Agenda item

(a)       That the final version of the Statement of Accounts 2015/16 be recommended to County Council;

(b)       That the Wales Audit Office reports on the Audit of the Financial Statements for Flintshire County Council and Clwyd Pension Fund be received; and

(c)       That the Letters of Representation for Flintshire County Council and the Clwyd Pension Fund be recommended to County Council.

The Corporate Finance Manager presented the final version of the Statement of Accounts for 2015/16 with the Wales Audit Office (WAO) reports in connection with the audit of the financial statements and Letters of Representation for Flintshire County Council and the Clwyd Pension Fund.

Changes agreed with the WAO during the course of the audit had been incorporated into the accounts and actions taken by officers.  A response to the queries raised on the draft accounts at the July meeting had been forwarded to all Members, along with an offer to discuss any further queries directly with officers.  The WAO had commended the Council’s positive and proactive response to the issues raised on the 2014/15 audit and noted no reoccurrence of issues raised in previous years.  The Corporate Finance Manager thanked WAO colleagues for their work on the audit and summarised three new issues highlighted in the report.

Mr. John Herniman of WAO welcomed the Council’s approach in setting up the Accounts Governance Group to adopt a corporate oversight for the production of the accounts.  He said that significant progress had been made, with a clean audit opinion given on the accounts.  On the three new issues, the mathematical errors identified on the housing stock valuation would have no operational impact and no further action was required.  It was also noted that work would need to progress on recognising provision for potential liability on former waste disposal sites and to pursue up-to-date membership information for the Clwyd Pension Fund.

The Chief Executive thanked WAO colleagues, including Amanda Hughes who was not present.  He spoke about the continuation of the Accounts Governance Group which he had formed to support the Finance team, with involvement from WAO and progress reporting to the Chair and Vice-Chair of the Committee.

In response to questions from Councillor Ian Dunbar on the new issues, the Chief Executive said that provisional funding had been set aside for potential liabilities on former landfill sites and would be subject to further consideration by Cabinet and Overview & Scrutiny.  The housing re-valuation matter reinforced the need for a standard national model to be developed by the Welsh Government.  The Finance Manager explained the need to revalue council housing stock at least every five years and that this accounting entry showed the existing use value to the Council at the balance sheet date being 31 March 2016.  She explained the Council’s responsibilities in carrying out investigations on former waste disposal sites, with work starting on five former sites and another two nearing completion.

Councillor Arnold Woolley asked whether WG guidance on consistency of regional adjustment factors to value council stock could be pursued through the Welsh Local Government Association.  The Corporate Finance Manager said that this was an issue across all Welsh councils and that representations were being made through regional groups.

Following a query by Councillor Haydn Bateman, the Finance Manager agreed to follow-up a request for clarification on what was included within the figures for ‘specialist services’ on the Housing Revenue Account (HRA) Income and Expenditure Statement.  Details would also be given on the changes between the draft and final versions, which was likely to be a small amount of depreciation on leased assets such as aerials.

On the Clwyd Pension Fund, Councillor Glyn Banks asked about plans to manage or reduce the deficit.  The Chief Executive said that the majority of Local Government pension funds across the UK were in a deficit position and that a long-term strategy to reach a fully funded position had been developed.  Progress over the past few years had resulted in the Fund currently being 75% funded.

Mr. Matt Edwards thanked the Clwyd Pension Fund team for their co-operation in enabling WAO to conclude the audit work resulting in a positive, unqualified opinion on the accounts.  He confirmed that there were no reported misstatements and that details of corrected misstatements on the draft accounts were appended to the report.  The actions set out by management to address WAO recommendations on the Pension Fund accounts would be followed up as part of the audit for next year and made no material difference to the accounts.

When asked by Councillor Alison Halford about any concerns arising from the accuracy of the pension administration membership records, Mr. Edwards clarified that they did not impact on the Pension Fund accounts and the actuary had confirmed that the inaccuracies did give rise to material misstatement in the financial statements of the admitted bodies.  Councillor Halford suggested that the Audit Committee could be involved in discussions with the Clwyd Pension Fund Committee when the issue was under consideration.  The Chief Executive advised that Councillor Haydn Bateman was a member of both committees and that a specific item had been scheduled for that meeting at which the Corporate Finance Manager and the Pensions Finance Manager would provide an update.  He went on to say that the Clwyd Pension Fund accounts formed part of the consolidated accounts, and that the Clwyd Pension Fund Committee was amongst the key stakeholders with governance responsibility on the accounts.

On contingent liabilities, Councillor Halford queried whether there was any significant financial risk arising from employment tribunals.  The Finance Manager would check to confirm that this was a new liability within the accounts that did not apply in the previous year.  At the end of the 2015/16, the risk had been noted as a contingent liability following an assessment and consultation with the Interim HR Manager on the basis that current cases leading to tribunals were not considered to be material.  Councillor Halford requested details of the amount paid out by the Council to resolve employment tribunal claims.

The Chief Executive said that an overview of anonymised outcomes could be shared with the Committee.  Following further comments from Councillor Halford, the Chief Officer (Governance) spoke about the process for confidentiality agreements.  The Finance Manager explained that such costs would be summarised on the Income and Expenditure Statement within the accounts.  The Chief Executive advised that a breakdown of the number, total amount paid out and outcomes of employment tribunal claims for 2015/16 would be shared with the Committee within two weeks.  He explained that it would be an inappropriate practice to report individual cases to the Committee and that the Council had a good record on tribunal cases.  It was also explained that a cap was imposed on employment claims and that any significant amount for claims would be included as part of Revenue Budget Monitoring reporting to the Corporate Resources Overview & Scrutiny Committee.

When asked to sum up, the Chairman stated that the Committee’s focus was on procedural issues arising from claims against the Council.

The Chief Executive said that such claims would always present a risk especially to larger-scale employers.  He said that significant work had been done to mitigate risks over the years, including an ongoing review of the quality of disciplinary procedures with the Trade Unions.

RESOLVED:

(a)       That the final version of the Statement of Accounts 2015/16 be recommended to County Council;

(b)       That the Wales Audit Office reports on the Audit of the Financial Statements for Flintshire County Council and Clwyd Pension Fund be received; and

(c)       That the Letters of Representation for Flintshire County Council and the Clwyd Pension Fund be recommended to County Council.