Supplementary Pack 1
Argyll and Bute Council · 22 November 2022
Back to Audit and Scrutiny Committee — 22 November 2022 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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Argyll and Bute Council Comhairle Earra-Ghàidheal Agus Bhòid Executive Director: Douglas Hendry Kilmory, Lochgilphead, PA31 8RT Tel: 01546 602127 Fax: 01546 604435 DX 599700 LOCHGILPHEAD 17 November 2022 SUPPLEMENTARY PACK 1 AUDIT AND SCRUTINY COMMITTEE - BY MICROSOFT TEAMS on TUESDAY, 22 NOVEMBER 2022 at 3:00 PM I enclose herewith item 6 (2021-22 AUDITED ANNUAL ACCOUNTS) which was marked to follow on the Agenda for the above meeting. Douglas Hendry Executive Director ADDITIONAL ITEM(S) OR ITEM(S) TO FOLLOW 6. 2021-22 AUDITED ANNUAL ACCOUNTS (Pages 3 - 276) Report by Section 95 Officer Audit and Scrutiny Committee Martin Caldwell (Chair) Councillor Daniel Hampsey Councillor Graham Hardie Councillor Mark Irvine Councillor Reeni Kennedy-Boyle Councillor Jim Lynch (Vice-Chair) Councillor Andrew Vennard Shona Barton, Committee Manager Contact: Lynsey Innis, Senior Committee Assistant, Tel: 01546 604338 Public Document Pack
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 22 NOVEMBER 2022 2021-22 AUDITED ANNUAL ACCOUNTS 1. EXECUTIVE SUMMARY 1.1 Audit Scotland have now completed their audit of the Council's Accounts for the year to 31 March 2022 and also the Charitable Trusts administered by the Council and have issued audit certificates containing no qualifications. They were able to conclude that the Accounts present a true and fair view of the financial position as at 31 March 2022. The audited accounts incorporating the audit certificate for 2021-22 are attached. 1.2 The Council's unaudited accounts were completed and submitted by the historical statutory date of 30 June 2022. The audit has been completed within the timescale of 30 November 2022. 1.3 The main adjustments to the accounts, in addition to some presentational adjustments, are noted below: • Social Work entries to adjust the closing income for the transfer of unused funds to earmarked reserves held by the Council on behalf of the Integrated Joint Board. • An adjustment was required to the notional value of PPE and Testing Kits received from National Services Scotland (NSS) for Social Care. This adjustment was also replicated in the Group Accounts. • Reversal of accrual for Discretionary Housing Payment Income from Scottish Government. • Desktop assessment of high value assets which were not due to be revalued in the current financial year as part of the five year rolling program of revaluations. This was in part due to external factors such as inflation and was an area which affected all Local Authorities. 1.4 The balance of the General Fund reduced by £0.443m from £96.530m to £96.087m due to the reversal of an accrual as noted at 1.3 above. 1.5 The financial position of the Council based on the audited accounts can be summarised as follows: • Accounting Surplus on the provision of services for 2021-22 £15.016m. • Underspend against budget for 2021-22 £1.630m. • Total assets less liabilities at 31 March 2022 £479.663m. • General fund balance at 31 March 2021 £96.087m. Page 3 Agenda Item 6
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1.6 The committed funds within the General Fund Balance are £88.990m per the audited accounts. This leaves an unallocated General Fund Balance of £7.097m. This equates to 2.7% of the Council's budgeted net expenditure for 2021-22 and exceeds the agreed contingency of 2% of approved budget as agreed as part of the 2021-22 budget. 2. RECOMMENDATIONS 2.1 The Committee is asked to consider and recommend to Council that the Audited Annual Accounts of the Council and Charitable Trusts for the year to 31 March 2022 are approved. 3. CONCLUSION 3.1 This report advises members on the conclusion of the audit of the accounts. The external auditor's certificate is unqualified. The audit was completed within the required timescales. Minimal adjustments were made to the accounts during the audit process. 4. IMPLICATIONS 4.1 Policy - None. 4.2 Financial – None. 4.3 Legal - None. 4.4 HR - None. 4.5 Fairer Scotland Duty – None. 4.5.1 Equalities - None. 4.5.2 Socio-economic - None. 4.5.3 Islands - None. 4.6 Climate Change - None. 4.7 Risk - None. 4.8 Customer Service - None. Kirsty Flanagan Executive Director/Section 95 Officer 15 November 2022 Gary Mulvaney - Policy Lead for Financial Services and Capital Regeneration Projects Appendix 1 - Summary of Main Changes to Financial Statements Arising from Audit Appendix 2 -Argyll and Bute Council Audited Accounts 2021-22 Appendix 3 - Charities Accounts 2021-22 For further information contact Anne Blue, Head of Financial Services Anne.blue@argyll-bute.gov.uk Page 4
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APPENDIX 1 - SUMMARY OF MAIN CHANGES TO FINANCIAL STATEMENTS ARISING FROM AUDIT Section of Financial Statements Audited Accounts £'000 Unaudited Accounts £'000 Change £'000 Comments / Explanation Chief Executives Net Expenditure 6,877 6,434 443 Reversal of an accrual for Discretionary Housing Payment Income from Scottish Government Chief Executives Net Expenditure 6,877 6,434 443 Reversal of an accrual for Discretionary Housing Payment Income from Scottish Government Long term Assets 717,383 687,461 29,922 Desktop assessment regarding valuation of non- current assets that were not due to be re-valued as part of the 5 year rolling programme. Debtors 122,842 123,285 (443) Reversal of an accrual for Discretionary Housing Payment Income from Scottish Government General Fund Balance (96,087) (96,530) 443 Reversal of an accrual for Discretionary Housing Payment Income from Scottish Government Revaluation Reserve (157,645) (145,903) (11,742) Desktop assessment regarding valuation of non- current assets that were not due to be re-valued as part of the 5 year rolling programme. Capital Adjustment Account (241,327) (223,147) (18,180) Desktop assessment regarding valuation of non- current assets that were not due to be re-valued as part of the 5 year rolling programme. Balance Sheet Impact on Assets and Liabilities Impact on Council Reserves Comprehensive Income & Expenditure Account Expenditure and Funding Analysis Statement Page 5
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Section of Financial Statements Audited Accounts £'000 Unaudited Accounts £'000 Change £'000 Comments / Explanation (Surplus)/Deficit on Provision of Services (96,087) (96,530) 443 Reversal of an accrual for Discretionary Housing Payment Income from Scottish Government Cash Flow Statement Net (Surplus) on the Provision of Services (15,016) (1,025) (13,991) Desktop assessment regarding valuation of non- current assets that were not due to be re-valued as part of the 5 year rolling programme and reversal of DHP accrual. Adjustments to net surplus or deficit on the provision of services for non-cash movements (6,652) (20,643) 13,991 Desktop assessment regarding valuation of non- current assets that were not due to be re-valued as part of the 5 year rolling programme and reversal of DHP accrual. Net Cost of Service (165,203) (134,402) (30,801) Net of the adjustments above Long term Assets 727,738 696,433 31,305 Net of the adjustments above Debtors 18,382 18,825 (443) Net of the adjustments above Investment in Associates & Joint Ventures 13,161 13,162 (1) Net of the adjustments above Total reserves (523,231) (492,370) (30,861) Net of the adjustments above Group Comprehensive Income & Expenditure (165,263) (134,402) (30,861) Net of the adjustments below. General Fund Balance (96,087) (96,530) 443 Reversal of an accrual for Discretionary Housing Payment Income from Scottish Government Common Good (9,663) (8,299) (1,364) Desktop assessment regarding valuation of non- current assets that were not due to be re-valued as part of the 5 year rolling programme included Oban Swimming Pool. Council Unusable Reserves (394,480) (364,558) (29,922) Desktop assessment regarding valuation of non- current assets that were not due to be re-valued as part of the 5 year rolling programme. Share of Reserves of Associates (17,400) (17,382) (18) Adjustment as a result of changes with Associates Accounts Impact on Group Reserves Group Comprehensive Income and Expenditure Account Group Balance Sheet Group Statement of Movement in Reserves Statement of Movement in Reserves Page 6
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid Audited Annual Accounts for the year ended 31 March 2022 Page 7
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FRONT COVER PICTURE: PORNAHAVEN, ISLAY Page 8
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LANGUAGE OPTIONS If you would like this document in another language or format, or if you require the services of an interpreter, please contact us. Financial Services Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Tel: 01546 605522 Page 9
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ANNUAL ACCOUNTS CONTENTS www.argyll-bute.gov.uk Page 1 Page Management Commentary 4-24 Statement of Responsibilities for the Annual Accounts 25 Annual Governance Statement 26-39 The Remuneration Report 40-49 Expenditure and Funding Analysis 50-51 Statement of Comprehensive Income and Expenditure 52-53 Balance Sheet 54-55 Statement of Movement in Reserves – Movement in 2021-22 56-57 Statement of Movement in Reserves – Comparative Movement in 2020-21 58-59 Cash Flow Statement 60 Notes to the Financial Statements (See Page 2-3) 61-125 Council Tax Income Account 126 Notes to the Council Tax Income Account 127 Non Domestic Rate Income Account 128 Notes to the Non Domestic Rate Income Account 129 Group Accounts - Introduction 130 Group Statement of Comprehensive Income and Expenditure 131 Group Balance Sheet 132-133 Group Statement of Movement in Reserves – Movement in 2021-22 134 Group Statement of Movement in Reserves – Comparative Movement 2020-21 Group Cash Flow Statement 135 136 Notes to the Group Financial Statements 137-141 Independent Auditors Report 142 -145 Glossary of Terms Appendix A: Trade Union Facility Time Statement 2021-22 146-147 148-149 Page 11
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www.argyll-bute.gov.uk Page 2 NOTES TO THE FINANCIAL STATEMENTS CONTENTS Note No Page 1 Summary of Significant Accounting Policies 61-74 2 Accounting Standards Issued But Not Yet Adopted 74 3 Critical Judgements in Applying Accounting Policies 74-75 4 Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty 75-77 5 General Fund Reserves 78 6 Supplementary Notes to the Statement of Comprehensive Income and Expenditure 79-80 7 Other Operating Income and Expenditure 80 8 Agency Services 80-81 9 Community Care and Health (Scotland) Act 2002 81 10 Fees Payable to Audit Scotland 82 11 Waste Management Public Private Partnership 82 12 Grant Income 83 13 Related Parties 84-85 14 Property, Plant and Equipment 86-91 15 Heritage Assets 91 16 Intangible Assets 92-93 17 Investment Property 93-94 18 Schools Built under Public Private Partnership Contracts (PPP) 94-98 19 Operating Leases 98-99 20 Finance Leases 99-100 21 Long Term Debtors 101 22 Debtors 101 23 Assets Held for Sale 102 24 Cash and Cash Equivalents 102 25 Creditors 103 26 Financial Instruments Disclosures 103-107 27 Other Liabilities 107 Page 12
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www.argyll-bute.gov.uk Page 3 NOTES TO THE FINANCIAL STATEMENTS CONTENTS Note No Page 28 Provisions 108-109 29 Capital Grants Received in Advance 109 30 Defined Benefit Pension Schemes 109-115 31 Note to the Expenditure and Funding Analysis 116-118 32 Unusable Reserves 119-120 33 Usable Reserves 120 34 Contingent Liabilities 121 35 Termination Benefits 121-122 36 Trust Funds and Other Third Party Funds 122 37 Common Good Funds 122-123 38 Tax Incremental Financing (TIF) Projects 123 39 Cash Flow Statement – Operating Activities 124 40 Cash Flow Statement – Investing Activities 124 41 Cash Flow Statement – Financing Activities 125 Page 13
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www.argyll-bute.gov.uk Page 4 Management Commentary 1. INTRODUCTION Welcome to the financial statements for Argyll and Bute Council and its group for the year ended 31 March 2022. The statements have been compiled in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). This commentary outlines the key messages regarding the performance of the Council over the 2021-22 financial year as well as providing an indication of risks and issues which may impact upon the Council in the future. 2. PROFILE OF ARGYLL AND BUTE COUNCIL The report starts with outlining some key facts about Argyll and Bute. Page 14
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www.argyll-bute.gov.uk Page 5 Management Commentary 3. MISSION AND PRIORITIES The Council’s Corporate Plan 2018-2022 was approved in February 2018 and sets out our mission, vision and priorities for the next 5 years. Our mission: To make Argyll and Bute a place people choose to Live, Learn, Work and Do Business. Service Plans are also agreed and detail the measures, targets and timescales to achieve the required results. Service Plans are aligned to the Corporate Plan and the Argyll and Bute Outcome Improvement Plan. Our Corporate Plan 2018-2022 can be found on the Council website. Argyll and Bute is an area of Scotland with outstanding places, people and potential for a prosperous future for everyone. Our Council, along with our Community Planning Partners, is committed to ensuring that: Argyll and Bute’s Economic Success is built on a Growing Population. Page 15
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www.argyll-bute.gov.uk Page 6 Management Commentary Our six outcomes are: • People live active, healthier and independent lives • People will live in safe and stronger communities • Education skills and training maximise opportunities for all • Children and young people have the best possible start • Our economy is diverse and thriving • We have an infrastructure that supports sustainable growth The performance of the Council is reported on the Council’s website. Performance is reviewed by the Strategic Committees and then the Council and departmental performance reports and scorecards are presented to the Audit and Scrutiny Committee on a half-yearly basis. In 2021-22 we have tracked our progress on delivering our outcomes through 17 business outcomes and 85 success measures which are recorded on the Council’s scorecard. Progress is identified using a Red or Green status indicator to track performance. Of the 85 success measures in 2021-22, 57 were green (67%), 16 were red (19%) and for 12 (14%) no data is currently available. For comparison purposes as at 31 March 2021, there were 178 success measures and 137 were green (77%), 28 were red (16%) and 13 had no data (7%). An analysis by department is shown below. It should be noted that Covid has had an impact not just on our performance but also the ability for collecting and collating data. As a result the status of some measures that are currently displaying red or off-track may change in due course as data becomes available. 2020-21 and 2021-22 Success Measures Performance as at 31 March Some of our achievements, and the challenges we faced, in relation to the Council’s agreed Corporate Outcomes are highlighted below. Page 16
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www.argyll-bute.gov.uk Page 7 Management Commentary People Live Active Healthier and Independent Lives The empty homes services has an empty homes officer (EHO) who has an overall remit to assist and encourage owners to bring empty homes back into use. Wider outcomes, working in partnership include: • Over 500 empty homes brought back into use. • First Empty Homes Compulsory Purchase Order concluded - renovation works undertaken with no financial support and flat leased as private let. • Worked in conjunction with Mull and Iona Community Trust to undertake joint communication exercise with all registered empty home owners on the Island. • Hebridean Trust in Tiree supported by the EHO to drive forward plans for the long term use of all their buildings whilst assisting them to bring six listed empty flats back into use. Due to the scale of scheme, the EHO established a working group of relevant partners to maximise support to take this project forward. • The EHO is working with Islay Development Initiative to bring two empty flats back into use as affordable housing. This also provides unique opportunity to consider a plug and play model, which would allow people to move straight in to a fully set up home, on the grounds of property for additional housing provision. • Winner of outstanding team at the Scottish Empty Homes Conference 2022. People will live in safer and stronger communities The Trading Standards Team initially maintained a reactive presence, which, as restrictions eased, allowed a move to a proactive planned approach. This despite the impact of Covid, allowed the Team to deal with a high proportion of all premises identified as high risk. Developed the Community Safety Partnership Strategy 2021-2023 which underpins the Argyll and Bute Outcome Improvement Plan and sets out strategic priorities in relation to: • We live in a safe and positive community • We encourage safer road and water use • Our natural and built environment is protected • Our communities are supported and included. It also identifies how key partners including the Council, Police Scotland, Scottish Fire and Rescue Service, HM Coastguard, Health & Social Care Partnership (HSCP), Third Sector Interface (TSI) and local groups will bring together resources to ensure that Argyll and Bute is a safer place to live, work and visit. Page 17
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www.argyll-bute.gov.uk Page 8 Management Commentary Education skills and training maximise opportunities for all The level of participation in education, training or employment for 16-19 year-olds in Argyll and Bute was 93.5% for 2021. Although this represents a slight decrease from 94.1% in 2020 (equivalent to around 20 young people), Argyll and Bute remains above the Scottish average in all three classifications and is ranked 10th in Scotland for participation across all local authorities. Collaborative working between secondary schools, Skills Development Scotland, Community Learning and the Argyll and Bute Employability Partnership seeks to address the challenges in sustaining employment for young people. Schools have worked to develop a wide range of learning pathways for young people, enabling them to achieve a broad range of skills through national and wider achievement qualifications. A high number of young people enhanced their achievement portfolio last session and this has contributed to securing positive, sustained destinations upon leaving school, such as employment, further or higher education and training. Recovery from the pandemic-related dip in 2020 showed an increase from 92.45% to 95.01% in the percentage of young people in Argyll and Bute transitioning from school to a positive destination. Children and young people have the best possible start We are committed to increasing attainment and narrowing the poverty related attainment gap and since the publication of the Scottish Attainment Challenge 5 Year Impact Report, have put measures in place to aid recovery and improve attainment dips owing to the pandemic. This includes developing the data analytical, evaluation and quality improvement skills of staff so evidence-based decisions can be made, forming an important element of schools approach to Pupil Equity Funding. In collaboration with the authority link Education Scotland Attainment Advisor, key strengths in our work on addressing the poverty related attainment gap have been identified as: • A strategic and collaborative approach to leadership of the Scottish Attainment Challenge, especially since 2018. • A greatly increased awareness of and commitment to equity, both as a national priority and for its own sake. We have supported Head Teachers to have a high level of data-literacy and they apply this well to making improvements for equity. • Prior to the Covid-19 pandemic and subsequent lockdowns, strong progress towards closing the gap between the most and least disadvantaged learners in several measures, including attainment in literacy and numeracy in the broad general education, especially in primary 7, and in the senior phase, especially at Scottish Credit and Qualifications Framework (SCQF) levels 4 and 6 had been made • Successes in narrowing the gaps between the most and least disadvantaged learners in relation to attendance, inclusion, and sustained positive destinations for school leavers. • A strategic and collaborative approach to a culture of nurture to support children and young people affected by trauma, including (but not only) in the context of COVID-19. This approach includes a programme to train all Children’s Services staff in trauma-aware practices and to work with the Educational Psychology service to bring about cultural change in this context. This programme is leading to tangible improvements for many vulnerable young people. Effective interventions have continued to be delivered to support the mental health and wellbeing of children and young people across Argyll and Bute. The Educational Psychology Service has continued to lead Our Children Their Nurturing Education programme with 29 schools now engaging and have also progressed work on Addressing Non-Attendance through collaborative working via the Maximising Attendance Working Group. The Education Service has worked closely with partners across the Council to raise awareness of the incorporation of the UN Convention on the Rights of the Child into Scots Law and has provided Page 18
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www.argyll-bute.gov.uk Page 9 Management Commentary support and challenge to schools to ensure that a child centred and rights based approach informs our practice. A number of schools are members of the Rights Respecting Schools Accreditation programme, with this number increasing year on year. Our economy is diverse and thriving A Rothesay Townscape Heritage (TH) grant of £311,601 supported the comprehensive repair of a prominent listed building in multiple ownership, serving to safeguard the property for future generations whilst helping to lift the appearance of Rothesay’s town centre. Before After Traditional materials and methods of repair were used to ensure best practice, and align with Historic Environment Scotland’s Advisory Standards of Repair. Works encompassed roof works, including leadwork, chimney and skew repairs, as well as substantial masonry works to front, rear and gable elevations, which included stone indents and stone replacements, as well as full re-pointing and structural repairs. Rainwater goods and dormer windows were also restored and the roof inspected for rot and treated accordingly. Timber sash and case windows were restored, and uPVC windows replaced in timber. New close doors were added to front and rear. Rothesay TH is a heritage-led partnership project that is funded by National Lottery Heritage Fund, Historic Environment Scotland, Argyll and Bute Council, Highlands and Islands Enterprise, Smarter Choices Smarter Places and LEADER. The partnership funding totals, £2,746,049. It is anticipated with private owner contributions included, the total value of the project will be in excess of £3.2m. The programme is being delivered over a 5 year period, and will conclude on 31st March 2023. One of the main challenges we have faced in delivering Rothesay TH Projects was the impact of COVID19 on the construction industry and its effect on material costs. Although we had budgeted accordingly against projected costs, the rise in construction costs due to COVID19 meant that some works had to be reviewed as essential/desirable and in some cases owners had to increase contributions. With this in mind, another challenge was getting the property owners to agree in the first instance to move forward with the project. Despite attractive grant intervention rates it was not always easy to get the “buy in” from property owners, however stressing the importance of property maintenance and the implications if not addressed help with this challenge. Rothesay All-weather Canopy Using Scottish Government Town Centre Funding, Argyll and Bute Council supported community ambitions through delivery of an all-weather canopy with strong collaboration with the Bute Community Council, Isle of Bute BID and Elected Members. The new all-weather canopy was installed to support local businesses by extending a typical season through offering residents and visitors cover for dining. The canopy has proved to be a successful community asset as a hub for seasonal events in turn increasing footfall into the town centre. Page 19
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www.argyll-bute.gov.uk Page 10 Management Commentary Rothesay Pontoons The existing pontoons had reached the end of their useful life and have resulted in a negative customer experience that detracted from the wider offer of Rothesay and ultimately Bute. As part of an economic enabler it was proposed that the pontoons are replaced with a new piled system which will be more attractive and reliable for visiting vessels. It is forecast that a piled system will provide a safer structure, easier to maintain than a chain and anchor system, help attract more visitors to the harbour and ultimately generate additional income directly from berthing fees and indirectly additional income for local business as a consequence of additional visitors to the area. This project was achieved using funding from the Town Centre Fund and Crown Estates fund. In response to community concerns, as tourism opened up after Covid restrictions, we developed and promoted our ‘Have a great time. Be a great visitor’ message and campaign, bringing together information from different organisations. Page 20
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www.argyll-bute.gov.uk Page 11 Management Commentary The number of people claiming unemployment benefits has decreased across most wards since the relaxation of the lockdowns. This is largely due to the reopening of some sections of the hospitality and leisure sector and the growth in the construction sector. The percentage of the working age population who are claiming unemployment benefits is 2.7% for Argyll and Bute, which is considerably lower than Scotland as a whole (3.3%). The age group most impacted by the pandemic in terms on the claimant count continues to be the 25-49 year old group, followed by the 50+ age group. All age groups now show a significant drop in the number of claimants. The claimant count for each electoral ward in relation to lockdowns. Shows that the hardest hit areas are those with a high dependency on tourism. We have an infrastructure that supports sustainable growth Over the course of 2021/22 we have progressed with a number of ambitious marine engineering schemes designed to guarantee safe and sustainable future transport connectivity for our island communities. These include: Craignure - Developing the concept of this scheme towards a detailed design including significant public engagement where a community group is working with council on elements of the design process. Fionnphort/Iona - At this location we are progressing a £20million scheme to replace/renew key pieces of marine infrastructure to allow for full and unfettered access to and from Iona. Towards the end of the financial year, we were successful in securing a £5.5m grant for bridges and structures improvements/replacement. This will enable a number of bridges to be strengthened and/or replaced over the coming years, providing more resilience to transport infrastructure whilst also reducing some of the routine revenue maintenance work. Page 21
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www.argyll-bute.gov.uk Page 12 Management Commentary The Council is working towards the 2025 Biodegradable Municipal Waste (BMW) ban and the end of the Waste PPP contract in 2026. While these significant changes are some years in the future the planning is already underway. The BMW ban will pose a significant and ongoing financial risk to the Council. Officers are currently engaged on a number of fronts working with Scottish Government and neighbouring local authorities to plan for/reduce the impact. It is likely that Argyll and Bute will need additional transfer stations particularly in the Helensburgh and Lomond area to help create logistical efficiency. 4. FINANCIAL PERFORMANCE 2021-22 The Council has a robust financial reporting framework in place and a comprehensive monitoring pack is prepared and presented to every Policy and Resources Committee. This includes reports on the revenue budget, capital plan, financial risks, treasury monitoring, reserves and balances and delivery of any previously agreed savings. The financial framework is shown on the left. Revenue: Outturn against Budget The performance against budget for financial year 2021-22, after adjusting for automatic and proposed earmarked reserve proposals, was an overall underspend of £1.630m, 0.59% as summarised in the table below. (The corresponding position for 2020-21 was an underspend of £0.188m, 0.07%.) 2021-22 Final Revenue Budget Outturn Actuals Budget Variance Percentage Adjusted for Earmarkings (Overspend) Underspend £000 £000 £000 % Chief Executive's Unit 5,751 5,769 18 0.31% Executive Director (Douglas Hendry) 115,160 115,383 223 0.19% Executive Director (Kirsty Flanagan) 49,123 49,697 574 1.16% Total Departmental Expenditure 170,034 170,849 815 0.48% Page 22
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www.argyll-bute.gov.uk Page 13 Management Commentary Joint Boards 1,490 1,496 6 0.40% Loans Charges 9,382 9,382 0 0.00% Pension Costs 1,798 1,745 (53) (3.04%) Other 9,664 9,279 (385) (4.15%) Total Central Expenditure 22,334 21,903 (431) (1.97%) Social Work 62,871 62,871 0 0.0% Total Social Work Expenditure 62,871 62,871 0 0.0% Total Expenditure 255,239 255,622 383 0.15% Total Funding 278,706 277,459 1,247 0.45% UNDERSPEND 1,630 Within the Chief Executive’s Unit (Community Planning and Finance) there was a small underspend which was largely due to a reduction in travel costs as a result of COVID-19 restrictions and new ways of working. Within the remit of Executive Director Douglas Hendry (Education, Legal and Regulatory Support and Commercial Services) the main underspends were due to an over recovery of vacancy savings, reduced catering in schools due to less demand as a result of COVID-19, reduced running costs within Early Learning and Childcare and an underspend in NPDO and Hub Schools arising from insurance savings and the settlement of historic disputed cost reductions. The main overspends related to external residential placements within Education. Within the remit of Executive Director Kirsty Flanagan (Roads and Infrastructure, Development and Economic Growth and Customer Support Services) the main underspends were due to the over recovery of vacancy savings, additional income within Environmental Health, one-off income in Housing and additional planning fee income. The main overspends were due to the under recovery of building warrant fees and transportation project costs. The main reason giving rise to the overspend in central costs was due to insurance costs being higher than budget by £0.339m. Social Work, managed by the Health and Social Care Partnership, reported a breakeven position for 2021-22. This was after accounting for repayment of outstanding debt to the Council of £2.759m therefore clearing the balance of any debt owed to zero and after earmarkings of £2.201m (as per CIPFA/LASAAC Guidance, the earmarking on the HSCP has been recognised as a creditor on the Council’s balance sheet making the funds available to Social Work to spend in future years). There was a favourable position in relation to Council Tax funding, where collection rates were greater than anticipated and this was assisted by £0.450m of Low Income Pandemic Payments (LIPP) that were credited directly to Council Tax accounts. The overall favourable position for Departmental and Central Expenditure Budgets has provided the opportunity to earmark unspent budget for specific purposes aligned to the objectives, priorities and targets of the Council. Page 23
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www.argyll-bute.gov.uk Page 14 Management Commentary Delivery of 2021-22 Agreed Savings The Council has been required to make significant budget savings for a number of years in order to ensure it responds to continued funding reductions, rising cost pressures and complies with its statutory requirement to set a balanced budget whilst meeting the needs of local residents. Budget savings of £2.699m (64 saving options) were agreed for 2021-22. These, and savings agreed in previous years which had to be delivered in 2021-22 totalling £0.076m (17 saving options), were monitored throughout the year. The chart on the right shows the overall delivery of savings and any shortfall was absorbed within departmental resources as is evidenced from the overall departmental underspends. These saving options are all recurring in nature. Capital: Outturn against Budget The net 2021-22 capital expenditure was £24.831m compared to an annual budget of £31.012m, (adjusted for previously agreed slippages, accelerations and virements) giving rise to a year end slippage/underspend of £6.181m (19.9%). There are a number of under and (overspends) within the outturn position, the most significant are noted below: Project (Over) / Under Spend (£m) Harbour Investment Programme 2.484 Education (Asset Sustainability) 0.889 Roads and Infrastructure (Asset Sustainability) 0.670 Shared Office Accommodation (Asset Sustainability) 0.547 Clean Energy/Climate Change 0.464 HSCP Projects 0.250 Helensburgh Waterfront Development 0.238 Campbeltown Flood Scheme 0.231 Live Argyll Projects 0.142 Nature Restoration Fund 0.108 After accounting for previously agreed slippages, the total slippage in the capital programme in 2021- 22 was £28.217m. As reported in Audit Scotland’s Financial Overview 2020-21, capital expenditure across Scotland’s councils reduced by more than 20% as a result of COVID, impacting both cost and delivery plans. This is something that has continued in 2021-22. There are 180 projects within the Capital Plan: 94 of the projects are complete or on track which equates to 52%. £2,699,000 95.5% £76,000 4.5% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Percentage Delivery of Savings 2021-22 Savings Delivered Savings Shortfall Page 24
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www.argyll-bute.gov.uk Page 15 Management Commentary Health and Social Care Partnership (HSCP) The Argyll and Bute Integration Joint Board (IJB) with responsibility for Social Work and a range of health services was established and came into effect on 1 April 2016. The Council approved the 2021- 22 budget on 25 February 2021 and the amount approved for Social Work services transferring to the Integration Joint Board for 2021-22 was £62.211m. The budget figures quoted in the previous outturn table include in-year adjustments. In terms of the outturn position, the HSCP has reported a breakeven position for 2021-22 and has repaid the £2.759m balance owed to the Council in relation to the debt which had accumulated from overspends in previous years. The early repayment of this debt places the HSCP in an improved financial position which will enable it to accelerate its service transformation programme. The Council has a creditor totalling £2.201m on its balance sheet in relation to earmarked reserves which the Council holds on behalf of the HSCP. The earmarked balance comprises £1.519m of Scottish Government funding for a range of specific Scottish Government Initiatives and £0.682m for service transformation and infrastructure investment. 5. FINANCIAL STATEMENTS Expenditure and Funding Analysis Statement The Expenditure and Funding Analysis Statement shows how the Council funding is spent across services. It also compares to the expenditure shown in the Statement of Comprehensive Income and Expenditure and details the differences between the two. The differences are a result of accounting statutory adjustments that are required within the Statement of Comprehensive Income and Expenditure, for example, depreciation, pension adjustments etc. Comprehensive Income and Expenditure Statement (CIES) The CIES shows the accounting cost of providing services rather than the amount to be funded from taxation. Councils raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. The Council is required to make various statutory accounting adjustments to the net cost of services as reported in the budgetary outturn in order to comply with the Code of Practice for Local Authority Accounting in the United Kingdom 2021-22. These accounting adjustments include depreciation, loans fund principal repayment and accrued holiday leave not taken by 31 March 2022. Internal income also requires to be removed between segments within the CIES. During 2021-22 the Council managed a range of COVID support funding made available by the Scottish Government. The disclosure of these transactions in the Council’s financial statements depends on whether the Council is acting as an agent (i.e. acting as an intermediary) or a principal (acting on its own behalf). LASAAC Guidance on Accounting for Coronavirus Grants has confirmed that where the Council is acting as an agent it should not recognise the transactions as income or expenditure in the Comprehensive Income and Expenditure Statement although it is necessary to recognise a creditor (where funding from the Scottish Government has been provided in advance) or debtor (where funding is provided in arrears) in the Balance Sheet. This guidance has been applied to the Council’s 2021-22 financial statements. Reconciliation of CIES to Revenue Budget Outturn A reconciliation of the Surplus on the Provision of Services of £15.016m as noted in the CIES to the revenue budget outturn of £1.630m underspend is shown below. Page 25
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www.argyll-bute.gov.uk Page 16 Management Commentary Reconciliation of CIES to Revenue Budget Outturn £000 £000 Surplus/(Deficit) on Provision of Services 15,016 Remove statutory adjustments that don't feature in budget outturn: Depreciation 23,325 Impairment of Assets charged to services (13,182) Capital Funding (21,700) CFCR (735) Pension Adjustment 23,700 Statutory Repayment of Debt (2,514) Repayment of Finance Leases (4,844) Transfers to/from Other Statutory Reserves (553) Other Adjustments (671) 2,826 Movement In General Fund Balance 17,842 Adjust for earmarkings: Released sums earmarked to service budgets 2021-22 18,921 Revenue Budget 21-22 - investment in Capital (2,975) Revenue Budget 21-22 - COVID allocation to reserves (7,562) Repayment of Social Work Overspend by HSCP (2,759) Contributions to earmarked reserves 2021-22 (21,837) (16,212) Revenue Budget Underspend/(Overspend) 1,630 Page 26
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www.argyll-bute.gov.uk Page 17 Management Commentary Balance Sheet The Balance Sheet summarises the Council’s assets and liabilities as at 31 March 2022 and explanatory notes are provided. The net worth of the Council has increased by £152.293m from £345.370m as at 31 March 2021 to £497.663m as at 31 March 2022. The major changes are set out in the table below. Main Balance Sheet Changes 31/03/2021 £000 31/03/2022 £000 Change £000 Main Reason Long Term Assets 671,332 717,383 46,051 Revaluation of fixed assets and addition of pension debtor due to an increase in investment returns Current Assets 103,849 122,842 18,993 Investments previously categorised as long term now moved to short term as due to mature in less than 1 year. Current Liabilities (55,667) (66,513) (10,846) Increase in temporary borrowing after a period of little/no borrowing during the height of the pandemic. Long Term Liabilities (374,144) (276,049) 98,095 Pension liability reduced to zero as investment returns have been greater than expected leading to positive return on assets. Total 345,370 497,663 152,293 Provisions The Council has provisions totalling £4.310m on the Balance Sheet as detailed in Note 28 to the Accounts. The larger provisions, those £0.250m or over, are summarised below. • £1.989m for landfill sites. A provision for landfill sites was created in 2014-15 reflecting the Council’s liability for restoration and ongoing maintenance in respect of landfill sites operated by the Council at Glengorm, Gartbreck and Gott Bay. These have been provided for based on the net present value of estimated future costs. • £1.483m for NPDO and Hub DBFM Payments. This provision is held in relation to disputed performance deductions and unbilled utility costs. Pension Asset The Council is required to account for its share of the Strathclyde Pension Fund assets and liabilities. The information included in the Accounts is provided by the Pension Fund actuaries following the annual valuation of the Fund. The Council’s share of the assets of the Strathclyde Pension Fund have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on the assumptions about mortality rates, salary levels etc. The asset relates to benefits earned by existing or previous employees up to 31 March 2022. There has been a significant change in the pension valuation from a £82.314m liability in 2020-21 to a £4.634m asset in 2021-22. This is as a result of investment returns being greater than anticipated by our actuaries leading to positive return on assets. The pension liability or asset can fluctuate significantly year on year. The table below shows the pension liability or asset over the last three years. Further detail on the pension estimates are included within Note 30. Page 27
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www.argyll-bute.gov.uk Page 18 Management Commentary Pension Liability at the end of the financial year 2019-20 £000 2020-21 £000 2021-22 £000 Pension (Liability)/Asset (67,346) (82,314) 4,634 Borrowing During 2021-22 the Council’s external borrowing increased by £9.1m from £170.4m as at 31 March 2021 to £179.5m as at 31 March 2022. The increase was due to temporary borrowing taken out at the year end for cash flow purposes. The Council was under borrowed by £12.5m at 31 March 2022. This was due to higher than normal levels of cash balances partly due to slippage in the capital programme meaning there was no requirement to borrow at this stage. The Council’s 2022-23 ‘Treasury Management Strategy and Annual Investment Strategy’ was approved at the full Council meeting on 24 February 2022 and outlines the Council’s capital prudential and treasury indicators. Statement of Movement in Reserves This Statement shows the movement on the different reserves held by the Council, analysed into usable reserves (resource backed reserves which can be used to fund expenditure) and unusable reserves (required purely for accounting purposes and are not backed by resources). The balance of unusable reserves has increased by £133.895m from £260.585m as at 31 March 2021 to £394.480m as at 31 March 2022. The main reason for this movement is the increase in the pensions reserve noted earlier in this commentary plus smaller accounting adjustments required through the Capital adjustment account and revaluation reserve. The balance of usable reserves has increased by £18.398m from £84.785m as at 31 March 2021 to £103.183m as at 31 March 2022. This is due to an increase to the General Fund of £17.842m in addition to small increases to the Capital Fund outlined in Note 33.1 and the Repairs and Renewals Fund outlined in Note 33.2. In respect of the General Fund Balance movement, there has been an increase of £17.842m from a balance of £78.245m to £96.087m and the detail on the movement in the balance is summarised within the table below. The increase largely relates to the timing of Scottish Government funding that was unspent at the end of the year such as COVID funding, unspent grants including Local Authority Covid Economic Recovery (LACER), Early Learning & Childcare (ELC) 1140 hours and Crown Estates, and Scottish Government Initiatives such as Employability and the expansion of free school meals. It is expected that other Local Authorities will have a similar increase to their General Fund Balance due to the timing of the funding. Detail on all the earmarking is included within Note 5 to the Accounts. Page 28
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www.argyll-bute.gov.uk Page 19 Management Commentary Movement on General Fund Balance £000 Balance on General Fund 31 March 2021 78,245 Social Work Repayment of Debt 2,759 Revenue Budget 2021-22 – investment in capital (held in reserves) 2,975 Revenue Budget 2021-22 – COVID allocation to reserves 7,562 Released sums earmarked to service budgets 2021-22 (18,923) Contributions to earmarked reserves 2021-22 21,837 Overall budget underspend as noted above 1,630 Rounding 2 Balance on General Fund 31 March 2022 96,087 General Fund Balance The chart below shows what is included within the General Balance as at 31 March 2022 with a comparison to the position as at 31 March 2021. General Fund Balances as at 31 March 2021 and 31 March 2022 An analysis of the earmarked balances are shown in the chart below. Earmarked Balances held in the General Fund as at 31 March 2022 71.9 89 5 5.3 1.3 1.8 0 20 40 60 80 100 120 As at 31 March 2021 As at 31 March 2022 £ millions Committed/Earmarked Balances Contingency Unallocated Balances 0 5 10 15 20 25 30 Regeneration Projects Schools DMR Asset Management Fund Scottish Government Initiatives Investment in Affordable Housing Other Earmarkings Strategic Housing Fund COVID Unspent Grant and Third Party Contributions Unspent Budget Earmarkings Capital Projects Earmarked Reserves (£ Millions) Page 29
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www.argyll-bute.gov.uk Page 20 Management Commentary Group Accounts The Group accounts include Dunbartonshire and Argyll & Bute Valuation Joint Board, Strathclyde Partnership for Transport and Strathclyde Concessionary Travel Scheme Joint Committee as Associates as the Council have “significant influence” over their financial and operating policies. Live Argyll is a wholly owned subsidiary of Argyll and Bute Council and is consolidated within the group accounts on a line by line basis. In addition, the Council’s Common Good Funds have been fully consolidated into the Group Accounts and Note 37 gives further details on the Council’s Common Good Funds. The effect of inclusion of the Associates, Subsidiary and Common Good Funds on the Group Balance Sheet is to increase both reserves and net worth by £25.569m. This gives an overall net asset position for the Group of £523.231m, an increase of £165.261m from the previous year. The most significant increase is the swing in the pension position from a liability in 2020-21 to an asset in 2021-22 and the increase in the General Fund Balance as noted earlier in the commentary. The Argyll and Bute Integration Joint Board has responsibility for all health and social care functions relating to adults and children and will oversee the strategic planning and budgeting of these, together with corresponding service delivery for the residents of Argyll and Bute. Argyll and Bute Council contributed £62.870m towards the Argyll and Bute Integration Joint Board in the 2021-22 financial year. All transactions are accounted for and shown within the single entity statements and the IJB are treated as a Joint Venture within the Group Accounts therefore a share of their overall surplus and net assets have been recognised in the Group Statements. 6. KEY FINANCIAL INDICATORS The financial indicators outlined below have been developed to assist the reader in assessing the performance by the Council over the last financial year and the affordability of its ongoing commitments. Key Financial Indicators Financial Indicator 2020-21 2021-22 Comment Unallocated General Fund Balance as a proportion of next year’s Annual Budgeted Net Expenditure 2.53% 2.70% Reflects the level of funding available to manage financial risk/unplanned expenditure. This includes the 2% contingency. The 2021- 22 position is similar to the 2020-21 one and confirms there are sufficient reserves to meet any unplanned expenditure. Movement in the Unallocated General Fund Balance No Change £0.5m Reflects the extent to which the Council is using its Unallocated General Fund Balance (excluding contingency). A small increase in the 2021-22 balance reflects a degree of stability in the Council’s financial position. In-year Council Tax collection rate 96.12% 96.28% Reflects the Council's effectiveness in collecting Council Tax debt compared to a target of 96%. The target continues to be exceeded. Ratio of Council Tax Income to Overall Level of Funding 18.87% 19.08% Reflects the capacity of the Council to vary expenditure by raising Council Tax income. Actual Outturn compared to budgeted expenditure £0.188m 0.07% £1.630m 0.59% A measure of how the final outturn compares to the budgeted position. The surplus is a reflection of the effectiveness of the Council’s financial management. Page 30
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www.argyll-bute.gov.uk Page 21 Management Commentary Financial Indicator 2020-21 2021-22 Comment Capital Financing Requirement (CFR) for the current year £294.752 £307.100 Measurement of requirement to borrow for capital purposes. The increase in 21-22 reflects the gradual recovery of the capital programme after the impact of the COVID-19 pandemic with more capital investment than the previous year despite significant slippage. External Debt Levels for the current year £168.805m £177.934m Actual borrowing for capital investment levels. Increase in 2021-22 due to temporary borrowing taken at the year end for cash flow purposes. Ratio of financing costs to net revenue stream 4.35% 3.37% Measures the percentage of income that has been committed towards meeting the costs of borrowing. The more income needed to fund financing costs the less that is available to meet other revenue expenditure therefore the 2021-22 ratio reflects an improved position. 7. OUTLOOK A five year financial outlook informing Council of the estimated budget gap covering the period 2022-23 to 2026-27 using best case, worse case and mid-range scenarios was kept up to date during 2021-22 and presented to the Policy and Resources Committee in May, August, October and December 2021. Preparing any forward looking financial outlook is challenging due to the levels of uncertainty, for example the level of Scottish Government Grant, the impact of rising inflation and the uncertainty of pay awards being agreed before the budget setting process. The assumptions used to inform the outlook are reviewed, updated and reported regularly. The Council has a strong track record in financial management as recognised by previous years annual external audit reports and the Council’s Best Value report issued in May 2020. The chart below shows the cumulative budget gap over the next five years as reported to the Policy and Resources Committee on 16 June 2022. Cumulative Budget Gap 2023-24 to 2027-28 as reported on 16 June 2022 Budget Strategy A report to Council on 24 June 2021 set out the approach to the 2022-23 revenue budget process and identification of savings to balance the 2022-23 budget. It was agreed that a cross party Budget Working Group (BWG) be established comprising six elected members from the administration, three elected members from the opposition and two Trade Union representatives. The BWG’s role was to engage Page 31
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www.argyll-bute.gov.uk Page 22 Management Commentary with officers and provide a sounding board to assist in the development and identification of savings options. It does not have any decision making authority but can report to and make recommendations to either the Council or the Policy and Resources Committee. Its primary purpose was to assist in the savings identification process and provide a degree of scrutiny over options as they are being developed. New savings options were identified by officers and presented to the BWG at meetings held on 21 September 2021 and 2 November 2021, 16 December 2021 and 20 January 2022. The BWG agreed a suite of options which were presented to the Policy and Resources Committee on 9 December 2021 which would deliver £2.522m in savings in 2022-23, some were one-off and some were recurring. The BWG met again on 16 December 2021 and 20 January 2022 which has resulted in the savings options being further refined with the addition of two new savings options totalling £0.280m in 2022-23. The Council continues to be committed to developing multi-year savings proposals with a focus on longer term planning. The additional work and pressure on teams as a result of COVID during 2021-22 meant that there had to be more of a focus on balancing the 2022-23 budget, however, some of the savings options impact on future years. The Scottish Government Resource Spending Review published on 31 May 2022 is hoped to provide sufficient information to allow Councils to plan with more certainty as it will set out the spending plans for the remainder of the parliament term 2023-24 to 2026- 27. As with previous years, it is the intention to establish a cross party Budget Working Group who would meet early August to commence the budget discussions for 2023-24 and beyond. COVID Pandemic The COVID pandemic is now showing signs of receding, however, much work relating to recovery and renewal is still being undertaken. The Council still have COVID related funding as we move into financial year 2022-23 including the Recovery and Renewal Fund, Local Authority Covid Economic Recovery Fund monies (as reported to Council on 28 April 2022) as well as a provision for capital contract increases. We are experiencing significant increases in prices for capital works due to issues such as disruptions to the supply chain for both labour and materials and longer lead-in times in relation to the construction sector and material availability. Cost of Living Crisis The ‘cost of living crisis’ refers to the fall in ‘real’ disposable incomes (that is, adjusted for inflation and after taxes and benefits) that the UK has experienced since late 2021. It is being caused predominantly by high inflation outstripping wage and benefit increases and has been further exacerbated by recent tax increases. As well as affecting individuals, the cost of living crisis is having a significant impact on Council services. At the time of producing the accounts the current CPI was at 9% in the 12 months to April 2022. The Bank of England aims to keep the CPI rate of inflation at 2% plus or minus 1% (i.e. between 1% and 3%). As a result of the rising inflation, the Council is seeing significant increases in all areas of supplies, but specifically in utilities and fuel costs and it will be extremely challenging to contain spending within current resources. The pay award for 2022-23 is almost finalised (as at September 2022). There was increasing pressure from the Trade Unions to have a fair and equitable increase in light of the current cost of living. The Council have budgeted 2% for pay inflation in line with two thirds of other Councils as this is deemed to be affordable, however, this falls well short of the Trades Unions request. Every 1% over and above what is budgeted would add an additional pressure of circa £1.5m to the Council’s expenditure. The Scottish Government have provided Local Government with an additional funding for the latest offer, however, this still leaves a gap of circa 1.5% that has not been budgeted. These cost of living increases come at a time when the Scottish Government Resource Spending review published on 31st May 2022 advises that the funding to Local Government will remain as flat cash until 2026-27. Page 32
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www.argyll-bute.gov.uk Page 23 Management Commentary Rural Growth Deal The Council continues to take forward the £70m Rural Growth Deal (RGD) following the signing of the Heads of Terms in February 2021. Both UK and Scottish Governments are contributing £25m each with a further £20m (at least) match funding from the Council and partners. The focus is now on developing outline business cases and linking to new and evolving funding streams that can increase the economic and social benefits of the deal on our communities. A programme office is now established and good progress is being made on the outline business cases. Levelling Up Fund The UK Government’s Levelling Up Fund was announced by the Chancellor at the 2020 Spending Review. It is a fund jointly managed by HM Treasury, the Department for Levelling Up, Housing & Communities and the Department for Transport. It is worth £4.8 billion and is intended to support capital investment projects in town centre and high street regeneration, local transport projects, and cultural and heritage assets which must be bid for via a competition. The fund focuses investment on projects that require up to £20m of funding. There is however no minimum bid level. For higher-value transport schemes, there is also scope in securing investment in larger projects up to £50m by exception, but these will subject to more detailed business case processes and will need to score highly overall across the bidding criteria. The Council has submitted two bids (£20m regeneration bid and £50m transport bid) to the Levelling Up Fund round 2. The council has chosen to prepare packaged bids to better reflect the economic, population and geographic challenges of Argyll and Bute as a predominately rural region. It is considered that these bids could be potentially transformational for our economy, as a place to live, invest and visit. The bids take account of strict delivery deadlines of the fund spending profile and the need to reach net zero. The fund is highly competitive with no guarantee of success however all of the work to date helped to develop the different project elements of each bid package to a shovel ready status. It is expected that we will hear around October 2022 as to whether the Council has been successful in the bids. Risks The Council’s Strategic Management Team (SMT) actively manage strategic risks via a six monthly review of the Strategic Risk Register (SRR) which adopts established risk management arrangements including reviewing current mitigating measures and identifying key actions to further mitigate them. These actions are designed to be consistent with the work required to deliver services which are aligned to the Council’s objectives through the Council’s strategic and service plans. Furthermore departmental management teams review their operational risk registers (ORR) on a quarterly basis with all red risks identified in ORRs being reported to the SMT to ensure they are sighted on all emerging high priority risks. The SRR currently has 12 strategic risks which are categorised using a RAG (Red, Amber, Green) Status based on the residual impact and likelihood of crystallisation after accounting for mitigation measures. There are currently three risks classified as red as set out in the diagram below which also summarises the current mitigating actions. These are issues that the Council continues to manage through programmes of work such as the Rural Growth Deal, and the Levelling Up Fund, also the progression of a new Waste Strategy with a particular focus on the 2025 ban on Biodegradable Municipal Waste and reviewing contingency plans and disaster recovery plans in relation to Cyber Security. Page 33
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www.argyll-bute.gov.uk Page 24 Management Commentary 8. CONCLUSION The Council has continued to have good financial planning arrangements in place in 2021-22, and have managed the additional complexities and pressures brought about by COVID to ensure they operated within budget in 2021-22. It is recognised that the current cost of living crisis is creating significant financial challenges for all local authorities, however, our council is in a strong position to manage the financially challenging times. The Council are committed to deliver the best services to the people of Argyll and Bute within the available resources and to support local business to recover from the impact of COVID-19. 9. ACKNOWLEDGEMENTS We would take this opportunity to acknowledge the significant effort in producing the Annual Accounts and to record our thanks to both Elected Members and staff for their continued hard work and support. Councillor Robin Currie Pippa Milne Kirsty Flanagan Leader Chief Executive Section 95 Officer 24 November 2022 24 November 2022 24 November 2022 •Maximise external funding •Rural Growth Deal •Levelling Up Fund •Promote and market Argyll and Bute Economic and Population Decline •Developing options for new Waste Strategy •Planning for impact of Bio-degradable Municipal Waste Ban 2025 •Planning for impact of Scottish Deposit Return Scheme Waste Management •Contingency Planning •Raising Cyber Security awareness •Disaster Recovery Plan •Work with Scottish Government Cyber Resilience Team Cyber Security Page 34
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www.argyll-bute.gov.uk Page 25 Statement of Responsibilities for the Annual Accounts THE AUTHORITY'S RESPONSIBILITIES The Council is required: • to make arrangements for the proper administration of its financial affairs and to ensure that one of its officers has the responsibility for the administration of those affairs (Section 95 of the Local Government (Scotland) Act 1973). In this Authority, that officer is the Executive Director; • to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; • to 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); • to approve the Annual Accounts for signature. I confirm that these Annual Accounts were approved for signature by the Council at its meeting on 24 November 2022 Signed on behalf of Argyll and Bute Council Councillor Robin Currie Leader 24 November 2022 SECTION 95 OFFICER RESPONSIBILITIES The Section 95 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 Code). In preparing the Annual Accounts, the Section 95 Officer has: • selected suitable accounting policies and applied them consistently; • made judgements and estimates on a reasonable basis; • complied with legislation; • complied with the Local Authority Accounting Code of Practice 2021-22 (in so far as it is compatible with legislation). The Section 95 Officer has also: • kept adequate accounting records which were up to date; • taken reasonable steps for the prevention and detection of fraud and other irregularities. 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 2022. Kirsty Flanagan Section 95 Officer 24 November 2022 Page 35
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www.argyll-bute.gov.uk Page 26 Annual Governance Statement BACKGROUND / SCOPE OF RESPONSIBILITY Argyll and Bute Council’s (the Council) governance framework includes the systems, processes and culture by which the Council is controlled, engages with communities and monitors the achievement of strategic objectives. The Council conducts its business in accordance with the law and proper standards. The Council has a duty to make arrangements to secure continuous improvement in the way which its functions are exercised, having regard to the economic, efficient and effective use of public money. The system of internal control is a key part of the framework and is designed to manage risk to an acceptable level. In discharging these responsibilities, the Council has put in place proper arrangements for the governance of its affairs and the stewardship of the resources at its disposal. The Council has approved and adopted a Local Code of Corporate Governance (the Code), which is consistent with the principles and requirements of the CIPFA/SOLACE revised Framework for ‘Delivering Good Governance in Local Government 2016 and the Guidance Notes for Scottish Authorities 2016’. This Statement explains how the Council has complied with the Code and meets the requirements of current good practice. A copy of the Code may be obtained from the Head of Legal and Regulatory Services, Argyll and Bute Council, Kilmory, Lochgilphead, PA31 8RT and is also available on the Council’s website. THE GOVERNANCE FRAMEWORK The Code details how the Council will demonstrate compliance with the fundamental principles of corporate governance for public sector bodies. The seven key principles of our governance arrangements in 2021/22 are described in the Code, along with our supporting principles and key aspects of our arrangements to ensure compliance. Key features of our arrangements are summarised below. 1. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. We have four values, which underpin all that we do and provide a sound basis to achieve transformation to ensure we meet the challenges of the future and deliver quality services. These values are that we have a workforce which is: • Caring • Committed • Collaborative • Creative We have developed and communicated an Ethical Framework within the Council's Constitution, which defines standards of behaviour for Members and staff. Protocols for Member/Officer relations are also detailed within the Constitution. The Councillors’ Code of Conduct is set out at a national level, applying to all members in Scottish local authorities and is incorporated into the Council’s Constitution as part of the ethical framework which also includes a protocol for the Monitoring Officer. A register of members’ interests is available on the Council's website. The Constitution has a section on conduct at meetings and meeting agendas require declarations of interest to be made where appropriate. Anti-fraud and whistleblowing policies are in place and the Council has adopted the Scottish Public Services Ombudsman’s (SPSO’s) Model Complaints Handling Procedure. Standing orders for meetings are included within the Council’s constitution and training and support is provided to members on their role in Council committees. Page 36
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www.argyll-bute.gov.uk Page 27 Annual Governance Statement The Council complies with CIPFA’s Statement on the Role of the Chief Financial Officer in Local Government. 2. Ensuring openness and comprehensive stakeholder engagement. We have established clear channels of communication with the community and other stakeholders through our Communication Strategy. Key mechanisms include: Consultation Diary The Council has developed a consultation section on its website which hosts all consultations run by the Council, both current and historic. This includes a section which publicises the results and/or outcome of the consultation and the resultant decisions that have been taken, showing how they were informed by the consultation process. This is part of our commitment to You Said, We Did information sharing for the public. Keep in the Loop Service 2019/20 was the first full year that the pro-active Keep in the Loop Service was deployed. It proved hugely popular as a customer engagement tool and the 7,927 customers subscribed to receive notifications across the range of services. In 2021/22 the number of subscribers is 10,489. For customers it meant that they have been kept up to date with topical council information and opportunities to provide valued input on matters that affect them. MyAccount ‘Myaccount’ is the simple and secure sign-in service for accessing online public services in Scotland. It provides people living in Scotland with the ability to set up an online account and use it to access a growing range of online public services, Scotland-wide, including Argyll and Bute Council. 13,021 customers have signed up to this service, which is an increase from 11,079 in 2020/21. It allows customers to: • Fill in forms automatically with your details • Save forms for finishing later • Track the progress of your reports and requests • Access to council services that require proof of identity • Access your council tax account and sign up for e-billing • Find out when your bins are collected at a glance • Manage your email subscriptions and alerts • Avoid having to re-register with local council services when you move to a new part of Scotland • Bookmark useful pages to make them easier to find Public Performance Reporting The Council’s website makes all performance information available to the public within the performance section. This includes information on performance scorecards, budgets and other service related information. This ensures the Council is openly accountable to the public for its performance against agreed policies and standards. Public Performance Reporting was reviewed in 2021 and improved as part of the Performance Excellence Project, an action in the BV3 Action Plan. Accessibility Online service provision is only effective if it is easy to access. In order to ensure maximum accessibility for everyone and meet our equalities responsibilities, the Council’s website has been revised and refreshed to improve its rating for accessibility in the national Silktide accessibility score. In April 2022 the website had a 99% rating (excellent) and was the 13th highest ranking Council in the UK. Page 37
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www.argyll-bute.gov.uk Page 28 Annual Governance Statement In 2022 the website will be getting a major upgrade to Drupal 9 Content Management System and has procured expert input from Inspire Ltd to help with this Community Engagement The Council supports good community engagement with the resourcing of community development officers in the Community Planning and Community Development Team, part of the Chief Executives Unit. The team has resources and expertise to support hard to reach groups, community organisations and remote communities to have a voice in decision making. The team also provides best community engagement practice for any other requirement. The Council also oversees the work of Community Learning (Youth Work and Adult Learning) through its collaboration with its Arms-length External Organisation (ALEO) partner Live Argyll. The Council’s Community Development Team can also assist community organisations with developing new projects, funding opportunities, training needs and support with evaluation techniques. Local Community Development Officers also support community groups, organisations and individuals, particularly those who do not traditionally engage in community issues, to participate in local Area Community Planning Groups. Further to this the team has a Gaelic Development Worker to support and engage Gaelic learning and Gaelic speaking communities. The Council’s Governance section supports community engagement by providing the staff resource to support Area Community Planning Groups which act as a forum to enable local groups and organisations to participate in Community Planning and partnership working at a local area level throughout Argyll & Bute. The section has put arrangements in place across the partnership members to ensure these groups have had the ability to continue to meet on a virtual basis during the Covid19 pandemic response period. It also plays a key role in supporting the Community Safety Partnership which is an integral part of the Community Planning Partnership and takes a lead in relation to Outcome 6 of the Argyll and Bute Outcome Improvement Plan: People live in safer and stronger communities. This group has produced its first Community Safety Strategy which sets out strategic priorities and how the partnership will work together to focus resources in support of agreed actions. It also supports community engagement by resourcing community council liaison activities, including training and support activity, which helps to build the capacity of community councils. During the Covid 19 response period the Scheme for the Establishment of Community Councils was amended to facilitate community councils being able to meet on a virtual basis during this period to fulfil their representative role and advice and support was provided to facilitate this development. The Council actively seeks to ensure that young people are engaged in Community Planning and has implemented the following initiatives: • The 3 local Members of the Scottish Youth Parliament (MSYP's) attend the Community Planning Partnership Management Committee meetings on a rotational basis. • The Area Community Planning Groups (ACPG) invite members of local Youth Forums to attend meetings when they are held in their local areas & information is passed on to young people by Youth Workers who are kept updated on any developments. One ACPG currently has a young person in the Vice Chair role. • The revised Scheme of Establishment for Community Councils outlines the requirement to encourage young people to attend and participate in community council meetings” and the age to become a Community Councilor was lowered to be 16 to encourage more young people to become involved. The Council continues to promote the Community-Led Action Planning Toolkit (developed in partnership with Scottish Community Development Centre). Communities are being supported to consider use of the online toolkit in developing action plans that the community can lead on to address issues and needs in their communities. There are a number of existing community-led action plans and these are recognised as important community contributions to area community planning. Page 38
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www.argyll-bute.gov.uk Page 29 Annual Governance Statement The Community Planning Partnership undertook a Place Standard Engagement exercise to help shape the CPP priorities from 2021. This information has also been shared with communities to be used to develop community led action plans. A strong Community Planning Partnership (CPP) is in place with partners leading on each of the outcomes and emerging cross-cutting thematic working groups. This ensures a shared sense of accountability and ownership of working towards realising the CPP priorities. During the Covid pandemic, the council engaged with local community response groups, making sure that groups were supported with good practice and resources where required such as – lone volunteering policies, safe medication delivery process, insurance, confidentiality guidance etc. Regular online drop-in sessions were established and ran for a period of 2 years for the groups to receive updates and to enable them to highlight needs/challenges and ask questions of Council and its partners. Council/Committee Meetings Meetings are always held in public, unless one of the statutory exemptions in the Local Government (Scotland) Act 1973, schedule 7A applies to the content of the report. Agendas for and minutes of meetings are detailed on the Council’s website. When schedule 7A applies papers are adjusted to ensure that the maximum amount of content is in the public domain. The Council’s constitution defines the roles and responsibilities of the administration, committees, scrutiny and officer functions, with clear delegation arrangements and protocols for effective communication. The constitution is updated on an annual basis with the last update carried out in October 2021. The constitution includes collective and individual roles and responsibilities of the Leader, Provost, Policy Lead Councillors, other councillors and officers. It also includes a protocol for the role of the Monitoring Officer (the Executive Director for Customer Services). Best Value (BV) is assessed by the Council’s external auditors over the five year audit appointment, as part of the annual audit work and, additionally, a Best Value Assurance Report (BVAR) for each Council will be considered by the Accounts Commission at least once during this five year period. The Council’s Chief Executive presented an update on the Action Plan to the Council’s Audit and Scrutiny Committee on 16 March 2021 who accepted the progress to date. Audit Scotland followed up with the Council in May 2021 to review evidence against the progress listed in the Action Plan and stated in their Annual Report (December 2021) that the Council has made good progress. A further progress report was submitted to the Audit and Scrutiny Committee 15 March 2022 which illustrates how 22 of the 36 actions are complete and that a further report will come back in 12 months to provide a further update on the 14 actions remaining. The Standards Commission Advice Note for Councillors on Distinguishing between their Strategic Role and any Operational Work has previously been included in an Elected Member Seminar and is hosted on the Members Resource page on the Hub for ease of reference. 3. Defining outcomes in terms of sustainable economic, social, and environmental benefits. Our Corporate Plan sets out our, and our community planning partner’s, vision for Argyll and Bute’s economic success to be built on a growing population. It also defines our mission “To make Argyll and Bute a place people choose to live, learn, work and do business” and establishes our outcomes, priorities and approach to delivering on our shared ambition with our community partners. All services have plans containing an agreed set of quality standard measures which feed into the overall Corporate Plan. We have a Performance Improvement Framework (PIF) that ensures performance is integral to the work of the Council. The PIF is focused not just on measuring what we do but on measuring the difference we make in terms of our outcomes. Page 39
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www.argyll-bute.gov.uk Page 30 Annual Governance Statement Councillors and senior managers review and scrutinise the Council’s performance at all levels to ensure our services are having the desired impact on our communities and customers. At a strategic level, performance is scrutinised through our strategic committees and, more locally, at our area committees. The Audit and Scrutiny Committee, which meets four times a year, has a key role in reviewing and scrutinising how we are meeting our strategic objectives. They also promote good internal control, financial and risk management, governance and performance management, in order to provide reasonable assurance over the effective and efficient operation of the Council, and compliance with laws and regulations, including the Council’s Financial and Security Regulations, Contract Standing Orders and accounting codes of practice. The Council’s Capital programme and capital investment strategy is considered by the Executive Management team and approved by the Council at the budget meeting. 4. Determining the interventions necessary to optimise the achievement of the intended outcomes. The Council’s Executive Leadership Team (ELT) meet regularly with the administration to discuss their key priorities and requirements for decision making in addition there is regular survey and feedback on their needs and a regular review of governance arrangements to ensure that decision making is fully supported. The Council’s complaints process ensures that service and operational issues are picked up and improvements are undertaken when required. Services carry out consultations and public surveys on various projects and service improvement areas across the Council which inform reporting and decision making on these. The Council’s performance management framework has KPI’s allowing the monitoring of service outcomes which are reported to the Executive Leadership Team (ELT) and Members enabling management decision and appropriate interventions to be taken. Business outcomes are mapped to the corporate plan and the budget consultation process ensures that service priorities are affordable within resource constraints. 5. Developing the entity’s capacity, including the capability of its leadership and the individuals within it. Elected Member Development The Council has signed up to the Improvement Service’s Continuing Professional Development Framework for Elected Members. All Elected Members are provided with opportunities to progress personal development plans so that individual training needs and aspirations are identified and support provided as appropriate. This is complemented by a comprehensive seminar and workshop programme which addresses a wide range of topics and strategic issues. Since the introduction of new ways of working and operating in a virtual environment in response to the Covid-19 pandemic this programme has moved on-line and during 2021/22 a regular programme of webinars and workshops have taken place on-line which has facilitated a higher level of attendance. Additional training was undertaken by Elected Members in relation to the technology, knowledge and skills necessary to support the transition to a virtual environment including webcasting of strategic Committee meetings and the operation of meetings on a hybrid basis, enabling a mixed attendance of members being physically or virtually present. Support has been provided to Chairs in terms of process and guidance notes to facilitate the transition to operating on a virtual basis and enhance effectiveness in this regard. During this period a review of Elected Member Induction was undertaken in advance of Local Government Elections in May 2022. The programme was redesigned to focus on the whole geographical area of Argyll and Bute and to enable Members to gain a perspective on both local and strategic issues across the Council area whilst ensuring they have the opportunity to gain the knowledge and skills necessary to facilitate effective decision making, scrutiny and challenge in the early days of the new term. Following the 3 by-elections that took place in 2021-22 there was the opportunity to pilot some of the induction material on a virtual basis. Page 40
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www.argyll-bute.gov.uk Page 31 Annual Governance Statement Officer Development The Council supports officer development through a structured approach, driven by the values set out in the Corporate Plan and a behavioural competency framework. The Council has Argyll and Bute Manager and Leadership Programmes, which ensure that all employees who have management responsibilities are knowledgeable and effective in delivering services within the priority management policies and procedures of the Council, including finance, performance and people management. The Leadership Programme ensures that senior and aspiring leaders in the organisation have support to develop their leadership behaviours and to improve their overall impact and performance across the organisation. 6. Managing risks and performance through robust internal control and strong public financial management. Internal Financial Control Our standing orders, financial instructions, scheme of delegation and supporting procedure notes/manuals clearly define how decisions are taken and the processes and controls in place to manage risks. These are reviewed and updated on an annual basis. We ensure compliance with relevant laws and regulations, internal policies and procedures, and that expenditure is lawful. The Council’s Monitoring Officer advises on compliance with our policy framework, ensuring that decision making is lawful and fair. Our financial management arrangements conform to the CIPFA Statement on the Role of the Chief Financial Officer and we ensure that our independent Audit and Scrutiny Committee undertakes the core functions identified in CIPFA’s Audit Committees – Practical Guidance for Local Authorities. The Council's Audit and Scrutiny Committee endorses the preparation methodology and annual internal audit plan and monitors the performance of Internal Audit in completing the plan. The Council has a designated Data Protection Officer and all services have Information Asset Registers along with appropriate guidance on how data should be managed. The Council has a system of internal financial control designed to manage risk to a reasonable level. It is based on a framework of regular management information, financial regulations, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. Development and maintenance of the system is undertaken by officers within the Council and the named bodies mentioned below. In particular the system includes: • comprehensive budgeting systems • regular reviews by the Council and the named bodies (mentioned below) of periodic and annual financial reports which indicate financial performance against forecast • setting targets to measure financial and other performance • the preparation of regular financial reports which indicate actual expenditure against forecast • clearly defined capital expenditure guidelines • project management disciplines • guidance relating to financial processes, procedures and regulations • an effective Internal Audit section. Internal controls cannot eliminate risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. Page 41
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www.argyll-bute.gov.uk Page 32 Annual Governance Statement This annual review also covers the other bodies whose activities are incorporated into our Group Accounts and reliance is placed on the formal audit opinion contained in the financial statements of each individual body. • Dunbartonshire and Argyll and Bute Valuation Board • Strathclyde Partnership for Transport • Strathclyde Concessionary Travel Scheme Joint Committee • Live Argyll • Argyll and Bute Integration Joint Board The Council’s risk management processes are well developed. In particular the: • Strategic Risk Register is updated twice a year and approved by the SMT • Chief Executive presents the Strategic Risk Register to the Audit and Scrutiny Committee on an annual basis • Operational Risk Registers are updated quarterly by departmental management teams. Internal audit has a key role in relation to the Council’s governance to provide assurance over the effective management of risk. In September 2019 the Audit and Scrutiny Committee agreed that the CIA would perform an annual strategic risk assurance mapping exercise with this replacing a previous annual requirement for a risk management report. This was presented to the Audit and Scrutiny Committee in September 2019, September 2020 and September 2021. This exercise has confirmed that for all the risks in the Council’s strategic risk register there are either sufficient assurances in place or internal audit currently have scheduled work to fill identified gaps. This mapping exercise will continue to be performed annually and Internal Audit will perform an audit of compliance with risk management arrangements every three years unless issues are brought to the attention of the Chief Internal Auditor which would suggest a review is required outwith that cycle. 7. Implementing good practices in transparency, reporting, and audit to deliver effective accountability Internal Audit The Council and its Group bodies have internal audit functions, which operate to Public Sector Internal Audit Standards. The work of internal audit is informed by an analysis of the risk to which the Council and its Group bodies are exposed, with annual internal audit plans prepared based on that analysis. The Council's Audit and Scrutiny Committee endorses the preparation methodology and annual internal audit plan and monitors the performance of Internal Audit in completing the plan. The COVID-19 pandemic meant the 2021/22 audit plan needed to be revised and this revision was approved by the Audit and Scrutiny Committee on 15 March 2022. This was due to a need to redeploy audit resource to priority tasks required to support the Council’s response to the pandemic and support Financial Services. This resulted in three audits being removed from the 2021/22 plan. In her annual report presented to the Audit and Scrutiny Committee in June 2022 the interim CIA confirmed this did not affect her ability to provide an opinion on the Council’s systems of governance and internal control. The Chief Internal Auditor (CIA) provides the Audit and Scrutiny Committee with an annual report on internal audit activity in the Council and this confirms that reasonable assurance can be taken that the systems of governance and internal control are operating effectively. Internal audit provides members and management of the Council with independent assurance on risk management, internal control and corporate governance processes. External audit has, and continues to, use the work of internal audit. The Chair of the Audit and Scrutiny Committee is an independent lay member. During 2021/22, one of the seventeen audit reports presented to the Audit and Scrutiny Committee had an overall audit opinion of ‘limited’ assurance. The audit related to Contract Management Roads and Amenity Services. For these and all other audit reports, an action plan has been agreed and progress against their delivery is routinely monitored by Internal Audit. Management have accepted 100% of audit recommendations and a robust follow-up system is in place with progress reports presented to the SMT on a quarterly basis. Page 42
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www.argyll-bute.gov.uk Page 33 Annual Governance Statement During 2021/22 the following developments were made within Internal Audit: • the counter fraud team worked alongside internal audit to ensure there is cross team learning • the CIA engaged with members of the Audit and Scrutiny Committee as part of the planning process for the 2022/23 audit plan • the internal audit team delivered internal audit services to the Argyll and Bute Health and Social Care Partnership, undertaking 3 audits which were presented to the Audit and Risk Committee. Clear reports on a common format which are publically available and the Council has developed a hybrid meeting facility enabling physical and virtual attendance at meetings with a public broadcast function so that members of the public can see and hear meetings of the Council’s strategic committees live increasing openness and transparency. The Council prepares an annual report and an annual governance statement. The Audit and Scrutiny Committee receive an annual Strategic Risk Assurance Mapping report which helps inform their consideration of potential scrutiny topics. This is supported by the Council’s Scrutiny Framework and Manual which continues to be refreshed on an annual basis as the Council’s approach to scrutiny evolves and matures. GOVERNANCE ROLES AND RESPONSIBILITIES The Council has appropriate management and reporting arrangements to enable it to satisfy itself that its approach to corporate governance is adequate and effective in practice. The legislative framework of local government defines a number of posts which are primary to the Council’s governance arrangements. These include the Chief Executive, Pippa Milne fulfilling the role of Head of Paid Service. As Monitoring Officer, the Executive Director Douglas Hendry: • oversees the implementation of the Code and monitoring its operation • reports annually to the Council on compliance with the Code and any changes required to maintain it and ensure its effectiveness. Account has been taken of the results of reviews of internal control that have been carried out within each council service. Specific responsibilities are assigned to the Executive Director Kirsty Flanagan as the Council’s Chief Financial Officer (S95 Officer), to ensure that public funds are properly accounted for. In recognition of the significant role that the Chief Financial Officer has in relation to financial performance and the financial control environment, CIPFA has set out key principles that define the core activities and behaviours that belong to the role. These include, being a key member of the Leadership Team, being actively involved in and influencing decision making, and leading the delivery of good financial management across the whole organisation. The Council have appointed a Data Protection Officer in line with the requirements of the UK-General Data Protection Regulations and the Data Protection Act 2018. IMPACT OF COVID-19 AND RECOVERY STRATEGY Throughout the period 2021-22 the Council continued to operate Council and Committee meetings on a virtual basis in response to the Covid 19 pandemic. The Council has invested significantly in the technology to enhance the virtual meeting environment and by providing the additional option to operate on a hybrid basis, where attendance can be on a virtual or in person basis. The hybrid option was introduced in the first quarter of 2022 and was scheduled to be rolled out to Area Committee Meeting later in 2022. The Council commenced webcasting for strategic committees with the first webcast meeting being the Policy and Resources Committee in December 2021. This approach facilitates a greater reach in terms of public access to meetings and underpins our commitment to transparency and accessibility. The Council Constitution and associated protocols were amended to incorporate these developments and changes. As the country emerged from restrictions, work was well underway by the Recovery Working Group (RWG) in relation to three key themes of Restart, Recovery and Renew to assist and maximise the Council’s approach in delivering the Recovery Strategy and Framework within Argyll and Bute. Page 43
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www.argyll-bute.gov.uk Page 34 Annual Governance Statement COVID-19 also impacted on governance across services during 2021/22 and this has been assessed against four broad categories: 1. Impact on business as usual in the delivery of services While the Council returned to a more business as usual footing during the period, some specific areas where service delivery has been impacted are: • restrictions on travel and social distancing requirements continued to impact on the ability of planning and building standards officers to visit application sites and enforcement complaints – this required the use of remote verification inspections to be implemented • a wide range of services within Roads and Infrastructure Services continued to be impacted to some extent, but not limited to, burials, cremations, refuse collection, civic amenity sites, home to school transport and ferry transport • Learning and teaching moved from distance learning and returned to classroom teaching across Argyll and Bute. 2. New areas of activity as part of the national response to COVID-19 and any governance issues arising Some specific examples of new areas of activity are: • move to flexible online home working for 1400 employees with access via secure vpn to all files, processes and telephony • establishing procedures for estates staff to work safely, carry out remote marketing and arrange premises for COVID related projects • establishing an easing from lockdown group focussing on town centre recovery. • additional cleansing of buildings such as schools, public conveniences, crematoria chapel, and a variety of vehicles including ferries and refuse vehicles. • providing business support through the administration of COVID specific Scottish Government grants to local businesses and self-employed people • a Community Food Programme team to ensure vulnerable people can access food and provision of doorstep delivery of free school meals • a Caring for People partnership bringing together the Health and Social Care Partnership, Third Sector Interface and the Council to work together with a focus on helping people affected by COVID-19 to receive essential support where no other support exists • redeployment of staff from substantive posts to provide support in critical areas of response activity • establishment of HUB schools for children of keyworkers. 3. The funding and logistical consequences of delivering the local government response The Council’s Financial Services team have worked in conjunction with all services to capture and monitor the financial impact of COVID-19 in terms of creating new cost pressures and its impact on the delivery of agreed savings options. 4. Recovery and reinstating services post COVID-19 The Council agreed a ‘Recovery Strategy and Framework’ in 2020 focused on considering the actions and priorities required to return the Council, its services and wider issues including economic and social recovery, to the “new norm”. An Argyll and Bute Overarching Recovery Group was formed to lead this process with specific thematic groups focused on Council recovery, building back stronger communities, economic and social recovery, infrastructure and transportation, financial management and public health. This work recognised the impact of the pandemic on widening inequalities and is Page 44
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www.argyll-bute.gov.uk Page 35 Annual Governance Statement considering longer term social and economic impacts. Good progress has been made and the Council has published its Recovery document “Recovery, Renew and Restart” outlining its achievements and current priorities. FINANCIAL SUSTAINABILITY It is anticipated the Scottish public sector will continue to face a very challenging short and medium term financial outlook with significant uncertainty over the scale of likely reductions in funding. The one year financial settlements do not provide any degree of medium term certainty and ring-fencing of monies and additional policy commitments which are not always fully funded limit financial flexibility and create additional financial pressures. The financial outlook is significantly exacerbated by the extent to which COVID-19 will continue to impact on expenditure, loss of income and future years funding levels. The additional funds made available by the UK and Scottish Government to combat the impact of COVID-19, and the agreement on financial flexibilities to date, have been sufficient to combat the financial impact of COVID to the Council in 2021/22 and 2022/23. However there is likely to be ongoing pressure on the Capital Programme as a result of increasing costs that is difficult to accurately quantify at this stage and while an element of COVID-19 funding has been allocated to the programme relating to current works, increases could continue for some time and result in further overspends across the life of the programme. It may be that we will need to re-prioritise some of our capital spending. The Council continues to provide financial estimates for future years with their medium term financial outlook covering a five year window to provide a longer term view of the Council’s estimated budget gap. Preparing any forward looking financial outlook is challenging due to the levels of uncertainty however the assumptions are reviewed regularly and updated with the outlook prepared to reflect a best case, worst case and mid-range scenario. The Council continues to be committed to developing multi-year savings proposals with a focus on longer term planning. The additional work and pressure on teams as a result of COVID during 2021-22 meant that there had to more of a focus on balancing the 2022-23 budget, however, some of the savings options impact on future years. The Scottish Government Resource Spending Review published on 31 May 2022 is hoped to provide sufficient information to allow Council’s to plan with more certainty as it will set out the spending plans for the remainder of the parliament term 2023-24 to 2026-27. As with previous years, it is the intention to establish a cross party Budget Working Group who would meet early August to commence the budget discussions for 2023-24 and beyond. The Council has a strong track record in financial management as recognised by previous year’s annual external audit reports and the Council’s Best Value report issued in May 2020. The Best Value report also recognises that the Council’s medium to long term financial strategy helps support financial planning arrangements. This strategy was updated in August 2021 as recommended in the Best Value report and now covers the period 2020-21 to 2029-30. In addition to providing revenue and capital projections the Strategy also sets out the position in relation to the Council’s general fund reserve, the approach to managing the financial impact of COVID-19, approach to Treasury Management and the strategy to address budget gaps. HEALTH AND SOCIAL CARE INTEGRATION The Argyll and Bute Integration Joint Board (IJB) has been established as a separate legal entity from Argyll and Bute Council and NHS Highland, with its own separate governance arrangements. The IJB comprises eight voting members with four Elected Members nominated by Argyll and Bute Council and four Board members of NHS Highland. In addition there are a number of non-voting appointees representing other sectors and stakeholder groups, such as the Third Sector, Independent Sector, Patients and Service Users, Carers and Staff. The arrangements for the operation, remit and governance of the IJB are set out in the Argyll and Bute Integration Scheme which has been approved by Argyll and Bute Council and NHS Highland. This was most recently revised and formally signed off by the Scottish Government on 23 March 2021. The IJB, via a process of delegation from the Health Board and Local Authority as outlined in the Scheme of Page 45
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www.argyll-bute.gov.uk Page 36 Annual Governance Statement Integration has responsibility for the planning, resourcing and operational delivery of all integrated health and social care services within Argyll and Bute. The Council places reliance on the IJB’s framework of internal controls and similarly the IJB places reliance on the procedures, policies and operational systems of the Council and the Health Board. The IJB operates within an established procedural framework. The roles and responsibilities of board members and officers are defined within Standing Orders, the Integration Scheme, Financial Regulations and Standing Financial Instructions. The IJB has proportionate internal audit arrangements in place to provide independent assurance on risk management, corporate governance and the system of internal control. A risk based internal audit plan was carried out in 2021-22 and the IJB’s internal auditor has issued a formal annual report providing their independent opinion on the effectiveness of the IJB’s risk management, internal control and governance processes. During 2021-22 the IJB has further progressed a number of initiatives to develop its governance arrangements including embedding board development events within its governance structures, its committee annual reporting and evaluation process, progressing an induction and development program for staff and implemented its revised risk management strategy. It has also established a new Contingency Risk and Resilience Committee to reflect its status as Category 1 responder. The IJB has faced substantial financial challenge since its inception. However, during 2020/21 and 2021/22 it has been able to deliver savings, operate within its budget and generate a small general reserve from its underspend for the year. The HSCP delivered an underspend of £1.738m against the resources available to it, these totalled £307m for the year. During 2021/22 the IJB was able to repay the final £2.8m that it owed to Argyll & Bute Council relating to previous overspends. The IJB has welcomed the recent increases in funding from Scottish Government and this has enabled it to set a balanced budget with a realistic savings program. Like all public bodies, the HSCP is required to continually improve its efficiency and the value for money associated with the services it provides. It will do this through its Transformation agenda and its savings plans. It is now also seeking to develop longer term plans for investment in its physical and digital infrastructure in the coming years. The HSCP also anticipates that it faces a period of significant structural change as the National Care Service is introduced. Page 46
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www.argyll-bute.gov.uk Page 37 Annual Governance Statement UPDATE ON AREAS FOR DEVELOPMENT IN 2020/21 ANNUAL GOVERNANCE STATEMENT The 2020/21 Annual Governance Statement identified a number of areas for further development. A summary update for each area is provided in the table below. Area 2021/22 Update Continue to engage with the Scottish Government and other local authorities to determine the most efficient and effective way of ensuring the Council can provide a waste solution which complied with the 2025 Bio-degradable Municipal Waste Ban Specialist economic consultants now engaged on an options appraisal exercise to help inform the decision. This is to be reported to September’s Economic Development & Infrastructure committee. Further develop the Council’s Counter Fraud Team A report was submitted to the Executive Leadership Team (ELT) in July 2022 which demonstrated that during the period of the pilot that £748,133 had been rebilled arising from proactive and reactive work by the team and that £601,807 had been recovered. The ELT agreed to make both posts permanent and the Counter Fraud Team (CFT) have similar exercises planned in other areas of Argyll and Bute in order to identify, bill and recover monies due to the Council. Progress the project to upgrade the Council’s general ledger system with an anticipated go live of 1 April 2022 This has now been pushed back to 6 June 2022 at the earliest due to issues which have surfaced during the implementation of the automated interface between Concerto and Oracle. Complete the development of the automated interface between the Property Management System (Concerto) and the Financial System (Oracle) to process contractor payments The capital Oracle/Concerto interface has been completed. The revenue interface has been delayed because of the need for Oracle to be updated as advised above. Review of the scheme of delegation in relation to property matters to ensure decisions are taken at the correct level Further review of property delegations will be included in the next review of the constitution. Enhance reporting of workforce planning to the Executive Leadership Team (ELT) and Elected Members Operational Workforce Plans (WFP) are reviewed on a six monthly basis and each team in the council are assigned a WFP risk rating. Data from these discussions are collated and analysed in a report which is presented to ELT. Human Resources and Organisational Development (HROD) team highlight any common themes that would benefit from a revised corporate approach. Quarterly health of the organisation reports are presented to Departmental Management teams (DMT) and ELT which cover a number of workforce indicators. Further progress the work to digitalise all document and evidence exchanges for Local Development Plan 2 ‘Examination in Public’ Complete and Directorate for Planning & Enforcement Appeals (DPEA) have complimented Development & Economic Growth (DEG) on the provision of information in the required format Respond to the findings of the Scrutiny Review of the Strategic Housing Fund which was reported in June 2021 All identified actions have been completed Page 47
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www.argyll-bute.gov.uk Page 38 Annual Governance Statement Continue to improve quality and accuracy of asset information which will benefit asset valuations, calculations for utilities costs and asset management Contract let and work underway to gather updated asset information for major buildings – new plans being drawn. Estates has continued to improve records with the property measurement contract providing new plans for properties. As part of the asset valuation process Estates also building up property records and will use the details for the insurance valuation updates to be completed in 2022/23. Further progress the implementation of a self-billing approach using CareFirst for payments to social care providers This action has been suspended pending the implementation of two new key systems which would be integral to the revised process: The Oracle Fusion Financial Management System and the Eclipse Social Work Management System. Once the two systems are up and running and we know what the Eclipse system can do – the vendor is still writing the software - we’ll be able to determine the actions necessary to implement this process. Adopt the CIPFA Financial Management Code This action has been delayed due to resource issues and will be addressed during 2022/23 ISSUES FOR FURTHER DEVELOPMENT The review of governance and internal control has identified the following areas for consideration during 2022/23, particularly in the context of continuous improvement within the Council: • Continue to engage with the Scottish Government and other local authorities to determine the most efficient and effective way of ensuring the Council can provide a waste solution which complied with the 2025 Bio-degradable Municipal Waste Ban (Head of Roads and Infrastructure Services – March 2023) • Further enhance reporting of workforce planning to the Strategic Management Team and Elected Members (Head of Customer Support Services – March 2023) • Finalise the project to upgrade the Council’s general ledger system with an anticipated go live of 6 June 2022 (Head of Financial Services – June 2022) • Finalise the implementation of a self-billing approach using CareFirst for payments to social care providers (Head of Financial Services – March 2023) • Complete the development of an automated interface between Concerto and Oracle (Head of Commercial Services – March 2023) • Improve quality and accuracy of asset information which will benefit asset valuations, calculations for utilities costs and asset management (Head of Commercial Services – March 2023) • Progress roll-out of Microsoft 365 (Head of Customer Support Services – March 2023) • Develop data/analytics business intelligence tool (Head of Customer Support Services – March 2023) • Undertake review of performance information (Head of Customer Support Services – March 2023) • External Quality Assessment Framework (Head of Financial Services – March 2023) Page 48
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www.argyll-bute.gov.uk Page 39 Annual Governance Statement ASSURANCE The annual review of the effectiveness of the system of governance and internal financial control is informed by: • the work of officers within the Council • the work of Internal Audit as described above • the work of External Audit • the Statements of Governance and/or Internal Control provided by the bodies incorporated into our Group Accounts • statements of assurance provided by the Council’s Chief Executive, Executive Directors and Heads of Service • external review and inspection reports; and • recommendations from the Audit and Scrutiny Committee. It is the Council’s view that the systems for governance and internal control are operating effectively within Argyll and Bute Council and the aforementioned bodies during 2021/22 and that there are no significant weaknesses. This assurance is framed within the context of the work undertaken during the year and the evidence available at the time of preparing this statement. Councillor Robin Currie Pippa Milne Kirsty Flanagan Leader Chief Executive Section 95 Officer 24 November 2022 24 November 2022 24 November 2022 Page 49
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www.argyll-bute.gov.uk Page 40 The Remuneration Report BACKGROUND The Local Authority Accounts (Scotland) Regulations 2014 (SSI No.2014/200) require local authorities in Scotland to prepare a Remuneration Report as part of the annual statutory accounts. All information disclosed in the tables in this Remuneration Report were audited by Audit Scotland. All other sections within the Remuneration Report were reviewed by Audit Scotland to ensure it is consistent with the Financial Statements. REMUNERATION POLICY AND ARRANGEMENTS Councillors The remuneration of councillors is regulated by the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 (SSI No 2020/26). The Regulations provide for the grading of councillors for the purposes of remuneration arrangements. There are 4 grades of councillor in each local authority for the purposes of payment of remuneration, the Leader of the Council; the Civic Head (Provost); senior councillors; and councillors. The Leader of the Council and the Provost 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. The Regulations also provide for the banding of local authorities. Argyll and Bute is in Band B and the Council has determined the level of remuneration for councillors within that banding. The salary that is to be paid to the Leader of the Council is set out in the Regulations. For 2021-22 the salary for the Leader of Argyll and Bute Council is £37,213. The Regulations permit the Council to remunerate one civic head. The Regulations set out the maximum salary that may be paid to that civic head. The Council’s civic head is the Provost and their remuneration is set at £27,910 which is the maximum allowed for local authorities in Band B. The Regulations also set out the remuneration that may be paid to senior councillors in addition to the Leader and Civic Head and the total number of senior councillors the Council may have. The maximum yearly amount that may be paid to a senior councillor is 75% of the total yearly amount payable to the Leader of the Council. The total yearly amount payable by the Council for remuneration of all its senior councillors shall not exceed £0.326m. The Council is able to exercise local flexibility in the determination of the precise number of senior councillors up to a maximum of 14 and their salary within these maximum limits. The Council’s policy is to pay a salary of £26,359 to each appointed policy lead. Chairs of Area Committees without a policy lead remit are paid a salary of £21,976. In 2021-22, Argyll and Bute Council had 9 senior councillors in the administration (excluding the Provost and the Leader). The total salary remuneration for senior councillors (excluding the Provost and the Leader) during 2021-22 was £0.199m. 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. Senior Employees The salary of senior employees is set by reference to national arrangements as well as local decisions on management structures and their associated remuneration levels. The Scottish Joint Negotiating Committee (SJNC) for Local Authority Services (Chief Officials) sets the salary levels for the Chief Executives of Scottish Local Authorities and also sets out the spinal column salary points for Chief Officers which local authorities can utilise in setting the salary levels for posts within their authority. Circular CO/151 sets the amount of salary for the Chief Executive of Argyll and Bute Council for 2021-22. The salaries of Executive Directors are paid at SCP 43 with Heads of Service being paid at SCP 29. Page 50
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www.argyll-bute.gov.uk Page 41 The Remuneration Report COUNCILLORS’ REMUNERATION Councillors’ payments are made in accordance with the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 and The Local Government (Allowances and Expenses) (Scotland) Regulations 2007. The total amount of councillors’ remuneration paid by the Council during the year was: 2020-21 2021-22 Actual Members Allowances Actual £'000 £'000 429 Basic Councillor Salaries 480 62 Leader and Provost's Salary 65 226 Senior Councillor Salaries 199 8 Other Expenses and Allowances paid to Members 4 725 Total Allowances 748 The annual return of councillors’ salaries and expenses for 2021-22 is available for any member of the public to view at all Council libraries and public offices during normal working hours. It is also available on the Council’s website at http://www.argyll-bute.gov.uk/council-and-government/councillors-and- community-councillors. Page 51
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www.argyll-bute.gov.uk Page 42 The Remuneration Report SENIOR COUNCILLORS’ REMUNERATION Additional disclosures are required for senior councillors’ remuneration. Senior councillors’ remuneration is in accordance with the Local Governance (Scotland) Act 2004 (Remuneration) Regulations 2007 which for the purpose of remuneration, grades Councillors as either the Leader of the Council, The Civic Head (Provost), senior Councillors or Councillors. Details of senior councillors’ remuneration are as follows: 2020-21 Total Remuneration Senior Members Responsibility Salary, Fees and Allowances Taxable Expenses Total Remuneration £ £ £ £ 25,274 Councillor Rory Colville Policy Lead - Roads and Infrastructure Services and Chair of Mid Argyll, Kintyre & the Islands Area Committee from 22-10-20, Policy Lead for Support Services from 26-09-19 to 22-10-20 26,313 - 26,313 30,250 Councillor Robin Currie Leader from 24-09-20, Policy Lead for The Economy and Rural Growth from 22-10-20, Policy Lead for Housing, Roads and Infrastucture Services from 26-09-19 to 22-10- 20, Chair of Mid Argyll, Kintyre & the Islands Area Commitee to 22-10-20 37,148 - 37,148 10,420 Councillor Mary-Jean Devon Policy Lead for Support Services from 22-10-20 26,313 26,313 21,071 Councillor Bobby Good Chair of Bute & Cowal Area Committee 21,938 - 21,938 25,274 Councillor Kieron Green Policy Lead for Health and Social Care 26,313 - 26,313 25,728 Councillor David Kinniburgh Provost from 26-11-20, Policy Lead for Planning and Regulatory Services from 22-10-20, Policy Lead for Planning Services from 26-09-19 to 22-10-20 27,862 - 27,862 25,274 Councillor Yvonne McNeilly Policy Lead for Education 26,313 - 26,313 8,736 Councillor Barbara Morgan Chair of Helensburgh & Lomond Area Committee from 22-10-20 to 14-10-21 12,720 12,720 20,163 Councillor Aileen Morton Leader to 24-09-20, Policy Lead for Commercial Services and Strategic Priorities from 26-09-19 to 22-10-20 with oversight of Economic Growth from 26-11-19 to 20-05-20, Chair of Helensburgh & Lomond Area Committee from 25-11-21 19,611 - 19,611 25,274 Councillor Gary Mulvaney Depute Leader and Policy Lead for Financial Services and Major Projects from 26-09-19 26,313 - 26,313 20,469 Councillor Alasdair Redman Policy Lead for Business, Regeneration and Commercial Development from 22-10-20 to 20-08-21, Policy Lead for Economic Growth from 25-05-20 to 22-10- 20 21,873 - 21,873 21,071 Councillor Elaine Robertson Chair of Oban, Lorn & the Isles Area Committee 21,938 - 21,938 2021-22 Senior Councillors’ remuneration in the tables above does not include non-taxable expenses. The values in the table above relate to the actual payments made during 2021-22 which differ slightly from those stated on page 40 due to timing differences in regards to payroll. Page 52
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www.argyll-bute.gov.uk Page 43 The Remuneration Report EMPLOYEES’ REMUNERATION The Regulations require that local authorities provide an analysis of the number of employees whose remuneration in the year was £50,000 or more, including those classified as senior employees who are subject to separate disclosure requirements. The definition of remuneration includes all sums paid to or receivable by an employee, expense allowances chargeable to tax and the monetary value of benefits received other than in cash. This definition therefore includes all payments made to the employee in respect of agreed employment terminations or retirements. However, employer pension contributions are excluded from the definition. Readers should be aware when making comparisons between years that, due to contractual incremental pay increases, the number of employees covered by this disclosure will increase each year. In addition, payments made in respect of agreed employment terminations or retirements can also distort the number and/or banding of employees. The number of employees whose remuneration, excluding employer pension contributions and including redundancy/retirement payments, was £50,000 or more in bands of £5,000 was: Total 298278 £115,000 - £119,999 -- £120,000 - £124,999 -- £125,000 - £129,999 £130,000 - £135,000 1 £105,000 - £109,999 22 £110,000 - £114,999 -- - 3 £95,000 - £99,999 11 £85,000 - £89,999 -- £90,000 - £94,999 1- 7 Range 2021-222020-21 £ Number of OfficersNumber of Officers £50,000 - £54,999 140124 £60,000 - £64,999 4125 £55,000 - £59,999 8492 -1 £65,000 - £69,999 1617 £75,000 - £79,999 19 £70,000 - £74,999 44 £100,000 - £104,999 -- £80,000 - £84,999 Page 53
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www.argyll-bute.gov.uk Page 44 The Remuneration Report SENIOR EMPLOYEES’ REMUNERATION The table below provides details of the remuneration paid to the Council’s senior employees. This is defined by the regulations as; • someone who has responsibility for the management of the organisation, or • occupy a position which is politically restricted, or • any additional employee whose annual remuneration is £150,000 or more (remuneration includes salary, non-cash benefits and any lump sum payment for loss of employment) The following table sets out the remuneration disclosures for 2021-22 for senior officers: Total Remuneration 2020-21 Post Holder Salary (Including Fees and Allowances) Taxable Expenses Total Remuneration 2021-22 £ £ £ £ 129,066 Chief Executive - Pippa Milne 132,568 717 133,285 106,249 Executive Director - Douglas Hendry 106,908 822 107,730 106,157 Executive Director, Section 95 Financial Officer - Kirsty Flanagan 107,054 698 107,752 68,994 Head of Adult Services (Mental Health, Learning Disability, Addictions and Lifelong Conditions) (Section 3 Social Work Officer) - Julie Lusk (from 19-05-20 to 13-09-21) 40,345 - 40,345 79,441 (Full year equivalent) 80,336 - 80,336 Head of Children and Families and Criminal Justice (Section 3 Social Work Officer) - David Gibson (from 14-09- 21) 40,600 40,600 (Full year equivalent) 80,336 80,336 79,441 Live Argyll General Manager (Subsidiary of Argyll & Bute Council) - Kevin Anderson 80,501 - 80,501 Page 54
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www.argyll-bute.gov.uk Page 45 The Remuneration Report PENSION BENEFITS Pension benefits for councillors and local government employees are provided through the Local Government Pension Scheme (LGPS). Councillors’ pension benefits are based on career average pay. A councillor’s pay for pension purposes 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 (or indices) 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. Local government employees had a final salary pension scheme prior to 1 April 2015. This means that pension benefits are based on the final year’s pay and the number of years that person has been a member of the scheme. As of 1 April 2015, local government employees are now part of a defined benefit pension scheme worked out on a career average basis. Benefits accumulated are calculated using pensionable pay each scheme year, rather than final salary. All benefits accumulated prior to 1 April 2015 are protected. A five-tier contribution system is in place with contributions from scheme members based on how much pay falls into each tier. This is designed to give more equality between the costs and benefits of scheme membership. The tiers and members contribution rates for 2021-22 are as follows: Whole time pay Contribution Rate 2021-22 On earnings up to and including £22,300 5.50% On earnings above £22,301 and up to £27,300 7.25% On earnings above £27,301 and up to £37,400 8.50% On earnings above £37,401 and up to £49,900 9.50% On earnings above £49,901 12.00% From 1 April 2015, if a person works part-time their contribution is worked out on their part-time pay rate for the job. Prior to this, if a person worked part-time, their contribution rate was worked out on the whole- time pay rate for the job with actual contributions paid on actual pay earned. There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for a lump sum up to the limit set by the Finance Act 2004. From 1 April 2015, benefits are calculated on the basis of a revalued annual pension built up of 1/49th of pensionable pay each year, plus inflation to keep up with the cost of living. Prior to this date, the accrual rate guaranteed a pension based on 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. The value of the accrued benefits has been calculated on the basis of the age at which the person will first become entitled to receive a full pension on 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. Page 55
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www.argyll-bute.gov.uk Page 46 The Remuneration Report SENIOR COUNCILLORS’ PENSION BENEFITS The pension entitlements for senior councillors for the year to 31 March 2022 are shown in the table below, together with the contribution made by the Council to each senior Councillor’s pension during the year. The pension benefits shown relate to the benefits that the individual has accrued as a consequence of their relevant local government service and not just their current appointment. In-year pension contributions Accrued pension benefits Senior Members In-year pension contributions Accrued pension benefits £ £'000 £ £'000 4,878 6 Councillor Rory Colville Pension 5,078 7 2 Lump Sum 2 5,838 6 Councillor Robin Currie Pension 7,170 8 1 Lump Sum 1 1,433 5 Councillor Mary-Jean Devon Pension - - 2 Lump Sum - 4,878 2 Councillor Kieron Green Pension 5,078 3 - Lump Sum - 4,067 2 Councillor Bobby Good Pension 4,234 2 - Lump Sum - 4,966 6 Councillor David Kinniburgh Pension 5,377 7 2 Lump Sum 2 4,878 2 Councillor Yvonne McNeilly Pension 5,078 3 - Lump Sum - 3,693 1 Councillor Barbara Morgan Pension 2,455 2 Lump Sum 5,350 5 Councillor Aileen Morton Pension 3,785 6 - Lump Sum - 4,878 6 Councillor Gary Mulvaney Pension 5,078 6 2 Lump Sum 2 4,605 2 Councillor Alasdair Redman Pension 4,221 2 Lump Sum 332 7 Councillor Elaine Robertson Pension - - 1 Lump Sum - For the year to 31 March 2021 For the year to 31 March 2022 Note: Two councilors left the pension scheme during 2020-21 Page 56
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www.argyll-bute.gov.uk Page 47 The Remuneration Report SENIOR EMPLOYEES’ PENSION BENEFITS The pension entitlements for senior employees for the year to 31 March 2022 are shown in the table below, together with the contribution made by the Council to each senior employee’s pension during the year. The pension benefits shown relate to the benefits that the individual has accrued as a consequence of their relevant local government service and not just their current appointment. In-year pension contributions Accrued pension benefits Senior Officers In-year pension contributions Accrued pension benefits £ £'000 £ £'000 24,751 60 Pension 25,586 64 105 Lump Sum 106 20,334 59 Pension 20,546 61 106 Lump Sum 107 20,334 31 Pension 20,546 33 30 Lump Sum 31 15,332 2 Pension 7,690 4 - Lump Sum - Head of Children and Families and Criminal Justice (Section 3 Social Work Officer) - David Gibson (from 14-09-21) Pension 8,378 1 Lump Sum 15,332 29 Pension 15,537 31 38 Lump Sum 38 Live Argyll General Manager (Subsidiary of Argyll & Bute Council) - Kevin Anderson Chief Executive - Pippa Milne Executive Director of Customer Services - Douglas Hendry Executive Director, Section 95 Financial Officer - Kirsty Flanagan Head of Adult Services (Mental Health, Learning Disability, Addictions and Lifelong Conditions) (Section 3 Social Work Officer) - Julie Lusk (from 19-05-20 to 13-09-21) For the year to 31 March 2021 For the year to 31 March 2022 Note: J Lusk is on Secondment from 14-09-21 and her contributions are paid by the Scottish Government during this period. Page 57
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www.argyll-bute.gov.uk Page 48 The Remuneration Report EMPLOYEE EXIT PACKAGES The numbers of exit packages with cost per band for compulsory and other redundancies are set out in the table below: Exit Package Cost Band No £ No £ No £ No £ No £ No £ 6 42,526 2 27,866 8 70,392 £0 - £20,000 2 11,782 1 11,144 3 22,926 2 44,307 - - 2 44,307 £20,001 - £40,000 - - - - - - 2 94,397 - - 2 94,397 £40,001 - £60,000 - - - - - - 1 64,618 2 144,484 3 209,102 £60,001 - £80,000 - - 1 70,992 1 70,992 - - - - - - £80,001 - £100,000 - - 1 80,629 1 80,629 1 103,669 - - 1 103,669 £100,001 - £150,000 - - 1 133,113 1 133,113 - - - - - - £150,001 - £200,000 - - - - - - 12 349,517 4 172,350 16 521,867 2 11,782 4 295,878 6 307,660 2020-21 2021-22 Compulsory Redundancies Other Departures Total Compulsory Redundancies Other Departures Total For the purposes of this note, Exit Packages include: • Redundancy payment; • Strain on the fund cost (the amount which the Council is required to pay to the pension fund because the employee has retired before the assumed retirement age); • Added Years Lump Sum (the amount which the Council pays to the individual in a one-off lump sum, according to the compensatory added years awarded – maximum three years); and • A capitalised value of the recurring Compensatory Added Years payment. This represents the amount which the Council has to pay to the pension fund because the employee has retired with enhanced service (maximum three years). This amount is paid on an annual basis once a person has left employment with the Council and is therefore a notional cost at 31 March 2022. The cash value costs noted in the table represent the actual costs incurred by the Council for the agreed exit packages. The capitalised added years pension element for members of the Teachers’ Pension Scheme is included in the cash value cost as payment is made in advance to the teachers’ pension fund to settle this liability. The total cost of £0.308m in the table includes exit packages that have been agreed and charged to the Council’s Comprehensive Income and Expenditure Statement in the current year. These costs include all exit packages agreed by 31 March in each year, this does not necessarily mean that these payments have been made, for example an employee could have subsequently been re-deployed to an alternative post within the Council. The Council’s Balance Sheet includes a provision at 31 March 2022 of £0.065m, this represents the amount which has yet to be paid out by the Council and this amount is included within the bands above. The supplementary Termination Benefits Note 35 provides more information on the exit packages agreed in the last two financial years. Page 58
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www.argyll-bute.gov.uk Page 49 The Remuneration Report FACILITY TIME STATEMENT Under the Trade Union (Facility Time Publication Requirements) Regulations 2017, the Council is required to collect and publish data in relation to its usage and spend of trade union facility time in respect of employees who are trade union representatives. Full details for the period 1 April 2021 to 31 March 2022 are attached at Appendix A. Councillor Robin Currie Pippa Milne Leader Chief Executive 24 November 2022 24 November 2022 Page 59
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Expenditure and Funding Analysis www.argyll-bute.gov.uk Page 50 Net Expenditure Chargeable to the General Fund Adjustments between the Funding and Accounting Basis (Note 31) Net Expenditure in the Comprehensive Income and Expenditure Statement Net Expenditure Chargeable to the General Fund Adjustments between the Funding and Accounting Basis (Note 31) Net Expenditure in the Comprehensive Income and Expenditure Statement £'000 £'000 £'000 Service £'000 £'000 £'000 5,329 452 5,781 Chief Executive and Financial Services 5,790 1,087 6,877 Executive Director Douglas Hendry 410 27 437 Executive Director 330 59 389 9,426 6,827 16,253 Commercial Services 9,471 8,053 17,524 81,717 (1,567) 80,150 Education 86,427 (8,373) 78,054 8,557 3,359 11,916 Legal and Regulatory Support 9,466 (1,925) 7,541 Executive Director Kirsty Flanagan (2) 6 4 Executive Director 305 32 337 7,892 2,460 10,352 Customer Support 7,553 3,113 10,666 9,649 570 10,219 Development and Economic Growth 9,752 1,786 11,538 32,448 12,024 44,472 Roads and Infrastructure 30,914 17,187 48,098 58,107 3,465 61,572 Social Work 67,080 2,238 69,318 9,019 (1,347) 7,672 Other Non-Departmental Costs 10,974 (687) 10,287 222,552 26,276 248,828 Net Cost of Services 238,062 22,570 260,629 2020-21 2021-22 Page 60
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Expenditure and Funding Analysis www.argyll-bute.gov.uk Page 51 (251,127) (11,958) (263,085) Other Income and Expenditure (255,904) (19,741) (275,645) (28,575) 14,318 (14,257) (Surplus) / Deficit (17,842) 2,829 (15,016) (49,670) Opening General fund Balance (78,245) (28,575) Plus (Surplus) or Deficit on General Fund Balance (17,842) (78,245) Closing General Fund Balance at 31 March 2022 (96,087) The Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants, council tax and business rates) by local authorities in comparison with those resources consumed or earned by authorities in accordance with generally accepted accounting practices. It also shows how this expenditure is allocated for decision making purposes between the council’s services. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement. Page 61
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Statement of Comprehensive Income and Expenditure www.argyll-bute.gov.uk Page 52 Note Gross Expenditure Gross Income Net Expenditure Gross Expenditure Gross Income Net Expenditure £'000 £'000 £'000 Service £'000 £'000 £'000 25,784 20,003 5,781 Chief Executive and Financial Services 25,714 18,837 6,877 Executive Director Douglas Hendry 437 437 Executive Director 389 389 19,167 2,914 16,253 Commercial Services 21,022 3,498 17,524 93,170 13,020 80,150 Education 92,302 14,248 78,054 16,173 4,257 11,916 Legal and Regulatory Support 11,769 4,228 7,541 Executive Director Kirsty Flanagan 4 4 Executive Director 337 337 10,945 593 10,352 Customer Support Services 11,374 708 10,666 18,709 8,490 10,219 Development and Economic Growth 23,172 11,634 11,538 60,972 16,500 44,472 Roads and Infrastructure 70,602 22,504 48,098 - - 147,227 85,655 61,572 Social Work 158,106 88,788 69,318 11,263 3,591 7,672 Other Non-Departmental Costs 10,538 251 10,287 403,851 155,023 248,828 Net Cost of Services 425,325 164,696 260,629 2020-21 2021-22 Page 62
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Statement of Comprehensive Income and Expenditure www.argyll-bute.gov.uk Page 53 Other Operating Income and Expenditure: 6,286 Net (Gain)/loss on Disposal of Long Term Assets (103) 1,381 Other Operating Income and Expenditure 7 1,836 7,667 Total Other Operating Income and Expenditure 1,733 Financing and Investment Income and Expenditure: 16,805 Interest Payable and Similar charges 16,343 (955) Interest and Investment Income (805) 1,888 Net Pension Interest Expense 1,864 17,738 Total Financing and Investment Income and Expenditure 17,402 Taxation and Non-Specific Grant Income: (197,110) General Government Grants (191,432) (13,495) Government Capital Grants and Other Capital Contributions 12 (21,700) (23,284) Non-domestic Rates Redistribution (25,070) (164) Non-domestic Rates TIF (336) (54,437) Council Tax Income (56,242) (288,490) Total Taxation and Non-Specific Grant Income (294,780) (14,257) (Surplus)/Deficit on Provision of Services 6.1 (15,016) (9,030) (Surplus)/Deficit on revaluation of Long Term Assets (26,631) 3,388 Other Post Employment Benefits (Pensions) 30.2 (110,648) (5,642) Other Comprehensive Income and Expenditure (137,279) (19,899) Total Comprehensive Income and Expenditure (152,295) This statement shows the accounting cost in the year 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; this may be different from the accounting cost. The taxation position is shown in the Statement of Movement in Reserves. Page 63
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Balance Sheet www.argyll-bute.gov.uk Page 54 £'000 £'000 Note £'000 £'000 Long Term Assets Property Plant & Equipment 14 376,141 - Other Land and Buildings 414,852 9,945 - Vehicles, Plant, Furniture and Equipment 11,798 222,947 - Infrastructure Assets 230,478 5,950 - Community Assets 7,454 1,637 - Surplus Assets 1,408 25,599 - Assets Under Construction 35,344 642,219 Total Property Plant & Equipment 701,334 2,086 Heritage Assets 15 2,099 572 Intangible Assets 16 604 2,435 Investment Property 17 2,428 17,992 Long Term Investments 26 492 6,028 Long-Term Debtors 21 5,792 - Other Long Term Debtors (Pensions) 30 4,634 671,332 Total Long Term Assets 717,383 Current Assets 900 Inventories 842 20,446 Short Term Debtors (Net of Impairment) 22 18,263 1,865 Assets Held for Sale 23 1,509 45,000 Short Term Investments 82,500 35,638 Cash and Cash Equivalents 24 19,728 103,849 Total Current Assets 122,842 Current Liabilities (3,005) Short-term Borrowing 26 (17,882) (45,457) Short-term Creditors 25 (41,283) (7) Capital Grant Receipts in Advance 29 - (2,356) Provisions 28 (2,231) (4,842) Other Short Term Liabilities 27 (5,117) (55,667) Total Current Liabilities (66,513) Long-term Liabilities (167,418) Borrowing Repayable within a Period in Excess of 12 Months 26 (161,657) (117,432) Other Long-term liabilities 27 (112,313) (1,980) Provisions 28 (2,079) (5,000) Capital Grant Receipts in Advance 29 - (82,314) Other Long-term liabilities (Pensions) 30 (374,144) Total Long-term Liabilities (276,049) 345,370 Total Assets less Liabilities 497,663 31 March 202231 March 2021 Page 64
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Balance Sheet www.argyll-bute.gov.uk Page 55 £'000 £'000 Note £'000 £'000 Unusable Reserves 32 135,392 - Revaluation Reserve 157,645 217,237 - Capital Adjustment Account 241,327 (2,524) - Financial Instruments Adjustment Account (2,198) (82,314) - Pensions Reserve 4,634 (7,206) - Accumulated Absences Account (6,928) 260,585 394,480 Usable Reserves 33 4,406 - Capital Funds 4,414 2,134 - Repairs and Renewals Funds 2,682 78,245 - General Fund Balance 96,087 84,785 103,183 345,370 Total Reserves 497,663 31 March 202231 March 2021 The Balance Sheet is a snapshot of the value as at the 31 March 2022 of the assets and liabilities recognised by the Council. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. Reserves are reported as follows: • Unusable Reserves: are reserves that the Council is not able to use to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the revaluation reserve), where amounts would only become available to provide services if the assets are sold and reserves that hold timing differences shown in the Movement in Reserves Statement line “Adjustments between accounting basis and funding basis under regulations”. • Usable Reserves: are reserves that the Council may use to provide services, subject to the need to maintain a prudent level of reserves and statutory limitations on their use (for example the capital receipts reserve that may only be used to fund capital expenditure or repay debt). The Unaudited Annual Accounts were issued on 30 June 2022 and the Audited Annual Accounts were authorised for issue on 24 November 2022. Kirsty Flanagan Section 95 Officer 24 November 2022 Page 65
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 56 Movements in 2021-22 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2021 (78,245) (2,134) (4,406) (84,785) (135,392) (217,237) 82,314 2,524 7,206 (260,585) (345,370) (Surplus)/Deficit on Provision of Services (15,016) (15,016) - (15,016) Other Comprehensive Income and Expenditure (26,631) (110,648) (137,279) (137,279) Total Comprehensive Income and Expenditure (15,016) - - (15,016) (26,631) - (110,648) - - (137,279) (152,295) Adjustments between accounting basis and funding basis under regulations: Adjustment between CAA and Revaluation Reserve for depreciation that is related to the revaluation balance rather than historic cost - 3,746 3,746 3,746 Disposal of Assets 632 (632) Amortisation of Intangible Assets (36) (36) 36 36 - Depreciation of Non-current Assets (23,325) (23,325) 19,579 19,579 (3,746) Impairment of Non-current Assets 13,182 13,182 (13,182) (13,182) - Capital Grants and Contributions credited to the Comprehensive Income and Expenditure Statement 21,700 21,700 (21,700) (21,700) - Capital Expenditure Charged to the General Fund 735 735 (735) (735) - Net Gain or Loss on Sale of Non-current Assets 103 (815) (712) 712 712 - Amount by which finance costs calculated in accordance with the Code are different from the amount of finance costs calculated in accordance with statutory requirements 326 326 (326) (326) - Employee Benefits 278 278 (278) (278) - Amount by which pension costs calculated in accordance with the Code are different from the contributions due under pension scheme regulations (23,700) (23,700) 23,700 23,700 - Page 66
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 57 Unusable Reserves (Note 32) Movements in 2021-22 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Statutory Repayment of Debt - Loans Fund Advances 2,514 2,514 (2,514) (2,514) - Statutory Repayment of Debt - Finance Leases 44 44 (44) (44) - Statutory Repayment of Debt - NPDO Finance 4,800 4,800 (4,800) (4,800) - Total Statutory Adjustments (3,379) - (815) (4,194) 4,378 (23,280) 23,700 (326) (278) 4,194 - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (18,395) - (815) (19,210) (22,253) (23,280) (86,948) (326) (278) (133,085) (152,295) Transfer to/from Other Statutory Reserves 553 (548) 807 812 (810) (810) 2 (Increase)/Decrease in Year (17,842) (548) (8) (18,398) (22,253) (24,090) (86,948) (326) (278) (133,895) (152,293) Balance at 31 March 2022 Carried Forward (96,087) (2,682) (4,414) (103,183) (157,645) (241,327) (4,634) 2,198 6,928 (394,480) (497,663) Other Transfers required by Statute Usable Reserves (Note 33) This Statement shows the movement in the 2021-22 financial year on the different reserves held by the Council, analysed into ‘Usable Reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and “Unusable Reserves”. The ‘(Surplus)/Deficit on the Provision of Services’ line shows the true economic cost of providing the Council’s services, more details of which are shown in Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting purposes. The ‘Net (Increase)/Decrease before Transfers to Other Statutory Reserves’ line shows the Statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Council. Page 67
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 58 Unusable Reserves (Note 32) Comparative Movements in 2020-21 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2020 (49,670) (1,843) (4,379) (55,892) (126,560) (220,263) 67,346 2,850 7,048 (269,579) (325,471) (Surplus)/Deficit on Provision of Services (14,257) (14,257) - (14,257) Other Comprehensive Expenditure and Income (9,030) 3,388 (5,642) (5,642) Total Comprehensive Expenditure and Income (14,257) - - (14,257) (9,030) - 3,388 - - (5,642) (19,899) Adjustments between accounting basis and funding basis under regulations: Adjustment between CAA and Revaluation Reserve for depreciation that is related to the revaluation balance rather than historic cost. - 198 (198) - - Amortisation of Intangible Assets (89) (89) 89 89 - Depreciation and of Non-current Assets (22,041) (22,041) 22,041 22,041 - Impairment of Non-current Assets 3,142 3,142 (3,142) (3,142) - Capital Grants and Contributions credited to the Comprehensive Income and Expenditure Statement 13,495 13,495 (13,495) (13,495) - Capital Expenditure Charged to the General Fund 744 744 (744) (744) - Net Gain or Loss on Sale of Non-current Assets (6,286) (612) (6,898) 6,898 6,898 - Amount by which finance costs calculated in accordance with the Code are different from the amount of finance costs calculated in accordance with statutory requirements 326 326 (326) (326) - Employee Benefits (158) (158) 158 158 - Amount by which pension costs calculated in accordance with the Code are different from the contributions due under pension scheme regulations (11,580) (11,580) 11,580 11,580 - Usable Reserves (Note 33) Page 68
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Statement of Movement in Reserves www.argyll-bute.gov.uk Page 59 Unusable Reserves (Note 32) Comparative Movements in 2020-21 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Revaluation Reserve Capital Adjustment Account Pensions Reserve Financial Instrument Adjustment Account Accumu- lated Absences Account Total Unusable Reserves Total Reserves £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Statutory Repayment of Debt - Loans Fund Advances 5,246 5,246 (5,246) (5,246) - Statutory Repayment of Debt - Finance Leases 43 43 (43) (43) - Statutory Repayment of Debt - NPDO Finance 2,549 2,549 (2,549) (2,549) - Total Statutory Adjustments (14,609) - (612) (15,221) 198 3,611 11,580 (326) 158 15,221 - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (28,866) - (612) (29,478) (8,832) 3,611 14,968 (326) 158 9,579 (19,899) Transfer to/from Other Statutory Reserves 291 (291) 585 585 (585) (585) - (Increase)/Decrease in Year (28,575) (291) (27) (28,893) (8,832) 3,026 14,968 (326) 158 8,994 (19,899) Balance at 31 March 2021 Carried Forward (78,245) (2,134) (4,406) (84,785) (135,392) (217,237) 82,314 2,524 7,206 (260,585) (345,370) Other Transfers required by Statute Usable Reserves (Note 33) This Statement shows the movement in the 2020-21 financial year on the different reserves held by the Council, analysed into ‘Usable Reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and “Unusable Reserves”. The ‘(Surplus)/Deficit on the Provision of Services’ line shows the true economic cost of providing the Council’s services, more details of which are shown in Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting purposes. The ‘Net (Increase)/Decrease before Transfers to Other Statutory Reserves’ line shows the Statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Council. Page 69
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Cash Flow Statement www.argyll-bute.gov.uk Page 60 The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the reporting period. The statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amounts of net cash flow arising from operating activities is a key indicator of the extent to which the operations of the Council are funded by way of taxation and grant income or from the recipients of services provided by the Council. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Council’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Council. 2020-21 2021-22 £'000 Note £'000 (14,257) Net (Surplus) on the Provision of Services (15,016) (30,546) Adjustments to net surplus or deficit on the provision of services for non- cash movements (6,652) 2,471 Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities 7,928 (42,332) Net Cash Flows from Operating Activities 39 (13,740) 7,740 Net Cash Flows from Investing Activities 40 32,043 7,739 Net Cash Flows from Financing Activities 41 (2,393) (26,853) Net (Increase)/Decrease in Cash and Cash Equivalents 15,910 (8,785) Cash and Cash Equivalents at the beginning of the Reporting Period (35,638) (35,638) Cash and Cash Equivalents at the end of the Reporting Period 24 (19,728) Page 70
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www.argyll-bute.gov.uk Page 61 Notes to the Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 General Principles The Annual Accounts summarise the Council’s transactions for the 2021-22 financial year and its position at the year-end of 31 March 2022. The Council must ensure that its Annual Accounts are prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014, which section 12 of the Local Government in Scotland Act 2003 require to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2021-22, supported by International Financial Reporting Standards (IFRS) and statutory guidance issued under section 12 of the 2003 Act. The accounts have been prepared under the historic cost convention, other than changes resulting from the revaluation of certain categories of non-current assets and financial instruments, and on a going concern basis. 1.2 Accruals of Income and Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular: • Revenue from contracts with service recipients, whether for services or the provision of goods, is recognised when (or as) the goods or 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 services provided by employees) are recorded as expenditure when the services are received rather than when payments are made. • Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure 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 debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected. 1.3 Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty of notice of not more than 24 hours. 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 insignificant risk of change in value. In the Balance Sheet and 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. 1.4 Prior Period Adjustments, Changes in Accounting Policies, Estimates and Errors Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Council’s financial position or financial performance. Where a change is made, it is applied retrospectively by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Page 71
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www.argyll-bute.gov.uk Page 62 Notes to the Financial Statements Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period. 1.5 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 non-current assets during the year: • Depreciation attributable to the assets used by the relevant service. • Revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off. • Amortisation of intangible fixed assets attributable to the service. The council is not required to raise Council Tax to fund depreciation, revaluation and impairment losses or amortisation. However, it is required to make an annual contribution from revenue 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 amortisation are therefore replaced by Loans Fund principal repayments in the General Fund Balance by way of an adjusting transaction within the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. 1.6 Employee Benefits 1.6.1 Benefits Payable during Employment Short-term employee benefits are those due to be settled wholly within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave, paid sick leave, bonuses and non- monetary benefits (e.g. cars) for current employees. These benefits are recognised as an expense for services in the year in which employees render service to the Council. An accrual is made for the cost of holiday entitlements earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to the Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday entitlements are charged to revenue in the financial year in which the holiday absence occurs. 1.6.2 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. They are charged on an accruals basis to the appropriate service segment in the Comprehensive Income and Expenditure Statement at the earlier of when the Council can no longer withdraw the offer of those benefits or when the Council recognised costs for a restructuring. 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 Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. Page 72
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www.argyll-bute.gov.uk Page 63 Notes to the Financial Statements 1.6.3 Post-Employment Benefits The Council participates in two separate pension schemes: • The Scottish Teachers’ Pension Scheme administered by the Scottish Government • The Local Government (Scotland) Pensions Scheme administered by the Strathclyde Pension Fund. Both schemes provide defined benefits to members (retirement lump sums and pensions), earned while employees work for the Council. However, the arrangements for the teachers’ scheme mean that liabilities for these benefits cannot ordinarily be identified specifically to the Council. The scheme is therefore accounted for as if it were a defined contribution scheme. No liability for future payments of benefits is recognised in the Balance Sheet and the Education Services line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to the Teachers’ Pension Scheme in the year. Local Government Pension Scheme The Local Government Pension Scheme is accounted for as a defined benefits scheme: • The liabilities of the Strathclyde 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 and projected earnings for current employees. • Liabilities are discounted to their value at current prices, using a discount rate of 2.7% (based on the indicative rate of return on a “high quality corporate bond of equivalent term and currency to the liability” (as measured by the yield on iBoxx Sterling Corporates Index, AA over 15 years)). • The assets of the Strathclyde 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 liability is analysed into the following components: • Service cost comprising: Current service cost – the increase in liabilities as a result of years of service earned this year - allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked. 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 or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. Net interest on the net defined benefit liability (asset), i.e. net interest expense for the Council – the change during the period in the net defined benefit liability (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement. 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 Page 73
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www.argyll-bute.gov.uk Page 64 Notes to the Financial Statements the beginning of the period, taking into account any changes in the net defined liability (asset) during the period as a result of contribution and benefit payments. • Re-measurements comprising: The return on plan assets – excluding amounts included in the net interest on the net defined benefit liability (asset), charged to the Pension Reserve as Other Comprehensive Income and Expenditure. 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. Contributions paid to the Strathclyde 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 Movement in Reserves Statement, this means that there are transfers 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 to the fund but unpaid at the year-end. The negative balance that arises on the Pensions Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits earned by employees. 1.6.4 Post Employment Discretionary Benefits The Council also has restricted powers to make discretionary awards of retirements 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 Local Government Pension Scheme. 1.7 Events after the Reporting Period Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the 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 impact, 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. 1.8 Financial Liabilities Financial liabilities are recognised on the Balance Sheet when the Council becomes party to the contractual provisions of a financial instrument and initially measured at fair value and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying value 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. Page 74
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www.argyll-bute.gov.uk Page 65 Notes to the Financial Statements 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 Comprehensive Income and Expenditure Statement 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 and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repurchase/settlement. However, where repurchase has taken place as part of the restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write-down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate. Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain/loss over the term that was remaining on the loan against which the premium was payable or discount receivable when it was repaid. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement 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 Movement in Reserves Statement. 1.9 Financial Assets Financial assets are classified based on 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, and • Fair value through other comprehensive income 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 the cash flows do not take the form of a basic debt instrument). Financial Assets Measured at Amortised Cost Financial assets measured at amortised cost 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 Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For most of the financial assets held by the Council, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement. Financial Assets Measured at Fair Value through Profit or Loss Financial assets that are measured at fair value through profit or loss are recognised on the Balance Sheet when the Council becomes a party to the contractual provisions of a financial instrument and are initially measured and carried at fair value. Fair value gains and losses are recognised as they arrive in the Surplus or Deficit on the Provision of Services. The fair value measurements of the financial assets are based on the following techniques: • Instruments with quoted market prices – the market price Page 75
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www.argyll-bute.gov.uk Page 66 Notes to the Financial Statements • Other instruments with fixed and determinable payments – discounted cash flow analysis The inputs to the measurement techniques are categorised in accordance with the following three levels: • Level 1 inputs – quoted prices (unadjusted) in active markets for the identical assets that the Council can access at the measurement date. • Level 2 inputs – inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly. • Level 3 inputs – unobservable inputs for the asset. Any gains and losses that arise on the derecognition of the asset are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. Expected Credit Loss Model The Council recognises expected credit losses on all of its financial assets held at amortised cost, either on a 12-month or lifetime basis. The expected credit loss model also applies to lease receivables and contract assets. Only lifetime losses are recognised for trade receivables (debtors) held by the Council. 1.10 Government Grants and Contributions Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Council when there is reasonable assurance that: • The Council will comply with the conditions attached to the payments; and • The grants or contributions will be received. Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset in the form of 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 been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-Specific Grant Income and Expenditure (non-ringfenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement. Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Account. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Account are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure. 1.11 Heritage Assets The main heritage assets held by the Council are two art collections, an archaeology collection and a historic jail and courthouse which is operated as a “living” museum. The “Argyll Collection” is an art collection which was set up to provide the young people of Argyll and Bute with direct access to a wide range of quality art recognising that they had limited access to museums and galleries. In addition, the Council holds other works of art which are held at various libraries and the Campbeltown Museum. 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’s main heritage assets are accounted for as follows: Page 76
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www.argyll-bute.gov.uk Page 67 Notes to the Financial Statements The Art Collections The collections cover a range of media including acrylic, charcoal, embroidery, engraving, etching, gouache, lithography, oil, pastel, pencil, procion dye, screenprint, monoprint, watercolour, woodcut, ceramic, bronze and woodcarving. These items are reported in the Balance Sheet at insurance valuation which is based on market values. These valuations are updated periodically. The assets within the art collections are deemed to have indeterminate lives and a high residual value; hence the Council does not consider it appropriate to charge depreciation. Acquisitions are made by purchase or donation. Acquisitions are initially recognised at cost and donations are recognised at valuation with valuations provided by external valuers and with reference to appropriate commercial markets using the most relevant and recent information from sales at auctions. Inveraray Jail and Courthouse and “Other” Historic Buildings The building is owned by Argyll and Bute Council and leased out to an organisation which runs it as a “living museum”. The building is valued in accordance with the Council’s property, plant and equipment policy. Other buildings included in this category are McCaig’s Folly in Oban, the Argyll Mausoleum and Castle Lodge in Dunoon. Archaeology and “Other” Museum Exhibits The Council has obtained specialist valuations for the archaeology collection held within Campbeltown Museum which covers a range of objects including swords, bones, pottery, stone and leather remains. Similar to the Art Collections, these items are reported in the Balance Sheet at insurance valuation which is based on market values. These valuations will be updated periodically. The assets within the collection are deemed to have indeterminate lives and a high residual value; hence the Council does not consider it appropriate to charge depreciation. Heritage Assets – General The carrying amounts of heritage assets are reviewed where there is evidence of impairment for heritage assets, 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 (see note 1.19.3 in this summary of significant accounting policies). The proceeds of any disposals 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 receipts (see note 1.19.4 in this summary of significant accounting policies). 1.12 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. 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 not revalued, as the fair value of the assets held by the Council cannot 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 lines in the Comprehensive Income and Expenditure Statement. 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 lines in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Page 77
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www.argyll-bute.gov.uk Page 68 Notes to the Financial Statements Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account. 1.13 Interests in Companies and Other Entities The Council has material interests in companies and other entities that have the nature of subsidiaries, associates or joint ventures and requires to prepare Group Accounts. In the Council’s own single entity accounts, the interests in companies and other entities are recorded as financial assets at cost, less any provision for losses. 1.14 Inventories Inventories are included in the Balance Sheet at the lower of cost and net realisable value. The cost of inventories is assigned using the weighted average costing formula. 1.15 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. As a non-financial asset, investment properties are measured at highest and best use. 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 Comprehensive Income and Expenditure Statement. The same treatment is applied to gains and losses on disposal. Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account. 1.16 Leases Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases. Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification. Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets. 1.16.1 The Council as Lessee a) Finance Leases Property, plant and equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payments, if lower). The asset recognised is matched by a liability for the obligation to pay the lessor. Initial direct costs of the Council are added to the carrying amount of the asset. Premiums paid on entry into a lease are applied to writing down the lease liability. Page 78
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www.argyll-bute.gov.uk Page 69 Notes to the Financial Statements Lease payments are apportioned between: • A charge for the acquisition of the interest in the property, plant or equipment – applied to write down the lease liability, and • A finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement). Property, plant and equipment recognised under finance leases is accounted for using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life. The Council is not required to raise Council Tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead, a prudent annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements. Depreciation and revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two. b) Operating Leases Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefiting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a rent-free period at the commencement of the lease). 1.16.2 The Council as Lessor a) Finance Leases Where the Council grants a finance lease over a property or an item of plant and equipment, the relevant asset is written out of the Balance Sheet as a disposal. At the commencement of the lease, the carrying amount of the asset in the Balance Sheet (whether property, plant and equipment or assets held for sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. A gain, representing the Council’s net investment in the lease, is credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal), matched by a lease (long-term debtor) asset in the Balance Sheet. Lease rentals receivable are apportioned between: • A charge for the acquisition of the interest in the property – applied to write down the lease debtor (together with any premiums received); and • Finance income (credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement). The gain credited to the Comprehensive Income and Expenditure Statement on disposal is not permitted by statute to increase the General Fund Balance and is required to be treated as a capital receipt. Where a premium has been received, this is posted out of the General Fund Balance to the Capital Receipts Reserve in the Movement in Reserves Statement. When the future rentals are received, the element for the capital receipt on disposal of the asset is used to write down the debtor. At this point, the deferred capital receipts are transferred to the Capital Receipts Reserve. The written-off value of disposals is not a charge against Council Tax, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement. Page 79
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www.argyll-bute.gov.uk Page 70 Notes to the Financial Statements b) 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 relevant Service lines in the Comprehensive Income and Expenditure Statement, with the exception of rental income from investment property which is credited to Interest and Investment Income. 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. 1.17 Overheads and Support Services The costs of overheads and support services are not charged to service segments in accordance with the Council’s arrangements for accountability and financial performance. 1.18 Assets Held for Sale Property, plant and equipment are classified as Assets Held for Sale when the following criteria are met: • The property is available for immediate sale in its present condition. • The sale must be highly probable; and an active programme to locate a buyer and complete the plan must have been initiated. • The asset must be actively marketed for sale at a price that is reasonable in relation to its current fair value. • The sale should be expected to qualify for recognition as a completed sale within one year (although events or circumstances may extend the period to complete the sale beyond one year). When these criteria are met, assets within the category of Property, Plant and Equipment will be reclassified as Assets Held for Sale. 1.19 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 that are expected to be used during more than one financial year are classified as Property, Plant and Equipment. 1.19.1 Recognition Expenditure on the acquisition, creation, or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (i.e. repairs and maintenance) is charged as an expense when it is incurred. 1.19.2 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. The Council does not capitalise borrowing costs incurred while assets are under construction. Page 80
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www.argyll-bute.gov.uk Page 71 Notes to the Financial Statements 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 given up by the Council. Donated assets are measured initially at fair value. The difference between fair value and any consideration paid is credited to the Taxation and Non-Specific Grant Income line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally. Until conditions are satisfied, the gain is held in the Donated Assets Accounts. Where gains are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement. Assets are then carried in the Balance Sheet using the following measurement bases: • Infrastructure, community assets and assets under construction – depreciated historical cost. • Council offices – current value, determined as the amount that would be paid for the asset in its existing use (existing use value – EUV). • School buildings – current value, but because of their specialist nature, are measured at depreciated replacement cost which is used as an estimate of current value. • 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 as the amount that would be paid for the asset in its existing use (existing use value – EUV). Where there is no market-based evidence of current value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of current value. Where non-property assets have short useful lives or low values (or both), depreciated historical cost is used as a proxy for current value. Assets included in the Balance Sheet at current value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from their current value at the year-end, but as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Surplus or Deficit on the Provision of Services where they arise from the reversal of an impairment loss previously charged to a service. Where decreases in value are identified, they are accounted for by: • Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains). • Where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement. The Revaluation Reserve contains revaluation gains recognised since 1 April 2007, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. 1.19.3 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 by: Page 81
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www.argyll-bute.gov.uk Page 72 Notes to the Financial Statements • Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains) • Where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service lines in the Comprehensive Income and Expenditure Statement. Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service lines in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised. 1.19.4 Disposals and Non-current Assets Held for Sale When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset Held for Sale. The asset is re-valued 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 previous losses recognised in the Surplus or Deficit on the Provision of Services. 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 Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from disposals (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (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 Capital Adjustment Account. Disposal receipts are categorised as capital receipts. All capital receipts are credited to the Capital Receipts Reserve, and can then only be used for new capital investment. Receipts are appropriated to the Reserve from the General Fund Balance in the Movement in Reserves Statement. The written-off value of disposals is not a charge against Council Tax, as the cost of non-current assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement. 1.19.5 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. land and certain community assets) and assets that are not yet available for use (i.e. assets under construction). Where an 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 Capital Adjustment Account. 1.20 Private Finance Initiative (PFI) and Similar Contracts PFI 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 and as ownership of Page 82
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www.argyll-bute.gov.uk Page 73 Notes to the Financial Statements the property, plant and equipment will pass to the Council at the end of the contracts for no additional charge, the Council carries the assets used under the contracts on the Balance Sheet. The original recognition of these assets at fair value 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 Comprehensive Income and Expenditure Statement. • Finance Cost – this is calculated by applying the implicit interest rate in the lease to the opening lease liability for the period, this is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. • 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 Comprehensive Income and Expenditure Statement. • 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 – proportion of the amounts payable is posted to the Balance Sheet as a prepayment and then recognised as additions to Property, Plant and Equipment when the relevant works are eventually carried out. 1.21 Provisions and Contingent Liabilities 1.21.1 Provisions Provisions are made where an event has taken place that gives the Council a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. For instance, the Council may be involved in a court case that could eventually result in a settlement or the payment of compensation. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Council becomes aware of the obligation, and 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 set up in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year and where it becomes more likely than not that a transfer of economic benefits will not 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 obligation is settled. 1.21.2 Contingent Liabilities 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 liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Page 83
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www.argyll-bute.gov.uk Page 74 Notes to the Financial Statements 1.22 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 to score against the Surplus/Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement 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 do not represent usable resources for the Council – these reserves are explained in the relevant policies above and Note 32 to the accounts. 1.23 VAT Income and expenditure excludes any amounts related to VAT, as all VAT collected is payable to HM Revenue and Customs and VAT paid is recoverable. 2. ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED The standards introduced by the 2022-23 Code where disclosures are required in the 2021-22 financial statements in accordance with the requirements of paragraph 3.3.4.3 of the code are: • Annual Improvements to IFRS Standards 2018-2020. The annual IFRS improvement programme notes 4 changed standards: • IFRS 1 - Foreign operations of acquired subsidiaries transitioning to IFRS • IAS 37 - Onerous Contracts: Amendments to IAS 37 clarifies the intention of the code • IAS 41 - Agriculture The Code requires implementation from 1 April 2022, therefore there is no impact on the 2021/22 accounts. Furthermore there is no material impact anticipated in future years from the implementation of these standards. • IAS 16 - Property Plant & Equipment: amendments - Proceeds before intended Use There will be no material impact in future years from the adoption of this amendment. CIPFA/LASAAC has agreed to defer the implementation of IFRS 16 Leases until 1 April 2024. 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. Where a critical judgement has been made this is referred to in the relevant note to the core financial statements; however a summary of those with the most significant effect is detailed below: • 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. Page 84
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www.argyll-bute.gov.uk Page 75 Notes to the Financial Statements • The Council currently operates three Private Finance Initiative (PFI), or similar, contracts which are accounted for as Service Concession arrangements under IFRIC12 – Service Concession Arrangements. The Council has determined that in the case of the Schools NPDO contract and the new Schools DBFM contract, the Council has control over the services provided through use of the schools and that a qualifying asset has been created. The appropriate accounting treatment is to bring the assets “on Balance Sheet” along with a finance lease liability. • The Council also operates a Waste Management PPP contract. In this case the Council determined that a “qualifying asset” had not been created and that the Council did not have significant control over the services being provided. The appropriate accounting treatment was therefore determined to be “off Balance Sheet” and that payments to the contractor are charged to the appropriate service line within the Comprehensive Income and Expenditure Account. • The Council has considered its exposure to possible losses and made adequate provision where it is probable that an outflow of resources will be required and the amount of the obligation can be measured reliably. Where it has not been possible to measure the obligation, material contingent liabilities have been disclosed in Note 34. • Unused holiday entitlement earned at 31 March 2022 but not taken at that date has been quantified on the basis of a 5% sample of all non-term time Council employees. The calculation in respect of unused holidays for term time staff in schools is based on actual leave entitlement as at 31 March and no estimation is required for these staff. The liability shown in the 2021-22 financial statements in respect of the holiday pay accrual is £6.927m. • £2.132m has been treated as principal by the Council for costs associated with the provision of Personal Protective Equipment (PPE) and testing kits issued by NHS National Services Scotland to Argyll and Bute Council for social care services provided on behalf of Argyll and Bute Integration Joint Board and has therefore been included in both the income and expenditure figures for Social Work within the Comprehensive Income and Expenditure Statement. 4. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY The financial statements contain estimated figures that are based on assumptions made by the Council about which there is a degree of uncertainty. 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 items in the Council’s Balance Sheet at 31 March 2022 for which there is a significant risk of material adjustment in the forthcoming financial year are outlined in the table that follows: Page 85
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 76 Item Uncertainties Effect if Actual Results Differ from Assumptions Property, Plant and Equipment Assets are depreciated over useful lives that are dependent on assumptions about the level of repairs and maintenance that will be incurred in relation to individual assets. The current economic climate makes it uncertain that the Council will be able to sustain its current spending on repairs and maintenance, bringing into doubt the useful lives. If the useful life of assets is reduced, depreciation increases and the carrying amount of the assets falls. It is estimated that the annual depreciation charge for buildings would increase by £1.446m for every year that useful lives had to be reduced. Rolling Programme Valuation The Council employs professional valuers who are registered with the Royal Institution of Chartered Surveyors. These valuers carry out regular reviews of the assets reported in the Balance Sheet and any significant changes in value are processed as an asset revaluation or impairment. These valuations are based on their professional opinion using available market information at the time of assessment. Due to the high number of assets, a rolling program of asset valuations has been established for many years, with the aim of revaluing one fifth of the portfolio each financial year which is made up of various asset types. This is in addition to those assets which are valued annually; Surplus Assets, Investment Properties, Held for sale assets and those where capital spend has exceeded £0.1m in the current year. This carries inherent risk that assets not revalued in-year have been subject to material changes in value particularly if affected by external factors such as inflation. The highest risk in this respect relates to assets valued using the depreciated Replacement Cost (DRC) method, which for Argyll & Bute Council includes schools. To mitigate this risk, a desktop assessment was undertaken during the 2021-22 audit process to estimate the potential increase in value of seven schools which had previously been valued during 2017-18 & 2018-19. An adjustment was made to the accounts of £29.922m to reflect this assessment. Consideration is given on an annual basis to those assets which may have material impairment. Page 86
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 77 Pensions Liability 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. A firm of consulting actuaries is engaged to provide the Council with expert advice about the assumptions to be applied. The effects on the net pension’s liability of changes in individual assumptions can be measured. The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out as follows: Sensitivities at 31 March 2022 Approximate % Increase to Employer Liability Approximate monetary amount £’000 0.1% decrease in real discount rate 2% 16,417 1 Year increase in the member life expectancy 4% 34,850 0.1% increase in salary increase rate 0% 968 0.1% increase in pension increase rate 2% 15,333 Page 87
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Notes to the Financial Statements Page 78 www.argyll-bute.gov.uk 5. GENERAL FUND RESERVES The Council has ring-fenced £88.990m of the balance on the General Fund. Ring-fenced Balances Balance 1 April 2021 Funds Used Contributions to/from Funds New Earmarking agreed 2021-22 New Earmarking at end of 2021-22 Balance 31 March 2022 £'000 £'000 £'000 £'000 £'000 £'000 Strategic Housing Fund (Revenue from Additional Council Tax on Second Homes) 7,126 (2,672) 2,136 6,590 Investment in Affordable Housing 3,500 - (200) 3,300 Capital Projects 7,452 (6,279) 15,378 4,741 3,430 24,722 Lochgilphead and Tarbert Regeneration 2,272 (1) 2,271 Support for Rural Growth Deal 1,195 (137) 1,058 Asset Management 2,573 - 34 2,607 Piers and Harbours Investment Fund 970 - 673 1,643 Scottish Government Initiatives 1,116 (119) 2,144 3,141 Transformation 73 - (73) - CHORD 262 - 87 349 Devolved School Management Scheme (DSM) 1,020 (639) 1,601 1,982 Energy Efficiency Fund 218 - 218 Unspent Budget Required for Existing Legal Commitments 588 (113) 475 Unspent Third Party Contributions 8,393 (1,637) (2) 6,080 12,834 Contributions Carried Forward 144 (25) (2) 49 166 Other Previous Council Decisions 5,664 (828) (3,137) 2,400 244 4,343 Redundancy Reserve 1,899 (167) 1,732 Supporting Organisational Change 499 (111) 1,200 1,588 Spend to Save Route Optimisation Software 100 - 100 Fleet - Timing Delay 107 - 392 499 Hermitage Park 4 4 COVID-19 13,469 (5,003) (9,433) 7,562 2,369 8,964 Unspent Budget Carried Forward 13,248 (1,192) (4,246) 2,594 10,404 Total Ring-fenced 71,888 (18,923) (515) 14,703 21,837 88,990 Contingency 5,032 - 224 - - 5,256 Unallocated 1,325 - 4,682 (4,166) - 1,841 Total General Fund Balance 78,245 (18,923) 4,391 10,537 21,837 96,087 The contingency balance of £5.256m is 2% of the Council’s budgeted net expenditure for 2022-23. Page 88
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Notes to the Financial Statements Page 79 www.argyll-bute.gov.uk 6. SUPPLEMENTARY NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME AND EXPENDITURE 6.1 Expenditure and Income Analysed by Nature The Council’s expenditure and income is analysed as follows: 2020-21 Expenditure/Income 2021-22 £'000 £'000 Expenditure 163,138 Employee benefits expenses 184,092 163,560 Other services expenses 168,222 58,178 Contribution to Argyll and Bute Integration Joint Board 62,870 18,975 Depreciation, amortisation, impairment 10,141 18,693 Interest payments 18,207 1,400 Precepts and levies 1,419 (19) Other operating expenditure 417 6,286 Net Loss/(Gain) on the disposal of assets (103) 430,211 Total Expenditure 445,265 Income (96,845) Fees, charges and other service income (101,826) (58,178) Income to fund social care services (Argyll and Bute Integration Joint Board) (62,870) (955) Interest and investment income (805) (77,885) Income from council tax and non-domestic rates (81,648) (210,605) Government grants and contributions (213,132) (444,468) Total Income (460,281) (14,257) (Surplus)Deficit on the Provision of Services (15,016) Page 89
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Notes to the Financial Statements Page 80 www.argyll-bute.gov.uk 6.2 Revenue from Contracts with Service Recipients 31 March 2021 31 March 2022 £'000 £'000 23,427 23,449 23,427 23,449 Revenue from contracts with service recipients Total Included in Comprehensive Income and Expenditure Statement 7. OTHER OPERATING INCOME AND EXPENDITURE The expenditure of £1.836m shown in the Other Operating Income and Expenditure line on the Statement of Comprehensive Income and Expenditure can be analysed as follows: 2020-21 2021-22 Actual ing Income and Expenditure Actual £'000 £'000 1,400 Dunbartonshire and Argyll & Bute Valuation Joint Board Requisition 1,419 (19) Equal Pay Settlements and Legal Costs (16) - Other Operating Income and Expenditure not attributable to Services 433 1,381 Total 1,836 8. AGENCY SERVICES The Council bills and collects non-domestic rates on behalf of the Scottish Government from ratepayers situated within Argyll and Bute. The Council also bills and collects, along with its own council tax, domestic water and sewerage charges on behalf of Scottish Water. In addition, the Council received a number of funding streams from the Scottish Government in 2021/22 to support financial hardship experienced by third parties (individuals and businesses) related to the COVID-19 pandemic. The Council had no discretion over the terms of the funding and could not use it for service delivery. This means the Council acted as agent only and the grant funding received and paid out are not included in the Council's reserves, CIES or Balance Sheet. In some cases, an administration grant was awarded to the Council to facilitate these payments. This is accounted for as operational income and expenditure and not disclosed here. Page 90
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Notes to the Financial Statements Page 81 www.argyll-bute.gov.uk 2020-21 2021-22 Actual Actual £'000 £'000 23,284 Scottish Government - Contributions (to)/from the non-domestic rates pool 25,070 13,932 Domestic water and sewarage charges collected (14,317) (13,932) Domestic water and sewarage charges paid over to Scottish Water 14,317 289 Service income from Scottish Water for collection of domestic water and sewerage 289 7 Service income BID levy - Dunoon 7 7 Service income BID levy - Oban 7 (1,003) COVID - Financial Hardship and Self-Isolation grants paid out (1,405) 1,003 COVID - Financial Hardship and Self-Isolation funding received from Scottish Government 1,405 (37,144) COVID - Business Grant Scheme paid out (5,160) 37,144 COVID - Business Grant Scheme funding received from Scottish Government 5,160 (25,176) COVID - Strategic Framework grants paid out (17,543) 25,176 COVID - Strategic Framework funding received from Scottish Government 17,543 (3,623) COVID - Other support for businesses (including furlough support) paid out (7,445) 3,623 COVID - Other support for businesses (inculding furlough support) funding received from 7,445 Scottish Government 23,587 Total 25,373 Agency Income 9. COMMUNITY CARE AND HEALTH (SCOTLAND) ACT 2002 From 1 April 2016 health and social care services were fully integrated as part of the new Health and Social Care Partnership. During 2021-22 the Partnership included provision of services to older people, supporting people with a learning disability and provision of support to adults who have a mental health difficulty. Budgets are currently aligned which means that each Partner organisation holds their own element of the budget and records the income and expenditure that relates to the part of the service for which they are responsible. During 2021-22 income received by the Council from this source amounted to £7.666m and the related expenditure was £10.110m. This can be analysed as follows: Income Expenditure Income Expenditure £'000 £'000 Purpose of Services £'000 £'000 2,795 4,549 Care of the Elderly 3,355 5,203 2,793 3,310 Provision of Services for People with Learning Disabilities 2,857 3,279 1,352 1,551 Provision of Services for People with Mental Health Needs 1,454 1,628 6,940 9,410 7,666 10,110 7,148 5,217 2,362 2,241 14,088 14,627 TOTAL 10,028 12,351 2020-21 2021-22 Additional Covid Response Funding received via NHS for 2021-22 Page 91
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Notes to the Financial Statements Page 82 www.argyll-bute.gov.uk 10. FEES PAYABLE TO AUDIT SCOTLAND In 2021-22 the following fees relating to external audit and inspection were incurred: 2020-21 2021-22 £'000 £'000 266 Fees payable to Audit Scotland with regard to external audit services carried 272 out by the appointed Auditor 266 Total Remuneration 272 Auditor's Remuneration The figure above includes fees for the audit of the Council’s charitable trusts. Audit Scotland did not undertake any non-audit work in 2020-21 or 2021-22. 11. WASTE MANAGEMENT PUBLIC PRIVATE PARTNERSHIP The Council has entered into a Public Private Partnership for the provision of its waste disposal service. This agreement requires the provider to upgrade or replace three waste disposal sites, two transfer stations and five civic amenity sites. In addition, the provider will also provide composting facilities to meet waste diversion targets. When the agreement ends in September 2026, during financial year 2026- 27, the provider will hand back to the Council the waste disposal facilities with a remaining life of 5 years. The Council has paid a service charge of £6.028m which represents the value of the service provided from 1 April 2021 to 31 March 2022 (£4.864m for 2020-21). Under the agreement the Council is committed to paying the following sums: Future Repayment Periods £'000 2022-2023 6,658 2023-2025 13,763 2025-2027 9,444 Total 29,865 The average service charge equates to £5.168m per annum over the life of the contract. Page 92
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Notes to the Financial Statements Page 83 www.argyll-bute.gov.uk 12. GRANT INCOME The Council credited the following grants to the Comprehensive Income and Expenditure Statement in 2021-22: 2020-21 Grant Income 2021-22 £'000 £'000 Credited to Taxation and Non Specific Grant Income 197,110 Revenue Support Grant 191,432 23,284 Non Domestic Rates 25,070 2,137 Specific Capital Grant 285 8,480 General Capital Grant 10,822 48 Heritage Lottery Fund 137 1,339 Scottish Timber Transport Strategy 1,299 1,023 Scottish Government 1,126 102 Strathclyde Partnership for Transport (SPT) 195 SUSTRANS 189 11 Revenue Contribution to Capital Projects 27 329 Other Grants 2,620 26 Other Government Capital Grants 5,000 233,889 Total 238,202 Credited to Services 11,429 Scottish Government Specific Grants 12,830 3,703 Scottish Government Specific Grants - Scotland's Schools for the Future - 356 General Capital Grant - Private Sector Housing Improvement Grants 558 18,605 Housing Benefit Subsidy 17,809 3,860 Other Revenue Government Grants 5,751 37,953 Total 36,948 Page 93
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Notes to the Financial Statements Page 84 www.argyll-bute.gov.uk 13. 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. The aim of the Financial Reporting Standard dealing with Related Parties is to highlight instances where influence and control has been exercised over an external organisation by the Council, and where an elected member, their close family or someone in their household, has the ability to exercise the influence or control. Elected members and Senior Officers have completed a signed declaration on Related Party Interests and these have been used to compile this disclosure. 13.1 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, housing benefits). Grants received from government departments are set out in Note 12 – Grant Income. Members Members of the council have direct control over the Council’s financial and operating policies. The total of members’ allowances paid in 2021-22 is shown in the Remuneration Report. During the year there was one organisation in which members had a significant interest and where the total of transactions exceeded £10,000. 2020-21 Expenditure 2021-22 Expenditure £'000 Transactions in which Members have a significant interest £'000 24 Southpeak Services 28 24 Total 28 Page 94
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Notes to the Financial Statements Page 85 www.argyll-bute.gov.uk 13.2 Other Related Bodies This category relates to transactions with entities which are controlled or significantly influenced by the Council. During the year transactions with other related bodies were as follows: 2020-21 Expenditure 2021-22 Expenditure £'000 Related Bodies £'000 Transactions with related bodies during the year totalled 4,630 Of these, transactions with the following exceeded £10,000: 12 ACHA 32 1,773 LINK Group Ltd 1,827 232 West Highland Housing Association Ltd 168 72 Fyne Homes 407 Oban and Lorn Community Enterprise - Atlantis Leisure 514 23 Argyll and the Isles Tourism Ltd 15 201 Islay and Jura Community Enterprise 215 90 Mid Argyll Community Enterprise 139 70 Scotland Excell 71 53 Argyll and Bute Citizens Advice Bureaux 48 57 Bute Advice 149 248 Kintyre Recycling 132 281 SEEMIS 158 54 Argyll and the Isles Coast & Countryside Trust 220 362 Carr Gorm 380 121 Argyll & Bute Women's Aid 122 231 Argyll & Bute Care & Repair 178 162 HELP 149 70 COSLA 71 11 Kintyre Alcohol and Drugs Advisory Service (KADAS) - 10 South Kintyre Development Trust - 15 Fyne Futures - 180 Mull & Iona Community Trust (MICT) - 20 Argyll & Bute Rugby Football Club - 20 Islay Development Initiative (Previously RE-JIG) - 4,775 Total 4,588 Given the relationships the Council has with other organisations and partners it is possible that some related party transactions may exist. However, the purpose of the requirement to complete the disclosure is to provide additional information to the users of the Annual Accounts and, by declaring possible instances, there is no suggestion that any inappropriate transactions have taken place. Please refer to Group Accounts on pages 130 to 136. Page 95
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 86 14. PROPERTY, PLANT AND EQUIPMENT 14.1 Movement in Property, Plant and Equipment Other Land & Buildings Vehicles Plant & Equipment Community Assets Surplus Assets Assets Under Construction Total 2021-22 Infrastructure Assets £'000 £'000 £'000 £'000 £'000 £'000 £'000 Cost or Valuation At 1 April 2021 402,408 41,727 5,959 1,634 25,599 477,327 Additions 9,161 4,564 1,504 22 12,210 27,461 15,434 Additions financed under a new leasing arrangement - 6,420 35 6,455 8,290 (122) - 8,168 Derecognition - Disposals (6) (1,863) - (1,869) Assets reclassified (to)/from Held for Sale (248) (164) (412) 153 Other movements in cost or valuation 2,412 - - (2,465) (53) 53 At 31 March 2022 428,437 44,428 7,463 1,405 35,344 517,077 Depreciation and Impairments At 1 April 2021 (26,267) (31,782) (9) 3 - (58,055) (12,508) (2,711) - (15,219) (8,106) 20,042 20,042 5,133 5,133 - - - - - 1,863 1,863 15 - 15 (3) At 31 March 2022 (13,585) (32,630) (9) 3 - (46,221) Balance Sheet amount at 31 March 2022 414,852 11,798 7,454 1,408 35,344 470,856 230,478 Balance Sheet amount at 31 March 2021 376,141 9,945 5,950 1,637 25,599 419,272 222,947 Movements in 2021-22 Revaluation increases/(decreases) recognised in the Revaluation Reserve Revaluation increases/(decreases) recognised in the Surplus/Deficit on the Provision of Services Depreciation Charge for 2021-22 Depreciation written out to the Revaluation Reserve Depreciation written out to the Surplus/Deficit on the Provision of Services Impairment losses/(reversals) recognised in the Revaluation Reserve Impairment losses/(reversals) recognised in the Surplus/Deficit on the Provision of Services Derecognition - Disposals Other movements in depreciation and impairment Page 96
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 87 Other Land & Buildings Vehicles Plant & Equipment Community Assets Surplus Assets Assets Under Construction Total 2020-21 Infrastructure Assets £'000 £'000 £'000 £'000 £'000 £'000 £'000 Cost or Valuation At 1 April 2020 400,497 40,704 5,656 3,250 26,806 476,913 Additions 4,204 2,608 303 (3) 8,543 15,655 6,824 Additions financed under a new leasing agreement - - - - - - 406 - - 100 - 506 (1,348) - - (113) (7,170) (8,631) Derecognition - Disposals (1,086) (1,582) - - - (2,668) Assets reclassified (to)/from Held for Sale (223) - - (1,600) - (1,823) 200 Other movements in cost or valuation (42) (3) - - (2,580) (2,625) 2,622 At 31 March 2021 402,408 41,727 5,959 1,634 25,599 477,327 9,646 Depreciation and Impairments At 1 April 2020 (29,881) (31,077) (9) 4 - (60,963) (7,914) (2,287) (1) (10,202) (7,853) 9,467 9,467 1,169 67 1,236 823 1,582 2,405 69 (67) 2 At 31 March 2021 (26,267) (31,782) (9) 3 - (58,055) (7,853) Balance Sheet amount at 31 March 2021 376,141 9,945 5,950 1,637 25,599 419,272 222,947 Balance Sheet amount at 31 March 2020 370,616 9,627 5,647 3,254 26,806 415,950 221,154 Comparative Movements in 2020-21 Revaluation increases/(decreases) recognised in the Revaluation Reserve Revaluation increases/(decreases) recognised in the Surplus/Deficit on the Provision of Services Depreciation Charge for 2020-21 Depreciation written out to the Revaluation Reserve Other movements in depreciation and impairment Impairment losses/(reversals) recognised in the Surplus/Deficit on the Provision of Services Derecognition - Disposals Page 97
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 88 As permitted by Finance Circular 09-2022 the council has adopted both Statutory Override 1 & 2 relating to infrastructure assets which allow for the following; Statutory Override 1: For accounting periods commencing from 1 April 2021 until 31 March 2024 a local authority is not required to report the gross cost and accumulated depreciation for infrastructure assets. Statutory Override 2: For accounting periods commencing 1 April 2010 until 31 March 2024 the carrying amount to be derecognised in respect of a replaced part of an infrastructure asset is to be taken 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. Page 98
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 89 14.2 Valuation of Property, Plant and Equipment IAS 16 – Property, Plant and Equipment has been adapted for the public sector by IPSAS 17 – Property, Plant and Equipment. Under IPSAS 17 each category of Property, Plant and Equipment is valued as follows: • Infrastructure, community assets and assets under construction are valued at historical cost. • Vehicles, plant and equipment are valued at depreciated historical cost as a proxy for fair value. • All other classes of assets are valued at fair value. Where there is no market based evidence of fair value because of the specialist nature of the asset and the asset is rarely sold then an estimate of fair value is made using a depreciated replacement cost approach. The Council carries out a rolling programme that ensures that all Property, Plant and Equipment required to be measured is re-valued at least every five years. Assets identified as Corporate Surplus Assets are valued in accordance with IFRS 13 - Fair Value Measurement. The Balance Sheet value of Corporate Surplus assets at 31 March 2022 was £1.408m. Corporate Surplus assets are valued at their fair value on 31 March each year. Level 2 or 3 inputs were used for most Corporate Surplus asset valuations. Revaluations of Council owned land and property were carried out at 31 March 2022 in accordance with the Council’s rolling programme of revaluations. The revaluations have been carried out in house by the Council’s Estates Service. Valuations of land and buildings were carried out in accordance with the methodologies and basis for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. The following table shows the progress of the Council’s rolling programme for the revaluation of Other Land and Buildings: Other Land & Buildings £'000 31 March 2022 247,309 31 March 2021 61,402 31 March 2020 26,317 31 March 2019 49,880 31 March 2018 29,944 Total Cost or Valuation 414,852 Valued at Fair Value as at: Page 99
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Notes to the Financial Statements Page 90 www.argyll-bute.gov.uk 14.3 Depreciation The following useful lives and depreciation rates have been used in the calculation of depreciation: • Buildings – straight-line allocation over the useful life of the property as estimated by the valuer (20 to 60 years) • Infrastructure – straight-line allocation over 40 – 60 years • Vessels – straight line allocation over 25 years • Vehicles, Plant and Equipment - straight-line allocation over the useful life of the asset as determined by a suitably qualified officer (5 to 20 years) 14.4 Summary of Capital Expenditure and Financing Capital expenditure involves the creation of assets, the benefit of which will be available to future rates and Council taxpayers. It is financed from borrowing, capital receipts and capital grants. The cost of the asset is effectively borne over a period of years. In 2021-22 total spending on capital projects was £42.976m. The 2020-21 opening balance for the capital financing requirement has been restated to take account of the revaluation of the Landfill sites which had been incorrectly included in 2019-20. This subsequently results in the removal of £0.583m from Total Funding within 2020-21 as this is not a source of finance. There is also an adjustment in 20-21 to include assets held for sale (£25k). This note is for information only and does not impact the main financial statements. 2020-21 2021-22 £'000 £'000 294,885 Opening Capital Financing Requirement 294,752 Capital Investment: 3,851 Property Plant and Equipment: Other Land and Buildings 9,157 2,608 Vehicles, Plant, Furniture and Equipment 4,564 6,824 Infrastructure Assets 15,434 303 Community Assets 1,504 (3) Surplus Assets 22 8,543 Assets Under Construction 12,210 353 Property Plant and Equipment acquired under Finance Leases: Other Land and Buildings - DBFM Schools 4 - Heritage Assets 13 75 Intangible Assets 68 (25) Assets Held for Sale 22,529 Total Capital Investment 42,976 Sources of Finance: (612) Capital Receipts (838) (13,495) Government Grants (21,700) (744) Capital Financed from Current Revenue (735) (5,246) Net Borrowing (2,514) (2,592) Assets Aquired under Finance Leases/Schools NPDO (4,844) 27 Capital Receipts transferred to/(from) Capital Fund 3 (22,662) Total Funding (30,628) 294,752 Closing Capital Financing Requirement 307,100 Page 100
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Notes to the Financial Statements Page 91 www.argyll-bute.gov.uk 14.5 Commitments under Capital Contracts At 31 March 2022, the Council had commitments on capital contracts of £8.224m. This expenditure will be funded from a combination of Government Grants, borrowing and income from selling assets and contributions from Revenue Accounts. Similar commitments at 31 March 2021 were £18.675m. The major commitments are: £'000 Helensburgh Waterfront Development 2,959 Kilmory Business Park 1,980 Gartbreck/Glengorm Landfill Sites 896 Lochgilphead Front Green 486 St Muns Primary School Upgrade 262 Garelochhead Primary School Upgrade 254 Gibraltar Street, Oban, Public Realm 250 Dunoon Cycle Bothy 212 Oracle Replacement Project 202 Oban North Pier 150 Other small projects each less than £0.150m in value 573 15. HERITAGE ASSETS The main heritage assets held by the Council are two art collections, an archaeology collection and Inveraray Jail and Courthouse. The Council holds other heritage assets which are not valued and shown on the Balance Sheet. Further details on the council’s heritage assets policy can be found in note 1.11. Reconciliation of the carrying value of heritage assets held by the Council: Art Collections Heritage Property Total £'000 £'000 £'000 Cost or Valuation Net Book Value at 1 April 2021 1,600 486 2,086 Additions - 13 13 Disposals - - - Revaluations - - - Impairment Losses/(Reversals) recognised in the Revaluation Reserve - - - - - - At 31 March 2022 1,600 499 2,099 Movements in 2021-22 Transfer from Assets Under Construction Page 101
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Notes to the Financial Statements Page 92 www.argyll-bute.gov.uk 16. INTANGIBLE ASSETS Intangible assets comprise software licences and carbon reduction commitment allowances purchased in advance. Purchased software licences are shown at cost and this cost is charged to the relevant service lines within the Comprehensive Income and Expenditure Statement over the economic life of the licences, assessed as five years. The movement in intangible assets during the year was: £'000 £'000 Cost or Valuation At 1 April 2021 2,207 2,207 Additions 68 68 Disposals - - Revaluations - - Reclassifications - - At 31 March 2022 2,275 2,275 Amortisation and Impairments At 1 April 2021 (1,635) (1,635) Charge for 2021-22 (36) (36) Disposals - - At 31 March 2022 (1,671) (1,671) Balance Sheet amount at 31 March 2022 604 604 Balance Sheet amount at 31 March 2021 572 572 Movements in 2021-22 Purchased Software Licences Total Intangible Assets Page 102
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Notes to the Financial Statements Page 93 www.argyll-bute.gov.uk Total Intangible Assets Comparative Movements in 2020-21 £'000 £'000 Cost or Valuation At 1 April 2020 2,129 2,129 Additions 75 75 Disposals - - Revaluations - - Reclassifications 3 3 At 31 March 2021 2,207 2,207 Amortisation and Impairments At 1 April 2020 (1,546) (1,546) Charge for 2020-21 (89) (89) Disposals - - At 31 March 2021 (1,635) (1,635) Balance Sheet amount at 31 March 2021 572 572 Balance Sheet amount at 31 March 2020 583 583 Purchased Software Licences 17. INVESTMENT PROPERTY Investment property has been accounted for in accordance with IAS 4 - Investment Property, except where interpretations or adaptations to fit the public sector are detailed in the Code. The definition of an investment property in the context of the public sector is one that is used solely to earn rentals or for capital appreciation or both. The value of investment property is initially measured at cost and thereafter measured at fair value. The fair value of investment property reflects market conditions at 31 March 2022. Revaluations of investment properties were carried out at 31 March 2022 in house by the Estates Service. 17.1 Movement in Investment Property The movement in investment property during 2021-22 was: Investment Properties £'000 Cost or Valuation At 1 April 2021 2,435 Acquisitions - Disposals - Net Gains/Losses from fair value adjustments (38) Transfers 31 At 31 March 2022 2,428 Movements in 2021-22 Page 103
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Notes to the Financial Statements Page 94 www.argyll-bute.gov.uk 17.2 Investment Property Income and Expenditure The following items of income and expenditure have been accounted for in the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement: 2020-21 2021-22 £'000 £'000 113 Rental income from investment property 148 (4) Direct operating expenses arising from investment property (4) 109 144 18. SCHOOLS BUILT UNDER PUBLIC PRIVATE PARTNERSHIP CONTRACTS (PPP) Argyll and Bute Council have two schemes: Schools Non-Profit Distributing Organisation (NPDO) During 2007-08 two secondary schools, two joint campuses and one primary campus, developed as part of the Non-Profit Distributing Organisation (NPDO) variant of a Public Private Partnership (PPP), became operational. When the agreement ends in 2035 the provider will hand the five school complexes back to the Council, it is expected at that point in time each school will have an estimated life of 30 years remaining. Schools Hub Design, Build, Finance and Maintain Contract (DBFM) Campbeltown and Oban High Schools have been built under this type of arrangement which reached Financial Close in March 2016. Campbeltown Grammar School Construction Phase 1 was completed on 19 February 2018 and provided a new secondary school for pupils aged between 12 and 18. The new school has capacity for 500 pupils and replaces the existing Campbeltown Grammar School on the current school site at Hutcheon Road, Campbeltown. Phase 2 which included the demolition of the existing school buildings, provision of a car park, landscaping and 3G artificial turf pitch was completed during 2018-19. Oban High School Construction Phase 1 was completed on 5 April 2018 and provided a new secondary school for pupils between 12 and 18. The new school has capacity for 1300 pupils and replaces the existing Oban High School, on the current school site at Soroba Road, Oban. Phase 2 includes the demolition of the existing school buildings, provision of a car park, landscaping and a pedestrian footway with lighting from the new school facilities to the grass pitches owned by the Council at Glencruitten, Oban was completed during 2018-19. Page 104
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Notes to the Financial Statements Page 95 www.argyll-bute.gov.uk 18.1 Assets Held under Schools NPDO and DBFM Contracts Five schools were constructed under the Schools NPDO Contract; Hermitage Academy, Dunoon Grammar, Lochgilphead Joint Campus, Rothesay Joint Campus and Oban Primary Campus. The construction costs of the buildings, adjusted for revaluations on 31 March 2022 and depreciation to date are included as part of Operational Land and Buildings. As noted above two schools were completed under the Schools DBFM Contract. Oban High School and Campbeltown Grammar have been included within Operational Land & Buildings. Schools DBFM - Other Land & Buildings Schools NPDO - Other Land & Buildings Total Schools Built under PFI Contracts £'000 £'000 £'000 Cost or Valuation At 1 April 2021 59,250 130,677 189,927 Additions at Cost 4 - 4 Transfers - - - Revaluations 6,790 4,126 10,916 At 31 March 2022 66,044 134,803 200,847 Depreciation and Impairments At 1 April 2021 (5,535) (8,631) (14,166) Charge for 2021-22 (1,748) (3,089) (4,837) Transfers - - - Revaluations 7,286 11,719 19,005 At 31 March 2022 3 (1) 2 Balance Sheet amount at 31 March 2022 66,047 134,802 200,849 Balance Sheet amount at 31 March 2021 53,715 122,046 175,761 Movements in 2021-22 Page 105
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Notes to the Financial Statements Page 96 www.argyll-bute.gov.uk Schools DBFM - Other Land & Buildings Schools NPDO - Other Land & Buildings Total Schools Built under PFI Contracts £'000 £'000 £'000 Cost or Valuation At 1 April 2020 58,897 130,677 189,574 Additions at Cost 353 - 353 Transfers - - - Revaluations - - - At 31 March 2021 59,250 130,677 189,927 Depreciation and Impairments At 1 April 2020 (3,798) (5,756) (9,554) Charge for 2020-21 (1,737) (2,875) (4,612) Transfers - - - Revaluations - - - At 31 March 2021 (5,535) (8,631) (14,166) Balance Sheet amount at 31 March 2021 53,715 122,046 175,761 Balance Sheet amount at 31 March 2020 55,099 124,921 180,020 Comparative Movements in 2020-21 Page 106
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Notes to the Financial Statements Page 97 www.argyll-bute.gov.uk 18.2 Schools NPDO Finance Lease Liability The finance lease liability arising from the Schools NPDO contract is as follows: Schools DBFM Schools NPDO Total Schools Finance Lease Liability £'000 £'000 £'000 Balance at 1 April 2021 (55,909) (65,175) (121,084) Additions - - - Repayments 2,033 2,767 4,800 Prior year repayment adjustment - - - Schools Finance Lease Liability at 31 March 2022 (53,876) (62,408) (116,284) Split: Obligations payable within 1 year (2,000) (3,071) (5,071) Obligations payable after 1 year (51,876) (59,337) (111,213) Schools Finance Lease Liability at 31 March 2022 (53,876) (62,408) (116,284) Movements in 2021-22 Schools DBFM Schools NPDO Total Schools Finance Lease Liability £'000 £'000 £'000 Balance at 1 April 2020 (55,968) (67,666) (123,634) Additions - - - Repayments 1,994 2,491 4,485 Prior year repayment adjustment (1,935) - (1,935) Schools Finance Lease Liability at 31 March 2021 (55,909) (65,175) (121,084) Split: Obligations payable within 1 year (2,033) (2,766) (4,799) Obligations payable after 1 year (53,876) (62,409) (116,285) Schools Finance Lease Liability at 31 March 2021 (55,909) (65,175) (121,084) Comparative Movements in 2020-21 Page 107
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Notes to the Financial Statements Page 98 www.argyll-bute.gov.uk 18.3 Payments due to Operator under Schools NPDO Contract The Council is committed to paying the following sums under the Schools NPDO contract: Future Repayment Periods Lifecycle Costs Payment of Interest Service Charges Total Payments £'000 £'000 £'000 £'000 2022 - 2023 6,475 5,602 15,148 2023 - 2027 2,159 22,042 24,256 62,373 2027 - 2032 3,204 18,381 34,329 82,323 2032 - 2035 1,522 4,359 18,291 43,185 Total 6,885 51,257 82,478 203,029 Repayment of Liability £'000 13,916 26,409 19,013 62,409 3,071 18.4 Payments due to Operator under Schools DBFM Contract The Council is committed to paying the following sums under the Schools DBFM contract: Future Repayment Periods Payment of Interest Service Charges Total Payments £'000 £'000 £'000 2022- 2023 2,321 786 5,107 2023 - 2027 8,517 4,114 20,709 2027 - 2032 8,868 7,201 26,579 2032 - 2037 4,959 10,365 27,933 2037 - 2042 2,436 9,284 28,416 2042 - 2043 266 763 5,012 Total 27,367 32,513 113,756 53,876 Repayment of Liability £'000 8,078 10,510 3,983 2,000 12,609 16,696 19. OPERATING LEASES 19.1 Operating Leases – Amounts Paid to Lessors The Council uses land, buildings, vehicles, plant and equipment financed under the terms of an operating lease. The amounts paid under these arrangements in 2021-22 were as follows: 2020-21 2021-22 £'000 £'000 256 Land and Buildings 226 1,407 Vehicles 1,322 184 Plant and Equipment 176 1,847 Total 1,724 Page 108
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Notes to the Financial Statements Page 99 www.argyll-bute.gov.uk 19.2 Assets Held Under Operating Leases The Council was committed at 31 March 2022 to making payments of £2.990m under operating leases comprising the following elements: Other Land and Buildings Vehicles, Plant and Equipment Other Land and Buildings Vehicles, Plant and Equipment £'000 £'000 £'000 £'000 177 311 Due within 1 year 161 286 583 254 Due between 1 and 5 years 574 314 1,625 38 Due after 5 years 1,579 76 2,385 603 Value at 31 March 2,314 676 31st March 2021 31st March 2022 20. FINANCE LEASES 20.1 Finance Leases – Amounts Paid to Lessors During 2017-18 the Council purchased a new cremator for Cardross Crematorium under a finance lease arrangement. The amount paid under this arrangement in 2021-22 was as follows: 2020-21 2021-22 £'000 £'000 63 Plant and Equipment 63 63 Total 63 20.2 Assets Held Under Finance Leases Assets purchased under a finance leases are included within the assets of the Council and depreciated over the life of the asset as follows: 2020-21 2021-22 £'000 Vehicles, Plant and Equipment £'000 478 Value at 1 April 427 - Additions - (51) Depreciation (51) 427 Value at 31 March 376 Page 109
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Notes to the Financial Statements Page 100 www.argyll-bute.gov.uk 20.3 Finance Lease Liability The Council was committed at 31 March 2022 to making payments of £0.396m under finance leases comprising the following elements: Movements in 2021-22 £'000 Balance at 1 April 2021 (440) Additions - Repayments 44 Finance Lease Liability at 31 March 2022 (396) Split: Obligations payable within 1 year (63) Obligations payable between 1 and 5 years (251) Obligations payable after 5 years (155) Finance Lease Obligations at 31 March 2022 (469) Less Interest element of lease 73 Finance Lease Liability at 31 March 2022 (396) Comparative Movements in 2020-21 £'000 Balance at 1 April 2020 (483) Additions - Repayments 43 Finance Lease Liability at 31 March 2021 (440) Split: Obligations payable within 1 year (63) Obligations payable between 1 and 5 years (252) Obligations payable after 5 years (217) Finance Lease Obligations at 31 March 2021 (532) Less Interest element of lease 92 Finance Lease Liability at 31 March 2021 (440) Page 110
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Notes to the Financial Statements Page 101 www.argyll-bute.gov.uk 21. LONG TERM DEBTORS 31st March 2021 31st March 2022 £'000 £'000 14 House Loans 13 750 Waste PPP Historic Contamination Fund 750 1,384 Charging Orders - Care Home Fees 1,465 3,297 Strategic Housing Fund Loans to Registered Social Landlords 3,229 583 Other Long Term Debtors 335 6,028 Total Long Term Debtors 5,792 22. DEBTORS £'000 £'000 £'000 £'000 18,350 Arrears of Local Taxation 19,410 (16,170) Less: Impairment of Bad Debts (16,910) 2,180 2,500 1,030 Housing Benefits Overpayments 974 (955) Less: Impairment of Bad Debts (910) 75 64 6,092 Debtor Accounts 3,351 (1,012) Less: Impairment of Bad Debts (1,067) 5,080 2,284 - Net Debtor to Scottish Government for Non Domestic Rates 721 3,080 VAT Recoverable from HMRC 2,436 205 Strategic Housing Fund Loans due within 1 Year 68 6,037 Accrued Income 4,449 3,789 Other Debtors 5,741 20,446 Total Debtors 18,263 31 March 202231 March 2021 Page 111
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Notes to the Financial Statements Page 102 www.argyll-bute.gov.uk 23. ASSETS HELD FOR SALE The movement in assets held for sale during 2021-22 was: 2020-21 2021-22 £'000 £'000 674 1,865 1,624 228 (25) Additions - (43) Revaluation losses (12) - Revaluation gains 134 - Impairment losses - - Assets declassified as "Held for Sale" (Property, Plant and Equipment) - (365) Assets Sold (706) 1,865 Balance Sheet amount at 31st March 2022 1,509 Balance Sheet amount at 1st April 2021 Assets newly classified as "Held for Sale" (Property, Plant and Equipment) Movements 24. CASH AND CASH EQUIVALENTS The balance of Cash and Cash Equivalents is made up of the following elements: 31 March 2021 31 March 2022 £'000 £'000 4 1 (30) Cash in transit 74 25,518 Short term deposits with banks 5,117 17,290 Short term deposits in Money Market Funds 19,600 (7,144) Bank Current Accounts (5,064) 35,638 Total Cash and Cash Equivalents 19,728 Cash held by the Authority Page 112
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Notes to the Financial Statements Page 103 www.argyll-bute.gov.uk 25. CREDITORS 31 March 2021 31 March 2022 £'000 £'000 7,134 Accrued Payrolls and Superannuation 7,544 2,761 Accrued Employer's National Insurance Contributions and PAYE 2,880 7,206 Accrual for Short Term Accumulating Absences 6,927 983 Creditors System Liability 11 14,925 Accrued Expenditure 12,117 2,389 Health and Social Care Partnership Creditor 2,148 400 RCGF Grant Income 387 180 Housing Benefit Subsidy - 829 Trust Funds 856 1,171 Net Creditor to Scottish Government for Non Domestic Rates - 7,479 Other Creditors 8,413 45,457 Total Creditors 41,283 26. FINANCIAL INSTRUMENTS DISCLOSURES 26.1 Types of 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”: Long Term Current Long Term Current £'000 £'000 £'000 £'000 Investments and Lending 6,388 118,396 Loans and Receivables 6,284 38,434 Borrowing 284,848 50,920 273,969 64,282 31 March 202231 March 2021 Financial Liabilities at amortised cost 26.2 Fair Value of Assets and Liabilities Carried at Amortised Cost Financial assets (represented by lending and receivables) and financial liabilities (represented by borrowings) are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining period of the instrument, using the following assumptions: • Estimated interest rates at 31 March 2022 for loans from the PWLB were taken from the appropriate interest rate notice and for other loans receivable and payable from market rates obtained by our treasury advisors. • No early repayment or impairment is recognised. • Where an instrument will mature in the next 12 months, the carrying amount is assumed to approximate to fair value. Page 113
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Notes to the Financial Statements Page 104 www.argyll-bute.gov.uk • The fair value of trade and other receivables is taken to be the invoiced or billed amount. The fair values are calculated as follows: Carrying Amount Fair Value Carrying Amount Fair Value £'000 £'000 £'000 £'000 Lending 124,784 125,076 Loans and Receivables 44,718 44,954 Borrowing 335,768 422,798 Financial Liabilities 338,251 401,463 31 March 2021 31 March 2022 The fair value is greater than the carrying amount because the Council’s lending figure includes a number of loans where the interest rate receivable is higher than the rates available for similar loans at the Balance Sheet date. The commitment to receive interest above the current market rates increases the amount the Council would receive if it agreed the early repayment of loans. 26.3 Gains and Losses on Financial Instruments There are no gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to Financial Instruments. 26.4 Nature and Extent of Risks arising from Financial Instruments The Council’s management of treasury risks actively works 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. 26.5 Credit Risk Credit risk arises from the short-term lending of surplus funds to banks, money market funds, building societies 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 and money market funds whose credit rating is independently assessed as sufficiently secure by the Council’s treasury advisers and to restrict lending to a prudent maximum amount for each institution. The following analysis summarises the Council’s potential maximum exposure to credit risk, based on past experience and current market conditions. No credit limits were exceeded during the financial year and the Council expects full repayment on the due date of deposits placed with its counterparties. Amount at 31 March 2022 Historical Experience of Non-payment adjusted for Market Conditions at 31 March 2022 Estimated Maximum Exposure to Default and Uncollectability £'000 % £'000 24,717 - - Deposits with Banks and Money Market Funds The information in respect of the Council’s debtors can be found in note 21 and 22. The Debtor Accounts Page 114
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Notes to the Financial Statements Page 105 www.argyll-bute.gov.uk represents the amounts owed by the Council’s customers; Other Debtors include prepaid expenditure, accrued income and money owed to the Council in respect of projects being carried out under partnerships where the Council is the lead partner. The bad debt provision shown in note 22 represents the Council’s assessment of the likely recoverability of the debt outstanding. The credit risk around unprovided for debt is considered to be low. Debtors relate to the normal business of the Council and credit is issued on the Council’s standard credit terms. There are no significant amounts past due but not impaired where recoverability is considered to be an issue. 26.6 Liquidity Risk The Council’s main source of borrowing is the Treasury’s Public Works Loans Board (PWLB). There is no significant risk that the Council will be unable to raise finance to meet its commitments under Financial Instruments. The Council has safeguards in place to ensure that a significant proportion of its borrowings does not mature for repayment at any one time in the future to reduce the financial impact of re- borrowing at a time of unfavourable interest rates. The Council’s policy is to ensure that not more than 30% of the loans are due to mature within any financial year through a combination of prudent planning of new loans taken out and, where it is economic to do so, making early repayments. The maturity analysis of financial liabilities is as follows: 31 March 2021 31 March 2022 £'000 £'000 50,920 Less than one year 64,281 10,893 Between one and two years 5,284 16,915 Between two and five years 17,690 257,040 More than five years 250,996 335,768 338,251 Maturity analysis of financial liabilities All other amounts due to the Council for council tax, non-domestic rates and other income are due to be paid in less than one year. 26.7 Market Risk Changes in market interest rates influence the interest payable on borrowings and on interest receivable on surplus funds invested. For example, a rise in interest rates would mean an increase in the interest charged on borrowing at variable rates and an increased cost to the taxpayer. An increase in interest rates would also mean an increase in the income received on lending at variable rates and a reduction in cost for the taxpayer. Changes in market rates also affect the notional “fair value” of lending and borrowing. For example, a rise in interest rates would reduce the “fair value” of both lending and borrowing at fixed rates. Changes in “fair value” of lending and borrowing do not impact upon the taxpayer and are confined to prescribed presentational aspects in the Accounts. The Council has a variety of strategies for managing the uncertainty of future interest rates and the financial impact on the Council. It is the policy of the Council to limit its exposure to variable rate borrowing to a maximum of 30% of what it borrows. During periods of falling rates and where it is economically advantageous to do so, the Council will consider the repayment and restructuring of fixed interest rate debt. The Council takes the daily advice from its specialist treasury advisers and actively monitors changes in interest rates to inform decisions on the lending of surplus funds, new borrowings and restructuring Page 115
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Notes to the Financial Statements Page 106 www.argyll-bute.gov.uk of existing borrowings. Any potential for a financial impact on the Council is also significantly limited by the Scottish Government’s grant distribution mechanism that automatically adjusts for changes in interest rates in the Government Grant support the Council receives for “loan charges”. To illustrate the impact of changes in interest rates upon the Council, the following table shows the financial effect if rates had been 1% higher at 31 March 2022, with all other variables held constant: 31 March 2022 Impact on tax-payer £'000 Increase on interest payable on variable rate borrowings 105 Increase in interest receivable on variable rate lending - Increases in government grant receivable for “loan charges” - Net effect on Statement of Comprehensive Income & Expenditure 105 31 March 2022 Other accounting presentational changes £'000 A decrease in the “fair value” of fixed rate borrowing (disclosure confined to the notes to the financial statements) 43,465 The impact of a 1% fall in the interest rates would be as above but with the changes being reversed. 26.8 Price Risk The Council has no investment classified as “available-for-sale”. 26.9 Foreign Exchange Risk The Council does not lend or borrow in foreign currencies and has no exposure to gains or losses arising from movements in exchange rates. 26.10 Short-Term Deposits The short-term deposits arise as a result of the timing of expenditure and associated income and movements in fund and revenue balances. The Council adopts a proactive but prudent approach to its Treasury Management operations, which are governed by the fully revised edition of CIPFA’s Code of Practice on Treasury Management. 31 March 2021 31 March 2022 £'000 £'000 32,808 Banks and Money Market Funds 24,717 26.11 Soft Loans The Council has no material soft loans at 31 March 2022, on which no interest was being charged. Page 116
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Notes to the Financial Statements Page 107 www.argyll-bute.gov.uk 26.12 Short-Term Borrowing The Common Good and the various Trust Funds administered by the Council had monies temporarily invested with the Council’s loans fund during the year. The amounts at 31 March 2022 are shown in the table below. Further details of the nature and amounts of the funds of the Common Good and Trust Funds are shown in notes 36 and 37. 31 March 2021 31 March 2022 £'000 £'000 133 Common Good 139 829 Trust Funds 856 27. OTHER LIABILITIES Other liabilities consist of liabilities which by arrangement are payable at some point in the future or paid off by an annual sum over a period of time. Other liabilities total £117.430m as at 31 March 2022 and comprise the following: Opening Balance 1 April 2021 Movement in Year Closing Balance 31 March 2022 £'000 £'000 £'000 (440) 44 (396) (121,084) 4,800 (116,284) (750) - (750) Total Other Liabilities (122,274) 4,844 (117,430) Split: Short Term Liabilities (due within 1 year) (5,117) Long Term Liabilities (due after 1 year) (112,313) Total Other Liabilities (117,430) Movements in 2021-22 Finance Lease Liability (See note 20.3) Schools Finance Lease Liability (See note 18.2) Land Contamination Page 117
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Notes to the Financial Statements Page 108 www.argyll-bute.gov.uk 28. PROVISIONS Opening Balance 1 April 2021 Additional Provision Amounts Used Unused Amounts Reversed Closing Balance at 31 March 2022 £'000 £'000 £'000 £'000 £'000 (59) - - 16 (43) (71) (19) - - (90) (154) (20) - - (174) Service Choices Redundancy Costs (150) (65) 138 - (77) (1,909) (80) - - (1,989) (256) - - 33 (223) Litigation Claims (250) (50) 79 - (221) Insurance Excess Provision (10) - - - (10) (1,477) (379) 158 215 (1,483) Total Provisions (4,336) (613) 375 264 (4,310) Split: Short Term Provisions (due within 1 year) (2,231) Long Term Provisions (due after 1 year) (2,079) Total Other Liabilities (4,310) NPDO and Hub DBFM Payments Equal Pay Claims Commercial Rent Balances Income due to Registered Social Landlords Landfill Sites - Restoration and Aftercare Costs Utilities Provision A provision was created at the end of 2005-06 in relation to employees in catering, cleaning and home care services who had not accepted the Council’s equal pay settlement. There may be further outstanding claims where the settlement amount cannot be estimated reliably enough to provide for the costs. The Council reduced the discount on Council Tax from second homes to 10% during 2005-06. The additional Council Tax income invoiced during 2021-22 amounted to £2.106m; this amount is to be paid to registered social landlords to invest in social housing. A provision for cash not yet collected has been created amounting to £0.090m. There is a provision for Commercial Rents where arrangements have been put in place for repayment over a number of years. The provision reflects the uncertainty of collection of the debt. Liabilities have arisen in respect of employees who will be made redundant as a result of savings options agreed. The cost for any employee, whose contract has been terminated on or before 31 March 2022 has been incurred in year. For the employees who have confirmed acceptance of redundancy but have left or are leaving after 31 March 2022, a provision of £0.077m has been created. A provision for landfill sites was created in 2014-15 reflecting the Council’s liability for restoration and ongoing maintenance in respect of landfill sites operated by the Council, at Glengorm, Gartbreck and Gott Bay. The landfills sites were revalued at 31 March 2022 and the provision for restoration and aftercare increased to £1.989m. These have been provided for based on the net present value of estimated future costs. The utilities provision was created during 2011-12 to cover a potential liability in relation to discrepancies in charges for utility costs, £0.033m has been reversed during 2021-22 resulting in a total provision of £0.223m. Page 118
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Notes to the Financial Statements Page 109 www.argyll-bute.gov.uk A legal litigation provision was created in 2020-21 as the Council is currently involved in several ongoing cases that will incur costs into future years. The provision is based on sums invoiced and anticipated future costs. A provision was created in 2020-21 for insurance excess costs in relation to an ongoing HR process and this has been carried forward into 2021-22. The NPDO provision for withheld sums from the Unitary Charge paid to ABC Schools which relate to disputed performance deductions and unbilled utility costs. The HUB DBFM provision for withheld sums from the Monthly Service Payment paid to Hub North Scotland (O&C) Ltd which relate to disputed performance deductions. 29. CAPITAL GRANTS RECEIVED IN ADVANCE Opening Balance 1 April 2021 Capital Grants Received Amounts Used Closing Balance 31 March 2022 £'000 £'000 £'000 £'000 (5,000) - 5,000 - (7) - 7 - Total Other Liabilities (5,007) - 5,007 - Split: Capital Grant Receipts in Advance (due within 1 year) - Capital Grant Receipts in Advance (due after 1 year) - Total Other Liabilities - Ministry of Defence LIBOR Funding - Helensburgh & Lomond Grant in Aid - Gaelic School Capital Fund The Chancellor of the Exchequer, in his Spring 2016 Budget, awarded Argyll and Bute Council LIBOR funding of £5m. The Ministry of Defence (MOD) are acting on behalf of Her Majesty’s Treasury (HMT) with regard to all matters relating to this funding. The purpose of the grant is to provide a contribution to the costs of the provision of the new Helensburgh Leisure Centre on condition that serving personnel and their families are offered favourable admission terms. This is because the LIBOR funds are to be used to recognise the contribution made by the Armed Forces Community to the nation. These funds have been drawn down in 2021-22. 30. DEFINED BENEFIT PENSION SCHEMES Participation in Pension Schemes As part of the terms and conditions of employment of its officers, the Council makes contributions towards the cost of post-employment benefits. Although these benefits will not actually be payable until employees retire, the Council has a commitment to make the payments (for those benefits) and to disclose them at the time that employees earn their future entitlement. The Council participates in two separate pension schemes which meet the needs of employees in particular services. Both schemes provide members with defined benefits related to pay and service. The schemes are as follows: Page 119
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Notes to the Financial Statements Page 110 www.argyll-bute.gov.uk Teachers The Scottish Teachers’ Superannuation Scheme is an unfunded scheme administered by the Scottish Government. This means that liabilities for the benefits provided cannot be identified by the Council. The scheme is therefore accounted for as if it were a defined contribution scheme where no liability for future payments of benefits is recognised in the balance sheet and revenue accounts are charged with the employer’s contributions payable to the Scottish Government in the year. Local Government Pension Scheme This is administered by Strathclyde Pension Fund – this is a funded defined benefit final salary scheme, meaning that the Council and employees pay contributions into a fund, calculated at a level intended to balance the pension’s liabilities with investment assets. The contributions are based on rates determined by the Fund’s professionally qualified actuary and based on triennial valuations of the Fund. The principal risks to the Council of the scheme are the longevity assumptions, statutory changes to the scheme, changes to inflation, bond yields and the performance of the equity investments held by the scheme. These are mitigated to a certain extent by the statutory requirements to charge to the General Fund the amounts due by statute as described in the accounting policies note. 30.1 Accrued Pensions Contribution Due to the timing of salary processing, not all employee and employer contributions have been paid to the pension schemes by the 31 March 2022. These payments have been accrued and are included within the creditors figure on the Balance Sheet. These have been paid during April 2022. The amounts are as follows: • Local Government Pension Scheme – £1.671m • Teachers’ Scheme – £1.082m 30.2 Transactions in Respect of the Local Government Pensions Scheme The latest formal valuation of the Strathclyde Pension Fund for funding purposes was at 31 March 2020. The independent actuaries appointed by the Council are Hymans Robertson and they have assumed that employees have continued to earn new benefits on the same basis as the latest formal valuation and that the employer’s pensionable payroll over the year to 31 March 2022 remains substantially stable with new entrants replacing any leavers. We recognise the cost of retirement benefits in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge we are required to make against Council Tax is based on the cash payable in the year, so the real cost of retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. Page 120
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Notes to the Financial Statements Page 111 www.argyll-bute.gov.uk The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund via the Movement in Reserves Statement during the year: 2020-21 2021-22 £'000 £'000 24,830 Current Service Cost 37,756 73 Past Service Cost (Including Curtailments) 197 24,903 Net Cost of Services 37,953 1,888 Net Interest Expense 1,864 26,791 39,817 (153,529) Return on Assets (excluding amounts included in net interest) (46,314) (16,702) Other Experience (see note (i) below) 1,795 173,619 Change in Financial and Demographic Assumptions (66,129) 30,179 (70,831) Statement of Movement in Reserves: (11,580) (23,700) 15,211 Employer's Contributions Payable to the Scheme 16,117 Comprehensive Income and Expenditure Statement: Cost of Services: Total Post Employment Benefit Charged to the Surplus or Deficit on the Provision of Services Other Post Employment Benefit Charged to the Comprehensive Income and Expenditure Statement Total Post Employment Benefits Charged to the Comprehensive Income and Expenditure Statement Reversal of net charges made to the Surplus or Deficit for the Provision of Services for post employment benefits in accordance with the Code Actual Amount charged against the General Fund Balance for pensions in the year: Service cost comprising: (i) A measure of the difference between actual experience and that expected based upon a set of actuarial assumptions, during the period between two actuarial valuation dates, as determined in accordance with a particular cost method. (ASOP No. 4) Page 121
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Notes to the Financial Statements Page 112 www.argyll-bute.gov.uk 30.3 Assets and Liabilities in Relation to Post-Employment Benefits Reconciliation of present value of the scheme liabilities (defined benefit obligation): 2020-21 2021-22 £'000 £'000 743,420 897,836 24,830 Current Service Cost 37,756 73 Past Service Costs including Curtailments 197 17,390 Interest Cost 18,152 4,182 Contributions by Scheme Participants 4,457 131,520 Re-measurement (Gains) and Losses (64,334) (23,579) Estimated Benefits Paid (22,822) 897,836 Defined Benefit Obligation at 31 March 22 871,242 Defined Benefit Obligation at 1 April 21 Reconciliation of fair value of the scheme (plan) assets: 2020-21 2021-22 £'000 £'000 676,074 815,522 Re-measurement (Gains) and Losses: 153,529 Expected Rate of Return on Pension Fund Assets 46,314 (25,397) Actuarial (Gains) and Losses - 15,502 Interest Income on Plan Assets 16,288 15,211 Employers Contributions 16,117 4,182 Contributions by Scheme Participants 4,457 (23,579) Estimated Benefits Paid (22,822) 815,522 Fair Value of Employer Assets at 31 March 22 875,876 Fair Value of Employer Assets at 1 April 21 The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the Balance Sheet date. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets. 30.4 Pensions Assets and Liabilities Recognised in the Balance Sheet 2020-21 2021-22 £'000 Local Government Pension Scheme £'000 (870,979) Present Value of Funded Liabilities (846,815) (26,857) Present Value of Unfunded Liabilities (24,427) 815,522 Fair Value of Employer Assets 875,876 (82,314) Surplus/(Deficit) in the Scheme 4,634 The liabilities show the underlying commitments that the Council has in the long run to pay post- employment (retirement) benefits. Page 122
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Notes to the Financial Statements Page 113 www.argyll-bute.gov.uk 30.5 Analysis of Pension Fund’s Assets Argyll and Bute Council’s share of the Pension Fund’s assets at 31 March 2022 comprised: 2020-21 2021-22 £'000 £'000 13,691 Cash and Cash Equivalents 22,287 Equity Instruments (by industry type) 46,957 Consumer 41,032 46,519 Manufacturing 38,595 8,518 Energy and Utilities 9,115 28,867 Financial Institutions 24,122 22,751 Health and Care 29,269 37,735 Information Technology 50,860 - Other - 191,347 Sub-total Equity Instruments 192,993 Bonds (by sector) - Corporate - - Government - - Sub-total Bonds - Real Estate 66,075 UK Property 73,866 - Overseas Property - 66,075 Sub-total Real Estate 73,866 145,865 Private Equity (All) 171,465 Investment Funds and Unit Trusts 285,233 Equities 324,322 110,297 Bonds 88,462 345 Commodities 301 824 Infrastructure 769 1,698 Other 1,411 398,397 Sub-total Investment Funds and Unit Trusts 415,265 Derivatives - Forward Foreign Exchange Contracts - 147 Other - 147 Sub-total Derivatives - 815,522 Total Assets 875,876 Page 123
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Notes to the Financial Statements Page 114 www.argyll-bute.gov.uk 2020-21 2021-22 £'000 Fair Value of Pension Fund Assets £'000 Equity Securities 190,471 Quoted in an Active Market 192,575 876 Not Quoted in an Active Market 418 191,347 Sub-total Equity Securities 192,993 30.6 Basis for Estimating Assets and Liabilities The Council’s share of the liabilities of Strathclyde Pension Fund have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on the assumptions about mortality rates, salary levels, etc. The principal assumptions used by the actuary have been: 2020-21 2021-22 Years Mortality assumptions Years 19.8 Longevity at 65 for current pensioners: Men 19.6 22.6 Women 22.4 21.2 Longevity at 65 for future pensioners: Men 21.0 24.7 Women 24.5 2020-21 2021-22 % Financial Assumptions % 2.9% Rate of Inflation (CPI) 3.2% 3.6% Rate of Increase in Salaries 3.9% 2.9% Rate of Increase in Pensions (CPI) 3.2% 2.0% Rate for discounting scheme liabilities 2.7% 2020-21 2021-22 % Long-term Expected Rate of Return on Assets in the Fund % 2.0% Equity Investments 2.7% 2.0% Bonds 2.7% 2.0% Property 2.7% 2.0% Cash 2.7% An allowance is included for future retirements to elect to take 50% of the maximum additional tax-free cash up to HMRC limits for pre-April 2009 service and 75% of the maximum tax-free cash for post-April 2009 service. 30.7 Asset and Liability Matching (ALM) Strategy The main fund (Fund 1) of Strathclyde Pension fund does not have an asset and liability matching strategy (ALM) as this is used mainly by mature funds. The Fund does match, to the extent possible, the types of assets invested to the liabilities in the defined benefit obligation. As is required by the pensions and investment regulations, the suitability of various types of investment has been considered, as has the need to diversify investments to reduce the risk of being invested into too narrow a range. Page 124
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Notes to the Financial Statements Page 115 www.argyll-bute.gov.uk 30.8 Impact on the Council’s Cash Flow The objectives of the Fund are to keep employers’ contributions at as constant a rate as possible. The Fund has agreed a strategy to achieve a funding rate of 100% in the longer term. The Scheme is a multi- employer defined benefit plan and employers’ contributions have been determined so that employee and employer rates are standard across all participating Local Authorities. Employer’s contributions have been set at 19.3% for 2022-2023. The total contributions expected to be made to the Local Government Pension Scheme by the Council in the year to 31 March 2023 is £14.344m. This is based on an assumed pensionable payroll of £74.322m. The assumed weighted average duration of the defined benefit obligation for the Council falls into the “Medium” duration category which is between 17 and 23 years (this is different from the mortality assumptions quoted in the table above in “Basis for Estimating Assets and Liabilities”). 30.9 Teachers Pensions – Administered By Scottish Public Pensions Agency Teachers employed by the Council are members of the Scottish Teachers’ Superannuation Scheme, administered by the Scottish Public Pensions Agency. The Scheme is an unfunded statutory public service pension scheme with benefits underwritten by the UK Government. The Scheme is financed by payments from employers and from those current employees who are members of the Scheme and paying contributions at progressively higher marginal rates based on pensionable pay, as specified by the regulations. Employers currently pay a contribution rate of 23% - about two thirds of the cost of an individual's pension. This took effect from 1 September 2019. The Council has no liability for other employers’ obligations to the multi-employer scheme. As the scheme is unfunded there can be no deficit or surplus to distribute on the wind-up of the Scheme or withdrawal from the Scheme. The scheme is an unfunded multi-employer defined benefit scheme. It is accepted that the scheme can be treated for accounting purposes as a defined contribution scheme in circumstances where the Authority is unable to identify its share of the underlying assets and liabilities of the scheme. At the last valuation a shortfall of £1.3 billion was identified in the notional fund which will be repaid by a supplementary rate of 4.5% of employers’ pension contributions for fifteen years from 1 April 2015. This contribution is included in the 23% employers’ contribution rate. As a proportion of the total contributions into the Teachers’ Pension Scheme during the year ended 31 March 2022, the council’s own contributions equate to 1.45%. 9,229 Amount Paid Over (£'000) 9,497 23.00% Rate of Contribution (%) 23.00% 520 Amount of Added Years Awarded by the Council (£'000) 514 2021-222020-21 The contributions due to be paid to the Teacher’s Scheme by the Council in the next financial year are estimated to be £9.798m. Page 125
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Notes to the Financial Statements Page 116 www.argyll-bute.gov.uk 31. NOTE TO THE EXPENDITURE AND FUNDING ANALYSIS This note provides a reconciliation of the main adjustments to Net Expenditure Chargeable to the General Fund to arrive at the amounts in the Comprehensive Income and Expenditure Statement. Adjustments for Capital Purposes Note (i) Net change for Pension Adjustments Note (ii) Capital element of Schools NPDO payment Note (iii) Other Adjustments Note (iv) Total Adjustments £'000 £'000 £'000 £'000 £'000 Chief Executive and Strategic Finance - 1,108 - (21) 1,087 Executive Director (Douglas Hendry) Executive Director (Douglas Hendry) - 65 - (6) 59 Commercial Services 2,159 1,744 - 4,150 8,053 Education (5,401) 4,944 - (7,916) (8,373) Legal and Regulatory Support (605) 926 (4,800) 2,554 (1,925) Executive Director (Kirsty Flanagan) - Executive Director (Kirsty Flanagan) - 49 - (17) 32 Head of Customer Support 1,173 1,544 - 396 3,113 Head of Development and Economic Growth 341 1,754 (309) 1,786 Roads and Infrastructure 11,852 4,139 - 1,196 17,187 Social Work 170 2,381 - (313) 2,238 Other Non-Departmental Costs 4 (700) - 9 (687) - - 9,693 17,954 (4,800) (277) 22,570 Other Income and Expenditure (24,564) 5,746 - (923) (19,741) (14,871) 23,700 (4,800) (1,200) 2,829 Net Cost of Services Difference between General Fund Surplus and Comprehensive Income and Expenditure Statement (Surplus)/Deficit Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts Adjustments between Funding and Accounting Basis 2021-22 Page 126
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Notes to the Financial Statements Page 117 www.argyll-bute.gov.uk (i) Adjustments for Capital Purposes This column 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. • 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 those receivable in the year to those 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 which conditions were satisfied in the year. • Financing and investment income and expenditure – the statutory charges for capital financing (loans fund advances) and other revenue contributions are deducted from other income and expenditure as these are not chargeable under generally accepted accounting practices. (ii) Net change for the Pensions Adjustments Net change for the removal of pension contributions and the addition of IAS 19 Employee Benefits pension related expenditure and income: • For services this represents the removal of the employer pension contributions made by the Council 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. (iii) Capital element of schools NPDO payment • This is the capital cost of the annual payment to the schools NPDO operator and represents repayment of the Balance Sheet liability rather than a charge to Comprehensive Income and Expenditure Statement. (iv) Other Adjustments • 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. • For services an adjustment is made for the accrual of holiday pay and other similar entitlements, this is required under generally accepted accounting principles but the impact on the General Fund is mitigated by statute which allows the impact to be reversed out through the Movement in Reserves Statement. Page 127
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Notes to the Financial Statements Page 118 www.argyll-bute.gov.uk Adjustments for Capital Purposes Note (i) Net change for Pension Adjustments Note (ii) Capital element of Schools NPDO payment Note (iii) Other Adjustments Note (iv) Total Adjustments £'000 £'000 £'000 £'000 £'000 Chief Executive and Strategic Finance (66) 535 - (17) 452 Executive Director (Douglas Hendry) Executive Director (Douglas Hendry) - 34 - (7) 27 Commercial Services 1,834 844 - 4,149 6,827 Education 3,509 2,399 - (7,475) (1,567) Legal and Regulatory Services 2,911 443 (2,549) 2,554 3,359 Executive Director (Kirsty Flanagan) - Executive Director (Kirsty Flanagan) - 24 - (18) 6 Head of Customer Support Services 1,276 789 - 395 2,460 Head of Development and Economic Growth (9) 885 (306) 570 Roads and Amenity Services 8,839 1,996 - 1,189 12,024 Social Work 677 3,096 - (308) 3,465 Other Non-Departmental Costs 4 (1,351) - - (1,347) - - 18,975 9,694 (2,549) 156 26,276 Other Income and Expenditure from the Expenditure and Funding Analysis (13,184) 1,886 - (660) (11,958) 5,791 11,580 (2,549) (504) 14,318 Difference between General Fund Surplus and Comprehensive Income and Expenditure Statement (Surplus)/Deficit Net Cost of Services Adjustments between Funding and Accounting Basis 2020-21 Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts (Comparative Year) Page 128
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 119 32. UNUSABLE RESERVES Movements in the Council’s unusable reserves are detailed in the Statement of Movement in Reserves. 32.1 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: • Revalued downwards or impaired and the gains are lost • Used in the provision of services and the gains are consumed through depreciation, or • Disposed of and the gains are realised. The 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. 32.2 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 additions to those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or subsequent costs as depreciation, impairment losses and amortisations which are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert current and fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition, construction and subsequent costs. The Account contains accumulated gains and losses on Investment Properties. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date the Revaluation Reserve was created to hold such gains. 32.3 Financial Instruments Adjustment Account The Financial Instruments Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments and for bearing losses or benefiting from gains per statutory provisions. The Council uses the Account to manage premiums paid on the early redemption of loans. Premiums are debited to the Comprehensive Income and Expenditure Statement when they are incurred, but reversed out of the General Fund Balance to the Account in the Movement in Reserves Statement. Over time, the expense is posted back to the General Fund Balance in accordance with statutory arrangements for spreading the burden on Council Tax. 32.4 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 pension funds. The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Council has set aside to meet them. The statutory arrangements will ensure funding will have been set aside by the time the benefits come to be paid. Page 129
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 120 32.5 Accumulated Absences Account The Accumulated Absences 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. 33. USABLE RESERVES Movements in the Council’s usable reserves are detailed in the Statement of Movement in Reserves. 33.1 Capital Funds The Council holds two funds which make up the Capital Funds total in the Statement of Movement in Reserves, these are: Usable Capital Receipts Reserve During the 2006-07 financial year, and prior to the transfer of the Council’s housing stock during November 2006, the receipts from the sale of council houses were transferred to the Usable Capital Receipts Reserve. The amounts held in this reserve can only be used for social housing capital expenditure. Capital Fund During the 2007-08 financial year the Council established a Capital Fund under Section 22 of Schedule 3 of the Local Government (Scotland) Act 1975. All receipts from capital disposals are to be paid into this fund with effect from 14 February 2008. The movement in the Usable Capital Receipts Reserve and Capital Fund are as follows: Usable Capital Receipts Reserve Capital Fund Total Capital Funds £'000 £'000 £'000 Balance at 1 April 2021 2,872 1,534 4,406 Proceeds of Disposals 3 835 838 Transfer to Capital Adjustment Account - (835) (835) Contribution to Capital Fund From Revenue - - - Interest Earned 2 3 5 Balance at 31 March 2022 2,877 1,537 4,414 Movements in 2021-22 33.2 Repairs and Renewals Fund The movement in the Education Repairs and Renewals Fund is as follows: Balance at 1 April 2021 Contribution from Revenue Interest Earned Contribution to Revenue Balance at 31 March 2022 £'000 £'000 £'000 £'000 £'000 Education 2,134 (349) 2 895 2,682 Total 2,134 (349) 2 895 2,682 Movements in 2021-22 Page 130
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 121 34. CONTINGENT LIABILITIES 34.1 Equal Pay Claims The Council settled a number of equal pay claims during 2017-18, however there are a small number remaining where the outcome of the applications are unknown and there is insufficient information to allow the potential cost of these claims to be provided for. There is also the potential for other equal pay claims whose costs may be met by the Council. 34.2 Goodwin Judgement The Social Security Act 1986 introduced changes to survivor pensions which resulted in most public service pension schemes providing survivor benefits to widowers (male survivors in opposite-sex marriages) based on the female spouse’s service from 6 April 1988 onwards. Since the introduction of civil partnerships and same sex marriages, public service pension schemes have provided survivor benefits in respect of both which have been in line with those paid to widowers. An employment tribunal (the Goodwin case) concluded on 30 June 2020 that a female member in an opposite sex marriage is treated less favorably than a female in a same sex marriage or civil partnership, and that treatment amounts to direct discrimination on grounds of sexual orientation. Where schemes contain provisions deemed discriminatory, those provisions must be dis-applied as being contrary to the non-discrimination rule set out in section 61 of the Equality Act 2010. In light of this ruling the Chief Secretary to the Treasury has confirmed that amendments would be made to the Teachers’ Pension Scheme and other public service pension schemes so that “surviving male same-sex and female same-sex spouses and civil partners will, in certain cases, receive benefits equivalent to those received by widows of opposite sex marriages” There is still uncertainty surrounding the potential remedy to the Goodwin judgement however the Council’s actuaries have estimated the potential impact of implementing a solution to correct the past underpayment of spouses’ benefits to be circa 0.1% - 0.2% of gross obligations. This would amount to £0.871m at 0.1% for the Council or £1.742m at 0.2%. As there is still uncertainty over the remedy and the potential impact no provision has been made in the accounts at the current time. 34.3 Other Legal Challenges There are other legal challenges which are on-going and may result in future liabilities. 35. TERMINATION BENEFITS A number of savings options have been agreed at Council budget meetings to balance the Council budget. A number of these savings options were reliant on a reduction in the Councils staffing levels. The Council had forewarning of the level of savings required to balance the budget and had previously asked all Council employees to express an interest in voluntary redundancy. As a result of the budget savings options approved by the Council a number of employees have had their redundancy application accepted. Redundancy costs have been incurred by the Council since the 2010-11 financial year in relation to the budget savings agreed. In each year, provision was made within the financial year for the costs of all employees who had accepted redundancy as at 31 March ending that year, including accounting for costs for employees who confirmed redundancy by 31 March but left or were leaving after this date. The total cost accounted for in 2021-22 is £0.308m for 6 employees and in 2020-21 was £0.522m for 16 employees. These costs are detailed further in the Remuneration Report. Termination costs for all Council employees who have accepted redundancy by 31 March 2022 have been accounted for in 2021-22, or in previous financial years. The reduction in the staffing establishment includes posts from all services across the Council and reductions were in line with the savings agreed by the Council. There will be further redundancy costs Page 131
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 122 incurred as the Council is required to make further savings to balance the budget in future years and the council have earmarked monies from the loans fund one-off re-profiling gain. 36. TRUST FUNDS AND OTHER THIRD PARTY FUNDS The Council acts as sole or custodian trustee for 57 trust funds. The funds do not represent assets of the Council, and as such have not been included in the Balance Sheet. Funds for which the Council act as sole trustee: Income Expenditure Net Assets Reserves £'000 £'000 £'000 £'000 14 3 676 676 - 2 69 69 26 - 1,124 1,124 1 9 466 466 Total Trust Funds 41 14 2,335 2,335 Argyll Education Trust GM Duncan Trust MacDougall Trust Various Other Trust Funds Argyll Education Trust: this is made up of a number of small trusts to award prizes, bursaries, etc. to pupils and ex-pupils of schools within the former Argyll County Council area. GM Duncan Trust: for the provision of fuel, clothing and foodstuffs for the needy of Campbeltown. MacDougall Trust: for the provision of sheltered housing on the Ross of Mull. Further information on the Trust Funds, administered by the Council, can be obtained from Financial Services within the Chief Executive’s Unit. A number of the trust funds administered by the Council are charitable trusts and as such are required to comply with current Office of the Scottish Charities Regulator (OSCR) financial reporting requirements. Arrangements have been put in place to ensure that all charities administered by the Council comply and will continue to comply with these requirements. 37. COMMON GOOD FUNDS The Council administers the Common Good Accounts for the former Burghs of Oban, Campbeltown, Rothesay, Dunoon, Lochgilphead, Inveraray, Cove and Kilcreggan. The figures below summarise the aggregate income and expenditure for the year as well as providing a snapshot picture of the assets and liabilities at 31 March 2022. The Common Good Funds are for the benefit of the geographical areas of the former burghs. Further information on the Common Good Funds can be obtained from Financial Services within the Chief Executive’s Unit. 37.1 Common Good Income and Expenditure Account for the year ended 31 March 2022 Oban Common Good Other Common Goods Total Common Good Oban Common Good Other Common Goods Total Common Good £'000 £'000 £'000 £'000 £'000 £'000 132 22 154 Expenditure 160 39 199 (371) (226) (597) Income (217) (134) (351) (239) (204) (443) (Surplus)/Deficit for the Year (57) (95) (152) 2020-21 2021-22 Page 132
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 123 37.2 Common Good Balance Sheet at 31 March 2022 Oban Common Good Other Common Goods Total Common Good Oban Common Good Other Common Goods Total Common Good £'000 £'000 £'000 £'000 £'000 £'000 4,598 319 4,917 Tangible Fixed Assets 5,858 319 6,177 1,856 1,098 2,954 Investments 2,014 1,193 3,207 117 172 289 Current Assets 153 169 322 (9) (2) (11) Current Liabilities (42) - (42) 6,562 1,587 8,149 Total Assets less Liabilities 7,983 1,681 9,664 4,598 323 4,921 Revaluation Reserve 5,858 323 6,181 1,964 1,264 3,228 Common Good Fund 2,125 1,358 3,483 6,562 1,587 8,149 Total Net Worth 7,983 1,681 9,664 2020-21 2021-22 38. TAX INCREMENTAL FINANCING (TIF) PROJECTS The Council entered into an agreement with the Scottish Government in May 2014 in respect of the Lorn Arc Tax Incremental Finance (TIF) scheme. This agreement essentially allows for the repayment of debt arising from infrastructure investment from incremental Non-Domestic Rates (NDR) revenue. The assets to be funded by the TIF project largely comprise public realm and infrastructure improvements within the Lorn Arc area of Oban. The project is for 25 years, with the first material capital investment incurred during the financial year ended 31 March 2015. During the TIF project period, the Council is entitled to retain the TIF revenue from its NDR revenue, a pro-rata amount of NDR equal to the amount (if any) by which the collected amount exceeds the collectable amount. The Council is required to apply 100% of the TIF revenue towards repayment of the TIF debt. If all projects are delivered and debt is fully paid, the Council can retain 50% of the TIF revenue for further infrastructure investment until the end of the TIF period. Net capital expenditure incurred in the year to 31 March 2022, to be funded from borrowing, in respect of TIF assets totalled £0.049m (2020-21 £0.037m). This is reflected in the “Summary of Capital Expenditure and Financing” outlined within note 14.4. The total TIF debt to be repaid over the project period, in respect of investment to 31 March 2022, has been calculated in accordance with finance circular No. 4/2014 at £0.987m (2020-21 £0.939m). There is a retention of £0.336m of TIF income during 2021-22 (2020-21 £0.164m) to repay the notional borrowing for TIF. Principal sums accumulated by 2021-22 amount to £0.137m (2020-21 £0.132m) and cumulative interest £0.117m (2020-21 £0.115m) resulting in a net cumulative surplus of £1.103m (2020- 21 £0.773m) which will be used to pay down TIF debt per the TIF agreement and the balance of £0.252m will be placed in earmarked reserves to be used in future years to repay debt costs. Page 133
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 124 39. CASH FLOW STATEMENT – OPERATING ACTIVITIES The Net Cash Flows for Operating Activities can be reconciled to the Net (Surplus)/Deficit on the Provision of Services as follows: 2020-21 2021-22 £'000 £'000 (14,257) Net (Surplus)/Deficit on Provision of Services (15,016) (14,609) Statutory Adjustments through Statement of Movement in Reserves (3,379) 291 Transfer to/from Other Statutory Reserves 553 151 Increase/(Decrease) in Inventories (58) 2,311 Increase/(Decrease) in Debtors (2,487) (13,181) (Increase)/Decrease in Creditors and Provisions 3,312 (5,509) Other Revenue Adjustments (4,593) (30,546) (6,652) 5,063 Non Cash Capital 12,772 (2,592) Capital Element of Finance Lease Payments (4,844) 2,471 7,928 (42,332) Net Cash Flows from Operating Activities (13,740) 7,269 Interest Paid on Borrowings 7,074 2,592 Interest Paid on Finance Leases 4,844 (292) Interest Received on Bank Deposits (241) 9,569 Net Cash Outflow from Servicing of Finance 11,677 Adjustments to Net (Surplus)/Deficit on the Provision of Service for Non Cash Movements: Adjustments for items included in the Net (Surplus)/Deficit on the Provision of Services that are Investing and Financing Activities: The cash flows for Operating Activities include the following items: 40. CASH FLOW STATEMENT – INVESTING ACTIVITIES The cash flows for Investing Activities include the following items: 2020-21 2021-22 £'000 £'000 17,491 30,203 3,000 20,000 (612) (815) (12,139) (17,345) 7,740 Net Cash Outflow from Investing Activities 32,043 Purchase of Property, Plant and Equipment, Investment Property and Intangible and Heritage Assets Proceeds from the Sale of Property, Plant and Equipment and Investment Property Other Receipts from Investing Activities Investments made/(disposed of) during year Page 134
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Notes to the Financial Statements www.argyll-bute.gov.uk Page 125 41. CASH FLOW STATEMENT – FINANCING ACTIVITIES The cash flows for Financing Activities include the following items: 2020-21 2021-22 £'000 £'000 (332) (10,184) 313 1,892 2,592 4,844 5,166 1,055 7,739 Net Cash (Inflow)/Outflow from Financing Activities (2,393) Cash Payments for the Reduction of the Outstanding Liabilities relating to Finance Leases and on Balance Sheet PFI Contracts Other Receipts from Financing Activities Repayments of Short and Long Term Borrowing Cash Receipts of Short and Long Term Borrowing Page 135
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www.argyll-bute.gov.uk Page 126 Council Tax Income Account The Council Tax Income Account shows the gross income raised from council tax levied and deductions made under the Local Government Finance Act 1992. The resultant net income is transferred to the Comprehensive Income and Expenditure Statement of the Council. 2020-21 2021-22 Actual Actual £'000 £'000 70,624 Gross Council Tax Levied and Contributions in Lieu excluding RSL Second Home Additional Income 71,280 Less: (15,067) Other Discounts and Reductions (14,516) (1,484) Write-off of Uncollectable Debts and Allowance for Impairment (1,358) 54,073 Total 55,406 364 Adjustment to Previous Years' Community Charge and Council Tax 836 54,437 Transfers to General Fund 56,242 Page 136
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www.argyll-bute.gov.uk Page 127 Notes to the Council Tax Income Account 1. CALCULATION OF THE COUNCIL TAX Dwellings are valued by the Assessor and placed within a valuation band ranging from the lowest “A” to the highest “H”. The Council Tax charge is calculated using the Council Tax Base, Band D equivalent as below. This value is then decreased or increased dependent upon the band of the dwelling. The charge for each band for 2021-22 was as follows: Band Valuation Band £ per year A Up to £27,000 911.82 B £27,001 - £35,000 1,063.79 C £35,001 - £45,000 1,215.76 D £45,001 - £58,000 1,367.73 E £58,001 - £80,000 1,797.05 F £80,001 - £106,000 2,222.56 G £106,001 - £212,000 2,678.47 H Over £212,000 3,350.94 6/9 7/9 8/9 9/9 473/360 585/360 705/360 882/360 Ratio Band D 2. CALCULATION OF THE COUNCIL TAX BASE 2021-22 Council Tax Base A B C D E F G H Total Total Number of Properties 7,447 10,038 9,447 6,242 7,659 4,382 2,942 254 48,411 Less - 956 757 895 472 567 232 148 50 4,077 - 894 1,106 799 467 443 218 110 6 4,043 Effective Number of Properties 5,597 8,175 7,753 5,303 6,649 3,932 2,684 198 40,291 Band D Equivalent Factor (ratio) 67% 78% 89% 100% 131% 163% 196% 245% 3,731 6,358 6,892 5,303 8,736 6,390 5,256 485 43,151 Add Contribution in lieu in respect of Class 18 dwellings (Band D Equivalent) 499 Nominal Tax Yield 43,650 Less Provision for Council Tax Reduction Scheme 9.4% 4,104 Council Tax Base 2021-22 - Number of Band D equivalents 39,546 Exemptions / Deductions Adjustment for Single Chargepayers Band D Equivalent Number of Properties Page 137
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www.argyll-bute.gov.uk Page 128 Non Domestic Rate Income Account The Non-Domestic Rate Income 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 the Local Government (Scotland) Act 1975 as amended by the Local Government Finance Act 1992 on non-domestic property. The net income is paid to the Scottish Government as a contribution to the national non-domestic rate pool. 2020-21 2021-22 Actual Actual £'000 £'000 56,335 Gross rates levied and Contributions in Lieu 55,736 Less: (28,240) Reliefs and other deductions (25,366) - Payment of Interest - (281) Write-off of Uncollectable Debts and Allowance for Impairment (304) 27,814 Total Net Non-Domestic Rate Income 30,066 (2,914) Adjustments for prior years (4,024) - Business Rate Incentivisation Scheme (BRIS) NDR Income Retained - (164) Tax Incremental Finance (TIF) Scheme NDR Income Retained (336) 24,736 Contribution to National Non-Domestic Rate Pool 25,706 (1,452) Difference between Distributable and Contributable NDR Income amounts (636) 23,284 Distribution from Non-Domestic Rate Pool credited to Comprehensive Income and Expenditure Statement 25,070 Page 138
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www.argyll-bute.gov.uk Page 129 Notes to the Non Domestic Rate Income Account 1. ANALYSIS OF RATEABLE VALUES 2020-21 2021-22 £ £ 9,370,855 Industrial and freight transport subjects 9,355,020 73,835,770 Miscellaneous including Telecomms, Rail, Gas and Electricity Companies 75,263,110 Commercial subjects: 13,864,845 Shops 13,964,305 5,869,970 Offices 5,871,270 9,596,600 Hotels, Boarding Houses etc. 9,503,760 1,921,620 Others 1,921,820 114,459,660 Total Rateable Value 115,879,285 2. NON-DOMESTIC RATE CHARGE 2020-21 2021-22 Pence Pence 49.8p Rate Per Pound 49.0p 1.3p Supplementary Rate Per Pound for Properties between £51,000 and £95,000 1.3p 2.6p Supplementary Rate Per Pound for Properties over £95,000 2.6p 3. CALCULATION OF RATE CHARGE FOR EACH PROPERTY The rates charge for each subject is determined by the rateable value placed upon it by the Assessor multiplied by the Rate per £ announced each year by the Government. Page 139
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www.argyll-bute.gov.uk Page 130 Group Accounts - Introduction INTRODUCTION The Code of Practice on Local Authority Accounting in the United Kingdom 2021-22: Based on International Financial Reporting Standards, places a requirement on Councils to consider all their interests in external organisations including limited companies and other statutory bodies. Where the interest is considered to be material, the Council is required to prepare a full set of group accounts in addition to those prepared for Argyll and Bute Council. The Group Accounts are designed to show “a true and fair view” of the financial performance and position of the Council’s Group. THE GROUP ACCOUNTS The Group Accounts comprise the following financial statements: • Group Statement of Comprehensive Income and Expenditure: this statement shows the accounting cost in the year of providing the Council’s services and its share of the results of its associates in accordance with International Financial Reporting Standards, rather than the amount to be funded from taxation. Local authorities raise taxation to cover expenditure in accordance with regulations, and this is different from the accounting cost. The taxation position is shown in the Statement of Movement in Reserves. • Group Balance Sheet: The Balance Sheet is a snapshot of the value at the 31 March 2022 of the assets and liabilities recognised by the Council and its share of the net assets or liabilities of its associates and Common Good funds. The net assets of the Council (assets less liabilities) are matched by the reserves held by the Council. The net investment or liability in its associates is matched by its share of the reserves of the associates (i.e. its group reserves). • Group Statement of Movement in Reserves: this statement shows the movement in the year on the reserves held by the Council plus its share of the reserves of its associates. The Common Good reserves are also fully consolidated into the Group Accounts. The Council’s reserves are analysed into those which are “Usable Reserves” (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Council’s share of the reserves of Associates is an unusable reserve (i.e. it cannot be used to fund expenditure or reduce taxation). The Council’s Statement of Movement in Reserves gives a more detailed analysis of the movement in the Council’s usable and unusable reserves during 2021-22. • Group Cash Flow Statement: The Cash Flow Statement shows the changes in cash and cash equivalents of the Council and its associates Common Good Funds. The statement shows how the Group generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amounts of net cash flow arising from operating activities is a key indicator of the extent to which the operations of the Group are funded by way of taxation and grant income or from the recipients of services provided by the Group. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Group’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Group. Page 140
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www.argyll-bute.gov.uk Page 131 Group Statement of Comprehensive Income and Expenditure Gross Expenditure Gross Income Net Expenditure Gross Expenditure Gross Income Net Expenditure £'000 £'000 £'000 Service £'000 £'000 £'000 25,784 20,003 5,781 Chief Executive and Financial Services 25,714 18,837 6,877 130,969 22,977 107,992 Executive Director - Douglas Hendry 129,856 25,189 104,667 90,630 25,583 65,047 Executive Director - Kirsty Flanagan 105,485 34,846 70,639 147,227 85,655 61,572 Health and Social Care Integration 158,106 88,788 69,318 11,433 3,591 7,842 Other Non-Departmental Costs 10,718 251 10,467 1,981 5,010 (3,029) Associates and Joint Ventures Accounted for on an Equity Basis 2,125 9,390 (7,265) 408,024 162,819 245,205 Net Cost of Services 432,004 177,301 254,703 Other Operating Income and Expenditure: 6,286 Net (Gain)/loss on Disposal of Fixed Assets (103) 1,381 Other Operating Income and Expenditure 1,836 7,667 Total Other Operating Income and Expenditure 1,733 Financing and Investment Income and Expenditure: 16,211 Interest Payable and Similar charges 15,993 (955) Interest and Investment Income (805) 1,888 Net Pension Interest Expense 1,864 17,144 Total Financing and Investment Income and Expenditure 17,052 Taxation and Non-Specific Grant Income: (197,110) General Government Grants (191,432) (13,495) Government Capital Grants and Other Capital Contributions (21,700) (23,448) Non-domestic Rates Redistribution and Retained Non-domestic Rates (TIF & BRIS) (25,406) (54,437) Council Tax Income (56,242) (288,490) Total Taxation and Non-Specific Grant Income (294,780) (18,474) (Surplus)/Deficit on Provision of Services (21,292) (9,030) (Surplus)/Deficit on revaluation of Fixed Assets (27,995) 7,009 Other Post Employment Benefits (Pensions) (113,865) (591) Share of Other Comprehensive Income and Expenditure of Associates and Common Good Funds (2,111) (2,612) Other Comprehensive Income and Expenditure (143,971) (21,086) Total Comprehensive Income and Expenditure (165,263) 2020-21 2021-22 Page 141
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www.argyll-bute.gov.uk Page 132 Group Balance Sheet £'000 £'000 £'000 £'000 Long Term Assets Property Plant & Equipment 376,141 - Other Land and Buildings 414,852 9,945 - Vehicles, Plant, Furniture and Equipment 11,798 222,947 - Infrastructure Assets 230,478 10,848 - Community Assets 13,631 1,637 - Surplus Assets 1,408 25,599 - Assets Under Construction 35,344 647,117 Total Property Plant & Equipment 707,511 2,086 Heritage Assets 2,099 572 Intangible Assets 604 2,435 Investment Property 2,428 6,028 Long-Term Debtors 5,792 20,946 Long-Term Investments 3,699 - Other Long-Term Debtors (Pensions) 1,084 3,751 Investment in Associates and Joint Ventures 4,521 682,935 Total Long Term Assets 727,738 Current Assets 908 Inventories 863 20,541 Short Term Debtors (Net of Impairment) 18,382 1,865 Assets Held for Sale 1,509 45,000 Short Term Investments 82,500 38,011 Cash and Cash Equivalents 22,535 5,808 Investment in Associates and Joint Ventures 13,161 112,133 Total Current Assets 138,950 Current Liabilities (2,874) Short-term Borrowing (17,745) (45,952) Short-term Creditors (42,034) (7) Capital Grant Receipts in Advance - (2,356) Provisions (2,231) (4,842) Other Short Term Liabilities (5,117) (367) Liabilities in Associates and Joint Ventures (281) (56,398) Total Current Liabilities (67,408) Long-term Liabilities (167,418) Borrowing Repayable within a Period in Excess of 12 Months (161,657) (117,432) Other Long-term liabilities (112,313) (1,980) Provisions (2,079) (5,000) Capital Grant Receipts in Advance - (87,703) Other Long-term liabilities (Pensions) - (1,167) Liabilities in Associates and Joint Ventures - (380,700) Total Long-term Liabilities (276,049) 357,970 Total Assets less Liabilities 523,231 31 March 202231 March 2021 Page 142
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www.argyll-bute.gov.uk Page 133 Group Balance Sheet £'000 £'000 £'000 £'000 Unusable Reserves 135,392 - Revaluation Reserve 157,645 217,237 - Capital Adjustment Account 241,327 (2,524) - Financial Instruments Adjustment Account (2,198) (87,703) - Pensions Reserve 1,084 (7,206) - Accumulated Absences Account (6,928) 255,196 390,930 Usable Reserves 4,406 - Capital Funds 4,414 2,134 - Repairs and Renewals Funds 2,682 78,245 - General Fund Balance 96,087 84,785 103,183 9,861 Group Reserves 19,456 8,128 Common Good Reserves 9,662 357,970 Total Reserves 523,231 31 March 202231 March 2021 The Unaudited Annual Accounts were issued on 30 June 2022 and the Audited Accounts were authorised for issue on 24 November 2022. Kirsty Flanagan Section 95 Officer 24 November 2022 Page 143
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www.argyll-bute.gov.uk Page 134 Group Statement of Movement in Reserves Movements in 2021-22 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Total Unusable Reserves Total Reserves of the Council Total Live Argyll Reserves Usable Total Live Argyll Reserves Unusable £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2021 (78,245) (2,134) (4,406) (84,785) (260,585) (345,370) (8,024) (1,836) 5,389 (8,129) (357,970) (Surplus)/Deficit on Provision of Services (15,016) - - (15,016) - (15,016) (7,265) 1,159 - (170) (21,292) Other Comprehensive Income and Expenditure - - - - (137,279) (137,279) (2,111) (3,217) - (1,364) (143,971) Total Comprehensive Income and Expenditure (15,016) - - (15,016) (137,279) (152,295) (9,376) (2,058) - (1,534) (165,263) Total Statutory Adjustments (See Page 53 to 54) (3,379) - (815) (4,194) 4,194 - 1,839 (1,839) - - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (18,395) - (815) (19,210) (133,085) (152,295) (9,376) (219) (1,839) (1,534) (165,263) Transfer to/from Other Statutory Reserves 553 (548) 807 812 (810) 2 - - - - 2 (Increase)/Decrease in Year (17,842) (548) (8) (18,398) (133,895) (152,293) (9,376) (219) (1,839) (1,534) (165,261) Balance at 31 March 2022 Carried Forward (96,087) (2,682) (4,414) (103,183) (394,480) (497,663) (17,400) (2,055) 3,550 (9,663) (523,231) Council's Share of Reserves of Associates Total Common Good Reserves Total Reserves Other Transfers required by Statute Argyll and Bute Council Usable Reserves Page 144
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www.argyll-bute.gov.uk Page 135 Group Statement of Movement in Reserves Comparative Movements in 2020-21 General Fund Balance Repairs and Renewals Fund Capital Funds Total Usable Reserves Total Unusable Reserves Total Reserves of the Council £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 March 2020 (49,670) (1,843) (4,379) (55,892) (269,579) (325,471) (4,405) (520) 1,216 (7,705) (336,885) Surplus/(Deficit) on Provision of Services (14,257) - - (14,257) - (14,257) (3,029) (764) - (424) (18,474) Other Comprehensive Expenditure and Income - - - - (5,642) (5,642) (591) 3,621 - - (2,612) Total Comprehensive Expenditure and Income (14,257) - - (14,257) (5,642) (19,899) (3,619) 2,857 - (424) (21,085) Total Statutory Adjustments (See Page 55 to 56) (14,609) - (612) (15,221) 15,221 - - (4,173) 4,173 - - Net (Increase)/Decrease before Transfers to Other Statutory Reserves (28,866) - (612) (29,478) 9,579 (19,899) (3,619) (1,316) 4,173 (424) (21,085) Transfer to/from Other Statutory Reserves 291 (291) 585 585 (585) - - - - - - (Increase)/Decrease in Year (28,575) (291) (27) (28,893) 8,994 (19,899) (3,619) (1,316) 4,173 (424) (21,085) Balance at 31 March 2021 Carried Forward (78,245) (2,134) (4,406) (84,785) (260,585) (345,370) (8,024) (1,836) 5,389 (8,129) (357,970) Total Common Good Reserves Total Reserves Other Transfers required by Statute Argyll and Bute Council Usable Reserves Council's Share of Reserves of Associates Total Live Argyll Reserves Usable Total Live Argyll Reserves Unusable Page 145
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www.argyll-bute.gov.uk Page 136 Group Cash Flow Statement 2020-21 2021-22 £'000 Group Note £'000 (18,474) Net Deficit on the Provision of Services (21,292) (28,254) Adjustments to net surplus or deficit on the provision of services for non- cash movements (10,438) 2,471 Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities 8,155 (44,257) Net Cash OutFlow from Operating Activities 8 (23,575) 8,286 Investing Activities 9 41,442 7,741 Financing Activities 10 (2,391) (28,230) Net (Increase)/Decrease in Cash and Cash Equivalents 15,476 (9,781) Cash and Cash Equivalents at the beginning of the Reporting Period (38,011) (38,011) Cash and Cash Equivalents at the end of the Reporting Period (22,535) Page 146
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www.argyll-bute.gov.uk Page 137 Notes to the Group Financial Statements 1. GROUP ACCOUNTING POLICIES The group accounts are prepared in accordance with the policies set out in Note 1 to the Financial Statements. • The Strathclyde Partnership for Transport and Strathclyde Concessionary Travel Scheme Joint Committee financial statements have been prepared under the historic cost convention. 2. COMBINING ENTITIES The Council has an interest in a number of Associate Entities. For the purposes of consolidation and incorporation within the Group Accounts recognition has been made of the Council’s significant influence over Joint Boards and other entities. The Associates which have been incorporated are: • Dunbartonshire and Argyll & Bute Valuation Joint Board • Strathclyde Partnership for Transport • Strathclyde Concessionary Travel Scheme Joint Committee Under accounting standards, the Council is required to include the results of the above organisations as “associates” because it has “significant influence” over their financial and operating policies. The Council has no shares in or ownership of any of these organisations which are entirely independent of the Council under law and for taxation. Two of the three Joint Boards (SPT and Concessionary Travel) are included within the Group Accounts under the wider definition of an “associate” although the Council holds less than 20% of voting rights that is normally presumed to confer significant influence. This is in view of the funding arrangements between the constituent Councils and the Joint Boards. Live Argyll is a wholly owned subsidiary of Argyll and Bute Council and is consolidated within the group accounts on a line by line basis. The accounting period for all entities is 31 March 2022. 3. NON MATERIAL INTEREST IN OTHER ENTITIES The Council has an interest in Scotland Excel. Scotland Excel took up the activities of the Authorities Buying Consortium and similar bodies across the Scottish Local Authority sector on 1 April 2008. Renfrewshire Council prepare the financial statements for Scotland Excel in its role as lead authority. Scotland Excel is a not-for-profit organisation funded mainly by the 32 participating Scottish Local Authorities. The Council contributed £0.071m towards Scotland Excel in the 2021-22 financial year. The Council also has an interest in the Highlands and Islands Transport Partnership (HITRANS). The Partnership was established as one of the seven Scottish Regional Transport Partnerships. The Transport (Scotland) Act 2005 requires these Partnerships to prepare Transport Strategies for their regions which will enhance economic well-being; promote safety; social inclusion and equal opportunity; plan for a sustainable transport system; and integrate across boundaries with other partnerships. The Council has an interest in 57 Trust Funds where it acts as sole or custodian trustee. The funds do not represent assets of the Council. These entities are part of the Council’s group for the purposes of Group Accounts. As such it is recognised that the nature of the relationship with these bodies should be included within these notes. However, it has been decided that the Council’s share of the net worth of these entities is not material to a fair understanding of the financial position of the Council, and so they have not been consolidated into the Group Accounts. The Council inherited its interest in these entities following the reorganisation of local government in 1996. Page 147
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www.argyll-bute.gov.uk Page 138 Notes to the Group Financial Statements 4. ARGYLL AND BUTE INTEGRATION JOINT BOARD The Argyll and Bute Integration Joint Board was established as a body corporate by order of Scottish Ministers on 27 June 2015. The partnership between the Council and NHS Highland has been established in accordance with the provisions of the Public Bodies (Joint Working)(Scotland) Act 2014 and associated Regulations. The Integration Joint Board has responsibility for all health and social care functions relating to adults and children and will oversee the Strategic Planning and budgeting of these, together with corresponding service delivery for the residents of Argyll and Bute. The Council contributed £62.870 towards the Argyll and Bute Integration Joint Board in the 2021-22 financial year. The Council and NHS Highland are required to treat the IJB as a Joint Venture in their annual accounts and recognise a share of the overall surplus or deficit of the IJB for the year. 5. FINANCIAL IMPACT OF CONSOLIDATION The effect of inclusion of the Associates, Joint Ventures, Subsidiaries and Common Good Funds on the Group Balance Sheet is to increase both reserves and net worth by £25.568m. This gives an overall net asset position for the Group of £523.231m. All associates and subsidiaries have prepared their accounts on a ‘going concern’ basis. For Strathclyde Partnership for Transport and the Joint Valuation Board funding arrangements between the Scottish Government and constituent authorities remains assured. In common with these public bodies, 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. 6. FURTHER DETAILS ON CONSOLIDATION Strathclyde Partnership for Transport Strathclyde Partnership for Transport was formed on 1 April 2006 as the successor to the Strathclyde Passenger Transport Authority. It is a Joint Committee of all Councils in the West of Scotland plus Dumfries and Galloway Council. In association with the related Structure Planning Committees, the Partnership’s remit included the promotion of joint working to set out the policy framework for achieving the most effective management, development and integration of the transport network across boundaries in the medium to longer term through the Joint Transport Strategy. The Council contributed £0.409m or 1.14% of the Board’s estimated net running costs during 2021-22 and accounted for £5.523m of the Balance Sheet Assets within the Group Balance Sheet. The accounts of the Board are subject to independent audit and are available from the Treasurer to Strathclyde Partnership for Transport, Consort House, 12 West George Street, Glasgow G2 1HN. Strathclyde Concessionary Travel Scheme Joint Board This body comprises the 12 local authorities within the West of Scotland which oversees the operations of the concessionary fares scheme for public transport within its area. The costs of the scheme are met by a combination of funding from the 12 constituent councils and direct grant funding from the Scottish Government. During 2021-22 the Council contributed £0.206m or 5.04% of the net annual running costs and accounted for £0.232m of the Balance Sheet Assets within the Group Balance Sheet. The accounts of the Board are subject to independent audit and are available from the Treasurer to Strathclyde Concessionary Travel Scheme, Consort House, 12 West George Street, Glasgow G2 1HN. Live Argyll Live Argyll was established by Argyll and Bute Council and is limited by guarantee and was fully incorporated and commenced trading on 2 October 2017. The Trust is a charitable company registered in Scotland and provides a wide range of services within the Argyll and Bute area including libraries, leisure facilities, halls, sports development and community centres the assets of which are owned by the Council. During 2021-22 Argyll and Bute Council paid £3.938m in the form of a Management Fee to Live Argyll and reduced the overall net worth of the Group Balance Sheet by £1.495m. The board is made up of 3 independent board members, 3 Councillors and a Trade Union representative. Page 148
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www.argyll-bute.gov.uk Page 139 Notes to the Group Financial Statements Dunbartonshire and Argyll and Bute Valuation Joint Board This body was formed in October 1995 at Local Government reorganisation by a Statutory Instrument and is responsible for the maintenance of the electoral, council tax and non-domestic rates registers for Argyll and Bute, West Dunbartonshire and East Dunbartonshire Councils. The Board’s running costs are met by the three Councils. During 2021-22 Argyll and Bute Council contributed £1.47m towards estimated running costs and accounted for £0.032m of Balance Sheet Liabilities within the Group Balance Sheet. The accounts of the Board are subject to independent audit and will be available from the Valuation Joint Board’s website www.saa.gov.uk /dab-vjb/ and West Dunbartonshire Council’s website https://www.west-dunbarton.gov.uk/council/performance-and-spending/service- performance/financial-performance/ from 1 July 2022. The following disclosures are also required for Dunbartonshire and Argyll and Bute Valuation Joint Board because the Council’s interest exceeds the 25% threshold for accounting purposes:- 2020-21 2021-22 £'m £'m Argyll and Bute Council has a 49.69% share of: 2.898 Gross Income 2.958 0.213 Net (Surplus)/Deficit 0.245 0.640 Long Term Assets 0.674 0.897 Current Assets 0.994 (0.206) Liabilities due within one year (0.065) - Liabilities due over one year - (2.426) Pension Liability (0.507) (1.095) Capital and Revenue Reserves (2.110) 7. REPORTING AUTHORITY ADJUSTMENTS A number of adjustments are required to the Council’s Statement of Comprehensive Income and Expenditure (pages 52 to 53) for group accounting purposes. These can be summarised as follows: • All intra-group transactions have been removed from the Group Accounts as part of the subsidiary consolidation process. • The Common Good Funds described in note 37 of the Notes to the Financial Statements on pages 122 to 123 have been fully consolidated into the Group Accounts. This adjustment increases the net assets and reserves of Argyll and Bute Council’s Group by £9.664m. Page 149
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www.argyll-bute.gov.uk Page 140 Notes to the Group Financial Statements 8. GROUP CASH FLOW STATEMENT – OPERATING ACTIVITIES 2020-21 2021-22 £'000 £'000 (18,474) Net (Surplus)/Deficit on Provision of Services (21,292) (14,609) Statutory Adjustments through Statement of Movement in Reserves (1,540) 291 Transfer to/from Other Statutory Reserves 553 1,849 Transfer Group Other Comprehensive Income and Expenditure (5,309) 143 Increase/(Decrease) in Inventories (45) 2,260 Increase/(Decrease) in Debtors (2,463) (13,143) (Increase)/Decrease in Creditors and Provisions 3,056 (5,045) Other Revenue Adjustments (4,690) (28,254) (10,438) 5,063 Non Cash Capital 12,999 (2,592) Capital Element of Finance Lease Payments (4,844) 2,471 8,155 (44,257) Net Cash Flows from Operating Activities (23,575) 7,269 Interest Paid on Borrowings 7,074 2,592 Interest Paid on Finance Leases 4,844 (292) Interest Received on Bank Deposits (241) 9,569 Net Cash Outflow from Servicing of Finance 11,677 Adjustments to Net (Surplus)/Deficit on the Provision of Service for Non Cash Movements: Adjustments for items included in the Net (Surplus)/Deficit on the Provision of Services that are Investing and Financing Activities: The cash flows for Operating Activities include the following items: 9. GROUP CASH FLOW STATEMENT – INVESTING ACTIVITIES 2020-21 2021-22 £'000 £'000 17,491 30,244 3,000 20,000 (612) (815) 546 9,358 (12,139) (17,345) 8,286 Net Cash Outflow from Investing Activities 41,442 Investments made/(disposed of) during year Purchase of Property, Plant and Equipment, Investment Property and Intangible and Heritage Assets Net Receipts from Investment in Associates and Joint Ventures Proceeds from the Sale of Property, Plant and Equipment and Investment Property Other Receipts from Investing Activities Page 150
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www.argyll-bute.gov.uk Page 141 Notes to the Group Financial Statements 10. GROUP CASH FLOW STATEMENT – FINANCING ACTIVITIES 2020-21 2021-22 £'000 £'000 (332) (10,184) 313 1,892 2,592 4,844 5,168 1,057 - - 7,741 Net Cash (Inflow)/Outflow from Financing Activities (2,391) Other Payments from Financing Activities Cash Receipts of Short and Long Term Borrowing Other Receipts from Financing Activities Cash Payments for the Reduction of the Outstanding Liabilities relating to Finance Leases and on Balance Sheet PFI Contracts Repayments of Short and Long Term Borrowing Page 151
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www.argyll-bute.gov.uk Page 142 Independent Auditor’s Report Independent auditor’s report to the members of Argyll and Bute 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 Argyll and Bute Council and its group for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973. The financial statements comprise the group and council-only Statements of Comprehensive Income and Expenditure, Balance Sheets, Statements of Movement in Reserves, and Cash Flow Statements, notes to the financial statements, including a summary of significant accounting policies and council-only Expenditure and Funding Analysis, Council Tax Income Account, and Non-Domestic Rate Income Account. 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 2021/22 (the 2021/22 Code). In my opinion the accompanying financial statements: • give a true and fair view in accordance with applicable law and the 2021/22 Code of the state of affairs of the council and its group as at 31 March 2022 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 2021/22 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 26 September 2022. The period of total uninterrupted appointment is one year. 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 Page 152
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www.argyll-bute.gov.uk Page 143 Independent Auditor’s Report 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 Section 95 Officer and Argyll and Bute Council’s Audit and Scrutiny Committee for the financial statements As explained more fully in the Statement of Responsibilities, the Section 95 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 Section 95 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 Section 95 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 Scrutiny Committee is responsible for overseeing the financial reporting process. 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: • obtaining an understanding of the applicable legal and regulatory framework and how the council and its group is complying with that framework; • identifying which laws and regulations are significant in the context of the council and its group; • assessing 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. Page 153
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www.argyll-bute.gov.uk Page 144 Independent Auditor’s Report 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 part of the Remuneration Report I have audited the part of the Remuneration Report described as audited. In my opinion, the audited part of the Remuneration Report has been properly prepared in accordance with The Local Authority Accounts (Scotland) Regulations 2014. Other information The Section 95 Officer is responsible for other information in the annual accounts. The other information comprises the Management Commentary, Annual Governance Statement, Statement of Responsibilities and the unaudited part 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. 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 Page 154
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www.argyll-bute.gov.uk Page 145 Independent Auditor’s Report • 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 am 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 part 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; or • there has been a failure to achieve a prescribed financial objective. 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 120 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. Pauline Gillen CPFA Audit Director Audit Scotland 4th Floor, South Suite Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Page 155
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www.argyll-bute.gov.uk Page 146 Glossary of Terms Existing Use Value. The market value of a particular Council property, less the difference between the average rental income between public and private sector properties. Expected Rate of Return on Pension Assets. The average rate of return, including both income and changes in fair value but net of scheme expenses, expected over the remaining life of the related obligation on the actual assets held by the Scheme. Fair Value. This is the price at which an asset could be exchanged in an arm’s length transaction less any grants receivable towards the purchase or use of the asset. Financial Asset. A right to future economic benefits controlled by the Council that is represented by cash, an equity instrument of another entity, a contractual right to receive cash from another entity or a financial right to exchange financial instruments under conditions that are potentially favourable to the Council. Financial Instrument. Any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another. Financial Instruments Adjustment Account. This holds the accumulated difference between the financing costs included in the Income and Expenditure Account and the accumulated financing costs required in accordance with regulations to be charged to the General Fund Balance. Financial Liability. An obligation to transfer economic benefits controlled by the Council that is represented by a contractual obligation to deliver cash or another financial asset to another entity or a contractual obligation to exchange financial instruments under conditions which are potentially unfavourable to the Council. Financial Reporting Standard (FRS). Financial Reporting Standards are issued by the Accounting Standard Board and define proper accounting practice for a given transaction or event. Fixed Assets. Tangible assets that yield benefits to the Council and the services it provides for a period of more than one year. Gains/losses on settlements and curtailments. The result of actions to relieve the Council of liabilities or events that reduce the expected future service or accrual of benefits of employees. This is charged or credited to Non Distributed costs in the Comprehensive Income and Expenditure Statement. General Fund Balance. This contains the net surplus on the provision of Council services combined with any balances from previous years and any contributions to other funds or reserves made during the year. Group Accounts. The purpose of group accounts is to show the Council’s interest in organisations and companies within the Financial Statements. The Council’s shares of the assets and liabilities of these other entities are shown in the Group Movement in Reserves Statement, Comprehensive Income and Expenditure Statement and Group Balance Sheet. Government Grants. Assistance by government and inter- government agencies and similar bodies, whether local, national or international, in the form of cash or transfers of assets to an authority in return for past, or future, compliance with certain conditions relating to the activities of the Council. Heritage Assets. Assets which are intended to be preserved in trust for future generations because of their cultural, environmental and historical associations and are held by the Council of the maintenance of heritage. International Accounting Standards (IAS). International Accounting Standards are issued by the International Accounting Standards Board and define proper accounting practice for a given transaction or event. IAS’s take precedence over other accounting standards in the hierarchy of technical accounting standards. International Public Sector Accounting Standards (IPSAS), a set of accounting standards issued by the IPSAS Board for use by public sector entities around the world in the preparation of financial statements. Impairment. A reduction in the value of fixed or financial asset below the valuation held on the balance sheet. Infrastructure Assets. Fixed assets that are inalienable, expenditure on which is recoverable only by continued use of the asset created. Examples of infrastructure assets are highways and footpaths. Intangible Assets. Non-financial assets which do not have physical substance but are identifiable and are controlled by the Council. Interest Cost (Pensions). The expected increase during the period in the present value of the scheme liabilities because the benefits are one period closer to settlement. Inventories. Inventories may comprise the following: goods or other assets purchased for re-sale; consumable stores; raw materials and components purchased for incorporation into products for sale; products and services in intermediate stages of completion; long term contract balances; and finished goods. Liquid Resources. Current asset investments that are readily disposable by the Council without disrupting its business and are either readily convertible to known amounts of cash at or close to the carrying amount, or traded on the active market. Page 156
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www.argyll-bute.gov.uk Page 147 Glossary of Terms Materiality. Information is included where the information is of such significance as to justify its inclusion, and omission or misstatement could, individually or collectively, influence the decisions or assessments of users made on the basis of the financial statements. National Non-Domestic Rates Pool. All non-domestic rates collected by Council’s are remitted to the national pool and, thereafter, distributed to Councils by the Scottish Government. Net Book Value. The amount at which fixed assets are included in the Balance Sheet, i.e. their historical cost or current value less cumulative amounts provided for depreciation. Net Realisable Value. The open market value of the asset in its existing use, or open market value in the case of non- operational assets, less the expenses to be incurred in realising the asset. Non-Current Assets. Non-current assets are not expected to be realised within 12 months and are held to provide future economic benefits to the Council. Non-operational assets. Are assets held by the Council but not directly occupied, used or consumed in the delivery of services. Examples of non-operational assets are investment properties and assets that are surplus to requirements, pending sale or redevelopment. Officers’ Remuneration. All sums paid to or receivable by an employee and sums due by way of expenses allowances (as far as those sums are subject to UK Income Tax). Operating Leases. A lease other than a finance lease, i.e. a lease which does not transfer the risks and rewards of ownership to the lessee. Operating Assets. All items which derive from events or transactions that fall within the ordinary activities of the Council and which need to be disclosed separately by virtue of their size or incidence to give fair presentation of the accounts. Past Service Costs (Pensions). The increase in the present value of the scheme liabilities related to employee service in prior periods arising in the current period as a result of the introduction of, or improvement to, retirement benefits. Pensions Reserve. The Pensions Reserve absorbs the timing differences arising from different arrangements for accounting for post-employment benefits and for funding benefits in accordance with statutory provisions. Prior Period Adjustments. Those material adjustments applicable to prior years arising from changes in accounting policies or from the correction of fundamental errors. They do not include normal recurring corrections or adjustments of accounting estimates made in prior years. Public Private Partnerships (PPP). Those partnerships enable the Council to purchase services from the private sector and pay a fee based on pre-defined output criteria. The private sector uses this fee to repay loans taken out to finance the building or refurbishment of the assets. Residual Value. The net realisable value of an asset at the end of its useful life. Related Party Transactions. A related party transaction is the transfer of assets or liabilities, or the performance of services by, to or for a related party irrespective of whether a charge is made. Renewal and Repairs fund. This contains funds credited at the Council’s discretion from the General Fund and is available for use on capital or revenue expenditure on Council assets. Revaluation Reserve. Records unrealised gains arising since 1 April 2007 from holding fixed assets not yet realised through sales. Service Expenditure Analysis (SEA). An analysis which groups together expenditure on services within headings or divisions as defined in the Service Reporting Code of Practice (SeRCOP). Specific Government Grants. These are grants received from Central Government in respect of a specific purpose or service. Unusable Reserves. Those reserves which hold unrealised gains and losses where amounts would only become available to provide services if the assets are sold and reserves that hold timing differences. Usable Reserve. Those reserves which the Council may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use. Useful Life. The period over which the Council will derive benefits from the use of a fixed asset. Page 157
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www.argyll-bute.gov.uk Page 148 Appendix A Trade Union Facility Time Statement 2021-22 This information is published under the Trade Union (Facility Time Publication Requirements) Regulations 2017 Schedule 2 (Regulation 8) Table 1: Relevant Union Officials Total number of employees who were relevant union officials during the relevant period. Number of employees who were relevant union officials during the relevant period Full time equivalent employee number Central Function 18 17.4 Education Function 8 7.8 Note: The headcount figure for relevant union officials includes all stewards and school based reps who are elected by their peers to provide first line support for members. Table 2: Percentage of Time Spent on Facility Time Number of employees who were relevant union officials employed during the relevant period who spent a) 0%, b) 1%-50%, c) 51%-99% or d) 100% of their working hours on facility time. Percentage of time Number of employees Central Function Education Function 0% 0 5 1% - 50% 17 2 51% - 99% 1 0 100% 0 1 Page 158
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www.argyll-bute.gov.uk Page 149 Table 3: Percentage of Pay Bill Spent on Facility Time The percentage of the total pay bill spent on paying employees who were relevant union officials for facility time during the relevant period. Central Function Education Function The total cost of facility time £119,964 £64,715 The total pay bill £106,970,507 £52,279,467 The percentage of the total pay bill spent on facility time 0.11% 0.12% Table 4: Paid Trade Union Activities Percentage of total paid facility time hours spent by employees who were relevant union officials during the relevant period on paid trade union activities. Central Function Education Function Time spent on paid trade union activities as percentage of total paid facility time hours calculated as: (total hours spent on paid trade union activities by relevant union officials during the relevant period ÷ total paid facility time hours) x 100 0% 0% Page 159
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 SC019599 McCaig Trust SC019607 Marquess of Bute Silver Wedding Dowry SC013578 Baillie Gillies Bequest SC013600 Kidston Park Trust SC018697 Miss Annie Dickson Bequest SC018698 Logie Baird Prize Fund SC020382 Argyll Education Trust SC021328 Oban Common Good Page 160
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid McCaig Trust AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 Scottish Charity Number: SC019599 Page 161
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McCaig Trust Contents Page 1 Page Trustees’ Annual Report 2 - 6 Independent Auditor’s Report 7-10 Statement of Financial Activities 11 Balance Sheet 12 Notes to the Financial Statements 13 - 15 Page 162
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McCaig Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 2 The Trustees present their annual report together with the financial statements and the Independent Auditor’s report for the year ended 31 March 2022. REFERENCE AND ADMINISTRATION INFORMATION Charity Name: McCaig Trust Scottish Charity Number: SC019599 Principal Office: Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Current Trustees: Councillor James Anderson Councillor John Armour Councillor William Gordon Blair Councillor Paul Collins (from Jan2022) Councillor Rory Colville Councillor Robin Currie Councillor Mary-Jean Devon Councillor Lorna Douglas Councillor James Findlay Councillor Audrey Forrest Councillor George Freeman Councillor Bobby Good Councillor Kieron Green Councillor Graham Archibald Hardie Councillor Anne Horn Councillor Donald Kelly Councillor David Kinniburgh Councillor James Lynch Councillor Donald MacMillan Councillor Liz McCabe Councillor Roderick Mccuish Councillor James McGrigor Councillor Julie McKenzie Councillor Yvonne McNeilly Councillor Jean Moffat Councillor Barbara Morgan (resigned Oct 21) Councillor Aileen Morton Councillor Gary Mulvaney Councillor Iain Paterson Councillor Gemma Penfold Councillor Douglas Philand Councillor Alastair Redman Councillor Alan Reid Councillor Elaine Robertson Page 163
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McCaig Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 3 Current Trustees continued: Councillor Alexander Taylor Councillor Richard Trail Councillor Andrew Vennard Honorary Secretary: Douglas Hendry Executive Director Argyll and Bute Council Honorary Treasurer: Kirsty Flanagan FCCA,CPFA,ACIBS Section 95 Officer Argyll and Bute Council Independent Auditor: Kyle McAulay CA Senior Audit Manager 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Document The town council shall in the building proposed to be erected by them at Corran Parks, Oban, accommodation for the McCaig Memorial Institute including accommodation for a reference library, lending library, reading room and museum and shall equip and furnish said accommodation all to the satisfaction of the governing body. Appointment of Trustees The trustees of the charities are the elected members (councillors) of Argyll and Bute Council. Trustees are appointed through their election to Argyll and Bute Council. Organisational Structure The trustees (as the elected members of the council) meet once a year at the Annual General Meeting (AGM) to consider and approve the annual report and financial statements and any other business such as future plans and the reorganisation of trust funds. The trustees delegate the day to day administration of the charities to officers of the Council. The Council has established a range of committees with delegated powers to allow it to discharge its business effectively. This includes the management of charities. The Council has an approved constitution that governs the conduct of business by the Council and covers standing orders for meetings, a scheme of administration and delegation, financial and security regulations, contract standing orders and an ethical framework. Related Parties Trustees hold this position because they are elected members of Argyll and Bute Council. Argyll and Bute Council provides administration services to the Charity at no cost to the Trust. Page 164
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McCaig Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 4 Risk Management The Section 95 Officer of Argyll and Bute Council has taken the steps required by trustees to consider the major risks to which the charity is exposed, in particular those related to its operation and finance, and to be satisfied that systems are in place to mitigate the exposure to the major risks. Management of Funds and Investment Policy The Trustees rely upon the expertise of Argyll and Bute Council to manage the investments to ensure the maximum return at least risk to the Charity. In this way, the income stream for the future benefit of the charity is protected. The Section 95 Officer of the Council is responsible for securing the proper management of the investments of the Charity. The day-to-day management of investments is performed by external investment managers under a discretionary agreement. OBJECTIVES AND ACTIVITIES The object of the fund is to contribute towards the cost of a library and institute in Oban. ACHIEVEMENTS AND PERFORMANCE In the year to 31 March 2022, there was one grant awarded of £803 (2020-21 – £1,288). FINANCIAL REVIEW Investments and Reserves The funds decreased by £701 (2020-21 decreased by £1,170). The reserves of the trust at 31 March 2022 amount to £81,783, £46,645 in unrestricted (revenue) funds and £35,138 in endowment (capital) funds. These funds are invested as follows: 31 March 2021 31 March 2022 £ £ Local Government Bonds 7,600 7,600 Investments in Endowment Funds 7,600 7,600 Debtor Barclays Wealth Undistributed income - - Cash and Bank - Argyll & Bute Council 74,884 74,183 82,484 81,783 Current Assets in Restricted Funds 35,138 35,138 Current Assets in Unrestricted Funds 47,346 46,645 Total Funds 82,484 81,783 Over the year, the value of investments remained at £7,600 and £74,183 was invested in the Councils loans fund. The change in cash balances from £74,884 to £74,183 is due to investment income receivable of £102 offset by grants paid out of £803. Page 165
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McCaig Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 5 Reserves Policy Unrestricted free reserves at 31 March 2022 were £46,645. The Trust has no explicit reserves policy, but the endowment funds of the Charity are held for capital growth and to provide an annual income. Income only from the investments may be distributed on an annual basis to ensure that the original funds grow over time. No specific targets have been set for either the endowment or unrestricted funds. Any unspent income is held in the unrestricted funds. Income and Expenditure The Statement of Financial Activities on page 7 provides an analysis of the income and expenditure for the twelve months to 31 March 2022. Income for the year amounted to £102 (2020-21 - £118). £7 (2020-21 - £0) came from deposits with Argyll and Bute Council and £95 (2020-21 - £118) from Local Bond interest. TRUSTEES' RESPONSIBILITIES STATEMENT The trustees are responsible for preparing the trustees' report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards. The law applicable to charities in Scotland requires the charity trustees to prepare financial statements for each year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources, of the charity for that period. In preparing these financial statements, the trustees are required to: • select suitable accounting policies and then apply them consistently; • observe the methods and principles in the applicable Charities SORP; • make judgments and accounting estimates on a reasonable basis; • state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business. CONCLUSION The reserves of the Charity decreased by £701 in the year. The trust made 1 award during the year. Since 2013-14 an audit is required to be carried out by the appointed auditor of Argyll and Bute Council in accordance with the requirements of the Local Government (Scotland) Act 1973. The appointed auditor of Argyll and Bute Council is Audit Scotland and the Trustees would like to thank them for undertaking this task. Page 166
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McCaig Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 6 DECLARATION Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA,CPFA,ACIBS Honorary Treasurer Page 167
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McCaig Trust Independent Auditor’s Report – For the Year ended 31 March 2022 Page 7 Independent auditor’s report to the trustees of the McCaig Trust 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 statement of accounts of the McCaig Trust for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Financial Activities, the Balance Sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and the United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In my opinion the accompanying financial statements: • give a true and fair view of the state of affairs of the charity as at 31 March 2022 and of its incoming resources and application of resources for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulation 8 of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. 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 charity’s ability 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. Page 168
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McCaig Trust Independent Auditor’s Report – For the Year ended 31 March 2022 Page 8 Responsibilities of the trustees for the financial statements The trustees are 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 trustees 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 trustees are responsible for assessing the charity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees intend to discontinue the charity’s operations, or have no realistic alternative to do so. 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 economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity is complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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. Page 169
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McCaig Trust Independent Auditor’s Report – For the Year ended 31 March 2022 Page 9 Reporting on other requirements Other information The trustees are responsible for other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit, the information given in the Trustees' Annual Report 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 Charities SORP (FRS 102). Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. Page 170
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McCaig Trust Independent Auditor’s Report – For the Year ended 31 March 2022 Page 10 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 171
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McCaig Trust Statement of Financial Activities Page 11 STATEMENT OF FINANCIAL ACTIVITIES FOR YEAR ENDING 31 MARCH 2022 Note Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ INCOMING RESOURCES Incoming resources from generating funds: Investment income from managed funds 5 118 95 - 95 Interest from short-term deposits - 7 - 7 Donated Services (Audit) 6 41 45 45 Total Incoming Resources 159 147 - 147 RESOURCES EXPENDED Audit fee 6 41 45 - 45 Charitable Activities: Grants awarded 7 1,288 803 - 803 Total Resources Expended 1,329 848 - 848 Net Incoming/(Outgoing) Resources before Other Recognised Gains/(Losses) (1,170) (701) - (701) Total funds brought forward 10 83,654 47,346 35,138 82,484 Total funds carried forward 82,484 46,645 35,138 81,783 All incoming resources and resources expended derive from continuing activities. The notes on pages 13 to 15 form an integral part of these financial statements. Page 172
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McCaig Trust Balance Sheet as at 31 March 2022 Page 12 BALANCE SHEET AS AT 31 MARCH 2022 Note Unrestricted Funds Permanent Endowmen t Funds 2021 Unrestricte d Funds Permanent Endowmen t Funds 2022 £ £ £ £ £ £ Fixed Assets Investments 8 - 7,600 7,600 - 7,600 7,600 Total Fixed Assets - 7,600 7,600 - 7,600 7,600 Current Assets Cash at Bank and at Hand 9 47,346 27,538 74,884 46,645 27,538 74,183 Total Current Assets 47,346 27,538 74,884 46,645 27,538 74,183 Total Assets 47,346 35,138 82,484 46,645 35,138 81,783 Funds of the Charity Unrestricted Funds 47,346 - 47,346 46,645 - 46,645 Endowment Funds - 35,138 35,138 - 35,138 35,138 Total Charity Funds 47,346 35,138 82,484 46,645 35,138 81,783 The notes on pages 13 to 15 form an integral part of these financial statements. Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 173
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McCaig Trust Notes to the Financial Statements Page 13 1. Basis of Preparation The principal accounting policies are summarised below. The accounting policies have been applied consistently throughout the year and the preceding year. 1.1. Basis of Accounting The financial statements are prepared under the historic cost convention and in accordance with: a) Accounting and Reporting by Charities – Statement of Recommended Practice (SORP 2019 - 2nd Edition); and the Financial Reporting Standard for Smaller Entities FRS102 b) The Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). 2. Accounting Policies 2.1. Form of Financial Statements a) Unrestricted funds are those that may be used at the discretion of the trustees in the furtherance of the objects of the charity. b) The permanent endowment funds are invested in perpetuity and derive an annual investment income which is available for distribution. 2.2 Incoming Resources a) All incoming resources are recognised and included in the Statement of Financial Activities when the charity becomes entitled to the resources; the trustees are virtually certain they will receive the resources and the monetary value can be measured with sufficient reliability. The following specific policies are applied to particular categories of income. b) Income from investments is included in the year to which it relates. c) Investments gains and losses includes any gain or loss on the sale of investments and any gain or loss resulting from revaluing investments to market value at the end of the year. d) The value of the services provided free of charge by Argyll and Bute Council has not been included in the accounts but is described in the trustees’ annual report. 2.3 Resources Expended a) All expenditure is included in the Statement of Financial Activities on an accrual basis and is recognised when there is a legal or constructive obligation to pay out resources. 3. Taxation The charity is not liable to income or capital gains tax on its charitable activities. Irrecoverable VAT is included in the expense to which it relates. Page 174
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McCaig Trust Notes to the Financial Statements Page 14 4. Trustee Remuneration, Expenses and Related Party Transactions (a) No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year (2020-21 - £0). (b) The trust received interest of £7 (2020-21 £0) from Argyll & Bute Council on unrestricted reserves placed on short-term deposit with them and also local bond interest of £95 (2020-21 - £118). All transactions incoming and outgoing are made via the Council’s accounts. (c) There were no other transactions between the charity and any trustee or any connected person during the year (2020-21 - £0). 5. Investment Income Total Funds 2021 Unrestricted Funds Permanent Endowment Fund Total Funds 2022 £ £ £ £ Income from Local Government Bond 118 95 - 95 Interest on Short-term deposits with Argyll and Bute Council - 7 - 7 Total Investment Income 118 102 - 102 6. Audit Fees The independent auditor’s fee is a donated service amounting to £45 (2020-21 – £41). 7. Grants Awarded In the year to 31 March 2021, there was one grant awarded of £803 (2020-21 – £1,288). 8. Fixed Asset Investments £ Carrying (market) value at 1 April 2021 7,600 Add: additions to investments at cost - Add/(deduct): net gain/loss on revaluation Add/(deduct): change in uninvested cash balance in Capital Account - Deduct sales proceeds Carrying (market) value at 31 March 2022 7,600 Analysis of Investments Investments listed on recognised stock exchange - Local Government Bonds 7,600 Cash held as part of the investment portfolio - Total 7,600 Page 175
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McCaig Trust Notes to the Financial Statements Page 15 The charity holds two three-year fixed term deposit local bonds from Argyll and Bute Council, one for £600 with a rate of 0.61% repayable on 31st March 2024, and the other for £7,000 with a rate of 1.04% repayable on 30th September 2024 in a continuation of historic practice. An analysis of the net assets between funds for current and comparative figures is provided in the balance sheet. 9. Cash and Bank Balances Unrestricted Funds Permanent Endowment Funds Total Funds £ £ £ Short-term deposits with Argyll and Bute Council: Carrying value at 1 April 2021 47,346 27,538 74,884 Add: lodgements during year 102 - 102 (Less): withdrawals during year (803) - (803) Cash and Bank at 31 March 2022 46,645 27,538 74,183 During the year the above short term deposits were held by Argyll and Bute Council, which manages the administration of the funds on behalf of the Trustees. The Council also acts as the banker for the charity and, as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. No costs were incurred by the trust for this work. The balances are repayable on demand. Interest is payable on balances. 10. Movement in Funds At 1 April 2021 Incoming Resources Outgoing Resources Gains/ Losses At 31 March 2022 £ £ £ £ Unrestricted Revenue Funds 47,346 147 (848) - 46,645 Permanent Endowment Funds 35,138 - - - 35,138 Total Funds 82,484 147 (848) 0 81,783 Page 176
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid Marquess of Bute Silver Wedding Dowry AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 Scottish Charity Number SC019607 Page 177
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Marquess of Bute Silver Wedding Dowry Contents Page Trustees’ Annual Report 2 - 5 Independent Auditors Report 6 - 8 Statement of Receipts and Payments 9 Statement of Balances 10 Notes to the Financial Statements 11 Page 178
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Marquess of Bute Silver Wedding Dowry Trustees’ Annual Report – For the Year ended 31 March 2022 Page 2 The Trustees present their annual report together with the financial statements and the Independent Auditor’s report for the year ended 31 March 2022. REFERENCE AND ADMINISTRATION INFORMATION Charity Name: Marquess of Bute Silver Wedding Dowry Charity Number: SC019607 Principal Office: Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Current Trustees: Councillor James Anderson Councillor John Armour Councillor William Gordon Blair Councillor Paul Collins (from Jan 2022) Councillor Rory Colville Councillor Robin Currie Councillor Mary-Jean Devon Councillor Lorna Douglas Councillor James Findlay Councillor Audrey Forrest Councillor George Freeman Councillor Bobby Good Councillor Kieron Green Councillor Graham Archibald Hardie Councillor Anne Horn Councillor Donald Kelly Councillor David Kinniburgh Councillor James Lynch Councillor Donald MacMillan Councillor Liz McCabe Councillor Roderick Mccuish Councillor James McGrigor Councillor Julie McKenzie Councillor Yvonne McNeilly Councillor Jean Moffat Councillor Barbara Morgan (Resigned Oct 2021) Councillor Aileen Morton Councillor Gary Mulvaney Councillor Iain Paterson Councillor Gemma Penfold Councillor Douglas Philand Councillor Alastair Redman Councillor Alan Reid Page 179
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Marquess of Bute Silver Wedding Dowry Trustees’ Annual Report – For the Year ended 31 March 2022 Page 3 Current Trustees continued: Councillor Elaine Robertson Councillor Alexander Taylor Councillor Richard Trail Councillor Andrew Vennard Honorary Secretary: Douglas Hendry Executive Director Argyll and Bute Council Honorary Treasurer: Kirsty Flanagan FCCA,CPFA,ACIBS Section 95 Officer Argyll and Bute Council Independent Auditor: Kyle McAulay CA Senior Audit Manager 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Document £1,000 was given by John Patrick Crichton-Stuart, 3rd Marquess of Bute, on 12 April 1897 (the date of his silver wedding) to Rothesay Town Council. Noted in the Rothesay Town Council Minutes 12th April 1897 and 10th May 1897. Appointment of Trustees The trustees of the charities are the elected members (councillors) of Argyll and Bute Council. Trustees are appointed through their election to Argyll and Bute Council. Organisational Structure The trustees (as the elected members of the council) meet once a year at the Annual General Meeting (AGM) to consider and approve the annual report and financial statements and any other business such as future plans and the reorganisation of Charities. The trustees delegate the day to day administration of the charities to officers of the Council. The Council has established a range of committees with delegated powers to allow it to discharge its business effectively. This includes the management of charities. The Council has an approved constitution that governs the conduct of business by the Council and covers standing orders for meetings, a scheme of administration and delegation, financial and security regulations, contract standing orders and an ethical framework. Related Parties Trustees hold this position because they are elected members of Argyll and Bute Council. Argyll and Bute Council provides administration services to the Charity. Page 180
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Marquess of Bute Silver Wedding Dowry Trustees’ Annual Report – For the Year ended 31 March 2022 Page 4 Risk Management The Section 95 Officer of Argyll and Bute Council has taken the steps required by trustees to consider the major risks to which the charity is exposed, in particular those related to its operation and finance, and to be satisfied that systems are in place to mitigate the exposure to the major risks. Management of Funds and Investment Policy The Trustees rely upon the expertise of Argyll and Bute Council to manage the investments to ensure the maximum return at least risk to the charity. In this way, the income stream for the future benefit of the charity is protected. The funds of the charity are deposited with Argyll and Bute Council. There are two local bonds with a total of £2,400 (see note 7). For the balance of the funds the charity receives interest at the average market rate for the Council’s borrowing. The interest received from Argyll and Bute Council is shown in the Statement of Receipts and Payments. OBJECTIVES AND ACTIVITIES The objective of the fund is to provide a donation to one or two girls from the poorer classes on their wedding. ACHIEVEMENTS AND PERFORMANCE In the year to 31 March 2022, there were no grants awarded. (20-21 – £500). FINANCIAL REVIEW Overview No grants were awarded during 2021-22 (2020-21 - £500). Income during 2021-22 came from interest from deposits with Argyll and Bute Council of £5 (2020-21 - £0) and local bond interest of £30 (2020-21 - £31). The Charity held cash and bank of £7,269 as at 31 March 2022 (2020-21 - £7,234) and local bonds totalling £2,400 (2020-21 - £2,400). Reserves Policy The unrestricted free reserves at the financial year-end were £6,269 (2020-21 £6,234). This includes cash and bank only repayable on demand. The Charity has no explicit reserves policy, but the “capital” of the fund (as identified from the governing documents or available evidence) is held effectively as a permanent endowment, with only the annual income available for disbursement in the year via the unrestricted reserve. The unrestricted reserves are available for the objects of the Charity. CONCLUSION The charity made no grant awards during 2021-22 (20-21 – £500). Since 2013-14 an audit is required to be carried out by the appointed auditor of Argyll and Bute Council in accordance with the requirements of the Local Government (Scotland) Act 1973. The appointed auditor of Argyll and Bute Council is Audit Scotland and the Trustees would like to thank them for undertaking this task. Page 181
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Marquess of Bute Silver Wedding Dowry Trustees’ Annual Report – For the Year ended 31 March 2022 Page 5 DECLARATION Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 182
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Marquess of Bute Silver Wedding Dowry Independent Auditor’s Report – For the Year ended 31 March 2022 Page 6 Independent auditor’s report to the trustees of the Marquess of Bute Silver Wedding Dowry 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 statement of accounts of the Marquess of Bute Silver Wedding Dowry for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis. In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2022 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1), (2) and (3) of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are 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 trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 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 Page 183
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Marquess of Bute Silver Wedding Dowry Independent Auditor’s Report – For the Year ended 31 March 2022 Page 7 influence the economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity is complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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 Other information The trustees are responsible for other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Page 184
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Marquess of Bute Silver Wedding Dowry Independent Auditor’s Report – For the Year ended 31 March 2022 Page 8 Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit the information given in the Trustees' Annual Report 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 Charities Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 185
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Marquess of Bute Silver Wedding Dowry Statement of Receipts and Payments – For the Year ended March 2022 Page 9 Receipts and Payments Account for the Year Ended 31 March 2022 Note 2021 Unrestricted Funds Permanent Endowment Funds 2022 £ £ £ £ RECEIPTS Income from investments other than land and buildings 4 31 35 - 35 Donated Services (Audit) 8 5 5 - 5 Total Receipts 36 40 - 40 PAYMENTS Charitable Activities - Grants and donations 5 500 - - Audit Fee 8 5 5 5 Total Payments 505 5 - 5 Surplus / (Deficit) for Year (469) 35 - 35 All income in 2021-22 and 2020-21 relate to unrestricted funds. The notes on page 11 form an integral part of these financial statements Page 186
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Marquess of Bute Silver Wedding Dowry Statement of Balances as at 31 March 2022 Page 10 Statement of Balances as at 31 March 2022 Note Unrestricted Funds Permanent Endowment Funds 2021 Unrestricted Funds Permanent Endowment Funds 2022 £ £ £ £ £ £ Cash and Bank Balances 6 Opening Balances 6,703 1,000 7,703 6,234 1,000 7,234 Surplus for year (469) - (469) 35 - 35 Closing Balances 6,234 1,000 7,234 6,269 1,000 7,269 Investments 7 Market value 2,400 - 2,400 2,400 - 2,400 Cost 2,400 - 2,400 2,400 - 2,400 The notes on page 11 form an integral part of these financial statements. Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 187
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Marquess of Bute Silver Wedding Dowry Notes to Financial Statements Page 11 1. Basis of Accounting These accounts have been prepared on the Receipts and Payments basis in accordance with the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). The statements are prepared on a going concern basis. 2. Fund Accounting (a) Unrestricted funds are those that may be used at the discretion of the trustees in furtherance of the objects of the charity. (b) Permanent endowment funds are those that the original capital cannot be spent as income and must remain in the form of investments. Any income return generated by the invested endowment may be spent on the activities of the trust. 3. Taxation The Charity is not liable to income or capital gains tax on its charitable activities. Irrecoverable VAT is included in the expense to which it relates. 4. Trustee Remuneration, Expenses and Related Party Transactions (a) No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year (2020-21 - £0). (b) The Charity received interest of £5 (2020-21 - Nil) from Argyll and Bute Council and also local bond interest of £30 (2020-21 - £31). All transactions incoming and outgoing are made via the Council’s accounts. (c) There were no other transactions between the charity and any trustee or any connected person during the year (2020-21 - £0). 5. Grants In the year to 31 March 2022 no grants were awarded, (20-21 – £500). 6. Cash and Bank Balances During the year the Charity’s balances were held by Argyll and Bute Council, which manages the administration of the funds on behalf of the Trustees. No costs were incurred by the Charity for this administration. The Council also acts as the banker for the charity and, as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. The balances are repayable on demand. Interest is payable on balances. 7. Investments The charity holds two three-year fixed term deposit local bonds from Argyll and Bute Council, one for £2,000 with a rate of 1.99% repayable on 31 March 2025, and the other for £400 with a rate of 0.89% repayable on 30 September 2024 in a continuation of historic practice. 8. Audit Fees. The independent auditor’s fee is a donated service amounting to £5 (2020-21 – £5). Page 188
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid Baillie Gillies Bequest AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 Scottish Charity Number SC013578 Page 189
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Baillie Gillies Bequest Contents Page 1 Page Trustees’ Annual Report 2 - 5 Independent Auditor’s Report 6-8 Statement of Receipts and Payments 9 Statement of Balances 10 Notes to the Financial Statements 11 Page 190
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Baillie Gillies Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 2 The Trustees present their annual report together with the financial statements and the Independent Auditor’s report for the year ended 31 March 2022. REFERENCE AND ADMINISTRATION INFORMATION Charity Name: Baillie Gillies Bequest Charity Number: SC013578 Principal Office: Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Current Trustees: Councillor James Anderson Councillor John Armour Councillor William Gordon Blair Councillor Paul Collins (from Jan 2022) Councillor Rory Colville Councillor Robin Currie Councillor Mary-Jean Devon Councillor Lorna Douglas Councillor James Findlay Councillor Audrey Forrest Councillor George Freeman Councillor Bobby Good Councillor Kieron Green Councillor Graham Archibald Hardie Councillor Anne Horn Councillor Donald Kelly Councillor David Kinniburgh Councillor James Lynch Councillor Donald MacMillan Councillor Liz McCabe Councillor Roderick Mccuish Councillor James McGrigor Councillor Julie McKenzie Councillor Yvonne McNeilly Councillor Jean Moffat Councillor Barbara Morgan (resigned Oct 2021) Councillor Aileen Morton Councillor Gary Mulvaney Councillor Iain Paterson Councillor Gemma Penfold Councillor Douglas Philand Councillor Alastair Redman Page 191
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Baillie Gillies Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 3 Current Trustees continued: Councillor Alan Reid Councillor Elaine Robertson Councillor Alexander Taylor Councillor Richard Trail Councillor Andrew Vennard Honorary Secretary: Douglas Hendry Executive Director Argyll and Bute Council Honorary Treasurer: Kirsty Flanagan FCCA, CPFA, ACIBS Section 95 Officer Argyll and Bute Council Independent Auditor: Kyle McAulay CA Senior Audit Manager 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Documents The charity was ‘inherited’ from Bute County Council. William Gillies, Cooper and Fish curer in Rothesay, and at some time a Baillie and Chief Magistrate of that Burgh, bequeathed £200 for the benefit of the poor of Rothesay. He was elected to the Town Council in 1812 and retired in 1835. Mrs Margaret Stevenson, or Lochhead, died circa 1947. Bequest of £50 to Rothesay Town Council, the income of which is to provide coals for the deserving poor of the Burgh. Archibald Brown, Clerk in the Bute Savings Bank Rothesay, died 1903. Will confirmed and recorded in 1903, detailing bequest of £100. The interest to be divided annually at Candlemas among the deserving old and infirm poor of Rothesay. James Duncan, Merchant in Valparaiso, Chile, thereafter residing in Rothesay died in 1874. He bequeathed £2,000 to Rothesay Town Council. Noted in the Minute Book of the Charity, 1875-1894 in the District Archives. The income was to be distributed half yearly to 10 older women of good character and honest repute, over 60 years of age and not in parochial relief, whose parents as well as themselves have been born in Rothesay or the Island of Bute. Misses Gibson, Ardmory, Rothesay. Janet Gibson died in 1893 her will was confirmed and recorded in 1894 with a bequest of £200 to the Minister of the Parish of Rothesay and to Rothesay Town Council. The interest was to be paid out at Candlemas to the most deserving of the poor and each recipient was to get 25 pence. Mrs Ann Taylor, or Jackson, residing at Easterhouse, Baillieston, died 1892 and her will was confirmed and recorded 1892. She made a bequest of £100, the annual income of which was to be expended from Page 192
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Baillie Gillies Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 4 time to time providing coals for the poor persons of the name Taylor residing in Rothesay and who were born in Skipness (Kintyre) or Rothesay. Minute Book of the Bequest 1892-94 in District Archives. Annie McMillan - Minutes of Rothesay Town Council 28th November 1947, a bequest of £100 to Rothesay Town Council to provide coals for the deserving poor of Rothesay. Jane Paterson of Whinny Brae, Rothesay, died 1902. Will confirmed and recorded in 1903 with a bequest of £300 made to Rothesay Town Council. The income from the bequest was to be divided at Candlemas among the old and infirm poor of Rothesay. Appointment of Trustees The trustees of the charities are the elected members (councillors) of Argyll and Bute Council. Trustees are appointed through their election to Argyll and Bute Council. Organisational Structure The trustees (as the elected members of the council) meet once a year at the Annual General Meeting (AGM) to consider and approve the annual report and financial statements and any other business such as future plans and the reorganisation of trust funds. The trustees delegate the day to day administration of the charities to officers of the Council. The Council has established a range of committees with delegated powers to allow it to discharge its business effectively. This includes the management of charities. The Council has an approved constitution that governs the conduct of business by the Council and covers standing orders for meetings, a scheme of administration and delegation, financial and security regulations, contract standing orders and an ethical framework. Related Parties Trustees hold this position because they are elected members of Argyll and Bute Council. Argyll and Bute Council provides administration services to the Charity. Risk Management The Section 95 Officer of Argyll and Bute Council has taken the steps required by trustees to consider the major risks to which the charity is exposed, in particular those related to its operation and finance, and to be satisfied that the systems are in place to mitigate the exposure to the major risks. Management of Funds and Investment Policy The Trustees rely upon the expertise of Argyll and Bute Council to manage the investments to ensure the maximum return at least risk to the charity. In this way, the income stream for the future benefit of the charity is protected. The funds of the charity are deposited with Argyll and Bute Council and receive interest at the average market rate for the Council’s borrowing. The interest received from Argyll and Bute Council is shown in the Statement of Receipts and Payments. OBJECTIVES AND ACTIVITIES The objectives of the various funds that make up the Baillie Gillies fund are as follows: • Baillie Gillies Bequest - Prevention and relief of poverty in Rothesay. • Margaret Lochhead Bequest - Prevention and relief of poverty in Rothesay through grants to individuals for purchase of coals. • Archibald Brown Bequest - The interest is to be divided annually at Candlemas among the deserving old and infirm poor of Rothesay. Page 193
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Baillie Gillies Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 5 • James Duncan Bequest - Prevention and relief of poverty in Rothesay through distribution to ten old women whose parents as well as themselves were born in Rothesay • Janet Gibson Bequest - Prevention and relief of poverty in Rothesay. • Ann Jackson Bequest - Prevention and relief of poverty in Rothesay, by providing coals for poor persons of the name Taylor residing in Rothesay who were born in Skipness (Kintyre) or Rothesay. • Annie McMillan Bequest - Prevention and relief of poverty in Rothesay through grants to individuals for coal. • Jane Paterson Bequest - The objective of the fund is for the prevention and relief of poverty in Rothesay. ACHIEVEMENTS AND PERFORMANCE In the year to 31 March 2022, there were no grants made (20-21 – £0). FINANCIAL REVIEW Overview The Charity is dormant. The only source of income during 2021-22 came from interest from deposits with Argyll and Bute Council of £1 (2020-21 - £1) and Local Bond Interest £1 (2020-21 - £1). The trust held cash at bank of £9,991 as at 31 March 2021 (2020-21 - £9,989). Reserves Policy The unrestricted free reserves in cash at bank at the financial year-end were £6,941 (2020-21 - £6,939). The Charity has no explicit reserves policy, but the “capital” of the fund (as identified from the governing document or available evidence) is held effectively as a permanent endowment, with only the annual income available for disbursement in the year via the unrestricted reserve. The unrestricted reserves are available for the objects of the trust. CONCLUSION The charity did not undertake any activities during the year. Since 2013-14 an audit is required to be carried out by the appointed auditor of Argyll and Bute Council in accordance with the requirements of the Local Government (Scotland) Act 1973. The appointed auditor of Argyll and Bute Council is Audit Scotland and the Trustees would like to thank them for undertaking this task. DECLARATION Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Kirsty Flanagan FCCA, CPFA, ACIBS Trustee Honorary Treasurer Page 194
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Baillie Gillies Bequest Independent Auditor’s Report – For the Year ended 31 March 2022 Page 6 Independent auditor’s report to the trustees of the Baillie Gillies Bequest 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 statement of accounts of the Baillie Gillies Bequest for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis. In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2022 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1), (2) and (3) of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are 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 trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 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 Page 195
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Baillie Gillies Bequest Independent Auditor’s Report – For the Year ended 31 March 2022 Page 7 influence the economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity is complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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 Other information The trustees are responsible for other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit, the information given Page 196
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Baillie Gillies Bequest Independent Auditor’s Report – For the Year ended 31 March 2022 Page 8 in the Trustees' Annual Report 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 Charities Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 197
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Baillie Gillies Bequest Statement of Receipts and Payments – For the Year ended March 2022 Page 9 Receipts and Payments Account for the Year Ended 31 March 2022 Note 2021 Unrestricted Funds Permanent Endowment Funds 2022 £ £ £ £ RECEIPTS Income from investments other than land and buildings 4 1 2 - 2 Donated Services (Audit) 8 5 5 - 5 Total Receipts 6 7 - 7 PAYMENTS Charitable Activities - Grants and donations 5 - - - - Audit Fee 8 5 5 - 5 Total Payments 5 5 - 5 Surplus / (Deficit) for Year 1 2 - 2 All income in 2021-22 and 2020-21 relates to unrestricted funds. The notes on page 12 form an integral part of these financial statements. Page 198
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Baillie Gillies Bequest Statement of Balances at 31 March 2022 Page 10 Statement of Balances as at 31 March 2022 Note Unrestricted Funds Permanent Endowment Funds Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ £ £ Cash and Bank Balances 6 Opening Balances 6,938 3,050 9,988 6,939 3,050 9,989 Surplus for year 1 - 1 2 - 2 Closing Balances 6,939 3,050 9,989 6,941 3,050 9,991 Investments 7 Market value 50 - 50 50 - 50 Cost 50 - 50 50 - 50 The notes on page 12 form an integral part of these financial statements. Approved and authorised for issue by the trustees on 24th November and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 199
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Baillie Gillies Bequest Notes to the Financial Statements Page 11 1. Basis of Accounting These accounts have been prepared on the Receipts and Payments basis in accordance with the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). The statements are prepared on a going concern basis. 2. Fund Accounting (a) Unrestricted funds are those that may be used at the discretion of the trustees in furtherance of the objects of the charity. (b) Permanent endowment funds are those that the original capital cannot be spent as income and must remain in the form of investments. Any income return generated by the invested endowment may be spent on the activities of the Charity. 3. Taxation The charity is not liable to income or capital gains tax on its charitable activities. Irrecoverable VAT is included in the expense to which it relates. 4. Trustee Remuneration, Expenses and Related Party Transactions (a) No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year (2020-21 - £0). (b) The Charity received interest from deposits with Argyll and Bute Council of £1 (2020-21 - Nil) and Local Bond Interest of £1 (2020-21 £1). All transactions incoming and outgoing are made via the Council’s accounts. (c) There were no other transactions between the charity and any trustee or any connected person during the year (2020-21 - £0). 5. Grants In the year to 31 March 2022, there were no grants made (20-21 – £0). 6. Cash and Bank Balances During the year the Charity’s balances were held by Argyll and Bute Council, which manages the administration of the funds on behalf of the Trustees. The Council also acts as the banker for the charity and, as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. The balances are repayable on demand. Interest is payable on balances. 7. Investments The charity holds a three-year fixed term deposit £50 local bond from Argyll and Bute Council, repayable on 30 September 2024. The rate of interest is 0.89%. This is a continuation of historic practice. 8. Audit Fees The independent auditor’s fee is a donated service amounting to £5 (2020-21 – £5). Page 200
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid Kidston Park Trust AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 Scottish Charity Number SC013600 Page 201
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Kidston Park Trust Contents Page 1 Page Trustees’ Annual Report 2 - 5 Independent Auditors Report 6-8 Statement of Receipts and Payments 9 Statement of Balances 10 Notes to the Financial Statements 11 Page 202
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Kidston Park Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 2 The Trustees present their annual report together with the financial statements and the Independent Auditor’s report for the year ended 31 March 2022. REFERENCE AND ADMINISTRATION INFORMATION Charity Name: Kidston Park Trust Charity Number: SC013600 Principal Office: Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Current Trustees: Councillor James Anderson Councillor John Armour Councillor William Gordon Blair Councillor Paul Collins (from Jan 2022) Councillor Rory Colville Councillor Robin Currie Councillor Mary-Jean Devon Councillor Lorna Douglas Councillor James Findlay Councillor Audrey Forrest Councillor George Freeman Councillor Bobby Good Councillor Kieron Green Councillor Graham Archibald Hardie Councillor Anne Horn Councillor Donald Kelly Councillor David Kinniburgh Councillor James Lynch Councillor Donald MacMillan Councillor Liz McCabe Councillor Roderick Mccuish Councillor James McGrigor Councillor Julie McKenzie Councillor Yvonne McNeilly Councillor Jean Moffat Councillor Barbara Morgan (resigned Oct 2021) Councillor Aileen Morton Councillor Gary Mulvaney Councillor Iain Paterson Councillor Gemma Penfold Councillor Douglas Philand Councillor Alastair Redman Councillor Alan Reid Page 203
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Kidston Park Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 3 Current Trustees continued: Councillor Elaine Robertson Councillor Alexander Taylor Councillor Richard Trail Councillor Andrew Vennard Honorary Secretary: Douglas Hendry Executive Director Argyll and Bute Council Honorary Treasurer: Kirsty Flanagan FCCA, CPFA, ACIBS Section 95 Officer Argyll and Bute Council Independent Auditor: Kyle McAulay CA Senior Audit Manager 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Document A bequest of £1,000 was made by William Kidston towards the upkeep of Kidston Park (formerly Cairndow or Cairndhu Park) in April 1889. It was noted in the minutes of a meeting of the Town Council of the Burgh of Helensburgh. Appointment of Trustees The trustees of the charities are the elected members (councillors) of Argyll and Bute Council. Trustees are appointed through their election to Argyll and Bute Council. Organisational Structure The trustees (as the elected members of the council) meet once a year at the Annual General Meeting (AGM) to consider and approve the annual report and financial statements and any other business such as future plans and the reorganisation of Charity funds. The trustees delegate the day to day administration of the charities to officers of the Council. The Council has established a range of committees with delegated powers to allow it to discharge its business effectively. This includes the management of charities. The Council has an approved constitution that governs the conduct of business by the Council and covers standing orders for meetings, a scheme of administration and delegation, financial and security regulations, contract standing orders and an ethical framework. Related Parties Trustees hold this position because they are elected members of Argyll and Bute Council. Argyll and Bute Council provides administration services to the Charity. Risk Management The Section 95 Officer of Argyll and Bute Council has taken the steps required by trustees to consider the major risks to which the charity is exposed, in particular those related to its operation and finance, and to be satisfied that systems are in place to mitigate the exposure to the major risks. Page 204
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Kidston Park Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 4 Management of Funds and Investment Policy The Trustees rely upon the expertise of Argyll and Bute Council to manage the investments to ensure the maximum return at least risk to the charity. In this way, the income stream for the future benefit of the charity is protected. The funds of the charity are deposited with Argyll and Bute Council. The charity receives interest at the average market rate for the Council’s borrowing. The interest received from Argyll and Bute Council is shown in the Statement of Receipts and Payments. OBJECTIVES AND ACTIVITIES The objective of the fund is to provide a public park, or recreation ground for the inhabitants of Helensburgh and for the purposes of boating and bathing in the Gareloch. ACHIEVEMENTS AND PERFORMANCE In the year to 31 March 2022, the trust spent no funds on the upkeep of the park (20-21 - £110) FINANCIAL REVIEW Overview Income during 2021-22 came from interest from deposits with Argyll and Bute Council of £1 (2020-21 - nil). The trust held cash and bank of £3,599 as at 31 March 2022 (2020-21 - £3,598). Reserves Policy The unrestricted free reserves at the financial year-end were £2,599 (2020-21 - £2,598). This includes cash and bank only repayable on demand. The Charity has no explicit reserves policy, but the “capital” of the fund (as identified from the governing documents or available evidence) is held effectively as a permanent endowment, with only the annual income available for disbursement in the year via the unrestricted reserve. The unrestricted reserves are available for the objects of the Charity. CONCLUSION The reserves of the Charity increased by £1 in the year. Since 2013-14 an audit is required to be carried out by the appointed auditor of Argyll and Bute Council in accordance with the requirements of the Local Government (Scotland) Act 1973. The appointed auditor of Argyll and Bute Council is Audit Scotland and the Trustees would like to thank them for undertaking this task. Page 205
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Kidston Park Trust Trustees’ Annual Report – For the Year ended 31 March 2022 Page 5 DECLARATION Approved and authorised for issue by the trustees on 24th November and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 206
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Kidston Park Trust Independent Auditor’s Report – For the Year ended 31 March 2022 Page 6 Independent auditor’s report to the trustees of the Kidston Park Trust 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 statement of accounts of the Kidston Park Trust for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis. In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2022 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1), (2) and (3) of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are 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 trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 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 Page 207
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Kidston Park Trust Independent Auditor’s Report – For the Year ended 31 March 2022 Page 7 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 economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity is complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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 Other information The trustees are responsible for other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report Page 208
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Kidston Park Trust Independent Auditor’s Report – For the Year ended 31 March 2022 Page 8 In my opinion, based on the work undertaken in the course of the audit the information given in the Trustees' Annual Report 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 Charities Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 209
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Kidston Park Trust Statement of Receipts and Payments as at 31 March 2022 Page 9 Receipts and Payments Account for the Year Ended 31 March 2022 Note 2021 Unrestricted Funds Permanent Endowment Funds 2022 £ £ £ £ RECEIPTS Income from investments other than land and buildings 4 - 1 - 1 Donated Services (Audit) 7 2 2 - 2 Total Receipts 2 3 - 3 PAYMENTS Charitable Activities - Grants and donations 5 110 - - - Audit Fee 7 2 2 - 2 Total Payments 112 2 - 2 Surplus / (Deficit) for Year (110) 1 - 1 All income in 2021-22 and 2020-21 relates to unrestricted funds. The notes on page 12 form an integral part of these accounts. Page 210
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Kidston Park Trust Statement of Balances as at 31 March 2022 Page 10 Statement of Balances as at 31 March 2022 Note Unrestricted Funds Permanent Endowment Funds Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ £ £ Cash and Bank Balances 6 Opening Balances 2,708 1,000 3,708 2,598 1,000 3,598 Surplus for year (110) - (110) 1 - 1 Closing Balances 2,598 1,000 3,598 2,599 1,000 3,599 The notes on page 12 form an integral part of these financial statements. Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 211
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Kidston Park Trust Notes to the Financial Statements Page 11 1. Basis of Accounting These accounts have been prepared on the Receipts and Payments basis in accordance with the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). The statements are prepared on a going concern basis. 2. Fund Accounting (a) Unrestricted funds are those that may be used at the discretion of the trustees in furtherance of the objects of the charity. (b) Permanent endowment funds are those that the original capital cannot be spent as income and must remain in the form of investments. Any income return generated by the invested endowment may be spent on the activities of the Charity. 3. Taxation The charity is not liable to income or capital gains tax on its charitable activities. Irrecoverable VAT is included in the expense to which it relates. 4. Trustee Remuneration, Expenses and Related Party Transactions (a) No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year (2020-21 - £0). (b) The trust received interest of £1 (2020-21 - £0) from deposits with Argyll and Bute Council. All transactions incoming and outgoing are made via the Council’s accounts. (c) There were no other transactions between the charity and any trustee or any connected person during the year (2020-21 - £0) 5. Grants / Expenditure on Charitable Activities In the year to 31 March 2022, there was no expenditure by the trust (2020-21 - £110). 6. Cash and Bank Balances During the year the Charity balances were held by Argyll and Bute Council, which manages the administration of the funds on behalf of the Trustees. No costs were incurred by the trust for this administration. The Council also acts as the banker for the charity and, as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. The balances are repayable on demand. Interest is payable on balances. 7. Audit Fees The independent auditor’s fee is a donated service amounting to £2 (2020-21 – £2). Page 212
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid Miss Annie Dickson Burgh Bequest AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 Scottish Charity Number SC018697 Page 213
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Miss Annie Dickson Burgh Bequest Contents Page 1 Page Trustees’ Annual Report 2 - 5 Independent Auditor’s Report 6-8 Statement of Receipts and Payments 9 Statement of Balances 10 Notes to the Financial Statements 11 Page 214
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Miss Annie Dickson Burgh Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 2 The Trustees present their annual report together with the financial statements and the Independent Auditor’s report for the year ended 31 March 2021. REFERENCE AND ADMINISTRATION INFORMATION Charity Name: Miss Annie Dickson Burgh Bequest Charity Number: SC018697 Principal Office: Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Current Trustees: Councillor James Anderson Councillor John Armour Councillor William Gordon Blair Councillor Paul Collins (from Jan 2022) Councillor Rory Colville Councillor Robin Currie Councillor Mary-Jean Devon Councillor Lorna Douglas Councillor James Findlay Councillor Audrey Forrest Councillor George Freeman Councillor Bobby Good Councillor Kieron Green Councillor Graham Archibald Hardie Councillor Anne Horn Councillor Donald Kelly Councillor David Kinniburgh Councillor James Lynch Councillor Donald MacMillan Councillor Liz McCabe Councillor Roderick Mccuish Councillor James McGrigor Councillor Julie McKenzie Councillor Yvonne McNeilly Councillor Jean Moffat Councillor Barbara Morgan (resigned Oct 2021) Councillor Aileen Morton Councillor Gary Mulvaney Councillor Iain Paterson Councillor Gemma Penfold Councillor Douglas Philand Councillor Alastair Redman Councillor Alan Reid Councillor Elaine Robertson Page 215
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Miss Annie Dickson Burgh Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 3 Current Trustees continued: Councillor Alexander Taylor Councillor Richard Trail Councillor Andrew Vennard Honorary Secretary: Douglas Hendry Executive Director Argyll and Bute Council Honorary Treasurer: Kirsty Flanagan FCCA, CPFA, ACIBS Section 95 Officer Argyll and Bute Council Independent Auditor: Kyle McAulay CA Senior Audit Manager 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Documents A bequest by Miss Mary Ann Dickson dated 4th April, 1927 to the Town Council of the Burgh of Helensburgh. Noted in an Excerpt from Copy Will and Codicils. Miss LA Colvil’s bequest - A Legacy of £200 was passed by Mr J Percival Agnew to the Town Council to perpetuate his cousin’s name in Helensburgh by means of a fund for necessitous cases. Noted in the minutes of a meeting of the Finance Committee of Helensburgh Town Council on 22nd December 1969. Appointment of Trustees The trustees of the charities are the elected members (councillors) of Argyll and Bute Council. Trustees are appointed through their election to Argyll and Bute Council. Organisational Structure The trustees (as the elected members of the council) meet once a year at the Annual General Meeting (AGM) to consider and approve the annual report and financial statements and any other business such as future plans and the reorganisation of charity funds. The trustees delegate the day to day administration of the charities to officers of the Council. The Council has established a range of committees with delegated powers to allow it to discharge its business effectively. This includes the management of charities. The Council has an approved constitution that governs the conduct of business by the Council and covers standing orders for meetings, a scheme of administration and delegation, financial and security regulations, contract standing orders and an ethical framework. Related Parties Trustees hold this position because they are elected members of Argyll and Bute Council. Argyll and Bute Council provides administration services to the charity. Page 216
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Miss Annie Dickson Burgh Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 4 Risk Management The Section 95 Officer of Argyll and Bute Council has taken the steps required by trustees to consider the major risks to which the charity is exposed, in particular those related to its operation and finance, and to be satisfied that the systems are in place to mitigate the exposure to the major risks. Management of Funds and Investment Policy The Trustees rely upon the expertise of Argyll and Bute Council to manage the investments to ensure the maximum return at least risk to the charity. In this way, the income stream for the future benefit of the charity is protected. The funds of the charity are deposited with Argyll and Bute Council. The funds of the charity receives interest at the average market rate for the Council’s borrowing. The interest received from Argyll and Bute Council is shown in the Statement of Receipts and Payments. OBJECTIVES AND ACTIVITIES The objective of the fund is for the relief of distress in the Burgh of Helensburgh. ACHIEVEMENTS AND PERFORMANCE In the year to 31 March 2022, there were no grants made (2020-21 – £0). FINANCIAL REVIEW Overview The charity is dormant. There was no income from deposits with Argyll and Bute Council during 2021-22 (2020-21 - £0). The trust held cash and bank of £4,201 as at 31 March 2021 (2020-21 - £4,201). Reserves Policy The unrestricted free reserves at the financial year-end were £1,253 (2020-21 - £1,253). This includes cash and bank only repayable on demand. The charity has no explicit reserves policy, but the “capital” of the fund (as identified from the governing documents or available evidence) is held effectively as a permanent endowment, with only the annual income available for disbursement in the year via the unrestricted reserve. The unrestricted reserves are available for the objects of the trust. CONCLUSION The charity did not undertake any activities during the year. Since 2013-14 an audit is required to be carried out by the appointed auditor of Argyll and Bute Council in accordance with the requirements of the Local Government (Scotland) Act 1973. The appointed auditor of Argyll and Bute Council is Audit Scotland and the Trustees would like to thank them for undertaking this task. Page 217
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Miss Annie Dickson Burgh Bequest Trustees’ Annual Report – For the Year ended 31 March 2022 Page 5 DECLARATION Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 218
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Miss Annie Dickson Burgh Bequest Independent Auditor’s Report – For the Year ended 31 March 2022 Page 6 Independent auditor’s report to the trustees of the Miss Annie Dickson Burgh Bequest 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 statement of accounts of the Miss Annie Dickson Burgh Bequest for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis. In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2022 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1), (2) and (3) of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are 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 trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 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 Page 219
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Miss Annie Dickson Burgh Bequest Independent Auditor’s Report – For the Year ended 31 March 2022 Page 7 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 economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity is complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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 Other information The trustees are responsible for other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Page 220
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Miss Annie Dickson Burgh Bequest Independent Auditor’s Report – For the Year ended 31 March 2022 Page 8 Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit the information given in the Trustees' Annual Report 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 Charities Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 221
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Miss Annie Dickson Burgh Bequest Statement of Receipts and Payments – For the Year ended March 2022 Page 9 Receipts and Payments Account for the Year Ended 31 March 2022 Note Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ RECEIPTS Donated Services (Audit) 6 2 2 - 2 Total Receipts 2 2 - 2 PAYMENTS Audit Fee 6 2 2 - 2 Total Payments 2 2 - 2 Surplus / (Deficit) for Year - - - - All income in 2020-21 and 2021-22 relates to unrestricted funds. The notes on page 12 form an integral part of these financial statements. Page 222
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Miss Annie Dickson Burgh Bequest Statement of Balances as at 31 March 2022 Page 10 Statement of Balances as at 31 March 2022 Note Unrestricted Funds Permanent Endowment Funds Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ £ £ Cash and Bank Balances 5 Opening Balances 1,253 2,948 4,201 1,253 2,948 4,201 Closing Balances 1,253 2,948 4,201 1,253 2,948 4,201 The notes on page 12 form an integral part of these financial statements. Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIBS Honorary Treasurer Page 223
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Miss Annie Dickson Burgh Bequest Notes to the Financial Statements Page 11 1. Basis of Accounting These accounts have been prepared on the Receipts and Payments basis in accordance with the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). The statements are prepared on a going concern basis. 2. Fund Accounting (a) Unrestricted funds are those that may be used at the discretion of the trustees in furtherance of the objects of the charity. (b) Permanent endowment funds are those that the original capital cannot be spent as income and must remain in the form of investments. Any income return generated by the invested endowment may be spent on the activities of the charity. 3. Taxation The charity is not liable to income or capital gains tax on its charitable activities. Irrecoverable VAT is included in the expense to which it relates. 4. Trustee Remuneration, Expenses and Related Party Transactions (a) No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year (2020-21 - £0). (b) The trust received interest of £0 (2020-21 - £0) from deposits with Argyll & Bute Council. All transactions incoming and outgoing are made via the Council’s accounts. (c) There were no other transactions between the charity and any trustee or any connected person during the year (2020-21 £0). 5. Cash and Bank Balances During the year the charities balances were held by Argyll and Bute Council, which manages the administration of the funds on behalf of the Trustees. No costs were incurred by the trust for this administration. The Council also acts as the banker for the charity and, as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. The balances are repayable on demand. Interest is payable on balances. 6. Audit Fees The independent auditor’s fee is a donated service amounting to £2 (2020-21 – £2). Page 224
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid Logie Baird Prize Fund AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 Scottish Charity Number SC018698 Page 225
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Logie Baird Prize Fund Contents Page 1 Page Trustees’ Annual Report 2 - 5 Independent Auditor’s Report 6-8 Statement of Receipts and Payments 9 Statement of Balances 10 Notes to the Financial Statements 11 Page 226
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Logie Baird Prize Fund Trustees’ Annual Report – For the Year ended 31 March 2022 Page 2 The Trustees present their annual report together with the financial statements and the Independent Auditor’s report for the year ended 31 March 2022. REFERENCE AND ADMINISTRATION INFORMATION Charity Name: Logie Baird Prize Fund Charity Number: SC018698 Principal Office: Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8TL Current Trustees: Councillor James Anderson Councillor John Armour Councillor William Gordon Blair Councillor Paul Collins (from Jan 2022) Councillor Rory Colville Councillor Robin Currie Councillor Mary-Jean Devon Councillor Lorna Douglas Councillor James Findlay Councillor Audrey Forrest Councillor George Freeman Councillor Bobby Good Councillor Kieron Green Councillor Graham Archibald Hardie Councillor Anne Horn Councillor Donald Kelly Councillor David Kinniburgh Councillor James Lynch Councillor Donald MacMillan Councillor Liz McCabe Councillor Roderick Mccuish Councillor James McGrigor Councillor Julie McKenzie Councillor Yvonne McNeilly Councillor Jean Moffat Councillor Barbara Morgan (resigned Oct 2021) Councillor Aileen Morton Councillor Gary Mulvaney Councillor Iain Paterson Councillor Gemma Penfold Councillor Douglas Philand Councillor Alastair Redman Councillor Alan Reid Page 227
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Logie Baird Prize Fund Trustees’ Annual Report – For the Year ended 31 March 2022 Page 3 Current Trustees continued: Councillor Elaine Robertson Councillor Alexander Taylor Councillor Richard Trail Councillor Andrew Vennard Honorary Secretary: Douglas Hendry Executive Director Argyll and Bute Council Honorary Treasurer: Kirsty Flanagan FCCA, CPFA, ACIB Section 95 Officer Argyll and Bute Council Independent Auditor: Kyle McAulay CA Senior Audit Manager 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Document Ex-Bailie J. Arnold Fleming of Locksley, Helensburgh, invested the sum of £200 in the names of the Provost, Magistrates and Councillors of the Burgh of Helensburgh, for the Logie Baird Prize Fund. Noted in the minutes of the Town Council of Helensburgh, January 1956. Appointment of Trustees The trustees of the charities are the elected members (Councillors) of Argyll and Bute Council. Trustees are appointed through their election to Argyll and Bute Council. Organisational Structure The trustees (as the elected members of the Council) meet once a year at the Annual General Meeting (AGM) to consider and approve the annual report and financial statements and any other business such as future plans and the reorganisation of Charity funds. The trustees delegate the day to day administration of the charities to officers of the Council. The Council has established a range of committees with delegated powers to allow it to discharge its business effectively. This includes the management of charities. The Council has an approved constitution that governs the conduct of business by the Council and covers standing orders for meetings, a scheme of administration and delegation, financial and security regulations, contract standing orders and an ethical framework. Related Parties Trustees hold this position because they are elected members of Argyll and Bute Council. Argyll and Bute Council provides administration services to the Charity. Page 228
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Logie Baird Prize Fund Trustees’ Annual Report – For the Year ended 31 March 2022 Page 4 Risk Management The Section 95 Officer of Argyll and Bute Council has taken the steps required by trustees to consider the major risks to which the charity is exposed, in particular those related to its operation and finance, and to be satisfied that systems are in place to mitigate the exposure to the major risks. Management of Funds and Investment Policy The Trustees rely upon the expertise of Argyll and Bute Council to manage the investments to ensure the maximum return at least risk to the charity. In this way, the income stream for the future benefit of the charity is protected. The funds of the charity are deposited with Argyll and Bute Council and receive interest at the average market rate for the Council’s borrowing. The interest received from Argyll and Bute Council is shown in the Statement of Receipts and Payments. OBJECTIVES AND ACTIVITIES The objective of the fund is for the advancement of education by providing an annual prize to a pupil at Hermitage Academy, Helensburgh. ACHIEVEMENTS AND PERFORMANCE In the year to 31 March 2022, there was one grant awarded of £30 (20-21 – £0). FINANCIAL REVIEW Overview There was no income to the charity during the year (2020-21 £0). The Charity had cash and bank of £1,914 as at 31 March 2022 (2020-21 - £1,944). Reserves Policy The unrestricted free reserves in cash and bank at the financial year-end were £1,714 (2020-21 - £1,744). The Charity has no explicit reserves policy, but the “capital” of the fund (as identified from the governing document or available evidence) is held effectively as a permanent endowment, with only the annual income available for disbursement in the year via the unrestricted reserve. The unrestricted reserves are available for the objects of the Charity. CONCLUSION The charity did not undertake any activities during the year. Since 2013-14 an audit is required to be carried out by the appointed auditor of Argyll and Bute Council in accordance with the requirements of the Local Government (Scotland) Act 1973. The appointed auditor of Argyll and Bute Council is Audit Scotland and the Trustees would like to thank them for undertaking this task. Page 229
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Logie Baird Prize Fund Trustees’ Annual Report – For the Year ended 31 March 2022 Page 5 DECLARATION Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIB Honorary Treasurer Page 230
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Logie Baird Prize Fund Independent Auditor’s Report – For the Year ended 31 March 2022 Page 6 Independent auditor’s report to the trustees of the Logie Baird Prize Fund 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 statement of accounts of the Logie Baird Prize Fund for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Receipts and Payments, the Statement of Balances and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and a receipts and payments basis. In my opinion the accompanying financial statements: • properly present the receipts and payments of the charity for the year ended 31 March 2022 and its statement of balances at that date; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulations 9(1), (2) and (3) of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Responsibilities of the trustees for the financial statements The trustees are 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 trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 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 Page 231
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Logie Baird Prize Fund Independent Auditor’s Report – For the Year ended 31 March 2022 Page 7 influence the economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity is complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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 Other information The trustees are responsible for the other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit the information given Page 232
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Logie Baird Prize Fund Independent Auditor’s Report – For the Year ended 31 March 2022 Page 8 in the Trustees' Annual Report 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 Charities Accounts (Scotland) Regulations 2006. Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 233
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Logie Baird Prize Fund Statement of Receipts and Payments – For the Year ended March 2022 Page 9 Receipts and Payments Account for the Year Ended 31 March 2022 Note Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ RECEIPTS Income from investments other than land and buildings 4 - - - - Donated Services (Audit) 6 1 1 - 1 Total Receipts 1 1 - 1 PAYMENTS Charitable Activities - Grants and donations - 30 - 30 Audit Fee 6 1 1 - 1 Total Payments 1 31 - 31 Surplus / (Deficit) for Year - (30) - (30) All income in 2020-21 and 2021-22 relates to unrestricted funds. The notes on page 12 form an integral part of these financial statements. Page 234
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Logie Baird Prize Fund Statement of Balances as at 31 March 2022 Page 10 Statement of Balances as at 31 March 2022 Note Unrestricted Funds Permanent Endowment Funds Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ £ £ Cash and Bank Balances 5 Opening Balances 1,744 200 1,944 1,744 200 1,944 Surplus for year - - 11 (30) - (30) Closing Balances 1,744 200 1,944 1,714 200 1,914 The notes on page 12 form an integral part of these financial statements. Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIB Honorary Treasurer Page 235
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Logie Baird Prize Fund Notes to the Financial Statements Page 11 1. Basis of Accounting These accounts have been prepared on the Receipts and Payments basis in accordance with the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). The statements are prepared on a going concern basis. 2. Fund Accounting (a) Unrestricted funds are those that may be used at the discretion of the trustees in furtherance of the objects of the charity. (b) Permanent endowment funds are those that the original capital cannot be spent as income and must remain in the form of investments. Any income return generated by the invested endowment may be spent on the activities of the trust. 3. Taxation The charity is not liable to income or capital gains tax on its charitable activities. Irrecoverable VAT is included in the expense to which it relates. 4. Trustee Remuneration, Expenses and Related Party Transactions (a) No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year (2020-21 - £0). (b) The Charity received interest of £0 (2020-21 - £0) from Argyll and Bute Council. All transactions incoming and outgoing are made via the Council’s accounts. (c) There were no other transactions between the charity and any trustee or any connected person during the year (2020-21- £0). 5. Grants In the year to 31 March 2022, there was one grant awarded of £30 (20-21 – £0). 6. Cash and Bank Balances During the year the Charity balances were held by Argyll and Bute Council, which manages the administration of the funds on behalf of the Trustees. No costs were incurred by the Charity for this administration. The Council also acts as the banker for the charity and, as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. The balances are repayable on demand. Interest is payable on balances. 7. Audit Fees The independent auditor’s fee is a donated service amounting to £1 (2020-21 – £1). Page 236
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Argyll and Bute Council Comhairle Earra Ghàidheal agus Bhòid County of Argyll Educational Trust Scheme, 1960 AUDITED Annual Report and Financial Statements 2021-2022 For the Year ended 31 March 2022 Scottish Charity Number: SC020382 Page 237
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County of Argyll Educational Trust Scheme, 1960 Contents Page 1 Page Trustees’ Annual Report 2 - 6 Independent Auditor’s Report 7-10 Statement of Financial Activities 11 Balance Sheet 12 Notes to the Financial Statements 13 - 15 Page 238
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County of Argyll Educational Trust Scheme, 1960 Trustees’ Annual Report – For the Year ended 31 March 2022 Page 2 The Trustees present their annual report together with the financial statements and the Independent Auditor’s report for the year ended 31 March 2022. REFERENCE AND ADMINISTRATION INFORMATION Charity Name: County of Argyll Educational Trust Scheme, 1960 Scottish Charity Number: SC020382 Principal Office: Argyll and Bute Council Kilmory Lochgilphead Argyll PA31 8RT Current Trustees: Councillor James Anderson Councillor John Armour Councillor William Gordon Blair Councillor Paul Collins (from Jan 2022) Councillor Rory Colville Councillor Robin Currie Councillor Mary-Jean Devon Councillor Lorna Douglas Councillor James Findlay Councillor Audrey Forrest Councillor George Freeman Councillor Bobby Good Councillor Kieron Green Councillor Graham Archibald Hardie Councillor Anne Horn Councillor Donald Kelly Councillor David Kinniburgh Councillor James Lynch Councillor Donald MacMillan Councillor Liz McCabe Councillor Roderick Mccuish Councillor James McGrigor Councillor Julie McKenzie Councillor Yvonne McNeilly Councillor Jean Moffat Councillor Barbara Morgan (resigned Oct 2021) Councillor Aileen Morton Councillor Gary Mulvaney Councillor Iain Paterson Councillor Gemma Penfold Councillor Douglas Philand Councillor Alastair Redman Councillor Alan Reid Councillor Elaine Robertson Page 239
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County of Argyll Educational Trust Scheme, 1960 Trustees’ Annual Report – For the Year ended 31 March 2022 Page 3 Current Trustees continued: Councillor Alexander Taylor Councillor Richard Trail Councillor Andrew Vennard Honorary Secretary: Douglas Hendry Executive Director Argyll and Bute Council Honorary Treasurer: Kirsty Flanagan FCCA, CPFA, ACIB Section 95 Officer Argyll and Bute Council Independent Auditor: Kyle McAulay CA Senior Audit Manager 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT STRUCTURE, GOVERNANCE AND MANAGEMENT Governing Document The Trust is a scheme under the Education (Scotland) Acts, 1939 to 1956, for the future government and management of certain educational endowments in the County of Argyll. Formed by the amalgamation of fourteen individual endowments and approved by His Late Majesty King George V in Council on 24th July, 1933. Robert MacFie of Airds and Oban, Sugar Refiner in Liverpool, died 1899. His will confirmed and recorded in 1899 a bequest of £150. Appointment of Trustees The trustees of the charities are the elected members (councillors) of Argyll and Bute Council. Trustees are appointed through their election to Argyll and Bute Council. Organisational Structure The trustees (as the elected members of the council) meet once a year at the Annual General Meeting (AGM) to consider and approve the annual report and financial statements and any other business such as future plans and the reorganisation of trust funds. The trustees delegate the day to day administration of the charities to officers of the Council. The Council has established a range of committees with delegated powers to allow it to discharge its business effectively. This includes the management of charities. The Council has an approved constitution that governs the conduct of business by the Council and covers standing orders for meetings, a scheme of administration and delegation, financial and security regulations, contract standing orders and an ethical framework. Page 240
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County of Argyll Educational Trust Scheme, 1960 Trustees’ Annual Report – For the Year ended 31 March 2022 Page 4 Related Parties Trustees hold this position because they are elected members of Argyll and Bute Council. Argyll and Bute Council provides administration services to the Trust at no cost to the trust. Risk Management The Section 95 Officer of Argyll and Bute Council has taken the steps required by trustees to consider the major risks to which the charity is exposed, in particular those related to its operation and finance, and to be satisfied that systems are in place to mitigate the exposure to the major risks. Management of Funds and Investment Policy The Trustees rely upon the expertise of Argyll and Bute Council to manage the investments to ensure the maximum return at least risk to the charity. The investment approach is a moderate risk tolerance with a balanced portfolio to achieve the primary objectives of capital growth and income for awards. In this way, the capital and income stream for the future benefit of the trust is protected. The Section 95 Officer of the Council is responsible for securing the proper management of the investments of the trust. The day-to-day management of investments is performed by an external firm of stockbrokers under a discretionary agreement. OBJECTIVES AND ACTIVITIES The objective of the fund is for the advancement of education for children and young people within the former County of Argyll. This objective is met by the issuing of grants to individuals and organisations. Robert MacFie - The objective of the fund is for the advancement of education by providing a gold Dux medal to Oban High School. ACHIEVEMENTS AND PERFORMANCE In the year to 31 March 2022, there were 17 grants made to individuals across Argyll totalling £2,850 (2020-21 - 29 grants - £4,350). FINANCIAL REVIEW Investments and Reserves The funds increased by £50,309 (2020-21 increased by £87,440). The increase was due to a gain on the revaluation of the investment assets and interest received less grants paid out. The reserves of the trust at 31 March 2022 amount to £675,837; £178,437 in unrestricted funds and £497,400 in permanent endowment funds. These funds are held as follows: 31 March 2021 31 March 2022 £ £ COIF Charities Investment Fund 457,884 497,400 Cash and Bank - Argyll & Bute Council 167,644 178,437 Total Assets 625,528 675,837 Current Assets in Restricted Funds 457,884 497,400 Current Assets in Unrestricted Funds 167,644 178,437 Total Funds 625,528 675,837 Page 241
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County of Argyll Educational Trust Scheme, 1960 Trustees’ Annual Report – For the Year ended 31 March 2022 Page 5 Over the year, the value of investments increased by £39,516 from £457,884 to £497,400. The Charities original investment fund (COIF) valuation at 31 March 2022 was 25,542.41 units held with a unit value of 1,947.35 pence. The increase in cash and bank from £167,644 to £178,437 is due to investment income received of £13,643, less grants awarded of £2,850. Reserves Policy Unrestricted free reserves at 31 March 2022 were £178,437. The Trust has no explicit reserves policy, but the “capital” of the trust is held effectively as a permanent endowment for capital growth and to provide an annual income. Income only from the investments may be distributed on an annual basis to ensure that the original funds grow over time. No specific targets have been set. Any unspent income net of all expenses is held in the unrestricted funds and is available for the objectives of the trust. Income and Expenditure The Statement of Financial Activities on page 8 provides an analysis of the income and expenditure for the twelve months to 31 March 2022. Income for the year amounted to £13,643 (2020-21 - £13,374). Expenditure was incurred on grants awarded of £2,850 (2020-21 - £4,350). There was a gain of £39,516 in 2021-22 for changes in the market value of investments (a gain in 2020-21 of £78,416). The Charities original investment fund (COIF) valuation at 31 March 2021 was 25,542.41 units held with a unit value of 1,947.35 pence (31 March 2021 – 1,792.64). TRUSTEES' RESPONSIBILITIES STATEMENT The trustees are responsible for preparing the trustees' report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards. The law applicable to charities in Scotland requires the charity trustees to prepare financial statements for each year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources, of the charity for that period. In preparing these financial statements, the trustees are required to: • select suitable accounting policies and then apply them consistently; • observe the methods and principles in the applicable Charities SORP; • make judgments and accounting estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business. CONCLUSION The reserves of the trust increased by £50,309 which was due to investment revaluation and Interest received. The trust made 17 awards with total value of £2,850 and the trust is well placed to continue to deliver its charitable objects for the foreseeable future. Since 2013-14 an audit is required to be carried out by the appointed auditor of Argyll and Bute Council in accordance with the requirements of the Local Government (Scotland) Act 1973. Page 242
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County of Argyll Educational Trust Scheme, 1960 Trustees’ Annual Report – For the Year ended 31 March 2022 Page 6 The appointed auditor of Argyll and Bute Council is Audit Scotland and the Trustees would like to thank them for undertaking this task. DECLARATION Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIB Honorary Treasurer Page 243
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County of Argyll Educational Trust Scheme, 1960 Independent Auditor’s Report – For the Year ended 31 March 2022 Page 7 Independent auditor’s report to the trustees of the County of Argyll Educational Trust Scheme, 1960 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 statement of accounts of the County of Argyll Educational Trust Scheme, 1960 for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Financial Activities, the Balance Sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and the United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In my opinion the accompanying financial statements: • give a true and fair view of the state of affairs of the charity as at 31 March 2022 and of its incoming resources and application of resources for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulation 8 of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. 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 charity’s ability 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. Page 244
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County of Argyll Educational Trust Scheme, 1960 Independent Auditor’s Report – For the Year ended 31 March 2022 Page 8 Responsibilities of the trustees for the financial statements The trustees are 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 trustees 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 trustees are responsible for assessing the charity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees intend to discontinue the charity’s operations, or have no realistic alternative to do so. 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 economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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 Page 245
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County of Argyll Educational Trust Scheme, 1960 Independent Auditor’s Report – For the Year ended 31 March 2022 Page 9 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 Other information The trustees are responsible for other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit, the information given in the Trustees' Annual Report 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 Charities SORP (FRS 102). Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. Page 246
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County of Argyll Educational Trust Scheme, 1960 Independent Auditor’s Report – For the Year ended 31 March 2022 Page 10 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973. Page 247
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County of Argyll Educational Trust Scheme, 1960 Statement of Financial Activities – for the Year ended March 2022 Page 11 STATEMENT OF FINANCIAL ACTIVITIES FOR YEAR ENDING MARCH 2022 Note Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ INCOMING RESOURCES Incoming resources from generating funds: Investment income from managed funds 5 13,374 13,643 13,643 Interest from short-term deposits - - - Donated Services (Audit) 6 313 368 368 Total Incoming Resources 13,687 14,011 14,011 RESOURCES EXPENDED Audit fee 6 313 368 368 Charitable Activities: Grants awarded 7 4,350 2,850 2,850 Total Resources Expended 4,663 3,218 3,218 Net Incoming/(Outgoing) Resources before Other Recognised Gains/(Losses) 9,024 10,793 10,793 OTHER RECOGNISED GAINS AND (LOSSES) Gains and (losses) on investment assets Unrealised gains/(losses) 8 78,416 - 39,516 39,516 Total Gains and (Losses) on Investment Assets 78,416 - 39,516 39,516 Net Movement in Funds 87,440 10,793 39,516 50,309 Total funds brought forward 538,088 167,644 457,884 625,528 Total funds carried forward 625,528 178,437 497,400 675,837 All incoming resources and resources expended derive from continuing activities. The notes on pages 13 to 15 form an integral part of these financial statements. Page 248
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County of Argyll Educational Trust Scheme, 1960 Balance Sheet as at 31 March 2022 Page 12 BALANCE SHEET AS AT 31 MARCH 2022 Note Unrestricted Funds Permanent Endowment Funds Total Funds 2021 Unrestricted Funds Permanent Endowment Funds Total Funds 2022 £ £ £ £ £ £ Fixed Assets Investments 9 - 457,884 457,884 - 497,400 497,400 Total Fixed Assets - 457,884 457,884 - 497,400 497,400 Current Assets Cash at Bank and at Hand 10 167,644 - 167,644 178,437 178,437 Total Current Assets 167,644 - 167,644 178,437 - 178,437 Total Assets 167,644 457,884 625,528 178,437 497,400 675,837 Funds of the Charity 13 Unrestricted Funds 167,644 - 167,644 178,437 - 178,437 Endowment Funds - 457,884 457,884 - 497,400 497,400 Total Charity Funds 167,644 457,884 625,528 178,437 497,400 675,837 The notes on pages 13 to 15 form an integral part of these financial statements. Approved and authorised for issue by the trustees on 24th November 2022 and signed on their behalf by: Councillor J Lynch Trustee Kirsty Flanagan FCCA, CPFA, ACIB Honorary Treasurer Page 249
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County of Argyll Educational Trust Scheme, 1960 Notes to the Financial Statements Page 13 1. Basis of Preparation The principal accounting policies are summarised below. The accounting policies have been applied consistently throughout the year and the preceding year. 1.1. Basis of Accounting The financial statements are prepared under the historic cost convention and in accordance with: a) Accounting and Reporting by Charities – Statement of Recommended Practice (SORP 2019- 2nd Edition); and the Financial Reporting Standard for Smaller Entities FRS102. b) The Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended). 2. Accounting Policies 2.1 Form of Financial Statements a) Unrestricted funds are those that may be used at the discretion of the trustees in the furtherance of the objects of the charity. b) The permanent endowment funds are invested in perpetuity and derive an annual investment income which is available for distribution. 2.2 Incoming Resources a) All incoming resources are recognised and included in the Statement of Financial Activities when the charity becomes entitled to the resources; the trustees are virtually certain they will receive the resources and the monetary value can be measured with sufficient reliability. The following specific policies are applied to particular categories of income. b) Income from investments is included in the year to which it relates. c) Investments gains and losses includes any gain or loss on the sale of investments and any gain or loss resulting from revaluing investments to market value at the end of the year. d) The value of the services provided free of charge by Argyll and Bute Council has not been included in the accounts but is described in the trustees’ annual report. 2.3 Resources Expended a) All expenditure is included in the Statement of Financial Activities on an accrual basis and is recognised when there is a legal or constructive obligation to pay out resources. 3. Taxation The charity is not liable to income or capital gains tax on its charitable activities. Irrecoverable VAT is included in the expense to which it relates. 4. Trustee Remuneration, Expenses and Related Party Transactions (a) No remuneration or expenses were paid to charity trustees or persons connected to a trustee during the year (2020-21 - £0). (b) The trust received interest of £0 (2020-21 £0) from Argyll and Bute Council on unrestricted reserves placed on short-term deposit with them. All transactions incoming and outgoing are made via the Council’s accounts. Page 250
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County of Argyll Educational Trust Scheme, 1960 Notes to the Financial Statements Page 14 (c) There were no other transactions between the charity and any trustee or any connected person during the year (2020-21 - £0). 5. Investment Income Total Funds 2021 Unrestricted Funds Total Funds 2022 £ £ £ Investment Interest from CCLA 13,374 13,643 13,643 Interest on Short-term deposits with Argyll and Bute Council - - - Total Investment Income 13,374 13,643 13,643 6. Audit Fees The independent auditor’s fee is a donated service amounting to £368 (2020-21 – £313). 7. Grants Awarded During the year to 31 March 2022, £2,850 of grants were awarded to 17 individuals in accordance with the trust’s objective of the advancement of education for children and young people within the former County of Argyll (2020-21 - 29 grants - £4,350). 8. Gains and Losses on Investment Assets Over the year, the value of investments increased by £39,516 from £457,884 to £497,400 due to year-end valuation of Charities Original Investment Fund (COIF) unit trust investments. 9. Fixed Asset Investments There were 25,542.41 units held in the Charities Original Investment Fund (COIF) at a unit price of 1,947.35 pence at 31 March 2022. Page 251
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County of Argyll Educational Trust Scheme, 1960 Notes to the Financial Statements Page 15 10. Cash and Bank Balances Unrestricted Funds Total Funds £ £ Short-term deposits with Argyll and Bute Council: Carrying value at 1 April 2021 167,644 167,644 Add: lodgements during year 13,643 13,643 (Less): withdrawals during year (2,850) - 2,850 Gains/losses - - Cash and Bank at 31 March 2022 178,437 178,437 During the year the above short term deposits were held by Argyll and Bute Council, which manages the administration of the funds on behalf of the Trustees. The Council also acts as the banker for the charity and, as detailed above, all transactions incoming and outgoing are made via the Council’s accounts. No costs were incurred by the trust for this work. The balances are repayable on demand. Interest is payable on the balance. 11. Movement in Funds At 1 April 2021 Incoming Resources Outgoing Resources Gains/ Losses At 31 March 2022 £ £ £ £ Unrestricted Revenue Funds 167,644 13,643 (2,850) 178,437 Permanent Endowment Funds 457,884 0 0 39,516 497,400 Total Funds 625,528 13,643 (2,850) 39,516 675,837 Page 252
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Oban Common Good Fund Trustees’ Report and Financial Statements for the year ended 31 March 2022 Charity number SC021328 Simmers & Co Chartered Accountants OBAN Page 253
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Oban Common Good Fund Financial Statements Year ended 31 March 2022 Page Trustees' annual report 1 Independent auditor's report to the trustees of the Oban Common Good Fund and Accounts Commission 5 Statement of financial activities 8 Balance Sheet 9 Statement of cash flows 10 Notes to the financial statements 11 Page 254
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Oban Common Good Fund Trustees' Annual Report Year ended 31 March 2022 - 1 - The trustees present their report and the financial statements of the charity for the year ended 31 March 2022. Reference and administrative details Registered charity name Oban Common Good Fund Charity registration number SC021328 Principal office Argyll & Bute Council Area office Kilmory Lochgilphead PA31 8RT The trustees Councillor E Robertson (Retired 5 May 2022) Councillor Sir J McGrigor (Retired 5 May 2022) Councillor J Lynch Councillor K Green Councillor A Kain (Appointed 19 May 2022) Councillor L Martin (Appointed 19 May 2022) Charity secretary Ms Kirsty Flanagan FCCA CPFA ACIBS Auditor Kyle McAulay CA Audit Scotland 8 Nelson Mandela Place Glasgow Bankers The Royal Bank of Scotland 26 George Street Oban Argyll PA34 5SB Page 255
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Oban Common Good Fund Trustees' Annual Report (continued) Year ended 31 March 2022 - 2 - Structure, governance and management Legal and Administrative Status The Oban Common Good Fund is regulated by the Local Government Scotland Act 1973. It is registered as a charity in Scotland, and is recognised as a charity for taxation purposes by H M Revenue & Customs. Recruitment and Appointment of Management Committee The management committee consisted of three councillors who represent the two wards of Oban plus one further councillor. The councillors are charity trustees for the purposes of charity law and are replaced by their successors during each local government election. Trustee Induction and Training Most councillors are already familiar with the work of the charity and attend an introductory meeting with those councillors who continue as trustees to introduce the most recent work of the charity and to introduce current objectives and plans. Organisational structure The trustees meet on a quarterly basis to review grant applications and monitor the fund's financial position. The trustees use an agreed distribution policy in order to determine the approval and level of grant assistance made available to the applicant. Approval for grants over £5,000 requires the agreement of all trustees. The trustees delegate day to day responsibility for the running of the fund to the secretary and fund administrators. The fund administrators were appointed in 2015 and reappointed in 2018 and 2021 following competitive tender processes and are currently Simmers & Co, Chartered Accountants. Risk Management The trustees have assessed the major risks to which the charity is exposed, and in particular those related to the finance of the fund, and are satisfied that systems are in place to mitigate exposure to the major risks. Objectives and activities The fund consists of a Revenue Account and a Capital Account, with the Capital Account being held in perpetuity with no distribution permitted therefrom without the prior consent of Argyll & Bute Council as parent body. The Revenue Account represents income available for distribution and the Capital invested in perpetuity derives an annual investment income which is available for distribution annually once associated fund costs have been accounted for. The objectives are to administer the fund having regard to the interests of the inhabitants of the town of Oban. A comprehensive distribution policy provides a framework for grant distributions. Page 256
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Oban Common Good Fund Trustees' Annual Report (continued) Year ended 31 March 2022 - 3 - Achievements and performance The Fund agreed to the distribution of 15 grants totalling £48,560 (2021 8 grants totalling £20,604) as detailed in Note 3 on page 10 of the financial statements. Projects support covered a wide spectrum of community activity in Oban arts, sports, economic development and cultural heritage. In the current climate of severe financial constraints, the Trustees recognise that there will continue to be substantial pressures placed on the Fund in terms of the number of applications, which must be balanced against the income to the Fund, which is subject to the vagaries of the stock market. In terms of this latter issue, management of the funds is delegated to CCLA Investment Management for Charities (CCLA) to increase the ethical approach to investment whilst maintaining a positive return. Financial review The funds result for the year was a surplus on unrestricted funds of £1,291,598 (2021 – deficit £18,399 - restated) and a surplus on restricted funds of £129,928 (2021 - £257,824 restated). Surpluses are generated from the growth in value of the investment and, in 2022, the revaluation the property asset fund. Reserves policy The Oban Common Good Fund invests the capital account in perpetuity in order to generate investment income to distribute annually, the balance of undistributed funds in any year is maintained in a revenue account. This can be used to increase the capital account where the return from the capital account investments shows signs of diminishing in real terms value due to the economic climate. At the year end, the restricted funds amounted to £1,635,417 (2021 - £1,505,489 restated) and the unrestricted funds amounted to £6,347,694 (2021 - £5,056,096 restated). Included within capital funds is property with a net book value of £5,858,000 (2021 - £4,598,000). Following a review of Statement of Recommended Practice 2019, the trustees concluded that the disclosure of the revaluation reserve arising from the revaluation of the Atlantis Swimming Pool building in 2019 was more appropriately classed as unrestricted funds. As this change resulted in a material adjustment to the accounts, the previous years accounts were restated. A further valuation was carried out on 31 March 2022 and reflected in these accounts. Plans for future periods The trustees recognise that the current pandemic is having serious impacts on the town of Oban and will look to assist where possible to mitigate the effects whilst carefully monitoring the fund's investment performance to ensure its long-term sustainability. Trustees' responsibilities statement The trustees are responsible for preparing the trustees' report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The law applicable to charities in Scotland requires the charity trustees to prepare financial statements for each year which give a true and fair view of the state of affairs of the charity and of the incoming resources and application of resources, of the charity for that period. Page 257
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Oban Common Good Fund Trustees' Annual Report (continued) Year ended 31 March 2022 - 4 - In preparing these financial statements, the trustees are required to: • select suitable accounting policies and then apply them consistently; • observe the methods and principles in the applicable Charities SORP; • make judgments and accounting estimates on a reasonable basis; • state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business. The trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charity's transactions and disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities and Trustees Investments (Scotland) Act 2005, the Charity Accounts (Scotland) Regulations 2006, and the provisions of the Trust Deed. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The trustees' annual report was approved on 24 November 2022 and signed on behalf of the board of trustees by: Councillor A Kain Ms Kirsty Flanagan FCCA CPFA ACIBS Trustee Charity Secretary Page 258
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Oban Common Good Fund Independent Auditor's Report to the Trustees of Oban Common Good Fund and the Accounts Commission Year ended 31 March 2022 - 5 - Opinion on financial statements I certify that I have audited the financial statements in the statement of accounts of the Oban Common Good Fund for the year ended 31 March 2022 under Part VII of the Local Government (Scotland) Act 1973 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Statement of Financial Activities, the Balance Sheet and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and the United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In my opinion the accompanying financial statements: • give a true and fair view of the state of affairs of the charity as at 31 March 2022 and of its incoming resources and application of resources for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Charities and Trustee Investment (Scotland) Act 2005, and regulation 8 of The Charities Accounts (Scotland) Regulations 2006. 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 am independent of the charity 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. 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 charity’s ability 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. Responsibilities of the trustees for the financial statements The trustees are 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 trustees determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Page 259
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Oban Common Good Fund Independent Auditor's Report to the Members of Oban Common Good Fund (continued) Year ended 31 March 2022 - 6 - In preparing the financial statements, the trustees are responsible for assessing the charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees intend to discontinue the charity’s operations, or have no realistic alternative to do so. 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 economic 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: • obtaining an understanding of the applicable legal and regulatory framework and how the charity is complying with that framework; • identifying which laws and regulations are significant in the context of the charity; • assessing 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 charity’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. Other information The trustees are responsible for other information in the statement of accounts. The other information comprises the Trustees’ Annual 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 Page 260
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Oban Common Good Fund Independent Auditor's Report to the Members of Oban Common Good Fund (continued) Year ended 31 March 2022 - 7 - 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 Trustees’ Annual Report to the extent explicitly stated in the following opinion prescribed by the Accounts Commission. Opinion prescribed by the Accounts Commission on the Trustees’ Annual Report In my opinion, based on the work undertaken in the course of the audit, the information given in the Trustees' Annual Report 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 Charities SORP (FRS 102). Matters on which I am required to report by exception I am required by The Charity Accounts (Scotland) Regulations 2006 to report to you if, in my opinion: • proper accounting records have not been kept; or • the financial statements 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. 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 120 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. Kyle McAulay CA Senior Audit Manager Audit Scotland 4th Floor, South Suite The Athenaeum Building 8 Nelson Mandela Place Glasgow G2 1BT 24 November 2022 Kyle McAulay is eligible to act as an auditor in terms of Part VII of the Local Government (Scotland) Act 1973 Page 261
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Oban Common Good Fund Statement of Financial Activities Year ended 31 March 2022 The notes on pages 11 to 21 form part of these financial statements. - 8 - 2022 2021 Unrestricted funds Restricted funds Total funds Total funds (restated) Note £ £ £ £ Income and endowments Donations and legacies 4 3,572 – 3,572 3,281 Investment income 5 55,051 – 55,051 53,662 ----------------------- ----------------------- ----------------------- ----------------------- Total income 58,623 – 58,623 56,943 ============== ============== ============== ============== Expenditure Expenditure on charitable activities 6,7 160,046 - 160,046 131,936 ----------------------- ----------------------- ----------------------- ----------------------- Total expenditure 160,046 - 160,046 131,936 ============== ============== ============== ============== Net gains on investments 8 (28,521) (129,928) (158,449) (314,418) ----------------------- ----------------------- ----------------------- ----------------------- Net income and net movement in funds (72,902) 129,928 57,026 239,425 ============== ============== ============== ============== Other recognised gains and losses Gains from revaluation of fixed assets 1,364,500 - 1,364,500 - ----------------------- ----------------------- ----------------------- ----------------------- New movement in funds 1,291,598 129,928 1,421,526 - ============== ============== ============== ============== Reconciliation of funds Total funds brought forward 5,056,096 1,505,489 6,561,585 6,322,160 ----------------------- ----------------------- ----------------------- ----------------------- Total funds carried forward 6,347,694 1,635,417 7,983,111 6,561,585 ============== ============== ============== ============== The statement of financial activities includes all gains and losses recognised in the year. All income and expenditure derive from continuing activities. Page 262
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Oban Common Good Fund Balance Sheet 31 March 2022 The notes on pages 11 to 21 form part of these financial statements. - 9 - 2022 2021 (Restated) Note £ £ £ Fixed assets Tangible fixed assets 14 5,858,000 4,598,000 Investments 15 2,014,410 1,855,961 ----------------------- ----------------------- 7,872,410 6,453,961 Current assets Debtors 16 13,847 13,509 Cash at bank and in hand 139,034 103,395 ----------------------- ----------------------- 152,881 116,904 Creditors: amounts falling due within one year 18 42,179 9,280 ----------------------- ----------------------- Net current assets 110,701 107,624 ----------------------- ----------------------- Total assets less current liabilities 7,983,111 6,561,585 ----------------------- ----------------------- Net assets 7,983,111 6,561,585 ============== ============== Funds of the charity Restricted funds 1,635,417 1,505,489 Unrestricted funds Revaluation reserve 5,193,931 3,981,154 Other unrestricted income funds 1,153,763 1,074,942 ----------------------- ----------------------- Total unrestricted funds 6,347,694 5,056,096 ----------------------- ----------------------- Total charity funds 19 7,983,111 6,561,585 ============== ============== These financial statements were approved by the board of trustees and authorised for issue on 24 November 2022, and are signed on behalf of the board by: Councillor A Kain Trustee Page 263
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Oban Common Good Fund Statement of Cash Flows Year ended 31 March 2022 The notes on pages 11 to 21 form part of these financial statements. - 10 - 2022 2021 Note £ £ Cash flows from operating activities Net income 57,026 239,425 Adjustments for: Depreciation of tangible fixed assets 104,500 104,500 Net gains on investments (158,449) (314,418) Dividends, interest and rents from investments (55,039) (53,626) Other interest receivable and similar income (12) (36) Accrued expenses/(income) 32,736 (3,958) Changes in: Trade and other debtors (338) – ----------------------- ----------------------- Cash generated from operations (19,576) (28,113) Interest received 12 36 ----------------------- ----------------------- Net cash used in operating activities (19,564) (28,077) ============== ============== Cash flows from investing activities Dividends, interest and rents from investments 55,039 53,626 ----------------------- ----------------------- Net cash from investing activities 55,039 53,626 ============== ============== Net increase in cash and cash equivalents 35,475 25,549 Cash and cash equivalents at beginning of year 103,395 77,846 ----------------------- ----------------------- Cash and cash equivalents at end of year 17 138,870 103,395 ============== ============== Page 264
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Oban Common Good Fund Notes to the Financial Statements Year ended 31 March 2022 - 11 - 1. General information The charity is a public benefit entity and a registered charity in Scotland and is unincorporated. The address of the principal office is Argyll & Bute Council, Kilmory, Lochgilphead, PA31 8RT. 2. Statement of compliance These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland', the Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (Charities SORP (FRS 102)) and the Charities and Trustee Investment (Scotland) Act 2005 and the Charity Accounts (Scotland) Regulations 2006 (as amended). 3. Accounting policies Basis of preparation The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through income or expenditure. The financial statements are prepared in sterling, which is the functional currency of the entity. Going concern There are no material uncertainties about the charity's ability to continue. Judgements and key sources of estimation uncertainty The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Fund accounting Unrestricted funds are available for use at the discretion of the trustees to further any of the charity's purposes. Designated funds are unrestricted funds earmarked by the trustees for particular future project or commitment. Restricted funds are subjected to restrictions on their expenditure declared by the donor or through the terms of an appeal, and fall into one of two sub-classes: restricted income funds or endowment funds. Page 265
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 3. Accounting policies (continued) - 12 - Incoming resources All incoming resources are included in the statement of financial activities when entitlement has passed to the charity; it is probable that the economic benefits associated with the transaction will flow to the charity and the amount can be reliably measured. The following specific policies are applied to particular categories of income: • income from donations or grants is recognised when there is evidence of entitlement to the gift, receipt is probable and its amount can be measured reliably. • legacy income is recognised when receipt is probable and entitlement is established. • income from donated goods is measured at the fair value of the goods unless this is impractical to measure reliably, in which case the value is derived from the cost to the donor or the estimated resale value. Donated facilities and services are recognised in the accounts when received if the value can be reliably measured. No amounts are included for the contribution of general volunteers. • income from contracts for the supply of services is recognised with the delivery of the contracted service. This is classified as unrestricted funds unless there is a contractual requirement for it to be spent on a particular purpose and returned if unspent, in which case it may be regarded as restricted. Resources expended Expenditure is recognised on an accruals basis as a liability is incurred. Expenditure includes any VAT which cannot be fully recovered, and is classified under headings of the statement of financial activities to which it relates: • expenditure on raising funds includes the costs of all fundraising activities, events, non- charitable trading activities, and the sale of donated goods. • expenditure on charitable activities includes all costs incurred by a charity in undertaking activities that further its charitable aims for the benefit of its beneficiaries, including those support costs and costs relating to the governance of the charity apportioned to charitable activities. • other expenditure includes all expenditure that is neither related to raising funds for the charity nor part of its expenditure on charitable activities. All costs are allocated to expenditure categories reflecting the use of the resource. Direct costs attributable to a single activity are allocated directly to that activity. Shared costs are apportioned between the activities they contribute to on a reasonable, justifiable and consistent basis. Page 266
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 3. Accounting policies (continued) - 13 - Tangible assets Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other recognised gains and losses, unless it reverses a charge for impairment that has previously been recognised as expenditure within the statement of financial activities. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other recognised gains and losses, except to which it offsets any previous revaluation gain, in which case the loss is shown within other recognised gains and losses on the statement of financial activities. Depreciation Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows: Freehold property - Straight line over 40 years Investments Unlisted equity investments are initially recorded at cost, and subsequently measured at fair value. If fair value cannot be reliably measured, assets are measured at cost less impairment. Listed investments are measured at fair value with changes in fair value being recognised in income or expenditure. Investments in associates Investments in associates accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in associates accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value taken through income or expenditure. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the associate arising before or after the date of acquisition. Investments in joint ventures Investments in jointly controlled entities accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Page 267
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 3. Accounting policies (continued) - 14 - Investments in jointly controlled entities accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value taken through income or expenditure. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the joint venture arising before or after the date of acquisition. Impairment of fixed assets A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash- generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the charity are assigned to those units. Financial instruments A financial asset or a financial liability is recognised only when the charity becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the amount receivable or payable including any related transaction costs. Current assets and current liabilities are subsequently measured at the cash or other consideration expected to be paid or received and not discounted. Debt instruments are subsequently measured at amortised cost. Where investments in shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in income and expenditure. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future Page 268
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 3. Accounting policies (continued) Financial Policies (continued) - 15 - payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in the statement of financial activities, with the exception of hedging instruments in a designated hedging relationship. Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised under the appropriate heading in the statement of financial activities in which the initial gain was recognised. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised. 4. Donations and legacies Unrestricted Funds Total Funds 2022 Unrestricted Funds Total Funds 2021 £ £ £ £ Donations Donations 3,572 3,572 3,281 3,281 ============== ============== ============== ============== 5. Investment income Unrestricted Funds Total Funds 2022 Unrestricted Funds Total Funds 2021 £ £ £ £ Income from listed investments 55,039 55,039 53,626 53,626 Bank interest receivable 12 12 36 36 ----------------------- ----------------------- ----------------------- ----------------------- 55,051 55,051 53,662 53,662 ============== ============== ============== ============== Page 269
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 - 16 - 6. Expenditure on charitable activities by fund type Unrestricted Funds Restricted Funds Total Funds 2022 £ £ £ Grant awards 48,560 – 48,560 Support costs 111,486 - 111,486 ----------------------- ----------------------- ----------------------- 160,046 - 160,046 == ============ ============== ============== Unrestricted Funds (Restated) Restricted Funds (Restated) Total Funds 2021 (Restated) £ £ £ Grant awards 20,605 – 20,605 Support costs 111,331 - 111,331 ----------------------- ----------------------- ----------------------- 131,936 - 131,936 ============== ============== ============== 7. Expenditure on charitable activities by activity type Grant funding of activities Support costs Total funds 2022 Total fund 2021 £ £ £ £ Grant awards 48,560 – 48,560 20,605 Governance costs 97,312 14,174 111,486 111,331 ----------------------- ----------------------- ----------------------- ----------------------- 145,872 14,174 160,046 131,936 ============== ============== ============== ============== Grants awarded £ Friends of Oban Community Play Park 560 Community equipment Oban Community Council – Xmas Lights 350 5,000 Camanachd Association 3,000 Oban Winter Festival 2,000 Argyllshire Gathering Trust 500 Adventure Oban 5,000 Oban Celtic 5,000 Oban and Ganavan Heritage ~Society 3,456 Oban High School Parent Council 15,400 Oban Sailing Club 995 Lorn Drama Club 1,000 Hebridean Outdoor Pursuits 2,925 Oban Gaelic Choir 1,250 Oban FM 6,000 Grant award reductions and refunds (3,876) -------------- Total 48,560 -------------- Page 270
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 - 17 - 8. Net gains on investments Unrestricted Funds Restricted Funds Total Funds 2022 £ £ £ Gains/(losses) on other investment assets 28,521 129,928 158,449 ============== ============== ============== Unrestricted Funds Restricted Funds Total Funds 2021 £ £ £ Gains/(losses) on other investment assets 56,594 257,824 314,418 ============== ============== ============== 9. Net income Net income is stated after charging/(crediting): 2022 2021 £ £ Depreciation of tangible fixed assets 104,500 104,500 ============== ============== 10. Auditors remuneration 2022 2021 £ £ Fees payable for the audit of the financial statements 3,572 3,281 ============== ============== 11. Staff costs The total staff costs and employee benefits for the reporting period are analysed as follows: 2022 2021 £ £ Nil Nil The average head count of employees during the year was Nil (2021: Nil). No employee received employee benefits of more than £60,000 during the year (2021: Nil). 12. Trustee remuneration and expenses No remuneration or other benefits from employment with the charity or a related entity were received by the trustees (2021 - none). 13. Transfers between funds There were no fund transfers in the year (2021 – none). Page 271
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 - 18 - 14. Tangible fixed assets Land and buildings £ Cost At 1 April 2021 4,950,000 Revaluations 908,000 ----------------------- At 31 March 2022 5,858,000 ============== Depreciation At 1 April 2021 352,000 Charge for the year 104,500 Revaluations (456,500) ----------------------- At 31 March 2022 - ============== Carrying amount At 31 March 2022 5,858,000 ============== At 31 March 2021 4,598,000 ============== Oban Common Good Fund have leased the Oban Swimming Pool to Oban and Lorn Community Enterprise Ltd (OLCE) for a peppercorn rent. The Oban Common Good Fund has classified this as an operating lease recognising the totality of the arrangement with OLCE:- • OLCE have since 1994, fundraised and built a multi-purpose sports facility to compliment the original swimming pool. • Argyll and Bute Council provide an annual operating subsidy, (£515,323 excluding VAT – 2021/22, £488,688 (2020/21)), towards the running costs of the facility. • At expiry of the lease in 2037, the facility will revert back to the Oban Common Good Fund. The Oban Swimming Pool was transferred to the Oban Common Good Fund in 1995 but only recognised in the 2013 accounts with an effective transfer date of 1 April 2012. At that date, the building was transferred at a historic cost of £1,088,392 and accumulated depreciation of £424,323. The building was subsequently subject to full revaluation by Argyll and Bute Council on 31 March 2019 on a Depreciation Replacement Costs basis. The asset was subject to desktop revaluation on 31 March 2022 at £5,858,000 with an estimated useful life of 40 years. Page 272
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 - 19 - 15. Investments Other investments £ Cost or valuation At 1 April 2021 1,855,961 Additions – Other movements 158,449 -------------------------- At 31 March 2022 2,014,410 ================ Impairment At 1 April 2021 and 31 March 2022 – ================ Carrying amount At 31 March 2022 2,014,410 ================ At 31 March 2021 1,855,961 ================ All investments shown above are held at valuation. 16. Debtors 2022 2021 £ £ Other debtors 13,847 13,509 ============== ============== 17. Cash and cash equivalents Cash and cash equivalents comprise the following: 2022 2021 £ £ Cash at bank and in hand 139,033 103,395 Bank overdrafts (163) – ----------------------- ----------------------- 138,870 103,395 ============== ============== 18. Creditors: amounts falling due within one year 2022 2021 £ £ Bank loans and overdrafts 163 – Accruals and deferred income 42,016 9,280 ----------------------- ----------------------- 42,179 9,280 ============== ============== Page 273
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 - 20 - 19. Analysis of charitable funds Unrestricted funds At 1 April 2021 Income Expenditure Transfers Gains and losses At 31 March 2022 £ £ £ £ £ £ General funds 1,074,942 58,623 (160,046) 90,480 89,764 1,153,763 Oban swimming pool 3,891,154 - - (90,480) 1,303,257 5,193,931 ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- 5,056,096 58,623 (160,046) - 1,393,021 6,347,694 ============== ============== ============== ============== ============== ============== At 1 April 2020 (restated) Income Expenditure Transfers Gains and losses At 31 March 2021 (Restated) £ £ £ £ £ £ General funds 1,002,861 56,943 (131,936) 90,480 56,594 1,074,942 Oban swimming pool 4,071,634 - - (90,480) - 3,981,154 ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- 5,074,495 56,943 (131,936) - 56,594 5,056,096 ============== ============== ============== ============== ============== ============== Restricted funds At 1 April 2021 Income Expenditure Gains and losses At 31 March 2022 £ £ £ £ £ Investment funds 1,505,489 - - 129,928 1,635,417 ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- 1,505,489 - - 129,928 1,635,417 ============== ============== ============== ============== ============== At 1 April 2020 (Restated) Income Expenditure Gains and losses At 31 March 2021 (restated) £ £ £ £ £ Investment funds 1,247,665 - - 257,824 1,505,489 ----------------------- ----------------------- ----------------------- ----------------------- ----------------------- 1,247,665 - - 257,824 1,505,489 ============== ============== ============== ============== ============== Following a review of the Statement of Recommended Practice 19, the charity changed the disclosure of the revaluation reserve in 2021 relating to the full revaluation of the Oban Swimming Pool in 2019. As the amount was material it was appropriate to restate the balances for restricted, and unrestricted funds. A further desktop revaluation exercise was undertaken at 31 March 2022 and is reflected in these accounts. Page 274
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Oban Common Good Fund Notes to the Financial Statements (continued) Year ended 31 March 2022 - 21 - 20. Analysis of net assets between funds Unrestricted Funds Restricted Funds Total Funds 2022 £ £ £ Tangible fixed assets 5,858,000 - 4,858,000 Investments 378,993 1,635,417 2,014,410 Current assets 152,880 – 152,880 Creditors less than 1 year (42,179) – (42,179) ----------------------- ----------------------- ----------------------- Net assets 6,347,694 1,635,417 7,983,111 ============== ============== ============== Unrestricted Funds Restricted Funds Total Funds 2021 (restated) £ £ £ Tangible fixed assets 4,598,000 - 4,598,000 Investments 280,868 1,575,093 1,855,961 Current assets 116,904 – 116,904 Creditors less than 1 year (9,280) – (9,280) ----------------------- ----------------------- ----------------------- Net assets 5,056,096 1,575,093 6,561,585 ============== ============== ============== 21. Financial instruments The carrying amount for each category of financial instrument is as follows: 2022 2021 £ £ Financial assets measured at fair value through income and expenditure Financial assets measured at fair value through income and expenditure 8,025,291 6,570,865 ============== ============== Financial liabilities measured at fair value through income and expenditure Financial liabilities measured at fair value through income and expenditure 42,179 9,280 ============== ============== 22. Analysis of changes in net debt At 1 Apr 2021 Cash flows At 31 Mar 2022 £ £ £ Cash at bank and in hand 103,395 35,638 139,033 Bank overdrafts – (163) (163) ----------------------- ----------------------- ----------------------- 103,395 35,475 138,870 ============== ============== ============== Page 275
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