Annual Report and Accounts 2005

Statement of Accounts

Audit of accounts of Tameside Metropolitan Borough Council

The auditors of local authorities are appointed by the Audit Commission under section 2 of the Audit Commission Act 1998 to audit the accounts of a local authority as a whole, which include a summary of the accounts of the local authority’s pension fund. PricewaterhouseCoopers LLP acts as the appointed auditor of Tameside Metropolitan Borough Council, and intend to express an opinion on the Council’s accounts for the financial year 2004/2005 by the 31 October 2005

The audit report is made solely to Tameside Metropolitan Borough Council in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 54 of the Statement of Responsibilities of Auditors and of Audited Bodies prepared by the Audit Commission.

Copies of the audited accounts of Tameside Metropolitan Borough Council can be obtained from the Borough Treasurer at:

Tameside Metropolitan Borough Council
Council Offices
Wellington Road
Ashton-under-Lyne
OL6 6DL

1. Notes to the Accounts

The financial statements have been prepared in accordance with the accounting recommendations of the Financial Reports of Pension Schemes – a Statement of Recommended Practice. However disclosures have been limited to those required by the Code of Practice on Local Authority Accounting in the United Kingdom: a Statement of Recommended Practice. The financial statements summarise the transactions of the Scheme and deal with net assets at the disposal of the Management Panel.  They do not take account of obligations to pay pensions and benefits which fall due after the end of the Scheme year.  The actuarial position of the Scheme, which does take account of such obligations, is dealt with in the statement by the actuary and these financial statements should be read in conjunction with it.

2. Accounting Policies

Basis of preparation: The accounts have been prepared on an accruals basis.  That is, income and expenditure is recognised as it is earned or incurred, not as it is received or paid, with the exception of property income and transfer values.  Transfer values are recognised on a received or paid basis. Property income is recognised on a due date for payment basis.

Additional Voluntary Contributions: The Fund provides an AVC scheme for its contributors, the assets of which are invested separately from the Fund.  The scheme provider is Prudential where the sums saved are used to secure additional benefits on a money purchase basis for those contributors electing to pay additional voluntary contributions.  These AVC sums are not included in the Fund’s financial statements because the Fund has no involvement in the management of these assets.

Additional Voluntary Contributions Income:  Where a member is able and chooses to use their AVC fund to buy scheme benefits, this is treated on a cash basis and is categorised within Transfers In.

Investment Income: Interest and dividends on fixed interest and equity securities and on short term deposits has been accounted for on an accruals basis. 

Accrued Investment Income:  Accrued investment income has been categorised within other investments together with outstanding settlements in accordance with the Statement of Recommended Practice.  This classification has the effect of reducing the prior year net current assets and liabilities by £15,058,000.

Foreign Income:  Foreign income is translated into sterling at the rate ruling at the date of conversion.  Income due at the year end is translated at the rate ruling at 31 March 2005.

Benefits: Benefits includes all benefit claims payable by the Fund during the financial year.

Valuation of Investments: all investments are valued at their market values as at 31 March 2005 determined as follows:

•      Listed securities are valued at mid-market value ruling at the balance sheet date.

•      Unit trust and managed fund investments are stated at the mid point of latest prices quoted by the managers as at 31 March 2005.

•      Unlisted securities are valued having due regard to latest dealing, professional valuation, asset values and other financial information. This includes Ventures North West investments, included within Local Investments.

•      Investments held in foreign currencies have been valued on the relevant basis and translated into sterling at the rate ruling at the balance sheet date.

•      Freehold and leasehold properties are included on the basis of open market valuations prepared by independent valuers in accordance with the principles laid down by the Royal Institution of Chartered Surveyors Appraisal and Valuation Manual.

•      The Fund’s main property portfolio has been valued by CRE, Chartered Surveyors, as at 31st December 2004.  This independent valuation has subsequently been adjusted for transactions undertaken between 1 January 2005 and 31 March 2005.

•      The Greater Manchester Property Venture Fund portfolio (included with Local Investments) has been valued as at 31 March 2005 by Dunlop Heywood Lorenz Ltd, Chartered Surveyors.

•      Indirect private equity investments are interests in limited partnerships which are valued based on the Fund’s share of the net assets of the limited partnership.

Acquisition costs of investments: Acquisition costs of investments are included in the purchase price.

Interest on Property Developments: Interest on property developments is accounted for within the property asset values.

Investment Management Expenses: Investment management expenses are shown within the Fund account

Net (Profit)/Loss on Foreign Currency:  Net (profit)/loss on foreign currency comprises the change in value of short term deposits due to exchange rate movements during the year.

3. Employees’ Contributions

Transfers in from the Additional Voluntary Contribution provider have been reclassified as a transfer in from an external source and are now included in the Transfers In balance. Prior year comparative figures have been adjusted to reflect this change – movement of £3,148,000 to Transfers In for year ended 31 March 2005 and £3,505,000 to Transfers In for the year ended 31 March 2004.

4. Benefits Payable

5. Payments to and on account of leavers

6. Investment Income

Income received is net of all taxes paid and irrecoverable. Income received by Legal and General pooled funds is automatically reinvested within the relevant sector fund and thus excluded from the above analysis. Similarly UBS pooled funds for emerging market equities and UK Small Companies in which we invest have income automatically reinvested with the fund.

The Fund also invests in property unit trusts and managed funds.

UK registered companies: Legal and General Investment Management Ltd; ING Real Estate Investment Management (UK Funds) Ltd; Standard Life Investments Ltd; Lend Lease Real Estate Investment Services Ltd; Schroder Property Investment Management Ltd; Morley Pooled Pensions Ltd; Protego Real Estate Investors LLP; Lend Lease Real Estate Investment Services Ltd; Merrill Lynch Investment Managers Ltd; Henderson Global Investors Ltd.

Channel Islands registered companies: Guernsey International Fund Managers Ltd; Mourant International Finance Administration

7. Change in market value of investments

The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at year end and all profits and losses realised on sales of investments during the year.

8. Equities

9.  Fixed interest corporate and government bonds and index linked securities

10. Property Investments consist of

11. Local Investments

12. Cash instruments

Cash instruments are short dated bonds and are thus valued as listed securities. Included in the value in the Net Assets statement is the Fund’s cash holding within the Legal & General pooled fund (insurance contract) (see Note 17).

13. Cash and Deposits

14. Other investments