Agenda item

The Financial Accounting and Planning Team Leader presented and commented on the Council’s Statement of Accounts 2013/14. He tabled a document summarising the key elements of the accounts, which is attached as Appendix 1 to these minutes.

The Divisional Director – Business Support drew attention to the use of capital receipts to fund the capital programme to keep borrowing low, explaining the decrease in the Capital Receipts Reserve of £6.4m on the previous year.

Mr Henderson explained that the Unusable Reserves comprised many technical accounting adjustments and were not “real money”.

In response to a question from the Chair about the transfer of Community Centres to external parties, the Divisional Director – Business Support explained that they would be reflected in the accounts for the Property Service and in the Balance Sheet. The Financial Accounting and Planning Team Leader explained that value recorded for these transfers included the building and the land.

The Financial Accounting and Planning Team Leader then presented and commented on the Avon Pension Fund Accounts.

The Divisional Director – Business Support thanked the Finance Team for their excellent work and the Grant Thornton team for their constructive working relationship with Council staff.

A Member asked what the financial outlook for the Council was over the next six months. The Divisional Director – Business Support said that things were going reasonably well. At present a small overspend was projected, which had been reported to Cabinet. Directors were reasonably confident that a balanced budget could be delivered over the year.

The Grant Thornton team presented the External Audit Findings Reports for the Council and for the Avon Pension Fund. Mr Morris said that the Council’s accounts would be given an unqualified opinion. There had been one objection to the accounts, which he believed would be resolved in the next couple of days. He drew attention to the list of significant risks.

The Chair asked about the valuation of investment assets as mentioned on page 13 of the audit findings for the Council (agenda page 29). Mr Morris explained that the external auditors were satisfied with the values and the accounting for assets, but that there needed to be enhanced reporting arrangements.

Mr Henderson commented on the Value-for-Money report. He said that the Council’s financial plan had been delivered, but a balanced budget would be difficult to deliver from 2014/15, though the Council’s track record gave some grounds for optimism. The Chair noted that the Council had achieved green for every category in the Red, Amber, Green rating scheme. Mr Henderson responded that the Council had focussed on the right areas and taken the right actions.

Mr Morris said that an additional audit fee of £1,070 would be charged because work on NDR3 claims as explained on page 27 of the Findings Report (agenda page 43). He also said that an additional sentence would have to be added to the certificate, though this was not a reason to delay issuing an opinion on the accounts.

The Grant Thornton team commented on the Findings Report for the Avon Pension Fund. The Chair asked about the £2.2m overpayment of contributions by Bristol City Council referred to on page 10 of the Findings Report (agenda page 62). Mr Morris explained that BCC had not yet decided on whether to seek a repayment or to use the overpayment to pay future contributions.

It was suggested that the issue of payroll system password controls (agenda page 67) should appear in the Findings Report for the Council, not the Avon Pension Fund, as the issue related to former employees of the Council and not to pensioners leaving the Pension Fund. Mr Morris said he would look into this.

The Chair asked about the hot review of the Council undertaken by Grant Thornton. Mr Morris said this was carried out by the Grant Thornton technical team and was another layer of audit aimed at identifying any issues that might have been overlooked. In fact most of the issues thrown up by the hot review had already been identified. Mr Henderson said that the hot review provided no extra assurance about the validity of the figures in the accounts, but confirmed whether or not there was compliance with the CIPFA Code.

Members asked for further information about the revaluation of assets (agenda page 28). Mr Morris explained that accounting valuation rules change frequently. The latest CIPFA code had provided some new guidance. The Divisional Director – Business Support explained that property assets appeared both in the Council’s property register and in the register of fixed assets. There was a need to ensure these records were mutually consistent. The Code now required all assets of the same class should be valued at the same time, for example that all car parks should be valued in the same financial year taking into account all known factors, like the closure of the Police Station next to a Council car park to which a Member had referred. Any subsequent significant impairment of an asset would have to be reflected in the accounts. When an asset was disposed of the full current market rate was considered, without reference to the values recorded on the registers, though the market rate might be discounted by any community benefits to be realised by the transfer of the asset. Any subsequent significant impairment of an asset would have to be reflected in the accounts.

Turning to the Annual Governance Statement, Mr Morris said this had to be signed off on the same day as the accounts. As the Statement had been signed by the Leader of the Council and the Chief Executive on 12 September, he asked the Committee to confirm that no events had occurred since that date requiring the amendment of the Statement. The Divisional Director – Business Support said that officers were able to advise the Committee that no such events had occurred. Mr Morris also invited the Committee to authorise the Chair to send the Letter of Representation.

RESOLVED:

1. To note the issues contained within the Audit Findings Reports for the Council and the Avon Pension Fund.

2. To approve the audited Statement of Accounts for Bath and North East for 2013/14 (including the Annual Governance Statement).

3. To authorise the Chair to sign the Letter of Representation.