Agenda item

The Statement of Accounts 2021/22 is presented to the Governance and Audit Committee for approval. This report covers:

•       Accounts and Audit (Amendment) Regulations 2021

•       Accounts and Audit Regulations 2015

•       Section 21(2) Local Government Act 2003

•       Revised Statement of Accounts

•       Commentary on the outcome of the audit of the Statement of Accounts

The Assistant Director of Finance presented the report.  The Officer informed the Committee that the Draft Accounts were reviewed by Governance and Audit Committee on 20 July 2022 and published on 29 July 2022.  The statutory deadline was 31 July 2022 and this was met.  The Statement of Accounts was updated to reflect any changes that were identified by the Finance Team and then agreed with External Audit and included a narrative report, providing a guide to the most significant matters reported within the accounts.  It explained the Council’s financial position and assisted in the interpretation of the accounting statements.  A table within the report listed amendments to the draft accounts made to date.

The Council was required to produce an Annual Governance Statement (AGS) in accordance with the CIPFA/SOLACE framework “Delivering Good Governance in Local Government” in order to meet the statutory requirement set out in Regulation 6 of the Accounts and Audit Regulations 2015.  The statement was an open and transparent review of the effectiveness of the Council’s system of governance, risk management and internal control, including performance across all its activities.

The date for publishing the audited accounts was due to be 30 November 2022 but that deadline was not to be met due to delays beyond the Council’s control.  Such delays were unfortunately common across Local Government due to the limited resourcing of external audit.

During discussion, Members raised the following points:

·            Where was the loan to EnvironmentSK Ltd recorded?

·            How and why had approximately £500,000 been paid in termination benefits to leaving staff members?

·            Was it not the case that all four wholly-owned companies of the Council receive their income from the Council itself?

·            How frequently were the risks reviewed on the register?

·            Why was there insufficient uncertainty to indicate any impairment of assets as a result of potentially needing to close facilities or services?

·            What were the two collaborations in reference to joint operations (mentioned on page 69)?

·            Who made the decision when determining the uncertainty?

The Assistant Director of Finance confirmed that the EnvironmentSK Ltd loan was included within long-term Debtors on the balance sheet.  The Officer explained that LeisureSK Ltd received their income from customers.  This was a material amount (at least £1 million) of income from a third party.  This was the same for Gravitas Housing Ltd who received income from the sale of assets.

The Chief Finance Officer informed Members that termination benefits were put through a ‘value for money’ process which was overseen by the Head of Paid Service – The Chief Executive the s151 Officer and the Monitoring Officer.  The majority of these costs referred to were part of the recent Arts Restructure or the Corporate Restructure implemented in April last year.  The costs were offset against salary savings in line with best value.  The Officer clarified that the recommendations within the report were based on there being no material changes, just disclosure changes that had been identified.  The report was seeking a delegation to continue the closedown process based on the advice of the External Audit Team in regards to the extended  audit period.

A Member questioned whether it was ‘best practice’ to pay one Officer £81,000 and another £115,000 as severance payments.

The Chief Finance Officer confirmed that a decision was made to remove specific posts with a value-for-money test being integral to the decision-making.  The posts being removed enabled savings going forward.

The Chairman expressed an understanding of the reasons for these payments but added that it was important that these were scrutinised.

The Assistant Director of Finance confirmed that the Finance Risk Register was reviewed at the Finance, Economic Development and Corporate Services Overview and Scrutiny Committee.  Assets were routinely valued and critical judgements made as to their potential impact on the statement of accounts.  With the Fair-Funding review and Business Rates Retention review, there was insufficient information to assess the potential impact and this was recorded within the accounts.  The Chief Finance Officer clarified that this related to a theoretical risk as growth received from these income sources could potentially be redistributed elsewhere but the reviews were not progressing within the current political climate.

The Assistant Director of Finance confirmed that they and the Chief Finance Officer made the decision alongside advisors when determining the uncertainty on asset impairment.  The collaborations referred to were the East Midlands Building Control Partnership and the collaboration with Burghley Ltd over the development at St Martin’s Park.

The Chairman thanked the Finance Team for the extensive work that had been involved in the completion of the accounts.

It was proposed, seconded, and AGREED:

That the Governance and Audit Committee:

a)         Noted the outcome of the audit work to date by the Council’s external auditors Grant Thornton.

b)         Delegate authority to the Chief Finance Officer to make any final wording changes and accounting adjustments following the conclusion of any outstanding audit queries provided these were not material to the accounts.

c)         Delegate approval of the audited Statement of Accounts and the Letter of Representation to the Chairman on behalf of the Governance and Audit Committee in consultation with the Chief Finance Officer following the completion of the audit of the 2021/22 Statement of Accounts.

The Chief Finance Officer was to provide members of the Governance and Audit Committee with the audited Statement of Accounts for the financial year 2021/22 upon completion of the audit.