Agenda item

This report presents the Council’s draft 2022/23 Statement of Accounts to members of the Audit & Standards Committee.

Ahead of the report being presented to the Committee, the Chair clarified that as the accounts were currently in the draft stage and therefore not in a position to receive final approval, there was no requirement for the Audit & Standards Committee to meet following the Audit & Standards Advisory Committee.

Ben Ainsworth, Head of Finance was then invited to introduce a report that provided the Committee with an update on the Council’s draft 2022/23 Statement of Accounts.

In considering the report the Committee noted the following key points:

·                The Accounting Statements (page 45-49 of the Committee report) set out the Council’s income and expenditure for the year as well as its financial position at 31 March 2023 in compliance with the requirements of the CIPFA Code of Practice on Local Authority Accounting.

·                The Accounting Statements detailed a significant uplift in the Council’s total reserve funding (£650m) as detailed within the Comprehensive Income and Expenditure Statement (CIES) and the Movement in Reserves Statement (MiRs). Further details were also provided in distinguishing between usable and unusable reserve funds.

·                The Pensions Fund had seen an increase of £500m, this was reflective of the national picture of increased interest rates. If the trend were to continue the Council’s pension contributions as an employer could reduce.

·                The Committee’s attention was drawn to the Movement in Reserves Statement table (page 46 of the Committee report) that detailed an increase in Capital Grants and a decrease in the Earmarked General Fund Reserves. This decrease resulted from planned projects put in place to support post covid recovery with funds that had been released for these purposes reflected in the reduced General Fund Reserves.

·                The Committee noted that the Pension Fund accounts had been positively received by the Pension Fund Sub Committee.

In response to the update provided the Committee highlighted comments on a number of issues with the following responses provided:

·                In response to a Committee query in relation to the sufficiency of the General Fund Reserves, Minesh Patel, Corporate Director of Finance and Resources advised that that in general terms reserves were on a downward trajectory, however Brent were in a positive position whereby there was no reliance in using reserve funding. It was recognised that a generous reserve fund was favourable, and it was felt that the amount held (5% of the General Fund Balance) for unrestricted reserves was sufficient for the next financial year. However, it was noted that given the financial pressures arising through the cost-of-living crisis, inflation and demand for services, the situation would be closely monitored and if necessary, further consideration would be given to how the Council could increase its reserve funds.

·                The Committee recognised the difficulties in increasing reserve funding as it was likely to only be achieved through accruing an in-year surplus within the Council.

·                Following a Committee query in relation to the accessibility of the funds held in reserves, the Committee were advised of the process available to access funding, however once allocated the challenges in being able to replenish the funds were also identified.

·                In response to a query in relation to the funding sources used to support capital projects, Amanda Healy, Head of Finance, Capital Programme and Treasury, advised that most capital projects were housing schemes where there would be a contract in place based on viability assessments that would be funded by an element of borrowing.  Schemes for affordable housing would also be supported by GLA grants and Section 106 or Community Infrastructure Levy funding could also be used (subject to meeting the necessary criteria) to support the borough’s Capital commitments.

·                Following a Committee query in relation to the re-evaluation of Council dwellings, the Committee was advised that this was driven by the increase in housing prices in the borough that in turn drove the valuations of Council dwellings, construction costs had also increased and were reflected in the balance sheet.

·                The Committee required further information on how the Dedicated Schools Grant (DSG) would be settled if it remained in deficit. Minesh Patel, Corporate Director of Finance and Resources advised that any deficit that remained after the period of statutory override that was in place until 2026/27 may have to be settled from the General Fund. Plans were actively in place to continue to reduce the deficit, however the Council were awaiting future guidance from central government in relation to the final terms of repayment of the DSG.

In closing the discussion on the item, the Chair drew the Committee’s attention to an area of the report that provided information in relation to school’s deficits and falling school balances and advised that any further detailed questions should be emailed to the Deputy Director of Finance, with a full response to be provided at the next Committee meeting.

The Chair thanked the Finance Team on behalf of the Committee for their continued efforts in finalising the draft accounts ahead of their submission to the external auditors and for what the Committee felt was a particularly useful narrative section to the report. As no further issues were raised the Committee RESOLVED to note the draft Statement of Accounts for 2022/23 submitted to the external auditors.