CFA statement of account(1)
Leicester, Leicestershire and Rutland Combined Fire Authority
CONTENTS Combined Fire Authority 2011/2012 Statement of Accounts
Page Explanatory Foreword
2
Statement of Responsibilities
5
Statement of Accounting Policies
6
Independent Auditor's Report
14
Movement in Reserves Statement
17
Comprehensive Income and Expenditure Statement
18
Balance Sheet
19
Cash Flow Statement
20
Notes to the Accounts
21
Firefighters' Pension Fund
48
Pension Fund Statement
49
Glossary of Terms
50
Copies of the Statement of Accounts and a large print version, are available from the Service Headquarters at Anstey Frith, Leicester Road, Glenfield, Leicester LE3 8HD. Tel; Leicester (0116) 2872241
1
Leicester, Leicestershire and Rutland Combined Fire Authority
EXPLANATORY FOREWORD The accounting statements contained in this booklet represent the Combined Fire Authority's (CFA's) accounts for the year ended the 31st March 2012. The accounts have been presented in accordance with the requirements of the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local Authority Accounting in the United Kingdom 2011/12. The accounts comprise the following group of core financial statements:
Movement in Reserves Statement This statement shows the movement in year on the different reserves held by the Authority, analysed into usable reserves (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement (CIES).
Comprehensive Income and Expenditure Statement The CIES shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded by taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement (MIRS).
Balance Sheet This sets out the value of assets and liabilities of the CFA as at the 31 st March 2012. The net assets of the CFA (assets less liabilities) are matched by the reserves held by the CFA. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the CFA may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use. The second category of reserves are those that the CFA is not able to use to provide services. This category of reserves include reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line 'Adjustments between accounting basis and funding basis under regulations'.
Cash Flow Statement This summarises cash and cash equivalent inflows and outflows for capital and income and expenditure purposes by the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities.
Comparison of Income and Expenditure Spend to Budget The table overleaf provides a comparison of actual expenditure for the financial year ending the 31 st March 2012 with the revised budget.
Revised Budget
2
Actual
Variance
Leicester, Leicestershire and Rutland Combined Fire Authority
Employees Fire Pensions Indirect Employee Expenses Premises Transport Supplies and Services Other Local Authorities Support Services Capital Financing Gross Expenditure Income Net Expenditure Contribution to/(from) Specific Reserves Net Expenditure after Specific Reserves Contribution to/(from) General Fund Increased Council Tax Freeze grant
29,031 129 837 2,021 659 3,234 25 122 2,670 38,728 (1,917) 36,811 (40) 36,771 (121) 0
28,187 133 736 1,868 712 2,871 38 89 1,968 36,602 (2,279) 34,323 25 34,348 492 (1)
(844) 4 (101) (153) 53 (363) 13 (33) (702) (2,126) (362) (2,488) 65 (2,423) 613 (1)
Total Expenditure
36,650
34,839
(1,811)
The accounts for 2011/12 show an initial underspend of £2,488k compared to the revised budget. The main areas contributing to the underspend are as follows: Firefighters pay £434k, support staff pay £187k, control pay £223k, training £114k, repairs and maintenance £99k, energy £71k, uniforms and laundry £76k, communications and computing £72k, miscellaneous expenses £88k, operational equipment £42k, community safety delivery consumables £86k, finance support services £30k, debt management expenses £706k, secondment income £100k, charges £49k, princes trust income £168k, occupation health cost recovery £40k and other net variances of £36k, offset by a net increase in fuel expenditure £56k, cross border charges £41k and professional fees £38k. The £1,811k net overall underspend has been requested to be carried forward against specific requests which will help with budgetary constraints in 2012/13.
Comparison of Capital Spend to Revised Programme The table below provides a comparison of actual payments for the financial year ending the 31st March 2012 with the revised capital programme. Revised Programme £000
Actual
Variance
£000
£000
Appliances /Vehicles Property Equipment IT
1,112 1,714 321 116
1,043 1,041 265 66
-69 -673 -56 -50
Total Expenditure
3,263
2,415
-848
The underspend is mainly due to the later start than anticipated on the refurbishment of Oakham station (£65k), the fire control upgrade (£500k) and CCTV equpment (£55k) and the community safety pod not yet having been purchased (£80k). As a consequence of both the underspend of the capital projects and deliberate delay in borrowing to keep interest costs down, interest paid on borrowings for 2011/12 was £573k which was broadly in line with the revised budget for the year. Capital expenditure shown in the notes to the accounts also include expenditure which is incurred under income and expenditure but above the de-minimus level for adding to the the asset register. There were no material assets acquired nor significant liabilities incurred during the financial year.
Pensions Accounting The Balance Sheet shows liabilities in respect of four pensions schemes provided for our staff:
3
Leicester, Leicestershire and Rutland Combined Fire Authority
The £5.947 million liability (£4.095 million in 2010/11) on the Local Government Pension Scheme (LGPS) will be covered by the continued level of employer contributions. The Firefighters’ schemes are statutory unfunded ones and the significant total liability of £304.140 million (£278.880 million in 2010/11) is a result of this position. There is no requirement, or legal powers, for the FRA to fund this deficit, and any costs not financed by employee or employer contributions will now be met by direct government grant. More details on pensions can be found in note 34 to the Balance Sheet.
Borrowing Public Works Loans Board (PWLB) borrowing has been maintained at £7.728 million with no new borrowing in 2011/12. This is less than originally anticipated in the 2011-15 Medium Term Financial Plan when an authorised limit of £24.480 million was set. Finance lease principal outstanding has increased during 2011-12 by £1.085 million to £5.367 million against an authorised limit of £5.456 million. Borrowing to fund capital expenditure is primarily undertaken by procuring loans from PWLB, from finance leases available in the market, by using excess internal funds, by capital grants from the Department of Communities and Local Government (DCLG), by using proceeds from sales of surplus capital assets or by using one-off excess funds such as underspends.
Significant Provisions, Contingencies or Write Offs. There were no significant write-offs in 2011/12. The property revaluation undertaken on the 31st March 2012 resulted in £0.746m negative revaluations which were not covered by positive values held in the revaluation reserve from previous revaluations.
Events After the Balance Sheet Date It is anticipated that the service Headquarters will be sold in March 2014 once the new Headquarters has been built and all current occupants relocated. A sale price has been agreed with a purchaser and the value of the building impaired to reflect this sale price by the valuer.
Impact of Current Economic Climate on the CFA's Services The property revaluation on the 31st March 2012 identified £2.518m revaluation increases and £0.818m revaluation losses which affected the revaluation reserve. A further £0.387m negative revaluations (net of reversals of previous negative revaluations) were charged to the CIES. The net gain of £1.313m is 6.3% of the value of the entire property portfolio. The repairs and maintenance budget and the refurbishment plan in the capital programme help keep the value of the portfolio as high as the economy permits. In order to address the impact of the current economic climate, the following actions have been identified; Officers of the CFA have implemented efficiency savings across all areas of the Service. This has been achieved ahead of target and without any detriment to the performance of the Service. Further major efficiencies are planned with the introduction of a new duty system ‘Day Crewing Plus’ from 2013. The CFA has agreed to hold 5% of its revenue budget as a General Reserve. Any additional balances are to contribute towards capital projects and thus avoid the future costs of borrowing. The Medium Term Financial Strategy for 2012/15 highlights that the CFA has not fully committed its total income over the period. This provides a degree of flexibility for when future budget settlement figures are notified. The CFA is working closely with all major precepting authorities within Leicestershire and Rutland, to explore the impact of proposed government funding policy changes with regards to Business Rates and Council Tax Benefit from 2013/14.
4
Leicester, Leicestershire and Rutland Combined Fire Authority
STATEMENT OF RESPONSIBILITIES THE AUTHORITY'S RESPONSIBILITIES The CFA is required to; Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority that officer is the Treasurer, (ii) Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets, (iii) Approve the Statement of Accounts in accordance with the Accounts and Audit (England) regulations 2011. (i)
These accounts were approved by the Treasurer to the CFA on the 27th September 2012.
Peter Roffey CHAIRMAN OF THE COMBINED FIRE AUTHORITY THE TREASURER'S RESPONSIBILITIES The Treasurer is responsible for the preparation of the CFA's Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this Statement of Accounts the Treasurer has: (iv) selected suitable accounting policies and then applied them consistently, (v) made judgements and estimates that were reasonable and prudent, (vi) complied with the local authority Code. (vii) kept proper accounting records which were up to date, (viii) 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 Combined Fire st Authority as at the reporting date and of its expenditure and income for the year ended the 31 March 2012.
Trevor Peel TREASURER OF THE COMBINED FIRE AUTHORITY
5
Leicester, Leicestershire and Rutland Combined Fire Authority
STATEMENT OF ACCOUNTING POLICIES 1.
General Principles The accounts have been prepared with reference to: The objective of providing information about the financial position, performance and cash flows in a way that meets the 'common needs of most users'. The objective of showing the results of the stewardship and accountability of elected members and management for the resources entrusted to them; and the following underlying assumptions: ~ Accruals basis ~ Going concern basis The following qualitative characteristics: ~ Understandability ~ Relevance ~ Materiality ~ Reliability ~ Compliance The accounts are prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2011/12, as applicable to Fire Authorities. The accounting convention adopted is based upon historical cost modified by the revaluation of assets in the case of property, as described in subsequent notes. Accounting policies have been applied consistently throughout these accounts.
2.
Allocation of Support Services Cost The CFA purchases certain financial services from Leicestershire County Council. The cost of these services and in-house provision is presented in line with the Service Reporting Code of Practice and have been apportioned pro-rata to other expenditure on the major activities and corporate management.
3.
Basis of Charges for Capital Vehicles and items of plant and equipment with an original cost of less than £5k are not included in the asset register and therefore are not subject to depreciation. Depreciation/Amortisation Where depreciation/amortisation is provided for, assets are depreciated/amortised using the straight line method over the following periods: • Buildings - The useful economic life of each asset as determined as part of the revaluation process.
• Vehicles, Plant, Furniture and Equipment - estimated useful economic life (ranging from 5 to 15 years) • Intangible Assets - up to 5 years. All depreciation/amortisation is included in the CIES within cost of services. 4.
Basis of Debtors/Creditors Included in the Accounts The accounts of the CFA are maintained on an accruals basis, thus sums due to, or amounts owing by the CFA in respect of goods and services rendered but not paid for at the 31st March 2012 are included in the accounts.
6
Leicester, Leicestershire and Rutland Combined Fire Authority
The exception to this policy is payments spanning both 2011/12 and 2012/13 , e.g. gas, telephone and rent which, where not considered material, are brought into account in the year they became due and are not apportioned over the years to which they may relate. The necessity for a provision for doubtful debts in considered every year. At the 31st March 2012 no provision has been made relating to debts as there is no evidence of their impairment and historical evidence is that similar debts have been paid in full. 5.
Capital Receipts Proceeds from the sale of property, plant and equipment are initially credited to the Usable Capital Receipts Reserve, except proceeds from the sale of vehicles and equipment of less than £6,000 which are credited to the CIES.
6.
Cash and Cash Equivalents Cash and cash equivalents are represented by cash in hand and deposits with financial institutions repayable without penalty on demand and where interest earned is base rate or less. In the cash flow statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Authority's cash management.
7.
Collection Fund Adjustment Account The CFA is a precepting authority which levies a precept on the collection fund of billing Authorities, namely: Blaby District Council Charnwood District Council Harborough District Council Hinckley and Bosworth District Council Leicester City Council Melton District Council North West Leicestershire District Council Oadby and Wigston District Council Rutland County Council Billing Authorities in England are required by statute to maintain a separate fund for the collection and distribution of amounts due in respect of council tax. The funds key features relevant to accounting for council tax in the core financial statements are:
8.
a)
Billing Authorities collect and distribute council tax income on behalf of the major preceptors and itself.
b)
The council tax income for the year credited to the CFA's CIES is accrued income for the year. Each billing authority, however, may only release council tax from the collection fund to the CFA in accordance with the regulations. The collection fund adjustment account records the difference between council tax income recognised in the CIES and the amount calculated in accordance with regulations.
Contingent Liabilities Contingent Liabilities are: A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control: or A present obligation that arises from past events but is not recognised because it is not probable that a transfer of economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Where either of these circumstances are present, no provision is made, but the circumstances are explained as a note to the accounts.
7
Leicester, Leicestershire and Rutland Combined Fire Authority
9.
Employee Benefits Post-employment Benefits Employees of the CFA are members of one of four pension schemes, all of which are accounted for as defined benefits schemes. - The Local Government Pension scheme, for which Hymans Robertson calculate the liability as at the 31st March 2012 and which Leicestershire County Council administer. - Three Firefighters pensions schemes for which the Government Actuary's Department (GAD) calculate the liability. These schemes do not have the usual type of pension fund found in the private sector which uses investments to help meet scheme liabilities. Although the authority is required to maintain a pensions fund which: ~ receives employee and employer contributions and transfer values from other schemes, and ~ pays out benefits and transfer values to other schemes the authority does not have the power to invest money as would normally be the case with a pension fund. If the fund has insufficient money to meet all of its pension liabilities, the Secretary of State will make up the shortfall; if the fund is in surplus, the Secretary of State will take the excess to cover any shortfall in the funds of other authorities. IAS19 - Employee Benefits, requires the recognition of the Authority's share of assets and liabilities in the schemes as well as requiring recognition in the CIES of the full costs of providing for future retirement benefits earned by existing employees. The liabilities attributable to the Authority are included in the Balance Sheet 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 by employees, based on assumptions about mortality rates, employee turnover rates etc, and projections of earnings for current employees. Liabilities are discounted to their value at current prices, using a discount rate of 4.7% for the LGPS and 4.9% for the Firefighter's schemes. The firefighter's scheme is unfunded therefore has no assets. In respect of LGPS, in accordance with IAS 19 and in line with last year’s treatment, quoted securities held as assets in the defined benefit pension scheme are valued at bid price rather than mid-market value. Actuarial Losses and Gains are recognised within Other Comprehensive Income and Expenditure and the CIES, and reversed out within the MIRS to ensure they do not impact on the council tax payer. The change in the net pensions liability is analysed into seven components: - current service cost - the increase in liabilities as a result of years of service earned this year allocated in the CIES to the services for which the employees worked - past service costs - the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years - debited to the Surplus or Deficit on the Provision of Services in the CIES as part of the Non Distributed Costs - interest cost - the expected increase in the present value of liabilities during the year as they move one year closer to being paid - debited to the Financing and Investment Income and Expenditure line in the CIES - expected return on assets - the annual investment return on the fund assets atributable to the Authority, based on an average of the expected long-term return - credited to the Financing and Investment income and Expenditure Statement as part of Non Distributed Costs - gains or losses on settlements and curtailments - the results of actions to relieve the Authority of liabilities or events that reduce the expected future service or accrual of benefits of employees - debited or credited to the Surplus or Deficit on the Provisions of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs - actuarial gains and losses - changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions - charged to the Pensions Reserve - contributions paid to all the pension funds - cash paid as employer's contributions to the pension fund in settlement of liabilities, not accounted for as an expense.
8
Leicester, Leicestershire and Rutland Combined Fire Authority
A Pensions Reserve is held, from which appropriations have been made in order that the additional costs of providing for retirement benefits in accordance with the accounting standard do not impact on the level of local taxation. Benefits Payable during Employment During employment, employees receive short term benefits. Those payable include; wages and salaries, paid annual leave, paid sick leave and non-monetary benefits (e.g. provided cars) for current employees and are recognised as an expense for services in the year in which the employees render service to the Authority. An accrual is made for the cost of holiday entitlements earned by employees but not taken before the year-end, which employees can carry forward into the next financial year. The accrual is based on wage and salary rates applicable in the following financial year, being the period in which the employee takes the benefit. The accrual is charged to the Surplus or Deficit on the Provision of Services, but then reversed out in the Movement in Reserves so that revenue is charged in the financial year in which the holiday absence occurs. Termination Benefits Termination benefits are amounts payable as a result of a decision by the Authority to terminate an officer's employment before the normal retirement date or an officer's decision to accept voluntary redundancy and are charged on an accruals basis to the appropriate service in the CIES when the Authority is demonstrably committed to the termination of an officer or group of officers or making an offer to encourage voluntary redundancy. Where the termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by the Authority to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the MIRS, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end. Discretionary Benefits The Authority also has restricted powers to make discretionary awards of retirement benfits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of decision to make the award and accounted for using the same policies as are applied to the LGPS. 10.
Events after the Balance Sheet Date The Statement of Accounts was authorised for issue by the Treasurer on the 27th September 2012. Events taking place after this date are not reflected in the financial statements or notes. Where events taking place before this date provided information about conditions existing at the 31st March 2012, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information.
11.
Exceptional Items When items of income and expenditure are material, their nature and amount is disclosed separately, whether on the face of the CIES or in the notes to the Accounts, depending on how significant the items are to an understanding of the Authority's financial performance.
12.
Financial Instruments Financial liabilities/ loans and receivables are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and are carried at their amortised cost. Annual charges/credits to the Financing and Investment Income and Expenditure line in the CIES for interest payable/receivable are based on the carrying amount of the liability/asset, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instruments to the amount at which it was originally recognised. For most of the loans that the Authority has made, the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the CIES is the amount receivable for the year in the loan agreement.
9
Leicester, Leicestershire and Rutland Combined Fire Authority
13.
Grants Received Grants are accounted for on an accruals basis when there is reasonable assurance that it will be received. When all conditions attached to the grant are satisfied, income is recognised within the CIES on the relevant service line (attributable revenue grants and contributions) or Taxation and Non-specific Grant Income (non-ring fenced revenue grants and all capital grants). Capital grants recognised in this way are then reversed out of the General Fund and shown in the MIRS. Grants received where conditions have not been satisfied are shown in the Balance Sheet as Creditors. Capital grants not yet used to finance expenditure are shown in the Capital Grants Unapplied Reserve. When the grant is applied to expenditure this is transferred to the Capital Adjustment Account and shown in the movement in reserves statement.
14.
Group Accounts The financial statements contain information about the Fire Authority as an individual entity only. The statements do not contain consolidated financial information as the parent of a group. In accordance with paragraph 9.1.1.6 of the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2011/12, the Authority has taken advantage of the exemption from the requirement to prepare consolidated financial statements, as its interests in subsidiary undertakings are not considered material. This exemption will be subject to annual review.
15.
Income Recognition Revenue from the provision of services is recognised when the CFA can measure reliably the percentage completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the CFA. Interest receivable on investments is accounted for on the basis of the effective interest rate rather than the cash flows fixed or determined by the contract. Where revenue has been recognised but cash has not been received a debtor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.
16.
Inventories Inventories are measured at the lower of cost or net realisable value. Stocked items are assigned a cost using a first in, first out method (FIFO).
17.
Investments Investments are shown at the lower of cost and net realisable value. Leasing of Vehicles, Plant and Equipment
18. (i)
Lease rentals payable under operating leases, which are used to acquire vehicles or equipment as an alternative to capital financing, are not capitalised and rentals are charged to the CIES in the financial year to which they relate.
(ii) Finance Leases are capitalised in the balance sheet at fair value and depreciated over the life of the lease on a straight line method, the depreciation being charged to the CIES. A matching liability for the capitalised amount is created in the Balance Sheet when the asset is capitalised to recognise the obligation to pay the lessor. This liability is reduced over the estimated useful life of the asset. 19.
Non-Current Assets All expenditure on the acquisition and/or improvement of non-current assets is capitalised provided that the asset yields a benefit to the CFA for a period of more than a year and is over the de minimus limits described in (i) to (iii) below:
10
Leicester, Leicestershire and Rutland Combined Fire Authority
There is no depreciation or amortisation charged in the year of addition but a full year's depreciation or amortisation is charged in year of disposal. In the case of donated assets, these have been depreciated in the first year as they have been included in the Authority's accounts at gross book value with accumulated depreciation on transfer, and it is therefore considered appropriate to continue depreciating on transfer. Non-current assets are valued on the basis recommended by CIPFA and in accordance with the Statement of Asset Valuation Principles and Guidance Notes issued by the Royal Institute of Chartered Surveyors (RICS). The bases of valuation of the various categories of assets are as follows: (i)
Land and Operational Buildings This category of asset is included in the Balance Sheet at open market value for existing use, or where, due to the specialised nature of the asset this could not be assessed, at depreciated replacement cost. The current remaining average life of all buildings is 27 years. Valuation is carried out every year. The last valuation exercise was carried out by Cameron Butler BLE (Hons) MRICS of FHP Property Consultants.
The asset values used in the accounts are based on a certificate issued by FHP Property Consultants on all properties as at the 31st March 2012. Additions since the 1st April 2011 which are still under construction are included in the accounts at cost. (ii) Vehicles and Equipment Measurement is based upon actual cost depreciated over the individual assets' useful economic lives. (iii) Intangible Assets Intangible assets are assets that do not have a physical form, e.g. software licences, and are measured at historical cost for all assets with an original cost in excess of £10k and amortised over their useful economic lives. 20.
Prior Period adjustments Prior period adjustments may arise as a result in a charge of accounting policies or to correct a material error. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.
21.
Provisions Provisions are recognised when the Authority has a present obligation as a result of a past event, it is probable that a transfer of economics benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The CFA holds an insurance provision to cover the cost of known or likely claims relating to past events where it is anticipated that payment is likely to be made.
22.
Redemption of External Debt The CFA finances a proportion of its capital investment by raising loans. In accordance with the Local Government and Housing Act 1989 CIES has been charged with an amount that is sufficient to redeem a specified statutory percentage of outstanding debt. The sum set aside each year is called the Minimum Revenue Provision (MRP). The Authority's borrowing strategy allows debt rescheduling opportunities where advantageous.
23.
Reserves
11
Leicester, Leicestershire and Rutland Combined Fire Authority
EARMARKED RESERVES The CFA maintains a number of earmarked reserves to finance future expenditure as detailed below: (i)
Insurance Reserve The CFA's insurance policies require a degree of self-insurance. The insurance reserve has been established to meet future claims.
(ii) Occupational Health Reserve Created for the purpose of investing in reducing absence, early retirements, employee retention and vocational rehabilitation. (iii) Arson Reserve Created to support work on Arson reduction over the next 3 years from a one-off City Reward grant. (iv) IRMP Reserve Created to help with one off costs in implementing the Integrated Risk Management Plan (IRMP).
(v) III Health Retirement Reserve Created to help finance any DCLG imposed penalties for early retirements caused through ill health. (vi) Relocation Reserves Created to meet any costs associated with the employment of new employees where relocation expenses are appropriate. (vii) Part Time Workers Reserve Created to meet costs to be paid under the part time workers (Prevention of Less Favourable Treatment) Regulations 2000 once final agreement has been reached. (viii) Mutual Insurance Reserve These funds have been maintained to cover possible costs incurred whilst partaking in the Mutual Insurance group. (ix) Purchased Vehicle Reserve A replacement fund for 5 officer's cars which are purchased and not leased. (x) Training Rig This has been created to provide a capital contribution towards the Urban Search and Rescue (USAR) Training Rig which is due to be completed in 2014/15. (xi) Short-term Accumulating Compensated Absences Short-term accumulating compensated absences refers to benefits that employees receive as part of their contract of employment, entitlement to which is built up as they provide services to the CFA. The most significant and material element is holiday pay. Employees build up an entitlement to be paid holidays as they work. Under the code, the cost of providing holidays and similar benefits is required to be recognised when employees render services that increase their entitlement to future compensated absences. As a result, the CFA is required to accrue for any annual leave earned but not taken at the 31st March each year. The Government has issued regulations that mean Local Authorities are only required to fund holiday pay and similar benefits when they are used, rather than when employees earn the benefits. Amounts are transferred to the Accumulated Absences Account until the benefits are used. CAPITAL RESERVES
12
Leicester, Leicestershire and Rutland Combined Fire Authority
In accordance with standard accounting practice, two non cash-backed capital reserves exist as part of the system of capital accounting. These are: (xii) Revaluation Reserve The reserve started on the 1st April 2007 with a nil balance and represents gains in asset valuations recognised since that date only as a result of the periodic revaluation exercise of non-current assets. Where there is a revaluation reduction as a result of change in fair value, then the reduction in value is taken first through the revaluation reserve up to the amount of accumulated gains for that asset and thereafter through the CIES. If an impairment loss on any asset is charged to the CIES but had a revaluation gain in the reserve, an amount up to the value of the loss will be transferred to the Capital Adjustment Account. Any revaluation gains in the reserve for assets that are disposed or decommissioned will be transferred to the Capital Adjustment Account. Additional depreciation for the revalued amount above historical cost will be transferred each year to the Capital Adjustment Account. (xiii) The Capital Adjustment Account The Capital Adjustment Account replaced the Capital Financing Account from the 1st April 2007. Balances as at the 31st March 2012 represent the combined balances of the Capital Financing Account and Fixed Asset Restatement Account. This account represents amounts set aside from revenue resources or capital receipts, which have been used to finance expenditure on non-current assets, or for the repayment of external loans and other capital financing transactions. 24.
Value Added Tax (VAT) VAT incorporated in the CIES is limited to irrecoverable sums.
13
Leicester, Leicestershire and Rutland Combined Fire Authority
st Balance at the 31 March 2010
General Fund Balance
Earmarked General Fund Reserve
Total Useable Reserves
Unuseable Reserves
Total CFA Reserves
MOVEMENT IN RESERVES STATEMENT
£000
£000
£000
£000
£000
3,885
1,040
4,925
(288,919)
(283,994)
6,693
0
6,693
0
6,693
0
0
0
13,901
13,901
6,693
0
6,693
13,901
20,594
Adjustments between accounting basis and funding basis under regulations (Note 3)
(5,755)
0
(5,755)
5,755
0
Net Increase/(Decrease) before Transfers to Earmarked Reserves
938
0
938
19,656
20,594
(150)
150
0
0
0
788
150
938
19,656
20,594
4,673
1,190
5,863
(269,263)
(263,400)
(12,503)
0
(12,503)
0
(12,503)
0
0
0
(10,936)
(10,936)
(12,503)
0
(12,503)
(10,936)
(23,439)
14,240
0
14,240
(14,240)
0
1,737
0
1,737
(25,176)
(23,439)
(52)
52
0
0
0
Increase/(Decrease) in 2011/12
1,685
52
1,737
(25,176)
(23,439)
Balance at the 31st March 2012 carried forward
6,358
1,242
7,600
(294,439)
(286,839)
Surplus/(Deficit) on the Provision of Service Other Comprehensive Income and Expenditure Total Comprehensive Income and Expenditure
Transfers To/From Earmarked Reserves (Note 5) Increase/(Decrease) in 2010/11 st
Balance at the 31 March 2011 carried forward Surplus/ (Deficit) on the provision of Service Other Comprehensive Income and Expenditure Total Comprehensive Income and Expenditure Adjustments between accounting basis and funding basis under regulations (Note 3) Net Increase/(Decrease) before Transfers to Earmarked Reserves Transfers To/From Earmarked Reserves (Note 5)
17
Leicester, Leicestershire and Rutland Combined Fire Authority
COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT
4,551
(247)
4,304
Community Fire Safety
46,061
(38,238)
7,823
Firefighting and Rescue Operations
369
(20)
349
421
(21)
279
Net Expenditure
£000
Gross Income
£000
Gross Expenditure
Net Expenditure
£000
Notes
Gross Income
2011/12
Gross Expenditure
2010/11
£000
£000
£000
4,661
(263)
4,398
30,577
(3,855)
26,722
Fire Service Emergency Planning and Civil Defence
473
(17)
456
400
Corporate and Democratic Core
847
(26)
821
(17)
262
Non Distributed costs
89
0
89
51,681
(38,543)
13,138
36,647
(4,161)
32,486
21
0
21
6
17
0
17
17,003
(134)
16,869
Financing and Investment Income and 7 Expenditure
16,451
(158)
16,293
0
(36,721)
(36,721)
0
(36,293)
(36,293)
68,705
(75,398)
(6,693)
53,115
(40,612)
12,503
(790)
(13,111)
(13,901)
(20,594)
Cost of Services Other Operating Expenditure
Taxation and Non-Specific Grant Income
8
(Surplus) or Deficit on Provision of Services (Surplus) or Deficit on revaluation of non current assets
4
(1,618)
Actuarial (gains)/ losses on pensions assets/liabilities
4
12,554
Other Comprehensive Income and Expenditure Total Comprehensive Income and Expenditure
18
10,936
23,439
Leicester, Leicestershire and Rutland Combined Fire Authority
BALANCE SHEET
31st March 2011 £000
NOTE 22 22 23 30
31st March 2012 £000
26,865 932 40 0 27,837 4,836 250 4,972 10,058 (195) (476) (6,073) (6,744) (11,534) (282,975) (42) (294,551)
Property, Plant and Equipment Assets Under Construction Intangible Assets Long Term Debtors Long Term Assets Short Term Investments Inventories Short Term Debtors Current Assets Cash and Cash Equivalents Short Term Borrowing Short Term Creditors Current Liabilities Long Term Borrowing Net Pensions Liability Provisions Long Term Liabilities
(263,400)
Net Assets
4,673 1,190 5,863 (282,975) 2,736 11,197 55 (276)
Financed by: General Fund Balance Earmarked Reserves Usable Reserves Pension Reserve Revaluation Reserve Capital Adjustment Account Collection Fund Adjustment Account Short-term Accumulating Compensated Absences Adj Account
(269,263)
Unusable Reserves
(294,439)
(263,400)
Total Reserves
(286,839)
28 29 30 28 28 31 28 34 32
28,390 1,651 39 7 30,087 8,671 258 5,103 14,032 (20) (645) (7,755) (8,420) (12,450) (310,087) (1) (322,538) (286,839)
19
5 4 4 4 4 4
6,358 1,242 7,600 (310,087) 4,354 11,335 66 (107)
Leicester, Leicestershire and Rutland Combined Fire Authority
CASH FLOW STATEMENT 2010/11 £000
2011/12
£000
(6,693)
Note
907 (2,273) 5,112 (2,168)
£000
12,503
Net (surplus)/deficit on the provision of services
3,513
£000
Adjustment to net surplus or deficit on the provision of services for noncash movement
37 (17,839)
Adjustment for Investing and Financing cash flows included in operating activities
37
3,204 (2,132)
Total net cash flows from Operating Activities Investing Activities
39
3,081
Financing Activities
40
(1,124)
671
Net (Increase)/Decrease in cash and cash equivalents
(175)
476
Cash and cash equivalents at the beginning of the reporting period
(195)
(195)
Cash and cash equivalents at the end of the reporting period
20
(20)
Leicester, Leicestershire and Rutland Combined Fire Authority
NOTES TO THE ACCOUNTS 1
Critical Judgements in Applying Accounting Policies In applying the accounting policies set out in these accounts, the Authority has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the statement of accounts are: a) that despite a high degree of uncertainty about future funding levels for Local Government., the Authority has determined that at present, this is not sufficient to prevent the Authority continuing as a going concern b) impairment of investments will not be material c) relationships with the Local Authority Controlled Company (LACC) are treated as jointly controlled entity and Forge Health as a subsidiary in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12. d) that no contracts held by the Authority hold embedded leases e) that no major legal claims are in progress which could result in claims of a material value by or from the Authority
2
Assumptions made about the Future and other Major Sources of Uncertainty The Statement of Accounts contains estimated figures that are based in assumptions made by the Authority about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Authority's Balance Sheet at the 31 st March 2012 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:
3
Heading
Description of Uncertainty
Potential Effect if Results Differ from Assumption
Property, Plant and Equipment
Assets are depreciated over useful lives that are dependant on them being repaired and maintained sufficient to keep them in a usable condition for this period. If budgets for these repairs and maintenance were cut due to funding limitations, the anticipated lives may not be realised.
If the lives of the asset are reduced, this will have an impact on levels of depreciation and carrying value of assets will fall. It is estimated that the annual depreciation charge for all properties would increase by £31k for every year of reduction if applied to useful lives of the entire portfolio.
Intangible Assets
Assets are depreciated over estimated useful lives that are dependant on technological advances. If they became obsolete, the anticipipated lives may not be realised.
If the lives of the assets are reduced, this will have an impact on levels of depreciation and carrying values of the assets will fall. It is estimated that the annual depreciation charges of all intangible assets currently held would increase by £9k for every year of reduction.
Provisions
The Authority holds no material provisions.
Pension Liability
Estimation of the net liability to pay pensions depends on a number of complex judgements by the actuary relating to the discount rate used, the rate at which salaries are projected to increase, changed in retirement rates, mortality rates and expected returns on pensions assets. Within this Authority, the LGPS employs the Actuary, Hymans Robertson, and the Firefighters pension schemes are valued by GAD. These actuaries provide expert advice on assumptions to be applied.
Arrears
At the 31st March 2012, the Authority had a balance of If all outstanding debt over 121 days became irrecoverable, trade debtors of £58k. A review of all balances over 121 a charge of £26k would be made to the revenue budget. days outstanding found no evidence to conclude that any were unrecoverable. For this reason, no impairment of doubtful debts is considered necessary at this time.
Adjustments between Accounting Basis and Funding Basis under Regulations 21
The effects in the net pensions liability of changes in the individual assumptions can be measured. A 0.5% decrease in the discount rate would increase the pension liability by £33,373k.
Leicester, Leicestershire and Rutland Combined Fire Authority This note details the adjustments that are made to the total comprehensive income and expenditure that are specified by statutory provisions as being available to the Authority to meet future capital and revenue expenditure. 2010/11 Usable Movement in Reserves General Fund Unusable Reserves Balance £000
£000
2011/12 Usable Movement Reserves General Fund in Unusable Reserves Balance Adjustments primarily involving the Capital Adjustment Account;
£000
£000
Reversal of Items Debited or Credited to the CIES (1,375)
1,375
Charges for depreciation of non-current assets.
(1,164)
1,164
Impairment of Property, Plant and Equipment
(7)
7
907
(907)
(21)
21
1,260
(1,260)
Amortisation of Intangible assets
(1,505)
1,505
(387)
387
(8)
8
Capital grants and contributions applied
540
(540)
Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CIES
(17)
17
0
0
Donated Assets Insertion of Items Not Debited or Credited to the CIES
522
(522)
Statutory provision for the financing of capital investment
556
(556)
911
(911)
Capital expenditure charged against the General Fund Balances
959
(959)
(4,205)
4,205
(10,353)
10,353
11
(11)
169
(169)
0
0
(14,240)
14,240
Adjustments primarily involving the Pensions Reserve: 15,317
(15,317)
(10,618)
10,618
Reversal of items relating to retirement benefits debited or credited to CIES Employer's pensions contributions and direct payments to pensioners payable in the year Adjustments primarily involving the Collection Fund Adjustment Account:
67
(67)
Amount by which council tax income credited to the CIES is different from council tax income calculated for the year in accordance with statutory requirements. Adjustments primarily involving the Short Term Accumulating Compensated Absences Account:
(46)
46
Amount by which officer remuneration charged to the CIES on an accruals basis is different from remuneration chargeable in year in accordance with statutory requirements Other Adjustments:
4
2
(2)
5,755
(5,755)
Reversal of items relating to other adjustments debited or credited to the CIES
Unusable Reserves
2010/11
Revaluation Reserve: 22
2011/12
Leicester, Leicestershire and Rutland Combined Fire Authority £000 1,946 1,178 (42)
£000 2,736
Balance at 1st April Upward revaluation of assets and impairment Difference between fair value and historical cost depreciation
2,518 (82)
(346)
Downward revaluation of assets and impairment losses
(818)
2,736
Balance at 31 st March
4,354 Capital Adjustment Account:
2010/11 £000 10,162
Balance at 1st April
2011/12 £000 11,197
Reversal of items relating to capital expenditure debited or credited to the CIES (2,587) 0 42
Charges for depreciation and impairment on non-current assets Revaluation gains reversing prior year loses to CIES Difference between fair value and historical cost depreciation
(26)
Expenditure to CIES - not increasing value.
(21)
Loss on disposal of non-current asset
(2,345) 363 82 0 (17)
Capital Financing applied in year: 907 1,260
Capital grants credited to CIES that have been applied to capital financing.
540
522
Donated Assets Statutory provision for the financing of capital investment charged against the general fund.
556
938
Capital Expenditure charged against the General Fund Balance
959
11,197
Balance at 31 st March
(300,785) 13,111 0 (4,702) (13,930) 33,999 (50) (10,618) (282,975)
11,335 Pensions Reserve:
2010/11 £000
0
Balance at 1st April
2011/12 £000
(282,975)
Actuarial gains/losses on pensions assets and liabilities. Loss on Curtailments and Settlements
(12,554) (83)
Reversal of items relating to retirement benefits debited or credited to the Surplus/Deficit on the provision of Services in the CIES
(4,122)
Addition of Active Members by actuary
0
Changes in the past Service costs
0
Transfers In Employer's pensions contributions and direct payments to pensioners payable in the year
0
Balance at 31 st March Collection Fund Adjustment Account:
2010/11 £000
(10,353) (310,087) 2011/12 £000 55
67
Balance at 1st April Amounts by which council tax income credited to the CIES is different from council tax income calculated for the year in accordance with statutory requirements
55
Balance at 31 st March
66
(12)
2010/11 £000 (230)
(46) (276)
Short-term Accumulating Compensated Absences Adjustment Account:
11
2011/12 £000
Balance at 1st April Amount by which the officer remuneration charged to the CIES on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements.
(276)
Balance at 31 st March
(107)
23
169
Leicester, Leicestershire and Rutland Combined Fire Authority
5
Transfers between Earmarked Reserves
£000 Earmarked Reserve Insurance Other earmarked Reserves TOTAL 6
£000
£000
£000
6 197
0 353
122 1,068
0 58
42 68
164 1,078
1,040
203
353
1,190
58
110
1,242
2011/12 £000 Losses on the disposal of non-current assets
17
Financing and Investment Income Expenditure 2011/12 £000
2010/11 £000 546 16,457
Interest payable and similar charges Pensions interest cost and expected return on pensions assets
575 15,876
(78)
Dividend received
(57)
(56)
Interest receivable
(101)
16,869
TOTAL
16,293
Taxation and Non Specific Grant Income 2011/12 £000
2010/11 £000 (16,974)
Council Tax Income
(17,542)
(16,451)
Non domestic rates
(13,911)
(2,389) (907) (36,721)
Mar-12
st
Balance at 31
2011/12
2011/12
Transfers In
£000
Other Operating Expenditure
21
8
£000
128 912
2010/11 £000
7
Transfers Out
Mar-11
Balance at 31
2010/11
st
£000
Transfers In
2010/11
Apr-10
Balance 1
st
Transfers Out
This note sets out the amounts set aside from the General Fund in earmarked reserves to provide financing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fund expenditure in 2011/12.
Non-ring fenced government grants
(4,300) (540)
Capital Grant
(36,293)
TOTAL
24
Leicester, Leicestershire and Rutland Combined Fire Authority
9
Pensions Schemes As part of the terms and conditions of employment of its Officers and other employees, the CFA offers retirement benefits. Although these benefits will not actually be payable until the employees retire, the CFA has a commitment to make the payments that needs to be disclosed at the time that employees earn their future entitlement. The CFA participates in four different pension schemes. All of these schemes provide members with defined benefits related to pay and service. The schemes are detailed below: (i) Uniformed Firefighters This is made up of three unfunded schemes which means that there are no investment assets to match with the liability thus cash has to be generated to meet actual pension payments as they fall due. (ii) Control and Support Staff Employees, subject to certain qualifying criteria are eligible to join the LGPS administered by Leicestershire County Council. This is a funded scheme with employees and employers paying contributions into the fund calculated at a level intended to balance liabilities with investment assets.
10
Pensions Income and Expenditure The cost of retirement benefits in the Net Cost of Services represents the cost of benefits earned during the year and past service cost, which represent the estimated liability of discretionary benefits awarded by the employer. The charge to Council Tax is based, however, upon the actual employers contribution paid in year account after Net Operating Expenditure. The following transactions have been made in the income and expenditure account during the year: Local Government Pension Scheme 2010/11 2011/12 £000 £000
Firefighters' 1992 Injury Benefit Fire Fighters 2006 Pension Scheme Pension Scheme Scheme 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 £000 £000 £000 £000 £000 £000
Net Cost of Services ~ Current service costs ~ Past Service costs Net Operating Expenditure ~Interest cost ~Expected return on assets
823 (2,099)
724 6,870 0 (29,670)
570 6,250 0 (1,820)
500 0
1,310 (410)
1,480 0
1,157 (880)
968 (952)
15,120 0
14,810 0
840 0
750 0
220 0
300 0
1,667 668
(127) 613
17,580 (11,450) 9,900 9,610
510 100
(1,120) 130
(1,170) (50)
(1,780) 0
(662)
(607)
0
0
0
0
0
0
0 (6) 0 (668)
0 (6) 0 (613)
(9,900) 0 0 (9,900)
(9,610) 0 0 (9,610)
(100) 0 0 (100)
(130) 0 0 (130)
0 0 50 50
0 0 0 0
To be met from Government Grants and Local taxation: ~Movement on reserves statement Actual amount charged against council tax for pensions in the year: ~Employers contributions ~Retirement benefits paid to pensioners ~Unfunded benefits ~Transfer values received
25
Leicester, Leicestershire and Rutland Combined Fire Authority
11 Officers' Emoluments The following table sets out the remuneration disclosures for Senior Officers whose Salary is less than £150,000 but equal to or more than £50,000 per year. Post Title Salary
Bonus
Benefits in Kind
Total Remuneration
Pension
excluding
Contributions
Total Remuneration including
Pension contribution
Chief Executive Officer Director of Organisational Development Director of Infrastructure and Efficiency Projects Director of Community Safety Director of Finance and Corporate Risk
Pension contribution
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
138
140
6
0
0
0
144
140
23
19
167
159
114
114
0
0
0
1
114
115
24
24
138
139
101
88
4
0
1
2
106
90
0
0
106
90
105
106
0
0
1
1
106
107
22
22
128
129
87
88
0
0
6
10
93
98
15
12
108
110
During the year the number of Officers and Support Staff who received remuneration in excess of £50k excluding those shown above were: Number of Employees
Number of Employees
2010/11
2011/12 £50,000 - £54,999 £55,000 - £59,999 £60,000 - £64,999 £65,000 - £69,999 £70,000 - £74,999 TOTAL
18 8 0 3 0 29
18 10 0 1 2 31
12 Exit Packages The following termination benefits have been paid: Number of Packages 2010/11 £000 Compulsory 12 12 Voluntary 0 2 2 14
Total Amount
Number of Packages
Total Amount
2010/11 £000
2011/12 £000
2011/12 £000
17 17
£0 - £20,000 TOTAL COMPULSORY
2 2
16 16
0 51 51
£0 - £20,000 £20,001 - £40,000 TOTAL VOLUNTARY
4 0 4
41 0 41
68
TOTAL
6
57
26
Leicester, Leicestershire and Rutland Combined Fire Authority
13 Provisions for Repayment for External Loans The CFA is required by statue to set aside a Minimum Revenue Provision for the redemption of debt. In its Medium Term Financial Plan 2011/14 the CFA has stated its intention to provide 4% of the capital financing requirement as a Minimum Revenue Provision. The amount of this provision is detailed below: 2011/12 £000
2010/11 £000 Minimum Revenue Provision
522 522
556
TOTAL
556
14 Operating Leases Operating lease rentals paid to lessors in the year totalled £206,140 (2010/11 £253,243). As at the 31st March 2012 the CFA has a commitment to meet the following aggregate minimum lease payments for operating leases, all of which relate to vehicles, plant and equipment: 2011/12 £000
2010/11 £000 74 108 1 183
Operating Leases which expire: Within 1 year 1-5 years Over 5 years TOTAL
211 284 48 543
15 Members Allowance Sums paid are shown below: 2010/11 £000
2011/12 £000 71
Members Allowances
69
16 Related Parties The CFA is required to disclose material transactions with related parties, bodies or individuals that have the potential to exert control, or be controlled or influenced by the CFA. The DCLG has effective control of the general operations of the CFA. It is responsible for providing the statutory framework within which the CFA operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the CFA has with other parties (e.g. Council Tax). From the information currently available, there were no material transactions with related parties during 2011/12 other than those disclosed below: 2010/11 £000
Nature of Relationship
2011/12 £000
Due to: 195
Leicestershire County Council
Local partner/Supplier of service
136
Wholly owned subsidiary Local partner/Council Tax collection
(57) (9)
(2,345)
Due from Forge Health Limited Rutland DC DCLG: Pensions reimbursement
(2,237)
Net balance (from)/to related parties at 31st March
(78) (9)
Funding
27
(1,980) (1,910)
Leicester, Leicestershire and Rutland Combined Fire Authority
2010/11 £000
Nature of Relationship
111 312 0 0 0 0
(7) 0 (78)
Expenditure East Midlands Regional Management Board Leicestershire County Council Leicester City Council Leicestershire County Council Pension Fund Rutland DC DCLG Income East Midlands Fire and Rescue Control Centre Ltd Leicester City Council Forge Health Limited
(947) (286) (124) (4,425)
Rutland DC DCLG: New Dimensions Fire Control Implementation Firelink Pensions reimbursement
(5,447)
Net Transactions with related parties for year
(3)
2011/12 £000
Regional collaborative partnership Local Partner Local Partner Local Partner Local Partner Firelink provider
15 260 1 7 3 424
Jointly owned entity Local partner Wholly owned subsidiary
0 (1) (57) (9)
Local partner
(988) (20) (201) (4,916)
Government Grant Government Grant Government Grant Funding
(5,482)
17 Audit Costs In 2011/12 the CFA incurred the following fees relating to external audit, statutory inspection and other services: 2011/12 £000
2010/11 £000
112
Fees payable to the appointed auditor, PricewaterhouseCoopers with regard to external audit services under section 5 of the Audit Commission Act 1998 and any inspections relating to best value compliance under section 10 of the Local Government Act 1999.
65
4
Fees payable for other services (VAT helpline)
1
0
Fees payable for pensions advice
6
0
Fees payable for provided car taxation advice
9
116
81
TOTAL
28
Leicester, Leicestershire and Rutland Combined Fire Authority
18
East Midlands Regional Management Board The East Midlands Regional Management Board (RMB) was responsible for certain aspects of Fire and Rescue Services to the people of Derby, Derbyshire, Leicester, Leicestershire, Lincolnshire, Northamptonshire, Nottingham, Nottinghamshire and Rutland. It was formed on the 1st April 2004 and comprised ten elected members (two from each Fire and Rescue Authority). It was agreed on the 20th January 2011, in line with Government advice, that its activities would cease as soon as practicably possible. Some projects finished on the 31 st March 2011 although some could not be finalised until 2011/12. All projects have now ceased and the final audit of the RMB's accounts is being undertaken. The cost of many of the RMB projects that have been finalised in 2011/12 have been met initially by the individual Fire and Rescue Authorities concerned and then recharged to the RMB. The majority of the cost was met in full through carry forwards from 2010/11. The final charge borne by Leicestershire Fire and Rescue Service (and charged in the income and expenditure account) is detailed below. 2010/11 Total Project Cost £000
Project Description
2011/12 Total Project Cost £000
35 975 149 47 71 6 81 324
RMB running costs Regional Control* Regional Development* Regional Recruitment* Regional Consultation Regional Procurement Regional Fire Investigation Regional Finance system project
23 320 0 40 0 6 0 82
1,688
TOTAL REGIONAL PROJECTS
471
111
COST TO LEICESTERSHIRE
15
* The cost of the National Regional Control Project was offset in full by the carry forward of grant from the DCLG.
19
East Midlands Fire and Rescue Control Centre Ltd In November 2006, East Midlands Fire and Rescue Control Centre Ltd was created as a Local Authority Company to establish and manage the new regional fire control centre at Castle Donington. A Board with two elected members from each of the five local Fire and Rescue Authorities was constituted and met on a regular basis.
In December 2010, the DCLG announced that the Fire Control Project was to cease. The Board meeting of the 10th January 2011 agreed to initiate a process for the winding up of the Company and a new director structure was put in place. The Director of Finance and Head of Corporate Services at Leicestershire were appointed as directors from that date to close the company down once the lease had been successfully transferred to DCLG.
The Company's Annual General Meeting has agreed the Director's Report and Financial Statements for the period to the 31st March 2012. The accounts are kept at Leicestershire Fire and Rescue Service, Headquarters, Anstey Frith, Leicester Road, Glenfield, Leicester LE3 8HD.
The costs incurred by the company continue to be met by DCLG as Section 31 grant. The CFA has nominated responsibility for the financial arrangements of the company and all DCLG grant will be paid through the CFA. 2010/11 unused grant of £1,222,581 was carried forward. Further grant payment of £1,379,137 has been received by Leicestershire Fire and Rescue Service in the 2011/12 financial year. Of this, £114,962 was repaid to DCLG, £514,859 used in 2011/12 and £749,316 carried forward into 2012/13.
29
Leicester, Leicestershire and Rutland Combined Fire Authority
The table below details the expenditure incurred to the 31 st March 2012. 2010/11 £000
20
Expenditure Heading
2011/12 £000
383 15 1,376 16 40 26
Employees Employee Related Premises Transport Supplies and Services Professional Fees
139 6 1,594 (2) 0 0
1,856
TOTAL EXPENDITURE
1,737
1,856
INCOME
1,737
Forge Health Limited The Authority operates a trading company ‘Forge Health Ltd’ as a wholly owned subsidiary. The Company began trading from 1st April 2010 and its main activity is the provision of Occupational Health Services to the Private and Public Sector. For the year 2011/12, Forge Health Ltd reported a post tax profit of £56,729 and this sum is proposed by the Company to be wholly paid as dividend to the Authority. Note 16 of these statements discloses the total transactions with Forge Health Ltd and amounts due from/to at the year end. The financial statements of the Company are available from the Company Secretary, Forge Health Ltd, Leicestershire Fire and Rescue Service, Headquarters, Anstey Frith, Leicester Road, Glenfield, Leicester LE3 8HD.
21
Grants Received Other revenue grants received in 2011/12 by the CFA from DCLG were as follows: 2010/11 £000 975 286 0 0
New Dimensions FireControl / FireLink Transition Fire Control Firelink
30
2011/12 £000 988 0 20 201
Leicester, Leicestershire and Rutland Combined Fire Authority 22 Movement on Property, Plant and Equipment
Land and Buildings £000
Vehicles, Plant and Equipment £000
Assets under Construction £000
Total Property, Plant and Equipment £000
Cost or Valuation As at 1st April 2010
19,162
12,880
3,386
35,428
2,155
1,951
135
4,241
821
0
0
821
(1,177)
0
0
(1,177)
0
(21)
0
(21)
2,230
359
(2,589)
0
23,191
15,169
932
39,292
3,076
7,003
0
10,079
Depreciation charged to the Revaluation Reserve
42
0
0
42
Depreciation charged to the Surplus/Deficit on the Provision of Services
281
1,093
0
1,374
3,399
8,096
0
11,495
Additions Revaluation increases/(decreases) recognised in the Revaluation Reserve Revaluation decreases recognised in the Surplus/Deficit on the Provision of Services Derecognition - disposals Transfers As at 31st March 2011 Accumulated Depreciation and Impairment As at 1st April 2010 Depreciation Charge for Year:
As at 31st March 2011
31
Leicester, Leicestershire and Rutland Combined Fire Authority Land and Buildings £000
Vehicles, Plant and Equipment £000
Assets under Construction £000
Total Property, Plant and Equipment £000
Cost or Valuation As at 1st April 2011
24,368
15,169
932
40,469
186
1,462
887
2,535
Revaluation increases/(decreases) recognised in the Revaluation Reserve
1,700
0
0
1,700
Revaluation decreases recognised in the Surplus/Deficit on the Provision of Services
(746)
0
0
(746)
Reversal of previous revaluation decreases back to the Surplus/Deficit on the Provision of Services
359
0
0
359
Derecognition - disposals
(17)
0
0
(17)
0
168
(168)
0
25,850
16,799
1,651
44,300
4,576
8,096
0
12,672
Depreciation charged to the Revaluation Reserve
82
0
0
82
Depreciation charged to the Surplus/Deficit on the Provision of Services
412
1,093
Additions
Transfers As at 31st March 2012 Accumulated Depreciation and Impairment As at 1st April 2011 Depreciation Charge for Year:
Derecognition - disposals
1,505
0
0
As at 31st March 2012 Net Book value:
5,070
9,189
0
14,259
As at 31st March 2012
20,780
7,610
1,651
30,041
As at 31st March 2011
19,792
7,073
932
27,797
Included in the opening cost or valuation figure are finance lease assets of £6,659k for vehicles, plant and equipment. Opening depreciation on these assets was £1,601k. After additions of £757k and £640k depreciation for the year, the net book value of these assets at the 31 st March 2012 is £5,175k. New Dimensions assets valued at £1,260k were donated to the Authority by CLG as at the 31 st March 2011. These were transferred into Non-Current assets at this date. Depreciation to date on these assets is £410k. Asset remaining lives have been reviewed and altered where necessary. The impact of these changes are that depreciation is £62k more in 2011/12 than it would have been and negative revaluations charged to CIES are £58k less, a net effect of £4k more to CIES than under the original useful lives. A total amount of £8,091k is currently contracted for property and vehicles most of which is expected to be paid in 2012/13 and a small proportion in 2013/14. The majority of this (£7,769k) is in respect of the new headquarters and fire station development. 23 Movement of Intangible Assets 32
Leicester, Leicestershire and Rutland Combined Fire Authority Purchased Software Licences £000 Cost or Valuation As at 1st April 2010
85
Additions
40
As at 31st March 2011
125
Accumulated Amortisation As at 1st April 2010
78
Amortisation Charge for Year: Amortisation charged to the Surplus/Deficit on the Provision of Services As at 31st March 2011
7 85 Purchased Software Licences £000
Cost or Valuation As at 1st April 2011
125
Additions
7
As at 31st March 2012
132
Accumulated Amortisation As at 1st April 2011
85
Amortisation Charge for Year: Amortisation charged to the Surplus/Deficit on the Provision of Services
8
As at 31st March 2012 Net Book value:
93
As at 31st March 2012
39
As at 31st March 2011
40
Intangible assets currently held are site licences which have a finite life of 5 years, and are amortised on a straight line basis to reflect this. As at the 31st March 2012 there are no contractual commitments for the acquisition of intangible assets.
24 Details of Capital Expenditure
33
Leicester, Leicestershire and Rutland Combined Fire Authority Details of capital expenditure incurred during the year are as follows: 2010/11 £000 2,155 692 40 135 3,022
2011/12 £000 Land and Buildings Vehicles, Plant and Equipment Software Licences Assets in construction TOTAL
186 1,462 7 887 2,542
This includes property, plant and equipment and intangible assets (Notes 22 and 23). The 2011/12 expenditure is included in the accounts as follows: Land and Buildings £000
Vehicles, Plant and Equipment £000
186 862
1,462 25
7 0
1,655 887
1,048
1,487
7
2,542
Expenditure to be included in asset register Expenditure re assets in construction TOTAL
Software Licences £000
TOTAL £000
25 Financing of Capital Expenditure Capital expenditure was financed as follows: 2010/11 £000 721 0 900 38 0 456 907 3,022
2011/12 £000 Supported Capital Expenditure Capital Receipts General Fund Income and expenditure Finance Lease CFA Reserves (to be met by future Finance Lease) Grant TOTAL
0 0 839 120 464 579 540 2,542
A capital grant of £186,328 was received in 2008/09 for New Dimensions Accommodation, however no expenditure was incurred in 2008/09 or 2009/10, £1,044 in 2010/11 and none in 2011/12 therefore the remainder of the grant funding is carried over into 2012/13. The authority had an opening capital financing requirement of £12,875k at 1 st April 2011 and a closing capital financing requirement of £14,354k at 31 st March 2012.
26 Details of Assets owned by the Authority 34
Leicester, Leicestershire and Rutland Combined Fire Authority 31st March 2011 Number 20 1 1 1
19 13 34
31st March 2012 Number Buildings Fire Stations Fire Authority Headquarters Control Centre Training Unit
20 1 1 1
Vehicles & Equipment (owned) Operational Vehicles Ancillary Vehicles Vehicles & Equipment (leased) Operational Vehicles
21 17 37
27 Finance Lease Assets owned by the Authority Finance lease rentals paid to lessors relating to 2011/12 totalled £796,143 (£658,200 2010/11) of which £239,744 was interest and £556,399 was principal. All finance leases relate to Vehicles, Plant and Equipment and the net book value of these assets at the 31 st March 2012 is £4,225k. Obligations under Finance Leases payable: 2010/11 Minimum Lease Payments Present Value 2011/12 Minimum Lease Payments Present Value
35
Within 1 year £000
1-5 years £000
Over 5 years £000
683 653
2,707 2,322
1,692 1,221
876 842
3,316 2,896
2,084 1,551
Leicester, Leicestershire and Rutland Combined Fire Authority 28 Financial Instruments a) Categories of Financial Instruments The following categories of financial instruments are carried in the Balance Sheet: 31st March 2011 Long-Term Short-Term Included in: £000 £000 - Investments 0
4,836
31st March 2012 Long-Term Short-Term £000 £000
Loans and receivables at fair value
0
8,671
0
306
(7,728)
0
0
(2,795)
0
(20)
(4,722)
(645)
- Debtors 0
1,016
Financial assets carried at contract cost - Borrowings
(7,728)
0
Financial liabilities (i.e. borrowings) at amortised cost - Creditors
0
(3,989)
Financial liabilities carried at contract amount - Cash and Cash Equivalents
0
(195)
Bank deposits/(overdraft) - Other Liabilities
(3,806)
(476)
Finance leases
b) Maturity of Long-Term Borrowings and Other Liabilities st 31 March 2011 £000 509 3,918 1,526 5,581 11,534
31st March 2012 £000 2,391 3,205 1,443 5,411 12,450
Between 1 and 2 years Between 2 and 5 years Between 5 and 10 years Over 10 years TOTAL
PWLB interest of £81,440 has been accrued in the accounts, but is excluded from the long term borrowing figures above.
Any surplus or overdrawn cash balances remaining on a daily basis are included in the authority's treasury management activities. Funds are currently invested in short-term deposits with a limited range of banks in accordance with the CFA's Treasury Management policy. Investments are carried at the lower of cost and net realisable value.
Financial liabilities and financial assets represented by borrowings and investments are carried in the balance sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions: ~ PWLB debt; estimated interest rates at 31st March 2012 for new debt with the same maturity date from comparable lenders. ~ Investments; short term - carrying amounts in the Balance Sheet approximate to fair value.
36
Leicester, Leicestershire and Rutland Combined Fire Authority ~ For finance leases, the fair value is not significantly different from the carrying amount, because most of the loans commenced in the recent past and interest rates at the Balance Sheet date for these types of investments were not materially different. The fair values calculated are as follows: 31st March 2011 Carrying Fair Amount Value £000 £000 7,728 7,551 4,836
4,836
st
Financial Liabilities Financial Assets
31 March 2012 Carrying Fair Amount Value £000 £000 7,728 9,810 8,671
8,671
st The fair value for financial liabilities as at 31 March 2012 is more than the carrying amount because the Authority's portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the rates available for similar loans at the balance sheet date. This commitment to pay interest above current market rates increases the amount that the Authority would have to pay if the lender requested or agreed to early repayments of the loans.
c) Exposure to Risk The Authority's activities expose it to a variety of financial risks: ~ Credit risk - the possibility that other parties might fail to pay amounts due to the Authority ~ Liquidity risk - the possibility that the Authority might not have funds available to meet its commitments to make payments ~ Market risk - the possibility that financial loss might arise as a result of changes in, for example, interest rates. The CIPFA Code of Practice on Treasury Management has been adopted by the Authority and a Treasury Management Strategy is approved by the CFA each year. In this way, the risks are actively managed. Credit Risk Credit risk arises from deposits with financial institutions and from providing chargeable services to customers. The Authority publishes criteria for lending surplus cash in the Medium Term Financial Strategy. The details for this financial year are: * Minimum Credit Criteria / Sector Colour Band
Max % of total investments/ £ limit per institution
Max. Maturity Period
Blue (1 year) Orange (1 year) Red (6 months) Green (3 months)
£3m
364 days
UK sovereign rating
£3m
364 days
Government guarantee (explicit) on ALL deposits UK sovereign rating by high credit rated (sovereign rating) countries
£3m
364 days
UK Government support to the banking sector (implicit guarantee)
£3m
364 days
UK nationalised banks
Banks nationalised by high credit rated (sovereign rating) countries - non UK
UK sovereign rating
Institutions will be removed from the list where there are any doubts about their security. Invoices to customers for chargeable services are of relatively low value. The Authority actively pursues outstanding debt through the in-house legal service department.
37
Leicester, Leicestershire and Rutland Combined Fire Authority The following analysis summarises the Authority's potential maximum exposure to credit risk based on actual experience in terms of deposits and percentage of debt which has been written off as unrecoverable over the last three years in terms of debtors. All deposits shown on the Balance Sheet as at the 31st March 2012 were repaid to the Authority before the date the Statement of Accounts was authorised for issue where repayment was due in this period. There is no reason to doubt the credit quality of any of the customers amounts, whether current or past due for payment.
1st April 2011
£000 4,697 12 114 4,823
Loans and Receivables
31st March 2012
Deposits with Banks and Financial Institutions Trade Debtors: - not yet due for payment - past due date for payment TOTAL
£000 8,671 30 28 8,729
Est. Maximum
Historical
Exposure to
Experience
Credit Risk
of Default
£000 0
% 0.00
0 0 0
0.00 0.02
The past due amount is analysed by age as follows: 1st April 2011
31st March 2012
£000 5 0 0 109 0 114
£000 Less than 1 month overdue 1-2 months overdue 2-6 months overdue 6-12 months overdue Over 1 year overdue TOTAL
1 1 0 19 7 28
Liquidity Risk The Authority is able to access borrowings from the PWLB so there is no significant risk that it will be unable to raise funds in order to meet its commitments relating to financial liabilities. The risk the Authority is exposed to is that it will need to replenish its borrowings when interest rates are unfavourable. The Authority's strategy is to place limits on the percentage of borrowings due to mature at intervals as follows: Maturity of Borrowing: Maturity Structure of fixed interest rate borrowing 2012/13 Lower Limit 0% 0% 0% 0% 25%
Under 12 months 12 months to 2 years 2 years to 5 years 5 years to 10 years 10 years and above
Upper Limit 30% 30% 50% 70% 100%
This strategy allows the Authority time to restructure debt when interest rates are favourable. The Authority's strategy is to maintain sufficient cash balances to meet daily revenue requirements without recourse to borrowing other than short term borrowing in exceptional circumstances.
All trade and other payables are due to be repaid within one year.
38
Leicester, Leicestershire and Rutland Combined Fire Authority
Market Risk The Authority has borrowing and investments and the following table shows the potential financial effects at 31st March 2012, if interest rates had been different by 1% up or down with all other variables held constant.
1% Increase 1% Decrease £000 £000 Interest payable on variable rate borrowings Interest receivable on variable rate investments Interest payable on fixed rate investment assets Interest payable on fixed rate borrowings liabilities
n/a 60 n/a 77
n/a (60) n/a (77)
1% is our estimate of possible variations within the market. 29 Inventories
31st March 2011 £000
31st March 2012 £000
144 17 89
Operational Equipment Uniforms Other
127 7 124
250
TOTAL
258
There have been no write-downs during 2011-12, nor any reversals of any previous write downs. Inventory valued at £335k was utilised in 2011-12. 30 Debtors 31st March 2011 £000
31st March 2012 £000
2,916 87 1,969
Short-Term Debtors: - Central Government Bodies - Other Local Authorities - All Other
3,531 68 1,504
0 4,972
Long Term Debtors TOTAL
7 5,110
31 Creditors 31st March 2011 £000
st
31 March 2012 £000
1,685 195 4,193
Central Government Other Local Authorities All other
4,842 392 2,521
6,073
TOTAL
7,755 39
Leicester, Leicestershire and Rutland Combined Fire Authority Trade and other creditors are shown at Amortised Cost. There is no Fair Value adjustment to be made.
32 Provisions Movements during the Year. The CFA holds an insurance provision for claims in progress. Timing of payment of these claims is difficult to predict as they may be subject to legal process. The amounts put aside are decided upon by reviewing the current level of claims and assessing the likelihood of their success. There are currently no material unfunded risks. Income to this provision is from a reserve currently held for this purpose, so has no impact on the CIES. Movements in the provision are as follows:
st
Balance 31 March 2010 £000
Additional amount provided 2010/11 £000
37
5
st
Expenditure Balance 31 2010/11 March 2011 £000 £000 0
42
Expenditure 2011/12 £000 0
Unused amount reversed 2011/12 £000 41
st
Balance 31 March 2012 £000 1
33 Grants Received Grants for £1,404,283 and £1,800,000 (£906,963 in 2010-11) were received from the CLG for Capital Expenditure of which £539,825 was used in financial year and the remainder carried forward to 2012/13. The £1,800,000 was related to the replacement of fire control systems. Since the year end an agreement has been signed with Nottinghamshire and Derbyshire Combined Fire Authorities to introduce a tri-service control. As part of this project, Derbyshire will act as the lead financial authority and the £1,800,000 was paid over to them in August 2012.
40
Leicester, Leicestershire and Rutland Combined Fire Authority
34
Pensions Assets and Liabilities. Reconciliation of Present Value of the Scheme Liabilities - Firefighters Schemes:
Defined benefit obligation at 01/04/2010 Movement in year ~Current service costs ~Addition of Active Members ~Changes in Past Service costs
~Pension Transfers In ~Actuarial (gain)/loss ~Finance Interest cost less expected return on assets ~Employer contribution/ Pension paid. Defined benefit obligation at 31/03/2011 Movement in year: ~Current service costs ~Actuarial (gain)/loss ~Finance Interest cost less expected return on assets ~Employer contribution/ Pension paid. Defined benefit obligation at 31/03/2012 Projection of employer contributions for 2012/13 (all schemes) Cumulative actuarial (gain)/loss (based on actuary's historical records)
Firefighters (1992 Scheme)
Injury Awards (1992 Scheme)
Firefighters (2006 Scheme)
Total
£000
£000
£000
£000
284,980
1,740
3,520
290,240
6,870 0 (29,670) 0 (5,990)
570 13,930 (1,820) 0 (2,160)
1,310 0 (410) 50 (220)
8,750 13,930 (31,900) 50 (8,370)
15,120
840
220
16,180
(9,900) 261,410
(100) 13,000
0 4,470
(10,000) 278,880
6,250 9,990
500 920
1,480 0
8,230 10,910
14,810
750
300
15,860
(9,610) 282,850
(130) 15,040
0 6,250
(9,740) 304,140
-
-
(33,610)
(1,550)
-
2,869
(1,100)
Reconciliation of Present Value of the Scheme Liabilities - LGPS £000 22,565
Defined benefit obligation at 01/04/2010 Movement in year: ~Current service costs
823 (2,099) (4,545) 1,157 (928) (4) 313
~Changes in Past Service costs
~Actuarial (gain)/loss ~Finance Interest cost ~Estimated Benefits paid ~Estimated Unfunded Benefits paid ~Contributions by Members Defined Benefit Obligation at 31/03/2011 Movement in year: ~Current service costs ~Actuarial (gain)/loss ~Finance Interest cost ~Loss on Curtailments
17,282 724 760 968 83 (439)
~Estimated Benefits paid
(4)
~Estimated Unfunded Benefits paid
292
~Contributions by Members Defined Benefit Obligation at 31/03/2012 Projection of employer contributions for 2012/13 Cumulative actuarial (gain)/loss (based on actuary's historical records)
41
19,666 703 6,297
(36,260)
Leicester, Leicestershire and Rutland Combined Fire Authority
Reconciliation of Fair Value of Scheme Assets - LGPS
2010/11 £000 12,020 880 196 706 313 4 (4) (928) 13,187
2011/12 £000 As at 1st April Expected rate of return Actuarial gains and losses Employer contributions Contributions by scheme participants Contributions in respect of unfunded benefits Estimated unfunded benefits paid Estimated benefits paid As at 31st March
13,187 952 (884) 611 292 4 (4) (439) 13,719
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected returns on equity investments reflect long-term real rates of return experiences in the respective markets.
The actual return on scheme assets in the year was £73,000 (2010/11 £1,055,000). The underlying assets and liabilities of the CFA at the 31st March 2012 are as follows, from the valuations dated the 22nd May 2012 (LGPS) and the 14th May 2012 (all Firefighters schemes) The liabilities show the underlying commitment that the Authority has in the long run to pay retirement benefits. The reader of the accounts needs to be aware that this liability will be financed from the annual income and expenditure budget of the Authority in future years. Scheme History Year ended 31st March 2008 £000
Year ended 31st March 2009 £000
Year ended 31st March 2010 £000
Year ended 31st March 2011 £000
Year ended 31st March 2012 £000
LGPS -
Funded Unfunded Firefighters Pension Scheme 1992 Firefighters Pension Scheme- Injury awards Firefighters Pension Scheme 2006 Fair value of assets in LGPS
(11,929) (66) (212,950) (1,280) (740) 10,483
(11,963) (62) (200,780) (9,630) (1,270) 8,178
(22,484) (81) (284,980) (15,670) (3,520) 12,020
(17,213) (69) (261,410) (13,000) (4,470) 13,187
(19,593) (73) (282,850) (15,040) (6,250) 13,719
Total net liability
(216,482)
(215,527)
(314,715)
(282,975)
(310,087)
(1,446) (66) (212,950) (1,280) (740)
(3,785) (62) (200,780) (9,630) (1,270)
(10,464) (81) (284,980) (15,670) (3,520)
(4,026) (69) (261,410) (13,000) (4,470)
(5,874) (73) (282,850) (15,040) (6,250)
Present value of liabilities:
Surplus/(deficit) in the scheme: LGPS -
Funded Unfunded Firefighters Pension Scheme 1992 Firefighters Pension Scheme- Injury awards Firefighters Pension Scheme 2006
42
Leicester, Leicestershire and Rutland Combined Fire Authority
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 dependant on assumptions about mortality rates, salary levels etc. The principal assumptions used by the actuaries have been: 2010/11 Fire Pension LGPS Scheme
2011/12 Fire Pension LGPS Scheme Long term expected rate of return on assets in the scheme:
7.5% 4.9% 5.5% 4.6%
-
Equity Investments Bonds Property Cash
20.9 23.3
23.4 25.3
23.3 25.6
26.3 28.0
Mortality Assumptions: Longevity at 65 for current pensioners: Men Women Longevity at 65 for future pensioners: Men Women
3.6% 2.8% 5.1% 5.5%
3.8% 3.0% 5.3% 5.7%
Rate of Inflation Rate of pensions increase Rate of increase in salaries Rate for discounting scheme liabilities
6.2% 3.9% 4.4% 3.5%
-
20.9 23.3
23.4 25.3
23.3 25.6
26.5 28.3
3.1% 2.5% 4.8% 4.8%
3.6% 2.5% 4.7% 4.9%
Constitution of the Fair Value of Scheme Assets The Firefighters pension schemes have no assets to cover their liabilities. The LGPS assets consist of the following, by proportion of the total assets held:
31st March 2011 82% 7% 11% 0%
31st March 2012 Equity Investments Bonds Property Cash
65% 16% 11% 8%
History of Experience Gains and Losses The actuarial gains/losses identified as movements on Pension Reserves can be analysed into the following categories, measured as a percentage of assets or liabilities at 31st March: 2007/08 % Differences between the expected and actual return on assets - LGPS
2008/09 %
(7.48)
43
(45.81)
2009/10 % 21.51
2010/11 % 1.49
2011/12 % (6.44)
Leicester, Leicestershire and Rutland Combined Fire Authority
Experience gains and losses on liabilities - LGPS Experience gains and losses on liabilities - Firefighters schemes: Firefighters Pension Scheme 1992 Firefighters Pension Scheme- Injury awards Firefighters Pension Scheme 2006
(17.12)
0.01
0.00
4.55
0.44
2007/08 % 1.70 (5.50) 4.10
2008/09 % 0.40 6.80 2.40
2009/10 % 4.10 1.80 5.10
2010/11 % 0.90 8.80 1.10
2011/12 % 1.30 (0.30) 4.80
44
Leicester, Leicestershire and Rutland Combined FIre Authority
35 Collection Fund Adjustment Account
Melton BC
£000
£000
£000
£000
£000
66
132
70
40
287
55
24
57
8
739
(21)
(50)
(18)
(10)
(128)
(3)
(7)
(35)
(2)
(274)
(20)
(46)
(19)
(25)
(50)
(18)
(12)
(24)
0
(214)
(7)
(15)
(20)
(4)
19
1
(6)
(19)
(4)
(55)
(18)
(21)
(13)
(1)
(128)
(35)
1
21
(2)
(196)
140
306
273
43
72
73
10
25
63
1,005
(54)
(136)
(64)
(12)
(22)
(38)
(2)
(7)
(3)
(338)
(51)
(47)
(63)
(23)
(20)
(25)
0
(12)
(18)
(259)
(7)
(17)
(13)
(2)
(13)
(6)
(1)
(12)
5
(66)
(28)
(106)
(133)
(6)
(17)
(4)
(7)
6
(47)
(342)
Rutland CC
Leicester CC
£000
North-West Leics DC
Harborough DC
£000
2010/11 Council Tax Arrears Impairment Allowance for Bad/ Doubtful Debts Council Tax Over and Prepayments Collection Fund (Surplus)/Deficit Cash 2011/12 Council Tax Arrears Impairment Allowance for Bad/ Doubtful Debts Council Tax Over and Prepayments Collection Fund (Surplus)/Deficit Cash
Oadby & Wigston DC
Charnwood BC
£000
Collection Fund Heading
Hinckley & Bosworth BC
Blaby DC
The Collection Fund Adjustment Account represents the Authority's share of the Collection Fund Surplus/Deficit held by each Council Tax billing authority within Leicester, Leicestershire & Rutland. For 2010/11 and 2011/12, the breakdown of the figure on the Authority's Balance Sheet is as follows:
Total
£000
£000
The Authority's Collection Fund Adjustment Account therefore has a surplus of £66k at the 31st March 2012 (31st March 2011 - Surplus of £55k) 36 Contingent Liabilities Since the closure of the accounts for 2011/12 two cases of unauthorised pension payments have been discovered. Work is ongoing with our pension advisors to determine the level of any liabilities that will accrue to the CFA. The results of the investigation will be reflected in the 2012/13 statement of accounts. In September 2012 the CFA lost a personal injury case brought by a previous crew manager. The amount of the liability is with both solicitors. The resulting charge will be included in the 2012-13 accounts.
44
Leicester, Leicestershire and Rutland Combined FIre Authority 37
Reconciliation of the Surplus on the CIES to the Revenue Activities Cash Flow. 2010/11 £000 £000
2011/12 £000 £000 Non Cash Transactions Movement on pensions Depreciation and impairment on non-current assets Donated Assets Movement in short term accumulating compensated absence adjustment Other items
4,699 (2,577) 1,260 (46) 1,150
(14,558) (1,900) 0 169 10
4,486
(16,279) Revenue Items on an Accruals Basis: Change in creditors Change in debtors Change in long-term debtors Movement on provisions Change in inventories
(1,223) 246 0 (5) 9
(1,612) 3 0 41 8
(973) 3,513
907 907
38
(1,560) Total adjustments to net surplus/deficit on the provisions of services for non cash movements
(17,839)
Items classified elsewhere in the statement: Capital Grant received
3,204
Total adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activites
3,204
Operating Activities The cash flows from operating activities include the following items: 2010/11 £000 (69) 563
39
2011/12 £000 Interest received Interest paid
(101) 534
Investing Activities 2010/11 £000 2,733
2011/12 £000 Purchase of property, plant and equipment, investment property and intangible assets.
3,249
Net Cash Flow from purchase of, and proceeds from the sale of, short and long term investments
(907)
Capital Grants and contributions
37 5,112
2,469
3,815 (3,204)
Other receipts from investing activities
1
Net Cash Flow from Investing Activites
3,081
45
Leicester, Leicestershire and Rutland Combined FIre Authority
40
Financing Activities 2010/11 £000
2011/12 £000
(2,225) 57
Cash receipts from short-term and long-term borrowing Repayments of short-term and long-term borrowing
(1,640) 516
(2,168)
Net Cash Flow from Financing Activities
(1,124)
46
Leicester, Leicestershire and Rutland Combined Fire Authority
41 Segmental Analysis The analysis of income and expenditure by service on the face of the CIES is that specified by the Service Reporting Code of Practice. Decisions about resource allocation are taken by the CFA, who are considered to be the chief operating decision maker, on the basis of a one segment for the whole CFA. These reports are prepared on a different basis from the accounting policies used in the financial statements. In particular: ~ No charges are made in relation to capital expenditure (whereas depreciation, revaluation and impairment losses in excess of the balance on the Revaluation Reserve and amortisations are charged to services in the CIES). ~ The cost of retirement benefits is based on cash flows (payment of employer's pensions contributions) rather than current service cost of benefits accrued in the year.
RECONCILIATION BETWEEN MANAGEMENT ACCOUNTS AND CIES
Actual £000
Not Reported in Management Accounts £000
Not included in CIES
TOTAL
£000
£000
2010/11 Employee expenses IAS19 Other service expenses Depreciation, amortisation and impairment Interest payments Loss on disposal of non-current assets Gross Expenditure Fees, charges and other income Interest and investment income Income from Council Tax Government grants and contributions
29,079 0 6,448 0 549 0 36,076 (746) (56) 0 (1,402)
46 (4,699) 0 1,388 0 21 (3,244) 0 (78) (16,974) (19,747)
0 0 (522) 0 0 0 (522) 0 0 0
29,125 (4,699) 5,926 1,388 549 21 32,310 (746) (134) (16,974) (21,149)
TOTAL
33,872
(40,043)
(522)
(6,693)
(Surplus)/Deficit on the Provision of Services 2011/12 Employee expenses IAS19 Other service expenses Depreciation, amortisation and impairment Interest payments Loss on disposal of non-current assets Gross Expenditure Fees, charges and other income Interest and investment income Income from Council Tax Government grants and contributions
(6,693) 28,187 0 7,840 0 575 0 36,602 (717) (101) 0 (1,461)
(169) 14,558 (79) 1,900 0 17 16,227 (303) (57) (17,542) (18,751)
0 0 (1,394) 0 0 0 (1,394) 0 0 0
28,018 14,558 6,367 1,900 575 17 51,435 (1,020) (158) (17,542) (20,212)
TOTAL
34,323
(20,426)
(1,394)
12,503
(Surplus)/Deficit on the Provision of Services
12,503
47
Leicester, Leicestershire and Rutland Combined Fire Aurthority
FIREFIGHTERS' PENSION FUND 1.
At the beginning of 2006/07 Government changed the way in which firefighter pensions were financed. Prior to 2006/07 outgoing pension costs (as expenditure) and employee contributions (as income) were charged directly to the then revenue account (now the Comprehensive Income and Expenditure Account (CIES)). The difference, being the net cost of the scheme was borne on that account for Council Tax setting purposes.
2.
In accordance with the requirements of IAS19 the actual cost of pensions required for Council Tax setting purposed is replaced by the current service cost of pensions in the CIES, and reversed out in movement in reserves statement.
3.
In 2006/07 the arrangement was changed whereby the employee contributions, and a new employers contribution are paid into a separate account out of which pensions are paid. Any deficit on this account is made up by direct government funding.
4.
From 2006/07 it is these employer contributions (rather than the net cost of pensions) that are now replaced in the CIES.
5.
The Government has determined that this account is deemed a pension fund separate from the CIES and is thus reported on separately. There are no assets in this scheme and the difference between income and expenditure is met by direct government funding to balance the account to nil each year, and therefore there is no surplus or deficit on this fund to impact on overall Authority reserves.
6.
The pensions fund's financial statements do not take account of liabilities to pay pensions and other benefits after the 31st March 2012.
7.
The accounts are prepared in accordance with the same code of practice and accounting policies as outlined in the Statement of Accounting policies starting on page 6.
8.
Any Government funding payable is paid in two instalments, 80% of the estimated annual amount at the start of the year and any further surplus or deficit settled with DCLG following audit of the accounts for the year.
9.
The fund is currently in deficit by £304.140m (£278.880m as at 31st March 2011).
48
Leicester, Leicestershire and Rutland Combined Fire Authority
PENSION FUND STATEMENT Firefighters' Pension Fund 2010/11 £000
(2,978) (15) (1,621) (65) (4,679)
6,413 2,920 56 96 9,485 4,806
(2,461) 2,345
2010/11 £000
Fund Account
2011/12 £000
Income to the Fund Contributions Receivable: ~ from employer ~ normal contributions ~ ill health contributions ~ from members Transfers In: ~ individual transfers in from other schemes Income to the Fund Spending by the fund Benefits Payable: ~ Pension payments ~ Commutation of pensions and lump-sum retirement benefits. ~ Lump-sum death benefits. Payments To and On Behalf of Leavers ~ Individual transfers out of the scheme Spending by the Fund Net amount receivable for the year before top up grant receivable from sponsoring department Top-up grant received from sponsoring department Net Amount Receivable for the Year
Firefighters' Pension Fund Net Assets Statement
(2,895) (18) (1,596) (1) (4,510)
7,009 2,639 0 0 9,648 5,138
(3,158) 1,980
2011/12 £000
Net Current Assets and Liabilities: 2,345
~ pensions top up grant receivable from sponsoring department
1,980
2,345
Net Assets at the End of the Year
1,980
49
Leicester, Leicestershire and Rutland Combined Fire Authority
GLOSSARY OF TERMS 1. Accruals The concept that income and expenditure are recognised as they are earned or incurred, not as money is received or paid. 2. Capital Expenditure Expenditure on the acquisition of fixed assets or expenditure which adds to and not merely maintains the value of existing fixed assets. 3. Capital Receipts Income from the sale of assets. Such income may only be used to repay loan debt or to finance new capital expenditure. 4. Cash Equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 5. Chartered Institute of Public Finance and Accountancy (CIPFA) The principle accountancy body dealing with Local Government finance. 6. Corporate and Democratic Core Includes all aspects of members' activities and corporate management (see 7 below). 7. Corporate Management Concerns those activities and costs relating to provision of infrastructure, whether by the Authority or not, and the information which is required for public accountability. 8. Creditors Amounts owed by the CFA for which payment has not been made by the end of the financial year. 9. Debtors Amounts due to the CFA but unpaid at the end of the financial year. 10. Depreciation The measure of the wearing out, consumption, or other reduction in the usual economic life of a fixed asset. 11. Government Actuary's Department A Government Department that provides advice upon public sector pension arrangements, social security provision and regulators of private pension policies. 12. Long Term Borrowing
50
Leicester, Leicestershire and Rutland Combined Fire Authority Loans raised to finance capital spending which have still to be repaid. 13. Non-current Assets Tangible assets that yield benefits to the Authority for a period of more than one year. 14. Non Distributed Costs Costs relating to pension scheme past service costs, settlements and curtailments. 15. Operating Leases A method of financing the acquisition of assets, notably equipment, vehicles, plant etc. which involves the payment of a rental by the user for a period which is normally substantially less than the useful economic life of the asset. 16. Provision A liability or loss relating to a past event which is likely or certain to be incurred but uncertain as to the date when it will arise, which can be reasonably estimated. 17. Reserve An amount set aside for purposes falling outside the definition of a provision. 18. Revenue Expenditure Expenditure arising from the day to day operation of the CFA.
51
CONTENTS Combined Fire Authority 2011/2012 Statement of Accounts
Page Explanatory Foreword
2
Statement of Responsibilities
5
Statement of Accounting Policies
6
Independent Auditor's Report
14
Movement in Reserves Statement
17
Comprehensive Income and Expenditure Statement
18
Balance Sheet
19
Cash Flow Statement
20
Notes to the Accounts
21
Firefighters' Pension Fund
48
Pension Fund Statement
49
Glossary of Terms
50
Copies of the Statement of Accounts and a large print version, are available from the Service Headquarters at Anstey Frith, Leicester Road, Glenfield, Leicester LE3 8HD. Tel; Leicester (0116) 2872241
1
Leicester, Leicestershire and Rutland Combined Fire Authority
EXPLANATORY FOREWORD The accounting statements contained in this booklet represent the Combined Fire Authority's (CFA's) accounts for the year ended the 31st March 2012. The accounts have been presented in accordance with the requirements of the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local Authority Accounting in the United Kingdom 2011/12. The accounts comprise the following group of core financial statements:
Movement in Reserves Statement This statement shows the movement in year on the different reserves held by the Authority, analysed into usable reserves (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement (CIES).
Comprehensive Income and Expenditure Statement The CIES shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded by taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement (MIRS).
Balance Sheet This sets out the value of assets and liabilities of the CFA as at the 31 st March 2012. The net assets of the CFA (assets less liabilities) are matched by the reserves held by the CFA. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the CFA may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use. The second category of reserves are those that the CFA is not able to use to provide services. This category of reserves include reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line 'Adjustments between accounting basis and funding basis under regulations'.
Cash Flow Statement This summarises cash and cash equivalent inflows and outflows for capital and income and expenditure purposes by the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities.
Comparison of Income and Expenditure Spend to Budget The table overleaf provides a comparison of actual expenditure for the financial year ending the 31 st March 2012 with the revised budget.
Revised Budget
2
Actual
Variance
Leicester, Leicestershire and Rutland Combined Fire Authority
Employees Fire Pensions Indirect Employee Expenses Premises Transport Supplies and Services Other Local Authorities Support Services Capital Financing Gross Expenditure Income Net Expenditure Contribution to/(from) Specific Reserves Net Expenditure after Specific Reserves Contribution to/(from) General Fund Increased Council Tax Freeze grant
29,031 129 837 2,021 659 3,234 25 122 2,670 38,728 (1,917) 36,811 (40) 36,771 (121) 0
28,187 133 736 1,868 712 2,871 38 89 1,968 36,602 (2,279) 34,323 25 34,348 492 (1)
(844) 4 (101) (153) 53 (363) 13 (33) (702) (2,126) (362) (2,488) 65 (2,423) 613 (1)
Total Expenditure
36,650
34,839
(1,811)
The accounts for 2011/12 show an initial underspend of £2,488k compared to the revised budget. The main areas contributing to the underspend are as follows: Firefighters pay £434k, support staff pay £187k, control pay £223k, training £114k, repairs and maintenance £99k, energy £71k, uniforms and laundry £76k, communications and computing £72k, miscellaneous expenses £88k, operational equipment £42k, community safety delivery consumables £86k, finance support services £30k, debt management expenses £706k, secondment income £100k, charges £49k, princes trust income £168k, occupation health cost recovery £40k and other net variances of £36k, offset by a net increase in fuel expenditure £56k, cross border charges £41k and professional fees £38k. The £1,811k net overall underspend has been requested to be carried forward against specific requests which will help with budgetary constraints in 2012/13.
Comparison of Capital Spend to Revised Programme The table below provides a comparison of actual payments for the financial year ending the 31st March 2012 with the revised capital programme. Revised Programme £000
Actual
Variance
£000
£000
Appliances /Vehicles Property Equipment IT
1,112 1,714 321 116
1,043 1,041 265 66
-69 -673 -56 -50
Total Expenditure
3,263
2,415
-848
The underspend is mainly due to the later start than anticipated on the refurbishment of Oakham station (£65k), the fire control upgrade (£500k) and CCTV equpment (£55k) and the community safety pod not yet having been purchased (£80k). As a consequence of both the underspend of the capital projects and deliberate delay in borrowing to keep interest costs down, interest paid on borrowings for 2011/12 was £573k which was broadly in line with the revised budget for the year. Capital expenditure shown in the notes to the accounts also include expenditure which is incurred under income and expenditure but above the de-minimus level for adding to the the asset register. There were no material assets acquired nor significant liabilities incurred during the financial year.
Pensions Accounting The Balance Sheet shows liabilities in respect of four pensions schemes provided for our staff:
3
Leicester, Leicestershire and Rutland Combined Fire Authority
The £5.947 million liability (£4.095 million in 2010/11) on the Local Government Pension Scheme (LGPS) will be covered by the continued level of employer contributions. The Firefighters’ schemes are statutory unfunded ones and the significant total liability of £304.140 million (£278.880 million in 2010/11) is a result of this position. There is no requirement, or legal powers, for the FRA to fund this deficit, and any costs not financed by employee or employer contributions will now be met by direct government grant. More details on pensions can be found in note 34 to the Balance Sheet.
Borrowing Public Works Loans Board (PWLB) borrowing has been maintained at £7.728 million with no new borrowing in 2011/12. This is less than originally anticipated in the 2011-15 Medium Term Financial Plan when an authorised limit of £24.480 million was set. Finance lease principal outstanding has increased during 2011-12 by £1.085 million to £5.367 million against an authorised limit of £5.456 million. Borrowing to fund capital expenditure is primarily undertaken by procuring loans from PWLB, from finance leases available in the market, by using excess internal funds, by capital grants from the Department of Communities and Local Government (DCLG), by using proceeds from sales of surplus capital assets or by using one-off excess funds such as underspends.
Significant Provisions, Contingencies or Write Offs. There were no significant write-offs in 2011/12. The property revaluation undertaken on the 31st March 2012 resulted in £0.746m negative revaluations which were not covered by positive values held in the revaluation reserve from previous revaluations.
Events After the Balance Sheet Date It is anticipated that the service Headquarters will be sold in March 2014 once the new Headquarters has been built and all current occupants relocated. A sale price has been agreed with a purchaser and the value of the building impaired to reflect this sale price by the valuer.
Impact of Current Economic Climate on the CFA's Services The property revaluation on the 31st March 2012 identified £2.518m revaluation increases and £0.818m revaluation losses which affected the revaluation reserve. A further £0.387m negative revaluations (net of reversals of previous negative revaluations) were charged to the CIES. The net gain of £1.313m is 6.3% of the value of the entire property portfolio. The repairs and maintenance budget and the refurbishment plan in the capital programme help keep the value of the portfolio as high as the economy permits. In order to address the impact of the current economic climate, the following actions have been identified; Officers of the CFA have implemented efficiency savings across all areas of the Service. This has been achieved ahead of target and without any detriment to the performance of the Service. Further major efficiencies are planned with the introduction of a new duty system ‘Day Crewing Plus’ from 2013. The CFA has agreed to hold 5% of its revenue budget as a General Reserve. Any additional balances are to contribute towards capital projects and thus avoid the future costs of borrowing. The Medium Term Financial Strategy for 2012/15 highlights that the CFA has not fully committed its total income over the period. This provides a degree of flexibility for when future budget settlement figures are notified. The CFA is working closely with all major precepting authorities within Leicestershire and Rutland, to explore the impact of proposed government funding policy changes with regards to Business Rates and Council Tax Benefit from 2013/14.
4
Leicester, Leicestershire and Rutland Combined Fire Authority
STATEMENT OF RESPONSIBILITIES THE AUTHORITY'S RESPONSIBILITIES The CFA is required to; Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority that officer is the Treasurer, (ii) Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets, (iii) Approve the Statement of Accounts in accordance with the Accounts and Audit (England) regulations 2011. (i)
These accounts were approved by the Treasurer to the CFA on the 27th September 2012.
Peter Roffey CHAIRMAN OF THE COMBINED FIRE AUTHORITY THE TREASURER'S RESPONSIBILITIES The Treasurer is responsible for the preparation of the CFA's Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this Statement of Accounts the Treasurer has: (iv) selected suitable accounting policies and then applied them consistently, (v) made judgements and estimates that were reasonable and prudent, (vi) complied with the local authority Code. (vii) kept proper accounting records which were up to date, (viii) 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 Combined Fire st Authority as at the reporting date and of its expenditure and income for the year ended the 31 March 2012.
Trevor Peel TREASURER OF THE COMBINED FIRE AUTHORITY
5
Leicester, Leicestershire and Rutland Combined Fire Authority
STATEMENT OF ACCOUNTING POLICIES 1.
General Principles The accounts have been prepared with reference to: The objective of providing information about the financial position, performance and cash flows in a way that meets the 'common needs of most users'. The objective of showing the results of the stewardship and accountability of elected members and management for the resources entrusted to them; and the following underlying assumptions: ~ Accruals basis ~ Going concern basis The following qualitative characteristics: ~ Understandability ~ Relevance ~ Materiality ~ Reliability ~ Compliance The accounts are prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2011/12, as applicable to Fire Authorities. The accounting convention adopted is based upon historical cost modified by the revaluation of assets in the case of property, as described in subsequent notes. Accounting policies have been applied consistently throughout these accounts.
2.
Allocation of Support Services Cost The CFA purchases certain financial services from Leicestershire County Council. The cost of these services and in-house provision is presented in line with the Service Reporting Code of Practice and have been apportioned pro-rata to other expenditure on the major activities and corporate management.
3.
Basis of Charges for Capital Vehicles and items of plant and equipment with an original cost of less than £5k are not included in the asset register and therefore are not subject to depreciation. Depreciation/Amortisation Where depreciation/amortisation is provided for, assets are depreciated/amortised using the straight line method over the following periods: • Buildings - The useful economic life of each asset as determined as part of the revaluation process.
• Vehicles, Plant, Furniture and Equipment - estimated useful economic life (ranging from 5 to 15 years) • Intangible Assets - up to 5 years. All depreciation/amortisation is included in the CIES within cost of services. 4.
Basis of Debtors/Creditors Included in the Accounts The accounts of the CFA are maintained on an accruals basis, thus sums due to, or amounts owing by the CFA in respect of goods and services rendered but not paid for at the 31st March 2012 are included in the accounts.
6
Leicester, Leicestershire and Rutland Combined Fire Authority
The exception to this policy is payments spanning both 2011/12 and 2012/13 , e.g. gas, telephone and rent which, where not considered material, are brought into account in the year they became due and are not apportioned over the years to which they may relate. The necessity for a provision for doubtful debts in considered every year. At the 31st March 2012 no provision has been made relating to debts as there is no evidence of their impairment and historical evidence is that similar debts have been paid in full. 5.
Capital Receipts Proceeds from the sale of property, plant and equipment are initially credited to the Usable Capital Receipts Reserve, except proceeds from the sale of vehicles and equipment of less than £6,000 which are credited to the CIES.
6.
Cash and Cash Equivalents Cash and cash equivalents are represented by cash in hand and deposits with financial institutions repayable without penalty on demand and where interest earned is base rate or less. In the cash flow statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Authority's cash management.
7.
Collection Fund Adjustment Account The CFA is a precepting authority which levies a precept on the collection fund of billing Authorities, namely: Blaby District Council Charnwood District Council Harborough District Council Hinckley and Bosworth District Council Leicester City Council Melton District Council North West Leicestershire District Council Oadby and Wigston District Council Rutland County Council Billing Authorities in England are required by statute to maintain a separate fund for the collection and distribution of amounts due in respect of council tax. The funds key features relevant to accounting for council tax in the core financial statements are:
8.
a)
Billing Authorities collect and distribute council tax income on behalf of the major preceptors and itself.
b)
The council tax income for the year credited to the CFA's CIES is accrued income for the year. Each billing authority, however, may only release council tax from the collection fund to the CFA in accordance with the regulations. The collection fund adjustment account records the difference between council tax income recognised in the CIES and the amount calculated in accordance with regulations.
Contingent Liabilities Contingent Liabilities are: A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control: or A present obligation that arises from past events but is not recognised because it is not probable that a transfer of economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient reliability. Where either of these circumstances are present, no provision is made, but the circumstances are explained as a note to the accounts.
7
Leicester, Leicestershire and Rutland Combined Fire Authority
9.
Employee Benefits Post-employment Benefits Employees of the CFA are members of one of four pension schemes, all of which are accounted for as defined benefits schemes. - The Local Government Pension scheme, for which Hymans Robertson calculate the liability as at the 31st March 2012 and which Leicestershire County Council administer. - Three Firefighters pensions schemes for which the Government Actuary's Department (GAD) calculate the liability. These schemes do not have the usual type of pension fund found in the private sector which uses investments to help meet scheme liabilities. Although the authority is required to maintain a pensions fund which: ~ receives employee and employer contributions and transfer values from other schemes, and ~ pays out benefits and transfer values to other schemes the authority does not have the power to invest money as would normally be the case with a pension fund. If the fund has insufficient money to meet all of its pension liabilities, the Secretary of State will make up the shortfall; if the fund is in surplus, the Secretary of State will take the excess to cover any shortfall in the funds of other authorities. IAS19 - Employee Benefits, requires the recognition of the Authority's share of assets and liabilities in the schemes as well as requiring recognition in the CIES of the full costs of providing for future retirement benefits earned by existing employees. The liabilities attributable to the Authority are included in the Balance Sheet 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 by employees, based on assumptions about mortality rates, employee turnover rates etc, and projections of earnings for current employees. Liabilities are discounted to their value at current prices, using a discount rate of 4.7% for the LGPS and 4.9% for the Firefighter's schemes. The firefighter's scheme is unfunded therefore has no assets. In respect of LGPS, in accordance with IAS 19 and in line with last year’s treatment, quoted securities held as assets in the defined benefit pension scheme are valued at bid price rather than mid-market value. Actuarial Losses and Gains are recognised within Other Comprehensive Income and Expenditure and the CIES, and reversed out within the MIRS to ensure they do not impact on the council tax payer. The change in the net pensions liability is analysed into seven components: - current service cost - the increase in liabilities as a result of years of service earned this year allocated in the CIES to the services for which the employees worked - past service costs - the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years - debited to the Surplus or Deficit on the Provision of Services in the CIES as part of the Non Distributed Costs - interest cost - the expected increase in the present value of liabilities during the year as they move one year closer to being paid - debited to the Financing and Investment Income and Expenditure line in the CIES - expected return on assets - the annual investment return on the fund assets atributable to the Authority, based on an average of the expected long-term return - credited to the Financing and Investment income and Expenditure Statement as part of Non Distributed Costs - gains or losses on settlements and curtailments - the results of actions to relieve the Authority of liabilities or events that reduce the expected future service or accrual of benefits of employees - debited or credited to the Surplus or Deficit on the Provisions of Services in the Comprehensive Income and Expenditure Statement as part of Non Distributed Costs - actuarial gains and losses - changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions - charged to the Pensions Reserve - contributions paid to all the pension funds - cash paid as employer's contributions to the pension fund in settlement of liabilities, not accounted for as an expense.
8
Leicester, Leicestershire and Rutland Combined Fire Authority
A Pensions Reserve is held, from which appropriations have been made in order that the additional costs of providing for retirement benefits in accordance with the accounting standard do not impact on the level of local taxation. Benefits Payable during Employment During employment, employees receive short term benefits. Those payable include; wages and salaries, paid annual leave, paid sick leave and non-monetary benefits (e.g. provided cars) for current employees and are recognised as an expense for services in the year in which the employees render service to the Authority. An accrual is made for the cost of holiday entitlements earned by employees but not taken before the year-end, which employees can carry forward into the next financial year. The accrual is based on wage and salary rates applicable in the following financial year, being the period in which the employee takes the benefit. The accrual is charged to the Surplus or Deficit on the Provision of Services, but then reversed out in the Movement in Reserves so that revenue is charged in the financial year in which the holiday absence occurs. Termination Benefits Termination benefits are amounts payable as a result of a decision by the Authority to terminate an officer's employment before the normal retirement date or an officer's decision to accept voluntary redundancy and are charged on an accruals basis to the appropriate service in the CIES when the Authority is demonstrably committed to the termination of an officer or group of officers or making an offer to encourage voluntary redundancy. Where the termination benefits involve the enhancement of pensions, statutory provisions require the General Fund balance to be charged with the amount payable by the Authority to the pension fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the MIRS, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year end. Discretionary Benefits The Authority also has restricted powers to make discretionary awards of retirement benfits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of decision to make the award and accounted for using the same policies as are applied to the LGPS. 10.
Events after the Balance Sheet Date The Statement of Accounts was authorised for issue by the Treasurer on the 27th September 2012. Events taking place after this date are not reflected in the financial statements or notes. Where events taking place before this date provided information about conditions existing at the 31st March 2012, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information.
11.
Exceptional Items When items of income and expenditure are material, their nature and amount is disclosed separately, whether on the face of the CIES or in the notes to the Accounts, depending on how significant the items are to an understanding of the Authority's financial performance.
12.
Financial Instruments Financial liabilities/ loans and receivables are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and are carried at their amortised cost. Annual charges/credits to the Financing and Investment Income and Expenditure line in the CIES for interest payable/receivable are based on the carrying amount of the liability/asset, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instruments to the amount at which it was originally recognised. For most of the loans that the Authority has made, the amount presented in the Balance Sheet is the outstanding principal receivable (plus accrued interest) and interest credited to the CIES is the amount receivable for the year in the loan agreement.
9
Leicester, Leicestershire and Rutland Combined Fire Authority
13.
Grants Received Grants are accounted for on an accruals basis when there is reasonable assurance that it will be received. When all conditions attached to the grant are satisfied, income is recognised within the CIES on the relevant service line (attributable revenue grants and contributions) or Taxation and Non-specific Grant Income (non-ring fenced revenue grants and all capital grants). Capital grants recognised in this way are then reversed out of the General Fund and shown in the MIRS. Grants received where conditions have not been satisfied are shown in the Balance Sheet as Creditors. Capital grants not yet used to finance expenditure are shown in the Capital Grants Unapplied Reserve. When the grant is applied to expenditure this is transferred to the Capital Adjustment Account and shown in the movement in reserves statement.
14.
Group Accounts The financial statements contain information about the Fire Authority as an individual entity only. The statements do not contain consolidated financial information as the parent of a group. In accordance with paragraph 9.1.1.6 of the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2011/12, the Authority has taken advantage of the exemption from the requirement to prepare consolidated financial statements, as its interests in subsidiary undertakings are not considered material. This exemption will be subject to annual review.
15.
Income Recognition Revenue from the provision of services is recognised when the CFA can measure reliably the percentage completion of the transaction and it is probable that economic benefits or service potential associated with the transaction will flow to the CFA. Interest receivable on investments is accounted for on the basis of the effective interest rate rather than the cash flows fixed or determined by the contract. Where revenue has been recognised but cash has not been received a debtor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.
16.
Inventories Inventories are measured at the lower of cost or net realisable value. Stocked items are assigned a cost using a first in, first out method (FIFO).
17.
Investments Investments are shown at the lower of cost and net realisable value. Leasing of Vehicles, Plant and Equipment
18. (i)
Lease rentals payable under operating leases, which are used to acquire vehicles or equipment as an alternative to capital financing, are not capitalised and rentals are charged to the CIES in the financial year to which they relate.
(ii) Finance Leases are capitalised in the balance sheet at fair value and depreciated over the life of the lease on a straight line method, the depreciation being charged to the CIES. A matching liability for the capitalised amount is created in the Balance Sheet when the asset is capitalised to recognise the obligation to pay the lessor. This liability is reduced over the estimated useful life of the asset. 19.
Non-Current Assets All expenditure on the acquisition and/or improvement of non-current assets is capitalised provided that the asset yields a benefit to the CFA for a period of more than a year and is over the de minimus limits described in (i) to (iii) below:
10
Leicester, Leicestershire and Rutland Combined Fire Authority
There is no depreciation or amortisation charged in the year of addition but a full year's depreciation or amortisation is charged in year of disposal. In the case of donated assets, these have been depreciated in the first year as they have been included in the Authority's accounts at gross book value with accumulated depreciation on transfer, and it is therefore considered appropriate to continue depreciating on transfer. Non-current assets are valued on the basis recommended by CIPFA and in accordance with the Statement of Asset Valuation Principles and Guidance Notes issued by the Royal Institute of Chartered Surveyors (RICS). The bases of valuation of the various categories of assets are as follows: (i)
Land and Operational Buildings This category of asset is included in the Balance Sheet at open market value for existing use, or where, due to the specialised nature of the asset this could not be assessed, at depreciated replacement cost. The current remaining average life of all buildings is 27 years. Valuation is carried out every year. The last valuation exercise was carried out by Cameron Butler BLE (Hons) MRICS of FHP Property Consultants.
The asset values used in the accounts are based on a certificate issued by FHP Property Consultants on all properties as at the 31st March 2012. Additions since the 1st April 2011 which are still under construction are included in the accounts at cost. (ii) Vehicles and Equipment Measurement is based upon actual cost depreciated over the individual assets' useful economic lives. (iii) Intangible Assets Intangible assets are assets that do not have a physical form, e.g. software licences, and are measured at historical cost for all assets with an original cost in excess of £10k and amortised over their useful economic lives. 20.
Prior Period adjustments Prior period adjustments may arise as a result in a charge of accounting policies or to correct a material error. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.
21.
Provisions Provisions are recognised when the Authority has a present obligation as a result of a past event, it is probable that a transfer of economics benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The CFA holds an insurance provision to cover the cost of known or likely claims relating to past events where it is anticipated that payment is likely to be made.
22.
Redemption of External Debt The CFA finances a proportion of its capital investment by raising loans. In accordance with the Local Government and Housing Act 1989 CIES has been charged with an amount that is sufficient to redeem a specified statutory percentage of outstanding debt. The sum set aside each year is called the Minimum Revenue Provision (MRP). The Authority's borrowing strategy allows debt rescheduling opportunities where advantageous.
23.
Reserves
11
Leicester, Leicestershire and Rutland Combined Fire Authority
EARMARKED RESERVES The CFA maintains a number of earmarked reserves to finance future expenditure as detailed below: (i)
Insurance Reserve The CFA's insurance policies require a degree of self-insurance. The insurance reserve has been established to meet future claims.
(ii) Occupational Health Reserve Created for the purpose of investing in reducing absence, early retirements, employee retention and vocational rehabilitation. (iii) Arson Reserve Created to support work on Arson reduction over the next 3 years from a one-off City Reward grant. (iv) IRMP Reserve Created to help with one off costs in implementing the Integrated Risk Management Plan (IRMP).
(v) III Health Retirement Reserve Created to help finance any DCLG imposed penalties for early retirements caused through ill health. (vi) Relocation Reserves Created to meet any costs associated with the employment of new employees where relocation expenses are appropriate. (vii) Part Time Workers Reserve Created to meet costs to be paid under the part time workers (Prevention of Less Favourable Treatment) Regulations 2000 once final agreement has been reached. (viii) Mutual Insurance Reserve These funds have been maintained to cover possible costs incurred whilst partaking in the Mutual Insurance group. (ix) Purchased Vehicle Reserve A replacement fund for 5 officer's cars which are purchased and not leased. (x) Training Rig This has been created to provide a capital contribution towards the Urban Search and Rescue (USAR) Training Rig which is due to be completed in 2014/15. (xi) Short-term Accumulating Compensated Absences Short-term accumulating compensated absences refers to benefits that employees receive as part of their contract of employment, entitlement to which is built up as they provide services to the CFA. The most significant and material element is holiday pay. Employees build up an entitlement to be paid holidays as they work. Under the code, the cost of providing holidays and similar benefits is required to be recognised when employees render services that increase their entitlement to future compensated absences. As a result, the CFA is required to accrue for any annual leave earned but not taken at the 31st March each year. The Government has issued regulations that mean Local Authorities are only required to fund holiday pay and similar benefits when they are used, rather than when employees earn the benefits. Amounts are transferred to the Accumulated Absences Account until the benefits are used. CAPITAL RESERVES
12
Leicester, Leicestershire and Rutland Combined Fire Authority
In accordance with standard accounting practice, two non cash-backed capital reserves exist as part of the system of capital accounting. These are: (xii) Revaluation Reserve The reserve started on the 1st April 2007 with a nil balance and represents gains in asset valuations recognised since that date only as a result of the periodic revaluation exercise of non-current assets. Where there is a revaluation reduction as a result of change in fair value, then the reduction in value is taken first through the revaluation reserve up to the amount of accumulated gains for that asset and thereafter through the CIES. If an impairment loss on any asset is charged to the CIES but had a revaluation gain in the reserve, an amount up to the value of the loss will be transferred to the Capital Adjustment Account. Any revaluation gains in the reserve for assets that are disposed or decommissioned will be transferred to the Capital Adjustment Account. Additional depreciation for the revalued amount above historical cost will be transferred each year to the Capital Adjustment Account. (xiii) The Capital Adjustment Account The Capital Adjustment Account replaced the Capital Financing Account from the 1st April 2007. Balances as at the 31st March 2012 represent the combined balances of the Capital Financing Account and Fixed Asset Restatement Account. This account represents amounts set aside from revenue resources or capital receipts, which have been used to finance expenditure on non-current assets, or for the repayment of external loans and other capital financing transactions. 24.
Value Added Tax (VAT) VAT incorporated in the CIES is limited to irrecoverable sums.
13
Leicester, Leicestershire and Rutland Combined Fire Authority
st Balance at the 31 March 2010
General Fund Balance
Earmarked General Fund Reserve
Total Useable Reserves
Unuseable Reserves
Total CFA Reserves
MOVEMENT IN RESERVES STATEMENT
£000
£000
£000
£000
£000
3,885
1,040
4,925
(288,919)
(283,994)
6,693
0
6,693
0
6,693
0
0
0
13,901
13,901
6,693
0
6,693
13,901
20,594
Adjustments between accounting basis and funding basis under regulations (Note 3)
(5,755)
0
(5,755)
5,755
0
Net Increase/(Decrease) before Transfers to Earmarked Reserves
938
0
938
19,656
20,594
(150)
150
0
0
0
788
150
938
19,656
20,594
4,673
1,190
5,863
(269,263)
(263,400)
(12,503)
0
(12,503)
0
(12,503)
0
0
0
(10,936)
(10,936)
(12,503)
0
(12,503)
(10,936)
(23,439)
14,240
0
14,240
(14,240)
0
1,737
0
1,737
(25,176)
(23,439)
(52)
52
0
0
0
Increase/(Decrease) in 2011/12
1,685
52
1,737
(25,176)
(23,439)
Balance at the 31st March 2012 carried forward
6,358
1,242
7,600
(294,439)
(286,839)
Surplus/(Deficit) on the Provision of Service Other Comprehensive Income and Expenditure Total Comprehensive Income and Expenditure
Transfers To/From Earmarked Reserves (Note 5) Increase/(Decrease) in 2010/11 st
Balance at the 31 March 2011 carried forward Surplus/ (Deficit) on the provision of Service Other Comprehensive Income and Expenditure Total Comprehensive Income and Expenditure Adjustments between accounting basis and funding basis under regulations (Note 3) Net Increase/(Decrease) before Transfers to Earmarked Reserves Transfers To/From Earmarked Reserves (Note 5)
17
Leicester, Leicestershire and Rutland Combined Fire Authority
COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT
4,551
(247)
4,304
Community Fire Safety
46,061
(38,238)
7,823
Firefighting and Rescue Operations
369
(20)
349
421
(21)
279
Net Expenditure
£000
Gross Income
£000
Gross Expenditure
Net Expenditure
£000
Notes
Gross Income
2011/12
Gross Expenditure
2010/11
£000
£000
£000
4,661
(263)
4,398
30,577
(3,855)
26,722
Fire Service Emergency Planning and Civil Defence
473
(17)
456
400
Corporate and Democratic Core
847
(26)
821
(17)
262
Non Distributed costs
89
0
89
51,681
(38,543)
13,138
36,647
(4,161)
32,486
21
0
21
6
17
0
17
17,003
(134)
16,869
Financing and Investment Income and 7 Expenditure
16,451
(158)
16,293
0
(36,721)
(36,721)
0
(36,293)
(36,293)
68,705
(75,398)
(6,693)
53,115
(40,612)
12,503
(790)
(13,111)
(13,901)
(20,594)
Cost of Services Other Operating Expenditure
Taxation and Non-Specific Grant Income
8
(Surplus) or Deficit on Provision of Services (Surplus) or Deficit on revaluation of non current assets
4
(1,618)
Actuarial (gains)/ losses on pensions assets/liabilities
4
12,554
Other Comprehensive Income and Expenditure Total Comprehensive Income and Expenditure
18
10,936
23,439
Leicester, Leicestershire and Rutland Combined Fire Authority
BALANCE SHEET
31st March 2011 £000
NOTE 22 22 23 30
31st March 2012 £000
26,865 932 40 0 27,837 4,836 250 4,972 10,058 (195) (476) (6,073) (6,744) (11,534) (282,975) (42) (294,551)
Property, Plant and Equipment Assets Under Construction Intangible Assets Long Term Debtors Long Term Assets Short Term Investments Inventories Short Term Debtors Current Assets Cash and Cash Equivalents Short Term Borrowing Short Term Creditors Current Liabilities Long Term Borrowing Net Pensions Liability Provisions Long Term Liabilities
(263,400)
Net Assets
4,673 1,190 5,863 (282,975) 2,736 11,197 55 (276)
Financed by: General Fund Balance Earmarked Reserves Usable Reserves Pension Reserve Revaluation Reserve Capital Adjustment Account Collection Fund Adjustment Account Short-term Accumulating Compensated Absences Adj Account
(269,263)
Unusable Reserves
(294,439)
(263,400)
Total Reserves
(286,839)
28 29 30 28 28 31 28 34 32
28,390 1,651 39 7 30,087 8,671 258 5,103 14,032 (20) (645) (7,755) (8,420) (12,450) (310,087) (1) (322,538) (286,839)
19
5 4 4 4 4 4
6,358 1,242 7,600 (310,087) 4,354 11,335 66 (107)
Leicester, Leicestershire and Rutland Combined Fire Authority
CASH FLOW STATEMENT 2010/11 £000
2011/12
£000
(6,693)
Note
907 (2,273) 5,112 (2,168)
£000
12,503
Net (surplus)/deficit on the provision of services
3,513
£000
Adjustment to net surplus or deficit on the provision of services for noncash movement
37 (17,839)
Adjustment for Investing and Financing cash flows included in operating activities
37
3,204 (2,132)
Total net cash flows from Operating Activities Investing Activities
39
3,081
Financing Activities
40
(1,124)
671
Net (Increase)/Decrease in cash and cash equivalents
(175)
476
Cash and cash equivalents at the beginning of the reporting period
(195)
(195)
Cash and cash equivalents at the end of the reporting period
20
(20)
Leicester, Leicestershire and Rutland Combined Fire Authority
NOTES TO THE ACCOUNTS 1
Critical Judgements in Applying Accounting Policies In applying the accounting policies set out in these accounts, the Authority has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the statement of accounts are: a) that despite a high degree of uncertainty about future funding levels for Local Government., the Authority has determined that at present, this is not sufficient to prevent the Authority continuing as a going concern b) impairment of investments will not be material c) relationships with the Local Authority Controlled Company (LACC) are treated as jointly controlled entity and Forge Health as a subsidiary in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12. d) that no contracts held by the Authority hold embedded leases e) that no major legal claims are in progress which could result in claims of a material value by or from the Authority
2
Assumptions made about the Future and other Major Sources of Uncertainty The Statement of Accounts contains estimated figures that are based in assumptions made by the Authority about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Authority's Balance Sheet at the 31 st March 2012 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:
3
Heading
Description of Uncertainty
Potential Effect if Results Differ from Assumption
Property, Plant and Equipment
Assets are depreciated over useful lives that are dependant on them being repaired and maintained sufficient to keep them in a usable condition for this period. If budgets for these repairs and maintenance were cut due to funding limitations, the anticipated lives may not be realised.
If the lives of the asset are reduced, this will have an impact on levels of depreciation and carrying value of assets will fall. It is estimated that the annual depreciation charge for all properties would increase by £31k for every year of reduction if applied to useful lives of the entire portfolio.
Intangible Assets
Assets are depreciated over estimated useful lives that are dependant on technological advances. If they became obsolete, the anticipipated lives may not be realised.
If the lives of the assets are reduced, this will have an impact on levels of depreciation and carrying values of the assets will fall. It is estimated that the annual depreciation charges of all intangible assets currently held would increase by £9k for every year of reduction.
Provisions
The Authority holds no material provisions.
Pension Liability
Estimation of the net liability to pay pensions depends on a number of complex judgements by the actuary relating to the discount rate used, the rate at which salaries are projected to increase, changed in retirement rates, mortality rates and expected returns on pensions assets. Within this Authority, the LGPS employs the Actuary, Hymans Robertson, and the Firefighters pension schemes are valued by GAD. These actuaries provide expert advice on assumptions to be applied.
Arrears
At the 31st March 2012, the Authority had a balance of If all outstanding debt over 121 days became irrecoverable, trade debtors of £58k. A review of all balances over 121 a charge of £26k would be made to the revenue budget. days outstanding found no evidence to conclude that any were unrecoverable. For this reason, no impairment of doubtful debts is considered necessary at this time.
Adjustments between Accounting Basis and Funding Basis under Regulations 21
The effects in the net pensions liability of changes in the individual assumptions can be measured. A 0.5% decrease in the discount rate would increase the pension liability by £33,373k.
Leicester, Leicestershire and Rutland Combined Fire Authority This note details the adjustments that are made to the total comprehensive income and expenditure that are specified by statutory provisions as being available to the Authority to meet future capital and revenue expenditure. 2010/11 Usable Movement in Reserves General Fund Unusable Reserves Balance £000
£000
2011/12 Usable Movement Reserves General Fund in Unusable Reserves Balance Adjustments primarily involving the Capital Adjustment Account;
£000
£000
Reversal of Items Debited or Credited to the CIES (1,375)
1,375
Charges for depreciation of non-current assets.
(1,164)
1,164
Impairment of Property, Plant and Equipment
(7)
7
907
(907)
(21)
21
1,260
(1,260)
Amortisation of Intangible assets
(1,505)
1,505
(387)
387
(8)
8
Capital grants and contributions applied
540
(540)
Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the CIES
(17)
17
0
0
Donated Assets Insertion of Items Not Debited or Credited to the CIES
522
(522)
Statutory provision for the financing of capital investment
556
(556)
911
(911)
Capital expenditure charged against the General Fund Balances
959
(959)
(4,205)
4,205
(10,353)
10,353
11
(11)
169
(169)
0
0
(14,240)
14,240
Adjustments primarily involving the Pensions Reserve: 15,317
(15,317)
(10,618)
10,618
Reversal of items relating to retirement benefits debited or credited to CIES Employer's pensions contributions and direct payments to pensioners payable in the year Adjustments primarily involving the Collection Fund Adjustment Account:
67
(67)
Amount by which council tax income credited to the CIES is different from council tax income calculated for the year in accordance with statutory requirements. Adjustments primarily involving the Short Term Accumulating Compensated Absences Account:
(46)
46
Amount by which officer remuneration charged to the CIES on an accruals basis is different from remuneration chargeable in year in accordance with statutory requirements Other Adjustments:
4
2
(2)
5,755
(5,755)
Reversal of items relating to other adjustments debited or credited to the CIES
Unusable Reserves
2010/11
Revaluation Reserve: 22
2011/12
Leicester, Leicestershire and Rutland Combined Fire Authority £000 1,946 1,178 (42)
£000 2,736
Balance at 1st April Upward revaluation of assets and impairment Difference between fair value and historical cost depreciation
2,518 (82)
(346)
Downward revaluation of assets and impairment losses
(818)
2,736
Balance at 31 st March
4,354 Capital Adjustment Account:
2010/11 £000 10,162
Balance at 1st April
2011/12 £000 11,197
Reversal of items relating to capital expenditure debited or credited to the CIES (2,587) 0 42
Charges for depreciation and impairment on non-current assets Revaluation gains reversing prior year loses to CIES Difference between fair value and historical cost depreciation
(26)
Expenditure to CIES - not increasing value.
(21)
Loss on disposal of non-current asset
(2,345) 363 82 0 (17)
Capital Financing applied in year: 907 1,260
Capital grants credited to CIES that have been applied to capital financing.
540
522
Donated Assets Statutory provision for the financing of capital investment charged against the general fund.
556
938
Capital Expenditure charged against the General Fund Balance
959
11,197
Balance at 31 st March
(300,785) 13,111 0 (4,702) (13,930) 33,999 (50) (10,618) (282,975)
11,335 Pensions Reserve:
2010/11 £000
0
Balance at 1st April
2011/12 £000
(282,975)
Actuarial gains/losses on pensions assets and liabilities. Loss on Curtailments and Settlements
(12,554) (83)
Reversal of items relating to retirement benefits debited or credited to the Surplus/Deficit on the provision of Services in the CIES
(4,122)
Addition of Active Members by actuary
0
Changes in the past Service costs
0
Transfers In Employer's pensions contributions and direct payments to pensioners payable in the year
0
Balance at 31 st March Collection Fund Adjustment Account:
2010/11 £000
(10,353) (310,087) 2011/12 £000 55
67
Balance at 1st April Amounts by which council tax income credited to the CIES is different from council tax income calculated for the year in accordance with statutory requirements
55
Balance at 31 st March
66
(12)
2010/11 £000 (230)
(46) (276)
Short-term Accumulating Compensated Absences Adjustment Account:
11
2011/12 £000
Balance at 1st April Amount by which the officer remuneration charged to the CIES on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements.
(276)
Balance at 31 st March
(107)
23
169
Leicester, Leicestershire and Rutland Combined Fire Authority
5
Transfers between Earmarked Reserves
£000 Earmarked Reserve Insurance Other earmarked Reserves TOTAL 6
£000
£000
£000
6 197
0 353
122 1,068
0 58
42 68
164 1,078
1,040
203
353
1,190
58
110
1,242
2011/12 £000 Losses on the disposal of non-current assets
17
Financing and Investment Income Expenditure 2011/12 £000
2010/11 £000 546 16,457
Interest payable and similar charges Pensions interest cost and expected return on pensions assets
575 15,876
(78)
Dividend received
(57)
(56)
Interest receivable
(101)
16,869
TOTAL
16,293
Taxation and Non Specific Grant Income 2011/12 £000
2010/11 £000 (16,974)
Council Tax Income
(17,542)
(16,451)
Non domestic rates
(13,911)
(2,389) (907) (36,721)
Mar-12
st
Balance at 31
2011/12
2011/12
Transfers In
£000
Other Operating Expenditure
21
8
£000
128 912
2010/11 £000
7
Transfers Out
Mar-11
Balance at 31
2010/11
st
£000
Transfers In
2010/11
Apr-10
Balance 1
st
Transfers Out
This note sets out the amounts set aside from the General Fund in earmarked reserves to provide financing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fund expenditure in 2011/12.
Non-ring fenced government grants
(4,300) (540)
Capital Grant
(36,293)
TOTAL
24
Leicester, Leicestershire and Rutland Combined Fire Authority
9
Pensions Schemes As part of the terms and conditions of employment of its Officers and other employees, the CFA offers retirement benefits. Although these benefits will not actually be payable until the employees retire, the CFA has a commitment to make the payments that needs to be disclosed at the time that employees earn their future entitlement. The CFA participates in four different pension schemes. All of these schemes provide members with defined benefits related to pay and service. The schemes are detailed below: (i) Uniformed Firefighters This is made up of three unfunded schemes which means that there are no investment assets to match with the liability thus cash has to be generated to meet actual pension payments as they fall due. (ii) Control and Support Staff Employees, subject to certain qualifying criteria are eligible to join the LGPS administered by Leicestershire County Council. This is a funded scheme with employees and employers paying contributions into the fund calculated at a level intended to balance liabilities with investment assets.
10
Pensions Income and Expenditure The cost of retirement benefits in the Net Cost of Services represents the cost of benefits earned during the year and past service cost, which represent the estimated liability of discretionary benefits awarded by the employer. The charge to Council Tax is based, however, upon the actual employers contribution paid in year account after Net Operating Expenditure. The following transactions have been made in the income and expenditure account during the year: Local Government Pension Scheme 2010/11 2011/12 £000 £000
Firefighters' 1992 Injury Benefit Fire Fighters 2006 Pension Scheme Pension Scheme Scheme 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 £000 £000 £000 £000 £000 £000
Net Cost of Services ~ Current service costs ~ Past Service costs Net Operating Expenditure ~Interest cost ~Expected return on assets
823 (2,099)
724 6,870 0 (29,670)
570 6,250 0 (1,820)
500 0
1,310 (410)
1,480 0
1,157 (880)
968 (952)
15,120 0
14,810 0
840 0
750 0
220 0
300 0
1,667 668
(127) 613
17,580 (11,450) 9,900 9,610
510 100
(1,120) 130
(1,170) (50)
(1,780) 0
(662)
(607)
0
0
0
0
0
0
0 (6) 0 (668)
0 (6) 0 (613)
(9,900) 0 0 (9,900)
(9,610) 0 0 (9,610)
(100) 0 0 (100)
(130) 0 0 (130)
0 0 50 50
0 0 0 0
To be met from Government Grants and Local taxation: ~Movement on reserves statement Actual amount charged against council tax for pensions in the year: ~Employers contributions ~Retirement benefits paid to pensioners ~Unfunded benefits ~Transfer values received
25
Leicester, Leicestershire and Rutland Combined Fire Authority
11 Officers' Emoluments The following table sets out the remuneration disclosures for Senior Officers whose Salary is less than £150,000 but equal to or more than £50,000 per year. Post Title Salary
Bonus
Benefits in Kind
Total Remuneration
Pension
excluding
Contributions
Total Remuneration including
Pension contribution
Chief Executive Officer Director of Organisational Development Director of Infrastructure and Efficiency Projects Director of Community Safety Director of Finance and Corporate Risk
Pension contribution
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
2010/11
2011/12
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
138
140
6
0
0
0
144
140
23
19
167
159
114
114
0
0
0
1
114
115
24
24
138
139
101
88
4
0
1
2
106
90
0
0
106
90
105
106
0
0
1
1
106
107
22
22
128
129
87
88
0
0
6
10
93
98
15
12
108
110
During the year the number of Officers and Support Staff who received remuneration in excess of £50k excluding those shown above were: Number of Employees
Number of Employees
2010/11
2011/12 £50,000 - £54,999 £55,000 - £59,999 £60,000 - £64,999 £65,000 - £69,999 £70,000 - £74,999 TOTAL
18 8 0 3 0 29
18 10 0 1 2 31
12 Exit Packages The following termination benefits have been paid: Number of Packages 2010/11 £000 Compulsory 12 12 Voluntary 0 2 2 14
Total Amount
Number of Packages
Total Amount
2010/11 £000
2011/12 £000
2011/12 £000
17 17
£0 - £20,000 TOTAL COMPULSORY
2 2
16 16
0 51 51
£0 - £20,000 £20,001 - £40,000 TOTAL VOLUNTARY
4 0 4
41 0 41
68
TOTAL
6
57
26
Leicester, Leicestershire and Rutland Combined Fire Authority
13 Provisions for Repayment for External Loans The CFA is required by statue to set aside a Minimum Revenue Provision for the redemption of debt. In its Medium Term Financial Plan 2011/14 the CFA has stated its intention to provide 4% of the capital financing requirement as a Minimum Revenue Provision. The amount of this provision is detailed below: 2011/12 £000
2010/11 £000 Minimum Revenue Provision
522 522
556
TOTAL
556
14 Operating Leases Operating lease rentals paid to lessors in the year totalled £206,140 (2010/11 £253,243). As at the 31st March 2012 the CFA has a commitment to meet the following aggregate minimum lease payments for operating leases, all of which relate to vehicles, plant and equipment: 2011/12 £000
2010/11 £000 74 108 1 183
Operating Leases which expire: Within 1 year 1-5 years Over 5 years TOTAL
211 284 48 543
15 Members Allowance Sums paid are shown below: 2010/11 £000
2011/12 £000 71
Members Allowances
69
16 Related Parties The CFA is required to disclose material transactions with related parties, bodies or individuals that have the potential to exert control, or be controlled or influenced by the CFA. The DCLG has effective control of the general operations of the CFA. It is responsible for providing the statutory framework within which the CFA operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the CFA has with other parties (e.g. Council Tax). From the information currently available, there were no material transactions with related parties during 2011/12 other than those disclosed below: 2010/11 £000
Nature of Relationship
2011/12 £000
Due to: 195
Leicestershire County Council
Local partner/Supplier of service
136
Wholly owned subsidiary Local partner/Council Tax collection
(57) (9)
(2,345)
Due from Forge Health Limited Rutland DC DCLG: Pensions reimbursement
(2,237)
Net balance (from)/to related parties at 31st March
(78) (9)
Funding
27
(1,980) (1,910)
Leicester, Leicestershire and Rutland Combined Fire Authority
2010/11 £000
Nature of Relationship
111 312 0 0 0 0
(7) 0 (78)
Expenditure East Midlands Regional Management Board Leicestershire County Council Leicester City Council Leicestershire County Council Pension Fund Rutland DC DCLG Income East Midlands Fire and Rescue Control Centre Ltd Leicester City Council Forge Health Limited
(947) (286) (124) (4,425)
Rutland DC DCLG: New Dimensions Fire Control Implementation Firelink Pensions reimbursement
(5,447)
Net Transactions with related parties for year
(3)
2011/12 £000
Regional collaborative partnership Local Partner Local Partner Local Partner Local Partner Firelink provider
15 260 1 7 3 424
Jointly owned entity Local partner Wholly owned subsidiary
0 (1) (57) (9)
Local partner
(988) (20) (201) (4,916)
Government Grant Government Grant Government Grant Funding
(5,482)
17 Audit Costs In 2011/12 the CFA incurred the following fees relating to external audit, statutory inspection and other services: 2011/12 £000
2010/11 £000
112
Fees payable to the appointed auditor, PricewaterhouseCoopers with regard to external audit services under section 5 of the Audit Commission Act 1998 and any inspections relating to best value compliance under section 10 of the Local Government Act 1999.
65
4
Fees payable for other services (VAT helpline)
1
0
Fees payable for pensions advice
6
0
Fees payable for provided car taxation advice
9
116
81
TOTAL
28
Leicester, Leicestershire and Rutland Combined Fire Authority
18
East Midlands Regional Management Board The East Midlands Regional Management Board (RMB) was responsible for certain aspects of Fire and Rescue Services to the people of Derby, Derbyshire, Leicester, Leicestershire, Lincolnshire, Northamptonshire, Nottingham, Nottinghamshire and Rutland. It was formed on the 1st April 2004 and comprised ten elected members (two from each Fire and Rescue Authority). It was agreed on the 20th January 2011, in line with Government advice, that its activities would cease as soon as practicably possible. Some projects finished on the 31 st March 2011 although some could not be finalised until 2011/12. All projects have now ceased and the final audit of the RMB's accounts is being undertaken. The cost of many of the RMB projects that have been finalised in 2011/12 have been met initially by the individual Fire and Rescue Authorities concerned and then recharged to the RMB. The majority of the cost was met in full through carry forwards from 2010/11. The final charge borne by Leicestershire Fire and Rescue Service (and charged in the income and expenditure account) is detailed below. 2010/11 Total Project Cost £000
Project Description
2011/12 Total Project Cost £000
35 975 149 47 71 6 81 324
RMB running costs Regional Control* Regional Development* Regional Recruitment* Regional Consultation Regional Procurement Regional Fire Investigation Regional Finance system project
23 320 0 40 0 6 0 82
1,688
TOTAL REGIONAL PROJECTS
471
111
COST TO LEICESTERSHIRE
15
* The cost of the National Regional Control Project was offset in full by the carry forward of grant from the DCLG.
19
East Midlands Fire and Rescue Control Centre Ltd In November 2006, East Midlands Fire and Rescue Control Centre Ltd was created as a Local Authority Company to establish and manage the new regional fire control centre at Castle Donington. A Board with two elected members from each of the five local Fire and Rescue Authorities was constituted and met on a regular basis.
In December 2010, the DCLG announced that the Fire Control Project was to cease. The Board meeting of the 10th January 2011 agreed to initiate a process for the winding up of the Company and a new director structure was put in place. The Director of Finance and Head of Corporate Services at Leicestershire were appointed as directors from that date to close the company down once the lease had been successfully transferred to DCLG.
The Company's Annual General Meeting has agreed the Director's Report and Financial Statements for the period to the 31st March 2012. The accounts are kept at Leicestershire Fire and Rescue Service, Headquarters, Anstey Frith, Leicester Road, Glenfield, Leicester LE3 8HD.
The costs incurred by the company continue to be met by DCLG as Section 31 grant. The CFA has nominated responsibility for the financial arrangements of the company and all DCLG grant will be paid through the CFA. 2010/11 unused grant of £1,222,581 was carried forward. Further grant payment of £1,379,137 has been received by Leicestershire Fire and Rescue Service in the 2011/12 financial year. Of this, £114,962 was repaid to DCLG, £514,859 used in 2011/12 and £749,316 carried forward into 2012/13.
29
Leicester, Leicestershire and Rutland Combined Fire Authority
The table below details the expenditure incurred to the 31 st March 2012. 2010/11 £000
20
Expenditure Heading
2011/12 £000
383 15 1,376 16 40 26
Employees Employee Related Premises Transport Supplies and Services Professional Fees
139 6 1,594 (2) 0 0
1,856
TOTAL EXPENDITURE
1,737
1,856
INCOME
1,737
Forge Health Limited The Authority operates a trading company ‘Forge Health Ltd’ as a wholly owned subsidiary. The Company began trading from 1st April 2010 and its main activity is the provision of Occupational Health Services to the Private and Public Sector. For the year 2011/12, Forge Health Ltd reported a post tax profit of £56,729 and this sum is proposed by the Company to be wholly paid as dividend to the Authority. Note 16 of these statements discloses the total transactions with Forge Health Ltd and amounts due from/to at the year end. The financial statements of the Company are available from the Company Secretary, Forge Health Ltd, Leicestershire Fire and Rescue Service, Headquarters, Anstey Frith, Leicester Road, Glenfield, Leicester LE3 8HD.
21
Grants Received Other revenue grants received in 2011/12 by the CFA from DCLG were as follows: 2010/11 £000 975 286 0 0
New Dimensions FireControl / FireLink Transition Fire Control Firelink
30
2011/12 £000 988 0 20 201
Leicester, Leicestershire and Rutland Combined Fire Authority 22 Movement on Property, Plant and Equipment
Land and Buildings £000
Vehicles, Plant and Equipment £000
Assets under Construction £000
Total Property, Plant and Equipment £000
Cost or Valuation As at 1st April 2010
19,162
12,880
3,386
35,428
2,155
1,951
135
4,241
821
0
0
821
(1,177)
0
0
(1,177)
0
(21)
0
(21)
2,230
359
(2,589)
0
23,191
15,169
932
39,292
3,076
7,003
0
10,079
Depreciation charged to the Revaluation Reserve
42
0
0
42
Depreciation charged to the Surplus/Deficit on the Provision of Services
281
1,093
0
1,374
3,399
8,096
0
11,495
Additions Revaluation increases/(decreases) recognised in the Revaluation Reserve Revaluation decreases recognised in the Surplus/Deficit on the Provision of Services Derecognition - disposals Transfers As at 31st March 2011 Accumulated Depreciation and Impairment As at 1st April 2010 Depreciation Charge for Year:
As at 31st March 2011
31
Leicester, Leicestershire and Rutland Combined Fire Authority Land and Buildings £000
Vehicles, Plant and Equipment £000
Assets under Construction £000
Total Property, Plant and Equipment £000
Cost or Valuation As at 1st April 2011
24,368
15,169
932
40,469
186
1,462
887
2,535
Revaluation increases/(decreases) recognised in the Revaluation Reserve
1,700
0
0
1,700
Revaluation decreases recognised in the Surplus/Deficit on the Provision of Services
(746)
0
0
(746)
Reversal of previous revaluation decreases back to the Surplus/Deficit on the Provision of Services
359
0
0
359
Derecognition - disposals
(17)
0
0
(17)
0
168
(168)
0
25,850
16,799
1,651
44,300
4,576
8,096
0
12,672
Depreciation charged to the Revaluation Reserve
82
0
0
82
Depreciation charged to the Surplus/Deficit on the Provision of Services
412
1,093
Additions
Transfers As at 31st March 2012 Accumulated Depreciation and Impairment As at 1st April 2011 Depreciation Charge for Year:
Derecognition - disposals
1,505
0
0
As at 31st March 2012 Net Book value:
5,070
9,189
0
14,259
As at 31st March 2012
20,780
7,610
1,651
30,041
As at 31st March 2011
19,792
7,073
932
27,797
Included in the opening cost or valuation figure are finance lease assets of £6,659k for vehicles, plant and equipment. Opening depreciation on these assets was £1,601k. After additions of £757k and £640k depreciation for the year, the net book value of these assets at the 31 st March 2012 is £5,175k. New Dimensions assets valued at £1,260k were donated to the Authority by CLG as at the 31 st March 2011. These were transferred into Non-Current assets at this date. Depreciation to date on these assets is £410k. Asset remaining lives have been reviewed and altered where necessary. The impact of these changes are that depreciation is £62k more in 2011/12 than it would have been and negative revaluations charged to CIES are £58k less, a net effect of £4k more to CIES than under the original useful lives. A total amount of £8,091k is currently contracted for property and vehicles most of which is expected to be paid in 2012/13 and a small proportion in 2013/14. The majority of this (£7,769k) is in respect of the new headquarters and fire station development. 23 Movement of Intangible Assets 32
Leicester, Leicestershire and Rutland Combined Fire Authority Purchased Software Licences £000 Cost or Valuation As at 1st April 2010
85
Additions
40
As at 31st March 2011
125
Accumulated Amortisation As at 1st April 2010
78
Amortisation Charge for Year: Amortisation charged to the Surplus/Deficit on the Provision of Services As at 31st March 2011
7 85 Purchased Software Licences £000
Cost or Valuation As at 1st April 2011
125
Additions
7
As at 31st March 2012
132
Accumulated Amortisation As at 1st April 2011
85
Amortisation Charge for Year: Amortisation charged to the Surplus/Deficit on the Provision of Services
8
As at 31st March 2012 Net Book value:
93
As at 31st March 2012
39
As at 31st March 2011
40
Intangible assets currently held are site licences which have a finite life of 5 years, and are amortised on a straight line basis to reflect this. As at the 31st March 2012 there are no contractual commitments for the acquisition of intangible assets.
24 Details of Capital Expenditure
33
Leicester, Leicestershire and Rutland Combined Fire Authority Details of capital expenditure incurred during the year are as follows: 2010/11 £000 2,155 692 40 135 3,022
2011/12 £000 Land and Buildings Vehicles, Plant and Equipment Software Licences Assets in construction TOTAL
186 1,462 7 887 2,542
This includes property, plant and equipment and intangible assets (Notes 22 and 23). The 2011/12 expenditure is included in the accounts as follows: Land and Buildings £000
Vehicles, Plant and Equipment £000
186 862
1,462 25
7 0
1,655 887
1,048
1,487
7
2,542
Expenditure to be included in asset register Expenditure re assets in construction TOTAL
Software Licences £000
TOTAL £000
25 Financing of Capital Expenditure Capital expenditure was financed as follows: 2010/11 £000 721 0 900 38 0 456 907 3,022
2011/12 £000 Supported Capital Expenditure Capital Receipts General Fund Income and expenditure Finance Lease CFA Reserves (to be met by future Finance Lease) Grant TOTAL
0 0 839 120 464 579 540 2,542
A capital grant of £186,328 was received in 2008/09 for New Dimensions Accommodation, however no expenditure was incurred in 2008/09 or 2009/10, £1,044 in 2010/11 and none in 2011/12 therefore the remainder of the grant funding is carried over into 2012/13. The authority had an opening capital financing requirement of £12,875k at 1 st April 2011 and a closing capital financing requirement of £14,354k at 31 st March 2012.
26 Details of Assets owned by the Authority 34
Leicester, Leicestershire and Rutland Combined Fire Authority 31st March 2011 Number 20 1 1 1
19 13 34
31st March 2012 Number Buildings Fire Stations Fire Authority Headquarters Control Centre Training Unit
20 1 1 1
Vehicles & Equipment (owned) Operational Vehicles Ancillary Vehicles Vehicles & Equipment (leased) Operational Vehicles
21 17 37
27 Finance Lease Assets owned by the Authority Finance lease rentals paid to lessors relating to 2011/12 totalled £796,143 (£658,200 2010/11) of which £239,744 was interest and £556,399 was principal. All finance leases relate to Vehicles, Plant and Equipment and the net book value of these assets at the 31 st March 2012 is £4,225k. Obligations under Finance Leases payable: 2010/11 Minimum Lease Payments Present Value 2011/12 Minimum Lease Payments Present Value
35
Within 1 year £000
1-5 years £000
Over 5 years £000
683 653
2,707 2,322
1,692 1,221
876 842
3,316 2,896
2,084 1,551
Leicester, Leicestershire and Rutland Combined Fire Authority 28 Financial Instruments a) Categories of Financial Instruments The following categories of financial instruments are carried in the Balance Sheet: 31st March 2011 Long-Term Short-Term Included in: £000 £000 - Investments 0
4,836
31st March 2012 Long-Term Short-Term £000 £000
Loans and receivables at fair value
0
8,671
0
306
(7,728)
0
0
(2,795)
0
(20)
(4,722)
(645)
- Debtors 0
1,016
Financial assets carried at contract cost - Borrowings
(7,728)
0
Financial liabilities (i.e. borrowings) at amortised cost - Creditors
0
(3,989)
Financial liabilities carried at contract amount - Cash and Cash Equivalents
0
(195)
Bank deposits/(overdraft) - Other Liabilities
(3,806)
(476)
Finance leases
b) Maturity of Long-Term Borrowings and Other Liabilities st 31 March 2011 £000 509 3,918 1,526 5,581 11,534
31st March 2012 £000 2,391 3,205 1,443 5,411 12,450
Between 1 and 2 years Between 2 and 5 years Between 5 and 10 years Over 10 years TOTAL
PWLB interest of £81,440 has been accrued in the accounts, but is excluded from the long term borrowing figures above.
Any surplus or overdrawn cash balances remaining on a daily basis are included in the authority's treasury management activities. Funds are currently invested in short-term deposits with a limited range of banks in accordance with the CFA's Treasury Management policy. Investments are carried at the lower of cost and net realisable value.
Financial liabilities and financial assets represented by borrowings and investments are carried in the balance sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions: ~ PWLB debt; estimated interest rates at 31st March 2012 for new debt with the same maturity date from comparable lenders. ~ Investments; short term - carrying amounts in the Balance Sheet approximate to fair value.
36
Leicester, Leicestershire and Rutland Combined Fire Authority ~ For finance leases, the fair value is not significantly different from the carrying amount, because most of the loans commenced in the recent past and interest rates at the Balance Sheet date for these types of investments were not materially different. The fair values calculated are as follows: 31st March 2011 Carrying Fair Amount Value £000 £000 7,728 7,551 4,836
4,836
st
Financial Liabilities Financial Assets
31 March 2012 Carrying Fair Amount Value £000 £000 7,728 9,810 8,671
8,671
st The fair value for financial liabilities as at 31 March 2012 is more than the carrying amount because the Authority's portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the rates available for similar loans at the balance sheet date. This commitment to pay interest above current market rates increases the amount that the Authority would have to pay if the lender requested or agreed to early repayments of the loans.
c) Exposure to Risk The Authority's activities expose it to a variety of financial risks: ~ Credit risk - the possibility that other parties might fail to pay amounts due to the Authority ~ Liquidity risk - the possibility that the Authority might not have funds available to meet its commitments to make payments ~ Market risk - the possibility that financial loss might arise as a result of changes in, for example, interest rates. The CIPFA Code of Practice on Treasury Management has been adopted by the Authority and a Treasury Management Strategy is approved by the CFA each year. In this way, the risks are actively managed. Credit Risk Credit risk arises from deposits with financial institutions and from providing chargeable services to customers. The Authority publishes criteria for lending surplus cash in the Medium Term Financial Strategy. The details for this financial year are: * Minimum Credit Criteria / Sector Colour Band
Max % of total investments/ £ limit per institution
Max. Maturity Period
Blue (1 year) Orange (1 year) Red (6 months) Green (3 months)
£3m
364 days
UK sovereign rating
£3m
364 days
Government guarantee (explicit) on ALL deposits UK sovereign rating by high credit rated (sovereign rating) countries
£3m
364 days
UK Government support to the banking sector (implicit guarantee)
£3m
364 days
UK nationalised banks
Banks nationalised by high credit rated (sovereign rating) countries - non UK
UK sovereign rating
Institutions will be removed from the list where there are any doubts about their security. Invoices to customers for chargeable services are of relatively low value. The Authority actively pursues outstanding debt through the in-house legal service department.
37
Leicester, Leicestershire and Rutland Combined Fire Authority The following analysis summarises the Authority's potential maximum exposure to credit risk based on actual experience in terms of deposits and percentage of debt which has been written off as unrecoverable over the last three years in terms of debtors. All deposits shown on the Balance Sheet as at the 31st March 2012 were repaid to the Authority before the date the Statement of Accounts was authorised for issue where repayment was due in this period. There is no reason to doubt the credit quality of any of the customers amounts, whether current or past due for payment.
1st April 2011
£000 4,697 12 114 4,823
Loans and Receivables
31st March 2012
Deposits with Banks and Financial Institutions Trade Debtors: - not yet due for payment - past due date for payment TOTAL
£000 8,671 30 28 8,729
Est. Maximum
Historical
Exposure to
Experience
Credit Risk
of Default
£000 0
% 0.00
0 0 0
0.00 0.02
The past due amount is analysed by age as follows: 1st April 2011
31st March 2012
£000 5 0 0 109 0 114
£000 Less than 1 month overdue 1-2 months overdue 2-6 months overdue 6-12 months overdue Over 1 year overdue TOTAL
1 1 0 19 7 28
Liquidity Risk The Authority is able to access borrowings from the PWLB so there is no significant risk that it will be unable to raise funds in order to meet its commitments relating to financial liabilities. The risk the Authority is exposed to is that it will need to replenish its borrowings when interest rates are unfavourable. The Authority's strategy is to place limits on the percentage of borrowings due to mature at intervals as follows: Maturity of Borrowing: Maturity Structure of fixed interest rate borrowing 2012/13 Lower Limit 0% 0% 0% 0% 25%
Under 12 months 12 months to 2 years 2 years to 5 years 5 years to 10 years 10 years and above
Upper Limit 30% 30% 50% 70% 100%
This strategy allows the Authority time to restructure debt when interest rates are favourable. The Authority's strategy is to maintain sufficient cash balances to meet daily revenue requirements without recourse to borrowing other than short term borrowing in exceptional circumstances.
All trade and other payables are due to be repaid within one year.
38
Leicester, Leicestershire and Rutland Combined Fire Authority
Market Risk The Authority has borrowing and investments and the following table shows the potential financial effects at 31st March 2012, if interest rates had been different by 1% up or down with all other variables held constant.
1% Increase 1% Decrease £000 £000 Interest payable on variable rate borrowings Interest receivable on variable rate investments Interest payable on fixed rate investment assets Interest payable on fixed rate borrowings liabilities
n/a 60 n/a 77
n/a (60) n/a (77)
1% is our estimate of possible variations within the market. 29 Inventories
31st March 2011 £000
31st March 2012 £000
144 17 89
Operational Equipment Uniforms Other
127 7 124
250
TOTAL
258
There have been no write-downs during 2011-12, nor any reversals of any previous write downs. Inventory valued at £335k was utilised in 2011-12. 30 Debtors 31st March 2011 £000
31st March 2012 £000
2,916 87 1,969
Short-Term Debtors: - Central Government Bodies - Other Local Authorities - All Other
3,531 68 1,504
0 4,972
Long Term Debtors TOTAL
7 5,110
31 Creditors 31st March 2011 £000
st
31 March 2012 £000
1,685 195 4,193
Central Government Other Local Authorities All other
4,842 392 2,521
6,073
TOTAL
7,755 39
Leicester, Leicestershire and Rutland Combined Fire Authority Trade and other creditors are shown at Amortised Cost. There is no Fair Value adjustment to be made.
32 Provisions Movements during the Year. The CFA holds an insurance provision for claims in progress. Timing of payment of these claims is difficult to predict as they may be subject to legal process. The amounts put aside are decided upon by reviewing the current level of claims and assessing the likelihood of their success. There are currently no material unfunded risks. Income to this provision is from a reserve currently held for this purpose, so has no impact on the CIES. Movements in the provision are as follows:
st
Balance 31 March 2010 £000
Additional amount provided 2010/11 £000
37
5
st
Expenditure Balance 31 2010/11 March 2011 £000 £000 0
42
Expenditure 2011/12 £000 0
Unused amount reversed 2011/12 £000 41
st
Balance 31 March 2012 £000 1
33 Grants Received Grants for £1,404,283 and £1,800,000 (£906,963 in 2010-11) were received from the CLG for Capital Expenditure of which £539,825 was used in financial year and the remainder carried forward to 2012/13. The £1,800,000 was related to the replacement of fire control systems. Since the year end an agreement has been signed with Nottinghamshire and Derbyshire Combined Fire Authorities to introduce a tri-service control. As part of this project, Derbyshire will act as the lead financial authority and the £1,800,000 was paid over to them in August 2012.
40
Leicester, Leicestershire and Rutland Combined Fire Authority
34
Pensions Assets and Liabilities. Reconciliation of Present Value of the Scheme Liabilities - Firefighters Schemes:
Defined benefit obligation at 01/04/2010 Movement in year ~Current service costs ~Addition of Active Members ~Changes in Past Service costs
~Pension Transfers In ~Actuarial (gain)/loss ~Finance Interest cost less expected return on assets ~Employer contribution/ Pension paid. Defined benefit obligation at 31/03/2011 Movement in year: ~Current service costs ~Actuarial (gain)/loss ~Finance Interest cost less expected return on assets ~Employer contribution/ Pension paid. Defined benefit obligation at 31/03/2012 Projection of employer contributions for 2012/13 (all schemes) Cumulative actuarial (gain)/loss (based on actuary's historical records)
Firefighters (1992 Scheme)
Injury Awards (1992 Scheme)
Firefighters (2006 Scheme)
Total
£000
£000
£000
£000
284,980
1,740
3,520
290,240
6,870 0 (29,670) 0 (5,990)
570 13,930 (1,820) 0 (2,160)
1,310 0 (410) 50 (220)
8,750 13,930 (31,900) 50 (8,370)
15,120
840
220
16,180
(9,900) 261,410
(100) 13,000
0 4,470
(10,000) 278,880
6,250 9,990
500 920
1,480 0
8,230 10,910
14,810
750
300
15,860
(9,610) 282,850
(130) 15,040
0 6,250
(9,740) 304,140
-
-
(33,610)
(1,550)
-
2,869
(1,100)
Reconciliation of Present Value of the Scheme Liabilities - LGPS £000 22,565
Defined benefit obligation at 01/04/2010 Movement in year: ~Current service costs
823 (2,099) (4,545) 1,157 (928) (4) 313
~Changes in Past Service costs
~Actuarial (gain)/loss ~Finance Interest cost ~Estimated Benefits paid ~Estimated Unfunded Benefits paid ~Contributions by Members Defined Benefit Obligation at 31/03/2011 Movement in year: ~Current service costs ~Actuarial (gain)/loss ~Finance Interest cost ~Loss on Curtailments
17,282 724 760 968 83 (439)
~Estimated Benefits paid
(4)
~Estimated Unfunded Benefits paid
292
~Contributions by Members Defined Benefit Obligation at 31/03/2012 Projection of employer contributions for 2012/13 Cumulative actuarial (gain)/loss (based on actuary's historical records)
41
19,666 703 6,297
(36,260)
Leicester, Leicestershire and Rutland Combined Fire Authority
Reconciliation of Fair Value of Scheme Assets - LGPS
2010/11 £000 12,020 880 196 706 313 4 (4) (928) 13,187
2011/12 £000 As at 1st April Expected rate of return Actuarial gains and losses Employer contributions Contributions by scheme participants Contributions in respect of unfunded benefits Estimated unfunded benefits paid Estimated benefits paid As at 31st March
13,187 952 (884) 611 292 4 (4) (439) 13,719
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected returns on equity investments reflect long-term real rates of return experiences in the respective markets.
The actual return on scheme assets in the year was £73,000 (2010/11 £1,055,000). The underlying assets and liabilities of the CFA at the 31st March 2012 are as follows, from the valuations dated the 22nd May 2012 (LGPS) and the 14th May 2012 (all Firefighters schemes) The liabilities show the underlying commitment that the Authority has in the long run to pay retirement benefits. The reader of the accounts needs to be aware that this liability will be financed from the annual income and expenditure budget of the Authority in future years. Scheme History Year ended 31st March 2008 £000
Year ended 31st March 2009 £000
Year ended 31st March 2010 £000
Year ended 31st March 2011 £000
Year ended 31st March 2012 £000
LGPS -
Funded Unfunded Firefighters Pension Scheme 1992 Firefighters Pension Scheme- Injury awards Firefighters Pension Scheme 2006 Fair value of assets in LGPS
(11,929) (66) (212,950) (1,280) (740) 10,483
(11,963) (62) (200,780) (9,630) (1,270) 8,178
(22,484) (81) (284,980) (15,670) (3,520) 12,020
(17,213) (69) (261,410) (13,000) (4,470) 13,187
(19,593) (73) (282,850) (15,040) (6,250) 13,719
Total net liability
(216,482)
(215,527)
(314,715)
(282,975)
(310,087)
(1,446) (66) (212,950) (1,280) (740)
(3,785) (62) (200,780) (9,630) (1,270)
(10,464) (81) (284,980) (15,670) (3,520)
(4,026) (69) (261,410) (13,000) (4,470)
(5,874) (73) (282,850) (15,040) (6,250)
Present value of liabilities:
Surplus/(deficit) in the scheme: LGPS -
Funded Unfunded Firefighters Pension Scheme 1992 Firefighters Pension Scheme- Injury awards Firefighters Pension Scheme 2006
42
Leicester, Leicestershire and Rutland Combined Fire Authority
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 dependant on assumptions about mortality rates, salary levels etc. The principal assumptions used by the actuaries have been: 2010/11 Fire Pension LGPS Scheme
2011/12 Fire Pension LGPS Scheme Long term expected rate of return on assets in the scheme:
7.5% 4.9% 5.5% 4.6%
-
Equity Investments Bonds Property Cash
20.9 23.3
23.4 25.3
23.3 25.6
26.3 28.0
Mortality Assumptions: Longevity at 65 for current pensioners: Men Women Longevity at 65 for future pensioners: Men Women
3.6% 2.8% 5.1% 5.5%
3.8% 3.0% 5.3% 5.7%
Rate of Inflation Rate of pensions increase Rate of increase in salaries Rate for discounting scheme liabilities
6.2% 3.9% 4.4% 3.5%
-
20.9 23.3
23.4 25.3
23.3 25.6
26.5 28.3
3.1% 2.5% 4.8% 4.8%
3.6% 2.5% 4.7% 4.9%
Constitution of the Fair Value of Scheme Assets The Firefighters pension schemes have no assets to cover their liabilities. The LGPS assets consist of the following, by proportion of the total assets held:
31st March 2011 82% 7% 11% 0%
31st March 2012 Equity Investments Bonds Property Cash
65% 16% 11% 8%
History of Experience Gains and Losses The actuarial gains/losses identified as movements on Pension Reserves can be analysed into the following categories, measured as a percentage of assets or liabilities at 31st March: 2007/08 % Differences between the expected and actual return on assets - LGPS
2008/09 %
(7.48)
43
(45.81)
2009/10 % 21.51
2010/11 % 1.49
2011/12 % (6.44)
Leicester, Leicestershire and Rutland Combined Fire Authority
Experience gains and losses on liabilities - LGPS Experience gains and losses on liabilities - Firefighters schemes: Firefighters Pension Scheme 1992 Firefighters Pension Scheme- Injury awards Firefighters Pension Scheme 2006
(17.12)
0.01
0.00
4.55
0.44
2007/08 % 1.70 (5.50) 4.10
2008/09 % 0.40 6.80 2.40
2009/10 % 4.10 1.80 5.10
2010/11 % 0.90 8.80 1.10
2011/12 % 1.30 (0.30) 4.80
44
Leicester, Leicestershire and Rutland Combined FIre Authority
35 Collection Fund Adjustment Account
Melton BC
£000
£000
£000
£000
£000
66
132
70
40
287
55
24
57
8
739
(21)
(50)
(18)
(10)
(128)
(3)
(7)
(35)
(2)
(274)
(20)
(46)
(19)
(25)
(50)
(18)
(12)
(24)
0
(214)
(7)
(15)
(20)
(4)
19
1
(6)
(19)
(4)
(55)
(18)
(21)
(13)
(1)
(128)
(35)
1
21
(2)
(196)
140
306
273
43
72
73
10
25
63
1,005
(54)
(136)
(64)
(12)
(22)
(38)
(2)
(7)
(3)
(338)
(51)
(47)
(63)
(23)
(20)
(25)
0
(12)
(18)
(259)
(7)
(17)
(13)
(2)
(13)
(6)
(1)
(12)
5
(66)
(28)
(106)
(133)
(6)
(17)
(4)
(7)
6
(47)
(342)
Rutland CC
Leicester CC
£000
North-West Leics DC
Harborough DC
£000
2010/11 Council Tax Arrears Impairment Allowance for Bad/ Doubtful Debts Council Tax Over and Prepayments Collection Fund (Surplus)/Deficit Cash 2011/12 Council Tax Arrears Impairment Allowance for Bad/ Doubtful Debts Council Tax Over and Prepayments Collection Fund (Surplus)/Deficit Cash
Oadby & Wigston DC
Charnwood BC
£000
Collection Fund Heading
Hinckley & Bosworth BC
Blaby DC
The Collection Fund Adjustment Account represents the Authority's share of the Collection Fund Surplus/Deficit held by each Council Tax billing authority within Leicester, Leicestershire & Rutland. For 2010/11 and 2011/12, the breakdown of the figure on the Authority's Balance Sheet is as follows:
Total
£000
£000
The Authority's Collection Fund Adjustment Account therefore has a surplus of £66k at the 31st March 2012 (31st March 2011 - Surplus of £55k) 36 Contingent Liabilities Since the closure of the accounts for 2011/12 two cases of unauthorised pension payments have been discovered. Work is ongoing with our pension advisors to determine the level of any liabilities that will accrue to the CFA. The results of the investigation will be reflected in the 2012/13 statement of accounts. In September 2012 the CFA lost a personal injury case brought by a previous crew manager. The amount of the liability is with both solicitors. The resulting charge will be included in the 2012-13 accounts.
44
Leicester, Leicestershire and Rutland Combined FIre Authority 37
Reconciliation of the Surplus on the CIES to the Revenue Activities Cash Flow. 2010/11 £000 £000
2011/12 £000 £000 Non Cash Transactions Movement on pensions Depreciation and impairment on non-current assets Donated Assets Movement in short term accumulating compensated absence adjustment Other items
4,699 (2,577) 1,260 (46) 1,150
(14,558) (1,900) 0 169 10
4,486
(16,279) Revenue Items on an Accruals Basis: Change in creditors Change in debtors Change in long-term debtors Movement on provisions Change in inventories
(1,223) 246 0 (5) 9
(1,612) 3 0 41 8
(973) 3,513
907 907
38
(1,560) Total adjustments to net surplus/deficit on the provisions of services for non cash movements
(17,839)
Items classified elsewhere in the statement: Capital Grant received
3,204
Total adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activites
3,204
Operating Activities The cash flows from operating activities include the following items: 2010/11 £000 (69) 563
39
2011/12 £000 Interest received Interest paid
(101) 534
Investing Activities 2010/11 £000 2,733
2011/12 £000 Purchase of property, plant and equipment, investment property and intangible assets.
3,249
Net Cash Flow from purchase of, and proceeds from the sale of, short and long term investments
(907)
Capital Grants and contributions
37 5,112
2,469
3,815 (3,204)
Other receipts from investing activities
1
Net Cash Flow from Investing Activites
3,081
45
Leicester, Leicestershire and Rutland Combined FIre Authority
40
Financing Activities 2010/11 £000
2011/12 £000
(2,225) 57
Cash receipts from short-term and long-term borrowing Repayments of short-term and long-term borrowing
(1,640) 516
(2,168)
Net Cash Flow from Financing Activities
(1,124)
46
Leicester, Leicestershire and Rutland Combined Fire Authority
41 Segmental Analysis The analysis of income and expenditure by service on the face of the CIES is that specified by the Service Reporting Code of Practice. Decisions about resource allocation are taken by the CFA, who are considered to be the chief operating decision maker, on the basis of a one segment for the whole CFA. These reports are prepared on a different basis from the accounting policies used in the financial statements. In particular: ~ No charges are made in relation to capital expenditure (whereas depreciation, revaluation and impairment losses in excess of the balance on the Revaluation Reserve and amortisations are charged to services in the CIES). ~ The cost of retirement benefits is based on cash flows (payment of employer's pensions contributions) rather than current service cost of benefits accrued in the year.
RECONCILIATION BETWEEN MANAGEMENT ACCOUNTS AND CIES
Actual £000
Not Reported in Management Accounts £000
Not included in CIES
TOTAL
£000
£000
2010/11 Employee expenses IAS19 Other service expenses Depreciation, amortisation and impairment Interest payments Loss on disposal of non-current assets Gross Expenditure Fees, charges and other income Interest and investment income Income from Council Tax Government grants and contributions
29,079 0 6,448 0 549 0 36,076 (746) (56) 0 (1,402)
46 (4,699) 0 1,388 0 21 (3,244) 0 (78) (16,974) (19,747)
0 0 (522) 0 0 0 (522) 0 0 0
29,125 (4,699) 5,926 1,388 549 21 32,310 (746) (134) (16,974) (21,149)
TOTAL
33,872
(40,043)
(522)
(6,693)
(Surplus)/Deficit on the Provision of Services 2011/12 Employee expenses IAS19 Other service expenses Depreciation, amortisation and impairment Interest payments Loss on disposal of non-current assets Gross Expenditure Fees, charges and other income Interest and investment income Income from Council Tax Government grants and contributions
(6,693) 28,187 0 7,840 0 575 0 36,602 (717) (101) 0 (1,461)
(169) 14,558 (79) 1,900 0 17 16,227 (303) (57) (17,542) (18,751)
0 0 (1,394) 0 0 0 (1,394) 0 0 0
28,018 14,558 6,367 1,900 575 17 51,435 (1,020) (158) (17,542) (20,212)
TOTAL
34,323
(20,426)
(1,394)
12,503
(Surplus)/Deficit on the Provision of Services
12,503
47
Leicester, Leicestershire and Rutland Combined Fire Aurthority
FIREFIGHTERS' PENSION FUND 1.
At the beginning of 2006/07 Government changed the way in which firefighter pensions were financed. Prior to 2006/07 outgoing pension costs (as expenditure) and employee contributions (as income) were charged directly to the then revenue account (now the Comprehensive Income and Expenditure Account (CIES)). The difference, being the net cost of the scheme was borne on that account for Council Tax setting purposes.
2.
In accordance with the requirements of IAS19 the actual cost of pensions required for Council Tax setting purposed is replaced by the current service cost of pensions in the CIES, and reversed out in movement in reserves statement.
3.
In 2006/07 the arrangement was changed whereby the employee contributions, and a new employers contribution are paid into a separate account out of which pensions are paid. Any deficit on this account is made up by direct government funding.
4.
From 2006/07 it is these employer contributions (rather than the net cost of pensions) that are now replaced in the CIES.
5.
The Government has determined that this account is deemed a pension fund separate from the CIES and is thus reported on separately. There are no assets in this scheme and the difference between income and expenditure is met by direct government funding to balance the account to nil each year, and therefore there is no surplus or deficit on this fund to impact on overall Authority reserves.
6.
The pensions fund's financial statements do not take account of liabilities to pay pensions and other benefits after the 31st March 2012.
7.
The accounts are prepared in accordance with the same code of practice and accounting policies as outlined in the Statement of Accounting policies starting on page 6.
8.
Any Government funding payable is paid in two instalments, 80% of the estimated annual amount at the start of the year and any further surplus or deficit settled with DCLG following audit of the accounts for the year.
9.
The fund is currently in deficit by £304.140m (£278.880m as at 31st March 2011).
48
Leicester, Leicestershire and Rutland Combined Fire Authority
PENSION FUND STATEMENT Firefighters' Pension Fund 2010/11 £000
(2,978) (15) (1,621) (65) (4,679)
6,413 2,920 56 96 9,485 4,806
(2,461) 2,345
2010/11 £000
Fund Account
2011/12 £000
Income to the Fund Contributions Receivable: ~ from employer ~ normal contributions ~ ill health contributions ~ from members Transfers In: ~ individual transfers in from other schemes Income to the Fund Spending by the fund Benefits Payable: ~ Pension payments ~ Commutation of pensions and lump-sum retirement benefits. ~ Lump-sum death benefits. Payments To and On Behalf of Leavers ~ Individual transfers out of the scheme Spending by the Fund Net amount receivable for the year before top up grant receivable from sponsoring department Top-up grant received from sponsoring department Net Amount Receivable for the Year
Firefighters' Pension Fund Net Assets Statement
(2,895) (18) (1,596) (1) (4,510)
7,009 2,639 0 0 9,648 5,138
(3,158) 1,980
2011/12 £000
Net Current Assets and Liabilities: 2,345
~ pensions top up grant receivable from sponsoring department
1,980
2,345
Net Assets at the End of the Year
1,980
49
Leicester, Leicestershire and Rutland Combined Fire Authority
GLOSSARY OF TERMS 1. Accruals The concept that income and expenditure are recognised as they are earned or incurred, not as money is received or paid. 2. Capital Expenditure Expenditure on the acquisition of fixed assets or expenditure which adds to and not merely maintains the value of existing fixed assets. 3. Capital Receipts Income from the sale of assets. Such income may only be used to repay loan debt or to finance new capital expenditure. 4. Cash Equivalents Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 5. Chartered Institute of Public Finance and Accountancy (CIPFA) The principle accountancy body dealing with Local Government finance. 6. Corporate and Democratic Core Includes all aspects of members' activities and corporate management (see 7 below). 7. Corporate Management Concerns those activities and costs relating to provision of infrastructure, whether by the Authority or not, and the information which is required for public accountability. 8. Creditors Amounts owed by the CFA for which payment has not been made by the end of the financial year. 9. Debtors Amounts due to the CFA but unpaid at the end of the financial year. 10. Depreciation The measure of the wearing out, consumption, or other reduction in the usual economic life of a fixed asset. 11. Government Actuary's Department A Government Department that provides advice upon public sector pension arrangements, social security provision and regulators of private pension policies. 12. Long Term Borrowing
50
Leicester, Leicestershire and Rutland Combined Fire Authority Loans raised to finance capital spending which have still to be repaid. 13. Non-current Assets Tangible assets that yield benefits to the Authority for a period of more than one year. 14. Non Distributed Costs Costs relating to pension scheme past service costs, settlements and curtailments. 15. Operating Leases A method of financing the acquisition of assets, notably equipment, vehicles, plant etc. which involves the payment of a rental by the user for a period which is normally substantially less than the useful economic life of the asset. 16. Provision A liability or loss relating to a past event which is likely or certain to be incurred but uncertain as to the date when it will arise, which can be reasonably estimated. 17. Reserve An amount set aside for purposes falling outside the definition of a provision. 18. Revenue Expenditure Expenditure arising from the day to day operation of the CFA.
51
