GLOSSARY
Accounting Standards
International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) are the accounting standards that the Authority are required to follow when producing the financial statements.
Accruals
An accounting principle that recognises income and expenditure as they are earned or incurred, not as money is received or paid.
Actuarial Assumptions
Predictions made for factors that will affect the financial position of the pension scheme.
Actuarial Gains and Losses
Changes in the estimated value of the pension fund because events have not coincided with the actuarial assumptions made or the assumptions themselves have changed.
Amortisation
The measure of the consumption of an intangible asset over its useful life.
Budget
A budget is a plan of approved spending during a financial year.
Capital Programme
The plan of approved spending on non-current assets.
CIPFA
The Chartered Institute of Public Finance and Accountancy, the institute that governs accounting in the public sector.
Collective Investment Fund
Fund of investments held by the Authority which provides loans to property developers to support the acceleration of commercial property developments within the West Midlands region.
Credit loss
Cash shortfalls measured by the difference between the net present value of all the contractual cash flows that are due to an authority in accordance with the contract for the instrument and the net present value of all the cash flows that the authority expects to receive.
Deficit
This occurs when spending exceeds income.
Depreciation
The measure of wear and tear, consumption or other reduction in the useful economic life of a non-current asset.
Expected credit loss
The weighted average of credit losses with the respective risks of a default occurring as the with the weights.
Fair Value
The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
Financial Instrument
Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Year
The Authority’s financial year runs from 1 April to the following 31 March.
Impairment of Asset
An asset has been impaired when it is judged to have lost value other than through normal use.
Intangible Assets
An item which does not have physical substance (for example software) but can be identified and used by the Authority over a number of years.
Lease
A finance lease is an agreement to pay for an asset in regular instalments where the person paying the lease (the lessee) is deemed to own the asset. In contrast, an operating lease occurs when the lessee is not considered to own the asset.
LOBO
Lenders Options Borrowers Option. A form of loan where the lender can change certain conditions of the loan, such as the dates and the interest rate. If this occurs, the borrower then has the option of either continuing with the loan or redeeming it in full without a penalty.
Materiality
An item is material if its inclusion in the financial statements would influence or change the judgement of a reasonable person. If the information would have no impact on the decision maker, it is deemed not material.
Public Works Loan Board (PWLB)
A government agency that lends money to local authorities. Local authorities are able to borrow some or all of their requirements to finance capital expenditure from this source.
Revenue Expenditure Funded from Capital under Statute (REFCUS)
Spending on assets that have a lasting value but are not owned by the Authority.