Meeting documents

To consider the attached report.

Contact Officer:  Nuala Donnelly (01296) 585164

The Accounts and Audit Regulations state that Members should only approve the accounts when they have been made aware of the findings of the audit and hence were able to make a better informed decision.

Following on from the report on the draft accounts to the June meeting, Members received a report updating them on the audit process and the changes made to the accounts in accordance with the external auditor’s recommendations. The auditors’ comments and findings from their work on the 2018/19 accounts had already been reported to Members earlier in the meeting.  Members had also been made aware of the exception circumstances of the 2018/19 audit programme.

Subject to being satisfied with the revised accounts and that the auditor’s comments had been correctly responded to, the Committee was required to authorise the Chairman to sign them on the Audit Committee’s behalf, together with the Director with responsibility for Finance, although this would not be done in time to comply with the 31 July statutory deadline. However, it was requested that the Committee delegate to the Director with responsibility for Finance, in consultation with the Chairman or Vice Chairman, the ability to make such changes to the accounts that are considered necessary in order to achieve the statutory deadline.

As detailed in the Committee report, that Statement of Accounts had been amended to reflect the correct position for the following items:

·                    A change in the depreciation charged to buildings at Pembroke Depot which had been incorrectly identified as non-depreciable in the fixed asset register. The deprecation impact on 18/19 of £57,712 was considered an immaterial change.

·                    A number of changes to the valuations for certain properties resulting from a detailed review of the Valuer’s report. The Councils external valuer (WHE) had used the incorrect cost per square metre for assets valued using Depreciated Replacement Cost (DRC). The value of the changes was an increase in asset value of £4.2m.

·                    A change to the Community centre valuation method from Existing Use Value (EUV) to DRC methodology resulted in asset valuation changes of £7.187m. EY specialists reviewed the methodology and had concluded that the assets were under-valued. The Councils external valuer updated the valuations.

·                    The fixed asset register had also been amended to reflect changes in asset life but this did not impact on the depreciation charged in 2018/19 as they would only be applicable from 1 April 2019.

·                    A change had been made in relation to pensions.  After the balance sheet date, the Government had been denied leave to appeal to the Supreme Court against a judgement that changes made in public sector pension schemes in 2015 were age discriminatory. Generally known as the McCloud judgement. This was a national issue affecting many public sector bodies.  The Council had asked its actuary, Barnett Waddingham, to adjust for the actual figures while they were also addressing the impact of the McCloud case. The effect of these adjustments had been to increase the liability on the balance sheet by £1.552million for McCloud.

·                    There had been a change in the classification of the Hales Leys Loan repayment.  This had been incorrectly identified as a capital receipt.  The reclassification of £350,000 to "deferred capital receipts" had been actioned.

·                    A minor change to the classification of collection fund balances had resulted in an immaterial correction of 19/20 precept balance.

·                    A change in the disclosure of the number of employees receiving over £50,000 in remuneration had incorrectly stated 25 employees and had now been changed to 29.

In addition to these changes, at the time of publication of the agenda for the Audit Committee meeting, the Statement of Accounts for 2018-19 had been awaiting final review and approval by the Auditors.  The Statement of the Accounts had now been reviewed and a number of changes have been made to the version published for the meeting.  A paper was circulated at the Audit Committee meeting (included as an attachment to the Minutes) and which provided a reference to the pages of the Accounts where the changes had been made.

The changes made had been actioned in the Councils fixed asset system and Finance System.  The changes had been agreed and actioned with the Audit team. The restatement had been addressing an administrative oversight only.  Members referred to the Update note as well as the Committee report in reviewing the Statement of Accounts for 2018/19.

The Committee was also informed that there were a number of unadjusted audit differences in the draft financial statements which given their values were below materiality and the Council was not proposing to adjust for these, namely-

·                    In relation to the impact of the pensions case relating to Guaranteed Minimum Pensions (GMP) equalisation we have estimated the maximum impact on the pensions liability of £227,000. The Councils actuary have advised that the impact of GMP is not material. This view has been corroborated by the external auditors.

·                    In relation to the difference between estimated plan assets of the pension scheme and actual plan assets as at 31 March 2019 there is a difference of £659,000. This is the audit team assessment of the likely changes and is not supported by a formal report from the Actuary. The difference will be a factor of timing of the audit.

·                    In relation to the restatement of the prior year accounts for changes to the group consolidation which were not material and as,per IAS 8, should have been corrected in the current year. The impact on the CIES was £236,000.

Having considered the final Statement of Accounts for 2018/19, it was –

RESOLVED –

(1)          That Finance staff be thanked for their work in preparing and auditing the financial statements for 2018-19, particularly given the exception circumstances of the 2018-19 audit programme.

(2)          That the final outturn position of the Council’s Statement of Accounts 2018-19, as now agreed, be noted.

(3)          That approval be given to the Chairman of the Audit Committee to sign off the Statement of Accounts for 2018-19 on the Committee’s behalf.