Agenda item

** Please note that Appendices 1 & 2 to this report will follow as they are currently being finalised **

Report of the Director of Resources.

Purpose of Report

The purpose of this report is to obtain official sign-off by the Chief Financial Officer and the Chairman of Accounts, Audit and Risk Committee on the audited Statement of Accounts 2014-15.

Recommendations

1.1       The Accounts, Audit and Risk Committee is recommended to approve the amendments to the draft 2014-15 financial statements.

The Director of Resources submitted a report to obtain official sign-off by the Chief Financial Officer and the Chairman of the Accounts, Audit and Risk Committee of the audited Statement of Accounts 2014/15.

In introducing the report, the Head of Finance and Procurement gave an overview of the changes that had been made to the accounts since the preliminary “subject to audit” version was considered by the Committee at its 24 June meeting.

The Committee was advised that the majority of the changes were primarily presentational. The main changes related to the inclusion of Graven Hill management costs of £52k, which the auditors were satisfied with but created a ripple through the accounts requiring associated amendments.

The Head of Finance and Procurement advised the Committee that the other main change related to a disclosure recognising a Department for Communities and Local Government (DCLG) debtor for NNDR3 (Business Rates) Return 2014 of £1.5million.  In an error on the part of CDC, the NNDR3 had been underclaimed from DCLG in 2012/13. Officers had now contacted DCLG requesting that the money be paid to CDC, however as the business rates payment system had since changed, it would only be possible for the full amount to be claimed if DCLG agreed there were special circumstances. If it was deemed there were no special circumstances, it would only be possible to reclaim 60% of the £1.5m overpayment.

The Head of Finance and Procurement reported that DCLG had agreed to consider repayment, subject to information being submitted The outstanding amount was recorded in the accounts as a debtor and would not be impaired at this stage as The Head of Finance and Procurement remained confident of full repayment after discussions with DCLG, who had advised that they would give some indication if they would make the payment, by 28 September 2015.

The external auditor advised the Committee that if they endorsed the accounts, they were effectively supporting the belief of officers that the full £1.5m would be repaid by DCLG. The external auditor recommended caution and that the Committee agree to impair the 40% of the payment that was reliant on special circumstances. If the money was not impaired there was the potential that 100% would be lost.

In response to members’ questions regarding how the £1.5m had not been picked up earlier, the Head of Finance and Procurement explained that it was human error in the calculation of the NNDR3 claim form.

Having regard to the explanation of the Head of Finance and Procurement and the comments of the external auditor, Members discussed the implications on impairing 40% of the unclaimed £1.5m from DCLG.

The Committee agreed to accept all of the amendments made to the accounts since their June 2015 meeting with the exception of the disclosure recognising DCLG as a debtor for NNDR3 of £1.5m.

To enable the signing off of the accounts by the statutory deadline of 30 September 2015, the Committee further agreed to delegate authority for the approval of the Statement of Accounts 2014-15 to the Head of Finance and Procurement, in consultation with the Chairman, subject to the provision of evidence to the external auditor that the full £1.5m would be returned by DCLG. If this evidence was not provided, only the 60% that could be claimed without the requirement for special circumstances should be included in the accounts and the remaining 40% of the £1.5m should be impaired.

The Committee requested that a separate report be submitted to their December meeting detailing the full history about what happened to arrive at this position and setting out the current position.

Resolved

(1)       That, excluding the amendment relating to the disclosure recognising DCLG as a debtor for NNDR3 (business rates) of £1.5m. the amendments to the Statement of Accounts 2014-15 made since the June meeting of the Committee be approved.

(2)       That authority for final approval of the Statement of Accounts 2014-15 be delegated to the Head of Finance and Procurement, in consultation with the Chairman, subject to the provision of evidence to the external auditor that the full £1.5m would be returned by DCLG. If this evidence was not provided, the 40% repayment requiring special circumstances to be applied, should be impaired.