Agenda item

(To receive a report which provides the Committee with an opportunity to scrutinise and comment on the Draft Statement of Accounts)

Consideration was given to a report which presented the Draft Statement of Accounts for Lincolnshire County Council for the financial year 2014/15.  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:

·         There had been very little change to the format and content of the accounts this year, as last year there had been a lot of changes in terms of business rates etc.;

·         In terms of the underspend, and the increase in reserves, most of this would be in the financial volatility fund.

·         The risk profile for the authority would be higher if it did not have these reserves;

·         In terms of the accounting for schools non-current assets, this had been on CIPFA's agenda for some time, but they had not been able to issue guidance as practices between authorities were so diverse.  For 2014/15 CIPFA had issued clarification on this matter and changes arising from this have been reflected in the 2014/15 accounts.  These changes were reviewed by KPMG in February/March and this approach agreed prior to year end;

·         Reserves were classed as either usable or unusable.  The 'usable' reserves totalled £238million, however, this was then split between capital and revenue;

·         Note 9 – Transfer to/from earmarked funds – showed that the biggest earmarked reserves were in the financial volatility – Budget shortfall and financial volatility funds.  Members were reminded that these funds could only be used once;

·         The funding shortfall needed to be taken out of the base budget, using the reserves to fund this would buy time, but that was all;

·         Page 28 – there had not been too many key movements, the only one that needed to be highlighted to the Committee was in relation to Public Health, as the income was more than expenditure.  It was noted that this was a ring fenced grant, and that the income only showed as greater due to timing;

·         Note 10 – Other operating expenditure – the total had jumped due to capital disposals relating to schools becoming academies;

·         It was noted that the County Council retained legal ownership of the land when a school became an academy.  When the lease expired both the land and the school buildings would revert back to the County Council.  This would also be the case if a school stopped operating as an academy;

·         Members were advised that the Revenue Support Grant would continue to reduce;

·         Note 12 - In relation to council tax, it was noted that there had been a larger surplus than seen in recent years;

·         It was not yet clear whether the Council Tax Freeze Grant would continue;

·         It was believed that 90% of the audit work by KPMG had been completed;

·         In relation to the value of property, land and equipment, it was noted that this figure needed to be reduced by £57million, with a corresponding entry in the revaluation reserve.  This adjustment was needed to ensure assets were carried at fair value at the end of the financial year;

·         Page 30 – Cash Flow Statement – it was noted that this did not add any value to the accounts as a whole;

Other notes that were specifically highlighted to the Committee included the following:

·         Note 3 – Critical Judgements in applying accounting policies;

·         Note 4 – Assumptions made about the future and other main sources of estimation uncertainty;

·         Note 43 – Private Finance Initiatives (PFI) and similar contracts;

·         Note 46 – Contingent Liabilities;

·         Note 47 – Contingent Assets – it was noted that this was the same as the previous year;

·         Note 48 – Prior Period Adjustment;

Pension Fund Accounts

·         The rules for investing pension pensions money was considerably different to the investment of the Council's money;

·         The difficulty would be in not knowing what the new Pension Boards would bring;

·         Page 166 – the Lincolnshire Fire and Rescue Pension Fund was unfunded;

·         It would be crucial that Serco provided all relevant information in time;

It was noted that officers had finished preparing the accounts before the end of May 2015, even though the authority had until the end of June to complete this work.  It was expected that that it would take longer in the following year to prepare the accounts due to the new financial systems.  However, as this year's accounts had been completed early, this gave more time to prepare the following year, and officers would start preparing the accounts for next year in the summer months.

RESOLVED

            That the comments made in relation to the draft Statement of Accounts 2014/15 be noted.