Agenda item

To submit –

·        Statement of Accounts post-Audit;

·        Audit Wales’ ‘ISA260’ report;

·        Letter of Representation (Appendix 4 – ISA260 Report).

DECISION:

·        To accept and approve the 'ISA260' Report by Audit Wales in respect of Cyngor Gwynedd

·        To accept and approve the Statement of Accounts 2024/25 (post-audit)

·        The Chair of the Committee and the Head of Finance to electronically certify the Letter of Representation

·        To congratulate the officers for their work of securing an unqualified statement

·        To thank Audit Wales for effective collaboration

 

 

The report was submitted by the Assistant Head of Finance - Accountancy and Pensions. Members were reminded that conditional accounts on the Gwynedd audit for 2024/25 had already been submitted to the Committee at the meeting in September where the Statement was discussed in detail, drawing attention to the main matters and relevant notes. It was reiterated that the Harbours accounts had also been submitted to the Committee in May, and it was nice to report that there were no adaptations deriving from the Audit, and therefore they did not need to be resubmitted.

 

It was reported that the accounts had been subject to audit by Audit Wales since the beginning of June and that an unconditional opinion was given on the accounts by the Auditors with a combination of post-audit adaptations and recommendations had been implemented.

 

Reference was made to four misstatements that had not been corrected, noting that they were not being considered as material, but where relevant, they would be corrected as a part of the 2025/26 accounts.

 

·        Note 15: Property, Apparatus and Equipment:

1.     Categorisation issue, namely that an item of capital expenditure had been funded from the UK Shared Prosperity Fund (UKSPF), wrongly categorised and treated as an addition to the balance sheet, instead of as revenue spending, funded from capital through statute. It was confirmed that the money was not being questioned.

2.     Relating to a technical matter relating to capital treatment.

3.     That an error in the Cyngor Gwynedd valuation worksheet had led to inconsistencies between the Valuer's valuation worksheets and the figures used to update the register.

 

These will receive due attention by the 2025-26 accounts.

 

·        Note 21: Creditors - matter relating to the grant balance treatment and to be corrected for the 2025-26 accounts.

·        Note 17a Financial Instruments and Note 35 IFRS 16 Leases - matters associated with each other where the new requirement on councils in 2024/25 related to leasing. This was the first year in terms of accounting treatment for leases, and therefore the matters to be addressed for the 2025-2026 accounts.

 

When discussing adjustments to the Statements of Accounts that have changed, attention was drawn to:

 

·        Note 19 - Cash and Cash Equivalents and the categorisation on 31 March, which related to the payment instruction to the bank on the last day of the year and its treatment. As noted in the Auditor's report, the CIPFA guidelines are restricted for this specific scenario and the change has affected the balance sheet and the cash flow statement.

·        Note 21 - Creditors. Attention was drawn to the change in creditor categorisation between the long-term and short-term for 2024/25 and the previous year, as well as correcting the creditor mis-classification in Debtors and added wording in Note 18a Debtors.

·        Note 35 IFRS 16 Leases - due to new requirements relating to leasing, the format has been adapted to comply with all CIPFA requirements.

·        Note 38 Pension Costs - note simplified as well as improved clarity on the Related Parties note.

 

It was reiterated that the adjustments did not affect the Income and Expenditure Statement or the Movement in Reserves Statement, and in the context of the balance sheet, adjustments between different headings on the Balance Sheet which had been implemented instead of changing the bottom line. Nevertheless, it was noted that the cash flow statement had been adjusted.

 

Yvonne Thomas, Sioned Owen and Siwan Glyn from Audit Wales were welcomed to the meeting to submit their report on the Audit of Accounts. It was noted that Audit Wales intended to publish an unqualified audit opinion on the 2024/25 accounts, reiterating that the accounts provide an accurate and fair picture of the situation and comply with appropriate practices.  It was reiterated that the action steps had now been completed and there were no additional matters. Although there were no complete assurances, it was noted that the Auditors work on a material assurance level with a 2024/25 relevance level of £6.385 million and had been implemented independently over the audit period. Cyngor Gwynedd Finance Officers were thanked for their support and for the good cooperation during the process.

 

Attention was drawn to the new format of the report and the key summary, which was easier for the reader to understand, as well as the results of the audited risks. It was noted, due to the number of misstatements and further enquiries, that this would affect the final fee. It was highlighted that Audit Wales had set an ambition of adjusting the timetable for completing account audits by September 2026. It was acknowledged that the timetable was ambitious but that discussions had been held with Local Authorities to ensure that this was achievable - it was reiterated that this was the timetable in place before Covid-19.

 

Thanks were expressed for the reports.

 

The Council's Finance Officers were congratulated on preparing all the information and for Audit Wales for their support. The work was of a high standard and the accounts were seen to provide a 'clear and fair picture', which reflected that.

 

Matters arising from the ensuing discussion:

·        In line with the projections, the intention was to use reserves, but now it was seen that there was a net increase of £9.0m in the funds / reserves. Good news, but were these details available when setting the tax or had a better settlement figure been received?

·        It was accepted that setting a budget from projections was difficult, but there was a need to ensure that the public and the Councillors obtained a clear picture of the situation, particularly when consulting on setting the Council tax.

·        An increase of £4m in the Highways reserves? Was this projected?

 

In response to the observations, Members were reminded that this was a snapshot on one day (31/03/25) and that a a number of late grants had been received which meant that there had been no need to use reserves. Although a substantial sum appeared in the reserve, the amount was low in comparison with previous years, and despite occasional use being made of it to close financial deficits, the fund was being continuously reviewed to see how it could be strengthened. Reference was made to a recent review from Audit Wales, where it was concluded, although there was room to formalise the Council's reserves, the Council made positive use of the administration for these reserves.

 

In terms of presenting information clearly and accurately to the public, the Head of Finance noted that he always sought to do so, and that he did, as best as he possibly could as the 151 Officer, sign to confirm that the accounts were accurate. He reiterated in January 2026 that further work would be done to review the reserves when setting the 26/27 budget. It was highlighted that the figures would be likely to fluctuate, but everything was being checked and balanced when setting the budget.

 

In response to a comment that £4m had been added to the Highways Department's reserves, it was noted that this amount was money that was received to de-trunk - transfer the responsibility for highways from the Highways Agency to the management of the relevant local authority - the road between Bontnewydd and Plas Menai after building the Caernarfon bypass. It was reiterated that this was one-off funding to maintain the highways.

 

In response to a comment regarding the inflation rate being highlighted as 2.75% in Note 38 - Pension Costs) although the Bank of England noted a rate of inflation of 3.8%, it was noted that Hymans Robertson (Independent Actuary Company) looked to the long-term and acted on an expected average over many years into the future.

 

In response to a comment regarding an increase in employer national insurance contributions and whether Cyngor Gwynedd had received grant funding or had had to submit a funding bid in order to pay, it was noted that the cost was £4.5m and that a grant of £3.9m had been received from the Welsh Government. There would be a deficit of £770k in the 2025/26 budget.

 

RESOLVED

·        To accept and approve the 'ISA260' Report by Audit Wales in respect of Cyngor Gwynedd

·        To accept and approve the Statement of Accounts 2024/25 (post-audit)

·        The Chair of the Committee and the Head of Finance Department to certify the Letter of Representation electronically

·        To congratulate the officers for their work of securing an unqualified statement

·        To thank Audit Wales for effective collaboration