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Agenda item

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

Minutes:

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 this meeting, and that lessons would be learnt in terms of completing the work. He noted that they were satisfied with the standard of the accounts, and that the issue surrounding the value of Council car parks was a matter of opinion and that an understanding would be reached.

 

The Cabinet Member for Finance explained that the Council had completed the final accounts, and noted his disappointment that Deloitte had failed to complete the work in accordance with the schedule. He expressed his appreciation of the Accounting Team's work. 

 

A member of the Committee reiterated the observations made by the Cabinet Member for Finance, noting his appreciation of the team's work.

 

A member drew attention to the recommendation, noting that it would be unwise to vote in favour of it as it stood. He enquired about the Council's banking over-indebtedness position. He referred to an article in the press regarding North Wales Councils' response to a freedom of information request connected to pension fund investments. He elaborated on this, noting that Gwynedd Pension Fund money was being invested in companies producing weaponry. He noted that this was a moral issue and that he would personally avoid investments of this kind. He added that the Council did not appear to make sufficient enquiries regarding investments, and that there was a need to take action to ensure that the Pension Fund's money was not being invested in companies of this kind.

 

In response to the above observations, the Head of Finance Department noted the following:

·         In terms of the recommendation, it was possible that the wording was unfortunate, but the recommendation was to accept and note the Statement, subject to the audit. He suggested a possible amendment to the wording for the Committee to consider, namely "To accept the pre-audit version of the Council's Statement of Accounts for 2018/19, and to note that the final version would be submitted to the Committee at its extraordinary meeting on 13 September 2019."

·         That it was a cash-flow issue which was highlighted by the bank over-indebtedness on 31 March, where the Council was to receive grants to reconcile the situation early in April. Had the Council borrowed money, there would have been related costs, and so this was the most cost-effective way to fund specific costs.

·         That the Council had responded to the press on the pension investments issue. He explained that the pool investments included a number of companies, some of whom - such as Airbus, Siemens and Volkswagen - undertook a small proportion of their work in the defence sector. He emphasised that the Council did not target investments of this kind, but with the Pension Fund's asset managers investing across the stock market, it was inevitable that some companies would have elements of work involving the defence sector. He noted that those who had submitted a Freedom of Information request had misled the press in its findings.

 

The member asked further whether the Council was taking every possible step to prevent investments of this kind. In response, the Head of Finance noted that the Pensions Committee, in its meeting on 8 November 2018, had approved an Investment Strategy Statement which included amended investment principles. He noted that the Pensions Committee, at its meeting in the afternoon, would consider allocating 12% of the Pension Fund to a low carbon permissive equity fund. He emphasised that it was impossible to predict the Pensions Committee's decision, but that there was a clear move towards more responsible investment. The member noted that he welcomed the move towards more ethical investment.

 

A member noted, following the decision on the McCloud legal case and the rejection of the Government's appeal, that the Government was looking again at the public services pension schemes situation with associated costs of around £4 billion. It was likely that there would be implications. In response, the Head of Finance noted that the Governmental review was ongoing, and that all Gwynedd Pension Fund employers were fortunate not to have to identify reserve liability.

 

In response to a question by a member regarding payments made to the former Head of Highways and Municipal, the Head of Finance noted that a redundancy package had been given to the former Head as part of the Council's managerial review. This in turn had achieved a considerable amount of financial savings.

 

RESOLVED to accept the pre-audit version of the Council's Statement of Accounts for 2018/19, and to note that the final version would be submitted to the Committee at its extraordinary meeting on 13 September 2019.

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