North Yorkshire Council
Audit Committee
23 June 2025
Draft Statement of Accounts 2024/25
Report of the Corporate Director Resources
1.0 PURPOSE OF REPORT
1.2 To approve a Corporate Governance Working Group and its membership in order to provide further overview of the NYC SOFA for 2024/25.
2.0 SUMMARY
2.1. The 2024/25 Draft Statement of Accounts for North Yorkshire Council is in the process of being published in advance of the statutory 30th June 2025 deadline. This report sets out the next steps and timeline for the audit, certification and publication of the final accounts.
3.1. The Accounts and Audit Regulations set out the requirements and timelines for Member approval of Local Authority Accounts and one of the Terms of Reference for this Committee is to approve the Annual Statement of Accounts (SOFA).
3.2. The regulations set out the requirement for the Statement of Accounts (SOFA) to be certified by the Section 151 Officer (Corporate Director – Resources) and approved by Members (the Audit Committee) in advance of the certification and publication.
3.3 In response to mounting delays and pressures in the external audit market, the Government announced measures to tackle a worsening backlog in local audit and restore transparency and accountability over how public money is spent across England. Backstop dates cover the historic backlog and future audits through to 2027/28.
3.4 The backstop dates are:
· Financial year 2024/25: 27 February 2026
· Financial year 2025/26: 31 January 2027
· Financial year 2026/27: 30 November 2027
· Financial year 2027/28: 30 November 2028
3.5 The NYC Draft SOFA is currently in the final stages of consolidation and officers are working to publish ahead of the Audit Committee meeting.
3.6 At this stage, there is no requirement for Member approval of a draft SOFA in advance of consideration and review by External Audit. The SOFA documents are being circulated to the Audit Committee for information and review/comment only, not formal approval.
4.0 DRAFT STATEMENT OF ACCOUNTS 2024/25
4.1 Unfortunately, due to additional pressures the NYC Draft SOFA is currently in the final stages of consolidation and officers are working to publish ahead of the Audit Committee meeting. Once certified by the Corporate Director Resources and published, the Draft SOFA will be circulated to the Committee as Appendix D to the report.
4.2 The format and content of the SOFA follows on from previous years and must comply with CIPFA’s Code of Practice on Local Authority Accounting in the United Kingdom 2024/25. The Code prescribes the accounting treatment and disclosures for all transactions within local authority accounts. A summary sheet giving a brief explanation of the various statements included in the SOFA is attached as Appendix B.
Revenue and Capital Outturn 2024/25
4.3 Revenue Budget and Capital 2024/25 outturn reports for all councils were considered by the Executive on 27 May 2025. The expenditure and funding details reported in the outturn position form the basis of the information reflected in each SOFA.
4.4 However, council budget and financial reporting arrangements are designed to fit the organisational structure of each Council and are different to the statutory year-end requirements reflected in the SOFA. Therefore, the management accounts have been reworked to fit the formal requirements of the Code. Although the presentation of the figures in the SOFA is very different, the resulting changes do not affect the overall net expenditure to be funded from Central Government Grant, Business Rates and Council Tax or the levels of working balances.
4.5 The main differences between Council management accounts and the published statutory accounts are set out at Appendix C.
Accounting Policies 2024/25
4.6 As reported to the Audit Committee in March 2025 the Accounting Policies for 2024/25 have been updated following changes to the CIPFA Code of Practice following the adoption of IFRS 16 in relation to accounting for leases.
4.7 There were no other key changes to the Code of Practice that impact on the Councils 2024/25 Accounting Policies.
Audit and Certification of Accounts
4.8 Whilst the amended Accounts and Audit Regulations require that the External Auditor to formally sign off the 2024/25 accounts by 26 February 2026, the audit of the Draft SOFA is expected to be undertaken between June and September 2025 which would, if completed in time, allow the final approval at the September meeting of Audit Committee.
4.9 Following the conclusion of the audit, the Corporate Director Resources must re-certify the Final version of the SOFA before it is approved by the Audit Committee. Any significant changes reflected in the Final SOFA compared with the Draft version, resulting from the audit, will be reported to Members.
4.10 On completion of the external audit a report from the Auditor will be submitted to the meeting of this Committee. Following consideration of the Auditor’s report, the Committee will be asked to consider and approve the SOFA with the Chairman being asked to sign and date the Accounts prior to being formally signed off by the External Auditors. The Auditors’ conclusion from their audit will also be reported through the Annual Audit Letter.
Annual Governance Statement
4.11 The NYC draft SOFA also includes the draft Annual Governance Statement (AGS). A separate report on the Annual Governance Statement is included on the agenda of this meeting.
5.0 Proposed Sign-off Arrangements
5.1 The approach taken in previous years has been to create a working group to support the Audit Committee in reviewing the SOFA and associated governance documents. Subject to the views of Audit Committee, the proposal for 2024/25 is to continue with the same approach taken in previous years and establish a Corporate Governance Working Group (the Working Group) to review the NYC Draft accounts for 2024/25.
5.2 It is proposed that a report from the Working Group would then be considered in advance of the NYC SOFA at the September Committee.
5.3 The terms of reference of the Working Group is set out at Appendix A.
6.0 ALTERNATIVE OPTIONS CONSIDERED
6.1 No alternative options were considered.
7.0 FINANCIAL IMPLICATIONS
7.1 There are no specific financial implications.
8.0 LEGAL IMPLICATIONS
8.1 There are no specific legal implications.
9.0 EQUALITIES IMPLICATIONS
9.1 There are no equalities implications.
10.0 CLIMATE CHANGE IMPLICATIONS
11.1 There are no climate change implications.
12.0 REASONS FOR RECOMMENDATIONS
12.1 Member approval is required to sign off the audited SOFA in order to fulfil the obligations of those charged with the council’s governance (i.e. the Audit Committee).
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13.0 |
RECOMMENDATIONS
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i) That Members approve the creation and membership of the Corporate Governance Working Group as set out in paragraphs 5.1 – 5.3 and Appendix A; ii) That members consider the draft Statement of Final Accounts for 2024/25 in advance of the accounts being audited and resubmitted to the Audit Committee on 29 September 2025 (Appendix D).
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APPENDICES:
Appendix A – Governance Working Group Membership and Terms of Reference
Appendix B – Statement of Accounts: Brief Explanation of Contents
Appendix C – Main Differences Between the Management Accounts and the Published Statutory Accounts
Appendix D – NYC Draft SOFA 2024/25 (To Follow)
BACKGROUND DOCUMENTS:
CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2024/25
Gary Fielding
Corporate Director – Resources
County Hall
Northallerton
June 2025
Report Author – John Raine Head of Corporate and Technical Finance
Note: Members are invited to contact the author in advance of the meeting with any detailed questions.
APPENDIX A
Corporate Governance Working Group
Membership
Subject to nominations, the following Audit Committee Members are:
TBC
Terms of Reference
To consider the Statement of Final Accounts for North Yorkshire Council for 2024/25 and make recommendations to Audit Committee.
Meeting Frequency
To be determined and subject to the audit completion reports received.
APPENDIX B
STATEMENT OF FINAL ACCOUNTS
Brief Explanation of Contents
(a) Narrative Statement
The purpose of this statement is to act as a guide to the most significant matters impacting on the Council's finances. It gives provides commentary on the Councils financial performance and value for money in its use of resources.
(b) Independent Auditor’s Report
The report explains the auditors’ responsibilities in relation to the Statement of Accounts. It also expresses an opinion on the Accounts and shows how this opinion was reached. The report also gives a value for money opinion in terms of the arrangements for securing economy, efficiency and effectiveness, (currently not included in draft SOFA).
(c) Statement of Responsibilities for the Statement of Accounts
This statement outlines the Council’s responsibilities for the Accounts under local government legislation and any other requirements. It also details the legal and professional responsibility for the Accounts of the Corporate Director – Finance and Central Services (i.e. Section 151 officer).
(d) Statement of Accounting Policies
This statement explains the principles, bases, conventions and rules applied by the Council in preparing the Statement of Accounts.
(e) Expenditure and Funding Analysis
This statement demonstrates how the funding available to the Council for the year has been used in providing services in comparison with those resources consumed or earned by the Council
(f) Comprehensive Income and Expenditure Statement
This shows the Net Cost of the Services provided by the Council and how this has been financed from general government grants and local tax payers. This Statement shows the accounting cost in the year of providing services in accordance with specified accounting principles, rather than the amount to be funded from taxation.
(g) Movement in Reserves Statement
This Statement shows the movement in the different reserves held by the Council over the year. The Statement is analysed into usable reserves, those that can be applied to fund expenditure or reduce local taxation, and other unusable reserves.
(h) Balance Sheet
This is a statement of the overall financial position of the Council at the end of the year and shows the Balances and Reserves at the Council’s disposal, its long term indebtedness and the fixed and net current assets employed in its operations.
(i) Cash Flow Statement
The Cash Flow Statement shows the changes in cash and cash equivalents of the Council during the financial year. The Statement shows how the Council generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities.
(j) Notes to the Core Financial Statements
These notes provide further details and explanation of the figures included in the Core Financial Statements.
(k) Group Accounts
The Council conducts some of its activities through partnerships and separate undertakings. Some of these are not directly reflected in the statements (e) – (i) above due to legal and regulatory reasons. These Group Accounts are required to present a full picture of the Council’s economic activities and financial position in order to aid the primary financial statements.
(l) North Yorkshire Pension Fund Accounts
The Accounts show the income and expenditure of the North Yorkshire Pension Fund together with the financial position of the Fund on 31 March.
(m) Annual Governance Statement
This statement sets out the framework within which financial control and corporate governance is managed and reviewed by the Council and the main components of the system. It also reports on significant identified weaknesses and the actions undertaken to rectify these.
APPENDIX C
MAIN DIFFERENCES BETWEEN THE MANAGEMENT ACCOUNTS
AND THE PUBLISHED STATUTORY ACCOUNTS
1.0 CAPITAL CHARGES
In the SOFA, the Council is required to adopt CIPFA’s Capital Accounting Regulations which means that each service has to reflect a depreciation charge for the assets they use (land, building, plant and machinery etc.) Adjustments are also made for the following other types of capital charge:
· impairment of non-current (fixed) assets
· revaluation losses from the revaluation of property
· changes in the market value of Investment Properties
· amortisation of intangible assets
· revenue expenditure from capital under statute (capital expenditure that does not result in a Council asset)
These capital charges replace the minimum revenue provision (MRP) for debt repayment which is included in the management accounts, and charged against the Council’s budget requirement. The MRP is therefore not charged to the Comprehensive Income and Expenditure Statement. Similarly, capital expenditure which is funded directly by the General Fund (funded by Council Tax, General Revenue Grant and Business Rates) is not charged to the Comprehensive Income and Expenditure Statement.
Capital charges are off-set by capital grants and contributions (which are used to fund expenditure on non-current (fixed assets). These contributions are credited in full to the Comprehensive Income and Expenditure Statement in the year where the terms and conditions of these contributions have been satisfied but this treatment does not impact on the management accounts of the Council. Where the conditions of these capital grants have not been met at year-end, the grant is held in the balance sheet as ‘Capital Grant Unapplied’.
2.0 TRANSFERS TO AND FROM RESERVES
Transfers into, and expenditure funded from, reserves are not considered part of the net cost of services and are therefore not reflected at all within the Income and Expenditure Statement.
3.0 EMPLOYER’S PENSION FUND CONTRIBUTIONS AND ADJUSTMENTS INVOLVING THE PENSION FUND RESERVE
Accounting for retirement benefits (IAS 19) requires that employer’s contributions to pension schemes, reflected in service accounts should only consist of ‘current service’ costs. As the actual contributions made to the North Yorkshire Pension Fund by the Council include an element of back-funding to recover the Pension Fund deficit, the service expenditure figures reported in the SOFA have to be adjusted to reflect the current service cost as calculated by the Fund actuary.
In addition, the Comprehensive Income and Expenditure Statement also includes, as part of operating expenditure, the net impact of the notional return (Council share) of the Pension Fund assets and the increase in accrued future pension liabilities.
The required changes also reflect the inclusion of the attributable share of Pension Fund assets and liabilities in the Council’s Balance Sheet. This reflects the Council’s commitment to the Pension Fund but does not mean however that legal title or obligation has passed from the trustees of the Pension Fund to the employer.
4.0 COUNCIL TAX AND BUSINESS RATES (COLLECTION FUND) ACCOUNTING
The Council’s Income and Expenditure Statement includes the
Authority’s share of the carried forward Council Tax and Business Rates Collection Fund surpluses and/or deficit. This is in place of the estimated sums at the previous year end that have been paid over to the Council during the year and used for Budget/Council Tax setting purposes in future years.
5.0 HOLIDAY AND FLEXI PAY ACCRUAL
The Council has to charge the Income and Expenditure Statement with an estimate of accrued and untaken Annual Leave and Flexi Leave at 31 March. This figure includes a substantial figure for untaken Teacher’s (and other schools-based staff) holiday pay, in relation to the days worked and taken as holiday in the Spring Term at each school. This adjustment is purely notional and does not impact on the Council’s budget requirement or level or working balances (GWB).
6.0 GAINS AND LOSSES ON THE DISPOSAL ON NON-CURRENT (FIXED) ASSETS
An example of this would be where a School acquires Academy status and there is an automatic transfer of the ownership of the Land and Building of the school premises to the School’s Board of Governors for nil value. Such a notional loss does not, however, impact on the day to day management accounts or level of general working balances.
7.0 OTHER DIFFERENCES
Certain other transactions such as interest earned and paid, precept payments to other bodies etc. are not considered as part of the net cost of services and are required to be shown as separate items below service expenditure totals in the Income and Expenditure account. Similarly some Government Grants and Funding sources are required to be shown as overall general funding, rather than being included in the Income and Expenditure Statement as Service income.