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 2014/2015.
The Statement of Accounts was a technical publication containing accounting statements 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 2014/2015 Statement of Accounts had been prepared in compliance with International Financial Reporting Standards (IFRS).
The Explanatory Foreword provided a narrative context to the accounts by briefly explaining the main sections and presenting a summary of the Councils financial position and performance for the year and its prospects for future years.
The Council achieved a net saving of £3.85 million against its revenue budget (2.95% of its budget). This included £2.4 million of accelerated savings against 2015/2016 savings targets as set out in Appendix A to the submitted report. The major variances from budget for each service Directorate were highlighted.
Details of the state of the local economy were outlined on page 12 of the submitted report. The town had experienced an increase in business growth, inward investment and expansion enquiries via Economic Development and the economic outlook remained optimistic. Unemployment in the town had decreased, although it was still above the national average.
The financial report detailed where the Council got its money from and what it spent it on, what the Council owned, and how much was owed by and to, other organisations. It was highlighted that employee costs continued to decrease due to the impact of the Change Programme review. Staff numbers had fallen by 1,441 (27%) and Full Time Equivalents (FTEs) in post by 613 (21%) since 2010.
The Councils performance in collecting Council Tax in 2014/2015 was 93.55% collected in the year, compared to 93.4% the previous year.
A summary of the Balance Sheet showed that the total value of Council assets had increased by £37 million during the year to £577.7 million.
It was noted that the Pension Liability had increased by £42.3 million between 31 March 2014 and 31 March 2015 and the Accounting Services Manager explained that this was due to a fall in the value of the discount rate used to calculate the liability.
The net revenue saving of £3.9 million in 2014/2015 had resulted in an increase in General Balances from £9.6 million as at 31 March 2014 to £13.5 million as at 31 March 2015. The level of reserves was consistent with the overall financial environment and the key financial risks faced by the Council. There was a £500,000 draw down from school reserves as a result of three schools converting to academy status during 2014/2015 which was partially offset by a £100,000 saving on delegated schools revenue spending. Total schools balances stood at £6.6 million as at 31 March 2015.
The Teesside Pension Fund Accounts formed part of Middlesbrough Councils Accounts and would be submitted to the Teesside Pension Fund and Investment Panel for approval in due course. The membership of the Fund continued to increase although the number of active members had decreased.
The Statement of Accounts would be subject to external audit by Deloitte which commenced on 22 June and was expected to be completed by 31 August 2015. 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 net revenue saving of £3.85 million for the 2014/2015 financial year against a revenue budget of £130.60 million.
Committee Members raised queries in relation to items including an overspend in Commerical and Corporate Services, vacant commercial properties and schools' reserves, and the Chief Finance Officer and Accounting Services Manager provided explanations.
AGREED that the draft Statement of Accounts 2014/2015 were approved.