Agenda item

This report presented the Core Financial Statements, which formed part of the Statement of Accounts for the Combined Fire Authority for the financial year ended 31 March 2021. 

The Statements 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 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.

The Statement of Accounts contained estimated figures that were based on assumptions about the future or that were otherwise uncertain, relating to areas such as pension liabilities, property asset valuations etc.  Estimates were made taking into account historical experience, current trends or other relevant factors.  

It was noted that the 2020/21 core statements presented did not include the adjustments required for recognising the Authority’s share of the collection fund income position for both Council Tax and Business rates, as the information had not yet been received from all billing authorities (this would be updated for the final version of the accounts).

It was noted that the Authority’s 25% share of North West Fire Control Ltd accounts ended 31 March 2021 had been included.

Narrative Report

This set out the financial context in which the Combined Fire Authority operated and provided an overview of the financial year 2020/21 as well as details of future plans. 

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.  

The Director of Corporate Services highlighted:

Revenue Support Grant – the Authority did not receive any Revenue Support Grant during 2019/20 due to the Lancashire business rates pool pilot for part of that year.  Instead, the national non?domestic rates increased to compensate for this.

Non-Domestic Rates Redistribution – Amounts raised through non?domestic rates, including the Authority’s element of business rates collection fund surplus accumulated during the preceding year by the billing authorities, in addition to top up grant receivable from the Government as part of the localisation of business rates.  The change between years reflected the reduction for the business rates pool applicable during 2019/20 only.

Business rates S31 grant – This grant was allocated to the Authority by the Government and related to small business rates reliefs allowed by the Government as part of the localisation of business rates.

Business Rates Reliefs S31 grant – The 2020/21 balance related to additional business rates relief funding announced prior to 31 March which would be received during 2021/22 but related to 2020/21.

Covid 19 S31 Grant – This reflected the S31 grant received during 2020/21; the majority of which had been spent during the year as previously reported and the balance transferred into an earmarked reserve for future use.

Actuarial (Gains) / Losses on Pensions Assets and Liabilities – This was a notional charge arising from the Actuary changing their assumptions on which future pensions liabilities were calculated, such as mortality rates, future interest rates, pay and pension increases, return on assets.  In 2019/20 actuarial gains reduced the overall pensions liability, as the forecast rates of the consumer price index had reduced from the year before, largely due to market uncertainties surrounding the pandemic.

Total Comprehensive Income and Expenditure – This showed the total cost of providing services, presented in accordance with generally accepted accounting practices, rather than showing the amount funded from taxation.

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.

The Director of Corporate Services advised that the reason the balance sheet showed a £764.9m deficit was the Pensions Reserve of £887.4m which related to adjustments required under International Accounting Standards 19 (IAS19).  This was a notional reserve required in order to offset the net liability of the Authority in respect of the pension schemes.  Members noted that appendix 6 showed the core statements with the pensions accounting for the IAS19 removed showed the Authority’s net worth at £123m.

Cash flow statement

This 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.

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 2021.  This would be subject to review by the Authority’s external auditors, Grant Thornton which was scheduled to take place in June and July.  A further report would be presented to the Audit Committee in September, following completion of the external audit. At this meeting the Chair of the Audit Committee would be asked to sign the final statement of accounts, as well as the Treasurer.

Councillor Williams commented, in relation to council tax and business rates as detailed on page 53 of the agenda pack, that there was a national shortfall in the collection of council tax and business rates which was hoped would improve but could affect the Authority going forwards.  The Director of Corporate Services advised that part of the budget setting process included looking at the collection fund deficit / surplus on an annual basis and the medium-term financial plan estimated any recovery period. 

RESOLVED: - That the Committee noted and endorsed the Core Financial Statements.