A report of the Chief Finance Officer was presented, the purpose of which was for Members of the Corporate Affairs and Audit Committee to receive and review the Middlesbrough Council Draft Statement of Accounts 2013/2014.
The Statement of Accounts was a technical publication containing accounting statements that had been prepared in accordance with the Code of Practice on Local Authority Accounting in Great Britain and the Statutory Accounts and Audit Regulations (The Code). The Code was updated annually and specified the accounting principles and practices required to prepare a Statement of Accounts that presented a true and fair view of the position of a Local Authority.
The 2013/2014 Statement of Accounts had been prepared in compliance with International Financial Reporting Standards (IFRS).
The Explanatory Foreword provided information in relation to the format of the Statement of Accounts as well as a review of the financial position of the Council for the financial year 2013/2014.
The Accounting Services Manager highlighted an error on the Senior Staff remuneration note. A revised copy of page 88 of the Accounts had been circulated.
The Council had achieved a balanced budget for 2013/2014 after making a contribution of £1,584 million to the Change Fund Reserve. The Change Programme Review was ongoing and the Council needed to invest in service reconfiguration to meet the challenges presented by the unprecedented public spending cuts, increasing costs and growth in demand for services, as well as continuing to deliver the Mayors Vision for the town.
Key indicators of the state of the local economy were detailed on page 35 of the submitted report. Whilst the majority of indicators had improved, it was highlighted that the number of empty commercial properties had increased. It was also noted that youth unemployment had improved. The Accounting Services Manager agreed to provide further information with regard to possible reasons for the changes in those indicators.
The report included information as to where the Council got its funding from and what the money was spent it on, as well as detailing what the Council owned, how much it was owed by, and was owed to, other organisations. A change to funding during the year had been the Retained Business Rate scheme, implemented from 1 April 2013, under which the Council could keep a proportion of the income received from business rates.
A summary of the Balance Sheet showed that the total value of Council assets had decreased by £25.4 million during the year. This was mainly due to depreciation in the value of operational plant and equipment and also the conversions of schools to academy status.
The Council was expected to maintain a minimum balance on the General Fund of between £4 million and £4.5 million over the medium term to cover unexpected financial risks after making specific reserves and provisions to meet known and expected liabilities. The balance at 31 March 2014 remained unchanged at £6 million. It was noted that schools were still holding more overall reserves than the Council with the total schools balance being £6.2 million.
The Councils performance in collecting Council Tax in 2013/2014 was 93.4% collected in the year, compared to 96% the previous year. However, due to the changes to welfare reform and introduction of the Council Tax Benefit Scheme the Council had set a target of 94% collection rate, 2% less than the previous years rate.
The financial performance of the Teesside Pension Fund for the year to 31 March 2014 was positive with the value of fund rising to over £3 billion for the first time, ending at £3.049 billion. The rise was due to UK, European and US equity markets and investment income. The membership of the Fund continued to increase although the number of active members had decreased.
As part of the arrangement the Council had with Municipal Mutual Insurance (MMI), the Councils former insurers, the Council had to fund any ongoing liabilities for claims. During the course of 2013/2014 the Council made payments totalling £901,800 as clawback of previously paid claims due under the MMI Scheme of Insurance. The Council potentially had liability for ongoing contributions to any future claims for anything that was previously insured through MMI.
The Statement of Accounts would be subject to external audit by Deloitte which would commence on 30 June and was expected to be completed by 31 August 2014. A Statement (ISA 260) would be produced which would detail any unadjusted misstatements found during the course of the audit.
Overall the accounts showed a sound financial position for the Council with the level of balances being in line with the Councils Medium Term Financial Plan. The Council achieved a break-even position in 2013/2014 against a revenue budget of £140.402 million.
AGREED as follows that:
1. the draft Statement of Accounts 2013/2014 were approved.
2. further information with regard to possible reasons for the increase in empty commercial properties and the decrease in youth unemployment would be provided to the Committee.