Issue - meetings

48.1     The Committee considered a report presenting the Independent Auditor (Grant Thornton) report to those charged with governance, and reporting on anticipated unqualified audit opinion on the 2019/20 Pension Fund Annual Report.

48.2     It was clarified that there has been a delay in the Independent Auditor, Grant Thornton, issuing its audit opinion, but this is due to their own internal processes and not the ESPF.

48.3     The Committee RESOLVED to:

1. note the draft Independent Auditor’s (Grant Thornton - GT) report to those charged with governance on Pension Fund Annual Report 2019/20;

2. approve the draft Pension Fund Annual Report for publication.

45.1.      The Board considered a report containing both the draft Independent Auditor’s (Grant Thornton) report to those charged with governance on Pension Fund Annual Report 2019/20 and the draft Pension Fund Annual Report.

45.2.      Stephen Osborn (SO) asked when the Annual report and accounts will be published, as the University of Brighton’s external auditors had asked for a copy.

45.3.      SK clarified that the statutory deadline is 1st December 2020 and the draft will be agreed by the Pension Committee on 30th November 2020.  A copy of the draft would be available from 20th November 2020 (the date of publication of the Pension Committee agenda and papers) that could be shared with the auditors provided there is the caveat that it is a draft and not yet signed off.

45.4.      The Chair asked whether the number of primary pension contributions received late in the financial year 2019/20 was typical, or worse than normal.

45.5.      Russell Wood (RW) said the number was similar to previous years and included some of the same employers who crop up year on year. The majority of employers, however, pay on time. SK reminded the Board that the issue of employer contributions would become a standing item on the Board’s agenda from February 2021.

45.6.      The Chair asked whether the Pension Fund Annual Report was usually this lengthy.

45.7.      SK explained that Chartered Institute of Public Finance and Accountancy (CIPFA) guidance was introduced from mid-2019 setting out exactly what must, should and may be included in an annual report. Prior to then, it was at the discretion of administering authorities as to what they included. The CIPFA guidance includes a requirement to have the Funding Strategy Statement and other policies included in full, whereas before there was only a link, resulting in this year’s report being longer than previously. SK advised next years’ report could be longer still, as the team will review the report with the intention of ensuring they have satisfied the “should” and “may” actions from the CIPFA guidance. 

45.8.      The Chair asked if any members of the East Sussex Pension Fund (ESPF) had asked for copies.

45.9.      SK said she was not aware as normally people would access it via the website, but a copy would be provided on request.

45.10.   The Board RESOLVED to note the report.

Report by Chief Finance Officer

28.1 The Committee considered a report by the Chief Finance Officer regarding the Independent Auditor’s report to those charged with governance and Statement of Accounts for 2019/20on the audit opinion on the 2018/19 Statement of Accounts.  

28.2 The Committee RESOLVED to –

1) note the Independent Auditor’s (GT) Report to those charged with governance on

ESCC Accounts and the Value for Money conclusion report;

2) authorise the Chief Finance Officer to sign the formal Letter of Representation to

GT UK LLP; and

3) approve the 2019/20 Statement of Accounts for publication.

Report by the Chief Finance Officer

23.1     The Committee considered a report by the Chief Finance Officer which presented the external auditor’s (Grant Thornton) report to those charged with governance and the Statement of Accounts before it is presented to the Governance Committee.

23.2     The Committee discussed the following:

·         Cash flow, and the comments about “going concern” and reporting to Cabinet  

·         Property, Plant and Equipment (PPE) valuation

·         Savings requirements and the Value for Money Recommendation 

·         McCloud judgement and contingencies for liabilities

23.3     The Committee was informed that the cash flow forecast to November 2021 had been provided but not yet reviewed, but it was not anticipated to raise significant issues, owing to the short term investments and treasury management in place. It was confirmed that financial reporting to Cabinet has been expanded to present Covid-related spending alongside routine spending, and that a finance risk log is maintained.

23.4     PPE is an area of focus for the external auditors due to the material value within the accounts an the challenge at the national level around investments and valuations.  Valuations were highlighted as an issue within the Redmond Review (see Item 7).  In respect of the County Council’s audit, the professional valuer expressed a material uncertainty related to land and buildings which GT recommended should be included in the notes to the accounts, which was agreed to. 

23.5     The scale of any future savings requirements is unknown at this point.  The Spending Review, which aimed to issue a 3 year revenue and 4 year capital funding allocations, has been delayed.  There will now be a one year Spending Review, to be announced on 25 November 2020, with the Local Government Settlement expected before Christmas as the spending review is in late November with the Local Government Settlement following in December.  Cabinet have agreed the budget planning principle to not seek further additional savings at this point, with the  potential of using reserves, if required, to set a balanced budget for 2021/22.  Any spending announcements from Government have to be analysed, modelled into the Medium Term Financial Plan, assessed against the Core Offer before deciding on any savings.

23.6     It was set out that the provision made in the accounts for liabilities resulting from the McCloud judgement were the best estimate available at 31 March 2020.  Subsequent consultation could lead to a lower level of liability, but for the purposes of the 2019/20 accounts the higher estimate is the more appropriate one. In any event any adjustment would not be a material adjustment.

23.7     The Committee RESOLVED to (1) note the Grant Thornton report; and

(2) confirm that there were no additional comments they wished the Governance Committee to consider.