Agenda item

(a)       That the draft Statement of Accounts 2022/23 (which includes the Annual Governance Statement) be noted; and

(b)       That Members note the opportunity to discuss any aspect of the draft Statement of Accounts with officers or Audit Wales during the audit period, prior to the final audited version being brought back to the Committee for final approval on 22 November 2023.

The Corporate Finance Manager presented the Draft Statement of Accounts 2022/23 (subject to audit) for information only at this stage.  These comprised the Group accounts and its wholly owned subsidiaries, along with the Annual Governance Statement which had been reviewed at the previous meeting.  The open consultation period during the Summer would provide an opportunity for Members to raise any aspect of the accounts with officers prior to the Committee receiving the final audited version for approval in November.

A presentation covered the following:

·         Purpose and Background of the Accounts

·         Contents and Overview

·         Responsibility for the Accounts

·         Links to Budget Monitoring

·         Changes to the Statement of Accounts for 2022/23

·         Key Issues and Impacts

·         Headlines - Council Fund (Revenue), Revenue Reserves, Significant Movements, Capital and Housing Revenue Account (HRA)

·         Accounts Governance Group

·         Timeline and Next Steps

It was confirmed that the draft accounts had been completed and submitted within the Welsh Government (WG) deadline which had been extended to take account of the appropriate accounting of asset valuations at a time of high inflation and the legacy impacts of the pandemic.  The deadline for submitting the final audited accounts had been extended to 30 November 2023.

The Chair recognised the challenges in producing the accounts and paid tribute to the work of the team.  On the narrative report, he referred to capital programme data on pages 3 and 5 and suggested that comparison of spend against budget would be helpful for the reader.

The Corporate Finance Manager explained that whilst the presentation of data was unchanged, he would incorporate an additional column in future statements to show variances across portfolios together with a clear definition to prescribed wording such as ‘inalienable assets’.

On rent arrears, the Corporate Finance Manager agreed to share explanation on the difference in the outturn shown in the narrative report (which did not include overpayments, pre-payments etc) as opposed to the amount on note 13 which reflected the actual amount on the balance sheet for short-term debtors.  Although rent collection levels in Flintshire were high, the increase in rent arrears nationally had been identified as a red risk in the Council’s corporate risk register and was being closely monitored by the Community & Housing Overview & Scrutiny Committee.  On the recovery of Council Tax, the Council’s robust approach to maximising collections along with proportionate support had helped to maintain good performance resulting in a collection rate of 97.4% in 2022/23 which was well above the Welsh average.

On the increase in service balances, the officer explained the robust process for challenging and reporting, including carry-forward requests, as detailed in monthly budget monitoring reports to Cabinet and Corporate Resources Overview & Scrutiny Committee.

Sally Ellis asked about planning for future requirements on asset valuations and was told that the current process would be undertaken annually, for consistency.  In response to further questions, the Corporate Finance Manager had no concerns about meeting the revised deadlines for 2023/24.  On the reduction in Council Fund reserves shown in the Movement in Reserves Statement, he reported no significant change and that school reserves were now reducing following the high levels during the pandemic and were being monitored.  In response to a request for more clarity on pension reserves shown on page 39, it was explained that a re-valuation in 2022 had reflected an improved position and that the figures, shown for accounting presentation purposes, did not impact on the Council’s financial position.

On the delayed introduction of IFRS 16 accounting policies from April 2024, the Principal Accountant said that work was in hand to prepare for the changes which were around the recognition of leases in the financial statements.

Councillor Bernie Attridge referred to the HRA Income and Expenditure Statement and queried income loss from void properties.  The Corporate Finance Manager advised that this was incorporated into the net income figures shown in the accounts, with greater detail on significant variances reported in budget monitoring updates to Cabinet and Overview & Scrutiny.  He went on to refer to the widespread problem of escalating rent arrears and said that the Council had bad debt provision and a robust debt recovery policy framework in place.  A query on different housing stock figures quoted in the accounts and reported to Overview & Scrutiny was due to some properties being under construction.

Councillor Andrew Parkhurst sought an opinion on the impact of pension deficits if the Pension Fund disinvested in companies whose primary business was in fossil fuels, and consequences on the Council’s finances.

The Corporate Finance Manager agreed to pursue a written response from the pensions team.  He would also respond separately to questions on the recipients of soft loans and insurance cover/risk registering of unvalued items in the Council’s archives.

The Chief Executive advised that a disinvestment strategy had been published, as approved by the Clwyd Pension Fund Committee with oversight by the professional consultants and the Fund’s Actuary.

On officers’ remuneration, it was confirmed that the definition of senior officers was the Chief Executive and those directly reporting to him and that Note 26 listed details of other senior officers.  On Note 28, Councillor Parkhurst referred to the section on officers’ interests in businesses receiving payments from the Council and remarked that senior managers reporting directly to Chief Officers could have a degree of influence over their areas of responsibility.  He requested greater transparency on those individuals in the accounts.  Officers would provide a separate response, along with background on the reduction in receipts from the Local Health Board and Welsh Local Government Association on Note 28.

When asked by Brian Harvey about the Council’s approach to tackling rent arrears, the Chief Executive spoke about the range of intervention measures deployed by the teams to help people to remain in their homes.  On public engagement, the Corporate Finance Manager said that whilst the availability of the financial accounts was publicised in the local press, key messages were conveyed on the budget to highlight the Council’s financial position.

Following a question by the Chair, the Corporate Finance Manager explained that the embedded practice for reviewing non-essential spend across all services was now an effective part of the budget monitoring process.  Whilst those areas of spend were not removed from the budget altogether, they formed part of consideration towards mitigating in-year cost pressures.

When asked about the increase in audit fees, Simon Monkhouse said that this was mainly due to the revised auditing standard ISA 315 which required a greater skill mix to undertake a more detailed planning process to auditing accounts.  As this was the first year of implementation, it was hoped that fees would reduce over time as the changes were embedded.  High inflationary levels were also a factor in the increased fees.  On the timetable, work was ongoing to meet the final approval deadline in November and plans were in place over the next three years to bring back the deadline in line with previous years.

Councillor Allan Marshall referred to conflicting wording on the purpose of the item and recommendations.  The Corporate Finance Manager drew attention to the timeline shared in the presentation including the opportunity for questions to be raised, prior to the accounts being received for formal approval on 22 November.

The Chair suggested an amended recommendation for clarity, which was moved and seconded by Councillors Attridge and Parkhurst.

RESOLVED:

(a)       That the draft Statement of Accounts 2022/23 (which includes the Annual Governance Statement) be noted; and

(b)       That Members note the opportunity to discuss any aspect of the draft Statement of Accounts with officers or Audit Wales during the audit period, prior to the final audited version being brought back to the Committee for final approval on 22 November 2023.