Greenwich Council

Agenda item

Statement of Accounts 2016/17

Decision:

Noted the Audit Findings Report (AFR) in respect of the Royal Borough of Greenwich and the Pension Fund

 

Noted there were no comments from the Audit and Risk Management Panel and Pension Fund Investment and Administration Panel

 

Approved the Statement of Accounts for the year ended 31 March 2017 at, incorporating agreed amendments.

 

Agreed that the Mayor sign and date the revised Statement of Accounts.

Minutes:

The Mayor advised Council that the Royal Borough’s accounts, the Pension Fund accounts and the Statement of Accounts for the year ended 31 March 2017, had been circulated on a Supplementary Agenda. The Mayor informed Council that the Accounts and the Auditor’s Findings Report had been considered at the beginning of week by the Pensions Fund Investment and Administration Panel and the Audit and Risk Management Panel, and that neither Panel had any further comments for the Council’s consideration. 

 

The Mayor welcomed Paul Dossett, the Engagement Lead from Grant Thornton to the meeting, and asked him to introduce the Auditor’s Findings Report.

 

Paul Dossett, the Engagement Lead from Grant Thornton, summarised the report. He advised Council that the deadline for submission of Statement of Accounts was being brought forward next year for all councils. He stated that he intended to give an unqualified opinion on the accounts and unqualified conclusion on value for money. He informed Council that they had not been able to certify the audit closed because the whole of government accounts would not be completed until October, and because they had received an objection from a local authority elector and that had to be considered.

 

The Mayor invited questions to the auditor.

 

Councillor Spencer Drury referring to Page 12 of the Supplementary Agenda and the “late provision of requested audit evidence” resulting in higher charges to the Council, and Page 21 “Confirmation requests from

third parties” asked how much was this to cost and did he consider there was a problem in getting information on time.

 

Paul Dossett, the Engagement Lead from Grant Thornton replied that receiving information from third parties was a perennial challenge for auditors, for various reasons, and it was mentioned as it was something they and the Council wanted improved. There had been challenges early on in the audit process with regard to the availability of information which had led to a delay in the timetable, the fee for that was still under discussion with Officers but it was not a significant fee and it would be reported to the Audit and Risk Management Panel.

 

In moving the recommendation, Councillor Denise Hyland, Leader of the Council, thanked Paul Dossett and his team for their report. The Leader thanked Scrutiny and the Audit and Risk Management Panel for their work on scrutinising the accounts. The Leader of the Council noted that the accounts had again been prepared in record time. While the Royal Borough of Greenwich was a leader in accounts closure it was not a race, it was about accuracy; and the Council continued to demonstrate sound governance and deliver value for money. The Leader said it was pleasing that this had been achieved against the backdrop of funding reductions during the austerity period. The Leader of the Council recalled that she had suggested last year that the July Council be moved forward a week so they could conclude business before the school holiday as part of making the Council a family friendly Council. The Leader thanked the Director of Finance and the Assistant Director of Finance & Deputy s151 Officer and all those who had made it possible.

 

Councillor Don Austen, Chair of the Pension Fund Investment & Administration Panel, noted the expected unqualified opinion. He thanked the Auditors and Finance Officers, and his fellow Panel Members, for their work. He highlighted the increase to the Pension Fund over the last five years and that it had gone from being 81% to 91% funded. Councillor Austen commented that the Pension Fund members could feel confident that the Fund was prudent and wisely administered.

 

Councillor Spencer Drury thanked Officers and Grant Thornton. He felt that the late publication of the Supplementary Agenda made it hard for backbench Councillors to consider the Accounts, which was relevant in relation to “providing accountability to taxpayers” as stated in the report. Councillor Drury noted that it was hard for the Auditor to get data and if that late response led to a higher charge for the Council that should be a concern. He noted that in the Long Term Borrowing report which had gone to the Audit and Risk Management Panel that the average rate of long term borrowing was better in comparison than if taken from the Public Works Loans Board (PWLB) and had saved the Council money in interest costs and helped keep borrowing costs lower. But the PWLB rates had not always been as high as reported. He suggested Councillors needed to be informed as to the cost of conversion of loans as it could lead to significant long term savings. He referred to page 48 of the Accounts which stated that “The fair value of the liabilities is higher than the carrying amount because the Authority’s portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the prevailing rates at the Balance Sheet date. This shows a notional future loss”. He sought the views of other Councillors as it appeared to be that the Council was paying above the rate on many loans. He asked if LOBO’s had ever been called, if so why had there been no redemption?; would the Council be taking their side of the Option as soon as possible to refinance debt at a better rate?; could the Council do so outside of Option dates and what would be the penalty and would it be worth it?

 

Councillor Mehboob Khan said all those questions had been answered at the meeting of Audit and Risk Management Panel. Councillor Khan noted the history of the use of the LOBO, and highlighted that the Council did not have special conditions attached to its LOBO and so were able to convert to other types of lending at low rates. He commented on the high interest borrowing rates under a previous Conservative Government which was still costing the taxpayer money. He noted that when the Council’s LOBO ends they would not have a problem because there were no penalty clauses. He highlighted that because of prudential financing the Council’s borrowing was less than what it should be and so they were not paying interest on that which freed up money for essential public services. He commented on the Housing Revenue Account (HRA) cap and that because the Government had changed the rules they were now at the cap. He compared the depressed value of the Council’s social housing with its value as stated by the Auditor at the meeting of Audit and Risk Management Panel; because of the cap the Council could not borrow to invest in essential safety improvements to their social housing despite the disparity in their value compared to the borrowing limit against them. That was the result of the Government’s tinkering with the financial system.

 

In closing the debate Councillor Denise Hyland, Leader of the Council, invited Councillor Drury to write to her with any questions on the issue. It appeared that the Auditor was comfortable with their LOBO arrangement because the Council played safe and did not take risks; they were prudent and careful. The Leader stated that they needed to get the Government to lift the HRA borrowing cap; the Council’s revenue stream was healthy and they could do much more for residents in social housing and for residents waiting for social housing. Right to Buy (RTB) was another example, the Government only allowed them to spend 30% of the RTB receipt on a new property. That limited the Council’s capacity for the provision of social housing.

 

The matter was put to the vote and it was unanimously

 

Resolved –

 

1.       That the Audit Findings Report (AFR) in respect of the Royal Borough of Greenwich and the Pension Fund be noted.

 

2.       That there were no comments from the Audit and Risk Management Panel and Pension Fund Investment and Administration Panel be noted.

 

3.       That the Statement of Accounts for the year ended 31 March 2017 at, incorporating agreed amendments be approved.

 

4.       That the Mayor sign and date the revised Statement of Accounts be agreed.

Supporting documents: