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Financial Report



Annual Report and Statement of Accounts 
for the Independent Living (1993) Fund
for the year ended 31 March 2004

 

 

 

 

 

 

 

Page   Contents
   
1   Trustees’ Report
   
7   Statement of Trustees’ and Chief Executive’s responsibilities
   
9   Statement on the System of Internal Control
   
15   Auditor’s Report
   
17   Statement of Accounts
   
20   Notes to the Accounts

  


 


 


 

Independent Living (1993) Fund

Trustees' Report for the Year ended 31 March 2004

Independent Living Funds appointed Trustees

Sydney Shore CBE (to October 2003; Chairman to July 2003)
   Chairman since 1993. A career banker who retired as a General Manager of Lloyds TSB plc. Involved in fund raising, social and church activities and was formerly a Vice Chairman of a large NHS Trust

 

Margaret Cooper (Chairman from August 2003)
   Solicitor. Chairman of The Appeals Tribunal, including disability appeals tribunals. Chairman of industrial tribunals and fair employment tribunals. 

 

John Shepherd OBE (Treasurer/Vice-Chairman)
   Vice Chairman since 1993. Chartered Accountant. Retired Commercial Finance Director with extensive experience in the manufacturing industry. Has worked with and for disabled people as a Director of Remploy.

 

Thomas Begg
    Management consultant in health & social care. Retired Director of Social Services. Former assistant honorary secretary to the Association of Directors of Social Services. Former Social Services Adviser to the Assembly of Welsh Counties and to the Welsh Local Government Association.

 

Anne Davies OBE (to October 2003)
   Former Chairman: Centre for Accessible Environments. Consultant on disability issues with NHS Trusts. Author and broadcaster.

 

Rachel Chiu
   Watchmaker. Chairperson of Birmingham Chinese Youth Centre, Treasurer of Chinese Community Centre- Birmingham and Regional Committee member of WM Community Fund. Former Social Worker. Freelance consultant supporting community projects.

 

Peter Cooke (from October 2003)
Professor of Automotive Industries Management; academic, writer and broadcaster on automotive and disability issues. International consultant on automotive industries. Non-executive director of Remploy. Winston Churchill Memorial Fellow of 2002.

 

Ann Goodborn (to May 2003)
   Chartered Accountant. Finance Director with extensive experience in manufacturing industry and education. Has worked in a variety of roles including Corporate Finance, Audit, Project Management and Consultancy. Involved in Music for Youth, teaching for Birmingham Education Authority for many years.

 

Stephen Jack (from May 2003)
Chartered Accountant. Executive director of Collins Stewart Tullett plc and Hon Treasurer of the Greater London Fund for the Blind. Has held senior financial management positions in a number of international financial services organisations.

 

Marie Martin (from October 2003)
   Past Chairman of Age Concern Richmond upon Thames, now an advisor. Chairman of Shooting Star Children’s Hospice. Trustee of the Hampton Fuel Trust. Chairman of Linden Hall Day Centre. Ex manager of social services for Hounslow & Kingston Upon Thames. Presently an outreach worker for B N A Nursing.


A minimum of two and a maximum of seven Trustees are appointed by the Secretary of State for Work and Pensions for a term of five years. Trustees may elect their own Chairman and sub-committees.

The Trustees do not receive any remuneration, but are reimbursed for out-of-pocket expenses. There are no other unpaid persons or volunteers upon whose services the Fund is dependent.


Sub-committees

a)   A Referrals Panel consisting of the Chairman plus one other Trustee, rotating on a monthly basis, considers in the first instance individual cases referred by the Chief Executive where she considers this is appropriate.
 
b)    An Audit Committee consisting of Margaret Cooper (until July 2003; Chairman until July 2003), John Shepherd (Chairman from August 2003), Tom Begg and Stephen Jack (from August 2003) is responsible for ensuring the operational co-operation between auditors and the Fund's Accounting Officer and staff, for assessing the outcome of external and internal audits, and dealing with risk management and corporate governance issues.
   
c)   A Salaries Committee consisting of John Shepherd (Chairman), Margaret Cooper (to July 2003), Tom Begg and Stephen Jack (from August 2003) is responsible for recommending senior staff salaries and changes to the general pay scales for directly employed staff, taking into consideration rates of pay in the Department for Work and Pensions.









Chief Executive appointed by the Trustees and Accounting Officer as designated by the Principal Accounting Officer for Work and Pensions

Mrs Elaine Morton

External auditor Internal auditor
Comptroller and Auditor 
General National Audit Office
157-197 Buckingham Palace Road 
London SW1W 9SP
Bentley Jennison 
St Matthews House 
6 Sherwood Rise
Nottingham
    

The only fee paid to National Audit Office was £31,725 for the external audit.

 
Solicitors Bankers
Eversheds
115 Colmore Row
Birmingham B3 3AL
Lloyds TSB Commercial
Butt Dyke House
33 Park Row
Nottingham NG1 6GZ


  
Objectives 


The Independent Living (1993) Fund, generally referred to as "the 93 Fund", was set up in April 1993 to provide financial help for disabled people throughout the UK. Its awards are in the form of regular monthly payments to enable people to pay for personal assistance.

The Fund is mainly financed by central government through the provision of grants in aid and is constituted as a discretionary trust fund. The Secretary of State for Work and Pensions appoints the Trustees. The same Trustees are responsible for the Independent Living (Extension) Fund, generally referred to as "the Extension Fund", which is a charity having similar financing and objectives, but which does not accept new applications.

The Fund exists to provide financial assistance, under the terms of the Trust Deeds, in an efficient, cost effective way that supports a disabled person’s requirements for personal care and domestic assistance which enables independent living (this statement of purpose was agreed by the Trustees).


The Trust Deed

The Trust Deed of the 93 Fund determines who is eligible for its help. A successful applicant must:

 be living in the United Kingdom

 be at least 16 and under 66 years of age

 receive the highest care component of the Disability Living Allowance

 be able to live independently in the community for at least six months

 have savings of less than £18,500

 have an income which is insufficient to cover the cost of the care needed

 be assessed by the local authority as being at risk of entering residential care, or capable of leaving it to live in the community

 receive at least £200 worth of direct payments and/or services per week from the local authority (net of any charge), and

 be assessed as needing additional care

The Trust Deed also determines certain restrictions upon how awards may be spent, and the maximum weekly payment that can be made to any user. The maximum weekly payment has been £395 since April 2002.

The partnership with local authorities marks the main difference between the 93 Fund and the Extension Fund (although there are also differences in eligibility criteria and financial limits). Disabled people must have the support of their local social services department in making an application to the Fund.


Organisation and administration

The Fund’s offices are at The Equinox Building, Island Business Quarter, City Link, Nottingham, NG2 4UU. The equivalent of 144 full-time staff administers both the 93 Fund and Extension Fund, and 79 self-employed ILF Assessors (based on an annual average) carry out assessments for both Funds.

There has been an increase in staff in order to improve user service. This includes a substantial review process ensuring that users are visited at two-yearly intervals to enable a full review of care needs leading to an up to date offer of financial assistance, and improvements to payment security.

The Fund seeks to employ disabled persons where they meet the criteria advertised for the post, and will make all adjustments possible within reasonable limits of resources and business needs to meet the terms of the Disability Discrimination Act.


Review of developments

A total of 3,673 new applications were received during the year, compared with 3,203 during 2002-03. By the end of March 2004, 10,319 people were receiving awards from the 93 Fund and the average award was £254 per week, compared with 9,006 people receiving an average £242 per week at March 2003. All current users have now been revisited under the new review process, and awards reflect the full reassessment of care needs.

The Fund has invested in training and development for staff to maintain and improve the standard of service provided for users. Process reviews are also being carried out in all areas of operation to ensure the most effective use of staff resources. Other administration costs have also been subject to review to ensure best value for money, and a programme of regular retendering for major services and supplies has been established.

The Fund has Contact Officers in all Social Services Departments in Great Britain and Health and Social Services Boards in Northern Ireland for the dissemination of information and advice about the Fund. The Fund has made presentations to social workers and disability groups on the operation of the Fund, and has also produced a Professional Users Guide.

A User Group was set up during 2001-02 with users from counties close to the Fund’s offices, and this group has made a significant contribution to the review of Funds literature resulting in a revised information pack for all users. Consultation will be extended to users in all areas by a variety of methods.

The Fund has agreed with the Department for Work and Pensions a regular data matching service for users who have given permission for information to be checked against state benefits. This will improve the Fund’s ability to respond to relevant changes of circumstance, and help ensure that payments are based on up to date information and incorrect payments are avoided.

The website (www.ILF.org.uk) has been maintained throughout the year to provide answers to frequently asked questions, and to give information about the User Group. The website includes a Publication Scheme in compliance with the requirements of the Freedom of Information Act 2000.


Financial position

The 93 Fund and Extension Fund are jointly financed, mainly out of money voted by Parliament as grants in aid for the purpose of making regular grants to individuals. 99.9% of the £194 million grant in aid available for this year has been drawn on for users of the two Funds.

The Fund is committed to prompt payment of bills for goods and services received. Payments are normally made within the period specified in the contract. Where there is no contractual or other understanding, they are paid within 15 days of the receipt of the goods or services, or presentation of a valid invoice or similar demand, whichever is later. 73% of invoices paid in the year met this target.

Grant in aid is received as unrestricted funds, except for amounts which are allocated to a restricted capital fund in respect of capital acquisitions. The Fund holds a working cash reserve sufficient to meet at least one week’s client payments, within a limit of 5% of the value of the grant in aid available for the year. Grant in aid is drawn on a four-weekly basis throughout the financial year, in time to ensure the working cash reserve is not exhausted. The Fund provides advance estimates of expenditure to inform government allocations of grant in aid from year to year; the Trustees are required to take reasonable steps to ensure expenditure does not exceed available funding.

Assets are held only for the purpose of managing the Fund. The Trust Deed provides that the Trustees: (i) can borrow only with the specific agreement of the Secretary of State; (ii) cannot lend; (iii) cannot issue guarantees or indemnities; (iv) can only invest Fund moneys in interest-bearing accounts.

The statement of accounts presented with this report has been prepared in accordance with an agreement made between the Trustees and the Secretary of State for Work and Pensions. 


Elaine Morton, Chief Executive


Margaret Cooper, Chairman


Tom Begg, Vice Chairman


Stephen Jack, Treasurer


Independent Living (1993) Fund

Statement of Trustees' and Chief Executive's Responsibilities


In accordance with the Trust Deed, the Secretary of State for Work and Pensions appoints the Trustees of the Fund. The Trustees are required to appoint, with the approval of the Secretary of State, a full time official to be known as the Chief Executive.

Under the Trust Deed and the consequential agreement between the Trustees and the Secretary of State, the Trustees are required to prepare a statement of accounts for every accounting period (financial year) in the form agreed with the Secretary of State. The accounts are prepared on an accruals basis and must give a true and fair view of the income and expenditure and state of affairs of the Fund.

In preparing the accounts, the Trustees are required to:
 
observe all relevant guidance given in "Government Accounting" and the Treasury publication “Executive Non-Departmental Public Bodies: Annual Reports and Accounts Guidance” as amended from time to time
 
ensure that every statement of accounts shall meet best commercial accounting practices including Accounting Standards issued or adopted by the Accounting Standards Board, and Statements of Recommended Practice, insofar as they are appropriate to the Fund and are in force for the financial period for which the statement of accounts is prepared;
prepare a Trustees' report (to be included with the statement of accounts), which confirms that the accounts have been prepared in accordance with the agreement made with the Department for Work and Pensions.

The Trustees, with the assistance of the Chief Executive, are required to apply accounting practices and financial systems to the administration of the Trust so as to enable them to:
 
  monitor and take reasonable steps to ensure compliance with the terms and conditions upon which money has been paid to and accepted by the Trustees as part of the Trust Fund;
   
  monitor and take reasonable steps to ensure that expenditure in any financial year does not exceed the programme, budgets and forecasts in respect of that financial year and the amount of public funds provided by way of grant made to the Independent Living (1993) Fund for that financial year;
   
  take reasonable steps to safeguard against fraud and theft;
   
  keep and maintain books, records and accounts and apply accountancy practices and financial systems which fully and properly record all money received and paid respectively by and on behalf of the Trustees for the purposes of the Trust.

The Trustees and the Chief Executive are responsible for effective control of the full range of issues related to corporate governance. A separate statement is provided on the system of internal control.

 



Elaine Morton, Chief Executive


Margaret Cooper, Chairman


Tom Begg, Vice Chairman


Stephen Jack, Treasurer


Independent Living (1993) Fund

Statement on Internal Control for Year ending 31 March 2004


Scope of Responsibility


As Accounting Officer I have responsibility for maintaining a sound system of internal control that supports the achievement of the Independent Living Funds’ policies, aims, objectives and policies whilst safeguarding the public funds and the Funds’ assets for which I am personally responsible, in accordance with the responsibilities assigned to me in Government Accounting.

The Board of Trustees also has responsibility for maintaining a sound system of internal control and for reviewing its effectiveness. As one of the two Funds (the Extension Fund) is a registered charity, in line with the Charities Statement of Recommended Practice (SORP) 2000, the Trustees have a joint responsibility for the preparation of the accounts and annual reports with myself.

The Department for Work and Pensions (DWP) financially sponsors the Fund. The DWP Senior Accountable Official within the Disability and Carers Directorate of DWP is responsible for monitoring the activities of the Funds on behalf of the Secretary of State for Work and Pensions. In addition there is an accountability to the Permanent Secretary of DWP who is responsible for ensuring the financial and management controls applied by the Department and the Funds are appropriate and satisfactory. 

All constituting documents (Trust Deeds and Agreement document), under which the Funds operate, are produced by the Secretary of State for DWP for Trustees’ signature. This structure does have associated risks of documents being out of date but the Funds ensure regular liaison is maintained to proactively manage the issues.

The nature of the relationship and accountability with DWP means that some aspects of corporate governance are not directly controlled by the Funds. However the control system operated by the Funds takes into account the impact of the relationship with DWP as well as those policies set by DWP. 

The purpose of the system of internal control 

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Funds’ policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The overall control environment has been developed further from October 2003 with the introduction of a validated assurance mechanism through internal auditors. This more comprehensive system has operated since that date to 
the end of the year at 31 March 2004 and up to the date of approval of the annual report and accounts, and accords with Treasury guidance.

Capacity to handle risk 

The strategy and leadership for managing risk is initially formulated by the Senior Managers and then recommended to the Audit Committee and Board of Trustees for agreement. The strategy identifies the key organisational risk areas and senior managers who take ownership of the risk area and report on the effectiveness of controls in their area of responsibility on a quarterly basis. 

Risk Management is an integral part of the strategic and business planning process as the key aims and objectives from the Funds’ Business Plan are assessed for risks against potential achievement. This is then continued through into the operational level of the management of the risk with action plans and key work objectives for relevant managers. New activities are assessed for risk and added to the risk register at the quarterly update.

The risk register is presented to and progress in managing risk and identifying new risk is reported to and discussed with the Audit Committee and then with the full Board on a six monthly basis. 

Staff are made aware of the key risk areas in their own areas through face to face briefings and discussions on outcomes from the control check system within their own areas. However it is recognised that we can learn from other good practices to embed the understanding of the risk management processes further in terms of all staff knowing the wider perspective outside their own direct area. This is already been addressed and further progress is planned for the following year through the recently developed method of electronic internal communication. Enhanced training on the process of risk assessment for section managers and comprehensive explanations on the progress being made to manage risk will also develop the further assessment of risk at operational level and ensure good practices are sustained. 

Relevant DWP personnel within the Carers Directorate Benefits Policy Division receive a copy of the risk register so are aware of the ILF organisational risks and mitigation plans. In addition they have been present when the full Board discusses risk management. Where DWP actions are directly linked to the mitigation of any ILF identified risk, proactive liaison takes place to ensure appropriate actions are taken and progress reported to the Board of Trustees. 


The Risk and Control Framework

Senior Managers are nominated as individual risk owners and have the authority to manage the risk directly or through others. The approach to risk is that assessments of risk are prioritised to ensure resources available for mitigation are directed appropriately. The Funds recognise that certain risks are inherent and, at a particular moment no active mitigation may be the appropriate response. Senior managers recognise that the risk environment is always changing so continue to consider risk management on a quarterly basis using an organisational wide risk register, collating and documenting progress on managing the key risks through the mitigation plans.

Risks are evaluated using a range of different factors. As an organisation providing a service to clients with high support needs, risks which impact on service delivery are rated as priority. Relationships with others such as local councils are also an important area as local councils directly contribute to our capacity to deliver our service as we rely on information from them. 

In addition, with a cash limited budget and as a publicly funded organisation, financial and payment security risk issues are also important. 

Consideration is always given to those areas where real or perceived image with key stakeholders including the sponsoring department are involved. Overall the Funds recognise all risks impact on overall reputation and the ultimate effectiveness of the organisation. 

The organisational register of risk assessed the key risk areas for the year as process and performance reflecting the stage the organisation had reached within the context of the programme of change. In relation to this stage in organisational development, technological risks including the IT infrastructure and system development were relevant. 

The risk control environment is comprised of control measures and control checks. Control measures represent day to day processes and systems which add value to the control process. This framework of management processes includes policies, management information, financial regulations, administrative procedures and a system of appropriate delegation and accountability. For example quarterly assessments of legislation changes impacting on the Funds’ activities are reported to the Senior Management team and progress updates on actions needed to ensure compliance are provided. 

Control checks to gain assurance across a wide spectrum of key areas also contribute by producing management information on a quarterly basis. Reporting ensures regular assessment of the effectiveness of the operation but also assesses the inherent design of a control to ensure continued relevance to the control framework. The control check reports also deal with any control failures and there were no significant control check failures during the year.

In addition there are regular reports made by managers, who have responsibility for the development and maintenance of the internal control framework, on steps taken to manage risk in their own areas of responsibility including progress on key business projects.

Review of effectiveness

As Accounting Officer I also have responsibility for reviewing the effectiveness of the system of internal control. This is informed by a combination of sources including the reports from the internal control checks, from managers within the Funds who have responsibility for the development and maintenance of the internal control framework, comments made by internal auditors, the Department’s internal audit services (DWPIAS) and the external auditors in their management letter and other reports. 

Internal auditors appointed in Autumn 2003 now provide independent assurance. The results of their reports are discussed with the senior managers collectively and with the staff in the area being audited. They have produced reports during this year on risk management and the system of financial control. The system of financial control was audited with an opinion of substantial assurance given. Some need to progress embedding of risk management was identified and accepted by the Trustees and an action plan to do this has been developed. An annual assessment of the effectiveness of the work of the internal auditors is being developed for the future. 

The Funds can access the services of DWPIAS and the Department can arrange for them to carry out an internal audit if required. During the year DWPIAS completed an assessment of control in the area of overpayments to standards defined in the Government Internal Audit Manual and an audit opinion of substantial assurance was given.

NAO, as external auditors, also consider the control processes and actively review progress. 

In summary the reports provided by internal and external audits have been positive with no areas of fundamental weakness in control. There are plans to address those areas meriting some attention ensuring a system of continuous improvement is in place.

The Audit Committee, on an annual basis, ensure that none of the auditors wish to discuss any issue relating to their reports on internal control or risk management matters directly with them without the presence of senior management. The documented responses show that none of the auditors have had any issue to raise on this basis during the year. 

The Board of Trustees is ultimately responsible for the system of internal control and for reviewing its effectiveness. It has established some key procedures and policies to review the effectiveness of the system of internal control. The Board remains committed to maintaining good internal control practices looking at both those areas which are within the exclusive remit of the Trustees but also ensuring active liaison is maintained in those areas where the Funds are impacted but does not directly control outcomes. In judging the effectiveness of the Funds’ controls, the Board of Trustees monitors the reports of management and the Audit Committee with the Chairman of the Audit Committee reporting the outcome of the Audit Committee meetings to the Board and the Board receiving the minutes of all the meetings. The Board also reviews financial information monthly and key performance indicators quarterly. The Board approves projects with high risk and/or high financial costs. Those decisions are informed by analysis of risk, value for money and affordability. 

Without diminishing its own responsibilities the Board has delegated certain processes to the Audit Committee and these include:
 
· initially reviewing the effectiveness of the risk management process agreeing a register of the organisation’s main risks and updates on progress prior to six monthly reports to the Board of Trustees;
· reviewing the internal, external audit and DWPIAS work plans;
· considering reports from management, internal audit, DWPIAS and external audit on the system of internal control and material weaknesses in their management letters;
· discussing with management the actions to be taken on any identified control weaknesses identified by the Audit Committee or in internal, external or DWPIAS audit or governance reports.

I have been advised on the implications of the result of my review of the effectiveness of the system of internal control by the Audit Committee and the Board of Trustees and a plan to address minor weaknesses and ensure continuous improvement of the system is in place. 


Significant internal control problems

During the year there have been no significant internal control problems. 

 



Elaine Morton, Chief Executive


Margaret Cooper, Chairman


Tom Begg, Vice Chairman


Stephen Jack, Treasurer


The Report of the Comptroller and Auditor General to the Trustees of the Independent Living (1993) Fund

I have audited the financial statements on pages 17 to 28. These financial statements have been prepared in the form directed by the finance memoranda and approved by the Treasury; they have been prepared under the historical cost convention and the accounting policies set out on pages 20 to 21.

Respective responsibilities of the Board of Trustees, the Chief Executive and the Auditor

As described on pages 7 to 8, the Board of Trustees and the Chief Executive, as Accounting Officer, are responsible for the preparation of financial statements and for ensuring the regularity of financial transactions funded by Parliamentary grant (“Grant in Aid”). The Board of Trustees and the Chief Executive are also responsible for the preparation of the Foreword/other contents of the Annual Report. In discharging my responsibilities, as independent auditor, I have regard to the standards and guidance issued by the Auditing Practices Board and the ethical guidance applicable to the auditing profession. I have been appointed as auditor by the trustees under the terms of the extant letter of engagement and in accordance with the conditions of the trust deed. 
I report my opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Charities Act 1993 and whether in all material respects the expenditure, income and resources funded by Grant in Aid have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. I also report if, in my opinion, the Foreword is not consistent with the financial statements, if the Independent Living (1993) Fund has not kept proper accounting records, or if I have not received all the information and explanations I require for my audit.
I read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements. 
I review whether the statement on pages 9 to 14 reflects the Independent Living (1993) Fund compliance with Treasury’s guidance on the Statement on Internal Control. I report if it does not meet the requirements specified by Treasury, or if the statement is misleading or inconsistent with other information I am aware of from my audit of the financial statements. I am not required to consider, nor have I considered whether the Accounting Officer’s Statement on Internal Control covers all risks and controls. I am also not required to form an opinion on the effectiveness of the Independent Living (1993) Fund corporate governance procedures or its risk and control procedures. 


Basis of audit opinion

I conducted my audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Board of Trustees and the Chief Executive in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Independent Living (1993) Fund circumstances, consistently applied and adequately disclosed.
I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by error or by fraud or other irregularity and that, in all material respects, the expenditure, income and resources funded by Grant in Aid have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements.
The maintenance and integrity of the Independent Living (1993) Fund’s website is the responsibility of the Accounting Officer; the work carried out by the auditors does not involve consideration of these matters and accordingly the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Opinion

In my opinion:
 
· the financial statements give a true and fair view of the state of affairs of the Independent Living (1993) Fund as at 31 March 2004 and of the incoming resources and application of resources for the year then ended and have been properly prepared in accordance with the Charities Act 1993; and 
   
· in all material respects the expenditure, income and resources funded by Grant in Aid have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.


 
John Bourn 
Comptroller and Auditor General 
15 July 2004
National Audit Office
157-197 Buckingham Palace Road
Victoria, London, SW1W 9SP




Independent Living (1993) Fund Statement of Accounts

Statement of Financial Activities for the Year ended 31 March 2004
  
Unrestricted, restricted and endowment funds  Unrestricted, restricted and endowment funds 
   
Notes     2003-2004 2002-2003
£  £ 
Incoming resources    
 
Activities in furtherance of the 
trust's objectives
4a  122,873,823 102,998,859
   
Bank interest 171,783 157,913
 
Other income 4b 1,816,174   2,277,906
 
Total incoming resources 124,861,780 105,434,678
 
Resources expended
 
Direct charitable expenditure:
Grants to individuals (118,947,823) (97,877,624)
Support costs (5,677,877)  (5,368,144)
Management and administration 6 (52,564) (53,238)
 
Total resources expended (124,678,264) (103,299,006)
 
Net incoming resources 183,516 2,135,672
 
Balances brought forward at 1 April 2003 4,690,736 2,555,064
 
Balances carried forward at 31 March 2004  4,874,252  4,690,736



The majority of financial activity relates to unrestricted funds; a full analysis of
 unrestricted, restricted and endowment funds is provided at Note 4.

All gains and losses are included in the Statement of Financial Activities.

The net movement in funds arises wholly from continuing activities.

The notes on pages 20 to 28 form part of this account.

 




Balance Sheet as at 31 March 2004
Notes     31 March 2004 31 March 2003
£  £
Fixed Assets
 
Tangible fixed assets 7 405,466 385,495
 
Current Assets
 
Debtors 8 6,440,368 5,766,483
Cash at bank and in hand 9 4,468,786 4,305,240
  10,909,154 10,071,723
Current Liabilities
Amounts falling due within one year 10 (6,440,368) (5,766,482)
Net Current Assets 4,468,786 4,305,241
 
Total Assets less Current Liabilities 4,874,252 4,690,736
 
Fund Balances:  
 
Endowment Trust Fund 127 125
  
Restricted income funds allocated to:
Grants to individuals 3,680,506 2,946,832
Support costs,
management and administration  4 788,153 1,358,284
  
Restricted capital funds 4 405,466 385,495
  4,874,252 4,690,736


The notes on pages 20 to 28 form part of this account.


Elaine Morton, Chief Executive


Margaret Cooper, Chairman


Tom Begg, Vice Chairman


Stephen Jack, Treasurer

These accounts were approved by the Trustees on 14 July 2004 



Cash Flow Statement for the Year ended 31 March 2004
 
Notes    2003-2004 2002-2003
  £ £
Operating activities
Grants in aid received 4 122,238,300  100,341,000
Other cash receipts 11a 1,266,583 3,119,767
Payments to individuals 5 (117,434,726) (96,946,345)
Other operating cash payments 11b (5,936,311) (4,371,735)
 
Net cash inflow
from operating activities 11c 133,846 2,142,687
 
Returns on investments and 
servicing of finance
Interest received 11d 163,903 155,552
 
Capital Expenditure and Financial Investment
  
Acquisition of fixed assets (134,213) (232,606)
Sale of fixed assets 10 354
  
Net cash (outflow) from investing activities (134,203) (232,252)
  
Increase in cash and cash equivalents 163,546  2,065,987 
     
 
Reconciliation of Increase in Cash to 
Net Funds (see note 11e) 2003-2004 2002-2003
  £ £
Increase in cash 163,546 2,065,987
Net funds at 1 April 2003 4,305,240 2,239,253
 
Net funds at 31 March 2004 4,468,786 4,305,240

   


The notes on pages 20 to 28 form part of this account



Notes to the Accounts

1 Nature and purpose of funds

The Trust Fund was established on 25 February 1993 with an initial endowment of £100 from the Secretary of State for Work and Pensions. This money is held in perpetuity with any interest earned being added to the original sum.

The main source of funding is grants in aid from the Department for Work and Pensions (Great Britain) and the Department for Social Development (Northern Ireland). This funding is given under the terms of an annual conditions of grant agreement between the Secretary of State and the Trustees, in order to provide assistance with the cost of personal and domestic care to disabled applicants meeting the terms of the Trust Deed and to meet the support costs, management and administration costs and capital costs of the Fund. The majority of funds are unrestricted, except where grant in aid income is allocated to a restricted capital grant fund as explained in note 3(e) below.

All assets and liabilities revert to the Secretary of State for Work and Pensions in the event of the closure of the Fund.

2 Accounting convention

The accounts are prepared under the historic cost convention, and in the form agreed between the Trustees of the Fund and the Secretary of State. Without limiting the information given, the accounts also meet the applicable requirements of the Charities (Accounts and Reports) Regulations 1995, the Statement of Recommended Practice for Accounting by Charities (SORP 2000) issued by the Charity Commissioners, the accounting standards issued and adopted by the Accounting Standards Board, and supplementary guidance on public sector accounting issued from time to time by Her Majesty's Treasury.

3 Accounting policies

The following policies have been used consistently in dealing with items which are considered material to the Fund's accounts: 
 
a) Grants in aid received
 
Funding to cover grants to individuals and management and administration expenses is provided through grants in aid from the Department for Work and Pensions and the Department for Social Development. Grants in aid are received on the basis of the Fund's estimated cash payments during the financial year. Grants in aid received for capital expenditure are explained in note (e) below.

Since these accounts are prepared on an accruals basis the grants in aid received (see note 4) are adjusted to reflect accruals at the beginning and end of the year. The balances at the end of the financial year reflect indebtedness between the Fund and the Departments, which will be met through the cash provisions in the following year.
b) Grants to individuals
 
Grants to individuals are discretionary grants made within the terms of the Trust Deed. Payments are made every four weeks in arrears, and grants due but unpaid at 31 March are accrued for in these accounts. 

Where grants are returned in whole or in part, the refunds are brought to account at the date of receipt. Potential refunds are not accrued for. Grants to individuals are shown net of refunds in these accounts.
c) Support costs, management and administration
 
The Secretary of State has agreed to allow this Fund to provide an administration service for the Independent Living (Extension) Fund and to charge an administration fee. Accordingly both Funds are administered jointly by staff employed by the Trustees of this Fund. All support costs and management and administration costs for both Funds are borne in full by this Fund, which recovers an agreed administration fee. 

The administration fee is estimated for the year in advance and paid on the basis of the original estimate. At the end of the year the fee is recalculated according to the agreed method for attributing and apportioning costs; any underpayment is shown as a debtor, whilst any overpayment is shown as a liability in the notes to the accounts.
d) Fixed assets and depreciation
 
All assets are held as grouped assets, and are held only for the purpose of managing this Fund and the Independent living (Extension) Fund (see note 3c above). Assets are capitalised in these accounts in the year of acquisition, and are valued at historical cost. Assets are recorded individually in a fixed assets register to facilitate proper control and accounting. Depreciation is charged on a straight line basis over the estimated useful life of each asset, commencing in the year following its acquisition.
 
Fixed assets are depreciated over the following expected life spans:
 
Office equipment 5 years
IT hardware 5 years
IT bespoke software 3 years
 
Under the administration arrangements described at 3c, this Fund purchases all assets necessary for the administration of both Funds.
e) Capital expenditure
 
Funding for capital acquisitions is included in the grants in aid and in accordance with SSAP 4 and SORP 2000, is allocated to a separate restricted capital fund. Amounts are transferred from this fund to unrestricted income funds (support costs, management and administration) to match the related annual depreciation charges over the expected useful lives of the associated fixed assets and to match any losses on disposal of items with a remaining net book value (see notes 4 and 7).
f) Leases
 
Leases are accounted for on an accruals basis. The charge to the Fund for the year is shown under Support costs, and any amount unpaid at the end of the financial year is included in Liabilities (see notes 6 and 10). The Statement of Financial Activity thus reflects the charge to the Fund for the year.
g) Support and Administration costs
 
Resources expended other than payments to individuals are shown as support costs or management and administration costs. Only Trustees expenses and audit costs are shown under management and administration. This reflects the fact that the Fund is set up for the sole purpose of providing financial assistance to disabled people under the terms of the Trust Deed, and the majority of expenditure is directly attributable to this purpose.


4 Analysis of funds

Unrestricted income funds Restricted Endowment Total Total
allocated between: capital Trust Fund 2003-2004 2002-2003
  Support costs,    funds
Grants to    Management &   
individuals    administration   
£   £   £

£

£ £
Grants in aid received (a)  118,168,400   3,935,687     134,213  - 122,238,300 100,341,000
Grants in aid: (debtor)    
  at 1 April 2003 (a) (3,641,494)   (2,074,597)    - - (5,716,091) (3,058,232)
Grants in aid: debtor     
   at 31 March 2004 (a) 5,154,591   1,197,023   - - 6,351,614 5,716,091
      
Grant income 119,681,497   3,058,113   134,213  -  122,873,823 102,998,859
Bank interest -   171,781   - 2 171,783 157,913
Other income (b) -   1,816,174   - - 1,816,174 2,277,906
Transfers between funds (c)  -   114,242   (114,242) - - -
     
Funds available 119,681,497   5,160,310   19,971 2 124,861,780 105,434,678
Expenditure (notes 5 & 6) (118,947,823)   (5,730,441)   - - (124,678,264) (103,299,006)
 
Net movement in funds 733,674   (570,131)   19,971 2 183,516 2,135,672
Funds brought forward    
  at 1 April 2003 2,946,832   1,358,284   385,495 125 4,690,736 2,555,064
   
Funds carried forward    
at 31 March 2004 3,680,506   788,153   405,466 127 4,874,252 4,690,735

Unrestricted funds are held by the Fund for the purpose of making grants to individuals and for meeting the related support costs and management and administration costs. Restricted capital funds are held for the purpose of fixed asset acquisitions and related depreciation and disposals in accordance with the policy described in note 3(e). The endowment trust fund consists of the original endowment and any bank interest earned on the sum, and is held in trust. The only arrangements for the transfer of funds are those detailed in note c below.

(a) Grants in aid summary
Received (Debtor) Debtor Total Total
2003-2004 1 April 2003 31 Mar 2004 2003-2004   2002-2003
£ £ £ £   £
Department for Work
  and Pensions 118,791,000 (5,551,186) 6,179,888 119,419,702   100,268,555
Department for Social 
  Development 3,447,300 (164,905) 171,726 3,454,121   2,730,304
Totals  122,238,300 (5,716,091) 6,351,614 122,873,823 102,998,859

Grants in aid are provided from the Consolidated Resource Accounts of the above Departments.

Debtors at 1 April 2003 match grants to individuals and management and administration payments made during the year in respect of the previous financial year and prepayments made during the previous year in respect of this year.

Debtors at 31 March 2004 match unpaid grants to individuals and management and administration expenditure due for the current financial year shown as creditors in the balance sheet at 31 March 2004, and prepayments made in this financial year in respect of the following financial year included as debtors in the balance sheet at 31 March 2004. 

(b) Other income summary
2003-2004  2002-2003
£ £
Administration fees 1,816,084 2,277,666
Other income 90 240
Total other income 1,816,174 2,277,906

Administration fees are paid by the Independent Living (Extension) Fund for the attributed and apportioned management and administration costs of that Fund (see note 3c).

(c) Transfers between funds

As explained in note 3e, funding is transferred from restricted capital funds to match the depreciation charge for the year and losses on disposal of capital assets (£114,232 in total for this year and £162,568 for 2002-2003 - see note 6).

5 Grants to individuals (see note 3b)
2003-2004 2002-2003
£ £
Payments made in year 117,434,726 96,946,345
(Creditors) at 1 April 2003 (3,641,494) (2,710,215)
Creditors at 31 March 2004 5,154,591 3,641,494
Grants payable for year 118,947,823 97,877,624
Number of individuals in receipt of payments 11,048 9,576

6 Support costs, management and administration
  2003-2004    2002-2003
  £   £
Support Costs  
Directly employed staff:  
Gross pay 2,491,310   2,176,088
Employer's National Insurance contributions 232,796   184,449
Employer's contribution to pension schemes and insurances (see note 13) 202,908   176,688
Total direct salary costs 2,927,014   2,537,225
Agency staff 82,680   58,430
   
Total staff costs (see note a) 3,009,694   2,595,655
Computer running costs 151,882   63,128
Postage, printing and stationery 289,287   203,603
Accommodation and utilities 733,747   1,229,088
ILF Assessors’ fees and expenses 955,223   875,172
Depreciation 112,891   92,897
Losses on disposal 1,341   69,671
Services, communications, training, etc 423,812   238,930
   
Total Support costs 5,677,877   5,368,14

Support costs include £790,768 on the operating lease (land and buildings) for the Equinox Building, and £1,222 on the operating lease (equipment) for a vending machine (see note 14).

Support costs, management and administration (continued)
2003-2004   2002-2003
£   £
Management and administration expenses  
  Trustees' expenses 20,839   17,988
  Auditor's remuneration 31,725   35,250
Total management and administration expenses 52,564   53,238
Total Support costs and Management and administration expenses 5,730,441   5,421,382

The Fund is exempt from paying Corporation Taxation under the provisions of paragraph 505 of the Income and Corporations Tax Act 1988.
(a) Emoluments paid to senior staff having authority or responsibility for directing or controlling the major activities of the Fund are:

 
Band   Name and position
£45,000 - £50,000   Elaine Morton (Chief Executive)
£30,000 - £35,000   Trevor Chapman (Information & Service Director)
  Gillian Smith (Personnel Director)
  Gary Stephenson (Finance Director)
£25,000 - £30,000   Jacky Fisher (Social Work Director)
  James Sanderson (Operations Director)

Jacky Fisher works for the Fund on a part-time basis. The Fund pays an amount equivalent to 8% of gross salary into a “defined contributions” group pension scheme (see note 13).

An average of 144 directly employed staff (124 in 2002-2003) were employed to administer this Fund and the Independent Living (Extension) Fund (see note 3c). Part time staff are included in proportion to hours worked.

7 Fixed assets
Office     IT hardware     Total     Total
equipment     and software     2003-2004     2002-2003
COST £     £     £     £
  Balance at 1 April 2003 33,526     712,554     746,080     655,662
  Additions in year 33,076     101,137     134,213     232,606
  Disposals in year (12,220)           (12,220)     (142,188)
 
Balance at 31 March 2004 54,382 813,691 868,073 746,080
              
DEPRECIATION            
  Balance at 1 April 2003 14,448     346,137     360,585     339,851
  Charge for the year (see note a) 5,379     107,512     112,891     92,897
  Disposals in year (10,869)      -     (10,869)     (72,163)
   
  Balance at 31 March 2004 8,958 453,649 462,607 360,585
             
NET BOOK VALUES            
  At 31 March 2004 45,424     360,042     405,466     385,495
  At 1 April 2003 19,078     366,417     385,495     315,811

(a) Depreciation for the year is based on historical cost at the start of the year (see note 3d).


8 Debtors
31 March 2004 31 March 2003
£ £
Due from Departments (see note 3a) 6,351,614 5,716,091
Accrued bank interest 20,895 13,015
Other debtors 738 9,004
Prepayments 67,121 28,373
6,440,368 5,766,483

All debtors are due within one year.

9 Cash at bank
2003-2004 2002-2003
£ £
Balance at 1 April 2003 4,305,240 2,239,253
Net cash inflow 163,546 2,065,987
Balance at 31 March 2004 4,468,786 4,305,240
 
REPRESENTED BY: 31 March 2004 31 March 2003
  £ £
Endowment Trust Fund 127 125
 
Restricted income funds allocated to:
Grants to individuals 3,680,506 2,946,831
Management and administration 788,153 1,358,284
4,468,786 4,305,240


10 Liabilities
31 March 2004 31 March 2003
£ £
(a) Amounts falling due for payment within one year
 
Liability due to individuals but not paid (see note 3b)  5,154,591 3,641,494
Liability due to Extension Fund 562,555 1,112,146
Trade creditors  646,298 977,592
Accruals 76,924 35,250
6,440,368 5,766,482

The liability due to the Extension Fund represents a prepayment of management fees. As explained in note 3(c) the fee is paid on the basis of original estimates and then recalculated at the end of the year, the excess is shown as a liability.

(b) There were no amounts falling due for payment after one year.


11 Reconciliations to cash flow statement
2003-2004    2002-2003 
£ £
(a) Reconciliation of other income to other cash receipts     
  Other income 1,816,174    2,277,906
   (Decrease)/increase in creditor with Extension Fund (549,591)    841,861
  Other cash receipts 1,266,583    3,119,767

  
(b) Reconciliation of support costs and management and administration expenses
to other operating cash payments
  Support costs 5,677,877 5,368,144
  Management and administration expenses 52,564 53,238
  Depreciation (112,891) (92,897)
  Losses on disposal (1,341) (69,671)
  Decrease/(increase) in trade creditors and accruals  289,620 (907,383)
  Increase in other debtors and prepayments 30,482 20,304
  Other operating cash payments  5,936,311 4,371,735

 
(c) Reconciliation of net movement in funds to
net cash inflow from operating activities
Net movement in funds 183,516 2,135,672
Interest received (163,903) (155,552)
Depreciation charge  112,891 92,897
Losses on disposal 1,341 69,671
(Increase) in debtors (673,885) (2,680,524)
Increase in current liabilities 673,886 2,680,523
Net cash inflow from operating activities 133,846 2,142,687

 
(d) Reconciliation of bank interest to interest received
  Bank interest  171,783 157,913
  (Increase) in accrued interest (7,880) (2,361)
  Interest received 163,903 155,552


(e) Analysis of net funds
Note 31 March 2003  31 March 2004 Cash flows Cash flows
2003-2004 2002-2003
£ £ £ £
 
Cash at bank 9 4,305,240 4,468,786 163,546 2,065,987
Totals 4,305,240 4,468,786 163,546 2,065,987


12 Losses

Although payments to individuals are discretionary grants (see note 3b) action is taken to recover payments which are found to have been based on incorrect information. Losses are recorded where it is decided not to pursue recovery, and there were 447 items with a total value of £358,908 written off in 2003-04 (200 items totalling £108,227 in 2002-03).


13 Pension commitments

The Independent Living (1993) Fund does not operate its own pension scheme. Staff employed directly by the Fund are invited to participate in a personal pension scheme operated by Scottish Widows' Fund and Life Assurance Society. This is a defined contributions group pension scheme to which the Independent Living (1993) Fund contributes an amount based on each participating employee's gross salary. In 1994 1995 the Trustees of the Fund approved a contribution rate of eight per cent of gross salary and this rate continued in 2002-2003 and in 2003-2004. The value of each employee's contribution is at the discretion of the employee.

Staff joining the Fund since the arrangements were set up do not have to join the scheme. In this event the Fund does not make any contribution to other schemes, because of the group pension arrangements agreed with Scottish Widows.

Pension scheme contributions due for staff directly employed by the Independent Living (1993) Fund are charged as revenue expenditure and included in the Financial Activity account in the year in which the charge accrues. The total of the pension contributions due from the Fund for 2003-2004 was £198,887 (£173,330 for 2002-2003).

The value of accrued contributions not paid over to the pension scheme at 31 March 2004 was nil (nil at 31 March 2003).

14 Leases and hire purchase

No lease has yet been signed for the accommodation and facilities provided under the general arrangements used by the Department for Work and Pensions, but a Tenancy at Will was signed by the Trustees on the move to Equinox Building in January 2003. The ongoing commitment is shown below; the facilities element of the lease is recalculated each year, and may be abated by penalties for failure to deliver the agreed service level. 

There is an operating lease for a vending machine provided by Sterling Capital Finance plc, taken out in March 2003. There are no other leases, and no hire purchase commitments.

Operating lease rentals due within the next year on leases expiring within: 

31 March 2004 31 March 2003
£ £
One year -  -
Two to five years (equipment – vending machine) 1,222 -
More than five years (land & buildings – Equinox Building) 790,768 691,409


15 Trustees' interests and indemnities

The Trustees receive no remuneration. Nine Trustees received reimbursement for travel and subsistence expenses amounting to £20 893 (£17,988 in 2002-2003). No transactions were undertaken in which any Trustee or person connected with any Trustee had a material interest.

There are no policies of insurance against loss arising from the neglect or default of the Trustees, nor any policies providing an indemnity for Trustees in respect of the consequences of any such loss.

By the terms of the Trust Deed, the Secretary of State for Work and Pensions provides that Trustees are not personally liable for any loss to the Fund other than that arising from wilful and individual fraud, wrongdoing or omission on the part of a Trustee who is found to be liable.

16 Related party transactions

The Independent Living (1993) Fund is administered by Trustees appointed by the Secretary of State for Work and Pensions. Related parties are the Trustees and all parts of the Department for Work and Pensions including its agencies (as representing the Secretary of State). The Trustees are the controlling party.

The Trustees are also the trustees of the Independent Living (Extension) Fund, a registered charity with similar objectives in relation to the provision of financial assistance to disabled people with the costs of care. The Fund provides an administration service for that charity and charges a management fee. The fee for the year was £1,816,084 (£2,277,666 in 2002-2003) and creditors of £562,555 (£1,112,146 in 2002-2003) representing prepaid fees are included in the accounts.

During the year no other related parties, including the Trustees and key management staff, have undertaken any material transactions with the Independent Living (1993) Fund.


17 Financial instruments and associated risks

The Fund has no borrowings and relies primarily on departmental grants for its cash requirements, and is therefore not exposed to liquidity risks. The Fund also has no material deposits, and all material assets and liabilities are denominated in sterling, so it is not exposed to interest rate risk or currency rate risk. All liabilities are due for payment within one year (see note 10).


18 Capital commitments

Capital expenditure authorised and committed at 31 March 2004 was nil (nil at 31 March 2003).

Capital expenditure authorised and not committed at 31 March 2004 was nil (nil at 31 March 2003).


19 Contingent liabilities

There were no contingent liabilities at 31 March 2004 (nil at 31 March 2003).

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