Agenda item

The Committee received a report and presentation on the draft 2019/20 Annual Accounts for the MCA Group prior to formal external auditing. 

The presentation drew Members’ attention to the Narrative Report set out in the Statement of Accounts.  This described the issues and financial impact of the activity in 2019/20.  It also covered performance in terms of activity and finance, Covid-19 considerations and the financial health of the Group in detail.

Members noted the following headlines:

·           The MCA’s net underspend is £675,000 in 2019/20.  This has been allocated to the Mayoral Election Reserve as there is a forthcoming cost of c£2m in 2022.

·           An underspend of £505,000 on the South Yorkshire Transport revenue budget corresponding reduction in use of Earmarked Levy Reduction Reserve.

·           The overall capital programme spend was £4.494m less than planned.  The MCA Board had approved carrying forward all of the underspends to complete the programme in 2020/21. 

·           In section 4, Covid-19 implications were discussed.  New Provisions and Earmarked reserves had been identified to ease potential pressures on current year budgets.  These are:

·      SYPTE Covid-19 Income Loss £1.6m 

·      MCA Covid-19 Income Loss £0.5m

·      Recovery Plan £0.4m

·      SYPTE Recovery Reserve £3.0m

The structure of the 2019/20 Statement of Accounts was presented and noted by Members. 

In assessing the financial strength of the MCA, Members’ attention was drawn to note 30 of MCA Balance Sheet and note 60 of the Group Balance Sheet.  The Group had usable reserves of £90.944m.  The value had increased from £75.548m in 2018/19.  The major factor for the increase in usable capital receipts was the repayment of an investment. 

The balance sheet reflected a very strong financial position.  The medium-term financial plan looked to utilise all of the Levy Reduction Reserve (£19.52m) over the next three years. 

N O’Neil stated that, Finance Directors were required to consider the on-going financial strength of an organisation as they present the financial accounts.  The emergence of the Covid-19 epidemic is a key consideration and a theme that had been covered by a specific section within the Narrative Statement. 

Risks to the on-going sustainability of each part of the Group had been assessed and specific budgetary impacts examined.  Potential further calls on SCR Group resources had also been reviewed and sensible provisions and changes to earmarked reserves had been proposed as part of the closedown process. 

Members noted that the Group remains in strong financial health with the ability to continue to operate and deliver its services in 2020/21 and beyond.

R Jarvis asked if provisions included in the accounts were based on assumptions.  Additionally, he asked what the External Auditors view was in respect of this. 

N O’Neil replied that, in terms of income loss, the MCA predicted that there would be income loss in respect of tenants leaving the Advanced Manufacturing Park (AMP).  Mitigations were in place to manage the impact in 2020/21.  In respect of SYPTE, assumptions had been made on their overall losses during the year. 

Assurances were provided that, sound assumptions would be presented to the External Auditor.

Members’ provided the following comments on the Statement of Accounts:-

·           Narrative report – Supply Chains.  R Jarvis commented that there was no mention of the Government’s current 2 metre social distancing rule and the implications this would have on public transport, as of today.

·           Investment income may change from the period when the statement of accounts was written.

·           Underspends on the SYPTE Capital Programme - will they be utilised in the following year, due to Covid-19?

·           Reserves and provisions – SYPTE accounts refers to ‘Asset Management’ (£0.5m).  This is not included in the Narrative Report. 

·           Page 8 – Key Developments in the year.  Is the number of homes completed during the year correct?

·           Page 9 – Key Developments in the year – Tram Train pilot.  Is the terminology correct for the assessment criteria used for the pilot?

·           Page 87 – External Audit Fees.  There was no variation to the External Audit fees shown in the accounts as discussed at a previous meeting. 

N O’Neil stated that the fees variation was in relation to the 2018/19 fee, which was currently being adjudicated by the PSAA.  A discussion would take place at the July meeting. 

N O’Neil thanked Members’ for their comments and agreed to incorporate in the final version of the accounts. 

RESOLVED – That Members reviewed the Annual Accounts for 2019/20 and approve for publication ahead of external auditing in line with CIPFA Code of Practice.