To approve the 2019/20 statement of accounts and associated letter of representation to Grant Thornton, the external auditors.

The committee considered the 2019/20 statement of accounts and associated letter of representation to Grant Thornton, the external auditors.

The head of corporate finance presented the report, the principal points included: the position with the delivery of an overall underspend in 2019/20 of £0.6m and the increase in the general reserve balance to £9.1m; the increase in earmarked reserves due to the allocation of grant funding from central government due to the Covid 19 pandemic; and asset valuations were reported as being subject to ‘material valuation uncertainty’ as a precaution to reflect the potential impact of the pandemic on the economy.

Questions and comments were invited from committee members and responses were provided, the principal points included:

1.         With reference made to the ‘legal implications’ section of the report (agenda page 67), it was requested that all dates include the relevant year.

2.         There was a discussion about revaluations in terms of property, plant and equipment.  Jon Roberts, engagement lead for Grant Thornton, advised that International Standard on Audit (UK) 540 (revised) would require the committee to have a full understanding of the estimation processes that the council had followed and auditors would be undertaking more work in this area.  The chairperson noted the need for training to be arranged for committee members.

3.         In response to questions, the chief finance officer: acknowledged the underspend in adults and communities and commented on the challenges associated with balancing the budget to the penny for services which were dependent on people’s needs; noted that the outturn had been reported to cabinet on 25 June 2020 (minute 157 refers); and confirmed that the allocation of the budget, including the adult social care precept, was agreed by Council.

4.         In response to a question on ‘Herefordshire’s proportion of the net deficit on the Worcestershire County Council Pension Fund as at 31 March 2020 is £259.5m’ (agenda page 79), the chief finance officer provided an overview of the position with the pension fund.  The chairperson noted the public availability of the minutes of the Pensions Committee (note: at the time of publication, these can be found via the following link: https://worcestershire.moderngov.co.uk/ieListMeetings.aspx?CommitteeId=391).

5.         There was a further discussion about the treatment of valuations in the accounts and the possible impact of the pandemic on land and property prices.

6.         With reference made to the ‘1.3 Borrowing Costs’ section in the statement of accounts (agenda page 92), it was questioned whether ‘at least £10k of annual interest cost’ for certain schemes was appropriate given current interest rates.  The chief finance officer said that this de minimis level had been in place for some time and was broadly in line with other authorities but it could be looked at.

7.         In response to a question, the chief finance officer commented on property maintenance and insurance provision.

8.         The chairperson requested further information on aged debts and the quantums involved.  Jon Roberts noted that the audit of aged debts was an important procedure and agreed to come back on this issue.

Recommendation a) was agreed unanimously.  In accordance with paragraph 4.1.141 of the Council’s constitution, a recorded vote was held on recommendation b) and this was also agreed unanimously by Councillors Bartlett, Bolderson, Bowen, Jinman, Summers and Shaw.

Resolved:  That:

a)           the 2019/20 statement of accounts, at appendix A to the report, be approved; and

b)           the letter of representation, at appendix B to the report, be signed by the chairman of the committee and the chief finance officer.