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Agenda Item 6
Reports to Committees
Liverpool City Council
Report to: Audit & Accounts Committee
Subject:
Audited Statement of Accounts 2007/08
Report no:
FMS/26/0
8
Date:
30th Sept ember 2008
Reporting officer:
Robert C
orbett
Acting Executive Director
Contact officer:
Robert Corbett
Tel: 225 2347
email: [email address]
Ward:
City wide
1. Purpose and recommendations
To consider and approve the revised statement of Accounts for 2007/08.
That:
a) the revised Statement of Accounts 2007/08 be approved;
b) the Committee continues to receive quarterly update reports of the
progress in addressing the significant internal control issues identified in
the Statement of Internal Control.
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2. Relevant background information
The pre-audited Statement of Accounts for 2007/08 as presented to the Audit
and Accounts Committee.
3. Key issues
In June the Council approved the Statement of Accounts for 2007/08 making
them available for public inspection and audit by the Auditors.
The Auditors are required to issue a report to those charged with governance
summarising the conclusions of their audit work. Within the City Council the
Audit & Accounts Committee fulfils this role.
A report from the Auditors is elsewhere on this Committee’s agenda.
However, since the Statement of Accounts was approved in June a number of
issues and adjustments have been identified that should properly be reflected in
the Statement of Accounts. The Statement of Accounts now attached, therefore
reflect the following key adjustments.
Capital Commitments re City Centre Movement Strategy
The value of capital commitments included disclosure of the City Centre
Movement Strategy - £6.486m. This is made up of two elements, the larger of the
two, totalling £5.578m, relating to Phase 2 of the scheme which has not yet been
formally committed. Audit testing found that there has been no final authorisation
for the scheme to date. As a result some of the anticipated ERDF funding will
now be available from NWDA and private funding.
The disclosure of capital commitments are overstated. The disclosure note
should only contain those schemes to which the authority is legally committed.
Rate Support Grant Debtor
The reconciliation of the RSG entitlement arising from the NDR national pool
showed an understatement of £1.3m in the disclosed debtor in the accounts,
compared to the actual debtor, due to historic errors in the spreadsheet used to
perform the reconciliation. The error had been identified and the full amount of
income received, but the General Ledger has not been updated for the correct
amount. This has now been actioned.
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Disclosure of Losses and Gains re Derecognition of Financial Investments
The Statement of Recommended Practice (SORP) requires that gains and losses
arising from treasury management activities concerning the early repayment of
debt should be recorded in the accounts gross and gains and losses not simply
netted off.
An amendment was therefore necessary to identify gains of £1.949m and losses
of £1.876m to explain the a net “gains on the repayment of debt” of £73k – as per
note 20b to the accounts.
Creditors and Prepayments
Audit testing of the Council’s creditors balance identified an occasion where the
accounts recorded a liability as a creditor rather than a prepayment. The
necessary adjustment has no impact upon the financial position of the council but
does adjust two figures on the balance sheet.
Creditors and Provisions
Audit testing of the council’s creditors balances identified an occasion where the
accounts overstated the value of creditors but understated the value of the
provision required for future expenditure. Again the necessary adjustment has
no impact upon the financial position of the council but does adjust two figures on
the balance sheet.
Pension Fund Assets
The assets of the pension fund are required under accounting requirements to be
apportioned and recorded within the accounts of each employing body. The
estimate of pension fund assets prepared by the Merseyside Pension Fund was
understated by 1.5% (£17m). The notes to the accounts now reflect the correct
assessment.
Fixed Asset Reconciliation
The Council has made progress in its aim of recording all property information
into the new TRIBAL system. There is a list of potential duplications on the asset
register resulting in an overstatement of fixed assets of £4m. Officers are
currently investigating this matter.
Work is continuing to investigate the discrepancies arising from the process of
matching the property information and amend the accounts accordingly.
However, significant progress has been made during the year and the Council’s
fixed asset management database is now much more reliable than in previous
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years and the work to make it fuller fit for purpose will be completed by the end of
March 2009.
Collection Fund re Council Tax Provision for Bad Debts
The Council Tax Bad Debt Provision was calculated on information available at
the accounts presentation date. However, actual collection performance in the
year to date suggests the bad debt provision could be understated by between
£1.2m and £2.2m. The Collection Fund performance continues to be closely
monitored each month and any further impact of the downturn in the national
economy will be reported in future quarterly financial review reports.
Housing Stock Transfer
As reported to the Audit & Accounts Committee in June the council was in
discussion with the auditors over the final accounting arrangements for the
housing stock transfer. It has therefore subsequently been determined that to
fully comply with the SORP that an adjustment was needed to the impairment
value of the housing stock at the year end. This adjustment makes no difference
to the financial position of the council.
4. Conclusions
That the revised Statement of Accounts for 2007/08 presents fairly the financial
position and income and expenditure of Liverpool City Council for the year ended
31st March 2008.
5. Key to any abbreviations used
Cipfa – Chartered Institute of Public Finance & Accountancy
EMT – Executive Management Team
MTFP – Medium Term Financial Plan
SORP - Statement of Recommended Practice
RSG - Rate Supporting Grant
NDR - Non Domestic Rates
NWDA –North West Development Agency
ERDF - European Regional Development Fund
6. Documents attached
Statement of Accounts 2007/08
