Agenda item

The Director of Corporate Services presented the report.

The draft Statement of Accounts for the financial year ended 31 March 2020 presented to Resources Committee in September confirmed that: i) 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; ii) this would be subject to review by the Authority’s external auditors, Grant Thornton; iii) that a further report would be presented to the Audit Committee in November, following completion of the external audit; and iv) at that meeting the Chair of the Audit Committee would be asked to sign the final statement of accounts, as well as the Treasurer.  In light of this the Committee noted and endorsed the report and accounts, based on the various outturn reports presented on the same agenda.  Subsequent to that the full set of accounts was submitted for audit to Grant Thornton. 

The Statement of Accounts had been updated to reflect the following changes identified during the audit (as reported in the Audit Findings Report – elsewhere on the agenda) and a revised statement of accounts was considered by Members.

Adjusted Misstatements

The following significant adjustments had been made to the accounts, as referred to in the External Audit Findings Report – referred to elsewhere on this agenda: -

·         HM Treasury published its consultation on reforms to public sector pension schemes on 16 July 2020. Following this the Authority requested updated IAS 19 calculations for the additional McCloud/Sargeant liability to allow for Authority specific membership data, rather than using data for the Fire scheme as a whole. In line with CIPFAs guidance the Authority had included this change in the remeasurement item. This resulted in a reduction of £4.1m to the Firefighter Pension Scheme liability. Hence the accounts had been adjusted for this.

It was noted that the actual impact of an increase in scheme liabilities that arose from McCloud/Sargeant judgment would be measured through the pension valuation process, which determined employer and employee contribution rates.

·         The value of fixed assets had increased by £100k reflecting a discrepancy between the valuer’s valuations and the value recorded in the fixed asset register.

·         The draft accounts included a provision of £600k for backdating of pensionable allowances to the date of the High Court ruling, March 2019. The Authority was attempting to resolve the issue of further backdating via the collective bargaining arrangements, but this had not yet been concluded. Pending the outcome of those discussions the Authority had now allowed for 6 years of backdating and had adjusted the draft accounts to include £1.8m provision. As the estimated value was material and the obligation related to events prior to the start of the financial year, management had disclosed a prior period adjustment in relation to this matter.

Misclassifications and disclosure changes

A number of misclassifications and disclosure changes were noted.

The Director of Corporate Services / Treasurer advised that there was one further adjustment that had recently come to light.  He referred to page 82 of the agenda pack, note 24 to the accounts entitled, ‘adjust net surplus (deficit) on the provision of services for non-cash movements’ which were adjustments that did not impact on cash.  It was noted that the total for 2019/20 should be 24,420 because of a transposition error and this did not feature anywhere else in the accounts.   The Director of Corporate Services confirmed this was not material to the accounts given the scale of the error and advised that after discussing this with the auditors it was proposed that the accounts be re-approved and signed as now presented and the letter of representation (to be discussed later on the agenda) be amended to reflect the change.

The Director of Corporate Services highlighted the following details:

Page 48 of the agenda set out the balance sheet which included 3 years of balance sheet because the prior period adjustment affected years 2018 and 2019 therefore these been re-stated. 

Pages 50, 51 and 52 all set out the various adjustments that the prior period adjustment created.

Page 78, note 20 for contingent liability set out the note regarding the potential backdating of pensionable allowances which had been amended following the Norman v Cheshire Fire and Rescue Service to reflect 6 years of backdating in the accounts. 

Page 85, note 30 for critical judgements informed the accounts of the interpretation of any large decisions which included the McCloud / Sargeant Judgement and Norman v Cheshire Fire and Rescue Service pensionability of allowances which had already been mentioned.

In response to a question raised by Councillor Smith the Director of Corporate Services advised that the cost of the pensionability of allowances was built into this year’s budget however there was nothing in the budget for any backdating, when an agreement on this was reached it would impact on reserves.

RESOLVED: - That the Committee re-approved the revised Statement of Accounts.