The Chief Constable for Bedfordshire Police STATEMENT OF ACCOUNTS

Transcription

1 The Chief Constable for Bedfordshire Police STATEMENT OF ACCOUNTS 2013/2014 1

2 Table of Contents Table of Contents TABLE OF CONTENTS... 2 EXPLANATORY FOREWORD... 3 FINANCIAL REVIEW... 6 STATEMENT OF RESPONSIBILITIES... 9 ANNUAL GOVERNANCE STATEMENT INDEPENDENT AUDITOR S REPORT TO THE CHIEF CONSTABLE OF BEDFORDSHIRE POLICE COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT MOVEMENT IN RESERVES STATEMENT BALANCE SHEET CASH FLOW STATEMENT NOTES TO THE ACCOUNTS EXTERNAL ADVISERS GLOSSARY OF TERMS

3 Explanatory Foreword Introduction Explanatory Foreword This foreword provides a brief explanation of the financial statements and the regulations which underpin them. When the Police Reform and Social Responsibility Act 2011 came into force on 22 November 2012 one of the key reforms was to replace Police Authority s with Police & Crime Commissioners. At midnight on 21 November 2012 all property, rights and liabilities belonging to Bedfordshire Police Authority transferred to the Police and Crime Commissioner for Bedfordshire. At the same time the Chief Constable for Bedfordshire Police was established as a separate body, via creation of a corporation sole, responsible for the operational policing of Bedfordshire. The two corporate soles are both schedule 2 bodies under the 1998 Audit Commission Act and so are both required to publish accounts and are subject to audit. In addition they are both local authorities as per the Accounts and Audit Regulations. The Police & Crime Commissioner s function is to hold the Chief Constable to account in order to secure the maintenance of an efficient and effective police force. Therefore, for accounting purposes, the Police and Crime Commissioner (PCC) for Bedfordshire is the parent entity of the Chief Constable for Bedfordshire Police and together both corporate soles form the PCC for Bedfordshire Group. Group Structure The Police & Crime Commissioner for Bedfordshire Group PCC for Bedfordshire 100% Chief Constable As the holding parent, the PCC guarantees any outstanding liability by the Chief Constable who is a 100% subsidiary. This is reflected in accounting terms by the existence of a group relationship between the two corporation soles. Group relationships require the completion of a consolidated group Statement of Accounts in addition to those for the individual entities, this is published separately. The Commissioner sets strategic direction through his Police and Crime Plan and exercises control of funding by delegation to the Chief Constable. The Statement of Accounts reflects this control and in addition reflects the operational direction and control which the Chief Constable has over the majority of staff and officers The group position reflects the consolidated accounts of the Police and Crime Commissioner for Bedfordshire and its accounting subsidiary the Chief Constable for Bedfordshire Police. The Statement of Accounts The 2013/14 Statement of Accounts is prepared in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local Authority Accounting 2013/14 (the Code). The accounts also reflect the following frameworks and regulations: The Police Reform and Social Responsibility Act 2011 (the Act) Financial Regulations for the PCC for Bedfordshire Group The scheme of delegation between the PCC and the Chief Constable 3

4 Explanatory Foreword At phase one of the Act the assets, liabilities and reserves belonging to Bedfordshire Police Authority were transferred to The PCC for Bedfordshire. The Scheme of Delegation determines the responsibilities of each of the two bodies during phase one of the reforms and Financial Regulations underpin the use of the Commissioner s assets and staff by the Chief Constable. The PCC for Bedfordshire retains control of the assets transferred to them by the Police Reform Act and in addition, receives all income and funding and makes all payments for the Group from their Police Fund. The Commissioner has not set up a separate bank account for the Chief Constable and instead delegates a budget within which the Chief Constable exercises day to day control. It is recognised that in exercising day-to-day direction and control the Chief Constable will undertake activities and incur expenditure to allow the police force to operate effectively. It is therefore appropriate for the income and expenditure associated with the day to day direction and control to be shown in the Chief Constable s Comprehensive Income and Expenditure Statement, with the resources consumed by the Chief Constable being offset by an intra-group transfer of resources from the Commissioner. In turn the assets and liabilities associated with this income and expenditure are recognised in the Chief Constable s balance sheet with the net balance shown as owing to the Chief Constable by the Commissioner. This is a change to the accounting policy and requires the re-statement of 2012/13 comparative figures, an explanation of these changes and their effects on comparative figures is shown at Note 2. The Chief Constable s Movement in Reserves Statement consists only of the unusable reserves associated with the timing differences between financing and recognition of the employee s liabilities, both for pensions and for accumulated absences, required by statute. All other reserves are held by the Commissioner who has not delegated responsibility for these reserves to the Chief Constable. The accounts for the Chief Constable for Bedfordshire Police for 2013/14, which will be the basis for the Audit Opinion, consist of: (i) (ii) (iii) (iv) (v) (vi) Financial Review this outlines revenue expenditure in 2013/14, the major changes to the accounts from 2012/13 and future financial prospects of the Chief Constable. Statement of Responsibilities this includes the financial responsibilities of the Chief Constable and the Chief Constable s Chief Finance Officer (CFO). Annual Governance Statement this statement is a statutory document which sets out how the Chief Constable has ensured that it has proper arrangements for governance of its affairs allowing it to effectively exercise its functions including the arrangements for the management of risk, during the financial year. Statement of Accounting Policies the policies adopted in compiling the accounts. Audit Opinion the statutory opinion for the Statement of Accounts. Comprehensive Income and Expenditure Statement this statement shows the accounting cost in the year of providing services in accordance with accounting standards, rather than the amount to be funded from taxation. In order to reflect the operational direction and control which the Chief Constable has over staff and officers in their employment, the income and expenditure associated with providing operational policing is reflected in the Chief Constable s statement of accounts. 4

5 Explanatory Foreword (vii) (viii) (ix) Movement in Reserves Statement this statement shows the movement in the year on the different reserves held by the Chief Constable for Bedfordshire. Balance Sheet the balance sheet shows the value as at the balance sheet date of the assets and liabilities recognised by the Chief Constable. All noncurrent assets remain under the Commissioner s control however employment liabilities associated with the Chief Constable s staff are recognised along with an element of working capital supported by an intra-group debtor between the Chief Constable and Commissioner. Cash Flow Statement the Cash Flow Statement shows the changes in cash and cash equivalents by classifying cash flows as operating, investing and financing activities. However during 2013/14 all cash is held by the PCC for Bedfordshire so the cash flow statement for the Chief Constable balances to nil. 5

6 Financial Review Financial Review Financial Performance The total 2013/14 Revenue Budget allocated by the PCC for Bedfordshire to the Chief Constable for operational policing and support functions was M; actual expenditure amounted to M. The breakdown of which is shown in Note 20. The under spend for the year of 4.998M arose in the following areas: M Collaborated Units Territorial Policing Corporate Expenditure Business Support Total Use of the underspend of 4.998M on the Chief Constable s delegated budgets is dealt with by the PCC and shown in the separate accounts of the PCC for Bedfordshire and the PCC for Bedfordshire Group where it is added to the 0.367M funding surplus for the year and the underspend on PCC budgets of 0.042M to form the group underspend of 5.367M. A breakdown of the Chief Constables variances is shown below: Budget Variance Reason 000 Collaborated Units -1,670 Areas of protective service collaboration are subject to high degrees of volatility, such as major crime, armed policing and roads policing. In addition there have been underspends within ICT as projects were delayed until the future of the Strategic Alliance was clarified. Employee expenses -3,272 Following the introduction of the new policing model the force continued to reduce officer numbers during 2013/14, the reduction exceeded expectations and a recruitment process began again towards the end of the financial year. Other Service Costs 314 The force invested in improvements to the estate, and fast track recruitment process added to the overspend in this area in order to rebuild officer numbers. Income -370 The improvements of processes and the management of mutual aid and special police services via duty time have provided the force with more accessible income. The majority of the under spend is as a result of police officer and staff vacancies allied with substantial underspends within collaborated units. The force is now developing a recruitment strategy for the recruitment and retention of officers to ensure that the now agreed policing model is fully populated going forward. It is important to recognise that in the backdrop of continued budget cuts along with a period of reducing officer numbers the Chief Constable has delivered some excellent results as shown by the performance table in the Group Accounts. 6

7 Financial Review Pension Reserves The balance sheet includes a liability of M which is the commitment that the Chief Constable for Bedfordshire has in the long-term, to pay retirement benefits. This liability has a substantial impact on the net worth of the Chief Constable as recorded in the balance sheet, resulting in a negative overall balance of M. However, statutory arrangements for funding the deficit mean that the financial position remains healthy as the deficit of the Local Government Pension Scheme (LGPS) will be made good by increased contributions over the remaining working life of employees, as assessed by the scheme actuary. Finance is only required to be raised to cover police pensions when the pensions are actually paid. Under the Police Pension Fund Regulations 2007, if the amounts receivable by the pensions fund for the year are less than amounts payable, then an annual transfer is required to meet the deficit to the pension fund. Subject to parliamentary scrutiny and approval, up to 100% of this cost is met by central government pension top-up grant. Bedfordshire Police Partnership Trust Bedfordshire Police Partnership Trust is a charitable organisation supported by the PCC for Bedfordshire Group. The objective of the Trust is to concentrate its efforts on community-based issues relating to crime prevention, domestic violence, road safety, drugs awareness and other important areas that have a direct bearing on the quality of life. The Chief Constable supported the day to day administration of the Trust by providing two members of staff and office accommodation, the cost of which is included in the above expenditure. Changes in Accounting Policies Accounting policies have been updated to clarify the approach to group accounting and incorporate changes to IAS 1 and IAS19. Details of which are shown at Note 1 Changes in accounting policies require retrospective adjustment; therefore the financial statements for 2013/14 have been re-stated for all material effects as shown at Note 2. Future Prospects The financial environment in which the Commissioner and Chief Constable envisage they will be operating in within the next four years raises significant challenges and risks in relation to the overall delivery of the Commissioners Police & Crime Plan and specifically in relation to the revenue budgets and capital programmes. In considering these accounts therefore it is helpful to be aware of some specific context in relation to the financial environment the organisation is operating in. As a result of the Comprehensive Spending Review (CSR) there is an estimated funding gap of 3.5M in 2015/16. This was preceded by the requirement to find savings of 21M between 2011/12 and 2014/15. The policing sector is envisaging similar reductions to those experienced between 2011/12 and 2014/15 in the following CSR period 2015/16 to 2018/19. Following the planned reduction in officer numbers in order to support the policing model and funding gap, the force had its first recruitment drive during 2013/14 since 2010 and is developing a recruitment strategy, designed to maintain officer numbers and provide a workforce more representative of the community it serves. An increasing percentage of the annual budget is spent in the area of policing delivered by Collaborated Units. Whilst this has provided savings for the force and increased resilience, the priorities for Bedfordshire have to be considered alongside those of Hertfordshire and Cambridgeshire Constabularies. 7

8 Financial Review In addition Bedfordshire Police will take over as the lead force for both the Eastern Region Special Operations Unit and the Eastern Region Counter Terrorism Investigation Unit during 2014/15. Further information Additional information on revenue and capital expenditure is detailed in the notes to the accounts. Further information may be obtained from: Chief Finance Officer Bedfordshire Police Police Headquarters Woburn Road Kempston Bedford MK43 9AX Any person interested also has a statutory right to inspect the accounts at Police Headquarters, Woburn Road, Kempston before the completion of each annual audit as publicly advertised. 8

9 Statement of Responsibilities Statement of Responsibilities The Chief Constable s Chief Finance Officer Responsibilities The Chief Finance Officer is responsible for the preparation of the Chief Constable for Bedfordshire s statement of accounts in accordance with proper practices as set out in the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this statement of accounts the Chief Finance Officer has: selected suitable accounting policies and then applied them consistently; made judgements and estimates that were reasonable and prudent; complied with the Code; kept proper accounting records 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 gives a true and fair view of the financial position of the Chief Constable as at the 31 March 2014 and its income and expenditure for the year then ended. Philip Wells Chief Finance Officer to the Chief Constable & Police & Crime Commissioner 25 th September 2014 The Chief Constable s Responsibilities The Chief Constable is required: to make arrangements for the proper administration of its financial affairs and to secure that one of its officers (the Chief Finance Officer) has the responsibility for the administration of those affairs; to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; to ensure that there is an adequate annual governance statement; to approve the statement of accounts. Colette Paul Chief Constable of Bedfordshire Police 25 th September

10 Annual Governance Statement Annual Governance Statement 1. Scope of Responsibility The Chief Constable is responsible for the delivery of operational policing for the County of Bedfordshire and for ensuring that business is conducted in accordance with the law and proper standards. In addition the Chief Constable is responsible for safeguarding public money, ensuring it is properly accounted for and used economically, efficiently and effectively. The Chief Constable also has a duty to make arrangements to secure continuous improvement in the way in which the Force s functions are exercised, having regard to a combination of economy, efficiency and effectiveness. In discharging this overall responsibility, the Chief Constable has direction and control over the officers and staff of Bedfordshire Police. She is also responsible for putting in proper arrangements for the governance of her affairs, facilitating the effective exercise of her functions, and which includes ensuring a sound system of internal control is maintained throughout the year and that arrangements are in place for the management of risk. The Chief Constable, in conjunction with the Police and Crime Commissioner (PCC) has approved and adopted a code of corporate governance, which is consistent with the principles of the CIPFA/SOLACE Framework: Delivering Good Governance in Local Government. This statement explains how the Authority has complied with the code and also meets the requirements of regulation 4(2) of the Accounts and Audit Regulations 2011 in relation to the system of internal control. 2. The Purpose of the Governance Framework This statement has been prepared for the 2013/14 financial year and reports on the effectiveness of the governance arrangements throughout the year and outlines future actions to enhance the governance arrangements. The governance framework comprises the systems and processes, and culture and values, by which the Chief Constable is directed and controlled and its activities through which she is accountable. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives; it can therefore provide only reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Commissioner s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. A three Force (Bedfordshire, Cambridgeshire and Hertfordshire) Scheme of Governance was jointly agreed in April 2014 for future years, which can be found on the PCC s website and reflects the collaboration ambition of the three Forces and PCCs moving forward. 3. The Governance Framework This section describes the key elements of the systems and processes that comprise the governance arrangements that have been put into place for the Chief Constable. It explains the overarching structures that have been put in place to deal with systems and processes and how they are linked to each other. In producing this 10

11 Annual Governance Statement explanation steps have been taken to ensure that the actions identified in the Code of Corporate Governance are being complied with. The statutory framework in which the Chief Constable as a Corporation Sole will operate is: Police Reform and Social Responsibility Act; Policing Protocol Order 2011; Home Office Financial Management Code of Practice; and the Strategic Policing Requirement; Focusing on Outcomes for the Local People The Chief Constable set out her purpose and priorities, to fight crime and protect the public in her five year plan. This plan stipulated a number of key deliverables under the main headings of: Public improving rapport and keeping the public at heart of all that we do People representative, appropriate use of skills, appropriate training/development Partnerships common purpose of crime reduction and continued collaboration Productivity removal of waste, increase use of technology Communication public engagement, improved access, improved social media Performance reduce crime levels and gang related impacts; increase satisfaction and under reported crime levels These priorities and deliverables are aligned with the Commissioner s Police and Crime Plan as well as those priorities with regards to the Strategic Policing Requirement. The Chief Constable reported end of year performance for 2013/14 that showed that the Force had continued to show sustained performance improvement on 2012/13. In addition the Chief Constable has clearly stated her performance measures for the forthcoming year and in doing so focused on areas where she expects continuous improvement around crime reduction but also where she expects, through improved processes and engagement with the public, higher levels of crime to be reported, such as sexual offences and hate crime. To further enhance this, the Chief Constable has re-engineered the Force s performance management framework to ensure that there is further robust management and reporting in place in relation to overall force performance. Working together to achieve a common purpose, with clearly defined functions and roles. As set out above the governance arrangements have been developed in line with the Police Reform and Social Responsibility Act 2011, the statutory Policing Protocol and the Home Office Financial Management Code of Practice. The Scheme of Delegation includes details of the various duties delegated to senior officers. Financial Regulations (including contract standing orders) have been developed to ensure that the financial responsibilities of the Chief Constable are clear. 11

12 Annual Governance Statement The Chief Constable regularly meets with the Commissioner and meets formally as an Executive Board on a monthly basis, along with the Deputy Chief Constable and Chief Finance Officer, to review activities and take decisions relating to strategy, governance and for the Commissioner to hold the Chief Constable to account. The Commissioner also holds the Chief Constable to account, through the Alliance Summit Board for the provision of those services that have been or will be delivered collaboratively under Section 22 of the Police Act The Force Executive Board and Joint Audit Committee review the risk registers to ensure a shared understanding of the strategic risks of the Force. Promoting values and demonstrating the values of good governance through upholding high standards of conduct and behaviour The Chief Constable has adopted a policy on Anti-Fraud and Corruption. The policy is designed to encourage prevention, promote detection and identify a clear pathway for investigation of fraudulent and/or corrupt activities or behaviour. The Force takes the view that conduct issues are not just the domain of the collaborated Professional Standards Department. New codes of conduct and a review of the way police officers are subject to misconduct inquiries were introduced in October 2008, following the Taylor Report, directed at making timelier and less bureaucratic interventions. In addition to this the Force has pro-actively taken on board the national Code of Ethics released by the College of Policing and at the forefront nationally in embedding this within the Force. The Force has policies for Professional Standards, which are tri-force policies, with Cambridgeshire and Hertfordshire, and a policy for whistleblowing to deal with all disclosures of inappropriate behaviour or malpractice, including fraud and misappropriation. This includes areas catered for under the Public Interest Disclosure Act Policy is developed and assessed for equality impact. This ensures that compliance with legislation and the interest of stakeholders is considered prior to producing policy. Policy is managed corporately and individual policies are the responsibility of Heads of Business or the collaborated units. Equality objectives have been agreed and published for the Force and the Chief Constable chairs the Equality and Diversity Board which considers equality issues on the delivery of our service both internally and externally. Taking informed and transparent decisions, which are subject to effective scrutiny and managing risk All decision making is carried out in accordance with the Governance framework. The Governance arrangements ensure that the key decisions taken by the Chief Constable are made in the light of all necessary information and analysis and where appropriate made public (unless exempt under the Provision of Access to Information rules). Appropriate legal, financial, human resources and other professional advice is considered as part of the decision-making process. The Chief Constable has appropriate oversight and scrutiny of the Force decision-making through the Force Executive Board. 12

13 Annual Governance Statement The Force decision making process also includes a Force Resources Board, chaired by the Deputy Chief Constable which is fed by both the Continuous Improvement Board and the Performance Board. The Force also operate Performance and Tasking Boards which are chaired by the Assistant Chief Constable and are undertaken on a monthly basis The Force is subjected to an extensive internal and external inspection regime and the results of these inspections are published to ensure appropriate scrutiny of decision-making. The Force s Risk Management Strategy is fed by an Organisational Strategic Assessment that considers both current and future issues with regards to performance, organisational aspect, finance and changes in legislation. The Force Executive review the Strategic Risk Register, which flows from the Organisational Strategic Assessment, on a monthly basis to ensure that all decisions made are made in cognisance of the Strategic Risks for the Force. Particular emphasis has been placed on the clear distribution of roles and responsibilities and the distinctive ownership for risks. These are also considered at the relevant Governance Boards, dependant on the risk itself, of Force Resources Board, Continuous Improvement Board or Performance Board. The Force has taken lead responsibility for the tri-force delivery of Protective Services as well as the regional responsibility for the Eastern Region Serious and Organised Crime Unit (ERSOU) and the Counter Terrorism Investigation Unit (CTIU). The Lead Force arrangement will enable the Chief Constable to ensure that both tri-force and regional resources are being deployed in a way that delivers better outcomes for our public. The Governance for these operations is through a Joint Force Governance Group, which includes a Bedfordshire PCC representative. This Board is governed by Local Force and PCC s Board as well as a regional Chief Constables and PCCs Board. Developing the capacity and capability of staff and officers to be effective. The Chief Constable takes a pro-active approach to staff development, and has developed processes that identify training requirements for individuals. There is a programme in place for the senior officers of the Force who will require continuing professional development. The Force adopted a programme of training to develop the investigation capability of the Force. Engaging with local people and other stakeholders to ensure robust public accountability. The Force, through their dedicated Superintendent and Chief Inspector roles, regularly meet and discusses local issues with Community Safety Partnership representatives to ensure that local issues are picked up and dealt with. The Chief Constable has also during the year bolstered the Force s Neighbourhood policing model by reverting some police officers back to neighbourhood roles to support the function currently undertaken by PCSOs. The Force has undertaken an internal workforce survey to help understand views of key stakeholders, i.e. staff and officers, in the delivery of their work. The outcome of this is regularly reviewed to ensure that the Chief Constable is taken the appropriate actions to mitigate against some of the risks highlighted in the survey, by officers and 13

14 Annual Governance Statement staff which in turn will help to ensure that service delivery meets the needs of the public. The Force through the Chief Constable, Chief Officers and Senior Managers has increased its visibility in the communities, through public held meetings and widened its engagement with all communities to ensure that the service provided, is that which meets the public s needs. Reliable financial reporting and internal financial controls. Financial control involves the existence of a structure which ensures that all resources are used as efficiently and effectively as possible to attain the overall objectives and targets. Internal financial control systems are in place to minimise the risk of loss, unlawful expenditure or poor value for money, and to maximise the use of the assets and limited resources. The Financial Regulations and Standing Orders provide the overarching framework for this control. The Force s financial management framework follows national and/or professional best practice and its key elements are set out below: The Chief Constable as Corporation Sole has a Chief Finance Officer (CFO) with responsibility under Section 151 of the Local Government Act 1972 to ensure that there are arrangements in place for the proper administration of financial affairs. The CFO also has certain statutory obligations under Section 114 of the Local Government Finance Act 1988 which cannot be delegated, namely, reporting any potentially unlawful decisions by the Force on expenditure and where a loss or deficiency may arise. The CFO must also report in the event that spending in the year is likely to exceed available resources. The organisation fully complies with the CIPFA Statement on the Role of the Chief Financial Officer in the Police Service. The finance function is governed by the Financial Regulations which are framed under the Home Office Code of Financial Management. The Chief Constable is responsible for adherence to Police Regulations and the Force monitored for additional compliance by HMIC and HM Revenue and Customs. Responsibility and accountability for resources rests with managers who are responsible for service provision. The Commissioner has adopted the CIPFA Code of Practice on Treasury Management requiring approval of an annual Treasury Management Strategy including an annual investment strategy which the Force adheres to. In accordance with the CIPFA Prudential Code and best accounting practice a four-year medium-term financial plan (MTFP) and a four-year capital programme are produced. The revenue budget provides an estimate of the annual income and expenditure requirements for Bedfordshire Police (PCC and Chief Constable) and sets out the financial implications of the Police and Crime Plan. It provides chief officers with the authority to incur expenditure and the basis on which to monitor the financial performance. Capital expenditure is an important element in the development the policing business since it represents major investment in new and improved assets. The 14

15 Annual Governance Statement Commissioner approves the capital programme each year and monitors its implementation and funding closely. Audit Committee The Chief Constable and Commissioner have a Joint Audit Committee (JAC) that provides independent scrutiny and assurance on the adequacy of the corporate governance and risk management frameworks and the associated control environments. In addition the JAC gives advice according to good governance principles and proper practices. In particular the Audit Committee: Supports the Chief Constable and statutory officers in ensuring that effective governance is in place and functioning effectively, and making recommendations for improvement. Monitors the effective development and operational of the internal control environment and risk management processes and makes recommendations to the Chief Constable, as appropriate. Reviews and endorses the Chief Constable s Governance Statements and Statement of Accounts, bringing to the attention of the Chief Constable and amendments proposed for consideration. Undertakes an annual review of the Chief Constable s system of internal audit Monitors and reviews the work and reports of both the external and internal auditors and provides opinions and recommendations where appropriate. Partnerships The Force works with numerous partnerships, these being with the Eastern Region for Counter Terrorism and Organised Crime, Hertfordshire Constabulary and Cambridgeshire Constabulary for the delivery of numerous protective and organisational support services and is part of the Chiltern Transport Consortium as well as the National Police Air Consortium. During the year governance arrangements to support the collaborative working were revised and there is now an overarching memorandum of understanding and a formal section 22 agreement. Collaboration with Cambridgeshire and Hertfordshire is comprised of three main work streams: Protective Services; Organisational Support; and Operational Support. There is a designated lead for each of the work streams with the Chief Constable of Bedfordshire being the lead for Protective Services. 4. REVIEW OF EFFECTIVENESS The Chief Constable s role in maintaining the effectiveness of the governance framework extends to ensuring that there is an approved Code of Corporate Governance and that the Code includes the arrangements for review thereof. The Chief Constable manages the Force through a series of Boards. The Force Executive Board (FEB), which is responsible for governance and strategic direction, is chaired by the Chief Constable. This is fed through three key strategic Boards, these being Continuous Improvement Board - focusing on change, The Performance Board - focusing on operational performance and the Resources Board - focusing on the strategic and value for money aspects of the resources of the Chief Constable. 15

16 Annual Governance Statement Through the combination of these Boards the Chief Constable ensures there is a tight control framework around financial management, performance, corporate governance and the risk management process and also oversees areas of business such as Professional Standards, Human Resources, and the Change Programme. The Chief Constable has a Joint Audit Committee, with the Commissioner, which fulfils the core functions of an audit committee in accordance with the guidance set out in the CIPFA publication Audit Committees Practical Guidance for Local Authorities. The Force is subject to regular external scrutiny of the quality of service by Her Majesty s Inspectorate of Constabulary (HMIC), internal and external auditors. Inspection reports are considered as appropriate and made public (unless this is not possible for the reasons outlined above). The HMIC reported, in July 2013, that whilst Bedfordshire had responded well to the funding challenge, it felt that there was a significant risk beyond 2015/16 of sustaining service delivery if funding continued to be reduced. The HMIC reported on Domestic Abuse in November 2013 and highlighted some risks for which an action plan was requested early in The HMIC also conducted a without notice custody inspection, which whilst recognised the positive service delivered by the officers and staff concluded that the Greyfriars Custody suite was not fit for purpose. Whilst the Commissioner and Chief Constable knew the suite needing replacing and had received planning permission to do so, this resulted in the earlier, than expected, closure of the custody facility in Greyfriars. The Joint Audit Committee plays a pivotal role in the system of internal control through its oversight of audit arrangements. The Committee approved the external audit plan and received the annual audit letter from the external auditor. The Committee also approved the annual internal audit plan, receives regular internal audit reports and monitored management performance against agreed action plans to address any weaknesses identified. In addition, the Committee oversaw progress on Risk Management and related issues. The Head of Internal Audit's Annual Report for the year ended 31 March 2014 has been received and was considered by Interim Joint Audit Committee on 26 th June The Report includes an opinion on the internal financial control framework which stipulates that the control framework is adequate, as shown below. In our opinion based upon the work we have undertaken, for the 12 months ended 31 March 2014, Bedfordshire Police had adequate and effective risk management, control and governance processes to manage the achievement of the organisation s objectives. 5. SIGNIFICANT GOVERNANCE ISSUES In 2012/13 four issues of governance were identified, as shown below: Storage and Control of Controlled Drugs The follow up audit that was undertaken in this area of activity concluded that good progress had been made in strengthening the control environment for this activity. 16

17 Annual Governance Statement Anti-Social Behaviour (ASB) The Chief Constable asked the HMIC to re-visit the Force following their previous inspection on ASB, after the recommended improvements had been implemented. This follow up inspection resulted in the Force receiving a positive report in relation to ASB. Collaboration Whilst the collaboration programme, for the majority of 2013/14 continued to be in a state of deliberation and little progress made, the Chief Constables and Commissioners of Bedfordshire, Hertfordshire and Cambridgeshire have now signed a Memorandum of Understanding and agree for the Chief Constables to create a Change team, for which key roles are now in place, to take forward the collaboration work in 2014/15. Financial Challenges Policing as a whole continues to face a financial challenge but with Bedfordshire s crime mix and size it faces a bigger challenge than others. The Chief Constable has commenced with both collaboration and a significant programme of transformation which will assist the Force in meeting its financial and performance challenge over the medium term. In 2013/14 there were a few governance issues that the Chief Constable needed to, or has had to address in relation to improvements, which are shown below: Domestic Abuse National and Force reports highlight national concerns and specific concerns in Beds over high Domestic Abuse (DA) risk and Force processes, structure and resources. - The Assistant Chief Constable (ACC) is personally driving the Force s response to the Domestic Abuse inspection. - Domestic Abuse improvement plans have been shared with HMIC. - HMIC visited the Force in April 2014 to review the Force s improvement plans. Initial feedback reflected positively on the initial improvements and on the on-going change plans. - A Mini review is scheduled for August, prior to HMIC visit in Sept Evolving DA Action Plan with partner and stakeholder engagement. - The CEO of national CAADA has reviewed the Beds DA Action Plan and has offered support with on-going development. Custody Initial inspection feedback reported, staff, were seen as professional, caring, committed and passionate about their work and the inspection team was really impressed at the way they dealt with detainees. The inspectors raised concerns about the physical condition of the custody estate, specifically over the facilities at Greyfriars, which they considered unfit for purpose. Despite recent installation of latest CCTV and digital recording equipment they highlighted the poor design layout and potential safety hazards associated with a building of that age. Comments on the condition of the estate were highlighted in the previous inspection in 2010, and little has been done to address those concerns. The following items are of note: - Greyfriars was closed on Friday 11 April 2014, immediately following the inspection. 17

18 Annual Governance Statement - Plans were already in place, and the Estates Strategy has always been included an action plan on custody, to make our custody areas better for both detainees and our staff. - We have been saving up to replace these facilities since their last inspection in Planning permission is in place for a completely new facility which will be built at force headquarters in the next months. - The Planning application for the temporary custody facility at force headquarters will be considered on 23 June 2014 with an aspiration to complete the move during the first week of September Financial Challenges Whilst not a governance issue per se, it is important to highlight the significant financial challenge the Force has over the Medium Term, in the light of further funding reductions within the Police Service. The Force have a Medium Term Financial Plan which highlights that savings plans are in place to bridge the financial gaps, but these will need to be regularly reviewed to ensure they come to fruition. A key element of the medium term financial plan is the delivery of the transformation programme called the Quality Improvement Programme which will transform the way in which Bedfordshire delivers its policing service along with investment into ICT. This change programme will be governed by both a local change board, as well as the tri-force change board being sighted. Performance Challenge Whilst performance for 2013/14 showed a continuous improvement against the performance in 2012/13, which is extremely positive due to the continuing reductions in police funding, the Force will over the medium term continually face funding reductions and the ability to maintain performance improvement will become difficult. This is an area therefore that will require a high level of scrutiny over the forthcoming year. Colette Paul Chief Constable for Bedfordshire Police Philip Wells Chief Finance Officer to the Chief Constable 25 September September

19 Audit Opinion INDEPENDENT AUDITOR S REPORT TO THE CHIEF CONSTABLE OF BEDFORDSHIRE POLICE Opinion on the Chief Constable for Bedfordshire financial statements We have audited the financial statements of the Chief Constable of Bedfordshire for the year ended 31 March 2014 under the Audit Commission Act The financial statements comprise the Chief Constable of Bedfordshire Movement in Reserves Statement, the Chief Constable of Bedfordshire Comprehensive Income and Expenditure Statement, the Chief Constable of Bedfordshire Balance Sheet, the Chief Constable of Bedfordshire Cash Flow Statement, and the related notes 1 to 28 and the Chief Constable for Bedfordshire Pension Fund Account Statements. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2013/14. This report is made solely to the Chief Constable of Bedfordshire in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 48 of the Statement of Responsibilities of Auditors and Audited Bodies published by the Audit Commission in March To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Chief Constable of Bedfordshire, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the Chief Finance Officer and auditor As explained more fully in the Statement of Responsibilities set out on page 9, the Chief Finance Officer is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2013/14, and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Chief Constable of Bedfordshire circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Chief Finance Officer; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Statement of Accounts 2013/14 to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. 19

20 Audit Opinion Opinion on financial statements In our opinion the financial statements: give a true and fair view of the financial position of the Chief Constable of Bedfordshire as at 31 March 2014 and of its expenditure and income for the year then ended; and have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2013/14. Opinion on other matters In our opinion, the information given in the Statement of Accounts 2013/14 for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we report by exception We report to you if: in our opinion the annual governance statement does not reflect compliance with Delivering Good Governance in Local Government: a Framework published by CIPFA/SOLACE in June 2007 (updated as at December 2012); we issue a report in the public interest under section 8 of the Audit Commission Act 1998; we designate under section 11 of the Audit Commission Act 1998 any recommendation as one that requires the Chief Constable to consider it at a public meeting and to decide what action to take in response; or we exercise any other special powers of the auditor under the Audit Commission Act We have nothing to report in these respects. Conclusion on the Chief Constable s arrangements for securing economy, efficiency and effectiveness in the use of resources Respective responsibilities of the Chief Constable and the auditor The Chief Constable is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements. We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Chief Constable has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. The Code of Audit Practice issued by the Audit Commission requires us to report to you our conclusion relating to proper arrangements, having regard to relevant criteria specified by the Audit Commission. We report if significant matters have come to our attention which prevent us from concluding that the Chief Constable has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Chief Constable s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively. 20

21 Audit Opinion Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources We have undertaken our audit in accordance with the Code of Audit Practice, having regard to the guidance on the specified criteria, published by the Audit Commission in October 2013, as to whether the Chief Constable has proper arrangements for: securing financial resilience; and challenging how it secures economy, efficiency and effectiveness. The Audit Commission has determined these two criteria as those necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Chief Constable put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Chief Constable had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources. Conclusion On the basis of our work, having regard to the guidance on the specified criteria published by the Audit Commission in October 2013, we are satisfied that, in all significant respects, the Chief Constable of Bedfordshire put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March Certificate We certify that we have completed the audit of the accounts of the Chief Constable of Bedfordshire in accordance with the requirements of the Audit Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission. Mark Hodgson Date: 26 September 2014 for and on behalf of Ernst & Young LLP, Appointed Auditor Cambridge. A signed copy of this audit report is held by the Chief Finance Officer. 21

22 Comprehensive Income and Expenditure Statement Comprehensive Income and Expenditure Statement This statement recognised the financial resources consumed at the request of the Chief Constable in exercising day-to-day direction and control of the police force for the financial year, presented using accounting standards rather than amounts being funded from taxation. The Comprehensive Income & Expenditure Statement includes the intra-group transfer of funding from the PCC to the Chief Constable to cover resources consumed; the resulting balance of Total Comprehensive Income & Expenditure reflects the movement in employees liability during the year. Gross Expenditure 2012/13 (re-stated as per Note 2) Gross Income Net Expenditure Gross Expenditure 2013/14 Gross Income Net Expenditure Notes ,680-1,201 40,479 Local Policing 38, ,350 7, ,344 Dealing with the Public 8, ,228 8, ,240 Criminal Justice Arrangements 8, ,896 4, ,441 Roads Policing 4, ,373 8, ,765 Specialist Operations 7, ,400 5, ,494 Intelligence 6, ,289 30, ,133 Investigations 31, ,889 6,610-1,122 5,488 Investigative Support 6,693-1,256 5,437 4,766-1,000 3,766 National Policing 5,053-1,083 3, Corporate & Democratic Core Non-Distributed Costs ,209-5, ,743 Cost of Services 117,858-5, ,704 Financing & Investment Income & 37,890 37,847 8 Expenditure PCC Funding for Financial -104,843 3 Resources Consumed -100,955 (Surplus) or Deficit on Provision of 46,790 49,596 Services Re-measurements of the net 55,757 defined benefit liability Other Comprehensive Income & 55,757 Expenditure 102,547 Total Comprehensive Income & Expenditure -62, ,580-12,984 22

23 Movement in Reserves Statement Movement in Reserves Statement This statement shows the movement in the 12/13 and 13/14 financial years on the reserves held by the Chief Constable. The only transactions shown are those that relate to the Pensions Reserve and the Accumulated Absences Reserve (reflecting movements relating to staff and officers under the direction and control of the Chief Constable). All other reserves are held by the Commissioner. Police Fund Total Usable Reserves Unusable Reserves Total Authority Reserves Balance as at 1 st April 2012 (Re-stated) , ,229 Movement In Reserves during 2012/13 (Surplus) or deficit on provision of services (Re-stated) 46,790 46, ,790 Other Comprehensive Income & Expenditure (Re-stated) ,757 55,757 Total Comprehensive Income & Expenditure 46,790 46,790 55, ,547 Adjustments between accounting basis & funding basis under regulations (note 7) -46,790-46,790 46,790 0 (Increase) / Decrease in Year , ,547 Balance as at 1 st April 2013 (re-stated as per Note 2) , ,776 Movement In Reserves during 2013/14 (Surplus) or deficit on provision of services 49,596 49, ,596 Other Comprehensive Income & Expenditure ,580-62,580 Total Comprehensive Income & Expenditure 49,596 49,596-62,580-12,984 Adjustments between accounting basis & funding basis under regulations (note 7) -49,596-49,596 49,596 0 (Increase) / Decrease in Year ,984-12,984 Balance as at 31 st March , ,792 23

24 Balance Sheet & Cash Flow Statement Balance Sheet As at 31 st March 2013 (Re-stated as per Note 2) As at 31 st March Note 0 Non-Current Term Assets 0 1,014 Payments in advance 2, Inventories ,640 Short Term Debtors 3, ,645 Intra group Debtors 2, ,414 Current Assets 8,281-5,971 Short Term Creditors Accumulated Absences -4, ,407 Other Short Term Creditors -7, Receipts in Advance ,378 Current Liabilities -12, ,805 Liability Relating to Defined Benefit Pension Schemes -865, ,007 Provisions ,812 Non-Current Liabilities -866, ,776 Net Assets -870, ,776 Unusable Reserves 870, ,776 Total Equity 870,792 The balance sheet sets out the assets, liabilities and reserves at the year end. As previously mentioned the Chief Constable does not own any non-current assets these all remain under the direction and control of the PCC for Bedfordshire and are therefore shown in the PCC for Bedfordshire s group accounts. However the Chief Constable is deemed to hold the employment liabilities associated with the employees under their direction and control which are matched by a negative unusable reserve. In addition working capital balances are recognised relating to expenditure consumed and income generated under the control of the Chief Constable, these are matched by an Intra-group Debtor to reflect the amount due from the Commissioner in order for the Chief Constable to meet these overall liabilities. Colette Paul Philip Wells 25 September September 2014 Chief Constable for Bedfordshire Police Chief Finance Officer to the Chief Constable 24

25 Balance Sheet & Cash Flow Statement Cash Flow Statement As at 31 st March 2013 (Re-stated as per Note 2) As at 31 st March Note -46,790 Net surplus or (deficit) on the provision of services -49,596 46,790 Adjust net surplus or deficit on the provision of services for noncash movements 49,596 0 Adjust for items included in the net surplus or deficit on the provision of services that are investing and financing activities 0 0 Net cash flows from Operating Activities 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 0 This statement reflects that all cash balances are held by the Police & Crime Commissioner. 25

26 Notes to the Accounts Note 1: Accounting Policies 1. General The Statement of Accounts summarises the transactions for the 2013/14 financial year and the position of the Group as at 31 March It has been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2013, supported by International Financial Reporting Standards (IFRS) which is recognised by statute as representing proper accounting practice. The Income and Expenditure Statement is presented as per the Service Reporting Code of Practice published annually by CIPFA. The accounting convention adopted is historical cost, modified by the revaluation of certain categories of non-current assets. 2. Cost Recognition and Intra-Group Adjustment All contracts are held in the name of the PCC for Bedfordshire and the PCC pays for all expenditure including salaries of police officers, PCSOs and police staff. There is no transfer of cash between the PCC and Chief Constable, the Chief Constable does not have a bank account into which monies can be received or paid from. Costs are recognised in the Chief Constable s accounts to reflect the resources consumed and generated in the direction and control of day-to-day policing at the request of the Chief Constable. In addition the Chief Constable s accounts reflect the employment and postemployment liabilities in accordance with IAS19 which states that liabilities relating to these benefits should follow the cost of employment. The Chief Constable s Total Comprehensive Income and Expenditure reflects the movement in the Chief Constable s unusable reserves as all other net expenditure is met by a transfer of resources from the PCC and no usable reserves are held by the Chief Constable. 3. Debtors and Creditors The Chief Constable for Bedfordshire s accounts are maintained on the basis of receipts and payments converted at the year end to income and expenditure by bringing creditors and debtors of material significance into account. Where consumption of goods and services needs to be recognised in the relevant financial year, but cash has not been paid a creditor or debtor for the relevant amount, is recorded in the group Balance Sheet. The following exceptions are applied consistently and their effect is not material on the accounts from one year to the next. (i) Overtime paid to Police staff which has been claimed after the end of the financial year is not accrued; (ii) Electricity and similar quarterly payments are charged so that four payments appear in each year s accounts. Payments are not apportioned between financial years. For monthly accounts, twelve payments are charged during the year; (iii) Travel expenses claimed after the end of the financial year have not been accrued. As all payments are made by the PCC on the Chief Constables behalf, the creditors and debtors recognised on the Chief Constables balance sheet will need to be 26

27 financed by the PCC, therefore an intra group debtor is recognised in the Chief Constables balance sheet and an intra-group creditor on the PCC s balance sheet to show that the liability ultimately rests with the PCC. 4. Pensions As part of the terms and conditions of employment the Group offers retirement benefits for Police Officers and Staff. Both Schemes provide members with defined benefits related to pay and service. (i) Police Officers Police Pension Scheme This Scheme is unfunded. The charge to the Accounts represents the applicable IAS19 charges as determined by the Actuary. The Code of Practice requires separate statements to be produced which are shown at Note 28. (ii) Other Employees Local Government Pension Scheme (LGPS) Subject to certain qualifying criteria, police staff are eligible to join the Local Government Pension Scheme administered by Bedford Borough Council. The Scheme is funded and all group pension costs are charged to the Chief Constable for Bedfordshire s Accounts; these comprise the IAS 19 amounts determined by the Actuary. These amounts contain a nominal amount relating to staff employed by the Commissioner meaning the Commissioner s accounts do not reflect any cost or liability relating to the staff pension scheme. The Commissioner s balances are judged not to be material therefore no split is requested from the Actuary and this judgement is kept under review. The figures included within the Accounts are based on the IAS19 requirements, that an organisation should account for retirement benefits when it is committed to give them, even if the actual giving will be many years in the future. Injury benefits paid under both police pension schemes are disclosed separately. These payments are unfunded and are paid directly by the group. Injury awards are subject to the same treatment as police pension schemes, with the movement on the liability being attributable to any change in interest cost and actuarial gains / losses. This obligation to pay pensions benefits in the future is recognised as a liability in the Chief Constable for Bedfordshire s balance sheet. In the Comprehensive Income and Expenditure Statement, transactions are recorded that indicate the change over the year in the pension liability. The transactions are not cash-based but are instead actuarially calculated amounts that reflect more accurately the true changes in the scheme s long-term liabilities. The following items should be noted: The attributable defined benefit liabilities of each scheme should be measured on an actuarial basis using the projected unit credit method i.e. an assessment of the future payments that will be made in relation to retirement benefits earned to date, based on assumptions about mortality rate, employee turnover rates and projections of projected earnings for current employees. Liabilities for the payment of future injury benefits are based on current and projected injury statistics (including an element for serving police officers) as determined by the actuary. Liabilities are discounted to their value at current prices using a discount rate of 4.5% for Local Government Pension Scheme and 4.3% for the Police Pension Scheme (based on the indicative rate of return on high quality corporate bonds determined by the actuaries). 27

28 28 Notes to the Accounts In the case of the local government scheme, which is a funded scheme, the scheme assets are deducted in determining the overall liability. Quoted securities held as scheme assets are valued at their bid value at the latest available date. The change in the net pension liability is analysed into the following components: The current service cost (the increase in liabilities as a result of years of service earned this year) is allocated to the relevant service line in the Comprehensive Income and Expenditure Statement The past service cost (the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years) is debited to 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) is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. Interest Income on assets (the annual investment return on the fund assets attributable to the group) is credited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. Changes to IAS19 have altered the way in which the fair value of interest income on plan assets are calculated, the effect on the financial statements is that amounts credited to the Surplus / Deficit on Provision of Services (financing income) is reduced, this is countered by an adjustment shown in Other Comprehensive Income and Expenditure. There is no effect on the overall pension liability. The changes in the values relating to 2012/13 ( 0.062M) are not judged to be material therefore no re-statement of balances has been made. Gains / losses on settlements (the result of actions to relieve the group of liabilities or events that reduce the expected long term return) are debited / credited to the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs. Re-measurements of the net defined benefit liability (asset) are debited / credited to the appropriate reserve. This includes an amount for actuarial gains / losses and estimated returns on plan assets which arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions. The employers contributions made in the year are not accounted for as an expense. The above balances and transactions are included in the accounts to provide a more informative picture of the Chief Constable s pension schemes and this liability is matched by an unusable reserve. 5. Officers Emoluments Officers Emoluments are disclosed in Note 21 to the accounts on a cash basis of gross pay as notified in the P60s to the Inland Revenue and including taxable benefits within the P11Ds. The figures contained within the Comprehensive Income and Expenditure Statement, however, are prepared on an accruals basis in accordance with proper accounting practices.

29 6. VAT VAT is included in the accounts of the Chief Constable for Bedfordshire, only to the extent that it is not recoverable. VAT Receivable is excluded from income. 7. Overhead and Support Services During the year, Corporate Services, central costs and overheads are managed within approved budgets and their costs are not recharged to devolved operational budgets. At the end of the year, in accordance with the costing principles of the CIPFA Service Analysis Code of Practice 2013/14 (SERCOP), the cost of overheads and support services are charged to the SERCOP defined service areas with the exception of: - Corporate and Democratic Core: costs relating to the PCC for Bedfordshire s status as a multi-functional democratic organisation. - Non Distributed Costs: the cost of discretionary benefits awarded to employees retiring early and any depreciation and impairment losses chargeable on non-operational properties. These two cost categories are defined in SERCOP and accounted for as separate headings in the Comprehensive Income and Expenditure Statement, as part of Cost of Services. 8. Leases Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the services benefiting from use of the leased property, plant or equipment. Charges are made on a straight line basis over the life of the lease, even if this does not match the pattern of payments (i.e. there is a rent free period at the commencement of the lease). Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards of ownership from the lessor to the lessee. The Chief Constable has assessed its leases and the total value of potential finance leases are not of significant value, and therefore all leases are treated as operating leases. The Chief Constable has no leases where it is the lessor. 9. Benefits Payable during Employment Short-term employee benefits such as wages and salaries, paid annual leave and time owed for current employees are recognised as an expense in the year in which employees render service. An accrual is made against the services in the Surplus / Deficit on Provision of Services for the cost of leave earned by employees but not taken before the year end. The accumulated cost is carried as a liability on the Chief Constables balance sheet and reversed out of the General Fund Balance by a credit to the Accumulating Compensated Absences Adjustment Account in the Movement in Reserves Statement. The accumulated cost is carried entirely as a liability on the Chief Constables balance sheet which therefore contains a nominal amount relating to staff employed by the Commissioner, this is judged not to be material therefore no split is required and this judgement is kept under review. 10. Termination Benefits Termination benefits are amounts payable as a result of a decision to terminate an officer s employment before the normal retirement date or an officer s decision to accept voluntary redundancy and are charged on an accruals basis to the relevant service line in the Comprehensive Income and Expenditure Statement once a valid expectation of redundancy is created. 29

30 11. Events after the Reporting Period Events after the reporting period are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date in which 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 indicate 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 to the accounts 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. 12. 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 Chief Constable for Bedfordshire s financial performance. 13. Jointly Controlled Operations and Jointly Controlled Assets Jointly controlled operations are activities undertaken by the Chief Constable for Bedfordshire in conjunction with other ventures, that involve the use of assets and resources of the ventures, rather than the establishment of a separate entity. The Comprehensive Income & Expenditure Statement is debited with the expenditure it incurs from the activity of the operation. As the PCC receives all income and funding, any income receivable from the structure of the arrangement will be credited to the Comprehensive Income and Expenditure Statement of the PCC. The PCC then credits the Chief Constable with an equivalent amount through the intra-group funding. Jointly controlled assets are items of property, plant or equipment that are jointly controlled by the Chief Constable and other ventures, with the assets being used to obtain benefits for the ventures. The joint venture does not involve the establishment of a separate entity. The Comprehensive Income and Expenditure Statement is debited with the expenditure it incurs from the activity of the operation. As the PCC receives all income and funding, any income received from the structure of the arrangement will be credited to the Comprehensive Income and Expenditure Statement of the PCC. The PCC then credits the Chief Constable with an equivalent amount through the intra-group funding. 14. Overheads and Support Services The costs of overheads and support services are charged to those operations that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice (SERCOP). The total absorption costing principle is used the full cost of overheads and support services are shared between users in proportion to the benefits received, with the exception of Non Distributed Costs as defined in SERCOP which are accounted for under a separate heading in the Comprehensive Income and Expenditure Statement. 30

31 15. Provisions, Contingent Liabilities and Contingent Assets Provisions are made when an event has taken place that gives the Chief Constable for Bedfordshire a legal or constructive obligation that probably requires settlement by a transfer of economic benefits or service potential, and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Chief Constable for Bedfordshire becomes aware of the obligation, and measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. Estimated settlements are reviewed at the end of each financial year. If it becomes less than probable that a transfer of economic benefits will be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service. A contingent liability arises where an event has taken place that gives the Chief Constable a possible obligation whose existence will only be confirmed by the occurrence of uncertain future event not wholly within its control. Contingent liabilities also arise in circumstance where a provision would otherwise be made but the recognition criterion above is not met. A contingent liability is not recognised on the balance sheet but disclosed in the notes to the accounts. 16. Prior Period Adjustments Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. 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 PCC for Bedfordshire s financial position or performance. Where a change is made it is applied retrospectively by adjusting opening balances and comparative amounts for the prior period as if the new policy had always applied. Changes in accounting estimates are applied prospectively, i.e. in the current and future year affected by the change. Where material errors are discovered in prior period figures they are corrected retrospectively by amending opening balances and comparative amounts for the prior period. 17. Revenue Recognition Specific grants & contributions which result in the Commissioner providing additional resources to the Chief Constable in the budget are included in the Commissioners Comprehensive Income and Expenditure Statement as well as all non-specific government grants. Other fees, charges and service income is recognised in the Chief Constables Comprehensive Income and Expenditure Statement as these are generated within the Chief Constable s budget by staff under their operational direction and control. 31

32 Note 2: Changes in Accounting Policies The main change to the Accounting Policies has been brought about by increased CIPFA guidance issued during 2013/14. This had led to more income and expenditure / assets and liabilities being recognised in the Chief Constables financial statements due to the level of control the Chief Constable has over the majority of staff who are still employed by the PCC for Bedfordshire at stage one of the Police Reform and Social Responsibility Act. Income, expenditure, asset and liability recognition is driven by an assessment of whether the control of the associated economic benefits sits with the Chief Constable or Commissioner. For the 2012/13 accounts the assessment of control began with an assessment of whether the Chief Constable or Commissioner controlled the economic benefits associated with the expenditure in the Chief Constables delegated budget. As the Commissioner had not delegated the benefit of holding reserves or the potential benefits from under spending against budget it was judged that the Commissioner retained control of the expenditure delegated via the Chief Constable s budget leaving the Chief Constables accounts with nil balances on all financial statements. However further guidance has since been issued from CIPFA (LAAP bulletin 98A) requesting that operational control is used as the basis for making the control judgement, once the Commissioner s control of economic benefits is over-ridden by the operational control held by the Chief Constable this required changes to the format of the group accounts and to the accounting policies which specify the approach taken (see accounting policy 2. Cost Recognition and Intra-group Adjustments). This change to accounting policies requires restatement of the following balances relating to 2012/13: Opening 1 April 2013 Balance Sheet The table below shows the adjustments required for the recognition of assets and liabilities on the Chief Constables balance sheet: 2012/13 Statements Chief Constable Pension Net Assets Intra group Adjustment /13 Re-stated Police & Crime Commissioner 2012/13 Statements Intra group Adjustment /13 Re-stated Total Adjustment (Group Accounts) Current Assets: Payments in Advance 0 1,014 1,014 1,014-1, Inventories Short Term Debtors 0 2,640 2,640 8,743-2,640 6,103 0 Intra-group Debtors - 4,645 4, Current Liabilities: Short Term Creditors 0-5,971-5,971-5,971 5,971 0 Employees Liability 0 Other Short Term Creditors 0-7,407-7,407-8,620 7,407 1,213 0 Intra-group Creditors ,645-4,645 - Long Term Liabilities: Liability Relating to Defined 0-877, , , ,805 0 Benefit Pension Schemes 0 Provisions 0-1,007-1,007-1,007 1, Equity Unusable Reserves 0 883, , , ,776-29,188 0 In addition revised legislation came into effect on 1 April 2013 granting the Chief Constable the same status as local authorities under sections 21 and 22 of the Local 32

33 Government Act This enables the Chief Constable to apply the same statutory override for employee benefits, the prior year figures have been re-stated solely for comparative purposes. 2012/13 Comprehensive Income and Expenditure Statement The table below shows the adjustments required for the recognition of income and expenditure on the Chief Constables Comprehensive Income & Expenditure Statement, these adjustments give rise to the re-stated figures on the Comprehensive Income & Expenditure Statement. Chief Constable Police & Crime Commissioner 2012/13 Intra 2012/13 Re-stated 2012/13 Intra 2012/13 Total Re-stated Adjustment Statements group Statements group (Group Adjustment Adjustment Accounts) Net Cost of Services 0 113, , , ,743-5,834 0 Other Operating Income & Expenditure Financing & Investment Income & Expenditure 0 37,890 37,890 38,103-37, Taxation & Non-Specific Grant , ,082 0 Income Commissioners Funding to the Chief 0-104, , , ,843 0 Constable for Resources Consumed (Surplus) deficit on the Provision of 46,790 46,790 44,592-46,790-2,198 0 Services Surplus (deficit) on revaluation of Non-Current Assets Re-measurements of the defined 0 55,757 55,757 55,757-55, benefit liability / asset Total Comprehensive Income & Expenditure 102, , , ,547-2,259 0 Other changes to accounting policies arise from changes to IAS1. IAS1 requires the format of Comprehensive Income and Expenditure Statement to show separately any re-classifiable gains / losses on financial assets in order to show users of the accounts the effect these gains or losses may have on the Surplus / Deficit on the Provision of Service if reclassification occurred. The PCC s accounting policy has been clarified to state that no such separation is required as no amounts of Other Comprehensive Income are re-classifiable to the Surplus or Deficit on the Provision of Services, this has given rise to a change of heading from Actuarial Gains / Losses to Re-measurements on the Net Defined Benefit Liability (asset). A change to IAS 19 Employee Benefits has led to changes in the presentation of actuarial pension values relating to the LPGS in the Comprehensive Income & Expenditure Statement. The overall charge to the Comprehensive Income and Expenditure Statement remains the same and further details are contained in Note 28. Changes to IAS 19 have altered the way in which the fair value of LGPS plan assets are calculated, the effect on the financial statements is that amounts credited to the Surplus / Deficit on Provision of Services (financing income) is reduced, this is countered by an adjustment in the re-measurements of the net defined benefit liability in Other Comprehensive Income and Expenditure. There is no effect on the overall pension liability, and the revaluation of interest income on plan assets does not give rise to a material change therefore no restatement of prior year balances is required. 33

34 Note 3: PCC Funding for Resources Consumed / Intra-Group Adjustments The background and principles that underpin the accounting arrangement and create the need for an intra-group adjustment are explained in the Explanatory Foreword. Under the current arrangements the Chief Constable does not hold any cash or reserves. However a budget is delegated to the Chief Constable for which the Chief Constable has operational control of the associated income and expenditure. It is felt that to accurately reflect the financial impact of the day-to-day control exercised by the Chief Constable over policing Bedfordshire it is necessary to capture the income and expenditure associated with their delegated budget on their own Comprehensive Income and Expenditure Statement. As a consequence the associated assets and liabilities relating to these balances are also required to be shown on the Chief Constables balance sheet The Commissioner has undertaken to fund the resources consumed by the Chief Constable and makes all payments from the police fund. In order to reflect this position in the accounts the funding from the Commissioner offsets all expenditure on the Chief Constables Comprehensive Income & Expenditure Statement to leave just the movement on unusable reserves which is reflected in the Chief Constables Movement in Reserves Statement. The following table shows the calculation of the funding provided to the Chief Constable: PCC Funding provided to the Chief Constable for Resources Consumed 2012/ / Net Cost of Services (Chief Constable) 113, ,704 Financing & Investment Income & Expenditure 37,890 37,847 Actuarial (gain) / loss on pension assets / liabilities 55,757-62,580 Adjust for Movement in Unusable Reserves: Pensions Reserve -101,392 11,822 Accumulated Absences Reserve -1,155 1,162 Total funding transfer 104, ,955 In practice instead of transferring this funding to the Chief Constable the Commissioner makes all payments on their behalf, therefore an element of the resources consumed by the Chief Constable remain unpaid at the year end. This leaves the Chief Constable with its own current liabilities which after deduction of current assets is supported by the Commissioner in the form of an Intra-group creditor / debtor. Intra-group Debtor 2012/ / Creditors & Receipts in Advance 7,407 7,568 Provisions 1, Current assets (excluding PCC debtor) -3,769-5,947 Total Owing by Commissioner to Chief Constable 3,465 2,334 This has the effect of showing working capital on the Chief Constables balance sheet which are then supported by the Commissioner. 34

35 The following table shows the movement through the intra-group account: Intra-group Adjustments The Chief Constable 000 The Commissioner 000 The Group 000 Comprehensive Income & Expenditure Statement 2012/13 PCC Funding for Resources Consumed -104, ,843 0 Comprehensive Income & Expenditure Statement 2013/14 PCC Funding for Resources Consumed -100, ,955 0 Balance Sheet 2012/13 Intra Group Creditor / Debtor 4,645-4,645 0 Balance Sheet 2013/14 Intra Group Creditor / Debtor 2,334-2,334 0 Note 4: Standards Issued but not yet Adopted IFRS 10, 11, 12 and 13 have been amended along with IAS 27 and 28 regarding standards relating to consolidation and presentation of group accounts. The changes incorporate a new definition of control, therefore a new assessment of the group boundary will be required. IFRS 13 includes changes to Fair Value measurement which may require some assets to be re-valued. In addition changes to IAS 32 Financial Instruments and IFRS 1 Presentation of Financial Statements may require minor changes to the format and presentation of figures. Any changes to the financial statements resulting from these amendments to standards will apply retrospectively to the 2014/15 accounts. Note 5: Material Items of Income and Expense Material items relate to the pension scheme income and expenditure (disclosed at Notes 7 and 8) and to employee benefits (disclosed at note 16 and 18). Note 6: Events After the Balance Sheet Date Events after the balance sheet date have been considered for inclusion in the accounts up to the authorised for issue date, 25 th September No adjusting events have taken place as no events have occurred before this date which provided information about conditions existing at 31 st March 2014 The Police Reform and Social Responsibility Act 2011 provides for a stage 2 transfer whereby the PCC agrees what assets, staff, rights and liabilities are transferred to the Chief Constable. A transfer of officers and a large proportion of staff to the Chief Constables employment will take place on 1 st April 2014, which is considered to be a non-adjusting event. 35

36 Note 7: Adjustments Between Accounting Basis & Funding Basis This note details the adjustments that are made to the Chief Constables available resources in the Total Comprehensive Income and Expenditure Statement in accordance with proper accounting practice 2013/2014 Usable Reserves Police Fund Capital Receipts Reserve Capital Grant Unapplied Account Movement in Unusable Reserves Adjustments involving the Compensated Absences Adjustment Account: Amount by which officer remuneration charged to Comprehensive Income & Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements , ,162 Adjustments involving the pensions reserves: Reversal of items relating to post-employment benefits debited or credited to the Provision of Services in the Comprehensive Income & Expenditure Statement Employer's pension contributions and direct payments to pensioners -65, ,178 14, ,420 TOTAL ADJUSTMENTS -49, , /2013 Comparative Figures Usable Reserves Police Fund Capital Receipts Reserve Capital Grant Unapplied Account Movement in Unusable Reserves Adjustments involving the Compensated Absences Adjustment Account: Amount by which officer remuneration charged to Comprehensive Income & Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements , ,155 Adjustments involving the pensions reserves: Reversal of items relating to post-employment benefits debited or credited to the Provision of Services in the Comprehensive Income & Expenditure Statement Employer's pension contributions and direct payments to pensioners -59, ,922 14, ,287 TOTAL ADJUSTMENTS -46, ,790 36

37 Note 8: Financing & Investment Income & Expenditure 2012/ / ,280 Pensions Interest Cost and Expected Return on Pension 35,620 Assets Police Pensions 1,610 Pensions Interest Cost and Expected Return on Pension 2,227 Assets LGPS 37,890 Total 37,847 Note 9: Critical Judgements & Assumptions Made about the Future In applying the accounting policies the Chief for Bedfordshire has had to make certain judgements and assumptions about complex transactions or those involving uncertainty about future events. In order to apply the group accounting requirements the relationship between the PCC and Chief Constable has been assessed. The PCC remains in control of all assets and reserves however it is judged that the Chief Constable has sufficient operational control over staff and delegated budgets that this expenditure and associated income is shown on the Comprehensive Income and Expenditure Statement for the Chief Constable. The Chief Constable for Bedfordshire is involved in various joint arrangements with other forces which are detailed in notes 34 to 36. These arrangements are judged to be jointly controlled operations and therefore the accounting statements reflect only the Chief Constable for Bedfordshire s share of transactions and balances in accordance with the CIPFA Code of Practice. The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported as assets and liabilities as at the balance sheet date and the income and expenses reported during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The key judgements and areas of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are: The costs arising from employer s liability and third party claims made against the Chief Constable for Bedfordshire are provided for according to the estimated costs provided by insurers. Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. Actuaries are used to make these judgements and provide the estimates of pension assets and liabilities, the details of which are detailed at note 28. Note 10: Financial Instruments Categories of Financial Instruments The borrowings and investments disclosed in the balance sheet are made up of the following categories of financial instruments. 37

38 2012/ / Current Financial Liabilities at amortised cost: Trade Creditors 2,815 2,336 Loans and Receivables: Trade Debtors 1,443 1,257 Trade debtors and creditors relate to balance sheet amounts (including payments in advance and receipt in advance) adjusted for statutory debtors and creditors. No financial instruments have been re-classified during 2013/14. Fair Value of Assets and Liabilities Financial liabilities and financial assets represented by loans and receivables are carried in the Balance Sheet at amortised cost. Their fair value has been calculated below by calculating the net present value of the future cash flows using the following assumptions: The fair value of trade and other receivables is taken to be the invoiced or billed amount Credit Risk Credit risk is the possibility that one party to a financial instrument will fail to meet their contractual obligations, causing a loss for the other party. The fair value of each class of financial liabilities and assets carried in the Balance Sheet at amortised cost is as follows: 2012/ /14 Carrying Value Fair Value Carrying Value Fair Value Financial Liabilities: PWLB Borrowing Creditors & Receipts In Advance 2,815 2,815 2,336 2,336 Loans and Receivables: Short-Term Investments Debtors and Payments in 1,443 1,443 1,257 1,257 advance 38

39 The following analysis summarises the Chief Constables potential maximum exposure to credit risk, based on experience of default and non-collectability over the last five financial years: Deposits with banks and financial institutions Amount as at 31 March Historical experience of default % Estimated maximum exposure to default and non-collectability Customers 3, Note 11: Inventories Inventories comprised of the following: 2012/ / HQ Store (uniforms and other operational 45 equipment) 66 Firearms Equipment Balance at 31 st March 91 Note 12: Debtors 2012/ / Central government bodies 851 1,818 Other local authorities 2, All other bodies 152 2,640 Balance at 31 st March 3,126 Note 13: Payments in Advance These represent payments prior to 31 st March 2014 for supplies and services relating to the period after 1 April / / ,014 All other bodies 2,730 1,014 Balance at 31 st March 2,730 Note 14: Intra-group Debtor This represents the amount of financial support the Chief Constable requires from the Commissioner in order to settle working capital balances. 2012/ / ,645 Amount owing to Commissioner 2,334 3,645 Balance at 31 st March 2,334 39

40 Note 15: Receipts In Advance This relates to income received prior to 31 st March 2014 funding activities that had not commenced at that date. Note 16: Creditors The creditors of the Chief Constable for Bedfordshire can be analysed as follows: 2012/ / ,322 Central government bodies 2,015 3,295 Other local authorities 3,104 1,790 Other entities and individuals 2,419 7,407 Other Short Term Creditors 7,538 5,971 Short term accumulating absences 4,809 13,378 Balance at 31 st March 12,347 Note 17: Provisions The following provisions are made in the Chief Constable s accounts: Insurance Transport Consortium Insurance Legal Provision Balance as at 1 st April ,007 Amounts used in 2013/ ,007 Provision made in 2013/ Balance as at 31 st March Total Insurance All of the employer s liability and public liability claims are individually insignificant. Provision is made for those claims where it is deemed probable that a settlement will be made based on past experience of court decisions about liability and the amount of damage payable. The Chief Constable for Bedfordshire may be reimbursed by its insurers, but until claims are actually settled no income is recognised as the insurers will only reimburse amounts above a 0.100M excess or if the stop loss for the year is exceeded. The majority of the higher value claims take more than 1 year to be resolved. Transport Consortium Insurance The provision is made to meet the value of outstanding claims as defined by the Chiltern Transport Consortium, again an excess of 0.100M applies. It is deemed that the cost of these insurance claims are under the direction and control of the Chief Constable as these relate to actions arising from the day to day operational control exercised by the Chief Constable. 40

41 Note 18: Unusable Reserves 2012/ / ,765 Pensions Reserve LGPS 47, ,040 Pensions Reserve Police Pensions 818,510 5,971 Accumulated Absences Account 4, ,776 Total Unusable Reserves 870,792 Accumulated Absences Account Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the account. Although the costs of employment benefits are shown in the Chief Constables accounts the PCC funds this by way of an intra-group adjustment and maintains this un-usable reserve. 2012/ / ,816 Balance at 1 st April -5,971 4,816 Cancellation of accrual made at the 5,971 end of the preceding year -5,971 Amounts accrued at the end of the current year -5,971 Balance at 31 st March -4,809 Pensions Reserves The pension reserves absorb the timing differences arising from the different arrangements for accounting for post-employment benefits and for funding benefits in accordance with statutory provisions. The Chief Constable for Bedfordshire accounts for post-employment benefits in their Comprehensive Income and Expenditure Statement as the benefits are earned by employees under their control accruing years of service, updating their liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. The debit balance on the Chief Constable and Group Pension Reserves therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Group has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid. 2012/ Pension Reserve Local Government Scheme 2013/ ,266 Balance at 1 st April 48,765 11,675 Re-measurements of the net defined benefit liability. -5,058 5,852 Reversal of items relating to retirement benefits debited or credited to the Surplus or Deficit on the Provision of services in the Comprehensive Income and Expenditure Statement 7,318-3,028 Employer s pension contributions and direct -3,552 payments to pensioners payable in the year 41

42 48,765 Balance at 31 st March 47, / Pension Reserve Police Pension Scheme 2013/ ,147 Balance at 1 st April 829,040 44,082 Re-measurements of the net defined benefit liability -57,523 54,070 Reversal of items relating to retirement benefits debited or credited to the Surplus or Deficit on the Provision of services in the Comprehensive Income and Expenditure Statement 57,860-11,259 Employer s pension contributions and direct -10,868 payments to pensioners payable in the year 829,040 Balance at 31 st March 818,510 42

43 Note 19: Cash Flow Statement Operating Activities 2012/ /14 The Chief Constable The Group The Chief Constable The Group ,790 44,592 Net surplus or deficit on the 49,596 42,517 provision of services Contributions (to) / from provisions Interest Cost /Unwinding of Discount ,422 Contributions (to) / from reserves -23-1,136 Capital Grants 1, ,755 Depreciation & Impairment -1,052-45,635-45,635 IAS 19 pension adjustments -50,757-50, Increase / (decrease) stock (Increase)/ decrease in receipts in advance ,451 Increase / (decrease) debtors Increase / (decrease) debtors Inter Company Increase/ (decrease) payments in advance (Increase) / decrease creditors ,790-46,363 Adjust net surplus or deficit on the -49,596-48,521 provision of services for non-cash movement Remove profit / loss on sale of noncurrent assets 0-2,433 Net cash flows from operating activities 0-6,158 Note 20: Amounts Reported for Resource Allocation Decisions The analysis of income and expenditure by service on the face of the Comprehensive Income & Expenditure Statement is that specified by the Service Reporting Code of Practice (SERCOP). However decisions about resource allocation are taken by the management team based on budget reports analysed across departments. These reports are prepared on a different basis to the financial statements. In particular: Charges are made in relation to capital expenditure for management reporting purposes only, these are reversed out for the purposes of the Chief Constables Financial Statements. The cost of retirement benefits is based on cash flows rather than current service cost of benefits accrued in the year. Expenditure on some support services is budgeted for centrally under the heading Corporate and not charged to departments. 43

44 Service Analysis 2013/14 Territorial Policing Protective Services Corporate Services Corporate Total Fees, charges & other service income ,308-8,673 Government grants -5-2, ,668 Total Income ,341 Employee expenses 56,937 18,214 9,882 4,099 89,132 Premises , ,908 Transport 1,851 1, ,656 Supplies & Services 2,068 1,561 4, ,830 Agency & Contracted Services 256 1, ,601 Capital Financing Total Expenses 61,132 22,891 17,633 5, ,996 Net Expenditure 60,215 15,845 16,621 2,974 95,655 Amounts Transferred to / from Reserve 1,356 1,356 Outturn Reported 60,215 15,845 16,621 4,330 97, /13 Comparative Figures Territorial Policing Protective Services Corporate Services Corporate Total Fees, charges & other service income -1,805-3, ,187-7,839 Government grants -3,919-2, ,834 Total Income -5,724-5, ,214-14,673 Employee expenses 61,485 17,165 9,892 4,302 92,844 Premises , ,600 Transport 2, ,765 Supplies & Services 2,424 1,087 3, ,470 Agency & Contracted Services 949 1, ,206 Capital Financing ,002 2,064 Total Expenses 66,932 21,309 17,049 6, ,949 Net Expenditure 61,208 15,546 16,077 4,445 97,276 The following reconciliation shows how the figures in the analysis of income and expenditure above relate to the figures included in the Comprehensive Income & Expenditure Statement: 44

45 / /14 Net Expenditure in Service Analysis 97,276 97,011 Add amounts not reported to management Not included in Service Analysis 9,394 5,898 Short term accumulating compensated absences 1,155-1,162 Depreciation 0 0 Impairment 0 0 IFRS 17 / IAS 19 Adjustments - Police 17,790 22,240 IFRS 17 / IAS 19 Adjustments - LGPS 4,242 5,091 Remove amounts reported to management not included in Comprehensive Income & Expenditure Statement IFRS 17 / IAS 19 Adjustments - Police -11,259-10,868 IFRS 17 / IAS 19 Adjustments - LGPS -3,028-3,552 Remove amounts reported to management not included in Cost of Services Vehicle sales income reported to management Interest income reported to management Interest paid reported to management Capital charges (management reporting purposes only) Budgeted transfers to reserves -1,234-1,356 Cost of Services in Comprehensive Income and Expenditure Statement 113, ,704 Note 21: Officers Remuneration The number of employees whose remuneration, excluding pension contributions and redundancy payments, was 50,000 or more in bands of 5,000 as shown below. 2012/13 Remuneration Band 2013/ ,000 to 54, ,000 to 59, ,000 to 64, ,000 to 69, ,000 to 74, ,000 to 79, ,000 to 84, ,000 to 89, ,000 to 95, ,000 to 99, TOTALS 114 The employees in the bandings above do not include the remuneration of the posts of Senior Officers and Relevant Police Officers which are now separately disclosed below as required by the Accounts and Audit Regulations or the redundancy payments now disclosed separately. 45

46 Exit Packages 2013/14 During 2013/14 the Chief Constable agreed 19 exit packages of which 17 were identified as set up costs of new collaborated units and funded as such. Cost band Number of compulsory redundancies Number of other departures agreed Total number of exit packages in each band Total cost of exit packages in each band < 20, ,000 20,000-40, ,000 40,000-60, ,000 Total ,000 Exit Packages 2012/13 During 2012/13 the Chief Constable agreed 3 exit packages. Cost band Number of compulsory redundancies Number of other departures agreed Total number of exit packages in each band Total cost of exit packages in each band < 20, ,000 20,000-40, ,000 40,000-60, ,000 Total ,000 Senior Officers and Relevant Police Officers Remuneration 2013/14 Salary, fees Employers Compensation Reimbursement and Pension for Loss of Total of Expenses allowances Contribution Office The Chief Constable A (note1) 112,721 26, ,737 The Chief Constable B (note 2) 33, ,850 Deputy Chief Constable 124,098 26,722 1, ,155 Assistant Chief Constable A (note 3) 27,488 5, ,990 Assistant Chief Constable B (note 4) 28,811 5, ,546 Assistant Chief Constable C (note 5) 97,317 20, ,542 Assistant Chief Officer 114,498 17, ,938 Chief Constable s Chief Finance Officer 89,141 13,282 1, ,846 Notes Note 1: Role undertaken from 01/07/2013. Note 2: Role undertaken until 09/06/2013. Note 3: Role undertaken until 18/06/2013. Note 4: Role undertaken until 14/06/2013. Note 5: Role undertaken from 07/05/

47 Senior Officers and Relevant Police Officers Remuneration 2012/13 Salary, fees and allowances Employers Pension Contribution Reimbursement of Expenses Total The Chief Constable 149, , ,899 Deputy Chief Constable 122,099 26,567 1, ,141 Assistant Chief Constable A 119,665 25, ,432 Assistant Chief Constable B (note 1) 119,553 25, ,709 Assistant Chief Officer 117,494 14, ,960 The Chief Finance Officer to Police & Crime Commissioner and Chief Constable A (note 2) 11,561 1, ,052 The Chief Finance Officer to Police & Crime Commissioner and Chief Constable B (note 3) 21,709 2, ,678 Note 1: Role undertaken on secondment from 03/12/2012 to 31/03/2013 with income of 54K being received for this period. Note 2: Role undertaken from 22/11/12 to 11/01/2013. Note 3: Role undertaken from 14/01/2013. Note 22: Agency & Contracted Services Agency and contracted services of 3.601M ( 4.206M in 2012/13) include levies totalling 0.607M towards the cost of Forensic and DNA Testing ( 0.596M in 2012/13). Note 23: External Audit Fees External audits are provided by Ernst & Young LLP. 2012/ / Audit Fee Re Chief Constable Total Audit Fees 20 47

48 Note 24: Transport Consortium The PCC for Bedfordshire, together with Thames Valley Police and, since 1 April 2008, Hertfordshire Constabulary and the Civil Nuclear Constabulary, operate a consortium for vehicle provision. Costs are allocated to the forces in proportion to the size of the fleet. Bedfordshire s contribution for 2013/14 was 1.78M (14.63% of spend) ( 1.87M in 2012/13). The total costs of the consortium are shown below: 2012/ / ,562 Employee Costs 2, Premises 336 3,383 Running Costs 3,132 2,616 Insurance 2,269 5,266 Vehicles 5,472-1,651 Income -1,801 12,511 Total 11,870 The capital value of the vehicles is 2.751M and is included in the Commissioners and Group Balance Sheet. Note 25: Eastern Region Special Operations Unit The Eastern Region Special Operations Unit (ERSOU) was established 1 April 2010 as a joint arrangement between 6 forces Hertfordshire, Cambridgeshire, Essex, Suffolk, Norfolk and Bedfordshire to provide one serious and organised crime unit for the eastern region. Bedfordshire s contribution for 2013/14 was 1.057M (of which 0.067M related to capital expenditure) and 1.082M in 2012/13. The total costs of the unit (including capital expenditure) are shown below: 2012/ / ,563 Eastern Region Intelligence Unit 1, Regional Asset Recovery Team Set Up Costs 0 0 Training Costs 0 1,695 Eastern Region Special Operations Unit 1,673 1,577 Northern Area 1,576 1,578 Southern Area 1,578 7,329 Operating Expenditure 7, Operating Income 0-1,524 Home Office Grant -1,536 5,783 Net Expenditure Funded by Forces 5,720 Note 26: Bedfordshire, Hertfordshire and Cambridgeshire Strategic Alliance Initially Bedfordshire Police and Hertfordshire Police began a major collaboration exercise starting with the Major Crime Unit in 2007/8, extending to Scientific Services and Professional Standards in 2008/09 and then other units within what was classified as the Protective Services in 2009/10; Firearms, Dogs and Civil Contingencies. In 48

49 2010/11 bi-force collaborations also took place in Pensions, Information Communication Technology, Roads Policing, Firearms Licensing and Counter Terrorism and Domestic Extremism. The collaboration process was continued by moving from the bi-force arrangement (Bedfordshire and Hertfordshire) to a tri-force arrangement (Bedfordshire, Hertfordshire and Cambridgeshire), starting with Procurement in April 2011 and followed by Professional Standards in January 2012, Major Crime Unit, Scientific Services and Firearms (now called Armed Police Unit) all going live in April 2012 and CT&DE going live in November From April 2013 Roads Policing, Dogs, Operational Planning, Cameras, Ticketing and Collisions, became tri-force collaborated units. Visual Evidence (identity parades and CCTV) will become part of the tri-force collaborated Scientific Services Unit. Set up costs incurred in 2013/14 were joint funded as follows: Tri-force Collaborated Roads Policing Unit Chief Constable Group Set Up Costs Funded By: Bedfordshire Cambridgeshire Hertfordshire

50 Tri-force Collaborated CTC Safety Camera Chief Constable Group Set Up Costs Funded By: Bedfordshire Cambridgeshire Hertfordshire Tri-force Collaborated Scientific Services Chief Constable Group Set Up Costs Funded By: Bedfordshire Cambridgeshire Hertfordshire Tri-force Collaborated Operational Planning Chief Constable Group Set Up Costs 4 4 Funded By: Bedfordshire -1-1 Cambridgeshire -1-1 Hertfordshire -2-2 Tri-force Collaborated Dog Unit Chief Constable Group Set Up Costs 1 1 Funded By: Hertfordshire -1-1 Tri-force Collaborated Professional Standards Unit Chief Constable Group Set Up Costs Funded By: Bedfordshire Cambridgeshire Hertfordshire Tri-force Major Crime Unit Collaborated Unit Major Crime Unit (B&HMCU) became operational as a bi-force unit during November 2007 and was set up to provide joint investigation of a wide range of serious offences and critical incidents. For this unit the Home Office provided three years funding 50

51 totalling 300K. The unit then became tri-force from April / /14 Chief Constable Group Chief Constable Group ,321 9,321 Running Costs 9,739 9,739 9,321 9,321 Total Expenditure 9,739 9,739 Funded by: -2,522-2,522 Bedfordshire Contribution -2,636-2,636-3,027-3,027 Cambridgeshire -3,162-3,162 Contribution -3,772-3,772 Hertfordshire Contribution -3,941-3,941-9,321-9,321 Total Funding -9,739-9,739 Tri-force Collaborated Scientific Services This unit became operational as a bi-force unit in April 2009 and was set up to provide joint scientific services for both forces. This then became tri-force from April 2012 Forensic submissions, although considered part of the collaborated unit, are treated separately and each force manages its own budget for this area. 2012/ /14 Chief Constable Group Chief Constable Group ,903 7,903 Running Costs 8,498 8,498 7,903 7,903 Total Expenditure 8,498 8,498 Funded by: -2,035-2,035 Bedfordshire Contribution -2,188-2,188-2,473-2,473 Cambridgeshire -2,659-2,659 Contribution -3,395-3,395 Hertfordshire Contribution -3,651-3,651-7,903-7,903 Total Funding -8,498-8,498 Tri-force Collaborated Professional Standards Unit This unit became operational in April 2009 and was set up to provide professional standard services on the BCU based Taylor model for both forces to include access control, IT security and vetting (and Criminal Records Bureau for Hertfordshire) and became tri-force in Jan 2012 with Cambridgeshire joining the unit and Hertfordshire CRB leaving the strategic alliance. 51

52 2012/ /14 Chief Constable Group Chief Constable Group ,819 2,819 Running Costs 2,866 2,866 2,819 2,819 Total Expenditure 2,866 2,866 Funded by: Bedfordshire Contribution Cambridgeshire Contribution -1,206-1,206 Hertfordshire Contribution -1,226-1,226-2,819-2,819 Total Funding -2,866-2,866 Tri-force Collaborated Armed Police Unit (was Firearms Unit) This unit became operational as a bi-force unit in July 2009 and was set up to provide firearms operatives and training for both forces. It then became a tri-force unit from April / /14 Chief Constable Group Chief Constable Group ,333 7,333 Running Costs 7,244 7,244 7,333 7,333 Total Expenditure 7,244 7,244 Funded by: -2,542-2,542 Bedfordshire Contribution -2,512-2,512-2,211-2,211 Cambridgeshire -2,184-2,184 Contribution -2,580-2,580 Hertfordshire Contribution -2,548-2,548-7,333-7,333 Total Funding -7,244-7,244 Tri-force Collaborated Procurement This unit became operational in April It consists of a combined department with single contracts team serving a single uniform stores facility at Huntingdon and all other contracts required by 3 forces managed by a strategic Head of Procurement. 2012/ /14 Chief Constable Group Chief Constable Group Running Costs Total Expenditure Funded by: Bedfordshire Contribution Cambridgeshire Contribution Hertfordshire Contribution Total Funding

53 Tri-force Special CT & DE Unit This unit was set up as bi-force unit with Bedfordshire and Hertfordshire in April 2011 in order to maximise the provision of Counter-Terrorism and Domestic Extremism services by establishment of a collaborated unit capable of delivering safety and reassurance to local communities and contributing to national security. This then became tri-force with Cambridgeshire joining in November / /14 Chief Constable Group Chief Constable Group ,290 1,290 Running Costs 1,549 1,549 1,290 1,290 Total Expenditure 1,549 1,549 Funded by: Bedfordshire Contribution Cambridgeshire Contribution Hertfordshire Contribution ,290-1,290 Total Funding -1,549-1,549 Tri-force Collaborated Dog Unit This unit became operational as a bi-force unit in April 2009 and was set up to provide dogs, managers and trainers for both forces. It then became a tri-force collaboration with Cambridgeshire joining the strategic alliance from April / /14 Chief Constable Group Chief Constable Group ,895 1,895 Running Costs 2,789 2,789 1,895 1,895 Total Expenditure 2,789 2,789 Funded by: Bedfordshire Contribution Cambridgeshire Contribution -1,232-1,232 Hertfordshire Contribution -1,199-1,199-1,895-1,895 Total Funding -2,789-2,789 53

54 Tri-force Collaborated Operational Planning and Civil Contingencies This unit became operational as a bi-force unit in September 2009 and was set up as a single unit covering all civil contingency matters, providing operational and public order planning and associated training, and providing the lead and coordination of all search matters for both forces. In April 2013 a tri-force Level 2 Operational and Training Unit was set up with Cambridgeshire joining the strategic alliance, whilst the Level 1 planning resources where kept as a bi-force (Bedfordshire and Hertfordshire) Unit. 2012/ /14 Chief Constable Group Chief Constable Group Running Costs Total Expenditure Funded by: Bedfordshire Contribution Cambridgeshire Contribution Hertfordshire Contribution Total Funding Bi-force Collaborated ICT This unit became operational in April 2011 and involves a phased implementation of joint ICT function commencing with the creation of a single management team, service desk and projects team and having a 5 year plan to provide further savings linked to the convergence of all ICT systems. 54

55 2012/ /14 Chief Constable Group Chief Constable Group ,568 Running Costs 0 11, ,568 Total Expenditure 0 11,776 Funded by: 0-4,026 Bedfordshire Contribution 0-4, ,542 Hertfordshire Contribution 0-7, ,568 Total Funding 0-11,776 Bi-force Collaborated Pensions This unit became operational in April 2011 and was created to establish a joint police pension administration and pension payroll unit. 2012/ /14 Chief Constable Group Chief Constable Group Running Costs Total Expenditure Funded by: Bedfordshire Contribution Hertfordshire Contribution Total Funding Bi-force Firearms Licensing This unit was set up as bi-force unit with Bedfordshire and Hertfordshire in April 2011 with the creation of one administration unit employing an intelligence lead approach within the licensing arena in relation to renewals of certificates. 2012/ /14 Chief Constable Group Chief Constable Group Running Costs Total Expenditure Funded by: Bedfordshire Contribution Hertfordshire Contribution Total Funding

56 Tri-force Roads Policing Unit This unit was set up as bi-force unit with Bedfordshire and Hertfordshire in April 2011 by creating integrated teams providing traffic patrol, ANPR capability and vehicle recovery services. It was then set up as a Tri-force unit including Cambridgeshire in April / /14 Chief Constable Group Chief Constable Group ,838 10,838 Running Costs 14,313 14,313 10,838 10,838 Total Expenditure 14,313 14,313 Funded by: -3,468-3,468 Bedfordshire Contribution -3,263-3, Cambridgeshire Contribution -4,695-4,695-7,370-7,370 Hertfordshire Contribution -6,355-6,355-10,838-10,838 Total Funding -14,313-14,313 Tri-force PS Command As the process of Protective Services collaboration continued a collaborated command unit was set up as a tri-force arrangement with Bedfordshire, Cambridgeshire and Hertfordshire in April / /14 Chief Constable Group Chief Constable Group Running Costs Total Expenditure Funded by: Bedfordshire Contribution Cambridgeshire Contribution Hertfordshire Contribution Total Funding Tri-force Collaboration Team In order to aid the process of collaboration, a team of specialists (including operationally experienced officers, finance, HR, ICT, communications, project officers) from the 3 forces were added to the existing management team in April 2012 in order to produce and implement the business cases. This joint funded team was disbanded in May 2013 and new arrangements are being put in place for the management of collaboration. 56

57 2012/ /14 Chief Constable Group Chief Constable Group ,584 2,584 Running Costs ,584 2,584 Total Expenditure Funded by: Bedfordshire Contribution Cambridgeshire Contribution ,155-1,155 Hertfordshire Contribution ,584-2,584 Total Funding Tri-force Collisions, Traffic and Cameras A tri-force unit (Bedfordshire, Hertfordshire and Cambridgeshire) was set up in April 2013 comprising of the Central Ticket Office (CTO) performing the functions of camera enforcement and tickets and prosecutions, a Collisions Administration Unit (CAU) providing a collision recording and investigative function and a relevant management team. 2012/ /14 Chief Constable Group Chief Constable Group Running Costs 1,121 1, Total Expenditure 1,121 1,121 Funded by: 0 0 Bedfordshire Contribution Cambridgeshire Contribution Hertfordshire Contribution Total Funding -1,121-1,121 Bi-force Resilience This bi-force unit (Bedfordshire and Hertfordshire) covers the Level 1 operational planning resources, and is what remains of the original bi-force Operational Planning Unit with the Level 2 remit, now being covered by the new Tri-force Operational Planning Unit. 2012/ /14 Chief Constable Group Chief Constable Group Running Costs Total Expenditure Funded by: 0 0 Bedfordshire Contribution Cambridgeshire Contribution Hertfordshire Contribution Total Funding

58 Note 27: Related Parties The Financial Reporting Standard on Related Party Disclosures (IAS 24) and the 1998 Code of Practice require that material related party transactions are disclosed in the Statement of Accounts. Other Public Bodies Subject to Common Control UK Government exercises some control over the general operations of the Chief Constable for Bedfordshire and it is responsible for the majority of funding from the Police & Crime Commissioner in the form of grants. Details of grants received from government departments are disclosed in the Group Accounts. Material transactions with other public bodies have been disclosed in other notes to the Accounts (see notes 22-24). Officers A review to determine related party transactions with the Chief Constable for Bedfordshire involved all senior members of staff. No material transactions were identified other than those disclosed elsewhere in the Statement of Accounts. Entities Controlled by or Significantly Influenced by the Chief Constable for Bedfordshire. Bedfordshire Police Partnership Trust has 12 trustees, 4 of which are employed by the PCC for Bedfordshire but reporting into the Chief Constable for Bedfordshire. For this reason the Trust is deemed to be significantly influenced by the Chief Constable through its representation on the board of trustees. Payments made to the Partnership Trust during 2013/14 total 60K. The Partnership Trust has paid the PCC for Bedfordshire 118K towards the total cost of staff provided to run the scheme. 58

59 Note 28: Defined Benefit Pension Schemes The costs and liabilities associated with the retirement benefits are recorded in the Chief Constables accounts, the costs are then funded and liabilities guaranteed by the Commissioner via an intra-group adjustment. A negative pension reserve is held on the Commissioners balance sheet. As part of the terms and conditions of employment of its officers and other employees, the Chief Constable for Bedfordshire offers retirement benefits. Although these benefits will not actually be payable until employees retire, the Chief Constable has a commitment to make the payments that need to be disclosed at the time that employees earn their future entitlement. The Chief Constable for Bedfordshire participates in two pension schemes: The Local Government Pension Scheme (LGPS) for police staff, administered by Bedford Borough Council this is a funded defined benefit final salary scheme, meaning that the PCC for Bedfordshire and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets. The Police Pension Scheme for Police Officers this is an unfunded defined benefit final salary scheme administered by the PCC for Bedfordshire, meaning that there are no investment assets built up to meet the pensions liabilities, and cash has to be generated to meet actual pensions payments as they eventually fall due. Under the Police Pension Fund Regulations 2007, if the amounts receivable by the pensions fund for the year is less than amounts payable, the police authority must annually transfer an amount required to meet the deficit to the pension fund. Subject to parliamentary scrutiny and approval, up to 100% of this cost is met by central government pension top-up grant. If however the pension fund is in surplus for the year, the surplus is required to be transferred from the pension fund to the police authority which then must repay the amount to central government. Quoted securities held as assets in the LGPS defined benefit pension scheme are valued at bid price. The costs of retirement benefits are recognised in the Cost of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge that the PCC for Bedfordshire is required to make against Council Tax is based on the cash payable in the year, so the real cost of retirement benefits is reversed out through the Movement in Reserves Statement. The transactions below are included in the Group Comprehensive Income and Expenditure Statement during the year: 59

60 Local Government Pension Scheme Police Pension Scheme 2012/ / / / Net Total Cost of Service Current Service Costs 3,909 5,032 17,660 21,560 Past Service Costs/Gains Losses/Gains on Curtailments & Settlements Surplus or Deficit on the Provision of Services Interest Costs 4,637 5,403 36,280 35,620 Interest Income on plan assets* -3,027-3, Other Comprehensive Income & Expenditure Re-measurements: Actuarial gains and losses arising on changes in demographic 0 3, assumptions Actuarial gains / losses arising on changes in financial assumptions 15,135-9,906 27, ,290 Other experience gains and losses -23 8,696 16,082 61,617 Return on plan assets (excl amount in net interest expense)* -3,438-7,101 Total Charge to the Comprehensive Income and Expenditure Statement* 17,526 2,260 98, Movement in Reserves Statement Reversal of net charges made for retirement benefits in accordance -5,852-7,318-54,070-57,860 with IAS19* Actual Amounts charged against the General Fund Balance for pensions in the year: Employers Contributions payable to the scheme 3,028) 3, Retirement Benefits payable to pensioners 0 0 9,928 9,503 Injury Award Benefits 0 0 1,331 1,365 *Amounts affected by change to IAS 19 revised 2012/13 LGPS values reduce interest income on plan assets by 0.062M and increase return on plan assets by 0.062M as per Note 2. 60

61 Assets and Liabilities Recognised in the Balance Sheet The amount included in the Group Balance Sheet arising from the obligation in respect of its defined benefit plans is as follows: Funded Liabilities: Local Government Pension Scheme Unfunded Liabilities: Police Pension Scheme 2012/ / / / , , , ,510 Present value of the defined benefit obligation Fair value of plan assets -69,342-81,908 Sub-total 48,765 47, , ,510 Other movements in the liability (asset) (if applicable) Net liability arising from the defined benefit obligation 48,765 47, , ,510 Reconciliation of the movements in the fair value of scheme assets Local Government Pension Scheme 2012/ / st April 60,437 69,342 Expected rate of return / Interest 3,027 3,176 income Re-measurement gains and losses: Return on plan assets, excl the 3,438 7,101 amount included in the net interest expense Other 0 0 Employer contributions 3,028 3,552 Contributions by scheme 1,484 1,485 participants Benefits paid -2,072-2, st March 69,342 81,908 The expected return on scheme assets is based on the long-term future expected investment return for each asset class as at the beginning of the period. The total returns on scheme assets for the period 1 April 2013 to 31 March 2014 was 5.5% and the difference between these two is shown as a re-measurement gain or loss. 61

62 Reconciliation of present value of the scheme liabilities Funded Liabilities: Local Government Pension Scheme 2012/ /14 (Restated) Unfunded Liabilities: Police Pension Scheme 2012/ /14 (Restated) st April 94, , , ,040 Current service cost 3,909 5,032 17,660 21,560 Interest cost 4,637 5,403 36,280 35,620 Contributions by scheme 1,484 1,485 4,813 5,023 participants Re-measurement (gains) and losses: Actuarial gains / losses 0 3, arising from changes in demographic assumptions Actuarial gains / losses 15,135-9,906 27, ,290 arising from changes in financial assumptions Other experience (gains) -23 8,696 16,082 61,617 / losses Benefits paid -2,072-2,748-16,071-15,890 Past service cost Losses /(gains) on curtailments st March 118, , , ,510 Reconciliation of the opening and closing surplus / (deficit) Funded Liabilities: Local Government Pension Scheme Unfunded Liabilities: Police Pension Scheme 2012/ / / / Opening Surplus (deficit) -34,266-48, , ,040 Current Service Cost -3,909-5,032-17,660-21,560 Contributions by employer 3,028 3,552 11,259 10,868 Past Service Costs Interest Cost -4,637-5,403-36,280-35,620 Expected Return on Assets 3,027 3, Curtailment losses and gains Re-measurement Gains / (losses) -11,675 5,058-44,082 57, st March -48,765-47, , ,510 62

63 Local Government Pension Scheme assets comprised: *The total asset value shown here varies to the plan asset value due to timing differences in data compilation. Basis for estimating Assets and Liabilities Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. The Borough Council Fund liabilities have been assessed by Hymans Robertson, an independent firm of actuaries. The Police Pension scheme liabilities have been assessed using the Government Actuary Department s IAS19 spread sheet (GFS) which has been designed to satisfy the disclosure requirements contained within the CIPFA Code of Practice. 63