25. Unusable reserves - Notes to the core accounting statements
31 March 2020 £000 | 31 March 2021 £000 | |
---|---|---|
22,488 | Revaluation Reserve | 23,365 |
16,686 | Capital Adjustment Account | 16,222 |
(557,793) | Pension Reserve | (668,571) |
191 | Collection Fund Adjustment Account | (1,899) |
(206) | Accumulated Absences Account | (294) |
(518,634) | Total Unusable Reserves | (631,177) |
Revaluation Reserve
The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment and Intangible Assets. The balance is reduced when assets with accumulated gains are:
- Re-valued downwards or impaired and the gains are lost
- Used in the provision of services and the gains are consumed through depreciation, or
- Disposed of and the gains are realised.
The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.
2019/ 20 £000 | 2020 / 21 £000 | |
---|---|---|
21,339 | Balance at 1 April | 22,488 |
5,193 | Upward revaluation of assets | 1,869 |
(3,517) | Downward revaluation of assets and impairment losses not charged to the Surplus / Deficit on the Provision of Services | (287) |
1,676 | 1,582 | |
23,015 | Surplus or deficit on revaluation of non-current assets not posted to the Surplus or Deficit on the Provision of Services | 24,070 |
(527) | Difference between fair value depreciation and historical cost depreciation | (644) |
0 | Accumulated gains on assets disposed of | (61) |
(527) | Amount written off to the Capital Adjustment Account | (705) |
22,488 | Balance at 31 March | 23,365 |
Capital Adjustment Account
The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert fair value figures to historical cost basis). The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition, construction and enhancement.
The Account contains gains recognised on donated assets that have yet to be consumed by the Authority, and also contains revaluation gains accumulated on Property, Plant and Equipment before April 2007, the date that the Revaluation Reserve was created to hold such gains.
Note 8 provides details of the source of all the transactions posted to the Account, apart from those involving the Revaluation Reserve.
2019/ 20 £000 | 2020 / 21 £000 | |
---|---|---|
18,709 | Balance at 1 April | 16,687 |
Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Account (CIES) | ||
(3,605) | - Charges for depreciation and impairment of non-current assets | (3,275) |
(35) | - Revaluation losses on Property, Plant and Equipment and reversal of previous impairments | 76 |
(418) | - Amortisation of intangible assets | (320) |
0 | - Revenue expenditure funded from capital under statute | 0 |
(69) | - Amounts of non-current assets written off on disposal or sale as part of the gain / loss on disposal to the CIES | (189) |
(4,127) | (3,708) | |
527 | Adjusting amounts written out of the Revaluation Reserve | 644 |
(3,600) | Net written out amount of the cost of non-current assets consumed in the year | (3,064) |
Capital financing applied in the year: | ||
15 | - Use of Capital Reserve to finance new capital expenditure | 235 |
0 | - Capital grants and contributions credited to the CIES that have been applied to capital financing | 0 |
1,541 | - Statutory provision for the financing of capital investment charged against the General Fund balance | 1,674 |
0 | - Voluntary provision for the financing of capital investment charged against the General Fund balance | 0 |
0 | - Application of grants to capital financing from Capital Grants Unapplied Account | 0 |
22 | - Capital expenditure charged against the General Fund balance | 691 |
1,578 | 2,600 | |
0 | Movement in the Donated Assets Account credited to the CIES | |
16,687 | Balance at 31 March | 16,223 |
Pension 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 Authority accounts for post employment benefits in the Comprehensive Income and Expenditure Statement (CIES) 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 Authority makes employer’s contributions to pension funds or eventually pays any pensions for which it is directly responsible. 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 Authority has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid.
2019/ 20 £000 | 2020 / 21 £000 | |
---|---|---|
(568,940) | Balance at 1 April | (557,793) |
21,999 | Remeasurements on the net defined benefit pension | (101,361) |
(27,837) | Reversal if items relating to retirement benefits debited or credited to the Surplus or Deficit on the Provision of Services in the CIES | (25,397) |
16,985 | Employers pensions contributions and direct payments to pensioners payable in the year | 15,980 |
(557,793) | Balance at 31 March | (668,571) |
Collection Fund Adjustment Account
The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax and non-domestic rates income in the Comprehensive Income and Expenditure Statement as it falls due from council tax payers and business rates payers compared with the statutory arrangements for paying across amounts to the General Fund from the Collection Fund.
2019/ 20 £000 | 2020 / 21 £000 | |
---|---|---|
232 | Balance at 1 April | 191 |
(41) | Amount by which council tax and non-domestic rates income credited to the Comprehensive Income and Expenditure Statement is different from council tax and non-domestic rates income calculated for the year in accordance with statutory requirements | |
191 | Balance at 31 March | (1,899) |
Accumulated absences adjustment account
The Accumulated Absences Adjustment Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year e.g. annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account.
2019/ 20 £000 | 2020 / 21 £000 | |
---|---|---|
(209) | Balance at 1 April | (206) |
209 | Settlement or cancellation of accrual made at the end of the preceding year | 206 |
(206) | Amount accrued at the end of the current year | (294) |
3 | Amount by which officer remuneration charged to the CIES on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements | (88) |
(206) | Balance at 31 March | (294) |