Glossary
A
Actuarial gain (loss)
The changes in the pension fund’s deficits or surpluses that arise because of :
a) Events have not coincided with the assumption used by the actuary when carrying out the previous triennial valuation of the fund or
b) The actuary changing the assumptions used in the current triennial valuation exercise from those used previously
Agency
Where one authority (the main authority) pays another authority (the agent) to do work for them.
Approved Budget
The budget which has been approved by full council, adjusted to reflect in year virements (i.e. transfers between budgets).
Asset
An item that is intended to be used for several years such as a building or a vehicle.
Asset Management Revenue Account
An account that the authority is required to maintain. It is used as a balancing account to record capital charges made into service revenue accounts, and other capital accounting entries so there is no cost to the taxpayer.
Assumed National Council Tax (ANCT)
The standard level of council tax for a Band D property (the middle of the range) if all the authorities spent at the level of their Formula Spending Share (FSS.)
Authorised limit
This represents the maximum amount of our debt at any one time during the year, under the new Prudential borrowing regime that was introduced from April 2004
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B
Band D Equivalent
The weighted number of domestic properties subject to Council Tax in a local authority’s area. It is expressed as a proportion to Band D which is the middle property band (e.g. 1 Band H = 2 Band D; 1 1/2 Band A = 1 Band D).
Benefits we have awarded for added years
Added years are additional pensionable years that the council may grant when a member of staff retires early because of redundancy or in the efficiency of the service, These additional years will increase the employee’s retirement benefit which are paid for by the Council, not the pension fund, and are usually financed from the savings that will be made.
Best Value
Under the Local Government Act 1999, local authorities must constantly aim to improve their services. Best Value was the approach introduced that gives local authorities a duty to provide local people with high-quality and efficient services.
Billing authority
The local authority, which collects the Council Tax. In Warwickshire, the district or borough council is the billing authority.
Budget
A statement of our spending plans. The council’s financial year starts on 1 April and ends on 31 March.
Business rates (National Non-Domestic Rate – NNDR)
(Short Definition)
A levy on businesses, based on a national rate in the pound set by government multiplied the rateable value of the property.
(Long Explanation)
Businesses pay business rates instead of Council Tax. Each year, the Government sets the rate in the pound and business rates are collected by the billing authority. Business rates are pooled nationally and a share is given back to local authorities based on the number of people living in the area. The amount charged is based on multiplying the rateable value of each business property by the national rate in the pound.
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C
Capital Financing Reserve
The money we have set aside from day-to-day spending to use for capital spending or to repay loans.
Capital Fund
A reserve that is set aside to fund future spending on assets.
Capital programme
Our plan of future spending on capital projects such as buying land, buildings, vehicles and equipment.
Capital receipt
(Short Definition)
Income from selling assets that have a long-term value.
(Long Explanation)
Income from selling assets that have a long-term value. Capital receipts can be used to finance new capital expenditure within rules set by central government, but they cannot be used to finance day-to-day spending.
Capital spending
Spending on assets that have a lasting value, for example, land, buildings and large items of equipment such as vehicles.
Capital spending charged to revenue
Paying for capital spending direct from the council’s revenue monies.
Capping
A power under which the Government may limit the maximum level of local authority spending or increases in that level year on year, which it considers excessive. It is a tool to restrain increases in council tax.
Cash-flow statement
Summarises cash paid to and received from other organisations and individuals for capital and revenue purposes.
Central departments
Departments, which provide support (i.e. Chief Executives, County Treasurer’s, Property Services, Contracts and Management Services) to those departments, which deal with the public.
CIPFA
Chartered Institute of Public Finance and Accountancy. One of the major accountancy institutes which specialises in the public sector.
Collection Fund
A fund managed by the billing authority (District Council) to receive Business Rates income and Council Tax income. It is also used to make payments to the national business rates pool and to pay a share of council tax collected to the County Council, Police Authority, District Council and Parish Councils.
Comprehensive Performance Assessment
This is a process used by the Audit Commission to assess how well local authorities are performing. Authorities are assessed as being in categories ranging from “Excellent” to “Poor”. Those authorities which are considered to be well run and have a rating of “Good” or “Excellent” have been given greater flexibilities and freedoms, and are subject to lower levels of inspection than poorer performing authorities.
Corporate and democratic core
Spending relating to the need to co-ordinate and account for the many services we provide to the public including the cost of member representation and activities associated with public accountability.
Cost Centre Manager (CCM)
The manager who is responsible for the financial activities and management of a specific service or support service activity.
Council Tax
A tax charged on domestic householders based on their property band. There are eight bands of property values. The amount paid will depend on which band your property is in. A reduction for empty properties or if you live on your own. In Warwickshire, the district or borough council issues Council Tax bills and collects the Council Tax.
Council Tax Base
An assessment by each billing authority of the number of converted to Band D equivalents (the average band), after properties, allowing for non-collection and new properties, on which a tax can be charged.
Council Tax surpluses/losses
The District Councils’ tax bases are calculated using estimated collection rates. Actual collection rates in a given year may give rise to a surplus/deficit to be taken into account when setting tax levels for the following year. Amounts in respect of Council Tax are shared between the District Council concerned, the County Council and the Police Authority pro-rata to the share of the aggregate of the precepts and demands on the collection fund. These surpluses and losses are applied to reduce or increase the spending of the authority.
Creditors
People or organisations we owe money to for work, goods or services, which have not been paid for by the end of the financial year.
Current assets
Short-term assets that constantly change in value such as stocks, debtors and bank balances.
Current liabilities
Monies that are due to be paid in less than one year such as bank overdrafts and money owed to suppliers.
Current service cost
The current service cost is the increase in the value of the pension scheme's future pension liabilities arising from the employee’s on-going membership of the pension scheme.
Current spending
The yearly running costs of local authorities, not including specific grants and the cost of buying our assets.
Curtailment costs
Curtailment costs are the amounts of money that are paid to a new pension scheme when a defined group of staff transfer from one pension scheme to another. The costs represent the value of the pension rights accrued by the transferring staff.
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D
Debtors
People who owe us money that is not paid by the end of the financial year.
Deferred charges
Spending on assets that have a lasting value, for example, land and buildings, which are not owned by us.
Depreciation
The drop in the value of assets such as buildings and vehicle which reflects wear and tear, age and the asset becoming out of date.
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E
Earmarked reserves
Money set aside for a specific purpose.
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F
Financial Reporting Standard (FRS)
Recommendations on the way we need to treat certain items in our accounts.
Financial Year
Our financial year starts on 1 April and ends on 31 March.
Fixed-Asset Restatement Reserve
This is an accounting reserve that shows the change in the value of our assets from the historic cost to their current valuation. .
Floors
The minimum level of grant, as determined by government, that an authority will receive.
Formula Spending Share (FSS)
This is a sum of money generated by a national formula which is used by government as the basis for allocating revenue support grant. Each local authority has a Formula Spending Share.
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G
General reserves
Money set aside to be used in the future to meet unforeseen eventualities.
Government grants
Payment by the Government towards the cost of local-authority services. These are either for particular purposes or services (specific grants) or to fund local services generally (revenue support grant).
Government grants deferred account
The amount of money given to us by government to spend on assets that have a lasting value, for example, land and buildings. This amount is reduced each year as the value of the asset reduces due to wear and tear.
Gross spending
The overall cost of providing our services before allowing for government grants or other income.
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H
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I
Imprest Account
Small bank accounts set up by departments, where using the County Fund would be impractical.
Internal Market
The provision of support services to other departments within the County Council.
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J
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K
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L
Leasing
A method of renting the use of vehicles, machinery and equipment. The items do not belong to us, but are the property of the leasing company to whom we pay rentals.
Liabilities
Money we will have to pay to people or organisations in the future.
Loss
The amount left over when expenses are higher than all income received.
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M
Minimum revenue provision (MRP)
The statutory minimum amount by which the council must set aside to repay loans.
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N
Net asset value
The total value of an organisation’s assets, less its liabilities and capital charges.
Net book value
The value of an asset after depreciation.
Net spending
The cost of providing a service after allowing for specific grants and other income from fees and charges (i.e. not including Council Tax and money from the Government).
Non-distributed costs
Past service pension costs including settlements and curtailments which are not to be included in total individual service costs.
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O
Operating leases
A specific type of lease under which ownership of the goods and any profits or losses remain with the company (the lessor) leasing the goods to us.
Overheads
Spending on items not directly related to the supply of our services, for example, office cleaning costs.
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P
Past service costs
The past service cost is the extra liability that arises when the council grants extra retirement benefits that did not exist before.
Pensions interest cost and expected return on assets
The net interest cost is the increase in the value of the pension scheme liabilities that arise because those liabilities are one year closer to being paid.
The expected return on assets is the forecast of accrued benefit from investments of the pension fund in the long-term.
Petty Cash
Small sums of cash kept by departments to pay minor expenses.
Precept
(Definition of a Precept)
The amount each non-billing authority, (County Council, Police Authority or Parish Council) asks the billing authority (district and borough council) to collect every year to meet their spending.
(Definition of our Precept)
The amount we (the precepting authority) ask the district and borough councils to collect each year for us to meet our spending.
Provisions
Money set aside to meet specific service liabilities, and to meet spending.
Provision for credit liabilities
Money set aside to repay outstanding loans or avoid new borrowing
Prudential Code
A statutory code of practice that sets out the framework for local authority capital finance that ensures:
- Capital expenditure plans are affordable;
- All external borrowing and other long term liabilities are within prudent and sustainable levels; and
- Treasury management decisions are taken in accordance with professional good practice.
Prudential System
A system introduced from April 2004 which allows local authorities to determine how much long-term borrowing it can afford to undertake to fund capital expenditure. This system replaced the previous complex regulatory framework of capital controls with a system based on self-regulation by local authorities. The system is enshrined in the Prudential Code.
Public service agreement
An agreement made between a local authority and central government containing a set of agreed stretched targets for improving services. If the council meets these targets it will receive additional funding from central government, together with greater freedoms and flexibilities from regulations.
The PWLB
The Public Works Loans Board is a government agency, which provides long-term loans to local authorities at favourable interest rates only slightly higher than those at which the Government itself can borrow.
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Q
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R
Rateable Value (RV)
A value placed on all non-domestic properties (businesses) on which rates have to be paid, broadly based on the rent that the property might earn, after deducting the cost of repairs and insurance. The rateable value is determined by the Inland Revenue’s Valuation Office Agency.
Reconciliation
A reconciliation explains how figures are worked out, and shows how they are used in different statements in our accounts.
Reimbursements
Payments we receive for work we do for other public organisations, for example, the Government.
Reserves and funds
Savings we have built up from surpluses.
Resident Population
The assessment of the number of people living in the area. This is a measure used by the Government to determine levels of local authority funding. For 2005/2006 it is based on the number of adults as at 30 June 2003 for each authority, as estimated by the Registrar General and adjusted for boundary changes in force from 1 April 2004 to 31 March 2005.
Restated
This is where we have changed figures that we have been published in the past to show like-for-like comparisons with later year’s figures
Resource equalisation
This was a process introduced by central government in 2003/2004 as part of the grant review which aims to bring the average assumed level of council tax which authorities need to charge broadly in line with actual council tax levels.
Revenue spending
Spending on the day-to-day running of services - mainly wages, running expenses of buildings and equipment, and debt charges. These costs are met from the Council Tax, government grants, fees and charges.
Revenue Support Grant
The main government grant to support local authority services.
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S
Scheduled and admitted bodies
A scheduled body is an organisation which has the right under legislation –to become a member of the Local Government Pension Scheme
An admitted body is an organisation which does not have the automatic right to join the Local Government Pension Scheme but can join (be admitted to) with the agreement of the administering authority. It must be non-profit-making and will normally be receiving a grant from either central or local government.
Settlement costs
The cost arising when we make a lump-sum payment to a pension scheme member in exchange for their rights to receive certain pension benefits.
Specific grants
Payments from the Government to cover local-authority spending on a particular service or project. Specific grants are usually a fixed percentage of the costs of a service or project.
Statement of standard accounting practice (SSAP)
Recommendations on the way we need to treat certain items in our accounts.
Stock and stores
Goods bought which have not been used.
Supported Capital Expenditure (Revenue)
Capital schemes for which the government will provide revenue support. This was introduced from 2004/2005 to provide revenue support for traditionally funded capital schemes and replaces credit approvals
Surplus
The remainder after taking away all expenses from income.
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T
Tax Base
The tax base is an assessment by each billing authority of the likely yield of a Council Tax of £1, taking into account the number of properties on which a tax can be levied. The Tax base counts properties as Band D equivalents .For setting Council Tax, the tax base is based on the District or Borough Council's number of Band D equivalent properties within each local authority area, allowing for non-collection of Council Tax and new properties.
Traded Services
A service that has a zero budget and has to generate sufficient income from the delivery of services to paying customers to cover their total costs.
Trust fund
Money that does not belong to us but is managed by us for the owners of the money.
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U
Unapportionable central overheads
Costs that do not relate to a single service or services, and so are held centrally.
Underwriting
An agreement by a fund manager to buy any unsold new issue of shares in exchange for a fee.
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V
Virement
The transfer of budget from one spending head to another. Limits on the amount of transfers are specified in the Council's Financial Regulations.
Virtual bank
A fund for self-financing projects.
W
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X
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Y
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Z