Agenda item

Report of the Chamberlain.

The Committee considered the 2014/15 City Fund and Pension Fund financial statements, together with Deloitte’s report thereon.  The Chairman was pleased at the high attendance (the previous week) at the Members’ Briefings sessions on the Financial Statements.  The Chamberlain advised that, subject to a satisfactory conclusion on a few areas still being reviewed by Deloitte, an unqualified opinion was expected and this position was confirmed by Deloitte.  Members were advised that the Crossrail commitment of £200m from City Fund was now being shown as a note on the face of the balance sheet and that the payment was anticipated to be made by the end of March 2016.

        Members were asked to note the following three areas still being reviewed:

1        Deloitte had challenged the City of London Corporation’s treatment of proceeds from long leasehold disposals (e.g. in the case of the sale of 2 Fann Street).   The City is currently treating the entire proceeds as capital receipts whereas Deloitte consider that there is an argument for part of the proceeds being treated as deferred income and released to revenue over the length of the lease (e.g. over 125 years).  The issue revolves around interpretation as to whether the entire transaction can be treated as a finance lease (capital receipt) or whether the land element should be separated and treated as an operating lease (revenue).  The Chamberlain advised that the outcome would inform how we treated future lease disposals. 

2.       The calculation of the provision for business rate appeals is complex and has required several iterations – the raw data set comprising 44,000 lines and a rateable value of £12.6 billion.  Analyses have been prepared to try and determine trends over the past few years across a number of appeal categories, to identify potential duplicate claims on the Valuation Office list, to disregard settled appeals from the Valuation Office list, and to quantify refunds agreed in the old financial year but not paid until the new financial year.  The latest estimate of the provision is with Deloitte for review.

3.       Due to staff shortages in the Police Finance Team,  Deloitte are awaiting information to support the treatment of a number of specific government grants.  The backlog of requests is gradually being reduced and officers are confident that Deloitte will be able to conclude satisfactorily on the treatment of grant income.

        Members were reminded that the accounts are required to be signed by 30th September 2015 and officers were confident that they would be ready ahead of the deadline.   The process of delegation, as set out in the recommendations would be for the Town Clerk, in consultation with the Chairman and Deputy Chairman of the Audit and Risk Management Committee to recommend approval of any amendments to the Finance Committee.  The Chamberlain would present these amendments in a revised income and expenditure account and balance sheet, with columns and notes setting out the movements between the original and revised versions.  Members were advised that, if the Chairman and Deputy Chairman deemed it necessary, the revisions would be shared with the entire Committee for comment, ahead of the financial statements being signed.    The recommendation would then be considered by the Town Clerk, in consultation with the Chairman and Deputy Chairman of the Finance Committee. 

        RESOLVED – That:

1.          The Town Clerk, in consultation with the Chairman and Deputy Chairman of the Audit and Risk Management Committee, approve any material changes to the financial statements required before the signing of the audit opinion by Deloitte; which is expected to be by the end of August or early September 2015.

2.          Subject to the above, the accounts be recommended for approval to the Finance Committee.