Independent auditor's report to the Chief Constable of South Yorkshire

Chief Constable of South Yorkshire Police

Statement of Accounts

2014/15

SOUTH YORKSHIRE POLICE - STATEMENT OF ACCOUNTS 2014/15

EXPLANATORY FOREWORD

Explanatory Foreword

Financial Statements

Statement of Responsibilities

Movement in Reserves Statement

Comprehensive Income and Expenditure Statement

Balance Sheet

PAGE NO

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Cash Flow Statement

Notes to Accounts:

1. Accounting policies

2. Critical judgements in applying accounting policies

3. Assumptions made about the future and other major sources of estimation uncertainty

4. Material items of income and expense

5. Adjustments between accounting basis and funding basis under regulation

6. Financing and investment income and expenditure

7. Current liabilities

8. Long term liabilities

9. Unusable reserves

10. Cash flow statement – adjustments for non-cash movement

11. Amounts reported for resource allocation decisions

12. Officers’ remuneration and numbers

13. Termination benefits

14. External audit costs

15. Related parties

16. Leases

17. Defined benefit pension schemes

18. Regional working

19. Events after the balance sheet date

Police Pension Fund Account and Notes

Other Statements

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Independent Auditor’s Report to the Chief Constable of South Yorkshire

Annual Governance Statement

Glossary of Terms

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59

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1.

2.



Introduction

A significant change in the way in which police services in England and Wales are governed and held accountable occurred during 2012/13, as a consequence of the Police Reform and

Social Responsibility Act 2011 which received Royal Assent on 15 th September 2011. One of the key reforms was to replace all Police Authorities with new Police and Crime

Commissioners (PCCs) who came into power on 22 November 2012. At the same time the

Chief Constables of all forces in England and Wales were established as separate legal entities and made responsible for their own police force. The primary function of the Chief

Constable is the exercise of operational policing responsibilities under the Police Act 1996.

The main role of the PCC is to hold their Chief Constable to account for the exercise of these duties and to ensure that they deliver an efficient and effective policing service.

On 22 November 2012, when the South Yorkshire PCC came into power, the assets, liabilities, reserves and employees previously belonging to the South Yorkshire Police

Authority were transferred to him and during the first phase of transition have remained under the PCC ’s control. During 2013/14, changes were made to reporting for police pensions and accumulated absences, which are now included in the Chief Constable ’s accounts. The PCC receives all income and funding and makes all payments for the South

Yorkshire Police Service from the Police Fund. The Chief Constable fulfils his duties under the Act within an annual budget set by the PCC. A governance framework is in operation which determines the respective responsibilities of the two individuals and details local arrangements in relation to the use of the PCC’s assets and staff.

In the past one set of statutory accounts was prepared for the Police Authority and Force combined. In line with the above changes there has been a requirement for the Force to prepare its own statutory accounts from 2012/13 onwards, which are separate from those of the PCC. The South Yorkshire Group position included within the PCC ’s accounts reflected the consolidation position of both the PCC and the Chief Constable.

The Statement of Accounts is a statutory publication required under the Accounts and Audit

Regulations and prepared in accordance with the Code of Practice on Local Authority

Accounting in the United Kingdom 2013/14 (the Code), published by the Chartered Institute of Public Finance and Accountancy (CIPFA). The Code specifies the principles and practices of accounting required to give a true and fair view of the financial position at the end of the financial year and the transactions during the year.

The information contained in the various statements and notes is of a highly technical nature and it may be useful to refer to the Glossary on page 59 for further explanation.

Changes to the Accounting Statements

There have been no re-statements of the Comprehensive Income and Expenditure

Statement or the Balance Sheet.

3. Explanation of Financial Statements

The Chief Constable’s Statement of Accounts consist of the following financial statements:



Movement in Reserves Statement

This shows the movement of the Chief Constable’s reserves during the year, analysed into usable (General Fund Balance) and unusable reserves. Usable reserves can be used to fund expenditure. However all usable reserves are held by the PCC and therefore the General Fund has a nil opening and closing balance in the Chief

2



Constable’s Statement. Unusable reserves are those that have been created to reconcile the accounting entries required to comply with the Code with those that the

Chief Constable must statutorily charge to the General Fund Balance for council tax setting purposes. They are not therefore available to spend in the future.

The Adjustments between the Accounting Basis and Funding Basis under

Regulation line within the Statement consolidates all the adjustments needed to convert the Surplus or Deficit on the Provision of Services in the Comprehensive

Income and Expenditure Statement to the movement in the General Fund Balance for the year.



Comprehensive Income and Expenditure Statement

This statement shows the accounting cost for the year of providing services in accordance with generally accepted accounting practices. The PCC receives all income which therefore is excluded from the Chief Constable’s Statement. The Surplus or

Deficit on the Provision of Services within the Statement shows the increase or decrease in net worth of the Chief Constable as a result of incurring expenses and generating income. The Other Comprehensive Income and Expenditure line shows any changes in net worth which have not been reflected in the above Surplus or Deficit, for example, actuarial gains or losses on pensions assets and liabilties.



Balance Sheet

This sets out the assets, liabilities and reserves of the Chief Constable.



Cash Flow Statement

This summarises the movements in cash and cash equivalents during the year. As all the changes in cash and cash equivalents are presented in the PCC

’s accounts, this statement simply shows the net surplus or deficit on provision of services adjusted for non-cash movements.

These Accounts are supported by the Statement of Responsibilities and the Notes to the

Accounts which include the accounting policies adopted (Note 1). An Annual Governance

Statement is also published with the Accounts which sets out the governance framework and the review of its effectiveness.

In addition, there is a supplementary accounting statement for the Pension Fund Account which shows the transactions, as determined by regulation, for the two Police Pension

Schemes (1987 and 2006).

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4.



Summary of the Financial Year - Revenue Budget

The PCC provided the Force with a 2014/15 revenue budget funded from a combination of reserves, government grant and income raised from council tax.

The Forces budget for 2014/15 was approved in February 2014, with 2014/15 being the final year of the Gove rnment’s four year Comprehensive Spending Review period. The grant funding reduction in cash terms for the PCC was expected to be 3.3% but this became a

4.8% cash reduction due the ‘top slicing’ of the National Grant. The Community Safety specific grant funding has now been absorbed within the mainstream Government Grant for

2014/15. In total, the year on year cash reduction amounts to almost £9.5m.

The PCC set an increase in Band D Council Tax of £3 per annum in line with the maximum increase regarded by the Government as not being excessive. The additional income this generated partially offset the grant reduction and hence enabled the PCC to achieve one of his policy objectives which was to maintain existing numbers of frontline police officers and police community support officers.

Employee costs

Premises costs

Transport costs

Supplies & Service costs

Support & Agency costs

Capital Financing costs

Income

Hillsborough

Regional Working

Total Net Expenditure

Budget Actual Variation

£000

246,823

£000

241,697

£000

206,263 203,487 (2,776)

7,573 7,123 (450)

4,733 3,851 (882)

12,742 11,644 (1,098)

24,818 25,032

22 -

214

(22)

(9,328) (10,444) (1,116)

- 999 999

- 5 5

(5,126)

The Chief Constable‘s actual revenue expenditure for the year was £241.7m. This figure was before statutory accounting adjustments and therefore does not reconcile to the

Comprehensive Income and Expenditure Statement.

The Force outturn was a revenue underspend of £5.1m. Employee underspends have contributed £2.5m to this. This can be explained as follows:

 Police pay was underspent by £1.5m. This was the net position after absorbing an overspend of £1.2m on police overtime relating to demonstrations, other special events and overtime worked on mutual aid to other forces. Underspends on police pay arose as the

Force carried vacancies due to a significant number of unanticipated leavers and retirements and as experienced officers retired they were replaced by new recruits and transferees on a lower spinal point.



Ill health retirements reflected 27 actual retirements compared to a budget for 6 resulting in an overspend on police pensions of £1m.

4



5.



Police Staff pay underspent by £1.4m. The underspend was largely due to prudently maintaining vacancies until Diamond Reviews had concluded.

 PCSOs underspent by £0.4m. Vacancies for PCSOs arose throughout the year and were not filled in anticipation of achieving the savings target set for 2015/16.

The majority of the underspend of £0.4m on premises costs has arisen on energy and water.

Part of this was due to lower usage due to a mild winter and process changes which have led to improved projections.

Transport underspent by £0.8m and the main contributor to this was fuel underspends. This was partly because of the reduced costs of fuel and reduced usage. As Diamond Reviews have concluded, vehicles have not been replaced and savings have been captured.

Supplies and services, although balanced, do include Hillsborough Counsel Fees of £0.7m.

These costs have been offset by a number of underspends across the supplies and services category, none of which is material in isolation.

Support and agency overspe nt by £0.2m and this is after costs of £1.4m have been incurred for mutual aid bought in to support European Defence League (EDL) demonstrations. This cost was offset by a reduced contribution to the collaborated Information Systems (IS) service of £1.3m and underspends from forensic and pathology budgets of £0.5m. The reduced contribution to the IS collaboration is due to a number of underspends across the IS function including pay underspends due to a high turnover of staff, underspends arising from the implementation of mobile technology for police officers, lower than anticipated airwave service costs and a reduction in the renewal costs of support and maintenance contracts.

The reduced costs of forensic and pathology is due to lower prices and tighter control over submissions. In addition to this the F orce incurred costs of £0.2m on Operation Stovewood and had an unachieved saving of £0.3m for National Police Air Service (NPAS).

Income has exceeded target by £1.1m, of which £0.7m was received for officers providing mutual aid to other forces. Income was also received for the transfer of the uniform, clothing and equipment stock to West Yorkshire at a value of £0.3m.

Overall the F orce exceeded its 2015/16 savings target by £0.8m.

Retirement Benefits

The Group participates in three pension schemes which are accounted for in line with

International Accounting Standard (IAS) 19, the requirements of which are further explained in the Accounting Policies and other notes to the financial statements. The Chief Constable has therefore included the commitment to pay future retirement benefits as a liability on the

Balance Sheet to reflect the true accounting position even though these will not be paid until many years into the future.

The inclusion of this estimated liability of £2,998m is matched by a pensions reserve within unusable reserves in the Balance Sheet. The negative balance on the Pensions Reserve therefore measures the beneficial impact to the General Fund of being required to account for retirement benefits on the basis of cash flow rather than as benefits are earned by employees.

The inclusion of this reserve has a substantial impact on the net worth of the Chief

Constable. The amount charged for the year in accordance with accounting standards is different to that included in the PCC’s revenue budgets which reflects the amounts paid as pensions.

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6.

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8.



Change in Accounting Policy

There have been no changes in accounting policy during 2014/15.

Regional Working

The PCC and Chief Constable work with the other three Yorkshire and Humber PCCs and

Chief Constables to deliver a number of specific services on a regional basis. The governance for the regional programme is undertaken by the Regional Collaboration Board headed by the four PCCs and attended by their respective Chief Constables and Chief

Executives.

From September 2013, individual Forces have been assigned lead force responsibility for each functional area of work. South Yorkshire leads on Regional Procurement and Firearms.

All work is fully funded from contributions made by the four participating PCCs.

In addition, separate collaboration exists between the PCC and Chief Constable and their counterparties in Humberside. The Forces have combined their Human Resources departments and Information Systems departments in order to increase capacity and further reduce costs by standardising processes and support. South Yorkshire and Humberside collaboration work is overseen by a Joint Collaboration Board headed by the two PCCs, attended by senior officers of their respective offices and forces and supported by separate

Information Systems and Human Resources Programme Boards.

Further information is included in the Accounting Policies and Notes to the Financial

Statements.

Sustainability Reporting

South Yorkshire Police is committed to sustainability it recognises that it has a moral and legal obligation to be environmentally responsible, to have a positive impact on the communities it serves, to support our people and our partners, to do the right thing and lead by example wherever possible.

South Yorkshire Police employs a Sustainability Manager to develop and implement the

Force Sustainability Strategy, to engage with its people to achieve behaviour change and to maximise efficiency and save money wherever possible whilst striving to improve environmental performance.

The following initiatives have been pursued during 2014/15:



South Yorkshire Police and Humberside Police have jointly agreed seven key sustainability commitments and in January 2012 South Yorkshire Police formulated a sustainability strategy around these commitments. The strategy is updated annually to reflect progress made.

 South Yorkshire Police takes part in the Yorkshire and Humberside Business in the

Community Environment Index and in 2014 the Force achieved a score of 85%. South

Yorkshire Police joined the Index in 2010 and since then has increased its score every year and received three Significant Improver awards, Bronze status in 2012 and Silver

Status in 2013 and 2014. The Environment Index is an on-line survey that looks at all aspects of environmental management and performance. Each year around 90 – 100 of the Reg ion’s organisations take part. The index assesses a participant’s strategy,

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EXPLANATORY FOREWORD integration of strategy into operations, environmental management and performance in reducing negative impacts on the environment.

 South Yorkshire Police has a Carbon Management Plan initially drawn up in March 2011 and updated on an annual basis. The Plan includes a carbon reduction target, which is to reduce the Force carbon footprint by 30% by 2015, from 2009 levels. South Yorkshire

Police has worked hard to meet this target and to date, a 15% emissions reduction has been achieved, over 60 carbon saving projects have been completed and over £500,000 saved.

 South Yorkshire Police is working with suppliers to achieve zero waste to landfill and prioritises waste recycling wherever possible. In January 2014 the Force launched a general waste segregation programme, replacing under desk bins with waste recycling stations. The recycling scheme will help meet the Force recycling target and improve environmental performance. In addition to general waste, the Force recycles many different waste streams including waste uniform and body armour, printer and toner cartridges, handcuffs, vehicles and parts, horse manure, plastics, confidential paper, batteries, electrical equipment, mobile phones and lamps. Throughout 2014 it launched a waste reduction scheme for operational policing and established income generation schemes for valuable waste streams.

 South Yorkshire Police has a growing network of over 150 sustainability champions who are all involved in a waste management and energy efficiency training programme.

Champions are responsible for carrying out audits, identifying opportunities for improvement and promoting sustainability across the Force.



In July 2014, the force held its first Sustainability Award ceremony to reward and recognize the work undertake by our Sustainability Champions. The event, chaired by the Forces Director of Finance and attended by the Chief Constable and Deputy Police and Crime Commissioner, served to thank and commend those who had demonstrated exceptional commitment to sustainability throughout the Force.

 South Yorkshire Police encourages and supports green travel and in 2014 the Force took part in a number of funded “Inmotion!” schemes including Sheffield Walkbost and

Eco-driver training. Plans are underway to launch a car lease salary sacrifice scheme in

2015 which will bring a number of environmental benefits.

 South Yorkshire Police ’s vehicle fleet is reducing its carbon footprint and in 2014 purchased 10 electr ic Ampera’s for use across the Force. Almost all new vehicles have a lower g CO2 per km less than the vehicle they replace. The Force also has over 150 pedal cycles for operational use and work is underway to increase the use of these bikes on all shifts where practicable.

 In 2014 a mobile data project was launched whereby all operational marked vehicles were allocated a Toughbook laptop, allowing officers to spend more time away from the station, completing essential paperwork and administration whilst out and about and reducing unnecessary travel and fuel consumption.

 All Information Systems are designed to make the best use of resources and by doing so will achieve significant improvements in efficiency and productivity, without compromising a maximum return on investment and value for money. The use of Multi-

Functional Devices and Document Management Software solutions has reduced the unnecessary use of consumables (such as ink and paper) and reduced the need for multiple copies of a single document. Computer room facilities are provided using the latest energy efficient technology. Equipment life is extended where prudent, maximising

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9.


EXPLANATORY FOREWORD efficiency and reducing capital expenditure. All technological solutions reinforce the

Force’s sustainable policies. At the design stage of information systems and equipment, full consideration is given to the diverse needs of staff and officers working for the

Organisation, balanced against the green agenda. Collaboration with Humberside will bring new opportunities by reducing the carbon footprint from using a shared IT infrastructure. In addition, the introduction of virtualisation technology will provide further opportunities for improved sustainability.

Financial Prospects

The Revenue Budget of the Chief Constable must be viewed within the context of the funding received from the Police and Crime Commissioner to ensure the efficient and effective operation of the Force. For the foreseeable future Government forecasts indicate that until the Government has cleared its budget deficit that the Force will receive a significantly reduced income year on year until at least 2017/18.

The grant funding received by the Police and Crime Commissioner for 2015/16, a 5.1% reduction, which is to be transferred to the Force is less than predicted because the Home

Office has reduced funds available to local policing by top slicing the monies available to fund Home Office priorities such as the funding of the Independent Police Complaints

Commission, National Police IT and the Innovation Fund.

Whilst the budget set for 2014/15 required significant savings to be made the Force has through its Diamond 2 programme continued to methodically review the structure of the

Force, which have delivered the savings required. During the year a significant of unplanned costs were occurred as a result of EDL marches within the County together with the continued costs of supporting the Hillsborough Inquest. The Commissioner has successfully made Special Grant applications to the Home Office to part fund theses costs.

Policing can be highly unpredictable and as a result major crime or public order activity can consume significant resources. This is especially so should the Force use mutual aid from other police forces. Should the Force experience a significant increase in such operational activity it would be anticipated that the Chief Constable would seek permission from the

Police and Crime Commissioner to the use of Reserves. It has been assumed that the costs relating to Hillsborough will be met outside of the current revenue budget and matched by

Home Office funding .

South Yorkshire Police has made revenue savings in the past eight years in excess of £60m per annum. These recurrent savings are now built into the revenue budget 2015/16. The continued reduction in funding means that it becomes harder to identify savings without impacting on service delivery. The Diamond 2 programme is however delivering a transformational restructuring of the Force to deliver these savings whilst maintaining performance. The forthcoming years will see greater reliance on collaborative work with the other three forces in the Yorkshire and Humberside Region to deliver financial savings.

The Force operate strong financial management systems and the

‘Diamond’ reviews, forecast savings in the forthcoming year, whilst ambitious, will be delivered. It is vital however, that active monitoring of future year savings in undertaken for without significant savings the Force will not be able to balance its budget in 2016/17.

The Force Senior Command Team on a monthly basis, comprehensively monitor the financial and operational performance of the Force. These monitoring arrangements will need to be enhanced in the forthcoming year to provide greater linkages to the workforce

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EXPLANATORY FOREWORD planning team managed by the Assistant Chief Officer (HR) to facilitate an improvement in forecasting changes on staff budgets. Similarly, there will need to be more robust monitoring of the implementation of Diamond 2 Reviews and other savings approved by the Senior

Command Team to facilitate the delivery of balanced budgets in future years. By enhancing the Forces forecasting capability, quicker remedial action can be taken to ensure savings plans are delivered.

10. Further information about the accounts is available from:

Nigel J Hiller CPFA FCCA

Director of Finance,

South Yorkshire Police,

Police Headquarters,

Carbrook House,

5, Carbrook Hall Road,

Sheffield,

S9 2EH.

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STATEMENT OF RESPONSIBILITIES

The Chief Constable ’s Responsibilities

The Chief Constable is required to:



make arrangements for the proper administration of the Force’s financial affairs and to ensure that one officer has the responsibility for the administration of those affairs. In this situation, that officer is the Director of Finance



manage the Force’s affairs to secure economic, efficient and effective use of resources and safeguard its assets



approve the Statement of Accounts.

David Crompton Chief Constable:

Date:

The Director of Finance’s Responsibilities

The Director of Finance is responsible for the preparation of the Chief Constable ’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 Director of Finance has:



selected suitable accounting policies and then applied them consistently



made judgments and estimates that were reasonable and prudent



complied with the local authority Code.

The Director of Finance has also:



kept proper accounting records which were kept up to date



taken reasonable steps for the prevention and detection of fraud and other irregularities.

I certify that the attached Statement of Accounts presents a true and fair view of the financial position of the Chief Constable as at 31 March 2015 and the Force’s income and expenditure for the year then ended.

Date:

Nigel J Hiller CPFA FCCA, Director of Finance

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MOVEMENT IN RESERVES STATEMENT

This statement shows the movement in the year on the different reserves held by the Chief

Constable. The majority of reserves are managed by the PCC for South Yorkshire. However, due to a change in accounting policy, the pension reserve and accumulated absence reserve are both included the Chief Constable

’s statement below for 2014/15.

£000 £000 £000 £000 £000

Balance at 1 April 2013 - (2,627,140) (5,068) (2,632,208) (2,632,208)

Movement in reserves during 2013/14

Surplus / (deficit) on the provision of services (114,687) - - - (114,687)

Other Comprehensive Income and Expenditure - 153,298 - 153,298 153,298

Total Comprehensive Income and

Expenditure

Adjustments between accounting basis and funding basis under regulations (Note 5)

Net Increase / (Decrease) before Transfers to

Earmarked Reserves

Transfers to/(from) Earmarked Reserves

(114,687)

114,687

-

-

Increase/(Decrease) in 2013/14

Balance at 31 March 2014 carried forward

Movement in reserves during 2014/15

Surplus / (deficit) on the provision of services (94,709)

- 37,962 649 38,611 38,611

- (2,589,178) (4,419) (2,593,597) (2,593,597)

- - - (94,709)

(316,750) - (316,750) (316,750) Other Comprehensive Income and Expenditure -


Expenditure

Adjustments between accounting basis and funding basis under regulations (Note 5)

Movement between Chief Constable and Police and Crime Commissioner in respect of Pension

Reserve re; LGPS pension scheme

(94,709)

94,709

(316,750)

(94,933)

3,307

-

224

(316,750)

(94,709)

3,307

(411,459)

-

3,307

Net Increase / (Decrease) before Transfers to


Transfers to/(from) Earmarked Reserves

Increase/(Decrease) in 2014/15

Balance at 31 March 2015 carried forward

-

-

153,298

(115,336)

37,962

-

(408,376)

-

-

649 (114,687)

649

-

224

-

153,298

38,611

-

(408,152)

-

38,611

-

38,611

-

(408,152)

-

- (408,376) 224 (408,152) (408,152)

- (2,997,554) (4,195) (3,001,749) (3,001,749)

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COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT

This statement shows the accounting cost in the year of providing operational services in accordance with generally accepted accounting practices. All income is included in the PCC ’s

Income and Expenditure Statement.

Gross

Expenditure

£000

125,460

2013/14

Gross

Income

£000

-

Net

Expenditure

£000

125,460 Local Policing

Gross

Expenditure

£000

113,968

2014/15

Gross

Income

£000

-

Net

Expenditure

£000

113,968

19,604

23,837

12,003

26,780

14,325

58,878

10,305

4,478

868

171

503

297,212

(295,385)

1,827

112,860

114,687

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

19,604 Dealing with the Public

23,837 Criminal Justice Arrangements

12,003 Road Policing

26,780 Specialist Operations

14,325 Intelligence

58,878 Investigations

10,305 Investigative Support

4,478 National Policing

868 Hillsborough Inquest

171 Corporate & Democratic Core

503 Non Distributed Costs:

297,212

Total Financial Resources

Consumed

(295,385)

Intra Group Adjustment - funding provided by the PCC for financial resources consumed by the Chief

Constable

1,827 Net Cost of Policing Services

112,860

Financing and investment income and expenditure (Note 6)

114,687

(Surplus) or Deficit on Provision of

Service

18,649

21,808

10,047

22,488

14,487

54,411

9,472

4,542

999

395

66

271,332

(289,945)

(18,613)

113,322

94,709

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

18,649

21,808

10,047

22,488

14,487

54,411

9,472

4,542

999

395

66

271,332

(289,945)

(18,613)

113,322

94,709

(153,298)

Remeasurements of the net defined benefit liability

(153,298)

(38,611)

Other Comprehensive Income and

Expenditure


Expenditure

316,750

316,750

411,459

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BALANCE SHEET AND CASH FLOW STATEMENTS

Balance Sheet

The Balance Sheet shows the assets, liabilities and reserves at the year end. The net assets

(assets less liabilities) are matched by the reserves held. Usable reserves may be used to fund services and are all held by the PCC. Unusable reserves are not able to be used to provide services and are kept to manage the accounting processes for retirement and employee benefits.

31 March 2014

£000

31 March 2015

£000

- Long Term Assets

- Total Long Term Assets

- Current Assets

-

-

-

- Total Current Assets

(4,419) Current Liabilities (Note 7)

(4,419) Total Current Liabilities

(2,589,178) Long Term Liabilities (Note 8)

(2,589,178) Total Long Term Liabilities

(2,593,597) Net Assets

-

(4,195)

(4,195)

(2,997,554)

(2,997,554)

(3,001,749)

- Usable Reserves

2,593,597 Unusable Reserves (Note 9)

-

3,001,749

2,593,597 Total Reserves 3,001,749

Cash Flow Statement

The Cash Flow Statement shows the changes in cash and cash equivalents during the reporting period. The Chief Constable has only non-cash transactions as all receipts and payments go through the Police Fund held by the PCC.

2013/14

£000

2014/15

£000

94,709 114,687 Net (surplus) or deficit on the provision of services

(114,687)

Adjustments to net surplus or deficit on the provision of services for non-cash movements (Note 10)

-

-

Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities

Proceeds from sale of property

- Net Cash Flows from Operating Activities

- Investing Activities

- Financing Activities

- Net Increase or Decrease in Cash and Cash Equivalents

- Cash and cash equivalents at the beginning of the period

- Cash and Cash Equivalents at the End of the Reporting Period

(94,709)

-

-

-

-

-

-

-

-

13

1. a) b) c)


NOTES TO ACCOUNTS

ACCOUNTING POLICIES

General Principles

The Statement of Accounts summarises the Chief Constable of South Yorkshire Police’s transactions for the 2014/15 financial year and the position at the year end of 31 March

2015. The Force is required to prepare an annual Statement of Accounts in accordance with proper accounting practices by the Accounts and Audit (England) Regulations 2011. These practices primarily comprise the Code of Practice on Local Authority Accounting in the

United Kingdom 2014/15 (the Code), and the Service Reporting Code of Practice 2014/15, supported by International Financial Reporting Standards (IFRS).

The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments.

Relationship between the PCC and the Chief Constable for accounting purposes

The PCC and the Chief Constable are both required to prepare their own statutory accounts.

The South Yorkshire Group position, which reflects the consolidated position of both the

PCC and the Chief Constable, is included within the PCC’s Statement of Accounts.

The PCC is the holder of the Police Fund and all payments for the Group are made by the

PCC from the Fund. The PCC is also the recipient of all funding, including government grant and precepts and other income and this is paid into the Fund. The Comprehensive Income and Expenditure Statement for the PCC therefore includes all income received analysed over the relevant service lines.

The Comprehensive Income and Expenditure Statement for the Chief Constable includes all the costs of operational policing. An intragroup adjustment is included in both the PCC’s and

Chief Constable’s Comprehensive Income and Expenditure Statement to reflect the funding provided by the PCC for financial resources consumed by the Chief Constable.

All assets, liabilities and reserves are held by the PCC and are therefore included within the

PCC’s Balance Sheet except for those relating to pensions and accrued employee benefits which form part of the Chief Constable’s Balance Sheet (see paragraph (f) for further explanation). Since the PCC has control over non-current assets, and therefore retains the long-term risks and rewards of ownership, the charges to revenue for their use is included in the PCC’s Comprehensive Income and Expenditure Statement, analysed over the relevant service lines.

Accruals of Income and Expenditure

Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:



Supplies are recorded as expenditure when they are consumed. Where there is a gap between the date significant supplies are received and their consumption, they are carried as inventories on the Balance Sheet of the PCC.



Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made.



Where income and expenditure has been recognised but cash has not yet been received or paid, a debtor or creditor for the relevant amount is recorded in the PCC ’s Balance

Sheet. Where it is doubtful that debts will be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected.

14

d) e) f)



Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors

Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, that is, in the current and future years affected by the change and do not give rise to a prior period adjustment.

Changes in accounting policies are only made when required by proper accounting practices or when the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the financial position or financial performance.

Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied.

Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

Exceptional Items

When items of income and expenditure are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the Notes to the Accounts, depending on how significant the items are to an understanding of the performance.

Employee Benefits

Transactions relating to employee benefits are included in the financial statements of either the PCC or the Chief Constable according to where the direction and control of those employees lies.

Benefits Payable During Employment

Short-term employee benefits are those due to be settled within 12 months of the year-end.

They include such benefits as salaries, paid annual leave and flexitime, bonuses and nonmonetary benefits (for example cars) for current employees and are recognised as an expense in the year in which employees render service. An accrual is made for the cost of holiday entitlements and other forms of leave, such as time off in lieu, earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the salary rates applicable in the following accounting 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 within the Comprehensive Income and

Expenditure Statement and then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

Termination Benefits

Termination benefits are amounts payable as a result of a decision to terminate employment before the normal retirement date or of an employee ’s decision to accept voluntary redundancy. These are charged on an accruals basis to the Comprehensive Income and

Expenditure Statement when there is demonstrable commitment to the termination of the employment of an employee or group of employees or to making an offer to encourage voluntary redundancy.

When termination benefits involve the enhancement of pensions, statutory provisions require the General Fund Balance to be charged with the amount payable to the pension fund or pensioner in the year, not the amount calculated according to the relevant

15


NOTES TO ACCOUNTS accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end.

Retirement Benefits

Employees of the PCC and the Chief Constable participate in the following pensions schemes:



the 1987 and 2006 Police Pension Schemes (PPS) for police officers are unfunded schemes, which means that there are no investment assets built up to meet the pensions liabilities, and cash has to be generated to meet the actual payments as they fall due.

The PCC is required by legislation to operate a Pension Fund with the amounts that must be paid into or out of the Pension Fund being specified by regulation. The former

Police Authority set up a Pension Fund on 1 April 2006 from which pensions payments are made and into which contributions, from the PCC and employees, are received. The

PCC then receives a top-up grant from the Government equal to the sum by which the amount payable for pensions from the Pension Fund exceeds the amount receivable from the PCC into the Pension Fund. The Pension Fund is shown separately in the

Accounts.



the Local Government Pension Scheme (LGPS) for police staff, administered by the

South Yorkshire Pensions Authority, is a funded scheme, which means that the PCC and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets.

The above schemes provide defined benefits to members (retirement lump sums and pensions), earned as employees work. They are accounted for in accordance with the requirements for defined benefits schemes, based on the principle that an organisation should account for retirement benefits when it is committed to give them, even though this may be many years into the future.

A pensions asset or liability is recognised in the Balance Sheet, made up of the net position of retirement liabilities and pension scheme assets. Retirement liabilities are measured on an actuarial basis using the projected unit method, by assessing the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates and estimations of projected earnings for current employees. Pension scheme assets (LGPS only) attributable to the

PCC are included at their fair value. There is currently a net pensions liability and this is matched in the Balance Sheet by a Pensions Reserve.

The change in net pensions liability during the year is analysed into several components:



current service cost – the increase in liabilities as a result of service earned by employees in the current year. This is charged to services within the Comprehensive

Income and Expenditure Statement.



past service cost – the increase in liabilities arising from current year decisions, the effect of which relates to service earned in earlier years. This is part of Non Distributed Costs in the Comprehensive Income and Expenditure Statement.



net interest on the net defined benefit liability – the change during the period in the net defined benefit liability that arises from the passage of time. This is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability at the beginning of the period, taking into account any changes in the net defined benefit liability during the period as a

16

g) h)


NOTES TO ACCOUNTS result of contribution and benefit payments. This is charged to the Financing and

Investment Income and Expenditure line within the Comprehensive Income and

Expenditure Statement.



Remeasurements comprising: o the return on plan assets (LGPS only) – this excludes amounts included in net interest on the net defined benefit liability and is charged to the Pensions Reserve as

Other Comprehensive Income and Expenditure o 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. This is charged to the

Pensions Reserve as Other Comprehensive Income and Expendture.



Contributions paid / benefits paid – cash paid as employer’s contribution by the PCC either to LGPS or directly to pensioners to reduce the scheme liabilities.

Statutory provisions require that the amount charged to the General Fund Balance is that payable to pensions funds rather than that calculated under accounting standards. This means that an appropriation to or from the Pensions Reserve is done within the Movement in Reserves Statement to replace the notional sums for retirement benefits with the actual pensions costs. The negative balance on the Pensions Reserve thereby measures the beneficial impact to the General Fund of being required to account for retirement benefits on the basis of cash flow rather than as benefits are earned by employees.

Overheads and Support Services

The costs of overheads and support services are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA’s Service Reporting

Code of Practice . The total absorption costing principle is used, where the full cost of overheads and support services are shared between users in proportion to the benefits received, with the exception of:



Corporate and Democratic Core – costs relating to the democratic processes of the Chief

Constable and other corporate costs



Non distributed costs – the cost of discretionary benefits awarded to employees retiring early and impairment losses chargeable on Assets Held for Sale.

These two cost categories are accounted for as separate headings in the Comprehensive

Income and Expenditure Statement in the Chief Constable ’s Financial Statements.

Regional Working

The PCC and Chief Constable engage with the other Yorkshire and Humber PCCs and Chief

Constables to deliver a number of specific services on a regional basis. The governance of this regional programme is undertaken by a Regional Collaboration Board headed by the four PCCs and attended by their Chief Executives and the Chief Constables.

From September 2013 each functional area is now being delivered via a Lead Force model.

In addition a separate collaboration exists between the PCC and Chief Constable and their counterparts in Humberside. South Yorkshire Police and Humberside Police have combined their Human Resources departments and Information Systems departments in order to increase capacity and further reduce costs by standardising processes and support. This collaboration is overseen by a Joint Collaboration Board headed by the two PCCs, and supported by Programme Boards for each function.

17

i) j) k) l)



The above collaboration with Humberside Police has been treated as a joint operation and therefore in order to comply with IFRS11 Joint Arrangements the Group Comprehensive

Income and Expenditure Statement only reflects SYP’s share of the income and expenditure.

Each force recognizes only its share of any jointly procured fixed assets. South Yorkshire acts as lead administration force for the collaboration arrangement and as such recognises

100% of any liabilities with a corresponding debtor for Humberside PCC for their share of the costs at the balance sheet date.

The Group Comprehensive Income and Expenditure Statement incorporates the costs of regional working together with any income received or recharged. Assets owned by the PCC but contributing to regional working are retained on the PCC ’s Balance Sheet.

More information is included in Note 18.

Foreign Currency Translation

Where a transaction has been entered into in a foreign currency, the transaction is converted into sterling at the exchange rate applicable on the date the transaction was effective.

VAT

The Chief Constable does not submit a VAT return as the PCC submits a single VAT return on behalf of the Group. Income and expenditure is shown in these accounts as excluding amounts related to VAT, as all VAT collected is payable to the HM Revenue and Customs and all VAT paid is recoverable from them.

Events After the Balance Sheet Date

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of

Accounts is authorised for issue. Two types of events can be identified:



those that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events



those that are indicative of conditions that arose after the reporting period – the

Statement of Accounts are not adjusted to reflect such events, but where a category of events would have a material affect, disclosure is made in the notes of the nature of the events and their estimated financial effect.

Events taking place after the date of authorisation for issue are not reflected in the

Statement of Accounts.

Accounting Standards That Have Been Issued But Not Yet Adopted

The Code requires that information is disclosed relating to the impact of any accounting standards have been issued but have not yet been adopted.

There are no standards that have been issued but not yet adopted that will result in a change in accounting policy from 1 April 2015.

18

3.


NOTES TO ACCOUNTS m) Reserves

2.

The Chief Constable does not hold any usable reserves. However, certain reserves are kept to manage the accounting processes for retirement and employee benefits and they do not represent usable resources.

CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

In applying the accounting policies set out in Note 1, the PCC and Chief Constable have had to make certain judgements about complex transactions or those involving uncertainty about future events. In applying the revised accounting arrangements for the PCC and the Chief

Constable, a number of judgements have been made with regard to the financial statements.

 The Chief Constable’s Financial Statements include: o all the operational costs of policing within the Comprehensive Income and

Expenditure Account o all IAS19 pensions transactions in the Comprehensive Income and Expenditure

Account and pensions liabilities together with pensions reserve in the Balance

Sheet o the accrual for employee benefits and the matching Accumulated Absence

Account in the Balance Sheet.



The PCC

’s Financial Statements include: o all other assets, liabilities and reserves within the Balance Sheet o no accounting entries relating to IAS19 pensions transactions for the PCC ’s staff who are members of the Local Government Pension Scheme in the financial statements as this is not regarded as material o the charge to revenue for the use of non-current assets, including depreciation, revaluation and impairment and amortisation of intangible assets within the

Comprehensive Income and Expenditure Account o all income within the Comprehensive Income and Expenditure Statement.

ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF

ESTIMATION UNCERTAINTY

The Statement of Accounts contains estimated figures that are based on assumptions made 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.

19



The items in the Chief Constable’s Balance Sheet at 31 March 2015 for which there is a significant risk of material adjustment in the forthcoming year are as follows:

Item

Pensions

Liability

Uncertainties Effect if Actual Results Differ from Assumptions

Estimation of the net liability to pay pensions is extremely volatile as it depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets.

Actuaries are engaged to provide the

PCC with expert advice about the assumptions to be applied for each of its pension schemes.

Whilst the effects on the net pensions liability of changes in individual assumptions can be measured, the assumptions interact in complex ways.

During 2014/15, the actuaries advised that the net pensions liability has increased by approximately £317m as a result of estimates being revised and updating financial and demographic assumptions. This is reported on the Chief Constable’s Income and

Expenditure and further information is provided at Note 17.

4. MATERIAL ITEMS OF INCOME AND EXPENSE

During the year significant unplanned costs were occurred as a result of EDL marches within the County together with the continued costs of supporting the Hillsborough Inquest. The

Commissioner has made Special Grant applications to the Home Office to part fund these costs.

Hillsborough Inquest costs have been shown separately in the Comprehensive Income and

Expenditure Statement. Whilst this is not material for the Chief Constable, it has been included separately for transparency as these are material for the Group shown within the

PCC’s Statement of Accounts.

20

5.



ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER

REGULATION

This note details the adjustments that are made to the total Comprehensive Income and

Expenditure recognised by the Chief Constable in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Chief Constable to meet future capital and revenue expenditure.

2014/15

Usable Reserves

Adjustments primarily involving the Pensions Reserve:



Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure

Statement

 Employer’s pensions contributions and direct payments to pensioners payable in the year



Additional contribution by PCC to Pension Account to balance deficit on the Account

Adjustments primarily involving the Accumulated

Absences Account:



Amount by which officer remuneration charged to the

Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

Total Adjustments

2013/14

£000

170,766

(35,272)

(40,561)

(224)

94,709

Usable Reserves

£000

(170,766)

35,272

40,561

224

(94,709)

Adjustments primarily involving the Pensions Reserve:



Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure

Statement

 Employer’s pensions contributions and direct payments to pensioners payable in the year



Additional contribution by PCC to Pension Account to balance deficit on the Account

£000

180,587

(34,352)

(30,899)

£000

(180,587)

34,352

30,899

21



Adjustments primarily involving the Accumulated Absences

Account:



Amount by which officer remuneration charged to the

Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

Total Adjustments

(649)

114,687

649

(114,687)

6.

7.

8.

FINANCING AND INVESTMENT INCOME AND EXPENDITURE

31 March

2014

£000

112,860 Pensions interest cost and expected return on pensions assets

112,860 Total

CURRENT LIABILITIES

31 March

2014

£000

4,419 Other entities and individuals

4,419 Total

LONG TERM LIABILITIES

31 March

2015

£000

113,322

113,322

31 March

2015

£000

4,195

4,195

31 March

2014

£000

2,589,178 Pension Liability

2,589,178 Total

31 March

2015

£000

2,997,554

2,997,554

The Pensions Liability represents the net position of retirement liabilities and the pension scheme assets and is matched by the Pensions Reserve (Note 9)

22



9. UNUSABLE RESERVES

31 March

2014

£000

31 March

2015

£000

(4,419) Accumulated Absences Account

(2,589,178) Pensions Reserve

(2,593,597) Total

Pensions Reserve

(4,195)

(2,997,554)

(3,001,749)

The Pensions Reserve absorbs the timing difference arising from the different arrangements for accounting for post employment benefits and for funding benefits in accordance with statutory provisions.

The Chief Constable accounts for post employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed, as employer’s contributions are made to pension funds or eventually direct pensions are paid.

The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources set aside to meet them.

The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid.

The transactions on the Pensions Reserve are as follows:

2013/14

£000

(2,627,140) Balance at 1 April

Movement of opening reserve between Chief Constable and

Police & Crime Commissioner

153,298 Actuarial gains or (losses) on the pensions assets and liabilities

(180,587)

65,251

Reversal of items relating to retirement benefits debited or credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement

Employer’s pensions contributions and direct payments to pensioners payable in the year

2014/15

£000

(2,589,178)

3,307

(316,750)

(170,766)

75,833

(2,589,178) Balance at 31 March (2,997,554)

In terms of the pension reserve there has been a change during 2014/15 in respect of Stage 2 transfers that saw a number of staff transfer from the employment of the Chief Constable to the

Police and Crime Commissioner during 2014/15. Previously all LGPS pension costs and liabilities were recognised in the Chief Constables Statement of Accounts and those of the Group. Following the Stage 2 transfers, the Police and Crime Commissioner now recognises any costs and liabilities relating to the staff that are directly employed by the Police and Crime Commissioner, the staff that transferred were those within Corporate Finance, Corporate Communications and Legal Services.

23



Accumulated Absences Account

The Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year, for example annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account.

2013/14

£000

(5,068) Balance at 1 April

649

Settlement or cancellation of accrual made at the end of preceding year

- Amounts accrued at the end of the current year

649

Amount by which officer remuneration charged to the Comprehensive

Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements

(4,419) Balance at 31 March

10. CASH FLOW STATEMENT – ADJUSTMENTS FOR NON-CASH MOVEMENT

2014/15

£000

(4,419)

224

-

224

(4,195)

The adjustments to the net surplus or deficit on the provision of services for non-cash movements include the following items:

2013/14

£000

649 Decrease in creditors

(115,336) Movement in pensions liability

(114,687)

Adjustments to net surplus or deficit on provision of services for non-cash movements

11. AMOUNTS REPORTED FOR RESOURCE ALLOCATION DECISIONS

2014/15

£000

224

(94,933)

(94,709)

The analysis of income and expenditure by service on the face of the Comprehensive

Income and Expenditure Statement in the Chief Constable ’s Financial Statements is that specified by the Service Reporting Code of Practice . However, decisions about the resource allocation are taken on the basis of budget reports analysed across budget holders. 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 Comprehensive Income and

Expenditure Statement in the PCC ’s Financial Statements

 the cost of retirement benefits is based on cash flows (payment of employer’s contributions) rather than current service cost of benefits accrued in the year

24



The income and expenditure of the Chief Constable ’s principal budget holders recorded in the budget reports for the year is as follows:

2014/15

Employee costs

Premises

Transport

Supplies & Services

Total operating expenses

Income

Net cost of services

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

14,617 21,096 16,027 38,965 33,517 26,880 14,201 9,909 3,276 178,488

145

488

259

191

769

319

234

508

215

244

1,187

612

392

1,724

2,591

190

888

3,924

110 5,342

111 (2,008)

-

194

6,848

3,861

2,538 17,884 5,781 34,123

15,509 22,375 16,984 41,008 38,224 31,882 16,960 31,127 9,251 223,320

(44) (61) (78) (85) (2,607) (462) (580) (1,641) (3,614) (9,172)

15,465 22,314 16,906 40,923 35,617 31,420 16,380 29,486 5,637 214,148

2013/14

Employee costs

Premises

Transport

Supplies & Services

Total operating expenses

Income

Net cost of services

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

16,685 24,519 18,225 44,020 36,220 16,118 11,333 12,458 6,403 185,981

155

567

311

246

903

450

238

588

455

344

1,375

829

353

2,520

2,208

201

809

4,022

38 5,040

62 (1,804)

-

305

6,615

5,325

2,070 17,858 4,997 33,200

17,718 26,118 19,506 46,568 41,301 21,150 13,503 33,552 11,705 231,121

(74) (51) (206) (85) (2,721) (228) (317) (1,397) (6,796) (11,875)

17,644 26,067 19,300 46,483 38,580 20,922 13,186 32,155 4,909 219,246

Support Services includes Senior Command Team, Professional Standards, Corporate

Finance, Supply Chain Management, Facilities Management, Information Systems, Vehicle

Fleet Management, Legal Services, Human Resources and Corporate Communications.

In 2014/15 Criminal Justice Admin Department was renamed Corporate Services. This department now also includes the Business Change Department and the Community Safety

Department. In 2013/14 both Business Change and Community Safety were included within the Support Services analysis.

25



Reconciliation of Budget Holder Income and Expenditure to Financial Resources

Consumed in the Comprehensive Income and Expenditure Statement.

This reconciliation shows how the figures in the analysis of budget holder income and expenditure relate to the amounts included in the Comprehensive Income and Expenditure

Statement.

2013/14

£000

2014/15

£000

219,246 Net Expenditure in the Budget Holder Analysis

29,375 Net Expenditure of services and support services not included in the analysis

67,078

Amounts in Comprehensive Income and Expenditure Statement, not reported to management in the analysis

(18,487)

Amounts reported to management not included in Comprehensive Income and

Expenditure Statement

297,212 Comprehensive Income and Expenditure Statement

214,148

27,549

57,220

(27,585)

271,332

Amounts in the Comprehensive Income and Expenditure Statement, not reported to management in the analysis, include an accounting adjustment for the IAS19 pension adjustment and the employee benefit accrual.

Amounts reported to management, not included in Comprehensive Income and Expenditure

Statement include the removal of actual pension contributions and an adjustment under

IFRS 11 to remove H umberside Police’s share of costs relating to Human Resources and

Information Systems that both Forces collaborate on. Also removed is the non grant income and costs relating to the support functions that went to the PCC as part of the Stage 2 transfers in the year. Both of these are reported in the PCC ’s Comprehensive Income and

Expenditure Statement.

26



Reconciliation to Subjective Analysis

2014/15

Fees, charges and other service income

Total income

Employee costs

Other service expenses

Total operating expenses

Surplus or deficit on the provision of services

£000 £000

(9,172) (9409)

(9,172) (9,409)

178,488 39,070

44,832 (2,112)

223,320 36,958

214,148 27,549

£000 £000 £000 £000 £000 £000

- 18,581 - - - -

- 18,581 - - - -

57,220 (43,529) 231,249 (249,862) (18,613) 113,322

- (2,637) 40,083 (40,083) - -

57,220 (46,166) 271,332 (289,945) (18,613) 113,322

57,220 (27,585) 271,332 (289,945) (18,613) 113,322

£000

-

-

94,709

-

94,709

94,709

2013/14

£000

Fees, charges and other service income

Total income

(11,875)

(11,875)

Employee costs

Other service expenses

185,981

45,140

Total operating expenses 231,121

Surplus or deficit on the provision of services

219,246

£000

(8,850)

(8,850)

38,697

(472)

38,225

29,375

£000

-

-

67,078

-

67,078

67,078

£000

20,725

£000

-

£000

-

20,725 - -

(34,352) 257,404 (255,577)

(4,860) 39,808 (39,808)

(39,212) 297,212 (295,385)

(18,487) 297,212 (295,385)

£000

-

£000

-

£000

-

- - -

1,827 112,860 114,687

- - -

1,827 112,860 114,687

1,827 112,860 114,687

27



12. O

FFICERS’ REMUNERATION AND NUMBERS

The remuneration paid to the Force’s senior employees during 2014/15 is as follows:

2014/15

Chief Constable

– D Crompton

Deputy Chief Constable

£

157,668

130,821

Assistant Chief Constable

– Territorial

Operations

Assistant Chief Constable –

Specialist Operations

(to 13 th July 2014)


–

Specialist Operations

(from 20 th Aug 2014)

107,356

36,872

53,233

Director of Finance

112,066

£

150

150

150

-

150

460

£

1,738

-

-

2,972

763

1,838

£ £

- 159,556

- 130,971

- 107,506

- 39,844

- 54,146

- 114,364

£ £

36,314 195,870

29,959 160,930

23,444 130,950

7,935

14,189

47,779

68,335

12,215 126,579

Notes

 The post Assistant Chief Officer Human Resources is not showing in the table above as the post is shared with Humberside Police. South Yorkshire Police pay for 50% of the employee’s costs as part of the collaborative shared service for Human Resources.

 The post of Assistant Chief Constable – Specialist Operations was vacant between 13 th

July and 20 th August 2014.

Currently benefits in kind figures are yet to be finalised for the Deputy Chief

Constable and Assistant Chief Constable – Territorial Operations therefore have not been included in the above table. This will be rectified for the final audited version of the accounts.

28



Comparative Figures for

2013/14

Chief Constable

–

D Crompton

Deputy Chief Constable

£

155,406

129,577


(From 12 th August 2013)

Temporary Assistant Chief

Constable (To 11 th August

2013)

61,846

30,074

£

150

150

-

-

£

2,266

£

-

2,400

2,232

-

-

-

-

£ £ £

157,822 35,956 193,778

132,127 29,663 161,790

64,078 14,484 78,562

30,074 6,586 36,660


Acting Deputy Chief

Constable (Regional Working to 2 nd January 2014)

Director of Finance

116,867

86,049

111,400

430

150

450

3,714

2,075

3,034

-

-

-

121,011 26,595 147,606

88,274 20,243 108,517

114,884 11,920 126,804

Notes



For the period 1 st April to 11 th August a Temporary ACC post was created to cover the duties of a vacant ACC post. The permanent ACC joined the Force on 12 th August

2013.



The post of Acting Deputy Chief Constable (Regional Working) was being covered by a substantive ACC from South Yorkshire. This arrangement ceased on 2 nd January 2014.

29



The Force ’s employees (officers and staff) including the senior employees identified in note

12 receiving more than £50,000 remuneration for the year (excluding employer’s contributions) were paid the following amounts:

-

-

1

-

-

-

317

-

-

-

1

-

1

-

1

2013/14

Number

151

90

36

10

9

2

8

5

-

2

-

£

50,000 - 54,999

55,000 - 59,999

60,000 - 64,999

65,000 - 69,999

70,000 - 74,999

75,000 - 79,999

80,000 - 84,999

85,000 - 89,999

90,000 - 94,999

95,000 - 99,999

100,000 - 104,999

105,000 - 109,999

110,000 - 114,999

115,000 - 119,999

120,000 - 124,999

125,000 - 129,999

130,000 - 134,999

135,000 - 139,999

140,000 - 144,999

145,000 - 149,999

150,000 - 154,999

155,000 - 159,999

160,000 - 164,999

165,000 - 169,999

170,000 - 174,999

1

-

1

-

-

-

316

-

-

-

1

-

2

1

1

2014/15

Number

125

83

38

16

10

8

14

7

3

3

2

30



The number of exit packages with total cost per band and total cost of compulsory and other departures are set out in the table below.

Exit Package cost band (including special payments)

£0 - £20,000

£20,001 - £40,000

£40,001 - £60,000

£60,001 - £80,000

£80,001 - £100,000

Number of compulsory redundancies

Number of other departures agreed

Total number of exit packages per cost band

Total cost of exit packages in each band

2013/14 2014/15 2013/14 2014/15 2013/14 2014/15 2013/14 2014/15

£000 £000

6

-

-

6

2

-

54

22

6

3

1

-

60

22

6

9

3

-

521

583

266

82

86

-

-

-

6

-

-

8

5

1

88

-

-

4

5

1

94

-

-

351

89

12 1,810

-

-

168

The total costs in the above table include all exit packages that were paid or agreed in each year.

13. TERMINATION BENEFITS

Costs shown in Note 12 on exit packages include a number of termination payments. During

2014/15, there were 4 staff whose contracts were terminated as part of the voluntary early release scheme at a cost of £0.074m compared to 88 employees at a cost of £1.77m in

2013/14. The exit packages all related to police staff and no police officer termination payments were made in either year.

14. EXTERNAL AUDIT COSTS

The Chief Constable has incurred the following costs in relation to the audit of the Statement of Accounts undertaken by its external auditors, KPMG.

2013/14

£000

25

Fees payable with regard to external audit services carried out by the appointed auditor for the year

- Audit Commission rebate

25

2014/15

£000

25

-

25

31



15. RELATED PARTIES

The Chief Constable is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Force or to be controlled or influenced by the Force. Disclosure of these transactions allows an assessment of the extent to which the Chief Constable might have been constrained in his ability to operate independently or might have secured the ability to limit another party’s ability to bargain freely with the Force.

Central Government

Central Government has significant influence over the general operations of the Chief

Constable. It is responsible for providing the statutory framework within which the Chief

Constable operates, provides the majority of funding in the form of grants and prescribes the terms of many of the transactions that the Chief Constable has with other parties.

Officers

Certain officers might also be in a position to influence significantly the policies of the Chief

Constable. No material related party transactions have been identified following consultation with relevant officers.

16. LEASES

Operating Leases

The PCC currently has operating leases for some properties, computer equipment and a small number of vehicles. The future minimum lease payments due under non-cancellable leases in future years are:

31 March

2014

£000

31 March

2015

£000

411 Not later than one year

718 Later than one year and not later than five years

- Later than five years

333

137

-

1,129 Total 470

The expenditure charged to the Comprehensive Expenditure and Income Statement during the year in relation to these leases was £0.42m in 2014/15 (£0.465m in 2013/14).

32



17. DEFINED BENEFIT PENSION SCHEMES

Participation in Pensions Schemes

As part of the terms and conditions of employment of its employees, the PCC makes contributions towards the cost of post employment benefits. Although these benefits will not actually be payable until employees retire, the PCC has a commitment to make the payments and this needs to be disclosed at the time that employees earn their future entitlement.

The Force and PCC participates in three pension schemes as explained in the Accounting

Policies: Pension schemes for police officers (PPS 1987 and 2006) and the Local

Government Pension Scheme (LGPS) for support staff, administered by the South Yorkshire

Pensions Authority.

Injury awards are payable irrespective of whether a police officer is a member of the

Pension Scheme and tax rules from 1 April 2006 prevent injury awards from being part of pension scheme regulations. Injury awards have been moved into a separate Police

Compensation Scheme (PCS) and under the pensions financial arrangements they must be paid from the PCC ’s operating account and not the Pension Fund Account. The injury awards have been accounted for as part of the pensions adjustments and information relating to these injury awards are disclosed separately in the following notes.

Transactions relating to Post-employment Benefits

The cost of retirement benefits is recognised in the reported Comprehensive Income and

Expenditure Statement when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge required against council tax is based on the cash payable in the year, so the real cost of post-employment / retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement. The following transactions have been made in the Comprehensive Income and Expenditure Statement and the General Fund Balance via the Movement in Reserves Statement during the year:

2014/15

Comprehensive Income and Expenditure

Statement

Cost of Services



Current service cost



Past service cost



Curtailments

Financing and Investment Income and

Expenditure



Net interest expense

Total post employment benefit charged to the Surplus or Deficit on the Provision of

Services

PPS

1987

£000

41,190

-

-

104,460

145,650

PPS

2006

£000

6,850

-

-

2,400

9,250

PCS

£000

1,050

10

-

3,830

4,890

LGPS

£000

Total

£000

8,288

-

56

57,378

10

56

2,632 113,322

10,976 170,766

33



2014/15

Other post employment benefit charged to the Comprehensive Income and Expenditure

Statement

Remeasurement of the net defined benefit liability comprising:



Return on plan assets (excluding the amount included in the net interest expense)



Actuarial gains and losses arising on changes in demographic assumptions



Actuarial gains and losses arising on changes in financial assumptions



Experience gains and losses

Total post employment benefit charged to the Comprehensive Income and Expenditure

Account

Movement in Reserves Statement



Reversal of net charges to Surplus or

Deficit for the Provision of Services for post employment benefits in accordance with the Code

Actual amount charged against the General

Fund Balance for pensions in the year

 Employer’s contribution payable



Retirement benefits payable to pensioners



Additional contribution to Police Pension

Fund Account to balance deficit

PPS

1987

£000

(67)

(75,170) (5,750) (34,260)

417,230 14,370

(51,450) (1,650) (3,020)

436,193 16,305 (22,459)

Total

£000

- (115,180)

66,059 507,589

- (56,120)

57,477 487,516

(145,650) (9,250) (4,890) (10,976) (170,766)

22,104

-

PPS

2006

£000

85

3,673

-

46,404 (5,843)

PCS

£000

9,930

-

1,711

-

LGPS

£000

1 (19,558) (19,539)

7,784

-

-

33,561

1,711

40,561

In addition to the above adjustments made in the Movement in Reserves Statement there has been a movement of the opening balance on the pensions reserve of £3.307m in respect of the stage 2 transfers that saw a number of staff transfer from the employment of the Chief Constable to the

Police and Crime Commissioner during 2014/15. Previously all LGPS pension costs and liabilities were recognised in the Chief Constables Statement of Accounts and those of the Group. Following the Stage 2 transfers, the Police and Crime Commissioner now recognises any costs and liabilities relating to the staff that are directly employed by the Police and Crime Commissioner, the staff that transferred were those within Corporate Finance, Corporate Communications and Legal Services.

An adjustment has been made accordingly in the Movement in Reserves Statement and Balance

Sheet of the Chief Constable and the Police and Crime Commissioner, this change has had no effect on the Group position.

34



Comparative figures for 2013/14 are:

2013/14

Comprehensive Income and Expenditure

Statement

Cost of Services






Past service cost



Curtailments

Financing and Investment Income and

Expenditure



Net interest expense

Total post employment benefit charged to the Surplus or Deficit on the Provision of

Services

Other post employment benefit charged to the Comprehensive Income and Expenditure

Statement

Remeasurement of the net defined benefit liability comprising:



Return on plan assets (excluding the amount included in the net interest expense)



Actuarial gains and losses arising on changes in demographic assumptions



Actuarial gains and losses arising on changes in financial assumptions



Experience gains and losses

Total post employment benefit charged to the Comprehensive Income and Expenditure

Account

Movement in Reserves Statement



Reversal of net charges to Surplus or

Deficit for the Provision of Services for post employment benefits in accordance with the Code

Actual amount charged against the General

Fund Balance for pensions in the year

 Employer’s contribution payable



Retirement benefits payable to pensioners



Additional contribution to Police Pension

Fund Account to balance deficit

PPS

1987

£000

48,030

-

-

103,310

151,340

-

(260)

(72,660)

(40,270)

38,150

21,852

-

36,298

PPS

2006

£000

6,870

-

-

2,100

8,970

-

(10)

(4,060)

(1,355)

3,545

3,244

-

(5,399)

PCS

£000

1,130

30

-

3,980

5,140

-

180

(2,220)

(6,955)

(3,855)

-

1,655

-

LGPS

£000

11,194

-

473

3,470

15,137

(6,787)

4,768

1,213

(10,551)

7,601

-

-

Total

£000

67,224

30

473

112,860

180,587

(6,787)

4,678

(24,882) (103,822)

(47,367)

27,289

(151,340) (8,970) (5,140) (15,137) (180,587)

32,697

1,655

30,899

35



Pensions Assets and Liabilities recognised in the Balance Sheet

The amount included in the Balance Sheet arising from the PCC ’s obligation in respect of its defined benefit plans is as follows:

31 March 2015

Present value of defined benefit obligation

Fair value of plan assets

Net liability arising from defined benefit obligation

PPS

1987

£000

2,755,260

-

2,755,260

PPS

2006

£000

68,450

-

68,450

PCS

£000

63,130

-

63,130

LGPS

£000

354,751

(244,037)

110,714


31 March 2014

Present value of defined benefit obligation

Fair value of plan assets

Net liability arising from defined benefit obligation

PPS

1987

£000

2,387,500

-

2,387,500

PPS

2006

£000

50,050

-

50,050

PCS

£000

87,300

-

87,300

Reconciliation of the Movements in the Fair Value of the LGPS (Plan) Assets

LGPS

£000

285,149

(220,821)

64,328

31 March

2014

£000

199,221 Opening fair value of scheme assets at 1 April

-

8,893

6,787

Movement of opening balance between Chief Constable and Police and Crime Commissioner

Interest income

(Expected rate of return in 2013/14)

Remeasurement (gains) and losses - return on plan assets

(Actuarial gains in 2013/14)

7,601 Contributions from employer

3,404 Contributions from employees into the scheme

(4,875) Benefits paid

(210) Administration expenses

220,821 Closing fair value of scheme assets at 31 March

31 March

2015

£000

220,821

(10,246)

9,781

19,592

7,784

3,188

(6,687)

(196)

244,037

36



Reconciliation of Present Value of the Scheme Liabilities (Defined Benefit Obligation)

2014/15

Opening balance at 1 April

Movement of opening balance between Chief

Constable and Police and Crime Commissioner


Interest cost

Contributions from Scheme participants

Remeasurement (gains) and losses

 actuarial gains/losses arising from changes in demographic assumptions

 actuarial gains/losses arising from changes in financial assumptions

 experience gains and losses

Past service cost

Benefits paid

Curtailments

Closing balance at 31 March


PPS

1987

£000

2,387,500

-

41,190

104,460

11,770

(75,170)

417,230

(51,517)

-

(80,203)

-

2,755,260

PPS

2006

£000

50,050

-

6,850

2,400

1,820

(5,750) (34,260)

PCS

£000

87,300

LGPS

£000

285,149

- (13,519)

1,050

3,830

-

8,092

12,413

3,188

-

14,370

(1,565)

-

275

-

68,450

9,930

(3,020)

10

(1,710)

-

63,130

66,059

-

(6,687)

56

354,751

2013/14

Opening balance at 1 April


Interest cost

Contributions from Scheme participants

Remeasurement (gains) and losses

 actuarial gains/losses arising from changes in demographic assumptions

 actuarial gains/losses arising from changes in financial assumptions

 experience gains and losses

Past service cost

Benefits paid

Curtailments

Closing balance at 31 March

PPS

1987

£000

2,407,500

48,030

103,310

11,690

(260)

(72,660)

(40,269)

-

(69,841)

-

2,387,500

PPS

2006

£000

44,350

6,870

2,100

1,530

(10)

(4,060)

(1,355)

-

625

-

50,050

PCS

£000

92,810

1,130

3,980

-

180

(2,220) (24,882)

(6,955)

30

(1,655)

-

87,300

1,213

-

(4,875)

473

285,149

LGPS

£000

281,701

10,984

12,363

3,404

4,768

37



Local Government Pension Scheme Assets comprise:

31 March 2014

£000 %

Equities

48,000 21.7 

UK quoted

88,335 40.0 

Overseas quoted

136,335 61.7

-

Bonds

-



UK Government Fixed

22,981 10.5 

UK government indexed

5,790 2.6



Overseas government fixed

13,768

885

6.2



UK other

0.4



Overseas other

43,424 19.7

18,499

3,177

21,676

Property

8.4 

UK direct

1.4



Property funds

9.8

14,908

14,908

Alternatives

6.8



Pooled investment vehicles

6.8

4,478

4,478

Cash

2.0 

Cash accounts

2.0

220,821 100.0 Total scheme assets

31 March 2015

£000 %

47,099

98,224

145,323

1,879

29,284

6,223

12,568

1,562

19.3

40.2

51,516

22,964

3,661

26,625

16,595

16,595

6.8

6.8

3,978 1.6

3,978 1.6

244,037 100.0

59.5

0.8

12.0

2.6

5.2

0.6

21.2

9.4

1.5

10.9

The 2013/14 comparative figures shown above have not been restated in respect of the

£10.246m movement of scheme assets between the Chief Constable and the Police and

Crime Commissioner in respect of the Stage 2 transfer of staff within Corporate Finance,

Corporate Communications and Legal Services.

The restated value of the Chief Constables scheme assets as at 31

£210.575m. st March 2014 was

All scheme assets have quoted prices in active markets except pooled investment vehicles.

38



Basis for Estimating Assets and Liabilities

Liabilities have been assessed on an actuarial basis using the projected unit credit method, which is an estimate of the pensions that will be payable in future years dependent on assumptions including mortality rates, employee turnover and salary levels. The liabilities of the Police Pension and Compensation Schemes have been assessed by the Government

Actuary’s Department (GAD). The LGPS fund liabilities have been assessed by Mercer, the

Police and Crime Commissioners actuary using estimates based on the latest full valuation of the scheme as at 31 March 2013.

The significant assumptions used by the actuaries have been:

23.4

25.9

2.5%

4.5%

2.5%

4.4%

-

-

-

-

2013/14

PPS LGPS

-

Long-term expected rate of return on assets :

7.0% Equity investments

25.6

28.0

3.4% Government bonds

4.3% Other bonds

6.2%

0.5% Cash / Liquidity

25.2

28.3

Property

Mortality Assumptions:

Longevity at 65 for future pensioners (in years)



Men



Women

22.9

25.5

2.4%

4.2%

2.4%

4.6%

Longevity at 65 for current pensioners (in years)



Men



Women

Financial Assumptions:

Rate of Inflation (CPI)

Rate of Increase in Salaries

Rate of Increase in Pensions

Rate for Discounting Scheme Liabilities

23.3

25.7

2.20%

4.20%

2.20%

3.30%

-

-

-

-

2014/15

PPS LGPS

- 6.5%

25.4

27.9

2.2%

2.9%

5.9%

0.5%

25.3

28.4

23.0

25.6

2.10%

3.85%

2.10%

3.40%

The estimation of the defined benefit obligations is sensitive to the actuarial assumptions set out in the above table. The sensitivity analyses in the following tables have been provided by the actuaries and have been determined based on reasonably possible changes in assumptions occuring at the end of the reporting period and assumes for each change that the assumption analysed changes while other other assumptions remain constant. The assumptions for longevity, for example, assume that life expectancy increases or decreases for men and women. In practice, this is unlikely to occur, and changes in some of the assumptions may be interrelated. The estimations in the sensitivity analysis have followed the accounting policies for the scheme, i.e. on an actuarial basis using the projected unit credit method. The methods and types of assumptions used in preparing the sensitivity analysis below did not change from those used in the previous period.

39



Impact on the Defined Benefit Obligation in the Schemes

PPS

Assumption

Longevity - increase by one year

Rate of increase in salaries – increase by 0.5%

Rate of increase in pensions – increase by 0.5%

Rate of discounting scheme liabilities – increase by 0.5%

Increase / (Decrease)

1987 Scheme 2006 Scheme

£000 £000

67,000 1,200

42,000 4,800

258,000

(317,000)

5,500

(11,600)

LGPS

Assumption

Longevity - increase by one year

Rate of inflation – increase by 0.5%

Rate of increase in salaries – increase by 0.5%

Rate of discounting scheme liabilities – increase by 0.5%

Increase / (Decrease)

£000

6,558

8,149

2,881

(7,966)

Impact on the PCC ’s Cash Flows

An objectives of the LGPS is to keep employer’s contributions at as constant a rate as possible. The strategy agreed with the actuary is to achieve a funding level of 100% over the next 21 years. The next triennial valuation is due for 31 March 2016. The contributions in respect of the Police pension schemes are determined by the Government.

The liabilities show the underlying commitments that the PCC has in the long run to pay employment benefits . The total liability of £3,003.4m for Group (£2,997.5m for Chief

Constable) has a substantial impact on the net worth of the PCC as recorded in the Group

Balance Sheet, resulting in a negative overall balance of £2,927m.

However, statutory arrangements for funding the deficit mean that the financial position of the PCC remains healthy:



the deficit on the LGPS will be made good by increased contributions over the remaining working life of the employees (ie before payments fall due), as assessed by the scheme actuary.



finance is only required to be raised to cover police pensions when the pensions are actually paid.

The total contributions expected to be made to the LGPS by the PCC in the year to 31

March 2016 is £8.3m. Expected contributions for the Police Pensions Schemes in the year to 31 March 2016 are £25.8m. The weighted average duration of the defined benefit obligation for scheme members is:



LGPS – 23 years



PPS 1987 – 22 years



PPS 2006 – 32 years.

40



18. REGIONAL WORKING

The PCC and Chief Constable engage with the other Yorkshire and Humber PCCs and

Chief Constables to deliver a number of specific services on a regional basis. The Regional

Collaboration Programme was developed to bring opportunities across many policing activities whilst retaining local identity and accountability.

From September 2013, a Lead Force model has been adopted for each functional area of regional collaboration, with the Regional Collaboration Board retaining the governance over all the arrangements. South Yorkshire is the lead force for Regional Procurement and

Regional Firearms, and during 2014/15 took lead force responsibility for Regional Stores. It provides all the financial administration necessary to ensure that the costs are properly captured and fully recharged to the four participating PCCs and Chief Constables.

The lead force arrangements have been reviewed against IFRS 11 on Joint Arrangements and it has been determined that they fall outside the scope of a joint operation.

The summary position for these services is detailed in the memorandum below.

2014/15

Staff Costs

Property related expenses

Supplies and services

Transport related expenses

Expenditure

Other Reimbursed Income

WYP Reserve Transfer

Contributions

Income

Deficit/(Surplus) in year

Humberside Police

North Yorkshire Police

South Yorkshire Police

West Yorkshire Police

Total

Release from Regional Reserve

(135)

(134)

-

(30)

-

(32)

(73)

(135)

-

Stores

2014/15

£000

107

20

6

2

135

-

Procurement

2014/15

£000

1,534

18

66

68

1,686

(143)

- (65)

(1,481)

(1,689)

(3)

(266)

(198)

(405)

(612)

(1,481)

3

Firearms

2014/15

£000

137

-

1

-

138

-

-

(129)

(129)

9

(24)

(17)

(33)

(55)

(138)

(9)

41



Comparative Figures for 2013/14 are as follows, however it should be noted that the figures are from September 2013 only as prior to that WYP led on regional budgets and the lead force model was not in place.

2013/14

Staff Costs




Expenditure

Contributions

Income


Humberside Police

North Yorkshire Police



Total

-

-

-

-

-

-

-

-

Stores

2013/14

£000

-

-

-

-

-

Procurement

2013/14

£000

867

10

50

29

956

(953)

(953)

3

(172)

(129)

(243)

(409)

(953)

Firearms

2013/14

£000

37

-

-

-

37

(46)

(46)

(9)

(8)

(6)

(12)

(20)

(46)

The below table shows the contributions made in 2014/15 by the South Yorkshire PCC, to those services for which other regional forces are the lead force.

Regional Service Lead Force Responsibility 2014/15

Contribution

£000

Underwater/Marine

Scientific Support

Programme Team

People Protection

Confidential Unit

Intelligence

Special Ops

Humberside Police







Serious & Organised Crime West Yorkshire Police

Fraud West Yorkshire Police

123

4,020

89

141

130

153

251

200

66

It should be noted that the costs of Scientific Support do not include forensic submissions.

42



The PCC has collaborative working arrangements with Humberside PCC with the creation of two joint services, Human Resources (HR) and Information Systems (IS). Each of these ventures has a collaboration agreement under Section 22A of the Police Act 1996 covering the main responsibilities. The costs of each are shared based on the size of the respective budgets, assessed using a measure of “net revenue expenditure”.

This joint collaborative arrangement with Humberside PCC is treated as a Joint Operation under IFRS 11, with only South Yorkshire PCC’s share of income and expenditure being recognised in the Group Comprehensive Income and Expenditure Statement.

The table below shows the total costs of the collaborative working arrangements and the relevant share of the costs and percentage allocations of the costs for Human Resources and Information Systems.

Staff Costs




Third Party Costs

Expenditure

Grant Income

Contributions

Other Income

Income


Humberside Police


Total

Humberside Police % share of costs

South Yorkshire Police % share of costs

Human

Resources

2014/15

£000

9,549

3

369

391

9

10,321

-

(10,202)

(119)

(10,321)

-

(4,228)

(5,974)

(10,202)

41.44%

58.56%

Information

Systems

2014/15

£000

4,312

-

972

149

2

5,435

(134)

(5,300)

(1)

(5,435)

-

(2,203)

(3,097)

(5,300)

41.60%

58.40%

43



The comparative data for 2013/14 is shown below:

Staff Costs




Third Party Costs

Expenditure

Contributions

Other Income

Income


Humberside Police


Total

Humberside Police % share of costs

South Yorkshire Police % share of costs

Human

Resources

2013/14

£000

9,639

1

301

328

-

10,269

(10,138)

(131)

(10,269)

-

(4,279)

(5,859)

(10,138)

42.21%

57.79%

Information

Systems

2013/14

£000

3,972

-

358

113

223

4,666

(4,666)

-

(4,666)

-

(1,904)

(2,762)

(4,666)

40.80%

59.20%

19. EVENTS AFTER THE BALANCE SHEET DATE

To the date of publishing the draft set of accounts there have been no reportable post balance sheet events.

44


POLICE PENSION FUND ACCOUNT AND NOTES

2013/14

£000 £000

(24,179)

(916)

(13,214)

Contributions Receivable

From the PCC



Normal



Early retirements

Officers’ Contributions

56,047

13,547

86

(38,309)

(947) Transfers In from Other Schemes

Benefits Payable



Pensions



Commutations and lump sum retirement benefits



Death benefits

7

468

69,680

Payments to and on account of Leavers



Refunds of contributions

475



Transfers out to other schemes

30,899 Net Amount Payable for the year

(30,899) Additional Contribution from the PCC

- Net Amount Payable / Receivable for Year

NET ASSETS STATEMENT

31 MARCH

2014

£000

Current Assets

65 

Contributions due from the PCC

36 

Contributions due from officers

39 

Amount owing from General Fund

Current Liabilities

(140) 

Unpaid pensions benefits

- TOTAL

The payroll date for police officers fell on the 29th March 2015 so there was an adjustment for two days for 2014/15, for 2013/14 there was an adjustment for one day.

2014/15

£000 £000

(23,612)

(2,165)

(13,584)

59,404

(39,361)

(493)

19,756

75

12

1,168

79,235

1,180

40,561

(40,561)

-

31 MARCH

2015

£000

127

73

(200)

-

45


POLICE PENSION FUND ACCOUNT AND NOTES

Notes to the Pension Fund Account

The Police Pension Fund Account is operated in accordance with the Police Pension Fund

Regulations 2007 (SI 2007 No 1932), which specifies the amounts that must be paid into and out of the Fund. The Chief Constable administers the Fund Account on behalf of the

PCC although no cash is transacted by the Chief Constable, with all payments and receipts being made by the PCC.

An employer’s contribution is paid into the Fund, together with contributions from employees who are members of the Police Pensions Schemes. The contribution rates are based on percentages of pensionable pay, as determined nationally by the Government and subject to triennial revaluation by the Government Actuary’s Department. The current contribution rates are 37.7% to 38.2% for the 1987 Scheme (24.2% for the employer and 13.5% to 14% for employees) and 34.9% to 36.2% for the 2006 Scheme (24.2% for the employer and

10.7% to 12% for employees). Payments are also made into the Fund in respect of ill health retirements.

The schemes are unfunded which means that there are no investment assets built up to meet pensions payments. The Pension Fund Account is therefore balanced to nil each year by a transfer from the PCC ’s General Fund which then receives a top-up grant from the

Government if contributions are insufficient to meet the defined pensions benefits payable.

Any surpluses on the Fund are repayable to the Government.

The accounting policies adopted for the Pension Fund follow those set out in the Statement of Accounting Policies (Note 1). However the Net Assets Statement does not include liabilities to pay pensions and other benefits after the Balance Sheet date. These are dealt with within the Group Financial Statements in accordance with the application of

International Accounting Standard 19 - Retirement Benefits.

46


INDEPENDENT AUDITOR’S REPORT TO THE CHIEF CONSTABLE OF SOUTH

YORKSHIRE

Independent auditor’s report to the Chief Constable of South Yorkshire

Not applicable to draft set of accounts will be included within final set of audited accounts to be published 30 th September 2015.

47


ANNUAL GOVERNANCE STATEMENT

ANNUAL GOVERNANCE STATEMENT 2014/15

1. Scope of Responsibility

1.1 The South Yorkshire Police Force is responsible for ensuring that its business is conducted in accordance with statute and proper standards and that public resources are safeguarded and properly accounted for. South Yorkshire Police also has a duty under the Local

Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.

1.2 In discharging this overall responsibility, the Force is responsible for putting in place proper arrangements for the governance of its affairs and facilitating the exercise of its functions which includes arrangements for ensuring that there is a sound system of internal control and that arrangements are in place for the management of risk.

1.3 The South Yorkshire Police and Crime Commissioner ( Commissioner ) and the Chief

Constable have adopted a common Corporate Governance Framework which is consistent with the principles of the 2007 Chartered Institute of Public Finance and Accountancy /

Society of Local Authority Chief Executives (CIPFA/SOLACE) framework document

“Delivering Good Governance in Local Government” and the subsequent addendum and guidance note for police issued in 2012. A copy of the framework can be obtained from the

Commissioner’s web site http://www.southyorkshire-pcc.gov.uk/Document-Library/Policies-

Lists-Registers/Code-of-Corporate-Governance.pdf

or by writing to the Chief Executive of the Office of the Police and Crime Commissioner, Regent Street, Barnsley, South Yorkshire

S70 2HG.

1.4 Good governance arrangements are the foundations on which South Yorkshire Police establishes its policies and the services it delivers to the Community. This said, governance itself must be responsive to developments in services, expectations, and the actions of other stakeholders. This Annual Governance Statement is an opportunity for the Force to demonstrate that the fundamentals of good governance remain in place, and that they are responding to internal and external changes.

2. The Purpose of the Governance Framework

2.1 Governance is about how organisations ensure that they are doing the right things, in the right way, for the right people, in a timely, inclusive, open and accountable manner. The governance framework comprises the systems, processes, culture and values adopted by the Force in the conduct of its affairs. It enables the Force to monitor the achievement of its strategic objectives and to consider whether appropriate and cost effective services which provide value for money are being delivered.

2.2 The system of internal control is a significant part of the framework and is designed to manage risk to a reasonable level. It can, however, provide only reasonable and not absolute assurance of effectiveness. The system of internal control is a continuous process designed to identify and prioritise risks to the achievement of the Force’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should that happen, and to manage them efficiently, effectively and economically.

2.3 The governance framework as set out in this statement has been in place for the year ended

31 st March 2015 and up to the date of approval of the Statement of Accounts.

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3. The Governance Framework

3.1 The scope of the governance and internal control framework spans the whole range of the

Force’s responsibilities and activities. The Force’s compliance with the six core principles determined within the national CIPFA/SOLACE guidance, “Delivering Good Governance in

Local Government” is demonstrated below :

3.2 Core Principle 1 : Focusing on the purpose of the Commissioner and the Force, and on outcomes for the community, and creating and implementing a vision for the local area.

● The Force’s vision, mission and priorities are adopted from those of the Commissioner, as contained within his Crime Plan 2013/17, and are prominently displayed on the Force’s intranet, appropriately communicated to all staff and have clear linkages to all reviews undertaken in response to the Comprehensive Spending Review reduction in budgets.

Vision

To make South Yorkshire the safest place to live, learn, work and run businesses

Mission

To work with and commission South Yorkshire Police and partners to deliver reductions in crime and anti-social behaviour

Strategic Priorities

Reducing Crime and Anti-Social Behaviour

Protecting Vulnerable People

Improving Visible Policing

The Force’s intention is to adopt future revisions to the Commissioner’s vision.

● In working to the Commissioner’s priorities, the Force uses a Performance Framework supported by well established performance management processes to hold local commanders and departmental heads to account for the delivery of cost effective services.

This includes the Performance and Governance regime which involves the Deputy Chief

Constable in meeting formally with local management teams on a six monthly basis. On a monthly basis the Assistant Chief Constable ( Local Policing ) will meet with district commanders where supportive and intrusive inquiries will be made in relation to on-going activity, processes and practices, and their contribution to meeting targets. Up to date operational priorities are published prominently on the Force’s intranet site.

● The process for reviewing and updating policing objectives and their associated targets is integrated within the overall planning cycle, based on the Commissioner’s Police and Crime

Plan, which sets out how the Force intends to deliver the Commis sioner’s priorities. Central to this is a robust financial planning and budgetary control procedure which reflects the

Force’s commitment to devolved financial management and is underpinned by a comprehensive Medium Term Financial Strategy.

● The Commissioner and Chief Constable operate to a comprehensive “Joint Corporate

Governance Framework”.

49



3.3 Core Principle 2 : Leaders, officers and partners working together to achieve a common purpose with clearly defined functions and roles.

●

The Policing Protocol Order 2011, issued by the Home Secretary, sets out the framework within which the Commissioner is expected to work with the Chief Constable and Police and

Crime Panel. The purpose of the Order is to enhance policing for local communities and clarify the functions of the respective parties.

● The Force supports the Commissioner in providing operational and back office functions collaboratively where these have been demonstrated to provide cost effective and efficient services. These arrangements are undertaken with either the other three forces of the

Region ( West Yorkshire, North Yorkshire and Humberside ) or are increasingly being based on a two force collaboration with Humberside. The major collaborations include : Specialist

Crime functions, Scientific Support including Crime Scene Investigations, the Underwater

Support Unit, Public Order and Firearms Training, Procurement, Information Systems and

Human Resources . A “Strategic Partnership” with Humberside Police was agreed towards the end of 2014/15. This is based on a presumption that all services will be run collaboratively unless there is a compelling case not to do so.

● Under the Comprehensive spending Review 2011/12 to 2014/15 the Force has reviewed every significant area of its operations. This has ensured that not only are functions becoming more efficient but also more clearly defined and underpinned by clear organisation charts, detailed governance arrangements and comprehensive and up to date individual job role profiles. Year-end Officer Assurance Certificates are obtained from all senior staff, which formally recognise their individual responsibilities and highlight any in year governance issues.

● South Yorkshire Police undertake a User Satisfaction Survey which is a monthly telephone survey that monitors satisfaction from victims of crime. The survey is a Home Office requirement and the data informs service improvements locally.

● The Chartered Institute of Public Finance and Accountancy document, “The Role of the

CFO of the Police and Crime Commissioner and the CFO of the Chief Constable”, published in 2012, sets out five principles that define the core activities and legislative and professional standards pertaining to the role of the Chief Financial Officer who must :

○ be a key member of the leadership team, helping it to develop and implement

strategy and to resource and deliver strategic objectives sustainably and in the public

interest,

○ be actively involved in, and able to bring influence to bear on, all material business decisions (subject to the operational responsibilities of the Chief Constable) to ensure immediate and longer term implications, opportunities and risks are fully considered, and aligned with the financial strategy,

○ lead the promotion and delivery of good financial management so that public money is safeguarded at all times and used appropriately, economically, efficiently and effectively,

○

work in close liaison with the Commissioner, Chief Executive and the Chief Constable to ensure that the finance function is resourced to be fit for purpose and

○ be a professionally qualified accountant and be suitably experienced and ensure professional knowledge is kept current through continuing professional development.

50



The Force fully complies with the requirements of this CIPFA document and, consistent with it, employs a Director of Finance who is responsible for leading the Finance Function within the Force and works closely with the Commissioner’s Chief Financial Officer to deliver sound financial management across the two organisations. The Director of Finance is a member of the Senior Command Team. All finance posts have appropriate role profiles which detail formal qualification, experience and behavioural requirements. In addition support is provided to ensure that staff meet the needs of the Force’s Performance Development

Review regime, which is accredited for Continuing Professional Development purposes by the majority of the accounting institutes including the Association of Accounting Technicians.

The Force’s financial administration arrangements are determined by the Commissioner’s

Financial Regulations which are supplemented by the Force’s own Financial Instructions.

● Barnsley Metropolitan Borough Council’s Head of Internal Audit & Risk Management leads the internal audit function and has full access to the Force and its staff. He attends the Joint

Independent Audit Committee of South Yorkshire’s Police and Crime Commissioner and

Chief Constable to comment on the adequacy and effectiveness of the Force’s internal control systems and leads and directs an internal audit service that is resourced to be fit for purpose, professionally qualified and suitably experienced.

● Force wide Equality and Diversity strategies are in place, supported by Equality Impact

Assessments.

● Each two years the Force undertakes a force wide staff satisfaction survey covering all police officers and police staff. The results of the latest one were reported in February, 2015 and a response to it published by the Deputy Chief Constable on the Staff Engagement intranet site. In addition, chief officers ensure that they are in regular and direct communication with employees through the use of such as “road shows”, the latest being held towards the end of 2014/15, and the long established “Questions for the Chief” intranet site.

3.4 Core Principle 3 : Promoting values for the Commissioner and demonstrating the values of good governance through upholding high standards of conduct and behaviour.

● The Policing Protocol 2011 requires forces to abide by the seven Nolan principles which should be central to the conduct and behaviour of all. It highlights the expectation that relationships will be based on the principles of goodwill, professionalism, openness and trust. The Nolan principles are : selflessness, integrity, objectivity, accountability, openness, honesty and leadership.

● The College of Policing's Code of Ethics became established in July 2014 and sets the national standard for ethical decision making and professional conduct in the policing environment. The Force is embedding the Code of Ethics into its culture, policies and practices under the leadership of a superintendent and informed by the views and opinions of thirteen focus groups established to assist in its implementation.

● In support of the Policing Protocol 2011, the Force operates to its own “FIRST” principles which were re-launched in 2013/14. The principles are: Fairness, Integrity, Respect,

Standards and Trust. This initiative is supported by a dedicated intranet site intended as a hub of information for all staff and officers about the principles and incorporating links, information, films and policies relating to each of them. The initiative is further supported by the elearning module, “Without Fear or Favour”.

51



● The Commissioner, with the full support of the Chief Constable, has established an

Independent Ethics Panel to provide independent and effective challenge and assurance about the integrity, standards and ethics of decision-making in policing.

● The Force has comprehensive and robust internal control policies and procedures in place for Professional Standards Department led initiatives covering such as : Anti Fraud and

Corruption measures including “whistle-blower” arrangements supported by trained welfare officers, a confidential reporting line, a mechanism for overseeing secondary employment / business interests, gifts, gratuities and hospitality registration arrangements and guidance on

● The Commissioner and Chief Constable jointly maintain an internal audit service which provides an assurance function and reports to the Joint Independent Audit Committee. The function undertakes testing and compliance work to ensure that management controls are effective and robust to prevent, detect and deter error, fraud and corruption and thereby protect the integrity of the officers and staff using the systems and processes. There are some aspects of audit plans, for both the Commissioner and the Force, that target areas perceived as vulnerable to fraud and corruption or where the integrity of officers or staff participating in processes could be called into question. Such areas are identified using the risk management process and / or a fraud and corruption vulnerability assessment.

● The Force participates in the Cabinet Office’s biennial National Fraud Initiative (NFI) which

matches electronic data within and between public and private sector bodies to help prevent

and detect fraud.

3.5 Core Principle 4 : Taking informed and transparent decisions which are the subject to effective scrutiny and managing risk.

● The Commissioner’s Decision-Making Framework is part of the Corporate Governance

Framework. The Framework applies to decision-making by the Commissioner and those exercising delegated authority on behalf of the Commissioner including the Chief Constable and Force. During 2014/15 the decision-making process has been reviewed and decisions, unless urgent, are now formally brought to the Commissioner’s Governance and Assurance

Board.

● The Commissioner and the Chief Constable have a joint Risk Management Framework and Strategy which is reviewed annually. The Strategy establishes that the Commissioner and Chief Constable have separate risk registers, action plans and procedures in place to identify potential strategic risks. However, both organisations have a consistent approach to the management of those strategic risks once identified. All risks common to both the PCC and Force are identified and described using the same terminology within each risk register.

A common scoring mechanism is used for Opportunities and Risks and a common template has been developed to include; ownership, the direction of travel of the risk and timescales for completion of planned control measures. media relations. The Department is assisted in this work by a network of local, district and department based Integrity champions. In relation to Fraud and Corruption the

Commissioner’s Financial Regulations are very clear and detailed with both the

Commissioner and the Chief Constable having a responsibility to foster a culture that will not tolerate fraud and corruption.

● The Commissioner and Chief Constable maintain an established Joint Independent Audit

Committee, comprised of five independent members, which has the objective of challenging and supporting the work of the Commissioner and Force, so enhancing public trust and confidence in their governance. The Committee receives regular reports on the work of

Internal and External Audit, financial management, performance management and crucially,

52


ANNUAL GOVERNANCE STATEMENT on the risk management process as it is recognised that there is a need to continually monitor, challenge and review the Force’s Strategic Risk Register and associated action plans to ensure their currency, completeness and effectiveness. Within the Force, the Senior

Command Team ( comprising the Chief Constable and chief officer colleagues ) oversees compliance with the joint Police Crime Commissioner and Force Risk Management Strategy and ensures that all significant risk are appropriately recorded and managed

● All reports to the Senior Command Team and other formal bodies systematically take account of a range of control factors including risks, legal, financial, policy and performance implications. This body reviews all significant reports, emanating from the Force, prior to them being submitted to the Commissioner. The Director of Finance is a full SCT member and, consistent with his statutory responsibilities, ensures that any proposed expenditure is lawful. Against this background the Force is well placed to ensure compliance with relevant laws and regulations, internal policies and procedures.

● As part of its governance remit, the Audit Committee will consider the Annual Governance

Statement and as necessary provide comments to the Commissioner. In addition, it will monitor the implementation of any emerging developments or improvements, recommended through the review process.

● As part of its performance management regime the Force uses overarching “TEN” project and action monitoring software to effectively manage and ensure compliance with decisions including those emanating from Her Majesty’s Inspectorate of Constabulary and internal audit and external audit reports.

● In terms of the on-going provision of services the Force has a dedicated Business

Continuity Co-ordinator and detailed, individual district and department business continuity

plans.

3.6 Core Principle 5 : Developing the capacity and capability of the Commissioner and the

Force to be effective .

● Arrangements are in place to ensure the effective management of change and

transformation. The Force has a well established “Diamond” process, originally created a year prior to the Comprehensive Spending Review in 2010. The current “Diamond 2”, led by the Deputy Chief Constable, reviews service delivery to enable the restructuring of operational units and departments to improve efficiency, effectiveness and economy. This process has been successful in facilitating the management of approximately twenty percent budget reductions over the financial years 2011/12 to 2014/15. Review implementation is overseen by the Workforce Implementation Group, chaired by the Deputy Chief Constable, savings monitored on a monthly basis and the outcome of individual reviews is subject to a robust regime of closure reporting to ensure that all anticipated benefits are achieved before formal sign-off. Overall progress in this area is under regular review by Her Majesty’s

Inspectorate of Constabulary (HMIC), most recently as part of the Police Efficiency, leadership and Legitimacy (PEEL) assessment of May, 2015.

● The Force participates in a large and diverse range of joint working arrangements including partnership work with the South Yorkshire Fire and Rescue Service, Yorkshire

Ambulance Service, local metropolitan borough councils, schools, colleges, the Immigration

Service, the Post office and local businesses and charities. The Force work in collaboration with the other Yorkshire and Humber forces of West Yorkshire, Humberside and North

Yorkshire. In these instances arrangements are regulated by formal legal agreements and underpinned by a stipulation that Internal Audit are to have access to the appropriate financial documentation of partner bodies. Where there are particular concerns then the

53



Force has the option of requesting that the Head of Internal Audit commission work to provide the necessary assurance.

● Arrangements are in place for identifying the development needs of officers, supported by appropriate training. Role profiles, person specifications and schedules of main duties exist for all posts which identify post holder responsibilities and corresponding skills requirements.

Arrangements have been bolstered by the Diamond 2 work which has helped to ensure that functions have become ever more clearly defined and underpinned by accurate, up to date organisation charts, detailed governance arrangements and comprehensive individual job documentation. The performance of officers within roles is managed by a well established, personal development review (PDR) mechanism. The Force l aunched a “Health and

Wellbeing Strategy” in 2014/15 to further support officers impacted by current organisational change and the on-going investigation of legacy related issues.

3.7 Core Principle 6 : Engaging with local people and other stakeholders to ensure robust public accountability.

● The Force has arrangements to establish clear channels of communication with all sectors of the community and other stakeholders, ensuring accountability and encouraging open consultation. Service quality is monitored through county-wide consultation processes and by the direct engagement of members and officers in Community Safety Partnerships (CSP).

The results of this activity are notified to the Commissioner for his consideration.

● The Commissioner chairs a monthly Governance and Assurance Board (GAB) which assists and supports him in decision making and policy direction. This is attended by the

Chief Constable and his chief officer colleagues and receives monthly Force performance reports. The Commissioner and Chief Constable meet on a regular basis to review progress against the Police and Crime Plan objectives.

● South Yorkshire Police carry out a User Satisfaction Survey which is a monthly telephone

survey that monitors satisfaction from victims of crime. The survey is a Home Office requirement and the data informs service improvements locally. For example, Track my

Crime was initially proposed as a result of low ‘follow-up’ scores in the satisfaction survey, which has consistently been the poor performer comparatively when looking at all aspects of the survey .

● Accountability is enhanced by external reporting under the “transparency agenda” which requires the Force to publish details of all expenditure in excess of £500 and details of all chief officer expenses.

● The Force produces statutory accounts which communicate financial performance and achievements. The external auditors, in their Annual Audit letter 2013/14, issued an unqualified opinion on the Chief Constable’s statutory accounts but a qualified conclusion in relation to the responsibility to secure Value for Money (VFM), where concerns were recorded in relation to child sexual exploitation. It was stated that the Commissioner had failed to fully identify the potential financial consequences in relation to Rotherham and that the Chief Constable had failed to both sufficiently support the Commissioner in managing the financial risks and to fully recognise the widespread nature of the historical problem as outlined in the Professor Alexis Jay OBE report of August 2014 on child sexual exploitation in Rotherham.

54

4.



Review of Effectiveness

The South Yorkshire Police Force has a responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control and its arrangements for internal audit. This review is informed by the work of senior officers and bodies within the Force that have a responsibility for the development and maintenance of the governance environment.

Police and Crime Commissioner; the Commissioner is responsible for determining the overall governance framework for his Office and the Force. This underwent a significant review in 2013/14 which culminated in the Home Office approval, in April 2014, of the Stage

2 staff transfer scheme which has resulted in the Commissioner formally employing the staff of the Corporate Finance, Legal Services and Media & Marketing departments.

Chief Constable: the Chief Constable is responsible for maintaining the corporate governance arrangements for the Force. He is assisted in this by National Police Chief

Council colleagues sitting as the Senior Command Team (SCT).

Governance and Assurance Board: this body is chaired by the Commissioner and it ’s membership included the Deputy Police and Crime Commissioner ( whilst in post ) and chief officers of both the Force and the Office of the Police and Crime Commissioner. Meetings are held monthly.

Director of Finance ; this post holder is the Chief Constable’s Chief Financial Officer, a professionally qualified accountant with a statutory responsibility to ensure the proper financial administration of the Force and a personal fiduciary responsibility to the local council taxpayers.

Senior Officers : Force chief officers, commanders and heads of department are formally required to complete “Officer Assurance Certificates“ which provide assurances regarding their activities and responsibilities in implementing and maintaining systems of internal control operating within their area of responsibility. Any concerns are fully considered and, if considered appropriate by the Senior Command Team, reflected in the “Significant

Governance Issues” part of the AGS.

Joint Independent Audit Committee of South Yo rkshire’s Police and Crime Commissioner and Chief Constable: the Commissioner and the Chief Constable have established a permanent Joint Independent Audit Committee comprising five members appointed following public advertisement. This body met five times during 2014/15. It receives regular reports form the Head of Internal Audit and other senior OPCC and Force officers.

Internal Audit: in line with the Home Office “Financial Management Code of Practice for the

Police Forces of England and Wales ” document of October 2013, the Force and the Office of the Police and Crime Commissioner operate with a shared internal audit service. This is provided by Barnsley M etropolitan Borough Council’s Head of Internal Audit who, each year, is required to provid e an “Assurance Opinion” on the review of internal control”. His statement for 2014/15, as reported to the JIAC of 15 th June 2015, is reproduced below:

“ Based on the systems reviewed and reported on by Internal Audit during the year, together with management’s response to issues raised …. I have given an adequate assurance opinion.

• Of the 23 completed pieces of work 20 (87%) received a positive opinion, i.e. either substantial or adequate.

55



• 96% of recommendations made were either Significant or Merits Attention.

• 4% were fundamental.

The significant financial challenge for the PCC and Force in 2015/16 and beyond and the consequential change and innovation programme brings with it major risks and potential governance and control issues. The Senior Management Teams will need to remain focussed on implementing the necessary changes whilst maintaining a sound control and governance framework

– i.e. ‘staying safe’. The 2015/16 Internal Audit Plan aims to support the Senior Management Teams through this change programme as well as focus on particular areas of activity and responsibility identified as higher risk.

Of particular importance will be the ability of the OPCC and Force to work together to successfully deli ver the Police and Crime Commissioner’s objectives whilst securing the necessary financial savings. There remain significant governance pressures together with the need to balance developing ever more efficient processes whilst maintaining the sound stewardship and accountability of public funds. Such a balance requires innovation and measured risk taking. The Internal Audit Plan for 2015/16 and the focus for the Team will be to support management across the OPCC and Force to secure this balance.”

In addition to the work undertaken by the above bodies and individuals, further assurances in relation to governance are provided by :

Independent Ethics Panel ; the Commissioner, with the full support of the Chief Constable, established an Independent Ethics Panel during the year to provide independent and effective challenge and assurance around the integrity, standards and ethics of decisionmaking in policing.

Her Majesty’s Inspectorate of Constabulary ( HMIC ) Inspections ; HMIC determines those areas of the Force that it will inspect based on what it judges to be in the public interest. The responsibility for responding to issues raised in HMIC inspections lies with the Force.

External Audit: KPMG are the external auditors for both the Commissioner and the Force. In their Annual Audit letter 2013/14 they issued an unqual ified opinion on the Commissioner’s and Force’s statutory accounts but a qualified opinion in relation to the responsibility to secure value for money, where concerns were recorded in relation to child sexual exploitation.

Senior Command Team: rather than operate a separate Governance Board the Chief

Constable has chosen to oversee governance arrangements using the Senior Command

Team which formally considers Annual Governance Action Plan reports on a two monthly basis.

5. Significant Governance Issues

5.1 The following actions scheduled in the Annual Governance Statement 2013/14 were closed during 2014/15.

● In consultation with the OPCC, establish new Stage 2 mechanisms as required by the

Police Act 2011 to be effective from 1 st April, 2014 : consistent with the OPCC’s AGS Action

Plan, this issue was reported as closed to the Joint Independent Audit Committee of 26 th

September, 2014.

● Collaborative working with Humberside Police : this was reported as closed to the Joint

Independent Audit Committee of 24 th March, 2015 following progress made in both fully

56


ANNUAL GOVERNANCE STATEMENT discharging the recommendations of the Internal Audit “Review of the SYP/HP Collaboration

Savings Spreadsheets” report and in producing regular, robust budget monitoring information.

5.2 The following actions scheduled in the Annual Governance Statement 2013/14 were still

current in 2014/15.

● The Hillsborough Inquest has heard evidence from the events of the day, with witness from all emergency services including the Match Commander, the pre-hospital care expert, a football policing e xpert and witnesses in relation to the Force’s evidence gathering process in the aftermath of the Disaster. Phase 2, ‘movements of the deceased’, began in May 2015 with evidence being heard from witnesses and police officers who had contact with the deceased. The Force’s External Inquiries Team continues to closely monitor proceedings. In

March, 2015 the Commissioner was successful in securing a Home Office special grant of

£10.7m towards the costs so far incurred in 2013/14 and 2014/15.

● The removal of delegation rights from police officers: the Police Reform and Social

Responsibility Act 2011 prohibits Police Commissioners from delegating authority to police officers. The biggest impact of this has been in the area of procurement where police officers cannot currently authorise the placing of orders for goods and services. Changes can now be made following Stage 2 changes and the introduction of the new corporate governance arrangements introduced by the Chief Executive and reported to the Joint

Independent Audit Committee of 29 th July, 2014. The Force reinstated police officer authorisations in June, 2015.

● Consultation with the OPCC, to review governance changes: the Commissioner’s Chief

Executive is to conclude a review of the effe ctiveness of the Commissioner’s corporate governance framework including regional structures, systems and processes. The Force will need to operate within this, hence it being included within the Force’s AGS. The Joint

Independent Audit Committee update of 15th June states that the “Chief Executive, Chief

Finance and Commissioning Officer and the Head of Strategic Development and Assurance are currently reviewing the arrangements and anticipate, following consultation with the

Force Director of Finance to h ave completed the review by the end of July 2015.”

● Child Sexual Exploitation (CSE) : this has been monitored throughout the year as part of the Force’s risk management process. The Force continues to attract national media attention centered around the Professor Alexis Jay OBE report of August 2014 on child sexual exploitation in Rotherham between 1997 and 2013 and the Louise Casey report of

February 2015 into Rotherham Metropolitan Borough Council. Significant additional resourcing has been introduced to the Public Protection Unit and the Chief Constable has initiated an independent, National Crime Agency, investigation into how the Force has historically responded to matters raised in the above reports. The findings of the Review were presented to the Force on 13 th April, 2015. The Force’s response to recent revelations has been recognised as being at the forefront of good practice by the College of Policing.

5.3 The review of governance arrangements 2014/15 has raised one new issue;

Sickness Absence Reporting: a draft Internal Audit report of June, 2015 states that ;

“…. there is an adequate framework of internal control in relation to the processes for capturing, recording and reporting employee sickness absence. However, the processes in operation at South Yorkshire and Humberside are different and this should be reviewed to provide for a more efficient, effective and consistent approach to sickness management.

57



The audit has identified some shortfalls in relation to compliance with the established processes, which directly impact on the ability to ensure data is captured accurately, completely, in a timely manner and subsequently to ensure performance management information and published statistics are robust and fit for purpose .”

6. Statement of the Chief Constable and Director of Finance

6.1

We propose over the coming year, 2015/16, to take steps to address the above matters to further enhance our governance arrangements. We are satisfied that these steps will address the need for improvements identified in the review of effectiveness, and we will monitor their implementation and operation during the course of the year through the Force

Senior Command Team and feed this into the next annual review.

Signature ……………………….. Signature ……………………….

David Crompton

Chief Constable

Date :

Nigel J. Hiller CPFA FCCA

Director of Finance

Date :

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GLOSSARY OF TERMS

Accrual

The concept that income and expenditure is recognised as it is earned or incurred, not as cash is received or paid.

Actuarial Gain or Loss

The change in actuarial deficits or surpluses that arise because either events have not coincided with the actuarial assumptions made for the last valuation (experience gains or losses), or because the actuarial assumptions have changed.

Amortisation

The writing down of an asset over a period of time in order to charge the revenue account for the usage of the asset.

Assets

Items of worth which are measurable in monetary terms. Current assets are ones that change in value on a day to day basis whereas fixed assets are assets which yield benefit to the PCC for a period of more than one year.

Budget

A statement defining in financial terms the PCC ’s plans over a specified period. The budget is prepared as part of the process for setting the precept.

Capital Expenditure

Spending on the acquisition of assets or spending which adds to and not merely maintains the value of an existing asset.

Capital Receipt

Proceeds from the disposal of land or other capital assets which may be used to reduce debt or to finance capital expenditure, but cannot be used to support revenue expenditure.

Chartered Institute of Public Finance and Accountancy (CIPFA)

The accounting body that provides accounting guidance to the public sector. The guidance provided by CIPFA is defined as proper accounting practice and has statutory backing.

Corporate and Democratic Core

The costs associated with corporate policy making, together with costs relating to corporate management, public accountability and treasury management.

Creditor

Amounts owed by the PCC for works done and goods or services received for which actual payments had not been made by the end of the financial year.

Current Service Cost (Pensions)

This measures the increase in the present value of pensions liabilities generated in the financial year by employees. It is an estimate of the true economic cost of employing people in the financial year, earning service that will eventually entitle them to the receipt of a lump sum and pension when they retire.

Debtor

Amounts due to the PCC for works done and goods or services supplied for which actual payments had not been received by the end of the financial year.

59



Defined Benefit Pension Scheme

Retirement benefits are defined independently of the contributions payable and benefits are not directly related to the investments of the scheme. The scheme may be funded or unfunded.

Depreciation

The measure of the wearing out, consumption or other reduction in the useful life of a fixed asset arising from age, wear and tear, deterioration or obsolescence.


Amounts set aside for a specific purpose in one financial year and carried forward to meet expenditure in future years

Expected Rate of Return on Pensions Assets

This is a measure of the average rate of return expected on the investment assets held by the scheme for the year. It is not intended to reflect the actual realised return on the scheme, but a longer-term measure, based on the value of assets at the start of the year and an expected return factor.

Finance Lease

A lease that transfers all the risks and rewards of ownership of a fixed asset to the lessee.

Assets held in this way by the PCC appear on the PCC ’s balance sheet and are accounted for as property, plant and equipment.

Financial Instrument

This is any contract that gives rise to a financial asset of one entity and a financial liability of another. The term covers both financial assets such as loans receivable and liabilities such as borrowings.

General Fund Balance

The General Fund Balance is the description given in the Code to those reserves held by The

PCC that are not earmarked for specific purposes and is more commonly described as

General Reserves.

Government Grants

Assistance by Government and inter-governmental agencies and similar bodies in the form of cash or transfers of assets to a PCC in return for past or future compliance with certain conditions relating to the activities of the PCC.

Gross Book Value

The value of an asset before deducting depreciation and impairment.

Impairment

A reduction in the value of a fixed asset below its carrying amount on the balance sheet.

Intangible Fixed Assets

These are fixed assets such as software licences that do not have physical substance, but are identifiable and controlled through legal or custody rights.

Interest Costs (Pensions)

The expected increase in the present value of liabilities during the year as they move one year closer to being paid.

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Liabilities

Amounts due to individuals or organisations which will have to be paid at some point in the future. Current liabilities are usually payable within one year of the balance sheet date.

Net Book Value

The amount at which fixed assets are included in the balance sheet, that is their historical or current value less the cumulative amounts provided for depreciation.

Operating Leases

A lease where substantially all the risks and rewards of ownership of a fixed asset remain with the lessor.

Outturn

Actual income and expenditure for the financial year.

Past Service Cost (Pensions)

These costs represent the increase in liabilities arising from decisions taken in the current year to improve retirement benefits, but whose financial effect is derived from years of service earned in earlier years.

Provisions

Sums set aside to cover a liability that is likely to be incurred, but the amounts or date on which the cost will arise is uncertain.

Reserves

A reserve is an amount set aside for a specific future purpose in one financial year and carried forward to meet expenditure in future years.

Revenue Expenditure

Expenditure on day to day running costs incurred by the Chief Constable on behalf of the PCC in the provision of services

Treasury Management

The management of the PCC ’s investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.

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Independent auditor's report to the Chief Constable of South Yorkshire

Chief Constable of South Yorkshire Police

Statement of Accounts

2014/15

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Independent auditor's report to the Chief Constable of South Yorkshire

Chief Constable of South Yorkshire Police

Statement of Accounts

2014/15

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