Agenda item

Simon Tompkins, Finance Manager, reported on the changes to accounting standards and disclosure requirements that had taken place during 2014/15 together with their effect on the Council’s accounting policies.  It also highlighted the steps being taken to achieve earlier closure in response to the Government’s stated intention of bringing forward the Local Government Reporting Timetable in 2017/18 whilst still maintaining high quality Financial Statements that were fully compliant with the Code of Practice on Local Authority Accounting (the Code).

Local Authority accounting operated in a dynamic environment which was subject to ongoing changes to accounting standards and legislative requirements which impacted on local government financial reporting.  It was important that the Council continued to response to the changes promptly and effectively to ensure that the financial information used by management and stakeholders represented the Council’s true financial position.

The Government had signalled its intention to bring forward the date by which the Council’s annual Statement of Accounts must be prepared and published.  Current Regulations required unaudited accounts to be prepared by 30^th June and audited accounts to be published by 30th September.  New regulations which were likely to be laid in 2015 were expected to bring the dates forward to 31^st May and 31^st July respectively.  The new Regulations were expected to come into effect for the 2017/18 financial year but authorities were being strongly encouraged to bring about the transition earlier so they were fully geared up in advance of the change.

Accordingly, the 2014/15 closedown timetable had been designed to carry out procedures, previously undertaken at year-end, in -year wherever possible and to review and re-engineer year end processes where necessary to achieve a quicker closedown.

The other key changes in 2014/15 and action taken to address them were set out in Appendices 1 and 2 of the report submitted.

Prior to 2010/11 the Accounts and Audit Regulations had required that the unaudited Financial Statements be approved by Members by 30^th June and the audited Financial Statements by 30^th September.  The Accounts and Audit Regulations 2011 removed the requirement for Members to formally approve the unaudited Financial Statements.  The Audit Committee had agreed that, in order to maintain strong governance over financial reporting, it would receive the unaudited Financial Statements for information after they had been authorised and release for publication.  Accordingly, the unaudited Financial Statement must be authorised for publication by the Interim Strategic Director of Resources and Transformation by 30^th June, 2014, presented to the July Audit Committee and the audited 2014/15 Financial Statements submitted to the September meeting for formal approval following presentation of KPMG’s ISA 260 report.

Discussion ensued on the new Regulations and the implications of bringing forward the requirement to produced unaudited accounts by 31^st May with the following raised/highlighted:-

-          The Authority was currently on course to achieve the new deadline

-          Earlier closure was being achieved by bringing work forward in-year and by greater use of estimation techniques. This has required cultural change as well as procedural

-          The increased use of estimation had introduced a greater element of risk of misstatement but this was being mitigated through quality assurance being undertaken by Finance teams on information before it was provided to the Central Team and further checks by the Central Team on its receipt. This should ensure the high standard of previous years was maintained and  prevent material misstatements occurring in the accounts presented for audit 

-          Any errors identified by KPMG above a certain level that did arise would be submitted to the Committee for consideration

Resolved:-  (1)  That the changes to the Council’s accounting policies be noted.

(2)  That the requirement for the Audit Committee to formally approve the audited 2014/15 Financial Statements at the September meeting be noted.

(3)  That the unaudited Financial Statements be submitted to the July meeting.