Agenda item

(a)       That the draft Statement of Accounts 2011/12 (including the Annual Governance Statement), together with the underlying policies, be noted; and

(b)       That the planned provision of ‘drop-in’ sessions over the summer period, subject to Members’ consideration at Audit Committee, be noted.

The Head of Finance introduced a report to present the Statement of Accounts 2011/12 (subject to audit) for Members’ information only at this stage.  The accounts would come back to the Committee in late September for approval and recommendation to County Council following the audit.  She said that this had been the culmination of work across the whole of the organisation and referred to challenges due to changes in regulations.  At today’s meeting, the Wales Audit Office (WAO) was represented by Huw Lloyd Jones whose remit related to performance assessment; however the work on the financial audit would be led by  Amanda Hughes and colleagues who had already started on the audit work.

The Corporate Finance Manager and Finance Manager (Strategy & Technical) delivered a presentation which detailed the main points:

·         Purpose and Background

·         Key Dates

·         Responsibility

·         Contents and Overview

·         Links to budget monitoring

·         Headlines

·         Core Statements

·         Next Steps

·         Questions

The Finance Manager (Strategy & Technical) said that in line with previous practice, drop-in sessions for Members would be arranged for early September 2012 and she reported on the links between the pages of the accounts and changes in the Code of Practice.

The Head of Finance said that officers had endeavoured to link the regulatory nature of presenting the accounts in accordance with legislation with strategic internal budget monitoring and final budget monitoring reporting to make the information as useful as possible for members.  She referred to a new note on exit packages and explained that reports were regularly received by Cabinet and Overview & Scrutiny on retirements and redundancies dealt with under the Council’s policies.

Mr. Huw Lloyd Jones of WAO gave information on his role as manager for performance audits across the six North Wales Authorities, with Karen Lees the contact for Flintshire.  He also reported on the performance audit work mentioned on the WAO Regulatory Programme which aimed to ensure that the Council was providing value for money.  The Chief Executive explained that Mr Lloyd Jones had replaced Mr Stephen Martin who had previously attended meetings of the Committee.

Councillor R.B. Jones referred to the underspend figure on page 2 of the draft accounts which, when reported to the Corporate Resources Overview & Scrutiny Committee, had been split to show an underspend of £1.287M from Directorate services and £1.548M from Corporate Finance.  He also queried why the joint arrangements listed on page 69 did not include the Regional School Effectiveness & Improvement Service and Regional Commissioning Hub.  On the first question, the Corporate Finance Manager explained that the figure in the draft accounts was in respect of the Central Loans and Investment Account only and agreed to provide Councillor Jones with a reconciliation of the figure contained within the final outturn monitoring report..  On joint arrangements, he explained that this was a timing issue as the report had stated the Council’s position at 31 March 2012.  The Chief Executive commented on the current status of transition of the two collaborative projects which would be included in the following year’s accounts.

In response to further queries by Councillor Jones on the revaluation of assets and depreciation of land, the Head of Corporate & Capital Accounting explained that the figure of £817,877 shown on page 4 included investment properties and agricultural estates which were separated on the balance sheet on page 9.  On the second query, he stated that land did not depreciate and that it was only the buildings included under the standard asset category heading, ‘other land and buildings’ on page 15 (such as schools and County Hall) that were subject to a depreciation charge. The Chair asked for further clarity of wording such as this in future reports and this was noted by officers.

Councillor G.H. Bateman raised concerns at the drop in land values on page 4 and queried the increase in values shown on page 9 for vehicles, plant, furniture and equipment and surplus assets.  The Chief Executive commented on the difference between revaluation and depreciation.  The Head of Corporate & Capital Accounting explained that the comment under ‘Critical Judgments in Applying Accounting Policies’ on page 12 covered a significant part of the reduced value of assets.  On the second query, Councillor Bateman noted that further details were included in the notes on page 41.  The Head of Corporate & Capital Accounting explained that finance lease arrangements for refurbishment works at Deeside Leisure Centre had resulted in increased values, as indicated on pages 4 and 50.  The Head of Corporate & Capital Accounting pointed out the movement in figures for ‘Assets held for sale’ shown on the balance sheet and said that at each financial year end, the list of assets likely to be disposed during the following year would be reviewed and any unlikely to be sold would be moved to ‘surplus assets’.

Mr. P.D. Williams suggested a change to the heading of ‘Current Provisions - Accumulated Absences’ on page 54 and asked about accumulated holiday pay.  The Finance Manager (Strategy & Technical) spoke about changes to accounting arrangements that required the Council to account for benefits earned by employees but not yet taken. Figures were based on a sample of employees to reflect the population at the balance sheet date, 31 March 2012, the majority of which is the calculated value of annual leave earned but not yet taken.  The council operates an annual leave policy that runs from 1 April to the 31 March and allows 5 days leave to be carried forward. This is the majority of the accounting adjustment. The Chief Executive said that the Council had made representations against the new arrangements during consultation and stressed that it was only on exceptional occasions where annual leave had to be bought back from employees or that employees were allowed to carry forward more than five days’ annual leave to the following year.

In response to a further question from Mr. Williams on actions to address the increase in rent arrears on page 73, the Chief Executive said that this had been subject to full scrutiny by committees with local press coverage and that further details would be shared with Mr. Williams.

The Chair sought an update on the liquidation of AD Waste and further information on Clwyd Theatr Cymru (CTC) mentioned on pages 55/56.  The Corporate Finance Manager reported that the accounts of AD Waste had been closed for 2011/12 on the same basis as that of 2010/11 and that he and the Head of Finance would provide a written update.  The Chief Executive explained that CTC was an asset owned by the Council, with 40% core funding from the Council and 60% core funding from the Arts Council for Wales (ACW).  The Theatr had an annual turnover of £5.5M but had reported a small operating deficit which was planned to be recovered in 2012/2013.  The Chair asked about the cost to the Council if the Theatr was to cease trading.  The Chief Executive replied that he was unable to provide a costing but said there would be significant closing and redundancy costs and that the Council could not be assured of ACW sharing any liability. He stated that the Council had chosen to maintain its commitment to the Theatr in past years and that, unless directed otherwise, he and others would continue to make it a trading success.

Councillor I.B. Roberts commented that the WAO had previously made reference to the governance arrangements of the Theatr.  He went on to remark that such an operating deficit would not be allowed at schools but accepted the assurance that this would be recovered, asking when a report on the Theatr would be received at full Council.  The Chief Executive said that following a review at his instigation, governance of the Theatr had now been improved including annual reporting of its business plan.

Councillor Roberts expressed concern about the position of the Council in supporting the Theatr as a production company, which he said represented a unique arrangement in Wales.  In replying, the Chief Executive said that the Theatr was not a high risk on a performance level.

The Chair spoke of her personal support for the Theatr and questioned whether any further information should be pursued via the Committee, Overview & Scrutiny or Cabinet.  Following a comment on funding, Councillor Roberts remarked on a current study funded jointly by the Council and ACW which would be brought back to the Council.

In response to further comments by Councillor Roberts on reporting and the need for Lifelong Learning Overview & Scrutiny Committee to include consideration of CTC in its remit, the Chief Executive said that in addition to regular reports to Cabinet, the Theatr would also be subject to discussion at the ACW Partnership Committee in September 2012.  On the latter point, the Democracy & Governance Manager confirmed that a report was to be received at the next Constitution Committee meeting to consider a change to Overview & Scrutiny Committees’ Terms of Reference in consideration of CTC.

Following a query by Councillor Bateman on the figures for long-term debtors on the balance sheet, the Head of Corporate & Capital Accounting pointed out that note 25 in the accounts provided detail and a breakdown of figures.  The Chief Executive highlighted the increased cost for renewal and improvement loans due to changes in the Housing Renewal Policy.  The Head of Finance went on to explain that this was indicative of the Council’s work on housing to assist first time buyers or enabling homeowners to upgrade their homes in accordance with Council policy.  Councillor Bateman commented on the amount of £100,000 available for this and the Chief Executive explained that this was a new scheme with only a part year commitment which would increase over time and that Housing Overview & Scrutiny Committee had received detail on the implementation of the scheme.  The Head of Finance spoke of the limited resources available to work with Tai Clwyd on the scheme and that a phased approach was being taken to help ensure success.

The Chair thanked Members for their questions and the Head of Finance and her team for their explanation on some complex areas and for the work on the accounts.

The Chief Executive also extended his appreciation to the Finance team for completing the accounts within the required deadline, particularly in respect of additional accounting requirements for the North Wales Regional Waste Treatment Partnership.

RESOLVED:

(a)       That the draft Statement of Accounts 2011/12 (including the Annual Governance Statement), together with the underlying policies, be noted; and

(b)       That the planned provision of ‘Drop-in’ sessions over the summer period, subject to Members’ consideration at Audit Committee, be noted.