Accounting Errors at CCC - Post 4/15 in a series - City Deal Accounted for Correctly

4 - 2015/16 – City deal accounted for correctly

2015/16 was the first financial year of City Deal 1.  The first City Deal grant of £20m was receivable and duly received in that financial year. Consequently £20m was correctly recorded in the Comprehensive Income & Expenditure Account (CIES) as City Deal revenue. 

In the same year CCC received an additional £17.8m of City Deal grant.  This component was disclosed as grant received in advance because it related to the following year’s grant.  The £17.8m was therefore not recognised in the 2015/16 CIES but was held in the balance sheet as a creditor (Dr Cash, Cr Creditor - £17.8m).  This accounting treatment was correct, and corresponds to the deferred income scenario described in the box above.  This is how it was disclosed on page 89 of CCC’s final 2015/16 financial statements:

This correct accounting treatment shows that CCC’s CFO and the BDO auditor understood how City Deal grants should be accounted for.  In the following year (2016/17), only £2.221m of grant would be receivable in cash from the government under the arrangement, and the credit balance above would be reversed out to make the revenue up to the £20m grant total for the 2016/17 financial year (Dr Creditors, Cr Revenue £17.8m).