To note the draft, unaudited Statement of Accounts for 2023/24. 

The Head of Strategic Finance (HSF) presented the 2023/24 Draft Statement of Accounts, the key points included:

·       The accounts had been prepared in accordance with the International Financial Reporting Standards (IFRS) and our compliant with the Chartered Institute of Public Finance and Accountancy (CIPFA) code of Practice.

·       Herefordshire Council were amongst a small group of unitary authorities that had published the Draft Statement of Accounts in accordance with the statutory deadline of 31 May 2023 which presents the position and performance of the Council for the year ended 31st of March 2024.

·       The financial outturn position for 2023/24 as reported to cabinet on the 16th of May, was an overspend of £8.7 million.

·       81% of the council’s land and building assets had been revalued in the year through external valuers in line with the councils rolling programme.

·       100% of investment assets had been valued in the year which was a requirement by international standards.

·       The accounts would now be subject to external audit testing. It was noted that additional resource had been identified by the external auditors and the audit had started three weeks earlier than anticipated and would hopefully support a timely audit opinion to be brought to this committee in September in line with the statutory audit deadline. 

On behalf of the committee, the Chairperson thanked the officers involved for the efficient preparation of the Draft Statement of Accounts.

In response to committee questions, it was noted

1.          The HSF explained the process and procedures for valuing council properties.

2.              The Cabinet member for Finance and Corporate Services (CMFCS) advised the committee that an improvement recommendation had already been put forward to include the value of 100% in each case against the gross funding and income 2023/24 and gross expenditure 2023/24 pie charts as detailed on page 60. An explanation of the correlation between the two pie charts would also be provided.

3.              It was explained that the purpose of the narrative report on page 58 is considered best practice to provide background for the user of the accounts of the Council and its operations throughout the year including its leadership and political structure.

4.              The HSF explained that the high risk areas are those which are subject to volatility throughout the year and by reference to last year's outturn report, those areas where there were significant budget variances are looked at and informs the allocation of the councils resources and reporting of risk through the monthly financial monitoring.

5.              The HSF would provide the committee with a written explanation of the decrease in Surplus/ deficit on the provision of services as recorded at 32.6m in 2022/23 to 7m in 2023/24.

6.              The CMFCS explained each cabinet member had taken ownership of their own portfolios to work with officers to highlight any areas they think could be cut in order to make savings. 

7.              The movement in unusable reserves as referred to on page 115 were explained.

8.              The HSF explained that there is an accounting standard that governs the classification of council assets. Property, plant and equipment represents the council’s operational assets and property for rental income purposes are classified as Investment property. 

9.              The HSF in relation to pooled budgets as referred to on page 92, would provide the committee with a written explanation of how the consolidated children’s services budget of 1.5m is funded.

10.           The HSF would provide the committee with a full breakdown of where the £8.7m overspend was funded from.

11.          The CMFCS confirmed that the general reserves had been maintained and it was their plan that they would continue to increase this year to an even better position.

12.          In order to mitigate negative public perception, a simplified set of statements had been published this year alongside the statutory document which was hoped would provide a more user friendly document, alerting users and residents to a snapshot of the Council's position and performance.

RESOLVED

That:

a)    The Audit and Governance Committee noted, and commented on the draft, unaudited Statement of Accounts for 2023/24.

Action(s)

2023/24-029 The HSF to provide the committee with a written explanation of the decrease in Surplus/ deficit on the provision of services as recorded at 32.6m in 2022/23 to 7m in 2023/24.

2023/24-030 The HSF to provide the committee with a full breakdown of where the funding came from to cover the council’s overspend of £8.7m