2011 annual financial statements presented: Double-digit result more positive than expected
The annual accounts for 2011 are more positive according to double-entry accounting: City Treasurer Berthold Brehm today informed city councillors and media representatives about the annual results that are now available. The topic will also be discussed again at the next Administration and Finance Committee on 9 October.
The initial situation:
With the budget, the city council decides on the funds available for the fulfilment of tasks. In the cameralistic system, a distinction was made between the administrative budget and the capital budget, i.e. between current expenditure and investments. Following the switch to double-entry accounting in 2011, the municipal budget now consists of an operating budget and a financial budget.
In accordance with the previous accounting regulations and by analogy with commercial enterprises, the City of Chemnitz is also legally obliged to prepare annual financial statements under double-entry accounting. The annual financial statements are intended to show the accounting of the budget and provide an overview of the asset, financial and earnings situation. The annual financial statements are based on the balance sheet date and a historical perspective.
In contrast to the annual financial statement, the double-entry annual financial statement not only compares planned and actual cash flows, but also includes non-cash income and expenses in the result.
The 2011 annual financial statements:
In the first budget using double-entry accounting for 2011, a deficit of € -37.65 million was reported in the income budget.
With the preparation of the first double-entry annual financial statements for 2011, taking into account all business transactions, an overall result of 12.16 million euros has now been calculated in the income statement. This results in an arithmetical improvement in earnings totalling 49.8 million euros.
This result reflects the savings efforts of the city and, above all, the city council. In addition, these deviations can also be seen in other cities - such as Leipzig and Dresden - which are presenting annual accounts according to double-entry accounting standards for the first time. The experiences of the first double-entry budgets and the first double-entry annual financial statements are currently being analysed and incorporated into the future preparation, for example to more accurately reflect the consideration of depreciation.
However, the discrepancies totalling around 49 million euros are not all cash-effective, but are found to a large extent as pure balance sheet items in the annual financial statements: 33 million in total are non-cash items and result from the development of municipal investments (15.5 million euros) and the one-off effect following the reversal of special items on the liabilities side for subsidies (17.5 million euros). This involved the release of provisions that were only required at a later date following delays in construction measures.
The approximately 15 million euros that actually affect cash relate to additional income, for example from tax revenue, lower personnel expenses or lower interest on loans.
This table provides an overview of the deviations from the 2011 budget:
non-cash | 33 million € | thereof € 15.5 million increase in financial assets | This amount reflects the development of the municipal investments. |
of which € 17.5 million reversal of special items on the liabilities side | This is a one-off effect for 2011 (e.g. subsidies) | ||
Cash-effective | 15 million € | of which € 5.3 million Additional income from taxes | |
of which € 7.6 million additional income from Hartz benefit sharing | |||
of which € 3.8 million reduction in personnel expenses | |||
of which € 1.6 million reduction in KdU expenses | |||
of which € 2.2 million reduction in interest on loans | |||
of which € 1.8 million lower income from fees and charges | |||
of which € 3.2 million additional expenses for social transfer payments |
In simple terms, it can be stated that the deficit of € 17.5 million from the 2011 budget planning was balanced out in purely monetary terms by the cash-effective improvement in earnings.
The resolutions on the development and consolidation concept made a major contribution to the equalisation - also in terms of intergenerational fairness - starting in 2011.
As can be seen from the above overview, the 2011 result is largely characterised by non-cash income. Looking at the cash flows separately, this positive result also led to an increase in cash and cash equivalents. Overall, a liquidity improvement of EUR 2.48 million was achieved.
Thanks to the available liquidity reserve, the city was able to demonstrate a positive development to the Saxony state authorities, including for the budget approval of subsequent years, despite the deficits in the earnings budget.
The results of the 2011 annual financial statements must initially be included in the next annual financial statements for 2012, which will be available next year, in accordance with the municipal budget regulations for double-entry accounting (SächsKomHVO-Doppik).