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GRAMPIAN JOINT POLICE BOARD
ANNUAL STATEMENT OF ACCOUNTS
2004-05
Grampian Joint Police Board Statement of Accounts 2004-05
GRAMPIAN JOINT POLICE BOARD
STATEMENT OF ACCOUNTS 2004-05
CONTENTS
INDEX
Page 2 List of Members and Officials
Page 3 Explanatory Foreword by the Treasurer
Page 7 Statement of Responsibilities for the Statement of Accounts
Page 8 Statement on the System of Internal Financial Control
Page 11 Independent Auditors' Report
Page 13 Best Value Accounting Code of Practice Revenue Account
Page 15 Subjective Revenue Account
Page 17 Balance Sheet
Page 18 Statement of Total Movement in Reserves
Page 19 Statement of Accounting Policies
Page 23 Notes to the Accounts
Page 37 Cash Flow Statement
Page 38 Notes to the Cash Flow Statement
Page 40 Glossary of Terms
Page 1
Grampian Joint Police Board Statement of Accounts 2004-05
GRAMPIAN JOINT POLICE BOARD
MEMBERS AND OFFICIALS 2004 - 2005
The members and officials of the Joint Police Board for 2004 - 2005 were as noted below.
CONVENOR
Councillor G.S. Saluja, OBE, Aberdeenshire Council
VICE CONVENORS
Councillor M. Greig, Aberdeen City Council
Councillor G. McIntyre, Moray Council
ABERDEENSHIRE COUNCIL
Appointed Members -
Councillor A.G. Howie
Councillor J. A. McGregor
Councillor D.F. Smith
Councillor S.C. Tennant
Councillor A. Wallace
MORAY COUNCIL
Appointed Members -
Councillor R. McIntosh
Councillor R.H. Shepherd
ABERDEEN CITY COUNCIL
Appointed Members -
Councillor R. Hutcheon
Councillor J. Porter
Councillor B. Rattray
Councillor J. Stewart
Councillor K. Stewart
OFFICIALS
Chief Constable - Colin McKerracher, Grampian Police
Clerk - Crawford Langley, Aberdeen City Council
Treasurer - Gordon Edwards, Aberdeen City Council
Page 2
Grampian Joint Police Board Statement of Accounts 2004-05
EXPLANATORY FOREWORD BY THE TREASURER
INTRODUCTION
Grampian Joint Police Board was created by a Statutory Instrument in 1995, known as
'The Grampian Combined Police Area Amalgamation Scheme Order 1995' and came into
operation on 1 April 1996, to administer the policing provision for the new local government areas
of Aberdeen City, Aberdeenshire and Moray. The Statutory Instrument makes provision with
respect to the members and Officers of the Board and its procedures, powers and duties. As part
of these duties, the Board is required to publish an Annual Statement of Accounts, the object of
which is to demonstrate publicly the proper stewardship of its financial affairs.
This foreword provides an explanation of the Board's Statement of Accounts along with a
summary of the financial out-turn for the year ended 31 March 2005.
Grampian Police are also required to prepare an Annual Report on the activities of the Force
during the year and copies can be obtained from Police Headquarters, Queen Street, Aberdeen.
2004-05 REVENUE OUTTURN
In year 2003-04, the Board reported a net deficit position of £0.165million(m). However, due to
the change in Pension Legislation which removed the ability to maintain a provision for commuted
sums payable to officers who are eligible to retire but who have not yet done so, a prior period
adjustment was required. This result in the adjusted surplus of £0.707m in year 2003-04.
For the year ended 31 March 2005, the Board had a surplus on its revenue account of £1.250m
(see Revenue Account, page 13). However, £1.415m has been earmarked for making pension
commutation payments which is no longer being provided for, therefore, the real revenue
position is a deficit of £0.165m. In terms of budget position, at the start of the year the Board
agreed to use £1.329m of reserves to maintain staffing levels and service provision. Comparing
the outturn to the budget shows an under-spend of £1.164m (in effect only using £0.165m of
reserves).
The principal reasons for this surplus are:
· The Financial Reporting Standard (FRS17) valuation of the Police Pensions by the actuaries
includes the future commutation payment for these officers and to avoid double counting
expenditure within the accounts the Board are now required to show this as a surplus within
the year and earmark this within the General Reserve. Payments made to officers from the
prior year earmarked reserve totalled £1.298m, with the sum of £1.415m being transferred to
the reserve in respect of officers due to retire during 2004-05 but who have continued in
service. The total earmarked commutation reserve is now £2.843m (£2.725m in 2003-04).
· During the year, the Board received additional unbudgeted government grants of £1.313m.
These grants allowed the funding of additional Financial Analysts and Investigators
(£0.156m), Special Constables Pilot Scheme (£0.150m), Youth Justice Management Unit
(£0.044m), High Visibility Jackets and Body Armour (£0.125m), Airwaves Project (£0.189m)
and £0.649m for a number of other specific projects.
· During the year the Board also received additional income of £1.018m including £0.110m
Page 3
Grampian Joint Police Board Statement of Accounts 2004-05
towards an Aglow Exercise and £0.571m from Local Authorities for Community Wardens.
These additional grants and income financed the expenditure that was required to meet the
specific purposes for which the funding was provided and largely explain miscellaneous budget
overspends on police officers, support staff and supplies and services.
Restated Reserves as at 1 April 2004 following the pension provision adjustments required under
FRS17 were £5.052m and as at 31 March 2005, the accounts show a cumulative revenue reserve
of £5.004m. A number of commitments have been made against this reserve:
· The approved revenue budget for 2005-06 assumes a commitment of £0.632m from
reserves.
· The indicative revenue budget for 2006-07 assumes a further commitment of £0.161m
from reserves.
· The sum of £2.843m is earmarked for future payment of pension commuted sums.
The cumulative surplus, adjusting for these commitments, is £1.368m. Although the General
Fund Reserve balance exceeds the Scottish Executive (SE) limits of 5% of Grant Aided
Expenditure (GAE), the Board have written confirmation from the SE that the sums earmarked
for the payment of commuted sums are to be excluded from the calculation and when this is
taken into account the Reserves held by the Board fall within the set parameters.
The adequacy of unallocated general reserves is dependent upon an assessment of strategic,
operational and financial risks facing the Board. Close monitoring of the financial position will be
maintained throughout the year ahead together with a further assessment of the Board’s strategy in
January 2006.
Constituent Authority Requisitions
For 2004-05, the Board approved a revenue budget of £84.321m, of which £43.756m was initially
requisitioned from the constituent authorities. A revised estimate for Common Police Services
reduced the sums due by Local Authorities by £0.046m to £43.710m.
2004-05 CAPITAL OUTTURN
Capital expenditure is determined by the Board, based on specific Scottish Executive (SE) grant,
capital receipts and Prudential borrowing (if required). The capital grant from the SE amounted
to £4.237m and this was further enhanced by the use of capital receipts from the sale of assets of
£3.608m (£1.014m in current year and £2.594m brought forward from previous years) and
additional capital income from other sources of £0.045m. The total capital spending available
was therefore £7.890m. The actual capital expenditure in 2004-05 was £5.730m. The balance of
£2.160m is carried forward to next year.
NET PENSION LIABILITY
The net pension liability, shown in Balance Sheet amounts to £546.331m. This comprises
£536.251m in respect of Police Officers and £10.080m in respect of Support Staff.
The Police Officers' Pension Scheme is un-funded and pension payments, net of Police Officers'
Page 4
Grampian Joint Police Board Statement of Accounts 2004-05
contributions, are met annually from revenue funding. In prior years a provision was made for
commutation payments to officers eligible to retire before the financial year-end but who
continued to be serving officers. The implementation of FRS 17 required that this provision is no
longer made, with the surplus generated added to the General Fund Reserve with a view to
earmarking the specific surplus for pension commutations. As at 31 March 2005, the sum of
£2.843m has been earmarked for a total of 27 Officers.
The cost of providing pensions for Force Support staff, participating in the Local Government
Pension Scheme is charged to the revenue account in accordance with the statutory requirements
of the scheme administered by Aberdeen City Council.
FRS 17 was implemented fully in 2003-04 and under this standard there is an obligation to
recognise the Board's full pension obligations in the year they are earned. The current pension
valuations under FRS 17 lead to the creation of a charge to net operating expenditure within the
Revenue Account in 2004-05 of £44.090m and this is offset by a corresponding entry of £44.090m
in the appropriation account. These charges lead to an overall Pension Liability of £546.331m
with a corresponding negative pension reserve of £546.331m. It is important to recognise that
these adjustments are so substantial because the Police Pension Scheme is un-funded and have
been made for accounting purposes.
The technical accounting change has had no impact on the underlying basis for meeting the
Board's current and ongoing pension liabilities. These will be met out of the Board's funding from
Government Grants and contributions from constituent authorities under the Amalgamation
Scheme 1995. Accordingly, it has been considered appropriate to adopt a going concern basis for
the preparation of these financial statements.
FINANCIAL STATEMENTS
Revenue Accounts
Provide details of the revenue expenditure of the Board for the year and show how that
expenditure was financed primarily by requisitions from the constituent authorities and Police
Grant from the Scottish Executive.
Balance Sheet
Summarises all the assets and liabilities of the Board and presents a picture of the Board's
financial position as at 31 March 2005.
Statement of Total Movements in Reserves
This provides both capital and revenue reserves detailing the movement in balances during the
year.
Capital Account Summary
Provides a summary of the Capital Expenditure incurred during the year, together with details of
the method of arrangement for financing the costs.
Page 5
Grampian Joint Police Board Statement of Accounts 2004-05
Notes to the Revenue Account and Balance Sheet
Provides additional information on various aspects of the Board's financial transactions which
are not detailed separately within the main accounting statements.
Cash Flow Statement
This statement provides details of the inflows and outflows of cash arising from transactions
with third parties for both capital and revenue items.
ACKNOWLEDGEMENT
The production of the Statement of Accounts is a team effort, primarily involving staff from
Grampian Police, supported by Aberdeen City Council Finance and ICT Services and I would
take this opportunity to thank them for their help and co-operation.
Gordon Edwards MA, CPFA
Treasurer
21 June 2005
Page 6
Grampian Joint Police Board Statement of Accounts 2004-05
Statement of Responsibilities for the Statement of Accounts
The Board is required:
· To make arrangements for the proper administration of its financial affairs and to secure
that one of its Officers has the responsibility for such administration of those affairs. For
this Board that Officer is the Treasurer, who is the Corporate Director for Finance and
ICT of Aberdeen City Council; and
· To manage its affairs to secure economic, efficient and effective use of resources and
safeguard its assets.
The Treasurer's responsibilities:
The Treasurer is responsible for the preparation of the Board's Statement of Accounts which, in
terms of the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Local
Authority (Scotland) Accounts Advisory Committee (LASAAC) Code of Practice for Local
Authority Accounting in Great Britain, (the Code) is required to present fairly the financial
position of the Board at the accounting date and its income and expenditure for the year ended 31
March 2005.
In preparing the Statement of Accounts, the Treasurer has:
· Selected suitable accounting policies and then applied them consistently;
· Made judgements and estimates that were reasonable and prudent;
· Complied with the Code;
· Kept proper accounting records; and
· Taken reasonable steps for the prevention and detection of fraud and other irregularities.
Page 7
Grampian Joint Police Board Statement of Accounts 2004-05
STATEMENT ON THE SYSTEM OF INTERNAL FINANCIAL CONTROL
Scope of Responsibility
This statement is given in respect of the Statement of Accounts for Grampian Joint
Police Board. I acknowledge my responsibility for ensuring that an effective system of
internal financial control is maintained and operated in connection with the resources
concerned.
The Force is responsible for ensuring that its business is conducted in accordance with the
law and proper standards, that public money is safeguarded, properly accounted for and
used economically.
Internal Control
The system of internal financial control can provide only reasonable and not absolute
assurance that:
· Assets are safeguarded;
· Transactions are authorised and properly recorded; and
· That material errors or irregularities are either prevented or would be detected
within a timely period.
The system of internal financial control is based on a framework of regular management
information, financial regulations, administrative procedures and processes (including
segregation of duties), management supervision and a system of delegation and
accountability. Development and maintenance of the system is undertaken by the
managers within Grampian Police. In particular, the system includes:
· Comprehensive budgeting systems;
· Regular reviews of periodic and annual financial reports which indicate financial
performance against the forecasts;
· Setting targets to measure financial and other performance;
· The preparation of regular financial reports which indicate actual expenditure and
income against the forecasts;
· Clearly defined capital expenditure guidelines; and
· As appropriate, formal project management disciplines.
It is the responsibility of the Force's senior management to establish an appropriate and
sound system of internal control and to monitor the continuing effectiveness of that
system.
Internal Audit Arrangements
The Force has in place a Service Level Agreement with the Internal Audit Section of
Aberdeen City Council whose responsibility it is to provide an annual overall assessment
of the robustness of the internal control system. The Internal Audit Section are also
responsible for:
Page 8
Grampian Joint Police Board Statement of Accounts 2004-05
· Ensuring the relevance, reliability and integrity of information, so ensuring as far as
possible the completeness and accuracy of records;
· Ensuring adherence to Force policies, strategies, objectives and any statutory
requirements; and
· Reviewing the means of safeguarding assets and, as appropriate, verifying their
existence.
In accordance with the principles of Corporate Governance, the Internal Audit Manager
reports on all the above issues with independence and impartiality to the Stewardship Sub-
Committee of the Joint Police Board on a regular basis.
Developments In Internal Control
During the year, progress was made in the following areas that were mentioned last year
as requiring attention:
· Business Plan for the Finance Section: The Finance section within the Force is
now at full strength and a Business Plan was drawn up which included key
objectives and developments for the coming year. The Plan was approved by the
Force Executive and published in the recent 'Platform for Success 2005-2008'
document;
· Fraud and Corruption Policy: This policy has been subsumed within a Force
wide Professional Standards Policy which includes ethics, conduct and whistle
blowing. The policy was presented to and agreed by the Stewardship Sub-
Committee during the year;
· Risk Management Strategy: The strategy document was approved by the
Stewardship Sub Committee in March 2005 but work is on-going to fully assess
the risks identified and ensure appropriate risk management; and
· Corporate Governance Code: A draft has been prepared and is currently being
updated to reflect the recent CIPFA good practice guidance. This will be completed
within the next few months.
The following key documents are also in the process of being reviewed:
· Standing Orders – Review underway with plan to reorganise the current format;
· Financial Regulations and Procedures – Revised regulations to be presented to
future Stewardship Sub-Committee. Good progress has also been made to collate
detailed financial procedures and these will be completed during the forthcoming
year; and
· ICT Strategy covering significant financial systems – An ICT Strategy exists
covering all Scottish Police Forces and during the year the new Head of ICT will
produce a local strategy covering all major Force systems, disaster recovery and
contingency plans.
Page 9
Grampian Joint Police Board Statement of Accounts 2004-05
Basis of Opinion
My evaluation of the effectiveness of the system of internal financial control is informed
by a number of sources:
· The work of the Force Finance Section, and other managers within the Force;
· The work of the Internal Audit Service as described above;
· The External Auditors in their annual audit letter and other reports to the
Stewardship Sub-Committee;
· The work of any other review agencies (e.g. HMIC); and
· My knowledge of the Force's governance, risk management and performance
monitoring arrangements.
Opinion
It is my opinion based on the above that the Force had in place a generally sound system of
internal controls for the year to 31 March 2005. Considerable progress has been made in
the areas identified in last years' statement as requiring attention and an action plan is in
place to complete these tasks. There is also an appropriate mechanism in place to identify
any area of weakness and to take corrective action through implementation of
recommended actions from Internal and External audit reports.
Gordon Edwards MA, CPFA
Treasurer
21 June 2005
Page 10
Grampian Joint Police Board Statement of Accounts 2004-05
INDEPENDENT AUDITORS' REPORT
To the members of Grampian Joint Police Board and the Accounts Commission for
Scotland.
We certify that we have audited the financial statements on pages 13 to 39 under the Local
Government (Scotland) Act 1973. The financial statements have been prepared in accordance
with the accounting policies set out 19 to 22.
This report is made solely to the parties whom it is addressed in accordance with Part VII of the
Local Government (Scotland) Act 1973 and the Code of Audit Practice approved by the Accounts
Commission and for no other purpose, as set out in paragraph 43 of the Statement of
Responsibilities of Auditors and of Audited Bodies prepared by Audit Scotland, dated July 2001.
Respective responsibilities of the Treasurer and Auditors
As described on page 7 the Treasurer of the Joint Board is responsible for the preparation of the
financial statements in accordance with the Code of Practice on Local Authority Accounting in the
United Kingdom, a Statement of Recommended Practice (‘the SORP’). Our responsibilities, as
independent auditors, are established by statute and the Code of Audit Practice approved by the
Accounts Commission, and guided by the auditing profession’s ethical guidance.
We report our opinion as to whether the financial statements present fairly the financial position of
the Joint Board at 31 March 2005 and its income and expenditure for the year. We also report if,
in our opinion, the Joint Board has not kept proper accounting records, or if we have not received
all the information and explanations we require for our audit.
We review whether the Statement on the System of Internal Financial Control on pages 8 to 10
complies with the requirements of the SORP. We report if, in our opinion, the statement does not
comply with the requirements or if it is misleading or inconsistent with other information we are
aware of from our audit. We are not required to consider whether the statement covers all the risks
and controls or form an opinion on the effectiveness of the Joint Board’s corporate governance
procedures or risk and control procedures.
We read the other information published with the financial statements and consider the
implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements.
Page 11
Grampian Joint Police Board Statement of Accounts 2004-05
Basis of audit opinion
We conducted our audit in accordance with Part VII of the Local Government (Scotland) Act 1973
and the Code of Practice, which requires compliance with relevant United Kingdom Auditing
Standards issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures
in the financial statements. It also includes an assessment of the significant estimates and
judgements made by the Treasurer in the preparation of the financial statements and of whether the
accounting policies are appropriate to the Joint Board’s circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanation which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
that the financial statements are free from material misstatements, whether caused by fraud or
other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Opinion
In our opinion the financial statements present fairly the financial position of the Joint Board as at
31 March 2005 and its income and expenditure for the ear then ended.
Henderson Loggie
Chartered Accountants
Register Auditors
48 Queens Road
Aberdeen
AB15 4YE
12 September 2005
Page 12
Grampian Joint Police Board Statement of Accounts 2004-05
BEST VALUE ACCOUNTING CODE OF PRACTICE
REVENUE ACCOUNT FOR THE YEAR ENDED 31 MARCH 2005
2004 2005
£000's £000's Notes
EXPENDITURE 1 to 7
41,787 Crime Management 48,896
10,263 Traffic Management 12,010
4,838 Public Order 5,662
21,846 Community Safety 25,564
10,263 Call Management 12,010
12,749 Pensions 13,908
1,230 Common Police Services 370
102,976 GROSS OPERATING EXPENDITURE 118,420
INCOME
(3,972) Other Income (5,428)
(4,520) Pension Contributions (5,281)
(8,492) (10,709)
94,484 NET COST OF SERVICES 107,711
(63) Transfer from Asset Management Revenue Account (1,449) 8
23,670 Pension Interest Cost/Expected Return on Pension Assets 26,310 20
(233) Interest on Revenue Balances (409)
117,858 NET OPERATING EXPENDITURE 132,163
APPROPRIATIONS
739 Revenue Contribution from/(to) the Capital Financing Reserve (45)
(34,248) Movement on Pension Reserve (44,090) 20
872 Transfer to General Reserve 0
85,221 NET EXPENDITURE 88,028
GOVERNMENT GRANT
(42,805) Government Grant - Police (44,133)
(1,102) Government Grant – Civil Defence and Others (1,435)
(43,907) (45,568)
41,314 AMOUNT TO BE MET BY CONSTITUENT COUNCILS 42,460
(41,149) Requisitions from Constituent Local Authorities (43,710)
165 DEFICIT / (SURPLUS) FOR THE YEAR (1,250)
PRIOR YEAR ADJUSTMENT:
(872) Transfer to General Reserve 0
(707) ADJUSTED SURPLUS FOR THE YEAR (1,250)
Page 13
Grampian Joint Police Board Statement of Accounts 2004-05
2004 2005
£000's £000's
2,327 General Reserve as at 31 March 2004 -
General Reserve Brought Forward at 1 April 2004 2,327
Transfer to / (from) General Reserve during year 2004-05:
Opening Pension Provision as at 1 April 2003 1,853
Provision of Pension during year 2003-04 872
2,725
Payment to retirees during year 2004-05 (1,298)
Net surplus for the year 2004-05 1,250
General Reserve as at 31 March 2005 5,004
Where there is a number shown in the 'Notes' column, there is a further explanation in the Notes to the Accounts from page 23.
Page 14
Grampian Joint Police Board Statement of Accounts 2004-05
SUBJECTIVE REVENUE ACCOUNT FOR THE YEAR ENDED 31 MARCH 2005
2004 2005 2005
Actual Budget Actual
£000's £000's £000's
EMPLOYEE COSTS
45,405 Police Officers 48,329 48,995 Note 3
15,393 Support Staff 15,296 17,678
3,509 Other Allowances 3,505 3,422
23,316 Pensions 33,403 31,647
87,623 100,533 101,742
OPERATING COSTS
Property Costs
1,067 Rates 1,180 1,156
424 Rents and Insurances 472 461
753 Repairs and Maintenance 685 763
485 Heating, Lighting and Cleaning 480 519
2,729 2,817 2,899
Transport and Plant Costs
269 Repairs 240 258
563 Petrol and Diesel Fuel 525 649
235 Licences and Insurances 350 294
115 Car Leasing and Allowances 149 152
476 Other Travelling 486 574
1,658 1,750 1,927
Supplies and Services Costs
1,068 Operational Equipment and Materials 1,000 961
287 Uniforms and Clothing 200 400
1,140 Computer Equipment Hire and Maintenance 1,320 1,169
52 Catering 60 95
730 Conferences and Subsistence 575 624
402 Printing, Stationery and Postages 305 446
1,083 Telephones 574 972
288 Insurances 327 302
32 Advertising 35 37
974 Other Costs 781 1,054
6,056 5,177 6,060
Payments to Agencies and Other Bodies
1,236 Common Police Services/Scottish Drug Enforcement Agency 877 928
380 Medical Fees 292 307
241 Other Costs 315 396
1,857 1,484 1,631
222 Council Support Services 463 454
2,831 Capital Charges Unallocated 2,213 3,707 Note 8
102,976 GROSS OPERATING EXPENDITURE 114,437 118,420
Page 15
Grampian Joint Police Board Statement of Accounts 2004-05
2004 2005 2005
Actual Budget Actual
£000's £000's £000's
INCOME
(4,520) Pension Contributions (4,910) (5,281)
(259) Rents (210) (429)
(320) Sales, Fees and Charges (290) (367)
(610) Partnership Income 0 (581)
(2,573) Recoveries (2,358) (3,033)
(210) Other Grant Funding 0 (1,018)
(8,492) (7,768) (10,709)
94,484 NET COST OF SERVICES 106,669 107,711
(63) Transfer from Asset Management Revenue Account 0 (1,449) Note 8
23,670 Pension Interest Cost/Expected Return on Pension Assets 26,310 26,310 Note 20
(233) Interest on Revenue Balances (150) (409)
117,858 NET OPERATING EXPENDITURE 132,829 132,163
APPROPRIATIONS
739 Revenue Contributions from/(to) the Capital Financing Reserve 0 (45)
(34,248) Movement on Pension Reserve (44,090) (44,090) Note 20
872 Transfer to General Reserve 0 0
85,221 NET EXPENDITURE TO BE MET FROM GRANTS 88,739 88,028
AND TAXATION
GOVERNMENT GRANT
(42,805) Government Grant – Police (44,132) (44,133)
(124) Government Grant - Civil Defence (120) (122)
(978) Government Grant – Other (1,209) (1,313)
(43,907) (45,461) (45,568)
41,314 NET EXPENDITURE 43,278 42,460
(41,149) Constituent Authorities Contribution (43,278) (43,710)
165 DEFICIT/(SURPLUS) FOR THE YEAR 0 (1,250)
PRIOR YEAR ADJUSTMENT
(872) Transfer to General Reserve 0 0
(707) ADJUSTED SURPLUS FOR THE YEAR 0 (1,250)
Page 16
Grampian Joint Police Board Statement of Accounts 2004-05
BALANCE SHEET
As at 31 March 2004 As at 31 March 2005
£000's £000's £000's £000's Notes
FIXED ASSETS 9
Operational Assets
19,387 Land and Buildings 33,155
2,649 Vehicles, Plant and Equipment 5,116
22,036 38,271
Non Operational Assets
3,132 Land and Buildings 4,172
25,168 42,443
Current Assets
251 Stock in Hand 256 10
3,416 Debtors 3,232 11
264 Sums due from Constituent Councils 292 12
6,893 Short Term Investments 9,536 13
15 Cash 15
10,839 13,331
Less: Current Liabilities
(4,765) Creditors (5,785) 14
(321) Loans Repayable Within One Year (550) 15
(500) Provisions (676) 16
(706) Bank Overdraft (1,488) 17
(6,292) (8,499)
4,547 Net Current Assets 4,832
29,715 47,275
Less: Long Term Liabilities
(411,311) Net Pension Liability (546,331) 20
0 Capital Grant Deferred Account (3,393) 18
0 Capital Contributions Deferred Account (30) 19
(9,316) Loans Repayable After One Year (8,766) 15
(390,912) NET ASSETS / (LIABILITIES) (511,245)
Financed by the following reserves:
184 Fixed Asset Restatement Account 13,950
12,569 Capital Financing Account 13,972
2,594 Usable Capital Receipts 2,160
(411,311) Pension Reserve (546,331)
5,052 General Reserve 5,004 21
(390,912) TOTAL NET WORTH (511,245)
Gordon Edwards MA, CPFA
Treasurer
21 June 2005
Page 17
Grampian Joint Police Board Statement of Accounts 2004-05
STATEMENT OF TOTAL MOVEMENTS IN RESERVES FOR THE YEAR ENDED
31 MARCH 2005
Capital Reserves Revenue Reserves
Fixed Asset Capital Usable
Restatement Financing Capital General Pension
Account Account Receipts Reserve Reserve TOTAL
£000's £000's £000's £000's £000's £000's
Balance as at 1 April 2004 184 12,569 2,594 2,327 (408,586) (390,912)
Transfer to General Reserve:-
Opening Pension Provision as at
1 April 2003 1,8531 (1,853) -
Provision of pension during year
2003-04 8721 (872) -
Restated Balance as at 1April
2004 184 12,569 2,594 5,052 (411,311) (390,912)
Revaluation during the year 14,381 14,381
Disposals at NBV (615) (615)
Capital Grant Applied 859 859
Proceeds of Disposal 1,014 1,014
Capital Receipts Applied 1,448 (1,448) -
Transfer to Revenue Account (904) (904)
Net Operating Surplus for the
year 1,250 1,250
Transfer from Reserves (1,298) (1,298)
Pension Reserve:-
Net Actuarial Gains/ (Losses) (98,420) (98,420)
Adjustment for Employers'
Contributions Paid 1,970 1,970
Reversal of Revenue Account
entries (46,060) (46,060)
Pension & Lump Sum
Expenditure 7,490 7,490
Balance as at 31 March 2005 13,950 13,972 2,160 5,0042 (546,331) (511,245)
1
Refer to Notes to Accounts – Note 21(a) General Reserve
2
Refer to Notes to Accounts – Note 21(b) General Reserve
Page 18
Grampian Joint Police Board Statement of Accounts 2004-05
STATEMENT OF ACCOUNTING POLICIES
1. General
The accounts have been prepared in accordance with the Code issued in 2004 by CIPFA and
LASAAC. The Board has adopted the accounting convention of historical cost modified by the
revaluation of certain categories of assets.
2. Basis of Inclusion of Debtors and Creditors
Both the Revenue and Capital Accounts are prepared on an accruals basis in accordance with the
Code of Practice and Accounting Standards. Accordingly amounts due or payable, which relate
to activities during the year, are included whether or not the cash has been actually received or
paid in the year.
3. Capital Expenditure on Fixed Assets
In line with guidance to local authorities from CIPFA, the principles of capital accounting are,
firstly, that capital expenditure is held as a fixed asset, provided it yields benefit to the Board for
more than one year. This excludes expenditure on routine repairs and maintenance of fixed
assets which is charged directly to the Revenue Account. Secondly, the Revenue Account is
charged for the use of the asset based on its value. Additions and disposals have been adjusted
for and annual depreciation has been calculated. Any material changes to asset valuations are
adjusted in the year in which they occur.
Fixed assets are valued on the basis recommended by CIPFA and in accordance with the
Statements of Asset Valuation Principles and Guidance Notes issued by The Royal Institution of
Chartered Surveyors (RICS). Fixed assets are classified into groupings required by the Code.
Fixed assets have been included in the Balance Sheet on the following basis. All assets are
included in the balance sheet at the lower of net current replacement cost and net realisable value
in existing use.
All land and buildings were re-valued at 31 March 2005 by the Estate Manager of Aberdeenshire
Council, George Morrison MRICS, in accordance with the Statements of Asset Valuation
Principles and guidance notes issued by RICS. All valuations have been carried out in accordance
with the principles and guidance notes prepared by CIPFA. The valuation methods are detailed in
note 9b.
The surplus arising on the initial valuation of fixed assets has been credited to the fixed asset
restatement account. Subsequent revaluations of fixed assets are planned at five yearly intervals,
although material changes will be adjusted in the interim period, as they occur.
Income from the disposal of fixed assets is accounted for on an accruals basis.
Page 19
Grampian Joint Police Board Statement of Accounts 2004-05
4. Depreciation
Depreciation is calculated to write off the cost or valuation of fixed assets over their estimated
useful lives as follows. Assets in the course of construction are not depreciated until they are
brought into use.
(i) Freehold Land is an asset with infinite life and has not therefore been depreciated.
(ii) Buildings are depreciated on a reducing balance basis over their estimated useful lives of
30 years from the date of completion.
(iii) Vehicles are depreciated over three years on a straight line basis with residual value of
approximately 10% of cost.
(iv) Other fixed assets are depreciated on a straight-line basis over their estimated useful lives
as follows:
Computers and software 3 years
Plant and equipment 10 years
5. Basis of Valuation of Stocks
Stocks are included at the lower of cost and net realisable value.
6. Reserve Funds
The five reserves shown in the Balance Sheet can be explained as follows.
Fixed Asset Restatement Account
This has been renamed in the 2004 Code from the Fixed Asset Restatement Reserve. It is
credited with increases and debited with decreases in the value of assets carried at current value.
The account is also debited with the net book value of asset disposal.
Capital Financing Account
This has also been renamed in the 2004 Code from the Capital Financing Reserve. It contains
the difference between the loans fund principal repayment and the amount charged for
depreciation / impairment. It also contains the amount of capital expenditure financed from
capital receipts, capital funded from current revenue (CFCR) and any releases from the Capital
Grant Deferred Account.
As such, both Fixed Asset Restatement and Capital Financing Accounts do not, therefore,
represent funds available for use.
Usable Capital Receipts
This is credited with proceeds from the disposal of assets and debited when these receipts are
applied. Therefore, it is available for use in future years.
Page 20
Grampian Joint Police Board Statement of Accounts 2004-05
General Reserve
This represents the accumulated funds from the current and prior years and is available for use in
future years.
The Code: A statement of Recommended Practice, has specifically adopted FRS 17. The
application of FRS 17 precludes the creation of a provision for the liability arising from
Commuted Lump Sums. In order to ensure funds are available to meet this liability, the Scottish
Executive has permitted the earmarking of part of the Usable Revenue Reserve. The earmarked
value for Pension Commutation Reserve is now £2.843m (£2.725m in 2003-2004).
Pension Reserve
In accordance with FRS 17 – Retirement Benefits, the Board is required to disclose certain
information concerning assets, liabilities, income and expenditure related to pension schemes for
its employees. This represents the net liabilities at the year end date.
7. Charges to Revenue
In previous years a provision was made for future pension commutation liabilities in respect of
normal retirements as at the end of the financial year. The implementation of FRS 17 has led to a
change in accounting treatment with all future pension commutation liabilities for normal
retirements now being transferred to Usable Revenue Reserve as part of the funding surplus for the
year and specifically earmarked for future requirement.
The Code requires the Revenue Account to be charged with a capital charge for all fixed assets
used in the provision of services. The total charge covers the annual provision for depreciation
plus a notional interest of 3.5% on the current value of fixed assets.
8. Pension
The Force participates in two different Pension Schemes which provide benefits for employees.
Both schemes provide members with defined benefits related to pay and service. The schemes are
as follows.
(i) Police Pension Scheme is un-funded and therefore net pension payments are charged to the
revenue account in the year in which payment is made.
(ii) The cost of providing pensions for Force Support staff, participating in the
Local Government Pension Scheme is charged to the revenue account in accordance with
the statutory requirements of the scheme administered by Aberdeen City Council.
9. Redemption of Debt
Grampian Joint Police Board maintains a Loans Fund administered by Aberdeen City Council
under powers contained in the Local Government (Scotland) Act 1975. All loans raised by the
Board are administered by the Council.
The Revenue Account is charged with annual repayments of principal plus interest and expenses.
Debt is written off in accordance with the terms of each loan raised.
Page 21
Grampian Joint Police Board Statement of Accounts 2004-05
10. Operating Leases
Rental payable under operating leases are charged to the Revenue Account over the term of
lease.
11. Interest
The interest from Short Term Investments, on an accruals basis, is used to augment revenue
expenditure.
12. Revenue Grants
Police Grant is received by monthly instalment on 51% of GAE levels approved by the Scottish
Executive and accounted for on an accruals basis. Separate 100% funding is received in respect
of specific purposes, e.g. Ports Policing, Drugs Enforcement Agency Officers, Special
Constables and Restorative Justice measures.
13. Capital Grants
Capital grant income is recognised in the Balance Sheet initially in the Capital Grant Deferred
Account and it is released to revenue via the Asset Management Revenue Account (AMRA) on
the same basis, in terms of method and period, as the depreciation charged on the asset financed
by the grant or contribution. Where the sums have been received from sources other than grants
from the Government, a separate Capital Contributions Deferred Account has been established
to take account of this income as recommended by the guidance notes issued by CIPFA. The
accounting treatment is the same as the Capital Grant Deferred Account.
14. Local Authority Contributions
Three local authorities: Aberdeen City Council, Aberdeenshire Council and Moray Council
contribute to the net expenditure of the Force after all other costs and income have been taken
into account. The contributions are requisitioned at the beginning of the financial year and
payment is made in 12 monthly instalments.
15. Other Income
This includes payments from third parties, other Local Authorities and Police organisations in
return for services provided to them.
Page 22
Grampian Joint Police Board Statement of Accounts 2004-05
NOTES TO ACCOUNTS
1. EXPENDITURE ON PUBLICITY
Grampian Joint Police Board is required to keep a separate account of expenditure on publicity.
Such costs are included as part of administration costs and during 2004-05 the Board incurred
£158,950 on publicity material which requires to be disclosed, analysed as follows:-
2004 2005
£000's £000's
Staff Recruitment 105 122
General Publicity 31 37
136 159
2. MEMBERS' ALLOWANCES
The total amount paid in special responsibility allowances to the Convenor was £8,718
(2004: £3,441).
3. OFFICERS' EMOLUMENTS
The number of employees whose remuneration exceeded £40,000 during the year was as
follows:
2004 2005
Remuneration Band Number of Employees Number of Employees
£40,000 - £49,999 269 321
£50,000 - £59,999 29 45
£60,000 - £69,999 8 14
£70,000 - £79,999 3 5
£80,000 - £89,999 1 0
£90,000 - £99,999 1 1
£100,000 - £109,999 0 0
£110,000 - £120,000 1 1
312 387
Page 23
Grampian Joint Police Board Statement of Accounts 2004-05
4. PENSION COSTS
Police Officers
In 2004-05, the net costs of pensions and other benefits amounted to £8,626,572 (2003-04:
£8,228,079) representing 21.3% of pensionable pay (2003-04: 22.4%).
Other Staff
In 2004-05, the Board paid employer's contributions of £1,952,061 (2003-04: £1,610,001) into
the Aberdeen City Council Pension Fund, representing 15.0% (2003-04: 14.2%) of pensionable
pay. The contribution rate is determined by the Fund's Actuary based on triennial valuations,
the last review being at 31 March 2002. Under pension regulations, contribution rates are set to
meet 100% of the overall liabilities of the fund.
The capital cost of any discretionary increases in pensions payment (eg discretionary added
years) agreed by the authority amounted to £7,275 (2003-04: £7,036).
Disclosure on pension costs per FRS 17 is included in the Balance Sheet.
Further information can be found in Aberdeen City Council's Pension Fund's Annual Report
which is available from the Finance and ICT Services, AECC, 2nd Floor, Balgownie 1,
Conference Way, Bridge of Don, Aberdeen.
5. OPERATING LEASES
During year 2004-05, the total operating lease payment for land and buildings amounted to
£434,382 (2003-04: £402,808). At 31 March 2005, the authority has commitments to make the
following future minimum lease payments under non-cancellable operating leases.
2004 2005
£000's £000's
Land & buildings
- Not later than 1 year 309 334
- Later than 1 year but not later than 5 years 1,010 1,037
- Later than 5 years 1,787 2,363
3,106 3,734
Page 24
Grampian Joint Police Board Statement of Accounts 2004-05
6. AGENCY ARRANGEMENTS
Under various statutory powers, a Board may agree, with other local authorities or Boards and
Government Departments, to do work on their behalf and likewise certain of the Board's service
work may be undertaken on its behalf by other bodies. The main items of Agency income and
expenditure were as follows:
2004 2005
Agency Expenditure £000's £000's
Common Police Services 1,230 370
Child Abuse Coordinator, Aberdeen City Council 0 1
Forensic Lab Services 6 0
Others 35 133
Identification Bureau 198 259
Payments under service level agreements and ad
hoc arrangements for the provision of various
support services: 312 367
1,781 1,130
Agency Income (Included in Other Income)
Forensic Laboratory Services 314 363
Staff Secondments - Central Services 1,225 958
1,539 1,321
7. AUDIT FEES
The fee payable to Audit Scotland in respect of external audit services for year 2004-05 was
£40,640 (2003-04: £44,300).
Page 25
Grampian Joint Police Board Statement of Accounts 2004-05
8. ASSET MANAGEMENT REVENUE ACCOUNT
2004 2005
£000's £000's
This account comprises:
Income:
Capital Charges – Revenue Account (2,831) (3,707)
Expenditure:
Loans Fund Interest and Expenses 917 896
Provision for Depreciation 1,851 2,221
Capital Grant Applied 0 (859)
(63) (1,449)
This shows the surplus arising from the capital charges made to the Board for the use of assets
and the cost to the Board of financing those assets. Under the Code, Boards are required to
charge service costs for the use of assets based on the value of replacement or depreciation of
the assets, rather than the cost of repaying the loans taken out to finance the assets.
9. FIXED ASSETS
(a) Information on Assets Held
The main assets held by the Joint Board as at 31 March 2005 include the following items:
Operational Assets 2004 2005
Number Number
Properties 51 47
Radio Masts/Sites 8 8
Vehicles 265 284
Garage 1 1
Non-Operational Assets
Leased Properties 3 4
Leased Houses 30 29
Police Houses 31 20
Page 26
Grampian Joint Police Board Statement of Accounts 2004-05
(b) Movement on Fixed Assets
Operational Non-Oper'l Vehicles,
Land and Land and Plant and
Buildings Buildings Equipment Total
COST OR VALUATION £000's £000's £000's £000's
Balance at 1 April 2004 21,736 3,583 7,561 32,880
Reclassification (30) 30 - -
Additions 1,756 - 3,974 5,730
Disposals (31) (634) (419) (1,084)
Surplus on revaluations 9,752 1,193 - 10,945
Balance at 31 March 2005 33,183 4,172 11,116 48,471
Representing:
- Cost 213 - 11,116 11,329
- Valuation as at 31 March 2005 32,970 4,172 - 37,142
33,183 4,172 11,116 48,471
DEPRECIATION
Balance at 1 April 2004 2,349 451 4,912 7,712
Reclassification (1) 1 - -
Depreciation for Year 662 92 1,467 2,221
Disposals (4) (86) (379) (469)
Surplus on revaluations (2,978) (458) - (3,436)
Balance at 31 March 2005 28 - 6,000 6,028
Net Book Value at 31 March 2005 33,155 4,172 5,116 42,443
Net Book Value at 31 March 2004 19,387 3,132 2,649 25,168
The property portfolio was re-valued at 31 March 2005 by Estate Manager of Aberdeenshire
Council, George Morrison MRICS, in accordance with the Statements of Assets Valuation
Practice and guidance notes of RICS. The revaluation surplus of £14.381m has been transferred
to the Fixed Asset Restatement Account.
All valuations have been carried out in accordance with the principles and guidance notes
prepared by CIPFA. The valuation method adopted for valuation of land and buildings at the
year end date are shown as below.
Valuation Method
Surplus land and buildings held for subsequent sales and
classified as non-operational assets in the accounts. Market Value (MV)
Land and buildings held for the purposes of the authority and
classified as operational assets in the accounts;
- Operational and non-specialised Existing Use Value (EUV)
- Operational and specialised Depreciated Replacement Cost (DRC)
Page 27
Grampian Joint Police Board Statement of Accounts 2004-05
(c) Capital Account Summary
This account indicates the level of capital expenditure incurred on acquisition, creation or
maintenance of capital assets during the year. Details are also provided of the written down
value of capital expenditure as at 31 March 2005, together with a note of how expenditure in
2004-05, was financed. Capital expenditure is not directly charged against the revenue account
in the year in which it is incurred but normally over a number of years in which the benefit
would accrue to the Board.
2004 2005
Capital Expenditure during Year £000's £000's
Land and Buildings and Building works 2,452 1,756
Plant and Equipment 828 2,932
Vehicles 226 1,042
3,506 5,730
Financed as follows:
Cash Investments 2,292 0
Capital Grant Received - Scottish Executive 0 4,121
Specific Grant – Scottish Executive 131 116
Capital Receipts from Sales of Fixed Assets 344 1,448
Capital Income – Other Sources 0 45
Contributions from Revenue 739 0
3,506 5,730
Outstanding debt at 31 March 9,637 9,316
10. STOCK IN HAND
2004 2005
£000's £000's
Communications Equipment 11 22
Cleaning and Medical Supplies 6 7
Heating Oil 8 12
Stationery 29 19
Uniforms 147 145
Vehicle Parts 50 51
251 256
Page 28
Grampian Joint Police Board Statement of Accounts 2004-05
11. DEBTORS
The Debtors figure at 31 March 2005, is made up as follows:
2004 2005
£000's £000's
Trade Debtors 1,477 1,348
Less: Provision for Bad Debts (40) (42)
Net Trade Debtors 1,437 1,306
Loan Interest Receivable 105 216
Taxation 608 688
Grant – Civil Defence & Police 1,235 978
3,385 3,188
Long Term Debtors
Rental Prepayment 31 28
Capital Contribution – Other Source 0 16
3,416 3,232
12. SUMS DUE TO / FROM CONSTITUENT COUNCILS
This represents requisitions due but not yet received.
13. SHORT TERM INVESTMENTS
This represents the net surplus cash funds invested on a daily basis with Aberdeen City Council
Loans Fund.
14. CREDITORS
The Creditors figure at 31 March 2005, is made up as follows:
2004 2005
£000's £000's
Trade Creditors 2,810 3,763
Taxation 1,632 1,745
Loan Interest 323 277
4,765 5,785
Page 29
Grampian Joint Police Board Statement of Accounts 2004-05
15. LOANS
Included within the Board's debt at 31 March 2005, are the following categories:
Outstanding as at Range of Interest
31 March 2005 Rates
£000's
Source of Loan
Public Works Loan Board (PWLB) 9,316 7.4% - 11.0 %
Analysis of Loans by Maturity
Number of Years PWLB
£000's
0-1 550
1-2 -
2-5 321
5-10 6,027
over 10 2,418
9,316
16. PROVISIONS
A £0.676m provision has been made (2003-04: £0.500m) in respect of amounts likely to be
settled in cash for employees accrued time off in lieu.
17. BANK ACCOUNT
The Bank Overdraft represents cheques issued and BAC payments issued but not presented at 31
March 2005. The bank account balance is managed on a daily basis to ensure that best use is
made of available funds.
Page 30
Grampian Joint Police Board Statement of Accounts 2004-05
18. CAPITAL GRANT DEFERRED ACCOUNT
This represents the amount of Capital Grant received from the Scottish Executive in the year
2004-05. The balance is reduced by a contribution to the Asset Management Revenue Account
to offset the depreciation on the fixed asset.
2005
£000's
Capital Grant received during year 2004-05 4,237
Transfer to Asset Management Revenue Account (844)
Balance as at 31 March 2005 3,393
19. CAPITAL CONTRIBUTIONS DEFERRED ACCOUNT
This represents the amount of capital income contributed from other sources in the year 2004-05
for purchase of the vehicles. The balance is reduced by a contribution to the Asset Management
Revenue Account to offset the depreciation provided for the year.
2005
£000's
Capital Income contributed from other sources 45
Transfer to Asset Management Revenue Account (15)
Balance as at 31 March 2005 30
20. EMPLOYEE BENEFITS
FRS17
In accordance with FRS 17, Grampian Police is required to disclose certain information
concerning assets, liabilities, income and expenditure related to pension schemes for its
employees.
(a) Police Officers
Grampian Police participates in the Police Force Pension Scheme. The Police Force Pension
Scheme is a defined benefit scheme based on final pensionable salary. The Scheme is not funded
and therefore has no assets set aside to meet the liabilities. Payments are made to individuals on
a 'pay as you go' basis, as and when they are required.
The most recent full valuation was carried out as at 31 March 2002, and has been updated by
independent actuaries to take account of the requirements of FRS17 in order to assess the
liabilities of the Fund as at 31 March 2005. Liabilities are valued on an actuarial basis using the
projected unit method which assesses the future liabilities discounted to their present value.
Page 31
Grampian Joint Police Board Statement of Accounts 2004-05
The main assumptions used for the purposes of FRS 17 are as follows:
31 March 2004 31 March 2005
Discount rate 6.4% pa* 5.3% pa
Rate of increase in salaries 4.4% pa 4.4% pa
Rate of increase in pensions in 2.9% pa 2.9% pa
payment
Rate of increase in deferred pensions 2.9% pa 2.9% pa
Rate of inflation 2.9% pa 2.9% pa
*for scheme liabilities. A discount rate of 5.4% has been used to determine the 2004-05 pension
cost.
Position in the Fund
The following amounts were measured in accordance with the requirements of FRS 17:
31 March 2004 31 March 2005
£m £m
Estimated liabilities in the Scheme 408.38 536.25
The movement in net liabilities for the year to 31 March 2005 is as follows:
2004 2005
£m £m
Net liabilities as at 1 April (381.76) (408.38)
Contributions paid (i.e. pensions paid in year less members
contributions) 7.56 7.49
Current service cost (11.53) (17.22)
Past service costs 0 0
Gain / loss on any settlements or curtailments 0 0
Interest on pension scheme liabilities (23.41) (26.30)
Actuarial gain/loss 0.76 (91.84)
Net liabilities as at 31 March (408.38) (536.25)
The amounts charged to the Revenue Account for the year 2004-05 are as below.
£m £m
Analysis of amounts charged to net services costs
Current service cost (11.53) (17.22)
Past service costs 0 0
Gain/loss on any curtailments/settlements 0 0
Total charged to net services cost (11.53) (17.22)
Analysis of amount credited to other finance income
Interest on pension scheme liabilities (23.41) (26.30)
Net charge/credit to other finance income (23.41) (26.30)
Page 32
Grampian Joint Police Board Statement of Accounts 2004-05
The amounts shown in actuarial gain/(loss) are as below.
Amount Percentage
£m
Experience gains and losses on
pension liabilities 4.27 0.8% of scheme liabilities
Changes in assumptions underlying
the present value of pension
liabilities (96.11) 17.9% of scheme liabilities
Total (91.84) 17.1% of scheme liabilities
(b) Support Staff
Grampian Police participates in the Local Government Pension Scheme which is administered by
Aberdeen City Council. The local Government Pension Scheme is a defined benefit scheme based
on final pensionable salary.
The most recent valuation was carried out as at 31 March 2002, and has been updated by
independent actuaries to the Aberdeen City Council Pension Fund (the Fund) to take account of
the requirements of FRS17 in order to assess the liabilities of the Fund as at 31 March 2005.
Liabilities are valued on an actuarial basis using the projected unit method which assesses the
future liabilities discounted to their present value.
Grampian Police's contribution rate over the accounting period was 255% of members'
contributions. The contribution rates certified for Grampian Police at the 31 March 2002 valuation
are as follows:
April 2003 to March 2004 245% of members' contributions
April 2004 to March 2005 255% of members' contributions
April 2005 to March 2006 265% of members' contributions
These figures include the past service element of the contribution rate.
The main assumptions used for the purposes of FRS17 are as follows:
31 March 2004 31 March 2005
Discount rate 6.4% pa* 5.3% pa
Rate of increase in salaries 4.4% pa 4.4% pa
Rate of increase in pensions in
payment 2.9% pa 2.9% pa
Rate of increase in deferred pensions 2.9% pa 2.9% pa
Rate of inflation 2.9% pa 2.9% pa
*for scheme liabilities. A discount rate of 5.4% pa has been used to determine the 2004-05 pension
cost.
Page 33
Grampian Joint Police Board Statement of Accounts 2004-05
31 March 2004 31 March 2005
Long-term expected rates of return on:
Equities 7.7% pa 7.7% pa
Government Bonds 4.7% pa 4.7% pa
Property 6.7% pa 6.7% pa
Other Assets 4.2% pa 4.8% pa
Average long term expected rate of
return 7.1% pa 7.2% pa
Position in the Fund
Assets are valued at fair value, principally market value for investments. The proportions of total
assets held in each asset type by the Fund as a whole at 31 March 2004 and 31 March 2005 are as
follows:
31 March 2004 31 March 2005
Equities 76% 83%
Bonds 13% 10%
Property 6% 3%
Other 5% 4%
The following amounts, needed for reconciliation to the Balance Sheet, were measured in
accordance with the requirements of FRS 17:
31 March 2004 31 March 2005
£m £m
Share of assets 24.44 29.82
Estimated funded liabilities 27.29 39.76
Estimated unfunded liabilities* 0.08 0.14
Grampian Police's surplus (2.93) (10.08)
*Note that unfunded liabilities are not allowed for unless specifically instructed. Where they are
included they are also allowed for in the analyses below.
Page 34
Grampian Joint Police Board Statement of Accounts 2004-05
The movement in net liabilities for the year to 31 March 2005 is as follows:
2004 2005
£m £m
Net liabilities at 1 April (6.13) (2.93)
Contributions paid 1.62 1.96
Contributions towards un-funded liabilities(i.e. pensions
paid in year) 0.01 0.01
Current service cost (1.54) (2.49)
Past service costs (0.01) (0.04)
Gain/loss on any settlements or curtailments 0 0
Expected return on pension fund assets 1.26 1.82
Interest on pension scheme liabilities (1.52) (1.83)
Actuarial gain/loss 3.38 (6.58)
Net liabilities at 31 March (2.93) (10.08)
The amounts charged to the Revenue Account are as below.
£m £m
Analysis of amounts charged to net services costs
Current service cost (1.54) (2.49)
Past service costs (0.01) (0.04)
Gain/loss on any curtailments/settlements 0 0
Total charged to net services cost (1.55) (2.53)
Analysis of amount credited to other finance income
Expected return on pension fund assets 1.26 1.82
Interest on pension scheme liabilities (1.52) (1.83)
Net charge/credit to other finance income (0.26) (0.01)
The amounts shown in the actuarial gain/(loss) are as below.
Amount Percentage
£m
Actual return less expected return on
assets 1.08 3.6% of scheme assets
Experience gains and losses on
pension liabilities 0.68 1.7% of scheme liabilities
Changes in assumptions underlying
the present value of pension
liabilities (8.34) 20.9% of scheme liabilities
Total (6.58) 16.5% of scheme liabilities
Page 35
Grampian Joint Police Board Statement of Accounts 2004-05
21. GENERAL RESERVE
(a) In previous years, a separate pension provision was made for the pension lump
sums (commutation) due to officers who were eligible to retire but had decided to
continue in the Force. With the introduction of FRS 17 and the need to show the
figures differently, it is necessary to restate the opening balance as at 1 April
2004 (from £2.327m to £5.052m), with a corresponding change to the Pension
Reserve. The difference (£2.725m) represents the opening pension provision as at
1 April 2003 (£1.853m) plus the provision for the financial year 2003-04
(£0.872m).
(b) The total earmarked commutation reserve as at 31 March 2005 has been updated
to £2.843m and this is included in the General Reserve Balance as at 31 March
2005 (£5.004m). Of the balance remaining (£2.161m), some is already committed
to future years to balance the proposed budget (£0.632m for year 2005-06 and
£0.161m for year 2006-07).
22. CAPITAL COMMITMENTS
At the year ended date 31 March, the following significant capital projects have been
entered into by the Board.
2004 2005
£000's £000's
Amounts contracted for, but not provided 3,319 1,259
Amounts authorised, but not contracted for 0 0
3,319 1,259
23. EURO
Grampian Joint Police Board have not incurred any costs relating to the introduction of
the Euro in the current financial year and no future commitments currently exist.
24. COMPARATIVE FIGURES
Certain comparative figures have been adjusted as a result of the change in accounting
policy for provision of pension, details of which are set out in the Statement of Total
Movements in Reserves.
Page 36
Grampian Joint Police Board Statement of Accounts 2004-05
CASH FLOW STATEMENT
This statement provides details of the movements of cash arising from transactions with third
parties, for both revenue and capital payments.
2004 2005
£000's £000's £000's £000's
Revenue Cash Outflows
Activities Cash paid to and on behalf of employees 76,542 85,549
Other Operating Cash Payments 12,729 89,271 11,466 97,015
Cash Inflows
Requisitions (41,350) (43,682)
Grants Received (42,960) (44,382)
Pension Contributions (4,520) (5,281)
Other Operating Cash receipts (4,392) (93,222) (6,940) (100,285)
Net Revenue Activities (Note 1) (3,951) (3,270)
Servicing Cash Outflows
of Finance Interest Paid 876 942
Cash Inflows
Interest Received (240) (298)
Net Servicing of Capital 636 644
Capital Cash Outflows
Activities Purchase of Fixed Assets 3,537 5,711
Cash Inflows
Sale of Fixed Assets (925) (1,014)
Capital Grant received from SE 0 (4,237)
Capital contributed from other sources 0 (925) (16) (5,267)
Net Capital Activities 2,612 444
NET CASH (INFLOW)/OUTFLOW
BEFORE FINANCING (703) (2,182)
Management of Net Increase in Short Term Deposits 980 2,643
Liquid Resources
Financing Cash Outflows
Repayments of Amounts Borrowed 0 321
DECREASE IN CASH 277 782
Page 37
Grampian Joint Police Board Statement of Accounts 2004-05
NOTES TO THE CASH FLOW STATEMENT
1. Reconciliation of surplus on General Fund with Revenue Activities Sub Total
2004 2005
Total Total
£000's £000's
(Deficit) / Surplus for the year per Revenue Account (165) 1,250
Sub-total (A) (165) 1,250
Adjust Surplus For Items Accounted for Elsewhere
in Cash Flow Statement :-
Loans Pool Principal and Interest repayments 2,518 673
CFCR 739 0
Sub-total (B) 3,257 673
Sub Totals (A) + (B) 3,092 1,923
Adjust For Movements in Working Capital :-
Decrease / (Increase) in Stocks 75 (5)
(Increase) / Decrease in Debtors (520) 184
Decrease in Constituent Councils' Debt 201 (28)
Increase in Creditors 22 1,020
Increase in Provisions 1,081 176
Revenue activities sub-total per statement 3,951 3,270
2. Reconciliation to Net Debt
2004 2005
Movement Movement
£000's £000's
Decrease in Cash in the Period 277 782
Decrease in Debt and Lease Financing 0 (321)
Increase in Liquid Resources (980) (2,643)
Movement in Net Debt in Period (703) (2,182)
Net Debt at 1 April 4,138 3,435
Net Debt at 31 March 3,435 1,253
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Grampian Joint Police Board Statement of Accounts 2004-05
Analysis of Net Debt
1 Apr 2004 Cashflow 31 Mar 2005
£000's £000's £000's
Cash in Hand (15) 0 (15)
Overdrafts 706 782 1,488
Debt due after 1 year 9,316 (550) 8,766
Debt due within 1 year 321 229 550
Current Asset Investments (6,893) (2,643) (9,536)
Total 3,435 (2,182) 1,253
3. Reconciliation of relevant movements within the Financing and Management of
Liquid Resources
Balance at Balance at 2004 2005
31 Mar 2004 31 Mar 2005 Movement Movement
£000's £000's £000's £000's
Management of Liquid Resources
Short Term Investments 6,893 9,536 980 2,643
Management of Financing
PWLB Loans 9,637 9,316 0 (321)
4. Analysis of Government Grants
2004 2005
£000's £000's
Police Grant 42,837 44,259
Civil Defence Grant 123 123
Total Government Grants per Cash Flow Statement 42,960 44,382
Page 39
Grampian Joint Police Board Statement of Accounts 2004-05
GLOSSARY OF TERMS
EXPENDITURE
Staff Costs
Include wages, salaries, bonuses, allowances, overtime, employer's National Insurance and
Superannuation contributions. They also include pension payments made to pensioners and
other beneficiaries under the Police Pension Regulations which are funded directly from
revenue.
Premises Costs
Include rent, rates, repairs and maintenance, heating and lighting costs as well as feu duties,
metered water charges, etc.
Supplies, Services and Operational Costs
Include the cost of radio communications, materials, equipment, spare parts, protective clothing
and payments to contractors and others for the provision of services.
Transport Costs
Include the cost of maintaining all vehicles and plant, fuel, tyres, repairs, road tax, insurance,
travel and subsistence payments.
Administration Costs
Include telephone, printing, stationery, advertising, postages and staff training.
Payments to Agencies and Others
Payments to other organisations in return for providing service on behalf of the Board.
Capital Financing Charges
These are the costs of financing assets owned or controlled by the Board and include loan
repayments, interest charges, leasing charges and debt management expenses.
Capital Charges
The charge for the use of assets comprises depreciation together with a notional interest payment
which is prescribed by the CIPFA/LASAAC Joint Committee.
Capital Financed from Current Revenue (CFCR)
The cost of capital expenditure financed at the Board's discretion from within the Revenue Budget.
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Grampian Joint Police Board Statement of Accounts 2004-05
INCOME
Grants
Grants received from Scottish Executive in respect of a specific purpose or service, usually
calculated as a pre-determined percentage of the expenditure actually incurred.
Services of Police and Other Income
Include payments from third parties, other Local Authorities and Police organisations in return
for services provided to them.
Pension Contributions
These relate to the pension contributions received from Police Officers towards the provision of
future pension benefits.
OTHER
Revenue Expenditure
This is expenditure incurred in providing services in the current year and which benefits that
year only.
Capital Expenditure
This is expenditure incurred in creating, acquiring or improving assets where the expenditure is
normally financed by borrowing over a period of years or utilising the income from the sale of
existing assets.
Public Works Loan Board (PWLB)
This is a Government Agency which provides long term loans to the Joint Police Board.
Page 41
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