Agenda item

The Wales Audit Officer (WAO) presented the ISA260 response to the Statement of Accounts noting that the results of the audit found that the format was as specified in Audit Standards and reported that the Audit was complete apart from a final review of the WAO team’s work.  The audit had gone exceptionally well, and it was remarked that the accounts were received 21 days ahead of the agreed deadline. 

The intention of the Auditor General to issue an unqualified audit report was confirmed.  It was explained that reasons for uncorrected misstatements were included in a letter of representation and didn’t detract from the unqualified status. Some other misstatements and explanations are also included that have been adjusted by management and some rounding errors will be addressed from next year.  It was suggested that it would be beneficial to utilise the CIPFA disclosure checklist.

Following presentation of the Audited Statement of Accounts and the ISA260 response, questions were invited

A Member asked if it was correct that the discounted cash flow of Morrisons lease (£1m) hadn’t been accounted for or was incorrect in the accounts. In response it was explained that it was reflected in the accounts as a deferred capital receipt as WAO had suggested that, as it was to be paid over 25 years, effectively there was an implied interest rate and it was preferable that it was reflected as £3m capital receipt and £1m interest.  It was added that in cash terms, the Council receives £4m with no adverse effect on the balance sheet.  It was agreed that, as this will be a standing item in the accounts for 25 years, it should be amended.

The Member asked if it was a flat line figure of £160,000K per annum for 25 years and if there were any implications on external funding.  It was answered that a revenue stream had been converted to use for capital purposes and Committee Members were reminded that the agreement was an upfront payment of £13.75m from Morrisons and a further £4m payable over 25 years.

Considering school budgets, WAO were asked if there was any risk in the council’s position regarding school balances.  It was noted that, in the previous financial year, six schools were in deficit but at the end of the year approximately twenty eight schools were estimated to be in deficit.  It was highlighted that nine or ten schools had substantial surpluses. 

It was clarified that the role of WAO is to evaluate the accounts to ensure that balances are reported accurately.  The committee were referred to the annual governance statement and noted that periodic monitoring information is provided.  The Member stated that there was an overall surplus last year but a £600,000 deficit forecast for next year, and asked for possible solutions.

The Head of Finance confirmed that Cabinet, and Children and Young People’s Select Committee, have received a report regarding school balances and possible actions to improve the situation next year.  The report is publicly available.

It was agreed to provide information outside of the meeting to a Member to clarify strategic risk assessment and added that the corporate strategic risk assessment is presented to Audit Committee for detailed consideration periodically.

It was agreed to endorse the Audited Statement of Accounts 2016/17 for Full Council approval and the ISA260 Response to the Accounts.