Agenda item

The Committee were presented with the Unaudited Statement of Accounts for Scrutiny.  The accounts had been approved for issue by the S151 Chief Finance Officer on 1 July 2021 to the auditor, Mazars, which was prior to the statutory deadline of 31 July 2021.

The Committee was responsible for the approval of the Statement of Accounts and any material amendments of the accounts recommended by the external auditors.  The Audited Statement of Accounts would therefore be presented to the Committee again on 28 September 2021 after the audit process.

Members of the Governance and Audit Committee would be provided with specific training on the Statement of Accounts to enable them to meet the requirements.

Taking information from the main Statements within the Accounts, i.e. the Income and Expenditure Account, the Movement in Reserves and the Balance Sheet, the financial performance indicators provided a view of the Council’s financial stability and health. 

The Council remained in a healthy position, with good levels of Usable Reserves, however the impact of the increase in the Pension Liability reflected an inability for the Authority to meet its liabilities.  The pension fund was not an immediate concern, and the increased liability, was mainly due to the financial assumptions of the value of liabilities in the current economic climate. 

The main elements of the Statement were detailed in Section 3 of the report and were highlighted to the Committee.

Debate ensued and reference the balance sheets, whilst acknowledging the level of reserves the Council still held, but recognising the fluctuating situation, particularly in respect of liabilities such as pension, assurance was sought that the Council had enough in reserves for future years .

In responding, Officers advised that the Council had increased its reserve from previous years. However the value of the assets was now less than that of liabilities the reasons for this was outlined to the Committee in detail. Officers were satisfied this gave the Council some level of resilience, but also the opportunity to continue to invest. The MTFP identified a balanced budget, but recognised a potential £1,000,000 shortfall within five years. Officers again provided assurance and were confident that this matter would be addressed in the ensuing years.  A number of national issues were yet to be determined including business rate retention policy and the review of fairer funding across all local authorities, both of which had the potential to impact the council's finances. All assumptions within the plan had been made with the level of prudence providing further assurance.

In responding to further questions, the Section 151 officer indicated the two greatest areas of concern and unknowns with potentially significant implications were the outcome of the business rates retention and the fairer funding for local authorities. It was also unclear how long government support would be provided to support the Covid recovery. Treasury management practices of the council also allowed fluidity, allowing the council to respond if necessary.

Members questioned the scenario, should the assumptions within the report not fall within the Council's favour. The Section 151 officer outlined the potential implications, and how the MTFP allowed for these and mitigated against them, where appropriate. Reference was made to the VAT exemption limits, which HMRC determined had been breached.  Officers outlined the circumstances, the calculation applied and indicated the ruling was being challenged. Officers were confident in being successful however, Members were advised that in the event the challenge was not successful approximately £740,000 would need to be paid to HMRC from the general fund.

There was some discussion as to whether the Statement of Accounts should refer to some staged targets in respect of carbon management.  However given this staged target approach was not part of an agreed policy at this time, no amendments were considerate appropriate at the current time.

The Committee commented that both this and the previous papers demonstrated that Officers had a handle on the processes and systems in place across the organisation and it was suggested this is where Members should take their assurance from.

 It was questioned whether the trust fund arrangement should be looked at going forward and whether this was now appropriate.

The Chairman also questioned how much of the reduction in allowances claimed by Members was as a result of the broadband allowance now being payable within the basic allowance, as opposed to savings from travel. Officers undertook to provide this information outside of the meeting.

At the request of Councillors, Officers outlined the difference between usable and non usable reserves referred to within the accounts, the latter mainly being for accounting adjustments such as differences in asset valuation.

Members were again reminded that full training would be provided prior to the meeting in September, the date of which would be circulated in due course.

RESOLVED that 

(a)         having had the opportunity to review the Unaudited Statement of Accounts there are no comments from the Committee which need to be referred to the Section 151 Officer for subsequent discussion with the Council’s External Auditors, Mazars;

(b)         the uncertainty around the Pension Fund Valuations which may result in amendments to the Statement of Accounts be accepted; and

(c)          the scale fee for the External Audit of the Statement of Accounts for 2020/21 be noted.

Note:  Councillor Dobbie left during consideration of the above item of business at 3.16pm and was not present for the vote.