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GREATER MANCHESTER FIRE AND RESCUE AUTHORITY

                         FINANCIAL STATEMENTS

                             ...
Introduction to the Statement of Accounts

Councillor Fred Walker,
Chairman of Greater Manchester Fire and Rescue Authorit...
EXPLANATORY FOREWORD BY THE TREASURER

1.   Introduction

     The Statement of Accounts is published to present fairly th...
3.   What the money was spent on:
     Salaries and Wages                                                                 ...
•   Partnership and Innovation: £1.110m
     •   Internal Communication improvements – Press monitoring & Intranet: £0.040...
The Government also determines the resources which it will pass to Local Authorities on a
      three year planning cycle....
11.   Financial Instruments

      The 2007 Statement of Recommended Practice (SORP) introduced a significant amount of
  ...
STATEMENT OF ACCOUNTING POLICIES

General Principles

The Statement of Accounts summarises the authority’s transactions fo...
Interest payable on borrowings and receivable on investments is accounted for in the year to
which it relates, on a basis ...
Charges for Lead District Support Services

The Chief Executive and the Executive Director - Business Support Services of ...
Government Grants and Contributions

Whether paid on account, by instalments or in arrears, government grants and third pa...
Pensions

Employees of the Authority are divided between two separate pension schemes. The Fire
Service Pension Scheme for...
•   gains/losses on settlements and curtailments – the result of actions to relieve the
        authority of liabilities o...
lower settlement than anticipated is made), the provision is reversed and credited back to the
relevant service revenue ac...
Increases in valuations are matched by credits to the Revaluation Reserve to recognise
unrealised gains. Exceptionally, ga...
•   Newly acquired assets with the exception of vehicles, plant and equipment are
       depreciated in the year following...
INCOME AND EXPENDITURE ACCOUNT

This income and expenditure account summarised the resources that have been applied and ge...
STATEMENT OF MOVEMENT ON THE GENERAL FUND BALANCE

         The Income and Expenditure Account shows the Authority’s finan...
At 31 March                                                            Note              At 31 March
      2007           ...
CASH FLOW STATEMENT
2006/07                                                             Note           2007/08
 £'m       ...
NOTES TO THE CORE FINANCIAL STATEMENTS

1.   Gains and Losses on Disposals of Fixed Assets

                              ...
4. Precept Income

    The precept received from the ten District Authorities of Greater Manchester includes adjustments
 ...
8. Officers’ Emoluments

    Set out below, in accordance with the Accounts and Audit Regulations 2003, are details of
   ...
Northwest Fire and Rescue Management Board

The Government issued a White Paper ‘Our Fire and Rescue Service’ during 2003/...
12. Audit Costs

    In 2007/08 the Authority incurred the following fees relating to external audit and inspections.

   ...
14. Fixed Assets

    Intangible Assets

    In 2006/07 the useful life of the Command and Control project was reassessed ...
The valuation of the new building at Ashton-Under-Lyne has been undertaken on a consistent
basis with other premises owned...
Information on assets held

    A physical analysis of the major fixed assets included on the balance sheet at 31 March 20...
cash flows that will take place over the remaining term of the instrument. For the Authority this
       specifically appl...
31 March 2007                                                                     31 March 2008
            £'m           ...
Fair Value

   Financial Liabilities and assets represented by loans and receivables are carried in the balance
   sheet a...
The purpose and operation of the provision are discussed in the following notes.

a) Insurance

In recent years, the Autho...
21. a. Capital Adjustment Account

    Movements within the Capital Adjustment Account are analysed below.

              ...
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
GREATER MANCHESTER FIRE AND RESCUE AUTHORITY
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GREATER MANCHESTER FIRE AND RESCUE AUTHORITY

  1. 1. GREATER MANCHESTER FIRE AND RESCUE AUTHORITY FINANCIAL STATEMENTS 2007/08 CONTENTS PAGE Introductory Statements Introduction to the Statement of Accounts by the Chairman 2 Explanatory Foreword by the Treasurer 3 Statement of Accounting Policies 8 Core Financial Statements Income and Expenditure Account 17 Statement of Movement on the General Fund Balance 18 Statement of Total Recognised Gains and Losses 18 Balance Sheet 19 Cash Flow Statement 20 Notes to the Core Financial Statements 21 Other Financial Statements Pension Fund Account 41 Notes to the Pension Fund Account 42 Governance and Audit Statement of Responsibilities for the Statement of Accounts 43 Annual Governance Statement 44 Audit Certificate and Opinion 62 Additional Information Glossary 65 Terms of Reference 68 1
  2. 2. Introduction to the Statement of Accounts Councillor Fred Walker, Chairman of Greater Manchester Fire and Rescue Authority I am pleased once again to comment on yet another successful financial year. The Accounts presented show an improvement in the financial position and this is the result of our commitment to the efficiency agenda, continuous improvement and value for money. Managing the finances of the Fire and Rescue Authority is a demanding and important activity because sound financial management is central to the success of any large organisation in that it provides stability. This stability means long term planning can take place with some confidence and investment be delivered in line with these plans. Sound financial management also helps to identify and free off resources and that maximises the opportunity to invest in new fire stations, technology and equipment. This investment in buildings and machines runs alongside the investment being made in our employees. It is critical to our success that firefighters are properly protected when tackling fires, hazardous substances and other life threatening emergency situations. The vision of the Greater Manchester Fire and Rescue Authority is to make Greater Manchester a safer place by being a modern community focused and influential Fire and Rescue Authority. It is about working in co-operation with local communities to identify and reduce risks from fires and other hazards and consulting and engaging with local communities in an inclusive and productive dialogue. At the same time there are the changes brought about by the modernisation of the fire and rescue service. These have required careful management and co-operation to implement. But the benefits of all this hard work are all too clear. The Service aims to reach fires where lives and property are at risk within seven minutes on at least 90% of occasions. When people are trapped in a road traffic collision the Service aims to reach them within eight minutes on 90% of occasions. The cost to the average band D council tax payer in 2007/08 was only £48 – less than a £1 per week. The Fire Service operates in a framework set by the Government. This means meeting the required efficiency targets and the national performance indicators. The Comprehensive Performance Assessment process and the Use of Resources element and Direction of Travel judgement are key independent measures of the Authority’s performance. And so it is pleasing to report that the auditors’ assessment of how well the Authority managed its finances under the Use of Resources continues to improve. The excellent scores achieved are independent testimony that across a range of financial criteria the Authority performs very strongly. The Accounts for 2007/08 show where the money has come from and what the money has been spent on and our accountability for the public funds provided to us by the taxpayers and government. We take our responsibilities for public funds very seriously and we make sure financial risks and implications are properly measured and fully considered before decisions are made. The Authority seeks to maintain enough revenue balances to ensure long term planning and stability and smooth out any year on year increases required from the taxpayers of Greater Manchester. As these Accounts help show these objectives have been achieved. Councillor Fred Walker 2
  3. 3. EXPLANATORY FOREWORD BY THE TREASURER 1. Introduction The Statement of Accounts is published to present fairly the financial position and transactions of the Authority. These accounts set out the financial results of the Authority’s activities for the year ended 31 March 2008 and have been prepared in accordance with the requirements of the Accounting Code of Practice published by the Chartered Institute of Public Finance and Accountancy (CIPFA). The purpose of the foreword is to offer interested parties an easily understandable guide to the most significant matters reported in the accounts. The inevitable use of technical language has been kept to a minimum. A glossary to help explain some of the technical terms can be found at the back of the publication. A Terms of Reference section has also been added to provide readers with information on various regulatory bodies/framework. The Authority's accounts for the year 2007/08 are set out on pages 8-61 and consist of:- • The Statement of Accounting Policies which explains the basis for the recognition, measurement and disclosure of transactions in the accounts. • The Income and Expenditure Account which summarises the Authority's revenue income and expenditure on all services during the financial year 2007/08. • The Statement of Movement on General Fund Balances which reconciles the Income and Expenditure Account with General Fund Balances. • The Statement of Total Recognised Gains and Losses which brings together all the recognised gains and losses of the Authority. • The Balance Sheet sets out the financial position of the Authority at 31 March 2008. • The Cash Flow Statement which summarises the total movement of cash and cash equivalents. • The Pension Fund Account which summarises the movements relating to the new firefighters’ pension scheme. • The Statement of Responsibilities for the Statement of Accounts which sets out the responsibilities of the Authority and the Treasurer for the accounts. • The Annual Governance Statement which reviews the effectiveness of the Authority’s system of Internal Control 2. Where the money came from: National Non Domestic Rates (Business Rate) 54% Precept Levied on the 10 Greater Manchester District Authorities 33% Government Grants 10% Rents, Charges, Interest Etc. 3% 3
  4. 4. 3. What the money was spent on: Salaries and Wages 70% Pensions - Employer Contributions 12% Running Expenses 12% Capital Financing Charges 6% The Authority receives Revenue Support Grant and an allocation of pooled National Non Domestic Rates directly from Central Government. It levies a precept on the ten Greater Manchester District Authorities for the balance of its expenditure requirements. The precept levied for 2007/08 was £37.508m which equated to a Council Tax Band D Equivalent of £48.00. 4. Comparison of Actual Expenditure in 2007/08 with the Budget. The main components of the 2007/08 budget and comparisons with actual income and expenditure are set out below. Original Actual Variation Budget Income and Expenditure £'m £'m £'m Budget Requirement 110.686 107.860 -2.826 External Financing -109.805 -109.805 - Surplus(-)/Deficit for the Year 0.881 -1.945 -2.826 General Fund Balances at 1 April 2007 -14.443 -17.113 -2.670 Surplus(-)/Deficit for the Year 0.881 -1.945 -2.826 General Fund Balances at 31 March 2008 -13.562 -19.058 -5.496 The Authority, by in year budget management has reduced the planned deficit from £0.881m to a surplus of £1.945m to give a net benefit to balances of £2.826m. This change is largely accounted for by service based changes due to lower than anticipated costs on: • budgeted numbers of ill health retirements £0.178m • pay costs, in part due to cessation of the Long Service Increments. £0.467m • delays in partnership initiatives £1.110m • minor increases in expenditure across all service heads £0.069m The Authority also benefited from additional interest earned on balances throughout the year of £0.259. An amount of £1.270m of the underspend has been earmarked to roll forward to fund initiatives in 2008/09, as follows: 4
  5. 5. • Partnership and Innovation: £1.110m • Internal Communication improvements – Press monitoring & Intranet: £0.040m • Consultancy fees: £0.120m 5. Capital Expenditure Capital expenditure and income was accrued in the accounts. In 2007/08 the Authority spent £8.101m on capital projects (£3.622m in 2006/07). Capital expenditure is analysed below. 2006/07 Project 2007/08 £’m £’m 1.933 Refurbishment, Adaptations and New Buildings 4.234 1.280 Operational, Communications and Computer Equipment 1.193 0.367 Vehicles: General Purpose Vehicles 0.137 0.042 Vehicles: Pumping and Special Appliances 2.537 3.622 Total Capital Expenditure 8.101 Capital expenditure has been incurred on the new fire station at Ashton under Lyne, which became operational during 2007/08. Expenditure has also been incurred on adaptations to buildings and ongoing refurbishments, including boiler replacements, which make buildings more efficient in the longer term. In view of the delays reported in 2006/07 we have accelerated spend in 2007/08 on operational vehicles. 6. Financing of Capital Expenditure The Authority has a rolling capital programme that is reviewed throughout the year. During recent years this programme has been financed mainly by borrowing from the internal resources of the Authority and by using Capital Reserve balances set aside for this purpose. The Supported Capital Expenditure (SCE) issued by Central Government did not increase in 2007/08 and remained at £3.703m. 7. Authority Balances and Reserves Balances at 1st April 2007 stood at £17.113m. The outturn would add £1.945m resulting in balances at 31 March 2008 of £19.058m. However currently £1.270m is earmarked for automatic carry forwards and £2.048m for the 2008/09 budget deficit leaving a remaining balance of £15.740m which in part is used to underpin the agreed three year Medium Term Financial Strategy. 8. Future Spending Plans The Authority has published a Medium Term Forecast for 2008/09 – 2010/11. This forecast sets out the overall shape of the Authority’s budget by establishing how available resources should be allocated to meet corporate objectives and provide the framework for the preparation of annual budgets. It is further developed to meet the corporate priorities of the Authority and to mitigate corporate risks identified in the Integrated Risk Management Plan (IRMP). 5
  6. 6. The Government also determines the resources which it will pass to Local Authorities on a three year planning cycle. Grant settlements for future years beyond 2008/09 have been provisionally set and the budget strategy has been aligned to best deliver the corporate objectives efficiently and within available resources. The Authority has traditionally operated with balances at or about 5% of net budget requirement for many years and this has proved to be appropriate in the light of the many challenges the Authority has faced. The intention is to release the higher level of balances in line with the medium term strategy to maintain the stability of precept levels and invest in one off capital projects with long term benefits. The Comprehensive Performance Assessment requires Fire and Rescue Authorities to make explicit the links between their spending plans, both revenue and capital, and their service delivery plans, which are underpinned by the IRMP. In addition under the Gershon efficiency review, the Authority needs to plan for business efficiencies and to report on how these have been achieved. Budgets are important in setting benchmarks and targets for the internal performance measurement framework, Best Value Performance Indicators and comparisons with other local authorities. In summary the Authority’s strategy remains to deliver low and affordable precept rises whilst seeking to deliver the aspirations contained within the IRMP for the benefit of the residents of Greater Manchester. This places greater emphasis on continuing to secure operational efficiencies inherent in the Integrated Risk Management approach. In addition, effective operational planning is now well aligned with the supporting financial framework, which is a strong requirement in the Audit Commission Use of Resources assessments and should ensure that the Authority’s strong position is maintained 9. Financial Reporting Standard 17 (FRS17) This financial reporting standard requires employers to report the full cost of pension benefits as they are earned, regardless of whether they have been paid for. The total liability is £925.7m. This is split between the Local Government Pension Scheme of £5.8m and the Fire Service Scheme of £919.9m. The Fire Service liability includes both the Firefighters’ Pension Scheme 1992 and the New Firefighters’ Scheme 2006. It should be noted that FRS17 does not impact upon the level of balances held by the Authority. 10. Pension Fund Account The Financial Statements now include a separate section for the Pension Fund Account in line with the Code of Practice on Local Authority Accounting 2007. Under the new pension funding arrangements each Authority in England is required by legislation to operate a Pension Fund and the amounts that must be paid into and out of the Fund are specified by regulation. 6
  7. 7. 11. Financial Instruments The 2007 Statement of Recommended Practice (SORP) introduced a significant amount of technical accounting guidance relating to Financial Instruments. A Financial Instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another, examples include trade payables, financial guarantees and bank deposits. Financial Instruments in so far as the Authority is concerned relate to loans receivable and borrowings. The Authority is required to disclose information that enables users of the financial statements to evaluate the nature and extent of any risks arising from Financial Instruments, for example credit risk, liquidity risk or market risk. Full details of the impact of these requirements can be seen in note 16 to the Accounts. 12. Other Matters The SORP introduced new arrangements for the Fire-fighters Pension Fund Account. In line with best practice and for comparison purposes the 2006/07 balance sheet figures have been amended to recognise this change. It should be noted that these figures are not material and do not impact on the bottom line. 13. Further Information The Statement of Accounts is intended to give electors, members, employees and other interested parties clear information about the Authority’s finances. I would welcome any constructive comments, which would help improve the information. To this end a questionnaire has been devised and included in the accounts. Further information about the Accounts is available from the Finance Division of the Business Support Services Department, Civic Centre, Millgate, Wigan. In addition, interested members of the public have a statutory right to inspect the accounts before the audit is completed. The availability of the Accounts for inspection is advertised in the local press throughout Greater Manchester. David J Smith MA PhD CPFA Treasurer to the Authority 25th June 2008 7
  8. 8. STATEMENT OF ACCOUNTING POLICIES General Principles The Statement of Accounts summarises the authority’s transactions for the 2007/08 financial year and its position at the year-end of 31 March 2008. It has been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom – A Statement of Recommended Practice 2007 (the SORP). The accounting convention adopted is historical cost, modified by the revaluation of certain categories of tangible fixed assets. The Statement of Accounts is prepared in accordance with the fundamental accounting principles relating to the qualitative characteristics of financial information as set out in the SORP; relevance, reliability, comparability, understandability and materiality. The accounts are also prepared in accordance with the three pervasive accounting concepts as defined by the SORP. Accruals The financial statements, other than cash flow information, are prepared on an accruals basis. The accruals basis of accounting requires the non-cash effects of transactions to be reflected in the financial statements for the accounting period in which those effects are experienced and not in the period in which any cash is received or paid. Going Concern The Statement of Accounts is prepared on a going concern basis, that is the accounts are prepared on the assumption that the authority will continue in operational existence for the foreseeable future. This means in particular that the income and expenditure accounts and balance sheet assume no intention to curtail significantly the scale of operation. Primacy of Legislative Requirements Local Authorities derive their powers from statute and their financial and accounting framework is closely controlled by primary and secondary legislation. To the extent that treatments are prescribed by law the accounting concepts outlined above may not apply in all cases. It is a fundamental principle of the CIPFA Code of Practice that, where specific legislative requirements and accounting principles conflict, legislative requirements shall apply. Accruals of Income and Expenditure The accounts of the Authority are maintained on an accruals basis in accordance with the CIPFA Code of Practice. Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular: • Fees, charges and rents due from customers are accounted for as income at the date the authority provides the relevant goods or services. • Supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption, they are carried as stocks on the balance sheet. • Works are charged as expenditure when they are completed, before which they are carried as works in progress on the balance sheet. 8
  9. 9. Interest payable on borrowings and receivable on investments is accounted for in the year to which it relates, on a basis that reflects the overall effect of the loan or investment. Where income and expenditure has been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the 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. Income and expenditure are credited and debited to the relevant service revenue account, unless they properly represent capital receipts or capital expenditure. Charges to Revenue for Fixed Assets Service revenue accounts, support services and trading accounts are debited with the following amounts to record the real cost of holding fixed assets during the year: • depreciation attributable to the assets used by the relevant service • impairment losses attributable to the clear consumption of economic benefits on tangible fixed assets used by the service and other losses where there are no accumulated gains in the Revaluation Reserve against which they can be written off • amortisation of intangible fixed assets attributable to the service. Redemption of Debt The Authority is not required to raise precept to cover depreciation, impairment losses or amortisations. However, it is required to make an annual provision from revenue to contribute towards the reduction in its overall borrowing requirement (equal to at least 4% of the underlying amount) measured by the adjusted Capital Financing Requirement. Depreciation, impairment losses and amortisations are therefore replaced by revenue provision in the Statement of Movement on the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account for the difference between the two. For the large proportion of assets, principally vehicles/equipment, voluntary additional contributions are made to ensure debt is repaid by the end of the expected life of the asset (3 to 15 years). Contingent Liabilities Contingent Liabilities are not accrued in the accounting statements. They are disclosed by way of the notes to the accounts if there is a possible obligation, which may require a payment or transfer of economic benefits. The Authority has no such liabilities. Cost of Support Services The Authority maintains an administrative centre at its Swinton Headquarters. In accordance with CIPFA Best Value Accounting Code of Practice 2007 (BVACOP), support services have been recharged across all service areas based upon net total cost. Any remaining balances are treated as trading and reported under the net cost of services. The cost of Corporate and Democratic and Non Distributed costs as defined by the BVACOP are allocated to separate objective expenditure heads and are not apportioned to other divisions of service. 9
  10. 10. Charges for Lead District Support Services The Chief Executive and the Executive Director - Business Support Services of Wigan Council are the Authority's Clerk and Treasurer respectively. Wigan Council provides support and expertise to the Authority in accordance with a Service Level Agreement. The services provided are as follows: • Computing Services (Restricted Services Only) • Internal Audit • Accounting and Other Financial Services • Property Related Services (Restricted Services Only) Legal Services are now provided within the Authority, however a small residual element is still undertaken by Wigan Council. Recharges for computer facilities are based on accepted practice in line with CIPFA guidelines. The remaining support service costs are based on staff time allocations and associated overheads. Deferred Charges Deferred charges represent expenditure that may be capitalised under statutory provisions but does not result in the creation of tangible assets. Deferred charges incurred during the year have been written off as expenditure to the relevant service revenue account. Where the authority has determined to meet the cost of the deferred charges from the existing capital resources or by borrowing, a transfer to the Capital Adjustment Account then reverses out the amounts charged in the Statement of Movement on the General Fund Balance so there is no impact on the level of precept. Discretionary Benefits The Authority also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme. Financial Assets Financial assets are classified into two types: • loans and receivables – assets that have fixed or determinable payments but are not quoted in an active market • available-for-sale assets that have a quoted market price and/or do not have fixed or determinable payments. Financial Liabilities Financial liabilities are initially measured at fair value and carried at their amortised cost. Annual charges to the Income and Expenditure Account for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. For most of the borrowings that the Authority has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable and interest charged to the Income and Expenditure Account is the amount payable for the year in the loan agreement. 10
  11. 11. Government Grants and Contributions Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as income at the date that the authority satisfies the conditions of entitlement to the grant / contribution, providing that there is reasonable assurance that the monies will be received and the expenditure for which the grant is given has been incurred. Revenue grants are matched in service revenue accounts with the service expenditure to which they relate. Grants to cover general expenditure (e.g. Revenue Support Grant) are credited to the foot of the Income and Expenditure Account after Net Operating Expenditure. Intangible Fixed Assets Expenditure on assets that do not have physical substance but are identifiable and controlled by the Authority (eg software licences) is capitalised when it will bring benefits for more that one financial year. The balance is amortised to the relevant service revenue account over the economic life of the investment to reflect the pattern of consumption of benefits. Investments Long-term investments are those which are not expected to be repaid until after 31 March 2009. They are shown in the Balance Sheet at cost less a provision for potential losses. Short-term investments are those which will be repaid on or before 31 March 2009 and are shown in the Balance Sheet at cost. Loans and Receivables Loans and receivables are initially measured at fair value and carried at their amortised cost. Annual credits to the Income and Expenditure Account for interest receivable are based on the carrying amount of the asset multiplied by the effective rate of interest for the instrument. For most of the loans that the Authority has made, this means that the amount presented in the Balance Sheet is the outstanding principal receivable and interest credited to the Income and Expenditure Account is the amount receivable for the year in the loan agreement. Where, the Authority has made loans at less than market rates (soft loans) a loss is recorded in the Income and Expenditure Account for the present value of the interest that will be foregone over the life of the instrument, resulting in a lower amortised cost than the outstanding principal. Interest is credited at a marginally higher effective rate of interest than the rate receivable from the lender, with the difference serving to increase the amortised cost of the loan in the Balance Sheet. Statutory provisions require that the impact of soft loans on the General Fund Balance is the interest receivable for the financial year. Reconciliation of amounts debited and credited to the Income and Expenditure Account to the net gain required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Statement of Movement on the General Fund Balance. Where assets are identified as impaired because of a likelihood arising from a past event that payments due under the contract will not be made, the asset is written down and a charge made to the Income and Expenditure Account. Any gains and losses that arise on the derecognition of the asset are credited/debited to the Income and Expenditure Account. 11
  12. 12. Pensions Employees of the Authority are divided between two separate pension schemes. The Fire Service Pension Scheme for its uniformed firefighters and the Local Government Pension Scheme for civilian staff. In accordance with proper practices the Authority has within its Statement of Accounts for 2007/08 adopted in full the Financial Reporting Standard (FRS)17. Both Pension schemes are classified as ‘defined benefit’ schemes under FRS17 and the accounting principles and their effect on the Financial Statements are explained below. The Fire Service Pension Scheme This is an unfunded scheme, which is administered by the Authority in accordance with DCLG regulations. For such schemes as there are no investment assets, the FRS17 requires recognition of the liability and pension reserve in the Balance Sheet and transactions in the Income and Expenditure Account for movements in the liability and reserve. The Local Government Pension Scheme The Local Government Scheme is accounted for as a defined benefits scheme: The liabilities of the Greater Manchester pension scheme attributable to the authority are included in the balance sheet on an actuarial basis using the projected unit method – ie an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc, and forecast of projected earnings for current employees. Liabilities are discounted to their value at current prices, using a discount rate of 3.2% (based on the indicative rate of return on a high quality corporate bond). The assets of the Greater Manchester pension fund attributable to the authority are included in the balance sheet at their fair value: • quoted securities – mid-market value • unquoted securities – professional estimate • unlisted securities – average of the bid and offer rates • property – market value. The change in the net pensions liability is analysed into seven components: • current service cost – the increase in liabilities as result of years of service earned this year allocated in the Income and Expenditure Account to the revenue accounts of services for which the employees worked • past service cost – the increase in liabilities arising from current year decisions whose effect relates to years of service earned in earlier years – debited to the Net Cost of Services in the Income and Expenditure Account as part of Non Distributed Costs • interest cost – the expected increase in the present value of liabilities during the year as they move one year closer to being paid – debited to Net Operating Expenditure in the Income and Expenditure Account • expected return on assets – the annual investment return on the fund assets attributable to the authority, based on an average of the expected long-term return – credited to Net Operating Expenditure in the Income and Expenditure Account 12
  13. 13. • gains/losses on settlements and curtailments – the result of actions to relieve the authority of liabilities or events that reduce the expected future service or accrual of benefits of employees – debited to the Net Cost of Services in the Income and Expenditure Account as part of Non Distributed Costs • actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions – debited to the Statement of Total Recognised Gains and Losses • contributions paid to the Tameside pension fund – cash paid as employer’s contributions to the pension fund. Statutory provisions limit the authority to raising Authority precept to cover the amounts payable by the Authority to the pension fund in the year. In the Statement of Movement on the General Fund Balance this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and any amounts payable to the fund but unpaid at the year-end. Private Finance Initiative (PFI) PFI contracts are agreements to receive services, where the responsibility for making available the fixed assets needed to provide the services passes to the PFI contractor. Payments made by the Authority under a contract are generally charged to revenue to reflect the value of services received in each financial year. The Authority has one project funded under the Private Finance Initiative – the provision of a fire station and borough command at Stretford. The contract began in December 1998. The PFI contract is for 25 years, with 16 years remaining, with all non-operational services being provided by PFF Stretford Limited, a special purpose company established for the scheme. The equity and debt funding is provided by Carden, Croft and Company Limited and the Bank of Scotland. In 1998/99 the Authority began to make payments under the contract. All costs will be charged to the Fire Service Revenue Account and the building will not be included within the value of fixed assets shown in the Authority’s Balance Sheet. During the life of the contract the Authority expects to make payments of an estimated £18.661m and receive Central Government subsidy of an estimated £12.402m. Provisions Provisions are made where an event has taken place that gives the Authority an obligation that probably requires settlement by a transfer of economic benefits, but where the timing of the transfer is uncertain. For instance, the Authority may be involved in a court case that could eventually result in the making of a settlement or the payment of compensation. Provisions are charged to the appropriate service revenue account in the year that the Authority becomes aware of the obligation, based on the best estimate of the likely settlement. When payments are eventually made, they are charged to the provision set up in the balance sheet. Estimated settlements are reviewed at the end of each financial year – where it becomes more likely than not that a transfer of economic benefits will not now be required (or a 13
  14. 14. lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service revenue account. Reserves The Authority sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating amounts in the Statement of Movement on the General Fund Balance. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service revenue account in that year to score against the Net Cost of Services in the Income and Expenditure Account. The reserve is then appropriated back into the General Fund Balance statement so that there is no net charge against Authority precept for the expenditure. Certain reserves are kept to manage the accounting processes for tangible fixed assets and retirement benefits and they do not represent usable resources for the Authority. Stocks and Work in Progress Stocks are included in the balance sheet at average cost. This is the method adopted by the Corporate Financial System. Work In progress is subject to an interim valuation at the year-end and recorded in the balance sheet at cost plus any profit reasonably attributable to the works. Tangible Fixed Assets Tangible fixed assets are assets that have physical substance and are held for us in the provision of services or for administrative purposes on a continuing basis. Recognition: expenditure on the acquisition, creation or enhancement of tangible fixed assets is capitalised on an accruals basis, provided that it yields benefits to the Authority and the services that it provides for more that one financial year. A deminimis level of £5,000 is in place for the capitalisation of expenditure for repairs. Expenditure that secures but does not extend the previously assessed standards of performance of asset (eg repairs and maintenance) is charged to revenue as it is incurred. A rolling programme of revaluation of fixed assets is contained within the Authority’s Asset Management Plan. This rolling programme caters for the re-valuation of all fixed assets and is carried out over 5 years. The valuation of properties is undertaken by Matthews and Goodman Property advisors, 196 Deansgate, Manchester. The latest valuation was certified as at 7 December 2006. The basis for the valuation of fixed assets is given below: Land and buildings are valued at least once every five years in accordance with the five-year rolling programme Operational land and buildings are valued at open market value for existing use, or where no market exists at depreciated replacement cost. Land and properties valued at open market value have not been depreciated but other properties are shown net of depreciation. The fire station and divisional headquarters constructed at Stretford under PFI arrangements are off- balance sheet. Non-operational land and buildings are valued at market value for existing or alternative use as appropriate. Vehicles, plant, furniture and equipment are valued at historic cost less depreciation. Non- operational work in progress is not depreciated. 14
  15. 15. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Income and Expenditure Account where they arise from the reversal of an impairment loss previously charged to a service revenue account. The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account. Impairment: the values of each category of assets and material individual assets that are not being depreciated, are reviewed at the end of each financial year for evidence of reductions in value. Where impairment is identified as part of this review, or as a result of a valuation exercise, this is accounted for by: • where attributable to the clear consumption of economic benefits – the loss is charged to the relevant service revenue account. • otherwise – written off against any revaluation gains attributable to the relevant asset in the Revaluation Reserve, with any excess charged to the relevant service revenue account. Where an impairment loss due to the consumption of economic benefits is charged directly to the Income and Expenditure Account but there were accumulated revaluation gains in the Revaluation Reserve for that asset, an amount up to the value of the loss is transferred from the Revaluation Reserve to the Capital Adjustment Account. Disposals: when an asset is disposed of or decommissioned, the value of the asset in the Balance Sheet is written off to the Income and Expenditure Account as part of the gain or loss on disposal. Receipts from disposals are credited to the Income and Expenditure Account as part of the gain or loss on disposal (ie netted off against the carrying value of the asset at the time of disposal). Any revaluation gains in the Revaluation Reserve are transferred to the Capital Adjustment Account. Amounts in excess of £10,000 are categorised as capital receipts. The capital receipts are required to be credited to the Usable Capital Receipts Reserve, and can then only be used for new capital investment or set aside to reduce the authority’s underlying need to borrow (the Capital Financing Requirement). Receipts are appropriated to the Reserve from the statement of Movement on the General Fund Balance. The written-off value of disposals is not a charge against Authority precept, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the statement of Movement on the General Fund Balance. Depreciation: depreciation is provided for on all assets with a determinable finite life (except for investment properties), by allocating the value of the asset in the Balance Sheet over the periods expected to benefit from their use according to the following policy: 15
  16. 16. • Newly acquired assets with the exception of vehicles, plant and equipment are depreciated in the year following acquisition and assets under construction are not depreciated until they are used. • Newly acquired vehicles, plant and equipment are depreciated in the year of acquisition on a pro-rata basis. Depreciation is calculated on the following bases: • Land – not depreciated • buildings – straight line allocation - 40 – 75 years • furniture and equipment – straight line allocation over a period of between 3 and 10 years • vehicles and IT equipment – straight line allocation over a period between 3 – 15 years The depreciation policies have been reviewed and updated to reflect current practices. There is no financial impact. Where an asset has major components with different estimated useful lives, these are depreciated separately. Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account. VAT Income and expenditure excludes any amounts related to VAT, as all VAT is payable to HM Revenue & Customs and all VAT paid is recoverable from it 16
  17. 17. INCOME AND EXPENDITURE ACCOUNT This income and expenditure account summarised the resources that have been applied and generated in providing services and managing the Authority during the last year. It includes all the day-to-day expenses and related income on accruals basis, as well as transactions measuring the value of fixed assets actually consumed and the real projected value of retirement benefits earned by employees during the year. 2006/07 Note 2007/08 2007/08 2007/08 Net Gross Income Net Expenditure Expenditure Expenditure £'m £'m £'m £'m 16.148 Community Safety 18.094 2.188 15.906 94.779 Fire Fighting and Rescue Operations 95.249 0.942 94.307 0.323 Fire Service Emergency Planning and Civil 0.407 0.028 0.379 Defence 0.626 Corporate and Democratic Core 0.638 - 0.638 0.740 Non Distributed Cost 0.029 - 0.029 112.616 Net Cost of Services 114.417 3.158 111.259 0.121 Loss on disposal of fixed assets 1 0.437 Surpluses(-)/Deficits on trading undertakings not 0.055 2 - included under net cost of services -0.671 Interest and Investment Income 3 -0.694 1.331 Interest payable and similar charges 1.138 Pension Interest Cost and Expected Return on 53.960 26 56.520 Pension Assets 167.412 Net Operating Expenditure 168.660 Financed By -36.104 Precept Income 4 -37.785 -58.745 Non Domestic Rates -61.670 -11.340 Revenue Support Grant -10.350 61.223 Deficit for the Year 58.855 I certify that the Income and Expenditure Account presents fairly the financial position of Greater Manchester Fire and Rescue Authority at 31 March 2008. David J Smith MA PhD CPFA Treasurer to the Authority 25th June 2008 17
  18. 18. STATEMENT OF MOVEMENT ON THE GENERAL FUND BALANCE The Income and Expenditure Account shows the Authority’s financial performance for the year, measured in terms of the resources consumed and generated over the last twelve months. However, the Authority is required to raise precept on a different accounting basis, the main difference being: • Capital investment is accounted for as it is financed, rather than when assets are consumed • Retirement benefits are charged as amounts become payable to pension funds and pensioners rather than as future benefits are earned. The General Fund Balance compares the Authority’s spending against the Precept it raised for the year, taking into account the use of reserves built up in the past and contributions to reserves earmarked for future expenditure. The statement summarises the difference between the outturn on the Income and Expenditure Account and General Fund Balances. 2006/07 Note 2007/08 £'m £'m 61.223 Deficit for the year on the Income and Expenditure Account 58.855 Net Additional amount required by statute and non-statutory proper practices -62.332 13 -60.800 to be debited or credited to the General Fund Balance for the year -1.109 Increase in the General Fund Balance -1.945 -16.004 General Fund Balance Brought Forward -17.113 -17.113 General Fund Balance Carried Forward -19.058 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES This statement brings together all the gains and losses of the Authority for the year and shows the aggregate increase in its net worth. In addition to the surplus generated on the Income and Expenditure Account, it includes gains and losses relating to the revaluation of fixed assets and re-measurement of the net liability to cover the cost of retirement benefits. 2006/07 Note 2007/08 £'m £'m 61.223 Surplus or deficit on the Income and Expenditure Account for the year 58.855 -1.138 Surplus or deficit arising on the revaluation of fixed assets -1.503 -117.210 Actuarial gains and losses on pension fund assets and liabilities 26 -193.050 - Other gains and losses - -57.125 Total recognised gain for the year -135.698 BALANCE SHEET AT 31 MARCH 2008 18
  19. 19. At 31 March Note At 31 March 2007 2008 £’m £'m £'m Fixed Assets 3.420 Intangible Fixed Assets 14 2.716 Tangible Fixed Assets Operational Assets 48.954 Other Land and Buildings 52.739 9.170 Vehicles, Plant and Equipment 10.735 0.665 Non Operational Assets 0.075 14 63.549 62.209 Total Fixed Assets 66.265 - Long-Term Debtors 0.113 62.209 TOTAL LONG TERM ASSETS 66.378 Current Assets 0.558 Stocks & Work in Progress 0.570 1.469 Debtors & Payments in Advance 15 1.414 7.879 Investments 16 6.594 0.759 Amount due from Pension Fund 15 - 10.665 8.578 Current Liabilities 3.165 Cash Overdrawn 0.442 0.288 Short Term Borrowing 17 0.311 4.414 Creditors 18 5.936 - Amount due to Pension Fund 18 0.584 7.867 7.273 65.007 TOTAL ASSETS LESS CURRENT LIABILITIES 67.683 14.088 Long Term Borrowing 19 13.851 1,058.955 Liability related to defined benefit pension scheme 26 925.758 2.092 Provisions 20 2.504 1,075.135 942.113 -1,010.128 TOTAL ASSETS LESS LIABILITIES -874.430 Financed By 0.638 Usable Capital Receipts Reserve 22 - -1,058.955 Pension Reserve 26 -925.758 - Revaluation Reserve 21b 1.472 23.148 Capital Adjustment Account 21a 24.144 7.928 Earmarked Reserves 23 6.654 17.113 General Fund Balances 19.058 -1,010.128 TOTAL NET WORTH -874.430 I certify that the Balance Sheet and related accounts present fairly the financial position of Greater Manchester Fire and Rescue Authority at 31 March 2008. David J Smith MA PhD CPFA Treasurer to the Authority 25th June 2008 19
  20. 20. CASH FLOW STATEMENT 2006/07 Note 2007/08 £'m £'m £'m REVENUE ACTIVITIES Cash Outflows 108.046 Cash Paid to and on Behalf of Employees 109.630 15.084 Other Operating Cash Payments 12.491 123.130 122.121 Cash Inflows -36.104 Precepts Received -37.785 -58.745 National Non Domestic Rate Receipts from National Pool -61.670 -11.340 Revenue Support Grant 31 -10.350 -10.323 Other Government Grants 31 -12.546 -2.970 Cash Received for Goods and Services -2.265 -6.412 Pensions -6.391 -125.894 -131.007 -2.764 Net Cash Inflow from Revenue Activities 27 -8.886 SERVICING OF FINANCE Cash Outflows 1.144 Interest Paid 1.061 Cash Inflows -0.567 Interest Received -0.600 0.577 0.461 CAPITAL ACTIVITIES Cash Outflows 2.649 Purchase of Fixed Assets 6.906 -0.004 Deferred Charges 0.113 Cash Inflows -0.058 Sale of Fixed Assets -0.230 2.587 6.789 0.400 Net Cash Outflow Before Financing -1.636 MANAGEMENT OF LIQUID RESOURCES -0.471 Net decrease in short term deposits 30 -1.378 FINANCING Cash Outflows 0.289 Net Repayments of Amounts Borrowed - long term loans 0.315 1.980 Net Repayments of Amounts Borrowed - short term loans -0.024 Cash Inflows - New Loans Raised - 2.269 Net Cash Inflow/Outflow from Financing 28 0.291 2.198 Net Decrease/Increase (-) in Cash 29 -2.723 20
  21. 21. NOTES TO THE CORE FINANCIAL STATEMENTS 1. Gains and Losses on Disposals of Fixed Assets NBV Receipts Loss on disposal £’m £’m £’m Vehicles sold 0.038 0 0.038 Other Assets Disposed 0.629 -0.230 0.399 Loss on disposal of fixed assets 0.667 -0.230 0.437 A significant sum within the loss reported above relates to the disposal of the station site at Ashton. This asset has now been written out of the accounts in line with the SORP. 2. Trading operations Holding Account Balances The Authority operates support services which can, under the Best Value Accounting Code of Practice, be classified as trading activities. The net cost of these activities is allocated in line with recommended practice across the services on the face of the Income and Expenditure Account. The activities included under central support services are : Finance, Information Technology, Personnel, Facilities Management and Catering. Contained within these activities is income of £0.338m which is not recorded on the face of the Income and Expenditure Account as income but is contained within the support services allocated under expenditure in line with recommended practice. The balance of income in the table is recharge income from the allocation of support to service heads. The Authority also holds the costs and recovery of income relating to seconded officers under support services. This is shown separately in the table below. Surplus/Deficit on Trading Accounts Expenditure Income Surplus(-)/Deficit £’m £’m £’m Central Support 20.421 -20.418 0.003 Secondments 0.860 -0.863 -0.003 Total 21.281 -21.281 0 3. Interest and Investment Income This represents the amount of interest earned on the authority’s revenue balances for 2007/08. During 2007/08 the Authority received a payment from the Bank of Credit and Commerce International (BCCI) of £0.051m (nil in 2006/07). 21
  22. 22. 4. Precept Income The precept received from the ten District Authorities of Greater Manchester includes adjustments of £0.277m in respect of previous years. 5. Provision for the Repayment of External Loans The transactions which have taken place are as follows: 2006/07 Transaction 2007/08 £’m £’m 2.216 MRP and Voluntary Contribution 2.211 -2.935 Amount Charged as Depreciation -3.246 -0.719 -1.035 0.270 Principal Repayments of Transferred Debt 0.291 -0.449 Balance to Income and Expenditure Account -0.744 The Minimum Revenue Provision (MRP) is the statutory amount which must be set aside from revenue for the repayment of external loans. In addition the Authority made a voluntary revenue contribution. This voluntary payment recognises the shorter life of a large proportion of assets, namely vehicles and plant, which would become obsolete before the full revenue provision for debt repayment had been made. The MRP for 2007/08 was £1.282m (£1.222m in 2006/07). In addition the Authority made a voluntary revenue contribution of £0.929m (£0.994m in 2006/07). 6. Publicity Expenditure Set out below, in accordance with S.5(1) of the Local Government Act 1986 and the Local Authorities (Publicity Account) (Exemption) Order 1987, is the Authority's spending on publicity. 2006/07 2007/08 £'m £'m 0.045 Recruitment Advertising 0.035 0.377 Other Publicity 0.431 0.422 Total 0.466 7. Members’ Allowances The total paid to Members in respect of basic, special responsibility, travel and subsistence allowances is set out below. 2006/07 2007/08 £'m £'m 0.226 Members’ Allowances 0.244 22
  23. 23. 8. Officers’ Emoluments Set out below, in accordance with the Accounts and Audit Regulations 2003, are details of Officers’ emoluments. Number of Employees Remuneration Band Number of Employees 2006/07 2007/08 39 £50,000 - £59,999 47 7 £60,000 - £69,999 12 1 £70,000 - £79,999 3 - £80,000 - £89,999 1 2 £90,000 - £99,999 3 - £100,000 - £109,999 - 3 £110,000 - £119,999 - 1 £120,000 - £129,999 2 - £130,000 - £139,999 2 - £140,000 - £149,999 - - £150,000 - £159,999 - 1 £160,000 - £169,999 1 54 Total 71 9. Agency Arrangements Payments are made to Wigan Council under the Lead Authority arrangements for the provision of financial and administrative services to the value of £0.312m (£0.303m in 2006/07). 10. Income for the Supply of Goods and Services under the Local Authorities (Goods and Services) Act 1970 As Lead Authority for the Greater Manchester Fire and Rescue Authority (GMFRA), Wigan Council charged £0.135m (£0.132m in 2006/07) for the provision of legal, computer and construction related services in the 2007/08 financial year. 11. Related Party Transactions The related parties of the Authority have been identified as its Members and Chief Officers and their close relatives, Central Government, the ten Greater Manchester District Authorities and other Authorities administering pensions on behalf of the Authority. A process has been established to identify related party transactions. This process includes an examination of the Register of Members’ Disclosures, an annual circulation to all Members and Chief Officers, reference to relevant minutes of Committee Meetings and the Authority’s Financial Accounts. No related party transactions have been disclosed for the 2007/08 financial year. Information relating to Members’ Allowances is disclosed in the notes. The Authority receives grants from Central Government and precepts from the Greater Manchester District Authorities. These transactions are disclosed within the Income and Expenditure Account and the Cash Flow Statement and related notes. 23
  24. 24. Northwest Fire and Rescue Management Board The Government issued a White Paper ‘Our Fire and Rescue Service’ during 2003/04.This required Fire Authorities (FRAs) to establish before 1st April 2004 Regional Management Boards (RMBs), the intention being to increase efficiency and effectiveness for all Fire Authorities by delivering shared services and reducing duplication of effort. In particular, RMBs are expected to deliver: • Resilience to Emergencies - especially potential chemical, biological, radiological or nuclear attack • Specialist or Common Services where appropriate - Fire Investigation, Procurement, Training, Personnel Management and Human Resources Management. The five Fire Authorities in the North West (Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside) formed a joint committee (the North West Fire and Rescue Management Board) in February 2004. The Committee is comprised of Councillors from the five constituent Authorities. The region has conducted significant work in 2007/08 by working collaboratively. Significant work has taken place in support of the national Fire Control Project. This project is sponsored by the Department of Communities and Local Government and is a national project replacing 42 Control Rooms across England which will provide an integrated and modern network of nine Regional Control Centres (RCCs). They will be able to receive calls and mobilise resources across the country. The North West Regional Control Centre will be located at Warrington, Cheshire. Funding to support this project at a regional level has been provided to the North West Fire and Rescue Management Board in the form of New Burdens grants from Department of Communities and Local Government. A full set of the Regional Management Board accounts are available from Ged Murphy, Treasurer to the Board, Greater Manchester Fire and Rescue Authority, 146 Bolton Road, Swinton, Manchester, M27 8US: Tel 0161 608 4001. Local Authority Controlled Company North West Fire Control Company has been established to operate the new regional control facility which takes over responsibility for the Fire and Rescue Service mobilisation for Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside in 2010. The company comprises 5 members, namely each of the constituent FRAs and 10 Directors, 2 from each of the constituent FRAs. The company is limited by guarantee and the liability of the Authority is limited. The Authority is one of 5 members of the company and has the right to appoint 2 of the 10 directors. The Authority has a relationship with the North West Fire Control Company. In line with accounting requirements it has been assessed that Group Accounts are likely to be required. The Company will not undertake any regional control function until the constituent Fire and Rescue Authorities agree that it should commence such a function. The Company has not incurred any expenditure and is dormant and therefore no group accounts are required for 2007/08. Tameside MBC administers debt transferred from the former Greater Manchester Council and the Authority makes annual repayments of principal together with interest and debt management expenses. In 2007/08 the total payment was £0.813m (£0.821m in 2006/07). 24
  25. 25. 12. Audit Costs In 2007/08 the Authority incurred the following fees relating to external audit and inspections. 2006/07 2007/08 £'m £'m 0.072 Fees payable to the Audit Commission with regard to external audit 0.086 services carried out by the appointed auditor - Fees payable to the Audit Commission in respect of statutory inspection - - Fees payable in respect of other services provided by the appointed - auditor 0.072 Total 0.086 13. Note of reconciling items for the Statement of Movement on the General Fund Balance 2006/07 2007/08 £'m £'m -0.766 Amortisation of intangible fixed assets -0.838 -2.171 Depreciation and impairment of fixed assets -3.173 -0.217 Write downs of deferred charges to be financed from capital resources -0.183 -0.121 Net loss on sale of fixed assets -0.437 -92.377 Net charges made for retirement benefits in accordance with FRS17 -91.590 Amounts included in the Income and Expenditure Account but required -95.652 by statute to be excluded when determining the Movement on the -96.221 General Fund Balance for the year 1.491 Minimum revenue provision for capital financing 1.573 -0.281 Capital Expenditure charged in the year to the General Fund Balance 2.457 Employer’s contributions payable to the Pension Fund and Retirement benefits 30.436 31.736 payable direct to pensioners Amounts not included in the Income and Expenditure Account but 31.646 required to be included by statute when determining the Movement on 35.766 the General Fund Balance for the year 0.994 Voluntary revenue provision for repayment of debt 0.929 0.680 Net transfer to or from earmarked reserves -1.274 Transfers to or from the General Fund Balance that are required to be 1.674 taken into account when determining the movement on the General -0.345 Fund Balance for the year Net Additional amount required to be credited to the General Fund -62.332 -60.800 balance for the year 25
  26. 26. 14. Fixed Assets Intangible Assets In 2006/07 the useful life of the Command and Control project was reassessed in view of the National Fire Regional Control project. Further expenditure has been incurred during the year on the implementation of the Rostering system. Expenditure on the procurement of the Performance Management system in 2007/08 has been identified as an intangible asset. £’m Valuation as at 31st March 2007 4.185 Less accumulated depreciation -0.765 Net book value as at 31st March 2007 3.420 Expenditure in year 0.134 Depreciation charge for the year -0.838 Net Book Value of fixed assets as at 31st March 2008 2.716 a) The Balance Sheet value of fixed assets represents their gross current value less accumulated depreciation. b) An analysis of fixed assets and capital expenditure during the year is shown below. Analysis of Fixed Assets and Capital Expenditure for 2007/08 Operational Assets Non Operational Assets Vehicles, Vehicles, Total Land and Land and Plant, and Plant and Buildings Buildings Equipment Equipment £’m £’m £’m £’m £’m Certified valuation as at 31st March 2007 51.414 24.494 0.665 - 76.573 Less accumulated depreciation -2.460 -15.324 - - -17.784 Net book value of fixed assets 48.954 9.170 0.665 0 58.789 At 31st March 2007 Movement in Expenditure 2007/08 2.126 3.174 1.825 - 7.125 Transfers between Non-Operational 2.415 - -2.415 - 0 and Operational Disposal of assets -0.629 -0.038 - - -0.667 Revaluation of assets 0.996 - - - 0.996 Impairment -0.762 - -0.762 Write out depreciation on revaluation 0.476 - - - 0.476 Depreciation charge for the year -0.837 -1.571 - - -2.408 Net book value of fixed assets as at 52.739 10.735 0.075 0 63.549 31st March 2008 The movement in expenditure of £7.125m does not include an amount of £0.305m (£0.282m in 2006/07),in respect of furniture and equipment and redecoration of premises which was financed from capital resources but was below the Authority’s de-minimis level and therefore has been charged to the Income and Expenditure Account in line with the SORP. This is offset by a transfer from the capital adjustment account. 26
  27. 27. The valuation of the new building at Ashton-Under-Lyne has been undertaken on a consistent basis with other premises owned by the Authority by our valuers, Matthews and Goodman. The valuation is on a depreciated replacement cost basis and excludes items of plant and machinery used in production. The existing station site at Ashton has been disposed of during the year and the loss on disposal charged to the Income and Expenditure Account. Commitments under capital contracts The Authority has approved a Capital Programme for 2008/09 of £6.430m which includes contractually committed expenditure as at 31 March 2008 of £1.356m on capital projects (£2.676m at 31 March 2007). The committed projects are identified below. 2006/07 2007/08 £'m Projects £'m 1.576 Ashton Fire Station 0 1.100 Operational Appliances 1.356 2.676 Total Committed Projects 1.356 Capital Expenditure and Financing in year Capital expenditure and arrangements made to finance this outlay are as follows: 2006/07 2007/08 2007/08 £'m £’m £'m Expenditure - Intangible Fixed Assets 0.134 Tangible Fixed Assets:- 1.439 Land and Buildings 4.234 1.689 Vehicles and Equipment 2.996 0.494 Home Fire Risk Check Initiative (HFRCI) 0.737 7.967 3.622 8.101 Financing - Contribution from Capital Reserve -2.591 Surplus from previous year -0.385 - 0.276 Capital Grants -0.554 0.028 Capital Receipts -0.868 3.703 Support Capital Expenditure -3.703 -8.101 -0.385 Surplus (-)/Deficit in Capital Finance 0 27
  28. 28. Information on assets held A physical analysis of the major fixed assets included on the balance sheet at 31 March 2008 is shown below: Further Analysis of the Most Significant Fixed Assets on the Balance Sheet At 31 March 2007 At 31 March 2008 (Numbers) (Numbers) 40 Operational Fire Stations and Borough Command Premises 40 1 Fire Service Headquarters 1 2 Training Centres – Manchester and Leigh Driving School 2 1 Technical Services Centre 1 30 Houses and Flats 30 295 Vehicles 313 52 Computer Systems and Peripherals 62 15. Debtors and Payments in Advance Debtors and Payments in Advance are analysed below. 31 March 2007 31 March 2008 £'m £'m 0.209 Sundry Debtors 0.769 0.387 VAT 0.176 - Government Grants 0.172 0.093 Chief Fire Officers Association 0.083 0.037 DCLG 0.025 0.388 Pension Transfer Values - 0.104 Interest - 0.251 Other Miscellaneous Debtors 0.189 1.469 Total Debtors 1.414 New accounting treatment for the Firefighters Pension Fund has required the reclassification of the amount due from the Pension Fund. This was included under debtors in 2006/07 but is now shown on a separate line on the face of the Balance Sheet. 16. Financial Instruments A full assessment of the new requirements has been undertaken and the only items that fall under the new requirements are Public Works Loans Board (PWLB) loans, transferred debt and the Cycle to Work scheme. PWLB loans have been treated in line with the requirements as set out in the SORP (see note 19). Previously the SORP required authorities to show accrued interest on borrowing within the current liabilities section of the balance sheet. Authorities now need to show the accrued interest as part of the carrying value of the loan. The accrued amounts added to the PWLB loans is £0.077m. Financial Liabilities and assets represented by loans and receivables are carried in the balance sheet at amortised cost. Their fair value can be assessed by calculating the present value of the 28
  29. 29. cash flows that will take place over the remaining term of the instrument. For the Authority this specifically applies to PWLB loans. The Fair value has been calculated at £8.586m by Sector, however it should be noted that alternative fair values can be calculated if an early repayment basis is adopted. If this basis was used the fair value would be £8.710m as calculated by PWLB. Transferred debt is classed as a statutory provision and therefore is not covered within the definition of financial instruments. The Cycle to Work scheme has been subjected to the criteria but it has been determined that the scheme is an employee benefit scheme and as such is outside the scope of financial instruments. In terms of risk, the only element would be interest rate movements on the Authority’s borrowings and investments. For instance, a rise in interest rates would have the following effects: • borrowings at variable rates - the interest expense charged to the Income and Expenditure Account will rise • borrowings at fixed rates - the fair value of the liabilities borrowings will fall • investments at variable rates - the interest income credited to the Income and Expenditure Account will rise • investments at fixed rates - the fair value of the assets will fall. As PWLB loans are the only significant items and these are calculated on a fixed rate basis, then minimal risk is attached to the Authority. 16a. Investments During the year the Authority invested its General Fund balances, reserves, and capital receipts in short term deposits. At 31 March 2008 an amount of £6.500m was invested (£7.879m in 2006/07). Previously, the SORP required authorities to show accrued interest on short term investments within the current assets section of the balance sheet. This presentation was based on the optional treatment allowed under FRS 4. The 2007 SORP incorporated the requirements of FRS 25, FRS 26 and FRS 29. Under these standards, the optional treatment allowed under FRS 4 is no longer permitted. Authorities will therefore show the accrued interest associated as part of the carrying value of the investment, £0.094m for 2007/08. Sector have calculated the fair value of the investments at £6.597m. 17. Short Term Borrowing This item relates to that part of the outstanding debt transferred from the former Greater Manchester County (GMC) on its abolition in 1986, that is repayable within 12 months of the Balance Sheet date. Tameside Metropolitan Borough Council administers this debt. The balance of the debt is shown in the Balance Sheet as long-term borrowing. 18. Creditors Creditors are analysed below. 29
  30. 30. 31 March 2007 31 March 2008 £'m £'m 1.759 Inland Revenue 1.794 0.478 Capital Creditors 1.107 0.130 Sundry Creditors 0.457 0.288 Government Grants 0.727 0.066 Car Allowances 0.068 0.028 Cheshire Fire and Rescue Payroll 0.038 1.665 Other Creditors 1.745 4.414 Total Creditors 5.936 New accounting treatment for the Firefighters Pension Fund has required the reclassification of the amount due to the Pension Fund. This was included under creditors in 2006/07 but is now shown on a separate line on the face of the Balance Sheet. 19. Long-Term Borrowing In the past the Authority has borrowed externally to finance the major part of its capital spending. More recently it has borrowed internally from revenue resources for this purpose. External long-term borrowing is analysed by maturity date below: Analysis of Long-Term Debt Maturity in Years Total Source 1 to 2 2 to 5 5 to 10 Over 10 £'m £'m £'m £'m £'m Public Works Loan Board (PWLB) - 2.298 4.000 0.700 6.998 Debt Transferred from former GMC 0.334 1.150 2.534 2.758 6.776 Total 0.334 3.448 6.534 3.458 13.774 Accrued Interest Previously the SORP required authorities to show accrued interest on borrowing within the current liabilities section of the balance sheet. This presentation was based on the optional treatment allowed under FRS 4. The 2007 SORP incorporated the requirements of FRS 25, 26 and 29. Under these standards, the optional treatment allowed under FRS 4 is no longer permitted. Authorities now need to show the accrued interest as part of the carrying value of the loan. The accrued amount added to the PWLB loans is £0.077m. This is not included in the table above. This will be received in 2008/09. It is included on the face of the balance sheet. 30
  31. 31. Fair Value Financial Liabilities and assets represented by loans and receivables are carried in the balance sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instrument. For the Authority this specifically applies to PWLB loans. Sector is a leading Treasury Management and Capital Financing Advisor to the UK Public Service Organisations. They have calculated the fair value at £8.586m by using the new borrowing rate, as opposed to the premature repayment rate as the discount factor for all PWLB borrowing. This is because the premature repayment rate includes a margin which represents the lender’s profit as a result of rescheduling the loan, which is not included in the fair value calculation since any motivation other than securing a fair price should be ignored. However it should be noted that alternative fair values can be calculated if an early repayment basis is adopted. If this basis was used the fair value would be £8.710m. as calculated by PWLB. Transferred Debt Tameside Metropolitan Borough Council administers debt transferred to the Authority from the former Greater Manchester County (GMC). This transferred debt is a statutory provision and is therefore not covered within the definition of Financial Instruments. Debt repayable within 12 months of the Balance Sheet date is classified as short term borrowing. 20. Provisions Movements within the Authority’s provisions during 2007/08 and the balances at the start and end of the year are shown below. Balance at Increase Decrease Balance at Description 1 April In In 31 March 2007 Year Year 2008 £’m £’m £’m £’m CPD Scheme 0 1.190 - 1.190 Insurance Provision 1.782 1.246 1.714 1.314 Pre-CPD Transitional 0.310 - 0.310 - Arrangements Total 2.092 2.436 2.024 2.504 31
  32. 32. The purpose and operation of the provision are discussed in the following notes. a) Insurance In recent years, the Authority has carried excess clauses within its legal liability and vehicle insurance policies. Since claims may not be settled for some time after they arise, an Insurance Provision was established to meet the cost of such claims. An annual revenue contribution is made to the provision and claims settlements are charged to the provision. In compliance with FRS12 the provision has been reduced to the amount required to meet all known liabilities assessed on an actuarial basis. The surplus above the sum required to meet the scheme liabilities of £0.567m has been transferred to the Insurance Reserve. The Authority is not aware of any material unfunded risks other than any possible liability resulting from unpaid claims against its former insurer Municipal Mutual Insurance Limited (MMI). b) Municipal Mutual Insurance Limited (MMI) MMI are no longer trading as an insurance company but they continue to meet claims liabilities in full from remaining resources. A Scheme of Arrangement with major creditors has been agreed and became effective , but held in reserve , on the 21st January 1994.The main effect of the Scheme if triggered would be the imposition of a levy on all claims paid since 30th September 1993. As at the 31st March 2007 the unpaid claims submitted by the Authority were estimated by MMI to be valued at £2,000 and the amount liable to the levy if the Scheme is triggered is £1.159m. c) Pre-CPD Payment Provision for the payment to those in receipt of long service increment under the transitional arrangements relating to the Continual Professional Development Scheme. This provision has been fully utilised during 2007/08. An estimated provision was also made in 2006/07 relating to outstanding pay related payments and this item has now been written back to revenue. d) CPD payment The National negotiations around CPD payments have been resolved and payments are scheduled to be made in July 2008. At the time of producing the accounts the number of employees eligible to receive a payment had not been quantified therefore a provision was created to recognise the potential liability. 32
  33. 33. 21. a. Capital Adjustment Account Movements within the Capital Adjustment Account are analysed below. £’m Balance at 1 April 2007 0 Transfer of FARA/CFA balance -23.178 Repayment of external loans -0.290 Financing of fixed assets 1.219 De minimis 0.305 NBV of Disposals 0.667 Capital Expenditure financed from Revenue -2.761 Impairment 0.762 Usable capital receipts applied -0.868 Balance at 31 March 2008 -24.144 b. Revaluation Reserve Movements within the Revaluation Reserve are analysed below. £’m Balance at 1 April 2007 0 Revaluations -1.472 Balance at 31 March 2008 -1.472 The balance sheet figures have been adjusted from those included in the accounts for 2006/07 to accommodate the implementation of the Revaluation Reserve. This reserve replaces the Fixed Asset Restatement Account (FARA). The £14.922m balance on FARA as at 31st March 2007 has been written off to the Capital Financing Account to form the new Capital Adjustment Account. The closing position on the reserve at 31st March 2008 therefore only shows revaluation gains accumulated since 1st April 2007. 22. Useable Capital Receipts £’m £’m Balance at 1 April 2007 -0.638 Amount received in year -0.230 Usable Capital Receipts Applied 0.868 0.638 Balance at 31 March 2008 0 The Balance of the capital receipts as at 1st April 2007 together with the receipts received during the year have been utilised to fund capital expenditure incurred during the year. 33

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