Agenda Document Pack - Audit and Risk Committee - 01/12/2025
Perth and Kinross Council · 1 December 2025
Back to Audit and Risk Committee — 1 December 2025 and its agenda
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Ambition | Compassion | Integrity Our vision is for a Perth and Kinross where everyone can live life well, free from poverty and inequality Council Building 2 High Street Perth PH1 5PH 24/11/2025 A hybrid meeting of the Audit and Risk Committee will be held in the Council Chamber on Monday, 01 December 2025 at 13:00. If you have any queries please contact Democratic Services on (01738) 475000 or email Committee@pkc.gov.uk. THOMAS GLEN Chief Executive Those attending the meeting are requested to ensure that all notifications are silent on their device and other devices are in silent mode. Please note that the meeting will be broadcast online and recorded. The recording will be publicly available on the Council’s website following the meeting. Members: Councillor David Illingworth (Convener) Councillor Bob Brawn (Vice-Convener) Councillor Liz Barrett Councillor Andy Chan Councillor Ken Harvey Councillor Iain MacPherson Councillor Grant Stewart Page 1 of 212
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Audit and Risk Committee Monday, 01 December 2025 AGENDA Members are reminded of their obligation to declare any financial or non-financial interest which they may have in any item on this agenda in accordance with the councillors’ code of conduct. 1 WELCOME AND APOLOGIES 2 DECLARATIONS OF INTEREST 3 MINUTE OF MEETING OF AUDIT AND RISK COMMITTEE OF 17 SEPTEMBER 2025 FOR APPROVAL 4 OUTSTANDING BUSINESS STATEMENT (copy herewith 25/329) 5 - 6 5 DRAFT 2024/25 ANNUAL ACCOUNTS (AUDITED) DRAFT 2024/25 ANNUAL AUDIT REPORT Report by Chief Finance Officer (copy herewith 25/330) 7 - 184 6 INTERNAL AUDIT FOLLOW UP Report by Chief Internal Auditor (copy herewith 25/331) 185 - 188 7 INTERNAL AUDIT UPDATE Report by Chief Internal Officer (copy herewith 25/332) 189 - 192 8 INTERNAL AUDIT - 24-03 MULTI-AGENCY SCREENING HUB (MASH) (copy herewith 25/333) 193 - 212 9 INTERNAL AUDIT - PETTY CASH Note: The report has now been withdrawn. It is recommended that the public and press should be excluded during consideration of the following item(s) in order to avoid the disclosure of information which is exempt in terms of Schedule 7A to the Local Government (Scotland) Act 1973 P1 INTERNAL AUDIT - HEALTH AND SOCIAL CARE PARTNERSHIP • Exempt Reason 15 - The identity of a protected informant. Page 3 of 212
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AUDIT AND RISKCOMMITTEE OUTSTANDING BUSINESS STATEMENT (OBS) (Report No. 25/329) Please note that this statement sets out outstanding decisions of this committee along with an update and estimated completion date. Actions which are overdue are shaded for ease of reference. Where an update reflects that an action is complete then the Committee’s agreement will be sought to its removal from the OBS. No Minute Reference Subject Title Outstanding Action Update Lead Officer /Service Action due Action Expected 8. 17 September 2025. Item 4. Best Value Thematic Management Report September 2025 – Transformation & Change Programme The breakdown in £11.2m of savings that the Council has delivered since 2022 through its Transformation and Change Strategy be shared with members. Information was circulated to members via email on 24 November 2025. Charlene Guild Complete 1 December 2025 9. 17 September 2025. Item 6. Internal Audit Follow-Up (Child Poverty) Information be shared with members on the benefits of understanding data on people in poverty with a protective characteristic. Response was circulated to members via email on 24 November 2025. Jackie Clark Complete 1 December 2025 4 Page 5 of 212
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee: Audit and Risk Committee Date of Meeting: 1 December 2025 Report Title: Draft 2024/25 Annual Accounts (Audited) Draft 2024/25 Annual Audit Report Report Number: 25/330 Report Author: Alison O’Brien, Corporate Accounting Manager Scott Walker, Chief Finance Officer Organisational Lead: Scott Walker, Chief Finance Officer ___________________________________________________________________ 1. Purpose 1.1 This report presents the Council’s draft 2024/25 Annual Accounts (Audited) in accordance with the Local Authority Accounts (Scotland) Regulations 2014 and draft 2024/25 Annual Audit Report. 1.2 This report includes the following sections: • Section 2 – Recommendations • Section 3 – Background • Section 4 - Draft 2024/25 Annual Accounts (Audited) • Section 5 - Draft 2024/25 Annual Audit Report • Section 6 – Conclusions • Section 7 – Impact Value Assessment • Section 8 - Appendices 2. Recommendations It is recommended that the Committee: 2.1 approves the 2024/25 Annual Accounts (Audited) – see Appendix 1. 2.2 authorises the Leader of the Council, the Chief Executive and the Chief Finance Officer to sign the 2024/25 Annual Accounts (Audited) and the Chief Finance Officer to sign the Letter of Representation – see paragraph 4.8. 5 Page 7 of 212
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2.3 Notes the contents of Audit Scotland’s Draft 2024/25 Annual Audit Report – see paragraph 5.3. 3. Background 3.1 In line with legislative requirements, the Audit and Risk Committee considered the 2024/25 Annual Accounts (Unaudited) on 25 June 2025 (Report No. 25/163 refers). 3.2 The 2024/25 Annual Accounts (Unaudited) were then submitted to Audit Scotland, the Council’s external auditors on the same day (25 June 2025). 3.3 The Annual Accounts are prepared in accordance with the 2024/25 CIPFA Code of Practice on Local Authority Accounting (“the Code”). 3.4 These accounts also comply with the Local Authority Accounts (Scotland) Regulations 2014 which revoked the Local Authority Accounts (Scotland) Regulations 1985. 3.5 The 2024/25 Annual Accounts (Unaudited) were available for public inspection between 30 June and 18 July 2025 (inclusive), during which time Audit Scotland received no objections. 4. Draft 2024/25 Annual Accounts (Audited) 4.1 The audit of the 2024/25 Annual Accounts took place between July and November 2025. The audit considered not only the financial statements but also areas such as financial performance and corporate governance. 4.2 Significant findings and key audit matters impacting on the draft 2024/25 Annual Accounts (Audited) are set out in detail in Exhibit 2 within the draft 2024/25 Annual Report which is included in Appendix 3. 4.3 These findings are summarised as follows: • Restatement of (previous year) gross expenditure figures • Classification of property, plant and equipment • IFRS 16 Implementation (leases) – Group • Debtors and Creditors • Fixed Asset Register • Remuneration Report 4.4 None of the issues identified above and within Exhibit 3 have an impact on the level of resources available to the Council. 4.5 In addition, there were a few minor presentational adjustments. Page 8 of 212
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4.6 Approval of the Accounts at today’s meeting will provide authorisation for the Leader of the Council, the Chief Executive and the Chief Finance Officer to sign them. The draft 2024/25 Accounts (Audited) (unsigned) are attached to this report at Appendix 1. 4.7 The Chief Finance Officer will also sign the Letter of Representation included at Appendix 2. Once signed, the draft 2024/25 Annual Accounts (Audited) and Letter of Representation will be passed to Audit Scotland so that they may issue their opinion in the form of an audit certificate. 4.8 ACTION: The Committee is asked to approve the draft 2024/25 Annual Accounts (Audited) and authorises the Leader of the Council, the Chief Executive and the Chief Finance Officer to sign them and also to authorise the Chief Finance Officer to sign the Letter of Representation. 4.9 All signatures will be provided electronically using a system recognised by Audit Scotland that ensures the signings comply with the legislative requirements. 5. Draft 2024/25 Annual Audit Report 5.1 The draft 2024/25 Annual Audit Report is set out at Appendix 3. This report sets out Audit Scotland’s opinions and conclusions on the overall audit and their findings to be reported under ISA260: Report to those Charged with Governance. 5.2 The key messages from the 2024/25 audit are set out on page 3 of Appendix 3 and are summarised as follows: Audit of the annual accounts All audit opinions stated that the annual accounts were free from material misstatement and prepared in accordance with the relevant requirements. Wider scope audit 1. Perth and Kinross Council’s budget setting and financial management arrangements operated effectively during 2024/25. 2. Appropriate arrangements are in place for financial sustainability despite the challenging financial environment in which the council is operating. 3. Arrangements in place around Vision, Leadership and Governance are generally appropriate. There is scope to improve transparency and scrutiny of senior management exits and restructuring decisions through presentation of options and proposals to elected members. Page 9 of 212
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4. The Council demonstrates a clear link between the use of resources and delivery of its priorities through measuring performance against a suite of Key Performance Indicators (KPIs) linked to its Corporate Plan. Best Value audit 1. The Council has effective and appropriate arrangements in place for securing Best Value. 2. The Best Value Management Report on service transformation reported the council has a clear vision and plan to support the transformation of its services and has robust officer-led governance arrangements in place to monitor its transformational projects through its Transformation Board and Project Teams. There is scope for the council to provide more information on the potential impacts of its transformation projects on vulnerable groups through its Equality and Fairness Impact Assessment process. 3. The Council has effective and appropriate arrangements in place for preparing and publishing Statutory Performance Information, with a slight improvement in performance compared to prior years and other councils. 5.3 ACTION: The Committee is asked to note the contents of Audit Scotland’s draft 2024/25 Annual Audit Report. 5.4 It is anticipated that the final 2024/25 Annual Audit Report will be issued by Audit Scotland following completion of the final accounts process. 6. Conclusions 6.1 Audit Scotland’s findings on the 2024/25 audit are set out in the draft 2024/25 Annual Audit Report which is attached at Appendix 3 to this report. 7. Impact and Value Assessment 7.1 This is an operational report, and as such, an impact and value assessment is not required. 8. Appendices Appendix 1 – Draft 2024/25 Annual Accounts (Audited) Appendix 2 – Letter of Representation Appendix 3 – Draft 2024/25 Annual Audit Report Page 10 of 212
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PERTH AND KINROSS COUNCIL ANNUAL ACCOUNTS 2024/25 AUDITED 5 Page 11 of 212
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Contents Management Commentary ........................................................................................................................................................... 1 Annual Governance Statement.................................................................................................................................................. 23 Independent auditor’s report to the members of Perth and Kinross Council and the Accounts Commission .................. 28 The Financial Statements .......................................................................................................................................................... 31 Movement in Reserves Statement ........................................................................................................................................... 31 Comprehensive Income and Expenditure Statement ............................................................................................................... 32 Balance Sheet .......................................................................................................................................................................... 33 Cash Flow Statement ............................................................................................................................................................... 34 Statement of Responsibilities for the Annual Accounts ......................................................................................................... 35 Notes to the Financial Statements ............................................................................................................................................ 36 1. Accounting Policies .............................................................................................................................................................. 36 2. Accounting Standards that have been issued but have not been adopted ........................................................................... 46 3. Critical Judgements in Applying Accounting Policies ........................................................................................................... 46 4. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty .................................................. 47 5. Adjustments between Accounting Basis and Funding Basis under Regulations .................................................................. 48 6. Expenditure and Funding Analysis ....................................................................................................................................... 49 7. Transfer (to)/from Earmarked Reserves ............................................................................................................................... 52 8. Other Operating Expenditure / Income ................................................................................................................................. 53 9. Financing and Investment Income and Expenditure ............................................................................................................. 53 10. Taxation and Non Specific Grant Income ........................................................................................................................... 54 11. Material Items of Income and Expense .............................................................................................................................. 54 12. Premiums and Discounts on Debt Rescheduling Written Down ......................................................................................... 54 13. General Grants, Bequests and Donations .......................................................................................................................... 54 14. Expenditure and Income Analysed by Nature .................................................................................................................... 55 15. Agency Services ................................................................................................................................................................. 55 16. External Audit Costs ........................................................................................................................................................... 55 17. Termination Benefits .......................................................................................................................................................... 55 18. Post-Employment Benefits ................................................................................................................................................. 55 19. Related Parties ................................................................................................................................................................... 61 20. Leases ................................................................................................................................................................................ 62 21. Property, Plant and Equipment........................................................................................................................................... 64 22. Heritage Assets .................................................................................................................................................................. 69 23. Investment Properties ........................................................................................................................................................ 70 24. Intangible Assets ................................................................................................................................................................ 71 25. Assets Held for Sale ........................................................................................................................................................... 71 26. Long Term Debtors ............................................................................................................................................................ 71 27. Inventories .......................................................................................................................................................................... 72 28. Debtors ............................................................................................................................................................................... 72 29. Creditors ............................................................................................................................................................................. 73 30. Provisions Other than Bad and Doubtful Debts .................................................................................................................. 73 31. Usable Reserves ................................................................................................................................................................ 73 32. Unusable Reserves ............................................................................................................................................................ 74 33. Impairment Losses ............................................................................................................................................................. 76 34. Grants ................................................................................................................................................................................ 77 35. Capital Expenditure and Capital Financing ........................................................................................................................ 78 36. Public Finance Initiatives and Similar Contracts ................................................................................................................. 78 37. Authorisation of Annual Accounts ....................................................................................................................................... 80 38. Contingent Liabilities .......................................................................................................................................................... 80 39. Financial Instruments ......................................................................................................................................................... 82 Page 12 of 212
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40. Devolved School Management (DSM) Schools.................................................................................................................. 87 41. Operating Activities ............................................................................................................................................................ 87 42. Investing Activities .............................................................................................................................................................. 87 43. Financing Activities ............................................................................................................................................................. 87 44. Cash and Cash Equivalents ............................................................................................................................................... 88 45. Trust Funds ........................................................................................................................................................................ 88 46. The Statutory Loans Fund .................................................................................................................................................. 89 Housing Revenue Account Income and Expenditure Statement ........................................................................................... 91 Statement of Movements on the Housing Revenue Account Balance ..................................................................................... 92 The Accompanying Notes to the Housing Revenue Account Income and Expenditure Statement .......................................... 93 Council Tax Income Account ..................................................................................................................................................... 94 The Accompanying Notes to the Council Tax Income Account ................................................................................................ 95 Non-Domestic Rate Income Account ........................................................................................................................................ 96 The Accompanying Notes to the Non-Domestic Rate Income Account.................................................................................... 97 Charitable Trusts ........................................................................................................................................................................ 98 Common Good ............................................................................................................................................................................ 99 The Accompanying Notes to the Common Good Accounts ................................................................................................... 100 Group Accounts ........................................................................................................................................................................ 101 Group Movement in Reserves Statement .............................................................................................................................. 101 Group Comprehensive Income and Expenditure Statement .................................................................................................. 102 Group Balance Sheet ............................................................................................................................................................. 103 Group Cash Flow Statement .................................................................................................................................................. 104 Reconciliation of the Single Entity Deficit for the Year to the Group Deficit ............................................................................ 105 Notes to the Group Accounts .................................................................................................................................................. 106 1. Combining Entities ............................................................................................................................................................. 106 2. Nature of Combination ....................................................................................................................................................... 107 3. Financial Impact of Consolidation and Going Concern ....................................................................................................... 107 4. Group Comprehensive Income and Expenditure Statement – Financing and Investment Income and Expenditure .......... 107 5. Group Balance Sheet – Investments .................................................................................................................................. 107 6. Group Balance Sheet – Short Term Debtors (net of provisions) ........................................................................................ 107 7. Group Balance Sheet – Short Term Creditors .................................................................................................................... 108 8. Group Balance Sheet – Pension Liability ........................................................................................................................... 108 9. Group Cash Flow Statement .............................................................................................................................................. 108 10. Group Cash Flow – Investment Activities ......................................................................................................................... 108 11. Group Cash Flow – Financing Activities ........................................................................................................................... 108 Remuneration Report ............................................................................................................................................................... 109 Glossary .................................................................................................................................................................................... 120 Page 13 of 212
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1 | Perth and Kinross Council Annual Accounts 2023/24 Management Commentary 1. Introduction These Annual Accounts contain the financial statements of Perth and Kinross Council and its group for the year ended 31 March 2025. This management commentary outlines the key messages in relation to financial planning and performance for financial year 2024/25 and how this has supported delivery of the Council’s strategic objectives. This commentary also looks forward, outlining the future financial plans for the organisation and the challenges and risks which it will face as it strives to meet the needs of the people of Perth and Kinross. A glossary of terms is set out from page 119. 2. Who are we, our vision and priorities The Council is situated in a central location in Scotland. It covers a geographical area of around 5,286 km² and has an estimated population of 152,560 (2023 mid-year estimate). Between 2003 and 2023, the population of Perth and Kinross increased by 12.2% which is an increase of 16,600 people (Scotland 8.3%). This is the 7th highest percentage change out of the 32 council areas in Scotland. The latest population projections (2018) to 2030 estimate a 2.0% growth of the population in Perth and Kinross compared to 0.8% increase across Scotland. Like all councils, external factors such as inflationary pressures facing households in recent years has only added to the increasingly complex challenges we face, against a backdrop of the most testing financial circumstances local government has ever experienced. This means that it will be impossible to continue doing the same things we have done in the past and we are rethinking how we work with, and within, our communities and with all of our partners to achieve the best outcomes for the people of Perth and Kinross. The Corporate Plan 2022 – 28, that was approved in December 2022, sets out a vision for “a Perth and Kinross where everyone can live life well, free from poverty and inequality”. It sets out the Council’s corporate outcomes which are aligned with its organisational values and designed to address or mitigate the impact of the many challenges the Council and its communities are facing both now and in the future. We are committed to working in partnership and better engaging with people and communities to ensure that they are involved and can have their say on where the Council must focus time and resources. The strategic outcomes are underpinned by seven key priorities, aimed to address or mitigate the challenges, focus our work where it is needed most, and support the delivery of our vision: • Tackling poverty • Tackling climate change and supporting sustainable places • Developing a resilient, stronger and greener local economy • Enabling our children and young people to achieve their full potential • Protecting and caring for our most vulnerable people • Supporting and promoting physical and mental wellbeing • Working in partnership with our communities – which is woven through all of the key priorities above. The priorities incorporate the careful consideration of the feedback received from our communities, elected members, partners and staff about what is important for Perth and Kinross. They are also evidence-based and reflect the areas of greatest need and those that we can most directly influence in our work. Importantly, the Corporate Plan sets the strategic direction for the Council and will act as a guide when making difficult decisions around where to invest funding and resources to support their achievement and ensure we have the greatest impact. The Plan is not designed to stand alone but is supported and strengthened by a wider strategic framework which overarches several areas of work all designed to contribute to our vision and outcomes. It connects the vision of the Council and its partners to the detailed plans that guide the delivery of our services. This framework ensures that all Council plans and strategies are driven by, and focused towards, the delivery of a single shared vision for the area and our services, connecting everything we do. 1 | Perth and Kinross Annual Accounts 2024/25 Page 14 of 212
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2 | Perth and Kinross Council Annual Accounts 2023/24 The main components of our Corporate Plan’s wider strategic framework are as follows: • The Local Outcome Improvement Plan which details new priorities with a focus on poverty in several key areas, setting out the actions that the Community Planning Partnership will take in the coming years to focus on inequalities which are stubborn and require continued collaborative approaches. • The Transformation and Change Strategy is a five-year strategy which sets out our extensive transformation programme acting as enabler to deliver on our corporate priorities. Delivery of the Transformation and Change programme will be underpinned by our “one council”, no wrong door approach, including our organisational-wide cultural and behavioural change programme. This also sets out our clear commitment to fully embed our values of Ambition, Compassion, and Integrity and work in partnership with communities to improve outcomes for all. • The Financial Strategy which details how we will address financial challenges and identifies thirteen principles to support the sustainability of the Council, both now and in the future. • The People and Culture Strategy 2024-2028 sets out our commitment to the people in our teams and our communities to ensure we have capacity and people in the right places to deliver our vision. It will support the organisation to deliver a sustainable approach to workforce development, culture and behaviours and effective workforce planning. It underpins our transformation and change programmes to enable us to deliver the best public services focussed on need and within available resources. The Corporate Plan demonstrates our commitment to improving services, enhancing the quality of life for people in Perth and Kinross and making best use of our resources and funding. We will continue to deliver effective and efficient services, delivering best value by working collaboratively with our partners. To achieve our vision, we have outlined clear outcomes, priorities, actions, and measurements of performance which will ensure we are held accountable, can report consistently, and remain focussed on the areas that matter to people in our communities. While this is a five-year plan, we know that there will be things outwith our control that will change. We will regularly review and monitor our performance against each of the key priorities to ensure that they are still relevant and effectively contribute to our vision. 3. The Annual Accounts 2024/25 The Annual Accounts report the financial performance of the Council. Their main purpose is to demonstrate the stewardship of public funds which have been entrusted to it for the delivery of the Council’s vision and strategic objectives. The requirements governing the format and content of the Council’s Annual Accounts are contained in the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 (the 2024 Code). The 2024/25 Annual Accounts have been prepared in accordance with this Code. 4. The Financial Plan In response to the financial challenges being faced by Local Government, in 2022, the Scottish Government introduced a range of financial flexibilities, one of which centred around the profiling of debt repayments charged to the General Fund for Public Private Partnership (PPP) contracts Finance Circular 10-2022: Finance Leases and Service Concession Arrangements. The revised accounting guidance allows the Council to account for the cost of the repayment element over the life of the assets rather than the life of the contract. What this means for the Council is that the cost can be accounted for over 50 years as opposed to the contract period of 25 or 30 years. This approach is deemed to be prudent as it matches the expenditure profile to the consumption of the assets over time, and by doing so, reduces the cost per annum as the debt is accounted for over a longer period of time. The total amount paid remains the same over the new repayment life. This is an accounting entry which has the effect of releasing a cumulative benefit which reflects the reduced charges to the accounts for the earlier years of the arrangements. The cumulative benefit to 31 March 2023 was in the region of £31 million, and there are also annual recurring benefits of approximately £3 million for 19 years and then the statutory charges will continue until the end of the reprofiled debt repayment period (see note 36). The application of the accounting guidance was approved by Council on 8 February 2023 (Report No. 23/43), and the accounting entries were actioned from financial year 2023/24. To support the delivery of the strategic objectives during 2024/25, Perth and Kinross Council approved a balanced gross revenue budget of £577.278 million for the General Fund (February 2024). In addition, the Housing and Social Wellbeing Committee approved a gross HRA revenue budget of £35.986 million for the Housing Revenue Account (January 2024). As part of its consistent approach to longer term financial planning, the Council has in place a Medium Term Financial Plan through to 2030/31 that was approved by Council in December 2024, a final Revenue Budget for 2025/26, and provisional Revenue Budgets for 2026/27 and 2027/28 that were approved in February 2025. The Council has also approved a Council Tax Strategy through to 2027/28. The HRA Budget was also updated in January 2025. The Financial Strategy approved in June 2022 remains in place. Councils need to account for their spending and income in a way which complies with the legislative requirements. Most day to day spending and income is recorded within the General Fund and the costs and income in relation to the management of our housing stock are recorded within the Housing Revenue Account. 2 | Perth and Kinross Annual Accounts 2024/25 Page 15 of 212
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3 | Perth and Kinross Council Annual Accounts 2023/24 Key to the delivery of Council Services is investment in the assets which are used to deliver these services (including schools, houses and transport infrastructure) and the utilisation of capital funding to stimulate development and regeneration in local areas. At the start of 2024/25 the Council budgeted for gross capital investment of £201.1m on General Fund activities and £21.8m in respect of the Housing Revenue Account. This expenditure is funded from borrowing, government grants, other external contributions, capital receipts, revenue contributions and earmarked reserves. The Council approved a new 6-year delivery programme for 2025/26 to 2030/31 at its meeting on 26 February 2025. 5. Performance Management Our Corporate Plan sets out our vision and seven strategic priorities for the period 2022-2028: 1. Tackling poverty 2. Tackling climate change and supporting sustainable places 3. Developing a resilient, stronger and greener local economy 4. Enabling our children and young people to achieve their full potential 5. Protecting and caring for our most vulnerable people 6. Supporting and promoting physical and mental wellbeing 7. Working in partnership with communities The Corporate Plan sets out clear outcomes, actions and performance measures, which we can be held accountable for and consistently report progress against. Performance against priorities and actions within the Corporate Plan were detailed within the Corporate Annual Performance Report (APR). The Council has a statutory duty to publish performance information for comparison and benchmarking purposes to its citizens and communities. In meeting this duty, we actively participate in the Local Government Benchmarking Framework (LGBF). Following the national report being published and the last of the 2023/24 data being published by the Improvement Services at the start of 2025, detailed individual services profiles with data comparing trends and ranks were produced for all Strategic Leads to consider and identify any relevant improvements. It showed that, within PKC, since the base year, 52% of all indicators have improved; 38% have declined and 9% have remained the same. It should be noted that in the base year (2010) we were considered a very high performing council compared to the national average. However, the most recent data shows performance in line with the national position, in that we have also seen the rate of decline overtaking the rate of improvement in our most recent data (45% compared to 35% respectively). There are 107 LGBF indicators with recently published data (2023/24 unless stated otherwise). Within this, there are 85 non- cost indicators (performance and satisfaction indicators), and 22 cost indicators. Locally we do not rank cost indicators as reduced costs do not necessarily mean improved outcomes for local communities. Within the most recent data for Perth and Kinross Council non-cost indicators, 32 (38%) performance indicators improved, 45 (53%) declined and 8 (9%) stayed the same from the previous year (2022/23). This represents less favourable outcomes and follows the national trend, with the rate of decline overtaking the rate of improvement. Changes in improving/declining performance and performance against the Scottish Average (SA) are demonstrated in charts below. The Improvement Service rank all indicators in terms of their performance out of the 32 Scottish local authorities, then consider these in ranking groups, known as quartiles. Looking at how PKC performance indicators sit within these quartiles gives a sense of how PKC is performing in comparison to other local authorities. However, it is necessary to consider that legitimate variations in data will exist across councils due to local policy choices and demographic profiles. 3 | Perth and Kinross Annual Accounts 2024/25 Page 16 of 212
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4 | Perth and Kinross Council Annual Accounts 2023/24 In the most current data, more than half (60%) of our non-cost indicators are in the upper two quartiles. This is an improvement of 5% to how we ranked last year. Performance Summary The 2024/25 Annual Performance Report was considered by Scrutiny and Performance Committee on 17 September 2025 and by Council on 29 October 2025. This report details the Council’s performance against our priorities for 2024/25, and the full range of information is available online at PK Performs. This includes the Council’s Annual Performance Report, Best Value Thematic Management Report, case studies and links to further relevant information, such as the Local Government Benchmarking Framework. The APR uses a series of 54 Key Performance Indicators (KPIs) and targets to measure performance over the reporting period. Performance against 2024/25 targets includes 18 areas where the target has been met or exceeded and 18 areas where the target has not been met. Further information is available at PK Performs. Out of the 54 indicators, 61% are moving in a favourable direction, 22% in an unfavourable direction, 9% remain static and 7% are either not available or it’s not appropriate to make a comparison. KPI Overview KPI Annual Change Change since last reporting year is favourable Change since last reporting year is unfavourable Change since last reporting year is static No data available to make comparison N/A 33 12 5 4 KPI performance against target Met or exceeded target ✔ Target not met ✖ Target not set 24/25 Target set but data not yet available Not appropriate to set target 18 18 7 3 8 The following graphs provide an overview of trends within the KPI data between 2023/24 and 2024/25, or the most recent year available. Caution should be applied when interpreting this data, as trends will only be indicative of performance. Trends should be considered in the context of the current operating environment, challenges and whether we control, influence or are informed by the data. 4 | Perth and Kinross Annual Accounts 2024/25 Page 17 of 212
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5 | Perth and Kinross Council Annual Accounts 2023/24 For 2024/25 a selection of performance outcomes are set out in the following table: Tackling Poverty Our Local Child Poverty Action Plan is a joint plan with NHS Tayside and sets out our ambitions to mitigate the impact poverty has on our children. In addition, the Anti-Poverty Task force has developed a tackling poverty strategy and action plan to shift the focus from reactive to preventative work, whilst ensuring that the lived experience of those dealing with poverty is central to this work. Perth and Kinross has made encouraging progress in reducing child poverty. The local rate is now 3.8% below the national average, nearly double the previous gap of 2%. This improvement has improved the area’s ranking to 7th nationally for lowest child poverty rates. While these results are promising, data will be closely monitored over the next two years to ensure the trend is sustained. A network of public, third sector, and community organisations collaborated to deliver holistic family support, focusing on employability, income maximisation, and wellbeing. Strategic efforts across all partner organisations supported parents into work by providing access to affordable housing, transport and childcare and employability support. Fuel use advice was provided to 1,638 households via SCARF in 2024/25. This shows an apparent decline in numbers but is due to the measure only reflecting Council-funded services, with other contributing services from previous years (such as the Heat Project) being funded elsewhere. We helped remove barriers to employment for parents by providing 3,229 childcare places across the public and private sectors and funding 300 Strong Start places for 2-year-olds. 5 | Perth and Kinross Annual Accounts 2024/25 Page 18 of 212
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6 | Perth and Kinross Council Annual Accounts 2023/24 In October 2024, our Welfare Rights and Welfare Fund teams won the Institute of Revenues, Rating and Valuation’s Excellence in Social Inclusion Performance Award for Scotland recognising their impactful work in prisons and foodbanks across urban and rural communities. We generated £9.2 million in additional income for Perth and Kinross residents through the benefits system; this is a £700k increase on last financial year and reflects stronger service promotion and improved follow-up efforts to better track financial outcomes. The number of new affordable homes in Perth and Kinross (including new builds and buy-backs) has increased from 173 in 2023/24 to 264 in 2024/25, more than achieving our target of 210. In 2024/25, 564 tenants received £203,000 in financial assistance through our Tenancy Sustainment Fund (TSF), helping them manage arrears and maintain stable housing. The fund uses a flexible, person-centred approach to ensure support reaches those who need it the most. Our rent collection strategy continues to deliver exceptional results, achieving an in-year collection rate of 100.17% in 2024/25, up from 99.15% the previous year. This result, supported by a 53-week rent year, reflects the success of our tenant-focused approach that balances financial rigour with personalised support. At the same time, current and gross rent arrears have both decreased from 2023/24 to 2024/25 by 1.56% and 2.15%, respectively. We continue to champion the Scottish Government’s Fair Work Action Plan by embedding fair work practices across our own operations and encouraging local employers to do the same. We ensure that all businesses receiving Council grant funding pay the living wage to their employees and through our Futures for All Employer Recruitment Incentive (ERI), we provided financial and employability support to 48 businesses – 20 in Perth and 28 in rural areas. All participating employers paid the living wage to new recruits (except apprentices), with a focus on helping individuals facing barriers to employment to access fair work opportunities. Key areas for improvement: Better understand and capture the value of preventative spend and how funds are allocated to develop a budgeting approach based on identified need and overall wellbeing. Review actions contributing to ongoing reduction in child poverty levels to identify and enhance the most effective interventions. Expand Fast Online Referral Tracking system referral pathways and deliver Support and Connect training to frontline staff and partners to provide a more consistent and comprehensive support service. Tackling climate change and supporting sustainable places 440 properties were upgraded to meet the Energy Efficiency Standard for Social Housing (EESH) standards in 2024/25. As of March 2025, 87% of properties meet EESH - a 5% improvement from the previous year. A £6.5m refurbishment began at the Double Dykes Gypsy Traveller site in Perth, replacing existing chalets with more energy efficient homes. Five chalets were delivered by April 2025 with energy-efficient heating and hot water systems and renewable technology. Over £3m in grants were issued by March 2025 through the Home Energy Efficiency Programmes for Scotland Area Based Schemes (HEEPS ABS) and ECO4 schemes to help private homeowners improve the energy efficiency of their properties. Although the number of public charging devices for public access increased in 2024/25 it fell below the target. A significant contributor to this has been delays in the provision of external funding and we expect a substantial 6 | Perth and Kinross Annual Accounts 2024/25 Page 19 of 212
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7 | Perth and Kinross Council Annual Accounts 2023/24 increase in 2026, with the signing of a new contract for an additional 100 units over and above existing plans for increased installations in 2025/26. In 2024/25 we planted 3,142 trees in our open spaces, an increase from 2,512 in 2023/24. Tree planting boosts carbon capture and contributes to climate resilience and flood mitigation. 16 Nature Restoration Fund grants were awarded, covering 199ha of land. These community-led projects focused on: controlling invasive species; riparian habitat restoration; wildflower meadow creation; and the provision of tools and training. Construction of the Comrie Flood Protection Scheme continues, following Council approval in November 2023. It remains on track for completion anticipated in Q4 2026 and within budget. The South Kinross Flood Protection Scheme was formally notified to the Scottish Government, with a Local Authority Hearing scheduled for October 2025. The Perth Surface Water Flood Study has been completed and additional studies commenced in Bridge of Earn, Scone and Comrie. Further study and planning work is also underway in Blairgowrie & Rattray, Dunkeld and Craigie. We more than doubled our management of grassland areas included in Grow Wild, increasing from 49.16ha to 121.5ha. Early monitoring has shown noticeable increases in insect and flower populations in unmown areas. Key areas of improvement: Ensure we have a cleaner and greener Council fleet. Develop local public transport solutions which set the needs of residents and the environment as top priority. Improved energy efficiency and reduction in carbon emissions in the Council estate. Increase provision of biodiversity sites. Developing a resilient, stronger and greener local economy We supported 252 business start-ups through Business Gateway, exceeding last year’s figures and surpassing our New Start and Pre-Start Plus programme target with 22 businesses supported and in line with performance in Tayside as a whole. Perth and Kinross has led the Tayside region in Business Gateway Growth referrals, with 23 high- potential businesses projecting turnover increases of £200k+, highlighting strong entrepreneurial momentum. Tailored support was provided to 254 micro-enterprises and 231 businesses participated in learning and networking sessions to improve knowledge and highlight opportunities for joint working. We launched a refreshed Invest in Perth website in October 2024, improving mobile responsiveness and accessibility, resulting in a 24% increase in traffic over six months. The Perth City & Towns platform grew to over 100,000 active users, supporting local businesses and events through a multi-platform marketing strategy and targeted campaigns. The number of registered businesses in the energy sector grew from 140 to 145 and multiple enquiries are coming in from other companies. Land and accommodation constraints continue to limit our growth potential, but recently Perth was ranked the 5th most sustainable city in the UK for business and first for renewable energy capacity per 100,000 people. Whilst additional heat pumps were installed in 2024/25, low carbon heat consumption fell due to operational issues with biomass boilers in 2 community campus facilities. Production of electricity increased significantly due to the installation of additional solar panels. Historically these two factors have been reported together, which shows a decreased in renewable energy generation. In future these two elements will be reported separately as they operate independently. The percentage of businesses connected to gigabit broadband increased from 46% in 2023/24 to 55% in 2024/25 exceeding 50% target. We expect this to grow further, particularly in hard-to-reach premises through the Scottish Government partnership with GoFibre. 7 | Perth and Kinross Annual Accounts 2024/25 Page 20 of 212
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8 | Perth and Kinross Council Annual Accounts 2023/24 We continued to position Perth and Kinross as a vibrant and distinctive destination for business, investment, and tourism by leveraging our cultural identity, natural assets, and international recognition as a UNESCO City of Craft and Folk Art. We achieved a 25.1% increase in total visitor numbers, with day visitors up 21% and overnight stays up 21.6%, contributing to a 33% rise in direct visitor spend and a 37% increase in the sector’s overall economic impact. Visitor numbers to key cultural sites increased significantly, largely driven by the opening of Perth Museum. Overall numbers increased from 484,000 in 2023/24 to 765,000 in 2024/25. We supported 618 adults to achieve learning outcomes – more than double our target of 300 – through SQA- accredited courses and short programmes in communications, numeracy, digital skills employability, volunteering and English for Speakers of Other Languages (ESOL). Our Youth Employability Team registered 140 new young people and 122 completed support – 94% of whom moved into a positive destination. Staff are based in every secondary school in Perth and Kinross delivering one-to-one and group support, and sector-based academies, and work closely with local employers. Key areas for improvement: Unlock new investment in employment and housing land to support business growth in foundational and key growth sectors. Make Perth and Kinross a more competitive inward investment destination and encourage investment for growth from existing businesses in foundational and key growth sectors. Unlock private investment and expertise to support public and private energy projects. Continue to grow visitor numbers for holidays and day trips. Further enhance our employability tracking and outreach capacity, supporting individuals in community settings. Enabling children and young people to achieve their full potential Our Early Learning and Childcare settings outperformed both national and comparator benchmarks in all Care Inspectorate Quality Indicators, reflecting the consistently high standards across Perth and Kinross. In 2023/24 4 out of 5 of our primary school pupils met expected levels in numeracy and literacy. This has increased from 78% from last year and shows a steady increase each year since 2020/21. We strengthened the use of data in school improvement planning. The majority of schools now include actions to reduce the Cost of the School Day in their Quality Improvement Plans for 2025/26 – ensuring equity is embedded in everyday decision-making. A National Thematic Inspection by His Majesty’s Chief Inspector of Education reviewed how local authorities support schools to improve. The visit to Perth and Kinross found our advice and guidance to be clear and comprehensive, with strong expectations set around standards and planning. Our responsive, risk-based approach to providing support and challenge to schools along with formal Quality Improvement Reviews were highlighted as good practice. Key strengths included: positive climate and ethos; effective data use; targeted use of Pupil Equity Funding (PEF); and impactful programmes such as National Improving Writing and Numeracy Schools. We continue to deliver on the Additional Support Needs (ASN) Transformation Programme. Examples of work include: the establishment of three additional Intensive Support Provisions (ISPs); consistent use of data (including PowerBI) to record needs accurately and provide appropriate support; and using Career Progression Pathway models to ensure staff are trained, skilled and confident 45 schools and 3 ELC settings now hold a Digital Schools Award, an increase of over 50% on 2023/24. Every school now has a named Digital Champion. Perth and Kinross had the second highest number of schools gaining Digital Schools Awards during 2024/25. In 2023/24, 75.6% of P1 children met all expected developmental milestones – a decrease from 80.6% in the previous year. This is likely to be linked to the cohort being born in during the COVID-19 pandemic, when early 8 | Perth and Kinross Annual Accounts 2024/25 Page 21 of 212
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9 | Perth and Kinross Council Annual Accounts 2023/24 supports were not available to families. Public Health Scotland confirms a national increase developmental concerns at age 4-5 reviews. We’ve seen steady improvement in literacy attainment across P1, P4 and P7. The gap between the most and least deprived cohorts narrowed from 27% in 2020/21 to 21% in 2023/24. Numeracy attainment has improved in both cohorts, but at a slower rate for SIMD Q1 than for Q5. As a result, the poverty-related attainment gap widened slightly in 2023/24. However, the long-term trend still shows progress, with the gap narrowing from 24% in 2020/21 to 22% in 2023/24. Senior phase leaver data also shows significant progress. The gap between SIMD Q1 and Q5 in achieving at least one Level 6 qualification has reduced from 41% in 2021/22 to 28% in 2023/24 and the gap for at least one Level 5 qualification over the same period has narrowed from 28% to 19%. In 2023/24, 60% (12 out of 20) Looked After Children (LAC) pupils attained at least one SCQF Level 4 qualification, below the national average of 72%, and attainment remains below that of all school leavers. Care should be taken when comparing these figures across years and cohorts due to the small numbers involved. A sub-group of the Raising Attainment Board has been established to focus on further improvements. Outcomes for our care-experienced learners are improving, with higher attainment in literacy and numeracy and more young people entering positive destinations on leaving school (up from 82% in 2022/23 to 95% in 2023/24) – though gaps remain compared to their peers. The Staged Intervention Framework was implemented across ELC settings and schools, offering a clear structure to support learners who face barriers. In September 2024, 39% of pupils (6,973) were identified as having an Additional Support Need - up from 35% in 2022/23, and close to the national average of 40%. Key areas for improvement: Attainment at key milestones is raised for all children and young people. Attendance rates improve, particularly in the secondary sector. Increase the number of young people going into positive destinations such as work experience, further education, volunteering and employment. Improved understanding of causes of attainment gap so that effective interventions can be identified and implemented. Improve support to children and young people with additional support needs to realise their full potential. Provide Kinship Carers with a range of supports to enable them to meet the needs of children in their care. Protecting and caring for our most vulnerable people In 2024/25 8,832 referrals were made to the Child Protection Duty Team – an increase of 9% from the previous year. This appears to be stabilising after increasing year on year post COVID-19. All referrals are triaged within 24 hours, with immediate action taken. The Scottish Child Interview Model (SCIM), introduced across Tayside in May 2024, is now well embedded in child protection processes. This trauma-informed approach was used in 85% of all interviews in 2024/25, ensuring children have the best possible opportunity to tell their story. Cross-boundary working with trained staff has strengthened consistency and access. The Child Protection Committee (CPC) launched its updated CPC Improvement Plan 2025 to 2028, supported by a new strategy and schedule to guide self-evaluation activities. Audits led by the Child Protection Interagency Coordinator highlighted strong practices in relationship-based practice and rapid responses to risk. Areas for improvement include enhancing child and young people’s plans and better incorporating their views into decision- making. 64% of people with intensive care needs received ‘care at home’, maintaining strong performance in line with the Scottish average of 65%. This reflects our continued commitment to helping people remain safely at home for as long as they wish to do so. 97.6% of adults were discharged from hospital without delay, consistently meeting the national target of fewer than 34.6 per 100,000 adults. This was supported by a number of interventions which have reduced unmet care needs by around 800 hours since August 2024. A Youth Housing Panel was established to support care-experienced young people who are moving into independent living. Meeting monthly, the panel matches individuals to suitable accommodation based on skills and needs, working 9 | Perth and Kinross Annual Accounts 2024/25 Page 22 of 212
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10 | Perth and Kinross Council Annual Accounts 2023/24 with partners including ROCK Trust and YMCA. Around10 care leavers are expected to benefit annually, with consideration of extending this to other young people with complex needs. In response to the National Housing Emergency, we reduced average re-let times from 37.8 days in 2023/24 to 24.87 days in 2024/25 and cut the number of void properties from 136 to 95. Improvements were achieved by deferring non- essential upgrades, simplifying compliance checks, and offering flexible decoration options. Our Community Justice Service (CJS) participated in a Care Inspectorate self-evaluation focused on performance, quality, and outcomes for individuals on community-based sentences. Perth and Kinross received onsite validation for the strength of its self-evaluation approach. Keys strengths included a clear capacity for improvement, demonstrated through targeted Strategic Needs and Assessments and alignment with the National Strategy for Community Justice. Areas for development included creating a Performance Framework and Dashboard, and a Quality Assurance Framework. Key areas for improvement: Take a partnership approach to the assessment of risk of significant harm to a child and minimising and reducing risk through early support and assessment. Enhance our housing support offer by implementing an Intensive Housing Support Service for people with complex needs. Where children cannot remain living at home, every effort is made to keep them within their kin network. Maintain significant relationships for care experienced children to deliver on the principles of The Promise. Supporting and promoting physical and mental wellbeing The SCOPE Team has supported 367 people – an 8% increase since March 2024. The team helps prevent hospital admissions and there were no hospital admissions for people with Learning Disabilities since 2021. We supported Live Active Leisure staff to deliver evidence-based falls prevention classes. These classes are based on later life training, postural stability instructor training, and have been shown to be highly effective in reducing falls among community dwelling older adults. Over 2,000 Wellbeing Community Classes were delivered, supporting more than 20,000 individual attendances. Activities included chair-based social classes, social circuits, aqua circuits/aerobics, and chair-based yoga. The risk of falls increases with age and given the growing older population in Perth and Kinross, higher admission rates due to falls are to be expected. This is reflected in the rate of 25 admissions per 1,000 people aged 65 and over in Perth and Kinross, compared to 23 per 1,000 for Scotland. Despite this, performance against this indicator remains good, with a marginal improvement of 1.6% compared to last year. Seven parks and play areas were enhanced- in Bridge of Earn, Luncarty, Blairgowrie, Scotlandwell, Greenloaning and Braco – with design development continuing for a further four in Perth and Crieff. Each project was shaped through community consultation to reflect local needs and aspirations. Between April 2024 and February 2025, 113 people were supported by local integrated care services to remain at home and avoid crisis placements or hospital admissions service, helping shift the balance of care. In Perth city, the integrated hub is now fully established, enabling rapid, multi-disciplinary responses when health deteriorates. Urgent care Advanced Nurse Practitioners are working with locality teams to expand this model across the region. Our Community Alarm service handled 260,911 calls in 2024/25, with 99.26% answered within 60 seconds - up from 98.83% the previous year. The service now supports over 3,900 clients and 12,000 devices, helping people stay safe and independent at home. 10 | Perth and Kinross Annual Accounts 2024/25 Page 23 of 212
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11 | Perth and Kinross Council Annual Accounts 2023/24 Waiting times for mental health services have increased from 39 weeks to 42. We are working with partners to improve access and reduce delays through better coordination and early intervention. Carers have a higher risk of financial exclusion. In 2024/25, 847 unpaid carers by Citizens’ Advice, mainly with debt and energy advice -a 40% increase from the previous year. We’re working with partners and internal teams to identify those in need and ensure they are signposted to appropriate support. Participation in extra-curricular sport activities has continued to rise, with 38% of secondary school pupils involved in extra-curricular clubs – placing Perth and Kinross in the top three local authorities in Scotland. Across the total school roll participation levels have increased again to 43%, compared to 39% in 2022/23. Attendance at Live Active Leisure venues fluctuated due to the closure of Bells Sports Centre following flooding, although figures did begin to recover in Q4 of 2024/25, with an increase of 25%. Part of this will be due to the opening of the new gym at the Dewars Centre. Key areas for improvement: Improve health and wellbeing in Perth and Kinross by increasing overall participation in sport and physical activity and promoting the wellbeing benefits of time spent in our natural surroundings. Improve health and wellbeing in Perth and Kinross by ensuring that people have access to wellbeing support when they need it. Working in partnership with communities We secured Fairer Futures funding support to scale up our multidisciplinary approach, appointing a programme manager and recruiting a dedicated project team to lead delivery in new priority localities: Rattray, South Crieff, and Muirton, alongside existing pilots in Letham, Highland, and Coupar Angus. We strengthened local coordination by consolidating Community Support and Enforcement services, with new leadership roles enabling more effective collaboration between specialist and locality-based teams. We also supported a record 65 community groups—exceeding our target of 60—to establish Community Resilience Groups using ringfenced Council funding, enhancing emergency preparedness and response, as demonstrated during recent severe weather events. We acquired 20 residential properties in Dunkeld from the National Trust for Scotland (NTS), enabling 20 households to transition into secure Council tenancies and increasing access to affordable housing in the area. This involved working closely with NTS and tenants to ensure a smooth transition, providing responsive support throughout the handover process. As part of the process, we introduced a local lettings policy that prioritises future allocations for individuals with strong ties to the Dunkeld area, reinforcing our commitment to the principle of “local homes for local people.” The development of new chalets at Double Dykes – phased occupation of which began in May 2025 - represents part of our wider investment in high-quality, culturally appropriate accommodation for Gypsy/Traveller communities. We introduced a resident-led engagement model shaped by direct feedback, including regular on-site sessions, digital participation via Microsoft Teams, tailored newsletters, and real-time updates through noticeboards - strengthening trust and empowering residents to play an active role in shaping their living environments. We continue to invest in community-led projects which support local residents to tackle issues, deliver services and generally improve quality of life. £200k was invested through the Warm Welcome Initiative to more than 100 community groups in the winter of 2024/25 to create warm and welcoming spaces, with a 34% increase in overall participation. In addition, £100k was allocated through participatory budgeting in identified localities to tackle socio-economic inequality, with over 2,500 votes cast (23% increase from last year). A further round of Community Investment Fund saw over £326k invested in 115 different community-led projects across Perth and Kinross. We supported 118 volunteer groups who contributed 40,000 hours to enhancing greenspace management. Despite reduced funding, we provided insurance, training, materials, and, in some cases, financial support, helping enhance local spaces and community pride. We also consulted communities on the design of 11 play areas, receiving 486 11 | Perth and Kinross Annual Accounts 2024/25 Page 24 of 212
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12 | Perth and Kinross Council Annual Accounts 2023/24 responses. Workshops with schools ensured children’s voices were heard, resulting in inclusive, multifunctional designs that reflect local aspirations. We launched our Leadership Competency Framework, setting out the actions and behaviours expected of all our teams to help us deliver our organisational vision and strategic outcomes. At the same time, we revised our leadership model and introduced the Five Foundations of Leadership to support cultural change and improve how we engage with residents. We adopted a new Performance and Development Discussion (PDD) Framework making it mandatory for all staff in early 2025. It includes structured prompts to encourage meaningful conversations about delivering better outcomes for people and communities. All annual PDDs are recorded in our HR system to support analysis and future organisational development planning. Key areas for improvement: Scale up and roll out of Fairer Futures programme to Rattray, South Crieff, Muirton and North Muirton. Develop updated locality profiles to support a needs-based approach. Support delivery of Business Improvement, Culture and Behaviours and Workforce Planning workstreams of the Leadership Development Phase 2 Transformation Project. Implement the newly developed Leadership and Managers Induction toolkit. For information about the Health and Social Care Partnership, please see the Perth and Kinross Integration Joint Board Annual Accounts 2024/25 which are available at Perth and Kinross Integration Joint Board. 6. Financial Performance Financial performance is part of the Council’s performance management culture with regular reporting during 2024/25 to elected members at the Finance and Resources Committee as well as regular briefings. This section summarises the main elements for 2024/25. The Expenditure and Funding Analysis brings local authority performance reporting based on expenditure measured under proper accounting practices, together with statutorily defined charges to the General Fund and Housing Revenue Account. Both the Comprehensive Income and Expenditure Statement and the Expenditure and Funding Analysis include a segmental analysis which requires Councils to report performance based on how they are structured and how they operate, monitor and manage financial performance. The 2024 Code requires that Councils present the segmental analysis based on the organisational structure under which they operate. Additionally, the Code requires that if a local authority changes the presentation or classification of items in its financial statements, the authority shall reclassify comparative amounts unless reclassification is impracticable. The prior years comparative figures have been restated to reflect the new structure of the Council. Although the Expenditure and Funding Analysis reflects the main variances, for operational reporting the Council’s Comprehensive Income and Expenditure reflects proper accounting practice. The Comprehensive Income and Expenditure Statement movements are not directly comparable with the movements in the Expenditure and Funding analysis. a) General Fund Revenue Expenditure for 2024/25 In 2024/25 the Council incurred actual net expenditure on Services of £505.157 million (which is the Cost of Services disclosed in the Comprehensive Income and Expenditure Statement on page 32). When Taxation and Non-Specific Grant Income, Financing and Investment Income and Expenditure and Other Operating Income and Expenditure are included there was a net Deficit on the Provision of Services of £26.160 million. The Expenditure and Funding Analysis information on pages 49 and 50 sets out adjustments between the net Deficit on the Provision of Services of £26.160 million, included in the Comprehensive Income and Expenditure Statement, and the Use of General Fund per CIES of £13.546 million in the table below. The adjustments of £12.614 million represent the difference between the net expenditure of the Council that is chargeable to taxation and rents and the figures reported in the Comprehensive Income and Expenditure Account. The deficit in the Expenditure and Funding Analysis is set out in the way in which the Council organises itself and manages and reports on financial performance. 12 | Perth and Kinross Annual Accounts 2024/25 Page 25 of 212
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13 | Perth and Kinross Council Annual Accounts 2023/24 The following table sets out adjustments to the most recently approved Revenue Budget to ensure that budget and actual figures are comparable. These include the Public Finance Initiative, external income and capital accounting adjustments. On a comparable basis the table shows a net variance (under spend/additional income) of £8.073 million which is explained in further detail. Updated Budget Per Revenue Monitoring Report No.4 Virements Capital Accounting Adjustments Revised Budget Net Expend. Charged to the General Fund and HRA Balances per Expend. and Funding Analysis Variance £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 COUNCIL SERVICES Education and Learning 170,811 (1,453) (346) 169,012 166,361 (2,651) Children, Families and Justice 27,036 (1,775) 0 25,261 23,770 (1,491) Economy, Development and Planning 17,641 660 0 18,301 17,742 (559) Environment and Infrastructure 35,241 48 (3,140) 32,149 31,860 (289) Housing and Communities 22,327 (1,155) (707) 20,465 18,544 (1,921) Property Services 66,330 (96) (17,093) 49,141 49,147 6 Legal and Governance 4,520 19 0 4,539 4,539 0 Customer and Digital Services 11,917 31 0 11,948 12,104 156 Strategic Planning, People and Performance 5,903 21 0 5,924 5,483 (441) Projects and Programmes 361 1 0 362 282 (80) Finance and Business Support 9,582 (2,339) 0 7,243 7,851 608 Directorate Core Costs 1,194 0 0 1,194 1,325 131 Health and Social Care 95,891 114 0 96,005 96,045 40 Housing Revenue Account 0 (8,237) 0 (8,237) (8,237) 0 Valuation Joint Board 1,466 0 0 1,466 1,434 (32) Non Distributed Costs 1,655 0 0 1,655 1,689 34 NET COST OF SERVICES 471,875 (14,161) (21,286) 436,428 429,939 (6,489) Taxation and Non-Specific Grant (462,163) 6,183 0 (455,980) (456,480) (500) Finance / Investment / Other 11,287 8,670 21,286 41,243 40,087 (1,156) Use of/(Increase) of General Fund per CIES 20,999 692 0 21,691 13,546 (8,145) Contributions to/(from) other Reserves 5,500 (692) 0 4,808 4,880 72 Use of/(Increase) of General Fund Balances 26,499 0 0 26,499 18,426 (8,073) The actual contribution from the General Fund was £18.426 million. This is £8.073 million less than planned and is made up of additional income and service under spends and is comparable with the revenue monitoring positions that have been presented regularly to the Finance and Resources Committee throughout the financial year. The following section provides a summary of the significant variances. Education and Learning delivered net under spends / additional income of £2.7 million. The main reasons for this are: In respect of the Devolved School Management (DSM) Scheme there was a net under spend / additional income of £527,000 reflecting savings on staff costs. With regards the Pupil Equity Fund there was a net under spend of £195,000 because expenditure is incurred by academic year rather than financial year. These resources will be carried forward by schools into 2025/26. Across the remaining non-devolved Education and Learning Services there was a net under spend / additional income of £1.567 million. This was achieved through a combination of additional staff slippage, partially offset by over spends on home to school transport and residential schools. A combination of revenue grants and transfers to earmarked Reserves resulted in a further net under spend of £362,000. In Children, Families and Justice there was a net under spend / additional income of £1.491 million. The main reasons for this were: There was an under spend of £715,000 across the Service due primarily to reduced expenditure on foster, kinship and adoption care due to a reduction in the number of placements. This was partially offset by an over spend on residential placements of £405,000 due to demand. Revenue grants that will be carried forward in earmarked Reserves contributed a further £1.181 million. The majority of this relates to the Whole Family Wellbeing Fund. 13 | Perth and Kinross Annual Accounts 2024/25 Page 26 of 212
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14 | Perth and Kinross Council Annual Accounts 2023/24 Across Economy, Development and Planning there was a net under spend / additional income of £559,000. The main reasons for this were as follows: Across the Service, there were over spends of £517,000 due to expenditure on consultancy, legal costs, electric vehicle charging points and delays in the delivery of approved savings. These were partially offset by under spends of £476,000 primarily from staff slippage and additional income (commercial rent, planning and building standards). Revenue grants that will be carried forward in earmarked Reserves contributed a further £600,000, primarily relating to employability initiatives. In Environment and Infrastructure there was a net under spend / additional income of £289,000. The main reasons for this variance were as follows: Across the Service there were under spends of £1.459 million from staff slippage, fuel, additional income and savings on the twin stream collection service. These were partially offset by over spends of £1.170 million depot and site works, vehicle materials and repairs as well as shortfalls in income from recharges and commercial waste. In Housing and Communities there was a net under spend / additional income of £1.921 million. The main reasons for this variance are as follows: Across the Service there was an under spend of £673,000 from, in the main, staff slippage and additional income. This was partially offset by over spends of £240,000 on additional homelessness costs and public transport tendered services. A combination of revenue grants and transfers to earmarked Reserves resulted in a further net under spend of £1.488 million. The majority of the grant income related to Ukraine Resettlement funding. In Customer and Digital there was a net over spend of £156,000 due, in the main, to additional costs associated with service charges from social housing providers. In Strategic Planning, People and Performance, there was a net under spend of £441,000 due primarily to the accelerated delivery of approved savings. Finance and Business Support hosts several corporate budgets including council wide savings targets and the discretionary non-domestic rates relief scheme. In 2024/25 the targets for which these initiatives were not achieved which resulted in an over spend of £608,000. Across the remainder of Service costs there was a net over spend of £59,000. In Taxation and Finance Income there was an underspend of £1.656 million arising from additional council tax income of £500,000 and other savings arising from interest and borrowing including private finance initiatives. General Fund and Housing Revenue Account Balances reduced by £15.512 million to £70.542 million in line with the budget adjustments approved throughout the year by Council and the Finance and Resources Committee as well as recognising the implications of final outturns and the implementation of the Service Concession Scheme. When the Housing Revenue Account Balance of £2.258 million and the earmarked Reserves of £49.569 million, that are set out on page 52 are excluded, this leaves an uncommitted General Fund Balance of £18.715 million or 4% of the net 2024/25 Revenue Budget. b) Composite Capital Budget and Housing Revenue Account Investment Programme 2024/25 A summary of the Council’s capital expenditure in 2024/25 is reflected within Note 35 to the Core Financial Statements on page 78. Total gross capital expenditure was £177.732 million, comprising £39.352 million on the Council’s Housing Revenue Account (HRA) and £138.380 million on the Council’s Composite (General Fund) Programme. Several significant projects are currently on-site and have made good progress during 2024/25, including the completion of the new River Tay crossing (CTLR) in the year. The Council’s gross expenditure includes: £56.448 million on various School Upgrades projects, including the replacement of Perth High School, a new Blairgowrie Recreation Centre, and Perth Academy Refurbishments. £51.146 million on Roads and Transport projects, including Structural Maintenance, Road Safety measures, bridges, and completion of the Destiny Bridge and New Kingsway which was opened in March 2025. £30.221 million on other works, including Flood Protection measures (£4.884 million); Commercial Property estate (£2.758 million); Community and Greenspace projects (£1.429 million); and property, infrastructure and IT upgrades (£14.934 million). The balance of £6.216 million relates to expenditure on various waste initiatives, vehicles and other miscellaneous works. £39.352 million on the HRA including Affordable Housing New Builds and Buy Backs (£25.975 million), Heating, Windows and Rewiring works (£3.780 million), Kitchen and Bathroom Upgrades (£2.311 million) and Gypsy Site Improvements (£3.391 million). Capital expenditure is funded by borrowing, asset sales, grants, other capital receipts, and Revenue Budget contributions. The Capital Financing Requirement (CFR, i.e., the underlying requirement to borrow for capital purposes) as at 31 March 2025 was £932.783 million. Actual capital debt was £858.559 million, comprising long-term borrowing (£715.200 million) and a PPP liability (£143.359 million). The ratio of borrowing to the CFR for 2024/25 has increased to 92.0% (2023/24 91.0%). During the 14 | Perth and Kinross Annual Accounts 2024/25 Page 27 of 212
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15 | Perth and Kinross Council Annual Accounts 2023/24 year the CFR increased by £116.432 million, reflecting the capital expenditure above, less capital receipts, grants and contributions and principal loan repayments. The CFR also includes a £2.914 million adjustment at 31 March 2025 by applying the service concession flexibility scheme that was approved by the Council in February 2023. The ratio of borrowing to the CFR increased because of the new borrowing being undertaken, less amounts repaid in the year. c) General Fund Reserves As at 31 March 2025 the Council had uncommitted General Fund balances of £18.715 million which represented 4% of the Council’s 2024/25 Revenue Budget approved in April 2024. Council policy, as set out in the Reserves Strategy approved by Council on 28 February 2024, is to retain uncommitted reserves of between 2% and 4% of net revenue expenditure over the medium term. The Council’s Reserves Strategy will continue to be reviewed, and updates will be considered by the Finance and Resources Committee and the Council as part of the revenue monitoring cycle. Full details of the Council’s General Fund Reserves are shown on page 31 and page 73 of the Financial Statements, along with information on future commitments. The Reserves position is summarised as follows: £m £m General Fund (68.284) Revaluation Reserve (336.851) Housing Revenue Account (2.258) Capital Adjustments Account (325.847) Capital Fund (36.992) Financial Instruments Adjustment Account 15.732 Insurance Fund (0.623) Pensions Reserve 18.533 Capital Receipts Reserve (1.332) Employee Statutory Adjustment Account 9.372 Capital Grants Unapplied (1.147) TOTAL USABLE RESERVES (110.636) TOTAL UNUSABLE RESERVES (619.061) TOTAL RESERVES (729.697) The Balance Sheet The Balance Sheet on page 33 summarises the Council’s assets and liabilities as at 31 March 2025 and explanatory notes are provided from page 36. Total net assets have reduced by £110.019 million to £729.697 million. Long Term Assets increased by £70.751 million, current assets reduced by £45.248 million, current liabilities increased by £26.218 million and long-term liabilities increased by £109.304 million. The major changes in the Council’s Balance Sheet between 31 March 2024 and 31 March 2025 are explained in more detail in the following paragraphs. Long Term Assets The value of long term assets increased by £70.751 million due to the continuation of the major capital investment being undertaken by the Council described above. Current Assets The level of Short-Term Investments reduced by £36.560 million and Cash or Cash Equivalents reduced by £6.538 million. This was the result of planned reduction of investments in recent years to fund the capital programme. The reduction in cash and cash equivalents follows the reduction in short-term deposits in line with cash flow requirements. Current Liabilities Short Term Borrowing increased by £21.183 million as a result of increased PWLB borrowing falling due within 12 months of the balance sheet date compared to last year. Short Term Creditors increased by £3.889 million primarily due to higher amounts payable to Scottish Government, Central Government, Other Local Authorities, NHS Bodies and Other Entities. Long Term Liabilities Long-Term Liabilities increased by £109.304 million due to an increase in Long Term Borrowing of £67.478 million from new borrowing throughout the year and an increase in Other Long Term Liabilities of £43.439 million due to movements in pension and public private partnership liabilities in line with the approved contract. The Council’s annual Treasury Management Strategy outlines the Council’s policy in relation to borrowing and investment. This is prepared in accordance with the Code of Practice on Treasury Management in Local Authorities. The majority of the Council’s borrowing comes from the Public Works Loan Board and market loans. Further details are provided at Note 39. Pensions Reserve International Accounting Standard 19 Revised (IAS19R) requires the disclosure of the Council’s share of Tayside Pension Fund’s assets and liabilities, both current and future. The information disclosed in the accounts is provided to the Council by the Pension Fund’s actuaries. The position at 31 March 2025 indicates a net liability of £18.533 million compared to a liability of £20.748 million on 31 March 2024 due to changes in assumptions. This liability is based on a snapshot valuation at 31 March 2025 and is a result of prevailing market conditions at that date. Triennial valuations of the Fund are carried out with the last valuation having taken place at 31 March 2023. Employer’s contributions were 17% of pensionable pay to 31 March 2024, reducing to 15.7% from 1 April 2024. For more information see Note 18. 15 | Perth and Kinross Annual Accounts 2024/25 Page 28 of 212
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16 | Perth and Kinross Council Annual Accounts 2023/24 Provisions, Contingencies and Write Offs The Council made provision for a number of eventualities which may have an effect on the financial position of the Council. The reasons for the provisions are outlined in Note 30 on page 73. International Financial Reporting Standard 16 (IFRS 16) – Leases The Council adopted IFRS 16 Leases with effect from 1 April 2024. The main impact of the requirements of IFRS 16 is that, for arrangements previously accounted for as operating leases (i.e. without recognising the leased vehicles, plant, equipment, property and land as an asset, and future rents as a liability), a right-of-use asset and a lease liability are now included on the Balance Sheet from 1 April 2024. The effect of this has been to increase Balance Sheet assets by £0.443m, and there is an equal increase in liabilities as at 1 April 2024. IFRS 16 also applies to service concession arrangements i.e. Public-Private Partnerships (PPP) and similar schemes. Under IFRS 16, where indexation (or other changes in a rate) affects future service concession payments, the lease liability requires to be remeasured. Instead of expensing the increased payment, the net present value of future payments that comprise the liability is recalculated based on the revised level of payments. The effect of this has been to increase Balance Sheet assets by £55.353m, with an equal increase in finance lease liabilities as at 1 April 2024. Of the £55.353m adjustment, £55.756m relates to the movement on transition to IFRS 16 in respect of the IIL Campuses, offset by other smaller movements. The addition of £55.756m to the assets would result in the overstatement of asset carrying values, and the assets have subsequently been restated to their previous values at 31 March 2024. There were a number of write-offs of debt and stock during the year which were approved by the Finance and Resources Committee on 25 June 2025 – Authority to Write Off Debts and Obsolete Stock. d) Accounting Ratios The following financial indicators have been developed to provide an indication of the sustainability and affordability of the Council’s financial plans. FINANCIAL INDICATOR 2024/25 2023/24 PURPOSE Uncommitted General Fund Reserve as a proportion of Annual Budgeted Net Expenditure 4.0% 4.0% Reflects the level of funding available to manage financial risk / unplanned expenditure. Movement in the Uncommitted General Fund Balance £0.004m £0.541m Reflects the extent to which the Council has increased its Uncommitted General Fund Reserve. Council Tax – In Year Collection Rate 97.3% 97.5% Demonstrates the Council’s effectiveness in collecting council tax debt. Ratio of Council Tax Income to Overall Level of Funding 20.1% 21.0% This reflects the Council’s capacity to vary expenditure by raising Council Tax Income. Capital Financing Requirement £932.783m £816.351m Measurement of requirement to borrow for capital purposes. External Debt Levels £858.559m £743.240m Actual borrowing for capital investment purposes. Capital Financing Requirement Ratio 92.0% 91.0% Measurement of prudence in relation to borrowing levels – borrowing only to invest in capital. Ratio of Financing Costs to Net Revenue Stream 3.9% 4.1% Measurement of the Council’s ability to fund borrowing costs. e) Financial Statements The primary financial statements presented within the Annual Accounts are as follows: The Movement in Reserves Statement reports movements 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 Unusable Reserves. The Comprehensive Income and Expenditure Statement reports the accounting cost of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Councils raise taxation to cover expenditure in accordance with regulations which may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. The Balance Sheet brings together all the assets and liabilities of the Council. It is a statement of the resources of the Council and how they have been financed. It is also a report on the Council’s financial position at a particular point in time and represents a snapshot of its financial affairs at the close of the year expressed in accounting terms. The Cash Flow Statement summarises the inflows and outflows of cash and cash equivalents arising from transactions with third parties on both day to day revenue transactions and capital activities. Cash is defined for the purpose of this statement as cash in hand and deposits repayable on demand less overdrafts repayable on demand. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with an insignificant risk of change in value. 16 | Perth and Kinross Annual Accounts 2024/25 Page 29 of 212
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17 | Perth and Kinross Council Annual Accounts 2023/24 The Code also requires the following to be included within the Annual Accounts: The Statement of Responsibilities for the Annual Accounts explains the responsibilities of the Council and of the Chief Finance Officer as they relate to the Annual Accounts. The Notes to the Financial Statements provide further information on the above financial statements. The Notes include an Expenditure and Funding Analysis which compares the net expenditure that is chargeable to taxation and rents and reconciles it to the Comprehensive Income and Expenditure Account. The service analysis for both the Expenditure and Funding Analysis and the Comprehensive Income and Expenditure Statement are now both provided in the way in which the Council organises itself and manages financial performance. The Annual Governance Statement explains how the Council has complied with the Chartered Institute of Public Finance and Accountancy (CIPFA) / Society of Local Authority Chief Executives (SOLACE) standard for good corporate governance and meets the requirements of relevant legislation and current good practice. The Remuneration Report provides details of the Council’s remuneration of its senior councillors and senior officers with regard to salary, taxable expenses and pension benefits and states how remuneration arrangements are managed. The report also provides information on exit packages agreed by the Council during the financial year. Supplementary Financial Statements The supplementary financial statements are as follows: The Housing Revenue Account shows the major elements of housing revenue account expenditure and how these are funded by rents and other income. The Council Tax Income Account reports the gross and net income from Council Tax, together with details of the number of properties on which Council Tax is levied, and the charge per property. The Non-Domestic Rates Income Account shows the gross and net income from non-domestic rates and details the amount payable to the national non-domestic pool and resulting net income for the financial year to the Council that is shown in the Comprehensive Income and Expenditure Statement. The Charitable Trusts statement includes the summary Income and Expenditure Account and Balance Sheet of those Charitable Trusts and Endowments administered by the Council. The Common Good statement includes the summary Income and Expenditure Account and Balance Sheet for the Common Good Funds administered by the Council. The Group Accounts incorporate the share of the Council’s Managed Funds, Subsidiaries and Associates into the Group Movement in Reserves Statement, Group Comprehensive Income and Expenditure Statement, Group Balance Sheet, Group Cash Flow Statement and include the Reconciliation of the Single Entity (Council) Surplus or Deficit for the year to the Group Surplus or Deficit. 7. Financial Outlook, Risks and Plans for the Future The local government landscape has never been more complex or challenging. Our communities continue to experience challenges in relation to the cost of living resulting in increased levels of poverty, we continue to see rapid growth in our elderly population and the impact of poor mental health and wellbeing. Added to that we have an ambitious policy agenda to regenerate our economy, reduce the impact of climate change, raise educational attainment, and to increase and optimise the use of digital technology; all of which will come with a significant cost attached. Furthermore, the strategic risk register highlights significant challenges around failing to protect children and vulnerable adults from harm and mitigating or reducing the impact of climate change across Perth and Kinross. At the same time, the Council continues to experience unprecedented financial and other resource pressures because of significant cost increases due to inflation and an increasing demand for services. Like the wider public sector, we operate in an increasingly complex environment. The medium to long term implications of Covid-19 remain uncertain, the continuing war in Ukraine impacts inflation costs and ongoing costs of refugee resettlement, increases in costs and the ongoing cost of living challenge are all placing significant pressure on the workforce and the budget we have available to deliver services to communities. This means the Council is facing the most testing organisational pressures and financial circumstances it has ever experienced. To make best use of available resources, the Council will need to make decisions on what it will stop doing, do less of, do more efficiently or do differently through our Transformation and Change programme, service design and working as collaboratively as possible with partners and communities. 17 | Perth and Kinross Annual Accounts 2024/25 Page 30 of 212
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18 | Perth and Kinross Council Annual Accounts 2023/24 As the Council faces these challenges, there are several key drivers which require it to transform its services and the way it works with partners and communities to deliver improved outcomes. These include: new and emerging priorities – social, economic and climate – that require the Council to review what, how and where it delivers services to meet these challenges. a growing ageing population and increasing complexity of need and demand for services. Through transforming how the Council works, driving efficiencies and reviewing service delivery, it will help address these challenges and respond to these drivers. The purpose of bringing together the Council’s budget and change plans is to make greater links between how it allocates its resources and mitigates the impact of budget cuts whilst continuing to make best use of available resources to meet its priorities. The Council’s policy framework provides parameters as to how it will make difficult decisions to deliver its agreed priorities by taking an evidence-based approach and placing a focus on need, not simply demand. Tough choices will also be required and the adoption of a three year Council Tax Strategy in February 2025 can go some way to lessening the impact of these challenges. The Corporate Plan 2022-28 sets out a vision for “a Perth and Kinross where everyone can live life well, free from poverty and inequality”. The seven key priorities included in the plan show how the Council will address the challenges it faces and focus its work where it is needed most to support the delivery of that vision. In recognition of the challenges the Council faces and to ensure that it continues to deliver on its priorities, a Financial Strategy was approved in June 2022. The Financial Strategy is the link between the Council’s long-term priorities and its financial capacity. Its aim is to build resilience and ensure that the Council has an affordable and sustainable Medium Term Financial Plan, which directs its resources to where they are most needed in line with Council agreed priorities and strategic outcomes. The Financial Strategy included a set of principles that assist in decision making. The budgetary strategy was last updated in December 2024 when the Council approved the Medium Term Financial Plan (MTFP) which included agreement to set Revenue Budgets for 2025/26, 2026/27 and 2027/28. The update of the MTFP considered future funding levels, increasing costs and rising need / demand over the short to medium term, insofar as they may impact on Perth and Kinross Council. In approving the MTFP in December 2024, the Council also endorsed a three year Council Tax Strategy to assist medium term financial planning in terms of levels of income. This Council Tax Strategy was developed to directly support the key priorities of the Council with additional funding for social care, education and learning and children and families. The Strategy also allowed for investment in transformation including funding for the development of artificial intelligence and supporting long term capital investment. The MTFP places the development of budgetary strategy in the context of delivering the Council’s key outcomes and considers the financial and process risks considered in the management of the Council’s finances. The MTFP is designed to inform the direction of travel of the Council for financial planning purposes. As detailed budget proposals are developed, the broad assumptions included within the MTFP are superseded by more detailed analysis of individual cost pressures and the identification of budget reduction options. The refinement of these assumptions is included in the final 2025/26 Revenue Budget and 2026/27 and 2027/28 Provisional Revenue Budgets. The current revenue budgets include the continued use of the Service Concession Scheme (Local Government Finance Circular 10/2022 - Finance Leases and Service Concession Arrangements: Statutory Guidance refers) which will impact on the future financial management of the Council. The final Housing Revenue Account Revenue Budget for 2025/26 and Five Year Capital Investment Programme and Rent Strategy to 2029/30 was approved by the Housing and Social Wellbeing Committee on 22 January 2025. The Committee approved the recommendation of an average weekly rent increase for 2025/26 of 6% (£4.78 per week) in accordance with the requirements of the Council’s approved Housing Business Plan including supporting investment in new council housing. Transformation and Change Our five year Transformation and Change Strategy was approved in June 2022 and is currently being reviewed to take us into phase two of our programme until 2027/28. Transformation and change is not new to Perth and Kinross Council, and we have been undertaking activity to transform, change and respond to the needs of our local communities and the many social, economic, environmental, and other challenges we have faced since our inception in 1996. All public and private sector services and organisations are facing significant challenges and rethinking how they will operate in the future to address these challenges and meet new and emerging demands. In its National Programme for Government 2025-26, the Scottish Government have set out their commitments to deliver renewed and strengthened public services and to ensure that the people of Scotland are protected during the cost of living crisis. It highlights the Scottish Government’s focus on “eradicating child poverty, growing the economy, talking the climate emergency and delivering high quality and sustainable public services”. 18 | Perth and Kinross Annual Accounts 2024/25 Page 31 of 212
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19 | Perth and Kinross Council Annual Accounts 2023/24 [1] M_O_R® is an industry standard methodology for Management of Risk which helps an organisation identify, assess, and control risk at the strategic, programme, project and operational levels. Although there are many challenges to face together, we have significant experience in delivering transformation and improvement projects. Phase One of our Transformation and change programme completed in June 2024 and we know from previous experience that a focused programme of transformational change makes a real impact on the way that we operate. The revised strategy sets out our continued commitment to transformation and change through our phase two programme and sets out the next chapter of transformation for us as a Council and the communities we serve. It reaffirms the commitments made in 2022 to our ambitious programme of transformation and change across the organisation. 1. A clear vision and objectives 2. Strong leadership commitment 3. Continuing innovative and agile approach 4. Comprehensive change management processes 5. Effective communication and engagement These changes will impact our communities, our teams, and how they deliver as we seek to respond to changing demands and resourcing levels. In addition, financial sustainability will be achieved and maintained through prudent financial management, targeted investment and dis-investment, income generation, cost reduction, and the development of more efficient and effective ways of working. Capital The Council approved a revised 6-year Composite Capital Budget for 2025/26 – 2030/31 on 26 February 2025. The Housing and Social Wellbeing Committee approved the 5-year HRA Capital Budget for 2025/26 - 2029/30 on 22 January 2025. Both these Capital plans were subsequently updated by the Finance and Resources Committee on 30 April 2025. The Council’s Composite Capital Budget includes major transport infrastructure improvements, including a link road from Bertha Park to the new crossing over the River Tay. Significant investment in improvements to existing infrastructure is also included within the capital budget, including the replacement of Blairgowrie Recreational Centre, as well as ongoing works within the annual rolling programmes and road network improvements. Also included is the replacement of Perth High School and a new primary school at Bertha Park. There are also various school refurbishments under the Investment in the Learning Estate programme. There is significant investment included in relation to new technologies, including the ongoing development of the new Social Work database (Mosaic) and investment in the Microsoft Estate, as well as the upgrading and replacement of School Audio Visual equipment and other Technology Upgrades. Other expenditure is ongoing in relation to progressing various Flood Protection Schemes, with work on the construction of the Comrie Flood Protection having already started, as well as economic development and planning initiatives, parks and public spaces improvements, waste reduction and recycling and property improvements. The HRA Investment Programme 2025/26 to 2029/30 continues to focus upon increasing the affordable housing stock with the provision of new affordable housing and Council house buy-backs, as well as the enhancement of the existing housing stock, including Energy Efficiency and External Fabric maintenance. The Capital Financing Requirement is estimated to peak at £1.306 billion in 2030/31 under current approved plans. The annual cost of servicing the borrowing and Public Private Partnership liabilities is being managed through the 1.25% annual increases in Council Tax and the Capital Fund Strategy within the Medium-Term Financial Plan. This ensures the Council’s plan remains affordable, prudent and sustainable. More detailed narrative on the Council’s capital investment plans, treasury management (borrowing and investments), prudential indicators and loans fund liabilities can be found in the Council's Treasury and Investment Strategy and Prudential Indicators 2025/26 to 2030/31 report presented to Council on 5 March 2025. The Treasury annual report was considered at the Finance & Resources Committee on 30 April 2025. Risk Management Effective risk management is an essential element of good governance and integral to the Council’s ability to deliver positive outcomes for its communities. The Council undertook a wholescale review of its approach to risk and developed and approved a new Risk Management Framework in 2017. Since then, it has been reviewed and further refined to ensure that it remains fit for purpose and reflects the complex risk landscape of local government in these changing and challenging times. The risk management framework has been developed based on best practice industry standards including the International Standard in Risk Management – ISO: 31000 and the Office of Governance and Commerce (OGC) Management of Risk Guidance (MoR[1]) and guidance from the Association of Local Authority Risk Managers (ALARM) and comprises: Risk Management Policy – statement of the Council’s commitment to effective risk management; Risk Management Strategy – articulates our overall approach to risk and provides a detailed risk hierarchy; Risk Management Appetite Statement – describes the levels of risk the Council is prepared to tolerate in pursuit of our objectives; and Risk Management Process Guide – provides a toolkit of techniques and processes to ensure that risk is managed effectively and that our approach to risk management is consistent across the organisation. 19 | Perth and Kinross Annual Accounts 2024/25 Page 32 of 212
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20 | Perth and Kinross Council Annual Accounts 2023/24 Within the Council there is a cohort of trained risk practitioners who provide technical guidance and support to ensure that a consistent approach to risk management is taken across the whole organisation. During 2024/25, there has been continued focus on developing our online risk management system, PK Performs, and supporting Strategic Leads and Officers from across the Council to understand and utilise this effectively. Risk trained officers have also worked with Risk Owners, and the Strategic Leadership Team (SLT) to review their current risks both strategically and operationally. This has taken the form of one-to-one support and an SLT workshop. The workshop looked at the overall challenges and opportunities facing the Council, and the impact of any new emerging risks. SLT also collectively reviewed the scoring of the risks to ensure a robust and consistent approach was taken across the risk profile as well as the results of a benchmarking exercise with other Local Authorities. In addition, work has been carried out within the Transformation Programme with risk profiles developed for all projects and profiles uploaded and monitored through PK Performs. We have also joined the Tayside Risk Management Group to enable us to share learning and best practice with colleagues and have the ability to benchmark to drive improvement. The focus for 2025/26 will be creating risk and performance dashboards through Power BI to aid our reporting arrangements from PK Performs. In addition, operational risk registers will be uploaded to PK Performs and further training will be delivered to all transformation project managers to allow monitoring and reporting on their risks regularly. We will be engaging with Elected Members and officers to develop a fresh Risk Appetite Statement, in conjunction with looking at our strategic planning arrangements. The latest annual report and Strategic Risk Register was considered by the Audit and Risk Committee on 25 June 2025. Workforce Management The Council values its employees, their skills, dedication, and passion to ensure it delivers essential services to the people, businesses and communities of Perth and Kinross. Our people continue to be our most important asset and remain at the heart of everything we do. The Council continues its journey of transformation and change, reshaping our organisation to ensure that we are prepared to deliver the best public services we can for the people of Perth and Kinross, focused on need and within available resources. Our workforce is fundamental to the achievement of this goal. We recognise the importance of creating an environment which allows the people in our teams to be their best. We have a clear vision, aims and aspiration for our workforce and bringing our people on that journey is an essential part of ensuring that our culture and ethos to be future-ready to deliver public services remains pivotal. The Corporate Plan 2022/23 – 2027/28 sets out the key priorities and vision for the council, including how we will approach the delivery of services. Our Transformation and Change Strategy recognises that to achieve the ambitions of the Council we need to transform our organisation including its size and shape. Our Financial Strategy recognises the unprecedented budget challenges and need for responsible decision-making given the context in which we work. The People and Culture strategy 2024-2028 approved in June 2024 is the enabler to support our workforce, to develop and support them to make decisions whilst we continue to reshape our organisation and ensure that we can deliver the best public services we can. We continue to focus our efforts on what makes change a success – our people – and have created learning and engagement opportunities to support our ambition of growth and change. Our People and Culture Strategy is based around our values of Ambition, Compassion and Integrity to ensure that it delivers direction on not only what we need to do but also why, where and how we should be delivering now and in the future. Our action plan sets out how we will create a healthy and flexible workforce with the appropriate skills, values and behaviours to address current and future demands. This focus on workplace culture, performance, boosting productivity, encouraging innovation and creativity, embracing agility, digital technology and promoting wellbeing, reward, recognition and resilience are key. These commitments will enable the Council to match its ambition for transforming services, growing the economy, reducing inequalities, protecting vulnerable people and supporting young people to be all they can be. The Council is a diverse local authority, supporting both local rural and urban areas. We are committed to enhancing the quality of life, not just for the people we serve, but also for the people who make our achievements possible, our dedicated and driven employees. We are operating within the context of changing demands for our services, financial pressures, an ageing population and need for a range of highly specialist skills and services required for delivery. Strong workforce planning, multi- disciplinary teams, integrated working, locality-based decision-making, sound governance and effective measures to monitor our progress to deliver our ambition is in place. We have implemented our executive leadership team, leadership competency framework and our new performance framework to focus our contributions against Corporate Priorities. This model embodies our vision and sets the cultural and leadership foundations for how we will engage and operate with our communities in future. Our Evolving Leaders in Practice programme embeds this way of thinking and being into year 2 of the strategy expanding key elements across the wider leadership cohort. This creates further leadership development opportunities for all leaders across the Council linking these to our established leadership competency framework. Our redesigned operating model continues to ensure that we work together to focus on positive outcomes for those we serve, implementing new ways of working, optimising existing and new technology and working collaboratively with partners, Arm’s Length External Organisations and other local authorities to create and adopt innovative approaches to service delivery. 20 | Perth and Kinross Annual Accounts 2024/25 Page 33 of 212
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21 | Perth and Kinross Council Annual Accounts 2023/24 We continue to demonstrate the importance of inclusion by being a role model for initiatives such as Living Wage, Carer Positive, Disability Confident, Young Person’s Guarantee and the Armed Forces Covenant. These reflect the commitment we make as an employer to support the different groups within our workforce and our communities. Development and talent management will also enable us to provide versatile people solutions to support the future strategic direction of the organisation. We also continue to invest in training and development opportunities for young people via Apprenticeship and Graduate Programmes. A focus on health and wellbeing and resilience are key to sustaining a healthy working environment and positive wellbeing culture and we continue to review and refresh the wide range of health and wellbeing initiatives and support we offer to our workforce. The Council is proud to be a Fair Work employer and continues to apply Fair Work principles, consulting and engaging with employees and their trade union representatives on improvements in our employment practices and arrangements. Equalities and fairness continue to be core principles in our People and Culture Strategy. This will ensure we continue to have the right skills in the right place when we need them and will contribute to working together to ensure everyone can live life well. 8. Supplementary Information a) Group Accounts The Code of Practice on Local Authority Accounting in the United Kingdom requires the Council to produce group financial statements where it has an interest in entities that meet the definition of a subsidiary, associate or joint venture. The Group results are presented alongside the results for the Council in the Annual Accounts. Further details of the associated entities that have been incorporated into the financial statements can be found on page 106. Horsecross Arts Limited now operates under its new brand of Perth Theatre and Concert Hall. The Council has an interest in six organisations (detailed on page 106) that do not form part of the main Accounts. The Council includes the results of these organisations in its Group Accounts due to the significant influence it has over their financial and operating practices. The Council also includes Charitable Trusts administered and controlled by the Council and Common Good Funds as managed funds within the Group Accounts. In accordance with the Code, the 2024/25 Group Accounts Statements are included on pages 101 to 105. The basis for consolidation is set out in the Notes to the Group Accounts Statements on pages 106 to 108. The effect of consolidation is to increase the Council’s net assets by £38.551 million resulting in a Group Balance Sheet showing net assets of £768.248 million at 31 March 2025 as set out on page 103. b) Common Good and Charitable Trust Funds Common Good Funds are administered by the local authority for the general benefit of the relevant communities. Overall, the Common Good Funds recorded an in-year surplus of £155,000 which, when applied to the surplus brought forward, results in an accumulated revenue surplus as at 31 March 2025 of £2.525 million. Details of income and expenditure accounts and balance sheets can be found on pages 99 and 100 of the Annual Accounts. These funds are subject to similar accounting policies and procedures to those that are applied to the Council’s main accounts. The main source of income to Common Good Funds is rent. The Council also administers several Charitable Trust Funds. Details of income and expenditure accounts and balance sheets can be found on page 98 of these Annual Accounts. Overall, the Trust Funds recorded an in-year surplus of £58,000 which, when applied to the surplus brought forward, results in an accumulated surplus as at 31 March 2025 of £3.781 million. Perth and Kinross Council’s Trust Funds, for which the Council is the sole trustee, also have to prepare their own Trustees’ Annual Report and this is separately available on the Council website. c) Public Private Partnerships / Design Build Finance Maintain In September 2000 the Council entered into a 25-year PPP contract for the construction, maintenance and operation of office accommodation and a car park. In 2024/25 the Council paid £3.065 million to the contractor under the terms of the contract. Between 2009 and 2012 six school campuses were also brought into operation at Blairgowrie, Glenearn, Loch Leven, Strathearn, North Inch and Breadalbane. The contractor’s obligation was to construct the schools and is to maintain them to a pre agreed standard. In 2024/25 the Council paid £22.4 million to the contractor under the terms of the contract. In addition, the Council paid £3.311 million in relation to Bertha Park High School in 2024/25. During 2023/24, the Council applied the revised accounting guidance for the treatment of Service Concession arrangements which has the impact of spreading the cost of the principal repayments across the life of the asset, generating both a retrospective benefit and annual benefit in the immediate term. The total unitary charge remains payable to the contractor; however, the Service Concession flexibility permits the Council to account for the cost of the repayment element of the unitary charge over the 50 year life of the asset rather than the 25 / 30 year contract life. Note 36 Public Finance Initiatives and Similar Contracts provides further detail. 21 | Perth and Kinross Annual Accounts 2024/25 Page 34 of 212
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22 | Perth and Kinross Council Annual Accounts 2023/24 9. Conclusion The Council has continued to demonstrate sound financial management in 2024/25 by delivering services during challenging times with the resources which are available to it. The pressures being experienced by Services in relation to demand are known and plans are in place to mitigate them. The Council is also facing significant inflationary pressures. These pressures have been reflected in budgets and the MTFP. The commitment to a Council Tax Strategy is a key component in addressing these challenges. The Council will continue to face many challenges in the future from the combined effect of reduced resources, increasing demands and expectations for our services. It is confident that by working more creatively with all its residents and partners, it will not only embrace these challenges but will maintain its performance and service delivery. Acknowledgements As in previous years, we would like to acknowledge the significant work of the finance teams in producing the Annual Accounts and thank colleagues across the Council and the wider Group for their continuing support. Thomas Glen Councillor Eric Drysdale Scott Walker Chief Executive Leader of the Council Chief Finance Officer Perth and Kinross Council Perth and Kinross Council Perth and Kinross Council 22 | Perth and Kinross Annual Accounts 2024/25 Page 35 of 212
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23 | Perth and Kinross Council Annual Accounts 2023/24 Annual Governance Statement 1 Purpose 1.1 The purpose of the Annual Governance Statement is to give assurance to the people of Perth and Kinross, our elected members, staff, partner agencies and other stakeholders that our governance arrangements are adequate and effective and that our system of internal control is robust. 2 Scope of Responsibility 2.1 As well as providing assurance as to the effectiveness of the governance arrangements in place for the Council, this Annual Governance Statement also covers the six organisations that are included in the Council’s Group Accounts. Live Active Leisure Limited (subsidiary) Perth Theatre and Concert Hall Limited (subsidiary) Culture Perth and Kinross Limited (subsidiary) Tayside Valuation Joint Board (associate) Tayside Contracts (associate) Perth and Kinross Integration Joint Board (joint venture) 3 Our Governance Framework 3.1 Our governance framework comprises our culture, values, rules, resources, systems, tools and processes which we have in place to help us achieve our strategic objectives. We recognise that the following are fundamental elements of good governance within public sector organisations: - Leadership, Culture and Values Vision, Direction and Purpose Stakeholder Engagement Organisational Development Effective Decision Making Internal Controls Scrutiny and Accountability 3.2 These fundamental elements of our governance framework reflect and seek to embed the principles of good governance within the 2016 CIPFA Framework for Delivering Good Governance in Local Government, namely: Behaving with integrity, demonstrating strong commitment to ethical values and respecting the rule of law Defining outcomes in terms of sustainable economic, social and environmental benefits Ensuring openness and comprehensive stakeholder engagement Developing the entity’s capacity, including the capability of its leadership and the individuals within it Determining the interventions necessary to optimise the achievement of the intended outcomes Managing risks and performance through robust internal control and strong public financial management Implementing good practices in transparency, reporting and audit to deliver effective accountability. 3.3 A crucial part of the framework is the system of internal control which is designed to manage and mitigate risk in relation to the achievement of our intended outcomes. 3.4 The Council manages risk through a continuous process of identification, assessment, evaluation, prioritisation and mitigation. We evaluate risk based on likelihood and impact in both financial and non-financial terms. We do however need to mitigate and manage risk proportionately; recognising that risk can never be eliminated completely and that only reasonable assurance can ever be given. 4 Our Governance Arrangements 4.1 Our culture and values are reflected in our behaviour and our decision-making. Our policies, processes and procedures including Elected Member and Employee Codes of Conduct, Whistleblowing and Anti-fraud and Corruption policies, Elected Member Register of Interests and Gifts and Hospitality Policy ensure that, as a Council, we respect the rule of law, behave with integrity, promote a culture of good governance and demonstrate a strong commitment to ethical values. 4.2 There are appropriate and effective arrangements in place for the discharge of the following statutory functions: Head of Paid Service Monitoring Officer Chief Finance Officer Chief Social Work Officer Data Protection Officer 23 | Perth and Kinross Annual Accounts 2024/25 Page 36 of 212
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24 | Perth and Kinross Council Annual Accounts 2023/24 4.3 In 2022/23, officers and elected members engaged with our communities and worked together in partnership to develop a new Corporate Plan which reflects the strategic priorities of the Council. The more detailed delivery plan, the Corporate Development Improvement Plan, was developed in 2023/24 to ensure that we deliver on those objectives and continue to provide high quality operational services. The Annual Performance Report for 2023/24, identifying key improvement activity for 2024/25, was reported to Council in October 2024. 4.4 Strategic, operational and political leadership is an integral element of effective governance. Following the extensive induction/refresher programme of training that was put in place for elected members following the Election, a long-term programme of personal development is being implemented. Similarly, an extensive leadership development programme is in place for officers, with a new leadership competency framework being implemented to enhance capacity and effectiveness, not only in senior leadership roles but across all levels of the organisation. 4.5 A new operational leadership structure, at the most senior level, concluded within the year, to ensure that it is fit for purpose and better aligned to deliver on the strategic objectives and key priorities of the Council. Transition arrangements were established to the new strategic leadership model. Whilst the structure has been designed to support a new way of working, an unavoidable consequence has been the loss of skilled and experienced officers at a senior level, the resultant risk requiring to be managed as part of that process. At the same time a number of key and experienced officers at service manager and team leader level have also left the organisation either through retiral or to take up other opportunities elsewhere, which exacerbates that risk. This will be managed through the ongoing programme of leadership redesign and development. 4.6 Leadership within the organisation is effective with good communication between elected members and senior management through Leaders’ meetings, Convenors meetings, Member Officer Working Groups and all-member briefings, where appropriate. There are also regular pre-agenda discussions in respect of each scheduled Council and Committee meeting. 4.7 Our Local Outcomes Improvement Plan and Corporate Plan set out our vision and purpose and have been subject to consultation and approval. The Financial Strategy and approved Medium Term Financial Plan and Revenue and Capital budgets prioritise how our financial resources are to be deployed. The Transformation and Change Strategy highlights our ambition to better support the delivery of services to the people of Perth and Kinross, particularly those in the greatest need. Key strategic documents such as the Capital Investment Blueprint and Corporate Asset Management Strategy, Housing Investment Programme, Anti-Poverty Strategy, Economic Wellbeing Plan and Climate Change Strategy provide the necessary direction to the organisation to enable it to deliver on its vision and priorities and to achieve its purpose. Furthermore, a new Sustainable Procurement Strategy 2024 to 2029 was approved by Council in June 2024. 4.8 We recognise the importance of good stakeholder engagement and will continue to engage and work in partnership with our communities, partners, and other stakeholders to ensure that we design and deliver the public services that our communities need and value. Our approach to consultations is based on the National Standards for Community Engagement and we have established a wide range of consultation processes and procedures. The Community Empowerment (Scotland) Act 2015 provides a framework for improving the quality of engagement and participation which is reflected in the Local Outcome Improvement Plan and our own Corporate Plan. 4.9 We are operating in an increasingly complex and financially challenging public sector landscape and must be able to adapt and evolve our services and workforce to continue delivering cost-efficient, high-quality services. Our people remain our most valuable assets and as an organisation we will secure the best outcomes for our communities by investing in the development of our workforce and of our leaders to ensure that they have the right skills and have sufficient capacity to deliver. Our approach is outlined in our Corporate Workforce Plan – Resourcing PKC Everyone Has Something To Offer. This approach was reviewed in 2023/24 and a new refreshed People and Culture Strategy was approved in June 2024. 4.10 The Council’s Scheme of Administration sets out the Council’s decision-making structure in terms of roles, remits and responsibilities to ensure transparency and accountability. This reflects the priorities and objectives of the Council and the senior officer leadership structure. 4.11 We have a robust suite of policies, procedures and management processes to ensure that there are appropriate internal controls in place in respect of: - Workforce Planning and Management Financial Planning and Management Risk and Performance Management Transformation and Change Management Procurement and Commissioning Major Investment Project Management Health and Safety Information Management and Security Civil Contingencies and Business Continuity Anti- Fraud and Corruption Conflicts of Interests Gifts and Hospitality 24 | Perth and Kinross Annual Accounts 2024/25 Page 37 of 212
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25 | Perth and Kinross Council Annual Accounts 2023/24 Whistleblowing and Reporting Concerns Complaints Handling Officer and Elected Member Conduct 4.12 As a public body we must be open, transparent and accountable for our decisions, actions, and performance. Our management and democratic structures and processes are designed to facilitate effective decision making and the proper scrutiny of those decisions and their impact in terms of performance and the achievement of our intended outcomes. 4.13 The Council set a final revenue budget for the year 2025/26 in February 2025, along with provisional budgets for 2026/27 and 2027/28. These revenue budgets demonstrate clear linkages with the Transformation and Change strategy. Each budget is allocated to a named budget holder. Budgets are monitored regularly by Service Management Teams and overall financial performance is monitored regularly by the Executive Leadership Team. Council, through the Finance and Resources Committee, receives regular financial monitoring information as part of the budgetary control framework and provides the required political scrutiny of our financial management and performance. 4.14 Capital spend is monitored by Service Management Teams and the Executive Leadership Team and reported regularly to the Finance and Resources Committee as part of the budgetary control framework. 4.15 The Council publishes an Annual Performance Report on its performance against the objectives set out within the Corporate Plan and Local Outcomes Improvement Plan. In order to improve transparency and clarity of these links, a Corporate Delivery and Improvement Plan has been developed. 4.16 The Corporate Delivery and Improvement Plan, which was approved by Council in May 2024, strengthens the alignment between the Corporate Plan priorities, improvement activity and budget and resource allocations, was developed and subject to consultation in year. It sets out detailed actions and outcomes for each priority and includes appropriate performance indicators. Performance is reported to the Executive Leadership Team and publicly through the Council’s Scrutiny and Performance Committee and relevant themed committees. Financial performance is publicly reported through the Finance and Resources Committee and relevant service committees. 4.17 The Council has a published process for dealing with the following and annually reports on performance in this respect of these areas: - Complaints from members of the public Requests for accessing information under the Freedom of Information legislation Accessing information under the Data Protection legislation. 5 Governance Assurance Process 5.1 The Council utilises a robust process of gathering assurance information from the Strategic Leadership Team, which concludes with Certificates of Assurance being signed. 5.2 Corporate assurance has also been provided as regards the adequacy of the internal controls from the following Officers: Chief Finance Officer (S 95 Officer) Strategic Lead for Legal and Governance Services /Monitoring Officer Chief Internal Auditor Data Protection Officer Records and Information Security Manager Corporate Procurement Manager Corporate HR Manager 5.3 For Arm’s Length External Organisations, reliance has been placed upon: Unaudited financial statements of the companies (audited accounts will be scrutinised when available) Assurance self-assessment evaluations Terms and conditions of Service Level Agreements Contract monitoring meetings with Services Performance information and financial monitoring reports to Services Presentations and reports to the Scrutiny and Performance Committee 5.4 For Tayside Contracts Joint Committee, Tayside Valuation Joint Board and Perth and Kinross Integration Joint Board, reliance is placed upon each organisation’s own Annual Governance Statement. 5.5 The draft Annual Governance Statement is considered by the Strategic Leadership Team and the Council’s Scrutiny and Performance Committee prior to inclusion within the final 2024/25 Annual Accounts. 5.6 The Annual Governance Statement is considered by the Audit and Risk Committee as part of the final 2024/25 Annual Accounts. 25 | Perth and Kinross Annual Accounts 2024/25 Page 38 of 212
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26 | Perth and Kinross Council Annual Accounts 2023/24 6 Effectiveness of Governance Arrangements for 2024/25 6.1 Based on the assurance process outlined above, in terms of effectiveness, the Council’s governance arrangements continue to be regarded as fit for purpose in accordance with the governance framework, subject to the areas identified for review or improvement set out in section 8 below. 6.2 Our financial management arrangements conform with the governance requirements of the CIPFA Statement on the Role of the Chief Financial Officer in Local Government (2015). 6.3 Our assurance arrangements conform with the governance requirements of the CIPFA Statement on the Role of the Head of Internal Audit (2010) and the External Quality Assessment of the Internal Audit function has been assessed as fully conforming with the Public Sector Internal Audit Standards in year. 6.4 The Council has designated the Strategic Lead for Legal and Governance as the Senior Information Risk Owner, with the Strategic Lead for Customer and Digital Services as Depute. Our information security measures have been reviewed in 2024/25 to ensure continuing compliance with the Public Service Network (PSN) and other cyber security requirements. 6.5 Our counter-fraud and anti-corruption arrangements conform with CIPFA’s Code of Practice on Managing the Risks of Fraud and Corruption. 6.6 The Chief Internal Auditor is the Council’s nominated Money Laundering Reporting Officer. There has been no relevant activity in respect of Council and its group during the year. 6.7 The Council’s Audit and Risk Committee operates in line with CIPFA’s Audit Committees: Practical Guidance for Local Authorities. 6.8 We have structures in place which support constructive challenge and effective scrutiny to our system of internal control and our broader governance arrangements. In particular: - Audit and Risk Committee Scrutiny and Performance Committee Finance and Resources Committee Themed Committees Executive Leadership Team / Strategic Leadership Team Policy and Governance Group Transformation Board Internal Audit External Audit (presently Audit Scotland) 7 Opinion of the Chief Internal Auditor 7.1 Audit activity and performance is detailed in the Annual Report by the Chief Internal Auditor for the year 2024/25, which was presented to the Council’s Audit and Risk Committee in June 2025. The report contains the Chief Internal Auditor’s opinion in respect of the effectiveness of the governance arrangements in place, as follows: - “In the Chief Internal Auditor’s opinion, reasonable reliance can be placed on the Council’s risk management and governance arrangements, and systems of internal control for 2024/25, subject to management implementation of the agreed actions detailed in Internal Audit reports.” 8 Areas for Review/Continued Improvement Action 8.1 We rely heavily on technology, and the way in which technology can shape and influence how we deliver services and work as an organisation in the future. We continue to review our cyber resilience and information governance arrangements to ensure that they are fit for purpose and robust and continue to support new and innovative ways of working, such as the ethical and responsible use of Artificial Intelligence. 8.2 The Council’s financial management, governance and reporting arrangements have been assessed against the financial management standards set out within the CIPFA Financial Management Code (2019). The Code is based upon the standards set out elsewhere within the Annual Governance Statement and the Council is considered to be compliant with the Code. Improvement actions arising from the review include consideration of how the Council can build upon existing practice in its budget consultation with stakeholders and strengthening existing reporting arrangements. 8.3 In addition to these areas, there are some specific areas which will be held under review pending the outcome of current transformation and change activity: Leadership culture and capacity Capacity and resources to lead, develop and deliver ongoing and future programme of transformation and change Strategic Procurement Workforce planning and organisational development Use of the Financial Strategy to address financial pressures Our approach to community engagement and empowerment. 26 | Perth and Kinross Annual Accounts 2024/25 Page 39 of 212
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27 | Perth and Kinross Council Annual Accounts 2023/24 Conclusion and Opinion The Council is legally required to review the effectiveness of its governance arrangements and to publish an Annual Governance Statement, with its Annual Accounts. The governance framework and, in particular, the system of internal control, has been assessed in accordance with guidance from the Chartered Institute of Public Finance and Accountancy (CIPFA). The review of the effectiveness of the Council’s system of internal control and overall governance framework has been informed by different sources assessing risk and providing assurance:- Executive Leadership Team/ Strategic Management Teams Chief Finance Officer Strategic Lead for Legal and Governance Services/ Monitoring Officer Chief Internal Auditor/ Internal Audit Data Protection Officer Policy and Governance Group External Audit External agencies and inspectorates. The Council’s Governance Framework is considered robust and effective. Given the changes in the leadership structure from 1 April 2024, certificates of assurance have been obtained from Strategic Leads, who are responsible for maintaining the system of internal control within their service area. Strategic Leads have reviewed the current governance arrangements and internal controls within their service area and provided assurance that these are effective. The Chief Finance Officer has provided assurance that the financial arrangements in place conform to the relevant CIPFA requirements and that our expenditure is lawful. The Monitoring Officer has provided assurance that our governance arrangements ensure compliance with relevant laws, regulations, internal policies, and procedures. The Chief Internal Auditor has provided assurance for the year 2024/25 and an Internal Audit plan has been developed for 2025/26 that will focus on areas which have been identified as corporate or service specific risks in relation to core business and the delivery of the Council’s agreed strategic priorities. We are satisfied that our governance arrangements and, in particular, our system of internal control, continue to be regarded as fit for purpose. Any identified improvement actions will continue to be delivered and monitored through service improvement plans, audit plans and change programmes to avoid duplication of effort. Our governance framework will continue to be reviewed and adapted where necessary to ensure that it remains robust and effective. Signed: Signed: Thomas Glen Councillor Eric Drysdale Chief Executive Leader of the Council 27 | Perth and Kinross Annual Accounts 2024/25 Page 40 of 212
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28 | Perth and Kinross Council Annual Accounts 2023/24 Independent auditor’s report to the members of Perth and Kinross Council and the Accounts Commission Reporting on the audit of the financial statements Opinion on financial statements I certify that I have audited the financial statements in the annual accounts of Perth and Kinross Council and its group for the year ended 31 March 2025 under Part VII of the Local Government (Scotland) Act 1973. The financial statements comprise the group and council-only Movement in Reserves Statements, Comprehensive Income and Expenditure Statements, Balance Sheets, and Cash Flow Statements, the council-only Housing Revenue Account Income and Expenditure Statement, Statement of Movements on the Housing Revenue Account Balance, Council Tax Income Account, Non-Domestic Rate Income Account, Charitable Trusts Income and Expenditure Account, Charitable Trusts Balance Sheet, Common Good Income and Expenditure Statement, Common Good Balance Sheet, the group-only Reconciliation of the Single Entity Deficit for the year to the Group Deficit, and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 (the 2024/25 Code). In my opinion the accompanying financial statements: give a true and fair view of the state of affairs of the council and its group as at 31 March 2025 and of the income and expenditure of the council and its group for the year then ended; have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2024/25 Code; and have been prepared in accordance with the requirements of the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003. Basis for opinion I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Accounts Commission for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Accounts Commission on 3 April 2024. My period of appointment is four years, covering 2023/24 to 2026/27. I am independent of the council and its group in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the council. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Conclusions relating to going concern basis of accounting I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the ability of the council and its group to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue. These conclusions are not intended to, nor do they, provide assurance on the current or future financial sustainability of the council and its group. However, I report on the council’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website. Risks of material misstatement I report in my Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon. Responsibilities of the Chief Finance Officer and Audit and Risk Committee for the financial statements As explained more fully in the Statement of Responsibilities, the Chief Finance Officer is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Chief Finance Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Chief Finance Officer is responsible for assessing the ability of the council and its group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless there is an intention to discontinue the operations of the council and its group. The Audit and Risk Committee is responsible for overseeing the financial reporting process. 28 | Perth and Kinross Annual Accounts 2024/25 Page 41 of 212
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29 | Perth and Kinross Council Annual Accounts 2023/24 Auditor’s responsibilities for the audit of the financial statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include: using my understanding of the local government sector to identify that the Local Government (Scotland) Act 1973, The Local Authority Accounts (Scotland) Regulations 2014, and the Local Government in Scotland Act 2003 are significant in the context of the council and its group; inquiring of Chief Finance Officer as to other laws or regulations that may be expected to have a fundamental effect on the operations of the council and its group; inquiring of the Chief Finance Officer concerning the policies and procedures of the councils and its group regarding compliance with the applicable legal and regulatory framework; discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the council’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report. Reporting on other requirements Opinion prescribed by the Accounts Commission on the audited parts of the Remuneration Report I have audited the parts of the Remuneration Report described as audited. In my opinion, the audited parts of the Remuneration Report have been properly prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014. Other information The Chief Finance Officer is responsible for the other information in the annual accounts. The other information comprises the Management Commentary, Annual Governance Statement, Statement of Responsibilities and the unaudited parts of the Remuneration Report. My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Management Commentary and Annual Governance Statement to the extent explicitly stated in the following opinions prescribed by the Accounts Commission. 29 | Perth and Kinross Annual Accounts 2024/25 Page 42 of 212
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30 | Perth and Kinross Council Annual Accounts 2023/24 Opinions prescribed by the Accounts Commission on the Management Commentary and Annual Governance Statement In my opinion, based on the work undertaken in the course of the audit: the information given in the Management Commentary for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with statutory guidance issued under the Local Government in Scotland Act 2003; and the information given in the Annual Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Delivering Good Governance in Local Government: Framework (2016). Matters on which I required to report by exception I am required by the Accounts Commission to report to you if, in my opinion: adequate accounting records have not been kept; or the financial statements and the audited parts of the Remuneration Report are not in agreement with the accounting records; or I have not received all the information and explanations I require for my audit. I have nothing to report in respect of these matters. Conclusions on wider scope responsibilities In addition to my responsibilities for the annual accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice, including those in respect of Best Value, are set out in my Annual Audit Report. Use of my report This report is made solely to the parties to whom it is addressed in accordance with Part VII of the Local Government (Scotland) Act 1973 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties. Rachel Browne CPFA Audit Director Audit Scotland 4th Floor 102 West Port Edinburgh EH3 9DN 30 | Perth and Kinross Annual Accounts 2024/25 Page 43 of 212
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General Housing Capital Insurance Capital Capital Total Unusable Total Fund Revenue Fund Fund Receipts Grants Usable Reserves Authority Balance Account Reserve Unapplied Reserves (Note 32) Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2023 (69,723) (2,647) (26,343) (1,306) (2,245) (87) (102,351) (764,851) (867,202) Movement in reserves during 2023/24 Total Comprehensive Income and Expenditure 41,392 9,901 0 0 0 0 51,293 (23,807) 27,486 Adjustments to Usable Reserves permitted by accounting standards (6,454) (2,357) 0 0 0 0 (8,811) 8,811 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (Note 5) (19,833) (7,157) 0 0 143 0 (26,847) 26,847 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (34,262) 0 0 0 0 0 (34,262) 34,262 0 Decrease in 2023/24 (19,157) 387 0 0 143 0 (18,627) 46,113 27,486 Transfers to/(from) Other Statutory Reserves 5,086 0 (4,683) (403) 0 0 0 0 0 Balance at 31 March 2024 carried forward (83,794) (2,260) (31,026) (1,709) (2,102) (87) (120,978) (718,738) (839,716) Movement in reserves during 2024/25 Total Comprehensive Income and Expenditure 28,909 (2,749) 0 0 0 0 26,160 83,859 110,019 Adjustments to Usable Reserves permitted by accounting standards (6,187) 776 0 0 0 0 (5,411) 5,411 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (Note 5) (9,178) 1,975 0 0 770 (1,060) (7,493) 7,493 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (2,914) 0 0 0 0 0 (2,914) 2,914 0 (Increase) or Decrease in 2024/25 10,630 2 0 0 770 (1,060) 10,342 99,677 110,019 Transfers to/(from) Other Statutory Reserves 4,880 0 (5,966) 1,086 0 0 0 0 0 Balance at 31 March 2025 carried forward (68,284) (2,258) (36,992) (623) (1,332) (1,147) (110,636) (619,061) (729,697) MOVEMENT IN RESERVES STATEMENT 31 | Perth and Kinross Annual Accounts 2024/25 Page 44 of 212
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Restated 2023/24 Gross Income Net Notes Gross Income Net Expenditure Expenditure Expenditure Expenditure £'000 £'000 £'000 £'000 £'000 £'000 COUNCIL SERVICES 182,377 (20,285) 162,092 Education and Learning 173,520 (5,546) 167,974 198,752 (110,826) 87,926 Health and Social Care 218,171 (120,943) 97,228 30,664 (5,478) 25,186 Children, Families and Justice 29,903 (5,896) 24,007 49,670 (15,621) 34,049 Economy, Development and Planning 37,967 (11,270) 26,697 61,020 (5,709) 55,311 Environment and Infrastructure 55,798 (5,924) 49,874 28,961 (13,367) 15,594 Housing and Communities 31,299 (12,273) 19,026 69,236 (5,733) 63,503 Property Services 85,064 (6,098) 78,966 5,653 (1,034) 4,619 Legal and Governance 5,637 (1,078) 4,559 36,503 (20,410) 16,093 Customer and Digital Services 36,545 (19,359) 17,186 6,392 (622) 5,770 Strategic Planning, People and Performance 6,304 (799) 5,505 251 (3) 248 Projects and Programmes 283 0 283 10,609 (2,912) 7,697 Finance and Business Support 10,980 (2,691) 8,289 3,434 0 3,434 Directorate Core Costs 1,327 0 1,327 43,489 (33,507) 9,982 Housing Revenue Account 38,239 (35,437) 2,802 1,436 0 1,436 Valuation Joint Board 1,434 0 1,434 728,447 (235,507) 492,940 COST OF SERVICES 732,471 (227,314) 505,157 0 (944) (944) Other Operating Income and Expenditure 8 138 (244) (106) 25,811 (7,002) 18,809 Financing and Investment Income and Expenditure 9 25,079 (5,649) 19,430 0 (459,512) (459,512) Taxation and Non-Specific Grant Income 10 0 (498,321) (498,321) 754,258 (702,965) 51,293 Deficit on Provision of Services 757,688 (731,528) 26,160 (24,003) (Surplus)/Deficit on revaluation of non current assets 83,518 196 Remeasurement of the net defined benefit liability 341 (23,807) Other Comprehensive Income and Expenditure 83,859 27,486 Total Comprehensive Income and Expenditure 110,019 2024/25 COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT 32 | Perth and Kinross Annual Accounts 2024/25 Page 45 of 212
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Notes £'000 £'000 1,512,833 Property, Plant and Equipment 21 1,580,002 51,814 Heritage Assets 22 52,099 14,715 Investment Property 23 16,184 348 Intangible Assets 24 2,189 543 Long Term Debtors 26 530 1,580,253 Long Term Assets 1,651,004 36,560 Short Term Investments 0 676 Assets Held for Sale 25 875 632 Inventories 27 620 52,344 Short Term Debtors 28 50,007 31,183 Cash and Cash Equivalents 44 24,645 121,395 Current Assets 76,147 (19,398) Short Term Borrowing 39 (40,581) (91,611) Short Term Creditors 29 (95,500) (1,668) Provisions 30 (2,814) (112,677) Current Liabilities (138,895) (3,564) Provisions 30 (1,951) (616,330) Long Term Borrowing 39 (683,808) (129,361) Other Long Term Liabilities 18, 20 and 36 (172,800) (749,255) Long Term Liabilities (858,559) 839,716 NET ASSETS 729,697 120,978 Usable Reserves 110,636 718,738 Unusable Reserves 32 619,061 839,716 TOTAL RESERVES 729,697 The Unaudited Annual Accounts were issued on 25 June 2025 and the Audited Annual Accounts were authorised for issue on 1 December 2025. The accompanying notes form an integral part of these financial statements. Scott Walker CPFA Chief Finance Officer Date: 31 March 202531 March 2024 BALANCE SHEET 33 | Perth and Kinross Annual Accounts 2024/25 Page 46 of 212
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2023/24 Notes 2024/25 £'000 £'000 (51,293) Deficit on the provision of services (26,160) 86,840 Adjustments to net deficit on the provision of services for non cash movements 73,936 (49,490) Adjustments for items included in the net deficit on the provision of services that are investing and financing activities (43,242) (13,943) Net cash flows from Operating Activities 4,534 8,267 Investing Activities 42 (91,070) 19,196 Financing Activities 43 79,998 13,520 Net (decrease)/increase in cash and cash equivalents (6,538) 17,663 Cash and cash equivalents at the beginning of the reporting period 31,183 31,183 Cash and cash equivalents at the end of the reporting period 44 24,645 CASH FLOW STATEMENT 34 | Perth and Kinross Annual Accounts 2024/25 Page 47 of 212
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35 | Perth and Kinross Council Annual Accounts 2023/24 Statement of Responsibilities for the Annual 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 those affairs under Section 95 of the Local Government (Scotland) Act 1973. In this Council that officer is the Chief Finance Officer. - to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets. - ensure the Annual Accounts are prepared in accordance with legislation (The Local Authority Accounts (Scotland) Regulations 2014), and so far as is compatible with that legislation, in accordance with proper accounting practices (section 12 of the Local Government in Scotland Act 2003). - approve the Annual Accounts for signature. I confirm that these Annual Accounts were approved for signature by the Audit and Risk Committee at its meeting on 1 December 2025. Signed on behalf of Perth and Kinross Council Councillor Eric Drysdale Leader of the Council Date: The Responsibilities of the Chief Finance Officer The Chief Finance Officer is responsible for the preparation of the Council’s Annual Accounts in accordance with proper practices as required by legislation and as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Accounting Code). In preparing these Annual Accounts, the Chief Finance Officer has: selected suitable accounting policies and applied them consistently; made judgements and estimates that were reasonable and prudent; complied with legislation; and complied with the Local Authority Accounting Code (in so far as it is compatible with legislation). The Chief Finance Officer has also: - kept proper accounting records which were up to date; - taken reasonable steps for the prevention and detection of fraud and other irregularities; - used the going concern basis of accounting on the assumption that the Council will continue in operational existence for the twelve months following the approval of the Annual Accounts. I certify that the Annual Accounts give a true and fair view of the financial position of the Council and its group at the reporting date and the transactions of the Council and its Group for the year ended 31 March 2025. Scott Walker CPFA Chief Finance Officer Date: 35 | Perth and Kinross Annual Accounts 2024/25 Page 48 of 212
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36 | Perth and Kinross Council Annual Accounts 2023/24 Notes to the Financial Statements 1. Accounting Policies General The Annual Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) and adapted to the Code of Practice as required by the Local Authority Accounts (Scotland) Regulations 2014 and section 12 of the Local Government in Scotland Act 2003. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 and supported by International Financial Reporting Standards. The Annual Accounts are intended to present a true and fair view of the financial position and transactions of the authority and have been prepared in accordance with the fundamental accounting principles of relevance, reliability, comparability, understandability and materiality. The accounting convention adopted in the Annual Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, or when the Council is entitled to the income, not simply when cash payments are made or received. In particular: Revenue from contracts with service recipients, whether for services or the provision of goods, is recognised when (or as) the goods and services are transferred to the service recipient in accordance with the performance obligations in the contract. 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 those rendered by the Council’s officers) 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. Where revenue and expenditure have 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 there is evidence that debts are unlikely to 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 Council is acting as an agent for another party (e.g. in the collection of Non-Domestic Rates and Water and Wastewater), income and expenditure are recognised only to the extent that commission is receivable by the Council for the agency services rendered or the Council incurs expenses directly on its own behalf in rendering the services. 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 highly liquid investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the Cash Flow Statement, 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. Changes in Accounting Policies and Estimates and Errors 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 or conditions on the Council’s financial position or financial performance. Where a change is made, it is applied retrospectively by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Changes in accounting estimates are accounted for prospectively, i.e., in the current and future years affected by the change. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period. 36 | Perth and Kinross Annual Accounts 2024/25 Page 49 of 212
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37 | Perth and Kinross Council Annual Accounts 2023/24 Charges to Revenue for Non-Current Assets Services, support services and trading accounts are debited with the following amounts to record the cost of holding fixed 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 fixed assets attributable to the service. The Council is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisations. However, it is required to make an annual provision from revenue to contribute towards the reduction in its overall borrowing requirement equal to an amount calculated on a prudent basis determined by the Council in accordance with the Statutory Repayment of Loans Fund Advances. Depreciation, revaluation and impairment losses and amortisations are therefore replaced by revenue provision in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account (CAA) in the Movement in Reserves Statement (MiRS) for the difference between the two. Contingent Assets and Liabilities 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. A contingent liability arises where an event has taken place that gives the Council a possible obligation whose existence 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 Assets and Liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Employee Benefits Benefits Payable During Employment Short-term employee benefits (those that fall due wholly within 12 months of the year-end), such as wages and salaries, paid annual leave and paid sick leave, bonuses and non-monetary benefits (e.g. cars) for current employees, are recognised as an expense in the year in which employees render service to the Council. An accrual is made against services in the Surplus or Deficit on the Provision of Services for the cost of holiday entitlements and other forms of leave earned by employees but not taken before the year-end and which employees can carry forward into the next financial year. Any accrual made is required under statute to be reversed out of the General Fund Balance by a credit to the Employee Statutory Adjustment Account in the MiRS. 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 or an officer’s decision to accept voluntary redundancy and are charged in the Comprehensive Income and Expenditure Statement (CIES) when the Council is demonstrably committed to terminate the employment of an officer. Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund 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 MiRS, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for termination benefits related to pensions enhancements 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 Employees of the Council are members of two separate pension schemes: The Scottish Teachers’ Superannuation Scheme and the Local Government Pension Scheme. The Scottish Teachers’ Superannuation Scheme is a statutory unfunded defined final benefit salary scheme administered nationally by the Scottish Public Pensions Agency on behalf of the Scottish Government. There are no investment assets built up under the scheme to meet pension liabilities. The contributions paid into the scheme by the Council and teaching employees are determined nationally and member’s pension benefits are prescribed under the Teachers’ Superannuation (Scotland) Regulations 2005 with the Scottish Government being responsible for meeting the scheme’s liabilities. Other employees, subject to certain qualifying criteria, are eligible to join the Local Government Pension Scheme (LGPS). The LGPS is a statutory funded defined final benefit salary scheme operated through local pension funds. Perth and Kinross Council and its employees pay contributions into the Tayside Pension Fund administered by Dundee City Council calculated at a level to balance the pension liabilities with investment assets. The contributions paid into the scheme by employees and member pension benefits are prescribed, for the period to which the accounts relate, by the Local Government Pensions Scheme (Scotland) Regulations 1998 as amended. Perth and Kinross Council’s contributions, as employer, into the Tayside Pension Fund are subject to the advice of the Fund actuary. 37 | Perth and Kinross Annual Accounts 2024/25 Page 50 of 212
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38 | Perth and Kinross Council Annual Accounts 2023/24 Both schemes provide defined benefits to members (retirement lump sums and pensions), earned as employees worked for the Council. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot be attributed specifically to the Council. The scheme is therefore accounted for as if it were a defined contributions scheme – no liability for future payments of benefits is recognised in the Balance Sheet and the Education Service line in the CIES is charged with the employer’s contributions payable to Teachers’ Pensions in the year. The Local Government Scheme is accounted for as a defined benefits scheme. The liabilities of the Tayside Pension Fund attributable to the Council are included in the Balance Sheet on an actuarial basis using the projected unit method – i.e. 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 which is based on the indicative rate of return on the high quality corporate bond index (i Boxx AA). The assets of the Tayside Pension Fund attributable 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 pension’s asset / liability is analysed into the following components: Service cost comprising: o Current service cost – the increase in liabilities as result of years of service earned this year – allocated in the CIES to the services for which the employees worked; o past service cost – the increase in liabilities as a result of a scheme amendment or curtailment whose effect relates to years of service earned in earlier years – debited to the Surplus/Deficit on the Provision of Services in the CIES as part of Non Distributed Costs; o net interest on the net defined liability / (asset), i.e. net interest expense for the authority – the change during the period in the net defined benefit liability / (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the CIES – this is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability / (asset) at the end of the period – taking into account any changes in the net defined benefit liability / (asset) during the period as a result of contribution and benefit payments. Remeasurements comprising: o the return on plan assets - excluding amounts included in net interest on the net defined benefit liability / (asset) – charged to the Pensions Reserve as Other Comprehensive Income and Expenditure; o 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 as Other Comprehensive Income and Expenditure. Contributions paid to the Tayside 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 Balance 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 MiRS, 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 on 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 (including teachers) are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the LGPS. 38 | Perth and Kinross Annual Accounts 2024/25 Page 51 of 212
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39 | Perth and Kinross Council Annual Accounts 2023/24 Events after the Reporting Period Events after the reporting period are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Annual Accounts are authorised for issue. Two types of events can be identified: those that provide evidence of conditions that existed at the end of the reporting period – the Annual Accounts are adjusted to reflect such events; those that are indicative of conditions that arose after the reporting period – the Annual Accounts are 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 Annual Accounts. Fair Value Measurement The Council measures some of its non-financial assets such as surplus assets and investment properties at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either: a) in the principal market for the asset or liability, or b) in the absence of a principal market, in the most advantageous market for the asset or liability. The Council measures the fair value of an asset or liability using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. When measuring the fair value of a non-financial asset, the Council takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Council uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Inputs to the valuation techniques in respect of assets and liabilities for which fair value is measured or disclosed in the Council’s financial statements are categorised within the fair value hierarchy, as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the authority can access at the measurement date Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: unobservable inputs for the asset or liability. 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 CIES 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 most of the borrowings that the Council has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the CIES is the amount payable for the year according to the loan agreement. Gains and losses on the repurchase or early settlement of borrowing are credited or debited to the Financing and Investment Income and Expenditure line in the CIES 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 respectively is deducted from or added to the amortised cost of the new or modified loan and the write-down to the CIES 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 CIES, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain/loss over the term of the replacement loan. The reconciliation of amounts charged to the CIES to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the MiRS. 39 | Perth and Kinross Annual Accounts 2024/25 Page 52 of 212
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40 | Perth and Kinross Council Annual Accounts 2023/24 Financial Assets Financial assets are classified based upon a classification and measurement approach that reflects the business model for holding the financial assets and their cashflow characteristics. There are three main classes of financial assets measured at:- amortised cost fair value through profit or loss (FVPL), and fair value through other comprehensive income (FVOCI) The Council’s business model is to hold investments to collect contractual cash flows. Financial assets are therefore classified as amortised cost, except for those whose contractual payments are not solely payment of principal and interest (i.e. where cash flows do not take the form of a basic debt instrument). 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 measured at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the CIES for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For deposits that the Council has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the CIES is the amount receivable for the year in the agreement. However, the Council has made loans to various organisations at less than market rates (soft loans). When a soft loan is made, a loss is recorded in the CIES (debited to the appropriate service) for the present value of the interest that will be foregone over the life of the instrument, resulting in a lower amortised cost than the outstanding principal. In subsequent years interest is credited to the Financing and Investment Income and Expenditure line in the CIES at a higher effective rate of interest than the rate receivable from the voluntary organisations, with the difference serving to increase the amortised cost of the loan in the Balance Sheet. 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 Financing and Investment Income and Expenditure line in the CIES. 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 de-recognition of an asset are credited/debited to the Financing and Investment Income and Expenditure line in the year they incur in the CIES. Going Concern The Chief Finance Officer is responsible for making an annual assessment of whether it is appropriate to prepare the accounts on a going concern basis. In accordance with the Code of Practice on Local Authority Accounting in the United Kingdom, an authority’s financial statements shall be prepared on a going concern basis; that is, the accounts should be prepared on the assumption that the functions of the authority will continue in operational existence for at least twelve months from the date of approval of the financial statements and it can only be discontinued under statutory prescription. The Council has significant net assets, investments and cash and a track record of preparing a balanced budget which incorporates significant savings that are subsequently achieved. The Covid pandemic continues to have an impact on the finance and operations of the Council. The Council has put in place robust measures to ensure the continuing strong financial management of its activities which demonstrates its ability to continue as a going concern. Work continues to assess the impacts of the pandemic and the mitigating actions taken to return to a balanced budget. Taken together, the Chief Finance Officer has determined that it remains appropriate to prepare the financial statements on a going concern basis. 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 CIES until conditions attaching 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 acquired using the 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/contributions) or Taxation and Non-Specific Grant Income (non-ring-fenced revenue grants and all capital grants) in the CIES. Where capital grants are credited to the CIES, they are reversed out of the General Fund Balance in the MiRS. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account. Where 40 | Perth and Kinross Annual Accounts 2024/25 Page 53 of 212
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41 | Perth and Kinross Council Annual Accounts 2023/24 it has been applied, it is posted to the CAA. Amounts in the Capital Grants Unapplied Account are transferred to the CAA once they have been applied to fund capital expenditure. Heritage Assets Heritage Assets are those assets that are intended to be preserved in trust for future generations because of their cultural, environmental or historical associations. Heritage Assets include museum and gallery collections and works of art. These assets are held by the Council in pursuit of its overall objectives in relation to the maintenance of the heritage. Since 1 April 2016 Culture Perth and Kinross has responsibility for the delivery and development of museum and library services in Perth and Kinross. The Trust manages the museum and gallery collections on behalf of the Council; however, the Council will continue to be custodian of the collections. Tangible Heritage Assets The Council’s Heritage Assets are held in the Perth Museum, Perth Art Gallery and Alyth Museum. The collections include Art, History and Natural History and are held in support of Council objectives i.e. to increase knowledge, understanding and appreciation of the local area and its history. 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 as detailed below. The Council has embarked upon a revaluation programme for all collection items deemed to have significant value, these being mainly items within Fine and Applied Art collections. In recognition of the key qualitative characteristics of the financial statements, i.e. understandability, relevance, reliability and comparability, the Council has chosen to apply a £10,000 de- minimus level for which items will be recognised within the Balance Sheet. The exclusion of individual items having a value of less than £10,000 does not impact upon the characteristics of the financial statements and a summary of the main collections and applicable accounting treatment is as follows. Art Collection The Fine Art collection includes paintings and sketches in various mediums, and although international in scope, its greatest strength is in the holding of Scottish pictures. The collection seeks to retain a balance between the historical and the contemporary whilst continuing to develop the holdings of works of specifically local interest. The Applied Art collection has been acquired since 1785 through purchase, gift or bequest. It covers a wide variety of objects and materials, within which the collections of Perth silver and Perthshire glass are unsurpassed in terms of national importance. Subject to the de-minimus noted above, items donated or acquired are valued by the curators at point of acquisition; in addition, there is a five year rolling programme of valuation to ensure all significant items in the Art collection are valued. All valuations are undertaken by the curators having relevant knowledge and experience and with reference to appropriate commercial markets. Art collection items are held in the Council balance sheet at market value and are tested annually for impairment, e.g. 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. As the assets within the art collection are deemed to have indeterminate lives and a high residual value, the Council does not consider it appropriate to charge depreciation. History Collection The History collection includes social history, archaeology, arms and armour, costume, archives, coins, medals and stamps, photography and world cultures collections. These items cannot be readily and/or reliably valued due to their diverse nature. The cost of valuation would be disproportionate in terms of any benefit derived to the user of the financial statements and the History collection is consequently excluded from the Council Balance Sheet. Natural History Collection The Natural History collection includes zoology, botany and geology collections. No market exists for these items and collections and there is no comparable data to form the basis of valuation. The cost of obtaining valuations would be disproportionate in terms of any benefit derived to the user of the financial statements and Natural History collections are consequently excluded from the Council Balance Sheet. Heritage Assets – General The Council may dispose of heritage assets which have a doubtful provenance or are unsuitable for public display. The proceeds of such items are 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. 41 | Perth and Kinross Annual Accounts 2024/25 Page 54 of 212
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42 | Perth and Kinross Council Annual Accounts 2023/24 The promotion of other cultural events and programmes during the year makes it difficult to reliably estimate the percentage of the Art Collection on display for public viewing. All items not on display are held in secure storage and access is permitted to scholars and others for research purposes. The Culture Perth and Kinross Collections Management Framework provides guidance on the collection, disposal or lending of heritage assets. Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council as a result of past events (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Council. Internally generated assets are capitalised where it is demonstrable that the project is technically feasible and is intended to be completed (with adequate resources being available) and the Council will be able to generate future economic benefits or deliver service potential by being able to sell or use the asset. Expenditure is capitalised where it can be measured reliably as attributable to the asset and restricted to that incurred during the development phase (research expenditure is not capitalised). Expenditure on the development of websites is not capitalised if the website is solely or primarily intended to promote or advertise the Council’s goods or services. 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. The depreciable amount of an intangible asset is amortised over its useful life to the relevant service line(s) in the CIES. 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 CIES. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the CIES. 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. To comply with these restrictions, the gain or loss on the derecognition of an intangible fixed asset shall be reversed out of the General Fund or Housing Revenue Account. The General Fund or Housing Revenue Account shall be debited (in the case of the gain) or credited (in the case of a loss) with an amount equal to the gain or loss on derecognition of the intangible asset. The gain or loss that is reversed out of the General Fund or Housing Revenue Account excludes any costs of disposal that either cannot be capitalised under regulation or statutory guidance or that the authority has chosen not to capitalise. The double entries are a credit to the capital receipts reserve or a capital grants and receipts unapplied account of an amount equal to the disposal proceeds and a debit to the capital adjustment account equal to the carrying amount of the intangible asset. Interests in Companies and Other Entities The Council has material interests in companies and other entities that have the nature of subsidiaries, associates and jointly controlled entities and require it to prepare group accounts. Inventories Inventories are included in the Balance Sheet at the lower of cost and net realisable value. Work in progress is valued at the cost of direct materials and labour plus attributable overheads based on the normal level of activity less any attributable losses. Investment Properties 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, being the price that would be received to sell such an asset in an orderly transaction between market participants at the measurement date. Properties are not depreciated but are revalued annually according to market conditions at the year-end. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the CIES. 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. To comply with these restrictions, the gain or loss on derecognition of an investment property shall be reversed out of the General Fund. The General Fund shall be debited (in the case of a gain) or credited (in the case of a loss) with an amount equal to the gain or loss on derecognition of the investment property. The double entries are a credit to the capital receipts reserve or a statutory capital fund or capital grants and receipts unapplied account of an amount equal to the disposal proceeds and a debit to the CAA equal to the carrying amount of the investment property. 42 | Perth and Kinross Annual Accounts 2024/25 Page 55 of 212
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43 | Perth and Kinross Council Annual Accounts 2023/24 Leases Leases that are exempt from IFRS 16 (Right of Use Assets – see policy on page 46) are classified as operating leases. The Council as Lessee Operating Leases - Rentals paid under operating leases are charged to the CIES as an expense of the services benefitting 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 (e.g. there is a rent-free period at the commencement of the lease). The Council as Lessor 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 Other Operating Expenditure line in the CIES. Credits are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. 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. 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 accrual’s 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 (e.g. repairs and maintenance) is charged as an expense when it is incurred. 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 initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located where there is a legal or constructive obligation to do so. The Council does not capitalise borrowing costs incurred whilst assets are under construction. The cost of assets acquired other than by purchase is deemed to be its fair value, unless the acquisition will not increase the cash flows of the Council. In the latter case, the cost of the acquisition is the carrying amount of the asset. 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 CIES, they are reversed out of the General Fund Balance to the CAA in the MiRS. Assets are then carried in the Balance Sheet using the following measurement bases: infrastructure and community assets – depreciated historical cost; assets under construction – historical cost dwellings – current value, determined using the basis of existing use value for social housing (EUV-SH). The Council values these assets using the Beacon approach (Adjusted Vacant Possession) other land and buildings – current value based on existing use value (EUV) for operational assets where there is an active market, or if there is no market based evidence of current value because of the specialist nature of the asset and/or the asset is rarely sold, depreciated replacement cost (DRC) using the instant build approach; surplus assets – the current value measurement base is fair value, estimated at highest and best use from a market participant’s perspective; all other assets – current value, determined by the amount that would be paid for the asset in its existing use (existing use value – EUV). Assets included in the Balance Sheet at current value are reviewed sufficiently regularly to ensure that their carrying amount is not materially different from their current value at the year-end, and subject to formal revaluation as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised 43 | Perth and Kinross Annual Accounts 2024/25 Page 56 of 212
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44 | Perth and Kinross Council Annual Accounts 2023/24 gains. Exceptionally, gains might be credited to the surplus or deficit on the provision of services where they arise from the reversal of a loss previously charged to a service. Where decreases in value are identified, the revaluation loss is 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 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 as to 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: 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 insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the CIES. Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service line(s) in the CIES, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised. Disposals and 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 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 previously recognised losses. Depreciation is not charged on Assets Held for Sale. 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 CIES as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the CIES also as part of the gain or loss on disposal (i.e. 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 CAA. Amounts received for a disposal are categorised as capital receipts. 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 (the capital financing requirement). Receipts are appropriated to the Reserve from the General Fund Balance in the MiRS. The written-off value of disposals is not a charge against council tax, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the CAA from the General Fund Balance in the MiRS. 44 | Perth and Kinross Annual Accounts 2024/25 Page 57 of 212
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45 | Perth and Kinross Council Annual Accounts 2023/24 Depreciation Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their useful lives. An exception is made for assets without a determinable finite useful life (i.e. freehold land and certain Community Assets) and assets that are not yet available for use (i.e. assets under construction). Leasehold Properties over period of lease Roads and Bridges 15-30 years Other Infrastructure Assets 10-30 years Vehicles, Plant and Equipment 3-15 years Council Buildings up to 50 years Council Dwellings 10-30 years Intangible Fixed Assets 3-5 years Where an item of Property, Plant and Equipment asset has major components whose cost is significant 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 General Fund. Private Finance Initiative (PFI) and Similar Contracts PFI and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the PFI contractor. As the Council is deemed to control the services that are provided under its PFI schemes the Council carries the assets used under the contracts on its Balance Sheet as part of Property, Plant and Equipment. The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment. Non-current assets recognised on the Balance Sheet are revalued and depreciated in the same way as property, plant and equipment owned by the Council. The amounts payable to the PFI operators each year are analysed into five elements: fair value of the services received during the year – debited to the relevant service in the CIES; finance cost – an interest charge on the outstanding Balance Sheet liability, debited to the Financing and Investment Income and Expenditure line in the CIES; contingent rent – increases in the amount to be paid for the property arising during the contract, debited to the Financing and Investment Income and Expenditure line in the CIES; payment towards liability – applied to write down the Balance Sheet liability towards the PFI operator (the profile of write-downs is calculated using the same principles as for a finance lease); lifecycle replacement costs – debited to the relevant service in the CIES. Provisions The Council is required to make provisions 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. Provision has been made for bad and doubtful debts in respect of Council Tax, Housing Rents and other items of income, where appropriate. In all cases the level of provision is based on experience and an assessment of the prospects of recovering the related debt. Provisions are charged as an expense to the appropriate service line in the CIES in the year that the council becomes aware of the obligation and 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 (e.g. 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. Reserves 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/Deficit on the Provision of Services in the CIES. The reserve is then appropriated back into the General Fund Balance in the MiRS so that there is no net charge against council tax for the expenditure. Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments and retirement benefits and that do not represent usable resources for the Council – these reserves are explained in the relevant notes. 45 | Perth and Kinross Annual Accounts 2024/25 Page 58 of 212
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46 | Perth and Kinross Council Annual Accounts 2023/24 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 a non-current asset is charged as expenditure to the relevant Service in the CIES 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 MiRS from the General Fund Balance to the CAA then reverses out the amounts charged so that there is no impact on the level of council tax. Right of Use Assets The Council has adopted IFRS16 (Leases) with effect from 1 April 2024. The adoption of the new standard resulted in the balance sheet recognition of a right-of-use asset and related lease liability in relation to former operating leases. The Council has elected to apply recognition exemptions to low value assets (below £10,000 when new) and to short-term leases i.e. existing leases that expire on or before 31 March 2026, and new leases with a duration of less than 12 months. A contract is, or contains a lease, if the contract conveys the right to control the use of an identified asset for a period of time, including arrangements for nil consideration.. VAT VAT payable is included as an expense only to the extent that it is not recoverable from His Majesty’s Revenue and Customs. VAT receivable is excluded from income. 2. Accounting Standards that have been issued but have not been adopted At the balance sheet date, the following new standards and amendments to existing standards have been published but not yet adopted by The Code: IAS 21 The Effects of Changes in Foreign Exchange Rate ( Lack of Exchangeability) issued in August 2023. The amendments to IAS 21 clarify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking, as well as require the disclosure of information that enables users of financial statements to understand the impact of a currency not being exchangeable. IFRS 17 Insurance Contracts issued in May 2017. IFRS 17 replaces IFRS 4 and sets out principles for recognition, measurement, presentation and disclosure of insurance contracts. The changes to the measurement of non-investment assets within the 2025/26 Code include adaptations and interpretations of IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets. These include setting out three revaluation processes for operational property, plant and equipment, requiring indexation for tangible noninvestment assets and a requirement to value intangible assets using the historical cost approach. These have the same effect as requiring a change in accounting policy due to an amendment to standards, which would normally be disclosed under IAS 8. However, the adaptations also include a relief from the requirements of IAS 8 following a change in accounting policy. These standards apply to Perth and Kinross Council from 1 April 2025 and are not expected to have a significant impact on the financial statements. 3. Critical Judgements in Applying Accounting Policies In applying the accounting policies set out in Note 1, the Council has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Annual Accounts are: Group Entities The Council has an interest in a number of subsidiary and associate companies and trusts. The most significant of these companies in terms of the size of trading operations, shareholding and board representation and other factors have been assessed and where deemed material to the Council, are included in the Group Accounts. Full details of these interests are shown in Note 1 to the Group Accounts. Public Sector Funding There is a high degree of uncertainty about future levels of funding for local government. However, the Council has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Council might be impaired as a result of a need to close facilities and reduce levels of service provision. Public Private Partnership (PPP) The Council is deemed to control the services provided under the agreement for the provision of educational establishments. The accounting policies for PPP schemes and similar arrangements have been applied and the assets under the contract are included within Property, Plant and Equipment on the Council’s Balance Sheet. Note 36 provides further details. 46 | Perth and Kinross Annual Accounts 2024/25 Page 59 of 212
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47 | Perth and Kinross Council Annual Accounts 2023/24 4. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty The Annual Accounts contain estimated figures that are based on assumptions made by the Council about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The item in the Council’s Balance Sheet at 31 March 2025 for which there is a significant risk of material adjustment in the forthcoming financial year are in respect of the Council’s Net Pensions Asset / Liability and valuation of Property, Plant and Equipment. Net Pension Liability Uncertainty Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. This is further detailed in Note 18 to the Accounts which includes a table setting out the potential sensitivity of change in assumptions on the Pension Liability. A firm of consulting actuaries is engaged to provide the Council with expert advice about the assumptions to be applied. Effect if Actual Results Differ from Assumptions The effects on the net pension asset / liability of changes in individual assumptions can be measured. For instance, a 0.1% increase in the discount rate assumption would result in a reduction in the pension liability of £11.243 million. However, the assumptions interact in complex ways and the pension asset had increased from £320.913 million in 2023/24 to £442.994 million in 2024/25. However, by applying IAS 19 and the asset ceiling provision contained therein, the Council has actually recognised a pension liability of £18.533 million in 2024/25 (£20.748 million in 2023/24). Property, Plant and Equipment - Valuations Uncertainty Although markets are functioning and transaction volumes are at levels where there is sufficient evidence on which to base opinions on value, there remain uncertainties due to worldwide events which continue to influence pricing. The valuation reports provided by Royal Institution of Chartered Surveyors (RICS) valuers have been used to inform the measurement of non-current assets in these financial statements. Specialised assets such as educational buildings are valued on the basis of depreciated replacement cost. Here the valuer bases their assessment on the cost to the Council of replacing the service potential of the assets; the uncertainty relates to the estimated costs of, rather than the extent of, service potential to be replaced. In 2024/25 the Council commenced use of the BCIS rates rebased to Scotland, instead of UK wide rates. The rebasing utilises recent regional differences between prices and combines these with a long-term average of price variation to provide a location factor; which is intended to give a closer, more realistic idea of how local prices could influence a project’s price before design. The valuer has provided estimates for the range of uncertainty attached to the valuation of Council dwellings. The valuation of Council dwellings requires the use of an Adjustment Factor which is applied to the vacant possession value of the housing stock to arrive at the reported Existing Use Value – Social Housing (EUV-SH). The Adjustment Factor is based on the ratio of private and public sector rents and yields. Rental ratios are established from data provided by the Council and from Local Housing Allowances, HM Rent Service, RICS, and using information on private sector rents from research including local letting agents. Information on yields is derived from the RICS, Building Society and Chartered Surveyor firm publications, and government publications. Effect if Actual Results Differ from Assumptions A sensitivity analysis has been undertaken in respect of all properties valued on a depreciated replacement cost basis to determine the potential movement in value due to changes in price estimates. The sensitivity analysis includes several assumptions, including that the Gross Internal Area (GIA) of each site remains unchanged, and the building use and condition remains in line with the previous valuation. The estimated movement in value at 31 March 2025 is £2.396m which is not material and has therefore not been adjusted. A sensitivity analysis on the Council housing revaluation has been undertaken by the valuer to examine the potential impact if the Adjustment Factor was increased or decreased by 5%, this being the tolerance listed within the valuation guidance published by the Ministry for Housing Communities and Local Government (MHCLG). The EUV–SH for the Council housing stock at 31 March 2025 is £305.931 million. A 5% increase or decrease to the Adjustment Factor would result in an increase or decrease of £42.116 million (13.77%) to the value of the Council housing stock. 47 | Perth and Kinross Annual Accounts 2024/25 Page 60 of 212
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48 | Perth and Kinross Council Annual Accounts 2023/24 5. Adjustments between Accounting Basis and Funding Basis under Regulations General Housing Capital Capital Total 2023/24 Fund Revenue Receipts Grants Balance Account Reserve Unapplied £'000 £'000 £'000 £'000 £'000 £'000 Adjustments involving the Capital Adjustment Account Depreciation and impairment on non-current assets (45,731) (14,194) 0 0 (59,925) (56,836) Revaluation Losses on Property, Plant and Equipment (11,888) 0 0 0 (11,888) (37,351) Reversal revaluation gains 714 587 0 0 1,301 3,928 Movements in Fair Value of Investment Properties 1,480 0 0 0 1,480 (300) Amortisation of Intangible Assets (1,232) 0 0 0 (1,232) (949) Capital grants and contributions credited to the Comprehensive Income and Expenditure Statement 31,714 10,365 0 0 42,079 46,429 Amounts of non current assets written off on disposal as part of the gain/loss (887) (153) 0 0 (1,040) (1,322) Revenue Expenditure Funded by Capital Under Statute (2,618) 0 0 0 (2,618) (3,770) Donated Assets 285 0 0 0 285 0 Items not debited or credited to the Comprehensive Income and Expenditure Statement Statutory provision for repayment of debt 13,238 3,083 0 0 16,321 15,260 Capital expenditure charged to the General Fund and HRA balances 3,303 1,833 0 0 5,136 4,734 Adjustments involving the Capital Receipts Reserve Transfer of sale proceeds credited as part of the gain/loss on disposal 710 192 (902) 0 0 0 Use of the Capital Receipts Reserve to finance new capital expenditure 0 0 1,672 0 1,672 1,983 Adjustments involving the Financial Instruments Adjustment Account 490 136 0 0 626 644 Adjustments involving the Capital Grants unapplied Application of grants unapplied 0 0 0 (1,060) (1,060) 0 Adjustments involving the Pensions Reserve Employer's pensions contributions and direct payments to pensioners payable in the year 21,587 1,707 0 0 23,294 22,766 Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure Statement (19,194) (1,544) 0 0 (20,738) (22,401) Adjustments involving Short Term Accumulated Absences Account Amount by which officer remuneration charged to the Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements (1,149) (37) 0 0 (1,186) 338 Total Adjustments (9,178) 1,975 770 (1,060) (7,493) (26,847) Usable Reserves 48 | Perth and Kinross Annual Accounts 2024/25 Page 61 of 212
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6. Expenditure and Funding Analysis - 2024/25 Net Net Expenditure Expenditure Adjustments in the charged to between the Comprehensive the General Funding and Income and Fund and HRA Accounting Expenditure Balances Basis Statement £000 £000 £000 Education and Learning 166,361 1,613 167,974 Health and Social Care 96,045 1,183 97,228 Children, Families and Justice 23,770 237 24,007 Economy, Development and Planning 17,742 8,955 26,697 Environment and Infrastructure 31,860 18,014 49,874 Housing and Communities 18,544 482 19,026 Property Services 49,147 29,819 78,966 Legal and Governance 4,539 20 4,559 Customer and Digital Services 12,104 5,082 17,186 Strategic Planning, People and Performance 5,483 22 5,505 Projects and Programmes 282 1 283 Finance and Business Support 7,851 438 8,289 Directorate Core Costs 1,325 2 1,327 Housing Revenue Account (8,237) 11,039 2,802 Valuation Joint Board 1,434 0 1,434 Non Distributed Costs 1,689 (1,689) 0 Cost of Services 429,939 75,218 505,157 Other Income and Expenditure (416,393) (62,604) (478,997) Deficit on Provision of Services 13,546 12,614 26,160 Opening General Fund and HRA Balance (86,054) Surplus on General Fund and HRA Balance in Year 13,546 Transfers from other Statutory Reserves 4,880 Service concession flexibility (2,914) Closing General Fund and HRA Balance at 31 March 2025 (70,542) This note provides a reconciliation of the main adjustments to Net Expenditure Chargeable to the General Fund and HRA Balances to arrive at the amounts in the Comprehensive Income and Expenditure Statement. The relevant transfers between Reserves are explained in the Movement in Reserves Statement. The split of the General Fund and HRA Balance is in the Movement in Reserves Statement. Notes to the Expenditure and Funding Analysis - adjustments between funding and accounting basis Note A Note B Note C £ '000 £ '000 £ '000 £ '000 COUNCIL SERVICES Education and Learning 751 199 663 1,613 Health and Social Care 791 287 105 1,183 Children, Families and Justice (5) 159 83 237 Economy, Development and Planning 8,838 82 35 8,955 Environment and Infrastructure 17,795 161 58 18,014 Housing and Communities 346 90 46 482 Property Services 29,785 0 34 29,819 Legal and Governance 2 0 18 20 Customer and Digital Services 5,037 0 45 5,082 Strategic Planning, People and Performance 0 0 22 22 Projects and Programmes 0 0 1 1 Finance and Business Support 14 387 37 438 Directorate Core Costs 0 0 2 2 Housing Revenue Account 10,998 4 37 11,039 Valuation Joint Board 0 0 0 0 Non Distributed Costs 0 (1,689) 0 (1,689) Cost of Services 74,352 (320) 1,186 75,218 Other Operating Expenditure and Income 138 0 0 138 Financing and Investment Income and Expenditure (17,801) (2,236) (626) (20,663) Taxation and Non-Specific Grant Income (42,079) 0 0 (42,079) Other income and expenditure from the Expenditure and Funding Analysis (59,742) (2,236) (626) (62,604) Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services 14,610 (2,556) 560 12,614 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts Adjustments for Capital Purposes Net change for the Pensions Adjustments Other Differences Total Adjustments 49 | Perth and Kinross Annual Accounts 2024/25 Page 62 of 212
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Net Net Expenditure Expenditure Adjustments in the charged to between the Comprehensive the General Funding and Income and Fund and HRA Accounting Expenditure Balances Basis Statement £000 £000 £000 Education and Learning 129,042 33,050 162,092 Health and Social Care 87,110 816 87,926 Children, Families and Justice 24,166 1,020 25,186 Economy, Development and Planning 10,473 23,576 34,049 Environment and Infrastructure 39,221 16,090 55,311 Housing and Communities 14,184 1,410 15,594 Property Services 62,141 1,362 63,503 Legal and Governance 4,831 (212) 4,619 Customer and Digital Services 10,398 5,695 16,093 Strategic Planning, People and Performance 5,777 (7) 5,770 Projects and Programmes 248 0 248 Finance and Business Support 6,328 1,369 7,697 Directorate Core Costs 3,434 0 3,434 Housing Revenue Account (6,985) 16,967 9,982 Valuation Joint Board 1,436 0 1,436 Non Distributed Costs 1,757 (1,757) 0 Cost of Services 393,561 99,379 492,940 Other Income and Expenditure (378,069) (63,578) (441,647) Deficit on Provision of Services 15,492 35,801 51,293 Opening General Fund and HRA Balance (72,370) Surplus on General Fund and HRA Balance in Year 15,492 Transfers to other Statutory Reserves 5,086 Service concession flexibility (34,262) Closing General Fund and HRA Balance at 31 March 2023 (86,054) This note provides a reconciliation of the main adjustments to Net Expenditure Chargeable to the General Fund and HRA Balances to arrive at the amounts in the Comprehensive Income and Expenditure Statement. The relevant transfers between Reserves are explained in the Movement in Reserves Statement. The split of the General Fund and HRA Balance is in the Movement in Reserves Statement. Notes to the Expenditure and Funding Analysis - adjustments between funding and accounting basis Note A Note B Note C £ '000 £ '000 £ '000 £ '000 COUNCIL SERVICES Education and Learning 32,991 199 (140) 33,050 Health and Social Care 589 287 (60) 816 Children, Families and Justice 881 159 (20) 1,020 Economy, Development and Planning 23,504 82 (10) 23,576 Environment and Infrastructure 15,953 161 (24) 16,090 Housing and Communities 1,333 90 (13) 1,410 Property Services 1,370 0 (8) 1,362 Legal and Governance (205) 0 (7) (212) Customer and Digital Services 5,706 0 (11) 5,695 Strategic Planning, People and Performance 0 0 (7) (7) Projects and Programmes 0 0 0 0 Finance and Business Support 7 1,374 (12) 1,369 Directorate Core Costs 0 0 0 0 Housing Revenue Account 16,928 67 (28) 16,967 Valuation Joint Board 0 0 0 0 Non Distributed Costs 0 (1,757) 0 (1,757) Cost of Services 99,057 662 (340) 99,379 Other Operating Expenditure and Income (518) 0 0 (518) Financing and Investment Income and Expenditure (14,960) (1,027) (644) (16,631) Taxation and Non-Specific Grant Income (46,429) 0 0 (46,429) Other income and expenditure from the Expenditure and Funding Analysis (61,907) (1,027) (644) (63,578) Difference between General Fund surplus or deficit and Comprehensive Income and Expenditure Statement Surplus or Deficit on the Provision of Services 37,150 (365) (984) 35,801 Total Adjustments Expenditure and Funding Analysis - 2023/24 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts Adjustments for Capital Purposes Net change for the Pensions Adjustments Other Differences 50 | Perth and Kinross Annual Accounts 2024/25 Page 63 of 212
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51 | Perth and Kinross Council Annual Accounts 2023/24 Note 6 cont’d Explanation to the Expenditure and Funding Analysis Adjustments for Capital Purposes Note A Adjustments for Capital Purposes adds in depreciation and impairment and revaluation gains and losses in the services line, and for: Other operating expenditure – adjusts for capital disposals with a transfer of income on disposal of assets and the amounts written off for those assets. Financing and investment income and expenditure – the statutory charges for capital financing and other revenue contributions are deducted from other income and expenditure as these are not chargeable under generally accepted accounting practices. Taxation and non-specific grant income and expenditure – capital grants are adjusted for income not chargeable under generally accepted accounting practices. Revenue grants are adjusted from that receivable in the year to that receivable without conditions or for which conditions were satisfied throughout the year. The Taxation and Non Specific Grant Income and Expenditure line is credited with capital grants receivable in the year without conditions or for conditions which were satisfied in the year. Net Change for the Pensions Adjustments Note B Net change for the removal of pension contributions and the addition of IAS 19 Employee Benefits pension related expenditure and income: For services – this represents the removal of the employer pension contributions made by the authority as allowed by statute and the replacement with current service costs and past service costs. For Financing and investment income and expenditure – the net interest on the defined benefit liability is charged to the Comprehensive Income and Expenditure Statement. Other Differences Note C Other differences between the amounts debited/credited to the Comprehensive Income and Expenditure Statement and amounts payable/receivable to be recognised under statute: For services – this represents the removal of the increase or decrease in the employee statutory adjustment account. For Financing and investment income and expenditure – the other differences column recognises adjustments to the General Fund for the timing differences for premiums and discounts and stepped interest rate loans. 51 | Perth and Kinross Annual Accounts 2024/25 Page 64 of 212
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52 | Perth and Kinross Council Annual Accounts 2023/24 7. Transfer (to)/from Earmarked Reserves The Reserves Strategy that the Council approved in February 2025 earmarked funding towards specific or known future commitments. The following table sets out the updated balances as at 31 March 2025 for these Earmarked Reserves taking cognisance of the final year-end position. Balance as at Transfers Balance as at 1 April 2024 (In)/Out) 31 March 2025 £'000 £'000 £'000 Revenue Grants (17,337) 3,982 (13,355) Service concession flexibility (17,262) 4,000 (13,262) Developer Contributions: Commuted Sums and Infrastructure and Affordable Housing (6,455) 626 (5,829) Transformation and Workforce Management (7,606) 2,769 (4,837) Affordable Housing (Resources accrued from reduced Council Tax Discounts) (5,609) 813 (4,796) Non-Recurring Pressures c/f from 2024/25 0 (1,424) (1,424) Anti-Poverty Measures (1,860) 547 (1,313) Communities 0 (1,003) (1,003) Car Parking (1,532) 555 (977) Devolved School Management (DSM) (501) (26) (527) Culture (857) 358 (499) School Estate (2,164) 1,853 (311) Climate Change (205) (90) (295) Works Maintenance (200) 0 (200) Modern Apprentices/Graduate Trainees (367) 181 (186) School Counsellors (329) 178 (151) Local Government Elections (53) (53) (106) Events 0 (97) (97) Property Maintenance (262) 182 (80) Salix Fund (102) 27 (75) Community Investment Fund (87) 26 (61) Non-Recurring Pressures c/f from 2023/24 (1,635) 1,576 (59) Child Abuse 0 (50) (50) Financial Assistance (20) (20) (40) Local Action Partnerships (46) 10 (36) Children and Young People's Residential Care (281) 281 0 Community Resilience (175) 175 0 Ventilation Measures (76) 76 0 Perth Leisure Vision (62) 62 0 Earmarked Balances (65,083) 15,514 (49,569) Purpose of Earmarked General Fund Balances The application and monitoring of the following reserves is part of the remit of the Finance and Resources Committee. Revenue Grants – these grants are being carried forward in reserves as the grant conditions have been met but the expenditure has not been fully incurred. Service Concession flexibility – these resources are earmarked to be phased over a number of years to contribute to the funding of the Revenue Budget. Developer Contributions: Commuted Sums and Infrastructure and Affordable Housing – the Environment, Infrastructure and Economic Development Committee approved supplementary guidance on 20 September 2023 for developer contributions covering community greenspace, primary education, Auchterarder A9 junction improvements, affordable housing and transport infrastructure. These sums are held in the Council’s Reserves until they are applied to relevant schemes. Transformation and Workforce Management – the Council has resources earmarked to enable the Transformation and Change Strategy and workforce management in future years. Affordable Housing (Resources accrued from reduced Council Tax Discounts) – these reserves have been generated as a result of the Council’s policy on varying the level of council tax charged for long term empty properties and second homes. These resources can only be used for the provision of affordable housing. Non-Recurring Pressures c/f from 2024/25 - the 2025/26 Revenue Budget includes non-recurring expenditure proposals which have been approved during the year at Finance and Resources Committee and as part of the year end process. 52 | Perth and Kinross Annual Accounts 2024/25 Page 65 of 212
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53 | Perth and Kinross Council Annual Accounts 2023/24 Anti-Poverty measures – The Council approved the creation of a COVID-19 Reserve on 27 January 2021 (Report 21/8 refers) to assist with addressing the ongoing impact of Covid-19 in future years. This has now been redirected towards Anti- Poverty measures. Communities – the Finance and Resources Committee in April 2025 approved the allocation of any resources above 4% of unearmarked reserves at year end towards a reserve for Communities. Car Parking – this balance is the accumulated surplus at 31 March 2025 which is restricted in its application under the Road Traffic Regulation Act 1984. Any proposals to utilise these resources will require approval by the Finance and Resources Committee. Devolved School Management (DSM) – the amount shown is the accumulated sum available to be carried forward at 31 March 2025 under the approved scheme for managing these budgets. The purposes for which the earmarked amount can be used and the procedures for its management and control are detailed in the Council’s approved DSM scheme. Culture – there was £363,000 approved for developing the cultural offer from the final under spend in the 2018/19 Revenue Budget and reported to Strategic Policy and Resources Committee during the year. This has been further increased by in- year underspends. School Estate – These resources include amounts previously approved by the Council for the primary and secondary school estate including maintenance works and resources for new schools. Climate Change – the Finance and Resources Committee in April 2023 approved the earmarking of resources for climate change activities due to a rephasing between years. Works Maintenance – The Council continues to earmark resources for future works maintenance. Modern Apprentices/Graduate Trainees – the Strategic Policy and Resources Committee approved the transfer of any final under spend on modern apprentices and graduate trainees. The remaining resources will be utilised in future years. School Counsellors – Revenue Budget 2020/21 Update No 2 to the Strategic Policy and Resources Committee approved the earmarking of resources received from the Scottish Government in respect of counselling in schools which are anticipated to be spent during 2025/26 (Report 20/225). Local Government Elections – these resources are earmarked in reserves as a contribution to local elections. Events- the Finance and Resources Committee in April 2025 approved earmarking £97,000 for future events from resources received in respect of an insurance claim in respect of the Christmas Light switch on. Property Maintenance – Revenue Budget Report No 3 to the Strategic Policy and Resources Committee on 21 November 2021 approved the earmarking of £250,000 resources in respect of property maintenance to be utilised in future years. This was increased by a further £55,000 in 2021/22. Salix Fund – Salix Finance Ltd is a Government owned non-departmental public body which provides interest free loan funding for energy efficiency works. The loan is re-paid to the fund over a number of years and re-invested in future energy efficiency works. Community Investment Fund – The Council continues to earmark the resources remaining from the fund for future investment. Non-Recurring Pressures c/f from 2023/24 – the 2024/25 Revenue Budget included non-recurring expenditure proposals which have been approved during the year at Finance and Resources Committee and as part of the year end process. Local Action Partnership – these resources are earmarked and utilised by an application process for payment to groups in one of the seven local action partnerships. Child Abuse – the 2025/26 revenue budget approved the earmarking of resources in respect of future costs incurred in preparing for public hearings in respect of investigations into Child Abuse arising from residential care claims. Financial Assistance – There is a recurring annual contribution from reserves to fund any future Mods and other events across Perth and Kinross. The remaining earmarked reserves detailed in the table were fully utilised or un-earmarked during 2024/25. 8. Other Operating Expenditure / Income 2024/25 2023/24 £'000 £'000 Losses and (Gains) on the Disposal of Non Current Assets 138 (518) Share of Tayside Contracts Surplus (244) (426) Total (106) (944) 9. Financing and Investment Income and Expenditure 2024/25 2023/24 £'000 £'000 Interest payable and similar charges 25,029 25,450 Pensions interest cost and expected return on pensions assets (2,236) (1,027) Interest receivable and similar income (994) (5,065) Income in relation to investment properties and changes in their fair value (2,369) (549) Total 19,430 18,809 53 | Perth and Kinross Annual Accounts 2024/25 Page 66 of 212
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54 | Perth and Kinross Council Annual Accounts 2023/24 10. Taxation and Non Specific Grant Income Restated 2024/25 2023/24 £'000 £'000 Council Tax Income (100,379) (97,348) Non Domestic Rates (64,717) (60,754) Non Ring-fenced Government Grants (291,146) (254,981) Capital Grants and Contributions (42,079) (46,429) Total (498,321) (459,512) Non Domestic Rates Income in 2023/24 has been restated for the costs of discretionary relief which is now included within Finance and Business Support rather than netted off Non Domestic Rate Income. 11. Material Items of Income and Expense In 2024/25 the Council did not receive any material items of income or expenditure not otherwise disclosed in the financial statements and notes. There were no material items of income or expenditure in 2023/24 not otherwise disclosed. 12. Premiums and Discounts on Debt Rescheduling Written Down The Code requires that any premiums or discounts arising from debt rescheduling should be written off in the year they were incurred, except in limited circumstances where they would qualify as a ‘modification’ of debt. During 2024/25 there were no such debt modifications. The net amount of premium and discount debited to the General Fund and HRA, including for transactions prior to 1 April 2007 (as permitted by statutory guidance), from the Financial Instruments Adjustment Account was £604,000 (2023/24 £623,000). 13. General Grants, Bequests and Donations Perth and Kinross Council is represented on, exercises influence over and provides grants to a large number of outside bodies which provide services to the public, consistent with the Council’s statutory responsibilities. During 2024/25 a total of £21.984 million (2023/24 £21.435 million) was paid out in support of these organisations ranging from remission of hall rents of a few pounds to the contribution towards the operational and other costs of Live Active Leisure Limited of £4.894 million (2023/24 £4.931 million). Details of grants are shown below. 2024/25 2023/24 £'000 £'000 Service Level Agreements with Outside Organisations 8,674 7,827 Live Active Leisure Limited 4,894 4,931 Culture Perth and Kinross 3,919 3,392 Perth Theatre and Concert Hall Ltd 1,056 1,142 Green Capital Recovery Fund 547 456 Perth Money Advice Service 413 413 Community Investment Fund 326 402 Churches Action for the Homeless 290 267 Pitlochry Festival Theatre 220 220 Commercial Property Regeneration Grants 210 275 Warm Spaces Grant 191 248 Local Action Partnerships 114 244 Perthshire Women's Aid 108 108 Perth and Kinross Heritage Trust 100 100 Perth and Kinross Countryside Trust 100 100 Other Miscellaneous Grants 822 1,310 Total 21,984 21,435 54 | Perth and Kinross Annual Accounts 2024/25 Page 67 of 212
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55 | Perth and Kinross Council Annual Accounts 2023/24 14. Expenditure and Income Analysed by Nature The Council’s expenditure and income is analysed as follows: 2024/25 2023/24 Expenditure / Income £'000 £'000 Expenditure Employee benefits expenses 270,615 261,470 Other services expenses 287,763 280,601 Contribution to Integrated Joint Board 92,223 83,241 Support service recharges 4,715 3,477 Depreciation, amortisation, impairment 77,155 100,019 Interest payments 25,079 25,450 Loss on the disposal of assets 138 0 Total Expenditure 757,688 754,258 Income Fees, charges and other service income 188,246 177,441 Interest and investment income 5,649 7,002 Taxation and Non-Specific Grant income 498,321 459,512 Grants and contributions 39,312 58,492 Gain on the disposal of assets 0 518 Total Income 731,528 702,965 Deficit on the Provision of Services 26,160 51,293 15. Agency Services Agency arrangements operate in some Services where the Council undertakes work on behalf of other local authorities; Scottish Water; government; and other public bodies. The Council received £554,000 in 2024/25 (£534,000 in 2023/24) in relation to the administration of collecting Scottish Water income on their behalf. This has been recognised in the Comprehensive Income and Expenditure Statement. In 2024/25 the Council issued no Covid-related and Cost of Living grants on behalf of both the Scottish and UK Governments (£159,000 in 2023/24). 16. External Audit Costs 2024/25 2023/24 £'000 £'000 External Audit Fees 358 350 17. Termination Benefits The Council terminated the contracts of nineteen employees in 2024/25, incurring costs of £601,000 (twenty-five employees in 2023/24, incurring costs of £1.511 million). 18. Post-Employment Benefits International Accounting Standard 19 ‘Employee Benefits’ (IAS 19) prescribes how pension costs and liabilities are to be disclosed in the financial statements. The standard requires employing organisations to account for post-employment benefits in the period in which they are committed to give them, even if the actual payment of these benefits will be many years in the future. The following notes are prepared in accordance with the code guidance on disclosure requirements in respect of IAS 19. Perth and Kinross Council participates in two different pension schemes, one for teaching staff and a separate scheme for all other employees. 55 | Perth and Kinross Annual Accounts 2024/25 Page 68 of 212
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56 | Perth and Kinross Council Annual Accounts 2023/24 Pensions Schemes Accounted for as Defined Contribution Schemes Teachers Teachers employed by the Council are members of the Teachers’ Pension Scheme, administered by the Scottish Government. The Scheme provides teachers with specified benefits upon their retirement, and the Council contributes towards the costs by making contributions based on a percentage of members’ pensionable salaries. The scheme is technically a defined benefit scheme. However, the Scheme is unfunded, and the Scottish Government uses a notional fund as the basis for calculating the employers’ contribution rate paid by local authorities. The Council is not able to identify its share of the underlying financial position and performance of the scheme with sufficient reliability for accounting purposes. For the purposes of the Annual Accounts, it is therefore accounted for on the same basis as a defined contribution scheme. In 2024/25, the Council paid £19.608 million to the Teachers’ Pensions scheme in respect of teachers’ retirement benefits, representing 26% of pensionable pay. The figures for 2023/24 were £16.725 million and 23%. There were no contributions remaining payable at the year-end. Additional payments relating to added year’s benefits, which the Council has inherited from predecessor authorities or awarded itself, together with related increases, amounted to £172,461 (2023/24 £189,391). Pension Schemes Accounted for as Defined Benefit Pension Schemes Local Government Pension Scheme The post-employment scheme for other employees, subject to certain qualifying criteria, is the Local Government Pension Scheme (LGPS) which is administered in this area by Dundee City Council in respect of all local authorities and admitted bodies in the former Tayside area. This is a multi-employer scheme in which it is possible for an employer to identify its share of the assets and liabilities on a consistent and reasonable basis. Employer’s liabilities can be evaluated directly by the Actuary at any time on membership data. Benefits It is a Career Average Revalued Earnings scheme, meaning that the Council and employees pay contributions into a fund, calculated at a level to balance the pension’s liability with investment assets. The pension’s accrual rate guarantees a pension based on 1/49th of career average revalued earnings and years of pensionable service. There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limit set by the Finance Act 2004. Pensions are increased annually in line with changes to the Pensions (Increases) Act 1971 and Section 59 of the Social Security Pensions Act 1975. Governance The Tayside Pension Fund is operated under the regulatory framework for the LGPS in Scotland and the governance of the scheme is the responsibility of the Tayside Pension Fund Committee. This Committee is comprised solely of elected members of Dundee City Council. Employing authorities (including Perth and Kinross Council) are represented at the Tayside Pension Board. Policy is determined in accordance with the Local Government Pension Scheme (Scotland) Regulations. Management of the Fund’s investments is carried out by the Fund’s Investment Advisory Panel which selects and appoints a number of external investment managers/partners and monitors their investment performance. Under the Regulations, employers fall into three categories, scheme employers (also known as scheduled bodies) such as Perth and Kinross Council, community admission bodies and transferee admission bodies. Admission agreements are generally assumed to be open-ended. However, either party can voluntarily terminate the admission agreement by giving an appropriate period of notice to the other parties. Any deficit arising from the cessation valuation will usually be levied on the departing admission body as a capital payment. Principal Risks The principal risks to the scheme are the longevity assumptions, statutory changes to the scheme, changes to inflation, bond yields and the performance of the investments held by the scheme. These are mitigated to a certain extent by the statutory requirements to charge the General Fund the amount due by statute as described in the accounting policy note. Discretionary Post-employment Benefits Discretionary post-retirement benefits on early retirements are an unfunded defined benefit arrangement, under which liabilities are recognised when an award is made. There are no plan assets built up to meet these pension liabilities. The contributions paid into the scheme by employees and member pension benefits are prescribed, for the period to which the accounts relate, by the Local Government Pensions Scheme (Scotland) Regulations 1998 as amended. Perth and Kinross Council’s contributions, as an employer, into the Tayside Pension Fund are subject to the advice of the Fund actuary. 56 | Perth and Kinross Annual Accounts 2024/25 Page 69 of 212
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57 | Perth and Kinross Council Annual Accounts 2023/24 The Local Government Pension Scheme allows for the award of discretionary post-employment benefits upon early retirement. This is an unfunded defined benefit final arrangement, under which liabilities are recognised when awards are made. However, there are no investment assets built up to meet the pension’s liabilities, and cash has to be generated to meet actual pension’s payments as they eventually fall due. Guaranteed Minimum Pension (GMP) Equalisation As a result of the High Court’s Lloyds ruling on the equalisation of GMPs between genders, a number of pension schemes have made adjustments to accounting disclosures to reflect the effect this ruling has on the value of pension liabilities. It is our understanding that HM Treasury has confirmed that the judgement "does not impact on the current method used to achieve equalisation and indexation in public service pension schemes". On 23 March 2021, the Government published the outcome to its Guaranteed Minimum Pension Indexation consultation, concluding that all public service pension schemes, including the LGPS, will be directed to provide full indexation to members with a GMP reaching State Pension Age (SPA) beyond 5 April 2021. This is a permanent extension of the existing ‘interim solution’ that has applied to members with a GMP reaching SPA on or after 6 April 2016. The Council’s valuation assumption for GMP is that the Fund will pay limited increases for members that have reached SPA by 6 April 2016, with the Government providing the remainder of the inflationary increase. For members that reach SPA after this date, the Council has assumed that the Fund will be required to pay the entire inflationary increase. This assumption is consistent with the consultation outcome and the actuaries do not believe that it is necessary to make any adjustments to the value placed on the liabilities as a result of the above outcome. Career Average Revalued Earnings Scheme (CARE) The Local Government Pension Scheme changed from Final Salary to Career Average Revalued Earnings (CARE) on 1 April 2015, with a change of accrual rate from 1/60th to 1/49th. Employees who were previously paying into the Final Salary scheme were automatically transferred into the new CARE scheme on 1 April 2015. Transactions Relating to Post-Employment Benefits The Council recognises the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge the Council is required to make against Council Tax is based on the cash payable in the year, so the real cost of post-employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance via the Movement in Reserves Statement during the year. Local Government Pension Scheme 2024/25 2023/24 £'000 £'000 Comprehensive Income and Expenditure Statement Cost of Services - Service Cost 22,974 23,428 Financing and Investment Income and Expenditure - Net Interest on the Defined Liability (2,599) (1,326) Administration Expenses 363 299 Total Post Employment Benefit Charged to the Deficit on the Provision of Services 20,738 22,401 Remeasurement of the net defined benefit liability comprising: Expected return on pension fund assets in excess of interest 24,909 (90,442) Other acturial gains on assets 0 (526) Changes in demographic assumptions (2,446) (16,097) Changes in financial assumptions (124,687) (5,135) Experience (gain)/loss on defined benefit obligation (2,282) 54,302 Changes in effect of asset ceiling 104,847 58,094 Total Post Employment Benefit Credited to the Comprehensive Income and Expenditure Statement 341 196 Movement in Reserves Statement Reversal of Net Charges made to the surplus or deficit on the provision of Services for post- employment benefits in accordance with the Code (20,738) (22,401) 57 | Perth and Kinross Annual Accounts 2024/25 Page 70 of 212
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58 | Perth and Kinross Council Annual Accounts 2023/24 IAS 19 limits the measurement of a net defined benefit asset to the lower of the surplus in the defined benefit plan and the asset ceiling. IAS 19 defines the asset ceiling as the present value of any economic benefits available in the form of reductions in future contributions to the plan. In accordance with International Financial Reporting Interpretations Committee - Interpretation 14 (IFRIC 14), the actuary has calculated the impact of the asset ceiling as £442.994 million (2023/24 £320.913 million). Therefore, a corresponding reduction has been applied to the defined benefit plan asset which results in a pension net liability of £18.533 million (2023/24 £20.748 million). Pensions Assets and Liabilities Recognised in the Balance Sheet The amount included in the Balance Sheet arising from the Council’s obligation in respect of its defined benefit scheme is as follows: 31 March 31 March 2025 2024 £'000 £'000 Present Value of the Defined Benefit Obligation 764,472 854,468 Present Value of Unfunded Obligation 18,533 20,748 Closing Defined Benefit Obligation 783,005 875,216 Impact of Asset Ceiling 442,994 320,913 Fair Value of Pension Fund Assets (Bid Value) (1,207,466) (1,175,381) Net Liability in Balance Sheet 18,533 20,748 A reconciliation of Perth and Kinross Council’s share of the present value of Tayside Pension Fund’s defined benefit obligation (liabilities) is as follows: 31 March 31 March 2025 2024 £'000 £'000 Opening Defined Benefit Obligation 875,216 802,296 Current Service Cost 22,308 22,976 Interest Cost 43,135 37,869 Change in Financial Assumptions (124,687) (5,135) Change in demographic assumptions (2,446) (16,097) Experience Gain on Defined Benefit Obligation (2,282) 54,302 Estimated Benefits Paid Net of Transfers In (35,398) (27,657) Past Service Costs (including Curtailments) 666 452 Contributions by Scheme Participants 8,197 7,856 Unfunded Pensions Payments (1,704) (1,646) Closing Defined Benefit Obligation 783,005 875,216 A reconciliation of the movements in Perth and Kinross Council’s share of the fair value of Tayside Pension Fund’s assets is as follows: 31 March 31 March 2025 2024 £'000 £'000 Opening Fair Value of Scheme Assets 1,175,381 1,031,655 Interest on Assets 62,968 51,738 Return on Assets Less Interest (24,909) 90,442 Other actuarial gains 0 526 Administration Expenses (363) (299) Contributions by Employer Including Unfunded 23,294 22,766 Contributions by Scheme Participants 8,197 7,856 Estimated Benefits Paid Plus Unfunded Net of Transfers (Out)/In (37,102) (29,303) Closing Fair Value of Scheme Assets 1,207,466 1,175,381 58 | Perth and Kinross Annual Accounts 2024/25 Page 71 of 212
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59 | Perth and Kinross Council Annual Accounts 2023/24 31 March 31 March 2025 2024 £'000 £'000 Opening Impact of Asset Ceiling 320,913 250,276 Interest on impact of Asset Ceiling 17,234 12,543 Actuarial Losses 104,847 58,094 Closing Impact of Asset Ceiling 442,994 320,913 Perth and Kinross Council’s share of Tayside Pension Fund’s assets at 31 March 2025 comprised: £'000 % £'000 % Equities 801,957 66% 847,604 72% Gilts 77,015 6% 74,161 6% Other Bonds 79,510 7% 77,223 7% Property 183,216 15% 104,188 9% Cash 65,449 5% 71,920 6% Alternatives 319 1% 285 0% Total 1,207,466 100% 1,175,381 100% 31 March 2025 31 March 2024 A further breakdown of the assets is as follows: Equities Consumer 8% 8% Manufacturing 7% 8% Energy and Utilities 2% 2% Financial Institutions 8% 8% Health and Care 5% 6% Information Technology 10% 8% Others 0% 3% 40% 43% Debt Securities Corporate Bonds 4% 4% UK Government Bonds 0% 0% Others 1% 1% 5% 5% Private Equity 2% 2% Property UK Property 10% 9% 10% 9% Investment Fund Unit Trusts Equities 27% 37% Bonds 6% 2% Infrastructure 5% 38% 39% Cash and Cash Equivalents 5% 2% Total 100% 100% 28 February 2025 28 February 2024 59 | Perth and Kinross Annual Accounts 2024/25 Page 72 of 212
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60 | Perth and Kinross Council Annual Accounts 2023/24 Basis for Estimating Assets and Liabilities Liabilities have been assessed on an actuarial basis using the projected unit credit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. Both the Local Government Pension Scheme and Discretionary Benefits liabilities have been assessed by Barnett Waddingham Public Sector Consulting, an independent firm of actuaries. Estimates for the Tayside Pension Fund are based on the latest full valuation of the scheme as at 31 March 2023. The principal assumptions used by the actuary have been: 2024/25 2023/24 Mortality Assumptions Longevity at 65 for Current Pensioners: - Men 18.8 18.9 - Women 21.7 21.6 Longevity at 65 for Future Pensioners: - Men 20.2 20.2 - Women 23.2 23.1 Rate of Increase in Salaries 3.9% 4.0% Rate of Increase in Pensions 2.9% 3.0% Rate for Discounting Scheme Liabilities 5.8% 4.9% The liabilities show the underlying commitments that the Council has in the long run to pay post-employment (retirement) benefits. The net liability of £18.533 million has a substantial impact on the net worth of the Council as recorded in the Balance Sheet. However, statutory arrangements for funding the deficit mean that the financial position of the Council remains sound: - Finance is only required to be raised to cover discretionary benefits when the pensions are actually paid. The total contribution expected to be made to the Local Government Pension Scheme by the Council in the year to 31 March 2026 is £20.251 million. Sensitivity Analysis The estimation of the defined benefit obligations is sensitive to the actuarial assumptions set out in the tables above. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period and assumes for each change that the assumption analysed changes while all the other assumptions remain constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be interrelated. The estimations in the sensitivity analysis have followed the accounting policies for the scheme, i.e. on an actuarial basis using the projected unit credit method. The methods and types of assumptions used in preparing the sensitivity analysis below did not change from those used in the previous period. £m £m £m £m £m Adjustment to discount rate +0.5% +0.1% 0% -0.1% -0.5% - Present value of total obligation £729.343 £771.762 £783.005 £794.521 £843.476 - Projected Service cost £15.997 £18.173 £18.759 £19.364 £21.979 Adjustment to long term salary increase +0.5% +0.1% 0% -0.1% -0.5% - Present value of total obligation £788.972 £784.182 £783.005 £781.837 £777.247 - Projected Service cost £18.759 £18.759 £18.759 £18.759 £18.759 Adjustment to pension increases and deferred revaluation +0.5% +0.1% 0% -0.1% -0.5% - Present value of total obligation £839.003 £793.661 £783.005 £772.606 £733.425 - Projected Service cost £22.114 £19.390 £18.759 £18.147 £15.874 £m £m £m Adjustment to mortality age rating assumption + 1 year None -1 year Present value of total obligation £812.068 £783.005 £755.138 Projected Service cost £19.422 £18.759 £18.113 60 | Perth and Kinross Annual Accounts 2024/25 Page 73 of 212
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61 | Perth and Kinross Council Annual Accounts 2023/24 19. Related Parties The Council is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Council or to be controlled or influenced by the Council. Disclosure of these transactions allows readers to assess the extent to which the Council might have been constrained in its ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Council. Scottish Government The Scottish Government has effective control over the general operations of the Council – it is responsible for providing the statutory framework within which the Council operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Council has with other parties (e.g. Council Tax bills). Grants received from government departments are set out in the subjective analysis in Note 14 on expenditure and income analysed by nature. Tayside Valuation Joint Board The Tayside Valuation Joint Board provides services on behalf of Perth and Kinross, Angus and Dundee Councils. The Council does not have any direct control or influence over the board and the amount payable to this body for valuation services and electoral registration services was £1.762 million (2023/24 £1.733 million). £1.434 million is disclosed in the Comprehensive Income and Expenditure Statement under Valuation Joint Board and £328,000 under Directorate Core Costs for electoral and registration services. Members Members of the Council have direct control over the Council’s financial and operating policies. The total of members’ allowances paid in 2024/25 is shown in the Remuneration Report. During 2024/25, two councillors had an interest in businesses from which the Council commissioned works and services to the value of £1,716 and £200 respectively. Contracts were entered into in full compliance with the Council’s standing orders and the Councillors’ Code of Conduct. In addition, the Council makes revenue and capital payments to a large number of organisations on which Council members are represented. Chief Officers Chief Officers of the Council have control over the Council’s financial and operating policies. The total of Chief Officers’ remuneration is shown in the Remuneration Report. Officers have a responsibility to adhere to a Code of Conduct which requires them to declare any interests in matters that directly or indirectly influence, or be thought to influence, their judgement or decisions taken during their work. During 2024/25 The Chief Executive was appointed as a Trustee and Company Director for Enable Scotland, Enable Scotland (Leading the Way), Crossroads Caring Scotland and the Mungo Foundation. During 2024/25 the Council made payments of £1.1 million with Enable Scotland and £572,000 with Crossroads Caring Scotland. Live Active Leisure Ltd This organisation provides leisure services within the area served by the Council. A grant was provided in 2024/25 amounting to £4.894 million (2023/24 £4.931 million). It is a sole member Company with the Council as that member. Perth Theatre and Concert Hall Ltd This organisation operates Perth Concert Hall and Perth Theatre. A grant was provided in 2024/25 amounting to £1.056 million (2023/24 £1.142 million). It is a sole member Company with the Council as that member. Culture Perth and Kinross Ltd This organisation has operated libraries, museums and arts galleries in Perth and Kinross since 1 April 2016. A grant was provided in 2024/25 amounting to £3.919 million (2023/24 £3.392 million). It is a sole member Company with the Council as that member. Tayside Contracts Joint Committee This organisation provides roads maintenance, catering and cleaning services to the Council. Payments to Tayside Contracts in 2024/25 amounted to £39.037 million (2023/24 £36.562 million). The Joint Committee is administered and controlled by Dundee City, Angus and Perth and Kinross Councils. Health and Social Care Partnership This organisation is a joint venture between Perth and Kinross Council and Tayside Health Board and has since 1 April 2016 provided an integrated Health and Social Care service. Contributions to the Health and Social Care Partnership in 2024/25 amounted to £92.223 million (2023/24 £83.231 million) and income received from the Partnership for commissioned services was £115.844 million (2023/24 £105.639 million). The Council has a Creditor of £232,000 due to the Health and Social Care Partnership as at 31 March 2025 (2023/24 £4.794 million). 61 | Perth and Kinross Annual Accounts 2024/25 Page 74 of 212
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62 | Perth and Kinross Council Annual Accounts 2023/24 20. Leases Council as Lessee The Council has adopted IFRS 16 Leases with effect from 1 April 2024. Properties and other vehicles, plant and equipment which fall within scope for IFRS 16 have been captured as right of use assets on the Council’s Balance Sheet. The following disclosures relate to low value assets having an individual value of less than £10,000, agreements with less than 12 months to run, and agreements which fail IFRS 16 tests. The Council operates a Lease Car Scheme which is available to eligible employees and lease rental payments are recovered from employees. The Council also leases in some fleet vehicles for use in the Council's operations. All current leasing agreements for cars and operational vehicles are due to expire during the financial years 2025/26 to 2027/28. The Council has also acquired the use of a number of properties by entering into leasing arrangements. The majority of such properties are used for office accommodation and any capital works undertaken within these premises is written down over the shorter of the lease term or the useful life of the property. The future minimum lease payments due under non-cancellable leases in future years are: 2024/25 2023/24 £'000 £'000 Not later than one year 182 166 Later than one year and not later than five years 253 272 Later than five years 33 536 468 974 The expenditure charged to the Services lines in the Comprehensive Income and Expenditure Statement during the year in relation to these leases was: 2024/25 2023/24 £'000 £'000 Minimum lease payments 153 170 Sublease payments receivable (25) (21) 128 149 Council as Lessor The Council leases out property under operating leases at normal market rents with the following purpose: Land for the generation of rental income arising from its use; land and buildings, which include offices and shops, for the supply of suitable business accommodation to promote economic development or satisfy social needs, or to solely generate rental income for the Council. The total future minimum lease payments receivable under non-cancellable leases in future years are: 2024/25 2023/24 £'000 £'000 Not later than one year 1,348 1,289 Later than one year and not later than five years 4,161 4,063 Later than five years 51,282 49,536 56,791 54,888 The minimum lease payments receivable do not include rents that are contingent on events taking place after the lease was entered into, such as adjustments following rent reviews. There were no material adjustments in respect of contingent rents during the years 2023/24 and 2024/25. Right of Use Assets As a lessee, the Council has previously classified leases as operating, or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Council. The CIPFA Code mandates the adoption of IFRS 16 Leases from 1 April 2024. The main impact of the accounting requirement is that a right of use asset and a corresponding lease liability are now included on the balance sheet at 1 April 2024. The CIPFA Code does include recognition exemptions to short-term leases and low value assets, and the Council has applied these. Right of use assets and the lease liabilities for short term leases that have a term of 12 months or less from the Balance Sheet date, and leases of low value assets, are not recognised on the balance sheet. The Council recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. 62 | Perth and Kinross Annual Accounts 2024/25 Page 75 of 212
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63 | Perth and Kinross Council Annual Accounts 2023/24 Right-of-use assets and lease liabilities have been calculated as if IFRS 16 had always applied but are recognised in the year of adoption and not by adjusting prior year figures. The Council has applied PWLB interest rates at 1 April 2024 to the outstanding lease rentals, the weighted average incremental borrowing rate equates to 4.70%. IFRS 16 also applies to service concession arrangements i.e. Public Private Partnerships (PPP) and similar schemes, and the contractual arrangements continue to be disclosed in Note 36. Right of Use (IFRS 16) liabilities: 2024/25 £'000 Value at 1 April 2024 443 Principal repaid in the year (67) Value at 31 March 2025 376 Other land and buildings 291 Vehicles, plant and equipment 85 376 Liability analysed by: Current 69 Non-current 307 376 Lease liabilities Within 1 year 69 Between 2 and 5 years 130 Over 5 years 177 Total liabilities 376 The Interest expense charged to the Comprehensive Income and Expenditure Statement during 2024/25 is £19,000, and the expense relating to short term leases is £54,000. 63 | Perth and Kinross Annual Accounts 2024/25 Page 76 of 212
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21. Property, Plant and Equipment Movements on Fixed Assets 2024/25 in respect of Property, Plant and Equipment are shown below: Movements in 2024/25 Other Vehicles Assets PFI and DBFM Council Land and Plant and Community Surplus Under Total Assets Dwellings Buildings Equipment Assets Assets Construction PPE included in PPE £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gross Book Value As at 1 April 2024 319,682 805,561 76,554 26,465 691 36,447 1,265,400 221,776 Additions 29,708 16,159 13,490 1,456 4 54,967 115,784 45 Revaluation increases recognised in the Revaluation Reserve 0 1,252 0 0 126 0 1,378 0 Revaluation decreases recognised in the Revaluation Reserve (45,488) (49,933) 0 0 (40) 0 (95,461) (49,399) Revaluation increases recognised in the Surplus / Deficit on the Provision of Services 0 940 0 0 211 0 1,151 0 Revaluation decreases recognised in the Surplus / Deficit on the Provision of Services 0 (13,426) 0 0 (194) 0 (13,620) (6,358) Derecognition - Disposals (3,249) (508) (7,830) 0 (204) 0 (11,791) 0 Asset reclassifications 6,287 (14,771) 0 228 1,084 7,276 104 0 Other movements 0 55,352 0 0 (1) 1 55,352 55,353 As at 31 March 2025 306,940 800,626 82,214 28,149 1,677 98,691 1,318,297 221,417 Depreciation As at 1 April 2024 0 (35,595) (48,354) (16,383) 0 0 (100,332) (8,467) Depreciation charge for 2024/25 (13,188) (21,219) (9,908) (1,240) 0 0 (45,555) (6,207) Depreciation written out to the Revaluation Reserve - Revaluation Gain 0 495 0 0 0 0 495 0 Depreciation written out to the Revaluation Reserve - Revaluation Loss 10,058 12 0 0 0 0 10,070 0 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Gain 0 8 0 0 0 0 8 0 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Loss 0 1,732 0 0 0 0 1,732 0 Derecognition - Disposals 3,096 8 7,647 0 0 0 10,751 0 Derecognition - Other 0 0 0 0 0 0 0 0 Asset reclassifications 0 39 0 (39) 0 0 0 0 Other movements 0 1 0 (1) 0 0 0 0 As at 31 March 2025 (34) (54,519) (50,615) (17,663) 0 0 (122,831) (14,674) Net Book Value at 31 March 2025 306,906 746,107 31,599 10,486 1,677 98,691 1,195,466 206,743 The gross book value above includes £29.585 million of fully depreciated assets which may still be in use. A review has commenced into these fully depreciated assets with a potential reduction in their value in 2025/26. 64 | Perth and Kinross Annual Accounts 2024/25 Page 77 of 212
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The reporting of book values for Infrastructure Assets is amended following the issue of the Local Government Finance Circular 09/2022. The Finance Circular outlines historic issues for the consistent accounting treatment of derecognised infrastructure components and the reporting of book values by local authorities. A CIPFA task group is progressing a remedy and the CIPFA Code will be updated in due course. To satisfy the audit of the 2024/25 accounts, the following statutory overrides are provided in the Circular: - Statutory Override 1: For accounting periods commencing from 1 April 2021 until 31 March 2025 a local authority is not required to report the gross cost and accumulated depreciation for infrastructure assets. Statutory Override 2: For accounting periods commencing from 1 April 2010 until 31 March 2025 the carrying amount to be derecognised in respect of a replaced part of an infrastructure asset is to be taken to be and accounted for as a nil amount. No subsequent adjustment shall be made to the carrying amount of the asset with respect to that part. The Council has elected to adopt both statutory overrides. The Net Book Value above excludes Infrastructure Assets, when these assets are included the NBV is as follows: Infrastructure Assets £'000 Net Book Value at 1 April 2024 347,765 Additions 56,551 Depreciation (19,780) Net Book Value at 31 March 2025 384,536 The total for all PPE, when Infrastructure Assets are included, is set out below: Total PPE £'000 Total PPE (above) 1,195,466 Net Book Value of Infrastructure Assets 384,536 Total PPE Net Book Value at 31 March 2025 (including Infrastructure Assets) 1,580,002 65 | Perth and Kinross Annual Accounts 2024/25 Page 78 of 212
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Property, Plant and Equipment cont’d Comparative Movements in 2023/24 *Other Vehicles Assets *PFI and DBFM Council Land and Plant and Community Surplus Under Total Assets Dwellings Buildings Equipment Assets Assets Construction PPE included in PPE £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gross Book Value As at 1 April 2023 359,761 750,076 67,420 25,569 1,783 56,047 1,260,656 220,689 Additions 19,974 32,667 13,153 895 0 25,307 91,996 31 Revaluation increases recognised in the Revaluation Reserve 0 44,764 0 0 0 0 44,764 26,020 Revaluation decreases recognised in the Revaluation Reserve (60,412) (25,962) 0 0 (5) 0 (86,379) (19,369) Revaluation increases recognised in the Surplus / Deficit on the Provision of Services 0 2,395 0 0 70 0 2,465 0 Revaluation decreases recognised in the Surplus / Deficit on the Provision of Services (2,207) (35,943) 0 0 (41) 0 (38,191) (5,595) Derecognition - Disposals (4,663) (1,004) (4,020) 0 (223) 0 (9,910) 0 Asset reclassifications 7,229 38,568 0 0 (891) (44,906) 0 0 Other movements 0 0 1 1 (2) (1) (1) 0 As at 31 March 2024 319,682 805,561 76,554 26,465 691 36,447 1,265,400 221,776 Depreciation As at 1 April 2023 (40,221) (30,506) (43,195) (15,195) 0 0 (129,117) (5,818) Depreciation charge for 2023/24 (16,413) (21,112) (9,011) (1,188) 0 0 (47,724) (5,949) Depreciation written out to the Revaluation Reserve - Revaluation Gain 0 10,108 0 0 0 0 10,108 1,771 Depreciation written out to the Revaluation Reserve - Revaluation Loss 51,864 3,647 0 0 0 0 55,511 1,348 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Gain 0 1,463 0 0 0 0 1,463 0 Depreciation written out to the Surplus / Deficit on the Provision of Services - Revaluation Loss 107 733 0 0 0 0 840 181 Derecognition - Dispoals 4,663 78 3,847 0 0 0 8,588 0 Other movements 0 (6) 5 0 0 0 (1) 0 As at 31 March 2024 0 (35,595) (48,354) (16,383) 0 0 (100,332) (8,467) Net Book Value at 31 March 2024 319,682 769,966 28,200 10,082 691 36,447 1,165,068 213,309 66 | Perth and Kinross Annual Accounts 2024/25 Page 79 of 212
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The reporting of book values for Infrastructure Assets is amended following the issue of the Local Government Finance Circular 09/2022. The Net Book Value above excludes Infrastructure Assets, when these assets are included the NBV is as follows: Infrastructure Assets £'000 Net Book Value at 1 April 2023 290,325 Additions 75,361 Depreciation (17,921) Net Book Value at 31 March 2024 347,765 The total for all PPE, when Infrastructure Assets are included, is set out below: Total PPE £'000 Total PPE (above) 1,165,068 Net Book Value of Infrastructure Assets 347,765 Total PPE Net Book Value at 31 March 2024 (including Infrastructure Assets) 1,512,833 67 | Perth and Kinross Annual Accounts 2024/25 Page 80 of 212
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68 | Perth and Kinross Council Annual Accounts 2023/24 Property, Plant and Equipment cont’d Capital Commitments At 31 March 2025, the Council has entered into a number of contracts for the construction or enhancement of Property, Plant and Equipment in 2024/25 and future years budgeted to cost £74.720 million. Similar commitments at 31 March 2024 were £120.622 million. The total commitment is made up of the following: 2024/25 2023/24 £'000 £'000 Education Projects 22,045 71,412 Roads and Bridges Improvement Schemes 12,634 44,745 Flood Prevention 30,823 0 Fleet Vehicles 779 1,142 Council Dwellings 4,546 1,172 Community Assets 0 133 Other Capital Projects 3,893 2,018 74,720 120,622 Education projects include Perth High School and Blairgowrie Recreation Centre. Roads and Bridges Improvement Schemes includes the Cross Tay Link Road (Destiny Bridge). Flood Prevention includes the Comrie Flood Prevention Scheme. Valuation of Assets Revaluations The Council carries out a rolling programme that ensures all Property, Plant and Equipment required to be measured at its current value is revalued at least every five years. The Council commissioned a potential movement review of the 2023/24 valuation for Council Dwellings as at 31 March 2025; and an external valuation for a further selection of assets which was performed during the last quarter of financial year 2024/25. In addition, the Council’s internal valuers performed valuations for a number of assets, including investment properties, and properties requiring revaluation due to redevelopment or a change of use, during the last quarter of financial year 2024/25. In applying the Royal Institution of Chartered Surveyors (RICS) Valuation Global Standards (‘Red Book’), the valuation reports include an explanatory note which provides an update on market conditions and confirms that markets are functioning again and there is adequate evidence on which to base an opinion of value. However, uncertainties do remain and there is the potential for markets to move rapidly in response to the effects of conflict in Eastern Europe and the Middle East. The valuation reports have been used to inform the measurement of non-current assets in these financial statements. The valuers have continued to exercise professional judgment in preparing the valuations and, therefore, this is the best information available to the Council as at 31 March 2025 and can be relied upon. Note 4 – Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty provides additional information. Surplus Assets are valued annually on a fair value basis. In terms of the fair value hierarchy, all Surplus Assets are valued at Level 2 and there were no transfers between Levels during the year. The table below sets out the Gross Book Value of asset categories carried at historic cost and current value at 31 March 2025, and shows the progress of the Council’s five-year rolling revaluation programme for property, plant and equipment. Other Council Land and Surplus Dwellings Buildings Assets Total £'000 £'000 £'000 £'000 Carried at historical cost 5 39,492 4 39,501 Values at current value as at: 31 March 2025 305,931 136,509 1,673 444,113 31 March 2024 1,004 186,819 0 187,823 31 March 2023 0 415,957 0 415,957 31 March 2022 0 4,389 0 4,389 31 March 2021 0 17,460 0 17,460 Total Cost or Valuation 306,940 800,626 1,677 1,109,243 Changes in Estimates The Council has made no material changes to accounting estimates for Property, Plant and Equipment in 2024/25. 68 | Perth and Kinross Annual Accounts 2024/25 Page 81 of 212
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69 | Perth and Kinross Council Annual Accounts 2023/24 22. Heritage Assets Reconciliation of the carrying value of Heritage Assets held by the Council Art War Other Total Collection Memorials £'000 £'000 £'000 £'000 Cost or Valuation Balance at 1 April 2023 51,740 48 26 51,814 Balance at 31 March 2024 51,740 48 26 51,814 Cost or Valuation Balance at 1 April 2024 51,740 48 26 51,814 Additions 285 0 0 285 Balance at 31 March 2025 52,025 48 26 52,099 Art Collection The collection of Fine Art maintained and preserved by Culture Perth and Kinross, on behalf of Perth and Kinross Council is varied and includes oil paintings (approximately 1,225 items), watercolours (900), drawings (4,000), prints (1,500), and sculptures (150). The Fine Art collection also includes J D Fergusson and Margaret Morris archives which number approximately 30,000 items and include a number of significant works. The Art Collection also includes silver, glass, ceramics, furniture, Oriental materials, horology, metalwork and jewellery; these are collectively identified as Applied Art. Curators within Culture Perth and Kinross continually monitor the sales values of works by artists within the collection and will revalue similar items if there is evidence of a movement in value. A significant pearl jewellery collection was recognised as donated to Heritage Assets in 2024/25. There were no significant additions in 2023/24. Additions and Disposals of Heritage Assets Aside from the pearls collection, there has been no significant addition, either by purchase or donation, to the Fine and Applied Art collection during the current or previous five financial years. The majority of the collections are held in perpetuity, or have disposal conditions attached, and consequently no Fine and Applied Art disposals have occurred during the current and previous five financial years. Fine and Applied Art The Fine Art collection owes its existence largely to the 1,926 bequests of local patrons Robert Hay Robertson and Robert Brough, although the first painting entered the collection as early as 1785. The collection is international in its scope and numbers over 4,000 items. It includes an interesting group of Italian ‘Old Masters’, a small but important group of 19th Century French works, a good group of 17th century Dutch and Flemish paintings and work by English artists including a small but highly important collection of natural history watercolours by Beatrix Potter. Its greatest strength however lies in its holding of Scottish pictures. These span the 16th to the 21st century and include such important works as Loch Katrine by Horatio McCulloch and D Y Cameron’s The Wilds of Assynt, as well as pictures with strong local connections. Amongst these are pictures by local artists, local topographical views and portraits of local individuals. The collection seeks to retain a balance between the historical and the contemporary aspects whilst continuing to develop the holdings of works of specifically local interest. In 1991 the collection was effectively doubled in size with the gifting of the J D Fergusson Art Foundation’s collection of artworks by the Scottish ‘Colourist’ John Duncan Fergusson (1874-1961) and its associated archive. The Applied Art collection has been acquired since 1785 through purchase, gift or bequest. It covers a wide variety of objects and materials, within which the collections of Perth silver and Perthshire glass are unsurpassed in terms of national importance. The ceramics collection contains significant collections of Staffordshire flat-back figures and Martinware studio pottery as well as a collection of studio pottery produced by potter’s native to or resident in the Perth and Kinross area. Other smaller collections include furniture, timepieces, oriental and other items. The promotion of other cultural events and programmes during the year makes it difficult to reliably estimate the percentage of the Art Collection on display for public viewing. However, all items are held in secure storage and access is permitted to scholars and others for research purposes. The museum collection also includes History and Natural History collections for which an amount of insurance cover has been obtained. These objects and collections, in most instances, are rare and irreplaceable and there is insufficient 69 | Perth and Kinross Annual Accounts 2024/25 Page 82 of 212
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70 | Perth and Kinross Council Annual Accounts 2023/24 evidence on which to place a reliable estimate of value. There are in excess of 289,000 items within the History and Natural History collections and the cost of obtaining valuations would be disproportionate in terms of any benefit derived to the user of the financial statements. On this basis, the History and Natural History collections are, therefore, excluded from the carrying value of Heritage Assets held by the Council. The Culture Perth and Kinross Limited Collections Management Framework provides guidance on the collection, disposal or lending of heritage assets. 23. Investment Properties 2024/25 2023/24 £'000 £'000 Rental income from investment property (939) (910) Direct operating expenses arising from investment property 50 61 Balance at end of year (889) (849) The following table summarises the movement in the fair value of investment properties over the year: 2024/25 2023/24 £'000 £'000 Balance at start of year 14,715 15,015 Additions - Purchases 150 0 Net gain / (loss) from fair value adjustments 1,480 (300) Transfer to Property, Plant and Equipment (161) 0 Balance at end of year 16,184 14,715 All of the Authority's investment properties are valued at Level 2 on the fair value hierarchy. Values as at 31 March 2025 and 31 March 2024 are as follows: 2024/25 2023/24 £'000 £'000 Recurring fair value measurements using: Industrial and Commercial Land 14,658 13,455 Shops and Offices 971 695 Other Investment Properties 555 565 Total Fair Value 16,184 14,715 Valuation Techniques used to Determine Level 2 Fair Values for Investment Properties Significant Observable Inputs – Level 2 The majority of the value of Industrial and Commercial Land relates to sites leased out on ground leases. Market data is available at national and local levels from sector specialists to provide the valuers with information, such as trends and rent yields, for the commercial and industrial markets. Local market activity for ground leases tends to follow national trends and valuations are undertaken using a discounted income approach. Ground leases are longer term arrangements and sites of this nature enjoy 100% occupancy levels; the rental income stream is known and market data for rent yields is available, all of which are observable input. As a result of the conditions of the ground lease agreement, there is no unobservable input. The valuation of investment land leased out on a ground lease therefore requires the use of observable market data and minimal, if any, unobservable data and is regarded as Level 2. Market data providing information on trends and rent yield is available from sector specialists for leased Shops and Offices. Local market data is used to assist the valuation process, and valuations are undertaken using the income approach, discounted using market rates to arrive at a net present value for the income stream. The valuer will also consider other factors, such as the age and condition of the property, when arriving at the final valuation. This requires judgement; however, any unobservable input is not considered to be significant in terms of any adjustment to the fair value of the property. The valuation of the shops and offices is mainly representative of the available market data, and the valuation input is primarily based on observable data. Therefore, the properties are categorised as Level 2. Other Investment Properties primarily relate to land held for development by the private sector, which will generate a receipt to the Council on disposal. Sites held for redevelopment are valued on the basis of the highest and best use of the site, taking into account adjacent and surrounding property, recent market activity, and development plan restrictions. The valuation of these sites is therefore based upon observable input, i.e. local market data, and as such will be regarded as Level 2. 70 | Perth and Kinross Annual Accounts 2024/25 Page 83 of 212
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71 | Perth and Kinross Council Annual Accounts 2023/24 Highest and Best Use of Investment Properties In estimating the fair value of the authority’s investment properties, the highest and best use of the properties is their current use. Valuation Techniques There has been no change in the valuation techniques used during the year for investment properties. Valuation Process for Investment Properties The fair value of the Council’s investment property is measured annually at each reporting date. All valuations are carried out internally, in accordance with the methodologies and bases for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. The Council’s valuation experts work closely with finance officers reporting directly to the Chief Finance Officer on a regular basis regarding all valuation matters. The valuation reports have been used to inform the measurement of Investment properties in these financial statements. The valuers have continued to exercise professional judgement in preparing the valuation and, therefore, this is the best information available to Council as at 31 March 2025 and can be relied upon. 24. Intangible Assets The movement on Intangible Asset balances during the year is as follows: 2024/25 2023/24 Assets Assets £'000 £'000 Balance at start of year Gross carrying amount 4,292 3,958 Accumulated amortisation (3,944) (2,995) Net carrying amount at start of year 348 963 Additions: Purchases 3,073 334 Other disposals: Gross Carrying Amount (2,214) 0 Accumulated amortisation 2,214 0 Amortisation for the period (1,232) (949) Net carrying amount at end of year 2,189 348 Comprising: Gross carrying amounts 5,151 4,292 Accumulated amortisation (2,962) (3,944) 2,189 348 Intangible Assets include the cost of software licences and bespoke software solutions deemed to provide future benefit to the Council. These items have been included and amortised over their perceived useful life. 25. Assets Held for Sale 2024/25 2023/24 2024/25 2023/24 £'000 £'000 £'000 £'000 Balance outstanding at start of year 676 273 0 403 Assets newly classified as held for sale 205 0 0 0 Revaluation gains 142 0 0 0 Assets declassified as held for sale (148) 0 0 0 Transfers from non-current to current 0 403 0 (403) Balance outstanding at year end 875 676 0 0 Current Non Current 26. Long Term Debtors 2024/25 2023/24 £'000 £'000 Other Entities and Individuals 530 543 Total 530 543 71 | Perth and Kinross Annual Accounts 2024/25 Page 84 of 212
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72 | Perth and Kinross Council Annual Accounts 2023/24 27. Inventories 2024/25 2023/24 £'000 £'000 Balance outstanding at start of year 632 441 Purchases 3,621 3,521 Recognised as an expense in the year (3,604) (3,330) Written off balances (32) 0 Reversal of write-offs previous years 3 0 Balance outstanding at end of year 620 632 Consumables and Maintenance Materials 28. Debtors 2024/25 2024/25 2023/24 2023/24 £'000 £'000 £'000 £'000 Gross Net Gross Net Scottish Government 12,969 18,429 Central Government 10,418 12,290 Other Local Authorities 184 485 NHS Bodies 704 670 Public Corporations 6 0 Other Entities and Individuals: Housing Rent 3,471 2,185 less: Impairment (1,923) (1,845) 1,548 340 Statutory Additions 6,649 6,066 less: Impairment (6,649) (6,066) 0 0 Other 10,497 8,489 less: Impairment (1,915) (1,853) 8,582 6,636 Trade 12,467 10,282 less: Impairment (1,488) (1,306) 10,979 8,976 Council Tax 22,812 21,350 less: Impairment (18,195) (16,832) 4,617 4,518 Total 50,007 52,344 72 | Perth and Kinross Annual Accounts 2024/25 Page 85 of 212
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73 | Perth and Kinross Council Annual Accounts 2023/24 29. Creditors 2024/25 2024/25 2023/24 2023/24 £'000 £'000 £'000 £'000 Gross Net Gross Net Scottish Government (446) (793) Central Government (8,005) (7,021) Other Local Authorities (1,292) (6,420) NHS Bodies (241) (909) Public Corporations and Trading Funds 0 0 Other Entities and Individuals: Current Right of Use Liabiltiy (9,129) 0 Employee Statutory Adjustment Account (9,372) (8,186) Prepaid Council Tax (2,712) (2,261) Other (28,734) (23,199) (49,947) (33,646) Trade Creditors (35,569) (42,822) Total (95,500) (91,611) 30. Provisions Other than Bad and Doubtful Debts Self-Insured/Uninsured Losses The Insurance Fund makes provision for losses arising from Property, Employers’ Liability, Public Liability, Motor, Fidelity Guarantee, Computer, Engineering and Travel/Personal Accident claims. The provision provides for an estimate of all liabilities likely to be incurred by the Council in respect of self-insured and uninsured losses in respect of incidents that have arisen prior to 1 April 2025. Payments to 3rd parties The Council has made provision for a number of potential compensation claims arising from significant capital projects within the Council’s capital programme. Commercial Rent The Council manages the rental leases for a number of commercial properties. The Council had previously made provision for rent refunds due to the downturn in the economic climate affecting retail trading performance. The provision at 31 March 2025 is to meet any potential liability for the years 2023/24 and 2024/25. Self Insured/ Payments Commercial Total Uninsured to 3rd parties Rent Losses £'000 £'000 £'000 £'000 Balance as at 1 April 2024 1,900 3,292 40 5,232 Additional provisions made in 2024/25 1,540 609 0 2,149 Amounts used in 2024/25 (1,426) (1,190) 0 (2,616) Balance as at 31 March 2025 2,014 2,711 40 4,765 Balance Sheet Disclosure: Less than 12 months 694 2,100 20 2,814 Over 12 months 1,320 611 20 1,951 2,014 2,711 40 4,765 31. Usable Reserves Movements in the Council’s Usable Reserves are detailed in the Movement in Reserves Statement and notes 5 and 6. 73 | Perth and Kinross Annual Accounts 2024/25 Page 86 of 212
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74 | Perth and Kinross Council Annual Accounts 2023/24 32. Unusable Reserves 2024/25 2023/24 £'000 £'000 Revaluation Reserve (336,851) (425,931) Capital Adjustments Account (325,847) (338,099) Financial Instruments Adjustment Account 15,732 16,358 Pensions Reserve 18,533 20,748 Employee Statutory Adjustment Account 9,372 8,186 Total Unusable Reserves (619,061) (718,738) Revaluation Reserve The Revaluation Reserve contains the gains made by the Council arising from increases in the value of its Property, Plant and Equipment. The balance is reduced when assets with accumulated gains are: - re-valued 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 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. 2024/25 2023/24 £'000 £'000 Balance at 1 April (425,931) (411,175) Upward revaluation of assets (1,873) (54,872) Downward revaluation of assets and impairment losses not charged to the (Surplus)/ Deficit on the Provision of Services 85,391 30,869 Sub-Total (342,413) (435,178) Difference between fair value depreciation and historical cost depreciation 5,411 8,811 Accumulated gains on assets sold or scrapped written out to the Capital Adjustment Account 151 436 Total Unusable Reserves (336,851) (425,931) Capital Adjustment Account The Capital Adjustment Account 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. The Account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement. The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition, construction and enhancement. The Account contains accumulated gains and losses on Investment Properties and gains recognised on donated assets that have yet to be consumed by the Council. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date that the Revaluation Reserve was created to hold such gains. Note 5 provides details of the source of all the transactions posted to the Account, apart from those involving the Revaluation Reserve. 74 | Perth and Kinross Annual Accounts 2024/25 Page 87 of 212
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75 | Perth and Kinross Council Annual Accounts 2023/24 2024/25 2023/24 £'000 £'000 Balance at 1 April (338,099) (400,119) Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement Charges for depreciation and impairment of non current assets 59,923 56,836 Revaluation (gains)/losses on Property, Plant and Equipment 10,587 33,423 Amortisation of intangible assets 1,232 949 Revenue expenditure funded from capital under statute 2,619 3,770 Amounts of non current assets written off on disposal as part of the gain/loss 1,040 1,322 (262,698) (303,819) Adjusting amounts written out of the Revaluation Reserve (151) (436) (262,849) (304,255) Capital financing applied in the year: Use of the Capital Receipts Reserve to finance new capital expenditure (1,672) (1,983) Donated assets (285) 0 Capital grants and contributions credited to the Comprehensive Income and Expenditure Statement (42,079) (46,429) Application of grants to capital financing from the Capital Grants Unapplied Account 1,060 0 Statutory provision for the financing of capital investment charged against the General Fund and HRA balances (16,387) (15,260) Statutory adjustment for Financial Flexibilities applied to Service Concession Arrangements (see note 36) 2,914 34,262 Capital expenditure charged against the general fund and HRA balances (5,136) (4,734) (324,434) (338,399) Movements in the fair value of the Investment Properties (1,480) 300 Movements in value of finance leases 67 0 Balance at 31 March (325,847) (338,099) Financial Instruments Adjustment Account The Financial Instruments Adjustment Account (FIAA) is used to hold the losses or gains arising on the early redemption of loans per statutory provisions, as well as the historic timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments. These statutory provisions allow for annual charges to be made in accordance with the original amortisation schedules which existed at the time the provisions were introduced. The Council uses the Account to manage the balance of premiums and discounts which existed at 31 March 2007 which arose on the early redemption of loans. Any premiums or discounts incurred or received after this date are also held in this Account. These are subsequently charged to the General Fund and Housing Revenue Account (HRA) in accordance with statutory provisions and so spreading the burden on Council Tax and Housing Rents. The Council also uses the FIAA to hold the difference in interest charges which arose on stepped interest rate loans. These had low interest rates in the early years before “stepping up” to a higher interest rate. Interest on such loans is now required to be charged consistently over the life of the loan using the Effective Interest Rate Method. The difference in the cumulative charges to 31 March 2007 under this new method was debited to the FIAA and will be charged to the General Fund and the HRA over the life of the loans under the statutory provisions. Accordingly, the balance on the FIAA as at 31 March 2025 in respect of the above provisions will be charged to the General Fund and HRA over the next 43 years. The movements on the FIAA during the year are shown below: 2024/25 2023/24 £'000 £'000 Balance at 1 April 16,358 17,002 Proportion of discounts incurred in previous financial years credited against the General Fund and HRA Balance in accordance with statutory requirements in the year 4 4 Proportion of premiums incurred in previous financial years charged against the General Fund and HRA Balance in accordance with statutory requirements in the year (608) (627) Difference on restatement of Stepped Interest Rate Loans (22) (21) Balance at 31 March 15,732 16,358 75 | Perth and Kinross Annual Accounts 2024/25 Page 88 of 212
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76 | Perth and Kinross Council Annual Accounts 2023/24 Pensions Reserve The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post- employment benefits and for funding benefits in accordance with statutory provisions. The Council accounts for post- employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Council makes employer’s contributions to pensions funds or eventually pays any pensions for which it is directly responsible. The debit balance on the Pensions Reserve therefore shows a substantial shortfall between the benefits earned by past and current employees and the resources the Council has set aside to meet them. 2024/25 2023/24 £'000 £'000 Balance at 1 April 20,748 20,917 Actuarial Loss on Pensions Assets and Liabilities 341 196 Reversal of Items Relating to Retirement Benefits Debited or Credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement 20,738 22,401 Employer's Pensions Contributions and Direct Payments to Pensioners Payable in the Year (23,294) (22,766) Balance at 31 March 18,533 20,748 Employee Statutory Adjustment Account The Employee Statutory Adjustment Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year, e.g. annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account. 2024/25 2023/24 £'000 £'000 Balance at 1 April 8,186 8,524 Cancellation of accrual made at the end of the preceding year (8,186) (8,524) Amounts accrued at the end of the current year 9,372 8,186 Balance at 31 March 9,372 8,186 33. Impairment Losses Movements in the value of properties during the year were mainly due to the revaluation of Council Dwellings with various individual operational buildings such as industrial units and shops. Investment properties were also revalued during 2024/25. All losses arising have been assessed as a revaluation loss rather than a loss attributed to deterioration in the anticipated level of the performance of the properties. 76 | Perth and Kinross Annual Accounts 2024/25 Page 89 of 212
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77 | Perth and Kinross Council Annual Accounts 2023/24 34. Grants The Council credited the following grants, contributions and donations to the Comprehensive Income and Expenditure Statement in 2024/25. 2024/25 2023/24 £'000 £'000 Credited to Taxation and Non Specific Grant Income Scottish Government - General Capital Grant 27,564 20,944 Scottish Government - Council Dwellings 9,615 3,679 Scottish Government - Specific Capital Grant 480 3,173 Scottish Government Bodies and Directorates - Perth Transport Futures 0 15,000 Developer Contributions 2,401 1,440 Other Third Party Contributions 2,019 2,193 42,079 46,429 Credited to Services Scottish Government - 1140 hours 0 13,915 Scottish Government - Bertha Park 2,525 2,508 Scottish Government - Riverside Primary 681 681 Scottish Government - Bail Supervision 791 522 Scottish Government - Pupil Equity Funding 1,864 1,874 Scottish Government - Scottish Attainment 748 500 Scottish Government - Community Led Local Development 691 825 Scottish Government - No One Left Behind 1,826 1,343 Scottish Government - Criminal Justice 1,834 1,834 Scottish Government - Other 5,371 8,384 Scottish Government Directorates & Bodies 245 246 Sport Scotland 423 414 Ukraine funding 1,087 500 Department for Levelling Up, Housing and Communities - Shared Prosperity 2,664 2,388 Other Third Party Contributions 820 4,184 21,570 40,118 The Council has received a number of grants, contributions and donations that have yet to be recognised as income as they have conditions attached to them that will require the monies or property to be returned. The balance at the year-end is as follows: 2024/25 2023/24 £'000 £'000 Revenue Grants - Received in Advance Scottish Government 619 566 Other grants and contributions 493 6 Balance at 31 March 1,112 572 77 | Perth and Kinross Annual Accounts 2024/25 Page 90 of 212
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78 | Perth and Kinross Council Annual Accounts 2023/24 35. Capital Expenditure and Capital Financing The total amount of capital expenditure incurred in the year is shown in the table below (including the value of assets acquired under PFI/PPP/DBFM contracts), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Council, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the Council that has yet to be financed. The CFR is analysed below. 2024/25 2023/24 £'000 £'000 Capital Financing Requirements b/fwd 816,351 679,034 Capital Expenditure Property, Plant and Equipment 173,884 167,356 Intangible Assets 3,073 334 Revenue Expenditure funded from Capital 775 3,770 177,732 171,460 994,083 850,494 Sources of Finance Capital Receipts (1,672) (1,983) Government Grants and Contributions (41,019) (46,429) Revenue Contributions (5,135) (4,733) Service concession flexibility 2,914 34,262 Loans Fund Principal Repayments (16,388) (15,260) (61,300) (34,143) Closing Capital Financing Requirement c/fwd 932,783 816,351 Movement 116,432 137,317 Analysed as: Increase in need to borrow 122,375 109,342 Net assets acquired under PPP contract (5,943) 27,975 116,432 137,317 36. Public Finance Initiatives and Similar Contracts The Council has an obligation for 25 years commencing September 2000 in respect of a unitary charge payment to be made for office accommodation and a car park. The unitary charge for 2024/25 for the office accommodation was £2.657 million (2023/24 £2.622 million). The unitary charge for 2024/25 for the car park was £408,000 (2023/24 £405,000). Future agreed payments will increase in line with inflation. The unitary charge payments for 2025/26 for the office accommodation will be £0.979 million and for the car park is £190,000. The contract payments end in September 2025 and the Council has agreed to purchase both Pullar House office accommodation and the car park at that point. The project agreement for provision of the facilities included the transfer of four Council properties to the operator in exchange for reduced annual payments over the life of the agreement. At the end of this project these assets do not revert back to the Council. The Council has an obligation for six school campuses in a Public Private Partnership with Axiom Education (Perth and Kinross) Ltd. North Inch Primary was brought into operation in 2011/12. Breadalbane Campus at Aberfeldy was completed in 2010/11 and the campuses at Blairgowrie, Perth South, Kinross, Crieff and the Roman Catholic School Campus were brought into operation during 2009/10. The Council will make unitary charge payments until the contract ends in 2042, at which time the campuses will be handed back to the Council at no cost. The estimated capital value of the scheme is £127.687 million. The unitary charge for 2024/25 for the campuses operating in the year was £22.404 million (2023/24 £21.646 million). Future agreed payments will increase in line with inflation. The unitary charge payments for 2025/26 for all school campuses will be £23.483 million. During 2019/20 the Council incurred an obligation for Bertha Park High School with the asset and liability recognised in the Annual Accounts. The unitary charge for 2024/25 was £3.311 million (2023/24 £3.260 million). Future agreed payments will increase in line with inflation. The unitary charge for 2025/26 for Bertha Park will be £3.320 million. 78 | Perth and Kinross Annual Accounts 2024/25 Page 91 of 212
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79 | Perth and Kinross Council Annual Accounts 2023/24 With effect from 1 April 2024, IFRS16 Leases applies to service concession arrangements. IFRS16 requires the lease liability to be remeasured whenever there is a change in indexation, or other changes in a rate, which impacts upon future unitary charge payments. Under IAS17 Leases, the additional cost relating to the financing of the asset was expensed as Contingent Rent. Under IFRS16, the net present value of future payments that comprise the liability is recalculated based on the revised level of payments. This has resulted in an increase in Balance Sheet assets of £54.476m at 1 April 2024, and a further increase of £876,000 in 2024/25 in respect of the annual recalculation. The increase in the Balance Sheet assets is met with a corresponding increase in the Balance Sheet liabilities. Movements in Fixed Assets under Public Private Partnerships during the year were: 2024/25 2023/24 £'000 £'000 Net Book Value at 1 April 213,309 214,871 IFRS16 Transition Restatement 54,476 0 IFRS16 Annual Revaluation 876 0 Additions 795 31 Revaluations (56,506) 1,056 Depreciation (6,207) (5,949) Depreciation write back 0 3,300 Net Book Value at 31 March 206,743 213,309 Movements in Public Private Partnership Liabilities during the year were: 2024/25 2023/24 £'000 £'000 Liabilities at 1 April 115,040 121,327 IFRS16 Transition Restatement 54,476 0 IFRS16 Annual Revaluation 876 0 Amounts repaid in year (8,857) (6,287) Liabilities at 31 March 161,535 115,040 Disclosed in the Balance Sheet as: Long Term Liabilities 153,960 108,613 Creditors 7,575 6,427 Liabilities at 31 March 161,535 115,040 Future Public Private Partnership liabilities due to be met: Repayment Interest Service Lifecycle Contingent TOTAL of Liability Charges Maintenance Rentals £'000 £'000 £'000 £'000 £'000 £'000 Due within one year 7,575 7,517 8,908 3,774 39 27,813 Due in 2 to 5 years 26,131 26,840 35,711 19,550 0 108,232 Due in 6 to 10 years 44,263 25,764 50,257 21,903 0 142,187 Due in 11 to 5 years 58,255 14,164 57,335 20,312 0 150,066 Due in 16 to 20 years 25,311 2,288 20,758 9,228 0 57,585 Due in 21 to 25 years 0 0 0 0 0 0 Total 161,535 76,573 172,969 74,767 39 485,883 These figures are based on the actual cash amount estimated to be payable and not on prices at 31 March 2025. The estimates for Service Charges and Lifecycle Maintenance include an assumed 2.5% inflationary uplift in future years. The future inflationary uplift is not applied to the estimates for the Repayment of Liability and Interest costs, IFRS16 requires that these reflect only the actual RPI movement to date. In September 2022, the Scottish Government issued statutory guidance (Local Government Finance Circular 10-2022) which allowed Councils temporary flexibility in accounting for Service Concession Arrangements entered into prior to April 2022. The guidance sets out the accounting requirements and options for recognising the capital repayment element of 79 | Perth and Kinross Annual Accounts 2024/25 Page 92 of 212
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80 | Perth and Kinross Council Annual Accounts 2023/24 these arrangements and permits Councils to undertake internal accounting changes to reprofile the repayment charged to General Fund over an extended period of time. The Service Concession Arrangements for which the revised accounting treatment has been adopted include the Council's PPP arrangement for the six school campuses, and the Design, Build, Finance, Maintain (DBFM) scheme for the Bertha Park Secondary School. The Council has applied the permitted flexibility in financial year 2023/24 on a retrospective annuity basis over 50 years. This approach is consistent with current Council Loans Fund policy and is considered prudent, sustainable, and affordable over the useful life of the asset. The 50 year annuity period replicates the useful asset life of other similar type assets held on the Council’s balance sheet i.e. schools. The current unitary charge repayments to contractors will continue until the end of the PPP and DBFM contracts, however, the use of this flexibility results in a one-off credit to the General Fund and ongoing annual savings for a period of time. At the end of the PPP and DBFM contracts, the unitary charge is no longer paid but reprofiled debt repayments continue to be charged to the General Fund until the debt liability has been extinguished. The calculation of the repayment charges, using the asset life annuity basis, is compared to the current charges which are made over the contract period. By applying the flexibility, a one-off combined pre 2023/24 retrospective saving of £31.186m (as detailed in the table below) were achieved. Comparison of current and revised debt repayments Current Repayment Revised Repayment (Reduction) / Cost £m £m £m Pre 2023/24 44,135 12,949 (31,186) Paid in 2023/24 4,515 1,439 (3,076) Paid in 2024/25 4,419 1,505 (2,914) Payable in 2025/26 4,321 1,574 (2,747) Payable within 2 to 5 years 17,045 7,054 (9,991) Payable within 6 to 10 years 28,841 10,802 (18,039) Payable within 11 to 15 years 38,228 13,527 (24,701) Payable within 16 to 20 years 19,230 16,944 (2,286) Payable within 21 to 25 years 0 21,231 21,231 Payable within 26 to 30 years 0 26,611 26,611 Payable within 31 to 35 years 0 31,522 31,522 Payable within 36 to 40 years 0 8,258 8,258 Payable within 41 to 45years 0 7,318 7,318 160,734 160,734 0 In addition an in-year saving occurs in scheduled debt repayments in 2024/25 of £2.914m (2023/24 £3.076m). This will be followed by a reduction in the annual charges for a further 17 years and then the statutory charges will continue until the end of the reprofiled debt repayment period. Over the full asset lives the total repayment for the debt liability remains the same. The statutory adjustment for 2024-25 has the following impact on the 2024/25 Balance sheet (Capital Adjustment Account) and Movement in Reserves statement: Impact on Balance Sheet and Movement in Reserves Statement 2024/25 2023/24 £m £m Capital Adjustment Account 2.914 34.262 Movement in Reserves Statement (2.914) (34.262) 37. Authorisation of Annual Accounts The unaudited Annual Accounts were authorised for issue by the Chief Finance Officer on 25 June 2025 and the Audited Accounts were authorised for issue on 1 December 2025. Events taking place after this date are not reflected in the financial statements or notes. Where events taking place before this date provided information about conditions existing at 31 March 2025, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information. 38. Contingent Liabilities The Council has made provision for insurance claims where appropriate and has an Insurance Fund to manage insurable risks. There is also a contingent liability in respect of potential insurance claims incurred but not reported which cannot be forecast with any certainty. There is a contingent liability relating to Municipal Mutual Insurance (MMI), who were the insurers for Tayside Regional Council (TRC). Following a Supreme Court judgement in November 2012 a scheme of arrangement has been put in place 80 | Perth and Kinross Annual Accounts 2024/25 Page 93 of 212
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81 | Perth and Kinross Council Annual Accounts 2023/24 where MMI will seek to recover, from the scheme members or successors, 25% (and increase from 15% applied after April 2016) of all claims paid out since 1993 on policies taken out by TRC (less an overall total reduction of £50,000). Perth and Kinross Council is one of the successor bodies of TRC. There is now a risk that the remaining assets of the TRC Insurance Fund will not be sufficient to meet all future liabilities due to the long time horizon for certain types of claims. The Limitation (Childhood Abuse) (Scotland) Act 2017 came into force on 4 October 2017 and removed the time limit on raising civil court actions relating to childhood abuse. The Council has received a small number of claims; however, it is not possible to determine with any certainty whether there is any liability at this time until the claims are fully investigated. In addition, it is not possible to estimate the potential financial effect in respect of future claims the Council may receive due to a number of uncertainties. This includes the number of claims which may arise and the extent of compensation which could arise. Additionally, the extent of re-imbursement which might arise from historic or current insurance policies cannot currently be assessed. The Council may also receive claims in respect of educational provision. The national historic abuse redress scheme launched in 2022. The Council has a number of contracts for the upgrade, redevelopment and acquisition of buildings and infrastructure. Costs relating to compensation for works and for acquisitions are currently being negotiated or refuted. The Council operates services from a number of properties as a tenant. In the future there may be a liability in respect of property costs to reinstate buildings to their original specification and design. The Council has a potential liability in respect of financial guarantees for the Tayside Pension Fund in respect of Scheduled Bodies and Admitted Bodies should they cease to exist, withdraw from the Pension Scheme or otherwise become unable to continue covering any unfunded liabilities. These bodies include Tayside and Central Scotland Transport Partnership, Live Active Leisure Ltd, Perth Theatre and Concert Hall Limited, Perth and Kinross Countryside Trust, Perth and Kinross Society for the Blind, Perth Citizens’ Advice Bureau and Culture Perth and Kinross. In addition, the Council has a potential liability in respect of pensions for the Convention of Scottish Local Authorities (COSLA) should the organisation cease to exist. The Council may also have a liability pertaining to a recent court decision for both itself and a Joint Committee. The UK Government is undertaking a consultation on amendments following this along with other legal cases which will impact on both the liability and the period that it may cover. Following the issue of the Reinforced Autoclaved Aerated Concrete (RAAC) safety alert in 2019, the Council previously carried out a review of existing building condition information which was followed up with non-invasive visual inspections where required. A subsequent inspection identified two sites with RAAC, one of which has been remediated. A RAAC Management Plan is in place for the remaining site and regular inspections are undertaken to monitor the condition of RAAC for any signs of deterioration. No significant changes have been recorded to date. The Council has a robust Building Condition Survey programme in place which comprises a 5-year rolling survey programme and also includes an annual review of survey data to monitor any changes in asset condition. In addition, the council is undertaking survey for defective timber trusses which will be remediated as required. There is a risk that the Council is affected by changes to non-domestic rates legislation. The financial impact of these potential changes is not yet quantifiable. 81 | Perth and Kinross Annual Accounts 2024/25 Page 94 of 212
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82 | Perth and Kinross Council Annual Accounts 2023/24 39. Financial Instruments Accounting regulations require the ‘financial instruments’ (investment, lending and borrowing) of the Council shown on the balance sheet to be further analysed into various defined categories. The investments, lending and borrowing disclosed in the balance sheet are made up of the following categories of ‘financial instruments’. 31 March 31 March 31 March 31 March 31 March 31 March 2025 2024 2025 2024 2025 2024 £'000 £'000 £'000 £'000 £'000 £'000 Financial Liabilities Financial Liabilities at amortised cost Public works Loan Board (PWLB) 619,500 572,000 35,697 15,775 655,197 587,775 Market Loans 64,308 44,330 515 0 64,823 44,330 Short Term Borrowing 0 0 4,369 3,623 4,369 3,623 Creditors 0 0 61,852 69,825 61,852 69,825 Total borrowings 683,808 616,330 102,433 89,223 786,241 705,553 Financial Assets Cash and Equivalents 0 0 24,645 31,183 24,645 31,183 Investment Deposits 0 0 0 36,560 0 36,560 Mortgages / Loans to Others 530 485 185 239 715 724 Debtors 0 58 8,333 14,460 8,333 14,518 Total investments 530 543 33,163 82,442 33,693 82,985 Long-Term Current Total Lender Option Borrower Option (LOBO) borrowings of £44.310 million have been included in long term borrowing as at 31 March 2025 but have a call date in the next 12 months. The above long term figures are based on the 2016 Code which requires that in undertaking Effective Interest Rate (EIR) calculations, the maturity period for a LOBO is taken as being the contractual period to maturity. Financial Instruments Gains / Losses The gains and losses recognised in the Comprehensive Income and Expenditure Account in relation to financial instruments are as follows: Financial Financial Liabilities Assets Liabilities measured at Loans and Total Total amortised cost receivables 2024/25 2023/24 £'000 £'000 £'000 £'000 Interest expense 25,519 0 25,519 22,774 Interest payable and similar charges 25,519 0 25,519 22,774 Interest income 0 (2,551) (2,551) (6,449) Interest and investment income 0 (2,551) (2,551) (6,449) (Gains)/losses on revaluation (22) 20 (2) (21) Surplus arising on revaluation of financial assets (22) 20 (2) (21) Net loss/(gain) for the year 25,497 (2,531) 22,966 16,304 Fair Value of Liabilities Carried at Amortised Cost The fair value of each class of financial assets and liabilities which are carried in the balance sheet as at 31 March 2025 at amortised cost is disclosed below. 82 | Perth and Kinross Annual Accounts 2024/25 Page 95 of 212
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83 | Perth and Kinross Council Annual Accounts 2023/24 Methods and Assumptions in valuation technique: The fair value of an instrument is determined by calculating the Net Present Value (NPV) of future cash flows, which provides an estimate of the value of payments in the future in today’s terms. The discount rate used in the NPV calculation is the rate applicable in the market on the date of valuation for an instrument with the same structure, terms and remaining duration. For debt, this will be the new borrowing rate since premature repayment rates include a margin which represents the lender's profit as a result of rescheduling the loan; this is not included in the fair value calculation since any motivation other than securing a fair price should be ignored. In addition, lenders do not have the ability to force the Council to repay debt early. The rates quoted in this valuation were obtained by the Council’s treasury management consultants from the market on 31 March 2025, using bid prices where applicable. The calculations are made with the following assumptions: For Public Works Loans Board (PWLB) debt, the discount rates used are the rates for new borrowing as per rate sheet number 126/25 on 31 March 2025 (pm). For other market debt and investments, the discount rates used are the rates available for an instrument with the same terms from a comparable lender. Interpolation techniques have been used between available rates where the exact maturity period was not available. No early repayment or impairment is recognised. Fair values have been calculated for all instruments in the portfolio. The fair values are calculated as follows: Carrying Amount Fair Value Carrying amount Fair value £'000 £'000 £'000 £'000 Public Works Loans Board (PWLB) 655,197 379,618 587,775 345,369 Market Loans (including LOBOs) 64,823 54,785 44,330 39,037 Short-term Borrowing 1,648 1,648 1,197 1,197 Other (Special Loans) 2,721 2,721 2,426 2,426 Creditors 61,852 61,852 69,825 69,825 Financial Liabilties 786,241 500,624 705,553 457,854 31 March 2025 31 March 2024 The Fair value is significantly less than the carrying amount because the majority of the Council’s long-term portfolio of loans are fixed rate loans where the interest rate payable is lower than the rates available for similar loans at the balance sheet date. The difference between the carrying amount and the fair value therefore represents the discount the Council would receive from the lender in the event these loans were to be repaid at that date. For comparison, if the Council were to have repaid all the loans to the PWLB on the balance sheet date, a total of £428 million would have been payable after applying the PWLB’s premature redemption rates applicable on that date. This is higher than the Fair Value shown in the table above, as the PWLB premature redemption rates include an additional profit margin over their comparative new borrowing rates. Fair Value of Assets Carried at Amortised Cost Carrying Amount Fair Value Carrying amount Fair value £'000 £'000 £'000 £'000 Cash (including petty cash) 24,645 24,645 31,183 31,183 Deposits with Banks and Building Societies 0 0 36,560 36,560 Mortgages 230 230 192 192 Loans to Others 485 485 532 532 Debtors (Long and short term) 8,333 8,333 14,518 14,518 Financial Assets 33,693 33,693 82,985 82,985 31 March 2025 31 March 2024 83 | Perth and Kinross Annual Accounts 2024/25 Page 96 of 212
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84 | Perth and Kinross Council Annual Accounts 2023/24 Where the fair value is higher than the carrying amount it’s because the Council’s portfolio of investments includes fixed rate deposits where the interest rate receivable is higher than rates available for similar deposits at the balance sheet date. Where the fair value is the same or lower than the carrying value, it’s because the interest receivable is the same or lower than the rates on the balance sheet date, or there is only a very short time left to maturity. For 2024/25, the fair value has been taken as the principal amount outstanding together with accrued interest, given the short-term nature of the instruments. Nature and Extent of Risks Arising from Financial Instruments The Council’s management of treasury risks is intended to minimise the Council’s exposure to the unpredictability of financial markets and to protect the financial resources available to fund services. The Council has fully adopted CIPFA’s Code of Treasury Management Practices and has written principles for overall risk management as well as written policies and procedures covering specific areas such as credit risk, liquidity risk and market risk. (i) Credit Risk Credit risk arises from the short-term lending of surplus funds to banks, building societies, Money Market Funds and other local authorities as well as credit exposures to the Council’s customers. It is the policy of the Council to place deposits only with a limited number of high quality banks, building societies and other financial institutions whose credit rating, together with other market information, is independently assessed as sufficiently secure by the Council’s treasury advisers and to restrict lending to a prudent maximum amount and duration for each institution. The Council’s policy also includes lending to other local authorities in the UK. Under the terms of the Council’s approved Treasury policy, only the highest rated banks and financial institutions are used. Accordingly, the expected credit loss on such deposits is deemed negligible, and no expected credit loss provision has been provided in the Income and Expenditure account for 2024/25 (2023/24 nil) on the grounds of immateriality. Applying historic default rates for the counterparties used by the Council as at 31 March 2025 shows the expected credit loss to be less than 0.02% to 0.05% of the principal sums deposited, whilst the actual historic default experienced by the Council is nil. Further, there is no information to indicate that this position has changed since the balance sheet date. The following analysis summarises the Council’s potential maximum exposure to credit risk, based on past experience and current market conditions. Historical Historical experience Estimated Amounts at 31 experience adjusted for maximum exposure March 2025 of default market conditions to default and as at 31 March 2025 uncollectability £'000 % % £'000 Deposits with banks and other financial institutions 24,182 0 0 0 Loans to Others 715 0 0 0 Customers 8,333 20.9 20.9 1,742 Total 33,230 - - 1,742 The Council’s overall exposure to credit risk in relation to its deposits in banks and other financial institutions of £24.2m above cannot be assessed generally, as the risk of non-payment of the principal sums or interest is specific to each individual institution. Experience indicates that any such non-payment is rare, and there is no evidence that any risk of default existed at 31 March 2025. The repayment profile of these deposits, including loans to others, is shown below: 31 March 31 March 2025 2024 £'000 £'000 Less than three months 24,182 56,752 Three to six months 0 10,403 Total 24,182 67,155 84 | Perth and Kinross Annual Accounts 2024/25 Page 97 of 212
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85 | Perth and Kinross Council Annual Accounts 2023/24 Loans to Others The Council initiates a legal charge on property where, for example, clients require assistance with payment of care fees, but cannot pay immediately until such time as their property is sold. The carrying value of the total amount outstanding as at 31 March 2025 in this category is £485,000 and experience of default is minimal. The Council has granted mortgages for essential property repairs in shared ownership properties as well as secured loans to property owners to bring their properties back into use for affordable rent under the Empty Home Loans Fund (EHLF) scheme. The total amount outstanding as at 31 March 2025 is £230,000 with no experience of default. The total amount of Loans to Others of £715,000 can be analysed as follows: 31 March 31 March 2025 2024 £'000 £'000 Less than three months 81 58 Three to six months 77 58 Six months to one year 145 123 More than one year 412 485 Total 715 724 Debtors The Council does not generally allow credit for customers, such that £5.393m of the £8.333m balance is past its due date for payment. 31 March 31 March 2025 2024 £'000 £'000 Less than three months 1,901 8,492 Three to six months 1,085 421 Six months to one year 884 1,302 More than one year 1,523 1,866 Total 5,393 12,081 (ii) Liquidity Risk The Council has access to borrowings from the money markets to cover day to day cashflow needs, as well as borrowing from the Public Works Loans Board or money markets for longer term funding requirements. As a result, there is no significant risk that the Council will be unable to raise finance to meet its commitments under financial instruments. The Council manages its portfolio in conjunction with interest rate forecasts to reduce the risk of a large proportion of its borrowing maturing at a time of higher interest rates, and so reduce the financial impact of re-financing at an unfavourable time. In addition, the monitoring of interest rate movements for the identification of debt rescheduling opportunities to amend the maturity profile, as well as achieving savings in interest charges, is undertaken on a continuous basis to further mitigate any refinancing risks. 85 | Perth and Kinross Annual Accounts 2024/25 Page 98 of 212
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86 | Perth and Kinross Council Annual Accounts 2023/24 The maturity structure of financial liabilities is as follows (at nominal value): Loans outstanding 31 March 31 March 2025 2024 £'000 £'000 Public Works Loans Board 652,000 585,000 Market debt 63,200 43,200 Temporary borrowing 1,599 1,152 Local bonds 2,711 2,415 Total 719,510 631,767 Less than 1 year 36,810 16,567 Between 1 and 2 years 27,500 5,000 Between 2 and 5 years 87,500 25,000 Between 5 and 10 years 20,000 37,500 Between 10 to 15 years 5,000 5,000 More than 15 years 542,700 542,700 Total 719,510 631,767 In the more than 15 years category there are £43.2 million of LOBO borrowings which have a call date in the next 12 months. (iii) Market Risk Interest rate risk The Council is exposed to interest rate risk in two different ways: the first being the uncertainty of interest paid/received on variable rate instruments and the second being the effect of fluctuations in interest rates on the fair value of an instrument. The current interest rate risk for the council is summarised below: Reductions in interest rates will affect interest earned on variable rate investments, and reduces income credited to the Comprehensive Income and Expenditure Statement. There would only be a small reduction in the interest payable on variable rate borrowing. Increases in interest rates will affect interest paid on variable rate borrowings, and increases the interest expense charged to the Comprehensive Income and Expenditure Statement, but is offset by increased investment returns. The fair value of fixed rate financial assets will fall if interest rates rise. This will not impact the balance sheet for assets held at amortised cost, but will impact the disclosure note for fair value. It would have a negative effect on the balance sheet for any assets held at fair value in the balance sheet, which would also be reflected in the Comprehensive Income and Expenditure Statement. However, no such assets at fair value were held by the Council as at 31 March 2025. The fair value of fixed rate financial liabilities will rise if interest rates fall. This will not impact the balance sheet for liabilities held at amortised cost, but will impact the disclosure note for fair value. The Council has a number of strategies for managing interest rate risk. The policy is to keep a maximum of 35% of its borrowings in variable rate loans. During periods of falling interest rates, and where economic circumstances make it favourable, fixed rate loans may be repaid early to limit exposure to higher costs, whilst fixed deposits may be undertaken for longer periods (within policy and counterparty limits). The treasury management team has an active strategy for assessing interest rate exposure that feeds into the setting of the annual budget and which is used to update the budget throughout the year. This allows any favourable or adverse changes to be accommodated. The analysis will also advise whether new borrowing taken out is fixed or variable. According to this assessment strategy, at 31 March 2025, if interest rates had been 1% higher with all other variables held constant, the financial effect would be: £'000 Increase in interest payable on variable rate borrowings 475 Increase in interest rate receivable on variable rate investments (482) Impact on Comprehensive Income and Expenditure Statement (7) Share of overall impact credited to the HRA (2) The impact of a 1% fall in interest rates would have been an estimated cost of £482,000 to the Council as a result of a reduction in investment income, whilst it would be unlikely that the lenders of the market loans borrowed would pass on the 86 | Perth and Kinross Annual Accounts 2024/25 Page 99 of 212
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87 | Perth and Kinross Council Annual Accounts 2023/24 reduction in rates payable. However, there would be a reduction of £43,000 payable on other loans. Therefore, the net cost of a 1% fall in interest rates would be £439,000 of which £96,000 would be debited to the HRA. Foreign Exchange Risk The Council has no financial assets or liabilities denominated in foreign currencies and thus has no exposure to loss arising from movements in exchange rates. Price Risk The Council does not invest in equities, however, does invest in other tradable instruments but with the intention of holding them until their maturity date. Therefore, the Council does not actively trade in such instruments, and is therefore not exposed to gains or losses on movements in their price. 40. Devolved School Management (DSM) Schools The accumulated balance on the General Fund at 31 March 2025 includes net surplus funds of £527,000 (31 March 2024 £501,000) in respect of schools participating in the Devolved School Management scheme. There are a small number of schools carrying forward deficits of £27,000 with the remaining schools having surpluses of £554,000. These balances are earmarked in 2024/25 for the individual schools concerned. There is Pupil Equity Funding from the Scottish Government of £195,000 (31 March 2024 £116,000) which is being carried forward to 2025/26 for schools within the Council’s earmarked general fund balances. 41. Operating Activities The cash flows for operating activities include the following items: 2024/25 2023/24 £'000 £'000 Interest received (994) (7,191) Interest paid 29,035 28,154 28,041 20,963 42. Investing Activities 2024/25 2023/24 £'000 £'000 Purchase of property, plant and equipment, investment property and intangible assets (170,611) (158,781) Purchase of short-term and long-term investments (6,000) (69,560) Proceeds from the sale of property, plant and equipment, investment property and intangible assets 902 1,840 Proceeds of short-term and long-term investments 42,560 188,339 Other receipts for investing activities 42,079 46,429 (91,070) 8,267 43. Financing Activities 2024/25 2023/24 £'000 £'000 Cash receipts of short and long-term borrowing 162,659 66,065 Cash payments for the reduction of the outstanding liabilities relating to fiannce leases and on balance sheet PFI contracts (8,857) (6,287) Repayments of short and long-term borrowing (73,804) (40,582) 79,998 19,196 87 | Perth and Kinross Annual Accounts 2024/25 Page 100 of 212
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88 | Perth and Kinross Council Annual Accounts 2023/24 44. Cash and Cash Equivalents The balance of cash and cash equivalents is made up of the following elements: 2024/25 2023/24 £'000 £'000 Cash held 25 47 Bank current accounts 438 542 Short-term deposits with banks and building societies 42 9 Short-term deposits with Local Authorities 15,025 29,529 Short-term deposits with other organisations 9,115 1,056 Total cash and cash equivalents 24,645 31,183 45. Trust Funds Perth and Kinross Council administers a number of Charitable Funds of varying sizes. The Income and Expenditure Account and Balance Sheet are detailed on page 98. These funds include Educational Trusts and other trusts which are primarily for the residents of Perth and Kinross. An exercise has been undertaken to reorganise many of the non-educational trusts in order for the funds to be more readily accessible. The Perth and Kinross Educational Trust gives financial assistance towards scholarships, second or subsequent degrees, mature students and further education. Assistance is also provided to schools for sports facilities and special equipment, promoting visual arts and education in music and drama. There are also preferences for certain beneficiaries usually named schools for prizes etc. Also, within the Perth and Kinross Educational Trust there are eight individual endowments for maintaining, furnishing and equipping school buildings. The other charitable trusts purposes include providing financial assistance in different areas of Perth and Kinross. 31 March 31 March 2025 2024 £'000 £'000 Educational Trust - Financial Assistance Net Assets 1,068 1,058 Net Incoming/(Outgoing) Resources before other recognised gains and losses 7 11 Educational Trust - Endowments Net Assets 50 48 Other Charitable Trusts Net Assets 2,663 2,617 Net Incoming Resources before other recognised gains and losses 39 48 Total Net Assets 3,781 3,723 Total Net Incoming Resources before other recognised gains and losses 46 59 Detailed Accounts for the Charities are available from the Chief Finance Officer, 2 High Street, Perth, PH1 5PH by contacting chxfinance@pkc.gov.uk or phoning 01738 475000. 88 | Perth and Kinross Annual Accounts 2024/25 Page 101 of 212
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89 | Perth and Kinross Council Annual Accounts 2023/24 46. The Statutory Loans Fund Loans Fund accounting is governed by The Local Authority (Capital Financing and Accounting) (Scotland) Regulations 2016, which came into force on 1 April 2016, and amended by the Local Authority (Capital Finance and Accounting) (Scotland) Amendment Regulations 2024 (the 2024 Amendment Regulations) which came into force on 1 April 2024. These regulations outline the way the Loans Fund is operated in relation to the repayment period and method that capital advances (capital expenditure funded by borrowing) are repaid (charged) on an annual basis. The Loans Fund is an internal fund operated by the Council to manage the amortisation of capital expenditure (capital advances) over the life of the various assets being funded by borrowing, and also to manage the external borrowing raised to finance the capital expenditure. Whilst both elements of the Loans Fund operate independently of each other, because they are based on the same capital plans, they will broadly be consistent to each other over the long term. However, significant differences may arise over the short-term. This may include, for example, delaying external borrowing due to unfavourable prevailing interest rates, where the Council’s daily cashflow remains positive, or where the Council has significant levels of Reserves. The annuity repayment method is used for all internal capital advances through the Loans Fund. For advances made from 2024/25, the Council has applied a 4.0% annuity rate as an appropriate rate to calculate the annual repayment of the loans fund advances (previously 6.25%). The Council repays (amortises) the capital advances over the life of the asset being funded, up to a maximum of 50 years. The Council also defers the repayment of Loans Fund advances until the asset being funded is completed and operational. Therefore, the total number of years may exceed 50 years from the year the capital expenditure was incurred where the total expenditure on an asset is spread over two or more years before the asset becomes operational. The value of Loans Fund advances outstanding at 31 March 2025 is £789.495 million. This is made up as follows: Advances Debt Repaid Net Advances Advances 1 April 2024 Transferred 2024/25 2024/25 31 March 2025 £'000 £'000 £'000 £'000 £'000 General Fund 474,354 107 (1,668) 97,114 569,907 Prudential Borrowing 46,601 (107) (2,779) 6,990 50,705 Sub Total 520,955 0 (4,447) 104,104 620,612 HRA 146,165 0 (3,084) 25,802 168,883 Total 667,120 0 (7,531) 129,906 789,495 The estimated future repayments of these advances is summarised in the table below: General Fund Prudential Sub Total: HRA Total Borrowing General Fund 31 March 2025 £'000 £'000 £'000 £'000 £'000 Within 1 year 2,711 3,190 5,901 3,025 8,926 Between 1 and 2 years 3,352 3,182 6,534 3,143 9,677 Between 2 and 5 years 11,232 7,907 19,139 10,362 29,501 Between 5 and 10 years 23,287 7,064 30,351 20,518 50,869 Between 10 and 15 years 31,313 4,848 36,161 20,532 56,693 between 15 and 20 years 42,881 4,075 46,956 16,953 63,909 Between 20 and 25 years 58,766 4,359 63,125 16,913 80,038 More than 25 years 396,365 16,080 412,445 77,437 489,882 Total 569,907 50,705 620,612 168,883 789,495 Comparison of the outstanding capital advances above with the Council’s long-term external debt demonstrates that actual capital expenditure funded by borrowing is higher than the actual borrowing undertaken to date by around £74.3 million. This “under-borrowed” position has increased from £38.9 million at the start of the year. This reflects the strategy adopted in recent years of deferring new borrowing whilst rates were at high levels and applying maturing investment balances to meet immediate cashflow requirements. New borrowing would only be undertaken when there were insufficient available balances, or where rates dropped below current forecasts. It should also be noted that the Council has approved a significant borrowing requirement over the next 6 years on its Capital programmes. The Council approved its new Composite Capital Budget to 2030/31 on 26 February 2025 (Report No. 25/37 refers), whilst the Housing and Social Wellbeing Committee approved the HRA Capital Investment Programme to 2029/30 on 22 January 2025 (Report No. 25/9 refers). The last report to the Finance and Resources Committee on 30 April 2025 (Report No. 25/100 refers) approved adjustments to these Programmes. 89 | Perth and Kinross Annual Accounts 2024/25 Page 102 of 212
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90 | Perth and Kinross Council Annual Accounts 2023/24 The latest approved General Fund (Composite) Capital Budget and Housing Investment Programme includes the amount of capital expenditure to be funded by borrowing (i.e. new Loans Fund advances) in each of the next 6 years as follows: General Housing Total Fund Investment Programme £'000 £'000 £'000 2025/26 132,216 26,615 158,831 2026/27 103,393 12,865 116,258 2027/28 67,055 12,652 79,707 2028/29 48,178 10,063 58,241 2029/30 30,302 17,659 47,961 2030/31 27,966 0 27,966 Total 409,110 79,854 488,964 All the above Loans Fund repayments have been included in the Loan Charge estimates within the approved Medium-Term Financial Plan and therefore remain affordable under the current Loan Charge Budget strategy. This also includes estimates of new borrowing for the years beyond 2030/31. 90 | Perth and Kinross Annual Accounts 2024/25 Page 103 of 212
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2023/24 £'000 £'000 £'000 £'000 Income (31,128) Dwelling Rents (33,613) 574 less Voids 519 (33,094) (596) Non-Dwelling Rents (619) 42 less Voids 38 (581) (2,399) Other Income (1,762) (33,507) Total Income (35,437) Expenditure 7,640 Repairs and Maintenance 8,878 16,135 Supervision and Management 16,174 19,263 Depreciation, impairment and revaluation losses on non current assets 12,831 3 Movement in the Impairment of Debtors 77 448 Other expenditure 279 43,489 Total Expenditure 38,239 9,982 Net Expenditure for HRA Services as included in the Comprehensive Income and Expenditure Statement 2,802 305 HRA services' share of Corporate and Democratic Core 269 10,287 Net Expenditure for HRA Services 3,071 HRA share of the operating income and expenditure included in the Comprehensive Income and Expenditure Statement: (3) (Gain) / Loss on sale of HRA Non-Current Assets (39) 3,756 Interest payable and similar charges 4,998 (284) Interest and investment income (247) (68) Net Interest on the net defined benefit liability (167) (3,787) Capital Grants and Contributions Receivable (10,365) 9,901 Deficit/(surplus) for the year on HRA services (2,749) HOUSING REVENUE ACCOUNT INCOME AND EXPENDITURE STATEMENT 2024/25 The Housing Revenue Account (HRA) Income and Expenditure Statement shows the economic cost in the year of providing housing services in accordance with generally accepted accounting practices, rather than the amount to be funded from rents and government grants. Councils charge rents to cover expenditure in accordance with the legislative framework which may be different from the accounting cost. The increase or decrease in the year, on the basis on which rents are raised, is shown in the Statement of Movements on the Housing Revenue Account Balance. 91 | Perth and Kinross Annual Accounts 2024/25 Page 104 of 212
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2023/24 £'000 £'000 £'000 (2,647) Balance on the HRA at the end of the Previous Year (2,260) 9,901 Deficit/(Surplus) for the year on the HRA Income and Expenditure Account (2,749) (7,157) Adjustments to Usable reserves permitted by Statute 1,975 (2,357) 776 387 Net Decrease before Transfers to or from Reserves 2 0 Transfer from Reserves 0 387 Movement in Year on the HRA 2 (2,260) Balance on the HRA at the end of the Current Year (2,258) Note to the Statement of Movement on the HRA Balance 2023/24 £'000 £'000 £'000 3 Gain on sale of HRA Non-current assets 39 (14,316) Depreciation and impairment of non current assets (14,194) (2,590) Revaluation Loss/(gain) 587 Capital Grants and Contributions credited to the Comprehensive Income and Expenditure 3,787 Statement 10,365 28 Adjustments involving Short Term Accumulated Absences Account (37) Reversal of items relating to retirement benefits credited to the Comprehensive Income (1,478) and Expenditure Statement (1,544) (14,566) (4,784) 1,479 1,707 year 147 Adjustments involving the Financial Instruments Adjustment Account 136 3,448 Statutory provision for the repayment of debt 3,083 2,335 Capital expenditure charged to the HRA balances 1,833 7,409 6,759 (7,157) 1,975 STATEMENT OF MOVEMENTS ON THE HOUSING REVENUE ACCOUNT BALANCE Net additional amount required by statute to be (credited)/debited to the HRA Balance for the year Employer's pension contributions and direct payments to pensioners payable in the Adjustments between Accounting Basis and Funding Basis Under Statute Items included in the HRA Income and Expenditure Account but excluded from the movement on HRA Balance for the year Items not included in the HRA Income and Expenditure Account but included in the movement on HRA Balance for the year 2024/25 2024/25 The Statement of Movement on the Housing Revenue Account balance reconciles the Housing Revenue Account to the HRA balance, an earmarked element of the Council’s General Fund Balance. 92 | Perth and Kinross Annual Accounts 2024/25 Page 105 of 212
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THE ACCOMPANYING NOTES TO THE HOUSING REVENUE ACCOUNT INCOME AND EXPENDITURE STATEMENT 1. Housing Stock at 31 March 2025 No. of Dwellings No. of Dwellings 31 March 2025 31 March 2024 Sheltered accommodation 284 285 Detached/Semi-Detached/Terraced 3,965 3,865 High Rise Flats 152 146 Tenement Flats/Other Flats/Maisonettes 3,825 3,757 Total 8,226 8,053 2. Rent Arrears at 31 March 2025 Gross Arrears Gross Arrears 31 March 2025 31 March 2024 £'000 % of Income £'000 % of Income Houses 3,281 9.8 2,994 9.6 Other Subjects 73 11.8 56 9.4 Totals 3,354 9.8 3,050 9.6 3. Impairment of Debtors impairment in 2023/24. In 2024/25 an impairment of £1.923 million has been provided in the Balance Sheet, an increase of £78,000 from the 93 | Perth and Kinross Annual Accounts 2024/25 Page 106 of 212
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2023/24 2024/25 £'000 £'000 £'000 119,476 Gross Charge 120,432 (3,903) Deduct - Exemptions (3,716) (195) Disabled Relief (204) (8,788) Discounts and Reductions (6,763) (7,431) Council Tax Reduction Scheme (7,590) 99,159 Net Council Tax 102,159 Deduct - (7) Ministry of Defence Properties 7 7 Contribution Received (7) 0 (1,607) Provision for Bad and Doubtful Debts (1,765) 97,552 Total Council Tax Income 100,394 (204) Adjustments for prior years for Council Tax (15) 97,348 Total Council Tax Income to Comprehensive Income and Expenditure Statement 100,379 COUNCIL TAX INCOME ACCOUNT The Council Tax Income Account shows the gross income raised from Council Taxes levied and deductions made under statute. The resultant net income is transferred to the Comprehensive Income and Expenditure Statement of the Council. 94 | Perth and Kinross Annual Accounts 2024/25 Page 107 of 212
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THE ACCOMPANYING NOTES TO THE COUNCIL TAX INCOME ACCOUNT 1. CALCULATION OF THE COUNCIL TAX BASE AT 31 MARCH 2025 2024/25 2023/24 A B C D E F G H TOTAL TOTAL No. of Properties 8,731 15,058 13,084 11,955 12,344 8,414 6,800 714 77,100 76,618 Exemptions (708) (671) (514) (308) (274) (128) (93) (24) (2,720) (2,861) Disabled Relief 74 34 3 33 (41) (11) (89) (3) 0 0 Discounts (1,388) (1,929) (1,407) (1,080) (851) (444) (272) (29) (7,400) (7,954) Effective No. of Properties 6,709 12,492 11,166 10,600 11,178 7,831 6,346 658 66,980 65,803 Ratio 240/360 280/360 320/360 360/360 473/360 585/360 705/360 882/360 Band D Equivalents 4,469 9,716 9,925 10,600 14,687 12,725 12,428 1,612 76,162 74,712 Contributions in lieu 7 7 TOTAL 76,169 74,719 Provision for non-payment at 1.75% (2% in 2023/24) (1,333) (1,494) COUNCIL TAX BASE 74,836 73,225 2. THE COUNCIL TAX CHARGE Fraction 2024/25 2023/24 Valuation of Actual Actual Band band D Charge Charge A 240/360 £935.79 £935.79 B 280/360 £1,091.75 £1,091.75 C 320/360 £1,247.72 £1,247.72 D 360/360 £1,403.69 £1,403.69 E 473/360 £1,844.29 £1,844.29 F 585/360 £2,280.99 £2,280.99 G 705/360 £2,748.89 £2,748.89 H 882/360 £3,439.04 £3,439.04 Range The valuation bands, the fractions used in calculating the Council Tax payable for each valuation band and the actual charges determined for 2024/25 are set out below: Each property is placed in one of eight valuation bands (A-H) in accordance with their value as at 1 April 1991. The Council Tax charge levied for each property is calculated in proportion to the Council Tax charge for a band D property by applying fractions. A discount of 25% is given where there is only one adult resident in a property or where all others are disregarded for Council Tax purposes; those disregarded include persons in detention, students, and those with a severe metal impairment. Where a dwelling is occupied only by disregarded persons a full exemption may apply. A 200% charge is payable on long term empty dwellings and most second homes. Second homes that are job- related or purpose-built holiday homes can receive a 50% discount. Reductions in Council Tax are also granted for dwellings adapted to meet the needs of persons with a disability. The Council Tax is based on the value of a domestic property together with a personal element which takes into account the number and circumstances of that property's occupants. Property Valuation Over £212,000 £0 - £27,000 £27,001 - £35,000 £45,001 - £58,000 £35,001 - £45,000 £106,001 - £212,000 £80,001 - £106,000 £58,001 - £80,000 95 | Perth and Kinross Annual Accounts 2024/25 Page 108 of 212
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2023/24 £'000 £'000 £'000 87,269 Gross Rate Levied 90,104 1,464 Discretionary Relief funded by the Council 738 (2,735) Transitional Relief (1,218) 89,624 Deduct: (2,889) Rate Rebates (3,138) 0 Interest on Overpaid Rates (10) (18,936) Reliefs, Charities etc. (19,446) (436) Provision for Bad and Doubtful Debts (369) (22,963) Adjustments to Previous Years: (594) Gross Rate Levied (1,319) 10 Transitional Surcharge/Relief 56 (204) Reliefs, Charities etc. (1,002) (571) Impairment for Bad and Doubtful Debts and Abatements (156) (2,421) 62,378 Net Non-Domestic Rate Income- 64,240 (62,378) Contribution to National Non-Domestic Rate Pool (64,240) 60,754 Contribution from National Non-Domestic Rate Pool 64,717 (1,624) Net contribution (to) / from National Non-Domestic Rate Pool 477 60,754 Total Non-Domestic Rate Income to Comprehensive Income 64,717 and Expenditure Statement 2024/25 NON-DOMESTIC RATE INCOME ACCOUNT The Non-Domestic Rate Account is an agent's statement that reflects the statutory obligation for billing authorities to maintain a separate Non-Domestic Rate Account. The statement shows the gross income from the rates and deductions made under statute. The net income is paid to the Scottish Government as a contribution to the national Non-Domestic Rate pool. 96 | Perth and Kinross Annual Accounts 2024/25 Page 109 of 212
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THE ACCOMPANYING NOTES TO THE NON-DOMESTIC RATE INCOME ACCOUNT 1. NON-DOMESTIC RATES 2. RATEABLE SUBJECTS AND VALUES Rateable Rateable No. of Value No. of Value Subjects £'000 Subjects £'000 at 1 April 2023 at 1 April 2023 at 1 April 2024 at 1 April 2024 1,695 34,527 Shops 1,689 34,446 79 1,656 Public Houses 78 1,645 1,056 13,487 Offices (including banks) 1,043 13,401 212 14,744 Hotels etc. 204 14,672 1,769 26,017 Industrial Subjects etc. 1,781 26,142 1,934 14,189 Leisure, Entertainment, Caravans etc. 1,824 13,876 151 5,147 Garages and Petrol Stations 150 5,007 59 1,471 Cultural 59 1,471 1,401 3,373 Sporting Subjects 1,405 3,256 120 16,452 Education and Training 119 16,697 420 8,811 Public Service Subjects 421 8,677 1 0 Communications 1 0 23 536 Quarries, Mines etc. 23 535 2 4,165 Petrochemical 2 4,165 237 1,906 Religious 238 1,914 117 6,343 Health, Medical 114 6,296 745 2,309 Other 750 2,363 62 3,580 Care Facilities 60 3,556 29 95 Advertising 28 89 94 12,677 Undertaking 96 12,883 10,206 171,485 Total 10,085 171,091 Non-Domestic Rates Income is set and pooled nationally but generated and collected locally by Scottish Local Authorities. It is distributed back to those local authorities through a distribution formula agreed with COSLA as part of the local government finance settlement, therefore it bears no direct relationship to the amounts collected by those authorities. The rate poundage set by the Scottish Government for 2024/25 was 49.8p (unchanged from 2023/24). The Small Business Bonus Scheme, introduced from 1 April 2008, provides relief to businesses based on their combined rateable value. Significant changes were made from 1 April 2023; the combined rateable value threshold remained at £35,000 with relief now available on all individual properties with a rateable value of £20,000 or less. Subject to eligibility, this provides 100% relief where the rateable value is £12,000 or less and a tapered award where the rateable value is greater than £12,000. Awards totalling almost £9.7 million were provided to businesses within the Perth and Kinross area in 2024/25. A supplement of 4.7p was charged on properties with a rateable value of between £51,001 and £100,000 and a supplement of 6.1p was charged on properties with a rateable value exceeding £100,000 to contribute towards the additional cost of the Small Business Bonus scheme. (1.3p and 2.6p respectively in 2023/24). 97 | Perth and Kinross Annual Accounts 2024/25 Page 110 of 212
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98 | Perth and Kinross Council Annual Accounts 2023/24 Charitable Trusts The Council administers Perth and Kinross Educational Trust and various other Charitable Trusts and Endowments. The figures below summarise the aggregate income and expenditure for the year and the assets and liabilities at 31 March 2025. 2024/25 2024/25 2023/24 £'000 £'000 £'000 Incoming Resources Income resources from generated funds: Income from donations and legacies 96 0 Investment income 158 163 Total Incoming Resources 254 163 Resources Expended Costs of generating funds: Investment management costs 17 16 Charitable activities 159 75 Governance costs 12 13 Reorganisation of trusts 20 0 Total Resources Expended 208 104 46 59 Other Recognised Gains: Gain/(losses) on Investment Assets 12 203 Net Movement in Funds for the Year 58 262 Reconciliation of Funds Total Funds Brought Forward 3,723 3,461 Total Funds Carried Forward 3,781 3,723 INCOME AND EXPENDITURE ACCOUNT FOR YEAR TO 31 MARCH 2025 Net Incoming Resources before other Recognised Gains and Losses 2024/25 2024/25 2023/24 £'000 £'000 £'000 Fixed Assets Tangible Assets 80 80 Investments 3,210 3,271 3,290 3,351 Current Assets Debtors 26 7 Investments - Amounts due by Perth and Kinross Council Loans Fund 474 374 500 381 Liabilities Creditors: amounts falling due within one year (9) (9) Net Current Assets 491 372 Net Assets 3,781 3,723 Total Funds 3,781 3,723 BALANCE SHEET AS AT 31 MARCH 2025 Notes to Charitable Trusts 1. The market value of Investments at 31 March 2025 was £3.210 million (31 March 2024 £3.271 million). 2. The unaudited accounts were issued on 25 June 2025 and the audited accounts were issued on 1 December 2025. Scott Walker CPFA Chief Finance Officer Date: 98 | Perth and Kinross Annual Accounts 2024/25 Page 111 of 212
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99 | Perth and Kinross Council Annual Accounts 2023/24 Common Good The Council administers the Common Good Accounts for ten former burghs within Perth and Kinross. The figures below summarise the aggregate income and expenditure for the year and detail the Assets and Liabilities at 31 March 2025. 2024/25 2024/25 2023/24 £'000 £'000 £'000 Expenditure Grants to Voluntary Organisations 161 167 Christmas Lighting 39 100 Property Costs 60 5 Supplies and Services 15 17 275 289 Income Rents, Fees, Charges etc. 285 279 Interest on Loans 130 114 Other 15 8 430 401 Operating Surplus for the Year 155 112 Surplus Brought Forward 2,370 2,258 Accumulated Surplus at 31 March 2,525 2,370 INCOME AND EXPENDITURE STATEMENT FOR YEAR TO 31 MARCH 2025 2024/25 2024/25 2023/24 £'000 £'000 £'000 Fixed Assets Property, Plant and Equipment 5,363 5,315 Right of Use Asset 20 0 Current Assets Debtors 22 16 Investments 2,693 2,340 Cash and Cash Equivalents 168 410 2,883 2,766 Current Liabilities Creditors and Accruals (78) (106) Net Current Assets / (Liabilities) 2,805 2,660 Long Term Liability - Right of Use (10) 0 Total Net Assets 8,178 7,975 Reserves Revenue 2,525 2,370 Capital 477 477 Revaluation Reserve 5,176 5,128 8,178 7,975 BALANCE SHEET AS AT 31 MARCH 2025 The unaudited accounts were issued on 25 June 2025 and the audited accounts were issued on 1 December 2025. Scott Walker CPFA Chief Finance Officer Date: 99 | Perth and Kinross Annual Accounts 2024/25 Page 112 of 212
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100 | Perth and Kinross Council Annual Accounts 2023/24 The Accompanying Notes to the Common Good Accounts 1. The use of common good assets is accounted for on a risk and rewards based approach. The Council General Fund or Housing Revenue Account will meet the day-to-day operating costs of the property, and any repairs or improvement works required to the property, in return for the use of the common good asset for the delivery of Council services. No rent for the use of the property is payable to the Common Good Fund on the basis that the Fund benefits from the Council expenditure incurred in maintaining and upgrading the sites. No expenditure is charged to the Common Good Fund for the Council expertise in managing the assets. In respect of common good sites that are leased out to a party external to the Council, the tenant will bear the responsibility for the upkeep of the property. The Common Good Fund is, therefore, credited with the annual rental income arising from the lease agreement. 2. Depreciation Depreciation on Common Good Funds is charged on buildings, based on current value less residual value over the remaining useful life of the property. The buildings have a life expectancy of over 50 years and depreciation has been charged on a straight line basis over that period. 3. Common Good Reserve Funds Surplus / Balance at (Deficit) Balance at 1 April 2024 2024/25 31 March 2025 Fund: £'000 £'000 £'000 Perth City 1,709 111 1,820 Aberfeldy 128 4 132 Abernethy 1 2 3 Alyth 20 2 22 Auchterarder 302 25 327 Blairgowrie 20 2 22 Crieff 15 1 16 Kinross 166 5 171 Pitlochry 9 3 12 Total 2,370 155 2,525 Coupar Angus Common Good Fund has a nil balance for both years. 4. Common Good Fixed Assets The Community Empowerment (Scotland) Act 2015 requires the Council to establish and maintain a list of property which is held as part of the Common Good. The review of property titles to facilitate the publication of the list has been completed, and following a period of public consultation, the findings are now available on the Common Good Land Register page of the Perth and Kinross Council website . The review of moveable Common Good property has continued in 2024/25 and is expected to complete in 2025/26. 5. Right of Use Assets The Council has applied IFRS16 Leases with effect from 1 April 2024. This means that the Perth site leased in for the storage of Christmas lighting is now considered a Right of Use asset, and results in a Balance Sheet asset in respect of the site with a corresponding liability for the remaining lease payments. The Right of Use asset and liability are brought onto the Balance Sheet at 1 April 2024 and there are no retrospective adjustments. The opening balance of the asset and liability is £29,000, the principal repaid during the year is £9,000, and the liability at 31 March 2025 is £20,000. The PWLB rate used for the calculation of the liability at 1 April 2024 is 5.24%, and the Interest expense charged to the Income and Expenditure Statement during the year is £1,500. 100 | Perth and Kinross Annual Accounts 2024/25 Page 113 of 212
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Restated Restated Authority's Authority's General Housing Capital Insurance Capital Capital Total Unusable TOTAL share of share of TOTAL Fund Revenue Fund Fund Receipts Grants Usable Reserves Authority subsidiaries associates Reserves Balance Account Reserve Unapplied Reserves Reserves and managed and joint funds ventures £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2023 (69,723) (2,647) (26,343) (1,306) (2,245) (87) (102,351) (764,851) (867,202) (30,545) (8,734) (906,481) Movement in reserves during 2023/24 Total Comprehensive Income and Expenditure 41,392 9,901 0 0 0 0 51,293 (23,807) 27,486 969 3,293 31,748 Adjustments to Usable Reserves permitted by accounting standards (6,454) (2,357) 0 0 0 0 (8,811) 8,811 0 0 0 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (19,833) (7,157) 0 0 143 0 (26,847) 26,847 0 0 0 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (34,262) 0 0 0 0 0 (34,262) 34,262 0 0 0 0 (Increase)/Decrease in 2023/24 (19,157) 387 0 0 143 0 (18,627) 46,113 27,486 969 3,293 31,748 Transfers to/(from) Other Statutory Reserves 5,086 0 (4,683) (403) 0 0 0 0 0 0 0 0 Balance at 31 March 2024 carried forward (83,794) (2,260) (31,026) (1,709) (2,102) (87) (120,978) (718,738) (839,716) (29,576) (5,441) (874,733) Movement in reserves during 2024/25 Adjustment on transition to new accounting arrangements for leases 0 0 0 0 0 0 0 0 0 0 (4,195) (4,195) (83,794) (2,260) (31,026) (1,709) (2,102) (87) (120,978) (718,738) (839,716) (29,576) (9,635) (878,927) Total Comprehensive Income and Expenditure 28,909 (2,749) 0 0 0 0 26,160 83,859 110,019 3,757 (3,097) 110,679 Adjustments to Usable Reserves permitted by accounting standards (6,187) 776 0 0 0 0 (5,411) 5,411 0 0 0 0 Adjustments from income and expenditure charged under the accounting basis to the funding basis (9,178) 1,975 0 0 770 (1,060) (7,493) 7,493 0 0 0 0 Adjustment to the statutory repayment of debt for service concession arrangements - permitted flexibility (2,914) 0 0 0 0 0 (2,914) 2,914 0 0 0 0 (Increase) or Decrease in 2024/25 10,630 2 0 0 770 (1,060) 10,342 99,677 110,019 3,757 (3,097) 110,679 Transfers to/(from) Other Statutory Reserves 4,880 0 (5,966) 1,086 0 0 0 0 0 0 0 0 Balance at 31 March 2025 carried forward (68,284) (2,258) (36,992) (623) (1,332) (1,147) (110,636) (619,061) (729,697) (25,819) (8,538) (768,248) GROUP MOVEMENT IN RESERVES STATEMENT 101 | Perth and Kinross Annual Accounts 2024/25 Page 114 of 212
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Restated 2023/24 Net Note Gross Income Net Expenditure Expenditure Expenditure £'000 £'000 £'000 £'000 SERVICES 162,092 Education and Learning 173,520 (5,546) 167,974 87,926 Health and Social Care 218,171 (120,943) 97,228 25,186 Children, Families and Justice 29,903 (5,896) 24,007 35,340 Economy, Development and Planning 49,869 (20,666) 29,203 55,311 Environment and Infrastructure 55,798 (5,924) 49,874 15,594 Housing and Communities 31,299 (12,273) 19,026 63,503 Property Services 85,064 (6,098) 78,966 4,619 Legal and Governance 5,637 (1,078) 4,559 16,093 Customer and Digital Services 36,545 (19,359) 17,186 5,770 Strategic Planning, People and Performance 6,304 (799) 5,505 248 Projects and Programmes 283 0 283 7,697 Finance and Business Support 10,980 (2,691) 8,289 3,434 Directorate Core Costs 1,327 0 1,327 9,982 Housing Revenue Account 38,239 (35,437) 2,802 1,436 Valuation Joint Board 1,434 0 1,434 104 Charitable Trusts 208 (96) 112 2 Common Good 275 (300) (25) 494,337 COST OF SERVICES 744,856 (237,106) 507,750 (944) Other Operating Expenditure / Income 0 (106) (106) 18,103 Financing and Investment Income and Expendtiure 4 25,067 (6,235) 18,832 (459,512) Taxation and Non-Specific Grant Income 0 (498,321) (498,321) 51,984 Deficit on Provision of Services 769,923 (741,768) 28,155 3,931 Share of the (Surplus)/Deficit on the provision of services by Associates and Joint Ventures 2,473 55,915 Group Deficit 30,628 (23,936) (Surplus)/Deficit on revaluation of non current assets 83,470 632 Remeasurement of the net defined benefit liability 1,002 (225) Other gains and losses 1,148 (638) Share of the other comprehensive income and expenditure of Associates and Joint Ventures (5,569) (24,167) Other Comprehensive Income and Expenditure 80,051 31,748 Total Comprehensive Income and Expenditure 110,679 2024/25 GROUP COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT 102 | Perth and Kinross Annual Accounts 2024/25 Page 115 of 212
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31 March 2024 Notes 31 March 2025 £'000 £'000 1,527,977 Property, Plant and Equipment 1,593,666 51,814 Heritage Assets 52,099 14,715 Investment Property 16,184 348 Intangible Assets 2,189 7,463 Long Term Investments 5 4,298 5,441 Investment in Joint Venture 12,732 543 Long Term Debtors 530 1,608,301 Long Term Assets 1,681,698 38,900 Short Term Investments 5 2,693 676 Assets Held for Sale 875 751 Inventories 747 54,795 Short Term Debtors 6 51,617 36,456 Cash and Cash Equivalents 31,259 131,578 Current Assets 87,191 Cash and Cash Equivalents (19,398) Short Term Borrowing (40,581) (94,817) Short Term Creditors 7 (98,660) (1,668) Provisions (2,814) (115,883) Current Liabilities (142,055) (3,564) Provisions (1,951) (616,330) Long Term Borrowing (683,808) 0 Liabilities in associates and joint ventures 0 (129,369) Other Long Term Liabilities (172,827) (749,263) Long Term Liabilities (858,586) 874,733 NET ASSETS 768,248 120,978 Usable Reserves 110,636 718,738 Unusable Reserves 619,061 23,319 Group Reserves 26,592 11,698 Charitable and Common Good Reserves 11,959 874,733 TOTAL RESERVES 768,248 The accompanying notes form an integral part of these financial statements. Scott Walker CPFA Chief Finance Officer Date: GROUP BALANCE SHEET The Unaudited Annual Accounts were issued on 25 June 2025 and the audited Annual Accounts were issued on 1 December 2025. 103 | Perth and Kinross Annual Accounts 2024/25 Page 116 of 212
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2023/24 Notes 2024/25 £'000 £'000 (51,984) Deficit on the provision of services (28,155) 86,989 Adjustments to net surplus or deficit on the provision of services for non cash movements 72,585 (49,490) Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities (43,242) (14,485) Net cash flows from Operating Activities 1,188 4,228 Investing Activities 10 (86,402) 19,196 Financing Activities 11 80,017 8,939 Net increase/(decrease) in cash and cash equivalents (5,197) 27,517 Cash and cash equivalents at the beginning of the reporting period 36,456 36,456 Cash and cash equivalents at the end of the reporting period 31,259 GROUP CASH FLOW STATEMENT 104 | Perth and Kinross Annual Accounts 2024/25 Page 117 of 212
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2023/24 2024/25 £'000 £'000 51,293 Deficit on the single entity Comprehensive Income and Expenditure Statement 26,160 for the year Add: (374) ● Managed Funds - Charitable Trusts and Common Good (213) 4,270 ● Joint Venture 2,373 (339) ● Associates 100 1,065 ● Subsidiaries 2,208 55,915 Deficit for the year on the Group Comprehensive Income and Expenditure Statement 30,628 RECONCILIATION OF THE SINGLE ENTITY DEFICIT FOR THE YEAR TO THE GROUP DEFICIT 105 | Perth and Kinross Annual Accounts 2024/25 Page 118 of 212
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106 | Perth and Kinross Council Annual Accounts 2023/24 Notes to the Group Accounts 1. Combining Entities The results of Tayside Valuation Joint Board which is jointly administered with Dundee City and Angus Councils have been included in the Group Accounts. The Council is exempt from including the Board as a subsidiary as the Scottish Government exercises a dominant influence on the Board evidenced particularly by its ability to reconstitute or abolish statutory bodies or otherwise influence their operating and financial policies. A number of Councillors have voting rights on the Board. The Council has an obligation to contribute to the Joint Board losses or deficits and the ability to exercise significant influence over it. The Joint Board has therefore been incorporated in the Group Accounts under the equity method of Accounting for Associates. For the purpose of consolidation and incorporation within the Group Accounts recognition has been made of the Council’s interest which is based on its share of the contributions made to the Tayside Valuation Joint Board, which in 2024/25 was 42.46% (2023/24 46.2%). The accounting period for the Board is the year to 31 March 2025 and the Board Statements of Accounts presents fairly its individual financial position. The individual accounts relating to Tayside Valuation Joint Board are published separately and can be obtained from the Director of Corporate Services, Dundee City Council, Dundee House, 50 North Lindsay Street, Dundee, DD1 1QE. In addition, the Council has also included Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. as subsidiaries within its Group Accounts in accordance with IAS 27 Consolidated and Separate Financial Statements, and in particular SIC 12 Consolidation – Special Purpose Entities. These organisations deliver services on behalf of the Council, and the Council therefore obtains benefit from their operations. In addition, service delivery is managed through Service Level Agreements specific to the service provision required from the organisations by the Council. Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. are governed by company and charitable trust regulation. For the purpose of consolidation and incorporation within the Group Accounts it has been assumed that the Council’s interest in these organisations is 100% due to the nature of Council control and direction over their operations. Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. are arm’s length companies with sole member status with the Council being the sole member in each company. The individual accounts relating to these organisations are published separately, and can be obtained from the following addresses:- Live Active Leisure Ltd. Caledonia House, Hay Street, Perth, PH1 5HS Perth Theatre and Concert Hall Ltd. Perth Concert Hall, Mill Street, Perth, PH1 5HZ Culture Perth and Kinross Ltd. A K Bell Library, 2-8 York Place, Perth, PH2 8EP The income, expenditure, assets and liabilities of the Charitable Trusts which are administered and controlled by the Council have also been included as a managed fund. The nature of the assets of the managed fund are heritable property, investments and debtors. The assets are not the property of Perth and Kinross Council and are subject to charitable trust regulations. The Income and Expenditure Account of the Charitable Trusts is detailed on page 98 of the Annual Accounts. The income, expenditure, assets and liabilities of the Common Good Accounts which are administered and controlled by the Council have also been included as a managed fund. The nature of the assets of the managed fund are heritable property, investments and debtors. The assets are the property of Perth and Kinross Council and are subject to the Accounting Code of Practice. The Income and Expenditure Account of the Common Good is detailed on page 99 of the Annual Accounts. Perth and Kinross Council’s share of the assets and liabilities of Tayside Contracts Joint Committee, which is jointly administered and controlled with Dundee City Council and Angus Council, has been included in the Group Accounts using the equity method for an associate due to the Council having significant influence rather than joint control over the entity. The Council’s investment in Tayside Contracts for 2024/25 is 41% (2023/24 40%). Copies of Tayside Contracts Joint Committee’s individual accounts are published separately, and can be obtained from Tayside Contracts, 1 Soutar Street, Dundee, DD3 8SS. Perth and Kinross Integration Joint Board (IJB) is the statutory body established to integrate health and social care services between the Council and NHS Tayside. The IJB Board consists of eight voting members, four of whom are Perth and Kinross councillors. The Council can therefore exercise joint control over the arrangement and the IJB has been consolidated into the Council Group accounts as a joint venture using the equity method and a percentage share of 50%. Copies of the Perth and Kinross Integration Joint Board individual accounts are published separately and can be obtained from the Chief Financial Officer, Perth and Kinross Integration Joint Board, 2 High Street, Perth, PH1 5PH. Tayside and Central Scotland Transport Partnership (TACTRAN) is a statutory body established under the Transport (Scotland) Act 2005. The partnership covers Angus, Dundee City, Perth and Kinross and Stirling Council areas. The results of TACTRAN have been excluded from Perth and Kinross Council’s Group accounts on the grounds of materiality. 106 | Perth and Kinross Annual Accounts 2024/25 Page 119 of 212
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107 | Perth and Kinross Council Annual Accounts 2023/24 2. Nature of Combination The Council inherited its interest in the Tayside Valuation Joint Board following the reorganisation of local government in 1996. It is considered that the Council’s interest was obtained on an acquisition basis. However, as no consideration was given, no goodwill requires to be accounted for. 3. Financial Impact of Consolidation and Going Concern The effect of inclusion of the Subsidiaries and Associates listed above in the Group Balance Sheet is to increase both reserves and net assets by £38.551 million (2023/24 £35.017 million increase). All Subsidiaries and the Associate have prepared their accounts on a ‘going concern’ basis. The Council’s Group Accounts have been prepared on a ‘going concern’ basis as there is no reason to suggest that future funding will not continue. Apart from the disclosures made in the Notes to the Group Accounts there were no material amounts or details in relation to associates or managed funds. 4. Group Comprehensive Income and Expenditure Statement – Financing and Investment Income and Expenditure 2024/25 2023/24 £'000 £'000 Council Financing and Investment Income and Expenditure 19,430 18,809 Subsidiaries (298) (226) Charitable Trusts (170) (366) Common Good (130) (114) Total Group CIES Financing and Investment Income and Expenditure 18,832 18,103 5. Group Balance Sheet – Investments 2024/25 2023/24 £'000 £'000 Council Investments 0 36,560 Charitable Trusts Investments 3,210 3,271 Common Good Investments 2,693 2,340 Subsidiaries 1,088 4,192 Total Group Investments 6,991 46,363 6. Group Balance Sheet – Short Term Debtors (net of provisions) 2024/25 2023/24 £'000 £'000 Net Debtors Balance - Note 28 to the Financial Statements 50,007 52,344 Subsidiary Debtors 1,562 2,428 Charitable Trust Debtors 500 381 Inter-company elimination (474) (374) Common Good Debtors 190 426 Inter-company elimination (168) (410) Total Group Debtors 51,617 54,795 107 | Perth and Kinross Annual Accounts 2024/25 Page 120 of 212
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108 | Perth and Kinross Council Annual Accounts 2023/24 7. Group Balance Sheet – Short Term Creditors 2024/25 2023/24 £'000 £'000 Net Creditors Balance - Note 29 to the Financial Statements (95,500) (91,611) Charitable Trust Creditors (9) (9) Inter-company elimination 474 374 Common Good Creditors (68) (106) Inter-company elimination 168 410 (94,935) (90,942) Subsidiary Creditors (3,725) (3,875) Total Group Creditors (98,660) (94,817) 8. Group Balance Sheet – Pension Liability 2024/25 2023/24 £'000 £'000 Net Pensions Liability at 31 March - Note 18 to the Financial Statements (18,533) (20,748) Subsidiaries (7) (7) Group Pension Liability at 31 March (18,540) (20,755) 9. Group Cash Flow Statement There has been no impact on the Group Cash Flow Statement from the inclusion of the Tayside Valuation Joint Board, Tayside Contracts Joint Committee, or the Perth and Kinross Integration Joint Board. Cash transactions between the Joint Boards and the Council are already included within the Council’s Cash Flow Statement and there were no dividend transactions. The impact of the inclusion of Live Active Leisure Ltd., Perth Theatre and Concert Hall Ltd. and Culture Perth and Kinross Ltd. within the Group Cash Flow Statement is to increase the net cash position by £6.614 million (2023/24, increase of £5.273 million). A cash increase of £4.691 million represents the Council’s 100% share of Live Active Leisure Ltd., a cash increase of £1.201 million represents the Council’s 100% share of Perth Theatre and Concert Hall Ltd and a cash increase of £0.722 million represents the Council’s 100% share of Culture Perth and Kinross Ltd. 10. Group Cash Flow – Investment Activities 2024/25 2023/24 £'000 £'000 Council Investing Activities (91,070) 8,267 Subsidiaries 4,668 (4,039) (86,402) 4,228 11. Group Cash Flow – Financing Activities 2024/25 2023/24 £'000 £'000 Council Financing Activities 79,998 19,196 Subsidiaries 19 0 80,017 19,196 108 | Perth and Kinross Annual Accounts 2024/25 Page 121 of 212
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109 | Perth and Kinross Council Annual Accounts 2023/24 Remuneration Report 1. Introduction The Local Authority Accounts (Scotland) Amendment Regulations 2011 (SSI No. 2011/64) require local authorities in Scotland to prepare a Remuneration Report as part of their annual statutory accounts. The disclosures within this report have been prepared in accordance with guidance issued by the Scottish Government on 13 May 2011 in Local Government Finance Circular No 8/2011 (subsequently updated). This guidance prescribes the content and format of the information presented within the Remuneration Report and specifies that remuneration disclosures are to be based upon taxable expenses and benefits. The disclosures are set out in accordance with proper accounting practice as prescribed by the Code of Practice on Local Authority Accounting in the UK and include prior year comparative figures. 2. Audit of Remuneration Report The Remuneration Report is a statement in its own right rather than a note to the accounts and certain disclosures within the report are subject to audit. All information disclosed in Tables 1 to 7 in this Remuneration Report has been audited by the Council’s appointed auditor, Audit Scotland. The other sections of the Remuneration Report have been reviewed by Audit Scotland to ensure that they are consistent with the financial statements. 3. Remuneration of Senior Councillors 3.1 The remuneration of Councillors is regulated by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 (SSI No. 2007/183). The Regulations provide for the grading of Councillors for the purposes of remuneration arrangements, as either, the Leader of the Council, the Civic Head (Provost), Senior Councillors or Councillors. The Leader of the Council and the Civic Head cannot be the same person for the purposes of payment of remuneration. A Senior Councillor is a Councillor who holds a significant position of responsibility in the Council’s political management structure. 3.2 When determining the level of remuneration for Councillors the Scottish Ministers considered the recommendations of the former Scottish Local Authority Remuneration Committee (SLARC). SLARC was an advisory Non-Departmental Public Body set up in 2005 to advise Scottish Ministers on the remuneration, allowances and expenses incurred by local authority councillors. The Committee was stood down in February 2013 however reconvened in April 2023 to undertake a one-off independent review of Councillor Remuneration to ensure terms and conditions reflect the responsibilities of a modern-day Councillor. The recommendations in relation to pay and banding changes were accepted by Scottish Government and implemented on 1 April 2025. 3.3 The Regulations set out the salary that is to be paid to the Leader of the Council in accordance with bandings also set out in the Regulations. The Regulations also permit the Council to remunerate one Civic Head, which in the case of Perth and Kinross Council is the Provost and set out the maximum salary that may be paid to that Civic Head. For 2024/25 the maximum salary for the Leader of Perth and Kinross Council is £42,698 and the Council has agreed that the Civic Head be paid 75% of the salary of the Leader, which for 2024/25 is a maximum of £32,024. Please refer to Table 1. 3.4 In addition to the Leader of the Council and Civic Head, Regulations also set out the maximum number of senior councillors the Council may have; the maximum yearly amount that may be paid to a senior councillor (75% of the total yearly amount payable to the Leader of the Council) and the maximum yearly amount payable by the Council for all senior councillors. Perth and Kinross Council may have a maximum of 14 senior councillors with a maximum salary of £32,024 and a maximum yearly amount payable for all senior councillors of £373,583 in 2024/25 (excluding the Council Leader, Civic Head, Conveners and Vice Conveners of Joint Boards). The Council is able to exercise local flexibility in the determination of the precise number of senior councillors and their salary within these maximum limits. 3.5 The Regulations also set out the remuneration payable to councillors with the responsibility of a Convener or a Vice- Convener of a Joint Board such as Tayside Valuation Joint Board. The Regulations require the remuneration to be paid by the Council of which the Convener or Vice-Convener is a member. Joint Board Conveners and Vice-Conveners are considered to be senior councillors for remuneration disclosure purposes. In financial year 2024/25, one councillor from Perth and Kinross Council served as Convener or Vice-Convener of a Joint Board. 3.6 During 2024/25 Perth and Kinross Council had 13 Senior Councillors and a Vice-Convener of a Joint Board. Details are provided in Table 1. Together with the Leader of the Council and the Provost, the total remuneration including taxable expenses paid to these Councillors was £469,810. The individual amounts payable to the Leader of the Council, the Provost, Senior Councillors of Perth and Kinross Council and the Vice-Convener of a Joint Board in 2024/25 are set out in Table 1. The Regulations also permit the Council to pay contributions or other payments as required to the Local Government Pension Scheme in respect of those Councillors who elect to become councillor members of the pension scheme. 109 | Perth and Kinross Annual Accounts 2024/25 Page 122 of 212
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110 | Perth and Kinross Council Annual Accounts 2023/24 Table 1: Remuneration of Senior Councillors, Conveners and Vice-Conveners of Joint Boards for Financial Year 2024/25 Name and Post Title Salary, Fees and Allowances 2024/25 £ Total Remuneration 2024/25 £ Total Remuneration 2023/24 £ Grant Laing Council Leader 42,698 42,698 40,205 Xander McDade Provost (Civic Head) 32,024 32,024 30,154 Peter Barrett Convener Licensing Board 26,176 26,176 24,648 Bob Brawn Convener Local Review Body 26,176 26,176 24,648 Dave Cuthbert Vice-Convener Tayside Valuation Joint Board 25,352 25,352 23,872 Stewart Donaldson Convener Finance and Resources Committee 29,448 29,448 27,729 Eric Drysdale Depute Leader 29,448 29,448 27,729 John Duff Leader of Largest Opposition Party 29,448 29,448 27,729 David Illingworth Convener Audit and Risk Committee 29,448 29,448 27,729 Ian Massie Convener Planning and Placemaking Committee 29,448 29,448 27,729 Tom McEwan Convener Housing and Social Wellbeing Committee 29,448 29,448 27,729 Andrew Parrott Depute Provost 26,176 26,176 26,784 John Rebbeck Convener Learning and Families Committee 29,448 29,448 27,729 Colin Stewart Convener Scrutiny and Performance Committee 29,448 29,448 27,729 Richard Watters Convener Climate Change and Sustainability Committee 29,448 29,448 27,729 Michael Williamson Convener Licensing Committee 26,176 26,176 24,648 TOTAL 469,810 469,810 444,520 Notes: (1) After adjusting for the salaries of the Leader of the Council, the Civic Head (Provost) and the Vice-Convener of Tayside Valuation Joint Board, the total salaries paid to Senior Councillors in 2024/25 was £369,736 which compares with the maximum under Regulations of £373,583. 3.7 The arrangements for political decision-making structures within Perth and Kinross Council as at 31 March 2025, which encompassed the salaries of all elected members including the Council Leader, Civic Head and Senior Councillors, were agreed at the meeting of the Council on 25 May 2022 (Report No. 22/110 refers) and are available on the Council’s website. 110 | Perth and Kinross Annual Accounts 2024/25 Page 123 of 212
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111 | Perth and Kinross Council Annual Accounts 2023/24 3.8 The Council paid the following salaries and expenses to all Councillors (including those listed in Table 1 above) in financial year 2024/25: Table 2: Remuneration Paid to Councillors 1 April 2024 to 31 March 2025 2024/25 2023/24 Type of Remuneration £ £ Salaries 974,424 926,897 Allowances & Expenses 32,253 35,499 Total 1,006,677 962,396 3.9 The annual return of Councillors’ salaries and expenses for 2024/25 is available for any member of the public to view at Culture Perth and Kinross Ltd. libraries and Council local area offices during normal working hours and is also available on the Council’s website at Councillors Expenses. 4. Remuneration of Senior Employees 4.1 The Council is required to publish the remuneration of senior employees as defined by the disclosure regulations. Senior employees are defined with reference to their management authority; to the political restriction placed upon their post under section 2(1) (a), (b) or (c) of the Local Government Housing Act 1989 and with reference to their reporting relationship to the Council’s ‘Head of Paid Service’ or Chief Executive. The disclosure requirements also include any employee whose annual remuneration is £150,000 or more. One employee of Perth and Kinross Council was remunerated at this level in 2024/25 (Chief Executive). 4.2 The application of the disclosure regulations in relation to the management structure of Perth and Kinross Council defines the following post-holders as senior employees in 2024/25: The Chief Executive as statutory head of paid service. The Strategic Lead of Education and Learning as the Council’s chief education officer, the Strategic Lead of Legal and Governance Services as the Council’s statutory monitoring officer; the Strategic Lead of Finance and Business Support as the Council’s proper officer for financial administration and the Council’s statutory chief social work officer. The following officers are directly accountable to the Council’s head of paid service and/or are directly accountable to the Council or any committee or sub-committee: o Depute Chief Executive o Director/Chief Officer of the Perth and Kinross Health and Social Care Partnership o Director of Economy, Place and Learning (until 2 August 2024) o Strategic Lead - Education and Learning and Chief Education Officer o Strategic Lead – Children, Families and Justice o Strategic Lead - Finance and Business Support and Chief Finance Officer o Strategic Lead – Legal and Governance and Statutory Monitoring Officer o Strategic Lead – Strategic Planning, People and Performance o Strategic Lead – Projects and Programmes o Strategic Lead - Economy, Development and Planning o Strategic Lead – Environment and Infrastructure o Strategic Lead – Customer and Digital Services o Strategic Lead – Housing and Communities o Strategic Lead – Property Services o Head of Integrated Health and Care - Adults o Head of Integrated Health and Care – Older People 4.3 The Scottish Joint Negotiating Committee (SJNC) for Local Authority Services sets the salaries for the Chief Executives of Scottish local authorities. 111 | Perth and Kinross Annual Accounts 2024/25 Page 124 of 212
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112 | Perth and Kinross Council Annual Accounts 2023/24 4.4 The remuneration of senior employees of Perth and Kinross Council for 2024/25 is detailed in Table 3 below: Table 3: Remuneration of Senior Employees of the Council for Financial Year 2024/25 (Job titles as at 31 March 2025) Name and Post Title Salary, Fees and Allowances 2024/25 £ Termination Payments (note 11) £ Total Remuneration 2024/25 £ Total Remuneration 2023/24 £ Thomas Glen Chief Executive (Note 1) 163,305 n/a 163,305 154,609 Clare Mailer Depute Chief Executive 141,133 n/a 141,133 124,797 Jacqueline Pepper Director/Chief Officer of the Health and Social Care Partnership 140,396 n/a 140,396 135,517 Alison Williams Director of Economy, Place and Learning (until 02/08/2024) (Note 2) 50,043 49,620 99,663 25,880 Sheena Devlin Strategic Lead – Education and Learning (until 08/01/2025) (Note 3) 95,575 838 96,413 135,517 Bernadette Scott Interim Strategic Lead – Education and Learning (from 02/12/2024 to 31/01/2025) (Note 4) 18,214 n/a 18,214 n/a David Macluskey Strategic Lead – Education and Learning (from 13/01/2025) (Note 5) 24,154 n/a 24,154 n/a Arun Singh Strategic Lead – Children, Families and Justice 109,285 n/a 109,285 18,728 Scott Walker Strategic Lead – Finance and Business Support 110,477 n/a 110,477 n/a Lisa Simpson Strategic Lead – Legal and Governance (Note 6) 110,132 n/a 110,132 107,647 Greg Boland Strategic Lead – Strategic Planning, People and Performance 102,630 n/a 102,630 n/a Charlene Guild Strategic Lead – Projects and Programmes (Note 7) 93,721 n/a 93,721 n/a Serge Merone Strategic Lead – Economy, Development and Planning (from 06/01/2025 Note 8) 26,133 n/a 26,133 n/a David Littlejohn Strategic Lead – Economy, Development and Planning (to 28/02/2025) 100,178 n/a 100,178 n/a Fraser Crofts Strategic Lead – Environment and Infrastructure 102,630 n/a 102,630 n/a Stephen Crawford Strategic Lead – Property Services 102,968 n/a 102,968 n/a Alan Taylor Strategic Lead – Customer and Digital Services 103,071 n/a 103,071 n/a Elaine Ritchie Strategic Lead – Housing and Communities 102,630 n/a 102,630 n/a Jane Menzies Head of Integrated Health and Care – Adults (from 07/10/24) (Note 9) 47,906 n/a 47,906 n/a Zoe Robertson Head of Integrated Health and Care – Older People (Note 10) 98,967 n/a 98,967 n/a Donna Mitchell Chief Finance Officer & Head of Governance/Performance, Health and Social Care 102,630 n/a 102,630 n/a TOTAL 1,946,178 50,458 1,996,636 1,070,738 112 | Perth and Kinross Annual Accounts 2024/25 Page 125 of 212
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113 | Perth and Kinross Council Annual Accounts 2023/24 Notes: (1) The substantive salary for the Chief Executive is laid down in COSLA Circular CO-154. Remuneration also includes £3,130 Returning Officer Fee. (2) Remuneration includes non-taxable Relocation Expenses, a non-contractual payment, and other taxable contractual payments due. The Full Year Equivalent Salary for the Post of Director of Economy, Place and Learning is £135,517. (3) The Full Year Equivalent Salary for the Post of Strategic Lead - Education and Learning is £109,285. Value quoted includes Salary Preservation of £11,195 for the period 01/04/2024 – 11/08/2024, and other taxable contractual payments due. (4) Temporary Appointment until Strategic Lead – Education and Learning post filled. The Full Year Equivalent salary is £109,285. (5) Permanent appointment to the Post of Strategic Lead - Education and Learning. The Full Year Equivalent Salary is £109,285. (6) The Full Year Equivalent Salary for the Post of Strategic Lead – Legal and Governance is £109,285. Value quoted includes Salary Preservation of £559 for the period 01/04/2024 – 01/07/2024. (7) The Full Year Equivalent Salary for the Post of Strategic Lead - Projects and Programmes is £102,630. Period of part-time employment 01/07/2024 – 30/11/2024. (8) The Full Year Equivalent Salary for the Post of Strategic Lead – Economy, Development and Planning is £109,285. (9) The Full Year Equivalent Salary for the Post of Head of Integrated Health & Care (Adults) is £102,630. (10) The Full Year Equivalent Salary for the Post of Head of Integrated Health & Care (Older People) is £102,630. Appointed to this post on a permanent basis from 5 August 2024. Value incorporates temporary higher duty payments of £5,995.33. (11) Termination payments including applicable contractual costs. 4.5 Election fees (where applicable) are included with senior employee salaries. No other taxable benefits or bonuses were received by the above-named senior employees of Perth and Kinross Council in 2024/25. 4.6 The remuneration paid to the Chief Executive of each of the Council’s subsidiary bodies for 2024/25 is detailed in Table 3A below: Table 3A: Remuneration of Council’s Subsidiary Bodies Senior Employees for Financial Year 2024/25 Name and Post Title Salary, Fees and Allowances 2024/25 £ Total Remuneration 2024/25 £ Total Remuneration 2023/24 £ Paul Cromwell Live Active Leisure – Chief Executive 89,437 89,437 85,586 Helen Smout Culture Perth and Kinross Limited – Chief Executive 73,730 73,730 72,000 Christopher Glasgow Perth Theatre and Concert Hall Limited – Chief Executive 73,281 73,281 44,123 TOTAL 236,448 236,448 230,507 113 | Perth and Kinross Annual Accounts 2024/25 Page 126 of 212
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114 | Perth and Kinross Council Annual Accounts 2023/24 5. General Disclosure of Remuneration by Pay Band 5.1 In accordance with the disclosure regulations, Table 4 below details the number of Perth and Kinross Council employees (including teachers) whose annual remuneration in 2024/25 was £50,000 or more, including senior employees subject to individual disclosure in section 4 of this report. The information is presented, as required, in bandings of £5,000. Table 4: Remuneration of Employees by Pay Band for 2024/25 Remuneration Bands Number of Employees 2024/25 2023/24 £50,000-£54,999 212 566 £55,000-£59,999 195 132 £60,000-£64,999 139 123 £65,000-£69,999 78 81 £70,000-£74,999 52 62 £75,000-£79,999 17 22 £80,000-£84,999 18 14 £85,000-£89,999 5 7 £90,000-£94,999 3 2 £95,000-£99,999 4 13 £100,000-£104,999 7 4 £105,000-£109,999 6 4 £110,000-£114,999 0 0 £115,000-£119,999 0 0 £120,000-£124,999 0 2 £125,000-£129,999 0 0 £130,000-£134,999 0 1 £135,000-£139,999 1 2 £140,000-£144,999 2 0 £145,000-£149,999 0 0 £150,000-£154,999 0 1 £155,000-£159,999 0 0 £160,000-£164,999 1 0 Total 740 1,036 (See Notes) Notes: As stated in the audited 2023/24 Annual Accounts, due to the delay in concluding the teachers and associated professionals 2022/23 pay award, the increase in remuneration was not applied until April 2023. This resulted in an artificial increase in numbers falling into the £50,000 - £54,999 band as this included backdated arrears for the period 1 April 2022 to 31 March 2023. For 2024/25 the £50,000 - £54,999 and £55,000 - £59,999 pay bands include 120 and 88 teaching staff respectively. For 2024/25 740 employees fell into the bandings above; 453 were teaching staff. Table 5: The number of Exit Packages with Total Cost per band and Total Cost of Compulsory and Other Redundancies (a) Exit package cost band (including special payments) (b) Number of compulsory redundancies (c) Number of other departures agreed (d) Total number of exit packages by cost band (b) + (c) (e) Total cost of exit packages in each band 2024/25 2023/24 2024/25 2023/24 2024/25 2023/24 2024/25 £’000 2023/24 £’000 £0 - £20,000 2 1 6 14 8 15 39 126 £20,001 - £40,000 0 0 3 2 3 2 73 79 £40,001 - £60,000 1 0 4 1 5 1 239 53 £60,001 - £80,000 0 0 1 1 1 1 75 72 £80,001 - £100,000 0 0 2 3 2 3 175 276 Over £100,000 0 0 0 3 0 3 0 905 Total 3 1 16 24 19 25 601 1,511 114 | Perth and Kinross Annual Accounts 2024/25 Page 127 of 212
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115 | Perth and Kinross Council Annual Accounts 2023/24 5.2 The costs included within Table 5 are all non-recurring and include payments to individual officers and to the relevant Pension Fund. 5.3 All of the individual exit packages included within Table 5 have been subject to a full business case or legal agreement where appropriate outlining the implications for the Council or are related to officers who have temporary contracts, and their contract has ceased but they are entitled to a redundancy payment due to their length of employment. In terms of the financial assessment for each business case, the maximum payback period is up to five years. The departure of individuals has delivered significant recurring savings to the Council in the past and also facilitated the delivery of an ambitious and challenging transformation / modernisation programme. 6. Remuneration by Subsidiary Bodies of Perth and Kinross Council 6.1 Councillors and senior employees of Perth and Kinross Council serve as board members, officials and technical advisors to subsidiary bodies of the Council. In 2024/25, the Strategic Lead of Legal and Governance and Strategic Lead of Finance and Business Support served as a proper officers to the Tayside and Central Scotland Transport Partnership (TACTRAN). No remuneration was paid to councillors or senior employees of Perth and Kinross Council by subsidiary bodies of the Council in 2024/25. 7. Disclosure of Pension Benefits 7.1 The disclosure regulations require the separate disclosure of accrued pension benefits for senior councillors and senior employees of Perth and Kinross Council. Pension Benefits for councillors and local government employees are provided through the Local Government Pension Scheme (LGPS). Councillors have only been eligible to join this scheme since May 2007. 7.2 Councillor’s pension benefits are based on career average pay. The councillor’s pay for each year or part year ending 31 March (other than the pay in the final year commencing 1 April) is increased by the increase in the cost of living as measured by the appropriate index between the end of that year and the last day of the month in which their membership of the scheme ends. The total of the revalued pay is then divided by the period of membership to calculate the career average pay. This is the value used to calculate the pension benefits. 7.3 From 1 April 2015 a career average scheme was implemented for local government employees. This means that pension is built up based on the pensionable pay for each year. The benefit is added to the employee’s pension account plus inflation increases. The scheme’s normal retirement age for both councillors and employees will vary dependant on age and length of pensionable service. 7.4 From 1 April 2009 a tiered contribution scheme was introduced with contributions from scheme members being based on how much pay falls into each tier. Prior to 2009 contribution rates were set at 6% for all non-manual employees. Tiered Pension Contribution Rates for Local Government Pension Scheme Members in 2024/25 Actual Pensionable pay Contribution Rate 2024/25 On earnings up to and including £27,000 5.5% On earnings above £27,001 and up to £33,000 7.25% On earnings above £33,001 and up to £45,300 8.5% On earnings above £45,301 and up to £60,400 9.5% On earnings of £60,401 and above 12% 7.5 Pensionable Pay includes salary, plus any contractual elements of pay such as shift payment, night working payment, standby and the monetary value of any accommodation or other allowances in kind pertaining to employment. 7.6 Under the scheme there is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limit set by the Finance Act 2004. The pension is built up based on pensionable pay in the year with an accrual rate of 1/49th added to the pension account. (Prior to 2015 the accrual rate was 1/60th of final pensionable salary and years of pensionable service. Prior to 2009 the accrual rate guaranteed a pension based on 1/80th and a lump sum based on 3/80th of final pensionable salary and years of pensionable service). 7.7 The value of accrued benefits has been calculated on the basis of the age at which the person will first become entitled to receive a pension on their retirement without reduction on account of its payment at that age; without exercising any option to commute pension entitlement into a lump sum; and without any adjustment for the effects of future inflation. The pension figures shown relate to the benefits that the person has accrued as a consequence of their local government service, and not just their current appointment. 115 | Perth and Kinross Annual Accounts 2024/25 Page 128 of 212
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116 | Perth and Kinross Council Annual Accounts 2023/24 7.8 Pension Entitlements of Senior Councillors The pension entitlements of senior councillors of Perth and Kinross Council for the year to 31 March 2025 are shown in Table 6 below, together with the contribution made by the Council to each senior councillor’s pension during the year. Table 6: Pension Entitlements of Senior Councillors for Financial Year 2024/25 Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2024/25 £ 2023/24 £ as at 31/03/2025 £’000 as at 31/03/2024 £’000 Difference £’000 Grant Laing Council Leader 6,704 6,835 Pension Lump Sum 8 0 6 0 2 0 Xander McDade Provost (Civic Head) 5,028 5,126 Pension Lump Sum 4 0 3 0 1 0 Peter Barrett Convener Licensing Board 4,110 4,190 Pension Lump Sum 9 2 8 2 1 0 Bob Brawn Convener Local Review Board 4,110 4,190 Pension Lump Sum 5 0 4 0 1 0 Dave Cuthbert Vice-Convener Tayside Valuation Joint Board 3,980 4,058 Pension Lump Sum 2 0 1 0 1 0 Stewart Donaldson Convener Finance and Resources Committee 4,623 4,714 Pension Lump Sum 5 0 4 0 1 0 Eric Drysdale Depute Leader 4,623 4,714 Pension Lump Sum 5 0 4 0 1 0 John Duff Leader of Largest Opposition Party 4,623 4,714 Pension Lump Sum 4 0 3 0 1 0 David Illingworth Convener Audit and Risk Committee 4,623 4,714 Pension Lump Sum 4 0 3 0 1 0 Ian Massie Convener Planning and Placemaking Committee 4,623 4,714 Pension Lump Sum 2 0 2 0 0 0 Tom McEwan Convener Housing and Social Wellbeing Committee 4,623 4,714 Pension Lump Sum 4 0 3 0 1 0 Andrew Parrott Depute Provost 4,110 4,553 Pension Lump Sum 5 0 4 0 1 0 John Rebbeck Convener Learning and Families Committee 4,623 4,714 Pension Lump Sum 4 0 3 0 1 0 Colin Stewart Convener Scrutiny and Performance Committee 4,623 4,714 Pension Lump Sum 4 0 3 0 1 0 Richard Watters Convener Climate Change and Sustainability Committee 4,623 4,714 Pension Lump Sum 4 0 3 0 1 0 Michael Williamson Convener Licensing Committee 4,110 4,190 Pension Lump Sum 6 0 5 0 1 0 TOTAL 73,759 75,568 Notes: (1) The in-year employer pension contributions shown are based on all pensionable earnings for financial year 2024/25, not just current appointments. (2) The pension benefits shown relate to the benefits that the individual has accrued as a consequence of their total local government service, including any service with a Council subsidiary body, and not just their current appointment. Councillors have only been eligible to join the Local Government Pension Scheme since May 2007. (3) The Employer Contribution Rate for 2023/24 was 17% however for financial year 2024/25 it reduced to 15.7% which explains the reduction in Employer costs. 116 | Perth and Kinross Annual Accounts 2024/25 Page 129 of 212
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117 | Perth and Kinross Council Annual Accounts 2023/24 7.9 The pension entitlements of senior employees of Perth and Kinross for the year to 31 March 2025 are shown in Table 7 below, together with the contribution made by the Council to each senior employee’s pension during the year. Table 7: Pension Entitlements of Senior Employees of the Council for Financial Year 2024/25 (Post titles as at 31 March 2025) Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2024/25 £ 2023/24 £ as at 31/03/2025 £’000 as at 31/03/2024 £’000 Difference £’000 Thomas Glen Chief Executive 25,639 26,283 Pension Lump Sum 84 0 77 0 7 0 Clare Mailer Depute Chief Executive 22,043 21,215 Pension Lump Sum 61 75 53 67 8 8 Jacqueline Pepper Director/Chief Officer, Perth and Kinross Health and Social Care Partnership 22,042 23,038 Pension Lump Sum 60 37 55 35 5 2 Alison Williams Director Economy, Place and Learning (to 02/08/2024) 7,253 3,657 Pension Lump Sum 0 0 0 0 0 0 Sheena Devlin Strategic Lead - Education and Learning (to 08/01/2025) 13,241 22,329 Pension Lump Sum 84 132 78 125 6 7 Bernadette Scott Interim Strategic Lead – Education and Learning (from 02/12/2024 to 31/01/2025) 13,402 n/a Pension Lump Sum 10 0 n/a n/a n/a n/a David Macluskey Strategic Lead – Education and Learning (from 13/01/2025) 13,592 n/a Pension Lump Sum 7 0 n/a n/a n/a n/a Arun Singh Strategic Lead – Children, Families and Justice 17,158 3,184 Pension Lump Sum 3 0 0 0 3 0 Scott Walker Strategic Lead – Finance and Business Support 17,159 n/a Pension Lump Sum 51 69 n/a n/a n/a n/a Lisa Simpson Strategic Lead – Legal and Governance 17,161 18,208 Pension Lump Sum 23 0 20 0 3 0 Greg Boland Strategic Lead – Strategic Planning, People and Performance 16,113 n/a Pension Lump Sum 49 61 n/a n/a n/a n/a Charlene Guild Strategic Lead – Projects and Programmes 14,714 n/a Pension Lump Sum 36 26 n/a n/a n/a n/a Serge Merone Strategic Lead – Economy, Development and Planning 12,159 n/a Pension Lump Sum 33 33 n/a n/a n/a n/a David Littlejohn Strategic Lead – Economy, Development and Planning (to 28/02/2025) 15,728 n/a Pension Lump Sum 34 14. n/a n/a n/a n/a Fraser Crofts Strategic Lead – Environment and Infrastructure 16,113 n/a Pension Lump Sum 47 52 n/a n/a n/a n/a Stephen Crawford Strategic Lead – Property Services 16,113 n/a Pension Lump Sum 45 40 n/a n/a n/a n/a Alan Taylor Strategic Lead – Customer and Digital Services 16,113 n/a Pension Lump Sum 51 57 n/a n/a n/a n/a Elaine Ritchie Strategic Lead – Housing and Communities 16,113 n/a Pension Lump Sum 35 26 n/a n/a n/a n/a Jane Menzies Head of Integrated Health and Care – Adults 7,805 n/a Pension Lump Sum 1 0 n/a n/a n/a n/a 117 | Perth and Kinross Annual Accounts 2024/25 Page 130 of 212
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118 | Perth and Kinross Council Annual Accounts 2023/24 Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2024/25 £ 2023/24 £ as at 31/03/2025 £’000 as at 31/03/2024 £’000 Difference £’000 Zoe Robertson Head of Integrated Health and Care – Older People 15,538 n/a Pension Lump Sum 15 0 n/a n/a n/a n/a Donna Mitchell Chief Finance Officer & Head of Governance/Performance, Health and Social Care 16,061 n/a Pension Lump Sum 26 13 n/a n/a n/a n/a TOTAL 331,260 117,914 Notes: (1) The in-year employer pension contributions shown are based on all pensionable earnings for financial year 2024/25, not just the current appointment. (2) Accrued pension benefits include total benefits accumulated during all membership of the Local Government Pension Scheme and not just service in their current role. (3) The Employer Contribution Rate for 2023/24 was 17% however for financial year 2024/25 it reduced to 15.7% which explains the reduction in Employer costs. (4) These are additional in-year pension contributions, representing strain costs being the amount the Council is required to pay to the pension fund. This is chargeable when an employee retires before the assumed retirement age, that would otherwise result in a shortfall in contributions up to the assumed retirement age. There were no Strain on Fund costs for this group of staff in 2024/25. 7.10 Pension Entitlements – Council’s Subsidiary Bodies The pension entitlements of the Chief Executives of each of the Council’s subsidiary bodies for the year to 31 March 2025 are shown in Table 7A below, together with the contribution made to each Senior Employees’ pension during the year. Table 7A: Pension Entitlements of Senior Employees of each of the Council’s Subsidiary Bodies for Financial Year 2024/25 Name and Post Title In-year pension contributions (Note 1) Accrued Pension Benefits (Note 2) 2024/25 £ 2023/24 £ as at 31/03/2025 £’000 as at 31/03/2024 £’000 Difference £’000 Paul Cromwell Live Active Leisure – Chief Executive 14,042 14,550 Pension Lump Sum 31 13 27 13 4 0 Helen Smout Culture Perth and Kinross Limited - Chief Executive 11,577 12,240 Pension Lump Sum 32 26 29 26 3 0 Christopher Glasgow Perth Theatre and Concert Hall Limited – Chief Executive 11,103 10,259 Pension Lump Sum 4 0 3 0 1 0 TOTAL 36,722 37,049 Notes: (1) The in-year employer pension contributions shown are based on all pensionable earnings for financial year 2024/25, not just the current appointment. (2) Accrued pension benefits include total benefits accumulated during all membership of the Local Government Pension Scheme and not just service in their current role. (3) The Employer Contribution Rate for 2023/24 was 17% however for financial year 2024/25 it reduced to 15.7% which explains the reduction in Employer costs. 118 | Perth and Kinross Annual Accounts 2024/25 Page 131 of 212
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119 | Perth and Kinross Council Annual Accounts 2023/24 8. Trade Union (Facility Time Publication Requirements) Regulations 2017 8.1 The Council is required to report from 1 April 2017 a range of information on facility time made available to its employees who are trade union representatives. This link provides the information: Trade Union Statutory Return 2024/25. Signed: Thomas Glen Councillor Eric Drysdale Chief Executive Leader of the Council Perth and Kinross Council Date: Perth and Kinross Council Date: 119 | Perth and Kinross Annual Accounts 2024/25 Page 132 of 212
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120 | Perth and Kinross Council Annual Accounts 2023/24 Glossary ACCOUNTING PERIOD The period of time covered by the accounts, normally a period of twelve months commencing on 1 April. The end of the accounting period is the Balance Sheet date. ACCRUALS Sums included in the final accounts to recognise revenue and capital income and expenditure earned or incurred in the financial year, but for which actual payment had not been received or made as at 31 March. BEACON METHOD (ADJUSTED VACANT POSSESSION METHOD) Based on the (vacant possession) market value of the asset which is the adjusted to reflect the assets’ use for social housing with a sitting tenant. CAA Capital Adjustment Account CAPITAL EXPENDITURE Expenditure on the acquisition of a fixed asset, which will be used in providing services beyond the current accounting period, or expenditure which adds to and not merely maintains the value of an existing fixed asset. CAPITAL FINANCING Funds raised to pay for capital expenditure. There are various methods of financing capital expenditure including borrowing, leasing, direct revenue financing, usable capital receipts, capital grants, capital contributions, revenue reserves and earmarked reserves. CAPITAL RECEIPT The proceeds from the disposal of land or other fixed assets. Proportions of capital receipts can be used to finance new capital expenditure, within rules set down by the Government but they cannot be used to finance revenue expenditure. CONTINGENT LIABILITY A contingent liability is either: A possible obligation arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the Council’s control; or A present obligation arising from past events where it is not probable that a transfer of economic benefits will be required, or the amount of the obligation cannot be measured with sufficient reliability. CORPORATE and DEMOCRATIC CORE The corporate and democratic core comprises all the activities that local authorities engage in specifically because they are elected, multi-purpose authorities. The cost of these activities are thus over and above those which would be incurred by a series of independent single purpose, nominated bodies managing the same services. There is therefore no logical basis for apportioning these costs to services. CREDITOR Amount owed by the Council for work done, goods received or services rendered within the accounting period, but for which payment has not been made by the Council by the end of that accounting period. CRR Capital Receipts Reserve CURRENT VALUE The measurement of operational assets used for the delivery of Council services. Property, plant and equipment is measured on the basis of service potential using existing use value for assets where an active market exists, existing use value-social housing for operational Council dwellings or depreciated replacement cost for assets where there is no market and/or the asset is specialised. DBFM Design Build Finance Maintain - A Non-Profit Distribution (NPD) model to Design, Build, Finance, and Maintain infrastructure which requires the private sector to take a fixed rate of return. The DBFM agreement provides the Council with the right to receive services in return for an annual payment (unitary charge) which comprises the costs of construction, finance, and maintenance, and for the provision of any agreed additional services, for the duration of the agreement. DEBTOR Amount owed to the Council for works done, goods received or services rendered within the accounting period, but for which payment has not been received by the Council by the end of that period. 120 | Perth and Kinross Annual Accounts 2024/25 Page 133 of 212
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121 | Perth and Kinross Council Annual Accounts 2023/24 EXISTING USE VALUE FOR SOCIAL HOUSING (EUV-SH) Is the estimated amount for which a property should exchange on the date of valuation, between a willing buyer and a willing seller in an arm’s length transaction. FAIR VALUE Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FIAA Financial Instruments Adjustment Account IMPAIRMENT A reduction in the value of a fixed asset to below its carrying amount on the Balance Sheet. MATERIALITY The concept that the Annual Accounts should include all amounts which, if omitted, or mis-stated, could be expected to lead to a distortion of the financial statements and ultimately mislead a user of the accounts. NET BOOK VALUE The amount at which fixed assets are included in the Balance Sheet, i.e. their historical costs or current value less the cumulative amounts provided for depreciation. NON-DISTRIBUTED COSTS These are overheads which cannot be directly allocated to a specific area of activity and as such are not apportioned to services. PPE Property, Plant and Equipment PRIOR YEAR ADJUSTMENT Material adjustments applicable to previous years arising from changes in accounting policies or from the correction of fundamental errors. This does not include normal recurring corrections or adjustments of accounting estimates made in prior years. PROVISION An amount put aside in the accounts for future liabilities or losses which are certain or very likely to occur but the amounts or dates of when they will arise are uncertain. PUBLIC WORKS LOAN BOARD (PWLB) An agency of HM Treasury, which provides loans mainly for capital purposes of one year or more to authorities at interest rates of up to 2% above those at which the UK Government can itself borrow at. REVENUE EXPENDITURE The day-to-day expenses of providing services. SERVICE CONCESSION ARRANGEMENTS Service concession (PPP and PFI) arrangements involve the operator undertaking an obligation to provide assets (and related services) that are used to provide services to the public (irrespective of who provides those services to the public). 121 | Perth and Kinross Annual Accounts 2024/25 Page 134 of 212
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Appendix 2 Rachel Browne, Audit Director Audit Scotland 4th Floor 102 West Port Edinburgh EH3 9DN Finance and Business Support Strategic Lead – Scott Walker 2 High Street, Perth, PH1 5PH Tel 01738 475000 www.pkc.gov.uk Contact Scott Walker Tel 01738 475515 Email SWWalker@pkc.gov.uk Our ref SW/KD Your ref Date 26 November 2025 Dear Rachel Perth and Kinross Council Annual Accounts 2024/25 1. This representation letter is provided in connection with your audit of the annual report and accounts of Perth and Kinross Council and its group, hereafter referred to as Perth and Kinross Council, for the year ended 31 March 2025 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view and have been properly prepared, and for expressing other opinions on the Remuneration Report, Management Commentary, and Annual Governance Statement. 2. I confirm to the best of my knowledge and belief, and having made such enquiries as I considered necessary, the following representations given to you in connection with your audit of Perth and Kinross Council’s annual accounts for the year ended 31 March 2025. General 3. I have fulfilled my responsibilities for the preparation of the 2024/25 annual accounts as set out in your 2024/25 Annual Audit Plan. All the accounting records, documentation, and other matters which I am aware are relevant to the preparation of the annual accounts have been made available to you for the purposes of your audit. All transactions undertaken by Perth and Kinross Council have been recorded in the accounting records and are properly reflected in the financial statements. 4. I confirm that the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. As you have reported, there are no uncorrected misstatements. Financial Reporting Framework 5. The annual accounts have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2024/25 (2024/25 Code), and the requirements of the Local Government (Scotland) Act 1973, the Local Government in Scotland Act 2003, and the Local Authority Accounts (Scotland) Regulations 2014. Delayed Office Opening for Employee Training This office will be closed from 8.45 am - 11.00 am on the first Thursday of each month. 5 Page 135 of 212
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6. In accordance with the Local Authority Accounts (Scotland) Regulations 2014, I have ensured that the financial statements give a true and fair view of the financial position of Perth and Kinross Council at 31 March 2025 and the transactions for 2024/25. Accounting Policies and Estimates 7. All material accounting policies applied are as shown in the note included in the financial statements. The accounting policies are determined by the 2024/25 Code, where applicable. Where the 2024/25 Code does not specifically apply, I have used judgement in developing and applying an accounting policy that results in information that is relevant and reliable. All accounting policies applied are appropriate to Perth and Kinross Council’s circumstances and have been consistently applied. 8. The methodology, significant assumptions, and data used in making accounting estimates are reasonable, and have been properly reflected and disclosed in the financial statements in accordance with the 2024/25 Code. Judgements made in making estimates have been based on the latest available and reliable information. Estimates have been revised where there are changes in the circumstances on which the original estimate was based or as a result of new information or experience. Going Concern Basis of Accounting 9. I have assessed Perth and Kinross Council’s ability to continue to use the going concern basis of accounting and have concluded that it is appropriate. I am not aware of any material uncertainties that may cast significant doubt on Perth and Kinross Council’s ability to continue to adopt the going concern basis of accounting. Assets 10. All assets at 31 March 2025 of which I am aware have been reported in the financial statements. 11. Where a rolling programme of asset valuations has been used, I have satisfied myself that the carrying amount of assets at 31 March 2025 does not differ materially from that which would be determined if a revaluation had been carried out at that date. 12. I carried out an assessment at 31 March 2025 as to whether there is any indication that an asset may be impaired and have recognised any impairment losses identified in the financial statements. 13. I have provided you with all information of which I am aware regarding any valuation exercises carried out after 31 March 2025. 14. There are no plans or intentions that are likely to affect the carrying value or classification of the assets recognised in the financial statements. 15. Owned assets are free from any lien, encumbrance, or charge, except as disclosed in the financial statements. Page 136 of 212
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Liabilities 16. All liabilities at 31 March 2025 of which I am aware have been reported in the financial statements. 17. Provisions have been recognised in the financial statements for all liabilities of uncertain timing or amount at 31 March 2025 of which I am aware where the conditions specified in IAS 37, as adapted by the 2024/25 Code, have been met. The amount recognised as a provision is the best estimate of the expenditure likely to be required to settle the obligation at 31 March 2025. Where the effect of the time value of money is material, the amount of the provision has been discounted to the present value of the expected payments. 18. Provisions recognised in previous years have been reviewed and adjusted, where appropriate, to reflect the best estimate at 31 March 2025, or to reflect material changes in the assumptions underlying the calculations of the provisions. 19. The accrual recognised in the financial statements for annual leave untaken by 31 March 2025 has been estimated on a reasonable basis. 20. There are no plans or intentions that are likely to affect the carrying value or classification of the liabilities recognised in the financial statements. Contingent Liabilities 21. There are no significant contingent liabilities, other than those disclosed in Note 38 to the financial statements, arising either under formal agreement or through formal undertakings requiring disclosure in the financial statements. All known contingent liabilities have been fully and properly disclosed in accordance with IAS 37, as adopted by the 2024/25 Code. Litigation and Claims 22. All known actual or possible legal claims have been disclosed to you and have been accounted for and disclosed in the financial statements in accordance with the 2024/25 Code. Fraud 23. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities. 24. I have provided you with all information in relation to: • my assessment of the risk that the financial statements may be materially misstated as a result of fraud, • any allegations of fraud or suspected fraud affecting the financial statements, and • fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements. Page 137 of 212
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Laws and Regulations 25. I have disclosed to you all known instances of non-compliance or suspected non- compliance with laws and regulations whose effects should be considered when preparing financial statements. Related Party Transactions 26. All material transactions with related parties have been appropriately accounted for and disclosed in the financial statements in accordance with IAS 24, as adopted by the 2024/25 Code. I have made available to you the identity of all of Perth and Kinross Council’s related parties and all the related party transactions of which I am aware. Remuneration Report 27. The Remuneration Report has been prepared in accordance with the Local Authority Accounts (Scotland) Regulations 2014, and all required information of which I am aware has been provided to you. Management Commentary 28. I confirm that the Management Commentary has been prepared in accordance with statutory guidance, and the information is consistent with the financial statements. Corporate Governance 29. I confirm Perth and Kinross Council has undertaken a review of the system of internal control during 2024/25 to establish the extent to which it complies with proper practices set out in Delivering Good Governance in Local Government: Framework 2016. I have disclosed to you all deficiencies in internal control identified from this review or of which I am otherwise aware. 30. I confirm that the Annual Governance Statement has been prepared in accordance with the Delivering Good Governance in Local Government: Framework 2016 and the information is consistent with the financial statements. There have been no changes in the corporate governance arrangements, or issues identified, since 31 March 2025 which require to be reflected in the Annual Governance Statement or annual accounts. Group Accounts 31. I have identified all the other entities in which Perth and Kinross Council has an interest and have classified and accounted for them in accordance with the 2024/25 Code. Any significant issues, including those related to fraud and any qualified audit opinions, in relation to the financial statements of group entities, have been provided to you. Any significant issues identified by you as group auditor have been communicated to management of group components, where relevant to those components. Page 138 of 212
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Events Subsequent to the Date of the Balance Sheet 32. All events subsequent to 31 March 2025 for which IAS 10, as adopted by the 2024/25 Code, requires adjustment or disclosure have been adjusted or disclosed. Yours sincerely Scott Walker Chief Finance Officer Page 139 of 212
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Perth and Kinross Council 2024/25 Annual Audit Report DRAFT Prepared for Perth and Kinross Council and the Controller of Audit December 2025 5 Page 141 of 212
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Perth and Kinross Council: 2024/25 Annual Audit Report DRAFT | 2 Contents Key messages 3 Introduction 5 Audit scope and responsibilities 6 Audit of the annual accounts 8 Wider scope audit 20 Best Value audit 27 Appendix 1 32 Appendix 2 41 Appendix 3 43 Accessibility You can find out more and read this report using assistive technology on our website www.audit.scot/accessibility. Page 142 of 212
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Key messages | 3 Key messages Audit of the annual accounts 1 All audit opinions stated that the annual accounts were free from material misstatement and prepared in accordance with the relevant requirements. Wider scope audit 2 Perth and Kinross council’s budget setting and financial management arrangements operated effectively during 2024/25. 3 Appropriate arrangements are in place for financial sustainability despite the challenging financial environment in which the council is operating. 4 Arrangements in place around Vision, Leadership and Governance are generally appropriate. There is scope to improve transparency and scrutiny of senior management exits and restructuring decisions through presentation of options and proposals to elected members. 5 The council demonstrates a clear link between the use of resources and delivery of its priorities through measuring performance against a suite of Key Performance Indicators (KPIs) linked to its Corporate Plan. Best Value audit 6 The council has effective and appropriate arrangements in place for securing Best Value. 7 The Best Value Management Report on service transformation reported the council has a clear vision and plan to support the transformation of its services and has robust officer-led governance arrangements in place to monitor its transformational projects through its Transformation Board and Project Teams. There is scope for the council to provide more information on the potential impacts of its transformation projects on vulnerable groups through its Equality and Fairness Impact Assessment process. Page 143 of 212
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Key messages | 4 8 The council has effective and appropriate arrangements in place for preparing and publishing Statutory Performance Information, with a slight improvement in performance compared to prior years and other councils. Page 144 of 212
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Introduction | 5 Introduction Purpose of the Annual Audit Report 1. The purpose of this Annual Audit Report is to report the significant matters identified from the 2024/25 audit of Perth and Kinross Council’s annual accounts and the wider scope areas specified in the Code of Audit Practice (2021). 2. The Annual Audit Report is addressed to Perth and Kinross Council, hereafter referred to as ‘the council’, and the Controller of Audit, and will be published on Audit Scotland’s website in due course. Appointed auditor and independence 3. Rachel Browne, of Audit Scotland, has been appointed as external auditor of the council for the period from 2023/24 until 2026/27. As reported in the Annual Audit Plan, Rachel Browne as engagement lead and the audit team are independent of the council in accordance with relevant ethical requirements, including the Financial Reporting Council’s Ethical Standard. There have been no developments since the issue of the Annual Audit Plan that impact on the continued independence of the engagement lead or the rest of the audit team from the council, including no provision of non-audit services. Acknowledgements 4. We would like to thank the council and its staff, particularly those involved in preparation of the annual accounts, for their cooperation and assistance during the audit. We look forward to working together constructively over the remainder of the audit appointment. Page 145 of 212
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Audit scope and responsibilities | 6 Audit scope and responsibilities Scope of the audit 5. The audit is performed in accordance with the Code of Audit Practice, including supplementary guidance, International Standards on Auditing (ISA) (UK), and relevant legislation. These set out the requirements for the scope of the audit which includes: • An audit of the financial statements and an opinion on whether they give a true and fair view and are free from material misstatement. • An opinion on statutory other information published with the financial statements in the annual accounts, namely the Management Commentary and Annual Governance Statement. • An opinion on the audited part of the Remuneration Report. • Conclusions on the council’s arrangements in relation to the wider scope areas: Financial Management; Financial Sustainability; Vision, Leadership and Governance; and Use of Resources to Improve Outcomes. • Reporting on the council’s arrangements for securing Best Value. • Providing assurance on the Housing Benefit Subsidy Claim and Non-Domestic Rates Return. • A review of the council’s arrangements for preparing and publishing statutory performance information. • Provision of this Annual Audit Report. Responsibilities and reporting 6. The Code of Audit Practice sets out the respective responsibilities of the council and the auditor. A summary of the key responsibilities is outlined below. Auditor’s responsibilities 7. The responsibilities of auditors in the public sector are established in the Local Government (Scotland) Act 1973. These include providing an independent opinion on the financial statements and other information reported within the annual accounts, and concluding on the council’s arrangements in place for the wider scope areas and Best Value. Page 146 of 212
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Audit scope and responsibilities | 7 8. The matters reported in the Annual Audit Report are only those that have been identified by the audit team during normal audit work and may not be all that exist. Communicating these does not absolve the council from its responsibilities outlined below. 9. The Annual Audit Report includes an agreed action plan at Appendix 1 setting out specific recommendations to address matters identified and includes details of the responsible officer and dates for implementation. The council’s responsibilities 10. The council has primary responsibility for ensuring proper financial stewardship of public funds, compliance with relevant legislation and establishing effective arrangements for governance, propriety, and regularity that enables it to successfully deliver its objectives. The features of proper financial stewardship include: • Establishing arrangements to ensure the proper conduct of its affairs. • Preparation of annual accounts, comprising financial statements for the council and its group that gives a true and fair view and other specified information. • Establishing arrangements for the prevention and detection of fraud, error and irregularities, and bribery and corruption. • Implementing arrangements to ensure its financial position is soundly based. • Making arrangements to secure Best Value. • Establishing an internal audit function. National performance audit reporting 11. The Auditor General for Scotland and the Accounts Commission regularly publish performance audit reports. These cover a range of matters, many of which may be of interest to the council and Audit and Risk Committee. Details of national and performance audit reports published over the last year can be seen in Appendix 3. Page 147 of 212
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Audit of the annual accounts | 8 Audit of the annual accounts Main judgements All audit opinions stated that the annual accounts were free from material misstatement and prepared in accordance with the relevant requirements. Audit opinions on the annual accounts 12. Perth and Kinross Council and its group’s annual accounts were approved by Audit and Risk Committee on 1 December 2025 and certified by the appointed auditor on 1 December 2025. The Independent Auditor’s Report is included in the council’s annual accounts, and this reports that, in the appointed auditor’s opinion, these were free from material misstatement. Audit timetable 13. The unaudited annual accounts and working papers were received on 25 June 2025 in accordance with the agreed audit timetable. Audit Fee 14. The audit fee for the 2024/25 audit was reported in the Annual Audit Plan and was set at £358,370. There were no significant developments that impacted on planned audit work required, therefore the audit fee reported in the Annual Audit Plan remains unchanged. Materiality 15. The concept of materiality is applied by auditors in planning and performing an audit, and in evaluating the effect of any uncorrected misstatements on the financial statements or other information reported in the annual accounts. 16. Broadly, the concept of materiality is to determine whether misstatements identified during the audit could reasonably be expected to influence the decisions of users of the annual accounts. Auditors set a monetary threshold when determining materiality, although some issues may be considered material by their nature. Therefore, materiality is ultimately a matter of the auditor’s professional judgement. Page 148 of 212
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Audit of the annual accounts | 9 17. Materiality levels for the audit of the council and its group were determined at the risk assessment phase of the audit and were reported in the Annual Audit Plan, which also reported the judgements made in determining materiality levels. These were reassessed on receipt of the unaudited annual accounts with only minor changes made to overall materiality. Materiality levels can be seen in Exhibit 1. Exhibit 1 2024/25 Materiality levels for the council and its group Materiality Council Group Materiality – set at 2% of gross expenditure £15.1 million £15.4 million Performance materiality – set at 65% of materiality. As outlined in the Annual Audit Plan, this acts as a trigger point. If the aggregate of misstatements identified during the audit exceeds performance materiality, this could indicate further audit procedures are required. £9.8 million £10.0 million Reporting threshold – set at 5% of materiality, limited to a maximum value of £0.5 million. £0.5 million £0.5 million Source: Audit Scotland Significant findings and key audit matters 18. ISA (UK) 260 requires auditors to communicate significant findings from the audit to those charged as governance, which for the council is Audit and Risk Committee. 19. The Code of Audit Practice also requires public sector auditors to communicate key audit matters. These are the matters that, in the auditor’s professional judgement, are of most significance to the audit of the financial statements and require most attention when performing the audit. 20. In determining key audit matters, auditors consider: • Areas of higher or significant risk of material misstatement. • Areas where significant judgement is required, including accounting estimates that are subject to a high degree of estimation uncertainty. • Significant events or transactions that occurred during the year. Page 149 of 212
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Audit of the annual accounts | 10 21. The significant findings and key audit matters to report are outlined in Exhibit 2. Exhibit 2 Significant findings and key audit matters Significant findings and key audit matters Outcome 1. Restated gross expenditure figures The 2023/24 gross income and expenditure figures were restated in the Comprehensive Income and Expenditure Statement (CIES) to reflect the council’s new reporting structure from 1 April 2024. Significant variances were identified between 2023/24 and 2024/25 gross expenditure figures in Education and Learning, and Property Services. It was identified that £10.9 million of rates and cleaning charges had not been reclassified from various service lines to Property as part of the 2023/24 restatement. Consequently, gross expenditure was not comparable between years. Management have adjusted for this in the audited annual accounts. 2. Property, Plant and Equipment classification The following issues were identified in the unaudited accounts: - A non-operational asset of £32.9 million was included in Other Land and Buildings as at 31 March 2025. It should have been classified as an Asset Under Construction. Depreciation of £0.7 million was charged to the CIES. The asset should not have been depreciated as it was not yet in use. - Infrastructure asset additions were overstated by £1.8 million due to capitalisation of costs incurred on an asset which the council does not own. The expenditure should have been accounted for as revenue expenditure funded by capital under statute (REFCUS). Management have adjusted for these issues in the audited annual accounts. Page 150 of 212
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Audit of the annual accounts | 11 Significant findings and key audit matters Outcome - £1.2 million of surplus assets were incorrectly classified as Assets held for sale within Long term assets. 3. Implementation of IFRS 16 accounting requirements for service concession arrangements and other leases The implementation of International Financial Reporting Standard 16: Leases (IFRS16) is mandatory for local government bodies from 2024/25. Under IFRS16, a lessee is required to recognise right-of-use (RoU) assets and associated lease liabilities on the Balance Sheet. IFRS16 also requires a service concession lease liability to be remeasured to include indexation changes over the period of the lease. Previously such charges were treated as expenses in the year. The council completed a comprehensive review of leases and contracts to identify all leases and arrangements containing a lease, in preparation for implementing IFRS 16. RoU assets, and associated liabilities, of £0.443m were brought on to the Balance Sheet at 1 April 2024 with only minor presentational amendments required for the audited accounts. Application of IFRS 16 to service concession arrangements was implemented correctly and free from material misstatement. A component of the council’s group incorrectly adjusted for IFRS 16 as applicable to peppercorn leases. The Group opening reserves balance was understated by £4.2 million. For the Group accounts to balance, it was necessary for the council to process a compensating adjustment of £4.2 million to the ‘Other Gains and Losses’ line of the Group CIES. The council queried the information provided by the component body. The component body agreed the necessary adjustments with its auditor, and management applied the appropriate revisions to the audited group accounts. 4. Debtors and Creditors The following issues were identified in the unaudited accounts: - Debtors and Creditors were understated by £1.432 million due to prepaid housing rents being incorrectly Management have adjusted for both issues in the audited annual accounts. Page 151 of 212
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Audit of the annual accounts | 12 Significant findings and key audit matters Outcome offset against debtors rather than being classified as accrued income. - £2.432 million of the outstanding long- term liability for PFI arrangements was incorrectly classified as a short-term creditor in the Balance Sheet. 5. Fixed asset register The following issues were identified in the fixed asset register: - There are a large number of fully depreciated assets with a nil net book value at 31 March 2025 on the council’s asset register. Audit testing of a sample of these assets was unable to verify their existence, nor whether the assets remain in use. - Intangible assets with differing useful lives have been capitalised under generic capital codes relating to the year of capitalisation and not the useful economic life (UEL) of the asset, resulting in incorrect amortisation. The impact is not material. Management had commenced a review of fully depreciated assets and a number were derecognised prior to the unaudited accounts being submitted. The review should be completed and assets no longer in use derecognised. Assets which remain in use should be re-assessed to confirm the depreciation policy applied is appropriate. Recommendation 1. Management have agreed to review intangible assets to ensure only those with a common date of recognition and common UEL are capitalised under a generic capital code. Recommendation 2. 6. Remuneration Report The following issues were identified within the Remuneration Report: - The remuneration and pension benefits of senior employees, with responsibility for key decision making within the council following the recent restructure, were not included for all relevant employees in the disclosures in the unaudited accounts. - A termination payment for a senior employee was not included as a separate category of remuneration in the unaudited accounts. Management have adjusted for the omitted disclosures in the audited annual accounts. Source: Audit Scotland Page 152 of 212
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Audit of the annual accounts | 13 Qualitative aspects of accounting practices 22. ISA (UK) 260 also requires auditors to communicate their view about qualitative aspects of the council’s accounting practices, including accounting policies, accounting estimates, and disclosures in the financial statements. Accounting policies 23. The appropriateness of accounting policies adopted by the council was assessed as part of the audit. These were considered to be appropriate to the circumstances of the council, and there were no significant departures from the accounting policies set out in the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). Accounting estimates 24. Accounting estimates are used in number of areas in the council’s financial statements, including the valuation of land and buildings assets and the valuation of the pension liability. Audit work considered the process management of the council has in place around making accounting estimates, including the assumptions and data used in making the estimates, and the use of any management experts. Audit work concluded: • There were no issues with the selection or application of methods, assumptions, and data used to make the accounting estimates, and these were considered to be reasonable. • There was no evidence of management bias in making the accounting estimates. 25. Details of the audit work performed and the outcome of the work on accounting estimates that gave rise to significant risks of material misstatement are outlined in Exhibit . Disclosures in the financial statements 26. The adequacy of disclosures in the financial statements was assessed as part of the audit. The quality of disclosures was adequate, with additional levels of detail provided for disclosures around areas of greater sensitivity, such as financial instruments and valuation of the pension liability. Group audit 27. The council is part of a group and prepares group financial statements. The group is made up of ten components, including the council which is the parent of the group. As outlined in the Annual Audit Plan, audit work was required on a number of the group’s components for the purposes of the group audit, and this work was performed by a combination of the audit team and the components’ audit teams. The audit work performed on the group’s components is summarised in Exhibit 3. Page 153 of 212
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Audit of the annual accounts | 14 Exhibit 3 Summary of audit work on the group’s components Group component Auditor and audit work required Summary of audit work performed Perth and Kinross Council Audit Scotland Full scope audit of the council’s annual accounts. The outcome of audit work performed is reported within the Annual Audit Report, with details of significant findings and key audit matters reported in Exhibit 2. Common Good Funds Audit Scotland Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Charitable Trusts Audit Scotland Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Live Active Leisure Ltd Azets Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Culture Perth and Kinross Azets Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Perth Theatre and Concert Hall (Horsecross Arts Ltd) Henderson Loggie LLP Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Page 154 of 212
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Audit of the annual accounts | 15 Group component Auditor and audit work required Summary of audit work performed Tayside Contracts Joint Committee Audit Scotland Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team. An adjustment was required to the Tayside Contracts Joint Committee accounts which impacted on the group accounts. Details are given in Item 3, Exhibit 2. Tayside Valuation Joint Board Audit Scotland Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Perth and Kinross Integration Joint Board Audit Scotland Analytical procedures at group level. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Tayside and Central Scotland Transport Partnership (Tactran) Audit Scotland N/A – not consolidated on grounds of materiality. Analytical procedures at the group level were performed by the audit team, and no significant issues were identified. Source: Audit Scotland 28. ISA (UK) 600 requires auditors to report the following matters if these are identified or encountered during an audit: • any instances where review of a component auditor’s work gave rise to issues and how this was resolved. • any limitations on the group audit. • any frauds or suspected frauds involving group or component management. Page 155 of 212
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Audit of the annual accounts | 16 29. No such matters were identified or encountered during the course of our audit of the group accounts. Significant matters discussed with management 30. All significant matters identified during the audit and discussed with the council’s management have been reported in the Annual Audit Report. Audit adjustments 31. Audit adjustments were required to the financial statements to correct misstatements that were identified from the audit. Details of all audit adjustments greater than the reporting threshold of £0.5 million are outlined in Appendix 2. Whole of Government Accounts (WGA) return 32. The council is part of the WGA boundary and therefore prepares a return that is used by HM Treasury to prepare the WGA. The National Audit Office (NAO) is the auditor for the WGA and issues instructions outlining audit procedures auditors must follow when auditing a WGA return. The threshold for requiring audit procedures to be performed on the WGA return was set at £2 billion. The council was below this threshold and therefore only limited audit procedures were required, and submission of an assurance statement to the NAO. Significant risks of material misstatement identified in the Annual Audit Plan 33. Audit work has been performed in response to the significant risks of material misstatement identified in the Annual Audit Plan. The outcome of audit work performed is summarised in Exhibit 4. Exhibit 4 Significant risks of material misstatement to the financial statements Risk of material misstatement Planned audit response Outcome of audit work Fraud caused by management override of controls Management is in a unique position to perpetrate fraud because of management’s ability to override controls that otherwise appear to be operating effectively. The audit team will: • Evaluate the design and implementation of controls over journal entry processing. • Make inquiries of individuals involved in the financial reporting process about inappropriate or Audit work performed found: • The design and implementation of controls over journal processing were appropriate. • No inappropriate or unusual activity relating to the processing of journal entries was identified from Page 156 of 212
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Audit of the annual accounts | 17 Risk of material misstatement Planned audit response Outcome of audit work unusual activity relating to the processing of journal entries. • Use data analytics to consider, identify, and test journal entries, focusing on those that are assessed as higher risk, such as those affecting revenue and expenditure recognition around the year-end. • Evaluate significant transactions outside the normal course of business. • Assess the adequacy of controls in place for identifying and disclosing related party relationships and transactions in the financial statements. • Assess changes to the methods and underlying assumptions used to prepare accounting estimates and assess these for evidence of management bias. discussions with individuals involved in financial reporting. • No significant issues were identified from testing of journal entries. • No significant issues were identified from transactions outside the normal course of business. • The controls in place for identifying related party relationships and transactions were adequate but disclosures in the accounts were incomplete. £1.672 million of transactions with bodies in which a senior officer had declared an interest were omitted by the finance team from a note in the unaudited accounts in error. We are satisfied that the amounts to be disclosed had been appropriately identified for disclosure and that the omission was accidental. There is no evidence of an attempt by management to override the controls in place. • No significant issues were identified with changes to methods and underlying assumptions used to prepare accounting estimates and there was no evidence of management bias. Conclusion: no evidence of fraud caused by management override of controls. Valuation of property, plant and equipment – Other Land and Buildings (OLB) The audit team will: • Evaluate the design and implementation of controls over the valuation process. Audit work performed found: • The design and implementation of controls Page 157 of 212
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Audit of the annual accounts | 18 Risk of material misstatement Planned audit response Outcome of audit work Perth and Kinross council held £1.5 billion of property, plant, and equipment (PPE) at 31 March 2024, of which £770 million was other land and building (OLB) assets. Perth and Kinross council is required to value land and building assets at existing use value where an active market exists for these assets. Where there is no active market, these assets are valued on a depreciated cost replacement (DRC) basis. As a result, there is a significant degree of subjectivity in these valuations which are based on specialist assumptions, and changes in the assumptions can result in material changes to valuations. In addition, OLB assets are revalued on a five-year rolling basis and with a valuation date of 1 April. Values may change between periodic valuations and there is, therefore, a risk of material movement between the date of valuation and the balance sheet date. • Review the information provided to the valuer and assess this for completeness and accuracy. • Evaluate the competence, capabilities, and objectivity of the valuers. • Obtain an understanding of management’s involvement in the valuation process to assess if appropriate oversight has occurred. • Review the reconciliation between the accounts, property asset register and valuers’ reports. • Test a sample of OLB assets subject to revaluation in 2024/25, confirm to valuers’ reports, critically assess the appropriateness of key data and assumptions and challenge these where required. • Review management’s fair value assessment that the financial statements accurately reflect the carrying value of the land and buildings at 31 March 2025, and challenged where required. over the valuation process were appropriate. • The information provided to the valuer was accurate and complete. • The valuers had sufficient competence, capability, and objectivity to perform their work. • Management are involved in the valuation process and have an appropriate level of oversight. • The data and assumptions used in the 2024/25 valuation process were appropriate. • Management’s assessment of assets not subject to a valuation process in 2024/25 was reasonable and concluded there was unlikely to be a material difference to the current value at the year-end. Conclusion: the valuation of PPE is not materially misstated. Source: Audit Scotland Areas of audit focus 34. In addition to the significant risks of material misstatement in Exhibit 3, our Annual Audit Plan identified two areas of specific audit focus: • Estimation in the value of pension assets and liabilities • Restatement of 2023/24 income and expenditure disclosures. Page 158 of 212
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Audit of the annual accounts | 19 35. We assessed the scope, independence and competence of the professional actuaries engaged to provide the pension estimates and reviewed the appropriateness of the actuarial assumptions and results, including comparison with other councils. We also confirmed officers’ arrangements for ensuring the reasonableness of the professional estimates and the accuracy of the information provided to the council by the actuary. We did not identify any issues with the valuation of pension assets or liabilities. 36. We reviewed the restatement of 2023/24 gross expenditure and income figures in the CIES and concluded that it had been performed correctly, except for £4.1 million of cleaning costs and £6.8 million of rates charges which had not been transferred from various service lines to Property. This was amended in the audited accounts, see Exhibit 2, Item 1. 37. No further audit procedures were required in respect of the specific areas of audit focus. Prior year recommendations 38. The council has made good progress in implementing the agreed prior year audit recommendations, with no actions outstanding from prior year. Further details are provided in Appendix 1. Page 159 of 212
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Wider scope audit | 20 Wider scope audit Conclusion Perth and Kinross Council’s budget setting and financial management arrangements operated effectively during 2024/25. Appropriate arrangements are in place for financial sustainability despite the challenging financial environment in which the council is operating. Arrangements in place around Vision, Leadership and Governance are generally appropriate. There is scope to improve transparency and scrutiny of senior management exits and restructuring decisions through presentation of options and proposals to elected members. The council is able to demonstrate a clear link between the use of resources and delivery of its priorities through measuring performance against a suite of Key Performance Indicators (KPIs) linked to its Corporate Plan. Audit approach to wider scope Wider scope 39. As reported in the Annual Audit Plan, the wider scope audit areas are: • Financial Management. • Financial Sustainability. • Vision, Leadership and Governance. • Use of Resources to Improve Outcomes. 40. Audit work is performed on these four areas and a conclusion on the effectiveness and appropriateness of arrangements the council has in place for each of these is reported in this chapter. Conclusions on wider scope audit Financial Management 41. The audit work performed on the arrangements the council has in place for securing sound financial management found that these were Page 160 of 212
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Wider scope audit | 21 effective and appropriate. This judgement is evidenced by the council having: • a system of internal control in place that is operating effectively and has no significant weaknesses or deficiencies. • clear and up-to-date policies and procedures, for example, financial regulations and scheme of administration, in place that ensure effective financial management. • clear and up-to-date policies in place for preventing and detecting fraud and other irregularities, and participation in fraud prevention and detection activities such as the National Fraud Initiative (NFI). • suitably qualified and experienced staff leading the finance function, which has sufficient skills, capacity, and capability to effectively fulfil its role. • effective arrangements in place for the scrutiny of arrangements that support sound financial management, and effective scrutiny and challenge provided by the Audit and Risk Committee. • an appropriate Internal Audit service in place who undertake a wide range of reviews, allowing the Chief Internal Auditor to provide an opinion that reasonable reliance can be placed on the Council’s risk management and governance arrangements, and systems of internal control for 2024/25. • a well-established budget-setting and monitoring process which allows effective development and scrutiny of spending plans by elected members 42. The council approved its 2024/25 revenue budget on 28 February 2024. The budget was set at £467.7 million based on Scottish Government funding of £344.8 million, council tax income of £103.9 million, capital grants of £1.6 million, council tax surcharges and single person discount of £3.6 million, and a net contribution from reserves of £13.8 million. 43. The budget was subsequently revised during the year to £496.1 million, primarily as a consequence of additional government grant funding for specific schemes and additional funding for local government and teachers’ pay awards and teachers’ pension costs. The council reported outturn expenditure of £492.5 million at the year end, a net underspend of £3.6 million against the revised budget. 44. The council approved its Housing Revenue Account (HRA) budget for 2024/25 on 24 January 2024. The 2024/25 budget was set at £36.0 million and was funded by rent increases of 6 per cent. The HRA reported a break-even position at the year end. Page 161 of 212
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Wider scope audit | 22 45. Total net capital expenditure incurred in 2024/25 was £161.4 million, of which £133.5 million related to the composite capital (general fund) programme and £27.9 million to the HRA. This spend was against final net capital budgets of £149.0 million and £28.1 million respectively. Significant areas of capital spend included £32.1 million on the Cross Tay Link Road (Destiny Bridge and New Kingsway), £34.5 million on the replacement of Perth High School and £15.4 million on council house buy-backs. 46. The council drew £4.1 million less from reserves in 2024/25 than planned per the revised budget. The final net draw on reserves was £22.4 million compared to the revised budgeted figure of £26.5 million. The council’s general fund balance at 31 March 2025 was £68.3 million of which £46.6 million was earmarked, leaving an uncommitted reserves balance of £18.7 million. 47. Overall, the council’s budget setting and financial management arrangements operated effectively during 2024/25. Controls over changes to key financial systems 48. In February 2025, the council switched from the SWIFT social care system to MOSAIC. We reviewed controls in place over the procurement and approval process for the change to the new system and found these to be appropriate and effective. 49. We also considered the general IT controls in place over the transition process. In particular, we requested and obtained evidence that: • Changes were appropriately tested in a test environment • Changes were approved before being moved into the live environment • Changes were only made by those with authorised access • Management approved the results of the conversion of data, and monitored that the conversion was performed in accordance with established conversion policies and procedures. 50. The council provided the requested evidence and we concluded that appropriate processes were in place to ensure the integrity and security of data on transfer. Financial Sustainability 51. The audit work performed on the arrangements the council has in place for securing financial sustainability found that these were generally effective and appropriate. This judgement is evidenced as set out in the remainder of this section. 52. The council produces a medium-term financial plan (MTFP) each year to support budget planning. The MTFP was last updated in December Page 162 of 212
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Wider scope audit | 23 2024 and covers a six-year period from 2024/25 to 2030/31. It aims to provide direction on how the council will deploy its financial resources to deliver on its priorities, and lays out projected optimistic, mid-range and pessimistic scenarios based on key variables known to put pressure on council finances, such as inflation and demographic changes. Various assumptions are made on the likely level of future funding, with the mid- range scenario assuming a ‘flat-cash’ situation over the period covered by the MTFP. 53. The mid-range scenario sets out a £80.4 million funding gap between 2024/25 and 2030/31. The Strategic Planning Update and 2026/27 to 2028/29 General Fund Revenue Budget, published in February 2025, notes that the Transformation and Change Programme has achieved £11.2 million of savings since 2022. The council is aiming to make savings of around £4 million during 2025/26 through transformation, but recognises that transformation alone will not address the council’s financial sustainability over the longer term. 54. The 2025/26 budget was approved by the council on 26 February 2025. The £503.2 million revenue budget includes a £106.3 million contribution to the Perth and Kinross Integration Joint Board (IJB). The council approved a 9.5% council tax increase for the year. The budget included a planned use of reserves amounting to £12 million. Subsequent revisions have increased this to £18.2 million. 55. The latest update provided to the council on 29 October 2025 set out a projected overspend of £5.6 million across the Health and Social Care Partnership (HSCP). Under the terms of the Integration Scheme, the council is exposed to the element of this overspend which has arisen from social care activity, amounting to £4.4 million. The HSCP has identified mitigating actions of £0.3 million in 2025/26. On 29 October 2025, the council also approved an additional financial contribution of up to £4.2 million to address the in-year pressures from increased demand. 56. The council’s level of usable reserves increased by £18.6 million in 2023/24, mostly through application of the service concession financial flexibility permitted by finance circular 10/2022. This has enabled the council to utilise £16 million of reserves to help balance its budget between 2024/25 and 2027/28. This flexibility only provides a temporary solution to budget pressures, with a £4 million gap emerging from 2028/29. Following council decisions, this has been reduced to recurring gap of £1 million which will require to be addressed from 2028/29. 57. To help ensure its financial sustainability, the council has agreed a 3- year council tax strategy, with an increase of 9.5% for 2025/26 as noted in paragraph 54, and indicative increases of 9.5% for 2026/27 and 6% for 2027/28. 58. The Pullar House PFI agreement expired in September 2025, presenting the council with the opportunity to purchase the assets on Page 163 of 212
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Wider scope audit | 24 contract expiry. At its meeting of 4 September 2024, the council approved the purchase of Pullar House and car park at market value, with the intention of creating a Public Sector Hub, leasing to other public bodies on a cost-sharing basis and improving customer access to multiple services. Capital funding of £10 million was approved to support the purchase. The final purchase price has still to be agreed. 59. Overall, we have concluded that there are appropriate arrangements in place for financial sustainability despite the challenging financial environment in which the council is operating. Vision, Leadership and Governance 60. The audit work performed on the arrangements the council has in place around its Vision, Leadership and Governance found that these were generally effective and appropriate. This judgement is evidenced by the council: • having a Corporate Plan in place that clearly sets out its vision, strategy, and priorities, supported by Annual Performance Reports which reflect the pace and depth of improvement required to realise these in a sustainable manner. • involving service users, delivery partners, and other stakeholders in the development of its vision, strategy, and priorities to ensure these align to their needs. • having clear financial and performance reporting in place, both internally and externally, that is linked to its Corporate Plan, and effective scrutiny and challenge of performance provided by the Audit and Risk, and Scrutiny and Performance Committees. • having effective governance arrangements in place in general, as reflected in the Annual Governance Statement included in the annual accounts. 61. In August 2024, the Director – Economy, Place and Learning left the employ of the council. Following discussions with the Executive team, the Chief Executive subsequently removed the role from the council’s staffing structure, moving to a smaller three-person Executive Team. This amended structure, comprising the Chief Executive, a Deputy Chief Executive and the Chief Officer of the Health and Social Care Partnership, was intended to support the council’s one council approach to place based delivery, and has contributed to overall leadership savings of £1.6 million over three years. 62. As the head of paid service, and as set out within the council’s scheme of delegation, it is within the Chief Executive’s remit to make decisions of this nature. Members were informed of the Executive Director’s departure and subsequent restructure through a series of Elected Member briefing notes. Page 164 of 212
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Wider scope audit | 25 63. Best practice, and the Accounts Commission’s expectation, is that decisions of such a significant nature are put to elected members for formal consideration. The Deputy Chair of the Accounts Commission wrote to all Scottish councils in September 2025 expressing the Commission’s expectation that “where decisions around restructuring and exit packages are being taken, councils must ensure there is clear evidence of effective governance, independent scrutiny, and value for money, as well as robust and transparent record keeping”. 64. There is scope to improve transparency and scrutiny of senior management exits and restructuring decisions through presentation of options and proposals to elected members. It is normal practice for the council to present such reports to elected members for approval, however we were informed via a matter of concern raised with Audit Scotland that the response to a Freedom of Information request relating to the Executive Director’s exit said there was no paper trail of the decision making. Consistently involving elected members in formal decision making on senior management exits and restructuring would avoid this. Recommendation 3 Transparency and scrutiny of restructuring decisions The council should review its process for informing members regarding significant restructuring decisions made by the Executive team. Where such decisions are being taken, the council should ensure there is clear evidence of effective governance, independent scrutiny, and value for money, as well as robust and transparent record keeping. 65. The council has also been subject to an investigation by the Scottish Information Commissioner (SIC) regarding its response to a Freedom of Information (FOI) request submitted in September 2024. The Commissioner found that the council had failed to comply with Part 1 of the Freedom of Information (Scotland) Act 2002 (FOISA) in responding to the information requests made by the applicants. 66. The SIC considered an appeal from a requestor in relation to a freedom of information request, which it has now determined that the council has fully complied with. The SIC subsequently opened an intervention to consider if the council complied with good practice in terms of records management, as set out in the Section 61 Code of Practice, in relation to an aspect of the request, the Commissioner may decide to issue a practice recommendation in relation to this. The council has responded to the Commissioner’s initial enquiry about this matter, and awaits further comment. Page 165 of 212
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Wider scope audit | 26 Arrangements for the prevention of fraud and corruption 67. We reviewed the council’s arrangements for the prevention of fraud and corruption, and its framework for ensuring awareness of the values and ethical standards expected of all employees and elected members and concluded these were appropriate. Codes of conduct are in place for staff and elected members. Induction training is provided to members upon taking office, and further training and support is available on an ongoing basis, from the council and the Improvement Service. It is important that members uphold, and are seen to uphold, the ethical standards expected of a public office holder (also known as the Nolan Principles). Use of Resources to Improve Outcomes 68. The audit work performed on the arrangements the council has in place around its Use of Resources to Improve Outcomes found that these were effective and appropriate. This judgement is evidenced by the council: • being able to demonstrate a clear link between the use of resources and delivery of its priorities through a suite of 54 Key Performance Indicators (KPIs) linked to its Corporate Plan 2022/23 – 2026/27 • reporting performance against these KPIs in an Annual Performance Report (APR) presented to the Scrutiny and Performance Committee in September each year, and subsequently to full Council. The report includes an Executive Summary which provides a helpful overview of KPI trends for each strategic priority • publishing a variety of performance data, including the APR, on the performance section of the council’s website PK Performs • providing two briefings each year to elected members, summarising the latest published data from the Local Government Benchmarking Framework, analysing the council’s performance relative to the Scottish average and providing trend analysis for certain key indicators compared to the position 5 years’ prior • being able to demonstrate improvements in performance against benchmarks and relative to other comparable organisations. 69. We comment further on the council’s performance in the Best Value section of this report. Page 166 of 212
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Best Value audit | 27 Best Value audit Conclusion The council has effective and appropriate arrangements in place for securing Best Value. The Best Value Management Report on service transformation reported the council has a clear vision and plan to support the transformation of its services and has robust officer-led governance arrangements in place to monitor its transformational projects through its Transformation Board and Project Teams. It also stated there is scope for the council to provide more information on the potential impacts of its transformation projects on vulnerable groups through its Equality and Fairness Impact Assessment process. The council has effective and appropriate arrangements in place for preparing and publishing Statutory Performance Information, with a slight improvement in performance compared to prior years and other councils. Audit approach to Best Value 70. Under the Code of Audit Practice, the audit of Best Value in councils is fully integrated within the annual audit. As part of the annual audit, auditors are required to take a risk-based approach to assessing and reporting on whether the council has made proper arrangements for securing Best Value, including follow up of findings previously reported in relation to Best Value. 71. The Accounts Commission also reports nationally on thematic aspects of councils’ approaches to, and performance in, meeting their Best Value duties. As part of the annual audit, thematic reviews, as directed by the Accounts Commission, are conducted on the council. The thematic review for 2024/25 is on the subject of service transformation and involved considering how the council is redesigning services to maintain outcomes and deliver services more efficiently. Conclusions and judgements on the thematic review are reported in a separate Management Report considered by the Audit and Risk Committee on 17 September 2025, and summarised in this chapter. Page 167 of 212
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Best Value audit | 28 Conclusions on Best Value The council’s arrangements and performance in meeting Best Value and community planning duties 72. The audit work performed on the arrangements the council has in place for securing Best Value and its community planning arrangements found these were effective and appropriate. This judgement is evidenced by: • the council having well established and effective governance arrangements in place, with the Best Value being a key aspect of the governance arrangements • the arrangements the council has in place around the four wider scope audit areas, which are generally effective and appropriate, contribute to it being able to secure Best Value • progress the council is making against previous audit recommendations as set out in Appendix 1. Themes prescribed by the Accounts Commission 73. As previously outlined, the Accounts Commission reports nationally on thematic aspects of council’s approaches to, and performance in, meeting their Best Value duties, with the thematic review for 2024/25 on the subject of service transformation. Conclusions and judgements on the council’s approach to service transformation are outlined in a separate Management Report which is available on the Audit Scotland website. A summary of the conclusions and judgments made in the report is outlined below. • The council has a clear vision and plan to support the transformation of its services. Its current Transformation and Change Strategy covers the period from 2022/23 to 2027/28 and includes fifteen projects. • The Council reports that it has delivered £11.2 million of savings since 2022 through its Transformation and Change Strategy. It is not yet clear how much its current transformation projects will contribute to bridging its projected budget funding gap of £80.4 million over the next five years. • The Council has robust officer-led governance arrangements in place to monitor its transformational projects through its Transformation Board and Project Teams. • The Council prepares updates on its Transformation and Change Strategy twice a year. These are considered by the Finance and Resources Committee or Council. Officers also regularly provide detailed updates to elected members on particular transformation projects through specific briefings or relevant committee reports. Page 168 of 212
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Best Value audit | 29 • The Council has a temporary programme management office (PMO) in place to help support the delivery of its Transformation and Change Strategy. The PMO’s term is due to end in March 2026 and the Council is currently considering what its future arrangements will be. • The Council has provided good examples of where it has worked with partners and its communities to improve outcomes and generate savings through its transformation projects. It is rolling out the structured and user-focused ‘Service Design’ approach to transforming its services. • There is scope for the Council to provide more information on the potential impacts of its transformation projects on vulnerable groups through its Equality and Fairness Impact Assessment (EFIA) process. • While the Council has provided the audit team with examples of where it has identified and monitored the financial and non-financial benefits of its transformation projects, it has plans to further enhance its approach to benefits realisation. Statutory performance information (SPI) and service performance 74. The Accounts Commission issued a Statutory Performance Information Direction which requires the council to report its: • performance in improving services and progress against agreed desired outcomes, and • a self-assessment and audit, scrutiny, and inspection body assessment of how it has responded to these assessments. 75. Auditors have a statutory duty to satisfy themselves that the council has made proper arrangements for preparing and publishing statutory performance information (SPI) in accordance with the Direction and report a conclusion in the Annual Audit Report. 76. Audit work assessed the arrangements the council has in place for preparing and publishing SPI, including how it has responded to assessments, and concluded the arrangements in place were effective and appropriate. 77. The Accounts Commission also requires auditors to report a summary of the information on service performance reported by the council. The council reports performance information on its website and through: • an Annual Performance Report which analyses performance against KPIs linked to the strategic priorities in the Corporate Plan 2022/23-2027/28 Page 169 of 212
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Best Value audit | 30 • reporting the council’s performance against the Local Government Benchmarking Framework (LGBF) 78. Service performance reporting is currently undertaken within the different Service Senior Management Teams and will be further informed by the council’s new draft Strategic Planning and Performance Framework. This is currently being consulted on prior to launch, and will be supported by the ongoing development of the Performance and Risk ‘PK Performs’ System. This will be augmented by the development of business and community insights dashboards which will bring together a range of business intelligence on council performance. 79. The information reported is a combination of the LGBF indicators and other relevant indicators the council has developed to monitor progress against key strategic priorities. From review of the performance information reported by the council, this was found to be sufficiently detailed to provide an assessment of progress the council is making against its strategic priorities and allow effective scrutiny of performance. 80. We reviewed 50 LGBF indicators to assess the council’s performance over a 5-year period in comparison with the other 31 Scottish councils. As shown in Exhibit 5, performance relative to other councils has improved over the five years. Of the 50 indicators, 25 improved and 21 declined, indicating an overall positive trend in outcomes. 81. There has been an increase in indicators in the top quartile and a decrease in those in the third and fourth quartiles. In 2019/20, 48% of indicators were in the top two quartiles, rising to 54% in 2023/24. This trend indicates that the council’s performance has not only improved in absolute terms but also strengthened its relative position compared to other councils. Page 170 of 212
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Best Value audit | 31 Exhibit 5 LGBF data comparison across all 32 Scottish councils Source: Audit Scotland analysis of LGBF data available at October 2025 82. Best Value findings and recommendations have been made in previous years’ Annual Audit Reports and in Management Reports on themes prescribed by the Accounts Commission. 83. Details of previous recommendations and progress the council is making against these can be seen in Appendix 1. Overall, the council is making reasonable progress in implementing the previous recommendations made, with three of the seven recommendations being implemented to date. Page 171 of 212
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Appendix 1 | 32 Appendix 1 Action plan 2024/25 2024/25 recommendations Matter giving rise to recommendation Recommendation Agreed action, officer and timing 1. Fully depreciated assets There are a large number of assets with a nil net book value at 31 March 2025 on the council’s asset register. Audit testing of a sample of these assets was unable to verify their existence, nor confirm whether the assets remain in use. Management’s review of fully depreciated assets should be completed and assets no longer in use derecognised. Assets which remain in use should be re-assessed to confirm the depreciation policy applied is appropriate. Exhibit 2, Item 5 Accepted Details of agreed action – The council will accelerate the review of fully depreciated assets and develop a derecognition policy where, if it is more likely than not, that an asset is no longer in use, it will be derecognised. Responsible officer – Chief Finance Officer Agreed date – 30 June 2026 2. Intangible assets Intangible assets with differing useful lives have been capitalised under generic capital codes relating to the year of capitalisation and not the useful economic life (UEL) of the asset, resulting in incorrect amortisation. Management should review the capitalisation of intangible assets to ensure only those with a common date of recognition and common UEL are capitalised under a generic capital code. Exhibit 2, Item 5 Accepted Details of agreed action – Expenditure on intangibles will be capitalised, where appropriate, using generic capital codes in batches, only where asset life is common. If useful economic life is based on licencing, assets will be derecognised automatically at the end of their licence period. Responsible officer – Chief Finance Officer Agreed date – 30 June 2026 3. Transparency and scrutiny of restructuring decisions Following the departure of the Director – Economy, Place and Learning, the Chief Executive made the decision The council should review its process for informing members regarding significant restructuring decisions made by the Executive team. Noted It is normal practice for the council to present reports on senior management exits and restructuring to elected members for approval where it is able to do so. The council Page 172 of 212
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Appendix 1 | 33 Matter giving rise to recommendation Recommendation Agreed action, officer and timing to remove the role from the council’s staffing structure and to proceed with a three- person Executive Team. Members were informed of the departure and restructure through a series of Elected Member briefing notes. Best practice, and the Accounts Commission’s expectation, is that decisions of such a significant nature are put to elected members for formal consideration. Where such decisions are being taken, the council should ensure there is clear evidence of effective governance, independent scrutiny, and value for money, as well as robust and transparent record keeping. Paragraph 64 will continue to operate in line with its approved Scheme of Delegation, taking on board all relevant guidance available at the time, adapted to the specifics of each individual situation. Responsible officer – N/A Agreed date – N/A Follow-up of prior year recommendations Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update 1. Communication with Tayside Pension Fund actuary Council officers do not communicate directly with the Tayside Pension Fund, relying instead on Dundee City Council (DCC) as the administering authority. Our audit found that information on early retirement and voluntary severance of 6 individuals was not communicated to the actuary by DCC. The omissions could have been readily identified through detailed review of the curtailment cost information included in the IAS19 report received from the actuary and associated supporting documents. Risk - whilst this did not result in a material error in the Officers should review the information provided by the pension fund actuary for consistency with their own understanding of voluntary severance and early retirals approved in year. Discrepancies identified should be raised with DCC contacts for communication to the pension fund actuary. Management response/agreed action: Officers will review early retirals as part of their management review of the pension disclosures for the accounts. Council officers will also engage with Dundee City Council to ensure that the information is provided to the actuary. Responsible Implemented Audit work on exit packages disclosed in the annual accounts did not identify any significant discrepancies with the information reported to the actuary via Dundee City Council. Page 173 of 212
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Appendix 1 | 34 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update accounts, future significant levels of voluntary severance or early retirals could lead to errors through incomplete information being provided to the actuary. officer: Corporate Accounting Manager Agreed date: 31 May 2025 2. Performance reporting in the Management Commentary Reporting of performance in the Management Commentary could be improved through the inclusion of KPIs and a summary of how the council has performed with respect to its targets for the year. The existing presentation lists a series of ‘outcomes’ which lack context and do not give users of the accounts a sense of whether performance is improving, declining, or static. Risk – the Management Commentary does not provide a balanced view of performance. The Annual Performance Report (APR) presented to the Scrutiny and Performance committee in September each year contains details of KPIs and targets, with a clear summary of whether targets have been met and an analysis of whether the trend over time is one of improvement or decline. Performance reporting in the Management Commentary can be improved through summarising performance in relation to KPIs and targets as presented in the APR. The use of graphs and trend analysis in public performance reporting should also be considered for inclusion, as recommended by the Accounts Commission. Management response/agreed action: Agreed to meet with Audit Scotland early in the 2024/25 process and review disclosure requirements. Responsible officer: Strategic Lead – Strategic Planning, People and Performance Agreed date: June 2025 Implemented The Strategic Lead – Finance and Business Support and the Strategic Planning, Performance and Risk Team Leader met with audit in early 2025 to agree performance information for inclusion. The unaudited annual accounts included the agreed information based on the 2023/24 annual performance report as the latest available. This was updated to 2024/25 information for the audited annual accounts. It had been agreed with officers that the revised statements for the audited annual accounts would be shorter. This was not implemented due to unforeseen staff absences within the performance team. It will be taken forward as a matter of priority with officers as part of planning the 2025/26 audit. 3. Senior Officer compliance with governance procedures Senior officers should be reminded of the need to disclose all activity which might be, or perceived to be, Implemented Relevant staff were contacted in January 2025 and reminded of their obligations Page 174 of 212
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Appendix 1 | 35 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update A senior officer participated in a marketing video for a local business which supplies goods and services to the council. Council procedures require senior officers to declare any activity which might give rise to a potential conflict of interest. The activity was not declared by the officer. Risk – the council is perceived to be biased when awarding contracts for goods or services. in conflict with their council role. Management response/agreed action: Agreed to remind Senior officers of procedures for disclosing conflict of interest or other works. Responsible officer: Strategic Lead – Strategic Planning, People and Performance Agreed date: January 2025 to declare any activity which might give rise to a potential conflict of interest. Progress against previous Best Value findings and recommendations Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress BV1. Service level workforce plans Service workforce plans are being developed and the council is developing its systems to provide access to service level workforce data. Risk - the council may fail to deliver on the People and Culture Strategy. The council should ensure its service level workforce planning measures align with actions in the People and Culture Strategy 2024-28 action plan as well as agreeing any additional service level workforce measures. Management response/agreed action: This is part of the remit of the Workforce Planning Themed Board who will monitor and agree actions within the People and Culture Strategy. HSCP has a separate Strategy and governance and reporting arrangement in place. Education and Learning undertakes annual staffing exercise. All other Strategic leads will develop their own service workforce plans that Implemented Measures monitoring progress under the People and Culture Strategy were reported to the Finance and Resources Committee in June 2025. The actions delivered were presented against the key actions under the People and Culture Strategy. Many of these have been measured in 2023/24 and 2024/25. Strategic Leads have completed template workforce plans that include specific information about skills gaps. Succession planning has also been included in the development of these plans. The Council reports actions delivered and achievements under this recommendation. The launch of the leadership development programme and Page 175 of 212
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Appendix 1 | 36 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress will be collectively reviewed at the Workforce Planning Themed Board, ELT, and Committee. Responsible officer: Strategic Lead – Strategic Planning, People and Performance Agreed date: Ongoing and annual update to Finance and Resources Committee participation in national development initiatives were cited as successes achieved under this action. Updated and longer-term workforce plans are now ongoing as part of workforce improvements. BV2. Quantifying workforce benefits from the introduction of digital technology The council has established many workforce benefits and productivity gains of its digital technology improvements but there is scope for more of these to be quantified. Risk - there is a risk that the council does not fully understand the workforce benefits from digital technology improvements to inform future decision- making. The council should build on the work it has done to date to demonstrate and quantify what workforce benefits and productivity gains have been made through its use of digital technology. Management response/agreed action: The Council will continue to grow the culture of embedding a standardised approach to Benefits Realisation: baselining service delivery costs and related “softer” metrics at the start of any improvement journey to ensure the impact of digital technology and new ways of working is maximised for improving efficiency of our workforce and outcomes for employees and citizens of Perth and Kinross. Responsible officer: Strategic Lead for Customer and Digital Services Agreed date: December 2025 Implemented The council's aim has been to continue to grow the culture of embedding a standardised approach to Benefits Realisation: baselining service delivery costs and related metrics to ensure the impact of digital technology and new ways of working is maximised for improving efficiency of its workforce and outcomes for employees. A new business partnering function has been introduced and a standardized approach to benefits realization is now embedded across digital transformation initiatives. Workforce benefits are captured, measured, and used to inform future decision-making. BV3. Flexible working benefits Although the council’s flexible The council should develop measures to assess the impact of its flexible working Partially Implemented A review of the Flexible Working Framework, Page 176 of 212
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Appendix 1 | 37 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress working framework contains a section on how the council will measure effectiveness of the framework, no specifics are provided in relation to how this will be done. Risk - there is a risk the council is not aware of the impact of flexible working on wellbeing and productivity. framework on staff productivity, wellbeing, and service performance to ensure these are being maintained or improved. Management response/agreed action: Strategic Leadership Team, Performance Improvement Team and People and Culture team will devise arrangements to capture qualitative and quantifiable data via pulse surveys, employee survey actions and feedback. Consideration will be given to how this can be captured via data and technology i.e. PK Performs to provide a standard approach in terms of performance monitoring. Responsible officer: Strategic Lead – Strategic Planning, People and Performance Agreed date: September 2025. including Hybrid working was undertaken. Flexible Working Guidance was refreshed in January 2025. The council's Working Smarter office rationalisation project gathered feedback on how well flexible/hybrid working arrangements have worked at team level. Employee engagement surveys have captured views on work life balance and levels of contribution that allows assessment of progress 2024 and 2025 surveys. The Workforce Planning Themed Board will consider additional measures. Responsible Officer: Strategic Lead – Strategic Planning, People and Performance Revised target date: 30 September 2026 BV4. Workforce-related benefits from shared service arrangements There will be inherent workforce related benefits arising from each of the shared working arrangements that the council has with its partners in Tayside and further afield. Risk - Lessons are not learned and applied when creating new, or developing existing, shared working arrangements. The council may not be utilising opportunities for shared services and collaboration opportunities across partner organisations. The council should develop a formalised analysis of the workforce-related benefits arising from shared service arrangements and further explore additional opportunities for shared service arrangements. Management response/agreed action: The Workforce Planning Themed Board will determine an approach to identify agreed measures and performance monitoring arrangements. Partially Implemented Workforce plans have been developed, which have provided the opportunity for the Workforce Planning Themed Board to consider alternative models of service delivery within the Council and, where appropriate, with other organisations. This work continues through Transformation activity. Existing arrangements are reported to council committees on a regular basis, an example being the Street Lighting Partnership, Page 177 of 212
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Appendix 1 | 38 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress Responsible officer: Strategic Lead – Strategic Planning, People and Performance Agreed date: September 2025. which is a collaboration with Tayside Contracts, Dundee City Council, and Angus Council. The council continues to explore other opportunities, such as Leadership Development opportunities available through NHS Tayside. Formalised analysis is still to be developed. Responsible Officer: Strategic Lead – Strategic Planning, People and Performance Revised target date: 30 September 2026 BV5. Monitoring and reporting on service level workforce plans The council will need to set out its approach to monitoring and reporting on service level workforce plans. Risk – service level workforce planning arrangements may not be supporting the delivery of the People and Culture Strategy. The council should set out its arrangements for monitoring and reporting on service level workforce plans. Management response/agreed action: This will be discussed with the Workforce Planning Themed Board to agree how to take this forward in respect of monitoring progress and reporting arrangements. Responsible officer: Strategic Lead – Strategic Planning, People and Performance Agreed date: March 2025 Implemented Service level workforce plans were developed using a standard template. This allowed a review of content and the identification of themes. The Workforce Planning Themed Board reviewed the themes and developed a broader programme of work, which was approved by the Finance and Resources Committee in June 2025 as part of reviewing the first year of the delivery of the People and Culture Strategy. The themes arising relate to resourcing challenges and requirements, skills development, leadership requirements and ongoing engagement and wellbeing issues. These will be Page 178 of 212
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Appendix 1 | 39 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress considered Council-wide and localised as appropriate. The Board has been the driver to achieve the submission of the initial 18- month service specific workforce plans and they are reviewing the content of these to develop the actions arising going forward. The Workforce Planning Board will continue to review the implementation of workforce plans and actions arising from them at their scheduled meetings. Further updates will be provided to the Finance and Resources Committee on an annual basis. BV6. Measuring the impact of workforce planning The council has still to develop measures and targets to monitor and report on progress against the workforce plan. Risk - workforce planning arrangements may not be supporting the delivery of the council’s strategic priorities. The council should further develop SMART measures and targets to assess the impact and effectiveness of its workforce planning actions in the People and Culture Strategy 2024-28. Management response/agreed action: This will be discussed with the Workforce Planning Themed Board to agree how to take this forward in respect of identifying measures to monitor progress, refreshing new or emerging priorities and reporting arrangements. Responsible officer: Strategic Lead – Strategic Planning, People and Performance Agreed date: June 2025 Implemented In addition to the existing workforce measures (turnover, costs of overtime etc) the People and Culture Strategy includes specific measures of performance/ success associated with the development and implementation of workforce plans. Updates on progress were presented to the Finance and Resources committee in June 2025 and will be continue to be presented on an annual basis. Page 179 of 212
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Appendix 1 | 40 Matter giving rise to recommendation Recommendation, agreed action, officer and timing Update on progress BV 2022/23 b/f. Best Value Reporting The Council has made slow progress on recommendations reported in the 2019 Best Value Assurance Report. The council should implement a process for routinely reporting Best Value action plan progress to committee. Management response/agreed action: An annual update will be provided through the Corporate Annual Performance Report which is reported to the Scrutiny and Performance Committee and the Council in September. This will also sit on our website as part of the supporting information which is accessible to the public. In addition, we will report six monthly to the Executive Leadership Team. Responsible Officer: Strategic Lead – Strategic Planning, People and Performance Target date: 30 September 2024 Revised date: 30 September 2025 Implemented The Annual Performance Report for 2024/25 presented to Scrutiny and Performance committee in September 2025 is supplemented by a progress report on how the Council is meeting its statutory duty to deliver best value, including an update on the Best Value Assurance Report (BVAR) improvement actions. The best value report referred to is being updated to meet accessibility requirements so is not currently available on PK Performs, but will be re- published once compliant Two actions remained outstanding from the 2019 BVAR: • developing a longer-term financial plan covering a five to ten year period • a wide-ranging review of the community planning partnership Sufficient evidence has been provided to the audit team to allow conclusion that both of these points have been addressed. Page 180 of 212
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Appendix 2 | 41 Appendix 2 Summary of adjusted misstatements Details Financial statements lines impacted Comprehensive Income and Expenditure Statement (CIES) Balance Sheet Audit adjustments to financial statements Dr Cr Dr Cr £000 £000 £000 £000 4. Restated gross expenditure figures Cost of services (Gross expenditure – Property) 10,863 Cost of Services (Gross expenditure – various) 10,863 Net impact on restated 2023/24 financial statements 0 (0) 5. Property, Plant and Equipment classification Property, Plant and Equipment 493 Assets Held for Sale – Long- term 1,155 Net cost of services 1082 Other Comprehensive Income and Expenditure 420 6. Group IFRS 16 adjustment Group reserves (Opening) 4,195 Group other comprehensive income and expenditure 4,195 7. Debtors and Creditors Short term debtors 1,432 Page 181 of 212
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Appendix 2 | 42 Details Financial statements lines impacted Comprehensive Income and Expenditure Statement (CIES) Balance Sheet Short term creditors 1,000 Other long term liabilities 2,432 Net impact on financial statements 662 (662) Audit adjustments in disclosures 1. A separate line was required in the Group Movement in Reserves Statement for Adjustment on transition to new accounting arrangements for leases. 2. The line for Assets Held for Sale in Long-term Assets was removed. 3. Disclosures in the Remuneration report were updated to include the additional senior employees identified for inclusion, and to separately disclose payments made to senior employees as compensation for loss of office. Page 182 of 212
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Appendix 3 | 43 Appendix 3 Supporting national and performance audit reports Report name Date published Local government budgets 2024/25 15 May 2024 Scotland’s colleges 2024 19 September 2024 Integration Joint Boards: Finance and performance 2024 25 July 2024 The National Fraud Initiative in Scotland 2024 15 August 2024 Transformation in councils 1 October 2024 Alcohol and drug services 31 October 2024 Fiscal sustainability and reform in Scotland 21 November 2024 Public service reform in Scotland: how do we turn rhetoric into reality? 26 November 2024 NHS in Scotland 2024: Finance and performance 3 December 2024 Auditing climate change 7 January 2025 Local government in Scotland: Financial bulletin 2023/24 28 January 2025 Transparency, transformation and the sustainability of council services 28 January 2025 Sustainable transport 30 January 2025 A review of Housing Benefit overpayments 2018/19 to 2021/22: A thematic study 20 February 2025 Additional support for learning 27 February 2025 Integration Joint Boards: Finance bulletin 2023/24 6 March 2025 Integration Joint Boards finances continue to be precarious 6 March 2025 General practice: Progress since the 2018 General Medical Services contract 27 March 2025 Council Tax rises in Scotland 28 March 2025 Page 183 of 212
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Perth and Kinross Council 2024/25 Annual Audit Report DRAFT Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot AS.5.0 Page 184 of 212
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 1 December 2025 Report Title: Internal Audit Follow Up Report Number: 25/331 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: Strategic Lead – Legal and Governance 1. Purpose 1.1 The purpose of this Report is to present current summary of Internal Audit’s ‘follow up’ work relating to actions due for completion up to September 2025. 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Follow Up Outcomes 5. Conclusion 6. Impact Value Assessment 7. Appendices 2. Recommendation It is recommended that the Committee: 2.1 Notes the current position in respect of the agreed actions arising from Internal Audit’s work. 3. Background/Context 3.1 The Global Internal Audit Standards in the UK Public Sector (GIAS (UKPS)) and the Code of Practice for the Governance of Internal Audit in UK Local Government require that the Audit Committee should oversee the tracking and implementation of actions agreed following audits. 3.2 Internal Audit request evidence from Services which confirms that actions have been implemented and, therefore, controls have been improved. 6 Page 185 of 212
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4. Progress Update 4.1 There were 3 actions due to be completed up to September 2025. Two actions have been verified by Internal Audit as having been satisfactorily completed. The remaining action has a revised completion date, as detailed in the Appendix 1. 5 Conclusion 5.1 Not applicable. 6. Impact Value Assessment 6.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 7. Appendices 7.1 Appendix 1 – Actions with a completion date of up to September 2025 which have yet to be completed Page 186 of 212
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Actions with a completion date up to September 2025 which have yet to be completed Finding Action Action owner & Service Date(s) Current status Internal Audit Opinion A24-01 - Business Continuity Management (BCM) Planning Action Point : Action Point 1.3 Importance: High Audit Committee Date: June 2025 Our observation highlighted the need for Business Continuity Plans (BCPs) to be regularly updated, particularly regarding contact details and emergency actions. Despite the introduction of a new template, up to-date BCPs were not found across all services. The audit concluded without verifying signed BCPs for all services Ensure all Business Continuity Plans are signed by the Strategic Leads Strategic Leads, supported by S Terras, Emergency Planning & Business Continuity Officer June 2025 Dec 2025 Some Strategic Leads are yet to provide a signed BCP for their strategic area. The Emergency Planning & Business Continuity Officer will ensure these are received. Satisfactory Appendix 1 6 Page 187 of 212
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Audit & Risk Committee Date of Meeting: 1 December 2025 Report Title: Internal Audit Update Report Number: 25/332 Report Author: Jackie Clark, Chief Internal Auditor Organisational Lead: Strategic Lead – Legal and Governance 1. Purpose 1.1 The purpose of this Report is to present a summary of Internal Audit’s work undertaken as part of the Internal Audit Plans for 2024/25 and 2025/26. 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Progress Update 5. Outcome from Consultancy Work 6. Conclusion 7. Impact Value Assessment 8. Appendices 2. Recommendation It is recommended that the Committee: 2.1 notes progress with Internal Audit activity. 3. Background/Context 3.1 The Global Internal Audit Standards in the UK Public Sector (GIAS (UKPS)) and the Code of Practice for the Governance of Internal Audit in UK Local Government require that the Audit Committee should receive regular engagement reporting for internal audit activity and on performance relative to the approved plan. 7 Page 189 of 212
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3.2 Work has continued on assignments from Perth & Kinross Council’s Internal Audit Plans. In addition, work has continued to be undertaken in connection with the Internal Audit provision for Perth & Kinross’ Integration Joint Board. 3.3 Internal Audit continues to support Services to investigate matches for the National Fraud Initiative in line with the timeline as laid down by Audit Scotland. In addition, Internal Audit has supported services in renewing Privacy Notices and ensuring that the Council is able to provide relevant datasets relating to personal care which are now required. 4. Progress Update 4.1 Appendix 1 shows the status of audits arising from the Internal Audit Plans. 4.2 Internal Audit is currently involved with further areas of unplanned work. There has been significant activity in relation to unplanned work. Where any control issues arise as a result of these, reports will be presented to the Audit & Risk Committee. 6 Conclusion 6.1 Not applicable. 7. Impact Value Assessment 7.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 8. Appendices 8.1 Appendix 1 – Internal Audit Activity Page 190 of 212
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Appendix 1 INTERNAL AUDIT UPDATE Internal Audit Activity Audit No. Title Lead Service(s) Status as at November 2025 Audit Committee 2024/25 A24-03 Multi Agency Safeguarding Hub Children, Families & Justice Completed December 2025 A24-04 Affordable Housing Housing & Communities Report in draft March 2026 2025/26 C25-01 Strategic Partnering – Education & Learning Education & Learning Ongoing March 2026 C25-02 Strategic Partnering – Environment & Infrastructure Environment & Infrastructure Ongoing June 2026 A25-03 External Funding Multiple Services Ongoing March 2026 A25-04 Health & Safety Strategic Planning, People & Performance March 2026 A25-05 Housing Regulator Submission Housing & Communities Report in draft March 2026 A25-06 Risk Maturity Strategic Planning, People & Performance June 2026 A25-07 Insurance Finance & Business Support Ongoing March 2026 A25-08 Administration of a social care establishment Adult Social Work Completed December 2025 A25-09 Petty Cash All Services Completed December 2025 A25-10 Payroll Strategic Planning, People & Performance Ongoing June 2026 A25-11 Assessment & Charging Finance & Business Support June 2026 A25-12 Asset Management Finance & Business Support June 2026 7 Page 191 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 Internal Audit Report Perth and Kinross Council 24-03 Multi-Agency Screening Hub (MASH) October 2025 Final Report (Report No. 25/333) Legal and Governance Corporate and Democratic Services Perth & Kinross Council Council Offices 2 High Street Perth PH1 5PH 8 Page 193 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 24-03 Multi-Agency Screening Hub (MASH) Contents by Section 1. Introduction 2. Executive Summary 3. Audit Background Information 4. Scope and Limitations 5. Assessment of the Control Environment 6. Summary of Findings 7. Conclusions 8. Acknowledgement 9. Action Implementation & Follow Up 10. Management Action Plan 11. Authorisation 12. Distribution 13. Assessment Definitions Page 194 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 1. Introduction 1.1 The audit of Multi-Agency Screening Hub (MASH) was undertaken as part of the Internal Audit Plan for 2024-25, which was approved by the Audit & Risk Committee on the 24th of June 2024. The period under review for the purposes of the audit exercise was financial years 2022-23, 2023-24 and 2024-25. 1.2 The indicative scope for the audit was to review the effectiveness of the arrangements in place. 1.3 This audit is linked to the Strategic Risk Register SR-01 “We fail to protect children and vulnerable adults from harm”, which was reported as Priority 1, Very High on the 17th of June 2025. 2. Executive Summary 2.1 The audit has found that reasonable assurance can be placed on the Council’s internal controls in relation to the arrangements in place to support the Multi- Agency Screening Hub (MASH). 2.2 There are seven actions arising from the findings in Section 6. An action plan is included at Section 10. Once these actions are completed, Internal Audit should be able to place substantial assurance on the arrangements in place. 3. Audit Background Information 3.1 Children (Scotland) Act 1995, Section 22 states that “A local authority shall safeguard and promote the welfare of children in their area who are in need; and so far as is consistent with that duty, promote the upbringing of such children by their families, by providing a range and level of services appropriate to the children’s needs.” 3.2 Getting It Right For Every Child (GIRFEC) is Scotland’s national approach to promoting, supporting, and safeguarding the wellbeing of all children and young people. It provides a consistent framework, shared language and common understanding of wellbeing. GIRFEC puts the child or young person at the heart and helps children and young people get the right support from the right people at the right time. 3.3 Children and young people’s needs and emerging risks require to be considered along the continuum of their lifespan. Risk is a dynamic concept that can be multi-dimensional in character. Risks may be reduced by parents or carers or through early identification, intervention and support from universal services. At times, a number of services or agencies may need to respond together as part of a co-ordinated intervention. Page 195 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 3.4 The Multi-Agency Screening Hub (MASH) is a Social Work and Third Sector Support Forum, which exists in a form of weekly meetings hosted by Children and Families Social Work and attended by a range of agencies and services who can offer support and advice to families at an early or earlier stage. 3.5 Currently, families in need of some additional support at a lower level require to be referred into MASH through the Child Protection Duty Team (CPDT) in Children and Families Services. 4. Scope and Limitations 4.1 The Audit has reviewed the effectiveness of the MASH in providing allocation of support to babies, children, young people and their families, and the adequacy of its arrangements in place. 4.2 To arrive at an opinion, the review included interviews with key officers, document reviews and analysis of the meetings recordings and of relevant performance indicators. 4.3 There were no limitations identified that would impact the Audit. However, we were not able to comment on the effectiveness of the arrangements of the partners’ agencies. 4.4 The details of the control objectives reviewed and Internal Audit’s assessment of their strength of control in each area are contained within Section 5 of this report. 5. Assessment of the Control Environment 5.1 The table below contains a summary of the findings against each control objective and Internal Audit’s assessment of the adequacy and effectiveness of the controls in place to meet each of the objectives agreed for this audit. Further details, including any improvement actions, are set out in the Management Action Plan. No. Control Objective Action Rating Control Objective Assessment 5 4 3 2 1 1 To ensure the adequacy of the arrangements in place to support the effective work of the Multi-Agency Screening Hub. 1 1 5 Reasonable assurance 5.2 The auditor has assessed that reasonable assurance can be placed on controls overall in relation to the Multi-Agency Screening Hub (MASH) from the audit. Meaning: “There is a generally sound system of governance, risk management and control in place. Some issues, non-compliance or scope for improvement Page 196 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 were identified which may put at risk the achievement of objectives in the area audited”. 5.3 A summary of the key findings and actions are provided in section 6, please note however, the following areas of good practice which have been highlighted during the audit: 5.4 MASH has proven to be very effective in providing timely and efficient allocation of support to babies, children, young people and their families. The meetings are held frequently, typically weekly, and proceed even when a small number of cases, such as two, are on the agenda, reflecting a strong commitment to the responsiveness. Initial referral screening is done by a qualified Social Worker in the CPDT. Over the course of a year, a substantial number of children are discussed (235 on average), with all cases allocated to the most appropriate agencies to ensure timely and targeted support. 5.5 The Service has promptly recognised a shortage of the staff resource and took proactive measures to address it. The targeted recruitment of two MASH employees allowed the Service to avoid disruption to the workflows and to ensure consistent service quality. 5.6 The process actively contributes to improved Child Protection outcomes through early intervention. By addressing concerns at such early stage, case risks are effectively mitigated, preventing their escalation into more serious cases and avoiding the need for statutory Social Work intervention. MASH also allows the allocation of cases that would otherwise be declined by the CPDT, preventing avoidable harm and encouraging development of more sustainable outcomes for the families and communities. It is illustrative that, although the number of Child Concern Reports is increasing every year (from 6234 in 2020-21 to 8454 in 2024-25), it does not result in a subsequent increase in the later stages of child protection interventions (Inter-Agency Referral Discussions, Child Protection Planning Meetings, Joint Investigative Interviews, Child Protection Orders etc). In fact, it appears to be the opposite - the numbers for those later intervention stages, as well as for the children being placed on the Child Protection Register (from 91 in 2021-22 to 66 in 2024-25), are decreasing every year (as could be seen in the table below): Page 197 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 5.7 All MASH activities and decisions are aligned with key national principles and strategic initiatives, such as GIRFEC principles, Whole Family Wellbeing programme and The Promise initiative, as well as with the United Nations Convention on the Rights of the Child. This ensures that the support allocated through the MASH remains relevant and contributory to broader governmental objectives. 5.8 All the MASH agencies possess adequate competencies. They are well- established organisations with years of effective collaboration with PKC. These long-standing relationships provide operational stability and reliability. Additionally, all of the partners have access to Child Protection Committee (CPC) trainings. This access promotes shared knowledge and supports continuous professional development. For partners with whom contractual agreements are in place, these documents also define expectations towards partners’ competencies. 5.9 Documentation practices are upheld to support accountability, transparency, traceability and informed decision-making. The records exist not only in the form of the MASH Register, but also as meeting recordings, meeting transcripts and MOSAIC case notes. 5.10 There is a range of data protection documents in place, which provide clarity and promote accountability. A formal Memorandum of Understanding (MOU) was developed in April 2025 to clearly define expectations and responsibilities in data handling. The MOU is comprehensive and ensures compliance with data protection laws. Data Protection framework is also outlined in Contracts/ Service Level Agreements (SLAs). 5.11 A Privacy Notice has been developed and formally published to ensure full transparency regarding the collection, use and safeguarding of personal information. The Notice clearly outlines the commitments to data protection and the lawful basis for processing information. Making the document accessible publicly helps to build trust with stakeholders and reinforces compliance with data protection laws, as well as with best practices. 5.12 Adherence to information minimisation principles ensures that only relevant and necessary data is shared. Secure communication channels are utilised at all times. Partner agencies are not granted direct access to the PKC’s case management system (MOSAIC). Personal passwords are never disclosed, maintaining the high standards of confidentiality and data security. 5.13 Accountability is reinforced by CPDT remaining involved for some period after allocation and by talking to the agencies prior to case closure to confirm case status, where appropriate. It is also supported by informing the referrers of allocation outcomes to facilitate their continuous engagement in the process. Importantly, there is also an option to escalate the cases back to the CPDT. 5.14 Although MASH is a relatively new project, the service has already initiated a review of its effectiveness, receiving positive feedback from the partners and confirmation of its significant strengths through the Desktop Audit. Those Page 198 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 reviews resulted in recognition and implementation of needed improvements (e.g., establishment of the Memorandum of Understanding, inclusion of a distinct consent for MASH discussion within referral forms, procedural updates to the outcomes distribution process etc), facilitating adaptive learning and continuous improvement. 5.15 The MASH strengthens inter-agency relationships and improves inter-agency communication. It also provides a platform for cooperation and effective collaboration for the agencies, inspiring their joint projects and avoiding duplication of efforts. 6. Summary of Findings 6.1 In addition to the good practice highlighted above, below is a summary of key findings and actions, which are reflected in the Management Action Plan, detailed in section 10. 6.2 There are some discrepancies between the Memorandum of Understanding (MOU) and the actual practice: “No information is shared by email prior to the MASH other than the names of the children/young people being discussed”. – This statement appears to be inaccurate as with the list of children’s and young people’s names, the partners also receive some other personal data, which includes their dates of birth, addresses, school’s details and their parents’ names, as well as the link to the main MASH data file (MASHUP Register). Such practice appears to breach the terms of the MOU, so it would be recommended to re-align the document with the practice by reviewing what data is getting shared prior to the MASH and, if needed, to amend the Memorandum accordingly. It is also advisable to strengthen the Register’s security by applying password protection and thereby preventing unauthorised data damage or alteration. - One of the agencies was not removed from the correspondence list and continued to receive sensitive information after their exit of the MASH group. It is acknowledged and appreciated that CPDT Team Leader has requested their removal, however it is recommended to always ensure that it is actioned as otherwise this would lead to unauthorised disclosure, breach of confidentiality obligations and non-compliance with data protection laws. The consequences might also include potential legal or regulatory actions. - It was observed that, on one occasion, a separate discussion between the two members was captured at the end of the meeting recording due to the belief that the recording had already stopped. It would be recommended to consistently verify that the recording has concluded before proceeding to any separate discussion as otherwise this could result in violation of confidentiality policies and of data protection regulations. Page 199 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 [Action Point 1] 6.3 Data recording is not always accurate, comprehensive and consistent: - Some key data is missing or inaccurate (gaps/ blank cells; data recorded or copied incorrectly). - Data extracted from MOSAIC does not appear to be checked for common sense before being transferred onto the Register/MASHUP List and distributed to the partners, resulting in errors in key information and misleading the agencies. - Data for the Register does not appear to be cross-checked with data on the Referral forms, resulting in discrepancies between the two of them. - Some outcomes are missing or inaccurate (blank cells; if multiple outcomes, not all allocations are always recorded; the background recorded instead of the allocation; some discrepancies between the document and the outcomes expressed at the meeting). This could lead to misallocation of the cases, to partners receiving misleading information, and to cases delays and escalations. There is also a risk of a reputational damage and of partners’ disengagement. [Action Point 2] 6.4 Please note that there are five other minor actions for the improvement in the control environment which are included within the management action plan. [Action Points 3-7] 7. Conclusion 7.1 The Internal Audit review is able to place reasonable assurance on the overall control environment for the Multi-Agency Screening Hub (MASH). The agreed actions, once implemented, should enable Internal Audit to place substantial assurance on these. 8. Acknowledgements 8.1 Internal Audit would like to thank all officers who were involved in this audit, particularly: Sharon Cooper, Service Manager - Children’s Services Page 200 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 Sheila Wilson, Improvement Officer - Children’s Services Debbie Reilly-Davidson, Team Leader - Child Protection Duty Team. 9. Action Implementation & Follow up 9.1 Responsibility for the maintenance of adequate and effective controls rests with management. Where the audit has identified areas for management action, these are identified in the Management Action Plan. Where a decision is taken by management not to act in response to finding from this review, it is the responsibility of management to assess and accept the risk arising from non- implementation. 9.2 Achievement of the agreed actions is monitored through Internal Audit’s ‘follow up’ arrangements. Page 201 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 10. Management Action Plan Action Point Para. No Finding Risk Rating Agreed Action & Evidence Action Owner Target Completio n Date 1 6.2 There are some discrepancies between the Memorandum of Understanding and the actual practice: - “No information is shared by email prior to the MASH other than the names of the children/young people being discussed”. – This statement appears to be inaccurate as with the list of children’s and young people’s names, the partners also receive some other personal data, which includes their dates of birth, addresses, school’s details and their parents’ names, as well as the link to the main MASH data file (“MASHUP Register”). Such practice appears to breach the terms of the MOU, so it would be recommended to re-align the 3 Agreed action:MOU will be updated (as the list of children, as well as their personal data on the MASH spreadsheet, is available for participants). Agreed evidence: • Updated MOU. • Updated format of invites to planned partners. S Wilson, Improvement Officer December 2025 Page 202 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 document with the practice by reviewing what data is getting shared prior to the MASH and, if needed, to amend the Memorandum accordingly. It is also advisable to strengthen the Register’s security by applying password protection and thereby preventing unauthorised data damage or alteration. - One of the agencies was not removed from the correspondence list and continued to receive sensitive information after their exit of the MASH group. It is acknowledged and appreciated that CPDT Team Leader has requested their removal, however it is recommended to always ensure that it gets actioned as otherwise this would lead to unauthorised disclosure, breach of confidentiality obligations and non- compliance with data protection laws. Agreed action:A review process will be put in place to ensure this does not happen again. Partners will be reminded to advise the MASH if they are removing themselves from MASH and they will be deleted from MASH systems and processes. Agreed evidence: • An up-to-date list of MASH planned partners. • A reminder email sent to the partners. Exit D Reilly- Davidson,CPDT Team Leader November 2025 Page 203 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 - It was observed, on one occasion, that a separate discussion between the two members was captured at the end of the meeting recording due to the belief that the recording had already stopped. It would be recommended to consistently verify that the recording has concluded before proceeding to any separate discussion as otherwise this could result in violation of confidentiality policies and of data protection regulations. process described in MASH Guidance. Agreed action: Meeting will consistently terminate after MASH discussions have taken place. Any separate discussion necessary between planned partners will take place as a separate Teams meeting and therefore will not be recorded. A designated person will be responsible for ensuring that the Teams meeting is ended immediately after the formal discussion concludes. Agreed evidence: A designation of a responsible person. No further recordings of conversations not related to MASH discussions. D Reilly-Davidson, CPDT Team Leader November 2025 2 6.3 Data recording is not always accurate, comprehensive and consistent: - Some key data is missing or inaccurate (gaps/ blank cells; data recorded or copied incorrectly). 2 Agreed action: • Admin Business Manager will be made aware of admin errors. • MASH workers will be responsible for accurate recording of information. • Mosaic process may eliminate the need for a MASH spreadsheet J Cooper, Senior Business Officer D Reilly-Davidson, CPDT Team Leader November 2025 Page 204 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 - Data extracted from MOSAIC does not appear to be checked for common sense before being transferred onto the Register/MASHUP List and distributed to the partners, resulting in errors in key information and misleading the agencies. - Data for the Register does not appear to be cross- checked with data on the Referral forms, resulting in discrepancies between the two of them. - Some outcomes are missing or inaccurate (blank cells; if multiple, not all allocations are always recorded; the background recorded instead of the allocation; some discrepancies between the document and the which will reduce the need for manual input. Agreed evidence: • Data recording roles and responsibilities outlined in MASH procedure or MASH Guidance. • Periodical verification of the accurateness of case notes and MASH spreadsheet entries. Page 205 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 outcomes expressed at the meeting). 3 6.4 In order to ensure adequate competencies of any future MASH partners, it would be advantageous to either formulate a MASH entry criteria or to create an entry QA Checklist, as well as to consider creating an Induction programme. 1 Agreed action:MASH Guidance will be created for partners and for induction purposes. This will include the entry criteria for partners to join the MASH group. Agreed evidence: Availability of MASH Guidance. D Reilly-Davidson, CPDT Team Leader G Irons, MASH Social Worker S Wilson, Improvement Officer March 2026 4 6.4 To support improved shared understanding of the MASH process, it would be beneficial to formally document the MASH procedure and to define in it a case allocation criteria. 1 Agreed action:MASH Guidance will be created for partners and for induction purposes. This will include the referral criteria for MASH and the case allocation criteria. Agreed evidence: Availability of MASH Guidance. D Reilly-Davidson, CPDT Team Leader G Irons, MASH Social Worker S Wilson, Improvement Officer March 2026 5 6.4 In order to improve decision- making and to increase transparency, it would be advisable to include in the Register the referrers, reasons for the referrals and to add a check column for the referrer’s awareness of the outcomes 1 Agreed action:This will be captured by the new system when the process moves to Mosaic. Agreed evidence: Relevant Mosaic entries. D Reilly-Davidson, CPDT Team Leader L Willoughby, Mosaic System Project Officer March 2026 Page 206 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 (“referrer informed of outcomes”), as well as the check columns for parental consent and for their awareness of the outcomes (“parents informed of outcomes”). 6 6.4 To avoid misinterpretation of the group’s role, it would be advisable to consider changing its title from Multi-Agency Screening Hub to Multi-Agency Safeguarding Hub (or to another suitable name). For coherence and accuracy, it would also be advisable to replace acronym “MASHUP” with acronym “MASH” in all relevant documents and in all future correspondence (“MASHUP List”, “MASHUP Register”, “MASHUP Group” etc). 1 Agreed action: • Any documentation, paperwork etc will be amended and partners/workers will be reminded that the process is MASH not MASHUP. • A change of name from “Screening” to “Safeguarding” will not be progressed though, as MASH is now an established name and because ‘Safeguarding’ would be misleading. However, it will be highlighted within MASH guidance that it is not only a screening hub, but also an allocation system. Agreed evidence: • MASH Guidance. D Reilly-Davidson, CPDT Team Leader G Irons, MASH Social Worker K Taylor, MASH Senior Social Care Officer From November 2025 Page 207 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 • Re-named MASH documentation. 7 6.4 To prevent inefficient resource use and case escalations, it might be constructive to consider using the potential for increased admin support (especially with the outcomes processing) and increasing the number of MASH partners (to avoid their waiting lists’ delays). 1 • Agreed action:Non- urgent referral form being reviewed with planned partners to determine if this can be accepted as an initial referral to avoid delays. • Admin support is centralised, however consideration of financial support re Modern Apprentice may be of benefit. Agreed evidence: • Proves of quicker allocation if MASH referral is accepted. • Appointment of a Modern Apprentice. D Reilly-Davidson, CPDT Team Leader S Wilson, Improvement Officer March 2026 Page 208 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 10. Authorisation 10.1 The auditor for this assignment was K Tarnowska. The supervising auditor was D Arachchilage. This report is authorised for issue: ... 11. Distribution 11.1 This report has been distributed to: T Glen, Chief Executive J Pepper, Chief Officer - PK HSCP A Singh, Strategic Lead - Children, Families and Justice/ CSWO S Cooper, Service Manager - Children’s Services S Wilson, Improvement Officer - Children’s Services D Reilly-Davidson, Team Leader - Child Protection Duty Team L Simpson, Strategic Lead - Legal & Governance Committee Services External Audit. Page 209 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 12. Assessment Definitions 12.1 The following table contains the definitions of the control objective assessment. Control Objective Assessment Level of assurance Definition Substantial Assurance A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited. Reasonable Assurance There is a generally sound system of governance, risk management and control in place. Some issues, non- compliance or scope for improvement were identified which may put at risk the achievement of objectives in the area audited. Limited Assurance Significant gaps, weaknesses or non-compliance were identified. Improvement is required to the system of governance, risk management and control to effectively manage risks to the achievement of objectives in the area audited. No Assurance Immediate action is required to address fundamental gaps, weaknesses or non-compliance identified. The system of governance, risk management and control is inadequate to effectively manage risks to the achievement of objectives in the area audited. 12.2 The following table contains the definitions applied by Internal Audit in rating audit findings/actions. Risk Rating for Individual Findings Rating Rating description Definition 5 Critical Significant observations/ major concerns which require immediate action. Management will need to add these to the appropriate Service risk register. Issue represents a control weakness which could cause, or is causing, severe disruption of the process or severe adverse effect on the ability to achieve process objectives 4 High Significant observations regarding the absence / failure of key controls requiring urgent action. Management should consider adding these to the appropriate Service/ divisional risk register. Page 210 of 212
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Final Report 24-03 Multi-Agency Screening Hub (MASH). V4 Issue represents a control weakness which could have, or is having, major adverse effect on the ability to achieve process objectives 3 Medium Observations regarding the effectiveness of key controls requiring reasonably urgent action. Management should consider these when updating any divisional / team risk registers. Issue represents a control weakness which could have, or is having, significant adverse effect on the ability to achieve process objectives 2 Low Minor observations regarding the adequacy of controls which require action to improve the efficiency, effectiveness, or economy of operations or which otherwise require to be brought to the attention of Senior Management. Issue represents a minor control weakness with minimal but reportable impact on the ability to achieve process objectives 1 Trivial / Minor Very minor observations which will be raised during the audit and may not be included within the final report. Issue represents a very minor control weakness with negligible impact on the ability to achieve process objectives. The issue will be raised during the audit and may not be included within the final report. Page 211 of 212
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