Agenda item

(Report of the Head of Finance & Procurement)

Mr Anthony Thomas (Head of Finance and Procurement) delivered a Presentation on the Review of Accounting Policies and Estimation Uncertainty for the Statement of Accounts 2020/21 and explained that best practice recommended that they are approved by this Committee.  Mr Thomas advised that the full list of Accounting Policies as produced in the Code of Practice for 2020/21 was shown in atable at Appendix A of the report and the Council’s proposed Accounting Policies list for the 2020/21 Statement of Accounts was shown at Appendix B of the report.  He advised that there were some minor amendments highlighted in blue for ease of reference whereby some changes have been made to the financial year specified and fixed assets had been updated to property, plant and equipment.  There were also some slightly more fundamental changes that related to the policy for financial assets shown at fair value.  Overheads and support services and component accounting and a policy for surplus assets as mentioned last year by members of this committee had been added.

Mr Thomas advised that the Code of Practice required that the judgements that he (as Head of Finance and Procurement) had made applying the Council’s Accounting Policies must be disclosed.  Disclosure of such critical judgements was made to enable users of the Statement of Accounts to better understand how the Accounting Policies are applied and to make comparisons between authorities regarding the basis on which these judgements are made.  The critical accounting judgements included in the accounts related to:-

·         Assets and liabilities for the Joint Waste Service;

·         The pensions guarantee with Freedom Leisure;

·         Business Rates appeals.

In terms of key sources of estimation uncertainty, the following was highlighted:-

·         International Accounting Standards 1 and 540 cover this area;

·         Assumptions about the future and other major sources of estimation uncertainty are disclosed in the Accounts;

·         Disclosures are restricted to assets and liabilities whose carrying amount is dependent on estimates that are difficult, subjective or based on complex judgements and where re-estimation may have a material impact.

Mr Thomas advised of his Estimation Uncertainties for 2020/21 and assurances were explained:-

·         Pension Liability – Estimates provided by the Pension Fund Actuary – LDC gain assurance from Staffordshire County Council Pensions Committee and Staffordshire County Council Pensions Team;

·         Other Land and Buildings and Fair Value Based Assets – Estimates provided by External Valuer - LDC gain assurance from the Estates Team as have qualified property professionals in-house;

·         Business Rate Appeals – Estimates based on value office agency statistics – LDC gain assurance from benchmarking through the finance team staff;

·         Bad Debt Provisions – Estimates provided by the Corporate Debt team – LDC gain assurance by the finance team and actual budget holders.

Members thanked Mr Thomas for his comprehensive report and queried whether the investment in Lichfield Housing Ltd. meant we should be preparing consolidated group accounts and, if not, should there be an Accounting Policy for this.  Mr Thomas agreed to look at this in the future as no need for consolidated group accounts yet in his opinion.

RESOLVED:- (1)  The Committee approved the Council’s proposed Accounting Policies that will form part of the 2020/21 Statement of Accounts (with suggested amendment in relation to interests in Companies and other entities to reflect the investment in Lichfield Housing Ltd);
(2) The Committee approved the Council’s approach to the CriticalAccounting Judgements and Key Sources of Estimation Uncertainty that will be considered in completing the 2020/21 Statement of Accounts;
(3) The Committee agreed to delegate to the Head of Finance and Procurement the ability to make further changes to the accounting policies to reflect the subsequent release of new or updated guidance.