The Assistant Director of Finance and Procurement will submit Document “D” which reports that the 2017-18 unaudited Draft Statement of Accounts were uploaded onto the Council’s website on 31 May 2018 and were now in the process of being audited.

The final audited 2017-18 Statement of Accounts are due to be approved by the Committee on 30 July 2018.

Recommended-

That the progress on the preparation of the 2017-18 Statement of Accounts be noted.

                                                                        (James Hopwood – 01274 432882)

The Appendix to Document “D” is lengthy and is therefore being circulated on a restricted basis.  It is available on the Minutes/Agenda Database of the Council’s internet site www.bradford.gov.uk or in Committee Secretariat, by contacting Fatima Butt on 01274 432227.

The Assistant Director of Finance and Procurement  submitted Document “D” which reported that the 2017-18 unaudited Draft Statement of Accounts were uploaded onto the Council’s website on 31 May 2018 and were now in the process of being audited.

The final audited 2017-18 Statement of Accounts were due to be approved by the Committee on 30 July 2018.

It was reported that the Committee was considering the draft accounts this year as the production of accounts moved forward by two months and would be signed off by the Committee on 30^th July; the reason for bringing the draft accounts was for the Committee to have the opportunity to look at them before they were signed off.

Members were informed that:

·         Last year the accounts showed a negative net worth because of the way the WYPF valuations had to be calculated.

·         The deficit had reduced very slightly and cash had reduced.

·         The collection fund position was worse than what was being expected for business rates and Council Tax, expected Council Tax deficit to be £500,000 but was actually £900,000; the increase in deficit was dealt with by using reserves.  It was the same situation in the collection of business  rates, the deficit was set aside by using reserves.

·         The total amount of cash had increased at 31 March 2018 due to the MRP (Minimum Revenue Provision) adjustments.

It was reported that new guidance which required Local Authorities to set aside a prudent amount of MRP (Minimum Revenue Provision) had been published.  The authority was reviewing its policy in respect of the annual charge for MRP in 2017/18. Changing MRP did not lead to revenue savings as the change reallocated the cost of financing into future years.

In response to a Member’s question it was reported that the authorities proposed use of the MRP Policy was appropriate and prudent and complied with regulations and guidance issued by the DCLG (Department of Communities and Local Government).

 Members were informed that:

·         To repay the debt element, normal accounting rules matching costs to time were basically the principles of depreciation; the cost of the building financed with the borrowing was charged to the revenue based on the timing of building usage.  However for Local Government, the Government had legislated to replace depreciation with an MRP policy.

·         The Council at 31 March 2018, held £310 million of old debt, it was in relation to this amount the proposal to change the Council’s MRP Policy was made.

·         At 31 March 2018, the Council held £186 million of debt for PFI (Private Finance Initiative),  the proposal was made to spread the debt repayments over none revenue budgets.

·         At 31 March 2018 the Council had £153 million of newer debt, this would be paid off in equal instalments numbered according to the lifespan of the buildings bought with the debt.  No change was proposed for the debt repayment on this debt.

·         Overall the debt totalled £649 million against the total value of long term assets held on the Council’s balance sheet of £1.1 billion.

In response to a Member’s question it was reported that legal advice on the Council’s proposal was sought and it was confirmed that it was in accordance with government regulations, the revisions the Council was making were prudent.

It was reported that provision for bad debt included writing a debt off and that money was set aside for such eventualities.

Members were informed that what was being proposed for schools in relation to the PFI contract was reasonable and that there would be no impact on a unitary charge.

In response to a Member’s question it was reported that under new proposals the PFI debt would be paid off on the life of school buildings and did not affect the PFI contract; how PFI assets was shown in the Council’s accounts would need to be considered.

It was reported that most authorities were already dealing with debt in this way and it was prudent to align assumption to asset life.

Resolved-

That the progress on the preparation of the 2017-18 Statement of Accounts be noted.

Action:           Assistant Director, Finance and Procurement