Agenda and minutes

To receive apologies for absence.

Councillors Aled Ll. Evans, R. Medwyn Hughes, Berwyn Parry Jones and Huw G. Wyn Jones.

To receive any declaration of personal interest.

No declarations of personal interest were received from any members present.

To note any items which are urgent business in the opinion of the Chairman so they may be considered.

There were no urgent items.

The Chairman shall propose that the minutes of the meeting of this committee, held on 13 June 2019, be signed as a true record.

The Chair signed the minutes of the previous meeting of this Committee, held on 13 June 2019, as a true record.

To submit, for information, the statutory financial declarations (subject to audit) for 2018/19.

The Senior Finance Manager set out the background and context of the report. Attention was drawn to a report submitted to the Committee on 13 June, which presented the end of year position in the form of a simple out-turn which summarised the financial situation for 2018/19, while the Accounts Statement was in standard form for external and governance purposes.

It was noted that the Finance Department had produced the 2018/19 statutory financial statements, and had released them to Deloitte, the Council's external auditors appointed by the Wales Audit Office, before 31 May. It was explained that it had been intended for the final accounts to be presented before the Committee at this meeting, following an audit. It was noted that, unfortunately, confirmation had recently been received from Deloitte to the effect that it had been unable to complete the audit and the External Auditors' ISA260 report for presentation at the meeting.  It was confirmed that an extraordinary meeting of the Committee would be held on 13 September in order to present the accounts following the audit, for the Committee's approval.

Members were reminded that the final Harbours accounts had been submitted to the Committee on 13 June. It was noted that confirmation had been received from Deloitte that there were no amendments to be made to the Harbours accounts following the audit, and that there was therefore no need to submit them to the Committee.

The Senior Finance Manager expanded upon the content of the Statement of Accounts. She referred to 'Note 15 - Property, Plant and Equipment', noting that Deloitte, as part of the audit, had raised a matter concerning the value of Council car parks, and that discussions were ongoing between the Property Service and Deloitte to change the value of the car parks. Attention was drawn to the recommendation that the Committee accept and note the Statement of the Council's Accounts (subject to audit) for 2018/19.

The Head of Finance Department noted that Members had an opportunity to ask questions and familiarise themselves with the contents of the final accounts before final approval at the extraordinary meeting. He referred to the legal judgement on the McCloud case which meant that there would be greater transitional protection for members of public services pension schemes. He noted that the Supreme Court had refused the Government's application for the right to appeal against the decision. He explained that some employers were required to set a reserve liability fund, but due to the fact that Gwynedd Pension Fund had predicted actuarial pay inflation in accordance with the case, the Council was not required to amend the figures. He noted that there would be extra wording under 'Note 38 - Pension Costs' to reflect this.

The Deloitte Financial Audit Engagement Leader noted his appreciation that an extraordinary meeting would be held. He explained that the audit was progressing well and that there was a few days' work remaining. He apologised that the ISA260 report was not ready for submission to  ...  view the full minutes text for item 5.

To submit:

(i)            the report of the Head of Finance

(ii)           ISA 260 report of the External Auditors

The Head of Finance submitted the statutory financial statements of the Pension Fund for approval by the committee. He expanded upon the content of the Statement of Accounts. He made reference to two of the Fund's key strategies, namely the finance strategy statement and the investment strategy statement. Attention was drawn to an increase of £143 million in the Fund's net assets over the 2018-2019 year, which brought the value of the Fund to over £2 billion.

He noted that the costs of managing investments had been higher during the 2018-19 financial year as it had been a period of high turnover in companies managing equity assets and associated investments, with accompanying costs. He went on to note that this was mainly following the transfer of most assets from the Fund's appointed managers, namely Fidelity and Veritas, to the Wales Pensions Partnership for joint investment. He noted that, in the long term, it was anticipated that the fees would fall and returns, if not improved, would be more robust due to the dispersal of investment risk.

The Deloitte Financial Audit Engagement Leader submitted the ISA 260 audit report. He noted that the Auditor General intended to issue an unqualified audit opinion on the financial statements.

The following main observations were made:

·         In terms of the equalisation of Guaranteed Minimum Pensions (GMPs) in relation to the McCloud case, this was not a material sum when considering the Fund in its entirety.  He was therefore satisfied that there was no need to amend any aspect of the accounts;

·         No misstatements had been corrected in the financial statements;

·         Assurance had been received from the external auditors at Carmarthenshire County Council, the host authority for the Wales Pension Partnership Joint Committee; and there were no matters arising;

·         That most of the recommendations raised in previous years had been addressed;

·         That the accounts were of an excellent standard.

A member drew attention to the fact that the Council as an employer contributed £22.4 million towards the cost of pensions. The member noted that the Fund was healthy and well administered. The member enquired as to whether the triennial actuarial valuation reduced the Council's contributions as an employer, thus reducing the burden on taxpayers. In response, the Head of Finance noted that he was confident that improvements had been seen in terms of investments, it having been a positive three-year period without market decline. He expanded to note that the situation of the triennial actuarial valuation would be confirmed on the day of the annual meeting of the Pensions Fund on 24 October 2019. He noted that there was no way to predict the actuary's findings, but that he was hopeful that the valuation would lead to equal or lower contributions for the Council as an employer.

A member noted that the income of £14 million on the Fund's assets, which was 0.7% of the Fund's value of £2 billion, appeared low at first glance, considering the level of the dividend. In response, the Head  ...  view the full minutes text for item 6.

To submit, for information, the report of the Investment Manager on the results of the Council’s actual borrowing and investment during the financial year that ended 31 March 2019.

The Investment Manager submitted the report on the Council's actual Treasury Management outcomes during 2018/19, against the strategy established for that financial year. She noted that the Council's borrowing activity was within the limits originally set, and £330,614 of interest had been received on investments, which was higher than the £130,000 within the budget. It was confirmed that none of the banks the Council had used for investments had failed to pay.

In response, the Head of Finance noted that the Council had taken advantage of new-found freedom in 2018/19 to invest in alternative options such as equity and property funds, which had improved return levels.

It was noted that the Investment Manager was commencing a period of flexible retirement, and that she would retire from the Council's service by January 2020. She was wished well on her retirement, and appreciation of her services to the Council and the former Meirionnydd District Council was noted.

RESOLVED to accept the report for information.

To submit the report of the Chair of the Audit and Governance Committee outlining the feedback from the meeting of the Working Group on 12 July 2019.

The report of the Chair of the Committee on a meeting of the above-mentioned working group held on 12 July 2019 was submitted. A failure to report on agreed actions at follow-up audits was considered for the following audits:

a) Arrangements for Children Leaving Care

b) Smallholdings

c) Recycling Targets

The working group meeting also gave consideration to audits which had been given a restricted assurance level, namely -

a) Diesel Tanks and Diesel Management

b) Safeguarding Arrangements - Establishments

c) General Data Protection Regulation

The relevant Cabinet Members and officers were invited to attend the meeting in order to discuss the matters arising.

In relation to the Smallholdings audit, a failure to invoice tenants in the past, and the weaknesses highlighted, a member noted a hope that there would be better arrangements in future. The Head of Finance explained that Smallholdings had received a considerable amount of attention lately, and that the matter had again been included in the Internal Audit Plan for 2019-20.

A discussion was held regarding the Recycling Targets audit. It was noted that changes to collection arrangements had come into force in the Dwyfor Area on 1 July, and that there had been an improvement in the standard of collection work. Attention was drawn to the fact that changes to collection dates had caused confusion, especially amongst older adults, and that an eye should be kept on the situation and an update received on the plan's implementation.

A member noted, in relation to the Diesel Tanks and Diesel Management audit, that it had become evident that site managers had not had responsibility for the condition of tanks in the past, and that he hoped that this situation would improve as site managers were now required to inspect tanks on a monthly basis. In response, the Head of Finance noted that the Internal Audit Service would conduct a follow-up audit.

RESOLVED to accept the report.