19.1 Overview
Reserves are amounts set aside by the Council as a result of surpluses, deferred expenditure or policy decisions to ‘save’ towards future expenditure. Reserves can be either specific (earmarked) or general. The level of reserves must be decided before the Budget and the Council Tax can be fixed.
Please note that this does not include the Pensions Reserve, set up under FRS 17 – Retirement Benefits, or the Fixed Asset Restatement Account and Capital Financing Account, which are required under Capital Accounting arrangements, but do not equate to funds available for spending. The Collection Fund Surplus is also not available to the Authority for revenue or capital purposes.
School’s need to refer to separate guidance in School’s Financial Regulations with regards to reserves.
19.2 Responsibility/Accountability
19.2.1 Council (click here for all responsibilities for the Council)
Each year as part of the budget setting process Council will review the appropriate level of general reserves with the guidance of the Section 151 Officer, and also determine the level, utilisation and appropriations to or from reserves.
Set the Council Tax having regard to the Collection Fund Surplus/Deficit.
19.2.2 Cabinet (click here for all responsibilities for the Cabinet)
Recommending the Financial Strategy and budget after taking advice regarding reserves from the Section 151 Officer into account.
As part of recommending the Statement of Accounts to Council, Cabinet should recommend appropriations to and from reserves.
Approve further funding for the Local Improvement Fund
19.2.3 Section 151 Officer (click here for all responsibilities for the Section 151 Officer)
Maintaining and operating the Borrow & Invest to Save Scheme.
Advising the Cabinet and/or the Council on prudent levels of the General Fund Balance, and the Housing Revenue Account balance.
Advising the Cabinet and/or the Council on levels and utilisation of reserves. The budget report to the Cabinet will include a statement showing the estimated opening general reserve fund balance for the year ahead, the addition to/withdrawal from balances, and the estimated end of year balance. Reference should be made to the extent to which such reserves are to be used to finance recurrent expenditure
Maintaining and reviewing the adequacy of the General Fund balance with regard to the strategic, operational and financial risks, in conjunction with the medium term financial plan.
Setting clear rules for the establishment and use of reserves, by considering the underlying budget assumptions and financial management arrangements of the authority.
Consideration during the preparation of the annual budget:
• The level of reserves needed for estimating future expenditure
• The establishment and maintenance of reserves
Managing the Local Improvement Fund.
Reviewing requests for the creation of appropriate new reserves.
19.2.4 Business Unit Heads (click here for all responsibilities of Business Unit Heads)
Nominating an officer who will be responsible for setting the level of reserves in consultation with the Section 151 Officer.
The responsible officer will report on reserves to Chief Executive as part of the annual budget and closure of accounts process in consultation with the Section 151 Officer.
Ensuring s106 monies are spent in accordance with the conditions of the funds, are properly accounted for and utilised in accordance with statutory provisions.
Managing within budget any project that comes under the Local Improvement Fund within their Business Unit.
19.3 Policy (click here for detailed procedures)
Reserves are maintained in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom: A Statement of Recommended Practice (CIPFA/LASAAC).
The General Fund Balance will be reviewed annually during the budget process in order that the balance adequately provides for current and expected circumstances maintained at a minimum of 3% of the annual Net Budget The Housing Revenue Account will be maintained at a minimum of £150 per property.
A policy relating to reserves and provisions is provided in Part IV.
A scheme allowing services to borrow, invest and repay monies from specific reserves is in place – see Section 20 Borrow to Invest to Save
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