Agenda item

Consider various unaudited annual reports and accounts by Chief Financial Officer prior to their submission to the External Auditors.  (Copies attached).

3.1     With reference to paragraph 5 of the Minute of 26 June 2018, there had been circulated copies of a report and associated papers by the Chief Financial Officer on the draft Annual Report and Accounts for Scottish Borders Council, Scottish Borders Council Pension Fund, Common Good Funds, Charitable Trusts, Bridge Homes LLP, SB Supports LLP, SB Cares LLP and Lowood Tweedbank Ltd..  The report provided the Audit and Scrutiny Committee with an opportunity to scrutinise the draft Annual Reports and Accounts for the year ended 31 March 2019 for Scottish Borders Council and associated Group Accounts prior to submission for External Audit Inspection by the statutory deadline of date of 30 June 2019.  The report summarised the financial transactions for 2018/19 and the balance sheet positions as at 31 March 2019 as set out in the Local Authority Accounts (Scotland) Regulations 2014.  In addition, Section 12 of the Local Government in Scotland Act 2003 required annual accounts to be prepared in accordance with proper accounting practice, primarily comprising the Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 and the Service Reporting Code of Practice 2017/18 supported by International Financial Reporting Standards (IFRS).  The Pension Fund Accounts were required to adhere to the Local Government Pension Scheme Amendment (Scotland) Regulations which specified what must be contained in the Annual Report and Accounts.  The Common Good and Trust Reports adhered to the Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing accounts in accordance with the Financial Reporting Standard for Smaller Entities (FRSSE), the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended).  Following audit and a public inspection period the finalised Audit report and Audited Accounts would be submitted to Council in September 2019.

1.2      The Chief Financial Officer then summarised Scottish Borders Council draft reports and accounts by means of a presentation.  He detailed the 2018/19 highlights which included – a Revenue out-turn of £1.302m underspend; and £16.414m of Financial Plan savings delivered, of which 71% was recurring.  Net Assets (excluding Pension Fund liabilities) had increased by £6.2mm net on the Balance Sheet.  Capital Expenditure was £47.8m with Fixed Asset NVB of £552.2m.  The presentation included the requirements under the Local Authority Accounts (Scotland) Regulations 2014 and the Council’s own Accounts timetable.  The Chief Financial Officer advised that the Council’s Audited Accounts would be available for public inspection for a 14 day period from 1 July and were required to be published on its website no later than 31 October 2019.  The presentation included an analysis of Revenue Expenditure by department and a breakdown of how efficiency savings had been achieved.  An increased turnover of £1m or 6.6% to £16.2m was reported in respect of external trading by SB Contracts and Members noted that this was as a direct result of a continuing challenging external market.  Mr Robertson went on to explain the - Statutory Accounting Adjustments; General Fund Balances; Balance Sheet overview; and Capital Out-turn for 2018/19.  Group Accounts were consolidated as detailed in the full report for Scottish Borders Council.  Mr Robertson gave a full explanation to Members’ questions with regard to the permanent and temporary savings, exit packages and clarity on the Lowood Tweedbank Accounts.  The Chair asked specific questions around Waste Management, Strategic Housing, Risk Management and Non-Domestic Rate income of which Mr Robertson responded fully.

1.3      With reference to the Pension Fund Annual Report and Accounts, Mr Robertson confirmed that Scottish Borders Council was one of the best funded LGPS nationally and the Pension Fund Committee had worked hard during the year to respond to the continually growing governance agenda and increasingly complex pension administration environment the Fund operates within.  The value of the Pension Fund had continued to increase with strong returns coming from global equities and the overall fund had grown by 7.6% during 2018/19 with the overall fund value increased to £732.9m, an increase of £48.3m.  The report was fully discussed and in response to questions, Mr Robertson advised that in relation to financial planning for pensioners going forward, the fund was moving asset classes to income bearing asset classes – eg rental income, to meet the fund requirements going forward.  Managers each had different benchmarks and had worked with an investment advisor and custodian to set benchmarks.  The Chairman raised concern at the non-attendance of Members at meetings.  Mr Robertson advised that they had all been reminded of their responsibility to attend meetings.  With regard to restructuring within local authorities, Members were advised that the merger collaboration consultation paper to gain an understanding across all local authority pension boards, would be presented to CoSLA on Friday.

3.4     The Trustees’ Annual Report and Financial Statements for the year ended 31 March 2019 was discussed and it was noted that the charity now comprised of 12 separate funds with two additional new funds this year, namely Coldstream and Eyemouth Common Good Fund.  The total statement of financial activities for year ended 31 March 2019 was £13.5m across the 12 common good funds.  In response to a question on the management of rental properties within the Lowood Estate, Mr Robertson advised that the principal activity for Lowood Tweedbank Limited was to act as mid-landlord for Scottish Borders Council of the residential properties within the Estate in order to ensure the continuation of the tenancy arrangements with all income and expenditure paid to the Council.

DECISION

(a)     NOTED the Draft Annual Report and Accounts 2018/19 for Scottish Borders Council and associated Group Accounts; and

(b)     AGREED to:-

(i)    support their submission for review by the External Auditors, Audit Scotland  for Scottish Borders Council, Scottish Borders Council Pension Fund, Common Good and Trust Funds Accounts; and

(ii)   support submission for review by KPMG who continued to provide the external audit of the Council subsidiaries SB Cares, SB Supports and Bridge Homes.