Police authorities and some Greater London Authority (GLA) bodies will now be able to join councils across England in using one of the Audit Commission's most popular online services.
The Ratios Tool allows local public bodies, and those interested in their finances, to check and compare their financial performance with others, at no cost. The service has been improved so comparisons can now be made geographically, with groups extended to include map areas or 'nearest neighbours'.
The original Local Government Ratios Tool was hailed as a helpful ready reckoner by 150 county and single tier councils when it was launched in 2008 alongside the Commission's national report Summing up: A review of financial management in local government. Last year it was extended to cover England's 201 district councils.
This year the Commission has added police authorities and three GLA bodies to the database, giving them access to this easy to use comparative information.
The tool calculates, and then allows users to compare and contrast:
- Working capital - the ratio between a body's assets and its current liabilities
- Usable reserves - capital and revenue reserves as a share of expenditure
- Long-term borrowing - as a share of tax revenue
- Long-term assets - in relation to long-term borrowing
There is an extra calculation for county and single-tier councils of their total school reserves as a share of dedicated schools grant.
The Commission's Managing Director of Audit, Martin Evans, explains:
'In the public sector there is no simple indicator of a body's financial health - we need to look at a range of measures to find out how effectively money is being managed.'
'Our ratios tool distils the complex accounts of councils, police authorities and GLA bodies into just a few indicators based on financial ratios. Of course they don't provide a detailed analysis, but they do give a reckoner that is accessible and helpful for financial planners.'
The calculations used don't, in themselves, indicate good or poor financial performance, because they are the products of a variety of local challenges and decisions. But they do allow similar bodies to make comparisons, identifying common trends and movements.
Martin says: 'At a time when the government is focusing on the need for financial transparency and accountability to local taxpayers, the Ratios Tool provides a unique resource that will be helpful to finance staff and 'armchair auditors' alike.'
Notes for editors
- The Ratios Tool can be used to download the calculated ratios and underlying data.
- The free online service includes 2007/08, 2008/09, and now 2009/10 audit data for all councils. 2008/09 balances have also been adjusted to comply with the new requirements of the local government Statement of Recommended Practice regarding IFRIC 12 and collection fund transactions. Data for police authorities and Greater London Authority bodies are from 2008/09 and 2009/10.
- The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone. Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers. On 13 August 2010 the Secretary of State for Communities and Local Government announced that he plans to disband the Audit Commission. His intention is to have new arrangements in place for auditing England's public bodies by 2012/13.
For more details about the role of the Audit Commission visit www.audit-commission.gov.uk
For further information please contact:
MARK NICHOLSON
Media Relations Manager, Audit Commission
Millbank Tower, London SW1P 4HQ
Direct line: 0844 798 2135 / 0207 166 2135
24hr Press line: 0844 798 2128 Mobile 07813 038132
E-mail m-nicholson@audit-commission.gov.uk