Agenda item

A verbal update by Ellie Stacey, Deputy Chief Finance Officer (Corporate)

The Deputy Chief Finance Officer (Corporate) gave a verbal update on the progress of the audit of the Council’s Financial Statements for 2020/21 as follows.

The external audit of Boston BC’s Financial Statements for 20/21 was still in its early stages.

External auditors were due to commence Boston audit work again from week commencing 22^nd November for 2 weeks.  Throughout this audit work, the officer would ensure their audit queries and requests were dealt with as a priority in order that this work could be progressed quickly.

Confirmation was given at the last meeting when the draft Financial Statements were presented that the Committee would receive be updated on any changes that were made during the review and audit process. There were four changes currently being made to the accounts to bring to the Committee’s attention, which were briefly referred to at the last meeting.

1.    An updated pensions report had now been received from the actuary. Officers were informed by LCC that there were some updated asset valuations that were not included in the first set of pension reports, due to the timing of this information being available – this was an item that affected many local authorities throughout Lincolnshire and wider, not just Boston.  In Boston’s report, this was a £1.2m increase in the closing fair value of pension fund assets,which reduced the net pensions liability by this same figure. This reduced the net pensions liability in the Balance Sheetoffset against the pensions reserve so effectively increased the net worth of the Council by this value. There was no impact on the General Fund outturn due to these accounting entries being reversed in the Movement in Reserves Statement under statutory accounting requirements.

2.    The amount owing to East Lindsey District Council (ELDC) by Boston regarding Strategic Alliance arrangements at the year-end was reduced by £42,000 as a result of a full review of the recharges between each authority. This was not material but was adjusted for completeness, and this was a favourable movement of £42,000 on the outturn report and on the Comprehensive Income and Expenditure Statement, and reduced the creditor to ELDC in the Balance Sheet at the year-end. This adjustment had been reviewed and approved by the new S151 Officer.

3.    Business Rates Levy – as discussed at the previous meeting, LG Futures were engaged to review the bad debt provision of the Collection Fund and an additional amount was set aside for the potential irrecoverable business rates debts. This did increase the Business Rates deficit, but additional Tax Income Guarantee income was received. As a result, the Business Rates levy payable to the pool increased by £128,000.

4.    Finally, officers had undertaken a review of the treatment of the grants relating to Covid and had identified £166,000 of New Burdens funding incorrectly classified on the working papers.  It had been put it into creditors on the Balance Sheet at year-end, effectively owing back to Central Government, where it should have been put into reserves as it was for the Council to decide how to utilise this money in administering the grants. This reduced the creditors on the Balance Sheet at year-end by £166,000 and increased usable reserves.

Taking these adjustments into account in total, the General Fund outturn position was improved by £80,000. This was proposed to be transferred to the Covid budget pressures smoothing reserve as part of the outturn report, being presented to Cabinet in December.

Whilst every effort was taken to ensure the draft financial statements were as accurate as possible at the time of publishing, they were 95 pages long and it was often the case that upon further review, officers find items that need adjusting. It was much more preferable that officer found these items before the auditors, in order that they could be transparent and ensure the required adjustments were made.

The General Ledger had been updated with these entries, and full working papers containing an audit trail of these changes and the notes they impact on in the accounts was currently in progress, this would be finalised this week. Officers were not aware of any further changes at this point in time, but they would inform the Committee of any further amendments when the audited Financial Statements were presented for approval. It was aimed to present these to the Committee in January, subject to no significant issues arising during the audit, and subject to no further delays regarding audit work.

Officers were in the process of arranging a training session on the Financial Statements, which would hopefully keep the document fresh in the Committee’s mind ready for the meeting where Members would be asked to consider and approve the final version of the audited Financial Statements, hopefully in January.