statement of accounts 2013-2014 · defined benefit pension schemes 95 35 contingent liabilities 109...

Statement of Accounts

2013-2014

Date Issued: 25 September 2014

CONTENTS

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Page Note Explanatory Foreword 3 Annual Governance Statement 14 Statement of Responsibilities 24 Audit Opinion 25 Statement of Accounts 28 Movement in Reserves Statement 28 Comprehensive Income and Expenditure 30 Balance Sheet 31 Cash Flow Statement 33 Notes to Main Financial Statements 35 Accounting Policies 35 1 Accounting Standards not yet adopted 48 2 Critical Judgements in applying accounting policies 48 3 Assumptions about the future 48 4 Material Items of Income and Expenditure 50 5 Events after Balance Sheet Date 50 6 Adjustments between Accounting and Funding Basis 50 7 Other Operating Expenditure 54 8 Financing and Investment Income and Expenditure 54 9 Taxation and non-specific grant income 54 10 Property, Plant and Equipment 55 11 Revaluations 57 12 Intangible Assets 58 13 Assets held for Sale 59 14 Impairment Losses 59 15 Financial Instruments 60 16 Nature and Extent of Risks of Financial Instruments 63 17 Inventories 67 18 Short Term Debtors 67 19 Cash and Cash Equivalents 68 20 Short Term Creditors 68 21 Provisions 69 22 Usable Reserves 71 23 Transfers to/from Earmarked Reserves 72 24 Unusable Reserves 74 25 Segmental Reporting 79 26 Members’ Allowances 86 27 Officers’ Remunerations 87 28 External Audit Costs 88 29 Grant Income 89 30 Related Parties 89 31 Capital Expenditure and Capital Financing 91 32 Leases 92 33 Termination Benefits 94 34 Defined Benefit Pension Schemes 95 35 Contingent Liabilities 109 36 Contingent Asset 109 37 WYFRA Pension Account 110 Glossary of Terms 113

EXPLANATORY FOREWORD

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1. Explanatory Foreword

1. Introduction

The Explanatory Foreword acts as an introduction to the Statement of Accounts and fulfils a number of

functions:

It provides an explanation of the key statements making up the Statement of Accounts;

It details the financial performance of the Authority including a summary of the revenue and

capital outturn;

Finally, it looks forward to the challenges the Authority might face in the future.

2 The Statement of Accounts

2.1 The Statement of Accounts summarise the financial transactions of the Authority during the year

and provide a snapshot of the financial value of the Authority at the end of the year (31 March

2014). They also include details of transactions from the previous financial year for the purpose

of comparison.

2.2 In order to achieve consistency of presentation there are specific guidelines setting out how the

accounts should be prepared and the following paragraph provides assurance that these accounts

comply with these guidelines.

2.3 These accounts have been prepared in accordance with the 2013/14 Code of Practice on Local

Authority Accounting based on International Financial Reporting Standards (IFRS) for 2013/14 and

the Accounting Codes of Practice published by the Chartered Institute of Public Finance and

Accountancy (CIPFA). The overriding requirement of the Code of Practice is that the Statement of

Accounts “presents a true and fair view” of the financial position of the Authority.

2.4 The accounts are extremely detailed and technical and consequently not easy to understand. The

purpose of the explanatory foreword is to provide a summary of the main financial statements

which can be easily understood by the non-financially trained reader. An explanation of the key

sections is provided below.

2.5 There has been a change in accounting policy following the adoption of the June 2011

amendments to IAS19 Employee Benefits. The key changes are related to new classes of

components of defined benefit cost which have been recognised in the financial

statements. Firstly, Pensions Interest Cost and Expected Returns on Assets have been combined

and renamed Net Interest Cost. Secondly, Actuarial Gains and Losses have been renamed Re-

measurements and are now split between the effect of changes in financial assumptions and

demographic assumptions in the disclosure notes. The impact of these changes on the financial

statements for 2012/13 is not material and therefore no restatement is required. However

relevant comparative information for 2012/13 has been included in the disclosure notes.

2.6 The Annual Governance Statement

The Fire Authority receives most of its income through taxation which is public money. This

brings with it a responsibility to ensure this money is used lawfully, effectively, efficiently and

economically. The Annual Governance Statement sets out the systems and procedures in place to


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make sure that the Fire Authority’s resources are used in accordance with the law and provide

best value for the tax payer. It includes an explanation of the key decision making processes and

an assessment of the checks and balances that are in place to make sure that these systems

operate correctly. Finally, it looks at the challenges that the Authority might face over the

following year and provides an assurance from the Chief Finance and Procurement Officer, the

Chief Executive/Chief Fire Officer and the Chairman that the systems that are in place are robust.

The Auditor’s Report

2.7 The Fire Authority is subject to an independent check by KPMG who have been appointed as the

Authority’s external auditor. This Audit includes a review of key financial systems and

transactions enabling them to assess the accuracy of the financial statement of accounts. The

Auditor’s Report explains their responsibilities in relation to the Statement of Accounts and sets

out their opinion on whether the accounts provide a ‘true and fair view’ of the financial position

of the Authority. In addition, the Auditor provides an opinion on the value for money aspects of

the authority’s transactions.

The Financial Statements

The next section explains the purpose of the 4 key statements included within the Statement of

Accounts.

2.8 A Movement in Reserve Statement

The Authority carries a number of financial reserves, and the purpose of this statement is to show

the movement in these reserves during the year. Reserves fall in to two categories ‘useable

reserves’ and ‘unusable reserves’. Useable reserves, as their title suggests, can be used to fund

future years’ expenditure and are supported by funds. These will normally have been built up

over a number of years by the Authority setting money aside to meet future commitments. The

statement shows that value of useable reserves has increased by £8.9m during the year from

£14.4m to £23.3m including the establishment of new reserves to meet the following

commitments. Details of these are explained in the main document.

Unusable reserves cannot be used to fund future years’ expenditure. The reason for this is that

they have been set up as a result of accounting adjustments and consequently they are not

backed by funds. An example of this type is an ‘asset revaluation reserve’ which is set up when

the book value of an asset (e.g. building) may have increased to reflect market value. Whilst the

value may have increased the funds would only become available if and when the asset was sold.

The statement shows that value of unusable reserves has improved by £33.6m during the year

from (£1,174.3m) to (£1.140.7m). Details of these are explained in the main document.

2.9 Comprehensive Income and Expenditure Statement

The Comprehensive Income and Expenditure Account shows the cost of providing services in the

year in accordance with ‘generally accepted accounting practices’. Included within this account

are a number of large transactions which do not involve the movement of cash which are

necessary to bring the accounts in line with accepted international accounting standards. These

include charges for depreciation and estimates of the future cost pensions. As a result of these

adjustments it is not possible to identify the cost of the service to the tax payer from this

statement.


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2.10 Details of the cost of the service and how this is funded through grant and council tax, is shown in

the outturn section of this explanatory forward.

2.11 Balance Sheet

The balance sheet shows the value of the Authority at 31 March 2014, showing its net assets and

liabilities and how these are matched by the reserves explained above. Looking at the bottom

line of the balance sheet it appears that the Authority has net liabilities of over £1bn. However, a

closer examination shows that the largest single item on the balance sheet is a liability relating to

defined pension benefits of just under £1.2bn at 31 March 2014. This represents the total future

cost of pension liabilities of all existing employees and current pensioners that will be paid over

their lifetime. The firefighters’ pension scheme is an unfunded scheme which does not carry

investments to meet future liabilities and consequently it appears on the face of it that the

Authority has huge liabilities. However, pension payments are funded annually by mixture of

authority contributions, employee contributions and government grant which means that the

Authority will not be expected to meet the whole of this liability in any future year. Therefore, if

we were to remove this liability from the balance sheet, it would show that the Authority has real

net assets of around £50m.

2.12 Cash Flow Statement

This statement removes all the non-cash transactions which are included in the comprehensive

income and expenditure account and provides details of the cash the Authority has raised during

year and shows how it has been spent. It includes the income from council tax, business rates,

government grants, fees and charges, sale of assets and borrowing.

2.13 The statement is broken down into three sections, the first showing the day to day running of the

fire service described as ‘operating activities’ and the second it’s expenditure on major capital.

Items such as land, buildings and equipment, described as ‘investing activities’, and finally, the

changes in borrowing and investments which are defined as its ‘financing activities’. Key points

from the cash flow statement are:-

Income raised through grants and taxation - £87.99m Cash paid to employees - £58.9m Cash paid for goods and services - £22.5m Expenditure on land buildings and equipment - £7.1m

Cash and investments held at 31 March 2014 – £10.373m

2.14 Pension Fund Statement

This statement provides details of income and expenditure on the firefighters’ pensions. There

are currently two firefighter pension schemes; the 2006 National Firefighters Pension Scheme and

the 1992 Firefighters’ Pension Scheme. The statement provides details of payments in the form

of monthly pensions and lump sum payments and contributions from the employer and the

employee with the balance funded by central government.


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There is also a balances sheet which shows the current year’s assets and liabilities which differ

from the whole life costs which are included in the Authority balance sheet.

3. Review of 2013/2014 including revenue and capital outturn

3.1 Changes to Local Government Finance

2013/2014 saw the implementation of two major changes to the way local government is

financed; these were the scheme for the Retention of Business Rates and the Localisation of

Council Tax benefit. Both of these changes have affected the way the Authority is funded and

have had an impact on the statement of accounts.

Retention of Business Rates

In previous years local business rates were paid to Central Government who then reallocated

them to the authorities as part of the Local Government Finance Settlement. The new system

allows local Authorities to retain 50% of the business rates with the balance being paid to central

government to be reallocated in the form of ‘Top up Grant’. The purpose of this change is to

encourage economic development within local authorities by enabling them keep any additional

income which is generated through economic growth.

Whilst the Fire Authority does not collect Business Rates Income, the government has accepted

that an efficient and effective fire authority can help generate economic growth. Consequently

the Authority is able to benefit from the new scheme by receiving 1% of the combined districts

business rates income, which is supported by ‘Top up Grant’. This change in funding can be seen

in Taxation and Non Specific Grant Income in Note 10 of the Statement of Accounts.

However, the increased dependence of the Authority on Local Business rates income means that

the Authority is vulnerable to a potential loss of income through a fall in economic activity. The

Authority has therefore set aside a reserve in the accounts to meet any future losses.

Localisation of Council Tax Benefit

In previous years people on low income and benefits received a payment from central

government towards the cost of their council tax which was known as Council Tax Benefit. In

2013/2014 this payment ceased to be replaced by a discount on the Council Tax bill. Once again,

whilst this appears to be a small change, it has an effect on the way this Authority is funded and

the accounts.

The overall impact is that the amount of income the Fire Authority receives through its precept

has fallen by £2.2m as a result of these discounts with a proportion of this being replaced by a

grant from central government. One of the consequences of this change is the need to collect

council tax from residents on low income who have not previously had to pay council tax. This

could result in an increase in arrears and future losses on the collection fund. The accounting

changes including the grant can be seen in Taxation and Non Specific Grant Income in Note 10 of

the statement of accounts.


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3.2 Financial Performance

West Yorkshire Fire and Rescue Authority remains proud of its record as a high performing, low

cost organisation and has continued to demonstrate these qualities in 2013/2014 despite facing a

number of major challenges including further cuts in funding and industrial action..

3.3 Revenue Budget

The Authority considered its budget in February 2013 against the background of a further £4.1m

loss in grant. However, in recognition of the Authority’s track record of low expenditure and low

taxation, it was given dispensation to increase its precept by £5 which would deliver additional

income of £3m. The Authority had already embarked on a fundamental restructure of service

delivery which was delivering significant savings and would continue to do so over the next few

years. Following consideration of the forecast budget deficit, included in the medium term

financial plan, the Authority took the decision to increase the precept by £4.99 including a

contribution of £0.97m into revenue balances. The Authority would continue its policy of non-

recruitment and strategic restructure of service delivery which commenced in 2012/2013.

3.4 Revenue Outturn

It became clear very early in the year that the Authority would underspend the approved budget,

principally as a result of the number of firefighters leaving in the last quarter of 2012/2013 and

the increased number of retirements in 2013/2014. As the year progressed savings on overtime

budgets, coupled with efficiencies in other areas of service, indicated an underspending of £3m

by January 2014 when the 2014/2015 budget was considered, enabling the Authority to freeze its

precept.

3.5 Revenue Budget and Outturn

By the end of the financial year this under spending had increased to £3.9m with the table below

providing a comparison of the revenue outturn with the approved revenue budget.


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EXPENDITURE

Revenue Outturn

£000

Approved

Budget

£000

Variance

£000

Employee expenses 67,388 70,287 -2,899

Premises Expenses 3,231 3,034 197

Transport Costs 2,332 2,293 39

Supplies and Services 4,250 5,009 -759

Insurance 891 960 -69

Lead Authority Charges 237 288 -51

Capital Financing Charges 6,852 6,823 29

Provision for Pay and Prices 702 702 0

Total Expenditure 85,883 89,396 -3,513

Grants 1,419 1,481 62

Other Income 1,689 1,196 -493

Total Income 3,108 2,677 -431

Net Expenditure 82,775 86,719 -3,944

An explanation of the major variations;

3.6 Employees -£2.89m (4% variance on approved budget)

Employee expenses make up by far the largest proportion of the Authority’s expenditure and

consequently make up the largest part of the budget variance. The majority of the

underspending can be broken down into 4 areas.

Firefighter retirements - -£1.1m

Firefighter overtime -£0.80m

Full year effect of the fundamental review of support staff -£0.67m

Reduction in retained firefighter call outs -£0.38m

3.7 Premises and Transport and Insurance

There was a saving of £167k on these areas of expenditure which was due to savings on vehicle

fuel costs

3.8 Supplies & Service -£0.759m

There have been savings in supplies and services expenditure of £0.46m due to reductions in

expenditure on equipment and savings on telecommunications contracts.

3.9 Contingency -£0.702m

The Authority maintains a separate budget for pay and price increases; this has under spent by

£0.70m which is due to the continuous pay freeze for support staff and issuing inflation free

budgets to spending departments. An amount equal to this underspending has been set aside as

a provision to meet future pay and price increases. This has been charged against sup[plies and

services.


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3.10 Income -£0.493m

The Authority received a significant increase in income in the last quarter of the financial year

through recharges from other authorities for assistance provided during the period of flooding in

the South of England. These authorities will be able to gain reimbursement of these charges from

central government through the Belwin Scheme.

Revenue Balances

3.11 Any variations between actual expenditure and the approved revenue budget have an impact on

the general fund balance of the Authority. At the beginning of the financial year the Authority

had revenue balances of £10.47 with an additional £0.97m to be added as part of the budget

increasing them to £11.44. The impact of the under spending is to increase balances to £13.1m at

31 March 2014 after setting up an earmarked reserve of £2.5m as approved at the budget

meeting.

3.12 The revenue balances provide the Authority with the flexibility to manage any delays in delivering

the medium term financial plan. The Authority needs to maintain a minimum level of balances to

meet future commitments and these are calculated as part of the Authority’s risk management

and business continuity review. The minimum revenue balance required has been increased to

£2.5m as part of the 2014/2015 revenue budget approval.

3.13 The Authority continues to face significant financial challenges in the next 4 years as funding for

public authorities continues to be reduced. The use of these balances will enable the Authority to

achieve these financial challenges whilst implementing its fundamental review of service delivery.

3.14 Details on all the Authority’s reserves are detailed in Notes 23, 24 and 25 to the accounts.

Capital investment

3.15 In addition to its day-to-day revenue spending the Authority planned to spend £12.302m on

major capital schemes in 2013/2014; a comparison to actual expenditure is detailed below:


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Revised

Capital

Plan

Expenditure

2013/14

Balance

uncommitted

£000 £000 £000

CORPORATE RESOURCES

Property Services 1,357 596 761

Information Technology 1,355 350 1,005

Transport 2,337 1,639 698

Human Resources 60 0 60

STRATEGIC DEVELOPMENT

IRMP 9,096 2,080 7,016

SERVICE DELIVERY

Operations 1,766 1,809 -43

Fire Safety & Community Relations 700 670 30

Total Expenditure 16,671 7,144 9,527

3.16 During 2013/2014 the Authority programmed to spend £16.67m on major capital projects with

£9m programmed on the delivery of the Integrated Risk Management plan which included the

site purchase and construction of new fire stations.

3.17 Unfortunately delays in land purchase on a number of sites have delayed construction. However

the Authority did commence construction on the new South Kirby and Rothwell fire stations both

of which will be completed in 2014/2015. In addition the Authority has now purchased the land

for a further three stations at Killingbeck, Batley and Rastrick with construction to commence on

all three sites early in 2014/2015.

3.18 Significant progress has been made on a number of schemes including the replacement command

and control system which has been delivered in a joint project with South Yorkshire FRA using

government grant which will go live in summer 2014.

3.19 Financing of the Capital Programme

Normally the Authority would fund the majority of its capital programme through long term

borrowing through the Public Works Loans Board. However, the impact of the economic

downturn on investment income coupled the continued uncertainty over the security of banking

industry in 2013/2014 resulted in the Authority investing a large proportion of its resources

internally.

3.20 The revenue balances held by the Authority at the beginning of the year £10.47m coupled with

the pension funding grant of over £20m received from central government resulted in the

Authority having significant funds to invest in the middle of the year. Rather than investing all

this externally the Authority has used it to repay some existing debt and fund the capital

expenditure during the year, with the intention of replacing this with borrowing towards the end

of the financial year.


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3.21 The impact of this cash flow coupled with a capital funding grant from central government has

meant that the Authority did not take any new long term loans during the financial year.

4. Current Economic Position and Future Grant settlements

4.1 The Country has seen a slow but sustained improvement in the state of the economy during

2013/2014 with the Country moving out of recession and a more optimistic forecast of economic

growth. However the Chancellor of the Exchequer has made it clear that the Country is not yet

out of the woods and that public bodies such as the fire service should plan for similar levels of

efficiency in the next 4 year spending review period as the current one.

4.2 When the Government announced the grant settlement for 2013/2014, it indicated a further loss

of grant of £4m for this Authority which was in line with our planning assumptions. However the

Authority did take advantage of a dispensation to increase its precept by £4.99 delivering

additional precept income of £3.0m

4.3 Following the Chancellor of the Exchequer’s 2013 spring budget it is clear that Local Government

can expect further similar cuts in the next spending review with the Authority losing a further

£3.96m of grant in 2014/2015. The Authority is in the process of implementing a fundamental

review of service delivery which will see its whole-time firefighter strength reduce to below 1000

posts by 2018 following a freeze on recruitment since 2009.

4.4 Whilst the current approvals will go some way to delivering the required savings, the latest

information from government suggests that further savings of around £8m may have to be

identified by 2018/2019 and the Authority will be commencing further reviews to deliver these

savings.

5. Planned Future Developments

(a) IRMP The Authority will continue to deliver its programme of station rationalisation with construction

of a further three stations commencing in 2014/2015. In addition the Authority is currently

drawing up innovative plans with West Yorkshire Police and Leeds City Council for a joint delivery

hub at Weetwood incorporating a new fire station and community safety facility.

(b) Information Technology The Authority IT systems and delivery model has been developed over a number of years and is

now in need of review. During 2014/2015 the Authority will commission an external review of its

IT provision and delivery to ensure it remains fit for purpose.

6. Pensions

6.1 The Authority participates in two pension schemes both of which provide members with defined

benefits related to pay and services. The schemes are described as follows:

(a) Local Government Pension Scheme (LGPS) – this is a funded scheme which means that the

Authority and employees pay contributions into a fund which is set at a level to balance pension

liabilities with investment assets.

(b) Firefighters’ Pension Schemes – there are two schemes; the Firefighters’ Pension Scheme 1992

(FPS) and the New Firefighters’ Pension Scheme 2006 (NPS), which are unfunded meaning that

there are no assets to pay for pension liabilities


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6.2 Following the Governments review of pensions both of these schemes are due to change from

final salary schemes to average schemes in the near future.

Local Government Pension Scheme 2014.-The scheme is still a defined benefit scheme but from 1

April 2014 the way pension is built up is different. In the new scheme benefits will be calculated

annually based on earnings rather than final salary.

In addition there is more flexibility in when the pension can be taken with the option to take it at

any age from 55 to 75. However the new scheme Normal Pension Age (NPA) is linked to State

Pension Age (SPA), and employees who take their pension before your NPA would normally

receive a reduced pension.

In terms of employee contributions those on higher pay will see an increase in their contribution

rate with the maximum contribution increasing from 7.5% to 12.5%. In terms of the cost to the

Authority this will still be calculated. In terms of the cost to the Authority this will still be

calculated on the same basis as under the old scheme with the employer picking up the difference

have taken account of employee contributions and investments returns.

Firefighters Pension Scheme 2015 – The new scheme is to be introduced in April 2015 and is

currently the subject of a dispute with the Fire Brigades Union. The main changes to the scheme

are that it will become a 40 year scheme with a normal retirement age of 60 although members

will be able to retire at 55 subject to an actuarial reduction in the pension.

Each Fire and Rescue Authority is required by legislation to operate a separate firefighters’

pension fund and the amounts paid into and out of the fund are specified by regulation. The fund

is topped up by Government grant if contributions are insufficient to meet pension payments

due. In 2013/2014 the Authority received £22m in pension top up grant to cover the shortfall.

6.3 Details of the Authority’s pension liability calculated under IAS19 are shown in Note 35.

Effectively the pension fund is in deficit by £1,176m which overshadows the rest of the balance

sheet giving a false impression of the overall financial worth of the Authority.

6.4 The Independent Public Services Pension Commission have proposed a number of changes for all

public service pensions, including an increase in normal pension age and a move from final salary

to career average re-valued earnings benefit. This is currently under statutory consultation, and

changes in benefits will be allowed for in future LGPS calculations once they have been

incorporated in the Regulations.

7. Conclusion

7.1 The Fire Authority is currently in the middle of a period of unprecedented change and is likely to

face further major challenges of the next five years. Despite this, management are confident that

the service can continue to move forward and maintain its reputation of a high performing low

cost public service.


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7.2 Finally, I would like to thank staff for their hard work, commitment and professionalism

throughout the year in maintaining the financial systems and records and reporting to

management and the Fire Authority.

ANNUAL GOVERNANCE STATEMENT

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2 Annual Governance Statement

2.1 Scope of Responsibility and Code of Corporate Governance

Corporate governance is a phrase used to describe how an organisation directs and controls what

it does. It covers the systems and procedures that are in place to ensure that business is

conducted in accordance with the law and proper standards, and that public money is properly

accounted for and used economically, efficiently and effectively.

West Yorkshire Fire and Rescue Authority has a duty to achieve best value in the way it functions

and ensure that arrangements are in place to secure continuous improvement in all areas of

service provision.

The Authority has set out its arrangements for the governance of its affairs in its constitution (a

copy of this can be found at www.westyorksfire.gov.uk). Included within the constitution is the

Authority’s Code of Corporate Governance which is consistent with the principles of the CIPFA /

SOLACE Framework Delivering Good Governance in Local Government.

In publishing this statement the Authority fulfils the requirement under 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 of internal control.

By applying the principles within the Authority’s own Code of Corporate Governance and applying

the Nolan Principles of Standards in Public Life, the Authority commits to deliver its services with

integrity, accountability, transparency, effectiveness, and inclusivity.

2.2 The Purpose of the Governance Framework

The governance framework comprises systems and processes, and cultures and values, by which

the Authority is directed and controlled. It enables the Authority to monitor the achievement of

its strategic objectives and to consider whether those objectives have led to the delivery of

appropriate, cost effective services.

The Authority acknowledges that it can never eliminate risk entirely from its operations and this

statement explains the systems used to manage this risk to a reasonable level.

The system of internal control is a significant part of that framework which is designed to manage

the Authority’s risk. 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 authority’s] policies, aims and objectives, to evaluate the

likelihood and potential impact of those risks being realised, and to manage them efficiently,

effectively and economically.

The governance framework has been in place at West Yorkshire Fire and Rescue Authority for the

year ending 31 March 2013 and will remain in place up to the date of the approval of the

statement of accounts.

http://www.westyorksfire.gov.uk/


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2.3 The Governance Framework

Summarised below are some of the key elements of the governance framework:

2.3.1 Strategic Objectives and the Service Planning Process

The Authority’s Ambition, Aims and Priorities are set out in its 2011-2015 Service Plan. This plan

is supported by the Integrated Risk Management Plan and the Medium Term Financial Plan, all of

which are reviewed and approved annually by the Authority. All these plans are published on the

website at www.westyorksfire.gov.uk. The Authority’s Ambition, aim and Priorities are:-

Ambition: ‘Making West Yorkshire Safer’ and it aims to achieve this by:-

Aim: ‘Provide an Excellent Fire and Rescue Service working in partnership to reduce

death, injury, economic loss and contribute to community well-being,

Priorities

Deliver a professional and resilient emergency response service

Deliver a proactive fire prevention and protection programme.

Provide a safe, competent and diverse workforce

Provide effective and ethical governance and achieve value for money in managing resources.

These objectives are set out in the Authority’s Service Plan and form part of area plans,

departmental plans and station plans. There is an ongoing system of monitoring and reporting

achievement of the Authority against its corporate aims with regular reports on progress

monitored by senior management and the Authority, through its committee structure. Copies of

the plan are distributed to all fire stations and departments of the Authority. In addition, it is

available on the internet along with copies of the reports on progress against corporate aims.

2.3.2 The Internal Control Environment

As explained previously, the Authority cannot eliminate all risks of failure to achieving its aims and

objectives and the purpose of the system of internal control is to manage risk to a reasonable

level. The system of internal control within West Yorkshire Fire and Rescue Authority is an

ongoing process, designed to identify the risks and to evaluate what impact failure would have on

the organisation. Once identified the Authority, where possible, eliminates the risks and, if this is

not possible, establishes procedures to manage the risks effectively, efficiently and economically.

The Authority confirms that its financial governance arrangements conform to the governance

requirements of the CIPFA statement of the role of the Chief Financial Officer in Local

Government.



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2.3.3 The Constitution

The Authority has a written constitution which is published on its internet site

(www.westyorksfire.gov.uk) and is included within the body of evidence which supports this

statement. This document forms the basis of the Governance Framework and sets out the way

the Authority is governed and is made up of the following documents:-

Authority committee standing orders and procedures

The roles and responsibilities of the directors and statutory officers

Access to information rules

Contract standing orders

Financial procedure rules

Anti-fraud and corruption strategy

Code of corporate governance

Members’ code of conduct

Officers’ code of conduct

Member / officer relations protocol

Officers’ employment rules

Protocol regarding the use of Authority resources by Members

Members’ allowances

Management structures

Officer delegation scheme

Complaints procedure

Whistle blowing policy

The Constitution is kept under constant review by the Clerk to the Authority and is formally

reviewed by the Full Authority at the Annual General Meeting.

2.3.4 The Committee Structure

The constitution sets out the Framework under which the Authority is governed. It sets out in

detail the composition of the Authority, the role and functions of the elected members, the roles

and responsibilities of designated office holders and the roles, functions and terms of reference of

the Authority and its Committees.

The Authority has four standing committees each of which along with the Authority meet 4 times

per year :-

Human Resources Committee (11 Members)

This committee deals with all issues relating to the employment of staff including conditions of

service, industrial relations, equal opportunities and training.

Finance and Resources Committee (11 Members)

This committee is responsible for all issues relating the Assets of the Authority. This includes

Finance (including recommendation to the Authority in relation to the revenue budget, capital

planning and precepts), Insurance, Treasury Management, Buildings land and property,

purchasing and supplies and data protection and computer development. This committee



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receives regular reports on the financial performance of the Authority along with detailed

updates on major capital schemes.

Audit Committee (6 Members)

This committee is established in accordance with CIPFA guidance ‘Audit Committees – Practical

Guidance for Local Authorities’. In addition to all matters relating to both internal and external

audit the committee is responsible for performance review and risk management and business

continuity.

Community Safety Committee (11 Members)

The Community Safety Committee was established in 2011/2012 to take on responsibility for all

aspects of service delivery of the Authority. Its responsibility includes the key areas of emergency

response, fire protection and fire prevention. This includes responsibility for integrated risk

management planning, national resilience support arrangements and shared services.

Executive Committee (6 Members)

The Executive Committee of 6 members which deals with any urgent matter.

The terms of reference of all the Authority’s committees are available on the Authority’s web site.

All meetings are open to the general public and wherever possible items are considered within

the public sessions of the meetings. Copies of reports and minutes of all meetings are published

on the Authority’s web site.

2.3.5 Management Structure

Following a review of corporate management during 2013/2014 a restructure of the Management

Board was approved and implemented with effect from 1 April 2014. The purpose of the revised

structure was to better align the board structure to the provision of service.

The revised Corporate Management Board made up of the following Executive Officers who meet

monthly:

Chief Executive/Chief Fire Officer,

Director of Strategic Development,

Director of Service Support,

Director of Service Delivery

Chief Legal and Governance Officer

Chief Finance and Procurement Officer

The Corporate Management Board is supported by a Management Team which, in addition to the

Board, includes senior officers from both the operational and non-operational sides of the

Authority.

There is a close interaction between management and elected members based around a formal

briefing process prior to each committee. In addition, management provide additional briefings

when required by elected members or when key issues are being addressed e.g. revenue budget

and IRMP.


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The Chief Executive’s Strategy Group, consisting of Management Board members and the Chair

and Vice Chair of the Authority, meet bi-monthly. The purpose of this group is to allow senior

management and the political leadership to consider major issues affecting this Authority and the

Fire Service as a whole. Leading elected members from the opposition are invited to attend the

meeting when key issues including the budget are being discussed.

These are the key elements which make up the Governance Framework. Other areas including

officer and member training and development, communication strategy and examples of the

performance management structure are provided in the supporting evidence.

2.4 Review of Effectiveness

The Authority has responsibility for conducting, at least annually, a review of the effectiveness of

its governance arrangements. The review process is on-going and is informed by the work of the

Management Board, The Chief Finance and Procurement Officer, Internal Audit, external auditor

and other external assessors. The results of the reviews are reported to the Authority through

the committee structure.

2.4.1 A self-assessment of our effectiveness

Integrated Risk Management Planning (IRMP)

The Authority is systematically reviewing the service it provides throughout the county through

the IRMP process. This process aims to improve community safety and reduce the risk of fires in

homes. The Authority uses a community risk matrix for the whole of the county which

categorises different levels of risk from very high to very low. The information provided by this

process has been used by the Authority to review fire cover throughout the county resulting in

approval to make radical changes to service delivery over the next 5 years.

Through this process, the Authority is able to continue to achieve its aim of making West

Yorkshire safer with its reducing resources.

Effective Performance Management

It is important that the Authority is able to measure its performance against its aims and

objectives. The Authority has a well-established performance management structure which is

focused on its outcomes. The system runs throughout the organisation from Fire Station level

through District Command to Authority wide achievement.

Each year the Authority produces district risk reduction plans which set service delivery priorities

and targets for the coming year. The targets are challenging, outcome based and are designed to

build on the success of the previous year. The service delivery framework, coupled with the

service delivery plans, has already proved to be successful in targeting the Authority’s resources

where the risk exists within each of the five districts.

Performance against the service delivery plan is monitored by the Service Delivery Board,

Management Board and Management Team with reports on performance presented to each


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meeting of the Community Safety Committee where each of the District Commanders attends to

be challenged by the members of the Committee.

This system of monitoring has proved successful in measuring performance and provides the vital

evidence needed to support the integrated risk management plan.

Effective Financial Planning and Management

Following the general election in 2010 it became clear that all public services including the fire

sector were facing a period of austerity and would suffer significant cuts in funding for a

prolonged period. As a result of this the Authority and its senior management took the decision

to fundamentally review service delivery to maintain similar levels of service with significantly

reducing resources. Using the Integrated Risk Management Planning process the Authority

approved the closure of 16 existing fire stations to be replaced by 8 new better placed more

efficient stations.

By the end of 2012/2013 the Authority had already lost in excess of £6m in grant and the

2013/2014 revenue spending settlement saw the Authority lose a further £4.1m but was able to

mitigate the impact of this loss with additional precept income of £3.0m. 2013/2014 has seen the

first phase of implementation of the IRMP with construction commencing on the first two new

fire stations and site purchases agreed for a further 3 sites. The Authority had planned to make

more progress on the station replacement programme within the year but problems purchasing

land have caused unavoidable delays.

The Authority has aligned its 5 year medium term financial plan with the capital plan, integrated

risk management plan and service plan to deliver a coordinated approach to service delivery.

The Authority has a track record of strong financial management and has once again delivered a

significant under-spending.

Effective Arrangements for Accountability

The Authority can demonstrate robust systems of accountability both to elected members and

the general public. The district command structure which mirrors the 5 district boundaries in

West Yorkshire. provide for close interaction with the local district councils on service delivery

and joint working.

The Authority presents its budget proposals to the district councils and provides representatives

of the business community with the opportunity to comment on the budget proposals.

Internal Audit

The Authority procures its internal audit service from Kirklees Council which not only provides

better value for money but also gives the Authority access to a specialist auditor and gives an

added element of independence. In 2013/2014 the Internal Audit section carried out a self-


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assessment against the Public Sector Internal Audit Standards and is substantially compliant. The

Auditor is to present an action plan to the Audit Committee to address the areas where it is less

than 100% compliant.

The work of internal audit extends well beyond the normal probity audits and includes

examination of the key financial systems as well as verification work on the Authority’s business

continuity plan. During 2013/2014 the Internal Audit section provided an independent review

role within the new command and control project implementation.

Human Resources

The Authority has a full range of robust policies and procedures to underpin the conduct of staff

from Discipline, Annual Performance Development Reviews, Absence Management procedures to

Flexible Working practices. The Authority has not recruited whole-time firefighters since autumn

2009 and does not anticipate commencing recruitment in the foreseeable future. . In terms of

training, the Authority continues to put priority on maintaining operational competence for all

firefighters.

The Authority’s pro-active Occupational Health and Safety Unit have produced policies that

maintain low levels of ill-health retirements. The Unit continues to maintain high levels of

workplace health and safety.

This process of self-assessment provides the Authority with the evidence to support

Managements’ conclusion that it is continuing to provide a high quality service with the resources

available.

Statement of Assurance

The Authority is required to produce an annual Statement of Assurance as part of the Fire and

Rescue National Framework for England. The purpose of the statement is to provide independent

assurance to communities and the Government that the service is being delivered efficiently and

effectively. Whilst the Fire and Rescue National Framework sets out the Government’s priorities

and objectives for fire and rescue authorities in England, it does not prescribe operational matters

as these are determined locally by fire and rescue authorities.

In April 2011, WYFRA published the Service Plan 2011-2015 which provides details of what the

service intends to do over the four years to meet the challenging needs and risks within the

community and deliver an excellent fire and rescue service whilst achieving efficiencies and

providing value for money services.

This Statement of Assurance provides assurance that WYFRA is providing an efficient, effective

and value for money service to the community of West Yorkshire in its financial, governance and

operational matters.


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Conclusion

Overall the Authority and its management board conclude that the systems and procedures

provide effective systems of management control.

2.4.2 External review

2012/2013 saw the appointment of KPMG as the Authority’s auditors which is the first time the

Authority has had a private sector provider. Whilst there will be some continuity of staff it is

anticipated that a different approach to the audit process may provide a different type of review

to the systems of governance.

2.4.3 Compliance

These systems and reviews demonstrate that the Authority’s assurance arrangements conform to

the governance requirements of the CIPFA Statement on the Role of the Head of Internal Audit

(2010). They also demonstrate the systems that are in place to enable the Monitoring Officer and

Chief Finance Officer to discharge their functions in relation to the governance of the Authority.

2.5 Significant Governance Issue

The main issue facing the Authority remains the further cuts in funding and the ability to deliver

the savings to meet the anticipated level of cuts. In addition to the further loss of grant in

2014/2015 the government have made it clear that there will be similar cuts in public spending

for the duration of the next spending review. Whilst the Authority has plans in place to achieve a

significant proportion of these savings these are to a degree dependent upon the delivery of the

major capital schemes. A more detailed explanation of these challenges is provided below.

Grant Loss

Whilst the Authority continues to plan on the basis of further grant reductions there remains

considerable uncertainty around the scale and timing of these cuts. Already since the Authority’s

budget was approved in February, the Chancellor’s Spring Budget has sign posted additional cuts

in public sector spending in the remainder of the current spending review and indicated that

similar levels of cuts will be required in the following 4 year spending review period. The review

of service provision approved in the two most recent IRMP’s will deliver a large proportion of the

savings required although further sustainable savings of between £6.0m and £10m will have to be

identified by 2019.

The £5 precept increase approved in 2013/2014 provided the Authority with long term

sustainable income of £2.9m providing some short term breathing space and means the Authority

will not have to significantly review fire cover in the next 2 years. Added to that the significant

under spending in the current financial year has added to the Authority’s balances which could be

used to support the budget in future years.


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IRMP delivery

The delivery of savings to match the cuts in funding is heavily dependent upon the delivery of the

Integrated Risk Management Plan. The Authority has encountered some delays in acquiring

suitable sites for the construction of new fire stations which has caused some delays in the

programme of construction. This will bring the challenge of managing a significant number of

major capital schemes within a much shorter time scale.

Failure to deliver the building programme within the timescale would have an impact on service

delivery.

Impact of the fundamental review

The Authority reduced the strength of the support staff structure by 90 posts as part of the

fundamental review with the revised structure being fully implemented with effect from

1 April 2013. It is important that following the first 12 months after implementation that the

Authority monitor the impact of the review on staff and the provision of service.

Changes to Pension Schemes and Industrial Action

Following the Hutton Review the Government are implementing changes to both the Firefighters’

Pension Schemes and the Local Government Pensions Scheme. The new Firefighters’ Pension

Scheme is a career average scheme based on a Normal pension age of 60 years compared to the

existing final salary scheme with a normal retirement age of 50 years. The Fire Brigades Union

are currently in the middle of an industrial dispute over the changes to the pension scheme which

has resulted in a programme of industrial action. The Authority has been able to maintain

adequate levels of fire cover during this period and it is important that the Authority maintain

these contingency arrangements.

Changes to the Senior Management Structure

As mentioned previously the Authority implemented changes to the Management Board with

effect from 1 April 2014 which included the introduction of part time working for two members of

the board. It is important that the Authority monitor the impact of the changes have on the

organisation.

The Fire Authority continues to operate in a difficult environment and we accept that the above

issues present the Authority and its Management Board with a major challenge. However,

previous performance demonstrates the ability of the Authority and its management to manage

in challenging times. We are therefore confident that we have the ability to continue to deliver a

high quality service whilst driving through major changes to the organisation, and that the

systems are in place to further enhance our governance arrangements.


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Simon Pilling

Chief Fire Officer / Chief Executive

Cllr Judith Hughes

Vice Chair, West Yorkshire Fire & Rescue Authority

Geoffrey Maren

Chief Finance and Procurement Officer

26 June 2014

STATEMENT OF RESPONSIBILITIES

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3. Statement of Responsibilities

3.1 The Authority’s Responsibilities

The Authority is required to:

Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority it is the Chief Finance and Procurement Officer;

Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets;

Approve the Statement of Accounts.

3.2 The Chief Finance and Procurement Officer’s Responsibilities

The Chief Finance and Procurement Officer is responsible for the preparation of the Authority's Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASACC Code of Practice on Local Authority Accounting in the United Kingdom (The Code). In preparing this Statement of Accounts, the Chief Finance and Procurement Officer has:

Selected suitable accounting policies and then applied them consistently;

Made judgements and estimates that were reasonable and prudent;

Complied with the Local Authority Code

The Chief Finance and Procurement Officer has also:

kept proper accounting records which were up to date

taken reasonable steps for the provision and detection of fraud and other irregularities.

3.3 Certificates

I certify that the financial statements set out on pages 28 - 109 presents a true and fair view of the financial position of the West Yorkshire Fire and Rescue Authority as at 31 March 2014, and its income and expenditure for the year then ended.

G Maren CIPFA Chief Finance and Procurement Officer Dated: 26 June 2014

AUDIT OPINION

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Independent auditor’s report to the members of West Yorkshire Fire and Rescue Authority

We have audited the financial statements of West Yorkshire Fire and Rescue Authority for the year ended

31 March 2014 on pages 24 to 109. The financial reporting framework that has been applied in their

preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the

United Kingdom 2013/14.

This report is made solely to the members of the Authority, as a body, in accordance with Part II of the

Audit Commission Act 1998. Our audit work has been undertaken so that we might state to the members

of the Authority, as a body, those matters we are required to state to them in an auditor’s report and for

no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to

anyone other than the members of the Authority, as a body, for our audit work, for this report, or for the

opinions we have formed.

Respective responsibilities of the Chief Finance and Procurement Officer and auditor

As explained more fully in the Statement of the Chief Finance and Procurement Officer’s Responsibilities,

the Chief Finance and Procurement Officer is responsible for the preparation of the Statement of

Accounts, which includes the financial statements, in accordance with proper practices as set out in the

CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom, and for being

satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the

financial statements in accordance with applicable law and International Standards on Auditing (UK and

Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for

Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements

sufficient to give reasonable assurance that the financial statements are free from material misstatement,

whether caused by fraud or error. This includes an assessment of whether the accounting policies are

appropriate to the Authority’s circumstances and have been consistently applied and adequately

disclosed; the reasonableness of significant accounting estimates made by the Treasurer; and the overall

presentation of the financial statements.

In addition, we read all the financial and non-financial information in the Explanatory Foreword to identify

material inconsistencies with the audited financial statements and to identify any information that is

apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in

the course of performing the audit. If we become aware of any apparent material misstatements or

inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the financial position of the Authority as at 31 March 2014 and of the

Authority’s expenditure and income for the year then ended;

have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local

Authority Accounting in the United Kingdom 2013/14.

AUDIT OPINION

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Matters on which we are required to report by exception

The Code of Audit Practice 2010 for Local Government Bodies requires us to report to you if:

the annual governance statement set out on pages 14 to 23 does not reflect compliance with

‘Delivering Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June

2007; or

the information given in the explanatory foreword for the financial year for which the financial

statements are prepared is not consistent with the financial statements; or

any matters have been reported in the public interest under section 8 of the Audit Commission Act

1998 in the course of, or at the conclusion of, the audit; or

any recommendations have been made under section 11 of the Audit Commission Act 1998; or

any other special powers of the auditor have been exercised under the Audit Commission Act 1998.

We have nothing to report in respect of these matters.

Conclusion on West Yorkshire Fire and Rescue Authority’s arrangements for securing economy, efficiency and effectiveness in the use of resources

Authority’s responsibilities

The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and

effectiveness in its use of resources, to ensure proper stewardship and governance, and to review

regularly the adequacy and effectiveness of these arrangements.

Auditor’s responsibilities

We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Authority

has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.

The Code of Audit Practice issued by the Audit Commission requires us to report to you our conclusion

relating to proper arrangements, having regard to relevant criteria specified by the Audit Commission.

We report if significant matters have come to our attention which prevent us from concluding that the

Authority has put in place proper arrangements for securing economy, efficiency and effectiveness in its

use of resources. We are not required to consider, nor have we considered, whether all aspects of the

Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are

operating effectively.

AUDIT OPINION

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Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of

resources

We have undertaken our audit in accordance with the Code of Audit Practice, having regard to the

guidance on the specified criteria, published by the Audit Commission in October 2013, as to whether the

Authority has proper arrangements for:

• securing financial resilience; and

• challenging how it secures economy, efficiency and effectiveness.

The Audit Commission has determined these two criteria as those necessary for us to consider under the

Code of Audit Practice in satisfying ourselves whether the Authority put in place proper arrangements for

securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2014.

We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we

undertook such work as we considered necessary to form a view on whether, in all significant respects,

the Authority had put in place proper arrangements to secure economy, efficiency and effectiveness in its

use of resources.

Conclusion

On the basis of our work, having regard to the guidance on the specified criteria published by the Audit

Commission in October 2013, we are satisfied that, in all significant respects, West Yorkshire Fire and

Rescue Authority put in place proper arrangements to secure economy, efficiency and effectiveness in its

use of resources for the year ending 31 March 2014.

Certificate

We certify that we have completed the audit of the financial statements of West Yorkshire Fire and

Rescue Authority in accordance with the requirements of the Audit Commission Act 1998 and the Code of

Audit Practice 2010 for Local Government Bodies issued by the Audit Commission.

Trevor Rees

for and on behalf of KPMG LLP, Appointed Auditor

Chartered Accountants

1, The Embankment

Neville Street

Leeds LS1 4DW

25 September 2014

Main Financial Statements

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4. Movement in Reserves Statement

This statement shows the movement in the year on the different reserves held by the Authority, analysed into usable reserves (i.e., those that can be applied to fund expenditure or reduce local taxation) and other reserves. The surplus or (deficit) on the Provision of Services line shows the true economic cost of providing the Authority's services; more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting. The net increase/decrease before transfers to earmarked reserves line shows the statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Authority.

Note Ge

ne

ral Fu

nd

Ba

lan

ce

Ea

rma

rke

d G

en

era

l

Fun

d R

ese

rve

s

Ca

pit

al R

ece

ipts

Re

serv

e

Ca

pit

al G

ran

ts

Un

ap

plie

d

To

tal U

sab

le R

ese

rve

s

No

te 2

3

Un

usa

ble

Re

serv

es

No

te 2

5

To

tal A

uth

ori

ty

Re

serv

es

£000 £000 £000 £000 £000 £000 £000

Movement in Reserves during 2012/13

Balance at 01 April 2012 8,414 3,933 516 0 12,863 -1,016,842 -1,003,979


Surplus or (-) Deficit on the provision of services -34,702 0 0 -34,702 0 -34,702

Other Comprehensive Income & Expenditure 0 0 0 0 -121,192 -121,192

Total Comprehensive Income & Expenditure -34,702 0 0 0 -34,702 -121,192 -155,894

Adjustments between accounting basis & funding basis under

regulations

7 36,787 -516 36,271 -36,271 0

Net Increase/Decrease before Transfers to Earmarked Reserves 2,085 0 -516 0 1,569 -157,463 -155,894

Transfers to/from (-) Earmarked Reserves 24 -31 31 0 0 0 0

Increase/Decrease in 2012/13 2,054 31 -516 0 1,569 -157,463 -155,894

Balance at 31 March 2013 carried forward 10,468 3,964 0 0 14,432 -1,174,305 -1,159,873


of 119 WYFRA

Note Gen

eral

Fun

d B

alan

ce

Earm

arke

d G

ener

al

Fund

Res

erve

s

Cap

ital

Rec

eipt

s

Res

erve

Cap

ital

Gra

nts

Una

pplie

d

Tota

l Usa

ble

Res

erve

s

No

te 2

3

Unu

sabl

e R

eser

ves

No

te 2

5

Tota

l Aut

hori

ty

Res

erve

s

£000 £000 £000 £000 £000 £000 £000

Movement in Reserves during 2012/13 - restated

Balance at 01 April 2012 8,414 3,933 516 0 12,863 -1,016,842 -1,003,979


Surplus or (-) Deficit on the provision of services -35,650 0 0 -35,650 0 -35,650

Other Comprehensive Income & Expenditure 0 0 0 0 -120,244 -120,244

Total Comprehensive Income & Expenditure -35,650 0 0 0 -35,650 -120,244 -155,894


regulations

7 37,735 -516 37,219 -37,219 0

Net Increase/Decrease before Transfers to Earmarked Reserves 2,085 0 -516 0 1,569 -157,463 -155,894

Transfers to/from (-) Earmarked Reserves 24 -31 31 0 0 0 0

Increase/Decrease in 2012/13 2,054 31 -516 0 1,569 -157,463 -155,894

Balance at 31 March 2013 carried forward - restated 10,468 3,964 0 0 14,432 -1,174,305 -1,159,873

Note Gen

eral

Fun

d

Bal

ance

Earm

arke

d G

ener

al

Fund

Res

erve

s

Cap

ital

Rec

eipt

s

Res

erve

Cap

ital

Gra

nts

Una

pplie

d

Tota

l Usa

ble

Res

erve

s (N

ote

23)

Unu

sabl

e R

eser

ves

(No

te 2

5)

Tota

l Aut

hori

ty

Res

erve

s

£000 £000 £000 £000 £000 £000 £000


Balance at 01 April 2013 10,468 3,964 0 0 14,432 -1,174,305 -1,159,873


Surplus or (-) Deficit on the provision of services -30,646 0 0 0 -30,646 0 -30,646

Other Comprehensive Income & Expenditure 0 0 0 0 73,120 73,120

Total Comprehensive Income & Expenditure -30,646 0 0 0 -30,646 73,120 42,474


regulations 7 35,905 0 0 3,634 39,539 -39,539 0

Net Increase/Decrease before Transfers to Earmarked Reserves 5,259 0 0 3,634 8,893 33,581 42,474

Transfers to/from (-) Earmarked Reserves 24 -2,595 2,595 0 0 0 0 0

Increase/Decrease in 2013/14 2,664 2,595 0 3,634 8,893 33,581 42,474

Balance at 31 March 2014 carried forward 13,132 6,559 0 3,634 23,325 -1,140,724 -1,117,399


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5. Comprehensive Income and Expenditure

This statement shows the accounting 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

2012/13 Restated 2012/13

Gro

ss

Exp

en

dit

ure

Gro

ss

Inco

me

Ne

t

Exp

en

dit

ure

Gro

ss

Exp

en

dit

ure

Gro

ss

Inco

me

Ne

t

Exp

en

dit

ure

Gro

ss

Exp

en

dit

ure

Gro

ss

Inco

me

Ne

t

Exp

en

dit

ure

£000 £000 £000 £000 £000 £000 £000 £000 £000

5,536 -332 5,204 5,536 -332 5,204 Community Fire Safety 4,434 -310 4,124

69,788 -1,749 68,039 69,871 -1,749 68,122 Fire Fighting & Rescue Operations 69,833 -2,105 67,728

478 -2 476 478 -2 476 Corporate and Democratic Core 440 -4 436

712 712 712 712 Non Distributed Costs 465 465

76,514 -2,083 74,431 76,597 -2,083 74,514 Cost of Services 75,172 -2,419 72,753

637 -947 -310 637 -947 -310 Other Operating Expenditure (Note 8) 474 -64 410

55,300 -2,979 52,321 53,228 -42 53,186Financing and Investment Income &

Expenditure (Note 9)53,853 -52 53,801

0 -91,740 -91,740 0 -91,740 -91,740Taxation and Non specific Grant Income

(Note 10)0 -96,318 -96,318

132,451 -97,749 34,702 130,462 -94,812 35,650 Deficit on Provision of Services 129,499 -98,853 30,646

0 0 Unrealised Surplus or Deficit on revaluation of fixed -250

assets

121,192 120,244 Remeasurement of the net defined benefit liability -72,850

0 0 Other adjustments -20

121,192 120,244 Other Comprehensive Income and Expenditure -73,120

155,894 155,894 Total Comprehensive Income and Expenditure -42,474

2013/14


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6. Balance Sheet

West Yorkshire Fire and Rescue Balance Sheet as at 31 March 2014 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 is those that the Authority is not able to use to provide services. This category of reserves includes reserves that hold 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 shown in the Movement in Reserves Statement line "Adjustments between accounting basis and funding basis under regulations"


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31 March Notes 31 March

2013 2014

£000 £000

Property, Plant and Equipment 11

73,185 Other Land & Buildings 74,970

15,475 Vehicle, Plant & Equipment 15,707

5,808 Assets Under Construction 4,307

433 Surplus Assets not held for sale 602

841 Intangible Assets 13 837

95,742 Long Term Assets 96,423

Short Term Investments

Assets Held for Sale 14

555 Inventories 18 511

5,714 Short Term Debtors 19 7,018

-979 Doubtful Debt provision 19 -1,791

13,791 Cash and Cash Equivalents 20 10,510

19,081 Current Assets 16,248

-400 Bank Overdraft -137

-7,935 Short Term Borrowing -1,238

-5,019 Short Term Creditors 21 -4,929

-1,208 Provisions (<1yr) 22 -852

-14,562 Current Liabilites -7,156

Long Term Creditors

-53,281 Long Term Borrowing -46,545

0 Capital Grants received in Advance 0

-1,206,782 Net liability related to defined Benefit Pension Schemes 35 -1,176,347

-71 Other Long Term Liabilities 33 -22

-1,260,134 Long Term Liabilities -1,222,914

-1,159,873 Net Assets -1,117,399

14,432 Usable Reserves 23 23,325

-1,174,305 Unusable Reserves 25 -1,140,724

-1,159,873 Total Reserves -1,117,399


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7. 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.


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Cash Flow Statement for 2013/14

2012/13 2013/14

£000 £000

Operating Activities

35,742 Council Tax Income 33,385

51,403 National Non Domestic Rates 21,703

4,094 Grants 34,066

-815 Sales of goods and rendering of services -1,205

42 Interest received 50

90,466 87,999

-57,950 Cash paid to and on behalf of employees -58,913

-22,946 Cash paid to suppliers of goods and services -22,571

-2,239 Interest Paid -2,214

-83,135 -83,698

7,331 Net Cash Flow from Operating Activities 4,301

Investing Activities

-7,075 Purchase of PPE, investment property and intangible assets -7,144

946

Proceeds from the sale of PPE, investment property and intangible assets

35

2,543 Capital grants received 7,325

0 Net increase/(decrease) in short term deposits 0

-3,586 Net cash flows from Investing Activities 216

Financing Activities

11,500 Cash receipts of short and long term borrowing 0

0 Other receipts from financing activities 0

-110 Cash payments for the reduction of the outstanding liability relating to finance

leases and on balance sheet PFI contracts (principal)

0

-9,636 Repayments of short and long term borrowing -7,535

1,754 Net cash flows from financing activities -7,535

5,499 Net increase or decrease in cash and cash equivalents -3,018

7,892 Cash and cash equivalents at the beginning of the reporting period 13,391

13,391 Cash and cash equivalents at the end of the reporting period 10,373

Notes to Main Financial Statements

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1. Statement of Accounting Policies

(i) General Principles

The Statement of Accounts summarises the Authority’s transactions for the 2013/2014 financial year and its position at the year end of 31 March 2014.

The accounts have been prepared in accordance with the requirements of the Code of Practice on Local Authority Accounting in the United Kingdom 2013/14. The accounting convention adopted is historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

The accounts also comply with the Service Reporting Code of Practice 2013/14 (SeRCOP) supported by International Financial Reporting Standards. This Code establishes proper practice with regard to consistent financial reporting.

The following accounting concepts have been applied and policies adopted in preparing the financial accounts:

Fundamental Accounting Concepts

The financial statements, other than cash flow information, are prepared on an accruals basis. This means that revenue and capital expenditure and income are recognised in the accounts in the period in which they are incurred or earned, not as money is paid or received.

Consistent accounting policies have been applied both within the year and between years unless otherwise identified.

The accounts have been prepared on a going concern basis that is on the assumption that the Authority will continue in operational existence for the foreseeable future.

The concept of materiality has been utilised such that insignificant items and fluctuations under an acceptable level of tolerance are permitted, provided in aggregate they would not affect the interpretation of the accounts.

Where specific legislative requirements and accounting principles conflict, legislative requirements are applied.

Accruals of Income and Expenditure

Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular;

Revenue from the provision of services is recognised when the Authority can measure reliably the completion of the transaction and it is probable that economic benefits associated with the transaction will flow to the Authority.

Supplies are recorded as expenditure when they are consumed

Expenses in relation to services received (including the services from employees) are recorded as expenditure when the services are received rather than when payments are made.

Interest receivable on investments and payable on borrowing is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.

Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet.


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(ii) Cash and Cash Equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of more than 24 hours. The Authority has deposits in financial institutions that are repayable on demand which are classified in the accounts as cash and cash equivalents.

In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts which form an integral part of the Authority’s cash management.

(iii) Exceptional Items

Any exceptional items are included in the cost of service to which they relate or on the face of the Comprehensive Income and Expenditure Statement, if such a degree of prominence is necessary to give a fair presentation of the accounts. Details of such items are given in the notes to the accounts. There have been no exceptional items identified in the 2013/14 accounts.

(iv) Prior Period Adjustments

Prior year adjustments may arise from changes in accounting policies or from the correction of a material error. Changes in accounting estimates are accounted for prospectively, (i.e.) in the current and future years affected by the change and do not give rise to a prior period adjustment. Material errors that are identified in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

(v) Charges to Revenue for Non-Current Assets

Front line services and support services are debited with the following amounts to record the cost of holding fixed assets during the year:

o Depreciation attributable to the assets used by the relevant service

o Revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve against which the loss can be written off.

o Amortisation of intangible fixed assets attributable to the service

The Authority is not required to raise council tax to fund depreciation, revaluation and impairment losses or amortisations; however, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement, which is calculated on a prudent basis determined by the Authority in accordance with statutory guidance.

Depreciation, revaluation and impairment losses and amortisations are replaced by a contribution in the General Fund Balance of Minimum Revenue Provision, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

(vi) Employee Benefits

a. Benefits payable during employment

Short term benefits are those due to be settled within 12 months of the year end. They include such benefits as salaries, paid annual leave and paid sick leave, bonuses and non–monetary benefits (e.g. cars) for current employees and are recognised as an expense for services in the year which employees render service to the Authority.

An accrual is made for the cost of holiday entitlements, accrued flexi time and time in lieu earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to the deficit on the Provision of Services but then reversed out through the Movement in Reserves Statement so


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that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

b. Termination Benefits

Termination benefits are amounts payable as a result of a decision by the Authority to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to the Non-Distributed Costs line in the Comprehensive Income and Expenditure Statement when the Authority is demonstrably committed to the termination of the employment or making an offer to encourage voluntary redundancy.

Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by the Authority to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end.

Accounting for retirement benefits is carried out in line with International Accounting Standard 19 (IAS19). IAS19 requires an authority to see beyond its commitment to pay contributions to pension funds and to determine the full longer-term effect that the award of retirement benefits in any year has had on the authority’s financial position. Inclusion of the attributable share of the fund assets and liabilities does not mean that legal title or obligation has passed to the employer, instead it represents the employer’s commitment to increase contributions to make up any shortfall in attributable net assets, or its ability to benefit via reduced contributions from a surplus in the scheme.

IAS19 only applies to defined benefit schemes that are those where retirement benefits are determined independently of the investments of the scheme and employers have obligations to make contributions where assets are insufficient to meet employee benefits.

c. Post-Employment Benefits

The Authority participates in 2 different retirement schemes:

o 1992 Firefighters’ Pension scheme (FPS)

o 2006 Firefighters’ Pension scheme (NFPS)

o Firefighters’ Compensation scheme (FCS)

o The Local Government Pension scheme (LGPS)

Uniformed firefighters may be members of either the 1992 Firefighters’ Pensions Schemes (FPS) or the 2006 (New) Firefighters’ Pension Schemes (NFPS). These schemes are unfunded, which means they have no investment assets to cover their liabilities, and cash has to be generated to meet actual payments as they fall due. On 1 April 2006 new arrangements came into being for funding and accounting for the Firefighters’ Schemes. Previously the Authority’s revenue account was used to receive employee contributions and to pay former employees on a ‘pay-as-you-go’ basis. Central Government funding was received as part of the general formula grant to support payment of pensions. From 1 April 2006 the Authority has set up a Firefighters’ Pensions Fund from which pension payments are made and into which all contributions (employees and employers) are received. The fund is topped up as necessary by specific government grant.

Under the Firefighters’ Compensation Scheme injury awards are payable to those firefighters who have sustained a qualifying injury in the exercise of their duties as a firefighter. From 1 April 2006


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all such injury awards paid under the new Firefighters’ Compensation Scheme (FCS) must be paid from the Authority’s revenue account.

The Local Government Pension scheme (LGPS) is accounted for as a defined benefits scheme:

o The liabilities of the LGPS attributable to the Authority are included in the Balance Sheet on an actuarial basis using an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees bases on assumptions about mortality rates, employee turnover rates and projections of expected earnings for current employees.

o Liabilities are discounted to their value at current prices using a discount rate of 5.4%

o The assets of the LGPS attributable to the Authority are included in the Balance Sheet at their fair value

The change in the net pensions liability is analysed into seven components:

- Current service cost – the increase in liabilities as a result of years of service earned this year – allocated in the Comprehensive Income and Expenditure Statement to the service to which the employee worked

- Past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of non-distributed costs

- Net interest on the net defined benefit liability (asset), i.e. net interest expense for the Authority – the change during the period in the net defined liability (asset) that arises from the passage of time charged to the Financing and Investment Income and Expenditure line of the Comprehensive Income and Expenditure Statement. This is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined liability (asset) at the beginning of the period taking into account any changes in the net defined benefit liability (asset) during the period as aresult of contribution and benefit payments.

Remeasurements comprising;

- The return on plan assets – excluding amounts included in net interest on the net defined liability (asset) which is charged to the Pensions Reserve as Other Comprehensive Income and Expenditure

- Gains or losses on settlements and curtailments – the result of actions to relieve the Authority of liabilities or events that reduce the expected future service or accrual of benefits to employees – debited or credited to the deficit on the Provision of Service in the Comprehensive Income and Expenditure Statement as part of non-distributed costs

- Actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – charged to the Pensions Reserve as Other Comprehensive Income and Expenditure

- Contributions paid to the LGPS – cash paid as employer’s contributions to the pension fund in settlement of liabilities; not accounted for as an expense.

In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by the Authority to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the


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Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end. The negative balance that arises on the Pension Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirements benefits on the basis of cash flows rather than as benefits earned by employees.

The 2013/14 Code (and IAS 19 Employee Benefits Revised) requires that administration costs directly related to the management of plan assets and any tax payable by the plan itself, other than tax included in the actuarial assumptions used to measure the defined benefit obligations, are recognised as a reduction in the return on plan assets and recorded in Other Comprehensive Income and Expenditure.

The 2013/14 Code does not prescribe a specific accounting treatment for administration costs that are not deducted from the return on plan assets. The accounting treatment adopted by West Yorkshire Pension Fund is to deduct administration costs from the cost of services.

d. Discretionary Benefits

The Authority also has the restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension scheme.

(vii) Events After the Balance Sheet Date

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified:

o Those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events

o Those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect.

(viii) Financial Instruments Financial Liabilities Financial Liabilities are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised.

For most of the borrowings that the Authority has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in the loan agreement.

Gains and losses on the repurchase or early settlement of borrowing are credited and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of repurchase/settlement. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing


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instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate.

Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Authority has a policy of spreading losses over the life of the replacement loan and gains over a similar period up to a maximum of ten years. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.

Financial Assets

Financial assets are classified into two types:

o Loans and receivables – assets that have fixed or determinable payments but are not quoted in an active market.

o Available for sale assets – assets that have a quoted market price and/or do not have fixed or determinable payments

Loans and Receivables

Loans and receivables are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement (CIES) for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument.

For most of the loans that the Authority has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement.

Where assets are identified as impaired because of a likelihood arising from a past event that payments due under the contract will not be made, the asset is written down and a charge made to the Financing and Investment line in the Comprehensive Income and Expenditure Statement.

Any gains/losses that arise on the de-recognition of the asset are credited/debited to the Financing and Investment line in the Comprehensive Income and Expenditure Statement.

Available for Sale Assets

Available-for-sale assets are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured and carried at fair value. Where the asset has fixed or determinable payments, annual credits to the Financing and Investment Income and Expenditure line in the CIES for interest receivable are based on the amortised cost of the asset multiplied by the effective interest rate for the instrument. Where there are no fixed or determinable payments, income (for example, dividends) is credited to the CIES when it becomes receivable by the Authority.

Foreign Currency Translation

Where the Authority has entered into a transaction denominated in a foreign currency, the transaction is converted into sterling at the exchange rate applicable on the date the transaction was effective.


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(x) Government Grants and Contributions

Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Authority when there is reasonable assurance that:

o The Authority will comply with the conditions attached to the payments, and

o The grants or contributions will be received

Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed by the recipient as specified, if not, future economic benefits or service potential must be returned to the transferor.

Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-Specific Grant Income (non-ring fences revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement. The Authority has set a de minimis level for revenue grants and contributions at £20,000.

Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has been used to finance capital expenditure, it is posted to the Capital Grants Unapplied Reserve. Where it is applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.

(xi) Intangible Assets

Expenditure on the acquisition of the intangible assets is capitalised, brought onto the balance sheet at cost and amortised over the period benefit is received. Estimated lives for new intangible assets vary. The Authority’s intangible assets are software and associated licences. Where the period of the licence is known the actual length is used as its useful life. Where this is not known, a life of five years is assumed.

Intangible assets are amortised on their current net book value and it is assumed that residual value is insignificant or nil. Intangible assets are reviewed annually for impairment. All services are charged with a provision for amortisation and, where required, any related impairment loss, for all intangible assets used in the provision of the service.

(xii) Inventories and Long Term Contracts

Inventories are included in the Balance Sheet at the lower of cost and net realisable value.

(xiii) Leases

Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. Leases that do not meet the definition of finance leases are accounted for as operating leases.

The Authority as Lessee


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Finance Leases

Property, plant and equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payment, if lower). The asset recognised is matched by a liability for the obligation to pay the lessor.

Lease payments are apportioned between:

o A charge for the acquisition of the interest in the property, plant or equipment – applied to write down the lease liability, and

o A finance charge (debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

Property, plant and equipment recognised under finance leases is accounted for using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the assets estimated useful life.

The Authority is not required to raise council tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead, a prudent annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements. Depreciation and revaluation and impairment losses are substituted by a revenue contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

Operating Leases

Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the service benefitting from the use of the leased property, plant or equipment.

Charges are made on a straight line basis over the life of the lease, even if this does match the pattern of payments.

The Authority leases no assets to other organisations

(xiv) Overheads and Support Services

The costs of overheads and support services are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 2013/2014 (SeRCOP). The aim of the analysis is to promote consistency between authorities in terms of the format and enable the comparability of financial performance reporting.

The total absorption costing principle is used – the full cost of overheads and support services are shared between users in proportion to the benefits received with the exception of:

o Corporate and Democratic Core – this is split into two areas;

o Democratic Representation and Management – this is policy making and includes elected member based expenditure

o Corporate Management – this includes the cost of the Chief Fire Officer

o Non Distributed Costs – these are costs which are specifically excluded from being charged, allocated or apportioned to service divisions. The two main areas of non-distributed costs are past service costs relating to retirement benefits and the cost of unused fixed assets.


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These above two cost categories are defined in Service Reporting Code of Practice (SeRCOP) and accounted for as separate headings in the Comprehensive Income and Expenditure Statement, as part of Net Expenditure on Continuing Services.

An apportionment between operations and community fire safety is completed at the end of each financial year for the cost of operational firefighters fitting smoke alarms in domestic properties.

Management services are apportioned to Operations and Community Fire safety bases on total gross expenditure within the financial year. Management services cover the functions of; finance, information technology, human resources, occupational health, transport and fleet management, stores and centralised property management.

(xv) Property, Plant and Equipment

Assets that have physical substance and are held for use in the supply of services or for administering services and are expected to be used during more than one financial year are classified as Property, Plant and Equipment.

Recognition

Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Authority and the cost of the item can be measured reliably.

The cost of enhancement work to existing assets is added to the appropriate fixed asset balance where the enhancement increases either the value or life of the asset. Expenditure that maintains but does not add to an assets’ potential to deliver future economic benefits is charged as an expense when it is incurred.

The Authority has a diminimis level of £10,000 whereby capital schemes below this limit are charged to revenue expenditure.

Measurement

Assets are initially measured at cost comprising the purchase price and any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Assets are carried in the Balance Sheet using the following measurement bases;

o Assets under construction – historical cost

o Operational Assets – including all fire stations, the Urban Search and Rescue Building and the Smoke House at FSHQ- depreciated replacement cost, with the exception of;

o FSHQ which comprises Oakroyd Hall, Training Centre, Breathing Apparatus Block, Mobilising and Control Centre, Transport workshops and stores, admin houses

o Surplus Development land at FSHQ

o Service Delivery Centre – fire safety training facility at Bramley, Leeds

o Surplus land adjoining Safety Central

o Site of former fire station at Nelson Street, Bradford

All the above assets are valued at market value.

o Non-property assets with short useful lives and/or low values – depreciated historical cost

o Fire Appliances – due to their specialist nature these are valued at depreciated historical cost


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o All other assets – fair value, determined as the amount that would be paid for the asset in its existing use

Property assets are formally valued every five years, with the last full valuation being the 31 March 2010.

Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Comprehensive Income and Expenditure Statement where they arise from the reversal of a loss previously charged to a service.

Where decreases in value are identified, they are accounted for by;

o Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gain)

o Where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.

The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated in the Capital Adjustment Account.

Impairment

Assets are assessed at the end of each financial year as to whether there is any indication that an asset may be impaired.

Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall.

Where identified, the impairment losses are accounted for by;

o Where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains)

o Where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.

Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised.

Depreciation

Depreciation is provided for on all fixed assets with a determinable finite life except for freehold land and assets under construction. Assets are depreciated on the straight line basis. Estimated lives for new assets vary but are mainly as follows:

o Buildings 50 years

o Vehicles and operational equipment 8-12 years

o Computer equipment 5 years

Estimated lives for all new appliances will be 12 years.

Where an item of Property, Plant and Equipment has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately.


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Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account.

Componentisation

For those assets where the cost of the component parts is significant are depreciated separately from the rest of the asset. The Authority has a £500,000 de minimis level on the net book value which means that if the carrying value of the asset is lower than this de minimis the asset is not componentised. For those assets that are assessed for componentisation each component must represent 25% of the total cost of the asset or the depreciation charges must be significant to the charge if componentisation was not used. The componentisation of an asset is also reviewed if the asset has significant enhancement expenditure during the year, is purchased/built from new and also during the formal 5 yearly property valuations. The Authority does not componentise fire appliances because the component parts have the same useful life as the asset as a whole.

Disposals and Non-Current Assets Held for Sale

Once management has made the decision that an asset has become surplus to requirements and it is being actively marketed for sale it is reclassified as an Asset Held for Sale. The asset is re-valued immediately before reclassification and then carried at the lower of this amount and fair value less costs to sell.

Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previous losses recognised in the surplus or deficit on the Provision of Services. Depreciation is not charged on Assets Held for Sale.

If assets no longer meet the criteria to be classified as Assets Held for Sale, they are reclassified back to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale, adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as held for sale, and their recoverable amount at the date of the decision not to sell.

When an asset is disposed of, the carrying amount of the asset in the Balance Sheet is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.

Amounts received for a disposal in excess of £10,000 are categorised as capital receipts.

The written off value of disposals is not a charge against council tax, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.

(xvi) Unusual or material charges or credits in the Accounts

These are items that due to their nature and/or value require separate disclosure. Details of unusual or material charges or credits in the Accounts for 2012/13 are shown in Note 5.

(xvii) Provisions, Contingent Liabilities and Contingent Assets

Provisions

Provisions are made where an event has taken place that gives the Authority a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation.


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Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year the Authority becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Balance Sheet.

Contingent Liabilities

A contingent liability arises where an event has taken place that gives the Authority a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Authority.

Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Contingent Assets

A contingent asset arises where an event has taken place that gives the Authority a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Authority.

Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts.

(xviii) Reserves

These are amounts set aside for purposes falling outside the definition of provisions. The Authority’s Revenue Reserves some of which can be used to support expenditure and others which have been established for other purposes. The General Fund Balance can be used to meet both capital and revenue expenditure and a minimum level must be maintained for risk management purposes. The Authority also has a number of earmarked reserves which are held for identified specific expenditure in the future. These will be reviewed periodically and those no longer required will be transferred to the General Fund Balance.

The revaluation reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the capital adjustment account.

The balances on the following reserves (i.e.) capital adjustment account, the financial instruments adjustment account, the revaluation reserve, the pension reserve and the collection fund adjustment account cannot be used for future expenditure.

(xix) Revenue Expenditure Funded from Capital Under Statute

This represents expenditure which may properly be capitalised under statutory provisions but which does not represent fixed assets. The expenditure is written off to revenue in the year it is incurred and an adjustment is made on the statement of General Fund Balance for the same amount so that there is no impact on council tax.

(xx) Value Added Tax

VAT is included in the accounts only to the extent that it is irrecoverable and therefore charged to service expenditure as appropriate.

VAT receivable is excluded from income.


of 119 WYFRA

(xxi) Council Tax and National Non-Domestic Rates Billing Authorities in England are currently required by statute to maintain a separate fund for the

collection and distribution of amounts due in respect of council tax and national non-domestic rates.

In its capacity as a billing authority, an authority acts as an agent - it collects and distributes council

tax on behalf of itself and other major preceptors such as the Fire Authority.

Council tax and National Non Domestic Rate (NNDR) income collected by billing authorities is credited

to their collection fund and represents accrued income for the year. Regulations determine when this

income should be released from the collection fund and transferred to the general fund of the billing

authority and other major preceptors (which in turn is credited to their general funds). The amount

credited under statute is an authority's precept and NNDR income for the year, plus the authority's

share of the surplus or deficit on the collection fund for the previous year.

The council tax and NNDR income of the Fire Authority included in the Comprehensive Income and

Expenditure Statement is the accrued income for the year. However, the difference between the

accrued income included in the Comprehensive Income and Expenditure Statement and the amount

required by regulation to actually be credited to the general fund in year is taken to the Collection

Fund Adjustment account. This account is held on the Balance Sheet, and included as a reconciling

item in the Total Movement in Reserves Statement. Hence the difference between accrued precepts

and NNDR income received and actual amounts received does not impact on the general Fund or the

revenue budget of the Authority.

Since the collection of council tax and NNDR income is in substance an agency arrangement, the cash

collected by the billing authority belongs proportionately to the billing authority and major

preceptors who share the risks and rewards that the amount of council tax and NNDR income could

be more or less than predicted. The effect of any bad debts written off, impairment provision and

also provisions for business rate appeals are shared proportionately.

The Authority therefore makes provision for the following items in its balance sheet at the financial

year end:

- Debtors for the Authority's share of council tax and NNDR arrears at 31 March.

- Provision for bad debts of Debtors in relation to council tax and NNDR arrears as at 31

March.

- Income in advance from Council Tax and NNDR payers who have paid their bills early.

- Creditor provision where the billing authorities have over-collected council tax and NNDR

income in year compared to the value of amounts actually paid over to the Authority.

- Creditor provision for appeals by NNDR payers who disagree with the Valuation of their

premises for NNDR purposes


of 119 WYFRA

2. Accounting Standards that have been issued but have not yet been applied The Code of Practice on Local Council Accounting in the United Kingdom 2013/14 (the Code) requires that the Authority discloses information relating to the impact of an accounting change that will be required by a new standard that has been issued but not yet adopted.

This requirement applies to accounting standards that come into effect for financial years commencing on or before the 1st January of the financial year in question (i.e. on or before 1 January 2014 for 2013/14). Disclosure requirements are expected to be included in a subsequent edition of the Code

The following changes are not considered to have a significant impact on the Statement of Accounts as demonstrated below:

IFRS 13 Fair Value Measurement (May 2011)

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

IAS 27 Separate Financial Statements (as amended in 2011)

IAS 28 Investments in Associates and Joint Ventures (as amended in 2011)

IAS 32 Financial Instruments: Presentation

It is anticipated that detail of the disclosures required for most of these changes will be included in the Code of Practice for 2014/15.

3. Critical Judgements in Applying Accounting Policies

In applying the accounting policies set out in Note 1, the Authority has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are judgements made in the process of applying the Authority’s accounting policies that have the most significant effect on the amounts recognised in the financial statements, e.g.,

o influences on going concern, such as future levels of funding for fire services. However, the Authority has determined that this uncertainty is not yet sufficient to provide an indication that the assets of the Authority might be impaired as, a result of a need to close facilities and reduce levels of service provision.

o the authority has an outstanding uninsured claim relating to exposure to asbestos, and it is possible that further claims may arise in the future

o there is currently a potential liability relating to pension payments for retained firefighters under the Part-time Workers (Prevention of Less Favourable Treatment Regulations) Agreement. A new Earmarked reserve totalling £2.5m has been established to recognise this potential cost to the Authority.

4. Assumptions made about the future and other major sources of estimation uncertainty The Statement of Accounts contains estimated figures that are based on assumptions


of 119 WYFRA

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 2014 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:

Item Uncertainties Effect If actual results differs from

Assumptions

Property, Plant

and equipment

Provisions

Pensions

Liability

Arrears

to be reduced

As at the 31st March 2014 the provision for the

Assets are depreciated over useful lives that are

dependent on assumptions about the level of

repairs and maintenance on individual assets.

The current economic climate makes it

uncertain if the Authority can sustain the

amount of the asset falls. It is estimated that the

annual charge for depreciation would increase by

£97k for every year that the useful lives have

current level of expenditure on repairs and

maintenance which could bring into doubt

useful lives assigned to the assets

The Authority shares the collection fund surplus

in retirement and mortality ages and expected

returns on investment funds. A firm of actuaries

and deficits with the 5 district councils of West

Yorkshire. Due the current economic climate the

estimated collection fund balance may be more

volatile

of sundry debtors for £218K. Due to the low levels of

bad debt the Authority does not have the need for a

bad debt provision but due to the current economic

climate this policy may be reviewed

If the useful lives of assets are reduced,

depreciation increases and hence the carrying

are appointed to provide the Authority with

expert advice

At the 31 March 2014 the Authority had a balance

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

ways and changes to other estimates and actuarial

non payment of council tax debtors

is £1,790k (£979k 2012/13).

This may rise due to the economic climate

because council tax payers maybe unable to pay

council tax

The effects on the net pension liability of changes

in individual assumptions can be measured. For

instance a 0.5% increase in the discount rate

assumption would result in a decrease in the

pension liability of £5.8 million

However, the assumptions interact in complex

reserves

assumptions may produce a different impact on

the total liability

The amount of debt exceeding 2 months was £45k

as at the 31 March 2014. This is to be monitored

and a provision would have to be funded from

revenue reducing the level of general fund


of 119 WYFRA

5. Material Items of Income and Expense

None of the charges impact upon the balances of the Fire Authority or upon Council Tax

IAS19 Employee Benefits

It is a requirement of the Code of Practice that details of any material items of income and

expenditure that are recorded in the Comprehensive Income and Expenditure Statement (CIES),

that would potentially distort any comparison with previous years are identified.

In 2013/14 the following transaction is included within the CIES.

This standard requires the recognition of the cost of pensions to be recorded in the CIES. Due to

the volatility and uncertainty of the estimation process involved in the calculation of these costs

there are significant variations each year. In 2013/14 a credit of £9.2m has been recorded in the

Firefighters and Rescue Operations line in the CIES (£12m 2012/13).

6. Events after the Balance Sheet Date

There have been no events taking place after 31 March 2014 which provide information that is

relevant to an understanding of the Authority's financial position but do not relate to conditions at

that date

The Statement of Accounts was authorised for use by the Chief Finance and Procurement Officer on

the 30th June 2014. Events taking place after this date are not reflected in the financial statements

or notes. Where events taking place before this date provided information about conditions existing

at the 31 March 2014, the figures in the financial statements and notes have been adjusted in all

material aspects to reflect the impact of this information.

7. Adjustments between Accounting Basis and Funding Basis Under Regulation

This note details the adjustments that are made to the Comprehensive Income and Expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are specified by Statutory provisions as being available to the Authority to meet future capital and revenue expenditure.


of 119 WYFRA

2012/13

Gen

eral

Fun

d

Bala

nce

Earm

arke

d

Gen

eral

Fun

d

Rese

rves

Capi

tal R

ecei

pts

Rese

rve

Capi

tal G

rant

s

Una

pplie

d

TOTA

L U

sabl

e

Rese

rves

Mov

emen

t in

unus

able

Rese

rves

£000 £000 £000 £000 £000 £000

Adjustments involving the Capital Adjustment Account:

Reversal of items debited or credited to the CIES

Charges for depreciation and impairment of non

current assets

5,435 5,435 -5,435

Revaluation losses on property, plant and

equipment

0 0 0

Amortisation of intangible assets 303 303 -303

Capital grants and contributions -2,577 -2,577 2,577

Revenue expenditure funded from capital under

statute

744 744 -744

Amounts of non current assets written off on

disposal or sale as part of the gain/loss on disposal

to the CIES

637 637 -637

Insertion of items not debited or credited to the CIES

Statutory provision for the financing of capital

investment

-4,586 -4,586 4,586

-44 0 0 0 -44 44

Adjustments involving the Capital Receipts Reserve:

Transfer of sale proceeds credited as part of the

gain/loss on disposal to the CIES

-947 -516 -1,463 1,463

-947 -516 0 -1,463 1,463

Adjustments involving the Financial Instruments

Adjustment Account:

Amount by which finance costs charged to the CIES

are different from finance costs chargeable in the

year in accordance with statutory requirements

-48 -48 48

-48 0 0 0 -48 48

Adjustments involving the Pensions Reserve:

Reversal of items relating to retirement benefits

debited or credited to the CIES

76,704 76,704 -76,704

Employers pension contributions and direct

payments to pensioners payable in the year

-38,639 -38,639 38,639

38,065 0 0 0 38,065 -38,065

Adjustments involving the Collection Fund

Adjustment Account:

Amount by which council tax income credited to

the CIES is different from council tax income

calculated for the year in accordance with

statutory requirements

-184 -184 184

-184 0 0 0 -184 184

Adjustment involving the Accumulating

Compensated Absences Adjustment Account:

Amount by which officer remuneration charged to

the CIES on an accruals basis is different from

remuneration chargeable in the year in accordance

with statutory requirements.

-55 -55 55

-55 0 0 0 -55 55

Total Adjustments 2012/13 36,787 0 -516 0 36,271 -36,271


of 119 WYFRA

2012/13 - restated

Gen

eral

Fun

d

Bal

ance

Earm

arke

d

Gen

eral

Fun

d

Res

erve

s

Cap

ital

Rec

eipt

s

Res

erve

Cap

ital

Gra

nts

Una

pplie

d

TOTA

L U

sabl

e

Res

erve

s

Mo

vem

ent

in

unus

able

Res

erve

s

£000 £000 £000 £000 £000 £000


Reversal of items debited or credited to the CIES


current assets

5,435 5,435 -5,435


equipment

0 0 0


Capital grants and contributions -2,577 -2,577 2,577


statute

744 744 -744



to the CIES

637 637 -637

Insertion of items not debited or credited to the CIES


investment

-4,586 -4,586 4,586

-44 0 0 0 -44 44

Adjustments involving the Capital Receipts Reserve:



-947 -516 -1,463 1,463

-947 -516 0 -1,463 1,463


Adjustment Account:




-48 -48 48

-48 0 0 0 -48 48




77,652 77,652 -77,652



-38,639 -38,639 38,639

39,013 0 0 0 39,013 -39,013


Adjustment Account:




statutory requirements

-184 -184 184

-184 0 0 0 -184 184







-55 -55 55

-55 0 0 0 -55 55

Total Adjustments 2012/13 - restated 37,735 0 -516 0 37,219 -37,219


of 119 WYFRA

2013/14

Ge

ne

ral F

un

d

Ba

lan

ce

Ea

rma

rke

d

Ge

ne

ral F

un

d

Re

serv

es

Ca

pit

al R

ece

ipts

Re

serv

e

Ca

pit

al R

ece

ipts

Un

ap

plie

d

TO

TA

L U

sab

le

Re

serv

es

Mo

vem

en

t in

Un

usa

ble

Re

serv

es

£000 £000 £000 £000 £000 £000


Reversal of items debited or credited to the CIES:


current assets

4,961 4,961 -4,961


equipment

238 238 -238


Capital grants and contributions -8,248 3,634 -4,614 4,614


statue

670 670 -670



to the CIES

426 426 -426

Insertion of items not debited or credited to the CIES:


investment

-4,726 -4,726 4,726

-6,311 3,634 -2,677 2,677

Adjustments involving the Capital Receipts Reserves:



-15 -15 15

-15 0 -15 15


Adjustment Account:




-49 -49 49

-49 -49 49




82,108 82,108 -82,108



-39,693 -39,693 39,693

42,415 42,415 -42,415


Adjustment Account:




-126 -126 126

-126 -126 126







-9 -9 9

-9 -9 9

Total Adjustments 2013/14 35,905 0 0 3,634 39,539 -39,539

Usable Reserves


of 119 WYFRA

8. Other Operating Expenditure

2012/13 2013/14

£000 £000

-310 Gains on the disposal of non current assets -410

-310 Total -410

9. Financing and Investment Income and Expenditure

2012/13 2012/13 2013/14

£000 £000 £000

Restated

2,213 2,213 Interest Payable and similar charges 2,129

53,039 50,967 Pensions interest cost 51,676

-2,937 0 Expected Return on pension assets 0

-42 -42 Interest Receivable and similar income -52

48 48 Income and expenditure in relation to

investment properties and changes in fair

value

48

52,321 53,186 TOTAL 53,801

Interest receivable and similar income represents the amount of interest earned on the Authority’s

revenue balances in 2013/14

10. Taxation and Non Specific Grant income

2012/13 2013/14

£000 £000

-35,685 Council Tax Income -33,886

-51,403 National Non Domestic Rates -7,707

-2,075 Non ring fenced Government Grants -46,477

-2,577 Capital Grants and Contributions -8,248

-91,740 TOTAL -96,318


of 119 WYFRA

11. Property, Plant and Equipment

Movements in 2012/13

Land

&

Bui

ldin

gs

Veh

icle

s, P

lant

& E

quip

men

t

Ass

ets

Und

er

Co

nstr

ucti

on

Surp

lus

Ass

ets

Tota

l

£000 £000 £000 £000 £000

Cost or Valuation

1 April 2012 80,812 30,094 1,005 896 112,807

Additions 1,710 3,194 1,131 6,035

Donations 0

Revaluation increases/(decreases) recognised

in the Revaluation Reserve

0

Revaluation increases/(decreases) recognised

in the Surplus/deficit on the provision of

services

0

De recognition - Disposals 0 -2,249 0 -460 -2,709

De recognition - other 0

Assets reclassified (to)/from Held for Sale 0

Other movements in cost or valuation -3,498 -334 3,832 0

Cost or Valuation 31 March 2013 79,024 30,705 5,968 436 116,133

Accumulated Depreciation and Impairment

1 April 2012 3,708 14,293 0 42 18,043

Depreciation charge 2,011 3,123 0 21 5,155

Depreciation written out to the Revaluation

Reserve

0

Depreciation written out to the Surplus/Deficit

on the Provision of Services

0

Impairment losses/(reversals) recognised in the

Revaluation Reserve

0

Impairment losses/(reversals) recognised in the

Surplus/Deficit on the Provision of Services

280 280

De-recognition - Disposals 0 -2,186 0 -60 -2,246

De-recognition - Other 0

Other movements in Depreciation and

Impairment

-160 160 0

Depreciation & Impairment 31 March 2013 5,839 15,230 160 3 21,232

Net book Value 31 March 2013 73,185 15,475 5,808 433 94,901

Net book Value 31 March 2012 77,104 15,801 1,005 854 94,764


of 119 WYFRA

Movements in 2013/14

Lan

d &

Bu

ildin

gs

Veh

icle

s, P

lan

t &

Equ

ipm

ent

Ass

ets

un

der

Co

nst

ruct

on

Surp

lus

asse

ts

Tota

l

£000 £000 £000 £000 £000

Cost or Valuation

1 April 2013 79,024 30,705 5,968 436 116,133

Additions 1,445 1,545 3,286 6,276

Acc Depreciation written off to Cost -211 -211

Revaluation recognised in the Revaluation

Reserve 300 300

Revaluation recognised in the provision of

services -238 -238

Derecognition - Disposals -536 -1,280 0 -1,816

Assets reclassified Held for Sale -145 -145

Other movements in Cost 2,874 659 -4,947 435 -979

31 March 2014 82,658 31,484 4,307 871 119,320

Depreciation & Impairment

1 April 2013 5,839 15,230 160 3 21,232

Depreciation charge 2,018 2,745 2 4,765

Acc Depreciation written off to Cost -211 -211

Impairment Losses recognised in the

Revaluation Reserve 50 50

Impairment recognised in the Provision of

Services 196 196

Derecognition - Disposals -90 -1,260 -1,350

Depreciation reclassified Held for Sale -145 -145

Other movements in Depreciation 132 -793 -160 18 -803

31 March 2014 7,688 15,777 0 269 23,734

Net Book Value

31 March 2014 74,970 15,707 4,307 602 95,586

31 March 2013 73,185 15,475 5,808 433 94,901

The following useful lives and depreciation rates have been used in the calculation of depreciation :

Buildings - 21 to 60 years

Vehicle, Plant, Furniture & Equipment - 5 to 15 years


of 119 WYFRA

Capital Commitments

- IRMP New fire station builds:

South Kirkby £1.6m

Raistrick £2.3m

- Rothwell fire station re-build - £1.4m

- Leeds Combined Aerial & Rescue Pump (CARP) £0.6m

- Refurbishment of Supplies & Transport building £0.8m

- New Control Project £1.9m

Outstanding commitments as at 31 March 2013 were £2.2m.

At 31 March 2014, the Authority has entered into contracts for the construction or enhancement of

Property, Plant and Equipment in 2013/14 and future years budgeted to cost £26 million. The major

commitments are :

12. Revaluations

- the properties have the benefit of planning permission for the replacement of the existing

buildings with modern equivalent values

- depreciated replacement cost valuations are carried out under the assumption of continued

occupation and use

- the land elements are based upon residential or commercial land values within the surrounding

area.

- adjustments have been made to reflect the physical (age), functional and economical

obsolescence of the existing buildings in producing the replacement cost

Following a major refurbishment, the Service Delivery Centre at Bramley was revalualed in March

2014 by GVA Grimley.

The significant assumptions applied in estimating the fair values are:

As stated in Note 1 Accounting Policies, section (xv), assets are carried on the Balance Sheet using

the following measurement bases:

- Assets under construction - historical cost

- Land & buildings depreciated replacement cost with the exception of surplus land, buildings at Fire

Service Headquarters and the Service Delivery Centre at Bramley which are valued at market value

The Authority formally revalues land and buildings every five years. The last formal valuation was

carried out by GVA Grimley at the 31 March 2010. To ensure that asset values are correctly

represented in the accounts, an internal review is undertaken by the property manager who is RICS

qualified at the 31 March 2014 to ascertain any material variations in asset values. The results from

this internal review confirm that there has been no gain or loss in the valuation of assets.


of 119 WYFRA

13. Intangible Assets

The Authority accounts for its software as intangible assets, to the extent that the software is not an

integral part of a particular IT system and accounted for as part of the hardware item of Property, plant

and Equipment. The intangible assets include purchased licences.

All software is given an finite useful life, based on assessments of the period that the software is expected

to be of use to the Authority.

The useful lives assigned to the major software suites used by the Authority are five years unless the period

of the licence is known.

The carrying amount of intangible assets is amortised on a straight line basis. The amortisation of £368k

charged to revenue in 2013/14 was charged to the IT support cost centre and then absorbed as an

overhead across all the service headings in the Net Expenditure of Services. It is not possible to quantify

exactly how much of the amortisation is attributable to each service heading.

The movement on Intangible Asset Balances during the year is as follows :

2012/13 2013/14

Software

Licences

Software

Licences

£000 £000

Balance at start of year:

Gross carrying amounts 1,546 1,678

Accumulated Amortisation 663 837

Net carrying amount at start of year 883 841

Purchases 261 198

Disposals 0 -10

Amortisation for the period -303 -368

Other movements 0 176

Net carrying amount at the end of year 841 837

Comprising:

Gross Carrying Amounts 1,678 1,990

Accumulated Amortisation 837 1,153

841 837


of 119 WYFRA

14. Assets Held for Sale

There are no Assets Held for Sale at 31 March 2014 other than two vehicles with a net book

value of zero that were held at the auctions awaiting sale.

15. Impairment Losses

Marsden Fire Station was revalued to its sale price resulting in a impairment of £195,504.


of 119 WYFRA

16. Financial Instruments

Categories of Financial Instruments

The following categories of financial instruments are carried in the Balance Sheet:

31-Mar-13 31-Mar-14 31-Mar-13 31-Mar-14

£000 £000 £000 £000

Investments

Loans and receivables 0 0 12,977 9,593

Available for sale financial assets 0 0 814 917

Total Investments 0 0 13,791 10,510

Debtors

Loans and receivables 0 0 0 0

Financial assets carried at

contract amounts0 0 2,011 1,913

Total Debtors 0 0 2,011 1,913

Borrowings

Financial liabilities at amortised cost 53,819 46,545 7,946 735

Financial liabilities at fair value

through profit and loss0 0 0 0

Total Borrowings 53,819 46,545 7,946 735

Other Long Term Liabilities

Finance lease liabilities 23 22 49 0

Other Long Term Liabilities 23 22 49 0

Creditors

Financial liabilities at amortised cost 0 0 586 0

Financial liabilities carried at

contract amounts

0 0 2,105 1,694

Total Creditors 0 0 2,691 1,694

Long Term Current


of 119 WYFRA

Income, Expense, Gains and Losses The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments are made up as follows:

Fin

an

cia

l Lia

bili

tie

s

me

asu

red

at

am

ort

ise

d c

ost

Fin

an

cia

l Ass

ets

: L

oa

ns

an

d

Re

ceiv

ab

les

Fin

an

cia

l Ass

ets

: A

vaila

ble

for

Sale

To

tal

Fin

an

cia

l Lia

bili

tie

s

me

asu

red

at

am

ort

ise

d c

ost

Fin

an

cia

l Ass

ets

: L

oa

ns

an

d

Re

ceiv

ab

les

Fin

an

cia

l Ass

ets

: A

vaila

ble

for

Sale

To

tal

£000 £000 £000 £000 £000 £000

Interest expense 2,205 0 0 2,205 2,129 0 0 2,129

Losses on derecognition 62 0 0 62 62 0 0 62

Total expense in surplus/deficit

on the provision of services

2,267 0 0 2,267 2,191 0 0 2,191

Interest income 0 -35 -7 -42 0 -33 -19 -52

Gains on derecognition -13 0 -13 0 -13 -13

Total income in surplus/deficit

on the provision of services

-13 -35 -7 -55 0 -46 -19 -65

Net gain/(loss) for the year 2,254 -35 -7 2,212 2,191 -46 -19 2,126

2012/13 2013/14

Fair Value of Assets and Liabilities

Financial liabilities, financial assets represented by loans and receivables and long term debtors

and creditors are disclosed in the Balance Sheet at amortised cost. Their fair value can be

assessed by calculating the present value of the cash flows that will take place over the

remaining term of the instruments, using the following assumptions:

- no early repayment or impairment is recognised

- where an instrument will mature in the next 12 months, the carrying amount is assumed to approximate to fair value.

- the fair value of trade and other receivables is taken to be the invoiced or billed amount


of 119 WYFRA

The fair values calculated are as follows:

Ca

rryi

ng

Am

ou

nt

Fair

Va

lue

Ca

rryi

ng

Am

ou

nt

Fair

Va

lue

£000 £000 £000 £000

Financial Liabilities 61,216 74,000 47,783 56,160

Long Term Creditors 0 0 0 0

31-Mar-1431-Mar-13

This calculation is based on interest rates quoted for long term loans at 31 March by the Public Works Loan Board for the early repayment of loans, except for the market loan where current comparable market rates have been used.

The fair value of the liabilities is more than the carrying amount because the Authority's portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the rates available for similar loans at the Balance Sheet date. This shows a notional future loss (based on economic conditions at 31 March 2013) arising from a commitment to pay interest to lenders above current market rates.

Ca

rryi

ng

Am

ou

nt

Fair

Va

lue

Ca

rryi

ng

Am

ou

nt

Fair

Va

lue

£000 £000 £000 £000

Loans and receivables 4,898 4,898 6,672 6,672

Long term debtors 0 0 0 0

31-Mar-1431-Mar-13

For short-term debtors and creditors, it is assumed that the carrying value will be a reasonable approximation of fair value.

The carrying amount of loans and receivables is deemed to be approximate to fair value because of the relatively short periods to maturity.


of 119 WYFRA

17. Nature and Extent of Risks arising from Financial Instruments

The Authority's activities expose it to a variety of financial risks:

a. Credit risk - the possibility that other parties might fail to pay amounts due to the Authority;

b. Liquidity risk - the possibility that the Authority might not have funds available to meet its commitments to make payments;

c. Market risk - the possibility that financial loss might arise for the Authority as a result of changes in such measures as interest rates and stock market movements.

The Authority's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the resources available to fund services. The procedures are set out through a legal framework in the Local Government Act 2003 and associated regulations. These require the Authority to comply with the CIPFA Prudential Code, the CIPFA Treasury Management in the Public Services Code and investment guidance issued under the Act. Kirklees Council manages the function on behalf of the Authority under the supervision of the Chief Financial & Procurement Officer and policies approved by Members in the annual treasury management strategy and the treasury management policy statement and practices. Credit Risk Investments The Authority manages credit risk by ensuring that investments are only placed with organisations of high credit quality as set out in the Treasury Management Strategy. These include commercial entities with a minimum long term credit rating of A, part nationalised banks or building societies with a rating at or above BBB-, the UK Government and other local authorities. Recognising that credit ratings are imperfect predictors of default, the Authority has regard for other measures including credit default swap and equity process when selecting commercial entities for investment. A limit of £3 million is placed on the amount that can be invested with a single counterparty (excluding the UK Government and other local authorities). The Authority also sets a group investment limit for institutions that are in the same banking group. At the year end, the Authority held cash deposits at banks and other financial institutions of £6.7m (£4.9m 31 March 2013). The Authority has instant access to cash deposits and did not make any investments longer than one year in 2013/14.

Short Term

Credit rating 31 March 2013 31 March 2014

AAA 917 814

AA- 1,354 307

A 2,702

UK Government 1,698 3,777

Total Investments 6,671 4,898

The table below sumarises the credit risk exposures of the Authority's investment

portfolio by credit rating


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The Authority’s maximum exposure to credit risk in relation to its investments in UK banks or building societies of £2.7m cannot be assessed generally as the risk of any institiution failing to make interest payments or repay the principal sum will be specific to each institution. Recent experience has shown that it is rare for such entities to be unable to meet their commitments. A risk of irrecoverability applies to all of the Authoirty’s deposits but there was no evidence at the 31st March that this was likely to crystallise. Customers The Authority does not allow credit for customers but due to the nature of some of the services provided by the Authority, payment prior to the service being carried out is highly unlikely.

Credit Risk

31 March 2013 31 March 2014

£000's £000's

Less than three months 102 45

Three to six months 0 0

Six months to one year 0 0

More than one year 0 0

102 45

Liquidity Risk As well as keeping cash in instant access deposit accounts, the Authority has ready access to borrowings from the Public Works Loans Board. Because of this, there is no significant risk that it will be unable to raise finance to meet its commitments. Instead the risk is that the Authority will be bound to replenish its borrowings at less favourable rates or, alternatively, liquidate its investments at more favourable rates. The strategy is to ensure that the loan repayment profile is even with no more than 20% of loans due to mature in one year. The maturity analysis of borrowing is shown below:

Liquidity Risk

31 March 2013 31 March 2014

£000 £000

Less than one year 1,535 735

Between one and two years 1,236 235

Between two and five years 3,706 706

Between five and ten years 4,402 3,667

Between ten years and

fifteen years

5,500 4,250

More than fifteen years 38,437 37,687

54,816 47,280

Uncertain date 2,000 2,000

The Authority has a £2 million “Lenders Option, Borrowers Option “(LOBO) loan where the lender has the option to propose an increase in the rate payable. The Authority will then have the option to accept


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the new rate or repay the loan without penalty. Due to low current interest rates, in the unlikely event that the lender excersises its option, the Authority is likely to repay the loan. The maturity date is therefore uncertain Market Risk Interest Rate Risk

The Authority is exposed to significant risk in terms of its exposure to interest rate movements in particular on borrowings. Movements in interest rates have a complex impact on the Authority. For instance, a rise in interest rates would have the following effects: o borrowings at variable rates - the interest expense charged to the surplus/deficit on the provision of

services will rise

o borrowings at fixed rates - the fair value of liabilities will fall

o investments at variable rates - the interest income credited to the surplus/deficit on the provision of services will rise

o investments at fixed rates - the fair value of the assets will fall Borrowings are not carried at fair value, so nominal gains and losses on fixed rate borrowings would not impact on the surplus or deficit on the provision of service or the Comprehensive Income & Expenditure Statement. However, changes in interest payable and receivable on variable rate borrowings and investments will be posted to the surplus or deficit on the provision of service and affect the general fund balance. The Authority has a number of strategies for managing interest rate risk. Policy is to aim to keep a maximum of 40% of its borrowings in variable rate loans. During periods of falling interest rates, and where economic circumstances makes 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 and provide compensation for a proportion of any higher borrowing costs. The treasury management strategy is proactive, providing for the constant assessment of interest rate exposures and deciding whether new borrowing is at fixed or variable rates. This strategy also aims to mitigate the impact of interest rate risk by setting upper limits on its net exposure to fixed and variable interest rates. At the 31 March 2014, £46.8 million of borrowing was at fixed rates and £0.5 million at variable rates. For investments, £1.7 million was at fixed rates and £4.5 million at variable rates. The impact of a 1% fall in interest rates would be as above but with the movements reversed

Increase in interest payable on variable rate borrowings 43

0

Impact on Surplus or Deficit on the Provision of Services 43

Increase in interest receivable on variable rate investments

As mentioned previously, the Authority also holds £2.0m of debt in the form of LOBO, which equates to 4.0% of its total borrowing. The LOBO agreement has a periodic option date on which the lender can


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opt to change the interest rate on a loan. If lenders exercise this option, then the Authority can either repay the loan (at no extra cost) or agree to the change of interest rate for the remaining term of the loan or until the lender chooses to exercise the option again. The Authority’s LOBO debt was exposed to variable rates through lender options early in the new financial year but the lender did not request a change in rates. The next time the loan is exposed in this way will be in 2016/17. The fair value of fixed rate borrowings would decrease by around £7.4 million if interest rates increased by 1%, and increase by the same figure if rates decreased by 1%. Price Risk The Authority does not invest in equity shares and consequently is not exposed to losses arising from movements in the prices of shares. Foreign Exchange Risk The Authority has no financial assets or liabilities denominated in foreign currencies and thus have no exposure to loss arising from movements in exchange rates.


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18. Inventories

Inventories (stock) are materials or supplies that will be used in producing goods or providing services or

distributed as part of the Authority’s ordinary business.

Clothing &

Uniforms

Operational

EquipmentPetrol & Derv Vehicle Spares

Total

2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

Balance Outstanding at start of

year

107 152 262 217 94 81 96 105 559 555

Purchases

Recognised as an expense in the

year

-45 67 45 -34 13 15 -9 -4 4 44

Balance Outstanding at year end 152 85 217 251 81 66 105 109 555 511

19. Short Term Debtors

31 March 2013 31 March 2014

£000 £000

712 Central Government Bodies 394

3,300 Other Local Authorities 5,168

0 NHS Bodies 0

41 Public Corporations and trading funds 46

1,661 Other entities and individuals 1,410

5,714 Total Short Term Debtors 7,018

The Authority has made a provision for bad debts in 2013/14 of £1,791k (2012/13 £979k) which

is due to the changes in the accounting for the Collection Fund and Business Rates Retention,

whereby a provision is made for the Authority's proportion of council tax and business rate

payers' bad debts.


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20. Cash and Cash Equivalents

The balance of Cash and Cash Equivalents is made up of the following elements:

31 March 2013 31 March 2014

£000 £000

8,893 Bank current accounts 3,838

4,898 Short term deposits with Building Societies 6,672

13,791 Total Cash and Cash Equivalents 10,510

21. Short Term Creditors

The table below shows the amount of short term creditors as at the 31st March 2014

31 March 2013 31 March 2014

£000 £000

1,218 Central Government Bodies 665

1,881 Other Local Authorities 2,921

8 NHS Bodies 8

1,912 Other entities and individuals 1,335

5,019 Total Short Term Creditors 4,929


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22. Provisions

Outstanding

Legal Cases

Termination

Benefits

Pensionable

Pay

Other

Provisions

Holiday

PayTotal

£000 £000 £000 £000

Balance b/fwd 1 April 2013 354 460 373 21 0 1,208

Additonal Provisions made in

2013/14

0 0 0 98 98

Amounts used in 2013/14 -104 -22 0 0 -22

Transfers out 0 -328 0 0 -432

Balance at 31 March 2014 250 110 373 21 98 852

The purpose and operation of the provisions are described below:

Outstanding Legal Cases

A former insurer for the Authority, Municipal Mutual Insurance (MMI) is running down its business,

whilst paying agreed claims in full. MMI has, however, entered into a Scheme of Arrangement in cases

of insolvency, which would involve a levy against claims and future payments. Following advice from our

actuary, a provision of £354k has been made in the accounts to cover this potential liability.

Termination Benefits

The Authority has approved a new duty system within our command and control function which will

become live in June 2014. A provision of £350k was made in the 2012/13 accounts for redundancy

payments within the department. Due to natural wastage the actual amount of redundancy costs

totalled £22k resulting in £328k of this provision being written back to the revenue account.

Pensionable Pay

Following the High Court Decision in the Norman v Cheshire case, the Authority has approved that some

allowances payable to firefighters will become pensionable. This results in an additional annual

employer pension cost of £118k, with £373k being owed in back pension payments.

Other Provisions

Following the payment of the amounts owing under the Part-Time Workers (Prevention of less

Favourable Treatment) regulations in June 2012 there is an amount outstanding relating to tax and

national insurance liabilities relating to this payment. The payment of National Insurance has been paid

over to HMRC but there is still an outstanding liability for tax whose payment is currently in dispute.


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Holiday Pay

There has been a change in the method in which payments for unpaid leave upon termination is

calculated. This has meant that terminated employees are entitled make a claim for additional holiday

pay payments resulting in a potential liability of £98k.


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23. Usable Reserves

Usable reserves can be used to fund and support the Authority's expenditure in future years Movements in the Authority's usable reserves are detailed in the Movement in Reserves Statement on together with Note 23.

31 March

2013

31 March

2014

£000 £000

10,468 General Fund 13,132

Earmarked Reserves:

27 Council Tax Reform 27

20 Body Bag Decontamination 20

174 Property and Equipment 174

97 Leap Year Fund 140

3,418 Control Room 1,532

76 New Risks 57

152 Enhanced Logistics 225

0 Insurance Claims 172

0 Service Support 560

0 Pensions Equalisation 221

0 PT Workers Pension 2,500

0 Reserve for Pay and Prices 702

0 Business Rate Appeals 226

0 Data Transparancy 3

3,964 Total Earmarked Reserves 6,559

0 Capital Grants Unapplied 3,634

14,432 23,325


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24. Transfers to/from Earmarked Reserves

This note shows the movements on earmarked reserves. These funds are available for the financing of

current and future expenditure plans

Balance

at

01/04/12

Transfers

out

2012/13

Transfers

in

2012/13

Balance

at 31

March

2013

Transfers

out

2013/14

Transfers

in

2013/14

Balance

at 31

March

2014

Earmarked Reserve:

Council Tax Reform Credits 0 27 27 27

Body Bag decontamination 0 20 20 20

Property and Equipment 23 151 174 174

Leap Year Payments 50 47 97 44 141

Control Room 3,600 -182 3,418 -1,887 1,531

New Risks 184 -108 76 -19 57

Enhanced Logistics 76 76 152 73 225

Insurance Claims 0 0 171 171

Service Support Reserve 0 0 560 560

Pension Equalisation Reserve 0 0 221 221

PT Workers Pension Reserve 0 0 2,500 2,500

Reserve for pay and prices 0 0 702 702

Business Rate Appeals 0 0 227 227

Transparancy 0 0 3 3

Total 3,933 -290 321 3,964 -1,906 4,501 6,559

The purpose and operation of the reserves are described below:

Council Tax Reform

This is a grant from Central Government that is to be used for costs relating to the changes in council tax

which came into effect in April 2014.

Body Bag Decontamination

This is a grant from Central Government for Urban Search and Rescue expenses.

Property and Equipment

The General earmarked reserve includes the balance of grant of £23k that relates to the former regional

control programme which was cancelled in January 2011 and £151k that relates to an insurance claim

for fire damage for which expenditure will be incurred in 2013 onwards.


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Leap Year

In order to spread the cost of the extra day relating to a leap year, an amount is set aside each year to

cover this additional cost.

Control Room

This reserve holds the grant from Central Government for the purchase of a New Control System. West

Yorkshire Fire and Rescue and South Yorkshire Fire and Rescue have jointly purchased the new system

and the grant of £3.6million is for both Authorities.

New Risks

This is Central Government grant for the purchase of specific equipment. As at the 31 March 2014 there

is a balance of £57k.

Enhanced Logistics

This is Central Government grant for the purchase of specific equipment. As at the 31 March 2014 there

is a balance of £225k.

Insurance Claims

This reserve holds the income received from an insurance claim in 2013/14 which will be utilised for any

uninsured claims that the Authority may face in future years.

Service Support

Due to the changing nature of the service a new reserve has been established to fund any expenditure

that may be required in order to enable service developments that are not built within the current

revenue budget.

Pensions Equalistion

This reserve will enable the Authority to manage the cost of ill health retirements. Any budget

underspending on ill health retirements are credited to the reserve and if, in a financial year there are

more ill health retirements that estimated these will be charged against this reserve providing there are

sufficient balances available.

Part Time Workers Pension Reserve

Under the part time workers (prevention of less favourable treatment) regulations, retained firefighters

are able to join the firefighters’ 2006 pension scheme and backdate their contributions to the date they

began employment with the Authority. A reserve of £2.5m has been established to meet this potential

cost.

Reserve for Pay and Prices

This reserve will enable the Authority to manage expenditure increases in future years due to changes in

pay awards and inflation.


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Business Rate Appeals

The Authority received a grant in 2013/14 of £226k to enable the management of business rate appeals

Data Transparancy

A grant was received in 2013/14 to enable systems to be put in place for the provision of data

transparency.

Capital Grants Unapplied

This is the underspend of capital grant of £7.2m received in 2013/14, this grant has been earmarked for

IRMP projects and will be spent in 2013/14.

25. Unusable Reserves

The summary of the unusable reserves can be found in the Balance Sheet, below is a detailed list of the unusable reserves of the Authority. Unusable reserves cannot be used to fund future expenditure by the Authority.

31 March

2013

31 March

2014

£000 £000

6,193 Revaluation Reserve 6,226

27,442 Capital Adjustment Account 30,372

-957 Financial Instruments Adjustment Account -908

-1,206,782 Pensions Reserve -1,176,347

-73 Collection Fund Adjustment Account 53

-128 Accumulating Compensated Absences Adjustment Account -120

-1,174,305 Total Unusable Reserves -1,140,724

Revaluation Reserve The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment (and Intangible Assets). The balance is reduced when assets with accumulated gains are: - re-valued downwards or impaired and the gains are lost

- used in the provision of services and the gains are consumed through depreciation, or


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- disposed of and the gains are realised. The reserve contains only revaluation gains accumulated since 1 April 2007, the date that the reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.

2012/13 2013/14

£000 £000

6,436 Balance at 1 April 6,193

-185 Difference between fair value depreciation and historical cost

depreciation

-157

-58 Transfer to Capital Adjustment Account -60

-243 Amount written off to the Capital Adjustment Account -217

Revaluation 250

6,193 Balance at 31 March 6,226

Capital Adjustment Account

The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition, construction and enhancement.

The following note details the source of all the transactions posted to the Account, apart from those involving the Revaluation Reserve


of 119 WYFRA

2012/13 2013/14

£000 £000

25,692 Balance as at 1 April 27,442

60 Adjustment to Opening Balance 1

25,752 27,443

Reversal of items relating to capital expenditure debited or credited

to the Comprehensive Income and Expenditure Statement:

-5,435

- charges for depreciation and impairment of non current assets

-4,961

0 - revaluation losses on property, plant and equipment -238

-303 - amortisation of intangible assets -368

-744 - revenue expenditure funded from capital under statute -670

-637 - amounts of non current assets written off on disposal or sale as

part of the gain/loss on disposal to the Comprehensive Income and

Expenditure Statement

-426

-7,119 -6,663

243 Adjusting amounts written out of the Revaluation Reserve 217

-6,876 Net written out amount of the cost of non current assets consumed

in the year

-6,446

Capital financing applied in the year:

1,463 - use of the Capital Receipts Reserve to finance new capital

expenditure

35

2,577 - capital grants and contributions credited to the Comprehensive

Income and Expenditure Statement that have been applied to

capital financing

4,615

4,526 - statutory provision for the financing of capital investment charged

against the General Fund

4,725

8,566 9,375

27,442 Balance as at 31 March 30,372


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Financial Instruments Adjustment Account The Financial Instruments Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments and for bearing losses or benefiting from gains per statutory provisions. The Authority uses the account to manage premiums paid on the early redemption of loans. Premiums are debited to the Comprehensive Income and Expenditure Statement when they are incurred, but reversed out of the General Fund Balance to the Account in the Movement in Reserves Statement. Over time, the expense is posted back to the General Fund Balance in accordance with statutory arrangements for spreading the burden on council tax. In the Authority's case, this period is the unexpired term that was outstanding on the loans when they were redeemed. As a result, the balance on the Account at 31 March 2014 will be charged to the General Fund in future years.

2012/13 2013/14

£000 £000

-1,005 Balance as at 1 April -957

48

Amount by which finance costs charged to the Comprehensive

Income and Expenditure Statement are different from finance costs

chargeable in the year in accordance with statutory requirements

49

The Financial Instruments Adjustment Account absorbs the timing differences arising from the different

arrangements for accounting for income and expenses relating to certain financial instruments and for bearing

losses or benefiting from gains per statutory provisions. The Account uses the Account to manage premiums paid

on the early redemption of loans. Premiums are debited to the Comprehensive Income and Expenditure

Statement when they are incurred, but in future years reversed out of the General Fund Balance to the Account

in the Movement in Reserves Statement. Over time, the expense is posted back to the General Fund Balance in

accordance with statutory arrangements for spreading the burden on council tax. In the Authority's case, this

period is the unexpired term that was outstanding on the loans when they were redeemed. As a result, the

balance on the Account at 31 March 2013 will be charged to the General Fund

Pensions Reserve The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post-employment benefits and for funding benefits in accordance with statutory provisions. The Authority's accounts for post-employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Authority makes employer's contributions to pension funds or eventually pays any pensions for which it is directly responsible.


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The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Authority has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid.

Restated

2012/13 2012/13 2013/14

£000 £000 £000

-1,047,525 -1,047,525 Balance at 1 April -1,206,782

-121,192 -120,244 Remeasurements of the net defined liability/(asset) 72,850

-76,704 -77,652 Reversal of items relating to retirement benefits debited or credited

to the Surplus or Deficit on the Provision of Services in the

Comprehensive Income and Expenditure Statement

-82,108

38,639 38,639 Employer's pensions contributions and direct payments to

pensioners payable in the year

39,693

-1,206,782 -1,206,782 Balance as at 31 March -1,176,347 Collection Fund Adjustment Account The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax income in the Comprehensive Income and Expenditure Statement as it falls due from council tax payers and non-domestic rate payers compared with the statutory arrangements for paying across amounts to the General Fund from the Collection Fund.

2012/13 2013/14

£000 £000

-257 Balance at 1 April -73

19 Adjustment to Opening Balance 0

-238 -73

165 Amount by which council tax income credited to the Comprehensive

Income and Expenditure Statement is different from council tax and

non-domestic rate income calculated for the year in accordance

with statutory requirements

126

The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax

income in the Comprehensive Income and Expenditure Statement as it falls due from council tax payers and non-

domestic rate payers compared with the statutory arrangements for paying across amounts to the General Fund

from the Collection Fund.


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Accumulating Compensated Absences Adjustment Account The Accumulating Compensated Absences Adjustment Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year e.g. Annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account.

2012/13 2013/14

£000 £000

-183 Balance at 1 April -128

183 Settlement or cancellation of accrual made at the end of the

preceding year

128

0 0

-183 Amounts accrued at the end of the current year -128

55 Amount by which officer remuneration charged to the

Comprehensive Income and Expenditure Statement on an accruals

basis is different from remuneration chargeable in the year in

accordance with statutory requirements.

8

The Accumulating Compensated Absences Adjustment Account absorbs the differences that would otherwise

arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year e.g.

Annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the

General Fund Balance is neutralised by transfers to or from the Account.

26. Segmental Reporting (Amounts Reported for Resource Allocation Decisions)

The analysis of income and expenditure by service on the face of the Comprehensive Income and Expenditure Statement is that specified by the Service Reporting Code of Practice (SeRCOP). However, decisions about resource allocation are taken by the Authority's Management Board on the basis of budget reports that are analysed across the Operations, Fire Prevention and Protection, Human Resources and Corporate Resources directorates. These reports are prepared on a different basis from the accounting policies used in the financial statements.

In particular,

- no charges are made in relation to capital expenditure (whereas depreciation, revaluation and impairment losses in excess of the balance on the Revaluation Reserve and amortisations are charged to services in the Comprehensive Income and Expenditure Statement

- the cost of retirement benefits is based on cash flows (payment of employers pension contributions) rather than current service cost of benefits accrued in the year.


of 119 WYFRA

- the corporate resources directorate is recharged to operations and fire prevention and protection in accordance with the requirements of SeRCOP.

2012/13

Fire

fig

hti

ng

an

d

Re

scu

e O

pe

rati

on

s

Fire

Pre

ven

tio

n a

nd

Pro

tect

ion

Hu

ma

n R

eso

urc

es

Co

rpo

rate

Se

rvie

s

CD

C

To

tal

£000 £000 £000 £000 £000

Fees and charges & other service income -312 -332 -305 -375 -2 -1,326

Government Grants -1,143 0 0 0 0 -1,143

Total Income -1,455 -332 -305 -375 -2 -2,469

Employee expenses 54,852 3,320 7,913 4,154 289 70,528

Other service expenses 5,510 370 780 4,772 239 11,671

Support service recharges 18,886 702 -8,406 -11,182 0 0

Total Expenditure 79,248 4,392 287 -2,256 528 82,199

Net Expenditure 77,793 4,060 -18 -2,631 526 79,730


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2013/14

Fire

fig

hti

ng

an

d

Re

scu

e O

pe

rati

on

s

Fire

Pre

ven

tio

n a

nd

Pro

tect

ion

Hu

ma

n R

eso

urc

es

Co

rpo

rate

Se

rvie

s

CD

C

To

tal

£000 £000 £000 £000 £000

Fees and charges & other service income -720 -310 -103 -413 -4 -1,550

Government Grants -1,385 0 0 -34 0 -1,419

Total Income -2,105 -310 -103 -447 -4 -2,969

Employee expenses 51,749 2,517 11,746 1,276 286 67,574

Other service expenses 5,356 324 498 4,712 187 11,077

Support service recharges 0 0 0 237 0 237

Total Expenditure 57,105 2,841 12,244 6,225 473 78,888

Net Expenditure 55,000 2,531 12,141 5,778 469 75,919


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Reconciliation of West Yorkshire Fire and Rescue Income and Expenditure to Cost of Services in the Comprehensive Income and Expenditure Statement

This reconciliation shows how the figures in the analysis of West Yorkshire Fire & Rescue income and expenditure relates to the amounts included within the Comprehensive Income and Expenditure Statement

Restated

2012/13 2012/13 2013/14

£000 £000 £000

79,730 79,730 Net expenditure in the analysis 75,919

6,142 6,142 - Depreciation 5,803

280 280 - Impairment 434

-12,036 -11,953 - Net Pension Adjustment for IAS19 -9,287

691 691 - Employees costs not charged to services 31

-321 -321 - Transfer to Reserves -139

-55 -55 - Accumulated Absences -8

74,431 74,514 72,753

Amounts in the Comprehensive Income and

Expenditure Statement not reported to management in

the analysis:

Cost of Services in Comprehensive Income and

Expenditure Statement


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Reconciliation to Subjective Analysis

This reconciliation shows how the figures in the analysis of income and expenditure relate to a subjective analysis of the surplus/deficit on the Provision of Services included in the Comprehensive Income and Expenditure Statement

2012/13

An

alys

is

Am

ou

nts

no

t

rep

ort

ed t

o

man

agem

ent

for

dec

isio

n m

akin

g

Co

st o

f se

rvic

es

Co

rpo

rate

amo

un

ts

Tota

l

£000 £000 £000 £000 £000

-1,326 -1,326 -1,326

Interest and Investment Income 0 -2,979 -2,979

Income from council tax 0 0

-1,143 -321 -1,464 -91,740 -93,204

Total income -2,469 -321 -2,790 -94,719 -97,509

Employee Expenses 70,529 -11,401 59,128 53,038 112,166

Other service expenses 11,671 280 11,951 2,213 14,164

Support service recharges 0 0 0

0 6,142 6,142 6,142

Interest payments 0 0 49 49

Precepts & levies 0 0 0

0 0 -310 -310

Total expenditure 82,200 -4,979 77,221 54,990 132,211

79,731 -5,300 74,431 -39,729 34,702Surplus or deficit on the Provision

of Services

Fees, charges & other service

income

Government grants and

contributions

Depreciation, amortisation and

impairment

Gain or loss on disposal of fixed

assets


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2012/13 - Restated

An

alys

is

Am

ou

nts

no

t

rep

ort

ed t

o

man

agem

ent

for

dec

isio

n m

akin

g

Co

st o

f se

rvic

es

Co

rpo

rate

amo

un

ts

Tota

l

£000 £000 £000 £000 £000

-1,326 -1,326 -1,326

Interest and Investment Income 0 -2,979 -2,979


-1,143 -321 -1,464 -91,740 -93,204

Total income -2,469 -321 -2,790 -94,719 -97,509




0 6,142 6,142 6,142



0 0 -310 -310


79,814 -5,300 74,514 -38,864 35,650


income


contributions


impairment


assets

Surplus or deficit on the Provision

of Services - restated


of 119 WYFRA

2013/14

Ana

lysi

s

Am

oun

ts n

ot

repo

rted

to

man

agem

ent

for

deci

sio

n m

akin

g

Co

st o

f se

rvic

es

Co

rpo

rate

amo

unts

Tota

l

£000 £000 £000 £000 £000

-1,550 -1,550 -1,550

Interest and Investment Income 0 -52 -52


-1,419 -139 -1,558 -96,317 -97,875

Total income -2,969 -139 -3,108 -96,369 -99,477




0 5,803 5,803 5,803



0 0 410 410


75,919 -3,167 72,752 -42,106 30,646Surplus or deficit on the Provision

of Services


income


contributions


impairment


assets


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27. Members’ Allowances

The Authority paid the following allowances and expenses to Members of the Fire Authority during the year.

2012/13 2013/14

£000 £000

133 Allowances 133

7 Expenses 7

140 140


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28. Officers’ Remunerations

The Remuneration paid to the Authority's senior employees is as follows

Post Holder Information Year

Salary

(including

fees &

allowances

BonusesExpense

Allowances

Benefits in

Kind (lease

car

benchmark)

Total

Remuneration

excluding

pensions

contributions

2013/14

Employer

Pension

Contributions

Total

Remuneration

including

pensions

contributions

2013/14

£ £ £ £ £ £ £

Simon Pilling - Chief Fire

Officer / Chief Executive2012/13 151,572 0 1,322 7,224 160,118 32,285 192,403

2013/14 151,572 0 1,704 7,224 160,500 32,285 192,785

Deputy Chief Fire Officer 2012/13 128,836 0 1,348 6,351 136,535 0 136,535

2013/14 128,836 0 1,553 6,351 136,740 0 136,740

Director of Fire Safety &

Community Relations2012/13 121,257 0 925 6,351 128,533 25,828 154,361

(note 1) 2013/14 81,121 0 1,154 6,351 88,626 17,279 105,905

Director of Fire Safety &

Community Relations2012/13 0 0 0 0 0 0 0

(note 2) 2013/14 34,312 0 326 6,351 40,989 7,308 48,297

Director of Human

Resources2012/13 118,559 0 1,184 6,351 126,094 26,063 152,157

(note 3) 2013/14 107,238 0 1,446 6,351 115,035 22,807 137,842

Director of Corporate

Services2012/13 105,441 0 509 4,536 110,486 14,417 124,903

2013/14 104,689 0 487 4,536 109,712 14,318 124,030

Chief Finance and

Procurement Officer2012/13 78,924

0 232 4,536 83,692 10,942 94,634

(note 4) 2013/14 51,651 0 269 4,536 56,456 7,342 63,798


of 119 WYFRA

Notes

2. This includes costs from the 20 July 2013

3. The Director of Human Resources started their role on the 20 July 2013

1. The Director of Fire Safety and Community Relations retired from their post on the 19th

July. This was filled by the Director of Human Resources who had been appointed in January

2013

4. The Chief Finance and Procurement Officer reduced his working hours from 37 hours to 24

hours per week from the 14th April 2013

The Authority's employees receiving more than £50,000 remuneration for the year (excluding employer's pension contributions) are shown in the table below:

Remuneration Band

Number of

Employees

2012/13

Number of

Employees

2013/14

£50,000 - £54,999 35 33

£55,000 - £59,999 12 13

£60,000 - £64,999 1 9

£65,000 - £69,999 1 3

£70,000 - £74,999 4 0

£75,000 - £79,999 0 3

53 61

The above numbers exclude senior officers which are included in the previous table.

29. External Audit Costs

The Authority has incurred the following costs in relation to the audit of the Statement of Accounts by the Authority's external auditor.

2012/13 2013/14

£000 £000

49 49

49 49

Fees payable to KPMG with regard to external audit

services carried out by the appointed auditor


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30. Grant Income

The Authority credited the following grants and contributions to the Comprehensive Income and Expenditure Statement in 2013/14

2012/13 2013/14

£000 £000

Credited to Taxation and non specific Grant Income

35,957 Council Tax Income 33,710

1,079 Council Tax Freeze Grant 0

51,402 Non Domestic Rates (NNDR) 0

0 NNDR Top up Grant 13,995

0 District Councils -Business Rates Retention 7,707

996 Revenue Support Grant 32,481

2,542 Capital Grant 7,325

91,976 Total 95,218

Credited to Services

1,428 New Dimension Programme 1,451

7 Canine Support 7

22 Operations - New Risks 0

27 Council Tax Reform 0

0 Small Business Rate Relief 227

0 Capitalisation Fund 171

0 Transparancy Code set up 2

1,484 Total 1,858

31. Related Parties

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 its ability to limit another party's ability to bargain freely with the Authority.


of 119 WYFRA

Central Government Central Government has a major influence over the general operations of the Authority - it is responsible for providing the statutory framework, within which the Authority operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Authority has with other parties. Grants received from Central Government are set out in the subjective analysis in Note 26 on reporting for resource allocation decisions. Members The Fire Authority is made up of 22 Local Councillors who are nominated by the five constituent

authorities of West Yorkshire, based on the size of the authority and the political balance. The Fire

Authority is responsible for making all decisions concerning the functions, powers, duties and

responsibilities of the Authority.

The total amount paid to Members in the form of allowances for 2013/2014 is shown in Note 27. Each

of the elected members is required to declare details of all personal interests they have with the

financial interests of the Authority including a nil return if there are no interests. For the financial year

2013/2014 all returns were nil.

Officers The Authority requires each member of the Management Board to sign a declaration that they have no individual interest in the financial affairs of the Authority. As at the 31st March 2014 all returns were nil. Entities Controlled or Significantly Influenced by the Authority The Authority receives a number of financial services from Kirklees Council in the form of treasury management, insurance, payroll and management of the main banking arrangements. The Authority also receives a number of services from the council in respect of refuse collection, building maintenance and repair. The amounts paid to Kirklees Council in 2013/14 are detailed below:

2012/13 2013/14

£000 £000

182 Financial Support Services 180

110 Cleaning Services 106

79 Property Repairs 83

18 Refuse Collection 12

32 Other Services 39

421 420 New Control Project Collaboration

The Authority has entered into a joint collaboration with South Yorkshire Fire & Rescue for the

acquisition of a replacement command and control system. The grant received from Central

Government was the result of a joint bid for funding and the tender was awarded in January 2013. The

new system will go live in June 2014.


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32. Capital Expenditure and Financing

The total amount of capital expenditure incurred in the year is shown in the table below (including the value of assets acquired under finance leases), together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Authority, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically the Authority that has yet to be financed. The CFR is analysed in the second part of this note.

2012/13 2013/14

£000 £000

Opening Capital Financing Requirement 63,747 62,140

Adjustment to Opening Balance -59 -34

Capital Investment

Property, Plant and Equipment 6,070 6,276

Intangible Assets 261 198

Revenue Expenditure Funded from Capital under Statute 744 670

Sources of Finance

Capital Receipts -1,463 -35

Government Grants and Contributions -2,577 -4,614

Sums set aside from revenue :

MRP/loan fund principle -4,583 -4,726

MRP/Leasing -49

Closing Capital Financing Requirement 62,140 59,826

Explanation of Movement in Year

Increase in underlying need to borrowing (supported by

Government financial assistance)

0 0

Increase in underlying need to borrowing (unsupported by

Government financial assistance)

-1,346 -2,280

Assets acquired under Finance Lease -202 0

Increase/(decrease) in Capital Financing Requirement -1,548 -2,280


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33. Leases

Authority as a lessee Finance Leases Finance Leases are the only Other Long Term Liabilities outstanding by the Authority. The Authority has acquired certain fire appliances 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:

31 March

2013

31 March

2014

£000 £000

Vehicles, Plant, Furniture and Equipment 12 0

12 0 The Authority is committed to making minimum payments, comprising settlement of the long-term

liability for the interest in the appliances 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:

31 March

2013

31 March

2014

£000 £000

Finance lease liabilities

(net present value of minimum lease payments)

Current 49 0

Non-current 22 22

Finance costs payable in future years 0 0

Minimum Lease Payments 71 22


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The minimum lease payments will be payable over the following periods:

Minimum Lease Payments Finance Lease Liabilities

31 March

2013

31 March

2014

31 March

2013

31 March

2014

£000 £000 £000 £000

Not later than one year 49 0 49 0

Later than one year but not later than

five years

22 22 22 22

Later than five years 0 0 0 0

71 22 71 22

Operating Leases

The Authority also uses vehicles financed under terms of an operating lease. The future minimum lease payments due under non-cancellable leases in future years are:

31 March

2013

31 March

2014

£000 £000

Not later than one year 367 398

Later than one year but not later than

five years

535 465

Later than five years - -

902 863

The expenditure charged to the Comprehensive Income and Expenditure Statement during the year in

relation to these leases was:

2012/13 2013/14

£000 £000

Minimum lease payments 913 943

913 943

The Authority has identified the use of phone lines as being under the terms of an operating lease under

IFRS. These items have not been included within the calculation as the Authority has been unable to

place a value on these leases.


of 119 WYFRA

34. Termination Benefits The Authority terminated the contracts of three employees in 2013/14, one as a result of redundancy and two as part of an early retirement plan incurring liabilities of £11k (£1,620k 2012/13)

Details of these payments by bands are detailed in the table below:

Exit package cost

band (including

special payments)

Number of

Compulsory

redundancies

Number of other

departures agreed

Total number of exit

packages by cost

band

Total cost of exit

packages in each band

2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14

£ £

£0 - £20,000 3 - 44 3 47 3 416,699 10,750

£20,001 - £40,000 - - 13 - 13 - 407,431 0

£40,001 - £60,000 - - 4 - 4 - 190,572 0

£60,001 - £80,000 - - 3 - 3 - 202,585 0

£80,001 - £100,000 - - 2 - 2 - 169,680 0

£100,001 - £150,000 - - 2 - 2 - 232,688 0

TOTAL 3 - 68 3 71 3 £1,619,655 £10,750

This is summarised in the table below

2012/13 2013/14

£000 £000

Redundancy Costs 843 4

Enhanced Pension Costs 777 7

TOTAL 1,620 11

Termination benefits are comprised of redundancy costs and the cost relating to enhanced early

pension contributions.


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35. Defined Benefit Pension Schemes

Participation in Pension Schemes As part of the terms and conditions of employment of its officers the Authority makes contributions towards the cost of post-employment benefits. Although these benefits will not actually be payable until the employees retire, the Authority has a commitment to make the payments that needs to be disclosed at the time that employees earn their future entitlement. The Authority participates in two pension schemes: a. The Local Government Pension Scheme, administered locally by West Yorkshire Pension Authority -

this is a funded defined benefit final salary scheme, meaning that the Authority and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets.

b. The Firefighters’ Pension Scheme, administered by West Yorkshire Pensions Authority - these are

unfunded schemes whereby current pensions are paid from current contributions and as such there are no assets only liabilities. Both the Authority and the employee make contributions to the fund with the shortfall being funded by Central Government in the form of a pension Top up Grant. There are two schemes administered by the Authority:

(i) The 1992 Firefighters’ Pension Scheme – this was closed to new entrants on the 31 March 2006 (ii) The 2006 Firefighters’ Pension Scheme – firefighters who joined the Authority after the

1st April 2006 are eligible to join this scheme.

Injury Allowance - The Firefighters’ Compensation Scheme 2006

This is for those employees that left employment with the Authority on ill health and is administered in

the same manner as the above two schemes. Injury Awards and awards payable on the death of a

firefighter attributable to a qualifying injury are not part of the Firefighters’ Pension Scheme because

they are payable irrespective of whether an employee is a member of the scheme. New tax rules with

effect from 1st April 2006 prevent Injury Awards from being part of the Pension Scheme Regulations and

the opportunity was taken to move the Injury Awards into a separate Firefighters’ Compensation

Scheme 2006 with all injury awards previously covered by the FPS being paid from the Authority’s

Income and Expenditure account, not their Pension Fund.

Transactions Relating to Retirement and Injury Benefits The Authority recognises the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge the Authority is required to make against council tax is based on the cash payable in the year, so the real cost of post-employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance via the Movement in Reserves Statement during the year:


of 119 WYFRA

Charges to Comprehensive Income & Expenditure Statement - 2012/13

Local Firefighters Firefighters Firefighters

Government 1992 (FPS) 2006 (NFPS) Compensation

Pension Pension Pension Pension

Scheme Scheme Scheme Scheme Total

2012/13 2012/13 2012/13 2012/13 2012/13

£000 £000 £000 £000 £000

Service Cost Comprising;

Current Service Cost (1,795) (19,490) (3,450) (1,260) (25,995)

Past Service Cost (651) 0 0 (40) (691)

(Gain) Loss on curtailments 0 0 0

Financing and Investment Income and

Expenditure:

Net Interest Expense (966) (46,320) (940) (2,740) (50,966)

Total Post Employment Benefits charged to

the surplus or deficit on the Provision of

Services

(3,412) (65,810) (4,390) (4,040) (77,652)

Other Post employment Benefits charged to

the Comprehensive Income and Expenditure

Statement:

Remeasurement of the net defined benefit

liability comprising:

Return on plan assets (excluding the amount

included in net interest)

4,234 4,234

Actuarial gains and losses arising on changes

in demographic assumptions

0 0


in financial assumptions

(5,266) (145,760) (3,900) (13,230) (168,156)

Actuarial gains and losses due to liability

experience

78 41,520 (360) 2,440 43,678



Statement

(954) (104,240) (4,260) (10,790) (120,244)

TOTAL AMOUNT RECOGNISED (4,366) (170,050) (8,650) (14,830) (197,896)


of 119 WYFRA

Comprehensive Income and Expenditure Statement - 2013/14





2013/14 2013/14 2013/14 2013/14 2013/14

£000 £000 £000 £000 £000

Service Cost Comprising:

Current Service Cost (1,776) (22,650) (4,380) (1,600) (30,406)

Past Service Cost (7) 0 0 (20) (27)

(Gain) Loss on curtailments 0 0 0 0 0

Financing and Investment Income and

Expenditure:

Net Interest Expense (1,005) (46,450) (1,210) (3,010) (51,675)


the surplus or deficit on the Provision of

Services

(2,788) (69,100) (5,590) (4,630) (82,108)

Other Post employment Benefits charged to


Statement:

Remeasurement of the net defined benefit

liability comprising:

Return on plan assets (excluding the amount

included in net interest)

-674 0 0 (674)


in demographic assumptions

1,658 0 0 1,658


in financial assumptions

5,885 25,590 2,670 14,450 48,595

Actuarial gains and losses due to liability

experience

3,401 19,750 120 0 23,271



Statement

10,270 45,340 2,790 14,450 72,850

TOTAL AMOUNT RECOGNISED 7,482 (23,760) (2,800) 9,820 (9,258)


of 119 WYFRA

Movement in Reserves Statement - 2012/13





2012/13 2012/13 2012/13 2012/13 2012/13

£000 £000 £000 £000 £000

Reversal of net charges to the Surplus or

Deficit for the provsion of services for post

employment benefits in accordance with

the code

3,412 65,810 4,390 4,040 77,652

Actual amount charged to the General Fund

Balance for pensions in the year:

Employer's contributions payable to

scheme

(1,979) (35,580) (1,050) (30) (38,639)

Retirement benefits payable to pensioners

1,433 30,230 3,340 4,010 39,013 Movement in Reserves Statement - 2013/14





2013/14 2013/14 2013/14 2013/14 2013/14

£000 £000 £000 £000 £000

Reversal of net charges to the Surplus or

Deficit for the provision of services for post

employment benefits in accordance with

the code

2,788 69,100 4,630 5,590 82,108

Actual amount charged to the General Fund

Balance for pensions in the year:

Employer's contributions payable to scheme(1,093) (37,410) (1,180) (10) (39,693)

Retirement benefits payable to pensioners

1,695 31,690 3,450 5,580 42,415


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Pension Assets and Liabilities Recognised in the Balance Sheet The amount included in the Balance Sheet arising from the Authority's obligation in respect of its defined benefit plans is as follows: 2012/13 Local Firefighters Firefighters Firefighters




2012/13 2012/13 2012/13 2012/13 2012/13

£000 £000 £000 £000 £000

Present Value of the defined benefit

obligation test

71,759 1,087,630 26,030 69,690 1,255,109

Fair Value of plan assets -48,327 -48,327

Sub total 23,432 1,087,630 26,030 69,690 1,206,782

Other movements in the liability (asset) if

applicable

Net liability arising from defined benefit

obligation23,432 1,087,630 26,030 69,690 1,206,782

2013/14 Local Firefighters Firefighters Firefighters




2013/14 2013/14 2013/14 2013/14 2013/14

£000 £000 £000 £000 £000

Present Value of the defined benefit

obligation

63,965 1,073,980 28,820 58,690 1,225,455

Fair Value of plan assets -49,108 0 0 0 -49,108

Sub total 14,857 1,073,980 28,820 58,690 1,176,347

Other movements in the liability (asset) if

applicable

0 0 0 0 0

Net liability arising from defined benefit

obligation14,857 1,073,980 28,820 58,690 1,176,347

The cumulative amount of the remeasurement of the net defined laibility recognised in the Comprehensive Income and Expenditure Statement to the 31 March 2014 is a gain of £72,850m.

The net liability relating to the defined Benefit Pension Schemes recognised in the Balance Sheet at 31 March 2014 is -£1,176m, made up of scheme liabilities -£1,225m less scheme assets £49m (2012/13 -£1,207m)


of 119 WYFRA

Reconcilliation of the Movements in the Fair Value of Scheme (Plan) Assets

West Yorkshire Fire & Rescue Authority employs a building block approach in determining the rate of return on Fund assets Historical markets are studied and assets with higher volatility are assumed to generate higher returns consistent with widely accepted capital market principles. The assumed rate of return on each asset class is set out within this note. The overall expected rate of return on assets is then derived by aggregating the expected return for each asset class over the actual asset allocation for the Fund at the 31 March 2014. 2012/13 Local Firefighters Firefighters Firefighters




2012/13 2012/13 2012/13 2012/13 2012/13

£000 £000 £000 £000 £000

Opening fair value of scheme assets 42,058 0 0 0 42,058

Interest income 2,019 0 0 0 2,019

Remeasurement gain (loss):

the return on plan assets, excluding the

amount included in the net interest expense

4,234 0 0 0 4,234

other (if applicable) 0 0 0 0 0

The effect of changes in foreign exchange

rates

0 0 0 0 0

Contributions from employers 1,979 0 0 0 1,979

Contributions from employees into the

scheme

499 0 0 0 499

Benefits paid -2,462 0 0 0 -2,462

Closing fair value of scheme assets 48,327 0 0 0 48,327


of 119 WYFRA





2013/14 2013/14 2013/14 2013/14 2013/14

£000 £000 £000 £000 £000

Opening fair value of scheme assets 48,327 0 0 0 48,327

Interest income 2,113 0 0 0 2,113


the return on plan assets, excluding the

amount included in the net interest expense

-674 0 0 0 -674

other (if applicable)

The effect of changes in foreign exchange

rates

0 0 0 0 0

Contributions from employers 1,093 0 0 0 1,093

Contributions from employees into the

scheme

399 0 0 0 399

Benefits paid -2,150 0 0 0 -2,150

Closing fair value of scheme assets 49,108 0 0 0 49,108 The actual return on scheme assets in the year was £1.4m (2012/13 £6.3m) Reconciliation of Present Value of the Scheme Liabilities (Defined Benefit Obligations)


of 119 WYFRA





2012/13 2012/13 2012/13 2012/13 2012/13

£000 £000 £000 £000 £000

Opening Balance at 1 April -63,103 -953,160 -17,410 -55,910 -1,089,583

Currrent Service Cost -1,795 -15,560 -2,740 -1,260 -21,355

Transfers In 0 -30 0 0 -30

Interest Cost -2,985 -46,320 -940 -2,740 -52,985

Contributions from scheme participants -499 -3,930 -710 -5,139


actuarial (gains)/losses arising from

changes in demographic assumptions

0 0 0 0 0


changes in financial assumptions

-5,266 -145,760 -3,900 -13,230 -168,156

actuarial (gains)/losses on liabilities -

experience

78 41,520 -360 2,440 43,678

Past Service Cost -651 0 0 -40 -691

Losses/(gains) on curtailments 0 0

Liabilities assumed on entity combinations 0 0 0 0 0

Benefits paid 2,462 35,610 30 1,050 39,152

Liabilities extinguished on settlements 0 0 0 0 0

Closing Balance 31 March -71,759 -1,087,630 -26,030 -69,690 -1,255,109 2013/14 Local Firefighters Firefighters Firefighters




2013/14 2013/14 2013/14 2013/14 2013/14

£000 £000 £000 £000 £000

Opening Balance at 1 April -71,759 -1,087,630 -26,030 -69,690 -1,255,109

Currrent Service Cost -1,776 -18,470 -3,590 -1,600 -25,436

Transfers In 0 -10 -10

Interest Cost -3,118 -46,450 -1,210 -3,010 -53,788

Contributions from scheme participants -399 -4,180 -790 0 -5,369



changes in demographic assumptions

1,658 0 1,658


changes in financial assumptions

5,885 25,590 2,670 5,640 39,785

actuarial (gains)/losses on liabilities -

experience

3,401 19,750 120 8,810 32,081

Past Service Cost -7 0 -20 -27

Losses/(gains) on curtailments 0 0 0 0

Liabilities assumed on entity combinations 0 0

Benefits paid 2,150 37,420 10 1,180 40,760

Liabilities extinguished on settlements 0 0

Closing Balance 31 March -63,965 -1,073,980 -28,820 -58,690 -1,225,455


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of 119 WYFRA

Local Government Pension Scheme Assets comprised:

Fair Value Fair Value

of scheme of scheme

assets assets

2013/14 2012/13

£000 £000

Cash and cash equivalents 318,967 356,205

Equity Instruments:

By industry type:

Basic Materials 484,126 490,670

Consumer Goods 1,045,229 1,026,486

Consumer Services 564,029 520,204

Financials 1,654,969 1,414,741

Health care 537,668 440,531

Industrials 764,700 662,631

Oil and Gas 717,889 689,608

Technology 232,171 211,881

Telecommunications 312,975 359,289

Utilities 257,938 243,484

Sub total equity 6,571,694 6,059,525

Bonds:

Corporate Bond 546,902 560,261

Government Bond 1,076,170 1,170,947

Sub total bonds 1,623,072 1,731,208

Property Unit Trusts 322,998 301,536

Private equity:

Private Equity 427,968 417,951

Private Equity infrastructure 102,428 77858

Equity Warrants 31 39

Suspended Equities 4,511 5,573

Unquoted Equities 4,783 4,795

Sub total private equity 539,721 506,216

Other investment funds:

Unit Trusts and Oeics 604,031 572,379

Hedge Funds 260,408 321,098

Preference Shares 3,447 3,457

Sub total other investment funds 867,886 896,934

Total assets 10,244,338 9,851,624


of 119 WYFRA

Basis for Estimating Assets and Liabilities

The significant assumptions used by the actuary have been:




Scheme Scheme Scheme Scheme

2012/13 2012/13 2012/13 2012/13

Long term expected rate of return on assets

in the scheme :

%

Equity investments 7.8

Bonds 3.3

Other 7.8

Mortality assumptions : Life time Life time Life time Life time

Longevity at 65 for current pensioners :

- Men 22.1 23.5 23.5 23.5

- Women 24.3 25.4 25.4 25.4

Longevity at 65 for future pensioners :

- Men 23.9 26.7 26.7 26.7

- Women 26.2 28.4 28.4 28.4

% % % %

Rate of inflation RPI 3.7 3.65 3.65 3.65

Rate of inflation CPI 2.8 2.5 2.5 2.5

Rate of increase in salaries 4.7 4.75 4.75 4.75

Rate of increase in pensions 2.8 2.5 2.5 2.5

Rate of increase to deferred pensions 2.8

Rate for discounting scheme liabilities 4.4 4.3 4.3 4.3

Take up option to convert annual pension

into retirement lump sum.

50.0


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Scheme Scheme Scheme Scheme

2013/14 2013/14 2013/14 2013/14

Long term expected rate of return on assets

in the scheme :

%

Equity investments 7.6

Bonds 3.4

Other 7.6

Mortality assumptions : Life time Life time Life time Life time

Longevity at 65 for current pensioners :

- Men 22.5 23.5 23.5 23.5

- Women 25.4 25.5 25.5 25.5

Longevity at 65 for future pensioners :

- Men 24.7 26.6 26.6 26.6

- Women 27.7 28.6 28.6 28.6

% % % %

Rate of inflation RPI 3.4 3.65 3.65 3.65

Rate of inflation CPI 2.4 2.5 2.5 2.5

Rate of increase in salaries 3.9 4.5 4.5 4.5

Rate of increase in pensions 2.4 2.5 2.5 2.5

Rate of increase to deferred pensions 2.4

Rate for discounting scheme liabilities 4.3 4.4 4.4 4.4

Take up option to convert annual pension

into retirement lump sum.75.0

The estimation of the defined benefit obligations is sensitive to the actuarial assumptions set out in the

table above. The sensitivity analyses below have been determined based on reasonably possible

changes of the assumptions occurring at the end of the reporting period and assumes for each change

that the assumptions remain constant. The assumptions in longevity, for example, assume that life

expectancy increases or decreases for men and women. In practice, this is unlikely to occur, and changes

in some of the assumptions may be interrelated. The estimations in the sensitivity analysis have

followed the accounting policies for the scheme, i.e. on an actuarial basis using the projected unit credit

method. The methods and types of assumptions used in preparing the sensitivity analysis below did not

change from those used in the previous period.


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Local Government Pension Scheme

Impact on the Defined Benefit obligation in the scheme

Increase in Decrease in

assumption assumption

£000's £000's

Longevity (increase or decrease in 1 year) 61,996 -64,860

Rate of general increase in salaries

(increase or decrease by 0.5%)64,986 -61,953

Rate of increase in pensions ( increase or

decrease by 0.5%)67,896 -59,506

Rate for discounting scheme liabilities


Firefighters Pension Sceme 1992




£000's £000's

Longevity (increase or decrease in 1 year) 18,000 -18,000




decrease by 0.5%)93,000 -93,000




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Firefighters Pension Sceme 2006




£000's £000's

Longevity (increase or decrease in 1 year) 400 400


(increase or decrease by 0.5%)3,400 3,400


decrease by 0.5%)2,400 2,400


(increase or decrease by 0.5%)5,800 5,800

Asset and Liability Matching (ALM) Strategy

West Yorkshire Pension Fund who manage the pension fund on our behalf do not currently have any formal asset liability matching strategies such as annuities or longevity swaps to manage risks. West Yorkshire Pension Fund reviews the mix of assets held after each triennial valuation, to ensure there is an appropriate balance between the expected return from those assets and the risk that outcomes will not meet expectations.

Impact on the Authority's Cash Flows: Local Government Pension Scheme The objectives of the scheme are to keep employers contributions at a constant a rate as possible. The Authority has agreed a strategy with the pension fund to achieve a funding level of 100% over the longer term. Funding levels are monitored on an annual basis , following an actuarial review in 2010 the Authority has paid additional pension contributions of £767k from 2011/12 to 2013/14. The last triennial valuation was completed on the 31 March 2013 which has resulted in the Authoirty needing to pay an additional £256k over the next 3 years to 2016/17. The management of the pension cash flows is set out in West Yorkshire Pension Fund's Funding Strategy Statement which identifies how employers pension liabilities are best met going forward, supports the regulatory requirement to maintain stable employer contribution rates and makes a prudent long term view of funding those liabilities. The Local Government Pension Scheme will need to take account of the national changes to the scheme under the Public Pensions Act 2013. Under the Act, the Local Government Pension Scheme in England and Wales and the other main existing public service schemes may not provide benefits in relation to service after 31 March 2014 (or service after 31 March 2015 for other main existing public service pension schemes in England and Wales), The Act provides for scheme regulations to be made within a common framework, to establish new career average revalued earnings schemes to pay pensions and other benefits to certain public servants.


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Fire fighters Pension Scheme 1992 & 2006 The Authority recieves a top up grant from Central Government which reimburses the cost of the Firefighters Pension Scheme 1992 and the New Firefighters Pension Scheme 2006. This grant is received in July which is based on 80% of the estimated pensions deficit for 2013/14 plus the remainder of the 2012/13 and any audit adjustments relating to 2011/12. The amount received in July 2013 was £27 million which the Authority uses to manage its pension cash flows during the year.

36. Contingent Liabilities At 31 March 2014, the Authority has the following contingent liabilities where it is not possible to

quantify the financial implications for the Authority:

1. Public liability claims in relation to former employees who were exposed to asbestos during a period when the Authority did not have any insurance to cover this. There are no outstanding claims.

2. Following complaints to the Pensions Ombudsman regarding the lack of an actuarial review of the Firefighters’ Pension scheme 1992, there is a potential liability relating to the payment of additional lump sums relating to retirements between 1998 and 2006.

3. The Government has a contract with Airwave which is for the provision of communications across all Fire Authorities in England and Wales. This contract is due to end in April 2016 which may result in a potential liability for the Authority of between £0.5m and £1m.

37. Contingent Asset The Executive Committee meeting on the 10th May 2013 approved to sell Marsden Fire Station to Holme Valley Rescue. This is by means of a deferred purchase whereby the Authority received a non-returnable deposit of £20k in 2013/14 with the balance of the sale of £150k due for payment in 2014/15.

WYFRA PENSION ACCOUNT

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West Yorkshire Fire and Rescue Authority Pension Account

There is a requirement in the Code of Practice to create a Pension Fund Account and a Net Assets Statement in respect of the Firefighters’ Pension Scheme. The primary objective is to separate the cost of providing pensions from the cost of running a fire service. Therefore, any accruals created relating to the Pension Fund are removed from the Balance Sheet and a corresponding entry created to recognise the relationship with the Pension Fund Account. Pension Fund Account

2012/13 2013/14

£000 Contributions Receivable £000

From employer

-8,054 Normal -7,661

-557 Ill Health -572

-4,643 From members -4,964

-13,254 -13,197

`

Transfers in

-33 Individual transfers in from other schemes -11

Benefits Payable

28,451 Pensions 30,308

9,325 Lump Sums 7,103

Payments to and on account leavers

205 Individual transfers out to other schemes 48

24,694 Net amount payable for the year 24,251

-24,694 Top Up Grant payable by the Government -24,251

0 0

Net current assets and Liabilities

8,914 Top Up Grant receivable from Government 6,177

87 Employee paid but not due 86

-129 Pension payments due but not paid -143

Unpaid pension benefits

-8,872 Cash Overdrawn -6,120

0 0


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Overview of the Pension Fund The Firefighters’ Pension Account has the legal status of a pension fund which was established under the Firefighters’ Pension Scheme (Amendment) (England) Order 2006. There are two schemes, The Firefighters’ Pension Scheme 1992 (FPS) and the New Firefighters’ Pension Scheme 2006 (NFPS). A new scheme is to be introduced from 1st April 2015 which will mean that both schemes will close to new entrants and all benefits accrued under the 1992 and 2006 schemes will be transferred to this new scheme. West Yorkshire Pension Fund administers and pays firefighters’ pensions on behalf of the Authority under the arrangement of a service level agreement. The account is an unfunded pension scheme and has no investment assets to support its liabilities. It provides for the payment of defined retirement benefits to members, or their dependants, from firefighter and employer contributions during the year and the deficit is topped up annually by Central Government in the form of a grant. This means that the Pension Fund Account balances to nil. Employees’ and employers contribution levels are based on percentages of pensionable pay set nationally by Central Government and are subject to revaluation by the Governments Actuary Department The percentage rates payable are:

2013/14 2013/14 1992FPS 2006 NFPS

Employer 21.3% 11.0% Employee - Bandings 11.0%-15.0% 8.5%-11.1 %

Membership of the Pension Fund as at the 31 March 2014 is as follows:

Category of Member 1992 FPS 2006 NFPS

Contributors 938 389

Deferred Pensioners 97 59

Pensioners 2166 6

The Pension Fund Statement does not take account of the liabilities for future retirement benefits; these are recognised in the main accounts of the Authority in Note 35 on defined benefit pension schemes.


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Accounting Policies The Pension Fund Accounts for the year ended 31st March 2014 are presented in the format as laid down in the Code of Practice on Local Authority Accounting in the United Kingdom 2013/14 issued by the Chartered Institute of Public Finance and Accountancy. The accounting policies adopted for the production of the Pension Fund Account follow those that are used to prepare the Authority’s primary statements. Accruals

The accounts have been prepared on an accruals basis. Benefits and Refunds

The Benefits and Refunds are accounted for in the year in which they become due for payment. Transfer Values

Transfer values are those sums paid to, or received from, other schemes, and the Firefighters’ Pension scheme outside England, for individuals, and relate to periods of previous pensionable employment. Transfer values received and transfer values paid are accounted for on a receipts and payments basis. Current Assets

Debtors are raised for known contributions due at the 31 March 2014 and the top up grant due from

Central Government

Current Liabilities

Creditors are raised for employer and employee contributions received into the fund before the 31

March 2014

Contingent Liabilities

Part Time Workers (Prevention of Less Favourable Treatment) Regulations. Under the part time

workers (prevention of less favourable treatment) regulations, our retained firefighters are able to

join the firefighters’ 2006 pension scheme and backdate their contributions to the date they began

employment with the Authority. The potential liability has been calculated to be in the range of £0

to £2.5m.

Following complaints to the Pensions Ombudsman regarding the lack of an actuarial

review of the Firefighters’ Pension scheme 1992, there is a potential liability relating to the payment

of additional lump sums relating to retirements between 1998 and 2006.

Long Term Pension Obligations

Details of the Authority’s long term pension obligations in respect of the Firefighters’ Pension

Scheme are in note 35 in the Statement of Accounts on pages 85 to 93.

GLOSSARY OF TERMS

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Accruals

The concept that income and expenditure are recognised as they are earned or incurred, not as money is received or paid.

Amortisation

Written off over a suitable period of time, usually in line with the useful life of an asset.

Asset

An item owned by the Authority, which has a monetary value. Assets can be current or non-current

Current asset – this is consumed or will cease to have value within the next financial year

Non–current asset – provide benefits to the organisation for a period of more than one year

Audit

An independent examination of the Authorities activities, either internally or externally by our appointed auditor KPMG

Budget

A statement defining in financial terms the Authority’s plans over a specified period. The budget is prepared as part of the process of setting the precept.

Capital Expenditure

Expenditure on the acquisition of a fixed asset or expenditure which adds to and not merely maintains the value of an existing fixed asset.

Capital Adjustment Account

This account provides a balancing mechanism between the different rates at which assets are depreciated and financed.

Capital Financing Costs

Each service is charged with an annual capital charge to reflect the cost of fixed assets used in the provision of services.

Capital Financing Requirement

This measures the underlying need to borrow to finance capital expenditure

Capital Receipts

These are the proceeds from the sale of capital assets and are treated in accordance with statutory provisions.

Commutation

This is where a member of the pension scheme gives up part of their pension in exchange for an immediate lump sum payment.

Consistency

The concept is that the accounting treatment of like items within an accounting period and from one period to the next is the same.

GLOSSARY OF TERMS

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Contingent Liability

A possible obligation which exists at the balance sheet date, whose existence will be confirmed only on the occurrence or non-occurrence of one or more uncertain future events. Where a material loss can be estimated with reasonable accuracy a liability is accrued in the financial statements. If, however a loss cannot be accurately estimated or its occurrence is not considered sufficiently probable to accrue it, the obligation is disclosed in a note to the balance sheet. Examples of contingent liabilities include legal claims pending settlement.

Corporate and Democratic Core

The Corporate and Democratic Core is concerned with the costs of corporate policy making and all member-based activities, together with costs that relate to the general running of the Authority including those relating to corporate management, public accountability and treasury management.

Corporate Governance

This is concerned with the Authority’s accountability for the stewardship of resources, risk management and relationship with the community. It encompasses policies on fraud, whistle blowing and corruption.

Council Tax Freeze Grant

An amount paid to the Authority to compensate for the loss in grant for not increasing the precept on the local taxpayers.

Creditors

Amounts owed by the Authority for work done, goods received or services rendered but for which payment has not been made at the balance sheet date.

Current Service (Pensions) Cost

The current service cost is an estimate of the true economic cost of employing people in a financial year, earning years of service that will eventually entitle them to a pension when they retire. It measures the full liability estimated to have been generated in the year (at today’s prices) and is thus unaffected by whether any fund established to meet liabilities is in surplus or deficit.

Debtors

Amounts of money due to the Authority but are unpaid at the balance sheet date.

Depreciated Replacement Cost

A method of valuation based on the gross cost of replacing the asset/building less an allowance for depreciation

Deferred Liabilities

These represent the outstanding obligations on finance leases.

Deferred Premiums and Discounts

These are payment penalties (premiums) or gains (discounts) incurred on certain loans that have been repaid prematurely. The premium or discount is equal to the present value of the difference between the remaining payments, which would have been made on the repaid loan, and the amount that could be received if the sum prematurely repaid was re-advanced at the current rate on a new loan for a period equal to the unexpired term of the original loan.

Defined Benefit Pension Scheme

Retirement benefits are determined independently of the investments of the scheme and employers have obligations to make contributions where assets are insufficient to meet employee benefits.

GLOSSARY OF TERMS

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Accounted for by recognising liabilities as benefits are earned (i.e. employees work qualifying years of service), and matching them with the organisation’s attributable share of the scheme’s investments.

Depreciation

The wearing out, consumption, or other reduction in the useful economic life of a fixed asset, whether arising from use, effluxion of time or obsolescence through technological or other changes.

De-recognition

The removal of financial assets that have previously been recognised in the balance sheet. A financial asset is de-recognised when the contractual rights to the cash flows from the financial asset have been expired or transferred.

Donated Asset

A donated asset is an asset that is transferred to/from the organisation for no monetary exchange

Events after the Balance Sheet Date

Events after the Balance Sheet date are those events, favourable and unfavourable, that occur between the Balance Sheet date and the date when the Statement of Accounts is authorised for issue (i.e. Authorised by the Authority’s chief finance officer)

Expected Rate of Return on Assets (Pensions)

The expected return is a measure of the return on the investment assets held by the scheme for the year. It is not intended to reflect the actual realised return by the scheme, but a longer-term measure, based on the value of assets at the start of the year (taking into account movement in assets during the year) and an expected return factor.

Fair Value

This is the amount that an asset could be bought or sold for between parties; the current market value of an asset can be evidence that the assets have been valued fairly.

Financial Instruments

This is any contract that gives rise to a financial asset of one entity and a financial liability or equity of another. The term covers both financial assets (e.g. loans receivable) and financial liabilities (e.g. borrowings)

Fixed Assets

Tangible assets that yield benefits to the Authority and the services it provides for a period of more than one year.

Funded Pension Scheme

A funded pension scheme is one in which the future liabilities for pension benefits are provided for by the accumulation of assets held externally to the employer’s business. The Authority’s employees, with the exception of firefighters, are covered by such a scheme, which is managed on its behalf by West Yorkshire Pension Fund.

Government Grants

Grants made by Central Government towards either revenue or capital expenditure to support the cost of the provision of the Authority’s services. These grants may be given specifically towards the cost of a particular defined service or to support the general revenue spend of the Authority (known as Revenue Support Grant).

GLOSSARY OF TERMS

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Impairment

This is a specific reduction on an authority’s balance sheet that adjusts the value of the authority’s assets. This would normally be to reflect the fall in economic prices or a reduction in the economic benefit of an asset.

Integrated Risk Management Plan (IRMP)

This is a strategy for managing risk within West Yorkshire. It leads to formulation of a strategic framework for managing community risk. The IRMP is underpinned by a suite of detailed risk indicators and demographic information which reflects key risks for both the community and firefighters.

Intangible Assets

These are non-financial fixed assets that do not have a physical substance but are identifiable and utilised by the Authority through legal or custody rights.

International Financial Reporting Standards

These are the accounting standards that have been adopted from 2010/11 onwards.

Interest Cost (Pensions)

For a defined benefit scheme, the expected increase during the period in the present value of scheme liabilities because the benefits are one period closer to settlement.

Inventories

The amount of unused or unconsumed stocks held in expectation of future use

Leasing

A method of financing capital expenditure which allows the Authority to use, but not own an asset. A third party (the lessor) purchases the asset on behalf of the Authority (the lessee) which then pays the lessor a rental over the life of the asset.

A finance lease substantially transfers the risks and rewards of ownership of a fixed asset to the lessee. An operating lease is any lease other than a finance lease.

Liability

A liability is where an Authority owes payment to an individual or organisation. There are two types:

- Current liability – an amount which will become payable or could be called within the next accounting period

- A deferred Liability – 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

Market Value The monetary value of an asset determined by current market conditions Materiality The concept that the Statement of Accounts should include all amounts which, if omitted or misstated, could be expected to lead to distortion of the financial statements to a reader of the statements

GLOSSARY OF TERMS

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Minimum Revenue Provision (MRP)

Represents the statutory minimum amount that must be charged to revenue in each financial year to repay external borrowings.

National non-domestic rates (NNDR)

Business rates is the commonly used name of non-domestic rates, a tax on the occupation of non-

domestic property.

Net Book Value

This is the gross cost of an asset adjusted for depreciation.

Net Current Replacement Cost

The cost of replacing or recreating an asset in its existing condition and in its existing use, i.e. the cost of its replacement or of the nearest equivalent asset, adjusted to reflect the current condition of the existing asset.

Net Realisable Value

The open market value of the asset in its existing use (or open market value in the case of non-operational assets), less the expenses of realising the asset.

Non-Distributed Costs

These are overheads from which no service now benefits. Costs that may be included are certain pension costs and expenditure on certain unused assets.

Non-Operational Assets

Fixed assets held by the Authority but not directly occupied, used or consumed in the delivery of services. Examples of non-operational assets are assets that are surplus to requirements, pending sale or redevelopment.

Operational Assets

Fixed assets held and occupied, used or consumed by the Authority in the direct delivery of services for which it has either a statutory or discretionary responsibility.

Past Service (Pensions) Costs

Past service costs are a non-periodic cost, arising from decisions taken in the current year, but whose financial effect is derived from years of service earned in earlier years. Discretionary benefits, particularly added years, awarded on early retirement are treated as past service costs.

Precept

This is a charge levied by a local authority which is collected on its behalf by another authority. It does this by adding the precept to its own Council Tax and paying over the appropriate cash collected.

Provision

An amount set aside to provide for a liability, which is likely to be incurred, but the exact amount and the date on which it will arise is uncertain.

Prudence

The concept that revenue is not anticipated but is recognised only when it is realised in the form of cash or of other assets, the ultimate cash realisation of which can be assessed with reasonable certainty.

http://en.wikipedia.org/wiki/Tax

GLOSSARY OF TERMS

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Public Works Loan Board (PWLB)

This is 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

Two or more parties are related parties when at any time during a financial period:

one party has direct or indirect control of the other party; or

the parties are subject to common control from the same source; or

one party has influence over the financial and operational policies of the other party to an extent that the other party might be inhibited from pursuing at all times its own separate interests; or

the parties, in entering a transaction, are subject to influence from the same source to such an extent that one of the parties to the transaction has subordinated its own separate interests

Reserves

A reserve is an amount set aside for a specific purpose in one financial year and carried forward to meet expenditure in future years.

Revaluation Reserve This reserve recognises revaluation gains recognised since April 2007. Revenue Expenditure

This is money spent on the day to day running costs of providing services. It is usually of a recurring nature and produces no permanent asset.

Service Reporting Code of Practice (SeRCOP)

SeRCOP replaced the previous Best Value Accounting Code of Practice (BVACOP). SeRCOP applies to all local authority services throughout the United Kingdom from 1 April 2014 for the preparation of 2014/15 Budgets, Performance Indicators and Statements of Accounts. SeRCOP is reviewed annually to ensure that it develops in line with the needs of modern local government, Transparency, Best Value and public services reform. This is increasingly important as Transparency initiatives are expected to become more sophisticated and to evolve constantly.

Settlements and Curtailments (Pensions)

Settlements and curtailments are non-periodic costs. They are events that change the pension liabilities but are not normally covered by actuarial assumptions, for example a reduction in employees through a transfer or termination of an operation.

Unfunded Pension Scheme

An unfunded pension scheme is one in which liabilities for pension benefits are charged to the employer’s revenue account in the year in which they arise and are not financed from investments held. The Authority operates such a scheme for its firefighters.

Useful Life

This is the period over which the Authority will derive benefits from the use of a fixed asset.

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G Maren CPFA

Chief Finance Officer

Oakroyd Hall

Birkenshaw

Bradford

BD11 2DY

Tel: 01274 682311

statement of accounts 2013-2014 · defined benefit pension schemes 95 35 contingent liabilities 109...

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