ £ £Chief Executive (see note 1) 120,259 200 120,459 22,355 142,814Director, Harrogate Convention Centre 97,756 0 97,756 17,596 115,352Director of Economy & Culture (see note 2) 22,024 35 22,059 3,965 26,024Director of Economy & Culture (see note 2) 59,792 50 59,842 10,762 70,604Director of Corporate Affairs 86,243 38 86,281 15,524 101,805Director of Community 83,257 2 83,259 14,986 98,245Head of Finance (see note 3) 27,757 0 27,757 4,996 32,753Financial Services Manager (see note 4) 31,467 0 31,467 5,664 37,131

Note 1: The Chief Executive’s salary for 2017/18 includes Returning Officer Fees of £9,458.Note 2: The Director of Economy & Culture post was occupied until 2 July 2017 and a new postholder commenced on 3 July 2017. These lines show the actual salary paid forthe portion of the year that each postholder was in place.Note 3: The Head of Finance post was occupied until 10 September 2017. The post remained vacant for the remainder of the year.Note 4: The Financial Services Manager took on the role of Section 151 Officer from 11 September 2017 in the absence of a Head of Finance.

2016/17 £ £ £ £ £Chief Executive (see note 1) 123,598 288 123,886 16,769 140,655Director, Harrogate Convention Centre 96,843 0 96,843 14,139 110,982Director of Economy & Culture 85,899 95 85,994 12,541 98,535Director of Corporate Affairs 85,717 12 85,729 12,515 98,244Director of Community (see note 2) 42,924 133 43,057 6,267 49,324Director of Community (see note 2) 39,324 14 39,338 5,741 45,079Head of Finance 61,834 216 62,050 9,028 71,078

Note 1: The Chief Executive’s salary for 2016/17 includes Returning Officer Fees of £13,894.Note 2: The Director of Community post was occupied until 30 September 2016 and a new postholder commenced on 3 October 2016. These lines show the actual salary paidfor the portion of the year that each postholder was in place.



54

20. External Audit Costs2017/18 2016/17

RestatedThe following amounts were payable to the external auditors in the year: £’000 £’000Fees for external audit services 51 51Fees for certifying grant claims and returnsFees for non-audit work

151

20*1

67 72* Restated figure – includes additional fees of £4,847 in respect of Benefits work

21. Grant Income

The Council credited the following grants and contributions to the Comprehensive Income and ExpenditureStatement in 2017/18.

2017/18 2016/17£’000 £’000

Credited to Taxation and Non Specific Grant Income:Government Capital GrantsMinistry of Housing, Communities & Local Government (Housing Grants) 370 78Homes England (Housing Grants) 179 378

Other Capital GrantsDevelopers Section 106 and other contributions (Housing & Play Areas) 965 884Contribution to Disabled Adaption from NYCC 36 0Friends of the Valley Gardens, Japanese Garden 80 0Donated arts exhibits 23 45Other small grants 7 24

1,660 1,409Other Government non-ringfenced grantsNew Homes Bonus Grant 1,227 1,653Business Rate Relief Grants 2,330 1,249Rural Service Delivery Grant 193 239Transition Grant 193 194Other Small Grants - New Burdens Grants etc 22 17

3,965 3,352Credited to Services:Capital Grants to Finance Revenue Expenditure Funded by Capital under StatuteGovernment GrantsMinistry of Housing, Communities & Local Government (Housing Grants) 316 493

316 493Specific Revenue GrantsGovernment GrantsDepartment for Work and Pensions Grants:Housing Rent Allowances 16,333 19,987Housing Rent Rebates 7,097 8,052Administration and various one-off grants 511 599Ministry of Housing, Communities and Local Government:Housing (inc Community Housing Fund in 16/17), Planning & Finance 496 648Lottery Grants (Cultural & Heritage Services) 409 262Natural England (AONB, Planning Services) 178 185Cabinet Office (Individual Electoral Registration) 25 30Other Grants (Environment Agency, OFGEM, English Heritage, DoE) 16 123

25,065 29,886Non-Government GrantsNYCC (Community Safety, Housing Services, AONB and Cultural Services 23 191Other Grants (Housing, Planning & Cultural Services) 229 106

252 297Total Grants and Contributions 31,258 35,437



55

In 2017/18, £1,143k of grant income was held as receipts in advance. £1,137k of this was Benefits Subsidygrant from the DWP, with the balance being Business Rates grants from MHCLG. In 2016/17, grantsreceipts in advance income was £1,742k, which was all Benefits Subsidy grant from the DWP.

22. Related Party Transactions

Related party transactions are those involving Councillors, senior officers, precepting local authorities andCentral Government. They are described here apart from those appearing elsewhere in these accounts.

Central Government exerts significant influence through legislation and funding. Details of the grantsreceived from Central Government can be found in note 21 and on the face of the CIES.

North Yorkshire County Council (NYCC) also exerts its influence through the provision of grants for variouspurposes (see note 21). In addition, the Council provides the following services on an agency basis toNYCC; the Council collected £2,939k of on-street parking income in 2017/18 (£2,652k 2016/17) and afterdeduction of related costs of £813k (£820k 2016/17), the balance of £2,126k (£1,832k 2016/17) was paidto NYCC in four quarterly instalments. NYCC were charged £90k (£91k 2016/17) for Grounds Maintenanceworks and paid £221k (£195k 2016/17) towards Housing Services lifelines and sheltered housing costsunder the Supporting People Scheme. NYCC also paid £16K costs for the NYCC election held in May 2017.They also paid £97k towards Community Safety expenditure (£95k 2016/17). They were paid £82k (£63k2016/17) for routine rentals for schools under Joint Use Agreements for Sport and Leisure Activities.

The North Yorkshire Police and Crime Commissioner paid £32k (£50k 2016/17) towards Community Safetyexpenditure and £16k (2016/17 £153k) for the 2016 Commissioner Election.

Payments totalling £44k (£62k 2016/17) were paid to Parish and Town Councils towards the cost ofGrounds Maintenance, Community Projects and Christmas Lighting. Income of £8k (£16k 2016/17) wasreceived for rental of recreation areas and properties leased to Parish and Town Councils.

There were no advances (£0k 2016/17) for car loans made to chief officers in the year under theirconditions of service. Repayments of car loans were £6k (£12k 2016/17), leaving a balance of £4k (£10k2016/17) at the year-end. Other transactions with these related parties are not listed individually, astheir values are not regarded as material to a fair understanding of the accounts. This is on the basis ofindividual questionnaires returned by all senior officers, councillors and former councillors.



56

23. Capital Expenditure and Capital Financing

2017/18 2016/17

GeneralFund

HousingRevenueAccount

Total

£’000 £’000 £’000 £’000Opening Capital Financing Requirement 21,300 60,756 82,056 83,232

Capital ExpenditureProperty, Plant & Equipment 6,176 6,039 12,215 12,445Heritage Assets 30 0 30 45Intangible Assets 105 0 105 0Revenue Expenditure Funded from Capitalunder Statute (included in the surplus on theComprehensive Income & ExpenditureAccount)

404 0 404 622

6,715 6,039 12,754 13,112Sources of FinanceCapital Receipts -3,056 -400 -3,456 -1,804Grants and Contributions -536 -1,346 -1,882 -1,628Revenue -205 0 -205 -217Major Repairs Reserve 0 -4,293 -4,293 -3,044

-3,797 -6,039 -9,836 -6,693Minimum Revenue Provision/set asidereceipts -580 0 -580 -7,595Closing Capital Financing Requirement 23,638 60,756 84,394 82,056

Explanation of movement in yearPrudential borrowing (unsupported) 2,918 0 2,918 6,419HRA Voluntary set aside 0 0 0 -7,000Statutory Revenue set aside -580 0 -580 -595Increase / Decrease (-) in Capital FinancingRequirement 2,338 0 2,338 -1,176

Items of Capital Expenditure

2017/18 2016/17

£’000 £’000Improvements to Council Dwellings – inc new build and purchases 6,039 4,478New Council office accommodation 3,958 6,419Computer Investment 975 217Ripon Pool 497 0Private Sector Housing Grants/Loans 316 494Vehicles and Plant 274 872Multi-storey car park payment machines 246 0Open Space and Play Area Improvements 110 83Tower Street car park refurbishment 117 0Leeds City Region Revolving Investment Fund 89 128Valley Gardens improvements 87 27Art Exhibits 30 45Turkish Baths improvements 16 0Leisure Centre Gym Equipment 0 273Other schemes 0 76

12,754 13,112



57

24. Operating Leasing Payments and Commitments

Council as Lessee:

Operating Leases (for land and buildings)

i) Leasing rentals paid to lessors in the year were:2017/18 2016/17

£’000 £’000Minimum lease payments 82 84Contingent rents 13 12

95 96

ii) The minimum lease payments for land and buildings due under non-cancellable leases in future yearsare:

31 March2018

31 March2017

£’000 £’000Not later than one year 81 39Later than one year and not later than five years 239 54Later than five years 38 42

358 135Council as Lessor:

The Council leases out property and equipment under operating leases mainly for the followingpurposes:

For the provision of community services, such as sports facilities, tourism services and communitycentres.

For economic development purposes to provide suitable affordable accommodation for localbusinesses.

To provide investment incomei) Minimum lease payments received from lessees in the year were £1,006k (£973k in 2016/17).

ii) The minimum lease payments receivable under non-cancellable leases in future years are:31 March

201831 March

2017£’000 £’000

Not later than one year 645 618Later than one year and not later than five years 1,216 1,276Later than five years 12,545 12,855

14,406 14,749

The minimum lease payments do not include rents that are contingent on events taking place after thelease was entered into, such as adjustments following rent reviews. In 2017/18 £320k of contingent rentswere receivable (£306k in 2016/17).

25. Termination Benefits

During 2017/18, a total of 23 exit packages were agreed (19 in 2016/17), with an associated liability of£472k (£299k 2016/17) - see note 19(b) for the number of exit packages and total cost per band. Thepayments are due to officers from a range of services across the Council, although the majority related tothe Finance and Organisational Development & Improvement support services. Of the £472k (£299k2016/17) payable, £317k was paid out during 2017/18 (£271k 2016/17), with a provision being created forthe remaining £155k to be paid in 2018/19 (£28k in 2016/17 to be paid in 2017/18). Of the total payable,£277k related to pension costs (£115k 2016/17).



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26. Defined Benefit Pension Schemesa) Participation in Pensions Schemes

As part of the terms and conditions of employment of its officers and other employees, the Council makescontributions towards the cost of post-employment benefits. Although these benefits will not actually bepayable until employees retire, the Council has a commitment to make the payments (for those benefits)and to disclose them at the time that employees earn their future entitlement.

The Council participates in two post-employment schemes:The Local Government Pension Scheme (LGPS), administered locally by North Yorkshire County Council(NYCC) – this is a funded defined benefit scheme, meaning that the council and employees paycontributions into a fund, calculated at a level intended to balance the pensions liabilities withinvestment assets.Arrangements for the award of discretionary post-retirement benefits upon early retirement – this isan unfunded defined benefit arrangement, under which liabilities are recognised when awards aremade. However, there are no investment assets built up to meet these pension liabilities, and cashhas to be generated to meet actual pension payments as they eventually fall due.

The North Yorkshire pension scheme is operated under the regulatory framework for the LGPS and thegovernance of the scheme is the responsibility of the Pension Fund Committee of NYCC. Policy isdetermined in accordance with Pensions Fund Regulations. The investment managers of the fund areappointed by the committee, which takes advice from the Corporate Director – Strategic Resources andthe fund’s investment advisers.The principal risks to the Council of the scheme are the longevity assumptions, structural changes to thescheme (i.e. large scale withdrawals), changes to inflation, bond yields and the performance of equityinvestments held by the scheme.

b) Transactions Relating to Retirement Benefits The costs of retirement benefits are recognised in the Net Cost of Services when they are earned by

employees, rather than when the benefits are eventually paid as pensions. However, the charge that isrequired to be made against Council Tax is based on the cash payable in the year, so the real cost ofretirement benefits is reversed out of the General Fund and Housing Revenue Account via the Movement inReserves Statement. The following transactions have been made in the Comprehensive Income andExpenditure Statement and Movement in Reserves Statement during the year:

2017/18 2016/17

Comprehensive Income & Expenditure Statement£’000 £’000

Cost of Services:Service cost comprising:

Current Service Cost 6,552 4,849Past Service Cost 211 113Gain(-)/loss from settlements 0 0

Financing & Investment Income & Expenditure:Net interest expense 1,037 1,284Total Post-employment Benefits charged to the Surplus or Deficit on the

Provision of Services 7,800 6,246Other Post-employment Benefits charged to the Comprehensive Income

and Expenditure Statement:Remeasurement of the net defined benefit liability comprising:

Return on plan assets (excluding the amount included in the netinterest expense)

11,314 31,016

Experience gain/loss(-) -1,350 14,137Gain/loss(-) due to changes in demographic assumptions 0 -2,865Gain/loss(-) due to changes in financial assumptions -4,601 -45,165

5,363 -2,877Total Post-employment Benefits charged to the Comprehensive Income

and Expenditure Statement 13,163 3,369



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b) Transactions Relating to Retirement Benefits (continued)

Movement in Reserves Statement 2017/18 2016/17£’000 £’000

Reversal of net charges made to the Surplus orDeficit on the Provision of Services -7,800 -6,246Actual amount charged against the General Fund Balance and

HRA Balance for pensions in the year:Employers’ contributions payable to the scheme 6,178 5,984

Amount by which pension costs calculated in accordance with IAS19are different from the contributions due under pension schemeregulations

-1,622 -262

c) Local Government Pension Scheme Assets and Liabilities Recognised in the Balance Sheet

The amount included in the Balance Sheet arising from the Council’s obligation in respect of thedefined benefit plan is as follows:

2017/18 2016/17£’000 £’000

Present value of the defined benefit obligation -271,387 -256,702Fair value of plan assets 233,099 212,832Net liability arising from defined benefit obligation -38,288 -43,870

d) Reconciliation of the Movements in the Fair Value of Scheme Assets

2017/18 2016/17£’000 £’000

Opening fair value of scheme assets 1 April 212,832 175,740Interest on plan assets 5,578 5,978Remeasurement gain/loss(-):

Return on plan assets, excluding the amountincluded in the net interest expense 11,314 31,016

Employer contributions 8,019 5,984Member contributions 1,379 1,354Benefits/transfers paid -6,023 -7,240Closing fair value of scheme assets 31 March 233,099 212,832

e) Reconciliation of the Present Value of the Scheme Liabilities (Defined Benefit Obligation)

2017/18 2016/17£’000 £’000

Opening balance 1 April 256,702 216,471Current service cost 6,552 4,849Interest cost 6,615 7,262Member contributions 1,379 1,354Remeasurement gains(-) and losses:

Experience gain(-)/loss 1,350 -14,137Gain(-)/loss due to changes in demographic assumptions 0 2,865Gain(-)/loss due to changes in financial assumptions 4,601 45,165

Past service cost loss/gain(-) on curtailments 211 113Benefits/transfers paid -6,023 -7,240Closing balance 31 March 271,387 256,702

In 2017/18, the Council made a one-off payment to the Pension Fund of £3,927k to cover futuredeficit liabilities for the period from 2017/18 to 2019/20. In line with the Council’s accounting



60

policies, £2,086k has been accounted for in 2017/18, with the remainder (£1,841k) being offsetagainst the pension liability on the balance sheet. In 2018/19, the pension reserve (note 16iv, -£40,129k) and the net pension liability (-£38,288k) will be brought into line as the prepaymentarrangements are accounted for.

f) Local Government Pension Scheme assets comprised:

Quoted Price inActive Market

Y/N

Fair Value of Scheme Asset31 March

2018%

2018£’000

2017%

2017£’000

Equities Y 64.8 151,048 65.4 139,192Property Y 8.0 18,648 8.5 18,091Government Bonds Y 16.5 38,461 14.2 30,222Corporate Bonds Y 0.0 0 3.1 6,598Cash Y 0.2 466 0.1 213Other Y 10.5 24,476 8.7 18,516Total 100.0 233,099 100.0 212,832

g) Basis for Estimating Assets and Liabilities

Liabilities have been assessed on an actuarial basis using the projected unit credit method, anestimate of the pensions that will be payable in future years dependent on assumptions aboutmortality rates, salary levels, etc. The NYCC fund liabilities have been assessed by Aon HewittLimited, an independent firm of actuaries, estimates being based on the latest full valuation of thescheme as at 31 March 2016.

2017/18 2016/17The significant assumptions used by the actuary have been:

Mortality assumptions:Longevity at 65 for current pensioners

Men: 22.9 yrs 22.8 yrsWomen: 26.4 yrs 26.3 yrs

Longevity at 65 for future pensionersMen: 25.1 yrs 25.0 yrsWomen: 28.7 yrs 28.6 yrs

Rate of Inflation CPI 2.10% 2.00%Rate of Inflation RPI 3.20% 3.10%Rate of increase in salaries 3.35% 3.25%Rate of increase in pensions 2.10% 2.00%Rate for discounting scheme liabilities 2.60% 2.60%

The estimation of the defined benefit obligations is sensitive to the actuarial assumptions set in thetable above. The sensitivity analysis below has been determined based on example changes of theassumptions occurring at the end of the reporting period and assumes for each change that theassumption analysed changes while all the other assumptions remain constant. The assumptions onlongevity, for example, assume that life expectancy increases or decreases for men and women. Inpractice, this is unlikely to occur, and changes in some of the assumptions may be interrelated. Theestimations in the sensitivity analysis have followed the accounting policies for the scheme, i.e. on anactuarial basis using the projected unit credit method. The methods and types of assumptions usedin preparing the sensitivity analysis below did not change from those used in the previous period.



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Impact on the DefinedBenefit Obligation in

the scheme£’000

Longevity (increase by 1 year) 8,009Rate of increase in pensions (increase by 0.1% per annum) 4,099Rate of increase in salaries (increase by 0.1% per annum) 1,039Rate for discounting scheme liabilities (increase by 0.1% per annum) -5,052

h) Impact on the Council’s Cash Flows

The objectives of the scheme are to keep employers’ contributions at as constant a rate as possible.The County Council has agreed a strategy with the scheme’s actuary to achieve a funding level of 100%over the next 23 years; for Harrogate Borough Council the period to 100% funding is 0.9 years. Fundinglevels are monitored on an annual basis. The next triennial valuation is due to be completed as at 31March 2019.

The scheme takes into account changes to the value of pension liabilities on a defined benefits basis,due to the enactment of the Public Service Pensions Act 2013. LGPS benefits in relation to service upto 31 March 2014 are determined on a final salary basis. Benefits accrued from 1 April 2014 aredetermined on a career average revalued earnings basis.

The total contributions expected to be made to the Local Government Pension Scheme by the Councilin the year to 31 March 2019 is £4.0m (year to 31 March 2018 £5.9m).

The weighted average duration of the defined benefit obligation for scheme members is 18.8 years(18.8 years 2016/17).

i) Investment Strategy

The Pension Fund Committee of North Yorkshire County Council has determined the investmentstrategy, which is aimed at growing the Fund’s assets to meet benefit obligations when they fall due.As required by the regulations, the suitability of various classes of investments has been consideredincluding assessing the benefit of asset class diversification. The Fund is primarily invested in equities(65% of scheme assets) and fixed income (17%), with investments also in property and alternatives,the proportions being not materially dissimilar to the comparative year. This strategy is reviewedperiodically, dependent on changes to market conditions and the solvency position of the Fund.

27. Contingent Assets and Contingent Liabilities

There are no contingent assets or liabilities as at 31 March 2018.

28. Nature and Extent of Risks Arising from Financial Instruments

The Council’s activities expose it to a variety of financial risks:Credit Risk – the possibility that other parties might fail to pay amounts due to the Council

Liquidity Risk – the possibility that the Council might not have funds available to meet itscommitments to make payments

Market Risk – the possibility that financial loss might arise for the Council as a result of changes insuch measures as interest rates and stock market movements.

The Council’s overall risk management programme focuses on the unpredictability of financial marketsand seeks to minimise potential adverse effects on the resources available to fund services. Proceduresfor risk management on treasury management are set out in the Local Government Act 2003 andassociated regulations. These require the Council to comply with the CIPFA Prudential Code and theCIPFA Treasury Management in the Public Services Code plus investment guidance issued under the Act.Risk management is carried out by a central treasury team, under policies approved by the Council in theannual treasury management strategy. The Council provides written principles for overall riskmanagement, as well as written policies covering specific areas, such as interest rate risk, credit risk andthe investment of surplus cash.a) Credit Risk



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Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Council’s customers.

The prime objective of treasury management activities is the security of the principal sums itinvests. This is achieved through the Council’s Annual Investment Strategy, which will ensurethat its counterparty list and limits reflect a prudent attitude towards organisations with whomfunds may be deposited. Deposits are not made with banks and financial institutions unless theyachieve a minimum level of credit worthiness. This is based on credit ratings from all threerating agencies, Fitch, Moody’s and Standard & Poor’s, as the core element, plus credit watchesand credit outlooks from credit rating agencies and Credit Default Swap spreads, to give earlywarning of likely changes in credit ratings.

The following analysis summarises the Council’s potential maximum exposure to credit risk, based onexperience of default and uncollectability over the last five financial years, adjusted to reflect currentmarket conditions and the age of the debts.

Amount at31 March

2018

HistoricalExperienceof Default

Adjusted forMarket

Conditions at31 March

EstimatedMaximum

Exposure toDefault and

Uncollectability

EstimatedMaximumExposure31 March

2017£’000 % % £’000 £’000

Deposits with Banks andFinancial Institutions 32,922 0.0 0.0 0 0Customers:Government and LocalAuthorities 2,198 0.0 0.0 0 0Other 1,145 2.7 3.7 40 50

40 50

No credit limits were exceeded during the reporting period by banks and financial institutions and theCouncil does not expect any losses from non-performance by any of its counterparties in relation todeposits.

The Council does not generally allow credit for customers, such that £1.4m of the £3.3m balance is past itsdue date for payment. This amount can be analysed by age as follows:

31 March2018

31 March 2017

£’000 £’000Less than three months 1,361 450Three to six months 17 12Six months to one year 8 4More than one year 7 12

1,393 478

b) Liquidity Risk

The level of short term deposits held by the Council mean that it does not currently require anyadditional long term borrowings and is in a position to meet the repayments due on its long term loans.

The Council has ready access to borrowings from the Public Works Loan Board and would be able totake up this option whenever rates are favourable. When new borrowings are required the Councilmust ensure that a significant proportion of the borrowings are not undertaken at a time ofunfavourable interest rates.



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The maturity analysis of financial liabilities is: 31 March2018

31 March2017

£’000 £’000Less than one year 26 261 - 2 years 5 52 - 5 years 15,018 15,0165 - 10 years 15,044 15,04010 - 15 years 15,041 15,04815 - 20 years 7,970 7,973

53,104 53,108

c) Market Risk

Interest Rate risk

The Council is exposed to risk in terms of its exposure to interest rate movements on its borrowingsand investments. Movements in interest rates have a complex impact on the Council. For instance arise in interest rates would have the following effects:

borrowings at variable rates – the interest expense charged to the Comprehensive Income andExpenditure Statement will riseborrowings at fixed rates – the fair value of the liabilities will fallinvestments at variable rates – the interest income credited to the Comprehensive Income andExpenditure Statement will riseinvestments at fixed rates – the fair value of the assets will fall.

Borrowings are not carried at fair value, so nominal gains and losses on fixed rate borrowings wouldnot impact on the Comprehensive Income and Expenditure Statement. However, changes in interestpayable and receivable on variable rate borrowings and investments will be posted to theComprehensive Income and Expenditure Statement and affect the General Fund Balance £ for £.

The Council has a number of strategies for managing interest rate risk. The policy is to aim to keep theproportion of interest paid on borrowing, which is at variable rates, at a maximum of 25%. Duringperiods of falling interest rates, and where economic circumstances make it favourable, fixed rate loanswill be repaid early to limit exposure to losses.

In 2017/18 all borrowings and investment were at fixed rates. If interest rates had been 1% higher withall other variables held constant, the financial effect at 31 March 2018, would be:

31 March£’000

Decrease in fair value of fixed rate investment assets (no impact on CI&ESStatement)

0

Decrease in fair value of fixed rate borrowings liabilities (no impact on CI&ESStatement)

5,360

The impact of a 1% fall in interest rates would be as above but with the movements being reversed.

d) Price Risk

The Council does not invest in equity shares and has no exposure to loss arising from movements in theprices of shares.

e) Foreign Exchange RiskThe Council has no financial assets or liabilities denominated in foreign currencies and therefore has noexposure to loss arising from movements in exchange rates.



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29. Expenditure and Income Analysed by Nature2017/18 2016/17

Expenditure/Income £’000 £’000ExpenditureEmployee expenses 32,084 30,157Other service expenses 45,759 49,929Support Service recharges 761 793Depreciation, revaluation losses and impairments -8,176 -60,246Interest and investment payments 2,805 2,958Precepts and levies (inc Business Rates tariff) 22,035 22,764Payments to Housing capital receipts pool 897 967Total Expenditure 96,165 47,322

IncomeFees, charges and other service income -43,330 -42,482Income from Council Tax and Business Rates -37,973 -39,427Government grants and contributions -30,294 -35,731Non-Government capital grants -1,111 -953Interest and investment income -495 -602Gain on disposal of non-current assets -1,080 -1,677Total Income -114,283 -120,872

Surplus(-) or Deficit on Provision of Services -18,118 -73,550


MOVEMENT ON THE HOUSING REVENUE ACCOUNT (HRA) STATEMENT FOR THE YEAR ENDED 31 MARCH 2018

65

2017/18 2016/17

£’000 £’000

Note HRA Balance brought forward -13,622 -16,571

Surplus (-) or Deficit in the year on HRA Income & ExpenditureStatement -20,579 -71,591

Adjustments between accounting basis and funding basis underregulations

Gain or Loss (-) on sale of HRA non-current assets 540 591

HRA share of contributions to or from (-) the Pensions Reserve -59 98

Capital Expenditure funded by the HRA 0 0

Transfer to Major Repairs Reserve 4,304 4,026

Transfers to/from (-) the Capital Adjustment Account:

2 Depreciation, impairments and revaluation losses 11,279 62,825

3 Voluntary set aside – repayment of debt 0 7,000

Net increase (-) or decrease before transfers to or from Reserves -4,515 2,949

Increase (-) or decrease in the year on the HRA -4,515 2,949

HRA Balance carried forward -18,137 -13,622


HOUSING REVENUE ACCOUNT INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 31 MARCH2018

66

2017/18 2016/17

£’000 £’000

Note Expenditure

Repairs and maintenance 4,003 4,814

Supervision and management 3,076 2,990

2 Depreciation and impairments of non-current assets -11,279 -62,825

Debt Management Costs 36 35

Total Expenditure -4,164 -54,986

Income

Dwelling Rents (gross) -16,045 -16,304

Non-dwelling rents (gross) -207 -228

Charges for services and facilities -948 -879

Contributions towards expenditure -276 -272

Total Income -17,476 -17,683

Net Cost/Surplus (-) of HRA Services included in the Whole AuthorityComprehensive Income and Expenditure Statement -21,640 -72,669

HRA share of Corporate Costs 57 61

Net Cost/Surplus (-) of HRA Services -21,583 -72,608

HRA share of the other operating income and expenditure included in theWhole Authority Comprehensive Income and Expenditure Statement

Gain (-) or loss on sale HRA non-current assets -540 -591

3 Interest payable 1,624 1,722

3 Investment Income -80 -114

Surplus (-) or Deficit for the year on HRA services -20,579 -71,591


NOTES TO THE HOUSING REVENUE ACCOUNT FOR THE YEAR ENDED 31 MARCH 2018

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1. General

The Housing Revenue Account is kept in accordance with the financial regime introduced in the LocalGovernment and Housing Act 1989. The account for 2017/18 is presented in accordance with theAccounting Code of Practice.The Movement on the HRA Statement incorporates the surplus or deficit on the Income andExpenditure Statement and effectively meets the statutory requirement to include the HousingRevenue Account as a single statement in the Statement of Accounts.

2. Depreciation, Impairments and Revaluation Losses

2017/18 2016/17Council Dwellings: £’000 £’000

Depreciation 4,151 3,975Reversal Prior Year Revaluation Losses -15,583 -66,851

Other Land and Buildings:Depreciation 109 35Revaluation Losses in year 0 3

Reversal Prior Year Revaluation Losses 0 -6Vehicles, Plant & Equipment

Depreciation 19 19Infrastructure Assets

Depreciation 25 0-11,279 -62,825

During 2017/18, the valuation of the Council’s housing stock was revised in line with the latest marketvalues. This led to a £15.6m net increase in the valuation, which was credited to the HRA in 2016/17in order to partially reverse previous revaluation losses charged there, but which was then reversedout to the Capital Adjustment Account so that there was no net effect on the HRA surplus.

3. Capital Asset Charges Accounting Adjustment

HRA paid interest charges in 2017/18 in accordance with the Item 8 Credit and Item 8 Debit (General)Determination 2012 (as amended). Interest paid is related to the HRA Capital Financing Requirement(CFR) which represents the HRA share of the Council’s borrowing for capital expenditure.

Interest Payable 2017/18 2016/17£'000 £'000

Interest on loans included in the HRA CFR 1,589 1,675Interest on unfinanced HRA CFR 35 47Total 1,624 1,722

From 1 April 2012 all of the Council’s external loans were earmarked as either for General Fund orHRA and interest paid on each loan is charged accordingly. Where HRA has not borrowed externallyto finance its CFR in full, it pays interest to the General Fund on the part which is being financed frominternal balances. The interest rate charged to HRA on the unfinanced CFR is the average rate ofinterest on the Council’s approved investments in the year (0.46% for 2017/18 and 0.62% in2016/17).



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In accordance with the same determination, HRA received the following interest credits:

Investment Income 2017/18 2016/17£'000 £'000

Average notional cash balance in year including MajorRepairs Reserve and capital receipts (16/17 only)

17,537 18,458

Average interest rate on approved investments 0.46% 0.62%

Interest on Notional Cash Balance -80 -114

In 2016/17, £7m was set aside to repay the second of the loans taken out to fund the self-financingpayment made to Government in 2011/12. No equivalent payments were made in 2017/18.

4. Council House Rent Arrears

For the financial year 2017/18 rent arrears from Council house tenants (both current and former)represented 1.86% of the total Council house rent income due (1.51% in 2016/17). This comprised1.30% for current tenants (1.15% in 2016/17) and 0.56% for former tenants (0.36% in 2016/17). Thearrears figures are as follows:

2017/18 2016/17Arrears at 31 March: £’000 £’000- current tenants 207 187- former tenants 89 57

296 244Provision for bad debts 199 160

5. Housing Stock

The Council was responsible for managing 3,844 dwellings as at 31 March 2018. The stock was made upas follows:

2017/18 2016/17Houses 1,322 1,337Flats, Bedsits and Maisonettes 1,790 1,795Bungalows 672 672Hostel Places 43 43Shared Ownership* 17 5

3,844 3,852

*This is the total number of properties in which the Council holds an equity stake – the retainedproportion of each property will vary.

The changes in the general housing stock can be summarised as follows:2017/18 2016/17

Stock at 1 April 3,852 3,889Sales to Council Tenants -24 -26Additions to council dwelling stock 4 9Additions to Shared Ownership stock 12 5Demolitions 0 -25

3,844 3,852



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6. Balance sheet values 31 March 18 1 April 17£’000 £’000

Council Dwellings 235,528 222,397Other Land and Buildings 5,256 2,371Vehicles, Plant and Equipment 759 778Infrastructure Assets 64 89Assets Under Construction 1,248 546

242,855 226,181The balance sheet value of dwellings at 1 April 2017 is £222m on a tenanted valuation (£157m 1 April2016 – the large increase is due to the social housing adjustment factor increasing from 31% for 2016to 41% for 2017). The vacant possession value of dwellings at 1 April 2017 is £540m (£504m 1 April2016). These two values show the economic cost of providing council housing at less than marketrents.

7. Capital Expenditure Analysis 2017/18 2016/17£’000 £’000

HRA Capital ExpenditurePlanned maintenance and improvements 3,566 2,570Purchase of properties to add to council dwelling stock 0 611Purchase of Affordable housing for shared ownership 1,505 479Construction of new dwellings 968 818

6,039 4,478HRA Capital FundingMajor repairs reserve -4,293 -3,044Capital Contributions and Grants -1,310 -968Contributions to disabled adaptations -36 -7HRA capital receipts -400 -459

-6,039 -4,478

8. Capital Receipts Analysis 2017/18 2016/17£’000 £’000

Sale of council dwellings -2,057 -2,515Payment to national pool 896 967Sale of shares in shared ownership properties -400 -72Balance of usable receipts available to finance capital expenditure -1,561 -1,620


THE COLLECTION FUND (ENGLAND) STATEMENT FOR THE YEAR ENDED 31 MARCH 2018

70

2017/18 2016/17Income £’000 £’000 £’000Council Tax collectable – Note 1 -105,866 -101,356Transfers to(-)/from General Fund: Council Tax benefits 38 41

Local discounts 4 -105,824 -26

Non-Domestic (NDR) Rates collectable – Note 2 -61,599 -61,825Total Income -167,423 -163,166

ExpenditurePrecepts and Demands: North Yorkshire County Council 73,131 68,856

North Yorkshire Police & CrimeCommissioner

13,607 13,063

North Yorkshire Fire and Rescue Authority 4,131 3,965Harrogate Borough Council 14,962 105,831 14,274

NDR Share Central Government 30,381 30,939Payments: North Yorkshire County Council 5,469 5,569

North Yorkshire Fire and Rescue Authority 608 619Harrogate Borough Council 24,305 60,763 24,752

NDR charges/receipts (-) Cost of collection allowance 287 288Transitional Protection Payments -33 254 51

Uncollectable Amounts: Council Tax Allowance for Impairment 286 116Council Tax written off 229 515 202NDR Allowance for Impairment 502 -181NDR Allowance for Appeals 2,717 -1,365NDR written off 418 3,637 457

Council Tax surplus re prior year to: NYCC, NYPCC & NYFRA 554 1,042

NDR surplus/deficit(-) re prior year to:HBCCentral Government, NYCC &NYFRAHBC

92

157105

174

-890-593

Total Expenditure 171,908 161,338

Surplus(-)/Deficit for the year – Council Tax 1,167 352Surplus(-)/Deficit for the year – NDR 3,318 -2,180Total Surplus(-)/Deficit for the year 4,485 -1,828

Fund Surplus(-)/Deficit at start of year – Council Tax -1,021 -1,373Fund Surplus(-)/Deficit at start of year – NDR -656 1,524Total Fund Surplus(-)/Deficit at start of year -1,677 151

Fund Surplus(-)/Deficit at end of year – Council Tax (Note 3) 146 -1,021Fund Surplus(-)/Deficit at end of year – NDR (Note 4) 2,662 -656Total Fund Surplus(-)/Deficit at end of year 2,808 -1,677


THE COLLECTION FUND (ENGLAND) STATEMENT FOR THE YEAR ENDED 31 MARCH 2018

71

Note 1 Council Tax 2017/18

The Council’s Taxbase (the estimated number of chargeable dwellings in each Band, adjusted for discountsand converted to an equivalent number of Band D dwellings) was calculated as follows:

Valuation Band Chargeable dwellings Ratio to Band D Band D EquivalentsA- (inc disabled relief) 31 5/9 17

A 5,250 6/9 3,500B 10,538 7/9 8,196C 13,604 8/9 12,092D 9,382 9/9 9,382E 8,436 11/9 10,310F 5,832 13/9 8,424G 5,175 15/9 8,626H 581 18/9 1,163

Total 58,829 61,710Adjustment for collection rate, banding appeals, contributions in lieu etc -230Council Taxbase 61,480

The average Band D Council Tax of £1,706.94 (£1,650.67 in 2016/17) was set by dividing the total of Precepts andDemands on the Collection Fund by the Council Taxbase shown above (60,196 in 2016/17). The Council Tax fordwellings in other Valuation Bands is the appropriate Ratio of the Band D tax.

Council Tax collectable includes £864k (£748k in 2016/17) of Government contributions in lieu of Council Tax forMinistry of Defence properties.

Note 2 Non Domestic Rates 2017/18

Non-domestic rates are collected on an agency basis and shares of the amount collectable are distributed inaccordance with Business Rate Retention legislation, the shares being: 50% to Central Government, 40% to HBC,9% to NYCC and 1% to NYFRA.The non-domestic rate was set by the Government at 47.9p for the year (49.7p 2016/17), and the total non-domestic rateable value at the end of the year was £162,976,822 (£152,238,935 2016/17). The gross rates thuspayable for the year were abated by reliefs for empty property, charitable occupiers, rating appeals andtransition, to give the net amount collectable shown above.

Note 3 Movement on the Fund Balance – Council Tax

Each Authority’s share of the movement on the Fund Balance in the year, a deficit of £1,167k (£352k deficit2016/17) is: NYCC £805k (£236k deficit 2016/17), NYPCC £151k (£49k deficit 2016/17), NYFRA £46k (£15k deficit2016/17) and HBC £165k (£52k deficit 2016/17).This amount is added to the Council Tax Demand for the year and any prior year surplus/deficit to give the CouncilTax Income figure on an accruals basis shown in the Comprehensive Income and Expenditure Statement.

Note 4 Movement on the Fund Balance - NDR

Each Authority’s share of the movement on the Fund Balance in the year, a deficit of £3,318k (£2,180k surplus2016/17) is: Central Government £1,659k (£1,090k surplus 2016/17), NYCC £299k (£196k surplus 2016/17),NYFRA £33k (£22k surplus 2016/17) and HBC £1,327k (£872k surplus 2016/17).This amount is added to the NDR Share for the year less the tariff and levy payments to the Leeds City RegionBusiness Rate Pool to give the retained Non-domestic Rate Income figure on an accruals basis shown in theComprehensive Income and Expenditure Statement.


GLOSSARY OF TERMS FOR THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2018

72

Accounting Policies

Principles, rules and procedures selected and followed by the management of an organisation in preparingand reporting the financial statements.

Accruals

The concept that income and expenditure are recognised as they are earned or incurred, not as cash isreceived or paid.

Amortisation

The allocation of the value of an intangible asset (less any expected residual value) over its useful life.

Capital Expenditure

Expenditure on the acquisition of a non-current asset or expenditure which enhances, rather than simplymaintaining, an existing non-current asset.

Capital Receipts

The proceeds from the sale of non-current assets in excess of £10,000. These are then available to fundfuture capital investment.

CIPFA

The Chartered Institute of Public Finance and Accountancy.

Collection Fund

The account into which Council Taxes and Non-Domestic Rates are paid, for distribution to preceptors, theCouncil’s General Fund, and Central Government.

Community Assets

Assets that an authority intends to hold in perpetuity, that have no determinable useful life and which mayhave restrictions on their disposal.

Contingent Asset

A possible asset that arises from past events and whose existence will be confirmed only by the occurrenceor non-occurrence of one or more uncertain future events not wholly within the control of the authority.

Contingent Rent

The portion of a lease payment that is not fixed in amount but is based on the future amount of a factorthat changes other than with the passage of time – for example, percentage of future sales, future inflationrates.

Contingent LiabilityA possible obligation that arises from past events and whose existence will be confirmed only by theoccurrence or non-occurrence of one or more uncertain future events not wholly within the control of theauthority,or:a present obligation that arises from past events but is not recognised because:a) it is not probable that an outflow of resources will be required to settle the obligation, orb) the amount of the obligation cannot be measured with sufficient reliability.



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CreditorsAmounts owed by the Council at year end for which payment has not yet been made.

Current AssetsCurrent Assets are cash and items that can be readily converted into cash.

Current LiabilitiesCurrent Liabilities are amounts that are due for payment by the Council within the near future.

Current Service Cost (Pensions)The increase in the value of the pension scheme’s future pension liabilities arising from the employees’membership of the pension scheme in the year.

DebtorsAmounts owed to the Council at the year end, where services have been delivered but payment has notbeen received.

DepreciationThe allocation of the value of an asset (less any expected residual value) over its useful life.

Earmarked ReservesEarmarked reserves are balances set aside for specific purposes. For each reserve, the purpose, usage andprocedures for transactions need to be clearly defined.

Fair ValueThe price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date.

Financial InstrumentsA contract that gives rise to a financial asset of one entity and a financial liability or equity instrument ofanother entity. Examples include loans and investments.

General Fund (GF)The account that includes expenditure and income associated with all Council services, apart from theCouncil’s own housing stock (see Housing Revenue Account).

Heritage AssetsAssets that are intended to be preserved in trust for future generations because of their cultural,environmental or historical associations. Examples include museum and art collections, civic regalia andhistoric buildings and monuments.

Historical CostThe amount of money originally paid for an asset.

HMRCHer Majesty’s Revenues and Customs.

Housing Revenue Account (HRA)This account includes the expenditure and income associated with the Council’s own housing stock. Understatute, these costs and income must be accounted for separately from the rest of the Council’s operations.



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IFRSInternational Financial Reporting Standards. These are guidelines and rules set by the InternationalAccounting Standards Boards (IASB) that organisations follow when compiling financial statements. TheCouncil does this by virtue of complying with CIPFA’s Code of Practice on Local Authority Accounting, whichis based on IFRS.

ImpairmentThe reduction in value of a non-current asset through physical damage, dilapidation or obsolescence.

Infrastructure AssetsInalienable assets, expenditure on which is only recoverable by continued use of the asset created, i.e.there is no prospect of sale or alternative use. Examples include roads, footpaths and bridges.

Intangible AssetAn identifiable non-monetary asset without physical substance. An example would be computer software.

Minimum Revenue Provision (MRP)The amount that the Council has calculated to be the prudent amount that it must charge to its revenueaccount in the year to repay debt, as required by statute.

Non-Domestic Rates (NDR)Otherwise known as business rates, these are collected from businesses by the Council. Shares of theincome are then paid over to Government (50%), North Yorkshire County Council (9%) and North YorkshireFire and Rescue Authority (1%), 40% being retained by the Council.

Net Book ValueThe amount at which non-current assets are included in the balance sheet. This will be their historical costor current valuation, less any depreciation that has been charged.

Non-current AssetsAssets such as buildings and vehicles, the benefits of which will be realised over a period of greater thanone year.

Operating LeaseUnder this type of lease, the risks and rewards of ownership of the leased goods remain with the lessor (theorganisation leasing out the goods).

Past Service Cost (Pensions)The change in the obligation for employee service in prior periods, arising as a result of changes to planarrangements in the current period. Past service cost may be either positive (where benefits areintroduced or improved) or negative (where existing benefits are reduced).

Precept/PreceptorsA precept is the amount that each non-billing authority (County Council, Police and Crime Commissioner,Fire & Rescue Authority, Parish Councils) asks the Council to collect from taxpayers on its behalf. TheCounty Council etc are known as preceptors.

ProvisionA liability of uncertain timing or amount.



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Prudential BorrowingThe Council’s borrowing for capital purposes must conform to the Prudential Code, a set of rules governingLocal Authority borrowing in the UK which (among other things) requires that borrowing is affordable andprudent.

PWLBThe Public Works Loan Board – a government body that lends money to public sector organisations.

Remeasurements of Pension Assets and Liabilities

The changes in the pension fund surplus or deficit that arise because a) actual events have not coincidedwith the assumptions made by the actuaries when they last valued the pension fund and/or b) theactuaries have updated the assumptions they’ve made since the previous valuation of the fund.

Revenue Expenditure Funded from Capital Under Statute (REFCUS)Expenditure that may be funded from capital resources but that does not result in an asset on the Council’sbalance sheet.

Revenue Support Grant (RSG)A general grant paid by Central Government towards the cost of providing local authority services in thearea.

Useful LifeThe period for which an asset is expected to be available for use.


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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HARROGATE BOROUGH COUNCIL

Will be published here once the audit is complete.


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APPENDIX 1

ANNUAL GOVERNANCE STATEMENT

Statement of Accounts - Harrogate and Governance Com… · Harrogate is a beautiful district in the...

Documents

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