Final accounts 2004-05

Report: 9b
Date: 27 October 2005
By: Treasurer

Summary

This report provides an update on latest progress in the audit of the final accounts 2004-05.

A. Recommendation

That

1. members note the position on the latest progress of the audit; and
2. agree the proposed changes to the accounts following two issues which have arisen during the audit.

B. Supporting information

Background

1. The full Authority agreed the draft statement of accounts for the year ended 31 March 2005, which were still subject to audit, at its meeting on 28 July 2005.

2. The Audit Commission, the MPA’s external auditors are now nearing completion of the audit. At the present moment they are intending to issue an unqualified audit opinion on 31 October. In addition the latest advice is that the Audit Commission will have no need to report to ‘those charged with governance’ matters of substance that have arisen during the audit. It will therefore not be necessary to arrange a meeting between the external auditor and members of the Corporate Governance Committee.

Matters arising

3. In the normal course of audit small matters and issues arise which may require amendment. This year there are two material issues that have arisen which, while they have been addressed to the satisfaction of external audit do need to be highlighted because of their size and because they reflect changes to the draft accounts last approved by members.

4. First, the auditors have identified that the accounting treatment for an amount of £14.6M specific grant due from the Home Office had been shown as income in advance (cash actually received in advance of the following financial year) rather than a debtor (sums still due). This change has been made on the balance sheet and has a neutral effect on the net worth of the balance sheet and does not affect the revenue account.

5. Secondly, the auditors have disagreed with the accounting treatment of one element of the acquisition of Empress State Building. Part of the arrangements for the purchase involved early termination of existing leases. The early termination payment of the lease at Wellington House was agreed at £16.2M and incorporated into the overall capital programme. The auditors have argued that the payment effectively relates to an early dilapidations payment and should now be treated as a revenue item rather than as capital expenditure. To effect this adjustment in the accounts (and still have a neutral effect) this payment will now be charged directly to the revenue account in 2004/05 and at the same time there will be a corresponding reduction in the revenue account in projects funded by revenue contributions to capital outlay (RCCOs) and currently charged to capital - thus having an overall neutral effect on the accounts.

C. Race and equality impact

There are no specific impacts arising from this update report.

D. Financial implications

As set out above.

E. Background papers

• Draft Accounts to 31 March 2005

F. Contact details

Report author: Ken Hunt, Treasurer, MPA.

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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