Glossary Accounting Policies Those principles, bases, conventions, rules and practices applied by an entity that specify how the effect of transactions and other events are to be reflected in its financial statements through: (i)
recognising
(ii)
selecting measurement bases for, and
(iii)
presenting assets, liabilities, gains, losses and charges to reserves.
Accounting policies do not include estimation techniques. Accounting policies define the process whereby transactions and other events are reflected in financial statements. For example, an accounting policy for a particular type of expenditure may specify whether an asset or a loss is to be recognised; the basis on which it is to be measured; and where in the revenue account or balance sheet it is to be presented. Accruals The amounts by which receipts or payments are increased (or reduced) in order to record the full income and expenditure incurred in an accounting period. Actuary An independent consultant who advises on the financial position of the Pension Fund. Actuarial Valuation Every three years the Actuary reviews the assets and liabilities of the Pension Fund and reports to the Authority on the Fund’s financial position and recommended employers’ contribution rates. Agency Arrangement An arrangement whereby an authority (the agent) acts on behalf of another (the principal) to collect income or incur expenditure on the behalf of the principal. Such income or expenditure is not included in the agent’s accounts other than any commission paid by the principal. Amortisation The writing off of an intangible asset or loan balance over a period of time. Appropriation The transfer of ownership of an asset from one service to another at an agreed (usually market) value. Balance Sheet A statement of all the assets, liabilities and other balances of the Authority at the end of an accounting period. Bid Price The purchase price that a buyer is willing to pay for an asset. Budget A forecast of future expenditure plans for the Authority. Detailed revenue budgets are prepared for each year and it is on the basis of these figures that the council tax is set. Budgets are revised towards the year end to take account of inflation, changes in patterns of services, and other factors. Capital Expenditure Expenditure on the acquisition of fixed assets or expenditure which adds to the value of an existing fixed asset. Capital Financing Requirement The measure of an authority’s capital borrowing need under the Prudential Code and the Local Government Act 2003. It is made up of the total value of the Authority's fixed assets and intangible assets less the sums accumulated in the revaluation reserve, deferred grant reserve and capital adjustment accounts. Capital Receipt Income received from the sale of a capital asset such as land or buildings. Code of Practice on Local Authority Accounting in the United Kingdom (The Code) Local authorities in the United Kingdom are required to keep their accounts in accordance with ‘proper practices’. This includes, for the purposes of local government legislation, compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom (the Code), prepared by the CIPFA/LASAAC Local Authority Accounting Code Board. The Code is reviewed continuously and is issued annually. Collection Fund A Statutory Account which receives council tax and non-domestic rates to cover the costs of services provided by Havering and its precepting authorities. Community Assets Assets that the Authority intends to hold in perpetuity, that have no determinable useful life, and that may have restrictions on their disposal. Examples of Community Assets are parks and historic buildings.
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