The Committee is asked to approve the Statement of Accounts for the year ended 31st March 2017, including Gloucestershire Pension Fund Accounts 2016/17.
Jayne Fuller, Financial Accounting Manager presented the report in detail. It was explained that the draft accounts were produced and presented for audit on 1st June 2017, nearly a week earlier than last year. The Director of Strategic Finance approved this Statement of Accounts for 2016/17. By doing so the Director of Strategic Finance confirmed the accounts presented a true and fair view of the Council’s financial position as at the 31st March 2017 and the income and expenditure for the year.
In accordance with the Accounts and Audit Regulations 2015, the draft accounts were available for public inspection for 30 working days, which was required to include the first two weeks of July. The inspection period for 2016-17 was from 12th June 2017 to 21st July 2017. It was noted that this included access via the Council’s website.
Since production of the draft accounts and during the audit of accounts the appropriate amendment for one non-trivial misstatement in the accounts had been made. This related to incorrect coding of schools income and expenditure for cheque book schools of £3.7 million. The Comprehensive Income and Expenditure Statement and supporting disclosures had been amended accordingly.
It was important to emphasis that this amendment did not change the Council’s outturn position approved by Cabinet in June 2017 or the level of usable reserves or balances reported in the balance sheet.
A number of other minor changes and updates agreed with Grant Thornton Ltd had also been incorporated.
Members were made aware that at the time of dispatch of the Committee papers the formal audit process of the accounts remained outstanding. It has now been identified that an additional disclosure is required under Note 4 of the accounts, in order to comply fully with the accounting regulations. A copy of the proposed disclosure was tabled at the meeting (a copy is attached to the signed minute book) for consideration and approval. This note showed the revenue received from customers through fees and charges. It was proposed to incorporate this disclosure within the published statement of accounts, following the Committee’s approval.
The Accounts & Audit Regulations 2015 required the annual Statement of Accounts to be produced and published by 30th September, and that they were approved by this Committee. Members were reminded that an extensive accounts training session was recently held to provide members with an opportunity to ask detailed questions about the accounts.
It was reported that there was a net valuation gain of £77.6 million. This was largely as a result of changes to the cost of building, and the BCIS index which was used to value school premises. In addition, it was explained that schools reserves were 100% ring-fenced to schools.
Officers explained that the capital fund reserve is fully committed to fund the approved capital programme. In addition, non-schools earmarked reserves had increased between 2015/16 and 2016/17 by £5.8 million, the movement in reserves was detailed in note 2 of the accounts.
Members were informed that general reserves had remained unchanged at £19.848 million. This equated to around 4.7% of the net budget and was within the Council’s target range of between 4% and 6% of the net budget. This level of general reserve equated to only six working days of average gross expenditure, or twelve working days of net expenditure. It was noted that they would reduce by £1.295 million to fund commitments in 2017/18, as agreed by County Council in February, which would reduce the opening balance on 1st April 2018 to £18.553 million, which equated to 4.5% of the 2017/18 net revenue budget.
The stability of reserves had reflected the sound financial management of the authority over the last three years.
The Committee were reminded that the summary report was intended to draw member’s attention to the key pieces of financial and accounting information contained within the Council’s Statement of Accounts. Therefore, this information should be considered in conjunction with the explanatory foreword of the 2016/17 Statement of Accounts.
A lengthy discussion occurred relating to the narrative summary. Councillor Hay stated that he was uncomfortable with some statements contained within the narrative, as they were not balanced and reflected the media statement issued media statement issued following Ofsted.
In response to another question, it was explained that the cultural issues raised by Ofsted were being addressed corporately per the recent Council debate. In response to a question on the improvement plan, it was explained that if the Authority did not improve, there would be further intervention from Ofsted. Officer’s explained that the Authority had not disputed any of Ofsted’s findings.
Members questioned the unknown unknowns, Grant Thornton and the Chief Internal Auditor explained they were not aware of any other key issues other than those reported to Committee. However, it was not possible to give a 100% guarantee or assurance that all council risks had been identified and were being adequately managed.
Members were reminded that the narrative needed to be read in conjunction with the Ofsted report and the Annual Governance Statement. Some members still questioned the tone of the narrative report and felt that it should be reflective of such findings. Whilst other members contested this point and felt the narrative was broad, the organisation was open and honest about the findings. As such, since the Ofsted Inspections, actions were already being taken to address the issues raised. To some members, it was evident that the Authority was well run, it was merely of question of how the narrative within the report was interpreted. It was noted that GCC was a large organisation and whilst governance frameworks were in place things can go wrong.
During the discussion, it was evident that there was a general mix of views amongst Committee members. As some members felt that perhaps there was some over emphasis on the good elements within the report, others felt the narrative reflected the general well-being of the council.
It was suggested that officers should be congratulated on their efforts to respond and overcome such adversity in a relatively short space of time and should be put into perspective. It was noted that all the issues had been publicly spoken about and the Authority was open and transparent.
At this point, the Director of Strategic Finance offered to amend the narrative, in relation to the Ofsted Inspection of Services for Children statement, third paragraph on page 104 of the report. It was suggested that the final sentence be removed from the narrative. This edit was supported by Members.
During the discussion on the accounts, it was also agreed that the following amendments be made:
• Page 118, the pensions liability had increased rather than decreased.
The external auditor confirmed they were satisfied with the statement of accounts for 2016/17. The auditor also commented that the foreword was clear, concise and presented a good overall picture of the Council’s position.
In response to a question regarding the objection raised in relation to the Energy from Waste scheme and why this was not in the narrative, officers explained that this had been received following the year end (31st March 2017) and publication of the accounts and therefore should not be included.
Members complimented officers on their efforts in producing the statement of accounts and summary accounts.
It was agreed that the Committee formally approved the Statement of Accounts following the two edits agreed the Director of Strategic Finance and the Committee and the Chairman of the Audit and Governance Committee signed the letter of representation on behalf of the Authority and Gloucestershire Pension Fund.
That the Committee formally approved the statement of accounts, subject to the following amendments:
• subject to acceptance by the Chief Executive and the Leader of the Council, that the final sentence in relation to the Ofsted Inspection of Services for Children statement, third paragraph on page 104 of the report be removed from the narrative.
• Page 118, the pensions liability had increased rather than decreased
That the Chairman of the Audit and Governance Committee sign the letter of representation on behalf of the Authority and Gloucestershire Pension Fund