DRAFT - Avon and Somerset Constabulary · 2018-02-16 · expected funding reductions from the...

www.avonandsomerset-pcc.gov.uk

2013/2014PCC FOR AVON & SOMERSET

STATEMENT OF ACCOUNTS

DRAFT

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Police & Crime Commissioner for Avon & Somerset

Officers of the Police & Crime Commissioner The statutory officers of the Police & Crime Commissioner are as follows:

Sue Mountstevens Police & Crime Commissioner for Avon & Somerset Phone: 01275 816378

John Smith Chief Executive to the Police & Crime Commissioner for Avon & Somerset Phone: 01275 816379

Mark Simmonds Chief Finance Officer to Police & Crime Commissioner for Avon & Somerset Phone: 01275 816380

Address for chief officers: Valley Road Portishead Bristol BS20 8JJ

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Statement of Accounts 2013/2014

Chief Finance Officer’s Foreword 3

Statement of Responsibilities 16

Auditor’s Certificate 17

Annual Governance Statement 18

Movement in Reserves Statement 28

Group Comprehensive Income and Expenditure Statement 29

PCC Comprehensive Income and Expenditure Statement 30

Balance Sheet 31

Cash Flow Statement 32

Notes to the Financial Statements 33

Police Officers Pension Fund Account Statements 78

Glossary of Terms 80

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Chief Finance Officer’s Foreword to the Statement of Accounts This section highlights and explains some of the more important matters that are reported in the accounts and comments on the key issues that have had a major effect on the finances now and in the future.

1 Introduction 2013/2014 was the first full year in office for the Police and Crime Commissioner (PCC) who was elected in November 2012 in accordance with the Police Reform and Social Responsibility Act 2011. The PCC for Avon and Somerset has set out a clear agenda to improve public connection with their police service, working with partners to drive through improvements in the criminal justice system and putting the voice of residents and victims of crime at the heart of police and criminal justice services. To support this, the PCC has published her Police and Crime Plans in 2013 and 2014 setting out in more details her priorities. The work of the PCC is made more challenging by the financial austerity that affects funding for police and our statutory partners. The PCC has made tough decisions to prioritise how best to allocate funding from an ever shrinking total fund. At the same time the PCC must anticipate and respond to the changing profile of needs across the communities of Avon and Somerset and the changing profile of victims and perpetrators of crime and anti-social behaviour. These changes and their impact on the Statement of Accounts are set out in more detail in this foreword. The Statement of Accounts summarises the financial year for 2013/2014. The Police and Crime Commissioner (PCC) has followed all the relevant accounting regulations in producing these accounts and this has been checked and certified by the external auditor. The accounts include the following: A statement of responsibilities - This sets out the responsibilities of the PCC and the

CFO in respect of the Statement of Accounts; An annual governance statement - This statement reviews the effectiveness of the

PCC’s internal control systems; A movement in reserves statement - This statement shows the movement during the

year on the different reserves held by the PCC; A comprehensive income and expenditure statement - 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. Taxation is raised 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;

A balance sheet at 31 March 2014 - The balance sheet shows the value as at the

balance sheet date of the assets and liabilities recognised by the PCC. The net assets of the PCC (assets less liabilities) are matched by the reserves held;

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A cash flow statement - The cash flow statement shows the changes in cash and cash

equivalents during the year. The statement shows how cash and cash equivalents are generated and used by classifying cash flows under operating, investing or financing activities;

A police officers pension fund account statement - This statement summarises the

total police officer pension contributions and pension benefits paid. The difference is funded by the Home Office.

2 Presentation of the Statement of Accounts This Statement of Accounts is prepared in accordance with Chartered Institute of Public Finance and Accountancy’s Code of Practice on Local Authority Accounting in the United Kingdom (referred to hereafter as the CIPFA Code).

2.1 Transfer Scheme Changes

The Police Reform and Social Responsibility Act 2011 set up new accountability and governance arrangements for police and now both the PCC and Chief Constable are ‘corporations sole’. In this new regime, each is a separate legal entity, though the Chief is accountable to the PCC. Both the PCC and OCC are Schedule 2 bodies under the 1998 Audit Commission Act and are both required to publish a statement of accounts and be subject to audit. This Statement of Accounts reflects these changes. On 22 November 2012 all assets, staff, contracts and liabilities were transferred from the former police authority to the first elected PCC for Avon and Somerset (Sue Mountstevens). At the same time a new corporation sole was created – that of Chief Constable (OCC). These accounts show the merged position of the PCC and the OCC and the individual position for the PCC. A second stage Transfer was completed with effect from 1 April 2014 whereby all police officers and most staff were transferred to the Chief Constable for employment and the PCC retained employment only of her immediate Office of Police and Crime Commissioner (OPCC) team. The PCC retained ownership of all existing and future assets and all contracts will still be let in the name of the PCC. The approach of how to account for costs and assets follows CIPFA guidance in so far as it is available and generally accepted accounting principles which look at the underlying substance of a transaction as opposed to its legal status. In applying the accounting treatment, consideration was given as to who ultimately exercised financial control and carried the risks and rewards of assets and liabilities with reference to the principles outlined in the PCC’s scheme of governance including the scheme of delegation, standing orders and financial regulations. As last year, the accounts are prepared after consideration of the above factors and having regard to: The scheme of governance as set by the PCC; The financial regulations and standing orders as set by the PCC; The police and crime plan as established and set by the PCC; The allocation of resources as set through the budget approved by the PCC; The power to appoint the Chief Constable resting with the PCC; Ownership and control of the general fund resting with the PCC;

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Powers to borrow funds resting with the PCC only; Consent of the PCC required to buy and sell property; Day to day command and control of staff undertaken by the Chief Constable.

The result of this review is that ultimately the control and risks associated with assets and liabilities rest with the PCC, whereas the day to day command and control of operational staff rests with the Chief Constable. Therefore, the accounting treatment adopted is: The PCC will produce the group accounts;

The OCC is treated as wholly owned subsidiary of the PCC for accounting

purposes;

All assets/liabilities are under the control of the PCC and are reported in the books of this entity, with the exception of the IAS 19 pension liability and associated assets, the short-term absences accrual (which places a financial value on holiday and time off owed to employees) and other employee expense accruals and provisions, all of which are reported in the books of the OCC. These liabilities are matched by an inter-group debtor to the PCC;

The accounts of the OCC show the operating cost of policing together with an

equal notional transfer of funding from the PCC. In addition, we show other disclosures in the notes to the OCC’s accounts concerning police officers and police staff remuneration and pensions costs;

All notes to this statement of accounts should be considered to relate to the PCC

and group position, unless it expressly states that they relate to the OCC in which case they wholly or materially relate to the OCC primarily.

2.2 Changes to the Statement of Accounts

A revision to the accounting standard IAS 19 Employee Benefits was made on the 1 January 2013 to take effect in accounting periods after that date. The changes affect the police staff pension scheme where the expected return on the scheme assets has been replaced by a net interest cost of £112.8m (£109.7m for 2012/2013) comprising of interest income on assets and interest expense on the liabilities. The return on assets of £2m (£17.9m for 2012/2013) is now shown within other comprehensive income and expenditure. The administration costs are now charged to the net cost of police services as opposed to the expected return on assets. The 2012/2013 statements and the disclosures in notes 18 to 20 have been re-stated to reflect these changes to the accounts.

3 Revenue Spending in 2013/2014

3.1 The Revenue Budget In February 2013 the PCC approved a total 2013/2014 revenue budget of £279.7m (2012/2013 £282.6m). This budget was then divided as follows: Constabulary budget - £275.81m (2012/2013 £281.2m); OPCC budget - £1.45m (2012/2013 £1.42m); Community Safety Commissioning - £2.4m (2012/2013 £nil).

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2013/2014 was the first year in which a community safety commissioning budget was set, having been created from new funds provided to the PCC which historically had been provided to other partner agencies. Having consulted with the residents of Avon and Somerset, the PCC made the decision supported by the Police and Crime Panel to freeze council tax in 2013/2014 and receive a freeze grant from the Government. Setting a budget in 2013/2014 under the prevailing conditions of reduced central government funding, inflation and other unavoidable financial commitments meant it was necessary to identify and deliver substantial savings. The main budget challenges and planning parameters for 2013/2014 were: Total reduction in funding of £3m, after accounting for:-

o Reduction in main grant funding of £3.2m; o Addition of new community safety grant funding of £2.4m; o Reduction in grants linked to freezes in council tax precept of £1.9m; o Addition of new local council tax support grant funding of £11.3m; o Reduction in council tax income of £11.6m, as consequence of the abolition

of council tax benefit, which brought about an 11.7% reduction in tax base.

Inflationary cost increases for both pay, and non-pay expenditure of £6.5m; Total savings budgeted in the year of £9.5m; A commitment to maintain front line police officer numbers as far as possible; A commitment to maintain investment in strategic technology programmes; A commitment to local partnership funding initiatives; Funding required to meet the PCC’s Police and Crime Plan objectives.

3.2 Revenue Financial Performance

The PCC, alongside the Chief Constable, continued to drive savings across all areas of the organisation, managing an ongoing reduction in headcount, to meet the known and expected funding reductions from the Government’s spending reviews. In order to be on course to balance the budget in 2014/2015 and beyond, planned savings have been made in 2013/2014 ahead of those required in that year to meet the projected decreased funding levels in the future. As a result of making planned savings in year, the 2013/2014 budget was underspent by 0.9%. The following table summarises the revenue financial performance for 2013/2014:

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Local policing areas 118,329 113,874 -4,455

Operational support (inc major incidents) 82,797 79,561 -3,236

Organisational support 21,980 23,779 1,799

Strategic alliances 34,383 34,545 162

Central pay & allowances 7,997 11,487 3,490

Central and miscellaneous cost 9,881 10,062 181

Contingency 294 3 -291

Grants 66 141 75

Office of the PCC 1,450 1,327 -123

Commissioning (inc exceptional items) 2,484 2,319 -165

279,661 277,098 -2,563

Contributions to earmarked reserves 0 1,738 1,738

279,661 278,836 -825

Over/

Under (-)£'000

Budget

£'000

Expenditure

£'000

It should be noted that the expenditure figure above cannot be directly agreed with the comprehensive income and expenditure statement on page 30 as we are required to include other items within the comprehensive income and expenditure statement which do not have an impact on the tax payer and are adjusted through the general fund balance. 3.2.1 Impact on Reserves

During 2013/2014 the PCC agreed with the Chief Constable to boost strategic reserves in year and from the under spend in order to fund our planned changes and transformation. This was identified as being needed in coming years to support investments required in technology and estates, enabling us to focus the reducing revenue budget on protecting front line officers. The reserve movements were to: Boost risk assessed levels of reserves by £0.8m to be in line with other

similar sized PCC’s and meet the emerging risks relating to the extent of change and transformation required to meet this period of extended austerity;

Transfer £4.9m to the capital financing reserve which is used to help fund

capital expenditure in 2014/2015 and reduce the need to take out any new borrowing in accordance with the PCC’s treasury management strategy; and

Top-up specific reserves by £1.7m to provide for future insurance needs and

support the financial model for our new PFI buildings.

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The charts below show, in percentages, the main areas of income and expenditure. Spending on employees made up the largest share. The largest area of income is government grants.

Police Officers51%

Premises3%

Supplies & services

8%

Transport2%

Police Staff22%

Other3%

Partnerships7%

PCSO's4%

Expenditure

Criminal Justice9%

Intelligence5%

Specialist Operations

7%

Local Policing40%

Investigative Support

3%

Road Policing4%

Dealing with the Public

8%

National Policing4%

Specialist Investigation

20%

Expenditure by operational activity

Operational Districts

41%

Operational Support

29%

Organisational Support

9%

Central Pay, Corporate Costs and Contingency

9%

Strategic Alliances

12%

Expenditure by service area

Government Grants

61%

Specific Grants4%

Partnerships4%

Council tax27%

Other income4%

Income

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3.2.2 Accounting for Pensions

In line with the International Accounting Standard IAS 19 employee benefits there is a significant pension liability of £2.9bn shown on the balance sheet. This liability is reduced to £2.7bn when pension scheme assets of £0.2bn are taken into account. More detail around this liability is disclosed in notes 18 to 20 to the accounts. The liability has no impact on the comprehensive income and expenditure statement and the actual reserves.

3.3 Operational Performance

At the same time as delivering savings the PCC and the Constabulary have focused on efficiency and outcomes. These efforts have ensured that progress on performance improvement has continued and this has been reflected in the main aspects of the Constabulary’s performance during 2013/2014. Total recorded crime fell by a further 2.2% in 2013/2014, continuing the long term reduction in crime recorded by both police statistics and the crime survey for England and Wales since 2001/2002, with more than 2,000 fewer crimes compared to 2012/2013. The PCC set the aspiration of becoming a top performing force nationally across each of her priority areas by 2017. Performance across these areas was encouraging in 2013/2014. Public confidence in the police in Avon and Somerset increased consistently throughout the year, moving from a lower quartile position in December 2012 to becoming one of the highest performing forces nationally. This is measured via the Crime Survey for England and Wales, which is an independent survey managed by the Office for National Statistics. Levels of burglary also fell to their lowest rate on record in Avon and Somerset, with the area’s comparative national position improving significantly. Similarly, detection rates for burglary rose steadily throughout the year to 14%. Avon and Somerset is now well on track to becoming one of the top performing forces nationally in terms of burglary reduction and burglary detections by 2017. Satisfaction amongst victims of crime increased to 89% - the 13th highest level nationally - while successful criminal justice outcomes saw similar improvements. The PCC has established in 2013 an Independent Residents panel to dip-sample complaints against the police and review areas of policing in an open and transparent way and this will contribute to increased levels of public confidence in policing.

3.4 Performance – Looking Ahead

The performance aspirations set out within the PCC’s 2014/2015 Police and Crime Plan present a number of key challenges for the Constabulary. These include: Increasing confidence to report incidents of domestic abuse. Domestic violence

cases recorded by police increased by around 5% in 2013/2014, however this is largely a result of improved recording practices. Further work is underway to increase confidence amongst victims and third parties to report these offences;

Increasing detections for serious sexual offences. While the number of detections

for serious sexual offences increased by 15% in 2013/2014, the rate of detections fell to 28%. This was largely due to the increased volume of reports received in the wake of the national Operation Yewtree investigations;

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Increasing satisfaction rates amongst victims of anti-social behaviour. Satisfaction rates amongst victims of ASB improved during 2013/2014 to 82% and the challenge has been set to bring further increases into line with that of crime victim satisfaction.

4 Capital Expenditure in 2013/2014 Alongside routine day-to-day costs, money is spent on assets such as buildings, vehicles, communications equipment, information technology systems and software. During the year continued investment was made in the Accommodation Programme to deliver improved facilities which will enable the effective and efficient policing of Avon and Somerset and in technology to better support police officers and staff. During 2013/2014 capital spending amounted to £8.5m. The following table shows how the money was spent.

Capital Expenditure

Information and communications systems 3,005 35.4

Estates 1,531 18.0

Transport 2,762 32.5

Plant, machinery and equipment 335 3.9

SAP ERP system 830 9.8

Air support 28 0.3

8,491 100.0

2013/2014

£'000 %

4.1 Estate Strategy and Private Finance Initiative (PFI) Scheme

During the year significant construction work was carried out on four new buildings which are the subject of a Private Finance Initiative scheme. Three of these buildings will deliver new police facilities in 2014/2015 that will be run by our PFI consortium partner over a 25 year concession after which they will transfer and be owned by the Avon and Somerset Police. The fourth building, Blackrock training facility, has unfortunately been delayed owing to a fire. It is anticipated that this building, which will be a shared facility with Gloucestershire and Wiltshire police, will become operational from 2015/2016. The current police estate comprises over 80 freehold property assets, with a combined book value of £126m at 31 March 2014. These buildings cover c. 91,000 square meters and the estate currently costs us c. £7.7m each year from utility bills and maintenance. Over the coming years, to meet the pressures from government funding reductions, we will be reducing the size and costs of this estate. Core to our strategy is the move into our new PFI buildings. The new PFI facilities will allow us to consolidate our teams and move out of some of our older buildings that are inefficient and no longer fit for purpose. Of equal importance, the new custody suites contained within these facilities, are being built to meet the most exacting standards to ensure the safety of detainees. As a result of these changes we will be disposing of some of the estate but where possible we will always seek to maintain local and town centre presence for our enquiry service and neighbourhood services. These are increasingly provided in partnership

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with our local authority partners – for example the Gateway integrated services in North Somerset. Continued funding pressures will require us to prioritise spend on our officers, PCSOs and staff. Our estates strategy will therefore focus on meeting the needs of our changing police operating model, support the needs of the public and deliver savings where possible. The PCC has provided in full for all identified PFI land purchases and PFI team costs in its capital programme. The revenue costs of the PFI project are more than covered by planned savings from estate rationalisation, partner income and efficiency changes as set out in the final business case. The PFI construction work has generated some £40m new work for local contractors of which nearly half has been awarded to local SME businesses boosting the local economy. As such, this PFI provides significant financial benefit to Avon and Somerset funded by savings and PFI credits from central government.

4.2 Treasury Management

In the financial year 2013/2014 the PCC complied in full with the CIPFA prudential code and operated within all agreed prudential indicators. The PCC continued to adopt a passive borrowing strategy and will only take new borrowing if absolutely required to manage risk and manage cash holdings. As a result total borrowing was reduced by £2m in 2013/2014. In advance of taking any new debt funding, the PCC utilises direct revenue funding, capital reserves, receipts from the sale of assets and other government grants in order to fund capital programmes which must all have approved business cases.

5 Looking Ahead to 2014/2015 and the Medium Term The PCC is developing detailed plans with the Chief Constable to achieve further savings that will help to balance the revenue budget over the remainder of the Government’s current Spending Review (SR) period to 2015/2016, as well as prepare for the known and expected funding reductions beyond the next election. The PCC takes a pessimistic view of the likely funding landscape across this timeframe and hence is looking at options with the Constabulary to reconfigure the policing services in Avon & Somerset over the medium term to deliver substantial further budget savings and improve the service offered to the public. The successful achievement of planned changes from 2010 to the end of March 2014 generated £34.4m of savings. The PCC has agreed a savings plan with the Constabulary and other partners to release a further £11.5m in 2014/2015. The combination of these cumulative savings puts the PCC in a strong position to address the challenges from the extended CSR period until March 2016. The next CSR will be after the next general election but all political parties face an ongoing (but now reducing) budget deficit and large total UK debt burden, making extended periods of funding constraint very likely.

5.1 2014/2015 Revenue Budget

In February 2014 the PCC approved a total 2014/2015 revenue budget of £276.2m (2013/2014 £279.7m). This budget was then divided as follows: Constabulary budget - £272.23m (2013/2014 £275.81m); OPCC budget - £1.42m (2013/2014 £1.45m); Community Safety Commissioning - £2.56m (2012/2013 £2.4m).

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The main budget challenges and planning parameters for 2014/2015 were: Total reduction in funding of £3.5m, after accounting for:-

o Reduction in main grant, and community safety grant funding of £8.6m (after

consolidation of community safety grant into main grant funding); o Increase in council tax income of £5.1m, as consequence of a 2.43%

increase in council tax base, and a 1.99% increase in precept. Inflationary cost increases for both pay, and non-pay expenditure of £8m; Total savings budgeted in the year of £11.5m.

5.2 Policing Precept 2014/2015

The PCC chose to raise increased funding through the council tax police precept level in 2014/2015 with a 1.99% increase taking the average (band D) council tax police precept up to £171 per annum for a band D household, up from £168 per annum. This increase was necessary to share the burden of funding cuts between savings and additional income and is the first rise in policing precept for Avon and Somerset in four years. The PCC consulted widely with local communities during the summer of 2013 about her council tax precept strategy and approach for future years before forming plans for the precept in 2014/2015 and beyond and found support for small increases in the policing precept to protect front line policing in the region. The PCC does benefit from any increases in the council tax base in the region but is not able to directly control this. The PCC is committed to safer and stronger communities and this in turn will continue to make the region an attractive place for people to be resident. In addition, the PCC has announced initiatives to tackle crime against business and has established a Business Crime Forum in the region. The PCC wishes to engage the police more closely with businesses and other partners to drive out best practice and drive down business crime, hence boosting business growth, investment and employment in the region.

5.3 Capital Programme 2014/2015 and beyond

The PCC has agreed a fully funded capital programme over the next three years including a significant investment programme in Information and Communications Technology (ICT) to support efficient and effective policing and deliver a better service to local people. In addition to supporting the strategy to consolidate the police estate to a lower cost and more efficient asset base utilising the new PFI buildings (reported above), the capital programme has set aside £15m for ICT over the next two years. These investments will: Support the new police operating model with more efficient digital data collection,

input and management in key areas of crime, intelligence, case and custody; Improve mobile working; and Enable better collaboration with other forces and local partners.

5.4 Home Office Innovation Fund

The PCC was successful in three innovation fund bids made to the Home Office in 2013/2014 to support innovation in the use of body worn cameras, improving citizens’ access to services via mobile devices and collaboration with other forces on key systems.

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The PCC has made seven new bids to the Home Office 2014/2015 innovation fund and led an additional regional bid. These include bids for funding to support: investment in storing and managing digital evidence including video; predictive analytics using “big data” to aid crime prevention; integration of service delivery with local partners; sustainability; and improved partnership working.

5.5 Community Safety and Victims Commissioning

The PCC believes that all partner agencies have a role to play to prevent and reduce crime and the PCC has applied this principle in her approach to commissioning services and making community safety grants. The PCC has retained a community safety budget of £2.56m in 2014/2015 to commission local community projects and outcomes to help build stronger and safer communities and prevent crime. The details of the allocation of this funding are set out on the PCC’s web site: http://www.avonandsomerset-pcc.gov.uk. In summary, money has been allocated to: Community Safety partnerships in all areas of the region; to drug testing and treatment programmes; to work with younger offenders to reduce re-offending; to fund targeted services for vulnerable victims of serious sexual violence crimes; to harden targets and reduce the risk of crime; and support diversionary projects for young people in more deprived parts of the region. In addition the PCC will, from October 2014, directly manage and commission local integrated victims care services. The PCC is now receiving funding from the Ministry of Justice (MoJ) alongside pooling relevant Constabulary budgets to prepare for and then go live with these new victims services from late summer 2014. The PCC has set a budget funded from MoJ grants and existing victims budgets in the OPCC and OCC to ensure the assumption of responsibility for commissioning of victims services is a success and that local victims see an enhanced and more joined-up service.

5.6 Commissioner’s Community Action Fund

The PCC has completed a successful first year of her Commissioner’s Community Action Fund that provided up to £200,000 to local community projects from funds raised by seizing criminal assets and cash (proceeds of crime). This money was allocated during the year to 60 successful bids for small (up to £5,000 each) grants totalling £195,000 over the year. The PCC will continue this fund at the same level in 2014/2015.

5.7 Approach to Future Challenges and Funding

The PCC recognises the huge pressure upon the public finances as a result of the national debt and ongoing structural budget deficit and the impact this may have on the Constabulary’s finances as a result of the current and future CSRs. The central funding reductions present a challenge to the service nationally and locally, to continue to meet public demand in a time of declining resources. The PCC is committed to delivering the financial cuts required to meet the CSR and will focus on core themes: Preventative policing to intervene early, reduce the risk of offending, safeguard the

vulnerable from harm and manage police demand; Meeting the needs of victims and better assessment of need and risk; Freeing up Police time by working with partners to integrate and coordinate local

services and improve efficiency.

http://www.avonandsomerset-pcc.gov.uk/

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These thematic areas will be supported by the capital programme investments in property and technology as well as the Constabulary’s new Operating Model that streamlines the way the police provide services to the public. The Constabulary’s Operating Model protects front line and neighbourhood policing and so embeds the principles of neighbourhood problem solving and prevention as well as working with local partners and agencies to tackle the areas of greatest risk and vulnerability. The PCC is committed to tackling long term priority locations and complex need and this is supported by the Constabulary structures agreed in the new Operating Model.

5.8 Police Funding Formula and “Damping”

The PCC for Avon and Somerset receives the majority of her annual funding from a formula derived government grant. The formula used calculates the relative needs of each police force area, and then adjusts this in order to reflect the historic funding position of each force prior to the introduction of this formula. This formula continues to operate to the significant financial detriment of Avon and Somerset. In the eight years ending March 2013 Avon and Somerset policing will have lost nearly £110m from its grant funding against its assessed need and has been the second worst affected Authority/PCC in the country during this period. This drastic loss of funding comes despite the so called “damping” mechanism only ever being intended as a short term transitional device to smooth funding increases from the previous CSR. The Government have finally indicated that they will review the policing funding formulas but this has been delayed until after the next general election. This is disappointing for people in this region. The ongoing, unfair distortion has been raised by the PCC at the highest levels in government. We look to a fairer settlement for the people of Avon and Somerset in the future when the policing funding formula is finally reviewed by government.

5.9 Efficiency and Effectiveness

The challenge of maintaining improvement in operational performance with less financial resources is to be met through an even greater emphasis by the PCC on outcomes, efficiency and effectiveness. Many of the initiatives to achieve efficiency have already been outlined in this report, but in summary this is being achieved through the combined approach of: better matching resources to demand and so prioritizing resources through the implementation of the Constabulary’s new Operating Model; centralising functions where appropriate to remove duplication and reduce the management overhead; rationalising the estate utilising the new PFI funded custom built custody and operational area centres and closing buildings that are no longer financially viable or fit for purpose; investing in technology; investing in integrated services with partners; managing recruitment of police officers; seeking to maintain and use appropriately our reserves; planning for the long term and achieving savings in procurement and other back office functions through our partnership in the Southwest One joint venture.

5.10 Risk

The PCC and OCC risk registers are constantly under review. The annual level of general reserve in the accounts is based on assigning values and probability to all material known risks. This has seen an increase in the level of general reserve this year due to the anticipation of ongoing funding reductions after the current CSR.

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One specific known risk, flagged in previous statements regarding Municipal Mutual Insurance (MMI) a former insurer of public bodies (now undergoing insolvent run-off) is now crystallising and an interim payment of £0.4m has been made as the PCC has inherited this liability from the former Police Authority. The PCC and OCC also recognise the risk of rising crime and public disorder from challenging economic times, government funding cuts, high levels of youth unemployment, welfare changes and high profile initiatives such as nuclear power, fracking and badger culls. The PCC and OCC make regular risk assessments of these and ensure that a minimum level of reserves is held, so that any such liability, should it arise, would be met from reserves.

5.11 Conclusions

The financial affairs of OCC and PCC have been and continue to be prudently and effectively managed. Best practice is being followed and a strong focus maintained on value for money, innovation, investment to save and achieving savings targets, whilst ensuring that service performance is still being maintained or improved. These accounts reflect the considerable changes in the governance of policing with the creation of two new corporations sole. It is hoped that this foreword gives the readers some explanation of the changes and a summary of the results that may otherwise be opaque to the average reader from the complex set of financial statements we are required to produce by accounting standards and the split into two new corporations. Looking ahead, the coming years present extremely challenging financial constraints coupled with a period of uncertainty regarding central government funding that will continue after the next general election. In a region as diverse as Avon and Somerset the task of representing all the residents is a considerable challenge, especially at a time of continued downwards pressure on all public sector funding - including policing budgets. The PCC is working hard to listen to the widest possible spectrum of her residents and local businesses and ensure their voices are heard when policing plans and funding plans are formulated and when changes to the service are considered. The PCC has important decisions to take in 2014/2015 on future council tax precepts, prioritising spending, commissioning services and allocating budget. The PCC is committed to delivering a safe and secure region in Avon and Somerset and ensuring the policing service is efficient and effective and reflects the wishes and needs of its communities. The PCC will focus on being as accessible as possible to people as well as working with the Chief Constable to achieve the vision, objectives and targets of her Police and Crime Plan.

Mark Simmonds BSc(Hons), ACA Chief Finance Officer to PCC 25 June 2014

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Statement of Responsibilities This section explains our responsibilities for our financial affairs and how we make sure we carry out these responsibilities properly.

1 Police and Crime Commissioner’s Responsibilities The Police and Crime Commissioner is required to: Make arrangements for the proper administration of the Police and Crime

Commissioner’s financial affairs and to make sure that one of its officers, the Chief Finance Officer, has responsibility for the management of those affairs;

Manage its affairs to secure the use of resources efficiently and effectively and safeguard assets;

Approve the Statement of Accounts.

2 The Chief Finance Officer’s Responsibilities The Chief Finance Officer is responsible for preparing the Statement of Accounts for the Police and Crime Commissioner for Avon and Somerset in accordance with proper accounting practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (The ‘Code’). In preparing the Statement of Accounts, the Chief Finance Officer has: chosen suitable accounting policies and then applied them consistently; made reasonable and prudent judgements and estimates; complied with the CIPFA Code; kept proper accounting records which were up to date; taken reasonable steps for the prevention and detection of fraud, including preparing an

audit and risk-management strategy; and made sure that the internal control systems are effective – pages 18 to 27 show this in

more detail.

I certify that the Statement of Accounts presents fairly the financial position of the Police and Crime Commissioner as at 31 March 2014 and its income and expenditure for the year ended 31 March 2014. Mark Simmonds BSc (Hons), ACA Chief Finance Officer to PCC 25 June 2014

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Auditor’s Certificate

Independent auditors’ report to the Police and Crime Commissioner for Avon and Somerset

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Annual Governance Statement There is a statutory requirement to prepare the Annual Governance Statement which sets out the internal controls in place to ensure ‘proper practices’ in accordance with the CIPFA/SOLACE Good Governance Framework. The statement also considers the extent to which the aspirations set out in the PCC’s Code of Corporate Governance are currently being met. These statements give the results of our yearly assessment of how well we are managing and controlling risks in achieving our aims and meeting the responsibilities we have by law.

1 Scope of Responsibilities The Police Reform and Social Responsibility Act 2011 (the Act) sets out the accountability and governance arrangements for police and crime. The Act establishes both the PCC and Office of the Chief Constable (OCC) as ‘corporations sole’. This means each is a separate legal entity, though the OCC is accountable to the PCC. Both the PCC and OCC are Schedule 2 bodies under the 1998 Audit Commission Act and are both required to publish a statement of accounts and be subject to audit. This statement covers the PCC’s own office and the group position of the PCC and OCC. A separate governance statement for the OCC is included in the accounts for the OCC. The PCC and OCC share most core systems of control including the SAP ERP systems, various services from Southwest One, internal policies and processes. Under the scheme of governance, most of the staff, officers and processes deployed in the systems of internal control are under the direction and control of the OCC. The PCC has oversight and scrutiny of the OCC’s delivery arrangements including governance, risk management and systems of internal control. As a result, the PCC places reliance on the OCC to deliver and support the governance and risk management processes and the framework described in this statement refers to the PCC’s own activity and where reliance is placed on the systems, people and processes of the OCC. The PCC and OCC are responsible for ensuring their business is conducted in accordance with the law and proper standards, and that public money is safeguarded, properly accounted for, and used economically, efficiently and effectively. In discharging this overall responsibility, the PCC and OCC are responsible for putting in place proper arrangements for the governance of their affairs and facilitating the exercise of their functions, which includes ensuring that a sound system of internal control is maintained through the year and that arrangements are in place for the management of risk. The PCC and OCC have adopted corporate governance principles which are consistent with the principles of the CIPFA/SOLACE Framework – Delivering Good Governance in Local Government. A copy of the Avon and Somerset Joint Scheme of Governance is on the web-site at www.avonandsomerset-pcc.org.uk or can be obtained from the PCC’s office at Police Headquarters, Valley Road, Portishead, BS20 8JJ, or by contacting 01275 816377. The PCC’s Chief Finance Officer (PCCCFO) has responsibility for providing advice on all financial matters, maintaining financial records and accounts and ensuring an effective system of financial control is in place. This role (together with the OCC Chief Finance Officer)

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conforms with the governance requirements established in the CIPFA statement on the role of the Chief Financial Officer.

2 The Governance Framework The governance framework in place throughout the 2013/2014 financial year covers the period from 1 April 2013 to 31 March 2014 and up to the date of approval of the Annual Statement of Accounts. This framework comprises the systems, processes, culture and values by which the PCC and OCC operate and the activities through which the PCC engages with and is accountable to the public. It enables the PCC to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate and cost-effective services which provide value for money. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable and foreseeable level. It cannot, however, eliminate all risk of failure to achieve aims and objectives and therefore only provides reasonable and not absolute assurance of effectiveness. The system of internal control is an ongoing process designed to identify and prioritise the risks to achieving the PCC’s aims and objectives, evaluate the likelihood and impact of those risks being realised and manage them effectively, efficiently and economically. Although the Chief Constable is responsible for operational policing matters, direction of police personnel and making proper arrangements for the governance of the Constabulary, the PCC is required to hold him, and those under his direction and control, to account for the exercise of those functions. The PCC must therefore satisfy itself that the Constabulary has appropriate mechanisms in place for the maintenance of good governance and that these operate in practice. This statement provides a summary of the extent to which the aspirations set out in the PCC’s Code of Corporate Governance are currently being met. It is informed by assurances on the six principles set out in the CIPFA/SOLACE Framework Delivering Good Governance in Local Government and by ongoing internal and external audit and inspection opinion. The PCC’s and OCC’s six principles of good governance are: Focusing on the purpose of the PCC, on the outcomes for the community and creating

and implementing a vision for the local area. Ensuring the PCC, officers of the PCC and partners work together to achieve a common

purpose with clearly defined functions and roles. Good conduct and behaviour. Taking informed and transparent decisions which are subject to effective scrutiny and risk

management. Compliance with laws and regulations. Developing the capacity and capability of the PCC and officers to the PCC to be effective. Engaging with local people and other stakeholders to ensure robust public accountability.

2.1 Focusing on the Policies of the PCC, on the Outcomes for the Community and Creating and Implementing a Vision for the Local Area

2.1.1 The purpose, vision, values, priorities and strategic objectives of the PCC are

reviewed on an ongoing basis and with a focus during the PCC’s business planning process and are set out in the PCC’s Police and Crime Plan. The PCC’s Police and Crime Plan focuses on the efficiency and effectiveness of the Constabulary and key priority areas for the PCC based on her engagement with the public: Tackling Anti-social behavior, burglary and road safety issues; tackling

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violence especially against women and children; and putting victims at the heart of the criminal justice system.

2.1.2 The PCC has engaged with the Constabulary on her planning via a joint strategic

planning process that culminated in the finalisation of the PCC’s Police and Crime Plan which has been developed by a Strategic Planning Working Group, comprising Constabulary leads, PCC and PCC’s lead officers. This working group has enabled a considered and informed approach to objective and priority setting built upon the election work of the PCC, findings of stakeholder and community engagement, strategic assessments of risk and threat, local performance, audit and inspection findings and improvement plans. The PCC has set new streamlined policing priorities, strategic objectives and targets.

2.1.3 The transition from the former Police Authority to the two new corporations sole

of PCC and OCC is now complete with a stage two transfer agreed in March 2014 whereby the employment for police staff and officers has transferred to the Chief Constable from 1 April 2014. The PCC has retained employment of her own small OPCC team and retained ownership of all assets. All contracts will continue to be let in the name of the PCC. This work has been praised by HMIC and external and internal audit.

2.1.4 The OPCC has developed its own business plan for 2013/2014 setting out the

PCC’s vision and values and focusing on value for money, and the efficient and effective use of funds and delivery of services to the public to meet the priorities set out in the PCC’s plans. In order to achieve the strategic aims, the PCC is committed to collaboration and partnership working, listening to community views and reflecting these in policing priorities, ongoing and visible community engagement and consultation, promoting equality, diversity, human rights and sustainability. The plan has taken account of relevant national guidance, legislation and policies.

2.2 Ensuring PCC, Officers for the PCC and Partners Work Together Efficiently and Effectively to Achieve a Common Purpose With Clearly Defined Functions and Roles

2.2.1 The PCC’s scheme of governance including Standing Orders, Financial

Regulations and Scheme of Delegation sets out a governance framework for the PCC, her officers and the Constabulary to work together. These documents were substantively reviewed and amended on transition to the PCC in November 2012 and updated again in 2014 to reflect the stage two transfer of staff to the Chief Constable.

2.2.2 The PCC holds regular meetings with the Chief Constable, other senior officers

and her senior leadership team. In addition, the PCC holds regular informal seminars with the Constabulary to discuss emerging issues and key developments. The PCC and OCC have agreed a joint vision to give clarity to their roles and responsibilities.

2.2.3 The PCC has allocated lead officers to her priority areas including consultation,

media, public contact, finance, human resources, victims, professional standards, equalities, volunteering including custody visiting, crimes of violence, anti-social behavior and burglary. Lead officers meet regularly with the PCC, key partners and with their opposite numbers in the Constabulary to consider emerging issues, funding matters, commissioning outcomes and other developments in each area of responsibility.

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2.2.4 The PCC considers all new major projects and business cases at a regular Finance Meeting with the CFO and the Chief’s CFO, Deputy Director of Finance and Head of Retained Finance.

2.3 Promoting Values for the PCC and Demonstrating the Values of Good Governance Through Upholding High Standards of Conduct and Behaviour

2.3.1 The PCC has a code of conduct and published values for her office. All relevant

PCC officers and staff are subject to policies and procedures covering discipline, grievance and standards of conduct.

2.3.2 The PCC maintains scrutiny of Professional Standards and continues to oversee

the Constabulary’s complaints process and operation of the Professional Standards department. All new Constabulary employees are given a briefing on Force standards and ethical behaviour and practices, whilst Professional Standards form a component of leadership training. New PCC staff receive an induction which includes a briefing on the code of conduct.

2.3.3 Independent residents Panel - The PCC has established a best in class independent panel to dip sample complaints made by members of the public about aspects of the Constabulary’s service. The Panel provides reports to the PCC and Chief Constable which are published on the PCC website.

2.4 Taking Informed and Transparent Decisions Which are Subject to Effective Scrutiny and Risk Management and Due Process; Ensuring Laws and Regulations are Followed

2.4.1 All decision making is carried out in accordance with the PCC’s Governance

framework including the Scheme of Governance, Standing Orders and Financial Regulations.

2.4.2 The Governance arrangements ensure that key decisions taken by the PCC are

documented and published alongside all supporting information. Finance meetings publish all supporting documents and minutes including decisions on investment business cases. In addition, performance reports and notes of other portfolio update meetings are made available on the PCC’s website.

2.4.3 The PCC has appropriate oversight and scrutiny of Constabulary decision making

through the PCC’s meetings with the Chief and by lead PCC officers meetings with senior Constabulary officers and staff, often attended by the PCC. The OPCC also attends a number of Constabulary Boards and planning sessions.

2.4.4 The PCC is complying with the requirements of the Elected Local Policing Bodies

Specified Information Order 2011, which sets out the responsibilities of Police and Crime Commissioners to publish information.

2.4.5 The PCC also takes account of their statutory obligations and key

legislative/policy developments in setting out the plans and priorities.

2.4.6 The PCC considers risk management in discharging all core functions. The PCC’s strategic risk register and scrutiny log remain live documents and are routinely considered at all key meetings, including OPCC team meetings, Joint Finance, Human Resources and the Audit Committees.

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2.5 Developing the Capacity and Capability of the PCC and Officers of the PCC to be Effective

2.5.1 The PCC has a policy of Performance and Development Reviews (PDR) in place.

PCC staff have been transferred from the former Police Authority and have been retained, trained and developed to meet the new challenges of the Office of the PCC (OPCC).

2.5.2 PCC staff continue to undergo a broad programme of development in order to

build capacity, resilience and continuity during transition to the OPCC. Training and development activity in 2013/2014 has included specially commissioned seminars, local and regional and partnership training events, presentations by the Constabulary and attendance at relevant conferences and workshops.

2.5.3 PCC officers and staff complete a regular PDR process with the Chief Executive,

Chief Finance Officer and other managers from the PCC’s senior leadership team. These have enabled staff to transition into new functions and roles in the OPCC and develop training requirements for individual officers.

2.5.4 The PCC will undertake specific training as required for the emerging challenges of this new role and also benefits from forum meetings with other PCC’s, membership of the Association of Police and Crime Commissioners (APCC) and input to senior OPCC officers from the Police and Crime Commissioners Treasurers’ Society (PACCTS).

2.6 Engaging with Local People and Other Stakeholders to Ensure Robust Public Accountability

2.6.1 In 2013/2014 the PCC built on the success of the previous year's consultation

and engagement programme. Key activities included attendance at high profile community events during the summer, meeting business leaders and business organisations, meeting charities, community groups and other key partners on a regular basis, holding public forum meetings in public and a series of surveys to discuss and seek views on budget and precept options. The PCC was awarded “Highly Commended” for public engagement from CoPaCC, a national organisation which compares Police and Crime Commissioners.

2.6.2 The engagement programme included PCC attendance and activity at a range of

stakeholder meetings and community events including Police and Communities Together (PACT), Local Strategic Partnerships (LSP’s) and Community Safety Partnerships (CSP) meetings, Bath and West Show and other regional events.

2.6.3 “Out and about” - The PCC has continued to lead the way amongst PCC’s in

attendance at community events and stakeholder meetings and the PCC has continued to spend at least one day each week out and about and accessible in the various communities of the region. During the PCC’s “out and about” days, the PCC will typically meet members of the public, volunteer and charity groups, other key partners and stakeholders and focus on listening to the views of the people in Avon & Somerset – especially the “quiet” voices that are not always heard in the “noise” of pressure and lobby groups.

2.6.4 Independent Residents Panel – as noted above, the PCC has established an

independent panel to dip sample complaints made by members of the public about aspects of the Constabulary’s service.

2.6.5 Public Forums - The PCC and the Chief Constable hold bi-monthly public forum events across the force area, targeted at members of the public and held in

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community venues. These are focused on addressing issues and concerns of local people and include presentations from the local Area Commander and opportunities for local people to ask questions or raise issues. The dates and notes of these meetings including questions and answers are published on the PCC website. Feedback and comments from these meetings are captured and fed into the data which is used to work with the force to influence the quality of policing service.

2.6.6 Local Policing Area Days and other Local Scrutiny - the PCC and Chief Constable attend a series of local visits to local policing areas. These focus on meeting local staff and partners. The visits include an opportunity for PCC and officers to review delivery of local Police and Crime Plans and issues raised.

2.6.7 External Governance Meetings - the PCC meets regularly with MP’s, leaders of local authorities and other key stakeholders in Avon and Somerset. The PCC has agreed an approach with the local Community Safety Partnerships (CSP) to agree joint agenda planning and to table key issues at CSP meetings as well as to monitor effective delivery of projects commissioned through the Community Safety Grant at CSP meetings. A similar approach of agreeing appropriate agenda items is taken with the Avon and Somerset Health and Wellbeing Boards. The PCC or a member of her team will attend the local Criminal Justice Board which is chaired by the Chief Constable. Papers for these meetings are available on line and will be linked from the PCC website.

2.6.8 Regional Representation - the Commissioner and Chief Constable meet monthly with the other four regional PCCs and Chief Constables in the South West of England and have developed a joint vision for working together which is included in the Police and Crime Plan.

2.6.9 National Representation - the Commissioner has joined the National Association of Police and Crime Commissioners - through this access is gained to various national agencies and groups. The Commissioner represents PCC's on the national Policing Oversight Group which is a national group of strategic police leaders.

2.7 Value for Money and Reliable Financial and Performance Statements are Reported and Internal Financial Controls Followed

2.7.1 Financial control involves the existence of a control structure which ensures that

all resources are used as efficiently and effectively as possible to attain the PCC’s overall objectives and targets. Internal financial control systems are in place to minimize the risk of loss, unlawful expenditure or poor value for money, and to maximize the use of the PCC’s assets and limited resources.

2.7.2 The PCC’s and Constabulary’s financial management and performance reporting

framework follows national and/or professional best practice and its key elements are set out below:

Financial Regulations establish the principles of financial control. They are

designed to ensure that the PCC conducts its financial affairs in a way which complies with statutory provision and reflects best professional practice. Standing Orders set out the rules to be followed in respect of contracts for the supply of goods and services.

Responsibility and accountability for resources rest with managers who are

responsible for service provision.

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The PCC has adopted the CIPFA Code of Practice on Treasury Management requiring the PCC to consider, approve and publish an annual treasury management strategy including an annual investment strategy.

In accordance with the Prudential Code and best accounting practice the

Constabulary and PCC produce a four year Medium Term Financial Plan (MTFP) and a five year capital programme. These are considered on an ongoing basis and form the core of further detailed deliberation on setting the precept level, the annual revenue budget and capital programme.

The MTFP includes full provision for inflation, known commitments and other

expenditure items which the Chief Constable has identified as necessary to deliver both national and local policing priorities.

The revenue budget provides an estimate of the annual income and

expenditure requirements for the police service and sets out the financial implications of the PCC’s policies. It provides chief officers with the authority to incur expenditure and a basis on which to monitor the financial performance of the PCC.

The PCC presents her precept proposals to the Police & Crime Panel (PCP)

by the end of February for their consideration and consider their recommendations, prior to finalizing the budget and precept in March.

Capital expenditure is an important element in the development of the PCC’s

service since it represents major investment in new and improved assets. The PCC considers and then approves a capital programme each year and monitors its implementation and funding closely at Finance meetings.

The PCC has established an oversight framework and set of principles for

projects designed to deliver the three year efficiency savings announced as part of the Comprehensive Spending Review (CSR) and anticipating further savings from the next CSR. The PCC is overseeing all aspects of the Constabulary’s Change Programme.

The PCC has approved a balanced budget for 2014/2015 with a 1.99%

increase in council tax precept and identified a much reduced deficit gap to close for 2015/2016.

The work to identify ongoing savings is being delivered via the ongoing

Change Programme. This will include planned investment in the Constabulary's new operating model, as well as investment in estates and technology to make delivery of policing better and more efficient. Collaboration programmes with other police forces, local partners and other blue light services will also be part of our considerations.

HMIC’s ongoing series of ‘Valuing the Police’ inspections have presented a

positive update thus far of Avon and Somerset’s financial preparedness for the current CSR and future funding challenges.

Quarterly financial performance reports are presented the PCC through the

finance meeting, and are published through the PCC's website enabling wider scrutiny of financial performance by the public.

Savings are being achieved ahead of plan and the resulting small under

spend in 2013/2014 has been used to further boost risk-assessed reserves,

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whilst departmental budgets for 2014/2015 have been reduced in line with under spends.

Performance reports are scrutinised six weekly in meeting between OCC

and OPCC leads and summary information is published on the PCC and OCC websites.

The quality of crime recording is improving under the leadership of a

dedicated Gold Group attended by OPCC officers; the meeting focuses on internal oversight and monitoring of crime recording. HMIC inspections provide assurance on crime recording and the OPCC ensures agreed actions for improvement are implemented. The PCC meets with the Constabulary Crime Registrar on a quarterly basis to review crime recording issues. The Constabulary have entered into a reciprocal peer review arrangement of compliance with crime recording standards with a regional force.

3 Review of Effectiveness The PCC has a responsibility for conducting, at least annually, a review of the effectiveness of the governance framework, including the system of internal audit and system of internal control. This is informed by the internal audit assurance, information gathered from PCC and Constabulary senior management, external audit opinions and reviews conducted by other agencies and inspectorates. For 2013/2014 these considerations took account of: the internal auditor’s reports to the Joint Audit Committee (JAC) throughout the year and

their annual report to JAC on 4 July 2014; external auditors’ comments reported at JAC meetings; the HMIC Valuing the Police ‘Preparedness’ inspection; the Force Strategic Risk Register; the PCC’s Strategic Risk Register; the Outturn position for 2013/2014 that delivered savings ahead of plan; and the planning and development of the MTFP for 2014/2015 and three years further

beyond. Matters arising from the audit and inspection activities are detailed below and have appropriate ownership and action plans in place to address the items raised.

4 Governance Following completion of the review of effectiveness we are satisfied that our arrangements for governance, risk management and control are generally adequate and effective. Joint Audit committee (JAC) - The interim JAC for the PCC and OCC has now been replaced by a substantive JAC during the summer of 2013 with the appointment of five new independent Members and the appointment of an independent Chair. New terms of reference have been agreed and published. During the year the JAC members have agreed a programme of audit work and have attended for training sessions covering audit committee duties, responsibilities and risks; emerging issues in policing governance and annual accounts. Internal Audit Programme - The reports of our internal auditors support the conclusion that our arrangements for governance, risk management and control are generally adequate and

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effective. Following a tender process, Baker Tilly were appointed as internal auditors from April 2014. During the 2013/2014 year the internal audit service was provided by RSM Tenon. The Internal Audit providers completed nine audits, presented four advisory reports, one position statement and conducted follow-up work on previous audits. Through this work they have concluded that: This year’s Internal Audit opinion, which is based on the 12 months ended 31 March

2014, reports that the PCC and OCC have adequate and effective arrangements for governance, risk management and control. In particular “green” high assurance was awarded against audit work completed in key areas of risk and control: Firearms Licensing; HR Unsocial hours; PCC expenses; Financial controls; Payroll and Governance.

Only one report, on Safeguarding, contained a new high priority action which has been

accepted by the OCC and is being implemented. The PCC has made good progress on her priority areas and put in place effective

governance arrangements and system of internal controls to manage the risks of the PCC’s own office and commissioning activities as well as, in conjunction with the Constabulary, to manage the wider organisational risks.

Transition stage two has been successfully completed at minimal cost and disruption in

accordance with a transfer scheme agreed between the PCC and Chief Constable whereby the employment of most police staff and the police officers has been transferred to the Chief Constable and the PCC has retained ownership of all assets and all contracts are let in the name of the PCC.

The audit work has been based on the PCC and Constabulary’s risk profile. The risk

maturity review indicated no areas of specific concern, only general improvement measures.

This internal audit work and wider work of the JAC has highlighted key risk and internal control issues, which are being addressed by PCC and Constabulary. These are:

4.1 Governance and Oversight of the Change Management Programme

Substantial progress has been made to ensure that the residual 2011-2016 Comprehensive Spending Review (CSR) funding gap is closed in 2015/2016 and attention is now focused on the plans and collaborations that will be needed to address the widening funding challenges forecast for the following two years. There still remains a funding gap for 2016/2017 and increasing to over £20m by 2017/2018. This will be addressed by further savings from Change Management projects, iterations of the new operating model, collaborations, new partnerships and precept rises (subject to the PCC’s ongoing consultation with the public on this matter and subject to centrally imposed referendum limits on precept rises). Scrutiny is provided via the PCC’s meetings with the Chief Constable, the PCC’s joint Finance meeting, the OCC’s Change Programme Board and Operating Model Board meetings (both attended by OPCC team members), OPCC attendance at Chief Officer Group meetings, regular planning meetings between the PCC and OCC CFO’s and joint planning seminars between senior Constabulary and the OPCC.

4.2 Safeguarding and Victim Care

The OCC acknowledge the recommendations regarding the design of the control framework and consistency of applying the framework. Internal audit note that the OCC are rolling out a new Operating Model that places high emphasis on victim care and

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safeguarding matters. The OCC have undertaken a number of steps to gain internal and external feedback on their approach and are aiming for continuous improvement in this high risk area. The implementation of a new integrated case & custody/crime & intelligence system in 2014/2015 will also support improvements and consistency in this area.

5 Assurance Summary No system of internal control can provide absolute assurance against material misstatement or loss; this statement is intended to provide reasonable assurance. However, on the basis of the review of the sources of assurance set out in this statement, we are satisfied that the PCC and OCC for Avon and Somerset have in place satisfactory and adequate systems of internal control which facilitate the effective exercise of their functions and which include arrangements for the governance, control and the management of risk.

Sue Mountstevens J Smith Police & Crime Commissioner Chief Executive to PCC for Avon and Somerset for Avon and Somerset

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Movement in Reserves Statement 2012/2013 and 2013/2014

Restated Movement in Reserves Statement 2012/2013

Balance as at 31 March 2012 7,500 29,626 2,401 39,527 -2,322,049 -2,282,522

Surplus or deficit(-) on provision

of services -148,896 0 0 -148,896 0 -148,896

Other comprehensive income and

expenditure 0 0 0 0 -72,670 -72,670

Total comprehensive income

and expenditure -148,896 0 0 -148,896 -72,670 -221,566

Adjustments between accounting

& funding basis under regulations 156,595 -2,594 -526 153,475 -152,939 536

Net increase/decrease(-)

before transfers to earmarked

reserves (note 6) 7,699 -2,594 -526 4,579 -225,609 -221,030

Transfers to/from earmarked

reserves (note 33) -1,624 1,624 0 0 0 0

Increase/decrease(-) in 2012/2013 6,075 -970 -526 4,579 -225,609 -221,030


Total

Unusable

Reserves

Total

£'000 £'000 £'000 £'000 £'000 £'000

Revenue

General Fund

Revenue

Specific

Reserves

Capital

Receipts

Reserves

Total Usable

Reserves

Movement in reserves statement 2013/2014


Surplus or deficit(-) on provision

of services -154,595 0 0 -154,595 0 -154,595


expenditure 0 0 0 0 131,282 131,282


and expenditure -154,595 0 0 -154,595 131,282 -23,313

Adjustments between accounting

& funding basis under regulations 161,520 -3,445 2,252 160,327 -159,840 487

Net increase/decrease(-)

before transfers to earmarked

reserves (note 6) 6,925 -3,445 2,252 5,732 -28,558 -22,826

Transfers to/from earmarked

reserves (note 33) -6,100 6,100 0 0 0 0

Increase/decrease(-) in 2013/2014 825 2,655 2,252 5,732 -28,558 -22,826


Capital

Receipts

Reserves

Total Usable

Reserves

Total

Unusable

Reserves

Total

£'000 £'000 £'000 £'000 £'000 £'000

Revenue

General Fund

Revenue

Specific

Reserves

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Group Comprehensive Income and Expenditure Statement for the year ended 31 March 2014

Comprehensive Income and Expenditure

Statement - Group

Expenditure

149,812 -14,766 135,046 Local policing 141,507 -6,297 135,210

32,007 -2,119 29,888 Dealing with the public 29,221 -2,223 26,998

29,013 -1,416 27,597 Criminal justice arrangements 32,403 -3,021 29,382

12,086 -3,286 8,800 Road policing 13,012 -3,207 9,805

26,270 -2,589 23,681 Specialist operations 26,473 -6,725 19,748

17,612 -693 16,919 Intelligence 18,562 -1,605 16,957

62,908 -1,656 61,252 Specialist investigation 72,226 -952 71,274

9,583 -125 9,458 Investigative support 9,619 -122 9,497

14,529 -13,971 558 National policing 14,422 -12,863 1,559

221 0 221 Non distributed costs 0 0 0

1,349 0 1,349 Corporate and democratic core 1,234 0 1,234

355,390 -40,621 314,769 Net cost of police services 358,679 -37,015 321,664

780 Gain(-)/loss on disposal of non-current assets -218

780 Other operating expenditure -218

1,743 External interest payable 1,652

-450 Interest and investment income -415109,715 Net interest on pensions 112,803

111,008

Financial and investment income

and expenditure 114,040

-112,691 Police - revenue grant -115,805

-58,977 Share of national non-domestic rates 0

-1,189 Revenue support grant 0

0 DCLG funding -61,543

-2,664 Capital grant and contributions -2,357

-5,247 Council tax top-up grant -3,331

0 Council tax support and transition grant -11,475

35,975 -35,975 0 Police pension top-up grant (note 19) 37,774 -37,774 0

-96,893 Council tax - local authorities (note 11) -86,380

-277,661 Taxation and non-specific grant income -280,891

148,896 Surplus(-)/deficit on provision of services 154,595

90,596

Actuarial gain(-)/loss on pensions

assets/liabilities (note 18) -129,243

-17,926 Return on pensions assets (note 18) -2,039

221,566


and expenditure 23,313

2012/2013

Gross

Expenditure

Gross

Expenditure

Gross

Income£'000 £'000

Re-stated

Gross

Income 2013/2014

£'000 £'000£'000 £'000

Sue Mountstevens Mark Simmonds BSc (Hons), ACA Police and Crime Commissioner Chief Finance Officer to PCC 25 June 2014 25 June 2014

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PCC Comprehensive Income and Expenditure Statement for the year ended 31 March 2014

Comprehensive Income and Expenditure

Statement - PCC

Expenditure

149,812 0 -14,766 -14,766 135,046 Local policing 140,311 1,196 -6,297 -5,101 135,210

32,007 0 -2,119 -2,119 29,888 Dealing with the public 29,221 0 -2,223 -2,223 26,998

29,013 0 -1,416 -1,416 27,597 Criminal justice arrangements 31,548 855 -3,021 -2,166 29,382

12,086 0 -3,286 -3,286 8,800 Road policing 13,012 0 -3,207 -3,207 9,805

26,270 0 -2,589 -2,589 23,681 Specialist operations 26,473 0 -6,725 -6,725 19,748

17,612 0 -693 -693 16,919 Intelligence 18,562 0 -1,605 -1,605 16,957

62,908 0 -1,656 -1,656 61,252 Specialist investigation 72,179 47 -952 -905 71,274

9,583 0 -125 -125 9,458 Investigative support 9,619 0 -122 -122 9,497

14,529 0 -13,971 -13,971 558 National policing 14,422 0 -12,863 -12,863 1,559

221 0 0 0 221 Non distributed costs 0 0 0 0 0

0 1,349 0 1,349 1,349 Corporate and democratic core 0 1,234 0 1,234 1,234

354,041 1,349 -40,621 -39,272 314,769 Net cost of police services before funding 355,347 3,332 -37,015 -33,683 321,664

-354,041 354,041 0 354,041 0 Inter-group funding -355,347 355,347 0 355,347 0

0 355,390 -40,621 314,769 314,769 Net cost of police services 0 358,679 -37,015 321,664 321,664

780 780 Gain(-)/loss on disposal of non-current assets -218 -218

780 780 Other operating expenditure -218 -218

1,743 1,743 External interest payable 1,652 1,652

-450 -450 Interest and investment income -415 -415109,715 0 109,715 Net interest on pensions 112,803 0 112,803

-109,715 109,715 109,715 0 Inter-group adjustment (pension interest cost) -112,803 112,803 112,803 0

111,008 111,008

Financial and investment income

and expenditure 114,040 114,040

-112,691 -112,691 Police - revenue grant -115,805 -115,805

-58,977 -58,977 Share of national non-domestic rates 0 0

-1,189 -1,189 Revenue support grant 0 0

0 0 DCLG funding -61,543 -61,543

-2,664 -2,664 Capital grant and contributions -2,357 -2,357

-5,247 -5,247 Council tax top-up grant -3,331 -3,331

0 0 Council tax support and transition grant -11,475 -11,475

35,975 0 35,975 Police pension top-up grant - Expenditure 37,774 0 37,774

-35,975 0 -35,975 Police pension top-up grant - Income -37,774 0 -37,774

-96,893 -96,893 Council tax - local authorities (note 11) -86,380 -86,380

-72,670 72,670 72,670 0

Inter-group adjustment (actuarial gain(-)/

loss and return on pensions assets) 131,282 -131,282 -131,282 0

-204,991 -277,661 Taxation and non-specific grant income -412,173 -280,891

-72,670 221,566 148,896 Surplus(-)/deficit on provision of services 131,282 23,313 154,595

90,596 0 90,596

Actuarial gain(-)/loss on pensions

assets/liabilities (note 18) -129,243 0 -129,243-17,926 0 -17,926 Return on pensions assets (note 18) -2,039 0 -2,039

0 221,566 221,566


and expenditure 0 23,313 23,313

PCC

Income

£'000£'000

Re-stated

OCC

Expenditure

PCC

Expenditure

PCC

Income

PCC

Total

OCC

Expenditure

Group

2012/2013

PCC

Expenditure

£'000 £'000 £'000 £'000 £'000£'000

Group

2013/2014

£'000

PCC

Total

£'000


31


Balance Sheet as at 31 March 2014

The respective balance sheets of the OCC, PCC and Group are detailed below. Note that the inter-group liability has been removed on consolidation at the group level.

Balance Sheet

Property, plant and equipment 21

0 124,018 124,018 Land and buildings 0 109,310 109,310

0 15,607 15,607 Vehicles plant and equipment 0 15,214 15,214

0 10,033 10,033 Assets under construction 0 10,571 10,571

0 1,385 1,385 Intangible fixed assets 0 1,369 1,369

Long term assets

0 109 109 Loans to officers 0 70 70 22

0 2,426 2,426 Prepayments 0 1,855 1,855 23

0 1 1 Shares in Southwest One Ltd 0 1 1 24

0 0 0 Long term investments 0 7,000 7,000 25

2,647,796 0 0 Long term liability - Intra-group prov 2,672,887 0 0

189,902 0 189,902 Police staff pension assets 203,904 0 203,904 20

2,837,698 153,579 343,481 Total non-current assets 2,876,791 145,390 349,294

0 612 612 Inventories (stock) 0 602 602

0 26,750 26,750 Short term investments 0 14,000 14,000 25

0 27,778 27,778 Debtors and payments in advance 0 28,722 28,722 26

0 11,883 11,883 Cash and cash equivalents 0 28,023 28,023 27

0 528 528 Assets held for sale 0 6,077 6,077 28

8,026 0 0 Intra-group debtor 7,020 0 0

8,026 67,551 67,551 Total current assets 7,020 77,424 77,424

0 -711 -711 Bank overdraft 0 -760 -760

0 -8,271 -8,271 Short term borrowings 0 -10,867 -10,867 29

-8,026 -21,407 -29,433 Creditors and receipts in advance -7,020 -21,949 -28,969 30

-8,026 0 Intra-group creditor 0 -7,020 0

-8,026 -38,415 -38,415 Total current liabilities -7,020 -40,596 -40,596

0 -32,662 -32,662 Long term borrowing 0 -28,524 -28,524 29

-68 -4,257 -4,325 Provisions -809 -5,669 -6,478 31

0 -1,552 -1,552 Capital grants receipts in advance 0 -1,516 -1,516

0 -2,647,796 0 Pension liability - intra-group prov 0 -2,672,887 0

-2,837,630 0 -2,837,630 Pension liability -2,875,982 0 -2,875,982

-2,837,698 -2,686,267 -2,876,169 Total long term liabilities -2,876,791 -2,708,596 -2,912,500

0 -2,503,552 -2,503,552 Net assets 0 -2,526,378 -2,526,378

0 44,106 44,106 Total usable reserves 0 49,838 49,838 6

0 -2,547,658 -2,547,658 Total unusable reserves 0 -2,576,216 -2,576,216 6

0 -2,503,552 -2,503,552 Total reserves 0 -2,526,378 -2,526,378

Re-stated

PCC

£'000

OCC

£'000

Group

2012/2013

Group

2013/2014

Notes

£'000 £'000

PCC

£'000

OCC

£'000


32


Cash Flow Statement

Cash Flow Statement

-72,670 221,566 148,896 Net surplus(-)/deficit on the provision of services 131,282 23,313 154,595

0 -10,974 -10,974 Depreciation and impairment of property, plant and equipment 0 -13,691 -13,691

0 -210 -210 Amortisation of intangible assets 0 -298 -298

1,393 -716 677 Increase(-)/decrease in provision charged back to service -741 -1,453 -2,194

72,670 -224,398 -151,728 Charges for retirement benefits in accordance with IAS 19 -131,282 -24,350 -155,632

0 1,189 1,189 Carrying amounts of non-current assets sold 0 2,034 2,034

0 -2,323 -2,323 Other 0 -1,301 -1,301

-3,020 4,916 1,896 Increase/decrease(-) in long and short term debtors -265 641 376

1,627 -1,947 -320 Increase(-)/decrease in long and short term creditors 1,006 -1,754 -748

0 -174 -174 Increase/decrease(-) in stock/WIP 0 -10 -10

72,670 -234,637 -161,967

Adjust net surplus or deficit on the provision of

services for non-cash movements -131,282 -40,182 -171,464

0 -420 -420 Proceeds from the sale of property, plant and equipment 0 -2,252 -2,252

0 2,664 2,664

Capital grants credited to the surplus or deficit on the provision

of service 0 2,357 2,357

0 2,244 2,244

Adjust net surplus or deficit on the provision of

services that are investing or financing activities 0 105 105

0 -10,827 -10,827 Net cash flows from operating activities 0 -16,764 -16,764

0 7,700 7,700 Purchase of property, plant and equipment 0 8,078 8,078

0 -420 -420 Capital receipts 0 -2,252 -2,252

0 -4,183 -4,183 Capital grant/contribution income due for the year 0 -2,320 -2,320

0 26,750 26,750 Purchase of short & long term investments 0 -5,750 -5,750

0 -614 -614 Interest received 0 -438 -438

0 29,233 29,233 Net cash flow from investing activities 0 -2,682 -2,682

0 -120 -120 Bank overdraft 0 -49 -49

0 0 0 Loans taken out 0 -229 -229

0 1,895 1,895 Repayment of long term loans 0 1,804 1,804

0 1,652 1,652 Interest paid 0 1,780 1,780

0 3,427 3,427 Net cash flow from financing activities 0 3,306 3,306

0 21,833 21,833 Net increase(-)/decrease in cash and cash equivalents 0 -16,140 -16,140

0 -33,716 -33,716

Cash and cash equivalents at the beginning of the reporting

period 0 -11,883 -11,883

0 -11,883 -11,883 Cash and cash equivalents at the end of the reporting period 0 -28,023 -28,023

£'000

Group

2012/2013

Re-stated

Group

2013/2014

£'000 £'000

PCC

£'000

OCC

£'000

PCC

£'000

OCC

33


Notes to the Financial Statements

1 Statement of Accounting Policies

1.1 General

The general principles adopted in compiling the accounts of the PCC are in accordance with the recommendations of CIPFA. They accord with CIPFA’s Code of Practice on Local Authority Accounting 2013/2014, the Best Value Accounting Code of Practice (CIPFA Code) 2013/2014 and the Accounts and Audit Regulations 2003 and are based on the following standards:

International Financial Reporting Standards (IFRSs) as adopted by the EU. International Public Sector Accounting Standards (IPSASs). UK Generally Accepted Accounting Practice (GAAP); (Financial Reporting

Standards (FRSs), Statements of Standard Accounting Practice (SSAPs) and Urgent Issues Task Force (UITF) abstracts) as far as they are applicable. All are maintained on an historic cost basis.

Following the introduction of the Police Reform and Social Responsibility Act 2011 and the Home Office guide to financial management code of practice for the police service for England and Wales, Avon and Somerset Police Authority was replaced by two corporate entities being the Police and Crime Commissioner for Avon and Somerset (PCC) and the Office of Chief Constable for Avon and Somerset (OCC). Both entities have prepared a statement of accounts for the year 1 April 2013 to 31 March 2014 based on consistent accounting policies.

1.2 Accruals of Income and Expenditure

Activity is accounted for and recorded on an accruals basis. This means that income is recorded in the accounts when it becomes due, rather than when it is received, and the outstanding amounts are included as debtors. Expenditure is included in the accounts when the goods or services are received or supplied, and any outstanding amounts are included as creditors. The PCC Group established a de minimis level of £100 for accruals in both 2012/2013 and 2013/2014.

1.3 Income Recognition

External income due to the PCC in the form of sales, fees, charges and rents are accrued and accounted for in the period to which they relate.

1.4 Council Tax

Council tax income included within the comprehensive income and expenditure statement includes our share of the surplus or deficits from other local authority collection funds.

1.5 Government Grants

1.5.1 Revenue Grant

We use government grants to fund expenditure on policing activities shown in the comprehensive income and expenditure statement.

34

1.5.2 Capital Grant

The income received from the Home Office capital grant is shown within the comprehensive income and expenditure statement. When the income is matched to the capital expenditure it is transferred to the capital adjustment account. Any unused capital grant has been allocated to capital grant unapplied account within the reserves. Capital grants with outstanding conditions attached have been transferred to the capital receipts in advance account.

1.5.3 Specific Grants

Income from specific grants where there are conditions outstanding at the end of the financial year are recognised as a creditor receipt in advance. Where the conditions have been met, or if there are no conditions attached, the income is recognised within the comprehensive income and expenditure statement when the expenditure is incurred. If the expenditure has not been incurred by the end of the financial year then this is transferred to the earmarked reserve.

1.6 Overhead Allocations

Overheads are allocated to service areas based either on headcount or expenditure depending on which is considered the most appropriate cost driver for the service area in question.

1.7 Interest

External interest receivable on investments and the interest payable on borrowing are charged to the comprehensive income and expenditure statement.

1.8 Repaying Debts

Loans are repaid in instalments at the minimum level set by the Government. Interest is paid on the outstanding loan balances.

1.9 VAT

Value-Added Tax is not included as income or expenditure of the PCC except where it is non-recoverable.

1.10 Leased Assets

All leases have been reviewed to determine if they are operational or finance leases. Finance leases - these are recognised 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. Property, plant and equipment held under finance lease is recognised as an asset on the balance sheet at the commencement of the lease, matched by a liability for the obligation to pay the lessor.

Operating leases - rents payable under operating leases are charged to the

comprehensive income and expenditure statement. All significant contracts or transactions have been reviewed for any ‘embedded leases’ (which convey the right to use an asset in return for a payment or series of payments). If

35

embedded leases are found to exist they would be treated in line with formal leases as described above. No embedded leases have currently been identified.

1.11 Employee Benefits

1.11.1 Benefits Payable During Employment

The full cost of employees (including salaries, paid annual leave, paid sick leave, bonuses and non-monetary benefits) is charged to the accounting period in which the employees worked. An accrual is made for the cost of any leave earned by employees but not taken before the year end which employees can carry forward into the next financial year. This accrual is charged to the provision of services within the comprehensive income and expenditure statement in the year that the benefit has arisen and is shown in the balance sheet of the OCC.

1.11.2 Termination Benefits

Termination benefits arise as a result of a decision by the PCC to terminate the employment of police staff before the normal retirement date. These benefits are charged on an accruals basis to the comprehensive income and expenditure statement.

1.11.3 Pension Benefits

There are different pension arrangements for police officers and for police staff. In both cases pensions and other benefits are paid to retired staff which relate to the individual’s length of service.

Until 31 March 2006 retired police officers were paid their pensions from the contributions received each year. However, from 1 April 2006, although the PCC makes the payments and collects the contributions, responsibility for the cost of these payments has transferred to the Government. Police staff including PCSO’s are part of the Local Government Pension Scheme, in which case, the PCC and the staff in the scheme pay into the pension fund at agreed rates. When an individual retires, the fund pays all the usual benefits. However, occasionally, extra costs have to be met when an employee retires early or retires due to ill health. These costs are charged to the comprehensive income and expenditure statement. In accordance with IAS 19 – Employee benefits, long term pension liabilities have been included in the OCC balance sheet.

1.11.4 Actuarial Gains and Losses

IAS 19 currently permits three methods of accounting for actuarial gains and losses being:

Immediate and full recognition outside of the comprehensive income and

expenditure statement; Deferred recognition through the comprehensive income and expenditure

statement; or Immediate and full recognition through the comprehensive income and

expenditure statement.

The OCC currently adopts the immediate and full recognition option.

36

1.12 Property, Plant and Equipment

Expenditure on capital assets is recognised in the accounts when the work is carried out or when the asset has been delivered. Assets are valued on the basis recommended by CIPFA, and this is in line with the Statements of Asset Valuation Practice and Guidance Notes that the Royal Institution of Chartered Surveyors issues. Chartered Surveyors, Jones Lang Lasalle, carried out the latest valuation of all land and buildings as at 1 April 2011. In accordance with the new requirements of the CIPFA code, the value of our assets has been considered as at the balance sheet date in order to assess that the value presented is not materially different to that which would have been presented if a full valuation were carried out as at that date. If an asset is worth more than the amount paid for it, the difference is added to the revaluation reserve. As assets are revalued every five years a further revaluation will take effect from 1 April 2016. An adjustment will be made to the value of assets if major changes in their value happen during the period between valuations. Properties are valued in the following ways:

Open-market value for existing use where it could be shown that similar properties

had recently been offered for sale.

Open-market value for alternative use where land and buildings could have a different use and so have a value which differs from their existing use.

Depreciated replacement cost (DRC) where an asset is of a specialist nature, such

as police stations or where there are no recent sales of similar properties. DRC valuations include the cost of replacing the asset and an allowance for the age of the asset. The value may be adjusted when the age and condition of the assets are taken into account.

Vehicles are carried in the balance sheet at depreciated historical cost. Assets under construction are carried at cost until the asset is made operational at which point they are classified accordingly and depreciation commences. From the 1 April 2010, when a valuation for an asset is undertaken, components of the asset are separately identified when the asset value is over £1,000,000 and the components value is over 20% of the total value of the asset. Components need to be separately identified, as they can be disposed or replaced separately from other components of the assets. Also each component will have a different useful life to the other components of the asset. When assets are disposed the value of the asset on the balance sheet is written off to the comprehensive income and expenditure statement as part of the gain or loss on disposal. The reversal of this is shown within the movement in reserves statement so that there is no impact to council tax. It is the PCC’s policy not to capitalise expenditure on individual items with a cost of less than £12,000.

1.13 Intangible Assets

These are mainly the cost of computer software licences where expenditure is recorded in the year that the software is put into use.

37

1.14 Depreciation

All assets are depreciated except for land and assets under construction. The following policies are used: Depreciation on buildings is based upon information provided within the latest

valuation report regarding the useful life of the buildings and their components, and is based on the ‘straight-line’ method. The straight line method writes off the value of an asset in equal annual instalments over the estimated useful economic life of the asset. The buildings are estimated to have useful lives up to 50 years. Once a building is operational and transferred from assets under construction depreciation commences on the building.

The value of other assets such as vehicles, computers and other equipment falls

steadily throughout their lives. These assets are expected to have shorter useful lives of up to seven years. The depreciation starts from the month of acquisition. Again the straight-line method of depreciation is used.

Intangible assets are amortised using the straight-line method over the period the

software is in use, which is typically four years. An exception to this is the SAP licence which is amortised over 25 years.

1.15 Impairments

The PCC’s properties are reviewed for impairment at the end of each financial year. Impairment could arise as the result of physical damage to a property or a general fall in prices. Where impairment is identified resulting from physical damage then the loss in value will be recognised in the comprehensive income and expenditure statement. Where impairment is identified resulting from a general fall in prices this will first be charged to the revaluation reserve to the extent that there are any previous gains in respect of the asset in question and thereafter in the comprehensive income and expenditure statement.

1.16 Assets Held for Sale

When a property is actively being marketed for sale and is likely to be sold within the next 12 months then the property has been classified under current assets held for sale in the balance sheet. When assets are classified as “held for sale” the asset value is shown at the lower of the carrying value and fair value of the asset less the disposal costs.

1.17 Inventory Valuation

Inventory held in respect of clothing, uniform, equipment and stationery is valued at moving average price. Vehicle parts and petrol are valued at cost. Certain low value miscellaneous items are treated as consumed stock and are not included as assets in the balance sheet.

1.18 Cash and Cash Equivalents

Cash is represented by cash in hand and deposits repayable within 24 hours. Cash equivalents are investments with maturity date of no more than 3 months which are

38

easily convertible into known amounts of cash and have insignificant risk of a change in value.

1.19 Financial Instruments

The fair value of financial assets and liabilities has been disclosed in the financial statements where it is considered that this varies materially from the carrying value.

1.20 Provisions

Provisions are made where an event has taken place that gives the PCC Group 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 obligation. Provisions are charges to the appropriate service line in the comprehensive income and expenditure statement in the year the PCC Group 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 the relevant risks and uncertainties. When settled the amounts agreed will be charged against the provision.

1.21 Contingent Liabilities

A contingent liability arises where an event has taken place that gives the PCC Group a possible obligation whose existence can only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the PCC Group. Contingent liabilities also arise in the situation where a provision would otherwise be made but where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the balance sheet but disclosed in a note to the accounts.

1.22 Reserves

The reserves that are held by the PCC are split between usable and unusable reserves on the balance sheet. Usable reserves are amounts of money we keep to pay for future projects, and to protect against unexpected events. The useable reserves include: The general fund is risk assessed annually by the Chief Financial Officer of the

PCC for the level of funds that the PCC needs to hold at the end of each financial year.

Earmarked reserves are balances we hold to meet future expenditure in defined

areas and within approved policies. Capital receipts reserve is where income is received from the sale of property,

plant and equipment and held in reserve to fund new capital expenditure. The capital grant unapplied reserve holds grant income which will be used to fund

future capital expenditure. The unusable reserves include: The revaluation reserve, which represents the changes in the value of assets as a

result of revaluation after 1 April 2007; revaluations made prior to the 31 March 2007 were transferred to the capital adjustment account below.

39

The capital adjustment account absorbs the timing differences arising from the consumption of property, plant and equipment and for the financing of the acquisitions and enhancements of the assets under statutory provision. This account also includes any revaluation gain/loss prior to 1 April 2007.

The collection fund adjustment account represents the PCC’s share of the surplus

or deficits on the local authorities collection funds that have been charged to the comprehensive income and expenditure statement and reversed out to this account so there is no impact on the general fund.

The short term compensated absences account represents outstanding employee

benefits at the year end that have been earned and not taken during the year. The cost of these benefits has been charged to the comprehensive income and expenditure statement and then reversed to this account ensuring there is no impact on the council tax payer and the general fund.

1.23 Post Balance Sheet Events

These are events occurring after the balance sheet date before the Statement of Accounts are authorised for issue. Two types of events can be identified: Adjusting events - where there is evidence that the conditions existed at the end of

the reporting period and the accounts are adjusted to reflect these events. Non-adjusting events – where these are indicative of conditions that arose after the

balance sheet date, the Statement of Accounts are not amended, but a note is included to provide an explanation of the nature and the effect of the event.

Events that have taken place after the authorised date of issue are not reflected within the Statement of Accounts.

2 Critical Judgements in Applying Accounting Policies The PCC’s accounts have been prepared on a going concern basis. Following the Police Reform and Social Responsibility act 2011, two new corporate entities were created being the PCC and OCC. All payments for the PCC Group are made by the PCC and no cash movements are made between the PCC and OCC. The PCC has the responsibility for managing the financial relationships with third parties and has legal responsibility discharging the contractual terms and conditions of suppliers. The PCC holds all the assets, liabilities and reserves, with the exception of the IAS 19 pension liabilities, the accumulated short term absences creditor accrual and other employee related accruals and provisions, as it is deemed that the OCC has direction and control of the activities of the officers and staff. The 2012/2013 accounts have been re-stated to include the short term absences creditor and other employee related accruals and provisions as it is deemed that the OCC has direction and control of the officers and staff, which is offset by an inter-group adjustment. These are matched on the balance sheet of the OCC by an inter-group adjustment with the PCC. The recognition point for PFI’s assets under construction has changed in 2013/2014 code, depending on where the construction risk of the asset and the cost of construction can be reliably measured. As part of the PFI contract the new properties are being constructed by the Blue Light Partnership (BLP) on behalf of the PCC. As BLP bear all the construction risk and hold all the construction costs, these assets have not been included on the PCC’s balance sheet as assets under construction as the PCC has no obligation during the construction phase. Further information on the PFI can be found in note 35.

40

3 Accounting Standards Issued But Not Adopted Various accounting standards have been issued during 2013/2014 but not adopted in this financial year. Their implementation is in respect of accounting periods which commence on or after 1 January 2014. The standards mainly concern group accounting and consolidation, joint arrangements and disclosures. Whilst they are detailed below they are not anticipated to have a material impact on the financial statements of the OCC/PCC. They may however increase the amount of disclosures required. IFRS 10 Consolidated Financial Statements. This standard identifies control as the basis

for consolidation. There is a new test of control with regard to the power of the investee. IFRS 11 Joint Arrangements. This standard establishes principles for financial reporting

by entities that have an interest in arrangements that are controlled jointly. IFRS 12 Disclosures in Interests in Other Entities. This standard requires an entity to

disclose information that enables the users of its financial statements to evaluate the nature of and risks associated with other entities and the effect of those interests on its financial position, performance and cash flows.

IAS 27 Separate Financial Statements This standard refers to where an entity elects to

present separate financial statements when accounting for investments in subsidiaries, joint ventures and associates.

IAS 28 Investment in Associates and Joint Ventures. This standard sets out the use of

the equity method when accounting for investments in associates and joint ventures where there is significant influence over the associate.

Other changes to accounting standards which have come into effect in 2013/2014 include: IAS 32 Financial Instruments. This standard provides amended guidance for the

offsetting of financial assets and liabilities. This will not have a significant impact on the financial statements as the OCC/PCC do not hold complex financial instruments.

IAS 1 Presentation of Financial Statements. This standard provides clarification on the

presentation of comparative financial information.

4 Assumptions Made About the Future and the Sources of Estimations In some areas figures in the accounts are based on estimates which take into account past experience, current trends and other relevant factors. By their nature these figures could vary and as such the material areas based on estimates are detailed below.

4.1 Pension Liability - OCC

The estimation of the net liability to pay pension depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are expected to increase, changes in retirement ages, mortality rates and the expected return on the fund’s assets. Actuaries provide the OCC with expert advice about the assumptions that have been applied. Further information is included within notes 18 to 20 regarding the assumptions that have been used by the actuaries to provide an estimate of the liability.

41

The following table shows the impact of a small change in either the discount rate or mortality assumptions for the Police Officer Pension Scheme.

Police Officer Sensitivity Analysis

Adjustment to discount rate +0.1% 0.0% -0.1%

Present value of total obligation 2,476,432 2,519,495 2,563,348

Projected service cost 61,561 63,045 64,567

Adjustment to long term salary

increase +0.1% 0.0% -0.1%



Adjustment to pension increases

and deferred revaluation +0.1% 0.0% -0.1%



Adjustment to mortality age +1 year None -1 year



£'000 £'000 £'000

The following table shows the impact of a small change in either the discount rate or mortality assumptions for the Police Staff Pension Scheme.

Police Staff Sensitivity Analysis

Adjustment to discount rate +0.1% 0.0% -0.1%

Present value of total obligation 348,582 356,487 364,579


Adjustment to long term salary

increase +0.1% 0.0% -0.1%



Adjustment to pension increases

and deferred revaluation +0.1% 0.0% -0.1%



Adjustment to mortality age +1 year None -1 year



£'000 £'000 £'000

4.2 Provisions

In determining the provisions set aside at 31 March 2014 to pay for known future costs it has been necessary to estimate and make assumptions about the future. More detail around the sources of these estimations and the underlying assumptions made are included within note 31 Provisions.

5 Events After the Balance Sheet Date In accordance with the Police Reform and Social Responsibility Act 2011, the Home Secretary approved the ‘stage 2 transfer’ agreement between the PCC and the OCC. As at 1 April 2014, the employees who are considered to be under the operational control of the OCC were

42

transferred to the employment of the OCC. This transfer did not alter any existing terms and conditions of employment, and did not constitute a break in employment. As a result of this transfer there is no change to the statement of accounts as the relevant employee’s costs are already shown charged to the OCC to reflect the command and control of these employees prior to this stage 2 transfer. The statement of accounts identifies a number of our properties as being held for sale as at the balance sheet date. Since 31 March 2014 the following properties have been sold: Filton Police Station; Lockleaze Police Station; New Bridewell. The sale of these properties does not have an impact on the financial statements as at 31 March 2014. The Constabulary has commenced a restructure of its operating model. This is the culmination of work which has taken place over the last 12 months. These changes to the operating model will impact on a significant number of staff, and the organisation is working through its management of change process to implement these changes. There is no impact on the financial statements as at 31 March 2014.

43

6 Notes to the Movement in Reserves Statement These notes support the movement in reserves statement shown on page 28.

Movement in Reserves Statement

2012/2013 - Usable

Balance as at 31 March 2012 7,500 29,626 2,401 39,527

Surplus or deficit(-) on provision of services -148,896 0 0 -148,896

Other comprehensive income and expenditure 0 0 0 0


and expenditure -148,896 0 0 -148,896

Adjustments between accounting & funding basis

under regulations

Reversal of items included to I&E

Amortisation of intangible assets 210 0 0 210

Depreciation of non-current assets (note 21) 10,974 0 0 10,974

Impairment of non-current assets 0 0 0 0

Revaluation loss 0 0 0 0

Capital grants and contributions -2,664 0 0 -2,664

Council tax collection fund adjustment -26 0 0 -26

Gain/loss(-) on disposal of non-current assets 780 0 420 1,200

Holiday pay accrual adjustment -1,646 0 0 -1,646

Net IAS 19 charge for retirement benefits 194,419 0 0 194,419

Insert amounts excluded in I&E

Minimum revenue provision (note 10) -1,790 0 0 -1,790

Contribution to disposal costs of capital sales -11 0 0 -11

Revenue contribution to finance capital -960 0 0 -960

IAS 19 employers contributions payable -42,691 0 0 -42,691

Other adjustments include:

Use of capital receipts reserve to finance capital 0 0 -946 -946

Reserves used to finance capital 0 -3,082 0 -3,082

Reversed excluded from I&E e.g. DPR,

air support 0 488 0 488

Net increase/decrease(-) before transfers

to earmarked reserves 7,699 -2,594 -526 4,579

Transfers to/from(-) earmarked reserves -1,624 1,624 0 0

Increase/decrease(-) in 2012/2013 6,075 -970 -526 4,579


Total

Usable

Reserves£'000 £'000 £'000 £'000

Revenue

General

Fund

Revenue

Specific

Reserves

Capital

Receipts

Reserve

44


2012/2013 - Unusable

Balance as at 31 March 2012 506 9,357 -2,423,330 -8,813 100,231 -2,322,049

Surplus or deficit(-) on provision of

services 0 0 0 0 0 0


expenditure 0 0 -72,670 0 0 -72,670

Total comprehensive income and

expenditure 0 0 -72,670 0 0 -72,670

Adjustments between accounting &

funding basis under regulations


Amortisation of intangible assets 0 0 0 0 -210 -210

Depreciation of non-current assets 0 0 0 0 -10,974 -10,974

Impairment of non-current assets 0 0 0 0 0 0

Revaluation loss 0 0 0 0 0 0

Capital grants and contributions 0 0 0 0 2,664 2,664

Council tax collection fund adjustment 26 0 0 0 0 26

Carrying value of assets disposed 0 0 0 0 -1,189 -1,189

Holiday pay accrual adjustment 0 0 0 1,646 0 1,646

Net IAS 19 charge for retirement

benefits (note 18 to 20) 0 0 -194,419 0 0 -194,419


Minimum revenue provision 0 0 0 0 1,790 1,790

Contribution to disposal costs of capital

sales 0 0 0 0 0 0

Revenue contribution to finance capital 0 0 0 0 960 960

IAS 19 employers contributions payable

(note 18 to 22) 0 0 42,691 0 0 42,691


Use of capital receipts reserve to

finance capital 0 0 0 0 945 945

Reserves used to finance capital 0 0 0 0 3,082 3,082


air support 0 0 0 0 49 49

Net increase/decrease(-) before

transfers to earmarked reserves 26 0 -224,398 1,646 -2,883 -225,609

Transfers to/from earmarked reserves 0 0 0 0 0 0

Increase/decrease(-) in 2012/2013 26 0 -224,398 1,646 -2,883 -225,609


Capital

Adjustment

Account

Total

Unusable

Collect Fund

Adjustment

Account

Revaluation

Reserve

Pensions

Reserve

Account

Short Term

Absences

Account£'000£'000£'000£'000 £'000£'000

45


2013/2014 - Usable


Surplus or deficit(-) on provision of services -154,595 0 0 -154,595

Other comprehensive income and expenditure 0 0 0 0

Total comprehensive income and expenditure -154,595 0 0 -154,595

Adjustments between accounting & funding basis

under regulations


Amortisation of intangible assets 298 0 0 298

Depreciation of non-current assets (note 21) 11,229 0 0 11,229

Impairment of non-current assets 2,462 0 0 2,462

Revaluation loss 0 0 0 0

Capital grants and contributions -2,357 0 0 -2,357

Council tax collection fund adjustment -1,149 0 0 -1,149

Gain/loss(-) on disposal of non-current assets -218 0 2,252 2,034

Holiday pay accrual adjustment -968 0 0 -968

Net IAS 19 charge for retirement benefits 195,991 0 0 195,991


Minimum revenue provision (note 10) -1,820 0 0 -1,820

Contribution to disposal costs of capital sales -1 0 0 -1

Revenue contribution to finance capital -1,588 0 0 -1,588

IAS 19 employers contributions payable -40,359 0 0 -40,359


Use of capital receipts reserve to finance capital 0 0 0 0

Reserves used to finance capital 0 -3,662 0 -3,662


air support 0 217 0 217


transfers to earmarked reserves 6,925 -3,445 2,252 5,732

Transfers to/from earmarked reserves -6,100 6,100 0 0

Increase/decrease(-) in 2013/2014 825 2,655 2,252 5,732


Total

Usable

Reserves£'000 £'000 £'000 £'000

Revenue

General

Fund

Revenue

Specific

Reserves

Capital

Receipts

Reserve

46


2013/2014 - Unusable


Surplus or deficit(-) on provision of

services 0 0 0 0 0 0


expenditure 0 0 131,282 0 0 131,282

Total comprehensive income and

expenditure 0 0 131,282 0 0 131,282

Adjustments between accounting &

funding basis under regulations


Amortisation of intangible assets 0 0 0 0 -298 -298

Depreciation of non-current assets 0 0 0 0 -11,229 -11,229

Impairment of non-current assets 0 -430 0 0 -2,032 -2,462

Revaluation loss 0 -57 0 0 57 0

Capital grants and contributions 0 0 0 0 2,357 2,357

Council tax collection fund adjustment 1,149 0 0 0 0 1,149

Carrying value of assets disposed 0 0 0 0 -2,034 -2,034

Holiday pay accrual adjustment 0 0 0 968 0 968

Net IAS 19 charge for retirement

benefits (note 18 to 20) 0 0 -195,991 0 0 -195,991


Minimum revenue provision 0 0 0 0 1,820 1,820

Contribution to disposal costs of capital

sales 0 0 0 0 0 0

Revenue contribution to finance capital 0 0 0 0 1,588 1,588

IAS 19 employers contributions payable

(note 18 to 20) 0 0 40,359 0 0 40,359


Use of capital receipts reserve to

finance capital 0 0 0 0 0 0

Reserves used to finance capital 0 0 0 0 3,662 3,662

Additional capital receipts 0 0 0 0 0 0


air support 0 0 0 0 271 271


transfers to earmarked reserves 1,149 -487 -24,350 968 -5,838 -28,558

Transfers to/from earmarked reserves 0 0 0 0 0 0

Increase/decrease(-) in 2013/2014 1,149 -487 -24,350 968 -5,838 -28,558

Balance as at 31 March 2014 1,681 8,870 -2,672,078 -6,199 91,510 -2,576,216

Capital

Adjustment

Account

Total

Unusable

Collect Fund

Adjustment

Account

Revaluation

Reserve

Pensions

Reserve

Account

Short Term

Absences

Account£'000£'000 £'000£'000£'000£'000

47

7 Service Analysis This note shows the analysis of income and expenditure by main service area.

Service Analysis 2012/2013

Fees, charges and other

service income 0 0 0 0 0 -24,307 -24,307

Government grants 0 0 0 0 0 -16,314 -16,314

Total income 0 0 0 0 0 -40,621 -40,621

Employee expenses 107,257 70,769 1,249 18,000 41,919 674 239,868

Other operating expenses 2,859 11,740 33,930 7,109 7,647 697 63,982

Total operating expenses 110,116 82,509 35,179 25,109 49,566 1,371 303,850

Net cost of services 110,116 82,509 35,179 25,109 49,566 -39,250 263,229

£'000

OCC PCC Group

Other

Services

Total Total

£'000 £'000 £'000

Local Policing

Areas

Operational

Support

Strategic

Alliances

Organisational

Support

£'000 £'000£'000

This note reconciles the service analysis with the net cost of police services within the comprehensive income and expenditure statement.

Reconciliation to Net Cost of Services in Comprehensive

Income and Expenditure Statement 2012/2013

Cost of services in service analysis 263,229

Add amounts not reported to management 51,540

Net cost of services in comprehensive income

and expenditure statement 314,769

Re-stated

Total

£'000

This note reconciles the service analysis with the surplus/deficit on the provision of services as shown in the comprehensive income and expenditure statement.

Reconciliation to Subjective Analysis

2012/2013

Fees, charges and other service income -24,307 0 -24,307 0 -24,307

Interest and investment income 0 0 0 -450 -450

Income from council tax 0 0 0 -96,893 -96,893

Government grants -16,314 0 -16,314 -180,768 -197,082

Total income -40,621 0 -40,621 -278,111 -318,732

Employee expenses 239,868 -1,646 238,222 0 238,222

Employee expenses - IAS 19 pensions 0 42,013 42,013 109,715 151,728

Other operating expenses 63,982 0 63,982 0 63,982

Depreciation, amortisation and impairment 0 11,184 11,184 0 11,184

Interest payments 0 0 0 1,743 1,743

Gain(-)/loss on disposal of assets 0 -11 -11 780 769

Total operating expenses 303,850 51,540 355,390 112,238 467,628

Surplus(-)/deficit on the provision of services 263,229 51,540 314,769 -165,873 148,896

Service

Analysis

£'000

Not

Reported to

Management£'000

Net Cost of

Services

£'000

Total

£'000

Corporate

Amounts

£'000

48

This note shows the analysis of income and expenditure by main service area.

Service Analysis 2013/2014

Fees, charges and other

service income 0 0 0 0 0 -23,430 -23,430

Government grants 0 0 0 0 0 -13,585 -13,585

Total income 0 0 0 0 0 -37,015 -37,015

Employee expenses 112,336 70,458 1,517 17,828 32,126 888 235,153

Other operating expenses 2,034 12,324 33,674 7,643 9,548 2,453 67,676

Total operating expenses 114,370 82,782 35,191 25,471 41,674 3,341 302,829

Net cost of services 114,370 82,782 35,191 25,471 41,674 -33,674 265,814

£'000

Local Policing

Areas

Operational

Support

Strategic

Alliances

Organisational

Support

Other

Services

Total

OCC PCC Group

Total

£'000 £'000 £'000 £'000 £'000 £'000

This note reconciles the service analysis with the net cost of police services within the comprehensive income and expenditure statement.

Reconciliation to Net Cost of Services in Comprehensive

Income and Expenditure Statement 2013/2014

Cost of services in service analysis 265,815

Add amounts not reported to management 55,849

Net cost of services in comprehensive income

and expenditure statement 321,664

Total

£'000

This note reconciles the service analysis with the surplus/deficit on the provision of services as shown in the comprehensive income and expenditure statement.

Reconciliation to Subjective Analysis

2013/2014

Fees, charges and other service income -23,430 0 -23,430 0 -23,430

Interest and investment income 0 0 0 -415 -415

Income from council tax 0 0 0 -86,380 -86,380

Government grants -13,585 0 -13,585 -194,511 -208,096

Total income -37,015 0 -37,015 -281,306 -318,321

Employee expenses 235,153 -968 234,185 0 234,185

Employee expenses - IAS 19 pensions 0 42,829 42,829 112,803 155,632

Other operating expenses 67,676 0 67,676 0 67,676

Depreciation, amortisation and impairment 0 13,989 13,989 0 13,989

Interest payments 0 0 0 1,652 1,652

Gain(-)/loss on disposal of assets 0 0 0 -218 -218

Total operating expenses 302,829 55,850 358,679 114,237 472,916

Surplus(-)/deficit on the provision of services 265,814 55,850 321,664 -167,069 154,595

Corporate

Amounts

Total

£'000 £'000 £'000 £'000 £'000

Service

Analysis

Not

Reported to

Management

Net Cost of

Services

49

8 Analysis of Expenditure This note shows employee costs, premises costs and other main areas of expenditure rather than how much particular activities cost which is shown in the main comprehensive income and expenditure statement.

Analysis of Income and Expenditure

Employees

230,939 Pay and other employment costs 226,339

7,524 Net costs of police pensions 7,049

238,463 233,388

Running expenses

10,704 Premises 10,341

6,254 Transport 6,137

23,251 Supplies, services, other expenses and leasing charges 25,928

40,209 42,406

1,371 PCC administration 1,243

0 PCC commissioning 2,098

746 Seconded officers 884

23,061 Partnerships 22,811

303,850 Total expenditure 302,830

-40,621 Income -37,015

263,229 Net expenditure after income 265,815

1,743 External interest 1,652

-450 Interest received -415

264,522 Net operating expenditure 267,052

1,790 Minimum revenue provision 1,820

960 Capital expenditure paid for from revenue 1,588

1,624 Reserve movements 6,100

268,896

Net expenditure to be met from government

grants and council tax 276,560

2013/2014

£'000

2012/2013

£'000

50

9 Income

Income

328 Sales 231

11,142 Fees and charges 11,334

327 Rents 301

746 Seconded officers 884

11,470 Southwest One recharges 10,680

16,608 Specific grants 13,585

40,621 Total income 37,015

2012/2013

£'000

2013/2014

£'000

Specific revenue grant income in the above table has been credited to the net cost of police services. Capital grant income has been included in taxation and non-specific grant income within the comprehensive income and expenditure statement.

10 Minimum Revenue Provision Under the Local Government and Housing Act 1989, we must charge a minimum revenue provision (MRP) to the comprehensive income and expenditure account to repay loans. The amount of this charge is calculated by reference to the useful life of the asset in respect of which the finance has been raised. The charge for 2013/2014 is £1,820,000 (£1,790,000 for 2012/2013).

11 Council Tax Council tax is collected by the local authorities in our area. The amounts receivable from each local authority are shown in the following table.

Council Tax

6,885 Mendip District Council 6,190

7,079 Sedgemoor District Council 6,310

6,758 Taunton Deane Borough Council 6,544

2,502 West Somerset District Council 2,225

10,290 South Somerset District Council 9,405

10,949 Bath and North East Somerset Council 10,145

23,548 Bristol City Council 19,474

15,516 South Gloucestershire Council 14,018

13,366 North Somerset Council 12,069

96,893 86,380

2012/2013

£'000

2013/2014

£'000

51

12 Paying Staff

Disclosure of Remuneration for Senior Employees 2012/2013

Post Holder Information

(post title and name)

Note

PCC - S Mountstevens 1 30,458 0 0 0 0 30,458 4,234 34,692

Chief Constable - C Port 2 142,232 0 7,023 5,853 0 155,108 0 155,108

Chief Constable - N Gargan 3 11,154 0 0 172 3,151 14,477 2,699 17,176

183,844 0 7,023 6,025 3,151 200,043 6,933 206,976

Total

Remuneration

Including

Pension

Contributions

2012/2013

Pension

Contributions

Total

Remuneration

Excluding

Pension

Contributions

2012/2013

Benefits in

Kind

Expense

Allowances

BonusSalary

(including

fees &

allowances)

Other

Payments

(Police

Officers

only)

££ ££££££

Note 1: The Police & Crime Commissioner started on 22/11/2012 at an annualised salary of £85,000. Note 2: The Chief Constable retired on 26/01/2013. His annualised salary was £148,194. Note 3: The Chief Constable started on 04/03/2013 at an annualised salary of £148,194.


Post Holder Information

(post title and name)

Note

PCC - S Mountstevens 85,000 0 0 0 0 85,000 11,985 96,985

Chief Constable - N Gargan 151,220 0 0 1,789 0 153,009 36,072 189,081

236,220 0 0 1,789 0 238,009 48,057 286,066

Salary

(including

fees &

allowances)

Bonus Expense

Allowances

Benefits in

Kind

Other

Payments

(Police

Officers

only)

Total

Remuneration

Excluding

Pension

Contributions

2013/2014

Pension

Contributions

Total

Remuneration

Including

Pension

Contributions

2013/2014£ £ £ £ £ £ £ £

52


Post Holder Information (post title) Note

PCC Employees

Chief Finance Officer to the PCC 1 35,113 0 0 0 35,113 4,881 39,994

Chief Executive to the PCC 105,849 0 0 45 105,894 14,713 120,607

OCC Employees

Chief Finance Officer to the OCC 105,849 0 1,522 4,831 112,202 14,713 126,915

Director of HR 105,881 0 828 2,995 109,704 14,717 124,421

Deputy Chief Constable 125,720 0 3,405 4,474 133,599 29,648 163,247

ACC Territorial Operations 109,199 8,226 0 5,003 122,428 25,615 148,043

ACC Protective Services 109,199 0 1,787 7,351 118,337 25,615 143,952

ACC Comms and Services Standards 104,069 0 0 7,196 111,265 24,151 135,416

Force Medical Officer 2 46,218 0 0 551 46,769 6,424 53,193

Force Medical Officer 3 50,258 0 0 0 50,258 6,986 57,244

CSUPT HQ Operations 4 75,482 0 0 1,407 76,889 18,026 94,915

CSUPT Territorial Operations 83,661 0 0 1,361 85,022 19,310 104,332

CSUPT Criminal Justice 81,535 0 0 1,387 82,922 19,030 101,952

CSUPT CID 5 74,252 3,649 0 1,359 79,260 17,660 96,920

CSUPT South Gloucestershire 74,394 0 0 1,342 75,736 18,003 93,739

CSUPT Communications 82,158 0 35 1,440 83,633 19,030 102,663

T/CSUPT CID 6 73,167 0 0 1,474 74,641 17,040 91,681

CSUPT Somerset East 83,732 0 0 1,447 85,179 19,030 104,209

CSUPT North Somerset 7 76,969 3,629 0 1,470 82,068 17,960 100,028

CSUPT Bristol 81,535 0 0 1,220 82,755 19,030 101,785

CSUPT BANES 8 77,113 3,629 0 1,585 82,327 17,960 100,287

CSUPT Somerset West 83,673 0 0 1,728 85,401 19,030 104,431

CSUPT HQ Operations 9 20,496 0 0 461 20,957 0 20,957

CSUPT Chief of Staff 10 18,382 0 1,156 454 19,992 0 19,992

1,883,904 19,133 8,733 50,581 1,962,351 388,572 2,350,923

Salary

(including fees

& allowances)

Bonus

£££

Total

Remuneration

Including

Pension

Contributions

2012/2013

Expense

Allowances

Benefits in

Kind

£

Total

Remuneration

Excluding

Pension

Contributions

2012/2013£££

Pension

Contributions

53


Post Holder Information (post title) Note

PCC Employees

Chief Finance Officer to the PCC 11 70,636 0 0 0 70,636 9,960 80,596

Chief Executive to the PCC 101,778 0 0 0 101,778 14,351 116,129

OCC Employees

Chief Finance Officer to the OCC 106,467 0 2,127 5,374 113,968 15,012 128,980

Director of HR 106,499 0 987 2,982 110,468 15,016 125,484

Deputy Chief Constable 12 123,163 0 0 3,481 126,644 28,998 155,642

Deputy Chief Constable 13 131,802 0 797 1,668 134,267 30,744 165,011

ACC Local Policing and Performance 104,652 0 0 4,991 109,643 24,292 133,935

ACC Specialist Operations 14 93,736 0 93 3,770 97,599 22,375 119,974

ACC Comms, Criminal Justice & CIM 15 85,404 0 0 1,290 86,694 19,945 106,639

ACC Specialist Operations 16 17,036 0 252 416 17,704 2,961 20,665

ACC Comms, Criminal Justice & CIM 17 83,050 0 0 1,238 84,288 18,054 102,342

Force Medical Officer 120,771 0 0 0 120,771 17,029 137,800

CSUPT Operations 77,583 0 0 1,305 78,888 18,108 96,996

CSUPT Programme Lead-Operating Model 74,828 0 0 1,239 76,067 18,108 94,175

CSUPT Somerset 84,371 0 1,450 1,225 87,046 19,141 106,187

CSUPT Head of CID 81,615 0 0 1,345 82,960 19,084 102,044

CSUPT Local Policing 81,981 0 0 1,298 83,279 19,141 102,420

CSUPT North East 81,747 0 0 1,486 83,233 19,084 102,317

CSUPT Criminal Justice 18 77,230 0 0 1,485 78,715 17,764 96,479

CSUPT Bristol 19 65,552 0 0 1,357 66,909 15,863 82,772

CSUPT Strategic Service Improvement 84,485 0 3,159 1,393 89,037 19,141 108,178

CSUPT Communications 20 83,629 0 0 1,348 84,977 17,024 102,001

1,938,015 0 8,865 38,691 1,985,571 401,195 2,386,766

£

Total

Remuneration

Including

Pension

Contributions

2013/2014

Pension

Contributions

££ £ £ £ £

Salary

(including fees

& allowances)

Bonus Expense

Allowances

Benefits in

Kind

Total

Remuneration

Excluding

Pension

Contributions

2013/2014

54

Notes to Remuneration for 2012/2013

Note 1: The Chief Finance Officer started on 01/10/2012 and works 29.6 hours per week. The full time equivalent salary is £87,783.

Note 2: The Force Medical Officer retired on 31/07/2012. The annualised salary was £138,653.76.

Note 3: The Force Medical Officer started on 29/10/2012 at an annualised salary of £118,329.

Note 4: The Chief Superintendent was promoted to this rank on 04/06/2012 at an annualised salary of £74,394.

Note 5: The Chief Superintendent works 37.12 hours per week. The full time equivalent salary is £78,636.

Note 6: The Chief Superintendent was temporarily promoted to this rank on 17/12/2012 at an annualised salary of £74,394.



Note 9: The Chief Superintendent retired on 30/06/2012. The annualised salary was £78,636.


Notes to Remuneration for 2013/2014

Note 11: The Chief Finance Officer to the PCC works 29.6 hours per week. The full time equivalent salary is £88,661.

Note 12: The Deputy Chief Constable was promoted to this rank on 10/06/2013 at an annualised salary of £123,480.

Note 13: The Deputy Chief Constable was seconded to College of Policing from 24/06/2013.

Note 14: The Assistant Chief Constable was promoted to this rank on 03/05/2013 at an annualised salary of £94,692.

Note 15: The Assistant Chief Constable was temporarily promoted to this rank on 13/01/2014 at an annualised salary of £94,692.

Note 16: The Assistant Chief Constable resigned on 12/05/2013. The annualised salary was £106,908.

Note 17: The Assistant Chief Constable retired on 27/01/2014. The annualised salary was £94,692.

Note 18: The Chief Superintendent was temporarily promoted to this rank on 13/01/2014 at an annualised salary of £75,138.



55

The number of staff to whom we pay more than £50,000 a year is shown below. Pay includes salary, taxable travel and expenses.

Pay Range

155 0 155 £50,000 - £54,999 129 0 129

98 0 98 £55,000 - £59,999 85 0 85

32 0 32 £60,000 - £64,999 20 0 20

9 0 9 £65,000 - £69,999 11 0 11

4 0 4 £70,000 - £74,999 5 1 6

13 0 13 £75,000 - £79,999 9 0 9

7 0 7 £80,000 - £84,999 6 1 7

2 0 2 £85,000 - £89,999 3 0 3

0 0 0 £90,000 - £94,999 0 0 0

0 0 0 £95,000 - £99,999 1 0 1

0 0 0 £100,000 - £104,999 0 1 1

1 1 2 £105,000 - £109,999 1 0 1

2 0 2 £110,000 - £114,999 2 0 2

1 0 1 £115,000 - £119,999 0 0 0

1 0 1 £120,000 - £124,999 1 0 1

0 0 0 £125,000 - £129,999 1 0 1

1 0 1 £130,000 - £134,999 1 0 1

0 0 0 £135,000 - £139,999 0 0 0

0 0 0 £140,000 - £144,999 0 0 0

0 0 0 £145,000 - £149,999 0 0 0

0 0 0 £150,000 - £154,999 1 0 1

1 0 1 £155,000 - £159,999 0 0 0

327 1 328 276 3 279

OCC

Number

PCC

Number

OCC

Number

PCC

Number

Total

2012/2013Number

Total

2013/2014Number

The numbers within each band can be impacted year on year by inflationary changes.

13 Exit Packages

£0 - £39,999 19 255 8 79 27 334

£40,000 - £99,999 3 196 0 0 3 196

22 451 8 79 30 530

Exit Packages 2012/2013

Banding £'000Number £'000 Number

Compulsory

Redundancies

Other Total

£'000 Number

During 2013/2014 three members of staff were made redundant. Two compulsory and one voluntary, the total value of exit packages was £52,435. All the exit packages relate to the OCC.

14 Transactions With Related Organisations and People There is a requirement to disclose material transactions with related parties. These are bodies or individuals that have the potential to control or influence the PCC or to be controlled or

56

influenced by the PCC. In doing this there is a requirement to consider the materiality from the viewpoint of both the PCC and the related party.

14.1 Members and Key Management Personnel

The PCC and the OCC were asked to disclose details of any transactions between themselves or members of their immediate family with the PCC which either total over £1,000 or which might require separate explanation. No transactions were disclosed from the OPCC and OCC.

14.2 Other Related Parties

The Home Office and the Department of Communities and local government exerts significant influence on the PCC through legislation and grant funding. In 2013/2014 supplies and services were provided by Southwest One to the value of £19,451,261 (£19,198,504 in 2012/2013). The payments to Southwest One covers both staffing costs and the provision of other services for the Human Resources, Technology Services, Finance, Administration, Estates (until June 2013) and Purchasing and Supply functions. Amounts of £10,649,297 (£11,459,844 in 2012/2013) were received for staff seconded to Southwest One and non-pay adjustments. At 31 March 2014 the PCC had creditor balances of £130,538 with Southwest One (£25 at March 2013). In addition at 31 March 2014 the PCC had debtor balances of £16,941 with Southwest One (£7,984 at 31 March 2013). For details of prepayments made to Southwest One refer to note 25. The PCC also has a relationship with the Police Community Trust and the Avon and Somerset Force Club. Payments were made to the Police Community Trust of £300,000 during the year (£185,000 in 2012/2013), both the creditor and debtor balance is £nil (both £nil in 2012/2013). Payments were also made to the Avon and Somerset Force Club of £47,961 (£39,302 in 2012/2013). The creditor balance at 31 March 2014 for the Force Club was £90 (£8,865 at 31 March 2013) and the debtor balance was £nil at 31 March 2014 and £nil in 2013. In addition £21,880 was received from the Force Club in 2013/2014 (£10,632 in 2012/2013).

15 Paying Members This note relates to payments to the Joint Audit Committee members who were appointed during 2013/2014. The figures for 2012/2013 relate to Police Authority members.

Members Allowances

152 Allowances 9

9 Expenses 1

161 Total 10

2012/2013

£'000

2013/2014

£'000

16 Rent For Operational Leases The PCC has entered into operating leases in respect of land and buildings.

57

Leased Land and Buildings

731 Rents paid in the year 622

The future minimum lease payments due under non-

cancellable leases in future years are:

670 Not later than one year 648

2,385 Later than one year and not later than five years 1,468

2,495 Later than five years 1,410

2012/2013

£'000

2013/2014

£'000

17 Audit Fees The audit fees for Grant Thornton relating to external audit services carried out under the Code of Audit practice for the audit of the 2013/2014 group financial statements are £73,470 (£79,000 for 2012/2013). The charge for the audit in respect of the PCC is £48,470 (£54,000 in 2012/2013) and in respect of the OCC is £25,000 (£25,000 in 2012/2013). In addition, there were non-audit fees of £1,750 relating to training of Joint Audit Committee members.

18 Pensions Costs and Liabilities - OCC The full costs of retirement benefits earned by employees during the year are recognised through the comprehensive income and expenditure statement net cost of police services as they are accrued. These costs are then reversed through the movement in reserves statement so that there is no impact on the general fund. It should be noted that the charge against council tax for pension benefits is based upon the cash value of employer’s contributions.

58

Comprehensive income and expenditure statement

Cost of services:

Current service cost 15,742 14,757 66,799 68,353

Past service cost including curtailments 227 0 1,915 0

Administration expenses 21 78 0 0

Financing and investment income and expenditure:

Net interest cost 6,692 6,654 103,023 106,149

Total post employment benefits charged to the

comprehensive income and expenditure statement 22,682 21,489 171,737 174,502

Other post employment benefits charged to the

comprehensive income and expenditure statement

Return on plan assets 17,926 2,039 0 0

Changes in demographic assumptions 0 -4,806 -125,519 -68,153

Changes in financial assumptions -70 -21,955 0 -120,104

Experience gain/loss(-) on defined benefit obligations -60 32,225 0 313,473

Other actuarial gain/loss(-) 0 -1,437 35,053 0

Total other comprehensive income 17,796 6,066 -90,466 125,216

Movement in reserves statement

Reversal of net charges made for retirement benefits in

accordance with the code -22,682 -21,489 -171,737 -174,502

Actual amount charged against the general fund

balance for pensions in the year

Employer's contribution to scheme 8,367 8,599 28,805 25,996

Retirement benefits payable to pensioners 118 118 5,401 5,646

Police Staff Police Officers

Re-stated Re-stated

2013/20142012/20132013/20142012/2013

£'000£'000£'000£'000

IAS 19 Pension Liabilities

-2,501,851 Police officers -2,519,495

-145,877 Police staff -152,583

-2,647,728 -2,672,078

2013/2014

£'000

2012/2013

£'000

19 Pensions for Police Officers - OCC Employer contributions levels are based on percentages of pensionable pay set nationally by the Home Office and are subject to triennial revaluation by the Government’s Actuary. From 1 April 2013 employee contributions increased and officers will pay contributions ranging from 10.7% to 14.0% depending on their pay scale and the scheme they are in. Employer contributions to the Police Officer Pension Scheme are projected at £24,501,000 in financial year 2014/2015. Benefits payable are funded by these contributions and any difference between benefits payable and contributions receivable, except for those amounts relating to injuries received in service, is payable by the PCC Group and then reclaimed from the Home Office.

59

The first table below shows the amount met by the PCC Group and second shows those met by the PCC Group and then reclaimed through the top-up grant from the Government.

Cost of Injury and Ill-Health Benefits - Police Officers

7,524 Payments to pensioners 7,049

2013/2014

£'000

2012/2013

£'000

Pensions Account

78,141 Benefits paid to officers 78,085

-42,166 Less contributions received from officers -40,311

35,975 Balance met from PCC Group 37,774

2012/2013

£'000

2013/2014

£'000

In most cases, police officers can receive a pension when they reach the age of 50, as long as they have completed 25 years’ service. A retiring officer can choose to receive part of their pensions as a tax-free lump sum. In line with IAS 19, we must reveal certain information on assets and liabilities related to pensions for our employees. We take part in the Police Force Pension Scheme which was established under the Police Pension Fund Regulations 2006 SI 2007 No.1932. This is a defined benefit scheme based on final pensionable salary and the fund is administered by the OCC. The scheme is not funded and so has no assets set aside to meet the liabilities. The scheme is accounted for in accordance with the PCC’s accounting policies as detailed on pages 33 to 39. A full valuation of the pension scheme liabilities was undertaken as at 31 March 2014. This work was carried out by independent actuaries who have taken account of the requirements of IAS 19 to assess the liabilities of the fund. Liabilities have been calculated by reference to police officers who are members of the fund as well as those who are already receiving pensions. Using the assumptions detailed in the tables below an estimate of the costs and liabilities associated with police officers pensions has been made.

Life Expectancy from Age 65 Years

Current pensioners

Males 23.4

Females 25.7

Retiring in 20 years

Males 25.6

Females 28.0

The main assumptions used for the purposes of IAS 19 are shown as yearly percentages.

4.3 Discount rate 4.4

4.7 Rate of increase in salaries 4.6

2.5 Rate of increase in pensions in payment 2.8

3.3 Retail price index 3.6

2.5 CPI increases 2.8

2013/2014

%

2012/2013

%

60

The movement in the present value of scheme liabilities for the year 31 March 2014 is as follows:

Present Value of Police Pension Scheme

Liabilities

-2,273,854 Present value of schemes liability as at 1 April -2,501,851

Movements in the year

-66,799 Current service cost -68,353

-1,915 Past service cost 0

82,254 Estimated benefits paid (net of transfers in) 80,977

-12,995 Contributions by scheme participants -13,708

-103,023 Interest costs -106,149

-125,519 Change in financial assumptions -68,153

0 Change in demographic assumptions -120,104

0 Experience gain/loss on defined benefit obligations 277,846

-2,501,851 Present value of schemes liability as at 31 March -2,519,495

2012/2013

£'000

2013/2014

£'000

The movement in the fair value of scheme assets for the year 31 March 2014 is as follows:

Fair Value of Police Pensions Scheme Assets

0 Present value of schemes assets as at 1 April 0


35,053 Experience gain/loss on defined benefit obligations 35,627

34,206 Contributions by employer 31,642

12,995 Contributions by scheme participants 13,708

-82,254 Estimated benefits paid (net of transfers in) -80,977

0 Present value of schemes assets as at 31 March 0

2012/2013 2013/2014

£'000 £'000

20 Pensions for Police Staff - OCC Our police staff can choose to join the Local Government Pension Scheme, which is a defined benefit scheme based on final pensionable salary. There are government rules which say how much needs to be put into a fund to meet the full costs of current and future pensions. The total amounts paid into the fund by the PCC and the percentage of employees’ contributions are shown below.

Pension Costs - Police Staff

8,253 185-253 PCC's contribution 8,684 188-256

2012/2013 2013/2014

Percentage of

Employees'

Contributions£'000

Payments Percentage of

Employees'

Contributions

Payments

£'000

During 2013/2014 we have paid into the fund at rates of between 188% and 256% of the rate which employees paid depending upon the whole time equivalent salary paid to employees.

61

Employer contributions to the Police Staff Pension Scheme are projected at £8,731,000 in financial year 2014/2015. It should be noted that the actuary has used an estimated value in respect of police staff employers pension contributions in arriving at the calculation of pension costs included in the comprehensive income and expenditure statement as disclosed in note 18. We are part of the pension scheme run by Somerset County Council. At 31 March 2013 the PCC’s share of the deficit on this scheme was £49,279,000. To contribute towards this liability the PCC has agreed to pay 11% of the employee salary to pay for new service of the current active members and an annual fixed sum to pay for the deficit recovery. The fixed sum due in 2014/2015 is £2,640,000. A full valuation of the pension scheme liabilities was undertaken as at 31 March 2013. This work has been updated by independent actuaries to the Somerset County Council pension fund who have taken account of the requirements of IAS 19 to assess the liabilities of the fund. Liabilities have been calculated by reference to police staff who are members of the fund as well as those who are already receiving pensions. Using the assumptions detailed in the tables below an estimate of the costs and liabilities associated with police staff pensions has been made.

Life Expectancy from Age 65 Years

Current pensioners

Males 23.6

Females 26.0

Retiring in 20 years

Males 25.8

Females 28.3

The main assumptions used for the purposes of IAS 19 are shown as yearly percentages.

4.7 Discount rate 4.6

4.8 Rate of increase in salaries 4.7

2.6 Rate of increase in pensions in payment 2.9

3.4 Retail price index 3.7

2.6 Consumer price index 2.9

%

2012/2013

%

2013/2014

The return on the pension fund assets on a bid value basis for the year to 31 March 2014 is estimated to be 6%. The estimated value of the PCC’s share of the fund’s assets is £203,903,000 on a bid value basis (2012/2013 £189,902,000). The assets are made up of the following:

62

Assets

Equities

- Quoted equities 27

- Standard life smaller companies fund 1

- Overseas equities - North America 18

- Overseas equities - Europe 11

- Overseas equities - Japan 2

- Overseas equities - Pacific (excluding Japan) 4

- Overseas equities - Nomura Japan fund 3

- Overseas equities - Pioneer emerging markets fund 4

- Private equity - Neurberger Berman Crossroads 2010 fund 1

72 71

Gilts - Public Sector

- UK fixed interest 2

- UK index linked 4

8 6

Other Bonds

- UK fixed interest corporate sector investment grade 8

- UK fixed interest corporate sector high yield 1

- Overseas corporate sector high yield 2

11 11

8 Property UK 10

1 Cash (invested internally) 2

100 Total assets 100

2012/2013 2013/2014

% %

The following amounts were measured in line with the requirements of IAS 19.

Police Staff Pensions

189,902 Share of assets in pension fund 203,903

-333,958 Estimated liabilities in pension fund -354,530

-1,821 Estimated unfunded liabilities -1,957

-145,877 Deficiency in fund -152,584

2012/2013

£'000

2013/2014

£'000

The movement in the present value of schemes obligations for the year 31 March 2014 is as follows:

63

Present Value of Police Staff Liabilities

-309,581 Present value of defined obligations as at 1 April -335,779


-15,742 Current service cost -14,757

-227 Past service cost, including curtailments 0

7,860 Estimated benefits paid (net of transfers in) 7,793

-3,920 Contributions by scheme participants -3,643

-14,157 Interest costs -15,683

118 Unfunded pension payments 118

-70 Change in financial assumptions -21,955

0 Change in demographic assumptions -4,806

-60 Experience loss(-)/gain on defined benefit obligations 32,225

-335,779 Present value of defined obligations as at 31 March -356,487

£'000

2013/2014

£'000

Re-stated

2012/2013

The movement in the fair value of scheme assets for the year to 31 March 2014 is as follows:

Fair Value of Police Staff Scheme Assets

160,105 Fair value of scheme assets as at 1 April 189,902


7,465 Interest on assets 9,029

17,926 Return on assets less interest 2,039

0 Other actuarial gain/loss(-) -1,437

-21 Administration expenses -78

8,485 Contributions by employer 8,717

3,920 Contributions by scheme participants 3,643

-7,978 Estimated benefits paid (net of transfers in) -7,912

189,902 Fair value of scheme assets as at 31 March 203,903

£'000

2013/2014

£'000

Re-stated

2012/2013

You can get more information in relation to the Police Staff Pension Scheme from Peninsula Pensions, Great Moor House, Bittern Road, Sowton Industrial Estate, Exeter, EX2 7NL.

64

21 Property, Plant and Equipment

Property, Plant and Equipment 2012/2013

Cost or valuation

As at 1 April 2012 134,220 83,101 9,970 227,291

Additions during year -4 5,355 637 5,988

Disposals -390 -14,533 -574 -15,497

Impairment 0 0 0 0

Reclassification 0 0 0 0

As at 31 March 2013 133,826 73,923 10,033 217,782

Depreciation and impairment

As at 1 April 2012 -4,716 -66,919 0 -71,635

Depreciation charge -5,109 -5,865 0 -10,974

Disposals 17 14,468 0 14,485

Reclassification 0 0 0 0

As at 31 March 2013 -9,808 -58,316 0 -68,124

Net book value

As at 31 March 2013 124,018 15,607 10,033 149,658

As at 31 March 2012 129,504 16,182 9,970 155,656

£'000 £'000 £'000 £'000

Land and

Buildings

Vehicles, Plant,

Machinery and

Equipment

Assets Under

Construction

Total

Property, Plant and Equipment 2013/2014

Cost or valuation

As at 1 April 2013 133,826 73,923 10,033 217,782

Additions during year 0 6,174 538 6,712

Disposals -1,230 -4,469 0 -5,699

Impairment 0 0 0 0

Reclassification -10,136 0 0 -10,136

As at 31 March 2014 122,460 75,628 10,571 208,659

Depreciation and impairment

As at 1 April 2013 -9,808 -58,316 0 -68,124

Depreciation charge -5,018 -6,211 0 -11,229

Disposals 80 4,113 0 4,193

Reclassification 1,596 0 0 1,596

As at 31 March 2014 -13,150 -60,414 0 -73,564

Net book value

As at 31 March 2014 109,310 15,214 10,571 135,095

As at 31 March 2013 124,018 15,607 10,033 149,658

£'000 £'000 £'000 £'000

Land and

Buildings

Vehicles, Plant,

Machinery and

Equipment

Assets Under

Construction

Total

Within ‘Assets under construction’ Gloucestershire and Wiltshire Police and Crime Commissioners have contributed £372,600 towards their share of the PFI development costs for the firearms training facility.

65

22 Loans to Officers Employees must repay these loans over a maximum of five years. They can only have a loan to buy a vehicle. The outstanding loans at 31 March 2014 is £69,883 (£108,731 31 March 2013).

23 Long Term Prepayments The Transition and Transformation prepayment at 31 March 2014 £1,855,000 (£2,426,000 at 31 March 2013) relates to a payment made to Southwest One in support of the transitional period, which is being repaid to the PCC as a reduction in unitary charge over the life of the contract.

24 Investments The PCC has an 8.5% shareholding (825 shares) in Southwest One Ltd. As there is no active market for these shares their fair value has not been disclosed.

25 Short and Long Term Investments Investments are deposits with UK banks, building societies and local authorities. Short term investments are convertible to cash from between 3 months and one year of the balance sheet date. Long term investments are convertible to cash over one year from the balance sheet date. Surplus funds are managed on behalf of the PCC by Somerset County Council Treasury. Funds are invested in line with policy approved by the PCC.

26 Debtors and Payments In Advance These balances reflect amounts owed to the PCC and payments made in advance for goods and services at the end of the year. It is expected that amounts owed will be received within 12 months of the year end date.

Debtors and Payments in Advance

16,267 Central government bodies 20,907

3,450 Other local authorities 4,127

48 NHS bodies 10

8,013 Other entities and individuals 3,678

27,778 Balance as at 31 March 28,722

2013

£'000

2014

£'000

66

27 Cash and Cash Equivalents

Cash and Cash Equivalents

137 Cash in hand 139

11,746 Short term deposits with building societies 27,884

11,883 Balance as at 31 March 28,023

£'000

2014

£'000

2013

28 Assets Held for Sale

Assets Held for Sale

Cost

684 Cost as at 1 April 528

21 Additions 0

0 Reclassification 8,539

0 Impairment -2,462

-177 Disposals -528

528 Balance as at 31 March 6,077

£'000

2012/2013

£'000

2013/2014

29 Loans Still to be Repaid Loans outstanding at the balance sheet date include amounts owing to the Public Works Loan Board (PWLB), amounts showing to other lenders under the terms of Lender Option Borrower Option (LOBO) and amounts owing to Salix Finance Ltd in respect of finance provided for the purchase of energy efficient boilers. The Salix loan of £228,516 was the only new loan taken in 2013/2014. This is an interest free loan over a period of four years provided to support energy efficiency and it is anticipated that the energy savings will offset the loan repayments.

Loans to be Repaid

8,271 Within one year 10,867

4,301 Between one and two years 5,592

9,079 Between two and five years 4,177

2,092 Between five and 10 years 1,565

17,190 More than 10 years 17,190

40,933 39,391

Less:

-8,271 Transferred to creditors (repayable in 2013/2014) -10,867

32,662 28,524

£'000

2014

£'000

2013

67

Within the above the fair value of the PWLB loans has been assessed at £31,868,828 (31 March 2013 £35,582,172) compared with a book value of £27,387,053 (31 March 2013 £29,158,105). The fair value of LOBO loans has been assessed at £14,208,790 (31 March 2013 £15,104,084) compared with a book value of £11,775,000 in both years. Under the terms of these loans the lender has the option to vary the interest rate at specified points in time. These loans are detailed in the following table.

Lender Option Borrower Option (LOBO)

6,500 6,500 30 yrs 4.50

2,500 2,500 70 yrs 3.99

2,775 2,775 70 yrs 4.10

11,775 Total 11,775

£'000

2013

Next Option

Date

Period

£'0002014

%

Interest

Rate

End DateDrawdown

Date

17/01/2005

12/02/2008

30/01/2008

17/01/2035

12/02/2015

30/01/2018

17/07/2014

14/02/2078

31/01/2078

30 Creditors and Receipts in Advance These are people and organisations who the PCC owed money to at the end of the year for goods or services it had already received, or who had already paid the PCC money for goods or services that they did not receive until after the end of March. It is expected that these liabilities will be paid within 12 months of the end of the reporting period.

Creditors and Receipts in Advance

0 5,867 5,867 Central government bodies 0 5,077 5,077

0 4,047 4,047 Other local authorities 0 3,063 3,063

0 29 29 NHS bodies 0 232 232

8,026 11,464 19,490 Other entities and individuals 7,020 13,577 20,597

8,026 21,407 29,433 Balance as at 31 March 7,020 21,949 28,969

£'000 £'000 £'000 £'000 £'000 £'000

OCC PCC Total

2012/2013

OCC PCC Total

2013/2014

31 Provisions

Provisions

Insurance 3,965 0 0 1,045 5,010

Legal services 177 -28 -99 609 659

Carbon reduction commitment 115 0 -115 0 0

Ill-health retirements - OCC 68 0 -68 309 309

Bank holiday pay - OCC 0 0 0 500 500

4,325 -28 -282 2,463 6,478

£'000

in Year

Used

£'000

31 March

2014

Balance

£'000

in Year

New

£'000

Unused

Reversed

£'000

1 April

2013

Balance

68

Following advice from our insurance experts as part of the annual review, we have divided the insurance fund between a provision of £5,010,000 which represents specific known liabilities, and a reserve to meet other liabilities. Details of the PCC insurance cover are shown in note 33. The insurance provision is based upon an actuarial evaluation of the discounted insurance liabilities as at 31 March 2014. This evaluation is based on the paid and outstanding claims position at this date. It should be noted that the timing of outflows in respect of these liabilities is inherently uncertain and events may not occur as expected. The legal services provision of £659,000 represents an estimate of the outcome of outstanding legal cases, which should be resolved in 2014/2015. The Environment Agency has confirmed that the PCC is not required to participate in the Carbon Reduction Commitment Energy Efficiency Scheme until 1 April 2019. Therefore no provision is required at 31 March 2014. The following provisions have been included in the accounts of the OCC. When a police officer retires on the grounds of ill-health an amount of two times average pensionable pay is payable to the Home Office in the year of retirement, known as the Capital Equivalent Charge Payment (CECP). At the 31 March 2014 there were four officers whose ill-health retirements had been approved but who had not actually retired. The provision is in respect of the CECP amounts which will fall due to the Home Office when these individuals actually retire. It is anticipated that these amounts will be paid in 2014/2015. There is a provision of £500,000 at 31 March 2014 for pay due to police officers and staff for bank holidays falling in maternity, paternity or adoption leave.

32 Contingent Liabilities We have reviewed the position in respect of contingent liabilities as at 31 March 2014. We are withholding £656,086 from our payment of Southwest One unitary charge invoices. This relates to services no longer provided. These amounts have not yet been contractually agreed with Southwest One. The service availability date for the PFI buildings is after 31 March 2014 and there are various outstanding contractual issues between ourselves and the PFI providers. There is therefore a potential liability but this is not thought to be material. A decision was taken during 2013/2014 to re-organise our staffing structure, processes and systems. This will be undertaken during 2014/2015 and could lead to liabilities for staff re-grading, redundancy and relocation costs. Annual assessments are carried out to manage our key risks and set the level of our reserves. These would include the following contingent liabilities; Potential amounts due for health related insurance claims not met by Municipal Mutual

Insurance. Ongoing IPCC (Independent Police Complaints Commission) and other investigations

which may lead to potential claims.

69

Potential liabilities for any police staff equal pay claims received after 31 March 2014 but relating to work carried out in the past six years.

Any amounts due in excess of the legal cases provision in note 31.

33 Funds and Reserves

33.1 General Fund

This reserve represents the risk assessed balances held by the PCC to meet unforeseen future events.

33.2 Capital Reserves

The revaluation reserve represents the difference between the current valuation and the original cost of our assets. The capital adjustment account provides a balancing mechanism between the different rates at which assets are depreciated and are financed. It should be noted that these reserves are matched by fixed assets within the balance sheet and are not resources available to the PCC. The usable capital receipts reserve represents the amounts received from the sale of capital assets held to fund future capital purchases. You can find the details of the movement on these reserves in the notes to the movements in reserves statement.

33.3 Revenue Reserves

The details of movements on specific reserves are as follows:

70

Revenue Reserves 2012/2013

Carry forwards 2,067 -2,067 272 0 272

Neighbourhood policing 2,617 -1,025 30 0 1,622

Operations 2,750 -397 397 0 2,750

Zephyr 408 -373 329 0 364

Buildings maintenance fund 422 0 756 0 1,178

Sustainability 409 -46 0 0 363

Workforce transformation 9,922 -1,119 1,592 0 10,395

Proceeds of crime 294 -112 170 0 352

Detained property 661 -1,078 1,635 0 1,218

General insurance 1,822 -1,266 0 0 556

Vehicle insurance 1,732 -514 550 0 1,768

Air support 580 -285 145 0 440

Specific revenue grants 1,233 -1,358 1,170 0 1,045

Other earmarked reserves 209 -152 107 0 164

Capital financing 3,000 -3,000 3,000 0 3,000

PCC post transition 1,500 0 0 -1500 0

Road safety 0 0 561 0 561

Hinkley Point 0 0 166 0 166

PFI smoothing 0 0 2,442 0 2,442

29,626 -12,792 13,322 -1,500 28,656

Adjustments Balance

31 March

2013£'000 £'000 £'000 £'000 £'000

Balance

1 April

2012

Reserves

Used in Year

Transfers

to Reserves

in Year

Revenue Reserves 2013/2014

Carry forwards 272 -272 367 0 367

Neighbourhood policing 1,622 -1,034 217 0 805

Operations 2,750 -118 118 0 2,750

Zephyr 364 -83 268 0 549

Buildings maintenance fund 1,178 -50 88 0 1,216

Sustainability 364 0 0 0 364

Transformation 10,395 -5,209 950 0 6,136

Proceeds of crime 352 -466 275 0 161

Detained property 1,217 -957 1,063 0 1,323

Insurance reserves 2,324 -3,169 2,426 0 1,581

Air support 440 -111 0 0 329

Grants carried forward 1,044 -1,169 1,712 0 1,587

Earmarked capital reserves 164 -137 95 0 122

Capital financing 3,000 -3,507 9,581 0 9,074

Road safety 561 -2 136 0 695

Hinkley Point 166 -314 198 0 50

PFI smoothing 2,442 0 513 0 2,955

LRF reserve 0 0 36 0 36

Victim support services 0 0 681 0 681

Miscellaneous reserves 0 0 530 0 530

28,655 -16,598 19,254 0 31,311

Balance

31 March

2014

Transfers

to Reserves

in Year

Reserves

Used in Year

Balance

1 April

2013

Adjustments

£'000£'000£'000£'000 £'000

71

The carry forward balance represents the cost of goods and services not received at 31 March, as well as amounts set aside for specific purposes. The neighbourhood policing reserve is held to finance the provision of neighbourhood policing services, and support initiatives and ongoing expenditure which help deliver our commitment to help build safer stronger communities. The operations reserve can be used at the chief officers discretion to manage risk associated with the reactive nature of policing work. Zephyr is a regional collaboration set up to destroy, dismantle and disrupt serious and organised crime across the South West of England. Avon and Somerset are the lead force for this collaboration, and the funds within the reserve are held on behalf of the region. The buildings maintenance reserve is held to capture any underspend in relation to our buildings repairs and maintenance budgets, so that these funds can be used in future years to support necessary work on our estate. The sustainability reserve is used to support projects and initiatives which will reduce and make more efficient our use of natural resources.

The transformation reserve is maintained to support the cost of the change programme over the next 12-24 months. The proceeds of crime reserve is used to hold funding received as a result of our work in the seizure and confiscation of assets we believe to have been gained through criminal activities. The funding is used to support our continued work in this area, as well as to support projects which meet the limitations placed upon us for how these funds can be used. The PCC operates a holding account, for seized monies and the sale proceeds of seized and unclaimed property under the Police (Property) Regulation 1997. In the main these assets will be returned to their owners. However, if they are not claimed these funds can be donated to worthy causes. The insurance reserve covers the vehicle, public and employer’s liability risk. The fund is subject to an annual actuarial review to assess the potential liabilities and is used to supplement our external insurance provision. The air support reserve is the balance of the funds from the helicopter provision that was shared with Gloucestershire PCC, before the service was transferred to the National Police Air Support service (NPAS). This amount is held to cover the outstanding liabilities relating to the air support partnership. The specific revenue grants reserve is used to hold grants income, where it is considered that the terms and conditions of the grant have been met. The earmarked capital reserve balance is held to meet the capital commitment on several ongoing schemes. The capital financing reserve has been created to help manage the forward funding of the capital programme to reduce the reliance on external borrowings. Road Safety fund is the surplus of funds received from the speed enforcement unit and will be used to support road safety initiatives.

72

The Hinkley Point reserve is to cover the cost of both the neighbourhood and protest policing at the site of the new Hinkley Point power station. The PFI interest smoothing reserve has been created in order to smooth the interest costs over the 25 year life of the PFI contract. The local resilience forum (LRF) reserve is the balance for various partners from public agencies as Avon and Somerset are the co-ordination point for this forum. The victims support reserve is the balance of the funding specifically received to enable victims support commission to be undertaken. The miscellaneous reserve contains funding that has been received from various sources that is required to be used for specific purposes.

34 Capital Commitments As at 31 March 2014 there are outstanding capital contractual commitments for vehicle replacements totalling £691,000.

35 Private Finance Initiative (PFI) Commitments On 4 September 2012 the PCC reached financial close on a contract with the Blue Light Partnership for the provision of four new facilities, which are being built under a Private Finance Initiative (PFI). A serious fire occurred at the specialist training centre construction site in August 2013. The fire caused considerable damage and will result in a delay in the availability of the facility until approximately June 2015. The three other buildings currently under construction are nearing completion and will become operational during 2014/2015. They will provide the PCC with custody and operational facilities over a 25 year contract life. The contract includes the provision of services including building maintenance and provides for asset lifecycle replacement. The financial implications of this contract will see the PCC commit to an annual unitary charge across the 25 year life of the contract, being £6,127,000 in the first year 2014/2015 and £248,589,000 over 25 years. It will also commit the UK Government (Home Office) to providing capital funding (known as PFI Credits) in the form of annual grants over 25 years, which will cover the majority of this unitary charge. The building and site assets, as provided under the contract, will remain the property of the Blue Light Partnership during the period of the contract and, with the exception of the shared specialist training centre, will become PCC assets at the end of the contract. However when the facilities become operational in 2014/2015 and 2015/2016, they will be recognised as assets on our balance sheet at the agreed value of £71,066,000 and matched initially on the balance sheet by a liability to the Operator (Blue Light Partnership). This liability will be written down over the life of the contract when payments which are identified as settling the liability, the capital element of the unitary charge, are made to the operator. The specialist training centre is shared with Wiltshire and Gloucestershire police and so an adjustment will be made to reflect only our share of this asset. Payments to be made under the PFI contract are set out in the table below. These payments are shown before the reduction for Wiltshire and Gloucestershire police share of the specialist training centre.

73

PFI Charges

Within 1 year 121 0 111 408 640

Within 2-5 years 6,697 343 18,245 11,009 36,294

Within 6-10 years 9,011 2,268 22,502 13,454 47,235

Within 11-15 years 10,104 5,227 21,595 12,639 49,565

Within 16-20 years 11,431 7,083 20,336 13,349 52,199

Within 21-25 years 13,020 6,758 18,992 16,411 55,181

Within 26-30 years 2,776 1,250 3,574 3,796 11,396

Total 53,160 22,929 105,355 71,066 252,510

Service

Charge

Interest

Charge

Total

2012/2013£'000 £'000 £'000

Lifecycle

Replacement

Costs£'000

Liability

£'000

PFI Charges

Within 1 year 1,081 13 3,079 1,954 6,127

Within 2-5 years 6,741 652 17,074 11,679 36,146

Within 6-10 years 9,157 3,530 22,043 12,952 47,682

Within 11-15 years 10,360 5,525 21,218 12,966 50,069

Within 16-20 years 11,721 6,940 20,050 14,059 52,770

Within 21-25 years 13,339 6,269 18,731 17,456 55,795

Within 26-30 years 0 0 0 0 0

Total 52,399 22,929 102,195 71,066 248,589

Service

Charge

Lifecycle

Replacement

Costs

Interest

Charge

Liability Total

2013/2014£'000 £'000 £'000 £'000 £'000

74

36 Capital Financing

Capital Expenditure and Financing

44,232 Opening capital financing requirement 42,442

Capital investment

6,121 Property, plant and equipment 6,993

Sources of finance

-945 Capital receipts 0

-2,664 Government grants and contributions -2,357

-526 Revenue contributions -1,888

-3,565 Earmarked reserves -3,662

-1,790 Minimum revenue provision -1,787

1,579 Capital creditors 1,084

-7,911 -8,610

42,442 Closing capital finance requirements 40,825

Explanation of movements in year

-1,790 Decrease in underlying need to borrowing -1,617

-1,790 Decrease(-) in capital financing requirement -1,617

£'000

2013/2014

£'000

2012/2013

37 Financial Instruments The liabilities and investments disclosed in the balance sheet are made up of the following categories of financial instruments.

Financial liabilities at

amortised cost

Borrowings 8,271 10,867 32,662 28,524

Creditors 24,081 17,620 0 0

Total 32,352 28,487 32,662 28,524

Loans and receivables

Investments 38,359 41,745 0 7,000

Debtors 20,103 26,759 0 0

Car loans 0 0 109 70

Total 58,462 68,504 109 7,070

31 March

2013

31 March

2013

31 March

2014

31 March

2014

Long Term

£'000£'000

Current

£'000£'000

Investments comprise of short and long term investments and cash and cash equivalents from the balance sheet. In arriving at the figures above petty cash has been excluded from cash and cash equivalents being £139,000 at 31 March 2014 (£137,000 31 March 2013).

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The gains and losses recognised in the comprehensive income and expenditure statement in relation to financial instruments are made up as follows:

Interest payable and similar

charges -1,743 -1,652 0 0

Interest and investment income 0 0 450 415

Liabilities Measured at

Amortised Cost

Loans and Receivables

£'000

31 March

2014

£'000

Financial Liabilities

31 March

2014

£'000 £'000

31 March

2013

Financial Assets

31 March

2013

The nature and extent of risks arising from financial instruments can be classified under the following headings: Credit risk: the possibility that other parties may fail to pay amounts due to the PCC. Liquidity risk: the possibility that the PCC might not have funds available to meet its

commitments to make payments. Market risk: the possibility that financial loss might arise for the PCC as a result of

changes in measures such as interest rates and stock market movements.

37.1 Credit Risk

Credit risk arises from deposits with banks and financial institutions as well as credit exposures to customers. Treasury management services are provided by Somerset County Council. Any surplus cash is invested temporarily on our behalf by the PCC’s treasury management providers with specified financial institutions, money market funds, or other Government or public sector bodies. In order to ensure the PCC’s risk exposure is minimised, credit ratings are monitored on an ongoing basis, and individual counterparty ratings are verified on the day of investment. As directed by the revised CIPFA Treasury Management Code, account is taken using ratings issued by three main rating agencies, Fitch, Moody's, and Standard & Poor's. Decisions are taken based on the lowest of these ratings. It should also be noted that a range of additional indicators are used to assess counterparty credit worthiness including for example credit default swaps, Government guarantees and support, and share price. All investments are held in sterling deposits and are rated as per the lending Counterparty Criteria approved each year by the PCC.

At 31 March 2014 investments can be analysed as follows:

76

- - - Deposits with Money Market Funds 1,675 0

3,000 0 Deposits with local authorities 7,000 0.03

27,859 0.09 Deposits with UK banks 33,070 0.06

7,500 0.09 Deposits with UK building societies 7,000 0.08

38,359 Total 48,745

Fitch Credit

Rating

AA

Default31 March

2013%£'000

Fitch Credit

Rating

AAA

A

AAA

A

Default31 March

2014

A

A/AA

%£'000

Included within long term loans are car loans to officers and staff which totalled £69,883 at 31 March 2014 (note 22). These loans are only granted to those who have been designated as essential users of cars for the performance of official duties. Interest on these loans is charged in accordance with set policy which reflects market rates of interest. These loans are considered to be fully recoverable. Debtors, classified as receivable financial instruments, are due within one year with no interest being payable. As such the fair value of these receivables is the same as the original invoice amount. They include £14,499,233 pension fund account debtor with the Home Office (2012/2013 £13,613,025). The PCC does not generally allow credit for customers. With the exception of those debts where recovery is certain the PCC impairs all debtors greater than 6 months old and 10% of those debtors between three and 6 months. At 31 March 2014 the total value of these impairments was £321,326 (31 March 2013 £280,026). The remaining value of unimpaired debtors can be analysed as follows:

Unimpaired Debtors

1,384 Less than three months 927

19 Three to six months 16

1,403 943

31 March

2014

£'000£'000

31 March

2013

Receipts in advance represent income where relevant expenditure will be made for the service provided in the following financial year, such as grants. As this is simply a question of timing the amortised cost in the balance sheet is deemed to be the fair value. Refer to note 26 for the balances on both debtors and payments in advance.

37.2 Liquidity Risk The PCC has a comprehensive cash flow management process managed on our behalf by Somerset County Council that seeks to ensure that cash is available as needed. At 31 March 2014 the PCC had £6,884,000 (31 March 2013 £5,496,000) in call accounts available to manage short term liquidity requirements. The PCC had a further £35,000,000 invested for a period of up to one year from the balance sheet date (31 March 2013 £33,000,000).

77

37.3 Market Risk

37.3.1 Interest Rate Risk

The PCC is exposed to risk in terms of interest rate movements on investments. A 0.5% change in interest rates could increase or reduce investment income by £244,000 based on the current level of investments. All borrowing is currently at fixed rates and there is therefore no interest rate exposure. Disclosure of the PCC’s loan financing, including the fair value of PWLB loans, has been included in note 29 to the accounts. The LOBO stepped interest loan taken out on 17 January 2005 is exempt from the requirements of the Accounting Standard by virtue of having been taken before 9 November 2007 the date after which stepped interest rate loans taken need to be accounted for in accordance with the new regulations. In respect of the other commercial loans taken in 2008 there are no step changes in interest specified in the loan agreements and therefore no adjustment to the carrying value of the loans is required.

37.3.2 Price Risk

The PCC does not invest in equity shares other than in the Police Staff Pension Scheme (note 20). This means that the PCC has no exposure to price risk outside of the Local Government Pension Scheme.

37.3.3 Foreign Exchange Risk

The PCC has no financial assets or liabilities denominated in foreign currencies. It therefore has no exposure to losses arising from movements in exchange rates.

78


Police Officers Pension Fund Account Statements - OCC This fund includes the income and expenditure in respect of police officers pensions which has been accounted for on an accruals basis. At the end of the financial year if the expenditure on the pension benefits is greater than the contributions received during the year, the PCC makes a payment to the pension fund and the Home Office pays a top-up grant for this liability to the PCC. The income received and expenditure paid to the pension fund is shown within the comprehensive income and expenditure statement, showing the net figure as nil. It should be noted that this statement does not take account of liabilities to pay pensions and other benefits after the year end. This note provides a more detailed breakdown of the figures shown in note 19 of the accounts.

Police Officers Pension Fund Account

Contributions receivable

Employers contributions:

-25,944 Normal -24,977

-2,861 Ill health/early retirements -1,019

-28,805 -25,996

Employee contributions

-11,731 1987 Police Pension Scheme -12,272

-1,222 2006 Police Pension Scheme -1,416

-12,953 -13,688

-408 Transfers in from other schemes -627

Benefits payable

59,415 Pensions 62,579

17,954 Commutations and lump sum retirement benefits 15,041

77,369 77,620

Payments to and on account of leavers

5 Refund of contributions 9

696 Transfers out to other schemes 456

71 Other 0

772 465

35,975 Deficit for the year before transfer from the PCC 37,774

-35,975 Additional funding payable by the PCC to meet deficit -37,774

0 Net amount payable/receivable for the year 0

£'000

2012/2013

£'000

2013/2014

79

This note shows the pension fund account assets and liabilities as at 31 March 2014.

Pension Fund Net Assets

Current assets

5,107 Pensions prepaid 0

Current liabilities

-5,107 Other current liabilities 0

0 Net assets 0

£'000 £'000

31 March

2013

31 March

2014

80


Glossary of Terms Term

Definition

Accounting policies

These are a set of rules and codes of practice we use when preparing the accounts.

Balance sheet This represents our overall financial situation as at 31 March.

Capital programme

This is a list of projects for buying or improving fixed assets. With the exception of vehicles, items individually acquired typically under £12,000 are not treated as capital expenditure.

Cash flow statement Summarises the income and outgoings of cash during the

financial year.

Closing value

The value at 31 March, the date when the accounts are closed.

Collection fund adjustment account

Difference between council tax cash received and the amount shown in the comprehensive income and expenditure statement.

Commuted sums

These are the lump sum amounts paid to officers when they retire, if they choose to have a lower pension.

Comprehensive income and expenditure statement

Summarises the income and expenditure during the financial year.

Contingent liabilities A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

Corporate and democratic core costs

These represent the costs of delivering public accountability and representation in policy-making and meeting our legal responsibilities.

CoPaCC Compares Police and Crime Commissioners.

Creditors Amounts which are owed to others.

Current assets and liabilities

Assets or liabilities which can be turned into cash or fall due within one year of the balance sheet date.

Current service cost The change in the present value of the defined benefit obligation for employee service in the current period.

Debtors Amounts which are due from others.

Depreciation

An amount set aside to pay for the gradual loss in value of our assets.

81

Term

Definition

Detained property These are items of property and cash, which are held until the courts decide who owns them.

Fair value The amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.

Financial instruments Contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial year Refers to the period covered by the accounts and runs from 1 April to 31 March.

Fixed assets These are items such as land, buildings, vehicles and major items of equipment, which give benefit to us for more than one year.

FRS Financial Reporting Standards. Standards of accounting practice to be adopted to ensure that accounts provide a true and fair view.

GAAP Generally Accepted Accounting Principles. These refer to the standard framework of guidelines for financial accounting used in any given jurisdiction and generally known as accounting standards.

Historical costs These are the amounts paid at the time we bought the assets.

HMRC Her Majesty’s Revenue and Customs. Responsible for the collection of tax in the UK.

IAS International Accounting Standard. An international accounting standard to help harmonise company financial information across international borders. Subsequently superseded by International Financial Reporting Standards (IFRS).

IFRS International Financial Reporting Standards. A set of international accounting and reporting standards that will help to harmonise company financial information across international borders.

Intangible fixed assets Assets that are not physical such as software licences.

JAC Joint Audit Committee

LOBO loans Lender Option Borrower Option loans are where the interest payable is agreed at the time the money is borrowed. If the lender wants to change the interest rate the borrower has the choice to pay at the new rate or repay the loan.

Liquid assets Liquid assets are made up of cash and other items, which can be exchanged for cash. Procedures are in place to make sure that they are kept securely and properly accounted for.

LRF Local Resilience Forum.

82

Term

Definition

Minimum revenue provision

This is the lowest amount allowed by the Government which has to be charged to the accounts for repaying loans.

Movement in reserves statement

Summarises the movement in the reserves of the PCC during the financial year.

National non-domestic rates income

The national non-domestic rates (or business rates) are collected by District Councils, paid to the Government and then distributed to all local authorities in proportion to population. The amount received by an authority is taken into account by the Government in determining the revenue support grant to be paid.

OCC Office of Chief Constable.

OPCC Office of Police and Crime Commissioner. Staff employed by the Police and Crime Commissioner.

Past service cost The change in the present value of the defined benefit obligation for employee service in prior periods resulting in the current period from the introduction of, or changes to, post employment benefits.

PCC Police Crime and Commissioner for Avon and Somerset.

PCC Group The term PCC Group refers to the Police and Crime Commissioner (PCC) for Avon and Somerset and the office of the Chief Constable (OCC).

PCSO Police community support officer.

Pension appropriations

This is the adjustment required to reduce the costs of pensions to the sum to be collected from taxation in the year.

PFI Private finance initiative.

Police pension top-up grant

The PCC operates a Pension Fund, which is balanced to nil at the end of the year. The PCC receives a top-up grant from the Home Office equal to this deficit to balance the fund.

Police revenue grant

The revenue grant is provided by the Home Office as part of the funding required by the PCC to finance a budget in line with the Government’s assessment. The balance of funding is from business rates, revenue support grant and council tax.

Precept The amount of money we can collect from the people who pay council tax.

Prepayment A payment in advance for goods or services.

Provision This is the money we keep to pay for known future costs.

PWLB

This is the Public Works Loan Board, which is an organisation financed by the Government. It lends money to PCC’s on set terms so that they can buy capital items.

83

Term

Definition

Receipt in advance Income received in advance of the financial year in which the services will be provided.

Revaluation reserve

This account represents the increase in value of our assets since 1 April 2007 over the amount originally paid for them.

Revenue support grant

Revenue support grant is paid by the Government to all PCC’s, using a distribution formula.

Seconded officers

These are police officers who, for agreed periods, temporarily work for other organisations. Their salaries and expenses are shown as spending and the money the organisation pays us for their placements is shown as income.

Servicing of finance This is a technical term and is usually the interest paid on loans.

Unapportionable central costs

These represent costs that do not directly contribute to the running of the police service and which cannot be allocated to specific activities.

2

Further information can be obtained online at:-

www.avonandsomerset-pcc.gov.uk (PCC Website)www.avonandsomerset.police.uk (Constabulary Website)

Or in writing to:-

The Chief Finance Offi cerOffi ce of the PCC for Avon & Somerset

PO Box 37, Valley RoadPortishead, Bristol BS20 8QJTelephone: 01275 816380

http://www.facebook.com/AandSPCC @AandSPCC

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