Agenda item

To consider a report by the Chief Officer (Financial Services) which presents the Draft Statement of Accounts 2016/17, prior to publication

(Report attached)

The Chief Finance Officer submitted a report which presented the Draft Statement of Accounts 2016/17, prior to them being made available for public inspection.

Members were informed that the Chief Finance Officer had reviewed the 2016/17 accounts and certified that they were a true and fair view of the council’s financial position and, that after consideration by the committee, the Accounts will be placed on deposit for public inspection and would be audited by the council’s external auditors (KPMG) over the summer period.  The final audited Accounts would be presented to the committee again in September for approval.

It was reported that the final outturn position for the year was a £0.8m use of the General Fund Reserve, which was £2.6m less than the figure budgeted for. Within this overall improved position there was an overspend of £7.9m against the Children’s Services budget, which was offset by an underspend of £6.4m against the City Development budget and net savings across other directorates.

Members were informed that the Housing Revenue Account outturn position resulted in the use of £10.0m of its revenue reserves. This included the use of £7.7m of reserves set aside to contribute to the Swarcliffe PFI scheme and the Little London, Beeston and Holbeck PFI scheme, and was after additional contributions of £3m to the Major Repairs Reserve to fund future capital expenditure.

The Principle Finance Manager also advised the Committee that the council’s net worth had increased during the year by £391m, and as at 31^st March 2017 stands at £1,244m. Within this increase in the net worth, there has been an increase of £658m in the value of tangible fixed assets, partly offset by an increase in the net pension liability of £80m. Net borrowing for capital and treasury management purposes has increased by £174m, reflecting an increase of £163m in the capital financing requirement and a slight reduction in the level of revenue balances which can be used to offset external borrowing.

Members were informed the council’s level of usable reserves decreased by £45m to £275m. The majority of the decrease was in ring-fenced reserves, with usable capital reserves decreasing by £12m and ring-fenced revenue reserves (primarily relating to the HRA and to schools) decreasing by £21m. The level of un-ring-fenced revenue reserves fell by £12m, primarily due to the planned use of £10m of health and social care reserves during the year.

The Principle Finance Manager reported that the position within the Collection Fund for business rates had slightly improved, with the closing deficit for 2016/17 having reduced by £25m to £49m, of which 49% (£24m) will fall on the council. A significant element of this deficit (£22m for the council) was taken into account when setting the 2017/18 budget. The outturn position therefore meant that a further £2m would have to be recovered when the 2018/19 budget was set.

Members asked for further clarification on the differences between the net pension liabilities shown in the accounts and the triennial actuarial review which showed a 94% funding position. The Principal Finance Manager advised the committee that the triennial review was a forward-looking assessment which took into account the expected future growth in the pension fund assets. Employer contribution rates were based on the triennial review and not on the accounting position.

In response to a query, the Chief Officer (Audit and Investment) assured the Committee that KPMG were allowed to undertake consultancy work subject to applying for permission from the Public Sector Audit Appointments body; the necessary permission was sought and obtained. Members were advised that the nature of the consultancy work undertaken was with Children’s Service, looking into traded income with schools and recovery rates.

Clarification was sought around the basis of some Key Performance Indicators: particularly focusing on whether the figures for; (i) the creation of 36,300 new jobs and (ii) the building of 3,306 new homes (In all sectors) were for in-year performance or were cumulative.

The Principle Finance Manager was unable to confirm the basis of the figures quoted and offered to make enquires with a view to circulating to Members once the information was available.

RESOLVED – To note the 2016/17 unaudited Statement of Accounts as certified by the Responsible Financial Officer, prior to their release for public inspection.