SOUTH WALES POLICE AUTHORITY
STATEMENT OF ACCOUNTS
FOR THE
YEAR ENDED 31st MARCH 2008
L.M. JAMES, BSc (Econ), CPFA
Treasurer to the Police Authority
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SOUTH WALES POLICE AUTHORITY
STATEMENT OF ACCOUNTS FOR THE YEAR ENDED
31st MARCH 2008
TABLE OF CONTENTS
Foreword - by the Treasurer........................................................................... 3
Independent Auditor’s Report to the Members of South Wales Police
Authority ........................................................................................................... 7
Accounting Policies ......................................................................................... 9
Statement of Responsibilities for the Accounts.......................................... 13
Income and Expenditure Account ................................................................ 14
Statement of Movement on the Police Fund Balance ................................. 15
Statement of Total Recognised Gains and Losses ..................................... 15
Balance Sheet................................................................................................. 16
Cashflow Statement ....................................................................................... 17
Notes to the Accounts ................................................................................... 18
Pension Fund Account .................................................................................. 32
Statement on Internal Control ....................................................................... 33
Glossary of Terms.......................................................................................... 36
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Foreword by the Treasurer
This Statement of Accounts presents the overall financial position of the Police Authority for the year
ended 31 March 2008. The accounts are produced in accordance with the Accounts & Audit (Wales)
Regulations 2005 and in the format stipulated by the Chartered Institute of Public Finance and
Accountancy in accordance with best accounting practice.
The Authority’s Accounts for the financial year 2007/8 are set out on pages 9 to 32 and consist of:
1. An Income and Expenditure Account, which shows the income and expenditure of the Authority;
2. A Balance Sheet, setting out the financial position of the Authority as at 31st March 2008;
3. A Statement of Movement on the Police Fund Balance;
4. A Statement of Total Recognised Gains and Losses;
5. A Cash Flow Statement, which summarises the movement of cash arising from transactions with third
parties for revenue and capital purposes and;
6. Notes to the Accounts, which explain further the entries in the financial statements;
7. Pension Fund Account.
These Statements of Account differ from those produced in previous years, as follows:
• The Service analyses of the Income and Expenditure account is combined into one main
service in accordance with continued changes by the Best Value Accounting Code of
Practice.
•
The Balance Sheet includes a new Fixed Asset Revaluation Reserve and Capital Adjustment
Account replacing the former Fixed Asset Restatement Account and Capital Financing
Account.
Revenue Account
The Police Authority set a net revenue budget for 2007/8 of £232.099 million, to fund existing expenditure
commitments, identified force priorities and continuation of projects within the Seren development
programme. The Authority delegates management of the bulk of the budget to the Chief Constable and
monitors performance on a regular basis.
The table below provides a summary of the final outturn position for 2007/8 compared to the approved
budget and incorporates transfers to reserves:
Budget
Actual
Variation
£000
£000
£000
Total Gross Expenditure
268,595
275,513
(6,918)
Income (8,291)
(9,757)
1,466
Other Grants
(28,205)
(31,687)
3,482
Net Movement in Earmarked Reserves
0
(1,090)
1,090
Net Revenue Expenditure
232,099
232,979
(880)
Financed by:
Police Grant (Home Office)
(94,815)
(94,815)
0
Revenue Support Grant (Welsh Assembly)
(44,692)
(44,692)
0
Non Domestic Rates (Welsh Assembly)
(32,657)
(32,657)
0
Amount to be met by local taxation
(59,935)
(59,935)
0
Net Movement in Police Fund Reserves
0
(880)
880
Total Net Expenditure and Contributions to
(232,099) (232,979)
880
Reserves
Note: the format of the above table compares the actual outturn in overall terms with the original budget. It differs in
format to the Income & Expenditure Account, which is presented in compliance with the CIPFA Statement of
Recommended Practice. The latter accounts for the Net Cost of Services split by service analysis and includes charges
for retirement benefits, depreciation and pensions top up grant receivable, which is subsequently required to be
contributed to the Pension Fund. Certain transactions are excluded from the Income and Expenditure Account, but
included in the above summary when determining the statutory Budget Requirement, i.e. Employers’ pension
contributions and Capital Expenditure funded from Revenue. Further analysis is provided in Note 15.
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The main variations to budget relate to Police Officer Pay, Police Pensions and Police Staff Pay. The
Police Officer pay budget was underspent at year end, mainly as a result of the Home Office decision to
limit the backdating of the 2.5% Police Officer pay award to 1st December only. A subsequent judicial
review found in favour of the Home Office which has resulted in £0.9 million being available to transfer to
General Reserves.
The Force’s Work Force Transformation programme includes a comprehensive review of the Police Officer
establishment which has identified a number of issues relating to ill health retirements. As a consequence
of this work slippage occurred in the number of medical retirements approved during the year and the
authority has established a specific reserve to meet the costs of additional ill health retirements which may
arise during 2008/9.
A number of initiatives and projects which were commenced during 2007/8 could not be finalised and the
Authority has felt it necessary and prudent to establish specific and earmarked reserves to ensure their
successful completion in addition to the normal, prudent, limited carry forward of devolved under-spends in
accordance with the devolved budgetary control framework.
Unplanned funding has been received in relation to the asset recovery process as a result of the Proceeds
of Crime Act. A specific reserve has been established to ensure continued activity in this important area of
crime prevention. There were also virements between subjective and objective categories of the budget
to better reflect budget holders business plans and organisational priorities which were identified during the
year.
The Authority’s Income and Expenditure Account has been presented (see page 14) in accordance with
the Chartered Institute of Public Finance and Accountancy’s (CIPFA) “Best Value Accounting Code of
Practice”. The definition of the service types is currently under revision and for this year the analysis is
combined into one, for Police Services.
Reserves
The financial position of the Authority has marginally strengthened with respect to the level of general and
earmarked reserves. In 2006/7, there were significant changes to the financing arrangements for Police
Pensions which required a charge to the general reserve. In 2007/8 the target for general reserves was
2% of the Net Budget Requirement, which is intended to safeguard the Authority in the event of any
unexpected significant financial burdens. The Authority has approved a risk based revised policy and has
set a target that general reserves should be maintained at 3% of Gross Revenue Expenditure. The
fortuitous saving in relation to the Police Officer pay award has allowed the Authority to begin to increase
general reserve levels to the approved target from £2.835 million to £3.715 million.
The Authority has a robust framework for identifying initiatives and projects which require continuation
funding. Variations in spending during the year have allowed specific and earmarked reserves to be
increased by £1.090 million to £5.432 million to finance these future expenditure requirements.
The Authority’s capital reserves stand at £21.992 million, which are fully committed to meet the Capital
Programme approved by the Authority and will be exhausted by 2010/11.
Capital Finance & Borrowing
Capital expenditure for the period was £14.039 million, financed by specific grant, borrowing, capital
receipts and revenue contributions. This represented investment in land and buildings of £7.001 million,
vehicles £2.160 million and information technology and other £4.878 million.
The Authority is able to finance capital expenditure by way of borrowing subject to prudential framework.
During the year a total of £1.671 million was borrowed from the Public Works Loan Board (PWLB) to partly
finance capital expenditure. Decisions about the capital programme and its financing are taken in the
context of CIPFAs Prudential Code, which provides authorities with more borrowing flexibility, however to
date this facility has not been utilised.
After accounting for repayments of previous debt, the total outstanding long term debt for capital purposes
increases from £11.988 million to £12.242 million at the 31st March 2008.
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Police Authority Assets
Assets of the Authority include Land and Buildings, Vehicles, Communications and Other Technological
Equipment. The total asset value for accounting purposes is included at £81.463 million, in line with the
formal revaluation of its Land & Buildings during 2006/7.
Pensions Liability
The Pension Scheme for Police Officers is unfunded by statute. From April 2006, the Home Office
introduced both new financing arrangements and a new pension scheme for recruits joining after that date.
These arrangements have fundamentally changed the financing arrangements for police pensions and
now include an employer's contribution, based on pensionable pay and the introduction of a new grant to
meet any in year deficits. The Fund’s Account is included separately at page 32.
A software model, developed by the Government Actuary's Department, has been used to calculate the
potential liability of the scheme based on Actuarial review, using Pension and Payroll data. This estimated
liability reduced over the year from £1,833 million to £1,608 million, a reduction of 12% which represents
an actuarial gain.
In the case of Police Staff, the Police Authority is an admitted body to the Rhondda Cynon Taff County
Borough Council Local Government Pension Scheme. Following the full actuarial valuation of that
Scheme, further work has been undertaken by the Fund’s Actuaries to derive suitable approximate
allocations to participating bodies. The Police Authority’s share of the estimated deficit in this scheme
reduced over the year from £73,540 million to £47,680 million as at 31 March 2008, a reduction of 35%.
This reduction reflects similar changes in financial and demographic assumptions and results in reduced
estimated liabilities also from an actuarial gain.
A new benefit structure was introduced in the Local Government Pension Scheme from 1 April 2008. This
change affects both the value of benefits earned up to 31 March 2008 and the cost going forward from that
date. The changes introduced in the 2008 scheme that affect the active members’ benefits earned before 1
April 2008 are:
■ An increase in the period of the pension guarantee following retirement from 5 to 10 years.
■ The introduction of contingent dependants’ benefits for co-habitees.
■ An increase in the lump sum on death in deferment benefits following the member leaving service from
three times to five times the deferred pension.
■ A change to service enhancements for ill-health and death in service pensions.
Corporate Governance A statement on the system of internal control is included in the accounts. The statement highlights the
Authority’s internal control environment, comments on its effectiveness and identifies issues for the future
work. The statement is backed by a signed statement by both the Chair and Chief Executive of the Police
Authority. Internal control systems are subject to a process of continuous improvement.
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Future Activities The Authority’s objectives for 2008/9 draw on those that have been set out in previous years, and focus on
reducing crime, anti-social behaviour and improving public reassurance – issues which our citizens have
identified as their prime concerns. Our vision is ‘Keeping South Wales Safe’ and this will be achieved by:
•
Making every contact count
•
Reducing crime and detecting crime
•
Providing an emergency service
•
Protecting our communities
•
Ensuring we are efficient and effective
The Authority has over past years made a substantial financial investment in new technology to support
operational policing. A new performance management regime within the Force/ Authority will ensure that
the planning and delivery of our objectives is aligned to keeping South Wales Safe. The Home Office will
publish the first Assessments of Policing and Community Safety (APACS) next year. The purpose of this
framework is to monitor and assess the crime and community safety work of South Wales Police and its
partners, and aims to simplify the performance landscape. South Wales Police has already come a long
way, but 2008/9 will focus on delivering a quality policing service that the public deserves.
The Comprehensive Spending Review 2007, provided details of Government funding, fixed for the next 3
years and guarantees increases of at least 2.5% in each year. As a result of this announcement, medium
term financial projections indicate that the consequential budget gap increases from £9.3 million to £11.1
million by 2010/11. This is prior to the realisation of cash releasing efficiencies. In addition, it is clear that
there is an expectation that average Council Tax increases will be at or below 5% for the same period.
South Wales Police has for many years under invested in the maintenance and modernisation of its
Estate. A major programme of rationalisation is underway coupled with the requirement for major
investment in the provision of effective operational and Headquarters based accommodation.
L. M. James, BSc (Econ), CPFA
Treasurer to the Police Authority
Dated: .. September 2008
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Independent Auditor’s Report to the Members of South Wales
Police Authority
I have audited the accounting statements, pension fund accounts and the related notes of South Wales
Police Authority for the year ended 31 March 2008 under the Public Audit (Wales) Act 2004. The
accounting statements comprise the Income and Expenditure Account, Statement of Movement on Council
Fund Balance, Statement of Total Recognised Gains and Losses, Balance Sheet, Cash Flow Statement.
The pension fund accounts comprise the Fund Account and the Net Assets Statement. The accounting
statements and pension fund accounts have been prepared under the accounting policies set out in the
Statement of Accounting Policies.
This report is made solely to South Wales Police Authority in accordance with Part 2 of the Public Audit
(Wales) Act 2004 and for no other purpose, as set out in paragraph 42 of the Statement of
Responsibilities of Appointed Auditors, and Inspectors and of Audited and Inspected Bodies (2005)
prepared by the Auditor General for Wales.
Respective responsibilities of the responsible financial officer and the independent auditor
The Chief Financial Officer’s responsibilities for preparing the Statement of Accounts, including the
pension fund accounts, in accordance with relevant legal and regulatory requirements and the Statement
of Recommended Practice on Local Authority Accounting in the United Kingdom 2007 are set out in the
Statement of Responsibilities for the Statement of Accounts.
My responsibility is to audit the accounting statements, pension fund accounts and related notes in
accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK
and Ireland).
I report to you my opinion as to whether the accounting statements and the pension fund accounts present
fairly, in accordance with relevant legal and regulatory requirements and the Statement of Recommended
Practice on Local Authority Accounting in the United Kingdom 2007:
•
the financial position of the local government body and its income and expenditure for the year;
and
•
the financial transactions of its pension fund during the year and the amount and disposition of
the fund’s assets and liabilities, other than liabilities to pay pensions and benefits after the end of
the scheme year.
I review whether the Statement on Internal Control reflects compliance with CIPFA’s guidance ‘The
Statement on Internal Control: Meeting the Requirements of the Accounts and Audit Regulations 2003’
published on 2 April 2004. I report if it does not comply with proper practices specified by CIPFA or if the
statement is misleading or inconsistent with other information I am aware of from my audit of the accounts.
I am not required to consider, nor have I considered, whether the Statement on Internal Control covers all
risks and controls. Neither am I required to form an opinion on the effectiveness of the Police Authority’s
corporate governance procedures or its risk and control procedures.
I read other information published with the accounting statements, and consider whether it is consistent
with the audited accounting statements. This other information comprises only the Explanatory Foreword. I
consider the implications for my report if I become aware of any apparent misstatements or material
inconsistencies with the accounting statements. My responsibilities do not extend to any other information.
Basis of audit opinion
I conducted my audit in accordance with the Public Audit (Wales) Act 2004 , the Code of Audit and
Inspection Practice issued by the Auditor General for Wales, and International Standards on Auditing (UK
and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounting statements. It also includes an
assessment of the significant estimates and judgments made by the Police Authority in the preparation of
the accounting statements and pension fund accounts, and of whether the accounting policies are
appropriate to the Authority’s circumstances, consistently applied and adequately disclosed.
I planned and performed my audit so as to obtain all the information and explanations which I considered
necessary in order to provide me with sufficient evidence to give reasonable assurance that the accounting
statements are free from material misstatement, whether caused by fraud or other irregularity or error. In
forming my opinion I also evaluated the overall adequacy of the presentation of information in the
accounting statements, pension fund accounts and related notes.
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Opinion
In my opinion:
•
The accounting statements present fairly, in accordance with relevant legal and regulatory
requirements and the Statement of Recommended Practice on Local Authority Accounting in the
United Kingdom 2007, the financial position of South Wales Police Authority as at 31 March 2008
and its income and expenditure for the year then ended; and
•
The pension fund accounts present fairly, in accordance with the Statement of Recommended
Practice on Local Authority Accounting in the United Kingdom 2007, the financial transactions of
the South Wales Police Authority Police Pension Fund during the year ended 31 March 2008 and
the amount and disposition of the fund’s assets and liabilities, other than liabilities to pay pensions
and benefits after the end of the scheme year.
Certificate
I certify that I have completed the audit of the accounts of South Wales Police Authority in accordance with
the requirements of the Public Audit (Wales) Act 2004 and the Code of Audit and Inspection Practice
issued by the Auditor General for Wales.
My conclusion on South Wales Police Authority’s arrangements for securing economy, efficiency and
effectiveness in its use of resources for the year ended 31 March 2008 will be reported separately in the
published Annual Audit Letter to the Authority.
Anthony Barrett
Appointed Auditor
Wales Audit Office
Unit 4, Evolution
Lakeside Business Park
St David’s Park
Ewloe, CH5 3XP
.. September 2008
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Accounting Policies
1. General Principles
The general principles adopted in compiling these accounts are those recommended by the Chartered
Institute of Public Finance and Accountancy (CIPFA). Reference is made to the Code of Practice on Local
Authority Accounting in the United Kingdom 2007: A Statement of Recommended Practice (the SORP).
This is supplemented by the Best Value Accounting - Code of Practice (BVACOP), applicable from April
2000, which revised the standard service classification for Local Authority Accounting and Reporting.
These codes of practice set out the fundamental principles on the application of Financial Reporting
Standards (FRS’s) and Statements of Standard Accounting Practice (SSAPs) as required by the Local
Government and Housing Act 1989, the Local Government Finance Act 1982 and the Accounts and Audit
Regulations. Any instances where these financial statements do not comply with the SORP are noted
below.
2. Debtors and Creditors
The revenue and capital transactions of the Authority are recorded on an accruals basis. Where actual
amounts were not available, it may have been necessary to use appropriate estimated values.
3. Stocks
Stocks are valued at the lower of original cost or net realisable value.
4. Value Added Tax (VAT)
The Police Authority is reimbursed for VAT and the Revenue Account has therefore been prepared
exclusive of this tax in accordance with SSAP 5.
5. Pensions
Police officers’ pensions are unfunded by statute. However, the funding arrangements changed on 1st April
2006, from ‘Pay As You Go’ (i.e. based on payments to current pensioners) direct charge to the Police
Authority’s Revenue Account to an annual employers’ pension contribution based on percentage of salary,
with the balance payable to pensioners met from a grant provided by the Home Office.
All other employees are eligible to join the Local Government Pension Scheme. The Police Authority is a
participating member of the Rhondda Cynon Taff County Borough Council Pension Fund. The Authority
makes an employer’s contribution into that Pension Fund.
6. Government Grants
Grants in respect of revenue expenditure are included in the accounts in the year in which the related
expenditure is charged.
Where the acquisition of a fixed asset is financed either whol y or in part by a government grant, the
amount of the grant is credited initially to the Government Grants Deferred Account. Amounts are released
to the Income and Expenditure Account over the useful life of the asset to match the depreciation charged
on the asset to which it relates.
7. Provisions
Provisions set aside amounts to provide for liabilities, which are likely to be incurred but there is
uncertainty as to the amounts or the dates on which they will arise. Provisions are charged direct to the
Income and Expenditure Account whilst the expenditure, when incurred, is charged against the provision.
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8. Reserves
Amounts have been set aside to meet specific expenditure in future years, as earmarked capital and
revenue reserves. Additionally, a general reserve (Police Fund)– funded from accumulated surpluses of
income over expenditure - is maintained to meet exceptional and unforeseen expenditure. The Authority
has a risk based approach to the retention of reserves with the aim of having a Police Fund balance of 3%
of Gross Revenue Expenditure.
9. Investments
All interest generated from the investment of reserves and income received in advance of expenditure are
accounted for as income in the Income and Expenditure Account. Investments are shown in the Balance
Sheet at cost.
10. Provision for the Repayment of Debt
The amount provided is based on the Minimum Revenue Provision of 4%, as required by legislation. The
Authority also makes a voluntary provision in excess of this sum in line with its repayment agreement with
the lender. This provision is charged to the Police Fund.
11. Capital Financing
Whilst the accounts are presented on the Capital Accounting basis in accordance with the CIPFA Code of
Accounting Practice, it is also necessary to account for the financing aspects of capital expenditure, which
is similarly prescribed by provisions of the Local Government Act 2003 and Regulations made thereunder.
Section 16 of the Act defines expenditure for capital purposes as that "which falls to be capitalised in
accordance with proper practices". Currently this definition includes:
•
Acquisition of land and existing buildings.
•
New construction, conversion and renovation.
•
Acquisition, renewal or replacement of vehicles and vessels.
• Acquisition, renewal or replacement of plant, machinery and equipment, including furniture and
fittings.
• Credit arrangements of the calculated initial cost (including finance leases but excluding operating
leases), when entering into or varying such arrangements.
Regulations also allow authorities to capitalise expenditure incurred on the acquisition or preparation of a
computer programme or system.
Allocations of Capital Grant and Credit Approvals are issued by the Home Secretary on an annual basis.
The latter was revised from April 2005 and defined as the Supported Capital Expenditure (Revenue) to
support capital programmes by way of borrowing approval. The Capital Programme may be enhanced by
Capital Receipts, Revenue financing, Reserves, PFI schemes. From April 2005 authorities are able to
raise additional capital finance from unsupported borrowing by applying the CIPFA Prudential Code of
Practice. This would set borrowing limits above that supported by the Home Secretary, by considering
tests of prudence and affordability.
Under the Private Finance Initiative, notional credit approvals may be applied for from the Home Office for
schemes meeting certain criteria. Such approvals would then be taken into account in the Revenue
Support Grant Settlement to the Authority, thus providing part funding of predefined contractual 'rental
type' payments, which could be based on actual service provision by the providing organisation. South
Wales Police have no PFI Schemes currently.
12. Fixed Assets
All expenditure on the acquisition, creation, or enhancement of fixed assets has been capitalised on an
accruals basis in accordance with FRS15, Tangible Fixed Assets.
Subsequent capital expenditure is capitalised where it provides an enhancement to the economic benefits
of the assets in excess of those previously assessed. The useful economic lives of fixed assets are
reviewed annually and adjusted where necessary. The de minimis level policy is to capitalise all capital
expenditure over £5,000.
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Intangible Fixed Assets
Expenditure on assets that do not have physical substance but are identifiable and controlled by the
authority [e.g. software licences] is capitalised when it will bring benefits to the authority for more than one
financial year. The balance is amortised to the relevant service revenue account over the economic life of
the investment to reflect the pattern of consumption of benefits.
Tangible Fixed Assets
Tangible fixed assets are assets that have physical substance and are held for use in the provision of
services or for administrative purposes on a continuing basis.
Recognition: expenditure on the acquisition, creation or enhancement of tangible fixed assets is
capitalised on an accrual basis, provided that it yields to the authority and the services that it provides for
more that one financial year. Expenditure that secures but does not extend the previously assessed
standards of performance of asset [e.g. repairs and maintenance] is charged to revenue as it is incurred.
Measurement: Assets are initially measured at cost, comprising all expenditure that is directly attributable
to bringing the asset into working condition for its intended use. Assets are then carried in the Balance
Sheet using the following measurement bases:
•
Investment properties and assets surplus to requirements – lower of net current replacement cost
or net realisable value.
•
Dwellings, other land and buildings, vehicles, plant and equipment – lower of net current
replacement cost or net realisable value in existing use.
•
Infrastructure assets and community assets – depreciated historical cost.
Net current replacement cost is assessed as:
•
non-specialised operational properties – existing use value
•
specialised operational properties – depreciated replacement cost
•
Investment properties and surplus assets – market value
•
Vehicles, plant and other equipment – based on historic cost as advised by a suitably qualified
officer
•
Computer and Communication Systems – depreciated replacement cost with new additions being
measured at historic cost as advised by a suitably qualified officer.
Assets included in the Balance Sheet at current value are re-valued where there have been material
changes in the value, but as a minimum every five years. Increases in valuations are matched by credits
to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the
Income and Expenditure Account where they arise from the reversal of an impairment loss previously
charged to a service revenue account.
The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its
formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment
Account.
Impairment: the values of each category of assets and of material individual assets that are not being
depreciated at the end of each financial year for evidence of reductions in value. Where impairment is
identified as part of this review or as a result of a valuation exercise, this is accounted for by:
•
Where attributable to clear consumption of economic benefits – the loss is charged to the relevant
service revenue account.
•
Otherwise – written off against revaluation gains attributable to the relevant asset in the
Revaluation Reserve, with any excess charged to the relevant service revenue account.
Where an impairment loss is charged to Income and Expenditure Account but there were accumulated
revaluation gains in the Revaluation Reserve for that asset, an amount up to the value of the loss is
transferred from the Revaluation Reserve to the Capital Adjustment Account.
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Disposals: when an asset is disposed of or decommissioned, the value of the asset in the Balance Sheet
is written off to the Income and Expenditure Account as part of the gain or loss disposal. Receipts from
disposals are credited to the Income and Expenditure Account as part of the gain of loss on disposal [i.e.
netted off against the carrying value of the asset at the time of disposal]. Any revaluation gains in the
Revaluation Reserve are transferred to the Capital Adjustment Account. Amounts in excess of £10,000
are categorised as capital receipts, are credited to the Usable Capital Receipts Reserve, and can then only
be used for new capital investment or set aside to reduce the authority’s underlying need to borrow [the
capital financing requirement]. Receipts are appropriated to the Reserve from the Statement of Movement
on the General Fund Balance.
The written-off value of disposals is not a charge against council tax, as the cost of fixed assets is fully
provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital
Adjustment Account from the Statement of Movement on the General Fund Balance.
Grants and Contributions: where grants and contributions are received that are identifiable to fixed
assets, the amounts are credited to the Government Grants Deferred Account. The balance is then written
down to the Income and Expenditure Account to offset depreciation charges. These write downs are not
separately identified to individual assets and respective asset lives. A reducing balance of 20% per annum
is applied, which write downs the value over a standard period of 5 years.
13. Depreciation
Depreciation is provided for on all assets with a determinable finite life [except for investment properties],
by allocating the value of the asset in the Balance Sheet over the periods expected to benefit from their
use. The following basis are used:
•
Land & Buildings: on a straight line basis using an estimated useful life of 50 years;
•
Vehicles: on a straight line basis over the period estimated to benefit from their use – between 3
and 5 years;
•
Computer Hardware: on a straight line basis over the period estimated to benefit from their use –
between 3 and 7 years;
•
Computer Software Licences: amortised on a straight line basis over the estimated life, between 3
and 7 years.
Where an asset has major components with different estimated useful lives, these are depreciated
separately.
Revaluation gains are also depreciated, with an amount equal to the difference between current value
depreciation charged on assets and the depreciation that would have been chargeable based on their
historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment
Account.
14. Leases
Property leases are accounted for as operating leases and disclosed with leases of vehicles and
equipment.
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Statement of Responsibilities for the Accounts
The Authority’s Responsibilities The Authority is required to:
• make arrangements for the proper administration of its financial affairs and to secure that one
of its officers has the responsibility for the administration of those affairs. In this Authority,
that officer is the Treasurer.
• manage its affairs to secure economic, efficient and effective use of its resources and
safeguard its assets.
•
approve the statement of accounts.
I certify that the South Wales Police Authority approved this statement of accounts at its meeting on 30th
June 2008.
Councillor Russell Roberts
Chair of the Police Authority
Dated: .. September 2008
The Treasurer’s Responsibilities
The Treasurer is responsible for the preparation of the Authority’s Statement of Accounts in accordance
with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in
the United Kingdom.
In preparing this statement of accounts, I have:
•
selected suitable accounting policies and then applied them consistently;
•
made judgements and estimates that were reasonable and prudent;
•
complied with the Code of Practice.
I have also:
•
kept proper accounting records which were up to date;
•
taken reasonable steps for the prevention and detection of fraud and other irregularities.
I certify that the Statement of Accounts, presents fairly the financial position of the Authority at the
accounting date and its income and expenditure for the year ended 31 March, 2008.
L.M. James, BSc (Econ), CPFA
Treasurer of the Police Authority
Dated: .. September 2008
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Income and Expenditure Account
For the Year Ended 31st March 2008
(CIPFA Best Value Accounting Code of Practice format)
2006-2007
Note
2007-2008
£000
Gross
Income &
Net
Expenditure
Grants Expenditure
£000
Service
Expenditure:
250,613
Police Services
297,015
(41,235)
255,780
845
Corporate and Democratic Core
954
0
954
140
Non-Distributed
Costs
4.2
2,530
0
2,530
251,598 NET COST OF SERVICES
300,499 (41,235) 259,264
(2,682)
Interest and investment income
(3,280)
(237)
Capital Financing Grant
12
(209)
0
Gain or Loss on Disposal of Fixed Assets
(311)
806
Interest payable and similar charges
801
(13,792)
Pensions Top up Grant receivable (Home Office)
(12,425
)
93,290
Pensions Interest Cost and expected return on pension
4
101,360
assets
328,983 NET OPERATING EXPENDITURE
345,200
Sources of Finance:
(92,112)
Police Grant (Home Office)
(94,815)
(44,316)
Revenue Support Grant (National Assembly)
(44,692)
(30,087)
Non-Domestic Rate Income (National Assembly)
(32,657)
(56,538)
Council Tax Payers
14
(59,935)
(223,053) TOTAL EXTERNAL FUNDING
(232,099)
105,930 DEFICIT/ (SURPLUS) FOR YEAR
113,101
The Income and Expenditure Account is presented in accordance with the CIPFA Best Value Accounting
Code of Practice (BVACOP), which sets out the service category under which expenditure should be
analysed. A traditional subjective analysis of expenditure may be found at Note 1 to the Accounts, which
outlines expenditure by type. The definition of the Service types is under revision by the Best Value Code
of Practice, and for this year the analysis is combined into one, for Police Services.
14 of 37
Statement of Movement on the Police Fund Balance
For the Year Ended 31st March 2008
The Income and Expenditure Account shows the Authority’s actual financial performance for the year,
measured in terms of the resources consumed and generated over the last twelve months. However, the
Authority is required to raise council tax on a different accounting basis, the main differences being:
• Capital investment is accounted for as it is financed, rather than when the fixed assets are
consumed.
• Retirement benefits are charged as amounts become payable to pension funds and
pensioners, rather than as future benefits are earned.
The Police Fund Balance shows whether the Authority has over/ under spent against the Budget
Requirement that it raised for the year, taking into account the use of reserves built up in the past and
contributions to reserves earmarked for future expenditure.
This reconciliation statement summarises the differences between the outturn on the Income and
Expenditure Account and the Police Fund Balance.
2006-2007
Note 2007-2008
£000
£000
105,930 Deficit/(Surplus) For the Year on the Income and Expenditure 113,101
Account
(104,213) Net additional amount required by statute and non-statutory proper
15 (113,981)
practices to be debited or (credited) to the Police Fund Balance for
the year
1,717 Decrease/(increase) in the Police Fund for the Year
(880)
(4,552) Police Fund Balance Brought Forward
(2,835)
(2,835) Police Fund Balance Carried Forward
(3,715)
Statement of Total Recognised Gains and Losses
For the Year Ended 31st March 2008
This Statement brings together all the gains and losses of the Authority for the year and shows the
aggregate increase in its net worth. In addition to the surplus generated on the Income and Expenditure
Account, it includes gains and losses relating to the revaluation of fixed assets and re-measurement of the
net liability to cover the cost of retirement benefits.
2006-2007
Note 2007-2008
£000
£000
105,930 Deficit/(Surplus) For the Year on the Income and Expenditure Account
113,101
(7,370) Deficit/(Surplus) Arising on Revaluation of Fixed Assets
16
(1,299)
(130,500) Actuarial Losses/(Gains) on Pension Fund Assets and Liabilities
4
(364,186)
(810) Other Losses/ (Gains) on Fixed Asset other movements
16
(526)
(32,750) Total Recognised Losses and (Gains) for the Year
(252,910)
(882) Prior year Adjustment
0
(33,632) Total Recognised Losses and (Gains) since last Statement of (252,910)
Accounts
15 of 37
Balance Sheet
as at 31st March 2008
2006-2007
Note
2007-2008
£000
£000
(Restated)
FIXED ASSETS:
1,201
Intangible Assets (Computer Software)
16
1,461
76,019
Tangible Fixed Assets
16
80,002
77,220
81,463
CURRENT ASSETS:
671
Stocks
18
725
17,611
Debtors
19
13,072
41,300
Short Term Investments & Deposits
20
47,625
0
Bank
256
9
Cash in hand
41
59,591 TOTAL
CURRENT
ASSETS
61,719
CURRENT LIABILITIES:
(21,015)
Creditors
21
(24,375)
(1,360)
Other Funds & Creditor Accounts
21
(1,627)
(1,688)
Bank Overdraft
0
(24,063) TOTAL
CURRENT
LIABILITIES
(26,002)
112,748 TOTAL ASSETS LESS CURRENT LIABILITIES
117,180
(11,988)
Long Term Borrowing
22
(12,242)
(6,469)
Government Grants Deferred Account
23
(8,510)
(5,466)
Provisions
24
(5,983)
Asset related to Local Government pension
4
99,460
106,820
scheme
Liability related to Local Government pension
4
(173,000)
(154,500)
scheme
(1,833,240)
Liability related to Police Pension scheme
4
(1,607,810)
(1,817,955) TOTAL ASSETS LESS LIABILITIES
(1,565,045)
EQUITY:
0
Revaluation
Reserve
25
(1,299)
(56,927)
Capital Adjustment Account
25
(58,007)
(177)
Usable Capital Receipts Reserve
25
0
73,540
Local Government Pensions Reserve/ Deficit
25
47,680
1,833,240
Police
Pensions
Reserve/ Deficit
25
1,607,810
(24,544)
Earmarked Capital Reserves
25
(21,992)
(4,342)
Earmarked Revenue Reserves
25
(5,432)
(2,835)
Police Fund Balance
25
(3,715)
1,817,955
1,565,045
16 of 37
Cashflow Statement
For The Year Ending 31st March 2008
2006-2007
Note 2007-2008
£000
£000
REVENUE ACTIVITIES
Cash
outflows
180,979
Cash paid to and on behalf of employees
193,866
28,587 Employers Contribution to Police Pensions
28,865
44,933
Other operating costs
39,026
13,792 Contribution to Pension Fund
11,229
Cash
inflows
(85,467)
Home Office Grants
(101,488)
(44,316) National
Assembly
Grants
(44,692)
(30,087)
Non-Domestic Rate Income
(32,657)
(56,538)
Precepts on Council Tax Collection Funds of Unitary Authorities
(59,935)
(16,110)
Receipts from Fees and Charges
(2,362)
(30,131) Other
Grants
(31,478)
5,642 NET CASH (INFLOW)/ OUTFLOW FROM REVENUE ACTIVITIES
374
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
806
Interest Paid
801
(237)
Capital Financing Grant
(209)
(8,953)
Pensions top up grant
(15,837)
(2,682)
Interest Received from Investments
(3,280)
(5,424) TOTAL NET CASH (INFLOW)/ OUTFLOW FROM REVENUE ACTIVITIES 26
(18,151)
CAPITAL ACTIVITIES
Cash
outflows
12,034
Purchase of fixed assets
14,537
Cash
inflows
(179)
Sale of fixed assets
(1,251)
(3,323)
Capital Grants Received
(3,115)
3,108 NET CASH (INFLOW)/OUTFLOW BEFORE FINANCING
(7,980)
MANAGEMENT OF LIQUID RESOURCES
(2,900)
Net (increase)/decrease in short-term deposits/ investments
6,325
FINANCING
Cash
outflows
1,271
Loan Repayments
1,350
Cash
inflows
(1,671)
New loans raised
(1,671)
(192) (INCREASE)/ DECREASE IN CASH AND CASH EQUIVALENT
27
(1,976)
An analysis of grants can be found in the notes to the Income and Expenditure Account, on page 23,
although the latter is presented on an accruals basis rather than on a cash basis.
17 of 37
Notes to the Accounts
1. Income and Expenditure Account: Traditional Subjective Expenditure
Format (Year Ended 31st March 2008)
2006-2007
Note 2007-2008
£000
£000
Expenditure:
178,021
Employee
Costs
186,273
63,870
Pensions (Current and Past service Cost)
4
61,270
45,264
Non- Pay costs
5
46,426
5,808
Depreciation
16
6,505
0
Impairment to Fixed Assets
16
4,140
(3,497)
Transfers from Government Grants Deferred Account
23
(4,115)
(7,737)
Income
13
(9,757)
(30,131)
Other
Grants
12
(31,478)
251,598 NET COST OF SERVICES
259,264
Corporate:
(2,682)
Interest and investment income
(3,280)
(237)
Capital Financing Grant
12
(209)
0
Gain or Loss on Disposal of Fixed Assets
(311)
806
Interest payable and similar charges
801
(13,792)
Pensions Top Up Grant receivable (Home Office)
(12,425)
93,290
Pensions (Interest Cost and expected return on assets)
4
101,360
328,983 NET OPERATING EXPENDITURE
345,200
Sources of Finance:
(92,112)
Police Grant (Home Office)
(94,815)
(44,316)
Revenue Support Grant (National Assembly)
(44,692)
(30,087)
Non-Domestic Rate Income (National Assembly)
(32,657)
(56,538)
Council Tax Payers
14
(59,935)
(223,053) TOTAL EXTERNAL FUNDING
(232,099)
105,930 DEFICIT/ (SURPLUS) FOR YEAR
113,101
18 of 37
2. Restatement of Prior Year Comparatives
2.1 As a result of changes in the format of the Authority’s Statement of Accounts, detailed below,
arising from changes to the Code of Practice on Local Government Accounting in the United Kingdom:
A Statement of Recommended Practice (the SORP), comparative figures for 2006/7 have been
restated, as follows:
Balance Sheet as at 31st March 2007
As previously Stated
Restated
EQUITY:
31st March 2007
31st March 2007
Revaluation Reserve
0
0
Fixed Asset Restatement Account
(12,478)
0
Capital Financing Account
(44,449)
0
Capital Adjustment Account
0
(56,927)
(56,927)
(56,927)
2.2 The restatement of Capital Grant Reserves as receipts in advance, which also restates Note 21
Creditors. These funds were fully applied during 2007/2008.
Balance Sheet as at 31st March 2007
As previously Stated
Restated
Current Liabilities/ Equity:
31st March 2007
31st March 2007
Creditors (Receipts in Advance)
0
(3,041)
Earmarked Capital Reserves
(27,585)
(24,544)
2.3 Additional y, new items are included in the Income and Expenditure Account and in Note 15 - “Net
additional amounts required by statute and non-statutory proper practices to be debited or credited to
the Police Fund Balance for the year” - which are taken into account in the “Statement of Movement
on the Police Fund Balance”. These include new entries for Gain or Loss on Disposal of Fixed Assets
and Impairment to Fixed Assets.
3. Employee Remuneration
During the year the number of officers and support staff who received remuneration in excess of
£60,000, excluding pension contributions, are provided below. This is a specific requirement of the
Accounts and Audit (Wales) Regulations 2005.
Number of Employees:
2006-2007 Remuneration
band
2007-2008
24 £60,000
-
£69,999
36
6 £70,000
-
£79,999
15
0 £80,000
-
£89,999
7
0 £90,000
-
£99,999
2
1 £100,000
-
£109,999
0
1 £110,000-
£120,000
0
1 £120,000-
£130,000
1
0 £130,000-
£140,000
0
0 £140,000-
£150,000
0
0 £150,000-£160,000
2
33
63
The above includes annual salaries and expense allowances as remuneration being chargeable to United
Kingdom income tax. For two individuals the payment of arrears of expense allowances relating to prior
years has significantly increased their total remuneration for the year ending 31st March 2008.
4. Pension Costs
4.1. As part of its terms and conditions of employment the Authority offers retirement benefits through
the following pension schemes:
The Police Pension Scheme (for police officers) – an unfunded defined benefit scheme,
meaning that there are no investment assets built up to meet pension liabilities. Instead,
from 1st April 2006, actual pension payments are met from a combination of employers’
and employee contributions, based on percentages of police salaries, and the balance
from Government Grant.
19 of 37
The Local Government Pension Scheme (LGPS - for police staff), provided by the
Rhondda Cynon Taff (RCT) County Borough Council Pension Fund – a defined benefit
scheme, based upon final pensionable salary.
4.2. The Authority recognises the cost of retirement benefits in the “Net Cost of Services” when
employees earn them, rather than when the benefits are actually paid as pensions. However, the
charge the Authority is required to make against Grants and Council Tax is based upon the cash
payable (employers contributions) in year, so the real cost of retirement benefits is reversed out of
the Income and Expenditure Account through the movement on the pension’s reserve. The
following transactions have therefore been made in the Income and Expenditure Account during
the year:
Police
Pension
LGPS Total
Scheme
2007-8
2006-7
2007-8
2006-7
2007-8
2006-7
£000
£000
£000
£000
£000
£000
Current Service Cost
51,020
56,500
7,720
7,230
58,740
63,730
Past Service Cost
760
0
1,770
140
2,530
140
Interest Cost
99,290
91,470
9,320
7,970
108,610
99,440
Expected Return on Assets
0
0
(7,250)
(6,150)
(7,250)
(6,150)
Total Movement to Income
151,070 147,970 11,560 9,190 162,630 157,160
and Expenditure Account
and Reversed in note 15
(162,630)
(157,160)
Charged to Grants and Local
Taxation:
Employers Contributions
29,115
28,587
8,194
7,270
37,309
35,857
4.3. The underlying assets and liabilities for retirement benefits attributable to the authority as at 31st
March 2008, including its share of the assets and liabilities of the RCT Pension Fund, are as
follows:
Police
Pension
LGPS Total
Scheme
2007-8
2006-7
2007-8
2006-7
2007-8
2006-7
£000
£000
£000
£000
£000
£000
Estimated Liabilities
1,607,810
1,833,240
154,500
173,000
1,762,310
2,006,240
Estimated Assets
0
0
(106,820)
(99,460)
(106,820)
(99,460)
Net Pension Liability
1,607,810
1,833,240
47,680
73,540
1,655,490
1,906,780
The Police Pension Scheme’s, include liabilities for the following:
2007-2008 2006-2007
£000
£000
Police Pension Scheme 1987
1,568,880
1,793,960
Police Injury Benefit Scheme
36,480
38,450
Police Pension Scheme 2006
2,450
830
1,607,810
1,833,240
4.4. The table below outlines the differences between expected and actual returns on assets,
experience of gains and losses arising on liabilities and the impact of changes in the
assumptions used by the Pension Actuaries.
Police
% of
Local
% of
Pensions
assets/
Government
assets/
£000
liabilities at
Pensions
liabilities
31.03.08
£000
at
31.03.08
The difference between the Expected and
0 0
(6,110)
(5.7%)
Actual Return on assets
Experience Gains and (Losses) arising on
15,680 (1.1%) (1,040) 0.7%
the scheme Liabilities
Changes in assumptions underlying the
319,950 (20.1%)
36,330
(23.5%)
present value of the pension liabilities
Actuarial (Loss)/ Gain
335,630
(21.2%)
29,180
(61.2%)
Total Police and Local Government
364,810
20 of 37
4.5. A full actuarial valuation of the RCT Pension Fund was undertaken on 31st March 2007 by Hewitt
Associates Limited dated 27th March 2008.
4.6. The Authority’s liability to pay benefits under the Police Pension Scheme has been estimated on
the basis of information provided by the Government Actuary and based on a date of 31st March
2008.
4.7. The main assumptions used by Hewitt Associates Limited and the Government Actuary were:
Police Pension
LGPS
Scheme
2007-8
2006-7
2007-8
2006-7
%
%
%
%
Inflation 3.7%
3.4%
3.7%
3.2%
Increase in Salaries
5.2%
4.9%
5.2%
4.7%
Increase in Pensions
3.7%
3.4%
3.7%
3.2%
Increases in Deferred Pensions
3.7%
3.2%
Rate of discounting scheme liabilities
6.9%
5.4%
6.8%
5.3%
4.8. As an unfunded scheme, the Police Pension Scheme has no assets to cover its liabilities. Assets
in the Rhondda Cynon Taff County Borough Council Pension Fund are valued at Fair Value –
principally open market value for investments - and consist of the following categories, analysed
by proportion of the total assets held by the fund:
31 March 2008
31 March 2007
Proportion of
Expected
Proportion of
Expected
Fund Assets
Return
Fund Assets
Return
Equities
73%
7.6%
81%
7.7%
Government Bonds
12%
4.6%
12%
4.7%
Corporate Bonds
2%
6.8%
1%
5.3%
Property
4%
6.6%
0%
6.7%
Other
9%
6.0%
6%
5.6%
Total 100%
100%
Average long term expected rate of
7.1%
7.2%
return
5. Non Pay Costs
2006-2007
2007/8
£000
£000's
7,031 Premises
7,629
8,288 Transport
8,864
24,006 Supplies & Services
22,054
9,348 Third Party Costs
12,263
399 Support
Services
389
(3,808) Less: Internal income and recharges
(4,773)
45,264
46,426
6. Support Services
A number of Local Authorities and other external organisations provide support services to the Police Authority,
they include the following: Figures include accrual’s where necessary.
2006-2007
2007-2008
£000
£000
284 Financial
Police Pension Payroll & Support Staff Pension Administration
303
Services:
- Rhondda Cynon Taff CBC,
Insurance Services - Vale of Glamorgan Council,
Internal Audit - contracted to commercial organisation.
35 Other
Valuation: Property Valuation Services- Neath Port Talbot
5
Services
CBC, Rhondda Cynon Taff CBC & other commercial
organisations
319
308
21 of 37
7. Audit Fee
2006-2007 2007-2008
£000
£000
80 External Audit – Wales Audit Office
82
8. Members’ Allowances
The total of allowances and expenses paid to members of the Police Authority were as follows:
2006-2007 2007-2008
£000
£000
196 Allowances
and
Expenses
197
9. Publicity Expenditure
Section 5 of the Local Government Act 1986 requires the disclosure of spending on publicity. The
costs incurred by the Authority were as follows:
2006-2007
2007-2008
£000
£000
538 Public Relations Department (Pay and Non Pay Costs)
480
342 Recruitment
Advertising
313
68 Other Advertising
144
948
937
10. Minimum Revenue Provision
Regulations require Police Authorities to set aside money to provide for the redemption of at least 4%
of outstanding debt. The difference between this amount and the charge for depreciation is charged to
the Police Fund as the “Minimum Revenue Provision for capital financing”.
2006-2007
2007-2008
£000
£000
(5,808) Amount charged as depreciation
(6,505)
718 Minimum Revenue Provision
1,350
(5,090) Charge to the Police Fund
(5,155)
11. Leases
11.1The annual cost of leases is as follows:
2006-2007
2007-2008
£000
£000
79 Vehicles (Operating Leases)
86
100 Equipment (Operating Leases)
153
1,041 Property
1,049
1,220
1,288
11.2 Outstanding commitments in respect of operating leases are as follows:
31 March 2008
31 March 2007
Property
Vehicles
Equipment
Property
Vehicles
Equipment
£000
£000
£000
£000
£000
£000
<
1
Year 984 48 210 823
53 149
2-5 Years
3,582
26
357
3,077
29
630
> 5 Years
1,813
0
0
2,011
0
0
6,379
74
567
5,911
82
779
22 of 37
12. Grant Income
2006-2007
Funding
2007-2008
£000's
Body £000's
(48) Alcohol Misuse Enforcement Campaign
Home Office
0
(578) All Wales Schools Programme Other
Local
Authorities
(683)
(1,053) Basic Command Unit Fund Grant
Home Office
(1,148)
(243) Building Safer Communities
Other Local Authorities
(143)
(953) Counter
Terrorism/Cardiff Airport
Home Office
(981)
Community Support Officers & Neighbourhood
(4,369) Policing Grant
Home Office
(6,157)
(4,628) Crime Fighting Fund/Extra Officers
Home Office
(4,628)
(173) Criminal
Justice
Board Home
Office
(172)
(1,910) Dedicated Security Posts
Home Office
(1,505)
0 Devolved Operation
Home Office
(183)
(359) Drugs Intervention Programme Home
Office
(366)
(1,060) Forensic
Science
DNA Home
Office
(1,060)
National Police
(444) Initial Police Learning & Development (IPLDP)
Improvement Agency
(162)
(200) Millennium Stadium Policing
Home Office
0
National Co-ordinator Special Branch -
(612) Surveillance Team
Home Office
0
(731) Operation
Safeguard
Home Office
(4)
(262) Police Incentivisation Fund
Home Office
(1,769)
National Council for
(229) Princes
Trust
Education and Training
(200)
(1,046) Regional Asset Recovery
Home Office
(1,058)
(2,438) Regional Intelligence Cell
Home Office
(3,472)
(819) Regional Intelligence Unit
Home Office
(594)
(826) Regional Task Force
Other Local Authorities
(737)
(2,320) Single Non Emergency Number
Home Office
(2,707)
(1,579) Special Priority Payments Grant
Home Office
(1,579)
Home Office/ NAW/
(2,447) Speed Reduction Camera
Other Local Authorities
(1,774)
Other Miscellaneous Grants (less than
(804) £150,000) Various
(396)
(30,131)
(31,478)
Capital Financing Grant
(237) Loan Charges re Pre 1990 loan debt
Home Office
(209)
(237)
(209)
(30,368)
(31,687)
23 of 37
13. Other Income
2006-2007
2007-2008
£000
£000
(1,539) Seconded Officers
(1,519)
(500) LA Traffic Parking Schemes (Cardiff CC)
(538)
(1,008) Special Duty Charges
(697)
(381) Special Services to National Assembly
(471)
(1,129) Vehicle Recovery Scheme
(1,110)
(187) Rents
(231)
(61) Mutual Aid to other Police Forces
(62)
(426) Recovery of Costs from other Police Forces
(464)
(628) Police Cost recovered
(2,767)
(275) Training Course fees
(231)
(159) Partnership Contributions
(208)
(172) Sale of Vehicles
(206)
(213) Vetting Check Income
(253)
(167) Illegal Immigrants Income
(116)
(153) Sale of Accident Reports
(162)
(739) Other (headings less than £150,000)
(722)
(7,737)
(9,757)
14. Financing from Council Taxpayers
In accordance with the Local Government Finance Act 1992, as amended by the Police Act 1996, the
South Wales Police Authority at its meeting on 12h February 2007 resolved to issue the following
precepts on the Council Tax Collection Funds of the following Local Authorities:
Precept (£)
Taxbase (no of
Precept (£)
2006-2007
Band D
2007-2008
£000’s
properties)
£000’s
Precepts:
16,383 Cardiff County Council
131,259.00
17,423
10,569 City and County of Swansea
84,853.00
11,264
5,898 Bridgend County Borough Council
47,156.87
6,260
2,091 Merthyr Tydfil CBC
16,683.37
2,215
5,697 Neath Port Talbot CBC
45,314.00
6,015
9,048 Rhondda Cynon Taff CBC
71,601.46
9,504
6,852 The Vale of Glamorgan Council
54,650.00
7,254
56,538
451,517.70 59,935
Resultant Council tax payable by tax payers in each
Authority area:
£84.28 Band A
£88.49
£98.33 Band B
£103.24
£112.37 Band C
£117.99
£126.42 Band D
£132.74
£154.51 Band E
£162.24
£182.60 Band F
£191.74
£210.70 Band G
£221.23
£252.84 Band H
£265.48
£294.98 Band I
£309.73
24 of 37
15. Detail of Reconciling Items for the Statement of Movement on the Police Fund
Balance
2006-2007
2007-2008
£000
£000
Amounts included in the Income and Expenditure Account but required
by statute to be excluded when determining the Movement on the Police
Fund Balance for the year
(5,808)
Depreciation and impairment of fixed assets
(6,505)
3,497
Government Grants Deferred amortisation
4,115
0
Net gain/ (loss) on sale of fixed assets
311
0
Impairment to Fixed Assets
(4,140)
(157,160)
Net charges made for retirement benefits in accordance with
(162,630)
FRS17
13,792 Additional
Contribution to the Pension Fund
12,425
(145,679)
(156,424)
Amounts not included in the Income and Expenditure Account but
required to be included by statute when determining the Movement on
the Police Fund Balance for the year
718
Minimum revenue provision for capital financing
1,350
3,378
Capital expenditure charged in-year to the Police Fund
2,468
35,857
Employers contributions payable to the Pensions Account and
37,309
retirement benefits payable direct to pensioners
39,953
41,127
Transfers to or from the Police Fund Balance that are required to be
taken into account when determining the Movement on the Police Fund
Balance for the year
553 Voluntary
revenue
provision for capital financing
0
960
Net transfer to/ or (from) earmarked reserves
1,316
1,513
1,316
(104,213) Net
additional
amount required to be credited to the Police Fund
(113,981)
balance for the year
25 of 37
16. Fixed Assets
16.1.
Movements in fixed asset valuations during the year were as follows:
Intangible
Land and
Vehicles, Plant
Total
(Software)
Buildings
and Equipment
£000 £000
£000
£000
Cost
At 1 April 2007
3,307
62,156
35,527
100,990
Additions 2,535
7,001
4,503
14,039
Less Non Enhancing
(1,753) (1,759)
(1,065)
(4,577)
Expenditure/ Impairments
Add: Assets funded from
133 0
304
437
Revenue
Disposals
(115)
(824)
(1,817)
(2,756)
Revaluations 0
77
0
77
Other movements
(26)
96
456
526
At 31 March 2008
4,081
66,747
37,908
108,736
Depreciation
At 1 April 2007
(2,106)
0
(21,664)
(23,770)
Charge for the year
(629)
(1,222)
(4,654)
(6,505)
Disposals 115
0
1,665
1,780
Revaluations 0
1,222
0
1,222
At 31 March 2008
(2,620)
0
(24,653)
(27,273)
Net Value at 1 April 2007
1,201
62,156
13,863
77,220
Net Value at 31 March 2008
1,461
66,747
13,255
81,463
16.2. Land and Building Asset Valuation
Operational Property and Police Houses were formally revalued by G.J. Nutt BSC MSc DMS FRICS,
Head of Property and Regeneration of Neath Port Talbot County Borough Council on 30th March 2007
in accordance with the stated accounting policies. In addition at each year there is an interim
revaluation process undertaken, which for 2007/8 confirmed that commercial property values had
been maintained and residential properties had increased by 3%.
16.3. Number of Fixed Assets
2006-2007
2007-2008
1 Police Headquarters, Bridgend
1
6 Divisional Headquarters
6
89 Other Police Stations and Offices
70
4 Radio Masts
4
16 Houses for Police Officers
15
116
96
692 Vehicles
718
26 of 37
16.4. Capital Expenditure
Major items of capital expenditure during the year fell into the following categories:
2006-2007
2007-2008
£000
£000
1,830 Land & Buildings
7,001
1,800 Vehicles
2,160
5,758 Computer Systems
3,972
909 Communication Systems
780
1,348 Other Equipment
126
11,645
14,039
16.5. Sources of Capital Finance
2006-2007
2007-2008
£000
£000
11,645 Total Capital Expenditure (on accrual basis)
14,039
Add/(less):
389 Accruals and adjustments
498
12,034 Total for Financing
14,537
Financing:
1,671 New Borrowing/ Loans to finance capital expenditure
1,671
2,746 Capital Grants (Home Office)
3,009
0 Capital Receipts
1,464
7,617 Direct Revenue Financing and Reserves
8,393
12,034
14,537
16.6. Future Capital Expenditure Commitments
Future expenditure commitments under capital contracts and outstanding purchase orders for
capital schemes as at 31st March 2008 are as follows:
Commitment
£000
Property Schemes
11,772
Vehicles
1,153
Computer Systems
316
Communication Systems
77
13,318
These would not include other planned or new capital schemes, arising as budgeted by the capital
programme.
17. Private Finance Initiative (PFI)
The Authority has no assets recognised under a PFI arrangement and therefore has no outstanding
contractual commitment with external organisations.
18. Stocks
Stock, as analysed below, has been valued at the lower of Cost or Net Realisable Value (NRV), using
the valuation bases indicated:
2006-2007
Basis of Valuation
2007-2008
£000
£000
63 Petrol, Diesel & Oil
Current Value (Cost/NRV)
53
366 Clothing and Uniforms
Current Value (Cost/NRV)
452
96 Stationery and Printing Materials
Current Value (Cost/NRV)
86
38 Traffic Parts
Current Value (Cost/NRV)
34
108 Communication Parts
Weighted Average
100
671
725
27 of 37
19. Debtors
An analysis of debts falling due within one year is as follows:
2006-2007
2007-2008
£000
£000
761 Other Sundry Debtors
1,639
(95) Less Provision for bad debts
(62)
11,494 Central
Government
8,644
1,749 Local Government and Police Authorities
1,994
11 Health Authorities
11
126 Payroll Temporary Advance Payments
45
3,565 Prepayments
801
17,611
13,072
20. Short Term Investments and Deposits
Surplus cash balances generated as a result of receiving grants and other income in advance of
budgeted revenue and capital payments, allow monies to be invested short term with Banks, Financial
Institutions and other Local Authorities.
21. Creditors
21.1. Creditors falling due within 1 year:
2006-2007
2007-2008
£000
£000
6,657 Sundry
Creditors
7,997
6,187 Central Government Departments
9,311
521 Local Government and Police Authorities
1,509
38 Health
Authorities
323
330 Public
Corporations
407
2,891 Pay, Overtime and Expenses
3,411
1,350 Short Term Borrowing (PWLB)
1,417
3,041 Receipts in advance (Restated from Capital Grant Reserve)
0
21,015
24,375
21.2. Other Funds and Creditor Accounts:
2006-2007
2007-2008
£000
£000
8 Police Property Act Fund
20
26 SWP Forfeiture of Drugs Money
36
479 SWP Assets and Monies pending judicial enquiries
594
846 Property Subject to Charge
962
1 Other
Accounts
15
1,360
1,627
22. Long Term Borrowing
Debt repayable over 1 year:
2006-2007
2007-2008
£000
£000
11,988 Public Works Loan Board (Fixed rates)
12,242
Maturing, as follows:
1,313
Between one and two years
1,295
3,564
Between two and five years
3,726
4,438
Between five and ten years
7,117
2,673
More than ten years
104
11,988
12,242
1,350 Short Term Borrowing
1,417
13,338 Carrying Amount (at amortised cost)
13,659
13,799 Fair Value of Financial Instruments
14,834
28 of 37
Local Authorities are now required to disclose the ‘Fair Value’ of Financial Instruments, including assets or
liabilities. The table above discloses the carrying amount or ‘Amortised Cost’, which excludes the value of
debt repayable of less than one year, included in the creditors note above. The difference between the
carrying amount and fair value, as calculated by the PWLB reflects discounts, premiums plus any accrued
interest.
23. Government Grants Deferred Account
The Government Grants Deferred Account shows the amount of Capital Expenditure financed by
Government Grant. A transfer is made to the Income and Expenditure Account in line with the
depreciation of capital assets charged to that account.
2006-2007
2007-2008
£000
£000
(7,220) Balance brought forward
(6,469)
(2,746) Transfer from Government Grant Reserve
(6,156)
3,497 Released to Income and Expenditure Account
4,115
(6,469) Balance carried forward
(8,510)
24. Provisions
24.1. Provisions represent sums set aside in respect of liabilities known or certain to occur, but for which
the timing and value are uncertain.
24.2. The following provisions are included in the Balance Sheet as at 31st March 2008, with movements
passing through the Income and Expenditure Account:
2007-2008 Movement
2006-2007
£000
£000
£000
Insurance- Public Liability Claims
(1,467)
659
(2,126)
Employers Liability Costs (439)
(132)
(307)
Employment Tribunal Claims
(305)
40
(345)
Job Evaluation Scheme
(3,187)
(852)
(2,335)
Interest on fund seizures
(118)
(118)
0
Injury Related Pension Payments
(250)
(250)
0
Other Provisions
(217)
136
(353)
(5,983) (517)
(5,466)
24.3.
Insurance Provision (Public Liability Claims):
24.3.1. The Police Authority maintains an Insurance Provision to meet the costs of likely policy
excesses and self insured risks for existing cases.
24.3.2. The following schedule outlines the main risks insured externally and those self insured.
Insured risks
'Self insured' risks
Employers Liability above £540,000 in Employers Liability below £540,000 in total and
total and above £75,000 for individual below £75,000 for individual claims
claims
Public Liability above £715,000 in total Public Liability below £715,000 in total and below
and above £75,000 for individual claims
£75,000 for individual claims
Employees' Personal Accident
Buildings- Fire, Aircraft impact, Arson,
Buildings- Storm damage below £10,000, Burst
Terrorism, Storm damage above
pipes, Vehicle impact damage unless recovered
£10,000
from third party, Vandalism.
Vehicles- Third party only
Vehicles- Accident damage unless recovered from
third party
All Risks (equipment), Computer and Theft of equipment
Money
Fidelity guarantee above £100,000
Fidelity claims below £100,000
29 of 37
24.3.3. The
Authority
provides an allocation from its revenue budget to assist in meeting these
costs.
24.4.
Employment Tribunal Claims : The Authority has made an assessment of the financial liability of
employment related claims.
24.5.
Job Evaluation Scheme: As part of its workforce modernisation programme, the Force is
undertaking job evaluation, which will reassess and realign the salary gradings for all Police Staff.
Negotiations are currently ongoing with staff associations to agree the protocols for implementation,
but it is already recognised that there will be a retrospective liability.
24.6.
Interest on fund seizures: The authority holds third party funds, seized from individuals arrested,
which are being held subject to further investigations of a criminal matter. Depending on the outcome
the funds are potentially repayable with interest.
24.7.
Injury Award Pension Payments: this provision is to reflect the potential liability of a number of
cases where injury related pension payments have not been made.
24.8.
Other Provisions : a number of other small provisions are held to recognise potential liabilities.
25. Movements on Reserves
Capital Reserves
Capital Earmarked
TOTAL
Revaluation
Adjustment
Capital Capital
Reserve
Account
Receipts
Reserves
£000
£000
£000
£000 £000
Restated Balance as at 1 April 2007
0
(56,927)
(177)
(24,544)
(81,648)
Net Surplus for the year
0
3,688
(1,287)
(226)
2,175
Gains or Losses credited or debited
(1,299)
(526)
0
0
(1,825)
Net amount transferred to or from
0
(4,242)
1,464
2,778 0
other Reserves
Balance as at 31 March 2008
(1,299)
(58,007)
0
(21,992)
(81,298)
Revenue Reserves
General
Earmarked TOTAL
Fund
Reserves
£000
£000 £000
Balance as at 1 April 2007
(2,835)
(4,342)
(7,177)
Transfers during year
(880)
(1,090)
(1,970)
Balance as at 31 March 2008
(3,715)
(5,432)
(9,147)
Pension Reserve/ Deficit
TOTAL
Local
Police
£000
Government
Pensions
Pensions
£000
£000
Balance as at 1 April 2007
73,540
1,833,240
1,906,780
Movements during year
(25,860)
(225,430)
(251,290)
Balance as at 31 March 2008
47,680
1,607,810
1,655,490
Grand Total Revenue and Capital
1,565,045
Reserves as at 31st March 2008
30 of 37
26. Reconciliation of Income & Expenditure Account Surplus/Deficit to Revenue
Activities Section of Cash Flow Statement
2006-2007
2007-2008
£000
£000
105,930 I & E Deficit / (Surplus)
A
113,101
Less: (Non-cash transactions)
(5,808) Depreciation
(6,505)
3,497
Government Grants Deferred Amortisation
4,115
0
Gain or Loss on Disposal of Fixed Assets
311
0
Impairment to Fixed Assets
(4,140)
(157,160)
Net charges made for retirement benefits in
(162,630)
accordance with FRS17
(389)
Movement in capital creditors
(498)
(159,860)
B
(169,347)
Add: (Accruals)
(1,759)
Provisions Decrease/( Increase)
(517)
(79) Stocks
(Decrease)/Increase
54
2,842 Debtors
Increase/(Decrease)
(4,539)
(1,381)
Creditors (Increase)/Decrease
(6,370)
(766)
Other Funds/ Creditors Decrease/ (Increase)
(267)
(1,143)
C
(11,639)
Add: (movement in reserves)
35,857
Employers contributions payable to the
37,309
Pensions Account
13,792 Contribution to Pension Fund
12,425
49,649
D
49,734
(5,424) NET CASH (INFLOW)/ OUTFLOW FROM
(18,151)
REVENUE ACTIVITIES (ITEM A less B plus, C, D)
27. Analysis of Net Investments, Debt and Liquid Resources
This table reconciles items in the Financing and Management of Liquid Resources sections of the Cash
Flow to the appropriate figures in the balance sheet. The movement in cash and bank balances equates to
the net movement on the Cashflow Statement.
2007-2008
Movement
2006-2007
£000
£000
£000
Net Investments/ Debt:
Investments
47,625
6,325
41,300
Debt due within 1 year
(1,417)
(67)
(1,350)
Debt due after 1 year
(12,242)
(254)
(11,988)
33,966 6,004
27,962
Liquid Resources:
Bank Balances/ Cash and Imprest
297
1,976
(1,679)
34,263
7,980
26,283
28. Related Party Transactions
Transactions with Central and Local Government are disclosed within relevant notes to the financial
statements, including details of government grants, support services and certain pension fund
transactions. Members interests are declared and recorded in the Statutory Register maintained by the
Chief Executive to the Police Authority. For Police Officers and Police Staff, the appropriate Chief Officer
maintains registers.
29. Police Authorities of Wales
The Police Authorities of Wales is a statutory joint committee formed in July 2007 representing the four
police authorities in Wales. The strategic goal of this organisation is to develop strategic policing
capabilities in Wales and to increase efficiency and effectiveness through collaboration.
The 4 police authorities have agreed to provide funding for this body and in 2007-08, South Wales Police
Authority has made a contribution of £250,000. Police Authorities of Wales has produced a statement of
accounts in 2007-08 and this is available on its website www.policeauthoritiesofwales.org.uk.
31 of 37
Pension Fund Account
Police
Police
Scheme’s
Scheme’s
2006-2007
2007-2008
Fund Account
Contributions receivable
from
employer
(25,909) Normal
(26,294)
(591) Early retirements
(237)
(267) Other (reimbursement of unabated pensions of '30+' police officers)
(377)
(11,583) from
members
(11,729)
Transfers in
(300) Individual transfers in from other schemes
(762)
(6) Other (recovery of pension overpayments)
0
Benefits Payable
39,997 Pensions
42,697
12,230 Commutations and lump sum retirement benefits’
9,106
0 Lump sum death benefits
3
Payments to and on account of leavers
14 Refunds of contributions
18
207 Individual transfers out to other schemes
0
13,792 Net Amount payable/ (receivable) for the year
12,425
(13,792) Additional contribution (from)/to the Police Fund
(12,425)
0 Net Amount payable/ receivable for the year
0
Net
Asset
Statement
Net current assets and liabilities
Current
Assets
4,839 Contribution from the Police Fund receivable
1,427
Current
Liabilities
Creditor – amount due to retired police officers following reassessment of
lump sum payments
(1,196)
Net
231
Notes to the Pension Fund Accounts
1. There are no investment assets of the fund. The fund is balanced to nil each year by receipt of
additional contribution from the Police Fund, which in turn is reimbursed by the sponsoring
department (Home Office). Or if in surplus, the Pension Fund reimburses the Police Fund in order
to reimburse the sponsoring department. The Police Pension Scheme is administered and
managed by a constituent local authority as a support service by Rhondda Cynon Taff County
Borough Council.
2. The fund’s financial statements do not take account of liabilities to pay pensions and other benefits
after the period end.
3. The amount of the additional contribution from the Police Fund includes £10.998m received,
equating to an instalment of 80% of that estimated, plus a further contribution receivable of
£1.427m.
4. The benefits payable includes an estimate of potential additional commutation payments of
£1.196m which have arisen from an actuarial review of age and gender related factors, the costs of
which will be off-set by additional grant.
32 of 37
Statement on Internal Control
1. Scope of Responsibility
This statement of internal control is given in respect of the statement of accounts for the South Wales
Police Authority as at 31 March 2008. The South Wales Police Authority is responsible for ensuring that its
business is conducted in accordance with the law and proper standards and that public money is
safeguarded, properly accounted for and used efficiently and effectively. The Authority also has a duty to
make arrangements to secure continuous improvement in the way in which its functions are exercised.
In discharging this responsibility, the Authority must ensure that there is an effective system of internal
control in place, which facilitates the exercise of its functions on an efficient and effective basis and
includes the management of risk.
2. The Purpose of the System of Internal Control
The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all
risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not
absolute assurance that assets are safeguarded, that transactions are authorised and properly recorded,
and that material errors or irregularities are either prevented or would be detected within a timely period.
The system of internal control is based on a framework of regular management information, financial
regulations, administrative procedures (including segregation of duties), management supervision, and a
system of delegation and accountability. Managers within the Authority undertake development and
maintenance of the system.
The system of internal control has been in place at South Wales Police Authority for the year ended 31
March 2008 and up to the date of approval of the annual report and accounts and accords with proper
practice.
3. The Risk and Control Framework
The key elements of the Authority’s internal control framework are as follows:
3.1. Capacity To Handle Risk (Responsibilities):
The first element of the Authority’s Risk and Control Framework is its capacity to handle risk
through an effective management and control structure, incorporating clear lines of responsibility
and accountability. The Force reviewed its governance arrangements during 2007/8 and changes
were implemented early in the year. The Authority manages risk through the following structure:
3.1.1.
The Police Authority: being
responsible
for
ensuring that the Force functions
effectively and efficiently;
3.1.2.
The Treasurer: has Section 151 responsibility and provides appropriate independent
advice to the Police Authority
3.1.3.
The Chief Constable: being
responsible for operational policing matters and the
direction of police personnel;
3.1.4.
The GOLD Chief Officer Group: being responsible for
the facilitation of policy and
decision making;
3.1.5.
The Planning and Performance Management Group: being responsible for actively
reviewing and reporting against the Authority’s “Best Value Policing and Performance
Plan”;
3.1.6.
The Finance and Audit Group: being responsible for ensuring that: the Force’s
systems and procedures promote economy, efficiency and effectiveness; the Force
maintains adequate financial records and that financial statements are a true reflection
of the financial position;
3.1.7.
Internal Audit: being responsible for the core ongoing review of the adequacy of
internal financial controls within the Authority, reporting to the Finance and Audit Group
and Chief Executive.
33 of 37
3.1.8.
The Force Inspectorate: being responsible for examining processes in Business
Command Units (BCU’s) and Force departments to ensure continuous improvement;
3.1.9.
The Human Resources Director: being responsible for ensuring the Authority employs
good personnel management systems and practices so that staff possess the right level
of knowledge, skill and competence to discharge their responsibilities efficiently and
effectively.
3.1.10.
The Appointed Auditor: the Wales Audit Office have the statutory responsibilities for
audit accounting statements, pension fund accounts and related notes in accordance
with relevant legal and regulatory requirements and International Standards on Auditing
(UK and Ireland).
3.1.11.
HMIC (Her Majesty’s Inspectorate of Constabulary): to promote the efficiency and
effectiveness of the police service, including police complaints and discipline, through
inspection and their other functions.
3.2. Regulations, Policies and Procedures:
The second element of the Authority’s control framework consists of the detailed framework of
regulations, policies and procedures, governed through the structure described above, within
which the Authority, its members, officers and staff operate. These regulations, policies and
procedures include:
3.2.1.
The Authority’s Constitution: sets out how the Authority operates, how decisions are
made, and the procedures that are to be followed to ensure that its operations are
controlled, efficient, transparent and accountable to the population it serves;
3.2.2.
The Best Value Policing and Performance Plan: sets out the Authority’s priorities and
objectives, setting targets to measure financial and other performance;
3.2.3.
Risk Registers: Identified risks are fully evaluated and fully documented in the
Corporate or Local Risk Register, as appropriate;
3.2.4.
Budget Framework and Reporting Arrangements: provides detailed financial
protocols and arrangements relating to the Authority’s comprehensive budgeting system
and the preparation of regular financial reports which indicate actual expenditure against
forecast;
3.2.5.
Statutory Financial and Audit Regulations: Provide the statutory framework within
which the Authority manages and reports its finances;
3.2.6.
Risk Based Audit Plan: Following appropriate standards, this forms the basis of regular
ongoing reviews of financial controls by the Authority’s professional Internal Audit
Service;
3.2.7.
Departmental Annual Plans: all BCU’s and Departments submit an annual plan
outlining service priorities, actions and performance measures, based upon the Police
Performance Assessment Framework (PPAF) which changes to Annual Performance
Assessment Community Safety (APACS) framework from April 2008.;
3.2.8.
The Control Strategy: sets out the arrangements for monitoring plans and performance
against those plans.
4. Review
of
Effectiveness
4.1. As Chief Executive of the South Wales Police Authority I have responsibility for conducting, at
least annually, a review of the effectiveness of the system of internal control.
4.2. This review is necessarily informed by the work of the internal auditors and the senior officers and
managers within the authority who have responsibility for the development and maintenance of
the internal control environment, and also by comments made by the external auditors and other
review agencies and inspectorates in their annual audit letter and other reports.
4.3. The main processes that have been applied in reviewing the effectiveness of the system of
internal control include:
4.3.1. A process to monitor progress towards the key strategic goals and to ensure that the
management of underlying risks, both at a strategic and operational level, is satisfactory;
34 of 37
4.3.2. A fundamental review of the Force’s risk register and governance arrangements was
undertaken during 2007/8. These have been reported to the Police Authority and have
been accepted as a robust monitoring mechanism going forward.
4.3.3. Regular reports by Internal Audit, including the Head of Internal Audit’s independent
opinion on the adequacy and effectiveness of risk management, control and governance
systems that includes annual and periodic reviews of major financial systems and
processes and other areas of risk;
4.3.4.
A formal year-end sign-off process by senior management to ensure as far as possible
that the controls and safeguards are being operated in line with established procedures,
policies and standards;
4.3.5.
The HMIC Assessment;
4.3.6.
Comments made by the external auditors in their annual Audit and Inspection letter.
5. Significant Internal Control Issues for the coming Year
5.1. The Police Authority and Chief Officers have advised me on the implications of the review of the
effectiveness of the system of internal control operated by the Authority and within the Force and
plan to ensure continuous improvement of the system in place. The Authority has also reviewed
its governance arrangements and changes will be implemented for 2008/9.
5.2. The areas of risk identified by the Authority and Chief Officers for the coming year which require
internal control developments are identified below, and we are satisfied that there are controls
and systems in place to address and manage them.
5.2.1.
The Workforce Transformation Programme;
5.2.2. The continued development of the NICHE, comprehensive records management
system;
5.2.3. Changes in the Authority’s priorities, working practices or structures arising from the
National Policing Plan or internal developments;
5.2.4. Collaboration
opportunities both within the policing family and the public sector
generally;
5.2.5.
Changes arising from the various efficiency initiatives;
5.2.6.
A review of the Procurement function to ensure necessary compliance whilst maximising
the opportunities of competitive purchasing;
5.2.7. Continued
development of the financial management function across the Force;
5.2.8. A revision of the authorities Scheme of Delegation, Contract Standing Orders and
Financial Regulations;
5.2.9. Development of joint working group to fully consider and review matters of internal
control. The formation of this group will also facilitate the required move to the Annual
Governance Statement and ensure that that the relevant key lines of enquiry from the
Police Use of Resources Evaluation are comprehensively dealt with.
Signed:
Signed:
Date:
Date:
Councillor Russell Roberts
Alan Fry
Chair of the South Wales Police Authority
Chief Executive to the
South Wales Police Authority
35 of 37
Glossary of Terms
AMORTISATION
Intangible assets should be amortised on a systematic basis over their economic lives. This is similar to depreciation.
ACCRUAL A sum included in the final accounts to cover income and expenditure attributable to the account period but for which
payment has not been made/received at the balance sheet date.
AGENCY SERVICES The provision of services by one body (the agent) on behalf of, and generally reimbursed by, the responsible body.
ACTUARIAL GAINS AND LOSSES
The changes in actuarial deficits or surpluses that can arise due to: experience gains and losses (events have not
coincided with the actuarial assumptions made for the last valuation) or the actuarial assumptions have changed.
ASSET Tangible and intangible assets that yield benefits to the authority for a period of more than one year. Benefits of less
than one year are regarded as Current Assets.
AUDIT An independent examination of an organisation’s activities.
BALANCE SHEET A statement of the recorded assets, liabilities and other balances at the date specified.
CAPITAL EXPENDITURE Expenditure on the acquisition of a fixed asset or expenditure which adds to and not merely maintains the value of an
existing fixed asset.
CAPITAL FINANCING ACCOUNT / CAPITAL ADJUSTMENT ACCOUNT
The Capital Financing Account contains the amounts which are required by statute to be setaside from capital receipts
for the repayment of external loans and the amount of capital expenditure financed from grants, revenue and capital
receipts. It also contains the difference between amounts provided for depreciation and that required to be charged to
revenue to repay the principal element of external loans.
CAPITAL RECEIPT Proceeds from the sale of fixed assets e.g. land or buildings, or other money received towards capital expenditure.
CAPITAL RECEIPTS RESERVE
The capital receipts reserve is available to fund future expenditure of a capital nature, as budgeted by the Capital
Programme.
CASH FLOW STATEMENT A statement that summarises the movements in cash, both revenue and capital, during the year.
CURRENT SERVICE COST (PENSIONS)
The increase in the present value of pension scheme's liabilities expected to arise from employee service in the current
period.
CREDITOR An amount owed by the authority for work done, goods received or services rendered within the accounting period but
for which payment has not yet been made.
DEBTOR An amount due to the authority within the accounting period but not received at the balance sheet date.
DEPRECIATION
The measure of the cost or revalued amount of the benefits of the fixed asset that have been consumed during the
period. Consumption includes the wearing out, using up or other reduction in the useful life of a fixed asset whether
arising from use, effluxion of time or obsolescence through either changes in technology or demand for the goods and
services produced by the asset.
EARMARKED CAPITAL RESERVES
These reserves, generated by additional voluntary revenue contributions, are available for financing future expenditure
of a capital nature, as budgeted by the Capital Programme.
FAIR VALUE
The fair value of an asset is the price at which it could be exchanged in an arm’s length transaction less, where
applicable, any grants receivable towards the purchase or use of the asset.
IMPAIRMENT
A reduction in the value of a fixed asset, below its carrying amount on the balance sheet.
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LEASING A method of financing the use of assets where a rental charge is paid over a specified period of time.
LIABILITY An amount due to an individual or organisation which will be paid at some time in the future.
PAST SERVICE COST (PENSIONS)
The increase in the present value of the scheme liabilities related to employee service in prior periods arising in the
current period as a result of the introduction of, or improvement to, retirement benefits.
POLICE FUND BALANCE
This reserve, which is maintained to meet exceptional and unforeseen expenditure.
POLICE GRANT The amount of Home Office grant towards the revenue requirements of the Police Authority.
POLICE CAPITAL GRANT The amount of Home Office grant towards the approved capital expenditure programme of the Police Authority.
POLICE PROPERTY ACT FUND This fund is set up in accordance with the Police (Disposal of Property) Regulations 1975 to receive the proceeds from
the disposal of assets remaining in the possession of the Police Authority as a result of criminal investigations. After
deduction of administration charges the fund can be used for such charitable purposes as the Authority may determine.
PRECEPT The amount of income collected by the constituent County Borough Councils from Council Tax payers to pay for Police
Authority services.
PROVISION An amount set aside in the accounts for liabilities that have been incurred, which are uncertain in terms of timing or
amount.
PUBLIC WORKS LOAN BOARD (PWLB) A Government agency which provides longer term loans to local authorities at interest rates only slightly higher than
those at which the government itself can borrow.
RESERVE Amounts set aside for purposes falling outside the definition of provisions and generally available for funding
expenditure after the balance sheet date. Earmarked reserves are set aside for specific purposes.
REVENUE ACCOUNT/ INCOME AND EXPENDITURE ACCOUNT An account which records an authority’s day to day expenditure and income on such items as salaries and wages,
running costs of services and the financing of capital expenditure.
REVENUE SUPPORT GRANT A National Assembly for Wales administered grant paid in support of an authority’s revenue expenditure.
NATIONAL NON DOMESTIC RATE (NNDR) The NNDR, or business rate, is the charge levied on occupiers of business premises to finance a proportion of local
authority and police revenue expenditure. The amount of NNDR is set by central government by virtue of a multiplier
applied to the rateable values. The multiplier is consistent throughout Wales with the total collected being distributed by
central government, but administered by the National Assembly for Wales.
STOCKS Uniforms, communication equipment parts, diesel, petrol and vehicle spares are procured by the Police Authority to use
on a continuing basis. The value of those items not used at the specified date are shown in the balance sheet as assets
of the Authority.
TEMPORARY BORROWING/INVESTMENT Money borrowed/ invested for an initial period of less than one year.
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