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AUDIT, GOVERNANCE & STANDARDS COMMITTEE |
28 July 2021 |
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Draft Annual Accounts 2020/21 |
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Final Decision-Maker |
Audit, Governance & Standards Committee |
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Lead Head of Service |
Ellie Dunnet, Head of Finance |
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Lead Officer and Report Author |
Paul Holland, Senior Finance Manager (Client) |
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Classification |
Public |
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Wards affected |
All |
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Executive Summary |
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This report presents the unaudited Statement of Accounts for 2020/21. The Statement will be subject to external audit prior to it being brought back to the Committee for formal approval in September. It also includes a paper from the external auditors which outlines their risk assessment and how it relates to the role of this committee in approving the Statement of Accounts
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Purpose of Report
To give the Committee the chance to review the Statement of Accounts and to raise any questions they may have prior to the external audit.
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This report makes the following recommendations to this Committee: |
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1. That the unaudited Statement of Accounts for 2020/21 are noted. 2. That the external auditor’s risk assessment document is noted.
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Timetable |
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Meeting |
Date |
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Audit, Governance & Standards Committee |
28 July 2021 |
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Draft Annual Accounts 2020/21 |
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1. CROSS-CUTTING ISSUES AND IMPLICATIONS
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Issue |
Implications |
Sign-off |
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Impact on Corporate Priorities |
We do not expect the recommendations will by themselves materially affect achievement of corporate priorities. However, they will support the Council’s overall achievement of its aims in demonstrating accountability and value for money. |
Director of Finance and Business Improvement
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Cross Cutting Objectives |
There is no specific implication, however sound financial management does support the delivery of the Council’s cross cutting objectives. |
Director of Finance and Business Improvement
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Risk Management |
This is detailed within section 5. |
Director of Finance and Business Improvement
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Financial |
The Statement of Accounts provides an overview of income and expenditure for the financial year to 31 March 2021, and details the council’s assets, liabilities and reserves at this date. |
Director of Finance and Business Improvement
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Staffing |
No implications identified. |
Director of Finance and Business Improvement
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Legal |
Under section 151 of the Local Government Act (LGA 1972), the Section 151 Officer has statutory duties in relation to the financial administration and stewardship of the authority, including advising on the corporate financial position and providing financial information. The Council is required to produce a statement of account in accordance with the Accounts and Audit (England) Regulations 2015. It is a function of the Audit, Governance and Standards Committee to review and approve the annual statement of accounts and to consider if appropriate accounting policies have been followed and whether there are concerns arising from the financial statements or from the audit that need to be brought to the attention of the Policy and Resources Committee or Council.
The Statement is required to be signed off by the Director of Finance & Business Improvement by 31st July 2021 and following the external audit to be approved and published by 30th September 2021. |
Team Leader Corporate Governance |
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Privacy and Data Protection |
No implications identified. |
Director of Finance and Business Improvement
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Equalities |
No implications identified.
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Director of Finance and Business Improvement
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Public Health |
No implications identified. |
Director of Finance and Business Improvement
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Crime and Disorder |
No implications identified. |
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Procurement |
No implications identified. |
Director of Finance and Business Improvement
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Biodiversity and Climate Change |
The implications of this report on biodiversity and climate change have been considered and are; · There are no implications on biodiversity and climate change.
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Biodiversity and Climate Change Officer |
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 30th September 2021 in accordance with the amended Accounts & Audit Regulations.
2.2 Prior to that the Statement has to be signed by the Director of Finance & Business Improvement as presenting a true and fair view of the Council’s financial position by 31st July 2021, and will then be subject to an external audit which is scheduled to commence on 23rd August 2021.
2.3 This report gives the Committee the opportunity to review the Statement prior to the external audit and to raise any questions they may have.
2.4 The Statement of Accounts consists of:
Narrative Report – this summarises the Council’s performance over the
financial year 2020/21 and highlights the most significant elements of the
financial statements.
Comprehensive Income and Expenditure Statement (CIES) – 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 – this is a financial statement which
details the balances the council held in reserves at 31st March 2021, 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 – this can be seen as a ‘snapshot’ of the authority’s
financial position at a specific point in time, showing what it owns and owes at 31st March 2021.
Cash Flow Statement – 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 – 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 – this sets out income and expenditure in
relation to Council Tax and Business Rates, and represents the position of
the Council’s role as a billing authority in collection revenue on behalf of
other bodies.
2.5 The council’s financial statements must comply with CIPFA’s 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. of complex and detailed disclosures which accompany the main financial statements.
2.6 Due to the impact of the Covid-19 pandemic on local authorities the Government amended the deadlines for the publication and approval of the accounts. The date for publication was amended from 31st May 2021 to 31st July 2021, and the date for formal approval amended from 31st July 2021 to 30th September 2021.
2.7 The unaudited version of the Statement is attached at Appendix 1. At this stage members should treat this document as a draft and subject to change.
2.8 The headline messages from the Statement of Accounts can be
summarised as follows:
· There has been an increase in the value of Property, Plant & Equipment held on the Balance Sheet following the acquisition of a number of houses for housing temporarily homeless families, along with the costs of refurbishing the Lockmeadow Complex which was acquired in 2019. There has also been significant spend on a number of ongoing developments – the Innovation Centre and the housing developments at Brunswick Street and Union Street.
· Short term creditors have increased, which primarily reflects grants received by the Council from Central Government to pay over to businesses and individuals adversely affected by the impact of Covid-19.
· Other Long-Term Liabilities have increased significantly, which reflects the annual remeasurement of the pension fund liability.
· The items above are also reflected in movements within the usable and unusable reserves. Within the usable reserves a new earmarked reserve of £13.5m has been established to provide funding for future Collection Fund deficits, which are now forecast as a result of the financial impact of Covid-19.
3. AUDIT RISK ASSESSMENT
3.1 Attached at Appendix 2 is a document from Grant Thornton (the external auditors) that outlines their approach to risk assessment during the audit and how it relates to the role of the Committee during this process. This paper also details the approach taken by management to calculating accounting estimates which form part of the financial statements. Members are invited to comment on this.
3.2 It also includes a series of questions that the auditors have asked of management and their responses. The Committee may wish to consider these responses and whether they are consistent with their understanding of the position.
4. AVAILABLE OPTIONS
4.1 The recommendation being made to the Committee is to note the
Statement of Accounts for 2020/21, and the report from the auditors on risk assessment.
5. PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS
5.1 That both documents are noted with the Committee having had an opportunity to review them prior to the external audit commencing.
6. RISK
6.1 Failure to meet the statutory deadlines for production and audit of the annual accounts would result in this being highlighted in Public Sector Audit Appointments Limited’s report on the results of auditors’ work. The impact of this risk materialising would have largely reputational repercussions for the Council and would limit the Council’s capacity to demonstrate accountability and value for money in its use of public funds. This risk has been considered with reference to the Council’s risk management framework and is considered to be within acceptable levels.
7. CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK
7.1 Members of the public have legal rights to inspect, ask questions about and
challenge items in the Council’s accounts. Details of this have been
published on the Council’s website and the statutory period ends on 1st September 2021. To date, no enquiries have been received in relation to this.
8. NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION
8.1 The external audit will commence on 23rd August 2021.
9. REPORT APPENDICES
The following documents are to be published with this report and form part of the
report:
· Appendix 1: Unaudited Statement of Accounts 2020/21
· Appendix 2: Informing the audit risk assessment 2020/21
10. BACKGROUND PAPERS
None