Agenda item

(To receive a report which asks Members of the Audit Committee to scrutinise and comment on the draft Statement of Accounts.  The final Statement of Accounts for 2013/14 will be presented to the Audit Committee in September for approval)

Consideration was given a report which presented the draft Statement of Accounts for Lincolnshire County Council for the financial year 2013/14.  Members of the Audit Committee were asked to scrutinise and comment on the draft Statement of Accounts.  The final Statement of Accounts would be presented to the Audit Committee in September for approval.  Ian Fifield from LG Futures was in attendance at the meeting to guide the Members through the Statement of Accounts and help them to fulfil their role to scrutinise and comment on the financial statements.

The Members of the Committee were guided through the draft Statement of Accounts, and were provided with the opportunity to ask questions on each section.  Some of the points raised during discussion included the following:

·         The outturn report was currently being circulated which set out the source of the underspend for the year and proposals for its use.  This would need to go to Full Council in September for approval;

·         The final Statement of Accounts would be approved by the Audit Committee at its meeting in September 2014;

·         There was a rolling 5 year programme for the valuation of land and buildings.  In addition to this an assessment of the fair value of these assets would be made on 31 March each year;

·         In relation the Castle, this was classes as a heritage asset and was included in the Council's books at historic cost.  However, it was reported that it would be possible to have a current valuation on the Magna Carta exhibit as a new asset;

·         There would be an opportunity with the Statement of Accounts for 2014/15 to look at what is included in the published accounts, in order to make the document shorter.  The Committee had some discretion in deciding what should be included in the statement of accounts, and this was something which had the support of the officers;

·         Page 81* - the county council was wholly accountable for public health.  The authority was the accountable body in terms of Learning Disability services, but not for mental health in terms of its joint working with health in these service areas;

·         Clarification was sought regarding the contribution to reserves.  It was noted that underspends would be transferred to a variety of reserves, but the majority would go to the financial volatility fund.  This would however, need to be approved by the full Council in September.  Note 10 provided further detail on all the different reserves;

·         Directorates that underspend were able to keep the first 1% of that underspend;

·         The difference between reserves and balances was clarified for the Committee;

·         Page 83 – this provided a summary of the revenue outturn;

·         The Committee was informed that there had been an underspend on the construction of the Energy from Waste plant, which was due to problems which were experienced during the commissioning phase, which led to this being extended.  This provided a benefit to the authority as the price per tonne sent for processing during the commissioning phase was lower than the contractual rate which had been in place since the commissioning period ended;

·         Money had been saved by not using external borrowing to fund capital projects;

·         The authority benefitted if academies wished to purchase any services from the local authority;

·         The difference between usable and unusable reserves was highlighted to the Committee.  It was noted that the majority of reserves were in unusable reserves, and these tended to be valuations of assets and land;

·         The authority did have a policy of not using external borrowing to fund projects, if capital receipts were not available as the preferred funding source;

·         Any surplus or deficit from the Legal Shared Service was ring fenced for re-use by the shared service, or divided up amongst the partner authorities;

·         Note 13 – it was noted that Council Tax income had fallen materially between the two years due to the impact of local council tax support schemes replacing the abolished national council tax benefit scheme.  There was a new business rates system in place, which was provided locally and the county council received a local share and a top up grant from government.  It was also noted that the Council Tax Freeze Grant had dropped and had been amalgamated into the Revenue Support Grant;

·         In terms of government funding, it was difficult to compare one year with another as figures had been moved around and systems had changed;

·         In relation to business rates, if a big business decided to move out of the county, the County Council would not lose out by a great deal, but it would have a significant impact on the appropriate district;

·         The opportunity to charge for services within planning were limited;

·         PFI contracts would only be included within the short term creditors depending on the timing of the payments, but generally they would not be included within this group;

·         Note 24 – employee benefits accrual related to any unpaid leave;

·         The Pension fund was very sensitive to long term interest rates;

·         Short term borrowing had appeared to increase, but it was noted that this was due to a change in presentation between 2012/13 and 2013/14.  Long term borrowing that only had one year of the term left had previously been included within Short Term Creditors rather than Short Term Borrowing;

·         Questions were raised regarding Note 55 – Contingent Liabilities, particularly in relation to the Expansion of ESPO and the Lincoln Southern Bypass Blight Payments.  In relation to the Lincoln Southern Bypass, it was noted that there were no plans to build the road at this time, but it was important to protect the route of the road;

Other noted brought to the attention of the Committee included the following:

·         Note 3 – Critical judgements in applying accounting, and Note 4 – Assumptions made about the future and other major sources of estimation uncertainty.  It was suggested that member review these notes and satisfy themselves with the judgements which had been made;

·         The Council's County Farms Estate was valued on 31 March each year, and was currently valued at £82m.  This was not an operational asset, but was a very valuable investment;

·         Academies were classed as a leased asset, as the land and buildings were owned by the authority but not operated by it, and were given a de minimis value due to the length of the lease.  If an academy closed, the asset would pass back to the authority, similarly, if the academy gave up the site, the lease would end and the asset would return to the local authority.  If the academy chose to relocate and this was funded by the local authority, the new buildings would become a local authority asset (if the academy funded it themselves, they would own the asset);

Pension Fund Accounts

·         Page 198 – it was clarified that transfers in referred to anyone who had chosen to transfer pension benefits from another scheme into the Lincolnshire scheme;

·         The pension fund was invested in companies worldwide;

·         The Pension Fund Accounts would be considered in more detail by the Pensions Committee at its meeting on 24 June 2014;

·         All work on the accounts was on time, and was prepared by the deadline.

(*page numbers refer to the page of the agenda pack, not the Statement of Accounts)

It was reported that the Annual Governance Statement would need to be amended to include consideration of the decision of the High Court in relation to the libraries review.

RESOLVED

            That the comments made in relation to the draft Statement of Accounts      2013/14 be noted.