Agenda item

To consider a report by the Chief Officer Financial Services which presents the draft 2017/18 Statement of Accounts and the draft Annual Governance Statement, both of which were published on 1^st June for the statutory public inspection period. The Statement of Accounts is included with the agenda as a separate document and will be published on the Council’s internet site. The draft Annual Governance Statement is attached as an appendix to this report.

The report also provides an update on the outstanding elector objection arising from the 2016/17 statement of accounts public inspection period.

(Report attached)

The Chief Finance Officer submitted a report which presented the draft 2017/18 Statement of Accounts and the draft Annual Governance Statement, both of which were published on 1^st June for the statutory public inspection period. The Statement of Accounts was included with the agenda as a separate document for the Committee and would be published on the Council’s internet site. The draft Annual Governance Statement was submitted as an appendix to the report.

  The report also provided an update on the outstanding elector objection arising from the 2016/17 statement of accounts public inspection period.

Members sought assurance with respect to the Council’s exposure to Lender Options Borrower Option (LOBO) loans

Members were informed that all of the Council’s LOBO loans had fixed interest rates. The lender does have the opportunity to review loans at set points and propose a higher interest rate. The Council could then either accept the new rate or repay the loan without incurring any breakage costs. In the event of a lender option being exercised, the Council would look at the most beneficial outcome, repaying the loan if cheaper alternative funding was available.

The Principal Financial Manager confirmed that such Council loans were managed through the Treasury Management Strategy within which there were parameters which managed the extent and risk of the Council’s exposure.

In response to a query from a Member, the Principal Financial Manager confirmed that if the Council wished to repay a LOBO loan when a lender option had not been exercised then it would incur breakage costs, as it would on Public Works Loan Board (PWLB) or other borrowing.

The Committee challenged the pace at which the LOBO objection from the local elector had been progressed by KPMG and the priority that had been given by KPMG to resolving the matter as quickly as it might have.  The committee were concerned that the 2016/17 audit remained to be signed off by KPMG at a time when the 2017/18 accounts were coming forward. 

Robert Fenton representing KPMG confirmed that they were working to ensure that as far as they could they should be able to finalise the 2016/17 accounts by the end of July and, in response to a Member query regarding whether the matter had been escalated within KPMG, it was confirmed that the LOBO objections had been prioritised within the company.

The Committee sought further information relating to the full scheme costs of PFI programmes set out in the Accounts and the arrangements for the transfer of PFI assets to Academies.

The Principal Financial Manager confirmed that full scheme costs for PFI schemes as set out in the Accounts along with the PFI Grants applicable to them would be circulated to the Committee.

The Committee queried the presentation of financial data relating to contributions to the Better Care Fund and whether how this had been presented was accurate in relation to Leeds West CCG and Leeds North CCG. 

The Principal Finance Manager advised that there appeared to be a possible drafting error on the draft accounts which would be reviewed and rectified if appropriate when the final accounts were presented to the Committee.

The Committee also requested a briefing session on the accounts in advance of the July meeting. 

Officers provided an assurance that the necessary arrangements would be made to accommodate the requested briefing session.

Members queried the group narrative in the accounts and whether Civic Enterprise Leeds (CEL) required to be referenced. 

Officers reported that it was their understanding that CEL was operating as part of the Council rather than needing to utilise the structure of the company (of the same name) that had been established.

Members asked whether the reserves and debt position were sufficient to meet the risks facing the Council and whether a review had been undertaken of other opportunities to limit our taxation liabilities.

The Chair emphasised how important robust and fit for purpose governance was to the effective delivery of the Council’s objectives.

The Head of Governance and Scrutiny Support confirmed that the issues arising from the meeting would be reflected in the revised Annual Governance Statement to be presented to the committee in July 2018.

  RESOLVED –

(i)  To note the 2017/18 unaudited Statement of Accounts as certified by the Responsible Financial Officer, which were now available for public inspection

(ii)  To note the draft Annual Governance Statement which had been published alongside the draft Statement of Accounts for public inspection

(iii)  That full scheme costs for PFI schemes as set out in the Accounts along with the PFI Grants applicable to them would be circulated to the Committee.

(iv)  That arrangements be made for a Briefing Session on the accounts in advance of the meeting on 30^th July 2018.