Agenda item

Closure of the Accounts 2020/21


Consideration was given to a report presented by Rob Mahon, Head of Corporate Finance, on the closure of the accounts 2020/21.


The Council had successfully met the 2018/19 timeframes in closing its accounts after the decision to bring forward the timetable for the publication of local authorities’ financial statements.  However, due to the unprecedented circumstances, last year’s closure of accounts deadlines had been extended for 2019/20.


It should also be noted that the volume of audit review, challenge and testing that the external auditors now had to carry out also placed additional strain on the Council’s resources. This additional strain would be further exacerbated by the continuing challenge that the Covid-19 pandemic placed on the resources of the Council’s Finance function. However, the timescales for the publication of the financial statements had now been extended for the next 2 years. The Accounts and Audit (amendment) Regulations 2021 (SI no 2021/263) would come into force on 31st March 2021 and would revise the statutory deadline for publishing the unaudited financial statements to 31st July, followed by the statutory deadline for publishing the audited financial statements by 30th September.


Under the Accounts and Audit Regulations 2015, local electors could only exercise their rights of inspection and to question the auditor or make formal objections for a single period of 30 working days commencing the day after the unaudited accounts had been published.  In order for the inspection period to commence, the Annual Governance Statement and Narrative Report (introduced by the Accounts and Audit Regulations 2015) would need to be published alongside the Council’s unaudited financial statements on the Council’s website. The timetable for preparing the Annual Governance Statement and Narrative Report was, therefore, being co-ordinated with the publication of the draft unaudited Statement of Accounts to meet this requirement.


The report also set out changes to the Local Authority Accounting Framework:-


-        Delaying of the implementation of IFRS16 for a further year.  This disclosure, which would see the removal of operational leases, with lessees expected to recognise all leases on their balance sheet as a right of use asset and a liability to make the lease payments, would now be reflected in the accounts for 2021/22


-        Schools converting to Academy.  A further 8 primary schools were expected to convert during 2020/21. The impact on the Council’s balance sheet and income and expenditure had yet to be determined but was likely to be material


-        Covid-19 grants.  The Council had received a high number of high value Government grants throughout the financial year in recognition of the financial consequences of the pandemic.  The accounting treatment of the grants would vary depending on their purpose, however, a number would need to be flagged as exceptional items due to their value otherwise distorting the understanding of the accounts.


The external auditor, Grant Thornton, had issued their own opinion on how Covid-19 grants should be treated within the Council’s accounts.  This would be reviewed and agreement reached on the way forward.


The Council’s Statement of Accounting Policies (Appendix B) were reviewed and updated where necessary.


Clarification was provided on the following issues:-


-        A number of the Covid-19 grants were reported through the Council’s financial monitoring reports i.e. emergency funding the Council received to support its general Covid-19 related impact costs, sale, fees and charges grant, a number of Public Health grants where providing grants through Council to Public Health providers and care providers and a number of business grants and test and trace grants


-        Covid-19 update report submitted to Cabinet bi-monthly


-        The Narrative report would identify the quantum of Covid grants


Resolved:-    (1)  That the key accounting issues and main changes to the accounts in 2020/21, as listed in Appendix A submitted, be noted.


(2)  That consideration be given to inclusion of a statement in the Narrative Report with regard to Covid-19 grants in order to provide a full picture setting out the scale and value in total.

Supporting documents: