Agenda item

Consideration was given to a report presented by Rob Mahon, Head of Service, on the closure of the accounts 2023/24.

The Accounts and Audit (Amendment Regulations 2022) came into force on 22^nd July, 2022 and extended the deadline for the publication of final audited accounts to 30^th November for 2021/22 accounts and then 30^th September for 2022/23 accounts and the following 5 years.  The deadline for publishing unaudited accounts had reverted back to the 31^st May for the 2022/23 accounts.  The Council had met this deadline, however, due to capacity issues in the audit industry, full audited accounts were not signed off and published until December 2023.

The Council was confident that the closure deadlines could be met for the 2023/24 accounts, however, meeting the 30^th September deadline for final audited accounts would depend upon the available capacity of the Council’s auditors.

The Local Audit and Accountability Act 2014, confers on local electors the right to inspect the accounting records, books, deeds, vouchers, contracts, bills and other documentation relating to the financial year in question.  It also gave them the right to question the auditor about the accounting records or make a formal objection on a matter of public interest or because they thought an item of account may be unlawful.  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 implementation of IFRS16 within Local Authorities had now been confirmed as taking place in 2024/25.  This disclosure 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.  Although implementation of the standard would take place in 2024/25, there would be the need for an assessment of the impact of the new standard as part of the 2023/24 accounting process.

Major changes to service delivery that had taken place in 2023/24 would also have a bearing on the financial statements including the continuing effect of schools converting to academies.

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

There was a national issue with Local Authority treatment for infrastructure assets.  This related to the way components of infrastructure expenditure were derecognised when new expenditure was incurred.  A statutory override had come into effect in December, 2022, allowing local authorities to assume that the carrying amount to derecognise was zero enabling external  auditors to give an unqualified audit opinion on the Council’s accounts.  This override was in force until 31^st March, 2025 and the Council would utilise this override again for the 2023/24 accounts.  The Council was working to assess the processes that needed to be put in place to ensure the treatment of infrastructure assets was compliant when the statutory override expired.

It was suggested that it would be helpful for the Committee to have a presentation on IFRS16 in the future and the impact on the balance sheet.  It was a very labour intensive piece of work and still working to short deadlines.  Embedding it fully into 2024/25 would be a real challenge but the deadline would be worked to.

Gareth Mills, External Auditor, concurred that IFRS16 was a big piece of work and his successor would engage with the Finance Team with a view to ensuring everything was ready for the 2024/25 financial year.

He confirmed that the 2022/23 accounts audit were concluded pre-Christmas as planned with Rotherham being in a small minority nationally that had achieved the pre-Christmas deadline. 

It would be highly unlikely that that the end of September 2024 deadline for the audit of accounts would be met.   Due to the backlog nationally being so significant, there may well be some national decisions taken to reset the system for the first year of the new contract (2023/24).  

Resolved:-  (1)  That the key accounting issues and main changes to the accounts in 2023/24, as listed in Appendix A submitted, be noted.

(2)  That the Council’s revised Account Policies, attached at Appendix B submitted, be noted.

(3)  That a presentation on IFRS16 be made to a future Audit Committee.