Agenda item

(Director of Resources) To consider the attached report (AGC-008-2016/17).

The Director of Resources presented the Statutory Statement of Accounts for 2015/16, an addendum sheet containing two notes for events after the Balance Sheet date, and the restatement of the Balance Sheet as at 1 April 2014.

The Director reminded the Committee that one of its key roles was scrutinising the annual Statutory Statement of Accounts. All Members of the Council would have the opportunity to debate the Accounts at the Council meeting scheduled for 27 September 2016 and part of that debate would be to consider the recommendation of this Committee. There had been no substantial changes to the annual Statutory Statement of Accounts for 2015/16. The format of the accounts and the disclosure notes within them were very similar to those for 2014/15. Also, following the significant changes to the system of local authority finance in 2013/14, 2015/16 had been a year of consolidation with no other significant changes.

The Director stated that there were three decisions made which required a major element of judgement. The first of these was that the pension liability for the Council had reduced from £69.929million to £66.981million, due to a £1.57million increase in the value of the scheme’s assets and a reduction of £1.378million in the projected liabilities. £66.981million was the extent of the Council’s liability if the pension fund was to close on 31 March 2016, and did not mean that this amount would have to be paid to the pension fund in the near future.

The second of these was asset valuations. Property, Plant and Equipment had a value of just under £700million in the Balance Sheet, an increase of £101million during the year. £99million of this increase related to Council Dwellings and Garages, which had been valued by the District Valuer. Investment Properties had a value of £63million in the Balance Sheet, and had risen by £9million for Industrial Estates and £11million for commercial properties; these properties had been valued by Deloitte LLP. The External Auditors were satisfied that the asset values had not been materially misstated.

The third of these was the provision for Business Rates Appeals. This had risen from £3.26million to £3.57million and had been calculated with the assistance of an external firm of rating experts. The Valuation Office had made some progress in settling appeals, but there were still over 400 appeals outstanding for the District, including some of the largest non-domestic premises in the District. It was highlighted that one outstanding appeal was for a property with a rateable value of £5.83million.

The Director reported that, during the year, the Council had reviewed some of its asset categories due to new accounting arrangements relating to the Highways Network Asset. It was found that some of the assets held under the headings of Infrastructure, Community Assets and Assets under Construction were either transport related and belonged to Essex County Council, or were related to the former waste disposal site at Bobbingworth which was now a park. Consequently, a retrospective restatement had been made to the Balance Sheet as at 1 April 2014 which had resulted in a reduction of £8.421million to the value of assets under Property, Plant and Equipment with a corresponding adjustment to the Capital Adjustment Account and reflected in the Unusable Reserves figure in the Balance Sheet. This adjustment would not impact upon the Council’s Usable Reserves and would not influence any subsequent decisions on financing or the level of Council Tax.

The Director concluded by stating that no significant adjustments to the Accounts had arisen from the audit, and that neither the Internal nor External Auditors had reported any material weaknesses in internal controls.

In response to questions from the Members present, the Director confirmed that action had been taken to reduce the Pension Scheme liability. The Local Government Pension Scheme was no longer a ‘final salary’ scheme and contributions had been increased, so the liabilities for the Council should continue to reduce over a period of time. In respect of the outstanding appeals for Non-Domestic Rates, it was felt that there was no end in sight. The revised list due in 2015 had been deferred until 2017, but progress on outstanding appeals by the Valuation Office had been suspended to produce the 2017 list. The Council was likely to receive fresh appeals when the 2017 list was implemented.

The Director acknowledged that the Statutory Statement of Accounts should have been watermarked as ‘Draft’ as they had yet to be agreed by the Council, and this would happen next year. When asked why items from the Transformation Programme had not been highlighted within the Accounts, the Director explained that the budget for the Transformation Programme was set as part of the regular budget setting process and progress with the Programme was regularly monitored by the Cabinet.

Resolved:

(1)        That the Statutory Statement of Accounts for 2015/16 be recommended to the Council for adoption.