Agenda item

To receive and note the Council’s Statement of Accounts (subject to audit) for 2022/23.

DECISION:

To accept the Council's Statement of Account (subject to audit) for 2022/23.

The Cabinet Member for Finance took the opportunity to thank all staff at the Finance Department for their commitment to ensure that the Council's (draft) Accounts Statement had been submitted to Audit Wales since the end of June, and this within a very short period. He gave members an update on their responsibilities and thanked them for the good collaboration.

The Assistant Head of Finance Department - Accountancy and Pensions explained that the accounts would usually be submitted before the summer, but as there had been no Committee meeting in June, this was the first opportunity to submit them. It was added that there had been an extension again this year to the statutory timetable to audit accounts, with the intention of completing the audit and this Committee approving the accounts in December.

Members were reminded that the end of year financial position for 2022/23 had been submitted to the Committee o 25 May in the form of a simple out-turn report, but the Statement of Accounts, for external and governance purposes, had to be completed in CIPFA standard form. It now appeared as a lengthy and technically complex document.

The content of the report was reported upon explaining that six sets of accounts for 2022/23 were being completed:

1.      Cyngor Gwynedd

2.      Gwynedd Pension Fund

3.      GwE (substantially-sized joint committee and therefore Full Statements had been prepared)

4.      North Wales Ambition Board (substantially-sized joint committee and therefore Full Statements had been prepared)

5.      Gwynedd Harbours and

6.      Gwynedd and Anglesey Joint Planning Policy Committee (submitted to a meeting of the Governance and Audit Committee on 25 May 2023).

Reference was made to the Narrative Report that provided information about the Accounts and on the vision and priorities of Gwynedd, the Financial Strategy and the financial performance measures. Members were guided through the report and details were provided on some elements:

·         Summary of capital expenditure. Capital expenditure amounted to £37 million during the year compared to £37 million in the previous year as well.

·         The main financial statements included Income and Expenditure Statement, Balance Sheet, Cash-flow etc.

·         Movement in Reserves Statement which was an important statement and summarised the Council's financial position. It was highlighted that the Council's general balances were £7.9 million at the end of March 2023, namely the same level as March 2022. That Reserves highlighted a reduction in the £106 million funds at the end of March 2022 compared to £104 million by the end of March 2023.

·         School balances where a reduction of £4.8m was seen in school balances - £17 million at the end of March 2022 compared to £12 million by the end of March 2023.

·         There had been a considerable shift in the balance sheet position by March 2023 compared to the previous year due to Pension Liability. It was explained that the matter was not unique to Gwynedd but rather a general picture due to market conditions. On 31 March 2023, the Council had a further pension liability of £242 million, but on 31 March 2023, the assets' value was higher than the liabilities' value with a net asset position of £136 million.  The reason for this was that the actuary's valuation used corporate bonds, and because these had yielded high, it had led to high accounting discount rates, which made the pension liability values substantially less.  It was added that the pension calculating standards did not allow assets to be shown for a defined benefit pension scheme, therefore the asset's value had been adjusted to £0 on the balance sheet. It was noted that the Finance Department was awaiting further instructions from Audit Wales and CIPFA on the matter, and if any change to the handling was needed following these instructions, they would be revised by the final Statement of Accounts. 

Reference was also made to Note 10 - Detailed information about funds which included earmarked Reserves: School Balances, Earmarked Reserves including analysis of the £104 million reserves (including the principal reserves, namely capital reserves, the Council plan reserve, supporting the financial strategy reserve and the Council's Tax Premium reserve).

Reference was made to Note 15 - Property, Plant and Equipment which presented an analysis per category: land and buildings, vehicles, plant and equipment etc. Capital Liabilities which included capital work at Ysgol Treferthyr, Cricieth - the amounts and payments so far.

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 Assistant Head of Finance was congratulated on submitting the report in an interesting and coherent manner. The report was comprehensive.

·         Congratulated the Department on completing the work within a tight schedule.

·         That having reserves was necessary for unexpected situations.

In response to a question regarding the Pension Liability and whether the matter would create instability, it was noted that market conditions and inflation were responsible for the situation and that it was a technical matter in essence.  The unusual situation related to technical recording rather than a financial matter.

In the context of reserves and the fact that they had been earmarked for specific fields, it was asked what would happen should anything unexpected arise e.g., free school meals.  It was noted that there were specific reserves to implement the Council's priorities and one-off bids, and it would be possible to fund something unexpected from this reserve.

In response to a question about reviewing earmarked reserves given that there had been no expenditure on some of those reserves this year, and the likelihood of the need for additional funding for next year's budget, it was noted that these reserves were reviewed on an annual basis with the Chief Executive. It was added that it was intended to restore some reserves and harvest others ensuring that funding was available for the future and to fund unexpected situations (the Supporting the Financial Strategy Reserve was an example of this). In response to a supplementary question on why the Covid-19 Recovery Arrangements Reserve could not be transferred to the general reserves, it was noted that this funding was the result of receiving grants from Welsh Government during the pandemic and that the Fund had been created as the accounts of the relevant year were closed.

RESOLVED to accept and note the Council's Statement of Accounts (subject to audit) for 2022/23.