Agenda item

To consider and receive the Statutory Statement of Accounts (pre-audit draft) for information

To accept and note the 2021/22 Statement of the Council’s Accounts (subject to audit).

Submitted - the report of the Head of Finance, submitting the statutory Statement of Accounts (pre-audit draft) for the 2021/22 financial year.  It was noted that:-

·         The draft accounts were currently being audited, and that the final version would be submitted following the audit, for approval at this committee's meeting on 17 November 2022. 

·         That there was no statutory requirement for elected members to approve the draft version of the Statement of Accounts.  Nevertheless, it was considered that submitting the draft statement to this committee for information was good practice, and was an opportunity for members to ask the financial officers about the content and equip themselves with relevant information in order to consider the relevant risks and other matters that will be subject to audit, within context.

The Cabinet Member for Finance gave members an update on their responsibilities, as well as an outline of where we had reached along the journey.  The Senior Finance Manager then expanded upon the content of the report.

The Chair thanked the Department for the detailed work, and invited questions and observations from members.  During the discussion, the following matters were raised:-

·         The Cabinet Member and Senior Finance Manager were thanked for providing very clear presentations, which drew attention to a number of very important matters in a comprehensible way.

·         Referring to the need to valuate more property as a result of the fact that inflation was so high, it was asked whether there were any changes in terms of valuating highway assets, and whether this was likely to create any delay in terms of auditing the accounts.  In response, it was noted that highways appeared under 'infrastructure' in Note 15 of the Accounts (Property, Tools and Equipment).  It was explained that highways were not being re-valuated, and that they were in on their historical cost.  If the Council did a piece of work on any road, it went in on at cost, and was valuated in accordance with the policy in Note 1 of the Accounts over 40 years.  It was noted further that work was afoot in England to change the system as this 'possibly' did not reflect the value of the road, and one of the proposals under consideration was that the net figure was only included, instead of the detailed analysis as in Note 15.  Also, there may be other options, but this was not an easy matter since the information held by councils about the expenditure incurred on roads was based on historical cost alone, since a valuation had never been carried out on them.  Furthermore, it was asked whether this would affect this year's audit of this Council's Accounts.  In response, it was noted that it could have an impact, but that the discussions were continuing.

·         It was asked whether the more detailed valuating was going to be a pattern for the future.  In response, it was explained that the high levels of inflation had affected this, and whilst inflation levels remained high, it was likely that there would be greater demand for this due to these volatile prices.  This matter was also being discussed as it was an extra burden on Councils during a financially turbulent time; although Gwynedd was more fortunate than other councils in this respect, since we had our own internal valuer to carry out the work.  It was also noted that the matter was still being discussed at the moment and that new guidance would be released soon, which would give a greater explanation of the matter. 

·         It was enquired whether the old road from Llanwnda to Caernarfon, which was now in the hands of Gwynedd Council following the opening of the new bypass, would be reflected in any way in the accounts.  In response, it was explained that additional funding was included in the settlement to reflect the fact that the road had been downgraded from its trunk road status, and had transferred from the Trunk Road Agency to the County Council.

·         In response to a question regarding the source of the funding of £4.4m on the Aberdyfi Harbour Walls, it was explained that there were a number of plans in the flooding and coastal field which had permission borrow, with support coming through the settlement to pay for them, and that this was already in the capital programme.

·         With reference to Table 3 of the Accounts - Summary of Capital Expenditure and its Funding - it was asked why the Environment expenditure was so much higher in 2021/22 than it was in 2020/21.   In response, it was explained that the main reason for that was because the Department had received £8.3m from the Local Transport Fund in 2021/22, compared with £2m in 2020/21.  It was also noted, contrary to the revenue expenditure, that the capital spending of the departments could vary substantially from one year to the next, subject to the projects in the pipeline.

·         It was noted that it appeared that the Council was being very prudent in increasing its reserves, but it was asked whether officers were concerned about the year to come, considering the current financial uncertainty.  In response, it was noted that when the budget had been set for the current financial year, that it was anticipated that the inflation level of salary costs and general levels of inflation was around 4%, which was a figure that was considered to be prudent at the time.  However, as the inflation figure was much higher than what had been budgeted for, and if everything else remained the same, the Council would overspend this year.  It was explained that the Council had been prudent and had made a number of difficult decisions over the years to ensure that we had reserves, in case a financial shock hits us.  In the current financial year, the Council had reserves and general balances that would mitigate the shock of additional energy costs and higher than anticipated costs.  However, reserves were not long-term answers, therefore, for the next year, the Accountancy Team was already looking in detail at the base from which we were working.  As the inflation figure was much higher this year than what was anticipated, the Council would have to increase the base for the years to come, and when setting the budget for next year, the Council would have to consider what was affordable and possibly cut the cloth to fit the money that was available.  It was confirmed, however, that it was not anticipated that the Council would be in a position of having to close schools / organisations some days of the week, as other councils did, and the committee was given assurance that the reserves that had already been earmarked would carry us through the hard winter ahead.

·         In reference to Note 10.29 of the Accounts - Council Tax Premium Account - a request was made for examples of projects under this heading.  In response, it was noted that although some capital schemes had slipped over the years, that a detailed analysis was included in the Housing Action Plan, which had been adopted by the Cabinet in December 2020, of the intended use of the Council Tax Premium money.

·         It was enquired whether it would be possible to know, when this committee would discuss the Council Tax Premium on 17 November, what proportion of the £13m came from premium that had been paid by Gwynedd residents.  In response, it was confirmed that this information could be provided in the report to the committee.

RESOLVED to accept and note the Council's Statement of Accounts (subject to audit) for 2021/22.