Agenda item

To present a report in respect of the above.

A report by the Head of Function (Resources) setting out the key judgements and estimates in the 2012/13 Statement of Accounts was presented for the Committee’s consideration and comment.

The Accountancy Manager confirmed that the Council’s 2012/13 Draft Statement of Accounts was signed by the Section 151 Officer on 28^th June, 2013 within the end of June statutory deadline and was published on the Council’s website at the beginning of July. The formal audit of the accounting statements has now commenced. The Officer proceeded to say that the accounts which cover the period from 1 April, 2012 to 31 March, 2013 are large and complicated statements and are prepared at a point in time and as such, judgements need to be made in applying accounting policies and assumptions made about future and other major sources of estimation uncertainty.

The Officer explained that the purpose of the report is to provide greater clarity on those judgments and that the report should be read in conjunction with the full Statement of Accounts. The report provides Members of the Committee with an opportunity to ask questions on areas highlighted for consideration in preparation for the formal presentation of the accounts and the Appointed Auditor’s Audit of Financial Statements Report to the Committee’s September meeting. The Accountancy Manager referred to the following as some of the key areas and aspects for the Committee’s focus –

·         The explanatory foreword which links the out-turn back to the budget for the year and the in year monitoring

·         The movement in reserves statement which summarises the reserves available to the Council, divided into usable and unusable categories and the movements on them during the year

·         Provisions which cover the sums of money set aside for known and probable events

·         Judgemental decisions and estimation uncertainties. These are summarised and explained at Notes 3 and 4 of the Statement of accounts and are reproduced as Appendices C and CH to the report.

Members considered the report and in the ensuing full discussion of the information presented they sought further explanation and clarification of the following matters –

·         The obligations to the Council in meeting its liabilities under Municipal’s Mutual Insurance’s Scheme of Arrangement with its creditors, the extent of its liabilities in this respect and the timescale.

·         Whether the reserve created by landfill cost savings as a result of diverting waste to recycling might be available for use other than in connection with recycling initiatives.

·         The position with regard to Council Fund Services and the reasons, impact and implications of over or underspending on specific services.

·         Whether year end savings achieved in Education and Social Services budgets were fortuitous or due to a planned long-term strategy.

·         The position with regard to the pension fund and the £18.4m increase in the net pension liability during 2012/13 from £63.7m to £83.1m and the implications thereof. Members were of the view that it would be helpful to them to better understand the sometimes significant year on year movements in the net pension liability figure and the reasons for these variances were they to receive a presentation by a representative of the Gwynedd Local Government Pension Fund.

·         The position with regard to school balances and specifically those schools in a position of deficit and the actions planned to address the situation. The importance of having in place a system of alerts to highlight potential problems early was emphasised as well as learning from experience and putting in place preventative measures/controls to seek to ensure that schools do not enter a situation of negative balance in the first place and that the situation of those in negative balance does not deteriorate.

·         A reported significant slippage in spending on the 3 Towns scheme and the reasons for that slippage. A request was made for Members of the Committee to be provided with an analysis of the grant funding for this regeneration scheme.

·         The rationale for carrying a balance of £2m in the Insurance Fund when claims against the fund are low and when it could be better used elsewhere. It was suggested that as the value of meeting a potential liability might well exceed £2m thereby encroaching on general reserves, the sum could just as well be retained in general reserves in the first place.

·         A request was made for further information to be provided to the Committee’s September meeting regarding the plans to manage the larger budgets and the services in which savings are likely or are projected to  be realised so that Members can link the budget, overspend and service response. It was pointed out that as the Audit Committee has a responsibility not only to scrutinise results but also to consider the impact of changes in expenditure, it requires contextual information in relation to  risk assessment  – particularly with regard to sensitive areas - and the possible consequence of shifts in spending,

The Officers responded to the specific points of inquiry raised by providing further information for the Members. The Head of Function (Resources) confirmed that all elements of revenue expenditure will be scrutinised over the coming months and that as part of the budget setting process options will be considered with the Executive and Council and budget management/savings plans will be shared with members in a planned workshop. As part of the process of identifying savings services will be asked to clarify the impact on delivery. The Accountancy Manager commented with regard to the provisional revenue outturn for 2012/13 that the turnaround in the position between the third and fourth quarters and the savings achieved have to be considered in terms of what they mean in relation to the Council’s underlying financial position in strengthening that position as regards providing the Council with more options than at first projected and the opportunity to consider alternatives.

It was resolved to accept the report and to note the key items highlighted along with the points of discussion arising.

ACTIONS ARISING:

·         Head of Function (Resources) to invite a representative of the Gwynedd Local Government Pension Fund along with Councillor H.Eifion Jones as this Authority’s representative on the Fund Committee to address the next meeting of the Audit Committee on the performance of the Pension Fund and any issues arising therefrom.

·         Head of Function (Resources) to provide Members of the Committee with an analysis of the grant funding for the 3 Towns Regeneration Scheme.