Issue - meetings

To acknowledge the 2024-25 Accounting Policies.

The Committee received a report from the Joint Finance Manager, Systems and Controls on the 2024-25 Accounting Policies for Spelthorne Borough Council and its subsidiaries, Knowle Green Estates and Spelthorne Direct Services Limited. The Committee was informed that these policies would be used in preparing the 2024-25 Statement of Accounts. Key changes included the new standard for operating leases, requiring lessees to recognise nearly all leases on the balance sheet. The need to review and possibly refine the policies based on audit feedback was also highlighted. The policies were to be effective immediately for the 2024-25 audit process.

The Committee initially inquired whether the change to recognise leases resulted from recommendations made by Grant Thornton during their external audit or whether this was decided independently. Emilia clarified that it was an independent decision, reflecting a widespread change in public sector accountancy, already implemented in the private sector. The Deputy Chief Executive added that the Audit Committee would hear references to this accounting change over the next year, relating to policy guidance under the International Financial Reporting Standard 16 (IFRS16).

The Independent Member, familiar with the wider accounting changes, asked about the material impact on property portfolios and other fixed assets. It was explained that the policy changes primarily affected the Council's role as a lessee, with the only material impact being on lease funding for refuse vehicles which had a value totalling £4 million. The Committee noted the technical nature of the change, and the Joint Finance Manager mentioned the implementation of software to handle lease calculations.

The Committee expressed confusion over the changes/updates to the Accounting Policies and asked what were the main points of focus. The Deputy Chief Executive suggested a future training session on the Statement of Accounts to address these issues and encouraged members to ask questions in advance or during meetings. The representative from Grant Thornton emphasised the need to focus on where the Council had departed from the Code of Practice on Local Authority Accounting (the code) or where there were particular areas of management judgement and estimate which resulted in a different financial position. The external audit process was also a helpful indicator to provide assurance on policy compliance. The Chief Accountant clarified on this occasion the Council had not departed from the code but would highlight this in future reports if this was the case. 

The Committee resolved to acknowledge the 2024-25 accounting policies.