Agenda item

This report presents the Council’s draft 2019/20 Statement of Accounts to members of the Audit & Standards Committee for noting prior to submission to external audit.

Daniel Omisore (Deputy Director of Finance) introduced the report that presented the Council’s draft 2019/20 Statement of Accounts prior to its submission to external audit.  He informed the Committee that ordinarily, the Director of Finance would be required by 31^st May following the year-end, to sign and date the draft Statement of Accounts and confirm that they presented a true and fair view of the financial position as at the year ending 31 March.  The final audited accounts would then be approved by the Council following external audit, by no later than 31 July of the same year.

The Deputy Director continued that in view of the recent coronavirus pandemic and the associated challenges facing Local Authorities and their finance teams, the Ministry for Housing, Communities & Local Government (MHCLG) had recently announced a relaxation of these deadlines. They had confirmed that applicable from 30 April (for Financial Year 2019-20 only) the draft accounts would need to be approved by 31 August 2020 and final, audited, accounts by 30 November 2020.  Members heard that given that the successful remote working arrangements thus far implemented, the Council was aiming to work, as far as possible, to the normal timeframes. This approach would ensure finance staff were free to focus on the COVID-19 recovery, budget setting and the Medium Term Financial Plan (MTFP) later in the year.  It was also felt this would help to alleviate resource pressure for auditors as it was expected that a number of Council audits might converge at the same time later in the year.  He then summarised the draft accounts clarifying the key aspects of the balance sheet and the movement in reserve statement, as set out within the supplementary report.

Prior to member discussion, the Chair reminded members they were not required to adopt the draft accounts at this meeting.  The Committee would consider the final draft set of accounts at their meeting in either July or September 2020.  He then invited Sophia Brown and Paul Dossett representatives from Grant Thornton (external auditor) to provide an update.

Sophia Brown informed the Committee that there was nothing further to report, at this stage, as they anticipated commencing the audit around 15^th June 2020 and would endeavour to complete by July 2020.  She added that Grant Thornton had discussed the key points of the audit with the Director of Finance.  Paul Dossett cautioned that access to the Civic Centre could also influence the progress of the audit.

The Chair then thanked the Deputy Director for his initial presentation and invited comments from members with the following issues raised:

(a)    Members took note of the impact of Covid-19 on incomes including rent payments and sought assurances on how the council intended to address such sensitive issues.  The Deputy Director responded that in addition to a wide range of support made available following the outbreak of the pandemic, a Debt Board had been set up to address issues including but not exclusive to rent collection, council tax and debt provisions.  He advised it was more likely that the full impact would be felt on the 2020/2021 accounts rather than the current financial year.

(b)    In observing the potential impact of the Covid-19 pandemic on the council’s finances, it was requested that a further financial update be received at the Committee meeting in July to enable members to monitor the spend in real time.  Carolyn Downs (Chief Executive) explained that this was the largely responsibility of the Council’s Resource and Public Realm Scrutiny Committee with work underway that would enable members of that Committee to assess the impact of Covid-19 and Medium Term Financial Plan, going forward.

(c)    Whilst welcoming the draft statement, Members went on to seek further clarification on the capital programme. The Deputy Director advised that for the financial year 2019/20 the Council spent £232m, which equated to 89% of the approved capital programme budget and was under spent to budget by £29.2m or 11%.  In reference to Table 3 of the narrative report, the following were noted:

·             Corporate landlord underspend of £5.3m was due to delays in commercial and legal negotiations in regards to final loan terms to the United College Group for works on a new campus.

·             A minor overspend in Regeneration of £0.2m was caused by the Morland Gardens scheme incurring design fee and other costs earlier than originally planned which would be offset by the equivalent underspend on the St Raphael’s Estate regeneration budget.

·             The Housing, Care and Investment underspend of £17m included difficulties in identifying and securing suitable street properties within the programme and delayed works.

·             Schools underspend of £1.2m due to slippage on a number of projects within the annual maintenance and schools expansion programmes now planned to be carried forward and completed in 2020/21.

·             South Kilburn underspend of £1.8m due delays in securing property acquisitions on William Dunbar and Saville, Crone Court and Austen House schemes.

·             Public realm underspend of £3.8m due to a number of infrastructure improvement programmes, with a large proportion of this sum relating to planned footways works which were paused in March due to the pandemic outbreak.

(d)    The Deputy Director advised the Committee that the Council continued to review the capital programme to assess the financial and delivery implications of the current pandemic on the delivery of programmes and projects planned to be completed within the next financial year. With the exception of a few contractors that ceased working on site or reduced their site activities (but resumed from May onwards), most of the capital programmes and projects had been progressing albeit within the social distancing constraints. Other than some of the savings targets (linked to securing rental income) now being delayed, there were no other material impacts anticipated from the recent review undertaken.

(e)    In response to questions as to whether there were any outstanding recommendations from last year’s external audit and whether the reserves set out in the report could be re-applied to other uses, the Deputy Director confirmed that the Council expected to resolve the recommendations and had already made significant progress in doing so. On reserves, he explained the current breakdown whilst noting that a large element was being held for statutory capital expenditure and as such could not be diverted to revenue purposes.

(f)     The external auditors advised that they would complete the audits for the subsidiaries before the Council’s audit, subject to the appropriate health and safety measures in place to again access to the Civic Centre.

As there were no further issues raised, the Chair thanked the Director of Finance and his team of officers for the comprehensive report and the detail clarifications submitted. It was RESOLVED:

(1)    To note the draft Statement of Accounts for 2019/20 and approve its submission to external audit.

(2)    That once agreed, the s151 Officer authorise the circulation of the draft audit to all members with final approval to be undertaken at the Committee meeting scheduled in either July or September 2020.