Glossary of terms

Accruals: The concept that income and expenditure are recognised as they as earned or incurred, not as money is received or paid.
Budget: A statement of the policy of the Authority expressed in financial terms. The budget is the financial element of a range of plans adopted by the Authority which include the Medium Term Financial Strategy and the Community Safety Plan.
Capital Expenditure: Expenditure on the acquisition of assets or expenditure which adds to, and not merely maintains, the value of existing assets.
Capital Receipts: Income derived from the sale of capital assets.
Chartered Institute of Public Finance and Accountancy (CIPFA): The principal accountancy body dealing with Local Authority and Public Sector finance.
Contingent Liability: A possible obligation arising from past events whose existence will be confirmed by the occurrence of an uncertain future event not wholly within the Authority’s control. It can also be a present obligation arising from past events where it is not probable that a transfer of economic benefits will be required or where the amount of the obligation is uncertain.
Creditors: Amounts owed by the Authority for which no payment has been made at the end of the financial year.
Debtors: Amounts due to the Authority for which no payment has been received at the end of the financial year.
Depreciation: The measure of the wearing out, consumption or other reduction in the useful economic life of an asset during an accounting period.
Finance Leasing: A method of financing the acquisition of assets. Legally the assets are owned by the lessor, although the risks and rewards of ownership of the asset pass to the lessee. The assets are shown on the Balance Sheet of the Authority.
Financial Instrument: Any contract which gives rise to a financial asset of one entity and a financial liability of another. Typical financial instruments are: trade payables, borrowings, bank deposits, trade receivables and investments.
Non-Current Assets: Tangible or intangible assets which yield benefits to the Authority for a period of more than one year. Tangible assets include land and buildings and certain specialist vehicles and equipment. Intangible assets include software.
Impairment: A reduction in the value of an asset, which is additional to the expected depreciation of that asset. Impairment may be a result of, for example, physical damage or reducing prices.
Operating Leasing: A method of financing the acquisition of assets, notably vehicles, plant and equipment which involves the payment of an annual rental for a period which is usually less than the useful life of the asset.
Provision: A liability or loss which is likely or certain to be incurred but where the date and precise amount are uncertain.
Reserve: An amount set aside for purposes outside the definition of provisions. Reserves include earmarked reserves set aside for specific policy purposes and balances which represent resources set aside for general contingencies.
Revenue Contribution to Capital Outlay: A fixed asset purchased directly from revenue contributions.
Revenue Expenditure and Income: That expenditure and income which relates to the day to day activities of the Authority.