Agenda item

The Director of Corporate Services gave thanks to the External Auditors, Internal Auditors, and the Finance Team for all their work on the arduous process of the Statement of Accounts.

The Director of Corporate Services presented the report to the meeting. The report presented the Statement of Accounts for the financial year ended 31 March 2024 which included the Authority’s 25% share of the North West Fire Control (NWFC) accounts. Its purpose was to give electors, local taxpayers, Fire Authority Member, employees, and other interested parties clear information about the Fire Authority’s finances.

The Committee considered the Statement of Accounts as presented.

The aim was to provide information on:

-        The cost of providing Fire Authority services in the financial year 2023/24.

-        How these services were paid for.

-        What assets the Fire Authority owned at the end of the financial year.

-        What was owed, to and by, the Fire Authority at the end of the financial year.

The narrative report provided a guide to the most important matters which were included in the Statement of Accounts. The Statement of Accounts had been prepared in accordance with the Accounts and Audit Regulations 2015 as amended by the Accounts and Audit (Amendment) Regulations 2021 and the Code of Practice on Local Authority Accounting in the United Kingdom.

The Statement of Accounts contained: -

Statement on Annual Governance Arrangements – Set out the Authority’s responsibilities regarding the system of internal control on corporate governance.

Independent Auditor’s Report to Members of Lancashire Combined Fire Authority – The Auditor’s report to the CFA on the accounts for 2023/24, which were set out in the agenda pack.

Statement of Responsibilities for the Statement of Accounts – Set out the responsibilities of the Authority and the Treasurer regarding the statement of accounts.

Comprehensive Income & Expenditure Statement – The Statement showed the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Fire Authority raised taxation to cover expenditure in accordance with regulations; this could be different from the accounting cost. The taxation position was shown in the Movement in Reserves Statement.

Movement in Reserves Statement – This statement showed the movement in year on the different reserves held by the Fire Authority analysed between usable and other reserves. The surplus or deficit on the Provision of Services line showed the true economic cost of providing the Fire Authority’s services, more details of which were shown in the Comprehensive Income and Expenditure Statement.

Balance Sheet – This showed information on the financial position of the Fire Authority as at the 31 March 2024, which included the level of balances and reserves at the Fire Authority’s disposal, its long-term indebtedness and the value of the assets held by the Fire Authority.

Cash Flow Statement – This showed the cash and cash equivalent movements in and out of the Fire Authority due to transactions with third parties for revenue and capital purposes.

Fire Fighters Pension Fund Account and Net Assets Statement – This presented the financial position of the fire fighters pension fund account, which showed whether the Authority owed, or was owed, money by the Government in order to balance the account, together with details of its net assets.

The Director of Corporate Services drew the Members attention to Page 17 of the agenda pack for the review of the year which included information from the Annual Service Plan in 2023/24.

In the 2023/24 Financial Overview on Page 18 of the agenda pack, it was noted by Members that a £5 increase (£82.27), in Council Tax had been agreed in line with the Council Tax referendum limit which allowed for an affordable, prudent, and sustainable budget that ensured that the Authority was able to deliver against its corporate priorities. The net revenue position showed a small overspend of £0.2m.

The chart on page 19 of the agenda pack illustrated that employee costs accounted for the majority of the expenditure and approximately half of the income came from Council Tax.

It was stated on Page 20 of the agenda pack that the Authority’s general fund balance at start of the year was £4.89m and the overspend of £0.22m from the Authority’s expenditure had been transferred to the reserve which had taken the balance to £5.66m. The Reconciliation table in the report summarised the key adjustments with adjustments for Capital Purposes and the net change for Pension Adjustments.

The Authority also held an additional £8.44m of earmarked revenue reserves and £20.45m of capital reserves and receipts. The Capital reserves and receipts were fully utilised within the medium-term financial strategy. Over half of the earmarked reserves related to the Authority’s two Private Finance Initiative (PFI) schemes, whereby monies were set aside in the early years of the scheme to meet future costs, thus easing the impact of inflationary pressures.

Page 21 of the agenda pack explained that the Authority’s Total net liabilities remained broadly unchanged at £503.0m to £502.5m which reflected the Authority’s compliance with International Accounting Standards and in particular, the requirement to show the full pensions liability in the accounts. Whilst the liability on the Local Government Pension Scheme was funded, the Fire-fighters Pension Scheme was unfunded, i.e. there were no assets from which future liabilities would be paid, and hence the Authority’s overall Fire-fighters pension liability of (£651.8m) was extremely large. If this liability was excluded, the Authority’s Total Net Assets would be £148.8m. The Firefighters Pension Scheme liability remained largely unchanged with a small increase of £0.290m of £224.4m. The pension liability included estimated costs in relation to the McCloud judgement. Long-term assets had increased slightly in value to £127.8m from £126.6m which reflected the investment in the asset base and the impact of revaluations.

In terms of future financial plans, the financial sustainability of the Authority was addressed in February 2024 as part of setting the Budget and Medium-Term Financial Strategy for 2024/25. Given the economic uncertainty, the potential impact of the Fair Funding Review and potential changes to local retention of Business rates, it was extremely difficult to anticipate the model of funding beyond the existing settlement. For the purpose of the medium-term financial strategy, it had been assumed that the funding would increase broadly in line with inflation. It was on that basis that the Service had set a balanced budget in future years, allowing for council tax increases in line with forecast inflation.

In response to a query from County Councillor Singleton with regards to acquiring the market value of the Service’s heritage assets, Georgia Jones, Key Audit Partner advised that the assets were very specialised and not sold on the open market and therefore the value was difficult to estimate. An insurance evaluation would assist with the accuracy of value; however, the cost of an assessment could offset the value of the assets.

County Councillor Singleton queried the difference between the 2023/24 interest paid of £1,341 on Page 73 of the agenda pack and the 2023/24 interest payment of £30,115 on Page 74. The Director of Corporate Services explained that the interest payment of £30,115 collected the interest element through the pensions assets and liabilities transactions. The interest paid of 1,341 included the interest paid on the Service’s loan and also PFI transactions. Part of the Unitary Charge included the interest element that the provider would have to pay as part of the 25-year PFI transaction.

The Director of Corporate Services confirmed, in response to a question from County Councillor Singleton, that the long-term borrowing had been taken over a 40-year term with the date to be paid in 2039.

County Councillor Salter asked for clarification on the non-material amendments as mentioned in the recommendation to Members. Georgia Jones, Key Audit Partner advised that it was possible that some amendments to the Statement of Accounts could arise following the Committee meeting. If the changes were non-material, then the Chair and the Director of Corporate Services could sign the Statement of Accounts, however, if the amendments were material, Audit Committee approval would be required.

County Councillor Shedwick acknowledged that there were some items beyond the Service’s control and congratulated the Finance Team on their fantastic statement of accounts.

It was noted by Members that Adam Latham, from the Finance Team, had recently qualified as an Accountant.

The Chair thanked the Finance Team for all their hard work.

Resolved: - That the Committee: -

i)                approved the Statement of Accounts and authorised the Audit Committee Chair and the Director of Corporate Services to sign them; and

ii)              approved any non-material amendments post Committee.