To receive a presentation on the draft Statement of Accounts for 2014/15.

Members received a presentation on the unaudited Statement of Accounts for 2014/15.  The presentation was introduced by the Chief Finance Officer and Head of Financial Control who circulated paper copies of the presentation slide pack together with copies of a document entitled ‘Unaudited Statement of Accounts – Central Bedfordshire Council 2014/15’ and copies of a document entitled ‘Core Financial Statements 2014/15 – Note 32 Remuneration’ which contained extracts from the unaudited Statement of Accounts.

A copy of the slide pack is attached at Appendix A to these minutes and a copy of the Core Financial Statements document is attached at Appendix B.  Because of its length a copy of the Unaudited Statement of Accounts is not attached as an appendix but can be accessed through the following link:

http://www.centralbedfordshire.gov.uk/council-and-democracy/spending/annual-accounts-financial-information/default.aspx

Members raised questions and sought clarification on various matters during the presentation. 

The Chief Finance Officer informed the meeting that the documents before them clearly indicated that the Council was in a strong financial position though uncertainty remained regarding future government funding and the Council’s reserves needed to be viewed in that context.

The Chief Finance Officer stated that he had signed the unaudited Statement of Accounts and would pass it to Ernst and Young LLP at the end of the meeting.  The company would carry out the audit over the summer with public inspection rights taking place between 6-31 July 2015.  The fully audited Statement of Accounts would be submitted to the meeting of the Audit Committee on 28 September 2015 for approval.

At the conclusion of the presentation a Member referred to the increase in the pension deficit as disclosed in the Statement of Accounts which, at £379.6m,  had increased by £72.5m in the year to 31 March 2015.  The Head of Financial Control explained that the Local Government Pension Scheme deficit in the Statement of Accounts was measured in line with International Accounting Standard 19 (IAS19). This IAS19 measure used the yield on bonds at the 31 March 2015 to discount the Pension Fund’s liabilities and changes in bond market yields had a significant impact on the level of estimated liabilities. Market rates of interest paid on corporate and government bonds had been in decline for many years which had increased pension scheme liabilities. Short term volatility in bond prices also meant that the calculation of liabilities could vary significantly within a short time period. The Head of Financial Control advised that, in the year ended 31 March 2015,  the change in financial assumptions to measure liabilities had increased the liabilities by £98,710m. Importantly, the actuarial calculation determining employers’ contribution rates was carried out on a different actuarial basis.

The Member suggested the possibility of finding alternative sources of investment that would secure greater returns. The Head of Financial Control explained that the Pension Fund’s investment approach was to seek an appropriate level of return that reflected both the scheme’s liabilities and risks. A later agenda item explained the approach in more detail (minute AUD/15/10 refers). 

The Member then referred to employee remuneration and the increase in the numbers below senior officer level being paid more than £50k a year.  He commented that more detailed information  and a comparison with a plc of a similar size to the Council would improve the disclosure note.  In response the Chief Finance Officer indicated  that the note included officers and  teachers and that the increase in numbers was largely related to national pay awards in the year and split broadly equally between teachers and officers.  Further, salary bands had remained unchanged for approximately 10 years so the impact of pay awards and increments  moved employees into higher remuneration bands.  The Member acknowledged the impact of annual inflation but felt that this supported the case for further data to be supplied.  He then sought further information on the number of job terminations.  In response the Chief Finance Officer referred to the information contained on page 84 of the unaudited Statement of Accounts and reminded the meeting that whilst there were initial costs for exit (redundancy) packages there were substantial ongoing savings by no longer requiring those posts.

The Chairman thanked the Chief Finance Officer and Head of Financial Control for their presentation.

NOTED

the presentation on the unaudited Statement of Accounts for 2014/15.