Final Accounts 2017/18
- Meeting of Audit Committee, Tuesday, 31st July, 2018 6.00 pm (Item 26.)
- View the background to item 26.
The Assistant Director, Financial Services and Revenues (Chief Finance Officer), presented his report for the Audit Committee to approve the Statement of Accounts (2017-18) on behalf of the Council in accordance with the Accounts & Audit Regulations 2015.
The Assistant Director, Financial Services and Revenues (Chief Finance Officer), said the audit had been completed significantly early, by 31st of July, instead of 30th of September to meet the revised statutory deadlines. He was pleased to confirm the report had achieved an unmodified opinion.
Councillor Levane raised the importance of the ‘implications’ listed in the report template. She said there are clear implications in terms of cohesion/human rights and asked why this was not addressed in the report? The Assistant Director, Financial Services and Revenues (Chief Finance Officer), explained this is a factual report which focuses on the variants/overspent/underspent and influences on the impact of the finances. If the public want to look at this, then the case has to be clear and concise enough.
Councillor Levane sought clarification on the investments in the pension fund. She asked whom does Hastings BC invest in local authorities? The Assistant Director, Financial Services and Revenues (Chief Finance Officer), said the pension fund is managed by East Sussex County Council, we have no say other than representation by District/Borough Councils. They have ethical investments which are constantly under review. We invest with banks and other local authorities and property funds. Banks and industries licensed as authorised institutions. (Refer to Treasury Management Policy – end year review and mid-year review).
Councillor Levane said Local Authorities could improve on reporting what they set out to achieve. Mr Lloyd-Thomas, BDO Partner, agreed, he said Local Authorities are behind. CIPFA have moved to full-blown annual reporting, but it is not a requirement at the moment for Local Authorities.
Councillor Levane asked for an explanation on investments with local authorities. The Assistant Director, Financial Services and Revenues (Chief Finance Officer), explained that these are short-term cash funds. Local Authorities are not credit rated but are considered safe. They use it to balance the books. Councillor Levane asked for an explanation on how it works: we lend to other local authorities and they pay principal and interest. The Assistant Director, Financial Services and Revenues (Chief Finance Officer) agreed this was correct.
Councillor Chowney added that Hastings BC loan Leeds Council money. It is a better rate of return than borrowing from a bank. The Assistant Director, Financial Services and Revenues (Chief Finance Officer), explained that you can only borrow money for capital. This is our own reserves we lend out. We can lend for temporary purposes for up to several years. Councillor Chowney asked why does it have to be capital, is it cheaper than borrowing from PWLB. The Assistant Director, Financial Services and Revenues (Chief Finance Officer), said it may not be cheaper. We lend on short-term interest. It can be for short-term cash flow issues, they may have invested too much on revenue purposes.
Councillor Levane said if accounts are wrong by a certain amount, can we rely on a true/fair opinion? Mr Leigh Lloyd-Thomas said that to be materially right, errors must not exceed 2% of gross spend. If wrong by more, they are assigned a modified opinion. Due to the complexity in accounting, no one can say these days that the accounts are right to the penny.
Councillor Rankin referred to the Funding Gap: predicted deficits between 2018/19 – 2021/22. These accounts say the shortfall is getting greater by 2021/22. The Assistant Director, Financial Services and Revenues (Chief Finance Officer) agreed This year it is a £1.39m deficit, the following year it will be up to £1.9m and the year after that £2.4m identified to Cabinet. The Medium-Term Strategy will be updated on this in September.
Councillor Rankin asked if the authority could reach a stage of what is our core offer. The Assistant Director, Financial Services and Revenues (Chief Finance Officer), said it is extremely difficult without cutting services to manage the budget. We reflect how long resources will last and how soon the income stream comes in. If government changes its statement regarding the fair funding scheme, we are unlikely to know how much we will get (County v Borough) until the next spending review in May/July 2019.
Councillor Charman asked if central government are observing the accounts of all local councils. The Assistant Director, Financial Services and Revenues (Chief Finance Officer) said they get all of our returns and are especially interested in our borrowing. He added that the National Audit Office had published a report that implied the government did not have a good enough grip on Local Authority finances but he is sure that they would be putting things in place now to put that right.
Councillor Chowney added to core offer that he wanted to see how much statutory service is required e.g. Environmental Health – number of food safety inspections. It is hard to refine the cost because the minimum level to meet statutory requirements is not defined (i.e. how often and how frequently).
Councillor Rankin referred to the expenditure, there is a big amount of money e.g. Clinical Commissioning Group (CCG). He asked how the flow of money works as there is a lot of money going in and out. The Assistant Director, Financial Services and Revenues (Chief Finance Officer), explained that CCG give us money upfront and is placed in reserves. We agree what objectives are in conjunction with CCG. They pay us to achieve these outcomes with other partner organisations. In this year there is £0.6 million in reserves. CCG give us money for health related initiatives e.g. for activities, access for health. Councillor Rankin asked if money was from the Central Government budget rather than CCG budget. The Assistant Director, Financial Services and Revenues (Chief Finance Officer) confirmed that it is Central Government money to CCG, they give us in return for an agreed programme. The money is for health prevention e.g. health hubs in community centres; alcohol prevention/smoking; active Hastings team e.g. sessions in gym. It is also used to assist fund homelessness, rough sleeping and mental health and some GP services.
Councillor Rankin asked what was happening with the White Rock Theatre? The Assistant Director, Financial Services and Revenues (Chief Finance Officer) explained that it is a re-negotiated contract for 2019. In expenditure terms, it goes down over six years to £150,000 per year in our contract with them. Hastings Borough Council pick up costs and maintenance. There will be £100,000 needed for maintenance but costs will be reduced going forward. Councillor Rankin enquired about £214,000 on regeneration activity – what kind? The Assistant Director, Financial Services and Revenues (Chief Finance Officer), explained that regarding regeneration, it is Bohemia and also reviewing any other projects. The Funding team will be putting in bids.
Councillor Rankin congratulated officers for including information on the budget in the report improving transparency re: changes to PIER process. Savings are identified and put in the budget. He said it was fantastic information e.g. Harold place toilets, cleaning contract and councillors were now able to see how well it performed.
Councillor Levane proposed a motion to approve the report as set out in the resolution below, which was seconded by Councillor Chowney.
RESOLVED (unanimously) that the draft Statementof Accountsbe approved and acopy signed by theChair of the Audit Committee in accordance with the Accounts & Audit Regulations 2015.
The reason for the decision was: Compliance with statutoryrequirements and goodpractice. TheCouncil is accountablefor the use of public money and continuously seeksto improve Value for Money.
- Final Accounts 2017/18 – Audit, item 26. PDF 146 KB
- Appendix A - Financial Statement 2017-18, item 26. PDF 795 KB