Agenda item

Statement of Accounts 2016-17

a)    Training Session – Understanding the Statement of Accounts by Rachel Spain, Corporate Finance Manager

 

b)    2016-17 Statement of Accounts

 

Report of Andrew Burns, Director of Finance and Resource

Minutes:

The Corporate Finance Manager delivered a presentation explaining the 2016-17 Statement of Accounts – how they are prepared, how public money has been spent in Staffordshire, the accounting concepts and principals and technicalities around the Balance Sheet.

 

The 2016-17 Statement of Accounts had been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom. The Director of Finance and Resources had prepared letters to the Auditors expressing an opinion that the accounts gave a true and fair view of the financial position of the Council and the Staffordshire Pension Fund in accordance with the appropriate rules and regulations.

 

In terms of Revenue Grant, the County Council had spent £477.8m after allowing for transfers to reserves, which was £4.7m more than had been budgeted for. The Health and Care Directorate had seen increasing pressures over recent years due to rising demographics and challenging market conditions. In addition to these pressures, the Better Care Fund income shortfall of £15m had impacted on this service area.

 

The Families and Communities Directorate ended the year with a small overspend of £0.4m, despite increasing placement costs for looked after children but these were offset by underspends in Education Services.

 

The Economy, Infrastructure and Skills Directorate achieved an overall underspend of £3.9m which has arisen from various initiatives. The underspend had been partially offset by overspend on waste tonnages and on winter maintenance.

In terms of Capital Outturn, the County Council spent grants from Government totalling £56.2m in 2015-16. £14.7m of borrowing to finance our capital spent was accounted for. The total capital spend for 2016-17 was £127.3m, compared to £84.8m in 2015-16.

 

The capital spend of £127.3m included £16.4m of revenue transformational spend which had been capitalised and funded from capital receipts generated in year, in accordance with the Capitalisation Direction issued by the Secretary of State.

 

The Balance Sheet showed that the total of assets less liabilities is £124.8 m which is a decrease of £173.8m when compared with the 2015-16 Balance Sheet. One of the main reasons for this decrease is that the value of property, plant and equipment had reduced due to the number of schools being disposed of following their conversion to academy status. Additionally there was an increase of £44.8m in the Councils share of liabilities associated with the pension fund.

 

The Balance Sheet also included a Prior Period Adjustment, required by the external auditors. This technical accounting adjustment which relates mainly to maintained schools, has not had an impact on the value which could be obtained should the assets be sold.

 

After taking account of the outturn, the General Fund Balance total was £21.0m as at 31 March 2017.  School reserves have decreased by £13.2m to £29.1m, reflecting the impact of academy conversions and schools using their reserves for specific protects or to support their revenue budgets. 

 

In 2016-17 the Pension Fund’s market value steadily increased over the year despite being impacted by volatility in global equity markets. The fund was now valued at £4,590.5m. 

 

A member asked about the reduction in school reserves and asked whether this represented overstaffing or questionable management practices in schools. The Deputy Director of Finance and Corporate Finance Manager explained the £13m decrease was roughly half due to academisation (so schools took any balances with them) and half had been used by schools in-year (which suggested some schools had need for additional funds). The Director of Finance and Resources acknowledged that the situation of schools using their reserves to a greater extent was replicated around the country.

 

Members asked for clarification around academisation whether the County Council retains responsibility for the building and why reserves (of public money) should move with the school, in effect moving reserves into the private sector. The Director explained that the DfE required in the academisation process that surplus reserves move with the school. Furthermore, when a school converts, the County Council leases the building to the new academy on a long term arrangement. The County Council no longer has control over that asset and so it is removed from the Balance Sheet. The County Council does not have responsibility to repair and maintain the building but an obligation to provide education in a community. All liabilities remain with the County Council. Approximately one third of schools were still maintained by the authority.

 

2016-17 had proved challenging in terms of MTFS. Within the first quarter it had become apparent that the NHS were not going to pay £15m BCF and overspending in various areas meat that a quick response to address the £20m of additional pressures. By introducing rigorous spending controls ultimately the overspend was reduced to £4m.

 

RESOLVED That (a) the 2016-17 Statement of Accounts be approved and

 

(b) the letters of representation from the Director of Finance and Resources be approved.

 

Supporting documents: