chief constable of durham constabulary...give a true and fair view of the financial position of the...

Chief Constable

for the year ended 31st March 2013

Statement of Accounts

of Durham Constabulary

ContentsPage

Explanatory Foreword 1 - 4

Independent Auditor's Report 5 - 7

Statement of Responsibilities 8

Movement in Reserves Statement 9

Comprehensive Income and Expenditure Statement 10

Balance Sheet 11

Cashflow Statement 12

Notes to the Accounts 13 - 21

Pension fund accounts 22 - 24

Glossary 25 - 26

Annual Governance Statement 27 - 41

The Chief Constable of Durham Constabulary Statement of Accounts 31 March 2013

Explanatory foreward

Introduction

Statement of Accounts

Information and Financial Statements

Following the Police Reform and Social Responsibility Act 2011, the Durham Police Authority was

abolished on 21 November 2012 and replaced with two corporation sole bodies, The Office of the

Durham Police and Crime Commissioner (Police and Crime Commissioner, PCC) and the Chief

Constable of Durham Constabulary (Chief Constable, CC). This set of accounts is the first to show the

financial position of the Chief Constable of Durham Constabulary. The financial position of the PCC and

the consolidated Group of the PCC and CC are set out in the PCC and Group accounts.

Movement in Reserves Statement (page 9): This statement does not show any transactions for the

year ended 31 March 2013 as the CC does not hold any reserves. All reserves are held and managed

by the PCC.

Comprehensive Income and Expenditure Statement (page 10): This discloses the expenditure

incurred in operating the Constabulary for the year.

Balance Sheet (page 11): The CC does not hold any assets, liabilities or reserves, all are held by the

PCC.

Cash Flow Statement (page 12): All payments were made and income received into the Police Fund

which is held by the PCC.

Statement of Responsibilities for the Statement of Accounts (page 8): This sets out the

responsibilities of the Chief Constable and the Chief Constable’s Chief Finance Officer.

The purpose of this foreword is to provide a clear guide to the most significant matters reported in the

Chief Constable’s Accounts. It explains the purpose of the financial statements that follow and

provides a summary of financial activities during 2012/13 and the financial position as at 31 March

2013.

This Statement of Accounts covers the financial year ended 31st March 2013 and has been prepared

in accordance with the provisions of the Accounts and Audit Regulations 2011, in accordance with the

Code of Practice on Local Authority Accounting in the United Kingdom 2012/13 and the Service

Reporting Code of Practice for Local Authorities 2012/13 (SeRCOP), supported by International

Financial Reporting Standards (IFRS).

The Statements required by the Code of Practice on Local Authority Accounting in the United Kingdom

2012/13 (the Code) are detailed below along with the objective of each statement.

The financial statements are as follows:

Independent Auditor's Report to the Chief Constable (pages 5 to 7): The Report of the External

Auditor on Chief Constable’s Accounts for the year ended 31 March 2013.

The Chief Constable of Durham Constabulary Statement of Accounts 31 March 2013 Page 1

Review of the Financial Year 2012/13

Original

BudgetActual

(Overspent) or

Underspent

£'000 £'000 £'000

101,803 101,018 785

4,734 4,481 253

3,056 3,020 36

2,430 2,325 105

7,871 8,585 (714)

23 20 3

119,917 119,449 468

Reduced demand for forensic science services was the main reason for spending within budget.

These costs impacted positively by effective fleet management were within budget.

The main reasons why costs were underspent were related to more effective energy and building

maintenance management and energy prices not increasing as much as expected.

The employee costs are under budget due to the timing of retirement and recruitment of police officers

and vacancies of police staff posts.

The Chief Constable’s spending is planned and controlled by a rigorous budget and financial management

process. The Chief Constable receives resources delegated from the PCC to deliver policing services to the

force area of County Durham and Darlington.

A comparison of actual revenue expenditure compared with budget is shown below together with an

explanation of the major variances.

Regional Collaborations

Transport

Agency Services

Supplies and Services

Support Costs

Gross Expenditure

Premises Related Costs

Transport Related Costs

Explanation of major variances:

Employee Related Costs

Revenue Spending

Employees

Premises


Cash Flow

Looking Ahead to 2013/14

Significant spend reductions and efficiencies were made to enable services to be delivered within the

allocated budget. Further spend reductions and efficiencies are being planned to manage the further

expected reductions in grant funding as part of the ongoing medium term financial planning process

for 2014/15, 2015/16 and future years.

The financial statements as detailed on pages 8 to 24 have been rounded to the nearest £1,000.


The main reasons for expenditure exceeding budget were related to the replacement of computing

equipment and professional fees.

All payments were made and income received into the Police Fund which is held by the PCC so there

were no cashflows within the Chief Constable's accounts.

Looking ahead, the Chief Constable plans to consume resources of £117.6m in 2013/14. The

Government’s four year Spending Review, covering the period 2011/12 to 2014/15 sets out

Government spending plans and the HM Treasury Spending Round 2013 announced in June 2013 set

out spending plans for 2015/16.

As a result of the current Review, the PCC has faced severe reductions in Formula Grant during the

period. The Spending Round announcement in June 2013 continues that trend of reductions in

Formula Grant.

International Accounting Standard 19

The Statement of Accounts also incorporates the effect of pensions liabilities accrued in order to

comply with International Accounting Standard 19 (IAS 19). Rather than accounting for the actual

expenditure on pensions, an assessment must be made by the Actuary of the costs accruing during the

year and this is incorporated within the accounts. The effect of the standard is to account for the

annual increase in pensions’ liability and total liability of both the unfunded and funded schemes as a

result of pension benefits earned by employees at the end of the financial year, which the PCC Group

is potentially committed to pay.

Roundings


Gary Ridley

Chief Constable's Chief Finance Officer

Acknowledgements

I would like to take this opportunity to thank the officers of the Chief Constable, who have produced

this Statement of Accounts.

Aykley Heads

Durham DH1 5TT

I hope that this document proves to be both informative and of interest to readers. It is important to

try and improve the quality and suitability of information provided and feedback is welcomed. If you

have any suggestions or comments on both the format of the report and its contents, or if you would

like any further information please contact, my office.

Telephone: 0191 375 2108

E-mail: [email protected]

or write to:

The Assistant Chief Officer

Police HQ


mailto:[email protected]

Opinion on the Chief Constable financial statements

Respective responsibilities of the Assistant Chief Officer and auditor

Scope of the audit of the financial statements

Independent Auditor's Report to the Chief Constable of Durham

Constabulary

We have audited the financial statements of the Chief Constable of Durham Constabulary for the year

ended 31 March 2013 under the Audit Commission Act 1998. The financial statements comprise the

Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement, the

Balance Sheet, the Cash Flow Statement, the Police Pension Fund Net Assets Statement and the Police

Pension Fund Account, and the related notes. The financial reporting framework that has been applied

in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority

Accounting in the United Kingdom 2012/13.

This report is made solely to the Chief Constable of Durham Constabulary in accordance with Part II of

the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 48 of the Statement

of Responsibilities of Auditors and Audited Bodies published by the Audit Commission in March 2010.

As explained more fully in the Statement of the Assistant Chief Officer’s Responsibilities, the Assistant

Chief Officer is responsible for the preparation of the Statement of Accounts, which includes the

financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of

Practice on Local Authority Accounting in the United Kingdom, and for being satisfied that they give a

true and fair view. Our responsibility is to audit and express an opinion on the financial statements in

accordance with applicable law and International Standards on Auditing (UK and Ireland). Those

standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

An audit involves obtaining evidence about the amounts and disclosures in the financial statements

sufficient to give reasonable assurance that the financial statements are free from material

misstatement, whether caused by fraud or error. This includes an assessment of: whether the

accounting policies are appropriate to the body’s circumstances and have been consistently applied

and adequately disclosed; the reasonableness of significant accounting estimates made by the

Assistant Chief Officer; and the overall presentation of the financial statements. In addition, we read

all the financial and non-financial information in the explanatory foreword to identify material

inconsistencies with the audited financial statements. If we become aware of any apparent material

misstatements or inconsistencies we consider the implications for our report.


Opinion on financial statements

In our opinion the financial statements:

•

•

Opinion on other matters

Matters on which we report by exception

We report to you if:

•

•

•

•

We have nothing to report in these respects.

Other matters on which we are required to conclude

•

•

•

As a result, we have concluded that there are no matters to report.

we exercise any other special powers of the auditor under the Audit Commission Act 1998.

We are required under Section 5 of the Audit Commission Act 1998 to satisfy ourselves that the Chief

Constable of Durham Constabulary has made proper arrangements for securing economy, efficiency

and effectiveness in its use of resources. We have undertaken our audit in accordance with the Code

of Audit Practice and, having regard to the guidance issued by the Audit Commission in November

2012, we have considered the results of the following:

our review of the annual governance statement;

the work of other relevant regulatory bodies or inspectorates, to the extent the results of the

work have an impact on our responsibilities;

our locally determined risk-based work.

we designate under section 11 of the Audit Commission Act 1998 any recommendation as one

that requires the Authority to consider it at a public meeting and to decide what action to take

in response; or

give a true and fair view of the financial position of the Chief Constable of Durham

Constabulary as at 31 March 2013 and of its expenditure and income for the year then ended;

and

have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local

Authority Accounting in the United Kingdom 2012/13.

In our opinion, the information given in the explanatory foreword for the financial year for which the

financial statements are prepared is consistent with the financial statements.

in our opinion the annual governance statement does not reflect compliance with ‘Delivering

Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June

2007 and the December 2012 addendum;

we issue a report in the public interest under section 8 of the Audit Commission Act 1998;


Certificate

Cameron Waddell CPFA

For and on behalf of Mazars LLP, Appointed Auditors

The Rivergreen Centre

Aykley Heads

Durham, DH1 5TS

We certify that we have completed the audit in accordance with the requirements of the Audit

Commission Act 1998 and the Code of Audit Practice issued by the Audit Commission.

27 September 2013


Statement of Responsibilities

The Chief Constable's Responsibilities

The Chief Constable is required to:

w

w

w Approve the Statement of Accounts.

The Assistant Chief Officer's Responsibilities

w selected suitable accounting policies and then applied them consistently

w made judgements and estimates that were reasonable and prudent

w complied with the Local Authority Code.

The Assistant Chief Officer has also:

w kept proper accounting records which were up to date

w taken reasonable steps for the prevention and detection of fraud and other

irregularities

Assistant Chief Officer's Certificate

G Ridley

G Ridley MBA CPFA Date 26 March 2013

Assistant Chief Officer

Chief Constable's Certificate

I confirm I have approved these accounts

M Barton

M Barton LL.B. Date 26 March 2013

Make arrangements for the proper administration of his financial affairs and to secure that one

of his officers has the responsibility for the administration of those affairs. In this organisation,

that officer is the Assistant Chief Officer.

Manage his affairs to secure economic, efficient and effective use of resources and safeguard

his assets.

The Assistant Chief Officer is responsible for the preparation of the Chief Constable's Statement of Accounts

in accordance with proper practices as set out in the CIPFA Code of Practice on Local Authority Accounting in

the United Kingdom 2012/13. In preparing this Statement of Accounts, the Assistant Chief Officer has:

I certify that the accounts present a true and fair view of the financial position of the Chief Constable of

Durham as at 31 March 2013 and of his income and expenditure for the year ended 31 March 2013. These

financial statements replace the unaudited financial statements certified by myself on 28 June 2013.


Years ended Police Earmarked Capital Total Unusable Total

31 March 2012 & Fund GF Receipts Useable Reserves Group

31 March 2013 Balances Reserves Reserves Reserves Reserves

£'000 £'000 £'000 £'000 £'000 £'000

Balance at 31 March 2011 - - - - - -

Total Comprehensive - - - - - -

Income and Expenditure

Adjustments between - - - - - -

accounting basis & funding

basis under regulations

Net (Increase)/Decrease - - - - - -

before Transfers to Earmarked

Reserves

Transfers to/from Earmarked - - - - - -

Reserves

Balance at 31 March 2012 - - - - - -

Total Comprehensive - - - - - -

Income and Expenditure

Adjustments between - - - - - -

accounting basis & funding

basis under regulations

Net (Increase)/Decrease - - - - - -

before Transfers to Earmarked

Reserves

Transfers to/from Earmarked - - - - - -

Reserves

Balance at 31 March 2013 - - - - - -

Movement in Reserves Statement for the Chief Constable of Durham

Constabulary

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

analysed into 'usable reserves' (ie those that can be applied to fund expenditure or reduce local

taxation) and other reserves.

This statement does not show any transactions for the year ended 31 March 2013 as the Chief Constable

does not hold any reserves. All reserves are held and managed by the PCC.


2011/12 2011/12 2011/12 2012/13 2012/13 2012/13

Restated Restated Restated

Gross Income Net Gross Income Net

Expenditure Expenditure Expenditure Expenditure

£'000 £'000 £'000 £'000 £'000 £'000

53,537 - 53,537 Local Policing 50,098 - 50,098

12,218 - 12,218 Dealing with the Public 11,827 - 11,827

13,209 - 13,209 Criminal Justice Arrangements 13,699 - 13,699

7,346 - 7,346 Road Policing 7,324 - 7,324

5,690 - 5,690 Specialist Operations 5,293 - 5,293

8,108 - 8,108 Intelligence 7,997 - 7,997

27,577 - 27,577 Investigations 28,368 - 28,368

4,554 - 4,554 Investigative Support 4,331 - 4,331

3,905 - 3,905 National Policing 3,069 - 3,069

10 - 10 Corporate and Democratic Core 6 - 6

Non Distributed Costs

450 - 450 Past Service Costs 970 - 970

136,604 - 136,604 Net Cost of Services before Funding 132,982 - 132,982

- (136,604) (136,604) PCC funding for resources consumed (132,982) (132,982)

136,604 (136,604) - Net Cost of Services 132,982 (132,982) -

This statement shows the accounting cost in the year for the Chief Constable of providing services at the

request of the PCC in accordance with generally accepted accounting practices. All costs are paid by the

PCC, the CC deploys assets, police officers and police staff to deliver the Police and Crime Plan. The

transfer of funding results in a nil cost of services in the CC accounts.

Comprehensive Income and Expenditure Statement for the Chief

Constable of Durham Constabulary for the Year Ended 31 March 2013

The 2011/12 figures have been restated to reflect classification changes as detailed in the Service

Reporting Code of Practice for Local Authorities - 2012/13 SeRCOP update”


£'000 £'000 £'000 £'000

- Property, Plant and Equipment -

- Intangible Assets -

- Total Long Term Assets -

- Assets held for Sale -

- Inventories -

- Short Term Debtors -

- Cash and Cash Equivalents -

- Total Current Assets -

- Short term Creditors -

- Total Current Liabilities -

- Provisions -

- Other Long Term Liabilities -

- Pensions Liability -

- Total Long Term Liabilities -

- Net Assets -

- Useable Reserves -

- Unusable Reserves -

- Total Reserves -

Balance Sheet for the Chief Constable of Durham Constabulary at 31

March 2013

31 March 2012 31 March 2013

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by

the Chief Constable. The net assets are matched by the reserves held by the Chief Constable.

The Chief Constable does not hold any assets, liabilities and reserves, these are all held by the PCC.

Therefore this statement does not show any balances at 31 March 2013.


2011/12 2012/13

£'000 £'000

Cash Inflow

- Cash Inflows generated from operating activities -

Cash Outflow

- Cash outflows generated from operating activities -

- Net cash flows from operating activities -

INVESTING ACTIVITIES

- Net cash flows from investing activities -

FINANCING ACTIVITIES

- Net cash flows from financing activities -

- Net increase or decrease in cash and cash equivalent -

- -

Less

- Cash and cash equivalents at the end of the reporting period -

- -

Cashflow Statement for the Chief Constable of Durham Constabulary

for the Year Ended 31 March 2013

The Cashflow Statement shows the changes in cash and cash equivalents of the Chief Constable during

the reporting period.

All payments were made and income received into the Police Fund which is held by the PCC.

OPERATING ACTIVITIES

Cash and cash equivalents at the beginning of the reporting period


1 ACCOUNTING POLICIES

1.1 General Principles

1.2 Revenue and Expenditure Recognition

1.3 Accruals of Income and Expenditure

w

w

1.4 Cash and Cash Equivalents

Notes to the Financial Statements for the Chief Constable of Durham

for the year to 31 March 2013

Expenses in relation to services received (including services provided by employees) are

recorded as expenditure when the services are received rather than when payments are

made.

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

inventories on the Balance Sheet of the Police and Crime Commissioner.

All cash is held by the Police and Crime Commissioner.

All expenditure is paid for by the Office of the Durham Police and Crime Commissioner, including the

wages of officers and police staff. The PCC is the recipient of all funding. The actual recognition in the

accounts of the two bodies is based on the economic benefit.

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

received. In particular:

The Statement of Accounts summarises the Chief Constable of Durham's transactions for the 2012/13

financial year and the position at the year-end of 31 March 2013. The Chief Constable is required to

prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2011 which require

accounts to be prepared in accordance with proper accounting practices. These practices primarily

comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2012/13 and the

Service Reporting Code of Practice for Local Authorities 2012/13 (SeRCOP), supported by International

Financial Reporting Standards (IFRS).

The accounting convention adopted in the Statement of Accounts is principally historical cost,

modified by the revaluation of certain categories of non-current assets and financial instruments.

On 22 November 2012, Durham Police Authority was replaced by two corporation sole bodies, the

Office of the Durham Police and Crime Commissioner and the Chief Constable for Durham

Constabulary. Both bodies are required to prepare separate Statements of Accounts.

The financial statements cover the 12 months to 31 March 2013.


1.5 Employee Benefits

Benefits Payable During Employment

Termination Benefits

Post Employment Benefits

Employees of the Group are members of two separate pension schemes:w The Police Pension Scheme for Police Officers, which is unfunded

w The Local Government Pensions Scheme, administered by Durham County Council.

The Police Pension Scheme for Police Officers

1.6 Events after the Balance Sheet date

w

w

those that provide evidence of conditions that existed at the end of the reporting period –

the Statement of Accounts is adjusted to reflect such events

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

Statement of Accounts is not adjusted to reflect such events, but where a category of

events would have a material effect, disclosure is made in the notes of the nature of the

events and their estimated financial effect.

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

Accounts.

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

include such benefits as wages and salaries, paid annual leave and paid sick leave, bonuses and non-

monetary benefits for current employees and are recognised as an expense for services in the year in

which employees render service to the Group. An accrual is made by the PCC for the cost of holiday

entitlements (or any form of leave, eg time off in lieu) earned by employees but not taken before the

year-end, which employees can carry forward into the next financial year. The accrual is charged to

PCC's Surplus or Deficit on the provision of Services , but then reversed out through the Movement in

Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the

holiday absence occurs.

Termination benefits are amounts payable as a result of a decision by the PCC to terminate an officer’s

employment before the normal retirement date or an officer’s decision to accept voluntary

redundancy and are charged on an accruals basis to the Net Cost of Services in the Comprehensive

Income and Expenditure Statement when the Group is demonstrably committed to the termination of

the employment of an officer or group of officers or making an offer to encourage voluntary

redundancy.

Both schemes provide defined benefits to members (retirement lump sums and pensions), related to

pay and service earned as employees working for the Group.

This is an unfunded defined benefit final salary scheme meaning that there are no investment assets

built up to meet the pensions liabilities, and cash has to be generated to meet actual pensions

payments as they eventually fall due. If the amounts receivable by the pensions fund for the year are

less than amounts payable, the Durham Police and Crime Commissioner must annually transfer an

amount to meet the deficit to the pension fund. This cost is then met by central government. If

however the pension fund is in surplus for the year, the surplus is required to be transferred from the

pension fund to the Durham Police and Crime Commissioner who then must repay the amount to

central government.

Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur


1.7 Financial Instruments

1.8 Overheads and Support Services

1.9

1.10 VAT

2 ACCOUNTING STANDARDS ISSUED NOT ADOPTED

The costs of overheads and support services are charged to those that benefit from the supply or

service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice

2012/13 (SeRCOP). The total absorption costing principle is used – the full cost of overheads and

support services are shared between users in proportion to the benefits received.

The CC does not hold any assets or liabilities, these are held by the PCC and details of the Financial

Instruments are shown in the financial statements of that body.

VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty’s

Revenue and Customs. VAT receivable is excluded from income.

Government Grants and Contributions

All government grants and contributions are paid to the Durham Police and Crime Commissioner.

In accordance with the Code, the Chief Constable shall disclose information relating to the the impact

of an accounting change that will be required by a new standard that has been issued but not yet

adopted. This requirement applies to accounting standards that come into effect for financial years

commencing on or before 1 January 2013.

IAS 19 Employee Benefits. The revised standard will increase the expenses recognise for funded

benefits. If this was adopted for the year ended 31 March 2013, the Local Government Pension

Scheme expenses recognised for funded benefits would increase from £5,260k to £5,960k. There

would be no effect on the Balance Sheet. The Police Officer Pension fund would remain unchanged.

IAS 1 Presentation of Financial Statements. The main change is a requirement to group items

presented in Other Comprehensive Income on the basis of whether they are potentially reclassifiable

to profit or loss at a future date. The main items which are most likely to require reclassifying are

exchange differences on translating operations, cash flow hedging and available for sale financial

assets, At present the CC does not hold these types of instruments and so this will not impact the

financial statements of the CC.


3 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

4 MATERIAL ITEMS OF INCOME AND EXPENSE

5 EVENTS AFTER THE BALANCE DATE

The Chief Constaable's Statement of Accounts was authorised for issue by the Assistant Chief Officer

on 28 June 2013. Events taking place after this date are not reflected in the financial statements or

notes. Where events taking place before this date provided information about conditions existing at

31 March 2013, the figures in the financial statements have been adjusted in all material respects to

reflect the impact of this information.

There are no material items of income and expense which are not already disclosed on the face of the

Comprehensive Income and Expenditure Statement or in the associated notes

In applying the accounting policies set out in Note 1, the Chief Constable has had to make certain

judgements about complex transactions or those involving uncertainty about future events.

Staff Costs. All staff are employed and paid by the PCC. These staff deliver the Police and Crime Plan.

All staff costs and IAS 19 costs are shown in the accounts of the PCC.

Transition Basis. The transition has been accounted for in line with the CIPFA Code of Practice for

Local Authority Accounting 2012/13 and LAAP Bulletin 95 Accounting for the Impact of Police Reform

which suggest that this is accounted for using merger accounting as per FRS 6 Acquisitions and

Mergers. PCC has applied merger accounting from 1 April 2012. This has resulted in the accounts for

the Durham Police and Crime Commissioner, for the Group and for the Chief Constable showing the

financial information from 1 April 2012.

Statutory Accounts. Both the PCC and the CC are separate bodies listed under schedule 2 of the Audit

Commission ct 1998 and so must produce statutory accounts. Both bodies comply with chapter 9 of

the code and so group accounts must be produced also.

Pension Fund Accounts. All payments are made from and receipts made to the Police Fund

administered by the PCC. The CC is responsible for administering the Police Pension Fund in

accordance with the Police Reform and Social Responsibility Act 2011. Therefore the Pension Fund

Accounts have been included in financial statements of the CC and the Group.

Asset and Liability Recognition. Long term control and long term access to the economic benefits

associated with assets such as buildings rests with the PCC. All expenditure is made by the PCC and CC

deploys assets to deliver the Police and Crime Plan. Therefore the assets and liabilities are recognised

on the Balance Sheet of the PCC.

Pension Fund Liability. The PCC as holder of the Police Fund is responsible for the the long term

funding and payment of pension costs to the pension fund. Any funding is received by the PCC. The

pension fund liability is recognised on the Balance Sheet of the PCC.


6

6.1 Introduction

6.2 Basis of transition

6.3 Accounting Principles

All payments for the group are made by from the Police Fund and all income and funding is received

into it. This includes all staff costs. The PCC is responsible for the funding of pension liabilities.

The Comprehensive Income and Expenditure Statement of the CC shows the accounting cost in the

year for the CC of providing services at the request of the PCC to deliver the Police and Crime Plan.

THE CREATION OF THE OFFICE OF THE DURHAM POLICE AND CRIME COMMISSIONER

AND THE CHIEF CONSTABLE OF DURHAM CONSTABULARY

Following the Police Reform and Social Responsibility Act 2011 (The Act), The Durham Police Authority

was replaced on 22 November 2012 with two corporation sole bodies, The Office of the Durham

Police and Crime Commissioner and the Chief Constable of Durham Constabulary. This set of accounts

is the first to show the financial position of The Chief Constable of Durham Constabulary.

The transition has been accounted for in line with the CIPFA Code of Practice for Local Authority

Accounting 2012/13 and LAAP Bulletin 95 Accounting for the Impact of Police Reform which suggest

that this is accounted for using merger accounting as per FRS 6 Acquisitions and Mergers. The Office of

the Durham Police and Crime Commissioner has applied merger accounting from 1 April 2012. This

has resulted in the accounts for the Durham Police and Crime Commissioner, for the Group and for

the Chief Constable showing the financial information from 1 April 2012.

On 22 November 2012 the assets, liabilities and reserves of the Durham Police Authority were

transferred to the Durham Police and Crime Commissioner. The International Accounting Standards

Board states that assets, liabilities and reserves should be recognised where it is probable that any

future benefit associated with the item will flow to or from the entity. The PCC holds all assets,

liabilities and reserves and is responsible for the police pension liability. Local arrangements confirm

this.

Based on the statutory responsibilities and local arrangements, it has been agreed that all the assets,

liabilities and reserves are recognised on the Balance Sheet of the Durham Police and Crime

Commissioner.


7 OFFICERS' REMUNERATION

The remuneration paid to the senior staff of the Chief Constable as follows:

31 March 2013 Salary Benefits Allowances Employers Total

in kind Pension

Contributions

£ £ £ £ £

Chief Constable - M Barton (from 4/10/2012) 66,346 2,529 1,794 - 70,669

Chief Constable - TJ Stoddart (to 3/10/2012) 65,946 3,650 7,025 15,959 92,580

Deputy Chief Constable (from 4/10/2012) 54,859 2,842 1,202 13,276 72,179

Deputy Chief Constable (to 3/10/2012) 54,891 2,529 4,109 - 61,529

Assistant Chief Constable (from 4/10/2012) 45,304 2,230 1,201 10,954 59,689

Assistant Chief Constable (to 3/10/2012) 52,924 2,841 - 12,807 68,572

Assistant Chief Officer 94,167 - 4,264 14,502 112,933

31 March 2012 Salary Benefits Allowances Employers Total

in kind Pension

Contributions

£ £ £ £ £

Chief Constable - TJ Stoddart 130,264 7,164 5,980 31,402 174,810

Deputy Chief Constable 109,782 5,058 5,789 - 120,629

Assistant Chief Constable 106,410 4,549 2,403 25,752 139,114

Assistant Chief Officer 91,288 - 4,263 13,740 109,291

£80,000 - £84,999 3 2

£85,000 - £89,999 3 2

£70,000 - £74,999 4 5

£75,000 - £79,999 6 3

£60,000 - £64,999 6 6

£65,000 - £69,999 3 3

£55,000 - £59,999 33 40

The Chief Constable's other employees receiving more than £50,000 remuneration for the year (excluding

employer's pension contributions) were paid the following amounts

Remuneration Band Number of Employees

2011/12 2012/13

£50,000 - £54,999 79 73


Exit

package

cost band

(including

special

payments)

2011/12 2012/13 2011/12 2012/13 2011/12 2012/13 2011/12 2012/13

£ £

£0-£20,000 - - 9 12 9 12 65,270 124,253

£20,001-

£40,000- - 1 1 1 1 36,600 22,688

£40,001-

£60,000- - 1 1 - 54,505 -

- - 11 13 11 13 156,375 146,941

8 EXTERNAL AUDIT COSTS

9 RELATED PARTIES

Central Government

Central government has effective control over the general operations of the Chief Constable. It is

responsible for providing the statutory framework within which the Chief Constable operates, provides

the majority of its funding in the form of grants which are paid to the Police and Crime Commissioner and

prescribes the terms of many of the transactions that the Group has with other parties. Grants received

by the Group from government departments are included within the Comprehensive Income and

Expenditure Statement of the Police and Crime Commissioner and the Group.

The Chief Constable is required to disclose material transactions with related parties ie bodies or

individuals that have the potential to control or influence or be controlled/influenced by the Chief

Constable. Disclosure of these transactions allows readers to assess the extent to which the Chief

Constable may have been constrained in his ability to operate independently or might have secured the

ability to limit another party’s ability to bargain freely with the Chief Constable. Transactions should be

disclosed where material to either the organisation or individual with whom the transaction has been

incurred.

The numbers of exit packages for the Chief Constable with the total cost per band and total cost of the

compulsory and other redundancies are set out in the table below:

Number of

compulsory

redundancies

Number of other

departures agreed

Total number of exit

packages by cost

band

Total cost of exit

packages in each band

The Chief Constable has incurred the following costs in relation to the audit of the Statement of Accounts

£20,000. An additional fee of £500 was charged to facilitate an IAS 19 workshop.


Other Public Bodies

Officers

10 DEPRECIATION AND AMORTISATION

11 REGIONAL COLLABORATION

The Commissioner has collaborative arrangements with other local Forces as follows:

w Cleveland and Durham Fingerprint Bureau (CDFB)

Contribution for 2012/13 was £328,725 (£339,606 in 2011/12)

w North East Air Support Unit (NEASU)

w Tactical Training Centre (TTC)


w Regional Intelligence Unit (RIU)


w Cleveland and Durham Special Operations Unit (CDSOU)

31 March 31 March

2012 2013

£'000 £'000

11,243 11,428

618 686

194 153

12,055 12,267

(6,045) (6,137)

(6,010) (6,130)

0 0

The Office of the Durham Police and Crime Commissioner

The Police and Crime Commissioner for Cleveland

Balance

Employees

Transport


Gross Expenditure

Funded by :-

All transactions with other public bodies were made with the PCC and are disclosed in the PCC's

financial statements.

There were no related party transactions involving the Chief Constable, or chief officers of the

Constabulary.

Within the CC's Comprehensive Income and Expenditure Statement, gross service expenditure

includes £4,647k of depreciation and amortisation borne by the PCC relating to the property, plant

and equipment of the PCC.

Contribution for 2012/13 was £571,166 (£622,208 in 2011/12). On 1 April 2013, the assets

The Special Operations Unit was set up during 2011/12 and is collaboration between the

Durham Police and Crime Commissioner and the Police and Crime Commissioner for

Cleveland to deliver roads policing and firearms response.


12 LEASES

13 DEFINED BENEFIT PENSION SCHEMES

Transactions Relating to Retirement Benefits

2011/12 2012/13 2011/12 2012/13

£'000 £'000 £'000 £'000

3,440 3,630 22,380 21,250

390 30 60 940

5,530 5,700 55,470 51,500

4,840 5,280 77,910 73,690

10,028 (2,810) 15,120 126,360

14,868 2,470 93,030 200,050

Other post employment benefit charged to the CIES

Actuarial gain/loss

Net Charge to the CIES

Expected return on assets in the scheme(4,520) (4,080) - -

Total post employment benefit charged to the

Comprehensive Income and Expenditure Statement

Net Cost of Service

Current service cost

Past service cost

Finance and Investment Income and Expenditure

Interest cost

Operating Leases

In 2007/08 Durham Police Authority acquired ‘Livescan’ under an operating lease relating to the

taking of fingerprints. This has been taken over by the Durham Police and Crime Commissioner.

Rentals amounting to £65,328 have been charged to the Comprehensive Income and Expenditure

Statement during 2012/13 (£65,328 in 2011/12). Future years’ rentals are £65,328 each year for

2013/14 and 2014/15.

The PCC recognises the costs of retirement benefits in the Net Cost of Services part of the

Comprehensive Income and Expenditure Statement when they are earned by employees, rather than

when the benefits are eventually paid as pensions. However, the charge required to be made against

Council Tax is based on the cash payable in the year, so the actual cost of retirement benefits

following transactions have been made in the Comprehensive Income and Expenditure Statement

during the year as follows:

Local Government Police

Pension Scheme Pension Scheme


PENSION FUND ACCOUNTS

2011/12 2011/12 2012/13 2012/13

£'000 £'000 £'000 £'000

(14,608) (12,540)

(35) (15)

(5,666) (6,073)

(20,309) (18,628)

Transfers in

(57) (893)

(389) (337)

25,730 27,572

9,328 6,419

83 0

35,141 33,991

- -

139 641

14,525 14,774

(14,525) (14,774)

- -

Benefits payable

Pensions

Commutations and lump sum retirement benefits

Lump Sum Death Benefit

Under the new arrangements the Pension Fund is balanced to nil at the end of the year by transferring from

the Police and Crime Commissioner’s Income and Expenditure Account an amount equivalent to the deficit

on the Fund. There are no investment assets relating to the Police Pension Fund.

Reimbursement of unabated pensions of ‘30+’ police officers

From members

Individual transfers in from other schemes

Recharges to other local Authorities

Net recharges

The funding arrangements for the Police Pension Scheme in England and Wales changed from 1 April 2006.

Before 1 April 2006 the scheme did not have a percentage of pensionable pay type of employer’s

contributions: rather each Police Authority was responsible for paying the pensions of its former employees

on a pay-as-you-go basis. Under the current funding arrangements the Scheme remains unfunded but no

longer on a pay-as-you-go basis as far as an individual Police and Crime Commissioner is concerned. The

Police and Crime Commissioner no longer meets the pension outgoings directly: instead they pay an

employer’s pension contribution based on a percentage of pay into the Pension Fund. Each individual

Policeand Crime Commissioner is required to operate a Pension Fund and the amounts that must be paid

into and paid out of the Pension Fund are specified by regulations.

The transactions of the Police Pension Fund are as follows. Net assets are included within the Police and

Crime Commissioner’s Balance Sheet.

Police Officer Pension Fund Account 2012/13

Contributions receivable

From employer

Payments to and on account of leavers

Refund of contributions

Individual transfers out to other schemes

Net amount payable for the year receivable from the Home

Office

Year end balance

Contribution from PCC in respect of deficit on the Police

Pension Fund Account


PENSION FUND ACCOUNTS cont.

As at

31 March

2012

As at

31 March

2013

£'000 £'000

Current Assets

3,862 Short Term Debtors 2,136

Current Liabilities

-87 Payables -1

-3,775 Cash -2,135

- Net Current Assets/Liabilities -

0 0

1 Basis of Preparation

2 Accounting Policies

Benefits

The financial statements do not take account of liabilities to pay pensions and other benefits which fall due

after the end of the financial year.

The pension fund accounts have been prepared in accordance with the CIPFA Code of Practice on local

Authority Accounting in the United Kingdom 2012/13.

The principal accounting policies are as follows:

Police Officer Pension Fund Asset Statement

The Police and Crime commissioner is also required to make payments into the Pension Fund in respect of

ill-health retirements when they are granted.

In accordance with the accruals concept benefits are accounted for in the year in which they become due

for payment.

Transfer Values

Transfer values are those sums paid payable by or receivable from, other pension schemes for individuals

only and relate to periods of previous pensionable employment. Transfers are accounted for on a receipts

and payments basis.

Contributions

Contributions represent the total amount receivable from the Police and Crime Commissioner and

pensionable employees. The contributions are made at rates determined by the Government Actuaries

Department. The Employer’s contributions are set at a nationally applied rate of 24.2% pensionable pay.

For 2012/13 the employee’s contributions are dependant on salary: 12.25 or 12.5% for the Police Officers

Pension Scheme 1987 and 10.1,10.5 or 10.75% for the Police Officers Pension Scheme 2006.


PENSION FUND ACCOUNTS cont.

Net Current Assets

The carrying amounts of current assets is shown below:-

As at

31 March

2012

As at

31 March

2013

£'000 £'000

Debtors

3,862 2,136

- -

3,862 2,136

Net Current Liabilities

As at

31 March

2012

As at

31 March

2013

£'000 £'000

Payables

(64) -

(23) (1)

Others - -

(87) (1)

Government Departments

Local Authorities

Government Departments

Local Authorities

Current Assets and Liabilities

The current assets and liabilities are measured at fair value and carried at their amortised cost.


GLOSSARY

Accruals

The concept that income and expenditure are recognised as they are earned or incurred, not as money

happens to be received or paid.

Budget

The Commissioner’s plans and policies expressed in financial terms.

Cash

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on

notice of not more than 24 hours.

Cash Equivalents

Cash equivalents are investments that mature within three months or less from the date of acquisition and

that are readily convertible to known amounts of cash with insignificant risk of change in value.

Chartered Institute of Public Finance and Accountancy (CIPFA)

The principal accountancy body dealing with local authority finance.

CIPFA Service Reporting Code of Practice (SeRCOP)

Replaced the previous Best Value Accounting Code of Practice. SeRCOP provides a consistent framework

for reporting local authority,including police authority,data.

Collection Funds

Funds administered by Durham County Council and Darlington Borough Council in which individuals’

Council Tax payments are paid. The Commissioner raises precepts on the funds to finance part of net

revenue expenditure.

Collection Fund Adjustment Account

The account through which to implement the accruals basis for recording the precept without affecting the

bottom line for taxpayers.

Contingency

The sum of money set aside to meet unforeseen expenditure or liability.

Council Tax

The local tax levied on householders, based on the relative market values of property, which helps to fund

local services.

Current Assets

Items that can be readily converted into cash.

Current Liabilities

Items that are due immediately or in the short-term.

Debtors

Persons or bodies who owe sums to the Commissioner.

Earmarked Reserves

These represent monies set aside that can only be used for a specific purpose.

Employee Benefits

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

salary, paid annual leave, paid sick leave, bonuses and non-monetary benefits for current employees and

are recognised as an expense in the year in which the employee renders service to the Commissioner. An

accrual is made for the cost of the benefit earned by an employee but not taken before the year end. The

accrual is charged to the surplus or deficit on the provision of Services, but then reversed out through the

Movement in Reserves Statement.

Interest Income

The money earned from the investment of surplus cash.


International Financial Reporting Standards (IFRS)

TheCommissioner’s financial statements have been prepared in accordance with the following statutory

accounting standards adopted by the International Accounting Standards Board (IASB):

International Financial Reporting Standards (IFRS)

International Accounting Standards (IAS)

Interpretations of the International Financial Reporting Interpretations Committee (IFRIC)

Interpretations of the Standing Interpretations Committee (SIC)

National Non-Domestic Rates (NNDR)

The business rate in the pound is the same for all non-domestic ratepayers and is set annually by the

government. Income from business rates goes into a central government pool that is then distributed to

authorities according to resident population.

Net Book Value

The amount at which fixed assets are included in the balance sheet, ie their historical cost or current value

less the cumulative amounts provided for depreciation.

Outturn

The actual amount spent in the financial year.

PayablesPersons or bodies to whom sums are owed by the Authority.Payments in Advance

These represent payments prior to 31st March for supplies and services received after 1st April.

Receipts in Advance

These represent income received prior to 31st March for supplies and services provided after 1st April.

Retirement Benefits

All forms of consideration given by an employer in exchange for services rendered by employees that are

payable after the completion of employment.

Revenue Expenditure and Income

Expenditure and income arising from the day to day operation of the Commissioner’s service.

Revenue Support Grant (RSG)

General government grant to assist in financing the overall net cost of services.

Running Expenses

All expenses other than those relating to employees and the financing costs of capital expenditure (capital

financing costs and revenue contributions). Running expenses include expenditure on maintenance of

buildings, consumable supplies, transport etc.

Termination Benefits

Amounts payable as a result of a decision to terminate an officer’s employment before the normal

retirement date or an officer’s decision to accept voluntary redundancy. They are charged on an accruals

basis to the Net Cost of Service in the Comprehensive Income and Expenditure Statement.

UK GAAP – Generally Accepted Accounting Standards

As IFRS is primarily drafted for the commercial sector and therefore does not address all accounting issues

relevant to local government in the UK, the Code prescribes a hierarchy of alternative standards on which

the accounting treatment and disclosures should be based where appropriate. The hierarchy comprises:

Financial Reporting Standards (FRS)

Statements of Standard Accounting Practice (SSAP)

Pronouncements of the Urgent Issues Task Force (UITF)


CHIEF CONSTABLE OF DURHAM ANNUAL GOVERNANCE STATEMENT 2012/13

ANNUAL GOVERNANCE STATEMENT 1. SCOPE OF RESPONSIBILITY Durham Constabulary is responsible for ensuring that its business is conducted in accordance with the financial governance arrangements outlined in the Financial Management Code of Practice for the Police Service of England and Wales (2012). The police service also has a statutory duty to secure value for money in the use of public funds. In discharging this overall responsibility, Durham Constabulary is responsible for putting in place proper arrangements for the governance of its affairs and facilitating the exercise of its functions, which includes the management of risk. Durham Constabulary established a Corporate Governance Framework through which the Chief Constable can be assured that the Force’s systems, policies and people are operating in a way that is driving the delivery of agreed corporate objectives, are focused on the key risks to the delivery of those objectives and are economic, efficient and effective. This statement meets the requirements of regulation 4(3) of the Accounts and Audit (England) Regulations 2011 in relation to the publication of an Annual Governance Statement (AGS). 2. THE PURPOSE OF THE GOVERNANCE FRAMEWORK The governance framework comprises the systems, processes, culture and values, by which the Force is directed and controlled and the activities through which it accounts to and engages with and leads its community. It enables the Force to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services, including achieving value for money. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Force’s policies, aims and objectives, to evaluate the likelihood and potential impact of those risks being realised and to manage them efficiently, effectively and economically. The governance framework has been in place at Durham Constabulary for the year ended 31 March 2013 and up to the date of the approval of the statement of accounts. 3. THE GOVERNANCE FRAMEWORK The Chief Constable is responsible for operational policing matters, the direction and control of police personnel, and for putting in place proper arrangements for the governance of the Force. Durham Police Authority was required to hold the Chief Constable to account for the exercise of those functions and those of the persons under his direction and control. Following the introduction of the Police Reform & Social

Responsibility Act 2011, Durham Police Authority was replaced by the Police and Crime Commissioner for Durham on 22 November 2012, therefore this statement makes reference to governance, where appropriate, under both arrangements. The features of the control environment that existed under the Durham Police Authority prior to the transfer of Strategic Governance responsibilities to the Commissioner are set out at Appendix A. The AGS provides a summary of the extent to which the Force meets the six principles of good governance as identified in the revised Delivering Good Governance in Local Government: Guidance Note for Police (2012).

Principle 1 Focusing upon the purpose of the PCC and the Force, and on outcomes for the community, and creating and implementing a vision for the local area To achieve this, the Chief Constable:-

• set out the Durham Constabulary’s vision and purpose in accordance with the Police and Crime Plan which sets out policing priorities to be delivered and which is reviewed annually

• decides how the quality of service for users is to be measured and ensures that the information needed to review service quality effectively and regularly is available;

• provides a commitment to the public to deliver excellent policing to inspire confidence and deliver high satisfaction to victims and local communities in accordance with the Force’s Aiming for Excellence philosophy and through 3 key themes of protecting neighbourhoods, tackling criminals and solving problems around the clock.

• works in partnership with Durham University to better understand the drivers of public confidence in relation to reducing crime and Anti Social Behaviour, improve PACT awareness and feeling informed

• engages with the public to better understand and address issues that have a negative impact on communities

• has a robust performance framework that ensures the Chief Constable is informed of progress against key performance targets.

• has effective arrangements in place to ensure the Constabulary performs to high standards and to identify and deal with failure in service delivery;

• established a Medium Term Financial Plan supported by robust, sustainable multi-year budgets

• continuously improves processes to ensure that the information needed to review performance in achieving value for money effectively and regularly is available;

• has reviewed many of the Force’s key functions and departments and embedded the new force operating model to ensure the delivery of effective policing with reduced numbers of staff. Frontline policing services are prioritised to ensure changes made will provide a maintained or improved service to the communities of County Durham and Darlington in future years – HMIC Policing in austerity: One year on

• compares performance against peer data as provided within the HMIC VFM profile – Valuing the Police 3 and seeks improvement where best practice is identified; and

• has a robust complaints process in place.

Principle 2 Leaders, officers and partners working together to achieve a common purpose with clearly defined functions and roles To achieve this, the Chief Constable:-

• monitors the efficient and effective management of human, financial and environmental resources. Clear examples of this have been the Estates Programme which has a heavy focus on reducing the impact upon the environment, adopting modern working methods and renewing key IT systems eg Blue Delta and Red Sigma.

• reviewed and implemented a new governance structure in relation to change management and improvement, termed the Service Improvement Programme. This recognised the need to sustain improvement in service delivery to the public, particularly in relation to public confidence indicators, whilst demonstrating value for money in the context of shrinking budgets.

• promotes an ethos of continuous improvement across the force in order to reduce organisational costs and improve performance. In practice this is driven through the Continuous Improvement Programme Board which commissions activities and oversees outcomes from the Strategic Programme Boards of Citizens Journey, Futures and Efficient Use of Resources. Each board is chaired by a Force Executive Officer;

• Individual programmes contain business cases to ensure value for money, programme and project plans to ensure effective resource management, quality measures; and projected benefits for communities.

• utilises “Plan on a Page” a well established strategic planning approach which combines the vision, business plan, performance and risk all within one document. Strategic business risks are discussed and debated at the monthly Force Management Group where a determination is made as to their level and the plan updated. As a minimum this is done across all business areas every three months, but may be done more dynamically as a new risk remerges. The plan utilises a balanced scorecard approach and links all the business areas within force, and the requirement to achieve value for money. Operational risks are overseen at the monthly Force Threat and Risk meeting which is the highest level operational meeting under the National Intelligence Model in Force.

• actively pursues joint working opportunities at a local, regional and national level, which has resulted in a number of policing services being delivered in collaboration with other forces or organizations; and

• ensures when working in partnership that the arrangements for governance and accountability for performance and financial administration are clearly articulated and disseminated;

Principle 3 Promoting values for the Force and demonstrating the values of good governance through upholding high standards of conduct and behaviour To achieve this, the Chief Constable:-

• has a detailed organisational structure, with clearly defined responsibilities and terms of reference, which are monitored and updated when required;

• has established clear roles and responsibilities for each of his senior officers. There is a formal Constabulary accountability/performance management framework and

each officer is subject to the Constabulary Personal Development Review procedures.

• ensures that officers and staff carry out their respective roles in a climate of openness, support and respect;

• has developed standards of conduct and personal behaviour which are defined and communicated through appropriate codes of conduct and protocols;

• is implementing recommendations contained within the HMIC public interest report – Without Fear or Favour that looked at police relationships with media and other parties, information disclosure, hospitality and gratuities, business interests procurement and contracts, and those of the follow up report - Revisting police relationships.

• has delivered Leading through Standards of Professionalism training via its Professional Standards Department to Officers and staff.

• has adopted a policy on counter fraud and corruption which clearly sets out the procedures to be operated and which is designed to encourage prevention, promote detection and identify a clear pathway for the investigation of fraudulent and/or corrupt practices or behaviour.

• has appropriate and long established Whistle-blowing arrangements and processes in place within the Constabulary; and

• has established procedures for dealing with and investigating complaints which are in line with national guidelines.

Principle 4 Taking informed and transparent decisions, which are subject to effective scrutiny and managing risk

To achieve this, the Chief Constable:-

• develops and maintains effective mechanisms for documenting evidence for decisions and recording the criteria, rationale and considerations;

• develops and maintains effective arrangements to challenge and scrutinise the Constabulary’s own performance and compliance with other requirements;

• provides objective and timely information which is necessary to take balanced and informed decisions;

• ensures that risk management is embedded and is used effectively to inform and focus decision making

• ensures the Constabulary has effective, transparent and accessible arrangements in place for dealing with complaints;

• ensures the Constabulary reviews and revises as appropriate its key governance documents, i.e. financial regulations and contract procedure rules;

• provides the PCC and External Audit with Revenue and Capital Monitoring reports on a regular basis; and

• worked with the PCC to establish a Joint Audit Committee. Principle 5 Developing the capacity and capability of all to be effective in their roles To achieve this, the Chief Constable:-

• has established clear roles and responsibilities for each of the Constabulary’s senior officers. There is a formal Constabulary accountability/performance management

framework and each officer is subject to the Constabulary Personal Development Review procedures.

• has robust performance management arrangements within the Constabulary which enables each officer’s needs, training and development requirements to be identified. The framework enables officers to work with their line managers to agree the appropriate actions to address their needs and regular reviews of progress are held

• ensures that all police staff are issued with contracts of employment, each role is covered by a job description, all of which are processed through the Constabulary job evaluation scheme to determine the appropriate remuneration for the role. All changes to terms and conditions of contracts or to job descriptions are negotiated through the police staff group.

• Police Officers are servants of the Crown, their terms and conditions are provided for under national police regulations. The Constabulary has a range of policies to support the implementation of the national regulations, and any changes to these policies are negotiated/subject to consultation through the Personnel User Group.

• takes into account previous training and experience when considering officer postings;

• considers succession planning of key roles within departments;

• ensures that PDRs / CPD is carried out; and

• ensures that key training is provided to Officers and staff including First Aid Training and Personal Safety Training.

Principle 6 Engaging with local people and other stakeholders to ensure robust public accountability

To achieve this, the Chief Constable:-

• holds regular meetings with local communities through the Police and Communities Together (PACT) initiative which offers the community a chance to be heard, to discuss issues that affect communities, to agree local action to tackle these issues and agree priorities.

• works with partner organisations through the Safe Durham Partnership to tackle crime, disorder, anti-social behaviour, substance misuse, other behaviour adversely affecting the local environment and to reduce re-offending as required by the Crime and Disorder Act 1998 and amended by the Police and Justice Act 2006 .

• The Safe Durham Partnership has developed a Partnership Plan as part of its statutory responsibility to develop a three year plan to tackle priorities identified from the County Durham Joint Strategic Assessment and public consultation.

• regularly publishes information on the Constabulary’s work and achievements

• undertakes a local Public Confidence Survey highlighting public confidence levels and concerns at a local level about policing in their neighbourhood.

• created the ring back bureau to engage directly with the victims of crime and keep them informed;

• is working with a group of volunteers who are undergoing training to develop a restorative approach to tackling crime and anti-social behaviour within the community. The volunteers are mostly local people who are giving their time to act as facilitators, bringing together victims and offenders to talk about the impact of an incident and what can be done to put things right.

• undertakes a victim satisfaction survey which provides the Force with information about the quality of service they have received from the Police service; and

• holds regular meetings through Neighbourhood Policing teams with the public to discuss local policing priorities and activities to focus work upon. Feedback from these meetings are also included as part of the Force’s priority setting process.

4. REVIEW OF EFFECTIVENESS Durham Constabulary has responsibility for conducting, at least annually, a review of the effectiveness of the governance framework, including the system of internal control. The review of effectiveness is informed by the work of the executive managers within the Force who have responsibility for the development and maintenance of the governance environment, the Annual Report of the Head of Internal Audit, and also by comments made by the external auditors and other review agencies and inspectorates. Based on Internal Audit work undertaken during 2012/13, the Head of Internal Audit has issued a Substantial overall assurance opinion on the adequacy and effectiveness of internal control operating across the Constabulary in 2012/13. This significant opinion ranking provides assurance that there is a sound system of control. However, there are some minor weaknesses, which may put some of the system objectives at risk, details of which are reported within the Head of Internal Audit’s progress reports. During the year the following Internal Audit Reports were provided: Finance Audit and Resources Committee Internal Audit Plan 2012/13 Analysis of Internal Audit Rejected Recommendations Fraud and Corruption Draft Annual Governance Statement 2011/12 (included as Report of Treasurer) Review of the effectiveness of Internal Audit (included as Report of the Treasurer and Chief Constable) Annual Internal Audit Report 2011/12 Risk Based Internal Audit Approach and Assurance Mapping Report on Force Business Continuity Planning Arrangements Annual Governance Statement 2011/12 (included as Report of Treasurer) Police Authority Internal Audit Progress Report 01 April 2012 to 30 September 2012 Fraud and Corruption - National Fraud Initiative 2012/13 Members’ Assurance Statement Annual Governance Statement 2011/12 (included as Report of Treasurer) Executive Board Progress Report 01 April 2012 to 31 December 2012 Progress Report 01 April 2012 to 31 March 2013

Internal Audit Plan 2013/14 (included as part of Joint Report of Treasurer and Assistant Chief Officer re provision of Internal Audit Services)

5. SIGNIFICANT GOVERNANCE ISSUES The Chief Constable is fully committed to the principles of corporate governance, and has worked closely with the Police and Crime Commissioner who took office in November 2012 to develop / enhance arrangements in place. Following the production of the Annual Governance Statement for 2011/12, an action plan was produced that contained 2 recommendations relating to the Force. Progress made in implementing each of these has been tracked during the year and formed the starting point of the work to produce the 2012/13 Annual Governance Statement. The following matters, identified in preparing the Statement and relevant at the time of its adoption, are considered to be significant. The announcements in respect of the next Comprehensive Spending Review have indicated that the headline figures for Government Departmental savings for the forthcoming financial years will continue to see funding reductions, coupled with limitations on raising Council Tax. This will prove increasingly challenging to the Force in terms of sustaining ongoing service delivery and will require a continuous review of officer and staffing structures and ongoing scrutiny of all non-staffing budgets. The Force will need to work closely with the PCC to ensure that savings are achieved and funding streams maximised to ensure that the budget remains in balance. The Police Reform and Social Responsibility Act 2011 requires the PCC to submit proposals to the Home Secretary in respect of the Stage 2 transfer of staff and assets to the Chief Constable as a separate Corporation Sole. There are significant unintended accounting consequences which are yet to be resolved by Central Government which would have significant budgetary implications if unresolved. It is imperative that officers work together and with the Police and Crime Commissioners’ Treasurers’ Society to ensure that this is resolved before Stage 2 is effective. Collaboration will continue to be addressed pro-actively in terms of collaborating with other forces, and other organisations. The coalition government have placed an increased emphasis on collaboration within the Police Service, and this is reflected in the PCC’s governance structure in relation to collaboration. I propose to address the above matters to further enhance my governance arrangements and will monitor the implementation and operation of these improvements over the course of the year. Signed: --------------------------------------------

Mike Barton Chief Constable of Durham Date:

------------------------------------------------

APPENDIX A

THE GOVERNANCE FRAMEWORK AS OPERATED WITHIN DURHAM POLICE AUTHORITY PRIOR TO THE TRANSFER OF STRATEGIC GOVERNANCE RESPONSIBILITIES TO THE POLICE AND CRIME COMMISSIONER Although the Chief Constable is responsible for operational policing matters, the direction and control of police personnel, and for putting in place proper arrangements for the governance of the Force, the Authority is required to hold him to account for the exercise of those functions and those of the persons under his direction and control. It therefore follows that the Authority must satisfy itself that the Force has appropriate mechanisms in place for the maintenance of good governance, and that these operate in practice. The key elements of the systems and processes that comprise the governance arrangements in place for the Authority and Force include:

Identifying and communicating the Authority’s vision of its purpose and intended outcomes for citizens and service users To achieve this, the Authority:-

• promotes its mission, vision and values;

• is working to ensure that the work the Authority and Constabulary undertake in partnership with others is underpinned by a common vision;

• decides how the quality of service for users is to be measured and ensures that the information needed to review service quality effectively and regularly is available;

• continuously improves processes to ensure that the information needed to review performance in achieving value for money effectively and regularly is available;

• considers the environmental impact of policies, plans and decisions;

• has effective arrangements in place to ensure the Constabulary performs to high standards and to identify and deal with failure in service delivery;

• established a 5 year Medium Term Financial Plan supported by multi-year budgets;

• based its 2011/12 Business Plan around the 6 principles of Good Governance and the delivery of the Authority’s vision and outcomes and has approved a business plan monitoring scheme; and

• widely communicates its vision in all statutory reports and plans as well as on the Durham Police Authority website and on all marketing communications.

Reviewing the Authority’s vision and its implications for governance arrangements

To achieve this, the Authority:-

• revised its Committee Structure in June 2010 to continue to align to the Authority’s vision and strategic outcomes and recognise the Authority’s reducing resources in the lead up to the introduction of elected Police and Crime Commissioners in November 2012.

Setting objectives and targets outlined in the Annual Policing Plan, including decision making structures

The setting of objectives and SMART (specific, measurable, achievable, realistic and timely) targets is addressed through the Business Planning and Productivity Committee which is tasked by the Authority to lead on the development of the Annual Policing Plan. The Committee determines the appropriate indicators to measure performance against local policing priorities as determined through the Joint Strategic Assessment with partners and a comprehensive consultation programme with local people. Performance against the targets is then monitored through the Authority’s Effective Policing Delivery Committee.

Monitoring performance against operational, financial and other strategic plans, including how key issues are identified and tasked At a strategic level, the Authority’s well established and continuously improving Committee Governance structure has established a robust framework for consideration of Statutory Financial Statements and other published performance information. In addition regular reports are considered by the Finance, Audit and Resources Committee to monitor the efficient and effective management of human, financial and environmental resources. Clear examples of this in the last two years have been the redundancy programme introduced to address the necessary budget reductions and the Estates Programme which has a heavy focus on reducing the Authority’s impact upon the environment. The Government White Paper ‘Protecting the Public: Supporting the Police to Succeed’ and the report of the High Level Working Group on Value for Money identified a number of implications for the future of forces in particular in terms of performance management. The Force is a strong performer in key areas and particularly in relation to public confidence indicators. However, the challenge recognised was the need to sustain improvement in service delivery to members of the public whilst demonstrating value for money in the context of shrinking budgets. In response, Durham Constabulary has reviewed and implemented a new governance structure in relation to change management and improvement, termed the Service Improvement Programme. A Service Improvement Programme Plan has been developed as part of work commissioned by the Executive relating to Performance Management arrangements and forms part of the Force Programme Board’s structure. The Service Improvement Programme Plan links to the Force vision and aims to drive improvement through strategic development and operational improvement within a robust accountability framework. The overarching outcomes sought by the programme are to achieve improvement aimed at the delivery of excellent services which demonstrate value for money within a balanced budget. The programme board structure which supports delivery of this is based upon the three areas of efficiency, effectiveness and economy.

Each board is chaired by a Force Executive Officer with the oversight, scrutiny and corporate review function undertaken by the overarching Value for Money Board.

In addition, the Authority:-

• provides training to Members and Authority officers as part of its commitment to implement the Office of Government Commerce’s Managing Successful Programmes methodology which addresses all aspects of programme planning, delivery and benefits realisation; and

• oversees the Constabulary’s Change Programme through the Authority’s Business Planning and Productivity Committee with clear interfaces into the Authority’s Finance, Audit and Resources Committee and Effective Policing Delivery Committee.

Measuring the quality of services for users, to ensure they are delivered in accordance with the Authority’s objectives and represent the best use of resources

Citizen focus and value for money are cross-cutting themes embedded into the Authority’s business through both its vision and supporting governance structures and processes. For example, the Authority through its Committees and Panels plays a critical programme assurance role in relation to the Constabulary through the scrutiny of:

• stakeholder involvement and engagement processes;

• business cases to ensure value for money;

• programme and project plans to ensure effective resource management;

• quality measures; and

• projected benefits for communities.

Risk management processes by which risks are identified and mitigated in Force and Authority

To achieve this the Constabulary:-

• has introduced a new “Plan on a Page” strategic planning approach which combines the vision, business plan, performance and risk all within one document. Strategic business risks are discussed and debated at the monthly Force Management Group where a determination is made as to their level and the plan updated. As a minimum this is done across all business areas every three months, but may be done more dynamically as a new risk remerges. The plan utilises a balanced scorecard approach and links all the business areas within force, and the requirement to achieve value for money. Operational risks are overseen at the monthly Force Threat and Risk meeting which is the highest level operational meeting under the National Intelligence Model in Force.

• reports to the Authority’s Finance, Audit and Resources Committee on risk issues.

In addition, the Authority:-

• through its governance of Protective Services, has adopted a risk based informed approach;

• risk assesses all reports that go through the Authority’s own committee structures; and

• has developed arrangements to identify and manage risks relating to its own activities and has an established risk register; and

• is working with the Force to ensure that common risks are identified and managed from both organisations respective perspectives.

Defining and documenting the roles and responsibilities of the Authority and Force and the senior Members and officers within each, setting out clear delegation arrangements and protocols for effective communication, and arrangements for challenging and scrutinising Force activity To achieve this, the Authority:-

• ensures there is a clear understanding of the respective roles and responsibilities of the Authority, its Members and officers and reviews the effectiveness of these roles and responsibilities;

• has a detailed organisational structure, with clearly defined responsibilities and terms of reference, which are monitored and updated when required;

• works with the Constabulary as well as its stakeholders and communities to develop and deliver against clearly defined strategic plans, priorities and targets to drive improvements in policing services;

• ensures when working in partnership that the arrangements for governance and accountability for performance and financial administration are clearly articulated and disseminated; and

• has Member and Officer Protocols, a Code of Corporate Governance and a protocol governing the relationship between the Authority and its Constabulary.

In addition, the Constabulary has established clear roles and responsibilities for each of its senior officers. There is a formal Constabulary accountability/performance management framework and each officer is subject to the Constabulary Personal Development Review procedures.

Developing, communicating and embedding codes of conduct, defining the standards of behaviour for Members, officers and staff


• ensures that Members and officers of the Authority carry out their respective roles in a climate of openness, support and respect; and

• has developed standards of conduct and personal behaviour expected between Members, Authority officers and staff and officers of the Constabulary which are defined and communicated through appropriate codes of conduct and protocols.

Reviewing and updating standing orders, standing financial instructions, a scheme of delegation, contract/procurement regulations, and supporting procedure notes/manuals, which clearly define how decisions are taken and the processes and controls required to manage risks


• develops and maintains effective mechanisms for documenting evidence for decisions and recording the criteria, rationale and considerations;

• develops and maintains effective arrangements to challenge and scrutinise the Constabulary’s performance and compliance with other requirements;

• ensures that it works with the Constabulary to obtain objective and timely information which is necessary to take balanced and informed decisions;

• ensures that risk management is embedded both within the Authority and Constabulary and is used effectively to inform and focus its decision making, scrutiny and monitoring work;

• ensures that both the Authority and Constabulary have effective, transparent and accessible arrangements in place for dealing with complaints; and

• reviews and revises as appropriate its key governance documents, i.e. the standing orders, financial regulations and contract procedure rules.

Ensuring the Authority’s financial management arrangements conform with the governance requirements of the CIPFA Statement on the Role of the Chief Financial Officer in a Police Authority (2010) The Treasurer to the Police Authority is professionally qualified and suitably experienced. He plays a key role in providing a strategic insight to the direction and control of Police Authority and Constabulary business decisions affecting financial resources. He ensures compliance with financial standards and gives due consideration to both the risk to and economic, efficient and effective use of resources. He works closely with the Chief Constable and Force in ensuring the Finance function provided is fit for purpose and that the management of the Authority’s resources is robust.

Undertaking the core functions of an audit committee, as identified in CIPFA’s Audit Committees – Practical Guidance for Local Authorities The Authority’s Finance, Audit and Resources Committee has responsibility for monitoring and reviewing the risk, control and governance processes and associated assurance processes to ensure internal control systems are effective and that policies and practices are in compliance with statutory and other regulations and guidance. This includes considering the work of External Audit, Internal Audit and Risk Management and making recommendations concerning the Authority’s relevant governance arrangements.

Ensuring compliance with relevant laws and regulations, internal policies and procedures, and that expenditure is lawful

The Authority’s two independent Statutory Officers have responsibility for its legal and financial services and secure support in the provision of these services through arrangements with Durham County Council and the Constabulary. Compliance issues are addressed through robust standing orders, financial regulations and procedural rules.

Whistle-blowing arrangements and processes for receiving and investigating complaints from the public

The Constabulary has a long established confidential reporting policy. The Authority has also developed its own confidential reporting code.

There are well established procedures within the Authority and Constabulary for dealing with and investigating complaints which are in line with national guidelines. Complaints are monitored through the Authority’s Complaints Committee.

Determining the conditions of employment and remuneration of officers and staff

There are robust arrangements in place including a Chief Officers’ Appointments Committee and Human Resources Sub-Committee. Conditions of Employment and remuneration issues have been dealt with during 2011/12 on a day by day basis by the respective HR teams in the Constabulary and County Council.

In addition, the Constabulary issues contracts of employment to all police staff, each role is covered by a job description, all of which are processed through the Constabulary job evaluation scheme to determine the appropriate remuneration for the role. All changes to terms and conditions of contracts or to job descriptions are negotiated through the police staff group.

Police Officers are servants of the Crown, their terms and conditions are provided for under national police regulations. The Constabulary has a range of policies to support the implementation of the national regulations, and any changes to these policies are negotiated/subject to consultation through the Personnel User Group.

Identifying the development needs of Members and senior officers in relation to their strategic roles, supported by appropriate training To achieve this, the Authority:-

• ensures that Members and officers have the resources and support necessary to perform effectively in their roles and functions subject to overall affordability;

• provides induction programmes tailored to individual needs as well as opportunities for Members and officers to update their knowledge on an ongoing basis;

• ensures there are effective arrangements designed to encourage individuals from all sections of the community to engage with, contribute to, and participate in the work of the Authority; and

• issues a skills assessment questionnaire to all new Members of the Authority to inform the Authority’s developing Training Strategy.

The Constabulary also has robust performance management arrangements which are supported by its Personal Development Review Framework. This framework enables each officer’s needs, training and development requirements to be identified. The framework enables officers to work with their line managers to agree the appropriate actions to address their needs and regular reviews of progress are held.

Establishing clear channels of communication with all sections of the community and other stakeholders, ensuring accountability and encouraging open consultation


• makes clear to all staff, the community and stakeholders, what they are accountable for and to whom;

• ensures arrangements are in place to enable the Authority to engage and consult effectively with partners, stakeholders and all sections of the community, recognising that different sections of the community have different priorities and different information needs;

• ensures that processes for taking decisions about matters where there are competing demands from different sections of the community openly recognise and address those differences;

• holds meetings in public, in a wide range of community settings, making appropriate arrangements for agenda items that for good reasons require confidentiality;

• regularly publishes information on the Authority’s and Constabulary’s work, achievements and satisfaction of users; and

• has invested in dedicated staffing capacity in communications and community engagement. A Communications Strategy and Joint Community Engagement Strategy between the Force and the Authority has also been approved by the Authority.

Incorporating good governance arrangements in respect of partnerships and other group working as identified by the Audit Commission’s report on the governance of partnerships, and reflecting these in the Authority’s overall governance arrangements

The Authority has invested in dedicated capacity to support its own role in partnership working. A Partnership Strategy has been developed which enables the Authority to effectively participate and evaluate the outputs and outcomes of partnership working through its Partnership and Engagement Committee. Governance requirements of the CIPFA Statement on the Role of the Chief Financial Officer in a Police Authority (2010) The Authority is fully compliant with the principles outlined in the CIPFA Statement on the Role of the Chief Financial Officer in a Police Authority (2010).

chief constable of durham constabulary...give a true and fair view of the financial position of the...

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