Agenda item

The Divisional Director – Business Support presented the report. He expressed his thanks to the Finance team for their work in preparing the appended documents. He drew attention to the statement in the foreword to the accounts (agenda page 86) that the required £12m savings in 2012/13 had been achieved together with a £168k underspend. This had been achieved with no impact on Council Tax or the Council’s revenue. A further £11m had to be saved in 2013/14, and the Council had a resource plan in place that would take total savings to just under £30m over the three years up to 2014/15. The auditors had identified a number of issues in relation to the Council’s Accounts (listed in paragraphs 4.1-4.3 of the covering report), including an issue relating to reconciliations between the Council’s property and accounts registers. The Chair commented that this was a recurrent issue and wondered whether the resources were available to fix it. The Divisional Director – Business Support said that the issue was that the existing software packages could not communicate with each other effectively, so that reconciliation between these registers had on occasion to be done manually, and misstatements could possibly occur if data was not entered in the correct order. He was therefore reviewing the situation with a view to potentially replacing the existing system as part of an improvement plan. He concluded by saying that a number of minor issues had been identified in relation to the accounts of the Avon Pension Fund (listed in paragraph 4.7); a management response and action plan relating to these was circulated to members. The auditors were proposing to issue an unqualified opinion on both sets of accounts. He invited the Committee to agree to the signing of the Letter of Representation.

Mr Morris commented on the audit findings. He referred to the list of outstanding issues listed on page 27 and said that work on capital accounting and housing benefit had now been completed. The adjusted misstatements tabulated on pages 35 and 36 had had no effect on the bottom line. Unadjusted misstatements needed to be referred to in the Letter of Representation. One of these was a balancing figure in the reserves statement of £835,000 for which the necessary correcting amendment had not been identified. It was his duty to bring this to the Committee’s attention, but it was for the Committee to decide what action should be taken about it. The Divisional Director – Business Support said that after further work that figure had been reduced; more work would be done to discover greater detail about it but that it was not recommended to make an adjustment.

A Member asked about the figure of £1.686m for debtors (agenda page 36) and whether the underspend of £168,000 would recur in future years. Mr Morris said that debtor comprised charges place on a number of individual properties, which should be placed in the long term debtors balance and not in short term debtors as at present. Replying to the question about the underspend, the Divisional Director – Business Support said that every year the Council followed a zero-base budget process; if the underspend represented a long-term saving, it could possibly count towards next year’s savings target.

A Member said that he accepted that the errors in the accounts were not significant, though there was a risk that the press might focus on them. He was happy that that the problems identified were being addressed. He was pleased that there had been such good co-operation between the finance team and the auditors.

Mr Hackett commented on the Avon Pension Fund audit. He said that a separate Letter of Representation would have to be signed in respect of the Fund’s accounts. He drew attention to the two unadjusted disclosure items listed on page 68 of the agenda. The second issue concerned the requirement under IFRS7 for every holding of over 5% of each asset class to be listed separately, which officers considered would produce a long list of relatively small investments.

A Member asked about the sum of £4.374m for Additional Voluntary Contributions. Mr Hackett that this sum was not actually invested in the Avon Pension Fund, but in other investment funds and that the note in the accounts did not make this clear.

A Member asked why it was not possible to estimate the value of the refunds of contributions due to the pension fund members referred to in misstatement 2 on page 67 of the agenda. Mr Hackett explained that these were people who had joined the Fund and then left and for whom no contact details were held. It was explained that the liability could not be calculated until the ex-members were contacted. The auditors did not believe that this uncalculated liability was significant or serious

Members congratulated the Finance team for producing an excellent set of accounts.

The Chair invited Members to email him any comments on the Action plans for both the Council and Pension Fund.

Following the discussion, it was RESOLVED:

1. To note the issues contained within the Annual Governance Reports for the Council and Avon Pension Fund.

2. To approve the audited Statement of Accounts for Bath and North East Somerset Council for 2012/13.

3. To agree that the Letter of Representation from Bath and North East Somerset Council should be signed.