Agenda item

Report of the City Treasurer.

4.1       The Committee had before it a report on the draft Statement of Accounts for 2015-16.  The chairman announced that the publication of the papers did not meet the statutory deadline.  These were circulated to the committee at the earliest opportunity once the external auditors had completed the necessary work to be able to report to members the findings from the audit of the accounts.  He agreed to accept the report and its appendix as a matter of urgency.

4.2       Steve Mair, City Treasurer, summarised the key items arising from the Statement of Accounts.  The Committee noted that the Council prepared its accounts for 2015-2016 and submitted them to the Council’s external auditors, Grant Thornton, for audit on 9^th April 2015.  This was a full 12 weeks in advance of the statutory requirement of 30^th June, was the earliest public sector accounts ever issued and exceeded the performance of 94% of the FTSE 100 including the 9 largest companies. The performance built upon the achievements in 2014-2015 which was one outcome from the financial management transformation work that is continuing. 

4.3       The Committee acknowledged the achievement and thanked the City Treasurer, Finance team and the internal and external auditors for their work having noted this year’s close down process had been challenging given the need to bed down the new Agresso system as part of the Managed Services Programme.

4.4       The Committee noted a technical change relating to the publication of local authority accounts effective from this year whereby the accounts are subject to new arrangements for the exercise of electors’ rights.  This means that no authority is able to approve or publish its accounts before 14^th July 2016 to allow for a 30 working day inspection period.  To comply with this a special meeting of the committee had been called for 4:30 PM on 14^th of July to approve the accounts which is after the end of the Council’s inspection period which concludes at 4 PM on the 14 July.

4.5       In order to obtain assurance on the accuracy of the information being processed through the managed services environment and feeding into the Council’s financial management system, officers within the Council’s finance team had undertaken a very significant amount of transaction testing in all of the key financial areas.  The City Treasurer was asked whether this would undermine any future discussions with the contractor on recovering costs.  He was also asked whether the acceleration of the accounts had resulted in the Council incurring any significant acceleration costs.  The City Treasurer explained that the testing had enabled the council to undertake corrective action and minimise the impact of any errors and weaknesses in the information being processed.  It would have weakened the Council’s position not to have dealt with this matter as early as possible and he considered that the significant amount of work, which has been documented, will prove useful in any future commercial discussions with the contractor.  The additional costs incurred were not excessive and that the on-going financial management transformation project will eventually deliver further improvements at less cost than presently.

4.6       The Committee noted that there was an underspend of £157.568m against the original gross budget of the Capital Programme at year end but that this had been significantly mitigated by the in-year re-profiling of the programme.  Members asked whether the Council could have obtained a better return by making use of the funds.  The City Treasurer advised that the Council’s Treasury team are provided with advance notice of any slippage in the Council capital programme so can therefore make use of any unused funds as appropriate.  He suggested that the Council could have indirectly benefited from the situation as it did not incur the costs of borrowing money to deliver capital schemes.

4.7       The City Treasurer was asked what he considered to be the appropriate level for general fund reserves.  He stated that given the scale of the Council’s budget the reserves which currently stood at £41.58m could and should be increased further.  He explained that it would only take a divergence of 2% from the Council’s gross budget in the year for the reserves to be largely used up.  He advised that reserve levels had previously been as high as £70m and that other comparable local authorities had higher reserve levels than the Council presently had.

4.8       The Committee put forward a few suggestions (service revenue outturn, comprehensive income and expenditure statement and interests in companies and other entities) to further improve the reading of the accounts

4.9      RESOLVED: That the draft 2015/16 Statement of Accounts be noted.

4.10     ACTION:

1.     Provide details of the non-pay expenditure overspend in Policy, Performance and Communications (Action for: Steve Mair, City Treasurer)

2.     Provide a note on changes to business rates where businesses with a rateable value below approximately £15,000 are no longer liable to pay rates. (Action for: Steve Mair, City Treasurer)

3.     Provide the committee with details of the methodology used to assess the value of the Council’s housing stock. (Action for: Steve Mair, City Treasurer)