Agenda item

To submit, for information, the statutory financial declarations (subject to audit) for 2014/15.

The Head of Finance Department set out the background and context of the report. Attention was drawn to the fact that unaudited draft accounts were being submitted here, with the final version to be submitted for the Committee's approval at the meeting on 24 September 2015.

The Senior Finance Manager guided members through the accounts and noted that the Annual Governance Statement would also be included with the accounts to form one composite document which would be brought before the next meeting of the Committee. It was reported that last year’s accounts had received approximately 800 visits on the website and this was heartening.   

The departments were congratulated on their work of managing budgets, as underspend only represented 0.18% (point one eighth of one per cent) of the total expenditure. 

The Head of Finance Department drew attention to the figure associated with 'Remeasurements of the net defined benefit liability/assets' of £70,697 million on page 9 of the accounts. He explained that the pension liability situation had not changed significantly but the actuarial projection unit method was used with today’s prices placed on some pension liabilities 60 years in the future. He noted that accounting rules insisted on using the returns rates on bonds as the discount rate, which meant that there was great movement between the years in the perceived value of the pension liabilities but were not a real change in terms of cash and this could give the wrong impression of the situation.

In response to a question regarding the costs of retirements at a time of cuts, the Head of Finance Department noted that the additional cost would be identified when applications were made for retirement funded by a contribution from the Department and/or the Corporate Redundancy Fund. Members were reminded that they had considered the decision of the Cabinet of the Council on 23 June 2015 to transfer £2,986,685 to the Redundancy Fund at the last meeting of the Committee. It was noted that the exact total cost could not be foreseen but the Redundancy Fund provision was being reviewed continuously so that the costs could be addressed.

In response to a further question, it was noted that the actuary had taken into account the change of pensionable age from 65 to 67 years. 

A member referred to school reserves under ‘Note 10 – Transfers to/from earmarked reserves’ on page 26 and he noted that schools should still be encouraged to reduce their balances. The Head of Finance Department confirmed that schools were encouraged to use balances for the students’ education and that the Education Department secured an explanation annually regarding the schools’ intention of dealing with the money. 

Regarding school balances, a member suggested the need to re-examine the funding formula for schools.

In response to an observation by a member, the Head of Finance Department noted that the Full Council, at its meeting on 9 October 2014, had underlined a previous decision not to invest the Council’s own money in Israel. In terms of the Pension Fund’s investments, it would have involved a long and costly exercise of re-contracting with the Investment Managers of the Fund to ensure that there would be no investment in Israel. He noted that officers and members of the Pensions Committee were trying to influence Investment Managers of companies who were investing on behalf of the Fund on how to invest the money and also they were trying to influence by means of the Local Authority Pension Fund Forum. He added that investment decisions to safeguard the interests of members of the scheme had to be made on the merits of the companies and the returns received.

A member referred to other employer costs under ‘Note 31 – Officers' Remuneration’ on page 56 regarding the retirement of Senior Officers. The Senior Finance Officer noted that the figures reflected additional costs for the Council and that they were not direct payments.  

All staff associated with preparing the accounts and all Council staff involved with the Council's budgets were thanked for their hard and detailed work.

RESOLVED to accept and note the 2014/15 Statement of the Council’s Accounts (subject to the 2014/15 audit).