Agenda item

To submit a report by the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 Officer incorporating the draft main financial statements for the 2019/20 financial year was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that included in the report are the draft Comprehensive Income and Expenditure Statement for 2019/20 and the draft Balance Sheet as at 31 March, 2020 together with information about reserves and balances. The figures contained within the report are unaudited and may therefore be subject to change. A report will be presented to the Council following the completion of the External Audit. In presenting the report the Portfolio Member for Finance took the opportunity to thank the Finance Service’s staff for their work over the course of the pandemic and he also thanked the Director of Function (Resources)/ Section 151 Officer for the guidance he had provided through this difficult time. Those sentiments were echoed by the Executive as a whole.

The Director of Function (Resources)/Section 151 Officer advised that the full draft Statement of the Accounts for 2019/20 is available on the Council’s website and will be presented to the Audit Committee on 21 July, 2020. In summary –

•           The draft Comprehensive Income and Expenditure Statement attached at Appendix 2 to the report shows the accounting cost in the year of providing services in accordance with accounting practices rather than the amount that is funded from taxation and it includes adjustments for depreciation, revaluation of assets, and the re-measurement of pension liability. The Government accepts that council tax payers should not be required to fund such adjustments and therefore the accounts exclude the impact of these in the note called Adjustments between Accounting Basis and Funding Basis under Regulations (Note 7 in the accounts).This note for 2019/20 shows £8.782m of accounting adjustments which are cancelled out in the Movement of Reserves Statement. This means that the true impact on the Council and Housing Revenue Account (HRA) reserves from the provision of services is reduced from a deficit of £7.683m to a surplus of £1.1m which is an increase in Council reserves. This is due to an underspend of £0.308m on the Council Fund and an underspend of £0.210m in the HRA and transfers to the earmarked reserves.

•           Table 1 of the report shows the movement in the Council’s usable reserves during the year; the balance of all usable reserves as at 31 March, 2020 was £25.944m which is an increase of £1.1m (4.2%). The HRA reserve, school balances and the Capital Receipts Reserve are ring-fenced and can only be used for the designated purpose.

•           Appendix 3 to the report presents the draft balance sheet for the Council as at 31 March, 2020. The overall net assets of the Council increased from £162.456m as at 31 March, 2019 to £190.618m as at 31 March, 2020 due partly to the addition of Market Hall, Holyhead and the newly built Ysgol Santes Dwynwen, Newborough. The Balance Sheet will change once of the results of the revised Pensions Valuation has been included in the Statement of the Accounts. The decision to review the Pensions Valuation was taken recently to understand the impact of the pandemic on the pension fund. This will not affect outturn for 2019/20 or the Council’s usable reserves which include the General Reserve.

•           Table 3 of the report shown the movement in earmarked reserves. These are funds that are allocated to meet known or potential future commitments. Table 4 of the report shows the new earmarked reserves requested for which the Executive’s approval is sought whilst Appendix 4 provides a detailed update of the earmarked reserves.

•           Table 5 of the report provides a summary of the school balances position. The level of school balances has fallen from a peak of £2.46m in 2015/16 to £0.197m at the end of the 2019/20 financial year – a reduction of 92% in five years reflecting the difficulties facing the majority of the Council’s schools.

•           The opening balance of the HRA on 1 April, 2019 was £8.387m. Slippage on capital projects during the year resulted in an underspend of £0.210m leading to a closing balance of £8.597m. This will be reinvested in the HRA in the future.

In clarification, the Portfolio Member for Finance reiterated that it is the £7.060m within the Council Fund General Reserve that is available to the Council as contingency to meet unexpected expenditure and that the other reserves – Council Fund Earmarked Reserves, HRA, School Reserves and Capital Receipt Reserves are to be used for the purposes designated.

It was resolved –

•           To note the draft unaudited main financial statements for 2019/20 (Full Statement of Accounts available on the Council’s website).

•           To note the position on earmarked reserves and to approve the use of, or increase to individual reserves as noted in Appendix 4 to the report.

•           To approve the new reserves amounting to £0.160m as shown in Table 4 of the report.

•           To note the school balances position.

•           To note the HRA balances as at 31 March, 2020.