Report of the Assistant Director Resources/Treasurer

The Panel received a report from the Assistant Director Resources/Treasurer (ADR/T) which presented the results of the External Auditor’s Audit Results Report (ISA 260).  It was noted that the External Auditor, EY had completed its audit of the Authority’s financial statements for the year ended 31 March 2021 and expected to issue an unqualified audit opinion on the financial statement.  Since the Auditor presented to the Panel on 28 September 2021, the following issues had been identified:

·       IAS19 report for Fire Fighters Pension Scheme – the service cost was underestimated due to the actuary excluding the allowance for future injury awards which required an adjustment of £767,000.

·       IAS19 report for Local Government Pension Scheme – in the previous report, the actuary used the provisional asset value (the assets) despite the Service choosing the option to use final figures.  The updated report now uses the final asset value figure which has resulted in an increase in asset values of £334,000.

The Authority’s financial statements had been updated to reflect technical accounting adjustments which did not impact on the general fund.  Officers were pleased to report that EY had made no recommendations for improvement as a result of its audit and raised no specific issues which required a response in the Letter of Representation.  The ISA 260 confirmed that the Authority had proper arrangements in place for securing value for money.

The Panel queried how the materiality assessment had been decided upon.  EY explained that their standard methodology was to overall planning materiality at 2% of gross expenditure (£1.05m) and performance materiality at 75% of overall planning materiality (£0.790m).  The threshold for reporting of misstatements to the Authority was £52,000.

The Panel also asked about the pension scheme deficit increase.  The ADR/T explained that the liabilities covered both the Firefighter Pension Scheme and the Local Government Pension Scheme.  Each year actuaries were commissioned to assess liabilities which varied from year to year.  The ADR/T reassured Members that due to the public nature of the Fire Authority and the schemes the pension related deficits did not impact either on council taxpayers or on the going concern basis of the accounts. 

Members asked about the large reserves and how this compared to the reserves held by other Fire Authorities.  The ADR/T informed the Panel that there was information on reserves available through data collected by the Home Office and the Fire Services Finance Network.  The ADR/T added that the Authority was currently holding relatively large reserves, however, this was in-line with the current reserves policy and most had been earmarked for the delivery of capital programme projects, investment in IT and Project 21.  Uncommitted reserves were in the region of £2million.  

Recognising the delays to capital projects, Members asked whether any contingency had been made for price increases.  The ADR/T responded that there was some provision for inflation had been made within the budgets for capital schemes.  If inflation exceeded those provisions then the Service would explore options for containing the pressure within the overall scheme budget, reprioritising across schemes or seeking approval for increases in scheme budgets.  Current levels of supply chain disruption had increased the risk of increases in scheme costs.  The improvements to Hove Fire Station were currently out for tender which would give a good indication of price increases in the market.  Discussion was also had over environmental considerations of projects.  It was noted that the Estates Strategy Delivery Board was very much aware of the issues and were ensuring that opportunities for environmental, sustainable improvements were being realised whenever possible however, it also was important to recognise that many of the station improvements were in order to ensure the health and safety of staff and this needed to remain the priority.

The Panel thanked EY for their report and attendance.

RESOLVED: That the Panel:

i.               notes the External Auditor’s Audit Results Report (ISA 260);

ii.              authorises the Assistant Director Resources / Treasurer and the Panel Chair to sign the formal letter of representation to the External Auditor; and

iii.             approves the 2020/21 Statement of Accounts for publication.