Agenda item

Presentation by Head of Finance

It was confirmed that Committee members received a copy of the Draft Financial Accounts and the Head of Finance was hoping to get more comments and feedback from the Committee. It was planned to have it signed off by Monday 10 June 2019 at the latest.

It was commented that in a couple of areas there were formatting issues. 

The Committee was then shown a presentation which informed the Committee of the main aspects of the accounts. 

Main points:

-The Group accounts were prepared in addition to the single entity accounts 

-The Council finished the year with a £2.4m underspend.

-The Social Care and Special Education Needs budgets overspent significantly at almost £5m.

-The Council’s total usable reserves decreased by £1.7m in year from £104.3m to £103.0m total usable reserves.

- In relation to Capital reserves, General reserves had been maintained at £6.5m which was the minimum required.

-The Movements in Reserves statement summarises the Council’s reserves in the CIES (Comprehensive Income and Expenditure Statement) held by the Council.

-The Cash Flow statement shows the movements in cash and cash equivalents of the Council. For 2018/19 there was a deficit on provision of services of £53.5m which was quite different to the £21.4m surplus for 2017/18 which was reported to Cabinet.

There were a number of Contingent Liabilities identified as at 31 March 2019; MMI Insurances, Newport City Homes etc.

Questions:

Members of the Committee were invited to make comments on the Statement. 

The Chair recommended that the Annual Governance Statement needed to be shortened which was noted.

A Member asked how it compared to the previous financial year and the Head of Finance confirmed that the process had gone well and was completed a week faster than last year and Finance completed their work quickly. 

A Member commented on the accounts that needed to be signed off by 31^st March at year end and whether anything could be done to speed up delivery. It was commented that Audit would have to change processes, like the risk conversation earlier. It was stated that it could be delivered if the timescale was 12 months.

It was commented on the implementations of cash flow for contractors and that it would not impact on finance work but would impact on invoices etc.

The Chair commented on page 80 of the accounts report for the figure of 755; the drainage board did not exist anymore and also page 90 of the report used the terms ‘hardcore’ and ‘topslice’ and the meaning of this was questioned. Plainer English in reports was requested by the Chair.

The Chair commented that consistency was required all the way through the report as there were formatting issues where the gains and losses bracket was inverse and surplus was shown as a bracketed term, as a gain could be a positive number.

The Chair also stated that it felt like the report was written as though a person was talking rather than it being a factual document. On page 8 the Chair commented on the diagram and that it should have short abbreviations and it was felt there was a lack of information.

Head of Finance agreed that a more factual report was needed and the Chair recommended that a sentence should be taken out or an explanation was needed instead

The Funding of the Net Expenditure budget on page 49 of the report was referred to and the £2.4 m underspend was commented on and how this was filtering though needed clarity.

The Head of Finance stated that the underspend would be transferred to reserves. It was hoped that the report was accessible to any reader of the narrative that was not from an accounting perspective.

In relation to Contingent liabilities on section 43, in relation to MMI insurances the Chair questioned the 15% levy in March 2016 and it was agreed that this paragraph needed to be reworked and that the Provisions note also needed to be looked at.

The Chair questioned the £29m capital spend and whether this amounted to a 50% slippage and whether there was a problem there. The Head of Finance confirmed there was a 50% slippage and that the Capital Programme needed to be looked at and some realism needed to be put into budgeting and this comment was appropriate and correct by the Chair. Work with managers needed to continue and the programmes phasing needed to be updated as it could not be correct if there was slippage. Was it that the resources were not delivering or was it bad management?

It was commented that Newport City Council was not unique in this, the main areas such as Schools were on Band B and the big individual projects eg new schools would be raised with colleagues.

IFRS 9 has had an impact which meant a reinstated balance sheet.

IFRS 15 had no material impact.

The Chair gave thanks to everyone in the accounts department for their hard work.

No specific actions were identified, and Audit Committee members were requested to come back to the Finance team with any comments.

The Assistant Head of Finance confirmed other colleagues had been spoken to and on the 31 May deadline the draft accounts were brought to Audit for information and was signed off by Head of Service.