(1) MEMBERS OF THE AVON FIRE AUTHORITY (2) APPROPRIATE

Clerk to Avon Fire Authority Police and Fire HQ, Valley Road, Portishead, Bristol BS20 8JJ Telephone 0117 926 2061 Extension 231 Fax 0117 927 2908

[email protected]

Working in partnership with the Gambia Fire & Rescue Service (GF&RS)

18 August 2020

(1) MEMBERS OF THE AVON FIRE AUTHORITY

Councillors Ashe, Butters, Davies, Goggin (Chair), Jones, Payne and Tucker

The quorum for the meeting is 4.

(2) APPROPRIATE OFFICERS

(3) PRESS AND PUBLIC

Dear Member

You are invited to attend a Meeting of the Audit, Governance and Ethics Committee to be held on Wednesday 26 August 2020 commencing at 10.30hrs.

The meeting will be held using a virtual facility called Zoom and joining instructions will follow.

The Agenda is set out overleaf.

Yours sincerely

David Daycock Deputy Clerk to the Fire Authority

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Notes Attendance Register: Attendance will be recorded by the Democratic Services Assistant and recorded within the Minutes of the Meeting. Code of Conduct – Declaration of Interests: any Member in attendance who has a personal interest in any matter to be considered at this meeting must disclose the existence and nature of that interest at the commencement of that consideration, or when the interest becomes apparent. A Member having a prejudicial interest must withdraw from the meeting room or meeting whilst the matter is considered. Contact: for any queries about the Meeting please contact Democratic Services on 0117 926 2061 ext. 231; or by e mail at [email protected]; or in person at Police and Fire HQ, Valley Road, Portishead, Bristol, BS20 8JJ (by appointment during normal office hours only). Emergency Evacuation Procedures: these will be advised at the start of the Meeting if appropriate. Exempt Items: Members are reminded that any Exempt Reports as circulated with this Agenda contain exempt information and should therefore be treated accordingly. They should not be disclosed or passed on to any other person(s). Members are also reminded of the need to dispose of such reports carefully and are therefore invited to return them to the deputy Clerk at the conclusion of the Meeting for disposal. Inspection of Papers: any person wishing to inspect Minutes, Reports, or a list of the background papers relating to any item on this Agenda should contact Democratic Services as above. Public Access: under Standing Order 21 and providing 2 clear working days’ notice has been given to the deputy Clerk ([email protected]) any resident or representative of a business or voluntary organisation operating in Bristol, South Gloucestershire, Bath and North East Somerset or North Somerset Council. Public Access Statements will not be able to be presented at the meeting by the author but will be received by Members and published along with the minutes of the meeting. There is a time limit of 30 minutes for Public Access Reports: reports are identified by the relevant agenda item number. Substitutes (for Committees only): notification of substitutes should have been received from Group Leaders by the deputy Clerk prior to the meeting.

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mailto:[email protected]

mailto:[email protected]

A G E N D A

1. Apologies for Absence 2. Emergency Evacuation Procedures 3. Declaration of Interests 4. Chair’s Business 5. Public Access 6. Annual Governance Statement 7. 2019/20 Draft Annual Statement of Accounts 8. Internal Audit Report – Governance and Assurance 9. Date of next Meeting – 5 November 2020

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1. SUMMARY

The Annual Governance Statement (AGS) 2019/20 sets out a framework by which the Fire Authority's internal systems and processes are directed and controlled. It enables the Fire Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of cost effective services.

2. RECOMMENDATION

1. The Committee is asked to agree the content of the draft AGS on the condition that paragraph 8.2 and 8.3 are updated with the Head of External Audit opinion when published.

2. The Committee is asked to approve the publication of the AGS 2019/20 alongside the final Statement of Accounts when audited.

3. BACKGROUND

3.1. Under the Accounts and Audit Regulations 2015, the Fire Authority is required to

produce an Annual Governance Statement (which subsumes the former Statement on Internal Control).

3.2. The Annual Governance Statement sets out how the Fire Authority will comply with these regulations and will ensure that high levels of governance are provided across the organisation, and is written to provide a clear assessment of how the governance framework has operated over the past financial year.

3.3. Section 7 provides details of the Head of Internal Audit opinion based on the areas

reviewed during the 12 months ending 31 March 2020. Internal Audit have formed the opinion that the Service has an adequate and effective framework for risk management, governance and internal control.

AVON FIRE AUTHORITY 06

MEETING:

Audit, Governance and Ethics Committee

MEETING DATE:

26 August 2020

REPORT OF:

Chief Fire Officer / Chief Executive

SUBJECT:

Annual Governance Statement 2019/20

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3.4. Paragraph 8.2 and 8.3 provides details of the External Audit opinion on the

Statement of Accounts 2019/20, however this is currently highlighted for illustration purposes only. The two paragraphs will require updating once the final accounts are audited and the External Audit opinion is published.

3.5. Section 10 provides details of proposed enhancements to the governance

framework to ensure it remains adequate and effective. 4. CONSIDERATIONS 4.1 Contribution to Key Priorities

It is recognised that effective systems of internal control are key to achieving the corporate objectives of the Fire Authority. In particular:

• Service Plan 2020 – 2023

• Medium Term Financial Plan

• Corporate Directorate Strategies

4.2 Financial implications

It is acknowledged that proficient, robust and effective systems of internal control will result in economic efficiencies and evidence of value for money.

4.3 Legal Implications

Under the Accounts and Audit Regulations 2015, the Fire Authority is required to produce, and approve, an Annual Governance Statement.

4.4 Equality & Diversity Implications

None.

4.5 Corporate Risk assessment

An annual health check of the Fire Authority’s annual governance framework was carried out in February 2020. A copy of the completed annual review of effectiveness and action plan 2019/20 is available to view on the Fire Authority’s website http://www.avonfire.gov.uk.

4.6 Environmental/Sustainability Implications

None.

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http://www.avonfire.gov.uk/

4.7 Health & Safety Implications None.

4.8 Crime & Disorder Implications

None. 5. BACKGROUND PAPERS

a) CIPFA/ SOLACE governance framework ‘Delivering good governance in local government 2016'

b) Service Plan 2020 – 2023 c) Medium Term Financial Plan d) Corporate Directorate Strategies

6. APPENDIX Annual Governance Statement 2019/20 7. REPORT CONTACT Jane Williams-Lock, Corporate Assurance Manager, extension 210.

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Annual Governance Statement

2019/20

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Table of Contents

1 Introduction ....................................................................................................................................3

2 What this Statement will tell you? .................................................................................................3

3 The CIPFA/Solace Governance Framework ...............................................................................4

4 Who is responsible for ensuring good governance? ..................................................................5

5 What is the system of Internal Control? .......................................................................................7

6 Annual review of effectiveness 2019/20 ......................................................................................9

7 The Head of internal audit opinion 2019/20 .............................................................................. 13

8 Significant governance Issues identified in 2019/20 ................................................................ 14

9 Statement of commitment ........................................................................................................... 15

10 Appendix A – Outcomes of the annual review of effectiveness 2019/20 ............................. 16

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1 Introduction 1.1 Avon Fire Authority is responsible for ensuring that it delivers it’s services in accordance with the prevailing legislation, regulations and

Government guidance and that proper standards of stewardship, conduct, probity and professional competence are set and adhered to by all those working for and with the Authority. This will ensure the services provided to the people of Avon are delivered efficiently, effectively and economically, and that public money is used wisely, is properly accounted for and achieves optimum value for money.

1.2 The Authority is committed to continuously improving its services to meet the needs of the public; reviewing and developing what it does; and consulting with the public about its activities on a regular basis. In discharging these responsibilities, the Authority is required to ensure that appropriate arrangements are put in place for the control and management of its business affairs, service performance, finances and for the management of the risks it faces.

1.3 The Annual Governance Statement also meets the requirements of the Accounts and Audit Regulations 2015, which require the Fire

Authority to publish a statement on internal control in accordance with proper practice. Proper practice has been defined as an Annual Governance Statement.

2 What this Statement will tell you? 2.1 The Governance Statement is based upon a baseline assessment using the Chartered Institute of Public Finance and Accountancy

(CIPFA) / Society of Local Authority Chief Executives and Senior Managers (Solace) Governance Framework and is divided into the seven core principles of good governance. Each principle is further broken down into specific activities and projects, of which a manager has overall responsibility for the management and monitoring of performance against each activity.

2.2 The Statement is written to provide a clear, simple assessment of how the governance framework has operated over the past financial year and it will also identify any improvements made and any weaknesses or gaps in the arrangements that require addressing. Its main aim is to provide you with confidence that the Authority is effectively managed, and delivers the services required in accordance with current legislation, our stated aim, objectives and values, and in a way that provides value for money.

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3 The CIPFA/Solace Governance Framework 3.1 The Annual Governance Statement 2019/20 is aligned to the ‘Delivering Good Governance in Local Government Framework’,

published by CIPFA/Solace in 2016. This Framework is intended to assist the Fire Authority in reviewing its governance arrangements and its approach to risk management. The overall aim of the CIPFA/Solace Framework is to ensure a sound system of control is in place and that there is clear accountability for decision making.

3.2 In order to achieve good governance, the Fire Authority will demonstrate that its governance structures comply with the seven core principles of the CIPFA/Solace Framework, these being:

a. Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law. b. Ensuring openness and comprehensive stakeholder engagement. c. Defining outcomes in terms of sustainable economic, social, and environmental benefits. d. Determining the interventions necessary to optimise the achievement of intended outcomes. e. Developing the entity’s capacity, including the capability of its leadership and the individuals within it. f. Managing risks and performance through robust internal control and strong public financial management. g. Implementing good practices in transparency, reporting, and audit to deliver effective accountability.

3.3 Each year the Fire Authority will ensure its governance arrangements are tested against the seven core principles by:

1. Reviewing existing governance arrangements (annual governance analysis and action plan). 2. Developing and maintaining an up-to-date Code of Governance, including arrangements for ensuring ongoing effectiveness

(process, policy and governance review); and 3. Reporting publicly on compliance with the local code on an annual basis on how the Fire Authority has monitored the

effectiveness of its governance arrangements in the year and on planned changes (Annual Governance Statement).

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4 Who is responsible for ensuring good governance? 4.1 The Fire Authority has overall responsibility for ensuring there is a sound system of governance (incorporating the system of internal

control), and that public money is safeguarded, properly accounted for, and used economically, efficiently, effectively and ethically.

4.2 The Fire Authority also has a duty under the Local Government Act 2003 and subsequent Localism Act 2011 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency, effectiveness and ethics. Internal arrangements for ensuring good governance include:

4.3 The Audit, Governance and Ethics Committee will consider and review issues relating to Audit, Governance, Risk Management and

the conduct of Members. Their work includes scrutinising and approving the Statement of Accounts, the Annual Governance Statement, Statement of Assurance and the Corporate Risk Register. The Committee also reviews the Code of Conduct for Members and preparation and training for the new requirements for dealing with investigations into Members' conduct.

4.4 The Performance Review and Scrutiny Committee will consider and review the Fire Authority’s policies, plans and objectives. Their work includes the development and agreement of an annual work programme, scrutinising performance against key indicators, considering reports on the outcome of reviews and making recommendations for improvement, and to monitor aspects of service improvement including health, safety and welfare, equality, training and development.

4.5 The People and Culture Committee will keep under review the Authority’s compliance with its duties under the Equalities Act 2010 and make recommendations to the Authority and/or the Service Leadership Board (SLB) as necessary and the determination of employee related issues.

4.6 The Local Pension Board will assist the Scheme Manager in administering the various firefighter pension schemes by providing governance and the scrutiny of policies, pension documentation, decisions and outcomes.

4.7 The Service Leadership Board and Service Leadership Team is responsible for considering overall operational, financial and performance management within the organisation. It is also responsible for making key decisions to minimise and manage risk; initiating corrective action through the application of new and existing internal control processes.

4.8 The Clerk (as the Monitoring Officer) is responsible for reviewing and revising delegations, protocols, documents and policies to

ensure that they correctly reflect current legislative requirements and meet the needs of the Fire Authority. The Clerk will also implement annual reminders of corporate governance requirements to ensure that they remain visible and raise the visibility and

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accessibility of the role of Monitoring Officer, to encourage Members and staff contact. The Clerk also provides a legal know-how service to the Fire Authority and Service Leadership Board on key matters.

4.9 The Treasurer contributes to the effective leadership, maintaining focus on its purpose and vision through rigorous analysis and challenge. The Treasurer contributes to the effective corporate management, including strategy implementation, cross organisational issues, integrated business and resource planning and risk management. The Treasurer leads the development of a Medium-Term Financial Strategy and the annual budgeting process to ensure financial balance is attained and supports the effective financial governance of the organisation. This role also leads or promotes change programmes within the organisation.

In addition, the Treasurer will ensure the medium-term financial strategy reflects the Fire Authority’s corporate priorities as set out within Our Service Plan including joint planning with partners and other stakeholders.

4.10 External Audit and Fire and Rescue Service Inspection reports and findings will be fully considered by the Fire Authority and where necessary the Service Leadership Board will develop an Improvement Plan which relates to areas identified as requiring improvement. Progress will be monitored by the Corporate Assurance Unit and corrective action or additional measures will be initiated through the Service Leadership Team.

4.11 Internal Audit is an independent and objective assurance service to the Fire Authority who complete a programme of reviews throughout the year, to provide an opinion on the internal control, risk management and governance arrangements of the Fire Authority.

In addition, Internal Audit undertakes a National Fraud Initiative and proactive fraud detection work, which includes reviewing the control environment in areas where fraud or irregularity has occurred. Any significant weaknesses in the control environment identified by Internal Audit are reported to the Audit, Governance and Ethics Committee and the external audit provider, currently Deloitte LLP.

4.12 The Corporate Risk Register is regularly reviewed by the Service Leadership Team and escalated to the Fire Authority as necessary. The current Risk Management policy requires the Corporate Risk Register to be presented to the Fire Authority twice a year.

4.13 The Community Risk Register is the responsibility of the Avon and Somerset Local Resilience Forum (LRF), and provides information on emergencies that could happen within the Avon and Somerset area, together with an assessment of how likely they are to happen and the impacts if they do. The information contained within the Community Risk Register is used to inform AF&RS Corporate Risk Register and the annual Strategic Assessment.

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5 What is the system of Internal Control? 5.1 The Fire Authority is responsible for putting in place a sound system of control, which includes the arrangements for the governance of

its affairs and facilitating the effective exercise of its functions, including arrangements for the management of risk.

5.2 The system of internal control is a significant part of ensuring good governance arrangements are in place and it is designed to manage risk to a reasonable level. However, the arrangements in place cannot completely eliminate the risk of failure, and therefore can only provide reasonable, and not absolute, assurance of effectiveness.

5.3 The overarching system of internal control is made up of a number of policies, procedures and corporate strategies that collectively ensure the key principles of governance are delivered. The Audit, Governance and Ethics Committee is a key component of the Fire Authority’s Internal Control System. Their work includes scrutinising and approving the Statement of Accounts, the Annual Governance Statement, Statement of Assurance and the Corporate Risk Register.

5.4 The work of the Performance Review and Scrutiny Committee includes scrutinising performance against key indicators, considering reports on the outcome of service reviews, making recommendations for improvement, and monitoring aspects of improvement activity including health, safety and welfare, equality, training and development.

5.5 The table below provides a sample of the plans, policies and internal control measures in place:

Governance and internal control arrangements Service Delivery and Service Delivery Support

• Fire Authority Constitution • AGEC • Members Code of Conduct • Scheme of Delegation to Officers • Confidential reporting code and guidance • RIPA policy • GDPR and Information Security Policy • Medium Term Financial Plan • Financial Regulations and Standing Orders

• Service Delivery Strategy • Service Delivery Support Strategy • Risk Reduction and Operational response strategies • Business Continuity Management Policy • Government Security Classifications • Safeguarding Children and Vulnerable Adults • Pandemic Response Policy • Mobilisation Policy • Avon Fire Authority Enforcement Policy

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• Confidential reporting code and guidance • Anti-fraud and anti-corruption strategy and response plan • Risk Management process • Financial Reporting to the Fire Authority • External Audit • Internal Audit

• Technical Fire Safety Risk Inspection Policy • High Absence Level Operating (HALO) Policy • Operational Preparedness Policy

Human Resources and staff policies IT and Communications

• Corporate Services Strategy • External Compliments and Complaints Policy • Data Protection Policy • Freedom of Information Policy • Equality Policy • Harassment and Bullying Policy • Health and Safety Policy • Health Surveillance Monitoring and Support Policy • Workplace fatality guidance • Attendance Management Policy • Conditions of Service • Discipline Policy • Grievance Policy • Health and Fitness Policy • People and Culture strategy

• Access Control Policy • Anti-virus Policy • Copyright Policy • Email Retention Policy • IT Change Control Policy • IT Incident Management Policy • IT Systems Lockdown Policy • IT Systems Acceptable Use Policy • IT Wireless Access Policy • Laptop and Mobile Devices Security Policy • Operating Systems Policy • Remote Access Policy • Removable Media Policy

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6 Annual review of effectiveness 2019/20

6.1 The Authority is required under Regulation 6 of the Accounts and Audit Regulations 2015 to carry out an annual review of the system of internal control to ensure appropriate governance of its affairs and to facilitate the preparation of an Annual Governance Statement. Under Regulation 10, the Governance Statement must be published alongside the Annual Statement of Accounts.

6.2 In order to determine the effectiveness of AF&RS governance arrangements the Chief Fire Officer, the Clerk and the Treasurer provides the primary source of assurance. A wide range of external sources will also provide assurance, including the results of corporate assessments, Her Majesty’s Inspectorate of Constabulary and Fire Service (HMICFRS) inspection, Internal and External Audit (through the annual audit of the accounts and value for money opinion).

6.3 Each year the Corporate Assurance manager carries out a review of the effectiveness of the system of internal control and if necessary, produces an action plan detailing recommendation for improvement. The processes being reviewed in this Statement have operated throughout the whole of the financial year ending 31 March 2020 and have remained in operation up to the date of approval of the 2019/20 Statement of Accounts.

6.4 The Corporate Risk Register (CRR) is a way of identifying significant corporate risks to the organisation, assessing the likelihood and

impact of those risks materialising, and ensuring there are adequate control measures in place to mitigate those risks.

6.5 The CRR is a live document which accurately reflects the level of our current risks, the planned interventions to mitigate risks and progress against these mitigations. The Service Leadership Team (SLT) reviews the CRR each month and, for further scrutiny, examines two risks per month in detail. SLT aim is to ensure cross-functional consideration is applied to risk scores and a Service wide view of interventions and control measures are taken into account when analysing specific risks and planned mitigations. The Audit Governance and Ethics Committee (AGEC) monitors and reviews the CRR every six months as part of the governance arrangements seeking assurance of appropriate management action are in place.

6.6 Our Corporate Risk Management Strategy includes a risk matrix which provides a risk score for the likelihood and the impact of a risk materialising. The table below provides details of how the risk score is determined. For example, if the likelihood of the risk materialising is ‘possible’, and the impact if this did happen is ‘moderate’, the risk score will be 13.

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Catastrophic 19 22 23 24 25

Major 14 17 18 20 21

Moderate 9 12 13 15 16

Minor 4 6 8 10 11

Insignificant 1 2 3 5 7 Impact Likelihood Remote Unlikely Possible Probable Highly

Probable

We use the matrix to identify the category of risk at the Inherent, Current and Planned stages of the risk journey. There are four main options for controlling risk; Terminate, Transfer, Tolerate and Treat. Treat is the most common response when the current risk score is high. By treating the risk, the Fire Authority is able to monitor the controls and actions in place to ensure the risk is reduced to an acceptable level.

Terminate: some risks can only be contained at an acceptable level by terminating the activity. The capacity to address risks in this way is limited, but it could apply to some projects that are no longer considered viable. This may also be used where a risk is determined as no longer current. Transfer: normally involves transfer of a risk or passing of risk to another area of the organisation or to a partner organisation. Tolerate: this applies when it may be appropriate to tolerate the risk at an agreed stage without any further action due to limited ability to mitigate or disproportionate cost of mitigation when compared to benefit. This risk will continue to be regularly monitored to ensure the risk remains at a tolerable level. Treat: the most common response in most cases, achieved by taking action to reduce the probability of the risk occurring or by reducing the impact. This enables the activity to be continued with but with controls and actions in place to ensure the reduction of the risk to an acceptable level.

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6.7 The table below provides details of the top three risks as at 27 March 2020 which have been given a risk action of ‘Treat’.

Risk Description Risk Action Current risk score

Planned Mitigation

CR02 – Risk Reduction Failure to achieve our statutory responsibilities in respect of the Fire and Rescue Services Act, Part 2, Section 6, to: Promote fire safety. Failure to Respond to Statutory Consultations in relation to Licensing and Building Regulations

Treat 24 Increase the establishment in Fire Safety through a variety of methods including Green Book Fire Safety Officers, External Transfers. Employ a part-time consultant trained in Building Regulations to assist with submissions to clear the backlog, provide resilience and training for an initial 6 month period, subject to review. Increased training of operational personnel to carry out greater number of Fire Safety checks, help provide advice and support. Fire Investigation Officers trained to level 5 standard. Introduction of the new IOS standard. Interim Risk Based Inspection Programme to fill void whilst greater piece of work around risk stratification is completed. Address vacancies in Children and Young People (CYP) and Vulnerable Adults (VA) departments. Potential restructure of this work area to facilitate movement of Crew Managers into the unit to fill vacancies

CR08 – Financial Capacity

Failure to have financial capacity to meet Authority and Government objectives.

Treat 23 Mitigating actions have been put in place to address this risk, with the Treasurer having recruited a finance interim to support the Change Management agenda, from June 2020. This interim will assess and project plan the required development of the Finance Team, to help strengthen resilience, to improve financial reporting and to develop a project plan to move towards Devolved Budgets. This work will include process mapping, reviewing policies and procedures, developing sound systems of financial control and supporting the team on addressing key priorities, including outstanding audit

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recommendations. The Treasurer has received approval from SLB and the Authority Chair to recruit a senior interim to support the team on Business Partnering, Business Case financial modelling and appraisal on finance business partnering and Capital Accounting. Despite the impact of COVID and the challenges of remote working, the Finance team has been successful in having the outstanding 2018/19 Final Accounts signed off. The Finance team has also progressed the 2019/20 draft final accounts and these are now being audited by the External Auditors. The team is on track for these accounts to be approved within the statutory deadlines which are:

• Draft Statement of Accounts – 31 August 2020 • Audited Statement of Accounts – 30 November 2020

Key functions such as payroll and payments to suppliers are operating as normal and no back log is anticipated. Review of team capacity, structure, skills and career development pathways informed by future model.

CR16 – Health, Safety and Welfare

Failure to comply with wider statute and regulations applicable to Avon Fire & Rescue Service in addition to our statutory requirements within the Fire services Act and the Fire Safety Order.

Treat 21 Develop and implement holistic health, welfare, wellbeing and fitness strategy (links with CR04). Explore the potential of a secure and anonymous reporting tool/platform for incidents of stress and mental ill-health. Analyse and resolve on-going issues with the recording system OSHENS. Review current OSHENS and FireWatch Systems with the view of introducing an 'interface' between the two systems in conjunction with the wider transformation programme.

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6.8 An annual review of effectiveness based on the seven core principles of the CIPFA/Solace Framework was undertaken in May 2020. The accompanying action plan was developed using information gathered from senior managers and was informed by the following:-

• The views of the External Auditor; • The views of the Head of Internal Audit contained in the Annual Audit report 2019/20; • A review of our performance against our stated objectives and targets as reported to the Performance, Review and Scrutiny

Committee; • A review of the Risk Management process and an internal review of the Corporate Risk Register; • The effectiveness of any changes and improvements made during the last financial year.

6.9 Appendix A provides details of the outcomes from the annual review of effectiveness in 2019-20.

6.10 On the basis of our self-assessment and the annual analysis of the system of internal control we believe our governance

arrangements are adequate and effective. However, we will continue to be proactive in our approach to monitoring the effectiveness of our governance arrangements and will carry out a comprehensive analysis each year.

7 The Head of internal audit opinion 2019/20 7.1 The Head of Internal Audit has formed the opinion that based on the areas reviewed during the 12 months ending 31 March 2020; the

Service has an adequate and effective framework for risk management, governance and internal control. Internal Audit have identified further enhancements to the framework of risk management, governance and internal control to ensure that it remains adequate and effective.

7.2 Completion of Internal Audit actions are monitored by management through the internal action tracking spreadsheet. Internal Audit also do an annual follow up audit to check and verify progress towards the management recommendations and actions. Internal Audit found that reasonable progress has been made in fully implementing internal audit actions, and a number of actions remain in progress towards their forthcoming completion dates.

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8 Significant governance issues identified in 2019/20 8.1 When determining whether an issue is significant and needs to be included within the Annual Governance Statement, the following will

be considered:

• seriously prejudiced or prevented the achievement of a principle objective • resulted in the need to seek additional funding or required a significant diversion of resources from another part of the Fire

Authority's business • had a material impact on the accounts • attracted significant public interest or seriously damaged the Fire Authority's reputation • resulted in formal action being taken by the S112 Officer or the Monitoring Officer • received significant adverse commentary in external inspection reports and which the Fire Authority has yet to address in a

timely manner • been identified by the Audit, Governance and Ethics Committee as significant.

8.2 Our External Auditors have confirmed that they will issue an ………. on the financial statements for the 12 months

ending 31 March 2020. It is also part of External Audit’s role to be satisfied that proper arrangements have been made to secure economy, efficiency and effectiveness in the use of resources (Value for Money - VFM)……..TO BE UPDATED

8.3 The Value for Money opinion, which considers whether arrangements were in place for the whole audit year of 2019/20, does not fully acknowledge the progress made and subsequent completion of the improvement programme in September 2019. Therefore, whilst the Authority acknowledges the value for money opinion; it considers that the steps necessary to strengthen its arrangements have already been completed. This was also confirmed when the then Minister of State for Crime, Policing and the Fire Service (Kit Malthouse MP) wrote to the Fire Authority in October 2019 recognising our success in addressing the recommendations……TO BE UPDATED

8.4 A significant amount of public interest took place during the financial year ending 31 March 2020. A member of the public identified issues relating to the evaluation of Fire Service assets going back a number of years. An independent investigation was conducted, the findings of which were reported to the satisfactions of the Audit, Governance and Ethics Committee at the meeting dated 22 May 2020.

8.5 The 2019/20 Internal Audit review of Financial Controls focused on the end to end process of the 2019/20 budget creation, delivery of

the 2018/19 budget, payments made to suppliers and the controls to adequately manage standing supplier data. Internal Audit issued a partial assurance opinion for this audit as they found that the current control framework for budget management is limited and they also

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noted that the Fire Authority can take only limited assurance over the management of supplier data. A management action plan is in place to address these issues and recommendations,

9 Statement of commitment 9.1 We have been advised of the implications of the result of the 2019-20 review of the effectiveness of the governance and internal control

framework, and of the plans to address identified weaknesses to ensure continuous improvement of the systems in place. We propose over the coming year to take steps to address the above matters to enhance further the Service’s governance and internal control arrangements.

9.2 We are satisfied that these steps will address the need for improvements that were identified in our review of effectiveness and that we will monitor their implementation and operation over the next year and as part of our next annual review of effectiveness.

Chair of Avon Fire Authority: Councillor Donald Davies

Chief Fire Officer/Chief Executive: Mick Crennell

Treasurer (S112 Officer): Danielle Neale

Clerk (Interim Monitoring Officer): David Daycock

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10 Appendix A – Outcomes of the annual review of effectiveness 2019/20

CIPFA/SOLACE Principle A

‘Behaving with integrity, demonstrating strong commitment to ethical values and respecting the rule of law’

Supporting evidence

Improvements planned in 2020/21

1.1 ‘Behaving with integrity’ • A new Avon Fire Authority (AFA) Constitution has been developed and

published (October 2019) which includes the expected behaviours of Members conduct, Member and Officer Relationships and Confidential Reporting Code and Guidance (Whistle Blowing).

• New Values and Behaviour Framework developed and published (October 2019) to set out expectations to our staff and Members

• New Leadership Charter developed and published to set expectations for Avon Fire & Rescue Service (AF&RS) leaders.

• The new People and Culture Committee provides scrutiny for Diversity, Inclusion and Equality matters.

• The Audit, Governance and Ethics Committee (AGEC) keeps under review the Members Code of Conduct and will suggest amendments if necessary.

• Members Code of Conduct: Fire Authority Members are required to adhere to a code of conduct and to a declaration of interest. This ensures that Members are aware of the requirements on them and their conduct and every Member is reminded of this by the Chair at the start of every meeting.

• Declarations of interests made at meetings: any Member in attendance

• External Compliments and Complaints policy due for

review by 1 August 2021.

• Grievance policy due for review 2021.

• Monthly Bulletin includes updates from the Chief Fire Officer (CFO), news, incidents, our people and events.

• Leadership Charter - The Service Leadership Team (SLT) keeps this document under review and will suggest amendments if necessary.

• Bullying and Harassment Policy and toolkit due for review

• Ongoing programme of cultural change with delivery

of a range of actions in the `Making Avon a Better Place to Work’ document.

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who has a personal interest in any matter to be considered at this meeting must disclose the existence and nature of that interest at the commencement of that consideration, or when the interest becomes apparent. A Member having a prejudicial interest must withdraw from the meeting room whilst the matter is considered.

• Minutes show declarations of interest were sought and appropriate declarations made

• Grant of dispensation for Members • Protocol for Member/Officer Relations • Induction for new Members and staff on standard of behaviour expected • Performance Appraisals • Station visits by Officers and Members • External Compliments and Complaints Policy • Grievance Policy • Equalities Awareness training • Harassment & Bullying database. • Whistleblowing • Fortnightly Bulletin • Communicate shared values with Members, Staff, the Community and

Partners. • Shared values will guide decision making • Anti-fraud and corruption policies are working effectively • Up-to-date register of interests (Members and staff) • Up-to-date register of gifts and hospitality • Whistleblowing policy has been made available to members of the

public, employees. partners and contractors • Complaints policy and examples of responding to complaints about

behaviour

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Supporting evidence


1.2 ‘Demonstrating strong commitment to ethical values’ • New Values and Behaviour Framework developed and published • The new People and Culture Committee provides scrutiny for Diversity,

Inclusion and Equality matters. • Performance, Review and Scrutiny Committee (PRSC) scrutiny of ethical

decision making. • Championing ethical compliance at governing body level • Clerk and Chief Fire Officer/Chief Executive (CFO) regularly review and

monitor register of declarations • Politically restricted posts • All relevant partnerships are assessed by the Partnership Manager and

when appropriate escalated to the Head of Risk Reduction or Assistant Chief Fire Officer (ACFO) Service Delivery.

• Ethic / values/ equality training for Members • Bullying & Harassment policy • Equality objectives are published every 4 years. • Report outcomes of training and key indicators to the Fire Authority • Firefighter development programme. • Promotion process • Probation Policy, Support Staff. This policy provides managers and staff

with the references they need to conduct a full probation period, with initial training in attendance, equalities and health & safety.

• Induction checklist and probation review forms. • Contract monitoring. • Procurement process. • Purchase Requisition Authorisation (PRA) electronic compliance system

is in place and Standing Orders updated to include all levels of spend. • Increased use of Blue Light e-procurement system • Policy Production and Management process that ensures each policy

• The Probation Policy due for scheduled review February 2021.

• Update and review the Contract Procedure Rules to further improve the commissioning of procurements for goods and services and appropriate delegation levels.

• Improve the PRA process, to ensure checks are in

place at the most appropriate levels.

• Provide updated procurement process and system training.

• The Policy, Management and Production process will

be reviewed as part of the Transformation Programme to ensure policies, Standard Operating Procedures (SOPs), National Operating Procedures (NOGs), guidance notes and other procedure notes are correctly identified and formatted, whilst ensuring the continuity of the robust processes already in place.

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has a completed and approved Equalities Impact Assessment. • Agreed values in partnership working: • Statement of business ethics communicates commitment to ethical

values to external suppliers • Ethical values feature in contracts with external service providers is

provided on our Internet pages. • Protocols for partnership working include our expectations and our

commitment to ethical values.

Supporting evidence

Improvements planned in 2020-21

1.3 ‘Respecting the rule of law.’ • New AFA Constitution developed and published. • Our Service Plan (2019-2022) was published in by April 2019 following

consultation with the public, business community, and other public sector organisations. A suite of documents underpin the Plan, including the AF&RS Strategic Assessment, Integrated Risk Management Plan (IRMP) Risk Register, Baseline Report, Enhanced Baseline Report and Station Risk Profiles.

• Our Service Plan and Strategic Assessment have been reviewed and a draft Service Plan (2020-2023) has been produced including progress updates and our achievements from 2019.

• Statutory provisions • Effective meetings of the Authority and its sub-committees • Constitution • Budget consultation • The Fire and Rescue Services Act 2004 provides the main legal basis on

which AFA provides its services to the communities we serve. Under ‘the Act’ the Secretary of State must prepare a National Framework setting out priorities for English fire and rescue authorities.

• The National Framework states that every fire and rescue authority must

• Our annually refreshed Service Plan will be published.

• The Transparency Code page on the website Intranet is regularly reviewed and reminders issued to staff when information is required to be updated.

• Regular monitoring will continue to take place to

ensure compliance with the code.

• Trade Union Facility Time clarified and added to the transparency page.

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assess all foreseeable fire and rescue related risks that could affect their communities, put in place arrangements to prevent and mitigate these risks and produce an IRMP/Service Plan.

• The IRMP/Service Plan is prepared in consultation with the public, business community, and other public sector organisations.

• Our Service Plan, Strategic Assessment and Performance Report are all available via the website.

• Transparency Code • The Audit, Governance and Ethics Committee is a public meeting with its

Terms of Reference, agenda and minutes published on the AF&RS Website.

• Anti-Fraud and Corruption Policy in place • Participate in the National Fraud Initiative • Work of Internal Audit

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CIPFA/SOLACE Principle B

‘Ensuring Openness and comprehensive stakeholder engagement’

Supporting evidence


2.1 ‘Openness’

• Consultation with staff through Staff Engagement Network, Research and Development Groups.

• New AFA Constitution developed and published including Terms of Reference for Committees.

• New Leadership Charter was developed and published setting out decision making practices

• Enhanced social media presence with quality and engaging content, through further training with teams.

• Reduction of the number of committees from five to three as part of the Constitutional Review Working Group with Terms of Reference reviewed.

• External and Internal Annual Reports published on the website. • Freedom of Information Act publication scheme and Code of Practice • Local Government Transparency Code • Privacy Notices • Authority's goals and values are contained in Our Service Plan • Inspection reports published on the website • Induction course available for new members and all members are made

aware of the Service’s documents and procedures regarding: o Codes of conduct o Whistleblowing o Compliments and complaints o Anti-fraud and corruption

• Complete work on a revised recognition and facility

time agreement for all the unions and add trade union facility time information to the website pages

• Regular review of Privacy notices and updates as required.

• Consultation with staff through staff engagement

network will continue.

• The Publication Scheme pages are regularly reviewed, and reminders will be issued to staff when information is required to be updated.

• The Transparency Code page on the website is regularly reviewed and reminders will be issued to staff when information is required to be updated.

• Our annually refreshed Service Plan will be

published. • Evaluate the consultation process to identify return

on investment and any appropriate amendments to our strategy/plan for stakeholder engagement

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• In addition, AF&RS has a Community Risk Reduction Strategy which is published on our AF&RS Website.

• Budget Consultation • The public are consulted on the main improvement plan (Our Service

Plan). This involves consultation groups in each of the four unitary areas. • To increase communication with particular target groups, advocates

have now been appointed. Station watches have also been given particular target groups to encourage communication at the local level.

• Documents detailing levels of performance (Performance Report, Annual Accounts, etc.) are freely available.

• The AFA monitors the level of service delivery to the public via post-incident surveys conducted by Opinion Research Services (who have a national Fire & Rescue Service framework contract). The Authority is also audited annually by the Audit Commission. Specific surveys on service delivery are conducted bi-annually.

• Finally, the AFA’s prime public responsibility is to reduce death and injury from fire and other emergencies. That is the ‘service’ that is offered and is measured, monitored and managed through a suite of Performance Indicators

• Meetings of the AFA • Any exempt reports noted • Record of decision making and supporting materials • Equalities Committee provides strategic direction and accountability to

the Fire Authority. • Senior officers are responsible for the day-to-day performance of the

organisation. They report to elected members who are accountable to the public. Various mechanisms are used as have already been outlined.

• Use of Consultation feedback

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Supporting evidence


2.2 ‘Engaging comprehensively with institutional stakeholders’

• Communication strategy • Budget Consultation • Collaboration Strategy

• Our Service Plan 2020 – 2023 was published on 1st April 2020 and was a refresh and update of Our Service Plan 2019 – 2022, which was prepared in consultation with key stakeholders. Stakeholders were identified and grouped as

o Level 1 - Staff, Avon Fire Authority Members, Rep Bodies (Fire Brigades’ Union (FBU), Fire and Rescue Services Association (FRSA), Unison, Unite) and the Staff Engagement Network.

o Level 2 – Local communities, Avon and Somerset Police & Crime Commissioner, local businesses, local authorities and bordering fire and rescue services.

o Level 3 – Avon & Somerset Constabulary, South Western Ambulance Service NHS Foundation Trust and Avon & Somerset Local Resilience Forum members.

o Level 4 – Local media and local Members of Parliament (MPs).

• Register of stakeholders with whom the Authority engage and for what purpose.

• Joint Consultative Committee (JCC) constitution, Fire Brigades Union (FBU) negotiation committee constitution.

• Health & Safety Committees for staff at all levels to be able to contribute to the decision making process.

• IT feedback surveys enable improvements to be made to the IT infrastructure.

• Enhance social media presence with quality and engaging content, through further training with teams.

• Delivering audience driven, behaviour change campaigns to educate on automatic fire alarms, fire safety, water safety, road safety and arson.

• Review bulletin format and continue to publish.

• Introduce fortnightly blogs from SLB to be sent to the organisation.

• Develop and launch a new Authority website.

• Actively seek and deliver consultation with our

communities to ensure the Service meets the needs of local people.

• Evaluate the consultation process to identify return on investment and any appropriate amendments to our strategy/plan for stakeholder engagement.

• Partnerships and Collaborative working agreements to be reviewed together with further work on evaluation of partnership working.

• To continue to liaise with all sections of the service to enable further contributions.

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• Budget consultation process extended to all staff • Partnership framework • Avon Fire Authority is committed to forming or joining Community Safety

partnerships that assist us in achieving our organisational priorities. Community Safety Partnerships are established on a regular basis and where appropriate this may include an element of funding which would be recorded and monitored through an official partnership agreement.

• The Framework document is currently under review

and will ensure that partnerships consider: o trust o a shared commitment to change o a culture that promotes and accepts

challenge among partners

Supporting evidence


2.3 ‘Engaging stakeholders effectively , including individual citizens and service users’

• Senior officers are responsible for the day-to-day performance of the organisation. They report to elected members who are accountable to the public. Various mechanisms are used as have already been outlined.

• The public are consulted on the main improvement plan (Our Service Plan) of the organisation. This consultation has been reviewed and improved over the last three years. It now involves consultation groups for the general public, business community and other public services in each of the four unitary areas.

• Documents detailing levels of performance (Best Value Report, Annual Accounts) are distributed to key stakeholders and made available physically and via the website.

• Record of public consultations • AF&RS consults with both internal and external stakeholders in a

number of ways. External consultation includes:

o Publishing public consultation documents o Publishing transparency documents and information

o Publishing budget and expenditure information

o Communications strategy

• Station and department visits will continue with the aim of talking about the values, social media and the media.

• Implementation of the Corporate Identity Communications Strategy which aims to strengthen the brand identity of both AF&RS and the Authority.

• New Operational response strategy, station risk profiling and targets for intervention in each station area documented.

• Website to be reviewed, in consultation with local people and staff and new website to be developed.

• Bulletin to be reviewed to ensure it continues to meet the needs of staff.

• Enable more opportunities for the public to have their say on their fire and rescue service

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o Review of partnerships in 3 of the 4 Unitary areas and presented to unitary managers

o Joint strategic needs assessment

• We publish all of our major documents via the website. We hold public consultation as already mentioned. We hold two major staff consultation sessions. One on the details of the IRMP, the other a more general consultation on staff perceptions. The authority published a bi-weekly bulletin to keep staff and stakeholders informed.

• Consultation of Safeguarding Annual Plans for the 4 Unitary areas and attendance at meetings / working groups. Consultation with Health and Wellbeing boards.

• Minutes of Crime & Disorder Reduction Partnership’s (CDPR) and equivalent meetings. Task and finish groups and Safeguarding boards.

• Campaigns both national and local.

• The Partnership Manager meets regularly with other FRSs to ensure consistency and sharing of Best Practice.

• Joint strategic needs assessment CIPFA SOLACE Principle C

‘Defining outcomes in terms of sustainable economic, social and environmental benefits’

Supporting evidence


3.1 ‘Defining outcomes’ • Vision, Mission and Values along with Service Priorities is used as a

basis for corporate and service planning • Our Service Plan 2020-2023 • Partnership Governance arrangements followed guidance from the Audit

Commission.

• The annually refreshed Service Plan will be produced and published

• Deliver against Our Service Plan objectives

• Undertake an annual review to evaluate progress

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• Due to changes in the environment we work we have sought to operate less formally seeking to create a more streamlined referral mechanism primarily for Home Fire Safety Visits (HFSV).

• We will ensure that a partnership agreement or memorandum of understanding is in place for any partnership where appropriate.

• Community engagement and involvement. • Corporate and Service plans • Monthly performance figures are produced and reported to the Fire

Authority. The Fire Authority papers also highlight activities in key areas. Additional scrutiny is provided by elected members in the Performance Rick and Scrutiny Committee

• We publish a Final Accounts report that contains full details of the Authorities financial affairs.

• Performance trends are established and reported upon • Risk Management Protocols • Performance information is produced monthly and reported to the local

managers, the Service Leadership Team, the Performance & Risk Management Forum (which includes Members) and the Fire Authority. Performance levels are challenged and remedial actions discussed.

• As an emergency service and a statutory member of the Local Resilience Forum, the Authority has robust resilience and business continuity plans in place.

• Fall back control at Kingswood. Disaster recovery. Section 13 & 16 arrangements. Membership of Local Resilience Forum (LRF).

• Capital replacement programme. Compliments and complaints procedures. Annual Audit Letter.

• Measure performance against Performance Indicators on a monthly basis.

• Performance management Strategy details the actions we take to rectify poor performance.

• Full participation in the HMICFRS Inspection programme and implementation of improvements accordingly.

• An agreed set of quality standard measures for each service element and included in service plans

• Quality of Service Surveys; we undertake customer satisfaction surveys

against the Plan in order to inform/amend/ confirm year 2 (2020/21) objectives in line with our ongoing assessment of risk.

• A review of the Corporate Services Strategy 2019-2022, Service Delivery Strategy, and Service Delivery Support Strategy will be undertaken.

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of those who use our service. Annual benchmarking report on our results produced by Opinion Research Survey (ORS).

• Annual benchmarking report compares us to other FRSs.

Supporting evidence


3.2 ‘Sustainable economic, social and environmental benefits’

• Capital investment is structured to achieve appropriate life spans and adaptability for future use or that resources (e.g. land) are spent on optimising social, economic and environmental wellbeing.

• Capital programme • Capital investment strategy • Discussion between Members and Officers on the information needs of

Members to support decision making • Record of decision making and supporting materials • Record of decision making and supporting materials • Protocols for consultation • Efficiency programmes, Effective decisions, • Community benefits, IRMP progress • Evaluation of Partnerships • IT to drive process change and access • Environmental impacts • Procurement policy template • Contract monitoring • Protocols ensure fair access and statutory guidance is followed

In addition to the publishing of the minutes of our public meetings, we comply with the Local Government Transparency Code published by the Department for Communities and Local Government in May 2014 and updated in 2015.

• Feasibility study of all sites suitable for additional renewables (non-FIT eligible)

• Finalisation of energy efficiency works

• Further development of the Environmental Management System to be compliant with ISO14001 standards

• Implementation of identified options for fuel efficiency and carbon reduction in AF&RS’ vehicle fleet, including telematics in ancillary fleet, electric vehicles where economically effective and install of electric vehicle charging infrastructure

• Targeting low cost and impact “in use” for further New Build and Refurbishment projects using the Energy Performance in Buildings Regulations DEC A standard, BREEAM (where applicable) and Renewable Generation Planning Guidance as design requirements and targets.

• Finalise Gap Analysis of the Environmental Protection NOGs. Alongside this, identification of

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The Code sets out key Principals for local authorities in creating greater transparency through the publication of public data. The Code sets out a mandatory and recommended set of data for publication which can be found on our website. The data subjects listed below are taken from the Code.

• Expenditure exceeding £500 • Procurement and credit card transactions • Procurement information and waste disposal contracts • Local Authority land and premises • Organisation Charts • Trade Union facility time • Senior salaries and pay Multiple • Constitution • Fraud • Gifts and Hospitality • Grants to voluntary, community and social enterprise organisations

improvements to operational procedures, training, equipment etc to ensure environmental protection at incidents and during training events.

• Service Level agreement with key outcomes for community engagement with Stand Against Racism and Inequality will be developed.

• Complete work on a revised recognition and facility time agreement for all the unions and add trade union facility time information to the website pages

• Regular monitoring takes place to ensure compliance with the code.

• Avon Fire and Rescue Service to publish more information on the waste disposal contracts.

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CIPFA SOLACE Principle D

‘Determining the interventions necessary to optimise the achievement of the intended outcomes’

Supporting evidence


4.1 ‘Determining interventions’ • Discussion between Members and Officers on the information needs

of Members to support decision making • Agreement of information that will be provided and timescales • Option appraisals • Financial Strategy • Monthly performance figures are produced and reported to the Fire

Authority regularly. The Fire Authority papers also highlight activities in key areas. Additional scrutiny is provided by Elected Members in the Performance Review & Scrutiny Committee.

• We publish an annual performance report. This report is approved by the Fire Authority. We produce a separate target paper which is also approved by the SLB.

• We publish a Final Accounts report that contains full details of the Authorities financial affairs including the Treasurers foreword, Budget reports, Medium Term Financial Plan (MTFP)

• Members sit on scrutiny committees

• Induction for any new Members of the Fire Authority

• Ongoing Member development programme

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Supporting evidence


4.2 ‘Planning interventions’ • Calendar of dates for developing and submitting plans and reports that

are adhered to • Communications Strategy • Evaluation of quality assurance process for Children and Young

People / Technical Fire Safety / Vulnerable Adults (CYP/ TFS/ VA). • Collaborative Working Framework and Operational Guidance 2017 -

2020 • Risk Management protocol: –Service Plan 2020-23 • Planning protocols • Key Performance Indicators (KPIs) have been established and

approved for each service element and included in Our Service Plan and are reported upon regularly:

• We have a series of management reports available to managers, in addition to monthly target trackers on-line reports.

• Reports include detailed performance results and highlight areas where corrective action is necessary

• Evidence that budgets, plans and objectives are aligned. • Budget guidance and protocols, medium term financial plan.

• Review of key stakeholders and improved understanding of our key audiences.

• Explore opportunities to collaborate with partner agencies including the police.

• Review of partnerships with agencies will be undertaken to ensure our joint objectives are being met.

• This will be included in the review of the Collaborative Working Framework and Operational Guidance 2017-2020

• A review of the business planning process will be undertaken in 2020 and a new planning calendar introduced.

• KPI will be reviewed

• The process of aligning the MTFP to the IRMP will be improved and formalised, in line with HMICFRS recommendation.

The HMICFRS report and inspection action plan can be viewed by accessing the following links:

https://www.justiceinspectorates.gov.uk/hmicfrs/publi cations/frs-assessment-2019-20-avon

https://www.avonfire.gov.uk/documents/category/214-hmicfrs-inspection

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https://www.justiceinspectorates.gov.uk/hmicfrs/publi%20cations/frs-assessment-2018-19-avon




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Supporting evidence


4.3 ‘Optimising achievement of intended outcomes interventions’

• Feedback surveys and exit/decommissioning strategies • Budgeting guidance and protocols • Financial Strategy • Liaison with voluntary and community sectors ensures that social

value is considered on a regular basis. • Service Plan demonstrates consideration of Social Value

• Improved Financial Control

• Strengthened Budgetary Control Framework

• Development of Finance Business Partnering

• Transitional Programme towards introducing

Devolved Budgets

CIPFA SOLACE Principle E

‘Developing the entity’s capacity, including the capability of its leadership

and the individuals within it’

Supporting evidence


5.1 ‘Developing the entity’s capacity’

• Regular reviews of activities, outputs and planned outcomes: o Agreed annual targets o Local Performance Indicators o Monthly target updates o Absence Monitoring o Personal Development Review (PDR) completion monitoring

• Action within improvement plan: “Consult with other fire and rescue services – and other high performing non-fire sector organisations – to assess good/best practice in the presentation of performance data to facilitate effective decision making”

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o Health and Safety target monitoring o Incident monitoring

• Protocol for Member/officer Relations • Effective report writing • Chair’s Briefing reviews agenda for each AFA meeting • Member/Officer Committees • Chair/Chief Fire Officer roles on the website. • Utilisation of research and benchmarking exercise with:

o Our family group o Chief Fire Officers Association (CFOA) Fire Statistics Monitor o CFOA Occupational Health group

• Annual reports to the Fire Authority • Legislation under the Localism Act 2011 now requires the Authority to

publish details of Senior officer pay on the website. • Standing Orders and Financial Regulations • Employees Pay Structure • Performance information is produced monthly and reported to the local

managers, the SLT, the PRSC (which includes Members) and the Fire Authority. Performance levels are challenged and remedial actions discussed.

• Measure performance against Local Performance Indicators on a monthly basis.

• Consultation on budget. Initial budget preparation process for Revenue and Capital linked to Authority objectives

• Effective operation of partnerships which deliver agreed outcomes • Partnership Governance and Guidance Framework • Partnership agreements available to Elected Members • All risk reduction partnerships are assessed by the Partnership

Manager and escalated where appropriate to the Head of Risk Reduction or ACFO Service Delivery. A partnership agreement is completed by the sponsoring officer and then reviewed by the Partnership Manager.

• Effective operation of partnerships which deliver agreed outcomes. • Organisational development plan.

• Hay Evaluation Advisor appointed and will assist the HR team with reviewing the pay and grading process for support staff.

• Intranet updated and work to look at including

partnership register on the internet is underway, but is a longer term objective

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Supporting evidence


5.2 ‘Developing the capability of the entity’s leadership and other individuals’

• Welcome briefing and Members Induction Pack. The induction programme is being constantly updated to reflect the changing environment – particularly the transformation programme.

• S112 and Monitoring Officer appropriately qualified and with high levels of experience.

• Standing Orders and Financial Regulations made available to Authority.

• Internal meetings and inclusion on all major issues. • Briefing to Members on statutory roles and governance • Briefing to staff on statutory roles and governance • A Financial Services Contract with Bristol City Council provides access

to range of financial support services and resources • Strong regional and national finance support networks provide good

resource on financial issues. • Financial Regulations are published online and integrated into internal

procedures. • Service Leadership Board • Exec Qualification • Members are appointed by the Local Authorities to Avon Fire Authority • Job descriptions. Each post within AF&RS has a job description for

support staff and a role map for uniformed officers. Each appointment is made using fair selection practices that measure candidates against the criteria for each post. This then, ensures we have the right people with the right skills, qualifications and experience for the role. Staff are further supported by policies, guidance notes, training courses including bespoke online learning and courses, alongside corporate and business plans to ensure they have the support they need to carry out their roles.

• New members training to be carried out for new Fire Authority appointees.

• Continuing training to be provided for existing elected members

• Ongoing review of corporate staff job descriptions, specifically as posts become vacant or when new posts are identified. These form the basis of the recruitment & advertising process, shortlisting and interview decisions.

• The review of the Promotion and Development policy and process/pathways ensure appointment decisions are based upon demonstration of the essential skills, knowledge and experience required for each job role.

• Staff engagement network and station based visit to all work places.

• Rolling out XVR level one IC assessments peripatetically particularly to RDS stations and develop IC level two assessment scenarios for FDO’s

• Member training events to continue into 2020/21.

• Software will be identified to provide better analysis of performance information made available to members.

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• Chief Executive and leader pairings have considered how best to establish and maintain effective communication

• Standing Orders and Financial Regulations which are reviewed on a regular basis, when any legal and organisational changes are considered and acted on. These are reviewed annually.

• The Audit, Governance and Ethics Committee (AGEC) keeps under review and will suggest amendments if necessary.

• Protocol for Member/Officer relations: roles of Chairman and Chief Fire Officer published on external website

• Incident Command Assessments for all operational managers. (Two year programme) Promotion Process

• PDRs. (Two year programme.) • MOST knowledge standards have been written for flexi officers and

frequency of repeats set. • Incident command assessments are carried out at South West

Command and Development Centre (SWCDC) on a two- yearly basis; other specialist skills are assessed through peer assessment within that speciality.

• Regular briefings meetings for members • Access to update courses/ information briefings on new legislation • Induction programme • Personal development plans for members and officers to:

o scrutinise and challenge recognise when outside o expert advice is required o promote trust o work in partnership lead the organisation o act as a community leader

• Efficient systems and technology used for effective support • Personal Development Review (PDR) process • Arrangements for succession planning: • Strategic Workforce Development Plan Update -Draft Fire & Rescue

People Strategy 2017/22 • Residents Panels • Stakeholder forum terms of reference • Strategic Partnership frameworks

• The Service will resource a dedicated Transformation Team to build on the work undertaken by the Internal Improvement Team in response to the Baker Report focusing on digitisation and streamlining of policies and processes

• Continue to build positive relationships with our

HMICFRS Service Liaison Lead via ongoing engagement activities

• Regular monitoring of progress against the full

Inspection Action Plan to be undertaken by SLT; Member-led scrutiny to be undertaken by the Performance Review and Scrutiny Committee.

• A revisit by an inspection team from HMICFRS will

be undertaken in 2020/21 to monitor progress against our published HMICFRS Inspection Action Plan.

• Cultural change is a journey and as such we are

committed to implementing our draft framework which outlines our journey and principles of cultural change. The document is called “Making Avon Fire & Rescue Service a better place to work” and it focuses on the key findings of the cultural review

• Review policies and procedures and implement

lessons learnt and best practice/ learning from national events.

• Ongoing policy reviews based upon priorities arising

from HMICFRS and Cultural Review.

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• HMICFRS Report • HMICFRS Action Plan • LGA Peer Review • AFA Meeting Papers 26/03/19 • Cultural Review Reports • Training and Development Plan • Staff development plans linked to appraisals • Implementing appropriate human resource policies and ensuring that

they are working effectively • Human Resource policies:

o Alcohol and Substance Misuse Policy o Probation Policy support staff o Secondary Contract Policy o Secondary Employment Policy Wholetime Personnel o Severe Weather Policy o Smoking Policy o Maternity Paternity and Adoption Leave Policy o Special Leave Policy o Support Staff o Grievance Policy o Continual Professional Development Continuous Personal

Development (CPD) Policy o Dyslexia Policy o Flexible working policy and procedure o Health and Fitness Policy

• Health & Safety and Human Resources Policies:

o Health Safety and Welfare Policy o Monitoring and Support Policy o Workplace fatality guidance o Health Surveillance Policy

• There is a review process for all policies. Stakeholders are involved in the review of policies to ensure they reflect improvements and changes made. This includes all aspects of health & wellbeing.

The HMICFRS report and inspection action plan can be viewed by accessing the following links:

https://www.justiceinspectorates.gov.uk/hmicfrs/publi cations/frs-assessment-2019-20-avon


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CIPFA SOLACE Principle F

‘Managing risks and performance through robust internal control and strong public financial management’

Supporting evidence


6.1 ‘Managing Risk’ • The management of the Corporate Risk Register has been fully

reviewed and is updated each month at Service Leadership Meetings, followed by updates to each Audit Governance and Ethics Committee meeting.

• The template for the Corporate Risk Register is being adopted for risk recording and planning within individual departments such as Property Services.

• Our Corporate Risk Strategy covers a three year period, but is reviewed annually.

• Performance Review and Scrutiny Committee includes Elected Members from each of the political parties. They are provided with monthly performance updates and encouraged to challenge areas of under-performance. Responsible officers have to answer questions and provide solutions to overcome poor performance. The results of the Performance Review and Scrutiny Committee are presented to the full Fire Authority.

• Performance Review and Scrutiny Committee scrutinises and challenges poor performance on behalf of AFA. PRSC terms of reference detail exactly how this is done.

• Risk management strategy/ policy formally approved and adopted and reviewed and updated on a regular basis.

• Equalities Impact Assessments • Code of conduct • Register of Interests

• Full review of the Corporate Risk Register on

SharePoint.

• Continue to review of corporate risks on a monthly basis at SLT (Minuted)

• The integration of Risk Assessments onto OSHENS

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• Gifts & Hospitality Register. • Annual reminder to staff in Bulletin from the CFO • Complaints policy published both externally and internally. All

complaints are analysed to identify trends. • Risk Management Protocol is Managed by our Health and Safety

Department who monitor and support relevant managers to review all risk assessments in line with their required review periods.

• Corporate Risk Register is scrutinised by SLT on a monthly basis. New Risks are discussed and approved by SLT.

• Business risks are identified and managed by local managers. • All Fire Authority papers include a mandatory summary of risk. • A summary of the Corporate Risk Register (CRR) progress is tabled to

the AGEC at each meeting.

Supporting evidence


6.2 ‘Managing Performance’ • Performance map showing all key activities have performance

measures • Benchmarking information • Cost performance (using inputs and outputs)

• Calendar of dates for submitting, publishing and distributing timely

reports that are adhered to • Discussion between Members and Officers on the information needs

of Members to support decision making • Publication of agendas and minutes of meetings • Agreement on the information that will be needed and timescales • The role and responsibility for scrutiny has been established and is

clear • Agenda and minutes of scrutiny meetings

• KPIs will be reviewed as part of the planning process

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• Evidence of improvements as a result of scrutiny • Terms of Reference • Membership • Financial standards, guidance • MTFP • Regular monitoring reports

Supporting evidence


6.3 ‘Robust Internal Control’ • Fire Authority Constitution • Scheme of Delegation • Financial Regulations • Contract Procedure Rules • Risk management strategy/ policy has been formally approved and

adopted and is reviewed and updated on a regular basis • Deliotte Final Report to the AGEC dated 31 March 2020 • Internal Audit – Annual Audit Plan 2019/2020 • 2019/2020 Audit Reports • As a single purpose Fire Authority we do not have the wide ranging

scope of a local authority. In our case the Audit Committee role is effectively carried out by the Fire Authority and Special Purposes Committee.

• Register of Interest with Contractors • Compliance with the Code of Practice on Managing the Risk of Fraud

and Corruption (CIPFA, 2014) • Participation in the National Fraud Initiative • Code of conduct • Register of Interests • Gifts & Hospitality Register. • Annual reminder to staff in Bulletin from the CFO

• RSM produced a 3-year Audit Plan which was

approved by the SLT.

• 2020/21 Audit reports will be circulated to the SLT and AGEC for consideration and approval.

• AGS 2019-2020 will be produced and circulated to

the AGEC for approval.

• Continue to review of corporate risks on a monthly basis at SLT.

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• Annual Governance Statement • Effective internal audit service is resourced and maintained • Audit Committee complies with best practice. See Audit Committees

Practical Guidance for Local Authorities and Police (CIPFA, 2013) • Terms of Reference, Membership, Training.

Supporting evidence


6.4 ‘Managing Data’ • Data management procedures • Designated Data Protection Officer • Designated data protection coordinator. • Senior Information Risk Officer • Data protection policies and procedures:

o Data protection policy o Freedom of information policy o Information security policy o IT policies o Security Incident Management Policy o Data Protection Impact Assessment (DPIA) Guidance

• Data Protection Impact Assessments (DPIA) • Contracts • GDPR and IT Security Internal Audit • Data sharing register and agreement • Data Protection Impact Assessments (DPIAs) • Data quality procedures and reports • Data validation procedures

• Data Protection and Information Security e-learning

will go out for procurement.

• Further training to be developed for specific roles where data is a critical part of the role such as HR and Information Asset Owners.

• Training will be provided to the Senior Information Risk Officer.

• DPIA’s to be completed for all new data shares, projects, policies to assess the risk and identify issues

• Complete work with Suppliers processing personal data to ensure these suppliers have a data processing agreement and schedule of processing as part of their contract.

• Implement new template, review and update existing agreements where personal data sharing has been identified.

• DPIA’s to be completed for all new data shares to

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assess the risk and identify issues

• Update registers in line with changes as agreements are reviewed.

6.5 ‘Strong public financial commitment’ • Financial management supports the delivery of services and

transformational change as well as securing good stewardship • Budget monitoring reports • Medium Term Financial Plan • Final Accounts • Scheme of Delegation • Financial Regulations

• Improved Financial Control

• Strengthened Budgetary Control Framework

• Development of Finance Business Partnering

• Transitional Programme towards introducing Devolved Budgets

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Supporting evidence


CIPFA SOLACE Principle G

‘Implementing good practices in transparency, reporting

and audit to deliver effective accountability’

Supporting evidence


7.1 ‘Implementing good practice in transparency’ • Annual Report • External and Internal Audit Annual Reports. Value for Money Audits. • Level of Council Tax. • Performance Information • Spending within Budget. • Medium Term Financial Plan (MTFP) • Well managed capital programme • Timely capital programme • Unit costs – reasons for difference • Information on needs of services and their impact. • Transparency Code • Fire Authority’s Governance and Ethics Committee (AGEC), a public

meeting with its agenda and minutes on the AF&RS Website. Its terms of reference are:

o To oversee all audit issues on behalf of the Fire Authority. o To consider all internal and external audit reports received,

review management action plans and monitor their implementation.

o To agree the internal and external audit plans.

• Complete work on a revised recognition and facility

time agreement for all the unions and add trade union facility time information to the website pages.

• Regular monitoring of the Transparency page on the external website to ensure compliance.

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o To scrutinise and approve the Statement of Accounts and bring any matters of concern to the Fire Authority.

o To make recommendations to the Fire Authority on the appointment of internal and external auditors.

o To keep under review the Fire Authority’s arrangements for whistleblowing and the prevention and detection of fraud, money laundering, corruption and bribery.

• We have a robust policy production and management process that ensures each policy has a completed and approved Equalities Impact Assessment and has considered GDPR. Officers are informed when policies they are responsible for become due for review.

Supporting evidence


7.2 ‘Implementing good practices in reporting’

• Formal annual report which includes key points raised by external scrutineers and service users' feedback on service delivery

• Annual financial statements • Appropriate approvals • Annual Governance Statement • Standing Orders and Financial Regulations. • Reports to FA and relevant working groups, including Partnership

Forum. • Reviewed on an annual basis and updated for approval by the Fire

Authority. • There are sections such as Finance, Property Services, Corporate

Improvement, Corporate Assurance and Human Resources available to offer advice to those making decisions.

• AGS produced each year and presented to the

AGEC for approval

• AGS 2020-2021 will be produced and presented to the AGEC for approval

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Supporting evidence


7.3 ‘Assurance and effective accountability’

• Our Service Plan and supporting strategies • Internal Audit recommendations have informed positive improvement • Audit, Governance and Ethics Committee, • Performance, Risk and Scrutiny Committee • Compliance with the Chartered Institute of Public Finance and

Accountancy (CIPFA) Statement on the Role of the Head of Internal Audit (2010)

• Compliance with Public Sector Internal Audit Standards • Annual Governance Statement • Community Safety Strategy

• Audit reports are circulated to the SLT and AGEC for consideration and approval

• Regular monitoring of audit recommendations takes place and reported to the AGEC twice a year.

• AGS produced each year and presented to the AGEC for approval

• Implementation of a new Community Safety Partnership agreement for all HFSV agencies

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AVON FIRE AUTHORITY

07 MEETING:


MEETING DATE:

26th August, 2020

REPORT OF:

The Treasurer Chief Fire Officer / Chief Executive

SUBJECT:

2019/20 draft Annual Statement of Accounts

1. SUMMARY

This report provides Members with the draft 2019/20 Statement of Accounts.

2. RECOMMENDATIONS The Committee is asked to review and approve the draft 2019/20 Statement of Accounts to enable the Fire Authority to meet its Public Notice requirement, which is required on or before the first working day of September 2020.

3. BACKGROUND 3.1 Under the Accounts and Audit Regulations 2015, the Fire Authority is required

to produce an Annual Statement of Accounts.

3.2. Due to COVID, the Ministry of Housing, Communities & Local Government has extended the deadlines for the production and audit of Statutory Accounts and the associated dates for public inspection. The publication date for final audited accounts has been moved to the 30th November 2020 and the Public Notice requirement has been extended to on or before the first working day of September 2020.

3.3. The interim Treasurer and the Chief Fire Officer presented the 2019/20 Revenue and Capital Programme outturn financial results to the Fire Authority meeting on the 12th May 2020. These were approved by the Fire Authority.

3.4. From mid-May to the 30th June, the finance team have been working very hard to complete work on the draft Statement of Accounts, to enable the External Audit to commence on the 6th July. This work has included some final adjustments to the outturn financial results shared with the Fire Authority in May 2020 and these can be viewed in Appendix 2.

50

3.5. The External Auditors have undertaken the first phase of their audit over two

weeks in July 2020 and will be completing the rest of their audit from the 14th September for three weeks. The Finance Team will continue to work closely with the External Auditors.

3.6. The attached document contains the draft 2019/20 Statement of Accounts, together with a narrative report. This narrative report gives an overview on the role of Avon Fire Authority, an overview of the Governance Structure and key financial issues arising from the Statement of Accounts. The Annual Governance Statement is contained within a separate report to the AGEC Committee.

4. CONSIDERATIONS

4.1 Contribution to Key Policy Priorities The Statement of Accounts forms a key part of the financial performance of the Fire Authority and its financial capability to deliver its services.

4.2. Financial Implications The attached draft Accounts detail all of the 2019/20 financial information. 4.3. Legal Implications

The Fire Authority must budget within its means and comply with relevant legislation.

4.4. Equality & Diversity Implications

None identified. 4.5. Corporate Risk Assessment

An annual audit is undertaken by External Audit each year, to ensure there are no material misstatements in the Statement of Accounts.

4.6. Environmental/Sustainability Implications The Statement of Accounts contains a section in the narrative report outlining the Fire Authority’s progress in reducing its CO2 emissions and other environmental initiatives.

4.7. Health & Safety Implications

None 4.8. Crime & Disorder Implications

None 4.9. Data Protection Implications

None

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5. BACKGROUND PAPERS The full set of the draft 2019/20 Statement of Accounts are attached and once approved will be available on the Fire Authority’s web-site.

6. APPENDICES

Appendix 1: Draft Statement of Accounts Appendix 2: Reconciliation to Accounts (Lynne to provide)

7. REPORT CONTACT

Lynne Lamb. Finance Manager.

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Statement of Accounts and Narrative Report 2019 - 2020

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APPENDIX 1

53

Avon Fire Authority

Statement of Accounts 2019/20

Contents Page

Narrative Report 1 – 30

Statement of Responsibilities for the Statement of Accounts 31

Core Financial Statements

Comprehensive Income and Expenditure Statement for year ending 31 March 2018

32

Movement in Reserves Statement 33

Balance Sheet at 31 March 2018 34

Cash Flow Statement 35

Notes to the Core Financial Statements

1. Statement of Accounting Policies 46 – 48

2a. Critical Judgements in Applying Accounting Policies 49

2b. Assumptions made about the future and other sources of estimationuncertainty

49

2c. Accounting Standards issued but not yet adopted

3. Expenditure and Funding Analysis

4. Note to the Expenditure and Funding Analysis

5. Expenditure and Income Analysed by Nature

50

51

52 – 53

53

6. External Audit Fees 54

7. Un-discharged obligations – Private Finance Initiative (PFI) scheme(Joint Training Centre)

54 – 55

8. Members’ Allowances 56 – 57

9. Employees Remuneration 58

10. Senior Officer Remuneration 59

11. Related Party Transactions 60

12. Adjustments between Accounting Basis & Funding Basis underregulations

61

13. Summary of Capital Expenditure and Non-Current Asset Disposals 62 – 63

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14. Capital Expenditure and Sources of Finance 64 – 65

15. Capital Financing – Minimum Revenue Provision 66

16. Non-Current Asset Valuation 67

17. Debtors 68

18. Cash and Cash Equivalents 68

19. Creditors 69

20. Analysis of Borrowing 69

21. Financial Instruments 70 – 78

22. Short Term Provisions 79 – 80

23. Long Term Provisions 80

24. Useable Reserves 81 – 85

25. Unusable Reserves 86 – 89

26. Retirement Benefits 90 – 100

27. Analysis of Income 101

28. Financing and Investment Income and Expenditure 101

29. Cash Flow Statement - Operating Activities 102

30. Cash Flow Statement - Investing Activities 102

31. Cash Flow Statement - Financing Activities

32. Contingent Liabilities

103

103

Other Statements

Firefighters Pension Fund Account

104 – 107

Glossary of Terms 108 – 110

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1

Narrative Report Introduction Avon Fire & Rescue Service (AF&RS) provides emergency, Prevention, Protection and Response services to the communities of Bath and North East Somerset, Bristol, North Somerset and South Gloucestershire. We are committed to providing a safer place for people to live, work and visit across the area made up of 132,609 hectares and a residential population of more than 1.1 million people, living in over 480,000 homes. We also provide the same services for millions of visitors and those that travel through our area each year. This document contains the Statement of Accounts for the Fire Authority for the year ended 31 March 2020. The preparation of the Statutory Statement of Accounts is undertaken in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2019/20. The Code specifies the principles and practices of accounting required to give a true and fair view of the financial position and transactions of the Fire Authority. Our role Our primary role is to provide an effective, efficient and economic fire and rescue service that meets the public’s expectations, our legislative requirements and is delivered by safe, professional and well trained staff. While firefighting has traditionally been at the forefront of our work, the role of a modern fire and rescue service has increased to cover the core functions of 'Preventing', 'Protecting' and 'Responding'. A lot of our work now focuses on how we can prevent accidents and emergencies from happening in the first place, as we believe this is the best way to protect our communities. We do this by providing advice and education through events, visits, campaigns and partnership working. Alongside this work we also provide a '999' response service to a range of incidents and emergencies from road traffic collisions and fires, to flooding and chemical spills. We work closely with the other emergency services, as well as numerous external agencies. We are committed to keeping our communities fully informed of how we are performing as a Service. All Committee meetings are open to the public to attend and our main Fire Authority meetings are available to watch on the AF&RS YouTube channel. It is also important for us to ensure the financial health of our organisation and to provide a best value service to the public. The substantial reduction in funding received from Central Government during the period of austerity has presented a significant challenge to the way in which we provide our service; however we have responded well in identifying the necessary ongoing efficiency savings to meet this funding reduction. Looking ahead beyond 2020 our most recent medium-term financial plan for the next four years anticipates further financial challenges, in particular uncertainties of the impact on future funding from a government-led Fair Formula Funding and Comprehensive Spending Review (CSR), the economic impact of the Covid-a9 pandemic and new cost pressures associated with pensions. Our latest forecast is that Avon Fire Authority could be facing a funding gap of around £2.5 million over this period depending on planning assumptions.

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2

Our Service Plan

Following extensive consultation with local communities, stakeholders and staff, our refreshed Service Plan was approved by the Fire Authority and published on 01 April 2020 and set out 30 pieces of work across our key objectives of Preventing, Protecting, Responding and Resilience as well as making our Service Stronger and Investing in our People. This Service Plan demonstrates our commitment to our continuous improvement journey and included consideration of further recommendations resulting from Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS) inspection in 2018 and included them in our 2019/20 action plan, aligned to the publication of this Service Plan. It clearly articulates our two Priorities of Making our Communities Safer and Making Our Service Stronger

Medium Term Financial Strategy It is also important for us to ensure the financial health of our organisation and to provide the best value service to the public. The substantial reductions in funding received from Central Government during the period of austerity has placed increased importance on the need for robust financial planning to ensure that required efficiency savings can be identified well in advance to avoid any detrimental impact to the way in which we provide our service. Our Medium-Term Financial Plan for the next four years anticipates further financial challenges ahead, forecasting that Avon Fire Authority is expecting to face a funding gap of around £2.5 million over this period. How we decide what we do What we decide to do is influenced by a number of factors: Our statutory responsibilities The Service has a range of statutory responsibilities it is required to perform, including those through the Fire and Rescue Services Act 2004, Civil Contingencies Act 2004, Regulatory Reform (Fire Safety) Order 2005, Policing and Crime Act 2017 and the Fire and Rescue National Framework for England. Direction from central Government The Fire and Rescue National Framework sets out the Government’s expectations for fire and rescue services, these being: • make appropriate provision for fire prevention and protection activities and response to

fire and rescue related incidents; • identify and assess the full range of foreseeable fire and rescue related risks their areas

face; • collaborate with emergency services and other local and national partners to increase

the efficiency and effectiveness of the service they provide; • be accountable to communities for the service they provide; and • develop and maintain a workforce that is professional, resilient, skilled, flexible and

diverse.

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3

Fire and Rescue Service Inspections As part of the Government’s fire reform programme and in order to strengthen the independence of the inspection regime for fire and rescue services, the remit of Her Majesty’s (HM) Inspectorate of Constabulary was widened in 2017 to create the new HM Inspectorate of Constabulary and Fire & Rescue Services (HMICFRS). The new Inspectorate is now responsible for inspecting and reporting on the efficiency and effectiveness of fire and rescue services in England. HMICFRS’ first inspection of all 45 English fire and rescue services was split into three tranches. Avon Fire & Rescue Service was placed in Tranche 1. The process started in April 2018 and our final report was published on 20 December 2018 (available at https://www.justiceinspectorates.gov.uk/hmicfrs/fire-and-rescue-services/avon) The report provides a graded judgement against each of three principal questions as well as each of the eleven ‘core’ questions within the HMICFRS inspection framework and methodology. There are four categories of graded judgement: outstanding, good, requires improvement and inadequate. Following the inspection fieldwork week in July 2018, HMICFRS wrote to the Service in August 2018 to raise a ‘cause of concern’ relating to the availability of sufficient specialist capacity within our Technical Fire Safety (TFS) department. As a result, we submitted a plan for a three-stage increase in TFS capacity between December 2018 and December 2019 and this is reflected in our overall HMICFRS inspection action plan which is available at https://avonfire.gov.uk/our-performance/hmicfrs. In October 2018, HMICFRS visited us again to focus on the cause of concern relating to TFS. Due to the timeframe between the initial inspection and the re-visit, HMICFRS was not expecting the identified areas to be fully resolved. However, they were looking to see that there was an effective plan in place with the right level of leadership and oversight to deal with the issues they identified. The results of the first re-visit are available at https://www.justiceinspectorates.gov.uk/hmicfrs/?frs=avon In August 2019, HMICFRS undertook a second re-visit to assess our progress to ensure sufficient specialist capacity within our TFS department required to:

a) comply with our statutory duty to respond to consultations under the Building Regulations within 15 working days; and

b) effectively discharge our risk-based inspection programme. The inspection team concluded that we have appropriate governance arrangements in place to support the political and strategic oversight of our HMICFRS improvement action plan which is regularly updated and published. We committed to increase staffing to 24 TFS officers (including Grey and Green Book staff) by the end of 2019. The increased capacity will translate to increased capability and capacity as training continues and we were encouraged that HMICFRS acknowledged our progress as ‘positive’ in its second re-visit letter available at https://www.justiceinspectorates.gov.uk/hmicfrs/?frs=avon&s We have also contracted a specialist consultant to assist with Building Regulations consultations while new TFS staff continue their training. Since the original HMICFRS visit in July 2018, we have seen dramatic improvements in our performance and are currently dealing with 100% of Building Regulations and licensing applications within statutory timescales whilst increasing the numbers of fire safety audits completed and continuing with ongoing prosecution activity.

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https://www.justiceinspectorates.gov.uk/hmicfrs/fire-and-rescue-services/avon

https://avonfire.gov.uk/our-performance/hmicfrs

https://www.justiceinspectorates.gov.uk/hmicfrs/?frs=avon

https://www.justiceinspectorates.gov.uk/hmicfrs/?frs=avon&s

4

In terms of the risk-based inspection programme (RBIP) we acted on the recommendations from the August 2019 re-visit and developed an interim RBIP based on incident data extracted from the national Incident Reporting System (IRS) data and commercially available Experian data. This interim RBIP was tested for risk ratings and accuracy based on previous inspection history and went live from 1 March 2020. This interim RBIP ensures we target our TFS inspections on premises presenting the highest risk based on data currently available to us pending the development of a wider risk stratification process based on risk modelling. Monitoring progress Progress against our HMICFRS Inspection Action Plan is monitored on a monthly basis by the Service Leadership Team and scrutinised at each meeting of the Fire Authority’s Performance Review and Scrutiny Committee. Suspension of inspections due to COVID-19 HMICFRS’ second round of fire and rescue service inspections in England should have commenced in early 2020. However, on 13 March 2020 HM Chief Inspector of Fire & Rescue Services wrote to all Chiefs and Chairs to confirm that as a result of the current coronavirus pandemic, all HMICFRS inspection activity “which requires appreciable input from forces and FRSs” has been suspended until further notice. However, we are expecting a thematic inspection in terms of how we have responded to the Covid19 pandemic and a further full Service inspection during 2021.

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5

Governance Arrangements Avon Fire Authority is responsible for ensuring that it delivers its services in accordance with the prevailing legislation, regulations and Government guidance; and that proper standards of stewardship, conduct, probity and professional competence are set and adhered to by all those working for and with the Authority. This will ensure the services provided to the people of Avon are delivered efficiently, effectively and fairly, and that public money is used wisely, is properly accounted for and achieves optimum value for money. The Fire Authority is committed to continuously improving its services to meet the needs of the public; reviewing and developing what it does; and consulting with the public about its activities on a regular basis. In discharging these responsibilities, the Authority is required to ensure that appropriate arrangements are put in place for the control and management of its business affairs, service performance, finances, and for the management of the risks it faces. Annual Governance Statement Under the Accounts and Audit Regulations 2015, the Fire Authority is required to produce an Annual Governance Statement. This document sets out a framework by which the Fire Authority’s internal systems and processes are directed and controlled. It enables the Fire Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of cost effective services. The Annual Governance Statement for 2019/20 can be viewed at: https://www.avonfire.gov.uk/documents/category/189-audit-governance-and-ethics-committee Governance Structure The Fire Authority has overall responsibility for ensuring there is a sound system of governance (incorporating the system of internal control), and that public money is safeguarded, properly accounted for, and used economically, efficiently, effectively and economically. The Fire Authority also has a duty under the Local Government Act 2003 and subsequent Localism Act 2011 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency, effectiveness and ethics. Internal arrangements for ensuring good governance include: The Audit, Governance and Ethics Committee will consider and review issues relating to Audit, Governance, Risk Management and the conduct of Members. Their work includes scrutinising and approving the Statement of Accounts, the Annual Governance Statement, Statement of Assurance and the Corporate Risk Register. The Committee also reviews the Code of Conduct for Members, and preparation and training for the new requirements for dealing with investigations into Members' conduct. The Performance Review and Scrutiny Committee will consider and review the Fire Authority’s policies, plans and objectives. Their work includes the development and agreement of an annual work programme, scrutinising performance against key indicators, considering reports on the outcome of reviews and making recommendations for improvement, and to monitor aspects of service improvement including health, safety and welfare, equality, training and development.

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https://www.avonfire.gov.uk/documents/category/189-audit-governance-and-ethics-committee

https://www.avonfire.gov.uk/documents/category/189-audit-governance-and-ethics-committee

6

The People and Culture Committee will undertake the recruitment, appointment and annual pay review of the Principal and Statutory Officers and to make recommendations to the Authority. The Committee also undertakes an annual review of all completed disciplinary, grievances and other employee disputes (including Employment Tribunals and personal injury claims). Their work includes monitoring of the Authority’s compliance against the Equality Act 2010, and to ensure the organisation has in place sufficient measures to ensure the welfare, wellbeing, policies and procedures affecting staff that promote positive culture.

The Local Pension Board will assist the Scheme Manager in administering the various firefighter pension schemes by providing governance and the scrutiny of policies, pension documentation, decisions and outcomes.

The Service Leadership Board and Service Leadership Team are responsible for considering overall operational, financial and performance management within the organisation. They are also responsible for making key decisions to minimise and manage risk; initiating corrective action through the application of new and existing internal control processes.

The Clerk (as the Monitoring Officer) is responsible for reviewing and revising delegations, protocols, documents and policies to ensure that they correctly reflect current legislative requirements and meet the needs of the Fire Authority. The Clerk will also implement annual reminders of corporate governance requirements to ensure that they remain visible and raise the visibility and accessibility of the role of the Monitoring Officer, to encourage Member and staff contact. The Clerk also provides a legal advice to the Fire Authority and Service Leadership Board on key matters.

The Treasurer contributes to the effective leadership, maintaining focus on its purpose and vision through rigorous analysis and challenge. The Treasurer contributes to the effective corporate management, including strategy implementation, cross organisational issues, integrated business and resource planning, risk management and supports the effective financial governance of the organisation. The Treasurer leads the development of a Medium-Term Financial Strategy and the annual budgeting process to ensure financial balance is achieved. The Treasurer leads or promotes change programmes within the organisation.

In addition, the Treasurer will ensure the medium-term financial strategy reflects the Fire Authority’s corporate priorities as set out within the Service Plan which incorporates the Integrated Risk Management Plan, including joint planning with partners and other stakeholders.

External Audit and Fire and Rescue Service Inspection reports and findings will be fully considered by the Fire Authority and where necessary the Service Leadership Board will develop an Action Plan which relates to areas identified as requiring improvement. Progress will be monitored by the Corporate Assurance Unit and corrective action or additional measures will be initiated through the Service Leadership Team.

Internal Audit is an independent and objective assurance service to the Fire Authority who complete a programme of reviews throughout the year, to provide an opinion on the internal control, risk management and governance arrangements of the Fire Authority. In addition, Internal Audit undertakes a National Fraud Initiative and proactive fraud detection work, which includes reviewing the control environment in areas where fraud or irregularity has occurred. Any significant weaknesses in the control environment identified by Internal Audit are reported to the Audit, Governance and Ethics Committee and the external audit provider, currently Deloitte LLP.

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7

The Corporate Risk Register is regularly reviewed by the Service Leadership Team and escalated to the Fire Authority as necessary. The current Risk Management policy requires the Corporate Risk Register to be presented to the Fire Authority (Audit, Governance and Ethics Committee) twice a year. Section 6 of the Annual Governance Statement 2019/20 provides details of the top three corporate risks impacting the Service and also a list of planned mitigations to reduce the risk to the Fire Authority as at 31 March 2020.

The Community Risk Register is the responsibility of the Avon and Somerset Local Resilience Forum (LRF), and provides information on emergencies that could happen within the Avon and Somerset area, together with an assessment of how likely they are to happen and the impacts if they do. The information contained within the Community Risk Register is used to inform AF&RS Corporate Risk Register and the annual Strategic Assessment.

The Strategic Assessment enables AF&RS to identify issues with the potential to affect the future strategic direction of the Service, as well as informing the Corporate Risk Register and underpinning the Service Plan

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8

Overview of the Financial Year 2019/20

The key financial issues arising from the Statement of Accounts are:

• The 2019/20 final outturn was a break even position in revenue terms ( 2018/19 break-even);

• The revised net expenditure budget for 2019/20 set by the Authority was £43,072,000(2018/19 £41,843,000), as reported to the Fire Authority in May 2020;

• The actual net expenditure was £43,060,000m (2018/19 £41,843,000), £12,000 lowerthan the budget figure (2018/19 the same as the budget);

• These budget and actual amounts comprise the net expenditure chargeable to thegeneral Fund, which relates to council tax, business rates and formula funding fromCentral Government. This is before statutory accounting adjustments relating topensions, capital and other differences, to get to the net expenditure in theComprehensive Income and Expenditure Statement;

• A full review of reserves was undertaken and transfers between reserves were madeduring the year and are described in the reserves section of this report;

• The general fund balance (working balance) remains at £1.5m (2018/19 £1.5m), whichis within the parameters agreed by the Fire Authority. This sum is intended to meetunforeseen expenditure and, if called upon, would then need to be replaced;

• The Fire Authority’s Medium-Term Financial Plan identifies certain budget pressuresand real term reductions in future Government grant funding, which will need to beconsidered through further efficiency savings. In response, the Fire Authority hasimplemented a range of cost saving measures which have contributed significantly tothe financial savings achieved in the year; and

• There is a four year capital programme which was approved by the Fire Authority inMarch 2019. This relates to land and buildings, fleet, operational equipment and IT. Thecapital programme for 2019/20 was £5,841,000, and there has been slippage of£5,052,000. This will be reviewed during 2020/21.

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9

Approved Financial Plan 2019/20

In setting a revenue budget with net expenditure of £42.3m the Fire Authority had to consider a number of major financial considerations including:

• A reduction in Central Government funding of 4.17%;• A limit on the increase in council tax of 2% before a referendum was required; and• No capital grant allocation.

In total an initial revenue budget, before the use of reserves, of £42.3m was approved by the Fire Authority for 2019/20. This included savings for 2019/20 of £562,000, compared to saving of £1,663,000, the details of which are shown below.

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10

Revised Revenue Budget and Spending in 2019/20

A number of changes to the budget were reported to the Fire Authority during 2019/20. In broad terms 55.9% (2018/19 56.8%) of the Fire Authority’s funding came from the local council tax payer, with a further 9.5% (2018/19 10.2%) from locally retained business rates. The majority of the remainder of the funding comes from Central Government, for items such as formula funding and business rates – top up grant and specific Government grants.

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11

Expenditure for the year was incurred in the following main areas:-

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12

The majority of expenditure continues to relate to employee staff costs. The 2019/20 staff costs have increased over 2018/19 mainly due to increased employer pension contributions. The cost of these increased contributions have been subsidised by Central Government by way of a specific grant, shown in income above. Other costs relate to capital funding. Due to the capital receipt from the sale of the Temple back HQ site in 2018/19, there was additional repayment of debt in that year.

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13

Set out below is a comparison between actual expenditure and revised budget for the year. Details supporting the major variations highlighted in the statement are as follows:

Further detail of variations can be found in the report to Avon Fire Authority on 12 May 2020, which can be accessed here – https://avonfire.gov.uk/documents/category/224-2020.

Original Revised ActualBudget Budget Expenditure2019/20 2019/20 2019/20 Difference

£'001 £'000 £'000 £'000

37,182 37,109 37,229 120Premises 2,376 2,465 2,433 (32)Transport 1,833 1,553 1,487 (66)

5,703 5,302 5,093 (209)1,528 1,522 1,525 3

Income (4,900) (5,679) (5,447) 23243,722 42,272 42,320 48

(650) (477) (473) 4- 1,277 1,213 (64)

43,072 43,072 43,060 (12)

Local tax payersCouncil Tax (27,122) (27,122) (27,121) 1Locally retained Business rates (4,632) (4,632) (4,621) 11Collection fund surpluses (246) (246) (246) -

Formula Funding (5,034) (5,034) (5,034) -Non-domestic rates redistribution (6,038) (6,038) (6,038) -

- - - -Working Balance

Expenditure on ServicesEmployees (net)

Supplies and ServicesOther Costs

Net Expenditure

Transfers to \ from revenue reservesTransfers from ReservesTransfers to Reserves

Net Expenditure after transfer to \ from reserves

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https://avonfire.gov.uk/documents/category/224-2020

14

Reserves

There are a number of reasons why the Fire Authority holds reserves. Reserves are an essential tool to ensure long-term budget stability, particularly at a time when the Fire Authority is facing significant year-on-year reductions in grant funding over the medium term. There is no statutory maximum level of reserves and traditionally AF&RS has held £1.5m in the general reserve and for 2019/20 this represents 3.1% of expenditure.

The Fire Authority maintains the following reserves:

• general reserve (working balance): to manage the impact of uneven cash flows andunexpected events or emergencies; and

• earmarked reserves: sums set aside to meet known or predicted specific requirements.

The detail and adequacy of reserves are considered by the Fire Authority as part of the annual budget setting process.

The opening balance of reserves at 1 April 2019 was £14.3m. A number of reserve movements were agreed by the Fire Authority, including the transfer of £1,354,000 into the Transformation Reserve to fund the future ICT strategy, and the following new reserves were approved at the year end, leaving a balance of £14.4m at 31 March 2020:

A full review of reserves is carried out annually to ensure continuing relevance and adequacy. This review has been undertaken by the Service Leadership Board in conjunction with the Treasurer. Existing and potential financial pressures on a risk basis are considered and this has been informed by the Medium Term Financial Planning (MTFP) process.

Reserve Justification £'000PPE / ICP Replacement To fund fluctuations in PPE costs 60

Community Safety To fund two electric vehicles, upgrade CFRMIS and support the assistive technology programme 70

Capital Financing To support the future capital programme 1BT WAN Upgrade To facilitate the upgraded BT WAN contract roll out 110Communication - UPS / Station End

To upgrade fire station call-out equipment, UPS and call-out PCs 30

Control & Communications - Welfare

To enable the rest areas for Control and Communications to be built and updated 25

Covid-19 Government grant to cover additional costs incurred as a result of the Covid-19 pandemic 192

National Operational Guidance To implement the new National Operational Guidance (NOG) 300

Extrication Challenge To purchase vehicles, equipment and PPE for training and events 7

IT Infrastructure To address problems identified with the existing IT infrastructure resulting from the recent review 406

Total 1,201

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15

Capital Budget and Spending 2019/20

The Fire Authority determines its capital investment plans and consequent level of borrowing in accordance with guidelines laid out in the Prudential Code issued by CIPFA. The Prudential Code requires the Fire Authority to ensure that its capital investment plans are affordable, prudent and sustainable.

For 2019/20, The Fire Authority set a revised capital programme of £5.8m (2018/19 £4.3m). Capital expenditure for the year is shown in the table below:

The programme for 2018/19 is shown in the table below:

AreaRevised Budget 2019/20

Outturn Variation Slippage

£'000 £'000 £'000 £'000

Fleet 2,500 20 0 2,480Premises 556 27 0 529Reinvesting for the Future 1,100 431 0 669Operational Equipment 307 80 0 227IT 1,177 231 0 946Funds not allocated 201 0 0 201Total Programme 5,841 789 0 5,052

AreaRevised Budget 2018/19

Outturn Variation Slippage

£'000 £'000 £'000 £'000

Fleet 2,150 306 6 1,850Premises 767 171 0 596Reinvesting for the Future 500 311 0 189Operational Equipment 191 40 (6) 145IT 452 96 1 357Funds not allocated 278 33 0 245Total Programme 4,338 957 1 3,382

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Funding for the programme was met from the following sources:

The capital receipt was from the sale of the Temple Back HQ site.

The Fire Authority invested in the following material assets during the year:

Premises • Continuation of the Reinvesting for the Future project with work proceeding on the

redevelopment of Avonmouth fire station - £428k;

Fleet • The purchase of an electric van - £20k;

Operational Equipment • Breathing Apparatus – replacement and a washing machine - £72k; and

IT • Commencement of a programme to upgrade the hardware and software, to enhance

resilience - £231k.

The budgets for a number of capital items have been rolled forward into 2020/21. An analysis of the prudential indicators demonstrates that borrowing was maintained within the approved prudential limits.

Funding Source2019/20 Funding

£'000

Capital Grant 0Revenue Contributions 251Capital Receipts / Capital Reserves 538Prudential Borrowing 0Total Funding 789

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Joint Training Centre (JTC) – Private Finance Initiative (PFI) scheme

The Authority, in partnership with Gloucestershire County Council and Devon and Somerset Fire and Rescue Authority, has invested in a twenty-five-year PFI contract to provide a joint fire and rescue service training centre at Avonmouth. Under this scheme the Authority receives a significant element of its fire training from Babcock PLC, who operate the training centre.

The Government provides some revenue support to the project in the form of grants (PFI credits) and the three authorities finance the balance by making contributions from their own resources. An analysis of the Authority’s future commitments to the net annual contract payments (50%), due under the PFI joint venture, along with further analysis of the asset value held on the balance sheet, are detailed in note 7 to the Core Financial Statements. Using existing indices and interest rates, a surplus has been predicted at the end of the contract period of around £0.32m (£0.16m attributable to Avon). A provision of £0.6m was set up in 2012/13 reflecting the Fire Authority’s share of the estimated deficit at that point and has been maintained at that level in 2019/20 to reflect the uncertainty around interest rates and other possible fluctuations.

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THE STATEMENT OF ACCOUNTS

The Statement of Accounts explains the Fire Authority’s finances during the financial year 2019/20 and its financial position at the end of the year. It follows approved accounting standards and is necessarily technical in parts. The Authority’s Statement of Accounts for the year 2019/20 comprises:

• The Statement of Accounting Policies – this explains the basis on which the figuresin the accounts are calculated.

• The Statement of Responsibilities – this sets out the respective responsibilities of theFire Authority and the Treasurer for the accounts.

• The Independent Auditor’s Report – this contains the external auditor’s audit opinionand audit certificate.

• The Financial Statements – this consists of the core financial statements groupedtogether along with detailed disclosure notes. The core financial statements include:

The Comprehensive Income and Expenditure Statement

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

2018/19 2019/20 ChangeComprehensive Income and Expenditure £'000 £'000 £'000

Fire fighting and rescue operations 41,630 42,648 1,018Adjustments for capital purposes (54) 1,766 1,820Net change for pension adjustments 29,605 10,553 (19,052)Other differences (2) 35 37Cost of providing services 71,179 55,002 (16,177)

2,816 16,672 13,856

(55,377) (52,505) 2,872Total deficit / (surplus) on the provision of services 18,618 19,169 551Surplus on revaluation of assets (6,997) (1,123) 5,874Actuarial losses on pension assets 19,034 (48,106) (67,140)Total other income and expenditure 12,037 (49,229) (61,266)Total comprehensive income and expenditure 30,655 (30,060) (60,715)

Financing and investment income and expenditure (net) including other operating income and expenditureTaxation and Grant Income including Firefighter Pension top-up grant

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The Movement in Reserves Statement This statement shows the movement in the year on the different reserves held by the Authority, analysed into ‘useable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Net Increase / Decrease before Transfers to earmarked reserves line shows the statutory General Fund balance before any discretionary transfers to or from earmarked reserves undertaken by the Authority. One of the most important issues for readers of the Financial Statements will be whether the Fire Authority has a surplus or deficit compared to its budget (and Council Tax) for the year. As the financial statements follow accounting standards rather than local government legislation, this isn’t easy to identify. The Movement in Reserves Statement reconciles the two different approaches. The Balance Sheet This statement shows the value at 31 March 2020 of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category of reserves are useable reserves, i.e. those reserves that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Authority is not able to use 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’.

The Authority has long-term assets worth £59.4m (2018/19 £69.1m) primarily comprising land and buildings and vehicles. Current assets at 31 March 2020 were £24.6m (2018/19 £15.5m) represented by short-term debtors of £14.9m (2018/19 £8.6m) and cash and cash equivalents of £9.7m (2018/19 £6.9m). This is an increase of £9.1m over the year and is primarily due to the deferred capital receipt for the old HQ site of £8.0m being moved to short term debtors. Current liabilities at 31 March 2020 were £7.2m (2018/19 £6.7m) comprising provisions of £1.1m (2018/19 £1.2m) and creditors of £6.1m (2018/19 £5.5m).

2018/19 2019/20 ChangeBalance Sheet £'000 £'000 £'000

Long-term assets 69,092 59,367 (9,725)Current assets 15,531 24,644 9,113Current liabilities (6,733) (7,223) (490)Long-term liabilities (676,191) (645,029) 31,162Net Liabilities (598,301) (568,241) 30,060Usable reserves 14,307 14,429 122Unusable reserves (612,608) (582,670) 29,938Total reserves (598,301) (568,241) 30,060

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The Balance Sheet identifies other long-term liabilities of £645m (2018/19 £676.2m). This primarily reflects future pension cash flows as calculated under accounting standard IAS 19. It should be noted that these have decreased by £30.96m from 2018/19.

The Cash Flow Statement

This statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents 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 Authority are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’s future service delivery.

In summary the Authority received surplus cash flows from operating activities of £3.8m (2018/19 £1.7m), an increase of £2.1m on the previous year. The deficit on investing cash flows was £0.8m (2018/19 £9.0m surplus – primarily representing the capital receipt on the sale of the former HQ at Temple Back). The deficit on financing activities was £0.2m (2017/18 £2.6m – representing the repayment of the PFI contract obligation and long-term debts). The overall increase in cash and cash equivalents was £2.8m (2018/19 £8.1m) for the year.

2018/19 2019/20 ChangeCash Flow Statement £'000 £'000 £'000

Net cash flows from operating activities (1,683) (3,826) (2,143)Investing activities (8,952) 789 9,741Financing activities 2,562 195 (2,367)Change in cash / cash equivalents (8,073) (2,842) 5,231

Cash / cash equivalents beginning of the year 1,193 (6,880) (8,073)Cash / cash equivalents end of the year (6,880) (9,722) (2,842)Change in cash / cash equivalents (8,073) (2,842) 5,231DRAFT

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The Firefighters’ Pension Fund Account and Net Assets Statement It is unusual for an unfunded pension scheme such as the Firefighters’ Scheme to have a fund account, as it holds no assets that need to be ring-fenced. Instead the purpose of the Firefighters’ Pension Fund is to provide a basis for identifying the balance of transactions taking place over the year and the arrangements needed to close the balance for that year. The primary objective is to allow the separation of the cost of providing pensions from the cost of running a fire and rescue service. For this reason the pension fund accounts are shown after the other financial statements.

2019/20 2019/20Forecast Outturn Variance

£'000 £'000 £'000Pensions OutgoingsPension payments 14,414 14,632 218Commutations 1,304 2,845 1,541Other 0 155 155Total Expenditure 15,718 17,632 1,914

Pension IncomeEmployee Contributions (2,334) (2,335) (1)Employer Contributions (5,255) (5,344) (89)In year ill health income (381) (352) 29Transfer in from other schemes (50) (16) 34Government Grant (7,698) (9,585) (1,887)Total Income (15,718) (17,632) (1,914)

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Total pension expenditure for the year was £17.6m (2018/19 £18.4m); employer contributions totalled £5.3m (2018/19 £2.8m) for the year. In total Government top-up grant of £9.6m (2018/19 £13.0m) is receivable to fund the gap between expenditure and income.

2018/19 2018/19Forecast Outturn Variance

£'000 £'000 £'000Pensions OutgoingsPension payments 13,736 13,925 189Commutations 3,125 4,429 1,304Other 0 66 66Total Expenditure 16,861 18,420 1,559

Pension IncomeEmployee Contributions (2,220) (2,347) (127)Employer Contributions (2,740) (2,829) (89)In year ill health income (382) (264) 118Transfer in from other schemes (50) 0 50Government Grant (11,469) (12,980) (1,511)Total Income (16,861) (18,420) (1,559)

Net Fund Expenditure 0 0 0

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Financial Climate and Medium Term Financial Planning The Fire Authority has to develop and produce a Medium Term Financial Plan (MTFP) to ensure that it has adequate resources to deliver its services into the future. The continued real terms reduction in Government funding has provided a significant financial challenge to the Fire Authority. Whilst the financial challenge is a key driver for change, it remains important that the Fire Authority’s future strategies continue to be service-led. The Fire Authority has published its refreshed Service Plan 2020-23 which incorporates its Integrated Risk Management Plan (IRMP). The Service Plan reflects the changing risk profile in Avon Fire Authority’s area and indicates how resources and capability will be used to mitigate foreseeable risks in our communities. The Fire Authority’s Service Plan 2020-23 can be viewed at https://www.avonfire.gov.uk/documents/category/216-service-plan The Fire Authority’s revised approved four-year medium-term financial plan covering the period 2020 to 2024 is summarised below:

The MTFP outlined above is based on a number of assumptions on key financial matters such as inflation, pay awards and government funding. In order to ensure the budget is in line with funding the following efficiencies have been identified:

20/21 21/22 22/23 23/24Detail Analysis £'000 £'000 £'000 £'000

Employees 39,415 39,104 39,816 40,392Premises 2,420 2,364 2,470 2,528Transport 1,609 1,641 1,674 1,708Supplies and Services 5,955 5,883 5,981 6,094Other Costs 1,034 1,115 1,648 2,286Unidentified Savings 0 (254) (856) (1,438)Total Expenditure 50,433 49,853 50,733 51,570Income (5,071) (4,956) (4,982) (5,013)Budget before use of reserves 45,362 44,897 45,751 46,557Reserves (1,636) (223) (146) 0Net Budget 43,726 44,674 45,605 46,557

Analysis of Savings 2020/21 - 2023/24Area 2020/21 2021/22 2022/23 2023/24 Total

£'000 £'000 £'000 £'000 £'000Employees (19) 0 (70) (71) (160)Premises (139) 0 0 0 (139)Transport (77) 0 0 0 (77)Supplies and Services 0 0 0 0 0Other Costs (571) 0 0 0 (571)Unidentified savings 0 (254) (856) (1,438) (2,548)Total Savings (806) (254) (926) (1,509) (3,495)Income 0 0 0 0 0Use of Reserves 0 0 0 0 0Total reductions (806) (254) (926) (1,509) (3,495)

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https://www.avonfire.gov.uk/documents/category/216-service-plan

24

These forecast savings for the period 2020 -2024 do not include any potential impact of Brexit. At the time of publication of the financial statements the UK has now left the European Union. In reviewing the MTFP the Authority has carried out an initial impact assessment, based on a no-deal scenario, in terms of how it may adversely impact future funding streams and costs. Whilst it is not possible to make forecasts with any certainty this assessment has highlighted the level of risk to the Authority’s finances and provided some assurance that this risk can be mitigated in the medium-term through the use of reserve balances.

The objectives of the MTFP are:

• To ensure the Authority’s aims and objectives can be delivered

• To ensure commitments do not exceed forecast resources over the four-year period

• To look for more efficient ways of delivering services

• To manage the resources available effectively and to ensure the budget is aligned withcorporate objectives

• To ensure that Council Tax increases are not excessive

• To ensure the Authority maintains a realistic level of general reserves to meetunforeseen events

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Brexit

Following the outcome of the referendum on the UK leaving the EU and the current position on negotiations between the UK Government and the EU on this withdrawal there is a significant amount of economic uncertainty which brings the potential for further periods of austerity for the UK as a whole.

It is not possible to provide financial forecasts of the impact of Brexit with any certainty. A report on the likely impact of Brexit on the Authority’s Medium Term Financial Plan 2019 – 2023 was presented to the Fire Authority in March 2019 and this is available at https://www.avonfire.gov.uk/documents/category/217-2019.

The focus of this initial impact assessment was to identify those finance and funding risks likely to be impacted by Brexit in the short term i.e. the next two years. It is considered that suitable mitigations are in place to manage those finance and funding risks for the next financial year 2020/21 but this will be carefully monitored.

Covid 19

The COVID-19 outbreak has been developing worldwide at different rates since it first emerged in China in December 2019, resulting in the World Health Organisation declaring a global pandemic on 11th March 2020. So far it has caused substantial volatility in financial markets and disruption in supply chains. The Authority has established a Critical incident Management Team to oversee and plan. The business continuity plans have been reviewed, since travel and office based working have been severely curtailed. The Authority is satisfied that it has in place appropriate plans, including home working with access to secure IT equipment and platforms, so as to minimise disruption to services. It has been identified that the IT infrastructure, whilst adequate to support activities in the short term, has some long term issues that will need to be resolved, and this work is being undertaken by the Transformation, Procurement and IT teams.

As a provider of frontline public services, there have been minimal operational impacts on the Authority as it to maintains the delivery of its core services. Due to the financing arrangements with the constituent Unitary Authorities, as at the date of signing, the Authority is not expecting a reduction in funding in the 2020/21 financial year. The precept and non-domestic rates will be paid by the Unitary Authorities as set out in the budget schedules. In addition Central Government funding totalling £1.062m has been allocated to the Authority to pay for additional Covid 19 related costs (£192k received in 2019/20 and a further £870k received in 2020/21).

The Authority also expects a negative impact on property asset values.

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Organisational Performance

AF&RS continues to make progress in reducing risk in our community by reducing the number and impact of incidents attended. We have met the reduction targets for deliberate large fires, deliberate vehicle fires, deliberate small fires and attendance at false alarms, and were just off target for accidental dwelling fires. Each incident that is prevented represents a reduction of risk in our community.

We are committed to doing all that we can to make our community safer and our Service stronger. We analyse our data to help us understand what additional interventions and initiatives we can take.

We are also very pleased to report that 93% of respondents said that they were very satisfied with the service they had received in an emergency and 1% were fairly satisfied. No respondents were dissatisfied with the service they received.

Any fatality in a fire is a tragic loss and AF&RS continues to work towards our target of zero deaths. In 2019/20 we recorded five fire fatalities (2019 three)

Our Performance Report published on our website gives full information about our progress against our targets.

The table below shows the key performance indicators that are considered central to monitoring performance against strategic objectives. The table shows how we measured against target for each indicator in 2019/20 and also compares our performance against 2018/19:

How we compare against target (2019/20)

How we compared with the previous year (2018/19)

Target (2019/20)

Actual (2019/20)

Actual (2018/19)

Numerical change

% change

Preventing Accidental dwelling fires (ADF) 485 504 534 -30 -5.6%

Deliberate primary fires (excluding vehicles) 235 218 227 -9 -4.0%

All deliberate vehicle fires 353 280 333 -53 -15.9%Deliberate secondary fires (excluding vehicles) 1,048 836 1,143 -307 -26.9%

Protecting Percentage of ADFs where no fire and rescue service firefighting action is required.

Monitor only 45.2% 43.6% N/A +1.6%

Responding Initial call fire in Building Cat.1: First Appliance in 8 mins

85% 92% 91% N/A +1.0%

Initial call fire in Building Cat.2: First Appliance in 10 mins

90% 95% 96% N/A -1.0%

Initial call fire in Building Cat.3: First Appliance in 15 mins

95% 96% 94% N/A -2.0%

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https://avonfire.gov.uk/our-performance/performance-reports

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Full resources required mobilised to fire in building 95% 100% 100% N/A 0.0%

Initial call fire – all other: First attendance in 15 mins 95% 97% 96% N/A +1.0%

Life threatening non-fire emergency: First attendance in 15 mins

95% 96% 97% N/A -1.0%

Calls for assistance answered within seven seconds

94% 96.2% 94.5% N/A +1.7%

AF&RS continues to provide an excellent response service to our community.

We are pleased to report that all of our response standards have been met, ensuring a lifesaving response is in attendance within the time that we have said we will achieve. We also answered over 96.2% (2019 94.5%) of 999 calls we received within our target time of seven seconds.

A summary of the service provided to our communities can be seen in the diagram below.

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CO2 Emissions Report and Environmental Update 2019/20

CO2 Emissions AF&RS reported carbon emissions are made up of building energy consumption (gas, electricity and heating oil), fleet vehicle fuel, and essential / casual and lease vehicle mileage claims. These are known as Scope 1 & 2 emissions and are from all activities, operations and sites over which we have direct control.

By the end of 2019/20, AF&RS reduced carbon emissions by 59% since a 2008/09 baseline, well ahead of our 50% reduction by 2020 target.

These reductions are due to improved efficiencies in our estate management and operation, delivery of cleaner energy sources and fleet improvements. In addition, energy and fuel at a national level has become less carbon intensive as the UK increases the proportion of mains electricity from renewables and biodiesel in pump fuel; therefore the carbon factor we use in our calculations has changed, also reducing our carbon footprint.

Property Emissions Over the past year, we achieved a 1% reduction in energy consumption (kWh) compared to the previous year, finalising the extensive programme of lighting and heating improvements undertaken in 2018/19 and planning for a further programme of works from 2020. It is also noted that one of our fire stations, Avonmouth, was announced as the winner in the UK Fire & Rescue Service’s energy saving competition for the 2018/2019 winter season.

Display Energy Certificates (DECs) DECs are produced for all buildings on our estate to give us a service-wide picture of our buildings’ performance. Similar to energy ratings for white appliances, A represents the most energy efficient and G the least. Our estate’s average DEC rating is now C (62) compared to E (112) in 2011/12.

The distribution of ratings for our buildings is shown in the graphic:

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Energy Efficiency Improvements During 2019/20, measures to improve energy efficiency included:

• External lighting upgrades at Lansdown and Yate, replacing fittings with high efficiencyLEDs and motion-detection controls;

• Building fabric improvements including installation of solar blinds at Hicks Gate androof insulation at Nova Way;

• Ongoing heating system improvements at the final 2 retained stations to be upgradedincluding new pipework, radiators and controls at Paulton & Radstock; and

• Enhancement of the Building Management System to improve heating & hot waterefficiencies across our larger sites.

Renewable Energy By the end of 2019/20, 87% of AF&RS’ total energy demand was met by renewables (on & off site), well above our 20% by 2020 target. Generation capacity on our 9 sites with solar PV systems is 170kWp, providing a Feed In Tariff income of £11-12,000 per annum. Measures taken during 2019/20 have included:

• Purchasing 100% renewable electricity and green gas (generated locally from theGeneco anaerobic digester plant in Avonmouth);

• Feasibility work to connect Temple Fire Station into Bristol City Council’s districtheat network; and

• Inclusion of renewable strategies in the briefs for new build fire stations atAvonmouth, Bath & Weston.

Transport Emissions Emissions associated with Transport have fallen by 30% compared to a 2008/09 baseline due to fleet improvements such as upgrading vehicles, improved call-challenging, changes in our automatic fire alarm response based on better risk analysis, and our adoption of low and zero emission vehicles.

Measures taken in 2019/20 have also included:

• Deployment of 2 electric vans for use by the Community Fire Safety team;• Initiating the installation of telematics in our fleet vehicles;

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• Development of our new Fleet Strategy in line with Clean Air Zone requirements;• Trials of low/ultra-low emission vehicles to inform our fleet replacement programme;

and• On-going involvement in the London Fire Brigade’s zero emissions fire appliance

research and development programme (ZEPA).

Environmental Report 2019/2020 A detailed report will be issued and made available on the AF&RS website providing more information about our environmental progress in 2019/20 and future plans.

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31

Statement of Responsibilities for the Statement of Accounts

The Authority's Responsibilities

The Authority is required:

to make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this Authority, that officer is the Treasurer;

to manage its affairs to secure economic, efficient and effective use of resources and to safeguard its assets;

to approve the statement of accounts.

The Treasurer's Responsibilities

The Treasurer is responsible for the preparation of the Authority'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.

In preparing this statement of accounts, the Treasurer has:

selected suitable accounting policies and then applied them consistently;

made judgements and estimates that were reasonable and prudent;

complied with the code of practice.

The Treasurer has also:

kept proper accounting records which were up to date;

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

I certify that the statement of accounts on pages 32-107 provide a true and fair view of the financial position of the Authority at the accounting date and its income and expenditure for the year ended 31 March 2020.

Signed

Danielle Neale Treasurer of the Avon Fire Authority 26 August 2020

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Comprehensive Income and Expenditure Statement for the Year Ended 31 March 2020

This statement shows the accounting cost in the year of providing services in accordance with Generally Accepted Accounting Principles (GAAP), rather than the amount to be funded from taxation. Authorities raise taxation to cover expenditure in accordance with regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement.

£'000 £'000 £'000 £'000 £'000 £'000

74,662 (3,483) 71,179 Fire fighting and rescue operations 60,844 (5,842) 55,002

74,662 (3,483) 71,179 60,844 (5,842) 55,002

(13,215) Other operating income -(12,954) Firefighter Pension Top up Grant (9,741)

16,031 Financing and investment income and expenditure (note 28)

16,672

(42,423)Taxation and non-specific grant income (note 27) (42,764)

18,618 19,169

(6,997) Surplus on revaluation of non-current assets (1,123)

19,034 Remeasurements of the net defined benefit liability (48,106)

12,037 (49,229)

30,655 (30,060)

Net

Exp

endi

ture

Gro

ss E

xpen

ditu

re

Gro

ss In

com

e

2019/20202018/2019

Gro

ss E

xpen

ditu

re

Gro

ss In

com

e

Deficit on Provision of Services

Net

Exp

endi

ture

Total Comprehensive Income and Expenditure

Cost of Services

Other Comprehensive Income and Expenditure

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Movement in Reserves Statement

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

Gen

eral

Fun

d Ba

lanc

e

Earm

arke

d F

und

Res

erve

s

Una

pplie

d C

apita

l Rec

eipt

s R

eser

ve

Tota

l Usa

ble

rese

rves

Unu

sabl

e R

eser

ves

Tota

l Aut

horit

y R

eser

ves

£'000 £'000 £'000 £'000 £'000 £'000

1,500 6,693 - 8,193 (575,839) (567,646)

Deficit on the provision of services (18,618) - - (18,618) - (18,618)

Other Comprehensive Income and Expenditure - - - - (12,037) (12,037)

(18,618) - - (18,618) (12,037) (30,655)

Adjustments between accounting basis & funding basis under regulations (note 12) 24,732 - - 24,732 (24,732) -

6,114 - - 6,114 (36,769) (30,655)

Transfers to/from earmarked Reserves (note 24) (6,114) 425 5,689 - - -

- 425 5,689 6,114 (36,769) (30,655)

1,500 7,118 5,689 14,307 (612,608) (598,301)

Deficit on the provision of services (19,169) - - (19,169) - (19,169)

Other Comprehensive Income and Expenditure - - - - 49,229 49,229

(19,169) - - (19,169) 49,229 30,060

Adjustments between accounting basis & funding basis under regulations (note 12) 19,826 - - 19,826 (19,826) -

657 - - 657 29,403 30,060

Transfers to/from earmarked Reserves (note 24) (657) 657 (535) (535) 535 -

- 657 (535) 122 29,938 30,060

1,500 7,775 5,154 14,429 (582,670) (568,241)

Movement in reserves during 2018/19

Net decrease before Transfers to Earmarked Reserves

Increase/(Decrease) in 2019/20

Balance at 31 March 2019 carried forwardMovement in reserves during 2019/20

Net Increase/(Decrease) before Transfers to Earmarked Reserves

Balance at 31 March 2020 carried forward

Increase/(Decrease) in 2018/19



Balance at 1 April 2018

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Balance Sheet as at 31 March 2020

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category of reserves are usable reserves, i.e. those reserves that the Authority may use to provide services, subject to the need to maintain a prudent level of reserves and any statutory limitations on their use (for example the Capital Receipts Reserve that may only be used to fund capital expenditure or repay debt). The second category of reserves is those that the Authority is not able to use 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’.

Notes£’000 £’000

61,009 Property, Plant & Equipment 13 59,16983 Intangible assets 13 198

8,000Long-term Debtor - Deferred Capital Receipt 17 -

69,092 Long-term Assets 59,367

8,651 Short-term Debtors 17 14,9226,880 Cash and Cash Equivalents 18 9,722

15,531 Current Assets 24,644

(1,189) Short-term Provisions 22 (1,075)(5,544) Short-term Creditors 19 (6,148)(6,733) Current Liabilities (7,223)

(7,000) Long-term borrowing 20 (7,000)Other Long-term Liabilities

(666,378) Net Pensions Liability 26 (635,418)(590) Long-term Provisions 23 (590)

(2,223) Deferred Liability 7 (2,021)

(676,191) Long-term Liabilities (645,029)

(598,301) Net Liabilities (568,241)

14,307 Usable Reserves 24 14,429(612,608) Unusable Reserves 25 (582,670)(598,301) Total Reserves (568,241)

31-Mar-19 31-Mar-20

Signed

Donald Davies Danielle Neale Chair of the Avon Fire Authority Treasurer of the Avon Fire Authority 26 August 2020 26 August 2020

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Cash Flow Statement

The Cash Flow Statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents 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 Authority are funded by way of taxation and grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Authority.

£'000 £'000

18,618 19,169

(38,211) (22,995)

17,910 -

(1,683) (3,826)

(8,952) 789

2,562 195

(8,073) (2,842)

1,193 (6,880)

(6,880) (9,722)

Net increase or decrease in cash and cash equivalents

Cash and cash equivalents at the end of the reporting period (note 18) overdraft (in-hand)

Cash and cash equivalents at the beginning of the reporting period

Investing Activities (note 30)

Financing Activities (note 31)

Net deficit on the provision of services

2018/2019 2019/2020

Adjustments to net deficit on the provision of services for non-cash movements (note 29)

Adjustments for items included in the net deficit on the provision of services that are investing and financing activities (note 29)

Net cash flows from Operating Activities

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Notes to the Core Financial Statements

1. Statement of Accounting Policies

i General Principles

The Statement of Accounts summarises the Authority’s transactions for the 2019/20 financialyear and its position at the year-end of 31 March 2020. The Authority is required to preparean annual Statement of Accounts in accordance with the Accounts and Audit Regulationsand be prepared in accordance with proper accounting practices. These practices primarilycomprise the Code of Practice on Local Authority Accounting in the United Kingdom 2019/20supported 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 financialinstruments.

ii Accruals of Income and Expenditure

Activity is accounted for in the year that it takes place, not simply when cash payments aremade or received.

The Authority adopted IFRS 15: Revenue Recognition from Contracts with Customers from1 April 2018, such that revenue from contracts with service recipients, whether for services orthe provision of goods, is recognised when (or as) the goods or services are transferred tothe service recipient in accordance with the performance obligations in the contract. Themain change is that revenue recognition is now based on the transfer of control over goodsand services to a customer rather than risks and rewards, which may result in changes to thepattern of revenue recognition. In local government, the generation of revenues from chargesto service recipients is only a minor funding stream and contracts with customers tend to beaccounted for and delivered within each financial year.

• Revenue from the sale of goods is recognised when the Authority transfers thesignificant control of ownership to the purchaser and it is probable that economicbenefits or service potential associated with the transaction will flow to the Authority.

• Revenue from the provision of services is recognised when the Authority can measurereliably the percentage of completion of the transaction and it is probable thateconomic benefits or service potential associated with the transaction will flow to theAuthority.

• Supplies are recorded as expenditure when they are consumed.• Expenses in relation to services received (including services provided by employees)

are recorded as expenditure when the services are received rather than whenpayments are made.

• Interest receivable on investments and payable on borrowings is accounted forrespectively as income and expenditure on the basis of the effective interest rate forthe relevant financial instrument rather than the cash flows fixed or determined by thecontract.

• Where revenue and expenditure have been recognised but cash has not beenreceived or paid, a debtor or creditor for the relevant amount is recorded in theBalance Sheet. Where debts may not be settled, the balance of debtors is writtendown and a charge made to revenue for the income that might not be collected.

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iii Cash and Cash Equivalents and Bank Overdrafts

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are short-term investments that are readily convertible to known amounts of cash with insignificant risk of change in value.

In 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 Authority’s cash management.

When the gross deficit of cash overdrawn on bank accounts has no offsetting arrangements the balance sheet shows the balance as Bank Overdrafts.

iv Exceptional Items When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the Authority’s financial performance.

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

Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. 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 where the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Authority’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.

vi Charges to Revenue for Non-Current Assets

Services and support services are charged with the following amounts to record the cost of holding fixed assets during the year:

• depreciation attributable to the assets used by the relevant service;• revaluation and impairment losses on assets used by the service where there are no

accumulated gains in the Revaluation Reserve against which the losses can be writtenoff;

• amortisation of intangible fixed assets attributable to the service.

The Authority is not required to raise council tax to fund depreciation, revaluation and impairment losses or amortisation. However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement calculated on a prudent basis determined by the Authority in accordance with statutory guidance. Depreciation, revaluation and impairment losses and amortisation are therefore replaced by the contribution in the General Fund Balance, described as the minimum revenue provision “MRP”, by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement for the difference between the two.

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vii Employee Benefits

Benefits Payable During Employment Short-term employee benefits are those due to be settled within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave and paid sick leave, bonuses and non-monetary benefits for current employees and are recognised as an expense for services in the year in which employees render service to the Authority. An accrual is made for the cost of holiday entitlements (or any form of leave e.g. 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 calculated for all employees using current salaries. The accrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

Termination Benefits

Termination benefits, whether they are a decision by the Authority to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy, are charged on an accruals basis to the relevant service line (or in discontinued operations) in the Comprehensive Income and Expenditure Statement.

Where termination benefits involve the enhancement of pensions, statutory provisions require the Authority’s Fund balance to be charged with the amount payable by the Authority 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.

Post-Employment Benefits

Employees of the Authority are divided between the 1992, 2006 and 2015 Firefighters Pension Schemes for its uniformed Firefighters and the Local Government Scheme for support staff and abated Firefighters:

• The Firefighters Pension Schemes are administered by the Bath & North EastSomerset Council in accordance with Department for Communities and LocalGovernment (DCLG) regulations.

• The Local Government Pensions Scheme (called the Avon Pension Fund) isadministered by Bath & North East Somerset Council.

All schemes provide defined benefits to members (retirement lump sums and pensions), earned as employees work for the Authority.

The Firefighters Pension Schemes

These are unfunded schemes. For such schemes, as there are no investment assets, IAS 19 requires recognition of the liability and pension reserve in the Balance Sheet and transactions in the Comprehensive Income and Expenditure statement.

The Local Government Pension Scheme

The Avon Pension Fund is accounted for as a defined benefits scheme: • The liabilities of the Avon Pension Fund attributable to the Authority are included in the

Balance Sheet on an actuarial basis using the projected unit method – i.e. anassessment of the future payments that will be made in relation to retirement benefitsearned to date by employees, based on assumptions about mortality rates, employeeturnover rates etc., and projections of projected earnings for current employees.

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• Liabilities are discounted to their value at current prices, using an appropriate discountrate based on the return for high quality corporate bonds.

• The assets of Avon Pension Fund attributable to the Authority are included in theBalance Sheet at their fair value:

o Quoted securities – current bid priceo Unquoted securities – professional estimateo Unitised securities – current bid priceo Property – market value.

• The movement on the net pensions liability is analysed into the following constituents:o Service cost comprising:

- Current Service cost - the increase in the present value of a defined benefitobligation (liabilities) resulting from employee service in the current period.

- Past service cost – (where applicable) the change in the present value ofthe defined benefit obligation for employee service in prior periods, resultingfrom a plan amendment (the introduction or withdrawal of, or changes to, adefined benefit plan) or a curtailment (a significant reduction by theAuthority in the number of employees covered by a plan).

- Any gain or loss on settlement – (where applicable) arising when anauthority enters into a transaction that eliminates all further legal orconstructive obligations for part or all of the benefits provided under adefined benefit plan.

o Net Interest on the defined benefit liability/(asset) – the change during thepresent in the net defined benefit liability/(asset) that arises from the passage oftime.

o Expected return on assets – the annual investment return on the fund assetsattributable to the Authority, based on an average of the expected long-termreturn – credited to the Financing and Investment Income and Expenditure linein the Comprehensive Income and Expenditure Statement.

o Gains or losses on settlements and curtailments – the result of actions torelieve the Authority of liabilities or events that reduce the expected futureservice or accrual of benefits of employees – debited or credited to the Surplusor Deficit on the Provision of Services in the Comprehensive Income andExpenditure Statement as part of Non Distributed Costs.

o Remeasurements of the net defined benefit liability (asset) comprising:- Actuarial gains and losses – changes in the present value of the defined

benefit obligation resulting from: a) experience adjustments (the effects ofdifferences between the previous actuarial assumptions and what hasactually occurred) and b) the effects of changes in actuarial assumptions.

- the Return on plan assets – excluding amounts included in net interest onthe net defined benefit liability/(asset).

o Contributions by scheme participants – the increase in scheme liabilities andassets due to payments made into the scheme by employees (where increasedcontribution increases pensions due to the employee in the future).

o Contributions by the Employer – the increase in scheme assets due topayments made into the scheme by the employer.

o Benefits paid – payments to discharge liabilities directly to pensioners.

In relation to retirement benefits, statutory provisions require the Authority’s Fund balance to be charged with the amount payable by the Authority to the pension fund or directly to

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pensioners in the year, not the amount calculated according to the relevant accounting standards. In the Movement in Reserves Statement, this means that there are appropriations to and from the Pensions Reserve to remove the notional debits and credits for retirement benefits and replace them with debits for the cash paid to the pension fund and pensioners and any such amounts payable but unpaid at the year-end. The negative balance that arises 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 flows rather than as benefits are earned by employees.

Discretionary Benefits

The Authority also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme.

Long-term Disability Benefit

In accordance with IPSAS 25 and the code, the Authority has rebutted the presumption to account for long-term disability benefit in the same way as other long-term benefits under IAS 19. The Authority considers that these could be both significant and volatile given the natureof the service provision and therefore accounts for them, under IAS 19, as defined post-employment benefits.

viii Events After the Balance Sheet Date

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

• Those that provide evidence of conditions that existed at the end of the reportingperiod – the Statement of Accounts is adjusted to reflect such events.

• Those that are indicative of conditions that arose after the reporting period – theStatement of Accounts is not adjusted to reflect such events, but where a category ofevents would have a material effect, disclosure is made in the notes of the nature ofthe events and their estimated financial effect.

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

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ix Financial Instruments and Fair Value Measurement

The accounting policy for financial instruments was amended in 2018/19 as a result of the adoption by the Code of IFRS 9. However, as the Authority does not have complex borrowing or lending arrangements, the accounting treatment of financial instruments has not changed. The Authority’s financial assets and financial liabilities are classified as held at amortised cost.

Financial Liabilities

Financial liabilities are recognised on the Balance Sheet when the Authority becomes a party to the contractual provisions of a financial instrument and are initially measured at fair value and are carried 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 the borrowings that the Authority 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.

Financial Assets

Financial assets are classified into two types: • Loans and receivables – assets that have fixed or determinable payments but are not

quoted in an active market.o Receivables are measured at fair value and carried at their amortised costo There are no material loans which require separate classification and

accounting treatment• Available-for-sale assets – assets that have a quoted market price and/or do not have

fixed or determinable payments.o There are no available for sale assets which require separate classification and

accounting treatment

Fair value measurement The Authority measures some of its financial instruments at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either: a) in the principal market for the asset or liability, orb) in the absence of a principal market, in the most advantageous market for the asset orliability.The Authority measures the fair value of an asset or liability using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

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The Authority uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Inputs to the valuation techniques in respect of assets and liabilities for which fair value is measured or disclosed in the Authority’s financial statements are categorised within the fair value hierarchy, as follows: Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the Authority can access at the measurement date Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 – unobservable inputs for the asset or liability. Financial instruments as set out in note 21 are classified at the following levels in the hierarchy:

• Level 1 – Short-term Creditors, Debtors, Cash & Cash Equivalents and Leases deferred liability.

• Level 2 – Borrowings including both PWLB & Local Authority loans and PFI deferred liability.

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x Government Grants and Contributions

Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Authority when there is reasonable assurance that:

• The Authority will comply with the conditions attached to the payments, and

• The grants or contributions will be received.

Amounts recognised as due to the Authority are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired using the grant or contribution are required to be consumed by the recipient as specified, or future economic benefits or service potential must be returned to the transferor.

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.

xi Intangible Assets

Expenditure on non-monetary assets that do not have physical substance but are controlled by the Authority as a result of past events (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Authority.

Intangible assets are measured initially at cost. Amounts are only revalued where the fair value of the assets held by the Authority can be determined by reference to an active market. In practice, no intangible asset held by the Authority meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised on a straight line basis over its useful life of 5 years to the Fire fighting and rescue operations service line in the Comprehensive Income and Expenditure Statement. An asset is tested for impairment whenever there is an indication that the asset might be impaired – any losses recognised are posted to the relevant service line in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal or abandonment 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, impairment losses and disposal gains and losses are not permitted to have an impact on the Authority’s Fund Balance. The gains and losses are therefore reversed out of the Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for sale proceeds) the Capital Receipts Reserve.

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xii. Property, Plant and Equipment

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

Recognition

Assets costing individually or collectively less than £5,000 are classed as de-minimis and are not capitalised. The expenditure is charged direct to the appropriate service line.

Expenditure 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 Authority and the cost of the item can be measured reliably. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (i.e. repairs and maintenance) is charged as an expense when it is incurred.

Measurement

Assets are initially measured at cost, comprising:

• the purchase price;

• any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

The Authority does not capitalise borrowing costs incurred whilst assets are under construction.

The cost of assets acquired other than by purchase is deemed to be its fair value, unless the acquisition does not have commercial substance (i.e. it will not lead to a variation in the cash flows of the Authority). In the latter case, where an asset is acquired via an exchange, the cost of the acquisition is the carrying amount of the asset given up by the Authority.

Valuation

Assets are then carried in the Balance Sheet using the following measurement bases: • operational land and properties and other operational assets – either depreciated

replacement costs for specialised assets, or at existing use value for other assets; • vehicles, plant and equipment – depreciated historical cost, as a proxy for fair value; • all other assets – fair value, determined as the amount that would be paid for the asset

in its existing use (existing use value – EUV).

Property valuations are undertaken by an external professional valuer independent of the Fire Authority in accordance with the RICS Valuation – Global Standards.

Where there is no market-based evidence of fair value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of fair value. The depreciated replacement cost assumes that the asset would be replaced with a modern equivalent, not a building of identical design, with the same service potential as the existing asset.

Where non-property assets that have short useful lives or low values (or both), depreciated historical cost basis is used as a proxy for fair value. 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 and 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

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credited to the Comprehensive Income and Expenditure Statement where they arise from the reversal of a loss previously charged to a service.

Where decreases in value are identified, they are accounted for by: • 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 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account.

Impairment

Assets are assessed at each year-end as to whether there is any indication that an asset may be impaired. Where indications exist 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 by: • 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(s) in the Comprehensive Income and Expenditure Statement.

Where an impairment loss is reversed subsequently, the reversal is credited to the relevant service lines 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.

Depreciation

Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their useful lives. An exception is made for assets without a determinable finite useful life (i.e. freehold land and certain Community Assets).

For all assets with a finite life, depreciation is calculated on a straight-line basis over the assessed useful life of the asset.

Depreciation is not charged in the year of acquisition.

Where a 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 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

When an asset is disposed of, or decommissioned, the carrying amount of the asset in the

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Balance Sheet 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 disposals (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 (i.e. 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 for a disposal in excess of £5,000 are categorised as capital receipts. The balance of receipts is required to be credited to the Capital Receipts Reserve, and can then only be used for new capital investment or set aside to reduce the Authority’s underlying need to borrow (the capital financing requirement). Receipts are appropriated to the Reserve from the General Fund Balance in the Movement in Reserves Statement.

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

Assets Held for Sale

When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing 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 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 value 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. xiii Private Finance Initiative (PFI) and Similar Contracts

PFI and similar contracts are agreements to receive services, where the responsibility for making available the property, plant and equipment needed to provide the services passes to the PFI contractor.

Under the Joint Training PFI Scheme the Authority is deemed to control, along with the other partners, the services that are provided under the PFI scheme, and neither the Authority, other partners, nor the Service Provider, retains any residual interest in the property at the end of the 25-year service period. For these reasons the Authority carries its share of the assets used under the contracts on its Balance Sheet as part of Property, Plant and Equipment.

The original recognition of these assets at fair value (based on the cost to purchase the property, plant and equipment) was balanced by the recognition of a liability for amounts due to the scheme operator to pay for the capital investment.

Non-current assets recognised on the Balance Sheet are revalued and depreciated in the same way as property, plant and equipment owned by the Authority.

The amounts payable to the PFI operator each year are analysed into five elements: • Fair value of the services received during the year – debited to the relevant service in

the Comprehensive Income and Expenditure Statement. • Finance cost – an interest charge on the outstanding Balance Sheet liability, debited to

the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

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• Contingent rent – increases in the amount to be paid for the property arising during the contract, debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement.

• Payment towards liability – applied to write down the Balance Sheet liability towards the PFI operator (the profile of write-downs is calculated using the same principles as for a finance lease).

• Lifecycle replacement costs – recognised as non-current assets on the Balance Sheet.

The Government provides some revenue support to the project in the form of grants (PFI credits) and the three authorities fund the balance by making contributions, from within their own resources.

The grant from the Government, together with the contributions from the partners is paid into an equalisation fund, which is administered by Gloucestershire County Council on behalf of the partners. Surpluses on the equalisation fund are invested in order to ensure that adequate funding throughout the life of the contract is available. The fund is reviewed, and if necessary, contributions amended every three to five years with the intention that the balance of the fund at the end of the contract will be nil.

xiv Provisions, Contingent Liabilities and Contingent Assets

Provisions

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

Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Authority 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 into account relevant risks and uncertainties.

When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year – where it becomes less than 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.

Where some or all of the payment required to settle a provision is expected to be recovered from another party (e.g. from an insurance claim), this is only recognised as income for the relevant service if it is virtually certain that reimbursement will be received if the Authority settles the obligation.

Contingent Liabilities

A contingent liability arises where an event has taken place that gives the Authority 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 Authority. 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.

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Contingent Assets

A contingent asset arises where an event has taken place that gives the Authority 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 Authority.

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 or service potential.

xv Reserves The Authority sets aside specific amounts as reserves for 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 reserves are kept to manage the accounting processes for non-current assets, retirement and employee benefits and do not represent usable resources for the Authority – these reserves are explained in the relevant policies. xvi VAT VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty’s Revenue & Customs. VAT receivable is excluded from income. xvii Council Tax and Non-Domestic Rates Council tax and Non-Domestic rate income included within the Comprehensive Income and Expenditure Statement includes our share of the surplus or deficit from other Local Authorities’ collection funds.

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2. a. Critical Judgements in Applying Accounting Policies

In applying the policies set out in the Statement of Accounting Policies, the Authority has to make certain judgements about complex transactions or those involving uncertainty about future events. It is felt that there are no critical judgement required in relation to applying accounting policies. b. Assumptions made about the future and other sources of estimation uncertainty

The Statement of Accounts contains estimated figures that are based on assumptions made by the Authority about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Authority’s Balance Sheet at 31 March 2020 for which there is a risk of adjustment in the forthcoming financial year are as follows: • The actuary has provided an assessment of the effect of changes in the assumptions

used in estimating pension assets and liabilities included in the accounts according to the requirements of IAS 19, as reported in note 26.

• Estimation of the net liability to pay pensions depends on a number of complex

estimates 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 Authority with expert advice about the assumptions to be applied. Please refer to the Sensitivity analyses provided in note 26.

• Land and Building assets are subject to external valuations every 5 years. These

valuations are physically completed for an element of the asset stock and then applied across the full asset stock. Although these valuations are completed by industry experts they are estimates and due to the high value of such assets there is a risk of error as the estimates could result in significant differences. No assumption has been made in relation to the potential impact of Brexit on property valuations as at this stage it is not possible to make forecasts with any certainty.

• COVID:

The Accounts demonstrate the performance of the Authority as at 31st March 2020, just one week after the UK officially went into lockdown as a result of the Covid 19 pandemic and changed the way we deliver services. In the South West of England we have been fortunate with infections from the pandemic and as an authority we have seen minimal impacts on sickness or our ability to deliver our core services. At the current time, it is not possible to accurately predict the longevity and severity of the impact of Covid-19 on the economy. Due to the specialist nature of our buildings and the fact we lease our administration space the values of our property assets have been based on the situation prior to Covid-19, on the assumption that values will be restored when the market becomes more fluid.

• There is still uncertainty about the implications of Britain leaving the European Union. At the current time it is not possible to predict the agreement that will be reached at the end of the transition period. The assumption has been made that this will not significantly impair the value of the Fire Authority’s assets. However this assumption needs to be revisited and reviewed regularly.

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c. Accounting Standards issued but not yet adopted

The Code of Practice on Local Council Accounting in the United Kingdom (the Code) requires the Authority to disclose information relating to the impact of an accounting change that will be required by a new standard that has been issued but not yet adopted. At the Balance Sheet date, the following new standards and amendments to existing standards have been published but not yet adopted by the Code of Practice of Local Authority Accounting in the United Kingdom: For this disclosure the standards introduced by the 2019/20 Code only include a number of minor amendments to the following International Financial Reporting Standards and are currently not applicable to the Authority. IFRS 16 Leases will require local authorities that are lessees to recognise most leases on their balance sheets as right-of-use assets with corresponding lease liabilities (there is recognition for low-value and short-term leases). CIPFA/LASAAC have deferred implementation of IFRS 16 for local government to 1 April 2021. IAS 40 Investment Property: Transfers of Investment Property provides further explanation of the instances in which a property can be classified as investment property. IFRIC 22 Foreign Currency Transactions and Advanced Consideration clarifies the treatment of payments in a foreign currency made in advance of obtaining or delivering services or goods. IFRIC 23 Uncertainty Over Income Tax Treatments provides additional guidance on income tax treatment where there is uncertainty. IFRS 9 Financial Instruments: prepayment features with negative compensation amends IFRS 9 to make clear that amortised cost should be used where prepayments are substantially lower than the unpaid principal and interest.

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3. Expenditure and Funding Analysis

This analysis shows how annual expenditure is used and funded from resources (government grants, council tax and business rates) in comparison with those resources consumed or earned. The Expenditure and Funding Analysis also shows how this expenditure is allocated for decision-making purposes. Income and expenditure accounted for under generally accepted accounting practices is presented more fully in the Comprehensive Income and Expenditure Statement.

2019/20 Net Expenditure Chargeable to the General Fund

Adjustment between Funding and Accounting Basis (Note 4)

Net Expenditure in the Comprehensive Income and Expenditure Statement

£'000 £'000 £'000

Fire fighting and rescue operations 42,648 12,354 55,002

Net Cost of Service 42,648 12,354 55,002

Other Income (43,305) 7,472 (35,833)

Surplus on Provision of Services (657) 19,826 19,169

Opening Usable Reserves Balance 14,307

Plus surplus on Usable Reserves Balance in year 657

Closing Usable Reserve Balance at 31 March 14,964

2018/19Net Expenditure Chargeable to the General Fund

Adjustment between Funding and Accounting Basis (Note 4)

Net Expenditure in the Comprehensive Income and Expenditure Statement

£'000 £'000 £'000

Fire fighting and rescue operations 41,630 29,549 71,179

Net Cost of Service 41,630 29,549 71,179

Other Income and Expenditure (47,744) (4,817) (52,561)

Surplus on Provision of Services (6,114) 24,732 18,618

Opening Usable Reserves Balance 8,193

Plus surplus on Usable Reserves Balance in year 6,114

Closing Usable Reserve Balance at 31 March 14,307

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4. Note to the Expenditure and Funding Analysis

This note provides a reconciliation of the main adjustments to Net Expenditure Chargeable to the General Fund balances to arrive at the amounts in the Comprehensive Income and Expenditure Statement. The relevant transfers between reserves are explained in the Movement in Reserves Statement.

2019/20Adjustments for Capital Purposes

Net change for the Pension Adjustments

Other Differences

Total Adjustments

£'000 £'000 £'000 £'000

Fire fighting and rescue operations 1,766 10,553 35 12,354

Net Cost of Service 1,766 10,553 35 12,354

Other Income and Expenditure 368 6,593 511 7,472

Deficit on Provision of Services 2,134 17,146 546 19,826

2018/19Adjustments for Capital Purposes

Net change for the Pension Adjustments

Other Differences

Total Adjustments

£'000 £'000 £'000 £'000

Fire fighting and rescue operations (54) 29,605 (2) 29,549

Net Cost of Service (54) 29,605 (2) 29,549

Other Income and Expenditure (7,050) 2,624 (391) (4,817)

(Surplus) or Deficit on Provision of Services (7,104) 32,229 (393) 24,732

• Adjustments for capital purposes

Cost of Service - adds in depreciation and impairment and revaluation gains and losses. Other operating expenditure – adjusts for capital disposals with a transfer of income on disposal of assets and the amounts written off for those assets. Financing and investment income and expenditure – the statutory charges for capital financing, i.e. Minimum Revenue Provision and other revenue contributions are deducted from other income and expenditure as these are not chargeable under generally accepted accounting practices. Taxation and non-specific grant income and expenditure – Capital grants are adjusted for as income not chargeable under generally accepted accounting practices. The Taxation and Non-Specific Grant Income and Expenditure line is credited with capital grants receivable in the year without conditions.

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• Net change for the pensions’ adjustments Net change for the removal of pension contributions and the addition of IAS 19 Employee Benefits pension-related expenditure and income: Cost of services - removes the employer pension contributions made by the Authority as allowed by statute and replaces it with current and past service costs. Financing and investment income and expenditure - the net interest on the defined benefit liability charged to the Comprehensive Income and Expenditure Statement. • Other Differences Other Differences between amounts debited/credited to the Comprehensive Income and Expenditure Statement and amounts payable/receivable to be recognised under statute: Taxation and non-specific grant income and expenditure - represents the difference between what is chargeable under statutory regulations for Council Tax and NDR that was projected to be received at the start of the year and the income recognised under generally accepted accounting practices in the Code. This is a timing difference as any difference will be brought forward in future Surpluses or Deficits on the Collection Fund.

5. Expenditure and Income Analysed by Nature

This reconciliation shows how the Surplus or Deficit on Provision of Service included in the Comprehensive Income and Expenditure Statement is analysed by nature.

2018/19 2019/20£’000 £’000

Expenditure36,822 Employee benefits expenses 45,4318,976 Other Service expenses 9,3653,576 Depreciation, amortisation and impairment 3,632

(13,215) Profit on disposal of non-current assets -16,263 Interest payments 19,39025,288 Pension past service costs -77,710 77,818

Income(458) Fees & charges and other service income (402)

(30,868) Income from Council Tax & Business Rates (31,692)(27,534) Grants and contributions (26,253)

(232) Interest and investment income (302)(59,092) (58,649)

18,618 Deficit on the provision of services 19,169

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6. External Audit Fees The Authority has incurred the following costs in relation to the audit of the Statement of Accounts and to non-audit services provided by the Authority’s external auditors.

2018/2019 2019/2020£’000 £’000

24 24

- 5- 9Additional fees regarding public access work

Fees payable with regard to external audit services carried out by the appointed auditorAdditional fees regarding extra work on the impact of the McCloud judgement

7. Un-discharged obligations – Private Finance Initiative (PFI) scheme (Joint Training Centre) As set out in the Accounting policies, under a joint PFI venture, the Authority now receives a significant element of its fire training from Babcock Fire Training (Avonmouth) Limited, a company contracted to provide the training until 31 March 2028. The training is supplied at the Joint Fire Training Centre, Avonmouth, a facility that the service provider designed, built, financed and now operates (DBFO) under the PFI contract. The Authority’s share (50%) of the annual net contract payments paid during the year together with the estimated amounts payable over the remaining nine years of the joint venture are as follows:

As detailed in the note 1 (Statement of Accounting Policies) and more specifically throughout this note the Authority has entered into a Joint Training PFI scheme. As part of this scheme the equalisation fund, administered by Gloucestershire County Council, is invested to ensure that adequate funding is available throughout the life of the contract. The fund is reviewed and if necessary contributions from the three partners amended every three to five years with the intention that the balance on the fund at the end of the contract will be nil.

Service Charge

Interest Repayment of Liability

Total

2018/2019 2019/2020£’000 £’000 £’000 £’000 £’000

1,478 909 411 195 1,515

1,515 Within 1 year 931 403 203 1,5376,366 Between 2 and 5

years 3,961 1,577 1,002 6,540

7,058 Between 6 and 9 years

3,236 1,093 1,018 5,347

Total contract payments

Outstanding undischarged contract obligations:

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The fund as at 31 March 2020 is forecasted to be in a small surplus at the end of the contract; this is a swing from a small deficit that was calculated at 31 March 2019. There are unknowns regarding inflation rates over the remaining 8 years of the contract. The Training Centre contributions by the three partners are to remain at current levels to mitigate the risk of future rises in inflation rates. The Authority considers it prudent to also keep the provision at existing levels. Summary totals for the Asset held under the PFI and accounted for as part of Non-Current Assets – namely the building, including lifecycle replacement costs and the effect of revaluation are as follows:

Property Plant &

Equipment£’000

5,523(3,086)

2,437

13(272)

2,178

RevaluationDepreciation

Gross Asset Value at 31 March 2019

Net Book Value of Asset at 31 March 2020

Accumulated Depreciation and ImpairmentNet Book Value of Asset at 31 March 2019

Movement in 2019/20

Summary totals for the corresponding liability are as follows:

The above listed commitments are affected by past inflation – previous price rises will be built into future payments – and also by future inflation – which gives rise to uncertainty about future payments.

Property Plant &

Equipment£’000

2,417

(194)

2,223

2022,021

PFI Lease Liability outstanding at 31 March 2019

PFI Lease Liability outstanding at 31 March 2020

PFI Lease Liability repaid in 2019/20

PFI Lease Liability - CurrentPFI Lease Liability - Deferred

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8. Members’ Allowances

In accordance with the Local Authorities (Members’ Allowances) (England) Regulations 2003 (as amended) the total sums paid by Avon Fire Authority to members/co-optees under the Avon Fire Authority Members’ Allowances Scheme for 2019/20 are set out on the following page. The summary of allowances, which have been paid under this scheme are as follows:

2018/2019 2019/2020£’000 £’000

56 51

56 51Total

Allowances

A copy of the Members’ Allowances Scheme and of the record of payments made under the scheme are available for inspection by appointment at Police and Fire Headquarters, Valley Road, Portishead, Bristol, BS20 8JJ between 8.30am and 4.30pm Monday to Friday (excluding public holidays).

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A detailed list of individual payments can be seen below:

2018/2019 Basic

Allo

wanc

e

Spec

ial

Resp

onsib

ility

Allow

ance

Trav

el &

Subs

isten

ce

Expe

nses

2019/2020£ £ £ £ £

281 - - - -1,512 1,542 - - 1,542

163 - - - -291 - - - -

1,972 1,542 - 176 1,718- 1,174 - 196 1,370

1,563 373 - 23 39611,659 1,542 9,414 263 11,219

3,831 1,542 2,124 - 3,666281 -

1,313 1,542 - 107 1,6491,571 153 - 17 1701,734 1,542 1,054 - 2,5963,871 373 509 - 882

- 1,238 - 57 1,2953,578 373 509 - 882

- 1,174 - 28 1,202281 - - - -

1,235 1,542 - - 1,542- 1,238 - - 1,238

2,545 1,542 252 1,604 3,398562 1,238 1,819 - 3,057

- 1,238 - - 1,2381,664 153 - - 153

- 1,174 - - 1,174- 1,238 - - 1,238

1,512 1,542 - - 1,5421,512 373 - - 3731,512 153 - - 153

429 - - - -- 1,204 - - 1,204

2,275 153 - - 153- 1,238 - - 1,238

558 - - - -1,512 153 - - 1531,844 153 - 34 1874,123 1,542 2,107 - 3,649

146 354 - - 354240 - - - -

55,570 30,338 17,788 2,505 50,631

Councillor N Wilton

Councillor I Scott

Councillor P AbrahamCouncillor J Ashe

Mrs S BurrellCouncillor C Windows

Councillor P Gggin

Councillor C DaviesCouncillor E Clough

Councillor D Davies

Mr M Rose

Councillor B Massey

Councillor M Shelford

Councillor M Tyrrell

Councillor H HopkinsonCouncillor A Hale

Councillor R Jacobs

Councillor B Shearn

Councillor M Williams

Councillor T Jones

Recipient

Councillor C BarrettCouncillor T Butters

Councillor A Barber

Councillor A Davis

Councillor R EddyCouncillor R Garner

Councillor A Monk

Councillor C Phipps

Councillor C JohnsonCouncillor H Jama

Councillor M MorrisCouncillor P Myers

Councillor C Jackson

Councillor A Shah

Councillor K Dudd

Councillor R Tucker

Councillor R Payne

Councillor S Pomfret

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9. Employees’ Remuneration

The Authority is required, by the Accounts and Audit Regulations 2015, to disclose the number of employees whose remuneration, excluding employer pension contributions, was £50,000 or more in bands of £5,000 and this information is set out in the following table – staff included in the senior officer remuneration table (note 10) are not included in this table:

2018/2019 2019/2020

13 39 15

11 134 72 24 1- 1

No. of Employees Remuneration Band

No. of Employees

£50,000 - £54,999£55,000 - £59,999£60,000 - £64,999£65,000 - £69,999£70,000 - £74,999£75,000 - £79,999£80,000 - £84,999

The number of exit packages, with total cost per band, are set out in the table below.

No. of departures

agreed

Total cost of exit

packages in each band £,000

No. of Compulsory

Redundancies

No. of other

departures agreed

Total no. of exit

packages by cost band

Total cost of exit

packages in each band £,000

1 5 - 1 1 1- - - 1 1 24- - - 1 1 331 5 - 3 3 58

2018/2019

Total

Exit Package Cost Band (including

special payments)

£20,001 - £30,000£30,001 - £40,000

2019/2020

£0 - £20,000

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10. Senior Officer Remuneration

Under the CIPFA Code of Practice, the Authority is required to disclose individual remuneration details for senior employees. Senior employees are defined as those employees who have a role in the overall management of the organisation. For the Authority, it is deemed that this applies to the Service Management Board (SMB) and the other statutory officer – the Monitoring Officer. Details of their remuneration and amounts paid to them in the year, are shown in the following table:

Post Holder Sala

ry In

cl. F

ees

& Al

lowa

nces

Bene

fits

in K

ind

Pens

ion

Cont

ribut

ions

Note

Tota

l Rem

uner

atio

n In

cludi

ng P

ensio

n Co

ntrib

utio

ns

£ £ £ £

2019/20 148,987 2,935 53,669 205,591 2018/19 144,064 15,132 33,625 192,821

2019/20 157,598 3,117 26,474 (1 187,189 2018/19 118,603 5,737 16,960 141,300

2019/20 120,430 3,698 33,039 157,167 2018/19 111,921 2,738 16,005 130,664

2019/20 18,753 633 2,877 (2 22,263 2018/19 - - - -

2019/20 118,905 1,314 44,381 164,600 2018/19 111,921 1,709 24,287 137,917

Director of Corporate Services 2019/20 - - - - 2018/19 84,783 7,305 11,732 (3 103,820

Interim Director of Corporate Services 2019/20 23,267 - 3,560 (4 26,827 2018/19 - - - -

Interim Treasurer 2019/20 12,257 - - (6 12,257 2018/19 15,841 - - (5 15,841

2019/20 120,090 682 34,943 155,715 2018/19 81,876 6,228 12,036 100,140

2019/20 29,734 - 3,784 (7 33,518 2018/19 96,999 - 14,259 111,258

Total 2019/20 750,021 12,379 202,727 965,127 Total 2018/19 766,008 38,849 128,904 933,761

(1) Post holder resigned 31/12/19(2) Interim appointment commenced 27/1/20(3) Post holder resigned 18/2/19(4) Interim appointment commenced 1/1/20(5) Interim appointment commenced 24/11/18(6) Interim appointment ended 30/6/19(7) Post holder resigned 30/6/19

Chief Fire Officer & Chief Executive - M Crennell

Assistant Chief Fire Officer - Director of Service Delivery Support

Legal Advisor, Clerk & Monitoring Officer

Interim Treasurer and Finance Manager

Assistant Chief Fire Officer - Director of Service Delivery

Deputy Chief Officer & Deputy Chief Executive - L Houghton

Interim Assistant Chief Fire Officer - Director of Service Delivery

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11. Related Party Transactions

The Code of Practice requires disclosure of material transactions with 'related parties' – bodies or individuals including key management / personnel that have the potential to control or influence the Authority or to be controlled or influenced by the Authority. For 2019/2020 the appropriate items are as follows:

• UK Government has effective control over the general operations of the Authority – it is responsible for providing the statutory framework within which the Authority operates; provides the majority of its funding in the form of grants (Revenue Support Grant and other specific grants) and redistributed non-domestic rates – (£16,512k).

• Members of the Authority have direct control over the Authority’s financial and

operating policies. They have been asked to provide information regarding Related Party transactions and from the information received it is believed that there have been no significant transactions during the year.

• Officers of the Authority have been asked to provide information regarding Related

Party transactions and from the information received it is believed that there have been no significant transactions during the year.

• Other local authorities:

Bristol City Council as a billing Authority responsible for collecting council tax

& business rates on behalf of the Fire Authority for its area (£11,761k). Also is a provider of financial services to the Fire Authority £227k.

Bath & North East Somerset Council as a billing Authority responsible for collecting council tax & business rates on behalf of the Fire Authority for its area - (£5,521k) and as the Authority responsible for administering the Avon Pension Fund, with contributions paid over in respect of Fire Authority employees and payments in respect of the Firefighters’ pension scheme £18,958k.

North Somerset Council (£6,424k) and South Gloucestershire Council (£8,497k) as billing authorities responsible for collecting council tax and business rates on behalf of the Fire Authority for their areas.

• Other public bodies:

HM Revenue & Customs as a significant element of the Fire Authority's

expenditure relates to payments for PAYE, National Insurance and VAT £6,662k. Income due in respect of February and March 2020 VAT returns of (£246k) is outstanding as at 31 March 2020.

Public Works Loan Board provides a long-term loan and the cost of servicing this debt is £221k.

Police and Crime Commissioner for Avon and Somerset own the premises of the Authority’s headquarters and the cost of the service charge is £245k.

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12. Adjustments Between Accounting Basis & Funding Basis Under Regulations

This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Authority to meet future capital and revenue expenditure.

2018/19

£’000 £’000 £’000 £’000

3,517 (3,517) 3,581 (3,581)

- - - -

59 (59) 52 (52)

(5,215) 5,215 - -

5,689 (5,689) - -

(593) 593 (251) 251

(375) 375 (280) 280

(179) 179 (195) 195

(2,007) 2,007 (773) 773

(8,000) 8,000 - -

37,293 (37,293) 24,951 (24,951)

(5,064) 5,064 (7,805) 7,805

(391) 391 511 (511)

(2) 2 35 (35)

24,732 (24,732) 19,826 (19,826)

Charges for depreciation, impairment & revaluation of non-current assets

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

Capital Grants and contributions applied

Amortisation of intangible assets

Adjustments involving the Capital Receipts Reserve

Profit/(Loss) on sale of non-current assetsAdjustments primarily involving the Deffered Capital Receipts Reserve

Statutory Provision for the Repayment of Debt - MRP

Adjustments primarily involving the Pensions Reserve

Adjustments primarily involving the Collection Fund Adjustment Account

Profit/(Loss) on sale of non-current assets

Insertion of items not debited or credited to the Comprehensive Income and Expenditure Statement

Capital expenditure charged against Fund balance

Employer's pension contributions and direct payments

Total Adjustments

Statutory Repayment of Debt - PFI

Voluntary Provision above MRP

Reversal of items relating to retirement benefits debited or credited to the Comprehensive Income and Expenditure Statement (see Note 26)

Adjustments primarily involving the Accumulated Absences Account

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

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

Adjustments primarily involving the Capital Adjustment Account

Mov

emen

t in

Unu

sabl

e R

eser

ves

Mov

emen

t in

Unu

sabl

e R

eser

ves

Fund

bal

ance

2019/20

Fund

bal

ance

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13. Summary of Capital Expenditure and Non-Current Asset Disposals

Property, Plant and Equipment Movements in Property, Plant and Equipment assets during the year are as follows:

Land & Buildings

PFI Vehicles & Equipment Total

£’000 £’000 £’000 £’000

42,316 4,988 26,307 73,611515 - 436 951

- - (531) (531)3,858 535 - 4,393

1,282 - - 1,282

47,971 5,523 26,212 79,706

(329) (2,815) (13,856) (17,000)(1,320) (271) (1,908) (3,499)

- - 500 5001,302 - - 1,302

(347) (3,086) (15,264) (18,697)

41,987 2,173 12,451 56,611

47,624 2,437 10,948 61,009

31 March 2019

Net book value of assets at 31 March 2018


31 March 2019

1 April 2018

2018/19

Cost or Valuation1 April 2018

Disposals

Revaluation written out to (surplus) / deficit on the provision of Services

Revaluation increases / (decreases) to (surplus) / deficit on the provision of Services

Additions

Depreciation and impairments

Charge for yearDisposals

Revaluation increases / (decreases) to Revaluation Reserve

Land & Buildings

PFI Vehicles & Equipment Total

£’000 £’000 £’000 £’000

47,971 5,523 26,212 79,706458 - 164 622(4) - (30) (34)

(2,378) 13 - (2,365)

1,545 - - 1,545

47,592 5,536 26,346 79,474

(347) (3,086) (15,264) (18,697)(1,397) (272) (1,713) (3,382)

- - 30 301,744 - - 1,744

- (3,358) (16,947) (20,305)

47,624 2,437 10,948 61,009

47,592 2,178 9,399 59,169


1 April 2019Charge for yearDisposalsRevaluation written out to (surplus) / deficit on the provision of Services

Cost or Valuation1 April 2019

Additions

2019/20


Disposals

Revaluation increases / (decreases) to (surplus) / deficit on the provision of Services

31 March 2020

Depreciation and impairments

31 March 2020

Revaluation increases / (decreases) to Revaluation Reserve

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Intangible Non-Current Assets Movements in intangible non-current assets during the year are as follows:

2018/19 2019/20£’000 £’000

918 9268 167- Disposals

926 1,093

(784) (843)(59) (52)

- Disposals(843) (895)

134 83

83 198

31 March 2020 (2019)

Original Cost

Net book value of assets at 31 March 2019 (2018)

1 April 2019 (2018)

31 March 2020 (2019)

Net book value of assets at 31 March 2020 (2019)

1 April 2019 (2018)Additions

Intangible Assets (Purchased software licences)

Charge for year

Amortisation and impairments


2018/19 2019/20£’000 £’000

4,664 -- Additions in year -- Revaluation -- -

4,664 -(4,664) -

- -

Assets newly classified as held for sale:


Balance at start of year

Balance at end of year

Assets sold

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14. Capital Expenditure and Sources of Finance Capital expenditure and sources of finance were as follows:

The Fire Authority determines its level of borrowing in accordance with the Prudential Code issued by CIPFA (subject to longstop controls). The Prudential Code requires the Fire Authority to ensure that its capital investment plans are affordable, prudent and sustainable. One of the prudential indicators, which relates to affordability, is the capital financing requirement; this indicates the underlying need to borrow for capital purposes. The table below shows how capital expenditure during the year has been financed (including the value of assets acquired under finance leases and the PFI contract), the sources of that finance and how this relates to the movement in the capital financing requirement during the year. The underlying need to borrow for capital purposes has also been analysed between borrowing supported by Government financial assistance and that which is not supported. The borrowing which is not supported relates to borrowing which the Authority has determined as prudent under the new prudential system.

2018/19 2019/20

£’000 £’000

515 Land and buildings 458306 Vehicles 20

41 Ops equipment 8088 IT Hardware 64

8 Software 167

958 789

- Unapplied Capital Receipts 535365 Capital Receipts 4593 Revenue Contributions 250

958 789

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2018/19 2019/20£’000 £’000

21,772 Opening Capital Financing Requirement 15,354

Capital Investment958 Property, Plant and Equipment 622

- Intangible assets 167

Sources of finance- Unapplied Capital Receipts (535)

(4,221) Capital Receipts (4)(3,155) Revenue Provision (1,499)

15,354 Closing Capital Financing Requirement 14,105

Explanation of movements in year

(202)Decrease in underlying need to borrow (supported by Government financial assistance) (1,053)

(6,216)Decrease in underlying need to borrow (unsupported by Government financial assistance) (195)

(6,418) Decrease in Capital Financing Requirement (1,248)

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15. Capital Financing - Minimum Revenue Provision The Authority is required by regulations, issued under the provisions of the Prudential Code, to make “prudent provision” for the redemption of debt. Whilst the term “prudent provision” is not defined in the regulations separate guidance has been issued on the interpretation of this term and the Authority has a legal obligation to comply with this. For debt incurred prior to 1 April 2008 the Authority has opted to continue to use the “Regulatory Method” to calculate its Minimum Revenue Provision (MRP) as permitted under the guidance. Therefore, the amount required to be set aside is 4% of the Authority’s Capital Financing Requirement. For any borrowing made under the provisions of the Prudential Code, after 1 April 2008 the Authority is required to repay this debt over the life of the asset that it is being utilised to fund. The balance of outstanding Prudential borrowing taken after 1 April 2008 will be deducted from the Authority’s Capital Financing Requirement to allow the Minimum Revenue Provision of 4% to be calculated. The repayment of prudential borrowing based on the life of the assets will then be added to this figure to arrive at the total MRP amount required to be set aside for the repayment of debt each year. During 2019/20 the Authority made additional Voluntary Revenue Provision (VRP) over and above MRP in relation to the repayment of deferred borrowing. The calculation of the Authority’s Capital Finance Requirement and its MRP and VRP is as follows:

2018/19 2019/20£'000 £'000

Opening Capital Financing Requirement as at 1 April:

61,409 Fixed Assets 59,843(12,554) Revaluation Reserve (19,060)(27,083) Capital Adjustments Account (26,677)

21,772 Capital Financing Requirement 14,106

(165) Adjustment Factor A (165)

21,607 Adjusted Capital Financing Requirement 13,941

555 MRP 2802,007 VRP 9682,562 1,248

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16. Non-Current Asset Valuation

The code requires assets carried at fair value to have a valuation at least every five years as a minimum, but these should be revalued more regularly if a five-yearly valuation would be insufficient to reflect material changes in value. Where there has been no material change the Authority has chosen to carry out the valuation of its properties on a five-year rolling basis. Land and Buildings were revalued by external valuers, Jones Lang LaSalle, as at 31 March 2020. Where appropriate the Authority’s properties have been valued on the basis of open market value for existing use. However, the nature of the Authority’s portfolio in terms of design, configuration and location, e.g. fire stations, has meant that the depreciated replacement cost approach has been considered more appropriate for the majority of its premises. The depreciated replacement cost assumes that the asset would be replaced with a modern equivalent, not a building of identical design, with the same service potential as the existing asset. The modern equivalent may well be smaller than the existing asset, for example due to technological advances in plant and machinery. The finite useful life of the Authority's assets on which depreciation has been provided are estimated as follows:

Assets Years

Buildings 10-60Fire Appliances 8-17Other Vehicles 6-10Trailers etc 5-12Communication equipment 12Computer equipment 5Other equipment 3-15

Intangible Assets are amortised on a straight-line basis over five years.

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17. Debtors

An analysis of debtors, amounts due in less than one year, is shown in the table below:

31/03/2019 31/03/2020

£'000 £'000

116 Trade Debtor 83 294 VAT - Non Trade 246

2,549 Collection Fund - Non Trade 1,799 3,804 Pension top up grant - Non Trade 3,026

- Deferred Capital Receipt - Non Trade 8,000 1,888 Other - Non Trade 1,768 8,651 14,922

The Deferred Capital Receipt above in 2018/19 was classified as a long-term debtor as per the table below.

31/03/2019 31/03/2020

£’000 £’000

8,000 Deferred Capital Receipts -8,000 -

18. Cash and Cash Equivalents

The balance of Cash and Cash Equivalents is made up of the following elements. The Authority does not hold any short-term deposits:

31/03/2019 31/03/2020£’000 £’000

6,880 Bank Current Accounts (overdraft) in-hand 9,7226,880 9,722

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19. Creditors

An analysis of creditors, amounts due in less than one year, is shown in the table below:

31/03/2019 31/03/2020£’000 £’000

(1,447) Trade Creditors (1,012)(612) PAYE - Non-trade (629)(457) Grants received in advance - Non-trade (992)

(3,028) Other - Non-trade (3,515)(5,544) (6,148)

20. Analysis of Borrowing The loans outstanding consist of a loan through Bristol City Council which was repaid in full during 2018/19 and two through The Public Works Loan Board. The maturity of long-term loans is as follows:

31/03/2019 31/03/2020£’000 £’000

- Between 1 and 2 years -- Between 2 and 5 years -- Between 5 and 10 years 3,500

7,000 Over 10 years 3,500

7,000 Total long-term borrowing at year-end 7,000

As at 31 March 2020 (2019) the Authority had deferred borrowing of £4,882k (£5,935k).

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21. Financial Instruments The borrowings and investments disclosed in the Balance Sheet are made up of the following categories of financial instruments:

31 March 2019

31 March 2020

31 March 2019

31 March 2020

£’000 £’000 £’000 £’000

(9,223) (9,021) (2,927) (3,848)

(9,223) (9,021) (2,927) (3,848)

8,000 - 13,507 23,396

8,000 - 13,507 23,396Total debtorsFinancial Assets at amortised cost

Total borrowingsFinancial Liabilities at amortised cost

Long-term Current

Reconciliation note The SORP requires a reconciliation to be made between the Balance Sheet and the Financial Instruments note where figures differ. The amounts listed in the table below have been excluded because they are not considered Financial Instruments.

31 March 2019

31 March 2020

£’000 £’000

(2,927) (3,848)

Statutory debt in relation to HMRC (612) 10 Receipts in advance (457) (992) Short-term liabilities in relation to PFI (195) (203)

Receipts in advance and overpayments in relation to Council Tax . (1,257) (652)

Fire Fighter pension scheme - Ill health (96) (463)

(5,544) (6,148)

Financial Liabilities at amortised cost as above

Current

Short-term Creditors per note 19

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Financial Instruments Gains/Losses

The gains and losses recognised in the Comprehensive Income and Expenditure Statement in relation to financial instruments are made up as follows:


Financial Assets

measured at amortised

costsLoans &

Receivables Total£’000 £’000 £’000

- Loan 221 - 221449 - 449

670 - 670

- (295) (295)

- (295) (295)670 (295) 375Net (gain)/loss for the year

- PFI

Interest payable and similar charges

Interest income

Interest and Investment Income

2019/2020

Interest expense

Fair Values Financial Liabilities and Financial Assets represented by loans and receivables are carried on the Balance Sheet at amortised cost. The fair value can be assessed by calculating the present value of the cash flows that take place over the remaining life of the instruments, using the following assumptions:

• For loans, the new maturity rates from the Public Works Loan Board (PWLB) as available at 31 March have been applied to provide the fair value;

• For loans receivable prevailing benchmark market rates have been used to provide the fair value;

• No early repayment or impairment is recognised; • Where an instrument has a maturity of less than 12 months or is a trade or other

receivable the fair value is taken to be the principal outstanding or the billed amount;

• The fair value of trade and other receivables is taken to be the invoiced or billed amount.

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The fair values calculated are as follows:


Carrying Amount Fair Value

Carrying Amount

Fair Value

£’000 £’000 £’000 £’000

Public Works Loan Board (7,000) (9,858) (7,000) (9,705)Deferred Liability - PFI (2,223) (2,223) (2,021) (2,021)

(9,223) (12,081) (9,021) (11,726)

(2,927) (2,927) (3,848) (3,848)

(12,150) (15,008) (12,869) (15,574)

31 March 2020

Total Financial LiabilitiesTrade and other creditors

Total debt

Loan Debt

31 March 2019

The fair value is greater than the carrying amount because the Authority’s portfolio of loans includes a number of fixed rate loans where the interest rate payable is higher than the rates available for similar loans in the market at the Balance Sheet date. Reconciliation note The Code of Practice requires a reconciliation to be made between the Balance Sheet and the Financial Instruments note where figures differ. The amounts listed in the table below have been excluded because they are not considered Financial Instruments.

31 March 2019

31 March 2020

£’000 £’000

(7,000) (7,000)

Long-term Borrowing per note 20 (7,000) (7,000)

(7,000) (7,000)

Carrying amount total debt per below

Current

Total Borrowing

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31 March 2019

31 March 2020

£’000 £’000

(2,927) (3,848)

Statutory debt in relation to HMRC (612) 10Receipts in advance (457) (992)Short-term liabilities in relation to leases inc PFI (195) (203)Receipts in advance and overpayments in relation to Council Tax (1,257) (652)

Fire Fighter pension scheme - Ill health (96) (463)

(5,544) (6,148)

Trade and other Creditors per above

Current

Short-term Creditors per note 19

Financial assets held at amortised cost

Financial assets held at fair value

Carrying Amount Fair Value

Carrying Amount

Fair Value

£’000 £’000 £’000 £’000

Deferred Capital Receipts 8,000 8,000 8,000 8,000

8,000 8,000 8,000 8,000Total Loans and Receivables

Financial assets held at fair value

31 March 2019 31 March 2020

Carrying Amount

Fair Value

Carrying Amount

Fair Value

£’000 £’000 £’000 £’000

6,880 6,880 9,721 9,721

6,880 6,880 9,721 9,721

6,626 6,626 5,674 5,674

13,506 13,506 15,395 15,395

Bank and cashFinancial assets held at amortised cost

31 March 2019 31 March 2020

Total Loans and Receivables

Trade and other debtors

Total debt / (credit)DRAFT

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Reconciliation note

The Code of Practice requires a reconciliation to be made between the Balance Sheet and the Financial Instruments note where figures differ. The amounts listed in the table below have been excluded because they are not considered Financial Instruments.

31 March 2019

31 March 2020

£’000 £’000

6,626 13,674

Short-term Debtors in Council Tax 2,342 2,499Provision for bad debt (611) (1,497)Short-term Debtors in VAT 294 246

8,651 14,922

Trade and other Debtors per above

Current

Short-term Debtors per note 17

Nature and Extent of Risk Arising from Financial Instruments and How the Authority Manages those Risks Key Risks The Authority’s activities expose it to a variety of financial risks; the key risks are:

• Credit risk - the possibility that other parties might fail to pay amounts due to the Authority;

• Liquidity risk - the possibility that the Authority might not have funds available to meet its commitments to make payments;

• Re-financing risk - the possibility that the Authority might be requiring to renew a financial instrument on maturity at disadvantageous interest rates or terms;

• Market risk - the possibility that financial loss might arise for the Authority as a result of changes in such measures as interest rate movements.

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

• by formally adopting the requirements of the Code of Practice; • by approving annually in advance prudential indicators for the following three years

limiting: o The Authority’s overall borrowing; o Its maximum and minimum exposures to fixed and variable rates; o Its maximum and minimum exposures to the maturity structure of its debt; o Its maximum annual exposures to investments maturing beyond a year;

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• by approving an investment strategy for the forthcoming year setting out its criteria for both investing and selecting investment counterparties in compliance with the Government Guidance.

These are required to be reported and approved at or before the Authority’s annual budget and council tax setting at the Fire Authority committee. These items are reported with the annual treasury management strategy which outlines the detailed approach to managing risk in relation to the Authority’s financial instrument exposure. Actual performance is also reported annually to Members. These policies are implemented by Bristol City Council under the terms of a Financial Services contract. The Authority maintains written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, and the investment of surplus cash through Treasury Management Practices (TMPs). These TMPs are a requirement of the Code of Practice and are reviewed regularly. The Authority’s treasury portfolio is not of a significant size to provide significant treasury risk.

Credit risk Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Authority’s customers. Deposits are not made with banks and financial institutions unless they meet the minimum requirements of the investment criteria outlined above, which gives priority to security and liquidity rather than yield.

The Authority’s surplus cash is invested with Bristol City Council. A fixed payment, or charge if overdrawn, on the daily cash balance is set at 7 days LIBID. As such this further reduces the credit risk to negligible amounts.

The following analysis summarises the Authority’s potential maximum exposure to credit risk, based on experience of default of payment due assessed by the ratings agencies and the Authority’s experience of its customer collection levels over the last five financial years, adjusted to reflect current market conditions.

Amount at 31 March 2020

Historical experience of default

Adjustments for market

conditions at 31 March

2020

Estimated maximum exposure to default at 31 March 2020

Estimated maximum exposure to default as reported 31 March 2019

£’000 £’000 £’000

2,250 0.0% 0.0% - -

- 0.0% 0.0% - -

3,272 0.0% 0.0% - -

8,394 0.3% 0.0% 4 4

13,916 4 4

Trade and other debtors

Other counterparties - Local Authorities

Other counterparties - Central Government

Other counterparties - NHS

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No breaches of the Authority’s counterparty criteria occurred during the reporting period and the Authority does not expect any losses from non-performance by any of its counterparties in relation to deposits. The Authority does not generally allow credit for its trade debtors. An analysis of debtors with reference to specific debtors and individual debts, not a formula basis, at the year-end has been carried out and an impairment to financial assets provision of £4k has been created to cover the risk of default. Due to the small number and value of debts the Authority’s write off policy is on a case by case basis when there is no reasonable expectation of recovery even though they are still subject to enforcement activity. There has been no change in our approach during the year and no material change from one year to another.

Liquidity risk The Authority’s Treasury Management function is managed by Bristol City Council under a Financial Services contract. Bristol City Council has ready access to borrowings from the Money Markets to cover any day-to-day cash flow need. There is therefore no significant risk that the Authority will be unable to raise finance to meet its commitments under financial instruments.

The Authority manages its liquidity position through the risk management procedures above (the setting and approval of prudential indicators and the approval of the treasury and investment strategy reports), as well through cash flow management procedures, undertaken on its behalf by Bristol City Council, required by the Code of Practice.

Refinancing and Maturity Risk The approved prudential indicator limits for the maturity structure of debt and the limits placed on investments placed for greater than one year in duration are the key parameters used to address this risk. The Authority approved treasury and investment strategies address the main risks and Bristol City Council manages the operational risks within the approved parameters.

The maturity analysis of financial liabilities is as follows:

2019/2020 £’000

Less than one year (4,050)Between 1 and 2 years (206)Between 2 and 5 years (797)More than 5 years (8,018)

(13,071)

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The maturity analysis of financial assets is as follows:

2019/2020 £’000

Less than one year 23,396Between 1 and 2 years -Between 2 and 5 years -More than 5 years -

23,396

Market risk Interest rate risk Interest on the Authority’s existing borrowing is based upon long-term fixed interest rate maturity loans and therefore there is minor exposure to interest rate movements. However, as previously indicated the Authority has deferred borrowing of £5,935k which is being funded by utilising balances to offset borrowing in the short term in accordance with the Authority’s approved Treasury Management Strategy.

A differential increase in interest rates between long-term and short-term rates would lead to an interest rate exposure for the Authority. This risk can be mitigated against increased counterparty risks associated with lending surplus balances as part of the treasury management function. The effect of a 1% change (rise or fall) in rates on interest rate risk relating to deferred borrowing of £4,882k would be £49k.

The Authority’s medium-term financial plan has made no provision for borrowing in 2020/2021.

Effects of a 1% rise in rates:

The effect of a 1% interest rate rise on Bank Interest receivable:

2019/2020 £’000

Increase in interest receivable on variable rate investments 112Impact on Surplus or Deficit on the Provision of Services 112

The effect of a 1% rise in the Discount rate used to calculate the Fair Value of the loans:

2019/2020 £’000

Decrease in fair value of fixed rate borrowings liabilities (no impact on the Surplus or Deficit on the Provision of Services or Other Comprehensive Income and Expenditure) (1,142)

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Effects of a 1% fall in rates:

As interest rates are low due to the current financial climate a 1% fall in rates is not possible as the average rate for 2019/20 was only 0.75%. The maximum impact could only be the interest received in the year of £295k.

2019/2020 £’000

Increase in interest receivable on variable rate investments (295)Impact on Surplus or Deficit on the Provision of Services (295)

Effect of a 1% fall in the Discount rate used to calculate the Fair Value of the loans:

2019/2020 £’000

Increase in fair value of fixed rate borrowings liabilities (no impact on the Surplus or Deficit on the Provision of Services or Other Comprehensive Income and Expenditure) 1,304

The methodology and assumptions are based on a 1% movement in rates as this is a simple visual comparator. Obviously rates could change by different amounts and so the impact would be proportionate. These assumptions are using the same methodology as used in the Note – Fair value of Assets and Liabilities carried at Amortised Cost. Price risk - The Authority does not generally invest in instruments with this type of risk. Foreign exchange risk - The Authority has no financial assets or liabilities denominated in foreign currencies. It therefore has no exposure to loss arising from movements in exchange rates.

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22. Short-term Provisions

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Fire Hydrants 65 - - 65 - - 65

HQ Relocation Expenses 186 - - 186 - (112) 74

NDR Appeals 586 662 (586) 662 (662) 733 733

Uniformed Staff Pay Award

191 - (191) - -

Major repairs 425 - (149) 276 (73) 203

1,453 662 (926) 1,189 (662) 548 1,075

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Details of the Authority’s Short-term Provisions are as follows:

• Fire Hydrants This provision has been created and retained due to a backlog of maintenance work. Hydrant inspections are scheduled to be carried out on a three yearly cycle but due to past staff shortages the inspection programme has been behind schedule. Any maintenance work identified then needs to be scheduled for repairs with the relevant water company. It is anticipated that this provision will be used over the next two years.

• HQ Relocation Expenses The Fire Authority moved support staff to share the Police headquarters site at Portishead. The staff, previously located at the headquarters site at Temple Back, were relocated in September 2017 and a provision was created to cover the expected additional travel costs that will be incurred by support staff as a result of this move in accordance with the Fire Authority’s approved relocation policy. The remainder of this provision will be used during 2020/21, as the three year period comes to an end in September 2020.

• NDR Appeals This provision has been created to allow for the cost of possible NDR Appeals. The timing is dependent on the Valuation Office hearing and passing judgement on these appeals.

• Uniformed Staff Pay Award This provision was utilised in 2018/19.

• Major Repairs During 2017/18 an accommodation block attached to one of the Authority’s fire stations suffered a significant structural failure. Investigations are ongoing to determine the extent of the defects and the necessary rectification works required as a result. Some works have taken place during 2018/19 and 2019/20 and it is

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anticipated that the remaining required rectification works will be undertaken during 2020/21.

23. Long-term Provisions

£’000 £’000 £’000 £’000 £’000 £’000 £’000

PFI 590 - - 590 - - 590590 - - 590 - - 590

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Private Finance Initiative Further to notes 1 and 7 and the volatility of the rates affecting the equalisation fund over the past few years, it is felt prudent to keep the provision for training centre contributions at existing levels. This exact value required will not be known until the end of the PFI scheme in 2028 and won’t fully be forecastable until 2026/27. DRAFT

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24. Usable Reserve

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Fund Balance 1,500 - - 1,500 - - 1,500 1,500 - - 1,500 - - 1,500

Invest to Save Reserve 1,000 - - 1,000 - - 1,000 1,000 - - 1,000 - - 1,000

Pension & Budget Pressures Reserves Incl.PPE / ICP Replacement Reserve 25 115 - 140 60 (140) 60 Control Resilience Reserve 328 - (32) 296 - - 296 Premises / H&S Critical Works Reserve 200 - - 200 - (53) 147 Pension Reserve 320 100 - 420 - - 420 Legal Fees Reserve 100 - - 100 - - 100 Community Safety Reserve 34 - (34) - 70 - 70 Marketing Reserve 28 - - 28 - (28) - Auxiliary Reserve 75 25 - 100 - - 100 Capital Financing Reserve 608 - (21) 587 1 - 588 Operational Fitness Reserve 70 - (35) 35 - (35) - Retention System Reserve 60 - - 60 - - 60 ESMCP Reserve 462 - (177) 285 - (18) 267 Procurement Reserve 40 - - 40 - (40) - Equality & Inclusivity Reserve 74 - - 74 - - 74

Improvement Programme Reserve 1,500 - (20) 1,480 - (1,480) - Airbus SC Responses softw are Reserve 6 - - 6 - - 6 Strategic Development softw are Reserve 10 - - 10 - - 10 Transformation Reserve - 457 - 457 1,354 - 1,811 Furniture Reserve - 20 - 20 - (20) - Sw ift Water Rescue Equipment Reserve - 100 - 100 - - 100 BT WAN Upgrade Reserve - - - - 110 - 110 Communication - UPS / Station End Reserve - - - - 30 - 30 Control & Communications - Welfare Reserve - - - - 25 - 25 COVID-19 Reserve - - - - 192 - 192 National Operational Guidance Reserve - - - - 300 - 300 Extrication Challenges Reserve - - - - 7 - 7 IT Infrastructure Reserve - - - - 406 - 406

3,940 817 (319) 4,438 2,555 (1,814) 5,179 Hydrants Reserve 100 - - 100 - - 100 Medical Intervention Reserve 40 - - 40 - - 40 PFI Equalisation Fund 1,613 - (73) 1,540 - (84) 1,456 Unapplied Capital Receipts Reserve 5,689 - 5,689 - (535) 5,154 Total Usable Reserve 8,193 6,506 (392) 14,307 2,555 (2,433) 14,429

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Details of the Authority’s approved reserves and an explanation of any movement during the year are as follows:

a. Invest to Save Reserve

Previously the Austerity Reserve, this reserve has been maintained to fund future initiatives and programmes to assist the Authority in achieving its medium-term financial targets. It is anticipated that this reserve will be utilised over the next four-five years.

In 2020/21 an amount of £642k will be utilised to make a payment in advance of the past service deficit costs of the Local Government Pension Scheme. This amount will then be paid back to the reserve over the following two years. The use of the reserve in this way results in a saving of £19k.

b. PPE/ICP Replacement Reserve This reserve was created to fund fluctuations in PPE costs. The original reserve was fully utilised in 2019/20, however there is a further requirement, so an additional £60k has been transferred in from other unused reserves. To be utilised as and when required.

c. Control Resilience Reserve A reserve was created to ensure resilience on the Control room function. This is a risk critical area and it has been agreed that recruitment will be undertaken so that the number of posts are over establishment, given the length of time required to suitably train Control room staff. Additionally, the roll out of the emergency services mobile communications programme (ESMCP) is expected to be finalised within the next three years. £32k was used in 2017/18, with the reserve expected to be fully utilised within the next four years.

d. Premises / H&S Critical Works Reserve This reserve has been created to finance any urgent works identified by the Authority as a priority in relation to Health and Safety, including works to remove asbestos. £53k was used in 2019/20. This reserve will be utilised as required.

e. Pension Reserve This reserve has been created to assist in the financing of ill-health pension retirements where costs of two or four times the retirees salary are paid to the Department for Communities and Local Government. An additional amount of £100k was transferred to this reserve during 2018/19 to meet expected costs. This reserve will be utilised as required.

f. Legal Fees Reserve This reserve has been set up to fund expenditure associated with legal claims, primarily property and employee costs. This reserve will be utilised as required.

g. Community Safety Reserve An amount of £34k to contribute to the Safe and Well Programme was fully utilised in 2018/19. A further £70k was transferred into the reserve to pay for two new electric vehicles, Pay for the upgrade of CFRMIS and to support the assistive Technology programme. This is expected to be utilised during 2020/21.

h. Marketing and Communications Reserve This reserve was fully utilised in 2019/20.

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i. Auxiliary Reserve This reserve will be utilised as required to provide training and equipment for auxiliary members of staff; an additional £25k was transferred into this reserve during 2018/19.

j. Capital Financing Reserve This reserve was created to support funding of the future Capital Programme including the reinvesting for the future programme and any variations in expenditure. £21k was utilised during 2018/19, with a further £1k being added in 2019/20. The reserve will be used as and when required.

k. Operational Fitness Reserve This reserve was fully utilised in 2019/20.

l. Document Management and Retention System Reserve This reserve has been set up to fund the development of a Corporate wide document system to improve administration and information security requirements, including GDPR. The reserve will be used as and when required.

m. ESMCP Reserve In March 2017 the Government paid a grant to Avon Fire and Rescue to fund the ESMCP project. A further grant was received in 2017/18. Work commenced during 2018/19, and £177k was utilised, with a further £18k in 2019/20. The balance of the grant will be utilised over the next two years whilst the project is completed.

n. Procurement Reserve This reserve was created to review the procurement function to align to the NFCC category model and strength skill sets. This is no longer required and the balance of £40k has been transferred to the PPE Replacement Reserve.

o. Equality & Inclusivity Reserve This reserve funds the review of the organisation’s strategic direction to reflect issues of culture and inclusiveness. And is expected to be to be utilised in the next two years.

p. Improvement Programme Reserve This reserve was set up in 2017/18 to fund the additional costs associated with the Best Value Improvement Programme agreed at the Fire Authority in October 2017. £20k was utilised during 2018/19 with a further £126k in 2019/20. As this programme has now come to an end, the remaining balance of £1,354k has now been transferred to the Transformation reserve.

q. Airbus SC Response Software Reserve This reserve has been created to fund the purchase of a mobile data terminal software update to units on appliances. This will be utilised in 2020/21.

r. Strategic Development Software Reserve This reserve will fund the purchase and implementation of strategic development software. This will be utilised in 2020/21.

s. Transformation Reserve This reserve has been created to undertake digitalisation and corporate level projects of the Authority. Digitalisation includes the introduction of Office 365, incident resource management and business process re-engineering. Corporate level projects include collaboration, cultural reviews and Firewatch enhancement.

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£457k was set aside in 2018/19, with a further £1,354k being transferred from the Improvement Programme Reserve during 2019/20. This will be utilised over the next three years

t. Furniture Reserve This reserve has been created to fund additional furniture requirements. This is no longer required and the balance of £20k has been transferred to the PPE Replacement Reserve.

u. Swift Water Rescue Equipment Reserve This reserve has been set up for health and safety reasons, for additional training and equipment. It will be utilised over the next two years.

v. BT WAN Upgrade Reserve To facilitate the upgraded BT WAN contract roll out. The funds will support the additional one-off costs associated with the main contract (provision of circuits to AFRS where required). An amount of £110k was transferred in during 2019/20. It is expected to be utilised during 2020/21.

w. Communication - UPS / Station End Reserve To enable the upgrade of fire station call-out equipment, UPS and call-out PCs. An amount of £30k was transferred in during 2019/20. It is expected to be utilised during 2020/21.

x. Control & Communications – Welfare Reserve To enable the welfare and rest areas for Control and Communications to be built and updated. An amount of £25k was transferred in during 2019/20. It is expected to be utilised during 2020/21.

y. COVID-19 Reserve In March 2020, it became apparent that Covid-19 would increase the costs of operating the Fire Service. The Government released a grant to cover the additional costs. As these costs had not yet materialised, an amount of £192k, the whole of the grant, was transferred to the reserve to cover future increased costs of PPE, cleaning, staff and IT, and is expected to be fully utilised in 2020/21.

z. National Operational Guidance Reserve To implement the new National Operational Guidance (NOG). An amount of £300k was transferred in during 2019/20. This is expected to be utilised over the next two years.

aa. Extrication Challenges Reserve To purchase vehicles, equipment and PPE for training and events. An amount of £7k was transferred in during 2019/20. It is expected to be utilised during 2020/21.

bb. IT Infrastructure Reserve To address problems identified with the existing IT structure resulting from the recent review undertaken. An amount of £406k was transferred in during 2019/20. It is expected to be utilised during the next two years.

cc. Hydrants Reserve This reserve has been set up to fund the costs of repair works resulting from an increasing number of inspections. The numbers can be highly volatile and by setting a reserve these costs can be covered as and when they are incurred.

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dd. Medical Intervention Reserve This reserve has been created to fund medical intervention and prevention initiatives and will be utilised as and when required.

ee. PFI Equalisation Fund A grant from the Government for the PFI project, along with contributions from partners, is paid into an Equalisation Fund. This fund is administered by Gloucestershire County Council, on behalf of the partners.

ff. Unapplied Capital Receipts Reserve This reserve has been set aside to fund the reinvesting in the future project which encompasses rebuilding and modernising three of the existing fire stations located at Avonmouth, Bath and Weston-super- Mare; and will be utilised over the next three to five years.

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25. Unusable Reserves

Balance at 31 March

2019

Balance at 31 March

2020£’000 £’000

19,060 19,626

26,678 25,636

(666,378) (635,418)

362 (149)

(330) (365)

8,000 8,000

(612,608) (582,670)

Collection Fund Adjustment A tAccumulated Absences Account

Deferred Capital Receipt Reserve

Total Unusable Reserves

Revaluation Reserve

Capital Adjustment Account

Pensions Reserve

Revaluation Reserve

2018/2019 2019/2020£’000 £’000

12,555 19,060

6,997 1,123

19,552 20,183

(492) (557)

19,060 19,626

Surplus or Deficit on revaluation of non-current assets not posted to the Surplus or Deficit on the Provision of Services

Balance at 31 March

Difference between fair value depreciation and historic cost depreciation

Balance at 1 April

Adjustment to revaluation of assets

The revaluation reserve records the accumulated gains on the non-current assets held by the Authority arising from increases in value, as a result of inflation or other factors, to the extent that these gains have not been consumed by subsequent downward movements in value. Where assets have been revalued the excess current value depreciation over the historic depreciation is charged to this reserve. On disposal, the revaluation reserve balance for the asset disposed of is written out to the Capital Adjustment Account. The overall balance on the reserve therefore represents the amount by which the value of non-current assets carried in the Balance Sheet is greater because they are carried at revalued amounts rather than depreciated historic cost.

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Whilst these gains arising from revaluations increases the net worth of the Authority they would only represent an increase in spending power if the relevant assets were sold and capital receipts generated. Capital Adjustment Account

2018/2019 2019/2020£’000 £’000

27,083 26,678

(3,518) (3,581)(59) (52)

(4,695) (4)

18,811 23,041

492 557

19,303 23,598

4,221 539

555 2802,007 968

592 251

26,678 25,636Balance at 31 March

Minimum revenue provision for capital financingVoluntary revenue provision for capital financing

Capital Financing applied in the yearCapital Grants and Capital Receipts credited to the Comprehensive Income and Expenditure Statement

Capital expenditure charged in-year to the fund balance

Adjusting amounts written out of the Revaluation Reserve

Net written out amount of the cost of non-current assets consumed in the year

Depreciation and impairment of non-current assets

Amounts of non-current assets written off on disposal or sale as part of the gain/loss on disposal to the Comprehensive Income and Expenditure Statement

Amortisation of intangible assets

Balance at 1 April

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

The 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 which are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation reserve to convert fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition, construction and enhancement. The account also contains revaluation gains accumulated on Property before 1 April 2007, the date that the Revaluation Reserve was created to hold such gains.

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Pensions Reserve Summary – See Note 26 for further information

2018/2019 2019/2020£’000 £’000

(615,115) (666,378)(19,034) 48,106

(37,293) (24,951)

5,064 7,805

(666,378) (635,418)Balance at 31 March

Balance at 1 AprilRemeasurements of pensions assets and liabilities

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

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

The pensions reserve absorbs the timing differences arising from the different arrangements for accounting for post-employment benefits and for funding benefits in accordance with statutory provisions. The Authority accounts for post-employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Authority makes employer’s contributions to pension funds or eventually pays any pensions for which it is directly responsible. The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefit earned by past and current employees and the resources the Authority 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. This reserve relates to the two pension schemes, Firefighters and Local Authority, and additional information is shown in note 26.

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Collection Fund Adjustment Account

2018/2019 2019/2020£’000 £’000

(29) 362

75 28296 (404)(3) (66)23 (69)

362 (149)

North SomersetBristol City Council

Balance at 31 March

South Gloucestershire

Balance at 1 April

Bath and North East Somerset

The Collection Fund Adjustment Account manages the differences arising from the recognition of council tax and non-domestic rates income in the Comprehensive Income and Expenditure Statement as it falls due from council tax payers and business rate payers, compared with the statutory arrangements for paying across amounts to the Fire Authority from the billing authorities. The annual movement attributable to each of the four billing authorities is shown in the table above. Accumulated Absences Account

2018/2019 2019/2020£’000 £’000

(332) (330)

332 330

(330) (365)-

2 (35)

(330) (365)Balance at 31 March

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

Balance at 1 April

Settlement or cancellation of accrual made at the end of the preceding yearAmount accrued at the end of the current year

Deferred Capital Receipt Reserve

31/03/2019 31/03/2020

£’000 £’000 8,000 Deferred Capital Receipts 8,000 8,000 8,000

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26. Retirement Benefits

Participation in Pension Schemes

As part of the terms and conditions of employment of its officers and other employees, the Authority offers retirement benefits. Although these benefits will not actually be payable until employees retire, the Authority has a commitment to make the payments that needs to be disclosed at the time that employees earn their future entitlement. The Authority participates in two pension schemes:

• Local Government Pension Scheme

All staff, other than uniformed Firefighters, are eligible to join the Local Government Pension Scheme (LGPS). The scheme is administered by Bath & North East Somerset Council and is called the Avon Pension Fund. The Fund provides members with benefits related to length of service and final or average salary. It is a ‘defined benefit’ scheme. The Fund’s Actuary carries out a valuation of the Fund every three years in accordance with government regulations. If the valuation indicates that there are insufficient assets to meet future liabilities, employer contribution rates are increased to make up the shortfall. The latest valuation was undertaken at 31 March 2016 and assessed the overall funding level at 86%.

• Firefighters’ scheme

Regular Firefighters employed before 6 April 2006 were eligible to join the Firefighters’ Pension Scheme but this scheme closed to new entrants from April 2006. The Employer contribution rate for this scheme was 37.3%. Employee contributions vary according to salary, as shown in the table under Note 2 to the Firefighters’ Pension Fund Account on page 106.

A New Firefighters’ Pension Scheme was introduced for regular and retained Firefighters employed since 6 April 2006, which has different contribution rates payable into the scheme and benefits available to scheme members. The employer contribution rate for this scheme was 27.4%. Employee contributions vary according to salary, as shown in the table under Note 2 to the Firefighters’ Pension Fund Account on page 106.

The arrangements for financing Firefighters’ pensions which came into effect in April 2006 required the Authority to set up a new ring-fenced ‘Pensions Account’ from which pension payments, retirement lump sums and transfers out have been made. The Pensions account is funded by employee and employer contributions, the reimbursement by the employer of charges for ill-health early retirements and transfers into the scheme with any deficit / surplus at the year-end being met by / paid to central government. The employer contribution rate is determined by central government. With effect from 1 April 2015 a new firefighters’ pension scheme, “The 2015 Firefighters’ Pension Scheme”, has been introduced which replaces both the 1992 and 2006 schemes. All firefighters in the 1992 or 2006 schemes transferred to the new scheme on 1 April 2015 unless they were eligible for taper protection. Eligibility for taper protection is dependent on the age of the individual firefighter as at 1 April 2012 and depending on circumstances can extend to 31 March 2022.

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As part of the Retained Firefighters’ Pension Settlement the Government has introduced the terms under which individuals that were employed as Retained Firefighters between 1 July 2000 and 5 April 2006 are entitled to purchase pension rights. The pension benefits are incorporated within the Firefighters’ Pension Scheme 2006 as it does not constitute a scheme on its own but rather a new modified section of the 2006 Scheme with different benefits. The modified scheme will be subject to the reforms that apply to the 1992 and 2006 schemes.

Transactions Relating to Retirement Benefits

The costs of retirement benefits are recognised in the Surplus or Deficit on Provision of Services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge required to be met from council tax is based on the cash payable in the year, so the real cost of retirement benefits is reversed out in the Movement in Reserves Statement. The transactions shown in the table on the next page have been made in the Comprehensive Income and Expenditure Statement and the Movement in Reserves Statement during the year:

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£’000 £’000 £’000 £’000

Current Service Cost 1,491 1,712 7,890 14,230Past service Costs / Curtailments 458 166 24,830 2,250

- - (12,954) (9,741)

Net Interest expense 435 484 15,120 15,820Administration expenses 23 30 - -

2,407 2,392 34,886 22,559

Return on Plan Assets (excluding the amount included in the Net Interest expense) (823) 4,194 - -Actuarial gains and losses arising on changes in experience assumptions - (896) (60) (4,900)Actuarial gains and losses arising on changes in demographic assumptions - (2,421) - (19,810)Actuarial gains and losses arising on changes in financial assumptions 2,977 (1,523) 16,940 (22,750)

4,561 1,746 51,766 (24,901)

(2,407) (2,392) (34,886) (22,559)

1,068 1,166 2,656 5,279

1,340 1,360

2019/20

Local Government Pension Scheme

Firefighters' Scheme

2018/19

Firefighters' Pension Top-up Grant

Other Post-employment Benefits charged to the Comprehensive Income and Expenditure Statement:

Financing and Investment Income and Expenditure:

Total Post-employment Benefits charged to the Surplus or Deficit on Provision of Services

2018/19 2019/20

Costs of Services:

Comprehensive Income and Expenditure Statement

Retirement Benefits payable to pensioners

Employer's contributions payable to the scheme

Reversal of net charges made to the Surplus or Deficit for the Provision of Services for post-employment benefits in accordance with the code

Actual amount charged against the Fund Balance for pensions in the year:

Remeasurement of the net defined benefit liability comprising:

Movement in Reserves Statement

Total Post-employment Benefits charged to the Comprehensive Income and Expenditure Statement

The cumulative amount of remeasurements recognised in the Comprehensive Income and Expenditure Statement to 31 March 2020 is (£163,823k).

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Assets and Liabilities in relation to Retirement Benefits

Reconciliation of present value of the scheme liabilities:

2018/2019 2019/2020 2018/2019 2019/2020£’000 £’000 £’000 £’000

(48,526) (54,841) (597,880) (645,650)

(1,491) (1,712) (7,890) (14,230)(458) (166) (24,830) (2,250)

- - - (20)- - - -

(1,264) (1,306) (15,120) (15,820)(307) (325) (2,180) (2,310)

Actuarial gains / (losses) from changes in demographic assumptions

- 2,421 - 19,810

Actuarial gains / (losses) from changes in financial assumptions

(2,977) 1,523 (16,940) 22,750

Actuarial gains / (losses) from experience

- 896 60 4,900

182 1,212 19,130 18,710

(54,841) (52,298) (645,650) (614,110)

Unfunded liabilitiesFirefighters' Scheme

Remeasurements gains and (losses):Contributions by scheme participantsInterest Cost

Current Service Cost

Liabilities at beginning of year - Restated

Benefits Paid

Liabilities at end of year

Funded liabilitiesLocal Government

Past Service Cost / CurtailmentsTransfers InTransfers Out

The past service cost/curtailments included in the prior year relate mainly to the impact of the McCloud judgement. Reconciliation of fair value of the scheme assets:

2018/2019 2019/2020 2018/2019 2019/2020£’000 £’000 £’000 £’000

Assets at beginning of year 31,291 34,113 - -Interest Income 829 822 - -

Return on Plan Assets, excluding the amount included in the net interest expense

823 (4,194) - -

Firefighters' Pension Top-up Grant - - 10,451 9,741Transfers In - - - 20Transfers Out - - - -Administration expenses (23) (30) - -Employer contributions 1,068 1,166 3,996 6,639Contributions by scheme participants 307 325 2,180 2,310Benefits paid (182) (1,212) (16,627) (18,710)Refund of Contributions - - - -

Assets at end of year 34,113 30,990 - -

Funded AssetsLocal Government

Unfunded AssetsFirefighters' Scheme

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The expected return on LGPS scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the Balance Sheet date. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets.

The actual return on scheme assets in the year was £2,177k (2018/19: £1,651k).

Scheme History

2015/16 2016/17 2017/18 2018/19 2019/20Restated Restated

£’000s £’000s £’000s £’000s £’000s

Local Government Scheme (38,441) (47,887) (48,526) (54,841) (52,298)Firefighters' Scheme (476,186) (579,994) (597,880) (645,650) (614,110)

(514,627) (627,881) (646,406) (700,491) (666,408)

26,268 29,719 31,291 34,113 30,990

Local Government Scheme (12,173) (18,168) (17,235) (20,728) (21,308)Firefighters' Scheme (476,186) (579,994) (597,880) (645,650) (614,110)

Total (488,359) (598,162) (615,115) (666,378) (635,418)

Present value of liabilities

Fair value of assets in the Local Government Scheme

Surplus/(deficit) in the

The liabilities show the underlying commitments that the Authority has in the long run to pay post-employment (retirement) benefits. The total liability of £635m (£666m) has a substantial impact on the net worth of the Authority as recorded in the Balance Sheet, resulting in a negative overall balance of £635m (£666m). However, statutory arrangements for funding the deficit mean that the financial position of the Authority remains healthy:

• The deficit on the Local Government scheme will be made good by increased

contributions over the remaining working life of employees (i.e. before payments fall due), as assessed by the scheme actuary.

• The deficit on the Firefighters’ scheme will be made good by annual contributions

by central government to the ring-fenced “Pensions Account” together with revised future employer contributions as determined by central government.

• The total contribution expected to be made by the Authority in the year to 31

March 2021 for the Local Government Pension Scheme is £1,846k. • The total contribution expected to be made by the Authority in the year to 31

March 2021 for the Firefighters’ pension schemes is £5,851k (1992 scheme: £901k; 2006 scheme: £120k; 2015 scheme: £4,788k; Retained Modified scheme: £42k).

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Basis for Estimating Assets and Liabilities Liabilities have been assessed on an actuarial basis using the projected unit method, an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. The Local Government Scheme liabilities have been assessed by Mercer Limited the independent actuary to the Avon Pension Fund, which manages the Local Government Scheme on behalf of the Authority. The Firefighters’ scheme liabilities have been assessed by the Government Actuary’s Department (GAD). The estimates for the Local Government scheme are based on the latest full valuation as at 31 March 2016 updated for the following years.

The main assumptions used by the actuary have been:

2018/2019 2019/2020 2018/2019

Men 23.7 23.2 22.0 21.3Women 26.2 25.3 22.0 21.3

Men 26.3 24.7 23.9 23.0Women 29.0 27.3 23.9 23.0

2.2% 2.1% 2.4% 2.0%3.7% 3.6% 4.4% 4.0%2.3% 2.2% 2.4% 2.0%2.4% 2.4% 2.5% 2.3%

Rate of increase in salaries

Longevity at 65 for future

Fire Fighters' Scheme2019/2020

Local Government

Rate of discounting scheme

Rate of inflation CPI

Rate of increase in pensions

Mortality assumptions:Longevity at 65 for current

The actuary has not carried out any specific investigations in relation to whether the average age of the membership has increased, but does not believe that there have been substantial changes since the 2016 valuation. For any employers who are not admitting new entrants to the Fund, the average age can be expected to increase gradually over time.

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The Firefighters’ scheme has no assets to cover its liabilities. The Local Government Scheme's assets consist of the following categories, by proportion of the total assets held:

31 March 2019

31 March 2020

% %

Equities UK quoted 7.5 7.0Global quoted 28.3 32.2Emerging markets 4.6 4.3

Bonds UK Government indexed 12.1 5.6Sterling Corporate Bonds 11.7 9.1

Property UK Property Funds 5.1 5.2Overseas Property Funds 4.6 4.7

Alternatives Hedge funds 4.9 5.8Diversified Growth Funds 12.5 13.5Infrastructure 7.0 8.0Secured Income 0.0 1.5EFT's 0.0 0.9

Cash Cash accounts 1.7 2.2

100 100

Local Government Scheme

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History of Experience Gains and Losses The experience adjustments arising on scheme assets and liabilities expressed as a percentage of the asset or liability at the year-end are as follows:

Local Government 2015/16 2016/17 2017/18 2018/19 2019/20

% % % % %

Experience gains and (losses) on assets (1.1)% 15.5% 1.8% 4.8% 7.0%

Experience gains and (losses) on liabilities 0.0% 0.0% 0.0% 0.0% 0.0%

Firefighters' Scheme2015/16 2016/17 2017/18 2018/19 2019/20

% % % % %

Experience gains and (losses) on liabilities 5.9% 0.4% (1.1)% 0.0% 0.0%

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Sensitivity Analysis Firefighters’ Scheme

The Code of Practice requires disclosure of information that describes how its defined benefit plans may affect the amount, timing and uncertainty of the Authority’s future cash flows. Sensitivity analyses have been provided by the actuaries to illustrate the impact of changes in the key industry financial and demographic assumptions for the pension schemes as follows:

Sensitivity AnalysisFirefighters' Pension Scheme 1992

Change in assumption * % £ Million

Rate of discounting scheme liabilities +1/2% a year (8.5)% -45.0

Rate of increase in salaries +1/2 % a year 1.0% 4.0

Rate of increase in pensions / deferred revaluation +1/2 % a year 7.0% 37.0

Life Expectancy: each pensioner subject to longevity of an individual one further year younger than assumed

3.0% 16.0

The weighted average duration of the defined benefit obligation is around 18 years.

Note: Employer Contributions of £1,133,456 were received during 2019/20.

Note: Current Service Cost (inclusive of member contributions) for 2020/21 is 75.2% of Pensionable Pay.

Sensitivity AnalysisFirefighters' 2006 scheme






3.0% 1.0


Note: Employer Contributions of £90,956 were received during 2019/20.


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Sensitivity AnalysisFirefighters' 2015 scheme






3.0% 1.0


Note: Employer Contributions of £4,054,597 were received during 2019/20.


* Opposite changes in the assumptions will produce approximately equal and opposite changes in the DBO. Doubling the changes in the assumptions will produce approximately double the change in the DBO. The sensitivities show the change in assumptions in isolation. In practice such assumptions rarely change in isolation and given the interdependencies between the assumptions the impacts may offset to some extent.

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Sensitivity Analysis Local Government Pension Scheme

The Code of Practice requires disclosure of information that describes how its defined benefit plans may affect the amount, timing and uncertainty of the Authority’s future cash flows. Sensitivity analyses have been provided by the actuaries to illustrate the impact of changes in the key industry financial and demographic assumptions for the pension schemes as follows:

Sensitivity Analysis

Sensitivity 1 Sensitivity 2 Sensitivity 3 Sensitivity 4

Disclosure item

£'000s £'000s £'000s £'000s £'000s

Liabilities 52,298 51,393 53,220 52,431 53,682

Assets (30,990) (30,990) (30,990) (30,990) (30,990)

Deficit / (Surplus) 21,308 20,403 22,230 21,441 22,692

Projected Service Cost for next year 1,569 1,526 1,615 1,569 1,616

Projected Net Interest Cost for next year

489 487 511 493 523

Local Government Pension scheme

+0.1% pa discount rate

+0.1% pa inflation

+0.1% pa pay growth

1 year increase in

life expectancy


The sensitivity analyses above for both schemes have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period and assumes for each change that the assumption analysed changes, while all the other assumptions remain constant. The assumptions in longevity, for example, assume that life expectancy increases or decreases for men and women. In practice, this is unlikely to occur, and changes in some of the assumptions may be interrelated. The estimations in the sensitivity analysis have followed the accounting policies for the schemes, i.e. on an actuarial basis using the projected unit credit method. The methods and types of assumptions used in preparing the sensitivity analysis above did not change from those used in the previous period.

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27. Analysis of Income

The Authority credited the following grants, contributions and donations to the Comprehensive Income and Expenditure Statement in 2019/20. Under IFRS 15 we have assessed for contracts and no further disclosure is required:

2018/2019 2019/2020£'000 £'000

- -

- -25,916 26,84011,555 11,072

4,952 4,85242,423 42,764

877 877444 457895 PFI grant 895

- Fire Fighters Pension Contribution Grant 2,4071,267 Other income 1,207

3,483 5,843

General Government GrantsNon-domestic Rates Distribution Total

Total

Credited to Services

Fire Link

Credited to Taxation and Non-specific Grant

New Dimension / USAR

Total Capital Grant

General Capital Grant

Precepts

None of the grants received by the Authority in 2018/19 or 2019/20 have conditions attached to them and therefore they are recognised as income in their year of receipt.

28. Financing and Investment Income and Expenditure The Authority incurred and received the following interest and investment to the Comprehensive Income and Expenditure Statement in 2019/20:

2018/2019 2019/2020£'000 £'000

258 Loans 221450 PFI 449708 670

15,555 16,304

(225) (295)

(7) (7)

16,031 16,672Total

Interest Payable and Similar Charges

Net Interest on the net defined benefit liability

Interest Receivable and Similar Income

Other Investment Income

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29. Cash Flow Statement – Operating Activities

The deficit on the provision of services has been adjusted for the following non-cash movements and that are investing or financing activities:

2018/2019 2019/2020£'000 £'000

(3,498) (3,382)(20) (199)(59) (52)

(901) (597)2,927 (1,729)

(32,229) (17,146)264 114

(4,695) (4)

(38,211) (22,995)

9,910 -8,000 -

17,910 -

Deferred Capital ReceiptsProceeds from Sale of non-current assets

Depreciation

Carrying amount of non-current assets held for sale, sold or derecognised

ImpairmentAmortisationDecrease in Creditors(Increase)/decrease in DebtorsMovements in Pension LiabilityContributions to Provisions

Cash Flow Statement – Operating Activities (Interest)

The cash flows for operating activities include the following items:

2018/2019 2019/2020£'000 £'000

(216) (287)489 436

Interest receivedInterest paid

30. Cash Flow Statement – Investing Activities

2018/2019 2019/2020£'000 £'000

958 789

(9,910) -

(8,952) 789

Purchase of property, plant and equipment

Net cash flows from investing activities

Proceeds from Sale of non-current assets

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31. Cash Flow Statement – Financing Activities

2018/2019 2019/2020

£'000 £'000

2,383 -

179 1952,562 195

Repayments of long-term borrowing

Net cash flows from investing activitiesCash payments for the reduction of a PFI liability

32. Contingent Liabilities Following the publication of the Independent Inspectors’ report in July 2017 a number of disciplinary investigations were initiated which are being undertaken by external independent investigators. The outcome of these investigations will only be known once they have been concluded and could result in potential claims being made against the Fire Authority. It is not possible to determine whether it is probable that an outflow of resources will result; or to make a reliable estimate of any resultant outflow of resources.

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Firefighters’ Pension Fund Account Under the new arrangements for financing Firefighters’ pensions which came into effect from April 2006 the Authority was required to set up a new ring-fenced ‘Pensions Account’. Details of the transactions on this account during the year are as follows:

2018/2019£’000 £’000 £’000

(2,829) - contributions in relation to pensionable pay (5,345)(264) - early retirements (404)

(2,347) (2,335)

(5,440) (8,084)

- (16)

13,925 14,6224,429 2,845

66 150

18,420 17,617

- 15

12,980 9,532

(12,980) (9,532)- -

Payments to and on account of leavers:

Transfers in from other authorities

Transfers out to other authorities

2019/2020

Pensions

Fire Authority

Firefighters' contributions

OtherCommutations and lump-sum retirement benefits

Top-up grant payable by the Government

Benefits payable:

Deficit for the year before top-up grant receivable from central government

Contributions receivable:

Total

There were no individual transfers in or out in 2018/19.

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Net assets statement The assets and liabilities of the pensions account as at 31 March 2020 are as follows:

31/03/2019 31/03/2020£’000 £’000

Current assets3,805 Top-up grant receivable from the Government 3,026

3,805 3,026Current liabilities

(3,240) Cash and Bank (2,360)(565) Creditor (666)

(3,805) (3,026)- Net assets -

Notes to the Firefighters’ Pension Fund Account 1. Operation of the Fund

The Firefighters’ Pension Fund Account was established under the Firefighters’ Pension Scheme (Amendment) (England) Order 2006 and the Fire Authority is responsible for its administration.

The Scheme is available to all Firefighters whether whole-time or part-time and whether regular, retained or volunteer, who satisfy one of the eligibility conditions set out in Part 2 of the Order. The Firefighters’ Pension scheme is an unfunded scheme and there are no investment assets. Benefits payable are funded by employer and employee contributions with the difference being met by top-up grant receivable from or payable to Central Government. The fund is balanced to nil each year by the inclusion of a Central Government debtor or creditor in respect of the amount of top-up grant due to or payable from Central Government for the year.

2. Contributions

Employees’ and employer’s contribution levels are based on percentages of pensionable pay set nationally by the Department for Communities and Local Government and are subject to triennial revaluation by the Government Actuary’s Department. With effect from 1 April 2012 Employee contributions to the Firefighters’ pension schemes are paid in relation to salary ranges as shown in the table below:

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Salary range from £0 £15,610 £21,853 £31,219 £41,625 £52,031 £62,437 £104,061 £124,872Salary range up to £15,609 £21,852 £31,218 £41,624 £52,030 £62,436 £104,060 £124,872 -

Firefighters' pension scheme:

1992 SchemeEmployer 37.30% 37.30% 37.30% 37.30% 37.30% 37.30% 37.30% 37.30% 37.30%Employee 11.00% 12.20% 14.20% 14.70% 15.20% 15.50% 16.00% 16.50% 17.00%

Total 48.3% 49.5% 51.5% 52.0% 52.5% 52.8% 53.3% 53.8% 54.3%


Total 35.9% 36.8% 37.8% 38.3% 38.6% 38.7% 39.1% 39.5% 39.9%

Retained Firefighters' Modified Scheme

Employer 37.30% 37.30% 37.30% 37.30% 37.30% 37.30% 37.30% 37.30% 37.30%Employee 11.00% 12.20% 14.20% 14.70% 15.20% 15.50% 16.00% 16.50% 17.00%

Total 48.3% 49.5% 51.5% 52.0% 52.5% 52.8% 53.3% 53.8% 54.3%

0 27,819 51,516 142,50127,818 51,515 142,500 or more

2015 SchemeEmployer 28.80% 28.80% 28.80% 28.80%Employee 11.00% 12.90% 13.50% 14.50%

Total 39.8% 41.7% 42.3% 43.3%

Salary range from £0 £15,610 £21,853 £31,219 £41,625 £52,031 £62,437 £104,061 £124,872Salary range up to £15,609 £21,852 £31,218 £41,624 £52,030 £62,436 £104,060 £124,872 -

Firefighters' pension scheme:


Total 32.7% 33.9% 35.9% 36.4% 36.9% 37.2% 37.7% 38.2% 38.7%


Total 20.4% 21.3% 22.3% 22.8% 23.1% 23.2% 23.6% 24.0% 24.4%

Retained Firefighters' Modified Scheme


Total 32.7% 33.9% 35.9% 36.4% 36.9% 37.2% 37.7% 38.2% 38.7%2015 Scheme


Total 25.3% 25.3% 25.3% 27.2% 27.2% 27.8% 27.8% 27.8% 28.8%

2018/ 2019

2019/ 2020

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In addition the Employer is required to reimburse charges for any ill-health early retirements.

3. Benefits payable from the fund Pension benefits are payable from the fund in accordance with the relevant statutory provisions and include ordinary and ill-health awards.

4. Accounting Policies

As an unfunded scheme there are no investment assets and the Net Assets Statement does not include liabilities to pay pensions and other benefits after the Balance Sheet date. In all other respects the accounting policies followed are the same as set out in the Statement of Accounting Policies on pages 36 – 48. Details of the pension liability of the Firefighters scheme, calculated in accordance with IAS 19, and included in the Core Financial Statements are set out in note 26 to the Core Financial Statements.

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GLOSSARY OF TERMS

ACCOUNTING PERIOD - This is the length of time covered by the accounts. This is normally a period of 12 months commencing on 1 April. The end of the accounting period is the Balance Sheet date. ACCRUALS - The accruals basis of accounting ensures that income and expenditure is reflected in the financial statements in the accounting period that they were earned or incurred, not as any cash is received or paid. ACTUARY - One who makes calculations for pensions and insurance purposes. ACTUARIAL GAINS AND LOSSES - For a defined benefit pensions scheme, the changes in actuarial deficits or surpluses that arise because: • Events have not coincided with the actuarial assumptions made for the last

valuation; or • The actuarial assumptions have changed ASSET - An asset is something that the Authority owns that has a monetary value. Assets are either current or long-term. • A current asset is one that will be used by the end of the next financial year (e.g.

stock, debtors) • A long-term (fixed) asset provides the Authority with benefits for a period of more

than one year (e.g. property, plant and equipment). BALANCE SHEET - The Balance Sheet is a financial statement summarising the overall financial position of the Authority at the end of the financial year. BUDGET - A budget is a statement that sets out the Authority’s service delivery plans and capital expenditure in monetary terms. CAPITAL ADJUSTMENT ACCOUNT - This is the money set aside in the Authority’s accounts for capital spending and to repay loans. CAPITAL CHARGES - This is a charge made to the Authority’s service revenue accounts to reflect the cost of utilising fixed assets in the provision of services. CAPITAL EXPENDITURE - Expenditure on the acquisition of a fixed asset that will be used to provide services beyond the current accounting period. CAPITAL FINANCING - This describes the various sources of money used to pay for capital expenditure. Capital expenditure can be funded from external sources, such as borrowing, capital grants and by contributions from the internal sources, such as capital receipts and reserves. CAPITAL RECEIPT - A capital receipt is the income that results from the sale of land, buildings and other capital assets. A specified portion of this may be used to fund new capital expenditure. The balance must be set-aside and may only be used for paying off debt, not for funding new revenue services.

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CASH AND CASH EQUIVALENTS - Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. CONTINGENT LIABILITIES - A possible liability relating to future expenditure at the Balance Sheet date, depending on the outcome of future uncertain events. CREDITORS - Amounts owed by the Authority to others for goods and services that have been supplied but not yet paid for by the end of financial year. CURRENT ASSETS - Items that can be readily converted into cash. CURRENT LIABILITIES - Items that are due to be paid immediately or in the short term. DEBTORS - Amounts owed to the Authority for goods and services, where the income has not been received at the end of the financial year. DEPRECIATION - This is a charge made to the revenue account each year, which reflects the loss in value of an asset due to age, wear and tear, deterioration or obsolescence. EVENTS AFTER THE BALANCE SHEET DATE (POST BALANCE SHEET EVENTS) - Events after the Balance Sheet date are those events, favourable or unfavourable, that occur between the Balance Sheet date and the date when the Statement of Accounts is authorised for issue. FIXED ASSETS - These are assets that yield benefits to the Authority and the services it provides for a period of more than one year. GENERAL FUND - The account that summarises the cost of providing Authority services (excluding the Housing Revenue Account). GOVERNMENT GRANTS - Grants made by the Government towards either revenue or capital expenditure to help with the cost of providing services and capital projects. Some of these grants have restrictions on how they may be used whilst others are general purpose. IMPAIRMENT - The reduction in value of an asset in the Balance Sheet owing to a change in the market value. This can be as a result of market fluctuations, physical damage or obsolescence. INCOME & EXPENDITURE STATEMENT - This is the Authority’s main revenue account. It summarises the income received from Council Tax and business rates, grants and fees and charges along with the associated expenditure on services provided. INTANGIBLE ASSETS - These are fixed assets on the Balance Sheet such as software licences that don’t have physical form but still have value.

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LIABILITIES - Amounts the Authority either owes or anticipates owing to others, whether they are due for immediate payment or not. MINIMUM REVENUE PROVISION (MRP) - The minimum amount that the Authority must charge to the revenue account to provide for the repayment of debt. NATIONAL NON-DOMESTIC RATE (NNDR) - A flat rate in the pound set by Government and levied on businesses in the City. The money is collected by the Council then pooled and redistributed by the Government to local authorities based on the resident population. OPERATIONAL ASSETS - These are fixed assets owned by the Authority and used in the direct delivery of services. PRIOR YEAR ADJUSTMENT - A material adjustment applicable to prior years arising from changes in accounting policies or from the correction of fundamental errors. PROVISIONS - Amounts set aside to meet liabilities or losses which are likely or certain to be incurred but where the amount due or the timing of the payment remains uncertain. PUBLIC WORKS LOAN BOARD (PWLB) - A Government body that lends money to local authorities for periods in excess of one year, often at preferential interest rates. RELATED PARTIES - Two or more parties are related parties when at any time during the financial period: • one party has direct or indirect control of the other party • the parties are subject to common control from the same source • one party has influence over the financial and operational policies of the other

party to the extent that the other party might be inhibited from pursuing its own interests; or

• the parties, in entering a transaction, are subject to influence from the same source to such an extent that one of the parties to the transaction has subordinated its own interests. Examples of related parties include central government, other local authorities and other bodies precepting or levying demands on the Council Tax, its members and its chief officers.

RESERVES - An amount set aside for a specific purpose in one financial year and carried forward to meet expenditure in future years. A distinction is drawn between reserves and provisions (see above), which are set up to meet known liabilities. REVENUE EXPENDITURE - Spending on day-to-day items including salaries and wages and other running costs associated with the provision of services. REVENUE SUPPORT GRANT (RSG) - The main grant paid to a local authority by Central Government to help fund the cost of its services. VOUNTARY REVENUE PROVISION (VRP) - The amount over and above MRP that the Authority has charged to the revenue account to provide for the repayment of debt.

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Produced by

Avon Fire & Rescue Service, Police & Fire Headquarters, PO Box 37, Valley Road, Bristol, BS20 8JJ

Tel: 0117 926 2061 Fax: 0117 925 0980 www.avonfire.gov.uk

@AvonFireRescue AvonFireRescue

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http://www.avonfire.gov.uk/

The outturn position was reported to the Fire Authority on 12 May 2020. Due to delays incurred relating to Covid-19, the aforementioned adjustments were required to complete the final draft statement of accounts for external audit review in July.

Appendix 2

AVON FIRE AND RESCUE AUTHORITYRevenue Budget Outturn reconciliation 2019/20

Variation£'000

Net expenditure per Fire Authority report on 12 May 2020 42,272Adjustments: HQ relocation reserve transfer (112) Ill health retirement pension amendment 8 Major repairs reserve transfer (73) Expenses paid in April 2020 relating to March 2020 27 Government grant update 192 Recoveries and recharges update 24 Additional bank interest accrued to 31 March 2020 (2) Additional accruals from post year end invoices (16)Net expenditure per narrative statement 2019/20 42,320

Revenue Budget Outturn 2019/20

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AVON FIRE AUTHORITY 08

MEETING:


MEETING DATE:

26 August 2020

REPORT OF:

Corporate Assurance Manager

SUBJECT:

Internal Audit – Reports on Audit of Governance and Assurance

1. SUMMARY 1.1 The purpose of this paper and its appendix is to set out the findings of the

internal audit of Governance and Assurance, together with the recommendations and management action plans. Internal Audit has given a reasonable assurance opinion in respect of this audit.

2. RECOMMENDATIONS

The Committee is asked to:

(a) Consider the Governance and Assurance internal audit report received (b) Review and agree the associated management action plan (c) In respect of the audit actions on Committee Terms of Reference and

Member allocation to sub-committee roles, consider and agree sending this report to the Clerk for the attention of the Member working group who would recommend any Constitution changes to the Fire Authority.

3. BACKGROUND

3.1. In accordance with the Public Sector Internal Audit Standards (PSIAS), Internal

Audit independently reviews all of the Fire Authority’s operations, resources, services and processes in place to: a) Establish and monitor achievement of objectives. b) Identify, assess and manage the risks to achieving those objectives. c) Facilitate policy and decision making. d) Ensure the economical, effective and efficient use of resources. e) Ensure compliance with established policies, procedures, laws and

regulations. f) Safeguard assets and interests from losses of all kinds, including those

arising from fraud, irregularity or corruption.

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g) Ensure the integrity and reliability of information, accounts and data, including internal and external reporting.

4 GOVERNANCE AND ASSURANCE AUDIT REPORT 4.1 The first audit of 2020/21, as set out in the Audit Plan agreed by this Committee,

focused on governance and assurance. The Governance and Assurance audit has been completed and the audit report finalised. The report is provided for the Committee to consider in the appendix and it is positive to note that this audit is being presented to this Committee earlier than scheduled in the 2020/21 Audit Plan.

4.2 The Governance and Assurance audit had the following objective: “To ensure the Fire Authority is underpinned by an appropriate governance structure and assurance framework so that it can discharge its duties to resource the Service commensurate with the level of risk present in the area, and to address the priorities of the Fire and Rescue National Framework.”

4.3 The Internal Auditors (RSM) have identified one medium and four low

priority/level recommendations and issued a ‘reasonable assurance’ audit opinion. This assurance level is defined as `reasonable assurance that the controls in place to manage the risk are suitably designed and consistently applied but issues have been identified that will need to be addressed to ensure the control framework is effective’.

4.4 In summary, the medium level recommendation refers to enhancing the draft

Governance and Assurance Framework being developed by the Corporate Assurance Manager in conjunction with the Service Leadership Team. The Audit report found this draft document clearly identifies the Authority’s approach to ensuring that good governance is delivered and `when compared to Fire Authority’s across our client base, Avon Fire Authority’s production of such a document highlights good practice and a more evolved approach to governance and assurance than most other fire authorities’. However RSM recommend enhancing this document with an underpinning assurance framework. An example of this framework is provided on page 18 of the appendix, and articulates the sources of assurance in place to ensure the achievement of strategic plans and objectives.

4.5 The associated management action is to develop an assurance framework by

31 March 2021 aligning to the Authority’s Constitution and its sub-committees. There is also a linked low level recommendation to map this framework to the Authority’s forward plan. The Corporate Assurance Manager plans to bring the Governance and Assurance framework to this Committee in advance of March 2021 for consideration.

4.6 The low level recommendations for management action refer to a review of the

governance structure (Constitution) after one full year of implementation and particular considerations are raised in respect of the AGEC Committee’s frequency and the terms of reference of the Performance, Review and Scrutiny Committee. It is noted that this review is planned. The first meeting of the Constitution Task and Finish Working group has been confirmed for 10

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September 2020. 4.7 Further low level recommendations relate to potential enhancements to the

process of allocating Members to Committees. 4.5 Management actions in respect of these recommendations are set out in the

Internal Audit report for the Committee to consider. 5 Further Information

5.1 Once completed audit reports agreed in the annual Audit Plan are reported to

the next available AGEC for scrutiny of the findings, recommendations and management action plans.

5.2 All the management action plans from internal audit reviews (including advisory reports) are collected and collated by the Corporate Assurance Manager and their implementation and completion is monitored. This monitor report will be provided to this Committee twice yearly for scrutiny at the start and end of each audit year.

6 CONSIDERATIONS 6.1 Contribution to Key Policy Priorities

Internal Audit helps the Fire Authority accomplish its objectives by bringing a systematic, disciplined approach to evaluating, reporting on and recommending improvements where necessary to secure effective internal control, risk management and governance arrangements.

6.2 Financial Implications

There are no direct financial implications of this report. However management actions identified in the audit reports may have financial implications which would be considered in accordance with the relevant financial and budgeting protocols. Appropriate arrangements for internal control, risk management and governance assist in ensuring value for money in the achievement of the Fire Authority’s objectives.

6.3 Legal Implications The provision of an Internal Audit function that operates in accordance with

PSIAS is a statutory requirement. 6.4 Equality & Diversity Implications No Equalities Impact Assessment necessary for this report as it relates to

matters concerning internal control, risk and governance only.

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6.5 Corporate Risk Assessment

The work of Internal Audit minimises the risk of failures in the Fire Authority’s internal control, risk management and governance arrangements, reduces fraud and other losses and increases the potential for prevention and detection of such issues.

6.6 Environmental/Sustainability Implications None 6.7 Health & Safety Implications None 6.8 Crime & Disorder Implications None 6.9 Data Protection Implications

None

7 BACKGROUND PAPERS None

8 APPENDIX 1 – Governance and Assurance audit report – 12 August 2020 9 REPORT CONTACT Jane Williams-Lock – Corporate Assurance Manager Ext 210

Mark Jones – Head of Internal Audit, RSM Risk Assurance Services LLP

Victoria Gould – Audit Manager, RSM Risk Assurance Services LLP

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AVON FIRE AND RESCUE SERVICE Governance and Assurance

Internal audit report 1.20/21

FINAL

12 August 2020 This report is solely for the use of the persons to whom it is addressed. To the fullest extent permitted by law, RSM Risk Assurance Services LLP will accept no responsibility or liability in respect of this report to any other party.

APPENDIX 1

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2

Background A review of Governance and Assurance for the Fire Authority was undertaken as part of the approved internal audit plan for 2020/21.

The objective of the audit area is to ensure the Fire Authority is underpinned by an appropriate governance structure and assurance framework so that it can discharge its duties to address the priorities of the fire and rescue national framework. This audit has sought to assess the adequacy and effectiveness of the governance and assurance frameworks in place, against good and expected practice across the sector.

Avon Fire Authority is responsible for making provision for promoting fire safety, undertaking firefighting, rescues from road traffic accidents and responding to other emergencies in the area covered by the four councils in the former Avon area. Members of the Authority provide political leadership and set the strategy direction for the organisation. The Fire Authority has overall control over the strategic direction, establishment, budget and functions of a fire and rescue service. The Chief Fire Officer / Chef Executive (CFO) is responsible for the day-to-day management of the organisation and is accountable to the Fire Authority for its efficient operation.

The Fire Authority consists of 20 councillors appointed by the Councils in proportion to the political parties as well as the number of people entitled to vote in their respective areas, as follows:

• Bath & North East Somerset: three Members;

• Bristol – eight Members;

• North Somerset – four Members; and

• South Gloucestershire - five Members.

Specific responsibilities of the Authority have been delegated to the following three sub-committees, each of which reports back to the Authority and / or the Service Leadership Board and has co-opted members from the Authority present at meetings:

• Audit, Governance and Ethics Committee (AGEC) – scrutinises and approves the Statement of Accounts, the Annual Governance Statement, Statement of Assurance and the Corporate Risk Register;

• Performance Review and Scrutiny Committee (PRSC) – scrutinises performance against key indicators and makes recommendations for improvement; and

• People and Culture Committee (PCC) (previously DICE and Employment Committees) - reviews the Authority’s compliance with the Equality Act 2010.

Following local elections in May 2019, the Authority Chair was re-elected after being originally appointed in June 2017, and new Members of the Authority were welcomed.

Avon Fire and Rescue Service’s operations are managed and overseen by two main groups; the Service Leadership Board, which considers strategic issues, finance and risk, and has overall responsibility for management of the organisation; the Service Leadership Team, which provides day to day leadership and management for the Service, overseeing the working environment and operations; and the Strategic Health, Safety and Welfare Committee, which discuss, resolve and consult on health and safety issues.

EXECUTIVE SUMMARY

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Conclusion The Fire Authority is underpinned by an appropriate and lean governance structure that benchmarks positively across the emergency services sector. We have identified areas where some improvements could be made. The Authority has begun steps to articulate its Assurance Framework, and this work could be expanded further to be even more effective by developing a map of assurances sources and linking this to the Authority and sub-committee work plans.

Internal audit opinion:

Taking account of the issues identified, the Authority can take reasonable assurance that the controls upon which the organisation relies to manage this area are suitably designed, consistently applied. However, we have identified issues that that need to be addressed in order to ensure that the control framework is effective in managing this area.

Key findings

The Authority

As part of this audit, we were due to gather feedback from members of the Fire Authority and it was agreed that this would be best obtained via a questionnaire, to understand their view on governance and assurance, as well as their experience of induction / training. The questionnaire was sent to Authority

Members on 30 April 2020, with an initial deadline of 20 May 2020, which was then extended until 29 May 2020, Members were also encouraged to take part via comms from the Chief Fire Officer. Just three responses were received from all Members (a total of 20) who were invited to partake in the questionnaire. We were therefore unable to draw any meaningful conclusions from the survey regarding the members’ views on governance and assurance. A summary of responses received from the three Members who responded to the questionnaire can be found in Appendix B.

The Authority has established a suitable sub-committee structure, consisting of the Audit, Governance and Ethics Committee (AGEC); the Performance Review and Scrutiny Committee (PRSC); and the People and Culture Committee (PCC). We were able to evidence an appropriate delegation of responsibilities to each committee through their respective terms of reference. In practice, the structure accurately aligns to the requirements of the Authority’s Constitution. When benchmarked against governance structures across our emergency services client base, we conclude the Authority’s structure is one that reflects good practice and a lean approach to governance.

We were able to evidence an appropriate flow of assurances and information through the provision of sub-committee minutes as part of the papers for each Authority meeting. We confirmed the Authority had met five times since June 2019, with the latest meeting being held virtually due to Covid-19 restrictions.

Attendance at Authority meetings is monitored throughout the year and each meeting held was at least quorate (one third of total members).

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Attendance ranged from 50% (10 members) to 70% (14 members) across the year, with an average of 62% observed across the year. Whilst quorate, a low attendance level can be detrimental to the effectiveness of Authority meetings. The Deputy Clerk confirmed that such an attendance level was expected, and the Authority could not impose sanctions for those who do not attend.

Allocation of members to sub-committees

There is an expectation that each Member of the Authority shall volunteer to sit on at least one sub-committee of the Authority and in default, the Authority shall allocate that Member to a Committee unless there is a good reason not to do so. At each Annual Authority meeting (usually in June) the Authority is asked to make appointments to sub-committees and external bodies such as the South West Councils and Local Government Association (LGA).

Through examination of minutes and papers from the Authority’s meetings when allocating members to sub-committees, it was evident that these decisions were based on replicating the political makeup of the Authority as far as possible, perhaps instead of ensuring the correct skills-mix of Members is allocated to each committee.

We confirmed a training programme for Members is in place with the aim of ensuring those allocated to a sub-committee are aware of its role and their responsibilities.

Audit Governance and Ethics Committee

The AGEC’s delegated responsibilities have been clearly defined in its terms of reference and reflect the responsibilities we’d expect to be delegated to such a committee. Through examination of the Committee’s minutes available to the public

via the Authority’s website, we confirmed the Committee had met just twice over the last municipal year (June 2019 – May 2020), in July 2019 and May 2020. The committee is required to meet at least four times per municipal year as per its Terms of Reference. A March 2020 meeting had been planned but did not take place. We confirmed the Committee had not met due to delays in obtaining sign off of the 2018/19 financial statements. The AGEC has other delegated responsibilities from the Authority, aside from review of the financial statements. There is therefore a risk that these responsibilities have not been given the appropriate oversight or attention throughout 2019/20. There is also a risk that the Committee, and in turn the Authority, have not received the required continuous assurances regarding these areas throughout the year. We did however note that risk register deep dives and scrutiny was undertaken by SLT and SLB in the absence of the AGEC.

Performance Review and Scrutiny Committee

The PRSC’s delegated responsibilities have been clearly defined in its terms of reference and reflect the responsibilities we’d expect to be delegated to such a committee. Through examination of the Committee’s minutes available to the public via the Authority’s website, we were also able to evidence scrutiny of reports of the business’ approach to topical areas such as the Grenfell Gap Analysis. We were therefore able to evidence the Committee was actively monitoring and reviewing the performance of the Service.

However, we were unable to confirm via observation that the Committee had suitably discharged its delegated responsibility regarding “the monitor and review of financial performance including revenue and capital budgets, treasury management, the use of resources and fees and charges”.

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People and Culture Committee

The terms of reference for the People and Culture Committee appropriately establish the delegated responsibilities of the PCC. The responsibilities established within the terms of reference seem appropriate and in line with responsibilities delegated to similar committees across our emergency services sector client base. We evidenced that the PCC were discharging their duties as required by their terms of reference and had met three times to date (at time of writing) in the 2019/20 municipal year, with a fourth meeting planned for June 2020. We also confirmed the People and Culture Panel had met on a further three occasions to discharge their delegated responsibilities regarding disciplinary and grievances matters.

Governance and Assurance Framework

The Fire Authority has developed a draft Governance and Assurance Framework (incorporating the local code of governance) for 2020 – 2023. The Governance and Assurance Framework explains how the Fire Authority delivers good governance and how it will review the effectiveness of its governance arrangements. The framework was established following the agreement by the Authority in September 2019 to set up a new committee structure, consisting of the Performance Review & Scrutiny Committee; Audit, Governance and Ethics Committee; and the People and Culture Committee. The draft Governance and Assurance Framework clearly identified the Authority’s approach to ensuring good governance is delivered. However, the framework established within the document does not fully and effectively identify and map the Authority’s sources of articulated assurance that it is achieving its strategic plans and

objectives. An effective assurance framework provides a clear and concise structure for identifying which of the organisation’s objectives are at risk because of inadequacies in the operation of controls, or where the organisation has insufficient assurance about them. An Assurance Framework should provide the Authority, and in turn its sub-committees with the required information and confidence about how risks are managed to effectively deliver the Authority’s objectives. With the establishment of such a document, the Authority are ahead of many other Fire Authorities in documenting its assurance framework. We have provided an example assurance map as an appendix to this report and are providing good practice ideas and support to management in how to further develop this area.

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DETAILED FINDINGS AND ACTIONS

Area: Governance Structure Assessment

Control

The Fire Authority has overall control over the strategic direction, establishment, budget and functions of a fire and rescue service. The Chief Fire Officer / Chef Executive (CFO) is responsible for the day-to-day management of the organisation and is accountable to the Fire Authority for its efficient operation.

The Authority has agreed a Constitution which sets out how it operates, how decisions are made, and the procedures and legislation followed to ensure that an efficient, effective, transparent and accountable service is delivered to the local community. Some of these processes are required by law, whilst others are matters for the Authority to agree.

The Constitution is divided into chapters which set out the basic rules governing the Authority’s business and includes rules regarding the following areas (but not limited to):

• The Fire Authority;

• Scheme of Delegation;

• Standing Orders;

• Financial Regulations;

• Code of Corporate Governance; and

• Members’ Code of Conduct and dealing with complaints.

The Constitution document is published on the Fire Authority’s website and was established in 2019.

Design Compliance

x

Findings / Implications

We obtained the Constitution document that was available through the Fire Authority’s website at the time of the audit (May 2020). Through examination we concluded the governance structure established within the Constitution is appropriate to support the Fire Authority and the Fire Service in meeting its strategic and operational objectives. When comparing the governance structure to a sample of 10 governance structures across our emergency services client base, we note the Authority’s structure reflects good practice and is “lean” in comparison to those reviewed, with an average of five sub-committees noted. We also confirmed that the Constitution was available for public access via the website.

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We confirmed the Constitution establishes the governance structure, including the responsibilities of the Authority itself, and each of its sub-committees through a Terms of Reference for each group (discussed further below). We also confirmed the interaction of the Authority’s sub committees with the operational Boards of Avon Fire and Rescue Service is established within these Terms of Reference. Testing throughout the audit confirmed a good general level of compliance with the requirements of the Constitution. Any exceptions identified during this audit have been discussed in the relevant areas below. When reviewing these instances of non-compliance, the Authority should question if the requirements of the Constitution for those particular areas remain practical, such as the meeting frequency of the AGEC and coverage of the PRSC. Good practice would also suggest that the Authority reviews the effectiveness of its adopted governance structure following one full year of implementation. The Corporate Assurance Manager confirmed this would take place during the review of the Constitution planned for Autumn 2020;

Management Action 1

The Constitution will be reviewed and amended as necessary following review of the instances of non-compliance identified in this Governance and Assurance audit. This will include a review of the effectiveness of the adopted structure of sub-committees supporting the Authority.

Action owner Clerk

Date 31 December 2020

Priority Low


Control

Members of the Authority provide political leadership and set the strategy direction for the organisation. Their role is to represent all of the communities across the four Unitary Authority areas in a fair and impartial manner, ensuring that their decision-making is focused on the risks within those communities and securing an equitable distribution of resources to meet those risks. All Members are expected to actively contribute and share responsibility for the good governance of the Authority and welfare of the communities served by the organisation. The Fire Authority consists of 20 councillors appointed by the four Councils in the former Avon area, in proportion to the number of people entitled to vote in their respective areas: • Bath & North East Somerset – three Members;

• Bristol – eight Members;

• North Somerset – four Members; and

• South Gloucestershire – five Members.

Design Compliance

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The Fire Authority’s key roles, responsibilities and functions are set out in its Terms of Reference, which is detailed in the Constitution. They include, but are not limited to: • Holding the CFO to account for the performance of the fire and rescue service; and for the efficiency,

effectiveness and economy of service delivery and continuous improvement in implementing the Authority’s vision, missions, values, objectives, priorities, plans and strategies;

• Setting the council tax / budget;

• Determining the Authority’s priorities and objectives for approving the Service Plan; and

• Approving changes to the Constitution.


Through examination of the Authority’s Terms of Reference, we confirmed the responsibilities of the Authority as a decision-making Board have been established and documented. The responsibilities identified within the Terms of Reference align with those seen for similar governance structures across our emergency services client base. The make-up of the Authority was in line with the proportions of the number of people entitled to vote in their Unitary Authority area, and therefore representative from a political perspective of the population the Authority serves. Through examination of Authority papers and minutes across the 2019/20 municipal year, we confirmed the Authority was exercising its responsibilities as detailed in its Constitution. We therefore confirmed the existence of the Authority as a decision-making Board and the establishment of its responsibilities. Compliance with discharging these responsibilities and monitoring of attendances is discussed in more detail below.

Management Action

None.


Control

The Authority has appointed the following Committees to carry out work on behalf of the Authority in accordance with the Terms of Reference delegated within the Constitution (and discussed further below): • Audit, Governance and Ethics Committee;

• People and Culture Committee;

• Performance Review and Scrutiny Committee; and

• Local Pension Board.

Design Compliance

x

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There is an expectation that each Member of the Authority shall volunteer to sit on at least one Committee and in default, the Authority shall allocate that Member to a Committee unless there is a good reason not to do so. At each Annual Authority meeting (usually in June) the Authority is asked to make appointments to sub-committees and external bodies such as the South West Councils and Local Government Association (LGA).


We confirmed the Authority has appointed the sub-committees detailed in the control to carry out the work of the Authority. Through examination of the Terms of Reference for each of the sub-committees, we confirmed specific responsibilities have been delegated to each committee within the Constitution. Through examination of the minutes of the Annual Authority meeting held in June 2019, we confirmed that a report “Appointments for the Municipal Year” had been presented by the deputy Clerk. This report detailed the appointments required to be made which included the appointment of committee chairs to the AGEC, PRS and Diversity, Inclusion, Cohesion and Equality and Employment Committees (now People and Culture); and the allocation of committee places taking into consideration changes in membership of the Fire Authority from the local elections in May. We noted that at the June 2019 meeting, the Authority “sought to replicate the political makeup of the Authority as far as possible through the makeup and composition of the Committee membership” (taken from minutes of the June 2019 Authority meeting). At the time of the meeting, notification of the political groups for the Municipal Year had yet to be received by the Authority, therefore allocation of the places to committees could not yet be determined. It was proposed that the allocation be completed by the Clerk in consultation with each political group leader. We did however note that that Chairs for each sub-committee were allocated at that meeting and this process was based on the political proportionality of the local elections and driven by the Chair of the Authority. At the following September 2019 meeting, it was confirmed that “allocations of Members to Committees would be sent to Group Leaders with nominations invited”. Through examination of Authority minutes for the December 2019 and February 2020 we were unable to evidence further scrutiny or decisions regarding the allocation of Members to sub-committees. We were able to evidence through examination of attendance records, that all Members of the Authority had been allocated to at least one sub-committee. It is evident that decisions regarding allocation of Members to sub-committees are based on replicating the political makeup of the Authority as far as possible, perhaps instead of ensuring the correct skills-mix of Members dependant on the key roles of each committee. As we could not see a robust process for this, we are unable to provide assurance that each committee has the configuration to be as effective as possible. We did note however that a Member Development Programme has been developed with the aim of ensuring those Members assigned to committees can be as effective as possible in those roles. This programme involves the AFA Member induction which provides Members with information regarding, but not limited to: • A “Facing the Future” guide that outlines the skills required to create a climate for effective governance and seeks to equip Members

to discharge their functions effectively; and

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• Personal impact and the link between good governance and personal impact, noting the biggest challenge – creating a climate for good governance whilst holding political stance.

Further, ad hoc training sessions are also provided, such as an AGEC Member training day regarding financial accounting. Whilst we note having such a programme represents good practice, the Authority could seek to improve the effectiveness of its committees and their decision making through the appointment of Members based on a skills-mix approach alongside political proportionality. We acknowledge the difficulty in implementing such a structure but thought should be given to its benefits to the Authority.

Management Action 2

The Authority will consider the existing skills of Authority Members prior to allocation to sub-committee roles, following the next set of local elections and subsequent committee membership review.

Action Owner Clerk to the Authority

Date 31 July 2021

Priority Low


Control

Since 2018/19 and for each municipal year, the Authority agrees a forward plan, which sets out key dates and possible major decisions that will need to be taken by Members for the coming year. It also identifies Member development events to support good governance. The forward plan is presented by the Deputy Clerk and is developed as a planning tool. The plan aims to enable Members via its committees to undertake pre-decision scrutiny. The forward plan is a standing agenda item for the Fire Authority to enable Members to be updated on any slippages or additions to the plan on an ongoing basis. It also aims to align key decisions to the corporate planning cycle and budget setting timeframes. The forward plan for 2019/20 identifies the key decisions and meeting dates for those decisions for the Fire Authority, Audit Governance and Ethics Committee, People and Culture Committee and the Performance, Review and Scrutiny Committee.

Design Compliance

x

N/A


Through examination of the Authority minutes for 2019/20, we confirmed the Forward Plan was a standing agenda item at each Authority meeting. We confirmed the Forward Plan for 2019/20 had first been presented to the Authority and also approved at the September 2019 meeting. Through examination of the Plan, we confirmed it establishes key dates and possible major decisions that will need to be taken by Members in the coming municipal year. The Plan also appropriately identifies the responsible sub-committee for each decision. We noted, however, that the Plan does not link to an Assurance Framework, which would highlight the key assurances Members would need to receive in order to effectively make the major decisions at those key dates. The lack of an effective Assurance Framework is discussed further below. Good practice identified across other public sector organisations, is where each board, group, or committee has a work plan for the year, linked back to the assurance framework and risk register, to ensure members receive all the required information to aid effective decision making.

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Management Action 3

The Authority’s Forward Plan will be linked to the Assurance Framework to ensure Members are provided with the appropriate assurances to support key decision making.

Action Owner Corporate Assurance Manager

Date 31 March 2021

Priority Low

Area: Attendance and Output Assessment

Control

The Fire Authority’s Standing Orders require the Authority to meet at least once a quarter and on such other occasions as may be necessary. The Authority also hold an annual meeting each year after the annual meetings of the constituent authorities within a month. Quorum for Authority meetings is “one third of the total number of Members of the Authority or alternatively any proportion of the total number of the Authority’s Members that it determines, provided that this proportion is no smaller than one third.” If at any time more than one third of the total number of Members of the Authority are disqualified, then unless at least two-thirds of the total number of Members are not disqualified, the quorum shall be determined by reference to the appropriate proportion of qualified Members of the Authority, rather than of the total number of Members. Attendance at Authority meetings is monitored through completion of an attendance book for each meeting. Records of attendance are maintained by the Democratic Services Assistant in a spreadsheet. Attendances at sub-committee meetings are also monitored and recorded in the same manner.

Design Compliance

x


Fire Authority Through examination of Authority papers and minutes for 2019/20, we confirmed Members were asked to record their attendance at each Authority meeting. We confirmed attendance is monitored and records maintained by the Democratic Services Assistant. Through examination of these records, we noted the following attendance rates for 2019/20:

AFA meeting Attendance % of full membership

June 2019 14 70%

September 2019 10 50%

October 2019 (extraordinary)

11 55%

December 2019 13 65%

February 2020 14 70%

Average 12 62%

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We were therefore able to conclude that each Authority meeting held was quorate based on the definitions established in the Terms of Reference. Attendance at Authority meetings was on average 62% of full Authority Membership, with a lowest attendance of 50%. Whilst all Authority meetings reviewed were quorate as per the Constitution, an average attendance of 62% could bring the effectiveness of the Authority meetings into question. Through interview with the Deputy Clerk to the Authority, it was noted that the Authority cannot impose actions on Authority Members should they not maintain appropriate attendance levels at meetings. The Deputy Clerk also noted that such an attendance rate was common across the Emergency Services sector. Sub-committees Through examination of sub-committee meeting papers and minutes, we confirmed attendance is recorded by attendees and records maintained by the Democratic Services Assistant the same spreadsheet used for AFA meetings. Through examination of attendance records, we confirmed the following average rates of attendance of Members at each sub-committee for the year to date, for which records were available at the time of the audit:

Sub-committee No. of meetings Average % of full membership

PRSC 3 86%

AGEC 1 83%

P+CC 2 58%

Average 76%

Whilst we note the average attendance at both the PRSC and AGEC (one meeting only tested) was of a good level, the attendance rate at the People and Culture Committee brings into question the effectiveness of the outputs generated by that group. Whilst quorum was attained at each meeting reviewed, quorum reflects a minimum number of members to make a decision and not necessarily ensure representation on a political or geographical basis, therefore there is the potential risk with lower levels of attendance at any committee or authority meeting. As noted above, the Authority cannot impose actions on Members should attendance at committee meetings become an issue, therefore no action has been agreed in this area.

Management Action

None.

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Control

The Audit, Governance and Ethics Committee’s (AGEC) primary purpose is to undertake the role of the Authority’s Audit Committee. Key functions of the committee include, but are not limited to:

• to oversee all audit issues on behalf of the Authority;

• to consider all internal and external audit reports received, review management action plans and monitor their implementation;

• to keep under review the Authority’s arrangements for whistleblowing and the prevention and detection of fraud, money laundering and bribery;

• to keep under review the Corporate Risk Register and the corporate business continuity planning framework seeking assurance of appropriate management action;

• to undertake an annual review of the Authority’s governance arrangements and make recommendations to the Authority; and

• to scrutinise and approve the Annual Governance Statement and the Statement of Assurance.

The Terms of Reference for the Committee require there to be seven Members of the Committee with a quorum of four. The Committee is to meet four times per municipal year and the Lead Officer is the Director of Corporate Services. All minutes for each committee meeting can be found on the Authority’s website for public review.

Design Compliance

x


We obtained the Terms of Reference for the AGEC and through examination, concluded that the Authority has appropriately established the delegated responsibilities of the Committee. The responsibilities established within the Terms of Reference for the Committee seem appropriate and in line with responsibilities established for similar committees across our emergency services sector client base. Through examination of the Committee’s minutes available to the public via the Authority’s website, we confirmed the Committee had met as follows over the last municipal year (June 2019 – May 2020): • 22 May 2020; and

• 20 July 2019.

The previous meeting before the July 2019 meeting had been held 31 May 2019, prior to the re-appointment of the Chair of the Authority. We note there had been meetings planned in September and December 2019 and March 2020, but these had not taken place.

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When the AGEC did meet, we were able to confirm that the quorum level was met in each instance, and the meetings allowed for scrutiny of the areas established as the Committee’s responsibility in the Terms of Reference. Through examination of the papers available for the meetings held, we were able to evidence appropriate links to the Service regarding the elements of the AGEC’s remit that require business input. As per the Terms of Reference for the Committee established within the Authority’s Constitution, the AGEC is required to meet four times per municipal year. We confirmed this had not happened for the 2019/20 municipal year, where only two meetings had been held. We confirmed the Committee had not met due to delays in obtaining sign off of the 2018/19 financial statements. We note that the Committee has other delegated responsibilities from the Authority, which are detailed in the above control. There is therefore a risk that these responsibilities have not been given the appropriate oversight or attention by the AGEC throughout 2019/20. There is also a risk that the Committee, and in turn the Authority, have not received the required continuous assurances regarding these areas throughout the year. For example, the internal audit report on Health & Safety was presented to the May 2020 AGEC meeting after the audit fieldwork took place in July 2019. We note that the Authority has established a strict timetable regarding the production of the financial statements for 2019/20 and it is therefore anticipated that such a delay would not occur again. The Deputy Clerk confirmed that, if required, any agenda items of the AGEC could be raised to the main Authority meeting if an AGEC meeting was to be cancelled. We were unable to evidence this process being in place for the Authority meetings reviewed as part of this audit. We also noted that whilst the risk register was not reviewed by the Authority or a sub-committee in the absence of AGEC, the SLT and SLB did undertake deep dive scrutiny of a sample of risks across the year.

Management Action

None.


Control

The People and Culture Committee’s (P+CC) primary purpose and function is to keep under review the Authority’s compliance with its duties under the Equalities Act 2010 and make recommendations to the Authority and/or Service Leadership Board (SLB) as necessary and the determination of employee related issues.

Key functions of the Committee include, but are not limited to:

• to undertake the recruitment and appointment of the Principal and Statutory Officers;

• to undertake the annual pay review for the Principal and Statutory Officers and to make recommendations to the Authority;

Design Compliance

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• to undertake an annual review of all completed disciplinary, grievances and other employee disputes;

• to undertake assurances that the organisation has in place sufficient measures to ensure the welfare, wellbeing, policies and procedures affecting staff that promote positive culture; and

• to monitor aspects of service performance including health, safety and welfare, equality and training and development.

The Terms of Reference for the Committee require there to be nine Members, with a quorum of four. The Committee is required to meet four times per municipal year and the Lead Officer is the Director of Service Delivery Support.


We obtained the Terms of Reference for the People and Culture Committee and through examination, concluded that the Authority has appropriately established the delegated responsibilities of the Committee. The responsibilities established within the Terms of Reference for the Committee seem appropriate and in line with responsibilities established for similar committees across our emergency services sector client base. Through examination of the Committee’s minutes available to the public via the Authority’s website, we confirmed the Committee had met as follows over the last municipal year (June 2019 – May 2020): • 7 November 2019 (full Committee including a Panel); • 13 November 2019 (Panel only); • 4 February 2020 (full Committee); • 5 March 2020 (full Committee); and • 15 May 2020 (full Committee). The next meeting was planned for 26 June 2020 and was due to be a Panel meeting to shortlist for the role of Clerk. We confirmed the Committee was therefore due to meet its meeting obligations for the municipal year. All meetings reviewed met the required quorum level and we were able to evidence the Committee had been discharging its delegated responsibilities throughout the year. We were also able to evidence suitable links to the Service’s operations for relevant areas to provide information to the Committee to aid decision making. This included attendances of key staff such as the HR Manager and the Culture and Inclusion Manager to present reports and provide updates.

Management Action

None.

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Control

The Performance Review and Scrutiny Committee’s (PRSC) primary purpose is to provide scrutiny of the performance of and the delivery of the Authority’s policies, plans and objectives.

Key functions of the Committee include, but are not limited to:

• to develop and agree the Annual Work Plan for the municipal year;

• to consider reports on the outcome of the reviews making recommendations to the Authority as to how service improvements can be put in place and to monitor their implementation on a regular basis;

• to monitor and review financial performance including revenue and capital budgets, treasury management, the use of resources and fees and charges;

• to monitor and review key performance targets and ensure the Authority has an effective performance management framework in place; and

• to deal with any matter reserved to the Authority for decision that requires determination between meetings of the Authority.

The Committee consists of seven Members and there is a quorum level of four. The Committee is required to meet four times per municipal year and the Lead Officer is the Director of Service Delivery.

Design Compliance

x


We obtained the Terms of Reference for the PRSC and through examination, concluded that the Authority has appropriately established the delegated responsibilities of the Committee. The responsibilities established within the Terms of Reference for the Committee seem appropriate and in line with responsibilities established for similar committees across our emergency services sector client base. Through examination of the minutes and papers for the Committee that were available via the Authority’s website, we confirmed the Committee had met on the following occasions in the 2019/20 municipal year: • 4 September 2019;

• 11 October 2019; and

• 31 January 2020.

A committee meeting had been planned for 3 April 2020, but this had been cancelled due to Covid-19. Through examination of the minutes and papers for the meetings held in 2019/20, we concluded that the PRSC meetings were quorate (at least four Members present).

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The Committee regularly discussed and scrutinised reports presented to them by members of the Fire Service, including (but not limited to) the Performance Report, presented by the Corporate Performance Manager; HMICFRS Improvement Action Plan updates presented by the HMICFRS Service Liaison Officer; and updates regarding the Improvement Programme as recommended by the Improvement Working Group. We were also able to evidence scrutiny of reports of the business’ approach to topical areas such as the Grenfell Gap Analysis. We were therefore able to evidence the Committee was actively monitoring and reviewing the performance of the Service. Whilst we recognise the Committee was discharging its delegated responsibilities regarding the areas listed above, we were unable to evidence appropriate action regarding “the monitor and review of financial performance including revenue and capital budgets, treasury management, the use of resources and fees and charges” (taken from the PRSC ToR). Whilst we confirmed review of financial performance by the Authority on a quarterly basis through the Scorecard, we could not evidence full review of the required areas by the PRSC detailed in the Terms of Reference. The scrutiny of financial performance is an important element of a governance structure. Without appropriate scrutiny at an appropriate level there is a risk that poor financial performance is not notified and rectified effectively. Through discussion with the Corporate Assurance Manager it was confirmed that the Authority’s Constitution would be reviewed in the Autumn of 2020 and scrutiny of financial performance would be re-assigned to a more appropriate committee. Financial performance is often scrutinised at a “Resources” or “Finance and Audit” type committee across the Emergency Services sector. The Authority should therefore seek to allocate the review of financial performance to the most suitable committee, ensuring the provision of such information can aid discussions and decisions regarding other items on that committee’s agenda.

Management Action 4

As part of the review of the Authority’s Constitution, the Terms of Reference of the PRSC will be reviewed and updated to reflect the committee’s role with regards to reviewing financial performance, and whether this needs to be assigned to an alternative committee or whether this stays as a Fire Authority role.

Action Owner Clerk

Date 31 December 2020

Priority Low

Area: Assurance Framework Assessment

Control

The Fire Authority has developed a draft Governance and Assurance Framework (incorporating the local code of governance) for 2020 – 2023. The Governance and Assurance Framework explains how the Fire Authority delivers good governance and how it will review the effectiveness of its governance arrangements. The framework was established following the agreement by the Authority in September 2019 to set up a new committee structure, consisting of the Performance Review & Scrutiny Committee; Audit, Governance and Ethics Committee; and the People and Culture Committee (all discussed above). The framework establishes the Authority’s approach to the following areas, but is not limited to:

Design Compliance

x

N/A

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• approach to determine the effectiveness of our governance arrangements;

• priorities for ensuring the Authority has the highest standards of governance;

• the annual review of effectiveness; and

• governance monitoring, reporting and approval.

The Governance and Assurance Framework remained in draft at the time of this audit.


We obtained the draft Governance and Assurance Framework and through examination, sought to confirm the Authority had identified and established its governance framework and the use of its Assurance Framework to ensure good governance can be delivered. We noted that the draft Governance and Assurance Framework clearly identified the Authority’s approach to ensuring good governance is delivered. When compared to Fire Authority’s across our client base, Avon Fire Authority’s production of such a document highlights good practice and a more evolved approach to governance and assurance than most other fire authorities. The framework established within the document did not effectively identify the Authority’s articulated assurance framework. An effective assurance framework provides a clear and concise structure for identifying which of the organisation’s objectives are at risk because of inadequacies in the operation of controls, or where the organisation has insufficient assurance about them. An Assurance Framework should provide the Authority, and in turn its sub-committees with the required information and confidence about how risks are managed to effectively deliver the Authority’s objectives. This in turn should ensure each committee’s decision making is in line with achieving the Authority’s strategic objectives. Further enhancements to this document to articulate sources of assurance is therefore required. An example assurance framework is included in Appendix A to this report.

Management Action 5

An Assurance Framework will be developed that articulates the first, second and third line of sources of assurance against the key controls in place to mitigate the risks to the Authority achieving its objectives. The framework will be aligned to the Authority’s constitution to ensure appropriate coverage of all assurances across its sub-committees.

Action Owner Corporate Assurance Manager

Date 31 March 2021

Priority Medium

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The following is an example of what a Fire Authority assurance framework / map may look like.

Appraisals & Development

People

Other

Service Improvement Plan

3rd Line of Assurance - Internal Audit

2021

/22

Governance/strategic

IT

Finance

Estates

Fire

and

Res

cue

Serv

ice

Cha

nge

Boa

rd

2nd Line of Assurance: Functional oversight/governance

Fire

and

Res

cue

Stra

tegi

c B

oard

2019

/20

2020

/21

Red - Minimal Assurance / Poor Progress

Income generation and management

Fleet

Emergency Services Network

Cyber security

GDPR/Data protection/information management

Medium term financial planning

Safeguarding

Health and safety

HR Transaction Processing and Payroll

Communication and Engagement

Recruitment and retention

Culture

Efficiencies/savings programmes

Value for money

People Structures Planning & Utilisation

Estates strategy

Integrated Risk Management Plan

Amber/green - Reasonable Assurance / Reasonable Progress

Green - Substantial Assurance / Good Progress

Procurement/contract management

ICT Strategy

IT Transformtion Programme

2018

/19

IDEA

HM

ICFR

S

Exte

rnal

aud

it

Emer

genc

y Se

rvic

es

Col

labo

ratio

n B

oard

Fire

and

Res

cue

Serv

ice

SLT

2016

/17

2017

/18Amber/red - Partial Assurance / Little Progress

Increasing Assurance1st Line of Assurance:Management control

and reporting

3rd Line of Assurance:Independent review

Advisory / AUP

Assurance Provided

Man

agem

ent R

evie

ws

&

App

rova

l

KPI

s

Exte

rnal

con

sulta

nts

Fire

and

Res

cue

Perf

orm

ance

and

R

esou

rces

Boa

rd

Training and Development

Risk Management

Wellbeing

Property Maintenance

Strategic Assessment of Risk

New Payroll, HR and OD system

Governance

Budgetary Control

Key Financial Controls

Business continuity and disaster recovery

Programme 2020

Police/fire collaboration

Software Licensing + IT Software Assets tracking

HMICFRS inspectionsPerformance management

ICT Contract Management

APPENDIX A: ASSURANCE FRAMEWORK

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The following questions were included in a questionnaire provided to Members of the Authority, with a selection of responses detailed below. The questionnaire was issued to 20 Members of the Authority, and after four weeks, responses were received from three.

Notable responses include:

• an average score of “2 (some, but weaknesses exist) for question 15 regarding the co-opting of members where expertise is required. The allocation of members to a sub-committee based on political proportionality has been identified as a weakness during this audit; and

• responses concerning the late provision of reports and how it may be more beneficial to receive papers further in advance of Authority meetings for question 8 regarding the timeliness of reports presented to the Authority.

Question Average score1. The Authority understands the organisation’s objectives, challenges and risks including current areas of particular focus and major projects? 4 (fully agree / demonstrated)2. The terms of reference adequately define the roles and responsibilities of the Authority and the actions we take align with these terms of reference? 4 (fully agree / demonstrated)3. I understand the Authority's governance structure and the assurance framework in place. 4 (fully agree / demonstrated)4. I understand the strategic direction the Authority seeks to take in the next five years. 4 (fully agree / demonstrated)5. As a group, I believe the Authority has sufficient skills and experience to undertake its role effectively. 3 (yes, but room for improvement)6. The Authority has the right mix of personalities to enable it to undertake its role effectively? 3 (yes, but room for improvement)7. The Authority reviews its meetings, impact and outcomes and considers its areas of coverage relating directly to the organisation’s strategic objectives? 4 (fully agree / demonstrated)8. The quality, content and timeliness of reports presented to the Authority are satisfactory and they provide sufficient information to aid the Authority decision making? 3 (yes, but room for improvement)9. I believe all members are well prepared for each meeting and will have read all papers and reports. 3 (yes, but room for improvement)10. Members are engaged in horizon scanning to ensure the Authority is focused on future risks and assurance needs as well as current and past risks and assurance? 3 (yes, but room for improvement)11. There is an appropriate balance between supporting the management team by imparting experience while members maintain an appropriate level of independence and challenge? 4 (fully agree / demonstrated)12. The assurances provided to the Authority on the effectiveness of risk management, governance and internal control is based on a broad range of assurances received and evidence obtained from across the business? 3 (yes, but room for improvement)13. The Authority actively requests information to support and help it to discharge its duties and responsibilities? 3 (yes, but room for improvement)14. The Authority identifies the development needs of its members and seeks to address those development needs, including through external training? 3 (yes, but room for improvement)15. Where there are any potential knowledge gaps, the Authority takes the opportunity to co-opt members where there expertise is required? 2 (some, but weaknesses exist)16. The induction and training process for Authority members ensured I understood the expectations of my role as an Authority member. 4 (fully agree / demonstrated)

APPENDIX B: QUESTIONNAIRE RESPONSES

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Categorisation of internal audit findings

Priority Definition

Low There is scope for enhancing control or improving efficiency and quality.

Medium Timely management attention is necessary. This is an internal control risk management issue that could lead to: Financial losses which could affect the effective function of a department, loss of controls or process being audited or possible reputational damage, negative publicity in local or regional media.

High Immediate management attention is necessary. This is a serious internal control or risk management issue that may lead to: Substantial losses, violation of corporate strategies, policies or values, reputational damage, negative publicity in national or international media or adverse regulatory impact, such as loss of operating licences or material fines.

The following table highlights the number and categories of management actions made as a result of this audit.

* Shows the number of controls not adequately designed or not complied with. The number in brackets represents the total number of controls reviewed in this area.

APPENDIX C: CATEGORISATION OF FINDINGS

Risk Control design not effective*

Non-compliance

with controls*

Agreed actionsLow Medium High

Governance Structure 2 (4) 1 (4) 3 0 0

Attendance and Outputs 0 (4) 3 (4) 1 0 0

Assurance Framework 1 (1) 0 (1) 0 1 0

Total

4 1 0

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APPENDIX C: SCOPE The scope below is a copy of the original document issued.

Scope of the review The scope was planned to provide assurance on how the Service manages the following area:

Objective of the area: To ensure the Fire Authority is underpinned by an appropriate governance structure and assurance framework so that it can discharge its duties to resource the service to commensurate with the level of risk present in the area, and to address the priorities of the fire and rescue national framework.

Objective of the audit: To assess the adequacy and effectiveness of the governance and assurance frameworks in place, against good and expected practice across the sector.

Additional management concerns The Fire Authority has had 50% change in its members as a result of the local elections in May 2019, and the Constitution was updated in late 2019.

We were informed that the current assurance framework was developed in 2016, and therefore may require updating. This will be done following the audit, taking into consideration any feedback or actions raised in this audit.

When planning the audit the following areas for consideration were agreed: We will review and assess whether the current governance structure / constitution supporting the Fire Authority is effective, reflects good practice, and is being applied in practice to enable the Authority and the Fire Service to meet its strategic and operational objectives.

We will look at the process for allocating members to each sub-committee, whether this lies under the control of AFRS or the councils, and how the skills mix is assessed.

We will review attendance and outputs from the Authority and sub-committee meetings.

We will benchmark the structure against other Fire Authorities.

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We will walk through the flows of assurance to the Authority and assess whether this is sufficient to enable the Authority to discharge its responsibilities effectively, and whether this mirrors the current assurance framework developed by the Fire Service.

As part of this audit we will look to gather feedback from members of the Fire Authority via a questionnaire to understand their view on governance and assurance, as well as their experience of induction / training.

Limitations to the scope of the audit assignment: We will not test or comment on the accuracy / data quality of the information being presented to the Fire Authority and its sub-committees.

We will not provide assurance that the Authority / Service has identified all its strategic risks.

Testing will be undertaken on a sample basis only.

Our work does not provide absolute assurance that material errors, loss or fraud do not exist.

The results of our work are reliant on the quality and completeness of the information provided to us.

Debrief held 23 July 2020 Internal audit Contacts [email protected] / 07768 952387 [email protected] / 07740 631140

Draft report issued 7 August 2020 Responses received 12 August 2020

Final report issued 12 August 2020 Client sponsor Angie Feeney - Deputy Director of Corporate Services Jane Williams-Lock - Corporate Assurance Manager Helen Dumbarton - Business Planning and Assurance Officer

Distribution Angie Feeney - Deputy Director of Corporate Services Jane Williams-Lock - Corporate Assurance Manager Helen Dumbarton - Business Planning and Assurance Officer

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The matters raised in this report are only those which came to our attention during the course of our review and are not necessarily a comprehensive statement of all the weaknesses that exist or all improvements that might be made. Actions for improvements should be assessed by you for their full impact. This report, or our work, should not be taken as a substitute for management’s responsibilities for the application of sound commercial practices. We emphasise that the responsibility for a sound system of internal controls rests with management and our work should not be relied upon to identify all strengths and weaknesses that may exist. Neither should our work be relied upon to identify all circumstances of fraud and irregularity should there be any.

Our report is prepared solely for the confidential use of Avon Fire and Rescue Service, and solely for the purposes set out herein. This report should not therefore be regarded as suitable to be used or relied on by any other party wishing to acquire any rights from RSM Risk Assurance Services LLP for any purpose or in any context. Any third party which obtains access to this report or a copy and chooses to rely on it (or any part of it) will do so at its own risk. To the fullest extent permitted by law, RSM Risk Assurance Services LLP will accept no responsibility or liability in respect of this report to any other party and shall not be liable for any loss, damage or expense of whatsoever nature which is caused by any person’s reliance on representations in this report.

This report is released to you on the basis that it shall not be copied, referred to or disclosed, in whole or in part (save as otherwise permitted by agreed written terms), without our prior written consent.

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