Agenda item

UNAUDITED STATEMENT OF ACCOUNTS 2018/19

To review and consider the draft Statement of Accounts 2018/19 in advance of the final (audit) statement being submitted for consideration and approval at the next meeting on 25 July 2019.

 

A copy of the Draft Statement of Accounts is attached.  Members are asked to focus their consideration around i) the Narrative Report, ii) Core Financial Statements iii) Notes to the Core Financial Statements iv) Housing Revenue Account v) Group Accounts. Where possible, Members are asked to provide advanced notice of any queries or comments they may have on the Draft accounts to ensure a response can be provided at the meeting.

 

These should be forwarded to Metin Halil at metin.halil@enfield.gov.uk by the 28 June 2019, if possible.

 

 

Minutes:

RECEIVED the draft 2018/19 Statement of Accounts in advance of the final statement being submitted for consideration and approval at the next Audit and Risk Management Committee meeting on 25 July 2019.

 

NOTED

 

1.    Matt Bowmer (Interim Director of Finance) introduced the report.

2.    The purpose of the meeting is for the committee to scrutinise and review the 2018/19 Statement of Accounts, so as to feel comfortable at the next meeting, to sign and agree those accounts.

3.    The report was presented a couple of weeks ago and finance team had asked for questions in advance which they could respond to. Some questions had been received in advance and these would be appended at the end of these minutes. Councillor Gunawardena had sent a list of questions to officers and these were tabled along with the responses. This was an opportunity for members to ask questions of officers.

Councillor Barry also e-mailed some questions through, but these were not received by finance officers. The Chair clarified that if members had any more questions, regarding the accounts, these should be sent to Metin Halil (Committee administrator) by the 12 July 2019 deadline.

4.    Councillor Barry’s questions regarding the draft accounts were addressed and responded to by officers, including Councillor Gunawardena’s questions. These questions will be appended to the minutes of this meeting along with the tabled questions/responses from Councillor Gunawardena.

5.    Tim Harlock (Interim Chief Accountant) began clarifying the narrative report (pages 5-15 of the report), which is an explanation of the main financial statements. There was also a member training session on Monday 1 July 2019 where finance officers also went through the financial statements.

6.    Councillor Barry’s questions were responded to as Tim Harlock went through the draft accounts.

Councillor Barry’s questions:

·         Page 6 of the draft accounts - the Meridian Water development.

Tim Harlock clarified that nothing had been set in stone at this stage and effectively, all that has happened is that the Council had chosen its development partner. Finance officers would re-word the paragraph beginning ‘The first phase of the £6Billion Meridian Water development,.

·         Page 8 of the draft accounts – regarding Enfield’s population. Matt Bowmer clarified that it was quite common that this information is within the narrative statement. Officers could add some wording to introduce this information regarding the population of the borough.

·         Page 11 of the draft accounts – regarding short term deposits.

Tim Harlock clarified that as there is no certainty, it is appropriate to keep short term deposits. So, the Council makes decisions to keep cash on a short term basis in case something happens and it needs cash very quickly. It is a good position to be in if you are not sure what the bigger picture will be.

·         Page 11 of the draft accounts – regarding net borrowing. Paul Reddaway (Head of Finance Pensions Investments) clarified that this is quite well explained in the Capital outturn report. It means that borrowing is increasing after Finance consider the investments the Council holds. As a Council, borrowing has gone up. The Council now has an ambitious capital programme and in year, it uses the money it has got to help support cash flow and as that runs out the Council borrows more money. This is a planned thing and is in line with the Council’s published capital programme. It had been a good time to borrow because interest rates over the last quarter had fallen.

·         Page 14 of the draft accounts – regarding the reduction of the Council’s carbon footprint. Matt Bowmer (Interim Director of Finance) clarified that this was in relation to the £8m vehicle replacement spend. So, if the Council are replacing older polluting vehicles to more modern ones, then there would be a reduction in the Council’s carbon footprint. He was not sure whether this could necessarily be articulated.

·         Page 20 of the draft accounts – Paragraph 1.27 is explained under paragraph 1.26 at the bottom of page 31 of the report.

·         Page 26 of the draft accounts – regarding a revaluation loss. Tim Harlock clarified that 5 years ago, property prices were going up by 5% a year. That valuation upwards goes into the revaluation reserve. But, now some property values are starting to go down, therefore if property values go down the first place the Council would take cash from would be the revaluation reserve.

·         Page 48 of the draft accounts – regarding credit risk exposure. Paul Reddaway clarified that it means that the Council holds more cash deposits at the end of the year. The increase of the credit risk exposure, from £15m to £37.7m is because the Council had borrowed £15m on the 28 March 2019 and has been put into the short-term cash account.

·         Page 49 of the draft accounts – regarding Trade and Lease receivables. Officers clarified that this meant sundry debts. The point of the table was to show how old debts profiles are.

·         Page 69 of the draft accounts – regarding the Council’s companies and their expected savings for the Council. Tim Harlock clarified that at this stage these were the Council’s accounts rather than the companies accounts. So potentially, officers could add some wording to the narrative report about savings. Councillor Leaver’s comments that this could not be done unless the losses or gains are calculated as a result of those entities and then it would be auditable. Page 69 of the report details one of the subsidiaries as Energetik (LVHN) and should be Lee Valley Heat Network (Energetik).

·         Page 72 of the draft accounts – regarding streetlighting, electric charging points and considered cost. Fay Hammond clarified that the council has a project to replace to LED lighting and would be approaching the Director of Environment & Operational Services about this. Fay Hammond would get back to the committee regarding this question.

ACTION – Fay Hammond (Acting Executive Director Resources).

·         Page 85 (point 8) of the draft accounts – regarding ‘Contribution from Pensions Reserve’ and what this was about. Tim Harlock clarified that the CIS (comprehensive income and expenditure statement) plus the MIRS (movement in reserves statement) equalled the general fund balance. This was an instance where IAS19 dictates that we have to put certain costs in to the CIS and then we switch them out in the MIRS adjustment. The CIS is the equivalent of profit and loss in the private sector. But in local government the CIS has to be presented in the same was as the private sector.

·         Pages 87 & 88 of the draft accounts – What is impairment of debt. Tim Harlock clarified that this was an allowance for debt that the Council doesn’t think will be collected i.e. Council tax.

In response to members concern regarding council tax debt, officers clarified that they are taken to court. There is a lot of legislation around council tax recovery and a duty on the council to try and recover all of it as it impacts on the council’s other services i.e. funding.

7.    Officers further clarified some of Councillor Gunawardena’s questions with the following actions generated:

·         Question 15, bullet point 3 regarding Red Lion Homes. Fay Hammond would enlarge upon bullet point 3 and e-mail the response to the Committee.

·         Questions 17 & 18 – Councillor Gunawardena felt that without knowing the targets for eliminating homelessness and temporary housing, it was difficult to know what is being audited and how the council is performing against the most important issues it is facing. Fay Hammond’s response that officers can provide this feedback to Sarah Cary (Executive Director Place) as part of the process and that she has heard your thoughts and comments on this.

ACTION – Fay Hammond (Acting Executive Director Resources).

8.    Fay Hammond thanks members for reading the report and for providing this level of scrutiny as it had been very thorough.  

Supporting documents: