Agenda item

For the Committee to receive a report regarding the Annual Accounts for

2021/22.

The Committee considered a report from the Chief Financial Officer (item 7 in the minute book). A summary was provided of some updates made to the accounts since they had been published on the Service’s website. Members were shown a comparison of the draft accounts presentation and the updated presentation for the following sections of the accounts; Movement in Reserves Statement, Balance Sheet, Cash flow statement and notes, Comprehensive Income amd Expensditure Statement (CIES), Expenditure and Funding Analysis, Adjustments between accounting and funding basis, Unusable reserves, government grants and contributions, Property, Plant and Equipment. Notable changes related to:

·        Update to collection fund entries, due to timing between the preparation of the draft accounts and the receipt of the finalised returns from the billing authorities. (net impact of £500k).

·       A grant transferred from the Isle of Wight had been removed from the grants disclosure note. (£141k).

·         Revision to the property valuation of Property, Plant and Equipment by a reduction of £1.5m (balance sheet), due to the external audit work as explained in the External Audit Results report.

 ·         Where the identified changes affected the numbers in the accounts, all changes related to unusable reserves. The usable reserves figures were unchanged.

In response to a question from Members, the Committee heard that the pension reserve on page 101 of the reports pack is an unusable (notional) accounting reserve and reflects the Authority’s share of the scheme assets and liabilities and is not a ‘cash’ figure. LGPS scheme assets and liabilities are subject to a full actuarial revaluation every three years.

Members discussed the underspend from the financial year 2021/22 of c.£2.6m and asked about the Reserves Strategy, and how this was decided and planned to be used in terms of capital and revenue spending. The Committee expressed concern that the equivalent of approximately 5% of the council tax precept had ended up being added to reserves for capital spending as a result of the underspend and the impact upon council taxpayers. They wished this to be noted. Members also asked about the value in the ICT Reserve, the Equipment Replacement Reserve, the HQ Maintenance Reserve and the increase of £4.5m to the total value of Usable Reserve.

Members heard that the Reserves Strategy is agreed by the Authority as part of the budget setting process in February each year and that adding the underspend of c£2.6m from 2021/22 to the capital payments reserve had been agreed by Members as part of the outturn report in July given the Authority’s future capital priorities. It was explained that planned contributions to reserves allow the Authority to fund the replacement of equipment and spend on ICT priorities at the time they are required, given the uneven profile of spend over time. The officer also explained that there were a limited number of ways for Fire Authorities to fund capital expenditure and that no capital funding was provided to the Authority by government. There were also limited opportunities to generate capital receipts from selling assets. The Authority therefore has to use revenue resources to fund capital expenditure. The officer gave examples such as the vehicle replacement programme and projects such as the building of the new Bishops Waltham Fire Station. 

Members heard that the Capital Payments Reserve is used to fund priorities of the Authority and that the Authority could determine what it could be spent on as the funding originally came from revenue sources.

Members heard that the maintenance of reserves had helped the Authority make strategic choices in the past and that the Community Risk Management Plan was informed by the ‘bottom line’.

Members heard that the Authority sets the Reserves Strategy and that a Budget Update Report would be presented to the Authority in December and then a Budget and Precept Report, including the Reserves Strategy in February 2023.

Resolved

·         The Statement of Accounts for 2021/22 (draft) at Appendix 1 was approved by the HIWFRA Standards and Governance Committee subject to any final amendments reported at the meeting including the changes outlined in paragraph 18, with the Chief Financial Officer given delegated authority to approve further minor amendments to the Statement of Accounts if required prior to publication.

·         The Letter of Representations (draft) attached at Appendix 2 was

approved and signed by the Chairman on behalf of the HIWFRA

Standards and Governance Committee.