Cash comprises cash in hand and on-demand deposits. Cash will also include bank overdrafts that are repayable on demand and that are integral to the Council’s cash management.

Balances classified as ‘Cash Equivalents’ fit the definition of being short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

The net balance of Cash and Cash Equivalents is made up of the following elements:

Provisions are amounts set aside to meet future material liabilities of uncertain timing and amount.

Insurance Provision

The Council operates an Insurance Provision which is funded from contributions from revenue accounts and is used to pay claims which fall below the excess. At the end of each year, an estimate of the outstanding claims is made and the balance on the Insurance Provision is set at that level. All excess payments under a particular category each year are totalled and if they exceed a ‘stop loss’, then all further claims are met in full by external insurance. There are four main areas of risk as follows:

Business Rates Appeals

Bexley, as a billing authority, is required to make provision for refunding ratepayers who have successfully appealed against the rateable value on their properties. This will include amounts relating to non-domestic rates charged to businesses in 2023/24 and earlier financial years. Assets and liabilities relating to business rates are shared between the Government, Bexley and the Greater London Authority. The provision shown above is the Council’s share of the total amount.

The Council keeps a number of reserves in the Balance Sheet. Some are required to be held for statutory reasons, some are needed to comply with proper accounting practice and others have been set up voluntarily to earmark resources for future spending plans. Reserves are reviewed as part of the budget process together with the Council’s agreed reserves policy in accordance with s.23 of the Local Government Act 2003.

Movements in the Council’s Usable reserves are detailed in the Movement in Reserves Statement. Unusable reserves are further detailed in Note 25. Earmarked reserves are detailed in Note 10.

Note 24a - Usable Capital Receipts Reserve

The capital receipts are income from the sale of long-term assets and repayments of capital advances.

Note 24b - Capital Grants Unapplied

The Capital Grants Unapplied Account holds the grants and contributions received that have not yet been utilised on the capital projects to which they relate. The grants are not assumed to have any conditions attached that would trigger a repayment to the original provider.

25.1 Revaluation Reserve

The Revaluation Reserve contains the gains made by the Council arising from increases in the value of its Property, Plant and Equipment and Heritage Assets. 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 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.

25.2 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 enhancement of those assets under statutory provisions. The account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement. The Account is credited with the amounts set aside by the Council as finance for the costs of acquisition, construction and enhancement.

The account contains accumulated gains and losses on investment Properties and gains recognised on donated assets that have yet to be consumed by the Council.            
 

25.3 Financial Instrument Adjustment Account

The Financial Instruments Adjustment Account (FIAA) 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 benefitting from gains per statutory provisions.

Premiums and Discounts

The Code requires that, unless directly attributable to a loan held on 31 March 2007, all premiums and discounts carried on the balance sheet be written off to the General Fund balance at 1 April 2007. * Statutory regulations allow for the impact on council tax to be mitigated through a transfer to the Financial Instruments Adjustment Account. The balance of premiums and discounts is amortised to revenue in line with the provisions set down in the Council’s accounting policies.

*The Code requires that premiums and discounts arising from debt restructuring on or after 1 April 2007 are charged to the General Fund. Exceptions are permitted where they meet the modification criteria prescribed in the Code. In these instances, they are valued at the carrying value of the new loan and amortised over the remaining period via the effective interest rate.

Soft Loans

The Code also requires that where the Council has provided loans at less than market rates, these should be accounted for on a fair value basis. The difference between the fair value and loan amount is accounted for as an immediate charge to the Comprehensive Income and Expenditure Statement and the impact to be mitigated through a transfer to the FIAA via the Movement in Reserves Statement. The fair value increases over the period of the loan and the annual impact is neutralised by writing down the balance to the General Fund balance by a transfer from the FIAA via the MIRS.

Stepped Interest Loans

Under the Code, where the Council has taken out loans with a stepped interest structure, the interest charged to the Comprehensive Income and Expenditure Statement is at the effective interest rate over the period of the loan. However, for stepped loans taken out before 9 November 2007, regulations permit authorities to charge interest to the General Fund balance at either:

• the effective interest rate or
• the interest rate due for the financial year under the loan agreement

Where the latter option is applied, the difference between the interest chargeable at the effective interest rate is transferred from the General Fund balance to the Financial Instruments Adjustment Account via the Movement in Reserves Statement and released back to the General Fund balance for the remaining period of the loan.

The transactions reflected in the FIAA are as follows:

25.4 Deferred Capital Receipts Reserve

The Deferred Capital Receipts Reserve holds the gains recognised on the disposal of non-current assets but for which cash settlement has yet to take place. Under statutory arrangements, the Council does not treat these gains as usable for financing new capital expenditure until they are backed by cash receipts. When the deferred cash settlement eventually takes place, amounts are transferred to the Capital Receipts Reserve.

25.5 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 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 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 Council 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.

25.6 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.

25.7 Accumulated Absences Account

The Accumulated Absences Account absorbs the difference 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.

25.8 DSG Adjustment Account

The DSG Adjustment Account holds accumulated deficits relating to the schools budget since 1 April 2020.

25.9 Pooled Investment Fund Adjustment Account

The Pooled Investment Fund adjustment account is charged with fair value gains and losses of pooled investment funds.

To arrive at the net cash flows from operating activities, the cash flow statement takes the surplus or deficit on provision of services and adjusts for non-cash movements and for items that are investing or financing activities.

The adjustments for non-cash movements are as follows:

The adjustments for items that are investing and financing activities are as follows:

The Council operated pooled funds with Bexley NHS Clinical Commissioning Group (CCG) to support the integration of health and social care services. The funds were administered under an agreement based on Section 75 of the National Health Service Act 2006. Contributions from the parties and expenditure and income for the year are summarised below.

Under the terms of the new Section 75 agreement approved in 2021/22, the former separate pooled funds for Mental Health, Learning Disability and Community Equipment are now subsumed into one Better Care Fund Pooled Fund, as reflected in the summary below. The London Borough of Bexley was the host for the Better Care Pooled Fund. Each party accounted for its own transactions.

The Council paid the following amounts to Members of the Council during the year.