Your Councillors

 

 

 

 

 


 

Annual Accounts 2018/19†††††††††††††††††††††††††††††††††††††††††††††††††

 

 

Final Decision-Maker

Audit, Governance and Standards Committee

Lead Head of Service/Lead Director

Mark Green, Director of Finance and Business Improvement

Lead Officer and Report Author

Paul Holland, Senior Finance Officer

Classification

Public

Wards affected

All

 


 

 

Timetable

Meeting

Date

Audit, Governance and Standards Committee

 

30 July 2019


Annual Accounts 2018/19†††††††††††††††††††††††††††††††††††††††††††††††††

 

1.        CROSS-CUTTING ISSUES AND IMPLICATIONS

 

Issue

Implications

Sign-off

Impact on Corporate Priorities

We do not expect the recommendations will by themselves materially affect achievement of corporate priorities. However, they will

support the Councilís overall

Director of Finance and Business Improvement

 

achievement of its aims in demonstrating accountability

and value for money.

 

Cross Cutting Objectives

There is no specific implication, however sound financial management does support the delivery of the Councilís cross cutting objectives.

Director of Finance and Business Improvement

Risk Management

This is detailed within section 5.

Director of Finance and Business Improvement

Financial

The Statement of Accounts provides an overview of income and expenditure for the financial year to 31 March 2019, and details the councilís assets, liabilities and reserves at this date.

Director of Finance and Business Improvement

Staffing

No implications identified.

Director of Finance and Business Improvement

Legal

No implications identified.

Director of Finance and Business Improvement

Privacy and Data Protection

No implications identified.

Director of Finance and Business Improvement

Equalities

No implications identified.

Director of Finance and Business Improvement

Public Health

No implications identified.

Director of Finance and Business Improvement

Crime and Disorder

No implications identified.

Director of Finance and Business Improvement

Procurement

No implications identified.

Director of Finance and Business Improvement

 

 

 

2.        INTRODUCTION AND BACKGROUND

 

2.1     The Council is required to have its audited Statement of Accounts approved by the Audit, Governance and Standards Committee by 31 July in accordance with the Accounts & Audit Regulations.

 

2.2     The Statement of Accounts consists of:

 

Narrative Report Ė this summarises the Councilís performance over the financial year 2018/19 and highlights the most significant elements of the financial statements.

 

Comprehensive Income and Expenditure Statement (CIES) Ė shows the accounting position of the council, and whether operations have resulted in a net surplus or deficit. The accounting position includes cash payments made to employees and for services, as well as non-cash expenditure such as depreciation and accruals. It also shows all sources of income received and accrued in the year. Accrued expenditure represents the value of goods or services received by the authority by 31 March which have not been paid. Similarly, accrued income represents income due, but not yet received.

 

Movement in Reserves Statement Ė this is a financial statement which details the balances the council held in reserves at 31 March 2019, analysed into usable reserves (such as the general fund, earmarked balances and capital receipts reserve) and unusable reserves (such as the pensions reserve, revaluation reserve and capital adjustment account).

 

Balance Sheet Ė this can be seen as a Ďsnapshotí of the authorityís financial position at a specific point in time, showing what it owns and owes at 31 March 2019.

 

Cash Flow Statement Ė sets out the authority's cash receipts and payments during the year, and analyses them into operating, investing and financing activities.

 

Accounting Policies and Supporting Notes Ė additional information provided to add context to the numbers presented in the main financial statements, and details judgements made by management in preparing this information.

 

Collection Fund Statement Ė this sets out income and expenditure in relation to Council Tax and Business Rates, and represents the position of the Councilís role as a billing authority in collection revenue on behalf of other bodies.

 

2.3     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.

 

2.4     The draft accounts were produced by the deadline of 31 May in accordance with the revised timetable for this process which came into force last year. External audit work commenced on 24 June.

2.5     The audited version of the Statement proposed for approval at this meeting is attached at Appendix 2.

 

2.6     The accounts show that the balance of usable reserves has increased by £2.5m to £14.4m at the end of 2018/19. The increase arises primarily from the additional Business Rates growth retained as a result of the authorityís participation in the Governmentís 100% Business Rates Retention Pilot.† The additional growth has been earmarked for expenditure during the course of 2019/20.

 

2.7     Other headline messages from the Statement of Accounts can be summarised as follows:

 

         The revenue outturn for the year was an underspend of £0.15m compared with the budget.

 

         The value of long term assets has increased by £18.9m.† This reflects a number of significant property acquisitions made during 2018/19, including 17 further temporary accommodation units, and the purchase of Lenworth House for conversion into apartments. It also includes the value of work to date on a number of significant projects including the Mote Park Adventure Zone and the housing developments at Union Street and Brunswick Street.

 

         Movements in the short term debtor and creditor balances reflect Collection Fund balances, and money which the Council is holding on behalf of other bodies, particularly in relation to business rates where the Council is the lead authority for the pilot project.

 

         Long term liabilities have decreased by £7.2m, which predominantly results from the decrease in the pension liability 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. While this has a substantial impact on the net worth of the council as recorded in the balance sheet, statutory arrangements in place to fund the deficit mean that the financial position of the council remains healthy. The deficit is currently being addressed through increased contributions to the fund over the working life of employees, as assessed by the scheme actuary.

 

2.8     The Statement of Accounts attached at Appendix 2 reflect changes that were identified during the course of the audit, and also incorporates suggestions made by members during the briefing session held in June.

 

2.9     A small number of suggestions to improve the presentation and clarity of the accounts were made by the external auditor and have been taken on board by officers. These were mainly to deal with rounding and consistency issues, and clarifying the new requirements around IFRS 15 which deals with recognition of revenue income.

 

2.10 External audit work is now substantially complete, and findings will be summarised within the Audit Findings Report. Please note that this report will follow publication of the agenda, but will be available for consideration at the meeting.

 

Letter of Representation

 

2.11 The Letter of Representation attached at Appendix 3 is written from the Council to the external auditor and will be signed by the Director of Finance and Business Improvement. [To follow]

 

2.12 This is provided for the purpose of expressing an opinion as to whether the Statement of Accounts gives a true and fair view in accordance with CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2018/19 and applicable law.

 

2.13 The letter confirms that the Council has fulfilled its responsibilities and provided the external auditor with access to all information of relevance to the financial statements audit including records, documentation and other matters.

 

2.14 The letter also confirms that the Councilís financial statements should be prepared on a going concern basis on the grounds that current and future sources of funding or support will be more than adequate for the Councilís needs. The appropriateness of this statement is evidenced by the fact that all services have full revenue budget provision for 2019/20 onwards and the capital programme, asset management plan and medium term financial strategy for 2019/20 onwards consider only service efficiencies and growth in corporate or service objectives.

 


 

3.        AVAILABLE OPTIONS

 

3.1     The recommendation being made to the Committee is to approve the Statement of Accounts for 2018/19, taking into consideration the work of the external auditor.

 

3.2     If the Committee chose not to approve the Statement of Accounts, this would result in the Council failing to meet its statutory responsibilities under the Accounts and Audit Regulations.


 

4.        PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS

 

4.1     The formal approval of the Statement of Accounts is a statutory requirement. The draft opinion of the external auditor is provided within Appendix 2 and concludes that the financial statements:

-       give a true and fair view of the financial position of the Authority as at 31 March 2019 and of its expenditure and income for the year then ended;

-       have been prepared properly in accordance with the CIPFA/LASAAC code of practice on local authority accounting in the United Kingdom 2018/19; and

-       have been prepared in accordance with the requirements of the Local Audit and Accountability Act 2014.

 

4.2     On this basis, it is considered appropriate for the Committee to approve the audit Statement of Accounts for 2018/19.


 

 

5.       RISK

 

5.1     Failure to meet the statutory deadline for production and audit of the annual accounts would result in this being highlighted in Public Sector Audit Appointments Limitedís report on the results of auditorsí work. The impact of this risk materialising would have largely reputational repercussions for the Council, and would limit the Councilís capacity to demonstrate accountability and value for money in its use of public funds. This risk has been considered with reference to the Councilís risk management framework, and is considered to be within acceptable levels.


 

6.       CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK

 

6.1     Members of the public have legal rights to inspect, ask questions about and challenge items in the Councilís accounts. Details of this have been published on the Councilís website and the statutory period ended on 12 July. To date, no enquiries have been received in relation to this.

 


 

7.       NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION

 

7.1     The external auditor is required to issue the audit opinion by 31 July.


 

8.        REPORT APPENDICES

 

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

         Appendix 1: External Auditorís Audit Findings Report (TO FOLLOW)

         Appendix 2: Audited Statement of Accounts 2018/19

         Appendix 3: Letter of Representation (TO FOLLOW)


 

9.        BACKGROUND PAPERS

 

None