To note changes to the methodology for dealing with high value, multi-component property assets.

The Chief Accountant advised that a new approach was to be adopted to more realistically apply depreciation across the Council’s lands and buildings to reflect the likely life expectancy of the various components of the assets.  This would apply to the Council’s property, plant, equipment and municipal buildings but exclude the investment properties and ensure consistency across the consolidated Spelthorne Group accounts.

The proposals followed Chartered Institute of Public Finance and Accountancy (CIPFA) guidance.  The KGE board had been consulted and accepted the proposals. 

In response to a question about cash flow implications, the Chief Accountant advised that there would be no direct impact on cash flow, but regular reviews of scheduled repairs to buildings and work required would be factored in as part of the annual budget process. 

The Committee asked about the rationale of choosing £5m as the starting point for the new methodology and if there was any provision to inflate that over time.  The Chief Accountant advised that the fixed asset portfolio had been reviewed and the aggregate was approximately £1.2m. There were a number of properties around £1m but nothing significant at £5m level and this was being used as a starting point and would be discussed with relevant parties including Audit Committee, external auditors on a regular basis.

Resolved to note the changes to the methodology for the Council’s property, plant and equipment, including municipal buildings, but excluding investment properties, as these will continue to be valued at ‘fair value’, in accordance with the CIPFA Code.