Agenda item

The Head of Strategic Finance and Property presented the Draft Statement of Accounts 2019/20. It was noted that the Draft Accounts were scheduled to be published by 31 May 2020, and were due to be audited by 31 July 2020. However, owing to the COVID-19 pandemic, Central Government had changed the requirements. The Council was now required to publish the Draft Statement of Accounts by 31 August 2020, to be audited and published by 30 November 2020.   As such, the Draft Statement of Accounts was being presented to the Committee a month before the statutory deadline. Assuming there were no delays in the external audit, which were not foreseen, audited accounts should be available to the Committee on 22 September 2020.

The Head of Strategic Finance and Property said that as a general rule, Members would be briefed on the key features of the accounts in a seminar prior to a Committee meeting, but this had been made difficult due to current circumstances, so a key summary was contained within the report. This contained: :

(A) Critical accounting policies and practices and any changes

to them;

(B) Decisions requiring a major element of judgement; and

(C) The extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed.

It was noted that IRFS 16 requirements on leases had been deferred due to the pandemic.

Members were advised that the Council was preparing group accounts for the first time, due to the establishment of the wholly owned subsidiary Millstream Property Investments Limited and its increased level of activity.

Officers assured Members that the Council had adequate resources to continue operation for the foreseeable future, due to a healthy balance sheet. There were significant fluctuations in the Pension Fund as well as movements in assets and liabilities, and the low rate of inflation had reduced the Council’s liabilities by around 10% due to anticipated wage stagnation. The Council’s pension liability would be paid over an extended period. Property, Plant and Equipment (PPE) had a value £63.315 million and another £15.486 million was added by investment properties.

The Chairman queried the impact on the Council if it was necessary for it to carry out work on the IRFS 16 requirements on leasing.

The Head of Strategic Finance and Property said that it would be a large piece of work, but as this was the second occasion the implementation of IRFS 16 had been postponed, some preparatory work had already been done and that it might not have a material impact on the accounts.

The Chairman referred to the Council’s Pension Liability and said this was the smallest liability in a number of years. He also mentioned the undervaluation of the Millstream properties, asked whether those accounts were audited at the time. The Chairman asked whether the valuation of the asset held for sale at the yearend was derived from cost.

The Head of Strategic Finance and Property said that the actuary used a prediction of the inflation rate, rather than the rate at that period in time but that assets and liabilities could move in either direction. He explained that Millstream’s accounts had not been previously audited, so it was only the external audit this year which discovered the undervaluation. This was primarily due to a discount given on three specific properties by the Council at the time of sale.

The Finance Business Partner said the cost of the asset was derived from a valuation at the end of February 2020.

It was moved by Councillor Fernando and seconded by Councillor Ward-Booth that the recommendations, as detailed, be approved.  After being put to the meeting and a vote taken, the motion was declared CARRIED.

RESOLVED – that (A) the Committee noted the amended timetable for the production and auditing of the annual Statement of Accounts; and

(B) the draft Statement of Accounts be received.