Annual Financial Report - Waverley Council · Annual Financial Report . 2012-2013 . Paul Wenham. BA (Hons) CPFA . Deputy Chief Executive

Annual Financial Report

2012-2013 Paul Wenham BA (Hons) CPFA Deputy Chief Executive

Waverley Borough CouncilStatement of Accounts 2012/2013

Contents

PageNumbers

Explanatory Foreword to the Statement of Accounts 1-8

Statement of Accounts

Statement of Responsibilities for the Statement of Accounts 9

Financial StatementsMovement in Reserves Statements (MiRS) 12-13Comprehensive Income and Expenditure Statement (CIES) 14Balance Sheet (BS) 15Cash-Flow Statement (CFS) 16

Notes to the Financial StatementsAccounting Policies 18-36Accounting Standards that have been issued but have not yet been adopted 37-38Other Notes 39-95

Supplementary Financial StatementsHousing Revenue Account (HRA) Income and Expenditure Statement 98 Movement on the HRA Statement 99 Notes to the Housing Revenue Account 100-107Collection Fund 108 Notes to the Collection Fund 109-110

Group Account StatementsGroup Movement in Reserves Statements 112-113Group Comprehensive Income and Expenditure Statement 114-115Group Balance Sheet 116Group Cash-Flow Statement 117Notes to the Group Account Statements 121-131Shottermill Recreation Ground Trust 134-135Ewart Bequest 136-137

Glossary of Terms and Abbreviations 138-141

142-153

154-157

Other Statements:158Trust Funds and other Small Funds

Audit Opinion

Annual Governance Statement

Waverley Borough Council Statement of Accounts 2012/2013

Waverley Borough Council - Information & Statistics Telephone: 01483 523333 Website: www.waverley.gov.uk General Statistics Area in hectares: 34,447 Area in Square Miles: 133 Estimated Population for 2012/2013: 121,600 Population per Hectare: 3.53 Council Offices Main Waverley Offices: Council Offices, The Burys, Godalming, Surrey, GU7 1HR Cranleigh Locality Office: Village Way, Cranleigh, Surrey, GU6 8AE Farnham Locality Office: South Street, Farnham, Surrey, GU9 7RN Haslemere Locality Office: Lion Green, Haslemere, Surrey, GU27 1LD Councillors in 2012/2013 Waverley Borough Council has 57 elected Councillors. For 2012/2013 the Council consisted of 56 Conservatives and 1 Independent Councillor. Councillors were elected to serve a term of four years, to end in May 2015. Leader Cllr R A Knowles Deputy Leader Cllr M H W Band The Council is led by an Executive, comprising the Leader of the Council and nine other councillors, all from the majority political party. The Executive's responsibilities are divided into ten portfolios with each Member leading on a specific group of policy issues. The Executive has to make decisions that are in line with the Council's overall policies and budget. If the Executive wishes to make a major decision that is outside the budget or policy framework, this must be referred to the Council as a whole to decide. Portfolio Holders in 2012/2013: Corporate Strategy Portfolio Cllr R A Knowles Finance, Property and HR Portfolio Cllr M H W Band IT and Green Spaces Portfolio Cllr S J O’Grady Communications and Customer Services Portfolio Cllr S N Reynolds Major Projects and Economic Development Cllr A Taylor-Smith Waste and Recycling Portfolio Cllr B Adams Housing Portfolio Cllr K Webster Leisure and Culture Portfolio Cllr Miss J Potts Car Parks and Community Safety Portfolio Cllr Mrs C A King Planning and Climate Change Portfolio Cllr B J Morgan


Corporate Management Team members in 2012/2013 Chief Executive

Mary Orton

Deputy Chief Executive & Section 151 Officer

Paul Wenham

Strategic Director Damian Roberts (joined 16 April 2012)

External Auditors in 2012/2013 Associate Director: Emily Hill Manager: Kathryn Sharp Address: Grant Thornton Grant Thornton House Melton Street Euston Square London NW1 2EP

Waverley Borough CouncilStatement of Accounts 2012/2013

1 Waverley Borough Council Statement of Accounts 2012/2013

Explanatory Foreword to the Statement of Accounts 2012/2013 1. Introduction

Waverley’s finances are complex and, although the Council endeavours to present its Accounts in an understandable way, Waverley is required by law to include a large amount of detail and to present much of this in a prescribed format. In accordance with Waverley’s commitment to openness, this Foreword to the Statement of Accounts presents an overview of Waverley’s accounts for 2012/2013 and aims to help readers understand the most significant issues reported in the accounts and how they relate to the Council’s overall business.

2. Overview

During 2012/2013 the economic climate continued to affect Waverley’s services with continued fluctuations in service demands and volatile income levels in some key areas such as building control, land charges and planning. However, relatively low and stable inflation helped with forecasting cashflows and monitoring and, overall, spending was contained within budgets. Low but stable interest rates resulted in disappointing percentage rate returns on investments although budgeted interest income was exceeded. Despite challenging conditions, collection rates on key income sources, council tax, business rates and rents, were very positive and performance remained strong. Waverley’s long term external borrowing remained at £187million, all of which relates to the Housing Revenue Account and the majority to Public Works Loan Board debt required as part of the transition to the new self-financing framework. This borrowing is all at fixed interest rates and covers maturity periods ranging from 6 to 28 years. Waverley is restricted in its ability to borrow additional housing money for housing purposes by a legal cap and its policy for General Fund borrowing is to only do so where there is a strong business case supported by a revenue stream arising from the borrowing. Waverley’s capital spending was high in the year with completion of the new Godalming Leisure Centre and an accelerated housing improvement programme including Decent Homes work.

3. Commentary on the Main Financial Statements for 2012/2013

This section provides a brief commentary on the main accounting statements and highlights the reasons for the major changes from the previous year. There are also specific disclosure notes expanding on many of the figures included in these financial statements. Waverley’s Statement of Accounts for 2012/2013 has been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2012/2013, issued by the Chartered Institute of Public Finance and Accountancy (CIPFA), and supported by International Financial Reporting Standards (IFRS). It is the main financial statements (which are set out below), disclosure notes and accounting policies which form the body of the statement of accounts which are subject to external audit scrutiny and opinion, and to which the statement of responsibilities refers. The explanatory foreword, annual governance statement and glossary lay outside the scope of such certification.


(A) The Core Financial Statements

The Movement in Reserves Statement (page 13) This statement shows movement in the year on the different reserves held by the Council, analysed into usable reserves (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The movements in comprehensive income and expenditure are fully analysed in the Comprehensive Income and Expenditure Statement which includes a full analysis of the surplus or deficit on the provision of services and the true economic cost of providing those services. This cost is different from the statutory amount required to be charged to the General Fund balance for council tax setting purposes, the requisite adjustments (relating particularly to charges for pensions and non-current assets) are separately identified. After allowing for transfers to and from earmarked reserves, there was a contribution to General Fund balances of some £187,000. The Comprehensive Income and Expenditure Statement - CIES (page 14) has two parts. The first part, the Surplus or Deficit on the Provision of Services, shows the accounting cost of providing services during the year in terms of the resources generated, consumed or set aside. These figures are specified in accordance with relevant International Financial Reporting Standards. They do not represent the amount to be funded from local taxation. Charges against council tax are specified in regulations which differ from accounting standards. The charge against council tax is shown in the movement in reserves statement. The second part, Other Comprehensive Income and Expenditure, includes other recognised gains and losses during the year due to asset and liability changes rather than economic performance. Together, these figures combined show the movement during the year in the Council’s total Balance Sheet value which is analysed in the Movement in Reserves Statement between usable and non-usable reserves.

Surplus or Deficit on the Provision of Services (page 14)

In 2012/2013 the CIES shows a £23million surplus compared to a £183million deficit in 2011/2012. The main reasons for this are: • in 2011/2012 Waverley had to make a one-off payment to the Government of

£189million as part of the new HRA self-financing framework • in 2012/2013 the HRA began to feel the benefit of HRA self-financing with interest

payments on the loan taken out to pay the Government being half the amount previously paid out as subsidy to the Government

• the value of the council dwelling stock at 1 April 2012 improved by some £15million (which reverses a previous loss taken through the CIES) and is reflected in the net cost of HRA services. This upward revaluation is reversed out in the Movement in Reserves Statement but forms part of the overall surplus.

• the main difference for the General Fund is the revaluation of Investment Properties. These are revalued yearly and in 2011/2012 their value was increased by some £4million in line with market conditions at the time. The current valuations suggest the market has stabilised and therefore during 2012/2013 their values have not altered materially. Again these revaluations are reversed out in the Movement in Reserves Statement but form part of the surplus or deficit on provision of services.


Other comprehensive income and expenditure • Pensions liability

Net pension liabilities are reported under the IAS19 reporting standard which sets out how balance sheet entries and charges to the income and expenditure account are to be recognised. The net liability is the difference between the Council’s share of the pension fund assets and the underlying commitment, based on actuarial assessment, which the Council has to fund for future retirement benefits.

Pension fund assets are subject to fluctuations in value depending on the current state of the stock market and other investment markets. Actual returns on pension fund assets rose by around 14% during the year which was £7.5million better than anticipated. However, Pension Fund estimated liabilities also increased over the period. These are discounted back to the balance sheet date and a lower discount rate, relative to inflation assumptions, has increased pension liabilities during the year by about 14%, which is £12.4million more than anticipated. The net result is that the actuarial loss has reduced to £4.9million, compared with the £8.1million in 2011/2012 when the return on assets and the increase in liabilities were both worse than expected.

• Revaluations

Waverley’s land assets have shown improvements in value according to market conditions and the revaluation programme. Upward valuations of assets are generally credited to the Revaluation Reserve where they are held to offset any future falls in value. However any upward revaluations that reverse a previous loss put through the Comprehensive Income and Expenditure Statement can also be taken through the Comprehensive Income and Expenditure Statement (as has been done with the upward revaluation of the dwelling stock referred to above).

Upward revaluations of £3.5million and valuation decreases of £0.2million netting to £3.3million have been recognised in the Revaluation Reserve rather than through the surplus/deficit on the provision of services. Balances on the Revaluation Reserve are asset-specific so, although the balance on the Revaluation Reserve is £15million, not all downward revaluations or impairments can be charged there.

The Balance Sheet (page 15) shows the value as at the balance sheet date of the assets and liabilities recognised by the Council. The net assets of the authority (assets less liabilities) are matched by the reserves held. Reserves are reported in two categories. The first category is usable reserves, i.e. those reserves that the authority may use to provide services, subject to the need to maintain a prudent level of reserves and to any statutory limitations on their use, e.g. the capital receipts reserve may only be used to fund capital expenditure or repay debt. The second category of reserves includes reserves that hold: • the unrealised gains and losses recognised in Other Comprehensive Income and

Expenditure where the amounts would only become available to provide services if the assets were sold;

• the required adjustments between the accounting basis and the funding basis, under regulations for charges made within the Comprehensive Income and Expenditure Statement, relating to non-current assets and pensions are shown in the movement in reserves statement.


Usable reserves have increased by £8million. This is due mainly to HRA self financing enabling the creation of two new housing reserves totalling £5.6million for affordable housing and stock improvement and capital receipts from Right-to-Buy sales of £2.3million. The balance on unusable reserves has increased by £13million due mainly to the movement on non-current assets.

Usable reserves • Balances and reserves

The Council had general balances of £13million at the year-end and the Housing Revenue Account £20million. Approximately £0.9million has already been planned to support future years’ budgets.

Earmarked reserves are sums set aside for specific purposes to meet items of future expenditure, the main ones being:

• Leisure Strategy Fund (£0.6million remaining) • Revenue Grants – where funding has been received for specific purposes

but not spent (£0.7million still to spend) • New Affordable Housing Reserve (£2.7million) • Stock Improvement Reserves (£2.9million)

• Capital grants unapplied reserve

This is the balance of capital grants and contributions received where the expenditure is yet to be incurred. When the expenditure is incurred the grant will be applied to offset it.

• Capital receipts

The Capital Receipts Reserve increased by £1.9million. This was due to receipts of £2.8million, £0.4million used for financing capital expenditure, £0.4million paid to the Government and other minor movements.

Changes in assets and liabilities • Non-Current assets

The increase in asset values is mainly due to the increased valuation of the Council dwelling stock. Other land assets have also increased in value according to market conditions.

• Short-term investments and cash and cash equivalents

Short-term investments fell by £7.5million. However, Cash and Cash Equivalents rose by £13.9million. Investments are classified according to how easily they can be converted into cash. The movement between Short-term investments and cash and cash equivalents was due to treasury management decisions to try and maximise returns. Taken together there has been an increase of £6.4million during the year. This is mainly due to the benefits gained from HRA self-financing and extra grant funding for decent homes.


The Cash-flow Statement (page 16) shows the changes in cash and cash equivalents of the Council during the reporting period. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash-flows as operating, investing and financing activities. The amount of net cash-flows arising from operating activities indicates the extent to which the operations of the Council have been funded by way of taxation, grant income or other fees charged by the Council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Council’s future service delivery. Cash-flows arising from financing activities are useful in predicting claims on future cash-flows by providers of capital (ie borrowing) to the Council. Cash arising from ongoing operations was temporarily invested in the money markets. Cash balances across the Council rose by £6.4million as detailed above. (B) The Supplementary Statements

The Housing Revenue Account (HRA) (page 98) shows in detail the income and expenditure on the Council’s housing landlord function included in the Comprehensive Income and Expenditure Statement. The Collection Fund (page 108) reflects the statutory requirement to maintain a separate Collection Fund. It shows the transactions in relation to non-domestic rates and council tax, and illustrates the way in which these have been distributed to preceptors and the Council’s General Fund.

(C) Group Account Statements (pages 112-117) The Accounts for 2012/2013 include Group Accounts covering the Shottermill Recreation Ground Trust and the Ewart Bequest. These statements reflect the stewardship responsibility the Council has over these charitable funds. The Group Accounts comprise the following key financial statements:

• Group Movement in Reserves Statement • Group Comprehensive Income and Expenditure Statement • Group Balance Sheet • Group Cash-Flow Statement

The Shottermill Recreation Ground Trust owns the Herons Leisure facility in Haslemere and the Council is the sole trustee. The management of this centre is included in the Council’s borough-wide contract with DC Leisure. The Ewart Bequest owns a small number of dwellings in Farnham that the Council manages and maintains.

4. Financial performance during the year

During 2012/2013 net spending was managed within budgets, high council tax and business rate collection levels were maintained and the Council reported a surplus of some £450,000 from the year’s budgeted General Fund revenue activities. The main contributors to this surplus were:

• additional interest earned mainly on internal loan to HRA £150,000 • additional land charges income received £105,000 • Waverley Training Services additional funding - net increase £91,000 • a saving on expected inflation of £75,000 • saving in external audit fees of £54,000


i) Waverley’s Income and Expenditure

The Council’s collection rates in the year for Council Tax and Business Rates remained high: 99.2% and 99.1% respectively, both exceeding the previous year’s performance. Waverley continued to manage its cash-flow effectively, monitoring its main items of expenditure such as pay and contract costs to match income flow. Regular budget monitoring ensured that overall spending was kept within approved budgets producing a saving in the year against budget.

ii) Comprehensive Income and Expenditure compared to Budget

Comprehensive Income and Expenditure Statement Headlines 2012/2013

Budget £’000

Actual £’000

Central Services to the Public 1,101 956 Cultural and Related Services 3,556 4,256 Environmental and Regulatory Services 4,324 4,563 Planning Services 2,434 3,250 Highways and Transport Services -2,347 -2,195 Housing Revenue Account -13,124 -13,455 HRA Dwelling stock upward revaluation reversing previous loss

0 -14,705

Other Housing Services 1,114 1,189 Adult Social Care 259 246 Corporate and Democratic Core 1,923 2,608 Non-Distributed Costs 707 1,358 Inflation Provision 250 within services

Gross Expenditure I&E Account 197 -11,929 Interest payable 7,867 5,848 Interest Receivable -285 -493 Investment Properties -526 413 Income from Local Tax Payers -9,004 -8,964 Income from Grants -4,920 -5,126 Capital Grants and Contributions -2,570 -3,069 Other items not impacting on balances 0 369 Surplus/Deficit on Provision of Services -9,241 -22,951

iii) Housing Revenue Account

Waverley has 4,891 council homes, including a small number of shared ownership properties, which are managed in the Housing Revenue Account (HRA). The HRA includes all the costs and income of managing and maintaining these properties. Nearly all of the income in the HRA comes from rents. 2012/2013 was the first year Waverley operated on a self-financing basis under its 30-year Business Plan. The plan includes the financing and repayment of the £189million debt taken on in order to make the one-off payment to the Government.


iv) Capital Expenditure

Capital expenditure relates to the costs of large items and projects which generally have a life of more than one year. Waverley has a three-year capital programme covering a wide range of investment in assets. The following table summarises Waverley’s capital expenditure in 2012/2013 compared with the budget. The table also shows the capital resources that the Council used to pay for this expenditure. Any expenditure, as part of the Capital Programme, that does not meet the accounting definition of capital has been transferred to revenue.

Capital Expenditure – Headlines 2012/2013

Budget

£’000

Actual

£’000

Approved Reschedule

£’000 General Fund Expenditure - General 4,939 2,360 784 Leisure Centre Strategy 3,966 2,534 847 Affordable Housing 98 98 0 Housing Revenue Account Expenditure 9,958 9,088 859 Total Expenditure 18,961 14,080 2,490

The approved General Fund rescheduling relates mainly to Waverley’s Leisure Centres programme which spans several financial years.

Financing of Capital Expenditure 2012/2013 Actual

£’000 Capital Receipts 448 Grants and Other Contributions 3,386 Major Repairs Reserve 5,441 Leisure Strategy Fund 1,984 Borrowing 191 Revenue 2,630 Total Funding 14,080

vi) Reserves and Balances

Waverley’s reserves and balances reflect a prudent financial position and the Medium- Term Financial Strategy currently indicates that they are adequate to meet financial challenges in the next three years. The pressures on the General Fund and the level of balances will be addressed as part of the Council’s review of its Financial Strategy later in 2013. Despite the impact of the recession, the positive action taken by the Council in 2012/2013, which is reflected in the accounts, has had a favourable impact on the General Fund with the working balance remaining above the approved minimum level of £3.1million.

The following table shows the movement on Waverley’s main reserves:

1 April 2012

Movement in year

31 March 2013

£’000 £’000 £’000 General Fund Working Balance (4,227) (187) (4,414) Housing Revenue Account Working Balances

(2,200) (465) (2,665)

Revenue Reserve Fund (2,826) (582) (3,408) Leisure Strategy Fund (2,583) 2,017 (566)


The General Fund Working Balance at 31 March 2013 shows a strong position. With the continuing volatility in the economy, together with future known pressures and doubts over future public sector Government support, it is desirable to maintain a cushion above the minimum level of balances.

5. The Next Twelve Months

Key challenges for Waverley in the coming period are: • Delivering the 30-year HRA Business Plan including investing significant additional

funds into the Decent Homes (DH) programme and commencing Waverley’s major new house-build strategy. Waverley was also awarded £8.4million of DH funding from the government for 2012/2013 and 2013/2014 which is dependent on delivering specific housing improvements.

• Uncertainty and risk around the impact of new legislation in relation to the council- tax support scheme and the business rates retention scheme. These new requirements transfer significant financial risk to Waverley and will need to be monitored closely in future years.

• Continuing to develop the Medium-Term Financial Strategy to ensure that sufficient resources are available to meet service demands as Government grant continues to reduce. This includes maximising opportunities and managing risks that arise from the new local government funding framework including retained business rates, local council tax reductions and the new homes bonus.

• Completing the delivery of the investment programme in Waverley’s leisure facilities including the refurbishment of the Herons leisure centre at Haslemere.

• Progressing the major regeneration project at Brightwells in Farnham. • Identifying further cost savings and efficiency measures to offset pressures, including

reductions in Government grant, on the Budget.

6. Further Information

Further information about the Statement of Accounts is available from the Accountancy Section, Council Offices, The Burys, Godalming, GU7 1HR. The accounts are available for inspection by residents of the Borough on dates advertised in the local press each year. On completion of the audit, copies of the Statement of Accounts are available for inspection at any of the Council’s offices and on Waverley’s website www.waverley.gov.uk.

The Council is keen to continue to improve the presentation of its Statement of Accounts and the views of Waverley’s residents and other key stakeholders are sought to help with this review. Please contact the Accountancy Section if you have any questions on any of the information included in Waverley’s accounts or any comments on its presentation. If you would like information presented in an alternative format, such as large print or another language, please contact us on 01483 523253 or e-mail the Chief Accountant at [email protected].

Paul Wenham Deputy Chief Executive and Section 151 Officer Dated:


9

Statement of Responsibilities for the Statement of Accounts The Council’s responsibilities The Council is required to:

• make arrangements for the proper administration of its financial affairs and to ensure that one of its officers has the responsibility for the administration of those affairs. In this Council, that officer is the Deputy Chief Executive;

• manage its affairs to secure economic, efficient and effective use of resources and

safeguard its assets; and

• approve the Statement of Accounts. The Chief Finance Officer’s responsibilities The Chief Finance Officer (Section 151 Officer), the Deputy Chief Executive, is responsible for the preparation of the Council’s Statement of Accounts in accordance with proper practices as set out in the CIPFA (Chartered Institute of Public Finance and Accountancy) Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this Statement of Accounts the Chief Finance Officer has:

• selected suitable accounting policies and applied them consistently; • made judgements and estimates that were reasonable and prudent, and • complied with the Code.

The Chief Finance Officer has also:

• kept proper accounting records which are up to date; and • taken reasonable steps for the prevention and detection of fraud and other

irregularities. We declare that the Statement of Accounts for 2012/2013 gives a true and fair view of the financial position of the Council and its income and expenditure for the year ended 31 March 2013. Paul Wenham Councillor Tom Martin Deputy Chief Executive & Audit Committee (Chairman) Section 151 Officer Dated: Dated:


10

11Waverley Borough Council

Statement of Accounts 2012/2013

Movement in Reserves Statement

Comprehensive Income and Expenditure Statement

Balance Sheet

Cash-Flow Statement

Financial Statements



Movement in Reserves Statement 2011/2012 - comparative information

General Revenue Earmarked Housing Earmarked Major Capital Capital Total Total TotalFund Reserve General Revenue HRA Repairs Receipts Grants Usable Unusable Reserves

Balance Fund Fund Account Reserves Reserve Reserve Unapplied Reserves ReservesReserves Account

Note See note 30 See note 31£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Balance at 31 March 2011 (4,053) (2,735) (3,545) (2,118) (584) 0 (8,198) (1,124) (22,357) (344,502) (366,859)

Movement in reserves during 2011/2012

(Surplus) or deficit on provision of services (4,513) 187,293 182,780 182,780Other Comprehensive Income and Expenditure 7 0 5,385 5,385

Total Comprehensive Income and Expenditure (4,513) 0 0 187,293 0 0 0 0 182,780 5,385 188,165

Adjustments between accounting basis and funding basis under regulations 8 4,222 (187,410) (2,666) 929 (83) (185,008) 185,008 0

Net (Increase)/Decrease before Transfers to Earmarked Reserves

(291) 0 0 (117) 0 (2,666) 929 (83) (2,228) 190,393 188,165

Transfers to/(from) Earmarked Reserves 9 117 (91) (26) 35 (35) 0 0

(Increase)/Decrease in Year (174) (91) (26) (82) (35) (2,666) 929 (83) (2,228) 190,393 188,165

Balance at 31 March 2012 (carried forward) (4,227) (2,826) (3,571) (2,200) (619) (2,666) (7,269) (1,207) (24,585) (154,109) (178,694)

Usable Reserves

This Statement shows the movement in the year on the different reserves held by the Council, analysed into 'usable reserves' (ie those that can be used to fund expenditure or reducelocal taxation) and other reserves. The (Surplus) or Deficit on the provision of services line shows the true economic cost of providing the Council's services, more details of which areshown in Comprehensive Income and Expenditure Statement. These costs are different from the statutory amounts required to be charged to the General Fund Balance and HousingRevenue Account for council tax setting and dwellings rent setting purposes. The 'Net Increase /Decrease before transfers to Earmarked Reserves' line shows the statutory GeneralFund Balance and Housing Revenue Account Balance before any discretionary transfers to or from Earmarked Reserves.



General Revenue Earmarked Housing Earmarked Major Capital Capital Total Total TotalFund Reserve General Revenue HRA Repairs Receipts Grants Usable Unusable Reserves

Balance Fund Fund Account Reserves Reserve Reserve Unapplied Reserves ReservesReserves Account

Note See note 30 See note 31£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Balance at 31 March 2012 (4,227) (2,826) (3,571) (2,200) (619) (2,666) (7,269) (1,207) (24,585) (154,109) (178,694)

Movement in reserves during 2012/2013

(Surplus) or deficit on provision of services 2,728 (25,679) (22,951) (22,951)Other Comprehensive Income and Expenditure 7 0 1,608 1,608

Total Comprehensive Income and Expenditure

2,728 0 0 (25,679) 0 0 0 0 (22,951) 1,608 (21,343)

Adjustments between accounting basis and funding basis under regulations 8 (2,305) 19,404 (136) (1,891) (123) 14,949 (14,949) 0


423 0 0 (6,275) 0 (136) (1,891) (123) (8,002) (13,341) (21,343)

Transfers to/(from) Earmarked Reserves 9 (610) (582) 1,192 5,811 (5,811) 0 0

(Increase)/Decrease in Year (187) (582) 1,192 (464) (5,811) (136) (1,891) (123) (8,002) (13,341) (21,343)

Balance at 31 March 2013 (carried forward) (4,414) (3,408) (2,379) (2,664) (6,430) (2,802) (9,160) (1,330) (32,587) (167,450) (200,037)

Usable Reserves

Movement in Reserves Statement 2012/2013



Comprehensive Income and Expenditure Statement (CIES)

2012/2013Gross Gross Net Gross Gross Net

Expenditure Income Expenditure Expenditure Income Expenditure£'000 £'000 £'000 £'000 £'000 £'000

Continuing Operations8,346 (7,378) 968 Central Services to the Public 8,413 (7,457) 9563,623 (766) 2,857 Cultural and Related Services 5,051 (795) 4,2568,320 (2,201) 6,119 Environmental & Regulatory Services 6,405 (1,842) 4,5635,183 (2,352) 2,831 Planning Services 5,917 (2,667) 3,2501,459 (3,780) (2,321) Highways and Transport Services 1,642 (3,837) (2,195)

25,434 (26,098) (664) Housing Revenue Account (p98) 13,921 (27,376) (13,455)

188,797 0 188,797HRA Settlement payment to the Government for HRA self-financing

0 0 0

0 0 0HRA Dwelling stock upward revaluation reversing previous loss *

(14,705) 0 (14,705)

30,518 (29,275) 1,243 Other Housing Services 32,391 (31,202) 1,1891,030 (483) 547 Adult Social Care 949 (703) 2462,964 (453) 2,511 Corporate and Democratic Core 2,719 (111) 2,608

611 (487) 124 Non-Distributed Costs 1,847 (489) 1,358

276,285 (73,273) 203,012 Net Cost of Services 64,550 (76,479) (11,929)

Other Operating Expenditure2,327 Precepts of Parish/Town Councils 2,426

445 Contribution of housing capital receipts to Government Pool 446(1,679) (Gain)/Loss on disposal of non- current assets (see also note 28) (1,172)

Financing and Investment Income and Expenditure236 Interest payable and similar charges 5,678546 Pension Interest Cost & Expected Return on Pension Assets 1,095

(433) Interest and Investment Income (323)(5,053) Investment Properties (note 18) 413

Taxation and Non-Specific Grant Income (note 10)(11,275) Council Tax income (11,390)(1,641) Non-ringfenced Government grants (1,152)(3,416) Non-domestic rate distribution (3,974)

(289) Capital grants and contributions (3,069)

182,780 (Surplus)/Deficit on Provision of Services (22,951)

(2,725) (Surplus)/deficit on revaluation of non-current assets (3,305)8,110 Actuarial (gains)/losses on Pension Fund Assets & Liabilities 4,913

5,385 Other Comprehensive Income & Expenditure (note 7) 1,608

188,165 Total Comprehensive Income & Expenditure (21,343)

* See HRA page 98 and 99For notes on the CIES see notes 7 and 10

2011/2012

The Statement shows the cost in the year of providing services on an accounting basis in accordance with generallyaccepted accounting practices, rather than the amount to be funded from council tax. Authorities raise council tax tocover expenditure in accordance with regulations, this may be different from the accounting cost.

These financial statements replace the unaudited financial statements certified by Mr Paul Wenham, the Deputy Chief Executive for Waverley Borough Council, on 28 June 2013.



Balance Sheet as at 31 March 2013

31 March 2012 31 March 2013£'000 Note £'000 £'000

Property, Plant and Equipment 11292,757 Council Dwellings 308,33666,727 Other Land and Buildings 72,1993,150 Vehicles, Plant and Equipment 3,238

651 Infrastructure Assets 614364 Community Assets 364

1,731 Surplus Assets 2,2552,978 Assets Under Construction 0

368,358 387,0061,408 Heritage Assets 17 1,335

14,210 Investment Property 18 13,860406 Intangible Assets 19 418

4 Long Term Investments 21 481 Long Term Debtors 25 64

384,467 Total Long-Term Assets 402,687

Current Assets15,029 Short Term Investments 21 7,519

86 Assets Held for Sale 28 6149 Inventories 10

5,564 Short Term Debtors 26 6,2167,350 Cash and Cash Equivalents 27 21,239

28,038 Total Current Assets 35,598

412,505 Total Assets 438,285

Current Liabilities(60) Short Term Borrowing 21 (73)

(8,454) Short Term Creditors 29 (7,390)(8,514) Total Current Liabilities (7,463)

Long-Term Liabilities(187,035) Long-term Borrowing 21 (187,261)(37,675) Pensions Liability 45 (42,987)

(587) Capital Grants Receipts in Advance 41 (537)(225,297) Total Long-Term Liabilities (230,785)

178,694 Net Assets 200,037

Financed by:(24,585) Usable Reserves 30 (32,587)

(154,109) Unusable Reserves 31 (167,450)

(178,694) Total Reserves (200,037)

The Balance Sheet shows the value as at the 31 March of the assets and liabilities of the Council. The netassets of the Council (assets less liabilities) are matched by the reserves held by the Council. Reserves arereported in two categories. The first category is usable reserves, ie those reserves that the Council may use toprovide services, subject to the need to maintain a prudent level of reserves and to any statutory limitations ontheir use (see note 30). The second category is those that the Council is not able to use to provide services.This category of reserves is called unusable reserves (see note 31).



Cash-Flow Statement

2011/2012 2012/2013£'000 £'000

Note

182,780 Net (Surplus)/Deficit on the Provision of Services * (22,951)

(1,675) Adjustments to net surplus or deficit on the provision of services 32 3,813for non-cash movements

2,918 Adjustments for items included in the net surplus or deficit on the 32 6,172provision of services that are investing and financing activities

184,023 Net cash-flows from Operating Activities 36 (12,966)

(6,249) Investing Activities 34 465

(184,743) Financing Activities 35 (1,388)

(6,969) Net (increase)/decrease in Cash and Cash Equivalents (13,889)

381 Cash and Cash Equivalents at the beginning of the reporting period 7,350

7,350 Cash and Cash Equivalents at the end of the reporting period 27 21,239

* See Comprehensive Income and Expenditure Statement page 14

For notes on the Cash-Flow Statement see notes 32-36

The Cash-Flow statement shows the changes in cash and cash equivalents of the Council during the reporting period.The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows asoperating, investing or financing activities. The amount of net cash flows arising from operating activities is a keyindicator of the extent to which the operations of the Council are funded by way of taxation, grant income or feesfrom services. Investing activities represent the extent to which cash outflows have been made for resources whichare intended to contribute to the Council's future service delivery. Cash-flows arising from financing activities areuseful in predicting claims on future cash-flows by lenders to the Council.



Notes to the Financial Statements


1. Statement of Main Accounting Policies

1.1 General Principles The Statement of Accounts summarises the Council’s transactions for the 2012/2013

financial year and its position at the year-end on 31 March 2013. The Council is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2011 and those Regulations require the Statement to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2012/2013 (the Code) and the Service Reporting Code of Practice 2012/2013, supported by International Financial Reporting Standards (IFRS).

The accounting convention adopted in the Statement of Accounts is principally

historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

1.2 Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, not simply when cash

payments are made or received. In particular:

• Income from the sale of goods is recognised when the Council transfers the significant risks and rewards of ownership to the purchaser and it is probable that economic benefits or service potential associated with the transaction will flow to the Council.

• Income from the provision of services is recognised when the Council can

measure reliably the percentage of completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the Council.

• Supplies are recorded as expenditure when they are consumed – where there is

a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet.

• Expenses in relation to services received (including services provided by

employees) are recorded as expenditure when the services are received rather than when payments are made.

• Interest payable on borrowings and receivable on investments is accounted for

on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract. However, as the Council borrowings and investments are either of a short duration or have fixed-interest rates, the ‘effective interest rate’ accounting method is generally equal to the fixed contractual cash flows on a single investment.

• Where income and expenditure has been recognised, but cash has not been

received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where it is doubtful that debts will be settled, the balance of


debtors is written down and a charge made to revenue for the income that might not be collected.

• Where the amount of an item of income or expenditure relating to the financial

year is not known at the 31 March, estimation techniques are applied to ensure that the accounts reflect the most likely position. The only material instances in the 2012/2013 accounts of estimation techniques being applied are in the calculation of the benefits subsidy figure and the amount owed to/by the Business Rates Pool. In both instances, while officers compile these figures from detailed information from the benefits and business rates systems, this work is done in advance of final claims being completed and audited. However, any changes are unlikely to be material.

1.3 Accounting practice for Council Tax

The Council Tax income included in the Comprehensive Income and Expenditure Statement for the year is the accrued income for the year. The difference between the income included in the Comprehensive Income and Expenditure Statement and the amount required by regulation to be credited to the General Fund is taken to the Collection Fund Adjustment Account and included as a reconciling item in the Movement in Reserves Statement on the General Fund Balance. The Council as billing authority recognises a creditor in its Balance Sheet for cash collected from taxpayers on behalf of major preceptors but not yet paid to them, or a debtor for cash paid to major preceptors in advance of it receiving the cash from Council Tax payers.

1.4 Accounting practice for National Non-Domestic Rates (NNDR) Under the Code, NNDR taxpayers’ debtor and creditor balances and impairment allowance for bad and doubtful debts are not Balance Sheet items of the Council as it is a ‘billing authority’ and acts as an agent of the Government when collecting NNDR. The debtor/creditor position that is recognised in the Council’s Balance Sheet is the amount of cash collected from NNDR taxpayers (less the amount retained in respect of the Council’s cost of collection allowance) that has not yet been paid to the Government or has been overpaid to the Government on the Balance Sheet date.

1.5 Cash and Cash Equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are, in accordance with the Council’s Treasury Management Policy, investments identified as meeting short-term needs rather than for investment purposes and are identified as those held ‘on call’ with a bank or building society rather than invested in longer term Fixed Deposits. They are readily convertible to known amounts of cash with insignificant risk of change in value. Cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Council’s cash management. Bank overdrafts will also form part of cash and cash equivalents where the bank balance fluctuates between cash in hand and cash overdrawn between years.


1.6 Exceptional Items

Where items of income and expenditure are material, their nature and amounts are disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the accounts, depending on how relevant the items are to an understanding of the Council’s financial performance.

1.7 Prior Period Adjustments, Changes in Accounting Policies and Estimates

and Errors

Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, ie in the current and future years affected by the change and do not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Council’s financial position or financial performance. Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

1.8 Charges to Revenue for Non-Current Assets

Non-Current Assets are all property, plant, equipment, intangible and other assets that bring longer term benefits (for a period of more than one year) to the Council, its customers and the services it provides. Services, support services and trading accounts are debited with the following amounts to record the cost of holding non-current assets during the year:

• depreciation attributable to the assets used by the relevant service • revaluation and impairment losses on assets used by the service where there

are no accumulated gains in the Revaluation Reserve against which the losses can be written off

• amortisation of intangible assets attributable to the service The Council is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisation. However, for the General Fund it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement of an amount calculated on a prudent basis determined by the Council in accordance with statutory guidance. Depreciation, revaluation and impairment losses and amortisation are therefore replaced by the contribution in the General Fund Balance by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.


1.9 Employee Benefits Benefits Payable during Employment

Short term employee benefits are those due to be settled within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave, paid sick leave and non-monetary benefits (eg cars) for current employees and are recognised as an expense for services in the year in which employees render service to the Council. The Code requires that a calculation is made for the notional cost of holiday entitlements (or any form of leave, eg time off in lieu) earned by employees but not taken before the financial year-end which employees could, in theory, carry forward into the next financial year. If the sum is material, an accrual is made based on the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to the surplus or deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial 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 an officer’s employment before the normal retirement date (eg compulsory redundancy or early retirement) or an officer’s decision to accept voluntary redundancy. These are charged on an accruals basis to the relevant service in the Comprehensive Income and Expenditure Statement at the date when the Council is committed to the termination of the employment of an officer or group of officers.

Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund or HRA balance to be charged with the amount payable by the Council to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end.

Post Employment Benefits

Most employees of the Council are members of the statutory Local Government Pension Scheme administered by Surrey County Council. This scheme provides defined benefits to members (retirement lump sums and annual pensions), earned while employees of the Council.

The Local Government Pension Scheme is accounted for as a defined benefits

scheme:

• The liabilities of the Surrey County Council pension scheme attributable to the Council are included in the Balance Sheet on an actuarial basis using the projected unit method – ie an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on


assumptions about mortality rates, employee turnover rates etc, and projected earnings for current employees.

• Liabilities are discounted to their value at current prices, using a discount rate of

4.5%.

• The assets of the Pension Fund attributed to the Council are included in the Balance Sheet at their fair value:

- quoted securities – current bid price - unquoted securities – professional estimate - unitised securities – current bid price - property – market value

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

1. 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 services for which the employees worked

2. past service cost – the increase in liabilities arising from current year decisions the effect of which relates to years of service earned in earlier years – debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non- Distributed Costs. From 1 April 2011 annual pension increases are calculated using CPI instead of RPI.

3. interest cost – the expected increase in the present value of liabilities during the year as they move one year closer to being paid – debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement

4. expected return on assets – the annual investment return on the fund assets attributable to the Council, based on an average of the expected long-term return – credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement

5. gains or losses on settlements and curtailments – the result of actions to relieve the Council of liabilities or events that reduce the expected future service or accrual of benefits of employees – debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non-Distributed Costs

6. actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – charged to the Pensions Reserve

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

In relation to retirement benefits, statutory provisions require the General Fund to be charged with the amount payable by the Council to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional


debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits are earned by employees.

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

1.10 Events After the Reporting Period

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events are identified:

• those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events

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

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

1.11 Financial Instruments Financial Liabilities

Financial liabilities are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised. For the Council’s borrowing, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest); and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year according to the loan agreement.


Borrowing costs are interest payments and other costs incurred in connection with the borrowing of funds. The Council has a policy of expensing borrowing costs and they are recognised as expenditure in the period in which they are incurred. Gains and losses on the repurchase or early settlement of borrowing are credited and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repurchase/settlement. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write-down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate. Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund or Housing Revenue Account Balance to be spread over future years.

Financial Assets

Financial assets are classified into two types:

• Loans and receivables – assets that have fixed or determinable payments but are not quoted in an active market

• Available-for-sale assets – assets that have a quoted market price and/or do not have fixed or determinable payments. The Council does not hold any of this type of asset.

Loans and Receivables Loans and receivables are recognised on the Balance Sheet when the Council

becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently carried at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For the Council, this effectively means that the interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement. However, at the 31 March the interest due but not received is included with the investment figure shown in the Balance Sheet, rather than treated as a debtor.

Where assets are identified as impaired because, of a likelihood arising from a past event that payments due under the contract will not be made, the asset is written down and a charge made to the Comprehensive Income and Expenditure Statement. The impairment loss is measured as the difference between the carrying amount and the present value of the revised future cash flows discounted at the asset’s original effective interest rate. Any gains and losses that arise on the derecognition of the asset are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.


1.12 Government Grants and Contributions Whether paid on account, by instalments or in arrears, government grants and third

party contributions and donations are recognised as due to the Council when there is reasonable assurance that:

• the Council will comply with the conditions attached to the payments, and • the grants or contributions will be received.

Amounts recognised as due to the Council are not credited to the Comprehensive

Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset in the form of grant or contribution are required to be consumed by the recipient as specified, or future economic benefits or service potential must be returned to the transferor.

Monies advanced as grants and contributions for which conditions have not been

satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-Specific Grant Income (non-ringfenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement.

Where capital grants are credited to the Comprehensive Income and Expenditure

Statement, they are reversed out of the General Fund or Housing Revenue Account Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Account are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.

Grants to cover general expenditure, eg Revenue Support Grant, Non-domestic rate

distribution, Local Services Support Grant are non-ringfenced and are credited to Taxation and Non-Specific Grant Income in the Comprehensive Income and Expenditure Statement.

1.13 Heritage Assets A tangible heritage asset is a tangible asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. An intangible heritage asset is an intangible asset with cultural, environmental or historical significance. Examples of intangible heritage assets include recordings of significant historical events. The term heritage asset is used in this section of the Code to refer to both tangible heritage assets and intangible heritage assets. Heritage assets are assets held and maintained principally for their contribution to knowledge and culture and are intended to be preserved in trust for future generations because of their cultural, environmental or historical associations.


Provided that they meet this definition, heritage assets can include historic buildings, civic regalia, museum collections and works of art. The carrying amounts of heritage assets are reviewed where there is evidence of impairment for heritage assets, eg where an item has suffered physical deterioration or breakage or where doubts arise as to its authenticity. Any impairment is recognised and measured in accordance with the Council’s general policies on impairment – see 1.20 page 33 in this Statement of Main Accounting Policies. If a Heritage Asset is disposed of, the proceeds would be accounted for in accordance with the Council’s general provisions relating to the disposal of property, plant and equipment. Disposal proceeds are disclosed separately in the notes to the financial statements and are accounted for in accordance with statutory accounting requirements relating to capital expenditure and capital receipts (see 1.20 page 34). Recognition: Heritage Assets are recognised and measured (including the treatment of revaluation gains and losses) in accordance with the Council’s accounting policies on property, plant and equipment. However, some of the measurement rules are relaxed in relation to heritage assets. Where information on cost or value is not available, and the cost of obtaining the information outweighs the benefits, the Code does not require that the asset is recognised on the Balance Sheet. For Heritage Assets not recognised on the Balance Sheet appropriate disclosures are made. The Council has set a de minimis level for the recognition of Heritage Assets of £5,000. The Council’s collections of heritage assets are accounted for as follows:

• Museum of Farnham Collection – this is reported in the Balance Sheet at insurance valuation which is based on market values. These insurance valuations are updated on an annual basis.

• Phillips Memorial Park – this is reported in the Balance Sheet at insurance valuation which is based on market values. These insurance valuations are updated on an annual basis.

• Art Collection – this is reported in the Balance Sheet at cost, insurance valuation based on market values (updated annually) or for significant items external valuation.

• Other – other items are reported in the Balance Sheet at either cost or insurance valuation based on market values (updated annually).

Depreciation: Most of the Heritage Assets are not subject to depreciation because of indeterminable lives, high residual values or the valuations being updated annually. However, depreciation may be charged if appropriate and in accordance with the Council’s general policies on depreciation shown at 1.20 on page 33.


1.14 Intangible Assets

Expenditure on assets that do not have physical substance but are identifiable and controlled by the Council as a result of past events (eg software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Council. Intangible assets are measured initially at cost. Amounts are only revalued where the fair value of the assets held by the Council can be determined by reference to an active market. In practice, no intangible asset held by the Council meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service line(s) in the Comprehensive Income and Expenditure Statement. Software is the only intangible asset that Waverley has and this is generally amortised on a five or seven year basis. An asset is tested for impairment whenever there is an indication that the asset might be impaired – any losses recognised are posted to the relevant service line(s) in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve. Waverley has set a de minimis level for the recognition of intangible assets of £5,000.

1.15 Interests in Companies and Other Entities The Council, as sole Trustee, has a material interest in the Shottermill Recreation

Ground Trust. The Council is therefore required to produce group accounts with the Shottermill Recreation Ground Trust as a subsidiary.

The Group Accounts also include The Ewart Bequest which is considered a subsidiary for the purpose of preparing this Statement of Accounts in accordance with the Code. In the Council’s own single-entity accounts, the interests in companies and other entities are recorded as investments, ie at cost, less any provision for losses.

1.16 Inventories and Long-term Contracts

Inventories are included in the Balance Sheet at the latest known purchase price. This is a departure from the requirements of the Code of Practice which require inventories to be shown at the lower of cost and net realisable value. This departure is not considered to be material since the Council does not carry large values of inventories. Long-term contracts are accounted for on the basis of charging the Surplus or Deficit on the Provision of Services with the value of works and services received under the contract during the financial year.


1.17 Investment Property

Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods or is held for sale. Investment properties are measured initially at cost and subsequently at fair value, based on the amount at which the asset could be exchanged between knowledgeable parties at arms-length. Properties are not depreciated but are revalued annually according to market conditions at the year-end unless the carrying value is not materially different from the fair value. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The same treatment is applied to gains and losses on disposal. Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve.

1.18 Leases Leases are classified as finance leases where the terms of the lease transfer

substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases.

Where a lease covers both land and buildings, the land and buildings elements are

considered separately for classification. Arrangements that do not have the legal status of a lease but convey a right to use

an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets.

The Council as Lessee Finance Leases Property, plant and equipment held under finance leases is recognised on the

Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payments, if lower). The asset recognised is matched by a liability for the obligation to pay the lessor. Initial direct costs of the Council are added to the carrying amount of the asset. Premiums paid on entry into a lease are applied to writing down the lease liability. Contingent rents are charged as expenses in the periods in which they are incurred.

Lease payments are apportioned between:


• a charge for the acquisition of the interest in the property, plant or equipment – applied to write down the lease liability, and

• a finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement).

Property, Plant and Equipment recognised under finance leases is accounted for

using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life (where ownership of the asset does not transfer to the Council at the end of the lease period).

The Council is not required to raise council tax to cover depreciation or revaluation

and impairment losses arising on leased assets. Instead, a prudent annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements. Depreciation and revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

The Council has no material assets acquired under finance leases. Operating Leases Rentals paid under operating leases are charged to the Comprehensive Income and

Expenditure Statement as an expense of the services benefiting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (eg there is a rent-free period at the commencement of the lease).

The Council leases in a small number of assets under operating leases. The Council as Lessor Finance Leases Where the Council grants a finance lease over a property or an item of plant or

equipment, the relevant asset is written out of the Balance Sheet as a disposal. At the commencement of the lease, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. A gain, representing the Council’s net investment in the lease, is credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (ie netted off against the carrying value of the asset at the time of disposal), matched by a lease (long-term debtor) asset in the Balance Sheet.

Lease rentals receivable are apportioned between:

• a charge for the acquisition of the interest in the property – applied to write down the lease debtor (together with any premiums received), and

• finance income (credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement).

The gain credited to the Comprehensive Income and Expenditure Statement on

disposal is not permitted by statute to increase the General Fund Balance and is


required to be treated as a capital receipt. Where a premium has been received, this is posted out of the General Fund Balance to the Capital Receipts Reserve in the Movement in Reserves Statement. Where the amount due in relation to the lease asset is to be settled by the payment of rentals in future financial years, this is posted out of the General Fund Balance to the Deferred Capital Receipts Reserve in the Movement in Reserves Statement. When the future rentals are received, the element for the capital receipt for the disposal of the asset is used to write down the lease debtor. At this point, the deferred capital receipts are transferred to the Capital Receipts Reserve.

The written-off value of disposals is not a charge against council tax, as the cost of

non-current assets is fully provided for under separate arrangements for capital financing. Amounts are therefore appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.

The Council has no material assets over which it has granted a finance lease. Operating Leases Where the Council grants an operating lease over a property or an item of plant or

equipment, the asset is retained in the Balance Sheet. Rental income is credited to the Comprehensive Income and Expenditure Statement when it is due. Credits are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (eg there is a premium paid at the commencement of the lease). Initial direct costs incurred in negotiating and arranging the lease are added to the carrying amount of the relevant asset and charged as an expense over the lease term on the same basis as rental income.

The Council owns a number of non-current assets that are leased out under

operating leases. 1.19 Overheads and Support Services The costs of overheads and support services are charged to those accounts that

benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 2012/2013 (SeRCOP). The total absorption costing principle is used – the full cost of overheads and support services are shared between users in proportion to the benefits received, with the exceptions of:

• Corporate and Democratic Core – costs relating to the Council’s status as a

multi-functional, democratic organisation. • Non-Distributed Costs – the cost of the back-funded element of the

employer’s pension contributions and impairment losses chargeable on Assets Held for Sale.

These two cost categories are defined in SeRCOP and accounted for as separate headings in the Comprehensive Income and Expenditure Statement, as part of Net Expenditure on Continuing Services. The HRA element is charged to the HRA revenue account.


1.20 Property, Plant and Equipment

Assets that have physical substance and are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. Recognition: Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (ie repairs and maintenance) is charged as an expense when it is incurred. The Council has set a de minimis level for the recognition of non-current assets of £5,000 for vehicles, plant and equipment (including Information Technology equipment) and £10,000 for land and buildings. Component Accounting: International Accounting Standard 16 (IAS16) – Property, Plant and Equipment (PPE) contains the accounting requirements for the separate recognition, depreciation and derecognition of parts of assets (referred to as componentisation). Componentisation shall be applied for depreciation purposes on enhancement or acquisition expenditure incurred and revaluations carried out from 1 April 2010. Components that are required to be depreciated separately are those that have a cost that is significant in relation to the total cost of the asset, a different useful life and method of depreciation.

The Council’s policy on componentisation is:

General Fund

• Components of an asset will be separated where their value is significant in relation to the total value of the asset and where those components have different useful lives to the remainder of the asset for depreciation purposes.

• Where there is more than one significant component part of the same asset with the same useful life, such component parts will be grouped together for deprecation purposes.

• A component may be an individual item or similar items with similar useful lives grouped.

• Where a component is replaced or restored, the carrying amount of the old component will be derecognised and the new component added. Where the carrying value of the derecognised/replaced component is not known a best estimate will be determined by reference to the current cost.

• Only assets with a gross book value of £1.5million and over will be considered for componentisation.

• Of those assets, for the purpose of determining a ‘significant’ component of an asset, components with a value of 25% in relation to the overall value of the


asset or over £500,000 will be considered and then only if the component has a different useful life for depreciation purposes, so as to result in depreciation charges that differ materially from the depreciation charges had the asset not been componentised.

• On componentisation, any Revaluation Reserve balances will remain with the structure of the building. Any future revaluation gains and losses will be applied across components as appropriate.

Housing Revenue Account (HRA)

• Dwelling stock - depreciation is based on the major repairs allowance. • Other HRA assets – the approach outlined above for the General Fund will be

followed. Measurement: Assets are initially measured at cost, comprising:

• The purchase price • Any costs attributable to bringing the asset to the location and condition

necessary for it to be capable of operating in the manner intended by management.

The Council does not capitalise borrowing costs incurred while assets are under construction. The cost of assets acquired other than by purchase is deemed to be their fair value, unless the acquisition does not have commercial substance (ie it will not lead to a variation in the cash flows of the Council). In the latter case, where an asset is acquired via an exchange, the cost of the acquisition is the carrying amount of the asset given up by the Council. Donated assets are measured initially at fair value. The difference between fair value and any consideration paid is credited to the Taxation and Non-specific Grant Income line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally. Until conditions are satisfied, the gain is held in the Donated Assets Account. Where gains are credited to the Comprehensive Income and Expenditure Statement they are reversed out of the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement. Assets are then carried in the Balance Sheet using the following measurement bases:

• infrastructure assets and community assets – depreciated historical cost • Council dwellings- fair value using existing use value-social housing (EUV-SH) • all other assets – fair value, determined as the amount that would be paid for

the asset in its existing use (existing use value EUV)

Where there is no market-based evidence of fair value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of fair value. Where non-property assets have short useful lives or low values (or both), depreciated historical cost basis is used as a proxy for fair value. Assets included in the Balance Sheet at fair value are revalued sufficiently regularly, but as a minimum every five years, to ensure that their carrying amount is not materially different from


their fair value at the year-end. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Comprehensive Income and Expenditure Statement where they arise from the reversal of a loss previously charged to a service. Where decreases in value are identified they are accounted for as follows:

• where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains)

• where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement.

The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. Impairment: Assets are assessed at each year-end to determine whether there is any indication that an asset may be impaired. Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall. Where impairment losses are identified, they are accounted for as follows:

• where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains)

• where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement.

Where an impairment loss is subsequently reversed, the reversal is credited to the relevant service line(s) in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised.

Depreciation: Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their estimated useful lives. An exception is made for assets without a determinable finite useful life (ie freehold land and certain Community Assets) and assets that are not yet available for use (ie assets under construction). Depreciation is calculated on the following bases:

• dwellings and other buildings – straight-line allocation over the useful life of the property as estimated by the valuer

• vehicles, plant and equipment – straight-line allocation over the useful life of the asset


• infrastructure – straight-line allocation over the useful life of the asset

Where an item of Property, Plant and Equipment asset has major components with a significant cost in relation to the total cost of the item, the components are depreciated separately.

Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account. Newly acquired/enhanced assets receive a full depreciation charge in their first year, regardless of the precise timing of the expenditure. Assets disposed of receive no depreciation charge in the year of disposal. From 1 April 2010, where an asset has major components with different estimated useful lives, these components will be depreciated separately. Following a revaluation, a full year of depreciation is charged in the year of revaluation.

Disposals and Non-Current Assets Held for Sale: When it becomes probable

that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale. The asset is revalued immediately before reclassification and is then carried at the lower of this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previous losses recognised in the Surplus or Deficit on Provision of Services. Depreciation is not charged on Assets Held for Sale.

If assets no longer meet the criteria to be classified as Assets Held for Sale, they are reclassified back to non-current assets and valued at the lower of their carrying

amount before they were classified as held for sale; adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as Held for Sale, and their recoverable amount at the date of the decision not to sell.

Assets that are to be abandoned or scrapped are not reclassified as Assets Held for

Sale. When an asset is disposed of or decommissioned, the carrying amount of the asset

in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (ie netted off against the carrying value of the asset at the time of disposal). Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.


Amounts received for a disposal in excess of £10,000 are categorised as capital receipts. A proportion of receipts relating to Right-to-Buy housing disposals (75% for dwellings, 50% for land and other assets, net of statutory deductions and allowances) is payable to the Government. The balance of receipts is required to be credited to the Capital Receipts Reserve, and can then only be used for new capital investment or set aside to reduce the Council’s underlying need to borrow. Receipts are appropriated to the Reserve from the General Fund Balance in the Movement in Reserves Statement.

The written-off value of disposals is not a charge against council tax, as the cost of

non-current assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.

1.21 Provisions, Contingent Liabilities and Contingent Assets Provisions: Provisions are made where an event has taken place that gives the

Council a legal or constructive obligation 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. For instance, the Council may be involved in a court case that could eventually result in the making of a settlement or the payment of compensation.

Provisions are charged as an expense to the appropriate service line in the

Comprehensive Income and Expenditure Statement in the year that the Council becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in

the Balance Sheet. Estimated settlements are reviewed at the end of each financial year - where it becomes less than probable that a transfer of economic benefits will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service.

Where some or all of the payment required to settle a provision is expected to be

recovered from another party (eg from an insurance claim), this is only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the Council settles the obligation.

There are no material potential settlements outstanding as at 31 March 2013 that

would require treating as a provision as described above. Waverley sets an amount aside from revenue to meet potential bad debts but this

does not meet the definition of a provision, therefore there are no material provisions in the 2012/2013 accounts.

Contingent Liabilities: A contingent liability arises where an event has taken place

that gives the Council a possible obligation the existence of which will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an


outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts.

Contingent Assets: A contingent asset arises where an event has taken place that gives the Council a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Council. Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential.

1.22 Reserves The Council sets aside specific amounts as reserves for future policy purposes or to

cover contingencies. Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure, to be financed from a reserve, is incurred it is charged to the appropriate service in that year against the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back to the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against council tax for the expenditure. The most significant reserve showing in Waverley’s 2012/2013 accounts is the Revenue Reserve Fund. It is the Council’s policy to hold this reserve to support the approved capital programme, to meet unforeseen capital expenditure, and to pay for one-off items of revenue expenditure.

Certain reserves are kept to manage the accounting processes for non-current assets

and retirement benefits - they do not represent usable resources for the Council. These reserves are detailed in the notes to the financial statements.

1.23 Revenue Expenditure Funded from Capital under Statute Expenditure incurred during the year that may be capitalised under statutory

provisions but does not result in the creation of Waverley-owned non-current assets has been charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the Council has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged in the year so there is no impact on the level of council tax. Where an external grant or contribution has been used to finance such expenditure, the grant is taken to the service charged with the expenditure.

1.24 Value Added Tax (VAT)

VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty’s Revenue and Customs. VAT receivable is excluded from income.


2. Accounting Standards that have been issued but have not yet been adopted The Council is required to disclose information relating to the impact of an accounting change required by a new standard that has been issued, but not yet adopted, in the 2012/2013 Code. For the 2012/2013 accounts there are a number of accounting changes that need to be reported. These relate to:

• IAS 19 Employee Benefits • IAS 1 Presentation of Financial Statements • Clarification of the recognition criteria for assets under construction or

intangible assets (IFRIC 12) • IAS 12 Income Taxes, and • IFRS 7 Financial Instruments: Disclosures (Offsetting Financial Assets and

Liabilities) IFRS 13 Fair Value Measurement, although issued, is likely to be adopted in the 2014/2015 Code and not the 2013/2014 Code. IAS 19 Employee Benefits The adoption of the 2011 amendments to IAS 19 Employee Benefits by the Code will result in a change in accounting policy by the Council. The key change affecting LGPS employers relates to the expected return on assets. There are new classes of components of defined benefit cost to be recognised in the financial statements and new definitions or recognition criteria for service costs and termination benefits. The effect of the change to IAS19 on the Comprehensive Income and Expenditure Statement to 31 March 2013 will be an increase in expenditure of £672,000 but with no change to the Council’s Usable reserves. IAS 1 Presentation of Financial Statements Adoption of the 2011 amendments to IAS 1 Presentation of Financial Statements in the Code will not result in a change of accounting policy for the Council. The Council does not have accounting entries (eg gains or losses on available for sale financial assets) which may be reclassified into the Surplus or Deficit on the Provision of Services as set out in the presentational amendments to the Standard. Clarifications of the recognition criteria for assets under construction or intangible assets (IFRIC 12) These amendments will not have a material impact on the financial statements of the Council.


IAS 12 Income Taxes The 2010 amendments to IAS 12 Income Taxes concerning deferred tax do not represent a material change to the Council’s Group Accounts. IFRS 7 Financial Instruments: Disclosures The IFRS7 amendments require a change in accounting policy on 1 April 2013 relating to the disclosure of information to enable users of the Council’s financial statements to evaluate the effect or potential effect of netting arrangements (offsetting financial assets and financial liabilities) on the financial position. These amendments will not have a material impact on the financial statements of the Council.



1. Funding Levels

2. VAT Tribunal Disclosure

Pensions

Bad Debts

Asset Valuations and Impairments

3. Critical judgements in applying accounting policies

4. Assumptions made about the future and other major sources of estimation uncertainty

In applying the accounting policies set out in Note 1, the Council has had to make certain judgements about complextransactions or those involving uncertainty about future events. Although many minor judgements have been madein the process of creating these accounts (eg whether a lease is a finance or operating lease based on the indicatorsdetailed in the Code) the only critical judgements made in the Statement of Accounts are as follows:

Following the decision of a VAT Tribunal in 2004/2005, which ruled that car parking provided by Local Authoritieswas unlikely to be subject to VAT, HM Revenues and Customs (HMRC) issued a business brief which advised LocalAuthorities of their right to stop accounting for VAT on car parking facilities. The Council took the decision to ceaseaccounting for VAT on its car parking charges. HMRC subsequently appealed the Tribunal's decision but the appealis not yet resolved. As at 31 March 2013, £4,613,615 is the amount of VAT that HMRC believe is due in respect ofthe Council's Car Parks and this has been recovered by the HMRC from the Council and is on "appeal". If HMRC losethis appeal the Council may be entitled to recover this sum.

An initial opinion of the Court was given in early June 2008 which appeared to favour the HMRC's case but the finaloutcome is not yet known.

No debtor has been included in the accounts as the money has been paid to HMRC and no contingent asset hasbeen disclosed in the notes to the accounts for this sum.

The Statement of Accounts contains estimated figures that are based on assumptions made by the Council about thefuture or that are otherwise uncertain. Estimates are made taking into account historical experience, current trendsand other relevant factors. However, because balances cannot be determined with certainty, actual results could bematerially different from the assumptions and estimates.

The only items in the Council’s Balance Sheet at 31 March 2013 for which there is a significant risk of materialadjustment in the forthcoming financial year are as follows:

Estimation of the net pensions liability depends on complex judgements relating to the discount rate used, projectedsalary increases, changes in retirement ages, and mortality rates. A firm of actuaries is engaged to provide theCouncil with expert advice as to the assumptions to be applied. A Sensitivity Analysis showing the effects of changesin individual assumptions is shown in Note 45 Defined Benefit Pension Schemes on page 93.

The Council has an allowance for estimated Bad Debts (impairment allowance) which covers all major sources ofincome and expenditure (see note 26 to the accounts). This allowance is considered adequate to cover future BadDebts.

Any asset valuation and impairment is based on an estimate and the Council draws on the expertise of its valuer tocalculate valuations, useful lives and impairment reviews in accordance with professional guidance.

There is a high degree of uncertainty about future levels of funding for local government. However, the Council hasdetermined that this uncertainty is not yet sufficient to provide an indication that the assets of the Council might beimpaired as a result of a need to lose facilities and reduce levels of service provision.



Other Comprehensive Income and Expenditure is made up of:

2011/2012 2012/2013£'000 £'000

(Surplus)/Deficit on revaluation of Property, Plant and Equipment(4,178) - Upward Revaluations (note 31 page 70) (3,547)1,453 - Impairments (note 12 page 51) 242

(2,725) (3,305)

8,110 Actuarial (gains)/losses on Pension Fund Assets and Liabilities (note 45 page 90) 4,913

5,385 Total Other Comprehensive Income & Expenditure 1,608

The Comprehensive Income and Expenditure Statement does not include any material items not disclosed separatelyon the face of the statement.

5. Material items of income and expense

The Statement of Accounts was authorised for issue on 17 September 2013 by Mr Paul Wenham, the Deputy ChiefExecutive for Waverley Borough Council.

Events taking place after this date are not reflected in the financial statements or notes. When events taking placebefore this date provided information about conditions existing at 31 March 2013, the figures in the financialstatements and notes have been adjusted in all material respects to reflect the impact of this information.

There are no significant material events which took place after 31 March 2013 which (although not relating toconditions at that date) provided information that is relevant to an understanding of the Council's financial positionat that date.

6. Events after the Balance Sheet date

7. Other Comprehensive Income and Expenditure



The following sets out a description of the reserves that the adjustments are made against.

General Fund Balance

Housing Revenue Account (HRA) Balance

Major Repairs Reserve

Capital Receipts Reserve

Capital Grants Unapplied

8. Adjustments between accounting basis and funding basis under regulations

The General Fund is the statutory fund into which the receipts of the Council are required to be paid and out of whichall liabilities of the Council are to be met except to the extent that statutory rules might provide otherwise. Theserules can also specify the financial year in which liabilities and payments should impact on the General Fund Balance,which is not necessarily in accordance with proper accounting practice. The General Fund Balance thereforesummarises the resources 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. The balance is notavailable to be applied to fund Housing Revenue Account Services.

The HRA Balance reflects the statutory obligation to maintain a revenue account for local authority council housingprovision in accordance with Part VI of the Local Government and Housing Act 1989. It contains the balance ofincome and expenditure as defined by the 1989 Act that is available to fund future expenditure in connection with theCouncil’s landlord function or (where in deficit) that is required to be recovered from tenants in future years.

This note details the adjustments that are made to the total comprehensive income and expenditure recognised bythe Council in the year in accordance with proper accounting practice to the resources that are specified by statutoryprovisions as being available to the Council to meet future capital and revenue expenditure.

The Council is required to maintain the HRA Major Repairs Reserve which controls the application of the MajorRepairs Allowance (MRA). The MRA is restricted to being applied to new capital investment in HRA assets or thefinancing of historical capital expenditure by the HRA. The balance shows the MRA that has yet to be applied at theyear-end.

The Capital Receipts Reserve holds the proceeds from the disposal of land or other assets which are restricted bystatute from being used other than to fund new capital expenditure or to be set aside to finance historical capitalexpenditure. The balance on the reserve shows the resources that have yet to be applied for these purposes at theyear-end.

The Capital Grants Unapplied Account (Reserve) holds the grants and contributions received towards capital projectsfor which the Council has met the conditions that would otherwise require repayment of the monies but which haveyet to be applied to meet expenditure. The balance is restricted by grant terms as to the capital expenditure againstwhich it can be applied and/or the financial year in which this can take place.

The statements on the following pages detail these adjustments.



MovementGeneral Housing Major Capital Capital inFund Revenue Repairs Receipts Grants Unusable

Balance Account Reserve Reserve Unapplied Reserves£'000 £'000 £'000 £'000 £'000 £'000

(1,097) (5,577) (6,674)

(2,920) (2,920)

14,705 14,705

(891) (190) (1,081)

Amortisation of Intangible assets (113) (113)(26) (26)

223 2,722 1 2,946

Income in relation to Donated Assets 16 16(356) (356)

(544) (1,064) (1,608)

3,871 743 4,614

124 (124) 0

0

CIES - Comprehensive Income and Expenditure Statement

* Revenue Expenditure Funded from Capital under Statute (796) Less Capital Grants and Contributions - applied 440

(356)

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CIES

Add items not debited or credited to the CIES:

Impairment losses & reversals on Property, Plant & Equipment

Movements in the fair value of Investment Properties

Revenue expenditure funded from capital under statute (REFFCUS) *

Capital grants and contributions applied

Impairment/Revaluation losses on Intangible assets

Revaluation losses & reversals on Property, Plant & Equipment

Depreciation of Property, Plant and Equipment

2012/2013Usable Reserves

Adjustments primarily involving the Capital Adjustment Account:

Reversal of items debited or credited to the CIES:

Capital expenditure charged against the General Fund and HRA balances

Adjustments primarily involving the Capital Grants Unapplied Account:

Application of grants to capital financing transferred to the Capital Adjustment Account

Capital grants and contributions unapplied credited to the CIES





481 2,299 (2,780) 0

448 448

(446) 446 0

Other movements (5) (5)

5,441 5,441

(2,506) (630) (3,136)

1,918 819 2,737

(39) (39)

Total Adjustments (2,305) 19,404 (136) (1,891) (123) 14,949

Transfer of cash sale proceeds credited as part of the gain/loss on disposal to the CIES

Use of the Major Repairs Reserve to finance new capital expenditure

Contribution from the Capital Receipts Reserve to finance the payments to the Government capital receipts pool

Adjustments primarily involving the Major Repairs Reserve:

Use of the Capital Receipts Reserve to finance new capital expenditure

Adjustments primarily involving the Capital Receipts Reserve:

Adjustments primarily involving the Pensions Reserve:

Employer’s pensions contributions and direct payments to pensioners payable in the year

Usable Reserves2012/2013

Reversal of items relating to retirement benefits debited or credited to the CIES (see Note 45)

Amount by which council tax income credited to the CIES is different from council tax income calculated for the year in accordance with statutory requirements

Adjustments primarily involving the Collection Fund Adjustment Account:





(1,452) (3,861) (5,313)

1,043 (1,104) (61)

4,416 26 4,442

Amortisation of Intangible assets (144) (144)(29) (29)

(1) (1)185 185

Income in relation to Donated Assets 96 96(475) 20 (455)

(188,797) (188,797)

(806) (806)

823 40 863

117 (13) (104) 0

1 1

CIES - Comprehensive Income and Expenditure Statement

* Revenue Expenditure Funded from Capital under Statute (783) Less Capital Grants and Contributions - applied 328

(455)

Capital grants and contributions unapplied credited to the CIES

Impairment/Revaluation losses & reversals on Property, Plant & Equipment

Add items not debited or credited to the CIES:Capital expenditure charged against the General Fund and HRA balances

Movements in the fair value of Investment Properties

Capital grants and contributions applied

Impairment/Revaluation losses on Intangible assets

Depreciation of Heritage Assets

HRA self-financing settlement payment to the Government

Usable Reserves

Adjustments primarily involving the Capital Grants Unapplied Account:

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CIES

Reversal of items debited or credited to the CIES:Depreciation of Property, Plant and Equipment

2011/2012Comparative figures

Revenue expenditure funded from capital under statute (REFFCUS) *

Application of grants to capital financing transferred to the Capital Adjustment Account

Adjustments primarily involving the Capital Adjustment Account:





198 2,287 (2,485) 0

2,978 2,978

(445) 445 0

Other movements (9) (9)

4,503 (4,503) 0

1,837 1,837

(2,025) (493) (2,518)

1,936 808 2,744

(21) (21)

Total Adjustments 4,222 (187,410) (2,666) 929 (83) (185,008)

Usable Reserves

Adjustments primarily involving the Collection Fund Adjustment Account:Amount by which council tax income credited to the CIES is different from council tax income calculated for the year in accordance with statutory requirements

2011/2012Comparative figures

Reversal of Major Repairs Allowance credited to the HRA

Use of the Major Repairs Reserve to finance new capital expenditure

Adjustments primarily involving the Pensions Reserve:Reversal of items relating to retirement benefits debited or credited to the CIES (see Note 45)

Adjustments primarily involving the Major Repairs Reserve:

Employer’s pensions contributions and direct payments to pensioners payable in the year

Contribution from the Capital Receipts Reserve to finance the payments to the Government capital receipts pool

Transfer of cash sale proceeds credited as part of the gain/loss on disposal to the CIESUse of the Capital Receipts Reserve to finance new capital expenditure

Adjustments primarily involving the Capital Receipts Reserve:



Revenue Reserve Fund (RRF)

2011/2012 2012/2013£'000 £'000

(2,735) Balance at 1 April (2,826)823 Capital Financing in year 1,887

(1,200) Capital Charges contributed from revenue (2,870)315 Funding of non-asset generating spend from capital budgets 504(29) Other (103)(91) Movement in year (582)

(2,826) Balance at 31 March (3,408)

Earmarked Reserves

1 April 2012 Net Movement Balance Balance Reserve in year 31 March 2013£'000 £'000 £'000

General Fund(2,583) Leisure Strategy Fund 2,017 (566)

(654) Insurance Reserves 0 (654)

0 Revenue Grants (611) (611)

0 Business Rates Revaluation (200) (200) Reserve exposure to backdated

(334) Other (14) (348) Other small funds(3,571) Total 1,192 (2,379)

Housing Revenue Account0 New Affordable Housing (2,728) (2,728)

Reserve0 Dwelling Stock Improvement (2,926) (2,926)

Reserve(569) Uninsured Losses Reserve (77) (646)(50) Mortgage Indemnity Reserve 0 (50)

Revenue Grants (80) (80)

(619) Total (5,811) (6,430)

9. Transfers to/from Earmarked and Other Specific Reserves

Purpose ofReserve

For losses/claims which are uninsured

This sets out the amounts set aside from the General Fund and HRA balances in earmarked reserves to providefinancing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fundand HRA expenditure.

The RRF is a General Fund Reserve used for financing capital expenditure and supporting revenue.

To be used to finance capital spend on the Leisure Strategy

Balance of unspent revenue grants, carried forward to meet future expenditure

Balance of unspent revenue grants, carried forward to meet future expenditure

To provide for the Council's

rateable value appeals

Reserves created from surplus generated as a result of HRA self-financing



2011/2012 2012/2013£'000 £'000

(11,275) Council Tax income (Waverley Borough Council and Town & Parishes) (11,390)(1,641) Non-ringfenced Government grants * (1,152)(3,416) Non-domestic rate distribution (3,974)

(289) Capital grants and contributions (see note 41) (3,069)(16,621) (19,585)

* Non-ringfenced Government Grants

The general Government Grants in the Comprehensive Income and Expenditure Statement comprise:

2011/2012 2012/2013£'000 £'000

(1,056) Revenue Support Grant (77)(364) New Homes Bonus (595)(221) Council Tax Freeze Grant for year (222)

** Local Services Support Grant (50) Other Revenue Grants (208)

(1,641) (1,152)

Council Tax Freeze Grant - 2011/2012 was the first year of the Council Tax Freeze grant - awarded to authoritieswhich held (or reduced) their average Band D council tax at the previous year's level. The grant was awarded forfour years at a fixed level. In 2012/2013 the 2011/2012 Council Tax Freeze grant is shown within the Non-domesticrate distribution amount of £3,974,000. The Council Tax Freeze grant for 2012/2013 was awarded for one year only.

Revenue Support Grant (RSG) - this is a grant which can be used to finance revenue expenditure on any service.Revenue Support Grant, redistributed business rates, New Homes Bonus, Council Tax Freeze grant and specificgrants make up the total level of revenue support the Government provides to local authorities for their corefunctions.

New Homes Bonus - is based on an average national council tax amount and is paid to the Council according to thetotal net increase in homes in the Borough between each September and the total number of empty homes beingbrought back into use.

Other Revenue Grants - these are other non-ringfenced grants and contributions received that are not attributed toa specific service. Any unspent element of the grant at the end of the year has been transferred to an earmarkedrevenue grant reserve.

Local Services Support Grant - this is a non-ringfenced general grant and the Council has the freedom to use thisgrant to meet locally identified priorities. ** The 2011/2012 grant allocation of £50,000 (under the title ofHomelessness prevention) was included in Net Cost of Services.

10. Taxation and Non-Specific Grant Income



Movements in 2012/2013

Council Other Vehicles, Infra- Community Surplus Assets TotalDwellings Land and Plant and structure Assets Assets under PPE

Buildings Equipment Construction£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Cost or ValuationAt 1 April 2012 296,484 68,876 6,521 1,255 364 1,921 2,978 378,399

(408) (314) (3) (725)

296,484 68,468 6,207 1,255 364 1,918 2,978 377,674

Additions/enhancement 9,088 2,256 561 11,905Donations 16 16

3,012 160 3,172

10,978 10,978

Derecognition Disposals (978) (73) (1,051)(112) (534) (646)

Other Reclassifications (1,706) 2,673 2,011 (2,978) 0At 31 March 2013 313,754 76,336 6,784 1,255 364 3,555 0 402,048

Depreciation and ImpairmentsAt 1 April 2012 (3,727) (2,149) (3,371) (604) 0 (190) 0 (10,041)

408 314 0 0 3 0 725

(3,727) (1,741) (3,057) (604) 0 (187) 0 (9,316)

Charge for 2012/2013 (5,441) (726) (451) (37) (19) (6,674)321 45 366

3,727 3,727

(20) (113) (4) (137)

(1,881) (34) (1,108) (3,023)

Derecognition Disposals 3 31 11 12

Other Reclassifications 42 (42) 0At 31 March 2013 (5,418) (4,137) (3,546) (641) 0 (1,300) 0 (15,042)

308,336 72,199 3,238 614 364 2,255 0 387,006

Impairment (losses)/ reversals recognised in the Revaluation Reserve

Revaluation increases/ (decreases) recognised in the Surplus/Deficit on the Provision of Services

Impairment (losses)/ reversals recognised in the Surplus/Deficit on the Provision of Services

Balance Sheet amount at 31 March 2013

Reclassified to/from Held for Sale

Adjustments between cost/value and depreciation/impairmentAdjusted 1 April 2012 balance

Depreciation written out to the Revaluation ReserveDepreciation written out to the Surplus/Deficit on the Provision of Services


11. Property, Plant and Equipment (PPE)

Adjustments between cost/value and depreciation/impairmentAdjusted 1 April 2012 balance

Revaluation increases/ (decreases) recognised in the Revaluation Reserve






Cost or ValuationAt 1 April 2011 298,477 65,557 6,091 1,218 364 1,957 0 373,664Additions/enhancement 3,435 7 371 2,978 6,791Donations 59 37 96

39 39

3,590 3,590

(4,597) (290) (4,887)

Derecognition Disposals (391) (391)Other Reclassifications (440) (27) (36) (503)At 31 March 2012 296,484 68,876 6,521 1,255 364 1,921 2,978 378,399

Depreciation and ImpairmentsAt 1 April 2011 (3,622) (1,338) (2,741) (568) 0 (180) 0 (8,449)Charge for 2011/2012 (3,727) (1,009) (531) (36) (10) (5,313)

340 7 347

3,622 43 3,665

(1,438) (15) (1,453)

1,248 (84) (3) 1,161

Other Reclassifications 5 (4) 1At 31 March 2012 (3,727) (2,149) (3,371) (604) 0 (190) 0 (10,041)

292,757 66,727 3,150 651 364 1,731 2,978 368,358

Transfer from De-minimis Asset RegisterRevaluation increases/ (decreases) recognised in the Revaluation ReserveRevaluation increases/ (decreases) recognised in the Surplus/Deficit on the Provision of Services

Impairment (losses)/ reversals recognised in the Revaluation ReserveImpairment (losses)/ reversals recognised in the Surplus/Deficit on the


Depreciation written out to the Revaluation ReserveDepreciation written out to the Surplus/Deficit on the Provision of Services



Depreciation Methods Used

Council Dwellings and other HRA Assets

General Fund Land and Buildings

Vehicles, Plant and Equipment

Infrastructure AssetsInfrastructure assets are depreciated on a straight-line basis over the estimated useful life of the asset.

Community AssetsThe Council's Community Assets are land and therefore not depreciated.

Surplus Assets

Estimated Useful Lives

Guidance allows that for a period of five years from the introduction of HRA self-financing in 2012/2013, depreciation canbe based on the former Major Repairs Allowance (MRA) calculation. The charge for 2012/2013 is based on thatcalculation.

Depreciation on Council Dwellings is normally equal to the transfer to the Major Repairs Reserve for the year so, while theeffect of depreciation is reversed out of the accounts, the transfer to the Major Repairs Reserve does impact on the HRArevenue account.

The estimated useful lives for depreciation purposes are reviewed on revaluation and when assets are coming to the endof their current useful life. Estimated useful lives are updated, if appropriate, and the new estimated useful life used tocalculate the depreciation charge for the year by dividing the carrying value of the asset over the new estimated usefullife. Where useful lives have been changed in 2012/2013, the effect on the depreciation charge for the year isimmaterial.

Depreciation on other HRA buildings has been calculated on a straight-line basis using estimated asset lives provided bythe District Valuer. Depreciation is a charge to the HRA balance, however, a credit is made to the Major Repairs Reserve(MRR) from the Capital Adjustment Account , via the Movement in the HRA Statement, to allow for this amount in theMRR (see HRA note 5. page 105).

Depreciation on General Fund buildings has been calculated on a straight-line basis using asset lives estimated by theCouncil's Estates and Valuation Manager. Depreciation is not provided for on land unless subject to depletion.

Depreciation on vehicles, plant and equipment has been calculated on a straight-line basis using asset lives of betweenthree and ten years, depending on the type of asset.

Depreciation on surplus building assets is calculated on a straight-line basis using estimated asset lives provided by theCouncil's Estates and Valuation Manager (General Fund properties) or the District Valuer (HRA properties).

Depreciation is charged to the services that receive the benefit of the assets during the year. It is reversed out of theComprehensive Income and Expenditure Statement via the Movement in Reserves Statement.



General Housing TotalFund Revenue Impairments

Account£'000 £'000 £'000

Surplus or Deficit on the Provision of ServicesLand and Buildings (1,758) (123) (1,881)Vehicles, Plant and Equipment (34) 0 (34)Surplus Assets (1,108) 0 (1,108)Assets Held for Sale (20) 0 (20)

(2,920) (123) (3,043)Intangibles (26) 0 (26)Total (2,946) (123) (3,069)

Other Comprehensive Income and ExpenditureCouncil Dwellings 0 (20) (20)Land and Buildings (113) 0 (113)Vehicles, Plant and Equipment (4) 0 (4)Heritage Assets (105) 0 (105)Total (222) (20) (242)

The table below shows the impairment losses and impairment reversals charged to the Surplus or Deficit on the Provisionof Services, detailed in note 8, and to Other Comprehensive Income and Expenditure note 7. These are consolidated innotes 11, 17, 19 and 28 which reconcile the movement over the year in Property, Plant and Equipment, Heritage assets,Intangible Assets and Assets Held for Sale.

12. Impairment Losses



2011/2012 2012/2013£'000 £'000

Opening Capital Financing Requirement 2,392 192,793

Capital InvestmentProperty, Plant and Equipment (1) 6,791 11,905Heritage Assets (2) 113 23Investment Properties (3) 1,205Intangible Assets (4) 109 151Revenue Expenditure Funded from Capital under Statute (5) 783 796Total Capital Expenditure 7,796 14,080

Sources of financeCapital Receipts (2,978) (448)Grants and Other Contributions (6) (514) (3,386)Major Repairs Reserve (1,837) (5,441)Leisure Strategy Fund (1,984)Revenue (863) (2,630)Total Capital Financing (6,192) (13,889)

HRA Settlement payment to the Government for HRA self-financing 188,797 0

Closing Capital Financing Requirement 192,793 192,984

Movement 190,401 191

Explanation of movements in yearCapital expenditure financed from borrowing 1,604 191HRA Settlement payment to the Government for HRA self-financing 188,797 0Increase/(Decrease) in Capital Financing Requirement 190,401 191

1. This figure matches the additions in note 11 Property, Plant and Equipment assets.2. This figure matches the additions in note 17 Heritage assets.3. This figure matches the additions in note 18 Investment Properties.4. This figure matches the additions in note 19 Intangible Assets.5. Revenue Expenditure Funded from Capital under Statute is treated as capital for control purposes. However, it forms part of the surplus or deficit on the Comprehensive Income and Expenditure Statement.6. Includes grants and contributions towards the Council's assets and non-Council owned assets (see note 41).

The total amount of capital expenditure incurred in the year is shown in the table below together with the resources usedfor its financing.

13. Capital Expenditure and Capital Financing



As at 31 March 2013, the major capital contracts entered into were as follows:

Contract ApproximateValue£'000

Housing Revenue Replacement kitchens and bathrooms Account in council-owned homes 10,285 2013/2019

Replacement heating systems incouncil-owned homes 5,143 2013/2019

The list below shows the range of assets that make up the non-current asset balances in the Balance Sheet:

NumberCouncil Dwellings 4,891

Other Land and BuildingsGarages 737Art Gallery 1Art Centre 1Museum & Garden 2Halls 2Leisure Centres 3Depots & Workshops 2Recreation Areas, Pavilions & Amenity Open Space 29Office Premises 4Miscellaneous Buildings 10Public Conveniences 9Day Centres 2Car Parks 27

The Council also owns a number of assets valued below the de minimis for recognition on the Balance Sheet.These are kept in a de minimis Asset Register and the values are regularly reviewed.

Community AssetsThese assets are perceived as being dedicated for public use and the Council is custodian.

Miscellaneous Land 6Recreation Areas, Play Areas & Amenity Open Space 3

The Council also owns a number of community assets (eg play areas) which are less than £10,000 in value.These do not appear on the Council's Balance Sheet but are kept in a de minimis Asset Register.

Surplus AssetsBrightwells in East Street, Farnham 7Dwellings/Other 3

Heritage AssetsSee Heritage Assets note 17.

15. Information on Assets Held

Purpose Period of Investment

14. Commitments under Capital Contracts



Valuation of property assets carried at fair value

The basis for valuation is set out in the Statement of Accounting Policies at page 32.

Carrying Value Council Other Surplus Totalat 31 March 2013 Dwellings Land and Assets

Buildings£'000 £'000 £'000 £'000

Valued at fair value in:2012/2013 308,336 21,173 2,255 331,7642011/2012 31,452 31,4522010/2011 11,665 11,6652009/2010 6,607 6,6072008/2009 1,302 1,302

Total 308,336 72,199 2,255 382,790

The valuation of the Council's assets:

Council Dwellings and Other HRA Assets

General Fund Land and Buildings

Vehicles, Plant and Equipment

Community and Infrastructure Assets

Surplus AssetsSurplus assets held for disposal are valued at their market value.

As these assets cannot be sold on the open market and have no alternative use, their values are based on their historicalcost.

All of the Council's Housing Revenue Account assets were revalued by the District Valuer. The General Fund land andbuildings were valued by the Council's Estates and Valuation Manager.

All of the Council's HRA assets were revalued by the District Valuer. The District Valuer carried out the valuation inaccordance with Government guidelines and valued the assets as at 1 April 2012. The basis of valuation is Existing UseValue (EUV) with a downward adjustment to reflect the use of the properties for social housing.

The General Fund land and buildings were valued in accordance with the Royal Institute of Chartered Surveyors (RICS)Statement of Asset Valuation Practice and Guidance Notes (Red Book) as supplemented by the Manual of Valuation(White Book) by the Council's Estates and Valuation Manager. In accordance with the Accounting Policies, assets arevalued as a minimum every five years. The General Fund land and buildings are valued at fair value: the amount thatwould be paid for the asset in its existing use. The de minimis level for land and buildings has been set at £10,000.

The Council carries out a rolling programme of revaluations ensuring that all property assets required to be measured atfair value are revalued at least every five years. The following statement shows when the those assets were mostrecently valued.

16. Revaluation Information

Vehicles, plant and equipment in the Balance Sheet are valued at historical cost i.e. the cost of the asset adjusted fordepreciation and impairment (if applicable). The de minimis level for vehicles, plant and equipment (includingInformation Technology) is £5,000.

The Code requires that software be shown separately on the Balance Sheet as Intangible Assets also at a de minimis of£5,000.



Reconciliation of the Carrying Value of Heritage Assets held by the Council.

Museum of Phillips Art Other TotalFarnham Memorial Collection HeritageCollection Park Assets

£'000 £'000 £'000 £'000 £'000Cost or Valuation

At 1 April 2012 319 395 315 380 1,409

Additions 23 23

Revaluations 9 9

(4) (101) (105)

At 31 March 2013 315 317 315 389 1,336

Depreciation and Impairment

At 1 April 2012 0 0 0 (1) (1)

Depreciation 0 0 0 0 0

At 31 March 2013 0 0 0 (1) (1)

Balance Sheet amount at 31 March 2013 315 317 315 388 1,335

Museum of Phillips Art Other TotalFarnham Memorial Collection HeritageCollection Park Assets

£'000 £'000 £'000 £'000 £'000Cost or Valuation

At 1 April 2011 319 274 130 371 1,094

Additions 0 113 0 113

0 8 185 9 202

At 31 March 2012 319 395 315 380 1,409

Depreciation and Impairment

At 1 April 2011 0 0 0 0 0

Depreciation 0 0 0 (1) (1)

At 31 March 2012 0 0 0 (1) (1)

Balance Sheet amount at 31 March 2012 319 395 315 379 1,408

Museum of Farnham Collection

Phillips Memorial Park

Art Collection

OtherThe remainder of the Heritage Assets are made up of civic regalia, architectural features, an old engine house and a smallpart of the Godalming Museum collection. These are all included in the Balance Sheet at insurance valuations.

Various paintings are held at a number of sites at their insurance valuations.

17. Heritage Assets

The Phillips Memorial Park is reported in the Balance Sheet at insurance valuation. The insurance valuations are updatedannually. Expenditure on restoration and enhancement began in 2011/2012 following the award of funding from theHeritage Lottery Fund and The Big Lottery Fund. This was the start of a five year programme of restoration andenhancement works to commemorate the hundredth anniversary of the sinking of the Titanic.

Revaluation increases/(decreases) recognised in the Revaluation Reserve

Impairment Losses/(reversals) recognised in the Revaluation Reserve

The museum collection is reported in the Balance Sheet at insurance valuation which is based on market values. Theinsurance valuations are updated annually.



- Industrial Estate & Units 29 - Other 16

2011/2012 2012/2013£'000 £'000

(645) Rental Income (699)34 Direct Operating Expenses 31

(4,442) Changes in fair value 1,081(5,053) Net (gain)/loss 413

The following table summarises the movement in the fair value of investment properties for the year:

Movement on Investment Property

2011/2012 2012/2013£'000 £'000

9,768 Balance at start of the year 14,2100 Additions/enhancements 1,2050 Disposals (474)

4,442 Net gains or losses from fair value adjustments (1,081)14,210 Balance at end of the year 13,860

Investment Properties were valued by the Council's Estates and Valuation Manager, Ailsa Woodruff MRICS.

An investment property is one that is used solely to earn rentals or for capital appreciation or both. Property that is usedto facilitate the delivery of services as well as to earn rentals or for capital appreciation does not meet the definition of aninvestment property and is accounted for as property, plant and equipment.

The Council's investment property portfolio comprise mainly industrial units together with a few miscellaneous properties,including shops:

The following items of income and expenditure have been accounted for in the Financing and Investment Income andExpenditure line in the Comprehensive Income and Expenditure Statement:

The Council's ability to realise the value of its investment property has, in some circumstances, been restricted by theexistence of long leases. However, there are no restrictions on the Council's right to the remittance of income and theproceeds of disposal.

18. Investment Property

The Council has no contractual obligations to purchase, construct or develop investment property or for repairs,maintenance or enhancement.

Investment properties are valued at fair value and are not subject to depreciation. They are revalued annually accordingto market conditions at the year-end unless the carrying value is not materially different from the fair value.



The movement on Intangible Asset balances during the year is as follows:

2011/2012 2012/2013£'000 £'000

Balance at start of year1,171 Original Cost 1,193(701) Accumulated amortisation (787)470 Net carrying amount at start of year 406109 Expenditure in year 151(29) Impairment losses recognised in the Surplus/Deficit on the Provision of Services (26)

(144) Amortisation (charged to Net Cost of Services in year) (113)406 Net carrying amount at end of year 418

Comprising1,193 Gross carrying amounts 1,289(787) Accumulated amortisation (871)406 Net carrying amount at end of year 418

These assets have a finite useful life and are amortised on a straight-line basis over asset lives of between five and sevenyears.

The amortisation charge for the year was charged to the Information Technology service and then absorbed as anoverhead across all services in the Net Cost of Services.

This category of assets represents purchased software and the relevant software licences. It relates to software that isnot an integral part of a particular IT system, integral software is accounted for as part of the hardware item and includedin Property, Plant and Equipment. Software licences are held for all of the Council's core systems which support servicesto the public. There are no internally generated intangible assets.

19. Intangible Assets



Financial Liabilities

Financial Assets

The three classifications for financial assets under the Code of Practice are:* Loan and Receivables* Available for Sale; and* Fair Value through Profit or Loss.

Loans and Receivables

Available for Sale and Fair Value through Profit or Loss

Transaction Costs

20. Financial Instruments - Classifications

The definition of a financial instrument is "any contract that gives rise to a financial asset of one entity and a financialliability or equity instrument of another entity".

The term 'financial instrument' covers both financial assets and financial liabilities. These range from straightforwardtrade receivables (trade debtors) and trade payables (trade creditors) to more complex transactions such as financialguarantees, derivatives and embedded derivatives. The Council's borrowings and investment transactions are alsoclassified as financial instruments. Amounts relating to council tax, non-domestic rates etc are outside the scope ofthese accounting provisions as they are statutory debts and do not arise from contracts.

A 'financial liability' is an obligation to transfer economic benefits controlled by the Council and can be represented bya contractual obligation to deliver cash or financial assets or an obligation to exchange financial assets and liabilitieswith another entity under conditions that are potentially unfavourable to the Council.

The Council's loan portfolio as at 31 March 2013 consisted of Public Works Loans Board (PWLB) debt of £187,035,000and £226,000 Local Enterprise Partnership (LEP) borrowing. Under the 2012/2013 Code of Practice this debt ismeasured at amortised cost. During the year temporary borrowing from the money markets was also undertaken.

Balances in call accounts as at 31 March 2013 are shown under "cash and cash equivalents" in the Balance Sheet asthey represent highly liquid investments that are readily convertible to known amounts of cash, with an insignificantrisk of changes in value.

A 'financial asset' is a right to future economic benefits controlled by the Council that are represented by cash or otherinstruments or a contractual right to receive cash or another financial asset.

The Council's portfolio of investments as at 31 March 2013 consisted of fixed term deposits and call accounts. Termdeposits and call accounts are classed as 'loans and receivables' and are measured at amortised cost. This form ofmeasurement does not change the amount of cash received under the terms of the investment. Trade receivables arealso classified as 'loans and receivables'. These have been measured at amortised cost on the Balance Sheet.

The Council does not have any assets on its Balance Sheet classified as Available for Sale (eg Money Market Funds) orany investments required to be measured at Fair Value through Profit or Loss (eg assets held for trading, derivativesetc.).

Where Financial Instruments are measured on the Balance Sheet at amortised cost, the related transaction costs (egcommissions payable to brokers) are permitted to be attached to the loan or investment and charged to theComprehensive Income and Expenditure Statement over the life of the instrument. Where those costs are consideredto be immaterial, however, they can be charged in full to the Comprehensive Income and Expenditure Statement inthe financial year they are incurred. The Council has adopted this latter approach in 2012/2013.



The Balance Sheet shows the following categories of Financial Instrument:

31 March 2012

Long-Term Current Long-Term Current£'000 £'000 £'000 £'000

Loans and Receivables4 15,029 Investments 4 7,519

81 2,232 Net Trade Receivables (within Debtors) 64 2,2760 7,350 Cash and Cash Equivalents 0 21,239

85 24,611 Total Financial Assets 68 31,034

Financial Liabilities at amortised cost(187,035) (60) Borrowings (187,261) (73)

0 (4,491) Trade Payables (within Creditors) 0 (3,509)(187,035) (4,551) Total Financial Liabilities (187,261) (3,582)

The following table identifies the composition of borrowing recorded on the Balance Sheet:

31 March 2012


Borrowings(187,035) 0 Nominal Amount (187,261) 0

0 (60) Accrued Interest 0 (73)(187,035) (60) Total Amortised Cost (187,261) (73)

The following table identifies the composition of investments recorded on the Balance Sheet:

31 March 2012


Investments4 15,000 Nominal Amount 4 7,5000 29 Accrued Interest 0 19

On-call Investments within Cash and Cash Equivalents0 8,500 Nominal Amount 0 22,5000 4 Accrued Interest 0 74

4 23,533 Total Amortised Cost 4 30,093

HRA self-financing borrowing (2011/2012)

Balance Balance

21. Financial Instruments Balances

31 March 2013Balance Balance

31 March 2013Balance Balance

Any long-term borrowing and long-term investments and debtors due to be settled within 12 months of the BalanceSheet date are presented in the Balance Sheet under 'current liabilities' or 'current assets'. These include accruedinterest on long-term borrowing and investments.

In 2011/2012 the HRA borrowed £5million from internal General Fund resources and took on new PWLB debt of£183.8million in order to finance the one-off payment of £189million to the Government as part of the new HRA self-financing framework.

31 March 2013



Gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to Financial Instruments are made up as follows:

Financial Financial Financial Financial Liabilities Assets Liabilities Assets

£'000 £'000 £'000 £'000Liabilities Loans and Liabilities Loans and

measured at receivables measured at receivablesamortised cost amortised cost

236 0 Total interest payable and other similar charges 5,678 0

0 (433) Total interest and investment income 0 (323)

236 (433) Net (gain)/loss for the year 5,678 (323)

- no early repayment or impairment is recognised

- where an instrument will mature in the next 12 months, carrying amount is assumed to approximate to fair value

- the fair value of trade and other receivables is taken to be the invoiced or billed amount.

2011/2012

22. Financial Instruments Income, Expense, Gains and Losses

2012/2013

23. Fair Value of Financial Assets and Liabilities carried at amortised cost

The Fair Value of the other financial instruments (trade payables and all financial assets) can be assessed bycalculating the present value of the cash flows that will take place over the remaining term of the instruments usingthe following assumptions:

The Council's investment portfolio at the Balance Sheet date consisted entirely of term deposits with Banks andBuilding Societies and call account deposits. The maturity dates of these investments were all within 12 months of theBalance Sheet date. None of the investments were impaired (i.e. considered at risk of default).

The Council's debt outstanding at 31 March 2012 consisted entirely of loans from the PWLB. As at 31 March 2013 theCouncil's debt outstanding similarly consisted of loans from the PWLB together with £226,000 of LEP borrowing. TheCouncil has been provided with Fair Value amounts in relation to its PWLB debt portfolio which calculate the amountsthe Council would have to pay to extinguish the PWLB loans on 31 March 2013. The carrying amount of the LEPborrowings is assumed to approximate to Fair Value.

For each class of financial asset and financial liability, the Council is required to disclose the Fair Value of that class ofassets and liabilities in such a way that a comparison with the carrying amount is possible.

The Council's long term loans and investments are carried in the Balance Sheet at amortised cost. Any debt andinvestments due to be settled within 12 months of the Balance Sheet date are presented in the Balance Sheet undercurrent liabilities or short term investments. These also include accrued interest for long term investments andborrowings, as well as accrued interest for cash and cash equivalents.

The 2012/2013 Code of Practice requires the Fair Values of these assets and liabilities to be disclosed for comparisonpurposes. Fair Value is "the amount for which an asset could be exchanged, or a liability settled, betweenknowledgeable, willing parties in an arm's-length transaction". The Fair Value of a financial instrument on initialrecognition is generally the transaction price.



The only Financial Instrument whose Fair Value differs from the Balance Sheet carrying amount is as follows:

31 March 2012

Carrying Fair Carrying Fair amount value amount value£'000 £'000 £'000 £'000

Financial Liabilities187,095 195,272 PWLB Borrowing 187,108 204,998

http://www.waverley.gov.uk/meetings/meeting/528/executive

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 the funds available to meet its commitments to make payments, and

market risk - the possibility that financial loss might arise for the Council as a result of changes in such measures as interest rates, exchange rates and stock market movements.

Credit Risk

Loans and Receivables

Balance31 March 2013

Balance

24. Nature and extent of risks arising from Financial Instruments

The Council's Annual Investment Strategy (AIS) for 2012/2013, which reviews the arrangements and approved limitsfor the operation of the Council's Treasury Management Policy, can be found at Appendix E to the Executive agendaon 7th February 2012. See the following link:

The Council's credit risk arises from deposits with banks and financial institutions as well as credit exposures to theCouncil's customers.

The Council's investments are classified into two groups "specified" and "non-specified". Specified deposits are thoseheld in sterling with a maturity of no more than a year and made with UK Local Authorities, the UK Government, or"high" credit-rated institutions (meaning AAA rating for sterling money market funds or a minimum of A- for any banksand building societies). Non-specified investments are any investments that, apart from having a maturity of morethan one year, meet all the other requirements of a "specified" investment.

Investments are made in compliance with the Council's Treasury Management Policy which is based on CIPFA's latestCode of Practice on Treasury Management. Risk is mitigated through the Annual Investment Strategy (contained inthe Treasury Management Policy) in compliance with the Department for Communities and Local Government'sInvestment Guidance for local authorities. The guidance emphasises that priority is to be given to security andliquidity rather than yield.

The Council's overall risk management policy focuses on the unpredictability of financial markets and seeks tominimise potential adverse effects on the resources available to fund services. Risk management, in relation totreasury management, is carried out by a Senior Accountant in consultation with the Deputy Chief Executive underpolicies approved by the Council in the Treasury Management Policy.

The fair value of the PWLB financial liability (Borrowings) is higher than the carrying amount because the interestpayable on the fixed rate PWLB loans is higher than the prevailing rates offered by the PWLB should the Council wishto repay the loans early. This shows a notional future loss (based on economic conditions at 31 March 2013) arisingfrom a commitment to pay interest above current market rates.

The Council has adopted CIPFA's Code of Practice on Treasury Management (and subsequent amendments) andcomplies with The Prudential Code for Capital Finance in Local Authorities (both revised in November 2011).



- the Council made no non-specified investments - £5million was the maximum investment in any single specified organisation at any one time *- £7.5million was the total investment with any group - £5million remaining the maximum with any single member of that group *- external advice, together with information received by officers, was used to ensure compliance with the strategy- Every investment was ratings-checked on the day of the investment and a list of potential counterparties prepared and approved by the S151 Officer and updated daily- The Deputy Chief Executive can seek the approval of the Executive to change the above limits during the year, if necessary, provided that it is in the best interests of the Council to do so.

Counterparty Fitch credit rating when Investment

placed

Credit Rating Criteria met

when Investment

placed

Credit Rating Criteria

met on 31 March 2013

Total

Instant access≥3 months and

<6 months≥6 months and < 12 months

£'000 £'000 £'000 £'000A stable Yes Yes 15,000 3,000 4,500 22,500

AA- stable Yes Yes 7,500 0 0 7,50030,000

Balance Invested as at 31 March 2013

Length of investment from date lent to maturity date

In order, primarily, to maximise the security and liquidity of the Council's investments, but also to enable flexibility ininvestment options allowing for the practicalities of day-to-day investment dealing, the Council's investment activity in2012/2013 was as follows:

During 2012/2013 the Council continued to employ the services of a private consultancy having regard to the housingself-financing reform implemented in March 2012 and the subsequent consequences.

- Investments were restricted to UK Local Authorities and the UK Government and institutions assessed as having a"high credit quality" (meaning AAA rating for sterling money market funds or a minimum of A- for any banks andbuilding societies) and being considered to have other high credit credentials

* During 2012/2013 the Council agreed to increase the maximum investment to £7.5million in any single organisationand to £10million for total investment with any group.

In practice market conditions meant that controls tightened further, within the bounds of the approved policy, tocreate as much security as possible for the Council's investment portfolio.

The Council did not have any monies invested in the Icelandic banking system when it collapsed in October 2008 andthe Council has no experience of default on its investments.

All the Council's £30.1million external investments (including £22.6million within Cash and Cash Equivalents) as at 31March 2013 (£23.5million total investments as at 31 March 2012) were either in UK banks or building societies and allwere specified investments. The average number of days to maturity as at 31 March 2013 was 20 (41 as at 31 March2012). The average rate of investment return as at 31 March 2013 was 0.87% (1.09% as at 31 March 2012).

The Council does not expect any losses from non-performance by any of its counterparties in relation to deposits. Thetable below summarises the nominal value of the Council's investment portfolio as at 31 March 2013 and confirms thatall investments were made in line with the Council's Annual Investment Strategy.

The above analysis shows that all deposits outstanding as at 31 March 2013 also met the Council's credit ratingrequirements on the 31 March 2013.



Trade Receivables

Liquidity risk

All trade and other creditor payables are due to be paid in less than one year.

It is considered that the Council has no material exposure to liquidity risk.

The maturity profile of the nominal value of the Council's debt as at 31 March 2013 was as follows:

31 March 2013

£'000s% of total

debt portfolioLong Term Borrowing 3,713 2

25,216 1349,391 2668,709 3736,994 203,238 2

Total Long Term Borrowing 187,261 100

Years≥ 1 year ≤ 5 years

>5 years ≤ 10 years>10 years ≤ 15 years

In relation to its customers, the Council does not generally allow credit, however it has a prudent impairmentallowance for Bad debts (see note 26 on page 65) to cover cases of default.

>15 years ≤ 20 years>20 years ≤ 25 years>25 years ≤ 30 years

There are no material trade receivable debts which pose a credit risk to the Council at the Balance Sheet date which have not been covered by the impairment allowance (for bad debts).

The impairment allowances for trade receivables have been calculated using general past experience of default for theparticular classes of debtor taking into account the age of outstanding debts. There are no trade receivables whichare individually determined to be impaired at the Balance Sheet date.

The Council has a comprehensive cash-flow management process that seeks to ensure that cash is available asneeded. If unexpected movements happen the Council has ready access to borrowings from the market and thePublic Works Loans Board and maintains a prudent amount invested on call at all times. There is no significant riskthat it will be unable to raise finance to meet its commitments under Financial Instruments. In the event of a majorissue with the HRA self-financing business plan, there is a small risk that the Council may need to refinance some of itslong-term borrowing (PWLB loans repayable on maturity between 4.5 years and 27.5 years) at a time of unfavourableinterest rates. There is currently, however, significant headroom within the business plan therefore the risk isconsidered small. The PWLB loans will be reviewed in the future as part of the Council's financial strategy.

An invoice is generally 'past due' after it has been raised. The credit quality of the trade receivables, which are neither past due nor impaired, is considered good. Of the trade debtors that are not impaired, the amount that is past due for payment is considered fully recoverable therefore risk is minimal on this amount.



Market risk - interest rate risk

- borrowings at fixed rates - the fair value of the liabilities borrowings will fall

- investments at fixed rates - the fair value of the assets will fall

Market risk - price risk

Market risk - foreign exchange risk

The Council received £323,000 external interest and investment income on its investments in 2012/2013 at an averageinterest rate of 0.87%. If the average rate had been 0.5% less (i.e. 0.37%) the Council would have receivedapproximately £186,000 less income; a 0.5% rise in interest rates would similarly have produced £186,000 moreincome. In setting the Budget for 2013/2014, the Council forecast £475,000 interest income.

The £5million HRA borrowing from internal General Fund resources is at a fixed rate of 3.4% and is not expected to berepaid in the short term. This internal borrowing gives the HRA flexibility and reduces the credit risk for the GeneralFund's investment portfolio.

Borrowings are not carried at fair value, so nominal gains and losses on fixed rate borrowings would not impact on theSurplus or Deficit on the Provision of Services or Other Comprehensive Income and Expenditure. However, changes ininterest receivable on variable rate investments would be posted to the surplus or deficit on the Provision of Servicesand affect the General Fund Balance.

The Council's investments were all held at fixed rates as at 31 March 2013 and are due, except for a small amount ofGovernment stock of £4,370 to mature within one year.

There is some risk with regard to the reinvestment of these deposits when they mature if interest rates should fallfurther. The Treasury Management team, however, has an active strategy for assessing interest rate exposure thatfeeds into the setting of the annual budget and the regular budget monitoring process.

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

The Council has no significant financial assets or liabilities denominated in a foreign currency. It therefore has noexposure to loss arising as a result of adverse movements in exchange rates.

The fair value of the Council's fixed rate borrowings liability (carrying value £187,334,000) was £205,224,000 at 31March 2013. If the discount rates (based on prevailing premature repayment interest rates) had been 1% less, thefair value of the Council's loans would have been £232,129,000 (£26,905,000 higher, but with no impact on theSurplus or Deficit on the Provision of Services or other Comprehensive Income and Expenditure). If the discount rateshad been 1% higher the fair value of the loans would be £182,022,000 (£23,202,000 less, but again with no impact onthe Surplus or Deficit on the Provision of Services or other Comprehensive Income and Expenditure).

The Council does not invest in equity shares and therefore is not subject to any price risk (i.e. the risk that the Councilwill suffer loss as a result of adverse movements in the price of financial instruments.)

- investments at variable rates - the interest income credited to the surplus or deficit on the Provision of Services will rise



31 March 2012 31 March 2013Balance Balance£'000 £'000

44 House Purchase Advances 415 Council House Mortgages 1

32 Other Loans 2281 64

31 March 2012Balance£'000 £'000 £'000

Debtors2,723 Government departments 2,170

0 less Impairment Allowance 02,723 2,170

452 Other local authorities and public bodies 4510 less Impairment Allowance 0

452 451

391 Council Tax payers 330(67) less Impairment Allowance (66)

324 264

283 Housing rents 347(146) less Impairment Allowance (140)137 207

2,571 Other Sundry 2,470(928) less Impairment Allowance (852)

1,643 1,618

5,279 Total Debtors net of impairment (bad debts) allowance 4,710

285 Payments in Advance 1,506

5,564 Total net Debtors & Payments in Advance 6,216

26. Short Term Debtors

25. Long Term Debtors

31 March 2013Balance

These items consist largely of mortgage debts and other smaller items repayable to the Council in instalments over anumber of years.



The balance of Cash and Cash Equivalents is made up of the following elements:


3 Cash held by the Council 3(1,157) Bank current accounts (2,736)8,504 Short-term investments 23,972

7,350 Total Cash and Cash Equivalents 21,239

Current Non- Current Non-Current Current

£'000 £'000 £'000 £'000

0 0 Balance outstanding at start of year 86 0 Transfers from non-current to current: (Assets newly classified as held for sale)

502 0 Property, Plant and Equipment 634 0

0 0 Impairments (20) 0(416) 0 Assets sold (86) 0

86 0 Balance outstanding at end of year 614 0

Comprising0 General Fund 125

86 Housing Revenue Account 48986 0 Balance outstanding at end of year 614 0

Disposals

27. Cash and Cash Equivalents

2012/20132011/2012

‘Short-term investments’ are those held on ‘call’ with a bank rather than invested in longer term Fixed Deposits.

28. Assets Held for Sale

See also note 11. Property, Plant and Equipment showing the financial effect of disposals from non-current assets notclassified as "Assets Held for Sale". The majority of the non-current disposals, not included here as they were notclassified as "Held for Sale" in the year, were Council Dwellings under the "right to buy" legislation.

The £1.17million gain on disposal of non-current assets in the Comprehensive Income and Expenditure Statement isfurther analysed in note 8.




Creditors(2,765) Government departments (1,466)

(404) Other local authorities and public bodies (211)(180) Housing rents and local taxes (170)

(3,927) Other creditors (3,150)(7,276) (4,997)

Receipts in Advance(172) Council Tax payers (156)(171) Section 106 receipts (1,181)(835) Others (1,056)

(1,178) (2,393)

(8,454) Total of Creditors & Receipts in Advance (7,390)

1 April 2012 Net Movement Balance Purpose of FurtherBalance Reserve in year 31 March 2013 Reserve detail of£'000 £'000 £'000 Movements

(4,227) General Fund (187) (4,414) Resources available to meet future running costs for non-housing services

See Movement in Reserves Statement on page 13 and note 8 to the Financial Statements

(2,826) Revenue Reserve Fund (582) (3,408) See note 9

(3,571) 1,192 (2,379) See note 9

(2,200) Housing Revenue Account (464) (2,664) Resources available to meet future running costs for council houses

See HRA Income and Expenditure Account, Movement on the HRA Statement & Note 4 to the HRA

(619) (5,811) (6,430) See note 9

(2,666) (136) (2,802) See note 5 to the HRA

(7,269) (1,891) (9,160) Proceeds of non-current assets sales that can only be used to fund capital expenditure

See next page for explanation of movement

(1,207) (123) (1,330) Capital resource applied when expenditure incurred

See note 41

(24,585) Total (8,002) (32,587)

30. Usable Reserves

Capital Grants Unapplied Account

General Fund Earmarked Reserves

Housing Revenue Account Earmarked Reserves

The Council has the following usable reserves in the Balance Sheet.

29. Short Term Creditors





Usable Reserves 2011/2012


(4,053) General Fund (174) (4,227) Resources available to meet future running costs for non-housing services

See Movement in Reserves Statement on page 12 and Note 8 to the Financial Statements

(2,735) Revenue Reserve Fund (91) (2,826) See note 9

(3,545) (26) (3,571) See note 9

(2,118) Housing Revenue Account (82) (2,200) Resources available to meet future running costs for council houses

See HRA Income and Expenditure Account, Movement on the HRA Statement & Note 4 to the HRA

(584) (35) (619) See note 9

0 (2,666) (2,666) See note 5 to the HRA

(8,198) 929 (7,269) Proceeds of non-current assets sales that can only be used to fund capital expenditure

See below for explanation of movement

(1,124) (83) (1,207) Capital resource applied when expenditure incurred

See note 41

(22,357) Total (2,228) (24,585)

Explanation of Movements on Usable Reserves

2011/2012 2012/2013Movement Movement

£'000 £'000 Capital Receipts Reserve

(2,485) Capital Receipts in year (net of disposal costs) (2,780)445 Pooling of Housing Receipts 446

2,978 Capital Financing in year 448(9) Other movements (5)

929 (1,891)

Capital Grants Unapplied Account(289) Grant/Contribution received in year credited to Non-Specific Grant Income (3,069)206 Used to finance capital expenditure in year 2,946(83) (123)


The Council also holds a Housing Major Repairs Reserve - see note 5 to the Housing Revenue Account.

Housing Revenue Account Earmarked Reserves

General Fund Earmarked Reserves






Revaluation balances(12,087) (3,269) (15,356) Holds unrealised

gains and losses on revaluation of assets, only becomes available if the assets are sold


Adjustment Accounts(179,586) Capital Adjustment Account (15,426) (195,012) Store of capital

assets set aside to represent past expenditure

See page 71 for explanation of movement

37,675 Pensions Reserve 5,312 42,987 Balancing account to allow inclusion of Pensions Liability in the Balance Sheet

See note 45 to the core financial statements

(7) 3 (4)(104) 39 (65) See Collection Fund

note 4 (p110) Waverley BC net share of outturn

(154,109) Total Unusable Reserves (13,341) (167,450)

Unusable Reserve 2011/20121 April 2011 Net Movement Balance Purpose of Further

Balance Reserve in year 31 March 2012 Reserve detail of£'000 £'000 £'000 Movements

Revaluation balances(9,675) (2,412) (12,087) Holds unrealised

gains and losses on revaluation of assets, only becomes available if the assets are sold


Adjustment Accounts(364,480) Capital Adjustment Account 184,894 (179,586) Store of capital

assets set aside to represent past expenditure

See page 71 for explanation of movement

29,791 Pensions Reserve 7,884 37,675 Balancing account to allow inclusion of Pensions Liability in the Balance Sheet

See note 45 to the core financial statements

(13) 6 (7)(125) 21 (104)

(344,502) Total Unusable Reserves 190,393 (154,109)

Revaluation Reserve

The Council has a number of unusable reserves in the Balance Sheet. These are required to be held for statutoryreasons and to comply with proper accounting practice.

31. Unusable Reserves

Collection Fund AdjustmentAccount

Deferred Credits

Revaluation Reserve (Restated)

Deferred CreditsCollection Fund AdjustmentAccount



Explanation of Movements on Unusable Reserves

Revaluation Reserve

- 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.

The movement on the Revaluation Reserve is made up as follows:


£'000 £'000

(9,675) Balance at 1 April (12,087)

(4,178) (3,547)

1,453 242

(2,725) (3,305)

88 26

225 Accumulated gains on assets sold or scrapped 10

313 Amount written off to the Capital Adjustment Account 36

(12,087) Balance at 31 March (15,356)

Downward revaluation of assets and impairment losses not charged to the Surplus/Deficit on the Provision of Services

Upward Revaluations of assets (including assets not previously on Balance Sheet)

Surplus or deficit on revaluation of non-current assets not posted to the Surplus or Deficit on the Provision of Services

Difference between fair value depreciation and historical cost depreciation

The Revaluation Reserve contains gains made by the Council arising from increases in the value of its Property, Plantand Equipment and Intangible Assets. The balance is reduced when assets with accumulated gains are:

The reserve contains only revaluation gains accumulated since 1 April 2007, the date that the reserve was created.Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.



Capital Adjustment Account

The movement on the Capital Adjustment is made up as follows:


£'000 £'000(364,480) Balance at 1 April (179,586)

Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement (see note 8):

5,313 Depreciation of non-current assets 6,67461 Impairment losses & reversals on Property, Plant & Equipment 2,9200 Revaluation losses & reversals on Property, Plant & Equipment (14,705)

144 Amortisation of intangible assets 11329 Impairment of intangible assets 261 Depreciation of heritage assets 0

475 Revenue expenditure funded from capital under statute 356188,797 HRA self financing settlement payment to the Government 0

806 Amounts of non-current assets written off on disposal or sale as part of the 1,608 gain/loss on disposal to the Comprehensive Income and Expenditure Statement

195,626 (3,008)(313) Adjusting amounts written out of the Revaluation Reserve (36)

195,313 Net written out amount of the cost of non-current assets consumed in the year (3,044)

Capital financing applied in the year:(2,978) Use of the Capital Receipts Reserve to finance new capital expenditure (448)(1,837) Use of the Major Repairs Reserve to finance new capital expenditure (5,441)

(185) Capital grants and contributions credited to the Comprehensive Income and (2,945) Expenditure Statement that have been applied to capital financing

(21) Application of grants to capital financing from the Capital Grants Unapplied (1) Account

(863) Capital expenditure charged against the General Fund and HRA balances (4,614)

(5,884) (13,449)

(4,442) Movements in the fair value of Investment Properties debited or credited to 1,081 the Comprehensive Income and Expenditure Statement

(96) Donated Assets credited to the Comprehensive Income & Expenditure Statement (16)3 Other 2

(179,586) Balance at 31 March (195,012)

The Account contains accumulated gains and losses on Investment Properties and gains recognised on donated assetsthat have yet to be consumed by the Council.

The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accountingfor the consumption of non-current assets and for financing the acquisition, construction or enhancement of thoseassets under statutory provisions. The Account is debited with the cost of acquisition, construction or enhancement asdepreciation, impairment losses and amortisations are charged to the Comprehensive Income and ExpenditureStatement (with reconciling postings from the Revaluation Reserve to convert fair value figures to a historical costbasis). The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition,construction and enhancement.

The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, thedate that the Revaluation Reserve was created to hold such gains.



Pensions Reserve

See Pensions note 45 for further detail

2011/2012 2012/2013£'000 £'000

29,791 Balance at 1 April 37,675

8,110 Actuarial gains or losses on pensions assets and liabilities 4,913

2,518 Reversal of items relating to retirement benefits debited or 3,136 credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement

(2,744) Employer’s pensions contributions and direct payments to pensioners (2,737) payable in the year

37,675 Balance at 31 March 42,987

Collection Fund Adjustment Account

2011/2012 2012/2013£'000 £'000

(125) Balance at 1 April (104)21 Amount by which council tax income credited to the Comprehensive Income 39

and Expenditure Statement is different from council tax income calculated for the year in accordance with statutory requirements

(104) Balance at 31 March (65)

The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax income inthe Comprehensive Income and Expenditure Statement as it falls due from council tax payers compared with thestatutory arrangements for paying across amounts to the General Fund from the Collection Fund.

The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for postemployment benefits and for funding benefits in accordance with statutory provisions. The Council accounts for postemployment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned byemployees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions andinvestment returns on any resources set aside to meet the costs. However, statutory arrangements require benefitsearned to be financed at the time the Council makes employer’s contributions to pension funds or eventually pays anypensions for which it is directly responsible. The debit balance on the Pensions Reserve therefore shows a substantialshortfall in the benefits earned by past and current employees and the resources the Council has set aside to meetthem. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come tobe paid.



Adjustments to net surplus or deficit on the provision of services for non-cash movements:

2011/2012 2012/2013£'000 £'000

(5,314) Depreciation (6,674)(90) Impairment and downward valuations (3,069)

Revaluation losses and reversals on Property, Plant & Equipment 14,705(144) Amortisations (113)(235) (Increase)/Decrease in impairments for bad debts 83(220) (Increase)/Decrease in Creditors 1,358354 Increase/(Decrease) in Debtors 594

(3) Increase/(Decrease) in Inventories 1226 Pensions liability (399)

(806) Carrying amount of non-current assets sold (1,608)4,442 Movements in the value of Investment Properties (1,081)

96 Donated Assets 1619 Capital Grants and contributions

(1,675) Total non-cash movements 3,813

Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities:

2011/2012 2012/2013£'000 £'000

433 Proceeds from short-term investments (cash interest on investments) 3232,485 Proceeds from the sale of Property, Plant and Equipment 2,780

Grants received for financing of capital expenditure 3,069

2,918 6,172

The cash-flows for operating activities includes the following items (on a cash basis):

2011/2012 2012/2013£'000 £'000

173 Interest paid 5,650(503) Interest received (345)

32. Cash-Flow Statement - non-cash movements

33. Cash-Flow Statement - Operating Activities

The Cash-Flow Statement has been prepared using the indirect method. This method derives the revenue cash flowby adjusting the Net Surplus or Deficit on the provision of services in the Comprehensive Income and ExpenditureStatement to a cash basis.

Adjustments are made for non-cash items which include depreciation and impairments, accruals and the non-cashelement of the pensions liability (as set out in the Accounting Policies).



2011/2012 2012/2013£'000 £'000

6,686 Purchase of property, plant and equipment and intangible assets 13,238115,700 Purchase of short-term investments 70,900

(126,212) Proceeds from short-term investments (78,755)(2,485) Proceeds from the sale of Property, Plant and Equipment (2,780)

43 Capital Grants and contributions received for the cost of purchasing property, (2,132) plant and equipment or intangible assets

19 Other payments/(receipts) (6)(6,249) Net cash-flows from investing activities 465

2011/2012 2012/2013£'000 £'000

(183,797) Cash receipts of long-term borrowing (226)(500) Cash receipts of short-term borrowing (7,000)500 Repayments of short-term borrowing 7,000

5 The difference between the preceptors’ share of council tax cash collected (21) and net cash paid to preceptors for their precept and settlement of the estimated surplus/deficit on the Collection Fund

(951) The difference between the cash collected from NNDR taxpayers and the (1,141) amount paid into the pool

(184,743) Net cash-flows from financing activities (1,388)

The gross cash receipts attributable to the Council and gross cash payments from operating activities are set outbelow:

2011/2012 2012/2013£'000 £'000

Gross cash receipts(11,275) Taxation - Council Tax collected in the year attributable to the Council (11,390)(40,099) Grants (specific and non-specific - includes NNDR) (42,162)(11,734) Housing Rents (11,893)(26,196) Sales of goods and services (28,448)

(89,304) Cash inflows from operating activities (93,893)

Gross cash payments11,346 Cash paid to and on behalf of employees 11,32513,763 Housing Benefit paid out 14,8352,327 Precepts paid 2,426

275 Payments to the capital receipts pool 53920,271 Cash paid to suppliers of goods and services 21,269

188,797 HRA Settlement payment to the Government for HRA self-financing 0173 Interest paid 5,650

36,375 Other payments for operating activities 24,883273,327 Cash outflows generated from operating activities 80,927

184,023 Net cash-flows from Operating Activities (12,966)

36. Cash-Flow Statement - Major classes of gross cash receipts and payments

34. Cash-Flow Statement - Investing Activities

35. Cash-Flow Statement - Financing Activities



In particular:

- In the budget reports, the cost of retirement benefits is based on cash flows (payment of employer’s pensions contributions) rather than current service cost of benefits accrued in the year.

The analysis of income and expenditure by service on the face of the Comprehensive Income and ExpenditureStatement is that specified by the Service Reporting Code of Practice . However, decisions about resource allocationare taken by the Council on the basis of budget reports analysed across its internal management structure. Theinternal management structure consists of service areas each with a Head of Service. The budget reports areprepared on a different basis from the accounting policies used in the financial statements.

The income and expenditure of the Council's services reported in the budget reports for the year is shown on thefollowing pages:

37. Amounts reported for resource allocation decisions

The Code of Practice on Local Authority Accounting requires a 'Segment Reporting' analysis to be disclosed based onthe Council's internal management reporting structure.



Service Information - for the year ended 31 March 2013

TotalSubjective Analysis based on Service Areas

Planning Organisational Development

Democratic and Legal Services

Community Services

Environmental Services

Housing Customer, IT and Offices Services

Finance General Fund Total

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

IncomeFees, charges and other service income (1,326) (396) (873) (2,453) (5,310) (1,148) (222) (1,620) (13,348) (27,376) (40,724)Government Grants and Contributions 0 0 0 0 0 (5) 0 (35,731) (35,736) (35,736)Total Income (1,326) (396) (873) (2,453) (5,310) (1,153) (222) (37,351) (49,084) (27,376) (76,460)

ExpenditureEmployee expenses 0 0 82 79 6 0 0 1,187 1,354 19 1,373Other service expenses 266 23 671 3,912 5,548 856 533 36,097 47,906 4,994 52,900Support Service recharges 3,424 1,433 1,374 2,079 1,640 1,245 351 1,595 13,141 3,517 16,658Depreciation, amortisation & impairment 5 0 0 1,685 158 0 176 1,148 3,172 (9,005) (5,833)Total Expenditure 3,695 1,456 2,127 7,755 7,352 2,101 1,060 40,027 65,573 (475) 65,098

Net Expenditure 2,369 1,060 1,254 5,302 2,042 948 838 2,676 16,489 (27,851) (11,362)

Reconciliation of service areas income and expenditure to Cost of Services in Comprehensive Income and Expenditure StatementThis reconciliation shows how the figures in the analysis of service areas income and expenditure relate to the amounts included in the Comprehensive Income and Expenditure Statement.

£'000Net Expenditure in Service Areas Analysis (11,362)Amounts in the Comprehensive Income and Expenditure Statement not reported to management in the Analysis (567)

Cost of Services in Comprehensive Income and Expenditure Statement (11,929)

2012/2013General Fund Housing

Revenue Account




This reconciliation shows how the figures in the analysis of Heads of Service income and expenditure relate to a subjective analysis of the Surplusor Deficit on the Provision of Services included in the Comprehensive Income and Expenditure Statement (CIES).

Reconciliation to Subjective Analysis

Total Service Analysis

Amounts not reported to

management for decision

making

Allocation of Support Service

Recharges

Cost of Services

Corporate Amounts

Total

£'000 £'000 £'000 £'000 £'000 £'000

IncomeFees, charges and other service income (40,724) (229) (40,953) (40,953)Interest and Investment Income 0 (1,022) (1,022)Income from Council Tax 0 (11,390) (11,390)Government Grants and Contributions (35,736) (433) (36,169) (1,152) (37,321)Non-domestic rate distribution 0 (3,974) (3,974)Capital grants and contributions 0 (3,069) (3,069)(Gain)/Loss on disposal of non-current assets 0 (1,172) (1,172)Total Income (76,460) (433) (229) (77,122) (21,779) (98,901)

ExpenditureEmployee expenses 1,373 (207) 14,754 15,920 1,095 17,015Other service expenses 52,900 73 2,720 55,693 31 55,724Support Service recharges 16,658 (18,229) (1,571) (1,571)Depreciation, amortisation & impairment (5,833) 984 (4,849) (4,849)Interest payments 0 5,678 5,678Precepts and levies 0 2,426 2,426Payment to Housing Capital Receipts Pool 0 446 446Loss on fair value of Investment Properties 0 1,081 1,081Total Expenditure 65,098 (134) 229 65,193 10,757 75,950

(Surplus)/Deficit on the provision of services

(11,362) (567) 0 (11,929) (11,022) (22,951)

2012/2013




TotalSubjective Analysis based on Service Areas

Planning Organisational Development

Democratic and Legal Services

Community Services

Environmental Services

Housing Customer, IT and Offices Services

Finance General Fund Total

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

IncomeFees, charges and other service income (1,360) (350) (867) (2,123) (5,670) (1,009) (208) (1,191) (12,778) (26,098) (38,876)Government Grants and Contributions 0 0 0 0 (1) (65) 0 (34,331) (34,397) (34,397)Total Income (1,360) (350) (867) (2,123) (5,671) (1,074) (208) (35,522) (47,175) (26,098) (73,273)

ExpenditureEmployee expenses 0 0 143 71 5 0 0 1,198 1,417 126 1,543Other service expenses 337 29 715 3,653 7,455 908 135 34,191 47,423 206,129 253,552Support Service recharges 3,469 1,302 1,370 2,170 1,673 1,208 261 1,577 13,030 3,320 16,350Depreciation, amortisation & impairment 33 0 0 75 (9) 3 44 14 160 4,965 5,125Total Expenditure 3,839 1,331 2,228 5,969 9,124 2,119 440 36,980 62,030 214,540 276,570

Net Expenditure 2,479 981 1,361 3,846 3,453 1,045 232 1,458 14,855 188,442 203,297

Reconciliation of service areas income and expenditure to Cost of Services in Comprehensive Income and Expenditure StatementThis reconciliation shows how the figures in the analysis of service areas income and expenditure relate to the amounts included in the Comprehensive Income and Expenditure Statement.

£'000Net Expenditure in Service Areas Analysis 203,297Amounts in the Comprehensive Income and Expenditure Statement not reported to management in the Analysis (285)

Cost of Services in Comprehensive Income and Expenditure Statement 203,012

General Fund Housing Revenue Account

2011/2012




This reconciliation shows how the figures in the analysis of Heads of Service income and expenditure relate to a subjective analysis of the Surplusor Deficit on the Provision of Services included in the Comprehensive Income and Expenditure Statement (CIES).

Reconciliation to Subjective Analysis

Total Service Analysis


management for decision

making


Recharges

Cost of Services

Corporate Amounts

Total

£'000 £'000 £'000 £'000 £'000 £'000

IncomeFees, charges and other service income (38,876) (163) (39,039) (39,039)Interest and Investment Income 0 (1,078) (1,078)Income from Council Tax 0 (11,275) (11,275)Government Grants and Contributions (34,397) (34,397) (1,641) (36,038)Non-domestic rate distribution 0 (3,416) (3,416)Capital grants and contributions 0 (289) (289)(Gain)/Loss on disposal of non-current assets 0 (1,679) (1,679)Gain on fair value of Investment Properties 0 (4,442) (4,442)Total Income (73,273) 0 (163) (73,436) (23,820) (97,256)

ExpenditureEmployee expenses 1,543 (285) 15,134 16,392 546 16,938Other service expenses 253,552 2,443 255,995 34 256,029Support Service recharges 16,350 (17,837) (1,487) (1,487)Depreciation, amortisation & impairment 5,125 423 5,548 5,548Interest payments 0 236 236Precepts and levies 0 2,327 2,327Payment to Housing Capital Receipts Pool 0 445 445Total Expenditure 276,570 (285) 163 276,448 3,588 280,036

(Surplus)/Deficit on the provision of services

203,297 (285) 0 203,012 (20,232) 182,780

2011/2012



2011/2012 2012/2013 2012/2013 2012/2013Number of Remuneration Band Number of Number of Number of Employees Employees Employees Employees

who left remaining atduring year year end

7 £50,000 - £54,999 8 0 8 4 £55,000 - £59,999 * 5 1 4 3 £60,000 - £64,999 1 0 1 1 £65,000 - £69,999 ** 3 1 2 1 £70,000 - £74,999 2 0 2 1 £75,000 - £79,999 1 0 1 2 £80,000 - £84,999 2 0 2 1 £85,000 - £89,999 0 0 0 1 £100,000 - £104,999 1 0 1 1 £120,000 - £124,999 0 0 0 0 £125,000 - £129,999 1 0 1 22 Total 24 2 22

Salary range bandings that are zero for both financial years have been omitted.

* Includes one manager who left in October 2012. Remuneration includes redundancy pay.** Includes one manager who left in January 2013. Remuneration includes an exit package.

(The Council has no Senior Officers whose salary is £150,000 or more per year.)

Post Salary Expense Compensation Benefits in Total Employers TotalTitle (including allowance for loss kind Remuneration Pension Remuneration

fees & of office (car and excluding Contributions includingallowances) medical employers pension

insurance) pension contributionscontributions

£ £ £ £ £ £ £Chief Executive

113,271 6,540 0 5,550 125,361 18,616 143,977

Deputy Chief Executive

93,966 4,251 0 4,090 102,307 15,430 117,737

Strategic Director *

77,456 0 0 3,594 81,050 12,770 93,820

* Strategic Director appointed April 2012.

38. Officers' Remuneration

2012/2013

The definition of remuneration here includes all amounts paid to or receivable by an employee other than employerspension contributions and includes sums by way of taxable expense allowances and the estimated monetary value of anybenefits.

The number of employees (including those whose remuneration has been disclosed individually in the tables below)whose remuneration, excluding employer's pension contributions, was £50,000 or more in bands of £5,000 were:

The remuneration disclosures for designated Senior Officers (Corporate Management Team members) whose salary isalso less than £150,000 but equal to or more than £50,000 per year are for 2012/2013:



The comparative information for 2011/2012, for those individuals covered in the 2012/2013 note above, is:

Post Salary Expense Compensation Benefits in Total Employers TotalTitle (including allowance for loss kind Remuneration Pension Remuneration

fees & of office (car and excluding Contributions includingallowances) medical employers pension

insurance) pension contributionscontributions

£ £ £ £ £ £ £Chief Executive

112,821 6,540 0 5,058 124,419 18,616 143,035

Deputy Chief Executive

93,516 4,251 0 3,790 101,557 15,430 116,987

Exit Packages

(b) (c) (d) (e)

Number of compulsory

redundancies

Number of other

departures agreed

Total number of exit

packages by cost band [(b) + (c)]

Total cost of exit

packages in each band

£

3 1 4 50,334

2 2 4 124,944

(b) (c) (d) (e)

Number of compulsory

redundancies

Number of other

departures agreed

Total number of exit

packages by cost band [(b) + (c)]

Total cost of exit

packages in each band

£

0 3 3 127,526

Exit package cost band (including special payments)

Exit package cost band (including special payments)

2012/2013

£20,001- £60,000

£0 - £80,000

£0 - £20,000

2011/2012

(a)

(a)

The numbers of exit packages with total cost of compulsory and other departures per band are set out in the tablesbelow:

2011/2012



2011/2012 2012/2013£'000 £'000

137 Basic Allowance 13940 Special Responsibility Allowance 4121 Travelling and Subsistence Allowance 216 Internet Charges 5

204 206

2011/2012 2012/2013£'000 £'000

109 Fees payable to external auditors with regard to external audit services 71 carried out by the appointed auditor for the year

33 Fees payable to external auditors for the certification of grant claims and 16 returns for the year

1 Fees payable in respect of other services provided by external auditors 4during the year

143 91

40. External Audit Costs

39. Members' Allowances

Members' allowances totalling £205,887 were paid in 2012/2013 (2011/2012 £203,999). A detailed list of theallowances paid to each Member can be found on the Council's website and is summarised below:

The Code requires the disclosure of all payments relating to the remuneration of Members, not just those formallydescribed as 'allowances'.

The Council incurred the following costs in relation to the audit of the Statement of Accounts, statutory inspections,certification of grant claims and to non-audit services provided by the Council’s external auditors:

Grant Thornton UK LLP were appointed as the Council's new external auditors during 2012/2013 and took over from the Audit Commission.




31 March 2012 2012/2013 31 March 2013Balance Credited to Used to Finance Movement Balance

Taxation and Capital inNon-Specific Expenditure YearGrant Income in Year

£'000 £'000 £'000 £'000 £'0000 Decent Homes Backlog funding (2,722) 2,722 0 0

(37) Planning Delivery Grant 6 0 6 (31)(221) Performance Reward Grant 92 0 92 (129)(928) Section 106 receipts (351) 134 (217) (1,145)(21) DWP Benefits Software (37) 38 1 (20)

0 Phillips Memorial Park (23) 23 0 00 Godalming Leisure Centre (19) 19 0 00 Other Contributions (15) 10 (5) (5)

(1,207) (3,069) 2,946 (123) (1,330)

Credited to Net Cost of ServicesRevenue Expenditure Funded from Capital Under Statute (REFFCUS)This is funding for spend on non-Council owned assets

2011/2012Received From Capital Total credited

in year Grants RIA to service£'000 £'000 £'000 £'000

(304) Disabled Facilities Grant (336) 0 (336)(4) Environment Agency 0 0 0

(20) S106 Contributions (7) (97) (104)

(328) (343) (97) (440)

Capital Grants Receipts in Advance

31 March 2012 31 March 2013Balance Grant/ Transferred Transferred Balance

Contribution to Non-Specific to Net CostReceived Grant Income of Services

(REFFCUS)£'000 £'000 £'000 £'000 £'000

(587) Section 106 receipts (47) 97 (537)

(587) (47) 0 97 (537)

41. Capital Grants and Contributions Income

2012/2013

The table below shows the capital grants and contributions credited to the Comprehensive Income and ExpenditureStatement in 2012/2013. These were used to finance capital expenditure in the year or transferred to the CapitalGrants Unapplied Account to be used for future financing.

The Council has received a number of grants and contributions that have yet to be recognised as income as they haveconditions attached to them that may require the monies to be returned to the giver. The balances at the year-endare as follows:

2012/2013



Trusts

Members

Pension Fund - is administered by Surrey County Council, details of the Pension Fund are shown in note 45.

Central Government

Main transactions with Government Departments (revenue grants on a cash basis):(includes funding received via Surrey County Council)

2011/2012 2012/2013£'000 £'000

(13,980) Rent Allowances (15,402)(13,117) Rent Rebates (13,773)(6,104) Council Tax Benefit (6,276)(3,416) Non-domestic rate distribution (3,974)

(364) New Homes Bonus (595)(601) Benefits Administration Subsidy (539)(519) Supporting People (446)

Waste recycling (total fund received in year) (277)(221) Council Tax Freeze Grant (222)

Personalisation and Prevention Partnership Funding (150) Troubled Families Funding (80)

(1,056) Revenue Support Grant (77) Welfare reform (71)

(42) Discretionary Housing Payments (66)(21) DEFRA Pollution (60)(55) Local Services Support Grant (used for Homelessness) (50)(85) Countryside Grants (45)(10) Housing Benefits Fraud Initiative 0

Balance of other minor grants received (59)

(39,591) (42,162)

42. Related Parties

The Council is required to disclose material transactions with related parties - bodies or individuals that have thepotential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of thesetransactions allows readers to assess the extent to which the Council might have been constrained in its ability tooperate independently or might have secured the ability to limit another party's ability to trade freely with the Council.

Central Government has effective control over some operations of the Council through legislation. It is responsible forproviding the statutory framework within which the Council operates, provides key funding in the form of grants andprescribes the terms of many of the transactions that the council has with other parties (eg housing benefits). Detailsof the main transactions with Government Departments are set out in the note below.

The Council has substantial interests in the Shottermill Recreation Ground Trust and the Ewart Bequest Trust. Therelevant transactions are disclosed in the Group Accounts.

Members of the Council have direct control over the Council's financial and operating policies. Every Member, ChiefOfficer and Head of Service is required to sign a related party transactions declaration. The Council must disclose anytransaction that is material to either the Council or the organisation or individual with which the transaction tookplace. From the declarations received for 2012/2013, there were no material transactions identified.



The Council's activity as lessee:

Finance LeasesThe Council has no material assets acquired under finance leases as at 31 March 2013.

Operating Leases

The future minimum lease payments due under non-cancellable leases in future years are:

31 March 2012 31 March 2013£'000 £'000

39 Not later than one year 48118 Later than one year and not later than five years 100407 Later than five years 390

564 Total non-cancellable operating leases 538

The Council's activity as lessor:

Finance LeasesThe Council has no material assets over which it has granted a finance lease as at 31 March 2013.

Operating LeasesThe Council leases out land and property under operating leases for the following purposes:

- economic development purposes to provide suitable accommodation for local businesses- the provision of community, leisure and recreation facilities.

The future minimum lease payments receivable under non-cancellable leases in future years are:

31 March 2012 31 March 2013£'000 £'000

873 Not later than one year 8743,102 Later than one year and not later than five years 3,115

55,152 Later than five years 54,310

59,127 58,299

43. Leases

Over the history of the Council it has acquired mainly small areas of land (part of car parking areas and common land)by entering into operating leases. The Council also acquires printers/photocopiers/franking and water machines andstaff cars under operating leases.

A number of pieces of land acquired under operating leases are sub-let out again. The total future minimum non-cancellable sublease payments expected to be received on these subleases is £341,000 (£354,000 as at 31 March2012).

The Council as "lessor" retains the assets in its Balance Sheet and the rental income is credited to revenue as itbecomes due.

The minimum lease payments receivable do not include rents that are contingent on future events, such asadjustments following rent reviews.



31 March 2012 31 March 2013Balance Closing

Balance£'000 £'000

(10) Small Trust Funds (8)(19) Other Small Funds (19)(71) Safer Waverley Partnership (41)

(872) The Ewart Bequest (955)(348) Shottermill Recreation Ground (347)

(1,320) Total Trust Funds and other Funds (1,370)

44. Trust Funds and other Small Funds

The Council acts as Trustee for legacies left by residents of the Borough for a variety of purposes and also administersa few small funds. These are not included in the Balance Sheet as they are unavailable for general use. Thefollowing provides a summary of the total Trust and other small funds administered by the Council. More details areprovided in the Trusts section of this publication.



Participation in Pension Schemes

45. Defined Benefit Pension Schemes

The Council's staff are able to be members of the statutory Local Government Pension Scheme as part of their termsand conditions of employment. Although pension payments will not actually be payable until employees retire, theCouncil has a commitment to make payments at the time that employees earn their future entitlement.

The statutory scheme is administered by Surrey County Council and is a defined benefit scheme, with pensionscurrently based on a proportion of final salaries according to length of service.

The figures disclosed below have been derived by Hymans Robertson, the Actuary to the Surrey Pension Fund, usingapproximate methods from the full actuarial valuation of the Fund carried out in April 2010.

The Actuary has prepared the figures by applying a ‘roll-forward’ approach to the last formal valuation. The statistics,projections and assumptions have been updated, but a full formal valuation has not been carried out. This approachis regarded as appropriate and cost-effective. The next formal valuation will take place as at 31 March 2013, with theoutcome being available towards the end of the year.

In the Council's opinion, the assumptions made by the Actuary, including rates of return on assets, discount rates,inflation and life expectancy are appropriate. There were no special factors regarding the Council’s profile that wouldbe likely to have a material impact upon the Actuary's figures.

Further information relating to Surrey County Council's Pension Fund can be found in the Pension Fund's AnnualReport which is available from Surrey County Council, County Hall, Resources Department, Kingston-Upon-Thames,KT1 2EA (website www.surreycc.gov.uk).



Transactions Relating to Retirement Benefits

2011/2012 2012/2013£'000 £'000

Comprehensive Income and Expenditure Statement

Cost of Services:

1,873 Current Service Cost 1,877

99 Past Service Cost 110

0 Curtailments and Settlements 54

Financing and Investment Income and Expenditure:

5,702 Interest cost 5,353

(5,156) Expected return on assets in the scheme (4,258)546 1,095

2,518 Net Charge to the Comprehensive Income and Expenditure Statement 3,136

Movement in Reserves Statement

General Fund Balance

(2,025) Reversal of net charges made to the Surplus or Deficit for the Provision of (2,506) Services for post-employment benefits in accordance with the code

Actual amount charged against the General Fund Balance:1,936 Employers' contributions payable to scheme 1,918

Housing Revenue Account Balance

(493) Reversal of net charges made to the Surplus or Deficit for the Provision of (630) Services for post-employment benefits in accordance with the code

Actual amount charged against the HRA Balance for pensions in the year:808 Employers' contributions payable to scheme 819

The Council recognises the cost of retirement benefits in the Net Cost of Service when they are earned by employeesrather than when the benefits are eventually paid as pensions. However, the charge required to be shown in theGeneral Fund and Housing Revenue Account is based on the cash payable in the year, so the real cost of retirementbenefits is reversed out via the Movement in Reserves Statement. The following transactions have been made in theComprehensive Income and Expenditure Statement and the General Fund Balance and Housing Revenue AccountBalance via the Movement in Reserves Statement during the year:



Balance Sheet Disclosures

Assets and Liabilities in Relation to Post-employment Benefits

31 March 2012 31 March 2013£'000 £'000

(112,558) Estimated liabilities in scheme (128,224)74,883 Estimated assets in scheme * 85,237

(37,675) Net asset/(liability) * (42,987)

Basis for Estimating Assets and Liabilities

The main assumptions used by the Actuary in the calculations have been:

31 March 2012 31 March 2013

2.5% Rate of Inflation 2.8% Rate of increase in salaries

2.5% Rate of increase in pensions 2.8%4.8% Rate for discounting scheme liabilities 4.5%

Take-up of option to convert annual pension25%/63% into retirement grant 25%/63%

Males FemalesCurrent Pensioners 21.9 years 24.0 yearsFuture Pensioners 23.9 years 25.9 years

The liabilities show the underlying commitments that the Council has in the long run to pay retirement benefits. Theliability of £43million has an impact on the net worth of the Council as recorded in the balance sheet, although itshould be seen in the context of the total Equity figure of £200million. In order to reduce the deficit on the Council'selement of the Fund, the Council is required to make annual backfunding contributions to the Fund.

* The Council's element of the Fund assets as at 31 March 2013 has been reduced from the Actuary's estimate by£524,000 to reflect the actual payments made to the Fund.

Liabilities have been assessed on an actuarial basis using the projected unit method, as required under IAS19. Underthe projected unit method, the current service cost will increase as the members of the scheme approach retirement.

The underlying assets and liabilities for retirement benefits attributable to the Council at 31 March are as follows:

1% until 31.3.15, thereafter 4.8% 1% until 31.3.15, thereafter 5.1%

Life expectancy is based on the Fund's VitaCurves with improvements in line with the Medium Cohort and a 1% paunderpin from 2007. This gives the following average future life expectancies at age 65:

Historic Life expectancy is based on the Fund's VitaCurves, with improvements from 2007 in line with the mediumcohort and a 1% pa underpin.

Assets in the County Council Pension Fund are valued at bid value as required under IAS19. The figures for theCouncil represent a proportionate share of the Fund as a whole.



Long-term Assets Long-term Assetsreturn £'000 return £'000% pa % pa

6.3% 55,026 Equity investments 4.5% 65,178

3.9% 13,568 Bonds 4.5% 15,437

4.4% 4,523 Property 4.5% 4,288

3.5% 2,261 Cash 4.5% 858

75,378 85,761

Revenue Account Costs

Actuary's Estimated Movements in Deficit during the Year

2011/2012 2012/2013£'000 £'000

(29,323) Deficit at beginning of Year (37,180)(1,873) Current Service Cost (1,877)

(99) Past Service Cost (110)2,603 Employer Contributions 2,588

168 Contributions in respect of Unfunded Benefits 1780 Impact of Settlements and Curtailments (54)

(546) Net Return on Assets (1,095)(8,110) Actuarial gains/(losses) (4,913)

(37,180) Deficit at end of Year (42,463)

Reconciliation of Defined Benefit Obligation - Estimated by Actuary

2011/2012 2012/2013£'000 £'000

104,757 Defined Benefit Obligation at beginning of Year 112,5581,873 Current Service Cost 1,877

99 Past Service Cost (Gains) 1100 Losses on Curtailments 54

5,702 Interest Cost 5,3534,315 Actuarial Losses (Gains) 12,404

639 Member Contributions 624(4,659) Estimated Benefits Paid (4,578)

(168) Estimated Unfunded Benefits Paid (178)112,558 Defined Benefit Obligation at end of Year 128,224

31 March 2012 31 March 2013

The Council, having taken the advice of the Actuary, has set the expected returns on assets as shown. The expectedreturn from 1.3.13 is equal to the discount rate in accordance with revisions to IAS19.



Reconciliation of Fair Value of Employer Assets - Estimated by Actuary

2011/2012 2012/2013£'000 £'000

75,434 Fair Value of Employer Assets at beginning of Year 75,3785,156 Expected Return on Assets 4,258

(3,795) Actuarial Gains (Losses) 7,4912,603 Employer contributions 2,588

168 Contributions in respect of Unfunded Benefits 178639 Member Contributions 624

(4,659) Estimated Benefits Paid (4,578)(168) Estimated Unfunded Benefits Paid (178)

75,378 Fair Value of Employer Assets at end of Year 85,761

Recognition in the Profit or Loss

% of pay £'000 % of pay £'000

20.0% 1,873 Current Service Cost 20.0% 1,877

60.8% 5,702 Interest Cost 56.4% 5,353

-55.0% (5,156) Expected Return on Employer Assets -45.0% (4,258)

1.1% 99 Past Service Cost 1.2% 110

0.0% 0 Losses on Curtailments and settlements 0.6% 54

26.9% 2,518 Total 33.2% 3,136

Summary of Scheme Position over past Five Years - Actuarial Figures

31 March 2009 31 March 2010 31 March 2011 31 March 2012 31 March 2013£'000 £'000 £'000 £'000 £'000

Fair Value of Assets 51,760 73,429 75,434 75,378 85,761Less Present Value of Liabilities 82,174 117,483 104,757 112,558 128,224Surplus/(Deficit) in Scheme (30,414) (44,054) (29,323) (37,180) (42,463)

31 March 2012 31 March 2013



Actuarial Gains and Losses

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013£'000 £'000 £'000 £'000 £'000

Differences between the expected and actual return on assets (20,970) 18,514 (3,112) (3,795) 7,491Value of Assets 51,760 73,429 75,434 75,378 85,761Percentage of Assets -40.5% 25.2% -4.1% -5.0% 8.7%

Differences between actuarialassumptions about liabilitiesand actual experience 38 (148) 6,016 (4,315) (12,404)Total Present Value of Liabilities 82,174 117,483 104,757 112,558 128,224Percentage of the Total Present Value of Liabilities 0.0% -0.1% 5.7% -3.8% -9.7%

Actuarial Gains/(Losses) recognised in CIES (13,902) (12,965) 2,904 (8,110) (4,913)Total Present Value of Liabilities 82,174 117,483 104,757 112,558 128,224Percentage of the Total PresentValue of Liabilities -16.9% -11.0% 2.8% -7.2% -3.8%

Cumulative Actuarial Gains and (Losses)Cumulative at beginning of year (540) (14,442) (27,407) (24,503) (32,613)recognised in CIES for yr (13,902) (12,965) 2,904 (8,110) (4,913)Cumulative Actuarial Loss (14,442) (27,407) (24,503) (32,613) (37,526)

Analysis of Actuarial Gains/(Losses) recognised in Comprehensive Income and Expenditure Statement

2010/2011 2011/2012 2012/2013£'000 £'000 £'000

Actual Return less Expected Return on Pension Scheme Assets (3,112) (3,795) 7,491Experience Gains and (Losses) Arising on the Scheme Liabilities 6,016 (4,315) (12,404)Changes in Assumptions compared with the previous report 0

Actuarial Gain/(Loss) Recognised in CIES 2,904 (8,110) (4,913)

Projected Pension Expense for the Year to 31 March 2014

% of pay £'000 Projected Current Service Cost 25.1% 2,279 Interest on Scheme Obligations 63.1% 5,728 Expected Return on Employer Assets -42.2% (3,827) Past Service Cost 0.0% 0 Losses on Curtailments and Settlements 0.0% 0 Total 46.0% 4,180

The actuarial gains identified as movements on the Pension Reserve during past five years and analysed into thefollowing categories, measured as absolute amounts and as a percentage of assets and liabilities at the year end:

The Actuary estimates the Council's Employer's Contributions for the Year to 31 March 2014 will be £2,506,000.The Council's Budget for 2013/2014 includes £2,730,800 for total Employer's Contributions to the Pension Fund.

31 March 2014



Sensitivity Analysis

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:

Change in Assumptions at year ended 31 March 2013 Approximate % increase Amountto Employer Liability £'000

0.5% decrease in Real Discount Rate 9% 11,409

1 year increase in Member Life Expectancy 3% 3,847

0.5% increase in the Salary Increase Rate 2% 2,651

0.5% increase in the Pension Increase Rate 7% 8,651



1 April 2010 2010/2011 2011/2012 2012/2013£'000 £'000 £'000 £'000

Cost of acquisitions of heritage assetsArt Collection 12 0 0 0Phillips Memorial Park restoration expenditure * 0 0 113 23Other 0 8 7 0

Valuation of heritage assetsArt Collection 130 142 327 327Phillips Memorial Park 274 274 282 294Museum of Farnham Collection 307 307 307 303Other 363 363 372 388

Total 1,086 1,094 1,408 1,335

Phillips Memorial Park

Preservation and Management

46. Heritage Assets: Five -year Summary of Transactions

47. Heritage Assets: Further information

In July 2011, the Heritage Lottery Fund/The Big Lottery Fund announced that funding had been awarded for a fiveyear programme of restoration and enhancement works to commemorate the one hundredth anniversary of thesinking of the Titanic.

The Phillips Memorial Park is named after Jack Phillips, who, as well as being a resident of Farncombe, was ChiefWireless Telegraphist on the Titanic and stayed at his post to broadcast distress messages while the ship sank on15 April 1912. The park includes a Memorial Cloister which was built in 1913 to commemorate his selfless act.

The Code of Practice on Local Authority Accounting requires the Council to give a summary of transactions relatingto heritage assets for the accounting period and the previous four accounting periods. However, this informationneed not be provided where it is not practicable to do so for accounting periods beginning before 1 April 2010. Assuch the Council is only providing this information from 1 April 2010.

* The restoration expenditure on the Philips Memorial Park was funded by grant from the Heritage LotteryFund/The Big Lottery Fund.

The Code of Practice on Local Authority Account requires additional disclosures in relation to Heritage Assets.



Museum of Farnham

Preservation and Management

Other Heritage Assets

At 31 March 2013 the Council has no material contingent liabilities or contingent assets.

48. Contingent Liabilities and Contingent Assets

The basis of the Museum collection is social history material found in, produced in, or closely associated with,Farnham and its surrounding villages. The Museum of Farnham (managed by the Farnham Maltings AssociationLimited from 5 April 2012) charts the town's history through its collection. The collection includes fine art,costume, archaeology, photography and other artefacts relating to the local area.

Acquisition procedures: The Museum has procedures in place to ensure that acquisitions are acquired legallyand ethically and in line with the mission statement objectives of the Museum as approved by the Curator of theMuseum.

Disposal procedures: in accordance with the Museum's long-term purpose to hold permanent collections, exceptfor sound curatorial reasons, there is a strong presumption against the disposal of any items in the collection.However the museum is free to dispose of any item following due consideration and its policy on disposal. Adecision to dispose of an item, whether by gift, exchange, sale or destruction (in the case of an item too badlydamaged or deteriorated), is the responsibility of the governing body of the Museum acting on the advice ofprofessional curatorial staff.

The Museum will continue to collect social history material that has a strong association with Farnham or itsimmediate vicinity.

The Museum recognises its responsibility in acquiring additions to its collections, to ensure that care of collections,conservation, documentation arrangements and appropriate use of collections will meet the requirements of theAccreditation Standard. It takes into account limitations on collecting imposed by such factors as inadequatestaffing, storage, arrangements for care of the collection and conservation resources. The Museum also has a PestManagement Plan in place to safeguard the collection from the threat of pests.

The other heritage assets held on the Balance Sheet are managed and preserved in line with the Council's generalduty of care and stewardship of the Borough's assets.





Supplementary Financial Statements

Housing Revenue Account (HRA)

Collection Fund



Housing Revenue Account Income and Expenditure Statement

2011/2012£'000 £'000 £'000

Expenditure4,150 Repairs and Maintenance 3,9512,543 Supervision and Management - General 2,668

925 - Special 93353 Rent, Rates, Taxes and other charges 99

788 Negative Subsidy transfer to General Fund 53211,859 Negative Subsidy Payable (including MRA element) 0

37 Transitional funding of Supporting People 264,965 Depreciation and Impairment of Non-Current Assets (MRA Equivalent - Note 5) 5,700

64 Debt Management Costs 1250 Movement in the allowance for Bad Debts 0

25,434 Total Expenditure 13,921

Income (25,407) Gross Dwelling rents (26,777)

342 Less: voids 409 (25,065) (26,368)

(308) Non-Dwelling Rents (341) (668) Charges for services and facilities (648) (57) Contributions towards expenditure (19)

(26,098) Total Income (27,376)

(664) (13,455)

0 Exceptional Item - Upward revaluation reversing previous loss on Non Current Assets * (14,705)188,797 Exceptional Item - Settlement payment to the Secretary of State (see page 6) -

371 HRA services share of Corporate and Democratic Core 413

188,504 Net Expenditure or Income of HRA Services (27,747)

HRA share of the operating income and expenditure included in the wholeauthority Comprehensive Income and Expenditure Statement:

(1,481) (Gain)/Loss on disposal for HRA non-current assets (1,235)224 Interest payable and similar charges 5,836 (23) Interest and Investment income (76) (55) Investment Properties 113 111 Pensions Interest Cost and Expected return on Pensions Assets 232

0 Government Grant towards revenue expenditure (80)13 Capital Grants and Contributions (2,722)

187,293 (Surplus)/Deficit for the year on HRA Services (25,679)

Notes to the Housing Revenue Account are contained in pages 100-107

2012/2013

The HRA Income and Expenditure Statement shows the economic cost in the year of providing housing services inaccordance with generally accepted accounting practices, rather than the amount to be funded from rents andgovernment 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 of which rents are raised, isshown in the Movement on the Housing Revenue Account Statement.

Net Expenditure or Income of HRA Services as included in the whole authority Comprehensive Income and Expenditure Statement



Movement on the Housing Revenue Account (HRA) Statement

2011/2012 2012/2013£'000 £'000

(2,118) Balance on the HRA as at the end of the previous reporting period (2,200)

187,293 (Surplus)/Deficit on the HRA Income and Expenditure Statement (25,679)

(187,410) 19,404

(117) Net (increase) or decrease before transfers to or from reserves (6,275)

35 Transfers to or (from) reserves 5,811

(82) (Increase) or decrease in year on the HRA (464)

(2,200) Balance on the HRA at the end of the current reporting period (2,664)

* The basis of valuation for dwelling stock is Existing Use Value (EUV) with a downward adjustment to reflect the useof properties for social housing. In 2010/2011 the Government revised the adjustment resulting in a considerable lossin the value of the dwelling stock. This downward revaluation was charged to the Net Expenditure or Income of ofHRA Services (although reversed out through the Movement on the HRA Statement). The current valuation of thestock shows an improvement in value and, therefore, this upward revaluation for 2012/2013 has also been putthrough Net cost of HRA services to partly offset the loss previously recognised rather than taken to the RevaluationReserve.

Adjustments between accounting basis and funding basis under the legislative framework (note 4)



Notes to the Housing Revenue Account

1. Housing Revenue Account - Asset Analysis

As at1 April 2012

Re-classifications

Additions DisposalsAs at

31 March 2013

Property, Plant and EquipmentCouncil Dwellings 4,946 (39) (16) 4,891 Other Land and Buildings 707 (1) 706 Surplus Assets 2 3 (2) 3

5,655 (37) 0 (18) 5,600

Investment Properties 7 7 Assets Held for Sale 1 3 (1) 3

Total HRA Assets 5,663 (34) 0 (19) 5,610

As at1 April 2011

Re-classifications

Additions DisposalsAs at

31 March 2012

Property, Plant and EquipmentCouncil Dwellings * 4,962 (10) (6) 4,946 Other Land and Buildings 715 (7) (1) 707 Surplus Assets * 4 (2) 2

5,681 (19) 0 (7) 5,655

Investment Properties 7 7 Assets Held for Sale * 0 4 (3) 1

Total HRA Assets 5,688 (15) 0 (10) 5,663

Total Property, Plant and Equipment

Total Property, Plant and Equipment

* 4 lettable units at Windrush House have been reclassified as a single Asset Held for Sale and 4 at Hillside flats have been reclassified as a single Surplus Asset.

Movements in 2012/2013 Number of Assets

Movements in 2011/2012 Number of Assets




Council Dwellings

Other Housing Land &

Buildings

Vehicles, Plant and

Equipment

Total Housing Property, Plant and Equipment (not including

Surplus)

Surplus Housing Assets

£'000 £'000 £'000 £'000 £'000Cost or ValuationAt 1 April 2012 296,484 3,785 7 300,276 387

(129) (129) (3)

Adjusted 1 April 2012 balance 296,484 3,656 7 300,147 384 Additions/enhancements 9,088 9,088

88 88

10,978 10,978

Derecognition Disposals (978) (978) (112) (112) (384)

Other Reclassifications (1,706) (305) (2,011) 2,011 At 31 March 2013 313,754 3,439 7 317,200 2,011

Depreciation and ImpairmentsAt 1 April 2012 (3,727) (396) (2) (4,125) (9)

129 129 3

Adjusted 1 April 2012 balance (3,727) (267) (2) (3,996) (6)Charge for 2012/2013 (5,441) (135) (1) (5,577)

266 266

3,727 3,727

(20) (20)

(123) (123)

1 1 6 Reclassifications 42 42 (42)At 31 March 2013 (5,418) (259) (3) (5,680) (42)

308,336 3,180 4 311,520 1,969

Depreciation written out on revaluation to Net Cost of HRA Services



Adjustments between cost/value and depreciation/ impairment

Revaluation Increases/(decreases) recognised in the Net Cost of HRA Services

Adjustments between cost/value and depreciation/ impairment

Impairment (losses)/reversals recognised in the Net Cost of HRA Services

Revaluation increases/(decreases) recognised in the Revaluation Reserve

Impairment (losses)/reversals recognised in the Revaluation Reserve

Depreciation written out to the Revaluation Reserve





Council Dwellings

Other Housing Land &

Buildings

Vehicles, Plant and

Equipment

Total Housing Property, Plant and Equipment (not including

Surplus)

Surplus Housing Assets

£'000 £'000 £'000 £'000 £'000Cost or ValuationAt 1 April 2011 298,477 3,806 7 302,290 573 Additions/enhancements 3,435 6 3,441

(4,597) (4,597)

Derecognition Disposals (391) (391)Reclassifications (440) (27) (467) (186)At 31 March 2012 296,484 3,785 7 300,276 387

Depreciation and ImpairmentsAt 1 April 2011 (3,622) (134) (1) (3,757) (9)Charge for 2011/2012 (3,727) (133) (1) (3,861) (5)

3,622 3,622

(129) (129) (3)

Derecognition Disposals 0 7 Reclassifications 0 1 At 31 March 2012 (3,727) (396) (2) (4,125) (9)

292,757 3,389 5 296,151 378

General Notes

Valuation of Council Dwellings and other HRA Land and Buildings

Additions to the Council Dwellings category represent the capital expenditure in the year on the housing stock.


Impairment losses/ (reversals) recognised in the Surplus/Deficit on the Provision of Services

Depreciation written out on revaluation to Net Cost of HRA Services

Revaluation increases/ (decreases) recognised in the Net Cost of HRA Services

All of the Council's HRA assets were revalued for the purposes of Resource Accounting and Rent Restructuring. TheDistrict Valuer carried out a desktop revaluation as at 1 April 2012 in accordance with Government guidelines to takeplace between the full revaluations every five years. The basis of valuation is Existing Use Value (EUV) with adownward adjustment to reflect the use of the properties for social housing.

Asset disposals have been written out at their book value. In the year, 12 properties were sold through right-to-buy,two sales on the open market, three shared-ownership properties were staircased to 100% and one rent to mortgageproperty was sold outright . The result of these and other small transactions was a gain of £1,234,950 on disposal ofHRA assets as shown on the face of the HRA Income and Expenditure Statement.



Investment Property

The Housing Revenue Account investment property portfolio comprises of mainly business premises.

2011/2012 2012/2013£'000 £'000

(29) Rental Income (77) (26) Changes in fair value 190

(55) 113

Movement on Investment Property

2011/2012 2012/2013£'000 £'000

778 Balance at start of the year 804 26 Net gains or losses from fair value adjustments (190)

804 Balance Sheet amount at 31 March 2013 614

Investment properties are valued at fair value and are not subject to depreciation.

Assets Held for Sale

See note 28 on page 66 for the Balance Sheet value of HRA Assets Held for Sale.

2. Investment Property and Assets Held for Sale

An investment property is one that is used solely to earn rentals or for capital appreciation or both. Property that isused to facilitate the delivery of services as well as to earn rentals or for capital appreciation does not meet thedefinition of an investment property and is accounted for as property, plant and equipment.

The following items of income and expense have been accounted for in the Investment Properties line in the HousingRevenue Account Income and Expenditure Statement:

The Council's ability to realise the value inherent in its investment property has, in some circumstances, beenrestricted by the existence of leases. However, there are no restrictions on the Housing Revenue Account's right tothe remittance of income and the proceeds of disposal.

The Housing Revenue Account has no contractual obligations to purchase, construct or develop investment property orfor repairs, maintenance or enhancement.

The following table summarises the movement in the fair value of investment properties for the year.



1 April 2012 1 April 2013£'000 £'000

914,368 General Stock (including Fully Sheltered Dwellings) and Shared Ownership 959,329

914,368 959,329

Explanation of the Vacant Possession Valuation

4. Reconciling items for the Statement of Movement on the Housing Revenue Account

2011/2012 2012/2013£'000 £'000

1. Adjustments between accounting basis and funding basis under regulations

Transfers to/from the Capital Adjustment Account (CAA) (134) Depreciation on other HRA Assets (136)

(3,727) Depreciation on Council Dwellings (equal to MRA) (5,441) (1,104) Reversal of impairment charge HRA Assets 0

0 Reversal of upward revaluation reversing previous loss 14,705 (188,797) Reversal of Settlement Payment to Secretary of State 0

26 Reversal of movements in the fair value of Investment Properties (190)

Net of Gain/(Loss) on disposal of HRA non-current assets (806) Amount of non-current assets written off on disposal to CAA (1,064)2,287 Sale proceeds (credited to the Capital Receipts Reserve) 2,299 1,481 1,235

3,727 Transfer depreciation to the Major Repairs Reserve 5,577816 Capital charged against the HRA balance 743 (13) Capital Grants and Contributions applied to capital expenditure 2,722

(493) Net charges made for retirement benefits in accordance with IAS19 (630)808 Actual amount charged against the HRA Balance for pensions in the year 819

(187,410) 19,404

2. Transfers to / from Earmarked Reserves0 Transfer to New Affordable Homes Reserve 2,728 0 Transfer to Stock Improvement Reserve 2,926

35 Net Contribution to Uninsured Loss Reserve 77 0 Transfer to Revenue Grants Earmarked Reserve 80

35 5,811

3. The vacant possession value of dwellings within the Council's HRA

The vacant possession valuation is based on the assumption that the property will be sold with vacant possession andnot for social housing purposes. The difference between the valuation that appears in Waverley's ConsolidatedBalance Sheet, which is based on the assumption that properties will be sold for social housing purposes, and thevacant possession valuation reflects the notional economic cost of holding council housing at less than market rents.



5. Analysis of the movement on the Major Repairs Reserve (MRR) during the year

2011/2012 2012/2013£'000 £'000

0 Balance Brought Forward as at 1 April (2,666) (3,861) Transfer into the MRR (equal to depreciation of HRA Assets) (5,577)

(776) Additional capital contribution from revenue 0 1,837 MRA Capital Expenditure: Dwellings 5,441

134 Reversal of depreciation on non-dwellings 0 (2,666) Movement in Year (136)

(2,666) Balance Carried Forward as at 31 March (2,802)

An Explanation of the Major Repairs Reserve

6. Analysis of movement on the Repairs and Maintenance Fund

2011/2012 2012/2013£'000 £'000

(363) Balance Brought Forward as at 1 April (363)0 Contribution to/(from) Revenue Expenditure 0

(363) Balance Carried Forward as at 31 March (363)

7. Summary of total HRA capital expenditure during the year and its financing

2011/2012 2012/2013£'000 £'000

Capital Investment3,435 Council Dwellings 9,088

6 Other land and buildings 0 3,441 9,088

Sources of finance

0 Revenue Contribution 743 0 Decent Homes Backlog Funding Grant 2,722

1,604 Capital Receipts 182 1,837 Major Repairs Reserve 5,441

3,441 9,088

To meet the Accounts and Audit Regulations requirements the Major Repairs Reserve is credited and the HRA balanceis debited with a sum equal to HRA depreciation. Following the start of self-financing in 2012/13, for a transitionalperiod of up to five years, guidance allows the former MRA calculation to be used as a reasonable estimated measureof depreciation on dwelling stock . For Accounting purposes, the Council currently accepts that the MRA is areasonable estimate of depreciation and depreciates the HRA dwelling stock in line with the MRA calculation.

The Council's Repairs and Maintenance Fund is used to finance revenue repairs expenditure during years whereplanned maintenance projects slipped from one financial year into the next. The balance on the Repairs andMaintenance Fund comprises part of the total HRA working balance.



8. Capital Receipts received in year

2011/2012 2012/2013£'000 £'000

542 Right-to-Buy 1,455

1,761 Other Buildings 851

5 Land 0

2,308 2,306

9. Breakdown of Housing Subsidy

2011/2012 Housing Subsidy Calculation 2012/2013£'000 £'000 £'000

Housing Element Entitlement:Expenditure

7,711 Management and Maintenance Element 0 3,727 Major Repairs Allowance 0

283 Charges for Capital 0 11,721 0

Income (1) Interest on Receipts 0

(23,579) Guideline Rent Income 0 (23,580) 0

(11,859) Total (Negative) Housing Subsidy for Year 0

11,859 Negative Subsidy to Central Pool 0

788 Negative Subsidy transfer to General Fund (Rent Rebates) 532

12,647 Total Negative Subsidy charge to HRA for Year 532

With the start of the HRA Self-Financing regime for local authority housing in 2012/2013 the HRA Subsidy system nolonger exists.

However, the requirement to pay the General Fund a rent rebate penalty remains as part of the self-financing system.It is calculated on the basis of actual average rent levels compared to Government guideline average rent levels. TheGeneral Fund does not benefit from this accounting arrangement because it has to show equivalent expenditure to thetransferred sum.



10. The amount of Rent Arrears

As at 31 March 2013Arrears % of annual

debitGross Annual

DebitArrears % of annual

debit£'000 £'000 £'000

HRA281 1.0% Housing Stock 29,339 342 1.2%

2 1.1% Shared Ownership 175 4 2.3%283 1.0% 29,514 346 1.2%

General Fund1 1.9% Leased/Miscellaneous Properties 0 0 0.0%1 1.9% 0 0 0.0%

284 1.0% Total Arrears 29,514 346 1.2%

(31 March 2012 £146,348)

11. Pensions

2011/2012 2012/2013£'000 £'000

808 Reinstatement of actual Pension costs charged to the HRA in year 819 (493) Reversal HRA Proportion of Current Service Cost (from Actuary's report) (630)

315 189

During the year Pension costs are charged to services but, in accordance with IAS19, these postings are reversed andCurrent Service Costs (as estimated by the Actuary) are 'charged' to the services. The HRA net cost of servicesreflects these adjustments. The adjustments must be reversed out in order to agree to the actual pension-relatedcharges made in the year. The following shows a summary of the reversal of those adjustments:

The payment representing the cost of backfunded pensions for HRA staff is included in the reinstated amount above.As the Council's part of the Pension Fund is reported on at a corporate rather than service level, the Actuary is notable to break the Fund down to show the HRA and General Fund elements in detail.

As at 31 March 2012

As at 31 March 2013, the balance of HRA provision for irrecoverable rent arrears was £140,253



The Collection Fund Income and Expenditure Account

2011/2012 2012/2013£'000 Income £'000 £'000 £'000

(77,736) Council Tax collectable (80,106)(32) 2011/2012 Council Tax credit balances (117)

(6,044) Transfers from General Fund - Council Tax Benefit (6,165)(33,412) Business Rates Collectable (note 2) (34,859)

(117,224) Total Income (121,247)

Expenditure

Council Tax Precepts and Demands61,658 Surrey County Council 63,055

Share of estimated 2011/2012 surplus 661 63,716

10,966 Surrey Police Authority 11,160Share of estimated 2011/2012 surplus 118 11,278

8,851 Waverley Borough Council 8,882118 Share of estimated 2011/2012 surplus 121

2,327 Parishes 2,426 11,42983,920 86,423

50 Transfer to Allowance for Bad/Doubtful Council Tax Debts 243

Business Rates33,228 Payment to National Pool 34,677

184 Transfer to General Fund - Cost of Collection 182

117,382 Total Expenditure 121,525

158 Movement in year before appropriations 278

Appropriations(928) Fund balance brought forward at 1 April 2012 - Council Tax (770)

(770) Fund Balance at 31 March 2013 * (492)

* See note 4 for the allocation of the surplus

The Collection Fund is a statement that reflects the statutory obligation for billing authorities, such as Waverley, tocollect and redistribute revenue on behalf of other bodies. The statement shows the transactions of the billingauthority in relation to these obligations including collection of council tax and non distributed rates anddistribution to local authorities and the Government of council tax and non-domestic rates.



Notes to the Collection Fund Accounts

1. Council Tax Base

2011/2012 Band D 2012/2013 Band DChargeable Band D Average Ratio to Chargeable Band D Average Dwellings equivalents Council Tax Band D Dwellings equivalents Council Tax

£ Band £0.75 0.4 - A (Disabled Relief) 5/9 0.75 0.4 -

707.00 466.6 1,012.92 A 6/9 693.00 457.4 1,039.52 2,565.00 1,975.1 1,181.74 B 7/9 2,576.00 1,983.5 1,212.77 7,928.25 6,976.9 1,350.56 C 8/9 7,973.25 7,016.4 1,386.03

10,799.50 10,691.4 1,519.38 D 9/9 10,822.75 10,714.5 1,559.28 8,329.25 10,078.4 1,857.02 E 11/9 8,339.50 10,090.8 1,905.79 6,154.75 8,801.3 2,194.66 F 13/9 6,182.00 8,840.3 2,252.29 7,399.75 12,209.6 2,532.30 G 15/9 7,422.00 12,246.3 2,598.80 1,743.75 3,452.6 3,038.76 H 18/9 1,766.25 3,497.2 3,118.56

45,628.00 54,652.3 45,775.50 54,846.8

2. Business Rates

3. Write-offs of Bad Debts

For tax-setting purposes, the number of dwellings in each valuation band, converted to Band D equivalents and allowingfor a collection rate of 99.0%, was estimated to be as follows:-

Individual charges are calculated by estimating the amount of income required to be paid from the Collection Fund inthe year to the Surrey Police Authority, Surrey County Council, Borough and Parish Councils (£85,523,404), dividing thisby the total Band D equivalents shown above (54,846.8) and rounding for administrative purposes. The resultantaverage charge at Band D of £1,559.28 is then multiplied by the proportion specified for a particular band to give anindividual amount due.

Under the arrangements for Business Rates (also known as National Non-Domestic Rates) the Council, acting as agentfor Central Government, bills and collects rates from businesses within the Waverley area.

Council Tax arrears of £250,341.27 were written off to the Allowance for Bad Debts in 2012/2013 compared with write-offs amounting to £14,116.97 in 2011/2012.

There are two multipliers: the standard non-domestic rating multiplier and the small business non-domestic ratingmultiplier. The former is higher to pay for small business rate relief. In 2012/2013 the standard national rate multiplierwas 45.8p (2011/2012 43.3p) and the small business multiplier was 45.0p (2011/2012 42.6p).

The total rateable value of business premises in Waverley as at 31 March 2013 was £96,192,909 (compared with£96,217,637 on 31 March 2012). The amount collected locally based on this rateable value and the appropriatepoundage and paid over to the national pool after deducting various reliefs and allowances is shown in theComprehensive Income and Expenditure Statement. The sum received from the national pool is paid directly to theGeneral Fund and is shown in the Comprehensive Income and Expenditure Statement and is based on a standardamount per head of relevant population.

The amount due to be paid is calculated by multiplying the rateable value of the property by the appropriate multiplier,or "poundage".



4. Allocation of Year-End Balance

Waverley Surrey Surrey TotalBorough County PoliceCouncil Council Authority

£ £ £ £

Share of £600,000 surplus 79,344 442,355 78,301 600,000

Share of £107,631.75 overpaid (14,136) (79,435) (14,061) (107,632)

Net share of outturn 65,208 362,920 64,240 492,368

The opening balance for the Collection Fund for 2012/2013 was a £770,679 surplus. Based on the estimated position inJanuary 2012 £900,000 surplus was distributed to the major preceptors in 2012/2013.

By the end of the 2012/2013 financial year, there was a £492,368.25 surplus on the Collection Fund. £600,000 will bedistributed to the major preceptors during 2013/2014 in proportion to their demand on the fund in 2012/2013. Theoverpayment of £107,631.75 will be recovered from major preceptors in 2014/2015 in proportion to the 2013/2014demands on the Collection Fund.



Group Movement in Reserves Statement

Group Comprehensive Income and Expenditure Statement

Group Balance Sheet

Group Cash-Flow Statement

Shottermill Recreation Ground Trust

Ewart Bequest

Group Account Statements



Movement in Reserves Statement 2011/2012 - comparative information

This statement combines the single Movement in Reserves Statement on page 12 with the transactions relating to subsidiaries as detailed on pages 134 to 137.

General Revenue Earmarked Housing Earmarked Major Capital Capital Total Total Total Trust TotalFund Reserve General Revenue HRA Repairs Receipts Grants Usable Unusable Authority Reserves Group

Balance Fund Fund Account Reserves Reserve Reserve Unapplied Reserves Reserves Reserves ReservesNote Reserves Account See note G10 See note G10

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Balance at 31 March 2011 (4,053) (2,735) (3,545) (2,118) (584) 0 (8,198) (1,124) (22,357) (344,502) (366,859) (9,892) (376,751)

Movement in reserves during 2011/2012(Surplus) or deficit on provision of services (4,513) 187,293 182,780 182,780 (1,206) 181,574

Other Comprehensive Income and Expenditure 7 0 5,385 5,385 (514) 4,871

(4,513) 0 0 187,293 0 0 0 0 182,780 5,385 188,165 (1,720) 186,445

0 0 0 0

(4,513) 0 0 187,293 0 0 0 0 182,780 5,385 188,165 (1,720) 186,445

Adjustments between accounting basis and funding basis under regulations

8 4,222 (187,410) (2,666) 929 (83) (185,008) 185,008 0 0

(291) 0 0 (117) 0 (2,666) 929 (83) (2,228) 190,393 188,165 (1,720) 186,445

Transfers to/(from) Earmarked Reserves 9 117 (91) (26) 35 (35) 0 0 0

Increase/Decrease in Year (174) (91) (26) (82) (35) (2,666) 929 (83) (2,228) 190,393 188,165 (1,720) 186,445

Balance at 31 March 2012 (carried forward) (4,227) (2,826) (3,571) (2,200) (619) (2,666) (7,269) (1,207) (24,585) (154,109) (178,694) (11,612) (190,306)

Adjustments between Group Accounts & Authority Accounts

Usable Reserves

Total Comprehensive Income and Expenditure

Net (Increase)/Decrease before transfers




This statement combines the single Movement in Reserves Statement on page 13 with the transactions relating to subsidiaries as detailed on pages 134 to 137.

General Revenue Earmarked Housing Earmarked Major Capital Capital Total Total Total Trust TotalFund Reserve General Revenue HRA Repairs Receipts Grants Usable Unusable Authority Reserves Group

Balance Fund Fund Account Reserves Reserve Reserve Unapplied Reserves Reserves Reserves ReservesNote Reserves Account See note G10 See note G10

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Balance at 31 March 2012 (4,227) (2,826) (3,571) (2,200) (619) (2,666) (7,269) (1,207) (24,585) (154,109) (178,694) (11,612) (190,306)

Movement in reserves during 2012/2013(Surplus) or deficit on provision of services 2,728 (25,679) (22,951) (22,951) 113 (22,838)

Other Comprehensive Income and Expenditure 7 0 1,608 1,608 0 1,608

Total Comprehensive Income and Expenditure 2,728 0 0 (25,679) 0 0 0 0 (22,951) 1,608 (21,343) 113 (21,230)

0 0 0 0

2,728 0 0 (25,679) 0 0 0 0 (22,951) 1,608 (21,343) 113 (21,230)

Adjustments between accounting basis and funding basis under regulations

8 (2,305) 19,404 (136) (1,891) (123) 14,949 (14,949) 0 0

423 0 0 (6,275) 0 (136) (1,891) (123) (8,002) (13,341) (21,343) 113 (21,230)

Transfers to/(from) Earmarked Reserves 9 (610) (582) 1,192 5,811 (5,811) 0 0 0

Increase/Decrease in Year (187) (582) 1,192 (464) (5,811) (136) (1,891) (123) (8,002) (13,341) (21,343) 113 (21,230)

Balance at 31 March 2013 (carried forward) (4,414) (3,408) (2,379) (2,664) (6,430) (2,802) (9,160) (1,330) (32,587) (167,450) (200,037) (11,499) (211,536)

Net (Increase)/Decrease before transfers


Adjustments between Group Accounts & Authority Accounts

Movement in Reserves Statement 2012/2013

Usable Reserves



Group Comprehensive Income and Expenditure Statement

2012/2013Gross Gross Net Gross Gross Net

Expenditure Income Expenditure Expenditure Income Expenditure£'000 £'000 £'000 £'000 £'000 £'000

Continuing Operations8,346 (7,378) 968 Central Services to the Public 8,413 (7,457) 9562,426 (757) 1,669 Cultural and Related Services 5,198 (778) 4,4208,320 (2,201) 6,119 Environmental & Regulatory Services 6,405 (1,842) 4,5635,183 (2,352) 2,831 Planning Services 5,917 (2,667) 3,2501,459 (3,780) (2,321) Highways and Transport Services 1,642 (3,837) (2,195)

25,434 (26,098) (664) Housing Revenue Account 13,921 (27,376) (13,455)

188,797 0 188,797HRA Settlement payment to the Government for HRA self-financing

0 0 0

0 0 0HRA Dwelling stock upward revaluation reversing previous loss

(14,705) 0 (14,705)

30,667 (29,430) 1,237 Other Housing Services 32,513 (31,365) 1,1481,030 (483) 547 Adult Social Care 949 (703) 2462,964 (453) 2,511 Corporate and Democratic Core 2,719 (111) 2,608

611 (487) 124 Non-Distributed Costs 1,847 (489) 1,358

275,237 (73,419) 201,818 Net Cost of Services 64,819 (76,625) (11,806)

Other Operating Expenditure2,327 Precepts of Parish/Town Councils 2,426

445 Contribution of housing capital receipts to Government Pool 446

(1,679) (Gain)/Loss on disposal of non-current assets (1,172)

Financing and Investment Income and Expenditure224 Interest payable and similar charges 5,668

546 Pension Interest Cost & Expected Return on Pension Assets 1,095

(433) Interest and Investment Income (323)

(5,053) Investment Properties 413

Taxation and Non-Specific Grant Income(11,275) Income from Council Tax (11,390)

(1,641) General Government grants (1,152)

(3,416) Non-domestic rate distribution (3,974)

(289) Capital grants and contributions (3,069)

181,574 (Surplus)/Deficit on Provision of Services (22,838)

(3,239) (Surplus)/deficit on revaluation of non-current assets (note G4.) (3,305)

8,110 Actuarial (gains)/losses on Pension Fund Assets & Liabilities 4,913

4,871 Other Comprehensive Income & Expenditure 1,608

186,445 Total Comprehensive Income & Expenditure (21,230)

2011/2012

The Statement shows the net expenditure of the single entity Comprehensive Income and Expenditure Account on page14 together with the transactions relating to subsidiaries as detailed on pages 134-137.



2011/2012 2012/2013£'000 £'000

182,780 Net (surplus)/deficit for the year on the Single Entity Comprehensive Income and (22,951)

Expenditure Statement

(Surplus)/Deficit in the Group Comprehensive Income and Expenditure Statement attributable to group entities (adjusted for intra-group transactions): Subsidiaries: Net Movement in Funds

(1,192) Shottermill Recreation Ground 161(14) Ewart Bequest (48)

181,574 (22,838)

Reconciliation of the Single Entity Surplus or Deficit for the Year to the Group Surplus or Deficit

(Surplus)/Deficit for the year on the Group Comprehensive Income and Expenditure Statement

This reconciliation statement summarises the difference between the outturn on the Single Entity Income andExpenditure Account and the Group Surplus or Deficit.

The role of this reconciliation is to show how the various group entities have contributed to the overall Surplus/Deficit onthe Group Comprehensive Income and Expenditure Account.



Group Balance Sheet as at 31 March 2013

31 March 2012 31 March 2013Single Entity Subsidiaries Group

£'000 Note £'000 £'000 £'000

Property, Plant and Equipment G5292,757 Council Dwellings 308,336 308,33676,879 Other Land and Buildings 72,199 9,966 82,1653,390 Vehicles, Plant and Equipment 3,238 231 3,469

651 Infrastructure Assets 614 614364 Community Assets 364 364

1,731 Surplus Assets 2,255 2,2552,978 Assets Under Construction 0 0

378,750 387,006 10,197 397,2031,408 Heritage Assets 17 1,335 1,335

14,210 Investment Property 18 13,860 13,860406 Intangible Assets 19 418 418

4 Long Term Investments 21 4 481 Long Term Debtors 25 64 64

394,859 Total Long-Term Assets 402,687 10,197 412,884

Current Assets15,029 Short Term Investments 21 7,519 7,519

86 Assets Held for Sale 28 614 6149 Inventories 10 10

5,564 Short Term Debtors G7 6,216 6,2168,602 Cash and Cash Equivalents G8 21,239 1,330 22,569

29,290 Total Current Assets 35,598 1,330 36,928

424,149 Total Assets 438,285 11,527 449,812

Current Liabilities(60) Short Term Borrowing 21 (73) (73)

(8,486) Short Term Creditors G9 (7,390) (28) (7,418)(8,546) Total Current Liabilities (7,463) (28) (7,491)

Long-Term Liabilities(187,035) Long-term Borrowing 21 (187,261) (187,261)(37,675) Pensions Liability 45 (42,987) (42,987)

(587) Capital Grants Receipts in Advance 41 (537) (537)(225,297) Total Long-Term Liabilities (230,785) 0 (230,785)

190,306 Net Assets 200,037 11,499 211,536

Financed by:(25,805) Usable Reserves G10 (32,587) (1,302) (33,889)

(164,501) Unusable Reserves G10 (167,450) (10,197) (177,647)

(190,306) Total Reserves (200,037) (11,499) (211,536)

This statement combines the single entity Balance Sheet on page 15 with the transactions relating to subsidiariesas detailed on pages 134 to 137 to form the Group Balance Sheets.



Group Cash-Flow Statement

2011/2012 2012/2013Single Group GroupEntity Activities Total

£'000 £'000 £'000 £'000

Note

181,574 Net (Surplus)/Deficit on the Provision of Services * (22,951) 113 (22,838)

(484) Adjustments to net surplus or deficit on the provision of G11 3,813 (191) 3,622services for non-cash movements

2,918 Adjustments for items included in the net surplus or deficit on 32 6,172 6,172the provision of services that are investing and financing activities

184,008 Net cash-flows from Operating Activities (12,966) (78) (13,044)

(6,237) Investing Activities G13 465 0 465

(184,743) Financing Activities 35 (1,388) (1,388)

(6,972) Net (increase)/decrease in Cash and Cash Equivalents (13,889) (78) (13,967)

1,630 Cash and Cash Equivalents at the beginning of the reporting period 7,350 1,252 8,602

8,602 G8 21,239 1,330 22,569

* See Group Comprehensive Income and Expenditure Statement page 114

For notes on the Group Cash-Flow Statement see notes G11 to G13 on pages 128 to 129.

Cash and Cash Equivalents at the end of the reporting period

The Cash-Flow statement combines the single entity statement on page 16 together with the transactions relating tosubsidiaries as detailed on pages 134-137.





Notes to Group Accounts




G1. Complementary Statement of Accounting Policies for Group Accounts Basis of Consolidation The Group Accounts have been prepared on the basis of a full consolidation of the financial transactions and balances of the Council, the Shottermill Recreation Ground Trust and the Ewart Bequest, each having a year-end of 31 March 2013. Accounting Policies The financial statements in the Group Accounts are prepared in accordance with the policies set out in the Statement of Main Accounting Policies on pages 18 to 36. Degree of Commitment The Council performs a role of stewardship over the charitable trusts included in the Group Accounts. As such it has a degree of commitment to meet any accumulated deficits or losses. Shottermill Recreation Ground Trust - the Herons Leisure Centre is an important part of the Council’s Leisure Strategy. In 2008 the Council entered into a 15 year management contract for the operation of this centre. Ewart Bequest - in the event that the Ewart Bequest falls into difficulty it is reasonable to assume that Waverley Borough Council would consider supporting the organisation to resolve the situation in line with its corporate priority of ‘Affordable Housing’. Trust Accounts The annual report and accounts for the Trusts are prepared in accordance with The Charities Act 2011, and applicable regulations. The Statement of Financial Activities and Balance Sheets for the Trust Accounts for the year ended 31 March 2013 are included at pages 134 to 137 for information. The full charity accounts are subject to audit/review according to audit thresholds. For the 2012/2013 accounts both the Shottermill Recreation Ground Trust and the Ewart Bequest are subject to independent review. The accounts can be obtained from the Charity Commission website http://www.charitycommission.gov.uk/index.asp or Waverley Borough Council.

http://www.charitycommission.gov.uk/index.asp



Included within the Group Accounts as subsidiaries are: Shottermill Recreation Ground Trust Ewart Bequest Trust

The assets of these trusts are not the property of the Council and are subject to charitable trusts.

The Council as Trustee of The Shottermill Recreation Ground Trust

The Council as Trustee of The Ewart Bequest

Other Comprehensive Income and Expenditure is made up of:

2011/2012 2012/2013£'000 £'000

(Surplus)/Deficit on revaluation of Property, Plant and Equipment(4,178) - Upward Revaluations (3,547)1,453 - Impairments 242(515) - Shottermill Recreation Ground upward revaluation of Leisure Centre 0

1 - Shottermill Recreation Ground impairment of equipment 0(3,239) (3,305)

G4. Other Comprehensive Income and Expenditure

The Shottermill Recreation Ground Trust has been included within the Group Accounts of the Council because, assole trustee of an operation which forms an important part of the Council's own leisure strategy, the Council has asignificant interest and influence over the Trust which, in the consideration of accounting statements, overrides thelegal form of the relationship.

The Council is the sole trustee for this trust which owns land at Farnham on which are built small dwellings suitablefor elderly people of limited financial resources (16 Bungalows at College Gardens and three bungalows at ArthurRoad). The accounts of the Trust represent the rental and investment income and the expenditure on themaintenance of the dwellings.

The Ewart Bequest has been included with the Group Accounts of the Council because as sole trustee of assetswhich form part an important part of the Council's housing service, the Council has a significant interest andinfluence over the Trust which, in the consideration of accounting statements, overrides the legal form of therelationship.

G2. General

G3. Subsidiary

The Council is the sole trustee for this trust – the working name of which is 'The Herons'. The Herons leisurecentre was opened during 1998/1999 and the management of the leisure centre is wholly contracted to D C LeisureLimited. The accounts of the Trust represent the costs of the Council as trustee in its capacity as a client of themanagement contractors.

Where there are no material additional amounts or details in relation to group activity the notes to the single entityaccounts apply. Therefore, these notes should be read in conjunction with the notes to the Council's accountsstarting on page 17.

The figures in the Group Accounts have been consolidated using the Trust Account statements on pages 134-137.






Cost or ValuationAt 1 April 2012 296,484 79,288 7,013 1,255 364 1,921 2,978 389,303

0 (408) (323) 0 0 (3) 0 (734)

296,484 78,880 6,690 1,255 364 1,918 2,978 388,569

Additions/enhancement 9,088 2,256 561 0 0 0 0 11,905Donations 0 0 46 0 0 0 0 46

0 3,012 0 0 0 160 0 3,172

10,978 0 0 0 0 0 0 10,978

Derecognition Disposals (978) (73) 0 0 0 0 0 (1,051)(112) 0 0 0 0 (534) 0 (646)

Other Reclassifications (1,706) 2,673 0 0 0 2,011 (2,978) 0At 31 March 2013 313,754 86,748 7,297 1,255 364 3,555 0 412,973


0 408 323 0 0 3 0 734

(3,727) (2,001) (3,300) (604) 0 (187) 0 (9,819)

Charge for 2012/2013 (5,441) (912) (489) (37) 0 (19) 0 (6,898)0 321 0 0 0 45 0 366

3,727 0 0 0 0 0 0 3,727

(20) (113) (4) 0 0 0 0 (137)

0 (1,881) (35) 0 0 (1,108) 0 (3,024)

3 0 0 0 0 0 31 11 12

Other Reclassifications 42 0 0 0 0 (42) 0 0At 31 March 2013 (5,418) (4,583) (3,828) (641) 0 (1,300) 0 (15,770)

308,336 82,165 3,469 614 364 2,255 0 397,203

Depreciation written out to the Surplus/Deficit on the Provision of Services

Adjusted 1 April 2012 balance

Depreciation written out to the Revaluation

Adjusted 1 April 2012 balance


Adjustments between cost/value and depreciation/impairment



Derecognition Disposals

G5. Group Property, Plant and Equipment (PPE)




Adjustments between cost/value and depreciation/impairment







Cost or ValuationAt 1 April 2011 298,477 74,249 6,432 1,218 364 1,957 0 382,697Additions/enhancement 3,435 7 383 0 0 0 2,978 6,803Donations 0 0 198 37 0 0 0 235

0 39 0 0 0 0 0 39

0 4,082 0 0 0 0 0 4,082

(4,597) 938 0 0 0 0 0 (3,659)

Derecognition Disposals (391) 0 0 0 0 0 0 (391)Other Reclassifications (440) (27) 0 0 0 (36) 0 (503)

At 31 March 2012 296,484 79,288 7,013 1,255 364 1,921 2,978 389,303


Charge for 2011/2012 (3,727) (1,196) (590) (36) 0 (10) 0 (5,559)0 363 0 0 0 7 0 370

3,622 100 0 0 0 0 0 3,722

0 (1,438) (16) 0 0 0 0 (1,454)

0 1,248 (86) 0 0 (3) 0 1,159

Other Reclassifications 0 5 0 0 0 (4) 0 1At 31 March 2012 (3,727) (2,409) (3,623) (604) 0 (190) 0 (10,553)

292,757 76,879 3,390 651 364 1,731 2,978 378,750


Depreciation written out to the Surplus/Deficit on the Provision of Services

Depreciation written out to the Revaluation Reserve

Transfer from De-minimis Asset Register







Valuation of trust assets carried at current value

31 March 2012Balance£'000 £'000 £'000

Debtors2,723 Government departments 2,170

0 less Impairment Allowance 02,723 2,170

452 Other local authorities and public bodies 4510 less Impairment Allowance 0

452 451

391 Council Tax payers 330(67) less Impairment Allowance (66)

324 264

283 Housing rents 347(146) less Impairment Allowance (140)137 207

2,571 Other Sundry 2,470(928) less Impairment Allowance (852)

1,643 1,618

5,279 Total Debtors net of impairment (bad debts) allowances 4,710

285 Payments in Advance 1,506

5,564 Total net Debtors & Payments in Advance 6,216

G6. Revaluation Information

G7. Group Short Term Debtors

The Herons leisure centre was revalued on 31 March 2012 and will be revalued on a five-yearly programme unlessmarket conditions suggest that more frequent valuations are necessary.

The assets of the Ewart Bequest were revalued by the District Valuer as at 1 April 2009. The District Valuer revalues allof the council's Housing Revenue Account (HRA) assets.

31 March 2013Balance



The Group balance of Cash and Cash Equivalents is made up of the following elements:


3 Cash held by the Council 3(1,157) Bank current accounts (2,736)8,504 Short-term investments 23,972

376 Shottermill Recreation Ground Trust 375876 Ewart Bequest 955

8,602 Total Cash and Cash Equivalents 22,569

31 March 2012 31 March 2013Balance Balance£'000 Creditors £'000

(2,765) Government departments (1,466)(404) Other local authorities and public bodies (211)(180) Housing rents and local taxes (170)

(3,959) Other creditors (3,178)(7,308) (5,025)

Receipts in Advance

(172) Council Tax payers (156)(171) Section 106 receipts (1,181)(835) Others (1,056)

(1,178) (2,393)

(8,486) Total of Creditors & Receipts in Advance (7,418)

G8. Group Cash and Cash Equivalents

G9. Group Short Term Creditors

‘Short-term investments’ are those held on ‘call’ with a bank rather than invested in the Money Market via a Broker.



2011/2012Usable Unusable Total

Reserves Reserves(Restated) (Restated)

£'000 £'000 £'000

The Council's Reserves (notes 30 and 31) (24,585) (154,109) (178,694)

Shottermill Recreation Ground Trust (page 135) (348) (9,110) (9,458)

Ewart Bequest (page 137) (872) (1,282) (2,154)

Trust Reserves (1,220) (10,392) (11,612)

Total Group Reserves at 31 March 2012 (25,805) (164,501) (190,306)

2012/2013Usable Unusable Total

Reserves Reserves£'000 £'000 £'000

The Council's Reserves (notes 30 and 31) (32,587) (167,450) (200,037)

Shottermill Recreation Ground Trust (page 135) (347) (8,950) (9,297)

Ewart Bequest (page 137) (955) (1,247) (2,202)

Trust Reserves (1,302) (10,197) (11,499)

Total Group Reserves at 31 March 2013 (33,889) (177,647) (211,536)

G10. Group Reserves

The Council keeps a number of reserves in the Balance Sheet. Some are required to be held for statutory reasons, someare needed to comply with proper accounting practice, and others have been set up voluntarily to earmark resources forfuture spending plans.



Adjustments to net surplus or deficit on the provision of services for non-cashmovements:

2011/2012Single Group GroupEntity Activities Total

£'000 £'000 £'000 £'000(5,560) Depreciation (6,674) (224) (6,898)1,193 Impairment and downward valuations (3,069) (1) (3,070)

0 14,705 14,705

(144) Amortisations (113) (113)(235) Increase in impairment for provision for bad debts 83 83(205) (Increase)/Decrease in Creditors 1,358 4 1,362354 Increase/(Decrease) in Debtors 594 594

(3) Increase/(Decrease) in Inventories 1 1226 Pensions liability (399) (399)

(806) Carrying amount of non-current assets sold (1,608) (1,608)4,442 Movements in the value of Investment Properties (1,081) (1,081)

235 Donated Assets 16 30 4619 Capital Grants and contributions

(484) Total non-cash movements 3,813 (191) 3,622

The cash-flows for operating activities includes the following items (on a cash basis):

2011/2012 2012/2013£'000 £'000

173 Interest paid 5,650(515) Interest received (355)

Revaluation losses and reversals on Property, Plant & Equipment

2012/2013

The Cash-Flow Statement has been prepared on the indirect method. This method derives the revenue cash flow byadjusting the Net Surplus or Deficit on the provision of services in the Comprehensive Income and ExpenditureStatement to a cash basis.

Adjustments are made for non-cash items which include depreciation and impairments, accruals and the non-cashelement of the pensions liability (as set out in the Accounting Policies).

G11. Group Cash-Flow Statement - non-cash movements

G12. Group Cash-Flow Statement - Operating Activities



2011/2012Single Group GroupEntity Activities Total

£'000 £'000 £'000 £'000

6,698 13,238 13,238

115,700 Purchase of short-term investments 70,900 70,900(126,212) Proceeds from short-term investments (78,755) (78,755)

(2,485) (2,780) (2,780)

43 (2,132) (2,132)

19 Other payments/(receipts) (6) (6)

(6,237) Net cash-flows from investing activities 465 0 465

The Council and its subsidiaries incurred the following fees relating to external audit and inspection:

2011/2012 2012/2013£'000 £'000

109 Fees payable to external auditors with regard to external audit services carried 71 out by the appointed auditor for the year

33 Fees payable to external auditors for the certification of grant claims and 16 returns for the year

4 Fees payable to external auditors for independent examinations carried out by the 4 appointed auditor for the year

1 Fees payable in respect of other services provided by external auditors during 4the year

147 95

The income and expenditure of the Group services for the year is shown on the following pages:

Grant Thornton UK LLP were appointed as the Council's new external auditors during 2012/2013 and took over from the Audit Commission.

Proceeds from the sale of Property, Plant and Equipment

The segment reporting analysis for the group accounts follows that for the single entity accounts on pages 76-79. Asthe results of the Trusts are not reported to the Council their results are not shown as reportable segments but areincluded as 'Net expenditure of subsidiaries not included in the analysis'.

G15. Amounts reported for resource allocation decisions

G14. External Audit Costs

G13. Group Cash-Flow Statement - Investing Activities

2012/2013

Purchase of property, plant and equipment, investment property and intangible assets

Capital Grants and contributions received (not through Net Surplus or Deficit on the provision of services



Group Service Information - for the year ended 31 March 2013

This reconciliation shows how the figures in the analysis of segment income and expenditure relate to a subjective analysis of the Surplus or Deficit on the Provision ofServices included in the Group Comprehensive Income and Expenditure Statement.

Reconciliation to Subjective Analysis Total Service Analysis (from single entity

analysis page 77)


management for decision making

Net expenditure of subsidiaries not included in

the analysis


Recharges

Sub - total

Cost of Services

Corporate Amounts

Total

£'000 £'000 £'000 £'000 £'000 £'000 £'000

IncomeFees, charges and other service income (40,724) (264) (229) (41,217) (41,217)Interest and Investment Income (10) (10) (1,022) (1,032)Income from Council Tax (11,390) (11,390)Government Grants and Contributions (35,736) (433) (36,169) (1,152) (37,321)Non-domestic rate distribution (3,974) (3,974)Capital grants and contributions (3,069) (3,069)(Gain)/Loss on disposal of non-current assets (1,172) (1,172)Total Income (76,460) (433) (274) (229) (77,396) (21,779) (99,175)

ExpenditureEmployee expenses 1,373 (207) 14,754 15,920 1,095 17,015Other service expenses 52,900 73 107 2,720 55,800 31 55,831Support Service recharges 16,658 55 (18,229) (1,516) (1,516)Depreciation, amortisation & impairment (5,833) 225 984 (4,624) (4,624)Interest payments 5,678 5,678Precepts and levies 2,426 2,426Payment to Housing Capital Receipts Pool 446 446Loss on fair value of Investment Properties 1,081 1,081Total Expenditure 65,098 (134) 387 229 65,580 10,757 76,337

(Surplus)/Deficit on the provision of services (11,362) (567) 113 0 (11,816) (11,022) (22,838)

2012/2013



Group Service Information - for the year ended 31 March 2012

This reconciliation shows how the figures in the analysis of segment income and expenditure relate to a subjective analysis of the Surplus or Deficit on the Provision ofServices included in the Group Comprehensive Income and Expenditure Statement.

Reconciliation to Subjective Analysis Total Service Analysis (from single entity

analysis page 79)


management for decision making

Net expenditure of subsidiaries not included in

the analysis


Recharges

Sub - total

Cost of Services

Corporate Amounts

Total

£'000 £'000 £'000 £'000 £'000 £'000 £'000

IncomeFees, charges and other service income (38,876) (340) (163) (39,379) (39,379)Interest and Investment Income (12) (12) (1,078) (1,090)Income from Council Tax (11,275) (11,275)Government Grants and Contributions (34,397) (34,397) (1,641) (36,038)Non-domestic rate distribution (3,416) (3,416)Capital grants and contributions (289) (289)(Gain)/Loss on disposal of non-current assets 0 0 (1,679) (1,679)Gain on fair value of Investment Properties (4,442) (4,442)Total Income (73,273) 0 (352) (163) (73,788) (23,820) (97,608)

ExpenditureEmployee expenses 1,543 (285) 15,134 16,392 546 16,938Other service expenses 253,552 132 2,443 256,127 34 256,161Support Service recharges 16,350 51 (17,837) (1,436) (1,436)Depreciation, amortisation & impairment 5,125 (1,037) 423 4,511 4,511Interest payments 236 236Precepts and levies 2,327 2,327Payment to Housing Capital Receipts Pool 445 445Total Expenditure 276,570 (285) (854) 163 275,594 3,588 279,182

(Surplus)/Deficit on the provision of services 203,297 (285) (1,206) 0 201,806 (20,232) 181,574

2011/2012





Trust Accounts



2011/2012Unrestricted Endowment Total

Funds Funds Funds£'000 £'000 £'000 £'000

Incoming ResourcesIncoming Resources from generated funds

(4) Investment Income (Interest on cash balance) (3) (3)

Incoming resources from charitable activities(2) Management Fee 0

(36) Grant from Waverley Borough Council (64) (64)

Other incoming resources(139) Assets given for use by the charity (30) (30)

(181) Total Incoming Resources (67) (30) (97)

Resources ExpendedCharitable activities

9 Building Maintenance 015 Equipment 02 Audit Fee 2 2

(8) Management fee 19 1944 Support costs 47 47

(1,073) Depreciation and Impairment 190 190

(1,011) Total Resources Expended 68 190 258

(1,192) Net incoming/outgoing resources 1 160 161

Other recognised gains/losses(514) Gains/losses on revaluation of fixed assets 0

(1,706) Net Movement in Funds 1 160 161

Reconciliation of Funds(7,752) Funds brought forward as at 1 April 2012 (348) (9,110) (9,458)(1,706) Net Movement in Funds 1 160 161

(9,458) Funds carried forward as at 31 March 2013 (347) (8,950) (9,297)

Waverley Borough Council as Trustee of Shottermill Recreation Ground

Statement of Financial Activities

2012/2013

The Council are Trustees of the Shottermill Recreation Ground and the Trust's leisure centre The Herons was openedduring 1998/1999. The management of The Herons is wholly contracted out and the accounts represent the costs ofthe Trustee in its capacity as the client of the management contractors.




31 March 2012Unrestricted Endowment Total

Funds Funds£'000 £'000 £'000

Fixed Assets8,870 Land and Buildings 8,719 8,719

240 Plant and Equipment 231 2319,110 Total Fixed Assets 0 8,950 8,950

Current Assets376 Deposits with Waverley Borough Council 375 375376 375 0 375

9,486 Total Assets 375 8,950 9,325

Less: Current Liabilities(28) Creditors (28) (28)

9,458 Total Assets less Current Liabilities 347 8,950 9,297

The Funds of the Charity:

(348) Unrestricted Funds (347) (347)(9,110) Endowment Funds (8,950) (8,950)

(9,458) Total Charity Funds (347) (8,950) (9,297)

31 March 2013

The assets in this Balance Sheet comprise 'The Herons' Leisure centre and its plant and equipment. These assets arenot the property of the Council and are subject to a charitable trust.



Waverley Borough Council as Trustee of the Ewart Bequest

2011/2012Unrestricted Endowment Total

Funds Funds Funds£'000 £'000 £'000 £'000

Incoming ResourcesIncoming Resources from generated funds

(8) Investment Income (Interest on cash balance) (7) (7)(86) Rental Income (92) (92)(77) Benefits Subsidy (78) (78)

(171) Total Incoming Resources (177) 0 (177)

Resources ExpendedCharitable activities

33 Premises (Building Maintenance) 5 52 Audit Fee 2 2

78 Benefits paid 79 798 Support Costs 8 8

36 Depreciation 35 35

157 Total Resources Expended 94 35 129

(14) Net incoming/outgoing resources (83) 35 (48)

Reconciliation of Funds(2,140) Funds brought forward as at 1 April 2012 (872) (1,282) (2,154)

(14) Net Movement in Funds (83) 35 (48)(2,154) Funds carried forward as at 31 March 2013 (955) (1,247) (2,202)

Statement of Financial Activities

2012/2013

The former Farnham Urban District Council inherited the bulk of the estate of the late Joseph Ewart in 1958. Themonies were left in trust for the purchase of a piece of land in or near Farnham, the building and the subsequentmaintenance of small dwellings suitable for elderly people of limited financial resources. In 2000/2001, followingapproval given by the Charity Commission, the Bequest financed the construction of a further three bungalows inFarnham, to provide additional accommodation on the same terms as the original Bequest. The three new bungalowswere completed at the beginning of 2001/2002 and were originally reflected in the Balance Sheet at the constructioncost, however, since then the District Valuer has revalued the properties and the revaluations are reflected in theaccounts below.




31 March 2012Unrestricted Endowment Total

Funds Funds£'000 £'000 £'000 £'000

Fixed Assets1,282 Other Land and Buildings - Trust dwellings 1,247 1,247

Current Assets876 Deposits with Waverley Borough Council 955 955

Less: Current Liabilities(4) Creditors & Receipts in Advance 0

872 Net Current Assets 955 0 955

2,154 Total Assets less Current Liabilities 955 1,247 2,202

The Funds of the Charity:(872) Unrestricted Funds (955) (955)

(1,282) Endowment Funds (1,247) (1,247)

(2,154) Total Charity Funds (955) (1,247) (2,202)

31 March 2013

The assets in this Balance Sheet comprise 16 dwellings in College Gardens, Farnham and 3 dwellings in Arthur Road,Farnham. These assets are not the property of the Council and are subject to a charitable trust.


Accruals This concept recognises income and expenditure as it is earned or incurred, not as money is received or paid. Amortisation The systematic allocation of the depreciable amount of an intangible asset over its useful life. Amortised Cost The amount at which the financial asset or financial liability is measured at initial recognition adjusted for principal repayments, cumulative amortisation, and any allowance for impairment or uncollectability. Asset Any object tangible or intangible, that is of value to its owner. Tangible assets include land and buildings, plant and machinery, fixtures and fittings & stock. Intangible assets include: goodwill, patents, licences, copyrights and trademarks. Capital Expenditure Expenditure on the acquisition of a non-current asset or expenditure that adds to and not merely maintains the value of an existing non-current asset. Capital Adjustment Account An unusable reserve that absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. Capital Receipts The proceeds from the disposal of non-current assets. Capital receipts can be used to pay off outstanding debt and to finance new capital expenditure within rules set down by Central Government, however they cannot be used to finance revenue expenditure. Carrying amount/value The cost or value less depreciation and impairment.

Central Services to the Public This covers services to the public that are often provided by central departments and includes Local Tax Collection, Elections, Emergency Planning, Local Land Charges and General Grants. CIPFA The Chartered Institute of Public Finance and Accountancy Community Assets Assets that the Council intends to hold in perpetuity, that have no determinable useful life and that may have restrictions on their disposal eg Common Land. Contingent Liability An obligation that, at the Balance Sheet date, can be anticipated to arise if a particular event occurs. A typical example is a legal claim pending settlement where there is no clear precedent. Contingent Rent That portion of a lease payment that is not fixed in amount but is based on a factor other than just the passage of time (eg price indices). Creditors A creditor is an organisation, body or individual from whom the Council has purchased goods or services but to whom payment has not yet been made at year-end. Debtors Organisations, bodies and individuals who have received goods or services from the Council but from whom payment has not been received at year-end. Deferred Credit This is income that has been received before the period or periods to which it relates. The income is shown in the Balance Sheet. Deficit A deficit will arise where expenditure exceeds income. A deficit can be financed by reserves.

Glossary of Terms and Abbreviations


Depreciation A measure of the cost of a non-current asset that has been used in the period. Depreciation is charged to services. Effective Interest method A method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. Effective Interest rate The rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument Existing Use Value This is a method of valuing property that achieves a valuation based on the current use of the asset. Fair Value The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arms-length transaction. For land and buildings it is the amount that would be paid for an asset in its existing use. Financial Instrument A financial instrument is any contract that gives rise to a financial asset (a right to future economic benefit) to one entity and a financial liability (an obligation to transfer economic benefit) to another. FRS Financial Reporting Standard General Fund This is the Council’s main revenue fund to which the day-to-day costs of providing the services are charged. The fund covers all the services provided by the Council except for the provision of council housing which has its own separate fund known as the Housing Revenue Account. Gross Book Value (GBV) The GBV of a non-current asset is the purchase or revalued value before any depreciation has been deducted.

Heritage Asset An asset with historical, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. Historical Cost The carrying amount of an asset as at 1 April 2007 (the date the Revaluation Reserve was created) or the date of acquisition if later, adjusted for subsequent depreciation or impairment (if applicable). Housing Revenue Account (HRA) The HRA is used to record the financial transactions involved with the provision of council housing (the ‘landlord’ function). The HRA is governed by the Local Government and Housing Act 1989, as amended and supplemented. The HRA is kept separate from the Council’s other accounts (ring-fenced) and is required to be self-financing. HRA Self-financing From the 1 April 2012 HRA self-financing replaced the Housing Subsidy system for all housing authorities. The Council has a 30 year business plan which includes financing and repayment of debt taken on to make a one-off payment to the Government. Housing Subsidy (replaced from 2012/2013 by HRA Self-financing) A Government grant paid to some housing authorities towards the cost of providing, managing and maintaining dwellings. In Waverley's case negative subsidy is paid to Central Government for redistribution to qualifying housing authorities throughout the country, with an increasing element retained centrally in the Exchequer. IFRS International Financial Reporting Standards Impairment Loss A significant decline in the value of an asset that is specific to that asset.


Infrastructure Assets Assets that form the fabric of the land and provide a valuable service, such as land drainage channels, footpaths and roads. Intangible Asset These assets lack physical substance and represent purchased software and software licences. Inventories Inventories is the value of consumable items which were unused at the end of the financial year. This includes paper etc from the internal print unit and canteen supplies. Investment Property An asset that is used solely to earn rentals or for capital appreciation or both. For example, the Council-owned industrial estates. Liability An obligation to transfer economic benefits (usually money) as a result of past transactions eg the purchase of services from a supplier will generate a liability to pay that supplier for those services. Major Repairs Allowance (MRA) From 2001/2002 to 2011/2012 under the MRA (which was part of the Housing Revenue Account (HRA) subsidy calculation) the Government provided each authority with an estimate of the long-term average amount of capital resources required to maintain their housing stock in its current condition. As allowed under the guidance, the Council depreciated its HRA dwelling stock in line with the MRA. This was replaced in 2012/2013 by HRA self financing, however, for a transitional period of five years a figure based on the MRA calculation can be used for depreciation. Market Value This is generally applied to the valuation of non-current assets. It is the value that could be achieved if the asset were offered for sale with no restrictions that could affect its value.

Minimum Lease Payments Those lease payments that the authority is, or can be required to make. Net The term ‘net’ is used where income for a service has been taken into account (ie offset against expenditure) thus reducing the total cost of that service. Net Book Value (NBV) The purchase value or revalued value of an asset less any depreciation that has been applied to that asset since its purchase or revaluation. Net Current Replacement Cost Gross current replacement cost reduced to reflect obsolescence and environmental factors. Net Realisable Value The existing use value of the (non-current) asset less any additional costs likely to be incurred in getting the assets into the ownership of the customer. Non-Current Assets Tangible and Intangible assets that yield benefits to the Council, its customers & services provided, for a period of more than one year. Non-distributed Costs This mainly relates to retirement benefits and charges in relation to non-operational assets. Outturn Total actual income and expenditure in the financial year. Payments in Advance (PIA) payments made for goods or services that will not be received until the next financial year. Precept A levy made by an authority for whom the billing authority (Waverley) collects Council Tax. Preceptor The Council’s preceptors are Surrey County Council, the Police and Crime Commissioner for Surrey and the Town and Parish Councils.


Property, Plant and Equipment Assets held, occupied, used or consumed by the Council in the direct delivery of those services for which it has either a statutory or a discretionary responsibility. For example, Waverley’s leisure centres. Provisions An amount set aside from revenue for a known liability of uncertain timing or amount. Receipts in Advance (RIA) These are payments that are received from debtors in advance of the start of the financial year to which they relate. Revenue Expenditure Funded from Capital Under Statute (REFFCUS) Expenditure incurred during the year that may be capitalised under statutory provision but does not result in the creation of a Waverley owned non-current asset. Revaluation Loss A decline in the value of an asset due to a fall in prices across the board. Revaluation Reserve This reserve is built up from the upward revaluations of individual assets. An asset should not have a negative revaluation balance, no matter how much the Reserve overall might be in surplus. Revenue Expenditure Day-to-day expenditure on the running of services. Includes staff costs, contracted services, electrical, water and gas charges, rent and business rates. Surplus A surplus will be generated where income exceeds expenditure. In some cases, a surplus will be transferred to an appropriate reserve.

Transaction costs Are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument (financial asset or financial liability). An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument.


ANNUAL GOVERNANCE STATEMENT 2012/13 1. SCOPE OF RESPONSIBILITY Waverley is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and is used economically, efficiently and effectively.

In discharging this overall responsibility, Waverley must put in place proper arrangements for governing its affairs to help it exercise its functions, which include arrangements for managing risk. Waverley’s Code of Corporate Governance accords with the CIPFA/SOLACE Framework “Delivering Good Governance in Local Government”. This Annual Governance Statement has been prepared in accordance with the proper practices as defined in the Code. A copy of the Code is available on the Council’s website.

The purpose of this Annual Governance Statement (AGS) is to explain how Waverley has complied with the principles of the Code. It also meets the requirements of Regulation 4 of the Accounts and Audit Regulations 2011 in relation to the publication of an Annual Governance Statement. Where there is scope to improve current arrangements when compared with the Code, the actions have been identified and are contained in the action plan at the end of this Statement.

The Annual Governance Statement underpins Waverley’s Corporate Plan and other key corporate strategies, including the Medium Term Financial Strategy, the workforce plan, equalities and diversities action plan and the Council’s environmental policies. It has been prepared with the assistance of the Council’s Corporate Management Team (CMT).

The evidence for this Statement is drawn from Council, Executive, Corporate Management Team and Heads of Service Team work. The work of internal and external audit is also taken into account. The system of internal control also covers the Council’s group activities.

2. THE PURPOSE OF THE GOVERNANCE FRAMEWORK

The “governance framework” comprises the systems, processes and controls, and the culture and values by which Waverley is directed and controlled and its activities through which it accounts to, engages with, and leads, the community. It enables Waverley to monitor how it achieves its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services. It has a key role in maintaining public confidence that Waverley is following high standards of governance.

The system of internal control is a significant part of that framework and is designed to manage, but not eliminate, risk of failure to achieve policies, aims and objectives and it provides reasonable assurance of its effectiveness. The system of internal control is based on a continuing process designed to identify and prioritise the risks to achieving Waverley’s policies, aims and objectives.


The purpose of the governance framework is to allow Waverley to –

• Focus on the outcomes for the area and its community; • Engage with local people and other stakeholders to ensure robust public

accountability; • Foster a leadership community that sees Members and Officers working

together to achieve a common purpose with clearly defined roles and responsibilities;

• Promote values and behaviours for the Council that will demonstrate how it will uphold good governance and high standards of conduct;

• Take informed and transparent decisions which manage risk and opportunity and are subject to effective scrutiny;

• Develop the capacity and capability of its Members and Officers to be effective and innovative.

The governance framework has been in place at Waverley for the year ended 31 March 2013 and up to the date of approval of the Statement of Accounts. 3. THE GOVERNANCE FRAMEWORK The key elements of the systems and processes that comprise the Council's governance framework are described below. Further details in relation to each element can be viewed through the Council's website http://www.waverley.gov.uk. a) Corporate Plan 2012 to 2015 – The Council adopted its current Corporate Plan 2012 – 2015 in February 2012. It sets the direction of the Council until the Borough Elections in 2015. The plan is available on Waverley’s website at www.waverley.gov.uk/corporateplan. Waverley’s Core priorities are VALUE:

Value for money The Council is committed to providing customer focused services at the best value for money. The Council will ensure that sound financial management is at the core of everything it does.

Affordable housing Waverley will work hard to provide more affordable housing in the Borough for people in housing need. The Council aims to be an excellent landlord, managing its own housing stock well and improving the fabric and condition of its properties.

Leisure and lives The Council will continue to support opportunities for all to take part in sport, recreation and other leisure activities to promote health and well-being for all.

http://www.waverley.gov.uk/corporateplan


Understanding our residents' needs It is important to the Council that it understands its residents and that it focuses on providing the services they want, by consulting with them and ensuring its services are designed to meet people's needs across the Borough. The Council will be active in consulting and working with residents, service users and local businesses.

Environment Waverley will continue to do everything within its powers to protect and enhance the area's unique mix of rural and urban communities throughout its towns, villages and hamlets. It will set an example in protecting the environment through its promotion of recycling and environmental sustainability.

Each of the Corporate Plan priorities has a number of measurable outcomes and targets. Each year, every Head of Service prepares, in conjunction with their Portfolio Holders, a Service Plan to deliver the Corporate Plan objectives and other service priorities. The draft 2013/14 Service Plans were presented to a joint meeting of the Overview and Scrutiny Committees in March 2013 before being agreed by the Executive in April 2013. b) Council Constitution - The Council Constitution, which is available on Waverley’s website, sets out how the Council operates, how decisions are made, and the procedures which are followed to ensure that these are efficient, transparent and accountable to local people. Each agenda for a Council or business meeting contains an item requiring members at the outset of the meeting to declare any relevant interests. The agendas and minutes of all the public meetings of the Council and its Committees are available on Waverley’s website. Waverley webcasts the majority of public meetings live via its website and makes available archive webcast recordings following the meetings. c) Council Structure - The Council operates under a ‘Strong Leader’ model, with members of the Executive responsible for individual Portfolios. At the full Council meeting held on the 8 May 2012 the following Executive portfolios and responsibilities were agreed:

• Leader of the Council – Corporate Strategy including Democratic Services, Representing Waverley, Wider Issues

• Finance, Property and Capital Resources, Human Resources • Waste and Recycling • Car Parks and Community Safety • Planning • IT and Green Spaces • Leisure and Culture • Communications and Customer Services • Major Projects and Economic Development • Housing


The Executive can only make decisions which are in line with the Council's overall Policy and Budget Framework. If it wishes to make a decision which is contrary to the Policy and Budget Framework, it must be referred to the full Council to decide. The Executive collectively make recommendations to the Council about the policy framework and take decisions that ensure services are provided within the framework. For most "key" decisions made by the Executive, the Council is required to publish in advance information about: (a) the matter to be decided; (b) who will be making the decision, and (c) the date or timescale for the decision and the place where the decision will be made. Most day to day service decisions are taken by Council Officers, and these powers are set out within Waverley’s Scheme of Delegation which forms part of the Council’s constitution. The Council appoints committees with power to carry out non-executive and other functions (e.g. planning and licensing where there is a statutory requirement for the Council to maintain committees). Non-executive functions are those which the Executive does not have the power to carry out. d) Policy Development & Scrutiny- During 2012/13 Waverley had two Overview and Scrutiny (O&S) Committees:

• Corporate Overview & Scrutiny Committee – remit includes Finances, Corporate Services and Housing.

• Community Overview & Scrutiny Committee – remit includes Community matters, Environment, Planning and Community Safety.

These Committees, and their respective Sub-Committees, hold the Executive to account for its decisions, provide an opportunity for a methodical review of performance and the effectiveness of policies and have a key role in the policy development process. e) Standards Committee/Panel - The Localism Act 2011 gave Councils an explicit duty to promote and maintain high standards of Member conduct and the statutory model Code of Conduct was abolished. In July 2012 the Council adopted a new Code of Conduct and local arrangements for dealing with complaints about councillors which were substantially simpler and clearer, and both came into effect from July 2012. The roles and responsibilities of the Panel include: (a) promoting and maintaining high standards of conduct by councillors and co-

opted members; (b) assisting councillors and co-opted members to observe the Members’ Code of

Conduct; (c) monitoring the operation of the Members’ Code of Conduct; and


(d) where the Monitoring Officer has decided a hearing is necessary, to hear complaints received concerning the conduct of Waverley Borough and Town and Parish councillors, and the determination as appropriate.

The new arrangements replaced the Standards Committee with a Standards Panel of 8 Waverley councillors and 2 Town and Parish representatives. The Panel would only convene in its entirety on an ad hoc basis and would operate more as a pool from which to draw councillors should a councillor complaint need to be progressed. The Council also appointed two Independent Persons whose views must be sought by the Council before it takes a decision on an allegation which it has decided shall be investigated, or at any other stage. The Member against which an allegation has been made can also consult them. The Council undertook the review the new arrangements after six months in operation. f) Audit Committee - The Audit Committee is made up of seven Councillors. The Council has delegated to this Committee responsibilities including:

• To consider the Council’s arrangements for corporate governance and recommend necessary actions to ensure compliance with best practice

• To maintain an overview of the Council’s Constitution in respect of contract procedure rules, financial regulations and codes of conduct and behaviour.

• To consider the Council’s compliance with its own and other published regulations, standards and controls.

• To monitor Council policies in “Raising Concerns at Work” and the anti-fraud and anti-corruption strategy and the Council’s complaints-handling process.

• To monitor the effective development and operation of internal control in the Council with particular reference to risk management.

• To approve the Council’s Annual Governance Statement • To consider whether appropriate accounting policies have been followed in the

preparation of the annual statement of accounts. • To consider all communications from the external auditor to the Audit

Committee, • To approve the annual statement of accounts. • To consider the Annual Review of the system of Internal Audit. • To consider the Internal Audit Client Managers Annual Report. • To approve the annual Internal Audit Service Plan.

g) Head of Paid Service - The Chief Executive is the designated Head of Paid Service and has overall corporate management and operational responsibility (including overall management responsibility for and authority over all officers). She provides professional advice to all parties in the decision making process; and,


together with the Monitoring Officer, is responsible for the system of record keeping for all Council's decisions. h) Monitoring Officer – The Head of Corporate Governance is designated as Waverley’s Monitoring Officer with responsibility for ensuring that the Council’s decision-making processes meet the requirements of the law and comply with principles of good governance and Waverley’s Codes of Conduct for Officers and Members. i) Chief Finance Officer - The Deputy Chief Executive is designated as Chief Finance Officer in accordance with Section 151 of the Local Government Act 1972. In March 2010 CIPFA issued a Statement on the role of the Chief Financial Officer in Local Government. This required the Chief Finance Officer (S 151 Officer) to: 1) be a key member of the Leadership Team, helping it to develop and implement strategy and to resource and deliver the authority's strategic objectives sustainably and in the public interest; 2) be actively involved in, and able to bring influence to bear on, all material business decisions to ensure immediate and longer term implications, opportunities and risks are fully considered, and alignment with the authority's financial strategy; and 3) lead the promotion and delivery by the whole authority of good financial management so that public money is safeguarded at all times and used appropriately, economically, efficiently and effectively. To deliver these responsibilities the Chief Financial Officer must: a) lead and direct a finance function that is resourced to be fit for purpose; and b) be professionally qualified and suitably experienced. Waverley’s financial management arrangements conform with the governance requirements of the CIPFA/SOLACE Statement. The S151 Officer has responsibility for establishing sound financial management within the Council and ensuring adherence to the Council's own financial standards and rules including the Financial Regulations (January 2012) and Contract Procedure Rules (January 2012). The Council has put in place a Medium Term Financial Strategy to support the aims of the Corporate Plan and a system of regular reporting of its financial position and performance during the year. j) Code of Corporate Governance – The Council has adopted a Code of Corporate Governance which sets out Waverley’s definition of corporate governance, the Values it stands for and the Key Principles of Corporate Governance that it has adopted. k) Anti Fraud, Corruption and Bribery Arrangements - The Council has an Anti-Fraud, Corruption and Bribery Policy that demonstrates its commitment to tackling fraud and corruption whether within or external to the Council. It details:


• The key principles of the policy; • The roles and responsibilities of Members and Officers; • Investigation procedures to be followed in a suspected case of fraud.

The Council's Whistleblowing Policy is a component of the Anti Fraud, Corruption and Bribery Policy. Fraud policies are in place and are reviewed every 2 years for example, Housing Benefit Fraud, Tenancy Fraud and Prosecutions. l) Corporate Complaints System - The Council has a Corporate Complaints Procedure which describes how complaints can be made and how the Council will deal with them. Waverley has adopted a three stage approach to ensure that if the complainant is dissatisfied with the initial response they can have the complaint investigation reviewed again:

• Stage 1 – Complaints dealt with by the contact officer • Stage 2 – Complaints dealt with by the Head of Service • Stage 3 – Complaints dealt with by the Chief Executive

If the complainant is still dissatisfied they can request that their complaint is examined by the Local Government Ombudsman. From April 2013 Housing complainants who have exhausted Waverley’s procedure and remain dissatisfied with the response will be able to raise their complaint with the Housing Ombudsman. Work has been undertaken to prepare for this change. m) Customer and Stakeholder Engagement - The Council has an established strategy to engage with citizens and the Community. Examples of this include:

• Waverley’s Citizens Panel – A representative panel of Waverley residents who have signed up to give their views and feedback on a regular basis. Two consultations were carried out with the panel in 2012/13.

• Forums which ensure the on-going consultation and communication with different groups in the Community including the Waverley Disability Forum, Faith Forum, Tenants Panel and Top Youth Council

• Waverley’s Website and social media, which is updated daily, and provides information about the Council & online access to services;

• ‘Making Waves’, Waverley’s newsletter, is produced three times a year and sent to all households within Waverley.

The Council also undertakes additional one off consultations on specific subjects, for example on the development of Waverley’s Planning Core Strategy or potential creation of a new Parish Council in Rowledge.

n) Performance Management - Quarterly performance results across all services were considered by the Overview and Scrutiny Committees and the Executive. The Overview and Scrutiny Committees had specific ‘Performance Sub Committees’ which went through the reports in detail with officers and reported their findings, concerns and recommendations back to the main Committees and on to the Executive. Individual staff performance is managed through Waverley’s annual appraisal system.


o) Risk & Opportunity Management – Waverley’s Risk Management Strategy and Process Document was reviewed during the year and was approved in March 2012 and March 2013. The Heads of Service Team maintain Corporate Risk Registers which define and assess risks to the Council's objectives and they record actions to manage these risks. The risks and actions are monitored on a quarterly basis. Strategic Directors review Service risk management processes quarterly e.g. the maintenance of Service I Team risk registers. The Audit Committee monitors the risk management plan periodically. In July 2012 senior managers and the Audit Committee took part in a review workshop that refreshed the Corporate Risk Register. p) Internal Audit - Internal Audit operates to the standards set out in the Chartered Institute of Public Finance Accountant's 'Public Sector Auditing Standards for Internal Audit in Local Government' adapted from the application of the Institute of Internal Auditors International Auditing Standards. The Council's appointed External Auditor will then assess Internal Audit against these standards and its most recent assessment is that Internal Audit satisfies these standards. The Internal Audit Client Manager reports annually to the Audit Committee on the performance of the Internal Audit Service in the Annual Internal Audit Report providing details of the activities completed in the financial year. q) External inspectorates - The Council maintains an objective and professional relationship with external auditors and statutory inspectors to seek assurance that the Council is providing efficient, effective and economic services and are proactive in securing continuous improvement in the way its functions are exercised. 4. REVIEW OF EFFECTIVENESS The Council has the responsibility for conducting an annual review of the effectiveness of its governance framework including the system of internal control which is then summarised in the Annual Governance Statement. The review was undertaken by a group of service heads and assurance was gained as follows: Management Assurance -

• A review of the implementation of the Risk Management Strategy and review of risk registers by Corporate Management Team.

• A review of Internal Audit Report findings and recommendation and the Audit Committee’s consideration of these

• A review of audits completed during the year by Internal Audit including specific reviews on the authority’s corporate governance arrangements, risk management, effectiveness of the Audit Committee and the corporate counter fraud arrangements, which provided an independent review of Waverley’s governance arrangements.

• CMT sign-off of committee reports to Members for decision • Monthly budget management meetings with Heads of Service.


• Audit reports, performance and risk information accessible on corporate ‘Covalent’ system

Statutory Officer Assurance

• The Head of Paid Service has reviewed and signed the Annual Governance Statement

• The Section 151 Officer provided assurance to external auditors 12 April 2013 • All internal audit reports are referred to the Head of Paid Service and the S151

Officer. Service Assurance -

• Heads of Service Team meetings to review HR Policies and Risk Registers. • Heads of Service team review audit recommendations • Governance covered on all induction courses which include all new staff • Connectors management group reviewed HR Policies

Performance Management -

• A review of performance management reports to CMT and Members including performance sub-committees

• A review of budget management reports to CMT and Members External Review Assurance -

• An examination of external audit reports • A review of complaints to the Local Government Ombudsman as set out in the

report to Corporate Overview and Scrutiny Committee in September 2012 Other Sources -

• An examination of the work of the Audit Committee in the year including the risk workshop in July 2012.

• An examination of Standards Committee and Overview & Scrutiny Committee minutes

• A review of the adequacy of the complaints procedure including monitoring and reporting outcomes.

• A review of Corporate Management Team meetings and Heads of Service Team reports and minutes.

5. PRODUCTION OF THE ANNUAL GOVERNANCE STATEMENT The publication of the Annual Governance Statement represents the end result of the review of the effectiveness of the governance framework. Corporate involvement in the production of the Statement included:


• Corporate Management Team – Throughout the year, Corporate Management Team have scrutinised all key governance reviews prior to being reported to Members – including HR policies, fraud strategy, risk management policy and review of risk registers, review of Standards Committee and internal audit plans.

• Statutory Officers -The S151 Officer and Monitoring Officer have been involved in all key governance issues during the year and the S151 officer reported on arrangements to the external auditors in February 2013 to meet international audit requirements. The Monitoring Officer in a key member of the corporate governance officer group that prepares the AGS.

• Audit Committee - The Committee has considered key aspects of the Governance Framework during the year including the Risk Management Policy, Fighting Fraud Locally and the National Fraud Initiative.

• Heads of Service – Have been involved in considering risks, HR policies and fraud reviews.

• Leader of the Council & Chief Executive - The Annual Governance Statement 2012-13 was signed by the Leader of the Council and the Chief Executive.

6. UPDATE ON SIGNIFICANT GOVERNANCE ISSUES 2012/2013

The actions identified in the previous AGS have been progressed during the year and more detail has been included in the preceding paragraphs. In summary, positive action has been taken on all as follows:

Action Progress

Review key business risks in the light of the revised Corporate Plan

Comprehensive review undertaken by CMT, Heads of Service and Audit Committee Members in July 2012

Initial review of the implementation of the Ethical Standards Framework

New Standards Framework approved July 2012. Further review of Member/Officer protocol June 2013

Monitor new Internal Audit Contract On going with performance measures reported in the Annual Internal Audit Report June 2013 for work completed in 2012/13.

Continue to monitor audit recommendations at the Audit Committee to ensure timely and thorough implementation

Each Audit Committee meeting in 2012/13 has received a report highlighting all recommendations that are outstanding or are approaching their agreed completion date. Members have debated the issues and challenged officers.


Review contract monitoring arrangements for major contracts

Review underway in housing for key housing contracts with new management structure implemented in July 2012.

Issues addressed effectively with ground maintenance contractor during the year

Implement specific budget monitoring arrangements for the HRA Business plan capital and revenue spending

Business Plan annual and 6-month review considered by CMT and reported to Members.

New HRA capital monitoring group in place meeting monthly throughout the year

New Housing Delivery Board established which considers strategic development opportunities and asset issues.

Review remaining employment policies Pay Policy Statement during the year and approved in February 2013

7. SIGNIFICANT GOVERNANCE ISSUES IDENTIFIED IN 2012/13

Whilst the actions identified in the previous year have largely been addressed, as the review of Waverley’s arrangements becomes even more challenging, officers continue to identify scope for further improvement in future. The key areas identified are as follows:

Action Responsible Target date

Revising Whistle-blowing Internal Audit Client Manager

September 2013 Audit Cttee

Revise Staff Code of Conduct and Annual Declarations

Head of Corporate Governance

December 2013

Wider ownership and awareness of AGS through HoST and Connectors

Head of Corporate Governance

December 2013

Continue programme of updating HR Policies

Strategic HR Manager

March 2014

Revise Annual Internal Audit Report to improve format and presentation

Internal Audit Client Manager

June 2013 Audit Cttee


for senior managers and Audit Committee and to include performance information of contractor

Level of assurance

This Annual Governance Statement demonstrates that the systems and processes that comprise Waverley’s governance arrangements provide a comprehensive level of assurance to the Council.

Certification

This Governance Statement has been prepared by officers with knowledge of the key governance issues. They have compiled a list of items of evidence to support an assessment against the Council’s Code of Corporate Governance and to support the action plan mentioned above. That assessment has been referred to in the preparation of this Governance Statement, which also draws upon the knowledge and understanding of those officers.

We therefore commend the Governance Statement to the Council.

Signed

Leader of the Council Chief Executive

See separate file for Audit Opinion



Trust Funds and other Small Funds

1. Small Trust Funds

1 April 2012 Receipts Balance 31 March 2013in year transferred

£'000 £'000 £'000 £'000

Warren Bequest (Farnham Museum) (6) 0 0 (6)

Museum Bequest Fund (2) 0 1 (1)

Mabel Squire Bequest (2) 0 2 0 (10) 0 3 (7)

2. Other Small Funds

1 April 2012 Receipts Expenditure 31 March 2013

in year in year£'000 £'000 £'000 £'000

Farnham Museum Club (11) (11)

Farnham Museum Society (1) (1)

Museum Fund Raising (3) (3)

Museum Donations (4) (4) (19) 0 0 (19)

3. The Safer Waverley Partnership (SWP)

1 April 2012 Receipts Expenditure 31 March 2013in year in year

£'000 £'000 £'000 £'000

Safer Waverley Partnership (71) (12) 42 (41)

The Council acts as Trustee for legacies left by residents of the Borough for a variety of purposes. These are notincluded in the Balance Sheet being unavailable for general use but are summarised below.

The following small funds are administered by the Council. These are not included in the Balance Sheet beingunavailable for general use but are summarised below.

The Council administers the funds of the Waverley Community Safety Partnership (known as the Safer WaverleyPartnership). The Safer Waverley Partnership for 2012/2013 comprised representatives from the followingorganisations: Waverley Borough Council, Surrey County Council, Surrey Police, Surrey Fire and Rescue Service,National Probation Service, Surrey Primary Care Trust and the Surrey Police Authority (until November 2012). ThePartnership spent money in accordance with the SWP Community Safety Strategic Assessment and Action Plan.

Documents

Annual Financial Report - Waverley Council · Annual Financial Report . 2012-2013 . Paul Wenham. BA (Hons) CPFA . Deputy Chief Executive