Members considered the 2018/19 audited Statement of Accounts.
Members had received the unaudited statement of accounts on 31 May; these accounts were now presented as audited. The accounts had been prepared in accordance with statutory guidance and in compliance with approved accounting policies.
The Strategic Finance and Business Support Manager highlighted the following points:
· Income and expenditure accounts showed a surplus of £1.583m, which compared to the revenue outturn of £3.133m, after taking into account statutory adjustments;
· West Lindsey District Council (WLDC) had net assets of £5.571m, with usable reserves totalling £23.631m;
· The General Fund Working balance was above the minimum provision of £2 million, and stood at £3.849m;
· WLDC remained well placed to meet the liabilities of future risks. In relation to cashflow for income and expenditure, there had been an increase of £2.113m.
Following this introduction, Members asked questions of officers. Further information was provided:
· The pension fund deficit reduced between 2016/17 and 2017/18. The main influence was around the assets and liabilities of the fund. There was a triennial review of the entire pension fund undertaken by actuaries, reassessing Council contributions to make sure the deficit was paid off within a 20 year timeline;
· There were 353 authorities in local government; WLDC were positioned in the upper quartile of this list in terms of their share of the deficit;
· The major impact on the surplus for the provision of services of £1.858m was the adjustment to the pension fund. Previously this had been a reduction in monies paid, whereas this year it had been an increase;
· The general fund balance would mitigate any risks in the short term. There were also contingency reserves for the commercial investment properties.
Brexit was difficult to assess at this point in time;
· The longer term debtors figure consisted of a number of external loans to third parties; for example:
§ the joint venture company for Market Street Renewal,
§ an independent developer loan of £200k to construct units;
§ intercompany loans with Sure Staff and West Lindsey Staffing Company;
· The fall in the net expenditure figure was due to a number of statutory adjustments to the amounts in the expenditure statement- statutory overrides where the Council Tax payer should be charged. These adjustments related to items such as capital purchases, financial income and expenditure;
· When WLDC receive grants, they come with a range of conditions. Unapplied grants were held on the balance sheet as a creditor;
· The provision of reserves had increased significantly;
· Following a review of business rate provisions for appeals, it was decided that these were being over-provided for;
· Currently WLDC was performing above the target for commercial investment; the property portfolio equated to a significant amount of money;
· The overall financial strategy was increasing income generation, and had long-standing plans in place to deal with critical issues;
· Internal Audit had looked at the investment approach and awarded positive levels of assurance;
· The largest provisions seemed to be for those appeals for business rates, informed by the threats that exist. The provisions were prudent;
· In 2018/19 WLDC were part of the 100% business rates retention pilot. This meant that there was no Revenue Support Grant (RSG), but 100% retention of business rates.
The retention of business rates was down to 50% in 2019/20, but the government had promised a 75% retention scheme in the future;
· The Minimum Revenue Provision (MRP) policy states that WLDC would not charge revenue for commercial investment properties funded through prudential borrowing. A valuation volatility reserve would mitigate any shortfall in the borrowing compared to the sale of any asset.
(1) Confirm there were no concerns arising from the Financial Statements within the Statement of Accounts that needed to be brought to the attention of Full Council;
(2) Approve the Statement of Accounts for 2018/19;
(3) Permit the Section 151 Officer and the Chairman of the Governance and Audit Committee to certify the letter of representation to West Lindsey District Council’s Auditor, Mazars, on completion of the audit.