Agenda item

To present the draft Statement of Accounts for 2014/15 incorporating the Annual Governance Statement 2014/15.

The draft Statement of Accounts for 2014/15 incorporating the Annual Governance Statement for 2014/15 was presented for the Committee’s consideration.

The Accountancy Services Manager and Deputy Section 151 Officer reported that the draft accounts for 2014/15 were closed some time ahead of the statutory 30 June deadline and, in accordance with good practice, they are being presented to the Audit Committee for its comments prior to the commencement of the formal audit. Unlike in previous years when the accounts production process was largely undertaken by a team of external staff, the 2014/15 accounts have been produced by internal Finance Service staff. The Officer referred to the Statement as being a complex and lengthy document and drew the Committee’s attention to the Statement of Reserves; the Income and Expenditure account and the Balance Sheet and accompanying notes as key areas of interest for the Committee. She confirmed that the Finance Service is comfortable with the Authority’s level of reserves and is satisfied with the contents of the financial statements.  She referred to additional documentation which was tabled at the meeting, and explained that this reflected certain adjustments made to the draft after the publication of this meeting’s agenda which do not fundamentally alter the Council’s financial position as set out in the draft Statement.

The Committee considered the draft Statement and noted the following points –

•           With regard to revenue expenditure, the Committee noted that the savings and efficiencies target of £6.3m for 2014/15 was successfully implemented in order to set the budget within the available resources. The Committee noted also that the financial challenges in 2015/16 and beyond will be even more acute as budgets continue to reduce and a further tranche of savings will have to be found; the Committee sought reassurance that the Authority is in a position to manage those challenges and the risks inherent in delivering further significant savings.  The Interim Head of Resources and Section 151 Officer said that every saving built into the 2015/16 budget has been costed more effectively than in previous years; there are budget plans around the delivery of each savings item; all the savings have been project planned and subjected to an equalities impact assessment so the savings delivery process for 2015/16 should be more straightforward than for 2014/15 when there was some uncertainty around how the savings programme would be delivered.

•           The Committee noted that the certification of the accounts by external audit has in some previous years been delayed  pending resolution of objections raised by member(s) of the public  and it sought assurance that Officers do not foresee such a situation arising in relation to the 2014/15 accounts. The Interim Head of Resources and Section 151 Officer said that the availability of the draft accounts has been advertised and members of the public are entitled to inspect the accounts and to ask questions thereon. He said that he was not aware of any issue arising from outside the Council at this point in time, and in the event that an issue does arise, whether it leads to a delay in certifying the accounts or not depends on the validity of the question and the objection being posed.  The Officer confirmed that he did not believe there was any aspect of the draft Statement that caused him  concern to the extent it  would force him to recommend that the audit process be slowed down, or would delay  the eventual approval of the accounts. Mr Martin George, PwC confirmed from an external audit perspective that there are no matters being investigated currently that would cause a delay in the audit process.

•           The Committee sought clarification of the Council’s reserves position in terms of their adequacy and the yardstick by which that is measured. The Committee also questioned whether the reserves carried by schools are an issue. The Accountancy Services Manager said that the Finance Service is satisfied with the Authority’s general balances which stand at just under 7%. Whilst the reserves held by schools are not a particular issue per se, schools holding high levels of reserves are required to have spending plans and those in deficit, a plan to address the deficit position. The Interim Head of Resources confirmed that the general expectation is that local authorities maintain a reserves balance of around 5% but that is subject to the individual views of Section 151 Officers. Whether a level of 5% is required by every authority depends on their circumstances; the financial challenges they are facing, historical performance and the quality of their financial management all of which factors would inform a decision regarding the adequacy of reserves. He said that it was his professional view that a reserves balance of 6% to 6.5% is reasonable for this Authority.

It was resolved to note the draft Statement of Accounts for 2014/15 prior to external audit.