WEST MIDLANDS LEADERS BOARD (formerly West Midlands Local Government Association)

Transcription

1 (formerly West Midlands Local Government Association) FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2010

2 LEADERS Board at 31 March 2010 Cllr K Taylor Cllr P Atkins Cllr K Barrow Cllr M Bird Cllr JP Campion Cllr D Cook Cllr D Cooper Cllr M Doody Cllr A Eade Cllr B Edwards Cllr A Farnell Cllr Mrs C Gandy Cllr S Geraghty Cllr P Gilbert Cllr R Grosvenor Cllr P Grove Cllr C Hayfield Cllr M Heenan Cllr R Hollingworth Cllr C Humphrey Cllr R Irving Cllr Dr G Lord Cllr K Meeson Cllr P Middlebrough Cllr A Millward Cllr N Patten Cllr R Phillips Cllr S Ralphs Cllr D S Smith Cllr N Stanley Cllr S Tagg Cllr L Topham Cllr M Whitby Coventry City Council Staffordshire County Council Shropshire Council Walsall Council Wyre Forest District Council Tamworth Borough Council Sandwell MBC Warwick DC Telford & Wrekin Council South Staffordshire Council Warwickshire County Council Redditch Borough Council Worcester City Council Nuneaton & Bedworth Borough Council East Staffordshire Borough Council Malvern Hills District Council North Warwickshire Borough Council Stafford Borough Council Bromsgrove District Council Rugby Borough Council Stoke on Trent City Council Worcestershire County Council Solihull MBC Wychavon District Council Dudley MBC Wolverhampton City Council Herefordshire Council Staffordshire Moorlands DC Lichfield District Council Cannock Chase District Council Newcastle under Lyme Borough Council Stratford upon Avon District Council Birmingham City Council Officers O Dutton Chief Executive Bankers Auditors Co-operative Bank Plc Clement Keys P O Box 101 Chartered Accountants and Registered Auditors 1 Ballam Street 39/40 Calthorpe Road Manchester Edgbaston M50 4EP Birmingham B15 1TS Actuary Mr Gary Bailey F.I.A Mercer Human Resource Consulting Four Brindleyplace Birmingham B1 2JQ

3 CONTENTS Page Report of the leaders Board 1 Report of the Independent Auditors 3 Revenue Account 4 Statement of Total Recognised Gains and Losses 5 Revenue account for Strategic Migration Partnership 6 Balance Sheet 7 Notes to the financial statements 8 The following page does not form part of the audited accounts Liability Statement of Members 14

4 REPORT OF THE BOARD The West Midlands Leaders Board (formerly the West Midlands Local Government Association) is an association of all the principal councils in the West Midlands region formed to represent and promote the interests of the region locally, nationally and internationally. It operates in accordance with a legally-binding constitution through a Board, Standing Committees, Portfolio Groups and Task Groups. Statement of Board responsibilities The constitution requires the Board to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the West Midlands Leaders Board and of the income and expenditure of the Board for that period. In preparing those financial statements, the Board is required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association will continue. The Board is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the West Midlands Leaders Board and to enable it to ensure that the financial statements comply with the accounting standards. It is also responsible for safeguarding the assets of the West Midlands Leaders Board and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities and maintenance of appropriate internal controls. The Board is responsible for the maintenance and integrity of the corporate and financial information included on the West Midlands Leaders Board website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. So far as each of the Board members are aware at the time the report is approved: - there is no relevant audit information of which the auditors are unaware; and - the Board has taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. Review of the year The Local Democracy, Economic Development and Construction Act received royal assent in November 2009 calling for the creation of new Leaders Boards and the abolition of regional assemblies. In our strategic focus was therefore the necessary transition arrangements to create a new West Midlands Leaders Board (WMLB) that continued to provide the range of services and activities of the West Midlands LGA, but that also prepared to take on the new leadership and policy functions and the possible transfer of Regional Planning Body responsibilities in support of a new integrated regional strategy. In the year we therefore:- Changed the name of WMLGA to the West Midlands Leaders Board; Created new governance arrangements and democratic structures for WMLB Adopted a revised Constitution for WMLB; and Prepared for the abolition of WMRA and transfer of its assets and liabilities to WMLB with effect from 1 st April The WMLGA therefore became the WMLB by virtue of a name change. There was no change to the legal status of the organisation, which remains that of an Employers Association under the Trade Union and Labour Relations Act WMLB continues to support partnership working with the Strategic Migration Partnership, Age UK, Business Voice West Midlands, Play England and other regional projects co-located at the Regional Partnership Centre. Page 1

5 REPORT OF THE LEADERS BOARD - continued Post balance sheet events Since the General Election and the arrival of the new Coalition Government there have been significant changes to public sector funding arrangements and in particular the Government has ceased funding for regional strategies. This had a significant impact on the operations of WMLB and since May, both elected members and local authority chief executives have been working hard to secure a future role for their regional body. There have been some key decisions made in recent months and prior to the formal adoption of these accounts. These are outlined below:- The WMLB changed its name to West Midlands Councils in July 2010 The staffing structure and overall scale of operations has been significantly reduced with related costs being met from reserves or directly by the local authorities WMC will continue to operate as a voluntary association of local government in the West Midlands and currently remains an Employers Association WMC will however cease to be an employing body and staff will be subject to a TUPE transfer to a host local authority employer by the 31 st March 2011 Membership of the organisation remains the 33 councils of the West Midlands represented by their Leaders This report was approved by the Board on 28 th September 2010 and signed on its behalf by: Cllr Philip Atkins, Chairman Page 2

6 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF WEST MIDLANDS LEADERS BOARD We have audited the financial statements of the West Midlands Leaders Board ( the Association ) for the year ended 31 March 2010 set out on pages 4 to 13. These financial statements have been prepared under the accounting policies set out on page 8. This report is made solely to the members, as a body, in accordance with the Trade Union and Labour Relations (Consolidation) Act Our audit work has been undertaken so that we might state to the Associations members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the Leaders Board and the auditors As described in the Statement of Board Responsibilities the Board is responsible for the preparation of the report of the Leaders Board and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Our responsibility is to audit those financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Trade Union and Labour Relations (Consolidation) Act We also report to you if in our opinion the information given in the report of the Leaders Board is not consistent with the financial statements. In addition, we report to you if, in our opinion the Leaders Board has not kept proper accounting records, if a satisfactory system of internal control has not been established and maintained or if we have not received all of the information, explanations and access to documents we require for our audit. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Board in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Leaders Board s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion: the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of affairs of the Association as at 31 March 2010 and of its income and expenditure for the year then ended; The financial statements have been properly prepared in accordance with the Trade Union and Labour Relations (Consolidation) Act 1992; and the information contained in the Report of the Board is consistent with the financial statements. 39/40 Calthorpe Road CLEMENT KEYS Edgbaston Chartered Accountants Birmingham Registered Auditors B15 1TS Date: 28 September 2010 Page 3

7 REVENUE ACCOUNT For the year ended 31 March INCOME Levies and subscriptions receivable (incl. IDeA) 1,442,246 1,516,683 Training Revenue 85, ,087 Consultancy fees 608, ,324 Bank interest 3,600 36,596 TU contribution to Provincial Council 3,737 3,628 Corporate income 116,671 23,275 Service Level Agreements and Management Fees 463, ,209 Incontext Income 16,225 - Other income 7,667 5,093 2,747,139 2,783,895 EXPENDITURE Staff costs (incl. Pension adjustment) 1,246,465 1,488,270 Member allowances 38,876 50,052 Training costs 44,145 75,689 Consultancy costs 247, ,130 Travel and subsistence 23,068 29,981 Establishment expenses 335, ,875 RPC development - 8,400 ICT & office equipment expenses 54,090 52,123 Professional fees 15,515 16,034 Copying, stationery and postage 45,573 52,651 Publishing and marketing materials 8,097 10,217 Conference costs 6,415 1,236 Party conference costs ,138 Corporate costs 1, Hospitality 5,721 8,651 West Midlands in Europe subscription 215, ,317 European activities and EU Connects 17,294 15,196 Other subscriptions 3,465 4,875 Other costs and work programmes 8,632 6,630 Bad debts 1, WMLGA review 9,600 36,525 Change Management 16,321 - Depreciation of fixed assets 17,729 19,501 2,362,774 2,781,136 Surplus on operational activities 384,365 2,759 Other finance costs Expected return on pension fund assets 451, ,000 Interest on pension scheme liability (826,000) (375,000) (808,000) (260,000) SURPLUS/(DEFICIT) FOR THE YEAR 9,365 (257,241) Page 4

8 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 31 MARCH 2010 Note Surplus/(Deficit) for the year Page 4 9,365 (257,241) Actuarial (loss)/surplus recognised on defined benefit pension scheme 7 (3,248,000) 1,088,000 Total recognised (losses) and gains for the year (3,238,635) 830,759 Page 5

9 REVENUE ACCOUNT WEST MIDLANDS STRATEGIC MIGRATION PARTNERSHIP For the year ended 31 March INCOME IND (Home Office) Grant receivable 170, ,000 Heart of Birmingham PCT - 26,500 CSIP - 5,000 Department of Health 19,130 31,098 Birmingham Health & Wellbeing P ship - 10,000 UKBA Reform Programme - 4,000 CLG Stronger Comms Post 14,416 - Welcome to West Midlands 57,000 - Other 17,227 20,232 EXPENDITURE 277, ,830 Salaries 179, ,666 Travel and subsistence 8,523 9,448 Meetings and hospitality 5,572 1,556 Establishment 26,595 23,962 Training 150 5,512 Welcome to West Midlands 48,073 - CLG Stronger Comms Post 14,416 - Phones and printing 1, (284,206) (241,018) MOVEMENT IN FUNDS FOR THE YEAR (6,433) 25,812 UNEXPENDED FUNDS AT 31 MARCH ,461 27,649 UNEXPENDED FUNDS AT 31 MARCH 2010 page 7 47,028 53,461 Page 6

10 BALANCE SHEET 31 MARCH Note Tangible fixed assets 2 48,750 58,466 Current assets Income receivable 529, ,777 Amounts due from WMIE 261,456 95,628 Employee loans recoverable 5 3,054 8,953 Prepayments and accrued income 156, ,951 Other debtors 50,365 12,636 Balance at bank 857, ,925 Cash balance Creditors : amounts falling due within one year 1,858,337 1,400,125 Bank loan - 9,133 Creditors balances 169, ,324 Project income received in advance: Special projects 3 370, ,538 Strategic Migration Partnership (Pg 6) 47,028 53,461 Accrued expenses and deferred income 79, ,022 Other creditors 258,486 73, , ,866 Net current assets 933, ,259 Creditors : amounts falling due after more than one year Bank loan - (18,266) Net assets before pension scheme obligations 981, ,459 Pension scheme obligations 7 (8,504,000) (4,991,000) Financed by (7,522,176) (4,283,541) Revenue reserve - deficit 4 (7,522,176) (4,283,541) Approved on <> 2010 <>, Chairman Olwen Dutton, Chief Executive Page 7

11 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March Accounting policies The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The main accounting policies are as follows:- (a) Going Concern As set out in the Report of the Board the organisation has been advised that its funding from the UK central government is to be curtailed which will impact on the funding of the organisation. Plans are being considered for the future operations and funding of the organisation and, despite the uncertainty, it is considered appropriate to prepare the accounts on a going concern basis. (b) Fixed assets and depreciation Tangible fixed assets are stated at cost, less capital contributions, less depreciation. Depreciation is provided at rates designed to write off the costs, net of capital contributions less estimated residual values of the assets over their expected useful lives. The bases adopted are as follows: Expenditure on leasehold property Expenditure on office furniture and equipment Expenditure on computer equipment - straight line over the term of the lease; - straight line over 10 years; - straight line over 3 years (c) Operating leases Rentals charged on operating leases relating to property, office equipment and motor vehicles are written off to the Revenue Account over the period of the lease. (d) Foreign currency Transactions in foreign currencies are translated into sterling at the rate applicable on the date of the transaction. Assets held in foreign currencies are translated at the rate applicable at the end of the year. (e) Pension costs and liabilities The amount charged to the Revenue Account as part of staff costs in respect of the defined benefit pension scheme comprises current and past service costs. The interest costs and the expected returns on scheme assets are shown as other finance costs within the Revenue Account. Actuarial gains and losses are recognised within the Statement of Total Recognised Gains and Losses. Pension assets are measured at fair value and pension liabilities are measured on an actuarial basis using the projected unit basis. Full actuarial valuations are obtained on a triennial basis and updated at each balance sheet date in the intervening years. The defined benefit asset or liability is presented separately on the balance sheet. (f) Special projects In seeking to meet its objects the Leaders Board manages various projects on behalf of its partners. The income and expenditure relating to these projects is not reflected within these accounts other than the financial contributions made by the Leaders Board to these projects. Page 8

12 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March Tangible fixed assets Expenditure on s/t Office leasehold property equipment Total Cost At 31 March , , ,487 Transferred from WMRA - 64,444 64,444 Additions - 8,010 8,010 At 31 March , , ,940 Depreciation At 31 March ,937 99, ,018 Transferred from WMRA - 64,443 64,443 Charge for the year - 17,729 17,729 At 31 March , , ,190 Net book value 31 March ,749 48, March ,468 58,468 3 Special project monies held on account Expenditure Income /Transfers ERN 5, ,000 European Structural Funds 14,663-3,728 10,935 Health redundancy reserve 7,850-7,850 - Black Country Study 25, ,990 Regional Development Centres 7, ,000 Transport Policy Forum 18, ,086 LAA Programme 2,774-2,774 - WMC Incontext 28,576-28,576 - Media Monitoring (RA) RPC Development 4, ,676 CBF Project Team 144, , , ,007 WMRA E&D Action Plan 4, ,000 ESF Co Financing Plan (25,459) 144, ,066 - Corporate Training Plan 19,136 19,003 15,000 23,139 LSC Reg Planning Grp - 8,510-8,510 W2WM Comms - 20,000-20,000 Project M ment of E&D - 7,000-7,000 ERN Print of Climate Change - 2,554-2, , , , ,522 Page 9

13 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March Revenue Reserve At 31 March deficit (4,283,541) Surplus for the year 9,365 Actuarial loss for the year page 5 (3,248,000) At 31 March deficit (7,522,176) Analysed as: Pension reserve - deficit (8,504,000) (4,991,000) General reserve 981, ,459 (7,522,176) (4,283,541) 5 Employee loans recoverable Recoverable within one year 3,054 5,909 Recoverable after more than one year - 3,044 6 Financial commitments 3,054 8,953 (a) Rentals payable on non-cancellable operating leases in force at the end of the year were as follows: Property Other Property Other Leases expiring in months 179,110 41, ,341 48,810 (b) The Leaders Board guarantees the office equipment leases of West Midlands in Europe. The office equipment leases have annual rentals of 3,420 (2009: nil) for leases which expire in under 12 months and 14,028 (2009: 12,627) for leases which expire in months. Page 10

14 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March Pension scheme The Leaders Board operates a defined benefit scheme in the UK for all qualifying employees. The funding of the scheme is assessed in accordance with advice received from independent actuaries. The scheme is subject to a triennial actuarial review with the most recent one having been at 31 March This valuation has been updated to 31 March 2010 for the purposes of the disclosures given below. Financial assumptions applied by the actuary when valuing the liabilities of the scheme 31 March 31 March 31 March Projected unit Valuation method % % % Discount rate Inflation rate Increases to pensions in payment Salary increases The assets in the fund and the financial assumptions applied in respect of their return and their valuations were: Long term rate of return expected Value at 31 March % % % Equities ,942,000 4,263,000 5,530,000 Government Bonds , , ,000 Other bonds , , ,000 Property , , ,000 Other , , ,000 Total fair value of assets 9,483,000 6,558,000 7,800,000 The amount recognised in the balance sheet is as follows: Present value of scheme obligations (17,987,000) (11,549,000) Fair value of scheme assets 9,483,000 6,558,000 Deficit in scheme (8,504,000) (4,991,000) Movement in deficit during the year Deficit at beginning of year (4,991,000) (5,722,000) Movement in year Current service costs (406,000) (561,000) Past service costs (146,000) (10,000) Contributions paid 662, ,000 Interest cost (375,000) (260,000) Actuarial (loss)/gain (3,248,000) 1,088,000 Deficit in scheme at end of year (8,504,000) (4,991,000) Page 11

15 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March Pensions continued Analysis of actuarial loss Actual return less expected return on assets 1,720,000 (2,038,000) Changes in assumptions (4,968,000) 3,126,000 Net actuarial (loss)/surplus (3,248,000) 1,088,000 History of experience of gains and losses % % % Difference between expected and actual return on scheme assets (percentage of scheme assets) ,720, (2,038,000) -2.0 (156,000) Experience gains and losses on scheme liabilities (888,000) Total amount recognised in statement of total recognised gains and losses (percentage of scheme liabilities) 18.1 (3,248,000) ,088, (1,682,000) Amounts recognised in the Revenue Account are as follows: Service costs (406,000) (561,000) Past service costs (146,000) (10,000) Expected return on pension scheme assets 451, ,000 Interest on pension liability 826, ,000 Total cost recognised in the Revenue Account 725, ,000 8 Related party transactions (a) (b) (c) West Midlands Leaders Board (WMLB) has entered into a Service Level Agreement with two of its members, West Midlands in Europe, (WMIE) and West Midlands Regional Assembly (WMRA) whereby WMLB seconds staff and provides financial management, human resources and administrative support services to WMIE and WMRA. The amounts charged by WMLB to WMIE and WMRA in the accounts in respect of its services under the service level agreements are: Nil (2009: Nil) and 50,648 (2009: 49,173) respectively. Birmingham City Council, which is a member of WMLB, has entered into an agreement with the Leaders Board whereby the Council is the legal leaseholder of a property in Brussels occupied by the Leaders Board. The Borough Council of Sandwell, which is a member of WMLB has entered into an agreement with the Leaders Board whereby the Council is the legal leaseholder of the Leaders Board property in Britain. Page 12

16 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March Related party transactions continued (d) (e) As noted at page 4 WMLB pays allowances to the Chairman, Vice Chair and Portfolio holders and reimburses, on the production of receipts, travelling expenses incurred outside the region As part of the formal winding up process of West Midlands Regional Assembly the balances on all open projects were been transferred to WMLB subsequent to the yea end. A summary of the amounts transferred is included below: Project balances transferred from WMRA Energy West Midlands 2,500 Rural & Forestry Framework 59,200 Housing 15,697 Housing CEPDG 30,000 Sandwell RHA 40,476 Waste 18,445 Big Lottery Fund 24,236 EU Connects 13,789 RHE Strategy Fund 9,291 OPEN (1,455) 212,179 9 Contingent asset note The Leaders Board is the employer body for its own and other organisations staff, who belong to the West Midlands Pension Fund. Staff costs including pension contributions are recharged to these other organisations through service level agreements. As the Leaders Board is the employer body, it meets the full liability of the West Midlands Pension Fund pension deficit in its financial statements. However, in the event of the Leaders Board ceasing to be an employer body then these other organisations would be asked to take over their share of the pension scheme assets and liabilities. Page 13

17 LIABILITY STATEMENT OF MEMBERS (UNAUDITED) as at 31 March 2010 The following assets, liabilities and committed expenditure represent the members financial responsibilities in the event of the cessation of the Board. WMiE liabilities Note Operating leases commitments to end of leases WMIE (50%) - translated at 0.90 Rent 197,746 Photocopiers 18,728 IT Maintenance 400 Other 98 (216,972) Dilapidations provision for Belgian offices (50%) (A) (15,000) Potential redundancy costs WMiE staff paid by WMLB (50%) (22,621) Potential redundancy costs WMiE staff paid in Brussels (50%) (46,952) WMLB liabilities Potential UK redundancy costs (not including pension strain or PILON) (992,285) Operating leases commitments to end of leases Rent, rates, insurance and service charge (B) 1,175,274 Car Parking Spaces 76,633 Vending Machine 2,148 Photocopiers 78,846 Franking Machine 6,574 (1,339,475) Dilapidations provision for Birmingham offices (C) (100,000) Less: Revenue Reserves of West Midlands Leaders Board (excluding pension liabilities) 981,824 Reserves of West Midlands in Europe controlled by WMLB (50%) translated at ,502 Potential transfer of reserves from WMRA (A) 115,000 Total net liabilities (1,598,979) This does not form part of the audited financial statements of WMLB but is to aid to Local Authorities to assess their liability. Apportionment would be calculated in proportion to the subscription paid as a percentage of the total local authorities levies. (A) Estimated figure (B) Based on known lease commitment term and amounts paid in the year to 31 March 2010 (C) Estimated per square foot (D) Although the organisation will have no liability to the West Midlands Pension Scheme in respect of redundancies, in the event of it being wound up, the costs of any actuarial strain arising will be borne by those councils who are members in the form of increased contributions in future years. Page 14