Agenda item

Approval of the 2006/07 Statement of Accounts

Meeting of Audit and Governance Committee, Wednesday, 27 June 2007 7.00 pm (Item 6.)

To receive and consider report 21/07 of the Strategic Director and Chief Finance Officer.

The Council has a statutory duty to publish annual audited accounts. The accounts must be signed by the Chief Finance Officer and approved by the appropriate committee of the Council.

Under the Council’s Constitution the Audit and Governance Committee has the responsibility “to consider and determine on behalf of the Council all aspects of the Accounts of the Authority including the approval of the Statement of Accounts”.

Officers have prepared the draft accounts which are included in the agenda. If there are any amendments made to the draft accounts between circulation of the agenda and the meeting, the Chief Finance Officer will explain these at the meeting.

The Audit Commission will carry out an onsite audit of the approved accounts in order to provide an opinion on their accuracy and completeness. This may result in amendments to the accounts, which will be reported at the September meeting.

Recommendations

(a) That the Committee approves the 2006/07 Statement of Accounts, subject to subsequent amendments agreed with the external auditor;

(b) That the Chair of the Committee signs and dates the Statement of Accounts.

Minutes:

The Committee received and considered report 21/07 of the Strategic Director and Chief Finance Officer which presented the draft Statement of Accounts for 2006/07. The Council had a statutory duty to publish annual audited accounts, which must be signed by the Chief Finance Officer and approved by the appropriate Committee of the Council. In accordance with the Council’s Constitution, the Audit and Governance Committee had the responsibility to consider and determine on behalf of the Council all aspects of the accounts of the Authority, including the approval of the Statement of Accounts. Prior to considering the report, the Strategic Director and Chief Finance Officer circulated amendments to the Statement of Accounts, a copy of which is attached to these Minutes.

The Joint Head of Finance explained how the Statement of Accounts 2006/07 had been compiled and reminded the Committee that its remit was to be satisfied that the Council had the necessary processes in place to provide satisfactory accounts for the Authority. The Committee considered the Statement of Accounts in detail and asked a number of questions, as follows:-

Question	Answer
Can the Officers explain the reason for the increase in net expenditure for highways, roads and transport services?	The increased net expenditure is primarily due to the concessionary fares scheme.
Why has provision for bad debts been specified in the accounts?	Provision for bad debts has now been included in the income and expenditure account at the request of the external auditor who had required the Council to take a more robust line in the reporting of the level of sundry debtors.
Does the “surplus arising on revaluation of fixed assets” relate to the Council’s investment portfolio?	The surplus figure is made up of revaluations and restatements in respect of operational, non-operational and intangible assets owned by the Council. The revaluations and restatements relate mainly to the Old Gaol in Abingdon which had previously been down valued as a result of a dispute regarding legal ownership but this had now been resolved satisfactorily and the value of the asset increased accordingly.
Why has there been a big increase in the level of debtors?	Increase in arrears on Council Tax and Business Rate payments due to changes in the collection systems. Central Government behind in reimbursing the Council on Housing Benefit payments.
Is the level of debtors a “sign of the times” regarding the economy?	Yes, and this is acknowledged in the accounts. The Vale continues to perform well in collecting both Business and Council Tax.
In the cash flow statement 2006/07, what were the “other capital grant payments”?	A grant from the Heritage Lottery Fund towards the Abbey Grounds project and renovation grants.
Which fixed asset was sold during 2006/07?	Challow Depot.
Are the Council’s ear-marked reserves adequate?	The adequacy of ear-marked reserves is a matter for the budget setting process. The role of this Committee in approving the Statement of Accounts is to be satisfied as to the accuracy of the accounts. However, it should be noted that a number of ear-marked reserve accounts have been closed in response to concerns previously raised by Members.
In respect of related party transactions, Central Government does not provide the majority of this Council’s funding (44%) and this wording should be changed to read “high proportion”.	If benefit payments are included then the Government does provide the majority of funding to the Council. Need to expand explanation in the Statement of Accounts to make this clear.
Does the Council undertake highway maintenance works on behalf of Oxfordshire County Council? If so, should this be included under Note 13 to the Core Financial Statement – Local Authority (Goods and Services) Act 1970?	Yes, the Council does undertake works to maintain highway verges on behalf of OCC and this is included under Note 5 – Agency Work. However, it could also be included in Note 13.
In respect of fixed assets as detailed in Note 16, should the Corn Exchange, Faringdon and the Fitzharrys Common Room be included in the list of fixed assets?	The list of fixed assets provided in Note 16 is not an exhaustive list. However, the Council does own the Corn Exchange and the Fitzharrys Common Room and these will be included in the list.
Under Note 16, it should be noted that the site held for development in Wantage (previously used as a depot) which was sold, refers to the former Challow Depot site which resides in the parish of East Challow.	This will be amended.
The Council’s Fund Manager has performed disappointingly in 2006/07 compared to the In-House Investment Team. Is this level of poor performance being addressed?	The Council continually reviews the performance of its Fund Manager and takes advice from its Investment Consultant. It should be noted that the in-house team’s performance was boosted by the investment, over a two year term, of a windfall payment received by the Council.
The Statement of Accounts shows different figures (£17.81 million and £17.84 million) as the Council’s deficit on the Pension Fund. Could the Officers explain?	The figure of £17.81 million is the figure notified by the Actuary to the Pension Fund and the figure of £17.84 million is the actual contribution. This variation will be investigated.
Why has there been a large increase in single persons discount provision in respect of Council Tax payments?	Many benefit claimants living alone do not claim the single person discount and this needs to be reflected as it has an impact on the level of benefit payments made by the Council.
Why is the Westway Shopping Centre, Botley shown separately as a note in the Trading Statement for Investment Properties?	This is historical and the reason for including this as a separate note will be investigated. It should be noted that Westway Shopping Centre is directly managed by the Council.
In the “Explanation of Financial Terms”, should the EMU fund be removed from the list?	Yes.
Page 1 of the Statement of Accounts paragraph 1.4, the fourth sentence to read “the Council is free to decide how best to spend the money.”	Noted.

Question

Answer

Can the Officers explain the reason for the increase in net expenditure for highways, roads and transport services?

The increased net expenditure is primarily due to the concessionary fares scheme.

Why has provision for bad debts been specified in the accounts?

Provision for bad debts has now been included in the income and expenditure account at the request of the external auditor who had required the Council to take a more robust line in the reporting of the level of sundry debtors.

Does the “surplus arising on revaluation of fixed assets” relate to the Council’s investment portfolio?

The surplus figure is made up of revaluations and restatements in respect of operational, non-operational and intangible assets owned by the Council. The revaluations and restatements relate mainly to the Old Gaol in Abingdon which had previously been down valued as a result of a dispute regarding legal ownership but this had now been resolved satisfactorily and the value of the asset increased accordingly.

Why has there been a big increase in the level of debtors?

Increase in arrears on Council Tax and Business Rate payments due to changes in the collection systems. Central Government behind in reimbursing the Council on Housing Benefit payments.

Is the level of debtors a “sign of the times” regarding the economy?

Yes, and this is acknowledged in the accounts. The Vale continues to perform well in collecting both Business and Council Tax.

In the cash flow statement 2006/07, what were the “other capital grant payments”?

A grant from the Heritage Lottery Fund towards the Abbey Grounds project and renovation grants.

Which fixed asset was sold during 2006/07?

Challow Depot.

Are the Council’s ear-marked reserves adequate?

The adequacy of ear-marked reserves is a matter for the budget setting process. The role of this Committee in approving the Statement of Accounts is to be satisfied as to the accuracy of the accounts. However, it should be noted that a number of ear-marked reserve accounts have been closed in response to concerns previously raised by Members.

In respect of related party transactions, Central Government does not provide the majority of this Council’s funding (44%) and this wording should be changed to read “high proportion”.

If benefit payments are included then the Government does provide the majority of funding to the Council. Need to expand explanation in the Statement of Accounts to make this clear.

Does the Council undertake highway maintenance works on behalf of Oxfordshire County Council? If so, should this be included under Note 13 to the Core Financial Statement – Local Authority (Goods and Services) Act 1970?

Yes, the Council does undertake works to maintain highway verges on behalf of OCC and this is included under Note 5 – Agency Work. However, it could also be included in Note 13.

In respect of fixed assets as detailed in Note 16, should the Corn Exchange, Faringdon and the Fitzharrys Common Room be included in the list of fixed assets?

The list of fixed assets provided in Note 16 is not an exhaustive list. However, the Council does own the Corn Exchange and the Fitzharrys Common Room and these will be included in the list.

Under Note 16, it should be noted that the site held for development in Wantage (previously used as a depot) which was sold, refers to the former Challow Depot site which resides in the parish of East Challow.

This will be amended.

The Council’s Fund Manager has performed disappointingly in 2006/07 compared to the In-House Investment Team. Is this level of poor performance being addressed?

The Council continually reviews the performance of its Fund Manager and takes advice from its Investment Consultant. It should be noted that the in-house team’s performance was boosted by the investment, over a two year term, of a windfall payment received by the Council.

The Statement of Accounts shows different figures (£17.81 million and £17.84 million) as the Council’s deficit on the Pension Fund. Could the Officers explain?

The figure of £17.81 million is the figure notified by the Actuary to the Pension Fund and the figure of £17.84 million is the actual contribution. This variation will be investigated.

Why has there been a large increase in single persons discount provision in respect of Council Tax payments?

Many benefit claimants living alone do not claim the single person discount and this needs to be reflected as it has an impact on the level of benefit payments made by the Council.

Why is the Westway Shopping Centre, Botley shown separately as a note in the Trading Statement for Investment Properties?

This is historical and the reason for including this as a separate note will be investigated. It should be noted that Westway Shopping Centre is directly managed by the Council.

In the “Explanation of Financial Terms”, should the EMU fund be removed from the list?

Yes.

Page 1 of the Statement of Accounts paragraph 1.4, the fourth sentence to read “the Council is free to decide how best to spend the money.”

Noted.

RESOLVED

(a) that the 2006/07 Statement of Accounts, together with the amendments set out in the Appendix attached to these Minutes, be approved, subject to subsequent amendments agreed with the External Auditor;

(b) that the Chair of the Audit and Governance Committee be authorised to sign and date the Statement of Accounts.

Supporting documents: