Accounts for the Chief Constable for Kent Police. Unaudited Statement of Accounts 2017/18

Transcription

1 Accounts for the Chief Constable for Kent Police Unaudited Statement of Accounts 2017/18

2 Contents Page WRITTEN STATEMENTS AND CFO NARRATIVE REPORT Narrative Report CORE FINANCIAL STATEMENTS Comprehensive Income and Expenditure Statements NOTES TO THE ACCOUNTS Notes Supporting the Comprehensive Income Statement SUPPLEMENTARY ACCOUNTS Police Officer Pensions Fund Account Page 4 Page 32 Page 42 Page 78 Page 81 Independent Auditor s Report Page 10 Page 34 Statement of Responsibilities for the Statement of Accounts Movement in Reserves Statement Balance Sheet Expenditure and Funding Analysis Page 43 Notes Supporting the Movement in Reserves Statement GLOSSARY AND CONTACTS Glossary of Terms Note References Page 86 Page 14 Page 36 Page 51 Page 87 Annual Governance Notes Supporting the Cash Flow Statement Statement 2017/18 Balance Sheet Page 15 Page 40 Page 54 Notes Supporting the Cash Flow Statement Page 64 Other Notes Page 65 Note 12 Accounting Policies Page 66 Contact Information 2٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Contents Page

3 Written statements

4 Narrative report to the Accounts of the Chief Constable of Kent Message from Chief Constable Alan Pughsley, QPM Kent Police has had another magnificent year against the challenges of rising demand and continued austerity. Our success was highlighted most notably by Her Majesty s Inspectorate of Constabulary and Fire and Rescue Services (HMICFRS) rating Kent Police as outstanding for its legitimacy in keeping Kent safe and reducing crime for an unprecedented third year in a row. The grading published on 12 December 2017 follows the annual PEEL inspection where HMICFRS assess police forces on their Efficiency, Effectiveness and Legitimacy. An earlier report published on 9 November 2017 also rated the force s understanding of demand outstanding and how well it uses resources and plans for future demand as good. The Legitimacy inspection found the force to be outstanding at treating the people it serves with fairness and respect; good at ensuring its workforce behaves ethically and lawfully; outstanding at treating its workforce with fairness and respect - and outstanding overall. To have our legitimacy graded at this level is magnificent news and an endorsement or our work to provide a first class service to the people of Kent. In spite of the challenges and demands face by police today, we have achieved this by focussing on the things that matter the most and doing the right thing. As a force we are focussing on understanding the demand placed on our officers and staff to ensure we have the resources needed to deliver the best service possible. Our understanding of demand has also been rated as outstanding by HMICFRS and should give the public the confidence in our ability to meet the challenges both now and in the future. Demand on policing has reached unprecedented levels and we pride ourselves in finding innovative ways or working effectively and efficiently whilst keeping victims and witnesses at the heart of everything we do. The increase in demand is a national policing pressure. In Kent the force has seen a total increase in recorded crime of 26.5% (October to October). This rise can mainly be attributed to improved crime recording accuracy and the public s trust and confidence in reporting crime to Kent Police. Notwithstanding these figures, Kent Police has seen significant reductions in some crime categories such as Anti-social behaviour. This has seen a reduction of 11% countywide in the period to October 2017, equating to just over 5,000 fewer incidents in both rural and urban areas. 4٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Narrative Report

5 In the last few years Kent Police has been moving forward to meet the evolving demands through a wide ranging programme of work to harness innovation and technology. The aim is to develop and drive change to maintain a modern, well-equipped organisation fit for 21 st century policing. Supported by the Police and Crime Commissioner (PCC), Mr Scott and the chief officer team recent developments include the Mobile First Programme, Body Worn Video and Channel Shift (online crime reporting). A newly formed team, the Innovation Task Force, will also drive forward analytical initiatives to tackle some of the biggest challenges facing modern policing. The objective is for technology to not only offer value for money (VfM) for the public purse but that in doing so, it is used in the best way possible across the force to get the greatest benefit and improve and streamline working practices and subsequently deliver a first class service to the county. A good example is the Mobile First project to ensure all front line officers and staff are equipped with modern smart phones permitting them to access policing applications remotely. This will maximise the time they can spend visibly and accessible to the public rather than needing to return to the station to complete essential paperwork. Policing is a complex business and this financial year has seen a few occasions where the force has not met the standards I expect. On these occasions I have ensured measures are quickly put in place to address these areas to ensure the public are well served, victims remain at the heart of everything we do and efficiency and effectiveness are optimised. The June 2017 HMICFRS report on crime recording in Kent Police was one such area. The Inspector gave an overall judgement of inadequate stating that Kent Police had failed to maintain the improvements in crime-recording accuracy reported on their 2014 survey. The Inspector did however comment officers and staff are placing the victim at the forefront of their crime recording decisions; the force has worked hard in bringing about improvements in the use of scrutiny and out-of-court disposals. I and the force responded quickly to these findings and have, for example: Increased the size of the data audit unit; Appointed a new lead for crime recording and investigative standards: and Prioritised the recruitment for new staff into roles within the investigation management unit. In addition to this and as you would expect I have emphasised to all of my officers and staff the importance of this aspect of policing in the trust and confidence the public have in our service. I am pleased to be able to report that Kent Police continues to make excellent progress in this area with far higher levels of recording and accuracy than was evidenced in this report. In addition to inspections by HMICFRS the force is reviewed by professional auditors across a broad range of services from Treasury Management to IT implementations. The findings from these audits are reported to the Joint Audit Committee (JAC) along with any recommendations, agreed management actions and implementation dates for these actions. Audit reports also contain an opinion on the level of assurance that can be gained from the controls around the area of business being reviewed, two with positive assurance: Reasonable assurance and substantial assurance and two for negative opinions: Partial assurance and no assurance. For the financial year 2017/18 four areas of business have returned with Substantial Assurance: Mobile Policing; Capital Accounting and Fixed Assets; General Ledger and Treasury Management. Four have reasonable assurance: Procurement; Creditors; Debt collection and recovery and Payroll. Three have partial assurance: Leavers and Movers; Firearms storage & disposal and Taser stock control; Risk Management. One was returned with no assurance which was Proceeds of Crime Act (POCA) and seized monies cash property and drugs. Assurance rating None Partial Reasonable Substantial POCA seizures Leavers & Procurement Mobile Policing movers Firearms storage Creditors Capital accounting Risk Debt collection General Ledger Management Payroll Treasury Management 5٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Narrative Report

6 All audit recommendations are reviewed by the Chief Finance Officer (CFO) and implementation dates monitored to ensure the force makes the agreed process and control improvements to the timescales that have been signed off. Anything with negative opinions is given greater internal scrutiny and the recommendations from the recent POCA seizures audit are well underway and being led by Assistant Chief Constable (ACC) for the Serious Crime Directorate. Organisational Risks As previously stated, policing is a complex and dynamic service covering an ever evolving population with growing demands through increased use of technology as well as meeting the needs for public reassurance and visibility. Kent Police operates a risk register at department, directorate and force level depending on the agreed severity of each risk. These risks are formally considered and discussed by the Chief Officer team quarterly with risk owners managing the day to day impacts and mitigations of these risks. Kent Police holds an annual Star Chamber, chaired by the Director of Corporate Services, Chair of the JAC and PCC s CFO where all force level risks are scrutinised with the risk owner. Due to the nature of many of the risks inherent in policing the register is not publicly available but does cover operational as well as business risks and those which fall across both such as the impact of Brexit. Discussion of the risk register is also a standing agenda item at the quarterly JAC in the closed session of the meeting. Meeting future demand On 12 September 2017 the force went live with a new policing model. This programme, termed New Horizon, firmly places vulnerability at its heart, with specialist services for vulnerable adults and children; dedicated services for missing children and those who are exploited and specialist PCSO roles covering youth engagement, vulnerable adults, adult interventions and domestic abuse. Mental health is also very much a priority with the creation of a dedicated Mental Health Team. Counter terrorism and domestic extremism; Domestic abuse, sexual offences and serious violence; and of course, high harm impact crime. It is a tough time to work in policing. Whether an officer, a member of police staff, a PCSO, a special or a volunteer we are all expected to do more and there are less of us so we need to work smarter and be more innovative as we manage the increasing demands on policing. The new model recognises these pressures and provides growth in the numbers of officers and staff in some front line roles whilst allocating resources based on demand, threat, risk and harm with a constant focus on those who need us most. The New Horizon model was developed assuming that the Government and Home Office position on continued austerity across the public sector would continue. The Home Office settlement in December 2017 saw the funding landscape for policing shift with the cash amount of the Police Grant maintained at the same level as 2017/18 and PCCs given the ability to increase the precept by up to per Band D property without risking a referendum. Mr Scott, PCC for Kent, and I agree that this relatively modest increase per household represents a significant opportunity to strengthen policing for the county. At the Police and Crime Panel on 8 th February 2018 Mr Scott presented the Kent Police budget and the increase was agreed providing up to a further 200 police officers in Kent. This increase will extend New Horizon and invest these resources in visible front-line services from April ٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Narrative Report The model compliments the six priorities in the Control Strategy, these being: Child sexual exploitation; Gangs; Human trafficking and modern slavery;

7 Summary from the Chief Finance Officer to the Chief Constable, Paul Curtis, FCMA, GCMA Key Financial Information for 2017/18 The Chief Constable (CC) has a statutory responsibility for the control, direction and delivery of operational policing services for Kent and Medway. The PCC is elected by the public every four years to secure the maintenance of an efficient and effective policing service for the county and to hold the CC accountable for the exercise of their functions and those persons under their direction and control. The CC has operational control of Police Officers, PCSOs and all other staff except those working in the Office of the Police and Crime Commissioner (OPCC). The PCC has strategic control of all assets and liabilities and is responsible for reserves policy and controlling all cash flow. These statutory accounts explain how the resources provided by the PCC have been used to deliver operational policing for the financial year 2017/18. Revenue Budget In April the CC is given an annual budget to deliver policing in Kent. For 2017/18 this budget was 281.2m and the final expenditure for the year 278.1m resulting in an underspend of 3.1m of which 0.5m relates to the OPCC. This underspend is handed back to the PCC and will be mainly added to the Investment Reserve of Kent Police to fund significant future projects to further improve policing performance. This underspend represents the management accounting balance, i.e. it reflects the impact on the local council tax payer, at the end of the year. It excludes the notional costs shown in the accounts to comply with International Financial Reporting Standards (IFRS). The Comprehensive Income and Expenditure Statement (CIES) includes these notional costs, such as pensions, as well as the management accounting information. In effect, the CIES 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. This distinction is very important in interpreting the overall position. Authorities raise taxation to cover expenditure classified in accordance with regulations and this is very different to the accounting cost. On a fully IFRS compliant basis, the CIES show the net cost of policing services at 342.1m, some 54.6m more than the previous year. The overall operating deficit for 2017/18 is 122.3m compared to 96.6m in the previous year, explained mainly by the increase in costs mentioned above, plus additional income to the inter-group funding from the PCC of 14.2m and a reduction in pension interest costs of 14.7m. The total CIES is a deficit of 293.6m, compared to a deficit last year of 444.7m, due to 176.8m change (gain) in the re-measurement of the net defined benefit liability as per the independent actuarial assessment. General Context and Medium Term Challenge In his Budget on the 22 November 2017 the Chancellor gave no hint that there would be any significant change to the Police funding for 2018/19. The assumption was therefore that the budget for policing would be protected in real terms and that local force budgets would be protected in cash terms but only if each Commissioner set the maximum precept increase allowed in each year of the spending review period. On the 19 December, the Policing Minister announced the draft general grant allocation for each force area for 2018/19. Each PCC would receive the same cash grant as received in 2017/18. He also announced that PCCs could increase their precept by per Band D property without initiating a referendum. He went on to state that Forces and PCCs could assume this level of increase may be available in 2019/20 too providing certain conditions were met nationally. These conditions were around continuing to achieve cost reductions, particularly around joint and collaborative procurement; to ensure efficiency savings were derived from mobile technology; and that PCCs would provide greater transparency around the reserves they hold. This settlement provides a huge opportunity for Kent Police and one that the PCC and CC have embraced. The Commissioner consulted widely with the public of Kent and following very favourable feed-back proposed an increase to the Precept of the full 7٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Narrative Report

8 12.00 per Band D property. This budget was agreed by the Police and Crime Panel on 8 February with the increased budget providing up to 200 additional front-line officers contributing to local policing as well as in specialised teams addressing areas of particular threat, risk and harm. As part of the grant settlement the Policing Minister announced the intention to develop a new funding formula for the Police settlement was still in place but would be unlikely to be implemented before the next Comprehensive Spending Review. Any potential consequences of this review are not incorporated in the Force s Medium Term Financial Plans although the future uncertainty on the impact of this review remains. The CC set out his plan on how Kent Police can meet the challenges facing policing now and in the future utilising the increased budget from raising the precept. This includes investment of new resources into areas of increasing demand such as cyber-crime and high visibility to help provide further reassurance to the public including local policing and rural teams. Forces and PCCs could assume this level of increase may be available in 2019/20 providing certain conditions were met nationally. Even with this favourable settlement there is an ongoing requirement for Forces to continue to make further savings from their revenue budgets. Based upon modest assumptions around inflation, previous trends and scanning the financial horizon Kent s savings requirement to 2021/22 is forecast to be 21.4m. A prudent use of reserves in 2018/19 and 2019/20 has been agreed by the PCC to smooth the impact of savings over the medium term. The Statement of Accounts This narrative report is deemed to have the same meaning as the narrative Statement in the Accounts and Audit regulations The Police Reform and Social Responsibility Act 2011 (the Act) replaced Police Authorities with elected PCCs and created two corporations sole, the Office of the Commissioner and the corporation sole in the CC. In line with the Act and the related Policing Protocol, The PCC is ultimately responsible for the combined group accounts; both income and expenditure. Accordingly, this Statement of Accounts records the expenditure and income of the CC for the financial year 2017/18 and its financial position at the 31 March The accounts have been prepared in accordance with the appropriate Codes of Practice published by the Chartered Institute of Public Finance and Accountancy (CIPFA). The accounts have also been produced in accordance with International Financial Reporting Standards (IFRS) and the latest CIPFA LAAP Bulletins. All assets, liabilities, property, plant and equipment are under the ownership of the PCC for Kent and therefore do not appear in these accounts. In relation to employment, from April 2014, all Police Officers and the vast majority of police staff, formerly under the direction of the CC, had their employment contracts formally transferred to the CC. All these employment arrangements have been approved by the Home Secretary. Structure of the accounts The Accounts begin with this Narrative Report followed by the Auditor s Report on page 10. The statement of the responsibilities of the CC for Kent and his CFO in relation to the management and reporting arrangements for the CC s resources (page 14). The PCC for Kent and CC for Kent have a combined Annual Governance Statement (AGS), which broadens the coverage of the previous Statement of Internal Control to embrace all of the organisation s key governance processes and safeguards, is shown starting on page 15. The Summary of Accounting Policies is shown in note 12 on page 66. The main financial statements comprise: Comprehensive Income and Expenditure Statement Movement in Reserves Statement Balance Sheet Cash flow Statement 8٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Narrative Report

9 In addition to these primary statements there are a number of notes which help explain the figures, including a set of accounting policies showing the approach the CC for Kent has taken in compiling the accounts. 9٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Narrative Report

10 INDEPENDENT AUDITOR S REPORT TO THE CHIEF CONSTABLE OF KENT POLICE INDEPENDENT AUDITOR S REPORT TO THE CHIEF CONSTABLE FOR KENT POLICE Opinion on the Chief Constable for Kent financial statements This page has been deliberately left blank 10٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Independent Audit Report

11 11٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Independent Audit Report This page has been deliberately left blank

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13 13٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Independent Audit Report This page has been deliberately left blank

14 Statement of Responsibilities for the Statement of Accounts for the Chief Constable of Kent The Chief Constable s Responsibilities The Chief Constable is required: To make arrangements for the proper administration of his financial affairs and to ensure that one of his officers (the CFO for the CC) has the responsibility for the administration of those affairs; To manage his affairs to ensure economic, efficient and effective use of resources and safeguard its assets; To approve the Statement of Accounts. Completion of the approval process by the Chief Constable of Kent Police I approve this Statement of Accounts for 2017/18. Alan Pughsley QPM Chief Constable 30 th April 2018 The Chief Finance Officer of the Chief Constable s Responsibilities The CFO of the CC is responsible for the preparation of the Statement of Accounts for the CC of Kent in accordance with proper practices as set out in the CIPFA / LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (The Code). In preparing this Statement of Accounts the CFO has: Selected suitable accounting policies and then applied them consistently; Made judgements and estimates that were reasonable and prudent; Complied with the Code of Practice. The CFO of the CC has also: Ensured that proper accounting records are kept which are up to date; Taken reasonable steps for the prevention and detection of fraud and other irregularities. I certify that the Statement of Accounts for the CC for Kent for the year ended 31 st March 2018 have been prepared in accordance with proper accounting practices and provide a true and fair view of the financial position of the CC as at 31 st March 2018 and his income and expenditure for the year then ended. Paul Curtis Chief Finance Officer of the Chief Constable 30 th April ٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Statement of Responsibilities

15 Annual Governance Statement 2017/18 1. This statement is expressed in the name of the PCC (subsequently to be referred to in this document as the PCC) and the accounts of the CC. It covers the financial year 2017/18 (but extends to cover the period to the signing of the Statements of Accounts at the end of July 2018). The PCC and the CC are responsible for ensuring that business is conducted in accordance with the law and proper standards and that public money is safeguarded and properly accounted for, and is used efficiently and effectively. More specifically, there are a number of statutory responsibilities that flow from the Police Reform and Social Responsibility Act (PRSRA) 2. In discharging these various responsibilities both are responsible for putting in place proper arrangements for the governance of their affairs including the management of risk. 3. The PCC and CC endorse the code of governance consistent with the principles of the Chartered Institute of Public Finance and Accountancy (CIPFA)/Society of Local Authority Chief Executives (SOLACE) Framework, Delivering Good Governance in Local Government. This statement explains how the PCC and CC comply with that Code and also meet the statutory requirement to prepare an AGS. The PCC and CC endorse and comply with the CIPFA statement on the role of the CFO in local government 2010 as set out in the application note, delivering good governance in local government. Both also endorse and comply with the relevant specific codes produced by both CIPFA and the Home Office arising out of, or related to the PRSR Act This includes the March 2014 CIPFA Statement on the role of the CFO and relevant parts of the Account and Audit Regulation 2011 as amended and the Home Office Financial Management Code of Practice. 4. The CIPFA/Solace framework was revised for 2016/17, and the AGS was reviewed and refreshed last year. The new presentation and layout of the revised AGS was found to be clear and user-friendly, and so this approach has been retained for The document is subdivided into a number of areas, all of which relate to one of the seven principles in the framework: Principle A: behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law Principle B: ensuring openness and engagement comprehensive stakeholder Principle C: defining outcomes in terms of sustainable economic, social and environmental benefits Principle D: determining the interventions necessary to optimise the achievement of the intended outcomes Principle E: developing the entity s capacity, including the capability of its leadership and the individuals within it Principle F: managing risks and performance through robust internal control and strong public financial management Principle G: implementing good practices in transparency, reporting, and audit to deliver effective accountability The governance framework for the Office of the OPCC was revised in following the election of the new PCC for Kent, Mr Matthew Scott. This has been developed and refined in 17-18, but there have been few significant changes. The framework enables the PCC to monitor the achievement of objectives including VfM, has been developed to reflect the PCC s priorities, and will continue to transform and adapt. Kent Police has its own Governance Framework based around the same seven principles described above and linking directly to the College of Policing s Code of Ethics. The primary decision making forum for the force is the Chief Officer Strategic Meeting which meets weekly and decides the strategy and direction of the force. Below this are various other strategic and tactical boards including the Strategic Change Board, Force Resource Board and Directorate Boards each chaired by the relevant Chief Officer lead. Crucially the force meets with and is held to account by the PCC formally at the Performance and Delivery Board and also weekly at CC and PCC meetings. 15٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

16 These frameworks remain an expression of the systems, processes, culture and values by which the work of the PCC, the OPCC, and Kent Police, is directed and controlled and how it accounts to, engages with, and provides leadership to the communities they serve. Vision and Leadership: the Police and Crime Plan and Holding to Account, and the Control Strategy Principle C The Police and Crime Plan, Safer in Kent: The Community Safety and Criminal Justice Plan sets out the strategic vision of the PCC from April 2017 to March This sets the direction for the CC, and articulates the PCC s vision for Kent. The Plan sets out the basis for Leadership of the organisations as being strong ethics, transparency and integrity at all times. There are three guiding principles in the Plan, namely that People suffering from mental ill health need the right care from the right person ; crime is important, no matter where it takes place ; and vulnerable people must be protected from harm. The Police and Crime Plan also helps guide the agendas of the Police and Crime Panel (PCP), which meets regularly in public and is responsible for reviewing and reporting on the actions and decisions of the PCC. The Panel recently agreed the PCC s proposal for the precept, and reviewed and provided positive feedback on the revised Plan. One of the principle ways that the PCC holds Kent Police to account for delivery of the Safer in Kent Plan is through his quarterly Performance and Delivery Board. It is a meeting held in public, and the CC is required to attend and answer questions about policing in the county. The agenda includes items on Force Performance, Police and Crime Plan Delivery, Finance, People and Collaboration. The CC is also required to submit papers ahead of the meeting and these are published on the website. Through recent discussion with the CC, the PCC has determined however that it is not necessarily helpful to have two separate papers relating to Force Performance and Police and Crime Plan Delivery effectively performance is delivery of the Police and Crime Plan. As a result, from March 2018, the agenda includes an item titled Safer in Kent Plan: Delivery & Performance. In addition, the PCC has provided some guidance on the style of paper to ensure it reflects the totality of policing linked to the plan. As a key area of focus, this development will be monitored closely over the coming year to ensure the appropriate level of support and challenge. As well as the Performance and Delivery Board, the PCC has regular oneto-one meetings with the CC, conducts the CC s annual Personal Development Review and attends the Force Culture Board, chaired by the CC. In addition, there continues to be regular attendance by senior OPCC staff at Force meetings, including the Force Performance Management Committee, and one-to-one meetings at Head of Department level. The issue of mental health is considered a golden thread by the PCC, and runs through all governance strands and arrangements.. In addition to being represented on the Kent and Medway Mental Health Crisis Care Concordat Strategic Group, the PCC chairs a quarterly Mental Health & Policing Oversight Board. With Chief Officer and Chief Executive representation from Kent Police, Kent and Medway NHS and Social Care Partnership Trust (KMPT), West Kent Clinical Commissioning Group and South East Coast Ambulance Service, the purpose of the board includes: reviewing delivery of the Kent Police and KMPT Mental Health Strategy; maintaining a strategic overview of performance across mental health crisis care services in Kent and Medway; enhancing partnership working in order to support the delivery of safe, effective and timely care for those in crisis. The Board allows open and honest dialogue between partners, with a focus on ensuring those with mental health issues who come into contact with Kent Police for whatever reason, receive the right care, from the right 16٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

17 person, at the right time. Discussions to date have included the operation of triage schemes within the county, the effective management of those who repeatedly contact the emergency services inappropriately, and the impact of changes to the Mental Health Act 1983 introduced by the Policing and Crime Act 2017 (for further detail, see update to risks from previous year). The work of this Board will continue to develop over the coming year. The governance framework around managing crime is well established, with the OPCC having appropriate access to internal Kent Police data, as well as external data, including the quarterly ONS Crime in England and Wales Statistical Bulletins. However ongoing work by individual forces to improve crime recording practices makes interpretation of trends over time, especially between Forces, difficult. As a result, within the Police and Crime Plan, the PCC makes it clear that progress will not be judged on stipulated numerical targets, but will instead consider other feedback, for example from Her Majesty's Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) reports and other independent publications. The Force has a four year Control Strategy that is reviewed annually. It takes into account national policing issues, policing priorities for Kent (including joint working with other public sector agencies) and the direction set by the PCC for Kent. Nationally, there is a greater emphasis on vulnerability as an issue: as a priority for the Home Secretary, it is subject to national scrutiny and independent inspection by HMICFRS. The Control Strategy already features many of the key themes sexual exploitation, abuse, drugs, gangs and human trafficking. The Police, the PCC and other key bodies are working together to raise awareness of these issues in order to protect both adults and young people from harm, support victims of crime by guaranteeing their rights through the Victims Code, tackle hate crime and ensure those perpetrating serious and heinous crimes are brought to justice. The Force s Mission, Vision, Values and Priorities have been clearly communicated by the CC and are embedded within insite, the force s intranet and available to all officers and staff. These simple, clear and effective statements can be summarised by the Chief s mantra of Do the right thing which ties to the Code of Ethics. The Force Culture Board, chaired by the CC, helps ensure all officers and staff have an open forum to raise issues with the Chief in an open and transparent forum. The Force uses an on-line tool, rolled out force-wide which gives a 24/7 conduit for all staff to raise questions and make suggestions around continuous improvement and the use of resources. Each of these questions are reviewed by a Chief Officer along with the replies with regular reports going to the Chief Officer Strategic Meeting (COSM) summarising the activity and suggestions. The Force has been rated as outstanding for Leadership in the last two years Police Efficiency, Effectiveness and Leadership (PEEL) assessments by HMICFRS. There is a substantial body of evidence behind this assessment, including the Force s Mission, Vision, Values and Priorities as well as the Culture Board. Open and transparent communication and engagement, and accountability Principles B and G On 1 April 2017 the PCC published his Police and Crime Plan, titled Safer in Kent: The Community Safety and Criminal Justice Plan. The PCC committed to updating the Plan regularly in line with what local communities want, recognising that he has a duty to consult with victims and the wider community. The PCC launched his Annual Policing Survey to the public on 23 June 2017 as an online form available in multiple languages. A variety of methods of engagement were used to publicise it and encourage participation including a press release, social media, e-newsletters, letters to key stakeholders and the Kent Police intranet. Additionally, hard copies of printed leaflets were displayed in some public buildings and were handed out at large-scale events such as the Kent Police Open Day and at 17٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

18 the Kent County Show. The PCC also engaged directly with partner agencies and promoted the survey at private briefings and residents meetings. The survey closed on 10 January 2018 with 1,661 responses received out of a population of 1,820,400. Against the industry standard confidence level of 95%, this equates to a margin of error of just 2.4% in the data received statistically significant enough to offer reliable data. Effective engagement of this nature is vital for the PCC, in terms of his legitimacy and to ensure that his plan reflects the needs and aspirations of Kent s residents, and is set out to some degree in the Safer in Kent Plan (page 12). The PCC again engaged in an open and transparent way in announcing his policing precept proposal for 2018/19. A blog was posted on the OPCC website and sent to local media. The PCC participated in a number of local radio and TV interviews and explained what the additional precept funds would be spent on. This also enables taxpayers to hold him to account in future over whether the promised uplift in police officer numbers has been delivered. In the interests of transparency, a report summarising the responses received to both the Annual Policing Survey and the precept proposal was published on the OPCC website and sent to the Kent and Medway Police and Crime Panel. It openly demonstrates how the public s views have helped shape the spring 2018 refresh of the Safer in Kent Plan. A paper setting out the OPCC s wider communications plan was submitted to the Kent and Medway Police and Crime Panel, which noted the active public engagement the PCC has entered into. The PCC has established regular meetings with the Chair of Panel, representation on the relevant boards such as the Kent and Essex Collaboration Board and the Kent and Medway Crisis Care Concordat Steering Group, and hosts regular partners briefing days at the OPCC. There is a regular cycle of visits to local Community Safety Partnerships, and the PCC and their senior officers attend the Kent Criminal Justice Board and Probation services. In addition, there is a programme of proactive engagement with community groups and stakeholders representing harder to reach communities. This includes visits to Kent Mosques and the Vaisakhi celebrations, plus the Voluntary Police Cadets, schools, Kent Youth Council and the Youth Parliaments. The OPCC website is kept up to date, compliant with the necessary legislation and open and accessible, for which a CoPaCC OPCC Transparency Mark has again been achieved. It meets national accessibility standards and is available to view in a multitude of different languages; it is optimised for mobile devices; and allows users to request a meeting with the PCC, contact the Office, or submit funding bids online. An Annual Report is published and taken to the Police and Crime Panel for public consideration, and all major decisions are documented in standard format and published on the website as per the requirements of the Specified Information Order. All reports, unless confidential, are published on the PCC s website, as are notes from the Performance and Delivery Board and the minutes of the JAC. The PCC has Schemes of Consent for the statutory officers and the CC, and all policies are owned by a specific individual and reviewed annually. These policies are reviewed regularly with the policy owner charged with ensuring they remain up-to-date and accurate with any changes consulted on and communicated to all officers and staff through and or the intranet. The Financial Regulations cover both organisations and are maintained between the Force and PCC s CFOs and reviewed annually. These are shared with budget holders and managers to ensure best practice and follow the schemes of consent outlined above. The Force s Culture Board is open to all officers and staff. This is replicated across directorates and, along with an open, on-line communication tool on the intranet allows staff to express their ideas and receive replies to their questions and comments. This later tool has proven to be very widely used and is reviewed at a Chief Officer level to ensure the corporate 18٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

19 replies are timely and comprehensive as well as being actioned if appropriate. Kent Police has a contact management work-stream with one of the aspects being how the public interacts with it via the Kent Police website. Online crime recording is now operational and work is on-going to facilitate live chat and the accessing of some services such as payment of licenses this will include recording crime, getting advice on frequently asked questions and crime prevention tips. These enhancements also include functionality which will significantly improve the recruitment process for prospective new police officers and ultimately members of staff too. The new portal will also include functionality to enable public interaction which will be used to gauge public opinion on service quality, visibility and confidence in the service. The Force maintains a Research Bureau which is responsible for undertaking surveys with the public of Kent. This helps inform the force around public perceptions of policing, fear of crime and overall satisfaction with the service. The findings from this research help inform the Chief Officer Team around resource allocation and whether the force is providing a quality service to the public it serves. Decision making, and risk management Including a review of the mitigation of the risks identified last year, and issues identified for this year Principle F The Force and the PCC have risk registers, both at a strategic and operational level. These are reviewed and challenged by the JAC. The Force strategic risk register is managed by a senior member of the CC s team and operational risks are managed at all levels throughout the organisation. The OPCC s risk register process is led by the PCC s CFO and features as part of routine discussion on overall delivery in both the PCC s weekly meetings with his senior team, and senior officers management meetings. Understandably, the Force s risk management needs to be much more complex given the size of the organisation and the inherent risks in operational policing. Recent audits have painted a generally positive picture of increasing risk maturity for both organisations. The most recent audit of risk management was more restricted in its scope, looking only at the risk assurance processes in place. It stated that the OPCC could take substantial assurance from its processes, and that Kent Police could take partial assurance. However, Kent Police and RSM believe that the overall risk management processes are fit for purpose and believe the lower rating on this element is in part owing to the process being newly established. Both registers form part of the established management processes within respective operations and are used as a key driver for improvement. They form the basis of the Internal Audit programme delivered by our internal auditors and reported to the JAC. The Force holds an annual review of all strategic risks chaired by the Director of Corporate Services and with the PCC s CFO and Chair of the JAC as panellists. All risk owners are invited to the meeting to explain the risk and its mitigation along with how it is being pro-actively managed by the Force. In addition to this challenge day, changes and updates to the Risk Register are reported to the Chief Officer Strategic Meeting (COSM) quarterly a process designed to ensure transparency and ensure all organisational risks are understood and balanced against resources and demand. There is a comprehensive, interlinked approach to the governance and oversight of decision making and performance, as outlined in part under Vision and Leadership. As well as attending the Performance and Delivery Board, the Police and Crime Panel members receive a briefing from the CC annually, and the minutes from the Board are supplied to the Panel on a regular basis. HMICFRS reports are a standing item at both the Performance and Delivery Board and the JAC and the Chief Executive in the OPCC regularly meets with the Deputy CC to review the reports and performance against them. The Financial reports have become more detailed and are provided for scrutiny by the Chief Officer teams, the PCC, the relevant Force and PCC s 19٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

20 Boards and the JAC. The JAC receives standing budget monitoring reports and reports on the Statement of Accounts. There is the established framework of the Scheme of Consent, financial regulations and contract standing orders that both organisations adhere to, as well as the work of the internal and external auditors. The internal audit plan is set in consultation with both organisations and with direct reference to their respective risk registers. The External Auditors provide the annual audit letter which confirmed that both organisations had the necessary and effective arrangements in place for securing VfM governance and internal controls, and have issued an unqualified opinion on the accounts for the last year. PROVISIONAL Both the internal and the external auditors attend the JAC and have access to members when officers are not present to ensure all issues are raised when needed. There is on-going work building and developing a performance framework that captures outcomes and benefits realisation to help demonstrate VfM for both the PCC in holding the Force to account, and for commissioned services. The Force facilitated two Business Case masterclasses with speakers from the Office of the Police and Crime PCC, Corporate Finance and also from PA Consulting. These workshops have been focussed on improving the quality of business cases and ensuring that not only are the costs accurately and completely described but the benefits are also clearly articulated. CIPFA published a revised Treasury management Code of practice in late December 2017 and the Ministry of Housing, Communities and Local Government issued revised Guidance in February However, as CIPFA s Local Authority Guidance Notes have not yet been published no changes were required to the 2018/19 treasury management strategy. The impact of these new publications on future strategies will be monitored in 2018/19. The risks identified last year are outlined below, with the actions/mitigations taken. The current areas of risk are highlighted at the end of this section, and the areas for development and opportunity in the broader governance framework are identified throughout this document and are summarised as an action plan at the end. Ongoing from the previous year: a. Impact of Athena; This risk related to delays to the go-live date for Athena and the potential longevity of its legacy system, Genesis. A substantial upgrade was implemented to Genesis ensuring business continuity until the Athena go-live date mitigating the operational risk to the Force. b. Responding to the Policing and Crime Act 2017; The Act received Royal Assent on 31 January 2017 and its provisions have been introduced in stages throughout the year. There is a new statutory duty on the police, fire and rescue and ambulance service to keep opportunities to collaborate under review and a requirement to collaborate with one another where it is in the interests of either their efficiency or effectiveness. It included provisions that enable a PCC to take on responsibility for the governance of fire and rescue in their area. However, recognising that local leaders are best placed to identify what will work best, the government did not mandate what action PCCs should take; instead offering four options. The Kent PCC took the decision to opt for the Representation Model (at this time), and requested membership of the Kent and Medway Fire and Rescue Authority. At their Annual Meeting on 15 June 2017, Kent and Medway Fire and Rescue Authority accepted the PCC s request to be appointed as an additional Member of the Authority as soon as it is permitted by legislation. In the meantime, the PCC attends and participates in all meetings on an informal non-voting basis. It also introduced significant changes to the police complaints system, building on the previous years reforms. It substantially increases a PCC s role, both in terms of the actual handling of complaints, and also how the CC is held to account for performance in complaints management. For the first time, the Government legislated to give elements of operational complaints 20٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

21 handling to an outside body, in this case PCCs. The main legal requirement is that all PCCs will take over the appellate function currently carried out by force PSDs. Beyond this though, there are two options for other functions of force PSDs to be taken on by OPCCs. Model 2 would see PCCs being the recording body, and also attempt to resolve very low level matters outside of the formal processes; Model 3 would, in addition to this, make PCCs responsible for keeping complainants updated and providing the final outcome. All PCCs will take on the appellate function and have to increase the level of oversight of complaints handling; the main decision is whether they wish to adopt either Model 2 or 3. Any decision will have an impact in relation to staffing and finance that will increase depending on the extent of a PCC s involvement. Implementation has been delayed, but the PCC has received a business case to inform his decision making. On 11 December 2017, the Act implemented changes to the police powers and places of safety provisions in the Mental Health Act 1983, including: making it unlawful to use a police station as a place of safety for anyone under the age of 18 in any circumstances; allowing a police station to be used as a place of safety for adults only in specific circumstances; reducing the previous maximum detention period of up to 72 hours to 24 hours; requiring a police officer, where practicable, to consult a health professional before exercising a section 136 power. In preparation for these changes, Kent Police worked with partners to identify alternative pathways for those in crisis, and the PCC continues to keep the impact under review at his regular meeting. c. Continuing devolution of victims services to the PCC. This matter has continued to be delayed at the national level. The Government has indicated, in its letter setting out the grant award for 18/19, that there will be a Victims Strategy published, and within that, further consideration of devolution to PCCs. However, this Strategy is not expected imminently. d. Transfer of appellate function for complaints from CC to PCC The implementation date for the transfer of the complaints functions has been put back to early 2019, as a result of the complexities of the subject matter and the impact of Brexit. Therefore there has been little movement on this risk in 17-18, and it will be transferred as a risk for e. Improvements to information security The Force invited the Information PCC s Office to undertake a review of the processes and procedures in Force in order to understand potential weaknesses and for the Force to strengthen the processes. Following the report a substantial improvement plan has been implemented including additional staffing, changes to processes and strengthened procedural controls, and there have been significant updates on this matter to the Audit committee. f. Delivery of the New Horizons project Go-live for New Horizon, a demand led policing model focussing on threat, harm, risk and vulnerability, went live in September The policing model was designed in full consultation with officer and staff and hence has considerable buy-in from across the force. The initial post implementation review has shown the model to be successful even though demand continues to grow considerably. Responding effectively to the four partial assurance internal audit reports on - PCC Assurance over Procurement The Procurement function has continued to improve, The team is now fully staffed which has enabled them to put in place proper processes for the letting and managing of contracts. The 21٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

22 introduction of the Procurement Governance Board provides an appropriate level of governance and assurance to the CFOs g. - Control of Information Assets Dove-tails with the improvements to information security discussed above. - Creditors The single site business centre has addressed the weaknesses identified in the audit and reviewed its processes and training of new staff. Many of the issues were around capacity within the team which is now up to strength. - IT procurement. Investment has been made in the Procurement function as described above. - High priority advisory review of Restorative Justice As part of the assurance programme, the OPCC received one no assurance opinion on the internal audit of the Restorative Justice service. While this was disappointing it was not unexpected and plans were already in place to procure a new RJ provider and relaunch the service from 1 st October This new service, provided by Restorative Solutions, has already made a positive impact with the number of referrals, especially for young people, with proactive work being undertaken to increase referrals for adults. This has involved working closely with Victim Support, Kent Police Witness Care Unit, the Youth Offending Teams and Prisons. Awareness raising is a key part of the new service as it is essential there is a clear understanding or RJ and how to access the service. Awareness amongst the Force was identified as a particular area for development and ensuring that there is a clear and consistent understanding of what RJ is, work has focused on developing links with particular teams and positive action is being undertaken. We currently have monthly contract meetings to monitor service delivery and another audit of the RJ service is planned in the 2018/19 internal audit plan for which we would expect the audit opinion to improve. Key risk areas for These risks have been identified by the two organisations CFOs, based on the highest rated risks in the risk registers, and also those which have the broadest impact (which may not necessarily equate to the highest scoring). Some of the highest-rated Force risks are not included, as they are inherent, on-going and relatively stable. This list also includes the internal audit reports where there is partial/no assurance. The work to mitigate these risks will be reported on in the next AGS. One of the key areas for the Force is to improve crime recording practises, as the Force did not meet the standard the CC expected when inspected by HMICFRS, being rated as inadequate. There was a swift reaction from the Force, to increase the size of the unit, appoint a new lead, and look to recruit new members of staff. In addition, the CC recorded a video, to emphasise to all of Kent Police s officers and staff the importance of this aspect of policing in relation to maintaining public confidence and trust in the organisation. Implementation of GDPR, including specifically the risks around commissioning of services Implementation of Athena Crime recording (both improving the processes and holding the CC to account for this) Transfer of complaints/appeal functions Ensuring a coherent approach to RJ Capacity of current providers to continue with services to victims of sexual violence offences Recruitment of additional officers and staff 22٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

23 The three key Internal Audit reports with no or partial assurance: Leavers and Movers, POCA and firearms. People and integrity Principles A and E The PCC has set out his personal commitment to acting with integrity and to the highest standards in his Police and Crime Plan (page 4), emphasising that he has signed and published the Committee on Standards in Public Life checklist and also his personal Code of Conduct which reflects the Seven Principles in Public Life. He is clear that he will hold the CC to account for the Code of Ethics forming the bedrock of standards and behaviour within Kent Police. The CC personally chairs the Force Culture Board, a clear demonstration of how much the force values integrity. At the CC s direction all directorates have their own culture boards all contributing to the force s outstanding HMIC assessment on Legitimacy. Both organisations maintain an up to date gifts and hospitality register, and a record of Chief Officers and PCC s expenses, all of which are publically available. Following the audit, both organisations have enhanced their policies around gifts and hospitality in line with the recommendations, and these registers are now reported to the JAC annually. The OPCC website has been remapped so that transparency documents are now located on the webpages they relate to, making them easier to find. Both organisations have up to date policies on complaints and whistleblowing, and handle all complaints and FOI requests as required by legislation and external organisations such as the Information PCC s Office (ICO) and the newly renamed and re-organised Independent Office for Police Conduct (formerly the IPCC) (IOPC). There is a mutual commitment to transparency, and the OPCC has a section on its website to reflect this, and ensures compliance with the Specified Information Order requirements. Both the Force and the PCC s Office aim to attract, develop and support the best people, and to be employers of choice. There is a commitment to flexible working which is developing, whilst taking into account the organisations specific needs. There is a strong commitment to the development of staff at all levels in both organisations, with staff being encouraged to gain further qualifications and experience through in house and external providers, and by mentoring. There are a number of overarching strategies in place that outline this, and are supported by policies and processes which both organisations adhere to 1 as well as new initiatives such as Develop You and the Ideas Drop. The Force s Control Strategy is clear that the service to residents in Kent will be delivered professionally and above all ethically. The culture for the Force is set by the leadership and is supported by the Culture Board and the Internal Ethics Committee, which meet quarterly and have a set quorum of members plus additional inclusive representation from across the organisation. The Force was again graded as outstanding by HMICFS for legitimacy, for the third year in a row, and is the only Force to currently hold this grading. There is a revamped Diversity and Inclusion Board held by the Force, with attendance from the OPCC, and a related Diversity and Inclusion Strategy which is owned at Assistant CC level. The key areas for development will be the embedding of the new Diversity and Inclusion Strategy, and the work of the Board in reviewing this, and Kent Police s work to recruit and retain a greater number of people from BAME backgrounds. Medium term plan and value for money Principle D 23٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

24 There is a comprehensive framework and process to support the organisations achieving the required outcomes via the Medium Term Financial Plan; this sets the context for the on-going decisions over the life of the Police and Crime Plan. The MTFP is updated regularly to reflect the changes in the social, governmental and financial environment, and any significant changes are reported to the Chief Officer Team and JAC each quarter. The Police and Crime Plan, budget and MTFP are reported as a joint paper to the Police and Crime Panel, reflecting the need for them to be developed together, and there is a financial planning timetable and process that ensures they are integrated. The communication between the CFOs, Chief Officers and PCC is at the heart of this process, and the regular meetings assist in determining the information needs which in turn inform the decision making. This cascades further to internal departments and partner agencies (covered in detail further on in the AGS), with clear guidance and protocols issued for day to day business and a defined process for business cases for future service delivery which encapsulates impact, benefits realisation and effective appraisals. VfM is a key element of the Safer in Kent Plan; it underpins everything the Force and PCC do, and is embedded within the two organisations and financial regulations. The external view on VfM is provided by the External Auditors, who state that there are adequate arrangements in place, and by HMICFRS, who view the Force as good with outstanding features. The Force make extensive use of the HMICFRS VfM profiles to determine performance against their most similar Forces, which helps identify areas of potential strength and weakness, and is reported to the JAC. A procurement Governance Board has been established to provide both CFOs with a clear view of procurement issues; this was in response to the audit into assurance over procurement, which could only provide partial assurances. This Board will ensure better planning, shared procurement opportunities and helps drive VfM through improved procurement, locally, regionally and nationally, and will monitor the issues raised in the audit. To enhance these arrangements there is scope to improve the linkages between financial and planning documents, and for further scrutiny and review of the Financial Regulations. The Financial Regulations are maintained between the Force and PCC s CFOs and reviewed annually. These are shared with budget holders and managers to ensure best practice and follow the schemes of consent outlined above A new Financial Management Code of Practice is due to be published in 2018/19 and while little change is expected any amendments required by the new code will implemented during the year. Working with partners, and commissioning Vision Principles A-G Within the PCC s Police & Crime Plan he has made a commitment to collaborate with other organisations to tackle crime and community issues more effectively, particularly focusing on improved communication, making better use of limited resources and greater sharing of skills and expertise. This commitment is reflected in the commissioning approach of the PCC, as working with partners to reduce crime, anti-social behaviour and to support victims is vital. The PCC supports both statutory partners, charities, voluntary and community groups through either grants, funding opportunities or formally commissioned services to ensure that collaborative working can be undertaken to reduce crime, anti-social behaviour and support victims. There is an overarching Commissioning Strategy, which is publically available, which sets out the PCC s approach. It is currently being revised for the new financial year, specifically focussing on grant monitoring 24٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

25 processes and grant-giving conditions. This document forms part of the Police and Crime Plan and clearly sets out the governance processes for funding so that there is transparency in decision making and oversight of the outcomes achieved. In addition, details of the timelines for all funding streams, including when they open, when decisions will be made and when monitoring is due are included. This ensures that there are clear expectations from the outset and that resources can be managed accordingly. Whilst commissioning and partnerships are naturally aligned it is not necessary to always link working with partners with the provision of funding. The PCC actively engages with a range of partners to support delivery of the Police & Crime Plan priorities. This can be demonstrated through the engagement with a wide variety of partnership groups and activities, such as CSPs, which enables opportunities for collaborative working to identified and progressed. MTFP/VfM The PCC s website includes details of organisations funded, the project being delivered and the amount of funding received. The Police and Crime Plan clearly sets out the financial arrangements and medium term budget for partners and commissioning. The Office follows all procurement guidelines as set out in the Financial Regs, and the OJEU processes for the tendering of services where the threshold is reached. The Commissioning Strategy provides guidance on whether services should be commissioned or follow a grant process, and the best procurement route for services. There are proportionate monitoring processes in place for all funding organisations, which includes the collation of returns into yearly reports, and there will be increased monitoring of how funds are spent, with greater expectations on partners this year. This ensures that the PCC s funds are being spent effectively and that the appropriate outcomes are being achieved. The Office is developing clear links to the Force to ensure that work with all our partners is interlinked and complementary. Transparent communication, Engagement and Accountability The Office is accountable to the MoJ for the Victims Services grant and provides grant monitoring forms twice yearly, outlining what has been achieved. Consultation exercises have been undertaken on grant funding processes and larger commissioning exercises, such as Restorative Justice, where appropriate. In compliance with the MoJ Grant Agreement, the Support Services that have been commissioned or provided with the Grant, including referral services, are also specified in the Annual Report. As well as the transparency in funding, via the website and the Safer in Kent Plan, there has been extensive engagement with partners, especially with organisations in receipt of funding (such as Community Safety Partnerships) to ensure sharing of good practice and to identify opportunities for collaboration. The OPCC will hold partners to account in greater depth, ensuring that the schemes funded support the aims of the Police and Crime Plan. There is also work to progress co-commissioning arrangements where appropriate, and utilising grant criteria to encourage cross district border projects. Decision making and risk management There has been one internal audit in this area, focussing on the broader commissioning project, which stated that the OPCC could take reasonable assurance in this area, and was positive about the work of the OPCC. It has been reviewed by the Audit Committee, and in addition the Head of Department has presented to the JAC. There is also a specific risk register for the core victims services contract. The forms that support the PCC s commissioning are clear, with specific criteria, and all funding decisions are taken with clear reference to the Safer in Kent Plan, and how the project will support its objectives. Decision making is carried out using a scoring matrix which correlates to the bid criteria and demonstrates the links to the Safer in Kent Plan priorities. People and Integrity 25٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

26 There has been extensive, tailored and on-going engagement with partners at all levels to ensure they not only understand the role of the PCC in commissioning, but how they can best engage with the Office and access the funding on offer. The PCC also supports a Victims Panel, as an independent group who can offer qualitative information and personal insight on service design and delivery. Essex Essex Police have been the Force s collaboration partner for a number of years. The Serious Crime Directorate provides intelligence and support to target and tackle anyone involved in serious criminality. The Directorate is one of the largest in UK policing dedicated to tackling serious and organised crime, with more than 1,100 officers and staff working together across both counties. The Support Services Directorate provides specialist services to Kent and Essex Police including Transport, Estates, Procurement, HR, transactional processing and IT. The vision is to work with Essex police to reduce costs whilst increasing capability for both forces through the delivery of a first class service and achieving economies of scale. Both directorates report to the Kent and Essex Collaboration Board. The Serious Crime Directorate is led by an ACC and is accountable to both CCs. Support Services is led by the Director who also reports to the two Chiefs. Joint audits are commissioned to assist with the governance of the collaborative directorates with reports going to both force CFOs, the two Offices of the PCC and both JACs. Recharges of costs are maintained and undertaken between Finance Departments for both Forces against detailed budgets which are constructed in line with the Section 22 agreements governing the collaboration agreements. These costs and budgets form part of the overall financial position of the force and therefore are reported monthly to the Chief Officer Team and OPCC. Opinion of the Internal Auditors The following is the opinion of RSM: For both the Office of the PCC, and for Kent Police, the Internal Auditors agreed and concluded that: RSM opinion to be included In their Annual Report, it was noted that there were four partial or no assurance reports (Leavers and Movers; Proceeds of Crime Act and Seized Monies- Cash, Property and Drugs; Firearms Storage and disposal, and Taser stock control; and Risk Management (Force) that identified a number of issues that management needed to address as a high priority, with the exception of the Risk Management audit which was related to structure and process and has already been addressed. Both organisations have agreed actions to address these findings which are regularly monitored by senior management and the JAC. The report on POCA was of particular concern, and has been subject to greater internal scrutiny. The implementation of the recommendations is well underway and is being led by the ACC for the Serious Crime Directorate. They have also been included in the key risk areas for The outcomes will be summarised in next year s AGS. 26٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

27 Statement on the effectiveness of the current governance framework and action plan summary The PCC and the CC have a shared responsibility to ensure an annual review of the overall effectiveness of the governance system. The review is informed by the work of the internal auditors and key managers within the OPCC and the CC team (with collaboration benefits from sharing the same external and internal auditors with Essex). It is also informed by the comments of external agencies as they apply to Governance. The view of the PCC, supported by his statutory officers and the CC supported by his Chief Officers is that overall the effectiveness of governance, risk management and controls remain generally sound. A number of actions are listed above as required to enhance the control environment, and are collated into an action plan below. Action Plan for The below details (in order of appearance in the AGS, as opposed to ranking by importance) the areas for improving governance for both organisations in Continuing to improve the Kent Police s website functionality, including live chat, improved recruitment services and ways to gauge opinion The embedding of the new Diversity and Inclusion Strategy; the work of the Board in reviewing this, and Kent Police s work to recruit and retain a greater number of people from BAME backgrounds. Increase the governance around partnership funding, specifically improving the monitoring of how funds are committed by partner agencies Develop the hold to account function in respect of partner agencies, ensuring that their schemes support the aims of the Police and Crime Plan. Ensuring the reporting by the Force to the P&D Board demonstrates the linkages with the Police and Crime Plan and how the Force is producing demonstrable outcomes. Develop and enhance the governance of the multi-agency approach to mental health, through the Board, to deliver improved and joined up services Explore opportunities to collaborate with KFRS Improvements to information security, via the action plan implemented, to be embedded and monitored. Review the impact of the Treasury Management Code of Practice and implement any relevant changes to strategies. Appendix A Response to the previous year s action plan Develop the approach, processes and evaluation system in relation to holding the CC to account, and to ensure that the public can see benefit and successes of the PCC s work, and ensuring VfM. The first of the Performance & Delivery Board meetings (formerly the Governance Board) was held in June 2017, and this Board has strengthened the PCC s process for holding the CC to account. With an agenda consisting of Force Performance, Police and Crime Plan Delivery, Finance, People and Collaboration, as well as a re-invigorated OPCC premeet process, it has enabled the PCC to effectively monitor delivery against the Police and Crime Plan, as well as the totality of policing in the county. The pre-meet process also helps the PCC to challenge, through the use of probing questions, and show support where appropriate. It is anticipated that the changes to the agenda being introduced from March 2018 will serve to strengthen the process for holding the CC to account further. To support development of the Annual Report, the Head of Policy 27٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

28 Coordination and Research regularly captures information from SMT colleagues on progress against each of the priorities within the Police and Crime Plan. Each member of the SMT has also been allocated specific policy areas linked to the Plan that the PCC has determined he would like to deliver during his term of office. In this way, the activity of the OPCC is focused on delivery of the PCC s priorities and specific activities are linked to tangible outcomes. Refining the OPCC website, to ensure that it is user friendly and assists in effectively directing members of the public to the area that they need. The new OPCC website went live on 1 st March It features an improved search function to aid the public, and has been awarded the CoPaCC OPCC Transparency Quality Mark for 2017/18. Further work on how best to effectively identify decisions that will require formal management. The following principles underpin the PCC s formal decision-making approach: Transparency - unless there are reasons for confidentiality, consistent with legislation, decisions and the supporting reasons should be publicly available Openness subject to confidentiality, the most important decisions should be taken in a public forum and should be the subject of public engagement and consultation Proportionality the administrative process should be proportionate to the nature of the decision being taken Timeliness the process should enable timely decisions to be made Auditable there should be evidence to demonstrate, if necessary, how the decision was made and what advice was taken Engagement and consultation formal decisions will be made, wherever possible, following engagement with local people and other stakeholders to ensure robust public accountability. The identification of formal decisions has been raised at SMT level by the Chief Executive. As part of business as usual, the Head of Policy Coordination & Research captures potential decisions as and when they arise, and meets regularly with the PCC and Chief Executive to discuss those that will formally be recorded. A standard template is used to record all formal decisions so they can be uploaded to the website for transparency purposes and regularly submitted to the PCP for review. Kent Police to develop their approach to business cases, demonstrating consideration of risk Through the Support Services Directorate two Business Case Masterclasses have been run based around the Treasury s Five Case model. These masterclasses were well attended and well received and included inputs from both Force and PCC CFOs as well as from PA Consulting. Emphasis was placed around the identification of which risk(s) are being addressed through the business case (including reference to the Force Risk Register) as well as on the accuracy and completeness of all costs and a full description of the benefits of the case. The main departments initiating business cases were included within the masterclasses so the majority of project and programme managers received the same input with a consequential increase in quality and uniformity of business cases thereafter. Develop financial performance information, including taking the Treasury Management Strategy to the JAC for scrutiny. More detailed financial information is provided on a monthly basis to both CFOs. This is shared with Chief Officer teams. The treasury management 28٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

29 strategy has been shared with the JAC and will be reported on an annual basis. The JAC will also receive reports on the performance of the strategy on a regular basis. Both organisations to improve their policies around gifts and hospitality. Both organisations have enhanced their policies around gifts and hospitality in line with the recommendations, and these registers are now reported to the JAC annually. Ensure the transparency section on the OPCC website is updated and in compliance with the legislation when the new website is established The OPCC website has been remapped so that transparency documents are now located on the webpages they relate to, making them easier to find. Both organisations to review their approach to Equality and Diversity, specifically how the Force s Board operates and how the PCC holds the CC to account. There is a new Diversity and Inclusion Strategy, and related Board, which the Force holds and the OPCC attends. Staff from the PCC s Office also sit on the Force s Hate Crime Forum and the Stop and Search Scrutiny Panel. Independent members from the ICV and IPAG schemes also review the Force s Stop and Search encounters. Improve the linkages between financial and planning documents There is a greater understanding of the Medium Term Financial Plan amongst the Chief Officer Team and wider Force management tiers than has previously been the case. The links between Home Office Grant, Precept, base budget, demand, inflation and savings are now present in discussions around the thinking and proposals for new policing models and demand management. The Force CFO and Finance Senior Leadership Team work alongside the Force Change Team to ensure costs and benefits are well understood, accurate and articulated in the development of the new policing model. Ensure further scrutiny and review of the Financial Regulations. The Financial Regulations have been revised and updated by the PCC s and Force CFOs and include version control, review dates and the date the next review is due. This document will doubtless continue to evolve and will be shared with Finance colleagues and budget managers as changes arise. Review the Commissioning Strategy for onwards This is currently taking place and is linked to the findings of an internal audit into grant processes during the autumn of The revised Commissioning Strategy will be publically available and clearly set out the parameters for issuing and monitoring all funding issued, whether grant, formally commissioned or a funding round. Refresh the grant awards process to ensure that it reflects the revised Commissioning Strategy This is currently taking place and linked to the findings of an internal audit into grant processes during the autumn of In addition, learning from the grant processes during has helped to inform further improvements to processes for Consider new ways to improve oversight of and outcome reporting from funded organisations A key theme for the funding processes is ensuring that funded organisations report effectively on outcomes and that there is a clear 29٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

30 governance and oversight process for delivery. Grant conditions and monitoring processes are being strengthened as a result. Ensure consistent funding application process for OPCC and Force. The Commissioning Strategy for will clearly reflect the funding application processes to ensure consistency of approach, which will also support the review and collation of information so effective oversight can be maintained. Matthew Scott Police and Crime Commissioner for Kent 30th April 2018 Alan Pughsley QPM Chief Constable for Kent 30 th April ٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Annual Governance Statement

31 Core Financial Statements

32 Comprehensive Income and Expenditure Statements (for the year ended 31st March 2018) The Comprehensive Income and Expenditure Statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different to the accounting cost. Gross Expenditure 2016/17 Kent Police Chief Constable 2017/18 Gross Income Group Net Expenditure Gross Expenditure Gross Income Group Net Expenditure 000 s 000 s 000 s 000 s 000 s 000 s 54,804 2,376 7, ,303 24,066 27,681 19,597 45, ,804 Central Operations 66,818 2,376 Chief's Office 2,519 7,829 DCC Portfolio 9, ,303 Divisions 131,987 24,066 Serious Crime Directorate 29,439 27,681 Support Services 32,214 19,597 Local Policing and Partnerships 21,509 45,843 Corporate Charges 47, , ,499 Net Cost of Policing Services 342, , ,818 2,519 9, ,987 29,439 32,214 21,509 47,725 (295,153) Intra Group Funding For Chief Constable's Net Service Cost (309,311) (7,654) Net Cost of Services 32,802 32٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

33 Comprehensive Income and Expenditure Statements (continued) Gross Expenditure 2016/17 Kent Police Chief Constable 2017/18 Gross Income Group Net Expenditure Gross Expenditure Gross Income Group Net Expenditure 000 s 000 s 000 s 000 s 000 s 000 s Other Operating Expenditure 0 Net (Gains) / Losses on disposal of fixed assets 0 0 Total Other Operating Expenditure 0 Financing & Investment Income & Expenditure 0 Interest Element of Finance Leases 0 0 Interest Payable on PFI Unitary Payments 0 104,213 Pensions Interest Cost 89,511 0 Investment Interest Income 0 0 Income & expenditure in relation to investment properties & changes in their fair value 104,213 Total Financing & Investment Income & Expenditure 89,511 Taxation & Non Specific Grant Income 0 Capital Grants 0 0 Precept Income 0 0 Non-service related Government Grants 0 0 Home Office Pension Grant 0 0 Total Taxation & Non Specific Grant Income 0 96,559 Deficit for the year 122,313 0 (Surplus) on Revaluation of Non-Current Assets 0 0 Deficit in the fair value of Property Funds 0 348,104 Remeasurement of the net defined benefit liability 171, ,663 Total Comprehensive Income and Expenditure 293, ٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

34 The Movement in Reserves Statement This statement shows the movement in year on the different reserves held by Kent Police, analysed into 'useable' (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. For fur Kent Police Chief Constable Statement 2017/18 General Fund (Includes Earmarked reserves and Insurance Fund) Capital Reserve & Capital Contributions Unapplied Reserve Total Useable Reserve Total Unusable Reserves Total Reserves '000's '000's '000's '000's '000's BALANCE AS AT 1st APRIL (3,426,717) (3,426,717) Surplus / (Deficit) on the Provision of Services on an accounting basis (122,313) 0 (122,313) 0 (122,313) Other Comprehensive Income & Expenditure (171,321) (171,321) TOTAL COMPREHENSIVE INCOME & EXPENDITURE (122,313) 0 (122,313) (171,321) (293,634) Adjustments between accounting basis and funding basis under regulations (Note 6) 122, ,313 (122,313) 0 Net increase / decrease before transfers to Earmarked Reserves (293,634) (293,634) Transfer to / (from) Reserves Increase / (Decrease) in the year (293,634) (293,634) BALANCE AS AT 31ST MARCH (3,720,351) (3,720,351) Transfers to and from Earmarked Reserves and Note xx Unusable Reserves. 34٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

35 The Movement in Reserves Statement (Continued) Kent Police Chief Constable Statement 2016/17 General Fund (Includes Earmarked reserves and Insurance Fund) Capital Reserve & Capital Contributions Unapplied Reserve Total Useable Reserve Total Unusable Reserves Total Reserves '000's '000's '000's '000's '000's BALANCE AS AT 1st APRIL (2,982,054) (2,982,054) Surplus / (Deficit) on the Provision of Services on an accounting basis (96,559) 0 (96,559) 0 (96,559) Other Comprehensive Income & Expenditure (348,104) (348,104) TOTAL COMPREHENSIVE INCOME & EXPENDITURE (96,559) 0 (96,559) (348,104) (444,663) Adjustments between accounting basis and funding basis under regulations (Note 6) 96, ,559 (96,559) 0 Net increase / decrease before transfers to Earmarked Reserves (444,663) (444,663) Transfer to / (from) Reserves Increase / (Decrease) in the year (444,663) (444,663) BALANCE AS AT 31ST MARCH (3,426,717) (3,426,717) 35٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

36 The Balance Sheet The Balance Sheet shows the value as at 31 st March 2018 of the assets and liabilities recognised by the CC. The net assets of (assets less liabilities) are matched by the reserves held by the CC. Reserves are reported in two categories: The reserves are presented within two categories, usable reserves and unusable reserves. Useable reserves may be used to provide services subject to statutory limitations on their use and the need to maintain prudent level of reserves for financial stability. Unusable reserves cannot be used to fund Kent Police. 31 March 2017 '000's Notes Property, Plant & Equipment 31st March 2018 '000's 0 Land and Buildings 0 0 Vehicles, Plant & Equipment 0 0 Assets under Construction 0 0 Surplus Assets 0 0 Heritage Assets 0 0 Investment Properties 0 Intangible Assets 0 Software 0 0 Assets under Development Long Term Investments 0 Non Property Investments 0 0 Long Term Debtors 0 0 Total Long Term Assets 0 36٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

37 The Balance Sheet (Continued) 31 March st March 2018 Notes '000's '000's 0 Short Term Investments 0 0 Inventories 0 0 Short Term Debtors 0 0 Cash & Cash Equivalents 0 0 Assets Held for Sale 0 0 Total Current Assets 0 (2,730) 8 Short Term Creditors (2,912) 0 Provisions falling due within one year 0 (2,730) Total Current Liabilities (2,912) 0 Long Term Creditors 0 0 Provisions falling due after one year 0 Other Long Term Liabilities (3,423,987) 9 Police Officer & Police Staff Pension Liability (3,717,439) (3,423,987) Total Long term Liabilities (3,717,439) (3,426,717) Net Assets (3,720,351) 37٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

38 The Balance Sheet (Continued) 31 March st March 2018 Notes '000's '000's Usable Reserves 0 General Fund 0 0 Earmarked Revenue Reserves 0 0 Capital Reserve 0 0 Capital Contributions Unapplied Reserve 0 0 Insurance Fund 0 0 Total Usable Reserves 0 Unusable Reserves 0 Revaluation Reserve 0 (3,423,987) 9 Pensions Reserve (3,717,439) 0 Capital Adjustment Account 0 0 Financial Instruments Adjustment Account 0 0 Collection Fund Adjustment Account 0 (2,730) 8 Short Term Accumulated Compensated Absences Account (2,912) 0 Financial Instruments Revaluation Reserve 0 (3,426,717) Total Unusable Reserves (3,720,351) (3,426,717) Total Reserves (3,720,351) 38٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

39 The Balance Sheet (Continued) I confirm that the Chief Constable for Kent Police approved these accounts as at 31 st March Paul Curtis, Chief Finance Officer for the Chief Constable for Kent Police 30 th April ٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

40 The Cash Flow Statement The Cash flow Statement shows the changes in cash and cash equivalents of the CC during the reporting period. All cash and cash equivalents are held by the PCC and therefore there are no entries in this statement. 2016/ s Cash Flow Statement for Kent Chief Constable for Kent 2017/18 96,559 Net (surplus) or deficit on the provision of services 122,313 (96,559) Adjustments to net surplus or deficit on the provision of services for non-cash movements (Note 11) (122,313) 0 Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities 0 Net Cash flows from Operating Activities 0 0 Investing Activities 0 0 Financing Activities 0 0 Net increase or decrease in cash and cash equivalents 0 0 Cash and cash equivalents at the beginning of the reporting period 0 0 Cash and cash equivalents at the end of the reporting period s 0 40٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Core Financial Statements

41 Notes to the Accounts

42 Notes supporting the comprehensive income and expenditure statement

43 Note 1 Expenditure and Funding Analysis Net Expenditure chargeable to General Fund 2016/17 CC Analysis 2017/18 Adjustments between Funding and Accounting basis Net Expenditure in the CIES Net Expenditure chargeable to General Fund Adjustments between Funding and Accounting basis Net Expenditure in the CIES '000's '000's '000's '000's '000's '000's 57,184 (2,380) 54,804 Central Operations 59,681 7,137 66,818 2,401 (25) 2,376 Chief's Office 2, ,519 7, ,829 DCC Portfolio 8,254 1,648 9, ,748 (9,445) 105,303 Divisions 121,175 10, ,987 23, ,066 Serious Crime Directorate 25,636 3,803 29,439 26,425 1,256 27,681 Support Services 27,826 4,388 32,214 17,942 1,655 19,597 Local Policing and Partnerships 17,691 3,818 21,509 45, ,843 Corporate Charges 46, , Office of the Police and Crime Commissioner ,153 (7,654) 287,499 Net cost of Policing Services 309,311 32, ,113 (295,153) 0 (295,153) Intra Group Funding For Chief Constable's Net Service Cost (309,311) 0 (309,311) 0 (7,654) (7,654) Net cost of Services 0 32,802 32, , ,213 Other income and expenditure 0 89,511 89, ,559 96,559 (Surplus) or deficit 0 122, , Opening General Fund balance 0 0 Plus (Deficit)/Surplus on General Fund 0 0 Closing General Fund ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CIES 1 General Fund includes Earmarked Reserves and the Insurance Fund.

44 Note 2 Note to the Expenditure and Funding Analysis Adjustment for Capital Purposes (Note 1) Net Change for Pensions Adjustments (Note 2) 2016/17 CC 2017/18 Other Differences (Note 3) Total Adjustments Adjustments from General Fund to arrive at the comprehensive Income and Expenditure Statement amounts Adjustment for Capital Purposes (Note 1) Net Change for Pensions Adjustments (Note 2) Other Differences (Note 3) Total Adjustments '000's '000's '000's '000's '000's '000's '000's '000's 0 (2,380) 0 (2,380) Central Operations 0 7, ,137 0 (25) 0 (25) Chief's Office DCC Portfolio 0 1, ,648 0 (9,445) 0 (9,445) Divisions 0 10, , Serious Crime Directorate 0 3, , , ,256 Support Services 0 4, , , ,655 Local Policing and Partnerships 0 3, , Corporate Charges Office of the Police and Crime Commissioner (7,863) 209 (7,654) Net cost of Services 0 32, , , ,213 Other income and expenditure 0 89, , , ,559 Difference between General Fund (Surplus) or Deficit and Expenditure Statement (Surplus) or Deficit 0 122, ,313 Note 1 This column adds in depreciation, impairments and revaluation gains and losses. It also adjusts for capital disposals with a transfer of the income on the disposal and the amounts written-off. MRP is deducted, adjustments are also made to recognise capital grant income. 44 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CIES Note 2 This column shows the lines which have been affected by the removal of pension contributions and replaced with IAS 19 debits and credits. Note 3 Other differences includes Short Term Accumulated Absences and the Collection Fund adjustment.

45 Note 3 Officers Remuneration 2016/17 Number of Employees Remuneration Band ( ) 2017/ ,000 54, ,000 59, ,000 64, ,000 69, ,000 74, ,000 79, ,000 84, ,000 89, ,000 94, ,000 99, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Total 516 Regulation 4 of the Accounts and Audit Regulations 2015 places a specific requirement on the CC of Kent to disclose the number of employees whose taxable remuneration falls within certain brackets. Accordingly the number of employees whose remuneration, excluding pension contributions was 50,000 or more in bands of 5,000 is show in the table. The amended Regulations introduce a requirement to disclose individual remuneration details for senior employees whose salary is 50,000 or more per year. For these employees their salaries are listed individually by way of job title. Additionally persons whose salary is 150,000 or more per year must be identified by name. A senior employee is considered one whose salary is greater than 50,000 per year (calculated pro rata for part time employees) and who is responsible for the management of Kent Police to the extent that the person has power to control the major activities of the service, in particular activities involving the expenditure of money, whether solely or collectively with other persons. This includes all National Police Chiefs Council (NPCC) ranking police officers, the Director of Essex and Kent Support Services, the Director of Corporate Services and the Force CFO. These individuals have also been accounted for under the remuneration band table above. 45 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CIES

46 Note 3 Officers Remuneration (Continued) Post Title Chief Constable, Mr Alan Pughsley Note Salary including allowances Perf nce. Related Pay Expenses Allowances 2017/18 Other Payments (Police Staff) Benefits in kind Other Payments (Police Officers only) Total remuneration (excl pension contributions) Pension contributions Total remuneration (including pension contributions) 205, , , ,831 Deputy Chief Constable 150, , ,724 Assistant Chief Constable (Serious Crime Directorate) Assistant Chief Constable (Central Operations) Assistant Chief Constable (Local Policing & Partnerships) Chief Finance Officer to the Chief Constable Director of Essex & Kent Support Services Director of Corporate Services Head of Programme (Athena) 1 79, , ,137 16,217 97, , , ,665 22, , , ,085 23, ,683 89, ,734 10,264 99, , ,380 17, , , , ,485 13, , , , ,729 Total 1,075, , ,092, ,583 1,196,353 Notes: 1. Temporary ACC (Serious Crime Directorate) was filled by an Essex Officer to 2 nd July 2017 and then from 3 rd July 2017 this position was filled by a Kent Officer (please refer to Essex Statement of Accounts for Essex Officer pay). The ACC for SCD is a shared post 50:50 Kent Police and Essex Police. Full costs are shown in the Kent accounts as Kent is the employing Force. 2. The Director of Support Services is a shared post, 50:50 Kent Police and Essex Police. Full costs are shown against Kent as the employing Force. 3. Head of Programme (Athena) left post on 4th February ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CIES

47 Note 3 Officers Remuneration (Continued) Post Title Chief Constable, Mr Alan Pughsley Note Salary including allowances Perf nce. Related Pay Expenses Allowances 2016/17 Other Payments (Police Staff) Benefits in kind Other Payments (Police Officers only) Total remuneration (excl pension contributions) Pension contributions Total remuneration (including pension contributions) 203, , , ,228 Deputy Chief Constable 149, , , ,640 Assistant Chief Constable (Serious Crime Directorate) Assistant Chief Constable (Central Operations) Assistant Chief Constable (Local Policing & Partnerships) Assistant Chief Constable (Local Policing & Partnerships) Chief Finance Officer to the Chief Constable Director of Corporate Services Director of Essex & Kent Support Services Director of Corporate Communications 1 13, ,882 2,793 16, , , ,846 16, , , ,447 3,228 21, , ,244 23, , , ,263 9,496 96, , , ,723 13, , , , ,156 17, , , ,355 6,831 64,186 Head of Programme (Athena) 8 53, , ,155 Total 1,051, , ,079,939 93,382 1,173,321 Notes: 1. ACC (Serious Crime Directorate) filled by Essex Officer 30 th October 2015 to 16 th October 2016 and then from 5 th December 2016 to date; Kent officer filled position during 17 th October to 4 th December 2016 (please refer to Essex Statement of Accounts for Essex Officer pay). 2. ACC (Central Operations) started in post 6 th June ACC (Local Policing & Partnerships) left post 5 th June The new ACC (Local Policing & Partnerships) started in post 6 th June Also covered the role of PCC CFO during 15 th August to 30 th October The Director of Support Services is a shared post, 50:50 Kent Police and Essex Police. Full costs are shown against Kent as the employing Force. 7. Director of Corporate Communications left post 18 th September Head of Programme (Athena) started in post 3 rd May 2016 working 22.2 hrs pw. 47 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CIES

48 Note 4 - Termination Benefits At 31 st March 2018 Kent Police is still undergoing restructures as part of the plans to meet a reduction in Government funding. This follows Government announcements in the Budget of further significant funding reductions to the Police Service over a four year period, ending in March In order to meet the challenge of a reduced budget the PCC and Chief Officer team agreed to embark on a rigorous review of all services. This review recommended a reduction in staff numbers over the four years whilst maintaining front-line services where possible. Despite the stated objective of managing these reductions through natural wastage as people voluntarily leave the organisation there has been redundancy amongst police staff. Kent Police terminated the contracts of some employees in 2017/18, incurring costs of 0.084m ( 0.466m in 2016/17). These payments were made to staff made redundant mostly on a voluntary basis, as part of the Kent Police rationalisation of the service. Payments were made to staff in accordance with Kent Police policy L1280, available on the Kent Police website, and are calculated on a combination of age, length of service and pay scale of the employee at the time of their leaving the organisation. The following table shows the number of people leaving the organisation through redundancy in bands of 20,000. Number of people 2016/17 Redundancy Cost Pension Cost Total Cost to Kent Police Number of people 2017/18 Redundancy Cost Pension Cost 000 s 000 s 000 s 000 s 000 s 000 s 000 s Total Total 48 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CIES

49 Note 5 Audit Fees In 2017/18 the following fees were incurred relating to external audit and inspection, carried out by our appointed external auditors, Ernst & Young LLP. 2016/ / s 000 s 19 Fees payable in respect to External Audit Fees Total ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CIES

50 Notes to the movement in reserves statement

51 Note 6 Adjustments between Accounting Basis and Funding Basis under Regulations 2017/18 Included in the Comprehensive Income & Expenditure Account Pensions Reverse General Fund (Includes Earmarked reserves and Insurance Fund) Capital Reserve & Capital Contributions Unapplied Reserve Total Useable Reserves Total Unusable Reserves 000 s 000 s 000 s 000 s Reversal of pension charges made during the year (76,342) 0 (76,342) 76,342 Pension payments appropriated to the pension reserve 198, ,473 (198,473) Accumulated Compensated Absences Account Reversal of leave accrual (182) Total 122, ,313 (122,313) 2016/17 Included in the Comprehensive Income & Expenditure Account Pensions Reverse General Fund (Includes Earmarked reserves and Insurance Fund) Capital Reserve & Capital Contributions Unapplied Reserve Total Useable Reserves Total Unusable Reserves 000 s 000 s 000 s 000 s Reversal of pension charges made during the year (80,240) 0 (80,240) 80,240 Pension payments appropriated to the pension reserve 176, ,590 (176,590) Accumulated Compensated Absences Account 0 51 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to MIRS Reversal of leave accrual (209) Total 96, ,559 (96,559)

52 Note 7 - Income and Expenditure Analysed by Nature 2016/17 '000's Expenditure CC 2017/18 '000's 280,932 Employee benefits expenses 334,946 0 Other service expenses 0 0 Depreciation, amortisation and impairment 0 0 Interest Payments 0 104,213 Pensions interest cost 89,511 6,567 Inter Force Recharges 7, ,712 Total expenditure 431,624 (295,153) Income 0 Fees, charges and other service income 0 0 Income from Council tax and Business Rates 0 0 Government grants and contributions 0 0 Home Office Pension top-up grant 0 0 Inter Force Recharges 0 0 Interest and investment income 0 0 Income in relation to investment properties & changes in their fair value 0 0 Gains on disposal of non -current assets 0 Intra group funding for Chief Constables net service cost (Includes Support service recharges expenditure) (309,311) (295,153) Total income (309,311) 96,559 (Surplus) or Deficit on the Provision of Service 122, ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to MIRS

53 Notes supporting the balance sheet

54 Note 8 Short Term Creditors 2016/ / s 000 s 2,730 Short Term Compensated Absences 2,912 2,730 2,912 Note 9 Net Pension Liability 2016/ / s 000 s 3,423,987 Net Pension Liability 3,717,439 3,423,987 3,717, ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

55 Note 10 Defined Benefit Pension Schemes Transactions Relating to Retirement Benefits The PCC recognise the cost of retirement benefits in the Net Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. The charge the PCC is required to make against the Council Tax however, is based on the cash payable in the year and therefore the real cost of retirement benefits is reversed out of the Comprehensive Income and Expenditure Statement. The following transactions have been made in the PCC s accounts during the year. 2016/ s Comprehensive Income & Expenditure Statement Cost of Services: Police Officer Pension Schemes (Combined) 2017/18 57,100 Current service cost 84,700 0 Past service cost / (gain) Effect of settlements 0 Financing & investment Income & Expenditure: 0 Interest income on plan assets 0 99,300 Interest costs on defined benefit obligations 84,200 0 Impact of Asset Ceiling on net interest 0 156,400 Total post employment benefit charged to the (surplus) / deficit on the Provision of Services 169,100 Other post employment benefit charged to the Comprehensive Income & Expenditure Statement: 18,600 Actuarial losses (gains) arising from change in demographic assumptions (34,200) 609,200 Actuarial losses (gains) arising from change in financial assumptions 0 (327,100) Other experience 244, ,100 Total post employment benefit charged to the Comprehensive Income & Expenditure Statement 379,300 Movement in Reserves Statement (156,400) Reversal of net charges made to the (surplus) / deficit on the Provision of Services for post employment benefits (169,100) Actual amount charged to against the General Fund for Pensions in the year 73,200 Actuarial Contributions to Fund 68, s 55 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

56 Note 10 Defined Benefit Pension Schemes (Continued) Assets and Liabilities in Relation to Retirement Benefits The following table reconciles the present values of the liabilities of the police pension schemes: Reconciliation of Present Value of the Scheme Liabilities (Defined Benefit Obligation) 2016/ / s 000 s 2,846,900 Benefit obligation at start of year 3,230,800 57,100 Current Service Cost 84,700 99,300 Interest on Pension Liabilities 84, ,700 Actuarial losses/ (gains) 210,200 14,700 Contributions by scheme participants 15,000 0 Past Service Gains 200 (87,800) Benefits paid / (received) (83,700) (100) Transfers in from / (out to) other authorities 100 3,230,800 Benefit obligation at end of year 3,541,500 Reconciliation of Movements in the Fair Value of the Scheme (Plan) 2016/ / s 000 s 0 Opening Fair Value of Assets 0 0 Expected return on assets 0 0 Actuarial gains (losses) on assets 0 73,200 Contributions by employer 68,600 14,700 Contributions by participants 15,000 (100) Transfers in from / (out to) other authorities 100 (87,800) Net benefits paid out (83,700) 0 Closing Fair Value of Assets 0 56 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

57 Note 10 Defined Benefit Pension Schemes (Continued) Pensions Assets and Liabilities Recognised in the Balance Sheet 2016/ s Police Pension Scheme (Combined) 2017/18 3,230,800 Present value of Police Pension Scheme defined benefit obligation 3,541,500 0 Fair value of assets in the Police Pension Scheme 0 3,230,800 3,541,500 3,230,800 Net Liability arising from the defined benefit obligation 3,541,500 Basis for Estimating Assets and Liabilities (PPS) Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. The Police Pension Schemes have been assessed by Hymans Robertson LLP, an independent firm of actuaries. The principal assumptions used in their calculations have been: 2016/17 Mortality assumptions: 2017/18 Longevity at 65 (60 for Police Officers) for current pensioners: 30.2 Men Women 31.0 Longevity at 65 (60 for Police Officers) for future pensioners: 31.6 Men Women % Rate of inflation (RPI) 3.5% 3.4% Rate of increase in salaries 3.5% 2.4% Rate of increase on pensions 2.5% 2.6% Rate of discounting for scheme liabilities 2.7% 90.0% Take up of option to convert annual pension into retirement lump sum 90.0% 000 s 57 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

58 Note 10 Defined Benefit Pension Schemes (Continued) The liabilities show the underlying commitments that the PCC has in the long term to pay retirement benefits. The total liability of 3.5bn ( 3.2bn 2016/17) has a substantial impact on the net worth of the PCC as recorded in the Balance Sheet. Statutory arrangements for funding the deficit however, mean that the financial position of the PCC remains healthy. Police Pensions are charged to the Police Pension Fund Account and any shortfall between the value of pensions paid in the year and the receipts into the Account from the employer and employee contributions is funded from the General Fund. A top-up grant from the Government is then claimed to cover the deficit or, in the event of a surplus, repaid to the Government. 2016/ s Local Government Pension Scheme Comprehensive Income & Expenditure Statement Service Cost 2017/18 14,776 Current service cost 23, Past service cost / (gain) (Gain) / Loss on curtailments & settlements 0 Financing & investment Income & Expenditure: 17,100 Interest costs 16,200 (12,187) Expected return on assets in the scheme (10,899) 20, Administration Expenses 248 Total post employment benefit charged to the (surplus) / deficit on the Provision of Services Other Post -employment Benefits charged to the Comprehensive Income and Expenditure Statement 54,830 Return on plan assets (excluding amount included in net interest expense) (2,401) 4,420 Actuarial (losses) gains arising from demographic assumptions 0 (127,284) Actuarial (losses) gains arising from financial assumptions 41,280 22,136 Experience (losses) gains 0 (1,505) Other 0 (27,213) (20,190) Total post employment benefit charged to the Comprehensive Income & Expenditure Statement Movement in Reserves Statement Reversal of net charges made to the (surplus) / deficit on the Provision of Services for post employment benefits Actual amount charged to against the General Fund for Pensions in the year 000 s 29,363 68,242 (29,363) 7,040 Employers contribution payable to the scheme 7, ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

59 Note 10 Defined Benefit Pension Schemes (Continued) The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed asset investments are based on gross redemption yields at the Balance Sheet date. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets. The actual return on scheme assets in the year was 8.5m ( 67.0m /17). Pensions Assets and Liabilities Recognised in the Balance Sheet 2016/ s Local Government Pension Scheme Present value of liabilities 2017/18 (578,286) Local Government Pension Scheme (572,999) 387,134 (191,152) Fair value of assets in the Local Government Pension Scheme 000 s 398,934 (174,065) 0 Other movements in the liability /(asset) 0 Net liability arising from defined benefit obligation (2,035) Local Government Pension Scheme (1,874) (193,187) Total (175,939) 59 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

60 Note 10 Defined Benefit Pension Schemes (Continued) Reconciliation of Present Value of the Scheme Liabilities The following tables reconcile the present value of liabilities and assets of the Local Government Pension Scheme attributable to the PCC: 2016/ /18 Local Government Pension Scheme 000 s 000 s 452,226 Balance bought forward 580,321 14,776 Current service cost 23,499 17,100 Interest cost 16,200 3,698 Contributions by scheme participants 3,910 Remeasurement (Gains) and Losses (4,420) Actuarial Gains / Losses arising from changes in demographic assumptions 0 127,284 Actuarial Gains / Losses arising from changes in financial assumptions (41,280) (22,136) Experience (Gains)/Losses on defined benefit obligation Past service costs Losses/(Gains) on curtailments 0 0 Liabilities assumed on entity combinations 0 (8,341) Benefits paid / transfers paid (7,925) 0 Liabilities extinguished on settlements 0 (162) Unfunded pensions payments (167) 580,321 Balance carried forward 574,873 Reconciliation of Present Value of the Scheme Liabilities The Local Government Pension Scheme s assets consist of the following categories, by proportion of the total assets held: 31st March st March s % 000 s % 273, Equities 272, ,888 1 Gilts 3, , Other Bonds 36, , Property 48, ,891 3 Cash 10, ,185 4 Target Return Portfolio 27, , Total 398, ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

61 Note 10 Defined Benefit Pension Schemes (Continued) Reconciliation of the Movements in Fair Value of Scheme Assets 2016/ /18 Local Government Pension Scheme 000 s 000 s 319,592 Opening fair value of the scheme assets 387,134 12,187 Interest Income 10,889 Remeasurement gain / (loss) 54,830 Expected return on assets (2,401) (1,505) Other 0 0 The effect of changes in foreign exchange rates 0 7,040 Employer contributions 7,742 3,698 Contributions by employees into the scheme 3,910 (8,503) Benefits paid (8,092) (205) Other (248) 387,134 Closing fair value of scheme assets 398, ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

62 Note 10 Defined Benefit Pension Schemes (Continued) Basis for Estimating Assets and Liabilities (LGPS) Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. The Local Government Pension Scheme (LGPS) liabilities have been assessed by Barnett Waddingham, an independent firm of actuaries. Estimates for the LGPS scheme are based on the 10 months valuation of the scheme as at 31 st March The principal assumptions used in their calculations have been: 2016/17 Local Government Pension Scheme 2017/18 Years Mortality assumptions: Years Longevity at 65 (60 for Police Officers) for current pensioners: 23.0 Men Women 25.2 Longevity at 65 (60 for Police Officers) for future pensioners: 25.1 Men Women 27.5 % % 3.6% Rate of inflation (RPI) 3.4% 1.8% Rate of inflation (CPI) on which Pensions are based 2.4% 4.2% Rate of increase in salaries 3.9% 2.7% Rate of increase on pensions 2.4% 2.8% Rate of discounting for scheme liabilities 2.8% 50.0% Take up of option to convert annual pension into retirement lump sum 50.0% The liabilities show the underlying commitments that the PCC has in the long term to pay retirement benefits. The total liability ( 175.9m) has a substantial impact on the net worth of the PCC as recorded in the Balance Sheet. Statutory arrangements for funding the deficit however, mean that the financial position of the PCC remains healthy. The deficit on the Local Government Scheme will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary. 62 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to Balance Sheet

63 Notes supporting the cash flow statement

64 Note 11 Cash Flow Statement 2016/ /18 CC Adjustments to net surplus / deficit on the provision for non-cash movements CC 000 s 000 s (209) (Increase) / decrease in creditors (182) (96,350) Pensions liability (122,131) (96,559) Total (122,313) 64 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Notes to CFS

65 Other notes

66 The Accounting Policies have been updated to include the changes to the 2017/18 Code. The Accounts and Audit Regulations 2015 introduced a significant change in statutory deadlines from the 2017/18 financial year. This means the preparation and approval of accounts will be brought forward with draft accounts needing to be prepared by 31 st May and the publication of the audited accounts by 31 st July. Note 12 Accounting Policies i. General Principles The Statement of Accounts summarises the CC for Kent s transactions for the financial year 2017/18 and its position as at the 31 st March 2018 subject to the notes below. The Accounts and Audit Regulations 2015 require the CC for Kent to prepare an annual Statement of Accounts in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 and the Chartered Institute of Public Finance and Accountancy (CIPFA) in the United Kingdom 2017/18, supported by International Financial Reporting Standards (IFRS). The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of noncurrent assets and financial instruments. The requirements to use the going concern basis of accounting mean that the CC for Kent do not apply paragraph 25 of IAS 1 Presentation of Financial Statements mandating management to make an assessment of CC for Kent s ability to continue as a going concern. But instead report on the impact of financial pressures in the Narrative Report Telling the Story of the Financial Statements, and the relevant liquidity reporting requirements under the Code s adoption of IFRS 7 Financial Instruments: Disclosures. The 2017/18 Code Guidance Notes include additional clarification in relation to the Expenditure and Funding Analysis to provide additional guidance to assist accounts preparers in the preparation of the note. At midnight on the 21 st November 2012 all property, rights, assets and liabilities which previously belonged to the Kent Police Authority were transferred to the PCC for Kent. This includes all property, plant and equipment and income. The CC s Accounts show all expenditure related to the delivery of policing services for the year including staff costs, pension costs and the provision for short term compensated absences whilst the PCC s Single Entity Accounts only show those costs directly related to the Office of the PCC. The CC of Kent has direct control of all Police Officers, PCSOs and all Police Staff except those working in the Office of the PCC. Although the employment contracts for all staff are held by the PCC the substance of the relationship is that the CC who has the effective power to control how these resources are deployed and used. Whether posts are recruited if they become vacant, whether posts can be made redundant or where posts can be located and what roles are assigned to them are also decisions within the control of the CC. Included within staff costs are the IAS 19 pension costs for Officers and staff and also any short-term compensated absences such as the provision for payment of outstanding annual leave and time off in lieu balances at the year-end date. These costs follow the rest of the pay related costs and therefore logically sit with the CC. 66 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes The CC s Accounts therefore include staff costs for the above groups of employees only.

67 Note 12 Accounting Policies (Continued) As stated above all contracts and bank accounts are held by the PCC. All economic benefits arising from any transaction also falls to the PCC so all costs and income are held with the PCC. The CC is unable to enter into borrowing arrangements so costs such as the PFI contracts and any leasing arrangements must be held by the PCC. As stated above all property plant and equipment is in the ownership of the PCC. Decisions around the amount of resources available for investing in capital activities are made by the PCC as are decisions around disposals. The PCC agrees the five year capital programme and monitors expenditure against it throughout the year. Only salary transactions for Police Officers, PCSOs and all staff (other than those directly working in the OPCC) are shown in the Accounts of the CC. All other transactions are shown in the PCC Accounts. ii. Accruals of Expenditure Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. iii. Exceptional Items When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the CC for Kent s financial performance. iv. Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the CC for Kent s financial position or financial performance. Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period. v. Employee Benefits 67 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

68 Note 12 Accounting Policies (Continued) Benefits Payable During Employment Short-term employee benefits are those due to be settled within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave and paid sick leave, bonuses and non-monetary benefits (e.g. cars) for current employees and are recognised as an expense for services in the year in which employees render service to the CC for Kent. An accrual is made for the cost of holiday entitlements (or any form of leave, e.g. time off in lieu) earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out through the intra-group transfer from the PCC for Kent s Accounts. Short-term compensated absences are those periods in which an employee does not provide services to the employer but continues to be paid. Compensated absences may be accumulating or non-accumulating. Accumulating absences are those that are carried forward and can be used in future periods if the current entitlement is not used in full. For Kent Police this includes annual leave, flexi-leave and time off in lieu. Accumulating absences may be vesting or non-vesting. Where vesting, employees who leave are entitled to a cash payment in respect of any unused entitlement; where non-vesting, benefits lapse if an employee leaves before the vesting date. For Kent Police vesting accumulated short term compensated absences are annual leave and time off in lieu only. Flexi-time is non-vesting. Short term accumulating compensated absences shall be: - Recognised when employees render services that increases their entitlement to future compensated absences. - Measured as the additional amount that CC for Kent expects to pay as a result of unused entitlement that has accumulated at the Balance Sheet date including associated employer s national insurance contributions. The Apprenticeship Levy was introduced from 1st April The Apprenticeship Levy is a charge on all large UK employers with a pay bill of over 3million per annum. Kent Police is required to pay 0.5% of its annual payroll into the Levy and these funds will be used to pay for new apprenticeships. Payment of the levy is recognised as an employee expense and is recognised as such in accordance with the requirements of section 6.2 (Benefits Payable During Employment) of the code. The Apprenticeship Levy is payable through Pay As You Earn (PAYE) and is payable alongside income tax and national insurance and is accounted in the same way. Any amounts credited to income received in Kent Police s Apprenticeship Scheme will be accounted under Government Grant in accordance with section 2.3 (Government and Non-Government Grants). There were no apprenticeships during 2017/18 therefore Termination Benefits Termination benefits are amounts payable as a result of a decision by the PCC for Kent or the CC for Kent to terminate an employee s contract before the normal retirement date or an officer s decision to accept voluntary redundancy and are charged on an accruals basis to overheads in the Comprehensive Income and Expenditure Statement. Termination benefits are recorded in the accounts when Kent Police have confirmed and communicated their decision to the termination of the employment of an individual or group of individuals or making an offer to encourage voluntary redundancy. 68 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes Where termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by Kent Police to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the

69 Note 12 Accounting Policies (Continued) Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. Post-Employment Benefits Kent Police participates in three different types of pension schemes for police officers and a single scheme for police staff. Post employee benefits are associated with the Kent Police Group and CC s Accounts, they do not materially affect the accounts of the Single Entity for the PCC for Kent. The Police Pension Scheme (PPS), governed by the Police Pensions Regulations 1987 (as amended). The New Police Pension Scheme (NPPS), regulated under the Police Pension Regulations The 2015 Scheme, regulated under the Police Pension Regulations The Local Government Pensions Scheme, administered by Kent County Council. As a results of changes in requirements under International Accounting Standard 19 (IAS19) the net pensions liability is analysed into several components: Service cost comprising: o current service cost being the increase in liabilities as a result of years of service earned this year allocated in the Comprehensive Income and Expenditure Statement to the services for which the employees worked; o past service cost the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years debited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs; o gains or losses on settlements and curtailments the result of actions to relieve Kent Police of liabilities or events that reduce the expected future service or accrual of benefits of employees debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs; Interest cost the expected increase in the present value of liabilities during the year as they move one year closer to being paid debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement; Re-measurement of the net defined benefit liability comprising: o expected return on assets the annual investment return on the fund assets attributable to Kent Police, based on an average of the expected longterm return credited to the Pension Reserve; o actuarial gains and losses arising on changes in demographic assumptions changes in the net pensions liability that arise because experience has not reflected the demographic assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions debited to the Pensions Reserve; o actuarial gains and losses arising on changes in financial assumptions changes in the net pensions liability that arise because experience has not reflected the financial assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions debited to the Pensions Reserve; 69 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

70 Note 12 Accounting Policies (Continued) contributions paid to the pension fund cash paid as employer s contributions to the pension fund in settlement of liabilities; not accounted for as an expense. In relation to retirement benefits, statutory provisions require the General Fund balance to be charged with the amount payable by Kent Police to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. The negative balance that arises on the Pensions Reserve thereby measures the impact to the General Fund of being required to account for retirement benefits on the basis of cash flows rather than as benefits are earned by employees. Accounting and Reporting by Pension Funds has been updated to reflect the 2017/18 Code s requirements for the new disclosure of investment management transaction costs and clarification on the approach to investment concentration disclosure. Police Pension Schemes All police schemes are contributory occupational pension schemes with officers making varying levels of contributions dependent on their salary level. Contributions to both the old and new police pension schemes have three tiers as follows: Salary Level Police Pension Scheme New Police Pension Scheme CARE Scheme From 1st April /2018 (2016/2017) % Contribution Rate 2017/2018 (2016/2017) % Contribution Rate 2017/2018 (2016/2017) % Contribution Rate Under 27,000 pa 14.25% (14.25%) 11.00% (11.00%) 12.44% (12.44%) 27,000 to 59,999 pa 14.25% (14.25%) 12.05% (12.05%) 13.44% (13.44%) 60,000 pa or more 15.05% (15.05%) 12.75% (12.75%) 13.78% (13.78%) The Police Pension Account was set up on 1 st April 2006 to administer all police pension schemes. The police pension schemes are defined benefit schemes (without managed pension assets). The employer s contribution for each serving officer is common to all schemes at 21.3% of pensionable pay. This is set nationally and is subject to a three yearly review. Accrued net pension liabilities have been assessed on an actuarial basis in accordance with IAS 19. The net liability and a pensions reserve incorporating all pension schemes have been recognised in the Balance Sheet, as have entries in the Comprehensive Income and Expenditure Account for movements in the asset / liability relating to the defined benefit schemes. Transfers into and out of the schemes representing joining and leaving the police are recorded on a cash basis in the Pension Account as a result of the time taken to finalise the sums involved. 70 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

71 Note 12 Accounting Policies (Continued) The liabilities of the police pension schemes attributable to Kent Police are included in the Balance Sheet on an actuarial basis using the projected unit method i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates and projections of earnings for current employees. Liabilities as well as anticipated gains and losses are discounted to their value at current prices using a discount rate prescribed by the Funds Actuaries. The Local Government Pension Scheme The Local Government Pension Scheme is a contributory occupational pension scheme with police staff making contributions in accordance with the table below dependent on their salary level. Salary Level LGPS Rate up to 31st March 2018 Up to 13,700 pa ,701 to 21,400 pa ,401 to 34,700 pa ,701 to 43,900 pa ,901 to 61,300 pa ,301 to 86,800 pa ,801 to 102,200 pa ,201 to 153,300 pa 11.4 More than 153,301 pa 12.5 The Local Government Scheme is accounted for as a defined benefits scheme. % The liabilities of the pension fund attributable to Kent Police are included in the Balance Sheet on an actuarial basis using the projected unit method i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, and projections of projected earnings for current employees. 71 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

72 Note 12 Accounting Policies (Continued) Liabilities are discounted to their value at current prices. The assets of the pension fund attributable to Kent Police are included in the Balance Sheet at their fair value: quoted securities current bid price unquoted securities professional estimate unitised securities current bid price property market value. Discretionary Benefits Kent Police also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme. vi. Events After the Balance Sheet Date Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified: those that provide evidence of conditions that existed at the end of the reporting period the Statement of Accounts is adjusted to reflect such events; those that are indicative of conditions that arose after the reporting period the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect. Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. vii. Overheads and Support Services Overheads are apportioned and the costs of support services are fully allocated to the Net Cost of Services. viii. VAT VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty s Revenue and Customs. VAT receivable is excluded from income. 72 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

73 Note 13 Assumptions Made about the Future and Other Major Sources of Estimation Uncertainty The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However the nature of estimation means that actual outcomes could differ from those estimates. The key judgements and estimation uncertainty that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities in the next financial year are listed below: Police Pension Schemes The range of sensitivities regarding the principal assumptions used to measure the combined Police Pension Schemes liabilities are set out below: Police Pension Scheme (Schemes Combined) Sensitivity analysis 000 s 000 s 000 s Adjustment to discount rate 0.50% 0.00% -0.50% Present value of total obligation 3,194,593 3,541,500 3,888,407 Projected service cost 69,368 84, ,432 Adjustment to member life expectancy +1 year None -1 Year Present value of total obligation 3,647,746 3,541,500 3,435,254 Projected service cost 87,222 84,900 82,578 Adjustment to salary increase rate 0.50% 0.00% -0.50% Present value of total obligation 3,583,641 3,541,500 3,499,359 Projected service cost 85,215 84,900 84,585 Adjustment to pension increases and deferred revaluation 0.50% 0.0% -0.50% Present value of total obligation 3,822,628 3,541,500 3,260,372 Projected service cost 92,750 84,900 77, ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

74 Note 13 Assumptions Made about the Future and Other Major Sources of Estimation Uncertainty (Continued) Local Government Pension Scheme The sensitivities regarding the principal assumptions used to measure the Local Government Pension Scheme are set out below: Sensitivity analysis 000 s 000 s 000 s Adjustment to discount rate 0.10% 0.00% -0.10% Present value of total obligation 562, , ,993 Projected service cost 20,687 21,276 21,882 Adjustment to member life expectancy +1 year None -1 Year Present value of total obligation 595, , ,823 Projected service cost 21,955 21,276 20,618 Adjustment to salary increase rate 0.10% 0.00% -0.10% Present value of total obligation 576, , ,342 Projected service cost 21,276 21,276 21,276 Adjustment to pension increases and deferred revaluation 0.10% 0.00% -0.10% Present value of total obligation 586, , ,528 Projected service cost 21,884 21,276 20,684 Police Pension Scheme and LGPS Information from the Actuaries is reviewed against the information previously provided and market commentaries for reasonableness and compared with other Force s expectations and returns through the PACCTS network. The tables included above are taken directly from the actuarial statements. Given the high values for the liabilities in the pension s schemes they are susceptible to small fluctuations in discount rates etc. causing relatively large variation in the values. This is why the sensitivity analysis tables have been included in the Statement of Accounts. 74 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

75 Note 14 Events After the Balance Sheet Date The Statement of Accounts was authorised for issue by the CFO on 30 th April Events taking place after this date are not reflected in the financial statement or notes. Where events taking place before this date provided information about conditions existing at 31 st March 2018, the figures in the financial statements and notes have been adjusted in all material respects to reflect this information. There are no material non-adjusting events to report. Note 15 - Related Parties The CC for Kent Police is required to disclose material transactions with related parties bodies or individuals that have the potential to control or influence the authority or to be controlled or influenced by Kent Police. Disclosure of these transactions allows readers to assess the extent to which the CC might have been constrained in their ability to operate independently or might have secured the ability to limit another party s ability to bargain freely with the CC. Central Government Central government has effective control over the general operations of the CC of Kent it is responsible for providing the statutory framework within which the CC operates, provides the majority of its funding in the form of grants to the PCC and prescribes the terms of many of the transactions that the Kent Police has with other parties (e.g. council tax bills). Officers The Kent Police Chief Officer team lead by the CC has direct control over all operational decisions and the day-to-day running of Kent Police as well strategic decision making in conjunction with the Commissioner. All Chief Officers have been contacted and there are no related party transactions to disclose for 2017/18. Other Public Bodies Through the PCC for Kent, Kent Police has a number of business relationships with public organisations such as local authorities in Kent and other Police Forces in England and Wales mainly Kent County Council, Essex Police and West Yorkshire Police for the National Police Air Service (NPAS). Kent Police has two main collaborative agreements with Essex Police covering Serious Crime and Support Services. Jointly Controlled Operations are further explained in note 36 in the Kent Police Group Accounts. 75 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes Note 15 - Related Parties (Continued)

76 Police and Crime Commissioner The CC for Kent and PCC for Kent are separate legal entities as described in the Narrative report. Despite this the two entities are intrinsically linked with the PCC for Kent holding all bank accounts, assets, liabilities and reserves for both entities. The CC for Kent has a budget approved by the Commissioner with any underspends against that budget transferring back to the PCC at the end of the financial year. As such the PCC for Kent is described as a related party. Note 16 Contingent Assets and Liabilities The CC recognises material contingent assets and liabilities, which arise from past events, whose existence can only be confirmed by the occurrence of one or more uncertain future events, which are not wholly within the CC s control. The CC of Kent Police, along with other CCs and the Home Office, currently has 192 claims lodged against them with the Central London Employment Tribunal. The claims are in respect of alleged unlawful discrimination arising from the Transitional Provisions in the Police Pension Regulations Claims of unlawful discrimination have also been made in relation to the changes to the Judiciary and Firefighters Pension regulations. In the case of the Judiciary claims the claimants were successful and in the Firefighters case the respondents were successful. Both of these judgements are subject to appeal, the outcome of which may determine the outcome of the Police claims. The Tribunal has yet to set a date for a preliminary or substantive Police hearing. Legal advice suggests that there is a strong defence against the Police claims. The quantum and who will bear the cost is also uncertain, if the claims are partially or fully successful. For these reasons, no provision has been made in the 2016/17 Accounting Statements. The CC for Kent Police, along with other CCs has a contingent liability arising from the Allard and Others vs Devon and Cornwall Police legal case. This case arises from under-cover officers in Devon and Cornwall Police claiming under Police Regulations that they were entitled to on-call payments arising from having to take telephone calls throughout the course of their duties and outside of their normal working hours. The case was upheld against Devon and Cornwall at the High Court and the ruling applies to all other Home Office Forces. Whilst the outcome of the legal case is not in doubt the timings and amount of any payments due to the claimants are yet to be ascertained. Work remains ongoing by all forces to identify all claims and the quantum of each payment that is due. For these reasons no provision has been made in the 2016/17 Statement of Accounts. Note 17 - Date of Authorisation of the Statement of Accounts for Issue The Statement of Accounts was authorised for issue on 30 th April 2018 by Mr Paul Curtis, CFO to the CC of Kent Police. 76 ٠Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Other Notes

77 Supplementary accounts

78 Police Officer Pension Fund Account 2016/ / s Contributions receivable 000 s (23,147) Police and Crime Commissioner for Kent (23,433) (14,846) Serving Police Officers (15,031) (1,816) Capital equivalent payment for ill-health (874) Transfers In (195) Individual transfers in from other schemes (191) (40,004) Total Receipts (39,529) Benefits payable 64,737 Pensions 67,110 17,123 Commutations and lump sum payments 15,718 Lump sum death benefits 114 Payments to and on account of leavers 75 Refund of contributions Individual transfers out to other schemes Benefits payable - backdated in respect of Milne v Gad Additional lump sum adjustments and interest paid in 2017/18 Less surplus of Milne v GAD funds previously paid by the Home Office Adjustment to Previous Pension Fund accounts 38 Pensioner allowances paid in earlier year's 1 82,143 Total Payments 83,093 42,139 (38,831) (3,308) 0 (42,139) Sub-total for the year before transfer from Police and Crime Commissioner for Kent of amount equal to the deficit Transfer of amount from the PCC of amount equal to the deficit - benefits (21.3%) Transfer of amount from the PCC of amount equal to the deficit - benefits (2.9%) Transfer of amount from the PCC of amount equal to the deficit - Milne v Gad Transfer of amount from the Police and Crime Commissioner for Kent of amount equal to the deficit 80 (27) 43,563 (40,258) (3,306) 0 (43,563) 0 Net amount payable for the year 0 The table above identifies the movements on the Police Officer Pension Fund Account for the year. Introduction The Police Officer Pension Fund Account was established under the Police Pension fund Regulations 2007 (SI 2007 No 1932). It is administered on behalf of the PCC by Kent County Council. The Fund receives income each year from: Employer s contributions from the PCC, based on a percentage of pay Contributions from serving police officers Other receipts Pensions to retired officers, lump sum payments and other benefits are paid from the Fund. The Account is balanced to nil at the end of the year by a contribution from or to the General Fund. The Account is not backed by any investment assets. And its outgoings are funded entirely from the receipts identified above. The Fund accounts solely for the benefits payable in the financial year, and does not account for benefits payable after the period end. 78٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Supplementary Accounts

79 The above statement does not include liabilities to pay pensions and other benefits after the Balance Sheet date. The liabilities for future retirement benefits are disclosed in Note 10 of these Accounts. From July 2015 the top up amount included a reduction to reflect the difference between the former employer contribution rates of 24.2% and the new contribution rate of 21.3%. The difference between the two rates was retained by the Exchequer in and will be again in In May 2015, the Pensions Ombudsman (Ombudsman) published their Final Determination in the case of Milne v Government Actuaries Department (GAD). This case centred on whether GAD had a proactive responsibility to review the commutation factors used in the calculation of the lump sum payments made to pensioners when they opt to take an increased amount of their pension benefit in that form. The Ombudsman found in favour of the plaintiff, which meant that for all Police Pension Scheme 1987 cases where pension entitlements were drawn between 1 December 2001 and 1 December 2006 recalculation of lump sum payments should take place based upon revised commutation factors to be issued by GAD, including adjustment for interest. The 2017/18 financial statements include benefits payable totalling 0.08m (2016/17 - nil) in respect of this matter, with all of this cost fully refundable from the Home Office. Pension Fund Net Asset Statement 2016/ / s 000 s 0 Unpaid pension benefits 0 0 Amount owing from the general fund 0 0 Net Current Assets and Liabilities 0 79٠ Kent Police Chief Constable s Draft Accounts 2017/18 ٠ Supplementary Accounts

80 Glossary