Agenda item

Purpose: To provide Members with the final copy of the Council’s Financial Statements.

(David Holling left the meeting at 5.25pm)

The Committee considered a report (Agenda Item 6) concerning the West Berkshire Council Financial Statements for 2014/15.

The s151 Officer had approved the draft Financial Statements in June 2015 and these had been published online. KPMG had completed their audit and had issued an unqualified opinion of the Financial Statements which was featured in the to-follow pack.

The Governance and Ethics Committee were required to approve, or not, the Financial Statements for the audit to be finalised and the accounts closed for the 2014/15 financial year by the 30 September 2015.

Councillor Webb advised that this item was connected to the External Audit Plan which was adopted in April 2014 and identified that one of the key issues was the corporate risk register (which had just been added to the Forward Plan for discussion). Referring to the significant audit risk identified by KPMG on page 7 of the to-follow pack, Councillor Webb enquired whether KPMG had written to schools in order to verify ownership. Ian Pennington advised that they had not as an alternative procedure was used to search the title deeds available within the Council. Ian Pennington clarified that it was the Council’s responsibility, and not the Accountancy department specifically, to demonstrate a review had been undertaken on the legal titles of all school assets.

Councillor Bridgman expressed the view that the report was in danger of being self-congratulatory and due to its importance, would have liked more time to consider the report. Councillor Bridgman had identified some formatting errors and felt more attention to detail was required due to the report being in the public arena. He sought clarification on whether Newbury and Thatcham were referred to as one urban area or two and considered that the two towns had discrete features.

Councillor Bridgman referring to page 37, asked why short term borrowing was necessary if the Council had surplus cash. Andy Walker advised that whilst the Council’s net balance over the year was positive, there were peaks and troughs in cash flow so there might be short term borrowing of funds to meet a liability. He brought Members’ attention to the Treasury Management Report that was due to be presented to the Executive on 10 September 2015 which would offer further clarification.

Councillor Bridgman identified references within the report to the Governance and Audit Committee and requested that a note be inserted which recorded that the Governance and Audit Committee had been merged with the Standards Committee to create the Governance and Ethics Committee in July 2015. He also identified a typographical error on one of the report headers which should read ‘Core Financial Statements’.

Councillor Cole observed that there appeared to be a large pension deficit and asked for further explanation. Ian Pennington explained how the pension deficit was calculated and the low likelihood of the Council’s risk materialising in respect to the pension deficit; he provided assurance that the figures were calculated in the correct way. Councillor Cole said that he felt a pension deficit figure of £250m warranted further examination. Councillor Webb advised Members that the Committee’s role was not to scrutinise the figures but to approve the methods used in creating the Financial Statements 2014/15 as there was a Pension Group which managed the scheme. Councillor Webb noted that it was an unlikely scenario that the Council’s pension liability would have to be met all at the same time as not all members of the pension scheme were of pensionable age. The Pension Group would ensure the scheme evolved with the needs over the following 15 to 20 years.

Councillor Rick Jones noted the difference between the pension liability in 2013/14 and 2014/15. Ian Pennington advised that this was due to interest rates. Councillor Cole commented that views regarding life expectancy changed constantly. Ian Pennington advised that the Council’s position was not unusual.

It was identified that the Annual Governance Statement included in the body of the report was from 2013/14 and would be updated once the Annual Governance Statement 2014/15 had been approved later in the meeting. Councillor Bridgman suggested that the Annual Governance Statement be excluded from the report if it was not the correct version.

A number of formatting and grammatical corrections were identified.

Councillor Cole sought clarification on whether the asset value of £5k on page 54 referred to the item price or package price and said that he was specifically thinking about IT equipment. Andy Walker explained that IT equipment had a 5 year asset life and the package price was calculated.

(Barry Dickens left the meeting at 5.50pm.)

Councillor Cole made an enquiry regarding the Self Insurance Fund, in particular the ex-Berkshire County Council Liabilities figure on page 87. Ian Priestley advised that payments were still being made to Municipal Mutual Insurance Ltd for Berkshire County Council liabilities.

Councillor Bridgman gave his thanks to KPMG for producing a report which was straight forward and clear. Councillor Webb gave his thanks to Andy Walker and his team for producing an accurate report of the Council’s Financial Statements for 2014/15.

RESOLVED that the Financial Statements 2014/15 be approved.