Agenda, decisions and minutes

To receive any Declarations and advise Members accordingly.

Personal interest declared by Sally Ellis and Councillor Glyn Banks on Agenda Item 4 ‘Draft Statement of Accounts 2016/17’.

The following members declared a personal interest on agenda item 4 ‘Draft Statement of Accounts 2016/17’:

Sally Ellis - member and family members in the membership of the Pension Fund; and Councillor Glyn Banks - Board Member of NEW Homes.

To confirm as a correct record the minutes of the meeting on 12 June 2017.

That the minutes be approved as a correct record and signed by the Chair.

The minutes of the meeting held on 12 June 2017 were submitted.

RESOLVED:

That the minutes be approved as a correct record and signed by the Chair.

(a)       That the draft Statement of Accounts 2016/17 (which includes the Annual Governance Statement approved by the Committee at its June 2017 meeting) be noted; and

(b)       That the Committee approve the arrangements for the ‘drop in sessions’ that have been arranged for early September and note the ability to discuss any aspect of the Statement of Accounts with officers or the Wales Audit Office throughout July, August and September, prior to the final audited version being brought back to the Committee for recommendation to Council for final approval on 27 September 2017.

The Corporate Finance Manager and Finance Manager - Technical Accountancy presented the draft Statement of Accounts 2016/17 (subject to audit) for information.  These comprised the Group accounts - including its wholly owned subsidiary North East Wales (NEW) Homes - and the Clwyd Pension Fund.  The final audited accounts would be received on 27 September for approval and recommendation to County Council on the same day, prior to the statutory publishing deadline of 30 September.  This was a corporate document produced from significant work across the Authority, in particular the Technical Accounting team in Corporate Finance.

A presentation was made covering the following areas:

·         Purpose and Background

·         Contents and Overview

·         Responsibility

·         Links to Budget Monitoring

·         Headlines - Council Fund, Reserves at Year End, Capital and Housing Revenue Account (HRA)

·         Changes to 2016/17 Statement of Accounts

·         Principal Statements

·         Accounts Governance Group

·         Progress in addressing prior year issues

·         Timeline and next Steps

·         Impact of earlier deadlines on materiality

Mr John Herniman of Wales Audit Office (WAO) explained the general approach to the audit in taking an overall view on materiality to inform judgements on the accuracy of the accounts and that the inevitable reporting of misstatements may not necessarily require amendments.  He welcomed the arrangements for the Accounts Governance Group to have oversight of the process.  He highlighted the introduction of earlier statutory publishing deadlines for future accounts as a significant challenge to all and suggested that the Council may wish to consider trialling this at an earlier stage.  The effect of early closure would mean a greater emphasis on estimated data and possibly more minor errors in the accounts but the focus was on ensuring they were materially correct and therefore the Council might not want to amend for minor errors.

Mr Matthew Edwards of WAO confirmed receipt of the draft accounts within the deadline and thanked the Finance officers for providing information to support the accounts which contributed to the efficiency of the audit.  Any key issues arising from the audit would be summarised in the report due at the next meeting.

The Chief Executive spoke about the effective role of the Accounts Governance Group on the accounts work.  In welcoming the advice from WAO colleagues on meeting the challenge on earlier deadlines, he gave assurance that resources in the Finance team would be monitored to ensure they were sufficient to discharge the statutory duties.

In response to concerns raised by Councillors Chris Dolphin and Glyn Banks, Mr Herniman clarified that the proposed change to accounts publication dates for Welsh local authorities was a Welsh Government decision which followed changes made in England driven by UK Treasury to produce the UK’s Whole of Government Accounts quicker.  Whilst acknowledging the challenges, there was a benefit in having an earlier understanding of the year end position.  On his earlier comments, he explained that accounts inevitably included some degree of estimated data and minor issues did not generally impact on the opinion of material correctness which was the main consideration.  When asked about the  ...  view the full minutes text for item 18.

That the report be noted.

The Corporate Finance Manager presented supplementary financial information to accompany the draft Statement of Accounts 2016/17 in line with the Notice of Motion approved in 2013.

The information on posts covered by interim or temporary appointments showed the amounts paid to organisations for such arrangements and did not reflect the salaries of the individuals concerned.  The costs for consultants and non-permanent posts across the Council included theoretical annualised costs if those individuals had been employed for the whole year, as well as the actual costs incurred.

On the latter, the Chief Executive explained that these were specialist services for which there could be no retained in-house capability.

RESOLVED:

That the report be noted.

(a)       That the draft Treasury Management Annual Report 2017/17 be noted with no matters to be drawn to the attention of Cabinet on 26 September 2017;

(b)       That the Treasury Management 2017/18 Quarter 1 update be noted; and

(c)       That additional training be organised for the Committee prior to the Treasury Management training session.

The Finance Manager - Technical Accountancy presented the Annual Report on the Council’s Treasury Management Policy, Strategy and Practices 2016/17 for review and recommendation to Cabinet.

As part of an update on Treasury Management activity in the first quarter of 2017/18, a slight increase was reported in the investment portfolio.  The position on borrowing reflected the strategy to use short-term borrowing at lower rates.  A graph showed movement on investments and short-term borrowing balances between April 2016 and June 2017.  To support the reporting cycle for 2017/18, a training session by the Treasury Management advisers, Arlingclose Ltd would be arranged for all Members in early January 2018.

The Chair highlighted the need for assurance on the ability of the revenue account to support the increasing external debt levels along with comparison with other councils.  The Finance Manager agreed to incorporate this in the next update report.  She drew attention to the recent Cabinet report on Prudential Indicators which included the percentage of revenue costs servicing long-term debt.

In response to queries from the Chair, explanation was given on the specialist services provided by Arlingclose and on the debt maturity profile where peaks reflected the loans taken out to end the negative housing subsidy system.

Councillors Paul Johnson and Chris Dolphin raised queries on short-term borrowing between councils.  The Finance Manager explained that there was a difference between managing a council’s cashflow and the budgeted position reported by councils, and referred to the graph showing movement in cash balances managed by short-term investments and short-term borrowing.

On Councillor Dolphin’s earlier comment, Councillor Glyn Banks felt that the size of the Committee was adequate.  He proposed that the Committee, particularly newer Members, could benefit from additional training prior to the Treasury Management training.  This was seconded by Councillor Johnson.  He also suggested that Arlingclose could deliver the training via a video link.  The Finance Manager explained that the contract with Arlingclose allowed for one training session per year so there may be a small cost for additional training, or consideration could be given to delivering in-house training by officers.

The Chief Executive pointed out the benefits of a smaller specialist Committee membership but said that the size of the Committee could be reviewed at the next Annual General Meeting if Members so wished.

The Interim Internal Audit Manager invited suggestions for specific themes for training which could be included on the Forward Work Programme.

RESOLVED:

(a)       That the draft Treasury Management Annual Report 2017/17 be noted with no matters to be drawn to the attention of Cabinet on 26 September 2017;

(b)       That the Treasury Management 2017/18 Quarter 1 update be noted; and

(c)       That additional training be organised for the Committee prior to the Treasury Management training session.

There was one member of the press in attendance.