Agenda item

The Committee were presented with the Unaudited Statement of Accounts for Scrutiny. The Accounts had been approved for issue by the S151 Officer on 31 May 2023 to the Auditor, Mazars, prior to this statutory deadline for consideration and review. These were published on 31 May 2023 and available until 12 July 2023 for public inspection.

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 statement of accounts had been prepared under the International Financial Reporting Standards based Code of Practise on Local Authority Accounting.

The Audited Statement of Accounts would therefore be presented to the Committee on 26 September 2023 after the audit process. The Unaudited Statement of Accounts for 2022/23 had been prepared under the International Financial Reporting Standards based Code of Practice on Local Authority Accounting (the Code). Members noted that extended deadlines again applied as they had the previous year, with the unaudited accounts having to be published on or before 31 May 2023. Audited accounts must be published by 30 September 2023.

In his introduction, the Financial Services Manager clarified the items in the statements which were displayed as positives were expenditure and items displayed either with a minus sign or in brackets were income. Items within the accounts that the Officer was keen to highlight were the primary statements which showed an improved balance sheet position mainly due to an improved position on the Pension fund. This was due to increased investment returns and changes to longer term assumptions.

The general fund had reduced slightly to £4.682 million (m) as planned which was still well within prudent levels. Earmarked reserves had increased slightly as the Council had achieved a budget surplus for 2022/23. The Council was still holding £3.7m of capital grants at the balance sheet date for schemes which were due to be delivered in 2023/24. The Comprehensive Income and Expenditure Statement showed an accounting surplus on services of £1.841m. This had then been reconciled to the actual budget surplus in the Expenditure and Funding Analysis found at note 7 in the accounts.

The Financial Services Manager stated the key message was that the Council had good reserve levels and a robust medium term financial strategy which together meant the Council was an ongoing concern with no material uncertainty at this stage. In concluding his assessment, the Officer placed on record his thanks to the finance team who had worked very hard during March, April and May to meet the deadline for producing the accounts.

Members of the Governance and Audit Committee would be provided with specific training on the Statement of Accounts, as required by the Constitution, prior to the relevant Committee Meeting.

Debate ensued, and Members referenced the balance sheets and made comments about the financial performance of several parts of the Council. Further assurance was requested about the reserves and contingency planning by the Authority. It was explained by the Section 151 Officer that a pay award could be agreed upon in the near future and that there were contingency plans in case of any voids of the commercial property stock. In a later enquiry concerning substantial changes to reserves year on year, the Officer explained that a supporting document would benefit the Committee when the budget setting process was in progress. This included a review of the adequacy of the reserves and projects, how they were to be spent, and the addition/removal of them from the projected income.

In explaining the effect of inflation, the Section 151 Officer explained that different inflation rates applied to the Authority's expenditure. These included an initial 2% on the current pay award negotiations, with another 2% after that. It was later explained that this could increase further. Pension increases were set externally and therefore the Council had no control over these increases. Pensions received a 1% triage, which the contribution from the Authority was set. The council tax increase scheduled for 2024/25 was 2.99% at the maximum capped level without a referendum. Members also heard that the utility market inflationary increases were significantly higher, with 100% on electricity and gas, whilst water was set at a 6% increase. The Section 151 Officer stressed that she was happy to provide the medium-term financial strategy to Members for their information to assist with any concerns about overspending and the effect on the Authority's finances.

To provide clarity Officers advised that the forecast for pensions had been provided by Barnett Waddingham, Barnett Waddingham, being the actuary appointed by Lincolnshire County Council. Lincolnshire County Council's audit financial statements of the pension financial statements and /or the actuarial assumptions were reviewed by both the auditors of Lincolnshire County Council and also our own auditors as well, and in effect was considered twice.

Funding was also set a side to contribute to any funding gap at the next triannual valuation. In a later query on the pension contribution and arrangements made by employees, Members were advised that the Authority operated an auto-enrolment scheme, with employees tending to opt for the local government pension scheme. The Section 151 Officer explained that she was unaware of any significant cost pressures on other schemes and emphasised that she would check further.

On a query about the local industrial strategy, and the effect of operating in a water-stress county in consideration for longer-term preparation, Members learned that the Chief Executive Officer had recently attended and worked on water-related matters and that an update to Members was possible. The Section 151 Officer was keen to stress that it was about ports and the villages supporting the local community's logistical improvements.

In a query about the placement of the Authority within the national picture, the Section 151 Officer explained a new Local Government Office (OFLOG) to benchmark financial information had been created. The first report on reserves had been released, and future reports were scheduled to be shared. It was clarified that since not all Councils had published their 2022/23 account information, any such comparison at the time of debate was challenging.

In responding to a Member's observations regarding capital receipts, the changes to the Capital Receipts Reserve fluctuated yearly. This change was dependent on sold and bought assets in that specified year. Any capital reciepts could only be spent on capital projects.

In answering a query about the business rates retention scheme mentioned, Members learned that the Authority and other local government authorities previously received an annual grant in the form of the Revenue Support Grant, which was paid from National non-domestic rates (NNDR) which had previously all been paid over to the government. With the reduction of Revenue Support Grant, local authorities could retain a portion of the business rates they collected. The Section 151 Officer noted that the level of Revenue Support Grant previously received greatly exceeded the current level of the business rates retention scheme. In replying to a related query about the increase in council tax collection, it was explained that the budget setting process had a baseline of 98.02% collection rate of council tax, whilst the actual collection was 0.6% more, with a collection rate of 98.8%. This would therefore boost the budget in future years.

In response to a later Pensions query about reviewing the mortality assumptions and the possibility of younger pension enrolees losing out on due to shorter lives, it was noted that the District Council representative on the Lincolnshire County Council Pension Committee, Councillor Trevor Young, could be notified of the Committee's suggestions.

Having been moved and, seconded, on being put to the vote it was unanimously

RESOLVED that 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.

After the vote, the Chairman wanted to record his thanks to the Section 151 Officer and the Finance team for their hard work on getting the Unaudited Statement of Accounts prepared in time.