Agenda item

(To receive a report from Sue Maycock (Head of Finance – Corporate), which invites the Committee to scrutinise and comment on the draft Statement of Accounts 2020/21)

Michelle Grady (The Assistant Director – Finance) introduced the draft Statement of Accounts for 2020/21 financial year. The final Statement of Accounts for 2020/21 would be presented to the Audit Committee on 27^th September 2021 following the external audit process.

The Committee asked how accurate the property asset values identified within the report were after the impact of the Covid-19 pandemic. The Assistant Director – Finance explained that the Council had a five year rolling programme to revalue all of the Council's assets. Last year, under the guidance of surveyors, the external auditors included a note of caution in the accounts. The Council's property assets had in fact increased in value over the past year. If there was a drop in value, it would be detailed in the unuseable reserves.

While appreciating why employee annual leave may have not been taken in the past year, the Committee asked for further detail on this. The Assistant Director – Finance explained that a survey was carried out across staff but would have increased during 2020/21 as staff possibly couldn't take leave due to increased Covid work demands. From 2020/21 to 2021/22 staff had temporarily been allowed to carry over additional leave to normal.

The Committee sought confirmation that controls for purchasing had been maintained throughout the past year. The Assistant Director – Finance stressed all standard controls continued throughout the Covid-19 pandemic. Some procurement had been delayed as it wasn't considered appropriate in the middle of the pandemic. All extensions or unexpected purchases had been carried out through the authority of the normal governance structure.

The pandemic had resulted in a decreased demand in services; the Committee asked how the Council intended to deal with a demand resurgence coming back in a future. The Assistant Director – Finance stated that some services hadn't been delivered, resulting in underspend. While such underspend would be reviewed, she noted that demand for services such as public health, would likely return in the future.

Other commercial organisations were considering less accommodation for staff to work in, the Committee asked if the Council were looking at redistributing resources to support a more digital way of working. The Assistant Director – Finance explained that, within the smarter working agenda, a reduction in the Council's property was expected.

Appreciating the risks and liabilities that could arise when operating trading companies, the Committee sought further clarity on their governance and intents. The Assistant Director – Finance gave an overview of the Council's current trading companies and offered assurance in their governance. Transport Connect was a passenger transport company which the Council took ownership of because of failure in the market. The intent behind the creation of Transport Connect was to provide a transportation service to residents rather than to make profit. Lincolnshire Future and Lincolnshire Property hadn’t traded since their creation. Any decision to make them operational would have to go through the Executive. Legal Services offered a shared service with Lincolnshire's District Councils. In addition, the liabilities of these companies were detailed within their accounts.

The Committee noted that the Council's reserves were fairly similar to previous years'; they asked if they were still considered sufficient as the Council moved out of the pandemic. The Assistant Director – Finance explained that the Council had to complete a going concern statement which set out its financial position. This would be considered by the external auditors as part of the Council's accounts. The Council's reserves, which currently sat at just over 3 per cent, were within its policy of maintaining a level of 2.5 to 3.5 per cent.

The Committee noted that they would have preferred if the narrative report could include more detail for forward looking consideration. The Assistant Director – Finance understood their preference and agreed.

Making reference to the short and long term provisions detailed within the report, the Committee asked if the usage that hadn't been replenished, had been specifically depleted from a provision. The Assistant Director – Finance explained that the insurance claims provisions were based on claims that the Council already had in the system; the insurance reserves had in fact increased.

Referring to the increase in senior officers' remuneration, the Committee felt that further narrative explanation would be of benefit. The Assistant Director – Finance explained that this had been addressed in previous years. She added that narrative complied with the CIPFA code reporting requirements and the Council didn’t typically have enquires about this. However, this approach would be revisited if more of an interest was taken. In a follow up question, the Committee asked if the Council had a maximum on staffing costs as they do in the NHS. The Assistant Director – Finance stated that there was nothing in particular detailing how the Council had to spend its budget; as this was a local decision for elected members.

The Committee noted that inflation had particularly hit the construction industry's material costs, how was the Council taking this into account. The Assistant Director – Finance explained that the Council were indeed seeing a growth in tender prices. The Capital Programme budget was set in January; prices had increased since then. This was be considered during the budget setting process when the whole programme needed to be reviewed. 

The Committee sought clarity on the cause of the underspend for service areas. The Assistant Director – Finance explained that it resulted from a combination of reduced demand, resources being redirected into the Covid response which was covered by grant funding for example Adult Care and Community Wellbeing.

RESOLVED

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