Report Date:27 June 2017
Report Author: T. Hagland
BLAENAU GWENT COUNTY BOROUGH COUNCILReport to / The Chair and Members of the Audit Committee
Report Subject / Draft Statement of Accounts 2016/2017
Report Author / Tony Hagland
Report date / 27 June 2017
Directorate / Resources
Executive Portfolio / Financial Management and Strategy
Date of meeting / 1August 2017
Date signed off by
Monitoring Officer(please note for decision making reports only, to be submitted by Performance Team)
Date signed off by
Section 151 Officer(as above)
Date signed off by Chair(for all reports, to be submitted by Performance Team) / n/a
Key words / Draft Statement of Accounts 2016/2017
Report Information Summary
1. / Purpose of Report*1.1 / To present for consideration the 2016/2017 Draft Statement of Accounts and to consider the Authority’s financial standing as at 31 March 2017 (subject to Audit).
2. / Scope of the Report*
2.1 / The Statement of Accounts is prepared in accordance with relevant statutory and regulatory provisions, accounting codes of practice and accounting standards. It details the financial transactions of the Authority for the 2016/2017 financial year and the value of assets, liabilities and reserves at the balance sheet date (31 March 2017).
3. / Contribution to the National Well-Being Goals – Detail attached as Appendix 1
3.1 / The management of the Authority’s assets, liabilities and reserves (in recognition of the need to plan for known and/or predicted future service delivery and other commitments) allows the Authority to meet its obligations in pursuance of the national well-being goals.
4. / Recommendation(s) / Endorsement by other groups, e.g. CMT/Committees/Other groups*
4.1 / None.
5. / Recommendation/s for Consideration*
5.1
5.2 / The Audit Committee accepts this report and receives the Draft 2016/2017 Statement of Accounts for consideration.
In monitoring budgets for 2017/2018, setting a Revenue Budget for 2018/2019 and in developing future medium term spending plans, the Council takes into consideration the financial standing of the Authority as reported within the attached Draft Statement of Accounts for 2016/2017.
Why this topic is a priority for the Council?*
Report author to identify links to the main corporate strategies.
Single Integrated Plan (SIP) / Corporate Improvement Plan (CIP) / Performance Management Improvement Framework (PMIF) / Operating Model / Transforming Blaenau Gwent (TBG Programme) / Relevant legislation / Other
(please state)
Accounts & Audit (Wales) Regulations 2014; Public Audit Wales Act 2004. / Statutory Returns;
Financial Governance
Reporting Pathway*
Report author to identify proposed reporting pathway.(To identify dates where relevant)
Directorate Management Team (DMT) / Corporate Management Team (CMT) / Audit / Democratic Services Committee / Scrutiny / Executive / Council / Other (please state)
01/08/2017
*Denotes mandatory section
Main Report
1. / Background and Context*1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9 / The requirements for preparation, inspection, audit, approval and publication of Local Authority annual accounts are specified in the Accounts and Audit (Wales) Regulations 2014 [the 2014 Regulations] and the Public Audit (Wales) Act 2004 [the 2004 Act].
Section 25 of The Local Authorities (Capital Finance and Accounting) (Wales) Regulations 2003 specifies that the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local Authority Accounting (“the Code”) represents proper practice in preparing local authority accounts in compliance with section 8(1) of the 2014 Regulations.
Section 10(1) of the 2014 Regulations require a provisional (i.e. pre-audit) Statement of Accounts to be fully prepared by the end of June and certified by the Chief Finance Officer as presenting a true and fair view of the Authority’s financial position and its income and expenditure for the year ended 31 March 2017.
Section 11 of the 2014 Regulations and Section 29 of the 2004 Act require that the Accounts and other documents are madeavailable for public inspection for 20 working days.
The documents available for public inspection are specified by Section 30 of the 2004 Act and the security and control of this information is managed by senior staff within Accountancy and Financial Planning during the period.
Section 31 of the 2004 Act provides for local electors to make objections to the External Auditor regarding any item of account that is contrary to law or any matter that could result in a report in the public interest. The auditor must appoint a date on or after which these rights can be exercised.
Section 10(2) of the Accounts and Audit (Wales) Regulations 2014 requires the Authority to publish a completed Statement of Accounts by the end of September.
To this end, the Accounts, having been re-certified by the Chief Finance Officer, will be re-presented to the Audit Committee for approval in September. Following approval, the Chair of the Audit Committee (as the person presiding over the meeting)is required to sign and date the Accounts.
The Authority would then anticipate receiving a signed audit opinion from the Auditor General for Wales by 30 September 2017.However, if the final statutory report presented by the Wales Audit Office were to contain any material qualification issues, the audited Statement of Accounts may also need to be reported to Council.
2. / Performance Evidence and Information*
2.1
2.2
2.3
2.4
2.5
2.6 / The Draft Statement of Accounts for 2016/2017 have been prepared in accordance with the relevant statutes, regulations, accounting codes and standards. In compliance with Section 10(1) of the 2014 Regulations, the Draft Accounts were signed and dated by the Chief Finance Officer on 23 June 2017.
The External Auditor (i.e. the Wales Audit Office or WAO) has commenced a detailed financial audit of the individual disclosure notes and accounts that comprise the overall Statement and is expected to finalise the Audit of Financial Statements Report in late August.
The period of public inspection has been advertised and will take place from Monday 24 July 2017 until Friday 18 August 2017 inclusive. The auditor has given notice that the date on or after which electors may exercise their rights to objections is Tuesday 22 August 2017.
If there are any matters to be reported to Members arising out of the above, then these will be reported separately. Any issues arising from the external audit of the Statement of Accounts or objections raised during the inspection period will be presented to the Audit Committee in September as part of the Auditor’s formal Audit of Financial Statements.
Section 22 of the 2004 Act requires the External Auditor to consider whether a report should be made in the public interest for any matter arising during the course of the audit, including from objections made following public inspection.
Preparation and approval by the Chief Finance Officer of the Statement of Accounts by the statutory deadline of 30 June ensures that Accountancy & Financial Planning achieves one of its major performance targets. Non-achievement of this target would expose the Council to risks explained in section 3.
3. / Risk Implications*
3.1
3.2 / Failure to meet the statutory deadline for preparation and initial approval of the Statement of Accounts could expose the Council to the risk of adversecomments from the appointed external auditors.
Achievement of the statutory requirements in relation to the annual Accounts is important in terms of demonstrating that the Authority has the appropriate governance arrangements in place to manage the reporting of its strategic financial affairs.
4. / Financial Implications* (to include any VAT implications)
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10 / The Narrative Report section of the Draft Statement of Accounts highlights the most significant matters affecting the Accounts and outlines the Authority’s overall financial position.
Revenue Expenditure and Outturn(Narrative Report Note 5.1, page 3) reports Net Outturn on Portfolios, as included in Management Accounts, as £137.447m. This represents a provisional favourable variance of £0.071m compared to the revised budget for the year.
In addition to the Management Accounts position, to comply with the Accounting Code, other accounting adjustments are required. In summary these are:-
- Net Expenditure Chargeable to the Council Fund of £4.873m
- Offset by net transfers of £4.664m from earmarked reserves and a net transfer from the Council Fund of £0.209m (Narrative Report Note 5, page 5 and Note 14, page 14).
Where required by the Accounting Code and IAS 37 (Provisions, contingent liabilities and contingent assets), specific sums have been provided in relation to known liabilities. Total provisions held at 31 March 2017 amounted to £6.383m (Narrative Report Note 7.1, page 8), with the most significant provisions being in respect of Short-term Accumulating Compensated Absences (£1.715m), Insurance (£1.405m), Contaminated Land (£1.111m) and Lease Dilapidation – Anvil Court/Ebbw Vale Multi Storey Car Park (£0.750m).
The draft Statement of Accounts reports a net decrease in the Council Fund of £0.209m, from £6.072m to £5.863m at 31 March 2017 (Narrative Report Note 7.2, pages 8-9).
Usable Capital Receipts increased by £0.476m during the year as a result of the sale of a number of Council buildings. Capital Grants Unapplied decreased by £0.740m as a result of their application to fund capital expenditure.
The level of earmarked reserves has been determined in accordance with the reserves protocol agreed by Corporate Management Team in April 2016.
The level of usable reserves available to the Authority has reduced by £4.397m in 2016/2017. A summary of the provisional strategic financial position of the Authority, is given below:
Usable Reserves / 31 March 2016 / Increase/ (Decrease) / 31 March 2017
£000 / £000 / £000
Council Fund / 6,072 / (209) / 5,863
Earmarked Reserves / 10,669 / (3,924) / 6,745
Usable Capital Receipts / 8,421 / 476 / 8,897
Capital Grants Unapplied / 1,019 / (740) / 279
Total Usable Reserves / 26,181 / (4,397) / 21,784
The Council has agreed to set a Council Fund target level of 4%. As at 31st March 2016, the Council Fund balance of £6.072m equated to 4.55% of Net Revenue Expenditure. This has reduced to £5.863m or 4.39% of net revenue expenditure as at 31st March 2017 which continues to be above the target level.
Given the planned use of reserve during 2017/18 it is forecast that the Council Fund balance will fall below the 4% target, consideration will therefore need to be given to an action plan to restore the Council Fund to the agreed level.
5. / Staffing/Workforce Development Implications*
5.1 / There are no direct personnel/staffing implications arising out of this report.
6. / Options for Consideration
6.1 / The Audit Committee considers the Draft Statement of Accounts for 2016/2017.
7. / Impact Assessment Against Proposals / Options*
7.1 /
- Thinking for the long term
- Taking an integrated approach
- Taking a preventative approach
- Collaborating
- Involvement
7.2 / Equality Impact Assessment (EQIA)
An EQIA is not required as this report provides an actual outturn position in relation to the Authority’s transactions and year-end balances for the financial year, on an objective basis in accordance with relevant accounting standards, codes, concepts, principles, guidance and legislation.
8. / Conclusion*
8.1
8.2
8.3
8.4 / The Statement of Accounts has been prepared in accordance with The Accounts and Audit (Wales) Regulations 2014, the 2016/17 CIPFA Code of Practice on Local Authority Accounting, the Service Reporting Code of Practice, and the Accounting for Collaboration Code.
The completion of the annual Statement of Accounts represents the compilation, interpretation and reporting of every financial transaction that occurs within the Authority and requires the interfacing of all the Authority’s corporate and departmental financial systems, together with a high degree of co-operation between staff.
Faced with the significant challenges mentioned above, it is of credit to the colleagues and staff of all departments that I am able to present these accounts by the statutory deadline.
I would also like to take this opportunity to thank my Accountancy & Financial Planning colleagues for their continuing dedication and professional commitment, which has again ensured that the Council is able to meet the prescribed target.
*Denotes mandatorysection
1
Report Date:27 June 2017
Report Author: T. Hagland
Appendix 1Assess how well your project / activity will result in multiple benefits for our communities and contribute to the national well-being goals.
Description of the Well-being goals / How will your project / activity deliver benefits to our communities under the national well-being goals? / Is there anyway to maximise the benefits or minimise any negative impacts to our communities (and the contribution to the national well-being goals)?
A prosperous Wales
An innovative, productive and low carbon society which recognises the limits of the global environment and therefore uses resources efficiently and proportionately (including acting on climate change); and which develops a skilled and well-educated population in an economy which generates wealth and provides employment opportunities, allowing people to take advantage of the wealth generated through securing decent work. / Preparation of statutory accounts in pursuance of the stewardship of the Authority’s resources provides neutral, bias-free evidence to inform decisions regarding projects and activities through which to deliver benefits to the local community under the national well-being goals.
A resilient Wales
A nation which maintains and enhances a biodiverse natural environment with healthy functioning ecosystems that support social, economic and ecological resilience and the capacity to adapt to change (for example climate change). / Preparation of statutory accounts in pursuance of the stewardship of the Authority’s resources provides neutral, bias-free evidence to inform decisions regarding projects and activities through which to deliver benefits to the local community under the national well-being goals.
A healthier Wales
A society in which people’s physical and mental well-being is maximised and in which choices and behaviours that benefit future health are understood. / Preparation of statutory accounts in pursuance of the stewardship of the Authority’s resources provides neutral, bias-free evidence to inform decisions regarding projects and activities through which to deliver benefits to the local community under the national well-being goals.
Description of the Well-being goals / How will your project / activity deliver benefits to our communities under the national well-being goals? / Is there anyway to maximise the benefits or minimise any negative impacts to our communities (and the contribution to the national well-being goals)?
A more equal Wales
A society that enables people to fulfil their potential no matter what their background or circumstances (including their socio economic background and circumstances). / Preparation of statutory accounts in pursuance of the stewardship of the Authority’s resources provides neutral, bias-free evidence to inform decisions regarding projects and activities through which to deliver benefits to the local community under the national well-being goals.
A Wales of cohesive communities
Attractive, viable, safe and well-connected communities. / Preparation of statutory accounts in pursuance of the stewardship of the Authority’s resources provides neutral, bias-free evidence to inform decisions regarding projects and activities through which to deliver benefits to the local community under the national well-being goals.
A Wales of vibrant culture and thriving Welsh language
A society that promotes and protects culture, heritage and the Welsh language, and which encourages people to participate in the arts, and sports and recreation. / Preparation of statutory accounts in pursuance of the stewardship of the Authority’s resources provides neutral, bias-free evidence to inform decisions regarding projects and activities through which to deliver benefits to the local community under the national well-being goals.
A globally responsible Wales
A nation which, when doing anything to improve the economic, social, environmental and cultural well-being of Wales, takes account of whether doing such a thing may make a positive contribution to global well-being. / Preparation of statutory accounts in pursuance of the stewardship of the Authority’s resources provides neutral, bias-free evidence to inform decisions regarding projects and activities through which to deliver benefits to the local community under the national well-being goals.