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.
Supporting documents:
- Statement of Accounts 2018/19, item 5. PDF 126 KB
- Appendix - Statement of Accounts 2018/19 Subject to Audit, item 5. PDF 775 KB