To note the draft, unaudited Statement of Accounts for 2025/26.

The Head of Strategic Finance introduced the draft Statement of Accounts for 2025–26, highlighting the significant work completed by the finance team. The following principal were noted;

1.     The accounts were published early (29 May), ahead of the statutory deadline (30 June), and the audit had already begun.

2.     The aim was to complete the audit and approve final accounts by 29 September, earlier than the statutory deadline (31 January 2027).

3.     The Comprehensive Income and Expenditure Statement showed a £0.9m deficit, due to technical accounting adjustments (e.g. asset revaluations, pension liabilities), despite a balanced outturn in management accounts.

4.     The Balance Sheet showed net assets of £614.9m, general fund reserves of £10.1m (unchanged) and earmarked reserves of £70.9m.

5.     A two-page summary had been included to make the accounts more accessible to non-specialists.

On behalf of the committee, the chair offered his congratulations to the Director of Finance and her wider team for their achievements.

In response to committee questions, it was noted:

1. Comments about government funding pressures were acknowledged, but it was confirmed the document should remain non-political, focusing on factual reporting rather than attributing causes.
2. Regarding the Dedicated Schools Grant (DSG), a SEND reform plan was being submitted to government and if approved, the council could receive funding to cover 90% of the DSG deficit, significantly improving finances. The remaining 10% would be managed over time, with a clear repayment strategy in place.
3. A lack of detailed information regarding the £5.7m Central Treasury Management variance was noted, particularly in relation to investment and contractual income. It was explained that the accounts are required to follow a prescribed format, which does not permit the inclusion of this level of detail which and could be found in separate reports (e.g. cabinet outturn reports).
4. Concerns about external consultants for transformation were met with assurance that there will be strong internal governance and challenge. External input will be used selectively to provide additional ideas and expertise, not dictate solutions.
5. Changes in reserves were clarified as classification/interpretation issues (e.g. school reserves) rather than unexplained losses.
6. Officers would review and clarify the wording to better explain how reserves relate to insurance risks. (Page 83 – Narrative Report)  Action 2026/27-6
7. Capital expenditure and grants figures are explained through technical accounting treatments, with full detail in supporting notes and subject to audit.
8. Questions on treasury management and borrowing confirmed, decisions were actively managed, supported by advisors, and aligned with the approved strategy.
9. The transition from Balfour Beatty to M Group did not offer a direct cost saving, but a move to better value for money and improved service delivery.
10. Reserves are used to manage specific financial risks (e.g. insurance excesses) and are clearly tracked and reviewed.
11. It was explained that loss on disposal of non-current assets mainly arose from, academy school transfers (no proceeds) or asset disposals (e.g. vehicles, property).
12. REFCUS was explained as revenue expenditure funded from capital, e.g. grants spent on residents’ homes where no asset is retained by the council.
13. PFI arrangements for Whitecross School remained the Council’s responsibility, with a formal review planned ahead of contract expiry (approx. 5 years remaining).  It was acknowledged that risks can arise from factors such as supplier failure or asset transfer liabilities, but these were being actively assessed as part of forward planning and contract review.
14. Potential financial impacts of El Niño and climate change were queried and explained that no precise cost were forecast but risks were recognised and managed within existing financial planning.
15. It was clarified that Enterprise Zone income related to retained business rates, with incentives provided to businesses to support economic growth.
16. Significant capital delivery and financial management improvements were noted as positive outcomes.
17. The format and content of the accounts are prescribed by accounting standards (CIPFA Code), limiting flexibility in presentation. Ongoing work at a national level (CIPFA’s Better Reporting Group) is seeking to improve clarity and accessibility of local authority financial reporting, with a focus on user needs. The terms of reference of this group would be circulated to members. Action 2026/27-7

The committee acknowledged the finance teams award for most improved financial reporting and the Director of finance offered her thanks to her team for the preparation of the accounts and the significant work undertaken by them.

The report was noted.