Agenda item

(Director of Resources) To consider the attached report (AGC-010-2014/15).

The Director of Resources presented a report on the Statutory Statement of Accounts for 2013/14.

The Director reminded the Committee that one of its key roles was the scrutiny of the Annual Statutory Statement of Accounts. There had been no significant changes to the accounting policies and practices during the year, but the most substantial change to the contents of the Accounts for 2013/14 arose from the implementation at the start of the year of the local retention of non-domestic rates. Previously, non-domestic rates had been collected and passed to a National Pool for redistribution, which did not provide Councils with an incentive to improve the economic development of its area and thereby increase their income. From 2013/14, Councils could increase their income through retaining a share of any growth in non-domestic rates collected. This was a significant change to the way local authorities were financed as the Government wanted to provide an incentive for economic development.

In respect of Assets Held for Sale, the Director stated that in 2012/13, it had been anticipated the property at Leader Lodge in North Weald Bassett would be sold for £515,000; that sale had not completed but a subsequent offer of £652,000 had been received. For 2013/14, the former car park at Church Hill in Loughton had been included, and this site had been subsequently sold for £858,000.

With regard to Decisions Requiring a Major Element of Judgement, the Director highlighted that the Council’s liability to the Pension Fund had decreased by almost £18million to £57.8million. This reduction was due to an increase of £6.7million in the value of the Scheme’s assets, and a reduction of £10.9million in the projected liabilities. Another area highlighted to the Committee was the provision of £1.486million for appeals against the valuation set by the Valuation Office Agency for non-domestic properties. The number of appeals had been increasing in recent years and this provision had been calculated by an external firm of rating experts who had analysed the outstanding appeals. However, new rules were due to be introduced to make it possible to dismiss those appeals considered to have no merit or substance.

Regarding Significant Adjustments Resulting from the Audit of the Accounts, the Director indicated that the Pension Scheme deficit had initially been overstated by £500,000 as the original information provided by the Actuary was incorrect. The second adjustment had arisen from an error in accounting for income from the local retention of business rates; it had initially been thought that the Council would receive £177,000 from the ‘safety net’ but the Government grant to compensate for late changes to the overall system had not been included, which would result in the Council not receiving any funding from the ‘safety net’. Both of these adjustments had been corrected in the Statement.

Following the publication of the agenda, the Director reported that the Revaluation Reserve had been increased by £230,000 with a corresponding reduction made to the Capital Adjustment Account (note 24 in the Accounts). Neither the Internal nor External Auditor had reported any material weakness in internal controls; if any subsequently arose then they would be reported to the Committee. The Director concluded that the Stock Market had recovered following a period of uncertainty prior to the Scottish Referendum, and a degree of economic stability was now expected.

In response to queries from the Members of the Committee, the Assistant Director of Resources (Accountancy) explained that the Council had lost its subsidy from the Government regarding Council Tax Benefits as this had been discontinued in 2013/14. It was agreed that a note should be added to the Accounts to explain the change. The Director reassured the Committee that the value of the Council’s Housing Stock exceeded the £185million borrowed to finance the Housing Revenue Account Subsidy, and that the current Council Housebuilding Programme had been accelerated to minimise the monies that needed to be paid back to the Government from any further sales of Council housing stock under the Local Government Act 2003. The known staff vacancies had been accounted for within the budget; salaries were monitored monthly by the Management Board and reported to the Finance & Performance Management Cabinet Committee. The Assistant Director pointed out the problems encountered in identifying suitable counterparties with which to invest, hence £13million had been kept in short term deposit accounts.

Resolved:

(1)        That the Statutory Statement of Accounts for 2013/14 be recommended to the Council for adoption.