Agenda item

To consider the attached report.

Contact Officer:  richard.ambrose@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 were required to be approved and signed by the Council’s Audit & Governance Committee.  Due to Covid-19, the statutory deadline for completion of the 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 the pandemic.  The draft statement of accounts had been published on the Council’s website on 28 August, meeting the revised statutory deadline.  The public inspection period for the accounts had run from 1 September 2020 to 12 October 2020 and had now ended.

The audit of the accounts had commenced in September and at the time of publishing the Committee report, the plan was that the audit fieldwork would be substantially completed followed by closing procedures and final reviews with a view to sign off of the audit by the statutory deadline of 30 November. The audit of the Pension Fund Accounts had been completed.

In accordance with the International Standard on Auditing (ISA) 260, the External Auditor (Grant Thornton) had prepared a detailed record of all matters arising from the audit of the Statement of Accounts. This Report was attached as Appendix 2.  Members were informed that subject to the completion of all work, the auditors were proposing to issue an unqualified opinion on the financial statements.  However, the Value for Money opinion was likely to be qualified as the auditors still had some concerns in relation to the Ofsted Rating on Children’s Services.  These concerns were unlikely to change until such stage as a further Ofsted inspection was carried out.

The Statement of Accounts outlined the Council’s financial performance for the year. The accounts provide 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 these accounts were summarised as follows:-

Buckinghamshire County Council Statement of Accounts – the Committee was informed of the main adjustments made to the draft accounts as a consequence of the audit and which had been agreed with Grant Thornton.

Long-Term Assets – Note 15 Property, Plant and Equipment – asset value had decreased from £1,466m to £1,461m. This was due to an error on the revaluations of the assets. Note 19 Investment Properties – asset value decrease from £188m to £187m. This was due to an error on the revaluations of the assets. This amendment had also affected the Balance Sheet, reducing the Long-Term Assets from £1,685m to £1,679m. This had not impacted on the bottom line.

Leases - Authority as a Lessor - Operating Leases – Leases relating to our investment properties had been omitted from this note. In the draft accounts we had reported having £6.942m of operating leases. Having reviewed and reworked the information we were now reporting to have £61.989m over the life of the leases and £9.192m due within the next financial year 2020/21. This was a presentational error.  All income relating to these leases had been accounted for correctly. This adjustment did not affect the bottom line.

Pension Fund – there had not been any amendments to the main statements of the Pension Fund.

Investments – Note 9 – The bottom line for this note had not changed but the presentation of the numbers within the table had been amended to ensure correct categorisation of the investment figures.

Additional Financial Risk Management Disclosures – Note 13 – Market price Sensitivity Analysis table. The numbers within this table had not changed however the table did not cast correctly. This had been amended

Actuarial Position of the Fund – Note 17 – Incorrect Financial assumptions as used by Barnett Waddingham had been report in the draft accounts. These had not been amended.

Members were informed that none of the adjustments to the Statement of Accounts had impacted on the outturn position and, therefore, there had been no change to the General Fund Reserves as compared to that previously reported in the draft accounts.  The overall position on the General Fund reserve was an increase of £4.534m to £30.954m.  The increase was due to an underspend of £534k and a budgeted contribution of £4m.  Earmarked reserves had reduced by £8.249m to £89.634m (with £14.034m earmarked for Schools).  The overall outturn and level of General Fund reserves had not changed following the audit. These reserves had been rolled forward into the new authority.

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

BCC Statement of Accounts

(i)                 That the “emphasis of matters” paragraph in the Audit Findings report highlighted 3 main issues: operation of land and buildings, investment in property, and investments made by the Pension Fund.

(ii)               that the outturn position for the revenue budget was a small underspend of £0.53m for the year.  There had been an overall underspend of £5.46m in the capital programme, with the main variance due to slippage on primary and secondary school places projects due to delays on land purchases and building delays.  However, a table was provided with the accounts that showed this was by far the smallest outturn variance (slippage) for a number of years.

(iii)             that BCC had made additional external borrowings of £40m at the end of the financial year although in hindsight this had possibly not been needed.

(iv)             that while they could see there had been some positive direction of travel to address issues identified for Children’s Services, the auditors would require evidence from a further Ofsted inspection before they would be able to update the VFM opinion.

Pension Fund Accounts

(v)               it was confirmed that the 5 legacy Councils had all been up to date on 1 April 2020 with their payments to the Pension Fund, when the Buckinghamshire had commenced.

(vi)             that a few of the smaller authorities were not up-to-date with their payments to the Pension Fund.  These were for small amounts, which were being actively pursued.

(vii)           that the Pension Fund liability was calculated every 3 years by the appointed actuary, with annual updates in the intervening years.  The last such valuation had taken place as at 31 March 2019, which had assessed that the past service funding level of the Fund as a whole had increased from 87% to 94% between 31/3/2016 and 31/3/2019.  The improvement was mainly due to good investment returns and employer contributions.  All employers were projected to be fully funded by no later than 31 March 2035.  The next valuation would take place as at 31 March 2022.

(viii)         that the Pension Fund liability amount of £624m was an estimate provided for inclusion with the financial accounts.

(ix)             that the Pension Fund liability related only to the liability of the County Council as at 31 March 2020.  The statement of accounts produced for 2020-2021, as at 31 March 2021, would bring together the Pension Fund liability information from the 5 legacy Councils.

(x)               Actuarial Position of the Fund (Note 17) – that as the suggested amendment had been immaterial, the Council had relied on the financial assumption as used by Barnett Waddington and not made the amendment.

(xi)             Action Plan (Scheme contributions) – a revised system for the reconciliation of monthly returns from scheduled and admitted bodies had been introduced including how information was reported to the Pension Fund and senior management.

(xii)           IAS 19 (Milton Keynes Council – management was working with Milton Keynes Council to try to ensure that their data was provided ahead of year end closedown and audit in the future.

Having reviewed the Buckinghamshire County Council and Pension Fund 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 from the external auditors be noted.

(2)               That management’s proposed treatment of the Valuation of Academies (Audit Findings of BCC Accounts, Appendix C, Audit Adjustments, Impact of unadjusted misstatements) not to make an amendment as the difference was not material be approved.

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

(4)               That the Service Director (Corporate Finance and Section 151 Officer) be authorized, following consultation with the Chairman, to make any final amendments to the accounts arising from outstanding work prior to the approval of the final statements of accounts.

(5)               That the Chairman and the Service Director – Corporate Finance (and Section 151 Officer), be authorized to sign off the final accounts, subject to no material amendments being required to the main financial statements.

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

Note:  Councillor Stuchbury abstained from voting on the resolutions.