Statement of Accounts 2015-16

Audit, Governance and Standards Committee

11 July 2016

Is the final decision on the recommendations in this report to be made at this meeting?

Yes

 

Statement of Accounts 2015-16

 

Final Decision-Maker

Audit, Governance and Standards Committee

Lead Director or Head of Service

Mark Green, Director of Finance & Business Improvement

Lead Officer and Report Author

Ellie Dunnet, Chief Accountant

Classification

Non-exempt

Wards affected

N/A

 

 

This report makes the following recommendations to the final decision-maker:

1.    To note the draft 2015-16 Statement of Accounts attached at Appendix I.

2.    To note and comment on the Chairmanís response to enquiries made by the external auditor, attached at Appendix II.

 

 

This report relates to the following corporate priorities:

         Keeping Maidstone Borough an attractive place for all

         Securing a successful economy for Maidstone Borough

The Statement of Accounts shows how the council has managed its resources over the previous financial year.† Effective financial management is integral to ensuring that value for money is achieved in the delivery of the councilís priorities.

 

 

Timetable

Meeting

Date

Audit, Governance and Standards Committee

11 July 2016 (draft)

Audit, Governance and Standards Committee

19 September 2016 (final Ė audited)



Statement of Accounts 2015-16

 

 

1.                        PURPOSE OF REPORT AND EXECUTIVE SUMMARY

 

1.1      The draft statement of accounts has been prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2015-16.† The purpose of this report is to provide the committee with an early opportunity to review the draft accounts submitted for audit prior to formally approving them in September.

 

1.2      The audit has now commenced and representatives from Grant Thornton will be in attendance at the meeting to answer any questions relating to the audit and provide a verbal update on progress.

 

1.3      As part of the external audit process, the external auditor is required to make certain enquiries of the Chairman of this committee, the responses to which are documented within Appendix II.† The Chairman has requested that his responses are ratified by the committee prior to being formally submitted to the external auditor.

 

 

 

2.                        INTRODUCTION AND BACKGROUND

 

2.1      The draft Statement of Accounts attached at Appendix I was submitted to the councilís external auditors on 30 June in line with the amended Accounts & Audit Regulations 2011.

 

2.2      Under these regulations the Audit, Governance and Standards Committee are required to formally approve the final audited Statement of Accounts by 30 September for the previous accounting period in their capacity as the committee charged with governance.

 

2.3      It is considered appropriate to bring the draft Statement of Accounts to the committee at this stage to provide an early opportunity for committee members to review the Statement and to ask any relevant questions of officers in advance of the statutory deadline in September.

 

2.4      The draft Statement of Accounts is currently subject to external audit.† In conducting their work, the external auditors need to establish an understanding of the management processes in place to detect fraud and to ensure compliance with laws and regulations.† In this regard, the external auditor is required to make enquiries of the Chair of this committee as to their knowledge of such processes, and awareness of any actual, suspected or alleged fraud.†

 

 

 

 

 

3.                        AVAILABLE OPTIONS

 

3.1      The annual production and external audit of the Statement of Accounts is a statutory requirement and there are therefore no alternative options.

 

 

4.         PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS

 

4.1      It is recommended that the committee:

 

4.1.1     notes the draft unaudited Statement of Accounts attached at Appendix I to this report; and

 

4.1.2     notes and comments on the Chairmanís response to enquiries made by the external auditor, attached at Appendix II.

 

Further information regarding these documents is set out below:

 

Statement of Accounts 2015-16

 

4.2      As noted above, the councilís financial statements must comply with CIPFAís Code of Practice on Local Authority Accounting, which is based on International Financial Reporting Standards (IFRS).† Both frameworks require a number of complex and detailed disclosures which accompany the main financial statements.† There have not been any significant changes to these accounting requirements for 2015-16.

 

4.3      Officers have made efforts to Ďde-clutterí the Statement of Accounts in recent years by removing unnecessary and immaterial disclosures.† The remaining disclosures may appear extensive, but are considered necessary in order to comply with accounting standards.

 

4.4      In order to ensure that the key messages are delivered, the statements are preceded by a Narrative Report, which summarises the councilís performance over the financial year 2015-16 and highlights the most significant elements of the financial statements.†

 

The 2015-16 Statement of Accounts demonstrates that the council has continued to manage its resources effectively despite significant financial pressures brought about by sustained reductions in central government funding, and that it is preparing to deal with the continuing economic uncertainty and associated challenges that lie ahead.† This is evidenced by the fact that the balance on the general fund and usable reserves has increased by £3.6m to £18.85m at the end of 2015-16.† It should be noted that within this increase, £3.2m needs be set aside to fund the deficit on the collection fund.†

 

4.5      Headline messages from the Statement of Accounts can be summarised as follows:

  †††Long term investments have decreased by £5m.† All of the councilís investments are now short term (less than one year) which is reflected in the increase in short term investments.

  ††† Movements in the short term debtor and creditor balances relate to amounts due to and from precepting authorities in relation to Council Tax and NNDR including the Kent Business Rates Pool.

 

  ††† Long term liabilities have decreased by £6.3m, which is largely a consequence of the decrease in pensions liability arising from changes in actuarial assumptions following the annual assessment of the fund by actuaries acting on behalf of Kent County Council.† There is a corresponding increase in the value of unusable reserves.† The next full actuarial valuation of the Fund will be carried out as at 31 March 2016 and will set the employer contributions for the period from 1 April 2017 to 31 March 2020.

 

Understanding how the Audit, Governance and Standards Committee gains assurance from management

 

4.6      The letter attached at Appendix II details a series of questions which the external auditor must ask of the committee in order to comply with International Auditing Standards.† The questions pertain to the management processes in place to ensure compliance with applicable law and regulation, and to prevent and detect fraud which may impact on the financial statements.† Similar questions have been asked of management and a response has been provided.

 

4.7      The Chairís proposed responses to the questions are included as an appendix to the letter and the committee are asked to confirm that they are satisfied with the details provided, prior to a formal response being issued to the external auditor.

 

 

 

 

 

 

 

 

5.        CROSS-CUTTING ISSUES AND IMPLICATIONS

 

Issue

Implications

Sign-off

Impact on Corporate Priorities

Production of the annual Statement of Accounts which is free from material or significant error is a key element of the annual external assessment process.† It is therefore important that the statement of accounts meets this requirement.

Director of Finance & Business Improvement

Risk Management

The primary risks are that the Council fails to produce its accounts in accordance with the requirements of the Code of Practice or statutory timetable.† A risk assessment has been undertaken in order to mitigate this risk.

Director of Regeneration & Communities

Financial

The Statement of Accounts provides an overview of income and expenditure for the financial year to 31 March 2016, and details the councilís assets, liabilities and reserves at this date.

Section 151 Officer & Finance Team

Staffing

Not applicable.

 

Legal

Not applicable.

 

Equality Impact Needs Assessment

Not applicable.

 

Environmental/Sustainable Development

Not applicable.

 

Community Safety

Not applicable.

 

Human Rights Act

Not applicable.

 

Procurement

Not applicable.

 

Asset Management

Not applicable.

 

 

6.         REPORT APPENDICES

 

The following documents are to be published with this report and form part of the report:

               Appendix I: Draft un-audited Statement of Accounts 2015-16

               Appendix II: Understanding how the Audit, Governance and Standards Committee gains assurance from management (letter and Chairís response)

 

 

7.         BACKGROUND PAPERS

 

None