Agenda item

Consider various unaudited Annual Reports and Accounts by Executive Director Finance & Regulatory prior to their submission to the External Auditors.  (Copy covering report attached.)

7.1       With reference to paragraph 7 of the Minute of 23 June 2020, there had been circulated copies of a report and associated papers, by the Executive Director Finance and Regulatory, providing an opportunity to scrutinise the draft Scottish Borders Council and Group Annual Report and Accounts for the year ended 31 March 2021 prior to their submission to the External Auditors.   It was explained that the draft Report and Accounts were still subject to Statutory Audit, which would commence in July as normal, but may conclude later than usual due to competing audit demands as a result of the ongoing impact of COVID-19.  It was estimated that following the Audit process, the final report and Accounts would be submitted to Council in October 2021.  The Accounts summarised the financial transactions for the 2020/21 financial year and the balance sheet positions as at 31 March 2021 as set out in the Local Authority Accounts (Scotland) Regulations 2014.  The draft Annual Accounts for year ending 31 March 2021 were attached as Appendices 1 – 5 to the report as follows: Annual Accounts for Scottish Borders Council; SBC Common Good Funds; SBC Welfare Trust; SBC Education Trust;  SBC Community Enhancement Trust; Ormiston Trust for Institute Fund;  SBC Charitable Trusts; Bridge Homes LLP; and Lowood Tweedbank Ltd. The accounts would be submitted to the External Auditors, Audit Scotland or KPMG as appropriate for full audit by 30 June 2021 and be available for public inspection on the Council’s website for a 14 day period commencing 1 July 2020.

7.2       The Executive Director Finance & Regulatory, David Robertson, highlighted the main issues from the Scottish Borders Council 2020/21 draft accounts by means of a visual presentation, which included an overview of the impact of COVID-19 and financial results in services.  The COVID-19 pandemic had caused a major impact on delivery of public services during 2020/21, with ongoing impacts on a number of Council services.  Despite this extremely challenging operating environment there were significant achievements during 2020/21.  The Council had administered over £52m of grants to local businesses, established 5 community assistance hubs and accelerated roll out of Inspire Learning to support home learning during lockdown.  Headline figures for the year were as follows: £12.1m of Financial Plan savings had been achieved, £7.9m (66%) of which were on a permanent basis; a net underspend of £2.516m was delivered from a revenue budget of £278.4m;  revenue expenditure of £275.6m representing a net underspend of (0.9%) against the final approved budget; and capital expenditure of £54.8m, including investment in schools, flood protection, roads lighting and other assets, with a favourable year end timing movement of £9.5m against the revised budget.  The presentation gave an analysis of revenue expenditure by service and included a chart detailing efficiency savings achieved over the past 5 years, categorised into permanent and temporary savings brought forward.  As at 31 March 2021, the total Useable Reserves Balance was £47.7m, a net increase of £17.8m during the year, mainly attributed to an increase in earmarked balances; specifically £15.7m COVID-19 funding has been earmarked to support the 2021/22 budget.   The presentation went on to refer to the Group accounts that were included with the papers. 

7.3       Mr Robertson answered Members’ questions on the accounts and provided further clarification where requested.  He noted the request for, and agreed, two minor wording changes in the section of his report relating to plans for the future.  In response to a question about short term borrowing for cash flow purposes Mr Robertson explained that a major aspect of treasury management operations was to ensure that the Council’s cash flow was adequately planned with cash being available when needed.  There were various peaks in outflows of cash and a complicated pattern of income during the year.  Temporary short term borrowing, currently at less than 1% interest, was a normal treasury practice to ensure there was always sufficient cash to meet liabilities. Borrowing was only undertaken however when strictly necessary and in fact, savings in borrowing costs had been delivered during the year by utilising internal cash available.  In terms of the group accounts the Chairman raised a question relating to the Welfare Trust, Education Trust and Community Enhancement Trust, all of which had received an increase in income from investments during 2020/21 and had significant balances in place as at 31 March 2021.  Using as an example the charitable purpose of the Welfare Trust, as stated in the paper, he asked why, during the recent and ongoing time of crisis, there had not been more dispersal of grants from these Trusts.  Mr Robertson referred to the considerable work previously undertaken to consolidate a large number of trust funds and that work was still outstanding to set up a fully functioning system of governance for grant applications.  The application process should align with other mechanisms of grant funding e.g. the Community Fund and, in the case of the Education Trust it had been noted that there was further outstanding work to be carried out to consult with school communities prior to reorganising a number of residual trust funds.  After further discussion about the Charitable Trust Funds, Members agreed to ask for the operation and governance of the funds to be reviewed and for a follow-up report to be taken to the Executive Committee in 3 – 6 months’ time.  The Chairman thanked Mr Robertson and his team for their work behind the preparation of the accounts.

DECISION

            AGREED:-

(a)        to note the Draft Annual Report and Accounts 2020/21 for Scottish Borders Council and associated Group Accounts; and

(b)       to support its submission for review by the External Auditors, Audit Scotland for Scottish Borders Council, Common Good and Trust Funds accounts, and to KPMG who continue to provide the external audit of the Council’s subsidiary Bridge Homes.

(c)       that in respect of the three re-organised trusts: SBC Welfare Trust; SBC Education Trust; and SBC Community Enhancement Trust:

(i)         to express concern at the lack of significant activity in terms of their  promotion and dispersal of funding;

            (ii)      to ask officers to review the operation and governance of these Trusts  with a view to better publicising and promoting their aims and objectives;

            (iii)     to ask the Service Director for Young People Engagement & Inclusion to engage with Finance staff to facilitate the consolidation of the remaining SBC Charity Funds; and                                                            

            (iv)      to ask the Chief Executive to present a follow-up report on these funds to the Executive Committee within the next 3 to 6 months.