URL: https://rother.moderngov.co.uk/ieDecisionDetails.aspx?ID=1843

Decision Maker: Audit Committee

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: No

Purpose: This report summarises the draft financial statements and accompanying narrative report for the financial year 2024/25.

Content: Members received the report of the Deputy Chief Executive on the draft Statement of Accounts 2024/25 which provided commentary on the core financial statements and included the draft Annual Governance Statement.  The Statement of Accounts was published on the Council’s website and was included within Appendix A of this report.   At present, Grant Thornton (External Auditors) had not started their work on the 2024/25 accounts following their audit planning activities and enquiries in March 2025.  Work was expected to commence in September 2025.   Members were advised that the draft accounts did not include the implementation of the IFRS16 relating to Leases. The impact of the standard was not believed to be material, however work was being undertaken to support this position.   The core financial statements related to:   •     Comprehensive Income and Expenditure Statement (CIES): showed the Council’s actual financial performance for the year, measured in terms of the resources consumed and generated over the last 12 months. It therefore did not show the “cash” position for the Council and was intended to reflect private sector accounting practice in presenting a profit and loss account. Members noted that figures were significantly different from those presented in budget monitoring reports, both due to differences in layout and inclusion of various items which were ignored for Council Tax setting purposes.  The statement showed that the Council had a deficit of £6.573m on provision of services (surplus of £9.334m in 2023/24).  Additional accounting entries relating to revaluation of assets and pensions reduced the 2024/25 deficit to £3.468m. •     Movement in Reserves Statement: analysed the Reserves into Useable and Unusable Reserves and linked with the CIES. The deficit of £6.573m shown on the CIES represented the true economic costs of providing the Council’s services was adjusted for statutory items which should or should not be charged to the General Fund for Council Tax setting purposes.  Adjustments resulted in a surplus of £1.221m being moved into Earmarked Reserves, most of which comprised of ringfenced grants which would be used in future years. •     Balance Sheet: fundamental to the understanding of the Council's year-end financial position, as it showed the balances and reserves at the Council's disposal and its long-term indebtedness, the net current assets employed in its operations and summarised information on the fixed assets held.  The net worth of the Council had decreased by £3.468m from £95.847m total reserves balance at the end of 2023/24 to £92.38m at the end of 2024/25; this was attributed to £4.324m increases in usable reserves. •     Pension Fund Liability: the Balance Sheet at the end of 2023/24 had slightly reduced to £1.052m.  Actuary figures referred to a pension asset; a ceiling was applied for the third year running.  Immediate action was not required to manage the deficit; it was not something that the Council had control over or would affect the Revenue Budget. •     Cash Flow Statement: brought together in a single statement the inflows and outflows of cash arising from the Council's transactions with third parties for revenue, investment and capital purposes. Cash balances had been consistently decreasing over the last few years as the Council had been engaging in internal borrowing for Capital Programme purposes due to high interest rates. •     Collection Fund Income and Expenditure Account: a separate account in relation to Business Rates and Council Tax and their distribution.  Overall, the Collection Fund at year end was a deficit of £1.604m compared to £2.003m surplus in the previous year.  This balance was made up of the Council Tax fund deficit, the majority of which would be shared with East Sussex County Council.  The Business Rates Fund balance was £1.457m deficit.   The Balance Sheet showed that, overall, the financial position of the Council remained sound with short-term needs still being met. However, with the majority of reserves being ringfenced grants, there was a need for continuing pressure to monitor and reduce operational costs and increase income opportunities.   Members had the opportunity to ask questions, and the following points were noted during discussions:   •     the position had improved from in-year reports and as the Council had underspent during the 2024/25 financial year, £400,000 would be put back into Reserves; •     budget savings continued to be important and would be monitored; •     challenges differed each year - weather affected car park income, fewer interim members of staff were being used in senior positions, planning fees and levels of homelessness were continuing issues; •     it was stated in the Narrative that the Planning Committee consisted of 14 Members, but that had now been reduced to 10. Although correct for the 2024/25 year, it gave the wrong impression; •     the Blackfriars Spine Road was now an asset of the Rother DC Housing Company; and •     the Council was currently reviewing the Government’s proposals for the Fair Funding Formula, although no details for Rother were available yet, and would be responding to the consultation in due course. The funding would be a three-year settlement from April 2026.   Members were happy to approve the Council’s 2024/25 Statement of Accounts, together with the Draft Annual Governance Statement 2024/25, which would therefore not need considering at the September meeting.   Members congratulated officers for their work on the accounts and for the information provided to the Committee.   RESOLVED: That the Council’s 2024/25 Statement of Accounts and Annual Governance Statement be approved.   (Councillor Byrne declared an Other Registerable Interest as a Member of Bexhill-on-Sea Town Council, and in accordance with the Members’ Code of Conduct remained in the meeting for the consideration thereof.)   (Councillor Coupar declared an Other Registerable Interest as a Director of Rother DC Housing Company Ltd, and in accordance with the Members’ Code of Conduct remained in the meeting for the consideration thereof.)   (Councillor Thomas declared an Other Registrable Interest as Chair of Rother DC Housing Company Ltd, and in accordance with the Members’ Code of Conduct remained in the meeting for the consideration thereof.)

Date of Decision: July 21, 2025