Your Councillors


Agenda item

Report of the Head of Finance and Resources - Management Letter 2014/15 - Update Report

Minutes:

The Committee considered the report of the Head of Finance and Resources setting out the current position with regard to the issues identified in the External Auditor’s Management Letter that accompanied the Accounts for 2014/15.

 

Members were reminded that the External Auditors had recommended that the Charity should have its own accounting records separate from  the Council; that the Council stop reclaiming input VAT on behalf of the Charity; and that consideration should be given to changing the legal status of the Charity.

 

Members were given an update by Officers on these three issues and were advised that:-

·  that a  spreadsheet had been set up in the Council’s financial management system, Agresso which allowed the financial transactions of the Charity to be processed separately;

·  the Auditors had considered the VAT status of the Charity in a separate report and recommended that the Council cease reclaiming input VAT on behalf of the Charity as it considered that the management fee paid to Mytime for running the Golf Course at Cobtree was a lease payment.  However, it has been confirmed that the management fee was for running the Golf Course on behalf of the Trust and not a fee for the lease.  Therefore this fee was considered a standard rated supply and therefore all input VAT could be reclaimed.

Although the VAT had been claimed correctly, the Auditors recommended that the Trust should be registered separately for VAT as the taxable supplies for the Trust are over the threshold for registering for VAT and these supplies are separate to the Council’s supplies.

·  the Auditors had recommended that consideration be given to changing the legal status of the Charity.  The Head of Mid Kent Legal Partnership had indicated that a review of all the charitable bodies would be undertaken and a report would be brought back to the Committee once this work has been completed.  If there was a change to the legal structure of the Charity then this could require a new company to be set up.

In response to questions by Members, Officers confirmed that:
 

·  the Head of Mid Kent Legal Partnership would be asked to submit terms of reference for the review to Members before carrying out the review of the charities.

·  the Trustees’ liability issue would be investigated and a report would come back to the next meeting.

·  MBC enforce the car parking in Cobtree but the machines are the property of Cobtree Manor Estate Trust.  This is dealt with by separate arrangement at no cost to the Trust although the Council receive the income from any fines.

RESOLVED:

 

(1)  That the Committee notes the current position with regards to the issues identified in the External Auditor’s Management Letter that accompanied the Accounts for 2014/15;

(2)  That legal advice is sought on the setting up a new company;

(3)  That Officers report back to the next meeting on the Trustee’s liability issue and the response to the auditor’s recommendations; and

(4)  That  the Charity be registered as a separate body for VAT purposes.

Voting:  For:  5  Against:  0  Abstentions:  0

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