Agenda item

This report gives a brief review of the Council’s annual Statement of Accounts and the Council’s Pension Fund Accounts for 2010/11. It also provides an overview of the issues arising from the audit of the accounts prior to the publication of the Audit Commission’s formal opinion on those accounts. These issues are identified in the Audit Commission’s Annual Governance Reports 2010/11, which are attached, with the revised Statement of Accounts, which will follow.

HiteshJolapara, Deputy Director of Finance, introduced the report, which had appended to it the Council’s annual statement of Accounts and the Council’s Pension Fund Accounts for 2010/11, together with the Annual Governance Reports 2010/11, which were compiled by the Audit Commission as the Council’s External Auditor.

He said that the accounts were the first compiled following the introduction of IFRS, which had resulted in a number of changes, including in the treatment of grants, leases and of fixed assets. He said that the accounts showed an underspend of £3.3 million, whilst the HRA showed a net small overspend but retained a positive balance.

He said that the accounts showed a credit of £88 million following the move from RPI to CPI for Pension Fund calculations. The balance sheet also showed a £465 million fall in the value of assets. With regards to the Annual Governance Reports, he said that the verdict was an unqualified set of accounts and all work was now completed, with no issues outstanding.

Julian McGowan, Audit Manager, Audit Commission, said that the Audit Commission would issue an unqualified opinion on both the Statement of Accounts and the Pension Fund Accounts, together with the Value for Money assessment. He said the process was now complete subject to the receipt of signed accounts and a letter of signed representation.

He said that the production of the accounts had been inherently difficult, given the introduction of IFRS and the consequential number of technical adjustments necessary. Further, key staff had changed during the year although the Council had completed the work without additional resources. Progress had been good, with all statutory deadlines met.

With regards to comments on the accounts, he said that following last year’s recommendations, that the Pension Fund’s internal controls had improved, though further improvement was possible. He said that, though there were no real concerns and no adjustments on the general fund had been necessary, one recommendation was that the Council should be assured that the accounts handed to the auditor were final, given the change in the arrangements for approval. 

Councillor Botterill asked about the items on the Comprehensive Income and Expenditure that related to actuarial assumptions regarding the Pension Fund. Eric Norman, Corporate Accountancy Manager, said that the adjustments were caused by the incorporation of actuarial assumptions made in the 2010 assessment of the Fund, in relation to the change from RPI to CPI for calculating inflation, and to a reduction in long-term liabilities (Non distributed costs- General and Actuarial (gains)/losses on pension assets/liabilities respectively). He noted that small changes to assumptions could provoke large balance sheet movements. Jane West, Director of Financial and Corporate Services, said that officers would write to the Committee, clarifying the way that the most recent actuarial valuation had been incorporated into the accounts.

Eugenie White said that, with regards to page 7, it would be helpful if there was some account of the move from the original budget to the revised budget. Hitesh Jolapara said that any virements made in year were agreed by members; he said that the accounts could include a note explaining the substantive movements made in future years.

In response to questions from Councillor Botterill and the Chairman, Jane West said that the revisions were likely to be as a result of carry forwards, with the underspend attributable to a better than expected recovery rate for parking debt, following the appointment of a new firm of bailiffs.

Councillor Murphy asked why spending had fallen in the Children’s Services department. Officers agreed to respond with an explanation of the figure. He also asked about the number of officers receiving more than £50,000 a year, which appeared to have risen. Jane West said that this might be the result of spinal increments, but that officers would check the figures and provide the Committee with a response.

Councillor Murphy asked about the Council’s use of its overdraft facility. Pat Gough, Assistant Director of Business Support, confirmed that the Council did have an overdraft facility, but that the facility was part of the contract for the Council’s bank account. As such, use of the facility did not incur interest or occasion changes as a normal overdraft might do.

RESOLVED THAT

(i)                 The contents of the Auditor’s Annual Governance Reports be noted, and that;

(ii)               The Council’s response to the Annual Governance Reports, and that;

(iii)             The management representation letter be approved, and that;

(iv)              The Statement of Accounts 2010/11 be approved.