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THE POLICE AND CRIME COMMISSIONERFOR SOUTH YORKSHIRE

STATEMENT OF ACCOUNTS

2017/18

THE POLICE AND CRIME COMMISSIONER FOR SOUTH YORKSHIRESTATEMENT OF ACCOUNTS 2017/18

CONTENTS

PAGE NO

Narrative Statement 1

Financial StatementsStatement of Responsibilities 17

Group Movement in Reserves Statement 18

Police and Crime Commissioner’s Movement in Reserves Statement 19

Group Comprehensive Income and Expenditure Statement 20

Police and Crime Commissioner’s Comprehensive Income and Expenditure Statement 21

Group and Police and Crime Commissioner’s Balance Sheet 22

Group and Police and Crime Commissioner’s Cash Flow Statement 23

Notes:

1. Accounting policies 24

2. Critical judgements in applying accounting policies 36

3. Changes to financial statements 36

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

36

5. Material items of income and expense 38

6. Expenditure and funding analysis7. Adjustments between accounting basis and funding basis

3941

8. Subjective Analysis9. Transfers to and from earmarked reserves

4243

10. Other operating expenditure 44

11. Financing and investment income and expenditure 44

12. Taxation and non specific grant income 44

13. Property, plant and equipment 45

14. Intangible assets 47

15. Financial instruments 49

16. Nature and extent of risks arising from financial instruments 51

17. Inventories 54

18. Debtors 54

19. Cash and cash equivalents 55

20. Assets held for sale 55

21. Creditors 55

22. Provisions 56


CONTENTS

PAGE NO23. Usable reserves 57

24. Other long term liabilities 57

25. Unusable reserves 58

26. Cash flow statement – adjustments for non-cash movement 63

27. Cash flow statement – investing activities 63

28. Cash flow statement – financing activities 64

29. Officers’ remuneration 65

30. Termination benefits 69

31. External audit costs 69

32. Grant income 70

33. Related parties 72

34. Capital expenditure and capital financing 73

35. Leases 73

36. Regional working 75

37. Defined benefit pension schemes 80

38. Events after the balance sheet date 94

39. Contingent liabilities 95

Police Pension Fund Account and Notes 97

Other StatementsIndependent Auditor’s Report to the Police and Crime Commissioner for South Yorkshire 99

Annual Governance Statement 102

Glossary of Terms

Acronyms and Abbreviations

116

120


NARRATIVE STATEMENT

1. ORGANISATIONAL OVERVIEW AND EXTERNAL ENVIRONMENT South Yorkshire consists of the four local authority areas of Barnsley, Doncaster, Rotherham and Sheffield, covers 599 square miles and has a mixture of both urban and rural areas. The rivers running from the Pennines to the west of the county supported the steel manufacturing industry with Sheffield once being the undisputed iron, steel and cutlery capital of the world. The County has a number of areas of deprivation concentrated within what were, originally, the mining communities and some of the urban areas of the city and townships.

The County has a population of just over 1.38 million (Office for National Statistics 2016) with 11.9% from a minority ethnic background (Census 2011). The elderly population is expected to rise significantly over the next few years and the residential population is supplemented by university students and the large numbers who visit, socialise in, commute into, or travel through the County each year. The transport infrastructure includes major rail stations and an airport.

The Black and Minority Ethnic (BME) population is increasing in size and diversity. In addition to the African Caribbean and South Asian community (including Pakistani/Kashmiri/Indian/Bangladeshi) who have been resident long-term, there has been an influx of other minority ethnic groups. The largest increases in international communities within South Yorkshire are Polish, Asian sub-continent, Chinese, Eastern European and Roma. A further increase has seen new emerging communities from African and the Middle East. The main languages spoken by these communities are Mandarin, Hindu, Urdu, Punjabi, Polish, Arabic, Roma, Lithuanian and Romanian.

South Yorkshire Police (SYP) is the thirteenth largest of the forty-four forces in England, Wales and Northern Ireland. The Force area is divided into four policing districts, which are co-terminus with the Metropolitan Boroughs. In addition, the Force has central departments that provide specialist support services such as the Specialist Operations Unit and Specialist Crime Services which deal with threats posed by public disorder, firearms, child abuse and organised crime, whilst being responsible for planning around civil emergencies. These services, whilst less visible than front line policing, are integral to meeting the Police and Crime Commissioner’s (PCC’s) strategic policing priorities and the Force’s operational objectives.

The PCC’s Police and Crime Plan sets out the priorities for SYP. These are the priorities that have emerged from the conversations the PCC has had with members of the public, both individually and with groups from every demographic, every ethnic and community group, young and old, urban and rural, inner-city and outer suburb. The aim is for South Yorkshire to be a safe place to live and for the police service to achieve this by:

Protecting vulnerable people Reducing crime and anti-social behaviour Enabling fair treatment

There has been good progress in 2017/18 with a new leadership team showing determination and purpose, successful child sexual exploitation prosecutions and the return of local policing. The improvement journey was recognised by Her Majesty’s Inspector of Constabulary and Fire & Rescue Services (HMICFRS) in March 2018, following the 2017 Effectiveness inspection, with SYP assessed as ‘good’. This builds on the similar assessment relating to leadership and legitimacy.

1


NARRATIVE STATEMENT

Population InformationThe mid 2016 population data for South Yorkshire as provided by the Office for National Statistics is as follows:

The total population for White British and Black & Minority Ethnic (BME) groups in 2011 (from Census) is as follows:

Area Barnsley Doncaster Rotherham Sheffield TotalTotal Population 231,221 302,402 257,280 552,698 1,343,601% White British 96.1% 91.8% 91.9% 80.8% 88.1%% Black & Minority Ethnic 3.9% 8.2% 8.1% 19.2% 11.9%

Staffing Information The staffing information for the Force and Office of the PCC (OPCC) as at 31 March 2018 is as follows:

Full Time Equivalent (FTE)

Number of employees

Police Officers 2,465 2,508

Police Community Support Officers 221 232

Police Staff 1,956 2,204

PCC 23 24

Total 4,665 4,968

In addition, the Force is supported by 161 Special Constables, 59 Police Cadets, 20 Police Cadet Leaders and 209 other volunteers.

2

Age Groups Barnsley Doncaster Rotherham Sheffield Total

0-9 29,009 38,123 32,394 67,505 167,031 10-19 26,255 33,908 29,984 68,760 158,907 20-29 29,412 37,917 31,236 109,339 207,90430-39 29,090 38,533 30,704 71,929 170,25640-49 33,077 40,066 35,383 71,946 180,47250-59 34,502 42,946 36,688 66,899 181,03560-69 28,455 35,758 30,674 53,085 147,97270-79 19,961 24,189 22,310 39,913 106,373 80-89 9,522 12,517 10,386 21,362 53,78790+ 1,935 2,440 2,171 4,686 11,232

Grand Total 241,21

8 306,397 261,930 575,424 1,384,969


NARRATIVE STATEMENT

2. GOVERNANCE

The PCC and Chief Constable work to a common Joint Corporate Governance Framework which determines how they and their respective organisations will do business together. This Framework was fully updated during 2017/18 to reflect the principles, and the broader requirements, of the CIPFA ‘Delivering Good Governance in Local Government: Framework’ and the associated “Guidance Notes for Policing Bodies in England and Wales”, both published in 2016.

After reviewing governance matters for 2017/18, the PCC and his Chief Executive have jointly signed the Annual Governance Statement which schedules those concerns, recognised in 2017/18 and prior years, that are to be managed in 2018/19. In addition, the Statement gives a full account of the PCC’s actions in addressing matters which were identified in the previous, 2016/17 Statement as requiring improvement in the year.

3. ECONOMIC CLIMATE The 2017/18 Police Finance Settlement, which was announced in February 2017, confirmed that, as was the case in 2016/17, the level of grant funding from Government would reduce. However, the figures relating to overall funding, including precept income, assumed that PCCs would increase council tax by the maximum amount allowable and that the council tax base would also increase, to result in a flat cash level.

The 2017/18 Finance Settlement also once again provided ‘greater flexibility’ to the ten PCCs with the lowest council tax precepts to raise their precept by an amount equivalent to £5 on a band D property. As the precept for 2016/17 issued by the PCC was the eighth lowest in England, this flexibility extended to South Yorkshire PCC.

Therefore the PCC proposed that the council tax precept for 2017/18 be increased by a level equivalent to £5 for Band D properties, in accordance with the funding assumptions set by the Home Office. This would represent an increase of 3.26% and would produce a Band D council tax of £158.16 (£153.26 in 2016/17) and total council tax income of £54.3m.

In deciding to use the ‘greater flexibility’, the PCC was aware that during 2017/18 applications to the Home Office for Special Grant Funding would need to be made to meet the costs of legacy issues relating to the Hillsborough Disaster and child sexual exploitation, that were estimated at about £9m. There was a concern that if the council tax was not increased by the maximum available to South Yorkshire, then there was the potential that the Home Office may not look favourably on any application for additional grant funding from Government.

The 2017/18 Finance Settlement for policing in South Yorkshire saw a reduction of £2.5m in government grant. As the number of Band D equivalent properties in South Yorkshire increased by 2% and the PCC utilised the ‘greater flexibility’ to increase the precept, this resulted in an overall funding increase of £0.3m. However, this was insufficient to meet the cost pressures arising from inflation, demand and legacy costs in 2017/18 and so savings and use of reserves were required to balance the budget.

3


NARRATIVE STATEMENT

With the inclusion of the collection fund surplus the approved budget requirement for 2017/18 was £242.287m as shown in the table below. This represented an increase in the budget requirement of approximately 0.13% compared to 2016/17.

£000 £000 %

Budget Requirement 242,287

Sources of FinanceDepartment of Communities and Local Government Funding (76,380)Police Grant (99,192)Council Tax Freeze Grant 2011/12 (1,269)Council Tax Support Grant (9,591)Collection Fund Surplus (1,540) 77.6

Council Tax Income: Barnsley Doncaster Rotherham Sheffield

(9,861)(12,509)(10,792)(21,153) (54,315) 22.4

Total Financing (242,287) 100

4. REGIONAL WORKING / COLLABORATION The PCC and the Chief Constable work with other the three Yorkshire and Humber PCCs and Chief Constables (West Yorkshire, North Yorkshire and Humberside), to deliver a number of services on a regional basis. These include the Organised Crime Unit, Scientific Support, Collision Investigation and Underwater Search. The governance for the regional programme is overseen by the Regional Collaboration Board headed by the four PCCs and attended by their Chief Constables and Chief Executives. Since September 2013, individual forces have been assigned lead force responsibility for each functional area of work. South Yorkshire leads on Regional Procurement, Stores and Firearms. All work is fully funded from contributions made by the four participating PCCs.

In addition, separate collaboration exists between the PCC and Chief Constable and their counterparts in Humberside. The Forces have a combined Information Services Department and work collaboratively on Legal Services, with a shared Head of Service. The shared Joint Specialist Operations Unit was disbanded during the year and the HR collaboration is currently being reviewed in order to ensure it is achieving best value for both Forces.

South Yorkshire and Humberside collaboration work is overseen by a Joint Collaboration Board headed by the two PCCs, attended by senior officers of their respective offices and forces and supported by a Joint Governance Board chaired by both Deputies, as well as separate Information Services Programme Boards.

Further information on this area is included in the Accounting Policies and Notes to the Financial Statements.

4


NARRATIVE STATEMENT

5. RISK MANAGEMENT The PCC and Chief Constable have a Joint Risk Management Strategy for managing risk and maximising opportunity. The PCC’s Senior Leadership Team actively manages strategic risks and discusses risk at its weekly meetings, updating the PCC’s risk register as required and reporting activity to the Joint Independent Audit Committee.

Each strategic risk has: a clear description, an owner, a manager, a completion date and a quantification of the risk both before and after taking account of controls and identified risk mitigations. The strategic risks which were current at 31 March 2018 comprised:

Holding the Chief Constable to account for the Reputation of South Yorkshire Police Sustainability of the PCC Strategic and Financial Planning Capacity & Capability of OPCC Capacity & Capability of South Yorkshire Police’s Senior Command Team Governance

Formal assessments of management confidence are clear in demonstrating that there are no risks for which significant control gaps and /or weaknesses exist.

The PCC group accounts reflect actuarial valuations of assets and liabilities in accordance with International Accounting Standard (IAS) 19, in respect of both police pensions for police officers and for police staff in the Local Government Pensions Scheme. The valuations for police officers are provided by the Government Actuary’s Department (GAD) and the liabilities in connection with these are largely met by the Home Office.

Police staff are members of the South Yorkshire Pensions Fund. This is administered by the South Yorkshire Pensions Authority. The Fund is revalued by professional actuaries every three years when future contribution rates will be set to recover any deficit position.

The PCC has included the commitment to pay future retirement benefits as a liability on the Balance Sheet to reflect the true accounting position even though these will not be paid until many years into the future. The inclusion of this estimated liability of £3,289.3m is matched by a Pensions Reserve within unusable reserves in the Balance Sheet. The inclusion of this reserve has a substantial impact on the net liability of the Group which is shown on the Balance Sheet as £3,206.1m. The net assets excluding these pensions liabilities would be £83.2m.

The treatment of this area is further explained in the Accounting Policies and other Notes to the Financial Statements.

6. FINANCIAL STRATEGY AND RESOURCE ALLOCATION

5


NARRATIVE STATEMENT

With the level of overall funding for policing in South Yorkshire increasing by only £0.3m in 2017/18, the challenge was to ensure that any additional costs were offset by expenditure reductions. It was made clear in statements by the Minister for Policing that Forces would have to meet increased costs by achieving greater levels of efficiencies.

The budget assumed increases for pay awards, pension fund contribution rate increases, the apprenticeship levy, investments in Force departments and investment in Information Technology. Savings proposals were identified to offset these additional costs including reductions in spending in 2016/17 to be carried forward as a contribution to the 2017/18 budget.

In order for the Force to address the recommendations of both the Peer Review, that took place in 2016 and HMICFRS Police Effectiveness, Efficiency and Legitimacy (PEEL) inspections the Chief Constable created a lead for Change and Innovation to provide strategic direction and oversight to the Force response. A new Business Change and Innovation Directorate was established to effectively assess demand and determine the size/scope of a new operating model to ensure that the Force was capable and resourced to meet current and future demands. This significant investment was approved by the PCC in November 2016, with resources being applied in 2017/18.

If the council tax increase had not been agreed it would have led to a reduction in funding for South Yorkshire. Each 1% increase in council tax generates approximately £0.5m in additional council tax income. The Chief Constable indicated that reductions in the amount available to the Force would have delayed the implementation of the investments in the new change and performance teams. These investments were key to the Force understanding demand and improving performance. The impact of this would have been to delay the recovery of the Force and the development of a new operating model to enhance neighbourhood policing.

Since 2010/11, the policing grant has reduced by 22.3%. At the same time, South Yorkshire Police has faced growth in demand, inflation and the need to fund a number of ongoing ‘Legacy’ issues relating to the Hillsborough Disaster and Child Sexual Exploitation (CSE). This has meant that each year’s budget was balanced through a combination of savings, increases in the council tax precept and some use of reserves.

7. OPERATIONAL PERFORMANCE

6


NARRATIVE STATEMENT

HMICFRS independently assess all police forces as part of their PEEL (police effectiveness, efficiency and legitimacy) inspection process. In the 2017 inspections, South Yorkshire Police was judged to be:

‘good’ for effectiveness (how effective the force is at keeping people safe and reducing crime);

‘requires improvement’ for efficiency (how efficient the force is at keeping people safe and reducing crime) and was the same judgement in 2016; and

‘good’ for legitimacy (how legitimate the force is at keeping people safe and reducing crime).

The Force has made significant progress since the 2016 HMICFRS PEEL inspections and is working towards improving these HMICFRS judgments even further.

Nationally, the Crime Survey for England and Wales1 (independent of police recorded crime volumes) shows that during the 12 months to December 2017, levels of most types of crime remained at similar levels to 2016. Exceptions to this stable picture were rises in some types of theft and in lower-volume but higher-harm types of violence, and a fall in the high-volume offence of computer misuse.

Police forces in England and Wales have reported an increase of 15% nationally in volumes of all recorded crime when comparing the 12 months to December 2017 to the 12 months to December 2016. Comparing the same periods, South Yorkshire Police recorded an increase of 30% (+33,314 offences) in overall crime2. Offence categories showed the highest percentage change for South Yorkshire Police:

Public order offences +142% (+6,874 offences) Violence without injury +101% (+12,353 offences) Miscellaneous crimes against society +59% (+1,216 offences)

These rises are largely attributable to victim-based crime identified through improved crime recording standards in public order offences and lower level violence without injury offences. These changes positively reflected the Force identifying missed crimes previously recorded as anti-social behaviour (ASB). This meant more victims were identified and able to be provided appropriate support services where necessary. Child sexual exploitation (CSE) and abuse, gang related violence and domestic abuse continue to be a focus for the Force.

Delivering neighbourhood policing and protecting vulnerable people; proactively understanding and preventing crime and harm; and tackling crime and ASB are the key priorities for the Force.

The Force has re-established neighbourhood policing including partnership based safer neighbourhood services hubs, focused on problem-solving and early interventions including tackling repeat demand locations through dedicated problem-solving plans to address local issues.

The Force is in the process of implementing changes to its Criminal Investigations Department (CID) structure following the Force Crime Review launched in February 2017 to design, build and deliver strong, efficient and effective crime services across the county, aligned to the Force’s key objectives for the year which is contained in the Plan on a Page.

1 Data from ONS website (Crime in England and Wales: year ending December 2017)2 Data from ForceSight Feb183 Data from ForceSight Feb18

7


NARRATIVE STATEMENT

The Force has effective arrangements in place to have a sufficiently comprehensive understanding of demand to inform its operating model for the following areas; contact routes into the Force, response, neighbourhoods/local policing, and crime.

In the 12 months to December 2017, South Yorkshire Police brought to justice 18,796 suspects or 13% of all offences3. Brought to justice refers to charges/report for summons/TIC4s/all cautions/FPND5s/cannabis warnings and community resolutions. This figure is a reduction of 1,301 from the previous 12-month period. A large part of recorded crime is attributable to increases in crimes recorded where the victim does not support or engage with a prosecution and in the 12 months to December 2017, this accounted for 24,025 offences (17%) of all crime. By comparison, in the previous 12-month period this accounted for 9,230 offences (8%) of all crime. This is an increase of 160% from earlier to later periods where the victim did not support/engage with the prosecution.

In 2017/18, 78% of victims of crime in South Yorkshire (sampled from victims of burglary dwelling, vehicle crime, violent crime and hate crimes) reported they were ‘at least fairly satisfied’ with the whole experience. Compared to the previous 12 months, satisfaction has remained high for victims of burglary dwelling (90%), but has seen slight reductions for victims of violent crime (73%) and hate crime (71%). These slight reductions are attributable to lower satisfaction levels with follow up. This feedback from victims continues to form a key part of the Force’s delivery plan and the Force has implemented a new complete victim care strategy to improve victim satisfaction and service delivery. In 2017/18, 81% of victims of domestic abuse reported they were satisfied with the overall service provided by South Yorkshire Police.

Reported crime is not the only issue police forces deal with, with over 46% of all the calls for service to the Force in 2017/18 being linked to concern for public safety (including concern/collapse, suspicious circumstances, domestic incidents and missing persons) and 13% being related to anti-social behaviour (nuisance, personal and environmental). In total, calls for service in to South Yorkshire Police have decreased by 5% during 2017/18, with over 428,647 reported incidents recorded on the Force’s incident management system6 in the last 12 months.

The Force has a comprehensive performance management framework that supports delivery of the Force’s Plan on a Page to deliver the Police and Crime Commissioner’s (PCC) Police and Crime Plan.

Satisfaction Information (Victims of Crime)The User Satisfaction Survey helps the Force to understand the level of service that it is giving to victims of crime. The survey is managed by the Force Performance Management

3

4 Offences taken into consideration (TIC)5 Fixed penalty notice for disorder (FPND)66 Data from Monthly incidents report

8


NARRATIVE STATEMENT

Unit, with telephone interviews conducted by SMSR Ltd. The Survey made contact with a sample of over 1,800 victims of violent crime, burglary dwelling and vehicle crime over the year to establish their views in relation to the service they had received from the Force. In 2017/18, 77% of victims surveyed were satisfied (i.e. “fairly”, “very” or “completely”) with the overall service - no significant change from the 78% result in 2016/17. Results for 2017/18 are as follows:

Satisfied Sample % Satisfied

Dist

rict

Doncaster 369 480 77%Barnsley 307 400 77%

Rotherham 314 406 77%Sheffield 425 540 79%FORCE 1,415 1,826 77%

Use

r Gr

oup Burglary Dwelling 519 579 90%

Vehicle Crime 423 601 70%Violent Crime 473 646 73%

Serv

ice

Aspe

ct

Ease of Contact 1,129 1,252 90%Actions Taken 1,324 1,816 73%

Follow Up 1,143 1,811 63%Treatment 1,668 1,826 91%

Commissioning

The PCC commissions or grant funds services and activities where there is a statutory responsibility, and in support of the delivery of priorities and outcomes in the Police and Crime Plan. The Commissioning budget for 2017/18 was £5.2m, with £1.8m being funded through the Ministry of Justice Grant. The outturn position is £4.7m with 80% of the underspend being carried forward in the Commissioning Reserve for future capital projects.

The Commissioning priorities are translated into funding streams which support the delivery of commissioned activity. While some of the funding streams relate to the direct commissioning of services – e.g. relating to statutory responsibilities for victims’ services – much of what needs to be delivered is achieved by allocating resources to a combination of local authorities, local organisations and community groups who must all work together, and with South Yorkshire Police to achieve outcomes:

Chief Constable’s Budget – The amount of budget allocation is based on the Chief Constable’s annual assessment of policing need to provide policing services to the communities of South Yorkshire, and his contribution to regional and national policing requirements.

9


NARRATIVE STATEMENT

Community Safety Fund – Prior to the introduction of PCCs, the Government allocated grant funding to local authorities and public health for community safety partnership activity, drugs intervention programmes and youth offending services. From 2015/16 the Government rolled this grant into the main police grant and the PCC has maintained a budget allocation for each of the areas.

Victims of Crime Fund - This funds the majority of commissioned services such as the Sexual Assault Referral Centre, Victim Services, Independent Sexual Violence Advocates Services, support for victims of Domestic Abuse and Restorative Justice Services.

Partnership Fund – This funding supports the activities of various partnership boards, predominantly the Safeguarding Children and Safeguarding Adults Boards in South Yorkshire.

Priority Response Fund – The fund was created to enable the PCC to allocate funding to issues and priorities that emerge during the financial year. In 2017/18 it supported a project in Rotherham, that works to support young vulnerable adults experiencing poor mental health and who require support to guide them away from crime and anti-social behaviour.

Community Grant Fund – This fund supports community organisations and groups. The PCC runs community grant schemes throughout the year, using an application and assessment process to select activity that contributes to the priorities and outcomes in the Police and Crime Plan. The assessment process involves the OPCC and a community safety representative from South Yorkshire Police.

In 2017/18 the PCC awarded over £0.14m to the third, voluntary and charity sectors as part of a Community Grant Scheme. All of the organisations receiving funding from the scheme do exemplary work, which contribute to making a difference to people’s lives across South Yorkshire. For example, the PCC supported three Street Pastor schemes in South Yorkshire, which aim to reduce anti-social behaviour and vulnerability of individuals in the night-time economy. This reduces demand on policing and other emergency services, supports the local authorities and night-time business community by creating a safer environment in which the public can enjoy themselves.

Further developments of the South Yorkshire Victim Centre were made including the provision of a court video link to allow vulnerable witnesses and victims to give evidence to the court via the link, rather than attending and facilities to provide a safer and more welcoming environment for those who need to attend the centre during the hours of darkness. The Centre was a finalist in the APSE Best Collaborative Working Initiative category and Silver Award winner in the Police Service of the Year category.

8. FINANCIAL PERFORMANCE

Revenue Outturn

10


NARRATIVE STATEMENT

On 15 February 2017 the PCC approved a revenue budget of £250.078m. The net revenue budget, after use of reserves was £242.287m, which is the amount that is financed by government grant and council tax income.

During the year the budget was revised to reflect approved changes. The main revision in the Chief Constable’s budget relates to the Officer Voluntary Exit Scheme whereby costs had been forecast in 2017/18, with planned contributions from reserves. However, a number of staff exited the organisation in April 2017 which resulted in costs being incurred in March 2017 – the previous financial year. This reduces the expenditure in 2017/18 and consequently the required funding from reserves. The main revision in the PCC’s budget relates to Commissioning, with funds being permanently transferred to the Chief Constable’s budget for the provision of a number of Sheffield PCSOs.

Throughout the year the PCC reviewed regular reports on the financial position and the level of spending compared to the budget. At the end of the financial year, the level of spending was less than budget. The following table sets out the revised budget compared to the actual expenditure and grant and investment income in 2017/18:

Revise

d

Budge

tOuttur

nVariatio

n £'000 £'000 £'000 Office of the PCC 2,103 2,041 -62 Partnerships & Commissioning 3,397 2,909 -488 Capital Financing Costs 3,961 3,318 -643 Specific Grants -30 -1 29 Budgets under the control of the PCC 9,431 8,267 -1,164

Chief Constable247,68

7245,76

5 -1,922

Specific Grants -14,238-

13,863 375

Budget delegated to the Chief Constable

233,449

231,902 -1,547

Operation Stovewood Costs 1,000 1,311 311 Potential Compensation Claims 4,400 2,381 -2,019 Total Legacy Issues 5,400 3,692 -1,708

Total Combined Net Expenditure248,28

0243,86

1 -4,419

Contribution to/(From) Earmarked Reserves 0 3,763 3,763

Contribution to/(From) General Reserves -5,993 -5,337 656

Budget Requirement242,28

7 242,28

7 0

11


NARRATIVE STATEMENT

The revenue outturn for the year was £243.861m, before movement on reserves. This represents an overall underspend of £2.7m (£4.419m including legacy costs) compared to the budget for 2017/18. The most significant variances are:

The PCC has underspent by £1.2m compared to budget. This is mainly due to vacant posts within the OPCC, underspends on funding streams within Commissioning, to which the majority will be carried forward in the Commissioning Earmarked Reserve and a reduction in the final calculation of the Minimum Revenue Provision (MRP) for 2017/18.

The Chief Constable underspent his delegated budget by £1.5m. Further Information regarding this is included within the Chief Constable’s Statement of Accounts.

Information provided by the Force Legal Services Department indicates that the majority of costs relating to potential civil claims arising from the Hillsborough Inquests and Child Sexual Exploitation, are likely to fall on future financial years resulting in a £2.0m underspend in 2017/18.

The total costs of Operation Stovewood in 2017/18 was £8.6m, however following prior notification from the Home Office 85% (£7.5m) of these costs has been covered by Special Grant Funding. This is a slight overspend compared to the budget. As a precaution against potential costs exceeding budget or not being met from the Home Office Special Grant funding, the net underspend of legacy costs (£3.3m) has been carried forward in the Legacy Earmarked Reserve to such time that costs materialise.

The above figures are not the same as the Comprehensive Income and Expenditure Statement due to presentational differences required by proper accounting practice. However, the contribution of £3.7m to Earmarked Reserves and £5.3m from General Reserves is reflected in the Movement on Reserves Statement.

Revenue expenditure is reported in the Accounts under the Comprehensive Income and Expenditure Statement with a group deficit of £6.7m. The table below shows how the revenue outturn position varies from the Comprehensive Income and Expenditure Statement deficit:

£000 Underspend as per budgeted outturn (4,419) Use of reserves in year 5,993 Overall movement of reserves 1,574 Remove items included in budgeted outturn Debt charges (4,402) Pension contributions (34,630) Add items not charged to council tax Interest payable (including pensions) 88,188 Accounting charges for assets, depreciation, impairment, holiday pay etc. 64,505 Remove items not charged to council tax Top up grants, capital grants and other contributions (54,547) Re-measurement of net defined benefit liability re pensions (54,001) Total deficit on Group Comprehensive Income and Expenditure Statement 6,687

12


NARRATIVE STATEMENT

Capital Outturn

The PCC owns all assets and controls decision making in relation to capital expenditure, capital financing and borrowing.

The PCC approved a capital programme of £12.8m on 15 February 2017. However, following the 2016/17 financial outturn the budget was increased to £16m as a result of slippage on some projects. Further slippage, underspends and overspends were approved in year resulting in a final capital outturn of £7.1m in 2017/18. Approximately £7m has been slipped into 2018/19, this is due to a number of projects being either delayed or paused. The 2017/18 capital expenditure is split as follows:

£0.8m was spent on improving existing buildings.

£1.7m was spent on new vehicles purchased in accordance with the vehicle replacement programme.

£0.8m was spent on information, communications and operational equipment, including joint projects with Humberside Police.

£3.8m was spent on assets under construction, of which £1.8m including prior year assets was reclassified to operational use at the end of the year.

Reserves and Balances The movements in usable reserves are summarised below:

1 April 2017

Movement in Year

31 March 2018

£000 £000 £000Earmarked Reserves 28,756 3,763 32,519Capital Grants Unapplied - - -General Reserves 17,634 (5,337) 12,297

46,390 (1,574) 44,816

There are a number of specific purposes for which reserves are required by the PCC. In 2017/18 a contribution from general reserves was required to balance the budget particularly due to estimated legacy costs. However, following the slippage of potential legacy costs to future years, the underspend at year-end has been carried forward in the Legacy Earmarked Reserve. In line with the PCC’s published Reserves Strategy, General Reserves will be monitored closely and maintained at an appropriate level. A detailed breakdown of the movements in earmarked reserves is included in Note 9.

Treasury Management Capital expenditure is financed by a combination of government grants, internal resources such as capital receipts and direct revenue funding, with the balance coming from external borrowing. The PCC is able to borrow to fund capital investment provided that it can be demonstrated that it is affordable and prudent in accordance with CIPFA’s Prudential Code.

13


NARRATIVE STATEMENT

The PCC approves an annual Treasury Management Strategy Statement which includes requirements and proposed arrangements for borrowing during the year.

The PCC’s total outstanding borrowing from the Public Works Loan Board (PWLB) as at 31 March 2018 is £42.4m compared with the PCC’s underlying need to borrow (capital financing requirement – note 34) of £54.3m. This means that at some point in the future, the PCC is likely to need to borrow an additional £11.9m to ensure that the liquidity position is retained.

Sustainability

South Yorkshire Police is committed to sustainability and employs a Sustainability Manager, supported by a network of Sustainability Champions, to develop and implement the Force Sustainability Strategy. Key achievements include:

Installing green energy technology to reduce carbon emissions and save money. Technologies include solar panels, LED lights, biomass boilers, more efficient IT, free cooling technology, the use of mobile data and connecting two buildings to low carbon district heating networks in Sheffield.

Managing the Force’s carbon emissions to reduce its carbon footprint. The Force has achieved a 37% reduction in 2017 (based on 2009/10 baseline).

Managing waste effectively, recycling various waste streams. In 2017, the Force launched a new furniture reuse system.

Supporting and launching alternative staff travel initiatives to promote health and wellbeing and reduce CO2 emissions. In 2017 the Force offered its staff a Cycle2work salary sacrifice scheme, generating £18,000 savings, £9,000 income and providing bikes for 187 employees.

Continuing to run a fleet of ten Vauxhall Amperas, trialing Nissan Leaf vans and hybrid

vehicles and planning to procure additional electric vehicles to reduce emissions and improve the Fleet’s efficiency.

Maintaining the Force’s commitment to the principles of Eco-driving by teaching

appropriate techniques within the driver training programme.

9. OUTLOOK

The final Police Finance Settlement for 2018/19 was announced on 31 January 2018 with the Government maintaining police grant funding at the 2017/18 levels. However, this was with the expectation that, should each PCC raise their precept by the maximum allowed, along with the new council tax base, there would be an increase in funding for each police force.

The Council Tax Referendum Principles for 2018/19 allowed PCCs to increase Band D properties by up to £12 for the year. For South Yorkshire, this would represent an increase of 7.6% and would produce a Band D council tax of £170.16 (£158.16 in 2017/18). As 70% of South Yorkshire properties are in Band A and Band B, this would equate to annual increases of £8.00 and £9.33 respectively.

14


NARRATIVE STATEMENT

The Police Finance Settlement highlighted the Home Office’s intentions to offer greater certainty on plans for 2019/20. The intent is to maintain a broadly flat settlement with the same precept flexibility. However, this will be dependent on progress against a number of efficiency milestones to be agreed at a future date.

The PCC approved the £12 increase for a Band D property for 2018/19. This along with a £6m savings programme from the Chief Constable resulted in a budget shortfall of £7.3m after legacy costs, which will have to be met from general reserves. The PCC will once again apply to the Home Office during 2018/19 for Special Grant funding to meet the estimated costs of legacy issues.

Planning in the medium term is difficult when lacking clarity on future years’ funding. The PCC is continuing to work constructively with the Chief Constable in order to be in a position to respond strategically to any future changes in funding.

Whilst working to improve its understanding of the current and future policing needs of South Yorkshire, SYP is going through a programme of strategic change, including the reintroduction of neighbourhood policing, a review of crime management and also contact management, including Atlas Court. It is also implementing a transformational IT programme to realise productivity and efficiency savings in the future.

As at 31 March 2018 the overall level of revenue reserves estimated to be available is £37.3m. This includes General Reserves of £12.3m and Earmarked Reserves of £25.0m (excluding £7.4m earmarked for future capital expenditure). The approved budget for 2018/19 relies on a contribution from General Reserves of £7.3m to achieve a balanced budget. The Earmarked Reserves includes £11.4m in the Insurance Reserve which is set aside to meet the costs of potential liabilities under the current self-insurance arrangements and £9.1m in the Legacy Earmarked Reserve, which has been carried forward from underspends in relation to legacy costs over the last two years to provide for the potential future costs.

The General Reserve balance of £12.3m represents about 5% of the net revenue budget, in line with the Chief Finance and Commissioning Officer’s recommendation as to what would be deemed as a reasonable level. However, there remains a significant risk associated with legacy costs and the outcome of any future Home Office Special Grant Funding applications which could affect the level and adequacy of the reserves in future years. Further efficiencies and savings will need to be generated by the Force to support future budgets. The overall level of reserves will be kept under review as part of the medium term planning and the monitoring of risks.

10. BASIS OF PREPARATIONThe financial statements have been prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting. This follows International Financial Reporting Standards (IFRS) to the extent that they are meaningful and appropriate to local authority accounts as determined by Her Majesty’s Treasury.

The Statements reflect the current legislative framework, central to which is the Police Reform and Social Responsibility Act 2011.

Fundamentally, the PCC is responsible for the finances of the whole PCC Group and controls the assets, the majority of liabilities and the reserves. The PCC receives all income and funding and makes all payments from the PCC Police Fund. In turn, the Chief Constable

15


NARRATIVE STATEMENT

has a duty to fulfill prescribed functions under the the Police Reform and Social Responsibilty Act 2011 within the annual budget set by the PCC in consulation with the Chief Constable.

The PCC’s Statement of Accounts consists of the following financial statements:

Movement in Reserves Statement: this shows the movement of reserves during the year, analysed between usable and unusable reserves. The Chief Constable has no usable reserves. Unusable reserves are those that have been created to reconcile the accounting entries required to comply with the Code with those that must be statutorily charged to the General Fund Balance for council tax setting purposes. These cannot be used to support local expenditure.

Comprehensive Income and Expenditure Statement: this statement shows the cost for the year of providing services. The PCC receives all income which is, therefore, excluded from the Chief Constable’s Statement.

Balance Sheet : this sets out the assets, liabilities and reserves of the PCC and Group as at 31 March each year.

Cash Flow Statement: this summarises the movements in cash and cash equivalents during the year. It shows how cash and cash equivalents are used or generated in operating, investing and financing activities.

Statement of Accounting Policies: this sets out details of the accounting policies adopted in compiling the Statement of Accounts.

Police Pension Fund Account: this sets out the position for the three Police Pension Scheme (1987, 2006 and 2015) Fund Accounts as at 31 March each year.

Annual Governance Statement: this is published with the Accounts and sets out how the Force complies with statutory corporate governance requirements.

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

11. FURTHER INFORMATION

There is more information about the finances of the PCC on its website www.southyorkshire-pcc.gov.uk or by contacting:

The Chief Finance and Commissioning Officer, South Yorkshire Police and Crime Commissioner, Carbrook House,5, Carbrook Hall Road,Sheffield, S9 2EH

16

http://www.southyorkshire-pcc.gov.uk/

http://www.southyorkshire-pcc.gov.uk/

THE POLICE AND CRIME COMMISSIONER FOR SOUTH YORKSHIRESTATEMENT OF ACCOUNTS 2017/18STATEMENT OF RESPONSIBILITIES

The Commissioner’s ResponsibilitiesThe Commissioner is required to:

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. That officer is the Chief Finance Officer

manage his affairs to secure the economic, efficient and effective use of resources and to safeguard his assets

approve the Statement of Accounts.

I approve this Statement of Accounts Dr Alan Billings, Police and Crime Commissioner for South Yorkshire Date: 26 July 2018

The Chief Finance Officer’s ResponsibilitiesThe Chief Finance Officer is responsible for the preparation of the Commissioner’s Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code).

In preparing this Statement of Accounts, the Chief Finance Officer has:

selected suitable accounting policies and then applied them consistently

made judgements and estimates that were reasonable and prudent

complied with the Local Authority Code 2017/18.

The Chief Finance Officer has also:

kept proper, up to date accounting records

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

assessed the ability to continue as a going concern, disclosing, as applicable, matters related to going concern

used the going concern basis of accounting on the assumption that the functions will continue in operational existence for the foreseeable future

maintained such internal control which is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

I certify that the attached Statement of Accounts presents a true and fair view of the financial position of the Commissioner as at 31 March 2018 and his income and expenditure for the year then ended.

Michael Clements, Chief Finance and Commissioning Officer Date: 26 July 2018

17


GROUP MOVEMENT IN RESERVES STATEMENT

This statement shows the movement in the year of the different reserves held by the Group analysed into ‘usable reserves’ (those that can be applied to fund expenditure or reduce local taxation) and other ‘unusable reserves’. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing services, more details of which are shown in the Group Comprehensive Income and Expenditure Statement. This is different from the statutory amounts required to be charged to the General Fund Balance for council tax setting. The Net Increase/Decrease before the Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to and from earmarked reserves.

Gen

eral

Fu

nd

Bal

ance

Earm

arke

d R

eser

ves

Cap

ital

Gra

nts

Una

pplie

d

Tota

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eser

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Tota

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Res

erve

s

Tota

l R

eser

ves

£000 £000 £000 £000 £000 £000

Balance at 1 April 2016 17,597 22,730 49 40,376 (2,604,503) (2,564,127)

Movement in Reserves during 2016/17

Total Comprehensive Income and Expenditure (49,703) - - (49,703) (585,607) (635,310)

Adjustments between accounting basis and funding basis under regulations (Note 7) 55,766 - - 55,766 (55,766) -

Net Increase / (Decrease) before Transfers to Earmarked Reserves 6,063 - - 6,063 (641,373) (635,310)

Transfers to/(from) Earmarked Reserves (Note 9) (6,026) 6,026 (49) (49) 49 -Increase/(Decrease) in 2016/17 37 6,026 (49) 6,014 (641,324) (635,310)

Balance at 31 March 2017 carried forward 17,634 28,756 - 46,390 (3,245,827) (3,199,437)

Movement in Reserves during 2017/18

Total Comprehensive Income and Expenditure (63,171) - - (63,171) 56,484 (6,687)


Net Increase / (Decrease) before Transfers to Earmarked Reserves (1,574) - - (1,574) (5,113) (6,687)

Transfers to/(from) Earmarked Reserves (Note 9) (3,763) 3,763 - - - -Increase/(Decrease) in 2017/18 (5,337) 3,763 - (1,574) (5,113) (6,687)

Balance at 31 March 2018 carried forward 12,297 32,519 - 44,816 (3,250,940) (3,206,124)

18


THE PCC’S MOVEMENT IN RESERVES STATEMENT

This statement shows the movement in the year of the different reserves held by the PCC, analysed into ‘usable reserves’ (those that can be applied to fund expenditure or reduce local taxation) and other unusable reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the PCC’s services, more details of which are shown in the PCC’s Comprehensive Income and Expenditure Statement. This is different from the statutory amounts required to be charged to the General Fund Balance for council tax setting. The Net Increase/Decrease before the Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to and from earmarked reserves undertaken by the PCC.

Gen

eral

Fu

nd

Bal

ance

Earm

arke

d R

eser

ves

Cap

ital

Gra

nts

Una

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Tota

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Res

erve

s

Tota

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eser

ves

£000 £000 £000 £000 £000 £000

Balance at 1 April 2016 17,597 22,730 49 40,376 37,756 78,132

Movement in reserves during 2016/17

Total Comprehensive Income and Expenditure 5,123 - - 5,123 1,670 6,793

Adjustments between accounting basis and funding basis under regulations (Note 7) 940 - - 940 (940) -

Net Increase / (Decrease) before Transfers to Earmarked Reserves

6,063 - - 6,063 730 6,793

Transfers to/(from) Earmarked Reserves (Note 9) (6,026) 6,026 (49) (49) 49 -

Increase/(Decrease) in 2016/17 37 6,026 (49) 6,014 779 6,793

Balance at 31 March 2017 carried forward 17,634 28,756 - 46,390 38,535 84,925

Movement in reserves during 2017/18

Total Comprehensive Income and Expenditure (3,411) - - (3,411) 2,711 (700)


Net Increase / (Decrease) before Transfers to Earmarked Reserves

(1,574) - - (1,574) 874 (700)

Transfers to/(from) Earmarked Reserves (Note 9) (3,763) 3,763 - - - -

Increase/(Decrease) in 2017/18 (5,337) 3,763 - (1,574) 874 (700)

Balance at 31 March 2018 carried forward 12,297 32,519 - 44,816 39,409 84,225

19


GROUP COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT

This statement shows the cost in the year of providing services for the Group in accordance with generally accepted accounting practices. PCCs raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Group Movement in Reserves Statement and Expenditure Funding Analysis.

2016/17 2017/18Gross

ExpenditureGross

IncomeNet

ExpenditureGross

ExpenditureGross

IncomeNet

Expenditure£000 £000 £000 £000 £000 £000

15,162 - 15,162 Barnsley 15,824 - 15,82422,181 - 22,181 Doncaster 23,803 - 23,80316,855 - 16,855 Rotherham 17,910 - 17,91038,956 - 38,956 Sheffield 40,953 - 40,95340,834 - 40,834 Specialist Crime Services 43,177 - 43,17718,409 - 18,409 Specialist Operations Unit 20,655 - 20,655

936 - 936 Performance & Governance 1,951 - 1,9511,061 - 1,061 Business Change & Innovation 2,025 - 2,0251,120 - 1,120 Community Safety 1,053 - 1,053

13,711 - 13,711 Criminal Justice Administration 13,702 - 13,70217,041 - 17,041 Contact Management 18,212 - 18,212

4,160 - 4,160 Corporate Finance 3,623 - 3,6239,664 - 9,664 Facilities Management 9,963 - 9,963

10,471 - 10,471 Information Services 11,400 - 11,4007,454 - 7,454 Human Resources 8,796 (3) 8,7932,690 - 2,690 Professional Standards 2,711 - 2,7112,101 - 2,101 Senior Command Team 2,011 - 2,011

889 - 889 Corporate Communications 743 - 743619 - 619 Legal Services 1,133 - 1,133

(1,453) - (1,453) Vehicle Fleet Management (1,308) - (1,308)14,624 - 14,624 Regional & Collaboration 15,749 - 15,749

155 - 155 Hillsborough Inquests / Claims 88 - 885,647 - 5,647 CSE / Operation Stovewood 9,969 - 9,969

18,237 - 18,237 Other 21,147 - 21,14711,971 (24,536) (12,565) PCC 13,431 (27,105) (13,674)

273,495 (24,536) 248,959 Cost of Services 298,721 (27,108) 271,613

496 (506) (10) Other Operating Expenditure (Note 10) 713 (333) 380

94,797 (144) 94,653 Financing and investment income and expenditure (Note 11)

88,188 (175) 88,013

- (293,899) (293,899) Taxation and non-specific grant income (Note 12) - (296,835) (296,835)

368,788 (319,085) 49,703 (Surplus) or Deficit on Provision of Service 387,622 (324,451) 63,171

(1,760)(Surplus) or deficit on revaluation of Property, Plant and Equipment (Note 13)

(2,483)

587,367Remeasurements of the net defined benefit liability(Note 25/37)

(54,001)

585,607 Other Comprehensive Income and Expenditure (56,484)

635,310 Total Comprehensive Income and Expenditure 6,687

20


THE PCC’S COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT

This statement shows the accounting cost in the year of providing the PCC’s services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. PCCs raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the PCC’s Movement in Reserves Statement.

2016/17 2017/18Gross

ExpenditureGross

IncomeNet

ExpenditureGross

ExpenditureGross

IncomeNet

Expenditure£000 £000 £000 £000 £000 £000

11,971 (24,536) (12,565) PCC 13,431 (27,105) (13,674)

11,971 (24,536) (12,565) Cost of services 13,431 (27,105) (13,674)

299,563 - 299,563Intra-group adjustment – funding provided by the PCC for financial resources consumed by the CC

311,812 - 311,812

311,534 (24,536) 286,998 Total Cost of Policing Services 325,243 (27,105) 298,138

496 (506) (10) Other Operating Expenditure (Note 10) 713 (333) 380

1,932 (144) 1,788Financing and investment income and expenditure (Note 11)

1,903 (175) 1,728

- (293,899) (293,899) Taxation and non-specific grant income (Note 12) - (296,835) (296,835)

313,962 (319,085) (5,123) (Surplus) or Deficit on Provision of Service 327,859 (324,448) 3,411

(1,760) (Surplus) or deficit on revaluation of Property, Plant and Equipment (Note 13) (2,483)

90Remeasurements of the net defined benefit liability(Note 25/37)

(228)

(1,670) Other Comprehensive Income and Expenditure (2,711)

(6,793) Total Comprehensive Income and Expenditure 700

21


GROUP AND PCC’S BALANCE SHEET

The Balance Sheet shows the value of assets and liabilities recognised by the Group and the PCC. The net assets/(liabilities) (assets less liabilities) are matched by the reserves held. Reserves are reported in two categories. The first category of reserves is usable reserves, that is, those reserves that may be used to provide services, subject to the need to retain a prudent level of reserves and subject to any statutory limitations on their use (for example the Capital Receipts Reserve may only be used to fund capital expenditure or repay debt). The second category of reserves is those that are not able to be used to provide services. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing differences shown in the Movement in Reserves Statement line ‘Adjustments between accounting basis and funding basis under regulations’.

31 March 2017 31 March 2018Group PCC Group PCC

£000 £000 £000 £000

89,535 89,535 Property, Plant and Equipment (Note 13) 92,628 92,6282,452 2,452 Intangible Assets (Note 14) 2,205 2,205

91,987 91,987 Long-Term Assets 94,833 94,833

- - Short-Term Investments (Note 15) - -704 704 Assets Held for Sale (Note 20) 1,043 1,043186 186 Inventories (Note 17) 169 169

43,083 43,083 Short-Term Debtors (Note 18) 32,087 32,08724,617 24,617 Cash and Cash Equivalents (Note 15/19) 36,179 36,17968,590 68,590 Current Assets 69,478 69,478

(604) (604) Short-Term Borrowing (Note 15) (2,500) (2,500)(26,764) (22,984) Short-Term Creditors (Note 21) (32,322) (28,997)

(3,040) (3,040) Provisions (Note 22) (2,115) (2,115)(428) (428) Revenue Grants Receipt in Advance (Note 32) (583) (583)(590) (590) Capital Grants Receipts in Advance (Note 32) - -

(31,426) (27,646) Current Liabilities (37,520) (34,195)

- - Revenue Grants Receipt in Advance (Note 32) - -(134) (134) Capital Grants Receipt in Advance (Note 32) - -

(1,430) (1,430) Long-Term Provisions (Note 22) (3,230) (3,230)(40,560) (40,560) Long-Term Borrowing (Note 15) (38,093) (38,093)

(3,286,464) (5,882) Other Long-Term Liabilities (Note 24) (3,291,592) (4,568)(3,328,588) (48,006) Long-Term Liabilities (3,332,915) (45,891)

(3,199,437) 84,925 Net Assets/(Liabilities) (3,206,124) 84,225

46,390 46,390 Usable Reserves (Note 23) 44,816 44,816(3,245,827) 38,535 Unusable Reserves (Note 25) (3,250,940) 39,409

(3,199,437) 84,925 Total Reserves (3,206,124) 84,225

22


GROUP AND PCC’S CASH FLOW STATEMENT

The Cash Flow Statement shows the changes in cash and cash equivalents of the PCC and Group during the reporting period. The Statement shows how cash and cash equivalents are generated and used by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the PCC and Group are funded by way of taxation and grant income or from the recipients of services provided. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (that is borrowing) to the PCC.

31 March 2017 31 March 2018Group PCC Group PCC

£000 £000 £000 £000

49,703 (5,123) Net (surplus) or deficit on the provision of services 63,171 3,411

(49,985) 4,841 Adjustments to net surplus or deficit on the provision of services for non-cash movements (82,149) (22,389)

(1,341) (1,341)Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities

(1,533) (1,533)

(51,326) 3,500 Adjusted net cash flows from Operating Activities (Note 26) (83,682) (23,922)

9,296 9,296 Investing Activities (Note 27) 5,542 5,542

(6,531) (6,531) Financing Activities (Note 28) 3,407 3,407

1,142 1,142 Net Increase or decrease in cash and cash equivalents (11,562) (11,562)

(25,759) (25,759) Cash and cash equivalents at the beginning of the period (24,617) (24,617)

(24,617) (24,617) Cash and cash equivalents at the end of the reporting period (Note 19) (36,179) (36,179)

23

THE POLICE AND CRIME COMMISSIONER FOR SOUTH YORKSHIRE STATEMENT OF ACCOUNTS 2017/18

NOTES TO ACCOUNTS

1. ACCOUNTING POLICIESa) General Principles

The Statement of Accounts summarises the transactions of the PCC and the Group for the 2017/18 financial year and the position as at the year-end of 31 March 2018. The term ‘Group’ is used to indicate the transactions and policies of the PCC and the Chief Constable of South Yorkshire Police. The PCC is required to prepare an annual Statement of Accounts in accordance with proper accounting practices by the Accounts and Audit (England) Regulations 2015. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 (the Code), and the Service Reporting Code of Practice 2017/18, 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.

b) Relationship Between the PCC and the Chief Constable for Accounting PurposesThe PCC and the Chief Constable are both required to prepare their own statutory accounts. The South Yorkshire Group position, which reflects the consolidated position of both the PCC and the Chief Constable, is included within the PCC’s Statement of Accounts.

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

The Comprehensive Income and Expenditure Statement for the Chief Constable includes all the costs of operational policing. An intra-group adjustment is included in both the PCC’s and Chief Constable’s Comprehensive Income and Expenditure Statement to reflect the funding provided by the PCC for financial resources consumed by the Chief Constable.

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

c) Accruals of Income and Expenditure

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

Supplies and services 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.

Income is credited to the Comprehensive Income and Expenditure Statement in the year in which it is earned.

Fees, charges and rents due for services provided are accounted for as income at the date that the relevant goods or services are provided.

24


NOTES TO ACCOUNTS Interest payable on borrowings and receivable on investments is accounted for as

expenditure or income respectively on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.

Where income and expenditure has been recognised but cash has not yet been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where it is doubtful that debts will be settled, the balance of debtors is reduced and a charge made to revenue for the income that might not be collected.

d) Cash and Cash EquivalentsCash is represented by cash in hand and demand deposits. Cash Equivalents are short-term, highly liquid investments with financial institutions that are readily convertible to known amounts of cash with insignificant risk of change in value. The PCC has classified investments in Call Accounts and Money Market Funds, which provide instant access with no penalty, as cash equivalents.

In the Balance Sheet and the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the PCC’s cash management.

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

Changes in accounting policies are only made when required by proper accounting practices or when the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the PCC’s financial position or financial performance. Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied.

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

f) Exceptional ItemsWhen items of income and expenditure are material, their nature and amount is disclosed separately, either in the Comprehensive Income and Expenditure Statement or in the Notes to the Accounts, depending on how significant the items are to an understanding of PCC’s performance.

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

25


NOTES TO ACCOUNTS

Benefits Payable During EmploymentShort-term employee benefits are those due to be settled within 12 months of the year-end. They include salaries, paid annual leave, flexitime and other non-monetary benefits such as cars. They are recognised as an expense in the year in which employees render service. An accrual is made for the cost of holiday entitlements and other forms of leave, such as time off in lieu, earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to the Surplus or Deficit on the Provision of Services within the Comprehensive Income and Expenditure Statement and then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

Termination BenefitsTermination benefits are amounts payable as a result of a decision to terminate employment before an employee’s normal retirement date or where an employee decides to accept voluntary redundancy. These are charged on an accruals basis to the Comprehensive Income and Expenditure Statement when there is a demonstrable commitment to the termination of the employment of an employee or group of employees.

When termination benefits involve the enhancement of pensions, statutory provisions require the General Fund Balance to be charged with the amount payable to the Pension Fund or pensioner in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, appropriations are required to and from the Pensions Reserve to remove the notional debits and credits for pension enhancement termination benefits and replace them with debits for the cash paid to the Pension Fund and pensioners and any such amounts payable but unpaid at the year-end.

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

The 1987, 2006 and 2015 Police Pension Schemes (PPS) for police officers are unfunded schemes, which means that there are no investment assets built up to meet the pensions liabilities, and cash has to be generated to meet the actual payments as they fall due. The PCC is required by legislation to operate a Pension Fund with the amounts that must be paid into or out of the Pension Fund being specified by regulation. The former Police Authority set up a Pension Fund on 1 April 2006 from which pensions payments are made and into which contributions, from the PCC and employees, are received. The PCC then receives a top-up grant from the Government equal to the sum by which the amount payable for pensions from the Pension Fund exceeds the amount receivable from the PCC into the Pension Fund. The Pension Fund is shown separately in the Accounts. The latest Career Average Revalued Earnings (CARE) pension scheme which was introduced on 1 April 2015 moves away from the ‘final salary’ arrangements of the 1987 and 2006 schemes, and is as a result of Lord Hutton’s independent review of public service pensions.

The Local Government Pension Scheme (LGPS) for police staff, administered by the South Yorkshire Pensions Authority, is a funded scheme, which means that the PCC and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets.

26


NOTES TO ACCOUNTSThe above schemes provide defined benefits to members (retirement lump sums and pensions), earned as employees work. They are accounted for in accordance with the requirements for defined benefits schemes, based on the principle that an organisation should account for retirement benefits as they are accrued, even though they may be paid many years into the future.

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

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

current service cost – the increase in liabilities as a result of service earned by employees in the current year. This is charged across the Districts and Departments within the Comprehensive Income and Expenditure Statement.

past service cost – the increase in liabilities arising from current year decisions, the effect of which relates to service earned in earlier years. This is charged to across the Districts and Departments within the Comprehensive Income and Expenditure Statement.

net interest on the net defined benefit liability – the change during the period in the net defined benefit liability that arises from the passage of time. This is calculated by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the net defined benefit liability at the beginning of the period, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. This is charged to the Financing and Investment Income and Expenditure line within the Comprehensive Income and Expenditure Statement.

Remeasurements comprising:

o the return on plan assets (LGPS only) – this excludes amounts included in net interest on the net defined benefit liability and is charged to the Pensions Reserve as Other Comprehensive Income and Expenditure.

o actuarial gains and losses – changes in the net pensions liability that arise because events have not coincided with assumptions made at the last actuarial valuation or because the actuaries have updated their assumptions. This is charged to the Pensions Reserve as Other Comprehensive Income and Expendture.

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

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

27


NOTES TO ACCOUNTS

h) Government Grants and ContributionsWhether paid on account, by instalments or in arrears, Government grants and third party contributions and donations are recognised as income when there is a reasonable assurance that:

the grants or contributions will be received, and

the PCC will comply with the conditions attached to the grant or contribution.

Amounts recognised as due to the PCC are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Most grants and contributions will be given with stipulations as to how and when they are to be spent and the consequences if resources are not applied in the manner authorised. Grants and contribution may have conditions that require funding to be returned if not met.

Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line (attributable revenue grants and contributions) or Taxation and Non-Specific Grant Income (non-ring fenced revenue grants and all capital grants) in the Comprehensive Income and Expenditure Statement.

Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Reserve. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied Reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.

i) Intangible AssetsExpenditure on assets that do not have physical substance but are identifiable and controlled by the PCC, such as software licences, are capitalised when it is expected that future economic benefit or service potential will flow to the PCC for more than one year.

Internally generated assets are capitalised where it is demonstrable that the project is technically feasible, is intended to be completed and the PCC will be able to generate future economic benefits or deliver service potential by being able to sell or use the asset.

Intangible assets are measured initially at cost. The depreciable amount of the intangible asset balance is subsequently amortised over its useful life to the relevant service line in the Comprehensive Income and Expenditure Statement. Any gain or loss arising from the disposal of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement.

Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation and gain or losses on disposal are not permitted to have an impact on the General Fund Balance and are reversed out in the Movement in Reserves Statement to the Capital Adjustment Account and the Capital Receipts Reserve (for sale proceeds greater than £10,000).

j) Property, Plant and Equipment

28


NOTES TO ACCOUNTSAssets that have physical substance and are held for use in the provision of services or for administrative purposes and are expected to be used for more than one financial year are classified as Property, Plant and Equipment.

RecognitionExpenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the PCC and the cost can be measured reliably. Expenditure on repairs that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential is charged as an expense when it is incurred.

MeasurementAssets are initially measured at cost, comprising the purchase price and any costs directly attributable to bringing the asset into working condition for its intended use. The PCC does not capitalise borrowing costs incurred whilst assets are under construction.

Assets are then carried in the Balance Sheet at fair value, determined as the amount that would be paid for the asset in its existing use (existing use value – EUV), except for:

non-property assets that have short useful lives and/or low values which are measured at depreciated historical cost basis as a proxy for fair value,

assets under construction which are measured at historical cost,

surplus assets which are measured at Fair Value using a Market Value basis.

Donated assets are measured initially at fair value. The difference between fair value and any consideration paid is credited to the Taxation and Non-Specific Grant Income line of the Comprehensive Income and Expenditure Statement, unless the donation has been made conditionally. Until conditions are satisfied, the gain is held in the Donated Assets Account. Where gains are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement.

Assets included in the Balance Sheet at fair value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from their fair value at the year-end, but as a minimum every five years. Increases in valuations are matched by credits to the Revaluation Reserve to recognise unrealised gains. Exceptionally, gains might be credited to the Comprehensive Income and Expenditure Statement when they arise from the reversal of a loss previously charged to a service.

Where decreases in value are identified, they are accounted for as follows:

where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against that balance (up to the amount of the accumulated gains),

where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.

The Revaluation Reserve contains revaluation gains recognised since 1 April 2007, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account.

29


NOTES TO ACCOUNTS

ImpairmentAssets are assessed at each year-end to determine whether there is any indication that an asset may be impaired. Where indication exists and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall.

Where impairment losses are identified, they are accounted for as follows:

where there is a balance of revaluation gains for the asset in the Revaluation Reserve, the carrying amount of the asset is written down against the balance (up to the amount of the accumulated gains),

where there is no balance in the Revaluation Reserve or an insufficient balance, the carrying amount of the asset is written down against the relevant service line in the Comprehensive Income and Expenditure Statement.

Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service line in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss, adjusted for depreciation that would have been charged if the loss had not been recognised.

DepreciationDepreciation is provided on all Property, Plant and Equipment assets by the systematic allocation of depreciable amounts over their useful lives. An exception is made for assets without a determinable finite useful life, such as freehold land, and assets that are not yet available for use (assets under construction).

Depreciation is calculated on the following bases:

Buildings – straight line allocation over the useful life of the property as estimated by the valuer,

Vehicles, plant, furniture and equipment – straight line allocation over the useful life of each asset.

Where an item of Property, Plant and Equipment asset has major components whose cost is significant in relation to the total cost of the item, the components are depreciated separately.

Revaluation gains are also depreciated, with an amount equal to the difference between current value depreciation charged on the assets and the depreciation that would have been chargeable based on their historical cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account.

Disposals and Non-Current Assets Held for SaleWhen it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continued use, it is reclassified as an Asset Held for Sale. The asset is revalued immediately before reclassification and then carried at the lower of this amount and the fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement. Gains in fair

30


NOTES TO ACCOUNTSvalue are recognised only up to the amount of any previous losses recognised in the Surplus or Deficit on Provision of Services. Depreciation is not charged on Assets Held for Sale.

If assets no longer meet the criteria to be classified as Assets Held for Sale, they are reclassified back to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale, adjusted for depreciation, amortisation or revaluations that would have been recognised had they not been classified as Held for Sale, and their recoverable amount at the date of the decision not to sell.

Assets that are to be abandoned or scrapped are not reclassified as Assets Held for Sale.

When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets Held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal. Receipts from disposal (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (netted off against the carrying value of the asset at the time of disposal). Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.

Amounts received from disposals in excess of £10,000 are categorised as capital receipts and are required to be credited to the Capital Receipts Reserve as part of the Movement in Reserves Statement. The Capital Receipts Reserve can only be used to either finance new capital investment or reduce the PCC’s borrowing requirement and when sums are utilised for this purpose they are transferred to the Capital Adjustment Account.

The written-off value of disposals is not a charge against council tax, as the cost of non-current assets is fully provided for under separate arrangements for capital financing. Amounts are therefore appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.

k) Revenue Expenditure Funded from Capital under StatuteExpenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of a non-current asset is charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the PCC has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer from the General Fund Balance to the Capital Adjustment Account in the Movement in Reserves Statement then reverses out the amounts charged so there is no impact on the level of council tax.

l) Charges to Revenue for Non-Current AssetsServices are debited with the following amounts to record the real cost of holding non-current assets during the year:

depreciation attributable to the assets used,

revaluation and impairment losses on assets used where there are no accumulated gains in the Revaluation Reserve against which the losses can be written off,

amortisation of intangible assets attributable to the service.

The PCC is not required to raise council tax to cover depreciation, revaluation and impairment losses or amortisations. However, the PCC is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement (equal to an amount calculated on a prudent basis determined by the PCC in accordance with

31


NOTES TO ACCOUNTSstatutory guidance). Depreciation, revaluation and impairment losses and amortisations are therefore replaced by the contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

The PCC is also charged with the principal element of Transferred Debt taken over from the former South Yorkshire County Council, and managed by Rotherham MBC on the PCC’s behalf. This charge is included as another adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement.

m) LeasesLeases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases.

Where a lease covers land and buildings, the land and buildings elements are considered separately for classification.

Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets.

The PCC as a LesseeFinance LeasesProperty, Plant and Equipment held under finance leases is recognised on the Balance Sheet at the commencement of the lease at its fair value measured at the lease’s inception (or the present value of the minimum lease payments if lower). The asset recognised is matched by a liability for the obligation to pay the lessor. Initial direct costs are added to the carrying amount of the asset. Premiums paid on entry into a lease are applied to writing down the lease liability. Contingent rents are charged as expenses in the periods in which they are incurred.

Lease payments under finance leases are apportioned between:

a charge for the acquisition of the interest in the Property, Plant and Equipment – applied to write down the lease liability,

a finance charge, which is debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

Property, Plant and Equipment recognised under finance leases is accounted for using the policies applied generally to such assets, subject to depreciation being charged over the lease term if this is shorter than the asset’s estimated useful life.

The PCC is not required to raise council tax to cover depreciation or revaluation and impairment losses arising on leased assets. Instead, a prudent annual contribution is made from revenue funds towards the deemed capital investment in accordance with statutory requirements. Depreciation and revaluation and impairment losses are therefore substituted by a revenue contribution in the General Fund Balance, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

Operating Leases

32


NOTES TO ACCOUNTSRentals payable under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the service benefiting from the use of the leased Property, Plant and Equipment. Charges are made on a straight line basis over the term of the lease, even if this does not match the pattern of payments (for example there is a rent-free period at the commencement of the lease).

The PCC as a LessorFinance LeasesThe PCC has not granted any finance leases.

Operating LeasesWhere the PCC grants an operating lease over a property or an item of plant or equipment, the asset is retained in the Balance Sheet and rental income is credited to the Comprehensive Income and Expenditure Statement. Credits are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (for example there is a premium paid at the commencement of the lease).

n) Financial InstrumentsFinancial LiabilitiesFinancial liabilities are recognised on the Balance Sheet when the PCC becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and carried on the Balance Sheet at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. The effective interest rate is the rate that exactly discounts estimated future cash payments over the life of the instrument to the amount at which it was originally recognised.

For most of the borrowings that the PCC has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (plus accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year according to the loan agreement.

Gains or losses on the repurchase or early settlement of borrowing are credited or debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement in the year of the transaction. However, where repurchase has taken place as part of a restructuring of the loan portfolio that involves the modification or exchange of existing instruments, the premium or discount is respectively deducted from or added to the amortised cost of the new or modified loan and the write-down to the Comprehensive Income and Expenditure Statement is spread over the life of the loan by an adjustment to the effective interest rate.

Where premiums and discounts have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The PCC has a policy of spreading the gain or loss over the term of the replacement loan. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.

Financial Assets

33


NOTES TO ACCOUNTSThe PCC has financial assets classified as loans and receivables which are assets that have fixed or determinable payments but are not quoted in an active market. Loans and receivables are recognised on the Balance Sheet when the PCC becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value. They are subsequently measured at their amortised cost. Annual credits to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset multiplied by the effective interest rate for the instrument. For the loans that the PCC has made, this means that the amount on the Balance Sheet is the outstanding principal receivable (plus accrued interest) and the interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year according to the loan agreement.

o) Provisions, Contingent Liabilities and Contingent AssetsProvisionsProvisions are made where an event has taken place that gives the PCC a legal or constructive obligation that probably requires settlement by a transfer of economic benefits, and a reliable estimate can be made of the amount of the obligation. For instance, the PCC may be involved in a court case that could eventually result in the making of a settlement or the payment of compensation.

Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the PCC becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking account of relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Provisions are reviewed at the end of each financial year and where it becomes less probable that a transfer of economic benefits will now be required, or a lower settlement than anticipated is made, the provision is reversed and credited back to the relevant service.

Contingent Liabilities A contingent liability arises where an event has taken place that gives the PCC a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the PCC. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably.

Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the Accounts.

Contingent AssetsA contingent asset arises where an event has taken place that gives the PCC a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the PCC.

Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the Accounts where it is probable that there will be an inflow of economic benefits.

p) Reserves

34


NOTES TO ACCOUNTSThe PCC sets aside amounts as reserves for specific future policy purposes or to cover contingencies. Reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year to score against the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against council tax for the expenditure.

Certain other reserves are kept to manage the accounting processes for non-current assets, financial instruments, retirement and employee benefits and they do not represent usable resources for the PCC. These reserves are explained elsewhere in the Accounting Policies.

q) Regional Working The PCC and Chief Constable engage with the other Yorkshire and Humber region PCCs and Chief Constables to deliver a number of services on a regional basis. The governance of this regional programme is undertaken by a Regional Collaboration Board headed by the four PCCs and attended by their Chief Executives and the Chief Constables.

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

In addition, separate collaboration exists between the PCC and Chief Constable and their counterparts in Humberside. The Forces have a combined Information Services Department and work collaboratively on Legal Services, with a shared Head of Service. The shared Joint Specialist Operations Unit was disbanded during the year and the HR collaboration is currently being reviewed in order to ensure it is achieving best value for both Forces.

South Yorkshire and Humberside collaboration work is overseen by a Joint Collaboration Board headed by the two PCCs, attended by senior officers of their respective offices and forces and supported by a Joint Governance Board chaired by both Deputies, as well as separate Information Services Programme Boards.

The above collaboration with Humberside Police has been treated as a joint operation, therefore in order to comply with IFRS11 Joint Arrangements the Group Comprehensive Income and Expenditure Statement only reflects South Yorkshire Police’s share of the income and expenditure.

Each force recognises only its share of any jointly procured fixed assets. South Yorkshire act as lead administration force for the collaboration arrangement, and as such fully recognise any liabilities with a corresponding debtor for Humberside PCC for their share of the costs, as at the balance sheet date. More information is included in Note 36.

r) Inventories Inventories are included in the Balance Sheet at the lower of cost and net realisable value. The cost of inventories is assigned using an average costing formula.

s) Foreign Currency TranslationWhere the PCC has entered into a transaction using a foreign currency, the transaction is converted into sterling at the exchange rate applicable on the date the transaction was made.

t) VAT

35


NOTES TO ACCOUNTSIncome and expenditure excludes amounts related to VAT, as all VAT collected is payable to the Her Majesty’s Revenue and Customs and all VAT paid is recoverable from them. The PCC is responsible for the submission of a single VAT return covering all of the transactions for the Group.

u) Events After the Balance Sheet DateEvents after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified:

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

those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material affect, disclosure is made in the notes, indicating 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.

v) Accounting Standards That Have Been Issued But Not Yet AdoptedThe Code requires that information is disclosed relating to the impact of any accounting standards that have been issued but have not yet been adopted.

There are no standards that have been issued but not yet adopted that will result in a change in accounting policy from 1 April 2018.

2. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES In applying the accounting policies set out in Note 1, the PCC and Chief Constable are required to make certain judgments about complex transactions or those involving uncertainty about future events. The critical judgment made in the Statement of Accounts is:

There is a high degree of uncertainty about the future levels of funding for the PCC and the impact of future legacy costs such as civil claims in relation to the Hillsborough Inquests / Claims and CSE, work being undertaken in conjunction with the National Crime Agency to investigate historic allegations of CSE (Operation Stovewood) and the events that took place at Orgreave.

3. CHANGES TO FINANCIAL STATEMENTSThere has been no change to the 2016/17 financial statements.

4. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY The Statement of Accounts contains estimated figures that are based on assumptions made by the PCC about the future. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because figures cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.

The items in the PCC’s and Group Balance Sheet as at 31 March 2018 for which there is a significant risk of material adjustment in forthcoming years are as follows:

36


NOTES TO ACCOUNTS

Item Uncertainties Effect if Actual Results Differ from Assumptions

Property, Plant and Equipment

Assets are depreciated over useful lives that are dependent on assumptions about the level of usage of individual assets and the repairs that will be incurred to maintain individual assets in the future. The current economic climate makes it uncertain that the PCC will be able to sustain his current spending in either maintaining or replacing his assets, bringing into doubt the useful lives assigned to assets.

If the useful lives of assets are reduced then depreciation increases and the carrying amount of the assets falls. The reverse occurs if the useful lives of assets are increased.

It is estimated that the annual depreciation charge would change, at maximum by around £351,000 for every year that useful lives increased or decreased.

Insurance Provision

The PCC has made a total provision of £1m for the settlement of outstanding insurance claims. It is difficult to predict the final outcome of claims until they are actually settled.

MMI Ltd are former insurers who ceased trading in 1992 and with whom there was a Scheme of Arrangement in case of insolvency involving a claw back of claims paid. No levies have been paid during 2017/18 and no further provision has been made at this stage.

There is a risk that existing claims are settled at higher or lower figures than estimated. In addition, since insurance claims develop over time, the requirement to make provisions could be increased by the identification in future years of additional liabilities incurred but not yet reported.

The position with regard to MMI Ltd is being kept under review by the Administrators and there may be further levies announced in future.

The PCC has earmarked sums in an Insurance Reserve to provide some cover in respect of both of these risks.

37


NOTES TO ACCOUNTS

Item Uncertainties Effect if Actual Results Differ from Assumptions

Pensions Liability

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

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

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

During 2017/18, the PCC’s Actuaries advised that the net pensions liability has decreased by approximately £54m as a result of estimates being revised and updating financial and demographic assumptions. This is reported on the Group Income and Expenditure Statement and further information is provided at Note 37.

5. MATERIAL ITEMS OF INCOME AND EXPENSE

The Group Comprehensive Income and Expenditure Statement includes costs incurred of £9.969m during 2017/18 relating to CSE. Special grant funding has been received of £7.439m which is included in the Group Comprehensive Income and Expenditure Statement.

The Group Comprehensive Income and Expenditure Statement also includes new additional provisions totalling £2.839m for Legal Claims.

38


NOTES TO ACCOUNTS6. EXPENDITURE AND FUNDING ANALYSIS

The Expenditure and Funding Analysis shows how annual expenditure is used and funded from resources (government grants and council tax) in comparison with those resources consumed or earned in accordance with generally accepted accounting practices. It also shows how this expenditure is allocated for decision making purposes between the districts, services and departments.

Group2016/17 2017/18

Net Expenditure Chargeable

to the General

Fund

Adjustments between the Funding and Accounting

Basis

Net Expenditure

in the Comprehensive

Income and Expenditure

Statement


to the General

Fund


Basis

Net Expenditure



Statement£000 £000 £000 £000 £000 £000

14,351 811 15,162 Barnsley 14,128 1,696 15,82421,105 1,076 22,181 Doncaster 21,287 2,516 23,80316,013 842 16,855 Rotherham 16,035 1,875 17,91037,000 1,956 38,956 Sheffield 36,685 4,268 40,95339,002 1,832 40,834 Specialist Crime Services 38,987 4,190 43,17717,795 614 18,409 Specialist Operations Unit 18,737 1,918 20,655

874 62 936 Performance & Governance 1,758 193 1,9511,011 50 1,061 Business Change & Innovation 1,856 169 2,0251,116 4 1,120 Community Safety 990 63 1,053

13,265 446 13,711 Criminal Justice Administration 12,722 980 13,70216,514 527 17,041 Contact Management 16,958 1,254 18,212

4,105 55 4,160 Corporate Finance 3,500 123 3,6239,608 56 9,664 Facilities Management 9,800 163 9,963

10,327 144 10,471 Information Services 10,966 434 11,4007,095 359 7,454 Human Resources 8,002 791 8,7932,575 115 2,690 Professional Standards 2,467 244 2,7112,023 78 2,101 Senior Command Team 1,886 125 2,011

797 92 889 Corporate Communications 764 (21) 743607 12 619 Legal Services 1,099 34 1,133

(1,490) 37 (1,453) Vehicle Fleet Management (1,404) 96 (1,308)14,436 188 14,624 Regional & Collaboration 15,325 424 15,749

152 3 155 Hillsborough Inquests / Claims 83 5 885,645 2 5,647 CSE / Operation Stovewood 9,956 13 9,969

16,059 2,178 18,237 Other 16,552 4,595 21,147(14,084) 1,519 (12,565) PCC (15,277) 1,603 (13,674)

235,901 13,058 248,959 Net Cost of Services 243,862 27,751 271,613(241,964) 42,708 (199,256) Other Operating Expenditure (242,288) 33,846 (208,442)

(6,063) 55,766 49,703 (Surplus) or Deficit 1,574 61,597 63,17140,327 Opening General Fund 46,390

6,063 Less/Plus Surplus or (Deficit) on General Fund in Year (1,574)

46,390 Closing General Fund at 31 March

44,816

39


NOTES TO ACCOUNTS

PCC only

2016/17 2017/18Net

Expenditure Chargeable

to the General

Fund


Basis

Net Expenditure



Statement


to the General

Fund


Basis

Net Expenditure



Statement£000 £000 £000 £000 £000 £000

(14,084) 1,519 (12,565) PCC (15,277) 1,603 (13,674)

(14,084) 1,519 (12,565) Net Cost of Services (15,277) 1,603 (13,674)

249,985 49,578 299,563 Intra-group adjustment – funding provided by the PCC for financial resources consumed by the CC

259,139 52,673 311,812

(241,964) (50,157) (292,121) Other Operating Expenditure (242,288) (52,439) (294,727)

(6,063) 940 (5,123) (Surplus) or Deficit 1,574 1,837 3,411

40,327 Opening General Fund 46,390

6,063 Less/Plus Surplus or (Deficit) on General Fund in Year (1,574)

46,390 Closing General Fund at 31 March 44,816

40


NOTES TO ACCOUNTS

7. ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS This note details the adjustments that are made to the total Comprehensive Income and Expenditure Statement recognised by the Group and the PCC in the year.

Group

Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts

Adjustments for Capital Purposes

Net change for the Pensions

Adjustments

Other Differences Total Adjustments

2016/17 2017/18 2016/17 2017/18 2016/17 2017/18 2016/17 2017/18

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

Barnsley - - 799 1,709 12 (13) 811 1,696

Doncaster - - 1,123 2,551 (47) (35) 1,076 2,516

Rotherham - - 853 1,926 (11) (51) 842 1,875

Sheffield - - 1,998 4,317 (42) (49) 1,956 4,268

Specialist Crime Services - - 1,936 4,201 (104) (11) 1,832 4,190

Specialist Operations Unit - - 795 1,732 (181) 186 614 1,918

Performance & Governance - - 55 166 7 27 62 193

Business Change & Innovation - - 35 172 15 (3) 50 169

Community Safety - - - 79 4 (16) 4 63

Criminal Justice Administration - - 492 951 (46) 29 446 980

Contact Management - - 509 1,301 18 (47) 527 1,254

Corporate Finance - - 49 134 6 (11) 55 123

Facilities Management - - 54 162 2 1 56 163

Information Services - - 138 432 6 2 144 434

Human Resources - - 289 789 70 2 359 791

Professional Standards - - 115 260 - (16) 115 244

Senior Command Team - - 57 156 21 (31) 78 125

Corporate Communications - - 17 52 75 (73) 92 (21)

Legal Services - - 10 34 2 - 12 34

Vehicle Fleet Management - - 35 99 2 (3) 37 96

Regional & Collaboration - - 167 430 21 (6) 188 424

Hillsborough Inquests / Claims - - 3 5 - - 3 5

CSE / Operation Stovewood - - 2 13 - - 2 13

Other - - 2,095 4,932 83 (337) 2,178 4,595

PCC 1,435 1,487 81 116 3 - 1,519 1,603

Net Cost of Services 1,435 1,487 11,707 26,719 (84) (455) 13,058 27,751

Other Operating Expenditure from 150 48 43,361 33,672 (803) 126 42,708 33,846

41


NOTES TO ACCOUNTSthe Funding Analysis

Difference between the General Fund surplus or deficit and the CIES surplus or deficit 1,585 1,535 55,068 60,391 (887) (329) 55,766 61,597

PCC only

Adjustments from General Fund to arrive at the Comprehensive Income and Expenditure Statement amounts

Adjustments for Capital Purposes

Net change for the Pensions

Adjustments

Other Differences Total Adjustments

2016/17 2017/18 2016/17 2017/18 2016/17 2017/18 2016/17 2017/18

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

PCC 1,435 1,487 81 116 3 - 1,519 1,603

Net Cost of Services 1,435 1,487 81 116 3 - 1,519 1,603

Intra-group adjustment – funding provided by the PCC for financial resources consumed by the CC

- - 49,578 52,673 - - 49,578 52,673

Other Operating Expenditure from the Funding Analysis

150 48 (49,504) (52,613) (803) 126 (50,157) (52,439)

Difference between the General Fund surplus or deficit and Comprehensive Income and Expenditure Statement surplus or deficit

1,585 1,535 155 176 (800) 126 940 1,837

8. SUBJECTIVE ANALYSISThis note shows expenditure, for the Group and PCC, split by type rather than by district, service and department.

Expenditure Group PCC

2016/17 2017/18 2016/17 2017/18

£000 £000 £000 £000

Employee Costs 218,349 236,500 1,369 1,372

Premises Costs 7,263 7,252 (32) 37

Transport Costs 3,904 3,675 15 11

Supplies and Services Costs 15,075 17,062 322 553

Agency 23,675 28,787 5,098 6,091

Capital Charges & Impairment of Assets 5,229 5,445 5,199 5,367

Income (24,536) (27,108) (24,536) (27,105)

Cost of Services 248,959 271,613 (12,565) (13,674)

Intra-Group Adjustment - - 299,563 311,812

Net Cost of Policing Services 248,959 271,613 286,998 298,138

42


NOTES TO ACCOUNTS

9. TRANSFERS TO AND FROM EARMARKED RESERVESThis note details the amounts set aside from the General Fund in earmarked reserves to provide financing for future expenditure plans and the amounts posted back from earmarked reserves to meet General Fund expenditure.

Balance at 1 April

2016

Transfers 2016/17

Balance at 31

March 2017

Transfers 2017/18

Balance at 31

March 2018

Out In Out In

£000 £000 £000 £000 £000 £000 £000Earmarked Reserves: Insurance Reserve 10,896 (130) - 10,766 - 656 11,422 Devolved Budget Reserve 1,660 (59) - 1,601 - - 1,601 Capital Reserve 7,484 - - 7,484 - - 7,484 Partnership Reserve - (13) 78 65 (65) - - Redundancy Reserve - - - - - 12 12 Innovation Reserve 2,000 - - 2,000 - - 2,000 Commissioning Reserve 680 (472) 267 475 - 372 847 Regional Working Reserve - (5) 17 12 (12) - - Revenue Grants Reserve 10 (10) 3 3 (3) 3 3 Legacy Reserve - (29) 6,379 6,350 (875) 3,675 9,150

Total 22,730 (718) 6,744 28,756 (955) 4,718 32,519

Net Transfer in/(out) 6,026 3,763

The purpose of each reserve held is set out below:

Earmarked Reserve Purpose

Insurance Reserve This represents sums set aside to fund future potential liabilities under current insurance arrangements.

Devolved Budget Reserve

The Chief Constable is allowed to carry forward underspends up to approved limits to fund expenditure in the following year.

Capital Reserve This was set aside in previous years to support the PCC’s future capital investment programme.

Partnership Reserve This represents sums set aside relating to partnership working underspends and contributions belonging to the partners. These have been released in 2017/18 and moved to current liabilities.

Redundancy Reserve

Innovation Reserve

This represents sums set aside relating to future potential redundancy liabilities.The PCC launched his own Innovation Reserve in 2013/14 with a sum of £2m drawn from General Reserves.

43


NOTES TO ACCOUNTSEarmarked Reserve Purpose Commissioning

ReserveUnderspends on commissioning are carried forward in this reserve to be spent in future financial years.

Revenue Grants Reserve

The treatment of revenue grants in accordance with the Code may result in a mismatch between spending and income. In order to address this, any grant which has not been used to fund related expenditure is contributed to this reserve and used to fund expenditure when it is incurred in future years.

Legacy ReserveThis represents underspends set aside to fund future potential liabilities in relation to Hillsborough and Child Sexual Exploitation.

10. OTHER OPERATING EXPENDITURE

2016/17 2017/18£000 £000

(44) (Gains) / Losses on the disposal of non-current assets 380

34 (Gains) / Losses on the disposal of intangibles -

(10) Total PCC and Group 380

11. FINANCING AND INVESTMENT INCOME AND EXPENDITURE

2016/17 2016/17 2017/18 2017/18£000 £000 £000 £000

Group PCC Group PCC

1,858 1,858 Interest payable and similar charges 1,844 1,844

(144) (144) Interest receivable and similar income (175) (175)

92,939 74 Pensions interest cost and expected return on pensions assets

86,344 59

94,653 1,788 Total 88,013 1,728

12. TAXATION AND NON SPECIFIC GRANT INCOME

2016/17 2017/18£000 £000

(53,844) Council tax income (55,730)

(9,591) Council tax support funding (9,591)

(78,734) Department of Communities and Local Government funding (Revenue Support Grant and Non Domestic Rates) (77,649)

(100,597) Home Office police grant (99,192)

(49,578) Home Office pension grant (52,673)

(1,555) Capital grants and contributions (2,000)

(293,899) Total PCC and Group (296,835)

44


NOTES TO ACCOUNTS

13. PROPERTY, PLANT AND EQUIPMENT

Movement in the PCC and Group balances in 2017/18:

Land and Buildings

Vehicles, Plant,

Furniture & Equipment

Surplus Assets

Assets under Cons-

truction

Total Property,

Plant & Equipment

£000 £000 £000 £000 £000

Cost or Valuation:At 1 April 2017 76,036 32,965 1,840 4,673 115,514Additions 757 2,476 - 3,872 7,105

Revaluation increases / (decreases) recognised in the Revaluation Reserve 1,989 - 36 - 2,025

Revaluation increases / (decreases) recognised in the Surplus / Deficit on the Provision of Services

(872) - (25) - (897)

Derecognition – disposals - (3,199) - - (3,199)

Derecognition – other (7) (4) - (52) (63)

Assets reclassified (to)/from Held for Sale - - (468) - (468)

Other reclassifications and movements in cost or valuation 12 1,567 (12) (1,850) (283)

At 31 March 2018 77,915 33,805 1,371 6,643 119,734

Accumulated Depreciation and ImpairmentAt 1 April 2017 (3,797) (22,127) (55) - (25,979)Depreciation charge (1,953) (2,868) (33) - (4,854)

Depreciation written out to the Revaluation Reserve 458 - - - 458

Depreciation written out to the Surplus / Deficit on the Provision of Services 643 - 11 - 654

Impairment losses / (reversals) recognised in the Surplus / Deficit on the Provision of Services

- - - - -

Derecognition – disposals - 2,575 - - 2,575

Assets reclassified (to)/from Held for Sale - - 40 - 40

Other reclassifications and movements in depreciation and impairment 4 - (4) - -

At 31 March 2018 (4,645) (22,420) (41) - (27,106)

Net Book ValueAt 31 March 2018 73,270 11,385 1,330 6,643 92,628

At 31 March 2017 72,239 10,838 1,785 4,673 89,535

45


NOTES TO ACCOUNTS

Comparative Movements in 2016/17:

Land and Building

s

Vehicles, Plant,

Furniture & Equipment

Surplus Assets

Assets under Cons-

truction

Total Property,

Plant & Equipment

£000 £000 £000 £000 £000

Cost or Valuation:At 1 April 2016 67,181 33,145 1,162 6,877 108,365Additions 1,843 1,998 - 7,731 11,572

Revaluation increases / (decreases) recognised in the Revaluation Reserve 953 - (64) - 889

Revaluation increases / (decreases) recognised in the Surplus / Deficit on the Provision of Services

(717) - (45) - (762)

Derecognition – disposals (10) (4,020) - - (4,030)

Derecognition – other (4) (17) - (106) (127)

Assets reclassified (to)/from Held for Sale - - (78) - (78)

Other reclassifications and movements in cost or valuation 6,790 1,859 865 (9,829) (315)

At 31 March 2017 76,036 32,965 1,840 4,673 115,514

Accumulated Depreciation and ImpairmentAt 1 April 2016 (3,590) (22,841) (41) (25) (26,497)Depreciation charge (1,725) (2,864) (53) - (4,642)

Depreciation written out to the Revaluation Reserve 677 - 194 - 871

Depreciation written out to the Surplus / Deficit on the Provision of Services 695 - 16 - 711

Impairment losses / (reversals) recognised in the Surplus / Deficit on the Provision of Services

- - - - -

Derecognition – disposals - 3,578 - - 3,578

Assets reclassified (to)/from Held for Sale - - - - -

Other reclassifications and movements in depreciation and impairment 146 - (171) 25 -

At 31 March 2017 (3,797) (22,127) (55) - (25,979)

46


NOTES TO ACCOUNTS

DepreciationThe following useful lives have been used in the calculation of depreciation:

Property – 10 to 70 years

Vehicles, Plant and Equipment – 1 to 20 years

Capital CommitmentsAt 31 March 2018, the PCC had entered into a number of contracts for the construction, enhancement or purchase of Property, Plant and Equipment at an estimated cost of £1.887m. These contracts included £0.580m for vehicle purchases, £1.194m for IT systems, £0.058m for equipment and £0.055m relating to buildings. Similar commitments at 31 March 2017 were £3.647m.

Revaluations The PCC carries out a rolling programme that ensures that all Property, Plant and Equipment required to be measured at fair value is revalued at least every five years. The valuations also reflected the needs of IFRS 13, to value surplus properties at fair value utilising a market value basis at three different levels. The valuations are carried out by an external valuer, Carter Jonas. The valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) Professional Standards (the Red Book). The progress at 31 March 2018 of the PCC’s rolling programme for the revaluation of non-current assets was:

Land & Buildings

Vehicles & Equip

Under Construction

Surplus Total

£000 £000 £000 £000 £000

Carried at historical cost 10,202 33,805 6,643 - 50,650Valued at fair value in: Current Year 9,501 90 9,591 2016/17 15,360 785 16,145 2015/16 20,305 492 20,797 2014/15 13,338 - 13,338

2013/14 and earlier 9,209 4 9,213

Total Cost or Valuation 77,915 33,805 6,643 1,371 119,734

14. INTANGIBLE ASSETS

The PCC accounts for software as intangible assets when it is integral to a particular IT system, in which case it is accounted for as part of the hardware item of Property, Plant and Equipment. The intangible assets include both purchased licences and internally generated software.

47


NOTES TO ACCOUNTSAll software is given a finite useful life, based on assessments of the period that the software is expected to be of use to the PCC. The useful lives assigned to the major software suites used by the PCC are:

Internally Generated Assets Other AssetsCase Preparation System 5 yearsCustody Handling System 7 yearsMobility & Customer Portal 5 yearsWindows 7 Migration 7 yearsBusiness Intelligence Software 7 yearsIT Efficiency & Collaboration 5 yearsMobile Data & Business Intel Visibility 5 yearsNational Police Procurement Hub 7 yearsOracle Upgrade 7 yearsPension System 7 years

The carrying amount of intangible assets is amortised on a straight line basis. The amortisation of £0.617m in 2017/18 is charged within the Cost of Services.

The movement on Intangible Asset balances for the PCC and Group during the year is as follows:

2017/18 2016/17Internally

Generated Other Total Internally Generated Other Total

£000 £000 £000 £000 £000 £000

Balance at start of year Gross carrying amount 2,004 6,038 8,042 1,990 5,753 7,743 Accumulated amortisation (1,649) (3,941) (5,590) (1,482) (3,979) (5,461)

Net carrying amount at 1 April 355 2,097 2,452 508 1,774 2,282Additions Internal development 100 - 100 41 - 41 Purchases - - - - 480 480Disposals - (349) (349) - (529) (529)Derecognition - (14) (14) - (8) (8)Reclassifications/Other changes - 284 284 (27) 342 315Amortisation write off on disposal - 349 349 - 495 495Amortisation for the period (94) (523) (617) (167) (457) (624)Net carrying amount at 31 March 361 1,844 2,205 355 2,097 2,452

Comprising:

Gross carrying amount 2,104 5,959 8,063 2,004 6,038 8,042 Accumulated amortisation (1,743) (4,115) (5,858) (1,649) (3,941) (5,590)

48


NOTES TO ACCOUNTS15. FINANCIAL INSTRUMENTS

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability of another. The definition is broad and covers instruments used in treasury management including the borrowing and lending of money and the making of investments. However it also extends to include such items as trade receivables (debtors) and trade payables (creditors) but excludes statutory obligations such as the debt transferred from the former South Yorkshire County Council, managed by Rotherham MBC.

Financial Instruments BalancesThe borrowing and investments disclosed in the PCC and Group Balance Sheets are made up of the following categories of financial instruments:

Long – term Current31 March

201831 March

201731 March

201831 March

2017£000 £000 £000 £000

InvestmentsLoans and receivables - - - -Total Investments - - - -

Cash and Cash EquivalentsLoans and receivables - - 36,179 24,617Total Cash and Cash Equivalents - - 36,179 24,617

DebtorsFinancial assets carried at contract amounts - - 1,872 5,271

Total Debtors - - 1,872 5,271

BorrowingFinancial liabilities at amortised cost (38,093) (40,560) (2,500) (604) Total Borrowing (38,093) (40,560) (2,500) (604)

CreditorsFinancial liabilities carried at contract amount - - (6,117) (3,614)Total Creditors - - (6,117) (3,614)

49


NOTES TO ACCOUNTS

Financial Instrument Income, Expense, Gains and LossesThe income, expense, gains and losses recognised in the PCC and Group Comprehensive Income and Expenditure Statements in relation to Financial Instruments are made up as follows:

2017/18 2016/17

Fina

ncia

l Li

abili

ties

at

Am

ortis

ed

Cos

t

Fina

ncia

l A

sset

s:

Loan

s an

d R

ecei

vabl

es

Tota

l

Fina

ncia

l Li

abili

ties

at

Am

ortis

ed

Cos

t

Fina

ncia

l A

sset

s:

Loan

s an

d R

ecei

vabl

es

Tota

l

£000 £000 £000 £000 £000 £000

Surplus or (Deficit) on the Provision of ServicesInterest expense (1,588) - (1,588) (1,486) - (1,486)

Interest income - 175 175 - 144 144Net Income / Expense (1,588) 175 (1,413) (1,486) 144 (1,342)

Net Gain / (Loss) for the year (1,588) 175 (1,413) (1,486) 144 (1,342)

The figures included in the above table exclude the interest expense that does not relate to financial liabilities at amortised cost.

Fair Value of Assets and Liabilities carried at Amortised CostFinancial Liabilities and Financial Assets represented by loans and receivables are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments.

The fair values of the PCC’s financial liabilities are set out below. Public Works Loan Board (PWLB) borrowing has been calculated by PWLB by using rates for premature repayment of loans on 31 March 2018.

31 March 2018 31 March 2017Carrying amount

Fair value Carrying amount Fair value

£000 £000 £000 £000

Financial liabilities – Borrowing 40,593 54,290 41,164 56,428

The fair value is higher than the carrying amount for Financial Liabilities because the PCC’s portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the rates currently available for similar loans at the Balance Sheet date. The commitment to pay interest at above the current market rate increases the amount that the PCC would have to pay if the lender requested or agreed to early repayment of the loans.

50


NOTES TO ACCOUNTSThe fair value of the PCC’s Loans and Receivable financial assets is assessed at the value in the Balance Sheet because of the relatively short period to maturity.

31 March 2018 31 March 2017Carrying amount Fair value Carrying

amountFair value

£000 £000 £000 £000

Loans and receivables - - - -

16. NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTSThe PCC and Group’s activities expose both to a variety of financial risks:

Credit Risk – the possibility that other parties might fail to pay amounts due,

Liquidity Risk – the possibility that the PCC and Group might not have funds available to meet its commitments to make payments,

Market Risk – the possibility that financial loss might arise for the PCC and Group as a result of changes in such measures as interest rates movements.

The PCC’s overall risk management procedures focus on the unpredictability of financial markets and are structured to implement suitable controls to minimise these risks. The procedures for risk management are set through a legal framework set out in the Local Government Act 2003 and associated regulations. These require the PCC to comply with the CIPFA Prudential Code, the CIPFA Code of Practice on Treasury Management in the Public Services and Investment Guidance issued through the Act. Overall these procedures require the PCC to manage risk in the following ways:

by formally adopting the requirements of the CIPFA Treasury Management Code of Practice,

by the adoption of a Treasury Policy Statement and treasury management clauses within financial regulations,

by approving annually in advance prudential and treasury indicators for the following three years limiting:

o the PCC’s overall borrowing

o the maximum and minimum exposures to fixed and variable rates,

o the maximum and minimum exposures to the maturity structure of its debt,

o the maximum annual exposures to investments maturing beyond a year.

by approving an Investment Strategy for the forthcoming year setting out the criteria for both investing and selecting investment counterparties in compliance with Government guidance.

These are required to be approved before the start of the year to which they relate. These items are reported with the annual Treasury Management Strategy Statement, which outlines the detailed approach to managing risk in relation to the PCC’s financial instrument exposure and can be found on the PCC’s website. Actual performance is also reported mid-year and after the end of the financial year.

51


NOTES TO ACCOUNTS

A Service Level Agreement is in place with Humberside PCC’s Treasury Team who implements policies with independent advice from Link Asset Services. There are principles for overall risk management, as well as policies covering specific areas, such as interest rate risk, credit risk, and the investment of surplus cash.

Credit RiskCredit risk arises from the lending of surplus funds to banks, building societies and other local authorities as well as credit exposures to the PCC’s customers. The risk is minimised through the Annual Investment Strategy, which requires that deposits are not made with financial institutions unless they meet identified minimum criteria set by the PCC. The Annual Investment Strategy also imposes maximum amounts and time limits in respect of each financial institution. The key areas of the Investment Strategy are that the minimum criteria for investment are based on the creditworthiness service provided by the sector.

Deposits with institutions were limited to a maximum of £20m for part nationalised banks, £15m with any other counterparty and £25m on any one banking group in the Annual Investment Strategy for 2017/18.

The PCC does not generally allow credit for customers. The total value of trade debtors at 31 March 2018 is £1.872m (£5.271m at 31 March 2017) of which £1.451m (£2.410m at 31 March 2017) is past its due date, analysed as follows:

31 March 2017

31 March 2018

£000 £000

2,061 Less than 3 Months 1,115

98 3 to 6 Months 155

83 6 to 12 Months 115

168 Over 12 Months 66

2,410 Total 1,451

The PCC has a historical experience of default of 0.6% in debtors, which equates to a risk of uncollectability of £32k.

Liquidity RiskThe PCC, through the Humberside Treasury Team has a comprehensive cash flow management system that seeks to ensure that cash is available as needed. As the PCC has access to borrow from the Public Works Loan Board (PWLB), there is no significant risk that the PCC will be unable to raise finance to meet his commitments under financial instruments. Instead, the risk is that the PCC will be bound to replenish a significant proportion of his borrowings at a time of unfavourable interest rates.

The PCC therefore has safeguards in place to ensure that a significant proportion of his borrowing does not mature for repayment at any one time in the future which reduces the financial impact of re-borrowing at a time of unfavourable interest rates.

52


NOTES TO ACCOUNTS

The maturity analysis of loans outstanding more than one year to PWLB as at 31 March 2018 is:

31 March 2017

31 March 2018

£000 £000

Maturing within:

8,300 >1 to 5 years 7,300

8,421 >5 to 10 years 7,740

19,999 >10 to 20 years 19,180

4,200 >20 to 30 years 4,200

1,450 >30 to 40 years 1,450

42,370 Total 39,870

The average rate payable by the PCC is 3.9% with rates ranging from 0.9% to 5.1%. The Amortised Cost of the above loans, including loans outstanding for less than one year is £40.593m.

All trade and other payables are due to be paid in less than one year.

Market RiskThe PCC is not exposed to specific risk in terms of interest movements as both borrowings and investments are at fixed rates. The PCC manages his exposure to fluctuations in interest rates with a view to containing its costs within approved budgets within the arrangements set out in its Treasury Management Statement.

The PCC received investment interest of £0.175m for the financial year with an average rate of 0.33%.

Price RiskThe PCC does not invest in equity shares on the markets and therefore is not at significant risk to price movements.

Foreign Exchange RiskThe PCC has no financial assets or liabilities in foreign currencies and thus has no exposure to loss arising from movements in exchange rates.

53


NOTES TO ACCOUNTS

17. INVENTORIES

2016/17 2017/18

Con

sum

able

St

ores

Vehi

cle

Mai

nten

ance

Sp

ares

Tota

l

Con

sum

able

St

ores

Vehi

cle

M

aint

enan

ce

Spar

es

Tota

l

£000 £000 £000 £000 £000 £000

Balance at 1 April 150 76 226 122 64 186

Purchases 1,164 682 1,846 818 - 818

Recognised as an expense in the year (1,192) (687) (1,879) (827) (7) (834)

Written off balances - (7) (7) - (1) (1)

Transfers of stock - - - - - -

Balance at 31 March 122 64 186 113 56 169

18. DEBTORS

31 March 2017

31 March 2018

£000 £000

24,236 Central government bodies 16,062

8,716 Other local authorities 4,433

45 NHS bodies -

10,086 Other entities and individuals 11,592

43,083 Total Group and PCC 32,087

54


NOTES TO ACCOUNTS19. CASH AND CASH EQUIVALENTS

31 March 2017

31 March 2018

£000 £000

32 Cash held by the PCC 9

33 Bank current accounts 40

24,552 Call and money market fund investments 36,130

24,617 Total PCC and Group 36,179

Cash that is seized by the Force because it is suspected of either having been used, or intended for use, for the purpose of crime, is held pending a court decision as to whether it should be returned or awarded under a forfeiture order to the Force or the Treasury. This seized cash is held in trust for third parties by the PCC and is therefore excluded from the Balance Sheet. The sum held at 31 March 2018 is £1.240m (£1.348m 31 March 2017).

20. ASSETS HELD FOR SALE

2016/17 2017/18£000 £000

635 PCC and Group Balance outstanding at start of the year 704

78 Assets newly qualified as held for sale 428

- Revaluation losses -

- Assets declassified as held for sale -

(9) Assets sold (89)

704 PCC and Group Balance outstanding at end of year 1,043

21. CREDITORS

31 March 2017

31 March 2017

31 March 2018

31 March 2018

£000 £000 £000 £000Group PCC Group PCC

7,663 7,663 Central government bodies 12,293 12,293

5,764 5,764 Other local authorities 7,228 7,228

14 14 NHS bodies 28 28

2 2 Public corporation and trading funds 4 4

13,321 9,541 Other entities and individuals 12,769 9,444

26,764 22,984 Total 32,322 28,997

55


NOTES TO ACCOUNTS

22. PROVISIONS

Insurance Voluntary Exit

Scheme

Statutory Redundancy

Legal Claims

Total

£000 £000 £000 £000

Balance at 1 April 2017 2,043 1,458 10 959 4,470

Additional provisions made in the year

344 - 2 2,839 3,185

Amounts used in the year (616) (1,458) - - (2,074)

Unused amounts reversed in the year

- - - (236) (236)

PCC & Group Balance at 31 March 2018

1,771 - 12 3,562 5,345

Provisions are shown on the Balance Sheet according to when they are likely to be utilised. When they will be used within a year they appear as Current Liabilities. Where they will not be used within a year they will appear as Long-Term Liabilities. Short-Term Provisions amount to £2.115m and Long-Term Provisions £3.230m.

Insurance ProvisionThe PCC provides a degree of self-insurance through his insurance provision. Under insurance policies, the PCC has to meet a proportion of each claim up an individual claim maximum and total maximum level each year. A contribution to the provision is made from revenue to fund this uninsured liability, in accordance with advice from the PCC’s insurance brokers. Payments are then made directly from the provision when claims are settled over the next few years.

Voluntary Exit SchemeA provision was made for the Voluntary Exit Scheme in 2016/17 in relation to Police Officers leaving the Force in April 2017.

Statutory RedundancyA provision has been made for Statutory Redundancy in relation to the Local Criminal Justice Board.

Legal ClaimsA provision has been made for new legal claims and an adjustment to reduce the provision within 2016/17.

56


NOTES TO ACCOUNTS23. USABLE RESERVES

Movements in the PCC and Group usable reserves are detailed below (see also note 9):

1 April 2017

Movement in Year

31 March 2018

£000 £000 £000

Earmarked Reserves 28,756 3,763 32,519

Capital Grants Unapplied - - -

General Reserves 17,634 (5,337) 12,297

46,390 (1,574) 44,816

24. OTHER LONG-TERM LIABILITIES

31 March 2017

31 March 2017

31 March 2018

31 March 2018

£000 £000 £000 £000Group PCC Group PCC

3,280 3,280 Transferred Debt from the former County Council 2,289 2,289

270 270 Insurance Settlements - -

3,282,914 2,332 Pensions Liability 3,289,303 2,279

3,286,464 5,882 Total 3,291,592 4,568

Transferred DebtThis consists of debt taken over from the former South Yorkshire County Council, where the loan management is undertaken by Rotherham MBC. Debt of £0.991m is repayable within the next twelve months and is included as part of Short-Term Creditors. The average interest rate paid in 2017/18 was 7.98% (8.96% in 2016/17).

31 March 2017

31 March 2018

£000 £000

991 Maturity between 1 and 2 Years 1,090

2,289 Maturity between 2 and 5 Years 1,199

- Maturity between 5 and 10 Years -

3,280 Total 2,289

Insurance Settlements Structured insurance settlements are written down annually to the Capital Adjustment Account.

Pensions Liability

The Pensions Liability represents the net position of retirement liabilities and the pension scheme assets and is matched by the Pensions Reserve (Note 25).

57


NOTES TO ACCOUNTS

25. UNUSABLE RESERVES

31 March 2017

31 March 2017

31 March 2018

31 March 2018

£000 £000 £000 £000

Group PCC Group PCC

6,632 6,632 Revaluation Reserve 8,905 8,905

30,754 30,754 Capital Adjustment Account 29,407 29,407

(95) (95) Financial Instruments Adjustment Account (74) (74)

3,594 3,594 Collection Fund Adjustment Account 3,468 3,468

(3,798) (18) Accumulated Absences Account (3,343) (18)

(3,282,914) (2,332) Pensions Reserve (3,289,303) (2,279)

(3,245,827) 38,535 Total (3,250,940) 39,409

Revaluation ReserveThe Revaluation Reserve contains the gains made by the PCC arising from increases in the value of Property, Plant and Equipment and Intangible Assets. The balance is reduced when assets with accumulated gains are:

revalued downwards or impaired and the gains are lost,

used in the provision of services and the gains are consumed through depreciation,

disposed of and the gains are realised.

The Reserve contains only revaluation gains accumulated since 1 April 2007, the date the reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.

2016/17 2017/18£000 £0005,085 Balance at 1 April 6,6321,903 Upward revaluations of assets 2,596

(143) Downward revaluations of assets and impairment losses not charged to the Surplus or Deficit on the Provision of Services (113)

1,760 Surplus or deficit on revaluation of non-current assets not posted to the Surplus or Deficit on the Provision of Services 2,483

(91) Prior year adjustment -

(120) Difference between fair value depreciation and historical cost depreciation (160)

(2) Accumulated gains on assets sold or scrapped (50)

(213) Amount written off to the Capital Adjustment Account (210)

6,632 Group and PCC Balance at 31 March 8,905

58


NOTES TO ACCOUNTS

Capital Adjustment AccountThe Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings to the Revaluation Reserve to convert fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the PCC as finance for the costs of acquisition, construction and enhancement. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date the Revaluation Reserve was created to hold such gains.

2016/17 2017/18£000 £000

32,098 Balance at 1 April 30,754

Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement:

(4,642) Charges for depreciation and impairment of non-current assets (4,854)

(51) Revaluation losses on Property, Plant and Equipment (243)

(624) Amortisation of Intangible Assets (617)

(496) Amounts of non-current assets written off on disposal or sale as part

of gain/loss on disposal to the Comprehensive Income and Expenditure Statement

(713)

(5,813) (6,427)213 Adjusting amounts written out of the Revaluation Reserve 210

(5,600) Net written out amount of the cost of non-current assets consumed in the year (6,217)

92 Capitalised insurance settlements 270

Capital financing applied in the year:

373 Use of the Capital Receipts Reserve to finance new capital expenditure 136

1,555 Capital grants, contributions and donations credited to the

Comprehensive Income and Expenditure Statement that have been applied to capital financing

2,000

49 Application of grants to capital financing from the Capital Grants Unapplied Account -

2,157 Statutory provision for the financing of capital investment charged against the General Fund 2,387

30 Capital expenditure charged against the General Fund 77

4,256 4,870


59


NOTES TO ACCOUNTS

Financial Instruments Adjustment Account

The Financial Instruments Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments and for bearing losses or benefiting from gains as per statutory provisions.

The PCC uses the Account to manage premiums paid on the early redemption of loans. Premiums are debited to the Comprehensive Income and Expenditure Statement when they are incurred, but reversed out of the General Fund Balance to the Account in the Movement in Reserves Statement. Over time the expense is posted back to the General Fund balance in accordance with statutory arrangements for spreading the burden on council tax. For the PCC, this period is the term of the replacement loan. As a result, the balance on the Account as at 31 March 2018 will be charged to the General Fund over the next 4 years.

2016/17 2017/18£000 £000

(116) Balance at 1 April (95)

- Premiums incurred in the year and charged to the Comprehensive Income and Expenditure Statement -

21Proportion of premiums incurred in previous financial years to be charged against the General Fund Balance in accordance with statutory requirements

21

21Amount by which finance costs charged to the Comprehensive Income and Expenditure Statement are different from finance costs chargeable in accordance with statutory requirements

21

(95) Group and PCC Balance at 31 March (74)

Collection Fund Adjustment AccountThe Collection Fund Adjustment Account manages the differences arising from the recognition of council tax income in the Comprehensive Income and Expenditure Statement as it falls due from council tax payers compared with the statutory arrangements for paying across amounts to the General Fund from the Collection Fund.

2016/17 2017/18£000 £000

2,791 Balance at 1 April 3,594

803

Amount by which council tax income credited to the Comprehensive Income and Expenditure Statement is different from council tax income calculated for the year in accordance with statutory requirements

(126)


60


NOTES TO ACCOUNTS

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

2016/17 2016/17 2017/18 2017/18£000 £000 £000 £000

Group PCC Group PCC

(3,882) (15) Balance at 1 April (3,798) (18)

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

455 -

(3) (3) Amounts accrued at the end of the current year - -84 (3) Amount by which officer remuneration charged to the

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

455 -

(3,798) (18) Balance at 31 March (3,343) (18)

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

Post employment benefits are accounted for in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees. The amounts included represent accrued years of service, inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as employers’ contributions to pension funds are made or eventually direct pensions are paid.

The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the PCC has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid.

61


NOTES TO ACCOUNTS

The transactions on the Pensions Reserve are as follows:

2016/17 2016/17 2017/18 2017/18£000 £000 £000 £000

Group PCC Group PCC(2,640,479) (2,087) Balance at 1 April (3,282,914) (2,332)

Adjustment of reserve between Group to PCC

(587,367) (90) Actuarial gains or (losses) on the pensions assets and liabilities

54,001 228

(138,305) (290)

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

(147,693) (326)

83,237 135Employer’s pensions contributions and direct payments to pensioners payable in the year 87,303 151

(3,282,914) (2,332) Balance at 31 March (3,289,303) (2,279)

62


NOTES TO ACCOUNTS

26. CASH FLOW STATEMENT - ADJUSTMENTS FOR NON-CASH MOVEMENT

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

2016/17 2016/17 2017/18 2017/18£000 £000 £000 £000

Group PCC Group PCC

(4,642) (4,642) Depreciation (4,854) (4,854)

(51) (51) Impairment and downward valuations (243) (243)

(624) (624) Amortisation (617) (617)

8,517 8,430 (Increase) / decrease in creditors (5,558) (6,013)

3,889 3,889 Increase / (decrease) in debtors (10,997) (10,997)

(40) (40) Increase / (decrease) in inventories (17) (17)

(176) (176) (Increase) / decrease in revenue grants in advance (155) (155)

(496) (496) Carrying amount of non-current assets and non-current assets held for sale, sold or derecognized (713) (713)

1,555 1,555 Capital grants applied 2,000 2,000

(2,941) (2,941) Movement in provisions (875) (875)

92 92 Movement in long term liabilities 270 270

(55,068) (155) Movement in pensions liability (60,390) (175)

373 373 Proceeds from sale of Property, Plant and Equipment and Intangible Assets

136 136

(1,858) (1,858) Interest paid (1,844) (1,844)

144 144 Interest received 175 175

(51,326) 3,500 Adjusted net cash flows from operating activities (83,682) (23,922)

27. CASH FLOW STATEMENT – INVESTING ACTIVITIES

2016/17

2017/18

£000 £000

11,958 Purchase of Property, Plant and Equipment and Intangible Assets 7,129

(373) Proceeds from sale of Property, Plant and Equipment and Intangible Assets (136)

(1,555) Capital grants (2,000)

(590) Other receipts from investing activities 590

- Other payments for investing activities 134

(144) Interest received (175)

9,296 Net cash flows from investing activities for PCC and Group 5,542

63


NOTES TO ACCOUNTS

28. CASH FLOW STATEMENT – FINANCING ACTIVITIES

2016/17 2017/18£000 £000

(10,000) Cash receipts of short and long-term borrowing -

(45) Other receipts from financing activities (33)

755 Repayments of short and long-term borrowing 605

901 Other payments for financing activities 9911,858 Interest paid 1,844

(6,531) Net cash flows from financing activities for PCC and Group 3,407

64


NOTES TO ACCOUNTS

29. OFFICERS’ REMUNERATIONThe remuneration paid to senior officers employed by South Yorkshire in 2017/18 is as follows:

2017/18

Sala

ry, F

ees

and

Allo

wan

ces

Expe

nses

Ben

efits

in

Kin

d

Oth

er

Paym

ents

Tota

l R

emun

erat

ion

Pens

ion

Con

trib

utio

n

Tota

l

£ £ £ £ £ £ £Police and Crime Commissioner 85,000 - - - 85,000 5,455 90,455

Chief Executive and Solicitor 113,547 318 - - 113,865 14,193 128,058

Chief Finance & Commissioning Officer(to 14 November 2017)

34,086 - - - 34,086 4,261 38,347

Chief Finance & Commissioning Officer(from 17 November 2017)

20,885 310 - - 21,195 2,611 23,806

Chief Constable – S Watson 162,019 - 4,897 3,375 170,291 38,030 208,321

Deputy Chief Constable (to 12 April 2017)

9,549 - - 9,154 18,703 1,433 20,136

Deputy Chief Constable – M Roberts(from 13 April 2017)

122,837 - 6,691 - 129,528 29,489 159,017

Assistant Chief Constable – SCS(to 12 April 2017)

8,687 - - - 8,687 2,044 10,731

Assistant Chief Constable – Specialist Operations (to 16 April 2017)

7,497 - - - 7,497 1,358 8,855

Assistant Chief Constable – SCS, CJAD & Custody (from 7 April 2017)

98,395 - 4,291 - 102,686 23,811 126,497

Assistant Chief Constable – BCI & Atlas Communications (from 8 May 2017)

89,616 - 6,196 - 95,812 21,344 117,156

Assistant Chief Constable – Local Policing & Ops Support (from 10 April 2017)

94,487 - 1,277 - 95,764 22,368 118,132

ACC seconded to College of Policing (to 6 September 2017)

56,348 - - - 56,348 12,263 68,611

Director of Resources 115,470 410 5,967 - 121,847 14,087 135,934

Notes The post Assistant Chief Officer (Human Resources) is not shown in the table above as

the post was shared with Humberside Police. South Yorkshire Police paid for 50% (£165,090) of the employee’s costs as part of the collaborative shared service for Human Resources. This post was dis-established in July 2017.

The cost of the ACC seconded to College of Policing was reimbursed in full.

65


NOTES TO ACCOUNTS The cost of a temporary Assistant Chief Constable (01 April 2017 to 06 April 2017) from

Greater Manchester Police was £2,172.

The post of Chief Executive and Solicitor is a dual role where the Chief Executive salary is £88,547 and the Solicitor salary is £25,000.

2016/17

Sala

ry, F

ees

and

Allo

wan

ces

Expe

nses

Ben

efits

in

Kin

d

Oth

er

Paym

ents

Tota

l R

emun

erat

ion

Pens

ion

Con

trib

utio

n

Tota

l

£ £ £ £ £ £ £Police and Crime Commissioner 85,000 - - - 85,000 9,605 94,605

Chief Executive and Solicitor 111,385 674 - - 112,059 12,586 124,645

Chief Finance Officer 82,039 620 - - 82,659 9,270 91,929

Chief Constable – D Crompton (to 29 September 2016)

143,916 - 2,570 - 146,486 - 146,486

Chief Constable – S Watson (from 1 December 2016)

48,988 - 3,798 6,750 59,536 11,855 71,391

Deputy Chief Constable – D Copley 131,225 - 4,991 19,143 155,359 30,559 185,918

Acting Deputy Chief Constable (from 8 August to 4 December 2016)

24,849 - - - 24,849 3,621 28,470

Assistant Chief Constable – Territorial Operations (to 1 June 2016

19,154 - 1,716 - 20,870 4,497 25,367

Assistant Chief Constable – Specialist Operations (to 4 April 2016)

2,322 - - - 2,322 545 2,867

Temporary Assistant Chief Constable – Territorial Operations (from 25 April 2016 to 7 August, then 5 December 2016 to 31 March 2017)

83,652 - 2,421 - 86,073 19,750 105,823

Temporary Assistant Chief Constable – Specialist Operations (from 25 April 2016 to 11 December 2016)

68,043 - - - 68,043 14,064 82,107

Assistant Chief Constable – SCS (from 9 January 2017)

23,889 - 873 - 24,762 5,621 30,383

ACC seconded to College of Policing (in post since 14 July 2014)

118,348 - 1,311 - 119,659 26,457 146,116

Director of Resources 114,993 820 5,448 - 121,261 12,994 134,255

Notes

The post Assistant Chief Officer (Human Resources) is not shown in the table above as the post is shared with Humberside Police. South Yorkshire Police pay for 50%

66


NOTES TO ACCOUNTS(£90,467) of the employee’s costs as part of the collaborative shared service for Human Resources.

The cost of the ACC seconded to College of Policing was reimbursed in full.

The cost of a temporary Chief Constable (3 May 2016 to 24 July 2016) from North Yorkshire Police was £43,717.

The cost of an interim Chief Constable (25 July 2016 to 30 November 2016) from Durham Constabulary was £68,171.

The cost of a temporary Assistant Chief Constable (3 May 2016 to 24 July 2016) from North Yorkshire Police was £33,808.

The cost of a temporary Assistant Chief Constable (25 July 2016 to 4 January 2017) from West Yorkshire Police was £56,369.

The cost of a temporary Assistant Chief Constable (12 December 2016 to 31 March 2017) from Greater Manchester Police was £39,540.

67


NOTES TO ACCOUNTS

Employees (both police officers and staff), of the PCC and the Chief Constable, including the senior employees identified in the previous table and termination packages, receiving more than £50,000 remuneration for the year (excluding employer’s pension contributions but including expenses) were paid the following amounts:

2016/17 2017/18Number £ Number

146 50,000 - 54,999 208

76 55,000 - 59,999 110

38 60,000 - 64,999 57

11 65,000 - 69,999 21

10 70,000 - 74,999 17

7 75,000 - 79,999 8

7 80,000 - 84,999 9

5 85,000 - 89,999 10

1 90,000 - 94,999 2

1 95,000 - 99,999 1

- 100,000 - 104,999 1

- 105,000 - 109,999 1

2 110,000 - 114,999 1

1 115,000 - 119,999 -

1 120,000 - 124,999 1

- 125,000 - 129,999 -

- 130,000 - 134,999 -

- 135,000 - 139,999 -

- 140,000 - 144,999 1

1 145,000 - 149,999 -

- 150,000 - 154,999 -

1 155,000 - 159,999 -

- 160,000 - 164,999 -

- 165,000 - 169,999 -

- 170,000 - 174,999 1

308 449

A number of employees work in shared services with other regional forces. Disclosure of such employees is made in the accounts of the force that holds the employment contract of those individuals.

68


NOTES TO ACCOUNTS

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

Exit package cost band (including special payments)

Number of compulsory

redundancies

Number of other departures

agreed

Total number of exit packages per cost band

Total cost of exit packages in

each band2016/17 2017/18 2016/17 2017/18 2016/17 2017/18 2016/17 2017/18

£000 £000

£0 - £20,000 - - 5 8 5 8 70 132

£20,001 - £40,000 - - 11 12 11 12 342 366

£40,001 - £60,000 - - 15 20 15 20 720 963

£60,001 - £80,000 - - 5 5 5 5 329 326

£80,001 - £100,000 - - - - - - - -

£100,001 - £120,000 - - - - - - - -

£120,001 - £140,000 - - 1 - 1 - 132 -

- - 37 45 37 45 1,593 1,787

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

30. TERMINATION BENEFITS

Costs shown in Note 29 on exit packages include a number of termination payments. During 2017/18, there were 4 staff whose contracts were terminated as part of the voluntary early release scheme / exit package at a cost of £0.074m compared to 2 employees at a cost of £0.135m in 2016/17. These all related to police staff. There were no compulsory redundancies in 2017/18, (£0m in 2016/17). Costs in 2017/18 relating to a police officer voluntary exit scheme amounted to £1.713m and 41 employees (£1.458m in 2016/17).

31. EXTERNAL AUDIT COSTS

The following costs have been incurred in relation to services provided by the external auditors, KPMG.

Group PCC Group PCC2016/17 2017/18

£000 £000 £000 £000

58 39 Fees payable with regard to external audit services carried out by the appointed auditor for the year 58 39

(31) - Fees due relating to prior years - -

- - PSAA rebate (9) (6)

69


NOTES TO ACCOUNTS

19 2Fees payable in respect of other services provided during the year – IAS charges/CSE/empower review 6 5

46 41 55 38

32. GRANT INCOME

The PCC credited the following grants and contributions to the Comprehensive Income and Expenditure Statement in the year:

2016/17 2017/18£000 £000

Credited to Taxation and Non Specific Grant Income(78,734) DCLG funding (Revenue Support Grant / National Non Domestic Rates) (77,649)

(9,591) Council Tax support funding (9,591)(100,597) Police Grant (99,192)(49,578) Home Office Pension Grant (52,673)

- Other non-ring fenced Grants -(1,262) Home Office Capital Grant (1,071)

(293) Other capital grants (929)

(240,055) Total (241,105)

2016/17 2017/18£000 £000

Credited to Services(4,721) Stovewood Special Grant (7,439)(1,614) Victims Support Services (MOJ) (1,838)(1,522) South Yorkshire Safety Camera Partnership (1,696)

- Sexual Assault Referral Centre (SARC) (1,038)(1,026) National ARV Uplift (808)

(796) Home Office Loan Charge Grant (758)(650) Disclosure & Barring Service (583)(552) Dedicated Security Posts (490)

- Problem Solving Tranformation Fund (318)(233) Prevent Strategy Delivery (280)(252) Meadowhall (278)(271) Barnsley PCSOs (271)

- Barnsley Town Centre Team (233)(233) Beat Team (233)(118) Sheffield IOM & DIP (113)(42) Op Whitle (45)

(1,158) Other Miscellaneous Grants (1,077)(554) Operation Ben -

70


NOTES TO ACCOUNTS2016/17 2017/18

£000 £000(300) Sheffield PCSOs -(202) CSE Special Grant -

(107) Prison Intell -(14,351) Total (17,498)

The PCC has received a number of grants and contributions that have yet to be recognised as income as they have conditions attached to them that will require the monies to be returned to the giver if not met. These have been split between short term current liabilities and long term liabilities where the projects will not take place and the funding will not be used within the coming 12 months. The balances at the year-end are as follows:

Current Liabilities

31 March 2017

31 March 2018

£000 £000

Revenue Grants Receipts in Advance- Dedicated Security Posts (238)

- Victims Support Services (227)

(7) Local Criminal Justice Board (37)

(36) Citizen Interaction Technologies (36)

(31) Culture and Risk Management (30)

(31) Other miscellaneous revenue grants (15)

(116) UK Human Trafficking Centre -

(207) National ARV Uplift -

(428) Total PCC and Group (583)

31 March 2017

31 March 2018

£000 £000

Capital Grants Receipts in Advance

(579) ESN Emergency Services Network -

(11) Sexual Assault Referral Centre (SARC) -

(590) Total PCC and Group -

Long Term Liabilities

71


NOTES TO ACCOUNTS31 March

201731 March

2018£000 £000

Revenue Grants Receipts in Advance

- -

- Total PCC and Group -

31 March 2017

31 March 2018

£000 £000

Capital Grants Receipts in Advance

(134) Mobile Information (National Police Improvement Agency) -

(134) Total PCC and Group -

33. RELATED PARTIES

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

Central GovernmentCentral Government has significant influence over the general operations of the PCC. It is responsible for providing the statutory framework within which the PCC operates, provides the majority of funding in the form of grants and prescribes the terms of many of the transactions that the PCC has with other parties (for example council tax bills). Grants received from government departments are set out in Notes 12 and 32.

OfficersCertain officers might also be in a position to influence significantly the policies of the PCC. No material related party transactions have been identified following consultation with relevant officers.

Other Public Bodies (subject to common control by central government)Rotherham MBC manages the debt taken over from the former South Yorkshire County Council on behalf of the PCC. Details are set out in Note 24.

There are also direct relationships between the PCC and other PCCs within the Yorkshire and Humber region in respect of Regional Collaboration arrangements. Details are disclosed in Note 36 to the financial statements.

72


NOTES TO ACCOUNTS

34. CAPITAL EXPENDITURE AND CAPITAL FINANCING

The total amount of capital expenditure incurred in the year is shown in the table below, together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the PCC, the expenditure results in an increase in the Capital Financing Requirement (CFR), a measure of the capital expenditure incurred historically by the PCC that has yet to be financed.

2016/17 2017/18£000 £000

42,216 Opening Capital Financing Requirement 50,878

Capital Investment11,445 Property, Plant and Equipment 4,809

513 Intangible Assets 2,320

Sources of Finance(373) Capital receipts (136)

(1,555) Government grants and contributions (2,000)

Sums set aside from revenue:

(30) Direct revenue contributions (77)

(1,338) Minimum Revenue Provision (1,486)

50,878 Closing Capital Financing Requirement 54,308

Represented by:8,662 Increase / (Decrease) in underlying need to borrow 3,430

35. LEASES

PCC as LesseeFinance LeasesThe PCC currently has two properties which have been acquired under finance leases which are carried as Property, Plant and Equipment in the Balance Sheet with the following net amounts:

73


NOTES TO ACCOUNTS31 March

201731 March

2018£000 £000

3,171 Land and Buildings 3,119

3,171 Total 3,119

The PCC acquired the lease of one property for 999 years and paid £1.8m in 2008 with an ongoing charge of £200 per annum. In 2011, the PCC acquired the lease of land for 999 years, paying £0.125m.

Operating Leases

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

31 March 2017

31 March 2018

£000 £000

345 Not later than one year 256

861 Later than one year and not later than five years 656

35 Later than five years -

1,241 Total 912

The expenditure charged to the Comprehensive Income and Expenditure Statement during the year in relation to these leases was £0.421m in 2017/18 (£0.402m in 2016/17).

PCC as LessorFinance LeasesThe PCC has not granted any finance leases.

Operating LeasesThe PCC does not currently have any operating leases.

74


NOTES TO ACCOUNTS

36. REGIONAL WORKING

The PCC and Chief Constable engage with the other Yorkshire and Humber region PCCs and Chief Constables to deliver a number of services on a regional basis. The Regional Collaboration Programme was developed to bring opportunities across many policing activities whilst retaining local identity and accountability.

Since September 2013, a Lead Force model was adopted for each functional area of regional collaboration, with the Regional Collaboration Board retaining responsibility for the governance arrangements. South Yorkshire is lead force for Regional Procurement and Regional Firearms, and during 2014/15 took lead force responsibility for Regional Stores. It provides all the financial administration necessary to ensure that the costs are properly captured and fully recharged to the four participating PCCs and Chief Constables.

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

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

2017/18Stores

2017/18Procuremen

t2017/18

Firearms2017/1

8£000 £000 £000

Staff costs 265 1,748 144Premises related expenses 129 25 -Transport related expenses 10 53 -Supplies and services 26 76 -Expenditure 430 1,902 144

Other reimbursed income - (208) -

Contributions (see below) (442) (1,679) (144)

Previous underspends utilised (15)Income (442) (1,902) (144)

Under/overspends in year (11) - -

Previous under/overspends not utilised

1 (3) 4

Balance c/f in current liabilities (10) (3) 4

Contributions

75


NOTES TO ACCOUNTSHumberside Police (97) (292) (26)North Yorkshire Police - (238) (21)South Yorkshire Police (138) (429) (37)West Yorkshire Police (207) (684) (60)Humberside PCC - (12) -

North Yorkshire PCC - (12) -

West Yorkshire PCC - (12) -

Total (442) (1,679) (144)

Comparative Figures for 2016/17 are as follows.

2016/17Stores

2016/17Procuremen

t2016/17

Firearms2016/1

7£000 £000 £000

Staff costs 272 1,684 142Premises related expenses 133 26 -Transport related expenses 6 60 -Supplies and services 24 76 -Expenditure 435 1,846 142

Other reimbursed income - (239) -

Contributions (see below) (434) (1,624) (138)Income (434) (1,863) (138)

Deficit/(Surplus) in year 1 (17) 4

Contributions

Humberside Police (91) (284) (25)North Yorkshire Police - (229) (20)South Yorkshire Police (131) (418) (36)West Yorkshire Police (212) (657) (57)Humberside PCC - (12) -

North Yorkshire PCC - (12) -

West Yorkshire PCC - (12) -

Total (434) (1,624) (138)

Movement in Regional Reserve (1) 17 (4)

76


NOTES TO ACCOUNTS

The table below shows the contributions made in 2017/18 by the South Yorkshire PCC, to those services for which other regional forces are the lead force.

Regional Service Lead Force Responsibility 2017/18 Contribution

£000

Underwater/Marine Humberside Police 130Crime Scene Investigators West Yorkshire Police 1,648External Forensics West Yorkshire Police 1,962Scientific Support West Yorkshire Police 2,691Collision Investigation Unit West Yorkshire Police 475Crime Unit West Yorkshire Police 1,632Data Retention and Investigatory Powers Act

West Yorkshire Police 105

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

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

The PCC entered into a collaborative arrangement with Humberside PCC for the Joint Specialist Operations Unit (JSOU) from 1 April 2016. The costs are shared based on the total size of the respective force budgets, assessed using a measure of NRE. This collaborative arrangement is based on a “host force model” with staff and officers remaining employed by the host force. Non-pay costs are incurred and income recognised by both forces with adjustments being made to reflect the adjusted NRE splits for both expenditure and income. The JSOU collaboration with Humberside PCC is treated as a joint operation under IFRS 11, with only South Yorkshire PCCs share of income and expenditure being recognised in the Group Comprehensive Income and Expenditure Statement.

The collaborative arrangement with Humberside for the Joint Specialist Operations Uniformed, JSO(U) ceased from 31 August 2017, with delivery of specialist operational resources reverting back to single force delivery. From 1 September 2017 all costs and income reverted back to being reported on by the respective force. Only costs and income

77


NOTES TO ACCOUNTSfrom 1 April 2017 to 31 August 2017 were shared based on "net revenue expenditure" (NRE).

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

Human Resources

2017/18

Information Services

2017/18

JSOU

2017/18£000 £000 £000

Staff costs 11,184 6,821 8,937Premises related expenses 8 4 105Transport related expenses 341 182 264Supplies and services 482 4,886 340Third party costs 4 - 2Expenditure 12,019 11,893 9,648

Grant income - - -Contributions (see below) (11,991) (11,892) (9,405)Other income (28) (1) (243)Income (12,019) (11,893) (9,648)

Deficit/(Surplus) in year - - -

Contributions

Humberside Police (4,920) (5,129) (3,907)South Yorkshire Police (7,071) (6,763) (5,498)

Total (11,991) (11,892) (9,405)

Humberside Police % share of costs 41.03% 43.13% 41.54%South Yorkshire Police % share of costs 58.97% 56.87% 58.46%

78


NOTES TO ACCOUNTS

The comparative data for 2016/17 is shown below:

Human Resources

2016/17

Information Services

2016/17

JSOU

2016/17£000 £000 £000

Staff costs 10,446 5,307 21,765Premises related expenses 4 5 264Transport related expenses 378 201 570Supplies and services 447 4,092 519Third party costs 4 - (2)Expenditure 11,279 9,605 23,116

Grant income - - -Contributions (see below) (11,220) (9,604) (22,551)Other income (59) (1) (565)Income (11,279) (9,605) (23,116)

Deficit/(Surplus) in year - - -

Contributions

Humberside Police (4,615) (4,137) (9,275)South Yorkshire Police (6,605) (5,467) (13,276)

Total (11,220) (9,604) (22,551)

Humberside Police % share of costs 41.13% 43.07% 41.13%South Yorkshire Police % share of costs 58.87% 56.93% 58.87%

79


NOTES TO ACCOUNTS

37. DEFINED BENEFIT PENSION SCHEMES

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

The PCC participates in four pension schemes as explained in the Accounting Policies: Pension schemes for police officers (PPS 1987, 2006 and 2015 and the Local Government Pension Scheme (LGPS) for support staff, administered by the South Yorkshire Pensions Authority.

Injury awards are payable irrespective of whether a police officer is a member of the Pension Scheme and tax rules from 1 April 2006 prevent injury awards from being part of pension scheme regulations. Injury awards have been moved into a separate Police Compensation Scheme (PCS) and under the pensions financial arrangements they must be paid from the PCC’s operating account and not the Pension Fund Account. The injury awards have been accounted for as part of the pensions adjustments and information relating to these injury awards are disclosed separately in the following notes.

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

80


NOTES TO ACCOUNTSPension Schemes PCC Only (LGPS)

2017/18 LGPS£000

Comprehensive Income and Expenditure Statement Cost of Services Current service cost 267

Past service cost -

Curtailments -

Financing and Investment Income and Expenditure Net interest expense 59

Total post employment benefit charged to the Surplus or Deficit on the Provision of Services PCC Only 326

Other post employment benefit charged to the Comprehensive Income and Expenditure StatementRemeasurement of the net defined benefit liability comprising:

Return on plan assets (excluding the amount included in the net interest expense) (38)

Actuarial gains and losses arising on changes in demographic assumptions -

Actuarial gains and losses arising on changes in financial assumptions (190)

Experience gains and losses -

Total post employment benefit charged to the Comprehensive Income and Expenditure Account PCC Only 98

Movement in Reserves Statement PCC Only Reversal of net charges to Surplus or Deficit for the Provision of Services for post

employment benefits in accordance with the Code (326)

Actual amount charged against the General Fund Balance for pensions in the year Employer’s contribution payable 151

Retirement benefits payable to pensioners -

Additional contribution to Police Pension Fund Account to balance deficit -

81


NOTES TO ACCOUNTSPension Schemes Group including PCC figures shown below

2017/18 PPS

1987PPS2006

PPS2015 PCS LGPS Total

£000 £000 £000 £000 £000 £000Comprehensive Income and Expenditure Statement Cost of Services Current service cost 18,890 340 22,170 830 16,953 59,183

Past service cost 2,020 - - 130 - 2,150

Curtailments - - - - 16 16

Financing and Investment Income and Expenditure Net interest expense 75,730 2,690 1,930 1,580 4,414 86,344

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

96,640 3,030 24,100 2,540 21,383 147,693


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

- - - - (4,854) (4,854)

Actuarial gains and losses arising on changes in demographic assumptions

(94,840) (3,520) (5,670) (1,420) - (105,450)

Actuarial gains and losses arising on changes in financial assumptions

85,740 8,160 2,020 450 (34,587) 61,783

Experience gains and losses

2,020 (870) 530 (7,160) - (5,480)

Total post employment benefit charged to the Comprehensive Income and Expenditure Account for the Group

89,560 6,800 20,980 (5,590) (18,058) 93,692

Movement in Reserves Statement – Group Reversal of net charges

to Surplus or Deficit for the Provision of Services for post employment

(96,640) (3,030) (24,100) (2,540) (21,383) (147,693)

82


NOTES TO ACCOUNTS2017/18 PPS

1987PPS2006


£000 £000 £000 £000 £000 £000benefits in accordance with the Code

Actual amount charged against the General Fund Balance for pensions in the year Employer’s contribution

payable11,191 721 11,145 - 9,433 32,490

Retirement benefits payable to pensioners

- - - 2,140 - 2,140

Additional contribution to Police Pension Fund Account to balance deficit

72,189 (781) (18,735) - - 52,673

Comparative figures for 2016/17 for the PCC only are:

2016/17 LGPS£000

Comprehensive Income and Expenditure Statement Cost of Services Current service cost 216

Past service cost -

Curtailments -

Financing and Investment Income and Expenditure Net interest expense 74

Total post employment benefit charged to the Surplus or Deficit on the Provision of Services PCC Only 290


Return on plan assets (excluding the amount included in the net interest expense) 392

Actuarial gains and losses arising on changes in demographic assumptions (51)

Actuarial gains and losses arising on changes in financial assumptions 1,332

Experience gains and losses (1,583)

Total post employment benefit charged to the Comprehensive Income and Expenditure Account PCC Only 380

83


NOTES TO ACCOUNTS2016/17 LGPS

£000Movement in Reserves Statement PCC Only Reversal of net charges to Surplus or Deficit for the Provision of Services for post

employment benefits in accordance with the Code (290)

Actual amount charged against the General Fund Balance for pensions in the year Employer’s contribution payable 135

Retirement benefits payable to pensioners -

Additional contribution to Police Pension Fund Account to balance deficit -

Pension Schemes Group including PCC figures shown below

2016/17 PPS1987

PPS2006


£000 £000 £000 £000 £000 £000Comprehensive Income and Expenditure Statement Cost of Services Current service cost 19,080 310 14,420 920 10,582 45,312

Past service cost - - - 50 - 50

Curtailments - - - - 4 4

Financing and Investment Income and Expenditure Net interest expense 83,960 2,360 1,060 1,920 3,639 92,939

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

103,040 2,670 15,480 2,890 14,225 138,305


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

- - - - (32,722) (32,722)

Actuarial gains and losses arising on changes in demographic assumptions

(47,410) - - (5,890) (3,404) (56,704)

Actuarial gains and losses arising on changes in financial assumptions

526,000 31,950 17,540 10,470 110,715 696,675

Experience gains and (7,860) 80 (850) 140 (11,392) (19,882)

84


NOTES TO ACCOUNTS2016/17 PPS

1987PPS2006


£000 £000 £000 £000 £000 £000losses

Total post employment benefit charged to the Comprehensive Income and Expenditure Account for the Group

573,770 34,700 32,170 7,610 77,422 725,672

Movement in Reserves Statement – Group Reversal of net charges

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

(103,040) (2,670) (15,480) (2,890) (14,225) (138,305)

Actual amount charged against the General Fund Balance for pensions in the year Employer’s contribution

payable11,919 167 11,876 - 7,887 31,849

Retirement benefits payable to pensioners

- - - 1,810 - 1,810

Additional contribution to Police Pension Fund Account to balance deficit

68,481 (437) (18,466) - - 49,578

Pensions Assets and Liabilities recognised in the PCC Balance SheetThe amount included in the Balance Sheet arising from the PCC’s obligation in respect of defined benefit plans is as follows:

31 March 2018 LGPS

£000

Present value of defined benefit obligation 4,733

Fair value of plan assets (2,454)

Net liability arising from defined benefit obligation 2,279

85


NOTES TO ACCOUNTSPensions Assets and Liabilities recognised in the Group Balance SheetThe amount included in the Balance Sheet arising from the PCC Group obligation in respect of defined benefit plans is as follows:

31 March 2018 PPS1987

PPS2006

PPS2015 PCS LGPS

£000 £000 £000 £000 £000

Present value of defined benefit obligation 2,894,990 108,050 86,720 52,530 470,347

Fair value of plan assets - - - - (323,334)

Net liability arising from defined benefit obligation 2,894,990 108,050 86,720 52,530 147,013

Comparative figures for 2016/17 are:

Pensions Assets and Liabilities recognised in the PCC Balance SheetThe amount included in the Balance Sheet arising from the PCC’s obligation in respect of defined benefit plans is as follows:

31 March 2017 LGPS

£000

Present value of defined benefit obligation 4,701

Fair value of plan assets (2,369)

Net liability arising from defined benefit obligation 2,332

Pensions Assets and Liabilities recognised in the Group Balance SheetThe amount included in the Balance Sheet arising from the PCC Group obligation in respect of defined benefit plans is as follows:

31 March 2017 PPS1987

PPS2006

PPS2015 PCS LGPS

£000 £000 £000 £000 £000

Present value of defined benefit obligation 2,888,810 101,190 58,150 60,260 482,388

Fair value of plan assets - - - - (307,884)

Net liability arising from defined benefit obligation 2,888,810 101,190 58,150 60,260 174,504

86


NOTES TO ACCOUNTS

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

PCC Only

31 March 2017

31 March 2018

£000 £000

2,462 Opening fair value of scheme assets at 1 April 2,369

92 Interest income 61

(392) Remeasurement (gains) and losses - return on plan assets 38

135 Contributions from employer 151

76 Contributions from employees into the scheme 68

- Benefits paid (230)

- Transfer between PCC and (CC) Group in year -

(4) Administration expenses (3)

2,369 Closing fair value of scheme assets at 31 March 2,454

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

Group (including PCC)

31 March 2017

31 March 2018

£000 £000

261,638 Opening fair value of scheme assets at 1 April 307,884

9,495 Interest Income 8,041

32,722 Remeasurement (gains) and losses – return on plan assets 4,854

7,887 Contributions from employer 9,433

3,197 Contributions from employees into the scheme 3,528

(6,858) Benefits paid (10,191)

(197) Administration expenses (215)

307,884 Closing fair value of scheme assets at 31 March 323,334

87


NOTES TO ACCOUNTS

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

2017/18 LGPS

PCC Only £000

Opening balance at 1 April 4,701Current service cost 264Interest cost 120

Contributions from Scheme participants 68

Remeasurement (gains) and losses:

actuarial gains/losses arising from changes in demographic assumptions -

actuarial gains/losses arising from changes in financial assumptions (190)

experience gains and losses -

Past service cost -

Benefits paid (230)

Curtailments -

Closing balance at 31 March – PCC only 4,733

2017/18 PPS1987

PPS2006

PPS2015 PCS LGPS

Group £000 £000 £000 £000 £000

Opening balance at 1 April 2,888,810 101,190 58,150 60,260 482,388

Current service cost 18,890 340 22,170 830 16,738

Interest cost 75,730 2,690 1,930 1,580 12,455

Contributions from Scheme participants 4,590 100 7,880 - 3,528

Remeasurement (gains) and losses

actuarial gains/losses arising from changes in demographic assumptions (94,840) (3,520) (5,670) (1,420) -

actuarial gains/losses arising from changes in financial assumptions 85,740 8,160 2,020 450 (34,587)

experience gains and losses 2,020 (870) 530 (7,160) -

Past service cost 2,020 - - 130 -

Benefits paid (87,970) (40) (290) (2,140) (10,191)

Curtailments - - - - 16

Closing balance at 31 March – Group 2,894,990 108,050 86,720 52,530 470,347

88


NOTES TO ACCOUNTSReconciliation of Present Value of the Scheme Liabilities (Defined Benefit Obligation)

Comparative figures for 2016/17 are:

2016/17 LGPS

PCC Only £000

Opening balance at 1 April 4,549Current service cost 212Interest cost 166

Contributions from Scheme participants 76

Remeasurement (gains) and losses:

actuarial gains/losses arising from changes in demographic assumptions (51)

actuarial gains/losses arising from changes in financial assumptions 1,332

experience gains and losses (1,583)

Past service cost -

Benefits paid -

Curtailments -

Closing balance at 31 March – PCC only 4,701

2016/17 PPS1987

PPS2006

PPS2015 PCS LGPS

Group £000 £000 £000 £000 £000

Opening balance at 1 April 2,395,440 66,220 19,390 54,460 366,607

Current service cost 19,080 310 14,420 920 10,385

Interest cost 83,960 2,360 1,060 1,920 13,134

Contributions from Scheme participants 5,620 310 6,640 - 3,197

Remeasurement (gains) and losses

actuarial gains/losses arising from changes in demographic assumptions (47,410) - - (5,890) (3,404)

actuarial gains/losses arising from changes in financial assumptions 526,000 31,950 17,540 10,470 110,715

experience gains and losses (7,860) 80 (850) 140 (11,392)

Past service cost - - - 50 -

Benefits paid (86,020) (40) (50) (1,810) (6,858)

Curtailments - - - - 4

Closing balance at 31 March – Group 2,888,810 101,190 58,150 60,260 482,388

89


NOTES TO ACCOUNTS

Local Government Pension Scheme Assets for the PCC Only comprise:

31 March 2017 31 March 2018£000PCC Only

% £000PCC Only

%

Equities

426 18.0 UK quoted 365 14.9

1020 43.0 Overseas quoted 1,006 41.0

1,446 61.0 1,371 55.9

Bonds

- 0.0 UK Government fixed - -

273 11.5 UK Government indexed 278 11.4

64 2.7 Overseas Government fixed 63 2.6

105 4.4 UK other 116 4.7

42 1.8 Overseas other 65 2.6

484 20.4 522 21.3

Property

192 8.1 UK direct 195 8.0

30 1.3 Property funds 30 1.2

222 9.4 225 9.2

Alternatives

180 7.6 Pooled investment vehicles 217 8.8

180 7.6 217 8.8

Cash

37 1.6 Cash accounts 119 4.8

37 1.6 119 4.8

2,369 100.0 Total scheme assets PCC 2,454 100.0

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

90


NOTES TO ACCOUNTS

Local Government Pension Scheme Assets for the Group comprise:

31 March 2017 31 March 2018£000

Group% £000

Group%

Equities

55,144 18.0 UK quoted 48,078 14.9

132,544 43.0 Overseas quoted 132,567 41.0

187,688 61.0 180,645 55.9

Bonds

- - UK government fixed - -

35,529 11.5 UK government indexed 36,666 11.4

8,374 2.7 Overseas government fixed 8,342 2.6

13,639 4.4 UK other 15,294 4.7

5,511 1.8 Overseas other 8,568 2.6

63,053 20.4 68,870 21.3

Property

24,908 8.1 UK direct 25,641 7.9

3,941 1.3 Property funds 3,913 1.2

28,849 9.4 29,554 9.1

Alternatives

23,430 7.6 Pooled investment vehicles 28,615 8.9

23,430 7.6 28,615 8.9

Cash

4,864 1.6 Cash accounts 15,650 4.8

4,864 1.6 15,650 4.8

307,884 100.0 Total scheme assets Group 323,334 100.0

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

91


NOTES TO ACCOUNTS

Basis for Estimating Assets and Liabilities applicable to both PCC and the GroupLiabilities have been assessed on an actuarial basis using the projected unit credit method, which is an estimate of the pensions that will be payable in future years dependent on assumptions including mortality rates, employee turnover and salary levels. The liabilities of the Police Pension and Compensation Schemes have been assessed by the Government Actuary’s Department (GAD). The LGPS fund liabilities have been assessed by Mercer, using estimates based on the latest full valuation of the scheme as at 31 March 2016.

The significant assumptions used by the Actuaries have been:

2016/17 2017/18PPS LGPS PPS LGPS

Mortality Assumptions:Longevity at 65 for future pensioners (in years)

25.2 25.1 Men 24.5 25.227.3 28.0 Women 26.1 28.1

Longevity at 65 for current pensioners (in years)

23.2 22.9 Men 22.6 23.025.2 25.7 Women 24.2 25.8

Financial Assumptions:2.65% 2.60% Rate for discounting scheme liabilities 2.55% 2.70%

2.35% 2.20% Rate of inflation (CPI) 2.30% 2.10%

2.35% 2.20% Rate of increase in pensions 2.30% 2.20%

3.45% 2.20% Rate of CARE revaluation 3.55% 2.10%

4.35% 3.45% Rate of increase in salaries (long term) 4.30% 3.35%

1.00% 1.00% Rate of increase in salaries (short term to 31/03/2020) 1.00% 1.25%

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

92


NOTES TO ACCOUNTS

Impact on the Defined Benefit Obligation in the Schemes

PPS Increase / (Decrease)

Assumption Group 1987 Scheme

2006 Scheme

2015 Scheme PPS

£000 £000 £000 £000

Longevity - increase by one year 72,000 3,000 2,000 1,000

Rate of increase in salaries – increase by 0.5% 29,000 9,000 - -

Rate of increase in pensions – increase by 0.5% 217,000 10,000 16,000 3,000

Rate of discounting scheme liabilities – increase by 0.5%

(275,000) (18,000) (15,000) (3,000)

LGPS Increase / (Decrease) Assumption PCC Only £000

Longevity - increase by one year 83

Rate of inflation – increase by 0.1% 141

Rate of increase in salaries – increase by 0.1% 40

Rate of discounting scheme liabilities – increase by 0.1% (137)

LGPS Increase / (Decrease) Assumption for the Group £000

Longevity - increase by one year 8,835

Rate of inflation – increase by 0.1% 10,307

Rate of increase in salaries – increase by 0.1% 2,270

Rate of discounting scheme liabilities – increase by 0.1% (10,086)

Impact on the PCC’s Cash FlowsAn objective of the LGPS is to keep employers’ contributions at as constant a rate as possible. The strategy agreed by the Pension Authority with the Actuary is to achieve a funding level of 100% over the next 18 years. The next triennial valuation is due on 31 March 2019 with an effective date of 1 April 2020. The contributions in respect of the police pension schemes are determined by the Government.

The liabilities show the underlying commitments that the PCC has in the long run to pay employment benefits. The total Group liability of £3,289.3m has a substantial impact on the net worth of the PCC as recorded in the Balance Sheet, resulting in a negative overall balance of £3,204.4m.

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

the deficit on the LGPS will be made good by increased contributions as assessed by the scheme actuary.

93


NOTES TO ACCOUNTS the actual payment costs of normal retirement is met by the police pension schemes,

based in part on the Force contributing a fixed percentage amount on officer salary costs to the Home Office.

The total contribution expected to be made to the LGPS by the PCC in the year to 31 March 2019 is £0.2m, a total of £9.8m for the Group. Expected contributions for the Police Pensions Schemes in the year to 31 March 2019 are £22.2m.

The weighted average duration of the defined benefit obligation for scheme members is:

LGPS – 22 years

PPS 1987 – 19 years

PPS 2006 – 32 years

PPS 2015 – 33 years.

38. EVENTS AFTER THE BALANCE SHEET DATEThe Statement of Accounts was authorised for issue by the Chief Finance & Commissioning Officer for the PCC on 26 July 2018. Events taking place after that date are not reflected in the financial statements or notes. However, where events after this date provide information about conditions existing at the 31 March 2018, the figures in the financial statements and notes have been adjusted in all material respects to reflect the impact of this information.

94


NOTES TO ACCOUNTS39. CONTINGENT LIABILITIES

The PCC has the following contingent liabilities:

The former Police Authority insurance company, MMI Limited, ceased trading in September 1992 and a ‘Scheme of Arrangement’ was agreed in case of insolvency, involving a claw back of claims paid. Since this time the PCC has only been notified on two occasions by the Scheme Administrators of levies due. A payment of £1.5m (15%) was paid in 2012/13 and a payment of £1m (10%) was paid in 2015/16.

Both payments had been set aside in the Earmarked Insurance Reserve and there remains a further 25% for any potential future levies, of which none were payable in 2017/18. The adequacy of the reserve will continue to be reviewed annually, as will the position of the scheme by the Scheme Administrators. The maximum future liability remains at approximately £7.6m.

Hillsborough Civil Claims - a number of civil claims arising from the day of the disaster itself have been issued against SYP. In addition a larger number of civil claims have been notified which cite misfeasance in a public office (allegations in relation to the preparation of police witness statements). In 2013 an application for special grant funding was submitted which included provision for civil claims (this element was not quantified). Details of quantum will be submitted to the Home Office once potential liability and quantum is more certain, although the Home Office has been regularly updated on the position. Therefore no provision has been made in the 2017/18 Statement of Accounts.

CSE Civil Claims - during the year the number of claimants that have notified a claim with SYP has increased. There are currently 7 claims that have been settled and 14 claims which have been assessed and a provision made, with the remaining expected to proceed for assessment and negotiations in the future. An application for special grant funding will be submitted to the Home Office once potential liability and quantum is more certain and if the criteria is met.

The Chief Constable of South Yorkshire, along with other Chief Constables and the Home Office, currently has 86 claims lodged against them with the Central London Employment Tribunal. The claims are in respect of alleged unlawful discrimination arising from the Transitional Provisions in the Police Pension Regulations 2015.

Claims of unlawful discrimination have also been made in relation to the changes to the Judiciary and Firefighters Pension regulations and in 2016/17 these claims were heard in the Employment Tribunal. In 2017/18 the Judiciary and Firefighter claims were heard in the Appeal Tribunal. Subsequent to this the respondents are appealing against the Appeal Tribunal judgements. In the case of the Firefighters the claimants are also appealing against aspects of the judgement. The outcome of these further appeals may influence the outcome of the Police claims. The Tribunal has agreed to stay the Police hearing and the Home Office has requested that the stay is extended in light of the further appeals. In the event that the Police claims are successful it is unclear what remedy would be applied, whether this would require further legislation and who it would impact.

Given the fact that the Judiciary and Firefighter claims are subject to further appeal and the Police claims are yet to be heard, and the uncertainty regarding remedy and quantum at this point in time it is not possible to provide an estimate of the financial effect in the event that the claims are partially or fully successful. For these reasons, no provision has been made in the 2017/18 Statement of Accounts.

95


NOTES TO ACCOUNTS

In 2001 the Office of the Deputy Prime Minister approved a capitalisation direction to cover specific future liabilities. The financial amount in relation to this has been utilised, however, the direction is until November 2021 and therefore a provision has been made to this date. Future liabilities will continue to be paid until events result in cessation. Currently the annual amount is £0.28m. However, an inflationary increase/decrease is required to be applied on an annual basis. Due to the uncertainty of the future obligation after 2021, no provision has been made after this date.

Following the Court of Appeal’s decision to uphold Ipswich Town Football Club’s appeal against Suffolk Constabulary in October 2017, the police service is working to understand the implications for charging for special police services nationally. With no confirmation of what will be required, no provision has been made in the 2017/18 Statement of Accounts.

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POLICE PENSION FUND ACCOUNT AND NOTES 2016/17 2017/18

£000 £000 £000 £000

Contributions ReceivableFrom the PCC

(18,977) Normal (18,719)

(1,696) Early retirements (532)

(12,264) Officers’ Contributions (11,972)

(32,937) (31,223)

(358) Transfers In from Other Schemes (1,153)

Benefits Payable65,033 Pensions 67,955

20,224 Commutations and lump sum retirement benefits 19,328

189 Death benefits 293

85,446 87,576

Payments to and on account of Leavers10 Refunds of contributions 14

- 10 Transfers out to other Schemes 8 22

52,161 Net Amount Payable for the year 55,222

(49,578) Additional Contribution from the PCC (via Home Office) (52,673)

(2,583) Additional Contribution from the PCC (2,549)

- Net Amount Payable / Receivable for Year -

NET ASSETS STATEMENT31 MARCH

201731 MARCH

2018£000 £000

Current Assets295 Contributions due from the PCC -

167 Contributions due from officers -

(5,103) Amount owing from General Fund (4,938)

4,641 Pensions paid in advance 4,938

Current Liabilities

- Unpaid pensions benefits -

- TOTAL -

The payroll for police officers was changed to monthly in March so no adjustment for 2017/18. For 2016/17 there was an adjustment for five days.

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Notes to the Pension Fund Account The Police Pension Fund Account is operated in accordance with the Police Pension Fund Regulations 2007 (SI 2007 No 1932), which specifies the amounts that must be paid into and out of the Fund. The Chief Constable administers the Fund Account on behalf of the PCC although no cash is transacted by the Chief Constable, with all payments and receipts being made by the PCC.

An employer’s contribution is paid into the Fund, together with contributions from employees who are members of the Police Pensions Schemes. The contribution rates are based on percentages of pensionable pay, as determined nationally by the Government and subject to triennial revaluation by the Government Actuary’s Department. The current contribution rates are:-

1987 Scheme = 35.55% to 36.35% (21.3% for the employer and 14.25% to 15.05% for employees),

2006 Scheme = 32.30% to 34.05% (21.3% for the employer and 11% to 12.75% for employees),

2015 Scheme = 33.74% to 35.08% (21.3% for the employer and 12.44% to 13.78% for employees).

The actuarial valuation has set the employer contribution rate for all three police pension schemes from 1 April 2015 at 21.3% of pensionable pay. The difference between the old employer contribution rate of 24.2% and the new rate will be retained by the Government. This means that the police pensions top up grant will be reduced by the difference between the contribution rates of 24.2% and 21.3%. Therefore, the reduction of 2.9% is payable via local PCC budget for 2017/18. Treatment of the revised employer contribution rate in future years is to be confirmed in due course.

Payments are also made into the Fund in respect of ill health retirements.

The schemes are unfunded which means that there are no investment assets built up to meet pensions payments. The Pension Fund Account is therefore balanced to nil each year by a transfer from the PCC’s General Fund which then receives a top-up grant from the Government if contributions are insufficient to meet the defined pensions benefits payable. Any surpluses on the Fund are repayable to the Government.

The accounting policies adopted for the Pension Fund follow those set out in the Statement of Accounting Policies (Note 1). However the Net Assets Statement does not include liabilities to pay pensions and other benefits after the Balance Sheet date. These are dealt with within the Group Financial Statements in accordance with the application of International Accounting Standard 19 - Retirement Benefits.

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INDEPENDENT AUDITOR’S REPORT TO THE COMMISSIONER

Independent auditor’s report to the Police and Crime Commissioner for South Yorkshire

OpinionWe have audited the financial statements of the Police and Crime Commissioner for South Yorkshire (‘the Authority’) for the year ended 31 March 2018 which comprise the Authority and Group Comprehensive Income and Expenditure Statements, the Authority and Group Balance Sheets, the Authority and Group Movement in Reserves Statements, the Authority and Group Cash Flow Statements and the related notes, including the accounting policies in note 1.

In our opinion the financial statements: give a true and fair view of the financial position of the Authority and the Group as at 31

March 2018 and of the Authority’s and the Group’s expenditure and income for the year then ended; and

have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2017/18.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Authority in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Going concernWe are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least twelve months from the date of approval of the financial statements. We have nothing to report in these respects.

Other information published with the financial statementsThe Chief Financial Officer is responsible for the other information published with the financial statements, including the Narrative Statement and the Annual Governance Statement. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information. In our opinion the other information published with the financial statements for the financial year is consistent with the financial statements.

Chief Financial Officer’s responsibilitiesAs explained more fully in the statement set out on page 17, the Chief Financial Officer is responsible for: the preparation of the Authority’s 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 2017/18; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Authority’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting on

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INDEPENDENT AUDITOR’S REPORT TO THE COMMISSIONERthe assumption that the functions of the Authority and the Group will continue in operational existence for the foreseeable future.

Auditor’s responsibilitiesOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

Report on the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources

ConclusionOn the basis of our work, having regard to the guidance issued by the Comptroller and Auditor General in November 2017, we are satisfied that, in all significant respects, the Police and Crime Commissioner for South Yorkshire put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2018.

Respective responsibilities in respect of our review of arrangements for security economy, efficiency and effectiveness in the use of resourcesThe Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.

We are required under Section 20(1) (c) of the Local Audit and Accountability Act 2014 to satisfy ourselves that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We report if significant matters have come to our attention which prevent us from concluding that the Authority has put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

We have undertaken our review in accordance with the Code of Audit Practice, having regard to the guidance on the specified criterion issued by the Comptroller and Auditor General in November 2017, as to whether the Police and Crime Commissioner for South Yorkshire had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. The Comptroller and Auditor General determined this criterion as that necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Police and Crime Commissioner for South Yorkshire put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2018.

Statutory reporting mattersThe Code of Audit Practice requires us to report to you if:

any matters have been reported in the public interest under Section 24 of the Local Audit and Accountability Act 2014 in the course of, or at the conclusion of, the audit;

any recommendations have been made under Section 24 of the Local Audit and Accountability Act 2014;

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http://www.frc.org.uk/auditorsresponsibilities


INDEPENDENT AUDITOR’S REPORT TO THE COMMISSIONER an application has been made to the court for a declaration that an item of account is

contrary to law under Section 28 of the Local Audit and Accountability Act 2014; an advisory notice has been issued under Section 29 of the Local Audit and Accountability

Act 2014; an application for judicial review has been made under Section 31 of the Local Audit and

accountability Act 2014.

We have nothing to report in these respects.

The purpose of our audit work and to whom we owe our responsibilitiesThis report is made solely to the Police and Crime Commissioner, as a body, in accordance with Part 5 of the Local Audit and Accountability Act 2014. Our audit work has been undertaken so that we might state to the Police and Crime Commissioner, as a body, those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Police and Crime Commissioner, as a body, for our audit work, for this report, or for the opinions we have formed.

Certification of completion of the auditWe certify that we have completed the audit of the financial statements of the Police and Crime Commissioner for South Yorkshire in accordance with the requirements of the Local Audit and Accountability Act 2014 and the Code of Audit Practice.

Rashpal KhanguraFor and on behalf of KPMG LLP, Statutory AuditorChartered Accountants1 Sovereign SquareSovereign StreetLeedsLS1 4DA

21st September 2018

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THE POLICE AND CRIME COMMISSIONER FOR SOUTH YORKSHIRESTATEMENT OF ACCOUNTS 2017/18ANNUAL GOVERNANCE STATEMENT

Annual Governance Statement 2017/18

1. What is Corporate Governance?

1.1 Corporate governance refers to the process by which organisations are directed, controlled, led and held to account. In other words, Corporate Governance is how we make sure we do things properly.

1.2 Each year the Police and Crime Commissioner (PCC) and Chief Constable (CC) are each required to produce an Annual Governance Statement. The Annual Governance Statement is the formal mechanism used to report on the effectiveness of the internal control and decision-making systems. The Annual Governance Statement complies with the reporting requirements contained in the CIPFA Code of Practice on Local Authority Accounting, and accompanies the accounts for the financial year. This document describes the governance arrangements in place over the last 12 months, improvements made in that year and areas for improvement in the year ahead.

2. The Purpose of the Joint Corporate Governance Framework (‘Framework’)

2.1 The PCC and CC work to a common Framework which describes how the PCC and the CC will do business together.

2.2 The Framework comprises the culture, values, systems and processes by which the PCC governs, and the activities through which he accounts to, engages with, and leads the community. The Framework also enables the PCC to monitor the delivery of his Police and Crime Plan and to assess whether appropriate and cost-effective services, which provide value for money, are being delivered. (A copy of the Framework is available on the PCC’s website, or by writing to the Chief Executive of the Office of the Police and Crime Commissioner, Carbrook House, Carbrook Hall Road, Sheffield S9 2EH).

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

2.4 The Framework was formally updated during 2017/18 to reflect the principles of the CIPFA ‘Delivering Good Governance in Local Government: Framework’ and the associated ‘Guidance Notes for Policing Bodies in England and Wales’, both published in 2016.

2.5 These principles below, have informed the identification of the governance issues recorded within this document for the 2017/18 financial year.

Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law,

Ensuring openness and comprehensive stakeholder engagement, Defining outcomes in terms of sustainable economic, social and environmental

benefits,

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Determining the interventions necessary to optimise the achievement of the intended outcomes,

Developing the entity’s capacity, including the capability of its leadership and the individuals within it,

Managing risks and performance through robust internal control and strong public financial management,

Implementing good practices in transparency, reporting and audit to deliver effective accountability.

3. What we said we were going to improve during 2017/18

3.1 Previous year’s remaining governance issues 2015/16A number of actions scheduled in the Annual Governance Statement 2015/16, and set out in the Governance Action Plan 2016/17, were still current at the end of March 2017. Set out below is a description of the progress made during 2017/18 in relation to each of these.

3.1.1 Joint Corporate Governance Framework, light touch review of effectiveness of delegations / consents, financial regulations and contract standing orders During 2016/17 significant weaknesses were identified in the PCC’s and CC’s governance arrangements. Activity to address these weaknesses became the priority for action during 2017/18. Financial regulations aside the majority of the intended work was completed, and all the necessary decisions were taken by the end of the financial year. There remained the need to formally update the memorandum of understanding and consents and delegations. Financial regulations will be subjected to a light touch review during the early part of 2018/19.

3.1.2 Financial services arrangements This area for improvement involved two specific actions. The first was the establishment of appropriate finance support arrangements and processes to replace those previously provided by South Yorkshire Joint Secretariat. This was completed by the end of March 2017. The second action related to a review of the provision of finance support services and the repositioning of the finance roles within the OPCC and SYP. The retirement of the PCC’s Chief Finance and Commissioning Officer during 2017/18 delayed progress with this review. The terms of reference are currently being revisited by the PCC’s new Chief Finance and Commissioning Officer and Force Director of Resources.

3.1.3 Capacity and capability of the OPCC – Partnerships and Commissioning Details of the progress made during 2017/18 to address this governance issue is included in the narrative set out below in paragraph 3.3.3.

3.1.4 The development and implementation of the PCC’s ‘Business Continuity Plan’ The testing of the PCC’s Business Continuity Plan took place during 2017/18 completing this action.

3.2 ‘Significant’ Governance Issues – 2016/17The annual review of annual governance for the financial year 2016/17 identified a significant weakness in the transparency and effectiveness of the PCC’s and CC’s governance arrangements. These were addressed through the implementation of more robust ‘holding to account’ arrangements and completion of the review of the Joint Corporate Governance Framework. Both were aimed at clarifying roles and responsibilities, strengthening the working relationship between the PCC / OPCC and CC / Force, and incorporating lessons learnt from the recent judicial review findings. Specific changes were made to provide clarity on the arrangements in place for joint discussion on matters that are

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considered to be novel, contentious or repercussive, as well as new dispute resolution arrangements linked to the Policing Protocol.

3.3 Control issues identified 2016/17Considerable progress was made in 2017/18 to address the control issues identified. A summary of that progress is set out below:

3.3.1 Robustness and effectiveness of PCC’s interim decision-making processes A light touch review of the interim decision-making process was completed resulting in some minor amendments to the templates used by the Force when seeking a decision from the PCC.

3.3.2 Gaps in community engagement and consultation activity to inform the PCC’s Strategic and Financial Planning process (priorities and budget) An engagement calendar for 2017/18 was put in place, which identified activity required by OPCC officers to establish the priorities of the public for policing and crime services. Analysis of the views gathered informed the content of the refresh of the Police and Crime Plan 2017-2021 (Renewed April 2018).

The calendar was updated throughout the year to include new opportunities for engagement.

3.3.3 Effectiveness of PCC partnerships, collaborations and commissioned activity in supporting delivery of the Police and Crime Plan

PCC funds are used in a variety of ways, including the direct commissioning of services for victims of crime and the provision of grants to local organisations and community groups. A Commissioning Strategy supports this process.

The PCC needs assurance that those he commissions are contributing to the delivery of his Police and Crime Plan. A Police and Partners Performance Framework project commenced during 2017/18, with the aim of clearly describing whether outcomes are being achieved.

The policing and partnership landscape is complex and much work was done throughout the year to map this, including a joint workshop between senior officers of the OPCC and SYP. This workshop sought to capture not only the partnership activity already underway, but whether there were any partnerships or collaborations on which the Force and OPCC should work together – for mutual support; to avoid duplication or ambiguity of role; or to foster new partnerships or collaboration relationships.

Work to review the capacity and capability of the partnership and commissioning functions within the OPCC continued under the leadership of the PCC’s former Chief Finance and Commissioning Officer. This review will be completed during 2018/19.

3.3.4 Capability of the OPCC in the performance, assurance and scrutiny areas Vacancies arose in the OPCC towards the end of 2016/17 which provided an opportunity to review the resource needed to support the PCC in the performance, assurance and scrutiny function. Following a recruitment process positions were filled during March 2018 with a new emphasis on two things: (a) performance assessment of delivery of the Police and Crime Plan and Local Criminal Justice Board’s outcomes across the wider policing and crime landscape,; and (b) evidence-led evaluation and scrutiny in areas where the PCC requires in-depth assurance activity.

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4. How we manage our business and the roles of those responsible

4.1 Public Accountability Board (‘PAB’) At the centre of the PCC’s governance arrangements is a public-facing governance meeting – the Public Accountability Board (‘PAB’). This meeting occurs monthly and is where most of the PCC’s ‘holding to account’ arrangements come together. The PCC receives formal reports from SYP on a range of areas in which the CC must be held to account. These areas are programmed in for the performance and financial year ahead. PAB is chaired by the PCC and attended by the CC and his chief officer colleagues.

PAB agendas, papers and minutes are published in line with the PCC’s commitment to openness and transparency.

4.2 The Joint Independent Audit Committee The PCC and CC have an established Joint Independent Audit Committee (‘JIAC’). This has the objective of assuring, supporting and challenging the work of the PCC and Force, so enhancing public trust and confidence in their governance. JIAC receives regular reports on internal control and governance related matters, including strategic risks, so that it may monitor, challenge and review the PCC’s and CC’s control measures to ensure their currency, completeness and effectiveness.

4.3 The Independent Ethics Panel The PCC, with the full support of the CC, established an Independent Ethics Panel (‘IEP’) to ensure that the police are acting with integrity and upholding high professional standards. The Panel provides the PCC and SYP with independent assurance and effective challenge, particularly in relation to the embedding of the Code of Ethics into culture, policies and practices. Whilst progress has been made in embedding the Code of Ethics within SYP, there is still more work to be done.

4.4 Public Engagement and Advisory PanelsThe PCC has continued to get out and about in the community, and has attended numerous local meetings, forums and events to hear from all sections of the community.

The PCC set up a ‘Victims, Survivors and their Families Panel’ so that he could hear directly about the experiences of victims; where services are meeting needs, and where they need improving or should be done in a different way.

Dedicated ‘Independent Advisory Groups’ (‘IAGs’) exist within each of the four local authority areas. Each IAG meets quarterly and has an independent chair and a SYP lead. Looking forward, the PCC intends to re-invigorate his ‘Strategic Independent Advisory Panel for Minority Communities’, so that it will include representation from each of the four IAGs and additional new independent members, including a new independent Chair.

An independent Policing Protests Advisory Panel, established by the PCC to offer support and challenge to Force in the planning and learning stages of managing protests and marches taking place in South Yorkshire. The Panel has no operational policing responsibilities, but it acts as a barometer as to the mood of communities when protests are planned.

Members of the Policing Protests Panel have been drawn from the PCC’s existing Independent Ethics Panel, and the Minority Communities Independent Advisory Panel, to represent a cross-section of communities from across South Yorkshire.

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4.5 Internal AuditThe PCC and CC jointly receive an internal audit service provided by Barnsley Metropolitan Borough Council. Internal audit officers have full access to the PCC’s staff and the appropriate financial documentation of both the PCC and SYP. Internal Audit is responsible for testing and compliance work, to ensure that management controls are sufficiently effective and robust so as to prevent, detect and deter error, fraud and corruption.

The Head of Internal Audit attends and provides reports to JIAC, as well as attending the PCC’s Senior Leadership Team meeting on a monthly basis.

4.6 External Inspection BodiesHer Majesty’s Inspectorate of Constabulary and Fire and Rescue Services (‘HMICFRS’) independently assesses police forces and policing activity in the public interest, ranging from neighbourhood teams through to serious crime and the fight against terrorism. HMICFRS provides the information to allow the public to compare the performance of their force against others, and their evidence is used to drive improvements in the service to the public.

4.7 Office of the Police and Crime Commissioner Business PlanA Business Plan is in place which sets out the core purpose, values and ethos of the Office of the Police and Crime Commissioner (‘OPCC’). The OPCC’s Delivery Plan (appended to the Business Plan) is updated each year to reflect the priorities and activities of the OPCC in support of the PCC and his Police and Crime Plan. The Business Plan and Delivery Plan drive the work of the OPCC and progress is monitored by the Chief Executive, with her Senior Leadership Team, on a monthly basis.

4.8 PCC Commissioned Assurance ActivityThe PCC jointly with the Force commissioned a large-scale survey into the levels of public trust and confidence in South Yorkshire Police which was carried out between October and December 2017. Hard-to-reach communities were targeted. The results showed that generally people had high levels of trust and confidence in the police. However, this was significantly lower from those who had been victims of crime. Work commenced to understand better this disparity and inform future service delivery.

Linking to public trust and confidence the PCC, supported by the CC, commissioned the IEP to support the Force and help the senior leadership group and workforce in developing its cultural work that underpins the delivery of the Police and Crime Plan and Force Plan on a Page.

In response to topical issues and / or risk based issues the PCC has requested assurance reports from the Force. Reports have included:

Randox Testing Services, prompted by Greater Manchester Police announcing they were conducting a criminal investigation into the manipulation by two members of staff at Randox Testing Services (RTS) Manchester laboratory.

The implementation of a new information system, CONNECT IT (designed to bring together all information relating to crime and harm prevention) and the impact on service delivery.

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Concerns prompted by the collapse of a high profile rape case following the failure by the Metropolitan police to disclose evidence and whether there may be similar cases in South Yorkshire.

4.9 Partnership EngagementThe PCC is not a named statutory partner within any partnership, although statute provides for a PCC role to bring partners together at a strategic / countywide level, where appropriate, to help meet the policing and crime needs of communities. There have been occasions when the PCC has become involved in a local partnership, but this has been specifically related to a geographic or thematic priority highlighted as important by members of the public.

The PCC personally attends, and / or is represented by OPCC officers, in a variety of partnership meetings across the county, an example of this being engagement with the Local Criminal Justice Board, the four Community Safety Partnerships and Local Safeguarding Boards.

4.10 Collaboration There is a strong push from government for the emergency services to collaborate. The Police and Crime Act 2017 mandates collaboration with Fire and Rescue Services, and allows PCCs to take on their local Fire and Rescue Service, as well as the police.

The PCC has put in place governance arrangements to take forward emergency services collaboration. A Police and Fire Collaboration Board, with supporting structures, has been set up to pursue together all possible ways for police and fire to work better together. Collaborative activity this year has included the setting up of a joint community safety function, and appointment of a Joint Head of Estates to lead the development and transformation of the police and fire estate, as well as scoping further opportunities to collaborate with other public service providers.

In December 2017, members of the Police and Fire Collaboration Board attended a visioning workshop, to clarify for all parties (and for the collaboration programme) the strategic direction and drivers for the collaboration. This has allowed an overarching legal agreement to be prepared to set the purpose, principles, governance arrangements and legal framework to the collaborative activity moving forwards. Sitting underneath this overarching collaboration agreement, each newly formed collaborative function or activity will then be reflected in a separate legal agreement, specific to arrangements agreed for that function or activity.

The Strategic Partnership with Humberside Police is overseen through a Joint Collaboration Board. Regional collaboration with Humberside, North Yorkshire and West Yorkshire is governed through the Regional Collaboration Board.

The newly constituted North East Transformation, Innovation and Collaboration Programme (‘NETIC’) was established during 2017/18 with an overarching aim:

‘To deliver transformational collaborative policing across the NE Region by maximizing the design and delivery of Strategic Policing Capabilities, and identifying new themes and functions to amplify the collaborative approach to address threats, risk and harm.’

NETIC’s governance arrangements include a NETIC Collaboration Board, consisting of the 7 PCC’s (supported by their chief executives) and Chief Constables, and a NETIC Delivery

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Board made up of the 7 Deputy Chief Constables and the PCC’s Chief Executives. Work to date has been in scoping potential collaborative opportunities and delivery of the national Specialist Capabilities Programme. The Programme Team is not yet fully formed.

5. Review of Effectiveness of the Joint Corporate Governance Framework (‘Framework’), including compliance with the Joint Code of Corporate Governance

5.1 The CIPFA ‘Delivering Good Governance in Local Government: Framework’ and the associated ‘Guidance Notes for Policing Bodies in England and Wales’ both became effective in 2016/17. In updating the Framework, to ensure compliance with this new requirement, officers of SYP and OPCC have reviewed governance arrangements.

5.2 The PCC and CC have responsibility for conducting, at least annually, a review of the effectiveness of the governance arrangements. In addition, the review of effectiveness of the system of internal control is informed by the work of Internal Audit, the JIAC and other assurance panels / activity, and the managers within both SYP and the OPCC. It is also informed by the comments received from external auditors and other agencies, and takes account of the improvements identified.

5.3 The Head of Internal Audit opinion for both the PCC and SYP is set out below:

“Based on the systems reviewed and reported on by Internal Audit during the year, together with management’s response to issues raised, the Head of Internal Audit is able to give an adequate assurance opinion regarding the effectiveness of the control, risk and governance environment”.

6. Annual Governance Statement 2016/17 - completed governance improvements

6.1 Set out below is a summary of those completed governance improvements during 2017/18 included in the narrative in paragraph 3 above. These are:

Financial services arrangements (1) – establishment of appropriate finance support arrangements

Development and implementation of the PCC’s Business Continuity Plan

Joint Corporate Governance Framework – revised Framework that clarifies roles and responsibilities of the PCC/OPCC and CC/Force, incorporating lessons learnt from the recent judicial review

Strengthened governance arrangements, specifically the PCC’s ‘Holding to Account’ arrangements

Decision-making processes

Gaps in community engagement and consultation activity to inform the PCC’s Strategic and Financial Planning process

Effectiveness of PCC partnerships, collaborations and commissioned activity – Commissioning Strategy and mapping of the policing and partnerships landscape

7. ‘Significant’ Governance Issues – 2017/18

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7.1 For the purpose of this review ‘significant’ is defined as:

‘An issue requiring action necessary to avoid exposure to a substantial risk to the achievement of the objectives of the system under review.’

7.2 The need for the CC to better align financial planning to strategic and operational priorities. This informs the PCC’s refresh of the Police and Crime Plan and budget setting. It also informs the PCC’s application for special grant funding to effectively manage costs of legacy issues, and scrutiny of SYP’s understanding of:

a) its current and future demand;

b) the affordability of its recommended Target Operating Model; and

c) robust future strategic planning, incorporating assessments of future demand to inform its financial planning, workforce planning, savings plans and an enabling capital programme.

8. Control Issues – 2017/18

8.1 Whilst not significant enough to prevent the achievement of objectives, a small number of issues were identified in the year that once implemented would enhance control frameworks.

8.2 Those dealt with during the year have led to the strengthening of internal policies, systems and processes around health and safety, terms and conditions for the appointment of staff and senior / chief officers, and gifts and hospitality.

8.3 The following control issues, including those outstanding from the previous year, will be addressed during 2018/19:

Carry forward control issues light touch review of financial regulations

finance support services

effectiveness of PCC partnerships, collaborations and commissioned activity in supporting delivery of the Police and Crime Plan

2017/18 control issues alignment of the PCC’s / OPCC’s risk management arrangements with OPCC Business

Plan objectives the effectiveness of the ‘Strategic Independent Advisory Panel for Minority Communities’

national arrangements for publishing contractual information and their alignment with those required locally

9. Annual Governance Action Plan

9.1 Attached at Appendix A is the PCC’s Annual Governance Action Plan for 2018/19.

10. Looking Forward / Current Issues

The PCC has identified the following areas of focus for 2018/19:

10.1 Partnerships and collaborations

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The partnerships and collaborations landscape for policing, crime and victims’ services is significant and continues to expand. The focus will be setting a strategic direction for this activity which recognises both diminishing public sector resources, and the national development of the remit of PCCs in community safety, the criminal justice system and emergency services.

In particular, in this coming year, the PCC will be looking to understand whether he can better support potential, past and current victims and survivors of child sexual exploitation within the funding parameters available.

The PCC will also want to focus on maximising opportunities for South Yorkshire Police and South Yorkshire Fire and Rescue to collaborate. This work will build on a collaborative programme which has already started to deliver more effective, efficient and economical services, making decisions that are in the best interests of the communities.

Establishing appropriate and proportionate governance arrangements and identifying the resources required to support and advise the PCC in this area will be of equal importance.

10.2 South Yorkshire Police’s efficiency and effectivenessSupporting and challenging SYP in its continued improvement work to (a) address the causes for concern identified by HMICFRS in its latest inspections, and (b) achieve sustained ‘Good’ performance ratings in future HMICFRS reports.

10.3 Continuing to scrutinise SYP in its understanding of:a) Its current and future demand;b) The affordability of its recommended Target Operating Model; andc) Robust future strategic planning, incorporating assessments of future demand to

inform its financial planning, workforce planning, savings plans and an enabling capital programme.

11. Statement of the Police and Crime Commissioner and Chief Executive

We propose over the coming year, 2018/19 to take steps to address the above matters to further enhance our governance arrangements. We are satisfied that these steps will address the need for improvements identified in the review of effectiveness. We will monitor their implementation and operation during the course of the year through the PCC’s Senior Leadership Team Meetings, and feed this into the next annual review.

Signature Signature

Dr Alan Billings Michelle ButteryPolice and Crime Commissioner Chief Executive and Solicitor

Date: 26 July 2018 Date: 26 July 2018

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ANNUAL GOVERNANCE ACTION PLAN 2018/19

SIGNIFICANT GOVERNANCE ISSUE2017/18

Proposed action Officer Responsible

EstimatedTimescale

ActualTimescale

Update Status

The need for the CC to better align financial planning to strategic and operational priorities. This informs the PCC’s refresh of the Police and Crime Plan and budget setting. It also informs the PCC’s application for special grant funding to effectively manage costs of legacy issues and scrutiny of SYP’s understanding of:

a) its current and future demand;

b) the affordability of its recommended Target Operating Model; and

c) robust future strategic planning, incorporating assessments of future demand to inform its financial planning, workforce planning, savings plans and an enabling capital programme.

Establishing monthly joint Planning and Efficiency Group (PEG), chaired by the PCC with the CC and SLG colleagues to review joint planning actions, timetables and savings plan and capital programme delivery.

Chief Finance and Commissioning Officer and Head of Governance

30 April 2018 6 April 2018 PEG inaugural meeting took place on 4 April 2018

Complete

Specific internal audit activity to review the robustness of SYP’s arrangements in driving the effective delivery of savings plans and that this work feed into the work requested of JIAC

Head of Internal Audit

30 September 2018

JIAC to review and provide assurance to the PCC on the effectiveness of the arrangements in place

Chief Finance and Commissioning Officer and Chair of JIAC

30 September 2018

The OPCC’s Delivery Plan Project 1: The PCC’s arrangements for holding the CC to


31 March 2019

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SIGNIFICANT GOVERNANCE ISSUE2017/18


EstimatedTimescale

ActualTimescale

Update Status

account for the delivery of an efficient and effective policing services. Specifically:

Close liaison with HMICFRS in relation to the identified causes of concern and remedial action being taken by SYP and effective Force Management Statement


31 October 2018

SYP performance reporting in relation to Police and Crime Plan outcome ‘Efficiency, effectiveness and Value for Money to the PCC’s Public Accountability Board


31 July 2018

Chairing and development of the Estates Board to oversee development of a joint estates strategy

Chief Finance and Commissioning Officer

31 December 2018

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CONTROL ISSUES 2017/18 Proposed action Officer Responsible

EstimatedTimescale

ActualTimescale

Update Status

Alignment of the PCC’s / OPCC’s risk management arrangements with OPCC Business Plan objectives

Recast PCC / OPCC Strategic Risks in line with Business Plan objectives

Head of Governance

31 July 2018

Update Joint Strategic Risk and Opportunity Strategy to reflect changes in working arrangements

Head of Governance and Force Head of Finance

30 September 2018

The effectiveness of the ‘Strategic Independent Advisory Panel for Minority Communities’

To carry out a review of the existing ‘Strategic Independent Advisory Panel for Minority Communities’ that ensures the Panel: membership is

representative of the South Yorkshire community; and

is integrated within the PCC’s other governance and assurance arrangements

Community Engagement and Communications Manager

30 September 2018

National arrangements for publishing contractual information and their alignment with those required locally

To raise the issue nationally

Chief Finance and Commissioning Officer and Director of Resources

31 March 2019

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CONTROL ISSUES 2017/18 Proposed action Officer Responsible

EstimatedTimescale

ActualTimescale

Update Status

To develop appropriate arrangements locally to ensure accurate publication of contractual arrangements

Chief Finance and Commissioning Officer and Director of Resources

30 September 2018

CONTROL ISSUES Carried Forward from 2016/17 (Action Plan 2017/18)


EstimatedTimescale

ActualTimescale

Update Status

Joint Corporate Governance Framework – financial regulations

Light touch review Chief Finance and Commissioning Officer

31 July 2018

Financial services support arrangements – repositioning the finance roles within SYP and the OPCC

Terms of reference to be revisited and project plan to be drafted


31 July 2018

Proposed new arrangements


31 March 2019

Effectiveness of PCC partnerships, collaborations and commissioned activity in supporting delivery of the Police and Crime Plan

Development of PCC’s Police and Partners Performance Framework

Head of Governance

30 September 2018

Population of the Police and Partners

Head of Governance

31 December 2018

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CONTROL ISSUES Carried Forward from 2016/17 (Action Plan 2017/18)


EstimatedTimescale

ActualTimescale

Update Status

Performance Framework

Review of the capacity and capability of the partnerships and collaborations function within the OPCC

Chief Executive and Solicitor

31 March 2019

Review of the capacity and capability of the OPCC commissioning function


31 March 2019

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GLOSSARY OF TERMS

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

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

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

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

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

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

Capital Financing RequirementThis measures the underlying need to borrow for capital purposes.

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

Chartered Institute of Public Finance and Accountancy (CIPFA)The accounting body that provides accounting guidance to the public sector. The guidance provided by CIPFA is defined as proper accounting practice and has statutory backing.

Contingent LiabilityA possible liability at the balance sheet date which will only be confirmed following the outcome of uncertain future events.

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

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GLOSSARY OF TERMS

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

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

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

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

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

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

Finance LeaseA lease that transfers all the risks and rewards of ownership of a fixed asset to the lessee. Assets held in this way by the PCC appear on the PCC’s Balance Sheet and are accounted for as property, plant and equipment.

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

General Fund BalanceThe General Fund Balance is the description given in the Code to those reserves held by the PCC that are not earmarked for specific purposes and is more commonly described as General Reserves.

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

Gross Book ValueThe value of an asset before deducting depreciation and impairment.

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GLOSSARY OF TERMS

ImpairmentA reduction in the value of a fixed asset below its carrying amount on the Balance Sheet.

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

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

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

Minimum Revenue ProvisionThe statutory minimum amount that must be set aside from revenue each year to repay debt. A prudent level is set by the PCC

Net Book ValueThe amount at which fixed assets are included in the Balance Sheet, that is their historical or current value less the cumulative amounts provided for depreciation.

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

OutturnActual income and expenditure for the financial year.

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

PreceptAn amount of money levied by one body (the precepting body) which is collected by another authority (the collecting authority) as part of the council tax. The PCC is the precepting body and the four South Yorkshire District Councils are the collecting authorities.

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

Prudential CodeLocal authorities are required to comply with the Prudential Code for Capital Finance in Local Authorities, published by CIPPA, in order to ensure that their capital investment plans are prudent, affordable and sustainable.

Public Works Loans BoardA Government controlled agency that provides a source of borrowing for public authorities.

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GLOSSARY OF TERMS

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

Revenue ExpenditureExpenditure on day to day running costs incurred by the PCC in the provision of services

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

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THE POLICE AND CRIME COMMISSIONER FOR SOUTH YORKSHIRESTATEMENT OF ACCOUNTS 2017/18ACRONYMS AND ABBREVIATIONS

ACPO Association of Chief Police OfficersBME Black and Minority EthnicCARE Career Average Revalued EarningsCC Chief ConstableCFR Capital Financing RequirementCIES Comprehensive Income and Expenditure StatementCIPFA Chartered Institute of Public Finance and AccountancyCPI Consumer Price IndexCPS Crown Prosecution ServiceCSE Child Sexual ExploitationCSP Community Safety PartnershipCSR Comprehensive Spending ReviewDCLG Department of Communities and Local GovernmentEUV Existing Use ValueFTE Full Time EquivalentGAD Government Actuaries DepartmentHMICFRS Her Majesty’s Inspector of Constabulary and Fire &

Rescue ServicesIAS International Accounting StandardsIFRS International Financial Reporting StandardsJIAC Joint Independent Audit CommitteeJSOU Joint Special Operations UniformedLASAAC Local Authority (Scotland) Accounts Advisory CommitteeLCJB Local Criminal Justice BoardLGPS Local Government Pension SchemeLSOA Lower Super Output AreaMOJ Ministry of JusticeMRP Minimum Revenue ProvisionMTRS Medium Term Resource StrategyNRE Net Revenue ExpenditureONS Office for National StatisticsOPCC Officer of the Police and Crime CommissionerPAB Public Accountability BoardPCC Police and Crime CommissionerPCS Police Compensation SchemePEEL Police Effectiveness, Efficiency and LegitimacyPPS Police Pension SchemesPWLB Public Works Loans BoardRICS Royal Institution of Chartered SurveyorsSCT Senior Command TeamSYP South Yorkshire Police

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