Agenda item

This report presented the Unaudited Statement of Accounts for the financial year ended 31 March 2020. 

The Statement of Accounts took account of the information presented in the Year End Revenue Outturn, Year End Capital Outturn, Year End Treasury Management Outturn and Year End Usable Reserves and Provisions Outturn reports and were prepared in line with recommended accounting practice which was not accounted for on the same basis as we accounted for council tax.  As such this meant they did not match the details in the Outturn reports, and hence the sections provided an overview of each statement and a reconciliation between Outturn reports and the Core Financial statements where appropriate.

It was noted that the Statement presented assumed that the Authority’s 25% share of North West Fire Control Ltd draft year end position for 2019/20.

Members noted that there would be a further pensions adjustment in respect of the recent HMT consultation on the McCloud/Sargeant remedy, estimated by our actuaries to reduce the Firefighters pension scheme liabilities by up to 1% (up to £8.1m).  Once our actuaries had completed the additional analysis, any changes required would be built in to the final version of the Statement of Accounts.

Narrative Report

This set out the financial context in which the Combined Fire Authority operated, and provided an overview of the financial year 2019/20 as well as details of future financial plans. 

Statement of Accounts

This reflected the position the Authority had reached in connection with corporate governance, including internal controls and risk management, including a review of the effectiveness of those arrangements as reported to Audit Committee in July 2020.

Auditors Report and Opinion

This would set out the Auditor’s opinion on the Statement of Accounts and would be included on completion of the audit which commenced in August.

Statement of Responsibilities

This set out the responsibilities of the Authority and the Treasurer in terms of overall management of the Authority’s finances and in terms of the production of the annual accounts.

Comprehensive income and expenditure account

This statement showed the accounting cost in the year of providing services. It was a summary of the resources that had been generated and consumed in providing services and managing the Authority during the last year. It included all day-to-day expenses and related income on an accruals basis, as well as transactions measuring the value of fixed assets actually consumed and the real projected value of retirement benefits earned by employees in the year.  

Movement in reserves statement

This statement showed the movement in the year on the different reserves held by the Authority, analysed into i) Usable Reserves (those that the Authority may use to provide services or reduce local taxation, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use) and ii) Unusable Reserves (which include reserves that hold unrealised gains and losses where amounts would only become available to provide services if the assets were sold; and reserves that hold timing differences ‘between accounting basis and funding basis under regulations’).

Balance Sheet

This showed the value as at the date of the assets and liabilities recognised by the Authority.  The net assets of the Authority (assets less liabilities) were matched by the reserves held by the Authority.

Balance Sheet

The Balance Sheet showed the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority.  The net assets of the Authority (assets less liabilities) were matched by the reserves held by the Authority.

Cash flow statement

The cash flow statement showed the changes in cash and cash equivalents of the Authority during the reporting period.  The statement showed how the Authority generated and used cash and cash equivalents by classifying cash flows as operating, investing and financing activities.

Signing of the Statement of Accounts

The unaudited Statement of Accounts would be signed by the Treasurer to certify that it presented a true and fair view of the financial position of the Authority as at 31 March 2020.  This would be subject to review by the Authority’s external auditors, Grant Thornton which was scheduled to take place in August and September.  A further report will be presented to the Audit Committee in November, following completion of the revised IAS19 pensions adjustments and completion of the external audit. At that meeting the Chair of the Audit Committee would be asked to sign the final statement of accounts, as well as the Treasurer.

The Director of Corporate Services advised that there was an independent review undertaken of local government accounts by Sir Tony Redmond the recommendations of which were published recently and were out for consultation including: i) the Chartered Institute of Public Finance and Accountancy to review and where possible simplify the accounts; ii) a summary statement be prepared that tied into the revenue outturn position which might make the accounts more understandable to non-technical accountants; and iii) that audit fees be increased to take account of the complexity involved.

CC Hennessy advised that training for Members on the pension scheme would be arranged with the Senior Pensions Adviser of the LGA.

CC O’Toole referred to page 44 regarding the impact on a number of departmental services of the pension adjustment.  He queried whether it would be possible to identify the pension increases separately to enable Members to better understand its effect.  In response, the Director of Corporate Services advised that the pension adjustment applied throughout the accounts.  This information could be provided separately outside the meeting however, the additional work to provide separate disclosures would be challenging in terms of the timeframe  to compile the accounts and the Finance Team’s capacity.  He assured Members that changes to departmental budgets were set out in the Revenue Budget report presented in February, and that a detailed analysis of departmental budgets year end variance was set out in the revenue outturn position referred to earlier.

As the changes related to the Pensions Schemes, and in the main to the Firefighter Pension Scheme, the Director of People and Development suggested and Members agreed that this be discussed at the next Strategy Group meeting. 

The Chief Fire Officer reassured Members that the accounts were subject to a qualified auditor process whereby auditors presented their reports and answered questions from Members of the Audit Committee.  Firefighter pension schemes had become far more complex with variations now on existing schemes and new schemes, and those schemes currently subject to possible other changes which could potentially continue until people retired. 

RESOLVED: - That the Committee:

i)     Noted and endorsed the Unaudited Statement of Accounts;

ii)       Consider the complex issue of Firefighter Pensions at the next Strategy Group meeting.