Agenda item

Members considered the Audited Statement of Accounts for 2020/2021.

An introduction was provided by the Section 151 Officer, who was pleased to advise that the Statement of Accounts 2020/21, had received an unqualified audit opinion.

The Statements reflected the Authority’s financial activity for the year up to 31 March 2020.

The Authority had continued to deliver it’s Executive Business Plan activities to achieve its corporate objectives, through investment projects and service delivery.

Whilst the Authority had not achieved the statutory deadline for the certification of the statement,  for reasons previously reported to Committee, the situation was not unique, with only 9% of authorities having met the 30 September deadline. 

The narrative report provided an illustrative and comprehensive view of the Council and it’s performance and achievements in delivering corporate plan objectives 

The Balance sheet (page 37)  detailed net liabilities of £2.543m which reflected the impact of a significant increase in the pension liability, and which was planned to reduce over a period of 20 years.

Useable reserves had increased from £24m to £29 with £18m earmarked for future investment and service improvements and to mitigate risk. 

The General Fund working balance was £7.3 of which £3.4m was unallocated and which exceeded the minimum requirement of £2.5m and which provided some resilience to changes in future funding in the medium term. 

The Comprehensive Income and Expenditure Account  (page 36) reflected £8.401m of net expenditure, of which a surplus on provision of services of £0.219m had been reconciled to the actual surplus from the Council’s  revenue activities  £5.534m which was contributed to the General Fund Balance and was net of £1.4m of support for ongoing projects, would be carried forward.

The Cash flow statement (page 38) showed a net outgoing of cash, reflecting the significant amount of grant funding the Authority was holding on behalf of Government and which would either be expended in the current year or returned to Government.

In terms of the accounts there had been a re-valuation of the pension fund to take into account the financial impacts of two legal cases, the McCloud judgement and The Goodwin case.  The re-valuations have been deemed below materiality at £232k and therefore the accounts have not been adjusted.

The S151 Officer placed on record her thanks to the Finance Team for their work in preparing the Statements, and invited questions from the Committee.

In responding, the S151 advised as to why the unusable reserves had increased.  Members noted this accounted for the re-valuation reserve, which reflected movements within asset values. This was not a cash transaction and did not appear in the revenue accounts.  Similarly the pension reserve, which had a significant reduction due to the re-evaluation of assets and liabilities of the fund, which accounted for the largest increase in the useable reserves. A smaller contributor was the capital adjustment account, which reflected the repayment and financing of capital assets.

Members commented on the improving quality of the report, its ease of reading for external users and the quality of the figures within there to give a sound picture of the Council’s finances.  Members did make a few comments aimed at improving the external users experience, namely seeking clarity around the FTE by Cluster, indicating clearer definitions would be of assistance and in respect of the Carbon Management Plan which stated emissions reduction, that any reduction should be further quantified and indicate how reductions had been achieved.    Members were reminded that reductions were quantified in reports to Policy Committees but it was accepted more detail could be helpful.

Committee also indicated that a note to the statements to explain the large difference between grant income and grant expenditure (for external readers) may have been helpful.

In response to further questions, the reason for a substantial increase in the provision for earmarked reserve for budget smoothing was explained.  This primarily related to the Business Grant Relief, in respect of Hospitality and Leisure, totalling £2.7m, however due to how business rates were accounted for, the actual charge to the Authority would not take place until 2021/22 and this additional reserve helped smooth the budget for future years.

It was confirmed that in respect of the Joint Venture Company MRSL, held by the Authority and which had property assets, only the principle loan outstanding featured in West Lindsey District Council’s Statement of Accounts.  Group accounts were prepared for the Joint Ventures.

Again noting provisions and reserves had increased ten fold, Officers advised the Pension reserve had seen a £10m increase, as previously advised, assumptions and notes which referred to this movement could be found at  Note 32.  In response to further comments regarding risk such pensions liabilities could have for organisations, the External Auditor advised that he was content, that the figures from the actuary were appropriately reflected in the Council’s financial statement.

The S151 Officer also indicated that there was a tri-annual review of the pension fund management which re-based the contribution levels. Over recent years the contribution rate had been increasing by 1%, as an employer’s contribution rate.

Members were reminded of the forthcoming Pensions Training which would aide Members understanding further.

In response to questions regarding severance pay detailed within the accounts, the S151 Officer confirmed that exit packages had been reviewed by Auditors and it had been confirmed that appropriate governance had been in place and as such the payments were appropriate in accordance with contractual requirements.

Finally in respect of Fair Value, assurance was sought that challenge was offered in respect of fair value estimates, with one such instance being highlighted to the Committee.  Due diligence was undertaken and Officers fully understood any rationale for a change in valuation and how that had been arrived at.

RESOLVED that: -

(a)     having reviewed the Statement of Accounts Committee confirms that there are no concerns arising from the Financial Statements that need to be brought to the attention of the Council.

(b)     the Statement of Accounts for 2020/21 and their certification by the Chairman of the Committee be approved; and

(c)     the Section 151 Officer and the Chairman of this Committee be permitted to certify the letter of representation to the Auditor, Mazars, on completion of the audit.