Agenda item

This report asks Members to review and comment upon the Council’s financial accounts for the financial year 2005/06 prior to their approval by Full Council before the end of June.  Copies of the draft Statement of Accounts have been circulated separately to Members.

Members considered a report which asked them to review and comment upon the Council’s financial accounts for 2005/06 prior to approval of the Statement of Accounts by full Council on 29 June.  Copies of the draft Accounts had been circulated separately to Members.

Under the new Comprehensive Performance Assessment (CPA) scoring system a higher score could be given to accounts that had been subjected to a “robust” scrutiny before approval.  It was therefore important for the Committee to discuss the accounts in some detail.  The report set out some key areas that Members might wish to examine or question further.  The Director of Resources, in his role as Section 151 Officer, advised that the main issues for concern were:

·        the Council’s level of reserves

·        the ongoing level of Schools balances

·        the size of the pension fund deficit in comparison to the overall budget

·        the records and clarity of the Council’s overall Section 106 funds and the planned use of those funds.

Members queried and commented on the following aspects of the Accounts:

·            Delegated School Reserves and why these were not decreasing fast enough (p.63 of the draft Accounts).  Officers referred to a report to the Schools Forum on 22 June which explained the reasons behind this issue.  It was noted that “clawback” arrangements were now in place enabling any unused reserves to be redistributed.

·         The increased level of Temporary borrowing.  Officers explained that this was due to the investment of the increased borrowing that the Council had undertaken in preparation for its forecast capital funding requirements over the coming years

·    The use of Finance and Operating Leases (p.64).  Officers explained that, although leases were still used in some cases (eg for vehicles), there was a general move away from leasing and towards Prudential borrowing, which was generally more cost effective.

·    The performance and management of the Pension Fund.  Officers reported that the next revaluation of the Fund was likely to show a marked improvement, as the last one had been carried out at a time when the stock market was particularly low.  City of York was in a better position than the rest of the county in terms of addressingits deficit.  The local aspects of the scheme were currently under review and a report setting out a range of options would be brought to Members in due course.

·    The valuation of Council properties under the right to buy provisions.  It was suggested that the current system, using a single valuer, ran the risk of undervaluing properties.  Officers agreed to look into this.

·    The potential effects of the government’s decision on capping.  Officers confirmed that a decision to cap would result in estimated losses of £455k, for which funding would have to be found this year.

There was also some discussion about school bank accounts, interest earned and Council Tax collection rates and methodology. 

RESOLVED: That the questions and issues raised be reported to the Executive.

REASON:      In accordance with the requirement to undertake a full Scrutiny of the Council’s Accounts and to enable the Committee’s comments to be taken into account when the Statement of Accounts is considered by the Executive on 27 June.