Agenda item

(To receive a report by Michelle Grady (Assistant Director – Strategic Finance), which invites the Committee to scrutinise and comment on the draft Statement of Accounts 2019/20)

Consideration was given to a report by the Assistant Director – Strategic Finance, which presented the draft Statement of Accounts for Lincolnshire County Council; Local Government Pension Scheme and the Fire and Rescue Pension Fund for the financial year 2019/20.  The draft Statement of Accounts was set out at Appendix A to the report.

The Committee was invited to scrutinise and comment on the draft Statement of Accounts for 2019/20.  The final Statement of Accounts for 2019/20 would be presented to the Committee on 28 September 2020. Although the Government had deferred the deadline for publishing accounts to the end of August 2020, owing to the coronavirus pandemic, the County Council had made a decision to work to the earlier deadline and had published its accounts for public inspection on 1 July 2020.  It was highlighted that auditors were already carrying out its annual audit on the draft statement of accounts.

The Committee had attended informal training on statement of accounts prior to the Committee's meeting on 13 July 2020.  A note of the questions, answers and issues raised had been circulated in advance of the meeting and published to the Council's website.

It was highlighted that the coronavirus pandemic had resulted in increased uncertainty with some of the asset valuations in the Pension Fund accounts, which were detailed in the Statement of Accounts (page 160 of the agenda pack onwards). The fair value of unquoted assets (including alternatives and private equity holdings) was unavoidably subjective in normal circumstances and Covid-19 disruptions could increase this. 

The Fund expected to start receiving the 31 March valuations in July 2020. When the valuations had been received, Fund Officers would consider their materially, both individually and collectively, and revise the accounts to reflect the valuations if necessary.  If these actual valuations were materially different from the original estimated valuations provided then this could indicate that a revised actuarial valuation of the pension fund net liability within the main accounts was required, as this could also have changed materially.  If this was the case then revisions would be made to the main accounts and the amendments would be presented for auditing.

The following points were highlighted to the Committee:

·         It was highlighted that the narrative report, which started on page 143 of the agenda pack, had also included the Revenue Budget Outturn Position 2019/20; Capital Gross Programme Outturn Position 2019/20; and the Council's Assets and Liabilities. 

·         Long term liabilities had included pension fund liabilities. The reduction in long term liabilities was largely as a result of the triennial valuation at April 2019.  The pension fund's investment strategy had delivered a return of 32% over the previous triennial review period, versus the assumed growth of 4% per annum.

·         Note 3 of the accounts sets out the Council's assumptions made about the future and other major sources of estimation uncertainty. Owing to the current uncertainties resulting from the coronavirus pandemic, the Council's assumptions would continue to be reviewed on a regular basis throughout the auditing of the accounts to ensure the assumptions were realistic.

·         The Comprehensive Income and Expenditure Statement 1 April 2019 to 31 March 2020; Movement in Reserves Statement 1 April 2019 to 31 March 2020; the Balance Sheet as at 31 March 2020; and the Cash Flow Statement as at 31 March 2020; which where the key elements of the statement of accounts were detailed on pages 163-166 of the agenda pack.

·         Comprehensive Income and Expenditure Statement 1 April 2019 to 31 March 2020 (Page 163) – the significant difference between 2018/19 and 2019/20 for Sustaining and Growing Business and the Economy was owing to a charge back of REFCUS [Revenue Expenditure funded from Capital under Statute], effectively where capital expenditure was charged back to revenue.  Another area with a large variation was Other Budgets, this was owing to the adjustments made to the 2018/19 accounts because of the impact of the McCloud judgement on the pension contributions.  Similarly with other operating expenditure – this was where the loss of assets was recorded and this could include when schools converted to academy status.  There had also been a change to the re-measurement of the net defined benefit, which was owing to the pension liability as referred to above.

·         The Lincolnshire Fire and rescue Pension Fund and the Local Government Pension Scheme accounts were set out from pages 292 onwards.

During discussion, the Committee made the following comments:

·         Authors were commended for making the accounts accessible, through the narrative statement, notes and the overall presentation of information.

·         It was reiterated that owing to the current uncertainties resulting from the coronavirus pandemic, the Council's assumptions would continue to be reviewed on a regular basis to ensure the assumptions were realistic.

·         The Council had incurred an increase in cost and expenditure as a result of the coronavirus pandemic and although the Council had lost a relatively small amount of income (through the closure of heritage services) and this had not been to the same level as other authorities which had relied on commercial income. The Council had, to date, received £35 million of grant funding from the Government for coronavirus related activity and the use of this grant funding, including any forecast expenditure, was being reported back to Government daily.  The vast majority of expenditure had been used on personal protective equipment and support the adult care market.  It was possible that the Council could exceed the £35 million grant funding.  However, additional grant funding was anticipated. 

·         The Overview and Scrutiny Management Board was scheduled to consider the Council's standard budget monitoring reports at the end of summer 2020.   The Committee was assured that scenario planning for any future coronavirus expenditure was taking place as part of the budget monitoring process.

·         It was recognised that during the pandemic there would be savings being made across the Council and this would include savings through a substantial reduction in the amount of travel claims and printing requirements.

RESOLVED

That the comments of the Committee on the draft Statement of Accounts 2019/20 be noted.