In accordance with the Accounts and Audit Regulations 2003, the Council’s accounts were required to be approved by the Council, or its delegated Committee, each year. The report of the Assistant Director Resources discussed the main issues affecting the Council’s draft Statement of Accounts and provided a commentary on the core financial statements. The full statement would be circulated to Members when available.
At the time of writing the report, the Council’s external auditors, Grant Thornton, had largely completed their work on the accounts for 2019/20. The published accounts included a Narrative Report and the Annual Governance Statement approved by the Audit and Standards Committee at its meeting on 18 May 2020. The Code of Practice had required no major changes in the presentation of the accounts.
The Finance Manager led Members through the draft Statement of Accounts and highlighted the following salient points:
· The Code of Practice had required no major changes in the presentation of the accounts for this year.
· The Movement in Reserves statement showed the movement in the year on the different reserves held by the Council (analysed between ‘usable’ and unusable). The deficit of £2.428m on the provision of services showed the true economic cost of providing the Council’s services.
· The net change of £2.392m before transfers to Earmarked Reserves showed the statutory General Fund Balance before any discretionary transfers to earmarked reserves was made by the Council.
· The Balance Sheet showed the balances and reserves at the Council’s disposal, its long-term indebtedness, the net current assets employed in its operations and summarised information on the fixed assets held. The net worth of the Council had increased by £15.2m and the useable cash resources had increased by £0.6m however useable reserves had reduced by £2.4m.
· The Pension Fund liability of £17.85m was a long-term financial assessment of a possible shortfall based on its current performance and therefore no immediate action was required.
· Overall the Collection Fund balance was in surplus for the year by £1.9m; this balance was made up of both Council Tax and Business Rates. For Council Tax, the Fund was in surplus by £0.471m as at 31 March 2020, with East Sussex County Council entitled to the majority of this amount. For Business Rates, the Fund was in surplus by £1.452m, with the Government receiving the highest amount followed by this Council.
The Balance Sheet showed that overall the financial position of the Council remained sound, however the COVID-19 pandemic continued to exacerbate financial pressure on the Council in 2021/21 and beyond. It was therefore essential that the Council recognised all financial pressures and continued to deliver the target savings and income set out in the Medium Term Financial Plan in order for the Council to continue to balance its budget.
Concern was raised regarding the valuation error (£650,000) of the Council’s properties and clarity was sought on how this situation had occurred. The Finance Manager advised that this had been a typographical (human) error on the floor space data used on two assets. Unfortunately, the valuations had been calculated using this data. The data was included in the audit test sample and the error had been identified by the External Auditors. It did not affect the Council’s cash position. True valuations would only be known once properties were taken to the open commercial market. At present, the Council had no intention of selling these properties. The Finance Manager pointed out that the External Auditors had described the overall quality of the accounts working papers as high, as reported earlier in the meeting.
The Committee approved the 2019/20 Statement of Accounts and agreed that delegated authority be granted to the Assistant Director Resources, in consultation with the Chairman of the Audit and Standards Committee to make minor non-consequential changes to the Statement.
1) the Council’s 2019/20 Statement of Accounts be approved; and
2) delegated authority be granted to the Assistant Director Resources, in consultation with the Chairman of the Audit and Standards Committee to make minor non-consequential changes to the Statement.