In 2006/07, incoming resources were £46,692,000 (2006: £37,637,000). The majority of these funds are Government grants of £39,509,000 (2006: £31,474,000). The increase was substantially due to the increase in funds received from the Financial Inclusion Fund (See note 3a in the financial statements).
The DTI, on behalf of the Government as a whole, provide an unrestricted grant-in-aid of £21,470,000 (2006: £23,605,000), being 46 per cent of our revenue (2006: 65 per cent). This covers the core costs of the organisation including supporting the bureaux network, providing the information system and the provision of the IT and administrative infrastructure.
The service is predominantly supported by Government grant funding. However, other sources of funding are critical for the ongoing projects and work programmes that Citizens Advice engages in.
During the year new grants were received from the Financial Inclusion Fund (FIF), HBOS Foundation, The Abbey National Charitable Trust, Northern Rock Foundation, Disability Rights Commission, AEGON UK plc and a number of other grants of less than £50,000 (See notes 3a and 3b in the financial statements). The Independent Complaints Advocacy Service (ICAS) contract came to an end in 2005/06 and therefore no income was received in 2006/07.
In 2006/07, the resources expended were £42,877,000 (2006: £37,515,000). The noticeable increase has arisen due to the full implementation of the FIF programme and other projects. These include increased funding from Barclaycard for Lone Parent Money advice, new DCLG homelessness work and new LSC Offender Support Services funding.
The anticipated cut in the DTI grant took effect in this financial year. Citizens Advice responded through the creation of a savings programme and a major structural change. The implementation and delivery of these changes will impact in the 2007/08 financial year. We have initiated savings programmes and seek to raise income from other sources to meet the shortfall. We have set a balanced budget for the financial year ending 31 March 2008. Operations will continue unaffected.
We will continue to seek to improve our revenue by exploiting commercial opportunities. The organisation strives to reduce reliance placed on the DTI funding through a savings programme as agreed by the trustees. The delivery of the programme will impact on the 2007/08 financial year.
Our reserves policy of DTI unrestricted funds is set for us by the DTI. Our maximum unrestricted DTI balance is equal to one month’s DTI grant in aid. The year end balance was £707,000 being within this limit (see note 18 to the financial statements for further information).
At 31 March 2007, total reserves held were £11,710,000 (2006: £7,895,000). Of this amount £8,834,000 (2006: £2,807,000) were restricted funds for agreed projects. The balance of reserves was the unrestricted funds of £2,876,000 (2006: £5,088,000). It is expected that this balance will be used to support any shortfall in funding over the next four years. Once our financial situation has stabilised, we anticipate setting a target for non DTI unrestricted funds.
London Region reserves were fully utilised during the year, being spent on bureau premises matters.
Restricted balances carried forward represent the balance of ongoing projects.
Citizens Advice participates in The National Association of Citizens Advice Bureaux Pension and Assurance Plan (1991), which is a mulit-employer, defined benefit arrangement. The last full reported actuarial valuation of this scheme was carried out by a qualified independent actuary as at 1 April 2004. This has been updated on an approximate basis to 31 March 2007. An actuarial valuation was carried as at April 2007 with the results currently awaited.
The scheme continues to be open to new members of Citizens Advice staff. The employer contribution rate is at 5.9 per cent and the employee contribution rate remains at 8.2 per cent of gross pay.
As required in its Memorandum paragraph 4(o), in furtherance of its objects, and no other purposes, the charitable company has the power to invest the monies of the charitable company not immediately required for its purposes in or upon such investments, securities or property as may be thought fit, subject nevertheless to such conditions and such consents as may for the time being be imposed or required by law.
All surplus funds are invested at the best interest rates attainable and interest rates are monitored regularly. Citizens Advice considers it to be prudent to hold all surplus funds in an interest bearing account so that there is no risk to the capital amount of funds. This is to protect the grant awarded to Citizens Advice for the purpose it was intended.
Payment of creditors
All invoices not in dispute were paid within 30 days of receipt of the invoice or the agreed contractual terms if otherwise specified. Citizens Advice terms of trade apply to all suppliers who supply goods and services worth over £5,000 per annum. A copy is available by writing to the Company Secretary at the registered office address as set out in the administrative details of this report.
Payment of grants to bureaux
Citizens Advice awards grants to bureaux. Agreed criteria are used to regulate bureau grants awarded from the DTI funds and other funder projects. The main criteria for grants to be awarded are as follows:
partnership funding with Local Authorities for paid bureaux workers
grants to improve buildings to meet Disability Discrimination Act requirements
supporting regional and national social policy and advice.
The financial statements of Citizens Advice have been audited by PricewaterhouseCoopers LLP. The audit fee to external auditors was £37,750. This was made up of the audit of Citizens Advice (£34,600), the subsidiary company, Citizens Advice Limited (£1,000) and two public sector grant audits (£2,150).
This is PricewaterhouseCoopers’ last year as the external auditor and Citizens Advice note appreciation for their services over the previous ten years. A competitive tender was won in this round by Baker Tilly, who will audit the financial statements for year ending 31 March 2008.
25 July 2007
David Harker OBE