Agenda item - Audited Statement of Accounts 2017/18

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Agenda item

Audited Statement of Accounts 2017/18

Report of the Executive Director, Finance & Resources

Decision:

That the Audit & Standards Committee:

 

1)            Notes the findings of the auditor (EY) in their Audit Results Report (ARR). The ARR is a separate item on this agenda.

 

2)            Notes the results of the public inspection of the accounts (Section 5).

 

3)            Approves the Letter of Representation on behalf of the council (Appendix 1).

 

4)            Approves the audited Statement of Accounts for 2017/18.

Minutes:

7.1         The Committee considered a report of the Executive Director, Finance & Resources that provided information about the audit of the council’s 2017/18 Statement of Accounts and recommended approval of the 2017/18 audited accounts and the Letter of Representation on behalf of the council.

 

7.2         Councillor Cobb asked why there was not a better balance between General Fund and Housing Revenue Account (HRA) reserves.

 

7.3         The Deputy Chief Finance Officer explained that this reflected the scale of business between the two as well as the need to hold reserves for a wide range of specific commitments on the General Fund side, such as PFI repayments, compared to the more narrowly defined use of HRA reserves. All reserves are approved by members.

 

7.4         Referring to the Statement of Accounts, Councillor Cobb stated that grants received from government were high, asked how much interest was being paid on the bank overdraft and asked why Homes for the City of Brighton & Hove did not meet IFRS10 Consolidated Financial Statements definition.

 

7.5         The Executive Director, Finance & Resources explained that in factual terms, government grant funding between 2011 and 2020 will have reduced by around £100m. In relation to the question raised on the Joint Venture (Homes for the City of Brighton & Hove), the Deputy Chief Finance Officer explained that in 2017/18 only set-up costs had been incurred, however, in future years there would be large transactions and therefore it would then meet the IFRS10 definition requiring production of Group Accounts. In relation to the query raised on the Balance Sheet item ‘bank overdraft’, the Deputy Chief Finance Officer clarified that this was an accounting overdraft but that there had been no actual overdrafts with the council’s bank, Lloyds Bank, and no overdraft charges had been incurred.

 

7.6         Councillor Cobb noted that Sussex Inshore Fisheries & Conservation Authority (SIFCA) was listed as a Levying Authority and enquired whether Councillor Sykes should have declared the basic allowance he received from SIFCA at this meeting. Furthermore, Councillor Cobb observed that the £389,000 paid in Exit Packages in 2017/18 was in her view, a waste of public money.

 

7.7         Councillor Sykes commented that a basic allowance was provided by the SIFCA however, whether that was claimed was a different matter.

 

7.8         Referring to page 39 of the Accounts, Diane Bushell noted that asset charges were higher than in previous years and asked for clarification on the reasons behind that. Furthermore, Diane asked if the council’s Rare Books were regularly revalued, noted that a high number (21%) of outstanding debtors at the Balance Sheet date were past their due date and that a claim by NHS foundation trust of 80% charity relief on hereditaments could have a significant impact upon the council. In addition, Diane highlighted that the mortality assumptions made in the Accounts were longer than other authorities.

 

7.9         In response to the questions and observations made, the Deputy Chief Finance Officer confirmed that Rare Books were revalued intermittently, that there would be significant impact if the charity relief claim on NHS Foundation Trust hereditaments was successful and the LGA were leading a defence of the claim on behalf of local authorities. The Deputy Chief Finance Officer added that mortality assumptions were evidence based by the fund’s actuary and whilst they could change, changes were normally kept within certain limits to avoid large fluctuations to employer contribution rates. In relation to the questions raised on asset charges and debtors, the Deputy Chief Finance Officer explained that he did not have the answer to hand and would circulate an update subsequent to the meeting.

 

7.10      The Chair noted that the Surplus on Provision of Services was £5.1m yet the Ernst & Young Audit Report recorded the figure at £1.3m and asked for the reasons behind the discrepancy.

 

7.11      The Deputy Chief Finance Officer explained that the discrepancy related to a difference in accounting presentation versus management accounts presentation, specifically the Targeted Budget Management standard the council applied. This was explained in more detail in the ‘Narrative Report’ section of the statements.

 

7.12      RESOVLED- That the Audit & Standards Committee:

 

1)            Notes the findings of the auditor (EY) in their Audit Results Report (ARR). The ARR is a separate item on this agenda.

 

2)            Notes the results of the public inspection of the accounts (Section 5).

 

3)            Approves the Letter of Representation on behalf of the council (Appendix 1).

 

4)            Approves the audited Statement of Accounts for 2017/18.

Supporting documents:

 


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