Agenda item

Mr Willis, Director of Corporate Resources and Section 151 Officer, introduced the report during which it was noted that the external auditor had very recently raised a concern regarding the valuation of some of the Council’s assets.  This issue would need to be resolved before the accounts could be signed off.  The statutory deadline for sign off of the accounts was the end of September.

Mr Wells, Grant Thornton UK LLP (GT) provided Members with a brief summary of the External Audit Findings document which he used to provide an explanation of where the asset valuation concern originated from.

During consideration of the item it was noted that

·  Some councils revalued all their investment property assets on an annual basis, however GT recognised that this approach could be prohibitively expensive for the Council.  The Council revalued 20% of its Investment property assets annually.

·  The valuation method of the Council’s assets had remained unchanged from previous years; however the method maybe reconsidered in future.

Councillor Campbell asked the following questions under Council procedure rule 20.1.  Mr Prashar, Head of Financial Services responded to each question in turn (response shown in italics):

1/ Page 8, Service Area. Why was there no comparison with previous years?

The context of these paragraphs was to highlight financial management during the period 1 April 2016 to 31 March 2017, so it only compared the spend to the budget rather than to prior years spend.

2/ Page 9, Financing. Why was there a marked difference between budget and actual figures?

The actual figure included parish precepts of £1.146 million to reconcile with Note 10 to the core financial statements which would not be included in the TDC budget.

3/ Page 10, Capital Programme 2017-21. Under the heading Construction, Replacements and Enhancements, and Housing Revenue Account (HRA) Schemes, why was there a marked difference between forecast for 2017/18 and the following years?

There were large schemes to be delivered in 2017/18 such as:

-HRA Schemes - New Build and Housing Intervention Programs.

-Construction, Replacement & Enhancement – Dreamland, Vehicle Replacement and Dalby Square Project.

4/ Page 18, Director of Operational Services. Expenditure had dropped from 2016, where were these savings made?

The difference was a cumulative effect rather than savings. The HAVS provision set up for fines in 2015/16 and charged to operational services (£2 million), was credited back to the service in 2016/17 to be transferred to Risk Reserve to meet potential future liabilities around risk (£1.7 million).  This was a net movement of £3.7 million. In addition, costs related to Animal Exports (£1.8 million) reflected in 2015/16, no longer existed in 2016/17.

5/ Page 19, Major Repairs Reserve. There was over £8 million in this fund. Was there a major building programme envisaged?

The Major Repairs Reserve was utilised to manage the peaks and troughs of the HRA Capital Programme over the next 30 years.  A new stock condition survey had been undertaken by East Kent Housing which would determine the capital works required to maintain the housing stock at Decent Homes, as well as the added pressures of fire precaution works in light of the government review.

6/ Page 20, Assets Held for Sale. Why was there a marked drop from 2016 to 2017?

The main reason for the decrease in Held For Sale Assets was the disposal of Ramsgate Swimming Pool (£250,000) in 2016/17.

7/ Page 30, Heritage Assets. Have we no heritage assets with environmental qualities? Would our historic parks fall into this category?

Although parks may have historic and environmental qualities, they were also used for the operational purposes of the authority. Accordingly, they were classified as Community Assets within the accounts. In accordance with accounting standards, they only had a nominal value assigned to them in the accounts which was why the Community Assets line in the accounts had a nil closing value when shown in round thousands of pounds.

8/ Page 40. The statement that financial uncertainty was not yet sufficient to reduce levels of service. This statement was not true. For example the levels of street cleaning have been reduced as have the frequency of grass cutting in our parks.
The context of the critical judgment note was only required to refer to material changes to services rather than specific ones. Materiality was based on a % of gross expenditure for the year which for 2016/17 would equate to £2.7million.

It was proposed by Councillor Dexter, seconded by Councillor Piper and Members agreed to approve the Statement of Accounts for 2016/17, subject to the resolution of the outstanding issue regarding asset valuation.

Mr Willis offered to provide committee Members with a briefing once the issue regarding asset valuation had been resolved.