Agenda item

To consider the draft Financial Statements for 2024/2025.

The ADFA explained these were the Draft Financial statements for year ending 31^st March 2025 so had not yet been audited. They had been shared with External Audit (EA) and one change to note for accounting policies which the Council was required to do, was the introduction of IFRS 16. Throughout the document there were comments that referred to re-statement of figures. This was not required by Audit but had been done to make the financial statements more accurate. As this would be the first set of accounts for a few years to be audited it was seen as a good time to go back and correct those. The Chair agreed that it was very prudent to make those minor changes and for the document to be as accurate as possible.

Cllr Cushing raised a concern about the large variance in the figures, particularly of employee costs, and asked what level of confidence the Committee could have when such a large variance, of 22%, on a relatively small budget was now presented compared to the Budget that was agreed at Full Council in Feb 2025. Cllr Cushing believed this should be monitored going forward. ADFA explained these were included in the financial statements as a statement of fact, reflecting the results of the year. Cllr Cushing wished to reiterate that the Councillors were required to make decisions based on the figures presented to them and if, in reality there was additional money available then, it was possible they may have taken a different decision The IP also agreed the high variance was a concern and felt the Council should be looking at its forecasting methods. The CE recognised that the 22% variance was something the Council needed to understand but he would have been more worried if it were a negative balance. As 40% of that variance related to income that was a positive position to be in but he accepted that there was a need to better understand the variance in staffing figures and that was an issue that he would ask the DRC and ADFA to investigate further.

The DRC said in relation to the variance of £1.6m in employee costs, that was made up of vacant posts and changing of funding in the Local Government Pension Scheme (LGPS), the latter being influenced by factors outside of the Council’s control. The DRC also confirmed he was looking, in fine detail, at the vacant posts and where those posts would no longer exist, and be deleted, how they could redirect those funds to other council activities. 

The CE answered a second query from the IP around temporary accommodation costs. The CE confirmed that over the last 3 years, the costs of TA was the largest cost pressure the Council faced after significant rises in Section 21 eviction notices. The costs of being a landlord had impacted the rental market so the stock of private rental units in the area had decreased. The Council had a statutory duty to assess if someone presented as homeless and if they established that they were, then there was a requirement to put them into temporary accommodation and that often meant, bed and breakfast. Over the past 5 years the Council had recognised it was not able to control those costs and therefore it was purchasing suitable accommodation to house homeless families Residents could then claim Housing Benefit to cover their rent which they couldn’t when they were placed in bed and breakfast.

The CE assured the Committee, and Cllr Fletcher, that for Valuation Office (VO) appeals and business rates evaluations the Council had earmarked commercial reserves for such instances and refunds so the risk to the authority was contained within that reserve.

The Chair asked for clarification on componentisation, on pg.107, the CE believed it was made up of things such as the Cromer pier and coast defences. EA had raised historically where this related, to that when the Council had assets that it routinely repaired that so this could extend its life before it came to its natural end.

The Chair asked, in reference to pg.127 (pg.53 of this report) under other items what cashflows referred to as there seemed to be a big change across the 2 years. The DRC said he would look into this and provide a response. CE thought it might be the need to payback certain Covid Grants as there was a need to pay those back within a certain timeframe, but this will be looked into and confirmed with the Committee for the next meeting.

The ADFO answered the Chair’s question about valuations, on pg.145, regarding the historical costs which were at 19, then 12 and now up to 26, and explained they reflected how assets were valued. Depending on stage of construction, they would be billed differently prior to being brought into use. Certain assets were carried at historical cost or at cost until they reached certain points that were in line with accounting policy.

The ADFA did add, at the end of the meeting, that when the 2023/24 Audit took place there had initially been a disclaimed opinion as the EA were not able to formally issue that opinion until the National Audit Office confirmed if they wanted to add extra procedures based on EA work. This had since come back, and confirmation had been received that the Audit was not subject to any extra work. The Council had the certificate signed by the EA, and this was on the website.

ACTION: To confirm what the cashflow on Pg.53 of the report refers to due to the big difference in figures across the 2 years.

The Committee noted the Report.