Agenda item

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

The report presented the Statement of Accounts for the financial year ended 31 March 2025 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 2024/25.

-       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 2024/25, 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 2025, 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.

Members noted that the net revenue position showed an underspend of £735,000.

The chart on page 25 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 26 of the agenda pack that the Authority’s general fund balance at the start of the year was £5.66mFollowing a review of reserves during the year and the transfer of the underspend the reserve balance at the end of the year was £6.56m. The Reconciliation table in the report summarised the key adjustments with adjustments for Capital Purposes and the net change for Pension Adjustments.

The DoCS explained a material change to be made within the Reserves statement with the Capital Funding Reserve to be moved into the Earmarked Reserves.

The Authority also held an additional £10.68m of earmarked revenue reserves and £18.33m 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 27 of the agenda pack explained that the Authority’s Total net liabilitieshad reduced from £503.0m to £435.2m mainly because of the change in actuarial assumptions of the uniformed firefighters pension scheme. The reduction in the liability was £60m and £50m of this was due to a gain due to changes in financial assumptions; essentially reflecting increasing assumptions about inflation and interest rates compared to the previous year. The net liability 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, there are no assets from which future liabilities would be paid, and hence the Authority’s overall Fire-fighters pension liability of (£588m) was extremely large. If this liability was excluded the Authority’s Total Net Assets would be £153m.

Long-term assets had increased slightly in value to £130m from £128m, reflecting the investment in the services asset base and the impact of revaluations.

In terms of future financial plans, the financial sustainability of the Authority was addressed in February 2025 as part of setting the Budget and Medium-Term Financial Strategy for 2025/26. Given 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 what funding would look like beyond the existing settlement, hence for the purpose of medium-term financial strategy it had been assumed that the funding would increases 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.

The Chair echoed the sentiments of the DoCS in thanking the Finance Team and internal and external Auditors for all their hard work on behalf of the Audit Committee.

In response to a question from County Councillor P Buckley in relation to the pension liabilities to date in this financial year, the DoCS’s explained that this was not something that the service monitored and an annual assessment was completed by Government Actuary's Department (GAD) each year with consideration given to a number of variants including the economy and changes in life expectancy. County Councillor P Buckley asked a further question in relation to what levels for concern where, the DoCS’s explained that this was considered by the national scheme when contribution rates were set, with all fire authorities in the same position.

The Chair suggested that all members of the Audit Committee would benefit from some training to ensure they were able to provide an appropriate level of scrutiny. This was unanimously agreed by the committee members and the DoCS agreed that opportunities could be explored.

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.