2021-22 local financial returns (LFRs) - guidance notes

Guidance notes to support local authorities in completing the 2021-22 LFR.

Annex A: Usable Reserves as in LFR 23

General Fund (Column C): Local Authorities are required under section 93(1) of the Local Government (Scotland) Act 1973 to have a General Fund. The LFR follows the Code requirement to calculate the total Surplus or Deficit on the provision of services and make statutory adjustments to adjust from an accounting basis to funding basis.

Housing Revenue Account (HRA) (Column D): The legislative framework does not allow for a specific housing reserve. This however is contrary in spirit to the ring-fenced nature of the HRA under the Housing (Scotland) Act 1987 which ring fences HRA monies. As such it is recognised that local authorities can separately identify a housing balance and the form therefore recognises this practice.

Harbour Account (Column E): The Orkney County Council Act 1974 and the Zetland County Council Act 1974 require Orkney and Shetland to keep separate accounts for their harbour undertaking, and provides the power for them to hold a reserve fund for the same undertaking.

Renewal and Repair Fund (Column F): Local Authorities are permitted under Section 16 (Schedule 3 paragraph 22 (1)) of the Local Government (Scotland) Act 1975, to establish a Renewal and Repair Fund. This fund may be used for repairing, maintaining, replacing and renewing the authority's buildings, plant and equipment.

Insurance Fund (Column G): Local Authorities are permitted under Section 16 (Schedule 3 paragraph 22 (1)) of the Local Government (Scotland) Act 1975 (as amended by schedule 13 of the Local Government etc. (Scotland) Act 1994) to establish an Insurance Fund.

Other Statutory Funds (Column H): In addition to the funds listed above, some local authorities may have specific statutory authority to hold other reserves. Such reserves are recorded under this heading.

Capital Fund / Capital Receipts (Column I): Local Authorities are permitted under section 16 (Schedule 3, Para 22 (1)) of the Local Government (Scotland) Act 1975 Act to establish a Capital Fund. Useable capital receipts reserves are also considered allowable under these powers.

This reserve may be used for the purpose of meeting the cost of capital expenditure and for the repayment of principal on loans, but not any interest on loans.

Capital Grants and Receipts Unapplied (Column J): This reserve holds capital grant and capital receipts that have been received but not yet used to fund capital expenditure.


Email: lgfstats@gov.scot

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