Agenda item

Joint Report of the Treasurer to the Joint Committee / Corporate Director of Resources and the Corporate Director of Neighbourhood Services.

The Head of Finance - Financial Services reminded Members that there had been a request from the Accountant, Spennymoor Town Council as regards formalising the existing practices as regards the reserves held by the Joint Committee into a formal policy document. 

Members were informed that the Chartered Institute of Public Finance and Accountancy (CIPFA) Local Authority Accounting Panel (LAAP) guidance set out recommendations on Reserves and Balances, making recommendations to the determination and to the adequacy of Local Authority Reserves. Councillors noted that this had been used as a basis on which to develop the Reserves Policy for the Central Durham Crematorium

The Joint Committee were informed that reserves were held for 3 main purposes: as a working balance to help cushion the impact of uneven cash flow and avoid unnecessary temporary borrowing; as a contingency to cushion the impact of unexpected events or emergencies; and as a means to build up funds – earmarked reserves to meet predicted future liabilities. 

Members learned that it was proposed that the a General Reserve balance of at least 30% of the annual income budget would be kept and that any surplus over this level would be transferred into the Major Capital Works Reserves as previously agreed by the Joint Committee during the year end closedown. 

The Head of Finance - Financial Services noted that the Major Capital Works Reserve would continue to be built up such that there would be sufficient reserves to enable cremator replacement at the requisite time, and added that once the Major Capital Works Reserve reached £1 Million, the Joint Committee would undertake a further review.

Councillors felt that the issue of extending the Chapel at the Crematorium was important and should be looked at further in the future, funding permitting.  The Superintendent and Registrar reminded Members that a previous feasibility study had set out a scheme for extension; however that scheme proved to be unaffordable at that time.  Members were asked to note that several issues, such as the location of the Book of Remembrance, main door height and public toilets were being looked at, and further information would be brought back to the Joint Committee accordingly.

The Head of Finance - Financial Services noted that the Major Capital Works Reserve could be used as a source of funding for these works, but that this would need to be balanced against the cremator replacement costs in future years. Once the feasibility study had been completed and costed, financing options and impact on the budget / reserves policy could be more fully considered.

Resolved:

(i)         That the Reserves Policy to set aside sufficient sums in Earmarked Reserves as is considered prudent for the anticipated known areas of future expenditure, maintaining a Major Capital Works Reserve balance of circa £1 Million to cover future liabilities in respect of cremator replacement be agreed.

(ii)        That Reserves Policy to maintain a General Reserve of at least 30% of the Joint Committee’s Income Budget be agreed.

(iii)       That the transfer of the surplus (over the 30% of income budget requirement) General Reserves balance to Major Capital Works Reserve at the 2012/13 year end as part of the preparation of the Annual Return and Statement of Accounts be agreed.