Item 10 - Unaudited 2023_24 WDC Annual Accounts
West Dunbartonshire Council · 28 August 2024
Back to West Dunbartonshire Council — 28 August 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer - Resources Council: 28 August 2024 Subject: Unaudited 2023/24 Annual Accounts 1. PURPOSE 1.1 The purpose of this report is to provide Council with a copy of the unaudited 2023/24 Annual Accounts and information regarding the 2023/24 outturn as set out in the draft accounts. 2. RECOMMENDATIONS 2.1 Members are asked to: a) note the unaudited 2023/24 Annual Accounts b) note the information provided in relation to the financial performance of the Council’s services and capital plan for 2023/24 c) note the current position regarding the Council’s reserves d) Agree to delegate authority to the Audit Committee to formally approve the audited accounts. 3. BACKGROUND 3.1 The annual unaudited accounts set out the financial statements of West Dunbartonshire Council (the Council) for the year ended 31 March 2024. Their main purpose is to demonstrate the stewardship of public funds entrusted to the Council. The requirements governing the format and content of local authority annual accounts are contained in the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). The 2023/24 accounts have been prepared in accordance with this Code. 3.2 There is a statutory requirement to prepare a set of accounts and submit them to the Controller of Audit. The date set by the Scottish Government for the submission of the unaudited annual accounts is 30 June each year. 3.3 The 2023/24 accounts were submitted to Forvis Mazars on 28 June 2024. 4. MAIN ISSUES 4.1 The unaudited accounts show that the outturn on the general fund is an overspend of £7.115m after the budgeted use of additional resources of £8.656m. This represents an overspend of 2.57% against the 2023/24 revised budget of £269.842m. ITEM 10
Page 2
4.2 The £7.115m overspend breaks down as: £000 Service overspend including loan charges 5,363 Use of earmarked reserves 2,646 Over recovery taxation and non-specific grant income (1,088) Other statutory adjustments 194 Total 7,115 The Housing Revenue Account (HRA) is reporting an in-year deficit of £1.666m. 4.3 Since 2010/11 local authorities have been required to prepare financial statements following International Financial Reporting Standards (IFRS). Under the Local Authority Accounts (Scotland) Regulations 2014 there is a requirement to include a management commentary in the accounts. The contents of the annual accounts are summarised in the paragraphs that follow. 4.4 Management Commentary: outlines the key messages regarding the objectives and strategy of the Council and its financial performance for the year. It also looks forward, outlining the future financial plans for the organisation and the challenges and risks which are faced by the Council. 4.5 Statement of Responsibilities for the annual accounts: outlines the Council’s responsibilities and also the responsibilities of the Council’s Section 95 Officer. 4.6 Annual Governance Statement: details the view on the adequacy of its governance and internal control system. It is the Council’s view that the systems for governance and internal control are operating effectively within the Council during 2023/24 and that there are no significant weaknesses. 4.7 Remuneration Report: details the remuneration policy, remuneration and pension benefits of senior councillors and senior officers in addition to detail on employee exit packages. Comprehensive Income and Expenditure Statement (CIES): 4.8 This statement shows the accounting cost of providing services rather than the amount to be funded from taxation, in order to comply with the requirements of the Code. This means that the net cost of service includes statutory accounting adjustments for depreciation, loans fund principal repayment, the net change for the pension adjustment and accrued holiday leave not taken by 31 March 2024; reducing the total cost of service provision by £4.861m. This is one of the main reasons why the actual outturn shown within the Comprehensive Income and Expenditure account differs from the actual outturn shown within the management commentary (page 8 of
Page 3
accounts), as these costs are not included as part of the service budgets. A reconciliation between the two outturns is shown at paragraph 4.10. 4.9 The Council ended the year with a 2023/24 deficit of £32.517m. This is the accounting surplus based on the IFRS compliant accounts rather than the movement in the General Fund Balance. It comprises of the following: £000 Deficit on Provision of Services 12,502 Deficit on the revaluation of long term assets (12,936) Actuarial loss on the pension fund asset 32,951 Total Deficit 32,517 4.10 The table below, sets out a reconciliation of the deficit on the provision of services of £12.502m as noted in the Statement of Comprehensive Income and Expenditure under IFRS requirements and the in-year revenue overspend of £7.115m against budget (paragraph 4.2): £000 Deficit on Provision of Services per the Comprehensive Income and Expenditure Statement 12,502 Statutory adjustments required by the Code (paragraph 4.8) 4,861 Deficit on Provision of Services per Movement in Reserves – pg 34 17,363 Adjust for movements to/from statutory reserves: Capital Receipts unapplied 171 Other Reserves (98) HRA Reserve (1,666) Movement in General Fund Balance 15,770 Use of Earmarked Reserves (8,656) Net General Fund budgetary control position 2023/24 7,115 4.11 Balance Sheet: The Balance Sheet shows that the net worth of the Council has decreased by £32.517m from £387.786m as at 31 March 2023 to £355.269m as at 31 March 2024. The major changes are set out in the table below. Movement in Reserves Statement
Page 4
4.12 This shows the movement on the different reserves held by the Council, analysed into usable reserves (resource backed reserves which can be used to fund expenditure) and unusable reserves (required purely for accounting purposes and are not backed by resources). 4.13 The total Council reserves have decreased from £387.786m at 31 March 2023 to £355.269m at 31 March 2024, a decrease of £32.517m, due to the reasons detailed in the table above. 4.14 The balance of unusable reserves has decreased by £15.513m from £355.513m as at 31 March 2023 to £340.360m as at 31 March 2024. This is mainly due to the revaluation of assets offset by the movement in the pension liability. 4.15 Cash Flow Statement: The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the financial year. The Cash and Cash Equivalents increased by £21.846m to £24.397m. This will be used to fund the repayment of temporary loans as they fall due in 2024/25. 4.16 Notes to the Financial Statement: The notes section provides further information and explanation on some of key figures included within the Accounts. The notes conform to the guidance issued by CIPFA/LASAAC within the Code of Practice on Local Authority Accounting. 4.17 Council Tax Income Account: This account shows the gross income raised from council tax levied and deductions made under the Local Government Finance Act 1992. The resultant net income is transferred to the CIES. Council Tax rate for Band D was £1,398.98 for 2023/24 compared to £1,332.36 in 2022/23 (a £66.62 increase) reflecting the 5% increase agreed by Council as part of the budget setting process. The income transferred to the general fund for Council Tax in 2023/24 was £40.798m. This compared to £39.313m in 2022/23. 4.18 Non Domestic Rate Income Account: This account is an agent’s statement that reflects the statutory obligation for billing authorities to maintain a separate Non Domestic Rate Account. Net Non-Domestic Rate Income to the Consolidated Income and Expenditure Account amounted to £93.396m for 2023/24. This compares to £107.740m in 2022/23. This is the Council’s share of the estimated NDR income which has been distributed proportionately on the basis of the Council’s 2022/23 mid-year income. It does not represent additional income to the Council, just a distribution of the national pool to reflect what is due to the Council as agreed as part of the 2023/24 settlement figure (already accounted for) and what the Council collected. 4.19 Housing Revenue Account In relation to the HRA, the draft accounts show a balance of £0.9698m as at 31 March 2024. This is below the prudential reserve target of £0.984m. Steps are being put in place to try to build the reserves back up to the
Page 5
prudential target in 2024/25 and beyond. Capital Programmes 4.20 Details of the capital programmes are shown in Appendix 4 (General Fund) and Appendix 5 (HRA) and are summarised below. The appendices detail the outturn of the projects within 2023/24 and provide further information on the projects which have been identified as red status (i.e. those projects which are likely to be significantly overspent and/or to have significant delays in completion). A list of the main capital projects progressed during 2023/24 is provided on page 12 of the Annual Accounts. The year end position is summarised as follows: Budget Spend Variance Overspend Underspend Reprofiling £,000 £,000 £,000 £,000 £,000 £,000 General Services 93,703 30,889 (62,814) 3,030 (1,872) (63,973) HRA 124,846 56,123 (68,683) 7,444 (70,636) (5,491) Total 132,290 62,227 -70,063 11,546 (72,508) (69,464) 4.21 The main areas of reprofiling in the year were: General Services District Heating Expansion Network expansion to Golden Jubilee National Hospital will commence pending positive commercial discussions. Schools Estate Improvement Plan Works Progressing. Projects anticipated to complete in 2024/25. Vehicle Replacement Delay due to the vehicle build time associated with the specialist vehicles and the delivery lead time from the date of supply order placement. Levelling Up Fund Artizan masterplan approved in November 2023. Designs are progressing as planned but some delays due to enabling works and commencement of the design phase HRA New house build Progress with new house build programme has been slower than anticipated. The projects are often complex, lengthy and require input from a range of stakeholders. A number of projects are due to complete over the next 2-3 years and these projects will increase the supply of quality affordable housing across West Dunbartonshire. Roofing Works There has been a slow down with the roofing programme because the roofing programme is increasingly renewing roofs within mixed tenure blocks. Mixed tenure works require consultation with owners and an agreement with owners on their share of costs before work commences. The challenging financial climate has made it more difficult to progress works with owners.
Page 6
4.22 Group Accounts: The Council is required to prepare Group Accounts in addition to its own Annual Accounts. Group Accounts are prepared when a Council has a material interest in other organisations. The purpose of the accounts is to combine its financial information with other organisations within its group. For 2023/24 the Council’s group consists of (a) West Dunbartonshire Leisure Trust (b) Dunbartonshire and Argyll and Bute Valuation Joint Board (c) Clydebank Property Company (d) West Dunbartonshire Energy Company (e) Health and Social Care Integrated Joint Board (f) Dumbarton Common Good and Trust Funds. 4.23 The effect of combining these entities on the Group Balances Sheet is to increase reserves and net assets by £19.031m creating an overall net asset of £374.300m. Next Steps 4.24 To enable the Council to meet its legislative requirements, Members require to approve the audited Annual Accounts for signature no later than 30 September 2024. As the audit of the Council’s 2022/23 accounts is still ongoing it is considered unlikely that the audit of the 2023/24 accounts will be completed by the 30 September 2024 deadline. It is not clear at the current time when the 2023/24 audit will be completed by and therefore it is not possible to determine which future meeting of the Council will be presented with the audited accounts for approval. Depending on the timing of the completion of the 2023/24 audit it may be that a meeting of the Audit Committee will be the most suitable time for the Accounts to be approved. Council is therefore asked to agree to delegate authority to the Audit Committee to formally approve the audited accounts if required. Charity Accounts 4.25 Appendix 7 provides Members with the accounts of the Trust Funds which are administered by the Council. These Financial Statements are also audited by our external auditors prior to submission to the Office of the Scottish Charity Regulator (OSCR). The draft Financial Statements 2023/24 have been presented to the external auditors. These are also included within the Council’s Group position. The summary position of the Trusts are noted below – interest gained was received for all trusts, with six grant payments made, four from the Alexander Cameron Bequest and two from Dr AK Glen Fund. As the AK Glen Fund has bene fully distributed it has been wound up and removed from the Scottish Charity Register.
Page 7
Opening Balance 2023/24 Surplus / (Deficit) 2023/24 Closing Balance 2023/24 Dunbartonshire Educational Trust Scheme 1962 92,508 4,216 96,507 McAuley Prize for Mathematics 22,333 1,022 23,352 Alexander Cameron Bequest 117,505 4,457 121,963 UIE Award 25,248 1,154 26,401 Totals 257,594 (10,847) 268,442 4.26 The audited Trust Fund accounts will be approved by the Council, together with the Council’s Financial Statements. 4.27 Common Good Appendix 8 provides Members with the accounts of the Dumbarton Common Good which are administered by the Council, also audited by our external auditors as part of the year end process. This is also included within the Council’s Group position. The main movements within the common good are noted below: £ Opening Balance 624,896 Income 344,439 Expenditure (408,021) Closing Balance 561,314 CONCLUSION 4.28 The Unaudited Annual Accounts have been prepared in accordance with professional and statutory requirements. The General Fund Balance has decreased by £15.770m from an opening balance of £29.303m to £13.533m, after taking into consideration the movement during the year, the end of year outturn position and earmarkings. The Council’s net worth, per the balance sheet, has decreased from £387.786m at 31 March 2023 to £355.269m at 31 March 2024, a decrease of £32.517m. 5. PEOPLE IMPLICATIONS 5.1 There are no people implications as a consequence of this report. 6. FINANCIAL AND PROCUREMENT IMPLICATIONS 6.1 There are no direct financial or procurement implications arising from this report.
Page 8
7. RISK ANALYSIS 7.1 No risk analysis was required 8. EQUALITIES IMPACT ASSESSMENT (EIA) 8.1 No equalities impact was required in relation to the preparation of this report. 9. CONSULTATION 9.1 The views of Legal Services have been requested on this report and have advised there are neither any issues nor concerns with the report. 10. STRATEGIC ASSESSMENT 10.1 Sound financial practices are cornerstones of good governance and support Council and officers to pursue the Council’s strategic priorities. Laurence Slavin Chief Officer - Resources Date: 28 August 2024 Person to Contact: Carol Alderson, Finance Manager, 16 Church Street, Dumbarton E-mail: carol.alderson@west-dunbarton.gov.uk Appendices 1. Draft Annual Accounts to 31 March 2024 2. General Services Budgetary Control Report to 31 March 2024 – Revenue 3. HRA Budgetary Control Report to 31 March 2024 - Revenue 4. General Services Budgetary Control report to 31 March 2024 – Capital 5. HRA Budgetary Control Report to 31 March 2024 - Capital 6. Draft Annual Accounts to 31 March 2024 for Trust Funds 7. Draft Position to 31 March 2024 for Dumbarton Common Good Background Papers Budget Report to Council - 6 March 2024