Audited Annual Accounts for the year ended 31 March 2024
Argyll and Bute Council · 17 December 2024
Back to Audit and Scrutiny Committee — 17 December 2024 and its agenda
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ARGYLL AND BUTE COUNCIL AUDIT AND SCRUTINY COMMITTEE FINANCIAL SERVICES 17 DECEMBER 2024 AUDITED ANNUAL ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2024 1. INTRODUCTION 1.1 This report provides Members with an update on the external audit of the Annual Accounts of the Council for the year ended 31 March 2024. 1.2 The audit of the annual accounts for the year ended 31 March 2024 is substantially complete. However, the external Annual Audit Report identifies some residual matters that remain outstanding at the time of report preparation. Mazars has committed to providing an update in relation to the outstanding matters through issuance of a follow up letter. In addition, Mazars have noted that they expect to issue an unqualified opinion and the draft opinion has been inserted into the Annual Accounts document. 2. RECOMMENDATION 2.1 It is recommended that the Audit and Scrutiny Committee: • Note that the audit is substantially complete and that Mazars have advised the Council that they are expecting to issue an unqualified opinion on the Council’s Accounts for the year ended 31 March 2024; • Accept and endorse the Annual Accounts, as attached as Appendix 2 to this report, and refer to the Council for approval; • Note that if the Council receives a follow-up letter from Mazars confirming there are no material changes to the Accounts, there would be no impediment to the Council signing off the Annual Accounts; and • Note that if the Council receives a follow-up letter from Mazars confirming there is a material change, it will be a matter for the Council to take forward the approval of the Accounts having regard to that. In this event, a further report will be submitted to the Audit and Scrutiny Committee for information. 3. DETAIL 3.1 Mazars are the Council’s appointed external auditors, with financial year 2023-24 being year 2 of a 5 year contract period. 3.2 There has been a significant improvement in the timescale for completion of the audit from the previous year. It is anticipated that continuous improvements will be made in future years towards a target completion date of 30 September. 3.3 The audit of the annual accounts for the year ended 31 March 2024 is substantially complete. However, the external Annual Audit Report identifies some residual matters
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that remain outstanding at the time of report preparation. Mazars has committed to providing an update in relation to the outstanding matters through issuance of a follow up letter. In addition, Mazars have noted that they expect to issue an unqualified opinion and the draft opinion has been inserted into the Annual Accounts document. 3.4 Assuming that there are no further changes to the accounts, the main adjustments, in addition to some presentational changes, are in respect of accounting for Pensions. It has been necessary to restate Pensions Assets, Liabilities and Reserves, to reflect technical guidance and accounting requirements of IAS19, in respect of the Asset Ceiling adjustment. Further details of the impact on the Financial Statements are provided in Appendix 1. 3.5 There has been no change to the General Fund balance, as a result of the adjustments noted in paragraph 3.4 above. 3.6 Key highlights of the Council’s financial position, based on the draft Audited Annual Accounts are as follows: • An accounting Surplus on Provision of Services for 2023-24 of £9.765m; • A Revenue Budget underspend for 2023-24 of £1.728m; • Total Assets less Liabilities as at 31 March 2024 of £522.020m; and • A General Fund Balance as at 31 March 2024 of £115.741m. 3.7 3.8 The committed funds within the General Fund are £107.443m per the draft Audited Annual Accounts, leaving an uncommitted General Fund balance of £8.298m as at 31 March 2024. This equates to 2.9% of the Council's approved budgeted net expenditure for 2023-24, exceeding the contingency set at 2% of approved budget, as agreed as part of the 2023-24 budget process. The draft Audited Annual Accounts for the year ended 31 March 2024 are included as Appendix 2 to this report. 3.9 There has been a significant improvement in the timescale for completion of the audit compared to the previous year. Whilst this is welcomed, continuous improvement is still required over future years, in order for the audit to be completed within the target timescale of 30 September, following the financial year end. A protracted audit process can have a detrimental impact in supporting other council priorities, such as the budget process, over this period. 4. CONCLUSION 4.1 This report provides Members with an update on the external audit of the Annual Accounts of the Council for the year ended 31 March 2024. 5. IMPLICATIONS 5.1 5.2 Policy – None Financial – None, with no impact on the General Fund balance.
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5.3 Legal – Not expected to be any legal issues. 5.4 HR – Further pressure placed upon key finance staff in respect of competing priorities and resourcing challenges, due to the protracted audit process beyond target completion date of 30 September 2024. 5.5 Fairer Duty Scotland: 5.5.1 Equalities – protected characteristics – None 5.5.2 Socio-economic Duty – None 5.5.3 Islands – None 5.6 Climate Change – None 5.7 Risk – None known at this time. 5.8 Customer Service - None 5.9 The Rights of the Child (UNCRC) - None Kirsty Flanagan Executive Director/ Section 95 Officer December 2024 Policy Lead for Finance and Commercial Services: Councillor Ross Moreland For further information contact: Carolyn Earl, Acting Head of Financial Services carolyn.earl@argyll-bute.gov.uk APPENDICES Appendix 1 - Summary of Substantive Audit Changes to Financial Statements for the year ended 31 March 2024 Appendix 2 - Argyll and Bute Council Draft Audited Annual Accounts for the year ended 31 March 2024
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Appendix 1 Summary of Substantive Audit Changes to Financial Statements for the year ended 31 March 2024 Financial Statement / Segment Audited Accounts £000s Unaudited Accounts £000s Change £000s Comments/Explanation Comprehensive Income and Expenditure Statement To reflect the technical guidance and accounting requirements of IAS19 in respect of Pensions. A restatement is required to reflect the Asset Ceiling adjustment, which brings the Pension Asset value to £nil, after allowing for the Unfunded Pensions Obligation/Liability. Other Comprehensive (Income) and Expenditure Actuarial (gains) or losses on Pension Assets and Liabilities 164,914 (123,880) 288,794 Movement in Reserves Statement Pension Reserve Other Comprehensive (Income) and Expenditure 164,914 (123,880) 288,794 Balance Sheet Long Term Assets Other Long Term Debtors (Pensions) 0 269,216 (269,216) Long Term Liabilities Unfunded Pensions Liability (19,578) 0 (19,578) Reserves Pensions Reserve 19,578 (269,216) 288,794 Note: The above adjustments reflect those within the Council’s (single entity) Financial Statements. Similar adjustments have also been made within the Group Financial Statements.