ii - humberside fire and rescue service...iii explanatory foreword by the director of finance and...
TRANSCRIPT
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Appendix 1
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CONTENTS
Page
Foreword iii
Audit Opinion xii
Statement of Responsibilities for the Statement of Accounts xv
Annual Governance Statement xvi
Movement in Reserves Statement 1
Comprehensive Income and Expenditure Statement 3
Balance Sheet 4
Cash Flow Statement 5
Notes to the Core Financial Statements 6
Firefighter Pension Fund Account 55
Glossary of Accounting Terms 57
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EXPLANATORY FOREWORD BY THE DIRECTOR OF FINANCE AND ASSETS/S.151 OFFICER 1. INTRODUCTION The Statement of Accounts summarises the financial performance of the Authority for year ended 31
st March 2012.
These Accounts have been prepared in accordance with the requirements of the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12 published by the Chartered Institute of Public Finance and Accountancy (CIPFA). The purpose of the foreword is to offer interested parties an easily understandable guide to the most significant matters reported in the Accounts. The inevitable use of technical language has been kept to a minimum. A „Glossary of Accounting Terms‟ to help explain some of the technical terms can be found in the publication. The Authority's Accounts for the year 2011/12 are set out on pages 1-66 and in addition to this foreword they consist of:
The Statement of Responsibilities states the responsibilities of the Authority and the Director of Finance and Assets for the Accounts. This statement is signed and dated by the Director of Finance and Assets under a statement that the Accounts give a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the year ended 31
st March;
The Annual Governance Statement which reviews the effectiveness of governance arrangements in the Authority;
The Movement in Reserves Statement which shows the movement in the year on the different reserves held by the Authority. This statement is split into useable and unusable reserves; the useable reserves are those that can be used by the Authority to fund expenditure; Unusable reserves are those reserves that are required to mitigate the effect of some transactions on council tax and those reserves that are created to mitigate unrealised gains and losses;
The Comprehensive Income and Expenditure Statement shows the accounting cost of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. The Authority raises taxation in accordance with regulations which are different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement (the movement on useable reserves);
The Balance Sheet which shows the value of the assets and liabilities recognised by the Authority at the balance sheet date;
The Cash Flow Statement which shows the changes in cash and cash equivalents during the year. This statement shows how the Authority generates and uses its cash and cash equivalents by classifying cash flows as operating, investing and financing activities;
The Pension Fund Account which shows the movements relating to the Firefighters‟ pension scheme. 2. 2011/12 FINANCIAL YEAR The 2011/12 financial year has seen greater stability in the UK banking sector but volatility continues to be an issue within the EU banking sector and EU economies more generally. The main impacts on Humberside Fire Authority are as follows:-
Continuation of low interest income on balances held by the Authority;
Continuation of tighter criteria for the on-lending of surplus funds as counterparty risk remains a concern;
As part of the Government‟s implementation of austerity measures the Authority has received a circa 6% reduction in external grant for the period 2011/12 and 2012/13.
The Authority continues to take a very prudent approach to the management of its financial affairs and has during 2011/12 implemented efficiencies totalling circa £3.5m.
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The last 2 years of the current Comprehensive Spending Review period (2013/14 and 2014/15) promise to be potentially more challenging than years 1 and 2. The Government has consistently stated that the reductions in external grant for Fire and Rescue will be backloaded and therefore potentially greater reductions than those already announced are expected.
The Authority continues to work hard to manage these financial challenges and indeed may well need to beyond the current CSR period and into the period 2015/16 onwards. 3. WHERE THE MONEY CAME FROM:
The Authority receives a Revenue Support Grant and an allocation of pooled National Non Domestic Rates directly from Central Government. It also sets a precept or council tax throughout the Humberside area for the balance of its expenditure requirements. The precept set for 2011/12 was £22.457m (2010/11 was £22.287m) which equated to a Council Tax Band D Equivalent of £77.92 (2010/11 was £77.92).
4. WHAT THE MONEY WAS SPENT ON: CUE AUTHORITY STATEMENT OF ACCCOUNTS 2006/2007 7
NNDR 37.26%
Government Grants 17.84%
Rents, Charges,
Interest etc. 1.93%
Precept 42.97%
Pensions - Employer
Contributions 11.20% Running
Expenses 15.78%
Capital Financing Charges 5.15%
Salaries & Wages 67.87%
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5. COMPARISON OF ACTUAL EXPENDITURE IN 2011/12 WITH THE BUDGET The actual income and expenditure of the Authority for 2011/12 compared with levels forecasted in the original and adjusted estimate, before IAS 19, Collection Fund adjustments and Management and Support recharges, is summarised below:
2010/11
£'000 £'000 £'000 £'000
4,211 Community Fire Safety 4,202 3,699 (503)
32,346 Fire Fighting & Rescue Operations 32,576 30,900 (1,676)
- Fire Service & Emergency Planning - - -
11,155 Management & Support 11,682 11,163 (519)
158 Corporate Democratic Core 156 152 (4)
76 Corporate Management 74 74 -
Non Distributable Costs/Income (561) (561) -
47,946 Net Cost of Service 48,129 45,427 (2,702)
983 Interest Payable and Similar Charges 1,216 996 (220)
(81) Interest Receiveable (50) (101) (51)
48,848 Net Operating Expenditure 49,295 46,322 (2,973)
(22,544) Precepts (22,764) (22,764) -
(3,446) General Government Grants (6,051) (9,191) (3,140)
(23,729) Non-Domestic Rates Distribution (19,575) (19,575) -
(871) (Surplus)/Deficit for the Year 905 (5,208) (6,113)
Accounting Adjustments
917 Grants and Contributions Deferred - 1,340 1,340
(4,324) Depreciation and Impairment of Fixed Assets (3,334) (3,336) (2)
298 Revenue Contribution to Capital Outlay 148 148 -
1,384 Minimum Revenue Provision 1,546 1,381 (165)
Contributions to/(from)
- Earmarked Reserve (131) 1,849 1,980
107 General Reserve 866 866 -
(2,489) Net (Surplus)/Deficit - (2,960) (2,960)
2011/12
ActualRevised
EstimateActual Variance
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Analysis of the major revenue variances:
£'000
Community Fire Safey
Wholetime Staff
Vacancies due to staff turnover (174)
Support Staff
Accumulation of posts remaining vacant throughout the year (199)
Vulnerable Adults
Equipment (91)
Fire Fighting & Rescue Operations
Wholetime Staff (1,255)
a) Anticipated increase in employers contribution to firefighters' pension
scheme did not occur in 2011/12
b) N.I. contribution rate being less than anticipated
c) Staff moved to cover long term sickness or into temporary posts to carry out
one off projects (this will be offset by an overspend on Management and
Support overspend) and reitirements being greater than anticipated
Support Staff
Posts remaining vacant throughout the year (14)
Energy Costs
Savings accrued from more efficient use of heating systems and electricity (20)
Repairs and Maintenance
Insurable works at Goole and Epworth Fire Stations 136
Hydrants
Less work carried out on hydrant maintenance than expected (240)
Consultants Fees
No expenditure due to the curtailment of the RCC project (140)
Maintenance Agreements
There are fewer maintenance agreements than anticipated (83)
Asset Rentals
Increase in the value of properties 232
Other Contributions
Money received from insurers (see repairs and maintenance above) (136)
Management and Support Services
Wholetime Staff 213
a) Staff movements to cover long term sickness or creation of posts to carry
out one off projects (this will be offset by an underspend in Fire Fighting
and Operations)
b) Various members of staff have been seconded to other organisations (this
will be offset by income)
Support Staff
Posts remaining vacant throughout the year (339)
Pensions
Ill health contributions were higher than anticipated 114
Course Fees
Less course fees than anticipated (80)
Agency Staff
Additional agency staff to cover vacant posts 54
Travel and Subsistence
Travel costs for training has been less than anticipated (20)
Rent
The movement of vehicle and equipment workshops has been delayed to 2012/13 (100)
Repairs and Maintenance 200
a) More repairs and maintenance work carried out than anticipated
b) The professional fees in relation to building works have been higher than
anticipated
Cont….
Overspend /
(Underspend)
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Cont….
£'000
Petrol
Less fuel consumed than anticipated during 2011/12 (20)
Uniforms
Less repairs and replacement of uniforms due to the rollout of new PPE during 10/11 (65)
Telephone Rentals
Transition costs associated with the new telephone system and additional
facilities to support Service Control 49
Maintenance of Computers
Additional maintenance costs associated with the new telephone system and
security work as highlighted in an internal audit report 75
Contingency
Contingency remaining at the end of the year (60)
Asset Rentals
Decrease in the value of properties (246)
Other Contributions (280)
a) Income received from staff members that are on secondment (see wholetime
staff - note b) under Management and Support Services
b) Money received from our insurers to cover non premises costs in respect of the
fire incident at Epworth fire station
Interest Payable
Less borrowing taken to fund capital projects in previous years has resulted in
lower interest charges (220)
Interest Receivable
Interest rates have gradually increased throughout the year coupled with higher (51)
than anticipated balances invested
Accounting Adjustments
MRP Lower than anticipated due to lower than predicted 10/11 capital spend (165)
Overspend /
(Underspend)
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6. CAPITAL EXPENDITURE A summary of the financial position for 2011/12 is set out below:-
£'000 £'000 £'000
Buildings
Hornsea 257 210 (47)
Pocklington 210 224 14
Withernsea 48 14 (34)
Patrington 52 14 (38)
Preston 52 14 (38)
Goole 23 23 -
Snaith 222 222 -
Minor Works 34 - (34)
Scunthorpe 130 - (130)
Epworth - 27 27
Grimsby, Peaks Lane 43 59 16
Waltham 179 180 1
Immingham West 175 - (175)
Workshops Relocation 100 - (100)
Service Headquarters 268 288 20
Vehicles 1,698 1,542 (156)
Plant & Equipment
IT Equipment 677 291 (386)
Resource Management System 220 - (220)
Water Rescue 100 100
Equipment 622 142 (480)
5,110 3,350 (1,760)
Project
2011/12
Revised
EstimateActual Variance
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Analysis of the most significant capital variances:
£'000
Scunthorpe
Building works now starting June 2012/13 (130)
Immingham West
Building works not to be started until 2012/13 (175)
Workshops Relocation
This project will commence in 2012/13 (100)
Vehicles
Operational vehicles will now be delivered in June 2012/13 (156)
Plant & Equipment
Ongoing IT replacement programme (386)
Purchase of the Resource Management System now slipped into 2012/13 (220)
Purchase of Breathing Apparatus ongoing and will continue in 2012/13 (300)
Part of Operational Equipment now slipped into 2012/13 (180)
Overspend/
(Underspend)
7. FINANCING OF CAPITAL EXPENDITURE The Authority has a rolling capital programme that is reviewed throughout the year. The programme is financed by external borrowing and the costs of the borrowing are met within the revenue budget. Supported Capital Expenditure (SCE) issued by Central Government for 2011/12 was £0.997m (2010/11 was £0.997m). 8. AUTHORITY BALANCES AND RESERVES Balances at 1st April 2011 stood at £10.188m. Earmarked reserves amounting to £4.379m were created during 2011/12 and this amount was transferred from the General Reserve. During 2011/12 £0.916m was transferred to the General Reserve and by adding £2.960m, the surplus for the year, balances at 31st March 2012 now stand at £15.864m.
9. PROVISIONS As at 31
st March 2012 the Authority does not have any provisions. There are a number of contingent
liabilities which may have an impact on the balances of the Authority in the future but currently these are difficult to predict or quantify the cost (Please see note 32). 10. FUTURE SPENDING PLANS The Authority has published a Medium Term Financial Plan for 2012/13 – 2015/16 which sets out the overall shape of the Authority‟s budget. It establishing how available resources will best deliver corporate objectives and mitigate corporate risks identified in the Strategic Plan. The Authority has received a capital grant of £1.336m and has supported borrowing of £0.997m to finance capital expenditure during 2012/13. The current level of borrowing held by the Authority is £21.564m. The operational boundary is £25.200m and the authorised limit is £29.200m (these are part of the Authority‟s prudential indicators that have been previously agreed in the Authority‟s Treasury Management report; Fire Authority 13
th February 2012).CC
NTS 2006/2007 9
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11. INTERNATIONAL FINANCIAL REPORTING STANDARD 19 (IAS19) This International Financial Reporting Standard requires employers to report the full cost of pension benefits as they are earned, regardless of whether they have been paid for. The total liability is £459.151m (2010/11 was £419.572m); this is split between the Local Government Pension Scheme £5.101m (2010/11 was £3.742m) and the Fire Service Scheme £454.050m (2010/11 £415.830m). The Fire Service liability includes both the Firefighters‟ Pension Scheme 1992 and the New Firefighters‟ Scheme 2006. It should be noted that IAS19 does not impact upon the level of balances held by the Authority. (Under IAS19 injury awards are now recognised in the accounts of the Authority).
12. NON DISTRIBUTED COSTS In the June 2010 Budget the Chancellor of the Exchequer announced that The Consumer Price Index would be used instead of the Retail Price index to increase Local Government and Firefighter pensions, this change has resulted in a reduction in the overall liability of the pension schemes. This amount is shown in the Comprehensive Income and Expenditure Statement as non distributed cost (£48.490m for the Firefighters‟ pension scheme and £2.466m for the Local Government Pension Scheme for 2010/11). This change has no effect on the General Fund Account.
13. PENSION FUND ACCOUNT The Financial Statements include a separate section for the Pension Fund Account. Under the pension funding arrangements each Authority in England is required by legislation to operate a Pension Fund and the amounts that must be paid into and out of the Fund are specified by regulation. 14. CHANGE IN STATUTORY FUNCTION There have been no changes to the Authority‟s statutory functions during 2011/12.
15. MATERIAL EVENTS AFTER 31
ST MARCH 2012
There have been no material events (either adjusting or non adjusting) that relate to conditions existing at the Balance Sheet date. HFR Solutions (Community Interest Company) commended trading on 1
st April 2012 (further details
are provided in note 8 Related Party Transactions and note 35 Financial Instruments).
16. GOING CONCERN The savings proposals previously agreed have resulted in a balanced budget for 2012/13 however a deficit is forecast for 2013/14, 2014/15 and 2015/16. The Authority will remain a going concern.
17. FURTHER INFORMATION The Statement of Accounts is intended to give electors, members, employees and other interested parties clear information about the Authority‟s finances. I would welcome any comments, which would help to improve the information. To this end a questionnaire has been devised and included in the Accounts. Further information about the Accounts is available from the Finance Section, Service Headquarters, Summergroves Way, Hull, HU4 7BB. In addition, interested members of the public have a statutory right to inspect the Accounts before the audit is completed. The availability of the Accounts for inspection is advertised in the local press throughout the Humberside area. Kevin J Wilson BSc Econ (Hons), CPFA Director of Finance and Assets/S.151 Officer June 2012
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STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS
The Authority’s Responsibilities
The Authority is required:
To make arrangements for the proper administration of its financial affairs and to ensure that one of its officers has the responsibility for the administration of those affairs. In this Authority that officer is the Director of Finance/S.151 Officer
To manage its affairs to ensure economic, efficient and effective
use of resources and to safeguard its assets
To approve the Statement of Accounts
I confirm that these Accounts were approved at the Fire Authority meeting held on 25th
September 2012. Signed on behalf of the Fire Authority by the Chair of the meeting approving the Accounts:
Date:
Director of Finance and Assets/S.151 Officer Responsibilities
The Director of Finance and Assets/S.151 Officer is responsible for the preparation of the Authority‟s statement of Accounts which, in accordance with the Code of Practice on Local Authority Accounting in Great Britain (the „Code of Practice‟), issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) is required to present fairly the financial position of the Authority at the accounting date, and its income and expenditure for the year ended 31 March 2012. In preparing this statement of Accounts, the Treasurer has: Selected suitable accounting policies and then applied them
consistently; Made judgements and estimates that were reasonable and prudent; Complied with the Code of Practice The Treasurer has also: Kept proper accounting records which were up to date; Taken reasonable steps for the prevention and detection of fraud
and other irregularities.
In accordance with regulation 8(2) of the Accounts and Audit Regulations 2011, I certify that the attached Statement of Accounts present a true and fair view of the financial position of the Authority as at 31 March 2012 and its income and expenditure for the year.
Date:
Kevin J Wilson BSc Econ (Hons), CPFA Director of Finance and Assets/S.151 Officer
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Humberside Fire Authority
ANNUAL GOVERNANCE STATEMENT 2011/12 Scope of Responsibility
1. The Humberside Fire Authority (HFA) is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The HFA also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
2. In discharging this overall responsibility, the HFA is responsible for putting in place proper arrangements for the governance of its affairs, facilitating the effective exercise of its functions and which includes arrangements for the management of risk.
3. The HFA has approved and adopted a code of corporate governance, which is consistent
with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government. A copy of the code is on our website at www.humbersidefire.gov.uk or can be obtained from the Secretary/Director of People.
4. This statement explains how the HFA has complied with the code and also meets the requirements of regulation 4(2) of the Accounts and Audit Regulations 2003 as amended by the Accounts and Audit (Amendment) (England) Regulations 2006 in relation to the publication of a statement on internal control and again amended in 2011.
The purpose of the governance framework
5. The governance framework comprises the systems and processes, and culture and values, by which the HFA is directed and controlled and its activities through which it accounts to, engages with and leads the community. It enables the HFA to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services.
6. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the HFA‟s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.
7. The governance framework has been in place at the HFA for the year ended 31 March 2012 and up to the date of approval of the Annual Performance Report and Statement of Accounts.
The Governance Framework 2011/12
8. The key elements of the HFA‟s governance framework in respect to 2011/12 included:
(a) The Constitution of Authority which includes:
• Committee Membership and Terms of Reference; • Scheme of Delegation to Officers; • Financial Procedure Rules; • Contract Procedure Rules; • Members‟ Code of Conduct; • Officers‟ Code of Conduct; • Protocol for Member and Officer Relationships; • Code of Corporate Governance.
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(b) The Audit, Performance and Scrutiny Committee, as well as the HFA itself, received regular reports on the HFA performance and governance arrangements.
(c) An approved Corporate Risk/Opportunity Management Strategy and Policy which includes
the maintenance of effective Strategic, Board and Directorate Risk Registers.
(d) An approved „Local Code of Corporate Governance‟ in accordance with the CIPFA/SOLACE Framework for Corporate Governance.
(e) The designation of the Chief Fire Officer as Chief Executive responsible to the HFA for all
aspects of operational management.
(f) The designation of the Director of Finance and Assets as S.151 Officer (Local Government Act 1972) in accordance with Section 112 of the Local Government Finance Act 1988 and conforming with the governance requirements of the CIPFA Statement on the role of the Chief Financial Officer in Local Government (2010).
(g) The designation of the Director of People as Monitoring Officer with the requirement to
report to the full HFA if it is considered that any proposal, decision or omission would give rise to unlawfulness or maladministration.
(h) The Performance and Risk Board (P&R Board) has met on 7 occasions. The P&R Board
has replaced the Organisational Performance Group and is similarly charged with undertaking a strategic overview of the HFA control environment, the response to external audit, performance management,strategic planning and scrutiny of Risk and Opportunity Management.
(i) The production of monthly Management Accounts and Prudential Indicators which are
distributed to all Members the Corporate Management Team and are considered at the regular Policy and Executive Committee and Audit, Performance and Scrutiny Committee meetings.
(j) The Service and Finance Planning process.
(k) An approved Asset Management Strategy and Asset Management Plans for HFA assets.
(l) The role of an external Independent (non voting) Member of the Audit, Performance and
Scrutiny Committee.
(m) A Strategic Plan for the period 2011 - 14 (refreshed in 2011). Strategic objectives and functional references.ne year IRMP for 2011/12. In accordance with the Service Business Planning Framework the Strategic Plan for 2011-14 has been approved by the HFA to ensure a three future years looking plan linked to financial planning.
(n) Production of an Annual Performance Report for 2011/12.
(o) Publicised the Anti-Fraud and Corruption Policy.
(p) Promoted Whistleblowing Policy.
(q) Promoted the Gifts and Hospitality Policy.
(r) Subscription to Public Concern at Work.
(s) The role of the Governance and Standards Committee.
(t) The work of the Partnership Forum in identifying and evaluating partnership arrangements.
(u) Member and Officer Development Programmes.
(v) An approved Treasury Management Policy and Prudential Indicators.
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(w) An approved HFA Performance Management Framework.
(x) A Protective Security Group, reporting to Corporate Management Team.
(y) Achievement of the ISO 14001 Environmental Management Standard.
(z) Award, following external Peer Challenge, of the Achieving Level of the Fire and Rescue
Service Equality Framework.
(aa) Re-certification, for a three year period, of the Customer Service Excellence Award following external assessment.
(bb) A Community Interest Company (CIC) was incorporated on 12 January 2012 but will not
commence trading until 1 April 2012. Review of the effectiveness of Internal Controls will incorporate CIC activity from 2012/13.
Review of Effectiveness
9. The HFA during 2011/12 completed a third in-depth review of its governance arrangements. The review has led to a proposed governance structure which will be considered by the HFA on 17 April 2012. In summary it proposed:
• The full Authority will become the sole decision making forum;
• The Policy and Executive Committee is abolished;
• The Governance and Standards Committee is abolished;
• Joint arrangements will be explored with Constituent Authorities and neighbouring Fire Authorities, in respect to dealing with complaints under a future Member Code of Conduct;
• The Audit, Performance and Scrutiny Committee becomes a Governance, Audit and Scrutiny Committee.
10. In respect to the internal governance of the Service a Board structure, aligned to Directorate
portfolios, was established during 2011 and is now acting as an effective enabler to cross Directorate, more holistic, working. The Board structure features 4 delivery Boards: People, Safety, Operational Assurance and Infrastructure, a Performance and Risk (scrutiny and assurance) Board with cross Board Chair representation and a programme level Change Board with Corporate and Strategic Manager representation chaired by the Chief Fire Officer. The Strategic Risk Management scrutiny role, previously provided through the Active Risk Team, is within the Terms of Reference of the Performance and Risk Board.
11. During 2011/12 there were 5 Editions of the Strategic Risk Register established by the
Corporate Management Team.
12. The Audit, Performance and Scrutiny Committee throughout 2011/12 received reports from Internal Audit in respect to the internal control environment. The internal audit plan is informed significantly by the Strategic Risk Register.
13. The induction and training of new Members during 2011/12 has further enabled Members to
discharge the functions of the HFA.
14. From the AGM on 27 May 2011 to the end of the 2011/12 cycle, the HFA Committees met as follows:-
HFA 7 occasions Policy and Executive 4 occasions Audit, Performance and Scrutiny 5 occasions Governance and Standards 5 occasions
60
xix
15. Members at each meeting of the Policy and Executive Committee and the Audit, Performance and Scrutiny Committee received Management Accounts for review.
16. The Authority also adopted a formal call in procedure of decisions.
17. The review of the effectiveness of the system of internal control is informed by:
• The work of Senior Officers • The work of Internal Audit • The Corporate Risk Opportunity Management Strategy • Performance information • The Audit Commission in their Annual Governance Letter and other reports
18. Internal Audit have undertaken a number of reviews during 2011/12. The following areas
were covered:
• Key Financial Systems Budgetary Control Payroll Creditor Payments General Ledger Treasury Management and Banking
• Support / Operational Systems
Pensions Station Review – Financial Management Procurement
• Strategic
Partnership Arrangements Programme Management Operational Risk
Significant Governance Issues 2011/12
19. No significant governance issues have arisen during the 2011/12 year. Conclusions
20. This Annual Governance Statement for 2011/12 provides Members with a high level of assurance on the Authority‟s governance arrangements.
Signed .……………………………………………...
…………………………………………
Chair of the Authority
Chief Fire Officer and Chief Executive
……………………………………………… ………………………………………… S.151 Officer Secretary and Monitoring Officer
61
1
S
TA
TE
ME
NT
OF
AC
CO
UN
TS
MO
VE
ME
NT
S IN
RE
SE
RV
ES
ST
AT
EM
EN
T
This
sta
tem
ent
show
s t
he m
ovem
ent
in t
he y
ear
on t
he d
iffe
rent
reserv
es h
eld
by t
he A
uth
ori
ty,
ana
lyse
d into
„usab
le r
eserv
es‟ (i.e
. th
ose t
hat
can b
e a
pp
lied t
o
fund e
xpend
iture
or
reduce l
ocal
taxatio
n)
and o
ther
reserv
es.
The S
urp
lus o
r (D
eficit)
on t
he P
rovis
ion o
f S
erv
ices l
ine s
ho
ws t
he
tru
e econom
ic c
ost
of
pro
vid
ing t
he
Au
thori
ty‟s
serv
ices,
more
deta
ils o
f w
hic
h a
re s
ho
wn i
n t
he C
om
pre
hensiv
e I
ncom
e a
nd E
xpen
diture
Sta
tem
ent.
These a
re d
iffe
rent
to t
he
sta
tuto
ry a
mounts
require
d t
o b
e c
harg
ed t
o t
he G
ene
ral R
eserv
e B
ala
nce f
or
council
tax s
ettin
g p
urp
oses.
The N
et
Incre
ase /
(D
ecre
ase
) befo
re t
ransfe
rs t
o
Earm
ark
ed R
eserv
es s
ho
ws the s
tatu
tory
Genera
l F
un
d b
efo
re a
ny d
iscre
tion
ary
tra
nsfe
rs to o
r fr
om
earm
ark
ed r
eserv
es u
ndert
ake
n b
y t
he A
uth
ority
. 2
01
1/1
2
Ea
rma
rke
d
Re
serv
es
Ge
ne
ral
Fu
nd
ing
Ba
lan
ce
Use
ab
le
Ca
pita
l
Re
ceip
ts
Re
serv
e
To
tal U
sab
le
Re
serv
es
Pe
nsi
on
s
Re
serv
e
Ca
pita
l
Ad
just
me
nt
Acc
ou
nt
Re
valu
atio
n
Re
serv
e
Co
llect
ion
Fu
nd
Ad
just
me
nt
Acc
ou
nt
To
tal A
uth
ori
ty
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serv
es
£'0
00
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00
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00
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00
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00
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00
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00
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te(s
)2
82
82
8,2
92
72
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92
7,2
9
Ba
lan
ce
at
31
Ma
rch
20
11
4,4
70
5,7
18
41
81
0,6
06
(41
9,5
72
)
3
0,8
23
10
,82
3
31
3
(36
7,0
06
)
Su
rplu
s o
r (D
efic
it) o
n P
rovi
sio
n o
f S
erv
ice
s
(acc
ou
ntin
g b
asi
s)(2
3,6
81
)
8
7
(23
,59
4)
(23
,59
4)
Oth
er
Co
mp
reh
en
sive
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en
ditu
re a
nd
In
com
e-
(1
0,9
50
)
1,7
44
(9,2
06
)
To
tal
Co
mp
reh
en
siv
e I
nc
om
e &
Ex
pe
nd
itu
re-
(2
3,6
81
)
8
7
(23
,59
4)
(10
,95
0)
-
1
,74
4
-
(3
2,8
00
)
Ad
just
me
nts
be
twe
en
Acc
ou
ntin
g B
asi
s &
Fu
nd
ing
Ba
sis
un
de
r R
eg
ula
tion
s (N
ote
3)
29
,35
7
2
9,3
57
(2
8,6
29
)
(32
7)
(31
2)
(1
87
)
(9
8)
Ne
t In
cre
as
e /
(D
ec
rea
se
) b
efo
re t
ran
sfe
rs t
o
Ea
rma
rke
d R
es
erv
es
-
5,6
76
8
7
5,7
63
(39
,57
9)
(3
27
)
1
,43
2
(1
87
)
(3
2,8
98
)
Tra
nsf
ers
to
/ (
fro
m)
Ea
rma
rke
d R
ese
rve
s4
,37
9
(4,3
79
)
-
-
Inc
rea
se
/ (
De
cre
as
e)
in Y
ea
r4
,37
9
1,2
97
8
7
5,7
63
(39
,57
9)
(3
27
)
1
,43
2
(1
87
)
(3
2,8
98
)
Ba
lan
ce
at
31
Ma
rch
20
12
8,8
49
7
,01
5
50
5
1
6,3
69
(4
59
,15
1)
30
,49
6
1
2,2
55
1
26
(3
99
,90
4)
62
2
MO
VE
ME
NT
IN
RE
SE
RV
ES
ST
AT
EM
EN
T (
2010/1
1)
20
10
/11
Ea
rma
rke
d
Re
serv
es
Ge
ne
ral
Fu
nd
ing
Ba
lan
ce
Use
ab
le
Ca
pita
l
Re
ceip
ts
Re
serv
e
To
tal U
sab
le
Re
serv
es
Pe
nsi
on
s
Re
serv
e
Ca
pita
l
Ad
just
me
nt
Acc
ou
nt
Re
valu
atio
n
Re
serv
e
Co
llect
ion
Fu
nd
Ad
just
me
nt
Acc
ou
nt
To
tal A
uth
ori
ty
Re
serv
es
£'0
00
£'0
00
£'0
00
£'0
00
£'0
00
£'0
00
£'0
00
£'0
00
£'0
00
No
te(s
)2
82
82
8,2
92
72
7,2
92
7,2
9
Ba
lan
ce
at
31
Ma
rch
20
10
2,1
50
5,4
42
33
07
,92
2(4
77
,22
8)
32
,56
3
9
,89
8
3
60
(4
26
,48
5)
Su
rplu
s o
r (D
efic
it) o
n P
rovi
sio
n o
f
Se
rvic
es
(acc
ou
ntin
g b
asi
s)2
0,7
45
*8
8
20
,83
3
20
,83
3
Oth
er
Co
mp
reh
en
sive
Exp
en
ditu
re a
nd
Inco
me
-
38
,36
6*
98
9
39
,35
5
To
tal
Co
mp
reh
en
siv
e I
nc
om
e &
Ex
pe
nd
itu
re-
2
0,7
45
88
2
0,8
33
3
8,3
66
-
98
9
-
60
,18
8
Ad
just
me
nts
be
twe
en
Acc
ou
ntin
g B
asi
s &
Fu
nd
ing
Ba
sis
un
de
r R
eg
ula
tion
s (N
ote
3)
(18
,14
9)*
(18
,14
9)
19
,29
0*
(1,7
40
)
(6
4)
(47
)
(70
9)
Ne
t In
cre
as
e /
(D
ec
rea
se
) b
efo
re
tra
ns
fers
to
Ea
rma
rke
d R
es
erv
es
-
2,5
96
8
8
2,6
84
57
,65
6
(1
,74
0)
92
5
(47
)
59
,47
8
Tra
nsf
ers
to
/ (
fro
m)
Ea
rma
rke
d R
ese
rve
s2
,32
0
(2,3
20
)
-
-
Inc
rea
se
/ (
De
cre
as
e)
in Y
ea
r2
,32
0
27
6
88
2
,68
4
5
7,6
56
(1,7
40
)
9
25
(4
7)
5
9,4
78
Ba
lan
ce
at
31
Ma
rch
20
11
4,4
70
5
,71
8
41
8
1
0,6
06
(4
19
,57
2)
30
,82
3
1
0,8
23
3
13
(3
67
,00
6)
*Am
ended for
Fire F
ighte
rs P
ensio
n G
rant, s
ee n
ote
on C
om
pre
hensiv
e I
ncom
e a
nd E
xpenditure
Sta
tem
ent
on p
age 3
.
63
3
CO
MP
RE
HE
NS
IVE
IN
CO
ME
AN
D E
XP
EN
DIT
UR
E S
TA
TE
ME
NT
This
sta
tem
ent
show
s t
he a
ccountin
g c
ost
in t
he y
ear
for
pro
vid
ing
serv
ices in a
ccord
ance w
ith g
enera
lly a
ccepte
d a
ccoun
tin
g p
ractices,
rath
er
than t
he a
mount
to
be f
unded f
rom
taxation.
Auth
orities r
ais
e t
axation t
o c
over
expen
diture
in a
ccord
ance w
ith r
egu
lations;
this
ma
y b
e d
iffe
rent
from
the a
ccounting c
ost.
The
taxation p
ositio
n is s
ho
wn in the
Mo
vem
ent in
Reserv
es S
tate
ment.
£'0
00£'
000
£'0
00£'
000
£'0
00£'
000
Exp
en
dit
ure
Inc
om
eN
etN
ote
(s)
Exp
en
dit
ure
Inc
om
eN
et
6,70
2**
(333
)
6,
369
Com
mun
ity F
ire
Saf
ety
5,92
1(2
57)
5,
664
48,9
31**
(804
)
48
,127
Fire
Fig
htin
g &
Res
cue
Ope
ratio
ns45
,708
(520
)
45,1
88
00
0F
ire
Ser
vice
Em
erge
ncy
Pla
nnin
g0
00
182
018
2C
orpo
rate
and
Dem
ocra
tic C
ore
152
015
2
106
0*10
6C
orpo
rate
Man
agem
ent
397
(323
)
74
0(5
0,95
6)
(5
0,95
6)
Non
Dis
trib
uted
Cos
t0
(561
)
(561
)
55,9
21(5
2,09
3)
3,
828
C
os
t o
f S
ervi
ces
- C
on
tin
uin
g O
per
atio
ns
52,1
77(1
,662
)
50
,515
(23)
(2
3)
O
ther
Ope
ratin
g E
xpen
ditu
re5
8484
26,1
20(8
1)
26,0
39F
inan
cin
g an
d In
vest
men
t In
com
e an
d E
xpen
ditu
re5
24,5
25(1
01)
24
,424
(50,
589)
**(5
0,58
9)
Ta
xatio
n an
d N
on-S
peci
fic G
rant
Inc
ome
5(5
1,34
2)
(51,
342)
(20,
745)
(S
urp
lus
) o
r D
efic
it o
n P
rovi
sio
n o
f S
ervi
ces
23,6
81
(989
)
(Sur
plu
s) o
r D
efic
it on
Rev
alu
atio
n of
Non
Cur
rent
Ass
ets
(1,7
44)
(38,
366)
*A
ctua
rial (
Gai
ns)
/ L
osse
s on
Pen
sio
n A
sset
s /
Lia
bilit
ies
10,9
50
(39,
355)
O
the
r C
om
pre
he
nsi
ve I
nc
om
e an
d E
xpe
nd
itu
re (
Su
rplu
s)/
Def
icit
9,20
6
(60,
100)
T
ota
l C
om
pre
he
nsi
ve I
nc
om
e an
d E
xpe
nd
itu
re (
Su
rplu
s)/
Def
icit
32,8
87
Yea
r en
de
d 3
1 M
arch
201
2Y
ear
end
ed
31
Mar
ch 2
011
*P
ensio
ns g
rant
receiv
ed f
rom
Depart
ment
of
Com
mun
itie
s a
nd L
ocal
Govern
ment
should
not
be r
ecognis
ed i
n t
he C
om
pre
hensiv
e I
ncom
e a
nd E
xpenditure
Sta
tem
ent
(£6,1
96k r
em
oved).
A
ctu
aria
l (G
ain
s)/
Losses o
n P
ensio
n A
ssets
/Lia
bili
tie
s a
dju
ste
d to r
eflect re
moval of
Firefig
hte
rs p
ensio
n g
rant and s
hould
not
be r
eco
gnis
ed in
the C
om
pre
hensiv
e S
tate
me
nt of In
com
e a
nd E
xpenditure
. **
Recla
ssific
atio
n o
f re
cognis
ed c
apital gra
nt of £917k. T
his
was p
revio
usly
applie
d to r
educe t
he a
mount
of depre
cia
tio
n charg
ed t
o F
ire F
ightin
g a
nd R
escue O
pera
tio
ns a
nd C
om
munity F
ire S
afe
ty.
Th
is C
apital lg
rant
is n
ow
recognis
ed in
the T
axatio
n a
nd N
on
-Specific
Gra
nt In
com
e lin
e o
f th
e C
om
pre
hensiv
e I
ncom
e a
nd E
xpenditure
. (
£125k r
em
oved fro
m C
om
munity F
ire S
afe
ty a
nd £
792k
rem
oved fro
m F
ire F
ightin
g a
nd R
escue O
pera
tio
ns).
£917k n
ow
recognis
ed in
Ta
xatio
n
and N
on-S
pe
cific
Gra
nt In
com
e.
64
4
BALANCE SHEET
The Balance Sheet shows the value as at the Balance Sheet date, of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories; the first category of reserves are usable reserves, i.e. those reserves that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt); the second category of reserves includes amounts that would only become available to provide services if the assets were sold; and reserves that hold a timing difference as shown in the Movement in Reserves Statement line „Adjustments between accounting basis and funding basis under regulations.
31-Mar-11 31-Mar-12
£'000 Note(s) £'000
60,280 Property, Plant & Equipment 16,17 61,850
376 Intangible Assets 19 394
60,656 Long Term Assets 62,244
413 Inventories 22 412
11,000 Short Term Investments* 19,023
4,053 Short Term Debtors 22 7,652
764 Cash and Cash Equivalents 765
16,229 Current Assets 27,852
**(3,761) Short Term Creditors 22 *(6,050)
**(1,100) Short Term Borrowing (1,104)
(4,861) Current Liabilities (7,154)
**(17,623) Long Term Borrowing 23 (18,614)
**(421,408) Other Long Term Liabilities *(464,232)
(439,031) Long Term Liabilities (482,846)
(367,006) Net Assets (399,904)
10,606 Usable Reserves 16,369
(377,612) Unusable Reserves (416,273)
(367,006) Total Reserves (399,904)
*Please see note 34 on Page 47 for details of the control grant of £7.2m
**Restated due to detailed cashflow analysis during 2011/12.
65
5
CASH FLOW STATEMENT
The Cash Flow Statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Authority are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority‟s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Authority.
Restated
31-Mar-11 31-Mar-12
£'000 Note(s) £'000
20,745* Net Surplus or (Deficit) on the Provision of Services (23,681)
(15,889)*
Adjust Net Surplus or Deficit on the Provision of Services for Non
Cash Movements 25 34,108
(1,005)*
Adjust for items included in the Net Surplus or Deficit on the
Provision of Services that are Investing and Financing Activities 25 (1,428)
3,851 Net Cash Flows from Operating Activities 8,999
(5,226)* Investing Activities 25 (9,779)
1,423* Financing Activities 25 781
48 Net Increase or (Decrease) in Cash and Cash Equivalents 1
716Cash and Cash Equivalents at the Beginning of the
Reporting Period764
764Cash and Cash Equivalents at the End of the Reporting
Period765
*Please see Comprehensive income and expenditure statement for details of £6,196k adjustment relating to Firefighter pensions grant on page 3. A number of other 2010/11 items have been reclassified following production of the 2011/12 Statement of Accounts, the increase in cash figure for 2010/11 remains at £48k.
66
6
NOTES TO THE ACCOUNTS STATEMENT OF ACCOUNTING POLICIES 1. Accounting Policies
The Fire Authority Financial Statements must meet the accounting requirements of the CIPFA Code of Practice on Local Authority Accounting which has been agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting 2011/12. The accounting policies contained in the CIPFA Code of Practice follow International Financial Reporting Standards to the extent that they are meaningful and appropriate to Local Authority Accounts, as determined by HM Treasury, who are advised by the Financial Reporting Advisory Board. Where the CIPFA Code of Practice on Local Authority Accounts permits a choice of accounting policy, the accounting policy which is judged to be the most appropriate to the particular circumstances of the Authority for the purpose of presenting fairly the position of the Authority is selected. The particular policies adopted by the Authority are described below and they have been applied consistently in dealing with items considered material in relation to the Accounts.
1.1 Accounting convention
These Accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets and inventories. Where appropriate financial assets and liabilities have been impaired or discounted to bring them to fair value.
1.2 Acquisitions and discontinued operations Activities are considered to be „acquired‟ only if they are taken on from outside the public sector. Activities are considered to be „discontinued‟ only if they cease entirely. They are not considered to be „discontinued‟ if they transfer from one public sector body to another. The Authority has not acquired or discontinued any operations during the reporting period.
1.3 Going Concern After making enquires, the Authority has formed a judgement, at the time of approving the financial statements that there is a reasonable expectation that the Authority has access to adequate resources to continue in operational existence for the foreseeable future. For this reason, the Authority continues to adopt the going concern basis in preparing the Accounts.
1.4 Critical accounting judgements and key sources of estimation uncertainty In the application of the Authority‟s accounting policies, management are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from those estimates and the estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised and if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
1.4.1 Critical judgements in applying accounting policies
In applying the accounting policies of the Authority, the Authority has had to make certain judgements about complex transactions or those involving uncertainty about future events. Where a critical judgement is required for the accounts, the judgement is made using the knowledge and experience of relevant officers.
The Authority has to decide whether the leases it enters into should be treated as operating or finance leases and whether contractual arrangements it enters into have the substance of a lease. These judgements are made on the professional opinion of the Authority‟s valuers, accountants and procurement officer. The Authority did not enter into any new leases, or lease type arrangements during 2011/12. The Authority has to decide whether land and buildings owned by the Authority are investment properties. The Authority‟s valuers and accountants make judgements in accordance with IAS 40 Investment Property. It has been determined that the Authority does not have any investment property as it does not hold land and/or buildings solely for rental income or capital appreciation. The Authority has to decide whether there is a group relationship between the Authority and other entities. The accountants assess each relationship that exists between the Authority and other entities that may result in a group accounts relationship. It has been determined that there are no material group relationships that require the production of group accounts.
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The Authority has to decide whether the Authority‟s exposure to possible losses is to be accounted for as a provision or a contingent liability. These decisions are taken by a combination of the Authority‟s accountants, solicitor and other relevant officers. Judgement is required to determine whether the Authority can be reasonably assured that the conditions of grant and contribution monies received have been met before recognising them as income in the Comprehensive Income and Expenditure Statement. Where conditions require specified expenditure to have taken place, the grant monies will not be recognised until this happens. Equally, where conditions specify that a grant or contribution must be repaid in the event of non-expenditure, the income is not recognised until expenditure is incurred.
1.4.2 Key Sources of estimation uncertainty
The Statement of Accounts contains estimated figures that are based on assumptions made by the Authority about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Authority‟s Balance Sheet at 31 March 2012 for which there is a significant risk of material adjustment in the following financial year are as follows: a) Pensions Liability and Reserve Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected return on pension fund assets. Hymans Roberts as actuaries are contracted to provide an estimate of the net liability relating to the Local Government Pension Scheme, The Government Actuaries Department are contracted to provide an estimate of the net liability relating to the Firefighters Pension Scheme. b) Valuation and depreciation charges Professional opinions of the values of land and buildings are made by the Valuation and Estates Team of East Riding of Yorkshire Council, who are contracted to provide Valuation and Estates advice to the Authority. Estimates of the useful lives of property, plant and equipment are made by the relevant officers who have knowledge of such issues based on their professional judgement e.g. useful lives of property are provided by the Authority‟s contracted valuers.
1.5 Revenue Revenue in respect of services provided is recognised when the performance occurs, and is measured at the fair value of the consideration receivable. Where income is received for a specific activity that is to be delivered in the following year the income is deferred. Goods are sold on an incidental basis. Income is recognised at the point the sale transaction occurs.
1.6 Apportionment of overheads Management and Support Services expenditure is allocated over Service areas using estimated gross pay as originally stated in the original 2011/12 budget.
1.7 Agency income Precept income is collected on behalf of the Authority by the four unitary authorities (East Riding of Yorkshire Council, Kingston Upon Hull City Council, North East Lincolnshire Council and North Lincolnshire Council); this income is collected under an agency arrangement with the Authority including an appropriate share of taxpayer transactions within the financial statements.
1.8 Employee Benefits Retirement benefit costs The Authority participates in three pension schemes, two for Firefighters and one for Support staff. All of the schemes provide members with defined benefits related to pay and service.
Firefighters The 1992 Firefighters‟ Pension scheme involves officers paying contributions of 11%. The 2006 Firefighters‟ Pension Scheme was introduced in 2006 and provides different benefits to the 1992 scheme. The 2006 scheme which all new recruits can join has a contribution rate of 8.5%. The Fire Authority Accounts for
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Firefighter pensions through the Firefighters‟ Pensions fund account. The cost to the Authority is via an employers‟ contribution and a capital charge for Officers who retire on ill health. Central Government provides/receives any balance on the Pension fund account. Support Staff The Fire Authority is an admitted body to the East Riding pension fund, which is administered by the East Riding of Yorkshire Council. Support staff are eligible to join the Local Government pension scheme which has varying contribution rates based on a members‟ salary. The Authority makes employers contributions as required into the East Riding Pension fund. The Authority has fully adopted IAS 19 Employee benefits with the exception of outstanding Annual Leave as described below. The financial statements reflect the commitment to make up any shortfall in attributable net assets in the pension fund. The overall pension liability is included in the Balance Sheet and service costs are reflected in the Comprehensive Income and Expenditure Statement. Outstanding Annual Leave at 31
st March
The CIPFA Code of Practice on Local Authority Accounting requires the Authority to recognise the amount of untaken annual leave at the 31
st March as a liability which is reflected on the Balance Sheet. To ensure
consistency Annual leave costs have been reflected in the year in which the annual leave is taken and the value of the liability has not been reflected in the financial statements if it is below £300,000.
1.9 Other Expenses
Other operating expenses are recognised when, and to the extent that, the goods or services have been received. They are measured at the fair value of the consideration payable.
1.10 Property, plant and equipment
Recognition Property, plant and equipment is capitalised if:
it is held for use in delivering services or for administration purposes;
it is probable that service potential will be provided to the Authority;
it is expected to be used for more than one financial year;
the cost of the item can be measured reliably; and
the item has a cost of at least £6,000
Where a large asset, for example a building, includes a number of components with significantly different asset lives (a minimum of 5 years), the components are treated as separate assets if they have a cost that is a significant proportion of the whole asset (a minimum of 25%). The components are treated as separate assets and depreciated over their useful economic life. Donated Assets are recognised at their value and are defined in the CIPFA Code of Practice on Local Government Accounting as those assets that are transferred at nil value or acquired at less than fair value. Donated assets that are from other public bodies are accounted for as a government grant (as required by IAS 20).
Valuation All property, plant and equipment are measured initially at cost, representing the cost attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets are measured subsequently at fair value. Land and buildings used by the Authority are stated in the Balance sheet at their re-valued amounts, being the fair value at the date of valuation. Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Fair values are determined as follows:
Operational Buildings – Depreciated Replacement cost
Land and non specialised buildings – market value for existing use
Vehicles, plant and equipment – historic cost less accumulated depreciation (as a proxy for current replacement cost)
Properties in the course of construction are carried at cost, less any impairment loss. Costs include professional fees but not borrowing costs, which are recognised as expenses immediately, as allowed by IAS
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23 for assets held at fair value. Assets are re-valued and depreciation commences when they are brought into use. An increase arising on revaluation is taken to the revaluation reserve except when it reverses an impairment previously recognised in expenditure, in which case it is credited to expenditure to the extent of the decrease previously charged there. A revaluation decrease is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset, and, thereafter, to expenditure. Gains and losses recognised in the revaluation reserve are reported as other comprehensive income in the Statement of Comprehensive Income. Subsequent expenditure Where subsequent expenditure enhances an asset beyond its original specification, the directly attributable cost is capitalised. Where subsequent expenditure restores the asset to its original specification, the expenditure is capitalised and any existing carrying value of the item replaced is written-off and charged to the Statement of Comprehensive Income.
Disposals Capital receipts from the sale of non current assets are held in the capital receipts unapplied account until such time as they are used to finance other capital expenditure or to repay debt. Gains and losses on the disposal of non current assets are recognised in the Comprehensive Income and Expenditure Statement.
1.11 Intangible Assts
Recognition Intangible assets are non-monetary assets without physical substance, which are capable of sale separately from the rest of the Authority‟s business or which arise from contractual or other legal rights. They are recognised only when it is probable that future economic benefits or service potential will be provided to the Authority; where the cost of the asset can be measured reliably, and where the cost is at least £6,000. Intangible assets acquired separately are initially recognised at fair value. Software that is integral to the operating of hardware, for example an operating system is capitalised as part of the relevant item of property, plant and equipment. Software that is not integral to the operation of hardware, for example application software, is capitalised as an intangible asset. Expenditure on research is not capitalised: it is recognised as an operating expense in the period in which it is incurred. Internally-generated assets are recognised if, and only if, all of the following have been demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use
the intention to complete the intangible asset and use it
the ability to sell or use the intangible asset
how the intangible asset will generate probable future economic benefits or service potential
the availability of adequate technical, financial and other resources to complete the intangible asset and sell or use it
the ability to measure reliably the expenditure attributable to the intangible asset during its development
Measurement The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the criteria are initially met. Where no internally-generated intangible assets can be recognised, the expenditure is recognised in the period in which it is incurred. Following initial recognition, intangible assets are carried at fair value by reference to an active market, or where no active market exists, at amortised replacement cost (modern equivalent assets basis). Internally-developed software is held at historic cost to reflect the opposing effects of increases and development costs and technological advances.
1.12 Depreciation, amortisation and impairments Freehold land and properties under construction are not depreciated. Otherwise, depreciation and amortisation are charged to write off the costs or valuation of property, plant and equipment and intangible non-current assets, less any residual value, over their estimated useful lives, on a straight line basis (with the exception of assets acquired under finance leases). The estimated useful life of an asset is the period over which the Authority expects to obtain economic benefits or service potential from the asset. This is specific to the Authority and may be shorter than the physical life of the asset itself. Estimated useful lives and residual values are reviewed each year end, with the effect of any changes recognised on a prospective basis. Assets
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held under finance leases are depreciated over their estimated useful lives. The approximate average useful lives (depreciation periods) are categorised below:
Buildings 40 years
Vehicles – Fire Appliances 15 years
Vehicles – Mobile Workshops 10 years
Vehicles – Lorries and Vans 7 years
Vehicles – Cars and Light Vans 5 years
Equipment 5 years
Assets acquired under Finance leases are depreciated over the term of the lease (or the life of the asset if this is lower than the term of the lease) on a straight line basis. At each reporting period end, the Authority checks whether there is any indication that any of its tangible or intangible non current assets have suffered an impairment loss. If there is indication of an impairment loss, the recoverable amount of the asset is estimated to determine whether there has been a loss and, if so, its amount. Intangible assets not yet available for use are tested for impairment annually. If there has been an impairment loss, the asset is written down to its recoverable amount, with the loss charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of the recoverable amount but capped at the amount that would have been determined had there been no initial impairment loss. The reversal of the impairment loss is credited to expenditure to the extent of the decrease previously charged there and thereafter to the revaluation reserve. The Authority is not required to raise council tax to cover depreciation, impairment or amortisation, however it is required to make an annual provision from its revenue budget to contribute towards the reduction in its overall borrowing requirement, the minimum revenue provision (MRP). This is equal to 4% of the adjusted capital financial requirement at 31 March 2009 and subsequent supported borrowing, together with an amount equal to any capital expenditure funded from unsupported borrowing, apportioned over the estimated life of the asset.
1.13 Government Grants
Government grants are grants from government bodies. Revenue grants are matched against the expenditure to which they relate. Capital grants are credited to income once any conditions of the grant have been satisfied. Assets purchased from government grants are valued, depreciated and impaired as described for purchased assets.
1.14 Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met when the sale is highly probable, the asset is available for immediate sale in its present condition and management is committed to the sale, which is expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Fair value is open market value including alternative uses. The profit or loss arising on the disposal of an asset is the difference between the sale proceeds and the carrying amount and is recognised in the Comprehensive Income and Expenditure Statement. On disposal, the balance for the asset on the revaluation reserve is transferred to the Capital Adjustment Account. Property, plant and equipment that is to be scrapped or demolished does not qualify for recognition as held for sale. Instead, it is retained as an operational asset and its economic life is adjusted. The asset is de-recognised when it is scrapped or demolished.
1.15 Leases
Leases are classified as finance leases when substantially all of the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases.
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The Authority as a lessee The Authority has a number of assets held under a finance lease (Vehicles). The outstanding liability relating to finance leases is reflected in the Authority‟s Balance Sheet, with the assets acquired under finance leases added to the Authority‟s asset register and the value reflected in the Property, plant and equipment total on the Balance Sheet. Interest costs relating to finance leases are reflected in the Comprehensive Income and Expenditure Statement. Payments for Finance leases are made in equal amounts over the term of the lease. Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives are recognised initially as a liability and subsequently as a reduction of rentals on a straight-line basis over the lease term. Where a lease is for land and buildings, the land and building components are separated. Leased land is treated as an operating lease. Leased buildings are assessed as to whether they are operating or finance leases.
1.16 Private Finance Initiative (PFI) transactions HM Treasury has determined that government bodies shall account for infrastructure PFI schemes where the government body controls the use of the infrastructure during the service concession period together with the residual interest in the infrastructure at the end of the period. This follows the principles of the requirements of IFRIC 12. The Authority therefore recognise the PFI asset as an item of property, plant and equipment together with a liability to pay for it. The services received under the contract are recorded as operating expenses. The Authority has not entered into any PFI transactions.
1.17 Inventories Inventories are valued at the lower of cost and net realisable value using the average cost method. This is considered to be a reasonable approximation to fair value.
1.18 Cash and cash equivalents Cash is cash in hand and deposits with any financial institution repayable without penalty on notice of not more than 24 hours. The balances on the current account and the business reserve account are cash. The balance in the Liquidity Manager Account is a cash equivalent (as this is held for investment purposes until a sufficient balance is achieved and a short term investment entered into). In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and that form an integral part of the Authority‟s cash management.
1.19 Provisions Provisions are recognised when the Authority has a present legal or constructive obligation as a result of a past event, it is probable that the Authority will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties. Currently the Authority has no provisions Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Authority, or a present obligation that is not recognised because it is not probable that a payment will be required to settle the obligation or the amount of the obligation cannot be measured sufficient reliability. A contingent liability is disclosed unless the possibility of payment is remote. A contingent asset is a possible asset that arises from past events and existence of which will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Authority. A contingent asset is disclosed where an inflow of economic benefits is virtually certain. Where the time value of money is material, contingencies are disclosed at their present value.
1.20 Reserves The Authority sets aside specific reserves for future policy purposes. The Authority has nine revenue reserves:
Clough Road Rebuild reserve
RDS Equal pay case reserve
Insurance Reserve
BA Replacement reserve
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Water Rescue Equipment reserve
Change Management reserve
Wide Area Network (WAN) reserve
Control reserve
General reserve The Authority has three capital reserves:
Capital adjustment account
Revaluation reserve
Capital receipts reserve Other reserves held by the Authority, are held to meet accounting requirements:
Pensions reserve
Collection fund adjustment account Details of these reserves are provided in the relevant note to the Accounts.
1.21 Financial assets Financial assets are recognised when the Authority becomes party to the financial instrument contract or in the case of trade receivables, when goods or services have been delivered. Financial assets are derecognised when the contractual rights have expired or the asset has been transferred. Financial assets are initially recognised at fair value. Financial assets are classified into the following categories: financial assets at fair value through profit and loss; held to maturity investments; available for sale financial assets, and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not quoted in an active market. After initial recognition, they are measured at amortised cost using the effective interest method, less any impairment. Interest is recognised using the effective interest method. Fair value is determined by reference to quoted market prices where possible, or failing that by reference to similar arms length transactions between knowledgeable and willing parties. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset. At the end of the reporting period the Authority assesses whether any financial assets, other than those held at „fair value through profit and loss‟ are impaired. Financial assets are impaired and impairment losses recognised if there is objective evidence of impairment, as a result of one or more events which occurred after the initial recognition of the asset and which has an impact on the estimated future cash flows of the asset. For financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between the assets carrying amount and the present value of the revised future cash flows discounted at the asset‟s original effective interest rate. The loss is recognised in expenditure and the carrying amount of the asset reduced directly. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through expenditure to the extent that the carrying amount of the receivable at the date of the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Financial Liabilities Financial liabilities are recognised in the Balance Sheet when the Authority becomes party to the contractual provisions of the financial instrument or, in the case of trade payables, when the goods or services have been received. Financial liabilities are de-recognised when the liability has been discharged, that is, the liability has been paid or expired. Financial liabilities are recognised at fair value.
1.22 Foreign Currencies The Authority‟s functional currency and presentational currency is sterling. Transactions denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of transactions. At the end
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of the reporting period, monetary items denominated in foreign currencies are retranslated at the spot exchange rate on 31 March. Resulting exchange gains and losses from either of these are recognised in the Authority‟s surplus/deficit in the period in which they arise.
1.23 Joint operations Joint operations are activities undertaken by the Authority in conjunction with one or more other parties but which are not performed through a separate entity.
1.24 Accounting standards that have been issued but have not yet been adopted IFRS 7 Financial Instruments: Disclosures has been issued and is included in the Code of Practice on Local Authority Accounting 2012/13 which CIPFA has issued. The requirements of this standard will be incorporated in the 2013/13 Annual Accounts and does not require restatement of previous statements comparatives.
1.25 Accounting standards issued that have been adopted early There are no accounting standards issued that have been adopted early.
1.26 Exceptional items Exceptional items shall be included in the costs of the service to which they relate and noted accordingly.
1.27 Prior Period Adjustments
Unless otherwise sanctioned by the Code of Practice on Local Authority Accounting, material prior period adjustments shall result in restatement of prior year figures and disclosure of the effect.
1.28 Events after the balance sheet date
Material events after the balance sheet date shall be disclosed as a note to the Accounts and amended in the accounts as required. Other events after the balance sheet date will be disclosed in a note with an estimate of the likely effect.
1.29 Group Accounts Each reporting period the Authority will review its interests and influence on all types of entities including, but not limited to, other authorities and similar statutory bodies, common good trust funds, charities, companies, joint committees and other joint arrangements. If appropriate, then group Accounts will be prepared in accordance with the Code of Practice on Local Authority Accounting.
1.30 VAT Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets.
1.31 Heritage Assets
Heritage Assets will be disclosed as a separate category of assets on the balance sheet.
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2. MATERIAL RISK AND UNCERTAINTY
Item Uncertainties Effect if actual results differ from assumptions
Property, Plant and Equipment
Assets are regularly re-valued by an external valuer to ensure values are a true reflection of the market at the 31
st March. Asset values could
be under or overstated. Depreciation is calculated based on the estimated useful life of the asset. .
For each 1% of under/over statement the value of Property would need to be adjusted by £0.515m. The carrying value of Property, Plant and Equipment is £62.245m. If the estimated useful life is under or overestimated by one year then the depreciation charge to the Comprehensive Income and Expenditure would be increased or reduced by £0.581m. The Depreciation charge is £3.094m.
Pensions Liability (Firefighters Pension Scheme)
The estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement and mortality ages. The Authority receives advice from two separate actuaries, one for the Firefighters pension scheme and one for the Local government pension scheme.
The opening balance on the Firefighters pension liabilities at 1 April 2011 was £415.830m. The effects on the net pension liabilities of changes in individual assumptions can be measured. For instance a 0.5% decrease in the discount rate would result in a increase in the pension liabilities of £45.405m. However, the assumptions interact in complex ways so changes in individual assumptions should be treated with caution.
Pensions Liability (Local Government Pension Scheme)
The estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement and mortality ages and expected returns on investment funds. The Authority receives advice from two separate actuaries, one for the Firefighters pension scheme and one for the Local government pension scheme.
The opening balance on the Local Government pension liabilities at 1 April 2011 was £20.358m (The opening balance on scheme assets was £16.616m). The effects on the net pension liabilities of changes in individual assumptions can be measured. For instance a 0.5% decrease in the discount rate would result in an increase in the pension liabilities of £2.696m. However, the assumptions interact in complex ways so changes in individual assumptions should be treated with caution.
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3. ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATIONS
Restated
£'000 £'000 £'000
Amounts included in the Comprehensive Income &
Expenditure Statement but required by statute to be
excluded when determining the Movement on the
General Fund balance for the year:
Depreciation and impairment of non current assets (3,336) (4,304)
Net profit/(loss) on sale of non current assets (84) 23
Grants and contributions deferred 1,340 917
Collection Fund Adjustment (187) (47)
Net Charges made for retirement benefits in accordance
with IAS 19
Local Government Pension Scheme (846) 1,178
Fire Fighters' Pension Scheme (32,950) 13,350
(36,063) 11,117
Amounts not included in the Comprehensive Income
and Expenditure Statement but required by statute to
be included when determining the movement on the
General Fund balance for the year:
Minimum Revenue Provision 1,381 1,384
Revenue Contributions to Capital Outlay 148 298
Employer's Contributions Payable to Pension Funds
Local Government Pension Scheme 975 978
Fire Fighters' Pension Scheme 4,202 4,372
6,706 7,032
Transfers to or from Fund Balances that are required
to be taken into account when determining the
Movement on the General Fund balance
Revenue Reserve - -
Water Rescue Equipment Reserve - -
Control Reserve - -
- -
Net additional amount required to be debited(credited)
to the General Fund Balance (29,357) 18,149
Appropriations to the Pensions Reserve for the year:
Reversal of IAS 19 Entries
Local Government Pension Scheme 846 (1,178)
Fire Fighters' Pension Scheme 42,793 (7,154)
Employer Contributions
Local Government Pension Scheme (975) (978)
Payments to Pensioners
Fire Fighters' Pension Scheme (16,300) (12,410)
Employee Contributions
Fire Fighters' Pension Scheme 2,265 2,430
Net additional amount required to be debited(credited)
to the Pension Reserve 28,629 (19,290)
2011/12 2010/11
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4. EXCEPTIONAL ITEMS
There are no exceptional items 5. OTHER OPERATING EXPENDITURE, FINANCING AND INVESTMENT INCOME, TAXATION AND NON SPECIFIC GRANTS
The details of these amounts are provided below:
Restated
2011/12 2010/11
Other Operating Expenditure £000s £000s
(Profit)/Loss on the disposal of assets 84 (23)
Total Other Operating Expenditure 84 (23)
Financing and Investment Income and Expenditure
Interest Payable 996 983
Interest Receivable (101) (81)
Pensions Interest Cost and Expected Return on Pension Assets
- Fire Fighters 23,580 24,850
- Local Government Pension Scheme (51) 287
Total Financing and Investment Income and Expenditure 24,424 26,039
Taxation and Non Specific Grant Income
Council Tax Payers 22,577 22,497
General Government Grants 7,850 3,446
Capital Grant Recognised 1,340 917*
National Non Domestic Rates 19,575 23,729
Total Taxation and Non Specific Grant Income 51,342 50,589 *see note on Comprehensive Income and Expenditure Statement on page 3
Precepts
The Authority, at its meeting on 14
th February 2011, set a precept for 2011/12 equivalent to a Band D Council
Tax of £77.92. Precepts and Collection Fund balances received from the four constituent Authorities for 2011/12 are as follows:
Precepts Total
2011/12 Residual 31 March 2012 2011/12
2010/11
£'000 £'000 £'000 £'000
Kingston upon Hull City Council 5,481 (11) 4 5,474
East Riding of Yorkshire Council 9,246 (15) 70 9,301
North East Lincolnshire Council 3,710 18 40 3,768
North Lincolnshire Council 4,020 10 4 4,034
22,457 2 118 22,577
Collection Fund Surplus/(Deficit)
Precepts Total
2010/11 Residual 31 March 2011 2010/11
2009/10
£'000 £'000 £'000 £'000
Kingston upon Hull City Council 5,422 2 62 5,486
East Riding of Yorkshire Council 9,210 4 95 9,309
North East Lincolnshire Council 3,696 (77) 73 3,692
North Lincolnshire Council 3,960 (32) 83 4,011
22,288 (103) 313 22,498
Collection Fund Surplus/(Deficit)
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The Fire Authority is made up of members who are largely local councillors from the four Local Authorities above. 6. MEMBERS’ ALLOWANCES
From 1 April 2003 the Authority is required to have its own scheme of Members‟ Allowances under the terms of the Local Authorities (Members‟ Allowances) (England) Regulations 2003. The total amount paid to Members under this scheme for 2011/12 was £127,479. (2010/11 was £131,318)
7. OFFICERS’ EMOLUMENTS
Regulation 4 of the Accounts and Audit (Amendment No.2) (England) Regulations 2009 [SI 2009 No. 3322] introduce a new legal requirement to increase transparency and accountability in Local Government for reporting the remuneration of senior employees.
The number of employees whose remuneration, excluding employer‟s pension contributions, was £50,000 or more in bands of £5,000 are disclosed below:
Remuneration
Band 2011/12 2010/11
Operational Non Total Operational Non Total
Operational Operational
£150-154,999 - - - - - -
£145-149,999 - - - - - -
£140-144,999 - - - - - -
£135-139,999 - - - 1 - 1
£130-134,999 1 - 1 - - -
£125-129,999 - - - - - -
£120-124,999 - - - - - -
£115-119,999 - - - - - -
£110-114,999 1 - 1 1 - 1
£105-109,999 - - - 1 - 1
£100-104,999 - - - - - -
£95-99,999 - 2 2 - 2 2
£90-94,999 - - - 1 - 1
£85-89,999 - - - - - -
£80-84,999 - - - - - -
£75-79,999 1 - 1 - - -
£70-74,999 2 - 2 - - -
£65-69,999 - - - 2 1 3
£60-64,999 3 - 3 1 - 1
£55-59,999 8 1 9 14 1 15
£50-54,999 8 2 10 4 2 6
24 5 29 25 6 31
Number of Officers in Band
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The following table sets out the remuneration disclosures for Senior Officers whose salary is less than £150,000 but equal to or more than £50,000 per year:
Disclosure for 2011/12
Salary Benefits in Total Employer's Total
(Including Kind (e.g. Remuneration pension Remuneration
fees & Car excluding contributions including
Allowances) Allowance) employer's 2011/12 employer's
pension pension
contributions contributions
2011/12 2011/12
Chief Fire Officer & Chief Executive (1st April - 30th April) 11,680 - 11,680 2,488 14,168
Chief Fire Officer & Chief Executive (1st May - 31st March) 124,464 - 124,464 26,511 150,975
Deputy Chief Fire Officer & Director
of Policy & Performance (1st April - 30th April) 9,618 - 9,618 2,049 11,667
Deputy Chief Fire Officer & Director
of Operations (1st May - 31st March) 105,794 - 105,794 22,534 128,328
Assistant Chief Fire Officer &
Director of Community Protection (1st April - 30th April) 9,052 - 9,052 1,928 10,980
Assistant Chief Fire Officer &
Director of Safety (1st May - 30th June) 18,104 - 18,104 3,856 21,960
Assistant Chief Fire Officer &
Director of Safety (1st July - 31st August) 18,104 - 18,104 3,856 21,960
Assistant Chief Fire Officer &
Director of Safety (1st September - 31st October) 18,104 - 18,104 3,856 21,960
Assistant Chief Fire Officer &
Director of Safety (1st November - 31st December) 18,104 - 18,104 3,856 21,960
Assistant Chief Fire Officer &
Director of Safety (13th February - 31st March) 14,358 - 14,358 3,058 17,416
Secretary to the Fire Authority &
Director of People 95,045 1,973 97,018 19,674 116,692
Director of Finance and Assets & S.151 Officer 95,045 1,683 96,728 19,674 116,402
537,472 3,656 541,128 113,340 654,468
Post Title
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Disclosure for 2010/11
Salary Benefits in Total Employer's Total
Kind (e.g. Remuneration pension Remuneration
Car excluding contributions including
Allowance) employer's 2010/11 employer's
pension pension
contributions contributions
2010/11 2010/11
£ £ £ £ £
Chief Fire Officer & Chief Executive 135,779 - 135,779 28,921 164,700
Deputy Chief Fire Officer & Director
of Policy & Performance 1st May-31st Mar 11 105,794 - 105,794 22,534 128,328
Deputy Chief Fire Officer & Director
of Policy & Performance 1st Apr-30th Apr 10 10,623 - 10,623 2,263 12,886
Assistant Chief Fire Officer &
Director of Personal &
Organisational Development 108,623 - 108,623 23,137 131,760
Assistant Chief Fire Officer &
Director of Community Protection 1st Jun-31st Dec 10 63,363 - 63,363 13,496 76,859
Assistant Chief Fire Officer &
Director of Community Protection 1 Apr 10-30 Apr 10 9,052 - 9,052 1,928 10,980
Secretary to the Fire Authority &
Director of Corporate Administration 95,045 1,107 96,152 19,389 115,541
Director of Finance & S.151 Officer 95,045 2,056 97,101 19,389 116,490
623,324 3,163 626,487 131,057 757,544
Post Title
The table below shows the number and cost of exit packages for which the Authority makes additional contributions to pension funds or redundancy payments.
Band 2011/12 2010/11
Compulsory
Redundancy Other Total (£)
Compulsory
Redundancy Other Total (£)
£0-80,000 - - - - 3 113,075
- - - - 3 113,075
Number of former Officers in Band
No additional contributions have been made in respect of exit costs during 2011/12 (£113,075 was incurred during 2010/11). The exit package costs paid in 2010/11 relate to additional pension strain costs payable to the ERYC Pension Fund. (The amounts are not disclosed in narrower bands as this would identify the amount of this contribution by individual).
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8. RELATED PARTY TRANSACTIONS
The Authority is required to disclose material transactions with related parties; bodies or individuals that have the potential to control or influence the Authority or to be controlled or influenced by the Authority. Disclosure of these transactions allows readers to assess the extent to which the Authority might have been constrained in it‟s ability to operate independently or might have secured the ability to limit another party‟s ability to bargain freely with the authority.
Government Grants
Central government has significant influence over the general operations of the Authority; it is responsible for providing the statutory framework within which the Authority operates, it provides a significant part of it‟s funding in the form of grants, and prescribes the terms of many of the transactions that the Authority has with other parties. The Authority receives National non domestic rates, General government grants and Capital Grants from the Department of Communities and Local Government. (Details of these grants are disclosed in note 6)
Pensions See note 24 of the Notes to the Core Financial Statements. Local Authority transactions The precept is collected on the Fire Authority‟s behalf by the four Local Authorities in the Humberside area (as disclosed in note 5), the following members are Local Councillors on these councils. East Riding of Yorkshire Council: Margaret Chapman MBE, Doreen Engall, Rita Hudson, Angela Ibson, Barbara Jefferson, Claude Mole, Keith Moore, Brian Skow. Kingston Upon Hull City Council: Alan Gardiner, David Gemmell OBE, Mary Glew, Michael Ross, John Shipley, Adam Williams. North East Lincolnshire: Darren Billard, Andrew De Freitas, David Hornby, Terry Walker. North Lincolnshire Council: John Briggs, Steve Swift, Rob Waltham, David Wells.
Other Related Party transactions During the course of 2011/12 no Members or senior officers of the Fire Authority, or their close relations, undertook any declarable related party transactions with the Authority. The Authority requires Members and senior officers to complete a declaration of related party transactions, and these declarations are used as the basis of this note. The disclosure note itself has been prepared in accordance with guidance on the interpretation of IAS 24 (Related Party Transactions) and its applicability to the public sector. Three officers of the Fire Authority are also Directors of HFR Solutions Community Interest Company (ACO Chris Blacksell, Director of People Robin Graham and Area Manager Nick Granger). HFR Solutions did not begin trading until 2012/13.
9. AUDIT COSTS During 2011/12 the Authority incurred the following Audit Commission fees relating to external audit and inspection:
2011/12 2010/11
£'000 £'000
Fees payable to the Audit Commission with regard to 64 70
external audit services carried out by the appointed auditor
Fees payable to the Audit Commission in respect of - -
statutory inspection
64 70
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10. CAPITAL EXPENDITURE AND NON CURRENT ASSET DISPOSALS Capital Expenditure
Capital expenditure incurred by the Authority during 2011/12 with comparatives for 2010/11 and the sources of financing are as follows:
Note : Expenditure on buildings in the year will not necessarily result in an increase in value on the Balance Sheet until the point at which the relevant assets are revalued (see table above and note 18 of the Notes to the Accounts). The value of de-minimis items of expenditure transferred to the Capital Adjustment Account for 2011/12 was nil (2010/11 was also nil).
Category of Asset Category of Asset
£'000 £'000
Land & Buildings Land & Buildings
Hornsea Refurbishment 210 Hornsea Refurbishment 16
Pockilington Refurbishment 224 Beverley Refurbishment 7
Withernsea Refurbishment 14 Pocklington Refurbishment 19
Patrington Refurbishment 14 Goole Refurbishment 108
Preston Refurbishment 14 Kirton Lindsey Refurbishment 2
Goole Refurbishment 23 Snaith Refurbishment 19
Grimsby, Peaks Lane Refurbishment 59 Grimsby, Peaks Lane Refurbishment 532
Snaith Refurbishment 222 Waltham Refurbishment 13
Epworth alterations 27 Service Headquarters 96
Waltham Refurbishment 180
Service Headquarters 288
Vehicles 1,542 Vehicles 919
Plant & Equipment Plant & Equipment
IT Equipment 291 IT Equipment 295
Equipment 242 Personal Protective Equipment 881
Equipment 433
3,350 3,340
£'000 £'000
Loan - Supported Borrowing 997 Loan - Supported Borrowing 997
- Unsupported Borrowing 865 - Unsupported Borrowing 1,129
Grants 1,340 Grants 916
Capital Contributions 148 Capital Contributions 298
3,350 3,340
Source of Finance
2011/12
Source of Finance
2010/11
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Capital Financing Requirement
Movements in the Capital Financing Requirement for the year 2011/12 are shown in the table below:
2011/12 2010/11
£'000 £'000
Restated*
Opening Capital Financing Requirement 17,828 17,087
Capital Investment
Operational Assets 2,823 2,672
Non Operational Assets 528 668
Sources of Finance
Capital Receipts
Government Grant & Contributions (1,339) (917)
Minimum Revenue Provision (1,381) (1,384)
Revenue Contributions to Capital Outlay (148) (298)
18,311 17,828
Explanation of Movements in Year
Increase in the Underlying Need to Borrow
Supported by Government Financial Assistance 997 997
Unsupported by Government Financial Assistance (514) (256)
483 741
*Opening Capital Finance Requirement adjusted to include £1,836k of assets reclassified from operating to finance leases on transition to IFRS.
Disposal of Fixed Assets
During 2011/12 the Authority received capital receipts of £87,175 for the sale of obsolete vehicles. (£89,098 during 2010/11)
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11. FINANCE LEASES
The Authority has a number of vehicles that have been acquired under finance leases. The assets acquired under these leases are carried as Property, Plant and Equipment in the Balance Sheet at the Following net Amounts:
2011/12 2010/11
£'000 £'000
Vehicles 1,464 1,789
1,464 1,789 The Authority is committed to making minimum payments under these leases comprising settlement of the long-term liability for the interest in the property acquired by the Authority and finance costs that will be payable by the Authority in future years while the liability remains outstanding. The minimum lease payments are made up of the following amounts:
2011/12 2010/11
£'000 £'000
Finance lease liabilities 1,481 1,893
Finance Costs
Current 75 94
Non Current 131 209
1,687 2,196 The minimum lease payments will be payable over the following periods:
2011/12 2010/11 2011/12 2010/11
£'000 £'000 £'000 £'000
Not later than one year 441 455 365 430
Later than one year and not later
than five years 1,263 1,545 1,321 1,283
Later than five years 283 196 94 340
1,987 2,196 1,780 2,053
Minimum Lease Finance Lease
12. OPERATING LEASES
The Authority has not entered into any operating leases during 2011/12. 13. DEFERRED LIABILITIES
Deferred Liabilities consist of liabilities which by arrangement are payable beyond the next year at some point in the future or are paid off by an annual sum over a period of time. The Authority had no deferred liabilities at the 31 March 2012 (2010/11 was also nil)
14. COMMITMENTS UNDER CAPITAL CONTRACTS
Below is a table of outstanding commitments under capital contracts as at 31 March 2012. 2011/12 capital investment will take place during 2012/13.
2012 2011
£'000 £'000
Building Refurbishments 96 51
Fire Appliances under construction 337
.
433 51
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15. ANALYSIS OF PROPERTY, PLANT & EQUIPMENT
The table below analyses the major types of asset and the numbers held in each category:
No. Held
31.03.12
No. Held
31.03.11
Operational Land & Buildings
Brigade Headquarters 1 1
Fire Stations 30 30
Other Offices 2 2
Non Operational Land & Buildings
Fire Stations - -
Vehicles
Fire Appliances 65 62
Lorries/Vans 42 36
Cars/Light Vans 96 104
Community Fire Safety Trailer 1 1
Educational Fire Appliance 3 3
Mobile Chef Unit 1 1
Icar 1 1
New Dimensions Assets (from DCLG) 4 4
Category of Asset
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16. PROPERTY, PLANT & EQUIPMENT (OPERATIONAL)
£'000 £'000 £'000 £'000
Value as at 1 April 2011 49,875 6,976 2,761 59,612
During the Year
Transfers - 668 668
Revaluations 1,744 - - 1,744
Additions 1,275 1,014 411 2,700
Disposals - (171) - (171)
Impairments (242) - - (242)
52,652 8,487 3,172 64,311
Depreciation for the Year (1,185) (1,074) (731) (2,990)
Value as at 31 March 2012 51,467 7,413 2,441 61,321
Nature of asset holding
Acquired under Finance Lease 1,464 1,464
Owned 51,467 5,949 2,441 59,857
51,467 7,413 2,441 61,321
Total
Operational Assets
Other
Land &
Buildings
Vehicles Plant &
Equipment
2010/11 Comparatives
£'000 £'000 £'000 £'000
Value as at 1 April 2010 50,695 7,297 1,916 59,908
During the Year
Transfers - 383 383
Revaluations 1,572 - - 1,572
Additions 810 251 1,473 2,534
Disposals - (16) - (16)
Impairments (1,982) - - (1,982)
51,095 7,915 3,389 62,399
Depreciation for the Year (1,220) (939) (628) (2,787)
Value as at 31 March 2011 49,875 6,976 2,761 59,612
Nature of asset holding
Acquired under Finance Lease 1,789 1,789
Owned 49,875 5,187 2,761 57,823
49,875 6,976 2,761 59,612
Total
Operational Assets
Other
Land &
Buildings
Vehicles Plant &
Equipment
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17. PROPERTY, PLANT & EQUIPMENT (NON OPERATIONAL)
£'000 £'000 £'000
Value as at 1 April 2011 - 668 668
During the Year
Transfers (668) (668)
Revaluations -
Additions 528 528
Disposals - - -
Impairments - - -
- 528 528
Depreciation for the Year - -
Value as at 31 March 2012 - 528 528
Nature of asset holding
Owned - 528 528
Held for
Sale
Assets Under
Construction Total
Non Operational Assets
2010/11 Comparatives
£'000 £'000 £'000
Value as at 1 April 2010 87 384 471
During the Year
Transfers (384) (384)
Revaluations -
Additions 668 668
Disposals (87) - (87)
Impairments - - -
- 668 668
Depreciation for the Year - -
Value as at 31 March 2011 - 668 668
Nature of asset holding
Owned - 668 668
Held for
Sale
Assets Under
Construction Total
Non Operational Assets
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18. VALUATION OF PROPERTY CARRIED AT CURRENT VALUE
The following statement shows the progress of the Authority‟s rolling programme for the revaluation of non-current assets. The valuation of the building stock is carried out by the Property Services department of the East Riding of Yorkshire Council and has an effective date of 1
st April each year. The basis for valuation of the different
categories of asset is set out in note 1.10 of the Statement of Accounting Policies and note 18 of Notes to the Core Financial Statements below: 2011/12
Non Operational
Assets
£'000 £'000 £'000 £'000 £'000
Value as at Historical Cost 33,805 7,413 2,442 528 44,188
Value at Current Value in:
Current Year 17,662 17,662
Value as at 31 March 2012 51,467 7,413 2,442 528 61,850
Nature of asset holding
Leased 1,464 1,464
Owned 51,467 5,949 2,442 528 60,386
51,467 7,413 2,442 528 61,850
Assets Under
Construction Total
Operational Assets
Other Land
& Buildings Vehicles
Plant &
Equipment
Note: the above valuations as at 31 March 2012 are net of accumulated depreciation to that date. 2010/11
£'000 £'000 £'000 £'000 £'000
Value as at Historical Cost 23,124 6,976 2,761 668 33,529
Value at Current Value in:
Current Year 26,751 26,751
Value as at 31 March 2011 49,875 6,976 2,761 668 60,280
Nature of asset holding
Leased 1,789 1,789
Owned 49,875 5,187 2,761 668 58,491
49,875 6,976 2,761 668 60,280
Total
Non Operational
Assets
Assets Under
Construction
Other Land
& Buildings Vehicles
Plant &
Equipment
Operational Assets
88
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19. MOVEMENTS IN INTANGIBLE ASSETS DURING 2011/12
Software licences are shown as Intangible Assets. These licences cover a number of systems held by the Service and their costs are written down over the life of the system they form part of. Amortisation is allocated to the Fire Fighting and Operations and Community Fire Safety Service lines in the Comprehensive Income and Expenditure Statement on the same basis as other overheads (Please see accounting policy 1.11).
Movements in intangible assets during the year are detailed in the table below:
£'000 £'000
2011/12 2010/11
Value as at 1 April 376 358
During the Year
Revaluations - -
Additions 122 137
Disposals - -
Impairments - -
Value Before Depreciation 498 495
Amortisation for the Year (104) (119)
Value as at 31 March 394 376
Nature of Asset Holding
Owned 394 376
20. PROPERTY, PLANT AND EQUIPMENT VALUATION
The non current assets included in the balance sheet of the Authority have been valued on the following basis and under the arrangements described: -
Operations Land & Buildings, Non-Operational Land & Buildings
Operational Land and Building Valuation basis: Depreciated Replacement Cost Service Headquarters: Existing Use Value Non Operational Land and Building Valuation basis: Existing Use Value Date of valuation: Ongoing from 1 April 1998 Revaluation approach adopted: Five year rolling programme of revaluation of asset stock
Vehicles, Plant & Equipment
Valuation basis: Depreciated Historical Cost Date of Valuation: Initial entry on Balance Sheet in year of acquisition
Revaluation approach adopted: Individual asset values and life expectancy to be reviewed on an ongoing basis
Operational buildings, vehicles, plant and equipment are depreciated on a straight-line basis. Depreciation is not applied to non-operational buildings. Revaluation of land and buildings held by the Authority is carried out by the Authority's Property Consultant. This role is currently undertaken by the East Riding of Yorkshire Council. Valuations are carried out by RICS/ISVA qualified staff.
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21. IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
The Comprehensive Income and Expenditure Statement includes £242k (£1,398k for 2010/11) relating to reduction in value of land and buildings that cannot be offset against previous revaluation increases held in the Revaluation reserve.
22. ANALYSIS OF NET ASSETS EMPLOYED
Individual balances are analysed below
Property, Plant and Equipment
See notes 16 and 17. Inventories
The value of inventories held by the Authority may be analysed as shown: -
31 March 31 March
2012 2011
£'000 £'000
Brigade Headquarters Store 323 319
Fuel 40 43
Headquarters Canteen 1 1
Engineering Workshop - Hull 30 30
Engineering Workshop - Grimsby 13 13
Mobile Workshops 5 7
412 413 Debtors
Long Term Debtors There were no long term debtors at 31 March 2012.
Short Term Debtors Amounts falling due within one year may be analysed as follows: -
Restated
31 March 31 March
2012 2011
£'000 £'000
Central Government Bodies 3,671 824
Other Local Authorities 657 105
NHS Bodies - -
Public Corporations and Trading Funds 31 19
Bodies External to General Government 3,293 3,105
7,652 4,053 Creditors
Analysis of short term creditors is as follows: -
Restated
31 March 31 March
2012 2011
£'000 £'000
Central Government Bodies 1,191 1,134
Other Local Authorities 2,207 433
NHS Bodies 1 3
Public Corporations and Trading Funds 8 104
Bodies External to General Government 2,643 2,087
6,050 3,761
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23. LONG TERM BORROWING
The outstanding borrowings of the Authority at 31 March 2012 which were repayable within a period in excess of 12 months were as follows:
% £'000 £'000
Public Work Loans Board 2.36 300
Public Work Loans Board 2.87 700
Public Work Loans Board 3.70 1,000 1,000
Public Work Loans Board 3.75 1,000 1,000
Public Work Loans Board 3.84 1,000
Public Work Loans Board 3.88 1,000 1,000
Public Work Loans Board 4.40 428 428
Public Work Loans Board 4.45 634 634
Public Work Loans Board 4.48 1,200 1,200
Public Work Loans Board 4.50 118 118
Public Work Loans Board 4.52 500 500
Public Work Loans Board 4.55 4,400 4,400
Public Work Loans Board 4.625 827 827
Public Work Loans Board 4.75 1,232 1,232
Public Work Loans Board 4.80 612 612
Public Work Loans Board 4.90 1,404 1,404
Public Work Loans Board 5.00 917 917
Public Work Loans Board 5.15 200 200
Public Work Loans Board 5.25 925 925
Public Work Loans Board 5.30 600
Public Work Loans Board 5.50 217 217
Public Work Loans Board 5.875 400
18,614 17,614
31 March
2012
31 March
2011
Source of Loan
Interest
Rate
Payable
Loans analysed by maturity are as follows:
£'000 £'000
Maturing in 1-2 Years 925 1,000
Maturing in 2-5 Years 3,297 3,312
Maturing in 5-10 Years 4,322 3,406
Maturing in More Than 10 Years 10,070 9,896
18,614 17,614
31 March
2012
31 March
2011
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24. PENSIONS
Participation in Pension Schemes
As part of the terms and conditions of employment of its officers and other employees, the Authority offers retirement benefits. Although these will not actually be payable until employees retire, the Authority has a commitment to make the payments and these should be disclosed at the time that employees earn their future entitlement. The Authority participates in three pension schemes:
The Firefighters‟ Pension Scheme 1992 for uniformed staff and The Firefighters‟ Pension Scheme 2006, for uniformed staff, which incorporates the Firefighters‟ Compensation Scheme 2006. Both the Firefighters‟ Pension schemes are unfunded defined benefit schemes, which means they provide pensions and other retirement benefits for employees based upon final salaries, but own no assets. As a result, the annual cost of the benefits paid is met using employer‟s and employees‟ contributions with the balance of the payments being met by the Government through a Top-Up grant. The Local Government Pension Scheme for civilian employees, administered by the East Riding of Yorkshire Council, is a funded scheme which means that the Authority and employees pay contributions into a fund, calculated at a level estimated to balance pension liabilities with investment assets. The table below shows the key features of the two firefighter pension schemes and details of the Local Government Pension scheme.
Key Features 1992 Firefighters scheme
2006 Firefighters scheme
Local Government Pension scheme
Status Closed Open Open
Contribution Rate
employee
employer
ill Health
11%
21.3% 5.2%
8.5% 11% 3.2%
5.5% to 7.5%
20.7%
Benefits
maximum pension
minimum lump sum
2/3 final salary
½ final salary
4 x pension
Nil
Maximum pensionable service
30 years None None
Normal retirement age 55 years 60 years 65 years
Accrual rate 1/60th for 20 years
2/60th for 20 years
1/70th 1/60th
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Transactions Relating to Retirement Benefits
The costs of retirement benefits are recognised in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. The charge the Authority is required to make against the levies raised is based on the cash payable in the year, so the real cost of retirement benefits is reversed out of the revenue account after Net Operating Expenditure. The following transactions have been made in the Comprehensive Income and Expenditure Account during the year:
2011/12 2010/11 2011/12 2010/11 2011/12 2010/11
£'000 £'000 £'000 £'000 £'000 £'000
Net Cost of Service
Current Service Cost (8,290) (9,080) (1,080) (1,210) (897) (1,001)
Unfunded Benefits 7 7
Past Service Costs - 47,810 - 680 - 2,466
Net Operating Expenditure
Interest Cost (23,160) (24,490) (420) (360) (1,138) (1,280)
Expected Return on Assets in the Scheme 1,189 993
Amounts to be Met from Levies Raised
Movement on Pensions Reserve 26,839 (27,080) 1,790 1,594 - -
Employers' Contribution Payable to Scheme (839) 1,185
Retirement Benefits Payable to Pensioners (4,611) (12,840) 290 704
Pension Scheme
Firefighters' 2006 Local Government
Pension Scheme
Firefighters' 1992
Pension Scheme
In addition to the recognised gains and losses included in the Income and Expenditure Account (shown in the table above), actuarial gains and (losses) of (£10.950m). (Gains of £38.366m for 2010/11) were included in the Statement of Comprehensive Income and Expenditure. The Estimated contributions payable to the Authority‟s pension schemes for 2012/13 is £4,608,000. (£5,251,000 for 2011/12) Actuarial gains and losses comprise: a) Experience adjustments (the effects of differences between the previous actuarial assumptions and what has
actually occurred), and b) The effects of changes in actuarial assumptions. Actuarial gains and losses are recognised in the Comprehensive Income and Expenditure Statement.
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Assets and Liabilities in Relation to Retirement Benefits
Reconciliation of present value of the scheme liabilities:
2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
1 April (384,590) (429,370) (24,620) (30,370) (6,630) (5,950) (20,358) (24,740)
Current service cost (7,680) (8,370) (610) (710) (1,080) (1,210) (897) (1,001)
Interest cost (21,750) (22,870) (1,410) (1,620) (420) (360) (1,138) (1,280)
Contributions by scheme participants (1,980) (2,060) (290) (370) (300) (306)
Actuarial gains/(losses) (17,470) 21,260 (980) 4,250 (840) 580 (599) 4,081
Estimated unfunded benefits paid - - 7 7
Benefits paid 15,880 12,410 420 430 - - 522 415
Past service costs/(Gains) - 44,410 3,400 - 680 - 2,466
31 March (417,590) (384,590) (27,200) (24,620) (9,260) (6,630) (22,763) (20,358)
Pension Scheme
Unfunded Liabilities
Firefighters' 1992
Unfunded Liabilities
Firefighters' 2006
Pension Scheme
Unfunded Liabilities
Firefighters'
Injury Awards
Funded Liabilities
Local Government
Pension Scheme
Reconciliation of present value of scheme assets:
2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
1 April - - - - - - 16,616 13,192
Expected rate of return - - - - - - 1,189 993
Actuarial gains /(losses) 10,068 6,319 420 430 (660) (750) (889) 1,569
Employer contributions 3,832 4,031 - - 370 380 968 971
Contributions in respect of unfunded benefits - - - - - 7 7
Contributions by scheme participants 1,980 2,060 - - 290 370 300 306
Unfunded benefits paid - - - - - - (7) (7)
Benefits paid (15,880) (12,410) (420) (430) - - (522) (415)
31 March - - - - - - 17,662 16,616
Firefighters
Injury Awards
Unfunded Liabilities
Firefighters 1992
Pension Scheme
Unfunded Liabilities Funded Liabilities
Firefighters 2006 Local Government
Pension Scheme Pension Scheme
Unfunded Liabilities
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the Balance Sheet date. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets.
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Reconciliation of opening and closing surplus/(deficit):
2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
1 April (384,590) (429,370) (24,620) (30,370) (6,630) (5,950) (3,742) (11,548)
Current Service Cost (7,680) (8,370) (610) (710) (1,080) (1,210) (897) (1,001)
Contributions by Employer 3,832 12,410 - 430 370 - 968 971
Contributions by scheme participants - (2,060) - - - (370) -
Interest Cost (21,750) (22,870) (1,410) (1,620) (420) (360) (1,138) (1,280)
Expected return on assets - - - - - - 1,189 993
loss on curtailments - - - - - - 7 7
Past Service Cost - 44,410 - 3,400 - 680 - 2,466
Actuarial gains/losses (7,402) 21,260 (560) 4,250 (1,500) 580 (1,488) 5,650
31 March (417,590) (384,590) (27,200) (24,620) (9,260) (6,630) (5,101) (3,742)
Firefighters
Injury Awards
Unfunded Liabilities
Firefighters 1992
Pension Scheme
Unfunded Liabilities Funded Liabilities
Firefighters 2006 Local Government
Pension Scheme Pension Scheme
Unfunded Liabilities
Scheme History
2007/08 2008/09 2009/10 2010/11 2011/12
£'000 £'000 £'000 £'000 £'000
Present Value of Liabilities
Local Government Pension Scheme (13,351) (13,363) (24,740) (20,358) (22,763)
Firefighters' 1992 Pension Scheme (316,880) (297,770) (429,370) (384,590) (417,590)
Firefighters' Injury Awards (5,920) (19,540) (30,370) (24,620) (27,200)
Firefighters' 2006 Pension Scheme (760) (2,220) (5,950) (6,630) (9,260)
Fair Value of Assets
Local Government Pension Scheme 10,694 8,784 13,192 16,616 17,662
Firefighters' 1992 Pension Scheme - - - - -
Firefighters' Injury Awards - - - - -
Firefighters' 2006 Pension Scheme - - - - -
Surplus/(Deficit) in the Scheme
Local Government Pension Scheme (2,657) (4,579) (11,548) (3,742) (5,101)
Firefighters' 1992 Pension Scheme (316,880) (297,770) (429,370) (384,590) (417,590)
Firefighters' Injury Awards (5,920) (19,540) (30,370) (24,620) (27,200)
Firefighters' 2006 Pension Scheme (760) (2,220) (5,950) (6,630) (9,260)
(326,217) (324,109) (477,238) (419,582) (459,151)
The Fair value of assets in the above table have been restated as permitted by IAS 19.
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35
The liabilities show the underlying commitments that the Authority has in the long-run to pay retirement benefits. The total net liability of £459.151m (£419.572m in 2010/11) has a substantial impact on the net worth of the Authority as recorded in the Balance Sheet, resulting in a negative overall balance of £399.904m (£367.006m in 2010/11). However, there are statutory provisions (most recently, S13 of the Local Government act 2003) for funding any Local Authority deficit. In addition, the deficit on the local government scheme will be made good by increased contributions over the remaining working life of employees as assessed by the scheme actuary.
Finance is only required to be raised to cover firefighters‟ pensions when pensions are actually paid i.e. as they actually retire.
Basis for Estimating Assets and Liabilities
Liabilities have been assessed on an actuarial basis using the projected unit method (an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc) by Hymans Robertson, an independent firm of actuaries for the Local Government Pensions Scheme and by the Government Actuaries Department (GAD) in relation to the Firefighters‟ Pension Schemes. Estimates for the Local Government Pension Scheme administered by the East Riding of Yorkshire Council have been based on the latest full valuation of the scheme as at 31 March 2011.
The principal assumptions used by the actuaries have been:
2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11
Long-term expected rate of return on assets
in the scheme :
Equity Investments 6.3% 7.5% - - - - - -
Bonds 3.6% 4.9% - - - - - -
Property 4.4% 5.5% - - - - - -
Other 3.5% 4.6% - - - - - -
Longevity at 65 for current pensioners:
Men 22.9 22.9 24.3 23.4 24.3 23.4 24.3 23.4
Women 25.7 25.7 26.3 25.3 26.3 25.3 26.3 25.3
Longevity at 65 for future pensioners:
(45 for Firefighters Pension Scheme)
Men 24.9 24.9 26.5 26.3 26.5 26.3 26.5 26.3
Women 27.7 27.7 28.3 28.0 28.3 28.0 28.3 28.0
Rate of Inflation 2.5% 2.8% 2.6% 3.1% 2.6% 3.1% 2.6% 3.1%
Rate of increase in salaries 4.8% 5.1% 4.7% 5.3% 4.7% 5.3% 4.7% 5.3%
Rate of increase in pensions 2.5% 2.8% 2.6% 3.1% 2.6% 3.1% 2.6% 3.1%
Rate for discounting scheme liabilities 4.8% 5.5% 4.9% 5.7% 4.9% 5.7% 4.9% 5.7%
Take-up of option to convert annual pension
into retirement lump sum 30.0% 30.0% N/a N/a N/a N/a N/a
Local Government Firefighters' 1992
Pension Scheme Pension Schemes
Firefighters' 2006
Pension Schemes
Firefighters'
Injury Awards
Mortality rates are projected to 2008 using the standard '92-series' mortality improvements and rated down one year. Future mortality improvements from 2008 are in line with the 2008-based UK national population projections.
96
36
Firefighters‟ Pension Schemes have no assets to cover their liabilities. Assets in the Local Government Pension Scheme administered by the East Riding of Yorkshire Council are valued at bid value and consist of the following categories, of the total assets held by the Fund:
2011/12 2010/11
£'000 £'000
Equity Investments 13,952 12,960
Bonds 1,590 1,662
Property 1,060 831
Cash 1,060 1,163
17,662 16,616
31 March
The actuarial gains identified as movements on the Pensions Reserve in 2011/12 can be analysed into the following categories, measured as a percentage of assets or liabilities at the 31 March 2012:
2007/08 2008/09 2009/10 2010/11 2011/12
% % % % %
Local Government Pension Scheme
Difference between the expected and
actual return on assets (6.67) (26.54) 22.58 9.44 (5.03)
Experience gains and losses on liabilities (0.40) (6.32) 40.62 (20.05) (0.73)
Firefighters' Pension Scheme 1992
Experience gains and losses on liabilities (23.93) (14.11) 28.82 (22.80) 2.55
Firefighters' Injury Awards
Experience gains and losses on liabilities - (2.20) (3.40) 11.50 0.39
Firefighters' Pension Scheme 2006
Experience gains and losses on liabilities (32.27) 19.32 46.05 (8.70) (0.44) The Code of Practice on Local Authority Accounting in the United Kingdom 2000 requires the disclosure of the capital cost of any discretionary pensions payments agreed by the Authority in respect of the Local Government Pension Scheme. There were no such payments made during the financial year 2011/12. Discretionary payments were made to Fire staff by the former Humberside County Council before the 1 April 1996 and are recharged to the Authority by the East Riding of Yorkshire Council. The cost to the Authority of these payments in 2011/12 was £7,701 (£7,701 during 2010/11). The capital cost of these payments is estimated at £73,421. (£73,421 for 2010/11) No discretionary costs are funded by the pension scheme itself.
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37
25. NOTES RELATING TO THE CASH FLOW STATEMENT
Movements in Cash and Cash Equivalents
31 March 31 March Movement
2012 2011
£'000 £'000 £'000
Bank In Hand/(Overdrawn) 765 764 1
765 764 1
Movements in Other Current Assets
31 March 31 March Movement
2012 2011
£'000 £'000 £'000
Adjusted Debtors 7,629 3,997 (3,632)
Collection Fund Adjustment Account (126) (313) 187
Adjusted Creditors* (9,072) (3,236) 5,836
Inventories 412 413 (1)
(1,157) 861 2,390 Movement in Long Term Borrowing
31 March 31 March Movement
2012 2011
£'000 £'000 £'000
P.W.L.B. Loans (19,718) (18,713) 1,005
Finance Leases (1,846) (2,196) (350)
(21,564) (20,909) 655 Cash Flow Statement – Adjust net surplus or deficit on the provision of services for non cash movements
2011/12 2010/11
£'000 £'000
Depreciation/Amortisation & impairment 3,336 4,303
Increase/(decrease) in Interest Creditors 4 4
Increase/(decrease) in Adjusted Creditors 5,836 (25)
(Increase)/decrease in Interest Debtors 10 (31)
(Increase)/decrease in Adjusted Debtors (3,632) 76
(Increase)/decrease in Inventories 1 (54)
Movement in Pension Liability 28,629 (25,486)
Carrying amount of non-current assets and non current assets
held for sale, sold or de-recognised 171 66
Adjustment for New Dimension Assets (949)
Adjustment for Pension Fund Grant 6,196
Other non-cash items charged to the net surplus or deficit on
the provision of services (247) 11
34,108 (15,889)
98
38
Cash Flow Statement – Adjust for items included in the net surplus or deficit on the provision of services that are investing and finance activities
2011/12 2010/11
£'000 £'000
Proceeds from short-term and long term investments
Proceeds from the sale of Property,Plant and Equipment
and intangible Assets (88) (88)
Any other items for which the cash effects are investing or
financing cash flows (1,340) (917)
(1,428) (1,005) Cash Flow Statement – Operating activities within the cash flow statement include the following cash flows relating to interest
2011/12 2010/11
£'000 £'000
Interest Received 91 50
Interest Paid (992) (992)
(901) (942) Cash Flow Statement – Cash Flows from Investing Activities
2011/12 2010/11
£'000 £'000
Purchase of property, plant and equipment, investment
property and intangible assets (3,241) (3,231)
Opening Capital Creditors (75) (75)
Closing Capital Creditors 109 75
Purchase of short-term and long-term investments (8,000) (3,000)
Proceeds from the sale of property, plant and
equipment, investment property and intangible assets 88 88
Proceeds from short-term and long-term investments
Other receipts from investing activities 1,340 917
Net cash flows from investing activities (9,779) (5,226)
Cash Flow Statement – Financing Activities
2011/12 2010/11
£'000 £'000
Cash receipts of short and long-term borrowing 2,000 3,000
Other receipts from financing activities
Appropriation to/from Collection Fund Adjustment
Account 126 47
Repayments of short and long-term borrowing (995) (1,202)
Repayments relating to Finance Leases (350) (422)
Other payments relating to financing activities
Other receipts from investing activities
Net cash flows from financing activities 781 1,423
Government Grants
An analysis of Other Government Grants received during 2011/12 is given in note 5 of the notes to the Core Financial Statements.
99
39
26. USEABLE RESERVES
The Authority retains a number of Reserves which are available to fund Expenditure. General Fund Balance - This is retained to fund unforeseen expenditure pressures.
Earmarked Reserves - These reserves are retained to fund particular items of expenditure and are reviewed each year, currently the Earmarked Reserves balance is £8,849k (£4,470k at the end of 2010/11). Capital Receipts reserve - This can be used to fund items of Capital Expenditure.
27. UNUSEABLE RESERVES
The Authority now retains four unuseable reserves:-
Capital Adjustment Account – This Reserve is required by the 2009 Statement of Recommended Practice and is used to allow the Authority to nullify the effect of non current asset expenses on the Accounts.
Revaluation Reserve – This Reserve is required by the 2009 Statement of Recommended Practice and reflects the amount to which the value of the property owned by the Authority has increased. A transfer can be made from the Revaluation Reserve to the Capital Adjustment Account to reflect the amount of additional depreciation that has been charged due to the increase in value of the property, should the value of a previously revalued property fall some or all of the loss can be offset against the amount remaining in the Revaluation Reserve.
Pensions Reserve – Please see Note 24 Pensions.
Collection Fund – This Reserve is required by the 2009 Statement of Recommended Practice for Adjustment Account billing and precepting Authorities regarding the collection and distribution of council tax receipts.
100
40
28.
MO
VE
ME
NT
ON
EA
RM
AR
KE
D R
EV
EN
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RE
SE
RV
ES
Mo
vem
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ts i
n E
arm
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Reserv
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BA
Repla
ce-
ment
Rese
rve
WA
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Contr
ol
Rese
rve
Clo
ugh R
oad
Rebuild
Rese
rve
Insu
rance
Rese
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Wate
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esc
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Equip
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RD
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qual
Pay
Rese
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Lane
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Change
Managem
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Rese
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£'0
00
£'0
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£'0
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£'0
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£'0
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Bala
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300
500
400
200
350
100
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70
Surp
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Exp
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-
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Adju
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betw
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ccountin
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Fundin
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Net
Incre
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Decre
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re T
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-
-
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Tra
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to /
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m E
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700
1,7
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(1
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1,7
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8,8
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101
41
2010
/11
M
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ts in
Earm
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Reserv
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Co
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Re
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Pro
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Re
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&
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Ba
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eg
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Ne
t In
cre
as
e /
De
cre
as
e b
efo
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ran
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rs t
o
Ea
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-
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Tra
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o /
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m E
arm
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Re
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s(7
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)
3
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se
in
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102
42
29. MOVEMENT ON CAPITAL RESERVES Movement on Capital Reserves
Revaluation Reserve
2012 2011
£'000 £'000
Acquisitions and enhancements - -
Gains/Losses on Revaluation of Non Current Assets Assets - Gains (2,042) (1,573)
Gains/Losses on Revaluation of Non Current Assets - Losses 298 584
Disposal of Assets with Revaluation Reserve Balances - 38
Depreciation and Impairments 312 26
Total Movement on Reserve (1,432) (925)
Balance Brought Forward 1 April (10,823) (9,898)
Balance Carried Forward at 31 March (12,255) (10,823) Capital Adjustment Account
2012 2011
£'000 £'000
Disposal of Assets 171 66
Depreciation 3,094 2,905
Impairments 242 1,398
Compensatory adjustment from the Revaluation Reserve to convert
current value depreciation debits to historical cost. (311) (30)
Deferred Grants and Contributions applied (1,488) (1,215)
Provision for Repayments of External Loans (MRP) (1,381) (1,384)
Total Movement on Reserve 327 1,740
Balance Brought Forward 1 April (30,823) (32,563)
Balance Carried Forward at 31 March (30,496) (30,823)
103
43
Useable Capital Receipts Reserve
2,012 2011
£'000 £'000
Amounts Receivable (87) (88)
Amounts Applied in Year - -
Total Increase/(Decrease) in Realisable Capital resources (87) (88)
Balance Brought Forward 1 April (418) (330)
Balance Carried Forward at 31 March (505) (418)
30. CAPITAL FROM REVENUE RESERVES The Local Government and Housing Act 1989 allows an Authority to finance an unlimited amount of capital expenditure through its revenue Accounts. Any capital expenditure incurred which is not financed by way of borrowing, capital receipts or capital grant must be charged to the revenue account and the financing shown as a contribution from reserves. Expenditure financed in this way by the Authority during 2011/12 was nil (2010/11 was also nil). 31. PROVISION FOR THE REPAYMENT OF EXTERNAL LOANS The Authority is required by statute to set aside a Minimum Revenue Provision (MRP) for the redemption of external debt. The method of calculating the provision is defined by statute. The minimum revenue provision for 2011/12 is as follows:
2011/12 2010/11
£'000 £'000
MRP based on Option 1 -
4% of CFR/Supported Borrowing 540 521
MRP based on Option 3(a) -
Equal Instalments of Self Financed Borrowing 481 441
MRP for Assets acquired under Finance Leases 360 422
Matched to the Principal repaid
1,381 1,384
104
44
32. CONTINGENT LIABILITIES
Pension Entitlements for part time workers
In January 2008 an Employment Tribunal issued a unanimous judgment to the effect that part time workers, including retained duty firefighters, were engaged in broadly similar work to their comparators and that they were treated less favourably than their named comparators in respect of access to pension rights and payment for sickness absence. As at the time of writing a data collection exercise has been completed and the Authority is waiting for confirmation that payments can be made. The potential liability faced by the Authority cannot be reliably measured at this time. In addition to the settlement of the legal case there may be additional payments to existing employees due to amendments to working conditions, at this time the additional costs cannot be quantified. Fire Fighters‟ Pension – Age Discrimination
Communities & Local Government (CLG) have determined that there has been age discrimination against members of the Firefighters‟ Pension Scheme 1992 who joined the scheme before the age of 20 in that these members would contribute to the scheme for a period in excess of 30 years but only accrue the same pension rights as members who contribute to the scheme for a period no greater than 30 years. There is a potential liability to the Authority but it is not quantifiable at this moment in time. Municipal Mutual Insurance (MMI) The former Authorities within the Humberside area (including Humberside Fire Authority) were required to enter into an agreement with Municipal Mutual Insurance (MMI) whereby the Authorities may be obligated to reimburse a proportion of claims paid by MMI since 1 October 1993 in respect of the risk for the former Humberside County Council. The value of claims paid by MMI up to 31 March 2012 and for which this Authority may be required to meet a proportion, is £11.2 million. It is likely that there may not be a solvent run off of the company‟s business with full payment of claims. The value of the clawback for claims already settled (to allow payment of outstanding claims) cannot be quantified at this time. Efficiencies Programme and Support Services Review In light of the financial challenges the Authority is likely to face from 2013/14 onwards the Fire Authority is currently developing an Operational Efficiency Programme and a review of Support Services. This was communicated to staff on 14
th June 2012. Proposals are still in development and more information
will be provided in due course. An earmarked change management reserve of £2.5m has been created to facilitate this process if required.
33. EVENTS AFTER THE BALANCE SHEET DATE HFR Solutions (Community Interest Company) commended trading on 1
st April 2012 (further details are
provided in note 8 Related Party Transactions and note 35 Financial Instruments. A review of Operational and Support services was communicated to staff on 14
th June 2012. (see note
32).
105
45
34. FINANCIAL INSTRUMENTS This Financial Instruments held by the Authority are included below and the Authority fully complies with the CIPFA Code of Practice on Local Authority Accounting. Amortised Cost
Financial instruments (whether borrowing or investment) are valued on an amortised costs basis using the effective interest rate (EIR) method. Fair Value
In these disclosure notes, financial instruments are also required to be shown at fair value. Fair value is defined as the amount for which an asset could be exchanged or a liability settled, assuming that the transaction was negotiated between parties knowledgeable about the market in which they are dealing and willing to buy/sell at an appropriate price, with no other motive in their negotiations other than to secure a fair price.
Compliance
This Authority has complied with the following: -
It has adopted the CIPFA Treasury Management in the Public Services: Code of Practice.
Set treasury management indicators to control key financial instrument risks in accordance with CIPFA‟s Prudential Code. Accounting regulations require the financial instruments (investment, lending and borrowing of the Authority) shown on the balance sheet to be further analysed into various defined categories. The investments, lending & borrowing disclosed in the balance sheet are made up of the following categories of “financial instruments”.
Restated
2012 2011 2012 2011
£'000 £'000 £'000 £'000
Financial liabilities at amortised cost (23,695) (19,459) (4,001) (4,861)
Financial liabilities at fair value through
profit and loss - - - -
Total borrowings (23,695) (19,459) (4,001) (4,861)
Loans and receivables - - 23,130 15,053
Available for sale financial assets - - - -
Unquoted equity investment at cost - - - -
Total investments - - 23,130 15,053
Long Term Current
31 March 31 March
106
46
Analysis of the Financial Liabilities and Loans and Receivables is shown in the table below:
2012 2011
Restated
£'000 £'000
Financial Liabilities
Current
Creditors** (3,153) (3,761)
Bank overdrawn - -
PWLB Loans (1,104) (1,100)
(4,257) (4,861)
Long Term
PWLB Loans (18,614) (17,613)
Creditors** (3,600)
Finance Leases (1,481) (1,846)
(23,695) (19,459)
(24,352) (24,320)
Financial Assets
Current
Debtors 4,107 4,053
Investments* 19,023 11,000
23,130 15,053
31 March
*The balance on investments includes £7.200m that was received on 16
th March 2012 from DCLG for
the East Coast and Hertfordshire Control Room project. The £7.200m is made up of £1.800m awarded to each of the four services (Humberside, Lincolnshire, Norfolk and Hertfordshire) and is held on behalf of the consortium by Humberside Fire Authority. **Included in current creditors above is £1.8m of the funding received as part of the Fire Control grant and this funding is held on behalf of the other services involved in the East Coast and Hertfordshire Control Room project. £3.6m of the grant is held in long term creditors above and the remaining £1.8m has been recognised in the Comprehensive Income and Expenditure Statement and is now held in the Control Reserve.
107
47
Gains and losses recognised in the Comprehensive Income and Expenditure Account for 2011/12 in relation to financial instruments are made up as follows:
Financial Total
Liabilities
Measured Loans and Available
at amortised Receivables for sale
cost Assets
£'000 £'000 £'000 £'000
Interest Expense (996) - - (996)
Loss on derecognition - - - -
Impairment losses - - - -
Interest payable and similar charges (996) - - (996)
Interest income - 101 - 101
-
Losses on revaluation - - -
-
Amounts recycled to the Income and
Expenditure Account after impairment - - - -
Interest and investment income - 101 - 101
Gains on revaluation - -
Losses on revaluation - -
Amounts recycled to the Income and
Expenditure Account after impairment - -
Surplus arising on revaluation of financial assets - -
Net gain/(loss) for the year (996) 101 - (895)
test
Financial Assets
2011/12
See also notes 1.21 and 1.22 of the Statement of Accounting Policies
108
48
Comparable figures for 2010/11 are shown in the table below:
Financial Total
Liabilities
Measured Loans and Available
at amortised Receivables for sale
cost Assets
£'000 £'000 £'000 £'000
Interest Expense (983) - - (983)
Loss on derecognition - - - -
Impairment losses - - - -
Interest payable and similar charges (983) - - (983)
Interest income - 81 - 81
-
Losses on revaluation - - -
-
Amounts recycled to the Income and
Expenditure Account after impairment - - - -
Interest and investment income - 81 - 81
Gains on revaluation - -
Losses on revaluation - -
Amounts recycled to the Income and
Expenditure Account after impairment - -
Surplus arising on revaluation of financial assets - -
Net gain/(loss) for the year (983) 81 - (902)
2010/11
Financial Assets
The fair value of each class of financial assets and liabilities which are carried in the balance sheet at amortised cost is disclosed below. The Fire Authority engaged Sector, a firm of financial consultants specialising in treasury management and capital finance in the U.K. Public Sector, who have calculated the Fair Value of the financial instruments stated above. Sector‟s methodology and assumptions have been adopted and are stated below. Methods and Assumptions in valuation technique The fair value of an instrument is determined by calculating the Net Present Value (NPV) of future cash flows, which provides an estimate of the value of payments in the future in today's terms. The discount rate used in the NPV calculation is the rate applicable in the market on the date of valuation for an instrument with the same structure, terms and remaining duration. For debt, this will be the new borrowing rate since premature repayment rates include a margin which represents the lender's profit as a result of rescheduling the loan; this is not included in the fair value calculation since any motivation other than securing a fair price should be ignored. The rates quoted in this valuation were obtained by our treasury management consultants from the market on 31 March 2012, using bid prices where applicable.
109
49
The calculations are made with the following assumptions: For PWLB debt, the discount rate used is the rate for new borrowing as per rate sheet number 128/12. For other market debt and investments the discount rate used is the rate available for an instrument with the same terms from a comparable lender. Interpolation techniques have been used between available rates where the exact maturity period was not available. No early repayment or impairment is recognised. Fair values have been calculated for all instruments in the portfolio, but only those which are materially different from the carrying value have been disclosed. The fair value of trade and other receivables is taken to be the invoiced or billed amount.
The fair values are calculated as follows:
Carrying Fair Carrying Fair
Amount Value Amount Value
£'000 £'000 £'000 £'000
Financial Liabilities (24,096) (25,505) (20,960) (20,575)
Loans and Receivables 19,023 18,994 15,612 15,636
31 March 2012 31 March 2011
The increase in the fair value of Financial Liabilities over the carrying amount is because the interest rate payable on the Authority‟s portfolio of fixed rate loans is higher than the rates for similar loans as at the Balance Sheet date. The decrease in the fair value of the Loans and Receivables over the carrying amount is due to the interest rate receivable on the Authority‟s portfolio of fixed rate investments is lower than the rates for similar loans as at the Balance Sheet date. The Authority‟s management of treasury risks actively works to minimise the exposure to the unpredictability of financial markets and to protect the financial resources available to fund services. The Authority has fully adopted CIPFA‟s Code of Treasury Management Practices and has written principles for overall risk management as well as written polices and procedures covering specific areas such as credit risk, liquidity risk and market risk. Credit risk
Credit risk arises from the short-term lending of surplus funds to banks, building societies and other local authorities as well as credit exposures to the Authority‟s customers. It is the policy of the Authority to place deposits only with a limited number of high quality banks and building societies whose credit rating is independently assessed as sufficiently secure by the Authority‟s treasury advisers and to restrict lending to a prudent maximum amount for each institution. In order to mitigate against risk and in the light of market conditions, the Director of Finance and Assets/Section 151 Officer considered that the most prudent approach was to restrict investments to UK based, and other „AAA‟ rated European institutions with a maximum limit of £2m.
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The following analysis summarises the Authority‟s potential maximum exposure to credit risk, based on past experience and current market conditions. No credit limits were exceeded during the financial year and the Authority expects full repayment on the due date of deposits placed with its counterparties.
31 March Historical Historical Estimated
2012 experience experience maximum
of default adjusted for exposure to
market default and
conditions at uncollectability
31 March
2012
£'000 % % £'000
Deposits with banks
and financial institutions 19,023 0.00 0.00 -
Bonds - 0.00 0.00 -
Customers 4,107 0.43 0.43 18
23,130 18
No credit limits were exceeded during the reporting period and the Authority does not expect any losses from non-performance by any of its counterparties in relation to deposits and bonds. Debtors The Authority does not generally allow credit for customers, such that only £39k of the £7,654k balance is past its due date for payment. The past due amount can be analysed by age as follows:
31 March 31 March
2012 2011
£'000 £'000
Less than three months 31 1
Three to six months 8 19
Six months to one year - -
More than one year - -
39 20 Liquidity Risk The Authority has access to a facility to borrow from the Public Works Loans Board. As a result there is no significant risk that the Authority will be unable to raise finance to meet its commitments under financial instruments. The Authority has safeguards in place to ensure that a significant proportion of its borrowing does not mature for repayment at any one time in the future to reduce the financial impact of re-borrowing at a time of unfavourable interest rates. The Authority‟s policy is to ensure that not more than 10% of loans are due to mature within any financial year and 25% within any rolling five-year period through a combination of prudent planning of new loans taken out and, where it is economic to do so, making early repayments. See note 23 of the notes to the accounts for an analysis of the maturity of long term loans with the Public Work Loans Board. All trade and other payables are due to be paid in less than one year.
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Market Risk Interest Rate Risk The Authority is exposed to interest rate risk in two different ways; the first being the uncertainty of interest paid/received on variable rate instruments, and the second being the effect of fluctuations in interest rates on the fair value of an instrument. The current interest rate risk for the Authority is summarised below: The fair value of fixed rate financial assets will fall if interest rates rise. This will not impact on the Balance Sheet for the majority of assets held at amortised cost, but will impact on the disclosure note for fair value. It would have a negative effect on the Balance Sheet for those assets held at fair value in the Balance Sheet, which would also be reflected in the Comprehensive Income and Expenditure Statement. The fair value of fixed rate financial liabilities will rise if interest rates fall. This will not impact on the Balance Sheet for the majority of liabilities held at amortised cost, but will impact on the disclosure note for fair value. The Authority has a number of strategies for managing interest rate risk. Policy is to aim to keep a maximum of 25% of its borrowings in variable rate loans. During periods of falling interest rates, and where economic circumstances make it favourable, fixed rate loans will be repaid early to limit exposure to losses. The risk of loss is ameliorated by the fact that a proportion of government grant payable on financing costs will normally move with prevailing interest rates or the Authority‟s cost of borrowing and provide compensation for a proportion of any higher costs. The treasury management team has an active strategy for assessing interest rate exposure that feeds into the setting of the annual budget and which is used to update the budget quarterly during the year. This allows any adverse changes to be accommodated. The analysis will also advise whether new borrowing taken out is fixed or variable. According to this investment strategy, at 31 March 2012, if interest rates had been 1% higher with all other variables held constant, the financial effect would be:
2012 2011
£'000 £'000
Decrease in fair value of fixed rate investment assets 57 15
Decrease in fair value of fixed rate borrowing liabilities 1,542 188
Price Risk The Authority does not invest in equity shares and does not have shareholdings in any joint ventures and therefore is not at significant risk to price movements. Foreign Exchange Risk The Authority has no financial assets or liabilities denominated in foreign currencies and thus has no exposure to loss arising from movements in exchange rates. Financial Guarantees On 12
th January 2012 Humberside Fire Authority incorporated HFR Solutions as a Community Interest
Company (CIC). The company has three Directors (who are all officers of Humberside Fire Authority). The Authority provides a financial guarantee (in the form of a parent company guarantee) to HFR
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Solutions. During 2011/12 HFR Solutions did not trade or enter into any transactions. HFR Solutions commenced trading on 1
st April 2012.
35. PRIOR PERIOD ADJUSTMENT
Two prior period adjustments have been made during 2011/12. Both of these adjustments are disclosed as part of the Comprehensive Income and Expenditure Statement on page 3. There were no adjustments required to balances disclosed on the Balance Sheet.
36. MATERIAL ITEMS OF INCOME AND EXPENDITURE There were no material items of income and expenditure during 2011/12 that are not disclosed elsewhere within the Statement of Accounts.. 37. HERITAGE ASSETS The Authority does not have any Heritage assets; a collection of fire memorabilia is held by the Fire Authority but has little financial value.
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FIRE FIGHTERS’ PENSION FUND ACCOUNT The following table analyses movements on the Fund for the year 2011/12:
2010/11 2011/12
£'000s £'000s
Contributions receivable:
(4,372) Employers contributions receivable (4,202)
(74) Other (255)
(2,354) Firefighters' contributions (2,265)
(6,800) (6,722)
(83) Transfers in from other authorities -
Benefits payable:
10,516 Pensions 11,111
1,892 Commutations & lump sum retirement benefits 4,687
12,408 15,798
Payments to and on account leavers
- transfers out to other authorities 89
5,525 Net amount payable for the year 9,165
(5,525) Top-up grant receivable to the firefighters pension fund (9,165)
- Fund Account balance -
Net Assets Statement
2010/11 2011/12
Current Assets
654 DCLG grant debtor 3,497
937 Pensions Paid in Advance 1,005
Current Liabilities
(1,591) Humberside Fire Authority (4,502)
- -
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NOTES TO THE FIREFIGHTERS’ PENSION FUND The funding arrangements for the Firefighters‟ Pension Scheme changed on 1 April 2006. The fund was established under the Firefighters‟ Pension Scheme (Amendment) (England) Order 2006. The fund is administered by Humberside Fire Authority. The fund is managed by the Director of Finance and Assets/s.151 Officer. The benefits payable from the fund are pensions, lump sum commutation payments and ill health pensions. Injury awards are payable from authorities general fund accounts. The Pension Fund is an unfunded scheme, consequently:
The fund has no investment assets
Benefits payable are funded by contributions from employers and employees;and
Any difference between benefits payable and contributions receivable is met by top-up grant from the Department of Communities and Local Government (DCLG)
The pension fund is statutorily prevented from including interest on cashflows and administration expenses in the pension fund. These expenses are accounted for in the Fire Authority‟s General fund account. Employees and employers contribution levels are based on percentages of pensionable pay set nationally by the DCLG and are subject to triennial revaluation by the Governments Actuary‟s Department. The employers contribution rates are determined nationally by the Government Actuary‟s Department and are currently 21.3% for the 1992 scheme and 11.0% for the 2006 scheme. The membership for the pensions fund is as follows;
Category of Member 31/3/2012 1992 FPS
31/3/2012 2006 NFPS
31/3/2011 1992 FPS
31/3/2011 2006 NFPS
Contributors 531 290 565 276
Deferred Pensioners 41 49 39 43
Pensioners 833 2 820 0
STATEMENT OF ACCOUNTING POLICIES The Accounting policies adopted for the pension fund follow those set out in the Authority‟s Statement of Accounting Policies (Note 1). Transfer values are an exception to this policy and are on a cash basis. The following items are estimated and are material to the Pension Fund account:
Estimation of top-up grant receivable The Pension Fund account does not take account of the obligations to pay pensions and benefits that fall due after the end of the financial year. These are reflected in the Authority‟s accounts in accordance with IAS 19 – Employee Benefits (Please see note 24 in the main financial statements).
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GLOSSARY OF TERMS
Accounting Period The period of time covered by the accounts, normally a period of twelve months commencing on 1 April. The end of the accounting period is the balance sheet date.
Accruals Sums included in the final accounts to recognise revenue and capital income and expenditure earned or incurred in the financial year, but for which actual payment had not been received or made as at 31 March.
Actuarial Gains and Losses For a defined benefit pension scheme, the changes in actuarial surpluses or deficits that arise because : events have not coincided with the actuarial assumptions made for the last valuation (experience gains and losses) or the actuarial assumptions have changed.
Agency Arrangements An arrangement between two organisations where one will act as an agent, collecting money on behalf of the other party, to whom the money is then paid over. An example of this is Council tax collections, where the four local authorities collect money from tax payers on behalf of the Fire Authority and then pay it over.
Asset An item having value to the Authority in monetary terms. Assets are categorised as either current or non-current: A current asset will be consumed or cease to have material value within the next financial year (e.g. cash and inventories); A non-current asset provides benefits to the Authority and to the services it provides for a period of more than one year and may be tangible e.g. a fire station or intangible, e.g. computer software licences.
Audit of Accounts An independent examination of the Authority‟s financial affairs.
Balance Sheet A statement of the recorded assets, liabilities and other balances at the end of the accounting period.
Budget The forecast of net revenue and capital expenditure over the accounting period.
Capital Expenditure Expenditure on the acquisition of a non-current asset, which will be used in providing services beyond the current accounting period or expenditure that adds to, and not merely maintains, the value of an existing non-current asset.
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Capital Financing Funds used to pay for capital expenditure. There are various methods of financing capital expenditure including borrowing, leasing, direct revenue financing, usable capital receipts, capital grants, revenue reserves and earmarked reserves.
Capital Programme The capital schemes the Authority intends to carry out over a specified period of time.
Capital Receipts The proceeds from the disposal of land or other non-current assets. Capital receipts can be used to finance new capital expenditure, but they cannot be used to finance revenue expenditure.
Cash Equivalents Short-term, highly liquid investments readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Component A part of an asset requiring separating from the total (host) asset into an asset in its own right as it has a cost that is significant in relation to the total cost of the asset. If the components also have a significantly different depreciable life from the host then it is depreciated separately.
Comprehensive Income and Expenditure Statement
Shows the accounting economic cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement.
Consistency The concept that the accounting treatment of like items, within an accounting period and from one period to the next, are the same.
Contingent Asset A possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Authority.
Contingent Liability A contingent liability is either: a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Authority, or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.
Corporate and Democratic Core The corporate and democratic core comprises all activities that fire authorities engage in specifically because they are comprised of members elected to
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local authorities. The cost of these activities are thus over and above those which would be incurred by a series of independent, single purpose, nominated bodies managing the same services. There is therefore no logical basis for apportioning costs to services.
Creditor Amount owed by the Authority for works done, goods received or services rendered within the accounting period, but for which payment has not been made by the end of that accounting period.
Current Service Cost (Pensions) The increase in the present value of a defined
benefit pension scheme‟s liabilities, expected to arise from employee service in the current period.
Debtor Amount owed to the Authority for work done, goods received or services rendered within the accounting period, but for which payment has not been received by the end of that accounting period.
Defined Benefit Pension Scheme
Pension schemes in which the benefits received by the participants are independent of the contributions paid and are not directly related to any investments of the scheme.
Depreciation The measure of the cost of the wearing out, consumption or other reduction in the useful economic life of the Authority‟s non-current assets during the accounting period, whether from use, the passage of time, or obsolescence through technological or other changes.
Effective Interest Rate This is the rate of interest necessary to discount the estimated stream of principal and interest cash flows through the expected life of a financial instrument to equal the amount after initial recognition.
Events after the Reporting Period Events after the reporting period are those events , favourable or unfavourable, that occur between the balance sheet date and the date when the Statement of Accounts is authorised for issue.
Exceptional Items Material items which derive from events or transactions that fall within the ordinary activities of the Authority and which need to be disclosed separately by virtue of their size or incidence to give fair presentation of the accounts.
Existing Use Value (EUV) The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm‟s-length transaction, after proper marketing wherein the parties had each knowledgeably, prudently and without compulsion, assuming that the buyer is granted vacant possession of all parts of the property required by the business and disregarding potential alternative uses and any other characteristics of the property that would cause the market value to differ from that needed to replace the remaining service
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potential at least cost. Under IFRS this is the same as Fair Value.
Expected Return on Pension Assets For a funded defined benefit scheme, this is the average rate of return including both income and changes in fair value but net of scheme expenses, which is expected over the remaining life of the related obligation on the actual assets held by the scheme.
Fair Value The amount of which an asset could be exchanged, or liability settled, between knowledgeable, willing parties in an arm‟s-length transaction. Under IFRS there is no consistent definition of Fair Value; different definitions apply in different circumstances.
Financial Instrument Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another. The term covers both financial assets and financial liabilities, from straightforward trade receivables (invoices owing) and trade payables (invoices owed) to complex derivatives and embedded derivatives.
Finance Lease A lease that transfers substantially all the risks and rewards of ownership of an asset to the lessee (even though title to the property may not be transferred). The asset is recorded on the Balance Sheet of the lessee.
Going Concern The concept that the Statement of Accounts are prepared on the assumption that the Authority will continue in operational existence for the foreseeable future.
Government Grants Grants made by the Government towards either revenue or capital expenditure in return for past or future compliance with certain stipulations relating to the activities of the Authority. Grants may be specific to a particular scheme or may support the revenue or capital spend (respectively) of the Authority in general.
Held for Sale Property, plant and equipment assets held by the Authority pending sale. Assets must meet strict criteria before been classified as Held for Sale.
Heritage Assets An asset with historic, artistic, scientific, technological, geophysical, or environmental qualities that is held and maintained principally for its contribution to knowledge and culture and this purpose is central to the objectives of the entity holding it.
Impairment A reduction in the value of a non-current asset to below its carrying value on the Balance Sheet. Impairment is caused by a consumption of economic benefit such as obsolescence or physical damage of an asset.
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Income Amounts that the Authority receives or expects to receive from any source, including fees, charges, sales and grants.
Intangible Assets An intangible (non-physical) item may be defines as an identifiable non-monetary asset when it is probable that the expected future economic benefits attributable to the asset will flow to the entity, and its cost can be measured reliably. An asset meets the identification criterion when it:
(a) Is separable, i.e. capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, asset or liability; or
(b) Arises from contractual or other legal rights , regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
Interest Cost (Pensions) For a defined benefit scheme, the expected increase during the period in the present value of the scheme liabilities because the benefits are one period closer to settlement.
Inventories Items of raw materials and stores an authority has procured and holds in expectation of future use. Examples are consumable stores, raw materials and products and services in intermediate stages of completion (work in progress).
Investments A sum invested on a long-term or continuing basis to support the activities of an organisation, or where the disposal of the investment is restricted in some way. Monies invested which do not meet these criteria are classified as current assets.
Liability A liability is where the Authority owes payment to an individual or another organisation, arising from past events.
A current liability is an amount which will or could become payable in the next accounting period, e.g. creditors or cash overdrawn.
A deferred liability is an amount which by arrangement is payable beyond the next year at some point in the future or to be paid off by an annual sum over a period of time.
Long-term Contract A contract entered into for the design, manufacture
or construction of a single substantial asset or the provision of a service (or a combination of assets or services which together constitute a single project), where the time taken to substantially complete the contract is such that the contract activity falls into more than one accounting period.
Materiality The concept that the Statement of Accounts should include all amounts which, if omitted, or misstated, could be expected to lead to a distortion of the
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financial statements and ultimately mislead a user of the accounts.
Minimum Revenue Provision (MRP) The minimum amount, which must be charged to the revenue account each year in order to provide for the repayment of loans and other amounts borrowed by the Authority.
Net Book Value (NBV) The amount at which non-current assets are included in the Balance Sheet, i.e. Their historical costs or current value, less the cumulative amounts provided for depreciation and impairment.
Net Current Replacement Cost The estimated cost of replacing or recreating a particular asset in its existing condition and in its existing use, i.e. the cost of its direct replacement.
Net Debt The Authority‟s borrowings less cash, cash equivalents and short term investments.
Net Realisable Value
The open market value of an asset less the expenses to be incurred in realising the asset.
Non-current Assets Property, Plant and Equipment held or occupied, used or consumed by the Authority in pursuit of its strategic objectives in the direct delivery of those services for which it has either a statutory or discretionary responsibility.
Non Distributed Costs (NDC) These are the overheads for which no user now benefits and as such are not apportioned to services.
National Non Domestic Rates (NNDR) The Non-domestic rate is a levy on businesses, based on a national rate in the pound set by the Government and multiplied by the assessed rateable value of the premises they occupy. It is collected by Local Authority‟s on behalf of Central Government and is then redistributed back to the Fire Authority.
Operating Lease A Lease other than a finance lease. The risks and rewards of ownership of a non-current asset that is leased remain with the lessor and on the lessor‟s Balance Sheet. The lessee accounts for the rental payments as revenue income and expenditure.
Past Service Cost (Pensions) For a defined benefit pension scheme, the increase
in the present value of the scheme liabilities related to the employee service in prior periods arising in the current period as a result of the introduction of, or improvement to, retirement benefits.
Pension Scheme Liabilities The liabilities of a defined benefit scheme for
outgoings due after the valuation date. Scheme liabilities measured using the projected unit method reflect the benefits that the employer is committed to provide for service up to that date.
Precept The levy made by precepting authorities on billing authorities, requiring the latter to collect income from
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council taxpayers on their behalf.
Prior Year Adjustment Material adjustments applicable to prior years arising from changes in accounting policies or from the correction of material errors. This does not include normal recurring corrections or adjustments of accounting estimates made in prior years.
Projected Unit Method An assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc, and projections of projected earnings for current employees.
Prospective Application Applying new accounting policies to transactions, other events and conditions occurring after (not before) the date as at which the policy is changed and recognising the effect of the change in the accounting estimate in the current and future period affected by the change.
Provision An amount put aside in the accounts for future liabilities or losses which are certain or very likely to occur as a result of a past event, but the amounts or dates of which they will arise are uncertain.
Public Works Loan Board (PWLB) A Central Government Agency, which provides loans for one year and above to authorities at interest rates only slightly higher than those at which the Government itself can borrow.
Related Parties There is a detailed definition of related parties IPSAS
20. For the Authority‟s purposes, related parties are deemed to include the Authority‟s Members, Senior Officers and their close family, partners, levying bodies, other public sector bodies, the Pension Fund and Assisted Organisations.
Related Party Transactions The Code requires the disclosure of any material
transactions between the Authority and related parties to ensure that stakeholders are aware when these transactions occur and the amount and implications of such.
Remuneration All sums paid to or receivable by an employee and
sums due by way of expenses allowances (as far as those sums are chargeable to UK income tax) and the monetary value of any other benefits received other than in cash. Pension contributions payable by the employer are excluded.
Reserves The residual interest in the assets of the Authority
after deducting all of its liabilities. These are split into two categories, usable and unusable. Usable reserves are those reserves that contain resources that an authority can apply to fund expenditure of either a revenue or capital nature (as defined). Unusable reserves are those that an authority is not able to utilise to provide services. They hold
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unrealised gains and losses (for example the revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences between expenditure being incurred and its financing e.g. Capital Adjustment Account.
Residual Value The net realisable value of an asset at the end of its
useful life. Retirement Benefits All forms of consideration given by an employer in
exchange for services rendered by employees that are payable after the completion of employment.
Retrospective Application Applying a new accounting policy to transactions,
other events and conditions as if that policy had always been applied. Opening balances and prior year income and expenditure comparatives must be adjusted.
Revaluation Loss A reduction in the value of a non-current asset below
its carrying amount in the Balance Sheet, caused by a general fall in prices across a whole class of assets.
Revenue Expenditure The day-to-day expenses of providing services. Revenue Support Grant A grant paid by Central Government to authorities,
contributing towards the general cost of services. Temporary Borrowing Money borrowed for a period of less than one year. True and Fair View The Statement of Accounts should be the faithful
representation of the effects of the transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the code. Compliance with the Code is presumed to result in financial statements that achieve a true and fair presentation.
Useful Economic Life The period over which the Authority will derive
benefits from the use of a non-current asset.
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CERTIFICATIONS We, the undersigned, certify that:- The Statement of Accounts represents a true and fair view of the financial position of the Humberside Fire Authority as at 31 March 2012 and the Comprehensive Income and Expenditure for the year ended 31 March 2012.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R. Hannigan – Chief Fire Officer & Chief Executive
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Councillor John Briggs – Chair
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
K. Wilson – Director of Finance and Assets/S.151 Officer 25th September 2012 (authorised for issue date)
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Humberside Fire Authority STATEMENT OF ACCOUNTS 2011/12 FEEDBACK FORM The Statement of Accounts evolves each year and not withstanding a large amount of information being prescribed by the Accounting Codes of Practice, the Authority attempts to make the document as readable and user friendly as possible. We would therefore welcome any comments from readers on the Statement of Accounts regarding improvements to the layout and readability for future years. If you could complete the following questionnaire and return it to the address below we will try to accommodate any comments received. Alternatively, if you are viewing this document on the internet, there is an on-line form which you can submit. We will attempt to incorporate any comments received by 31 March 2013 into the 2012/13 Statement of Accounts where possible and the Authority will try to include any comments received after that date into future year‟s documents. 1. Please indicate in what capacity you are viewing this Statement. Local Tax Payer Local Business Other, please specify …………………………………………………………. 2. Is the format and the layout of the Accounts easy to understand and follow? Yes No
If not why not?
3. Did you find the information you were looking for? Yes No If no, why? 4. Any other comments you have would be welcome: Please return to: Humberside Fire Authority FREEPOST NEA3610 Hull HU4 7BR
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