Agenda item

Report by Chief Financial Officer (attached)

Chair of the Governance Committee to report the recommendations of the Governance Committee held on 26 September 2022 (to follow).


Council considered a report by the Chief Financial Officer (circulated previously) regarding the Statement of Accounts for 2021/22.


The Director of Resources and Deputy Chief Executive advised that:


o   The draft Statement of Accounts for year ended 31 March 2022 had been signed by the Chief Financial Officer on 5 July 2022.

o   Previously the final date for the audited accounts to be published was 31 July (used to be 30 September).  This year the target date had been extended to 30 November 2022.

o   External Audit of Accounts – the audit of financial statements had taken place through July/August 2022 and was being concluded through September. The Audit Findings Report was presented to the Governance Committee on 26 September 2022 and reported an Unqualified Opinion on Financial Statements.  Two recommendations following Key Findings had been accepted by management and responses built into the Action Plan.  The accounts were required to be formally signed off at Full Council on 28 September 2022.

o   Narrative report (pages 26 to 36) set out the challenges the Council face, how the Council aim to meet those challenges (MTFP) and reviews the last financial year 2021-22.

o   The Council had originally budgeted to spend £13.639m in 2021-22. As at 31 December 2021, the Council was forecasting a net surplus of £89,000 against the budget.

o   The last quarter of the financial year had seen some favourable variances since the last reported position; most notably additional recycling sales income and reduced spend in the Waste and Recycling service, together with general employee vacancy savings.

o   It was pleasing to report that the final out turn position was a budget surplus of (£604,000) against original budget, which was an overall movement of (£515,000) from the last forecast at quarter 3.  The table on pages 30 and 31 detailed the main variances.

o   The options for balances (£604k) surplus included:

·       £400,000 Repairs Fund reserve – to fund capital investment business cases

·       £100,000 Local Plan reserve – to increase fund available to over the cost of the Local review

·       £104,000 Budget Management reserve – increase the fund available to help mitigate inflationary pressures in 2022-23 financial year

·       Members approved in June 2021 to proceed with the acquisition of Green Lanes Shopping Centre; for which the Council completed the purchase in November 2021.  The purchase of Green Lanes Shopping Centre was a once in a lifetime opportunity to acquire this strategic asset and complement other significant regeneration improvements being delivered within the Barnstaple town centre through the Future High Streets project.  The financial modelling demonstrated that revenue income generated from the centre would cover both the repayment of the loan and asset management costs and would return a contribution to the Council which could be used towards mitigating future risks on income volatility, investment back into the centre and the overarching council budget.

·       The financial outturn from the Centre produced a net return (income less costs) for the 2021/22 year of (£243,600) due to minimal borrowing costs for last financial year as these will start in 2022/23.  This was a positive return for the Council for the four and half months ownership in the 2021/22 year.  The net return to the Council of (£243,600); of this it was proposed to place £75,000 into an earmarked reserve to protect the council budget and mitigate against any future income volatility that could materialise as the Council move forwards with the centre and a further £168,600 into an earmarked reserve to fund future asset management initiatives to promote, market and maximise the occupancy of the Centre over the next few years, which the Council anticipated would then have a positive financial return on ongoing revenue streams.

·       This was important for the ongoing financial viability of the Centre, however the team have already made positive steps in filling five of the empty units in the last few months and the Director of Resources read out some recent feedback received from Knight Frank (Commercial Property Specialists) to the North Devon Council team which stated “As we discussed our involvement with Green Lanes is long standing.  Prior to your purchase I have to say that the level of voids within the scheme provided a fairly depressing experience however on my most recent visit the overall feel of the scheme had changed with the recent lettings which have been undertaken both improving occupancy levels but also improving the customer ‘experience’ within the scheme”.  This was really positive feedback for the Council and demonstrated the Council’s intent to make the Centre a success, both operationally and financially.

·       As at 31st March 2022 the Collection Fund reserve balance held was £5,722,000. This earmarked reserve was created to deal with the timing impacts of the Collection Fund (Business Rates), which ensured the revenue budget was not unduly affected in the year the taxes were collected. Collection Fund deficits/surpluses were reversed out to bring the revenue account back to the budgeted figure for the year; the deficits/surpluses were recovered/distributed in the following financial years.

·       This reserve included an £4,523,000 balance that would be utilised in 2022/23 and 2023/24 to mitigate timing differences of business rate reliefs awarded in 2021/22 that from an accounting perspective impact over the next two financial years; thus leaving the Collection Fund reserve with a residue balance of £1,200,000 protection against future volatility.

·       The main statements as detailed on pages 43 to 49. The Comprehensive Income and Expenditure Statement included a number of “non cash” accounting entries that were subsequently reversed out and had no impact on the Council Tax payer.

o   The recommended level of general fund balance was 5%-10% of the Council’s net revenue budget. It was pleasing to report that the combination of in year measures and robust budget management saw the Council through the financial pressures and resulted in a general fund reserve balance at 31 March 2022 of £1,211,000, which was a level of 8.9%.  The movement in Reserves Statement was detailed on page 87.

o   The Medium Term Financial Strategy 2022-2028 (pages 27 to 29) was refreshed annually and through the service planning process in 2022-23.  The refreshed forecasted cumulative budget gap / (surplus) for 2022-23 to 2027-28 was detailed on page 28.

o   The Key Performance Indicators (pages 37 to 41) as reported in Q4 Performance and Financial Management report to Strategy and Resources on 4 July 2022.

o   The Balance Sheet indicated the Councils total net worth was £47m.

o   The value of the Councils long term assets had increased from £98m as at 31st March 2021 to £121m as at 31st March 2022.

o   The Council’s long term borrowing had increased from £501,000 as at 31st March 2021 to £3m as at 31st March 2022.

o   The Council’s Defined Benefit Pension Scheme Liability had decreased from £71m as at 31st March 2021 to £64m as at 31st March 2022 and there was a note related to the breakdown of the figures on pages 107 to 112 of the report.

o   The cash flow statement and collection fund information was detailed on pages 47 to 49 of the report.

o   Pages 50 to 69 of the report detailing the accounting policies for which there were no material changes.

o   The notes to the accounts were detailed on pages 70 to 119 and provided a breakdown of the accounts figures

o   Pages 120 to 126 detailed the draft auditor’s report, which gave an unqualified opinion on the financial statements


Councillor Walker reported the recommendations of the Governance Committee held on 26 September 2022 (circulated previously) and thanked the Director of Resources and Deputy Chief Executive and his team for a comprehensive report.


It was moved by Councillor Walker and seconded by Councillor Lofthouse “that the Statement of Accounts 2021-22 be approved, and that the Chair of the Council sign and date the Statement of Accounts as required by the Accounts and Audit Regulations.”


RESOLVED that the Statement of Accounts 2021-22 be approved, and that the Chair of the Council sign and date the Statement of Accounts as required by the Accounts and Audit Regulations.

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