Corporate report

The Coal Authority annual report and accounts 2020 to 2021: Accountability report

Published 15 July 2021

Accountability report

The accountability report meets key accountability requirements to parliament. The requirements are based on the Companies Act 2006, as adapted for the public sector.

It encompasses the matters required to be dealt with in a directors’ report and in the remuneration and staff report, as set out in Chapter 6 of the Companies Act. It covers such matters as directors’ salaries and other payments, governance arrangements and the audit certificate and report. It is signed and dated by the accounting officer.

The accountability report consists of 3 main parts. These are the:

1. Corporate governance report, dealing with the Coal Authority’s governance structures and how they support the achievement of the Coal Authority’s objectives.

2. Remuneration and staff report, containing information about senior managers’ remuneration and other staff related disclosures required by the Companies Act and other governmental sources.

3. Parliamentary accountability and audit report, comprising additional disclosures required by parliament, and a view on such matters as regularity of expenditure, fees and charges and long term expenditure trends. It includes the audit certificate and report.

Corporate governance report

The corporate governance report consists of 3 main parts. These are the:

1. Directors’ report, which covers a variety of statutory disclosures not outlined elsewhere in the annual report and accounts.

2. Statement of accounting officer’s responsibilities, which sets out clearly the responsibilities assumed with respect to the annual report and accounts by the nominated accounting officer, and the legislative basis for them.

3. Governance statement, which explains the composition and organisation of the Coal Authority’s board and governance structures and how they support the achievement of the Coal Authority’s objectives.

Directors’ report

The Coal Authority presents its report and audited financial statements for the year ended 31 March 2021. The accounts have been prepared in a form directed by the Secretary of State with the consent of HM Treasury in accordance with paragraph 15(1)(b) of Schedule 1 of the Coal Industry Act 1994 (“the Act”). The accounting officer authorised these financial statements for issue on the date of certification by the Comptroller and Auditor General.

Functions, duties and powers of the Coal Authority

The powers and functions of the Coal Authority were initially set out in legislation by the Coal Industry Act 1994 and the Subsidence Act 1991 (as amended by the Coal Industry Act 1994). We assumed our functions on 31 October 1994.

These functions are set out at www.gov.uk/coalauthority and relate to the coal industry and the management of interests inherited from the British Coal Corporation, licensing of coal mining operations, dealing with coal mining subsidence and providing information.

The 1994 Act has been further amended by subsequent legislation, including the Water Act 2003 and the Water Services (Scotland) Act 2005. This has extended the Coal Authority’s powers to prevent or lessen the effect of the discharge of polluted water from a coal mine onto any land or into watercourses.

The Energy Act 2011 extended the Coal Authority’s powers to use its expertise in other non coal mining related contexts including action to protect water quality from the effects of polluted mine water discharge from abandoned mines, as required by the Water Framework Directive.

Review of operations

The chief executive’s report gives a summary of our activities during the year and the future outlook.

Finance risk management

The governance statement sets out the governance structures that we’ve used to monitor and control risk and the board’s approach to risk management. It also identifies and discusses the significant risks and the mitigation in place. We’ve a strong system of financial control and active financial risk management. We’ve no borrowings and rely on grant in aid and other income to fund our cash requirements.

We therefore have minimal exposure to liquidity, credit and cash flow risk. All assets and liabilities are denominated in sterling so there is no exposure to currency risk. We do not hold any assets that are directly impacted by interest rate movements nor do we engage in any hedge accounting.

We hold some items on the Statement of Financial Position that are discounted using rates specified by HM Treasury, specifically provisions. HM Treasury vary these discount rates from time to time, which will affect both the Statement of Financial Position and the Statement of Comprehensive Net Expenditure. This has had relatively low impact in 2020-21 (decrease of £15 million compared to £96 million in 2019-20).

Future developments

Our future developments and objectives have been discussed in other areas of the annual report, including the chief executive’s report and the strategic risks section of the performance report.

Research and development activities

We undertake a range of research and development activities to improve the efficiency of our operations and in particular reduce the long term net cost of treating mine water. This includes finding uses for our by-products (for instance iron ochre) and promoting the use of mine water flowing through abandoned mine workings as a source of geothermal heat and low carbon energy.

Branches outside the UK

We’ve no branches outside the UK.

Donations

We made no political or charitable donations during the year.

Employee involvement

We’re committed to engaging with staff throughout the business as outlined in ‘Our people’.

Employment

We’re committed to equal opportunities and have a strong focus on diversity and inclusion. This commitment means that decisions to appoint, reward, train, develop and promote are taken on the basis of skills and abilities, matched against the requirements of the job.

We support and celebrate difference and are working to attract, develop and maintain a more diverse workforce. We’re making progress but know there is more to do.

We seek to attract and retain high calibre employees. Opportunities for training are given high priority to ensure that all staff can contribute to their own career development.

Pensions and other post retirement benefits

Former and current employees who have chosen to join are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS) which is an unfunded multiemployer defined benefit scheme. The accounting policy is given in note 1 to the accounts and further information about the scheme is provided in the remuneration and staff report.

Personal data

There were no Information Commissioner’s Office (ICO) reportable data breaches during the year. The governance statement provides further details of our information risk management activities.

Long term expenditure trends

These are reviewed by the directors as part of the annual review of provisions.

Auditors

The Comptroller and Auditor General was appointed under the Coal Industry Act 1994 and reports to parliament on the audit examination. The audit fee was £65,000. No remuneration was paid to our auditors for non-audit work and no other services were provided.

Access to information and complaints

As a public body, we’ve a duty to answer requests under the Freedom of Information Act 2000 (FOIA) and the Environmental Information Regulations 2004 (EIR).

We received 76 requests (FOIA, EIR and Subject Access Requests) during the year and answered all in accordance with the deadlines and standards set by the ICO except one which was answered one day outside of the deadline. The ICO have confirmed that they will not issue a decision notice in respect of this. No requests went to appeal.

We received 28 letters from Members of Parliament, 3 from Members of the Scottish Parliament and 2 from a Welsh Senedd Member.

We received 33 complaints from members of the public and other customers. They were dealt with under our complaints procedure and resolved within the organisation with none referred to the Ombudsman. Our complaints procedure can be found on our website.

Board of directors

Board and their interests

No board member of the Coal Authority has any financial interest in the Coal Authority. A register of interests is maintained which is open to the public to view at our offices in Mansfield or can be accessed at www.gov.uk/coalauthority

There were no related party transactions in respect of board members in 2020-21.

Lisa Pinney MBE - Chief Executive

• appointed as Chief Executive from 1 June 2018

• appointed as Board Director from 1 June 2018 to 31 March 2020

• reappointed to 31 March 2023

Paul Frammingham – Chief Finance and Information Officer

• appointed as Board Director from 1 April 2011 to 31 March 2014

• reappointed to 31 March 2017

• reappointed to 31 March 2020

• reappointed to 31 March 2023

Carl Banton – Operations Director

• appointed as Board Director from 22 March 2021 to 31 March 2023

Jeff Halliwell (from 1 April 2021) – Non-Executive Director

• appointed as Board Director from 1 April 2021 to 31 March 2024

• appointed as Chair from 1 April 2021 to 31 March 2024

Gemma Pearce – Non-Executive Director

• appointed as Board Director from 1 April 2016 to 31 March 2019

• reappointed to 31 March 2022

Steve Wilson – Non-Executive Director

• appointed as Board Director from 1 April 2017 to 31 March 2020

• reappointed to 31 March 2023

Jayne Scott – Non-Executive Director

• appointed as Board Director from 1 April 2019 to 31 March 2022

Stephen Dingle (until 31 March 2021) – Non-Executive Director

• appointed as Board Director from 1 May 2008 to April 2011

• reappointed to 31 September 2014

• appointed as Chair from 1 April 2013 to 31 March 2017

• reappointed to 31 March 2020 (extended until 31 March 2021)

Statement of the accounting officer’s responsibilities

Under paragraph 15(1)(b) of Schedule 1 to the Coal Industry Act 1994 the Secretary of State, with the consent of HM Treasury, has directed the Coal Authority to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction.

The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Coal Authority and of its net expenditure, financial position, changes in taxpayers’ equity and cash flows for the financial year.

In preparing the accounts, the accounting officer is required to comply with the requirements of the government’s Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by the Secretary of State, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis

• make judgements and estimates on a reasonable basis

• state whether applicable accounting standards, as set out in the government’s Financial Reporting Manual, have been followed, and disclose and explain any material departures in the financial statements

• prepare the financial statements on a going concern basis

• confirm that the Annual Report and Accounts as a whole is fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable

The accounting officer for the Department for Business, Energy and Industrial Strategy (BEIS) has designated the chief executive as accounting officer of the Coal Authority.

The responsibilities of an accounting officer, including responsibility for the propriety and regularity of the public finances for which the accounting officer is answerable, for keeping proper records and for safeguarding the Coal Authority’s assets, are set out in Managing Public Money published by HM Treasury.

As accounting officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the Coal Authority’s auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware.

Governance statement

This governance statement outlines the governance, risk management and control arrangements in place to ensure achievement of the Coal Authority’s objectives. It concludes that these are effective and continue to develop to manage the Coal Authority’s risks so that we can continue to make a better future for people and the environment in mining areas.

The Coal Authority’s governance framework

We’ve committed to high standards of corporate guidance. We work within a framework document that is reviewed and agreed periodically with the Department for Business, Energy and Industrial Strategy (BEIS). This sets out the purpose of the Coal Authority, the core elements of the relationship with BEIS, and the framework within which we operate. In 2020-21 there have been no changes to this framework.

The Coal Authority has an established governance framework supported by an appropriate organisational culture. This is summarised below and explained in this statement.

Impact of COVID-19 response on governance framework

Towards the end of March 2020 the government announced measures to control the spread of the COVID-19 pandemic. The Coal Authority invoked its business continuity plan and moved to predominantly working from home with immediate effect.

A Senior Management Team (SMT) consisting of the Executive Leadership Team (ELT) and certain heads of department was created to manage the Coal Authority’s response. This ensured that we could prioritise activity to protect life, drinking water and the environment and focus on supporting our customers and the wellbeing of our teams. The SMT has remained in place throughout the period. Systems and governance processes remained effective and more detail is given in the following sections.

1. The board and its committees

1.1 Board of directors

The Coal Authority has an established governance framework supported by a board of directors. The board sets and communicates strategic intent and direction, makes strategic decisions that cannot be delegated and monitors and challenges corporate business performance.

Throughout most of 2020-21 the Coal Authority had 6 directors (2 statutory executive and 4 non-executive). Carl Banton (Operations Director) was appointed as a statutory executive director on 22 March 2021.

In February 2021 our new Chair, Jeff Halliwell was appointed to succeed Stephen Dingle. Jeff’s formal tenure as chair begins on 1 April 2021 and he attended the February and March meetings of the board. Non-executive directors are recruited and appointed to the board by the Secretary of State for BEIS. Statutory executive directors are recruited to their posts by the board and appointed to the board by the Secretary of State for BEIS.

We proactively changed our approach to board and committee meetings in the light of COVID-19, making the most of available technology and conducting meetings via video conferencing from March 2020. We ran shorter, more frequent meetings (10 board meetings and 6 audit and risk committee meetings in 2020-21 compared with 7 board and 3 audit and risk assurance committee meetings in 2019-20).

Membership and attendance of the board and its committees is shown in the table below.

	Board (10)	Audit (6)	HR and Remuneration (4)	SHE (1)
Stephen Dingle, Chair of Board (Non-Executive Director)	10	n/a[footnote 1]	4	1
Gemma Pearce, Chair of HR and Remuneration committee (Non-Executive Director)	10	6	4	1
Steve Wilson, Chair of SHE committee (Non-Executive Director)	10	6	4	1
Jayne Scott, Chair of Audit committee (Non-Executive Director)	10	6	4	0
Lisa Pinney, Chief Executive (Statutory Executive Director)	10	6	4	1
Paul Frammingham, Chief Finance and Information Officer (Statutory Executive Director)	9	6	4	n/a[footnote 1]
Carl Banton, Operations Director [footnote 2] (Statutory Executive Director)	1	n/a[footnote 1]	0	0

The commercial director, strategy and performance director, operations director (who was appointed as a statutory director of the board in March 2021) and head of legal and governance attended the board by invitation. Other senior managers attend the board in order to present papers and join strategic discussions and to support their learning and development.

1.2 Board performance

Compliance with the corporate governance code

We comply with the corporate governance code in central government departments and government guidance in so far as is relevant and practical for an arm’s length body of our size and complexity. In line with our BEIS framework document:

• the board monitors the Coal Authority’s performance in an effective manner including playing an active role in managing stakeholder relationships

• the board constructively challenges and helps to develop strategy, supported by the effective leadership of the chair who oversees a high standard of discussion and debate at meetings

• the board receives accurate, timely and clear information to support its decision making which is concise and fit for purpose. This includes frequent updates on the Coal Authority’s financial position, and achievements against corporate objectives

• the board ensures that a balanced and reasonable assessment of performance is reported to BEIS and regularly debates the main risks facing the Coal Authority. Through its audit and risk assurance committee the board maintains sound risk management and internal control systems

• the board annually reviews the Coal Authority’s corporate governance documentation in the March meeting of the board and includes the terms of reference for the board’s subcommittees

• the board has an appropriate balance of skills and experience to enable it to discharge its responsibilities effectively

• the HR and remuneration committee agrees executive remuneration within the guidelines set by HM Treasury and BEIS. Non-executive remuneration is set by BEIS and reviewed annually

Board performance and effectiveness review

The board undertakes regular evaluation of its own performance and that of its directors. All board members’ performance is appraised annually.

The board undertakes regular development sessions outside of formal board meetings to reflect on key aspects of its work. Usually board members visit sites to see the Coal Authority’s work first hand, however because of government travel restrictions it has not been possible to do this as a board this year. Where necessary and when restrictions have allowed individual board members have made COVID-secure site visits. In September and December 2020 the board held strategy sessions to review progress against its business plan and review the organisation’s strategic priorities for the next business planning period.

The board last undertook externally facilitated board evaluation during January 2020 to further build understanding of individual board member’s work preferences to facilitate even more effective team working and understand the board’s collective strengths and areas to develop. Learnings from this review have been actively implemented during board meetings through the period. During April 2021 a session was run with the same facilitator to examine how the change of chair may affect the board’s balance of work preferences and collective strengths.

The board considers that it has substantively achieved its objectives and has continued to operate effectively during 2020-21. The board sees value in regular reviews of its performance and objectives which ensures that they remain current and up to date.

1.3 Board committees

The board is supported by its committees as outlined below:

Audit and risk assurance committee

The Coal Authority’s audit and risk assurance committee (ARAC) members comprise of all the non-executive directors other than the chair of the board. The chief executive, the chief finance and information officer and the head of finance attend meetings by invitation. Other senior managers attend the committee in order to present papers and join discussions. In addition 2 committee meetings were observed separately by members of the BEIS ARAC including its chair. During 2020-21 the audit and risk assurance committee was chaired by Jayne Scott.

During 2020 the committee reviewed its terms of reference to better reflect the committee’s oversight of risk management processes and the board agreed that the committee change its title from audit committee to audit and risk assurance committee. The committee ensures that we operate effective and integrated risk management and control systems to ensure the overall level of assurance is adequate. It reviews external audit strategy and outcomes, recommends the approval of the annual report and accounts, and oversees the internal audit function provided by the Government Internal Audit Agency (GIAA). The committee met 6 times during the year and held an additional workshop which focused on risk assurance.

During the year the committee:

• reviewed and commented upon the new risk management and assurance framework

• reviewed the Coal Authority’s fraud prevention strategy and action plan

• continued to focus on financial reporting risk and reviewed our accounting policies, including review of significant judgements made in preparing the accounts and assumptions underlying our provisions balance

• assessed the overall control environment for reporting to the board and accounting officer

• received regular updates on the Coal Authority’s work to manage cyber risk

• reviewed other internal audit work undertaken by GIAA including:

  • COVID-19 Assurance Finance Controls / Approvals

  • Public Safety (Site Inspections)

  • Health and Safety

  • Mining information and data

In line with the previous year the internal audit opinion for 2020-21 offered management a ‘substantial’ level of assurance over the adequacy and effectiveness of the framework of governance, risk management and internal controls of the organisation. This follows a series of strong internal audit reviews during the year.

Internal audit identified no significant findings during the year and recommendations to enhance controls in specific areas have been adopted as appropriate.

The Human Resources (HR) and Remuneration committee

Membership of the HR and remuneration committee comprises 4 non-executive directors and the chief executive. This committee is chaired by Gemma Pearce. The strategy and performance director, and other members of the executive leadership team attend meetings by invitation.

The HR and remuneration committee has met 4 times within the year and has continued to support the Coal Authority in improving organisational capability to meet future business requirements.

During the year the committee:

• reviewed PDR distribution for 2019-20 to ensure the equitable distribution of performance related pay

• reviewed the pay remit principles prior to submission to government

• discussed the approach to organisational and staff performance reviews in the light of the COVID-19 pandemic

• reviewed and commented on the Gender Pay Gap report

• discussed and reviewed proposals for organisational changes to structure

• received regular updates on key strategic initiatives and HR and learning and development metrics such as work on diversity and inclusion, onboarding and anonymised recruitment

• considered the way that changes to working prompted by remote working and invoking the Coal Authority’s business continuity plan were impacting on staff wellbeing and organisational performance

Safety, Health and Environment (SHE) committee

The SHE committee is chaired by Steve Wilson. Membership of the committee includes the chief executive, operations director, head of environment, head of public safety and subsidence and head of SHE.

This year the committee’s terms of reference and membership have been reviewed to ensure the committee maintains strategic oversight of both the environmental/sustainability agenda as well as the health, safety and wellbeing agenda. Its main responsibilities are to provide oversight of the Coal Authority’s SHE and sustainability strategy, ensure a positive health and safety culture is embedded throughout the organisation and advise the board on SHE matters to support the business plan. The SHE committee review detailed information on health, safety, wellbeing and the environment to gain assurance on how the organisation is performing and to set the priorities.

The committee has met once during the year and considered:

• the Annual management review which provides assurance on the suitability, adequacy and effectiveness of the SHE management system and proposed future objectives to enable continued improvement

• mental health and wellbeing review

• an update on organisational performance and key strategic initiatives relating to health, safety and wellbeing

• environmental management and sustainability

• the adoption of, and adherence to, robust COVID safe working practices

As outlined above, in response to COVID-19 the board met more frequently during the period. The board also considered Sustainability objectives and the impact of COVID-19 on Safety, Health and Wellbeing during the year.

2. Performance management - executive leadership team

The executive leadership team (ELT) comprised the chief executive, the chief finance and information officer, the strategy and performance director, the operations director, the commercial director and the head of legal and governance, who all reported directly to the chief executive in 2020-21. Each member of the ELT is responsible for the leadership and delivery of their directorate, but is also collectively responsible for the leadership and delivery across the organisation. ELT is joined by 2 heads of department who attend meetings as a development opportunity on a 6 monthly rota.

This year ELT’s meeting patterns have responded to the changing business needs prompted by the pandemic and conducting business remotely. Meetings have a formalised rolling agenda which considers all aspects of the organisation’s work. In addition the meeting considers the chief executive’s monthly update report which provides a high level oversight of how the business is performing as a whole.

This report normally includes:

• updates from each directorate

• a review of organisational performance

• a financial summary report

• a review of movements against the Coal Authority’s corporate risk

• information on our people and the health, safety and wellbeing of our people, suppliers and the public

As outlined previously, an additional senior management team (comprising ELT and other key heads of department) was convened at the end of March 2020 to provide close oversight the Coal Authority COVID-19 response and the organisation’s business continuity plan.

3. Financial control

The Coal Authority has a strong system of financial control based on well defined levels of delegated authority and a clear budgetary framework. This system remains effective with no control issues of note identified by internal or external audit during the year.

Matters reserved for the board are clearly set out in the framework of strategic control with further detailed guidance in respect of policies, procedures and delegated authority levels published and available to staff.

The investment and opportunities board is an important part of our financial controls framework and has delegated authority from the chief executive to approve capital expenditure, key programmes, projects and commercial opportunities provided they are:

• in line with the Coal Authority’s strategy as set out in its 5 year business plan agreed by the board

• within the board’s risk appetite

• not a matter reserved to a government department

• in line with other government guidance relevant to the Coal Authority

Once programmes and projects have been approved by the investment and opportunities board they are overseen by a relevant programme board with the investment and opportunities board receiving regular updates and providing further oversight as required.

As part of our financial control framework we undertake an annual detailed review of our provisions for liability arising from past coal mining. Our business teams validate key assumptions and revise estimates that feed into this balance based on latest information.

This is followed by comprehensive review and challenge by our finance team and members of the ELT and analysis of drivers behind our provisions balance and key movements are presented to the Audit and Risk Assurance committee. Outputs from the provisions model feed into our annual financial statements (see note 13 to the accounts) as well as providing a framework for our detailed budget setting and medium term business planning.

4. Risk management

4.1 Embedded risk management and culture

Substantial progress has been made to continually improve our risk management and assurance processes and culture throughout the year. Examples of this are a focus on assurance mapping our risks and revisiting and revising the Boards Risk appetite statement. The new risk management and assurance framework (RMAF) is being rolled out across all directorates supported by the appointment of a risk manager. Evidence of our embedded risk management and culture includes:

• an approach to risk management that has been live to the new challenges posed by COVID-19, supported by the output of a GIAA facilitated COVID risk workshop

• board focus on strategy and key risks

• board review of its risk appetite in November 2020

• ongoing, live interaction between our managers, ELT members, and board members that promotes an understanding of risk

• processes that ensure, in line with our framework of strategic control, any issue or project that falls outside the board’s risk appetite is formally considered by the board for decision

• a risk register that is current, subject to quarterly management sign off, and subject to periodic audit committee, ELT and business team review

• ongoing implementation of the RMAF to ensure that risk management processes are consistent, proportionate and work effectively

• an investment and opportunities board that ensures business cases for projects adequately consider key risks in the context of risk appetite

• a risk register that is current, subject to quarterly management sign off, and subject to periodic audit committee, ELT and business team review

• the ELT’s continued focus on strategic issues and key risks around the culture, capacity and competence of our organisation

• business cases containing information in relation to risk appetite

4.2 Information assurance and cyber security

The Coal Authority does not hold top secret or secret information and the inherent information risk posed to government through the Coal Authority is relatively low. The senior information risk owner (the chief finance and information officer) is a board member and ensures that proportionate controls are implemented to manage information risk in line with the board’s risk appetite.

As part of our COVID-19 response and changes to our ways of working, we have continued to maintain a careful balance ensuring the security and availability of our information whilst meeting the requirements of the business.

We’ve an appropriate risk assessment, information risk management and data protection policy and an information asset register. This year we have completed the government’s Departmental Security Health Check-Lite self assessment, verified by an independent organisation. No significant gaps in control were identified.

Over the year we’ve undertaken a range of communications which have continued to improve information security awareness and improved our staffs’ understanding of cyber risks. This year we also launched an interactive cyber security and anti-fraud awareness platform to allows us to deliver bitesized and targeted learning to colleagues.

We’ve continued to improve our technical controls and a technical security strategy of strength through depth has been effective in trapping threats. We’re not aware of any significant breaches of security or policy or loss of personal protected information during the year.

4.3 Risk assessment

The key risks that we’ll need to manage to deliver our plans are outlined in the strategic risks section of the performance report. We continue to manage these risks closely. Further explanation of the risks and control measures is given in the performance report.

We attempt neither to eliminate risk, nor pursue opportunities without ensuring risk is considered and managed. Explicit reference to risk appetite allows us to adopt a common language across the Coal Authority and provides a framework for managers to confidently make risk based decisions.

Risk appetite is required to be referenced in board and investment and opportunities board papers. Understanding of the concept of risk appetite continues to be promoted through coaching and live, real time conversations with managers.

5. Other considerations

5.1 Alexander tax review

The Coal Authority has complied with the Alexander tax review off-payroll procedures as per HM Treasury requirements to ensure any off-payroll staff are paying the appropriate income tax and national insurance.

5.2 MacPherson review (2013) of quality assurance

The Coal Authority does not currently operate any business critical analytical models as defined in the MacPherson review (2013).

5.3 Counter fraud (including anti-bribery, anti-corruption) and whistleblowing

We’re committed to creating a transparent environment and have a robust policy framework including clear policies for counter-fraud (incorporating bribery and corruption) and whistleblowing. Each policy provides guidance to staff and is part of the induction process. Both policies are reviewed on an annual basis for relevance and clarity, before being briefed to staff and published on our intranet.

Assessment of activity and feedback confirms that policies are well understood, effective and easy to use. The board is particularly committed to ensuring that staff feel empowered, supported and protected should they need to raise any areas of concern.

5.4 Preventing modern slavery

All contracts are risk assessed in line with central government guidance on preventing modern slavery and to identify contracts for services or materials in high risk sectors. For these contracts additional assurance is sought from suppliers and their supply chain to ensure that labour and materials are sourced in line with best practice.

6. Robust and continually improving control environment

Despite significant changes in the way the organisation has worked over the year due to COVID-19, systems and governance processes remained effective and the Coal Authority’s critical activities have continued throughout the year. Work by the Government Internal Audit Agency has provided “substantial” assurance that key financial control and approval processes have remained effective and that our people have been supported to work at home safely.

Both COVID-19 and an emergency incident at Skewen, Wales, have required the forming of senior management teams to manage our response on a business continuity plan type footing. In both instances this approach has proved effective.

Despite these challenges during 2020-21 we have continued to work to improve our corporate governance and risk management processes to ensure that they are transparent, easy to use and fit for purpose.

We continue to review and evolve our control environment to ensure that it stays proportionate and effective as the external environment and our organisation continue to change.

7. Effectiveness of control environment

The system of governance, risk management and control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness.

The system of internal control has been in place in the Coal Authority for the year ended 31 March 2021 and, as illustrated, up to the date of approval of the annual report and accounts, in accordance with HM Treasury guidance.

Based on all of the elements of the Coal Authority governance framework illustrated in the diagram, I am satisfied that the Coal Authority’s governance, risk management and internal control arrangements continue to be proportionate, fit for purpose and working as intended.

Remuneration and staff report

Introduction

This report has been prepared in accordance with the government’s Financial Reporting Manual. The report is made by the accounting officer on behalf of the board on the recommendations of the HR and Remuneration committee. As part of the accountability report, the remuneration and staff report details key information relating to salaries and other payments, any exit payments or other significant awards to current or former senior managers. It also contains certain policies on both pay and wider issues, and statutory disclosure relating to such issues as fair pay and off-payroll engagements.

The following tables and sections within this report are subject to audit:

• non-executive directors’ remuneration

• executive directors’ remuneration

• executive directors’ pension entitlements

• average numbers of persons employed

• staff and related costs

• reporting of civil service and other compensation schemes

• pay multiples

The HR and Remuneration committee

As explained in the governance statement, the Coal Authority has an established HR and Remuneration committee. This determines and keeps under review the pay and reward strategy for all staff of the Coal Authority and approves the principles of the pay remit for submission to the Secretary of State for Business, Energy and Industrial Strategy (BEIS). The committee’s terms of reference prescribe that the chief executive shall not be present when their remuneration and conditions of employment are being considered.

Remuneration policy for the executive directors

Executive directors’ remuneration follows senior civil service guidance. The HR and Remuneration committee reviews and makes recommendations about the remuneration of the executive directors including the chief executive, which is formally determined by BEIS. The committee followed senior civil service guidance and awarded an average 2% increase in executive directors’ salaries from 1 April 2020.

Performance development reviews (PDR)

The executive directors participate in our PDR process. Individual assessments are made by the chief executive and reviewed by the chair and the HR and Remuneration committee. The chief executive’s assessment is made by the chair and reviewed by the HR and Remuneration committee. Appraisal of individual performance is based on the achievement of defined objectives and behaviours assessed against 3 performance scores.

Performance related pay (PRP)

PRP is non-contractual and non-pensionable and is subject to obtaining annual approval via the pay remit process from BEIS. The pay remit for 2020-21 was approved by BEIS in December 2020.

PRP is earned based on a corporate award, reflecting corporate and individual performance against objectives. Corporate performance for 2020-21 has been assessed by the board at 90% and PRP has been accrued accordingly.

The Trade Union (Facility Time Publication requirements)

Under the above regulations the Coal Authority is required to provide details of trade union time. For 2020-21, there is no activity to report.

Staff turnover

Twenty two employees left the organisation during the year, a percentage of 8.34%, compared to a percentage of 12.46% in 2019-20. It is difficult to draw conclusions on a year on year comparison as 2020-21 is likely to have been heavily influenced by COVID-19 and associated restrictions. As highlighted in the performance report, our COVID-19 response focused heavily on employee health and wellbeing.

Staff Sickness Absence

The sickness absence rate for the year was 3.2 days as against 7.7 days for 2019-20. This reduction is attributed to fewer cases of long term sickness and also a lower number of ad hoc sickness days as employees continued to work from home in accordance with COVID-19 related government guidance. Transmission of infectious illnesses such as cold/flu which account for a high proportion of all ad hoc absence were significantly reduced over 2020-21.

Executive directors’ contracts

It’s our policy that executive directors should have employment contracts with an indefinite term providing for 6 months’ notice.

The details of the executive directors’ employment contracts are shown below:

Lisa Pinney MBE

Date of continuous service:

• 1 June 2018

Notice entitlement:

• 6 months

Paul Frammingham

Date of continuous service:

• 6 May 2008

Notice entitlement:

• 6 months

Carl Banton ^{[footnote 3]}

Date of continuous service:

5 January 2004

Notice entitlement:

• 6 months

The notice period to be given by the chief executive is 6 months and by the remaining executive directors, 3 months.

Non-executive directors’ remuneration

From July 2016 non-executive directors have been appointed by BEIS. Between October 2008 and June 2016 they were appointed by the Department of Energy and Climate Change (DECC) in line with the Code of Practice issued by the Commissioner for Public Appointments. Their terms of engagement and remuneration are now determined by BEIS. They are not eligible to participate in the pension schemes or to receive PRP.

The fees paid to the non-executive directors are shown below:

	Contract end date	2020-21 £	2019-20 £
Jeff Halliwell [footnote 4]	31 March 2024	2,818	-
Stephen Dingle [footnote 4]	31 March 2021	27,050	27,050
Gemma Pearce	31 March 2022	11,666	11,666
Steve Wilson	31 March 2023	11,666	11,666
Jayne Scott	31 March 2022	11,666	11,666

Executive directors’ remuneration

	2020-21 Salary £000	2019-20 Salary £000	2020-21 Allowance £000	2019-20 Allowance £000	2020-21 PRP £000	2019-20 PRP £000	2020-21 Pension benefits £000	2019-20 Pension benefits £000	2020-21 Total £000	2019-20 Total £000
Lisa Pinney MBE	135-140	135-140	-	-	15-20	15-20	54	53	205-210	205-210
Paul Frammingham	90-95	90-95	10-15	10-15	10-15	10-15	39	38	155-160	155-160
Carl Banton [footnote 5]	0-5	-	0-5	-	0-5	-	2	-	5-10	-
Lisa Stanger [footnote 6]	-	150-155	-	15-20	-	-	-	35	-	205-210

Executive directors’ remuneration includes salary, non-consolidated performance related pay earned in the year under the PDR process (non-contractual), certain allowances and the value of pension benefits accrued during the year.

Allowances include car allowances in both years for all directors except for Lisa Pinney and Carl Banton and:

• in 2020-21, responsibility allowances for Paul Frammingham and Carl Banton

• in 2019-20, responsibility allowances for Paul Frammingham and Lisa Stanger

PRP is based on performance levels attained and is made as part of the performance review process. PRP relates to the performance in the year in which it becomes payable to the individual.

We also participate in a HMRC approved cycle to work scheme. Paul Frammingham has participated in this scheme in both 2020-21 and 2019-20.

No executive directors received any benefits in kind during 2020-21 or 2019-20.

Executive directors’ pension entitlements

	Accrued pension at pension age at 31 March 2021 and related lump sum £000	Real increase in pension and related lump sum at pension age £000	CETV at 31 March 2021 £000	CETV at 31 March 2020 £000	Real increase in CETV £000
Lisa Pinney MBE	5-10	2.5-5	97	61	24
Paul Frammingham	25-30	0-2.5	353	315	20
Carl Banton	20-25	0-2.5	416	413 [footnote 7]	2

Cash equivalent transfer values (CETV)

A CETV is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies.

The figures include the value of any pension benefit in another scheme or arrangement which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Civil Service pensions

Pension benefits are provided through the Civil Service pension arrangements. From 1 April 2015 a new pension scheme for civil servants was introduced – the Civil Servants and Others.

Pension Scheme or alpha, which provides benefits on a career average basis with a normal pension age equal to the member’s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has 4 sections: 3 providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65.

These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April 2015. Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 will switch into alpha sometime between 1 June 2015 and 1 February 2022. Because the Government plans to remove discrimination identified by the courts in the way that the 2015 pension reforms were introduced for some members, it is expected that, in due course, eligible members with relevant service between 1 April 2015 and 31 March 2022 may be entitled to different pension benefits in relation to that period (and this may affect the Cash Equivalent Transfer Values shown in this report – see below). All members who switch to alpha have their PCSPS benefits ‘banked’, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the 2 schemes.) Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a ‘money purchase’ stakeholder pension with an employer contribution (partnership pension account).

Employee contributions are salary-related and range between 4.6% and 8.05% for members of classic, premium, classic plus, nuvos and alpha. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to 3 years’ initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on the member’s pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate is 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member) into a stakeholder pension product chosen by the employee from the appointed provider – Legal & General. The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus, 65 for members of nuvos, and the higher of 65 or State Pension Age for members of alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha – as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the 2 schemes, but note that part of that pension may be payable from different ages.)

Further details about the Civil Service pension arrangements can be found at the website www.civilservicepensionscheme.org.uk

The Principal Civil Service Pension Scheme (PCSPS) and the Civil Servant and Other Pension Scheme (CSOPS) – known as ‘alpha’ – are unfunded multi-employer defined benefit schemes and the Coal Authority is unable to identify its share of the underlying assets and liabilities. A full actuarial valuation was carried out as at 31 March 2016. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation.

For 2020-21, employers’ contributions of £2,819,000 were payable to the above schemes (2019-20: £2,664,000) at one of 4 rates in the range 26.6% to 30.3% of pensionable pay, based on salary bands (2019-20: 26.6% to 30.3%).

The Scheme Actuary reviews employer contributions every 4 years following a full scheme valuation. The salary bands and contribution rates are set to meet the cost of the benefits accruing during the year to be paid when the member retires and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. 4 (2019-20:5) employees were enrolled in partnership accounts in the year and the total amount of contribution was £18,969 (2019-20: £23,249).

There were no early retirements on ill health grounds in 2020-21 (2019-20: 1). The additional accrued pension liabilities in 2019-20 amounted to £12,522.

Department	2020-21 Staff	2020-21 Other	2020-21 Total	2019-20 Staff	2019-20 Other	2019-20 Total
Development & Information	56	1	57	55	2	57
Operations	93	2	95	89	1	90
Commercial & Innovation	33	1	34	35	1	36
Information technology	32	2	34	32	-	32
Corporate Management & Services	50	2	52	46	3	49
Staff numbers	264	8	272	257	7	264

Average number of persons employed as analysed above is consistent with the Coal Authority’s organisational structure for both years.

Of the above, 7.8 full time equivalent persons were charged to capital projects during 2020-21 (2019-20: 4.3).

Staff and related costs

Staff costs comprise:	2020-21 Staff	2020-21 Other	2020-21 Total	2019-20 Staff	2019-20 Other	2019-20 Total
Wages and salaries	11,014	-	11,014	10,904	-	10,904
Social security costs	1,207	-	1,207	1,147	-	1,147
Other pension costs	2,819	-	2,819	2,687	-	2,687
Agency staff costs	-	773	773	-	318	318
Total staff costs	15,040	773	15,813	14,738	318	15,056

Staff composition

As at 31 March 2021	Non- executive directors	Executive leadership team	Senior managers	Staff	Total
Male	3	4	11	155	173
Female	2	2	6	105	115
Total	5	6	17	260	288

Disability, diversity and inclusion

We’re an inclusive employer and actively encourage and welcome applications from everyone who might have the right skills to help us make a better future for people and the environment in mining areas.

This means that we do the basics like providing reasonable adjustments for disabled and differently abled candidates at interview and help them succeed at work. We encourage flexible working, part time and term based hours and so on but we aim to go further than this and be a more diverse and inclusive organisation – a truly ‘great place to work for everyone’. We champion the career development, career progression and retention of all our employees. We have and are supporting and encouraging our people to establish a range of diversity networks and we try to ensure that a wide variety of voices can be heard at all levels of the organisation.

We have an equality, diversity and inclusion plan which focuses on practical steps to help us be even better and we continue to listen and learn. We know we have more to do and are committed to continuing to improve and grow.

Reporting of civil service and other compensation schemes – exit packages

2020-21 (2019-20 in brackets)	Number of compulsory redundancies	Number of other departures agreed	Total number of exit packages
<£10,000	0 (0)	0 (0)	0 (0)
£10,000 - £25,000	0 (0)	0 (0)	0 (0)
£25,000 - £50,000	0 (0)	0 (1)	0 (1)
£50,000 - £100,000	0 (0)	1 (0)	1 (0)
Total number of exit packages	0 (0)	1 (1)	1 (1)
Total cost - £000	0 (0)	85-90 (45-50)	85-90 (45-50)

During 2020-21 redundancy and other departure costs of £85,000-£90,000 (2019-20: £45,000-£50,000) were paid to a single leaver. Exit costs were accounted for in the year of departure and the award was determined in accordance with the provisions of the Civil Service Compensation scheme, a statutory scheme made under the Superannuation Act 1972.

There have been no further compensation schemes accrued in either 2020-21 or 2019-20.

Reporting of high paid off-payroll appointments

Highly paid off-payroll worker engagements as at 31 March 2021, earning £245 per day or greater:

	No
Existing engagements as of 31 March 2021	6
Of which, have existed for (at time of reporting):
less than 1 year	4
between 1 and 2 years	2
between 2 and 3 years	0
between 3 and 4 years	0
4 or more years	0

All highly paid off-payroll workers engaged at any point during the year ended 31 March 2021, earning £245 per day or greater:

	No
No. of off-payroll workers engaged during the year ended 31 March 2021	8
Of which:
not subject to off-payroll legislation	8
subject to off-payroll legislation and determined as in-scope of IR35	-
subject to off-payroll legislation and determined as out-of-scope of IR35	-
Number of engagements reassessed for compliance or assurance purposes during the year, of which:
number of engagements that saw a change to IR35 status following the consistency review	n/a

The Coal Authority routinely performs checks on proposed roles, including HMRC’s Employment Status Service tests, to determine IR35 status prior to any offer. Where these checks suggest that assurance as to income tax and national insurance obligations is required, contracts include the above mentioned clauses and assurance is requested from either the worker or the agent through whom they work.

Off-payroll engagements of board members, and/or, senior officials with significant financial responsibility, between 1 April 2020 and 31 March 2021:

Existing engagements as of 31 March 2021	No
Number of off-payroll engagements of board members, and/or senior officials with significant financial responsibility during the financial year	-
Number of individuals that have been deemed ‘board members, and/or, senior officials with significant financial responsibility’, during the financial year. This figure includes both off-payroll and on-payroll engagements	12

Consultancy expenditure for the year was £nil (2019-20: £nil).

Pay multiples

Reporting bodies are required to disclose the relationship between the remuneration of the highest paid director in their organisation and the median remuneration of the organisation’s workforce.

The banded remuneration of the highest paid director in the Coal Authority in the financial year 2020-21 was £155,000 to £160,000 (2019-20: £150,000 to £155,000). This was 3.7 times (2019-20: 3.7 times) the median remuneration of the workforce, which was £42,098 (2019-20: £40,738).

In 2020-21 and 2019-20, no employee received remuneration in excess of the highest paid director. Remuneration ranged from £17,565 to £160,000 (2019-20: £18,287 to £155,000).

Total remuneration includes salary, allowances and non- consolidated performance related pay. It does not include severance payments, employer pension contributions or the cash equivalent transfer value of pensions.

The figures for 2019-20 for Lisa Stanger include certain payments in lieu of notice. These do not form part of the calculations above, which are performed on an annualised basis.

Parliamentary accountability and audit report

As part of the accountability report, the Parliamentary accountability and audit report sets out those additional disclosures required by parliament, if not detailed elsewhere in the annual report and accounts, and contains the external audit report.

The following sections are subject to audit.

Regularity of expenditure: losses, special payments and gifts

There have been no material losses, special payments and/or gifts during 2020-21.

Fees and charges

The Coal Authority complies with the cost allocation and charging requirements set out in HM Treasury’s Managing Public Money and the Office of Public Sector Information guidance.

The Coal Authority’s most significant income streams, as outlined at notes 2 and 4.1 to the accounts, are explained below.

Commercial and Innovation operating segment includes the provision of mining reports which generated income of £7,906,000 (2019-20: £9,489,000), costs of £4,866,000 (2019-20: £5,905,000), and a surplus of £3,040,000 (2019-20: £3,584,000). Expenditure associated with specific programmes and activities is managed and reported under the operations segment, but relates to the enhancement of data and information. Mining reports services are charged at a commercial rate.

Commercial and Innovation includes the provision of advisory and technical services which generated income of £5,956,000 (2019-20: £5,342,000), costs of £5,914,000 (2019-20: £5,120,000) and a surplus of £42,000 (2019- 20: £222,000). The financial objective for the provisions of advisory and technical services is either, full cost recovery including an allowance for overhead recovery when providing services across government, or commercial rates, which reflect the increased levels of risk, when providing services into competitive markets.

The proportions of income are 99.9% (2019- 20: 85.2%) as a result of full cost recovery and 0.1% (2019-20: 14.8%) from commercial rates, reflecting continued growth in services provided to our customers across government as we support them in the delivery of key programmes.

Development and Information includes the provision of data licensing and mining information which generated external income of £1,197,000 (2019-20: £994,000), internal recharges of £1,788,000 (2019-20 £2,178,000), costs of £4,532,000 (2019-20: £4,944,000) and a deficit of £1,547,000 (2019-20: £1,772,000). The financial objective for the provision of licensing and permissions services is full cost recovery plus an allowance for overhead recovery.

Development and Information includes the provision of licensing and permissions activities which generated income of £769,000 (2019- 20: £834,000), costs of £934,000 (2019-20: £926,000) and a deficit of £165,000 (2019-20: deficit of £92,000). The financial objective for the provision of licensing and permissions services is full cost recovery plus an allowance for overhead recovery.

Remote contingent liabilities

Remote contingent liabilities are not required to be disclosed under International Accounting Standard (IAS) 37, but are considered here for parliamentary reporting and accountability purposes. The Coal Authority believes that sufficient disclosure is available in note 16 to the accounts: Contingent Liabilities and in note 13 to the accounts: Provisions to give the reader a full understanding of the liabilities it faces and may face.

Going concern

This report has been created on the basis of the Coal Authority being a going concern as detailed in 1.3 of the notes to the accounts.

This accountability report has been approved by the chief executive and accounting officer.

Lisa Pinney MBE

Chief Executive and Accounting Officer

1 July 2021

The certificate and report of the comptroller and auditor general to the Houses of Parliament

Opinion on financial statements

I certify that I have audited the financial statements of the Coal Authority for the year ended 31 March 2021 under the Coal Industry Act 1994. The financial statements comprise: the Statements of Comprehensive Net Expenditure, Financial Position, Cash Flows, Changes in Taxpayers’ Equity; and the related notes, including the significant accounting policies. These financial statements have been prepared under the accounting policies set out within them. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards as interpreted by HM Treasury’s Government Financial Reporting Manual.

I have also audited the information in the Accountability Report that is described in that report as having been audited.

In my opinion, the financial statements:

• give a true and fair view of the state of the Coal Authority’s affairs as at 31 March 2021 and of the Coal Authority’s net expenditure for the year then ended;

• have been properly prepared in accordance with the Coal Industry Act 1994 and Secretary of State directions issued thereunder.

Emphasis of matter

I draw attention to the disclosures made in notes 1.20 and 13 of the financial statements concerning the uncertainties inherent in the likely costs in respect of the Coal Authority’s liabilities for Mine Water Treatment, Public Safety and Subsidence Claims and Subsidence Pumping Stations totalling £2,458.0 million. As set out in the notes, given the long-term nature of the liabilities, management have needed to make significant judgements in estimating the provision. My opinion is not modified in respect of this matter.

Opinion on regularity

In my opinion, in all material respects, the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (ISAs) (UK), applicable law and Practice Note 10 ‘Audit of Financial Statements of Public Sector Entities in the United Kingdom’. My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I have also elected to apply the ethical standards relevant to listed entities. I am independent of the Coal Authority in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

The Coal Authority’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Coal Authority’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Board and the Accounting Officer with respect to going concern are described in the relevant sections of this certificate/report.

The going concern basis of accounting for the Coal Authority is adopted in consideration of the requirements set out in International Accounting Standards as interpreted by HM Treasury’s Government Financial Reporting Manual which require entities to adopt the going concern basis of accounting in the preparation of the financial statements where it anticipated that the services which they provide will continue into the future.

Other Information

The other information comprises information included in the annual report, but does not include the parts of the Accountability Report described in that report as having been audited, the financial statements and my auditor’s certificate thereon. The Board and the Accounting Officer is responsible for the other information. My opinion on the financial statements does not cover the other information and except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters

In my opinion, based on the work undertaken in the course of the audit:

• the parts of the Accountability Report to be audited have been properly prepared in accordance with Secretary of State directions made under the Coal Industry Act 1994; and

• the information given in the Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which I report by exception

In the light of the knowledge and understanding of the Coal Authority and its environment obtained in the course of the audit, I have not identified material misstatements in the Performance and Accountability report. I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• adequate accounting records have not been kept or returns adequate for my audit have not been received from branches not visited by my staff; or

• the financial statements and the parts of the Accountability Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of remuneration specified by HM Treasury’s Government Financial Reporting Manual are not made;

or

• I have not received all of the information and explanations I require for my audit; or

• the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Responsibilities of the Board and Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Board and the Accounting Officer, is responsible for:

• the preparation of the financial statements in accordance with the applicable financial reporting framework and for being satisfied that they give a true and fair view;

• internal controls as the Board and the Accounting Officer determines is necessary to enable the preparation of financial statement to be free from material misstatement, whether due to fraud or error.

• assessing the Coal Authority’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board and the Accounting Officer anticipates that the services provided by the Coal Authority will not continue to be provided in the future.

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Coal Authority Act 1994.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulation, including fraud.

My procedures included the following:

• Inquiring of management, the Coal Authority’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Coal Authority’s policies and procedures relating to:

  • identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

  • detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and

  • the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Coal Authority’s controls relating to the Coal Industry Act 1994 and Managing Public Money

• discussing among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, I identified potential for fraud in the following areas: revenue recognition and posting of unusual journals;

• obtaining an understanding of the Coal Authority’s framework of authority as well as other legal and regulatory frameworks that the Coal Authority operates in, focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations of the Coal Authority. The key laws and regulations I considered in this context included Coal Industry Act 1994, Managing Public Money, Employment Law, and tax Legislation

In addition to the above, my procedures to respond to identified risks included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations discussed above;

• enquiring of management, the Audit and Risk Assurance committee and in-house legal counsel concerning actual and potential litigation and claims;

• reading minutes of meetings of those charged with governance and the Board;

• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business; and

• In response to the risk of fraud in revenue recognition, performing specific procedures to gain assurance over the adequacy of controls that Coal Authority have in place, as well as specific tests of cut-off and estimated accrued income balances at year end.

I also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and significant component audit teams and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of my certificate.

In addition, I am required to obtain evidence sufficient to give reasonable assurance that the income and expenditure reported in the financial statements have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Report

I have no observations to make on these financial statements.

Gareth Davies

Comptroller and Auditor General

Date: 13 July 2021

National Audit Office 157-197 Buckingham Palace Road Victoria London SW1W 9SP

1. The director is not a member of this committee or board ↩ ↩² ↩³

2. Carl Banton was appointed as a statutory executive director on 22 March 2021 but including his executive role attended the board (10), SHE committee (1) and HR and remuneration committee (4). ↩

3. Carl Banton was appointed to the Coal Authority’s board on 22 March 2021 ↩

4. In February 2021 our new chair, Jeff Halliwell was appointed to succeed Stephen Dingle. Jeff’s formal tenure as chair begins on 1 April 2021 and he attended the February and March meetings of the board. ↩ ↩²

5. Carl Banton was appointed by BEIS as a statutory director on 22 March 2021. His package as a statutory director consists of a salary in the banding £75,000-£80,000, a pensionable allowance in the banding £5,000-£10,000 and a non-pensionable, non-guaranteed profit related pay award, which for the year 2020-21 (across Carl’s statutory and non-statutory roles in the year) was in the band £5,000-£10,000. No comparative figures are given as they relate to Carl’s non-statutory role ↩

6. Lisa Stanger left the Coal Authority on 31 March 2020 and received payment in lieu of notice of £70,000-£75,000. This includes payment in lieu of 6 months’ salary (£40,000-£45,000), holiday pay (£5,000-£10,000) and compensation for employers pension contribution (£10,000-£15,000), all of which are included in ‘salary’ above, and allowances of £5,000-£10,000. Directors’ allowances are explained below ↩

7. The 31 March 2020 CETV figure for Carl Banton is the CETV as at his appointment as a statutory director on 22 March 2021. ↩