To approve the critical accounting judgements that will be used in completing the 2015/16 annual accounts and to note the key sources of estimation uncertainty.

11.1           The report of the Finance and Asset Management Group Manager, circulated at Pages No. 48-55, set out the critical accounting judgements and key sources of estimation uncertainty that would be used in preparing the 2015/16 accounts.  Members were asked to approve the judgements and to note the key sources of estimation uncertainty.

11.2           The Finance Manager explained that the Council was required to produce an annual Statement of Accounts and the Audit Committee had approved the accounting policies to be used during the 2015/16 closedown at its meeting in March 2016.  In applying the Council’s accounting policies, certain judgements had to be made about complex transactions, or those involving uncertainty about future events.  The judgements were set out at Appendix A of the report and would be included as a note in the Statement of Accounts; Members were informed that the main ones were the same as the previous year, for example, it had been deemed that the Council had control of the Swimming Bath Trust on the basis that it had the right to appoint the majority of representatives to the board and, as the management agent, it had control over the financial and operating policies of the pool.  However, as the site had been revalued to nil in 2014/15, a decision had been taken not to prepare group accounts on the basis of immateriality.  In terms of the Council joining Ubico on 1 April 2015, consideration needed to be given as to whether the Council had an interest in the company, and whether group accounts should be produced, and the Finance team had been in discussion with Grant Thornton in this regard.  The conclusion which had been reached was that the Council did not have control over Ubico in an accounting sense; Tewkesbury Borough Council was one of six partners, each with a 16.7% share which was below the 20% threshold which was an indication of holding significant influence.  Other factors which had been considered included representation on the board, participation in policy making, material transactions and management influence.  It had been determined that there was no persuasive evidence that the Council had a significant level of control over the strategic direction and operation of Ubico and, therefore, group accounts did not need to be produced.  In response to a Member query, the Finance Manager explained that Tewkesbury Borough Council had previously been one of three partners in Ubico but this had recently increased to six meaning that its influence had reduced and would continue to diminish as more partners joined over time.  As there was no overall control, decisions were taken by the board based on a majority vote and clarification was provided that the board was comprised solely of Officers.  The Member went on to question how the Council could ensure that the residents of the Borough were getting the best service if it did not have any influence and assurance was provided that the Council had taken a decision to retain control of service delivery through its contract with Ubico. 

11.3           The Finance Manager advised that, in preparing the Statement of Accounts, there were areas where estimates were made.  These areas were set out in detail at Appendix 3 to the report and included useful lives and valuations of properties which were estimated by qualified valuers; the amount of arrears which were not collected based on past experience of collection of different types of debt; and the liability for future pension payments, which was estimated by qualified actuaries. It was noted that one new area of estimation had been identified by Grant Thornton in relation to income from garden waste payments.  Members were advised that the database contained 14,000 customers and it was impossible to look at every payment, given their value.  It was noted that customers all had different renewal dates which meant that an annual payment could potentially span two different financial years, as such, a view had been taken that payments taken within the month were for renewals starting the following month; this was referred to as Receipts in Advance.  A Member suggested that alternative systems could be considered, for example, in America, people paid for their bins upfront and a tag/sticker was attached to their gate; any properties without a tag/sticker did not have their bins collected.  The Corporate Services Group Manager explained that this issue had been discussed at the last meeting of the Committee as part of the garden waste audit.  It was recognised that a number of bins were being collected which had potentially not been paid for and he provided assurance that consideration was being given to alternative systems, including a sticker system, as part of the Joint Waste Team’s review of the garden waste service.

11.4           Having considered the information provided, it was

RESOLVED          That the critical accounting judgements that would be used in completing the 2015/16 annual accounts be APPROVED and the key sources of estimation uncertainty be NOTED.