Agenda item

A report by Ellie Stacey, Deputy Chief Finance Officer (Corporate), PSPS Ltd

The Deputy Chief Finance Officer (Corporate) presented the unaudited Financial Statements 2020/21, including the Annual Governance Statement, attached to the report at Appendix A, for the Committee’s consideration in accordance with the Council’s good practice. 

The Accounts and Audit Regulations 2015 required that the Responsible Finance Officer (Section 151 Officer) signed the unaudited Financial Statements no later than 31 May each year and that the Financial Statements be considered and approved by a committee of the Council no later than 31 July each year. 

However, due to the Coronavirus Pandemic, the regulations had been amended for 2020/21.  The Accounts and Audit (Coronavirus) Amendments Regulation 2020 (SI 2021/263) required that the Section 151 Officer signed the unaudited Financial Statements no later than 1 August 2021 and that they be considered and approved, including the Annual Governance Statement, by a committee of the Council no later than 30 September 2021.  The Section 151 Officer had formally approved the unaudited Financial Statements for publication in line with the statutory deadline of 1 August 2021.

The Financial Statements 2020/21 production was complete and had been prepared in accordance with the Code of Practice and the Council’s accounting policies.  The unaudited version of shown at Appendix A included the Comprehensive Income and Expenditure Statement, Movement in Reserves Statement, and Balance Sheet as at 31 March 2021, along with the Annual Governance Statement.

The Deputy Chief Finance Officer went through the narrative and key points of the statements in some detail.

The net worth of the Council, as shown in the Balance Sheet, had decreased by £8.461m and the Comprehensive Income and Expenditure Statement reflected this.  The main reasons were set out in paragraph 1.7 of the report. 

The major changes in the Balance Sheet at the year-end, considered significant enough to warrant specific reference, were:

·                An increase of £9.0m in Short-term Creditors, mainly due to Covid grants received in 2020/21 but not yet paid out to businesses, therefore ‘owed’ to Central Government at the year end, and also due to Section 31 Grant relating to Business Rates, where Central Government and Lincolnshire County Council’s shares were also paid to Boston Borough Council to assist with cash flow in year, and is therefore due to be paid back at year end.

·                An increase of £8.5m in Short-term Debtors, mainly due to the accounting entries associated with the resulting deficits on the Council Tax and Business Rates Collection Fund at 31 March 2021. The debtor balances were the net positions attributable from Lincolnshire County Council, Lincolnshire Police Authority and Central Government on the Collection Fund.

·                The Actuary’s assessment of the Council’s net Pension Liability increased by £9.4m, as a result of changes in demographic and financial assumptions.

It was noted that updated pensions reports had been requested following notification from Lincolnshire County Council regarding some updated asset valuations.

The audit by Mazars LLP commenced on 16 August 2021 and was in progress, though work was taking longer because it was being carried out remotely.  Officers met weekly with Mazars and were working to respond to queries and provide information as requests were received.  It was expected that there might be changes to the financial statements and these would be highlighted when the audited statements were presented to the Committee.  It was intended to present the Financial Statements to the Committee for approval on 8^th November.

The Deputy Chief Finance Officer then clarified some issues in response to questions raised.  The difference of £22m in “Other service expenses” compared to the previous year, as shown in Section 14 of the statements, was due to accounting for some of the Covid-19 grants that the Council had issued.  An update had been requested regarding the withheld repayments of the Council’s fixed term loan, which would be reported back to Members.

Members accepted an offer from the Deputy Chief Finance Officer to hold a briefing to go through the financial statements in more detail to aid understanding.

Members went on to discuss the poor sound quality of the venue, particularly with respect to virtual attendees, who were asked to attend in person in future if possible.  In order to accommodate this, it was suggested that the next meeting be held at Boston United’s conference centre.