After years of delays to the council’s 2019/20 accounts, it’s now emerged there was a £293m overestimation of the pension fund value, reports Grace Howarth, Local Democracy Reporter

Enfield Council “misstated” key financial figures in its 2019/20 accounts, an audit report has revealed.

After repeated delays to the finalisation of the civic centre’s accounts for that financial year, it’s now emerged there was a £293million overestimation of the pension fund value originally given in the first draft of the accounts.

Independent auditors BDO revealed that the council’s net pension liability was reported at £789m in its original accounts but was later adjusted to the much lower figure of £496m.

During a general purposes committee meeting at Enfield Civic Centre yesterday (Tuesday 10th), opposition leader Alessandro Georgiou called the difference in these numbers a “significant change” and said he was “not convinced” that valuation changes during the Covid-19 pandemic were the reason behind the adjusted figure.

Ciaran McLaughlin, an audit partner at BDO, told the committee it was a significant change and because the valuation can have “quite a large impact” it was not to be dismissed.

The pension liability is a current valuation of the future benefit payments projected to be paid to participants over the plan’s life.

Fay Hammond confirmed conversations around the calculation and the “impact” of the adjustment had taken place.

The report detailed how the initial £789.8m figure was based on market conditions dating 29th February 2020, while the new adjusted figure was based against market conditions on 31st March 2020.

The 2019/20 pension fund investment balance was also deemed a “misstatement”. The “material error” was stated to have an £18.9m impact on the fund and in total had resulted in a “downward change” of £20.9m.

Committee member Nia Stephens asked if the difference was accounted for and added to today’s pension fund, as the difference would affect “investment strategy”.

She also expressed concerns over how dated the market positions were that were being used to calculate current “assumptions”.

“This is quite old information and a lot of things have happened in the market since then,” she said.

Ciaran confirmed the accounts were now “up to date” and the impact was not necessarily “direct loss” as values “increased and decreased”.

In total, BDO identified 13 material misstatements which, as well as an overstatement on the pensions liability, included a valuation of properties and a block of land at Meridian Water.

The council spent £29.7m on remediation works at Meridian Water during the year up to March 2020, but site delivering costs were not allowed for in the original costs estimation. This cost was “incorrectly” reflected in assets under construction instead of surplus assets.

Other land and building valuations were understated by £41.2m, due to assets being omitted when moving from one system to another, and £32.6m was understated due the social housing discount being applied to properties not on social rental agreements.

BDO expected it would later issue an “unmodified opinion” on the council’s finances, meaning it had a reasonable level of assurance that with its new statements and adjustments a truer financial position for that time period had been reflected.

Read the full audit report:
Visit Agenda Supplement for General Purposes Committee

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