Agenda item

(Director of Finance & ICT) To consider the attached report (AGC-017-2013/14).

The Director of Finance & ICT presented a report on the Statutory Statement of Accounts for 2012/13.

The Director reported that there had been no significant changes to the statements this year. An additional note had been added for Assets Held for Sale, where the asset concerned was being actively marketed for sale at the date of the Balance Sheet. The only asset listed was Leader Lodge in North Weald, which belonged to the Housing Revenue Account. Unfortunately, the agreed sale had not been completed, although disposal was still the most likely outcome.

The Director advised the Committee of one decision within the Statement that required a major element of judgement; this being the Council’s liability to the Pension Fund. The Balance Sheet had indicated that the Council’s liability to the Pension Fund had increased from £65.6million to £75.4million in the past year. The value of the Scheme’s assets had increased but the projected liabilities had also increased. The main factor had been the reduction in the discount rate for future outgoing cash flows from 4.6% to 4.1%, which was a reflection on the projected state of the investments and money markets. The inclusion of the liability in the Balance Sheet indicated the monies that would be owed by the Council if the Pension Fund had closed on 31 March 2013.

The Director informed the Committee of the unusual transactions that had affected the Statement. The Council had received a compensation payment of £100,000 and interest of £237,000 on the payment, relating to a Compulsory Purchase Order for some land used in 1992 to construct the M25 motorway. It had been a complex case and required the Council to prove it had owned the land. As a disposal of land, the payment had been treated as a capital receipt whilst the interest had been treated as revenue income and credited to the District Development Fund.

The Director concluded that within the Balance Sheet, the total assets less liabilities figure had improved by £6.2million, long-term investments had increased by more than £10million and (as reported earlier) the Pensions Liability had increased by £9.8million over the year. No significant adjustments resulting from the Audit had arisen so far, and the weakness in Internal Control reported in 2011/12 of Senior Benefit Officers failing to perform the requisite checks had been resolved.

The Committee noted a number of further adjustments to be made to the Statement that was reported by the Assistant Director of Finance & ICT (Accountancy) and amended pages would be issued for the forthcoming Council meeting.

It was highlighted that note 16 of the Statement stated that the sale of Leader Lodge was expected to take place shortly, whereas the Director of Finance & ICT had reported that the Vendor had pulled out of the agreed sale. The Assistant Director agreed to amend the note to read that the sale was expected to take place within the next twelve months. It was also explained that the reduction in Other Service Expenses from £34.2million to £21.2million was due to the end of the Housing Revenue Account subsidy system, and the Car Leasing Scheme was currently being held in abeyance which accounted for the reduction in vehicle leasing charges during 2012/13.

The Chairman of the Committee made the following suggestions to improve the Statement:

(i)         Note 7, Earmarked Reserves – explain what they were and confirm that the External Auditors had verified the figures;

(ii)        Note 20, Debtors and Prepayments – provide further analysis for the increase in Sundry Debtors during 2012/13; and

(iii)       Note 22, Creditors – explain the rise in Sundry Creditors during 2012/13.

The Director of Finance & ICT undertook to provide answers for those questions to the members of the Committee before the Council meeting three days hence.

Recommended:

(1)        That the Statutory Statement of Accounts for 2012/13 be recommended to the Council for adoption, subject to the following amendments:

            (a)        making the adjustments outlined by the Assistant Director of Finance         & ICT (Accountancy) during the meeting;

            (b)        revising Note 16 to state that the sale of Leader Lodge was expected          to take place within the next twelve months; and

            (c)        providing further answers to the queries raised by the Committee and        revising the notes to the Statement if necessary.