Agenda item

To consider KPMG’s Governance Report and the audited Statement of Accounts for 2014-2015.

The Committee considered KPMG’s Governance Report and the audited Statement of Accounts for 2014-2015.  Mr Thompson, Director of Resources, summarised the key aspects of the Statement of Accounts and highlighted the changes that would be made for 2016/2017, which would include the valuation of roads in the Transportation Infrastructure assets valuation. It was noted that this should add approximately £800 million to the value of assets and reserves in the balance sheet.

Members raised questions regarding Treasury Management and were advised that the Treasury Services continuously looked to borrow at more favourable interest rates and that the Authority had very few Lender Option Borrower Option loans, which would have been attractively priced at the time they were taken.

The Committee questioned the reasons for the Council not applying for any supported capital expenditure approvals in order to borrow for capital purposes in 2014/2015. Mr Jack advised that borrowing support was not provided for this type of funding and any money received from the scheme required repayment. He explained that some authorities had used the borrowing in order to fund their redundancy costs. However, Blackpool Council had not needed to do this as redundancy payments had been able to be met through earmarked reserves.

The Committee noted the management fee received by the Council for its provision of payroll services for a number of organisations within the borough and across Lancashire and queried whether the Council was actively looking to sell its services more widely. Mr Jack advised that some service areas were actively looking to do this and highlighted the example of Positive Steps, which had recently helped to recruit positions for Sainsbury’s.

The Committee raised concerns regarding the potential financial implications relating to the Highfield Humanities College PFI scheme, in light of the school’s conversion to an academy. Members were advised that the arrangements relating to this were likely to be highly complex and that external support would potentially be required. However, it was noted that at the outset, the project had demonstrated value for money.

Mr Rees, Partner, KPMG, commented that the financial reports had been of a high quality and thanked Council officers for their help and co-operation throughout the audit process. He explained that the External Auditor’s report had summarised the key findings from two areas, namely the audit work in relation to the Council’s financial statements for 2014-2015 and its arrangements to secure economy, efficiency and effectiveness in its use of resources (Value for Money).

The Committee discussed the recommendations contained within the report and Mr Rees noted there were no Priority One recommendations. The Committee noted one of the recommendations related to payroll reconciliation segregation of duties and questioned whether this issue should be considered a more pressing concern for the Authority. It was reported to Members that management had been aware of the issue but that with reduced staffing levels, segregation of duties would prove increasingly difficult. However, Mr Jack advised that there were multiple system and software controls in place that prevented the issue posing a significant risk to the Council.

The Committee also discussed the KPMG recommendation regarding recognition of school assets. Mr Rees explained that, under new accounting guidance that had been issued by CIPFA on the recognition of voluntary aided schools in local authority balance sheets. Under KPMG’s interpretation of the guidance, it was considered that two primary schools, St. John Vianney and St. Kentigerns, should not be recognised by the Council. Upon questioning from Members, Mr Rees considered that this would only have a small effect on the Council financially and that the impact on the schools’ operations would be minimal.

Mr Rees reported that KMPG anticipated that an unqualified audit opinion on the Authority’s financial statements and Value for Money conclusion would be issued by 30 September 2015.

The Committee agreed to approve the audited Statement of Accounts for 2014-2015.

Background papers: None