To consider a summary of key changes in the Statement of Accounts for 2014/15 and internal procedures for producing the Statement of Accounts.

The Committee considered a report which summarised the key changes in the Statement of Accounts for 2014/15 and internal procedures for producing the Statement of Accounts.

The meeting noted in particular the change in the 2014/15 CIPFA Code of Practice which related to accounting for schools and meant that the income, expenditure, assets and liabilities of all maintained schools were required to be consolidated within local authorities’ accounts.  Members were advised that the Council’s valuations teams had been assessing school buildings within Central Bedfordshire to derive values and bring these assets on to the Council’s books during the current financial year.  It was expected that these assets would have a significant impact on the value of the assets held on the Council’s balance sheet.  However, and in response to a query by the Chairman, the Financial Controller explained that there would be no impact on local taxpayers as the required accounting entries ensured that there was no impact on the General Fund.  In response to a further query regarding whether the increase in asset value would enable greater levels of borrowing the Chief Finance Officer explained that, unlike the private sector, the Council’s borrowing capacity was determined through the use of prudential indicators and decisions in respect of financing capital expenditure.  Changes in asset valuations and recognition of additional assets such as Foundation schools would not influence the Council’s borrowing limits.

A Member referred to the Local Audit and Accountability Act 2014, which included updates to the Accounts and Audit Regulations 2011, and to the proposed changes to the deadlines for publication of councils’ Statements of Accounts.  Under the proposals the Chief Finance Officer would sign the draft accounts by 31 May (currently 30 June) and the audited accounts would have to be approved by the Audit Committee by 31 July (currently 30 September).  If the changes proceeded it was anticipated that they would be implemented from the 2017/18 financial year.  In response to the Member’s query the Chief Finance Officer stated that it would be difficult to meet the 31 May deadline without closing some accounts on the basis of estimates.  Consideration would therefore be given to the use of more estimates (following consultation with External Audit).  However, he indicated that a greater difficulty lay in auditing the accounts by 31 July as this represented a reduction of two months over the current deadline.  Further, the problem would be compounded by the absence of any flexibility, as all local authorities would be required to meet the same timescales, and this would generate difficulties for the relatively small number of external auditors to complete their work on time.

The Ernst & Young LLP Manager stated that the four largest external auditors had all made representations against the proposal because the rescheduling of local authority work would lead to an overlap with the auditing of Health Service accounts.  She added that, whilst no final decision had been taken on the proposal, she was of the opinion that it would be introduced and would, as a result, necessitate a change in the way the company undertook its auditing of council accounts, probably by undertaking the audit of month 12 accounts within the month (March) itself.  With regard to the impact on the External Audit fees charged she stated that these would remain unaltered as only the timescales would change.

The Chief Finance Officer assured the Committee that the Council’s officers would work in full co-operation with Ernst & Young, as the appointed External Auditor, to establish when it was acceptable to make use of estimates within the accounts and the process for reflecting the inevitable adjustments in the following financial year.

In conclusion the Committee expressed its dissatisfaction with the changes proposed to the audit deadlines by the Secretary of State as it was felt these would be disadvantageous to local authorities.

NOTED

the key changes in the Statements of Accounts for 2014/15 and internal procedures for producing the Statement of Accounts.

RESOLVED

1          that an interactive presentation on the unaudited accounts for 2014/15 be made to the Audit Committee at its meeting in June 2015;

2          that all members of the Council be invited to attend the above presentation.