Agenda item

Draft Statement of Accounts 2012/13

Decision:

(a) That the draft Statement of Accounts 2012/13, together with the underlying policies, be noted;

(b) That the planned provision of ‘drop-in’ sessions over the summer period be noted; and

Minutes:

Prior to consideration of the report, the Chair referred to concerns that she had previously raised about the sharing of information on matters relating to the acquisition of AD Waste and that she and the former Vice-Chair, Mr. P. Williams, had subsequently felt could be addressed through an audit carried out by an external auditor. A range of information had subsequently been shared at a confidential briefing with the Chief Executive, senior officers and Mr. J. Herniman of the Wales Audit Office (WAO), which provided clarification. Although some responses to queries raised by Mr. Williams remained outstanding, the WAO had agreed with the advice of officers that there was no requirement for an external audit. Any balances in the financial statements would be looked at as part of the annual audit of the accounts. The Chair indicated that she was satisfied with this resolution and commented on positive working with officers to achieve this.

The Chief Executive thanked the Chair, Vice-Chair and Mr. Williams for attending the briefing and confirmed that the remaining information would be provided. In response to further comments, he advised that once the liquidation of AD Waste had been completed, a confidential report on the service continuity outcomes would be provided to the Committee with planned future internal audit work on waste operations including specific reference to ‘inherited’ operations. Councillor P.G. Heesom also indicated that he had been satisfied with the response provided at the briefing. Mr. Williams thanked officers for the open and frank exchange which had taken place to bring the matter closer to a conclusion.

The Corporate Finance Manager introduced a report to present the Statement of Accounts 2012/13 (subject to audit) for Members’ information only at this stage. The accounts would be submitted to the Committee in late September 2013 for approval and recommendation to County Council following the audit.

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 - Council Fund, Reserves at Year End, Capital and HRA

· Core Statements

· Changes in 2012/13

· Next Steps

In response to earlier comments, a number of changes had been made to improve the format and layout of the accounts to assist the reader. The Committee was asked to encourage all Members of the Council to attend the ‘drop-in’ sessions with senior Finance officers in early September which offered the opportunity to raise queries on the accounts. Dates were being arranged and Members would be notified in due course.

Ms. A. Hughes of WAO confirmed that the draft accounts had been received within the statutory deadline and that there was a helpful ongoing dialogue with officers to address any issues arising.

The Head of Finance passed on her thanks to the officers across the Council who had worked hard to produce the draft accounts.

Councillor G.H. Bateman queried the increase in net expenditure for cultural and related services from last year and asked which services this involved. The Chief Executive said that this covered museums and community arts and may also include Clwyd Theatr Cymru which was a semi-separate entity. The Finance Manager (Strategy & Technical) agreed to provide a note of explanation. She would also provide detail on the increase in expenditure which could be due to the revaluation of assets carried out in the previous year.

On the reduction in long-term investments shown on the balance sheet, it was explained that the figures represented a snapshot at that time. As at 31 March 2012, a long-term investment of over £2m had been made which, at the same point in 2013, there were no long-term investments.

Councillor Heesom pointed out that a guidance note had not been included to explain the difference in the Pensions reserve. The Finance Manager (Strategy & Technical) said that Note 4 provided the relevant information on this with the scheme history providing an explanation on movement between 2008-2013. Technical adjustments were made to the account in accordance with accounting requirements / regulations. She added that this was a complex area of the accounts which could be discussed in more detail outside the meeting. Councillor Heesom agreed to this.

In response to queries raised by Mr. Williams on salary increases, the Chief Executive explained that the Director of Community Services had been appointed during the year in 2011 which meant that the full salary had only been reflected in the 2012/13 accounts. A note on this had been included in the accounts. The salary increase for the Head of Human Resources & Organisational Development was due to progression through incremental scales. Following a comment on the decrease in the building maintenance inventory and partnership arrangement with Travis Perkins, the Chief Executive advised that this service had been outsourced following a tendering exercise and was performing well. The Finance Manager (Strategy & Technical) said that the figures in the accounts reflected that this stock was now held by Travis Perkins rather than the Council. Mr. Williams asked if Internal Audit were monitoring the arrangement. The Internal Audit Manager confirmed that this was the case.

When asked about the increase in government departments under short-term debtors, it was explained that this was grant monies, owed to the Council at that point in time. The increase in 2012/13 was due to a small number of larger grants in Lifelong Learning being outstanding at the balance sheet date. The grants had subsequently been received. The Chief Executive said that the academic year rather than the financial year applied to some specific grants for Lifelong Learning and schools.

The Chair commented on the deferred liability which had been included in the accounts following the acquisition of AD Waste. The Head of Finance explained that as part of the transfer of the company, there was a need to recognise and provide for the environmental aftercare costs of former waste disposal sites. The Corporate Finance Manager said that the figure had been calculated to ensure there was sufficient funding for aftercare costs for the next 30 years.

On Equal Pay, the Chief Executive said that this was a sensitive issue currently under planning with expert external legal advice. It was intended to complete a Single Status Agreement in-year with reserves set aside to be discharged to meet one-off costs for Single Status and Equal Pay, which meant that the Council was in a stronger financial position than some other Authorities. On the calculation of Equal Pay entitlement, the Head of Legal & Democratic Services said that work was ongoing to refine information provided by the consultant to estimate costs. The Chief Executive said that there was a balance between potential resources and capital borrowing approval from Welsh Government (WG) to meet the costs of Equal Pay and an application had been submitted to WG for capitalisation approval. On Single Status, he spoke of ongoing negotiations with Trade Union colleagues on Part 3 terms and conditions and the pay and grading model which were nearing completion for a report to Council.

On segmental reporting, Councillor Bateman asked if the figure in Government grants related to the WG Housing Subsidy. The Head of Finance explained about the £6.2m negative / deficit Housing Subsidy paid by the Council to WG under the current subsidy arrangements. In response to a query on the indicated cost for the acquisition of AD Waste, the Chief Executive agreed that a breakdown could be provided. He said that there had been no financial transaction between the Council and AD Waste and referred to the footnote which explained that the purchase price was recorded on the Council’s balance sheet by way of an ‘inter company’ loan and would remain until the liquidation of the company. The Finance Manager (Strategy & Technical) went on to say that the balance sheet included total assets of £4.5m which matched with the inter company loan in the accounts, as mentioned in Note 28 - borrowing.

Responding to an earlier comment by Mr. Williams on the movement in reserves position from £417m to £341m and explanation given during the presentation on usable and unusable reserves, the Head of Finance pointed out that usable reserves had increased from £55m to £59m. One of the largest reserves was for Single Status and Equal Pay liability. She explained that she was required to advise Members on the adequacy of resources in determining the financial strategy and each year in setting the annual budget. This featured in the considerations of Overview & Scrutiny and Cabinet through the Medium Term Financial Plan and in the annual budget round. The Chief Executive commented on a statement made by the Local Government Minister on the need for Councils to carefully consider their reserves and explained that the Council’s arrangements were complying with this.

On behalf of the Committee, the Chair expressed her appreciation to the officers for their work on the accounts.

RESOLVED:

(a) That the draft Statement of Accounts 2012/13, together with the underlying policies, be noted;

(b) That the planned provision of ‘drop-in’ sessions over the summer period be noted; and

Supporting documents: