Agenda item

To consider the attached report.

Contact Officer:  Hasina.Shah@buckinghamshire.gov.uk

The Accounts and Audit Regulations 2015 required Local Authorities to prepare a Statement of Accounts in accordance with proper accounting practice and these were required to be approved and signed by the Council’s Audit & Governance Committee.  Due to Covid-19, the statutory deadline for completion of draft Statement of Accounts had been postponed from 31 May 2020 to 31 August 2020.  The publication of the audited statement had been postponed from 31 July 2020 to 30 November 2020.

Closing the 2019/20 Statement of Accounts and audit had been done under the challenging circumstances of lockdown due to Covid-19.  The draft statement of accounts had been published on the Council’s website on 8 June 2020, well in advance of the revised statutory deadline.  The public inspection period for the accounts had run from 8 June 2020 to 17 July 2020 and had now ended.

Since the draft accounts, the final National Non-Domestic Rates 3 (NNDR) had been completed and this had impacted on the outturn along with other minor adjustments which had resulted in a favourable variance of £150k which had been transferred to the Earmarked Reserve.  A re- adjustment of £210k to increase the value of a carpark asset had been agreed in the last few days but this did not impact on reserves.  Any further adjustment above the materiality for reporting threshold of £106k would be circulated to Audit and Governance Committee members.

The Committee was informed that the audit of the accounts had commenced in June and at the time of writing this report, the plan was for the audit fieldwork to be substantially complete followed by closing procedures and final reviews with a view to signing off the audit soon after the Audit Committee meeting on 29 July.

In accordance with the International Standard on Auditing (ISA) 260, the External Auditor (EY LLP) had prepared a detailed record of all matters arising from the audit of the Statement of Accounts. This Report was attached as Appendix 2.  The auditor’s opinion on the financial statements had yet to be confirmed and had therefore not been included in the Statement of Accounts.

Members were informed that the Statement of Accounts outlined AVDC’s financial performance for the year under the Narrative Section of the Statement. The accounts provided public information on the Council’s financial performance and were a key element of this performance review process by which the Council was held accountable to the public for the proper management and stewardship of financial resources.  The key financial sections within the accounts were summarised as follows:-

Accounting Policies: There were minor changes to the CIPFA Code and International Financial Reporting standards.  The Council was either already in compliance with these changes or some of the changes were not applicable to AVDC Statement of Accounts.

Significant movement between years

Comprehensive Income and Expenditure Account (CIES): This statement reports the net cost for the year of all functions for which the Council was responsible and demonstrated how that cost had been financed from general government grants and income from local taxpayers. Total Comprehensive Income and Expenditure for 2019/20 had been £18.0m (credit) compared to £7.0m (credit) in 2018/19.  The movement of £11.0m was summarised below:

·                    Cost of Services had increased by £6.3m resulting from Unitary transition costs of £5.2m, increased bad debt provision £0.6m, reduced income from the garden waste services £0.6m as a result of changes to the income collection policy, increased salary costs £0.6m, increased waste collection costs £0.4m, one-off contribution to Connected Counties £0.4m, reduced car parking income £0.4m and lower property rental income of £0.3m, offset by lower capital accounting entries of £2.3m.

·                    Other Operating Income and Expenditure had showed an increase in income of £0.7m, mainly as a result of increased capital receipts.

·                    Financing and Investment Income and Expenditure had increased costs by £2.1m. The reclassification of some assets as investment properties had resulted in fair value adjustments of £3.6m offset by net rental income of £0.9m. There had also been Increased dividend income of £0.5m.

·                    Taxation and Non-Specific Grant Income – had increased by £2.2m resulting from accounting adjustment of collection fund account £4.6m offset by decreased government grants £0.4m and capital contributions £2.0m.

·                    Other Comprehensive Income and Expenditure for the year had moved by £16.4m to £26.0 credit in 2019/20.  The main movements were due to IAS 19 pensions liability reduction adjustment of £17.9m offset by lower revaluation adjustments £1.5m.

Movement in Reserve Statement (MiRS): This was a summary of changes to the Council’s reserves over the course of the year.  These are broken down into two main categories :

·                    Usable reserves which can be used for capital investments or service improvements.  These decreased by £5.1m as they were used to fund the unitary transition cost of £5.2m and capital programme £3.4m offset by increase in capital receipt reserve by £2.6m due to receipts from sale of ex-council houses and repayment of capital loans and contributions to capital grants reserve £0.4m for affordable housing, and contributions to earmarked reserves £0.4m.

·                    Unusable reserves which are mainly held under the regulatory requirement for specific purposes.  These increased by £23.0m mainly due to increases in the pension reserve £19.6m, and capital adjustment account £3.3m.

Balance Sheet: This statement provided a snapshot of the Council’s assets and liabilities.  The Council’s net worth was £124.8m as at 31 March 2020, which represents an increase of £18.0m on the previous financial year. The key movements were:

·                    Long-Term Assets had grown by £5.1m with key components including capital investment of £7.1m offset by decreases in the fair values of capital assets of £2.1m.

·                    Current Assets had decreased by £5.2m from last year. Short term investments had reduced by £14.0m and cash balances increased by £9.9m in line with the strategy to ease the transition to the new Council. Short term loans had decreased by £2.2m, £0.4m , that was as a result of the write-off of subsidiary loans. Other short term debtors had increased by £1.1m.

·                    Current Liabilities increased by £0.3m.

·                    Non-Current Liabilities had fallen by £18.4m mainly due to a reduction in pension liability resulting from changes in financial and demographic assumptions determined by the actuary.

Cash Flow Statement: The net increase of £9.9m was in compliance with the strategy to hold cash to ease the transition to the new Council.

Members sought additional information on the statement of accounts and were informed:-

(i)                 that contingency fees paid to Transport for Bucks were only charged if they were used and would then appear in the accounts.  Councils had not been required to pay these contingencies in advance.

Action Log: Section 151 Officer to provide Cllr Clarke with a note on the above process

(ii)               that loans to Aylesbury Vale Estates and Aylesbury Vale Broadband (AVB) had been paid back in full and, as such, showed as a zero balance.  AVB no longer existed as a company.

(iii)             that fuller details of Usable and Unusable Reserves was included in the Movement in reserves statement at page 14 of the Statement of Accounts.  It was confirmed that Usable Reserves included earmarked reserves and general reserves.

(iv)             that while it was expected that the audit work would be delivered by the end of July, it was possible that some work would carry over into August due to the holiday season.

(v)               that Officers would check that the approval sign off for the Annual Governance Statements of the four Districts had been correctly, although it was accepted that there could be some lack of consistency due to creation of the new Council from 1 April 2020.

Having reviewed the Statement of Accounts 2019/20, and considered the audit progress and findings report from the external auditors (ISA 260 report), it was,

RESOLVED –

(1)               That the audit progress and findings report from the external auditors be noted.

(2)               That the Letter of Representation (ISA 260) be approved.

(3)               That, subject to the audit progress and findings reported to the meeting, the Statement of Accounts for Aylesbury Vale District Council for 2019/20 be approved.

(4)               That the Service Director – Corporate Finance (Section 151 Officer), in consultation with the Chairman of the Audit and Governance Committee, be authorised to make any final amendments to the Accounts arising from outstanding audit work prior  to the approval of the accounts by the auditor.

(5)               That the thanks of the Committee and the external auditors be passed to the Officers / Financial Teams from all of the legacy Councils for their efforts in putting together the statements of accounts this year under what had been very difficult circumstances.

Note:

1.                  Councillor Stuchbury abstained from voting on the resolutions.

2.                  Members asked that they be informed in due course of any amendments to the financial statements, which applied to all four sets of District Council financial statements (Action Log).